Exhibit 10.15
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SALE AND SERVICING AGREEMENT
among
LONG BEACH ACCEPTANCE AUTO RECEIVABLES TRUST 1999-2
Issuer
LONG BEACH ACCEPTANCE RECEIVABLES CORP.
Transferor
LONG BEACH ACCEPTANCE CORP.
Originator and Servicer
and
THE CHASE MANHATTAN BANK
Back-up Servicer, Custodian and Trust Collateral Agent
Dated as of December 1, 1999
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TABLE OF CONTENTS
Page
ARTICLE I DEFINITIONS.............................................................................................1
SECTION 1.1. Definitions.................................................................................1
SECTION 1.2. Other Definitional Provisions...............................................................1
SECTION 1.3. Calculations................................................................................2
SECTION 1.4. Action by or Consent of Noteholders.........................................................2
SECTION 1.5. Material Adverse Effect.....................................................................2
ARTICLE II CONVEYANCE OF RECEIVABLES..............................................................................3
SECTION 2.1. Conveyance of Initial Receivables...........................................................3
SECTION 2.2. Conveyance of Subsequent Receivables........................................................4
SECTION 2.3. Transfer Intended as Sale; Precautionary Security Interest..................................9
SECTION 2.4. Assignment by Transferor....................................................................9
SECTION 2.5. The Legal Files Are Not "Financial Assets".................................................10
SECTION 2.6. Further Encumbrance of Trust Assets........................................................10
ARTICLE III THE RECEIVABLES......................................................................................10
SECTION 3.1. Representations and Warranties of Transferor...............................................10
SECTION 3.2. Repurchase upon Breach of Representations and Warranties of the Transferor.................11
SECTION 3.3. Delivery of Legal Files and Receivable Files...............................................11
SECTION 3.4. Acceptance of Legal Files by Custodian.....................................................12
SECTION 3.5. Access to Receivable Files and Legal Files; Servicer's Duties with Respect to
Receivable Files; Custodian's Duties with Respect to Legal Files....................13
SECTION 3.6. Covenants of the Custodian.................................................................14
SECTION 3.7. Issuer's Certificate.......................................................................16
ARTICLE IV ADMINISTRATION AND SERVICING OF RECEIVABLES...........................................................17
SECTION 4.1. Duties of the Servicer.....................................................................17
SECTION 4.2. Collection and Allocation of Receivable Payments...........................................17
SECTION 4.3. Realization upon Receivables...............................................................18
SECTION 4.4. Physical Damage Insurance; Other Insurance.................................................19
SECTION 4.5. Maintenance of Security Interests in Financed Vehicles.....................................20
SECTION 4.6. Additional Covenants of Servicer...........................................................21
SECTION 4.7. Purchase of Receivables Upon Breach........................................................21
SECTION 4.8. Servicing Fee..............................................................................22
SECTION 4.9. Servicer's Certificate.....................................................................22
SECTION 4.10. Annual Statement as to Compliance; Notice of Default.......................................23
SECTION 4.11. Annual Independent Certified Public Accountant's Report....................................23
SECTION 4.12. Servicer Expenses..........................................................................24
SECTION 4.13. Retention and Termination of Servicer......................................................24
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SECTION 4.14. Access to Certain Documentation and Information Regarding Receivables......................24
SECTION 4.15. Verification of Servicer's Certificate.....................................................25
SECTION 4.16. Fidelity Bond..............................................................................26
SECTION 4.17. Delegation of Duties.......................................................................26
SECTION 4.18. Delivery of Back-up Tapes of Back-up Servicer..............................................27
ARTICLE V ACCOUNTS; PAYMENTS; STATEMENTS TO NOTEHOLDERS..........................................................28
SECTION 5.1. Accounts; Lock-Box Account.................................................................28
SECTION 5.2. Collections................................................................................30
SECTION 5.3. Application of Collections.................................................................30
SECTION 5.4. Intentionally Omitted......................................................................30
SECTION 5.5. Additional Deposits........................................................................30
SECTION 5.6. Payments; Policy Claims....................................................................31
SECTION 5.7. Statements to Noteholders; Tax Returns.....................................................35
SECTION 5.8. Reliance on Information from the Servicer..................................................38
SECTION 5.9. Optional Deposits by the Note Insurer......................................................38
SECTION 5.10. Spread Account.............................................................................38
SECTION 5.11. Withdrawals from Spread Account............................................................38
SECTION 5.12. Simple Interest............................................................................39
SECTION 5.13. Pre-Funding Account........................................................................39
SECTION 5.14. Capitalized Interest Account...............................................................40
SECTION 5.15. Class B Reserve Account....................................................................40
SECTION 5.16. Securities Accounts........................................................................41
ARTICLE VI THE NOTE POLICY.......................................................................................41
SECTION 6.1. Note Policy................................................................................41
SECTION 6.2. Claims Under Note Policy...................................................................41
SECTION 6.3. Preference Claims; Direction of Proceedings................................................43
SECTION 6.4. Surrender of Note Policy...................................................................43
ARTICLE VII THE TRANSFEROR.......................................................................................44
SECTION 7.1. Representations of the Transferor..........................................................44
SECTION 7.2. Liability of the Transferor................................................................46
SECTION 7.3. Merger or Consolidation of, or Assumption of the Obligations of, the Transferor............46
SECTION 7.4. Limitation on Liability of the Transferor and Others.......................................46
SECTION 7.5. Transferor May Own Notes...................................................................47
ARTICLE VIII THE SERVICER........................................................................................47
SECTION 8.1. Representations of Servicer................................................................47
SECTION 8.2. Indemnities of Servicer....................................................................49
SECTION 8.3. Merger or Consolidation of, or Assumption of the Obligations of, Servicer or
Back-up Servicer....................................................................51
SECTION 8.4. Limitation on Liability of Servicer and Others.............................................52
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SECTION 8.5. Servicer and Back-up Servicer Not to Resign................................................52
ARTICLE IX SERVICER TERMINATION EVENTS...........................................................................53
SECTION 9.1. Servicer Termination Events................................................................53
SECTION 9.2. Appointment of Successor...................................................................56
SECTION 9.3. Notification to Noteholders................................................................57
SECTION 9.4. Action Upon Certain Failures of the Servicer...............................................57
ARTICLE X THE TRUST COLLATERAL AGENT AND THE CUSTODIAN...........................................................58
SECTION 10.1. Duties of the Trust Collateral Agent and the Custodian.....................................58
SECTION 10.2. Trust Collateral Agent to Act for the Noteholders and Note Insurer.........................61
SECTION 10.3. Certain Matters Affecting the Trust Collateral Agent and the Custodian.....................61
SECTION 10.4. Trust Collateral Agent, Back-up Servicer and Custodian Not Liable for Notes or
Receivables..............................................................................63
SECTION 10.5. Trust Collateral Agent, Back-up Servicer and Custodian May Own Notes.......................64
SECTION 10.6. Indemnity of Trust Collateral Agent, Back-up Servicer and Custodian........................64
SECTION 10.7. Eligibility Requirements for Trust Collateral Agent and the Custodian......................64
SECTION 10.8. Resignation or Removal of Trust Collateral Agent or Custodian..............................64
SECTION 10.9. Successor Trust Collateral Agent or Custodian..............................................66
SECTION 10.10. Merger or Consolidation of Trust Collateral Agent or Custodian.............................67
SECTION 10.11. Co-Trustee; Separate Trustee...............................................................67
SECTION 10.12. Representations and Warranties of Trust Collateral Agent and the Custodian.................68
SECTION 10.13. Rights of Note Insurer to Direct Trust Collateral Agent....................................69
ARTICLE XI TERMINATION...........................................................................................69
SECTION 11.1. Termination................................................................................69
ARTICLE XII ADMINISTRATIVE DUTIES OF THE SERVICER................................................................70
SECTION 12.1. Administrative Duties......................................................................70
SECTION 12.2. Records....................................................................................71
SECTION 12.3. Additional Information to be Furnished to the Issuer.......................................71
SECTION 12.4. No Additional Compensation.................................................................71
ARTICLE XIII MISCELLANEOUS PROVISIONS............................................................................72
SECTION 13.1. Amendment..................................................................................72
SECTION 13.2. Protection of Title to Issuer..............................................................73
SECTION 13.3. Limitation on Rights of Noteholders........................................................75
SECTION 13.4. Governing Law..............................................................................76
SECTION 13.5. Notices....................................................................................76
SECTION 13.6. Severability of Provisions.................................................................77
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SECTION 13.7. Assignment to Indenture Trustee............................................................77
SECTION 13.8. Limitation of Liability of Owner Trustee, Custodian and Trust Collateral Agent.............77
SECTION 13.9. Independence of the Servicer...............................................................78
SECTION 13.10. No Joint Venture...........................................................................78
SECTION 13.11. Nonpetition Covenant.......................................................................78
SECTION 13.12. Third Party Beneficiaries..................................................................78
SECTION 13.13. Consent to Jurisdiction....................................................................78
SECTION 13.14. Headings...................................................................................79
SECTION 13.15. Trial by Jury Waived.......................................................................79
SECTION 13.16. Entire Agreement...........................................................................80
SECTION 13.17. Effect of Policy Expiration Date...........................................................80
ANNEXES
Annex A Defined Terms
EXHIBITS
Exhibit A-1 Form of Issuer's Certificate
Exhibit A-2 Form of Issuer's Certificate
Exhibit B-1 Form of Servicer's Certificate
Exhibit B-2 Form of Loan Master File Layout
Exhibit C Intentionally Omitted
Exhibit D Payment Deferment and Due Date Change Policies
Exhibit E Documentation Checklist
Exhibit F Form of Request for Transfer of Possession
Exhibit G Form of Custodial Letter
Exhibit H Form of Transfer Agreement
SCHEDULES
Schedule A Schedule of Receivables
Schedule B Location of Receivable Files; Location of Legal Files
Schedule C Delivery Requirements
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SALE AND SERVICING AGREEMENT ("Agreement"), dated as of
December 1, 1999, among LONG BEACH ACCEPTANCE AUTO RECEIVABLES TRUST 1999-2, a
Delaware business trust, as issuer (the "Issuer"), LONG BEACH ACCEPTANCE
RECEIVABLES CORP., a Delaware corporation, as transferor (the "Transferor"),
LONG BEACH ACCEPTANCE CORP., a Delaware corporation, as originator of the
receivables ("LBAC") and as servicer (in such capacity, the "Servicer") and THE
CHASE MANHATTAN BANK, a
New York banking corporation, as back-up servicer,
custodian and trust collateral agent, ("Back-up Servicer", "Custodian" and
"Trust Collateral Agent", respectively).
WHEREAS the Issuer desires to acquire a portfolio of
receivables arising in connection with motor vehicle retail installment sale
contracts acquired by LBAC through motor vehicle dealers;
WHEREAS the Transferor has purchased such receivables from
LBAC and is willing to convey such receivables to the Issuer;
WHEREAS the Issuer desires to acquire, from time to time,
additional receivables arising in connection with motor vehicle retail
installment sale contracts to be acquired by LBAC through motor vehicle dealers;
WHEREAS the Transferor has agreed to purchase, from time to
time, such additional receivables from LBAC and is willing to convey such
receivables to the Issuer; and
WHEREAS the Servicer is willing to service all such
receivables.
NOW, THEREFORE, in consideration of the premises and the
mutual covenants herein contained, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1. DEFINITIONS. Whenever used in this Agreement,
capitalized terms used and not otherwise defined herein shall have the meanings
set forth in Annex A attached hereto.
SECTION 1.2. OTHER DEFINITIONAL PROVISIONS.
(a) All terms defined in this Agreement (including Annex A hereto)
shall have the defined meanings when used in any instrument governed hereby and
in any certificate or other document made or delivered pursuant hereto unless
otherwise defined therein.
(b) As used in this Agreement, in any instrument governed hereby and in
any certificate or other document made or delivered pursuant hereto or thereto,
accounting terms not defined in this Agreement (including Annex A hereto) or in
any such instrument, certificate or other document, and accounting terms partly
defined in this Agreement (including Annex A hereto) or in any such instrument,
certificate or other document to the extent not defined, shall have the
respective meanings given to them under generally accepted accounting principles
as in
effect on the date of this Agreement or any such instrument, certificate or
other document, as applicable. To the extent that the definitions of accounting
terms in this Agreement (including Annex A hereto) or in any such instrument,
certificate or other document are inconsistent with the meanings of such terms
under generally accepted accounting principles, the definitions contained in
this Agreement (including Annex A hereto) or in any such instrument, certificate
or other document shall control.
(c) The words "hereof," "herein," "hereunder" and words of similar
import when used in this Agreement shall refer to this Agreement as a whole and
not to any particular provision of this Agreement; Section, Schedule and Exhibit
references contained in this Agreement are references to Sections, Schedules and
Exhibits in or to this Agreement unless otherwise specified; and the term
"including" shall mean "including without limitation."
(d) 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."
(e) Any agreement, instrument or statute defined or referred to herein
or in any instrument or certificate delivered in connection herewith means such
agreement, instrument or statute as from time to time amended, modified or
supplemented and includes (in the case of agreements or instruments) references
to all attachments thereto and instruments incorporated therein; references to a
Person are also to its permitted successors and assigns.
SECTION 1.3. CALCULATIONS. All calculations of the amount of
the Servicing Fee, the Back-up Servicer Fee, Custodian Fee and the Indenture
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 Receivable as of the
last day of a Collection Period shall refer to the close of business on such
day.
SECTION 1.4. ACTION BY OR CONSENT OF NOTEHOLDERS. Whenever any
provision of this Agreement refers to action to be taken, or consented to, by
Noteholders, such provision shall be deemed to refer to Noteholders of record as
of the Record Date immediately preceding the date on which such action is to be
taken, or consent given, by Noteholders. Solely for the purposes of any action
to be taken or consented to by Noteholders, any Note registered in the name of
the Transferor, 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 Indenture Trustee or the Trust Collateral Agent is entitled to rely upon any
such action or consent, only Notes which the Indenture Trustee or the Trust
Collateral Agent actually knows to be so owned shall be so disregarded.
SECTION 1.5. 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
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or circumstances could or would have a material adverse effect on the Issuer or
Noteholders (or any similar or analogous determination), such determination
shall be made without taking into account the insurance provided by the Note
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 Issuer, the
Noteholders or the Note Insurer (or any similar or analogous determination),
such determination shall be made by the Note Insurer in its sole discretion, so
long as no Note Insurer Default shall have occurred and be continuing.
ARTICLE II
CONVEYANCE OF RECEIVABLES
SECTION 2.1. CONVEYANCE OF INITIAL RECEIVABLES.
In consideration of the Issuer's delivery of the Certificate
to or upon the order of the Transferor on the Closing Date and the net proceeds
from the sale of the Notes and the other amounts to be distributed from time to
time to, or upon the order of, the Transferor in accordance with the terms of
this Agreement, the Transferor does hereby transfer, assign, set over and
otherwise convey to the Issuer, without recourse, all right, title and interest
of the Transferor in and to:
(i) the Initial Receivables listed in Schedule A hereto, all
monies received on the Initial Receivables after the Initial Cutoff
Date and, with respect to any Initial Receivables which are Precomputed
Receivables, the related Payahead Amount, and 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 Transferor 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 Issuer pursuant to the liquidation
of such Initial Receivable;
(v) the Purchase Agreement and the Guarantee including,
without limitation, a direct right to cause LBAC to purchase Initial
Receivables from the Issuer upon the occurrence of a breach of any of
the representations and warranties contained in Section 3.2(b) of the
Purchase Agreement or the failure of LBAC to timely comply with its
obligations pursuant to Section 5.5 of the Purchase Agreement;
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(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 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 Lock-Box Account, to the extent such amounts and
property relate to the Initial Receivables;
(ix) any proceeds from recourse against Dealers (other than
any Chargeback Obligations), including, without limitation, any Dealer
Title Guaranties with respect to the Receivables, with respect to the
sale of the Initial Receivables; and
(x) the proceeds of any and all of the foregoing.
SECTION 2.2. CONVEYANCE OF SUBSEQUENT RECEIVABLES.
(a) Subject to the conditions set forth in Section 2.2(b) and in the
related Transfer Agreement, in consideration of the Issuer's delivery to or upon
the order of the Transferor of the purchase price for the Subsequent
Receivables, in each case as described below and set forth in the related
Transfer Agreement, the Transferor shall on each Subsequent Transfer Date sell,
transfer, assign, set over and otherwise convey to the Issuer, without recourse,
all right, title and interest of the Transferor in and to:
(i) the Subsequent Receivables listed in Schedule A to the
related Transfer Agreement, all monies received on such Subsequent
Receivables after the applicable Subsequent Cut-off Date and, with
respect to any such Subsequent Receivables which are Precomputed
Receivables, the related Payahead Amount and 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 Transferor 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 Issuer pursuant to the liquidation
of such Subsequent Receivable;
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(v) each Transfer Agreement, the Purchase Agreement and the
Guarantee, including, without limitation, a direct right to cause LBAC
to purchase Subsequent Receivables from the Issuer upon the occurrence
of a breach of any of the representations and warranties contained in
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 the related
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.
The purchase price to be paid by the Issuer 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 5.13(b). Such purchase price shall equal
the aggregate Principal Balance of such Subsequent Receivables as of the related
Subsequent Cutoff Date.
(b) The Transferor shall transfer to the Issuer the Subsequent
Receivables and the other property and rights related thereto described in
Section 2.2(a) only upon the prior written consent of the Note 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 Transferor shall have provided the Indenture Trustee,
the Trust Collateral Agent, the Note 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
Indenture Trustee, the Trust Collateral Agent and the Note Insurer with
an electronic transmission of the information on the related Subsequent
Receivables set forth in such Addition Notice in a format acceptable to
each of the Indenture Trustee, the Trust Collateral Agent and the Note
Insurer no later than such fifth Business Day prior to the related
Subsequent Transfer Date;
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(ii) the Originator shall have delivered to the Transferor, a
written Subsequent Assignment, which shall include a list of the
Subsequent Receivables so transferred attached thereto as Schedule A,
and a copy thereof to the Note Insurer;
(iii) the Transferor, the Originator, the Trust and the Trust
Collateral Agent shall have executed a written Transfer Agreement,
which shall include a list of the Subsequent Receivables so transferred
attached thereto as Schedule A, and a copy thereof shall have been
delivered to the Note Insurer;
(iv) the Transferor 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;
(v) the Transferor shall have deposited or caused to be
deposited the related Subsequent Spread Account Deposit into the Spread
Account pursuant to Section 5.10 and the related Class B Reserve
Account Subsequent Deposit into the Class B Reserve Account pursuant to
Section 5.15(a);
(vi) as of each Subsequent Transfer Date, neither the Servicer
nor the Transferor will be insolvent nor will either of them be made
insolvent by the related transfer nor is any of them aware of any
pending insolvency;
(vii) the Funding Period shall not have terminated;
(viii) the Transferor shall have delivered to the Indenture
Trustee, the Trust Collateral Agent, the Note Insurer and each Rating
Agency an Officer's Certificate confirming the satisfaction of each
condition precedent specified in this Section 2.2(b) and in Section 5
of the related Transfer Agreement and certifying that:
(A) such conveyance of Subsequent Receivables by the
Transferor to the Trust on the related Subsequent Transfer
Date 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 Transferor has been, is or will become, on
or after the related Subsequent Transfer Date, indebted;
(B) the Transferor did not receive less than a
reasonably equivalent value in exchange for the conveyance of
the Subsequent Receivables by the Transferor to the Issuer on
the related Subsequent Transfer Date pursuant to the related
Transfer Agreement;
(C) the Transferor is not insolvent on the related
Subsequent Transfer Date and will not become insolvent as a
result of the conveyance of the Subsequent Receivables by the
Transferor to the Issuer on the related Subsequent Transfer
Date pursuant to the related Transfer Agreement;
(D) the Transferor is not engaged in a business or
transaction, and is not about to engage in a business or
transaction, for which any property remaining
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with the Transferor after such business or transaction would
be an unreasonably small amount of capital; and
(E) the Transferor has not incurred, and does not
believe that it will incur, debts that would be beyond the
Transferor's ability to pay as such debts mature;
(ix) the Originator shall have delivered to the Indenture
Trustee, the Trust Collateral Agent, the Note Insurer and each Rating
Agency an Officer's Certificate confirming the satisfaction of each
condition precedent specified in this Section 2.2(b) and in Section 5
of the related Transfer Agreement and certifying that:
(A) that such sale of Subsequent Receivables by the
Originator to the Transferor on the related Subsequent
Transfer Date 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 related Subsequent Transfer Date,
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 Transferor on
the related Subsequent Transfer Date pursuant to the Purchase
Agreement and the related Subsequent 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 Transferor on the related Subsequent
Transfer Date pursuant to the Purchase Agreement and the
related Subsequent Assignment;
(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 Transferor shall have delivered to each Rating Agency,
the Note Insurer, the Indenture Trustee and the Trust Collateral Agent
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 Note Insurer, the Indenture
Trustee and the Trust Collateral Agent on the Closing Date regarding
true sale, non-consolidation, perfection, and other such matters
satisfactory in form and substance to each of the Note Insurer, the
Indenture Trustee and the Trust Collateral Agent in its sole
discretion;
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(xi) the Transferor shall have taken all action required to
maintain the first priority perfected security interest (as defined in
the UCC) of the Issuer in the Trust Assets;
(xii) no selection procedures believed by the Transferor or
the Originator to be adverse to the interests of the Noteholders or the
Note 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 Notes; provided that written confirmation
of such ratings shall not be required from the Rating Agencies;
(xiv) the Transferor shall have provided the Indenture Trustee
and the Trust Collateral Agent with a supplement to the Schedule of
Receivables setting forth the Subsequent Receivables to be transferred
on such Subsequent Transfer Date;
(xv) the Transferor shall have caused a firm of independent
accountants to deliver to the Indenture Trustee, the Trust Collateral
Agent and the Note 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 61 months and the weighted
average original term for the Receivables will be no more than
63 months;
(2) each Receivable will have a minimum APR of 7.50%;
(3) each Receivable will have an original term of no
more than 72 months;
(4) no more than 60% of the Receivables will be
originated in California;
(5) the weighted average APR for the Receivables will
be greater than or equal to 17.25%;
(6) not less than 6.3% of the aggregate Principal
Balance of the Receivables will be Class I Receivables, not
less than 27% of the aggregate Principal Balance of the
Receivables will be Class IIA Receivables, not less than 41%
of the aggregate Principal Balance of the Receivables will be
Class IIB Receivables, no more than 21% of the aggregate
Principal Balance of the Receivables will be Class III
Receivables and not more than 1% of the aggregate Principal
Balance of the Receivables will be Class IV Receivables; and
(7) not more than 82% of the aggregate Principal
Balance of the Receivables will represent loans to finance the
purchase of used Financed Vehicles;
8
(xvi) the Transferor shall satisfy the document delivery
requirements for such Subsequent Receivables as specified in Section
3.3;
(xvii) the representations and warranties made by the
Transferor and the Servicer in Sections 7.1 and 8.1, 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(b) of the Purchase Agreement shall
be true and correct as of such Subsequent Transfer Date;
(xviii) on or before such Subsequent Transfer Date, the
Transferor shall have provided any information reasonably requested by
the Rating Agencies, the Note Insurer, the Indenture Trustee or the
Trust Collateral Agent with respect to any Subsequent Receivables;
(xix) the Custodian shall acknowledge receipt of files which
the Transferor 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 Transfer Agreement; and
(xx) the Servicer shall deliver the loan master file and
history information and the information required to be set forth in the
form attached hereto as Exhibit B-2 as specified in Section 4.18.
