EXHIBIT 4.5
==============================================================================
SALE AND SERVICING AGREEMENT
among
LONG BEACH ACCEPTANCE AUTO RECEIVABLES TRUST 20__-_
Issuer
LONG BEACH ACCEPTANCE RECEIVABLES CORP.
Transferor
LONG BEACH ACCEPTANCE CORP.
Originator and Servicer
and
[NAME OF INDENTURE TRUSTEE]
Back-up Servicer, Custodian and Trust Collateral Agent
Dated as of _________ , 20__
==============================================================================
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 Receivables...................................................................3
SECTION 2.2. Transfer Intended as Sale; Precautionary Security Interest..................................4
SECTION 2.3. Assignment by Transferor....................................................................4
SECTION 2.4. The Legal Files Are Not "Financial Assets"..................................................4
SECTION 2.5. Further Encumbrance of Trust Assets.........................................................4
ARTICLE III THE RECEIVABLES.......................................................................................5
SECTION 3.1. Representations and Warranties of Transferor................................................5
SECTION 3.2. Repurchase upon Breach of Representations and Warranties of the Transferor..................5
SECTION 3.3. Delivery of Legal Files and Receivable Files................................................6
SECTION 3.4. Acceptance of Legal Files by Custodian......................................................6
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............................8
SECTION 3.6. Covenants of the Custodian..................................................................9
SECTION 3.7. Issuer's Certificate.......................................................................11
ARTICLE IV ADMINISTRATION AND SERVICING OF RECEIVABLES...........................................................11
SECTION 4.1. Duties of the Servicer.....................................................................11
SECTION 4.2. Collection and Allocation of Receivable Payments...........................................12
SECTION 4.3. Realization upon Receivables...............................................................13
SECTION 4.4. Physical Damage Insurance; Other Insurance.................................................14
SECTION 4.5. Maintenance of Security Interests in Financed Vehicles.....................................14
SECTION 4.6. Additional Covenants of Servicer...........................................................15
SECTION 4.7. Purchase of Receivables Upon Breach........................................................16
SECTION 4.8. Servicing Fee..............................................................................16
SECTION 4.9. Servicer's Certificate.....................................................................17
SECTION 4.10. Annual Statement as to Compliance; Notice of Default.......................................17
SECTION 4.11. Annual Independent Certified Public Accountant's Report....................................17
SECTION 4.12. Servicer Expenses..........................................................................18
SECTION 4.13. Retention and Termination of Servicer......................................................18
i
SECTION 4.14. Access to Certain Documentation and Information Regarding Receivables......................19
SECTION 4.15. Verification of Servicer's Certificate.....................................................19
SECTION 4.16. Fidelity Bond..............................................................................20
SECTION 4.17. Delegation of Duties.......................................................................20
SECTION 4.18. Delivery of Back-up Tapes of Back-up Servicer..............................................21
ARTICLE V ACCOUNTS; PAYMENTS; STATEMENTS TO NOTEHOLDERS..........................................................22
SECTION 5.1. Accounts; Lock-Box Account.................................................................22
SECTION 5.2. Collections................................................................................23
SECTION 5.3. Application of Collections.................................................................24
SECTION 5.4. Intentionally Omitted......................................................................24
SECTION 5.5. Additional Deposits........................................................................24
SECTION 5.6. Payments; [Policy Claims]..................................................................24
SECTION 5.7. Statements to Noteholders; Tax Returns.....................................................28
SECTION 5.8. Reliance on Information from the Servicer..................................................30
SECTION 5.9. [Optional Deposits by the Note Insurer.....................................................30
SECTION 5.10. [Spread Account............................................................................30
SECTION 5.11. [Withdrawals from Spread Account...........................................................30
SECTION 5.12. Simple Interest............................................................................31
SECTION 5.13. Securities Accounts........................................................................31
ARTICLE VI [THE NOTE POLICY......................................................................................31
SECTION 6.1. [Note Policy...............................................................................31
SECTION 6.2. [Claims Under Note Policy..................................................................31
SECTION 6.3. [Preference Claims; Direction of Proceedings...............................................33
SECTION 6.4. [Surrender of Note Policy..................................................................33
ARTICLE VII THE TRANSFEROR.......................................................................................34
SECTION 7.1. Representations of the Transferor..........................................................34
SECTION 7.2. Liability of the Transferor................................................................35
SECTION 7.3. Merger or Consolidation of, or Assumption of the Obligations of, the Transferor............36
