Execution Copy
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SALE AND SERVICING AGREEMENT
among
LONG BEACH ACCEPTANCE AUTO RECEIVABLES TRUST 2000-1
Issuer
LONG BEACH ACCEPTANCE RECEIVABLES CORP.
Transferor
LONG BEACH ACCEPTANCE CORP.
Originator and Servicer
and
THE CHASE MANHATTAN BANK
Back-up Servicer, Custodian and Trust Collateral Agent
Dated as of June 1, 2000
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TABLE OF CONTENTS
Page
ARTICLE I DEFINITIONS 1...........................................................................................
SECTION 1.1. Definitions.................................................................................1
SECTION 1.2. Other Definitional Provisions...............................................................1
SECTION 1.3. Calculations................................................................................2
SECTION 1.4. Action by or Consent of Noteholders.........................................................2
SECTION 1.5. Material Adverse Effect.....................................................................2
ARTICLE II CONVEYANCE OF RECEIVABLES..............................................................................3
SECTION 2.1. Conveyance of Initial Receivables...........................................................3
SECTION 2.2. Conveyance of Subsequent Receivables........................................................4
SECTION 2.3. Transfer Intended as Sale; Precautionary Security Interest..................................9
SECTION 2.4. Assignment by Transferor....................................................................9
SECTION 2.5. The Legal Files Are Not "Financial Assets".................................................10
SECTION 2.6. Further Encumbrance of Trust Assets........................................................10
ARTICLE III THE RECEIVABLES......................................................................................10
SECTION 3.1. Representations and Warranties of Transferor...............................................10
SECTION 3.2. Repurchase upon Breach of Representations and Warranties of the Transferor.................11
SECTION 3.3. Delivery of Legal Files and Receivable Files...............................................11
SECTION 3.4. Acceptance of Legal Files by Custodian.....................................................12
SECTION 3.5. Access to Receivable Files and Legal Files; Servicer's Duties with Respect to
Receivable Files; Custodian's Duties with Respect to Legal Files....................13
SECTION 3.6. Covenants of the Custodian.................................................................14
SECTION 3.7. Issuer's Certificate.......................................................................16
ARTICLE IV ADMINISTRATION AND SERVICING OF RECEIVABLES...........................................................17
SECTION 4.1. Duties of the Servicer.....................................................................17
SECTION 4.2. Collection and Allocation of Receivable Payments...........................................17
SECTION 4.3. Realization upon Receivables...............................................................18
SECTION 4.4. Physical Damage Insurance; Other Insurance.................................................19
SECTION 4.5. Maintenance of Security Interests in Financed Vehicles.....................................20
SECTION 4.6. Additional Covenants of Servicer...........................................................21
SECTION 4.7. Purchase of Receivables Upon Breach........................................................21
SECTION 4.8. Servicing Fee..............................................................................22
SECTION 4.9. Servicer's Certificate.....................................................................22
SECTION 4.10. Annual Statement as to Compliance; Notice of Default.......................................23
SECTION 4.11. Annual Independent Certified Public Accountant's Report....................................23
SECTION 4.12. Servicer Expenses..........................................................................24
SECTION 4.13. Retention and Termination of Servicer......................................................24
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SECTION 4.14. Access to Certain Documentation and Information Regarding Receivables......................24
SECTION 4.15. Verification of Servicer's Certificate.....................................................25
SECTION 4.16. Fidelity Bond..............................................................................26
SECTION 4.17. Delegation of Duties.......................................................................26
SECTION 4.18. Delivery of Back-up Tapes of Back-up Servicer..............................................27
ARTICLE V ACCOUNTS; PAYMENTS; STATEMENTS TO NOTEHOLDERS..........................................................28
SECTION 5.1. Accounts; Lock-Box Account.................................................................28
SECTION 5.2. Collections................................................................................30
SECTION 5.3. Application of Collections.................................................................30
SECTION 5.4. Intentionally Omitted......................................................................30
SECTION 5.5. Additional Deposits........................................................................30
SECTION 5.6. Payments; Policy Claims....................................................................31
SECTION 5.7. Statements to Noteholders; Tax Returns.....................................................35
SECTION 5.8. Reliance on Information from the Servicer..................................................38
SECTION 5.9. Optional Deposits by the Note Insurer......................................................38
SECTION 5.10. Spread Account.............................................................................38
SECTION 5.11. Withdrawals from Spread Account............................................................38
SECTION 5.12. Simple Interest............................................................................39
SECTION 5.13. Pre-Funding Account........................................................................39
SECTION 5.14. Capitalized Interest Account...............................................................40
SECTION 5.15. Class B Reserve Account....................................................................40
SECTION 5.16. Securities Accounts........................................................................41
ARTICLE VI THE NOTE POLICY.......................................................................................41
SECTION 6.1. Note Policy................................................................................41
SECTION 6.2. Claims Under Note Policy...................................................................41
SECTION 6.3. Preference Claims; Direction of Proceedings................................................43
SECTION 6.4. Surrender of Note Policy...................................................................44
ARTICLE VII THE TRANSFEROR.......................................................................................44
SECTION 7.1. Representations of the Transferor..........................................................44
SECTION 7.2. Liability of the Transferor................................................................46
SECTION 7.3. Merger or Consolidation of, or Assumption of the Obligations of, the Transferor............46
SECTION 7.4. Limitation on Liability of the Transferor and Others.......................................47
SECTION 7.5. Transferor May Own Notes...................................................................47
ARTICLE VIII THE SERVICER........................................................................................47
SECTION 8.1. Representations of Servicer................................................................47
SECTION 8.2. Indemnities of Servicer....................................................................49
SECTION 8.3. Merger or Consolidation of, or Assumption of the Obligations of, Servicer or
Back-up Servicer....................................................................51
SECTION 8.4. Limitation on Liability of Servicer and Others.............................................52
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SECTION 8.5. Servicer and Back-up Servicer Not to Resign................................................53
ARTICLE IX SERVICER TERMINATION EVENTS...........................................................................53
SECTION 9.1. Servicer Termination Events................................................................53
SECTION 9.2. Appointment of Successor...................................................................56
SECTION 9.3. Notification to Noteholders................................................................58
SECTION 9.4. Action Upon Certain Failures of the Servicer...............................................58
ARTICLE X THE TRUST COLLATERAL AGENT AND THE CUSTODIAN...........................................................58
SECTION 10.1. Duties of the Trust Collateral Agent and the Custodian.....................................58
SECTION 10.2. Trust Collateral Agent to Act for the Noteholders and Note Insurer.........................61
SECTION 10.3. Certain Matters Affecting the Trust Collateral Agent and the Custodian.....................62
SECTION 10.4. Trust Collateral Agent, Back-up Servicer and Custodian Not Liable for Notes or
Receivables..............................................................................63
SECTION 10.5. Trust Collateral Agent, Back-up Servicer and Custodian May Own Notes.......................64
SECTION 10.6. Indemnity of Trust Collateral Agent, Back-up Servicer and Custodian........................64
SECTION 10.7. Eligibility Requirements for Trust Collateral Agent and the Custodian......................65
SECTION 10.8. Resignation or Removal of Trust Collateral Agent or Custodian..............................65
SECTION 10.9. Successor Trust Collateral Agent or Custodian..............................................66
SECTION 10.10. Merger or Consolidation of Trust Collateral Agent or Custodian.............................67
SECTION 10.11. Co-Trustee; Separate Trustee...............................................................67
SECTION 10.12. Representations and Warranties of Trust Collateral Agent and the Custodian.................69
SECTION 10.13. Rights of Note Insurer to Direct Trust Collateral Agent....................................69
ARTICLE XI TERMINATION...........................................................................................69
SECTION 11.1. Termination................................................................................69
ARTICLE XII ADMINISTRATIVE DUTIES OF THE SERVICER................................................................70
SECTION 12.1. Administrative Duties......................................................................70
SECTION 12.2. Records....................................................................................72
SECTION 12.3. Additional Information to be Furnished to the Issuer.......................................72
SECTION 12.4. No Additional Compensation.................................................................72
ARTICLE XIII MISCELLANEOUS PROVISIONS............................................................................72
SECTION 13.1. Amendment..................................................................................72
SECTION 13.2. Protection of Title to Issuer..............................................................73
SECTION 13.3. Limitation on Rights of Noteholders........................................................75
SECTION 13.4. Governing Law..............................................................................76
SECTION 13.5. Notices....................................................................................77
SECTION 13.6. Severability of Provisions.................................................................77
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SECTION 13.7. Assignment to Indenture Trustee............................................................77
SECTION 13.8. Limitation of Liability of Owner Trustee, Custodian and Trust Collateral Agent.............78
SECTION 13.9. Independence of the Servicer...............................................................78
SECTION 13.10. No Joint Venture...........................................................................78
SECTION 13.11. Nonpetition Covenant.......................................................................78
SECTION 13.12. Third Party Beneficiaries..................................................................79
SECTION 13.13. Consent to Jurisdiction....................................................................79
SECTION 13.14. Headings...................................................................................80
SECTION 13.15. Trial by Jury Waived.......................................................................80
SECTION 13.16. Entire Agreement...........................................................................80
SECTION 13.17. Effect of Policy Expiration Date...........................................................80
ANNEXES
Annex A Defined Terms
EXHIBITS
Exhibit A-1 Form of Issuer's Certificate
Exhibit A-2 Form of Issuer's Certificate
Exhibit B-1 Form of Servicer's Certificate
Exhibit B-2 Form of Loan Master File Layout
Exhibit C Intentionally Omitted
Exhibit D Payment Deferment and Due Date Change Policies
Exhibit E Documentation Checklist
Exhibit F Form of Request for Transfer of Possession
Exhibit G Form of Custodial Letter
Exhibit H Form of Transfer Agreement
SCHEDULES
Schedule A Schedule of Receivables
Schedule B Location of Receivable Files; Location of Legal Files
Schedule C Delivery Requirements
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SALE AND SERVICING AGREEMENT ("Agreement"), dated as of June 1, 2000,
among LONG BEACH ACCEPTANCE AUTO RECEIVABLES TRUST 2000-1, a Delaware business
trust, as issuer (the "Issuer"), LONG BEACH ACCEPTANCE RECEIVABLES CORP., a
Delaware corporation, as transferor (the "Transferor"), LONG BEACH ACCEPTANCE
CORP., a Delaware corporation, as originator of the receivables ("LBAC") and as
servicer (in such capacity, the "Servicer") and THE CHASE MANHATTAN BANK, a
New
York banking corporation, as back-up servicer, custodian and trust collateral
agent, ("Back-up Servicer", "Custodian" and "Trust Collateral Agent",
respectively).
WHEREAS the Issuer desires to acquire a portfolio of receivables
arising in connection with motor vehicle retail installment sale contracts
acquired by LBAC through motor vehicle dealers;
WHEREAS the Transferor has purchased such receivables from LBAC and is
willing to convey such receivables to the Issuer;
WHEREAS the Issuer desires to acquire, from time to time, additional
receivables arising in connection with motor vehicle retail installment sale
contracts to be acquired by LBAC through motor vehicle dealers;
WHEREAS the Transferor has agreed to purchase, from time to time, such
additional receivables from LBAC and is willing to convey such receivables to
the Issuer; and
WHEREAS the Servicer is willing to service all such receivables.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants herein contained, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1. DEFINITIONS. Whenever used in this Agreement, capitalized
terms used and not otherwise defined herein shall have the meanings set forth in
Annex A attached hereto.
SECTION 1.2. OTHER DEFINITIONAL PROVISIONS.
(a) All terms defined in this Agreement (including Annex A hereto) shall
have the defined meanings when used in any instrument governed hereby and in any
certificate or other document made or delivered pursuant hereto unless otherwise
defined therein.
(b) As used in this Agreement, in any instrument governed hereby and in any
certificate or other document made or delivered pursuant hereto or thereto,
accounting terms not defined in this Agreement (including Annex A hereto) or in
any such instrument, certificate or other document, and accounting terms partly
defined in this Agreement (including Annex A hereto) or in any such instrument,
certificate or other document to the extent not defined, shall have the
respective meanings given to them under generally accepted accounting principles
as in
effect on the date of this Agreement or any such instrument, certificate or
other document, as applicable. To the extent that the definitions of accounting
terms in this Agreement (including Annex A hereto) or in any such instrument,
certificate or other document are inconsistent with the meanings of such terms
under generally accepted accounting principles, the definitions contained in
this Agreement (including Annex A hereto) or in any such instrument, certificate
or other document shall control.
(c) The words "hereof," "herein," "hereunder" and words of similar import
when used in this Agreement shall refer to this Agreement as a whole and not to
any particular provision of this Agreement; Section, Schedule and Exhibit
references contained in this Agreement are references to Sections, Schedules and
Exhibits in or to this Agreement unless otherwise specified; and the term
"including" shall mean "including without limitation."
(d) With respect to all terms in this Agreement, the singular includes the
plural and the plural the singular; words importing any gender include the other
genders; references to "writing" include printing, typing, lithography, and
other means of reproducing words in a visible form; references to agreements and
other contractual instruments include all subsequent amendments thereto or
changes therein entered into in accordance with their respective terms and not
prohibited by this Agreement; references to Persons include their permitted
successors and assigns; and the term "including" means "including without
limitation."
(e) Any agreement, instrument or statute defined or referred to herein or
in any instrument or certificate delivered in connection herewith means such
agreement, instrument or statute as from time to time amended, modified or
supplemented and includes (in the case of agreements or instruments) references
to all attachments thereto and instruments incorporated therein; references to a
Person are also to its permitted successors and assigns.
SECTION 1.3. CALCULATIONS. All calculations of the amount of the
Servicing Fee, the Back-up Servicer Fee, Custodian Fee and the Indenture Trustee
Fee shall be made on the basis of a 360-day year consisting of twelve 30-day
months. All references to the Principal Balance of a Receivable as of the last
day of a Collection Period shall refer to the close of business on such day.
SECTION 1.4. ACTION BY OR CONSENT OF NOTEHOLDERS. Whenever any
provision of this Agreement refers to action to be taken, or consented to, by
Noteholders, such provision shall be deemed to refer to Noteholders of record as
of the Record Date immediately preceding the date on which such action is to be
taken, or consent given, by Noteholders. Solely for the purposes of any action
to be taken or consented to by Noteholders, any Note registered in the name of
the Transferor, LBAC, the Servicer or any Affiliate thereof shall be deemed not
to be outstanding and shall not be taken into account in determining whether the
requisite interest necessary to effect any such action or consent has been
obtained; PROVIDED, HOWEVER, that, solely for the purpose of determining whether
the Indenture Trustee or the Trust Collateral Agent is entitled to rely upon any
such action or consent, only Notes which the Indenture Trustee or the Trust
Collateral Agent actually knows to be so owned shall be so disregarded.
SECTION 1.5. MATERIAL ADVERSE EFFECT. Whenever a determination is to be
made under this Agreement as to whether a given event, action, course of conduct
or set of facts
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or circumstances could or would have a material adverse effect on the Issuer or
Noteholders (or any similar or analogous determination), such determination
shall be made without taking into account the insurance provided by the Note
Policy. Whenever a determination is to be made under this Agreement whether a
breach of a representation, warranty or covenant has or could have a material
adverse effect on a Receivable or the interest therein of the Issuer, the
Noteholders or the Note Insurer (or any similar or analogous determination),
such determination shall be made by the Controlling Party in its sole
discretion.
ARTICLE II
CONVEYANCE OF RECEIVABLES
SECTION 2.1. CONVEYANCE OF INITIAL RECEIVABLES.
In consideration of the Issuer's delivery of the Certificate to or upon
the order of the Transferor on the Closing Date and the net proceeds from the
sale of the Notes and the other amounts to be distributed from time to time to,
or upon the order of, the Transferor in accordance with the terms of this
Agreement, the Transferor does hereby transfer, assign, set over and otherwise
convey to the Issuer, without recourse, all right, title and interest of the
Transferor in and to:
(i) the Initial Receivables listed in Schedule A hereto, all monies
received on the Initial Receivables after the Initial Cutoff Date and, with
respect to any Initial Receivables which are Precomputed Receivables, the
related Payahead Amount, and all Liquidation Proceeds and Recoveries
received with respect to such Initial Receivables;
(ii) the security interests in the related Financed Vehicles granted
by the related Obligors pursuant to the Initial Receivables and any other
interest of the Transferor in such Financed Vehicles, including, without
limitation, the certificates of title and any other evidence of ownership
with respect to such Financed Vehicles;
(iii) any proceeds from claims on any physical damage, credit life and
credit accident and health insurance policies or certificates or the VSI
Policy, if any, relating to the related Financed Vehicles or the related
Obligors, including any rebates and premiums;
(iv) property (including the right to receive future Liquidation
Proceeds) that secures an Initial Receivable and that has been acquired by
or on behalf of the Issuer pursuant to the liquidation of such Initial
Receivable;
(v) the Purchase Agreement and the Guarantee including, without
limitation, a direct right to cause LBAC to purchase Initial Receivables
from the Issuer upon the occurrence of a breach of any of the
representations and warranties contained in Section 3.2(b) of the Purchase
Agreement or the failure of LBAC to timely comply with its obligations
pursuant to Section 5.5 of the Purchase Agreement;
(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
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credit accident and health insurance policies or certificates covering
a related Obligor or Financed Vehicle or his or her obligations with
respect to such Financed Vehicle and any recourse to Dealers for any of the
foregoing;
(vii) the Legal Files and the Receivable Files related to each Initial
Receivable and any and all other documents that LBAC keeps on file in
accordance with its customary procedures relating to the Initial
Receivables, the related Obligors or the related Financed Vehicles;
(viii) all amounts and property from time to time held in or credited
to the Lock-Box Account, to the extent such amounts and property relate to
the Initial Receivables;
(ix) any proceeds from recourse against Dealers (other than any
Chargeback Obligations), including, without limitation, any Dealer Title
Guaranties with respect to the Receivables, with respect to the sale of the
Initial Receivables; and
(x) the proceeds of any and all of the foregoing.
SECTION 2.2. CONVEYANCE OF SUBSEQUENT RECEIVABLES.
(a) Subject to the conditions set forth in Section 2.2(b) and in the
related Transfer Agreement, in consideration of the Issuer's delivery to or upon
the order of the Transferor of the purchase price for the Subsequent
Receivables, in each case as described below and set forth in the related
Transfer Agreement, the Transferor shall on each Subsequent Transfer Date sell,
transfer, assign, set over and otherwise convey to the Issuer, without recourse,
all right, title and interest of the Transferor in and to:
(i) the Subsequent Receivables listed in Schedule A to the related
Transfer Agreement, all monies received on such Subsequent Receivables
after the applicable Subsequent Cut-off Date and, with respect to any such
Subsequent Receivables which are Precomputed Receivables, the related
Payahead Amount and all Liquidation Proceeds and Recoveries received with
respect to such Subsequent Receivables;
(ii) the security interests in the related Financed Vehicles granted
by the related Obligors pursuant to such Subsequent Receivables and any
other interest of the Transferor in such Financed Vehicles, including,
without limitation, the certificates of title and any other evidence of
ownership with respect to such Financed Vehicles;
(iii) any proceeds from claims on any physical damage, credit life and
credit accident and health insurance policies or certificates or the VSI
Policy, if any, relating to the related Financed Vehicles or the related
Obligors, including any rebates and premiums;
(iv) property (including the right to receive future Liquidation
Proceeds) that secures a Subsequent Receivable and that has been acquired
by or on behalf of the Issuer pursuant to the liquidation of such
Subsequent Receivable;
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(v) each Transfer Agreement, the Purchase Agreement and the
Guarantee, including, without limitation, a direct right to cause LBAC to
purchase Subsequent Receivables from the Issuer upon the occurrence of a
breach of any of the representations and warranties contained in Section 4
of the related Transfer Agreement, or the failure of LBAC to timely comply
with its obligations pursuant to Section 5.5 of the Purchase Agreement;
(vi) refunds for the costs of extended service contracts with respect
to the related Financed Vehicles, refunds of unearned premiums with respect
to credit life and credit accident and health insurance policies or
certificates covering a related Obligor or the related Financed Vehicle or
his or her obligations with respect to a related Financed Vehicle and any
recourse to Dealers for any of the foregoing;
(vii) the Legal Files and the Receivable Files related to each such
Subsequent Receivable and any and all other documents that LBAC keeps on
file in accordance with its customary procedures relating to such
Subsequent Receivables, the related Obligors or the related Financed
Vehicles;
(viii) all amounts and property from time to time held in or credited
to the Lock-Box Account, to the extent such amounts and property relate to
such Subsequent Receivables;
(ix) any proceeds from recourse against Dealers (other than any
Chargeback Obligations), including, without limitation, any Dealer Title
Guaranties with respect to such Subsequent Receivables, with respect to the
sale of such Subsequent Receivables; and
(x) the proceeds of any and all of the foregoing.
The purchase price to be paid by the Issuer on each Subsequent
Transfer Date for the Subsequent Receivables so sold shall be set forth in the
related Transfer Agreement and shall be paid from monies released from the
Pre-Funding Account pursuant to Section 5.13(b). Such purchase price shall equal
the aggregate Principal Balance of such Subsequent Receivables as of the related
Subsequent Cutoff Date.
(b) The Transferor shall transfer to the Issuer the Subsequent Receivables
and the other property and rights related thereto described in Section 2.2(a)
only upon the prior written consent of the Note Insurer acting in its sole and
absolute discretion and the satisfaction of each of the following conditions on
or prior to the related Subsequent Transfer Date:
(i) the Transferor shall have provided the Indenture Trustee, the
Trust Collateral Agent, the Note Insurer and each Rating Agency with an
Addition Notice not later than five Business Days prior to the related
Subsequent Transfer Date and shall also have provided the Indenture
Trustee, the Trust Collateral Agent and the Note Insurer with an electronic
transmission of the information on the related Subsequent Receivables set
forth in such Addition Notice in a format acceptable to each of the
Indenture Trustee, the Trust Collateral Agent and the Note Insurer no later
than such fifth Business Day prior to the related Subsequent Transfer Date;
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(ii) the Originator shall have delivered to the Transferor, a written
Subsequent Assignment, which shall include a list of the Subsequent
Receivables so transferred attached thereto as Schedule A, and a copy
thereof to the Note Insurer;
(iii) the Transferor, the Originator, the Trust and the Trust
Collateral Agent shall have executed a written Transfer Agreement, which
shall include a list of the Subsequent Receivables so transferred attached
thereto as Schedule A, and a copy thereof shall have been delivered to the
Note Insurer;
(iv) the Transferor shall have caused the Servicer to deposit in the
Collection Account all collections on or in respect of the Subsequent
Receivables (to the extent conveyed to the Trust as specified in Section
2.2(b)) received prior to the related Subsequent Transfer Date;
(v) the Transferor shall have deposited or caused to be deposited the
related Subsequent Spread Account Deposit into the Spread Account pursuant
to Section 5.10 and the related Class B Reserve Account Subsequent Deposit
into the Class B Reserve Account pursuant to Section 5.15(a);
(vi) as of each Subsequent Transfer Date, neither the Servicer nor the
Transferor will be insolvent nor will either of them be made insolvent by
the related transfer nor is any of them aware of any pending insolvency;
(vii) the Funding Period shall not have terminated;
(viii) the Transferor shall have delivered to the Indenture Trustee,
the Trust Collateral Agent, the Note Insurer and each Rating Agency an
Officer's Certificate confirming the satisfaction of each condition
precedent specified in this Section 2.2(b) and in Section 5 of the related
Transfer Agreement and certifying that:
(A) such conveyance of Subsequent Receivables by the Transferor
to the Trust on the related Subsequent Transfer Date was made in good
faith for legitimate business purposes and was not made with intent to
hinder, delay or defraud any Person to which the Transferor has been,
is or will become, on or after the related Subsequent Transfer Date,
indebted;
(B) the Transferor did not receive less than a reasonably
equivalent value in exchange for the conveyance of the Subsequent
Receivables by the Transferor to the Issuer on the related Subsequent
Transfer Date pursuant to the related Transfer Agreement;
(C) the Transferor is not insolvent on the related Subsequent
Transfer Date and will not become insolvent as a result of the
conveyance of the Subsequent Receivables by the Transferor to the
Issuer on the related Subsequent Transfer Date pursuant to the related
Transfer Agreement;
(D) the Transferor is not engaged in a business or transaction,
and is not about to engage in a business or transaction, for which any
property remaining
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with the Transferor after such business or transaction would be an
unreasonably small amount of capital; and
(E) the Transferor has not incurred, and does not believe that it
will incur, debts that would be beyond the Transferor's ability to pay
as such debts mature;
(ix) the Originator shall have delivered to the Indenture Trustee, the
Trust Collateral Agent, the Note Insurer and each Rating Agency an
Officer's Certificate confirming the satisfaction of each condition
precedent specified in this Section 2.2(b) and in Section 5 of the related
Transfer Agreement and certifying that:
(A) that such sale of Subsequent Receivables by the Originator to
the Transferor on the related Subsequent Transfer Date was made in
good faith for legitimate business purposes and was not made with
intent to hinder, delay or defraud any Person to which the Originator
has been, is or will become, on or after the related Subsequent
Transfer Date, indebted;
(B) the Originator did not receive less than a reasonably
equivalent value in exchange for the sale of the Subsequent
Receivables by the Originator to the Transferor on the related
Subsequent Transfer Date pursuant to the Purchase Agreement and the
related Subsequent Assignment;
(C) the Originator is not insolvent on the related Subsequent
Transfer Date and will not become insolvent as a result of the sale of
the Subsequent Receivables by the Originator to the Transferor on the
related Subsequent Transfer Date pursuant to the Purchase Agreement
and the related Subsequent Assignment;
(D) the Originator is not engaged in a business or transaction,
and is not about to engage in a business or transaction, for which any
property remaining with the Originator after such business or
transaction would be an unreasonably small amount of capital; and
(E) the Originator has not incurred, and does not believe that it
will incur, debts that would be beyond the Originator's ability to pay
as such debts mature;
(x) the Transferor shall have delivered to each Rating Agency, the
Note Insurer, the Indenture Trustee and the Trust Collateral Agent Opinions
of Counsel with respect to the transfer of the Subsequent Receivables
substantially in the form of the Opinions of Counsel delivered to each
Rating Agency, the Note Insurer, the Indenture Trustee and the Trust
Collateral Agent on the Closing Date regarding true sale,
non-consolidation, perfection, and other such matters satisfactory in form
and substance to each of the Note Insurer, the Indenture Trustee and the
Trust Collateral Agent in its sole discretion;
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(xi) the Transferor shall have taken all action required to maintain
the first priority perfected security interest (as defined in the UCC) of
the Issuer in the Trust Assets;
(xii) no selection procedures believed by the Transferor or the
Originator to be adverse to the interests of the Noteholders or the Note
Insurer shall have been utilized in selecting the Subsequent Receivables;
(xiii) the conveyance of the Subsequent Receivables shall not result
in a qualification, modification or withdrawal of the then-current ratings
of the Notes; provided that written confirmation of such ratings shall not
be required from the Rating Agencies;
(xiv) the Transferor shall have provided the Indenture Trustee and the
Trust Collateral Agent with a supplement to the Schedule of Receivables
setting forth the Subsequent Receivables to be transferred on such
Subsequent Transfer Date;
(xv) the Transferor shall have caused a firm of independent
accountants to deliver to the Indenture Trustee, the Trust Collateral Agent
and the Note Insurer written confirmation that the Receivables, including
the related Subsequent Receivables, meet the following criteria:
(1) the weighted average remaining term of the Receivables will
be no more than 63 months and the weighted average original term for
the Receivables will be no more than 64 months;
(2) each Receivable will have a minimum APR of 7.5%;
(3) each Receivable will have an original term of no more than 72
months;
(4) no more than 60% of the Receivables will be originated in
California;
(5) the weighted average APR for the Receivables will be greater
than or equal to 17.25%;
(6) not less than 4% of the aggregate Principal Balance of the
Receivables will be Class I Receivables, not less than 27% of the
aggregate Principal Balance of the Receivables will be Class IIA
Receivables, not less than 41% of the aggregate Principal Balance of
the Receivables will be Class IIB Receivables, no more than 21% of the
aggregate Principal Balance of the Receivables will be Class III
Receivables and not more than 1% of the aggregate Principal Balance of
the Receivables will be Class IV Receivables; and
(7) not more than 85% of the aggregate Principal Balance of the
Receivables will represent loans to finance the purchase of used
Financed Vehicles;
8
(xvi) the Transferor shall satisfy the document delivery requirements
for such Subsequent Receivables as specified in Section 3.3;
(xvii) the representations and warranties made by the Transferor and
the Servicer in Sections 7.1 and 8.1, respectively, shall be true and
correct on and as of such Subsequent Transfer Date and the representations
and warranties made by the Originator with respect to each such Subsequent
Receivable being transferred to the Trust on such Subsequent Transfer Date
in Section 4 of the related Transfer Agreement and Section 3.2(b) of the
Purchase Agreement shall be true and correct as of such Subsequent Transfer
Date;
(xviii) on or before such Subsequent Transfer Date, the Transferor
shall have provided any information reasonably requested by the Rating
Agencies, the Note Insurer, the Indenture Trustee or the Trust Collateral
Agent with respect to any Subsequent Receivables;
(xix) the Custodian shall acknowledge receipt of files which the
Transferor shall represent are the Legal Files relating to the Subsequent
Receivables and the Custodian shall have reviewed the Legal Files relating
to the Subsequent Receivables and shall have determined that it has
received a Legal File for each Receivable identified in the supplement to
the Schedule of Receivables attached as Schedule A to the related Transfer
Agreement; and
(xx) the Servicer shall deliver the loan master file and history
information and the information required to be set forth in the form
attached hereto as Exhibit B-2 as specified in Section 4.18.
SECTION 2.3. TRANSFER INTENDED AS SALE; PRECAUTIONARY SECURITY
INTEREST. Each conveyance to the Issuer of the property set forth in Section 2.1
and Section 2.2 above is intended as a sale (for certain non-tax purposes) free
and clear of all Liens, and it is intended that the property of the Issuer shall
not be part of the Transferor's estate in the event of the filing of a
bankruptcy petition by or against the Transferor under any bankruptcy law. In
the event, however, that notwithstanding the intent of LBAC, the Transferor and
the Issuer, any transfer under this Agreement is held not to be a sale, this
Agreement shall constitute a security agreement under the UCC (as defined in the
UCC as in effect in the State of
New York) and applicable law, and the
Transferor hereby grants a security interest to the Issuer in, to and under the
property described in Section 2.1 and Section 2.2 above and all proceeds
thereof, for the benefit of the Noteholders and the Note Insurer as their
interests may appear herein, for the purpose of securing the payment and
performance of the Notes and the repayment of amounts owed to the Issuer from
the Transferor.
SECTION 2.4. ASSIGNMENT BY TRANSFEROR. The Transferor does hereby
transfer, assign and otherwise convey unto the Issuer, for the benefit of the
Noteholders and the Note Insurer, its right to any recourse to LBAC resulting
from the occurrence of a breach of any of their respective representations and
warranties contained in Section 3.2 of the Purchase Agreement and Section 4 of
each Transfer Agreement or from the failure of LBAC to comply with its
obligations pursuant to Section 5.5 of the Purchase Agreement. The provisions of
this
9
Section 2.4 are intended to grant the Issuer a direct right against LBAC to
demand performance under the terms of the Purchase Agreement.
SECTION 2.5. THE LEGAL FILES ARE NOT "FINANCIAL ASSETS". The parties
(for themselves, their successors, trustees, receivers and assigns) acknowledge
and agree that the Legal Files held pursuant to this Agreement are not
"financial assets" within the meaning of ss. 8.102(a)(9) of the Texas Business &
Commerce Code (the "TexaS UCC").
SECTION 2.6. FURTHER ENCUMBRANCE OF TRUST ASSETS.
(a) Immediately upon the conveyance to the Issuer by the Transferor of any
item of the Trust Assets pursuant to Section 2.1 and Section 2.2, all right,
title and interest of the Transferor in and to such item of Trust Assets shall
terminate, and all such right, title and interest shall vest in the Issuer, in
accordance with the Trust Agreement and Sections 3802 and 3805 of the Business
Trust Statute (as defined in the Trust Agreement).
(b) Immediately upon the vesting of the Trust Assets in the Issuer, the
Issuer shall have the sole right to pledge or otherwise encumber, such Trust
Assets. Pursuant to the Indenture, the Issuer shall grant a security interest in
the Trust Assets to the Indenture Trustee to secure the repayment of the Notes.
The Certificate shall represent the beneficial ownership interest in the Trust
Assets, and the Noteholders shall be entitled to receive payments with respect
thereto as set forth herein and pursuant to the Indenture.
(c) Following the payment in full of the Notes and the release and
discharge of the Indenture, all covenants of the Issuer under Article III of the
Indenture shall, until payment in full of the Certificate, remain as covenants
of the Issuer for the benefit of the Certificateholder, enforceable by the
Certificateholder to the same extent as such covenants were enforceable by the
Noteholders prior to the discharge of the Indenture. Any rights of the Indenture
Trustee under Article III of the Indenture, following the discharge of the
Indenture, shall vest in the Certificateholder.
(d) The Trust Collateral Agent shall, at such time as there are no Notes or
Certificates outstanding, the Note Policy has expired in accordance with its
terms and all sums due to (i) the Note Insurer hereunder or pursuant to the
Insurance Agreement, (ii) the Indenture Trustee pursuant to the Indenture and
(iii) the Trust Collateral Agent pursuant to this Agreement, have been paid,
release any remaining portion of the Trust Assets to the Transferor.
ARTICLE III
THE RECEIVABLES
SECTION 3.1. REPRESENTATIONS AND WARRANTIES OF TRANSFEROR. The
Transferor hereby makes each of the representations and warranties made by LBAC
in Section 3.2(b) of the Purchase Agreement and Section 4 of each Transfer
Agreement with respect to the Receivables to the same extent as if such
representations and warranties were fully set forth herein. With respect to such
representations and warranties, the Issuer is deemed to have relied on such
representations and warranties in acquiring the Receivables, the Note Insurer
shall be deemed to have relied on such representations and warranties in issuing
the Note Policy, the Indenture
10
Trustee is deemed to have relied on such representations and warranties in
issuing the Notes and the Noteholders are deemed to have relied on such
representations and warranties in purchasing the Notes. Such representations and
warranties speak as of the execution and delivery of this Agreement and as of
the Closing Date in the case of the Initial Receivables, and as of the related
Subsequent Transfer Date in the case of the Subsequent Receivables, but shall
survive the transfer and assignment of the Receivables to the Issuer and the
subsequent pledge thereof to the Indenture Trustee pursuant to the Indenture.
SECTION 3.2. REPURCHASE UPON BREACH OF REPRESENTATIONS AND WARRANTIES
OF THE TRANSFEROR.
(a) The Transferor, the Servicer, the Note Insurer, the Custodian, the
Trust Collateral Agent or the Issuer, as the case may be, shall inform the other
parties to this Agreement promptly, by notice in writing, upon the discovery of
any breach of the Transferor's representations and warranties made pursuant to
Section 3.1. As of the last day of the second Collection Period following the
discovery by the Transferor or receipt by the Transferor of notice of such
breach, unless such breach is cured by such date, the Transferor shall have an
obligation to repurchase any Receivable in which the interests of the
Noteholders or the Note Insurer are materially and adversely affected by any
such breach as of such date. In consideration of and simultaneously with the
repurchase of the Receivable, the Transferor shall remit, or cause LBAC to
remit, to the Collection Account the Purchase Amount in the manner specified in
Section 5.5 and the Issuer shall execute such assignments and other documents
reasonably requested by such person in order to effect such repurchase. The sole
remedies of the Issuer, the Trust Collateral Agent, the Indenture Trustee or the
Noteholders with respect to a breach of representations and warranties pursuant
to Section 3.1 shall be (i) the repurchase of Receivables pursuant to this
Section, subject to the conditions contained herein, or (ii) to enforce the
obligation of LBAC to the Transferor to repurchase such Receivables pursuant to
the Purchase Agreement. Neither the Owner Trustee, the Custodian, the Trust
Collateral Agent nor the Indenture Trustee shall have a duty to conduct any
affirmative investigation as to the occurrence of any conditions requiring the
repurchase of any Receivable pursuant to this Section.
(b) Pursuant to Section 2.1 and Section 2.2, the Transferor conveys to the
Issuer all of the Transferor's right, title and interest in its rights and
benefits, but none of its obligations or burdens, under the Purchase Agreement
including the Transferor's rights under the Purchase Agreement and the delivery
requirements, representations and warranties and the cure or repurchase
obligations of LBAC thereunder. The Transferor hereby represents and warrants to
the Issuer that such assignment is valid, enforceable and effective to permit
the Issuer to enforce such obligations of LBAC and the Transferor under the
Purchase Agreement.
SECTION 3.3. DELIVERY OF LEGAL FILES AND RECEIVABLE FILES.
(a) On or prior to the Closing Date in the case of the Initial Receivables,
and on or prior to the third Business Day immediately preceding the related
Subsequent Transfer Date in the case of the Subsequent Receivables, the
Transferor shall transfer and deliver to the Custodian at the offices specified
in Schedule B to this Agreement the Legal Files with respect to each applicable
Receivable.
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(b) On or prior to the Closing Date in the case of the Initial Receivables,
and on or prior to the third Business Day immediately preceding the related
Subsequent Transfer Date in the case of the Subsequent Receivables, the
Transferor shall transfer and deliver to the Servicer with respect to each
applicable Receivable the following, either in hard copy or in an electronic
format:
(i) a copy of the fully executed original of the Receivable with a
copy of the fully executed assignment from the related Dealer to the
Originator (together with copies of any agreements modifying the
Receivable, including, without limitation, any extension agreements);
(ii) a copy of the original credit application fully executed by the
Obligor;
(iii) a copy of the Lien Certificate or Title Package, as applicable;
(iv) all other documents listed on the Documentation Checklist in
effect on the Initial Cutoff Date or the related Subsequent Cutoff Date, as
applicable, relating to such Receivable, except that the Receivable Files
shall contain a copy of those documents the original of which constitutes a
part of the Legal File; and
(v) any and all other documents that the Servicer or the Originator
shall keep on file, in accordance with its customary procedures, relating
to a Receivable, an Obligor or a Financed Vehicle.