SECTION 2.3. TRANSFER INTENDED AS SALE; PRECAUTIONARY SECURITY
INTEREST. Each conveyance to the Issuer of the property set forth in Section 2.1
and Section 2.2 above is intended as a sale (for certain non-tax purposes) free
and clear of all Liens, and it is intended that the property of the Issuer shall
not be part of the Transferor's estate in the event of the filing of a
bankruptcy petition by or against the Transferor under any bankruptcy law. In
the event, however, that notwithstanding the intent of LBAC, the Transferor and
the Issuer, any transfer under this Agreement is held not to be a sale, this
Agreement shall constitute a security agreement under the UCC (as defined in the
UCC as in effect in the State of
New York) and applicable law, and the
Transferor hereby grants a security interest to the Issuer in, to and under the
property described in Section 2.1 and Section 2.2 above and all proceeds
thereof, for the benefit of the Noteholders and the Note Insurer as their
interests may appear herein, for the purpose of securing the payment and
performance of the Notes and the repayment of amounts owed to the Issuer from
the Transferor.
SECTION 2.4. ASSIGNMENT BY TRANSFEROR. The Transferor does
hereby transfer, assign and otherwise convey unto the Issuer, for the benefit of
the Noteholders and the Note 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 and Section 4 of each Transfer 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
9
Section 2.4 are intended to grant the Issuer a direct right against LBAC to
demand performance under the terms of the Purchase Agreement.
SECTION 2.5. THE LEGAL FILES ARE NOT "FINANCIAL ASSETS". The
parties (for themselves, their successors, trustees, receivers and assigns)
acknowledge and agree that the Legal Files held pursuant to this Agreement are
not "financial assets" within the meaning of ss. 8.102(a)(9) of the Texas
Business & Commerce Code (the "Texas UCC").
SECTION 2.6. FURTHER ENCUMBRANCE OF TRUST ASSETS.
(a) Immediately upon the conveyance to the Issuer by the Transferor of
any item of the Trust Assets pursuant to Section 2.1 and Section 2.2, all right,
title and interest of the Transferor in and to such item of Trust Assets shall
terminate, and all such right, title and interest shall vest in the Issuer, in
accordance with the Trust Agreement and Sections 3802 and 3805 of the Business
Trust Statute (as defined in the Trust Agreement).
(b) Immediately upon the vesting of the Trust Assets in the Issuer, the
Issuer shall have the sole right to pledge or otherwise encumber, such Trust
Assets. Pursuant to the Indenture, the Issuer shall grant a security interest in
the Trust Assets to the Indenture Trustee to secure the repayment of the Notes.
The Certificate shall represent the beneficial ownership interest in the Trust
Assets, and the Noteholders shall be entitled to receive payments with respect
thereto as set forth herein and pursuant to the Indenture.
(c) Following the payment in full of the Notes and the release and
discharge of the Indenture, all covenants of the Issuer under Article III of the
Indenture shall, until payment in full of the Certificate, remain as covenants
of the Issuer for the benefit of the Certificateholder, enforceable by the
Certificateholder to the same extent as such covenants were enforceable by the
Noteholders prior to the discharge of the Indenture. Any rights of the Indenture
Trustee under Article III of the Indenture, following the discharge of the
Indenture, shall vest in the Certificateholder.
(d) The Trust Collateral Agent shall, at such time as there are no
Notes or Certificates outstanding, the Note Policy has expired in accordance
with its terms and all sums due to (i) the Note Insurer hereunder or pursuant to
the Insurance Agreement, (ii) the Indenture Trustee pursuant to the Indenture
and (iii) the Trust Collateral Agent pursuant to this Agreement, have been paid,
release any remaining portion of the Trust Assets to the Transferor.
ARTICLE III
THE RECEIVABLES
SECTION 3.1. REPRESENTATIONS AND WARRANTIES OF TRANSFEROR. The
Transferor hereby makes each of the representations and warranties made by LBAC
in Section 3.2(b) of the Purchase Agreement and Section 4 of each Transfer
Agreement with respect to the Receivables to the same extent as if such
representations and warranties were fully set forth herein. With respect to such
representations and warranties, the Issuer is deemed to have relied on such
representations and warranties in acquiring the Receivables, the Note Insurer
shall be deemed to have relied on such representations and warranties in issuing
the Note Policy, the Indenture
10
Trustee is deemed to have relied on such representations and warranties in
issuing the Notes and the Noteholders are deemed to have relied on such
representations and warranties in purchasing the Notes. Such representations and
warranties speak as of the execution and delivery of this Agreement and as of
the Closing Date in the case of the Initial Receivables, and as of the related
Subsequent Transfer Date in the case of the Subsequent Receivables, but shall
survive the transfer and assignment of the Receivables to the Issuer and the
subsequent pledge thereof to the Indenture Trustee pursuant to the Indenture.
SECTION 3.2. REPURCHASE UPON BREACH OF REPRESENTATIONS AND
WARRANTIES OF THE TRANSFEROR.
(a) The Transferor, the Servicer, the Note Insurer, the Custodian, the
Trust Collateral Agent or the Issuer, as the case may be, shall inform the other
parties to this Agreement promptly, by notice in writing, upon the discovery of
any breach of the Transferor's representations and warranties made pursuant to
Section 3.1. As of the last day of the second Collection Period following the
discovery by the Transferor or receipt by the Transferor of notice of such
breach, unless such breach is cured by such date, the Transferor shall have an
obligation to repurchase any Receivable in which the interests of the
Noteholders or the Note Insurer are materially and adversely affected by any
such breach as of such date. In consideration of and simultaneously with the
repurchase of the Receivable, the Transferor shall remit, or cause LBAC to
remit, to the Collection Account the Purchase Amount in the manner specified in
Section 5.5 and the Issuer shall execute such assignments and other documents
reasonably requested by such person in order to effect such repurchase. The sole
remedies of the Issuer, the Trust Collateral Agent, the Indenture Trustee or the
Noteholders with respect to a breach of representations and warranties pursuant
to Section 3.1 shall be (i) the repurchase of Receivables pursuant to this
Section, subject to the conditions contained herein, or (ii) to enforce the
obligation of LBAC to the Transferor to repurchase such Receivables pursuant to
the Purchase Agreement. Neither the Owner Trustee, the Custodian, the Trust
Collateral Agent nor the Indenture Trustee shall have a duty to conduct any
affirmative investigation as to the occurrence of any conditions requiring the
repurchase of any Receivable pursuant to this Section.
(b) Pursuant to Section 2.1 and Section 2.2, the Transferor conveys to
the Issuer all of the Transferor's right, title and interest in its rights and
benefits, but none of its obligations or burdens, under the Purchase Agreement
including the Transferor's rights under the Purchase Agreement and the delivery
requirements, representations and warranties and the cure or repurchase
obligations of LBAC thereunder. The Transferor hereby represents and warrants to
the Issuer that such assignment is valid, enforceable and effective to permit
the Issuer to enforce such obligations of LBAC and the Transferor under the
Purchase Agreement.
SECTION 3.3. 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
Transferor 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.
11
(b) 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
Transferor 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 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 3.4. ACCEPTANCE OF LEGAL FILES BY CUSTODIAN. The
Custodian acknowledges receipt of files which the Transferor 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 Initial Receivable identified in Schedule A to this Agreement. The
Custodian declares that it holds and will continue to hold such files, any
Receivable Files relating to Subsequent Receivables and, in each case, any
amendments, replacements or supplements thereto and all other Trust Assets as
custodian, agent and bailee for the Trust Collateral Agent in trust for the use
and benefit of all present and future Noteholders. The Custodian shall review
each Legal File delivered to it no later than the Closing Date or the related
Subsequent Transfer Date, as applicable to determine whether such Legal Files
contain the documents referred to in the definition of the term "Legal File" and
shall certify on the Closing Date or the related Subsequent Transfer Date, as
applicable to such effect. 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 Trust Collateral Agent (if at such time the
Trust Collateral Agent is not also the Custodian hereunder), LBAC, the
Transferor, the Back-up Servicer and the Note Insurer promptly, in writing, of
the failure to receive a Legal
12
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 5.5. The sole remedy of the Indenture
Trustee, the Trust Collateral Agent, the Issuer or the Noteholders with respect
to a breach pursuant to this Section 3.4 shall be to require LBAC to purchase
the Receivables pursuant to this Section 3.4. Upon receipt of the Purchase
Amount and written instructions from the Servicer, the Trust Collateral Agent
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 Trust
Collateral Agent and are necessary to vest in LBAC or such designee the Issuer'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 Trust Collateral Agent and the Note Insurer. On the date which is
90 days following the Closing Date, or the related Subsequent Transfer Date, as
the case may be, or, if such date is not a Business Day, on the next succeeding
Business Day, the Custodian shall inform LBAC and the other parties to this
Agreement and the Note 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 5.5. The Transferor shall have no obligation to
repurchase any Receivable upon a breach pursuant to this Section 3.4. The
Transferor shall have no liability for any action taken or omitted to be taken
by LBAC pursuant to this Section 3.4.
SECTION 3.5. 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 Trust Collateral Agent, the Transferor, the Issuer
and the Note 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, as the case may be. In
addition, the Servicer and the Custodian shall provide such access to any
Noteholder 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
Noteholders 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 Noteholder shall be deemed to have agreed by its acceptance of a Note to
use its best efforts to hold in confidence all Confidential Information in
accordance with its then customary procedures; PROVIDED that
13
nothing herein shall prevent any Noteholder 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
Notes, (iii) any prospective institutional investor transferee in connection
with the contemplated transfer of a Note 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 Notes 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 connection with any litigation to which such Noteholder is a party or (d) in
order to protect or enforce such Person's investment in any Note.
(b) Upon instruction from the Trust Collateral Agent, the Servicer
shall release any Receivable Files to the Trust Collateral Agent, the Trust
Collateral Agent's agent or the Trust Collateral Agent's designee, as the case
may be, at such place or places as the Trust Collateral Agent may designate, as
soon as practicable. The Servicer shall not be responsible for the safekeeping
of such Receivable Files following such release to the Trust Collateral Agent
unless and until such Receivable Files are returned to the Servicer.
(c) The Custodian shall, within two Business Days of the request of the
Servicer, the Trust Collateral Agent or the Note Insurer, execute such documents
and instruments as are prepared by the Servicer, the Trust Collateral Agent or
the Note Insurer and delivered to the Custodian, as the Servicer, the Trust
Collateral Agent or the Note Insurer deems necessary to permit the Servicer, in
accordance with its customary servicing procedures, to enforce the Receivable on
behalf of the Issuer 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 F 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 G 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 Issuer, the Indenture Trustee, the Trust Collateral Agent and the
Note Insurer.
SECTION 3.6. 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,
except as provided in Section 10.8(e) hereof), 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 Issuer and shall make disposition thereof
only in accordance with the provisions of this Agreement. The Custodian shall
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
14
transfer such documents to any other party, including any subcustodian, except
as otherwise expressly provided herein.
(b) The Custodian covenants and warrants to the Issuer, the Trust
Collateral Agent, the Servicer and the Note Insurer that to the knowledge of its
Responsible Officers, as of the related date on which the Custodian makes the
certification required under Section 3.4 with respect to the Legal Files, it
holds no adverse interest, by way of security or otherwise, in any Receivable.
(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 Custodian. The 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 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 Issuer, the Transferor 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 under any 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
Noteholders or the Note Insurer pursuant to the provisions of this
Agreement, unless such Noteholders or the Note Insurer shall have
offered to the Custodian reasonable security or indemnity in form and
substance reasonably satisfactory to the Custodian, against the costs,
expenses and liabilities that may be incurred therein or thereby;
(iii) 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
15
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, and shall have no responsibility for
determining the accuracy thereof (except pursuant to Section 10.3(iv));
and
(iv) 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.
(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 Issuer. 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.
SECTION 3.7. ISSUER'S CERTIFICATE. Within five Business Days
after each Payment 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 3.4 or
purchased by the Servicer pursuant to Section 4.7, the Issuer shall execute an
Issuer's Certificate (in the form of Exhibit A-1 or A-2, as applicable), and
shall deliver such Issuer'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, with a copy to the Note Insurer. The Issuer's Certificate submitted with
respect to such Payment Date shall operate, as of such Payment Date, as an
assignment, without recourse, representation, or warranty, to LBAC or the
Servicer, as the case may be, of all the Issuer'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.
16
ARTICLE IV
ADMINISTRATION AND SERVICING OF RECEIVABLES
SECTION 4.1. DUTIES OF THE SERVICER. The Servicer, as agent
for the Issuer (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 Trust Collateral Agent, the Indenture Trustee, the
Back-up Servicer and the Note Insurer with respect to payments 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
Trust Collateral Agent to execute and deliver, on behalf of itself, the Issuer,
the Noteholders or any of them, any and all instruments of satisfaction or
cancellation, or partial or full release or discharge, and all other 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 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 (i) pursuant to an
order from a court of competent jurisdiction, (ii) in accordance with its
customary procedures or (iii) in accordance with Section 4.2. If the Servicer
shall commence a legal proceeding to enforce a Receivable, the Issuer 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 Trust Collateral Agent 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 Noteholders. The Servicer shall prepare and
furnish and the Trust Collateral Agent 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 4.2. 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
17
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 Receivable Payments on any
Receivable other than (a) in accordance with the Payment Deferment and Due Date
Change Policies, (b) in connection with a Deficient Liquidated Receivable, (c)
with the prior written consent of the Note Insurer, with respect to any other
Liquidated Receivable or (d) as otherwise required by applicable law.
Notwithstanding anything contained herein to the contrary, the Servicer may, at
its option, repurchase up to 25 Receivables in a manner consistent with Section
5.5 hereof and any such repurchased Receivable (an "Optional Repurchase
Receivable") shall not be deemed to be a Defaulted Receivable or a Liquidated
Receivable. The Servicer shall not modify the Payment Deferment and Due Date
Change Policies without the prior written consent of the Note Insurer. 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 Note
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 Receivable 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 Note 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 Note Insurer, any other Liquidated Receivable)
or the interest therein of the Issuer, the Noteholders or the Note Insurer other
than a modification in accordance with the Payment Deferment and Due Date Change
Policies.
On each Business Day, the Servicer shall prepare and transmit
to the Trust Collateral Agent and the Back-up Servicer in a form acceptable to
the Trust Collateral Agent 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 4.3. REALIZATION UPON RECEIVABLES.
(a) On behalf of the Issuer, the Noteholders and the Note 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
Receivable Payment thereon for 120 consecutive days or more; PROVIDED, HOWEVER,
that the Servicer may elect not to
18
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 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.
(i) The Servicer agrees that within 45 days from the Closing
Date or the related Subsequent Transfer Date, as applicable, 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.
(ii) 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 4.4. 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 Note 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
19
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 4.4(a) which, but for the actions of the Servicer, would have been
covered thereunder. The Servicer, on behalf of the Trust Collateral Agent, shall
take such reasonable action as shall be necessary to permit recovery under any
of the foregoing insurance policies. Any amounts collected by the Servicer under
any of the foregoing insurance policies shall be deposited in the Collection
Account pursuant to Section 5.2. In the event of the cancellation or non-renewal
of the insurance referred to in Section 4.4(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 4.5. 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 Trust Collateral Agent 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 Issuer 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
Note Insurer may (so long as a Note Insurer Default shall not have occurred and
be continuing) instruct the Trust Collateral Agent and the Servicer to take or
cause to be taken, or, if a Note Insurer Default shall have occurred and be
continuing, upon the occurrence of a Servicer Termination Event, either the
Trust Collateral Agent or the Trust Collateral Agent acting at the direction of
the Majorityholders 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
Note Insurer (or, if a Note Insurer Default shall have occurred and be
continuing, the Trust Collateral Agent), which opinion shall not be an expense
of the Note Insurer or the Trust Collateral Agent (as applicable), be necessary
to perfect or reperfect the security interests in the Financed Vehicles securing
the Receivables in the name of the Trust Collateral Agent on behalf of the
Issuer by amending the title documents of such Financed Vehicles to reflect the
security interest of the Trust Collateral Agent in the related Financed Vehicles
or by such other reasonable means as may, in the opinion of counsel to the Note
Insurer or the Trust Collateral Agent (as applicable), which opinion shall not
be an expense of the Note Insurer or the Trust Collateral Agent, 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 Note Insurer may (unless a Note Insurer Default shall have occurred and be
continuing) instruct the Trust Collateral Agent and the Servicer to take or
cause to be taken such
20
action as may, in the opinion of counsel to the Note Insurer, be necessary to
perfect or reperfect the security interest in the Financed Vehicles securing the
Receivables in the name of the Trust Collateral Agent on behalf of the Issuer,
including by amending the title documents of such Financed Vehicles to reflect
the security interest of the Trust Collateral Agent in the related Financed
Vehicle or by such other reasonable means as may, in the opinion of counsel to
the Note Insurer, be necessary or prudent; PROVIDED, HOWEVER, that if the Note
Insurer requests (unless a Note Insurer Default shall have occurred and be
continuing) that the title documents be amended prior to the occurrence of an
Insurance Agreement Event of Default, the out-of-pocket expenses of the Servicer
or the Trust Collateral Agent in connection with such action shall be reimbursed
to the Servicer or the Trust Collateral Agent, as applicable, by the Note
Insurer.
In addition to the foregoing, in the event any of the Servicer
Termination Events described in Section 9.1(iii) or (iv) shall have occurred, or
in the event LBAC shall have been removed or replaced as Servicer pursuant to
Section 8.3, Section 8.5, or otherwise pursuant to Section 9.1, 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 Trust Collateral
Agent in the Financed Vehicle at the expense of LBAC.
The Servicer hereby makes, constitutes and appoints the Trust
Collateral Agent 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 Trust Collateral Agent as lienholder or secured party on the related Lien
Certificates relating to a Financed Vehicle.
SECTION 4.6. ADDITIONAL COVENANTS OF SERVICER. The Servicer
hereby makes the following covenants to the other parties hereto and the Note
Insurer on which the Trust Collateral Agent shall rely in accepting the
Receivables in trust and on which the Note Insurer shall rely in issuing the
Note 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 Noteholders, the Issuer or the Note Insurer
in such Receivables, (iii) the Servicer shall not modify a Receivable, except in
accordance with Section 4.2, 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 4.7. PURCHASE OF RECEIVABLES UPON BREACH. The
Servicer, the Transferor, the Issuer, the Custodian or the Trust Collateral
Agent shall inform the other parties hereto and the Note Insurer promptly, in
writing, upon the discovery by the Servicer, the Transferor, the Issuer or a
Responsible Officer of the Trust Collateral Agent or the Custodian, as the case
may be, of any breach of the provisions of Section 4.2 relating to modifications
of the Receivables, or any breach of Sections 4.4, 4.5 or 4.6; 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
21
which such breach has a material adverse effect on such Receivable or the
interest therein of the Issuer, the Noteholders or the Note Insurer. In
consideration of the purchase of such Receivable, the Servicer shall remit the
Purchase Amount in the manner specified in Section 5.5. 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 Trust Collateral
Agent, the Issuer, the Note Insurer or the Noteholders with respect to a breach
of the provisions of Section 4.2 relating to modifications of the Receivables or
any breach of Sections 4.4, 4.5 or 4.6 shall be to require the Servicer to
repurchase Receivables pursuant to this Section 4.7; PROVIDED, HOWEVER, that the
Servicer shall indemnify the Trust Collateral Agent, the Indenture Trustee, the
Collateral Agent, the Back-up Servicer, the Custodian, the Transferor, the Note
Insurer, the Issuer and the Noteholders 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 Transferor shall have no obligation to repurchase the Receivables
upon a breach of the provisions of Section 4.2 relating to modifications of the
Receivables, or any breach of Sections 4.4, 4.5 or 4.6. The Transferor shall
have no liability for actions taken or omitted to be taken by the Servicer
pursuant to this Section 4.7.
SECTION 4.8. SERVICING FEE. The Servicing Fee for the initial
Payment 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
Payment 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 Precomputed Receivable that is
prepaid in full, to the extent not required by law to be remitted to the related
Obligor, the difference between the amounts received upon prepayment in full of
such Precomputed Receivable and the then outstanding Principal Balance of such
Precomputed Receivable and accrued interest thereon (calculated pursuant to the
Simple Interest Method) and other administrative fees or similar charges allowed
by applicable law with respect to Receivables, collected (from whatever source)
on the Receivables.
SECTION 4.9. SERVICER'S CERTIFICATE.