SECTION 7.4. Limitation on Liability of the Transferor and Others.......................................36
SECTION 7.5. Transferor May Own Notes...................................................................36
ARTICLE VIII THE SERVICER........................................................................................37
SECTION 8.1. Representations of Servicer................................................................37
SECTION 8.2. Indemnities of Servicer....................................................................39
SECTION 8.3. Merger or Consolidation of, or Assumption of the Obligations of, Servicer or
Back-up Servicer....................................................................41
SECTION 8.4. Limitation on Liability of Servicer and Others.............................................42
SECTION 8.5. Servicer and Back-up Servicer Not to Resign................................................42
ii
ARTICLE IX SERVICER TERMINATION EVENTS...........................................................................43
SECTION 9.1. Servicer Termination Events................................................................43
SECTION 9.2. Appointment of Successor...................................................................46
SECTION 9.3. Notification to Noteholders................................................................47
SECTION 9.4. Action Upon Certain Failures of the Servicer...............................................47
ARTICLE X THE TRUST COLLATERAL AGENT AND THE CUSTODIAN...........................................................48
SECTION 10.1. Duties of the Trust Collateral Agent and the Custodian.....................................48
SECTION 10.2. Trust Collateral Agent to Act for the Noteholders [and Note Insurer].......................51
SECTION 10.3. Certain Matters Affecting the Trust Collateral Agent and the Custodian.....................51
SECTION 10.4. Trust Collateral Agent, Back-up Servicer and Custodian Not Liable for Notes or
Receivables.........................................................................53
SECTION 10.5. Trust Collateral Agent, Back-up Servicer and Custodian May Own Notes.......................54
SECTION 10.6. Indemnity of Trust Collateral Agent, Back-up Servicer and Custodian........................54
SECTION 10.7. Eligibility Requirements for Trust Collateral Agent and the Custodian......................54
SECTION 10.8. Resignation or Removal of Trust Collateral Agent or Custodian..............................54
SECTION 10.9. Successor Trust Collateral Agent or Custodian..............................................56
SECTION 10.10. Merger or Consolidation of Trust Collateral Agent or Custodian.............................56
SECTION 10.11. Co-Trustee; Separate Trustee...............................................................57
SECTION 10.12. Representations and Warranties of Trust Collateral Agent and the Custodian.................58
SECTION 10.13. [Rights of Note Insurer to Direct Trust Collateral Agent...................................58
ARTICLE XI TERMINATION...........................................................................................59
SECTION 11.1. Termination................................................................................59
ARTICLE XII ADMINISTRATIVE DUTIES OF THE SERVICER................................................................60
SECTION 12.1. Administrative Duties......................................................................60
SECTION 12.2. Records61
SECTION 12.3. Additional Information to be Furnished to the Issuer.......................................61
SECTION 12.4. No Additional Compensation.................................................................61
ARTICLE XIII MISCELLANEOUS PROVISIONS............................................................................61
SECTION 13.1. Amendment..................................................................................61
SECTION 13.2. Protection of Title........................................................................63
SECTION 13.3. Limitation on Rights of Noteholders........................................................65
SECTION 13.4. Governing Law..............................................................................66
SECTION 13.5. Notices....................................................................................66
SECTION 13.6. Severability of Provisions.................................................................67
SECTION 13.7. Assignment to Indenture Trustee............................................................67
iii
SECTION 13.8. Limitation of Liability of Owner Trustee, Custodian and Trust Collateral Agent.............67
SECTION 13.9. Independence of the Servicer...............................................................67
SECTION 13.10. No Joint Venture...........................................................................68
SECTION 13.11. Nonpetition Covenant.......................................................................68
SECTION 13.12. Third Party Beneficiaries..................................................................68
SECTION 13.13. Consent to Jurisdiction....................................................................68
SECTION 13.14. Headings...................................................................................69
SECTION 13.15. Trial by Jury Waived.......................................................................69
SECTION 13.16. Entire Agreement...........................................................................69
SECTION 13.17. [Effect of Policy Expiration Date..........................................................70
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
SCHEDULES
Schedule A Schedule of Receivables
Schedule B Location of Receivable Files; Location of Legal Files
Schedule C Delivery Requirements
iv
SALE AND SERVICING AGREEMENT ("Agreement"), dated as of ____________, 20__,
among LONG BEACH ACCEPTANCE AUTO RECEIVABLES TRUST 20__-_, 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 [NAME OF INDENTURE TRUSTEE], a
___________________, 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; 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 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 Controlling Party in its
sole discretion.
