Exhibit 10.8
EXECUTION COPY
POOLING AND SERVICING AGREEMENT
Dated as of January 1, 1998
among
LONG BEACH ACCEPTANCE RECEIVABLES CORP.
Depositor
and
LONG BEACH ACCEPTANCE CORP.
Originator and Servicer
and
CHASE BANK OF TEXAS, NATIONAL ASSOCIATION
Trustee, Back-up Servicer, Custodian and Collateral Agent
$154,491,017.96
Long Beach Acceptance Auto Grantor Trust 1998-1
$129,000,000.00 6.19% Class A Certificates
$25,491,017.96 12.00% Class B Certificates
TABLE OF CONTENTS
SECTION PAGE
ARTICLE I
Definitions
SECTION I.1. Definitions ..........................................................1
SECTION 1.2. Usage of Terms ......................................................29
SECTION 1.3. Section References ..................................................29
SECTION 1.4. Limitation on Trust Activities ......................................29
SECTION 1.5. Calculations ........................................................29
SECTION 1.6. Action by or Consent of Certificateholders ..........................29
SECTION 1.7. Material Adverse Effect .............................................30
ARTICLE II
The Trust and Trust Property
SECTION 2.1. Creation of Trust ...................................................30
SECTION 2.2. Conveyance of Receivables ...........................................30
SECTION 2.3. Transfer Intended as Sale; Precautionary Security Interest ..........37
SECTION 2.4. Acceptance by Trustee ...............................................38
SECTION 2.5. Assignment by Depositor .............................................38
SECTION 2.6. Delivery of Legal Files and Receivable Files ........................38
SECTION 2.7. Acceptance of Legal Files by Custodian ..............................39
SECTION 2.8. Access to Receivable Files and Legal Files; Servicer's Duties
with Respect to Receivable Files; Custodian's Duties with
Respect to Legal Files .............................................40
SECTION 2.9. Covenants of the Custodian ..........................................41
SECTION 2.10. The Legal Files Are Not "Financial Assets" ..........................43
ARTICLE III
Administration and Servicing of Receivables
SECTION 3.1. Duties of Servicer ............................................... ..43
SECTION 3.2. Collection and Allocation of Receivable Payments ....................44
SECTION 3.3. Realization Upon Receivables ........................................45
SECTION 3.4. Physical Damage Insurance; Other Insurance ..........................46
SECTION 3.5. Maintenance of Security Interests in Financed Vehicles ..............47
SECTION 3.6. Additional Covenants of Servicer ....................................48
SECTION 3.7. Purchase of Receivables Upon Breach .................................48
SECTION 3.8. Servicing Fee .......................................................49
SECTION 3.9. Servicer's Certificate ..............................................49
SECTION 3.10 Annual Statement as to Compliance; Notice of Default ................50
SECTION 3.11. Annual Independent Certified Public Accountants Report ..............50
SECTION 3.12. Servicer Expenses ...................................................51
SECTION 3.13. Retention and Termination of Servicer ...............................51
SECTION 3.14. Access to Certain Documentation and Information Regarding
Receivable ..........................................................51
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SECTION 3.15. Verification of Servicer's Certificate ..............................52
SECTION 3.16. Fidelity Bond .......................................................53
SECTION 3.17. Delegation of Duties ................................................53
SECTION 3.18. Delivery of Back-up Tapes of Back-up Servicer .......................54
ARTICLE IV
Distributions; Accounts; Statements to Certificateholders
SECTION 4.1 Accounts; Lock-Box A ount ...........................................55
SECTION 4.2. Collections .........................................................57
SECTION 4.3. Application of Collections ..........................................57
SECTION 4.4. Payaheads ...........................................................58
SECTION 4.5. Additional Deposits .................................................58
SECTION 4.6. Distributions; Policy Claims ........................................58
SECTION 4.7. Class B Reserve Account .............................................65
SECTION 4.8. Statements to Certificateholders; Tax Returns .......................69
SECTION 4.9. [Reserved] ..........................................................72
SECTION 4.10 Reliance on Information from the Servicer ...........................72
SECTION 4.11. Optional Deposits by the Certificate Insurer ........................72
SECTION 4.12. Spread Account ......................................................72
SECTION 4.13. Policy ..............................................................73
SECTION 4.14. Withdrawals from Spread Account .....................................73
SECTION 4.15. Claims Under Policy .................................................73
SECTION 4.16. Preference Claims; Direction of Proceedings .........................75
SECTION 4.17. Surrender of Policy .................................................76
SECTION 4.18. Simple Interest Advances ............................................76
SECTION 4.19. Pre-Funding Account .................................................76
SECTION 4.20. Capitalized Interest Account ........................................77
ARTICLE V
The Certificates
SECTION 5.1. The Certificates ....................................................79
SECTION 5.2. Appointment of Paying Agent .........................................80
SECTION 5.3. Authenticating Agent ................................................80
SECTION 5.4. Authentication of Certificates ......................................81
SECTION 5.5. Registration of Transfer and Exchange of Certificates ...............81
SECTION 5.6. Mutilated, Destroyed, Lost or Stolen Certificates ...................86
SECTION 5.7. Persons Deemed Owners ...............................................86
SECT10N 5.8. Access to List of Certificateholders' Names and Addresses ...........86
SECTION 5.9. Maintenance of Office or Agency .....................................87
ARTICLE VI
The Depositor
SECTION 6.1. Representations of Depositor ........................................87
SECTION 6.2. Liability of Depositor; Indemnities .................................89
SECTION 6.3. Merger or Consolidation of, or Assumption of the Obligations
of, Depositor ......................................................90
SECTION 6.4. Limitation on Liability of Depositor and Others .....................91
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SECTION 6.5. Depositor May Own Certificates ......................................91
ARTICLE VII
The Servicer
SECTION 7.1. Representations of Servicer .........................................91
SECTION 7.2. Indemnities of Servicer .............................................93
SECTION 7.3. Merger or Consolidation of, or Assumption of the Obligations of,
Servicer or Back-up Servicer .......................................95
SECTION 7.4. Limitation on Liability of Servicer and Others ......................96
SECTION 7.5. Servicer or Back-up Servicer Not to Resign ..........................96
ARTICLE VIII
Default
SECTION 8.1. Events of Default ...................................................97
SECTION 8.2. Appointment of Successor ...........................................100
SECTION 8.3. Notification to Certificateholders .................................102
SECTION 8.4. [Reserved] .........................................................102
SECTION 8.5. Action Upon Certain Failures of the Servicer .......................102
ARTICLE IX
The Trustee
SECTION 9.1. Duties of Trustee ..................................................102
SECTION 9.2. Trustee's Certificate ..............................................104
SECTION 9.3. Certain Matters Affecting Trustee ..................................105
SECTION 9.4. Trustee Not Liable for Certificates or Receivables .................106
SECTION 9.5. Trustee May Own Certificates .......................................107
SECTION 9.6. Indemnity of Trustee and Custodian .................................107
SECTION 9.7. Eligibility Requirements for Trustee ...............................108
SECTION 9.8. Resignation or Removal of Trustee ..................................108
SECTION 9.9. Successor Trustee ..................................................109
SECTION 9.10. Merger or Consolidation of Trustee .................................110
SECTION 9.11. Co-Trustee; Separate Trustee .......................................110
SECTION 9.12. Representations and Warranties of Trustee ..........................111
SECTION 9.13. No Bankruptcy Petition .............................................112
SECTION 9.14. Trustee May Enforce Claims Without Possession of
Certificates ......................................................112
SECTION 9.15. Rights of Certificate Insurer to Direct Trustee ....................112
ARTICLE X
Termination
SECTION 10.1. Termination of the Trust ...........................................113
SECTION 10.2. Optional Purchase of All Receivables ...............................114
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ARTICLE XI
Miscellaneous Provisions
SECTION 11.1. Amendment .........................................................114
SECTION 11.2. Protection of Title to Trust ......................................115
SECTION 11.3. Limitation on Rights of Certificateholders ........................118
SECTION 11.4. GOVERNING LAW .....................................................119
SECTION 11.5. Notices ...........................................................119
SECTION 11.6. Severability of Provisions ........................................120
SECTION 11.7. Assignment ........................................................120
SECTION 11.8. Certificates Nonassessable and Fully Paid .........................120
SECTION 11.9. Nonpetition Covenant ..............................................120
SECTION 11.10. Third Party Beneficiaries .........................................120
SECTION 11.11. Certificate Insurer as Controlling Party ..........................121
EXHIBITS
Exhibit A Form of Class A Certificate
Exhibit B Form of Class B Certificate
Exhibit C Forrn of Excess Cash Flow Certificate
Exhibit D-1 Form of Trustee's Certificate
Exhibit D-2 Form of Trustee's Certificate
Exhibit E-1 Form of Monthly Certificateholder Statement
Exhibit E-2 Form of Loan Master File Layout
Exhibit F-1 Form of "Qualified Institutional Buyer" Transferee's Certificate
Exhibit F-2 Form of "Accredited Investor" Transferee's Certificate
Exhibit F-3 Form of "Registered Certificate" Transferee's Certificate
Exhibit F-4 Form of Transferor's Certificate
Exhibit G Form of ERISA Representation Letter
Exhibit H Form of Depository Agreement
Exhibit I Payment Application Procedures
Exhibit J Payment Deferment and Due Date Change Policies
Exhibit K Documentation Checklist
Exhibit L Form of Request for Transfer of Possession
Exhibit M Form of Custodial Letter
Exhibit N Form of Transfer Agreement
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SCHEDULES
Schedule A Schedule of Receivables
Schedule B Location of Receivable Files;
Location of Legal Files
Schedule C Delivery Requirements
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POOLING AND SERVICING AGREEMENT dated as of January 1, 1998 (the
"Agreement") among Long Beach Acceptance Receivables Corp., a Delaware
corporation, as depositor (the "Depositor"), Long Beach Acceptance Corp., a
Delaware corporation, as originator of the receivables ("LBAC"), and as servicer
(in such capacity, the "Servicer"), and Chase Bank of Texas, National
Association, a national banking association, as trustee, back-up servicer,
custodian and collateral agent (the "Trustee", "Back-up Servicer", "Custodian"
and "Collateral Agent", respectively).
In consideration of the premises and of the mutual agreements herein
contained, and other good and valuable consideration, the receipt of which is
acknowledged, the parties hereto, intending to be legally bound, agree as
follows:
ARTICLE I
DEFINITIONS
SECTION 1.1. DEFINITIONS. Whenever used in this Agreement, the
following words and phrases, unless the context otherwise requires, whenever
capitalized shall have the following meanings:
"ACTUARIAL RECEIVABLE" means any Receivable under which the portion of
a payment allocable to interest and the portion of a payment allocable to
principal is determined in accordance with the "actuarial" method.
"ADDITION NOTICE" means, with respect to the transfer of Subsequent
Receivables to the Trust pursuant to this Agreement and a Transfer Agreement, a
written notice which shall be given to the Trustee, the Certificate Insurer (in
addition to such notice, the Trustee and the Certificate Insurer shall both
receive an electronic transmission, in a format acceptable to the Trustee and
the Certificate Insurer, of the designated Subsequent Receivables to be sold to
the Trust) and each Rating Agency pursuant to Section 2.2(c) not later than five
Business Days prior to the related Subsequent Transfer Date, of the Depositor's
designation of Subsequent Receivables to be sold to the Trust and the aggregate
Principal Balance of such Subsequent Receivables as of the related Subsequent
Cutoff Date.
"AFFILIATE" of any Person means any Person who directly or indirectly
controls, is controlled by, or is under direct or indirect common control with
such Person. For purposes of this definition of "Affiliate", the term "control"
(including the terms "controlling", "controlled by" and "under common control
with") means the possession, directly or indirectly, of the power to direct or
cause a direction of the management and policies of a Person, whether through
the ownership of voting securities, by contract or otherwise.
"AGENCY AGREEMENT" means the Agency Agreement dated as of 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 Trustee and LBAC, dated as of the
Closing Date.
"AGREEMENT" means this
Pooling and Servicing Agreement, as the same may
be amended, supplemented or otherwise modified from time to time in accordance
with the terms hereof.
"AMC" means Ameriquest Mortgage Company, a Delaware corporation, or,
as applicable, its successors.
"AMOUNT FINANCED" with respect to a Receivable means the aggregate
amount originally advanced under the Receivable toward the purchase price of the
Financed Vehicle and any related costs.
"ANNUAL PERCENTAGE RATE" or "APR" of a Receivable means the annual rate
of finance charges stated in the Receivable. If after the Closing Date in the
case of an Initial Receivable, or the related Subsequent Transfer Date, in the
case of a Subsequent Receivable, the annual rate with respect to such Receivable
as of the Closing Date or related Subsequent Transfer Date, as applicable, is
reduced as a result of (i) an insolvency proceeding involving the related
Obligor or (ii) pursuant to the Soldiers' and Sailors' Civil Relief Act of 1940,
as amended, the Annual Percentage Rate or APR shall refer to such reduced rate.
"ASSUMPTION DATE" has the meaning set forth in Section 8.2.
"AUTHENTICATING AGENT" has the meaning assigned to such term in
Section 5.3.
"BACK-UP SERVICER" means Chase Texas, in its capacity as Back-up
Servicer pursuant to the terms of the Servicing Assumption Agreement or such
Person as shall have been appointed Back-up Servicer pursuant to Section 8.2(c).
"BACK-UP SERVICER FEE" means the fee payable to the Back-up Servicer so
long as LBAC is the Servicer, calculated in the same manner, on the same basis
and for the same period as the Servicing Fee is calculated pursuant to Section
3.8, based on the Back-up Servicer Fee Rate rather than the Servicing Fee Rate.
"BACK-UP SERVICER FEE RATE" shall be 0.025% per annum, payable monthly.
"BANKRUPTCY REMOTE ENTITY" means any special or limited purpose
corporation, partnership or other entity generally structured in accordance with
the guidelines of one or more nationally recognized statistical rating
organizations for such entities, whose certificate of incorporation, partnership
agreement or other governing document includes limitations on purpose;
limitations on amendments to the certificate of incorporation and bylaws,
partnership agreement or other governing documents; limitations on ability to
incur debt; limitations on liquidation, consolidation and merger or the sale of
all or a substantial part of its assets; covenants to maintain separateness from
affiliates; a special purpose bankruptcy remote equity owner, in the case of a
partnership; and at least two
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independent directors (of such corporation or of the corporate partner of such
partnership).
"BASIC DOCUMENTS" means this Agreement, each Transfer Agreement, the
Purchase Agreement, the Spread Account Agreement, the Servicer Termination Side
Letter, the Insurance Agreement, the Indemnification Agreement, the Guaranty,
the Certificate Purchase Agreement, the Premium Letter, the Lock-Box Agreement,
the Agency Agreement, the Servicing Assumption Agreement, the Stock Pledge
Agreement, the GCFP Xxxx of Sale and Assignment, the GCFP Releases 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, or the city in which the
Corporate Trust Office of the Trustee is relocated subject to prior written
notice with respect to such address to the Certificateholders, the Depositor,
the Servicer and the Certificate Insurer or any other location of any successor
Servicer, successor Trustee or successor Collateral Agent shall be authorized or
obligated by law, executive order, or governmental decree to be closed.
"CAPITALIZED INTEREST ACCOUNT" means the account designated as such,
established and maintained pursuant to Section 4.1.
"CAPITALIZED INTEREST ACCOUNT DEPOSIT" shall have the meaning assigned
to such term in Section 4.20(a).
"CAPITALIZED INTEREST ACCOUNT PROPERTY" shall have the meaning assigned
to such term in Section 4.20(b).
"CASUALTY" means, with respect to a Financed Vehicle, the total loss or
destruction of such Financed Vehicle.
"CERTIFICATE" means any one of the certificates executed by the Trustee
on behalf of the Trust and authenticated by the Trustee in substantially the
form set forth in Exhibit A, Exhibit B or Exhibit C hereto.
"CERTIFICATE ACCOUNT" means the account designated as such, established
and maintained pursuant to Section 4.1.
"CERTIFICATE BALANCE" as of any day, means the sum of the Class A
Certificate Balance on such day and the Class B Certificate Balance on such day.
"CERTIFICATE 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.
"CERTIFICATE OWNER" means, with respect to any Certificate registered
in the name of the Clearing Agency or its nominee, the Person who is the
beneficial owner of such Certificate, as reflected on the books of the Clearing
Agency (directly as a Clearing
3
Agency Participant or as an indirect participant, in each case in accordance
with the rules of such Clearing Agency).
"CERTIFICATE REGISTER and "CERTIFICATE REGISTRAR" mean, respectively,
the register maintained and the Certificate Registrar appointed pursuant to
Section 5.5.
"CERTIFICATEHOLDER" or "Holder" means the Person in whose name a
Certificate shall be registered in the Certificate Register, except that so long
as any Certificates are outstanding, solely for the purposes of giving any
consent, waiver, request or demand pursuant to this Agreement, the interest
evidenced by any Certificate registered in the name of the Depositor, LBAC, the
Servicer or any of their respective Affiliates, shall not be taken into account
in determining whether the requisite percentage necessary to effect any such
consent, waiver, request or demand shall have been obtained.
"CERTIFICATE PURCHASE AGREEMENT" means the Certificate Purchase
Agreement relating to the Class A Certificates, dated as of January 30, 1998,
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.
"CERTIFICATES" means, collectively, the Class A Certificates, the Class
B Certificates and the Excess Cash Flow Certificate.
"CHARGEBACK OBLIGATION" means, with respect to any Receivable
liquidated or prepaid in full, any obligation of a Dealer, as provided by the
related Dealer Agreement, to refund to LBAC certain portions of amounts
previously paid to the Dealer upon origination of such Receivable on account of
the APR of such Receivable exceeding the related buy rate.
"CHASE TEXAS" means Chase Bank of Texas, National Association (formerly
known as Texas Commerce Bank National Association), a national banking
association, and its successors in interest.
"CHASE TEXAS RELEASE" means the security interest release executed as
of January 1, 1998 by Chase Texas in favor of LBAC.
"CLASS A CERTIFICATE" means any one of the 6.19% Class A Certificates,
executed by the Trustee on behalf of the Trust and authenticated by the Trustee
in substantially the form set forth in Exhibit A hereto.
"CLASS A CERTIFICATE BALANCE" shall equal, initially, the Class A
Percentage of the sum of the Original Pool Balance and the Original Pre-Funded
Amount and, thereafter, shall equal the initial class A Certificate Balance,
reduced by all amounts previously distributed to Class A Certificateholders and
allocable to principal.
"CLASS A CERTIFICATEHOLDER" means the Person in whose name a Class A
Certificate shall be registered in the Certificate Register.
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"CLASS A DISTRIBUTABLE AMOUNT" means, for any Distribution Date, an
amount equal to the sum of the Class A Principal Distributable Amount for such
Distribution Date and the Class A Interest Distributable Amount for such
Distribution Date.
"CLASS A INTEREST CARRYOVER SHORTFALL" means, as of the close of
business on any Distribution Date, the excess of the Class A Interest
Distributable Amount for such Distribution Date and (without duplication) any
outstanding Class A Interest Carryover Shortfall from the preceding Distribution
Date plus interest on such outstanding Class A Interest Carryover Shortfall, to
the extent permitted by applicable law, at the Class A Pass-Through Rate from
such preceding Distribution Date through the current Distribution Date
(calculated on the basis of a 360-day year consisting of twelve 30-day months),
over the amount of interest that the Holders of the Class A Certificates
actually received on such current Distribution Date.
"CLASS A INTEREST DISTRIBUTABLE AMOUNT" means, for any Distribution
Date, an amount equal to thirty (30) days of interest at the Class A
Pass-Through Rate on the Class A Certificate Balance as of the close of business
on the last day of the related Collection Period (calculated on the basis of a
360-day year consisting of twelve 30-day months).
"CLASS A PASS-THROUGH RATE" means 6.19% per annum.
"CLASS A PERCENTAGE" means 83.50%.
"CLASS A POOL FACTOR" means, with respect to any Distribution Date, a
seven-digit decimal figure equal to the Class A Certificate Balance as of the
close of business on the last day of the related Collection Period divided by
the initial Class A Certificate Balance. The Class A Pool Factor will be
1.0000000 as of the Closing Date; thereafter, the Class A Pool Factor will
decline to reflect reductions in the Class A Certificate Balance.
"CLASS A PRINCIPAL CARRYOVER SHORTFALL" means, as of the close of
business on any Distribution Date, the excess of the Class A Principal
Distributable Amount and (without duplication) any outstanding Class A Principal
Carryover Shortfall from the preceding Distribution Date, over the amount of
principal that the Holders of the Class A Certificates actually received on such
current Distribution Date.
"CLASS A PRINCIPAL DISTRIBUTABLE AMOUNT" means, with respect to any
Distribution Date other than the Final Scheduled Distribution Date, the Class A
Percentage of the sum of the following amounts (without duplication): (i) the
principal portion as calculated in accordance with Section 4.3 of all Scheduled
Payments due during the related Collection Period and all prior Collection
Periods received during the related Collection Period on Precomputed Receivables
(including amounts transferred from the Payahead Account to the Certificate
Account to be applied to the principal portion of Scheduled Payments but
excluding Recoveries) and all payments of principal received on Simple Interest
Receivables during such Collection Period (excluding Recoveries); (ii) the
principal portion of all prepayments in full received during the related
Collection Period (including prepayments in full resulting from collections with
respect to a Receivable received
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during the related Collection Period plus the transfer of the Payahead Balance
with respect to such Receivable to the Certificate Account pursuant to Section
4.6(a)(ii)); (iii) the portion of the Purchase Amount allocable to principal of
each Receivable that became a Purchased Receivable as of the last day of the
related Collection Period and, at the option of the Certificate Insurer, the
Principal Balance of each Receivable that was required to be but was not so
purchased or repurchased; (iv) the Principal Balance of each Receivable that
first became a Liquidated Receivable during the related Collection Period and
(v) the aggregate amount of Cram Down Losses with respect to the Receivables
that have occurred during the related Collection Period. In addition, (i) on the
Final Funding Period Distribution Date, the Class A Principal Distributable
Amount will include the Class A Percentage of the Prepayment Amount and (ii) on
the Final Scheduled Distribution Date, the Class A Principal Distributable
Amount will equal the Class A Certificate Balance as of the Final Scheduled
Distribution Date.
"CLASS B ADDITIONAL INTEREST CARRYOVER SHORTFALL" means, as of the
close of business on any Distribution Date, the excess of the Class B Additional
Interest Distributable Amount for such Distribution Date and (without
duplication) any outstanding Class B Additional Interest Carryover Shortfall
from the preceding Distribution Date, plus interest on such outstanding Class B
Additional Interest Carryover Shortfall, to the extent permitted by applicable
law, at the Class B Pass-Through Rate from such preceding Distribution Date
through the current Distribution Date (calculated on the basis of a 360-day year
consisting of twelve 30-day months), over the amount of interest that the
Holders of the Class B Certificates actually received pursuant to clause (A) of
the last paragraph of Section 4.6(c) on such current Distribution Date.
"CLASS B ADDITIONAL INTEREST DISTRIBUTABLE AMOUNT" means, for any
Distribution Date other than the first Distribution Date, an amount equal to
thirty (30) days of interest at the Class B Pass-Through Rate on the Class B
Undistributed Principal Amount on the preceding Distribution Date (after giving
effect to distributions made on such preceding Distribution Date) (calculated on
the basis of a 360-day year consisting of twelve 30-day months). The Class B
Additional Interest Distributable Amount for the first Distribution Date will
equal zero.
"CLASS B CERTIFICATE" means any one of the 12.00% Class B Certificates,
executed by the Trustee on behalf of the Trust and authenticated by the Trustee
in substantially the form set forth in Exhibit B hereto.
"CLASS B CERTIFICATE BALANCE" shall equal, initially, the Class B
Percentage of the sum of the Original Pool Balance and the Original Pre-Funded
Amount and, thereafter, shall equal the initial Class B Certificate Balance,
reduced by the sum of all amounts previously distributed (i) to the Collateral
Agent, for deposit in the Class B Sub-account pursuant to Section 4.6(c)(ix),
(ii) to the Class B Certificateholders pursuant to Section 4.6(c)(ix) and (iii)
to the Class B Certificateholders pursuant to subclause third of clause (C) of
the last paragraph of Section 4.6(c).
"CLASS B CERTIFICATEHOLDER" means the Person in whose name a Class B
Certificate shall be registered in the Certificate Register.
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"CLASS B DISTRIBUTABLE AMOUNT" means, for any Distribution Date, the
sum of the Class B Principal Distributable Amount and the Class B Interest
Distributable Amount, in each case for such Distribution Date.
"CLASS B INTEREST CARRYOVER SHORTFALL" means, as of the close of
business on any Distribution Date, the excess of the Class B Interest
Distributable Amount for such Distribution Date and (without duplication) any
outstanding Class B Interest Carryover Shortfall from the preceding Distribution
Date, plus interest on such outstanding Class B Interest Carryover Shortfall, to
the extent permitted by applicable law, at the Class B Pass-Through Rate from
such preceding Distribution Date through the current Distribution Date
(calculated on the basis of a 360-day year consisting of twelve 30-day months),
over the amount of interest that the Holders of the Class B Certificates
actually received pursuant to Section 4.6(c)(vi) on such current Distribution
Date.
"CLASS B INTEREST DISTRIBUTABLE AMOUNT" means, for any Distribution
Date, an amount equal to thirty (30) days of interest at the Class B
Pass-Through Rate on the Class B Certificate Balance as of the close of business
on the last day of the related Collection Period (calculated on the basis of a
360-day year consisting of twelve 30-day months).
"CLASS B PASS-THROUGH RATE" means 12.00% per annum.
"Class B PERCENTAGE" means 16.50%.
"CLASS B POOL FACTOR" means, with respect to any Distribution Date, a
seven-digit decimal figure equal to the Class B Certificate Balance as of the
close of business on the last day of the related Collection Period divided by
the initial Class B Certificate 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 Certificate Balance.
"CLASS B PRINCIPAL CARRYOVER SHORTFALL" means, as of the close of
business on any Distribution Date, the excess of the Class B Principal
Distributable Amount and (without duplication) any outstanding Class B Principal
Carryover Shortfall from the preceding Distribution Date, over the sum of (i)
the amount of principal distributed to the Collateral Agent for deposit in the
Class B Sub-account pursuant to clause first of Section 4.6(c)(ix) and (ii) the
amount of principal distributed to the Holders of the Class B Certificates
pursuant to clause second of Section 4.6(c)(ix) (including without limitation
all principal distributed to the Class B Certificateholders from any Class B
Reserve Account Draw pursuant to Section 4.6(c)(ix)) on such current
Distribution Date.
"CLASS B PRINCIPAL DISTRIBUTABLE AMOUNT" means, with respect to any
Distribution Date, the Class B Percentage of the sum of the following amounts
(without duplication): (i) the principal portion as calculated in accordance
with Section 4.3 of all Scheduled Payments due during the related Collection
Period and all prior Collection Periods received during the related Collection
Period on Precomputed Receivables (including amounts transferred from the
Payahead Account to the Certificate Account to be applied to the principal
portion of Scheduled Payments but excluding Recoveries) and all payments of
principal received on Simple Interest Receivables during such Collection
7
Period (excluding Recoveries); (ii) the principal portion of all prepayments in
full received during the related Collection Period (including prepayments in
full resulting from collections with respect to a Receivable received during the
related Collection Period plus the transfer of the Payahead Balance with respect
to such Receivable to the Certificate Account pursuant to Section 4.6(a)(ii));
(iii) the portion of the Purchase Amount allocable to principal of each
Receivable that became a Purchased Receivable as of the last day of the related
Collection Period and, at the option of the Certificate Insurer, the Principal
Balance of each Receivable that was required to be but was not so purchased or
repurchased; (iv) the Principal Balance of each Receivable that first became a
Liquidated Receivable during the related Collection Period and (v) the aggregate
amount of Cram Down Losses with respect to the Receivables that have occurred
during the related Collection Period. In addition, (i) on the Final Funding
Period Distribution Date, the Class B Principal Distributable Amount will
include the Class B Percentage of the Prepayment Amount and (ii) on the Final
Scheduled Distribution Date, the Class B Principal Distributable Amount will
equal the Class B Certificate Balance as of the Final Scheduled Distribution
Date.
"CLASS B RESERVE ACCOUNT" shall have the meaning assigned to such term
in Section 4.7(a).
"CLASS B RESERVE ACCOUNT DRAW" shall have the meaning assigned to such
term in Section 4.7(d).
"CLASS B RESERVE ACCOUNT INITIAL DEPOSIT" means $5,795,800.54 such
amount being equal to the product of 5% and the Original Pool Balance.
"CLASS B RESERVE ACCOUNT PROPERTY" shall have the meaning assigned to
such term in Section 4.7(b).
"CLASS B RESERVE ACCOUNT SUBSEQUENT DEPOSIT" means, with respect to
any Subsequent Transfer Date, the amount specified in the related Transfer
Agreement (such amount shall be equal to the product of 5% and the aggregate
Principal Balance, as of the related Subsequent Cutoff Date, of Subsequent
Receivables to be conveyed to the Trust on such Subsequent Transfer Date).
"CLASS B SUB-ACCOUNT" means the Series 1998-1 Class B Sub-account, as
such term is defined in the Spread Account Agreement.
"CLASS B UNDISTRIBUTED PRINCIPAL AMOUNT" means, with respect to any
Distribution Date, the excess of (i) the aggregate amount distributed to the
Collateral Agent for deposit in the Class B Sub-account pursuant to clause
first of Section 4.6(c)(ix) on all prior Distribution Dates, over (ii) the
aggregate amount released from the Class B Sub-account and distributed to
Class B Certificateholders pursuant to clause (B) and subclause fourth of
clause (C) of the last paragraph of Section 4.6(c) on all prior Distribution
Dates.
"CLASS I RECEIVABLE" means each Receivable identified as a "Class I
Receivable" on the Schedule of Receivables.
8
"CLASS IIA RECEIVABLE" means each Receivable identified as a "Class 5
Receivable" on the Schedule of Receivables.
"CLASS IIB RECEIVABLE" means each Receivable identified as a "Class 2
Receivable" on the Schedule of Receivables.
"CLASS III RECEIVABLE" means each Receivable identified as a "Class 3
Receivable" on the Schedule of Receivables.
"CLASS IV RECEIVABLE" means each Receivable identified as a "Class 4
Receivable" on the Schedule of Receivables.
"CLASS SERVICING FEE RATE" means, with respect to any (i) Class I
Receivable, 1.00% per annum, (ii) Class IIA Receivable, 1.75% per annum, (iii)
Class IIB Receivable, 2.50% per annum, (iv) Class III Receivable, 3.00% per
annum, and (v) Class IV Receivable, 3.50% per annum. Notwithstanding the
foregoing, with respect to any Receivable as of any Determination Date, in the
event that the sum of (i) the weighted average of the Class A Pass-Through Rate
and the Class B Pass-Through Rate as of such Determination Date and (ii) the
applicable Class Servicing Fee Rate with respect to such Receivable as of such
Determination Date, exceeds the adjusted APR on such Receivable, the applicable
Class Servicing Fee Rate with respect to such Receivable shall be adjusted
downward in an amount equal to such excess; PROVIDED, that in no event shall
such Class Servicing Fee Rate be less than zero.
"CLASS SUCCESSOR SERVICING FEE RATE" means, with respect to any (i)
Class I Receivable, 0.75% per annum, (ii) Class IIA Receivable, 2.50% per annum,
(iii) Class IIB Receivable, 2.50% per annum, (iv) Class III Receivable, 2.50%
per annum, and (v) Class IV Receivable, 2.50% per annum.
"CLEARING AGENCY" means an organization registered as a "clearing
agency" pursuant to Section 17A of the Securities Exchange Act of 1934, as
amended.
"CLEARING AGENCY PARTICIPANT" means a broker, dealer, bank or other
financial institution or other Person for whom from time to time a Clearing
Agency effects book-entry transfers and pledges of securities deposited with the
Clearing Agency.
"CLOSING DATE" means January 30, 1998.
"CODE" means the Internal Revenue Code of 1986, including any successor
or amendatory provisions.
"COLLATERAL AGENT" means, as applicable: (a) with respect to the Spread
Account, the Collateral Agent named in the Spread Account Agreement, and any
successor thereto pursuant to the terms of the Spread Account Agreement, or (b)
with respect to the Capitalized Interest Account and the Class B Reserve
Account, the Trustee, in its capacity as collateral agent pursuant to Section
4.20(b) and Section 4.7, respectively.
9
"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 ACCOUNT" means the account designated as such, established
and maintained pursuant to Section 4.1.
"COLLECTION PERIOD" means each calendar month during the term of this
Agreement. Any amount stated "as of the close of business on the last day of a
Collection Period" shall give effect to the following calculations as determined
as of the end of the day on such last day: (1) all applications of collections,
(2) all current and previous Payaheads, (3) all applications of Payahead
Balances and (4) all distributions. The term "related Collection Period" shall
mean the Collection Period ended on the last day of the month preceding a date
of determination.
"CONFIDENTIAL INFORMATION" means, in relation to any Person, any
written information delivered or made available by or on behalf of LBAC or the
Depositor to such Person in connection with or pursuant to this Agreement or the
transactions contemplated hereby which is proprietary in nature and clearly
marked or identified as being confidential information, other than information
(i) which was publicly known, or otherwise known to such Person, at the time of
disclosure (except pursuant to disclosure in connection with this Agreement),
(ii) which subsequently becomes publicly known through no act or omission by
such Person, or (iii) which otherwise becomes known to such Person other than
through disclosure by LBAC or the Depositor.
"CORPORATE TRUST OFFICE" means the principal office of the Trustee at
which its corporate trust business shall be administered, which office at the
date of this Agreement is located at 000 Xxxxxx Xxxxxx, 0xx Xxxxx, Xxxxxxx,
Xxxxx 00000, Attention: Global Trust Services - Long Beach Acceptance Auto
Grantor Trust 1998-1, except that with respect to the presentation of
Certificates for payment or for registration of transfer and exchange, such term
shall also mean the office of the Trustee in The City of
New York, which on the
date hereof is Texas Commerce Trust Company, 00 Xxxxx Xxxxxx, Xxxxx Xxxxxxxx,
Xxxx 000, Window 00, Xxx Xxxx, Xxx Xxxx 00000, except that with respect to the
delivery of Legal Files, such term shall also mean the office of the Trustee in
the city of Dallas, Texas, which on the date hereof is 000 Xxxxx Xxxxx Xxxxxx,
00xx Xxxxx, Xxxxxx, Xxxxx 00000, Attention: Loan Document Custody - Long Beach
Acceptance Auto Grantor Trust 1998-1, in each case at which at any particular
time its corporate agency business shall be conducted.
"CRAM DOWN LOSS" means, with respect to a Receivable (other than a
Liquidated Receivable), if a court of appropriate jurisdiction in an insolvency
proceeding issues a ruling that reduces the amount owed on a Receivable or
otherwise modifies or restructures the Scheduled Payments to be made thereon, an
amount equal to (a) the Principal Balance of the Receivable immediately prior to
such order MINUS the Principal
10
Balance of such Receivable as so reduced, modified or restructured PLUS (b) if
such court shall have issued an order reducing the effective rate of interest on
such Receivable, the excess of (i) the net present value (using a discount rate
equal to the adjusted APR on such Receivable) of the Scheduled Payments as so
modified or restructured over (ii) the net present value (using a discount rate
equal to the original APR on such Receivable) of the Scheduled Payments as so
modified or restructured. A Cram Down Loss will be deemed to have occurred on
the date of issuance of such order.
"CURRENT CLASS B PRINCIPAL DISTRIBUTION" shall have the meaning
assigned to such term in Section 4.6(c)(ix).
"CURRENT CLASS B RESERVE ACCOUNT DEPOSIT" means, with respect to any
Distribution Date, an amount equal to the amount distributed to the Class B
Reserve Account pursuant to Section 4.6(c)(vii) on such Distribution Date.
"CURRENT CLASS B SUB-ACCOUNT DEPOSIT " means, with respect to any
Distribution Date, an amount equal to the amount distributed to the Class B
Sub-account pursuant to clause first of Section 4.6(c)(ix) on such Distribution
Date.
"CUSTODIAL LETTER" shall have the meaning assigned to such term in
Section 2.8(c).
"CUSTODIAN" means the Trustee and its successors-in-interest, acting in
its capacity as such under this Agreement.
"DEALER" means, with respect to a Receivable, the seller of the related
Financed Vehicle, who originated and assigned such Receivable to the Originator
pursuant to a Dealer Agreement, who in turn sold such Receivable to the
Depositor.
"DEALER AGREEMENT" means each agreement between a Dealer and the
Originator pursuant to which such Dealer assigned a Receivable to the
Originator.
"DEALER TITLE ADDENDUM" means, with respect to each Receivable as to
which the Dealer Title Guaranty, if applicable, is included in the related
Dealer Agreement, a schedule of Dealers delivered to the Custodian listing all
Dealers for which the Dealer Title Guaranty is included in the related Dealer
Agreement.
"DEALER TITLE GUARANTY" means, where, for reasons that are reasonably
acceptable to the Servicer, the relevant Dealer is temporarily unable to furnish
a Lien Certificate, a written guaranty of such Dealer (which may be included in
the related Dealer Agreement if so indicated on the Dealer Title Addendum); each
of such documents having been signed where required by the Dealer in the
appropriate spaces, and with all blanks properly filled in and otherwise
correctly prepared.
"DEFAULTED RECEIVABLE" means, with respect to any Distribution Date, a
Receivable with respect to which: (i) the related Obligor has failed to pay at
least 95% of a Scheduled Payment by its due date and such failure continues for
90 days (calculated based on a 360-day year of twelve 30-day months), (ii) the
Servicer has repossessed the related Financed Vehicle (and any applicable
redemption period has expired) or (iii) such
11
Receivable is in default and the Servicer has determined in good faith that
payments thereunder are not likely to be resumed.
"DEFICIENCY CLAIM AMOUNT" shall have the meaning specified in Section
4.14(a).