SECTION 3.4. ACCEPTANCE OF LEGAL FILES BY CUSTODIAN. The Custodian
acknowledges receipt of files which the Transferor has represented are the Legal
Files relating to the Initial Receivables. The Custodian shall hold the Legal
Files subject to the terms and conditions of this Agreement. The Custodian may
perform its duties in respect of custody of the Legal Files by or through its
agents or employees. The Custodian has reviewed the Legal Files relating to the
Initial Receivables and has determined that it has received a file for each
Initial Receivable identified in Schedule A to this Agreement. The Custodian
declares that it holds and will continue to hold such files, any Receivable
Files relating to Subsequent Receivables and, in each case, any amendments,
replacements or supplements thereto and all other Trust Assets as custodian,
agent and bailee for the Trust Collateral Agent in trust for the use and benefit
of all present and future Noteholders. The Custodian shall review each Legal
File delivered to it no later than the Closing Date or the related Subsequent
Transfer Date, as applicable to determine whether such Legal Files contain the
documents referred to in the definition of the term "Legal File" and shall
certify on the Closing Date or the related Subsequent Transfer Date, as
applicable to such effect. In addition, in the case of any Legal File which does
not contain either an original Lien Certificate or a Dealer Title Guaranty for
the related Financed Vehicle, the Custodian shall certify that the related
Dealer is listed on the Dealer Title Addendum. If the Custodian finds during its
review of the Legal Files or at any time thereafter that a Legal File for a
Receivable has not been received or that any of the documents referred to in the
definition of the term "Legal File" are not contained in a Legal File or, if
applicable, the related Dealer is not listed on the Dealer Title Addendum, the
Custodian shall promptly inform the Trust Collateral Agent (if at such time the
Trust Collateral Agent is not also the Custodian hereunder), LBAC, the
Transferor, the Back-up Servicer and the Note Insurer promptly, in writing, of
the failure to receive a Legal
12
File with respect to such Receivable (or of the failure of any of the
aforementioned documents to be included in the Legal File or the failure of the
related Dealer to be so listed) (it being understood that the Custodian's
obligation to review the contents of any Legal File and the Dealer Title
Addendum shall be limited as set forth in the preceding sentence). Unless any
such defect with respect to such Receivable shall have been cured by the last
day of the second Collection Period following discovery thereof by the
Custodian, LBAC shall repurchase any such Receivable as of such last day. In
consideration of the purchase of the Receivable, LBAC shall remit the Purchase
Amount, in the manner specified in Section 5.5. The sole remedy of the Indenture
Trustee, the Trust Collateral Agent, the Issuer or the Noteholders with respect
to a breach pursuant to this Section 3.4 shall be to require LBAC to purchase
the Receivables pursuant to this Section 3.4. Upon receipt of the Purchase
Amount and written instructions from the Servicer, the Trust Collateral Agent
shall cause the Custodian to release to LBAC or its designee the related Legal
File and shall execute and deliver all reasonable instruments of transfer or
assignment, without recourse, as are prepared by LBAC and delivered to the Trust
Collateral Agent and are necessary to vest in LBAC or such designee the Issuer's
right, title and interest in the Receivable. The Custodian shall make a list of
Receivables for which an application for a certificate of title or a Dealer
Title Guaranty but not a Lien Certificate is included in the Legal File as of
the date of its review of the Legal Files and deliver a copy of such list to the
Servicer, the Trust Collateral Agent and the Note Insurer. On the date which is
90 days following the Closing Date, or the related Subsequent Transfer Date, as
the case may be, or, if such date is not a Business Day, on the next succeeding
Business Day, the Custodian shall inform LBAC and the other parties to this
Agreement and the Note Insurer of any Receivable for which the related Legal
File on such date does not include a Lien Certificate, and LBAC shall repurchase
any such Receivable as of the last day of the Collection Period in which the
date, which is 150 days following the Closing Date in the case of the Initial
Receivables, or the related Subsequent Transfer Date, in the case of the
Subsequent Receivables occurs, if the related Legal File does not include a Lien
Certificate as of the close of business on such 150th day. In consideration of
the purchase of such Receivable, LBAC shall remit the Purchase Amount in the
manner specified in Section 5.5. The Transferor shall have no obligation to
repurchase any Receivable upon a breach pursuant to this Section 3.4. The
Transferor shall have no liability for any action taken or omitted to be taken
by LBAC pursuant to this Section 3.4.
SECTION 3.5. ACCESS TO RECEIVABLE FILES AND LEGAL FILES; SERVICER'S
DUTIES WITH RESPECT TO RECEIVABLE FILES; CUSTODIAN'S DUTIES WITH RESPECT TO
LEGAL FILES.
(a) The Servicer and the Custodian shall, upon reasonable notice, permit
the Originator, the Trust Collateral Agent, the Transferor, the Issuer and the
Note Insurer access to the Receivable Files and the Legal Files, respectively,
at all reasonable times, upon reasonable notice and during the Servicer's or the
Custodian's normal business hours, as the case may be. In addition, the Servicer
and the Custodian shall provide such access to any Noteholder upon reasonable
notice at all reasonable times during the Servicer's or the Custodian's normal
business hours, as the case may be, in cases where the Noteholders shall be
required by applicable statutes or regulations to review such documentation;
PROVIDED, HOWEVER, that the Servicer or the Custodian shall be entitled to rely
upon an Opinion of Counsel as to such fact. In each case, such access shall be
afforded without charge but only upon reasonable request. Each Noteholder shall
be deemed to have agreed by its acceptance of a Note to use its best efforts to
hold in confidence all Confidential Information in accordance with its then
customary procedures; PROVIDED that
13
nothing herein shall prevent any Noteholder from delivering copies of any
financial statements and other documents whether or not constituting
Confidential Information, and disclosing other information, whether or not
Confidential Information, to (i) its directors, officers, employees, agents and
professional consultants, (ii) any other institutional investor that holds
Notes, (iii) any prospective institutional investor transferee in connection
with the contemplated transfer of a Note or any part thereof or participation
therein who is subject to confidentiality arrangements at least substantially
similar hereto, (iv) any governmental authority, (v) the National Association of
Insurance Commissioners or any similar organization, (vi) any nationally
recognized rating agency in connection with the rating of the Notes by such
agency or (vii) any other Person to which such delivery or disclosure may be
necessary or appropriate (a) in compliance with any applicable law, rule,
regulation or order, (b) in response to any subpoena or other legal process, (c)
in connection with any litigation to which such Noteholder is a party or (d) in
order to protect or enforce such Person's investment in any Note.
(b) Upon instruction from the Trust Collateral Agent, the Servicer shall
release any Receivable Files to the Trust Collateral Agent, the Trust Collateral
Agent's agent or the Trust Collateral Agent's designee, as the case may be, at
such place or places as the Trust Collateral Agent may designate, as soon as
practicable. The Servicer shall not be responsible for the safekeeping of such
Receivable Files following such release to the Trust Collateral Agent unless and
until such Receivable Files are returned to the Servicer.
(c) The Custodian shall, within two Business Days of the request of the
Servicer, the Trust Collateral Agent or the Note Insurer, execute such documents
and instruments as are prepared by the Servicer, the Trust Collateral Agent or
the Note Insurer and delivered to the Custodian, as the Servicer, the Trust
Collateral Agent or the Note Insurer deems necessary to permit the Servicer, in
accordance with its customary servicing procedures, to enforce the Receivable on
behalf of the Issuer and any related insurance policies (including the VSI
Policy, if any) covering the Obligor, the Receivable or Financed Vehicle. The
Custodian shall not be obligated to release any document from any Legal File
unless it receives a request for transfer of possession signed, or, if such
request is transmitted electronically, transmitted by a Servicing Officer in the
form of Exhibit F to this Agreement and a custodial letter signed, or, if such
request is transmitted electronically, transmitted by a Servicing Officer in the
form of Exhibit G to this Agreement (the "Custodial Letter"). Such Custodial
Letter shall obligate the Servicer to return such document(s) to the Custodian
when the need therefor no longer exists. At all times while any Legal File is in
the Servicer's possession, the Servicer shall hold such Legal File in trust on
behalf of the Issuer, the Indenture Trustee, the Trust Collateral Agent and the
Note Insurer.
SECTION 3.6. COVENANTS OF THE CUSTODIAN.
(a) The Custodian, either directly or by acting through an agent or nominee
(which agent shall not be the Originator or any Affiliate thereof, except as
provided in Section 10.8(e) hereof), shall hold the Legal File and all other
documents relating to any Receivable that comes into its possession for the
exclusive use and benefit of the Issuer and shall make disposition thereof only
in accordance with the provisions of this Agreement. The Custodian shall
maintain continuous custody of the Legal File and such other documents received
by it in secure facilities in accordance with customary standards for such
custody and shall not release such documents or
14
transfer such documents to any other party, including any subcustodian, except
as otherwise expressly provided herein.
(b) The Custodian covenants and warrants to the Issuer, the Trust
Collateral Agent, the Servicer and the Note Insurer that to the knowledge of its
Responsible Officers, as of the related date on which the Custodian makes the
certification required under Section 3.4 with respect to the Legal Files, it
holds no adverse interest, by way of security or otherwise, in any Receivable.
(c) Instructions to the Custodian relating to this Agreement will be
carried out by the Custodian, in accordance with the terms and provisions of
this Agreement. The Custodian is authorized to conclusively rely on any such
instruction that it believes in good faith to have been given by the Servicer
pursuant to and in accordance with the terms and provisions of this Agreement.
The Custodian may record any such instructions given by telephone, and any other
telephone discussions with respect to this Agreement.
(d) The Custodian shall not by reason of this Agreement have a fiduciary
relationship in respect of the Servicer or LBAC or any Affiliate thereof, and
nothing in this Agreement, express or implied, is intended to or shall be so
construed so as to impose upon the Custodian any obligations in respect of this
Agreement except as expressly set forth in it. The Custodian, acting as
custodian, shall have no responsibility for (i) ascertaining or taking action
with respect to exchanges, maturities, tenders or other matters relative to any
Receivables, whether or not the Custodian has or is deemed to have knowledge of
such matters or (ii) taking any necessary steps to preserve rights against any
parties with respect to any Receivables, except as otherwise expressly set forth
herein in its capacity as Custodian. The Custodian does not assume and shall
have no responsibility for, and makes no representations as to, monitoring the
value of the Receivables and the related Legal Files. The Custodian may rely
upon the validity of documents delivered to it, without investigation as to
their authority or legal effectiveness.
(e) Each of the Servicer, the Issuer, the Transferor and LBAC acknowledges
and agrees that the Custodian:
(i) shall not be responsible for any of the agreements set forth in
the Purchase Agreement or any other documents or instruments other than
this Agreement, including its Exhibits, but shall be obligated only for the
performance of such duties as are specifically set forth in this Agreement;
(ii) shall not be under any obligation to exercise any of the rights
or powers vested in it by this Agreement, or to institute, conduct, or
defend any litigation under this Agreement or in relation to this
Agreement, at the request, order or direction of any of the Noteholders or
the Note Insurer pursuant to the provisions of this Agreement, unless such
Noteholders or the Note Insurer shall have offered to the Custodian
reasonable security or indemnity in form and substance reasonably
satisfactory to the Custodian, against the costs, expenses and liabilities
that may be incurred therein or thereby;
(iii) may rely and shall be protected in acting or refraining from
acting upon any resolution, Officer's Certificate, Servicer's Certificate,
certificate of auditors, or any
15
other certificate, statement, instrument, opinion, report, notice, request,
consent, order, appraisal, bond, or other paper or document believed by it
to be genuine and to have been signed or presented by the proper party or
parties, and shall have no responsibility for determining the accuracy
thereof (except pursuant to Section 10.3(iv)); and
(iv) may consult with counsel, and any Opinion of Counsel shall be
full and complete authorization and protection in respect of any action
taken or suffered or omitted by it under this Agreement in good faith and
in accordance with such Opinion of Counsel.
(f) If the Custodian shall request instructions from the Servicer or LBAC
with respect to any act or action (including failure to act) in connection with
this Agreement, the Custodian shall be entitled to refrain from such act or
taking such action unless and until the Custodian shall have received
instructions from such Person; and the Custodian shall not incur liability to
such Person or any other Person by reason of so refraining. Without limiting the
foregoing, neither the Servicer, nor LBAC, nor any other Person shall have any
right of action whatsoever against the Custodian as a result of the Custodian's
acting or refraining from acting in accordance with the Servicer's instructions
hereunder, other than any such action arising out of the Custodian's negligence,
bad faith or willful misconduct in so acting or refraining from acting.
(g) The Custodian shall physically segregate the Legal Files for the
Receivables from all other instruments similar in nature to such Legal Files in
its possession, and shall hold the Legal Files so as to reflect the ownership of
the Issuer. The Custodian shall xxxx its books, accounts and records to reflect
such fact. At its own expense, the Custodian shall maintain at all times during
which this Agreement is in effect, fidelity insurance in amounts customary for
similar transactions. Such insurance may be maintained by the Custodian in the
form of self-insurance.
SECTION 3.7. ISSUER'S CERTIFICATE. Within five Business Days after each
Payment Date on which Receivables shall be assigned to LBAC or the Servicer, as
applicable, pursuant to this Agreement, based on amounts deposited to the
Collection Account, notices received pursuant to this Agreement and the
information contained in the Servicer's Certificate for the related Collection
Period, identifying the Receivables purchased by LBAC pursuant to Section 3.4 or
purchased by the Servicer pursuant to Section 4.7, the Issuer shall execute an
Issuer's Certificate (in the form of Exhibit A-1 or A-2, as applicable), and
shall deliver such Issuer's Certificate, accompanied by a copy of the Servicer's
Certificate for such Collection Period to LBAC or the Servicer, as the case may
be, with a copy to the Note Insurer. The Issuer's Certificate submitted with
respect to such Payment Date shall operate, as of such Payment Date, as an
assignment, without recourse, representation, or warranty, to LBAC or the
Servicer, as the case may be, of all the Issuer's right, title, and interest in
and to such repurchased Receivable, and all security and documents relating
thereto, such assignment being an assignment outright and not for security.
16
ARTICLE IV
ADMINISTRATION AND SERVICING OF RECEIVABLES
SECTION 4.1. DUTIES OF THE SERVICER. The Servicer, as agent for the
Issuer (to the extent provided herein), and in such capacity, shall manage,
service, administer and make collections on the Receivables with reasonable
care, using that degree of skill and attention customary and usual for
institutions which service motor vehicle retail installment contracts similar to
the Receivables and, to the extent more exacting, that the Servicer exercises
with respect to all comparable automotive receivables that it services for
itself or others. The Servicer's duties shall include collection and posting of
all payments, responding to inquiries of Obligors on such Receivables,
investigating delinquencies, sending payment statements to Obligors, reporting
tax information to Obligors, accounting for collections, furnishing monthly and
annual statements to the Trust Collateral Agent, the Indenture Trustee, the
Back-up Servicer and the Note Insurer with respect to payments and complying
with the terms of the Lock-Box Agreement. The Servicer shall also administer and
enforce all rights and responsibilities of the holders of the Receivables
provided for in the Dealer Agreements to the extent that such Dealer Agreements
relate to the Receivables, the Financed Vehicles or the Obligors. Without
limiting the generality of the foregoing, and subject to the servicing standards
set forth in this Agreement, the Servicer is authorized and empowered by the
Trust Collateral Agent to execute and deliver, on behalf of itself, the Issuer,
the Noteholders or any of them, any and all instruments of satisfaction or
cancellation, or partial or full release or discharge, and all other comparable
instruments, with respect to such Receivables or to the Financed Vehicles
securing such Receivables and/or the certificates of title or other evidence of
ownership with respect to such Financed Vehicles; PROVIDED, HOWEVER, that
notwithstanding the foregoing, the Servicer shall not release an Obligor from
payment of any unpaid amount under any Receivable or waive the right to collect
the unpaid balance of any Receivable from the Obligor, except (i) pursuant to an
order from a court of competent jurisdiction, (ii) in accordance with its
customary procedures or (iii) in accordance with Section 4.2. If the Servicer
shall commence a legal proceeding to enforce a Receivable, the Issuer shall
thereupon be deemed to have automatically assigned, solely for the purpose of
collection, such Receivable to the Servicer. If in any enforcement suit or legal
proceeding it shall be held that the Servicer may not enforce a Receivable on
the ground that it shall not be a real party in interest or a holder entitled to
enforce such Receivable, the Trust Collateral Agent shall, at the Servicer's
expense and direction, take steps to enforce such Receivable, including bringing
suit in its name or the name of the Noteholders. The Servicer shall prepare and
furnish and the Trust Collateral Agent shall execute, any powers of attorney and
other documents reasonably necessary or appropriate to enable the Servicer to
carry out its servicing and administrative duties hereunder.
SECTION 4.2. COLLECTION AND ALLOCATION OF RECEIVABLE PAYMENTS.
Consistent with the standards, policies and procedures required by this
Agreement, the Servicer shall make reasonable efforts to collect all payments
called for under the terms and provisions of the Receivables as and when the
same shall become due and shall follow such collection procedures as it follows
with respect to all comparable automotive receivables that it services for
itself or others; PROVIDED, HOWEVER, that the Servicer shall notify each Obligor
prior to the Closing Date in the case of the Initial Receivables, and prior to
the related Subsequent Transfer Date, in the case of the Subsequent Receivables,
to make all payments with respect to the Receivables to the Lock-Box and shall
make reasonable efforts to cause Obligors to make all such payments to such
17
Lock-Box. The Servicer will provide each Obligor with a monthly statement in
order to notify such Obligors to make payments directly to the Lock-Box. The
Servicer shall allocate collections between principal and interest in accordance
with the customary servicing procedures it follows with respect to all
comparable automotive receivables that it services for itself or others and in
accordance with the terms of this Agreement. The Servicer, for so long as LBAC
is the Servicer, may grant extensions, rebates or adjustments on a Receivable in
accordance with the customary servicing procedures it follows with respect to
all comparable automotive receivables that it services for itself which shall
not modify the original due date of the Scheduled Receivable Payments on any
Receivable other than (a) in accordance with the Payment Deferment and Due Date
Change Policies, (b) in connection with a Deficient Liquidated Receivable, (c)
with the prior written consent of the Note Insurer, with respect to any other
Liquidated Receivable or (d) as otherwise required by applicable law.
Notwithstanding anything contained herein to the contrary, the Servicer may, at
its option, repurchase up to 25 Receivables in a manner consistent with Section
5.5 hereof and any such repurchased Receivable (an "Optional Repurchase
Receivable") shall not be deemed to be a Defaulted Receivable or a Liquidated
Receivable. The Servicer shall not modify the Payment Deferment and Due Date
Change Policies without the prior written consent of the Note Insurer. The
Servicer shall notify Xxxxx'x of any modification to the Payment Deferment and
Due Date Change Policies. If the Servicer is not LBAC, the Servicer may not make
any extension on a Receivable without the prior written consent of the Note
Insurer. The Servicer may in its discretion waive any late payment charge or any
other fees that may be collected in the ordinary course of servicing a
Receivable if it would forgo collection of such amount in accordance with its
customary procedures. Notwithstanding anything to the contrary contained herein,
the Servicer (i) shall not agree to any alteration of the interest rate on any
Receivable or of the amount of any Scheduled Receivable Payment on any
Receivable, except (a) as otherwise required by applicable law, (b) with respect
to a Deficient Liquidated Receivable and (c) with the prior written consent of
the Note Insurer, with respect to any other Liquidated Receivable, and (ii)
shall not agree to any modification that would result in a material adverse
effect on a Receivable (other than a Deficient Liquidated Receivable and, with
the prior written consent of the Note Insurer, any other Liquidated Receivable)
or the interest therein of the Issuer, the Noteholders or the Note Insurer other
than a modification in accordance with the Payment Deferment and Due Date Change
Policies.
On each Business Day, the Servicer shall prepare and transmit to the
Trust Collateral Agent and the Back-up Servicer in a form acceptable to the
Trust Collateral Agent and the Back-up Servicer, a record setting forth the
aggregate amount of collections on the Receivables processed by the Servicer on
the second preceding Business Day.
SECTION 4.3. REALIZATION UPON RECEIVABLES.
(a) On behalf of the Issuer, the Noteholders and the Note Insurer, the
Servicer shall use its best efforts, consistent with the servicing procedures
set forth herein, to repossess or otherwise convert the ownership of the
Financed Vehicle securing any Receivable as to which the Servicer shall have
determined eventual payment in full is unlikely. The Servicer shall commence
efforts to repossess or otherwise convert the ownership of a Financed Vehicle
on or prior to the date that an Obligor has not paid at least 95% of a
Scheduled Receivable Payment thereon for 120 consecutive days or more;
PROVIDED, HOWEVER, that the Servicer may elect not to
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commence such efforts within such time period if in its good faith judgment it
determines either that it would be impracticable to do so or that the proceeds
ultimately recoverable with respect to such Receivable would be increased by
forbearance. The Servicer shall follow such customary and usual practices and
procedures as it shall deem necessary or advisable in its servicing of
automotive receivables, consistent with the standards of care set forth in
Section 3.1, which may include reasonable efforts to realize upon any recourse
to Dealers and selling the Financed Vehicle at public or private sale. The
foregoing shall be subject to the provision that, in any case in which the
Financed Vehicle shall have suffered damage, the Servicer shall not expend funds
in connection with the repair or the repossession of such Financed Vehicle
unless it shall determine in its discretion that such repair and/or repossession
will increase the proceeds ultimately recoverable with respect to such
Receivable by an amount greater than the amount of such expenses. All
Liquidation Proceeds and Recoveries received shall be remitted directly by the
Servicer to the Collection Account, without deposit into any intervening account
as soon as practicable, but in no event later than the second Business Day after
receipt thereof.
(i) The Servicer agrees that within 45 days from the Closing Date or
the related Subsequent Transfer Date, as applicable, it shall make such
filings and effect such notices as are necessary under Section 9-114(1) of
the
New York UCC (or comparable section of the UCC of any applicable state)
to preserve its ownership interest (or security interest, as the case may
be) in any repossessed Financed Vehicles delivered for sale to Dealers.
(ii) The Servicer agrees that at any time after 45 days from the
Closing Date there will be (a) no more than 25 repossessed Financed
Vehicles in the aggregate delivered for sale to any Dealer and (b) no more
than 50 repossessed Financed Vehicles in the aggregate delivered for the
sale to all Dealers with respect to which the actions referred to in (b)(1)
above have not been effected. The Servicer agrees that prior to delivering
additional Financed Vehicles for sale to any such Dealer, it shall make
such filings and effect such notices as are necessary under Section
9-114(1) of the
New York UCC (or comparable section of the applicable UCC)
to preserve its ownership interest (or security interest, as the case may
be) in any such repossessed Financed Vehicle.
SECTION 4.4. PHYSICAL DAMAGE INSURANCE; OTHER INSURANCE.
(a) The Servicer shall continue to maintain the VSI Policy or another
collateral protection insurance policy providing physical damage insurance
coverage to at least the same extent as the VSI Policy with respect to all
Financed Vehicles, unless the Servicer shall have received the prior written
consent of the Note Insurer allowing the Servicer to no longer maintain any of
such polices. The Servicer, in accordance with the servicing procedures and
standards set forth herein, shall require that (i) each Obligor shall have
obtained insurance covering the Financed Vehicle, as of the date of the
execution of the Receivable, insuring against loss and damage due to fire,
theft, transportation, collision and other risks generally covered by
comprehensive and collision coverage and each Receivable requires the Obligor to
maintain such physical loss and damage insurance naming LBAC and its successors
and assigns as an additional insured, (ii) each Receivable that finances the
cost of premiums for credit life and credit accident and health insurance is
covered by an insurance policy or certificate naming LBAC as policyholder
(creditor) and (iii) as to each Receivable that finances the cost of an
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extended service contract, the respective Financed Vehicle which secures the
Receivable is covered by an extended service contract.
(b) To the extent applicable, the Servicer shall not take any action which
would result in noncoverage under any of the insurance policies referred to in
Section 4.4(a) which, but for the actions of the Servicer, would have been
covered thereunder. The Servicer, on behalf of the Trust Collateral Agent, shall
take such reasonable action as shall be necessary to permit recovery under any
of the foregoing insurance policies. Any amounts collected by the Servicer under
any of the foregoing insurance policies shall be deposited in the Collection
Account pursuant to Section 5.2. In the event of the cancellation or non-renewal
of the insurance referred to in Section 4.4(a)(i) above with respect to any
Financed Vehicle, the Servicer will endeavor, in accordance with its customary
servicing standards and procedures, to cause the related Obligor to obtain a
replacement insurance policy. In no event shall the Servicer be required to
force place insurance on a Financed Vehicle.
SECTION 4.5. MAINTENANCE OF SECURITY INTERESTS IN FINANCED VEHICLES.
(a) Consistent with the policies and procedures required by this Agreement,
the Servicer shall take such steps as are necessary to maintain perfection of
the security interest created in the name of LBAC by each Receivable in the
related Financed Vehicle, including, but not limited to, obtaining the execution
by the Obligors and the recording, registering, filing, re-recording,
re-registering and refiling of all security agreements, financing statements and
continuation statements or instruments as are necessary to maintain the security
interest granted by Obligors under the respective Receivables. The Trust
Collateral Agent hereby authorizes the Servicer to take such steps as are
necessary to re-perfect or continue the perfection of such security interest on
behalf of the Issuer in the event of the relocation of a Financed Vehicle or for
any other reason.
(b) Upon the occurrence of an Insurance Agreement Event of Default, the
Note Insurer may (so long as a Note Insurer Default shall not have occurred and
be continuing) instruct the Trust Collateral Agent and the Servicer to take or
cause to be taken, or, if a Note Insurer Default shall have occurred and be
continuing, upon the occurrence of a Servicer Termination Event, either the
Trust Collateral Agent or the Trust Collateral Agent acting at the direction of
the Majorityholders shall direct the Servicer to take and the Servicer shall
take or cause to be taken such action as may, in the opinion of counsel to the
Note Insurer (or, if a Note Insurer Default shall have occurred and be
continuing, the Trust Collateral Agent), which opinion shall not be an expense
of the Note Insurer or the Trust Collateral Agent (as applicable), be necessary
to perfect or reperfect the security interests in the Financed Vehicles securing
the Receivables in the name of the Trust Collateral Agent on behalf of the
Issuer by amending the title documents of such Financed Vehicles to reflect the
security interest of the Trust Collateral Agent in the related Financed Vehicles
or by such other reasonable means as may, in the opinion of counsel to the Note
Insurer or the Trust Collateral Agent (as applicable), which opinion shall not
be an expense of the Note Insurer or the Trust Collateral Agent, be necessary or
prudent. The Servicer hereby agrees to pay all expenses related to such
perfection or reperfection and to take all action necessary therefor. In
addition, prior to the occurrence of an Insurance Agreement Event of Default,
the Note Insurer may (unless a Note Insurer Default shall have occurred and be
continuing) instruct the Trust Collateral Agent and the Servicer to take or
cause to be taken such
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action as may, in the opinion of counsel to the Note Insurer, be necessary to
perfect or reperfect the security interest in the Financed Vehicles securing the
Receivables in the name of the Trust Collateral Agent on behalf of the Issuer,
including by amending the title documents of such Financed Vehicles to reflect
the security interest of the Trust Collateral Agent in the related Financed
Vehicle or by such other reasonable means as may, in the opinion of counsel to
the Note Insurer, be necessary or prudent; PROVIDED, HOWEVER, that if the Note
Insurer requests (unless a Note Insurer Default shall have occurred and be
continuing) that the title documents be amended prior to the occurrence of an
Insurance Agreement Event of Default, the out-of-pocket expenses of the Servicer
or the Trust Collateral Agent in connection with such action shall be reimbursed
to the Servicer or the Trust Collateral Agent, as applicable, by the Note
Insurer.
In addition to the foregoing, in the event any of the Servicer
Termination Events described in Section 9.1(iii) or (iv) shall have occurred, or
in the event LBAC shall have been removed or replaced as Servicer pursuant to
Section 8.3, Section 8.5, or otherwise pursuant to Section 9.1, then LBAC and/or
the Servicer shall immediately cause each Lien Certificate for a Financed
Vehicle to be marked to reflect the security interest of the Trust Collateral
Agent in the Financed Vehicle at the expense of LBAC.
The Servicer hereby makes, constitutes and appoints the Trust
Collateral Agent acting through its duly appointed officers or any of them, its
true and lawful attorney, for it and in its name and on its behalf, for the sole
and exclusive purpose of authorizing said attorney to execute and deliver as
attorney-in-fact or otherwise, any and all documents and other instruments and
to do or accomplish all other acts or things necessary or appropriate to show
the Trust Collateral Agent as lienholder or secured party on the related Lien
Certificates relating to a Financed Vehicle.
SECTION 4.6. ADDITIONAL COVENANTS OF SERVICER. The Servicer hereby
makes the following covenants to the other parties hereto and the Note Insurer
on which the Trust Collateral Agent shall rely in accepting the Receivables in
trust and on which the Note Insurer shall rely in issuing the Note Policy: (i)
the Servicer shall not release the Financed Vehicle securing any Receivable from
the security interest granted by such Receivable in whole or in part except in
the event of payment in full by the Obligor thereunder or repossession or other
liquidation of such Financed Vehicle, (ii) the Servicer shall not impair the
rights of the Noteholders, the Issuer or the Note Insurer in such Receivables,
(iii) the Servicer shall not modify a Receivable, except in accordance with
Section 4.2, and (iv) the Servicer shall service the Receivables as required by
the terms of this Agreement and in material compliance with its current
servicing procedures for servicing of all its other comparable motor vehicle
receivables.
SECTION 4.7. PURCHASE OF RECEIVABLES UPON BREACH. The Servicer, the
Transferor, the Issuer, the Custodian or the Trust Collateral Agent shall inform
the other parties hereto and the Note Insurer promptly, in writing, upon the
discovery by the Servicer, the Transferor, the Issuer or a Responsible Officer
of the Trust Collateral Agent or the Custodian, as the case may be, of any
breach of the provisions of Section 4.2 relating to modifications of the
Receivables, or any breach of Sections 4.4, 4.5 or 4.6; PROVIDED, HOWEVER, that
the failure to give such notice shall not affect any obligation of the Servicer
hereunder. Unless the breach shall have been cured by the last day of the second
Collection Period following such discovery by or notice to the Servicer of such
breach, the Servicer shall purchase any Receivable with respect to
21
which such breach has a material adverse effect on such Receivable or the
interest therein of the Issuer, the Noteholders or the Note Insurer. In
consideration of the purchase of such Receivable, the Servicer shall remit the
Purchase Amount in the manner specified in Section 5.5. For purposes of this
Section, the Purchase Amount shall, whenever applicable, consist in part of a
release by the Servicer of all rights to receive Simple Interest Excess with
respect to the related Receivable. The sole remedy of the Trust Collateral
Agent, the Issuer, the Note Insurer or the Noteholders with respect to a breach
of the provisions of Section 4.2 relating to modifications of the Receivables or
any breach of Sections 4.4, 4.5 or 4.6 shall be to require the Servicer to
repurchase Receivables pursuant to this Section 4.7; PROVIDED, HOWEVER, that the
Servicer shall indemnify the Trust Collateral Agent, the Indenture Trustee, the
Collateral Agent, the Back-up Servicer, the Custodian, the Transferor, the Note
Insurer, the Issuer and the Noteholders and each of their respective officers,
employees, directors, agents and representatives against all costs, expenses,
losses, damages, claims and liabilities, including reasonable fees and expenses
of counsel, which may be asserted against or incurred by any of them as a result
of third party claims arising out of the events or facts giving rise to such
breach. The Transferor shall have no obligation to repurchase the Receivables
upon a breach of the provisions of Section 4.2 relating to modifications of the
Receivables, or any breach of Sections 4.4, 4.5 or 4.6. The Transferor shall
have no liability for actions taken or omitted to be taken by the Servicer
pursuant to this Section 4.7.
SECTION 4.8. SERVICING FEE. The Servicing Fee for the initial Payment
Date shall equal the product of (a) one twelfth of the Servicing Fee Rate and
(b) the Original Pool Balance. Thereafter, the Servicing Fee for a Payment Date
shall equal the product of (i) one-twelfth of the Servicing Fee Rate and (ii)
the Pool Balance as of the last day of the second preceding Collection Period.
The Servicing Fee shall in addition include all late fees, prepayment charges
including, in the case of a Precomputed Receivable that is prepaid in full, to
the extent not required by law to be remitted to the related Obligor, the
difference between the amounts received upon prepayment in full of such
Precomputed Receivable and the then outstanding Principal Balance of such
Precomputed Receivable and accrued interest thereon (calculated pursuant to the
Simple Interest Method) and other administrative fees or similar charges allowed
by applicable law with respect to Receivables, collected (from whatever source)
on the Receivables.
SECTION 4.9. SERVICER'S CERTIFICATE.
(a) By 10:00 a.m.,
New York City time, on each Determination Date, the
Servicer shall deliver to the Issuer, the Trust Collateral Agent, the Indenture
Trustee, the Back-up Servicer, the Collateral Agent, the Transferor, the Note
Insurer, GCFP and the Rating Agencies, a Servicer's Certificate containing all
information necessary to make the payments pursuant to Section 5.6 (including,
if required, withdrawals from the Spread Account), for the Collection Period
preceding the date of such Servicer's Certificate and all information necessary
for the Trust Collateral Agent to send statements to Noteholders and the Note
Insurer pursuant to Section 5.7. Receivables to be purchased by the Servicer or
to be purchased by LBAC shall be identified by the Servicer by account number
with respect to such Receivable (as specified in the Schedule of Receivables).
22
(b) In addition to the information required by Section 4.9(a), the Servicer
shall include in the copy of the Servicer's Certificate delivered to the Note
Insurer (i) the Average Delinquency Ratio, the Cumulative Default Rate, and the
Cumulative Loss Rate (as such terms are defined in the Spread Account
Agreement), (ii) whether any Trigger Event (as such term is defined in the
Spread Account Agreement) has occurred as of such Determination Date, (iii)
whether any Trigger Event that may have occurred as of a prior Determination
Date is Deemed Cured (as defined in the Spread Account Agreement) as of such
Determination Date and (iv) whether to the knowledge of the Servicer an
Insurance Agreement Event of Default has occurred. The Servicer shall in
addition give notice of the occurrence of any Trigger Event or any Insurance
Agreement Event of Default to each Rating Agency.
SECTION 4.10. ANNUAL STATEMENT AS TO COMPLIANCE; NOTICE OF DEFAULT.
(a) The Servicer shall deliver to the Issuer, the Trust Collateral Agent,
the Indenture Trustee, the Back-up Servicer, the Collateral Agent, the
Transferor, the Issuer and the Note Insurer, on or before March 31 of each year
beginning March 31, 2001, an Officer's Certificate, dated as of December 31 of
the preceding calendar year, stating that (i) a review of the activities of the
Servicer during such preceding calendar year and of its performance under this
Agreement has been made under such officer's supervision and (ii) to the best of
such officer's knowledge, based on such review, the Servicer has fulfilled all
its obligations under this Agreement throughout such year, or, if there has been
a default in the fulfillment of any such obligation, specifying each such
default known to such officer and the nature and status thereof. The Trust
Collateral Agent shall send a copy of such certificate to the Rating Agencies.
(b) The Servicer shall deliver to the Issuer, the Trust Collateral Agent,
the Indenture Trustee, the Back-up Servicer, the Collateral Agent, the
Transferor, the Issuer, the Note Insurer and the Rating Agencies, promptly after
having obtained knowledge thereof, but in no event later than two (2) Business
Days after having obtained such knowledge, written notice in an Officer's
Certificate of any event which with the giving of notice or lapse of time, or
both, would become a Servicer Termination Event under Section 9.1.
SECTION 4.11. ANNUAL INDEPENDENT CERTIFIED PUBLIC ACCOUNTANT'S REPORT.
The Servicer shall cause a firm of nationally recognized independent certified
public accountants, who may also render other services to the Servicer or to the
Transferor, to deliver to the Issuer, the Trust Collateral Agent, the Indenture
Trustee, the Back-up Servicer, the Collateral Agent, the Issuer, the
Noteholders, the Note Insurer and each Rating Agency on or before April 30 of
each year beginning April 30, 2001, a report dated as of December 31 of the
preceding calendar year and reviewing the Servicer's activities during such
preceding calendar year, addressed to the Board of Directors of the Servicer,
and to the Trust Collateral Agent, the Back-up Servicer, the Collateral Agent,
the Issuer, the Transferor and the Note Insurer, to the effect that such firm
has audited the financial statements of the Servicer and issued its report
therefor and that such audit (a) was made in accordance with generally accepted
auditing standards, and accordingly included such tests of the accounting
records and such other auditing procedures as such firm considered necessary in
the circumstances; (b) included tests relating to automotive loans serviced for
others in accordance with the requirements of the Uniform Single Attestation
Program for Mortgage Bankers (the "Program"), to the extent the procedures in
the Program are applicable to the servicing obligations set forth in this
Agreement; (c) included an examination of
23
the delinquency and loss statistics relating to the Servicer's portfolio of
automobile, van, sport utility vehicle and light duty truck installment sales
contracts; and (d) except as described in the report, disclosed no exceptions or
errors in the records relating to automobile, van, sport utility vehicle and
light duty truck loans serviced for others that, in the firm's opinion, the
Program requires such firm to report. The accountant's report shall further
state that (1) a review in accordance with agreed upon procedures was made of
three randomly selected Servicer's Certificates; (2) except as disclosed in the
report, no exceptions or errors in the Servicer's Certificates were found; and
(3) the delinquency and loss information relating to the Receivables contained
in the Servicer's Certificates were found to be accurate.
The report will also indicate that the firm is independent of the
Servicer within the meaning of the Code of Professional Ethics of the American
Institute of Certified Public Accountants.
SECTION 4.12. SERVICER EXPENSES. The Servicer shall be required to pay
all expenses incurred by it in connection with its activities under this
Agreement (including taxes imposed on the Servicer, expenses incurred by the
Servicer in connection with payments and reports to Noteholders, the Trust
Collateral Agent and the Note Insurer and all other fees and expenses of the
Issuer including taxes levied or assessed against the Issuer, and claims against
the Issuer in respect of indemnification not expressly stated under this
agreement to be for the account of the Issuer).
SECTION 4.13. RETENTION AND TERMINATION OF SERVICER. The Servicer
hereby covenants and agrees to act as such under this Agreement for an initial
term, commencing on the Closing Date and ending on September 30, 2000, which
term shall be extendible by the Note Insurer for successive quarterly terms
ending on each successive December 31, March 31, June 30 and September 30 (or,
pursuant to revocable written standing instructions from time to time to the
Servicer and the Trust Collateral Agent, for any specified number of terms
greater than one), until the termination of the Issuer. Each such notice
(including each notice pursuant to standing instructions, which shall be deemed
delivered at the end of successive quarterly terms for so long as such
instructions are in effect) (a "Servicer Extension Notice") shall be delivered
by the Note Insurer to the Trust Collateral Agent and the Servicer. The Servicer
hereby agrees that, as of the date hereof and upon its receipt of any such
Servicer Extension Notice, the Servicer shall become bound, for the initial term
beginning on the date hereof and for the duration of the term covered by such
Servicer Extension Notice, to continue as the Servicer subject to and in
accordance with the other provisions of this Agreement. Until such time as a
Note Insurer Default shall have occurred and be continuing, the Trust Collateral
Agent agrees that if as of the fifteenth day prior to the last day of any term
of the Servicer, the Trust Collateral Agent shall not have received any Servicer
Extension Notice from the Note Insurer, the Trust Collateral Agent will, within
five days thereafter, give written notice of such non-receipt to the Note
Insurer, the Back-up Servicer (or any alternate successor servicer appointed by
the Note Insurer pursuant to Section 8.5) and the Servicer and the Servicer's
terms shall not be extended unless a Servicer Extension Notice is received on or
before the last day of such term.