2
ARTICLE II
CONVEYANCE OF RECEIVABLES
SECTION 2.1. Conveyance of 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 Receivables listed in Schedule A hereto, all monies received
on the Receivables after the Cutoff Date and, with respect to any
Receivables which are Precomputed Receivables, the related Payahead Amount,
and all Liquidation Proceeds and Recoveries received with respect to such
Receivables;
(ii) the security interests in the related Financed Vehicles granted
by the related Obligors pursuant to the 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 Receivable and that has been acquired by or on
behalf of the Issuer pursuant to the liquidation of such Receivable;
(v) the Purchase Agreement and the Guarantee including, without
limitation, a direct right to cause LBAC to purchase 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;
(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
Receivable and any and all other documents that LBAC keeps on file in
accordance with its customary procedures relating to the Receivables, the
related Obligors or the related Financed Vehicles;
3
(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 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
Receivables; and
(x) the proceeds of any and all of the foregoing.
SECTION 2.2. Transfer Intended as Sale; Precautionary Security Interest.
The conveyance to the Issuer of the property set forth in Section 2.1 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, the 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 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 2.3. 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 or from the failure of LBAC
to comply with its obligations pursuant to Section 5.5 of the Purchase
Agreement. The provisions of this Section 2.3 are intended to grant the Issuer a
direct right against LBAC to demand performance under the terms of the Purchase
Agreement.
SECTION 2.4. 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 Uniform Commercial Code.
SECTION 2.5. 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, 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
4
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 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 Trustee is deemed to have
relied on such representations and warranties in issuing the Notes, the
Noteholders are deemed to have relied on such representations and warranties in
purchasing the Notes and the Owner Trustee is deemed to have relied on such
representations and warranties in issuing the Certificate. Such representations
and warranties speak as of the execution and delivery of this Agreement and as
of the Closing Date 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
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, 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, 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.
(b) On or prior to the Closing Date, the Transferor shall transfer and
deliver to the Servicer with respect to each 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 Cutoff Date 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 Receivables. The Custodian shall hold the Legal Files
subject to the terms and conditions of
6
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 Receivables and hereby acknowledges
that it has determined that it has received a file for each Receivable
identified in Schedule A to this Agreement. The Custodian declares that it holds
and will continue to hold such files, 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 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 to such effect. In addition, in the case of any
Legal File which does not contain either an original Lien Certificate, an
application for a certificate of title 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 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, 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, 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
7
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 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; provided, however, that such Receivable Files may be, at the
discretion of the Servicer, in the form of electronic files or reproduced copies
of such electronic files. 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,
8
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 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
9
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 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
10
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.
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
11
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 to make all payments with respect to the Receivables to the
Lock-Box and shall make reasonable efforts to cause Obligors to make all such
payments to such Lock-Box. The Servicer will provide each Obligor with a monthly
statement in order to notify such Obligors to make payments directly to the
Lock-Box. The Servicer shall allocate collections between principal and interest
in accordance with the customary servicing procedures it follows with respect to
all comparable automotive receivables that it services for itself or others and
in accordance with the terms of this Agreement. The Servicer, for so long as
LBAC is the Servicer, may grant extensions, rebates or adjustments on a
Receivable in accordance with the customary servicing procedures it follows with
respect to all comparable automotive receivables that it services for itself
which shall not modify the original due date of the Scheduled 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
12
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 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 4.1, 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 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.
13
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 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
14
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 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
15
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 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.
16
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).
(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, 20__, 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,
17
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, 20__, 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 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 _______________ 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
18
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 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)
19
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.
(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 Payment Amount, the
Principal Payment Amount, the Interest Payment Amount, the Back-up Servicer
Fee, the Servicing Fee, the Indenture Trustee Fee, the Custodian Fee, [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
20
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 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, 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 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 ________ (with respect to the period from
and including the 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
21
by the Back-up Servicer to [the Note Insurer] simultaneously with its delivery
of such notice to the Servicer.
ARTICLE V
ACCOUNTS; PAYMENTS;
STATEMENTS TO NOTEHOLDERS
SECTION 5.1. Accounts; Lock-Box Account.