"DEFICIENCY CLAIM DATE" means, with respect to any Distribution Date,
the fourth Business Day immediately preceding such Distribution Date.
"DEFICIENCY NOTICE" shall have the meaning specified in Section
4.14(a).
"DELIVERY" means, when used with respect to Class B Reserve Account
Property or Capitalized Interest Account Property, the actions to be taken with
respect to the delivery thereof to the Collateral Agent and the holding thereof
by the Collateral Agent as follows:
(a) with respect to any Class B Reserve Account Property or Capitalized
Interest Account Property that consists of bankers' acceptances, commercial
paper, negotiable certificates of deposit and other obligations that constitute
"instruments" within the meaning of Section 9-105(l)(i) of the UCC (other than
certificated securities) and are susceptible of physical delivery, transfer
thereof to the Collateral Agent by physical delivery to the Collateral Agent,
endorsed to, or registered in the name of, the Collateral Agent or its nominee
or endorsed in blank and such additional or alternative procedures as may
hereafter become appropriate to effect the complete transfer of ownership of any
such Class B Reserve Account Property or Capitalized Interest Account Property
to the Collateral Agent free and clear of any adverse claims, consistent with
changes in applicable law or regulations or the interpretation thereof;
(b) with respect to any Class B Reserve Account Property or Capitalized
Interest Account Property that consists of a "certificated security" (as defined
in Section 8-102(a)(4) of the UCC), transfer thereof
(i) by physical delivery of such certificated security to the
Collateral Agent, provided that if the certificated security is in
registered form, it shall be endorsed to, or registered in the name of,
the Collateral Agent or indorsed in blank;
(ii) 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 Collateral Agent, if
the certificated security has been specially endorsed to the Collateral
Agent by an effective endorsement;
(c) with respect to any Class B Reserve Account Property or Capitalized
Interest Account Property that consists of 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
12
maintained with a Federal Reserve Bank by a securities intermediary which is
also a "depositary" pursuant to applicable federal regulations and issuance by
such securities intermediary of a deposit advice or other written confirmation
of such book-entry registration to the Collateral Agent of the purchase by the
securities intermediary on behalf of the Collateral Agent of such book-entry
security; the identification by the Federal Reserve Bank of such book-entry
certificates on its records being credited to the securities intermediary's
participant's securities account; 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 Collateral Agent and indicating that such securities
intermediary holds such book-entry security solely as agent for the Collateral
Agent; the making by the Collateral Agent of entries in the books and records
identifying such book-entry security as belonging to the Trustee, subject to the
provisions, hereof, or with respect to the Spread Account, the provisions of the
Spread Account Agreement; and such additional or alternative procedures as may
hereafter become appropriate to effect complete transfer of ownership of any
such Class B Reserve Account Property or Capitalized Interest Account Property
to the Collateral Agent free of any adverse claims, consistent with changes in
applicable law or regulations or the interpretation thereof;
(d) with respect to any Class B Reserve Account Property or Capitalized
Interest Account Property that consists of an "uncertificated security" (as
defined in Section 8-102(a)(18) of the UCC) and that is not governed by clause
(c) above, transfer thereof;
(i) (A) by registration to the Collateral Agent as the
registered owner thereof, on the books and records of the issuer
thereof.
(B) another Person (not a securities intermediary) either
becomes the registered owner of the uncertificated security on behalf
of the Collateral Agent, or having become the registered owner
acknowledges that it holds for the Collateral Agent.
(ii) the issuer thereof has agreed that it will comply with
instructions originated by the Collateral Agent without further consent
of the registered owner thereof;
(e) with respect to any Class B Reserve Account Property or Capitalized
Interest Account Property that consists of 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 the 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 Collateral Agent or acquires a financial asset for the
collateral agent, and in either case, accepts it for credit to the collateral
agent's securities account (as so defined), (C) becomes obligated under other
law, regulation or rule to credit a financial asset to the Collateral Agent's
securities account, or (D) has agreed that it will comply with "entitlement
orders" (as defined in Section 8102(a)(8) of the UCC) originated by the
Collateral Agent without further consent by the
13
"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 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; and
(f) in each case of delivery contemplated herein, the Collateral Agent
shall make appropriate notations on its records, and shall cause the same to be
made of the records of its nominees, indicating that securities are held in
trust pursuant to and as provided in this Agreement.
"DEPOSITOR" means Long Beach Acceptance Receivables Corp., a Delaware
corporation, as the seller of the Receivables under this Agreement, and each of
its successors pursuant to Section 6.3.
"DEPOSITORY AGREEMENT" means the agreement entered into among the
Depositor, the Trustee, and The Depository Trust Company, as the initial
Clearing Agency, in connection with the issuance of the Class A Certificates,
substantially in the form of Exhibit H hereto.
"DETERMINATION DATE" means, with respect to any Distribution Date, the
fifth Business Day preceding such Distribution Date.
"DISTRIBUTION DATE" means, for each Collection Period, the 25th day of
the following month, or if the 25th day is not a Business Day, the next
following Business Day, commencing February 25, 1998.
"DOCUMENTATION CHECKLIST" means the form attached hereto as Exhibit K.
"DRAW DATE" means, with respect to any Distribution Date, the third
Business Day (as defined in the Policy) immediately preceding such Distribution
Date.
"ELIGIBLE ACCOUNT" means (i) a segregated trust account that is
maintained with a depository institution acceptable to the Certificate
Insurer (so long as an Insurer Default shall not have occurred and be
continuing), or (ii) a segregated direct deposit account maintained with a
depository institution or trust company organized under the laws of the
United States of America, or any of the States thereof, or the District of
Columbia, having a certificate of deposit, short-term deposit or commercial
paper rating of at least "A-1+" by Standard & Poor's and "P-1" by Moody's and
(so long as an Insurer Default shall not have occurred and be continuing)
acceptable to the Certificate Insurer. In either case, such depository
institution or trust company shall have been approved by the Controlling
Party (as defined in the Spread Account Agreement), acting in its discretion,
by written notice to the Collateral Agent.
14
"ELIGIBLE INVESTMENTS" mean book-entry securities, negotiable
instruments or securities represented by instruments in bearer or registered
form which evidence:
(a) direct obligations of, and obligations fully guaranteed as to the
full and timely payment by, the United States of America;
(b) demand deposits, time deposits or certificates of deposit of any
depository institution or trust company incorporated under the laws of the
United States of America or any State thereof and subject to supervision and
examination by Federal or State banking or depository institution authorities;
PROVIDED, HOWEVER, that at the time of the investment or contractual commitment
to invest therein, the commercial paper or other short-term unsecured debt
obligations (other than such obligations the rating of which is based on the
credit of a Person other than such depository institution or trust company)
thereof shall be rated "A-1+" by Standard & Poor's and "P-1" by Moody's;
(c) commercial paper that, at the time of the investment or contractual
commitment to invest therein, is rated "A-1+" by Standard & Poor's and "P-1" by
Moody's;
(d) bankers' acceptances issued by any depository institution or trust
company referred to in clause (b) above;
(e) repurchase obligations with respect to any security pursuant to a
written agreement that is a direct obligation of, or fully guaranteed as to the
full and timely payment by, the United States of America or any agency or
instrumentality thereof the obligations of which are backed by the full faith
and credit of the United States of America, in either case entered into with (i)
a depository institution or trust company (acting as principal) described in
clause (b) or (ii) a depository institution or trust company the deposits of
which are insured by the Federal Deposit Insurance Corporation and whose
commercial paper or other short-term unsecured debt obligations are rated "A-1+"
by Standard & Poor's and "P-1" by Moody's and long-term unsecured debt
obligations are rated "AAA" by Standard & Poor's and "Aaa" by Moody's;
(f) with the prior written consent of the Certificate Insurer, money
market mutual funds registered under the Investment Company Act of 1940, as
amended, having a rating, at the time of such investment, from each of the
Rating Agencies in the highest investment category granted thereby; and
(g) any other investment as may be acceptable to the Certificate
Insurer and the Rating Agencies, as evidenced by the Certificate Insurer's prior
written consent to that effect, as may from time to time be confirmed in writing
to the Trustee by the Certificate Insurer, and only upon notification to each of
Moody's and Standard & Poor's.
Any Eligible Investments may be purchased by or through the trustee or
any of its Affiliates and shall include such securities issued by the Trustee or
its affiliates.
"ELIGIBLE SERVICER" means LBAC, the Backup Servicer or another Person
which at the time of its appointment as Servicer, (i) is servicing a portfolio
of motor vehicle retail
15
installment sale contracts and/or motor vehicle installment loans, (ii) is
legally qualified and has the capacity to service the Receivables, (iii) has
demonstrated the ability professionally and competently to service a portfolio
of motor vehicle retail installment sale contracts and/or motor vehicle
installment loans similar to the Receivables with reasonable skill and care, and
(iv) is qualified and entitled to use, pursuant to a license or other written
agreement, and agrees to maintain the confidentiality of, the software which the
Servicer uses in connection with performing its duties and responsibilities
under this Agreement or otherwise has available software which is adequate to
perform its duties and responsibilities under this Agreement.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"EVENT OF DEFAULT" means an event specified in Section 8.1.
"EXCESS CASH FLOW CERTIFICATE" means the Excess Cash Flow Certificate
executed by the Trustee on behalf of the Trust and authenticated by the Trustee
in substantially the form set forth in Exhibit C hereto.
"EXCESS CASH FLOW CERTIFICATEHOLDER" means the Person in whose name the
Excess Cash Flow Certificate shall be registered in the Certificate Register,
which initially shall be the Depositor.
"EXCESS CASH FLOW SUB-ACCOUNT" means the Series 1998-1 Excess Cash Flow
Sub-account, as such term is defined in the Spread Account Agreement.
"EXPECTED INTEREST" means, with respect to any Collection Period, the
product of (i) one-twelfth of the weighted average of the APRs (calculated based
on a 360-day year of twelve 30-day months) of Simple Interest Receivables which
were neither 30 days or more delinquent (calculated based on a 360-day year of
twelve 30-day months) nor Defaulted Receivables as of the first day of the
current Collection Period, weighted on the basis of the aggregate Principal
Balances of such Simple Interest Receivables as of the first day of the current
Collection Period and (ii) the aggregate Principal Balances of Simple Interest
Receivables which were neither 30 days or more delinquent (calculated based on a
360-day year of twelve 30-day months) nor Defaulted Receivables as of the close
of business on the last day of the immediately preceding Collection Period.
"FINAL FUNDING PERIOD DISTRIBUTION DATE" means the Distribution Date
immediately succeeding the date on which the Funding Period ends (or the
Distribution Date on which the Funding Period ends if the Funding Period ends on
a Distribution Date).
"FINAL SCHEDULED DISTRIBUTION DATE" shall be the Distribution Date in
January 25, 2005.
"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.
16
"FRACTIONAL UNDIVIDED Interest" means the fractional undivided interest
in the Trust that is evidenced by a Certificate.
"FUNDING PERIOD" means the period from the Closing Date until the
earliest to occur of (i) the date on which the remaining Pre-Funded Amount is
less than $100,000, (ii) the date on which an Event of Default under this
Agreement occurs or (iii) the close of business on April 30, 1998.
"GCFP XXXX OF SALE AND ASSIGNMENT" means the Xxxx of Sale and
Assignment dated as of January 1, 1998 between Greenwich Capital Financial
Products, Inc. ("GCFP"), as assignor, and LBAC, as assignee.
"GCFP RELEASES" means the security interest releases each executed as
of January 1, 1998 by GCFP in favor of LBAC.
"GUARANTEED DISTRIBUTIONS" shall have the meaning assigned to such term
in the Policy.
"GUARANTY" means the Guaranty, dated as of January 1, 1998, by AMC in
favor of the Trustee (in its capacity as such and for the benefit of the
Certificateholders), the Back-up Servicer, the Custodian, the Collateral Agent
and the Certificate Insurer, as the same may be amended, supplemented or
otherwise modified from time to time in accordance with the terms thereof.
"INDEMNIFICATION AGREEMENT" means the Indemnification Agreement dated
as of January 1, 1998, among Greenwich Capital Markets, Inc. as the initial
purchaser of the Offered Certificates, the Depositor and the Certificate
Insurer, as the same may be amended, supplemented or otherwise modified from
time to time in accordance with the terms thereof.
"INITIAL CUTOFF DATE" means the close of business on December 31, 1997.
"INITIAL RECEIVABLES" means the Receivables initially transferred by
the Depositor to the Trust pursuant to this Agreement on the Closing Date, which
Receivables are listed on the Schedule of Receivables.
"INSURANCE AGREEMENT" means the Insurance and Indemnity Agreement
dated as of January 1, 1998 among LBAC, the Depositor and the Certificate
Insurer, as the same may be amended, supplemented or otherwise modified from
time to time in accordance with the terms thereof.
"INSURANCE AGREEMENT EVENT OF DEFAULT" means an "Event of Default" as
defined in the Insurance Agreement.
"INSURER DEFAULT" shall mean any one of the following events shall have
occurred and be continuing:
17
(i) the Certificate Insurer fails to make a payment required
under the Policy;
(ii) the Certificate Insurer (A) files any petition or
commences any case or proceeding under any provision or chapter of the
United States Bankruptcy Code or any other similar Federal or State law
relating to insolvency, bankruptcy, rehabilitation, liquidation or
reorganization, (B) makes a general assignment for the benefit of its
creditors or (C) has an order for relief entered against it under the
United States Bankruptcy Code or any other similar Federal or State law
relating to insolvency, bankruptcy, rehabilitation, liquidation or
reorganization which is final and nonappealable; or
(iii) a court of competent jurisdiction, the
New York
Department of Insurance or other competent regulatory authority enters
a final and nonappealable order, judgment or decree (A) appointing a
custodian, trustee, agent or receiver for the Certificate Insurer or
for all or any material portion of its property or (B) authorizing the
taking of possession by a custodian, trustee, agent or receiver of the
Certificate Insurer (or the taking of possession of all or any material
portion of the property of the Certificate Insurer).
"INVESTMENT COMPANY ACT" means the Investment Company Act of 1940, as
amended.
"LBAC" means Long Beach Acceptance Corp., a Delaware corporation, and
its successors.
"LEGAL FILES" means, with respect to each Receivable, the following
documents held by the Custodian pursuant to Section 2.7: the fully executed
original of such Receivable with fully executed assignment from the related
Dealer to the Originator, (together with any agreements modifying the
Receivable, including, without limitation, any extension agreements), a fully
executed assignment in blank from the Originator, the Lien Certificate or the
Title Package, the fully executed original of any form legally required to be
executed by a co-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 the such Receivable. Notwithstanding the
foregoing, in the event that customary procedures and practices of any
applicable state permit the use of any instrument or document in lieu of
evidence of verification of physical damage insurance coverage, the term "Legal
Files" shall be deemed to include any such instrument or document in lieu of
evidence of verification of physical damage insurance coverage.
"LETTER OF CREDIT" has the meaning assigned to such term in Section
4.7(b).
"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.
18
"LIEN CERTIFICATE" means, with respect to a Financed Vehicle, an
original certificate of title, certificate of lien or other notification issued
by the Registrar of Titles of the applicable state to a secured party or such
other evidence acceptable to the Registrar of Titles of the applicable state, in
each case, which indicates that the lien of the secured party on the Financed
Vehicle is recorded on the original certificate of title. In any jurisdiction in
which the original certificate of title is required to be given to the Obligor,
the terms "Lien Certificate" shall mean only a certificate or notification
issued to a secured party.
"LIQUIDATED RECEIVABLE" means any Receivable with respect to which any
of the following shall have occurred (without duplication): (i) the Receivable
has been liquidated by the Servicer through the sale of the Financed Vehicle,
(ii) the related Obligor has failed to pay at least 95% of a Scheduled Payment
by its due date and such failure continues for 60 days (calculated based on a
360-day year of twelve 30-day months) after the first day on which the Servicer
may legally sell or otherwise dispose of the related Financed Vehicle following
its repossession, (iii) the related Obligor fails to pay at least 95% of a
Scheduled Payment by its due date and such failure continues for 150 or more
consecutive days (calculated based on a 360-day year of twelve 30-day months) as
of the end of a Collection Period or (iv) proceeds have been received which, in
the Servicer's good faith judgment, constitute the final amounts recoverable in
respect of such Receivable.
"LIQUIDATION PROCEEDS" means, with respect to a Liquidated Receivable,
the monies collected from whatever source during the Collection Period in which
such Receivable became a Liquidated Receivable, net of the reasonable costs of
liquidation, including reasonable expenses of the Servicer in connection with
such liquidation, plus any amounts required by law to be remitted to the
Obligor; PROVIDED, HOWEVER, that the Liquidation Proceeds with respect to any
Receivable shall in no event be less than zero.
"LOCK-BOX" means the post-office box, maintained pursuant to Section
4.1, into which the Servicer shall direct each Obligor under each Receivable to
forward all payments in respect of such Receivable.
"LOCK-BOX ACCOUNT" means the segregated account designated as such,
established and maintained pursuant to Section 4.1.
"LOCK-BOX AGREEMENT" means the Tri-Party Remittance Processing
Agreement, dated as of March 31, 1997, among the Servicer, the Lock-Box
Processor and the Trustee, as amended, modified or supplemented from time to
time in accordance with the terms thereof, unless such Agreement shall be
terminated in accordance with its terms or the terms hereof, in which event
"Lock-Box Agreement" shall mean such other agreement, in form and substance
acceptable to the Certificate Insurer, among the Servicer, the Lock-Box
Processor and the Trustee.
"LOCK-BOX BANK" means, as of any date, a depository institution named
by the Servicer and acceptable to the Certificate Insurer at which the Lock-Box
Account is established and maintained as of such date.
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"LOCK-BOX PROCESSOR" means initially Chase Texas and its successors or
any replacement or subcontracted Lock-Box Processor acceptable to the
Certificate Insurer under the Lock-Box Agreement.
"MONTHLY DEALER PARTICIPATION FEE" means, with respect to any
Distribution Date and Monthly Dealer Participation Fee Receivable, the portion
of the related dealer participation fee earned during the related Collection
Period as specified in the related Dealer Agreement.
"MONTHLY DEALER PARTICIPATION FEE DISTRIBUTABLE AMOUNT" means, with
respect to any Distribution Date, an amount equal to the aggregate collections
allocable to Monthly Dealer Participation Fees actually received in respect of
all Monthly Dealer Participation Fee Receivables for the related Collection
Period.
"MONTHLY DEALER PARTICIPATION FEE RECEIVABLE" means any Receivable to
be paid in accordance with the Originator's "As-Earned Program" and designated
as such on the Schedule of Receivables.
"MOODY'S" means Xxxxx'x Investors Service, Inc., and any successors
thereof.
"NEGATIVE CARRY AMOUNT" means, with respect to any Distribution Date
relating to the Funding Period, the amount, if any, by which (i) the Pre-Funding
Interest Amount exceeds (ii) the earnings received by the Trustee for such
Collection Period from investment of such Pre-Funded Amount.
"NON-REGISTERED CERTIFICATE" means a Certificate other than a
Registered Certificate.
"NOTICE OF CLAIM" means written or telecopied notice from the Trustee
to the Certificate Insurer, substantially in the form of Exhibit A to the
Policy.
"OBLIGOR" on a Receivable means the purchaser or co-purchasers of the
related Financed Vehicle or any other Person who owes or may be liable for
payments under such Receivable.
"OFFERED CERTIFICATES" means the Class A Certificates, and the Class B
Certificates.
"OFFICER'S CERTIFICATE" means a certificate signed by the chairman of
the board, the president, any vice chairman of the board, any vice president,
the treasurer, the controller or any assistant treasurer or any assistant
controller of LBAC, the Depositor or the Servicer, as appropriate.
"OPINION OF COUNSEL" means a written opinion of counsel who may but
need not be counsel to the Depositor or the Servicer, which counsel shall be
acceptable to the Trustee and the Certificate Insurer and which opinion shall be
acceptable to the Trustee and the Certificate Insurer in form and substance.
"OPTIONAL PURCHASE PERCENTAGE" means 10%.
20
"ORIGINAL POOL BALANCE" means $115,916,010.81.
"ORIGINAL PRE-FUNDED AMOUNT" means $38,575,007.15.
"ORIGINATION DATE" means, with respect to any Receivable, the date
specified in such Receivable as the date of execution thereof.
"ORIGINATOR" means LBAC, as originator of the Receivables.
"PAYABLE" means, with respect to any Precomputed Receivable, the sum
of (i) any amount received from or on behalf of the related Obligor which,
pursuant to the Payment Application Procedures, is to be applied as a partial
principal prepayment which is not to be applied to Scheduled Payments on such
Receivable until the earlier of (a) such time as such application would result
in such Precomputed Receivable being paid in full, including the payment of late
charges and miscellaneous fees and (b) the Collection Period in which such
Precomputed Receivable became a Liquidated Receivable, and (ii) any amounts
received by the Servicer in respect of any rebatable items (such as amounts in
respect of cancelled service contracts, extended warranties or insurance
policies and similar items, the cost of which was included in the Amount
Financed for such Precomputed Receivable) relating to such Precomputed
Receivable which is not to be applied as a prepayment of principal until the
earlier of (a) such time as such application would result in such Precomputed
Receivable being paid in full, including the payment of late charges and
miscellaneous fees and (b) the Collection Period in which such Precomputed
Receivable became a Liquidated Receivable.
"PAYAHEAD" on a Precomputed Receivable means the amount, including,
without limitation, any Payable, as of the close of business on the last day of
a Collection Period, determined in accordance with Section 4.4 with respect to
such Receivable.
"PAYAHEAD ACCOUNT" means the account designated as such,
established and maintained pursuant to Section 4.1. The Payahead Account
shall be held by the Trustee but shall be primarily for the benefit of the
Obligors of Precomputed Receivables and shall not be part of the Trust.
"PAYAHEAD BALANCE" on a Precomputed Receivable means the sum, as of
the close of business on the last day of a Collection Period, of all
Payaheads made by or on behalf of the Obligor with respect to such
Precomputed Receivable, as reduced by applications of previous Payaheads with
respect to such Precomputed Receivable, pursuant to Sections 4.3 and 4.4.
"PAYING AGENT" has the meaning assigned to such term in Section 5.2.
"PAYMENT APPLICATION PROCEDURES" means the Payment Application
Procedures attached hereto as Exhibit I.
"PAYMENT DEFERMENT AND DUE DATE CHANGE POLICIES" means the Payment
Deferment Policy and the Due Date Change Policy attached hereto as Exhibit J,
as such policies may be amended from time to time, with the prior written
consent of the
21
Certificate Insurer, upon delivery to the Trustee of the Opinion of Counsel
required by Section 3.2.
"PERSON" means any individual, corporation, limited liability company,
estate, partnership, joint venture, association, joint stock company, trust,
unincorporated organization, or government or any agency or political
subdivision thereof.
"PLAN" means any Person that is (i) an "employee benefit plan" (as
defined in Section 3(3) of ERISA) that is subject to the provisions of Title I
of ERISA, (ii) a "plan" (as defined in Section 4975(e)(1) of the Code) that is
subject to Section 4975 of the Code or (iii) an entity whose underlying assets
include assets of a plan described in (i) or (ii) above by reason of such plan's
investment in the entity.
"POLICY" means the financial guaranty insurance policy No. 50664-N
issued by the Certificate Insurer for the benefit of the Holders of the Class A
Certificates issued hereunder, including any endorsements thereto.
"POLICY CLAIM AMOUNT" shall have the meaning set forth in Section
4.15(a).
"POLICY PAYMENTS ACCOUNT" means the account designated as the Policy
Payments Account in, and which is established and maintained pursuant to,
Section 4.1.
"POOL BALANCE" as of the close of business on the last day of a
Collection Period means the aggregate Principal Balance of the Receivables
(excluding Liquidated Receivables and Purchased Receivables).
"PRECOMPUTED RECEIVABLE" means any Actuarial Receivable or Rule of
78's Receivable.
"PREFERENCE CLAIM" shall have the meaning set forth in Section
4.16(b).
"PRE-FUNDED AMOUNT" means, with respect to (i) the first
Distribution Date, the Original Pre-Funded Amount, and (ii) any Distribution
Date thereafter, the amount on deposit in the Pre-Funding Account (not
including any investment earnings thereon).
"PRE-FUNDING ACCOUNT" means the account designated as such and
established and maintained pursuant to Section 4.1 (b).
"PRE-FUNDING INTEREST AMOUNT" means, with respect to any Distribution
Date relating to the Funding Period, an amount equal to one month's interest on
the Pre-Funded Amount on deposit in the Pre-Funding Account as of the last day
of the related Collection Period at a rate equal to the sum of (a) the weighted
average of the Class A Pass-Through Rate and the Class B Pass-Through Rate, (b)
the Trustee Fee Rate and (c) the product of the Class A Percentage and the rate
at which the Premium for the Policy is calculated.
"PREMIUM" has the meaning assigned to such term in the Insurance
Agreement.
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"PREMIUM LETTER" means the letter agreement dated the Closing Date
among AMC, LBAC, the Trustee and the Certificate Insurer referring to payment of
the Premium.
"PREPAYMENT AMOUNT" means, as of the Final Funding Period Distribution
Date, the Pre-Funded Amount.
"PRINCIPAL BALANCE" of a Receivable, as of the close of business on
the last day of a Collection Period, means the Amount Financed minus the sum of
the following amounts (without duplication): (i) in the case of a Precomputed
Receivable, that portion of all Scheduled Payments actually received on or prior
to such day allocable to principal using the actuarial or constant yield method
(excluding Payaheads retained in the Payahead Account, but including Payaheads
that have been applied to reduce the Principal Balance of such Receivable); (ii)
in the case of a Simple Interest Receivable, that portion of all Scheduled
Payments actually received on or prior to such day allocable to principal using
the Simple Interest Method; (iii) any payment of the Purchase Amount with
respect to the Receivable allocable to principal; (iv) any Cram Down Loss in
respect of such Receivable; and (v) any prepayment in full or any partial
prepayment applied to reduce the Principal Balance of the Receivable; PROVIDED,
HOWEVER, that the Principal Balance of a Receivable that has become a Liquidated
Receivable shall equal zero.
"PURCHASE AGREEMENT" means the Purchase Agreement dated as of January
1, 1998, between the Depositor and LBAC, as the same may be amended, modified or
supplemented from time to time in accordance with the terms thereof, relating to
the purchase of the Receivables by the Depositor from LBAC.
"PURCHASE AMOUNT" means, with respect to a Receivable, the amount, as
of the close of business on the last day of a Collection Period, required to
prepay in full such Receivable (after giving effect to the application of any
Liquidation Proceeds and Recoveries collected in respect of such Receivable on
or prior to the last day of such Collection Period) under the terms thereof
including accrued and unpaid interest thereon to the end of the month of
purchase. The Purchase Amount relating to any Receivable that became a
Liquidated Receivable during any Collection Period preceding the month of
purchase shall be treated as Recoveries in respect of such Receivable.
"PURCHASED RECEIVABLE" means a Receivable purchased as of the close of
business on the last day of a Collection Period by the Servicer pursuant to
Section 3.7 or by LBAC pursuant to Section 2.7.
"RATED ENTITY" means a Person whose long-term unsecured debt
obligations (at the time of the transfer under Section 5.5) are rated within the
investment grade categories of each Rating Agency.
"RATING AGENCY" means Standard & Poor's and 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
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Person designated by the Certificate Insurer, notice of which designation shall
be given to the Trustee and the Servicer.
"RECEIVABLE" means each retail installment sale contract for a Financed
Vehicle which shall appear on the Schedule of Receivables (which Schedule of
Receivables may be in the form of microfiche) and all rights and obligations
thereunder except for Receivables that shall have become Purchased Receivables.
"RECEIVABLE FILES" means the documents specified in Section 2.6(b).
"RECORD DATE" means, with respect to any Distribution Date (other than
the first Distribution Date) or Determination Date, the close of business on the
last day of the calendar month immediately preceding the month in which such
Distribution Date or Determination Date occurs. The Record Date with respect to
the first Distribution Date shall be February 10, 1998.
"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 plus any amounts required by law to be
remitted to the Obligor.
"REGISTERED CERTIFICATE" means a Certificate that was sold pursuant to
a registration statement that has been filed and has become effective under the
Securities Act.
"REGISTRAR OF TITLES" means, with respect to any state, the
governmental agency or body responsible for the registration of, and the
issuance of certificates of title relating to, motor vehicles and liens thereon.
"REIMBURSEMENT OBLIGATIONS" means, with respect to each Distribution
Date, any amounts due to the Certificate Insurer under the terms hereof or under
the Insurance Agreement and with respect to which the Certificate Insurer has
not been previously paid whether or not LBAC is obligated to pay such amounts.
"REQUISITE AMOUNT" shall have the meaning assigned to such term in the
Spread Account Agreement.
"RESPONSIBLE OFFICER", as to the Trustee and the Back-up Servicer or
at such time as Chase Texas is the Servicer, the Servicer, an officer in Global
Trust Services of the Trustee, with knowledge of the Trust.
"RULE OF 78'S RECEIVABLE" means any Receivable under which the portion
of a payment allocable to earned interest (which may be referred to in the
related retail installment sale contract as an add-on finance charge) and the
portion allocable to the Amount Financed is determined according to the method
commonly referred to as the "Rule of 78's" method, the "sum of periodic
balances" method, the "sum of monthly balances" method or any equivalent method.
24
"SCHEDULED PAYMENT" means, for any Collection Period for any
Receivable, the amount indicated in such Receivable as required to be paid by
the Obligor in such Collection Period. If after the Closing Date in the case
of an Initial Receivable, or the related Subsequent Transfer Date in the case
of a Subsequent Receivable, the Obligor's obligation under such Receivable
with respect to a Collection Period has been modified so as to differ from
the amount specified in such Receivable as a result of (i) the order of a
court in an insolvency proceeding involving the Obligor, (ii) pursuant to the
Soldiers' and Sailors' Civil Relief Act of 1940, as amended or (iii)
modifications or extensions of the Receivable permitted by Section 3.2, the
Scheduled Payment with respect to such Collection Period shall refer to the
Obligor's payment obligation with respect to such Collection Period as so
modified.
"SCHEDULE OF RECEIVABLES" means the Schedule of Receivables attached as
Schedule A to this Agreement, as the same may be amended or supplemented
(including, without limitation, pursuant to any Transfer Agreement) from time to
time.
"SECURITIES ACT" means the Securities Act of 1933, as amended.
"SERVICER" means LBAC as the servicer of the Receivables and each
successor to LBAC (in the same capacity) pursuant to Section 7.3(a) or 8.2,
other than with respect to representations and warranties of the Servicer under
Section 7.1.
"SERVICER TERMINATION SIDE LETTER" means the letter from the
Certificate Insurer to the Servicer, the Depositor and the Trustee dated as of
January 1, 1998, 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 3.9, substantially in the form of
Exhibit E-1.
"SERVICING ASSUMPTION AGREEMENT" means the Servicing Assumption
Agreement, dated as of January 1, 1998, among LBAC, the Back-up Servicer and the
Trustee, as the same may be amended or supplemented from time to time in
accordance with its terms.
"SERVICING FEE" means the fee payable to the Servicer for services
rendered during the respective Collection Period, determined pursuant to Section
3.8.
"SERVICING FEE RATE" means, with respect to any Distribution Date, the
weighted average of the Class Servicing Fee Rates for the Receivables weighted
on the basis of the Principal Balance of the Receivables of each Class as of the
close of business on the last day of the second preceding Collection Period;
PROVIDED, HOWEVER, that if the Back-up Servicer or another entity becomes the
successor Servicer, the "Servicing Fee Rate" shall be equal to a rate not to
exceed the Successor Servicing Fee Rate.
"SERVICING OFFICER" means any person whose name appears on a list of
Servicing Officers delivered by the Servicer to the Trustee and the Certificate
Insurer, as the same may be amended from time to time.
25
"SIMPLE INTEREST ADVANCE" means the amount of interest, as of the close
of business on the last day of a Collection Period, which the Servicer is
required to advance on the Simple Interest Receivables pursuant to Section 4.18.
"SIMPLE INTEREST EXCESS" means, for any Collection Period, the excess,
if any, of (i) Collected Interest over (ii) Expected Interest for such
Collection Period.
"SIMPLE INTEREST METHOD" means the method of allocating a fixed level
payment between principal and interest, pursuant to which the portion of such
payment that is allocated to interest is equal to the product of the APR
multiplied by the unpaid principal balance multiplied by the period of time
(expressed as a fraction of a year, based on the actual number of days in the
calendar month and the actual number of days in the calendar year) elapsed since
the preceding payment of interest was made and the remainder of such payment is
allocable to principal.
"SIMPLE INTEREST RECEIVABLE" means any Receivable under which the
portion of a payment allocable to interest and the portion allocable to
principal is determined in accordance with the Simple Interest Method.
"SIMPLE INTEREST SHORTFALL" means, for any Collection Period, the
excess, if any, of (i) Expected Interest over (ii) Collected Interest for such
Collection Period.
"SPECIFIED CLASS B RESERVE ACCOUNT BALANCE" means, with respect to any
Distribution Date, an amount equal to the greater of (i) an amount equal to the
product of 9.5% and the Pool Balance on the close of business on the last day of
the related Collection Period and (ii) an amount equal to the excess, if any, of
(a) the product of 2.0% and the sum of the Original Pool Balance and the
aggregate Principal Balance of all Subsequent Receivables conveyed to the Trust
as of the related Subsequent Cutoff Dates over (b) the amount on deposit in the
Excess Cash Flow Sub-account; PROVIDED, HOWEVER, that in no event shall the
Specified Class B Reserve Account Balance exceed the Class B Certificate
Balance.
"SPREAD ACCOUNT" means the Spread Account (including the Excess Cash
Flow Sub-account and the Class B Sub-account therein) established and maintained
pursuant to the Spread Account Agreement.
"SPREAD ACCOUNT AGREEMENT" means the Master Spread Account Agreement
dated as of January 1, 1998, among the Depositor, the Certificate Insurer, the
Trustee and the Collateral Agent, as the same may be amended, supplemented or
otherwise modified from time to time in accordance with the terms thereof.
"STANDARD & POOR'S" means Standard & Poor's Ratings Services, a
division of The XxXxxx-Xxxx Companies, Inc. and any successors thereof.
"STOCK PLEDGE AGREEMENT" means the Stock Pledge and Collateral Agency
Agreement dated as of March 1, 1997, among LBAC, the Certificate Insurer, the
Trustee and the Collateral Agent, as the same may be amended, supplemented or
otherwise modified from time to time in accordance with the terms thereof.
26
"STATE" means any State of the United States of America, or the
District of Columbia.
"SUBSEQUENT CUTOFF DATE" means the close of business on the last day
of the calendar month immediately preceding the related Subsequent Transfer
Date, as set forth in the related Transfer Agreement.
"SUBSEQUENT RECEIVABLES" means the Receivables transferred by the
Depositor to the Trust pursuant to a Transfer Agreement on the related
Subsequent Transfer Date, which Receivables will be listed on Schedule A to the
related Transfer Agreement and will be treated as incorporated by reference in
the Schedule of Receivables pursuant to the related Transfer Agreement.
"SUBSEQUENT SPREAD ACCOUNT DEPOSIT" shall have the meaning specified
in the Spread Account Agreement.
"SUBSEQUENT TRANSFER DATE" shall have the meaning specified in the
related Transfer Agreement.
"SUCCESSOR SERVICING FEE RATE" means, with respect to any Distribution
Date, the weighted average of the Class Successor Servicing Fee Rates for the
Receivables, weighted on the basis of the Principal Balance of Receivables of
each Class as of the close of business on the last day of the second preceding
Collection Period.
"TEXAS UCC" shall have the meaning set forth in Section 4.7(c)(ii).
"TITLE PACKAGE" means (i) a Lien Certificate noting the lien of the
Originator of the Financed Vehicle, (ii) evidence that documentation has been
submitted to the appropriate state motor vehicle authority to obtain a Lien
Certificate noting the lien of the Originator of the Financed Vehicle or (iii) a
Dealer Title Guaranty, if any.
"TOTAL DISTRIBUTION Amount" shall mean, for each Distribution Date,
the sum of the following amounts (without duplication) with respect to the
related Collection Period: (i) all collections on Receivables (including amounts
transferred from the Payahead Account to the Certificate Account pursuant to
Section 4.6(a)(ii) and amounts received in connection with extensions, rebates
or adjustments on Receivables granted by the Servicer pursuant to Section 3.2,
but excluding amounts deposited in the Payahead Account); (ii) Liquidation
Proceeds received during such Collection Period with respect to Receivables that
became Liquidated Receivables during such Collection Period in accordance with
the Servicer's customary servicing procedures; (iii) proceeds from Recoveries
with respect to Liquidated Receivables; (iv) the Purchase Amount of each
Receivable that became a Purchased Receivable as of the last day of such
Collection Period; (v) any earnings on investments of funds in the Collection
Account, the Pre-Funding Account (only to the extent required to cover the
Pre-Funding Interest Amount as set forth in Section 4.1(b)) and the Payahead
Account pursuant to Section 4.1(b); (vi) the amount of any Simple Interest
Advance actually deposited to the Collection Account by the Servicer pursuant to
Section 4.18 with respect to such Collection Period; and (vii) the Negative
Carry Amount, if any, for such Collection Period to the extent it is deposited
27
to the Certificate Account pursuant to Section 4.6(a)(iv); PROVIDED, that the
Total Distribution Amount with respect to any Distribution Date shall not
include any Simple Interest Excess remitted to the Servicer or deposited in the
Excess Cash Flow Sub-account pursuant to Section 4.18.
"TRANSFER AGREEMENT" means each Transfer Agreement, substantially in
the form of Exhibit N, dated as of the related Subsequent Cutoff Date, among the
Depositor, the Originator and the Trustee, pursuant to which Subsequent
Receivables are conveyed to the Trust, as the same may be amended, supplemented
or otherwise modified from time to time in accordance with the terms thereof.
"TRIGGER EVENT" shall have the meaning assigned to such term in the
Spread Account Agreement.
"TRUST" means the trust created by this Agreement, the estate of which
shall consist of the Trust Assets.