SECTION 4.14. ACCESS TO CERTAIN DOCUMENTATION AND INFORMATION REGARDING
RECEIVABLES. The Servicer shall provide to representatives of the Indenture
Trustee, the Trust Collateral Agent, the Collateral Agent, the Back-up Servicer,
the Transferor, the Issuer and the
24
Note Insurer reasonable access to documentation and computer systems and
information regarding the Receivables and shall provide such access to
Noteholders in such cases where the Noteholders are required by applicable law
or regulation to review such documentation. In each case, such access shall be
afforded without charge but only upon reasonable request and during normal
business hours. Nothing in this Section 4.14 shall derogate from the obligation
of the Servicer to observe any applicable law prohibiting disclosure of
information regarding the Obligors, and the failure of the Servicer to provide
access as provided in this Section 4.14 as a result of such obligation shall not
constitute a breach of this Section 4.14.
SECTION 4.15. VERIFICATION OF SERVICER'S CERTIFICATE.
(a) On or before the fifth Business Day of each month, the Servicer will
deliver to the Trust Collateral Agent and the Back-up Servicer a computer
diskette (or other electronic transmission) in a format acceptable to the Trust
Collateral Agent and the Back-up Servicer containing such information with
respect to the Receivables as of the close of business on the last day of the
preceding Collection Period as is necessary for preparation of the Servicer's
Certificate. The Back-up Servicer shall use such computer diskette (or other
electronic transmission) to verify the information specified in Section
4.15(b)(iii) contained in the Servicer's Certificate delivered by the Servicer,
and the Back-up Servicer shall certify to the Note Insurer that it has verified
the Servicer's Certificate in accordance with this Section 4.15 and shall notify
the Servicer, the Note Insurer and the Trust Collateral Agent of any
discrepancies, in each case, on or before the related Deficiency Claim Date. In
the event that the Back-up Servicer reports any discrepancies, the Servicer and
the Back-up Servicer shall attempt to reconcile such discrepancies prior to the
related Deficiency Claim Date, but in the absence of a reconciliation, the
Servicer's Certificate shall control for the purpose of calculations and
payments with respect to the related Payment Date. In the event that the Back-up
Servicer and the Servicer are unable to reconcile discrepancies with respect to
a Servicer's Certificate by the related Payment Date, (i) the Back-up Servicer
will notify the Note Insurer and the Trust Collateral Agent, and (ii) the
Servicer shall cause a firm of independent certified public accountants, at the
Servicer's expense, to audit the Servicer's Certificate and, prior to the fifth
calendar day of the following month, reconcile the discrepancies. The effect, if
any, of such reconciliation shall be reflected in the Servicer's Certificate for
such next succeeding Determination Date. In addition, the Servicer shall, if so
requested by the Note Insurer (unless a Note Insurer Default shall have occurred
and be continuing) deliver to the Back-up Servicer (i) within five (5) Business
Days of demand therefor a computer tape containing as of the close of business
on the date of demand all of the data maintained by the Servicer in computer
format in connection with servicing the Receivables and (ii) within fifteen (15)
Business Days of demand therefor a copy of such other information as is
reasonably requested by the Note Insurer for the purpose of reconciling such
discrepancies. Other than the duties specifically set forth in this Agreement,
the Back-up Servicer shall have no obligations hereunder, including, without
limitation, to supervise, verify, monitor or administer the performance of the
Servicer. The Back-up Servicer shall have no liability for any actions taken or
omitted by the Servicer. The duties and obligations of the Back-up Servicer
shall be determined solely by the express provisions of this Agreement and no
implied covenants or obligations shall be read into this Agreement against the
Back-up Servicer.
25
(b) The Back-up Servicer shall review each Servicer's Certificate delivered
pursuant to Section 4.15(a) and shall, based upon the information provided from
the Servicer under Section 4.15(a):
(i) confirm that such Servicer's Certificate is complete on its face;
(ii) load the computer diskette (which shall be in a format acceptable
to the Back-up Servicer) received from the Servicer pursuant to Section
4.15(a) hereof, confirm that such computer diskette is in a readable form
and calculate the Principal Balance of each Receivable based on the
Principal Balance of such Receivable as of the preceding Payment Date (as
set forth in such Servicer's Certificate) and the current principal payment
for such Receivable (as set forth in such Servicer's Certificate) and
compare such calculation to that set forth in the Servicer's Certificate
(and give notice of any discrepancy to the Note Insurer); and
(iii) recalculate the Available Funds, the Class A Payment Amount, the
Class A Principal Payment Amount, the Class A Interest Payment Amount, the
Class B Payment Amount, the Class B Interest Payment Amount, the Class B
Principal Payment Amount, the Back-up Servicer Fee, the Servicing Fee, the
Indenture Trustee Fee, the Custodian Fee, the amount on deposit in the
Class B Reserve Account, the amount on deposit in the Spread Account and
the Premium in the Servicer's Certificate based solely on the balances and
calculations specifically set forth in the Servicer's Certificate, compare
such calculations to those set forth in the Servicer's Certificate. To the
extent of any discrepancy, the Back-up Servicer shall give notice thereof
to the Note Insurer. The Back-up Servicer's obligation shall be limited to
the mathematical recalculation of the amounts set forth in this Section
4.15(b)(iii) based on the Servicer's Certificate.
SECTION 4.16. FIDELITY BOND. The Servicer shall maintain a fidelity
bond in such form and amount as is customary for entities acting as custodian of
funds and documents in respect of consumer contracts on behalf of institutional
investors.
SECTION 4.17. DELEGATION OF DUTIES. The Servicer may at any time
delegate duties under this Agreement to sub-contractors who are in the business
of servicing automotive receivables with the prior written consent of the
Controlling Party; PROVIDED, HOWEVER, that no such delegation or sub-contracting
of duties by the Servicer shall relieve the Servicer of its responsibility with
respect to such duties. In the event the Servicer shall for any reason no longer
be the servicer of the Receivables (including by reason of a Servicer
Termination Event), the Back-up Servicer, its designee or any successor Servicer
shall assume all of the rights and obligations of the predecessor Servicer under
one or more subservicing agreements that may have been entered into by the
predecessor Servicer by giving notice of such assumption to the related
subservicer or subservicers within ten (10) Business Days of the termination of
the Servicer as servicer of the Receivables; PROVIDED, HOWEVER, that the Back-up
Servicer may elect to terminate a subservicing agreement with the prior written
consent of the Note Insurer, so long as no Note Insurer Default is then
continuing. If the Back-up Servicer does not elect to assume 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
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therein and to have replaced the predecessor Servicer as a party to the
subservicing agreement to the same extent as if the subservicing agreement had
been assigned to the assuming party except that the predecessor Servicer and the
subservicer, if any, shall not thereby be relieved of any liability or
obligations accrued up to the date of the replacement of the Servicer under the
subservicing agreement and the subservicer, if any, shall not be relieved of any
liability or obligation to the predecessor Servicer that survives the assignment
or termination of the subservicing agreement. The Back-up Servicer shall notify
each Rating Agency and the Note Insurer if any subservicing agreement is assumed
by the Back-up Servicer, its designee or the successor Servicer. The predecessor
Servicer shall, upon request of the Trust Collateral Agent, the Back-up Servicer
or any successor Servicer, but at the expense of the predecessor Servicer,
deliver to the assuming party all documents and records relating to the
subservicing agreement and the Receivables then being serviced and an accounting
of amounts collected and held by it and otherwise use its reasonable efforts to
effect the orderly and efficient transfer of the subservicing agreement to the
assuming party.
SECTION 4.18. DELIVERY OF BACK-UP TAPES OF BACK-UP SERVICER.
(a) In addition to the information to be delivered by the Servicer to the
Back-up Servicer on or before the fifth Business Day of each month pursuant to
Section 4.15(a), the Servicer shall deliver to the Back-up Servicer, or its
designated agent, a computer diskette (or other electronic transmission), in a
format acceptable to the Back-up Servicer or its designated agent, as the case
may be, with the loan master file and history information in the form attached
hereto as Exhibit B-2 on or prior to the Closing Date in the case of the Initial
Receivables, and on or prior to the related Subsequent Transfer Date in the case
of Subsequent Receivables, which loan master file and history information shall
be sufficiently detailed to enable the Back-up Servicer to maintain records
sufficient to assume the role of successor Servicer pursuant to this Agreement.
(b) In addition to the information required to be delivered by the Servicer
to the Back-up Servicer or its designated agent on or before the fifth Business
Day of each month pursuant to Section 4.15(a) and on or prior to the Closing
Date and each Subsequent Transfer Date pursuant to Section 4.18(a), the Servicer
shall deliver the loan master file and history information to the Back-up
Servicer or its designated agent on the Determination Date occurring in December
2000 (with respect to the period from and including the Initial Cutoff Date to
the last day of the related Collection Period) and on the Determination Date
occurring every six months thereafter in the form attached hereto as Exhibit B-2
in writing and on a computer diskette (or other electronic transmission) in a
format acceptable to the Back-up Servicer or its designated agent, as the case
may be, and as at such other times as may be requested by the Note Insurer or
the Back-up Servicer upon prior written notice to the Servicer, provided that
the Back-up Servicer shall deliver a copy of any such notice by the Back-up
Servicer to the Note Insurer simultaneously with its delivery of such notice to
the Servicer.
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ARTICLE V
ACCOUNTS; PAYMENTS;
STATEMENTS TO NOTEHOLDERS
SECTION 5.1. ACCOUNTS; LOCK-BOX ACCOUNT.
(a) The Servicer has established the Lock-Box Account as two Eligible
Accounts, one established with Chase Texas entitled "Long Beach Acceptance
Corp., Chase Texas, Agent Account--Auto Loan Programs," account number
00100916395, and one established with Bank of America National Trust and Savings
Association entitled "Long Beach Acceptance Corp., Chase Texas, Agent
Account--Auto Loan Programs," account number 1457202900; PROVIDED, that the
Servicer, with the prior written consent of the Note Insurer, may from time to
time (a) establish additional or substitute Lock-Box Accounts, each of which
shall be an Eligible Account, and (b) close or terminate the use of any of the
aforementioned accounts or any subsequently established accounts, each of which
accounts, at such time, shall no longer be deemed to be a Lock-Box Account;
PROVIDED, FURTHER, that pursuant to the Lock-Box Agreement, the Lock-Box
Processor and no other person, save the Trust Collateral Agent or the Servicer,
has authority to direct disposition of funds related to the Receivables on
deposit in the Lock-Box Account consistent with the provisions of this Agreement
and the Lock-Box Agreement. The Trust Collateral Agent shall have no liability
or responsibility with respect to the Lock-Box Processor's or the Servicer's
directions or activities as set forth in the preceding sentence. The Lock-Box
Account shall be established pursuant to and maintained in accordance with the
Lock-Box Agreement and shall be a demand deposit account which shall at all
times be an Eligible Account, initially established and maintained with Chase
Manhattan or, at the request of the Note Insurer, an Eligible Account satisfying
clause (i) of the definition thereof. The Servicer has established and shall
maintain the Lock-Box at a United States Post Office Branch. Notwithstanding the
Lock-Box Agreement or any of the provisions of this Agreement relating to the
Lock-Box and the Lock-Box Agreement, the Servicer shall remain obligated and
liable to the Trust Collateral Agent and the Noteholders for servicing and
administering the Receivables and the other Trust Assets in accordance with
provisions of this Agreement without diminution of such obligation or liability
by virtue thereof.
In the event the Servicer shall for any reason no longer be acting as
such, the Lock-Box Agreement shall terminate in accordance with its terms and
funds on deposit in the Lock-Box Account shall be distributed by Chase
Manhattan, as agent for the beneficial owners of funds in the Lock-Box Account
at such time (including the Issuer), and Chase Manhattan shall deposit any such
funds relating to the Receivables to such other account as shall be identified
by the Back-up Servicer or successor Servicer for deposit therein; PROVIDED,
HOWEVER, that the outgoing Servicer shall not thereby be relieved of any
liability or obligations on the part of the outgoing Servicer to the Lock-Box
Bank under such Lock-Box Agreement. The outgoing Servicer shall, upon request of
the Trust Collateral Agent, but at the expense of the outgoing Servicer, deliver
to the successor Servicer all documents and records relating to the Lock-Box
Agreement and an accounting of amounts collected and held in the Lock-Box
Account or held by the Lock-Box Processor in respect of the Receivables and
otherwise use its best efforts to effect the orderly and efficient transfer of
any Lock-Box Agreement to the successor Servicer. In the event that the Lock-Box
Account fails at any time to qualify as an Eligible Account, the Servicer, at
its expense, shall cause the Lock-Box Bank to deliver, at the direction of the
Controlling Party
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to the Trust Collateral Agent or a successor Lock-Box Bank, all documents and
records relating to the Receivables and all amounts held (or thereafter
received) on deposit in the Lock Box Account or held by the Lock-Box Processor
in respect of the Receivables (together with an accounting of such amounts) and
shall otherwise use its best efforts to effect the orderly and efficient
transfer of the lock-box arrangements, and the Servicer shall promptly notify
the Obligors to make payments to any new Lock-Box.
(b) In addition to the Lock-Box Account, the Trust Collateral Agent shall
establish, with itself, the Collection Account and the Note Account in the name
of the Issuer for the benefit of the Noteholders and the Note Insurer, the
Pre-Funding Account in the name of the Issuer for the benefit of the Noteholders
and the Note Insurer, the Capitalized Interest Account in the name of the Issuer
for the benefit of the Noteholders and the Note Insurer, and the Policy Payments
Account in the name of the Issuer for the benefit of the Noteholders. The
Collection Account, the Note Account, the Pre-Funding Account, the Capitalized
Interest Account and the Policy Payments Account shall be Eligible Accounts
initially established with the Trust Collateral Agent; PROVIDED, HOWEVER, if any
of such accounts shall cease to be an Eligible Account, the Servicer, with the
consent of the Note Insurer (so long as no Note Insurer Default has occurred and
is continuing), within five (5) Business Days shall, cause such accounts to be
moved to an institution so that such account meets the definition of Eligible
Account. The Servicer shall promptly notify the Rating Agencies and the
Transferor of any change in the location of any of the aforementioned accounts.
All amounts held in the Collection Account and the Pre-Funding Account
shall be invested by the Trust Collateral Agent at the written direction of the
Transferor in Eligible Investments in the name of the Trust Collateral Agent on
behalf of the Issuer and shall mature no later than one Business Day immediately
preceding the Payment Date next succeeding the date of such investment. In no
event shall the Trust Collateral Agent be liable for any insufficiency in the
Collection Account resulting from any investment loss in any Eligible Account.
Such written direction shall certify that any such investment is authorized by
this Section. No investment may be sold prior to its maturity. Amounts in the
Note Account and the Policy Payments Account shall not be invested. The amount
of earnings on investments of funds in the Collection Account during the
Collection Period related to each Payment Date shall be deposited into the Note
Account on each Payment Date, and shall be available for payment pursuant to
Section 5.6(c). The amount of earnings on investments of funds in the
Pre-Funding Account during the Collection Period related to each Payment Date
shall be deposited in the Note Account on each Payment Date in an amount not to
exceed the Pre-Funding Interest Amount, and such amount shall be available for
distribution pursuant to Section 5.6(c), and any remaining investment earnings
on the funds in the Pre-Funding Account shall remain on deposit in the
Pre-Funding Account and shall be distributed by the Trust Collateral Agent to
the Transferor on the Final Funding Period Payment Date. The amount of earnings
on investments of funds in the Capitalized Interest Account during each
Collection Period shall be deposited into the Capitalized Interest Account on
the Payment Date relating to such Collection Period prior to making any transfer
from the Capitalized Interest Account to the Note Account pursuant to Section
5.6(a)(iii). For purposes of this paragraph, the Trust Collateral Agent will
take delivery of the Eligible Investments in accordance with Schedule C.
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(c) The Trust Collateral Agent, pursuant to the Servicer's written
instruction, shall on or prior to each Payment Date (and prior to the transfer
from the Collection Account to the Note Account described in Section 5.6(a)(i))
transfer from the Collection Account to the Servicer, as additional servicing
compensation, the amount, if any, required to be paid to the Servicer pursuant
to Section 5.12.
SECTION 5.2. COLLECTIONS. The Servicer shall use reasonable efforts to
cause the Lock-Box Processor to transfer any payments in respect of the
Receivables from or on behalf of Obligors received in the Lock-Box to the
Lock-Box Account on the Business Day on which such payments are received,
pursuant to the Lock-Box Agreement. Within two Business Days of receipt of such
funds into the Lock-Box Account, the Servicer shall cause the Lock-Box Bank to
transfer available funds related to the Receivables from the Lock-Box Account to
the Collection Account, and if such funds are not available funds, as soon
thereafter as they clear (i.e., become available for withdrawal from the
Lock-Box Account). In addition, the Servicer shall remit all payments by or on
behalf of the Obligors received by the Servicer with respect to the Receivables
(other than Purchased Receivables), and all Liquidation Proceeds no later than
the second Business Day following receipt into the Lock-Box Account or the
Collection Account.
SECTION 5.3. APPLICATION OF COLLECTIONS. All collections for each
Collection Period shall be applied by the Servicer as follows:
With respect to each Receivable (other than a Purchased Receivable),
payments actually received from or on behalf of the Obligor shall be applied
hereunder, first, to interest and principal in accordance with the Simple
Interest Method to the extent necessary to bring such Receivable current,
second, in connection with the redemption of a defaulted Receivable, to
reimburse the Servicer for reasonable and customary out-of-pocket expenses
incurred by the Servicer in connection with such Receivable, third, to late fees
and fourth, to principal in accordance with the Simple Interest Method.
Notwithstanding anything herein to the contrary, no amount applied as interest
accrued on any Precomputed Receivable for any single Collection Period will
exceed 30 days' interest accrued thereon assuming a 360-day year of twelve
30-day months.
SECTION 5.4. INTENTIONALLY OMITTED.
SECTION 5.5. ADDITIONAL DEPOSITS. The following additional deposits
shall be made in immediately available funds on the dates indicated: (i) on the
Business Day immediately preceding each Determination Date, the Servicer or
LBAC, as the case may be, shall deposit or cause to be deposited in the
Collection Account the aggregate Purchase Amount with respect to Purchased
Receivables, (ii) on the Business Day immediately preceding each Determination
Date, the Trust Collateral Agent shall deposit in the Collection Account all
amounts to be paid under Section 11.1, (iii) on the Determination Date
immediately succeeding the date on which the Funding Period ends (or on the
Determination Date on which the Funding Period ends, if the Funding Period ends
on a Determination Date), the Trust Collateral Agent shall transfer the
remaining Pre-Funded Amount on deposit in the Pre-Funding Account to the Note
Account pursuant to Section 5.13(c) and (iv) on or before each Draw Date, the
Trust Collateral Agent shall transfer to the Collection Account any amounts
transferred to the Trust Collateral Agent by the Collateral Agent from the
Spread Account.
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SECTION 5.6. PAYMENTS; POLICY CLAIMS.
(a) The Trust Collateral Agent (based solely on the information set forth
in the Servicer's Certificate for the related Payment Date upon which the Trust
Collateral Agent may conclusively rely) shall transfer:
(i) on each Payment Date, from the Collection Account to the Note
Account, in immediately available funds, an amount equal to the excess of
the sum of (a) all funds that were deposited in the Collection Account,
plus (b) earnings on investments of funds in the Collection Account
pursuant to Section 5.1(b), for the related Collection Period over all
funds transferred from the Collection Account with respect to such
Collection Period pursuant to Section 5.1(c);
(ii) on each Payment Date during the Funding Period and on the Final
Funding Period Payment Date, from the Pre-Funding Account to the Note
Account, in immediately available funds, earnings on investments of funds
in the Pre-Funding Account for the related Collection Period pursuant to
Section 5.1(b);
(iii) on the Payment Date occurring in July 2000, from the Capitalized
Interest Account to the Note Account, an amount equal to the Additional
Interest Deposit;
(iv) on each Payment Date occurring in July, August and September
2000, from the Capitalized Interest Account to the Note Account, an amount
equal to the Negative Carry Amount for the related Collection Period, if
any; and
(v) on each Payment Date occurring in July and August 2000, from the
Capitalized Interest Account to the Transferor, an amount equal to the
excess, if any, of (x) the amount remaining on deposit in the Capitalized
Interest Account after giving effect to the withdrawal, if any, on such
Payment Date pursuant to Section 5.6(a)(iv) above, over (y) the Capitalized
Interest Requirement for such Payment Date.
(b) Prior to each Payment Date, the Servicer shall on the related
Determination Date calculate the Available Funds, the Class A Payment Amount,
the Class A Principal Payment Amount, the Class A Interest Payment Amount, the
Class B Payment Amount, the Class B Interest Payment Amount, the Class B
Principal Payment Amount, the Monthly Dealer Participation Fee Payment Amount,
the amount, if any, required to be withdrawn from the Collection Account and
paid to the Servicer as additional servicing compensation or contributed to the
Spread Account on behalf of the Servicer, in each case pursuant to Section 5.12
and, based on the Available Funds and the other amounts available for payment on
such Payment Date, determine the amount payable to the Noteholders.
(c) On each Payment Date, the Trust Collateral Agent shall (x) distribute
all amounts delivered by the Note Insurer to the Trust Collateral Agent for
deposit into the Collection Account pursuant to Section 5.9 for payment in the
amounts and priority as directed by the Note Insurer, and (y) (based on the
information contained in the Servicer's Certificate delivered on the related
Determination Date pursuant to Section 4.9 upon which the Trust Collateral Agent
may conclusively rely) subject to subsection (e) hereof, make the following
payments from the
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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 Class A Noteholders, 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 Note Interest with respect
to such Payment Date (plus (without duplication) interest on any
outstanding Class A Interest Carryover Shortfall, if any, to the extent
permitted by applicable law, at the Class A Note Rate, as applicable, from
and including such preceding Payment Date to but excluding the current
Payment Date (calculated on the basis of a 360-day year consisting of
twelve 30-day months)) and, if the Available Funds are insufficient to pay
such amounts, the Class A Noteholders will receive such deficiency from the
following sources in the following order of priority: (A) from the
remaining portion of the Deficiency Claim Amount with respect to such
Payment Date, if any, to the extent such Deficiency Claim Amount is
received by the Trust Collateral Agent from the Collateral Agent, after
application thereof pursuant to clauses (i) and (ii) above and (B) from the
Policy Claim Amount with respect to such Payment Date, if any, received by
the Trust Collateral Agent from the Note Insurer;
(iv) from the Available Funds (as such Available Funds have been
reduced by payments made pursuant to clauses (i) through (iii) above), and,
if such Payment Date is the Final Funding Period Payment Date, from the
Class A Percentage of any Mandatory Special Redemption, to the Class A
Noteholders, until the Class A Note Balance has been reduced to zero, an
amount equal to the sum of the Class A Principal Payment Amount with
respect to such Payment Date and any Class A Principal Carryover Shortfall
as of the close of business on the preceding Payment Date, and, if the
Available Funds are
32
insufficient to pay such amounts, the Class A Noteholders will receive such
deficiency from the following sources in the following order of priority:
(A) from the remaining portion of the Deficiency Claim Amount with respect
to such Payment Date, if any, after application thereof pursuant to clauses
(i) through (iii) above, plus (B) the remaining portion of the Policy Claim
Amount with respect to such Payment Date, if any, after application thereof
pursuant to clause (iii) above;
(v) FIRST, to the Note Insurer, from the Available Funds (as such
Available Funds have been reduced by payments made pursuant to clauses (i)
through (iv) above), an amount equal to the Reimbursement Obligations and,
if the Available Funds are insufficient to pay such Reimbursement
Obligations, the Note Insurer shall receive such deficiency from the
remaining portion of the Deficiency Claim Amount with respect to such
Payment Date, if any, to the extent received by the Trust Collateral Agent
from the Collateral Agent, after application thereof pursuant to clauses
(i) through (iv) above, SECOND, to the Trust Collateral Agent, the
Indenture Trustee, the Back-up Servicer and the Custodian, as applicable,
from the Available Funds (as such Available Funds have been reduced by
payments 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 $50,000 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 $100,000 in payment of such system conversion expenses;
(vi) to the Class B Noteholders, from the Available Funds (as such
Available Funds have been reduced by payments made pursuant to clauses (i)
through (v) above), an amount equal to the Class B Note Interest with
respect to such Payment Date (plus (without duplication) interest on any
Class B Interest Carryover Shortfall, to the extent permitted by applicable
law, at the Class B Note Rate from and including such preceding Payment
Date to but excluding the current Payment Date (calculated on the basis of
a 360-day year consisting of twelve 30-day months)) and, if the Available
Funds are insufficient to pay such amounts, the Class B Noteholders will
receive such deficiency from the Class B Reserve Account Draw;
(vii) if such Payment Date is the Final Funding Period Payment Date,
to the Class B Noteholders, the Class B Percentage of any Mandatory Special
Redemption; and
33
(viii) to the Collateral Agent for deposit in the Spread Account (or,
in the event the Spread Account is terminated by the Note Insurer in its
sole discretion or otherwise automatically pursuant to the terms of the
terms of Section 2.07 of the Spread Account Agreement, the Class B Reserve
Account), the remaining Available Funds (as such Available Funds have been
reduced by payments made pursuant to clauses (i) through (vii) above), if
any.
(d) In addition, on each Payment Date, after giving effect to the payments
specified in clauses (i) through (viii) above, the Trust Collateral Agent shall
(based on the information contained in the Servicer's Certificate delivered on
the related Determination Date pursuant to Section 4.9 upon which the Trust
Collateral Agent may conclusively rely) pay the following amounts, from the
following sources and in the following order of priority:
(i) to the Collateral Agent for deposit in the Class B Reserve
Account, from amounts on deposit in the Spread Account, the Current Spread
Account Release Amount with respect to such Payment Date, if any;
(ii) to the Class B Noteholders, until the Class B Note Balance has
been reduced to zero, from the Class B Reserve Account Release Amount, if
any, with respect to such Payment Date, an amount equal to the Class B
Principal Payment Amount with respect to such Payment Date; and
(iii) to the Certificateholder, the remaining Class B Reserve Account
Release Amount (after making the payment required pursuant to clause (ii)
above), if any.
(e) Each Noteholder, by its acceptance of its Note, will be deemed to have
consented to the provisions of Sections 5.6(c) and 5.6(d) relating to the
priority of payments, and will be further deemed to have acknowledged that no
property rights in any amount or the proceeds of any such amount shall vest in
such Noteholder until such amounts have been distributed to such Noteholder
pursuant to such provisions; PROVIDED, that the foregoing shall not restrict the
right of any Noteholder, upon compliance with the provisions hereof from seeking
to compel the performance of the provisions hereof by the parties hereto. Each
Noteholder, by its acceptance of its Note, will be deemed to have further agreed
that withdrawals of funds by the Collateral Agent from the Spread Account for
application hereunder, shall be made in accordance with the provisions of the
Spread Account Agreement.
In furtherance of and not in limitation of the foregoing, each Class B
Noteholder by its acceptance of a Class B Note, specifically acknowledges that
(A) interest pursuant to clause (vi) of Section 5.6(c) will be subordinated to
the prior payment in full of all amounts payable pursuant to clauses (i) through
(v) of Section 5.6(c) (PROVIDED, that such Class B Note Interest may be paid on
each Payment Date using amounts on deposit, if any, in the Class B Reserve
Account) and (B) no amounts shall be applied as principal on the Class B Notes,
unless and until such amounts have been distributed pursuant to Section
5.6(d)(ii) above for payment to such Class B Noteholder pursuant to the
priorities set forth in Section 5.6(d) above.
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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)(iii) above for payment to the Certificateholder pursuant to the
priorities set forth in Section 5.6(d) above. Each Class B Noteholder, by its
acceptance of a Class B Note and the Certificateholder, by its acceptance of the
Certificate, further specifically acknowledges that it has no right to or
interest in any moneys at any time held pursuant to the Spread Account Agreement
prior to the release of such moneys as aforesaid, such moneys being held in
trust for the benefit of the Class A Noteholders and the Note Insurer as their
interests may appear prior to such release. Notwithstanding the foregoing, in
the event that it is ever determined that any property held in the Spread
Account constitute a pledge of collateral, then the provisions of this Agreement
and the Spread Account Agreement shall be considered to constitute a security
agreement and the Transferor and the Certificateholder hereby grant to the
Collateral Agent and to the Trust Collateral Agent, respectively, a first
priority perfected security interest in such amounts, to be applied as set forth
in Section 3.03(b) of the Spread Account Agreement. In addition, the
Certificateholder, by acceptance of its Certificate, hereby appoints the
Transferor as its agent to pledge a first priority perfected security interest
in the Spread Account, and any property held therein from time to time to the
Collateral Agent for the benefit of the Trust Collateral Agent and the Note
Insurer pursuant to the Spread Account Agreement and agrees to execute and
deliver such instruments of conveyance, assignment, grant, confirmation, etc.,
as well as any financing statements, in each case as the Note Insurer shall
consider reasonably necessary in order to perfect the Collateral Agent's
Security Interest in the Collateral (as such terms are defined in the Spread
Account Agreement).
(f) Subject to Section 11.1 respecting the final payment upon retirement of
each Note, the Servicer shall on each Payment Date instruct the Trust Collateral
Agent to distribute to each Noteholder of record on the preceding Record Date
either (i) by wire transfer, in immediately available funds to the account of
such Holder at a bank or other entity having appropriate facilities therefor, if
such Noteholder is the Clearing Agency or such Holder's Notes in the aggregate
evidence an original Note Balance of at least $1,000,000, and if such Noteholder
shall have provided to the Trust Collateral Agent appropriate instructions prior
to the Record Date for such Payment Date, or (ii) by check mailed to such
Noteholder at the address of such Holder appearing in the Note Register, such
Holder's PRO RATA share (based on the outstanding Note Balance) of either the
Class A or Class B Payment Amount to be paid to such Class of Notes in
accordance with the Servicer's Certificate.
SECTION 5.7. STATEMENTS TO NOTEHOLDERS; TAX RETURNS.
(a) With each payment from the Note Account to the Noteholders made on a
Payment Date, the Servicer shall provide to the Note Insurer, the Transferor,
the Indenture Trustee, each Rating Agency and the Trust Collateral Agent (the
Trust Collateral Agent to forward to each Noteholder of record), the Servicer's
Certificate substantially in the form of Exhibit B-1 hereto setting forth at
least the following information as to the Notes to the extent applicable:
(i) the amount of the payment allocable to principal of the Class A
Notes and the Class B Notes, respectively;
35
(ii) the amount of the payment allocable to interest on the Class A
Notes and the Class B Notes, respectively;
(iii) the number of Receivables, the weighted average APR of the
Receivables, the weighted average maturity of the Receivables, the Pool
Balance, the Class A Pool Factor and the Class B Pool Factor as of the
close of business on the last day of the preceding Collection Period;
(iv) the Class A Note Balance and the Class B Note Balance as of the
close of business on the last day of the preceding Collection Period, after
giving effect to payments allocated to principal reported under clause (i)
above;
(v) the amount of the Monthly Dealer Participation Fee Payment Amount
paid to LBAC, the amount of the Servicing Fee paid to the Servicer and the
amount of the Back-up Servicer Fee paid to the Back-up Servicer with
respect to the related Collection Period, the amount of any unpaid
Servicing Fees and any unpaid Back-up Servicer Fees and the change in such
amounts from the prior Payment Date;
(vi) the amount of the Class A Interest Carryover Shortfall, if
applicable, and the Class A Principal Carryover Shortfall, if applicable,
on such Payment Date and the change in such amounts from the prior Payment
Date;
(vii) the amount of the Class B Interest Carryover Shortfall, if
applicable, on such Payment Date and the change in such amounts from the
prior Payment Date;
(viii) the amount paid, if any, to the Class A Noteholders under the
Note Policy for such Payment Date;
(ix) the amount paid to the Note Insurer on such Payment Date;
(x) the aggregate amount in each of the Spread Account and the Class B
Reserve Account;
(xi) the number of Receivables and the aggregate outstanding principal
amount scheduled to be paid thereon, for which the related Obligors are
delinquent in making Scheduled Receivable Payments between 30 and 59 days,
60 and 89 days, 90 and 119 days and 120 days or more (in each case
calculated on the basis of a 360-day year of twelve 30-day months), and the
percentage of the aggregate principal amount which such delinquencies
represent;
(xii) the number and the aggregate Purchase Amount of Receivables
repurchased by the Originator or purchased by the Servicer during the
related Collection Period;
(xiii) the cumulative number and amount of Liquidated Receivables, the
cumulative amount of any Liquidation Proceeds and Recoveries, since the
Cutoff Date to the last day of the related Collection Period, the number
and amount of Liquidated
36
Receivables for the related Collection Period and the amount of Recoveries
in the related Collection Period;
(xiv) the Average Delinquency Ratio, the Cumulative Default Rate and
the Cumulative Loss Rate (as such terms are defined in the Spread Account
Agreement) for such Payment Date;
(xv) whether any Trigger Event has occurred as of such Determination
Date;
(xvi) whether any Trigger Event that may have occurred as of a prior
Determination Date is Deemed Cured (as such term is defined in the Spread
Account Agreement) or otherwise waived as of such Determination Date;
(xvii) whether an Insurance Agreement Event of Default has occurred;
(xviii) the number and amount of Cram Down Losses, the number and
dollar amount of repossessions, the aging of repossession inventory and the
dollar amount of Recoveries;
(xix) for Payment Dates during the Funding Period and on the Final
Funding Period Payment Date, the amount withdrawn from the Pre-Funding
Account to purchase Subsequent Receivables during the related Collection
Period and the remaining Pre-Funded Amount on deposit in the Pre-Funding
Account;
(xx) for Payment Dates during the Funding Period and on the Final
Funding Period Payment Date, the Negative Carry Amount in respect of the
related Collection Period withdrawn from the Capitalized Interest Account,
the amount in excess of the Capitalized Interest Requirement, if any,
withdrawn from the Capitalized Interest Account and the amount remaining on
deposit in the Capitalized Interest Account; and
(xxi) for the Final Funding Period Payment Date, the amount of the
Pre-Funded Amount (if any) that has not been used to purchase Subsequent
Receivables and is being distributed as a payment of principal to
Noteholders.
Each amount set forth pursuant to subclauses (i), (ii), (v), (vi) and
(vii) above shall be expressed as a dollar amount per $1,000 of original
principal balance of a Note.
(b) No later than January 31 of each calendar year, commencing January 31,
2001, the Servicer shall send to the Indenture Trustee and the Trust Collateral
Agent, and the Trust Collateral Agent shall, provided it has received the
necessary information from the Servicer, promptly thereafter furnish to each
Person who at any time during the preceding calendar year was a Noteholder of
record and received any payment thereon (a) a report (prepared by the Servicer)
as to the aggregate of amounts reported pursuant to subclauses (i), (ii) and (v)
of Section 5.7(a) for such preceding calendar year or applicable portion thereof
during which such person was a Noteholder, and (b) such information as may be
reasonably requested by the Noteholders or required by the Code and regulations
thereunder, to enable such Holders to prepare their Federal and State income tax
returns. The obligation of the Trust Collateral Agent set forth in this
paragraph shall be deemed to have been satisfied to the extent that
substantially
37
comparable information shall be provided by the Servicer pursuant to any
requirements of the Code.
(c) The Servicer, at its own expense, shall cause a firm of nationally
recognized accountants to prepare any tax returns required to be filed by the
Issuer, and the Issuer shall execute and file such returns if requested to do so
by the Servicer. The Trust Collateral Agent, upon request, will furnish the
Servicer with all such information actually known to the Trust Collateral Agent
as may be reasonably requested by the Servicer in connection with the
preparation of all tax returns of the Issuer.
SECTION 5.8. RELIANCE ON INFORMATION FROM THE SERVICER. Notwithstanding
anything to the contrary contained in this Agreement, all payments from any of
the accounts described in this Article V and any transfer of amounts between
such accounts shall be made by the Trust Collateral Agent based on the
information provided to the Trust Collateral Agent by the Servicer in writing,
whether by way of a Servicer's Certificate or otherwise (upon which the Trust
Collateral Agent may conclusively rely).
SECTION 5.9. OPTIONAL DEPOSITS BY THE NOTE INSURER. The Note Insurer
shall at any time, and from time to time, with respect to a Payment Date, have
the option to deliver amounts to the Trust Collateral Agent for deposit into the
Collection Account for any of the following purposes: (i) to provide funds in
respect of the payment of fees or expenses of any provider of services to the
Issuer with respect to such Payment Date, (ii) to distribute as a component of
the Principal Payment Amount to the extent that the Note Balance as of the
Determination Date preceding such Payment Date exceeds the Pool Balance as of
such Determination Date or (iii) to include such amount as part of the Payment
Amount for such Payment Date to the extent that without such amount a draw would
be required to be made on the Note Policy.
SECTION 5.10. SPREAD ACCOUNT. The Transferor agrees, simultaneously
with the execution and delivery of this Agreement, to execute and deliver the
Spread Account Agreement and, pursuant to the terms thereof, to deposit the
Initial Spread Account Deposit in the Spread Account on the Closing Date. In
addition, on each Subsequent Transfer Date, pursuant to the terms of the Spread
Account Agreement, the Transferor shall deposit the related Subsequent Spread
Account Deposit in the Spread Account. Although the Transferor as
Certificateholder, has pledged the Spread Account to the Collateral Agent and
the Note Insurer pursuant to the Spread Account Agreement, the Spread Account
shall not under any circumstances be deemed to be a part of or otherwise
includible in the Issuer or the Trust Assets.
SECTION 5.11. WITHDRAWALS FROM SPREAD ACCOUNT.
(a) In the event that the Servicer's Certificate with respect to any
Determination Date shall state that the amount of the Available Funds with
respect to such Determination Date are less than the sum of the amounts payable
on the related Payment Date pursuant to clauses (i) through (iv) and subclause
FIRST of clause (v) of Section 5.6(c) (such deficiency being a "Deficiency Claim
Amount") then on the Deficiency Claim Date immediately preceding such Payment
Date, the Trust Collateral Agent shall deliver to the Collateral Agent, the Note
Insurer, the Fiscal Agent (as such term is defined in the Insurance Agreement),
if any, the Servicer, by
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hand delivery, telex or facsimile transmission, a written notice (a "Deficiency
Notice") specifying the Deficiency Claim Amount for such Payment Date. Such
Deficiency Notice shall direct the Collateral Agent to remit such Deficiency
Claim Amount (to the extent of the funds available to be distributed pursuant to
the Spread Account Agreement) to the Trust Collateral Agent for deposit in the
Collection Account.