(a) The Servicer has established the Lock-Box Account as three Eligible
Accounts, one established with [Name of indenture trustee] entitled
"____________", account number ________________, one established with [Name of
bank] entitled "____________," account number __________, and one established
with [Name of indenture trustee] entitled "____________," account number
___________; 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 [Name of indenture trustee] 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 [Name of indenture
trustee], as agent for the beneficial owners of funds in the Lock-Box Account at
such time (including the Issuer), and [Name of indenture trustee] shall deposit
any such funds relating to the Receivables to such other account as shall be
identified by the Back-up Servicer or successor Servicer for deposit therein;
provided, however, that the outgoing Servicer shall not thereby be relieved of
any liability or obligations on the part of the outgoing Servicer to the
Lock-Box Bank under such Lock-Box Agreement. The outgoing Servicer shall, upon
request of the 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
22
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 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], [and
the Policy Payments Account in the name of the Issuer for the benefit of the
Noteholders]. The Collection Account, the Note 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 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). For
purposes of this paragraph, the Trust Collateral Agent will take delivery of the
Eligible Investments in accordance with Schedule C.
(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
23
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, [and (iii) 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].
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 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).
(b) Prior to each Payment Date, the Servicer shall on the related
Determination Date calculate the Available Funds, the Principal Payment Amount,
the Payment Amount, the Interest 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
24
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:
(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 made 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 such
Deficiency Claim Amount is 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 made 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 such
Deficiency Claim Amount is received by the Trust Collateral Agent from [the
Collateral Agent], after application thereof pursuant to clause (i) above];
(iii) to the 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 made pursuant to clauses (i) and (ii) above),
an amount equal to the Class A-1 Note Interest, with respect to such
Payment Date (plus (without duplication) interest on any outstanding
Interest Carryover Shortfall, if any, to the extent permitted by applicable
law, at the Note Rate, for the related Accrual Period (calculated (i) with
respect to the Class A-1 Notes, on the basis of [the actual number of days
elapsed during such Accrual Period based on a 360 day year or a 360-day
year consisting of twelve 30-day months)] [and, if the Available Funds are
insufficient to pay such amounts, the 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 such Deficiency Claim Amount is
received by the
25
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 made pursuant to clauses (i) through (iii) above) to
the Noteholders, until the Note Balance has been reduced to zero, an amount
equal to the sum of the Principal Payment Amount with respect to such
Payment Date and any 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 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 made 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 $__________ per annum, and third
to the Back-up Servicer, from the Available Funds ----- (as such Available
Funds have been reduced by payments made 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 $_______________ in payment
of such system conversion expenses; and
26
(vi) to [[the Collateral Agent], for deposit in the Spread Account]
[the Certificateholder], the remaining Available Funds (as such Available
Funds have been reduced by payments pursuant to clauses (i) through [(v)]
above ), if any, [for application in accordance with provisions of the
Spread Account Agreement].
(d) [In addition, on each Payment Date, after giving effect to the payments
specified in clauses (i) through [(vi)] 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) shall pay to the Certificateholder the
amount, if any, to be released to the Certificateholder pursuant to the terms of
the Spread Account Agreement.]
(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.]
(f) 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, nor shall it have any right to receive
any amounts, unless and until such amounts have been distributed pursuant to
Section 5.6(d) above for payment to the Certificateholder. [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).]
(g) 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
27
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 the Payment Amount, to be paid
to such 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,
among at least the following information as to the Notes, to the extent
applicable:
(i) the amount of the payment allocable to principal of the Notes;
(ii) the amount of the payment allocable to interest on the Notes;
(iii) the number of Receivables, the weighted average APR of the
Receivables, the weighted average maturity of the Receivables, the Pool
Balance, and the Pool Factor, as of the close of business on the last day
of the preceding Collection Period;
(iv) the 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 Interest Carryover Shortfall, if applicable,
and the Principal Carryover Shortfall, if applicable, on such Payment Date
and the change in such amounts from the prior Payment Date;
(vii) [the amount paid, if any, to the Noteholders under the Policy
for such Payment Date;]
(viii) [the amount paid to the Note Insurer on such Payment Date;]
(ix) [the amount in the Spread Account;]
(x) the number of Receivables and the aggregate outstanding principal
amount scheduled to be paid thereon, for which the related Obligors are
delinquent in making Scheduled 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
28
consisting of twelve 30-day months), and the percentage of the aggregate
principal amount which such delinquencies represent;
(xi) the number and the aggregate Purchase Amount of Receivables
repurchased by the Originator or purchased by the Servicer during the
related Collection Period;
(xii) the cumulative number and amount of Liquidated Receivables, the
cumulative amount of any Liquidation Proceeds and Recoveries, since the
Cutoff Date to the last day of the related Collection Period, the number
and amount of Liquidated Receivables for the related Collection Period and
the amount of Recoveries in the related Collection Period;
(xiii) [the Average Delinquency Ratio, the Cumulative Default Rate and
the Cumulative Loss Rate (as such terms are defined in the Spread Account
Agreement) for such Payment Date;]
(xiv) [whether any Trigger Event has occurred as of such Determination
Date;]
(xv) [whether any Trigger Event that may have occurred as of a prior
Determination Date is Deemed Cured (as such term is defined in the Spread
Account Agreement) or otherwise waived as of such Determination Date;]
(xvi) [whether an Insurance Agreement Event of Default has occurred;
and]
(xvii) 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.