(a) By 10:00 a.m.,
New York City time, on each Determination Date, the
Servicer shall deliver to the Issuer, the Trust Collateral Agent, the Indenture
Trustee, the Back-up Servicer, the Collateral Agent, the Transferor, the Note
Insurer, GCFP and the Rating Agencies, a Servicer's Certificate containing all
information necessary to make the payments pursuant to Section 5.6 (including,
if required, withdrawals from the Spread Account), for the Collection Period
preceding the date of such Servicer's Certificate and all information necessary
for the Trust Collateral Agent to send statements to Noteholders and the Note
Insurer pursuant to Section 5.7. 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).
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(b) In addition to the information required by Section 4.9(a), the
Servicer shall include in the copy of the Servicer's Certificate delivered to
the Note Insurer (i) 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 4.10. ANNUAL STATEMENT AS TO COMPLIANCE; NOTICE OF DEFAULT.
(a) The Servicer shall deliver to the Issuer, the Trust Collateral
Agent, the Indenture Trustee, the Back-up Servicer, the Collateral Agent, the
Transferor, the Issuer and the Note Insurer, on or before March 31 of each year
beginning March 31, 2001, 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 Trust
Collateral Agent shall send a copy of such certificate to the Rating Agencies.
(b) The Servicer shall deliver to the Issuer, the Trust Collateral
Agent, the Indenture Trustee, the Back-up Servicer, the Collateral Agent, the
Transferor, the Issuer, the Note Insurer and the Rating Agencies, promptly after
having obtained knowledge thereof, but in no event later than two (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 a Servicer Termination Event under Section 9.1.
SECTION 4.11. 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 Transferor, to deliver to the Issuer, the Trust Collateral Agent, the
Indenture Trustee, the Back-up Servicer, the Collateral Agent, the Issuer, the
Noteholders, the Note Insurer and each Rating Agency on or before April 30 of
each year beginning April 30, 2001, 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 Trust Collateral Agent, the Back-up Servicer, the Collateral Agent,
the Issuer, the Transferor and the Note 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
23
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 4.12. SERVICER EXPENSES. 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 payments and reports to Noteholders, the
Trust Collateral Agent and the Note Insurer and all other fees and expenses of
the Issuer including taxes levied or assessed against the Issuer, and claims
against the Issuer in respect of indemnification not expressly stated under this
agreement to be for the account of the Issuer).
SECTION 4.13. 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 March 31, 2000, which
term shall be extendible by the Note 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 Trust Collateral Agent, for any specified number of terms
greater than one), until the termination of the Issuer. 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 Note Insurer to the Trust Collateral Agent 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 a
Note Insurer Default shall have occurred and be continuing, the Trust Collateral
Agent agrees that if as of the fifteenth day prior to the last day of any term
of the Servicer, the Trust Collateral Agent shall not have received any Servicer
Extension Notice from the Note Insurer, the Trust Collateral Agent will, within
five days thereafter, give written notice of such non-receipt to the Note
Insurer, the Back-up Servicer (or any alternate successor servicer appointed by
the Note Insurer pursuant to Section 8.5) 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 4.14. ACCESS TO CERTAIN DOCUMENTATION AND INFORMATION
REGARDING RECEIVABLES. The Servicer shall provide to representatives of the
Indenture Trustee, the Trust Collateral Agent, the Collateral Agent, the Back-up
Servicer, the Transferor, the Issuer and the
24
Note Insurer reasonable access to documentation and computer systems and
information regarding the Receivables and shall provide such access to
Noteholders in such cases where the Noteholders 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 4.14 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 4.14 as a result of such obligation shall not
constitute a breach of this Section 4.14.
SECTION 4.15. VERIFICATION OF SERVICER'S CERTIFICATE.
(a) On or before the fifth Business Day of each month, the Servicer
will deliver to the Trust Collateral Agent and the Back-up Servicer a computer
diskette (or other electronic transmission) in a format acceptable to the Trust
Collateral Agent 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 the information specified in Section
4.15(b)(iii) contained in the Servicer's Certificate delivered by the Servicer,
and the Back-up Servicer shall certify to the Note Insurer that it has verified
the Servicer's Certificate in accordance with this Section 4.15 and shall notify
the Servicer, the Note Insurer and the Trust Collateral Agent 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
payments with respect to the related Payment 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 Payment Date, (i) the Back-up Servicer
will notify the Note Insurer and the Trust Collateral Agent, 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 Note Insurer (unless a Note 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 Note Insurer for the purpose of reconciling such
discrepancies. Other than the 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.
25
(b) The Back-up Servicer shall review each Servicer's Certificate
delivered pursuant to Section 4.15(a) and shall, based upon the information
provided from the Servicer under Section 4.15(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 4.15(a) hereof, confirm that such computer diskette is in a
readable form and calculate the Principal Balance of each Receivable
based on the Principal Balance of such Receivable as of the preceding
Payment Date (as set forth in such Servicer's Certificate) and the
current principal payment for such Receivable (as set forth in such
Servicer's Certificate) and compare such calculation to that set forth
in the Servicer's Certificate (and give notice of any discrepancy to
the Note Insurer); and
(iii) recalculate the Available Funds, the Class A-1 Payment
Amount, the Class A-1 Principal Payment Amount, the Class A-1 Interest
Payment Amount, the Class A-2 Payment Amount, the Class A-2 Principal
Payment Amount, the Class A-2 Interest Payment Amount, the Class A
Payment Amount, the Class A Principal Payment Amount, the Class A
Interest Payment Amount, the Class B Payment Amount, the Class B
Interest Payment Amount, the Class B Principal Payment Amount, the
Back-up Servicer Fee, the Servicing Fee, the Indenture Trustee Fee, the
Custodian Fee, the amount on deposit in the Class B Reserve Account,
the amount on deposit in the Spread Account and the Premium in the
Servicer's Certificate based solely on the balances and calculations
specifically set forth in the Servicer's Certificate, compare such
calculations to those set forth in the Servicer's Certificate. To the
extent of any discrepancy, the Back-up Servicer shall give notice
thereof to the Note Insurer. The Back-up Servicer's obligation shall be
limited to the mathematical recalculation of the amounts set forth in
this Section 4.15(b)(iii) based on the Servicer's Certificate.
SECTION 4.16. 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 4.17. 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 Controlling Party; 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
a Servicer Termination Event), the Back-up Servicer, its designee or any
successor Servicer shall 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;
PROVIDED, HOWEVER, that the Back-up Servicer may elect to terminate a
subservicing agreement with the prior written consent of the Note Insurer, so
long as no Note Insurer Default is then continuing. If the Back-up Servicer does
not elect to assume
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any subservicing agreement, any and all costs of termination shall be at the
predecessor Servicer's expense. 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 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 Note 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 Trust Collateral Agent, 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 4.18. 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 fifth Business Day of each month pursuant
to Section 4.15(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 B-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 fifth
Business Day of each month pursuant to Section 4.15(a) and on or prior to the
Closing Date and each Subsequent Transfer Date pursuant to Section 4.18(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
June 2000 (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 B-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 Note 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 Note Insurer simultaneously with its delivery of such notice to
the Servicer.
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ARTICLE V
ACCOUNTS; PAYMENTS;
STATEMENTS TO NOTEHOLDERS
SECTION 5.1. ACCOUNTS; LOCK-BOX ACCOUNT.
(a) The Servicer has established the Lock-Box Account as two Eligible
Accounts, one established with Chase Texas entitled "Long Beach Acceptance
Corp., Chase Texas, Agent Account--Auto Loan Programs," account number
00100916395, and one established with Bank of America National Trust and Savings
Association entitled "Long Beach Acceptance Corp., Chase Texas, Agent
Account--Auto Loan Programs," account number 14572-02900; PROVIDED, that the
Servicer, with the prior written consent of the Note 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 Trust Collateral Agent 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 Trust Collateral Agent 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 Chase
Manhattan or, at the request of the Note 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 Trust Collateral Agent and the Noteholders 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 Chase
Manhattan, as agent for the beneficial owners of funds in the Lock-Box Account
at such time (including the Issuer), and Chase Manhattan 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 Trust Collateral Agent, 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, the Servicer, at
its expense, shall cause the Lock-Box Bank to deliver, at the direction of the
Controlling Party
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to the Trust Collateral Agent 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 Trust Collateral Agent
shall establish, with itself, the Collection Account and the Note Account in the
name of the Issuer for the benefit of the Noteholders and the Note Insurer, the
Pre-Funding Account in the name of the Issuer for the benefit of the Noteholders
and the Note Insurer, the Capitalized Interest Account in the name of the Issuer
for the benefit of the Noteholders and the Note Insurer, and the Policy Payments
Account in the name of the Issuer for the benefit of the Noteholders. The
Collection Account, the Note Account, the Pre-Funding Account, the Capitalized
Interest Account and the Policy Payments Account shall be Eligible Accounts
initially established with the Trust Collateral Agent; PROVIDED, HOWEVER, if any
of such accounts shall cease to be an Eligible Account, the Servicer, with the
consent of the Note Insurer (so long as no Note Insurer Default has occurred and
is continuing), within five (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
Transferor of any change in the location of any of the aforementioned accounts.
All amounts held in the Collection Account and the Pre-Funding
Account shall be invested by the Trust Collateral Agent at the written direction
of the Transferor in Eligible Investments in the name of the Trust Collateral
Agent on behalf of the Issuer and shall mature no later than one Business Day
immediately preceding the Payment Date next succeeding the date of such
investment. In no event shall the Trust Collateral Agent be liable for any
insufficiency in the Collection Account resulting from any investment loss in
any Eligible Account. 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 Note Account and the Policy Payments Account shall not
be invested. The amount of earnings on investments of funds in the Collection
Account during the Collection Period related to each Payment Date shall be
deposited into the Note Account on each Payment Date, and shall be available for
payment pursuant to Section 5.6(c). The amount of earnings on investments of
funds in the Pre-Funding Account during the Collection Period related to each
Payment Date shall be deposited in the Note Account on each Payment Date in an
amount not to exceed the Pre-Funding Interest Amount, and such amount shall be
available for distribution pursuant to Section 5.6(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 Trust
Collateral Agent to the Transferor on the Final Funding Period Payment Date. The
amount of earnings on investments of funds in the Capitalized Interest Account
during each Collection Period shall be deposited into the Capitalized Interest
Account on the Payment Date relating to such Collection Period prior to making
any transfer from the Capitalized Interest Account to the Note Account pursuant
to Section 5.6(a)(iii). For purposes of this paragraph, the Trust Collateral
Agent will take delivery of the Eligible Investments in accordance with Schedule
C.
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(c) The Trust Collateral Agent, pursuant to the Servicer's written
instruction, shall on or prior to each Payment Date (and prior to the transfer
from the Collection Account to the Note Account described in Section 5.6(a)(i))
transfer from the Collection Account to the Servicer, as additional servicing
compensation, the amount, if any, required to be paid to the Servicer pursuant
to Section 5.12.
SECTION 5.2. 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 5.3. 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 shall
be applied hereunder, first, to interest and principal in accordance with the
Simple Interest Method to the extent necessary to bring such 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.
Notwithstanding anything herein to the contrary, no amount applied as interest
accrued on any Precomputed Receivable for any single Collection Period will
exceed 30 days' interest accrued thereon assuming a 360-day year of twelve
30-day months.
SECTION 5.4. INTENTIONALLY OMITTED.
SECTION 5.5. 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 Trust Collateral Agent shall deposit in the Collection Account all
amounts to be paid under Section 11.1, (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 Trust Collateral Agent shall transfer the
remaining Pre-Funded Amount on deposit in the Pre-Funding Account to the Note
Account pursuant to Section 5.13(c) and (iv) on or before each Draw Date, the
Trust Collateral Agent shall transfer to the Collection Account any amounts
transferred to the Trust Collateral Agent by the Collateral Agent from the
Spread Account.
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SECTION 5.6. PAYMENTS; POLICY CLAIMS.
(a) The Trust Collateral Agent (based solely on the information set
forth in the Servicer's Certificate for the related Payment Date upon which the
Trust Collateral Agent may conclusively rely) shall transfer:
(i) on each Payment Date, from the Collection Account to the
Note 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 investments of funds in the
Collection Account pursuant to Section 5.1(b), for the related
Collection Period over all funds transferred from the Collection
Account with respect to such Collection Period pursuant to Section
5.1(c);
(ii) on each Payment Date during the Funding Period and on the
Final Funding Period Payment Date, from the Pre-Funding Account to the
Note Account, in immediately available funds, earnings on investments
of funds in the Pre-Funding Account for the related Collection Period
pursuant to Section 5.1(b);
(iii) on the Payment Date occurring in January 2000, from the
Capitalized Interest Account to the Note Account, an amount equal to
the Additional Interest Deposit; and
(iv) on each Payment Date occurring in January, February and
March 2000, from the Capitalized Interest Account to the Note Account,
an amount equal to the Negative Carry Amount for the related Collection
Period, if any.
(b) Prior to each Payment Date, the Servicer shall on the related
Determination Date calculate the Available Funds, the Class A-1 Payment Amount,
the Class A-1 Principal Payment Amount, the Class A-1 Interest Payment Amount,
the Class A-2 Payment Amount, the Class A-2 Principal Payment Amount, the Class
A-2 Interest Payment Amount, the Class A Payment Amount, the Class A Principal
Payment Amount, the Class A Interest Payment Amount, the Class B Payment Amount,
the Class B Interest Payment Amount, the Class B Principal Payment Amount, the
Monthly Dealer Participation Fee Payment 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 5.12 and, based on the Available
Funds and the other amounts available for payment on such Payment Date,
determine the amount payable to the Noteholders.
(c) On each Payment Date, the Trust Collateral Agent shall (x)
distribute all amounts delivered by the Note Insurer to the Trust Collateral
Agent for deposit into the Collection Account pursuant to Section 5.9 for
payment in the amounts and priority as directed by the Note Insurer, and (y)
(based on the information contained in the Servicer's Certificate delivered on
the related Determination Date pursuant to Section 4.9 upon which the Trust
Collateral Agent may conclusively rely) subject to subsection (e) hereof, make
the following payments from the Available Funds withdrawn from the Note Account
and from the other sources described below in the following order of priority:
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(i) FIRST, to LBAC, from the Available Funds, the Monthly
Dealer Participation Fee Payment Amount and all unpaid Monthly Dealer
Participation Fee Payment Amounts from prior Collection Periods, and
SECOND, to the Servicer, from the Available Funds (as such Available
Funds have 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 Available Funds are 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 respect to such Payment Date, if any, to the extent
received by the Trust Collateral Agent from the Collateral Agent;
(ii) to the Indenture Trustee, the Custodian and the Back-up
Servicer from the Available Funds (as such Available Funds have been
reduced by payments pursuant to clause (i) above), the Indenture
Trustee Fee, the Custodian Fee and the Back-up Servicer Fee,
respectively, and all unpaid Indenture Trustee Fees, Custodian Fees and
Back-up Servicer Fees from prior Collection Periods and, if the
Available Funds are insufficient to pay such amounts, the Indenture
Trustee, the Custodian and the Back-up Servicer will receive such
deficiency from the remaining portion of the Deficiency Claim Amount
with respect to such Payment Date, if any, to the extent received by
the Trust Collateral Agent from the Collateral Agent, after application
thereof pursuant to clause (i) above;
(iii) to the Class A-1 Noteholders and the Class A-2
Noteholders, PRO RATA based on the Note Interest due on each such class
of Notes, from the Available Funds (as such Available Funds have been
reduced by payments pursuant to clauses (i) and (ii) above), an amount
equal to the Class A-1 Note Interest and Class A-2 Note Interest,
respectively, with respect to such Payment Date (plus (without
duplication) interest on any outstanding Class A-1 or Class A-2
Interest Carryover Shortfall, if any, to the extent permitted by
applicable law, at the Class A-1 Note Rate or the Class A-2 Note Rate,
as applicable, from and including such preceding Payment Date to but
excluding the current Payment Date (calculated on the basis of a
360-day year consisting of twelve 30-day months)) and, if the Available
Funds are insufficient to pay such amounts, the Class A Noteholders
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 Payment Date, if any, to
the extent received by the Trust Collateral Agent 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 Payment Date,
if any, received by the Trust Collateral Agent from the Note Insurer;
(iv) from the Available Funds (as such Available Funds have
been reduced by payments pursuant to clauses (i) through (iii) above),
and, if such Payment Date is the Final Funding Period Payment Date,
from the Class A Percentage of any Mandatory Special Redemption, FIRST,
to the Class A-1 Noteholders, until the Class A-1 Note Balance has been
reduced to zero, an amount equal to the sum of the Class A Principal
Payment Amount with respect to such Payment Date and any Class A
Principal Carryover Shortfall as of the close of business on the
preceding Payment Date, and SECOND, to the Class A-2 Noteholders, after
the Class A-1 Note Balance has been reduced to zero, until the Class
A-2 Note Balance has been reduced to zero, an amount equal to the sum
of the
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remaining Class A Principal Payment Amount with respect to such Payment
Date and the remaining Class A Principal Carryover Shortfall as of the
close of business on the preceding Payment Date, and, if the Available
Funds are insufficient to pay such amounts, the Class A Noteholders
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 Payment Date, if any,
after application thereof pursuant to clauses (i) through (iii) above,
plus (B) the remaining portion of the Policy Claim Amount with respect
to such Payment Date, if any, after application thereof pursuant to
clause (iii) above;
(V) FIRST, to the Note Insurer, from the Available Funds (as
such Available Funds have been reduced by payments made pursuant to
clauses (i) through (iv) above), an amount equal to the Reimbursement
Obligations and, if the Available Funds are insufficient to pay such
Reimbursement Obligations, the Note Insurer shall receive such
deficiency from the remaining portion of the Deficiency Claim Amount
with respect to such Payment Date, if any, to the extent received by
the Trust Collateral Agent from the Collateral Agent, after application
thereof pursuant to clauses (i) through (iv) above, SECOND, to the
Trust Collateral Agent, the Indenture Trustee, the Back-up Servicer and
the Custodian, as applicable, from the Available Funds (as such
Available Funds have 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 Trust Collateral Agent, the
Indenture 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 9.2(a), to the extent not paid by the Servicer,
and all unpaid reasonable out-of-pocket expenses of the Trust
Collateral Agent, the Indenture 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 Trust
Collateral Agent, the Indenture 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 $50,000 per annum, and THIRD
to the Back-up Servicer, from the Available Funds (as such Available
Funds have 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 9.2(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;
(vi) to the Class B Noteholders, from the Available Funds (as
such Available Funds have been reduced by payments made pursuant to
clauses (i) through (v) above), an amount equal to the Class B Note
Interest with respect to such Payment Date (plus (without duplication)
interest on any Class B Interest Carryover Shortfall, to the extent
permitted by applicable law, at the Class B Note Rate from and
including such preceding Payment Date to but excluding the current
Payment Date (calculated on the basis of a 360-day year consisting of
twelve 30-day months)) and, if the Available Funds are insufficient to
pay such amounts, the Class B Noteholders will receive such deficiency
from the Class B Reserve Account Draw;
33
(vii) if such Payment Date is the Final Funding Period Payment
Date, to the Class B Noteholders, the Class B Percentage of any
Mandatory Special Redemption; and
(viii) to the Collateral Agent for deposit in the Spread
Account, the remaining Available Funds (as such Available Funds have
been reduced by payments pursuant to clauses (i) through (vii) above),
if any.
(d) In addition, on each Payment Date, after giving effect to the
payments specified in clauses (i) through (viii) above, the Trust Collateral
Agent shall (based on the information contained in the Servicer's Certificate
delivered on the related Determination Date pursuant to Section 4.9 upon which
the Trust Collateral Agent may conclusively rely) pay the following amounts,
from the following sources and in the following order of priority:
(i) to the Collateral Agent for deposit in the Class B Reserve
Account, from amounts on deposit in the Spread Account, the Current
Spread Account Release Amount with respect to such Payment Date, if
any;
(ii) to the Class B Noteholders, until the Class B Note
Balance has been reduced to zero, from the Class B Reserve Account
Release Amount, if any, with respect to such Payment Date, an amount
equal to the Class B Principal Payment Amount with respect to such
Payment Date; and
(iii) to the Certificateholder, the remaining Class B Reserve
Account Release Amount (after making the payment required pursuant to
clause (ii) above), if any.
(e) Each Noteholder, by its acceptance of its Note, will be deemed to
have consented to the provisions of Sections 5.6(c) and 5.6(d) relating to the
priority of payments, 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 Noteholder until such amounts have been distributed to such Noteholder
pursuant to such provisions; PROVIDED, that the foregoing shall not restrict the
right of any Noteholder, upon compliance with the provisions hereof from seeking
to compel the performance of the provisions hereof by the parties hereto. Each
Noteholder, by its acceptance of its Note, 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, each
Class B Noteholder by its acceptance of a Class B Note, specifically
acknowledges that (A) interest pursuant to clause (vi) of Section 5.6(c) will be
subordinated to the prior payment in full of all amounts payable pursuant to
clauses (i) through (v) of Section 5.6(c) (PROVIDED, that such Class B Note
Interest may be paid on each Payment Date using amounts on deposit, if any, in
the Class B Reserve Account) and (B) no amounts shall be applied as principal on
the Class B Notes, unless and until such amounts have been distributed pursuant
to Section 5.6(d)(ii) above for payment to such Class B Noteholder pursuant to
the priorities set forth in Section 5.6(d) above.
In furtherance of and not in limitation of the foregoing, the
Certificateholder by acceptance of the Certificate, specifically acknowledges
that no amounts shall be received by it,
34
nor shall it have any right to receive any amounts, unless and until such
amounts have been distributed pursuant to Section 5.6(d)(iii) above for payment
to the Certificateholder pursuant to the priorities set forth in Section 5.6(d)
above. Each Class B Noteholder, by its acceptance of a Class B Note and the
Certificateholder, by its acceptance of the 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
Noteholders and the Note 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 Transferor and the
Certificateholder hereby grant to the Collateral Agent and to the Trust
Collateral Agent, 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 Certificateholder, by acceptance of its
Certificate, hereby appoints the Transferor 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
Trust Collateral Agent and the Note 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 Note 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).