Any Deficiency Notice shall be delivered by 10:00 a.m.,
New
York City time, on the related Deficiency Claim Date. The amounts distributed by
the Collateral Agent to the Trust Collateral Agent pursuant to a Deficiency
Notice shall be deposited by the Trust Collateral Agent into the Collection
Account pursuant to Section 5.5.
SECTION 5.12. SIMPLE INTEREST. On each Determination Date, the Servicer
shall determine the amount, if any, of any Simple Interest Shortfall or Simple
Interest Excess for the related Collection Period. If the Servicer determines
that there is a Simple Interest Shortfall for such related Collection Period,
the Servicer shall make an advance (a "Simple Interest Advance") in the amount
of such Simple Interest Shortfall and deposit such Simple Interest Advance into
the Collection Account on or before the Business Day immediately preceding the
next succeeding Payment Date. If, however, the Servicer determines that there is
a Simple Interest Excess for such Collection Period, the Trust Collateral Agent
shall withdraw the amount of such Simple Interest Excess from the Collection
Account on the next Payment Date and pay the amount of such Simple Interest
Excess to the Servicer as additional servicing compensation. Notwithstanding the
immediately preceding sentence, to the extent that the aggregate amount of
Simple Interest Advances made by the Servicer with respect to all prior
Collection Periods does not exceed the aggregate amount of all Simple Interest
Excesses with respect to such prior Collection Periods, such excess shall be
deposited pursuant to Section 5.6(b) into the Spread Account and shall be
treated as a contribution to the Spread Account by the Servicer for the benefit
of the Certificateholder for federal income tax purposes. All references in this
Section 5.12 to the Servicer shall be deemed to refer to the Servicer only so
long as LBAC is acting in such capacity hereunder.
SECTION 5.13. PRE-FUNDING ACCOUNT.
(a) Pursuant to Section 5.1(b), the Trust Collateral Agent shall establish
and maintain the Pre-Funding Account as an Eligible Account in the name of the
Trust for the benefit of the Noteholders and the Note Insurer.
(b) On the Closing Date, the Transferor will deposit in the Pre-Funding
Account an amount equal to the Original Pre-Funded Amount from the proceeds of
the sale of the Notes. On each Subsequent Transfer Date, the Servicer shall
instruct the Trust Collateral Agent in writing to withdraw from the Pre-Funding
Account an amount equal to the Principal Balance of the Subsequent Receivables
(as of the related Subsequent Cutoff Date) conveyed to the Trust on such
Subsequent Transfer Date and pay such amount to or upon the order of the
Transferor upon satisfaction of the conditions set forth in this Agreement and
in the related Transfer Agreement with respect to such transfer.
(c) If (i) the Pre-Funded Amount has not been reduced to zero by the close
of business on the Final Funding Period Payment Date or (ii) the Pre-Funded
Amount has been
39
reduced to $100,000 or less during the Funding Period, in either case after
giving effect to any reductions in the Pre-Funded Amount on the Final Funding
Period Payment Date pursuant to Section 5.13(b), the Servicer shall instruct the
Trust Collateral Agent in writing to withdraw such remaining portion of the
Pre-Funded Amount from the Pre-Funding Account and deposit it in the Note
Account on such Payment Date to be applied as a partial redemption of the Notes,
in addition to the payment of principal and interest that otherwise would be
payable with respect to such Notes on such Payment Date.
SECTION 5.14. CAPITALIZED INTEREST ACCOUNT.
(a) Pursuant to Section 5.1(b), the Capitalized Interest Account shall be
an Eligible Account established and maintained by the Trust Collateral Agent in
the name of the Trust for the benefit of the Noteholders and the Note Insurer.
On the Closing Date, the Transferor will deposit in the Capitalized Interest
Account an amount equal to $673,869.20 (such amount, the "Capitalized Interest
Account Deposit").
(b) On the Payment Date occurring in July 2000, the amounts on deposit in
the Capitalized Interest Account shall be available for deposit to the Note
Account pursuant to Section 5.6(a)(iii) for distribution as provided in Section
5.6(c). On each Payment Date occurring in July, August and September 2000, the
amounts on deposit in the Capitalized Interest Account shall be available for
deposit to the Note Account pursuant to Section 5.6(a)(iv) for distribution as
provided in Section 5.6(c). On each Payment Date occurring in July and August
2000, the amount on deposit in the Capitalized Interest Account in excess of the
Capitalized Interest Requirement for such Payment Date shall be distributed to
the Transferor. On the Final Funding Period Payment Date, any remaining amounts
in the Capitalized Interest Account, after giving effect to the transfer
specified in Section 5.6(a)(iv) on such Payment Date, will be paid directly to
the Transferor. Upon any distribution to the Transferor of amounts on deposit in
the Capitalized Interest Account in accordance with the two preceding sentences,
the Noteholders and the Certificateholder will have no further rights in, or
claims to, such amounts.
(c) Amounts held in the Capitalized Interest Account shall be invested by
the Trust Collateral Agent in Eligible Investments which shall mature no later
than the Business Day immediately preceding the next Payment Date in accordance
with written instructions from the Transferor and such investments shall not be
sold or disposed of prior to their maturity.
SECTION 5.15. CLASS B RESERVE ACCOUNT. In order to effectuate the
subordination provided for herein and to enhance the amounts available to make
required payments to the Class B Noteholders, there shall be established and
maintained with the Trust Collateral Agent an Eligible Account entitled, "Class
B Reserve Account--Long Beach Acceptance Auto Receivables Trust 2000-1", which
will include the money and other property deposited and held therein pursuant to
Section 5.6(d)(i) and this Section 5.15.
(a) On the Closing Date, the Transferor shall deposit the Initial Class B
Reserve Account Deposit into the Class B Reserve Account. On each Subsequent
Transfer Date, the Transferor shall deposit the Class B Reserve Account
Subsequent Deposit into the Class B Reserve Account.
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(b) The amounts on deposit in the Class B Reserve Account shall be
available for payment in accordance with and subject to Section 5.6(d). Upon
termination of this Agreement and the Class B Noteholders having been paid all
amounts due under this Agreement, any remaining amounts in the Class B Reserve
Account will be distributed to the Certificateholder. Upon any such payment to
the Certificateholder, the Class B Noteholders will not have any further rights
in, or claims to, such amounts.
(c) Amounts held in the Class B Reserve Account shall be invested in
Eligible Investments which shall mature no later than the Business Day
immediately preceding the next Payment Date in accordance with written
instructions from the Transferor and such investments shall not be sold or
disposed of prior to their maturity. All income and gain recognition on such
investments shall be solely for the benefit of the Certificateholder. In no
event shall the Trust Collateral Agent be liable for any insufficiencies therein
resulting from an investment loss in any Eligible Investment.
(d) If on any Payment Date (based on the Servicer's Certificate delivered
on the related Determination Date by the Servicer pursuant to Section 4.9, upon
which the Trust Collateral Agent may conclusively rely) the Available Funds are
insufficient to pay the full amount described in clause (vi) of Section 5.6(c),
the Trust Collateral Agent shall withdraw the Class B Reserve Account Draw from
the Class B Reserve Account equal to such insufficiency and deliver the amount
so withdrawn to the Trust Collateral Agent for deposit in the Note Account for
application (in the order of priority provided by Section 5.6(c)) in respect of
such insufficiency.
SECTION 5.16. SECURITIES ACCOUNTS. The Trust Collateral Agent
acknowledges that any account held by it hereunder is a "securities account" as
defined in the Uniform Commercial Code as in effect in
New York (the "
NEW YORK
UCC"), and that it shall be acting as a "securities intermediary" of the
Indenture Trustee with respect to each such account held by it. The Trust
Collateral Agent acknowledges and agrees that (a) each item of property (whether
investment property, financial asset, security, instrument or cash) credited to
the Class B Reserve Account shall be treated as a "financial asset" within the
meaning of Section 8-102(a)(9) of the
New York UCC and (b) if at any time the
Trust Collateral Agent shall receive any order from the Indenture Trustee
directing transfer or redemption of any financial asset relating to the Class B
Reserve Account, the Trust Collateral Agent shall comply with such entitlement
order without further consent by LBAC or any other person.
ARTICLE VI
THE NOTE POLICY
SECTION 6.1. NOTE POLICY. The Originator agrees, simultaneously with
the execution and delivery of this Agreement, to cause the Note Insurer to issue
the Note Policy for the benefit of the Noteholders in accordance with the terms
thereof.
SECTION 6.2. CLAIMS UNDER NOTE POLICY.
(a) In the event that the Trust Collateral Agent has delivered a Deficiency
Notice with respect to any Determination Date, the Trust Collateral Agent shall
determine on the related
41
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, 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.
42
(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.
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.
43
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.
ARTICLE VII
THE TRANSFEROR
SECTION 7.1. REPRESENTATIONS OF THE TRANSFEROR. The Transferor makes
the following representations on which the Note Insurer shall be deemed to have
relied in executing and delivering the Note Policy and on which the Issuer is
deemed to have relied in acquiring the Receivables and on which the Indenture
Trustee, the Collateral Agent, Trust Collateral Agent and Back-up Servicer may
rely. The representations speak as of the execution and delivery of this
Agreement and as of the Closing Date in the case of Initial Receivables, and as
of the applicable Subsequent Transfer Date, in the case of Subsequent
Receivables, and shall survive the conveyance of the Receivables to the Issuer
and the subsequent pledge thereof to the Indenture Trustee pursuant to the
Indenture.
(a) ORGANIZATION AND GOOD STANDING. The Transferor has been duly organized
and is validly existing as a corporation in good standing under the laws of the
State of Delaware, with the corporate power and authority to conduct its
business as such business is presently conducted and to execute, deliver and
perform its obligations under this Agreement and the other Basic Documents to
which it is a party.
(b) DUE QUALIFICATION. The Transferor is duly qualified to do business as a
foreign corporation in good standing, and has obtained all necessary licenses
and approvals in all jurisdictions required for the performance of its
obligations under this Agreement and the other Basic Documents to which it is a
party other than where the failure to obtain such license or approval or
qualification would not have a material adverse effect on the ability of the
Transferor to perform such obligations or on any Receivable or on the interest
therein of the Issuer, the Noteholders or the Note Insurer.
(c) POWER AND AUTHORITY. The Transferor has the corporate power and
authority to execute and deliver this Agreement and the other Basic Documents to
which it is a party and to carry out their respective terms; the Transferor has
full corporate power and authority to sell and assign the property sold and
assigned to and deposited with the Issuer and has duly authorized such sale and
assignment to the Issuer by all necessary corporate action; and the execution,
delivery, and performance of this Agreement and the other Basic Documents to
which it is a party have been duly authorized by the Transferor by all necessary
corporate action.
(d) VALID SALE; BINDING OBLIGATION. This Agreement effects a valid sale,
transfer and assignment of the Initial Receivables and the other property
conveyed to the Issuer pursuant to Section 2.1, and upon execution of the
related Transfer Agreement and satisfaction of the conditions set forth in
Section 2.2(b) hereof and in such Transfer Agreement, this Agreement will effect
a valid sale, transfer and assignment of the related Subsequent Receivables and
the other related property to be conveyed to the Issuer pursuant to Section 2.2
on the related Subsequent Transfer Date, in each case enforceable against
creditors of and purchasers from the Transferor; and this Agreement and the
other Basic Documents to which the Transferor is a party
44
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 terms hereof and thereof do not conflict with, result
in any breach of any of the terms and provisions of, nor constitute (with or
without notice or lapse of time) a default under, the certificate of
incorporation or by-laws of the Transferor, or any material indenture,
agreement, mortgage, deed of trust, or other instrument to which the Transferor
is a party or by which it is bound or any of its properties are subject; nor
result in the creation or imposition of any material lien upon any of its
properties pursuant to the terms of any such indenture, agreement, mortgage,
deed of trust, or other instrument (other than the Basic Documents and the
Credit and Security Agreement); nor violate any law, order, rule, or regulation
applicable to the Transferor of any court or of any Federal or State regulatory
body, administrative agency, or other governmental instrumentality having
jurisdiction over the Transferor or its properties.
(f) NO PROCEEDINGS. Except for the Xxxxxx Case, 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
45
is, and for the four months preceding the date of this Agreement, has been,
located at Xxx Xxxx Xxxxxx Xxxxx, Xxxxxxx, Xxx Xxxxxx 00000.
(i) TRANSFEROR'S INTENTION. The Initial Receivables and other Initial
Transferred Property are being transferred, and the Subsequent Receivables and
other Subsequent Transferred Property will be transferred, with the intention of
removing them from the Transferor's estate pursuant to Xxxxxxx 000 xx xxx Xxxxxx
Xxxxxx 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.
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
46
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 it were not the Transferor or an affiliate
thereof, except as otherwise provided in the definition of "Noteholder" set
forth in Annex A hereto and as specified in Section 1.4. Notes so owned by or
pledged to the Transferor or such controlling or commonly controlled Person
shall have an equal and proportionate benefit under the provisions of this
Agreement, without preference, priority, or distinction as among all of the
Notes except as otherwise provided herein or by the definition of Noteholder.
ARTICLE VIII
THE SERVICER
SECTION 8.1. REPRESENTATIONS OF SERVICER. The Servicer makes the
following representations on which the Note Insurer shall be deemed to have
relied in executing and delivering the Note Policy and on which the Issuer is
deemed to have relied in acquiring the Receivables and on which the Indenture
Trustee is deemed to have relied on in accepting the pledge of the Receivables.
The representations speak as of the execution and delivery of this Agreement and
as of the Closing Date, in the case of the Initial Receivables and as of the
applicable Subsequent Transfer Date, in the case of the Subsequent Receivables,
and shall survive the conveyance of the Receivables to the Issuer and the
subsequent pledge thereof to the Indenture Trustee pursuant to the Indenture.
(i) ORGANIZATION AND GOOD STANDING. The Servicer is duly organized and
validly existing as a corporation in good standing under the laws of the
State of Delaware, with the corporate power and authority to own its
properties and to conduct its business as such properties shall be
currently owned and such business is presently conducted, and had at all
relevant times, and has, the corporate power, authority, and legal right to
acquire, own, sell and service the Receivables and to hold the Receivable
Files as custodian.
(ii) DUE QUALIFICATION. The Servicer is duly qualified to do business
as a foreign corporation in good standing, and has obtained all necessary
licenses and approvals in all jurisdictions in which the ownership or lease
of property or the conduct of its business (including the servicing of the
Receivables as required by this Agreement
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and the performance of its other obligations under this Agreement and the
other Basic Documents to which it is a party) shall require such
qualifications.
(iii) POWER AND AUTHORITY. The Servicer has the power and authority to
execute and deliver this Agreement and the other Basic Documents to which
it is a party and to carry out their respective terms; and the execution,
delivery, and performance of this Agreement and the other Basic Documents
to which it is a party have been duly authorized by the Servicer by all
necessary corporate action.
(iv) BINDING OBLIGATION. This Agreement and the other Basic Documents
to which it is a party constitute legal, valid and binding obligations of
the Servicer enforceable in accordance with their respective terms except
as enforceability may be limited by bankruptcy, insolvency, reorganization
or other similar laws affecting the enforcement of creditors' rights
generally and by equitable limitations on the availability of specific
remedies, regardless of whether such enforceability is considered a
proceeding in equity or at law.
(v) NO VIOLATION. The execution, delivery and performance by the
Servicer of this Agreement and the other Basic Documents to which the
Servicer is a party and the consummation of the transactions contemplated
hereby and thereby and the fulfillment of the terms hereof and thereof do
not conflict with, result in any breach of any of the terms and provisions
of, or constitute (with or without notice or lapse of time) a default
under, the certificate of incorporation or by-laws of the Servicer, or any
material indenture, agreement, mortgage, deed of trust, or other instrument
to which the Servicer is a party or by which it is bound or any of its
properties are subject; or result in the creation or imposition of any
material lien upon any of its properties pursuant to the terms of any
indenture, agreement, mortgage, deed of trust, or other instrument (other
than this Agreement); or violate any law, order, rule, or regulation
applicable to the Servicer of any court or of any Federal or State
regulatory body, administrative agency, or other governmental
instrumentality having jurisdiction over the Servicer or its properties.
(vi) NO PROCEEDINGS. Except for the Xxxxxx Case, 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.
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(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 Xxx Xxxx Xxxxxx
Xxxxx, Xxxxxxx, Xxx Xxxxxx 00000.
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
49
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 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 WTC (as defined
in the Trust Agreement) and its officers, directors, successors, assigns,
agents and servants (collectively, the "Indemnified Parties") from and
against, any and all liabilities, obligations, losses, damages, taxes,
claims, actions and suits, and any and all reasonable costs, expenses and
disbursements (including reasonable legal fees and expenses) of any kind
and nature whatsoever (collectively, "Expenses") which may at any time be
imposed on, incurred by, or asserted against the Owner Trustee, WTC or any
Indemnified Party in any way relating to or arising out of this Agreement,
the Basic Documents, the Owner Trust Estate (as defined in the Trust
Agreement), the administration of the Owner Trust Estate or the action or
inaction of the Owner Trustee under the Trust Agreement, except only that
the Servicer shall not be liable for or required to indemnify the Owner
Trustee from and against Expenses arising or resulting from any of the
matters described in the third sentence of Section 6.1 of the Trust
Agreement. The indemnities contained in this Section shall survive the
resignation or termination of the Owner Trustee or the termination of the
Trust Agreement. In any event of any claim, action or proceeding for which
indemnity will be sought pursuant to this Section, the Owner Trustee's
choice of legal counsel shall be subject to the approval of the Transferor
which approval shall not be unreasonably withheld.
(vi) LBAC, as Servicer, shall defend, indemnify and hold harmless the
Transferor, the Note Insurer, the Indenture Trustee, the Back-up Servicer,
the Collateral Agent, the Trust Collateral Agent, the Custodian, the Owner
Trustee, the Issuer, the Certificateholder and the Noteholders against any
and all costs, expenses, losses, damages, claims and liabilities arising
out of or resulting from LBAC's, the Trust's,
50
AMC's or LBARC's involvement in, or the effect on any Receivable as a
result of, the Xxxxxx Case.
(vii) Notwithstanding the foregoing, the Servicer shall not be
obligated to defend, indemnify, and hold harmless any Noteholder for any
losses, claims, damages or liabilities incurred by any Noteholders arising
out of claims, complaints, actions and allegations relating to Section 406
of ERISA or Section 4975 of the Code as a result of the purchase or holding
of a Note by such Noteholder with the assets of a plan subject to such
provisions of ERISA or the Code or the servicing, management and operation
of the Issuer.
(b) For purposes of this Section, in the event of the termination of the
rights and obligations of a Servicer (or any successor thereto pursuant to
Section 8.3) as Servicer pursuant to Section 9.1, or a resignation by such
Servicer pursuant to this Agreement, such Servicer shall be deemed to be the
Servicer pending appointment of a successor Servicer pursuant to Section 9.2.
The provisions of this Section 8.2(b) shall in no way affect the survival
pursuant to Section 8.2(c) of the indemnification by the outgoing Servicer
provided by Section 8.2(a).
(c) Indemnification under this Section 8.2 shall survive the termination of
this Agreement and any resignation or removal of LBAC as Servicer and shall
include reasonable fees and expenses of counsel and expenses of litigation. If
the Servicer shall have made any indemnity payments pursuant to this Section and
the recipient thereafter collects any of such 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
51
the Servicer in the Purchase Agreement shall have been breached (for purposes
hereof, such representations and warranties shall speak as of the date of the
consummation of such transaction), no Servicer Termination Event or Insurance
Agreement Event of Default, and no event which, after notice or lapse of time,
or both, would become a Servicer Termination Event or Insurance Agreement Event
of Default shall have occurred and be continuing, (ii) the Servicer shall have
delivered to the Indenture Trustee, the Trust Collateral Agent and the Note
Insurer an Officer's Certificate and an Opinion of Counsel in form and substance
satisfactory to the Indenture Trustee, the Trust Collateral Agent and the Note
Insurer each stating that such consolidation, merger or succession and such
agreement of assumption comply with this Section 8.3 and that all conditions
precedent provided for in this Agreement relating to such transaction have been
complied with, (iii) the Servicer shall have delivered to the Indenture Trustee,
the Trust Collateral Agent and the Note Insurer an Opinion of Counsel either (A)
stating that, in the opinion of such counsel, all financing statements and
continuation statements and amendments thereto have been executed and filed that
are necessary fully to preserve and protect the interest of the Issuer in the
Receivables and reciting the details of such filings or (B) stating that, in the
opinion of such counsel, no such action shall be necessary to preserve and
protect such interest and (iv) nothing herein shall be deemed to release the
Servicer from any obligation. The Servicer shall provide notice of any merger,
consolidation or succession pursuant to this Section 8.3(a) to the Indenture
Trustee, the Trust Collateral Agent, the Issuer, the Back-up Servicer, the
Collateral Agent, the Note Insurer, the Noteholders and each Rating Agency.
Notwithstanding anything herein to the contrary, the execution of the foregoing
agreement of assumption and 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
52
facie properly executed and submitted by any Person respecting any matters
arising under this Agreement.
(b) Except as provided in this Agreement, the Servicer shall not be under
any obligation to appear in, prosecute or defend any legal action that shall not
be incidental to its duties to service the Receivables in accordance with this
Agreement, and that in its opinion may involve it in any expense or liability.
SECTION 8.5. SERVICER AND BACK-UP SERVICER NOT TO RESIGN. Subject to
the provisions of Section 8.3, neither the Servicer nor the Back-up Servicer may
resign from the obligations and duties hereby imposed on it as Servicer or
Back-up Servicer, as the case may be, under this Agreement except upon
determination that by reason of a change in legal requirements the performance
of its duties under this Agreement would cause it to be in violation of such
legal requirements in a manner which would result in a material adverse effect
on the Servicer or Back-up Servicer, as the case may be, and the Note Insurer
does not elect to waive the obligations of the Servicer or Back-up Servicer, as
the case may be, to perform the duties which render it legally unable to act or
does not elect to delegate those duties to another Person. Notice of any such
determination permitting the resignation of the Servicer or Back-up Servicer, as
the case may be, shall be communicated to the Transferor, the Indenture Trustee,
the Trust Collateral Agent, the Issuer, the Note Insurer, and each Rating Agency
at the earliest practicable time (and, if such communication is not in writing,
shall be confirmed in writing at the earliest practicable time) and any such
determination by the Servicer or Back-up Servicer, as the case may be, shall be
evidenced by an Opinion of Counsel to such effect delivered to and satisfactory
to the Transferor, the Indenture Trustee, the Trust Collateral Agent, the Issuer
and the Note Insurer concurrently with or promptly after such notice. No such
resignation of the Servicer shall become effective until a successor servicer
shall have assumed the responsibilities and obligations of LBAC in accordance
with Section 9.2 and the Servicing Assumption Agreement, if applicable. No such
resignation of the Back-up Servicer shall become effective until an entity
acceptable to the Note Insurer shall have assumed the responsibilities and
obligations of the Back-up Servicer; PROVIDED, HOWEVER, that if no such entity
shall have assumed such responsibilities and obligations of the Back-up Servicer
within 120 days of the resignation of the Back-up Servicer, the Back-up Servicer
may petition a court of competent jurisdiction for the appointment of a
successor to the Back-up Servicer.
ARTICLE IX
SERVICER TERMINATION EVENTS
SECTION 9.1. SERVICER TERMINATION EVENTS. If any one of the following
events ("Servicer Termination Events") shall occur and be continuing:
(i) Any failure by the Servicer or, for so long as LBAC is the
Servicer, the Transferor, to deliver to the Trust Collateral Agent for
payment to Noteholders or deposit in the Spread Account any proceeds or
payment required to be so delivered under the terms of the Notes, the
Purchase Agreement, any Transfer Agreement or this Agreement (including
deposits of Purchase Amounts) that shall continue unremedied for a period
of two Business Days after written notice is received by the Servicer from
the Trust
53
Collateral Agent or the Note Insurer or after discovery of such failure by
the Servicer (but in no event later than the five Business Days after the
Servicer is required to make such delivery or deposit); or
(ii) The Servicer's Certificate required by Section 4.9 shall not have
been delivered to the Trust Collateral Agent and the Note Insurer within
one Business Day of the date such Servicer's Certificate is required to be
delivered; or the statement required by Section 4.10 or the report required
by Section 4.11 shall not have been delivered within five (5) days after
the date such statement or report, as the case may be, is required to be
delivered; or
(iii) Failure on the part of the Servicer to observe its covenants and
agreements set forth in Section 8.3 or, for so long as LBAC is the
Servicer, failure on the part of the Transferor to observe its covenants
and agreements set forth in Section 7.3; or
(iv) Failure on the part of LBAC, the Servicer or, for so long as LBAC
is the Servicer, the Transferor, as the case may be, duly to observe or to
perform in any material respect any other covenants or agreements of LBAC,
the Servicer or the Transferor (as the case may be) set forth in the Notes,
the Purchase Agreement, any Transfer Agreement or in this Agreement, which
failure shall continue unremedied for a period of 30 days after the date on
which written notice of such failure requiring the same to be remedied,
shall have been given (1) to LBAC, the Servicer or the Transferor (as the
case may be), by the Note Insurer or the Trust Collateral Agent, or (2) to
LBAC, the Servicer or the Transferor (as the case may be), and to the Trust
Collateral Agent and the Note Insurer by the Class A Noteholders evidencing
not less than 25% of the Class A Note Balance or, after the Policy
Expiration Date, by the Class B Noteholders, evidencing not less than 25%
of the Class B Note Balance; or
(v) The entry of a decree or order for relief by a court or regulatory
authority having jurisdiction in respect of LBAC or the Servicer (or, so
long as LBAC is the Servicer, the Transferor, or any of the Servicer's
other Affiliates, if the Servicer's ability to service the Receivables is
adversely affected thereby) in an involuntary case under the federal
bankruptcy laws, as now or hereafter in effect, or another present or
future, federal or state, bankruptcy, insolvency or similar law, or
appointing a receiver, liquidator, assignee, trustee, custodian,
sequestrator or other similar official of LBAC, the Servicer (or the
Transferor or any other Affiliate of LBAC, if applicable) or of any
substantial part of their respective properties or ordering the winding up
or liquidation of the affairs of LBAC or the Servicer (or the Transferor or
any other Affiliate of LBAC, if applicable) or the commencement of an
involuntary case under the federal or state bankruptcy, insolvency or
similar laws, as now or hereafter in effect, or another present or future,
federal or state bankruptcy, insolvency or similar law with respect to LBAC
or the Servicer (or the Transferor or any other Affiliate of LBAC, if
applicable) and such case is not dismissed within 60 days; or
(vi) The commencement by LBAC or the Servicer (or, so long as LBAC is
the Servicer, the Transferor or any of the Servicer's other Affiliates, if
the Servicer's ability to service the Receivables is adversely affected
thereby) of a voluntary case under the
54
federal bankruptcy laws, as now or hereafter in effect, or any other
present or future, federal or state, bankruptcy, insolvency or similar law,
or the consent by LBAC or the Servicer (or the Transferor or any other
Affiliate of LBAC, if applicable) to the appointment of or taking
possession by a receiver, liquidator, assignee, trustee, custodian,
sequestrator or other similar official of LBAC or the Servicer (or the
Transferor or any other Affiliate of LBAC, if applicable) or of any
substantial part of its property or the making by LBAC or the Servicer (or
the Transferor or any other Affiliate of LBAC, if applicable) of an
assignment for the benefit of creditors or the failure by LBAC or the
Servicer (or the Transferor or any other Affiliate of LBAC, if applicable)
generally to pay its debts as such debts become due or the taking of
corporate action by LBAC or the Servicer (or the Transferor or any other
Affiliate of LBAC, if applicable) in furtherance of any of the foregoing;
or
(vii) Any representation, warranty or statement of LBAC or the
Servicer or, for so long as LBAC is the Servicer, the Transferor, made in
this Agreement and, with respect to LBAC and the Transferor, the Purchase
Agreement, any Transfer Agreement or in each case any certificate, report
or other writing delivered pursuant hereto shall prove to be incorrect as
of the time when the same shall have been made (excluding, however, any
representation or warranty set forth in Section 3.2(b) of the Purchase
Agreement or Section 4 of any Transfer Agreement), and the incorrectness of
such representation, warranty or statement has a material adverse effect on
the Issuer and, within 30 days after written notice thereof shall have been
given (1) to LBAC, the Servicer or the Transferor (as the case may be) by
the Trust Collateral Agent or the Note Insurer or (2) to LBAC, the Servicer
or the Transferor (as the case may be), and to the Trust Collateral Agent
and the Note Insurer by the Class A Noteholders evidencing not less than
25% of the Class A Note Balance or, after the Policy Expiration Date, by
the Class B Noteholders, evidencing not less than 25% of the Class B Note
Balance, the circumstances or condition in respect of which such
representation, warranty or statement was incorrect shall not have been
eliminated or otherwise cured; or
(viii) The occurrence of an Insurance Agreement Event of Default; or
(ix) A claim is made under the Note Policy; or
(x) So long as a Note Insurer Default shall not have occurred and be
continuing, the Note Insurer shall not have delivered a Servicer Extension
Notice pursuant to Section 4.13;
then, and in each and every case, so long as a Servicer Termination Event shall
not have been remedied; PROVIDED, (i) no Note Insurer Default shall have
occurred and be continuing, the Note Insurer in its sole and absolute
discretion, or (ii) if a Note Insurer Default shall have occurred and be
continuing, then either the Trust Collateral Agent or the Trust Collateral Agent
acting at the direction of the Majorityholders, by notice then given in writing
to the Servicer (and to the Trust Collateral Agent if given by the Note Insurer
or by the Noteholders) or by the Note Insurer's failure to deliver a Servicer
Extension Notice pursuant to Section 4.13, may terminate all of the rights and
obligations of the Servicer under this Agreement. The Servicer shall be entitled
to its pro rata share of the Servicing Fee for the number of days in the
Collection Period prior to the
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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 Servicer, and in connection with system conversion costs, an aggregate
amount not to exceed for such conversion costs of $100,000, and to the extent
not so paid, such payment shall be made pursuant to Section 5.6(c)(v) hereof.
Upon receipt of notice of the occurrence of a Servicer Termination Event, the
Trust Collateral Agent shall give notice thereof to the Rating Agencies, the
Issuer and the Transferor. The predecessor Servicer shall grant the Transferor,
the Trust Collateral Agent, the Back-up Servicer and the Note Insurer reasonable
access to the predecessor Servicer's premises, computer files, personnel,
records and equipment at the predecessor Servicer's expense. If requested by the
Note Insurer, the Back-up Servicer or successor Servicer shall terminate any
arrangements relating to (i) the Lock-Box Account with the Lock-Box Bank, (ii)
the Lock-Box or (iii) the Lock-Box Agreement, and direct the Obligors to make
all payments under the Receivables directly to the Servicer at the predecessor
Servicer's expense (in which event the successor Servicer shall process such
payments directly, or, through a Lock-Box Account with a Lock-Box Bank at the
direction of the Note Insurer). The Trust Collateral Agent shall send copies of
all notices given pursuant to this Section 9.1 to the Note Insurer so long as no
Note Insurer Default shall have occurred and be continuing, and to the
Noteholders if a Note Insurer Default shall have occurred and be continuing.
SECTION 9.2. APPOINTMENT OF SUCCESSOR.
(a) Upon the Servicer's receipt of notice of termination pursuant to
Section 9.1 or the Servicer's resignation in accordance with the terms of this
Agreement, the predecessor Servicer
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shall continue to perform its functions as Servicer under this Agreement, in the
case of termination, only until the date specified in such termination notice
or, if no such date is specified in a notice of termination, until receipt of
such notice, and, in the case of resignation, until the later of (x) the date 45
days from the delivery to the Trust Collateral Agent of written notice of such
resignation (or written confirmation of such notice) in accordance with the
terms of this Agreement and (y) the date upon which the predecessor Servicer
shall become unable to act as Servicer, as specified in the notice of
resignation and accompanying Opinion of Counsel. In the event of termination of
the Servicer, the Back-up Servicer, shall assume the obligations of Servicer
hereunder on the date specified in such written notice (the "Assumption Date")
pursuant to the Servicing Assumption Agreement or, in the event that the Note
Insurer shall have determined that a Person other than the Back-up Servicer
shall be the successor Servicer in accordance with Section 9.2(c), on the date
of the execution of a written assumption agreement by such Person to serve as
successor Servicer. In the event of assumption of the duties of Servicer by the
Back-up Servicer, the Back-up Servicer shall be entitled to be paid by the
Servicer for the system conversion costs, an amount not to exceed $100,000. In
the event that such amount shall not have been timely paid by the Servicer, such
amount shall be paid under Section 5.6(c)(v) hereof; PROVIDED, HOWEVER, the
payment of such amount pursuant to Section 5.6(c)(v) shall not relieve the
Servicer of any obligation or liability to pay such amount. Notwithstanding the
Back-up Servicer's assumption of, and its agreement to perform and observe, all
duties, responsibilities and obligations of LBAC as Servicer under this
Agreement arising on and after the Assumption Date, the Back-up Servicer shall
not be deemed to have assumed or to become liable for, or otherwise have any
liability for, any duties, responsibilities, obligations or liabilities of LBAC,
the Transferor or any predecessor Servicer arising on or before the Assumption
Date, whether provided for by the terms of this Agreement, arising by operation
of law or otherwise, including, without limitation, any liability for, any
duties, responsibilities, obligations or liabilities of LBAC, the Transferor or
any predecessor Servicer arising on or before the Assumption Date under Sections
4.7 or 8.2 of this Agreement, regardless of when the liability, duty,
responsibility or obligation of LBAC, the Transferor or any predecessor Servicer
therefor arose, whether provided by the terms of this Agreement, arising by
operation of law or otherwise. In addition, if the Back-up Servicer shall be
legally unable to act as Servicer or shall have delivered a notice of
resignation pursuant to Section 8.5 hereof and a Note Insurer Default shall have
occurred and be continuing, the Back-up Servicer, the Trust Collateral Agent or
the Class A Noteholders evidencing not less than 66-2/3% of the Class A Note
Balance or, after the Class A Notes have been paid in full, by the Class B
Noteholders, evidencing not less than 51% of the Class B Note Balance may
petition a court of competent jurisdiction to appoint any successor to the
Servicer. Pending appointment pursuant to the preceding sentence, the Back-up
Servicer shall act as successor Servicer unless it is legally unable to do so,
in which event the predecessor Servicer shall continue to act as Servicer until
a successor has been appointed and accepted such appointment. In the event that
a successor Servicer has not been appointed at the time when the predecessor
Servicer has ceased to act as Servicer in accordance with this Section 9.2, then
the Note Insurer, in accordance with Section 9.2(c) shall appoint, or petition a
court of competent jurisdiction to appoint a successor to the Servicer under
this Agreement.
(b) Upon appointment, the successor Servicer shall be the successor in all
respects to the predecessor Servicer and shall be subject to all the
responsibilities, duties, and liabilities arising thereafter relating thereto
placed on the predecessor Servicer, and shall be entitled to the
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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 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
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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 and the correctness of the opinions expressed in any
certificates or opinions furnished to the Trust Collateral Agent or the
Custodian and conforming to the requirements of this Agreement;
(ii) Neither the Trust Collateral Agent nor the Custodian shall be
liable for an error of judgment made in good faith by a Responsible Officer
or officer of the Custodian, respectively, unless it shall be proved that
the Trust Collateral Agent or the Custodian, respectively shall have been
negligent in ascertaining the pertinent facts;
(iii) Neither the Trust Collateral Agent nor the Custodian shall be
liable with respect to any action taken, suffered, or omitted to be taken
in good faith in accordance with this Agreement or at the direction of the
Note Insurer or, after a Note Insurer Default, the Class A Noteholders
evidencing not less than 25% of the Class A Note Balance or, after the
Policy Expiration Date, by the Class B Noteholders, evidencing not less
than 25% of the Class B Note Balance, relating to the time, method, and
place of conducting any proceeding for any remedy available to the Trust
Collateral Agent or the Custodian, or exercising any trust or power
conferred upon the Trust Collateral Agent or the Custodian, as applicable,
under this Agreement;
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(iv) Neither the Trust Collateral Agent nor the Custodian shall be
charged with knowledge of any Servicer Termination Event or Event of
Default, unless a Responsible Officer assigned to the Trust Collateral
Agent's Corporate Trust Office or an officer of the Custodian receives
written notice of such Servicer Termination Event or Event of Default from
the Servicer, the Transferor, the Note Insurer or, after a Note Insurer
Default, the Class A Noteholders evidencing not less than 25% of the Class
A Note Balance or, after the Policy Expiration Date, by the Class B
Noteholders, evidencing not less than 25% of the Class B Note Balance (such
notice shall constitute actual knowledge of a Servicer Termination Event or
Event of Default by the Trust Collateral Agent); and
(v) Neither the Trust Collateral Agent nor the Custodian shall be
liable for any action taken, suffered or omitted by it in good faith and
reasonably believed by it to be authorized or within the discretion or
rights or powers conferred upon it by this Agreement.
(e) The Trust Collateral Agent and the Custodian may, but shall not be
required to, expend or risk its own funds or otherwise incur financial liability
in the performance of any of its duties hereunder, or in the exercise of any of
its rights or powers, unless it shall have been provided with indemnity against
such risk or liability in form and substance satisfactory to the Trust
Collateral Agent or Custodian, as applicable, and none of the provisions
contained in this Agreement shall in any event require the Trust Collateral
Agent or Custodian to perform, or be responsible for the manner of performance
of, any of the obligations of the Servicer under this Agreement except during
such time, if any, as the Trust Collateral Agent, in its capacity as Back-up
Servicer, shall be the successor to, and be vested with the rights, duties,
powers, and privileges of, the Servicer in accordance with the terms of this
Agreement.
(f) Except for actions expressly authorized by this Agreement, neither the
Trust Collateral Agent nor the Custodian shall take action reasonably likely to
impair the security interests created or existing under any Receivable or
Financed Vehicle or to impair the value of any Receivable or Financed Vehicle.
(g) All information obtained by the Trust Collateral Agent or the Custodian
regarding the Obligors and the Receivables, whether upon the exercise of its
rights under this Agreement or otherwise, shall be maintained by the Trust
Collateral Agent or Custodian, as applicable, in confidence and shall not be
disclosed to any other Person; PROVIDED that, nothing herein shall prevent the
Trust Collateral Agent or Custodian from delivering copies of such information
whether or not constituting confidential information, and disclosing other
information, whether or not confidential information to (i) its directors,
officers, employees, agents and professional consultants to the extent necessary
to carry on the Trust Collateral Agent's or Custodian's business in the ordinary
course, (ii) any Noteholder or the Note Insurer to the extent that such
Noteholder or the Note Insurer is entitled to such information under this
Agreement, but not otherwise, (iii) any governmental authority which
specifically requests (or as to which applicable regulations require) such
information, (iv) any nationally recognized rating agency in connection with the
rating of the Notes by such agency, or (v) any other Person to which such
delivery or disclosure may be necessary or appropriate, (a) in compliance with
any applicable law, rule, regulation or order, (b) in response to any subpoena
or other legal process, (c) in connection with any litigation to which the Trust
Collateral Agent or Custodian is a party or (d) in order to protect
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or enforce the rights of the Noteholders and the Note Insurer under the Issuer
established hereunder.