"TRUST ASSETS" means that property set forth in items (i) through (xi)
in Section 2.2(a), the Policy for the benefit of the Class A Certificateholders
and that property set forth in items (i) through (x) of Section 2.2(b);
PROVIDED, that the Payahead Account, the Spread Account, the Class B Reserve
Account and the Capitalized Interest Account shall not under any, circumstances
be deemed to be a part of or otherwise includible in the Trust or the Trust
Assets.
"TRUSTEE" means the Person acting as Trustee under this Agreement, its
successor-in-interest, and any successor trustee pursuant to Section 9.10.
"TRUSTEE FEE" means the monthly fee payable on each Distribution Date
to the Trustee in its capacities as Trustee, Custodian and Collateral Agent
hereunder for services rendered during the preceding Collection Period in an
amount equal to the product of (i) one twelfth of the Trustee Fee Rate and (ii)
the sum of the Class A Certificate Balance and the Class B Certificate Balance
as of the last day of the second preceding Collection Period; PROVIDED, HOWEVER,
that with respect to the initial Distribution Date, the Trustee Fee will equal
the product of one-twelfth of the Trustee Fee Rate and the sum of the initial
Class A Certificate Balance and the initial Class B Certificate Balance.
"TRUSTEE FEE RATE" means 0.026% per annum.
"TRUSTEE OFFICER" means any vice president, any assistant vice
president, any assistant secretary, any assistant treasurer, any trust officer,
or any other officer of the Trustee customarily performing functions similar to
those performed by any of the above designated officers and also means, with
respect to a particular corporate trust matter, any other officer to whom such
matter is referred because of his knowledge of and familiarity with the
particular subject.
"TRUSTEE'S CERTIFICATE" means a certificate completed and executed for
the Trustee by a Trustee Officer pursuant to Section 9.2, substantially in the
form of, in the case of an
28
assignment to LBAC, Exhibit D-1 and in the case of an assignment to the
Servicer, Exhibit D-2.
"UCC" means the Uniform Commercial Code as in effect in the respective
jurisdiction.
"VSI POLICY" means (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 or (iii) the vendor's single interest physical damage
insurance policy No. C1M2187817 issued by Utica National Insurance Group, as
applicable, with respect to the Financed Vehicles covered thereby, in each case
in which LBAC is the named insured and the Trustee is an additional named
insured.
SECTION 1.2. USAGE OF TERMS. With respect to all terms in this
Agreement, the singular includes the plural and the plural the singular; words
importing any gender include the other genders; references to "writing" include
printing, typing, lithography, and other means of reproducing words in a visible
form; references to agreements and other contractual instruments include all
subsequent amendments thereto or changes therein entered into in accordance with
their respective terms and not prohibited by this Agreement; references to
Persons include their permitted successors and assigns; and the term "including"
means "including without limitation."
SECTION 1.3. SECTION REFERENCES. All section references shall be to
Sections in this Agreement.
SECTION 1.4. LIMITATION ON TRUST ACTIVITIES. Notwithstanding any other
provision in this Agreement to the contrary, the Trustee shall have no power to
vary the investment of the Certificateholders within the meaning of Treasury
Department Regulation Section 301.7701-4(c) or to cause the Trust to engage in
business except as expressly set forth herein, or in the documents and
instruments executed in connection herewith, unless the Trustee and the
Certificate Insurer shall have received an Opinion of Counsel that such activity
shall not cause the Trust to be an association taxable as a
corporation for federal income tax purposes.
SECTION 1.5. CALCULATIONS. All calculations of the amount of interest
accrued on the Certificates and all calculations of the amount of the Servicing
Fee, the Back-up Servicer Fee, and the Trustee Fee shall be made on the basis of
a 360-day year consisting of twelve 30-day months. All references to the
Principal Balance of a Receivable as of the last day of a Collection Period
shall refer to the close of business on such day.
SECTION 1.6. ACTION BY OR CONSENT OF CERTIFICATEHOLDERS. Whenever any
provision of this Agreement refers to action to be taken, or consented to, by
Certificateholders, such provision shall be deemed to refer to
Certificateholders of record as of the Record Date immediately preceding the
date on which such action is to be taken, or consent given, by
Certificateholders. Solely for the purposes of any action to be taken or
consented to by Certificateholders, any Certificate registered in the name of
the
29
Depositor, LBAC, the Servicer or any Affiliate thereof shall be deemed not to be
outstanding and shall not be taken into account in determining whether the
requisite interest necessary to effect any such action or consent has been
obtained; PROVIDED, HOWEVER, that, solely for the purpose of determining whether
the Trustee is entitled to rely upon any such action or consent, only
Certificates which the Trustee knows to be so owned shall be so disregarded.
SECTION 1.7. MATERIAL ADVERSE EFFECT. Whenever a determination is to
be made under this Agreement as to whether a given event, action, course of
conduct or set of facts or circumstances could or would have a material adverse
effect on the Trust or the Certificateholders (or any similar or analogous
determination), such determination shall be made without taking into account the
insurance provided by the Policy. Whenever a determination is to be made under
this Agreement whether a breach of a representation, warranty or covenant has or
could have a material adverse effect on a Receivable or the interest therein of
the Trust, the Certificateholders or the Certificate Insurer (or any similar or
analogous determination), such determination shall be made by the Certificate
Insurer in its sole discretion, so long as no Insurer Default shall have
occurred and be continuing.
ARTICLE II
THE TRUST AND TRUST PROPERTY
SECTION 2.1. CREATION OF TRUST. Upon the execution of this Agreement
by the parties hereto, there is hereby created the Long Beach Acceptance Auto
Grantor Trust 1998-1.
SECTION 2.2. CONVEYANCE OF RECEIVABLES. (a) In consideration of the
Trustee's delivery of Certificates in an aggregate principal amount equal to the
sum of the Original Pool Balance and the Pre-Funded Amount to or upon the
written order of the Depositor, the Depositor does hereby sell, transfer,
assign, set over and otherwise convey to the Trustee, in trust for the benefit
of the Certificateholders, without recourse, all right, title and interest of
the Depositor in and to:
(i) the Initial Receivables listed in Schedule A hereto
and (A) with respect to any such Initial Receivables that are
Precomputed Receivables, all monies received thereon on and after the
Initial Cutoff Date (including Scheduled Payments due or to become due
thereon on and after the Initial Cutoff Date and Scheduled Payments
due prior to the Initial Cutoff Date but received on or after the
Initial Cutoff Date), principal prepayments relating to such Scheduled
Payments due on or after the Initial Cutoff Date but received by the
Depositor or LBAC before the Initial Cutoff Date, and any Payaheads
received with respect to payments due on the Initial Receivables on or
after the Initial Cutoff Date (which Payaheads shall be held in the
Payahead Account until the Collection Period in which such payments
are actually due with respect to the related Receivable, at which time
such Payaheads shall be applied as a component of the Total
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Distribution Amount), (B) with respect to any such Initial Receivables
that are Simple Interest Receivables, all monies received thereunder on
and after the Initial Cutoff Date (including Scheduled Payments due
before the Initial Cutoff Date but received by the Depositor or LBAC on
or after the Initial Cutoff Date) and (C) all Liquidation Proceeds and
Recoveries received with respect to such Initial Receivables;
(ii) the security interests in the related Financed Vehicles
granted by the related Obligors pursuant to the Initial Receivables and
any other interest of the Depositor in such Financed Vehicles,
including, without limitation, the certificates of title and any other
evidence of ownership with respect to such Financed Vehicles;
(iii) any proceeds from claims on any physical damage, credit
life and credit accident and health insurance policies or certificates
or the VSI Policy relating to the related Financed Vehicles or the
related Obligors, including any rebates and premiums;
(iv) property (including the right to receive future
Liquidation Proceeds) that secures an Initial Receivable and that has
been acquired by or on behalf of the Trust pursuant to the liquidation
of such Initial Receivable;
(v) the Purchase Agreement and the Guaranty including, without
limitation, a direct right to cause LBAC to purchase Initial
Receivables from the Trust upon the occurrence of a breach of any of
the representations and warranties contained in Section 3.2(b) of the
Purchase Agreement and/or Section 4 of the related Transfer Agreement,
or the failure of LBAC to timely comply with its obligations pursuant
to Section 5.5 of the Purchase Agreement;
(vi) refunds for the costs of extended service contracts with
respect to the related Financed Vehicles, refunds of unearned premiums
with respect to credit life and credit accident and health insurance
policies or certificates covering a related Obligor or Financed Vehicle
or his or her obligations with respect to such Financed Vehicle and any
recourse to Dealers for any of the foregoing;
(vii) the Legal Files and the Receivable Files related to each
Initial Receivable and any and all other documents that LBAC keeps on
file in accordance with its customary procedures relating to the
Initial Receivables, the related Obligors or the related Financed
Vehicles;
(viii) all amounts and property from time to time held in or
credited to the Collection Account, the Pre-Funding Account or the
Certificate Account;
(ix) all amounts and property from time to time held in or
credited to the Lock-Box Account, to the extent such amounts and
property relate to the Initial Receivables;
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(x) any proceeds from recourse against Dealers (other than any
Chargeback Obligations), including, without limitation, any Dealer
Title Guaranties with respect to the Initial Receivables, with respect
to the sale of the Initial Receivables; and
(xi) the proceeds of any and all of the foregoing.
In addition, the Depositor shall cause the Policy to be issued to and
delivered to the Trust for the benefit of the Class A Certificateholders.
(b) Subject to the conditions set forth in Section 2.2(c) and the
related Transfer Agreement, in consideration of the Trustee's delivery to or
upon the order of the Depositor of the purchase price for the Subsequent
Receivables, in each case as described below and set forth in the related
Transfer Agreement, the Depositor shall on each Subsequent Transfer Date sell,
transfer, assign, set over and otherwise convey to the Trustee, in trust for the
benefit of the Certificateholders, without recourse, all right, title and
interest of the Depositor in and to:
(i) the Subsequent Receivables listed in Schedule A to the
related Transfer Agreement and (A) with respect to any such Subsequent
Receivables that are Precomputed Receivables, all monies received
thereon on and after the related Subsequent Cutoff Date (including
Scheduled Payments due or to become due thereon on and after the
related Subsequent Cutoff Date and Scheduled Payments due prior to the
related Subsequent Cutoff Date but received on or after the related
Subsequent Cutoff Date), principal prepayments relating to Scheduled
Payments due on or after the related Subsequent Cutoff Date but
received by the Depositor or LBAC before the related Subsequent Cutoff
Date, and any Payaheads received with respect to any payments due on
such Receivable on or after the related Subsequent Cutoff Date (which
Payaheads shall be held in the Payahead Account until the Collection
Period in which such payments are actually due with respect to the
related Receivable, at which time such Payaheads shall be applied as
part of the Total Distribution Amount), (B) with respect to any such
Subsequent Receivables that are Simple Interest Receivables, all monies
received thereunder on and after the related Subsequent Cutoff Date
(including Scheduled Payments due before the related Subsequent Cutoff
Date but received by the Depositor or LBAC on or after the related
Subsequent Cutoff Date) and (C) all Liquidation Proceeds and
Recoveries received with respect to such Subsequent Receivables;
(ii) the security interests in the related Financed Vehicles
granted by the related Obligors pursuant to such Subsequent Receivables
and any other interest of the Depositor in such Financed Vehicles,
including, without limitation, the certificates of title and any other
evidence of ownership with respect to such Financed Vehicles;
(iii) any proceeds from claims on any physical damage, credit
life and credit accident and health insurance policies or certificates
or the VSI Policy
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relating to the related Financed Vehicles or the related Obligors,
including any rebates and premiums;
(iv) property (including the right to receive future
Liquidation Proceeds) that secures a Subsequent Receivable and that has
been acquired by or on behalf of the Trust pursuant to the liquidation
of such Subsequent Receivable;
(v) the related Transfer Agreement, the Purchase Agreement and
the Guaranty, including, without limitation, a direct right to cause
LBAC to purchase Subsequent Receivables from the Trust upon the
occurrence of a breach of any of the representations and warranties
contained in Section 3.2(b) of the Purchase Agreement, or Section 4 of
the related Transfer Agreement, or the failure of LBAC to timely comply
with its obligations pursuant to Section 5.5 of the Purchase Agreement;
(vi) refunds for the costs of extended service contracts with
respect to the related Financed Vehicles, refunds of unearned premiums
with respect to credit life and credit accident and health insurance
policies or certificates covering a related Obligor or Financed Vehicle
or his or her obligations with respect to a related Financed Vehicle
and any recourse to Dealers for any of the foregoing;
(vii) the Legal Files and the Receivable Files related to each
such Subsequent Receivable and any and all other documents that LBAC
keeps on file in accordance with its customary procedures relating to
such Subsequent Receivables, the related Obligors or the related
Financed Vehicles;
(viii) all amounts and property from time to time held in or
credited to the Lock-Box Account, to the extent such amounts and
property relate to such Subsequent Receivables;
(ix) any proceeds from recourse against Dealers (other than
any Chargeback Obligations), including, without limitation, any Dealer
Title Guaranties with respect to such Subsequent Receivables, with
respect to the sale of such Subsequent Receivables; and
(x) the proceeds of any and all of the foregoing.
The purchase price to be paid by the Trust on each Subsequent Transfer
Date for the Subsequent Receivables so sold shall be set forth in the related
Transfer Agreement and shall be paid from monies released from the Pre-Funding
Account pursuant to Section 4.19(b). Such purchase price shall equal the
aggregate Principal Balance of such Subsequent Receivables as of the related
Subsequent Cutoff Date.
(c) The Depositor shall transfer to the Trustee the Subsequent
Receivables and the other property and rights related thereto described in
Section 2.2(b) only upon the prior written consent of the Certificate Insurer
acting in its sole and absolute discretion and the satisfaction of each of the
following conditions on or prior to the related Subsequent Transfer Date:
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(i) the Depositor shall have provided the Trustee, the
Certificate Insurer and each Rating Agency with an Addition Notice not
later than five Business Days prior to the related Subsequent Transfer
Date and shall also have provided the Trustee and the Certificate
Insurer with an electronic transmission of the information on the
related Subsequent Transfer Receivables set forth in such Addition
Notice in a format acceptable to each of the Trustee and the
Certificate Insurer no later than such fifth Business Day prior to the
related Subsequent Transfer Date;
(ii) the Depositor shall have delivered to the Trustee an
executed Transfer Agreement in substantially the form of Exhibit N
hereto, which shall include a list of the Subsequent Receivables so
transferred attached thereto as Schedule A, and a copy thereof to the
Certificate Insurer and each Rating Agency;
(iii) the Depositor shall have caused the Servicer to deposit
in the Collection Account all collections on or in respect of the
Subsequent Receivables (to the extent conveyed to the Trust as
specified in Section 2.2(b)) received prior to the related Subsequent
Transfer Date;
(iv) the Depositor shall have deposited or caused to be
deposited the related Class B Reserve Account Subsequent Deposit into
the Class B Reserve Account pursuant to Section 4.7(b)(i);
(v) the Depositor shall have deposited or caused to be
deposited the related Subsequent Spread Account Deposit into the Spread
Account pursuant to Section 4.12;
(vi) as of each Subsequent Transfer Date, neither the Servicer
nor the Depositor was insolvent nor will either of them have been made
insolvent by such transfer nor is any of them aware of any pending
insolvency;
(vii) such addition will not result in a material adverse
federal tax consequence to the Trust or the Certificateholders as
evidenced by an Opinion of Counsel;
(viii) the Funding Period shall not have terminated;
(ix) the Depositor shall have delivered to the Trustee, the
Certificate Insurer and each Rating Agency an Officer's Certificate
confirming the satisfaction of each condition precedent specified in
this paragraph (c) and in Section 5 of the related Transfer Agreement
and certifying that:
(A) such sale of Subsequent Receivables by the Depositor to
the Trust on the date hereof was made in good faith for legitimate
business purposes and was not made with intent to hinder, delay or
defraud any Person to which the Depositor has been, is or will become,
on or after the date hereof, indebted;
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(B) the Depositor did not receive less than a reasonably
equivalent value in exchange for the sale of the Subsequent Receivables
by the Depositor to the Trustee on the related Subsequent Transfer Date
pursuant to the related Transfer Agreement;
(C) the Depositor is not insolvent on the related Subsequent
Transfer Date and will not become insolvent, as a result of the sale of
the Subsequent Receivables by the Depositor to the Trustee on the
related Subsequent Transfer Date hereof pursuant to the related
Transfer Agreement;
(D) the Depositor is not engaged in a business or transaction,
and is not about to engage in a business or transaction, for which any
property remaining with the Depositor after such business or
transaction would be an unreasonably small amount of capital; and
(E) the Depositor has not incurred, and does not believe that
it will incur, debts that would be beyond the Depositor's ability to
pay as such debts mature;
(x) the Originator shall have delivered to the Trustee, the
Certificate Insurer and each Rating Agency an Officer's Certificate
confirming the satisfaction of each condition precedent specified in
this paragraph (c) and in Section 5 of the related Transfer Agreement
and certifying that:
(A) that such sale of Subsequent Receivables by the Originator
to the Depositor on the date hereof was made in good faith for
legitimate business purposes and was not made with intent to hinder,
delay or defraud any Person to which the Originator has been, is or
will become, on or after the date hereof, indebted;
(B) the Originator did not receive less than a reasonably
equivalent Value in exchange for the sale of the Subsequent Receivables
by the Originator to the Depositor on the related Subsequent Transfer
Date pursuant to the Purchase Agreement and the related Assignment;
(C) the Originator is not insolvent on the related Subsequent
Transfer Date and will not become insolvent as a result of the sale of
the Subsequent Receivables by the Originator to the Depositor on the
related Subsequent Transfer Date hereof pursuant to the Purchase
Agreement and the related Assignment;
(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
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(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;
(xi) the Depositor shall have delivered to each Rating Agency,
the Certificate Insurer and the Trustee Opinions of Counsel with
respect to the transfer of the Subsequent Receivables substantially in
the form of the Opinions of Counsel delivered to each Rating Agency,
the Certificate Insurer and the Trustee on the Closing Date regarding
true sale, non-consolidation, perfection, and other such matters
satisfactory in form and substance to each of the Certificate Insurer
and the Trustee in its sole discretion;
(xii) the Depositor shall have taken all action required to
maintain the first perfected security interest (as defined in the UCC)
of the Trust in the assets of the Trust;
(xiii) no selection procedures believed by the Depositor or
the Originator to be adverse to the interests of the Certificateholders
or the Certificate Insurer shall have been utilized in selecting the
Subsequent Receivables;
(xiv) the conveyance of the Subsequent Receivables shall not
result in a qualification, modification or withdrawal of the
then-current ratings of the Class A Certificates and the Class B
Certificates; PROVIDED , that written confirmation of such ratings
shall not be required from the Rating Agencies;
(xv) the Depositor shall have provided the Trustee with a
supplement to the Schedule of Receivables setting forth the Subsequent
Receivables to be transferred on such Subsequent Transfer Date;
(xvi) the Depositor shall have caused a firm of independent
accountants to deliver to the Trustee and the Certificate Insurer
written confirmation that the Receivables, including the related
Subsequent Receivables, meet the following criteria:
(1) the weighted average remaining term of the Receivables
will be no more than 55 months and the weighted average original term
for the Receivables will be no more than 57 months;
(2) each Receivable will have a minimum APR of 9.75%;
(3) each Receivable will have an original term of no more
than 72 months;
(4) no more than 50% of the Receivables will be originated in
California;
(5) the weighted average APR for the Receivables will be
greater than or equal to 19.39%;
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(6) 5% or less of the aggregate Principal Balance of the
Receivables will be Class I Receivables, 20% or less of the aggregate
Principal Balance of the Receivables will be Class IIA Receivables, 39%
or less of the aggregate Principal Balance of the Receivables will be
Class IIB Receivables, 44% or less of the aggregate Principal Balance
of the Receivables will be Class III Receivables and the remainder (but
not to exceed 4%) of the aggregate Principal Balance of the Receivables
will be Class IV Receivables; and
(7) not more than 88% of the aggregate Principal Balance of
the Receivables will represent loans to finance the purchase of used
Financed Vehicles;
(xvii) the Depositor shall satisfy the document delivery
requirements for such Subsequent Receivables as specified in Section
2.6;
(xviii) the representations and warranties made by the
Depositor and the Servicer in Sections 6.1 and 7.1, respectively, shall
be true and correct on and as of such Subsequent Transfer Date and the
representations and warranties made by the Originator with respect to
each such Subsequent Receivable being transferred to the Trust on such
Subsequent Transfer Date in Section 4 of the related Transfer Agreement
and Section 3.2(d) of the Purchase Agreement shall be true and correct
as of such Subsequent Transfer Date;
(xix) on or before such Subsequent Transfer Date, the
Depositor shall have provided any information reasonably requested by
the Rating Agencies, the Certificate Insurer or the Trustee with
respect to any Subsequent Receivables;
(xx) the Custodian shall acknowledge receipt of files which
the Depositor shall represent are the Legal Files relating to the
Subsequent Receivables and the Custodian shall have reviewed the Legal
Files relating to the Subsequent Receivables and shall have determined
that it has received a Legal File for each Receivable identified in the
supplement to the Schedule of Receivables attached as Schedule A to the
related Subsequent Transfer Agreement; and
(xxi) the Servicer shall deliver the loan master file and
history information and the information required to be set forth in
Demographic File Report in the form attached hereto as Exhibit E-2 as
specified in Section 3.18.
SECTION 2.3. TRANSFER INTENDED AS SALE, PRECAUTIONARY SECURITY
INTEREST. Each conveyance to the Trust of the property set forth in Section
2.2 above is intended as a sale free and clear of all Liens, and it is
intended that the property of the Trust shall not be part of the Depositor's
estate in the event of the filing of a bankruptcy petition by or against the
Depositor under any bankruptcy law. In the event, however, that
notwithstanding the intent of LBAC, the Depositor and the Trustee, any
transfer under this Agreement is held not to be a sale, this Agreement shall
constitute a grant of a
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security interest in the property described in Section 2.2 above, for the
benefit of the Certificateholders and the Certificate Insurer as their interests
may appear herein.
SECTION 2.4. ACCEPTANCE BY TRUSTEE. The Trustee does hereby accept all
consideration conveyed by the Depositor pursuant to Section 2.2, and declares
that the Trustee shall hold such consideration upon the trusts herein set forth
for the benefit of all present and future Certificateholders and the Certificate
Insurer, subject to the terms and provisions of this Agreement.
SECTION 2.5. ASSIGNMENT BY DEPOSITOR. The Depositor does hereby
transfer, assign and otherwise convey unto the Trustee, for the benefit of the
Certificateholders and the Certificate Insurer, its right to any recourse to
LBAC resulting from the occurrence of a breach of any of their respective
representations and warranties contained in Section 3.2 of the Purchase
Agreement or from the failure of LBAC to comply with its obligations pursuant to
Section 5.5 of the Purchase Agreement. The provisions of this Section 2.5 are
intended to grant the Trustee a direct right against LBAC to demand performance
under the terms of the Purchase Agreement.
SECTION 2.6. DELIVERY OF LEGAL FILES AND RECEIVABLE FILES. (a) On or
prior to the Closing Date in the case of the Initial Receivables, and on or
prior to the third Business Day immediately preceding the related Subsequent
Transfer Date in the case of the Subsequent Receivables, the Depositor shall
transfer and deliver to the Custodian at the offices specified in Schedule B to
this Agreement the Legal Files with respect to each applicable Receivable.
(b) On or prior to the Closing Date in the case of the Initial
Receivables, and on or prior to the related Subsequent Transfer Date in the case
of the Subsequent Receivables, the Depositor shall transfer and deliver to the
Servicer with respect to each applicable Receivable the following:
(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
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(v) any and all other documents that the Servicer or the
Originator shall keep on file, in accordance with its customary
procedures, relating to a Receivable, an Obligor or a Financed Vehicle.
SECTION 2.7. ACCEPTANCE OF LEGAL FILES BY CUSTODIAN. The Custodian
acknowledges receipt of files which the Depositor has represented are the Legal
Files relating to the Initial Receivables. The Custodian shall hold the Legal
Files subject to the terms and conditions of this Agreement. The Custodian may
perform its duties in respect of custody of the Legal Files by or through its
agents or employees. The Custodian has reviewed the Legal Files relating to the
Initial Receivables and has determined that it has received a file for each
Receivable identified in Schedule A to this Agreement. The Custodian declares
that it holds and will continue to hold such files and any amendments,
replacements or supplements thereto (including, without limitation, the Legal
Files relating to any Subsequent Receivables) and all other Trust Assets as
custodian, agent and bailee for the Trustee in trust for the use and benefit of
all present and future Certificateholders. The Custodian shall review each Legal
File delivered to it no later than the Closing Date or the related Subsequent
Transfer Date, as the case may be, to determine whether, and shall certify on
the Closing Date or the related Subsequent Transfer Date, as the case may be,
that, such Legal Files contain the documents referred to in the definition of
the term "Legal File". In addition, in the case of any Legal File which does not
contain either an original Lien Certificate or a Dealer Title Guaranty for the
related Financed Vehicle, the Custodian shall certify that the related Dealer is
listed on the Dealer Title Addendum. If the Custodian finds during its review of
the Legal Files or at any time thereafter that a Legal File for a Receivable has
not been received or that any of the documents referred to in the definition of
the term "Legal File" are not contained in a Legal File or, if applicable, the
related Dealer is not listed on the Dealer Title Addendum, the Custodian shall
promptly inform the Trustee (if at such time the Trustee is not also the
Custodian hereunder), LBAC, the Depositor, the Back-up Servicer and the
Certificate Insurer promptly, in writing, of the failure to receive a Legal File
with respect to such Receivable (or of the failure of any of the aforementioned
documents to be included in the Legal File or the failure of the related Dealer
to be so listed) (it being understood that the Custodian's obligation to review
the contents of any Legal File and the Dealer Title Addendum shall be limited as
set forth in the preceding sentence). Unless any such defect with respect to
such Receivable shall have been cured by the last day of the second Collection
Period following discovery thereof by the Custodian, LBAC shall repurchase any
such Receivable as of such last day. In consideration of the purchase of the
Receivable, LBAC shall remit the Purchase Amount, in the manner specified in
Section 4.5. The sole remedy of the Trustee, the Trust, or the
Certificateholders with respect to a breach pursuant to this Section 2.7 shall
be to require LBAC to purchase the Receivables pursuant to this Section 2.7.
Upon receipt of the Purchase Amount and written instructions from the Servicer,
the Trustee shall cause the Custodian to release to LBAC or its designee the
related Legal File and shall execute and deliver all reasonable instruments of
transfer or assignment, without recourse, as are prepared by LBAC and delivered
to the Trustee and are necessary to vest in LBAC or such designee the Trustee's
right, title and interest in the Receivable. The Custodian shall make a list of
Receivables for which an application for a certificate of title or a Dealer
Title Guaranty but not a Lien Certificate is included in the Legal File as of
the
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date of its review of the Legal Files and deliver a copy of such list to the
Servicer, the Trustee and the Certificate Insurer. On the date which is 90 days
following the Closing Date or the related Subsequent Transfer Date, as the case
may be, or in either case, the next succeeding Business Day, the Custodian shall
inform LBAC and the other parties to this Agreement and the Certificate Insurer
of any Receivable for which the related Legal File on such date does not include
a Lien Certificate, and LBAC shall repurchase any such Receivable as of the last
day of the Collection Period in which the date which is 150 days following the
Closing Date, in the case of the Initial Receivables, or the related Subsequent
Transfer Date, in the case of the Subsequent Receivables, occurs if the related
Legal File does not include a Lien Certificate as of the close of business on
such 150th day. In consideration of the purchase of such Receivable, LBAC shall
remit the Purchase Amount in the manner specified in Section 4.5. The Depositor
shall have no obligation to repurchase any Receivable upon a breach pursuant to
this Section 2.7. The Depositor shall have no liability for any action taken or
omitted to be taken by LBAC pursuant to this Section 2.7.
SECTION 2.8. ACCESS TO RECEIVABLE FILES AND LEGAL FILES, SERVICER'S
DUTIES WITH RESPECT TO RECEIVABLE FILES, CUSTODIAN'S DUTIES WITH RESPECT TO
LEGAL FILES. (a) The Servicer and the Custodian shall, upon reasonable notice,
permit the Originator, the Trustee, the Depositor, and the Certificate Insurer
access to the Receivable Files and the Legal Files, respectively, at all
reasonable times, upon reasonable notice and during the Servicer's or the
Custodian's normal business hours. In addition, the Servicer and the Custodian
shall provide such access to any Certificateholder upon reasonable notice at all
reasonable times during the Servicer's or the Custodian's normal business hours,
as the case may be, in cases where the Certificateholders shall be required by
applicable statutes or regulations to review such documentation; PROVIDED,
however, that the Servicer or the Custodian shall be entitled to rely upon an
Opinion of Counsel as to such fact. In each case, such access shall be afforded
without charge but only upon reasonable request. Each Certificateholder shall be
deemed to have agreed by its acceptance of a Certificate to use its best efforts
to hold in confidence all Confidential Information in accordance with its then
customary procedures; PROVIDED that nothing herein shall prevent any
Certificateholder from delivering copies of any financial statements and other
documents whether or not constituting Confidential Information, and disclosing
other information, whether or not Confidential Information, to (i) its
directors, officers, employees, agents and professional consultants, (ii) any
other institutional investor that holds Certificates, (iii) early prospective
institutional investor transferee in connection with the contemplated transfer
of a Certificate or any part thereof or participation therein who is subject to
confidentiality arrangements at least substantially similar hereto, (iv) any
governmental authority, (v) the National Association of Insurance Commissioners
or any similar organization, (vi) any nationally recognized rating agency in
connection with the rating of the Certificates by such agency or (vii) any other
Person to which such delivery or disclosure may be necessary or appropriate (a)
in compliance with any applicable law, rule, regulation or order, (b) in
response to any subpoena or other legal process, (c) in connection with any
litigation to which such Certificateholder is a party, or (d) in order to
protect or enforce such Person's investment in any Certificate.
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(b) Upon instruction from the Trustee, the Servicer shall release any
Receivable Files to the Trustee, the Trustee's agent or the Trustee's designee,
as the case may be, at such place or places as the Trustee may designate, as
soon as practicable. The Servicer shall not be responsible for the safekeeping
of such Receivable Files following such release to the Trustee unless and until
such Receivable Files is returned to the Servicer.
(c) The Custodian shall, within two Business Days of the request of the
Servicer, the Trustee or the Certificate Insurer, execute such documents and
instruments as are prepared by the Servicer, the Trustee or the Certificate
Insurer and delivered to the Custodian, as the Servicer, the Trustee or the
Certificate Insurer deems necessary to permit the Servicer, in accordance with
its customary servicing procedures, to enforce the Receivable on behalf of the
Trust and any related insurance policies (including the VSI Policy) 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 by a Servicing Officer in the form of
Exhibit L to this Agreement and a custodial letter signed by a Servicing Officer
in the form of Exhibit M to this Agreement (the "Custodial Letter"). Such
Custodial Letter shall obligate the Servicer to return such document(s) to the
Custodian when the need therefor no longer exists. At all times while any Legal
File is in the Servicer's possession, the Servicer shall hold such Legal File in
trust on behalf of the Trust, the Trustee and the Certificate Insurer.
SECTION 2.9. COVENANTS OF THE CUSTODIAN.
(a) The Custodian, either directly or by acting through an agent or
nominee (which agent shall not be the Originator or any Affiliate thereof),
shall hold the Legal File and all other documents relating to any Receivable
that comes into its possession for the exclusive use and benefit of the Trust
and shall make disposition thereof only in accordance with the provisions of
this Agreement. The Custodian shall segregate the Legal Files and such other
documents from all other motor vehicle retail installment sale contracts and
similar documents in its possession and maintain continuous custody of the Legal
File and such other documents received by it in secure facilities in accordance
with customary standards for such custody and shall not release such documents
or transfer such documents to any other party, including any subcustodian,
except as otherwise expressly provided herein.
(b) The Custodian covenants and warrants to the Trustee, the Servicer
and the Certificate Insurer that to the knowledge of its Responsible Officers,
as of the related date on which the Custodian makes the certification required
under Section 2.7 with respect to the Legal Files, it holds no adverse interest,
by way of security or otherwise, in any Receivable, except as Trustee on behalf
of the Trust.
(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
41
terms and provisions of this Agreement. The Custodian may record any such
instructions given by telephone, and any other telephone discussions with
respect to this Agreement.
(d) The Custodian shall not by reason of this Agreement have a
fiduciary relationship in respect of the Servicer or LBAC or any Affiliate
thereof, and nothing in this Agreement, express or implied, is intended to or
shall be so construed so as to impose upon the Custodian any obligations in
respect of this Agreement except as expressly set forth in it. The Custodian,
acting as custodian, shall have no responsibility for (i) ascertaining or taking
action with respect to exchanges, maturities, tenders or other matters relative
to any Receivables, whether or not the Custodian has or is deemed to have
knowledge of such matters, or (ii) taking any necessary steps to preserve rights
against any parties with respect to any Receivables, except as otherwise
expressly set forth herein in its capacity as Trustee of the Trust or as
Custodian. The Custodian, acting as custodian, does not assume and shall have no
responsibility for, and makes no representations as to, monitoring the value of
the Receivables and the related Legal Files. The Custodian, acting as custodian,
may rely upon the validity of documents delivered to it, without investigation
as to their authority or legal effectiveness.
(e) Each of the Servicer, the Depositor and LBAC acknowledges and
agrees that the Custodian:
(i) shall not be responsible for any of the agreements set
forth in the Purchase Agreement or any other documents or instruments
other than this Agreement, including its Exhibits, but shall be
obligated only for the performance of such duties as are specifically
set forth in this Agreement;
(ii) shall not be obligated to take any legal or other action
that, in its judgment, might involve any expense or liability unless it
shall have been furnished with indemnification acceptable in form and
substance to the Custodian;
(iii) may rely on, and shall be protected in acting or
refraining from acting in good faith on, any written notice,
instruction, instrument, statement, request or document furnished to it
under this Agreement and reasonably believed by it to be genuine and to
have been signed or presented by the proper Person, and shall have no
responsibility for determining the accuracy thereof, and
(iv) may consult with counsel satisfactory to it, including
in-house counsel, and the opinion of such counsel shall be full and
complete authorization and protection in respect of any action
reasonably taken, suffered or omitted by it under this Agreement in
good faith and in accordance with the opinion of such counsel.
(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.
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Without limiting the foregoing, neither the Servicer, nor LBAC, nor any other
Person shall have any right of action whatsoever against the Custodian as a
result of the Custodian's acting or refraining from acting in accordance with
the Servicer's instructions hereunder, other than any such action arising out of
the Custodian's negligence, bad faith or willful misconduct in so acting or
refraining from acting.
(g) The Custodian shall physically segregate the Legal Files for the
Receivables from all other instruments similar in nature to such Legal Files in
its possession, and shall hold the Legal Files so as to reflect the ownership of
the Trust. The Custodian shall 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.
(h) The Trustee's Fee payable to Chase Texas, as Trustee, pursuant to
Section 4.6(c)(ii), shall be the only amount payable to the Custodian for its
services as Custodian hereunder.
SECTION 2.10. 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 Section 8.102(a)(9) of the Texas
Business & Commerce Code (the "Texas UCC").
ARTICLE III
ADMINISTRATION AND SERVICING OF RECEIVABLES
SECTION 3.1. DUTIES OF SERVICER. The Servicer, as agent for the Trust
(to the extent provided herein), and in such capacity, shall manage, service,
administer and make collections on the Receivables with reasonable care, using
that degree of skill and attention customary and usual for institutions which
service motor vehicle retail installment contracts similar to the Receivables
and, to the extent more exacting, that the Servicer exercises with respect to
all comparable automotive receivables that it services for itself or others. The
Servicer's duties shall include collection and posting of all payments,
responding to inquiries of Obligors on such Receivables, investigating
delinquencies, sending payment statements to Obligors, reporting tax information
to Obligors, accounting for collections, furnishing monthly and annual
statements to the Trustee, the Back-Up Servicer and the Certificate Insurer with
respect to distributions and complying with the terms of the Lock-Box Agreement.
The Servicer shall also administer and enforce all rights and responsibilities
of the holders of the Receivables provided for in the Dealer Agreements to the
extent that such Dealer Agreements relate to the Receivables, the Financed
Vehicles or the Obligors. Without limiting the generality of the foregoing, and
subject to the servicing standards set forth in this Agreement, the Servicer is
authorized and empowered by the Trustee to execute and deliver, on behalf of
itself, the Trust, the Certificateholders or any of them, any and all
instruments of satisfaction or cancellation, or partial or full release or
discharge, and all other
43
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; PROVIDE , HOWEVER
that notwithstanding the foregoing, the Servicer shall not, except pursuant to
an order from a court of competent jurisdiction, release an Obligor from payment
of any unpaid amount under any Receivable or waive the right to collect the
unpaid balance of any Receivable from the Obligor, except that the Servicer may
forego collection efforts if the amount subject to collection is de minimis and
if it would forego collection in accordance with its customary procedures. If
the Servicer shall commence a legal proceeding to enforce a Receivable, the
Trustee shall thereupon be deemed to have automatically assigned, solely for the
purpose of collection, such Receivable to the Servicer. If in any enforcement
suit or legal proceeding it shall be held that the Servicer may not enforce a
Receivable on the ground that it shall not be a real party in interest or a
holder entitled to enforce such Receivable, the Trustee shall, at the Servicer's
expense and direction, take steps to enforce such Receivable, including bringing
suit in its name or the name of the Certificateholders. The Servicer shall
prepare and furnish and the Trustee shall execute, any powers of attorney and
other documents reasonably necessary or appropriate to enable the Servicer to
carry out its servicing and administrative duties hereunder.
SECTION 3.2 COLLECTION AND ALLOCATION OF RECEIVABLE PAYMENTS.