(f) Subject to Section 11.1 respecting the final payment upon
retirement of each Note, the Servicer shall on each Payment Date instruct the
Trust Collateral Agent to distribute to each Noteholder 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 Noteholder is the Clearing Agency or such Holder's
Notes in the aggregate evidence an original Note Balance of at least $1,000,000,
and if such Noteholder shall have provided to the Trust Collateral Agent
appropriate instructions prior to the Record Date for such Payment Date, or (ii)
by check mailed to such Noteholder at the address of such Holder appearing in
the Note Register, such Holder's PRO RATA share (based on the outstanding Note
Balance) of either the Class A or Class B Payment Amount to be paid to such
Class of Notes in accordance with the Servicer's Certificate.
SECTION 5.7. STATEMENTS TO NOTEHOLDERS; TAX RETURNS.
(a) With each payment from the Note Account to the Noteholders made on
a Payment Date, the Servicer shall provide to the Note Insurer, the Transferor,
the Indenture Trustee, each Rating Agency and the Trust Collateral Agent (the
Trust Collateral Agent to forward to each Noteholder of record), the Servicer's
Certificate substantially in the form of Exhibit B-1 hereto setting forth at
least the following information as to the Notes to the extent applicable:
(i) the amount of the payment allocable to principal of the
Class A-1 Notes, the Class A-2 Notes and the Class B Notes,
respectively;
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(ii) the amount of the payment allocable to interest on the
Class A-1 Notes, the Class A-2 Notes and the Class B Notes,
respectively;
(iii) the number of Receivables, the weighted average APR of
the Receivables, the weighted average maturity of the Receivables, the
Pool Balance, the Class A-1 Pool Factor, the Class A-2 Pool Factor and
the Class B Pool Factor as of the close of business on the last day of
the preceding Collection Period;
(iv) the Class A-1 Note Balance, the Class A-2 Note Balance
and the Class B Note 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 Payment
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 amount of
any unpaid Servicing Fees and any unpaid Back-up Servicer Fees and the
change in such amounts from the prior Payment Date;
(vi) the amount of the Class A-1 Interest Carryover Shortfall,
if applicable, the Class A-2 Interest Carryover Shortfall, if
applicable, and the Class A Principal Carryover Shortfall, if
applicable, on such Payment Date and the change in such amounts from
the prior Payment Date;
(vii) the amount of the Class B Interest Carryover Shortfall,
if applicable, on such Payment Date and the change in such amounts from
the prior Payment Date;
(viii) the amount paid, if any, to the Class A Noteholders
under the Note Policy for such Payment Date;
(ix) the amount paid to the Note Insurer on such Payment Date;
(x) the aggregate amount in each of the Spread Account and the
Class B Reserve Account;
(xi) 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 Receivable Payments between
30 and 59 days, 60 and 89 days, 90 and 119 days and 120 days or more
(in each case calculated on the basis of a 360-day year of twelve
30-day months), and the percentage of the aggregate principal amount
which such delinquencies represent;
(xii) the number and the aggregate Purchase Amount of
Receivables repurchased by the Originator or purchased by the Servicer
during the related Collection Period;
(xiii) the cumulative number and amount of Liquidated
Receivables, the cumulative amount of any Liquidation Proceeds and
Recoveries, since the Cutoff Date to
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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;
(xiv) 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 Payment Date;
(xv) whether any Trigger Event has occurred as of such
Determination Date;
(xvi) 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;
(xvii) whether an Insurance Agreement Event of Default has
occurred;
(xviii) the number and amount of Cram Down Losses, the number
and dollar amount of repossessions, the aging of repossession inventory
and the dollar amount of Recoveries;
(xix) for Payment Dates during the Funding Period and on the
Final Funding Period Payment 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;
(xx) for Payment Dates during the Funding Period and on the
Final Funding Period Payment Date, the Negative Carry Amount in respect
of the related Collection Period withdrawn from the Capitalized
Interest Account and the amount remaining on deposit in the Capitalized
Interest Account; and
(xxi) for the Final Funding Period Payment Date, 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 Noteholders.
Each amount set forth pursuant to subclauses (i), (ii), (v),
(vi) and (vii) above shall be expressed as a dollar amount per $1,000 of
original principal balance of a Note.
(b) No later than January 31 of each calendar year, commencing January
31, 2001, the Servicer shall send to the Indenture Trustee and the Trust
Collateral Agent, and the Trust Collateral Agent 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 Noteholder 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 5.7(a) for such preceding calendar year or applicable portion thereof
during which such person was a Noteholder, and (b) such information as may be
reasonably requested by the Noteholders or required by the Code and regulations
thereunder, to enable such Holders to prepare their Federal and State income tax
returns. The obligation of the Trust Collateral Agent set forth in this
paragraph shall be deemed to have been satisfied to the extent that
substantially
37
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
Issuer, and the Issuer shall execute and file such returns if requested to do so
by the Servicer. The Trust Collateral Agent, upon request, will furnish the
Servicer with all such information actually known to the Trust Collateral Agent
as may be reasonably requested by the Servicer in connection with the
preparation of all tax returns of the Issuer.
SECTION 5.8. RELIANCE ON INFORMATION FROM THE SERVICER.
Notwithstanding anything to the contrary contained in this Agreement, all
payments from any of the accounts described in this Article V and any transfer
of amounts between such accounts shall be made by the Trust Collateral Agent
based on the information provided to the Trust Collateral Agent by the Servicer
in writing, whether by way of a Servicer's Certificate or otherwise (upon which
the Trust Collateral Agent may conclusively rely).
SECTION 5.9. OPTIONAL DEPOSITS BY THE NOTE INSURER. The Note
Insurer shall at any time, and from time to time, with respect to a Payment
Date, have the option to deliver amounts to the Trust Collateral Agent 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 Issuer with respect to such Payment Date, (ii) to distribute as
a component of the Principal Payment Amount to the extent that the Note Balance
as of the Determination Date preceding such Payment Date exceeds the Pool
Balance as of such Determination Date or (iii) to include such amount as part of
the Payment Amount for such Payment Date to the extent that without such amount
a draw would be required to be made on the Note Policy.
SECTION 5.10. SPREAD ACCOUNT. The Transferor 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 the Initial Spread Account 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 Transferor shall deposit the related
Subsequent Spread Account Deposit in the Spread Account. Although the Transferor
as Certificateholder, has pledged the Spread Account to the Collateral Agent and
the Note 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 Issuer or the Trust Assets.
SECTION 5.11. 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 Available Funds with
respect to such Determination Date are less than the sum of the amounts payable
on the related Payment Date pursuant to clauses (i) through (iv) and subclause
FIRST of clause (v) of Section 5.6(c) (such deficiency being a "Deficiency Claim
Amount") then on the Deficiency Claim Date immediately preceding such Payment
Date, the Trust Collateral Agent shall deliver to the Collateral Agent, the Note
Insurer, the Fiscal Agent (as such term is defined in the Insurance Agreement),
if any, the Servicer, by
38
hand delivery, telex or facsimile transmission, a written notice (a "Deficiency
Notice") specifying the Deficiency Claim Amount for such Payment 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 Trust Collateral Agent for deposit in the
Collection Account.
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 Trust Collateral Agent pursuant to a Deficiency
Notice shall be deposited by the Trust Collateral Agent into the Collection
Account pursuant to Section 5.5.
SECTION 5.12. SIMPLE INTEREST. 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 Payment Date. If, however, the Servicer determines
that there is a Simple Interest Excess for such Collection Period, the Trust
Collateral Agent shall withdraw the amount of such Simple Interest Excess from
the Collection Account on the next Payment 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 5.6(b) into the Spread Account and
shall be treated as a contribution to the Spread Account by the Servicer for the
benefit of the Certificateholder for federal income tax purposes. All references
in this Section 5.12 to the Servicer shall be deemed to refer to the Servicer
only so long as LBAC is acting in such capacity hereunder.
SECTION 5.13. PRE-FUNDING ACCOUNT.
(a) Pursuant to Section 5.1(b), the Trust Collateral Agent shall
establish and maintain the Pre-Funding Account as an Eligible Account in the
name of the Trust for the benefit of the Noteholders and the Note Insurer.
(b) On the Closing Date, the Transferor will deposit in the Pre-Funding
Account an amount equal to the Original Pre-Funded Amount from the proceeds of
the sale of the Notes. On each Subsequent Transfer Date, the Servicer shall
instruct the Trust Collateral Agent 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) conveyed to the Trust on such
Subsequent Transfer Date and pay such amount to or upon the order of the
Transferor 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 Payment Date or (ii) the
Pre-Funded Amount has been
39
reduced to $100,000 or less during the Funding Period, in either case after
giving effect to any reductions in the Pre-Funded Amount on the Final Funding
Period Payment Date pursuant to Section 5.13(b), the Servicer shall instruct the
Trust Collateral Agent in writing to withdraw such remaining portion of the
Pre-Funded Amount from the Pre-Funding Account and deposit it in the Note
Account on such Payment Date to be applied as a partial redemption of the Notes,
in addition to the payment of principal and interest that otherwise would be
payable with respect to such Notes on such Payment Date.
SECTION 5.14. CAPITALIZED INTEREST ACCOUNT.
(a) Pursuant to Section 5.1(b), the Capitalized Interest Account shall
be an Eligible Account established and maintained by the Trust Collateral Agent
in the name of the Trust for the benefit of the Noteholders and the Note
Insurer. On the Closing Date, the Transferor will deposit in the Capitalized
Interest Account an amount equal to $526,345.45 (such amount, the "Capitalized
Interest Account Deposit").
(b) On the Payment Date occurring in January 2000, the amounts on
deposit in the Capitalized Interest Account shall be available for deposit to
the Note Account pursuant to Section 5.6(a)(iii) for distribution as provided in
Section 5.6(c). On each Payment Date occurring in January, February and March
2000, the amounts on deposit in the Capitalized Interest Account shall be
available for deposit to the Note Account pursuant to Section 5.6(a)(iv) for
distribution as provided in Section 5.6(c). On the Final Funding Period Payment
Date, any remaining amounts in the Capitalized Interest Account, after giving
effect to the transfer specified in Section 5.6(a)(iv) on such Payment Date,
will be paid directly to the Transferor. Upon any such distribution to the
Transferor, the Noteholders will have no further rights in, or claims to, such
amounts.
(c) Amounts held in the Capitalized Interest Account shall be invested
by the Trust Collateral Agent in Eligible Investments which shall mature no
later than the Business Day immediately preceding the next Payment Date in
accordance with written instructions from the Transferor and such investments
shall not be sold or disposed of prior to their maturity.
SECTION 5.15. CLASS B RESERVE ACCOUNT. In order to effectuate
the subordination provided for herein and to enhance the amounts available to
make required payments to the Class B Noteholders, there shall be established
and maintained with the Trust Collateral Agent an Eligible Account entitled,
"Class B Reserve Account--Long Beach Acceptance Auto Receivables Trust 1999-2",
which will include the money and other property deposited and held therein
pursuant to Section 5.6(d)(i) and this Section 5.15.
(a) On the Closing Date, the Transferor shall deposit the Initial Class
B Reserve Account Deposit into the Class B Reserve Account. On each Subsequent
Transfer Date, the Transferor shall deposit the Class B Reserve Account
Subsequent Deposit into the Class B Reserve Account.
(b) The amounts on deposit in the Class B Reserve Account shall be
available for payment in accordance with and subject to Section 5.6(d). Upon
termination of this Agreement and the Class B Noteholders having been paid all
amounts due under this Agreement, any
40
remaining amounts in the Class B Reserve Account will be distributed to the
Certificateholder. Upon any such payment to the Certificateholder, the Class B
Noteholders will not have any further rights in, or claims to, such amounts.
(c) Amounts held in the Class B Reserve Account shall be invested in
Eligible Investments which shall mature no later than the Business Day
immediately preceding the next Payment Date in accordance with written
instructions from the Transferor and such investments shall not be sold or
disposed of prior to their maturity. All income and gain recognition on such
investments shall be solely for the benefit of the Certificateholder. In no
event shall the Trust Collateral Agent be liable for any insufficiencies therein
resulting from an investment loss in any Eligible Investment.
(d) If on any Payment Date (based on the Servicer's Certificate
delivered on the related Determination Date by the Servicer pursuant to Section
4.9, upon which the Trust Collateral Agent may conclusively rely) the Available
Funds are insufficient to pay the full amount described in clause (vi) of
Section 5.6(c), the Trust Collateral Agent shall withdraw the Class B Reserve
Account Draw from the Class B Reserve Account equal to such insufficiency and
deliver the amount so withdrawn to the Trust Collateral Agent for deposit in the
Note Account for application (in the order of priority provided by Section
5.6(c)) in respect of such insufficiency.
SECTION 5.16. SECURITIES ACCOUNTS. The Trust Collateral Agent
acknowledges that any account held by it hereunder is a "securities account" as
defined in the Uniform Commercial Code as in effect in
New York (the "
NEW YORK
UCC"), and that it shall be acting as a "securities intermediary" of the
Indenture Trustee with respect to each such account held by it. The Trust
Collateral Agent acknowledges and agrees that (a) each item of property (whether
investment property, financial asset, security, instrument or cash) credited to
the Class B Reserve Account shall be treated as a "financial asset" within the
meaning of Section 8-102(a)(9) of the
New York UCC and (b) if at any time the
Trust Collateral Agent shall receive any order from the Indenture Trustee
directing transfer or redemption of any financial asset relating to the Class B
Reserve Account, the Trust Collateral Agent shall comply with such entitlement
order without further consent by LBAC or any other person.
ARTICLE VI
THE NOTE POLICY
SECTION 6.1. NOTE POLICY. The Originator agrees,
simultaneously with the execution and delivery of this Agreement, to cause the
Note Insurer to issue the Note Policy for the benefit of the Noteholders in
accordance with the terms thereof.
SECTION 6.2. CLAIMS UNDER NOTE POLICY.
(a) In the event that the Trust Collateral Agent has delivered a
Deficiency Notice with respect to any Determination Date, the Trust Collateral
Agent shall determine on the related Draw Date whether the sum of (i) the amount
of Available Funds 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
41
pursuant to the Spread Account Agreement by the Collateral Agent to the Trust
Collateral Agent pursuant to a Deficiency Notice delivered with respect to such
Payment 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 payments required by Section 5.6(c)(i) and (ii), to pay the
Scheduled Payments for the related Payment Date, then in such event the Trust
Collateral Agent shall furnish to the Note 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 Scheduled Payments
with respect to such Payment Date (the amount of any such shortfall being
hereinafter referred to as the "Policy Claim Amount"). Amounts paid by the Note
Insurer under the Note Policy shall be deposited by the Trust Collateral Agent
into the Policy Payments Account and thereafter into the Note Account for
payment to Noteholders on the related Payment Date (or promptly following
payment on a later date as set forth in the Note Policy).
(b) Any notice delivered by the Trust Collateral Agent to the Note
Insurer pursuant to Section 6.2(a) shall specify the Policy Claim Amount claimed
under the Note Policy and shall constitute a "Notice of Claim" under the Note
Policy. In accordance with the provisions of the Note Policy, the Note Insurer
is required to pay to the Trust Collateral Agent 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 Note Policy) following receipt on
a Business Day (as defined in the Note Policy) of the Notice of Claim, and (ii)
the applicable Payment Date. Any payment made by the Note Insurer under the Note
Policy shall be applied solely to the payment of the Notes, and for no other
purpose.
(c) The Trust Collateral Agent shall (i) receive as attorney-in-fact of
each Noteholder any Policy Claim Amount from the Note Insurer and (ii) deposit
the same in the Policy Payments Account for disbursement to the Noteholders as
set forth in clauses (iii) and (iv) of Section 5.6(c). Any and all Policy Claim
Amounts disbursed by the Trust Collateral Agent from claims made under the Note
Policy shall not be considered payment by the Issuer or from the Spread Account
with respect to such Notes, and shall not discharge the obligations of the
Issuer with respect thereto. The Note Insurer shall, to the extent it makes any
payment with respect to the Notes, become subrogated to the rights of the
recipients of such payments to the extent of such payments. Subject to and
conditioned upon any payment with respect to the Notes by or on behalf of the
Note Insurer, each Noteholder shall be deemed, without further action, to have
directed the Trust Collateral Agent to assign to the Note Insurer all rights to
the payment of interest or principal with respect to the Notes which are then
due for payment to the extent of all payments made by the Note Insurer and the
Note Insurer may exercise any option, vote, right, power or the like with
respect to the Notes to the extent that it has made payment pursuant to the Note
Policy. Notwithstanding the foregoing, the order of priority of payments to be
made pursuant to Section 5.6(c) shall not be modified by this clause (c). To
evidence such subrogation, the Note Registrar shall note the Note Insurer's
rights as subrogee upon the register of Noteholders upon receipt from the Note
Insurer of proof of payment by the Note Insurer of any Interest Payment Amount
or Principal Payment Amount.
(d) The Trust Collateral Agent shall be entitled, but not obligated, to
enforce on behalf of the Noteholders the obligations of the Note Insurer under
the Note Policy.
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Notwithstanding any other provision of this Agreement, the Noteholders are not
entitled to institute proceedings directly against the Note Insurer.
SECTION 6.3. PREFERENCE CLAIMS; DIRECTION OF PROCEEDINGS.
(a) In the event that the Trust Collateral Agent has received a
certified copy of an order of the appropriate court that any Scheduled Payment
paid on a Note has been avoided in whole or in part as a preference payment
under applicable bankruptcy law, the Trust Collateral Agent shall so notify the
Note Insurer, shall comply with the provisions of the Note Policy to obtain
payment by the Note Insurer of such avoided payment, and shall, at the time it
provides notice to the Note Insurer, comply with the provisions of the Note
Policy to obtain payment by the Note Insurer, notify Holders of the Notes by
mail that, in the event that any Noteholder's payment is so recoverable, such
Noteholder will be entitled to payment pursuant to the terms of the Note Policy.
Pursuant to the terms of the Note Policy, the Note Insurer will make such
payment on behalf of the Noteholder to the receiver, conservator,
debtor-in-possession or trustee in bankruptcy named in the Order (as defined in
the Note Policy) and not to the Trust Collateral Agent or any Noteholder
directly (unless a Noteholder has previously paid such payment to the receiver,
conservator, debtor-in-possession or trustee in bankruptcy, in which case the
Note Insurer will make such payment to the Trust Collateral Agent for payment,
in accordance with the instructions to be provided by the Note Insurer, to such
Noteholder upon proof of such payment reasonably satisfactory to the Note
Insurer).
(b) Each Notice of Claim shall provide that the Trust Collateral Agent,
on its behalf and on behalf of the Noteholders, thereby appoints the Note
Insurer as agent and attorney-in-fact for the Trust Collateral Agent and each
Noteholder in any legal proceeding with respect to the Notes. The Trust
Collateral Agent shall promptly notify the Note Insurer of any proceeding or the
institution of any action (of which a Responsible Officer of the Trust
Collateral Agent has actual knowledge) seeking the avoidance as a preferential
transfer under applicable bankruptcy, insolvency, receivership, rehabilitation
or similar law (a "Preference Claim") of any payment made with respect to the
Notes. Each Holder of Notes, by its purchase of Notes, and the Trust Collateral
Agent hereby agree that so long as a Note Insurer Default shall not have
occurred and be continuing, the Note Insurer may at any time during the
continuation of any proceeding relating to a Preference Claim direct all matters
relating to such Preference Claim including, 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 Note Insurer, but subject to reimbursement as
provided in the Insurance Agreement. In addition, and without limitation of the
foregoing, as set forth in Section 6.2(c), the Note Insurer shall be subrogated
to, and each Noteholder and the Trust Collateral Agent hereby delegate and
assign, to the fullest extent permitted by law, the rights of the Trust
Collateral Agent and each Noteholder in the conduct of any proceeding with
respect to a Preference Claim, including, without limitation, all rights of any
party to an adversary proceeding action with respect to any court order issued
in connection with any such Preference Claim.
SECTION 6.4. SURRENDER OF NOTE POLICY. The Trust Collateral
Agent shall surrender the Note Policy to the Note Insurer for cancellation upon
its expiration in accordance with the terms thereof.
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ARTICLE VII
THE TRANSFEROR
SECTION 7.1. REPRESENTATIONS OF THE TRANSFEROR. The Transferor
makes the following representations on which the Note Insurer shall be deemed to
have relied in executing and delivering the Note Policy and on which the Issuer
is deemed to have relied in acquiring the Receivables and on which the Indenture
Trustee, the Collateral Agent, Trust Collateral Agent and Back-up Servicer may
rely. The representations speak as of the execution and delivery of this
Agreement and as of the Closing Date in the case of Initial Receivables, and as
of the applicable Subsequent Transfer Date, in the case of Subsequent
Receivables, and shall survive the conveyance of the Receivables to the Issuer
and the subsequent pledge thereof to the Indenture Trustee pursuant to the
Indenture.
(a) ORGANIZATION AND GOOD STANDING. The Transferor 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.
(b) DUE QUALIFICATION. The Transferor 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
Transferor to perform such obligations or on any Receivable or on the interest
therein of the Issuer, the Noteholders or the Note Insurer.
(c) POWER AND AUTHORITY. The Transferor 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 Transferor has
full corporate power and authority to sell and assign the property sold and
assigned to and deposited with the Issuer and has duly authorized such sale and
assignment to the Issuer 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 Transferor by all necessary
corporate action.
(d) VALID SALE; BINDING OBLIGATION. This Agreement effects a valid
sale, transfer and assignment of the Initial Receivables and the other property
conveyed to the Issuer pursuant to Section 2.1, and upon execution of the
related Transfer Agreement and satisfaction of the conditions set forth in
Section 2.2(b) hereof and in such Transfer Agreement, this Agreement will effect
a valid sale, transfer and assignment of the related Subsequent Receivables and
the other related property to be conveyed to the Issuer pursuant to Section 2.2
on the related Subsequent Transfer Date, in each case enforceable against
creditors of and purchasers from the Transferor; and this Agreement and the
other Basic Documents to which the Transferor is a party shall constitute legal,
valid and binding obligations of the Transferor 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
44
by equitable limitations on the availability of specific remedies, regardless of
whether such enforceability is considered in a proceeding in equity or at law.