(h) Money held in trust by the Trust Collateral Agent or the Custodian need
not be segregated from other funds except to the extent required by law or the
terms of this Agreement or the Indenture.
(i) Every provision of this Agreement relating to the conduct or affecting
the liability of or affording protection to the Trust Collateral Agent or the
Custodian shall be subject to the provisions of this Section 10.1.
(j) The Trust Collateral Agent and the Custodian each shall, and each
hereby agrees that it will, perform all of the obligations and duties required
of it under the
Sale and Servicing Agreement.
(k) The Trust Collateral Agent shall, and hereby agrees that it will, hold
the Note Policy in trust, and will hold any proceeds of any claim on the Note
Policy in trust, solely for the use and benefit of the Class A Noteholders.
(l) Without limiting the generality of this Section 10.1, the Trust
Collateral Agent and the Custodian each shall have no duty (i) to see to any
recording, filing or depositing of this Agreement or any agreement referred to
herein or any financing statement evidencing a security interest in the Financed
Vehicles, or to see to the maintenance of any such recording or filing or
depositing or to any recording, refiling or redepositing of any thereof, (ii) to
see to any insurance of the Financed Vehicles or Obligors or to effect or
maintain any such insurance, (iii) to see to the payment or discharge of any
tax, assessment or other governmental charge or any Lien or encumbrance of any
kind owing with respect to, assessed or levied against any part of the Pledged
Property, (iv) to confirm or verify the contents of any reports or certificates
delivered to the Trust Collateral Agent or the Servicer pursuant to this
Agreement or the Trust Agreement believed by the Trust Collateral Agent or the
Custodian, as applicable, to be genuine and to have been signed or presented by
the proper party or parties, or (v) to inspect the Financed Vehicles at any time
or ascertain or inquire as to the performance of observance of any of the
Issuer's, the Transferor's or the Servicer's representations, warranties or
covenants or the Servicer's duties and obligations as servicer and as custodian
of the Receivable Files under the
Sale and Servicing Agreement.
(m) In no event shall The Chase Manhattan Bank, in any of its capacities
hereunder, be deemed to have assumed any duties of the Owner Trustee under the
Delaware Business Trust Statute, common law, or the Trust Agreement.
(n) Neither the Trust Collateral Agent nor the Custodian shall be required
to give any bond or surety in respect of the powers granted to it under this
Agreement.
SECTION 10.2. TRUST COLLATERAL AGENT TO ACT FOR THE NOTEHOLDERS AND
NOTE INSURER. Prior to the payment in full of the Notes and the Reimbursement
Obligations and the expiration of the term of the Note Policy, the Trust
Collateral Agent shall act solely for the benefit of the Noteholders and the
Note Insurer, as their interests may appear herein.
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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 exercise as a prudent person would
exercise or use under the circumstances in the conduct of its own affairs.
(iv) Neither the Trust Collateral Agent nor the Custodian shall be
bound to make any investigation into the facts or matters stated in any
resolution, certificate, statement, instrument, opinion, report, notice,
request, consent, order, approval, bond, or other paper or document (other
than for the duties of the Custodian pursuant to Section 3.4), unless
requested in writing to do so by the Note Insurer (if no Note Insurer
Default shall have occurred or be continuing), the Transferor or the Class
A Noteholders evidencing not less than 25% of the Class A Note Balance or,
after the Policy Expiration Date, by the Class B Noteholders, evidencing
not less than 25% of the Class B Note Balance; PROVIDED, HOWEVER, that, if
the payment within a reasonable time to the Trust Collateral Agent or the
Custodian of the costs, expenses or liabilities likely to be incurred by it
in the making of such investigation shall be, in the opinion of the Trust
Collateral Agent or the Custodian, not reasonably assured to the Trust
Collateral Agent or the Custodian by the security afforded to it by the
terms of this Agreement, the Trust Collateral Agent or the Custodian, as
applicable, may require indemnity in form and substance satisfactory to it
against such cost, expense or liability as a condition to so proceeding.
The reasonable expense of every such examination shall be paid by the
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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.
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
63
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 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.
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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 Class A Noteholders evidencing not less than 25%
of the Class A Note Balance or, after the Policy Expiration Date, by the Class B
Noteholders, evidencing not less than 25% of the Class B Note Balance), the
Servicer shall promptly appoint a successor Trust Collateral Agent or Custodian,
as applicable, by written instrument, in duplicate, one copy of which instrument
shall be delivered to the resigning Trust Collateral Agent or Custodian, as
applicable, and one copy to the successor Trust Collateral Agent or successor
Custodian. If no successor Trust Collateral Agent or successor Custodian shall
have been so appointed and have accepted appointment within 30 days after the
giving of such notice of resignation, the Note Insurer may appoint a successor
Trust Collateral Agent or Custodian, as applicable, by written instrument, in
duplicate, one copy of which instrument shall be delivered to the resigning
Trust Collateral Agent or Custodian and one copy to the successor Trust
Collateral Agent or Custodian. If no successor Trust Collateral Agent or
Custodian shall have been so appointed and have accepted appointment within 60
days after the giving of such notice of resignation, the resigning Trust
Collateral Agent or Custodian may petition any court of competent jurisdiction
for the appointment of a successor Trust Collateral Agent or Custodian, as
applicable. The Trust Collateral Agent or the Custodian may be removed at any
time by written demand of the Note Insurer delivered to the Trust Collateral
Agent or the Custodian, as applicable, and the Servicer.
(b) If at any time (i) the Trust Collateral Agent or the Custodian shall
cease to be eligible in accordance with the provisions of Section 10.7 and shall
fail to resign after written request therefor by the Servicer, (ii) the Trust
Collateral Agent or the Custodian, as applicable, shall be legally unable to
act, (iii) the Trust Collateral Agent and the Indenture Trustee shall be
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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 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.
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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 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
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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 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
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Collateral Agent, to the extent permitted by law, without the appointment of a
new or successor Trust Collateral Agent.
SECTION 10.12. REPRESENTATIONS AND WARRANTIES OF TRUST COLLATERAL AGENT
AND THE CUSTODIAN. The Custodian and the Trust Collateral Agent shall make the
following representations and warranties with respect to itself on which the
Transferor, the Servicer, the Originator, the Issuer, the Note Insurer and
Noteholders shall rely:
(i) The Custodian and the Trust Collateral Agent are a New York
banking corporation, duly organized, validly existing, and in good standing
under the laws of the State of New York and have the corporate 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 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
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upon the payment to Noteholders and the Certificateholder of all amounts
required to be paid to them pursuant to this Agreement, the Indenture and the
Trust Agreement, satisfaction of all Reimbursement Obligations, and the
expiration of any preference period related thereto and the disposition of all
property held as part of the Issuer; PROVIDED, HOWEVER, in any case there shall
be delivered to the Trust Collateral Agent and the Note Insurer an Opinion of
Counsel that all applicable preference periods under federal, state and local
bankruptcy, insolvency and similar laws have expired with respect to the
payments pursuant to this Section 11.1. The Servicer shall promptly notify the
Trust Collateral Agent, the Transferor, the Issuer, each Rating Agency and the
Note Insurer of any prospective termination pursuant to this Section 10.1.
(b) Upon any sale of the assets of the Issuer pursuant to Section 8.1 of
the Trust Agreement, the Servicer shall instruct the Trust Collateral Agent to
deposit the proceeds from such sale after all payments and reserves therefrom
(including the expenses of such sale) have been made (the "Insolvency Proceeds")
in the Collection Account.
(c) Notice of any termination of the Issuer shall be given by the Servicer
to the Owner Trustee, the Trust Collateral Agent, the Collateral Agent, the
Back-up Servicer, the Indenture Trustee, the Note Insurer and the Rating
Agencies as soon as practicable after the Servicer has received notice thereof.
(d) Following the satisfaction and discharge of the Indenture and the
payment in full of the principal of and interest on the Notes, the
Certificateholders will succeed to the rights of the Noteholders hereunder.
ARTICLE XII
ADMINISTRATIVE DUTIES OF THE SERVICER
SECTION 12.1. ADMINISTRATIVE DUTIES.
(a) DUTIES WITH RESPECT TO THE INDENTURE. The Servicer shall take all
necessary action that is the duty of the Issuer to take pursuant to the
Indenture, pursuant to Sections 2.9 (with respect to the notice provisions
contained therein), 3.4, 3.5, 3.6, 3.7, 3.9, 3.10, 3.17, 8.3, 9.1, 9.2, 9.3,
11.1 and 11.13 of the Indenture (in each case, excluding any duty to make
payments to the Noteholders and the Note Insurer). In addition, the Servicer
shall consult with the Owner Trustee as the Servicer deems appropriate regarding
the duties of the Issuer under the Indenture. The Servicer shall monitor the
performance of the Issuer and shall advise the Owner Trustee when action is
necessary to comply with the Issuer's duties under the Indenture. The Servicer
shall prepare for execution by the Issuer or shall cause the preparation by
other appropriate Persons of all such documents, reports, filings, instruments,
certificates and opinions as it shall be the duty of the Issuer to prepare, file
or deliver pursuant to the Indenture.
(b) DUTIES WITH RESPECT TO THE ISSUER.
(i) In addition to the duties of the Servicer set forth in this
Agreement or any of the Basic Documents, the Servicer shall perform such
calculations and shall prepare for execution by the Issuer or the Owner
Trustee or shall cause the preparation by other appropriate Persons of all
such documents, reports, filings, instruments, certificates and
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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:
(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.
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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 Note Insurer
Default has occurred and is continuing or the Policy Expiration Date has
occurred with the consent of the Majorityholders, which consent given pursuant
to this Section or pursuant to any other provision of this Agreement shall be
conclusive and binding on such Holders and on all future Holders of such Notes
and of any Notes issued upon the transfer thereof or in exchange thereof or in
lieu thereof whether or not notation of such consent is made upon the Notes, for
the purpose of adding any provisions to or changing in any manner or eliminating
any of the provisions of this Agreement, or of modifying in any manner the
rights of the Holders of Notes; PROVIDED, HOWEVER, that, in the case of either
clause (i) or (ii) above, no such amendment shall (a) increase or reduce in any
manner the amount of, or accelerate or delay the timing of, or change the
allocation or priority of, collections of payments on Receivables or payments
that shall be required to be made on any Note or the Certificate or change the
applicable Note Rate without the consent of each Noteholder and
Certificateholder affected thereby, (b) reduce the aforesaid percentage of the
Note Balance required to consent to any such amendment, without the consent of
the Holders of all Notes then outstanding or eliminate the right of the
Noteholder or the Certificateholder to consent to any change described in clause
(a) affecting the Noteholder or the Certificateholder without the consent of the
Noteholder or the Certificateholder, as applicable, or (c) result in a downgrade
or withdrawal of the then current rating of the Notes by either of the Rating
Agencies without the consent of all the Noteholders; PROVIDED, FURTHER that in
the case of clause (ii) above, this Agreement may be amended from time to time
by the Issuer, the Transferor, the Originator, the Servicer, the Trust
Collateral Agent, the Back-up Servicer and the Custodian, for any of the
following purposes:
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(x) to correct or amplify the description of any property at any time
conveyed to the Issuer hereunder or any Transfer Agreement, or better to
assure, convey and confirm unto the property conveyed pursuant hereto or
any Transfer Agreement;
(y) to add to the covenants of the Transferor, the Originator or the
Servicer, for the benefit of the Holders of the Notes and the Note Insurer;
or
(z) to cure any ambiguity, to correct or supplement any provision
herein or in any Transfer Agreement which may be inconsistent with any
other provision herein or in any Transfer Agreement or to make any other
provisions with respect to matters or questions arising under this
Agreement or in any Transfer Agreement; PROVIDED that such action pursuant
to this subclause (z) shall not adversely affect in any material respect
the interests of the Holders of the Notes, as evidenced by satisfaction of
the Rating Agency Condition with respect to such amendment.
(b) The Trust Collateral Agent shall furnish prior notice of any such
proposed amendment to each Rating Agency and promptly after the execution of any
such amendment or consent, the Trust Collateral Agent shall furnish a copy of
such amendment and/or consent, if applicable, to each Noteholder, each of the
Rating Agencies and the Lock-Box Processor.
(c) Prior to the execution of any amendment to this Agreement, the Trust
Collateral Agent shall be entitled to receive and rely upon an Opinion of
Counsel stating that the execution of such amendment is authorized or permitted
by this Agreement and the Opinion of Counsel referred to in Section 13.2(i)(1).
The Trust Collateral Agent may, but shall not be obligated to, enter into any
such amendment which affects the Trust Collateral Agent's own rights, duties or
immunities under this Agreement or otherwise.
SECTION 13.2. PROTECTION OF TITLE.
(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
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and continuation statements have been executed and filed that are necessary
fully to preserve and protect the interest of the Trust Collateral Agent in the
Receivables and the other Trust Assets, and reciting the details of such filings
or (B) stating that, in the opinion of such counsel, no such action shall be
necessary to preserve and protect such interest.
(c) Each of the Transferor and the Servicer shall have an obligation to
give the Trust Collateral Agent, the Owner Trustee, the Note Insurer and the
other party at least thirty days' prior written notice of any relocation of its
principal executive office if, as a result of such relocation, the applicable
provisions of the UCC would require the filing of any amendment of any
previously filed financing or continuation statement or of any new financing
statement, shall promptly file any such amendment and shall deliver an Opinion
of Counsel (A) stating that, in the opinion of such counsel, all amendments to
all previously filed financing statements and continuation statements have been
executed and filed that are necessary fully to preserve and protect the interest
of the Trust Collateral Agent in the Receivables, and reciting the details of
such filings or (B) stating that, in the opinion of such counsel, no such action
shall be necessary to preserve and protect such interest. The Servicer shall at
all times maintain each office from which it shall service Receivables, and its
principal executive office, within the United States of America.
(d) The Servicer shall maintain accounts and records as to each Receivable
accurately and in sufficient detail to permit (i) the reader thereof to know at
any time the status of such Receivable, including payments and recoveries made
and payments owing (and the nature of each) and (ii) reconciliation between
payments or recoveries on (or with respect to) each Receivable and the amounts
from time to time deposited in the Collection Account in respect of such
Receivable.
(e) The Servicer shall maintain its computer systems so that, from and
after the time of conveyance under this Agreement of the Receivables to the
Issuer, the Servicer's master computer records (including any back-up archives)
that refer to a Receivable shall indicate clearly the interest of Long Beach
Acceptance Auto Receivables Trust 2000-1 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.
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(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 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.
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(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 Class A
Noteholders evidencing not less than 25% of the Class A Note Balance or, after
the Policy Expiration Date, by the Class B Noteholders, evidencing not less than
25% of the Class B Note Balance shall have made written request upon the Trust
Collateral Agent to institute such action, suit or proceeding in its own name as
Trustee under this Agreement and shall have offered to the Trust Collateral
Agent such reasonable indemnity as it may require against the costs, expenses,
and liabilities to be incurred therein or thereby and the Trust Collateral
Agent, for 30 days after its receipt of such notice, request, and offer of
indemnity, shall have neglected or refused to institute any such action, suit or
proceeding and during such 30-day period no request or waiver inconsistent with
such written request has been given to the Trust Collateral Agent pursuant to
this Section or Section 8.4; no one or more Holders of Notes shall have any
right in any manner whatever by virtue or by availing itself or themselves of
any provisions of this Agreement to affect, disturb, or prejudice the rights of
the Holders of any other of the Notes, or to obtain or seek to obtain priority
over or preference to any other such Holder, or to enforce any right, under this
Agreement except in the manner provided in this Agreement and for the equal,
ratable, and common benefit of all Noteholders. For the protection and
enforcement of the provisions of this Section 13.3, each Noteholder and the
Trust Collateral Agent shall be entitled to such relief as can be given either
at law or in equity. Nothing in this Agreement shall be construed as giving the
Noteholders any direct right to make a claim on the Note Policy.
SECTION 13.4. GOVERNING LAW. THIS AGREEMENT SHALL BE CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, AND THE OBLIGATIONS, RIGHTS,
AND REMEDIES OF THE PARTIES UNDER THIS AGREEMENT SHALL BE DETERMINED IN
ACCORDANCE WITH SUCH LAWS WITHOUT REGARD TO CONFLICT OF LAWS PRINCIPLES (EXCEPT
WITH REGARD TO THE UCC).
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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 Xxxxx'x 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: Xxxxxx Square North, 0000
Xxxxx Xxxxxx Xxxxxx, Xxxxxxxxxx, Xxxxxxxx 00000-0000, Attention: Corporate Trust
Administration (Telecopy: (000) 000-0000), (b) in the case of the Transferor, at
the following address: Xxx Xxxx Xxxxxx Xxxxx, Xxxxxxx, Xxx Xxxxxx 00000
(Telecopy: (000) 000-0000), 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: Xxx
Xxxx Xxxxxx Xxxxx, Xxxxxxx, Xxx Xxxxxx 00000 (Telecopy: (000) 000-0000),
Attention: General Counsel, (d) in the case of the Trust Collateral Agent, at
the Corporate Trust Office (Telecopy: (000) 000-0000), (e) in the case of the
Custodian, at the Corporate Trust Office (Telecopy: (000) 000-0000), (f) in the
case of Standard & Poor's, at the following address: 00 Xxxxx Xxxxxx, 00xx
Xxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention: Asset Backed Surveillance
Department, (g) in the case of Xxxxx'x, at the following address: 00 Xxxxxx
Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention: ABS Monitoring Department and (h)
in the case of the Note Insurer, at the following address: 000 Xxxx Xxxxxx, Xxx
Xxxx, Xxx Xxxx 00000, Attention: Senior Vice President, Transaction Oversight,
Re: Long Beach Acceptance Auto Receivables Trust 2000-1. Any notice required or
permitted to be mailed to a Noteholder shall be given by Federal Express or
similar overnight courier service, postage prepaid, at the address of such
Holder as shown in the Note Register. Any notice so mailed within the time
prescribed in this Agreement shall be conclusively presumed to have been duly
given, whether or not the Noteholder shall receive such notice.
(b) The Trust Collateral Agent shall give prompt written notice to each of
the Transferor, the Rating Agencies and each Noteholder of (i) any amendments to
the Insurance Agreement or the Note Policy (upon receipt of written notice of
any such amendments from LBAC or the Servicer), (ii) any change in the identity
of the Note Paying Agent and (iii) any failure to make payment under the Note
Policy.
SECTION 13.6. SEVERABILITY OF PROVISIONS. If any one or more of the
covenants, agreements, provisions, or terms of this Agreement shall be for any
reason whatsoever held invalid, then such covenants, agreements, provisions, or
terms shall be deemed severable from the remaining covenants, agreements,
provisions, or terms of this Agreement and shall in no way affect the validity
or enforceability of the other provisions of this Agreement or of the Notes or
the rights of the Holders thereof.
SECTION 13.7. ASSIGNMENT TO INDENTURE TRUSTEE. The Transferor hereby
acknowledges and consents to any mortgage, pledge, assignment and grant of a
security interest by the Issuer to the Indenture Trustee pursuant to the
Indenture for the benefit of the Noteholders and the Note Insurer of all right,
title and interest of the Issuer in, to and under the Receivables and/or the
assignment of any or all of the Issuer's rights and obligations hereunder to the
Indenture Trustee.
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SECTION 13.8. LIMITATION OF LIABILITY OF OWNER TRUSTEE, CUSTODIAN AND
TRUST COLLATERAL AGENT.
(a) Notwithstanding anything contained herein to the contrary, this
Agreement has been countersigned by Wilmington Trust Company not in its
individual capacity but solely in its capacity as Owner Trustee of the Issuer
and in no event shall Wilmington Trust Company in its individual capacity or,
except as expressly provided in the Trust Agreement, as Owner Trustee, have any
liability for the representations, warranties, covenants, agreements or other
obligations of the Issuer hereunder or in any of the certificates, notices or
agreements of the Issuer delivered pursuant hereto, as to all of which recourse
shall be had solely to the assets of the Issuer. For all purposes of this
Agreement, in the performance of its duties or obligations hereunder or in the
performance of any duties or obligations of the Issuer hereunder, the Owner
Trustee shall be subject to, and entitled to the benefits of, the terms and
provisions of the Trust Agreement.
(b) Notwithstanding anything contained herein to the contrary, this
Agreement has been executed and delivered by Chase Manhattan, not in its
individual capacity but solely as Back-up Servicer, Custodian and Trust
Collateral Agent and in no event shall Chase Manhattan have any liability for
the representations, warranties, covenants, agreements or other obligations of
the Issuer hereunder or in any of the certificates, notices or agreements of the
Issuer delivered pursuant hereto, as to all of which recourse shall be had
solely to the assets of the Issuer.
SECTION 13.9. INDEPENDENCE OF THE SERVICER. For all purposes of this
Agreement, the Servicer shall be an independent contractor and shall not be
subject to the supervision of the Issuer, the Trust Collateral Agent, the
Back-up Servicer or the Owner Trustee with respect to the manner in which it
accomplishes the performance of its obligations hereunder. Unless expressly
authorized by this Agreement, the Servicer shall have no authority to act for or
represent the Issuer or the Owner Trustee in any way and shall not otherwise be
deemed an agent of the Issuer or the Owner Trustee.
SECTION 13.10. NO JOINT VENTURE. Nothing contained in this Agreement
(i) shall constitute the Servicer and either of the Issuer or the Owner Trustee
as members of any partnership, joint venture, association, syndicate,
unincorporated business or other separate entity, (ii) shall be construed to
impose any liability as such on any of them or (iii) shall be deemed to confer
on any of them any express, implied or apparent authority to incur any
obligation or liability on behalf of the others.
SECTION 13.11. NONPETITION COVENANT. None of the Transferor, the
Servicer, the Trust Collateral Agent, the Custodian, the Back-up Servicer or
LBAC shall, prior to the date which is one year and one day after the
termination of this Agreement with respect to the Issuer or the Transferor,
petition or otherwise invoke the process of any court or government authority
for the purpose of commencing or sustaining a case against the Issuer or the
Transferor under any Federal or State bankruptcy, insolvency or similar law or
appointing a receiver, liquidator, assignee, trustee, custodian, sequestrator or
other similar official of the Issuer or the Transferor or any substantial part
of its property, or ordering the winding up or liquidation of the affairs of the
Issuer or the Transferor.
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SECTION 13.12. THIRD PARTY BENEFICIARIES. Except as otherwise
specifically provided herein with respect to Noteholders, the parties to this
Agreement hereby manifest their intent that no third party other than the Note
Insurer, the Owner Trustee and the Custodian with respect to the indemnification
provisions set forth herein, shall be deemed a third party beneficiary of this
Agreement, and specifically that the Obligors are not third party beneficiaries
of this Agreement. The Note Insurer and its successors and assigns shall be a
third-party beneficiary to the provisions of this Agreement, and shall be
entitled to rely upon and directly enforce such provisions of this Agreement so
long as no Note Insurer Default shall have occurred and be continuing. Except as
expressly stated otherwise herein or in the Basic Documents, any right of the
Note Insurer to direct, appoint, consent to, approve of or take any action under
this Agreement, shall be a right exercised by the Note Insurer in its sole and
absolute discretion. The Note Insurer may disclaim any of its rights and powers
under this Agreement (but not its duties and obligations under the Note Policy)
upon delivery of a written notice to the Trust Collateral Agent.
SECTION 13.13. CONSENT TO JURISDICTION.
(a) TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, THE PARTIES HERETO
HEREBY IRREVOCABLY SUBMIT TO THE JURISDICTION OF THE UNITED STATES DISTRICT
COURT FOR THE SOUTHERN DISTRICT OF NEW YORK AND ANY COURT IN THE STATE OF NEW
YORK LOCATED IN THE CITY AND COUNTY OF NEW YORK, AND ANY APPELLATE COURT FROM
ANY THEREOF, IN ANY ACTION, SUIT OR PROCEEDING BROUGHT AGAINST IT AND TO OR IN
CONNECTION WITH ANY OF THE TRANSACTION DOCUMENTS OR THE TRANSACTION OR FOR
RECOGNITION OR ENFORCEMENT OF ANY JUDGMENT, AND THE PARTIES HERETO HEREBY
IRREVOCABLY AND UNCONDITIONALLY AGREE THAT ALL CLAIMS IN RESPECT OF ANY SUCH
ACTION OR PROCEEDING MAY BE HEARD OR DETERMINED IN SUCH NEW YORK STATE COURT OR
IN SUCH FEDERAL COURT. THE PARTIES HERETO AGREE THAT A FINAL JUDGMENT IN ANY
SUCH ACTION, SUIT OR PROCEEDING SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN OTHER
JURISDICTIONS BY SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER PROVIDED BY LAW. TO
THE EXTENT PERMITTED BY APPLICABLE LAW, THE PARTIES HERETO HEREBY WAIVE AND
AGREE NOT TO ASSERT BY WAY OF MOTION, AS A DEFENSE OR OTHERWISE IN ANY SUCH
SUIT, ACTION OR PROCEEDING, ANY CLAIM THAT IT IS NOT PERSONALLY SUBJECT TO THE
JURISDICTION OF SUCH COURTS, THAT THE SUIT, ACTION OR PROCEEDING IS BROUGHT IN
AN INCONVENIENT FORUM, THAT THE VENUE OF THE SUIT, ACTION OR PROCEEDING IS
IMPROPER OR THAT THE RELATED DOCUMENTS OR THE SUBJECT MATTER THEREOF MAY NOT BE
LITIGATED IN OR BY SUCH COURTS.
(b) To the extent permitted by applicable law, the parties hereto shall not
seek and hereby waive the right to any review of the judgment of any such court
by any court of any other nation or jurisdiction which may be called upon to
grant an enforcement of such judgment.
(c) Each of LBAC and the Transferor hereby agree that until such time at
the Notes and the Reimbursement Obligations have been paid in full and the Note
Policy has expired in
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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 000 Xxxxxxxx
Xxxxxx, Xxx Xxxx, Xxx Xxxx 10007). Each of LBAC and the Transferor agrees that
service of such process upon such Person shall constitute personal service of
such process upon it.
SECTION 13.14. HEADINGS. The headings of articles and sections and the
table of contents contained in this Agreement are provided for convenience only.
They form no part of this Agreement and shall not affect its construction or
interpretation. Unless otherwise indicated, all references to articles and
sections in this Agreement refer to the corresponding articles and sections of
this Agreement.
SECTION 13.15. TRIAL BY JURY WAIVED. EACH PARTY HERETO HEREBY WAIVES,
TO THE FULLEST EXTENT PERMITTED BY LAW, ANY RIGHT TO A TRIAL BY JURY IN RESPECT
OF ANY LITIGATION ARISING DIRECTLY OR INDIRECTLY OUT OF, UNDER OR IN CONNECTION
WITH ANY OF THE TRANSACTION DOCUMENTS OR THE TRANSACTION. EACH PARTY HERETO (A)
CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY PARTY HERETO HAS
REPRESENTED, EXPRESSLY OR OTHERWISE, THAT IT WOULD NOT, IN THE EVENT OF
LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT
HAS BEEN INDUCED TO ENTER INTO THE TRANSACTION DOCUMENTS TO WHICH IT IS A PARTY
BY, AMONG OTHER THINGS, THIS WAIVER.
SECTION 13.16. ENTIRE AGREEMENT. This Agreement sets forth the entire
agreement between the parties with respect to the subject matter hereof, and
this Agreement supersedes and replaces any agreement or understanding that may
have existed between the parties prior to the date hereof in respect of such
subject matter.
SECTION 13.17. EFFECT OF POLICY EXPIRATION DATE. Notwithstanding
anything to the contrary set forth herein, all references to any right of the
Note Insurer to direct, appoint, consent to, accept, approve of, take or omit to
take any action under this Agreement or any other Basic Document shall be
inapplicable at all times after the Policy Expiration Date, and (i) if such
reference provides for another party or parties to take or omit to take any such
action following a Note Insurer Default, such party or parties shall be entitled
to take or omit to take such action following the Policy Expiration Date and
(ii) if such reference does not provide for another party or parties to take or
omit to take any such action following a Note Insurer Default, then the
Indenture Trustee acting at the direction of the Class B Noteholders holding in
the aggregate more than 50% of the outstanding Class B Note Balance shall have
the right to take or omit to take any such action following the Policy
Expiration Date. In addition, any other provision of this Agreement or any other
Basic Document which is operative based in whole or in part on whether a Note
Insurer Default has or has not occurred shall, at all times on or after the
Policy Expiration Date, be deemed to refer to whether or not the Policy
Expiration Date has occurred.
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IN WITNESS WHEREOF, the Issuer, the Transferor, the Originator, the
Servicer, the Trust Collateral Agent, the Back-up Servicer and the Custodian
have caused this
Sale and Servicing Agreement to be duly executed by their
respective officers as of the day and year first above written.
LONG BEACH ACCEPTANCE RECEIVABLES CORP.,
as Transferor
By:
-------------------------------------
Name:
Title:
LONG BEACH ACCEPTANCE CORP.,
as Originator and Servicer
By:
-------------------------------------
Name:
Title:
THE CHASE MANHATTAN BANK,
as Back-up Servicer, Custodian and Trust
Collateral Agent
By:
-------------------------------------
Name:
Title:
LONG BEACH ACCEPTANCE AUTO RECEIVABLES
TRUST 2000-1, as Issuer
By: Wilmington Trust Company, not in its
individual capacity, but solely as
Owner Trustee
By:
-------------------------------------
Name:
Title:
[
Sale and Servicing Agreement]
ANNEX A
Final Version
ANNEX A-DEFINED TERMS
"ACCOUNTS" means the Collection Account, the Note Account, the Policy
Payments Account, the Pre-Funding Account, the Capitalized Interest Account,
the Class B Reserve Account and the Spread Account.
"ACTUARIAL RECEIVABLE" means any Receivable under which the portion of a
payment allocable to interest and the portion of a payment allocable to
principal is determined in accordance with the "actuarial" method.
"ADDITIONAL INTEREST DEPOSIT" means $127,561.78, which amount shall be
remitted by the Trust Collateral Agent on the initial Payment Date to provide
funds for the additional four (4) days of interest on the Class A Notes and
Class B Notes for the period from the Closing Date through June 18, 2000.
"ADDITION NOTICE" means, with respect to the transfer of Subsequent
Receivables to the Trust pursuant to the
Sale and Servicing Agreement and a
Transfer Agreement, a written notice which shall be given to the Trust
Collateral Agent, the Note Insurer (in addition to such notice, the Trust
Collateral Agent and the Note Insurer shall both receive an electronic
transmission, in a format acceptable to the Trust Collateral Agent and the
Note Insurer, of the designated Subsequent Receivables to be conveyed to the
Trust) and each Rating Agency pursuant to Section 2.2(b) of the
Sale and
Servicing Agreement not later than five Business Days prior to the related
Subsequent Transfer Date, of the Transferor's designation of Subsequent
Receivables to be conveyed to the Trust and the aggregate Principal Balance
of such Subsequent Receivables as of the related Subsequent Cutoff Date.
"AFFILIATE" of any Person means any Person who directly or indirectly
controls, is controlled by, or is under direct or indirect common control
with such Person. For purposes of this definition of "Affiliate", the term
"control" (including the terms "controlling", "controlled by" and "under
common control with") means the possession, directly or indirectly, of the
power to direct or cause a direction of the management and policies of a
Person, whether through the ownership of voting securities, by contract or
otherwise.
"AGENCY AGREEMENT" means the Agency Agreement dated as of March 31, 1997
among Chase Texas, LBAC, GCFP and other Program Parties as defined therein,
as amended, modified or supplemented from time to time in accordance with the
terms thereof, including a Program Party Counterpart pursuant to Section 2
thereof among Chase Texas, as agent thereunder, the Trust Collateral Agent
and LBAC, dated as of the Closing Date.
"AMC" means Ameriquest Mortgage Company, a Delaware corporation, or, as
applicable, its successors.
"AMOUNT FINANCED" means, with respect to a Receivable, the aggregate
amount originally advanced under the Receivable toward the purchase price of
the Financed Vehicle and any related costs.
Annex A-1
"ANNUAL PERCENTAGE RATE" or "APR" of a Receivable means the annual rate
of finance charges stated in the Receivable. If after the Closing Date, in
the case of an Initial Receivable, or the related Subsequent Transfer Date,
in the case of a Subsequent Receivable, the annual rate with respect to such
Receivable as of the Closing Date or related Subsequent Transfer Date, as
applicable, is reduced as a result of (i) an insolvency proceeding involving
the ed Obligor or (ii) pursuant to the Soldiers' and Sailors' Civil Relief
Act of 1940, as amended, Annual Percentage Rate or APR shall refer to such
reduced rate.
"ASSIGNMENTS" means each of the Initial Assignment and each Subsequent
Assignment.
"ASSUMPTION DATE" has the meaning set forth in Section 9.2 of the
Sale
and Servicing Agreement.
"AUTHORIZED OFFICER" means, with respect to the Issuer, any officer or
agent of the Servicer, as applicable, who is authorized to act for the
Issuer in accordance with Section 12.1 of the
Sale and Servicing Agreement,
in matters relating to the Issuer and who is identified on the list of
Authorized Officers delivered by the Servicer to the Indenture Trustee on
the Closing Date such list may be modified or supplemented from time to
time thereafter).
"AVAILABLE FUNDS" shall mean, for each Payment Date, the sum of the
following amounts (without duplication) with respect to the related
Collection Period: (i) all collections on receivables (including amounts
received in connection with extensions, rebates or adjustments for
Receivables granted by the Servicer pursuant to Section 4.2 of the Sale and
Servicing Agreement) and with respect to each Collection Period during the
Funding Period, the related ahead Amount, if any; (ii) Liquidation Proceeds
received during such Collection Period with respect to Receivables that
became Liquidated Receivables during such Collection Period in accordance
with the Servicer's customary servicing procedures; (iii) proceeds from
Recoveries with respect to Liquidated Receivables; (iv) the Purchase Amount
of each Receivable that became a Purchased Receivable as of the last day of
such Collection Period; (v) the amount of Simple Interest Advance
deposited to the Collection Account by the Servicer with respect to such
Collection Period; (vi) any earnings on investments of funds in the
Collection Account and, to the extent necessary to cover the Pre-Funding
Interest Amount, the Pre-Funding Account; (vii) with respect to the Payment
Date occurring in July 2000, the Additional Interest Deposit; and (viii)
the Negative Carry Amount, if any, for such Payment Date to the extent it is
deposited to the Note Account pursuant to Section 5.6(a)(iv) of the Sale
and Servicing Agreement; provided that the Available Funds with respect to
any Payment Date shall not include any Simple Interest excess remitted to
the Servicer or deposited in the Spread Account.
"BACK-UP SERVICER" means Chase Manhattan, in its capacity as Back-up
Servicer pursuant to the terms of the Servicing Assumption Agreement or
such Person as shall have been appointed Back-up Servicer pursuant to
Section 9.2(c) of the Sale and Servicing Agreement.
"BACK-UP SERVICER FEE" means the fee payable to the Back-up Servicer so
long as LBAC is the Servicer, calculated in the same manner, on the same
basis and for the same period as the Servicing Fee is calculated pursuant
to Section 4.8 of the Sale and Servicing Agreement, the Back-up
Servicer Fee Rate rather than the Servicing Fee Rate.
Annex A-2
"BACK-UP SERVICER FEE RATE" shall be 0.0225% per annum, payable monthly.
"BANKRUPTCY REMOTE ENTITY" means any special or limited purpose
corporation, partnership or other entity generally structured in accordance
with the guidelines of one or more nationally recognized statistical rating
organizations for such entities, whose certificate of incorporation,
partnership agreement or other governing document includes limitations on
purpose; limitations on amendments to the certificate of incorporation and
bylaws, partnership agreement or other governing documents; limitations on
ability to incur debt; limitations on liquidation, consolidated and merger or
the sale of all or a substantial part of its assets; covenants to maintain
separateness from affiliates; a special purpose bankruptcy remote equity
owner, in the case of a partnership; and at least two independent directors
(of such corporation or of the corporate partner of such partnership).
"BASIC DOCUMENTS" means the Sale and Servicing Agreement, the Indenture,
each Transfer Agreement, the Purchase Agreement, the Spread Account
Agreement, the Trust Agreement, the Notes, the Certificate, the Servicer
Termination Side Letter, the Insurance Agreement, the Indemnification
Agreement, the Guarantee, the Note Purchase Agreement, the Premium Letter,
the Lock-Box Agreement, the Agency Agreement, the Servicing Assumption
Agreement, the Stock Pledge Agreement, the GCFP Release and the Chase Texas
Release.
"BUSINESS DAY" means any day other than a Saturday, a Sunday or a day on
which commercial banking institutions or trust companies in the City of New
York, the State of Texas, the State of New Jersey, the State of Delaware or
the city in which the Corporate Trust Office of the Trust Collateral Agent or
the Owner Trustee is relocated subject to prior written notice with respect
to such address to the Trust Collateral Agent, the Servicer and the Note
Insurer or any other location of any successor Servicer, successor Trust
Collateral Agent or successor Owner Trustee shall be authorized or obligated
by law, executive order, or governmental decree to be closed.
"CAPITALIZED INTEREST ACCOUNT" means the account designated as such,
established and maintained pursuant to Section 5.1(b) of the Sale and
Servicing Agreement.
"CAPITALIZED INTEREST REQUIREMENT" means (i) with respect to the July
2000 Payment Date, an amount equal to two month's interest on the Pre-Funded
Amount as of the last day of the immediately preceding Collection Period at a
rate equal to the sum of (a) the Weighted Average Note Rate, PLUS (b) the
Indenture Trustee Fee Rate, PLUS (c) the Custodian Fee Rate, PLUS (d) the
Class A Percentage of the rate at which the Premium for the Policy is
calculated, MINUS (e) 2.5%, and (ii) with respect to the August 2000 Payment
Date, an amount equal to one month's interest on the Pre-Funded Amount as of
the last day of the immediately preceding Collection Period at a rate equal
to the sum of (a) the Weighted Average Note Rate, PLUS (b) the Indenture
Trustee Fee Rate, PLUS (c) the Custodian Fee Rate, PLUS (d) the Class A
Percentage of the rate at which the Premium for the Policy is calculated,
MINUS (e) 2.5%.
"CASUALTY" means, with respect to a Financed Vehicle, the total loss or
destruction of such Financed Vehicle.
Annex A-3
"CERTIFICATE" means the trust certificate issued by the Issuer pursuant
to the Trust Agreement.
"CERTIFICATEHOLDER" means the registered holder of the Certificate as
set forth in the certificate register maintained by the Owner Trustee
pursuant to the Trust Agreement.