Consistent with the standards, policies and procedures required by this
Agreement, the Servicer shall make reasonable efforts to collect all payments
called for under the terms and provisions of the Receivables as and when the
same shall become due and shall follow such collection procedures as it
follows with respect to all comparable automotive receivables that it
services for itself or others; PROVIDED, HOWEVER, that the Servicer shall
notify each Obligor prior to the Closing Date in the case of the Initial
Receivables, and prior to the related Subsequent Transfer Date, in the case
of the Subsequent Receivables, to make all payments with respect to the
Receivables to the Lock-Box and shall make reasonable efforts to cause
Obligors to make all such payments to such Lock-Box. The Servicer will
provide each Obligor with a monthly statement in order to notify such
Obligors to make payments directly to the Lock-Box. The Servicer shall
allocate collections between principal and interest in accordance with the
customary servicing procedures it follows with respect to all comparable
automotive receivables that it services for itself or others and in
accordance with the terms of this Agreement. The Servicer, for so long as
LBAC is the Servicer, may grant extensions, rebates or adjustments on a
Receivable in accordance with the customary servicing procedures it follows
with respect to all comparable automotive receivables that it services for
itself, which shall not modify the original due dates of the Scheduled
Payments on Receivables other than in accordance with the Payment Deferment
and Due Date Change Policies. The Servicer shall not modify the Payment
Deferment and Due Date Change Policies without the prior written consent of
the Certificate Insurer and delivering to the Trustee and the Certificate
Insurer an Opinion of Counsel to the effect that such modification will not
adversely affect the status of the Trust as a grantor trust for Federal
income tax purposes PROVIDED, HOWEVER, that no Opinion of Counsel shall be
required for modification of the Payment Deferment and Due Date Change
Policies if either (i) such modification is necessary to permit the work out
of defaulted Receivables or (ii) the Servicer reasonably believes that such
modification is necessary to permit extensions designed to prevent the
default of
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Receivables. 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 Certificate Insurer. The Servicer may in its discretion waive any
late payment charge or any other fees that may be collected in the ordinary
course of servicing a Receivable if it would forgo collection of such amount in
accordance with its customary procedures. Notwithstanding anything to the
contrary contained herein, the Servicer (i) shall not agree to any alteration of
the interest rate on any Receivable or of the amount of any Scheduled Payment on
Receivables, except as otherwise required by applicable law, and (ii) shall not
agree to any modification that would result in a material adverse effect on a
Receivable or the interest therein of the Trust, the Certificateholders or the
Certificate Insurer other than a modification in accordance with the Payment
Deferment and Due Date Change Policies or would constitute reinvestment
adversely affecting the status of the Trust as a grantor trust for Federal
income tax purposes including, without limitation, any modification that would
result in a "deemed exchange" of a Receivable under Section 1001 of the Code on
account of such modification being made at a time when the obligations of the
Obligor under the Receivable neither are in default nor, in the reasonable good
faith judgment of the Servicer, probably will be in default in the reasonably
foreseeable future.
On each Business Day, the Servicer shall prepare and transmit to the
Trustee and the Back-up Servicer in a form acceptable to the Trustee and the
Back-up Servicer, a record setting forth the aggregate amount of collections on
the Receivables processed by the Servicer on the second preceding Business Day.
SECTION 3.3. REALIZATION UPON RECEIVABLES. (a) On behalf of the Trust,
the Certificateholders and the Certificate Insurer, the Servicer shall use its
best efforts, consistent with the servicing procedures set forth herein, to
repossess or otherwise convert the ownership of the Financed Vehicle securing
any Receivable as to which the Servicer shall have determined eventual payment
in full is unlikely. The Servicer shall commence efforts to repossess or
otherwise convert the ownership of a Financed Vehicle on or prior to the date
that an Obligor has not paid at least 95% of a Scheduled Payment thereon for 120
consecutive days or more; PROVIDED, HOWEVER, that the Servicer may elect not to
commence such efforts within such time period if in its good faith judgment it
determines either that it would be impracticable to do so or that the proceeds
ultimately recoverable with respect to such Receivable would be increased by
forbearance. The Servicer shall follow such customary and usual practices and
procedures as it shall deem necessary or advisable in its servicing of
automotive receivables, consistent with the standards of care set forth in
Section 3.1, which may include reasonable efforts to realize upon any recourse
to Dealers and selling the Financed Vehicle at public or private sale. The
foregoing shall be subject to the provision that, in any case in which the
Financed Vehicle shall have suffered damage, the Servicer shall not expend funds
in connection 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
45
account as soon as practicable, but in no event later than the second Business
Day after receipt thereof
(b) (1) The Servicer agrees that within 45 days from the Closing Date
it shall make such filings and effect such notices as are necessary under
Section 9-114(l) of the
New York UCC (or comparable section of the UCC of any
applicable state) to preserve its ownership interest (or security interest, as
the case may be) in any repossessed Financed Vehicles delivered for sale to
Dealers.
(2) The Servicer agrees that at any time after 45 days from
the Closing Date there will be (a) no more than 25 repossessed Financed Vehicles
in the aggregate delivered for sale to any Dealer and (b) no more than 50
repossessed Financed Vehicles in the aggregate delivered for the sale to all
Dealers with respect to which the actions referred to in (b)(1) above have not
been effected. The Servicer agrees that prior to delivering additional Financed
Vehicles for sale to any such Dealer, it shall make such filings and effect such
notices as are necessary under Section 9-114(l) of the
New York UCC (or
comparable section of the applicable UCC) to preserve its ownership interest (or
security interest, as the case may be) in any such repossessed Financed Vehicle.
SECTION 3.4. PHYSICAL DAMAGE INSURANCE; OTHER INSURANCE. (a) The
Servicer, in accordance with the servicing procedures and standards set forth
herein, shall require that (i) each Obligor shall have obtained insurance
covering the Financed Vehicle, as of the date of the execution of the
Receivable, insuring against loss and damage due to fire, theft, transportation,
collision and other risks generally covered by comprehensive and collision
coverage and each Receivable requires the Obligor to maintain such physical loss
and damage insurance naming LBAC and its successors and assigns as an additional
insured, (ii) each Receivable that finances the cost of premiums for credit life
and credit accident and health insurance is covered by an insurance policy or
certificate naming LBAC as policyholder (creditor) and (iii) as to each
Receivable that finances the cost of an extended service contract, the
respective Financed Vehicle which secures the Receivable is covered by an
extended service contract.
(b) The Servicer shall continue to maintain the VSI Policy or another
collateral protection insurance policy providing insurance coverage to at least
the same extent as the VSI Policy with respect to all Financed Vehicles. To the
extent applicable, the Servicer shall not take any action which would result in
noncoverage under any of the insurance policies referred to in Section 3.4(a) or
the VSI Policy which, but for the actions of the Servicer, would have been
covered thereunder. The Servicer, on behalf of the Trustee, shall take such
reasonable action as shall be necessary to permit recovery under any of the
foregoing insurance policies. Any amounts collected by the Servicer under any of
the foregoing insurance policies shall be deposited in the Collection Account
pursuant to Section 4.2. In the event of the cancellation or non-renewal of the
insurance referred to in Section 3.4(a)(i) above with respect to any Financed
Vehicle, the Servicer will endeavor, in accordance with its customary servicing
standards and procedures, to cause the related Obligor to obtain a replacement
insurance policy. In no event shall the Servicer be required to force place
insurance on a Financed Vehicle.
46
SECTION 3.5. MAINTENANCE OF SECURITY INTERESTS IN FINANCED VEHICLES.
(a) Consistent with the policies and procedures required by this
Agreement, the Servicer shall take such steps as are necessary to maintain
perfection of the security interest created in the name of LBAC by each
Receivable in the related Financed Vehicle, including, but not limited to,
obtaining the execution by the Obligors and the recording, registering, filing,
re-recording, re-registering and refiling of all security agreements, financing
statements and continuation statements or instruments as are necessary to
maintain the security interest granted by Obligors under the respective
Receivables. The Trustee hereby authorizes the Servicer to take such steps as
are necessary to re-perfect or continue the perfection of such security interest
on behalf of the Trust in the event of the relocation of a Financed Vehicle or
for any other reason.
(b) Upon the occurrence of an Insurance Agreement Event of Default, the
Certificate Insurer may (so long as an Insurer Default shall not have occurred
and be continuing) instruct the Trustee and the Servicer to take or cause to be
taken, or, if an Insurer Default shall have occurred and be continuing, upon the
occurrence of an Event of Default, the Trustee shall direct the Servicer to take
and the Servicer shall take or cause to be taken such action as may, in the
opinion of counsel to the Certificate Insurer (or, if an Insurer Default shall
have occurred and be continuing, the Trustee), which opinion shall not be an
expense of the Certificate Insurer or the Trustee (as applicable), be necessary
to perfect or reperfect the security interests in the Financed Vehicles securing
the Receivables in the name of the Trustee on behalf of the Trust by amending
the title documents of such Financed Vehicles to reflect the security interest
of the Trustee in the related Financed Vehicles or by such other reasonable
means as may, in the opinion of counsel to the Certificate Insurer or the
Trustee (as applicable), which opinion shall not be an expense of the
Certificate Insurer or the Trustee, be necessary or prudent. The Servicer hereby
agrees to pay all expenses related to such perfection or reperfection and to
take all action necessary therefor. In addition, prior to the occurrence of an
Insurance Agreement Event of Default, the Certificate Insurer may (unless an
Insurer Default shall have occurred and be continuing) instruct the Trustee and
the Servicer to take or cause to be taken such action as may, in the opinion of
counsel to the Certificate Insurer, be necessary to perfect or reperfect the
security interest in the Financed Vehicles securing the Receivables in the name
of the Trustee on behalf of the Trust, including by amending the title documents
of such Financed Vehicles to reflect the security interest of the Trustee in the
related Financed Vehicle or by such other reasonable means as may, in the
opinion of counsel to the Certificate Insurer, be necessary or prudent;
PROVIDED, HOWEVER, that if the Certificate Insurer requests (unless an
Insurer Default shall have occurred and be continuing) that the title
documents be amended prior to the occurrence of an Insurance Agreement Event
of Default, the out-of-pocket expenses of the Servicer or the Trustee in
connection with such action shall be reimbursed to the Servicer or the
Trustee, as applicable, by the Certificate Insurer.
In addition to the foregoing, in the event any of the events described
in Section 8.1(iii) or (iv) shall have occurred, or in the event LBAC shall have
been removed or replaced as Servicer pursuant to Section 7.3, Section 7.5, or
otherwise pursuant to Section 8.1. then LBAC and/or the Servicer shall
immediately cause each Lien Certificate for a
47
Financed Vehicle to be marked to reflect the security interest of the Trustee in
the Financed Vehicle at the expense of the Servicer.
The Servicer hereby makes, constitutes, and appoints the Trustee acting
through its duly appointed officers or any of them, its true and lawful
attorney, for it and in its name and on its behalf, for the sole and exclusive
purpose of authorizing said attorney to execute and deliver as attorney-in-fact
or otherwise, any and all documents and other instruments and to do or
accomplish all other acts or things necessary or appropriate to show the Trustee
as lienholder or secured party on the related Lien Certificates relating to a
Financed Vehicle.
SECTION 3.6. ADDITIONAL COVENANTS OF SERVICER. The Servicer hereby
makes the following covenants to the other parties hereto and the Certificate
Insurer on which the Trustee shall rely in accepting the Receivables in trust
and issuing the Certificates and on which the Certificate Insurer shall rely in
issuing the Policy: (i) the Servicer shall not release the Financed Vehicle
securing any Receivable from the security interest granted by such Receivable in
whole or in part except in the event of payment in full by the Obligor
thereunder or repossession or other liquidation of such Financed Vehicle, (ii)
the Servicer shall not impair the rights of the Certificateholders, the Trust or
the Certificate Insurer in such Receivables, (iii) the Servicer shall not amend
a Receivable, except that extensions may be granted in accordance with Section
3.2, and (iv) the Servicer shall service the Receivables as required by the
terms of this Agreement and in material compliance with its current servicing
procedures for servicing of all its other comparable motor vehicle receivables.
SECTION 3.7. PURCHASE OF RECEIVABLES UPON BREACH. The Servicer, the
Depositor or the Trustee shall inform the other parties hereto and the
Certificate Insurer promptly, in writing, upon the discovery by the Servicer,
the Depositor or a Responsible Officer of the Trustee, as the case may be, of
any breach of the provisions of Section 3.2 relating to extensions, rebates,
adjustments or other modifications of the Receivables, or any breach of Sections
3.4, 3.5 or 3.6; PROVIDED, HOWEVER, that the failure to give such notice shall
not affect any obligation of the Servicer hereunder. Unless the breach shall
have been cured by the last day of the second Collection Period following such
discovery by or notice to the Servicer of such breach, the Servicer shall
purchase any Receivable with respect to which such breach has a material adverse
effect on such Receivable or the interest therein of the Trust, the
Certificateholders or the Certificate Insurer; PROVIDED, HOWEVER,
notwithstanding the foregoing, the Servicer shall purchase any Receivable with
respect to which any breach of clause (ii) of the last sentence of the first
paragraph of Section 3.2 has occurred immediately upon discovery by or notice to
the Servicer of such breach. In consideration of the purchase of such
Receivable, the Servicer shall remit the Purchase Amount in the manner specified
in Section 4.5. For purposes of this Section, the Purchase Amount shall,
whenever applicable, consist in part of a release by the Servicer of all rights
to receive Simple Interest Excess with respect to the related Receivable. The
sole remedy of the Trustee, the Trust, the Certificate Insurer or the
Certificateholders with respect to a breach of the provisions of Section 3.2
relating to extensions, rebates, adjustments or other modifications of the
Receivables or any breach of Sections 3.4, 3.5 or 3.6 shall be to require the
Servicer to repurchase Receivables
48
pursuant to this Section 3.7; PROVIDE, HOWEVER, that the Servicer shall
indemnify the Trustee, the Back-up Servicer, the Custodian, the Depositor, the
Certificate Insurer, the Trust and the Certificateholders and each of their
respective officers, employees, directors, agents and representatives against
all costs, expenses, losses, damages, claims and liabilities, including
reasonable fees and expenses of counsel, which may be asserted against or
incurred by any of them as a result of third party claims arising out of the
events or facts giving rise to such breach. The Depositor shall have no
obligation to repurchase the Receivables upon a breach of the provisions of
Section 3.2 relating to extensions, rebates, adjustments or other modifications
of the Receivables, or any breach of Sections 3.4, 3.5 or 3.6. The Depositor
shall have no liability for actions taken or omitted to be taken by the Servicer
pursuant to this Section 3.7.
SECTION 3.8. SERVICING, FEE. The Servicing Fee for the initial
Distribution Date shall equal the product of (a) one-twelfth of the Servicing
Fee Rate and (b) the Original Pool Balance. Thereafter, the Servicing Fee for a
Distribution Date shall equal the product of (i) one-twelfth of the Servicing
Fee Rate and (ii) the Pool Balance as of the last day of the second preceding
Collection Period. The Servicing Fee shall in addition include all late fees,
prepayment charges including, in the case of a Rule of 78's Receivable that is
prepaid in full, to the extent not required by law to be remitted to the related
Obligor, the difference between the Principal Balance of such Rule of 78's
Receivable (plus accrued interest to the date of prepayment) and the principal
balance of such Receivable computed according to the "Rule of 78's", and other
administrative fees or similar charges allowed by applicable law with respect to
Receivables, collected (from whatever source) on the Receivables.
The Servicer shall be required to pay all expenses incurred by it in
connection with its activities under this Agreement (including taxes imposed on
the Servicer, expenses incurred by the Servicer in connection with distributions
and reports to Certificateholders, the Trustee and the Certificate Insurer and
all other fees and expenses of the Trust including taxes levied or assessed
against the Trust, and claims against the Trust in respect of indemnification
not expressly stated under this agreement to be for the account of the Trust).
SECTION 3.9. SERVICER'S CERTIFICATE. (a) By 10:00 a.m.,
New York City
time, on each Determination Date, the Servicer shall deliver to the Trustee, the
Back-up Servicer, the Collateral Agent, the Depositor, the Certificate Insurer
and the Rating Agencies, a Servicer's Certificate containing all information
necessary to make the distributions pursuant to Section 4.6 (including, if
required, withdrawals from or deposits to the Payahead Account and withdrawals
from the Spread Account (including each sub account therein), the Class B
Reserve Account, the Pre-Funding Account and the Capitalized Interest Account)
for the Collection Period preceding the date of such Servicer's Certificate and
all information necessary for the Trustee to send statements to
Certificateholders and the Certificate Insurer pursuant to Section 4.8.
Receivables to be purchased by the Servicer or to be purchased by LBAC shall be
identified by the Servicer by account number with respect to such Receivable (as
specified in the Schedule of Receivables).
49
(b) In addition to the information required by Section 3.9(a), the
Servicer shall include in the copy of the Servicer's Certificate delivered to
the Certificate Insurer (i) the Delinquency Ratio, the Average Delinquency
Ratio, the Cumulative Default Rate, and the Cumulative Loss Rate (as such terms
are defined in the Spread Account Agreement), (ii) whether any Trigger Event (as
such term is defined in the Spread Account Agreement) has occurred as of such
Determination Date, (iii) whether any Trigger Event that may have occurred as of
a prior Determination Date is Deemed Cured (as defined in the Spread Account
Agreement) as of such Determination Date, and (iv) whether to the knowledge of
the Servicer an Insurance Agreement Event of Default has occurred. The Servicer
shall in addition give notice of the occurrence of any Trigger Event or any
Insurance Agreement Event of Default to each Rating Agency.
SECTION 3.10. ANNUAL STATEMENT AS TO COMPLIANCE; NOTICE OF DEFAULT.
(a) The Servicer shall deliver to the Trustee, the Back-up Servicer, the
Collateral Agent, the Depositor and the Certificate Insurer, on or before
March 31 of each year beginning March 31, 1999, an Officer's Certificate,
dated as of December 31 of the preceding calendar year, stating that (i) a
review of the activities of the Servicer during such preceding calendar year
and of its performance under this Agreement has been made under such
officer's supervision and (ii) to the best of such officer's knowledge, based
on such review, the Servicer has fulfilled all its obligations under this
Agreement throughout such year, or, if there has been a default in the
fulfillment of any such obligation, specifying each such default known to
such officer and the nature and status thereof. The Trustee shall send a copy
of such certificate to the Rating Agencies.
(b) The Servicer shall deliver to the Trustee, the Back-up Servicer,
the Collateral Agent, the Depositor, the Certificate Insurer and the Rating
Agencies, promptly after having obtained knowledge thereof, but in no event
later than 2 Business Days after having obtained such knowledge, written notice
in an Officer's Certificate of any event which with the giving of notice or
lapse of time, or both, would become an Event of Default under Section 8.1.
SECTION 3.11. ANNUAL INDEPENDENT CERTIFIED PUBLIC ACCOUNTANT'S REPORT.
The Servicer shall cause a firm of nationally recognized independent certified
public accountants, who may also render other services to the Servicer or to the
Depositor, to deliver to the Trustee, the Back-up Servicer, the Collateral
Agent, the Certificateholders, the Certificate Insurer and each Rating Agency on
or before April 30 of each year beginning April 30, 1999, a report dated as of
December 31 of the preceding calendar year and reviewing the Servicer's
activities during such preceding calendar year, addressed to the Board of
Directors of the Servicer, and to the Trustee, the Back-up Servicer, the
Collateral Agent, the Depositor, and the Certificate Insurer, to the effect that
such firm has audited the financial statements of the Servicer and issued its
report therefor and that such audit (a) was made in accordance with generally
accepted auditing standards, and accordingly included such tests of the
accounting records and such other auditing procedures as such firm considered
necessary in the circumstances; (b) included tests relating to automotive loans
serviced for others in accordance with the requirements of the Uniform Single
Attestation Program for Mortgage Bankers (the "Program"), to the extent the
procedures in the Program are applicable to the servicing obligations set forth
50
in this Agreement; (c) included an examination of the delinquency and loss
statistics relating to the Servicer's portfolio of automobile, van, sport
utility vehicle and light duty truck installment sales contracts; and (d) except
as described in the report, disclosed no exceptions or errors in the records
relating to automobile, van, sport utility vehicle and light duty truck loans
serviced for others that, in the firm's opinion, the Program requires such firm
to report. The accountant's report shall further state that (1) a review in
accordance with agreed upon procedures was made of three randomly selected
Servicer's Certificates; (2) except as disclosed in the report, no exceptions or
errors in the Servicer's Certificates were found; and (3) the delinquency and
loss information relating to the Receivables contained in the Servicer's
Certificates were found to be accurate.
The report will also indicate that the firm is independent of the
Servicer within the meaning of the Code of Professional Ethics of the American
Institute of Certified Public Accountants.
SECTION 3.12. SERVICER EXPENSES. The Servicer shall be required to pay
all expenses incurred by it in connection with its activities hereunder,
including fees and disbursements of independent accountants, taxes imposed on
the Servicer, and expenses incurred in connection with distributions and reports
to Certificateholders.
SECTION 3.13. RETENTION AND TERMINATION OF SERVICER. The Servicer
hereby covenants and agrees to act as such under this Agreement for an
initial term, commencing on the Closing Date and ending on March 31, 1998,
which term shall be extendible by the Certificate Insurer for successive
quarterly terms ending on each successive June 30, September 30, December 31
and March 31 (or, pursuant to revocable written standing instructions from
time to time to the Servicer and the Trustee, for any specified number of
terms greater than one), until the termination of the Trust. Each such notice
(including each notice pursuant to standing instructions, which shall be
deemed delivered at the end of successive quarterly terms for so long as
such instructions are in effect) (a "Servicer Extension Notice") shall be
delivered by the Certificate Insurer to the Trustee and the Servicer. The
Servicer hereby agrees that, as of the date hereof and upon its receipt of
any such Servicer Extension Notice, the Servicer shall become bound, for the
initial term beginning on the date hereof and for, the duration of the term
covered by such Servicer Extension Notice, to continue as the Servicer
subject to and in accordance with the other provisions of this Agreement.
Until such time as an Insurer Default shall have occurred and be continuing,
the Trustee agrees that if as of the fifteenth day prior to the last day of
any term of the Servicer, the Trustee shall not have received any Servicer
Extension Notice from the Certificate Insurer, the Trustee will, within five
days thereafter, give written notice of such non-receipt to the Certificate
Insurer, the Back-up Servicer (or any alternate successor servicer appointed
by the Certificate Insurer pursuant to Section 7.5) and the Servicer and the
Servicer's terms shall not be extended unless a Servicer Extension Notice is
received on or before the last day of such term.
SECTION 3.14. Access TO CERTAIN DOCUMENTATION AND INFORMATION REGARDING
RECEIVABLES. The Servicer shall provide to representatives of the Trustee, the
Collateral Agent, the Back-up Servicer, the Depositor, and the Certificate
Insurer reasonable access to documentation and computer systems and information
regarding the Receivables and
51
shall provide such access to Certificateholders in such cases where the
Certificateholders are required by applicable law or regulation to review such
documentation. In each case, such access shall be afforded without charge but
only upon reasonable request and during normal business hours. Nothing in this
Section 3.14 shall derogate from the obligation of the Servicer to observe any
applicable law prohibiting disclosure of information regarding the Obligors, and
the failure of the Servicer to provide access as provided in this Section 3.14
as a result of such obligation shall not constitute a breach of this Section
3.14.
SECTION 3.15. VERIFICATION OF SERVICER'S CERTIFICATE. (a) On or before
the fifth Business Day of each month, the Servicer will deliver to the Trustee
and the Back-up Servicer a computer diskette (or other electronic transmission)
in a format acceptable to the Trustee and the Back-up Servicer containing such
information with respect to the Receivables as of the close of business on the
last day of the preceding Collection Period as is necessary for preparation of
the Servicer's Certificate. The Back-up Servicer shall use such computer
diskette (or other electronic transmission) to verify certain information
specified in Section 3.15(b) contained in the Servicer's Certificate delivered
by the Servicer, and the Back-up Servicer shall certify to the Certificate
Insurer that it has verified the Servicer's Certificate in accordance with this
Section 3.15 and shall notify the Servicer, the Certificate Insurer and the
Trustee of any discrepancies, in each case, on or before the related Deficiency
Claim Date. In the event that the Back-up Servicer reports any discrepancies,
the Servicer and the Back-up Servicer shall attempt to reconcile such
discrepancies prior to the related Deficiency Claim Date, but in the absence of
a reconciliation, the Servicer's Certificate shall control for the purpose of
calculations and distributions with respect to the related Distribution Date. In
the event that the Back-up Servicer and the Servicer are unable to reconcile
discrepancies with respect to a Servicer's Certificate by the related
Distribution Date, (i) the Back-Up Servicer will notify the Certificate Insurer
and the Trustee, and (ii) the Servicer shall cause a firm of independent
certified public accountants, at the Servicer's expense, to audit the Servicer's
Certificate and, prior to the fifth calendar day of the following month,
reconcile the discrepancies. The effect, if any, of such reconciliation shall be
reflected in the Servicer's Certificate for such next succeeding Determination
Date. In addition, the Servicer shall, if so requested by the Certificate
Insurer (unless an Insurer Default shall have occurred and be continuing)
deliver to the Back-up Servicer (i) within five (5) Business Days of demand
therefor a computer tape containing as of the close of business on the date of
demand all of the data maintained by the Servicer in -computer format in
connection with servicing the Receivables and (ii) within fifteen (15) Business
Days of demand therefor a copy of such other information as is reasonably
requested by the Certificate Insurer for the purpose of reconciling such
discrepancies. Other than the 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.
52
(b) The Back-up Servicer shall review each Servicer's Certificate
delivered pursuant to Section 3.15(a) and shall, based upon the information
provided from the Servicer under Section 3.15(a):
(i) confirm that such Servicer's Certificate is complete on
its face;
(ii) load the computer diskette (which shall be in a format
acceptable to the Back-up Servicer) received from the Servicer pursuant
to Section 3.15(a) hereof, confirm that such computer diskette is in a
readable form and calculate and confirm the Principal Balance of each
Receivable for the most recent Distribution Date; and
(iii) confirm that the Total Distribution Amount, the Class A
Distributable Amount, the Class A Principal Distributable Amount, the
Class A Interest Distributable Amount, the Class B Distributable
Amount, the Class B Interest Distributable Amount, the Class B
Additional Interest Distributable Amount, the Class B Principal
Distributable Amount, the Back-up Servicer Fee, the Servicing Fee, the
Trustee Fee, the amount on deposit in the Class B Reserve Account, the
amount on deposit in the Pre-Funding Account, the amount on deposit in
the Capitalized Interest Account and the amount on deposit in the
Spread Account (separately identifying the amounts credited to the
Excess Cash Flow Sub-account and the Class B Sub-account), and the
Premium in the Servicer's Certificate are accurate based solely on the
recalculation of the Servicer's Certificate.
SECTION 3.16. FIDELITY BOND. The Servicer shall maintain a fidelity
bond in such form and amount as is customary for entities acting as custodian of
funds and documents in respect of consumer contracts on behalf of institutional
investors.
SECTION 3.17. DELEGATION OF DUTIES. The Servicer may at any time
delegate duties under this Agreement to sub-contractors who are in the business
of servicing automotive receivables with the prior written consent of the
Certificate Insurer (so long as an Insurer Default shall not have occurred and
be continuing) or the Trustee (if an Insurer Default shall have occurred and be
continuing); PROVIDED, HOWEVER that no such delegation or sub-contracting of
duties by the Servicer shall relieve the Servicer of its responsibility with
respect to such duties. In the event the Servicer shall for any reason no longer
be the servicer of the Receivables (including by reason of an Event of Default),
the Back-up Servicer, its designee or any successor Servicer will thereupon
assume all of the rights and obligations of the predecessor Servicer under one
or more subservicing agreements that may have been entered into by the
predecessor Servicer by giving notice of such assumption to the related
subservicer or subservicers within ten (10) Business Days of the termination of
the Servicer as servicer of the Receivables. Upon the giving of such notice, the
Back-up Servicer, its designee or the successor Servicer shall be deemed to have
assumed all of the predecessor Servicer's interest therein and to have 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
53
any liability or obligations accrued up to the date of the replacement of the
Servicer under the subservicing agreement and the subservicer, if any, shall not
be relieved of any liability or obligation to the predecessor Servicer that
survives the assignment or termination of the subservicing agreement. The
Back-up Servicer shall notify each Rating Agency and the Certificate Insurer if
any subservicing agreement is assumed by the Back-up Servicer, its designee or
the successor Servicer. The predecessor Servicer shall, upon request of the
Trustee, the Back-up Servicer or any successor Servicer, but at the expense of
the predecessor Servicer, deliver to the assuming party all documents and
records relating to the subservicing agreement and the Receivables then being
serviced and an accounting of amounts collected and held by it and otherwise use
its reasonable efforts to effect the orderly and efficient transfer of the
subservicing agreement to the assuming party.
SECTION 3.18. Delivery OF BACK-UP TAPES OF BACK-UP SERVICER. (a) In
addition to the information to be delivered by the Servicer to the Back-up
Servicer on or before the fifth Business Day of each month pursuant to Section
3.15(a), the Servicer shall deliver to the Back-up Servicer, or its designated
agent, a computer diskette (or other electronic transmission), in a format
acceptable to the Back-up Servicer or its designated agent, as the case may be,
with the loan master file and history information in the form attached hereto as
Exhibit E-2 on or prior to the Closing Date in the case of the Initial
Receivables, and on or prior to the related Subsequent Transfer Date in the case
of Subsequent Receivables, which loan master file and history information shall
be sufficiently detailed to enable the Back-up Servicer to maintain records
sufficient to assume the role of successor Servicer pursuant to this Agreement.
(b) In addition to the information required to be delivered by the
Servicer to the Back-up Servicer or its designated agent on or before the fifth
Business Day of each month pursuant to Section 3.15(a) and on or prior to the
Closing Date and each Subsequent Transfer Date pursuant to Section 3.18(a), the
Servicer shall deliver the loan master file and history information to the
Back-up Servicer or its designated agent on the Determination Date occurring in
July 1998 (with respect to the period from and including the Initial Cutoff Date
to the last day of the related Collection Period) and on the Determination Date
occurring every six months thereafter in the form attached hereto as Exhibit E-2
in writing and on a computer diskette (or other electronic transmission) in a
format acceptable to the Back-up Servicer or its designated agent, as the case
may be, and as at such other times as may be requested by the Certificate
Insurer or the Back-up Servicer upon prior written notice to the Servicer,-
PROVIDED that the Back-up Servicer shall deliver a copy of any such notice by
the Back-up Servicer to the Certificate Insurer simultaneously with its delivery
of such notice to the Servicer.
54
ARTICLE IV
Distributions; Accounts;
STATEMENTS TO CERTIFICATEHOLDERS
SECTION 4.1. ACCOUNTS; LOCK-BOX ACCOUNT. (a) The Servicer has
established the Lock-Box Account as an Eligible Account entitled, "Chase Texas
Agent Account -Auto Loan Programs," account number 00100916395; PROVIDED that
pursuant to the Lock-Box Agreement, the Lock-Box Processor and no other person,
save the Trustee or the Servicer, has authority to direct disposition of funds
related to the Receivables on deposit in the Lock-Box Account consistent with
the provisions of this Agreement and the Lock-Box Agreement. The Trustee shall
have no liability or responsibility with respect to the Lock-Box Processor's or
the Servicer's directions or activities as set forth in the preceding sentence.
The Lock-Box Account shall be established pursuant to and maintained in
accordance with the Lock-Box Agreement and shall be a demand deposit account
which shall at all times be an Eligible Account, initially established and
maintained with Chase Texas or, at the request of the Certificate Insurer, an
Eligible Account satisfying clause (i) of the definition thereof The Servicer
has established and shall maintain the Lock-Box at a United States Post Office
Branch. Notwithstanding the Lock-Box Agreement or any of the provisions of this
Agreement relating to the LockBox and the Lock-Box Agreement, the Servicer shall
remain obligated and liable to the Trustee and the Certificateholders for
servicing and administering the Receivables and the other Trust Assets in
accordance with provisions of this Agreement without diminution of such
obligation or liability by virtue thereof.
In the event the Servicer shall for any reason no longer be acting as
such, the Lock-Box Agreement shall terminate in accordance with its terms and
funds on deposit in the Lock-Box Account shall be distributed by Chase Texas, as
agent for the beneficial owners of funds in the Lock-Box Account at such time
(including the Trust), and Chase Texas shall deposit any such funds relating to
the Receivables to such other account as shall be identified by the Back-up
Servicer or successor Servicer for deposit therein; PROVIDED, HOWEVER, that the
outgoing Servicer shall not thereby be relieved of any liability or obligations
on the part of the outgoing Servicer to the Lock-Box Bank under such Lock-Box
Agreement. The outgoing Servicer shall, upon request of the Trustee, but at the
expense of the outgoing Servicer, deliver to the successor Servicer all
documents and records relating to the Lock-Box Agreement and an accounting of
amounts collected and held in the Lock-Box Account or held by the Lock-Box
Processor in respect of the Receivables and otherwise use its best efforts to
effect the orderly and efficient transfer of any Lock-Box Agreement to the
successor Servicer. In the event that the Lock-Box Account fails at any time to
qualify as an Eligible Account, the Servicer, at its expense, shall cause the
Lock-Box Bank to deliver, at the direction of the Certificate Insurer (so long
as an Insurer Default shall not have occurred and be continuing) or the Trustee
(if an Insurer Default shall have occurred and be continuing) to the Trustee or
a successor Lock-Box Bank, all documents and records relating to the Receivables
and all amounts held (or thereafter received) on deposit in the Lock Box Account
or held by the LockBox 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
55
of the lock-box arrangements, and the Servicer shall promptly notify the
Obligors to make payments to any new Lock-Box.
(b) In addition to the Lock-Box Account, the Trustee shall establish,
with itself, the Collection Account, the Certificate Account in the name of the
Trustee for the benefit of the Certificateholders and the Certificate Insurer,
the Pre-Funding Account in the name of the Trustee for the benefit of the
Certificateholders and the Certificate Insurer, the Capitalized Interest Account
in the name of the 'Trustee for the benefit of the Certificateholders and the
Certificate Insurer, and the Policy Payments Account in the name of the Trustee
for the benefit of the Class A Certificateholders. In addition, the Trustee
shall establish with itself the Payahead Account in the name of the Trustee for
the benefit of Obligors of Receivables who make payments thereon in excess of
Scheduled Payments to the extent described in Section 4.3, and applicable late
fees and miscellaneous fees and for the benefit, to the extent of earnings on
investments of funds in the Payahead Account, of the Certificateholders. The
Payahead Account, the Class B Reserve Account, the Capitalized Interest Account
and the Spread Account established pursuant to the Spread Account Agreement
shall not be included in the Trust. Any amounts held on deposit in the Payahead
Account and any investment earnings thereon are owned by, and will be taxable
to, LBAC for federal income tax purposes. The Collection Account, the
Certificate Account, the Pre-Funding Account, the Payahead Account and the
Policy Payments Account shall be Eligible Accounts initially established with
the Trustee; PROVIDED, HOWEVER, if any of such accounts shall cease to be an
Eligible Account-, the Servicer, with the consent of the Certificate Insurer (so
long as no Insurer Default has occurred and is continuing), within 5 Business
Days shall, cause such accounts to be moved to an institution so that such
account meets the definition of Eligible Account. The Servicer shall promptly
notify the Rating Agencies and the Depositor of any change in the location of
any of the aforementioned accounts.
All amounts held in the Collection Account, the Pre-Funding Account and
the Payahead Account shall be invested by the Trustee at the written direction
of the Depositor in Eligible Investments in the name of the Trustee as trustee
of the Trust and -shall mature no later than one Business Day immediately
preceding the Distribution Date next succeeding the date of such investment.
Such written direction shall certify that any such investment is authorized by
this Section. No investment may be sold prior to its maturity. Amounts in the.
Certificate Account and the Policy Payments Account shall not be invested. The
amount of earnings on investments of funds in the Collection Account and
Payahead Account during the Collection Period related to each Distribution Date
shall be deposited into the Certificate Account on each Distribution Date, and
shall be available for distribution pursuant to Section 4.6(c). The amount of
earnings on .investments of funds in the Pre-Funding Account during the
Collection Period related to each Distribution Date shall be deposited in the
Certificate Account on each Distribution Date in an amount not to exceed the
Pre-Funding Interest Amount, and such amount shall be available for distribution
pursuant to Section 4.6(c), and any remaining investment earnings on the funds
in the Pre-Funding Account shall remain on deposit in the Pre-Funding Account
and shall be distributed by the Trustee to the Depositor at the end of the
Funding Period. The amount of earnings on investments of funds in the
Capitalized Interest Account during the Collection Period related to each
Distribution
56
Date shall be deposited into the Capitalized Interest Account on such
Distribution Date prior to making any transfer from the Capitalized Interest
Account to the Certificate Account pursuant to Section 4.6(a)(iv). For purposes
of this paragraph, the Trustee will take delivery of the Eligible Investments in
accordance with Schedule C.
(c) The Trustee shall on or prior to each Distribution Date (and prior
to the transfer from the Collection Account to the Certificate Account described
in Section 4.6(a)) transfer from the Collection Account (i) to the Payahead
Account all Payaheads as described in Section 4.3 received during the related
Collection Period, (ii) to the Servicer, as additional servicing compensation,
the amount, if any, required to be paid to the Servicer pursuant to Section
4.18, and (iii) to the Collateral Agent for deposit into the Excess Cash Flow
Sub-account, the amount of any contribution on behalf of the Servicer required
to be made thereto pursuant to Section 4.18 as certified to the Trustee by the
Servicer in accordance with Section 4.6(b) received during the related
Collection Period.
SECTION 4.2. COLLECTIONS. The Servicer shall use reasonable efforts to
cause the Lock-Box Processor to transfer any payments in respect of the
Receivables from or on behalf of Obligors received in the Lock-Box to the
Lock-Box Account on the Business Day on which such payments are received,
pursuant to the Lock-Box Agreement. Within two Business Days of receipt of such
funds into the Lock-Box Account, the Servicer shall cause the Lock-Box Bank to
transfer available funds related to the Receivables from the Lock-Box Account to
the Collection Account, and if such funds are not available funds, as soon
thereafter as they clear (i.e., become available for withdrawal from the
Lock-Box Account). In addition, the Servicer shall remit all payments by or on
behalf of the Obligors received by the Servicer with respect to the Receivables
(other than Purchased Receivables), and all Liquidation Proceeds no later than
the second Business Day following receipt into the Lock-Box Account or the
Collection Account.