(e) NO VIOLATION. The execution, delivery and performance by the
Transferor of this Agreement and the other Basic Documents to which the
Transferor 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 Transferor, or any material
indenture, agreement, mortgage, deed of trust, or other instrument to which the
Transferor is a party or by which it is bound or any of its properties are
subject; nor result in the 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 Transferor of any court or of any Federal or State
regulatory body, administrative agency, or other governmental instrumentality
having jurisdiction over the Transferor or its properties.
(f) NO PROCEEDINGS. There are no proceedings or investigations pending,
or to the Transferor's best knowledge, threatened, before any court, regulatory
body, administrative agency, or other governmental instrumentality having
jurisdiction over the Transferor or its properties: (A) asserting the invalidity
of this Agreement or the other Basic Documents to which the Transferor is a
party or the Notes, (B) seeking to prevent the issuance of the Notes or the
consummation of any of the transactions contemplated by this Agreement or the
other Basic Documents to which the Transferor is a party, (C) seeking any
determination or ruling that might materially and adversely affect the
performance by the Transferor of its obligations under, or the validity or
enforceability of, this Agreement or the other Basic Documents to which the
Transferor is a party or the Notes, (D) relating to the Transferor and which
might adversely affect the Federal or State income, excise, franchise or similar
tax attributes of the Notes or (E) that could have a material adverse effect on
the Receivables.
(g) NO CONSENTS. No consent, approval, authorization or order of or
declaration or filing with any governmental authority is required to be obtained
by the Transferor for the issuance or sale of the Notes or the consummation of
the other transactions contemplated by this Agreement and the other Basic
Documents to which the Transferor 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 Transferor 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 Issuer,
the Noteholders or the Note Insurer.
(h) CHIEF EXECUTIVE OFFICE. The Transferor hereby represents and
warrants to the Trust Collateral Agent that the Transferor'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 ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇.
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SECTION 7.2. LIABILITY OF THE TRANSFEROR. The Transferor shall be
liable only to the extent of the obligations specifically undertaken by the
Transferor under this Agreement and the representations made by the Transferor
in this Agreement.
SECTION 7.3. MERGER OR CONSOLIDATION OF, OR ASSUMPTION OF THE
OBLIGATIONS OF, THE TRANSFEROR. Any Person (a) into which the Transferor may be
merged or consolidated, (b) which may result from any merger or consolidation to
which the Transferor shall be a party or (c) which may succeed to the properties
and assets of the Transferor substantially as a whole, which person in any of
the foregoing cases executes an agreement of assumption to perform every
obligation of the Transferor under this Agreement, shall be the successor to the
Transferor 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 7.1 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 a Servicer Termination
Event shall have happened and be continuing, (ii) the Transferor shall have
delivered to the Note Insurer, the Indenture Trustee, the Trust Collateral Agent
and the Issuer 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 7.3 and that all conditions precedent, if any, provided
for in this Agreement relating to such transaction have been complied with,
(iii) the Transferor shall have delivered to the Note Insurer, the Indenture
Trustee, the Trust Collateral Agent and the Issuer 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 Issuer 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 Transferor's certificate of incorporation in respect of the
issuance of debt, independent directors and bankruptcy remoteness and (vi) the
Transferor shall have received confirmation from each Rating Agency that the
then current rating of the Notes will not be downgraded as a result of such
merger, consolidation or succession. A copy of such confirmation shall be
provided to the Trust Collateral Agent. 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 7.4. LIMITATION ON LIABILITY OF THE TRANSFEROR AND OTHERS.
The Transferor and any director or officer or employee or agent of the
Transferor 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 Transferor 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.
46
SECTION 7.5. TRANSFEROR MAY OWN NOTES. The Transferor and any
Person controlling, controlled by, or under common control with the Transferor
may in its individual or any other capacity become the owner or pledgee of Notes
with the same rights as it would have if it were not the Transferor or an
affiliate thereof, except as otherwise provided in the definition of
"Noteholder" set forth in Annex A hereto and as specified in Section 1.4. Notes
so owned by or pledged to the Transferor 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 Notes except as otherwise provided herein or by the definition
of Noteholder.
ARTICLE VIII
THE SERVICER
SECTION 8.1. REPRESENTATIONS OF SERVICER. The Servicer makes
the following representations on which the Note Insurer shall be deemed to have
relied in executing and delivering the Note Policy and on which the Issuer is
deemed to have relied in acquiring the Receivables and on which the Indenture
Trustee is deemed to have relied on in accepting the pledge of the Receivables.
The representations speak as of the execution and delivery of this Agreement and
as of the Closing Date, in the case of the Initial Receivables and as of the
applicable Subsequent Transfer Date, in the case of the Subsequent Receivables,
and shall survive the conveyance of the Receivables to the Issuer and the
subsequent pledge thereof to the Indenture Trustee pursuant to the Indenture.
(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, 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
47
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, the Notes or the Certificate, (B) seeking to prevent the
issuance of the Notes or the Certificate or the consummation of any of
the transactions contemplated by this Agreement, the Notes, the
Certificate, 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, the Notes,
the Certificate 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 Notes or the Certificate 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 Notes 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 Trust Collateral Agent 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
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇.
48
SECTION 8.2. 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
Indenture Trustee, the Trust Collateral Agent, the Owner Trustee, the
Collateral Agent, the Back-up Servicer, the Custodian, the Issuer, the
Note Insurer, the Noteholders and the Transferor, 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 Indenture Trustee, the Trust Collateral Agent, the Owner Trustee,
the Collateral Agent, the Back-up Servicer, the Custodian, the Issuer,
the Note Insurer and the Transferor, 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 Indenture Trustee, the Trust
Collateral Agent, the Owner Trustee, the Collateral Agent, the Back-up
Servicer, the Custodian, the Issuer, the Note Insurer or the
Transferor, with respect to the transactions contemplated herein,
including, without limitation, any sales, general corporation, tangible
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 Indenture Trustee, the Trust Collateral Agent, the Owner Trustee,
the Collateral Agent, the Custodian, the Back-up Servicer, the
Transferor, the Note Insurer, the Issuer and the Noteholders, 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 Indenture Trustee, the Trust
Collateral Agent, the Owner Trustee, the Collateral Agent, the Back-up
Servicer, the Custodian, the Transferor, the Note Insurer, the Issuer
or the Noteholders, 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 any other Basic Document to which it is a party or by reason of
reckless disregard of its obligations and duties under this Agreement
or any other Basic Document to which it is a party.
(iv) The Servicer shall indemnify, defend and hold harmless
the Indenture Trustee, the Trust Collateral Agent, the Owner Trustee,
the Collateral Agent, the Back-up Servicer, the Transferor, the Issuer,
the Custodian, the Note Insurer 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
contained herein or in any other Basic Document to which it is a party,
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
49
negligence (except for errors in judgment) of the Indenture Trustee,
the Trust Collateral Agent, the Owner Trustee, the Collateral Agent,
the Back-up Servicer, the Transferor, the Issuer, the Custodian or the
Note Insurer, as applicable; (b) relates to any tax other than the
taxes with respect to which the Servicer shall be required to
indemnify the Indenture Trustee, the Trust Collateral Agent, the Owner
Trustee, the Collateral Agent, the Back-up Servicer, the Transferor,
the Issuer, the Custodian or the Note Insurer; or (c) shall arise from
the Trust Collateral Agent's breach of any of its representations or
warranties set forth in Section 10.12.
(v) The Servicer shall indemnify the Owner Trustee and WTC (as
defined in the Trust Agreement) and its officers, directors,
successors, assigns, agents and servants (collectively, the
"Indemnified Parties") from and against, any and all liabilities,
obligations, losses, damages, taxes, claims, actions and suits, and any
and all reasonable costs, expenses and disbursements (including
reasonable legal fees and expenses) of any kind and nature whatsoever
(collectively, "Expenses") which may at any time be imposed on,
incurred by, or asserted against the Owner Trustee, WTC or any
Indemnified Party in any way relating to or arising out of this
Agreement, the Basic Documents, the Owner Trust Estate (as defined in
the Trust Agreement), the administration of the Owner Trust Estate or
the action or inaction of the Owner Trustee under the Trust Agreement,
except only that the Servicer shall not be liable for or required to
indemnify the Owner Trustee from and against Expenses arising or
resulting from any of the matters described in the third sentence of
Section 6.1 of the Trust Agreement. The indemnities contained in this
Section shall survive the resignation or termination of the Owner
Trustee or the termination of the Trust Agreement. In any event of any
claim, action or proceeding for which indemnity will be sought pursuant
to this Section, the Owner Trustee's choice of legal counsel shall be
subject to the approval of the Transferor which approval shall not be
unreasonably withheld.
(vi) Notwithstanding the foregoing, the Servicer shall not be
obligated to defend, indemnify, and hold harmless any Noteholder for
any losses, claims, damages or liabilities incurred by any Noteholders
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 Note by such Noteholder with the assets of a
plan subject to such provisions of ERISA or the Code or the servicing,
management and operation of the Issuer.
(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 8.3) as Servicer pursuant to Section 9.1, 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 9.2.
The provisions of this Section 8.2(b) shall in no way affect the survival
pursuant to Section 8.2(c) of the indemnification by the outgoing Servicer
provided by Section 8.2(a).
(c) Indemnification under this Section 8.2 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
50
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 8.3. 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 8.1 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 Servicer Termination Event or Insurance
Agreement Event of Default, and no event which, after notice or lapse of time,
or both, would become a Servicer Termination Event or Insurance Agreement Event
of Default shall have occurred and be continuing, (ii) the Servicer shall have
delivered to the Indenture Trustee, the Trust Collateral Agent and the Note
Insurer an Officer's Certificate and an Opinion of Counsel in form and substance
satisfactory to the Indenture Trustee, the Trust Collateral Agent and the Note
Insurer each stating that such consolidation, merger or succession and such
agreement of assumption comply with this Section 8.3 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 Indenture Trustee,
the Trust Collateral Agent and the Note 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 Issuer 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 8.3(a) to the Indenture
Trustee, the Trust Collateral Agent, the Issuer, the Back-up Servicer, the
Collateral Agent, the Note Insurer, the Noteholders and each Rating Agency.
Notwithstanding anything herein to the contrary, the execution of the foregoing
agreement of assumption and
51
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, (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 8.4. LIMITATION ON LIABILITY OF SERVICER AND OTHERS.
(a) Neither the Servicer nor any of the directors or officers or
employees or agents of the Servicer shall be under any liability to the
Indenture Trustee, the Trust Collateral Agent, the Owner Trustee, the Collateral
Agent, the Back-up Servicer, the Custodian, the Issuer, the Note Insurer, the
Transferor or the Noteholders, 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.
(b) 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 8.5. SERVICER AND BACK-UP SERVICER NOT TO RESIGN. Subject
to the provisions of Section 8.3, 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 Note 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 Transferor, the Indenture Trustee,
the Trust Collateral Agent, the Issuer, the Note Insurer, and each Rating Agency
at the earliest practicable time (and, if such communication is 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
52
be evidenced by an Opinion of Counsel to such effect delivered to and
satisfactory to the Transferor, the Indenture Trustee, the Trust Collateral
Agent, the Issuer and the Note 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 9.2 and the Servicing Assumption Agreement, if
applicable. No such resignation of the Back-up Servicer shall become effective
until an entity acceptable to the Note 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 120 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 IX
SERVICER TERMINATION EVENTS
SECTION 9.1. SERVICER TERMINATION EVENTS. If any one of the
following events ("Servicer Termination Events") shall occur and be continuing:
(i) Any failure by the Servicer or, for so long as LBAC is the
Servicer, the Transferor, to deliver to the Trust Collateral Agent for
payment to Noteholders or deposit in the Spread Account any proceeds or
payment required to be so delivered under the terms of the Notes, the
Purchase Agreement, any Transfer Agreement or 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 Trust Collateral Agent or the Note 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 Servicer's Certificate required by Section 4.9 shall
not have been delivered to the Trust Collateral Agent and the Note
Insurer within one Business Day of the date such Servicer's Certificate
is required to be delivered; or the statement required by Section 4.10
or the report required by Section 4.11 shall not have been delivered
within five (5) days after the date such statement or report, as the
case may be, is required to be delivered; or
(iii) Failure on the part of the Servicer to observe its
covenants and agreements set forth in Section 8.3 or, for so long as
LBAC is the Servicer, failure on the part of the Transferor to observe
its covenants and agreements set forth in Section 7.3; or
(iv) Failure on the part of LBAC, the Servicer or, for so long
as LBAC is the Servicer, the Transferor, as the case may be, duly to
observe or to perform in any material respect any other covenants or
agreements of LBAC, the Servicer or the Transferor (as the case may be)
set forth in the Notes, 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 Transferor (as the case may be),
53
by the Note Insurer or the Trust Collateral Agent, or (2) to LBAC, the
Servicer or the Transferor (as the case may be), and to the Trust
Collateral Agent and the Note Insurer by the Class A Noteholders
evidencing not less than 25% of the Class A Note Balance or, after the
Policy Expiration Date, by the Class B Noteholders, evidencing not less
than 25% of the Class B Note 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 Transferor, 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 Transferor 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 Transferor 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 Transferor 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 Transferor 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 Transferor 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
Transferor 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 Transferor 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 Transferor 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 Transferor
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 Transferor, made
in this Agreement and, with respect to LBAC and the Transferor, the
Purchase 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 or Section 4 of any Transfer
Agreement), and the incorrectness of such representation, warranty or
statement has a material adverse effect on the Issuer and, within 30
days after written notice thereof shall have been given (1) to LBAC,
the
54
Servicer or the Transferor (as the case may be) by the Trust Collateral
Agent or the Note Insurer or (2) to LBAC, the Servicer or the
Transferor (as the case may be), and to the Trust Collateral Agent and
the Note Insurer by the Class A Noteholders evidencing not less than
25% of the Class A Note Balance or, after the Policy Expiration Date,
by the Class B Noteholders, evidencing not less than 25% of the Class B
Note 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 Note Policy; or
(x) So long as a Note Insurer Default shall not have
occurred and be continuing, the Note Insurer shall not have delivered
a Servicer Extension Notice pursuant to Section 4.13;
then, and in each and every case, so long as a Servicer Termination Event shall
not have been remedied; PROVIDED, (i) no Note Insurer Default shall have
occurred and be continuing, the Note Insurer in its sole and absolute
discretion, or (ii) if a Note Insurer Default shall have occurred and be
continuing, then either the Trust Collateral Agent or the Trust Collateral Agent
acting at the direction of the Majorityholders, by notice then given in writing
to the Servicer (and to the Trust Collateral Agent if given by the Note Insurer
or by the Noteholders) or by the Note Insurer's failure to deliver a Servicer
Extension Notice pursuant to Section 4.13, 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 Notes 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 9.2; 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 Noteholder) based on any
alleged action or inaction of the predecessor Servicer as Servicer; and, without
limitation, the Trust Collateral Agent 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 related documents, or otherwise. The
predecessor Servicer shall cooperate with the successor Servicer and the Trust
Collateral Agent 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 Issuer. All reasonable costs and expenses (including
attorneys' fees) incurred in connection with transferring the Receivable Files
to the successor Servicer and amending this
55
Agreement to reflect such succession as Servicer pursuant to this Section 9.1
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 $100,000, and to the extent not so
paid, such payment shall be made pursuant to Section 5.6(c)(v) hereof. Upon
receipt of notice of the occurrence of a Servicer Termination Event, the Trust
Collateral Agent shall give notice thereof to the Rating Agencies, the Issuer
and the Transferor. The predecessor Servicer shall grant the Transferor, the
Trust Collateral Agent, the Back-up Servicer and the Note Insurer reasonable
access to the predecessor Servicer's premises, computer files, personnel,
records and equipment at the predecessor Servicer's expense. If requested by the
Note 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 Note Insurer). The Trust Collateral Agent shall send copies of
all notices given pursuant to this Section 9.1 to the Note Insurer so long as no
Note Insurer Default shall have occurred and be continuing, and to the
Noteholders if a Note Insurer Default shall have occurred and be continuing.
SECTION 9.2. APPOINTMENT OF SUCCESSOR.
(a) Upon the Servicer's receipt of notice of termination pursuant to
Section 9.1 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
Trust Collateral Agent 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, the 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 Note Insurer shall have determined that a
Person other than the Back-up Servicer shall be the successor Servicer in
accordance with Section 9.2(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 $100,000. In the event that such amount shall not
have been timely paid by the Servicer, such amount shall be paid under Section
5.6(c)(v) hereof; PROVIDED, HOWEVER, the payment of such amount pursuant to
Section 5.6(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,
56
obligations or liabilities of LBAC, the Transferor 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, the Transferor or any predecessor Servicer arising on or
before the Assumption Date under Sections 4.7 or 8.2 of this Agreement,
regardless of when the liability, duty, responsibility or obligation of LBAC,
the Transferor 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 8.5 hereof and
a Note Insurer Default shall have occurred and be continuing, the Back-up
Servicer, the Trust Collateral Agent or the Class A Noteholders evidencing not
less than 66-2/3% of the Class A Note Balance or, after the Class A Notes have
been paid in full, by the Class B Noteholders, evidencing not less than 51% of
the Class B Note 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 9.2, then the Note Insurer, in accordance with
Section 9.2(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 Note Insurer Default has occurred and is continuing,
the Note 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 Trust
Collateral Agent, the Issuer, LBAC, the Transferor, the Person then serving as
Back-up Servicer, any Noteholder or any other person if it does so. Subject to
Section 8.5, 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 to Section 9.1 or resignation of the
Servicer pursuant to Section 8.5. If upon any such resignation or termination,
the Note 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 9.3. NOTIFICATION TO NOTEHOLDERS. Upon any termination
of, or appointment of a successor to, the Servicer pursuant to this Article IX,
the Trust Collateral Agent shall give prompt written notice thereof to
Noteholders at their respective addresses appearing in the Note Register and to
each of the Rating Agencies.
SECTION 9.4. ACTION UPON CERTAIN FAILURES OF THE SERVICER. In
the event that a Responsible Officer of the Trust Collateral Agent shall have
knowledge of any failure of the Servicer specified in Section 9.1 which would
give rise to a right of termination under such
57
Section upon the Servicer's failure to remedy the same after notice, the Trust
Collateral Agent shall give notice thereof to the Transferor, the Servicer and
the Note Insurer. For all purposes of this Agreement, the Trust Collateral Agent
shall not be deemed to have knowledge of any failure of the Servicer as
specified in Section 9.1 unless notified thereof in writing by the Transferor,
the Servicer, the Note Insurer or by a Noteholder. The Trust Collateral Agent
shall be under no duty or obligation to investigate or inquire as to any
potential failure of the Servicer specified in Section 9.1.
ARTICLE X
THE TRUST COLLATERAL AGENT AND THE CUSTODIAN
SECTION 10.1. DUTIES OF THE TRUST COLLATERAL AGENT AND THE
CUSTODIAN.
(a) The Trust Collateral Agent and the Custodian, 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 Trust Collateral Agent and
the Custodian may, and at the direction of the Note Insurer (or, if a Note
Insurer Default shall have occurred and is continuing, the Majorityholders),
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
person would exercise or use under the circumstances in the conduct of its own
affairs.
(b) The Trust Collateral Agent and the Custodian, upon receipt of all
resolutions, certificates, statements, opinions, reports, documents, orders or
other instruments furnished to the Trust Collateral Agent and the Custodian 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; PROVIDED, HOWEVER, that, neither the Trust
Collateral Agent nor the Custodian shall be responsible for the accuracy or
content of any such resolution, certificate, statement, opinion, report,
document, order or other instrument. If any such instrument is found not to
conform in any material respect to the requirements of this Agreement, the Trust
Collateral Agent or the Custodian, as applicable, shall notify the Note Insurer
and the Noteholders of such instrument in the event that the Trust Collateral
Agent or the Custodian, after so requesting, does not receive a satisfactorily
corrected instrument.
(c) The Trust Collateral Agent 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.
(d) No provision of this Agreement shall be construed to relieve the
Trust Collateral Agent or the Custodian 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 Trust Collateral Agent and
the Custodian shall be determined solely by the express provisions of
this Agreement, neither the Trust Collateral Agent nor the Custodian
shall
58
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 Trust
Collateral Agent or the Custodian and, in the absence of bad faith on
the part of the Trust Collateral Agent or the Custodian, the Trust
Collateral Agent and the Custodian, as applicable, may conclusively
rely on the truth of the statements and the correctness of the opinions
expressed in any certificates or opinions furnished to the Trust
Collateral Agent or the Custodian and conforming to the requirements of
this Agreement;
(ii) Neither the Trust Collateral Agent nor the Custodian
shall be liable for an error of judgment made in good faith by a
Responsible Officer or officer of the Custodian, respectively, unless
it shall be proved that the Trust Collateral Agent or the Custodian,
respectively shall have been negligent in ascertaining the pertinent
facts;
(iii) Neither the Trust Collateral Agent nor the Custodian
shall 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 Note Insurer or, after a Note Insurer Default, the
Class A Noteholders evidencing not less than 25% of the Class A Note
Balance or, after the Policy Expiration Date, by the Class B
Noteholders, evidencing not less than 25% of the Class B Note Balance,
relating to the time, method, and place of conducting any proceeding
for any remedy available to the Trust Collateral Agent or the
Custodian, or exercising any trust or power conferred upon the Trust
Collateral Agent or the Custodian, as applicable, under this Agreement;
(iv) Neither the Trust Collateral Agent nor the Custodian
shall be charged with knowledge of any Servicer Termination Event or
Event of Default, unless a Responsible Officer assigned to the Trust
Collateral Agent's Corporate Trust Office or an officer of the
Custodian receives written notice of such Servicer Termination Event or
Event of Default from the Servicer, the Transferor, the Note Insurer
or, after a Note Insurer Default, the Class A Noteholders evidencing
not less than 25% of the Class A Note Balance or, after the Policy
Expiration Date, by the Class B Noteholders, evidencing not less than
25% of the Class B Note Balance (such notice shall constitute actual
knowledge of a Servicer Termination Event or Event of Default by the
Trust Collateral Agent); and
(v) Neither the Trust Collateral Agent nor the Custodian
shall 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.