"CHARGEBACK OBLIGATION" means, with respect to any Receivable liquidated
or prepaid in full, any obligation of a Dealer, as provided by the related
Dealer Agreement, to refund to LBAC certain portions of amounts previously
paid to the Dealer upon origination of such Receivable on account of the APR
of such Receivable exceeding the related buy rate.
"CHASE MANHATTAN" means The Chase Manhattan Bank, a New York banking
corporation, and its successors in interest.
"CHASE TEXAS" means Chase Bank of Texas, National Association, a
national banking association, and its successors in interest.
"CHASE TEXAS RELEASE" means the security interest release executed as of
June 1, 2000 by Chase Texas in favor of LBAC.
"CLASS" means Class A Notes or Class B Notes, as applicable.
"CLASS A INTEREST PAYMENT AMOUNT" means, for any Payment Date, an amount
equal to the product of (x) 1/12 (or with respect to the initial Payment
Date, 34/360), (y) the Class A Note Rate and (z) the Class A Note Balance as
of such Payment Date (without giving effect to any payments to be made on
such Payment Date).
"CLASS A MEMORANDUM" means the Private Placement Memorandum dated June
15, 2000 relating to the Class A Notes.
"CLASS A NOTE BALANCE" means initially, the Initial Class A Note Balance
and, thereafter, the Initial Class A Note Balance, reduced by all amounts
previously distributed to Class A Noteholders and allocable to principal.
"CLASS A NOTE INTEREST" means, for any Payment Date, the sum of the
Class A Interest Payment Amount for such Payment Date and the Class A
Interest Carryover Shortfall, if any, as of the immediately preceding Payment
Date.
"CLASS A NOTE RATE" means 7.87% per annum.
"CLASS A NOTE" means any one of the 7.87% Long Beach Acceptance
Receivables Trust 2000-1, Class A Notes, executed by the Owner Trustee on
behalf of the Issuer and authenticated by the Indenture Trustee in
substantially the form set forth in Exhibit A-1 attached to the Indenture.
"CLASS A NOTEHOLDER" means the Person in whose name a Class A Note is
registered on the Note Register.
Annex A-4
"CLASS A PAYMENT AMOUNT" with respect to a Payment Date will be an
amount equal to the sum of the Class A Principal Payment Amount and the Class
A Interest Payment Amount.
"CLASS A POOL FACTOR" means, with respect to any Payment Date, an
eight-digit decimal figure equal to the Class A Note Balance as of the close
of business on the last day of the related Collection Period divided by the
Initial Class A Note Balance. The Class A Pool Factor will be 1.0000000 as of
the Closing Date; thereafter, the Class A Pool Factor will decline to reflect
reductions in the Class A Note Balance.
"CLASS A INTEREST CARRYOVER SHORTFALL" means, as of the close of
business on any Payment Date, the excess of the Class A Interest Payment
Amount for such Payment Date and (without duplication) any outstanding Class
A Interest Carryover Shortfall from the preceding Payment Date, plus thirty
(30) days of interest on such outstanding Class A Interest Carryover
Shortfall, to the extent permitted by applicable law, at the Class A Note
Rate from and including such preceding Payment Date to but excluding the
current Payment Date, over the amount of interest actually paid to the
holders of the Class A Notes on such current Payment Date.
"CLASS A PERCENTAGE" means 92%.
"CLASS A PRINCIPAL CARRYOVER SHORTFALL" means, as of the close of
business on any Payment Date, the excess of the Class A Principal Payment
Amount and (without duplication) any outstanding Class A Principal Carryover
Shortfall from the preceding Payment Date, over the amount of principal
actually paid to the holders of the Class A Notes on such current Payment
Date.
"CLASS A PRINCIPAL PAYMENT AMOUNT" means, for any Payment Date, the sum
of (i) the Class A Percentage of the Principal Payment Amount and (ii) if
such Payment Date is the Final Funding Period Payment Date, the Class A
Percentage of any Mandatory Special Redemption. In addition, on the Final
Scheduled Payment Date, the Class A Principal Payment Amount will equal the
then outstanding Class A Note Balance.
"CLASS B MEMORANDUM" means, collectively, the Class A Memorandum and the
Class B Supplement thereto dated June 15, 2000.
"CLASS B NOTE BALANCE" means, initially, the Initial Class B Note
Balance and, thereafter, the Initial Class B Note Balance, reduced by all
amounts previously distributed to Class B Noteholders and allocable to
principal.
"CLASS B NOTE RATE" means 12.00% per annum.
"CLASS B NOTE" means any one of the 12.00% Long Beach Acceptance
Receivables Trust 2000-1, Class B Notes, executed by the Owner Trustee on
behalf of the Issuer and authenticated by the Indenture Trustee in
substantially the form set forth in Exhibit A-2 attached to the Indenture.
"CLASS B NOTEHOLDER" means the Person in whose name a Class B Note is
registered on the Note Register.
Annex A-5
"CLASS B PARITY AMOUNT" means, with respect to any Payment Date, an
amount equal to 8% of the then outstanding aggregate Principal Balance of the
Receivables as of the end of the immediately preceding Collection Period.
"CLASS B INTEREST CARRYOVER SHORTFALL" means, as of the close of
business on any Payment Date, the excess of the Class B Interest Payment
Amount for such Payment Date and (without duplication) any outstanding
Class B Interest Carryover Shortfall from the preceding Payment Date plus
thirty (30) days of interest on such outstanding Class B Interest Carryover
Shortfall, to the extent permitted by applicable law, at the Class B Note
Rate from and including such preceding Payment Date to but excluding the
current Payment Date, over the amount of interest actually paid to the
holders of the Class B Notes on such current Payment Date.
"CLASS B INTEREST PAYMENT AMOUNT" means, for any Payment Date, an amount
equal to the product of (x) 1/12 (or with respect to the initial Payment
Date, 34/360), (y) the Class B Note Rate and (z) the Class B Note Balance as
of such Payment Date (without giving effect to any payments to be made on
such Payment Date).
"CLASS B NOTE INTEREST" means, for any Payment Date, the sum of the
Class B Interest Payment Amount for such Payment Date and the Class B
Interest Carryover Shortfall as of the immediately preceding Payment Date.
"CLASS B PAYMENT AMOUNT" means, with respect to a Payment Date, an
amount equal to the sum of the Class B Interest Payment Amount and the Class
B Principal Payment Amount, if any, with respect to such Payment Date.
"CLASS B PERCENTAGE" means 8%.
"CLASS B POOL FACTOR" means, with respect to any Payment Date, an
eight-digit decimal figure equal to the Class B Note Balance as of the close
of business on the last day of the related Collection Period divided by the
Initial Class B Note Balance. The Class B Pool Factor will be 1.0000000 as of
the Closing Date; thereafter, the Class B Pool Factor will decline to reflect
reductions in the Class B Note Balance.
"CLASS B PRINCIPAL PAYMENT AMOUNT" means, (i) with respect to any
Payment Date on which there are no Class B Reserve Account Release Amounts
available for payment of principal to the Class B Noteholders, zero, and
(ii) with respect to any Payment Date on which there are Class B Reserve
Account Release Amounts available for payment of principal to the Class B
Noteholders, either (a) if the Class B Note Balance is greater than the Class
B Parity Amount with respect to such Payment Date, an amount equal to 100% of
such Class B Reserve Account Release Amounts, or (b) if the Class B Note
Balance is less than or equal to the Class B Parity Amount with respect to
such Payment Date, the lessor of (x) 100% of such Class B Reserve Account
Release Amounts and (y) the sum of (1) the Class B Percentage of the
Principal Payment Amount and (2) 75% of (A) such Class B Reserve Account
Release Amounts MINUS (B) the Class B Percentage of the Principal Payment
Amount. In addition, on the Final Scheduled Payment Date, the Class B
Principal Payment Amount will equal the then outstanding Class B Note Balance.
Annex A-6
"CLASS B RESERVE ACCOUNT" means the account designated as such,
established and maintained pursuant to Section 5.15 of the Sale and Servicing
Agreement.
"CLASS B RESERVE ACCOUNT DRAW" means, with respect to any Payment
Date, the amount, if any, withdrawn from the Class B Reserve Account to the
extent necessary to pay the full amount described in Sections 5.6(c)(vi) and
5.15(d) of the Sale and Servicing Agreement above on such Payment Date.
"CLASS B RESERVE ACCOUNT RELEASE AMOUNT" means, with respect to any
Payment Date, the excess of amounts on deposit in the Class B Reserve Account
(after giving effect to the withdrawal of any Class B Reserve Account Draw on
such Payment Date and any deposit of the Current Spread Account Release
Amount on such Payment Date) over the Specified Class B Reserve Account
Balance with respect to such Payment Date.
"CLASS B RESERVE ACCOUNT SUBSEQUENT DEPOSIT" means, with respect to
any Subsequent Transfer Date, an amount equal to the product of 3.5% and the
aggregate Principal Balance of Subsequent Receivables, as of the related
Subsequent Cutoff Date, conveyed to the Trust on such Subsequent Transfer
Date.
"CLEARING AGENCY" means an organization registered as a "clearing
agency" pursuant to Section 17A of the Securities Exchange Act of 1934, as
amended.
"CLEARING AGENCY PARTICIPANT" means a broker, dealer, bank or other
financial institution or other Person for whom from time to time a Clearing
Agency effects book-entry transfers and pledges of securities deposited with
the Clearing Agency.
"CLOSING DATE" means June 15, 2000.
"CODE" means the Internal Revenue Code of 1986, including any
successor or amendatory provisions.
"COLLATERAL AGENT" means the Collateral Agent named in the Spread
Account Agreement and any successor thereto pursuant to the terms of the
Spread Account Agreement.
"COLLECTION ACCOUNT" means the account designated as such,
established and maintained pursuant to Section 5.1(b) of the Sale and
Servicing Agreement.
"COLLECTED INTEREST" means for any Collection Period the sum of (i)
the portion of all payments made by or on behalf of the Obligors of Simple
Interest Receivables in respect of which any payment is actually received
during such Collection Period and (ii) all Liquidation Proceeds and Purchase
Amounts with respect to such Simple Interest Receivables, in each case that
are allocable to interest in accordance with the Servicer's customary
servicing procedures.
"COLLECTION PERIOD" means each calendar month during the term of the
Sale and Servicing Agreement. Any amount stated "as of the close of business
on the last day of a Collection Period" shall give effect to the following
calculations as determined as of the end of the day on such last day: (1) all
applications of collections and (2) all payments. The term
Annex A-7
"related Collection Period" shall mean the Collection Period ended on the
last day of the month preceding a date of determination.
"CONFIDENTIAL INFORMATION" means, in relation to any Person, any
written information delivered or made available by or on behalf of LBAC or
the Transferor to such Person in connection with or pursuant to the Sale and
Servicing Agreement or the transactions contemplated thereby which is
proprietary in nature and clearly marked or identified as being confidential
information, other than information (i) which was publicly known, or
otherwise known to such Person, at the time of disclosure (except pursuant to
disclosure in connection with the Sale and Servicing Agreement), (ii) which
subsequently becomes publicly known through no act or omission by such
Person, or (iii) which otherwise becomes known to such Person other than
through disclosure by LBAC or the Transferor.
"CONTROLLING PARTY" means the Note Insurer, so long as no Note
Insurer Default shall have occurred and be continuing or the Policy
Expiration Date has not occurred, and the Indenture Trustee, at the direction
of the Majorityholders, for so long as a Note Insurer Default shall have
occurred and be continuing or the Policy Expiration Date has occurred.
"CORPORATE TRUST OFFICE" means (i) with respect to the Indenture
Trustee, the Trust Collateral Agent and the Collateral Agent, the principal
office of the Trust Collateral Agent at which its corporate trust business
shall be administered, which office at the Closing Date is located at 000
Xxxx 00xx Xxxxxx, 00xx Xxxxx Xxx Xxxx, Xxx Xxxx 00000, Attention: Capital
Markets Fiduciary Services; and (ii) with respect to the Owner Trustee, the
principal corporate trust office of the Owner Trustee, which as of the
Closing Date is Xxxxxx Square North, 0000 Xxxxx Xxxxxx Xxxxxx, Xxxxxxxxxx,
Xxxxxxxx 00000-0000, Attention: Corporate Trust Administration.
"CRAM DOWN LOSS" means, with respect to a Receivable (other than a
Liquidated Receivable), if a court of appropriate jurisdiction in an
insolvency proceeding issues a ruling that reduces the amount owed on a
Receivable or otherwise modifies or restructures the Scheduled Receivable
Payments to be made thereon, an amount equal to (a) the Principal Balance of
the Receivable immediately prior to such order minus the Principal Balance of
such Receivable as so reduced, modified or restructured plus (b) if such
court shall have issued an order reducing the effective rate of interest on
such Receivable, the excess of (i) the net present value (using a discount
rate equal to the adjusted APR on such Receivable) of the Scheduled
Receivable Payments as so modified or restructured over (ii) the net present
value (using a discount rate equal to the original APR on such Receivable) of
the Scheduled Receivable Payments as so modified or restructured. A Cram Down
Loss will be deemed to have occurred on the date of issuance of such order.
"CREDIT AND SECURITY AGREEMENT" means the Credit and Security
Agreement, dated as of June 15, 2000, by and among GCFP, as lender, the
Transferor, as borrower, and LBAC, as guarantor, as the same may be amended,
supplemented or otherwise modified from time to time in accordance with the
terms thereof.
"CURRENT SPREAD ACCOUNT RELEASE AMOUNT" means, with respect to any
Payment Date, the excess of the amount on deposit in the Spread Account
(after giving effect to the
Annex A-8
withdrawal of any Deficiency Claim Amount from the Spread Account on such
Payment Date and the deposit to the Spread Account of the remaining Available
Funds pursuant to clause (viii) of Section 5.6(c) of the Sale and Servicing
Agreement on such Payment Date) in excess of the Requisite Amount with
respect to such Payment Date.
"CUSTODIAL LETTER" shall have the meaning assigned to such term in
Section 3.5(c) of the Sale and Servicing Agreement.
"CUSTODIAN" means, initially, The Chase Manhattan Bank, a New York
banking corporation and its successors-in-interest, acting in its capacity as
such under the Sale and Servicing Agreement, and thereafter, in the event
that The Chase Manhattan Bank is replaced in accordance with Section 10.8(c)
of the Sale and Servicing Agreement, the Servicer.
"CUSTODIAN FEE" means, with respect to any Payment Date, the greater
of (A) the product of (i) one-twelfth of the Custodian Fee Rate and (ii) the
Pool Balance as of the last day of the immediately preceding Collection
Period and (B) $1000.
"CUSTODIAN FEE RATE" means 0.022% per annum.
"CUTOFF DATE" means the Initial Cutoff Date or the Subsequent Cutoff
Date, as applicable.
"DEALER" means, with respect to a Receivable, the seller of the
related Financed Vehicle, who originated and assigned such Receivable to the
Originator pursuant to a Dealer Agreement, who in turn sold such Receivable
to the Transferor.
"DEALER AGREEMENT" means each agreement between a Dealer and the
Originator pursuant to which such Dealer assigned a Receivable to the
Originator.
"DEALER TITLE ADDENDUM" means, with respect to each Receivable as to
which the Dealer Title Guaranty, if applicable, is included in the related
Dealer Agreement, a schedule of Dealers delivered to the Custodian listing all
Dealers for which the Dealer Title Guaranty is included in the related Dealer
Agreement.
"DEALER TITLE GUARANTY" means, where, for reasons that are
reasonably acceptable to the Servicer, the relevant Dealer is temporarily
unable to furnish a Lien Certificate, a written guaranty of such Dealer
(which may be included in the related Dealer Agreement if so indicated on the
Dealer Title Addendum); each of such documents having been signed where
required by the Dealer in the appropriate spaces, and with all blanks
properly filled in and otherwise correctly prepared.
"DEFAULT" means any occurrence that is, or with notice or the lapse
of time or both would become, an Event of Default.
"DEFAULTED RECEIVABLE" means, with respect to any Payment Date, a
Receivable with respect to which the earlier of any of the following shall
have occurred: (i) the related Obligor has failed to pay at least 95% of a
Scheduled Receivable Payment by its due date and such failure continues for
90 days (calculated based on a 360-day year consisting of twelve 00-
Xxxxx X-0
day months), (ii) the Servicer has repossessed the related Financed Vehicle
(and any applicable redemption period has expired) or (iii) such Receivable
is in default and the Servicer has determined in good faith that payments
thereunder are not likely to be resumed; PROVIDED, HOWEVER, that Defaulted
Receivable shall not include any Optional Repurchase Receivable.
"DEFICIENCY CLAIM AMOUNT" shall have the meaning specified in
Section 5.11(a) of the Sale and Servicing Agreement.
"DEFICIENCY CLAIM DATE" means, with respect to any Payment Date, the
fourth Business Day immediately preceding such Payment Date.
"DEFICIENCY NOTICE" shall have the meaning specified in Section
5.11(a) of the Sale and Servicing Agreement.
"DEFICIENT LIQUIDATED RECEIVABLE" means a Liquidated Receivable with
respect to which the Servicer has repossessed and disposed of the related
Financed Vehicle, or with respect to which the Financed Vehicle has suffered
a total loss through casualty, confiscation or other cause, and following the
application of the Recoveries received by the Servicer as a result of the
repossession and disposition or other loss of such Financed Vehicle, the
Principal Balance of such Liquidated Receivable (assuming for purposes hereof
that such Principal Balance is not deemed to be zero) remains in excess of
zero.
"DEFINITIVE NOTE" means a definitive, fully registered Note issued
pursuant to the Indenture.
"DELIVERY" means, with respect to any Eligible Investments, the
perfection and priority of a security interest in which is governed by the
law of a jurisdiction which has adopted the 1994 Revision to Article 8 of the
UCC:
1. With respect to bankers' acceptances, commercial paper,
negotiable certificates of deposit and other obligations that constitute
"instruments" within the meaning of Section 9-105(1)(i) of the UCC (other
than certificated securities) and are susceptible of physical delivery,
transfer thereof to the Trust Collateral Agent by physical delivery to the
Trust Collateral Agent, indorsed to, or registered in the name of, the Trust
Collateral Agent or its nominee or indorsed in blank and such additional or
alternative procedures as may hereafter become appropriate to effect the
complete transfer of ownership of any such Eligible Investments to the Trust
Collateral Agent free and clear of any adverse claims, consistent with
changes in applicable law or regulations or the interpretation thereof;
2. With respect to a "certificated security" (as defined in Section
8-102(a)(4) of the UCC), transfer thereof:
(a) by physical delivery of such certificated security to the Trust
Collateral Agent, provided that if the certificated security is
in registered form, it shall be indorsed to, or registered in the
name of, the Trust Collateral Agent or indorsed in blank; or
Annex A-10
(b) by physical delivery of such certificated security in registered
form to a "securities intermediary" (as defined in Section
8-102(a)(14) of the UCC) acting on behalf of the Trust
Collateral Agent if the certificated security has been specially
indorsed to the Trust Collateral Agent by an effective
endorsement.
3. With respect to any security issued by the U.S. Treasury, the
Federal Home Loan Mortgage Corporation or by the Federal National Mortgage
Association that is a book-entry security held through the Federal Reserve
System pursuant to Federal book entry regulations, the following procedures,
all in accordance with applicable law, including applicable federal
regulations and Articles 8 and 9 of the UCC: book-entry registration of such
property to an appropriate book-entry account maintained with a Federal
Reserve Bank by a securities intermediary which is also a "depositary"
pursuant to applicable federal regulations and issuance by such securities
intermediary of a deposit advice or other written conformation of such
book-entry registration to the Trust Collateral Agent of the purchase by the
securities intermediary on behalf of the Trust Collateral Agent of such
book-entry security; the making by such securities intermediary of entries in
its books and records identifying such book-entry security held through the
Federal Reserve System pursuant to Federal book-entry regulations as
belonging to the Trust Collateral Agent and indicating that such securities
intermediary holds such book-entry security solely as agent for the Trust
Collateral Agent; and such additional or alternative procedures as may
hereafter become appropriate to effect complete transfer of ownership of any
such Eligible Investments to the Trust Collateral Agent free of any adverse
claims, consistent with changes in applicable law or regulations or the
interpretation thereof;
4. With respect to any item of Eligible Investments that is an
"uncertificated security" (as defined in Section 8-102(a)(18) of the UCC) and
that is not governed by clause (3) above, transfer thereof:
(a) (x) by registration to the Trust Collateral Agent as the
registered owner thereof, on the books and records of the issuer
thereof; or (y) by another Person (not a securities intermediary)
who either becomes the registered owner of the uncertificated
security on behalf of the Trust Collateral Agent, or having become
the registered owner acknowledges that it holds for the Trust
Collateral Agent; or
(b) the issuer thereof has agreed that it will comply with
instructions originated by the Trust Collateral Agent without
further consent of the registered owner thereof.
5. With respect to a "security entitlement" (as defined in Section
8-102(a)(17) of the UCC), if a securities intermediary (A) indicates by book
entry that a "financial asset" (as defined in Section 8-102(a)(9) of the UCC)
has been credited to be the Trust Collateral Agent's "securities account" (as
defined in Section 8-501(a) of the UCC), (B) receives a financial asset (as
so defined) from the Trust Collateral Agent or acquires a financial asset for
the Trust Collateral Agent, and in either case, accepts it for credit to the
Trust Collateral Agent's securities account (as so defined), (C) becomes
obligated under other law, regulation
Annex A-11
or rule to credit a financial asset to the Trust Collateral
Agent's securities account, or (D) has agreed that it will
comply with "entitlement orders" (as defined in Section
8-102(a)(8) of the UCC) originated by the Trust Collateral Agent
without further consent by the "entitlement holder" (as defined
in Section 8-102(a)(7) of the UCC), of a confirmation of the
purchase and the making by such securities intermediary of
entries on its books and records identifying as belonging to the
Trust Collateral Agent of (I) a specific certificated security in
the securities intermediary's possession, (II) a quantity of
securities that constitute or are part of a fungible bulk of
certificated securities in the securities intermediary's
possession, or (III) a quantity of securities that constitute or
are part of a fungible bulk of securities shown on the account of
the securities intermediary on the books of another securities
intermediary.
In each case of Delivery contemplated pursuant to paragraphs 1 through 5
above, the Trust Collateral Agent shall make appropriate notations on its
records, and shall cause same to be made of the records of its nominees,
indicating that such Eligible Investments are held in trust pursuant to and
as provided in the Sale and Servicing Agreement.
"DEPOSITORY AGREEMENT" means the agreement entered into among the
Issuer, the Indenture Trustee, and The Depository Trust Company, as the
initial Clearing Agency, in connection with the issuance of the Notes,
substantially in the form of Exhibit B attached to the Indenture.
"DETERMINATION DATE" means, with respect to any Payment Date, the
fifth Business Day preceding such Payment Date.
"DOCUMENTATION CHECKLIST" means the form attached to the Sale and
Servicing Agreement as Exhibit E.
"DRAW DATE" means, with respect to any Payment Date, the third
Business Day (as defined in the Policy) immediately preceding such Payment
Date.
"ELIGIBLE ACCOUNT" means (i) a segregated trust account that is
maintained with a depository institution acceptable to the Controlling Party,
or (ii) a segregated direct deposit account maintained with a depository
institution or trust company organized under the laws of the United States of
America, or any of the States thereof, or the District of Columbia, having a
certificate of deposit, short-term deposit or commercial paper rating of at
least "A-1+" by Standard & Poor's and "P-1" by Moody's and acceptable to the
Controlling Party. In either case, such depository institution or trust
company shall have been approved by the Controlling Party, acting in its
discretion, by written notice to the Collateral Agent.
"ELIGIBLE INVESTMENTS" mean book-entry securities, negotiable
instruments or securities represented by instruments in bearer or registered
form, with respect to which the Trust Collateral Agent has taken Delivery,
which evidence:
(a) direct obligations of, and obligations fully guaranteed as to
the full and timely payment by, the United States of America;
(b) demand deposits, time deposits or certificates of deposit of any
depository institution or trust company incorporated under the laws of the
United States of America or any
Annex A-12
State thereof and subject to supervision and examination by Federal or State
banking or depository institution authorities; PROVIDED, HOWEVER, that at the
time of the investment or contractual commitment to invest therein, the
commercial paper or other short-term unsecured debt obligations (other than such
obligations the rating of which is based on the credit of a Person other than
such depository institution or trust company) thereof shall be rated "A-1+" by
Standard & Poor's and "P-1" by Moody's;
(c) commercial paper that, at the time of the investment or contractual
commitment to invest therein, is rated "A-1+" by Standard & Poor's and "P-1" by
Moody's;
(d) bankers' acceptances issued by any depository institution or trust
company referred to in clause (b) above;
(e) repurchase obligations with respect to any security pursuant to a
written agreement that is a direct obligation of, or fully guaranteed as to the
full and timely payment by, the United States of America or any agency or
instrumentality thereof the obligations of which are backed by the full faith
and credit of the United States of America, in either case entered into with (i)
a depository institution or trust company (acting as principal) described in
clause (b) or (ii) a depository institution or trust company the deposits of
which are insured by the Federal Deposit Insurance Corporation and whose
commercial paper or other short-term unsecured debt obligations are rated
"A-1+" by Standard & Poor's and "P-1" by Moody's and long-term unsecured debt
obligations are rated "AAA" by Standard & Poor's and "Aaa" by Moody's;
(f) with the prior written consent of the Note Insurer, money market
mutual funds registered under the Investment Company Act having a rating, at the
time of such investment, from each of the Rating Agencies in the highest
investment category granted thereby; and
(g) any other investment as may be acceptable to the Note Insurer and
the Rating Agencies, as evidenced by the Note Insurer's prior written consent to
that effect, as may from time to time be confirmed in writing to the Trust
Collateral Agent by the Note Insurer, and only upon notification to each of
Moody's and Standard & Poor's.
Any Eligible Investments may be purchased by or through the Trust
Collateral Agent or any of its Affiliates and shall include such securities
issued by the Trust Collateral Agent or its affiliates.
"ELIGIBLE SERVICER" means LBAC, the Back-up Servicer or another Person
which at the time of its appointment as Servicer, (i) is servicing a portfolio
of motor vehicle retail installment sale contracts and/or motor vehicle
installment loans, (ii) is legally qualified and has the capacity to service the
Receivables, (iii) has demonstrated the ability professionally and competently
to service a portfolio of motor vehicle retail installment sale contracts and/or
motor vehicle installment loans similar to the Receivables with reasonable skill
and care, and (iv) is qualified and entitled to use, pursuant to a license or
other written agreement, and agrees to maintain the confidentiality of, the
software which the Servicer uses in connection with performing its duties and
responsibilities under the Sale and Servicing Agreement or otherwise has
available software which is adequate to perform its duties and responsibilities
under the Sale and Servicing Agreement.
Annex A-13
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"EVENT OF DEFAULT" means an event specified in Section 5.1 of the
Indenture.
"EXPECTED INTEREST" means, with respect to any Collection Period, the
product of (i) one-twelfth of the weighted average of the APRs (calculated based
on a 360-day year consisting of twelve 30-day months) of Simple Interest
Receivables which were neither 30 days or more delinquent (calculated based on a
360-day year consisting of twelve 30-day months) nor Defaulted Receivables as of
the first day of the current Collection Period, weighted on the basis of the
aggregate Principal Balances of such Simple Interest Receivables as of the first
day of the current Collection Period and (ii) the aggregate Principal Balances
of Simple Interest Receivables which were neither 30 days or more delinquent
(calculated based on a 360-day year consisting of twelve 30-day months) nor
Defaulted Receivables, as of the close of business on the last day of the
immediately preceding Collection Period.
"FINAL FUNDING PERIOD PAYMENT DATE" means the Payment Date immediately
succeeding the date on which the Funding Period ends (or on the Payment Date on
which the Funding Period ends if the Funding Period ends on a Payment Date).
"FINAL SCHEDULED PAYMENT DATE" means January 19, 2007.
"FINANCED VEHICLE" means a new or used automobile, van, sport utility
vehicle or light duty truck, together with all accessions thereto, securing an
Obligor's indebtedness under a Receivable.
"FUNDING PERIOD" means the period from the Closing Date until the
earliest to occur of (i) the date on which the remaining Pre-Funded Amount is
less than $100,000, (ii) the date on which an Event of Default under the
Indenture occurs or (iii) the close of business on August 31, 2000.
"GCFP" means Greenwich Capital Financial Products, Inc.
"GCFP RELEASE" means the security interest release executed as of June
1, 2000 by GCFP in favor of LBAC.
"GRANT" means mortgage, pledge, bargain, warrant, alienate, remise,
release, convey, assign, transfer, create, xxxxx x xxxx upon and a security
interest in and right of set-off against, deposit, set over and confirm pursuant
to the Indenture. A Grant of the Pledged Property or of any other agreement or
instrument shall include all rights, powers and options (but none of the
obligations) of the Granting party thereunder, including the immediate and
continuing right to claim for, collect, receive and give receipt for principal
and interest payments in respect of the Pledged Property and all other moneys
payable thereunder, to give and receive notices and other communications, to
make waivers or other agreements, to exercise all rights and options, to bring
proceedings in the name of the granting party or otherwise and generally to do
and receive anything that the granting party is or may be entitled to do or
receive thereunder or with respect thereto.
Annex A-14
"GREENWICH" means Greenwich Capital Markets, Inc., a Delaware
corporation.
"GREENWICH INFORMATION" means the information contained in the section
entitled "Placement of the Notes" in the Private Placement Memorandum.
"GUARANTEE" means the Guarantee, dated as of June 1, 2000, by AMC in
favor of the Back-up Servicer, the Custodian, the Trust Collateral Agent (in its
capacity as such and for the benefit of the Noteholders), and the Note Insurer,
as the same may be amended, supplemented or otherwise modified from time to time
in accordance with the terms thereof.
"INDEBTEDNESS" means, with respect to any Person at any time, (a)
indebtedness or liability of such Person for borrowed money whether or not
evidenced by bonds, debentures, notes or other instruments, or for the
deferred purchase price of property or services (including trade
obligations); (b) obligations of such Person as lessee under leases which
should have been or should be, in accordance with generally accepted
accounting principles, recorded as capital leases; (c) current liabilities of
such Person in respect of unfunded vested benefits under plans covered by
Title IV of ERISA; (d) obligations issued for or liabilities incurred on the
account of such Person; (e) obligations or liabilities of such Person arising
under acceptance facilities; (f) obligations of such Person under any
guarantees, endorsements (other than for collection or deposit in the
ordinary course of business) and other contingent obligations to purchase, to
provide funds for payment, to supply funds to invest in any Person or
otherwise to assure a creditor against loss; (g) obligations of such Person
secured by any lien on property or assets of such Person, whether or not the
obligations have been assumed by such Person; or (h) obligations of such
Person under any interest rate or currency exchange agreement.
"INDEMNIFICATION AGREEMENT" means the Indemnification Agreement, dated
as of June 1, 2000, among Greenwich Capital Markets, Inc. as the initial
purchaser of the Notes, the Transferor and the Note Insurer, as the same may be
amended, supplemented or otherwise modified from time to time in accordance with
the terms thereof.
"INDENTURE" means the Indenture, dated as of June 1, 2000, between the
Issuer and the Indenture Trustee, as the same may be amended and supplemented
from time to time.
"INDENTURE TRUSTEE" means The Chase Manhattan Bank, a New York banking
corporation, not in its individual capacity but as indenture trustee under the
Indenture, or any successor Indenture Trustee under the Indenture.
"INDENTURE TRUSTEE FEE" means the monthly fee payable on each Payment
Date to the Indenture Trustee, Trust Collateral Agent and Collateral Agent for
services rendered during the preceding Collection Period in an amount equal to
the greater of (A) the product of (i) one-twelfth of the Indenture Trustee Fee
Rate and (ii) the Note Balance as of the last day of the second preceding
Collection Period and (B) $250; PROVIDED, HOWEVER, that with respect to the
initial Payment Date, the Indenture Trustee Fee will equal the product of
one-twelfth of the Indenture Trustee Fee Rate and the Initial Note Balance.
"INDENTURE TRUSTEE FEE RATE" means 0.004% per annum.
Annex A-15
"INDEPENDENT" means, when used with respect to any specified Person,
that the person (a) is in fact independent of the Issuer, any other obligor
upon the Notes, the Transferor and any Affiliate of any of the foregoing
persons, (b) does not have any direct financial interest or any material
indirect financial interest in the Issuer, any such other obligor, the
Transferor or any Affiliate of any of the foregoing Persons and (c) is not
connected with the Issuer, any such other obligor, the Transferor or any
Affiliate of any of the Foregoing Persons as an officer, employee, promoter,
underwriter, trustee, partner, director or Person performing similar
functions.
"INDEPENDENT CERTIFICATE" means a certificate or opinion to be
delivered to the Trust Collateral Agent under the circumstances described in,
and otherwise complying with, the applicable requirements of Section 4.11 of
the Sale and Servicing Agreement, prepared by an Independent appraiser or
other expert appointed by an Issuer Order and approved by the Trust
Collateral Agent in the exercise of reasonable care, and such opinion or
certificate shall state that the signer has read the definition of
"Independent" in Annex A to the Sale and Servicing Agreement and that the
signer is Independent within the meaning thereof.
"INITIAL ASSIGNMENT" means the assignment dated as of June 1, 2000
by LBAC to the Transferor substantially in the form of Exhibit A to the
Purchase Agreement, pursuant to which the Initial Receivables are conveyed to
the Trust.
"INITIAL CLASS A NOTE BALANCE" means $128,800,000.
"INITIAL CLASS B NOTE BALANCE" means $11,200,000.
"INITIAL CLASS B RESERVE ACCOUNT DEPOSIT" means $3,312,292.63.
"INITIAL CUTOFF DATE" means the close of business on May 31, 2000.
"INITIAL NOTE BALANCE" means the sum of the Initial Class A Note
Balance and the Initial Class B Note Balance.
"INITIAL RECEIVABLES" means the Receivables initially transferred by
LBAC to the Transferor pursuant to the Purchase Agreement and by the
Transferor to the Issuer pursuant to the Sale and Servicing Agreement on the
Closing Date, which Receivables are listed on the Schedule of Receivables.
"INITIAL RECEIVABLES PURCHASE PRICE" means $94,636,932.41 (the
Principal Balance of the Initial Receivables as of the Initial Cutoff Date).
"INITIAL SPREAD ACCOUNT DEPOSIT" shall have the meaning set forth in
the Spread Account Agreement.
"INITIAL TRANSFERRED PROPERTY" shall have the meaning specified in
Section 2.1(a) of the Purchase Agreement.
Annex A-16
"INITIAL TRUST ASSETS" means all money, instruments, rights and
other property transferred by the Transferor to the Trust set forth in items
(i) through (x) in Section 2.1 of the Sale and Servicing Agreement, including
all proceeds thereof.
"INSURANCE AGREEMENT" means the Insurance and Indemnity Agreement,
dated as of June 1, 2000, among LBAC, the Transferor, the Issuer and the Note
Insurer, as the same may be amended, supplemented or otherwise modified from
time to time in accordance with the terms thereof.
"INSURANCE AGREEMENT EVENT OF DEFAULT" means an "Event of Default"
as defined in the Insurance Agreement.
"INSURANCE AGREEMENT INDENTURE CROSS DEFAULT" has the meaning
specified therefor in the Insurance Agreement.
"INSURER INFORMATION" means any information contained in the section
entitled "The Note Insurer" in the Private Placement Memorandum and the
financial statements of the Note Insurer attached to the Private Placement
Memorandum.
"INVESTMENT COMPANY ACT" means the Investment Company Act of 1940,
as amended.
"ISSUER" or "TRUST" means the Long Beach Acceptance Auto Receivables
Trust 2000-1, a Delaware business trust, created pursuant to the Trust
Agreement.
"ISSUER ORDER" and "ISSUER REQUEST" means a written order or request
signed in the name of the Issuer by any one of its Authorized Officers and
delivered to the Indenture Trustee.
"ISSUER'S CERTIFICATE" means a certificate completed and executed
for the Issuer by an Authorized Officer, substantially in the form of, in the
case of an assignment to LBAC, Exhibit A-1 to the Sale and Servicing
Agreement, and in the case of an assignment to the Servicer, Exhibit A-2 to
the Sale and Servicing Agreement.
"XXXXXX CASE" means Xxxxxx x. Xxxxxxx Ford, Case No. BC229917, filed
May 12, 2000 in California Superior Court, Los Angeles County.
"LBAC" means Long Beach Acceptance Corp., a Delaware corporation,
and its successors.
"LBAC INFORMATION" means (1) any information contained in or
incorporated by reference in the Class A Memorandum or the Class B Memorandum
other than the Greenwich Information or the Insurer Information, (2) the Rule
144A Information, (3) any information contained in or incorporated by
reference in any amendment or supplement to the Class A Memorandum or the
Class B Memorandum, as applicable, in each case other than the Greenwich
Information or the Insurer Information and (4) any other information provided
by LBAC or the Transferor to Greenwich and/or by Greenwich to investors, in
each case as to which LBAC or the Transferor certifies in writing constitutes
"LBAC Information."
Annex A-17
"LEGAL FILES" means, with respect to each Receivable, the following
documents held by the Custodian pursuant to Section 3.4 of the Sale and
Servicing Agreement: the fully executed original of such Receivable with
fully executed assignment from the related Dealer to the Originator (together
with any agreements modifying the Receivable, including, without limitation,
any extension agreements), a fully executed assignment in blank from the
Originator, the Lien Certificate or the Title Package, the fully executed
original of any form legally required to be executed by a co-xxxxxx, evidence
of verification of physical damage insurance coverage and the original of
each credit application fully executed by the related Obligor in respect of
such Receivable. Notwithstanding the foregoing, in the event that customary
procedures and practices of any applicable state permit the use of any
instrument or document in lieu of evidence of verification of physical damage
insurance coverage, the term "Legal Files" shall be deemed to include any
such instrument or document in lieu of evidence of verification of physical
damage insurance coverage.
"LIEN" means a security interest, lien, charge, pledge, equity or
encumbrance of any kind, other than tax liens, mechanics' liens, and any
liens that may attach to a Financed Vehicle by operation of law.
"LIEN CERTIFICATE" means, with respect to a Financed Vehicle, an
original certificate of title, certificate of lien or other notification
issued by the Registrar of Titles of the applicable state to a secured party
or such other evidence acceptable to the Registrar of Titles of the
applicable state, in each case, which indicates that the lien of the secured
party on the Financed Vehicle is recorded on the original certificate of
title. In any jurisdiction in which the original certificate of title is
required to be given to the Obligor, the term "Lien Certificate" shall mean
only a certificate or notification issued to a secured party.