SECTION 4.3. APPLICATION OF COLLECTIONS. All collections for each
Collection Period shall be applied by the Servicer as follows:
With respect to each Receivable (other than a Purchased Receivable),
payments actually received from or on behalf of the Obligor (other than any such
payment allocable to a Payable) shall be applied hereunder, in the case of a
Precomputed Receivable, first, to the Scheduled Payment of such Precomputed
Receivable, with interest and principal being allocated on an actuarial basis,
second, in connection with the redemption of a defaulted Receivable, to
reimburse the Servicer for reasonable and customary out-of- pocket expenses
incurred by -the Servicer in connection with such Receivable, and third, to any
late fees accrued with respect to such Precomputed Receivable and, in the case
of a Simple Interest Receivable, first, to interest and principal in accordance
with the Simple Interest Method to the extent necessary to bring such Simple
Interest Receivable current, second, in connection with the redemption of a
defaulted Receivable, to reimburse the Servicer for reasonable and customary
out-of-pocket expenses incurred by the Servicer in connection with such
Receivable, third, to late fees and fourth, to principal in accordance with the
Simple Interest Method. With respect to any Precomputed Receivable, any
remaining excess shall be added to the Payahead Balance, and shall be applied to
prepay the Precomputed Receivable, but only if the sum of such excess and the
previous
57
Payahead Balance shall be sufficient to prepay the Precomputed Receivable in
full. Otherwise, any such remaining excess payments with respect to a
Precomputed Receivable shall constitute a Payahead, shall increase the Payahead
Balance and shall be applied as set forth in Section 4.4.
SECTION 4.4. PAYAHEADS. As of the close of business on the last day of
each Collection Period, if the payments by or on behalf of the Obligor on a
Precomputed Receivable (other than a Purchased Receivable) shall be less than
the Scheduled Payment and accrued late fees with respect to such Receivable, the
Payahead Balance of an Obligor, other than the portion, if any, of such Payahead
Balance which constitutes a Payable, shall be applied by the Servicer to the
extent of the shortfall and such Payahead Balance shall be reduced accordingly.
The portion, if any, of the Payahead Balance of an Obligor which constitutes a
Payable shall be applied by the Servicer as a payment on the related Receivable
upon the earliest to occur of (i) the Collection Period in which such Receivable
becomes a Liquidated Receivable and (ii) payment in full of all other amounts
due and owing on such Receivable, including the payment of late charges and
miscellaneous fees.
SECTION 4.5. ADDITIONAL DEPOSITS. The following additional deposits
shall be made in immediately available funds on the dates indicated: (i) on the
Business Day immediately preceding each Determination Date, the Servicer or
LBAC, as the case may be, shall deposit or cause to be deposited in the
Collection Account the aggregate Purchase Amount with respect to Purchased
Receivables, (ii) on the Business Day immediately preceding each Determination
Date, the Originator or the Servicer, as the case may be, shall deposit in the
Collection Account all amounts to be paid under Section 10.2, (iii) on the
Determination Date immediately succeeding the date on which the Funding Period
ends (or on the Determination Date on which the Funding Period ends, if the
Funding Period ends. on a Determination Date), the Trustee shall remit the
remaining Pre-Funded Amount on deposit in the Pre-Funding Account to the
Certificate Account pursuant to Section 4.19(c) and (iv) on or before each Draw
Date, the Trustee shall remit to the Collection Account any amounts delivered to
the Trustee by the Collateral Agent.
SECTION 4.6. DISTRIBUTIONS, POLICY CLAIMS. (a) On each Distribution
Date, the Trustee shall cause to be made the following transfers and
distributions based solely on the amounts set forth in the Servicers Certificate
for the related Distribution Date:
(i) from the Collection Account to the Certificate Account, in
immediately available funds, an amount equal to the excess of the sum
of (a) all funds that were deposited in the Collection Account, plus
(b) earnings on investments of funds in the Collection Account pursuant
to Section 4. 1 (b), for the related Collection Period over all funds
transferred from the Collection Account with respect to such Collection
Period pursuant to Section 4. 1 (c);
(ii) from the Payahead Account to the Certificate Account, in
immediately available funds, the aggregate previous Payaheads to be
applied to Scheduled Payments on Precomputed Receivables or prepayments
for the related Collection Period pursuant to Sections 4.3 and 4.4,
plus earnings on investments
58
of funds in the Payahead Account for the related Collection Period
pursuant to Section 4. 1 (b);
(iii) from the Pre-Funding Account to the Certificate Account,
in immediately available funds, earnings on investments of funds in the
Pre-Funding Account for the related Collection Period pursuant to
Section 4. 1 (b); and
(iv) from the Capitalized Interest Account to the Certificate
Account, an amount equal to the Negative Carry Amount for the related
Collection Period, if any.
(b) Prior to each Distribution Date, the Servicer shall on the related
Determination Date calculate the Total Distribution Amount, the Class A
Distributable Amount, the Class A Interest Distributable Amount, the Class A
Principal Distributable Amount, the Class B Interest Distributable Amount, the
Class B Additional Interest Distributable Amount, the Class B Principal
Distributable Amount, the Monthly Dealer Participation Fee Distributable Amount,
the amount, if any, required to be withdrawn from the Collection Account and
paid to the Servicer as additional servicing compensation or contributed to the
Excess Cash Flow Sub-account on behalf of the Servicer, in each case pursuant to
Section 4.18 and, based on the Total Distribution Amount and the other amounts
available for distribution on such Distribution Date, determine the amount
distributable to the Certificateholders of each class.
(c) On each Distribution Date, the Trustee shall (x) distribute all
amounts delivered by the Certificate Insurer to the Trustee for deposit into the
Collection Account pursuant to Section 4.11 for distribution in the amounts and
priority as directed by the Certificate Insurer, and (y) (based on the
information contained in the Servicer's Certificate delivered on the related
Determination Date pursuant to SECTION 3.9) subject to subsection (d) hereof,
make the following distributions from the Total Distribution Amount withdrawn
from the Certificate Account and from the other sources described below in the
following order of priority:
(i) FIRST, to LBAC, from the Total Distribution Amount, the
Monthly Dealer Participation Fee Distributable Amount and all unpaid
Monthly Dealer Participation Fee Distributable Amounts from prior
Collection Periods, and SECOND, to the Servicer, from the Total
Distribution Amount (as the Total Distribution Amount has been reduced
by payments pursuant to subclause FIRST of this clause (i)), the
Servicing Fee and all unpaid Servicing Fees from prior Collection
Periods and, if the Total Distribution Amount is insufficient to pay
such Servicing Fee and such unpaid Servicing Fees from prior Collection
Periods, the Servicer will receive such deficiency from the Deficiency
Claim Amount with respect to such Distribution Date, if any, to the
extent received by the Trustee from the Collateral Agent;
(ii) to the Trustee, the Back-up Servicer and the Custodian,
from the Total Distribution Amount (as such Total Distribution Amount
has been reduced by payments pursuant to clause (i) above), the Trustee
Fee, the Back-up
59
Servicer Fee and all unpaid Trustee Fees and Back-up Servicer Fees from
prior Collection Periods and, if the Total Distribution Amount is
insufficient, the Trustee and Back-up Servicer will receive such
deficiency from the remaining portion of the Deficiency Claim Amount
with respect to such Distribution Date, if any, to the extent received
by the Trustee from the Collateral Agent, after application thereof
pursuant to clause (i) above;
(iii) to the Class A Certificateholders, from the Total
Distribution Amount (as such Total Distribution Amount has been reduced
by payments pursuant to clauses (i) and (ii) above), an amount equal to
the sum of the Class A Interest Distributable Amount and any Class A
Interest Carryover Shortfall as of the close of business on the
preceding Distribution Date (plus (without duplication) interest on
such outstanding Class A Interest Carryover Shortfall, to the extent
permitted by applicable law, at the Class A Pass-Through Rate from such
preceding Distribution Date through the current Distribution Date
(calculated on the basis of a 360-day year consisting of twelve 30-day
months)) and, if the Total Distribution Amount is insufficient, the
Class A Certificateholders will receive such deficiency from the
following sources in the following order of priority:. (A) from the
remaining portion of the Deficiency Claim Amount with respect to such
Distribution Date, if any, to the extent received by the Trustee from
the Collateral Agent, after application thereof pursuant to clauses (i)
and (ii) above and (B) from the Policy Claim Amount with respect to
such Distribution Date, if any, received by the Trustee from the
Certificate Insurer;
(iv) to the Class A Certificateholders, from the Total
Distribution Amount (as such Total Distribution Amount has been reduced
by payments pursuant to clauses (i) through (iii) above) and, if such
Distribution Date is the Final Funding Period Distribution Date, from
the Class A Percentage of any Prepayment Amount, an amount equal to the
sum of the Class A Principal Distributable Amount and any Class A
Principal Carryover Shortfall as of the close of business on the
preceding Distribution Date and, if the Total Distribution Amount is
insufficient, the Class A Certificateholders will receive such
deficiency from the following sources in the following order of
priority: (A) from the remaining portion of the Deficiency Claim Amount
with respect to such Distribution Date, if any, to the extent received
by the Trustee from the Collateral Agent, after application thereof
pursuant to -clauses (i) through (iii) above, plus (B) the remaining
portion of the Policy Claim Amount with respect to such Distribution
Date, if any, after application thereof pursuant to clause (iii) above;
(v) first, to the Certificate Insurer, from the Total
Distribution Amount (as such Total Distribution Amount has been reduced
by payments pursuant to clauses (i) through (iv) above), an amount
equal to the Reimbursement Obligations and, if the Total Distribution
Amount is insufficient, the Certificate Insurer shall receive such
deficiency from the remaining portion of the Deficiency Claim Amount
with respect to such Distribution Date, if any, to the extent received
by the Trustee from the Collateral Agent, after application
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thereof pursuant to clauses (i) through (iv) above, second, to the
Trustee, the Back-up Servicer and the Custodian, as applicable, from
the Total Distribution Amount (as such Total Distribution Amount has
been reduced by payments pursuant to clauses (i) through (iv) above and
subclause first of this clause (v)), all reasonable out-of-pocket
expenses of the Trustee, the Back-up Servicer and the Custodian
(including reasonable counsel fees and expenses), including, without
limitation, costs and expenses required to be paid by the Servicer to
the Back-up Servicer under Section 8.2(a), to the extent not paid by
the Servicer, and all unpaid reasonable out-of-pocket expenses of the
Trustee, the Back-up Servicer and the Custodian (including reasonable
counsel fees and expenses) from prior Collection Periods; PROVIDED,
HOWEVER, that unless an Event of Default shall have occurred and be
continuing, expenses payable to the Trustee, the Back-up Servicer and
the Custodian pursuant to this subclause second of clause (v) shall be
limited to a combined aggregate amount of $50,000 per annum, and third
to the Back-up Servicer, from the Total Distribution Amount (as such
Total Distribution Amount has been reduced by payments pursuant to
clauses (i) through (iv) above and subclauses first and second of this
clause (v)), in the event that the Back-up Servicer shall have assumed
the obligations of Servicer pursuant to Section 8.2(a) and the Servicer
fails to pay the Back-up Servicer for system conversion expenses as
required by said section, an aggregate amount not to exceed $100,000 in
payment of such system conversion expenses;
(vi) to the Class B Certificateholders, from the Total
Distribution Amount (as such Total Distribution Amount has been reduced
by payments pursuant to clauses (i) through (v) above), an amount equal
to the sum of the Class B Interest Distributable Amount and any Class B
Interest Carryover Shortfall as of the close of business on the
preceding Distribution Date (plus (without duplication) interest on
such Class B Interest Carryover Shortfall, to the extent permitted by
applicable law, at the Class B Pass-Through Rate from such preceding
Distribution Date through the current Distribution Date (calculated on
the basis of a 360-day year consisting of twelve 30-day months)) and,
if the Total Distribution Amount is insufficient, the Class B
Certificateholders will receive such deficiency from the Class B
Reserve Account Draw;
(vii) to the Collateral Agent for deposit in the Class B
Reserve Account, from the Total Distribution Amount (as such Total
Distribution Amount has been reduced by payments pursuant to clauses
(i) through (vi) above and net of the amount necessary to make the
Current Class B Principal Distribution pursuant to clause (ix) below),
an amount equal to the sum of the Class B Additional Interest
Distributable Amount and any Class B Additional Interest Carryover
Shortfall as of the close of business on the preceding Distribution
Date (plus (without duplication) interest on such Class B Additional
Interest Carryover Shortfall, to the extent permitted by applicable
law, at the Class B Pass-Through Rate from such preceding Distribution
Date through the current Distribution Date (calculated on the basis of
a 360-day year consisting of twelve 30-day months));
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(viii) to the Collateral Agent for deposit in the Excess Cash
Flow Sub-account, from the Total Distribution Amount (as such Total
Distribution Amount has been reduced by payments pursuant to clauses
(i) through (vii) above and net of the amount necessary to make the
Current Class B Principal Distribution pursuant to clause (ix) below),
to the extent necessary to maintain the amount on deposit in the Spread
Account at the Requisite Amount;
(ix) from the Total Distribution Amount (as such Total
Distribution Amount has been reduced by payments pursuant to clauses
(i) through (viii) above) and, if such Distribution Date is the Final
Funding Period Distribution Date, from the Class B Percentage of the
Prepayment Amount, an amount equal to the sum (such sum, the "Current
Class B Principal Distribution") of the Class B Principal Distributable
Amount and any Class B Principal Carryover Shortfall as of the close of
business on the preceding Distribution Date shall be distributed in the
following order of priority: first, to the Collateral Agent for deposit
in the Class B Sub-account, to the extent necessary to maintain the
amount on deposit in the Spread Account at the Requisite Amount, and
second, to the Class B Certificateholders and, if the Total
Distribution Amount is insufficient to make the Current Class B
Principal Distribution, the amount of such deficiency will be
distributed to the Class B Certificateholders (without deposit to the
Class B Sub-account) from the remaining amount, if any, of the Class
B Reserve Account Draw, after application thereof pursuant to clause
(vi) above; and
(x) to the Collateral Agent for deposit in the Class B Reserve
Account, the remaining Total Distribution Amount (after giving effect
to the payments pursuant to clauses (i) through (ix) above), if any.
In addition, on each Distribution Date, after giving effect to the
distributions specified in clauses (i) through (x) above, the Trustee shall
distribute the following amounts, from the following sources and in the
following order of priority:
(A) to the Class B Certificateholders, an amount equal to the
sum of the Class B Additional Interest Distributable Amount and any
Class B Additional Interest Carryover Shortfall as of the close of
business on the preceding Distribution Date (plus (without duplication)
interest on such Class B Additional Interest Carryover Shortfall, to
the extent permitted by applicable law, at the Class B Pass-Through
Rate from such preceding Distribution Date through the current
Distribution Date (calculated on the basis of a 360-day year
consisting of twelve 30-day months)), to be paid first, from amounts
delivered by the Collateral Agent to the Trustee from amounts on
deposit in the Class B Reserve Account, but not in excess of the
Current Class B Reserve Account Deposit, second, if such amounts are
insufficient, from amounts delivered by the Collateral Agent to the
Trustee from amounts on deposit in the Excess Cash Flow Sub-account,
but not in excess of the Current Class B Sub-account Deposit, and
third, if such amounts are insufficient, from amounts on deposit in
the Class B Reserve Account, after giving effect to the withdrawal
therefrom pursuant to subclause first above;
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(B) to the Class B Certificateholders, in reduction of the
Class B Undistributed Principal Amount until the Class B Undistributed
Principal Amount is reduced to zero, from amounts on deposit in the
Class B Sub-account delivered by the Collateral Agent to the Trustee,
the amount, if any, by which the amount on deposit in the Spread
Account (after giving effect to any withdrawal from the Excess Cash
Flow Sub-account pursuant to clause (A) above on such Distribution
Date) exceeds the Requisite Amount;
(C) to the Class B Certificateholders, from the amount on
deposit in the Excess Cash Flow Sub-account and delivered by the
Collateral Agent to the Trustee, the amount, if any, by which the
amount on deposit in the Spread Account (after giving effect to any
withdrawal from the Excess Cash Flow Sub-account pursuant to clause (A)
above and any withdrawal from the Class B Sub-account pursuant to
clause (B) above on such Distribution Date) exceeds the Requisite
Amount (such excess, the "Current Spread Account Release") in the
following order of priority: first, the excess of the amount
required to be distributed pursuant to Section 4.6(c)(vi) on such
Distribution Date over the amount actually distributed in respect
thereof (without giving effect to this clause (C)) on such
Distribution Date, second, the excess of the amount required to be
distributed pursuant to clause (A) above on such Distribution Date
over the amount actually distributed in respect thereof (without
giving effect to this clause (C))) on such Distribution Date, third,
the excess of the amount required to be distributed pursuant to
Section 4.6(c)(ix) on such Distribution Date over the amount
actually distributed in respect thereof (without giving effect to
this clause (C)) on such Distribution Date and fourth, in reduction
of the Class B Undistributed Principal Amount until the Class B
Undistributed Principal Amount is reduced to zero;
(D) to the Collateral Agent for deposit in the Class B Reserve
Account, the amount, if any, by which the Current Spread Account
Release exceeds the amount required to be distributed to Class B
Certificateholders pursuant to clause (C) above on such Distribution
Date; and
(E) from amounts on deposit in the Class B Reserve Account
delivered by the Collateral Agent to the Trustee, the amount, if any,
by which the amount on deposit in the Class B Reserve Account (after
giving effect to any withdrawal therefrom pursuant to clause (A)
above on such Distribution Date) exceeds the Specified Class B
Reserve Account Balance, first, to the Class B Certificateholders, in
reduction of the Class B Undistributed Principal Amount until the Class
B Undistributed Principal Amount is reduced to zero, and second to the
Holder of the Excess Cash Flow Certificate.
(d) The rights of the Class B Certificateholders to receive
distributions in respect of the Class B Certificates pursuant to Section
4.6(c)(vi) on a Distribution Date shall be and hereby are subordinated to the
payment of the amounts distributable pursuant to Sections 4.6(c)(i) through (v).
The rights of the Class B Certificateholders to receive amounts released from
the Class B Sub-account on a Distribution Date pursuant to clause
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(B) of the last paragraph of Section 4.6(c), the deposit of amounts in the Class
B Sub-account pursuant to clause first of Section 4.6(c)(ix) and distributions
in respect of the Class B Certificates on a Distribution Date pursuant to clause
second of Section 4.6(c)(ix) shall be and hereby are subordinated to the payment
of the amounts distributable pursuant to Sections 4.6(c)(i) through (vi). Any
amounts deposited in the Class B Sub-account pursuant to Section 4.6(c)(ix) will
be deemed (as reflected on the Servicer's Certificate) to have been paid to the
Class B Certificateholders for purposes of calculating the Class B Certificate
Balance. At such time as the Class A Certificates are paid in full and the
Certificate Insurer has received payment in full for all outstanding
Reimbursement Obligations and any other amounts owed to the Certificate Insurer
and the Term of the Policy (as defined in the Policy) has expired, the Class B
Certificateholders shall be entitled to exercise all rights granted to the Class
A Certificateholders under this Agreement.
(e) Each Certificateholder, by its acceptance of its Certificate, will
be deemed to have consented to the provisions of Section 4.6(c) and (d) relating
to the priority of distributions, and will be further deemed to have
acknowledged that no property rights in any amount or the proceeds of any such
amount shall vest in such Certificateholder until such amounts have been
distributed to such Certificateholder pursuant to such provisions; PROVIDED,
that the foregoing shall not restrict the right of any Certificateholder, upon
compliance with the provisions hereof from seeking to compel the performance of
the provisions hereof by the parties hereto. Each Certificateholder, by its
acceptance of the Certificate, will be deemed to have further agreed that
withdrawals of funds by the Collateral Agent from the Spread Account for
application hereunder, shall be made in accordance with the provisions of the
Spread Account Agreement.
In furtherance of and not in limitation of the foregoing, each Class B
Certificateholder and the Excess Cash Flow Certificateholder by acceptance of
its Class B Certificate or the Excess Cash Flow Certificate, as the case may be,
specifically acknowledges that no amounts shall be received by it, nor shall it
have any right to receive any amounts, unless and until such amounts have been
distributed pursuant to Section 4.6(c) or released pursuant to priority SEVENTH
of Section 3.03(b) of the Spread Account Agreement for distribution to such
Class B Certificateholder or the Excess Cash Flow Certificateholder, as the case
may be, pursuant to Section 4.6(c). Each Class B Certificateholder and the
Excess Cash Flow Certificateholder, by its acceptance of its Class B Certificate
or the Excess Cash Flow Certificate, as the case may be, further specifically
acknowledges that it has no right to or interest in any moneys at any time held
pursuant to the Spread Account Agreement or to the Class B Reserve Account
pursuant hereto prior to the release of such moneys as aforesaid, such moneys
being held in trust for the benefit of the Class A Certificateholders and the
Certificate Insurer, and with respect to moneys in the Class B Reserve Account,
for the benefit of the Class B Certificateholders 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 and/or in the Class
B Reserve Account constitute a pledge of collateral, then the provisions of this
Agreement and the Spread Account Agreement shall be considered to constitute a
security agreement and the Depositor, the Class B Certificateholders and the
Excess Cash Flow Certificateholder hereby grant to the Collateral Agent and to
the
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Trustee, respectively, a first priority perfected security interest in such
amounts, to be applied as set forth in Section 3.03(b) of the Spread Account
Agreement in the case of Spread Account moneys and Sections 4.6(c) and 4.7
hereof in the case of Class B Reserve Account moneys. In addition, each Class B
Certificateholder and the Excess Cash Flow Certificateholder, by acceptance of
its Certificate, hereby appoints the Depositor as its agent to pledge a first
priority perfected security interest in the Class B Sub-account, the Excess Cash
Flow Sub-account, and any property held therein from time to time to the
Collateral Agent for the benefit of the Trustee and the Certificate Insurer
pursuant to the Spread Account Agreement and agrees to execute and deliver such
instruments of conveyance, assignment, grant, confirmation, etc., as well as any
financing statements, in each case as the Certificate Insurer shall consider
reasonably necessary in order to perfect the Collateral Agent's Security
Interest in the Collateral (as such terms are defined in the Spread Account
Agreement) and each Class B Certificateholder and the Excess Cash Flow
Certificateholder, by acceptance of its Certificate, hereby appoints the
Depositor as its agent to pledge a first priority perfected security interest in
the Class B Reserve Account and any amounts held therein from time to time to
the Collateral Agent for the benefit of the Trustee and the Class B
Certificateholders and the Excess Cash Flow Certificateholder 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
Seller shall consider reasonably necessary in order to perfect the Collateral
Agent's security interest in the Class B Reserve Account.
(f) Subject to Section 10.1 respecting the final payment upon
retirement of each Certificate, the Servicer shall on each Distribution Date
instruct the Trustee to distribute to each Certificateholder of record on the
preceding Record Date either (i) by wire transfer, in immediately available
funds to the account of such Holder at a bank or other entity having appropriate
facilities therefor, if such Certificateholder is the Clearing Agency or such
Holder's Certificates in the aggregate evidence an original principal balance of
at least $1,000,000, and if such Certificateholder shall have provided to the
Trustee appropriate instructions prior to the Record Date for such Distribution
Date, or (ii) by check mailed to such Certificateholder at the address of such
Holder appearing in the Certificate Register, such Holder's Fractional Undivided
Interest of either the Class A Distributable Amount or the Class B Distributable
Amount in accordance with the Servicer's Certificate.
SECTION 4.7. CLASS B RESERVE ACCOUNT. (a) In order to effectuate the
subordination provided for herein and to assure that sufficient amounts to make
required distributions to the Certificateholders will be available, there shall
be established and maintained with the Trustee an Eligible Account entitled
"Class B Reserve Account--Long Beach Acceptance Auto Grantor Trust 1998-1" (the
"Class B Reserve Account"), which will include the money and other property
deposited and held therein pursuant to Sections 4.6(c)(vii) and (x) and this
Section 4.7. The Class B Reserve Account shall not be part of the Trust, but
instead will be held by the Trustee in a securities account maintained for the
Trustee by the Collateral Agent, constituting a security entitlement thereto,
for the benefit of the Class B Certificateholders. The Originator, the
Depositor, the Trustee and, by its acceptance of a Class B Certificate, each
Class B Certificateholder, each acknowledge that solely for federal and other
tax purposes, the
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Class B Certificateholders and the Excess Cash Flow Certificateholder shall be
deemed to own interests in a partnership the assets of which consist of the
Spread Account and the Class B Reserve Account (and any investment earnings
thereon). Each Class B Certificateholder and the Holder of the Excess Cash Flow
Certificate, by their acceptance thereof, agrees to treat the Spread Account,
the Class B Reserve Account and the rights to releases from the Trust into such
accounts (including any investment earnings derived therefrom) the same as such
partnership's assets for federal income tax purposes. The Excess Cash Flow
Certificateholder, by its acceptance of an Excess Cash Flow Certificate, further
acknowledges that any distributions received pursuant to clause (D) of the last
paragraph of Section 4.6(c) are pursuant to such partnership arrangement.
(b) On the Closing Date, the Depositor shall deposit the Class B
Reserve Account Initial Deposit into the Class B Reserve Account. On each
Subsequent Transfer Date, the Depositor shall deposit the related Class B
Reserve Account Subsequent Deposit into the Class B Reserve Account. In
addition, the Depositor may replace a portion of the amount deposited in the
Class B Reserve Account with a letter of credit to be provided to the
Depositor's affiliate, AMC, by a banking institution whose long-term debt
obligations are rated at least "Aa" by Moody's, in an amount equal to the amount
to be withdrawn from the Class B Reserve Account by the Depositor to effect such
substitution (such letter of credit, the "Letter of Credit"). The Depositor's
ability to substitute such Letter of Credit for a portion of the amount
deposited in the Class B Reserve Account shall be subject to the following
conditions precedent: (i) delivery by the Depositor to the Trustee, the Rating
Agencies and the Certificate Insurer of an Opinion of Counsel, in form and
substance acceptable to the Certificate Insurer, in its sole discretion, and
(ii) receipt of written confirmation from Moody's that the rating of the Class B
Certificates will not be qualified, modified or withdrawn. In the event that the
Letter of Credit is delivered to the Trustee and substituted for a portion of
the amount on deposit in the Class B Reserve Account and all conditions
precedent thereto have been satisfied, the Trustee shall, upon written request
from the Depositor, release the substituted portion of the amount on deposit in
the Class B Reserve Account to the Depositor.
(i) In order to give effect to the subordination provided for
herein and assure availability of the amounts maintained in the Class B
Reserve Account, the Depositor, as initial Holder of the Excess Cash
Flow Certificate, on behalf of itself, its successors and assigns, and
all future Excess Cash Flow Certificateholders by their acceptance of
an Excess Cash Flow Certificate, hereby sells, conveys and transfers to
the Collateral Agent and its successors and assigns, the Class B
Reserve Account Initial Deposit and all proceeds thereof, and hereby
pledges to the Collateral Agent and its successors and assigns, for the
benefit of the Trustee, all amounts deposited in or credited to the
Class B Reserve Account from time to time under this Agreement, all
Eligible Investments made with amounts on deposit therein, all earnings
and distributions thereon and proceeds thereof, subject, however, to
the limitations set forth below, and solely for the purpose of securing
and providing for payment of Class B Distributable Amounts, Class B
Interest Carryover Shortfalls, Class B Principal Carryover Shortfalls,
Class B Additional Interest Distributable Amounts and Class B
Additional Interest Carryover Shortfalls, in each case to the extent
provided in Section 4.6
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(all the foregoing, subject to the limitations set forth below, being
the "Class B Reserve Account Property"), to have and to hold all the
aforesaid property, rights and privileges unto the Collateral Agent its
successors and assigns, for the benefit of the Trustee, in trust for
the uses and purposes, and subject to the terms and provisions, set
forth in this Section. The Collateral Agent on behalf of the Trustee
hereby acknowledges such transfer and accepts the trusts hereunder and
shall hold and distribute the Class B Reserve Account Property in
accordance with the terms and provisions of this Section.
(ii) Consistent with the limited purposes for which such trust
is granted on each Distribution Date, the amounts on deposit in the
Class B Reserve Account shall be available for distribution as provided
in Section 4.6, in accordance with and subject to the following: if the
amount on deposit in the Class B Reserve Account (after giving effect
to all deposits thereto and withdrawals therefrom on such Distribution
Date) is greater than the Specified Class B Reserve Account Balance,
the Trustee shall release and distribute such excess to the Excess Cash
Flow Certificateholder pursuant to clause (E) of the last paragraph of
SECTION 4.6(c). Upon termination of this Agreement, any remaining
amounts in the Class B Reserve Account will be distributed to the
Excess Cash Flow Certificateholder and will constitute a termination of
the partnership that owns the Spread Account (including any
sub-accounts therein) and the Class B Reserve Account. Upon any such
distribution to the Excess Cash Flow Certificateholder, the Class A
Certificateholders and Class B Certificateholders will have no 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 Distribution Date in accordance with written
instructions from the Depositor and such investments shall not be sold or
disposed of prior to their maturity. All such investments shall be deemed to be
made at the direction of the Trustee and shall be made for the benefit of the
Trustee, and all income and gain realized thereon shall be solely for the
benefit of the Depositor subject to the security interest of the Trustee created
under SECTION 4.7(b)(ii). Realized losses, if any, on investment of the Class B
Reserve Account Property shall be charged first against undistributed investment
earnings attributable to the Class B Reserve Account Property.
The Trustee, the Depositor, as initial Holder of the Excess Cash Flow
Certificate, on behalf of itself, its successors and assigns, and all future
Excess Cash Flow Certificateholders by their acceptance of an Excess Cash Flow
Certificate, agree that:
(i) any Class B Reserve Account Property that is held in
deposit accounts shall be held solely in the name of the Collateral
Agent. Each such deposit account shall be subject to the exclusive
custody and control of the Collateral Agent, and the Collateral Agent
shall have sole signature authority with respect thereto;
67
(ii) any Class B Reserve Account Property that is a bankers
acceptance or is commercial paper, negotiable certificates of deposit
or another obligation that constitutes "instruments" within the meaning
of Section 9-105(1)(i) of the UCC or that is a "certificated security"
as defined in Section 8-102 of the UCC shall be delivered to the
Collateral Agent in accordance with paragraph (a) or (b), as
applicable, of the definition of "Delivery" and shall be held, pending
maturity or disposition, solely by the Collateral Agent or its
securities intermediary as described in such paragraphs (a) and (b) and
in accordance with Section 9.115 of the Uniform Commercial Code as
adopted in the State of Texas (the "Texas UCC");
(iii) any Class B Reserve Account Property that is a
book-entry security held through the Federal Reserve System pursuant to
Federal book-entry regulations shall be delivered in accordance with
paragraph (c), as applicable, of the definition of "Delivery" and shall
be maintained by the Collateral Agent, pending maturity or disposition,
through continued book-entry registration of such Class B Reserve
Account Property as described in such paragraph, and additionally,
shall be maintained in accordance with Section 9.115 of the Texas UCC;
and
(iv) any Class B Reserve Account Property that is an
uncertificated security as defined in Section 8-102(1)(b) of the UCC
and that is not governed by clause (ii) above shall be delivered to the
Collateral Agent in accordance with paragraph (d) of the definition of
"Delivery" and shall be maintained by the Collateral Agent, pending
maturity or disposition, through continued registration of the
Collateral Agent's (or its nominee's) ownership of such security, and
additionally, shall be maintained in accordance with Section 9.115 of
the Texas UCC.
Each of the Depositor, the Servicer, the Collateral Agent and the
Trustee agrees to take or cause to be taken such further actions, to execute,
deliver and file or cause to be executed, delivered and filed such further
documents and instruments (including, without limitation, any UCC financing
statements or this Agreement) as may be determined to be necessary to perfect
the interests created by this Section in favor of the Trustee or the Collateral
Agent and otherwise fully to effectuate the purposes, terms and conditions of
this Section. Except as heretofore provided with respect to Investment, the
Collateral Agent shall not comply or agree to comply with any order from the
Depositor or any other Person except the Trustee with respect to the disposition
of the Class B Reserve Account Property.
The Depositor shall:
(i) promptly execute, deliver and file any financing
statements, amendments, continuation statements, assignments,
certificates and other documents with respect to such interests and
perform all such other acts as may be necessary in order to perfect or
to maintain the perfection of the Collateral Agent's security interest
in the Class B Reserve Account Property; and
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(ii) make the necessary filings of financing statements or
amendments thereto within ten business days after the occurrence of any
of the following: (1) any change in its corporate name or any trade
name; (2) any change in the location of its chief executive office or
principal place of business; and (3) any merger or consolidation or
other change in its identity or corporate structure and promptly notify
the Trustee of any such filings.
(d) If on any Distribution Date the Total Distribution Amount is
insufficient to distribute the full amount described in clauses (vi) and (ix) of
Section 4.6(c), the Collateral Agent shall withdraw an amount from the Class B
Reserve Account (excluding any amount deposited therein on such Distribution
Date pursuant to Section 4.6(c)(vii)) equal to such insufficiency and deliver
the amount so withdrawn (the "Class B Reserve Account Draw") to the Trustee for
deposit in the Certificate Account for application (in the order of priority
provided by Section 4.6(c)) in respect of such insufficiencies and any such
disposition of the Class B Reserve Account Property is hereby deemed to be upon
the instruction of the Trustee.
SECTION 4.8. STATEMENTS TO CERTIFICATEHOLDERS; TAX RETURNS. (a) With
each distribution from the Certificate Account to the Certificateholders made on
a Distribution Date, the Servicer shall provide to the Certificate Insurer, the
Depositor, and to the Trustee, with a copy to each Rating Agency, for the
Trustee to forward to each Certificateholder of record a statement (prepared by
the Servicer) substantially in the form of Exhibit E hereto setting forth at
least the following information as to the Certificates to the extent applicable:
(i) the amount of such distribution allocable to principal of
the Class A Certificates and the Class B Certificates, respectively;
(ii) the amount of such distribution allocable to interest on
the Class A Certificates and the Class B Certificates, respectively;
(iii) the number of Receivables, the weighted average APR of
the Receivables, the weighted average maturity of the Receivables, the
Pool Balance, the weighted average Monthly Dealer Participation Fee,
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 Certificate Balance and the Class B
Certificate Balance as of the close of business on the last day of the
preceding Collection Period, after giving effect to payments allocated
to principal reported under clause (i) above;
(v) the amount of the Monthly Dealer Participation Fee
Distributable Amount paid to LBAC, the amount of the Servicing Fee paid
to the Servicer and the amount of the Back-up Servicer Fee paid to the
Back-up Servicer with respect to the related Collection Period, the
Class A Percentage of the sum of the Servicing Fee and the Back-up
Servicer Fee, the Class B Percentage of the
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sum of the Servicing Fee and the Back-up Servicer Fee, the amount of
any unpaid Servicing Fees and any unpaid Back-up Servicer Fees and the
change in such amounts from the prior Distribution Date;
(vi) The amount of the Class B Additional Interest Carryover
Shortfall, if applicable, on such Distribution Date and the Class B
Undistributed Principal Amount, if applicable, on such Distribution
Date, and the change in such amounts from the prior Distribution Date;
(vii) the Class B Additional Interest Distributable Amount;
(viii) the amount of the Class A Interest Carryover Shortfall,
if applicable, on such Distribution Date and the Class A Principal
Carryover Shortfall, if applicable, on such Distribution Date, and the
change in such amounts from the prior Distribution Date;
(ix) the amount of the Class B Interest Carryover Shortfall,
if applicable, on such Distribution Date, the Class B Additional
Interest Carryover Shortfall, if applicable, on such Distribution Date
and the Class B Principal Carryover Shortfall, if applicable, on such
Distribution Date, and the change in such amounts from the prior
Distribution Date;
(x) the amount paid, if any, to Class A Certificateholders
from funds received under the Policy for such Distribution Date;
(xi) the amount distributable to the Certificate Insurer on
such Distribution Date;
(xii) the aggregate amount in each of the Payahead Account,
the Spread Account (separately identifying amounts on deposit in the
Class B Sub-account and the Excess Cash Flow Sub-account) and the Class
B Reserve Account and the change in each such amount from the preceding
Distribution Date;
(xiii) the number of Receivables and the aggregate outstanding
principal amount scheduled to be paid thereon, for which the related
Obligors are delinquent in making Scheduled Payments between 30 and 59
consecutive days, 60 and 89 consecutive days, 90 and 119 consecutive
days and 120 consecutive days or more (in each case calculated on the
basis of a 360-day year of twelve 30-day months), as of the last day of
the related Collection Period, and the percentage of the aggregate
principal amount which such delinquencies represent;
(xiv) the number and the aggregate Purchase Amount of
Receivables that became Purchased Receivables during the related
Collection Period and summary information as to losses and
delinquencies with respect to the Receivables;
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(xv) the cumulative number and amount of Liquidated
Receivables, the cumulative amount of any Liquidation Proceeds and
Recoveries, since the Initial Cutoff Date to the last day of the
related Collection Period, the number and amount of Liquidated
Receivables for the related Collection Period and the amount of
Recoveries in the related Collection Period;
(xvi) the Delinquency Ratio, the Cumulative Default Rate,
the Cumulative Loss Rate and the Lockbox Percentage (as such terms are
defined in the Spread Account Agreement) for such Distribution Date;
(xvii) whether any Trigger Event has occurred as of such
Determination Date;
(xviii) 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;
(xix) whether an Insurance Agreement Event of Default has
occurred;
(xx) the number and amount of Cram Down Losses, the number and
dollar amount of repossessions, the aging of repossession inventory
with respect to Liquidated Receivables, the aging and repossession
inventory with respect to Receivables which are not Liquidated
Receivables and the dollar amount of Recoveries;
(xxi) for Distribution Dates during the Funding Period and the
Distribution Date immediately succeeding the Final Funding Period
Distribution Date, the amount withdrawn from the Pre-Funding Account to
purchase Subsequent Receivables during the related Collection Period
and the remaining Pre-Funded Amount on deposit in the Pre-Funding
Account;
(xxii) for Distribution Dates during the Funding Period and
the Distribution Date immediately succeeding the Final Funding Period
Distribution Date, the Negative Carry Amount in respect of the related
Collection Period withdrawn from the Capitalized Interest Account and
the amount remaining on deposit in the Capitalized Interest Account;
and
(xxiii) for the first Distribution Date that is on or
immediately following the end of the Funding Period, the amount of the
Pre-Funded Amount (if any) that has not been used to purchase
Subsequent Receivables and is being distributed as a payment of
principal to Offered Certificateholders.