(e) The Trust Collateral Agent and the Custodian 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 Trust
Collateral Agent or Custodian, as applicable, and none of the provisions
contained in this Agreement shall in any event require the Trust Collateral
Agent or Custodian 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 Trust Collateral Agent, in its capacity as Back-
59
up Servicer, shall be the successor to, and be vested with the rights, duties,
powers, and privileges of, the Servicer in accordance with the terms of this
Agreement.
(f) Except for actions expressly authorized by this Agreement, neither
the Trust Collateral Agent nor the Custodian shall take 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.
(g) All information obtained by the Trust Collateral Agent or the
Custodian regarding the Obligors and the Receivables, whether upon the exercise
of its rights under this Agreement or otherwise, shall be maintained by the
Trust Collateral Agent or Custodian, as applicable, in confidence and shall not
be disclosed to any other Person; PROVIDED that, nothing herein shall prevent
the Trust Collateral Agent or Custodian 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 Trust Collateral Agent's or Custodian's business in the ordinary
course, (ii) any Noteholder or the Note Insurer to the extent that such
Noteholder or the Note 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 Notes by such agency, or (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 Trust
Collateral Agent or Custodian is a party or (d) in order to protect or enforce
the rights of the Noteholders and the Note Insurer under the Issuer established
hereunder.
(h) Money held in trust by the Trust Collateral Agent or the Custodian
need not be segregated from other funds except to the extent required by law or
the terms of this Agreement or the Indenture.
(i) Every provision of this Agreement relating to the conduct or
affecting the liability of or affording protection to the Trust Collateral Agent
or the Custodian shall be subject to the provisions of this Section 10.1.
(j) The Trust Collateral Agent and the Custodian each shall, and each
hereby agrees that it will, perform all of the obligations and duties required
of it under the
Sale and Servicing Agreement.
(k) The Trust Collateral Agent shall, and hereby agrees that it will,
hold the Note Policy in trust, and will hold any proceeds of any claim on the
Note Policy in trust, solely for the use and benefit of the Class A Noteholders.
(l) Without limiting the generality of this Section 10.1, the Trust
Collateral Agent and the Custodian each shall have no duty (i) to see to any
recording, filing or depositing of this Agreement or any agreement referred to
herein or any financing statement evidencing a security interest in the Financed
Vehicles, or to see to the maintenance of any such recording or filing or
60
depositing or to any recording, refiling or redepositing of any thereof, (ii) to
see to any insurance of the Financed Vehicles or Obligors or to effect or
maintain any such insurance, (iii) to see to the payment or discharge of any
tax, assessment or other governmental charge or any Lien or encumbrance of any
kind owing with respect to, assessed or levied against any part of the Pledged
Property, (iv) to confirm or verify the contents of any reports or certificates
delivered to the Trust Collateral Agent or the Servicer pursuant to this
Agreement or the Trust Agreement believed by the Trust Collateral Agent or the
Custodian, as applicable, to be genuine and to have been signed or presented by
the proper party or parties, or (v) to inspect the Financed Vehicles at any time
or ascertain or inquire as to the performance of observance of any of the
Issuer's, the Transferor's or the Servicer's representations, warranties or
covenants or the Servicer's duties and obligations as servicer and as custodian
of the Receivable Files under the
Sale and Servicing Agreement.
(m) In no event shall The Chase Manhattan Bank, in any of its
capacities hereunder, be deemed to have assumed any duties of the Owner Trustee
under the Delaware Business Trust Statute, common law, or the Trust Agreement.
(n) Neither the Trust Collateral Agent nor the Custodian shall be
required to give any bond or surety in respect of the powers granted to it under
this Agreement.
SECTION 10.2. TRUST COLLATERAL AGENT TO ACT FOR THE
NOTEHOLDERS AND NOTE INSURER. Prior to the payment in full of the Notes and the
Reimbursement Obligations and the expiration of the term of the Note Policy, the
Trust Collateral Agent shall act solely for the benefit of the Noteholders and
the Note Insurer, as their interests may appear herein.
SECTION 10.3. CERTAIN MATTERS AFFECTING THE TRUST COLLATERAL
AGENT AND THE CUSTODIAN. Except as otherwise provided in the second paragraph of
Section 10.1:
(i) The Trust Collateral Agent and the Custodian 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 Trust Collateral Agent and the Custodian may consult
with counsel, and any written advice or 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 written advice or Opinion of Counsel.
(iii) Neither the Trust Collateral Agent nor the Custodian
shall be under any 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 Noteholders or the Note
Insurer pursuant to the provisions of this Agreement, unless such
Noteholders or the Note Insurer shall have offered to the Trust
Collateral Agent or the Custodian, as applicable,
61
reasonable security or indemnity in form and substance reasonably
satisfactory to the Trust Collateral Agent or the Custodian, as
applicable, against the costs, expenses and liabilities that may be
incurred therein or thereby. Nothing contained in this Agreement,
however, shall relieve the Trust Collateral Agent or the Custodian of
the obligations, upon the occurrence of a Servicer Termination Event or
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 person would exercise or use under the circumstances in the
conduct of its own affairs.
(iv) Neither the Trust Collateral Agent nor the Custodian
shall 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 the duties of the Custodian pursuant to
Section 3.4), unless requested in writing to do so by the Note Insurer
(if no Note Insurer Default shall have occurred or be continuing), the
Transferor or the Class A Noteholders evidencing not less than 25% of
the Class A Note Balance or, after the Policy Expiration Date, by the
Class B Noteholders, evidencing not less than 25% of the Class B Note
Balance; PROVIDED, HOWEVER, that, if the payment within a reasonable
time to the Trust Collateral Agent or the Custodian 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 Trust Collateral
Agent or the Custodian, not reasonably assured to the Trust Collateral
Agent or the Custodian by the security afforded to it by the terms of
this Agreement, the Trust Collateral Agent or the Custodian, as
applicable, 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 Trust
Collateral Agent or the Custodian, shall be reimbursed by the Person
making such request upon demand.
(v) The Trust Collateral Agent and the Custodian 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. Neither
the Trust Collateral Agent nor the Custodian shall be responsible for
any misconduct or negligence of any such agent appointed with due care
by it hereunder, or of any agent of the Servicer in its capacity as
Servicer or custodian or otherwise.
(vi) Except as may be expressly required by Sections 3.4,
subsequent to the sale of the Receivables by the Transferor to the
Issuer, neither the Trust Collateral Agent nor the Custodian shall have
any duty of independent inquiry, and the Trust Collateral Agent and the
Custodian may rely upon the representations and warranties and
covenants of the Transferor and the Servicer contained in this
Agreement with respect to the Receivables and the Receivable Files.
(vii) The Trust Collateral Agent and the Custodian may rely,
as to factual matters relating to the Transferor or the Servicer, on an
Officer's Certificate of the Transferor or Servicer, respectively.
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(viii) Neither the Trust Collateral Agent nor the Custodian
shall 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 Trust Collateral Agent or the Custodian
to take action, if the Trust Collateral Agent or the Custodian 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 10.4. TRUST COLLATERAL AGENT, BACK-UP SERVICER AND
CUSTODIAN NOT LIABLE FOR NOTES OR RECEIVABLES. The recitals contained herein
shall be taken as the statements of the Issuer, the Transferor or the Servicer,
as the case may be, and neither the Trust Collateral Agent, the Back-up Servicer
nor the Custodian assumes any responsibility for the correctness thereof.
Neither the Trust Collateral Agent, the Back-up Servicer nor the Custodian shall
make any representations as to the validity or sufficiency of this Agreement or
of the Notes, or of any Receivable or related document. Neither the Trust
Collateral Agent, the Back-up Servicer nor the Custodian shall at any 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 Issuer or its ability to generate the payments to be distributed
to Noteholders 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 3.4, 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 Issuer or of any intervening
assignment; except as required by Section 3.4, the performance or enforcement of
any Receivable; the compliance by the Transferor 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 Trust
Collateral Agent's, the Back-up Servicer's or Custodian'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 Note Insurer or any loss resulting therefrom (it being
understood that the Trust Collateral Agent, the Back-up Servicer and the
Custodian shall each remain responsible for any Trust Assets that it may hold);
the acts or omissions of the Issuer, the Transferor, the Servicer, or any
Obligor; any action of the Servicer taken in the name of the Trust Collateral
Agent or the Custodian; or any action by the Trust Collateral Agent or the
Custodian taken at the instruction of the Servicer; PROVIDED, HOWEVER, that the
foregoing shall not relieve either the Trust Collateral Agent, the Back-up
Servicer or the Custodian of its obligation to perform its duties under this
Agreement. Except with respect to a claim based on the failure of the Trust
Collateral Agent, the Back-up Servicer or the Custodian to perform its duties
under this Agreement or based on the Trust Collateral Agent's, the Back-up
Servicer's or the Custodian's negligence or willful misconduct, no recourse
shall be had for any claim based on any provision of this Agreement, the Notes,
or any Receivable or assignment thereof against the Trust Collateral Agent, the
Back-up Servicer or Custodian in their respective individual capacities, neither
the Trust Collateral Agent, the Back-up Servicer nor the Custodian shall have
any personal obligation, liability, or duty whatsoever to any Noteholder or any
other Person with respect to any such claim, and any such claim shall be
asserted solely against the Issuer or any indemnitor who shall furnish indemnity
as provided in this Agreement. Neither the Trust
63
Collateral Agent, the Back-up Servicer nor the Custodian shall be accountable
for the use or application by the Issuer of any of the Notes or of the proceeds
of such Notes, or for the use or application of any funds paid to the Servicer
in respect of the Receivables. The Issuer hereby certifies to the Trust
Collateral Agent, the Back-up Servicer and the Custodian that the Rating
Agencies rating the Notes are Standard & Poor's and ▇▇▇▇▇'▇ and that their
addresses are as set forth in Section 13.5. The Trust Collateral Agent, the
Back-up Servicer and the Custodian may rely on the accuracy of such
certification until it receives from the Issuer an Officer's Certificate
superseding such certification. All references above to the Back-up Servicer
shall be deemed to refer to the Back-up Servicer only so long as it is acting in
such capacity hereunder.
SECTION 10.5. TRUST COLLATERAL AGENT, BACK-UP SERVICER AND
CUSTODIAN MAY OWN NOTES. The Trust Collateral Agent, the Back-up Servicer and
the Custodian in their respective individual or any other capacities may become
the owner or pledgee of Notes and may deal with the Transferor and the Servicer
in banking transactions with the same rights as it would have if it were not
Trust Collateral Agent, Back-up Servicer or Custodian, as applicable.
SECTION 10.6. INDEMNITY OF TRUST COLLATERAL AGENT, BACK-UP
SERVICER AND CUSTODIAN. The Servicer shall indemnify the Trust Collateral Agent,
the Back-up Servicer, the Custodian and each officer, director and employee of
the Trust Collateral Agent, the Back-up Servicer 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 this Agreement, the
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.
The provisions of this Section 10.6 shall survive the termination of this
Agreement or any resignation or removal of LBAC as Servicer.
SECTION 10.7. ELIGIBILITY REQUIREMENTS FOR TRUST COLLATERAL
AGENT AND THE CUSTODIAN. The Trust Collateral Agent and the Custodian under this
Agreement shall at all times be organized and doing business under the laws of
the United States of America, with respect to the Trust Collateral Agent or the
laws of the State of New York, with respect to the Custodian; 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 Note 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 aforesaid supervising or examining authority, then for the
purpose of this Section 10.7, 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
Trust Collateral Agent or the Custodian shall cease to be eligible in accordance
with the provisions of this Section 10.7, the Trust Collateral Agent or the
Custodian shall resign immediately in the manner and with the effect specified
in Section 10.8.
SECTION 10.8. RESIGNATION OR REMOVAL OF TRUST COLLATERAL AGENT
OR CUSTODIAN.
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(a) The Trust Collateral Agent and the Custodian may at any time resign
and be discharged from the trusts hereby created by giving 30 days' prior
written notice thereof to the Servicer. To the extent that the Trust Collateral
Agent and the Custodian resign hereunder, the Indenture Trustee shall also
resign under the Indenture and the Collateral Agent shall resign under the
Spread Account Agreement. Upon receiving such notice of resignation, with the
prior written consent of the Note Insurer (or, if a Note Insurer Default shall
have occurred or is continuing, the Class A Noteholders evidencing not less than
25% of the Class A Note Balance or, after the Policy Expiration Date, by the
Class B Noteholders, evidencing not less than 25% of the Class B Note Balance),
the Servicer shall promptly appoint a successor Trust Collateral Agent or
Custodian, as applicable, by written instrument, in duplicate, one copy of which
instrument shall be delivered to the resigning Trust Collateral Agent or
Custodian, as applicable, and one copy to the successor Trust Collateral Agent
or successor Custodian. If no successor Trust Collateral Agent or successor
Custodian shall have been so appointed and have accepted appointment within 30
days after the giving of such notice of resignation, the Note Insurer may
appoint a successor Trust Collateral Agent or Custodian, as applicable, by
written instrument, in duplicate, one copy of which instrument shall be
delivered to the resigning Trust Collateral Agent or Custodian and one copy to
the successor Trust Collateral Agent or Custodian. If no successor Trust
Collateral Agent or Custodian shall have been so appointed and have accepted
appointment within 60 days after the giving of such notice of resignation, the
resigning Trust Collateral Agent or Custodian may petition any court of
competent jurisdiction for the appointment of a successor Trust Collateral Agent
or Custodian, as applicable. The Trust Collateral Agent or the Custodian may be
removed at any time by written demand of the Note Insurer delivered to the Trust
Collateral Agent or the Custodian, as applicable, and the Servicer.
(b) If at any time (i) the Trust Collateral Agent or the Custodian
shall cease to be eligible in accordance with the provisions of Section 10.7 and
shall fail to resign after written request therefor by the Servicer, (ii) the
Trust Collateral Agent or the Custodian, as applicable, shall be legally unable
to act, (iii) the Trust Collateral Agent and the Indenture Trustee shall be the
same Person and the Indenture Trustee shall have resigned or been removed
pursuant to Section 6.8 of the Indenture, or (iv) the Trust Collateral Agent or
the Custodian shall be adjudged bankrupt or insolvent, or a receiver,
conservator or liquidator of the Trust Collateral Agent, the Custodian or of any
of their respective property shall be appointed, or any public officer shall
take charge or control of the Trust Collateral Agent or Custodian or of its
property or affairs for the purpose of rehabilitation, conservation or
liquidation, then the Note Insurer shall (so long as no Note Insurer Default
shall have occurred and be continuing), or the Servicer may (if a Note Insurer
Default shall have occurred and be continuing) remove the Trust Collateral Agent
or Custodian. If the Note Insurer or the Servicer shall remove the Trust
Collateral Agent or Custodian under the authority of the immediately preceding
sentence, the Servicer or the Note Insurer, as the case may be, shall promptly
appoint a successor Trust Collateral Agent or Custodian, as applicable, by
written instrument, in duplicate, one copy of which instrument shall be
delivered to the Trust Collateral Agent or Custodian so removed and one copy to
the successor Trust Collateral Agent or successor Custodian, and pay all fees
and expenses owed to the outgoing Trustee, provided that any successor Trust
Collateral Agent or any successor Custodian appointed by the Servicer shall be
acceptable to the Note Insurer.
(c) Any resignation or removal of the Trust Collateral Agent or the
Custodian and appointment of a successor Trust Collateral Agent or Custodian
pursuant to any of the provisions
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of this Section 10.8 shall not become effective until acceptance of appointment
by the successor Trust Collateral Agent or Custodian, as applicable, pursuant to
Section 10.9 and payment of all fees and expenses owed to the outgoing Trustee.
The Servicer shall provide notice of such resignation or removal of the Trust
Collateral Agent or Custodian to each of the Rating Agencies and the Transferor.
(d) If the Trust Collateral Agent 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 10.8, then the Note Insurer (or, if a
Note Insurer Default shall have occurred and be continuing, the Majorityholders)
shall have the option, by 60 days' prior notice in writing to the Servicer and
the Trust Collateral Agent, to remove the Trust Collateral Agent, and the Note
Insurer shall not have any liability to the Trust Collateral Agent, LBAC, the
Transferor, the Servicer, the Issuer or any Noteholder in connection with such
removal.
(e) At any time following the Closing Date the Servicer may assume the
duties of Custodian under this Agreement; PROVIDED, that (i) the Note Insurer
provides its prior written consent to the Trust Collateral Agent (which consent
shall be granted or withheld by the Note Insurer in its sole discretion) and
(ii) the Rating Agency Condition has been satisfied.
SECTION 10.9. SUCCESSOR TRUST COLLATERAL AGENT OR CUSTODIAN.
Any successor Trust Collateral Agent or Custodian appointed pursuant to Section
10.8 shall execute, acknowledge and deliver to the Transferor, the Servicer, the
Note Insurer and to its predecessor Trust Collateral Agent or predecessor
Custodian, as applicable, an instrument accepting such appointment under this
Agreement, and thereupon the resignation or removal of the predecessor Trust
Collateral Agent or predecessor Custodian shall become effective and such
successor Trust Collateral Agent or successor Custodian, 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 Trust Collateral Agent or Custodian. The
predecessor Trust Collateral Agent or predecessor Custodian shall upon payment
of its fees and expenses deliver to the successor Trust Collateral Agent or
successor Custodian all documents and statements and monies held by it under
this Agreement; and the Servicer, the Note Insurer and the predecessor Trust
Collateral Agent or predecessor Custodian 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 Trust Collateral Agent or
successor Custodian all such rights, powers, duties, and obligations.
No successor Trust Collateral Agent or successor Custodian
shall accept appointment as provided in this Section 10.9 unless at the time of
such acceptance such successor Trust Collateral Agent or successor Custodian
shall be eligible pursuant to Section 10.7.
Upon acceptance of appointment by a successor Trust Collateral
Agent or successor Custodian pursuant to this Section 10.9, the Servicer shall
mail notice of the successor of such Trust Collateral Agent or Custodian under
this Agreement to all Holders of Notes at their addresses as shown in the Note
Register, the Transferor, and to the Rating Agencies. If the Servicer shall fail
to mail such notice within ten (10) days after acceptance of appointment by the
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successor Trust Collateral Agent, the successor Trust Collateral Agent or
successor Custodian shall cause such notice to be mailed at the expense of the
Servicer.
SECTION 10.10. MERGER OR CONSOLIDATION OF TRUST COLLATERAL
AGENT OR CUSTODIAN. Any corporation into which the Trust Collateral Agent or the
Custodian 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 Trust Collateral Agent or the Custodian shall be a party, or any corporation
succeeding to all or substantially all of the corporate trust business of the
Trust Collateral Agent or the Custodian, shall be the successor of the Trust
Collateral Agent or Custodian, as applicable, hereunder, provided such
corporation shall be eligible pursuant to Section 10.7, 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.
SECTION 10.11. CO-TRUSTEE; SEPARATE TRUSTEE.
(a) Notwithstanding any other provisions of this Agreement, at any
time, for the purpose of meeting any legal requirements of any jurisdiction in
which any part of the Issuer or any Financed Vehicle may at the time be located,
the Servicer, the Note Insurer (provided a Note Insurer Default shall not have
occurred and be continuing) and the Trust Collateral Agent acting jointly shall
have the power and shall execute and deliver all instruments to appoint one or
more persons approved by the Trust Collateral Agent to act as co-trustee,
jointly with the Trust Collateral Agent, or separate trustee or separate
trustees, of all or any part of the Issuer, and to vest in such Person, in such
capacity and for the benefit of the Noteholders, such title to the Issuer, or
any part thereof, and, subject to the other provisions of this Section 10.11,
such powers, duties, obligations, rights, and trusts as the Servicer, the Note
Insurer and the Trust Collateral Agent may consider necessary or desirable. If
the Servicer and the Note Insurer shall not have joined in such appointment
within fifteen (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 Trust
Collateral Agent 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 Trust Collateral Agent pursuant to
Section 10.7, except that the co-trustee or its parent shall comply with the
rating requirements set forth therein, and no notice of a successor Trust
Collateral Agent pursuant to Section 10.9 and no notice to Noteholders of the
appointment of any co-trustee or separate trustee shall be required pursuant to
Section 10.9.
(b) 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 Trust Collateral Agent shall be conferred upon and
exercised or performed by the Trust Collateral Agent 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
Trust Collateral Agent 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 Trust Collateral Agent under this
Agreement or, in its capacity as Back-up Servicer, as successor to the
Servicer under this Agreement), the Trust Collateral Agent shall be
incompetent or unqualified to perform such act or acts, in which event
such rights,
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powers, duties, and obligations (including the holding of title to the
Issuer 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 Trust Collateral Agent;
(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 Note Insurer Default shall have occurred and
be continuing, the Note Insurer may, and, in the event a Note Insurer
Default shall have occurred and be continuing, then, the Servicer and
the Trust Collateral Agent acting jointly may, at any time accept the
resignation of or remove any separate trustee or co-trustee.
(c) Any notice, request or other writing given to the Trust Collateral
Agent 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 shall refer to this
Agreement and the conditions of this Article X. 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 Trust Collateral Agent 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 Trust Collateral Agent. Each such
instrument shall be filed with the Trust Collateral Agent and a copy thereof
given to the Servicer.
(d) Any separate trustee or co-trustee may at any time appoint the
Trust Collateral Agent, 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 Trust Collateral Agent, to the extent permitted by law, without
the appointment of a new or successor Trust Collateral Agent.
SECTION 10.12. REPRESENTATIONS AND WARRANTIES OF TRUST
COLLATERAL AGENT AND THE CUSTODIAN. The Custodian and the Trust Collateral Agent
shall make the following representations and warranties with respect to itself
on which the Transferor, the Servicer, the Originator, the Issuer, the Note
Insurer and Noteholders shall rely:
(i) The Custodian and the Trust Collateral Agent are a New
York banking corporation, duly organized, validly existing, and in good
standing under the laws of the State of New York and have the corporate
powewr, authority and legal right to hold the Legal Files.
(ii) The Custodian and the Trust Collateral Agent have 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 has been duly executed and delivered by
the Trust Collateral Agent and the Custodian and constitutes a legal,
valid and binding obligation
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of the Trust Collateral Agent and the Custodian, enforceable in
accordance with its terms, subject to (x) applicable bankruptcy,
insolvency, reorganization, moratorium and other similar laws affection
creditor's rights generally and (y) general principals of equity.