Each amount set forth pursuant to subclauses (i), (ii), (v) and (vi) above
shall be expressed in the aggregate and 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,
20__, 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), (v)
and (vi) 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 comparable information shall be provided by the Servicer
pursuant to any requirements of the Code.
29
(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. Although the
Transferor as Certificateholder, has pledged the Spread Account to [the
Collateral Agent], 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 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.
30
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. 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.
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
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,
31
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. Notwithstanding any other provision of this Agreement, the
Noteholders are not entitled to institute proceedings directly against the Note
Insurer.]
32
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.]
33
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 Owner 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 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 Receivables and the other property conveyed to
the Issuer pursuant to Section 2.1, 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 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
34
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); 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 ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇.
(i) Transferor's Intention. The Receivables and other Transferred Property
are being transferred, with the intention of removing them from the Transferor's
estate pursuant to ▇▇▇▇▇▇▇ ▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ Bankruptcy Code, as the same
may be amended from time to time.
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.
35
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.
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
36
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 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 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.
37
(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 to be
obtained by the Servicer 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 ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇.
38
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
Certificateholder, [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, the Certificateholder 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 Issuer, 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
39
negligence 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 [NAME OF OWNER
TRUSTEE IN ITS INDIVIDUAL CAPACITY] (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, [NAME OF OWNER TRUSTEE
IN ITS INDIVIDUAL CAPACITY] 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.
(iv) 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
40
fees and expenses of counsel and expenses of litigation. If the Servicer
shall have made any indemnity payments pursuant to this Section 8.2 and the
recipient thereafter collects any of such amounts from others, the
recipient shall promptly repay such amounts to the Servicer, without
interest.
(d) In no event shall the Servicer be liable under this Agreement to any
Person for the acts or omissions of any successor Servicer, nor shall any
successor Servicer be liable under this Agreement to any Person for any acts or
omissions of a predecessor Servicer.
SECTION 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.
41
Notwithstanding anything herein to the contrary, the execution of the foregoing
agreement of assumption and compliance with clauses (i), (ii) or (iii) above
shall be conditions to the consummation of the transactions referred to in
clause (a), (b) or (c) above.
(b) Any Person (a) into which the Back-up Servicer may be merged or
consolidated, (b) which may result from any merger or consolidation to which the
Back-up Servicer shall be a party, (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
42
practicable time) and any such determination by the Servicer or Back-up
Servicer, as the case may be, shall be evidenced by an Opinion of Counsel to
such effect delivered to and satisfactory to the 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 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 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), by [the
Note Insurer or] the
43
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 Noteholders evidencing not less than 25% of the 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 or in each case any certificate, report or other writing
delivered pursuant hereto shall prove to be incorrect as of the time when
the same shall have been made (excluding, however, any representation or
warranty set forth in Section 3.2(b) of the Purchase Agreement), and 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 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 Noteholders
evidencing not less than
44
25% of the 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 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
45
Servicer, and in connection with system conversion costs, an aggregate amount
not to exceed for such conversion costs of $__________, and to the extent not so
paid, such payment shall be made pursuant to Section 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 $__________. 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, obligations or liabilities of LBAC, the
Transferor or any predecessor Servicer
46
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 Noteholders evidencing not less than
66-2/3% of the 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 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
47
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 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
48
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 Noteholders evidencing
not less than 25% of the 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 Noteholders evidencing not less than 25% of the 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-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.
49
(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 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
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
50
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 [Name of indenture trustee], 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, 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
51
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
Noteholders evidencing not less than 25% of the 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.
(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.
52
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 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 Moody's 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
53
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.