Each amount set forth pursuant to subclauses (i), (ii), (v), (vi) and (vii)
above shall be expressed as a dollar amount per $ 1,000 of original principal
balance of a Certificate.
(b) No later than January 31 of each calendar year, commencing
January 31, 1999, the Servicer shall send to the Trustee, and the Trustee
shall, provided it has
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received the necessary information from the Servicer, promptly thereafter
finish to each Person who at any time during the preceding calendar year was
a Certificateholder of record and received any payment thereon (a) a report
(prepared by the Servicer) as to the aggregate of amounts reported pursuant
to subclauses (i), (ii) and (v) of Section 4.8(a) for such preceding calendar
year or applicable portion thereof during which such person was a
Certificateholder, and (b) such information as may be reasonably requested by
the Certificateholders or required by the Internal Revenue Code and
regulations thereunder, to enable such Holders to prepare their Federal and
State income tax returns. The obligation of the Trustee set forth in this
paragraph shall be deemed to have been satisfied to the extent that
substantially comparable information shall be provided by the Servicer
pursuant to any requirements of the Code.
(c) The Servicer, at its own expense, shall cause a firm of nationally
recognized accountants to prepare any tax returns required to be filed by the
Trust, including the partnership returns for interests held by the Class B
Certificateholders and the Excess Cash Flow Certificateholder in the entity that
owns the Spread Account (including any sub-account therein) and the Class B
Reserve Account, and the Trustee shall execute and file such returns if
requested to do so by the Servicer. The Trustee, upon request, will furnish the
Servicer with all such information known to the Trustee as may be reasonably
requested by the Servicer in connection with the preparation of all tax returns
of the Trust.
SECTION 4.9. [RESERVED]
SECTION 4. 10. RELIANCE ON INFORMATION FROM THE SERVICER.
Notwithstanding anything to the contrary contained in this Agreement, all
distributions from any of the accounts described in this Article IV and any
transfer of amounts between such accounts shall be made by the Trustee in
reliance on information provided to the Trustee by the Servicer in writing,
whether by way of a Servicer's Certificate or otherwise.
SECTION 4.11. OPTIONAL DEPOSITS BY THE CERTIFICATE INSURER. The
Certificate Insurer shall at any time, and from time to time, with respect to
a Distribution Date, have the option (but shall not be required, except as
provided in Section 4.6(e)) to deliver amounts to the Trustee for deposit
into the Collection Account for any of the following purposes: (i) to provide
funds in respect of the payment of fees or expenses of any provider of
services to the Trust with respect to such Distribution Date, (ii) to
distribute as a component of the Class A Principal Distributable Amount to
the extent that the Class A Certificate Balance as of the Determination Date
preceding such Distribution Date exceeds the Class A Percentage of the Pool
Balance as of such Determination Date, or (iii) to include such amount as
part of the Class A Distributable Amount for such Distribution Date to the
extent that without such amount a draw would be required to be made on the
Policy.
SECTION 4.12. SPREAD ACCOUNT. The Depositor agrees, simultaneously
with the execution and delivery of this Agreement, to execute and deliver the
Spread Account Agreement and, pursuant to the terms thereof, to deposit
$2,318,320.22 in the Excess Cash Flow Sub-account on the Closing Date. In
addition, on each Subsequent Transfer
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Date, pursuant to the terms of the Spread Account Agreement, the Depositor
shall deposit the related Subsequent Spread Account Deposit in the Excess
Cash Flow Sub-account. Although the Depositor as agent of the Class B
Certificateholders and as Excess Cash Flow Certificateholder, has pledged the
Spread Account to the Collateral Agent and the Certificate Insurer pursuant
to the Spread Account Agreement, the Spread Account shall not under any
circumstances be deemed to be a part of or otherwise includible in the Trust
or the Trust Assets. The Depositor hereby agrees that it shall not, without
the prior written consent of the Excess Cash Flow Certificateholder and any
pledgee, consent to any amendment to the Spread Account Agreement nor will it
exercise its option to enter into a Series Supplement (as such term is
defined in the Spread Account Agreement) if the effect of such Amendment or
Series Supplement is to permit the cross-collateralization of the Series
1998-1 Excess Cash Flow Sub-account (as such term is defined in the Spread
Account Agreement) with the Trust Estate of such Series.
SECTION 4.13. POLICY. The Originator agrees, simultaneously with the
execution and delivery of this Agreement, to cause the Certificate Insurer to
issue the Policy for the benefit of the Class A Certificateholders in
accordance with the terms thereof.
SECTION 4.14. WITHDRAWALS FROM SPREAD ACCOUNT. (a) In the event that
the Servicer's Certificate with respect to any Determination Date shall state
that the amount of the Total Distribution Amount with respect to such
Determination Date is less than the sum of the amounts payable on the related
Distribution Date pursuant to clauses (i) through (iv) and subclause first of
clause (v) of Section 4.6(c) (such deficiency being a "Deficiency Claim
Amount") then on the Deficiency Claim Date immediately preceding such
Distribution Date, the Trustee shall deliver to the Collateral Agent, the
Certificate Insurer, the Fiscal Agent (as such term is defined in the
Insurance Agreement), if any, the Servicer, by hand delivery, telex or
facsimile transmission, a written notice (a "Deficiency Notice") specifying
the Deficiency Claim Amount for such Distribution Date. Such Deficiency
Notice shall direct the Collateral Agent to remit such Deficiency Claim
Amount (to the extent of the funds available to be distributed pursuant to
the Spread Account Agreement) to the Trustee for deposit in the Collection
Account.
(b) Any Deficiency Notice shall be delivered by 10:00 a.m.,
New York
City time, on the related Deficiency Claim Date. The amounts distributed by
the Collateral Agent to the Trustee pursuant to a Deficiency Notice shall be
deposited by the Trustee into the Collection Account pursuant to Section 4.5.
SECTION 4.15. CLAIMS UNDER POLICY. (a) In the event that the Trustee
has delivered a Deficiency Notice with respect to any Determination Date, the
Trustee shall determine on the related Draw Date whether the sum of (i) the
amount of Total Distribution Amount with respect to such Determination Date
(as stated in the Servicer's Certificate with respect to such Determination
Date) plus (ii) the amount of the Deficiency Claim Amount, if any, to be
delivered by the Collateral Agent to the Trustee pursuant to a Deficiency
Notice delivered with respect to such Distribution Date (as stated in the
certificate delivered on the immediately preceding Deficiency Claim Date by
the Collateral Agent pursuant to Section 3.03(a) of the Spread Account
Agreement)
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would be insufficient, after giving effect to the distributions required by
Section 4.6(c)(i) and (ii), to pay the Guaranteed Distributions for the
related Distribution Date, then in such event the Trustee shall furnish to
the Certificate Insurer no later than 12:00 noon
New York City time on the
related Draw Date a completed Notice of Claim in the amount of the shortfall
in amounts so available to pay the Guaranteed Distributions with respect to
such Distribution Date (the amount of any such shortfall being hereinafter
referred to as the "Policy Claim Amount"). Amounts paid by the Certificate
Insurer under the Policy shall be deposited by the Trustee into the Policy
Payments Account and thereafter into the Certificate Account for payment to
Class A Certificateholders on the related Distribution Date (or promptly
following payment on a later date as set forth in the Policy).
(b) Any notice delivered by the Trustee to the Certificate Insurer
pursuant to Section 4.15(a) shall specify the Policy Claim Amount claimed
under the Policy and shall constitute a "Notice of Claim" under the Policy.
In accordance with the provisions of the Policy, the Certificate Insurer is
required to pay to the Trustee the Policy Claim Amount properly claimed
thereunder by 12:00 noon,
New York City time, on the later of (i) the second
Business Day (as defined in the Policy) following receipt on a Business Day
(as defined in the Policy) of the Notice of Claim, and (ii) the applicable
Distribution Date. Any payment made by the Certificate Insurer under the
Policy shall be applied solely to the payment of the Class A Certificates,
and for no other purpose.
(c) The Trustee shall (i) receive as attorney-in-fact of each Class
A Certificateholder any Policy Claim Amount from the Certificate Insurer and
(ii deposit the same in the Policy Payments Account for disbursement to the
Class A Certificateholders as set forth in clauses (iii) and (iv) of Section
4.6(c). Any and all Policy Claim Amounts disbursed by the Trustee from claims
made under the Policy shall not be considered payment by the Trust or from
the Spread Account with respect to such Class A Certificates, and shall not
discharge the obligations of the Trust with respect thereto. The Certificate
Insurer shall, to the extent it makes any payment with respect to the Class A
Certificates, become subrogated to the rights of the recipients of such
payments to the extent of such payments. Subject to and conditioned upon any
payment with respect to the Class A Certificates by or on behalf of the
Certificate Insurer, each Class A Certificateholder shall be deemed, without
further action, to have directed the Trustee to assign to the Certificate
Insurer all rights to the payment of interest or principal with respect to
the Class A Certificates which are then due for payment to the extent of all
payments made by the Certificate Insurer and the Certificate Insurer may
exercise any option, vote, right, power or the like with respect to the Class
A Certificates to the extent that it has made payment pursuant to the Policy.
Notwithstanding the foregoing, the order of priority of payments to be made
pursuant to Section 4.6(c) shall not be modified by this clause (c). To
evidence such subrogation, the Certificate Registrar shall note the
Certificate Insurer's rights as subrogee upon the register of Class A
Certificateholders upon receipt from the Certificate Insurer of proof of
payment by the Certificate Insurer of any Class A Interest Distributable
Amount or Class A Principal Distributable Amount.
(d) The Trustee shall be entitled, but not obligated, to enforce on
behalf of the Class A Certificateholders the obligations of the Certificate
Insurer under the Policy.
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Notwithstanding any other provision of this Agreement, the Class A
Certificateholders are not entitled to institute proceedings directly against
the Certificate Insurer.
SECTION 4.16. PREFERENCE CLAIMS, DIRECTION OF PROCEEDINGS. (a) In
the event that the Trustee has received a certified copy of an order of the
appropriate court that any Guaranteed Distribution paid on a Class A
Certificate has been avoided in whole or in part as a preference payment
under applicable bankruptcy law, the Trustee shall so notify the Certificate
Insurer, shall comply with the provisions of the Policy to obtain payment by
the Certificate Insurer of such avoided payment, and shall, at the time it
provides notice to the Certificate Insurer, shall comply with the provisions
of the Policy to obtain payment by the Certificate Insurer, notify Holders of
the Class A Certificates by mail that, in the event that any Class A
Certificateholder's payment is so recoverable, such Class A Certificateholder
will be entitled to payment pursuant to the terms of the Policy. Pursuant to
the terms of the Policy, the Certificate Insurer will make such payment on
behalf of the Class A Certificateholder to the receiver, conservator,
debtor-in-possession or trustee in bankruptcy named in the Order (as defined
in the Policy) and not to the Trustee or any Class A Certificateholder
directly (unless a Class A Certificateholder has previously paid such payment
to the receiver, conservator, debtor-in-possession or trustee in bankruptcy,
in which case the Certificate Insurer will make such payment to the Trustee
for distribution, in accordance with the instructions to be provided by the
Certificate Insurer, to such Class A Certificateholder upon proof of such
payment reasonably satisfactory to the Certificate Insurer).
(b) Each Notice of Claim shall provide that the Trustee, on its
behalf and on behalf of the Class A Certificateholders, thereby appoints the
Certificate Insurer as agent and attorney-in-fact for the Trustee and each
Class A Certificateholder in any legal proceeding with respect to the Class A
Certificates. The Trustee shall promptly notify the Certificate Insurer of
any proceeding or the institution of any action (of which a Responsible
Officer of the Trustee has actual knowledge) seeking the avoidance as a
preferential transfer under applicable bankruptcy, insolvency, receivership,
rehabilitation or similar law (a "Preference Claim") of any distribution made
with respect to the Class A Certificates. Each Holder of Class A
Certificates, by its purchase of Class A Certificates, and the Trustee hereby
agree that so long as an Insurer Default shall not have occurred and be
continuing, the Certificate Insurer may at any time during the continuation
of any proceeding relating to a Preference Claim direct all matters relating
to such Preference Claim including, without limitation, (i) the direction of
any appeal of any order relating to any Preference Claim and (ii) the posting
of any surety, supersedeas or performance bond pending any such appeal at the
expense of the Certificate Insurer, but subject to reimbursement as provided
in the Insurance Agreement. In addition, and without limitation of the
foregoing, as set forth in Section 4.15(c), the Certificate Insurer shall be
subrogated to, and each Class A Certificateholder and the Trustee hereby
delegate and assign, to the fullest extent permitted by law, the rights of
the Trustee and each Class A Certificateholder in the conduct of any
proceeding with respect to a Preference Claim, including, without limitation,
all rights of any party to an adversary proceeding action with respect to any
court order issued in connection with any such Preference Claim.
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SECTION 4.17. SURRENDER OF POLICY. The Trustee shall surrender the
Policy to the Certificate Insurer for cancellation upon its expiration in
accordance with the terms thereof.
SECTION 4.18. SIMPLE INTEREST ADVANCES. On each Determination Date,
the Servicer shall determine the amount, if any, of any Simple Interest
Shortfall or Simple Interest Excess for the related Collection Period. If the
Servicer determines that there is a Simple Interest Shortfall for such
related Collection Period, the Servicer shall make an advance (a "Simple
Interest Advance") in the amount of such Simple Interest Shortfall and
deposit such Simple Interest Advance into the Collection Account on or before
the Business Day immediately preceding the next succeeding Distribution Date.
If, however, the Servicer determines that there is a Simple Interest Excess
for such Collection Period, the Trustee shall withdraw the amount of such
Simple Interest Excess from the Collection Account on the next Distribution
Date and pay the amount of such Simple Interest Excess to the Servicer as
additional servicing compensation. Notwithstanding the immediately preceding
sentence, to the extent that the aggregate amount of Simple Interest Advances
made by the Servicer with respect to all prior Collection Periods does not
exceed the aggregate amount of all Simple Interest Excesses with respect to
such prior Collection Periods, such excess shall be deposited pursuant to
Section 4.6(b) into the Excess Cash Flow Sub-account on behalf of the
Servicer and shall be treated as a contribution by the Servicer for the
benefit of the Holder of the Excess Cash Flow Certificate for federal income
tax purposes.
SECTION 4.19. PRE-FUNDING ACCOUNT.
(a) Pursuant to Section 4.1(b), the Trustee shall establish and
maintain the Pre-Funding Account as an Eligible Account in the name of the
Trustee on behalf of the Trust for the benefit of the Certificateholders and
the Certificate Insurer.
(b) On the Closing Date, the Depositor will deposit in the
Pre-Funding Account an amount equal to the Original Pre-Funded Amount from
the proceeds of the sale of the Offered Certificates. On each Subsequent
Transfer Date, the Servicer shall instruct the Trustee in writing to withdraw
from the Pre-Funding Account an amount equal to the Principal Balance of the
Subsequent Receivables (as of the related Subsequent Cutoff Date) sold to the
Trust on such Subsequent Transfer Date and pay such amount to or upon the
order of the Depositor upon satisfaction of the. conditions set forth in this
Agreement and in the related Transfer Agreement with respect to such transfer.
(c) If (i) the Pre-Funded Amount has not been reduced to zero by the
close of business on the Final Funding Period Distribution Date or (ii) the
Pre-Funded Amount has been reduced to $100,000 or less as of any Distribution
Date during the Funding Period, in either case after giving effect to any
reductions in the Pre-Funded Amount on such Distribution Date pursuant to
Section 4.19(b), the Servicer shall instruct the Trustee to withdraw such
remaining portion of the Pre-Funded Amount from the Pre-Funding Account and
deposit it in the Certificate Account on such Distribution Date to be applied
to a partial prepayment of the Offered Certificates to be paid pro rata in
accordance with the Class A Percentage and the Class B Percentage, in
addition to the payment of
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principal and interest that otherwise would be payable with respect to such
Offered Certificates on such Distribution Date.
SECTION 4.20. CAPITALIZED INTEREST ACCOUNT.
(a) Pursuant to Section 4. 1 (b), the Capitalized Interest Account
shall be an Eligible Account established by the Trustee in the name of the
Trustee for the benefit of the Certificateholders and the Certificate Insurer
and maintained with the Collateral Agent. On the Closing Date, the Depositor
will deposit in the Capitalized Interest Account an amount equal to
$638,876.72 (such amount, the "Capitalized Interest Account Deposit").
(b) In order to assure availability of the amounts maintained in the
Capitalized Interest Account, the Depositor, on behalf of itself, its
successors and assigns, hereby sells, conveys and transfers to the Collateral
Agent and its successors and assigns, the Capitalized Interest Account
Deposit and all proceeds thereof, and hereby pledges to the Collateral Agent
and its successors and assigns, for the benefit of the Trustee and the
Certificate Insurer, all amounts deposited in or credited to the Capitalized
Interest Account from time to time under this Agreement, all Eligible
Investments made with amounts on deposit therein, all earnings and
distributions thereon and proceeds thereof, subject, however, to the
limitations set forth below, and solely for the purpose of securing and
providing for payment of distributions on the Certificates, in each case to
the extent provided in Section 4.6 (all the foregoing, subject to the
limitations set forth below, being the "Capitalized Interest Account
Property"), to have and to hold all the aforesaid property, rights and
privileges unto the Collateral Agent, its successors and assigns, for the
benefit of the Trustee and the Certificate Insurer, in trust for the uses and
purposes, and subject to the terms and provisions, set forth in this Section.
The Collateral Agent on behalf of the Trustee and the Certificate Insurer
hereby acknowledges such transfer and accepts the trusts hereunder and shall
hold and distribute the Capitalized Interest Account Property in accordance
with the terms and provisions of this Section.
(i) Consistent with the limited purposes for which such trust
is granted on each Distribution Date, the amounts on deposit in the
Capitalized Interest Account shall be available for deposit to the
Certificate Account pursuant to Section 4.6(a)(iv) for distribution as
provided in Section 4.6(c). On the Final Funding Period Distribution
Date, any remaining amounts in the Capitalized Interest Account will be
paid directly to the Depositor. Upon any such distribution to the
Depositor, the Class A Certificateholders and Class B
Certificateholders will have no further rights in, or claims to, such
amounts.
(c) Amounts held in the Capitalized Interest Account shall be
invested by the Collateral Agent in Eligible Investments which shall mature
no later than the Business Day immediately preceding the next Distribution
Date in accordance with written instructions from the Depositor and such
investments shall not be sold or disposed of prior to their maturity. All
such investments shall be deemed to be made at the direction of the Trustee
and shall be made for the benefit of the Trustee, and all income and gain
realized thereon shall be solely for the benefit of, and taxable to, the
Depositor subject to
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the security interest of the Trustee created under Section 4.20(b)(i).
Realized losses, if any, on investment of the Capitalized Interest Account
Property shall be charged first against undistributed investment earnings
attributable to the Capitalized Interest Account Property.
The Trustee and the Depositor on behalf of itself, its successors
and assigns, agree that:
(i) any Capitalized Interest Account Property that is held in
deposit accounts shall be held solely in the name of the Collateral
Agent. Each such deposit account shall be subject to the exclusive
custody and control of the Collateral Agent, and the Collateral Agent
shall have sole signature authority with respect thereto;
(ii) any Capitalized Interest Account Property that is a
bankers acceptance or is commercial paper, negotiable certificates of
deposit or another obligation that constitutes "instruments" within the
meaning of Section 9-105(l)(i) of the UCC or that is a "certificated
security" as defined in Section 8-102 of the UCC shall be delivered to
the Collateral Agent in accordance with paragraph (a) or (b), as
applicable, of the definition of "Delivery" and shall be held, pending
maturity or disposition, solely by the Collateral Agent or its
securities intermediary as described in such paragraphs (a) and (b),
and in accordance with Section 9.115 of the Texas UCC;
(iii) any Capitalized Interest Account Property that is a
book-entry security held through the Federal Reserve System pursuant to
Federal book-entry regulations shall be delivered in accordance with
paragraph (c), as applicable, of the definition of "Delivery" and shall
be maintained by the Collateral Agent, pending maturity or disposition,
through continued book-entry registration of such Capitalized Interest
Account Property as described in such paragraph, and additionally,
shall be maintained in accordance with Section 9.115 of the Texas UCC;
and
(iv) any Capitalized Interest Account Property that is an
uncertificated security as defined in Section 8-102(l)(b) of the UCC
and that is not governed by clause (ii) above shall be delivered to the
Collateral Agent in accordance with paragraph (d) of the definition of
"Delivery" and shall be maintained by the Collateral Agent, pending
maturity or disposition, through continued registration of the
Collateral Agent's (or its nominees) ownership of such security, and
additionally, shall be maintained in accordance with Section 9.115 of
the Texas UCC.
Each of the Depositor, the Servicer, the Collateral Agent and the
Trustee agrees to take or cause to be taken such further actions, to execute,
deliver and file or cause to be executed, delivered and filed such further
documents and instruments (including, without limitation, any UCC financing
statements or this Agreement) as may be determined to be necessary to perfect
the interests created by this Section in favor of the Trustee or the
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Collateral Agent and otherwise fully to effectuate the purposes, terms and
conditions of this Section. Except as heretofore provided with respect to
investment, the Collateral Agent shall not comply or agree to comply with any
order from the Depositor or any other Person except the Trustee with respect
to the disposition of the Capitalized Interest Account Property.
The Depositor shall:
(i) promptly execute, deliver and file any financing
statements, amendments, continuation statements, assignments,
certificates and other documents with respect to such interests and
perform all such other acts as may be necessary in order to perfect or
to maintain the perfection of the Collateral Agent's security interest
in the Capitalized Interest Account Property; and
(ii) make the necessary filings of financing statements or
amendments thereto within ten business days after the occurrence of any
of the following: (1) any change in its corporate name or any trade
name; (2) any change in the location of its chief executive office or
principal place of business; and (3) any merger or consolidation or
other change in its identity or corporate structure and promptly notify
the Trustee of any such filings.
ARTICLE V
THE CERTIFICATES
SECTION 5. 1. THE CERTIFICATES. The Trustee shall, upon written
order or request signed in the name of the Depositor by one of its officers
authorized to do so and delivered to a Trustee Officer, execute on behalf of
the Trust, authenticate and deliver the Certificates to, or upon the order
of, the Depositor in the aggregate principal amount and denominations as set
forth in such written order or request. The Class A Certificates shall be
issuable in minimum denominations of fifty thousand dollars ($50,000) and
integral multiples of one thousand dollars ($1,000) in excess thereof. The
Class B Certificates shall be issuable in minimum denominations of five
hundred thousand dollars ($500,000) (or, in the case of not more than 20
Class B Certificates, two hundred and fifty thousand dollars ($250,000) and,
in the case of not more than 10 Class B Certificates, one hundred thousand
dollars ($100,000)) and integral multiples of one thousand dollars ($1,000)
and integral multiples of one thousand dollars ($1,000) in excess thereof.
The Class A Certificates shall be issued in fully registered book-entry form.
The Class B Certificates shall be issued in fully registered definitive form.
The Certificates shall be executed on behalf of the Trust by manual or
facsimile signature of a Trustee Officer. Certificates bearing the manual or
facsimile signatures of individuals who were, at the time when such
signatures shall have been affixed, authorized to sign on behalf of the
Trustee, shall be valid and binding obligations of the Trust, notwithstanding
that such individuals or any of them shall have ceased to be so authorized
prior to the authentication and delivery of such Certificates or did not hold
such offices at the date of such Certificates.
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SECTION 5.2. APPOINTMENT OF PAYING AGENT. The Trustee may act as or
appoint one or more paying agents (each, a "Paying Agent"). The Paying Agent
shall make distributions to Certificateholders from amounts delivered by the
Trustee to the Paying Agent from amounts on deposit in the Certificate
Account pursuant to Article IV. Either the Trustee or the Certificate Insurer
may remove the Paying Agent if such Person determines in its sole discretion
that the Paying Agent shall have failed to perform its obligations under this
Agreement in any material respect. The Paying Agent shall initially be the
Trustee. A co-paying agent may be chosen by the Trustee. Any co-paying agent
or any successor Paying Agent shall be permitted to resign as Paying Agent,
co-paying agent or successor Paying Agent, as the case may be, upon 30 days'
written notice to the Trustee, the Depositor and the Certificate Insurer. In
the event that the Trustee, any co-paying agent or any successor Paying Agent
shall no longer be the Paying Agent, co-paying agent or successor Paying
Agent, as the case may be, the Trustee, with the Certificate Insurer's
reasonable consent, shall appoint a successor to act as Paying Agent or
co-paying agent. The Trustee shall cause each Paying Agent and each successor
Paying Agent or any additional Paying Agent appointed by the Trustee (other
than the Trustee, which hereby agrees) to execute and deliver to the Trustee
an instrument in which such Paying Agent, successor Paying Agent or
additional Paying Agent shall agree with the Trustee that, as Paying Agent,
such Paying Agent, successor Paying Agent or additional Paying Agent will
hold all sums, if any, held by it for payment to the Certificateholders in
trust for the benefit of the Certificateholders entitled thereto in an
Eligible Account (which may be maintained with such Paying Agent) until such
sums shall be paid to such Certificateholders and shall promptly notify the
Trustee of any default in making such payment. The Paying Agent shall return
all unclaimed funds to the Trustee and upon removal of a Paying Agent shall
also return all funds in its possession to the Trustee. The provisions of
Sections 9.3 and 9.4 shall apply to each Paying Agent in its role as Paying
Agent. The fees of any Paying Agent or co-paying agent shall be paid by the
Trustee. Each Paying Agent and co-paying agent must be acceptable to the
Depositor.
SECTION 5.3. AUTHENTICATING AGENT. (a) The Trustee may appoint one
or more authenticating agents with respect to the Certificates which shall be
authorized to act on behalf of the Trustee in authenticating the Certificates
in connection with the issuance, delivery, registration of transfer, exchange
or repayment of the Certificates (the "Authenticating Agent"). Whenever
reference is made in this Agreement to the authentication of Certificates by
the Trustee or the Trustee's certificate of authentication, such reference
shall be deemed to include authentication by an Authenticating Agent and a
certificate of authentication executed on behalf of the Trustee by an
Authenticating Agent. Each Authenticating Agent must be acceptable to the
Depositor and the Certificate Insurer. The Trustee is hereby appointed as the
initial Authenticating Agent.
(b) Any institution succeeding to the corporate agency business of
an Authenticating Agent shall continue to be an Authenticating Agent without
the execution or filing of any paper or any further act on the part of the
Trustee or such Authenticating Agent.
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(c) Any Authenticating Agent may at any time resign by giving written
notice of resignation to the Trustee and to the Depositor. The Trustee may at
any time terminate the agency of an Authenticating Agent by giving notice of
termination to such Authenticating Agent and to the Depositor. Upon receiving
such a notice of resignation or upon such a termination, or in case at any time
an Authenticating Agent shall cease to be acceptable to the Trustee or the
Depositor or the Certificate Insurer, the Trustee may appoint a successor
Authenticating Agent. Any successor Authenticating Agent upon acceptance of its
appointment hereunder shall become vested with all the rights, powers and duties
of its predecessor hereunder with like effect as if originally named as an
Authenticating Agent. No successor Authenticating Agent shall be appointed
unless acceptable to the Trustee, the Depositor and the Certificate Insurer.
(d) The Trustee agrees to pay to each Authenticating Agent from its own
funds from time to time reasonable compensation for its services under this
Section 5.3.
(e) The provisions of Sections 9.3 and 9.4 shall be applicable to any
Authenticating Agent.
(f) Pursuant to an appointment made under this Section 5.3, the
Certificates may have endorsed thereon, in lieu of the Trustee's certificate of
authentication, an alternate certificate of authentication in substantially the
following form:
This is one of the Certificates described in the
Pooling and Servicing
Agreement.
[ ]
as Authenticating Agent for the Trustee,
By
Authorized Signatory
SECTION 5.4. AUTHENTICATION OF CERTIFICATES. The Trustee shall cause
the Certificates to be executed on behalf of the Trust, authenticated, and
delivered to or upon the written order of the Depositor, signed by its chairman
of the board, its president, or any vice president, without further corporate
action by the Depositor, in authorized denominations, pursuant to this
Agreement. No Certificate shall entitle its Holder to any benefit under this
Agreement, or shall be valid for any purpose, unless there shall appear on such
Certificate a certificate of authentication substantially in the form set forth
in Exhibit A or Exhibit B hereto or in Section 5.3, as the case may be, executed
by the Trustee by manual signature; such authentication shall constitute
conclusive evidence that such Certificate shall have been duly authenticated and
delivered hereunder. All Certificates issued on the Closing Date shall be dated
the Closing Date. All Certificates issued upon transfer or exchange thereafter
shall be dated the date of their authentication.
SECTION 5.5. REGISTRATION OF TRANSFER AND EXCHANGE OF CERTIFICATES. (a)
The Certificate Registrar shall maintain a Certificate Register in which,
subject to such reasonable regulations as it may prescribe, the Certificate
Register shall provide for the registration of Certificates and transfers and
exchanges of Certificates as provided in this
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Agreement. The Trustee is hereby initially appointed Certificate Registrar for
the purpose of registering Certificates and transfers and exchanges of
Certificates as provided in this Agreement. In the event that, subsequent to the
Closing Date, the Trustee notifies the Depositor that it is unable to act as
Certificate Registrar, the Depositor shall appoint another bank or trust
company, having an office or agency located in the Borough of Manhattan, The
City of New York, agreeing to act in accordance with the provisions of this
Agreement applicable to it, and otherwise acceptable to the Trustee, to act as
successor Certificate Registrar under this Agreement.
No transfer of a Certificate shall be made unless (I)(a) such transfer
(i) is made pursuant to an effective registration statement under the Securities
Act and any applicable state securities laws or (ii) is exempt from the
registration requirements under the Securities Act and such state securities
laws or (b) the Certificate Registrar is notified by such transferee that, with
respect to the Class A Certificates, such Certificate will be registered in the
name of the Clearing Agency or its nominee and shall be held by such transferee
in book-entry form through the Clearing Agency, and (II) such transfer is to a
Person that satisfies the requirements of paragraph (a)(2)(i) or (a)(2)(ii) of
Rule 3a-7 as then in effect or any successor rule ("Rule 3a-7") under the
Investment Company Act. Each prospective purchaser of a Non-Registered
Certificate shall deliver a completed and duly executed Transferee's Certificate
(in the form of Exhibit F-1 for "qualified institutional buyers" or Exhibit F-2
for "accredited investors"), and each prospective purchaser of a Registered
Certificate shall deliver a completed and duly executed Transferee's Certificate
in the form of Exhibit F-3, to the Trustee and to the Depositor for inspection
prior to effecting any requested transfer; except that in the case of a transfer
of any Class B Certificate or the Excess Cash Flow Certificate to a Bankruptcy
Remote Entity or a business trust as permitted under Section 5.5(d), such
Transferee's Certificate shall be delivered by the equity owner of, or owner of
the beneficial ownership interest in, such Bankruptcy Remote Entity or business
trust and, in such case, the Transferee's Certificate that is delivered shall
pertain to such Person's acquisition of such equity or beneficial ownership
interest (and the form for the appropriate Transferee's Certificate shall
contain such modifications as the Trustee may approve so that it pertains to
the acquisition of such equity or beneficial ownership interest, rather than
to acquisition of Certificates) and no such Transferee's Certificate need be
delivered, in such case, in the name of the Bankruptcy Remote Entity or business
trust with respect to the transfer thereto of such Class B Certificate or the
Excess Cash Flow Certificate. Each prospective transferor of a Non-Registered
Certificate not held in book-entry form (other than with respect to the initial
transfer of any such Certificate by Greenwich Capital Markets, Inc. or any
affiliate thereof as the initial transferee of the Depositor) shall deliver a
completed and duly executed transferor's Certificate in the form of Exhibit F-4
to the Trustee for inspection prior to effecting any requested transfer. The
Depositor and the Trustee may rely conclusively upon the information contained
in any such Transferee's Certificate and transferor's Certificate in the absence
of knowledge to the contrary. In connection with any transfer (other than the
transfer of any Certificate that is or has become a Registered Certificate on or
before such transfer or any transfer of a Certificate held in book-entry form),
the Trustee may (except in the case of (x) the initial transfer of any such
Certificate by Greenwich Capital Markets, Inc. or any affiliate thereof, as the
initial transferee of the Depositor, (y) a transfer to a "qualified
institutional buyer" who delivers
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a Transferee's Certificate in the form of Exhibit F-1 or (z) a transfer to an
institutional "accredited investor" who delivers a Transferee's Certificate in
the form of Exhibit F-2)) require an Opinion of Counsel to the effect that such
transfer may be effected without registration under the Securities Act, which
Opinion of Counsel, if so required, shall be addressed to the Depositor and the
Trustee and shall be secured at the expense of the Holder. The Trustee may rely
upon the representation of any Transferee made to the Trustee, and upon such
Opinion of Counsel, and shall be fully protected in so doing. Any Certificate
Owners shall be deemed to have agreed to these restrictions on transfer.
Under no circumstances may an institutional "accredited investor"
within Regulation D of the Securities Act take delivery in the form of a
beneficial interest in a book-entry Class A Certificate if such purchaser is not
a "qualified institutional buyer" as defined under Rule 144A under the
Securities Act.
(b) If an election is made to hold Certificates in book-entry form, the
Certificates shall be registered in the name of a nominee designated by the
Clearing Agency (and may be aggregated as to denominations with other
Certificates held by the Clearing Agency). With respect to Certificates held in
book-entry form:
(1) the Certificate Registrar and the Trustee will be entitled
to deal with the Clearing Agency for all purposes of this Agreement
(including the payment of principal of and interest on the Certificates
and the giving of instructions or directions hereunder) as the sole
holder of the Certificates, and shall have no obligation to the
Certificate Owners;
(2) the rights of Certificate Owners will be exercised only
through the Clearing Agency and will be limited to those established by
law and agreements between such Certificate Owners and the Clearing
Agency and/or the Clearing Agency Participants pursuant to the
Depository Agreement;
(3) whenever this Agreement requires or permits actions to be
taken based upon instructions or directions of Holders of Certificates
evidencing a specified percentage of the Class A Certificate Balance,
the Clearing Agency will be deemed to represent such percentage only to
the extent that it has received instructions to such effect from
Certificate Owners and/or Clearing Agency Participants owning or
representing, respectively, such required percentage of the beneficial
interest in the Certificates and has delivered such instructions to the
Trustee; and
(4) without the consent of the Depositor and the Trustee, no
such Certificate may be transferred by the Clearing Agency except to a
successor Clearing Agency that agrees to hold such Certificate for the
account of the Certificate Owners or except upon the election of the
Certificate Owner thereof or a subsequent transferee to hold such
Certificate in physical form.
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Neither the Trustee nor the Certificate Registrar shall have any
responsibility to monitor or restrict the transfer of beneficial ownership in
any Certificate an interest in which is transferable through the facilities of
the Clearing Agency.
If (i)(A) the Depositor advises the Trustee in writing that the
Clearing Agency is no longer willing or able to properly discharge its
responsibilities with respect to the Class A Certificates as described in the
Depository Agreement and (B) the Depositor is unable to locate a qualified
successor with respect to which (unless an Insurer Default has occurred and is
continuing) the Certificate Insurer has provided its prior written consent, (ii)
the Depositor at its option advises the Trustee in writing that it elects to
terminate the book-entry system through the Clearing Agency, or (iii) after the
occurrence of an Event of Default, the Certificate Insurer (or, if an Insurer
Default has occurred and is continuing, Certificate Owners representing
beneficial interests in Class A Certificates aggregating not less than a
majority of the Class A Certificate Balance) advise the Trustee and the Clearing
Agency through the Clearing Agency Participants in writing that the continuation
of a book-entry system through the Clearing Agency with respect to such class is
no longer in the best interests of the related Certificate Owners, then the
Trustee shall notify all such Certificate Owners, through the Clearing Agency,
and the Certificate Insurer of the occurrence of any such event and of the
availability of definitive Certificates to such Certificate Owners requesting
the same. Upon surrender to the Trustee of the related Certificates by the
Clearing Agency accompanied by registration instructions from the Clearing
Agency, the Trustee shall issue definitive Certificates and deliver such
definitive Certificates in accordance with the instructions of the Clearing
Agency. None of the Depositor, the Certificate Registrar nor the Trustee shall
be liable for any delay in delivery of such instructions and may conclusively
rely on, and shall be protected in relying on, such instructions. Upon the
issuance of definitive Certificates, the Trustee shall recognize the Holders of
the definitive Certificates as Certificateholders hereunder. The Trustee shall
not be liable if the Depositor is unable to locate a qualified successor
Clearing Agency.