"LIQUIDATED RECEIVABLE" means any Receivable with respect to which
the earlier of any of the following shall have occurred (without
duplication): (i) the Receivable has been liquidated by the Servicer through
the sale of the Financed Vehicle, (ii) the related Obligor has failed to pay
at least 95% of a Scheduled Receivable Payment by its due date and such
failure continues for 60 days (calculated based on a 360-day year consisting
of twelve 30-day months) after the first day on which the Servicer may
legally sell or otherwise dispose of the related Financed Vehicle following
its repossession, (iii) the related Obligor fails to pay at least 95% of a
Scheduled Receivable Payment by its due date and such failure continues for
150 or more consecutive days (calculated based on a 360-day year consisting
of twelve 30-day months) as of the end of a Collection Period or (iv)
proceeds have been received which, in the Servicer's good faith judgment,
constitute the final amounts recoverable in respect of such Receivable;
PROVIDED, HOWEVER, that Liquidated Receivable shall not include any Optional
Repurchase Receivable.
"LIQUIDATION PROCEEDS" means, with respect to a Liquidated
Receivable, the monies collected from whatever source during the Collection
Period in which such Receivable became a Liquidated Receivable, net of the
reasonable costs of liquidation, including the unreimbursed reasonable
expenses incurred by the Servicer in connection with (i) such liquidation and
(ii) the liquidation of any other Liquidated Receivable with respect to which
the Servicer believes in good faith that any additional monies are unlikely
to be collected, plus any amounts required by law to be remitted to the
Obligor; PROVIDED, HOWEVER, that the Liquidation Proceeds with respect to any
Receivable shall in no event be less than zero.
Annex A-18
"LOCK-BOX" means the post-office box or boxes, maintained pursuant to
Section 5.1 of the Sale and Servicing Agreement, into which the Servicer
shall direct each Obligor under each Receivable to forward all payments in
respect of such Receivable.
"LOCK-BOX ACCOUNT" means the segregated account or accounts designated
as such, established and maintained pursuant to Section 5.1(a) of the Sale
and Servicing Agreement.
"LOCK-BOX AGREEMENT" means the Tri-Party Remittance Processing
Agreement, dated as of March 31, 1997, among the Servicer, the Lock-Box
Processor and Chase Texas, as amended, modified or supplemented from time to
time in accordance with the terms thereof, unless such Agreement shall be
terminated in accordance with its terms or the terms hereof, in which event
"Lock-Box Agreement" shall mean such other agreement, in form and substance
acceptable to the Note Insurer, among the Servicer, the Lock-Box Processor
and the Indenture Trustee.
"LOCK-BOX BANK" means, as of any date, a depository institution named by
the Servicer and acceptable to the Note Insurer at which a Lock-Box Account
is established and maintained as of such date.
"LOCK-BOX PROCESSOR" means initially Chase Texas and its successors or
any replacement or subcontracted Lock-Box Processor acceptable to the Note
Insurer under the Lock-Box Agreement.
"MAJORITYHOLDERS" means, as of any date of determination, Class A
Noteholders, holding in the aggregate more than 50% of the outstanding Class
A Note Balance and Class B Noteholders, holding in the aggregate more than
50% of the outstanding Class B Note Balance.
"MANDATORY SPECIAL REDEMPTION" means any portion of the Pre-Funded
Amount remaining on deposit in the Pre-Funding Account after giving effect to
the acquisition by the Transferor and the conveyance to the Trust of all
Subsequent Receivables during the Funding Period, including any such
acquisition and conveyance on the date on which the Funding Period ends.
"MONTHLY DEALER PARTICIPATION FEE" means, with respect to any Payment
Date and Monthly Dealer Participation Fee Receivable, the portion of the
related dealer participation fee earned during the related Collection Period
as specified in the related Dealer Agreement.
"MONTHLY DEALER PARTICIPATION FEE PAYMENT AMOUNT" means, with respect to
any Payment Date, an amount equal to the aggregate collections allocable to
Monthly Dealer Participation Fees actually received in respect of all Monthly
Dealer Participation Fee Receivables for the related Collection Period.
"MONTHLY DEALER PARTICIPATION FEE RECEIVABLE" means any Receivable to be
paid in accordance with the Originator's "As-Earned Program" and designated
as such on the Schedule of Receivables.
"MOODY'S" means Xxxxx'x Investors Service, Inc., and any successors
thereof.
Annex A - 19
"NEGATIVE CARRY AMOUNT" means, with respect to any Payment Date relating
to the Funding Period, the amount, if any, by which (i) the Pre-Funding
Interest Amount exceeds (ii) the earnings received by the Trust Collateral
Agent for such Collection Period from investment of the Pre-Funded Amount.
"NON-REGISTERED NOTE" means a Note other than a Registered Note.
"NOTE" means a Class A Note or Class B Note, as the case may be.
"NOTE ACCOUNT" means the account designated as such, established and
maintained pursuant to Section 5.1(b) of the Sale and Servicing Agreement.
"NOTE BALANCE" means, with respect to any Payment Date, the sum of the
Class A Note Balance and the Class B Note Balance.
"NOTE INSURER" means Financial Security Assurance Inc., a monoline
insurance company incorporated under the laws of the State of New York, or
its successors in interest as issuer of the Policy.
"NOTE INSURER DEFAULT" shall mean any one of the following events shall
have occurred and be continuing.
(i) the Note Insurer fails to make a payment required under the Policy;
(ii) the Note Insurer (A) files any petition or commences any case or
proceeding under any provision or chapter of the United States Bankruptcy
Code or any other similar Federal or State law relating to insolvency,
bankruptcy, rehabilitation, liquidation or reorganization, (B) makes a
general assignment for the benefit of its creditors or (C) has an order for
relief entered against it under the United States Bankruptcy Code or any
other similar Federal or State law relating to insolvency, bankruptcy,
rehabilitation, liquidation or reorganization which is final and
nonappealable; or
(iii) a court of competent jurisdiction, the New York Department of
Insurance or other competent regulatory authority enters a final and
nonappealable order, judgment or decree (A) appointing a custodian, trustee,
agent or receiver for the Note Insurer or for all or any material portion of
its property or (B) authorizing the taking of possession by a custodian,
trustee, agent or receiver of the Note Insurer (or the taking of possession
of all or any material portion of the property of the Note Insurer).
"NOTE INTEREST" means, for any Payment Date, (i) with respect to the
Class A Notes, the Class A Note Interest and (ii) with respect to the Class B
Notes, the Class B Note Interest.
"NOTE OWNER" means, with respect to any Note registered in the name of
the Clearing Agency or its nominee, the Person who is the beneficial owner of
such Note, as reflected on the books of the Clearing Agency (directly as a
Clearing Agency Participant or as an indirect participant, in each case in
accordance with the rules of such Clearing Agency).
Annex A - 20
"NOTE PAYING AGENT" means the Indenture Trustee or any other Person that
meets the eligibility standards for the Indenture Trustee specified in Section
6.11 of the Indenture and is authorized by the Issuer to make the payments on
the Notes on behalf of the Issuer.
"NOTE PURCHASE AGREEMENT" means the Note Purchase Agreement relating to
the Notes, dated June 15, 2000, among Long Beach Acceptance Receivables
Corp., Long Beach Acceptance Corp. and Greenwich Capital Markets, Inc., as the
same may be amended, supplemented or otherwise modified from time to time in
accordance with the terms thereof.
"NOTE RATE" means (i) with respect to the Class A Notes, the Class A
Note Rate and (ii) with respect to the Class B Notes, the Class B Note Rate.
"NOTE REGISTER" and "NOTE REGISTRAR" mean, respectively, the register
maintained and the registrar appointed pursuant to Section 2.4 of the
Indenture.
"NOTEHOLDER" or "HOLDER" means the Person in whose name a Note shall be
registered in the Note Register, except that so long as any Notes are
outstanding, solely for the purposes of giving any consent, waiver, request
or demand pursuant to the Indenture or the Sale and Servicing Agreement, any
interest evidenced by any Note registered in the name of the Transferor,
LBAC, the Servicer or any of their respective Affiliates, shall not be taken
into account in determining whether the requisite percentage necessary to
effect any such consent, waiver, request or demand shall have been obtained.
"NOTICE OF CLAIM" means written or telecopied notice from the Trust
Collateral Agent to the Note Insurer, substantially in the form of Exhibit A
to the Policy.
"OBLIGOR" means, with respect to a Receivable, the purchaser or
co-purchasers of the related Financed Vehicle or any other Person who owes or
may be liable for payments under such Receivable.
"OFFICER'S CERTIFICATE" means (i) with respect to LBAC, the Transferor
or the Servicer, a certificate signed by the chairman of the board, the
president, any vice chairman of the board, any vice president, the treasurer,
the controller or any assistant treasurer or any assistant controller of
LBAC, the Transferor or the Servicer, as appropriate, and (ii) with respect
to the Issuer, a certificate signed by an Authorized Officer of the Issuer.
"OPINION OF COUNSEL" means a written opinion of counsel who may but need
not be counsel to the Transferor or the Servicer, which counsel shall be
acceptable to the Indenture Trustee and the Note Insurer, or the Owner
Trustee and the Note Insurer, as applicable, and which opinion shall be
acceptable to the Indenture Trustee and the Note Insurer or the Owner Trustee
and the Note Insurer, as applicable, in form and substance. Such Opinion of
Counsel shall not be at the expense of the Indenture Trustee, the Trust
Collateral Agent, the Note Insurer or the Owner Trustee.
"OPTIONAL REPURCHASED RECEIVABLE" means any Receivable repurchased by
the Servicer pursuant to Section 4.2 of the Sale and Servicing Agreement (up
to the limits specified therein).
Annex A - 21
"ORIGINAL POOL BALANCE" means $94,636,932.41.
"ORIGINAL PRE-FUNDED AMOUNT" means $45,363,067.59.
"ORIGINATION DATE" means, with respect to any Receivable, the date
specified in such Receivable as the date of execution thereof.
"ORIGINATOR" means LBAC, as originator of the Receivables.
"OWNER TRUST ESTATE" has the meaning assigned to such term in the Trust
Agreement.
"OWNER TRUSTEE" means Wilmington Trust Company, a Delaware banking
corporation, not in its individual capacity but solely as Owner Trustee under
the Trust Agreement, its successors-in-interest or any successor Owner
Trustee under the Trust Agreement.
"PAYAHEAD AMOUNT" means, with respect to Precomputed Receivables,
payments remitted by the related Obligors prior to the applicable Cutoff Date
in excess of the aggregate Scheduled Receivable Payments, Servicer expenses
and late fees, if any, with respect to such Precomputed Receivables, retained
by the Services in accordance with its payment application procedures.
"PAYMENT DATE" means, for each Collection Period, the 19th day of the
following month, or if the 19th day is not a Business Day, the next following
Business Day, commencing July 19, 2000.
"PAYMENT DEFERMENT AND DUE DATE CHANGE POLICIES" means the Payment
Deferment Policy and the Due Date Change Policy attached to the Sale and
Servicing Agreement as Exhibit D, as such policies may be amended from time
to time, with the prior written consent of the Note Insurer.
"PERSON" means any individual, corporation, limited liability company,
estate, partnership, joint venture, association, joint stock company, trust,
unincorporated organization, or government or any agency or political
subdivision thereof.
"PLAN" means any Person that is (i) an "employee benefit plan" (as
defined in Section 3(3) of ERISA) that is subject to the provisions of Title
I of ERISA, (ii) a "plan" (as defined in Section 4975(e)(1) of the Code) that
is subject to Section 4975 of the Code or (iii) an entity whose underlying
assets include assets of a plan described in (i) or (ii) above by reason of
such plan's investment in the entity.
"PLEDGED PROPERTY" has the meaning specified in the Granting Clause of
the Indenture.
"POLICY" means the financial guaranty insurance policy No. 50943-N issued
by the Note Insurer for the benefit of the Holders of the Class A Notes
issued pursuant to the Insurance Agreement, including any endorsements
thereto.
Annex A - 22
"POLICY CLAIM AMOUNT" shall have the meaning set forth in Section 6.2(a)
of the Sale and Servicing Agreement.
"POLICY EXPIRATION DATE" means the date on which the Class A Notes have
been paid in full and all outstanding Reimbursement Obligations and other
amounts due to the Note Insurer have been paid in full and the Term Of This
Policy (as defined in the Policy) has expired.
"POLICY PAYMENTS ACCOUNT" means the account designated as such,
established and maintained pursuant to Section 5.1(b) of the Sale and
Servicing Agreement.
"POOL BALANCE" means, as of the close of business on the last day of a
Collection Period, the aggregate Principal Balance of the Receivables
(excluding Liquidated Receivables and Purchased Receivables).
"PRECOMPUTED RECEIVABLE" means any Actuarial Receivable or Rule of 78's
Receivable.
"PREFERENCE CLAIM" shall have the meaning set forth in Section 6.3(b)
of the Sale and Servicing Agreement.
"PRE-FUNDED AMOUNT" means, with respect to (i) the first Payment Date,
the Original Pre-Funded Amount, and (ii) any Payment Date thereafter, the
amount on deposit in the Pre-Funding Account (not including any investment
earnings thereon).
"PRE-FUNDING ACCOUNT" means the account designated as such and
established and maintained pursuant to Section 5.1(b) of the Sale and
Servicing Agreement.
"PRE-FUNDING INTEREST AMOUNT" means, with respect to any Payment Date
relating to the Funding Period, an amount equal to one month's interest on
the Pre-Funded Amount as of the last day of the related Collection Period at
a rate equal to the sum of (a) the Weighted Average Note Rate, (b) the
Indenture Trustee Fee Rate, (c) the Custodian Fee Rate, and (d) the Class A
Percentage of the rate at which the Premium for the Policy is calculated.
"PREMIUM" shall have the meaning set forth in the Insurance Agreement.
"PREMIUM LETTER" means the letter agreement dated the Closing Date among
AMC, LBAC, the Indenture Trustee and the Note Insurer referring to payment of
the Premium.
"PRINCIPAL BALANCE" means, with respect to a Receivable, as of the close
of business on the last day of a Collection Period, the Amount Financed minus
the sum of the following amounts (without duplication): (i) in the case of
Precomputed Receivables, that portion of all Scheduled Receivable Payments on
each such Receivable actually received on or prior to such day allocable to
principal (A) prior to the Initial Cutoff Date or the Subsequent Cutoff Date,
as applicable, using the actuarial or constant yield method and (B)
thereafter, using the Simple Interest Method, PROVIDED, HOWEVER, that no
amount applied as interest accrued on any such Precomputed Receivable for any
single Collection Period will exceed 30 days' interest accrued thereon
assuming a 360-day year consisting of twelve 30-day months; (ii) in the case
of Simple Interest Receivables, that portion of all Scheduled Receivable
Payments on such
Annex A - 23
Receivable actually received on or prior to such day allocable to principal
using the Simple Interest Method; (iii) any payment of the Purchase Amount
with respect to the Receivable allocable to principal; (iv) any Cram Down
Loss in respect of such Receivable; and (v) any prepayment in full or any
partial prepayment applied to reduce the Principal Balance of the Receivable;
PROVIDED, HOWEVER, that the Principal Balance of a Receivable that has become
a Liquidated Receivable shall equal zero.
"PRINCIPAL PAYMENT AMOUNT" means, with respect to any Payment Date, the
sum of the following amounts (without duplication):
(a) the principal portion, allocated pursuant to Section 5.3 of
the Sale and Servicing Agreement, of all Scheduled Receivable Payments
due during the related Collection Period and all prior Collection
Periods and received during the related Collection Period on Precomputed
Receivables, excluding Recoveries) and all payments of principal
received on Simple Interest Receivables during such Collection Period
(excluding Recoveries);
(b) the principal portion of all prepayments in full received
during the related Collection Period, including prepayments in full
resulting from collections with respect to a Receivable received during
the related Collection Period;
(c) the portion of the Purchase Amount allocable to principal of
each Receivable that was repurchased by the Originator or purchased by
the Servicer in each case as of the last day of the related Collection
Period and, at the option of the Note Insurer, the Principal Balance of
each Receivable that was required to be but was not so purchased or
repurchased;
(d) the principal balance of each Liquidated Receivable that first
became a Liquidated Receivable during the related Collection Period; and
(e) the aggregate amount of Cram Down Losses with respect to the
Receivables that have occurred during the related Collection Period.
"PRIVATE PLACEMENT MEMORANDA" means the Class A Memorandum and the Class
B Memorandum.
"PROCEEDING" means any suit in equity, action at law or other judicial
or administrative proceeding.
"PURCHASE AGREEMENT" means the Purchase Agreement, dated as of June 1,
2000, between the Transferor and LBAC, as the same may be amended, modified
or supplemented from time to time in accordance with the terms thereof,
relating to the purchase of the Receivables by the Transferor from LBAC.
"PURCHASE AMOUNT" means, with respect to a Receivable, the amount, as of
the close of business on the last day of a Collection Period, required to
prepay in full such Receivable (after giving effect to the application of any
Liquidation Proceeds and Recoveries collected in respect of such Receivable
on or prior to the last day of such Collection Period)
Annex A - 24
under the terms thereof including accrued and unpaid interest thereon to the
end of the month of purchase. The Purchase Amount relating to any Receivable
that became a Liquidated Receivable during any Collection Period preceding
the month of purchase shall be treated as Recoveries in respect of such
Receivable.
"PURCHASED RECEIVABLE" means a Receivable purchased as of the close of
business on the last day of a Collection Period by the Servicer pursuant to
Sections 4.2 and 4.7 of the Sale and Servicing Agreement or by LBAC pursuant
to Section 3.4 of the Sale and Servicing Agreement.
"RATED ENTITY" means a Person whose long-term unsecured debt obligations
(at the time of the transfer of the Certificate pursuant to Section 3.7 of
the Trust Agreement) are rated within the investment grade categories of each
Rating Agency.
"RATING AGENCY" means Standard & Poor's and Xxxxx'x and any successors
thereof. If such organization or successor is no longer in existence, "Rating
Agency" shall be such nationally recognized statistical rating organization
or other comparable Person designated by the Note Insurer, notice of which
designation shall be given to the Trust Collateral Agent, the Indenture
Trustee and the Servicer.
"RATING AGENCY CONDITION" means, with respect to any action, that each
Rating Agency shall have been given ten (10) days' (or such shorter period as
shall be acceptable to each Rating Agency) prior notice thereof and that each
of the Rating Agencies shall have notified the Transferor, the Servicer, the
Note Insurer, the Trust Collateral Agent, the Indenture Trustee, the Owner
Trustee and the Issuer in writing that such action will not result in a
reduction or withdrawal of the then current rating of the Notes.
"RECEIVABLE" means each retail installment sale contract for a Financial
Vehicle which shall appear on the Schedule of Receivables (which Schedule of
Receivables may be in the form of microfiche) and all rights and obligations
thereunder except for Receivables that shall have become Purchased
Receivables.
"RECEIVABLE FILES" means the documents specified in Section 3.3(b) of
the Sale and Servicing Agreement.
"RECEIVABLES PURCHASE PRICE" means $94,636,932.41.
"RECORD DATE" means, with respect to any Payment Date or Determination
Date, the close of business on the last day of the calendar month immediately
preceding the month in which such Payment Date or Determination Date occurs.
"RECOVERIES" means, with respect to a Liquidated Receivable, the monies
collected from whatever source during any Collection Period following the
Collection Period in which such Receivable became a Liquidated Receivable,
net of the reasonable costs of liquidation, including the unreimbursed
reasonable expenses incurred by the Servicer in connection with (i) such
liquidation and (ii) the liquidation of any other Liquidated Receivable with
respect to which the Servicer believes in good faith that any additional
monies are unlikely to be collected, plus any amounts required by law to be
remitted to the Obligor.
Annex A - 25
"REDEMPTION DATE" means in the case of a redemption of the Notes
pursuant to Section 10.1(a) of the Indenture, the Payment Date specified by
the Certificateholder pursuant to Section 10.1(a).
"REDEMPTION PRICE" means the outstanding Note Balance as of the
Redemption Date, plus all accrued and unpaid interest thereon as of such
Redemption Date.
"REGISTERED NOTE" means a Note that was sold pursuant to a registration
statement that has been filed and has become effective under the Securities
Act.
"REGISTRAR OF TITLES" means, with respect to any state, the governmental
agency or body responsible for the registration of, and the issuance of
certificates of title relating to, motor vehicles and liens thereon.
"REIMBURSEMENT OBLIGATIONS" means, with respect to each Payment Date,
any amounts due to the Note Insurer under the terms of the Sale and Servicing
Agreement, the Insurance Agreement or the Premium Letter and with respect to
which the Note Insurer has not been previously paid whether or not LBAC is
obligated to pay such amounts.
"REPURCHASE EVENT" shall have the meaning specified in Section 6.2 of
the Purchase Agreement.
"REQUISITE AMOUNT" shall have the meaning specified in the Spread
Account Agreement.
"RESPONSIBLE OFFICER" means, as to the Trust Collateral Agent, the
Indenture Trustee, the Custodian and the Back-up Servicer or at such time as
Chase Manhattan is the Servicer, an officer in Capital Markets Fiduciary
Services of the Indenture Trustee having direct responsibility for the
administration of the Basic Documents to which such entitles are a party.
"RULE 144A INFORMATION" means any information provided to any holder or
prospective purchaser of Notes pursuant to Section 2.4(d) of the Indenture.
"RULE OF 78'S RECEIVABLE" means any Receivable under which the portion
of a payment allocable to earned interest (which may be referred to in the
related retail installment sale contract as an add-on finance charge) and the
portion allocable to the Amount Financed is determined according to the
method commonly referred to as the "Rule of 78's" method, the "sum of
periodic balances" method, the "sum of monthly balances" method or any
equivalent method.
"SALE AND SERVICING AGREEMENT" means the Sale and Servicing Agreement,
dated as of June 1, 2000, among the Issuer, the Transferor, the Servicer,
Chase Manhattan, as Back-up Servicer, Trust Collateral Agent and Custodian,
as the same may be amended or supplemented from time to time.
"SCHEDULE OF RECEIVABLES" means the Schedule of Receivables attached as
Schedule A to the Sale and Servicing Agreement, as the same may be amended or
supplemented (including, without limitation, pursuant to any Transfer
Agreement) from time to time.
Annex A - 26
"SCHEDULED RECEIVABLE PAYMENT" means, for any Collection Period for any
Receivable, the amount indicated in such Receivable as required to be paid by
the Obligor in such Collection Period. If after the Closing Date in the case
of an Initial Receivable, or the related Subsequent Transfer Date in the case
of a Subsequent Receivable, the Obligor's obligation under such Receivable
with respect to a Collection Period has been modified so as to differ from
the amount specified in such Receivable as a result of (i) the order of a
court in an insolvency proceeding involving the Obligor, (ii) pursuant to the
Soldiers' and Sailors' Civil Relief Act of 1940, as amended or (iii)
modifications or extensions of the Receivable permitted by Section 4.2 of the
Sale and Servicing Agreement, the Scheduled Receivable Payment with respect
to such Collection Period shall refer to the Obligor's payment obligation
with respect to such Collection Period as so modified.
"SCHEDULED PAYMENTS" shall have the meaning assigned to such term in the
Policy.
"SECURITIES ACT" means the Securities Act of 1933, as amended.
"SERVICER" means LBAC as the servicer of the Receivables and each
successor to LBAC (in the same capacity) pursuant to Section 8.3(a) or 9.2 of
the Sale and Servicing Agreement, other than with respect to representations
of the Servicer under Section 8.1 of the Sale and Servicing Agreement.
"SERVICER EXTENSION NOTICE" shall have the meaning set forth in Section
4.13 of the Sale and Servicing Agreement.
"SERVICER TERMINATION EVENT" means an event specified in Section 9.1 of
the Sale and Servicing Agreement.
"SERVICER TERMINATION SIDE LETTER" means the letter from the Note
Insurer to the Servicer, the Issuer and the Indenture Trustee dated as of
June 1, 2000, with respect to the renewal term of the Servicer.
"SERVICER'S CERTIFICATE" means a certificate completed and executed by a
Servicing Officer pursuant to Section 4.9 of the Sale and Servicing Agreement.
"SERVICING FEE" means the fee payable to the Servicer for services
rendered during the respective Collection Period, determined pursuant to
Section 4.8 of the Sale and Servicing Agreement.
"SERVICING FEE RATE" means, with respect to any Payment Date, 2.45% per
annum; PROVIDED, HOWEVER, that if the Back-up Servicer or another entity
becomes the successor Servicer, the "Servicing Fee Rate" shall be equal to a
rate not to exceed the Successor Servicing Fee Rate. Notwithstanding the
foregoing, so long as LBAC is the Servicer and with respect to any Receivable
as of any Determination Date, in the event that the sum of (i) the Weighted
Average Note Rate and (ii) the Servicing Fee Rate with respect to such
Receivable as of such Determination Date, exceeds the adjusted APR on such
Receivable, the Servicing Fee Rate with respect to such Receivable shall be
adjusted downward in an amount equal to such excess; provided, that in no
event shall such Servicing Fee Rate be less than zero.
Annex A - 27
"SERVICING OFFICER" means any person whose name appears on a list of
Servicing Officers delivered by the Servicer to the Trust Collateral Agent
and the Note Insurer, as the same may be amended from time to time.
"SIMPLE INTEREST EXCESS" means, for any Collection Period, the excess,
if any, of (i) Collected Interest over (ii) Expected Interest for such
Collection Period.
"SIMPLE INTEREST METHOD" means the method of allocating a fixed level
payment between principal and interest, pursuant to which the portion of
such payment that is allocated to interest is equal to the product of the
APR multiplied by the unpaid principal balance multiplied by the period of
time (expressed as a fraction of a year, based on the actual number of days
in the calendar month and the actual number of days in the calendar year)
elapsed since the preceding payment of interest was made and the remainder of
such payment is allocable to principal.
"SIMPLE INTEREST RECEIVABLE" means any Receivable under which the
portion of a payment allocable to interest and the portion allocable to
principal is determined in accordance with the Simple Interest Method.
"SIMPLE INTEREST SHORTFALL" means, for any Collection Period, the
excess, if any, of (i) Expected Interest over (ii) the Collected Interest for
such Collection Period.
"SPECIFIED CLASS B RESERVE ACCOUNT BALANCE" means, with respect to any
Payment Date, an amount equal to the greater of (i) 4% of the Pool Balance on
the close of business on the last day of the related Collection Period and
(ii) 2% of the sum of the Original Pool Balance and the aggregate Principal
Balance of all Subsequent Receivables conveyed to the Trust as of the related
Subsequent Cutoff Date. In no event, however, shall the Specified Class B
Reserve Account Balance exceed the Class B Note Balance.
"SPREAD ACCOUNT" means the Spread Account established and maintained
pursuant to the Spread Account Agreement.
"SPREAD ACCOUNT AGREEMENT" means the Master Spread Account Agreement
dated as of June 1, 2000 among the Transferor, the Note Insurer, the Trust
Collateral Agent and the Collateral Agent, as the same may be amended,
supplemented or otherwise modified from time to time in accordance with the
terms thereof.
"STANDARD & POOR'S" means Standard & Poor's Ratings Services, a division
of The XxXxxx-Xxxx Companies, Inc. and any successors thereof.
"STATE" means any State of the United States of America, or the District
of Columbia.
"STOCK PLEDGE AGREEMENT" means the Stock Pledge and Collateral Agency
Agreement, dated as of March 1, 1997, among LBAC, the Note Insurer and Chase
Texas, as trust collateral agent and collateral agent, as the same may be
amended, supplemented or otherwise modified from time to time in accordance
with the terms thereof.
Annex A - 28
"SUBSEQUENT ASSIGNMENT" means each assignment dated as of the related
Subsequent Cutoff Date by LBAC to the Transferor substantially in the form of
Exhibit B to the Purchase Agreement, pursuant to which Subsequent Receivables
are conveyed to the Trust.
"SUBSEQUENT CUTOFF DATE" means the close of business on the last day of
the calendar month immediately preceding the related Subsequent Transfer
Date, as set forth in the related Transfer Agreement.
"SUBSEQUENT RECEIVABLES" means the Receivables transferred by LBAC to
the Transferor pursuant to a Subsequent Agreement and by the Transferor to
the Trust pursuant to a Transfer Agreement, in each case on the related
Subsequent Transfer Date, which Receivables will be listed on Schedule A to
the related Subsequent Assignment and Transfer Agreement and will be treated
as incorporated by reference in the Schedule of Receivables pursuant to the
related Subsequent Assignment and Transfer Agreement.
"SUBSEQUENT RECEIVABLES PURCHASE PRICE" shall have the meaning set
forth in the related Transfer Agreement.
"SUBSEQUENT SPREAD ACCOUNT DEPOSIT" shall have the meaning specified in
the Spread Account Agreement.
"SUBSEQUENT TRANSFER DATE" shall have the meaning specified in the
related Transfer Agreement.
"SUBSEQUENT TRANSFERRED PROPERTY" shall have the meaning specified in
Section 2.3(a) of the Purchase Agreement.
"SUBSEQUENT TRUST ASSETS" means all money, instruments, rights and
other property transferred by the Transferor to the Trust set forth in items (i)
through (x) of Section 2.2(a) of the Sale and Servicing Agreement, including all
proceeds thereof.
"SUCCESSOR SERVICING FEE RATE" means, with respect to any Payment Date,
2.45% per annum.
"TERMINATION DATE" means the latest of (i) the expiration of the Note
Policy and the return of the Note Policy to the Note Insurer for cancellation,
(ii) the date on which the Note Insurer shall have received payment and
performance by the Issuer of its obligations under the Indenture and under the
Basic Documents and (iii) the date on which the Indenture Trustee shall have
received payment and performance by the Issuer of its obligations under the
Indenture and under the Basic Documents.
"TEXAS UCC" shall have the meaning set forth in Section 2.5 of the Sale
and Servicing Agreement.
"TITLE PACKAGE" means (i) a Lien Certificate noting the lien of the
Originator of the Financed Vehicle, (ii) evidence that documentation has been
submitted to the appropriate state motor vehicle authority to obtain a Lien
Certificate noting the lien of the Originator of the Financed Vehicle or (iii) a
Dealer Title Guaranty, if any.
Annex A - 29
"TRANSFER AGREEMENT" means each Transfer Agreement, substantially in
form of Exhibit H to the Sale and Servicing Agreement, dated as of the related
Subsequent Transfer Date, among the Transferor, the Originator and the Trust
Collateral Agent, pursuant to which Subsequent Receivables are conveyed to the
Trust, as the same may be amended, supplemented or otherwise modified from time
to time in accordance with the terms thereof.
"TRANSFEROR" means Long Beach Acceptance Receivables Corp., a Delaware
corporation, its successors and assigns.
"TRANSFERRED PROPERTY" means the Initial Transferred Property or the
Subsequent Transferred Property, as applicable.
"TRIGGER EVENT" shall have the meaning assigned to such term in the
Spread Account Agreement.
"TRUST AGREEMENT" means the Amended and Restated Trust Agreement, dated
as of June 1, 2000, between the Transferor and the Owner Trustee, as the same
may be amended or supplemented from time to time.
"TRUST ASSETS" means collectively, the Initial Trust Assets and the
Subsequent Trust Assets.
"TRUST COLLATERAL AGENT" means the Person acting as Trust Collateral
Agent under the Sale and Servicing Agreement, its successor-in-interest, and any
successor Trust Collateral Agent thereunder.
"TRUST OFFICER" means, (i) in the case of the Trust Collateral Agent,
any vice president, any assistant vice president, any assistant secretary, any
assistant treasurer, any trust officer, or any other officer of the Trust
Collateral Agent customarily performing functions similar to those performed by
any of the above designated officers and also means, with respect to a
particular corporate trust matter, any other officer to whom such matter is
referred because of his knowledge of and familiarity with the particular
subject, and (ii) in the case of the Owner Trustee, any officer in the Corporate
Trust Office of the Owner Trustee or any agent of the Owner Trustee under a
power of attorney with direct responsibility for the administration of all or
any part of this Indenture or any of the Basic Documents on behalf of the Owner
Trustee.
"UCC" means the Uniform Commercial Code as in effect in the respective
jurisdiction.
"VSI POLICY" means, as of the Closing Date, (i) the vendor's single
interest physical damage insurance policy No. 0-0000-0000 NJ issued by BALBOA
Life and Casualty, (ii) the vendor's single interest physical damage insurance
policy No. LS 700 9-0254 issued by Old Republic Minnehoma Insurance Company,
(iii) the vendor's single interest physical damage insurance policy No.
CIM2187817 issued by Utica National Insurance Group or (iv) the vendor's single
interest physical damage insurance policy No. UL6160 issued by Ohio Indemnity
Company, as applicable, with respect to the Financed Vehicles covered thereby,
in each case in which LBAC is the named insured and the Trust Collateral Agent
is an additional named insured; provided, that in the reasonable discretion of
the Servicer any of the aforementioned
Annex A - 30
policies may be cancelled and replaced with a substitute insurance policy, or,
with the prior written consent of the Note Insurer, the Servicer may self-insure
against the risk previously covered by the cancelled policy.
"WEIGHTED AVERAGE NOTE RATE" means, as of any Determination Date, the
weighted average of the Class A Note Rate and the Class B Note Rate (weighted
based on the outstanding Class A Note Balance and the outstanding Class B Note
Balance as of such Determination Date).
Annex A - 31
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 June 1, 2000, among Long Beach Acceptance Receivables Corp., Long Beach
Acceptance Corp., as originator and as servicer, The Chase Manhattan Bank, as
trust collateral agent, custodian and back-up servicer and Long Beach Acceptance
Auto Receivables Trust 2000-1, 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 ___________, ___.
___________________________________________
X-0-0
XXXXXXX X-0
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 June 1, 2000, among Long Beach Acceptance Receivables Corp., Long Beach
Acceptance Corp., as originator and as servicer, The Chase Manhattan Bank, as
trust collateral agent, custodian and back-up servicer and Long Beach Acceptance
Auto Receivables Trust 2000-1, 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 ___________, ____.
___________________________________________
X-0-0
XXXXXXX X-0
SERVICER'S CERTIFICATE
LONG BEACH ACCEPTANCE AUTO RECEIVABLES TRUST 2000-1
____% ASSET-BACKED NOTES, CLASS A
____% ASSET-BACKED NOTES, CLASS B
B-1-1
EXHIBIT B-2
Form of Loan Master File Layout
B-2-1
EXHIBIT C
INTENTIONALLY OMITTED
C-1
EXHIBIT D
PAYMENT DEFERMENT POLICY
o LBAC may grant a payment deferment provided that the deferment period does
not exceed 1 month (2 months if 12 or more payments have been made and if
the deferment is granted in writing by the President, or an Executive Vice
President, or the National Collections Manager, or a Regional Manager).
o Not more than 1 deferment event (which may consist of a 2 month deferment
according to the exceptions included in the policy) may be granted during
any 12-month period.
o The aggregate of all deferment periods during the term of a Receivable may
not exceed the lesser of 8 months or 50% of the weighted average life of
the original term of the Receivable (including deferments granted both
before and after the related Cut-Off Date).
o At least 6 payments must be made before a deferment may be granted.
o A request for a deferment must be made in writing.
o The deferment must bring the account current, so that after the deferment
is processed no payment is then due.
o Except as otherwise set forth in this policy, deferments must be granted in
writing by the Collection Manager or someone of equal or higher rank.
o A deferment fee will be collected for each deferment if allowed by
applicable law and may be waived or deferred only by the President, or an
Executive Vice President, or the National Collections Manager, or a
Regional Manager; PROVIDED, HOWEVER, that no deferment will be granted
unless the Servicer believes in good faith that the account probably would
default in the reasonably foreseeable future if a deferment is not
approved.
o Deferments which do not meet the above criteria may be granted in writing
on an exception basis (e.g., when required by law) by the President, or an
Executive Vice President, or the National Collections Manager, or a
Regional Manager.
o As of October 1, 2000, and the first day of each calendar quarter
thereafter, the aggregate number of Receivables the terms of which have
been extended during the preceding calendar quarter shall not exceed 4% of
the number of Receivables at the beginning of the preceding calendar
quarter.
o No deferment may extend the date for final payment of a Receivable beyond
the last day of the record Collection Period preceding the Final Scheduled
Payment Date.
D-1
DUE DATE CHANGE POLICY
o LBAC may grant a due date change, PROVIDED that the new due date is within
20 days of the current due date.
o Not more than 2 due date changes may be granted over the term of a
Receivable.
o If 2 due date changes are granted, the total number of days by which the
maturity date is extended may not exceed 20.
o A request for a due date change must be made in writing.
o The account must be current at the time the request is received.
o Due date changes must be granted in writing by the Collection Manager or
someone of equal or higher rank.
o No due date change may be granted if the aggregate of all deferment periods
and the requested due date change would exceed the lesser of 8 months or
50% of the original term of the Receivable.
D-2
EXHIBIT E
DOCUMENTATION CHECKLIST
CUSTOMER:
----------------------------------------------------------------------
ACCOUNT NUMBER:
----------------------------------------------------------------
This funding package contains the following initialed items:
1. Installment contract with proper signatures and Dealer endorsements 1.__________________
2. Copy of signed credit application 2.__________________
3. References as described in the Program Guidelines 3.__________________
4. Proof of income as described in the Program Guidelines 4.__________________
5. Copy of driver's license for all licensed signors 5.__________________
6. Title information (application and copy of existing title, receipt
of registration, or title copy already received) with lien
notation thereon, or Dealer Title Guaranty 6.__________________
7. Invoice or copy of computer screen printout showing NADA value,
NADA book page, Xxxxxx printout or Xxxxxx Blue Book page 7.__________________
8. In the case of a used Financed Vehicle, odometer statement (if not
on title info) 8.__________________
9. Signed agreement to provide insurance and verification paper or
other evidence of verification of insurance coverage 9.__________________
10. Notice to cosignor, if required 10._________________
11. Service contract or warranty papers 11._________________
12. Life, accident, health and GAP insurance policy copies, as
applicable 12._________________
13. Signed purchase order from dealer to customer 13._________________
E-1
EXHIBIT F
[Form of Request for Transfer of Possession]
___________, 19__
The Chase Manhattan Bank
000 Xxxx 00xx Xx., 00xx Xxxxx
Xxx Xxxx, XX 00000
Attention: Capital Markets Fiduciary Services
Attention: __________
Telephone: ___________
Telecopy: ____________
Ladies and Gentlemen:
Reference is made to the Sale and Servicing Agreement, dated as of June 1, 2000
(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 2000-1, a Delaware business trust, as issuer (the "Issuer"),
THE CHASE MANHATTAN BANK, a New York banking corporation, as trust collateral
agent, back-up servicer and custodian (in such capacity, the "Custodian").
Capitalized terms used but not defined in this letter have the meanings set
forth in the Sale and Servicing Agreement.