SECTION 10.13. RIGHTS OF NOTE INSURER TO DIRECT TRUST
COLLATERAL AGENT. Subject to clause (iii) of Section 10.3, unless a Note Insurer
Default shall have occurred and be continuing, the Note Insurer, after giving
written notice to the Trust Collateral Agent, shall have the right to direct the
time, method and place at or by which the Trust Collateral Agent conducts any
proceeding for any remedy available to the Trust Collateral Agent, or exercises
any such trust or power conferred upon the Trust Collateral Agent; PROVIDED,
HOWEVER, that subject to Section 10.1, the Trust Collateral Agent shall have the
right to decline to follow any such direction of the Note Insurer if the Trust
Collateral Agent, being advised by counsel, determines that the action so
directed may not lawfully be taken, or if the Trust Collateral Agent in good
faith shall, by a Responsible Officer of the Trust Collateral Agent, determine
that the proceedings so directed would be in violation of any Basic Document 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 Noteholders; PROVIDED, that nothing in this Agreement shall impair
the right of the Trust Collateral Agent to take any action deemed proper by the
Trust Collateral Agent and which is not inconsistent with such direction of the
Note Insurer.
ARTICLE XI
TERMINATION
SECTION 11.1. TERMINATION.
(a) The respective obligations and responsibilities of LBAC, the
Transferor, the Issuer, the Servicer, the Custodian and the Trust Collateral
Agent created hereby shall terminate upon the payment to Noteholders and the
Certificateholder of all amounts required to be paid to them pursuant to this
Agreement, the Indenture and the Trust 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 Issuer;
PROVIDED, HOWEVER, in any case there shall be delivered to the Trust Collateral
Agent and the Note 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 11.1. The
Servicer shall promptly notify the Trust Collateral Agent, the Transferor, the
Issuer, each Rating Agency and the Note Insurer of any prospective termination
pursuant to this Section 10.1.
(b) Upon any sale of the assets of the Issuer pursuant to Section 8.1
of the Trust Agreement, the Servicer shall instruct the Trust Collateral Agent
to deposit the proceeds from such sale after all payments and reserves therefrom
(including the expenses of such sale) have been made (the "Insolvency Proceeds")
in the Collection Account.
(c) Notice of any termination of the Issuer shall be given by the
Servicer to the Owner Trustee, the Trust Collateral Agent, the Collateral Agent,
the Back-up Servicer, the Indenture Trustee, the Note Insurer and the Rating
Agencies as soon as practicable after the Servicer has received notice thereof.
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(d) Following the satisfaction and discharge of the Indenture and the
payment in full of the principal of and interest on the Notes, the
Certificateholders will succeed to the rights of the Noteholders hereunder.
ARTICLE XII
ADMINISTRATIVE DUTIES OF THE SERVICER
SECTION 12.1. ADMINISTRATIVE DUTIES.
(a) DUTIES WITH RESPECT TO THE INDENTURE. The Servicer shall take all
necessary action that is the duty of the Issuer to take pursuant to the
Indenture, pursuant to Sections 2.9 (with respect to the notice provisions
contained therein), 3.4, 3.5, 3.6, 3.7, 3.9, 3.10, 3.17, 8.3, 9.1, 9.2, 9.3,
11.1 and 11.13 of the Indenture (in each case, excluding any duty to make
payments to the Noteholders and the Note Insurer). In addition, the Servicer
shall consult with the Owner Trustee as the Servicer deems appropriate regarding
the duties of the Issuer under the Indenture. The Servicer shall monitor the
performance of the Issuer and shall advise the Owner Trustee when action is
necessary to comply with the Issuer's duties under the Indenture. The Servicer
shall prepare for execution by the Issuer or shall cause the preparation by
other appropriate Persons of all such documents, reports, filings, instruments,
certificates and opinions as it shall be the duty of the Issuer to prepare, file
or deliver pursuant to the Indenture.
(b) DUTIES WITH RESPECT TO THE ISSUER.
(i) In addition to the duties of the Servicer set forth in
this Agreement or any of the Basic Documents, the Servicer shall
perform such calculations and shall prepare for execution by the Issuer
or the Owner Trustee or shall cause the preparation by other
appropriate Persons of all such documents, reports, filings,
instruments, certificates and opinions as it shall be the duty of the
Issuer or the Owner Trustee to prepare, file or deliver pursuant to
this Agreement or any of the Basic Documents or under state and federal
tax and securities laws, and at the request of the Owner Trustee shall
take all appropriate action that it is the duty of the Issuer to take
pursuant to this Agreement. In accordance with the directions of the
Issuer or the Owner Trustee, the Servicer shall administer, perform or
supervise the performance of such other activities in connection with
the Trust Assets (including the Basic Documents) as are not covered by
any of the foregoing provisions and as are expressly requested by the
Issuer or the Owner Trustee and are reasonably within the capability of
the Servicer.
(ii) In carrying out the foregoing duties or any of its other
obligations under this Agreement, the Servicer may enter into
transactions with or otherwise deal with any of its Affiliates;
PROVIDED, HOWEVER, that the terms of any such transactions or dealings
shall be in accordance with any directions received from the Issuer and
shall be, in the Servicer's opinion, no less favorable to the Issuer in
any material respect.
(c) NON-MINISTERIAL MATTERS. With respect to matters that in the
reasonable judgment of the Servicer are non-ministerial, the Servicer shall not
take any action pursuant to this Article XII unless within a reasonable time
before the taking of such action, the Servicer shall have notified the Owner
Trustee , the Note Insurer and the Trust Collateral Agent of the proposed
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action and the Owner Trustee and, with respect to items (i), (ii), (iii) and
(iv) below, the Trust Collateral Agent shall not have withheld consent or
provided an alternative direction. For the purpose of the preceding sentence,
"non-ministerial matters" shall include:
(i) the amendment of or any supplement to the Indenture;
(ii) the initiation of any claim or lawsuit by the Issuer and
the compromise of any action, claim or lawsuit brought by or against
the Issuer (other than in connection with the collection of the
Receivables);
(iii) the amendment, change or modification of this Agreement
or any of the Basic Documents;
(iv) the appointment of successor Note Registrars, successor
Note Paying Agents and successor Indenture Trustees pursuant to the
Indenture or the appointment of Successor Servicers or the consent to
the assignment by the Note Registrar, Paying Agent or Trustee of its
obligations under the Indenture; and
(v) the removal of the Trust Collateral Agent or the Indenture
Trustee.
(d) EXCEPTIONS. Notwithstanding anything to the contrary in this
Agreement, except as expressly provided herein or in the other Basic Documents,
the Servicer, in its capacity hereunder, shall not be obligated to, and shall
not, (1) make any payments to the Noteholders under the Basic Documents, (2)
sell the Pledged Property pursuant to Section 5.5 of the Indenture, (3) take any
other action that the Issuer directs the Servicer not to take on its behalf or
(4) in connection with its duties hereunder assume any indemnification
obligation of any other Person.
SECTION 12.2. RECORDS. The Servicer shall maintain appropriate
books of account and records relating to services performed under this
Agreement, which books of account and records shall be accessible for inspection
by the Issuer at any time during normal business hours.
SECTION 12.3. ADDITIONAL INFORMATION TO BE FURNISHED TO THE
ISSUER. The Servicer shall furnish to the Issuer from time to time such
additional information regarding the Trust Assets as the Issuer shall reasonably
request.
SECTION 12.4. NO ADDITIONAL COMPENSATION. The Servicing Fee
payable to the Servicer pursuant to Section 5.6(c)(i) and the Simple Interest
Excess, if any, payable to the Servicer, so long as LBAC is the Servicer,
pursuant to Section 5.12 shall be the only amounts payable to the Servicer for
its services hereunder.
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ARTICLE XIII
MISCELLANEOUS PROVISIONS
SECTION 13.1. AMENDMENT.
(a) This Agreement may be amended from time to time by the Issuer, the
Transferor, the Originator, the Servicer, the Trust Collateral Agent, the
Back-up Servicer and the Custodian and, (i) so long as no Note Insurer Default
has occurred and is continuing or the Policy Expiration Date has not occurred,
with the prior written consent of the Note Insurer and, (ii) if a Note Insurer
Default has occurred and is continuing or the Policy Expiration Date has
occurred with the consent of the Majorityholders, which consent given pursuant
to this Section or pursuant to any other provision of this Agreement shall be
conclusive and binding on such Holders and on all future Holders of such Notes
and of any Notes issued upon the transfer thereof or in exchange thereof or in
lieu thereof whether or not notation of such consent is made upon the Notes, 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 Notes; PROVIDED, HOWEVER, that, in the case of either
clause (i) or (ii) above, 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 payments
that shall be required to be made on any Note or the Certificate or change the
applicable Note Rate without the consent of each Noteholder and
Certificateholder affected thereby, (b) reduce the aforesaid percentage of the
Note Balance required to consent to any such amendment, without the consent of
the Holders of all Notes then outstanding or eliminate the right of the
Noteholder or the Certificateholder to consent to any change described in clause
(a) affecting the Noteholder or the Certificateholder without the consent of the
Noteholder or the Certificateholder, as applicable, or (c) result in a downgrade
or withdrawal of the then current rating of the Notes by either of the Rating
Agencies without the consent of all the Noteholders; PROVIDED, FURTHER that in
the case of clause (ii) above, this Agreement may be amended from time to time
by the Issuer, the Transferor, the Originator, the Servicer, the Trust
Collateral Agent, the Back-up Servicer and the Custodian, for any of the
following purposes:
(x) to correct or amplify the description of any property at
any time conveyed to the Issuer hereunder or any Transfer Agreement, or
better to assure, convey and confirm unto the property conveyed
pursuant hereto or any Transfer Agreement;
(y) to add to the covenants of the Transferor, the Originator
or the Servicer, for the benefit of the Holders of the Notes and the
Note Insurer; or
(z) to cure any ambiguity, to correct or supplement any
provision herein or in any Transfer Agreement which may be inconsistent
with any other provision herein or in any Transfer Agreement or to make
any other provisions with respect to matters or questions arising under
this Agreement or in any Transfer Agreement; PROVIDED that such action
pursuant to this subclause (z) shall not adversely affect in any
material respect the interests of the Holders of the Notes, as
evidenced by satisfaction of the Rating Agency Condition with respect
to such amendment.
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(b) The Trust Collateral Agent 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 Trust Collateral Agent shall furnish a copy of
such amendment and/or consent, if applicable, to each Noteholder, each of the
Rating Agencies and the Lock-Box Processor.
(c) Prior to the execution of any amendment to this Agreement, the
Trust Collateral Agent 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 13.2(i)(1).
The Trust Collateral Agent may, but shall not be obligated to, enter into any
such amendment which affects the Trust Collateral Agent's own rights, duties or
immunities under this Agreement or otherwise.
SECTION 13.2. PROTECTION OF TITLE TO ISSUER.
(a) Each of the Transferor, 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 Indenture Trustee on behalf of the Noteholders, the Trust
Collateral Agent and the Note Insurer in its interest in the Receivables and the
other Trust Assets and in the proceeds thereof. Each of the Transferor, as to
itself, and the Servicer, as to itself, shall deliver (or cause to be delivered)
to the Trust Collateral Agent, the Owner Trustee and the Note 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 Transferor 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 Trust Collateral Agent, the Owner
Trustee, the Note 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 Trust Collateral Agent 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 Transferor and the Servicer shall have an obligation to
give the Trust Collateral Agent, the Owner Trustee, the Note 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 Trust Collateral Agent 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
73
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.
(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 Collection Account
in respect of such Receivable.
(e) The Servicer shall maintain its computer systems so that, from and
after the time of conveyance under this Agreement of the Receivables to the
Issuer, 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 1999-2 in such Receivable and that such
Receivable is owned by the Issuer. Indication of the Issuer'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 Transferor 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 conveyed to and
is owned by the Issuer.
(g) The Servicer shall, upon reasonable notice, permit the Transferor,
the Trust Collateral Agent, the Back-up Servicer, the Owner Trustee and the Note
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 Transferor, the
Trust Collateral Agent, the Back-up Servicer, the Owner Trustee or to the Note
Insurer, within five Business Days, a list of all Receivables (by contract
number and name of Obligor) then held as part of the Issuer, 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 Issuer.
(i) The Servicer shall deliver to the Trust Collateral Agent, the Owner
Trustee and the Note 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 Trust Collateral Agent in the Receivables, and reciting the details
of
74
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
(2) within 90 days after the beginning of each calendar year
beginning with the first calendar year beginning more than three months
after the 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 Trust Collateral Agent 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 13.3. LIMITATION ON RIGHTS OF NOTEHOLDERS.
(a) The death or incapacity of any Noteholder shall not operate to
terminate this Agreement or the Issuer, nor entitle such Noteholder'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
Issuer, nor otherwise affect the rights, obligations and liabilities of the
parties to this Agreement or any of them.
(b) No Noteholder shall have any right to vote (except as specifically
provided herein including in Section 13.1) or in any manner otherwise control
the operation and management of the Issuer, or the obligations of the parties to
this Agreement, nor shall anything in this Agreement set forth, or contained in
the terms of the Notes, be construed so as to constitute the Noteholders from
time to time as partners or members of an association; nor shall any Noteholder
be under any liability to any third person by reason of any action taken
pursuant to any provision of this Agreement.
(c) So long as no Note Insurer Default has occurred and is continuing,
except as otherwise specifically provided herein, whenever Noteholder 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 Noteholders if the Note Insurer agrees to take such action or
give such consent or approval.
(d) If a Note Insurer Default shall have occurred and be continuing, no
Noteholder 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
75
Agreement, unless such Holder previously shall have given to the Trust
Collateral Agent a written notice of default and of the continuance thereof, and
unless also the Class A Noteholders evidencing not less than 25% of the Class A
Note Balance or, after the Policy Expiration Date, by the Class B Noteholders,
evidencing not less than 25% of the Class B Note Balance shall have made written
request upon the Trust Collateral Agent to institute such action, suit or
proceeding in its own name as Trustee under this Agreement and shall have
offered to the Trust Collateral Agent such reasonable indemnity as it may
require against the costs, expenses, and liabilities to be incurred therein or
thereby and the Trust Collateral Agent, 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
Trust Collateral Agent pursuant to this Section or Section 8.4; no one or more
Holders of Notes 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 Notes, 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
Noteholders. For the protection and enforcement of the provisions of this
Section 13.3, each Noteholder and the Trust Collateral Agent 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 Noteholders any direct right to make
a claim on the Note Policy.
SECTION 13.4. 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 13.5. NOTICES.
(a) All demands, notices and communications upon or to the Issuer, the
Transferor, the Servicer, the Trust Collateral Agent, the Note Insurer, Standard
& Poor's or ▇▇▇▇▇'▇ 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 Issuer, in
care of the Owner Trustee at the following address: ▇▇▇▇▇▇ Square North, ▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇, Attention: Corporate Trust
Administration (Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇), (b) in the case of the Transferor, at
the following address: ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
(Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇), Attention: General Counsel, or at such other address
as shall be designated by the Transferor in a written notice to the Trust
Collateral Agent, (c) in the case of the Servicer, at the following address: ▇▇▇
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ (Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇),
Attention: General Counsel, (d) in the case of the Trust Collateral Agent, at
the Corporate Trust Office (Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇), (e) in the case of the
Custodian, at the Corporate Trust Office (Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇), (f) in the
case of Standard & Poor's, at the following address: ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇
▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention: Asset Backed Surveillance
Department, (g) in the case of ▇▇▇▇▇'▇, at the following address: ▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇,
76
Attention: ABS Monitoring Department and (h) in the case of the Note Insurer, at
the following address: ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention:
Senior Vice President, Transaction Oversight, Re: Long Beach Acceptance Auto
Receivables Trust 1999-2. Any notice required or permitted to be mailed to a
Noteholder shall be given by Federal Express or similar overnight courier
service, postage prepaid, at the address of such Holder as shown in the Note
Register. Any notice so mailed within the time prescribed in this Agreement
shall be conclusively presumed to have been duly given, whether or not the
Noteholder shall receive such notice.
(b) The Trust Collateral Agent shall give prompt written notice to each
of the Transferor, the Rating Agencies and each Noteholder of (i) any amendments
to the Insurance Agreement or the Note Policy (upon receipt of written notice of
any such amendments from LBAC or the Servicer), (ii) any change in the identity
of the Note Paying Agent and (iii) any failure to make payment under the Note
Policy.
SECTION 13.6. 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 Notes or the rights of the Holders thereof.
SECTION 13.7. ASSIGNMENT TO INDENTURE TRUSTEE. The Transferor
hereby acknowledges and consents to any mortgage, pledge, assignment and grant
of a security interest by the Issuer to the Indenture Trustee pursuant to the
Indenture for the benefit of the Noteholders and the Note Insurer of all right,
title and interest of the Issuer in, to and under the Receivables and/or the
assignment of any or all of the Issuer's rights and obligations hereunder to the
Indenture Trustee.
SECTION 13.8. LIMITATION OF LIABILITY OF OWNER TRUSTEE,
CUSTODIAN AND TRUST COLLATERAL AGENT.
(a) Notwithstanding anything contained herein to the contrary, this
Agreement has been countersigned by Wilmington Trust Company not in its
individual capacity but solely in its capacity as Owner Trustee of the Issuer
and in no event shall Wilmington Trust Company in its individual capacity or,
except as expressly provided in the Trust Agreement, as Owner Trustee, have any
liability for the representations, warranties, covenants, agreements or other
obligations of the Issuer hereunder or in any of the certificates, notices or
agreements of the Issuer delivered pursuant hereto, as to all of which recourse
shall be had solely to the assets of the Issuer. For all purposes of this
Agreement, in the performance of its duties or obligations hereunder or in the
performance of any duties or obligations of the Issuer hereunder, the Owner
Trustee shall be subject to, and entitled to the benefits of, the terms and
provisions of the Trust Agreement.
(b) Notwithstanding anything contained herein to the contrary, this
Agreement has been executed and delivered by Chase Manhattan, not in its
individual capacity but solely as Back-up Servicer, Custodian and Trust
Collateral Agent and in no event shall Chase Manhattan have any liability for
the representations, warranties, covenants, agreements or other obligations
77
of the Issuer hereunder or in any of the certificates, notices or agreements of
the Issuer delivered pursuant hereto, as to all of which recourse shall be had
solely to the assets of the Issuer.
SECTION 13.9. INDEPENDENCE OF THE SERVICER. For all purposes
of this Agreement, the Servicer shall be an independent contractor and shall not
be subject to the supervision of the Issuer, the Trust Collateral Agent, the
Back-up Servicer or the Owner Trustee with respect to the manner in which it
accomplishes the performance of its obligations hereunder. Unless expressly
authorized by this Agreement, the Servicer shall have no authority to act for or
represent the Issuer or the Owner Trustee in any way and shall not otherwise be
deemed an agent of the Issuer or the Owner Trustee.
SECTION 13.10. NO JOINT VENTURE. Nothing contained in this
Agreement (i) shall constitute the Servicer and either of the Issuer or the
Owner Trustee as members of any partnership, joint venture, association,
syndicate, unincorporated business or other separate entity, (ii) shall be
construed to impose any liability as such on any of them or (iii) shall be
deemed to confer on any of them any express, implied or apparent authority to
incur any obligation or liability on behalf of the others.
SECTION 13.11. NONPETITION COVENANT. None of the Transferor,
the Servicer, the Trust Collateral Agent, 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 Issuer or the Transferor,
petition or otherwise invoke the process of any court or government authority
for the purpose of commencing or sustaining a case against the Issuer or the
Transferor 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 Issuer or the Transferor or any substantial part
of its property, or ordering the winding up or liquidation of the affairs of the
Issuer or the Transferor.
SECTION 13.12. THIRD PARTY BENEFICIARIES. Except as otherwise
specifically provided herein with respect to Noteholders, the parties to this
Agreement hereby manifest their intent that no third party other than the Note
Insurer, the Owner Trustee 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 Note 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 such provisions of this Agreement so
long as no Note Insurer Default shall have occurred and be continuing. Except as
expressly stated otherwise herein or in the Basic Documents, any right of the
Note Insurer to direct, appoint, consent to, approve of or take any action under
this Agreement, shall be a right exercised by the Note Insurer in its sole and
absolute discretion. The Note Insurer may disclaim any of its rights and powers
under this Agreement (but not its duties and obligations under the Note Policy)
upon delivery of a written notice to the Trust Collateral Agent.
SECTION 13.13. CONSENT TO JURISDICTION.
(a) TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, THE PARTIES
HERETO HEREBY IRREVOCABLY SUBMIT TO THE JURISDICTION OF THE
78
UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK AND ANY COURT
IN THE STATE OF NEW YORK LOCATED IN THE CITY AND COUNTY OF NEW YORK, AND ANY
APPELLATE COURT FROM ANY THEREOF, IN ANY ACTION, SUIT OR PROCEEDING BROUGHT
AGAINST IT AND TO OR IN CONNECTION WITH ANY OF THE TRANSACTION DOCUMENTS OR THE
TRANSACTION OR FOR RECOGNITION OR ENFORCEMENT OF ANY JUDGMENT, AND THE PARTIES
HERETO HEREBY IRREVOCABLY AND UNCONDITIONALLY AGREE THAT ALL CLAIMS IN RESPECT
OF ANY SUCH ACTION OR PROCEEDING MAY BE HEARD OR DETERMINED IN SUCH NEW YORK
STATE COURT OR IN SUCH FEDERAL COURT. THE PARTIES HERETO AGREE THAT A FINAL
JUDGMENT IN ANY SUCH ACTION, SUIT OR PROCEEDING SHALL BE CONCLUSIVE AND MAY BE
ENFORCED IN OTHER JURISDICTIONS BY SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER
PROVIDED BY LAW. TO THE EXTENT PERMITTED BY APPLICABLE LAW, THE PARTIES HERETO
HEREBY WAIVE AND AGREE NOT TO ASSERT BY WAY OF MOTION, AS A DEFENSE OR OTHERWISE
IN ANY SUCH SUIT, ACTION OR PROCEEDING, ANY CLAIM THAT IT IS NOT PERSONALLY
SUBJECT TO THE JURISDICTION OF SUCH COURTS, THAT THE SUIT, ACTION OR PROCEEDING
IS BROUGHT IN AN INCONVENIENT FORUM, THAT THE VENUE OF THE SUIT, ACTION OR
PROCEEDING IS IMPROPER OR THAT THE RELATED DOCUMENTS OR THE SUBJECT MATTER
THEREOF MAY NOT BE LITIGATED IN OR BY SUCH COURTS.