(c) No transfer of a Class B Certificate or the Excess Cash Flow
Certificate shall be made to any Person unless the Trustee and the Depositor
have received (A) a certificate (substantially in the form of Exhibit G) from
such transferee to the effect that such transferee (i) is not a Plan or a Person
that is using the assets of a Plan to acquire such Certificate or (ii) is an
insurance company investing assets of its general account and the exemptive
relief provided by Sections I and III of Department of Labor Prohibited
Transaction Class Exemption 95-60, 60 Fed. Reg. 35925 (July 12, 1995) (the
"Exemption") is available with respect to the transferee's acquisition and
holding of any such Certificate; PROVIDED, HOWEVER, that the Trustee will not
require such certificate in the event that, as a result of a change of law or
otherwise, counsel satisfactory to the Trustee, the Servicer and the Depositor
has rendered an opinion to the effect that the purchase and holding of any such
Certificate by a Plan or a Person using the assets of a Plan will not constitute
or result in a prohibited transaction under ERISA or Section 4975 of the Code.
The preparation and delivery of the certificate and opinion referred to above
shall not be an expense of the Trust, the Trustee, the Servicer or the Depositor
but shall be borne by the transferor.
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(d) No transfer, pledge or encumbrance of a Class B Certificate or
the Excess Cash Flow Certificate shall be made to any Person unless such
Person is a Rated Entity, a Bankruptcy Remote Entity or a business trust
established under Chapter 38 of Title 12 of the Delaware Code, 12 Del. C.
Section 3801 et seq. that is a Bankruptcy Remote Entity, or, in the case of
the Excess Cash Flow Certificate, Greenwich Capital Financial Products, Inc.
("GCFP"); PROVIDED, HOWEVER, that in the event GCFP forecloses on its
security interest in the Excess Cash Flow Certificate, the Excess Cash Flow
Certificate may be registered in the name of a Person that is not a
Bankruptcy Remote Entity for a period not to exceed two Business Days. Notice
of any transfer of the Excess Cash Flow Certificates shall be given by the
transferor to Xxxxx'x. In addition, no transfer of a Class B Certificate or
the Excess Cash Flow Certificate shall be made unless the related transferor
(i) has delivered to each of the Trustee and the Certificate Insurer an
Opinion of Counsel addressed to each of the Trustee and the Certificate
Insurer, in form and substance satisfactory to each of the Trustee and the
Certificate Insurer, stating that such transfer will not (A) adversely affect
the status of the Trust as a grantor trust pursuant to subpart E, part I of
the subchapter J of the Code and (B) cause the Excess Cash Flow Sub-account
or the Class B Reserve Account to be treated as taxable as a corporation and
(ii) has delivered to Xxxxx'x and the Certificate Insurer (A) notice of the
identity of the prospective transferee and (B) in the case of a Bankruptcy
Remote Entity, an Opinion of Counsel relating to non-consolidation of the
assets of such Bankruptcy Remote Entity with the assets of its parent entity.
For purposes of the preceding sentence, a transfer shall not include a
transfer to a party that is a member of the transferor's "Affiliate Group" as
that term is defined in Section 1501 of the Internal Revenue Code. The Class
B Certificates and the Excess Cash Flow Certificate shall each at all times
be registered in the name of a single holder (which need not be the same
entity with respect to the Class B Certificates and the Excess Cash Flow
Certificate).
(e) The Certificates, until such time, if at all, as they become
Registered Certificates, shall bear legends stating that they have not been
registered under the Securities Act and are subject to the restrictions on
transfer described in Section 5.5(a). The Class B Certificates and the Excess
Cash Flow Certificate shall additionally bear legends stating that they are
subject to the restrictions on transfer described in Section 5.5(c). By
purchasing a Certificate, each purchaser shall be deemed to have agreed to
these restrictions on transfer.
(f) In order to preserve the exemption for resales and transfers
provided by Rule 144A under the Securities Act, the Depositor shall provide to
any Holder of a Non-Registered Certificate and any prospective purchaser
designated by such Holder, upon request of such Holder or such prospective
purchaser, such information required by Rule 144A as will enable the resale of
such Non-Registered Certificate to be made pursuant to Rule 144A. The Servicer
and the Trustee shall cooperate with the Depositor in providing the Depositor
such information regarding the Non-Registered Certificates, the Receivables and
other matters regarding the Trust as the Depositor shall reasonably request to
meet its obligations under the preceding sentence.
(g) Upon surrender for registration of transfer of any Certificate at
the Corporate Trust Office, the Trustee shall execute, authenticate and deliver,
in the name of the
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designated transferee or transferees, one or more new Certificates of the same
Class in authorized denominations of a like aggregate principal amount.
(h) At the option of a Certificateholder, such Holder's Certificates
may be exchanged for other Certificates of the same Class in authorized
denominations of a like aggregate principal amount, upon surrender of the
Certificates to be exchanged at any such office or agency. Whenever any
Certificates are so surrendered for exchange the Trustee on behalf of the Trust
shall execute, authenticate and deliver the Certificates that the
Certificateholder making the exchange is entitled to receive. Every Certificate
presented or surrendered for registration of transfer or exchange shall be
accompanied by a written instrument of transfer in form satisfactory to the
Trustee and the Certificate Registrar duly executed by the Holder thereof or his
attorney duly authorized in writing.
(i) No service charge shall be made for any registration of transfer
or exchange of Certificates, but the Trustee may require payment of a sum
sufficient to cover any tax or governmental charge that may be imposed in
connection with any transfer or exchange of Certificates.
(j) All Certificates surrendered for registration of transfer or
exchange shall be cancelled and subsequently destroyed by the Trustee.
SECTION 5.6. MUTILATED, DESTROYED, LOST OR STOLEN CERTIFICATES. If (a)
any mutilated Certificate shall be surrendered to the Certificate Registrar, or
if the Certificate Registrar shall receive evidence to its satisfaction of the
destruction, loss, or theft of any Certificate and (b) there shall be delivered
to the Certificate Registrar, the Trustee and the Certificate Insurer such
security or indemnity as may be required by them to save each of them harmless,
then in the absence of notice that such Certificate shall have been acquired by
a bona fide purchaser, the Trustee on behalf of the Trust shall execute,
authenticate and deliver, in exchange for or in lieu of any such mutilated,
destroyed, lost or stolen Certificate, a new Certificate of like tenor and
denomination. In connection with the issuance of any new Certificate under this
Section 5.6, the Trustee and the Certificate Registrar may require the payment
of a sum sufficient to cover any tax or other governmental charge that may be
imposed in connection therewith. Any duplicate Certificate issued pursuant to
this Section 5.6 shall constitute conclusive evidence of ownership in the Trust,
as if originally issued, whether or not the lost, stolen, or destroyed
Certificate shall be found at any time.
SECTION 5.7. PERSONS DEEMED OWNERS. Prior to due presentation of a
Certificate for registration of transfer, the Trustee or the Certificate
Registrar may treat the Person in whose name any Certificate shall be registered
as the owner of such Certificate for the purpose of receiving distributions
pursuant to Section 4.6 and for all other purposes whatsoever, and neither the
Trustee nor the Certificate Registrar shall be bound by any notice to the
contrary.
SECTION 5.8. ACCESS TO LIST OF CERTIFICATEHOLDERS' NAMES AND ADDRESSES.
The Trustee shall furnish or cause to be furnished to the Servicer or the
Certificate Insurer, at the expense of the Trust, within 15 days after receipt
by the Trustee of a request therefor
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from the Servicer or the Certificate Insurer, as the case may be, in writing, a
list of the names and addresses of the Certificateholders as of the most recent
Record Date. If three or more Class A Certificateholders or Class B
Certificateholders, as applicable, or one or more Holders of Class A
Certificates or Class B Certificateholders, as applicable, evidencing not less
than 25% of the Class A Certificate Balance or the Class B Certificate Balance,
as applicable, apply in writing to the Trustee, and such application states that
the applicants desire to communicate with other Certificateholders with respect
to their rights under this Agreement or under the Certificates and such
application shall be accompanied by a copy of the communication that such
applicants propose to transmit, then the Trustee shall, within five Business
Days after the receipt for such application, afford such applicants access
during normal business hours to the current list of Certificateholders. Each
Holder, by receiving and holding a Certificate, shall be deemed to have agreed
to hold none of the Servicer, the Certificate Insurer or the Trustee accountable
by reason of the disclosure of its name and address, regardless of the source
from which such information was derived.
SECTION 5.9. MAINTENANCE OF OFFICE OR AGENCY. The Trustee shall
maintain in the Borough of Manhattan, The City of New York, an office or offices
or agency or agencies where Certificates may be surrendered for registration of
transfer or exchange and where notices and demands to or upon the Trustee in
respect of the Certificates and this Agreement may be served. The Trustee
initially designates its office located at Texas Commerce Trust Company, 00
Xxxxx Xxxxxx, Xxxxx Xxxxxxxx, Xxxx 000, Window 00, Xxx Xxxx, Xxx Xxxx 00000, as
its office for such purposes. The Trustee shall give prompt written notice to
the Servicer and to Certificateholders of any change in the location of the
Certificate Register or any such office or agency.
ARTICLE VI
THE DEPOSITOR
SECTION 6. 1. REPRESENTATIONS OF DEPOSITOR. The Depositor makes the
following representations to the Originator, the Certificate Insurer and the
Trustee, on which the Certificate Insurer relied in executing and delivering the
Policy, on which the Trustee on behalf of itself and the Certificateholders
relied in accepting the Initial Receivables in trust and executing and
authenticating the Certificates and on which the Trustee on behalf of itself and
the Certificateholders shall rely in accepting any Subsequent Receivables in
trust. The representations speak as of the execution and delivery of this
Agreement in the case of the Initial Receivables, and as of the related
Subsequent Transfer Date in the case of the Subsequent Receivables, and in each
case shall survive the sale of the related Receivables to the Trustee.
(i) ORGANIZATION AND GOOD STANDING. The Depositor has been
duly organized and is validly existing as a corporation in good
standing under the laws of the State of Delaware, with the corporate
power and authority to conduct its business as such business is
presently conducted and to execute, deliver and
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perform its obligations under this Agreement and the other Basic
Documents to which it is a party.
(ii) DUE QUALIFICATION. The Depositor is duly qualified to do
business as a foreign corporation in good standing, and has obtained
all necessary licenses and approvals in all jurisdictions required for
the performance of its obligations under this Agreement and the other
Basic Documents to which it is a party other than where the failure to
obtain such license or approval or qualification would not have a
material adverse effect on the ability of the Depositor to perform such
obligations or on any Receivable or on the interest therein of the
Trust, the Certificateholders or the Certificate Insurer.
(iii) POWER AND AUTHORITY. The Depositor has the corporate
power and authority to execute and deliver this Agreement and the other
Basic Documents to which it is a party and to carry out their
respective terms; the Depositor has full corporate power and authority
to sell and assign the property sold and assigned to and deposited with
the Trustee as part of the Trust and has duly authorized such sale and
assignment to the Trustee by all necessary corporate action; and the
execution, delivery, and performance of this Agreement and the other
Basic Documents to which it is a party have been duly authorized by the
Depositor by all necessary corporate action.
(iv) VALID SALE; BINDING OBLIGATION. This Agreement effects a
valid sale, transfer and assignment of the Receivables and the other
property conveyed to the Trust pursuant to Section 2.2, enforceable
against creditors of and purchasers from the Depositor; and this
Agreement and the other Basic Documents to which the Depositor is a
party shall constitute legal, valid and binding obligations of the
Depositor enforceable in accordance with their respective terms except
as enforceability may be limited by bankruptcy, insolvency,
reorganization or other similar laws affecting the enforcement of
creditors' rights generally and by equitable limitations on the
availability of specific remedies, regardless of whether such
enforceability is considered in a proceeding in equity or at law.
(v) NO VIOLATION. The execution, delivery and performance by
the Depositor of this Agreement and the other Basic Documents to which
the Depositor is a party and the consummation of the transactions
contemplated hereby and thereby and the fulfillment of the terms hereof
and thereof do not conflict with, result in any breach of any of the
terms and provisions of, nor constitute (with or without notice or
lapse of time) a default under, the certificate of incorporation or
by-laws of the Depositor, or any material indenture, agreement,
mortgage, deed of trust, or other instrument to which the Depositor is
a party or by which it is bound or any of its properties are subject;
nor result in the 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
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Depositor of any court or of any Federal or State regulatory body,
administrative agency, or other governmental instrumentality having
jurisdiction over the Depositor or its properties.
(vi) NO PROCEEDINGS. There are no proceedings or
investigations pending, or to the Depositor's best knowledge,
threatened, before any court, regulatory body, administrative agency,
or other governmental instrumentality having jurisdiction over the
Depositor or its properties: (A) asserting the invalidity of this
Agreement or the other Basic Documents to which the Depositor is a
party or the Certificates, (B) seeking to prevent the issuance of the
Certificates or the consummation of any of the transactions
contemplated by this Agreement or the other Basic Documents to which
the Depositor is a party, (C) seeking any determination or ruling that
might materially and adversely affect the performance by the Depositor
of its obligations under, or the validity or enforceability of, this
Agreement or the other Basic Documents to which the Depositor is a
party or the Certificates, or (D) relating to the Depositor and which
might adversely affect the Federal or State income, excise, franchise
or similar tax attributes of the Certificates or (E) that could have a
material adverse effect on the Receivables.
(vii) NO CONSENTS. No consent, approval, authorization or
order of or declaration or filing with any governmental authority is
required to be obtained by the Depositor for the issuance or sale of
the Certificates or the consummation of the other transactions
contemplated by this Agreement and the other Basic Documents to which
the Depositor is a party, except such as have been duly made or
obtained or where the failure to obtain such consent, approval,
authorization, order or declaration, or to make such filing, would not
have a material adverse effect on the ability of the Depositor to
perform its obligation under the Basic Documents to which it is a party
and would not have a material adverse effect on any Receivable or the
interest therein of the Trust, the Certificateholders or the
Certificate Insurer.
(viii) CHIEF EXECUTIVE OFFICE. The Depositor hereby represents
and warrants to the Trustee that the Depositor's principal place of
business and chief executive office is, and for the four months
preceding the date of this Agreement, has been, located at: Xxx Xxxx
Xxxxxx Xxxxx, Xxxxxxx, Xxx Xxxxxx 00000.
SECTION 6.2. LIABILITY OF DEPOSITOR; INDEMNITIES. The Depositor shall
be liable in accordance herewith only to the extent of the obligations
specifically undertaken by the Depositor under this Agreement and the
representations made by the Depositor in this Agreement. The Depositor shall
indemnify, defend, and hold harmless the Originator, the Servicer, the Trustee,
the Custodian, the Back-up Servicer, the Collateral Agent and the Certificate
Insurer and each of their respective officers, employees and directors from and
against any loss, liability or expense incurred by reason of (a) the Depositor's
willful misfeasance, bad faith, or negligence in the performance of its duties
under this Agreement, or by reason of reckless disregard of its obligations and
duties under this
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Agreement or (b) the Depositor's violation of Federal or State securities laws
in connection with the sale of the Certificates.
Indemnification under this Section 6.2 shall include, without
limitation, reasonable fees and expenses of counsel and expenses of litigation.
If the Depositor shall have made any indemnity payments to the Trustee, the
Custodian, the Collateral Agent or the Back-up Servicer pursuant to this Section
and the Trustee or the Back-up Servicer thereafter shall collect any of such
amounts from others, the Trustee, the Custodian, the Collateral Agent or the
Back-up Servicer shall repay such amounts to the Depositor, without interest.
SECTION 6.3. MERGER OR CONSOLIDATION OF, OR ASSUMPTION OF THE
OBLIGATIONS OF, DEPOSITOR. Any Person (a) into which the Depositor may be merged
or consolidated, (b) which may result from any merger or consolidation to which
the Depositor shall be a party, or (c) which may succeed to the properties and
assets of the Depositor substantially as a whole, which person in any of the
foregoing cases executes an agreement of assumption to perform every obligation
of the Depositor under this Agreement, shall be the successor to the Depositor
hereunder without the execution or filing of any document or any further act by
any of the parties to this Agreement; PROVIDED, HOWEVER, as a condition to the
consummation of any of the transactions referred to in clauses (a), (b) or (c)
above, (i) immediately after giving effect to such transaction, (x) no
representation or warranty made pursuant to Section 6.1 would have been breached
(for purposes hereof, such representations and warranties shall speak as of the
date of the consummation of such transaction) and (y) no event that, after
notice or lapse of time, or both, would become an Event of Default shall have
happened and be continuing, (ii) the Depositor shall have delivered to the
Certificate Insurer and the Trustee an Officer's Certificate and an Opinion of
Counsel each stating that such consolidation, merger, or succession and such
agreement or assumption comply with this Section 6.3 and that all conditions
precedent, if any, provided for in this Agreement relating to such transaction
have been complied with, (iii) the Depositor shall have delivered to the
Certificate Insurer and the Trustee an Opinion of Counsel either (A) stating
that, in the opinion of such counsel, all financing statements and continuation
statements and amendments thereto have been executed and filed that are
necessary fully to preserve and protect the interest of the Trustee in the
Receivables, and reciting the details of such filings, or (B) stating that, in
the opinion of such counsel, no such action shall be necessary to preserve and
protect such interest, (iv) immediately after giving effect to such
transaction, no Insurance Agreement Event of Default and no event that, after
notice or lapse of time, or both, would become an Insurance Agreement Event of
Default shall have happened and be continuing, (v) the organizational documents
of the Person surviving or resulting from such transaction shall contain
provisions similar to those of the Depositor's certificate of incorporation in
respect of the issuance of debt, independent directors and bankruptcy remoteness
and (vi) the Depositor shall have received confirmation from each Rating Agency
that the then current rating of the Class A Certificates or the Class B
Certificates, as applicable, will not be downgraded as a result of such merger,
consolidation or succession. A copy of such confirmation shall be provided to
the Trustee. Notwithstanding anything herein to the contrary, the execution of
the foregoing agreement of assumption and compliance with clause (i), (ii),
(iii) or (iv) above shall be
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conditions to the consummation of the transactions referred to in clause (a),
(b) or (c) above.
SECTION 6.4. LIMITATION ON LIABILITY OF DEPOSITOR AND OTHERS. The
Depositor and any director or officer or employee or agent of the Depositor may
rely in good faith on the advice of counsel or on any document of any kind,
prima facie properly executed and submitted by any Person respecting any matters
arising hereunder. The Depositor shall not be under any obligation to appear in,
prosecute, or defend any legal action that shall not be incidental to its
obligations under this Agreement, and that in its opinion may involve it in any
expense or liability.
SECTION 6.5. DEPOSITOR MAY OWN CERTIFICATES. The Depositor and any
Person controlling, controlled by, or under common control with the Depositor
may in its individual or any other capacity become the owner or pledgee of
Certificates with the same rights as it would have if it were not the Depositor
or an affiliate thereof, except as otherwise provided in the definition of
"Certificateholder" specified in Section 1.1 and in Section 1.6. Certificates so
owned by or pledged to the Depositor or such controlling or commonly controlled
Person shall have an equal and proportionate benefit under the provisions of
this Agreement, without preference, priority, or distinction as among all of the
Certificates except as otherwise provided herein or by the definition of
Certificateholder.
ARTICLE VII
THE SERVICER
SECTION 7.1. REPRESENTATIONS OF SERVICER. The Servicer makes the
following representations to the Depositor, the Certificate Insurer, the
Trustee, the Collateral Agent and the Back-up Servicer, on which the Depositor
relies in executing and delivering this Agreement, on which the Certificate
Insurer relies in executing and delivering the Policy, on which the Trustee on
behalf of itself and the Certificateholders relies in accepting the Initial
Receivables in trust and executing and authenticating the Certificates and on
which the Trustee on behalf of itself and the Certificateholders shall rely in
accepting any Subsequent Receivables in trust. The representations speak as of
the execution and delivery of this Agreement in the case of the Initial
Receivables, and as of the related Subsequent Transfer Date in the case of the
Subsequent Receivables, and in each case shall survive the sale of the related
Receivables to the Trustee.
(i) ORGANIZATION AND GOOD STANDING. The Servicer is duly
organized and validly existing as a corporation in good standing under
the laws of the State of Delaware, with the corporate power and
authority to own its properties and to conduct its business as such
properties shall be currently owned and such business is presently
conducted, and had at all relevant times, and has, the corporate power,
authority, and legal right to acquire, own, sell and service the
Receivables and to hold the Receivable Files as custodian.
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(ii) DUE QUALIFICATION. The Servicer is duly qualified to do
business as a foreign corporation in good standing, and has obtained
all necessary licenses and approvals in all jurisdictions in which the
ownership or lease of property or the conduct of its business
(including the servicing of the Receivables as required by this
Agreement and the performance of its other obligations under this
Agreement and the other Basic Documents to which it is a party) shall
require such qualifications.
(iii) POWER AND AUTHORITY. The Servicer has the power and
authority to execute and deliver this Agreement and the other Basic
Documents to which it is a party and to carry out their respective
terms; and the execution, delivery, and performance of this Agreement
and the other Basic Documents to which it is a party have been duly
authorized by the Servicer by all necessary corporate action.
(iv) BINDING OBLIGATION. This Agreement and the other Basic
Documents to which it is a party constitute legal, valid and binding
obligations of the Servicer enforceable in accordance with their
respective terms except as enforceability may be limited by bankruptcy,
insolvency, reorganization or other similar laws affecting the
enforcement of creditors' rights generally and by equitable limitations
on the availability of specific remedies, regardless of whether such
enforceability is considered a proceeding in equity or at law.
(v) NO VIOLATION. The execution, delivery and performance by
the Servicer of this Agreement and the other Basic Documents to which
the Servicer is a party and the consummation of the transactions
contemplated hereby and thereby and the fulfillment of the terms hereof
and thereof do not conflict with, result in any breach of any of the
terms and provisions of, or constitute (with or without notice or lapse
of time) a default under, the certificate of incorporation or by-laws
of the Servicer, or any material indenture, agreement, mortgage, deed
of trust, or other instrument to which the Servicer is a party or by
which it is bound or any of its properties are subject; or result in
the creation or imposition of any material lien upon any of its
properties pursuant to the terms of any indenture, agreement, mortgage,
deed of trust, or other instrument (other than this Agreement); or
violate any law, order, rule, or regulation applicable to the Servicer
of any court or of any Federal or State regulatory body, administrative
agency, or other governmental instrumentality having jurisdiction over
the Servicer or its properties.
(vi) NO PROCEEDINGS. There are no proceedings or
investigations pending, or to the Servicer's best knowledge,
threatened, before any court, regulatory body, administrative agency,
or other governmental instrumentality having jurisdiction over the
Servicer or its properties: (A) asserting the invalidity of this
Agreement or the other Basic Documents to which the Servicer is a party
or the Certificates, (B) seeking to prevent the issuance of the
Certificates or the consummation of any of the transactions
contemplated by this Agreement or the Certificates or the other Basic
Documents to which the Servicer is a party, (C)
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seeking any determination or ruling that might materially and adversely
affect the performance by the Servicer of its obligations under, or the
validity or enforceability of, this Agreement or the Certificates or
the other Basic Documents to which the Servicer is a party, (D)
relating to the Servicer and which might adversely affect the Federal
or State income, excise, franchise or similar tax attributes of the
Certificates or (E) that could have a material adverse effect on the
Receivables.
(vii) NO CONSENTS. No consent, approval, authorization or
order of or declaration or filing with any governmental authority is
required for the issuance or sale of the Certificates or the
consummation of the other transactions contemplated by this Agreement
and the other Basic Documents to which the Servicer is a party, except
such as have been duly made or obtained.
(viii) TAXES. The Servicer has filed on a timely basis all tax
returns required to be filed by it and paid all taxes, to the extent
that such taxes have become due.
(ix) CHIEF EXECUTIVE OFFICE. The Servicer hereby represents
and warrants to the Trustee that the Servicer's principal place of
business and chief executive office is, and for the four months
preceding the date of this Agreement, has been, located at: Xxx Xxxx
Xxxxxx Xxxxx, Xxxxxxx, Xxx Xxxxxx 00000.
SECTION 7.2. INDEMNITIES OF SERVICER. (a) The Servicer shall be liable
in accordance herewith only to the extent of the obligations specifically
undertaken by the Servicer under this Agreement and the representations made by
the Servicer herein.
(i) The Servicer shall defend, indemnify, and hold harmless
the Trustee, the Collateral Agent, the Back-up Servicer, the Custodian,
the Trust, the Certificate Insurer, the Certificateholders and the
Depositor, and their respective officers, directors, agents and
employees from and against any and all costs, expenses, losses,
damages, claims, and liabilities, arising out of or resulting from the
use, ownership, or operation by the Servicer or any affiliate thereof
of a Financed Vehicle.
(ii) The Servicer shall indemnify, defend and hold harmless
the Trustee, the Collateral Agent, the Back-up Servicer, the Custodian,
the Trust, the Certificate Insurer and the Depositor, and their
respective officers, directors, agents and employees from and against
any taxes that may at any time be asserted against the Trustee, the
Collateral Agent, the Back-up Servicer, the Trust, the Certificate
Insurer or the Depositor, with respect to the transactions contemplated
herein, including, without limitation, any sales, general corporation,
tangible personal property, privilege, or license taxes and costs and
expenses in defending against the same.
(iii) The Servicer shall indemnify, defend, and hold harmless
the Trustee, the Collateral Agent, the Custodian, the Back-up Servicer,
the Custodian,
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the Depositor, the Certificate Insurer, the Trust and the
Certificateholders, and their respective officers, directors, agents
and employees from and against any and all costs, expenses, losses,
claims, damages, and liabilities to the extent that such cost, expense,
loss, claim, damage, or liability arose out of, or was imposed upon the
Trustee, the Collateral Agent, the Back-up Servicer, the Depositor, the
Trust or the Certificateholders, and their respective officers,
directors, agents and employees through the negligence, willful
misfeasance, or bad faith of the Servicer in the performance of its
duties under this Agreement or by reason of reckless disregard of its
obligations and duties under this Agreement.
(iv) The Servicer shall indemnify, defend, and hold harmless
the Trustee, the Collateral Agent, the Back-up Servicer, the Depositor,
and the Custodian, and their respective officers, directors, agents and
employees from and against all costs, expenses, losses, claims,
damages, and liabilities arising out of or incurred in connection with
the acceptance or performance of the trusts and duties herein
contained, if any, except to the extent that such cost, expense, loss,
claim, damage or liability: (a) shall be due to the willful
misfeasance, bad faith, or negligence (except for errors in judgment)
of the Trustee, the Collateral Agent, the Back-up Servicer or the
Custodian, as applicable; (b) relates to any tax other than the taxes
with respect to which the Servicer shall be required to indemnify the
Trustee, the Collateral Agent, the Back-up Servicer or the Custodian;
or (c) shall arise from the Trustee's breach of any of its
representations or warranties set forth in Section 9.12.
(v) Notwithstanding the foregoing, the Servicer shall not be
obligated to defend, indemnify, and hold harmless any Certificateholder
for any losses, claims, damages or liabilities incurred by any
Certificateholders arising out of claims, complaints, actions and
allegations relating to Section 406 of ERISA or Section 4975 of the
Code as a result of the purchase or holding of a Certificate by such
Certificateholder with the assets of a plan subject to such provisions
of ERISA or the Code or the servicing, management and operation of the
Trust.
(b) For purposes of this Section, in the event of the termination of
the rights and obligations of a Servicer (or any successor thereto pursuant to
Section 7.3) as Servicer pursuant to Section 8.1, or a resignation by such
Servicer pursuant to this Agreement, such Servicer shall be deemed to be the
Servicer pending appointment of a successor Servicer pursuant to Section 8.2.
The provisions of this Section 7.2(b) shall in no way affect the survival
pursuant to Section 7.2(c) of the indemnification by the outgoing Servicer
provided by Section 7.2(a).
(c) Indemnification under this Section 7.2 shall survive the
termination of this Agreement and any resignation or removal of LBAC as Servicer
and shall include reasonable fees and expenses of counsel and expenses of
litigation. If the Servicer shall have made any indemnity payments pursuant to
this Section and the recipient thereafter collects any of such amounts from
others, the recipient shall promptly repay such amounts to the Servicer, without
interest.
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(d) In no event shall the Servicer be liable under this Agreement to
any Person for the acts or omissions of any successor Servicer, nor shall any
successor Servicer be liable under this Agreement to any Person for any acts or
omissions of a predecessor Servicer.
SECTION 7.3. MERGER OR CONSOLIDATION OF, OR ASSUMPTION OF THE
OBLIGATIONS OF, SERVICER OR BACK-UP SERVICER. (a) The Servicer shall not merge
or consolidate with any other Person, convey, transfer or lease substantially
all its assets as an entirety to another Person, or permit any other Person to
become the successor to the Servicer's business unless, after the merger,
consolidation, conveyance, transfer, lease or succession, the successor or
surviving entity shall be an Eligible Servicer and shall be capable of
fulfilling the duties of the Servicer contained in this Agreement and the other
Basic Documents to which the Servicer is a party. Any Person (a) into which the
Servicer may be merged or consolidated, (b) which may result from any merger or
consolidation to which the Servicer shall be a party, (c) which may succeed to
the properties and assets of the Servicer substantially as a whole, or (d) or
succeeding to the business of the Servicer shall execute an agreement of
assumption to perform every obligation of the Servicer hereunder, and whether or
not such assumption agreement is executed, shall be the successor to the
Servicer under this Agreement without further act on the part of any of the
parties to this Agreement; PROVIDED, HOWEVER, that nothing contained herein
shall be deemed to release the Servicer from any obligation hereunder; PROVIDED,
FURTHER, HOWEVER, that (i) immediately after giving effect to such transaction,
no representation or warranty made pursuant to Section 7.1 hereof or made by the
Servicer in the Purchase Agreement shall have been breached (for purposes
hereof, such representations and warranties shall speak as of the date of the
consummation of such transaction), no Event of Default or Insurance Agreement
Event of Default, and no event which, after notice or lapse of time, or both,
would become an Event of Default or Insurance Agreement Event of Default shall
have occurred and be continuing, (ii) the Servicer shall have delivered to the
Trustee and the Certificate Insurer an Officer's Certificate and an Opinion of
Counsel in form and substance satisfactory to the Trustee and the Certificate
Insurer each stating that such consolidation, merger or succession and such
agreement of assumption comply with this Section 7.3 and that all conditions
precedent provided for in this Agreement relating to such transaction have been
complied with, (iii) the Servicer shall have delivered to the Trustee and the
Certificate Insurer an Opinion of Counsel either (A) stating that, in the
opinion of such counsel, all financing statements and continuation statements
and amendments thereto have been executed and filed that are necessary fully to
preserve and protect the interest of the Trustee in the Receivables and reciting
the details of such filings, or (B) stating that, in the opinion of such
counsel, no such action shall be necessary to preserve and protect such interest
and (iv) nothing herein shall be deemed to release the Servicer from any
obligation. The Servicer shall provide notice of any merger, consolidation or
succession pursuant to this Section 7.3(a) to the Trustee, the Back-up Servicer,
the Collateral Agent, the Certificate Insurer, the Certificateholders and each
Rating Agency. Notwithstanding anything herein to the contrary, the execution of
the foregoing agreement of assumption and compliance with clauses (i), (ii) or
(iii) above shall be conditions to the consummation of the transactions referred
to in clause (a), (b) or (c) above.
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(b) Any Person (a) into which the Back-up Servicer may be merged or
consolidated, (b) which may result from any merger or consolidation to which the
Back-up Servicer shall be a party, or (c) which may succeed to the properties
and assets of the Back-up Servicer substantially as a whole, or (d) succeeding
to the business of the Back-up Servicer, shall execute an agreement of
assumption to perform every obligation of the Back-up Servicer hereunder, and
whether or not such assumption agreement is executed, shall be the successor
to the Back-up Servicer under this Agreement without further act on the part
of any of the parties to this Agreement; PROVIDED, HOWEVER, that nothing herein
shall be deemed to release the Back-up Servicer from any obligation.
SECTION 7.4. LIMITATION ON LIABILITY OF SERVICER AND OTHERS. Neither
the Servicer nor any of the directors or officers or employees or agents of
the Servicer shall be under any liability to the Trust or the
Certificateholders, except as provided under this Agreement, for any action
taken or for refraining from the taking of any action pursuant to this
Agreement; PROVIDED, HOWEVER, that this provision shall not protect the
Servicer or any such person against any liability that would otherwise be
imposed by reason of a breach of this Agreement or willful misfeasance, bad
faith, or negligence in the performance of duties or by reason of reckless
disregard of obligations and duties under this Agreement. The Servicer and
any director or officer or employee or agent of the Servicer may rely in good
faith on any document of any kind prima facie properly executed and submitted
by any Person respecting any matters arising under this Agreement.
Except as provided in this Agreement, the Servicer shall not be under
any obligation to appear in, prosecute, or defend any legal action that shall
not be incidental to its duties to service the Receivables in accordance with
this Agreement, and that in its opinion may involve it in any expense or
liability.
SECTION 7.5. SERVICER AND BACK-UP SERVICER NOT TO RESIGN. Subject to
the provisions of Section 7.3, neither the Servicer nor the Back-up Servicer
may resign from the obligations and duties hereby imposed on it as Servicer
or Back-up Servicer, as the case may be, under this Agreement except upon
determination that by reason of a change in legal requirements the
performance of its duties under this Agreement would cause it to be in
violation of such legal requirements in a manner which would result in a
material adverse effect on the Servicer or Back-up Servicer, as the case may
be, and the Certificate Insurer does not elect to waive the obligations of
the Servicer or Back-up Servicer, as the case may be, to perform the duties
which render it legally unable to act or does not elect to delegate those
duties to another Person. Notice of any such determination permitting the
resignation of the Servicer or Back-up Servicer, as the case may be, shall be
communicated to the Depositor, the Trustee, the Certificate Insurer, and each
Rating Agency at the earliest practicable time (and, if such communication is
not in writing, shall be confirmed in writing at the earliest practicable
time) and any such determination by the Servicer or Back-up Servicer, as the
case may be, shall be evidenced by an Opinion of Counsel to such effect
delivered to and satisfactory to the Depositor, the Trustee and the
Certificate Insurer concurrently with or promptly after such notice. No such
resignation of the Servicer shall become effective until a successor servicer
shall have assumed the responsibilities and obligations of LBAC in accordance
with Section
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8.2 and the Servicing Assumption Agreement, if applicable. No such resignation
of the Back-up Servicer shall become effective until an entity acceptable to the
Certificate Insurer shall have assumed the responsibilities and obligations of
the Back-up Servicer; PROVIDED, HOWEVER, that if no such entity shall have
assumed such responsibilities and obligations of the Back-up Servicer within 60
days of the resignation of the Back-up Servicer, the Back-up Servicer may
petition a court of competent jurisdiction for the appointment of a successor to
the Back-up Servicer.