The Servicer hereby requests that the Custodian transfer possession of the Legal
Files, or such portion of the Legal Files as is identified herein, relating to
the Receivables listed in Annex A hereto to [the Servicer] [________________ as
subservicer (the "Subservicer") for the Servicer] [for purposes of collection or
presentation, renewal or registration of transfer (unless the related
Receivables' Owner objects to this request to the Custodian (i) by 5:00 PM on
the same Business Day this request is made if it is made by 1:00 PM or (ii) by
11:00 AM on the next Business Day if this request is made after 1:00 PM] [for
purposes of correcting deficiencies in the Legal Files], the possession of which
is transferred pursuant to this request will be transferred subject to a
Custodial Letter duly executed by [the Servicer] [the Subservicer] and a
Transfer Notice duly executed by the Custodian. [The portion of the Legal Files
requested for transfer of possession hereunder is ___________.]
Very truly yours,
LONG BEACH ACCEPTANCE CORP.
By:
---------------------------------------
Name:
---------------------------------------
Title:
---------------------------------------
F-1
EXHIBIT G
[Form of Custodial Letter]
___________, 19__
The Chase Manhattan Bank
000 Xxxx 00xx Xx., 00xx Xxxxx
Xxx Xxxx, XX 00000
Attention: Capital Markets Fiduciary Services
Attention: __________
Telephone: ___________
Telecopy: ____________
Ladies and Gentlemen:
Reference is made to the Sale and Servicing Agreement, dated as of June 1, 2000
(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 2000-1, a Delaware business trust, as issuer (the "Issuer"),
THE CHASE MANHATTAN BANK, a New York banking corporation, as trust collateral
agent, custodian and back-up servicer. Capitalized terms used but not defined in
this letter have the meanings set forth in the Sale and Servicing Agreement.
[The Servicer] [_____________________, as Subservicer (the "Subservicer") for
the Servicer] acknowledges that the Issuer is owner of all Receivables (and
their proceeds). The Agreement provides that the Servicer, or the Subservicer,
may request from time to time that possession of all or a portion of the Legal
Files delivered to and held by the Custodian pursuant to the Sale and Servicing
Agreement be transferred to [the Servicer] [the Subservicer] [for purposes of
collection, or presentation, renewal or registration of transfer] [for purposes
of correcting deficiencies in the Legal Files]. Subject to the terms of the Sale
and Servicing Agreement, the Custodian is authorized to so transfer possession
of such Legal Files, or portion thereof, such transfer of possession to be
accomplished pursuant to a Transfer Notice substantially in the form of Annex A
to this Custodial Letter.
[The Servicer] [The Subservicer] hereby agrees as follows:
(a) [The Servicer] [The Subservicer] acknowledges that the possession of any
such Legal Files will be so transferred subject to this Custodial Letter and
that they are and will continue to be the sole property of the Issuer.
(b) [The Servicer] [The Subservicer] agrees that such Legal Files will be
returned to the Custodian immediately upon notice by the Custodian or the Trust
Collateral Agent that sixty (60) days have elapsed from the date of such
transfer; PROVIDED, that instead of sixty (60) days, the time limit applicable
to any certificate of title is one hundred twenty (120) days.
G-1
(c) The Legal Files will not be used for any purpose other than that for which
[the Servicer] [the Subservicer] hereby requests such transfer of possession.
(d) At all times while the Legal Files are in [the Servicer's] [the
Subservicer's] possession, [the Servicer] [the Subservicer] will hold the Legal
Files IN TRUST for the Indenture Trustee, the Issuer, the Noteholders and the
Note Insurer.
(e) [The Servicer] [The Subservicer] will include this Custodial Letter and each
Transfer Notice in its business records.
(f) [The Servicer] [The Subservicer] will not deliver the Legal Files to any
person other than the Custodian except with the prior written consent of the
Trust Collateral Agent.
This Custodial Letter shall be governed by and construed in accordance with the
laws of the State of Texas.
LONG BEACH ACCEPTANCE CORP.
By:
--------------------------------------
Name:
--------------------------------------
Title:
-------------------------------------
[SUBSERVICER'S NAME]
By:
--------------------------------------
Name:
--------------------------------------
Title:
-------------------------------------
G-2
EXHIBIT G - ANNEX A to Custodial Letter
[Form of Transfer Notice]
[Long Beach Acceptance Corp.
Xxx Xxxx Xxxxxx Xxxxx
Xxxxxxx, Xxx Xxxxxx 00000
Telecopy: (000) 000-0000]
[Subservicer (the "Subservicer")
Address
Address
Telecopy:_______________________]
Ladies and Gentlemen:
Reference is made to the Sale and Servicing Agreement, dated as of June 1, 2000
(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 2000-1, a Delaware business trust, as issuer (the "Issuer"),
THE CHASE MANHATTAN BANK, a New York banking corporation, as trust collateral
agent, back-up servicer and custodian. Capitalized terms used but not defined in
this letter have the meanings set forth in the Sale and Servicing Agreement.
The possession of the Legal Files relating to the Receivables listed in Annex A
is transferred to you IN TRUST for the Issuer, the Indenture Trustee, the Note
Holders and the Note Insurer, subject to the terms and provisions of the Sale
and Servicing Agreement, and subject to the Custodial Letter you executed
pursuant to Section 3.5(c) of the Sale and Servicing Agreement.
Very truly yours,
THE CHASE MANHATTAN BANK
By:
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Name:
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Title:
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EXHIBIT G - ANNEX A to Transfer Notice
Receivable Amount of Name of
Number Receivable Receivable Borrower
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EXHIBIT H
FORM OF TRANSFER AGREEMENT
TRANSFER NO. __________ OF SUBSEQUENT RECEIVABLES, dated as of
___________, _____, among LONG BEACH ACCEPTANCE AUTO RECEIVABLES TRUST 2000-1, a
Delaware business trust (the "Issuer" or the "Trust"), LONG BEACH ACCEPTANCE
CORP., a Delaware corporation ("LBAC" or the "Originator"), LONG BEACH
ACCEPTANCE RECEIVABLES CORP., a Delaware corporation (the "Transferor"), and THE
CHASE MANHATTAN BANK, a New York banking corporation, as trust collateral agent
(in such capacity, the "Trust Collateral Agent"), back-up servicer and custodian
pursuant to the Sale and Servicing Agreement referred to below.
W I T N E S S E T H:
WHEREAS, LBAC, the Transferor, the Issuer and the Trust Collateral
Agent are parties to the Sale and Servicing Agreement, dated as of June 1, 2000
(the "Sale and Servicing Agreement");
WHEREAS, LBAC and the Transferor are parties to the Purchase Agreement,
dated as of June 1, 2000 (the "Purchase Agreement");
WHEREAS, pursuant to the Purchase Agreement and the Subsequent
Assignment, LBAC desires to convey certain Subsequent Receivables to the
Transferor and pursuant to the Sale and Servicing Agreement and this Agreement
the Transferor desires to convey such Subsequent Receivables to the Issuer; and
WHEREAS, the Issuer is willing to accept such conveyance subject to the
terms and conditions hereof.
NOW, THEREFORE, the Issuer, the Transferor, the Trust Collateral Agent
and LBAC hereby agree as follows:
SECTION 1. DEFINED TERMS. Capitalized terms used herein that are not otherwise
defined shall have the meanings ascribed thereto in the Sale and Servicing
Agreement.
"Agreement" means this Transfer Agreement and all amendments hereof and
supplements hereto.
"Subsequent Cutoff Date" means, with respect to the Subsequent
Receivables conveyed hereby, the close of business of the last day of the
calendar month immediately preceding the Subsequent Transfer Date, which date is
_______________.
"Subsequent Receivables" means the Receivables identified on the
supplement to the Schedule of Receivables attached as Schedule A hereto.
"Subsequent Receivables Purchase Price" means $__________.
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"Subsequent Spread Account Deposit" means $__________.
"Subsequent Transfer Date" means, with respect to the Subsequent
Receivables conveyed hereby, __________________.
"Subsequent Transferred Property" shall have the meaning specified in
Section 2.3(a) of the Purchase Agreement.
SECTION 2. SCHEDULE OF SUBSEQUENT RECEIVABLES. Annexed hereto as Schedule A is a
supplement to the Schedule of Receivables listing the Subsequent Receivables to
be conveyed by the Transferor to the Issuer pursuant to this Agreement and the
Sale and Servicing Agreement on the Subsequent Transfer Date.
SECTION 3. CONVEYANCE OF SUBSEQUENT RECEIVABLES. Subject to the conditions set
forth in Section 5 hereof, in consideration of the payment of the Subsequent
Receivables Purchase Price to or upon the written order of the Transferor, the
Transferor does hereby sell, transfer, assign, set over and otherwise convey to
the Issuer, in trust for the benefit of the Noteholders and the Note Insurer,
without recourse, all right, title and interest of the Transferor in and to:
(1) the Subsequent Receivables listed in Schedule A hereto, all monies
received on such Subsequent Receivables after the Subsequent Cut-off Date and,
with respect to any Subsequent Receivables which are Precomputed Receivables,
the related Payahead Amount and all Liquidation Proceeds and Recoveries received
with respect to such Subsequent Receivables;
(2) the security interests in the Financed Vehicles granted by the
related Obligors pursuant to the Subsequent Receivables and any other interest
of the Transferor in such Financed Vehicles, including, without limitation, the
certificates of title and any other evidence of ownership with respect to such
Financed Vehicles;
(3) any proceeds from claims on any physical damage, credit life and
credit accident and health insurance policies or certificates or the VSI Policy,
if any, relating to the related Financed Vehicles or the related Obligors,
including any rebates and premiums;
(4) property (including the right to receive future Liquidation
Proceeds) that secures a Subsequent Receivable and that has been acquired by or
on behalf of the Trust pursuant to the liquidation of such Subsequent
Receivable;
(5) this Agreement, the Purchase Agreement and the Guarantee,
including, without limitation, a direct right to cause LBAC to purchase
Subsequent Receivables from the Trust upon the occurrence of a breach of any of
the representations and warranties contained in Section 4 of this Agreement or
the failure of LBAC to timely comply with its obligations pursuant to Section
5.5 of the Purchase Agreement;
(6) refunds for the costs of extended service contracts with respect to
the related Financed Vehicles, refunds of unearned premiums with respect to
credit life and credit accident and health insurance policies or certificates
covering a related Obligor or a related
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Financed Vehicle or his or her obligations with respect to a related Financed
Vehicle and any recourse to Dealers for any of the foregoing;
(7) the Legal Files and the Receivable Files related to each Subsequent
Receivable and any and all other documents that LBAC keeps on file in accordance
with its customary procedures relating to the Subsequent Receivables, the
related Obligors or the related Financed Vehicles;
(8) all amounts and property from time to time held in or credited to
the Lock-Box Account, to the extent such amounts and property relate to the
Subsequent Receivables;
(9) any proceeds from recourse against the Dealers (other than any
Chargeback Obligations), including, without limitation, any Dealer Title
Guaranties with respect to the Subsequent Receivables, with respect to the sale
of the Subsequent Receivables; and
(10) the proceeds of any and all of the foregoing.
The Transferor represents and warrants that the Subsequent Receivables
and other Transferred Property are being transferred with the intention of
removing them from the Transferor's estate pursuant to Section 541 of the
Bankruptcy Code, as the same may be amended from time to time.
SECTION 4. REPRESENTATIONS AND WARRANTIES OF THE ORIGINATOR. The Originator
makes the following representations and warranties as to the Subsequent
Receivables and the other Transferred Property relating thereto on which the
Transferor relies in accepting the Subsequent Receivables and the other
Transferred Property relating thereto and on which the Note Insurer will rely in
issuing the Policy. Such representations and warranties speak as of the
execution and delivery of this Agreement, but shall survive the sale, transfer,
and assignment of the Subsequent Receivables and the other Transferred Property
relating thereto to the Transferor and the subsequent assignment and transfer
pursuant to the Sale and Servicing Agreement:
(1) ORIGINATION DATE. Each Subsequent Receivable has an Origination
Date on or after __________________.
(2) PRINCIPAL BALANCE/NUMBER OF CONTRACTS. As of the Subsequent Cutoff
Date, the total aggregate Principal Balance of the Subsequent Receivables was
$_______________. The Subsequent Receivables are evidenced by _______ retail
installment sale contracts.
(3) MATURITY OF SUBSEQUENT RECEIVABLES. Each Subsequent Receivable has
an original term to maturity of not less than [__] months and not more than [__]
months; the weighted average original term to maturity of the Subsequent
Receivables is [___] months as of the Subsequent Cutoff Date; the remaining term
to maturity of each Subsequent Receivable was __ months or less as of the
Subsequent Cutoff Date; the weighted average remaining term to maturity of the
Subsequent Receivables was [___] months as of the Subsequent Cutoff Date.
(4) CHARACTERISTICS OF SUBSEQUENT RECEIVABLES. (A) Each Subsequent
Receivable (1) has been originated in the United States of America by a Dealer
for the retail sale
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of a Financed Vehicle in the ordinary course of such Dealer's business, such
Dealer had all necessary licenses and permits to originate such Subsequent
Receivables in the State where such Dealer was located, has been fully and
properly executed by the parties thereto and has been purchased by LBAC from
such Dealer under an existing Dealer Agreement with LBAC, in connection with the
sale of Financed Vehicles by the Dealers, and was validly assigned by such
Dealer to LBAC in accordance with its terms, (2) has created a valid, subsisting
and enforceable first priority security interest in favor of LBAC in the
Financed Vehicle, which security interest is assignable and has been validly
assigned by LBAC to the Transferor, which in turn has been validly pledged by
the Transferor to the Trust pursuant to the Sale and Servicing Agreement, which
in turn has been validly assigned by the Issuer to the Indenture Trustee
pursuant to the Indenture, (3) contains customary and enforceable provisions
such that the rights and remedies of the holder or assignee thereof shall be
adequate for realization against the collateral of the benefits of the security,
(4) provides for level monthly payments that fully amortize the Amount Financed
over the original term (except for the first or last payment, which may be
minimally different from the level payment) and yield interest at the Annual
Percentage Rate, (5) has an Annual Percentage Rate of not less than ____%, (6)
in the case of a Subsequent Receivable that is a Precomputed Receivable, in the
event that such Subsequent Receivable is prepaid, provides for a prepayment that
fully pays the Principal Balance and includes, unless prohibited by applicable
law, a full month's interest, in the month of prepayment, at the Annual
Percentage Rate, (7) is a Precomputed Receivable or a Simple Interest
Receivable, and (8) was originated by a Dealer to an Obligor and was sold by the
Dealer to LBAC without any fraud or misrepresentation on the part of such Dealer
or on the part of the Obligor; and (B) approximately [ ]% of the aggregate
Principal Balance of the Subsequent Receivables, constituting [ ]% of the number
of contracts, as of the Subsequent Cutoff Date, represents financing of used
automobiles, vans, sport utility vehicles or light duty trucks; the remainder of
the Subsequent Receivables represent financing of new automobiles, vans, sport
utility vehicles or light duty trucks; approximately [ ]% of the aggregate
Principal Balance of the Subsequent Receivables as of the Subsequent Cutoff Date
were originated under the LBAC Class I program; approximately [ ]% of the
aggregate Principal Balance of the Subsequent Receivables as of the Subsequent
Cutoff Date were originated under the LBAC Class IIA program; approximately [ ]%
of the aggregate Principal Balance of the Subsequent Receivables as of the
Subsequent Cutoff Date were originated under the LBAC Class IIB program;
approximately [ ]% of the aggregate Principal Balance of the Subsequent
Receivables as of the Subsequent Cutoff Date were originated under the LBAC
Class III program; approximately [ ]% of the aggregate Principal Balance of the
Subsequent Receivables as of the Subsequent Cutoff Date were originated under
the LBAC Class IV program; no Subsequent Receivable shall have a payment that is
more than 29 days overdue (calculated on the basis of a 360-day year of twelve
30-day months) as of the Subsequent Cutoff Date; [ ]% of the Subsequent
Receivables are Precomputed Receivables and [ ]% of the Subsequent Receivables
are Simple Interest Receivables; each Subsequent Receivable shall have a final
scheduled payment due no later than _____________, 200__; and each Subsequent
Receivable was originated on or before the Subsequent Cutoff Date.
(5) SCHEDULED PAYMENTS. Each Subsequent Receivable had an original
Principal Balance of not less than $______ nor more than $__________, has an
outstanding Principal Balance as of the Subsequent Cutoff Date of not less than
$_______ and not more than $__________ and has a first Scheduled Payment due, in
the case of Precomputed Receivables, or
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a scheduled due date, in the case of Simple Interest Receivables, on or prior to
____________, ____.
(6) NO BANKRUPTCIES. No Obligor was bankrupt at the time of origination
of the related Subsequent Receivable and no Obligor on any Subsequent Receivable
as of the Subsequent Cutoff Date was noted in the related Receivable File as
having filed for bankruptcy since origination of the Subsequent Receivable and
neither discharged, dismissed nor reaffirmed.
(7) ORIGINATION OF SUBSEQUENT RECEIVABLES. Based on the location of the
Dealers and the Principal Balances as of the Subsequent Cutoff Date,
approximately [ ]% of the Subsequent Receivables were originated in California,
approximately [ ]% of the Subsequent Receivables were originated in New York and
the remaining [ ]% of the Subsequent Receivables were originated in other
States.
(8) LOCKBOX. Prior to the Subsequent Transfer Date, the Transferor will
notify each Obligor to make payments with respect to its respective Subsequent
Receivable after the Subsequent Cutoff Date directly to the Lockbox, and will
provide each Obligor with a monthly statement in order to enable such Obligor to
make payments directly to the Lockbox.
(9) LOCATION OF LEGAL FILES; ONE ORIGINAL. A complete Legal File with
respect to each Subsequent Receivable has been or prior to the Subsequent
Transfer Date will be delivered to the Custodian at the location listed in
Schedule B to the Sale and Servicing Agreement. There is only one original
executed copy of each Subsequent Receivable.
(10) SCHEDULE OF SUBSEQUENT RECEIVABLES; SELECTION PROCEDURES. The
information with respect to the Subsequent Receivables set forth in the Schedule
A to this Agreement is true and correct in all material respects as of the close
of business on the Subsequent Cutoff Date and the Subsequent Transfer Date, and
no selection procedures adverse to the Trust, the Noteholders or to the Note
Insurer have been utilized in selecting the Subsequent Receivables. The computer
tape or other listing regarding the Subsequent Receivables made available to the
Transferor and its assigns is true and correct as of the Subsequent Cutoff Date
and the Subsequent Transfer Date in all respects. By the Subsequent Transfer
Date, LBAC will have caused the portions of LBAC's servicing records relating to
the Subsequent Receivables to be clearly and unambiguously marked to show that
the Subsequent Receivables constitute part of the Trust Assets and are owned by
the Trust in accordance with the terms of the Sale and Servicing Agreement.
(11) COMPLIANCE WITH LAW. Each Subsequent Receivable, the sale of the
Financed Vehicle and the sale of any physical damage, credit life and credit
accident and health insurance and any extended service contracts complied at the
time the related Subsequent Receivable was originated or made and at the
execution of this Agreement complies in all material respects with all
requirements of applicable Federal, State and local laws, and regulations
thereunder including, without limitation, usury laws, the Federal
Truth-in-Lending Act, the Equal Credit Opportunity Act, the Fair Credit
Reporting Act, the Fair Debt Collection Practices Act, the Federal Trade
Commission Act, the Xxxxxxxx-Xxxx Warranty Act, the Federal Reserve Board's
Regulations B and Z (including amendments to the Federal Reserve's Official
Staff Commentary to Regulation Z effective October 1, 1998 concerning negative
equity
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loans), the Soldiers' and Sailors' Civil Relief Act of 1940, as amended, the
California Automobile Sales Finance Act, and state adaptations of the National
Consumer Act and of the Uniform Consumer Credit Code, and other consumer credit
laws and equal credit opportunity and disclosure laws.
(12) BINDING OBLIGATION. Each Subsequent Receivable represents the
genuine, legal, valid and binding payment obligation in writing of the Obligor,
enforceable by the holder thereof in accordance with its terms and all parties
to each Subsequent Receivable had full legal capacity to execute and deliver
such Subsequent Receivable and all other documents related thereto and to grant
the security interest purported to be granted thereby.
(13) NO GOVERNMENT, CORPORATE OR FLEET OBLIGOR. None of the Subsequent
Receivables are due from the United States of America or any State or from any
agency, department, or instrumentality of the United States of America or any
State. All of the Subsequent Receivables are due from Obligors who are natural
persons or, if any Obligor is not a natural person, (a) such entity is an
obligor with respect to five or fewer Financed Vehicles and (b) the related
Subsequent Receivable or Subsequent Receivables have the benefit of the personal
guaranty of a natural person or persons. No Subsequent Receivable has been
included in a "fleet" sale (i.e., a sale to any single Obligor of more than five
Financed Vehicles).
(14) SECURITY INTEREST IN FINANCED VEHICLE. Immediately prior to the
sale, assignment, and transfer thereof, each Subsequent Receivable shall be
secured by a validly perfected first priority security interest in the Financed
Vehicle in favor of LBAC as secured party, and such security interest is prior
to all other liens upon and security interests in such Financed Vehicle which
now exist or may hereafter arise or be created (except, as to priority, for any
lien for taxes, labor or materials or any other non-consensual lien affecting a
Financed Vehicle arising subsequent to the Subsequent Transfer Date), and either
(i) all necessary and appropriate actions have been taken that would result in
the valid perfection of a first priority security interest in the Financed
Vehicle in favor of LBAC as secured party, and the Lien Certificate for each
Financed Vehicle shows, or if a new or replacement Lien Certificate is being
applied for a new or replacement Lien Certificate will be received within 150
days of the Subsequent Transfer Date and will show LBAC named as the original
secured party under any such Subsequent Receivable and the holder of a first
priority security interest in such Financed Vehicle, or (ii) a Dealer Title
Guaranty has been obtained with respect to such Financed Vehicle. With respect
to each Subsequent Receivable for which the Lien Certificate has not yet been
submitted to, or returned from, the Registrar of Titles, LBAC has received
either (i) written evidence from the related Dealer that such Lien Certificate
showing LBAC as the first lienholder has been applied for or (ii) a Dealer Title
Guaranty with respect to such Financed Vehicle. Immediately after the sale,
transfer and assignment thereof to the Trust, each Subsequent Receivable will be
secured by an enforceable first priority security interest in the Financed
Vehicle in favor of the Trust as secured party, which security interest is prior
to all other liens upon and security interests in such Financed Vehicle which
now exist or may hereafter arise or be created (except, as to priority, for the
lien of the Indenture and for any lien for taxes, labor or materials or any
other non-consensual lien affecting a Financed Vehicle arising subsequent to the
Subsequent Transfer Date).
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(15) SUBSEQUENT RECEIVABLES IN FORCE. No Subsequent Receivable has been
satisfied, subordinated or rescinded, nor has any Financed Vehicle been released
from the lien granted by the related Subsequent Receivable in whole or in part.
No provisions of any Subsequent Receivable have been waived, altered or modified
in any respect since its origination, except by instruments or documents
identified in the related Legal File on the Subsequent Transfer Date. No
Subsequent Receivable has been modified as a result of application of the
Soldiers' and Sailors' Civil Relief Act of 1940, as amended.
(16) NO WAIVER. No provision of a Subsequent Receivable has been
waived.
(17) NO AMENDMENTS. No Subsequent Receivable has been amended except to
the extent reflected in the related Legal File on the Subsequent Transfer Date.
(18) NO DEFENSES. Except for the Xxxxxx Case, as of the Subsequent
Transfer Date, no right of rescission, setoff, counterclaim or defense exists or
has been asserted or threatened with respect to any Subsequent Receivable. The
operation of the terms of any Subsequent Receivable or the exercise of any right
thereunder will not render such Subsequent Receivable unenforceable in whole or
in part or subject to any such right of rescission, setoff, counterclaim or
defense.
(19) NO LIENS. As of the Subsequent Transfer Date, there are no liens
or claims existing or which have been filed for work, labor, storage, materials
or taxes relating to a Financed Vehicle that shall be liens prior to, or equal
or coordinate with, the security interest in the Financed Vehicle granted by the
Subsequent Receivable.
(20) NO DEFAULT; REPOSSESSION. Except for payment delinquencies
continuing for a period of not more than twenty-nine days (calculated on the
basis of a 360-day year of twelve 30-day months), as of the Subsequent Cutoff
Date, no default, breach, violation or event permitting acceleration under the
terms of any Subsequent Receivable has occurred and not been cured; and no
continuing condition that with notice or the lapse of time would constitute a
default, breach, violation, or event permitting acceleration under the terms of
any Subsequent Receivable has arisen; and LBAC shall not waive and has not
waived any of the foregoing; and no Financed Vehicle shall have been repossessed
as of the Subsequent Cutoff Date.
(21) INSURANCE; OTHER. (A) Each Obligor has obtained insurance covering
the Financed Vehicle as of the execution of the Subsequent Receivable insuring
against loss and damage due to fire, theft, transportation, collision and other
risks generally covered by comprehensive and collision coverage which is in an
amount at least equal to the lesser of (x) its maximum insurable value or (y)
the principal amount due from the Obligor under the related Subsequent
Receivable and names LBAC and its successors and assigns as loss payee and each
Subsequent Receivable requires the Obligor to obtain and maintain such insurance
naming LBAC and its successors and assigns as an additional insured, (B) each
Subsequent Receivable that finances the cost of premiums for credit life and
credit accident or health insurance is covered by an insurance policy and
certificate of insurance naming LBAC as policyholder (creditor) under each such
insurance policy and certificate of insurance and (C) as to each Subsequent
Receivable that finances the cost of an extended service contract, the
respective
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Financed Vehicle which secures the Subsequent Receivable is covered by an
extended service contract.
(22) TITLE. It is the intention of LBAC that the transfer and
assignment of the Subsequent Receivables contemplated in the Purchase Agreement
constitute a sale of the Subsequent Receivables from LBAC to the Transferor and
that the beneficial interest in and title to such Subsequent Receivables not be
part of the debtor's estate in the event of the filing of a bankruptcy petition
by or against LBAC under any bankruptcy law. No Subsequent Receivable has been
sold, transferred, assigned, or pledged by LBAC to any Person other than the
Transferor or by the Transferor to any Person other than the Trust except with
respect to any such pledge that has been released on or prior to the Subsequent
Transfer Date. Immediately prior to the transfer and assignment of the
Subsequent Receivables contemplated in the Purchase Agreement, LBAC had good and
marketable title to each Subsequent Receivable, and was the sole owner thereof,
free and clear of all Liens, claims, encumbrances, security interests, and
rights of others and, immediately upon the transfer thereof, the Transferor
shall have good and marketable title to each such Subsequent Receivable, and
will be the sole owner thereof, free and clear of all Liens, encumbrances,
security interests, and rights of others other than the Lien of the Indenture,
and each such transfer has been perfected under the UCC. Immediately prior to
the transfer and assignment by the Transferor to the Trust contemplated by this
Agreement and the Sale and Servicing Agreement, the Transferor shall have good
and marketable title to each Subsequent Receivable, and shall be the sole owner
thereof, free and clear of all Liens, claims, encumbrances, security interests,
and rights of others other than the Lien of the Indenture and, immediately upon
the transfer thereof pursuant to this Agreement and the Sale and Servicing
Agreement, the Trust shall have good and marketable title to each such
Subsequent Receivable, and will be the sole owner thereof, free and clear of all
Liens, encumbrances, security interests and rights of others other than the Lien
of the Indenture, and each such transfer has been perfected under the UCC.
Without limiting the generality of the foregoing, no Dealer has any right, title
or interest in respect of any Subsequent Receivable. Neither the Transferor nor
LBAC has taken any action to convey any right to any Person that would result in
such Person having a right to payments received under any insurance policies
related to the Subsequent Receivables or the Financed Vehicles or the related
Dealer Agreements or to payments due under such Subsequent Receivables.
(23) LAWFUL ASSIGNMENT. No Subsequent Receivable has been originated
in, or is subject to the laws of, any jurisdiction under which the sale,
transfer, and assignment of such Subsequent Receivable under the Purchase
Agreement, this Agreement or the Sale and Servicing Agreement shall be unlawful,
void or voidable. LBAC has not entered into any agreement with any account
debtor that prohibits, restricts or conditions the assignment of any portion of
the Subsequent Receivables.
(24) ALL FILINGS MADE. All filings (including, without limitation, UCC
filings) necessary in any jurisdiction to give the Indenture Trustee a first
priority perfected ownership interest in the Subsequent Receivables and the
proceeds thereof and the other Transferred Property (other than the Financed
Vehicles) have been made.
(25) CHATTEL PAPER. Each Subsequent Receivable constitutes "chattel
paper" under the UCC.
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(26) VALID AND BINDING OBLIGATION OF OBLIGOR. Each Subsequent
Receivable is the legal, valid and binding obligation of the Obligor thereunder
and is enforceable in accordance with its terms, except only as such enforcement
may be limited by bankruptcy, insolvency or similar laws affecting the
enforcement of creditors' rights generally, and all parties to such contract had
full legal capacity to execute and deliver such contract and all other documents
related thereto and to grant the security interest purported to be granted
thereby.
(27) TAX LIENS. As of the Subsequent Transfer Date, there is no lien
against the related Financed Vehicle for delinquent taxes.
(28) TITLE DOCUMENTS. (A) If a Subsequent Receivable was originated in
a State in which notation of security interest on the title document of the
related Financed Vehicle is required or permitted to perfect such security
interest, the title document for such Subsequent Receivable shows, or if a new
or replacement title document is being applied for with respect to such Financed
Vehicle, the title document will be received within 150 days following the
Subsequent Transfer Date and will show, LBAC named as the secured party under
the related Subsequent Receivable as the holder of a first priority security
interest in such Financed Vehicle and (B) if the Subsequent Receivable was
originated in a State in which the filing of a financing statement under the UCC
is required to perfect a security interest in motor vehicles, such filings or
recordings have been duly made and show LBAC named as the original secured party
under the related Subsequent Receivable, and in either case, the Trust has the
same rights as such secured party has or would have (if such secured party were
still the owner of the Subsequent Receivable) against all parties claiming an
interest in such Financed Vehicle. With respect to each Subsequent Receivable
for which the relevant Dealer is temporarily unable to furnish either an
original Lien Certificate or satisfactory evidence that the appropriate lien has
been recorded on the related certificate of title or documentation has been
submitted to the appropriate state motor vehicle authority to record such lien
on such certificate of title, LBAC has received the related Dealer Title
Guaranty.
(29) CASUALTY. As of the Subsequent Cutoff Date, no Financed Vehicle
related to a Subsequent Receivable has suffered a Casualty.
(30) OBLIGATION TO DEALERS OR OTHERS. The Transferor and its assignees
will assume no obligation to Dealers or other originators or holders of the
Subsequent Receivables (including, but not limited to under dealer reserves) as
a result of its purchase of the Subsequent Receivables.
(31) FULL AMOUNT FINANCED ADVANCED. The full Amount Financed of each
Subsequent Receivable has been advanced to or on behalf of each Obligor, and
there are no requirements for future advances thereunder. The Obligor with
respect to the Subsequent Receivable does not have any option under the
Subsequent Receivable to borrow from any person additional funds secured by the
Financed Vehicle.
(32) NO IMPAIRMENT. Neither LBAC nor the Transferor has done anything
to convey any right to any Person that would result in such Person having a
right to payments due under the Subsequent Receivables or otherwise to impair
the rights of the Trust, the Noteholders or the Note Insurer in any Subsequent
Receivable or the proceeds thereof.
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(33) SUBSEQUENT RECEIVABLES NOT ASSUMABLE. No Subsequent Receivable is
assumable by another Person in a manner which would release the Obligor thereof
from such Obligor's obligations to the Transferor or LBAC with respect to such
Subsequent Receivable.
(34) SERVICING. The servicing of each Subsequent Receivable and the
collection practices relating thereto have been lawful and in accordance with
the standards set forth in the Sale and Servicing Agreement; other than LBAC and
any Back-up Servicer arrangement that has been entered into, no other person has
the right to service any Subsequent Receivable.
(35) ILLINOIS SUBSEQUENT RECEIVABLES. (a) LBAC does not own a
substantial interest in the business of a Dealer within the meaning of Illinois
Sales Finance Agency Act Rules and Regulations, Section 160.230(l) and (b) with
respect to each Subsequent Receivable originated in the State of Illinois, (i)
the printed or typed portion of the related Form of Subsequent Receivable
complies with the requirements of 815 ILCS 375/3(b) and (ii) LBAC has not, and
for so long as such Subsequent Receivable is outstanding shall not, place or
cause to be placed on the related Financed Vehicle any collateral protection
insurance in violation of 815 ILCS 180/10.
(36) CALIFORNIA SUBSEQUENT RECEIVABLES. Each Subsequent Receivable
originated in the State of California has been, and at all times during the term
of the Sale and Servicing Agreement will be, serviced by the Servicer in
compliance with Cal. Civil Codess.2981, et seq.
SECTION 5. CONDITIONS PRECEDENT. The obligation of the Trust to acquire the
Subsequent Receivables hereunder is subject to the satisfaction, on or prior to
the Subsequent Transfer Date, of the following conditions precedent:
(a) REPRESENTATIONS AND WARRANTIES. (i) Each of the
representations and warranties made by LBAC in Section 3.2 of the
Purchase Agreement and Section 4 of this Agreement and (ii) each of the
representations and warranties made by the Transferor in Section 3.1 of
the Sale and Servicing Agreement and Section 3.1 of the Purchase
Agreement, shall be true and correct as of the date of this Agreement
and as of the Subsequent Transfer Date.
(b) SALE AND SERVICING AGREEMENT CONDITIONS. Each of the
conditions set forth in Section 2.2(b) to the Sale and Servicing
Agreement shall have been satisfied.
(c) PURCHASE AGREEMENT CONDITIONS. LBAC shall have complied
with the requirements of Section 4.1 of the Purchase Agreement and
shall have delivered all documents required to be delivered pursuant to
Section 5.5 of the Purchase Agreement.
(d) SECURITY INTEREST PERFECTION. In connection with the
conveyance contemplated by this Agreement, the Transferor agrees to
record and file, at its own expense, a financing statement with respect
to the Subsequent Receivables now existing and hereafter created for
the sale of chattel paper (as defined in the UCC as in effect in the
State of New Jersey) meeting the requirements of applicable state law
in such manner as is sufficient to perfect the sale and assignment of
such Subsequent Receivables to the
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Trust, and the proceeds thereof (and any continuation statements as are
required by applicable state law), and to deliver a file-stamped copy
of each such financing statement (or continuation statement) or other
evidence of such filings (which may, for purposes of this Section,
consist of telephone confirmation of such filing with the file stamped
copy of each such filing to be provided to the Trust Collateral Agent
in due course), as soon as is practicable after the Transferor's
receipt thereof.
In connection with such conveyance, the Transferor further
agrees, at its own expense, on or prior to the Subsequent Transfer Date
(i) to annotate and indicate in its computer files that the Subsequent
Receivables have been transferred to the Trust pursuant to the Sale and
Servicing Agreement and this Agreement and (ii) to deliver to the Trust
Collateral Agent a computer file printed or microfiche list containing
a true and complete list of all such Subsequent Receivables, identified
by account number and by the Principal Balance of each Subsequent
Receivable as of the Subsequent Cutoff Date.
(e) ADDITIONAL INFORMATION. The Transferor shall have
delivered or caused to be delivered to the Trust Collateral Agent on
behalf of the Noteholders and the Note Insurer such information as was
reasonably requested by the Trust on behalf of the Noteholders or the
Note Insurer to satisfy itself as to (i) the accuracy of the
representations and warranties set forth in Section 4 of this Agreement
and Section 7.1 of the Sale and Servicing Agreement and (ii) the
satisfaction of the conditions set forth in this Section.
(f) DEPOSITS TO ACCOUNTS. On or prior to the Subsequent
Transfer Date, the Transferor shall deposit or cause to be deposited:
(1) the Subsequent Spread Account Deposit into the
Spread Account; and
(2) the Class B Reserve Account Subsequent Deposit
into the Class B Reserve Account; and
(2) $__________, which represents all monies received
pursuant to Section 3(1) (other than Liquidation Proceeds and
Recoveries), into the Collection Account.
SECTION 6. RATIFICATION OF AGREEMENT. As supplemented by this Agreement, the
Sale and Servicing Agreement is in all respects ratified and confirmed and the
Sale and Servicing Agreement as so supplemented by this Agreement shall be read,
taken and construed as one and the same instrument.
SECTION 7. THIRD PARTY BENEFICIARIES. Except as otherwise specifically provided
herein with respect to Noteholders, the parties to this Agreement hereby
manifest their intent that no third party other than the Note Insurer shall be
deemed a third party beneficiary of this Agreement, and specifically that the
Obligors are not third party beneficiaries of this Agreement. The Note Insurer
and its successors and assigns shall be a third-party beneficiary to the
provisions of this Agreement, and shall be entitled to rely upon and directly
enforce the provisions of this Agreement so long as no Note Insurer Default
shall have occurred and be continuing. Except as expressly stated otherwise
herein or in the Basic Documents, any right of the Note Insurer to
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direct, appoint, consent to, approve of, or take any action under this
Agreement, shall be a right exercised by the Note Insurer in its sole and
absolute discretion. The Note Insurer may disclaim any of its rights and powers
under this Agreement (but not its duties and obligations under the Policy) upon
delivery of a written notice to the Trust Collateral Agent.
SECTION 8. GOVERNING LAW. THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF NEW YORK, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF
THE PARTIES UNDER THIS AGREEMENT SHALL BE DETERMINED IN ACCORDANCE WITH SUCH
LAWS WITHOUT REGARD TO CONFLICT OF LAWS PRINCIPLES (EXCEPT WITH REGARD TO THE
UCC).
SECTION 9. AMENDMENTS. This Agreement may be amended from time to time by a
written amendment duly executed and delivered by the Issuer, LBAC, the
Transferor and the Trust Collateral Agent with the prior written consent of the
Note Insurer.
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IN WITNESS WHEREOF, the Issuer, LBAC, the Transferor and the Trust
Collateral Agent have caused this Agreement to be duly executed and delivered by
their respective duly authorized officers as of the day and the year first above
written.
LONG BEACH ACCEPTANCE AUTO RECEIVABLES TRUST
2000-1, as Issuer
By: Wilmington Trust Company, not in its
individual capacity, but solely as Owner
Trustee
By:
-------------------------------------
Name:
Title:
LONG BEACH ACCEPTANCE CORP.
By:
-------------------------------------
Name:
Title:
LONG BEACH ACCEPTANCE RECEIVABLES CORP.
By:
-------------------------------------
Name:
Title:
THE CHASE MANHATTAN BANK, as Trust
Collateral Agent.
By:
-------------------------------------
Name:
Title:
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SCHEDULE A
SCHEDULE OF RECEIVABLES
Schedule A-1
SCHEDULE B
Location of Receivable Files
Xxx Xxxx Xxxxxx Xxxxx
Xxxxxxx, Xxx Xxxxxx 00000
Location of Legal Files
0000 Xxxxxx
00xx Xxxxx
Xxxxxxx, Xxxxx 00000
Attention: Loan Document
Custody - Long Beach Acceptance
Auto Receivables Trust 2000-1
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