(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 Noteholders evidencing not less than 25% of the
Note Balance), the Servicer shall promptly appoint a successor Trust Collateral
Agent or Custodian, as applicable, by written
54
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 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
55
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
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
56
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, 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
57
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 [type of
entity], duly organized, validly existing, and in good standing under the
laws of the State of _______________ and have the corporate power,
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 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
58
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 Trust Assets;
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 11.1.
(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.
(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.
59
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 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:
60
(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.
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
61
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 all Holders and on all future Holders of
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 better to assure, convey and confirm
unto the property conveyed pursuant hereto;
(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 which may be inconsistent with any other provision herein or to make
any other provisions with respect to matters or questions arising under
this 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.
(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.
62
SECTION 13.2. Protection of Title.
(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 or change in its state of incorporation if, as a
result of such relocation or change, 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
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.
63
(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 2001-_ 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 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
64
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 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
Noteholders evidencing not less than 25% of the 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
65
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 Moody's under this Agreement shall be in writing, and
delivered (i) personally, (ii) by certified mail, return receipt requested,
(iii) by Federal Express or similar overnight courier service or (iv) by
telecopy, and shall be deemed to have been duly given upon receipt (a) in the
case of the Issuer, in care of the Owner Trustee at the following address:
____________, __________, Attention: (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: (201)
262-6868), 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 Moody's, at the following address: ▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention: ABS Monitoring Department and (h)
[in the case of the Note Insurer, at the following address: ________________,
Attention: ________________, Re: Long Beach Acceptance Auto Receivables Trust
20__-_.] 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
66
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 [Name of owner trustee] not in its
individual capacity but solely in its capacity as Owner Trustee of the Issuer
and in no event shall [Name of owner trustee] 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 ____________, not in its individual
capacity but solely as Back-up Servicer, Custodian and Trust Collateral Agent
and in no event shall ____________ 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.
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.
67
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 and the Certificateholder, 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 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
68
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 ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇]). 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 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.
69
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 also be
entitled to take or omit to take such action following a 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 Majorityholders 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.]
70
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:
[---------------------------],
as Back-up Servicer, Custodian and Trust
Collateral Agent
By:
------------------------------------------
Name:
Title:
LONG BEACH ACCEPTANCE AUTO
RECEIVABLES TRUST 20__-_, as Issuer
By: [Name of owner trustee], 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 __________, 20__, among Long Beach Acceptance Receivables Corp., Long
Beach Acceptance Corp., as originator and as servicer, ____________, as trust
collateral agent, custodian and back-up servicer and Long Beach Acceptance Auto
Receivables Trust 20__-_, 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 __________, 20__, among Long Beach Acceptance Receivables Corp., Long
Beach Acceptance Corp., as originator and as servicer, _______________, as trust
collateral agent, custodian and back-up servicer and Long Beach Acceptance Auto
Receivables Trust 20__-_, 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 20__-_
_____% ASSET-BACKED NOTES, CLASS A
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
D-1
DUE DATE CHANGE POLICY
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]
___________, 20__
[Name of indenture trustee]
---------------------------
---------------------------
Attention:
----------------
Attention:
-----------------
Telephone:
-----------------
Telecopy:
------------------
Ladies and Gentlemen:
Reference is made to the Sale and Servicing Agreement, dated as of
_______________, 20__ (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 20__-_, a Delaware business trust, as issuer
(the "Issuer"), ____________________, a ____________________, 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]
___________, 20__
[Name of indenture trustee]
---------------------------
---------------------------
Attention:
----------------
Attention:
-----------------
Telephone:
-----------------
Telecopy:
------------------
Ladies and Gentlemen:
Reference is made to the Sale and Servicing Agreement, dated as of __________,
20__ (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 20__-_, a Delaware business trust, as issuer (the
"Issuer"), ___________, a ___________, 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 __________,
20__ (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 20__-_, a Delaware business trust, as issuer (the
"Issuer"), ___________, a ___________, 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,
[NAME OF TRUST COLLATERAL AGENT]
By:
------------------------------
Name:
----------------------------
Title:
---------------------------
G-3
EXHIBIT G - ANNEX A to Transfer Notice
Receivable Amount of Name of
Number Receivable Receivable Borrower
---------- ---------- -------------------
G-4
SCHEDULE A
SCHEDULE OF RECEIVABLES
Schedule A-1
SCHEDULE B
Location of Receivable Files
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
Location of Legal Files
[Custodian Address]
Attention: Loan Document
Custody - Long Beach Acceptance
Auto Receivables Trust 20__-_
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