(b) To the extent permitted by applicable law, the parties hereto
shall not seek and hereby waive the right to any review of the judgment of any
such court by any court of any other nation or jurisdiction which may be called
upon to grant an enforcement of such judgment.
(c) Each of LBAC and the Transferor hereby agree that until such time
at the Notes and the Reimbursement Obligations have been paid in full and the
Note Policy has expired in accordance with its terms, each of LBAC and the
Transferor shall have appointed, with prior written notice to the Note Insurer,
an agent registered with the Secretary of State of the State of New York, with
an office in the County of New York in the State of New York, as its true and
lawful attorney and duly authorized agent for acceptance of service of legal
process (which as of the date hereof is National Registered Agents, Inc., whose
address is ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ 10007). Each of LBAC and the
Transferor agrees that service of such process upon such Person shall constitute
personal service of such process upon it.
SECTION 13.14. HEADINGS. The headings of articles and sections
and the table of contents contained in this Agreement are provided for
convenience only. They form no part of this Agreement and shall not affect its
construction or interpretation. Unless otherwise indicated, all references to
articles and sections in this Agreement refer to the corresponding articles and
sections of this Agreement.
SECTION 13.15. TRIAL BY JURY WAIVED. EACH PARTY HERETO HEREBY
WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY RIGHT TO A TRIAL BY JURY IN
RESPECT OF ANY LITIGATION ARISING DIRECTLY OR INDIRECTLY OUT OF, UNDER OR IN
CONNECTION WITH ANY OF THE TRANSACTION DOCUMENTS OR THE TRANSACTION. EACH PARTY
HERETO (A) CERTIFIES THAT
79
NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY PARTY HERETO HAS REPRESENTED,
EXPRESSLY OR OTHERWISE, THAT IT WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO
ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT HAS BEEN INDUCED TO
ENTER INTO THE TRANSACTION DOCUMENTS TO WHICH IT IS A PARTY BY, AMONG OTHER
THINGS, THIS WAIVER.
SECTION 13.16. ENTIRE AGREEMENT. This Agreement sets forth the
entire agreement between the parties with respect to the subject matter hereof,
and this Agreement supersedes and replaces any agreement or understanding that
may have existed between the parties prior to the date hereof in respect of such
subject matter.
SECTION 13.17. EFFECT OF POLICY EXPIRATION DATE. Notwithstanding
anything to the contrary set forth herein, all references to any right of the
Note Insurer to direct, appoint, consent to, accept, approve of, take or omit to
take any action under this Agreement or any other Basic Document shall be
inapplicable at all times after the Policy Expiration Date, and (i) if such
reference provides for another party or parties to take or omit to take any such
action following a Note Insurer Default, such party or parties shall be entitled
to take or omit to take such action following the Policy Expiration Date and
(ii) if such reference does not provide for another party or parties to take or
omit to take any such action following a Note Insurer Default, then the
Indenture Trustee acting at the direction of the Class B Noteholders holding in
the aggregate more than 50% of the outstanding Class B Note Balance shall have
the right to take or omit to take any such action following the Policy
Expiration Date. In addition, any other provision of this Agreement or any other
Basic Document which is operative based in whole or in part on whether a Note
Insurer Default has or has not occurred shall, at all times on or after the
Policy Expiration Date, be deemed to refer to whether or not the Policy
Expiration Date has occurred.
80
IN WITNESS WHEREOF, the Issuer, the Transferor, the
Originator, the Servicer, the Trust Collateral Agent, the Back-up Servicer and
the Custodian have caused this
Sale 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 Transferor
By: ________________________________________
Name:
Title:
LONG BEACH ACCEPTANCE CORP.,
as Originator and Servicer
By: ________________________________________
Name:
Title:
THE CHASE MANHATTAN BANK,
as Back-up Servicer, Custodian and Trust
Collateral Agent
By: ________________________________________
Name:
Title:
LONG BEACH ACCEPTANCE AUTO
RECEIVABLES TRUST 1999-2, as Issuer
By: Wilmington Trust Company, not in its
individual capacity, but solely as Owner
Trustee
By: ________________________________________
Name:
Title:
[
Sale and Servicing Agreement]
ANNEX A
DEFINED TERMS
Annex A
EXHIBIT A-1
Issuer's Certificate
pursuant to Section 3.4
of the
Sale and Servicing
Agreement
Reference is made to the
Sale and Servicing Agreement (the "Agreement"), dated
as of December 1, 1999, among Long Beach Acceptance Receivables Corp., Long
Beach Acceptance Corp., as originator and as servicer, The Chase Manhattan Bank,
as trust collateral agent, custodian and back-up servicer and Long Beach
Acceptance Auto Receivables Trust 1999-2, as issuer (the "Issuer"). The Issuer
does hereby sell, transfer, assign, and otherwise convey to LBAC, without
recourse, representation, or warranty, all of the Issuer'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 3.4 of the Agreement,
and all security and documents relating thereto.
IN WITNESS WHEREOF I have hereunto set my hand this __ day of ________________,
___.
-------------------------------------
▇-▇-▇
▇▇▇▇▇▇▇ ▇-▇
Issuer's Certificate
pursuant to Section 4.7
of the
Sale and Servicing
Agreement
Reference is made to the
Sale and Servicing Agreement (the "Agreement"), dated
as of December 1, 1999, among Long Beach Acceptance Receivables Corp., Long
Beach Acceptance Corp., as originator and as servicer, The Chase Manhattan Bank,
as trust collateral agent, custodian and back-up servicer and Long Beach
Acceptance Auto Receivables Trust 1999-2, as issuer (the "Issuer"). The Issuer
does hereby sell, transfer, assign, and otherwise convey to the Servicer,
without recourse, representation, or warranty, all of the Issuer'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 4.7 of the
Agreement, and all security and documents relating thereto.
IN WITNESS WHEREOF I have hereunto set my hand this __ day of ________________,
____.
-------------------------------------
▇-▇-▇
▇▇▇▇▇▇▇ ▇-▇
SERVICER'S CERTIFICATE
LONG BEACH ACCEPTANCE AUTO RECEIVABLES TRUST 1999-2
6.94% ASSET-BACKED NOTES, CLASS A-1
7.32% ASSET-BACKED NOTES, CLASS A-2
12.00% ASSET-BACKED NOTES, CLASS B
B-1-1
EXHIBIT B-2
Form of Loan Master File Layout
B-2-1
EXHIBIT C
INTENTIONALLY OMITTED
C-1
EXHIBIT D
PAYMENT DEFERMENT POLICY
- LBAC may grant a payment deferment provided that the deferment period
does not exceed 1 month (2 months if 12 or more payments have been made
and if the deferment is granted in writing by the President, or an
Executive Vice President, or the National Collections Manager, or a
Regional Manager).
- Not more than 1 deferment event (which may consist of a 2 month
deferment according to the exceptions included in the policy) may be
granted during any 12-month period.
- The aggregate of all deferment periods during the term of a Receivable
may not exceed the lesser of 8 months or 50% of the weighted average
life of the original term of the Receivable (including deferments
granted both before and after the related Cut-Off Date).
- At least 6 payments must be made before a deferment may be granted.
- A request for a deferment must be made in writing.
- The deferment must bring the account current, so that after the
deferment is processed no payment is then due.
- Except as otherwise set forth in this policy, deferments must be
granted in writing by the Collection Manager or someone of equal or
higher rank.
- A deferment fee will be collected for each deferment if allowed by
applicable law and may be waived or deferred only by the President, or
an Executive Vice President, or the National Collections Manager, or a
Regional Manager; PROVIDED, HOWEVER, that no deferment will be granted
unless the Servicer believes in good faith that the account probably
would default in the reasonably foreseeable future if a deferment is
not approved.
- Deferments which do not meet the above criteria may be granted in
writing on an exception basis (e.g., when required by law) by the
President, or an Executive Vice President, or the National Collections
Manager, or a Regional Manager.
- As of April 1, 2000, and the first day of each calendar quarter
thereafter, the aggregate number of Receivables the terms of which have
been extended during the preceding calendar quarter shall not exceed 4%
of the number of Receivables at the beginning of the preceding calendar
quarter.
- No deferment may extend the date for final payment of a Receivable
beyond the last day of the record Collection Period preceding the Final
Scheduled Payment Date.
D-1
DUE DATE CHANGE POLICY
- LBAC may grant a due date change, PROVIDED that the new due date is
within 20 days of the current due date.
- Not more than 2 due date changes may be granted over the term of a
Receivable.
- If 2 due date changes are granted, the total number of days by which
the maturity date is extended may not exceed 20.
- A request for a due date change must be made in writing.
- The account must be current at the time the request is received.
- Due date changes must be granted in writing by the Collection Manager
or someone of equal or higher rank.
- No due date change may be granted if the aggregate of all deferment
periods and the requested due date change would exceed the lesser of 8
months or 50% of the original term of the Receivable.
D-2
EXHIBIT E
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._________________
12. Life, accident, health and GAP insurance policy copies, as
applicable 12._________________
13. Signed purchase order from dealer to customer 13._________________
E-1
EXHIBIT F
[Form of Request for Transfer of Possession]
___________, 19__
The Chase Manhattan Bank
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇., ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Capital Markets Fiduciary Services
Attention: __________
Telephone: ___________
Telecopy: ____________
Ladies and Gentlemen:
Reference is made to the Sale and Servicing Agreement, dated as of December 1,
1999 (the "Sale and Servicing Agreement"), among LONG BEACH ACCEPTANCE
RECEIVABLES CORP., a Delaware corporation, as transferor, LONG BEACH ACCEPTANCE
CORP., a Delaware corporation, as originator and servicer, LONG BEACH ACCEPTANCE
AUTO RECEIVABLES TRUST 1999-2, a Delaware business trust, as issuer (the
"Issuer"), THE CHASE MANHATTAN BANK, a New York banking corporation, as trust
collateral agent, back-up servicer and custodian (in such capacity, the
"Custodian"). Capitalized terms used but not defined in this letter have the
meanings set forth in the Sale 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:
-------------------------------------------
F-1
EXHIBIT G
[Form of Custodial Letter]
___________, 19__
The Chase Manhattan Bank
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇., ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Capital Markets Fiduciary Services
Attention: __________
Telephone: ___________
Telecopy: ____________
Ladies and Gentlemen:
Reference is made to the Sale and Servicing Agreement, dated as of December 1,
1999 (the "Sale and Servicing Agreement"), among LONG BEACH ACCEPTANCE
RECEIVABLES CORP., a Delaware corporation, as transferor, LONG BEACH ACCEPTANCE
CORP., a Delaware corporation, as originator and servicer, LONG BEACH ACCEPTANCE
AUTO RECEIVABLES TRUST 1999-2, a Delaware business trust, as issuer (the
"Issuer"), THE CHASE MANHATTAN BANK, a New York banking corporation, as trust
collateral agent, custodian and back-up servicer. Capitalized terms used but not
defined in this letter have the meanings set forth in the Sale and Servicing
Agreement.
[The Servicer] [_____________________, as Subservicer (the "Subservicer") for
the Servicer] acknowledges that the Issuer 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 Sale 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 Sale
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 Issuer.
(b) [The Servicer] [The Subservicer] agrees that such Legal Files will be
returned to the Custodian immediately upon notice by the Custodian or the Trust
Collateral Agent 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.
G-1
(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.
(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 Indenture Trustee, the Issuer, the Noteholders and the
Note 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
Trust Collateral Agent.
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:
-------------------------------------------
G-2
EXHIBIT G - 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 Sale and Servicing Agreement, dated as of December 1,
1999 (the "Sale and Servicing Agreement"), among LONG BEACH ACCEPTANCE
RECEIVABLES CORP., a Delaware corporation, as transferor, LONG BEACH ACCEPTANCE
CORP., a Delaware corporation, as originator and servicer, LONG BEACH ACCEPTANCE
AUTO RECEIVABLES TRUST 1999-2, a Delaware business trust, as issuer (the
"Issuer"), THE CHASE MANHATTAN BANK, a New York banking corporation, as trust
collateral agent, back-up servicer and custodian. Capitalized terms used but not
defined in this letter have the meanings set forth in the Sale 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 Issuer, the Indenture Trustee, the Note
Holders and the Note Insurer, subject to the terms and provisions of the Sale
and Servicing Agreement, and subject to the Custodial Letter you executed
pursuant to Section 3.5(c) of the Sale and Servicing Agreement.
Very truly yours,
THE CHASE MANHATTAN BANK
By:
----------------------------------------------
Name:
--------------------------------------------
Title:
-------------------------------------------
G-3
EXHIBIT G - ANNEX A to Transfer Notice
Receivable Amount of Name of
Number Receivable Receivable Borrower
---------------------------------------------------------------------------
G-4
EXHIBIT H
FORM OF TRANSFER AGREEMENT
TRANSFER NO. __________ OF SUBSEQUENT RECEIVABLES, dated as of
___________, _____, among LONG BEACH ACCEPTANCE AUTO RECEIVABLES TRUST 1999-2, a
Delaware business trust (the "Issuer" or the "Trust"), LONG BEACH ACCEPTANCE
CORP., a Delaware corporation ("LBAC" or the "Originator"), LONG BEACH
ACCEPTANCE RECEIVABLES CORP., a Delaware corporation (the "Transferor"), and THE
CHASE MANHATTAN BANK, a New York banking corporation, as trust collateral agent
(in such capacity, the "Trust Collateral Agent"), back-up servicer and custodian
pursuant to the Sale and Servicing Agreement referred to below.
W I T N E S S E T H:
WHEREAS, LBAC, the Transferor, the Issuer and the Trust
Collateral Agent are parties to the Sale and Servicing Agreement, dated as of
December 1, 1999 (the "Sale and Servicing Agreement");
WHEREAS, LBAC and the Transferor are parties to the Purchase
Agreement, dated as of December 1, 1999 (the "Purchase Agreement");
WHEREAS, pursuant to the Purchase Agreement and the Subsequent
Assignment, LBAC desires to convey certain Subsequent Receivables to the
Transferor and pursuant to the Sale and Servicing Agreement and this Agreement
the Transferor desires to convey such Subsequent Receivables to the Issuer; and
WHEREAS, the Issuer is willing to accept such conveyance
subject to the terms and conditions hereof.
NOW, THEREFORE, the Issuer, the Transferor, the Trust
Collateral Agent 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 Sale 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
_______________.
"Subsequent Receivables" means the Receivables identified on
the supplement to the Schedule of Receivables attached as Schedule A hereto.
"Subsequent Receivables Purchase Price" means $__________.
H-1
"Subsequent Spread Account Deposit" means $__________.
"Subsequent Transfer Date" means, with respect to the
Subsequent Receivables conveyed hereby, ________________________.
"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 Transferor to the Issuer pursuant to this Agreement and the
Sale 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 Transferor, the
Transferor does hereby sell, transfer, assign, set over and otherwise convey to
the Issuer, in trust for the benefit of the Noteholders and the Note Insurer,
without recourse, all right, title and interest of the Transferor in and to:
(1) the Subsequent Receivables listed in Schedule A hereto,
all monies received on such Subsequent Receivables after the Subsequent Cut-off
Date and, with respect to any Subsequent Receivables which are Precomputed
Receivables, the related Payahead Amount and all Liquidation Proceeds and
Recoveries received with respect to such Subsequent Receivables;
(2) the security interests in the Financed Vehicles granted by
the related Obligors pursuant to the Subsequent Receivables and any other
interest of the Transferor 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 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 Guarantee,
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 4 of this Agreement or
the failure of LBAC to timely comply with its obligations pursuant to Section
5.5 of the Purchase 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 a related
H-2
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
Subsequent Receivable and any and all other documents that LBAC keeps on file in
accordance with its customary procedures relating to the Subsequent Receivables,
the related Obligors or the related 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 the Subsequent Receivables, with respect to the sale
of the 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
Transferor relies in accepting the Subsequent Receivables and the other
Transferred Property relating thereto and on which the Note 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 Transferor and the subsequent assignment and transfer
pursuant to the Sale and Servicing Agreement:
(1) ORIGINATION DATE. Each Subsequent Receivable has an
Origination Date on or after ________________.
(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
H-3
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 Transferor, which in turn has been validly pledged by
the Transferor to the Trust pursuant to the Sale and Servicing Agreement, which
in turn has been validly assigned by the Issuer to the Indenture Trustee
pursuant to the Indenture, (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 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; approximately [ ]% of the aggregate Principal Balance of the
Subsequent Receivables as of the Subsequent Cutoff Date were originated under
the LBAC Class IV 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 _____________, 200__; 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
------------, ----.
(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
H-4
Subsequent Cutoff Date was noted in the related Receivable File as having filed
for bankruptcy since origination of the Subsequent Receivable and neither
discharged, dismissed nor reaffirmed.
(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
New York and the remaining [ ]% of the Subsequent Receivables were originated in
other States.
(8) LOCKBOX. Prior to the Subsequent Transfer Date, the
Transferor 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 B to the Sale 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 Noteholders or to
the Note Insurer have been utilized in selecting the Subsequent Receivables. The
computer tape or other listing regarding the Subsequent Receivables made
available to the Transferor 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 Sale 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, 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.
H-5
(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 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 lien for taxes, labor or materials or any other non-consensual lien
affecting a Financed Vehicle arising subsequent to 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 the
lien of the Indenture and for any lien for taxes, labor or materials or any
other non-consensual lien 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
H-6
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.
(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 Transferor 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
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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 Transferor or by the Transferor to any Person other than
the Trust except with 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
Transferor 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 other than the Lien of
the Indenture, and each such transfer has been perfected under the UCC.
Immediately prior to the transfer and assignment by the Transferor to the Trust
contemplated by this Agreement and the Sale and Servicing Agreement, the
Transferor 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 other than the Lien of
the Indenture and, immediately upon the transfer thereof pursuant to this
Agreement and the Sale 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 other than the Lien of the Indenture, 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 Transferor 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 Sale 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 Indenture
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 to execute and deliver such contract and all other documents
related thereto and to grant the security interest purported to be granted
thereby.
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(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 a 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 150 days
following the Subsequent Transfer Date and will show, LBAC named as the 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 Trust 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 Transferor 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 Transferor 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 Noteholders or the Note Insurer in any
Subsequent Receivable or the proceeds thereof.
(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 Transferor or LBAC with
respect to such Subsequent Receivable.
(34) SERVICING. The servicing of each Subsequent Receivable and
the collesction practices relating thereto have been lawful and in accordance
with the standards set
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forth in the Sale 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 any 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 Sale 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 Transferor in Section 3.1 of
the Sale 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) SALE AND SERVICING AGREEMENT CONDITIONS. Each of the
conditions set forth in Section 2.2(b) to the Sale 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 Transferor agrees to
record and file, at its own expense, a financing statement with respect
to the Subsequent 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
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of each such filing to be provided to the Trust Collateral Agent in due
course), as soon as is practicable after the Transferor's receipt
thereof.
In connection with such conveyance, the Transferor 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 Sale and
Servicing Agreement and this Agreement and (ii) to deliver to the Trust
Collateral Agent 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 Transferor shall have
delivered or caused to be delivered to the Trust Collateral Agent on
behalf of the Noteholders and the Note Insurer such information as was
reasonably requested by the Trust on behalf of the Noteholders or the
Note Insurer to satisfy itself as to (i) the accuracy of the
representations and warranties set forth in Section 4 of this Agreement
and Section 7.1 of the Sale 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 Transferor shall deposit or cause to be deposited:
(1) the Subsequent Spread Account Deposit into the
Spread Account; and
(2) the Class B Reserve Account Subsequent Deposit
into the Class B Reserve Account; and
(2) $__________, which represents all monies received
pursuant to Section 3(1) (other than Liquidation Proceeds and
Recoveries), into the Collection Account.
SECTION 6. RATIFICATION OF AGREEMENT. As supplemented by this Agreement, the
Sale and Servicing Agreement is in all respects ratified and confirmed and the
Sale 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 Noteholders, the parties to this Agreement hereby
manifest their intent that no third party other than the Note 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 Note 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 Note Insurer Default
shall have occurred and be continuing. Except as expressly stated otherwise
herein or in the Basic Documents, any right of the Note Insurer to direct,
appoint, consent to, approve of, or take any action under this Agreement, shall
be a right exercised by the Note Insurer in its sole and absolute discretion.
The Note 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 Trust Collateral Agent.
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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 Issuer, LBAC, the
Transferor and the Trust Collateral Agent with the prior written consent of the
Note Insurer.
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IN WITNESS WHEREOF, the Issuer, LBAC, the Transferor and the
Trust Collateral Agent 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 AUTO RECEIVABLES
TRUST 1999-2, as Issuer
By: Wilmington Trust Company, not in its individual
capacity, but solely as Owner Trustee
By:
-------------------------------------------------------
Name:
Title:
LONG BEACH ACCEPTANCE CORP.
By:
-------------------------------------------------------
Name:
Title:
LONG BEACH ACCEPTANCE
RECEIVABLES CORP.
By:
-------------------------------------------------------
Name:
Title:
THE CHASE MANHATTAN BANK, as Trust
Collateral Agent.
By:
-------------------------------------------------------
Name:
Title:
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SCHEDULE A
SCHEDULE OF RECEIVABLES
Schedule A-1
SCHEDULE B
Location of Receivable Files
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Location of Legal Files
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Attention: Loan Document
Custody - Long Beach Acceptance
Auto Receivables Trust 1999-2
Schedule B-1
SCHEDULE C
Delivery Requirements
The Trust Collateral Agent 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 Trust Collateral Agent or its agent, together with
each document of transfer, if any, necessary to transfer title to such
investment to the Trust Collateral Agent in a manner that complies with this
Agreement and the requirements of the definition of Eligible Investments.
Schedule C-1