ARTICLE VIII
DEFAULT
SECTION 8.1. EVENTS OF DEFAULT. If any one of the following events
("Events of Default") shall occur and be continuing:
(i) Any failure by the Servicer or, for so long as LBAC is the
Servicer, the Depositor, to deliver to the Trustee for distribution to
Certificateholders or deposit in the Spread Account or the Class B
Reserve Account any proceeds or payment required to be so delivered
under the terms of the Certificates, the Purchase Agreement, any
Transfer Agreement and this Agreement (including deposits of Purchase
Amounts) that shall continue unremedied for a period of two Business
Days after written notice is received by the Servicer from the Trustee
or the Certificate Insurer or after discovery of such failure by the
Servicer (but in no event later than the five Business Days after the
Servicer is required to make such delivery or deposit); or
(ii) The certificate required by Section 3.9 shall not have
been delivered to the Trustee and the Certificate Insurer within one
Business Day of the date such certificate is required to be delivered;
the statement required by Section 3.10, or the report required by
Section 3.11 shall not have been delivered within five (5) days after
the date such certificates or statements or reports, as the case may
be, are required to be delivered; or
(iii) Failure on the part of the Servicer to observe its
covenants and agreements set forth in Section 7.3 or, for so long as
LBAC is the Servicer, failure on the part of the Depositor to observe
its covenants and agreements set forth in Section 6.3; or
(iv) Failure on the part of LBAC, the Servicer or, for so long
as LBAC is the Servicer, the Depositor, as the case may be, duly to
observe or to perform in any material respect any other covenants or
agreements of LBAC, the Servicer or the Depositor (as the case may be)
set forth in the Certificates, the Purchase Agreement, any Transfer
Agreement or in this Agreement, which failure shall continue unremedied
for a period of 30 days after the date on which written notice of such
failure requiring the same to be remedied, shall have been given (1) to
LBAC, the Servicer or the Depositor (as the case may be), by the
Certificate
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Insurer or the Trustee, or (2) to LBAC, the Servicer or the Depositor
(as the case may be), and to the Trustee and the Certificate Insurer by
the Holders of Class A Certificates evidencing not less than 25% of the
Class A Certificate Balance or, after the Class A Certificates have
been paid in full and all outstanding Reimbursement Obligations and
other amounts due to the Certificate Insurer have been paid in full and
the term of the Policy (as set forth therein) has expired, by the
Holders of Class B Certificates evidencing not less than 25% of the
Class B Certificate Balance; or
(v) The entry of a decree or order for relief by a court or
regulatory authority having jurisdiction in respect of LBAC or the
Servicer (or, so long as LBAC is the Servicer, the Depositor, or any of
the Servicer's other Affiliates, if the Servicer's ability to service
the Receivables is adversely affected thereby) in an involuntary case
under the federal bankruptcy laws, as now or hereafter in effect, or
another present or future, federal or state, bankruptcy, insolvency or
similar law, or appointing a receiver, liquidator, assignee, trustee,
custodian, sequestrator or other similar official of LBAC, the Servicer
(or the Depositor or any other Affiliate of LBAC, if applicable) or of
any substantial part of their respective properties or ordering the
winding up or liquidation of the affairs of LBAC or the Servicer (or
the Depositor or any other Affiliate of LBAC, if applicable) or the
commencement of an involuntary case under the federal or state
bankruptcy, insolvency or similar laws, as now or hereafter in effect,
or another present or future, federal or state bankruptcy, insolvency
or similar law with respect to LBAC or the Servicer (or the Depositor
or any other Affiliate of LBAC, if applicable) and such case is not
dismissed within 60 days; or
(vi) The commencement by LBAC or the Servicer (or, so long as
LBAC is the Servicer, the Depositor or any of the Servicer's other
Affiliates, if the Servicer's ability to service the Receivables is
adversely affected thereby) of a voluntary case under the federal
bankruptcy laws, as now or hereafter in effect, or any other present or
future, federal or state, bankruptcy, insolvency or similar law, or the
consent by LBAC or the Servicer (or the Depositor or any other
Affiliate of LBAC, if applicable) to the appointment of or taking
possession by a receiver, liquidator, assignee, trustee, custodian,
sequestrator or other similar official of LBAC or the Servicer (or the
Depositor or any other Affiliate of LBAC, if applicable) or of any
substantial part of its property or the making by LBAC or the Servicer
(or the Depositor or any other Affiliate of LBAC, if applicable) of an
assignment for the benefit of creditors or the failure by LBAC or the
Servicer (or the Depositor or any other Affiliate of LBAC, if
applicable) generally to pay its debts as such debts become due or the
taking of corporate action by LBAC or the Servicer (or the Depositor or
any other Affiliate of LBAC, if applicable) in furtherance of any of
the foregoing; or
(vii) Any representation, warranty or statement of LBAC or the
Servicer or, for so long as LBAC is the Servicer, the Depositor, made
in this Agreement and, with respect to LBAC and the Depositor, the
Purchase Agreement, any Transfer Agreement or in each case any
certificate, report or
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other writing delivered pursuant hereto shall prove to be incorrect as
of the time when the same shall have been made (excluding, however, any
representation or warranty set forth in Section 3.2(b) of the Purchase
Agreement and/or any Transfer Agreement), and the incorrectness of such
representation, warranty or statement has a material adverse effect on
the Trust and, within 30 days after written notice thereof shall have
been given (1) to LBAC, the Servicer or the Depositor (as the case may
be) by the Trustee or the Certificate Insurer or (2) to LBAC, the
Servicer or the Depositor (as the case may be), and to the Trustee and
the Certificate Insurer by the Holders of Class A Certificates
evidencing not less than 25% of the Class A Certificate Balance or,
after the Class A Certificates have been paid in full and all
outstanding Reimbursement Obligations and other amounts due to the
Certificate Insurer have been paid in full and the term of the Policy
(as set forth therein) has expired, by the Holders of Class B
Certificates evidencing not less than 25% of the Class B Certificate
Balance, the circumstances or condition in respect of which such
representation, warranty or statement was incorrect shall not have been
eliminated or otherwise cured; or
(viii) The occurrence of an Insurance Agreement Event of
Default; or
(ix) A claim is made under the Policy; or
(x) So long as an Insurer Default shall not have occurred
and be continuing, the Certificate Insurer shall not have delivered a
Servicer Extension Notice pursuant to Section 3.13;
then, and in each and every case, so long as an Event of Default shall not
have been remedied; PROVIDED, (i) no Insurer Default shall have occurred and
be continuing, the Certificate Insurer in its sole and absolute discretion,
or (ii) if an Insurer Default shall have occurred and be continuing, then
either the Holders of Class A Certificates evidencing not less than 51% of
the Class A Certificate Balance and the Holders of Class B Certificates
evidencing not less than 51% of the Class B Certificate Balance, or the
Trustee acting at the direction of such Holders, by notice then given in
writing to the Servicer (and to the Trustee if given by the Certificate
Insurer or by the Certificateholders) or by the Certificate Insurer's failure
to deliver a Servicer Extension Notice pursuant to Section 3.13, may
terminate all of the rights and obligations of the Servicer under this
Agreement. The Servicer shall be entitled to its pro rata share of the
Servicing Fee for the number of days in the Collection Period prior to the
effective date of its termination. On or after the receipt by the Servicer of
such written notice, all authority and power of the Servicer under this
Agreement, whether with respect to the Certificates or the Receivables or
otherwise, shall without further action, pass to and be vested in (i) the
Back-up Servicer or (ii) such successor Servicer as may be appointed under
Section 8.2; PROVIDED, HOWEVER, that the successor Servicer shall have no
liability with respect to any obligation which was required to be performed
by the predecessor Servicer prior to the date the successor Servicer becomes
the Servicer or any claim of a third party (including a Certificateholder)
based on any alleged action or inaction of the predecessor Servicer as
Servicer; and, without limitation, the Trustee is hereby authorized
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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 Trustee
in effecting the termination of the responsibilities and rights of the
predecessor Servicer under this Agreement, including the transfer to the
successor Servicer for administration by it of all cash amounts that shall at
the time be held or should have been held by the predecessor Servicer for
deposit, or shall thereafter be received with respect to a Receivable and the
delivery to the successor Servicer of all files and records concerning the
Receivables and a computer tape in readable form containing all information
necessary to enable the successor Servicer to service the Receivables and the
other property of the Trust. All reasonable costs and expenses (including
attorneys' fees) incurred in connection with transferring the Receivable Files
to the successor Servicer and amending this Agreement to reflect such succession
as Servicer pursuant to this Section 8.1 shall be paid by the predecessor
Servicer upon presentation of reasonable documentation of such costs and
expenses. In addition, any successor Servicer shall be entitled to payment from
the immediate predecessor Servicer for reasonable transition expenses incurred
in connection with acting as successor Servicer, and in connection with system
conversion costs, an aggregate amount not to exceed for such conversion costs of
$100,000, and to the extent not so paid, such payment shall be made pursuant to
Section 4.6(c) hereof. Upon receipt of notice of the occurrence of an Event of
Default, the Trustee shall give notice thereof to the Rating Agencies and the
Depositor. The predecessor Servicer shall grant the Depositor, the Trustee, the
Back-up Servicer and the Certificate Insurer reasonable access to the
predecessor Servicer's premises at the predecessor Servicer's expense. If
requested by the Certificate Insurer, the Back-up Servicer or successor Servicer
shall terminate any arrangements relating to (i) the Lock-Box Account with the
Lock-Box Bank, (ii) the Lock-Box or (iii) the Lock-Box Agreement, and direct the
Obligors to make all payments under the Receivables directly to the Servicer at
the predecessor Servicer's expense (in which event the successor Servicer shall
process such payments directly, or, through a Lock-Box Account with a Lock-Box
Bank at the direction of the Certificate Insurer). The Trustee shall send copies
of all notices given pursuant to this Section 8.1 to the Certificate Insurer so
long as no Insurer Default shall have occurred and be continuing, and to the
Certificateholders if an Insurer Default shall have occurred and be continuing.
SECTION 8.2. APPOINTMENT OF SUCCESSOR. (a) Upon the Servicer's receipt
of notice of termination pursuant to Section 8.1 or the Servicer's resignation
in accordance with the terms of this Agreement, the predecessor Servicer shall
continue to perform its functions as Servicer under this Agreement, in the case
of termination, only until the date specified in such termination notice or, if
no such date is specified in a notice of termination, until receipt of such
notice, and, in the case of resignation, until the later of (x) the date 45 days
from the delivery to the Trustee of written notice of such resignation (or
written confirmation of such notice) in accordance with the terms of this
Agreement and (y) the date upon which the predecessor Servicer shall become
unable to act as Servicer, as specified in the notice of resignation and
accompanying Opinion of Counsel. In the event of termination of the Servicer,
Chase Texas, as Back-up Servicer, shall
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assume the obligations of Servicer hereunder on the date specified in such
written notice (the "Assumption Date") pursuant to the Servicing Assumption
Agreement or, in the event that the Certificate Insurer shall have determined
that a Person other than the Back-up Servicer shall be the successor Servicer in
accordance with Section 8.2(c), on the date of the execution of a written
assumption agreement by such Person to serve as successor Servicer. In the event
of assumption of the duties of Servicer by the Back-Up Servicer, the Back-Up
Servicer shall be entitled to be paid by the Servicer for the system conversion
costs, an amount not to exceed $100,000. In the event that such amount shall not
have been timely paid by the Servicer, such amount shall be paid under Section
4.6(c)(v) hereof; PROVIDED, HOWEVER, the payment of such amount pursuant to
Section 4.6(c)(v) shall not relieve the Servicer of any obligation or liability
to pay such amount. Notwithstanding the Back-up Servicer's assumption of, and
its agreement to perform and observe, all duties, responsibilities and
obligations of LBAC as Servicer under this Agreement arising on and after the
Assumption Date, the Back-up Servicer shall not be deemed to have assumed or to
become liable for, or otherwise have any liability for, any duties,
responsibilities, obligations or liabilities of LBAC or any predecessor Servicer
arising on or before the Assumption Date, whether provided for by the terms of
this Agreement, arising by operation of law or otherwise, including, without
limitation, any liability for, any duties, responsibilities, obligations or
liabilities of LBAC or any predecessor Servicer arising on or before the
Assumption Date under Sections 3.7 or 7.2 of this Agreement, regardless of when
the liability, duty, responsibility or obligation of LBAC or any predecessor
Servicer therefor arose, whether provided by the terms of this Agreement,
arising by operation of law or otherwise. In addition, if the Back-up Servicer
shall be legally unable to act as Servicer or shall have delivered a notice of
resignation pursuant to Section 7.5 hereof and an Insurer Default shall have
occurred and be continuing, the Back-up Servicer, the Trustee or Class A
Certificateholders holding Class A Certificates evidencing not less than 66-2/3%
of the Class A Certificate Balance (or, if the Class A Certificates have been
paid in full, Class B Certificateholders holding Class B Certificates evidencing
not less than 51% of the Class B Certificate Balance) may petition a court of
competent jurisdiction to appoint any successor to the Servicer. Pending
appointment pursuant to the preceding sentence, the Back-up Servicer shall act
as successor Servicer unless it is legally unable to do so, in which event the
predecessor Servicer shall continue to act as Servicer until a successor has
been appointed and accepted such appointment. In the event that a successor
Servicer has not been appointed at the time when the predecessor Servicer has
ceased to act as Servicer in accordance with this Section 8.2, then the
Certificate Insurer, in accordance with Section 8.2(c) shall appoint, or
petition a court of competent jurisdiction to appoint a successor to the
Servicer under this Agreement.
(b) Upon appointment, the successor Servicer shall be the successor in
all respects to the predecessor Servicer and shall be subject to all the
responsibilities, duties, and liabilities arising thereafter relating thereto
placed on the predecessor Servicer, and shall be entitled to the Servicing Fee
and all of the rights granted to the predecessor Servicer, by the terms and
provisions of this Agreement.
(c) So long as no Insurer Default has occurred and is continuing, the
Certificate Insurer may exercise at any time its right to appoint as Back-up
Servicer or as successor
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Servicer a Person other than the Person serving as Back-up Servicer at the time,
and shall have no liability to the Trustee, LBAC, the Depositor, the Person then
serving as Back-up Servicer, any Certificateholder or any other person if it
does so. Subject to Section 7.5, no provision of this Agreement shall be
construed as relieving the Back-up Servicer of its obligation to succeed as
successor Servicer upon the termination of the Servicer pursuant to Section 8.1
or resignation of the Servicer pursuant to Section 7.5. If upon any such
resignation or termination, the Certificate Insurer appoints a successor
Servicer other than the Back-up Servicer, the Back-up Servicer shall not be
relieved of its duties as Back-up Servicer hereunder.
SECTION 8.3. NOTIFICATION TO CERTIFICATEHOLDERS. Upon any termination
of, or appointment of a successor to, the Servicer pursuant to this Article
VIII, the Trustee shall give prompt written notice thereof to Certificateholders
at their respective addresses appearing in the Certificate Register and to each
of the Rating Agencies.
SECTION 8.4. [RESERVED].
SECTION 8.5. ACTION UPON CERTAIN FAILURES OF THE SERVICER. In the event
that a Responsible Officer of the Trustee shall have knowledge of any failure of
the Servicer specified in SECTION 8.1 which would give rise to a right of
termination under such Section upon the Servicer's failure to remedy the same
after notice, the Trustee shall give notice thereof to the Depositor, the
Servicer and the Certificate Insurer. For all purposes of this Agreement, the
Trustee shall not be deemed to have knowledge of any failure of the Servicer as
specified in SECTION 8.1 unless notified thereof in writing by the Depositor,
the Servicer, the Certificate Insurer or by a Certificateholder. The Trustee
shall be under no duty or obligation to investigate or inquire as to any
potential failure of the Servicer specified in SECTION 8.1.
ARTICLE IX
THE TRUSTEE
SECTION 9.1. DUTIES OF TRUSTEE. The Trustee, both prior to the
occurrence of an Event of Default and after an Event of Default shall have been
cured or waived, shall undertake to perform such duties and only such duties as
are specifically set forth in this Agreement. If an Event of Default shall have
occurred and shall not have been cured or waived, the Trustee may, and at the
direction of the Certificate Insurer (or, if an Insurer Default shall have
occurred and is continuing, the Class A Certificateholder), shall exercise such
of the rights and powers vested in it by this Agreement and shall use the same
degree of care and skill in their exercise, as a prudent man would exercise or
use under the circumstances in the conduct of his own affairs.
The Trustee, upon receipt of all resolutions, certificates, statements,
opinions, reports, documents, orders or other instruments furnished to the
Trustee that shall be specifically required to be furnished pursuant to any
provision of this Agreement, shall examine them to determine whether they
conform to the requirements of this Agreement.
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The Trustee shall take and maintain custody of the Schedule of
Receivables included as Schedule A to this Agreement and shall retain copies of
all Servicer's Certificates prepared hereunder.
No provision of this Agreement shall be construed to relieve the
Trustee from liability for its own negligent action, its own negligent failure
to act, or its own bad faith; PROVIDED, HOWEVER, that:
(i) Prior to the occurrence of an Event of Default and after
the curing or waiving of all such Events of Default that may have
occurred, the duties and obligations of the Trustee shall be determined
solely by the express provisions of this Agreement, the Trustee shall
not be liable except for the performance of such duties and obligations
as shall be specifically set forth in this Agreement, no implied
covenants or obligations shall be read into this Agreement against the
Trustee and, in the absence of bad faith on the part of the Trustee,
the Trustee may conclusively rely on the truth of the statements and
the correctness of the opinions expressed in any certificates or
opinions furnished to the Trustee and conforming to the requirements of
this Agreement;
(ii) The Trustee shall not be liable for an error of judgment
made in good faith by a Trustee Officer, unless it shall be proved that
the Trustee shall have been negligent in ascertaining the pertinent
facts;
(iii) The Trustee shall not be liable with respect to any
action taken, suffered, or omitted to be taken in good faith in
accordance with this Agreement or at the direction of the Certificate
Insurer or, after an Insurer Default, the Holders of Class A
Certificates evidencing not less than 25% of the Class A Certificate
Balance or, after the Class A Certificates have been paid in full and
either (A) all outstanding Reimbursement Obligations and other amounts
due to the Certificate Insurer have been paid in full or (B) an Insurer
Default shall have occurred and be continuing, the Holders of Class B
Certificates evidencing not less than 25% of the Class B Certificate
Balance, relating to the time, method, and place of conducting any
proceeding for any remedy available to the Trustee, or exercising any
trust or power conferred upon the Trustee, under this Agreement;
(iv) The Trustee shall not be charged with knowledge of any
Event of Default, unless a Trustee Officer assigned to the Trustee's
Corporate Trust Office receives written notice of such Event of Default
from the Servicer or the Depositor, as the case may be, the Certificate
Insurer or, after an Insurer Default, the Holders of Class A
Certificates evidencing not less than 25% of the Class A Certificate
Balance or, after the Class A Certificates have been paid in full and
either (A) all outstanding Reimbursement Obligations and other amounts
due to the Certificate Insurer have been paid in full or (B) an Insurer
Default shall have occurred and be continuing, the Holders of Class B
Certificates evidencing not less than 25% of the Class B Certificate
Balance (such notice shall constitute actual knowledge of an Event of
Default by the Trustee); and
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(v) The Trustee shall not be liable for any action taken,
suffered or omitted by it in good faith and reasonably believed by it
to be authorized or within the discretion or rights or powers conferred
upon it by this Agreement.
The Trustee may, but shall not be required to, expend or risk its own
funds or otherwise incur financial liability in the performance of any of its
duties hereunder, or in the exercise of any of its rights or powers, unless it
shall have been provided with indemnity against such risk or liability in form
and substance satisfactory to the Trustee, and none of the provisions contained
in this Agreement shall in any event require the Trustee to perform, or be
responsible for the manner of performance of, any of the obligations of the
Servicer under this Agreement except during such time, if any, as the Trustee,
in its capacity as Back-up Servicer, shall be the successor to, and be vested
with the rights, duties, powers, and privileges of, the Servicer in accordance
with the terms of this Agreement.
Except for actions expressly authorized by this Agreement, the Trustee
shall take no action reasonably likely to impair the security interests created
or existing under any Receivable or Financed Vehicle or to impair the value of
any Receivable or Financed Vehicle.
All information obtained by the Trustee regarding the Obligors and the
Receivables, whether upon the exercise of its rights under this Agreement or
otherwise, shall be maintained by the Trustee in confidence and shall not be
disclosed to any other Person; PROVIDED that, nothing herein shall prevent the
Trustee from delivering copies of such information whether or not constituting
confidential information, and disclosing other information, whether or not
confidential information to (i) its directors, officers, employees, agents and
professional consultants to the extent necessary to carry on the Trustee's
business in the ordinary course, (ii) any Certificateholder or the Certificate
Insurer to the extent that such Certificateholder or the Certificate Insurer is
entitled to such information under this Agreement, but not otherwise (iii) any
governmental authority which specifically requests (or as to which applicable
regulations require) such information, (iv) any nationally recognized rating
agency in connection with the rating of the Certificates by such agency, (v) any
other Person to which such delivery or disclosure may be necessary or
appropriate, (a) in compliance with any applicable law, rule, regulation or
order, (b) in response to any subpoena or other legal process, (c) in connection
with any litigation to which the Trustee is a party, or (d) in order to protect
or enforce the rights of the Certificateholders and the Certificate Insurer
under the Trust established hereunder.
SECTION 9.2. TRUSTEE'S CERTIFICATE. On or as soon as practicable after
each Distribution Date on which Receivables shall be assigned to LBAC or the
Servicer, as applicable, pursuant to this Agreement, based on amounts deposited
to the Collection Account, notices received pursuant to this Agreement and the
information contained in the Servicer's Certificate for the related Collection
Period, identifying the Receivables purchased by LBAC pursuant to Section 2.7 or
purchased by the Servicer pursuant to Section 3.7 or 10.2, the Trustee shall
execute a Trustee's Certificate (in the form of Exhibit D-1 or D-2, as
applicable), and shall deliver such Trustee's Certificate,
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accompanied by a copy of the Servicer's Certificate for such Collection Period
to LBAC or the Servicer, as the case may be. The Trustee's Certificate submitted
with respect to such Distribution Date shall operate, as of such Distribution
Date, as an assignment, without recourse, representation, or warranty, to LBAC
or the Servicer, as the case may be, of all the Trustee's right, title, and
interest in and to such repurchased Receivable, and all security and documents
relating thereto, such assignment being an assignment outright and not for
security.
SECTION 9.3. CERTAIN MATTERS AFFECTING TRUSTEE. Except as otherwise
provided in the second paragraph of Section 9.1:
(i) The Trustee may rely and shall be protected in acting or
refraining from acting upon any resolution, Officer's Certificate,
Servicer's Certificate, certificate of auditors, or any other
certificate, statement, instrument, opinion, report, notice, request,
consent, order, appraisal, bond, or other paper or document believed by
it to be genuine and to have been signed or presented by the proper
party or parties.
(ii) The Trustee may consult with counsel, and any Opinion of
Counsel shall be full and complete authorization and protection in
respect of any action taken or suffered or omitted by it under this
Agreement in good faith and in accordance with such Opinion of Counsel.
(iii) The Trustee shall be under no obligation to exercise any
of the rights or powers vested in it by this Agreement, or to
institute, conduct, or defend any litigation under this Agreement or in
relation to this Agreement, at the request, order or direction of any
of the Certificateholders or the Certificate Insurer pursuant to the
provisions of this Agreement, unless such Certificateholders or the
Certificate Insurer shall have offered to the Trustee reasonable
security or indemnity in form and substance reasonably satisfactory to
the Trustee against the costs, expenses, and liabilities that may be
incurred therein or thereby; nothing contained in this Agreement,
however, shall relieve the Trustee of the obligations, upon the
occurrence of an Event of Default (that shall not have been cured or
waived), to exercise such of the rights and powers vested in it by this
Agreement, and to use the same degree of care and skill in their
exercise as a prudent man would exercise or use under the circumstances
in the conduct of his own affairs.
(iv) The Trustee shall not be bound to make any investigation
into the facts or matters stated in any resolution, certificate,
statement, instrument, opinion, report, notice, request, consent,
order, approval, bond, or other paper or document (other than for its
duties pursuant to Section 2.7), unless requested in writing to do so
by the Certificate Insurer, the Depositor or Holders of Class A
Certificates evidencing not less than 25% of the Class A Certificate
Balance or, after the Class A Certificates have been paid in full and
either (A) all outstanding Reimbursement Obligations and other amounts
due to the Certificate Insurer have been paid in full or (B) an Insurer
Default shall have occurred and be continuing,
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the Holders of Class B Certificates evidencing not less that 25% of the
Class B Certificate Balance; PROVIDED, HOWEVER, that if the payment
within a reasonable time to the Trustee of the costs, expenses, or
liabilities likely to be incurred by it in the making of such
investigation shall be, in the opinion of the Trustee, not reasonably
assured to the Trustee by the security afforded to it by the terms of
this Agreement, the Trustee may require indemnity in form and substance
satisfactory to it against such cost, expense, or liability as a
condition to so proceeding. The reasonable expense of every such
examination shall be paid by the Person making such request or, if paid
by the Trustee, shall be reimbursed by the Person making such request
upon demand.
(v) The Trustee may execute any of the trusts or powers
hereunder or perform any duties under this Agreement either directly or
by or through agents or attorneys or a custodian. The Trustee shall not
be responsible for any misconduct or negligence of any such agent or
custodian appointed with due care by it hereunder, or of any agent or
custodian of the Servicer in its capacity as Servicer or custodian or
otherwise.
(vi) Except as may be expressly required by Sections 2.7 and
10.1, subsequent to the sale of the Receivables by the Depositor to the
Trust, the Trustee shall have no duty of independent inquiry, and the
Trustee may rely upon the representations and warranties and covenants
of the Depositor and the Servicer contained in this Agreement with
respect to the Receivables and the Receivable Files.
(vii) The Trustee may rely, as to factual matters relating to
the Depositor or the Servicer, on an Officer's Certificate of the
Depositor or Servicer, respectively.
(viii) The Trustee shall not be required to take any action or
refrain from taking any action under this Agreement, or any related
documents referred to herein, nor shall any provision of this
Agreement, or any such related document be deemed to impose a duty on
the Trustee to take action, if the Trustee shall have been advised by
counsel that such action is contrary to (i) the terms of this
Agreement, (ii) any such related document or (iii) law.
SECTION 9.4. TRUSTEE NOT LIABLE FOR CERTIFICATES OR RECEIVABLES. The
recitals contained herein and in the Certificates (other than the certificate of
authentication on the Certificates) shall be taken as the statements of the
Depositor or the Servicer, as the case may be, and the Trustee assumes no
responsibility for the correctness thereof. The Trustee shall make no
representations as to the validity or sufficiency of this Agreement or of the
Certificates (other than the certificate of authentication on the Certificates),
or of any Receivable or related document. The Trustee shall at no time have any
responsibility or liability for or with respect to the legality, validity, and
enforceability of any security interest in any Financed Vehicle or any
Receivable, or the perfection and priority of such a security interest or the
maintenance of any such perfection and priority, or for or with respect to the
efficacy of the Trust or its ability to generate the payments to be distributed
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to Certificateholders under this Agreement, including, without limitation: the
existence, condition, location, and ownership of any Financed Vehicle; the
existence and enforceability of any physical damage insurance thereon; except as
required by Section 2.7, the existence, contents and completeness of any
Receivable or any Receivable Files or any computer or other record thereof; the
validity of the assignment of any Receivable to the Trust or of any intervening
assignment; except as required by Section 2.7, the performance or enforcement of
any Receivable; the compliance by the Depositor or the Servicer with any
warranty or representation made under this Agreement or in any related document
and the accuracy of any such warranty or representation prior to the Trustee's
receipt of notice or other actual knowledge by a Responsible Officer of any
noncompliance therewith or any breach thereof; any investment of monies by or at
the direction of the Servicer or the Certificate Insurer or any loss resulting
therefrom (it being understood that the Trustee shall remain responsible for any
Trust Property that it may hold); the acts or omissions of the Depositor, the
Servicer, or any Obligor; any action of the Servicer taken in the name of the
Trustee; or any action by the Trustee taken at the instruction of the Servicer;
PROVIDED, HOWEVER, that the foregoing shall not relieve the Trustee of its
obligation to perform its duties under this Agreement. Except with respect to a
claim based on the failure of the Trustee to perform its duties under this
Agreement or based on the Trustee's negligence or willful misconduct, no
recourse shall be had for any claim based on any provision of this Agreement,
the Certificates, or any Receivable or assignment thereof against the Trustee in
its individual capacity, the Trustee shall not have any personal obligation,
liability, or duty whatsoever to any Certificateholder or any other Person with
respect to any such claim, and any such claim shall be asserted solely against
the Trust or any indemnitor who shall furnish indemnity as provided in this
Agreement. The Trustee shall not be accountable for the use or application by
the Depositor of any of the Certificates or of the proceeds of such
Certificates, or for the use or application of any funds paid to the Servicer in
respect of the Receivables. The Depositor hereby certifies to the Trustee that
the Rating Agencies rating the Class A Certificates are Standard & Poor's and
Xxxxx'x and the rating agency rating the Class B Certificates is Xxxxx'x and
that their addresses are as set forth in Section 11.5. The Trustee may rely on
the accuracy of such certification until it receives from the Depositor an
Officer's Certificate superseding such certification.
SECTION 9.5. TRUSTEE MAY OWN CERTIFICATES. The Trustee in its
individual or any other capacity may become the owner or pledgee of Certificates
and may deal with the Depositor and the Servicer in banking transactions with
the same rights as it would have if it were not Trustee.
SECTION 9.6. INDEMNITY OF TRUSTEE AND CUSTODIAN. The Servicer shall
indemnify the Trustee, the Custodian and each officer, director and employee of
the Trustee and the Custodian for, and hold each such Person harmless against
any loss, liability, or expense incurred without willful misfeasance,
negligence, or bad faith on its part, arising out of or in connection with the
acceptance or administration of the Trust, or performance of duties as Custodian
of the Legal Files including the costs and expenses of defending itself against
any claim or liability in connection with the exercise or performance of any of
its powers or duties under this Agreement. Additionally the Depositor, pursuant
to Section 6.2, shall indemnify the Trustee and the Custodian with
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respect to certain matters, the Servicer, pursuant to Section 7.2, shall
indemnify the Trustee and the Custodian with respect to certain matters, and
Certificateholders, pursuant to Section 9.3 shall, upon the circumstances
therein set forth, indemnify the Trustee and the Custodian under certain
circumstances. The provisions of this Section 9.6 shall survive the termination
of this Agreement or any resignation or removal of LBAC as Servicer.
SECTION 9.7. ELIGIBILITY REQUIREMENTS FOR TRUSTEE. The Trustee under
this Agreement shall at all times be organized and doing business under the laws
of the United States of America; authorized under such laws to exercise
corporate trust powers; having a combined capital and surplus of at least
$50,000,000 and subject to supervision or examination by Federal or State
authorities satisfactory to the Certificate Insurer; and having a rating, both
with respect to long-term and short-term unsecured obligations, of not less than
investment grade by each Rating Agency. If such corporation shall publish
reports of condition at least annually, pursuant to law or to the requirements
of the aforesaid supervising or examining authority, then for the purpose of
this Section 9.7, the combined capital and surplus of such corporation shall be
deemed to be its combined capital and surplus as set forth in its most recent
report of condition so published. In case at any time the Trustee shall cease to
be eligible in accordance with the provisions of this Section 9.7, the Trustee
shall resign immediately in the manner and with the effect specified in Section
9.8.
SECTION 9.8. RESIGNATION OR REMOVAL OF TRUSTEE. THE Trustee may at any
time resign and be discharged from the trusts hereby created by giving 30 days'
prior written notice thereof to the Servicer. Upon receiving such notice of
resignation, with the prior written consent of (a) the Certificate Insurer and
the Holders of Class A Certificates evidencing not less than 66-2/3% of the
Class A Certificate Balance or (b) if the Class A Certificates have been paid in
full and all outstanding Reimbursement Obligations and other amounts owing to
the Certificate Insurer have been paid in full, with the prior written consent
of the Holders of Class B Certificates evidencing not less than 51% of the
Class B Certificate Balance, the Servicer shall promptly appoint a successor
Trustee by written instrument, in duplicate, one copy of which instrument shall
be delivered to the resigning Trustee and one copy to the successor Trustee. If
no successor Trustee shall have been so appointed and have accepted appointment
within 30 days after the giving of such notice of resignation, the Certificate
Insurer may appoint a successor Trustee by written instrument, in duplicate, one
copy of which instrument shall be delivered to the resigning Trustee and one
copy to the successor Trustee. If no successor Trustee shall have been so
appointed and have accepted appointment within 60 days after the giving of such
notice of resignation, the resigning Trustee may petition any court of competent
jurisdiction for the appointment of a successor Trustee. The Trustee may be
removed at any time by written demand of the Certificate Insurer delivered to
the Trustee and the Servicer.
If at any time the Trustee shall cease to be eligible in accordance
with the provisions of Section 9.7 and shall fail to resign after written
request therefor by the Servicer, or if at any time the Trustee shall be legally
unable to act, or shall be adjudged bankrupt or insolvent, or a receiver,
conservator or liquidator of the Trustee or of its
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property shall be appointed, or any public officer shall take charge or control
of the Trustee or of its property or affairs for the purpose of rehabilitation,
conservation or liquidation, then the Certificate Insurer shall (so long as no
Insurer Default shall have occurred and be continuing), or the Servicer may (if
an Insurer Default shall have occurred and be continuing) remove the Trustee. If
the Certificate Insurer or the Servicer shall remove the Trustee under the
authority of the immediately preceding sentence, the Servicer or the Certificate
Insurer, as the case may be, shall promptly appoint a successor Trustee by
written instrument, in duplicate, one copy of which instrument shall be
delivered to the Trustee so removed and one copy to the successor Trustee, and
pay all fees and expenses owed to the outgoing Trustee, provided that any
successor Trustee appointed by the Servicer shall be acceptable to the
Certificate Insurer.
Any resignation or removal of the Trustee and appointment of a
successor Trustee pursuant to any of the provisions of this Section 9.8 shall
not become effective until acceptance of appointment by the successor Trustee
pursuant to Section 9.9 and payment of all fees and expenses owed to the
outgoing Trustee. The Servicer shall provide notice of such resignation or
removal of the Trustee to each of the Rating Agencies and the Depositor.
If the Trustee and the Back-up Servicer shall be the same Person and
the rights and obligations of the Back-up Servicer shall have been terminated
pursuant to this Section 9.8, the Certificate Insurer (or, if an Insurer Default
shall have occurred and be continuing, Holders of Certificates evidencing a
majority of the Certificate Balance outstanding) shall have the option, by 60
days' prior notice in writing to the Servicer and the Trustee, to remove the
Trustee, and the Certificate Insurer shall not have any liability to the
Trustee, LBAC, the Depositor, the Servicer or any Certificateholder in
connection with such removal.
SECTION 9.9. SUCCESSOR TRUSTEE. Any successor Trustee appointed
pursuant to SECTION 9.8 shall execute, acknowledge, and deliver to the
Depositor, the Servicer, the Certificate Insurer and to its predecessor Trustee
an instrument accepting such appointment under this Agreement, and thereupon the
resignation or removal of the predecessor Trustee shall become effective and
such successor Trustee, without any further act, deed or conveyance, shall
become fully vested with all the rights, powers, duties, and obligations of its
predecessor under this Agreement, with like effect as if originally named as
Trustee. The predecessor Trustee shall upon payment of its fees and expenses
deliver to the successor Trustee all documents and statements and monies held by
it under this Agreement; and the Servicer, the Certificate Insurer and the
predecessor Trustee shall execute and deliver such instruments and do such other
things as may reasonably be required for fully and certainly vesting and
confirming in the successor Trustee all such rights, powers, duties, and
obligations.
No successor Trustee shall accept appointment as provided in this
Section 9.9 unless at the time of such acceptance such successor Trustee shall
be eligible pursuant to Section 9.7.
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Upon acceptance of appointment by a successor Trustee pursuant to this
Section 9.9, the Servicer shall mail notice of the successor of such Trustee
under this Agreement to all Holders of Certificates at their addresses as shown
in the Certificate Register, the Depositor, and to the Rating Agencies. If the
Servicer shall fail to mail such notice within 10 days after acceptance of
appointment by the successor Trustee, the successor Trustee shall cause such
notice to be mailed at the expense of the Servicer.
SECTION 9.10. MERGER OR CONSOLIDATION OF TRUSTEE. Any corporation
into which the Trustee may be merged or converted or with which it may be
consolidated, or any corporation resulting from any merger, conversion or
consolidation to which the Trustee shall be a party, or any corporation
succeeding to all or substantially all of the corporate trust business of the
Trustee, shall be the successor of the Trustee hereunder, PROVIDED such
corporation shall be eligible pursuant to Section 9.7, without the execution or
filing of any instrument or any further act on the part of any of the parties
hereto, anything herein to the contrary notwithstanding; PROVIDED FURTHER that
the Trustee shall mail notice of such merger or consolidation to the Rating
Agencies, the Depositor and the Certificate Insurer.
SECTION 9.11. CO-TRUSTEE; SEPARATE TRUSTEE. Notwithstanding any other
provisions of this Agreement, at any time, for the purpose of meeting any legal
requirements of any jurisdiction in which any part of the Trust or any Financed
Vehicle may at the time be located, the Servicer, the Certificate Insurer
(PROVIDED an Insurer Default shall not have occurred and be continuing) and the
Trustee acting jointly shall have the power and shall execute and deliver all
instruments to appoint one or more persons approved by the Trustee to act as
co-trustee, jointly with the Trustee, or separate trustee or separate trustees,
of all or any part of the Trust, and to vest in such Person, in such capacity
and for the benefit of the Certificateholders, such title to the Trust, or any
part thereof, and, subject to the other provisions of this Section 9.11, such
powers, duties, obligations, rights, and trusts as the Servicer, the Certificate
Insurer and the Trustee may consider necessary or desirable. If the Servicer and
the Certificate Insurer shall not have joined in such appointment within 15 days
after the receipt by it of a request so to do, or in the case an Event of
Default shall have occurred and be continuing, the Trustee alone shall have the
power to make such appointment. No co-trustee or separate trustee under this
Agreement shall be required to meet the terms of eligibility as a successor
trustee pursuant to Section 9.7, except that the co-trustee or its parent shall
comply with the rating, requirements set forth therein, and no notice of a
successor trustee pursuant to Section 9.9 and no notice to Certificateholders of
the appointment of any co-trustee or separate trustee shall be required pursuant
to Section 9.9.
Each separate trustee and co-trustee shall, to the extent permitted by
law, be appointed and act subject to the following provisions and conditions:
(i) All rights, powers, duties, and obligations conferred
or imposed upon the Trustee shall be conferred upon and exercised or
performed by the Trustee and such separate trustee or co-trustee
jointly (it being understood that such separate trustee or co-trustee
is not authorized to act separately without the Trustee joining in such
act), except to the extent that under any law of any
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jurisdiction in which any particular act or acts are to be performed
(whether as Trustee under this Agreement or, in its capacity as Back-up
Servicer, as successor to the Servicer under this Agreement), the
Trustee shall be incompetent or unqualified to perform such act or
acts, in which event such rights, powers, duties, and obligations
(including the holding of title to the Trust or any portion thereof in
any such jurisdiction) shall be exercised and performed singly by such
separate trustee or co-trustee, but solely at the direction of the
Trustee;
(ii) No trustee under this Agreement shall be personally
liable by reason of any act or omission of any other trustee under this
Agreement; and
(iii) Provided no Insurer Default shall have occurred and be
continuing, the Certificate Insurer may, and, in the event an Insurer
Default shall have occurred and be continuing, then, the Servicer and
the Trustee acting jointly may, at any time accept the resignation of
or remove any separate trustee or co-trustee.
Any notice, request or other writing given to the Trustee shall be
deemed to have been given to each of the other then separate trustees and
co-trustees, as effectively as if given to each of them. Every instrument
appointing any separate trustee or co-trustee shall refer to this Agreement
and the conditions of this ARTICLE IX. Each separate trustee and co-trustee,
upon its acceptance of the trusts conferred, shall be vested with the estates
or property specified in its instrument of appointment, either jointly with
the Trustee or separately, as may be provided therein, subject to all the
provisions of this Agreement, specifically including every provision of this
Agreement relating to the conduct of, affecting the liability of, or
affording protection to, the Trustee. Each such instrument shall be filed
with the Trustee and a copy thereof given to the Servicer.
Any separate trustee or co-trustee may at any time appoint the
Trustee, its agent or attorney-in-fact with full power and authority, to the
extent not prohibited by law, to do any lawful act under or in respect of
this Agreement on its behalf and in its name. If any separate trustee or
co-trustee shall die, become incapable of acting, resign or be removed, all
of its estates, properties, rights, remedies and trusts shall vest in and be
exercised by the Trustee, to the extent permitted by law, without the
appointment of a new or successor trustee.
SECTION 9.12. REPRESENTATIONS AND WARRANTIES OF TRUSTEE. The Trustee
shall make the following representations and warranties on which the Depositor,
the Servicer, the Originator, the Certificate Insurer and Certificateholders
shall rely:
(i) The Trustee is a national banking association duly
organized, validly existing, and in good standing under the laws of the
United States of America and has the corporate power, authority and
legal right, as Trustee and Back-up Servicer on behalf of the Trust, to
acquire, own, sell and service the Receivables, and to hold the
Receivable Files as Custodian.
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(ii) The Trustee has full corporate power authority and legal
right to execute, deliver, and perform this Agreement and shall have
taken all necessary action to authorize the execution, delivery and
performance by it of this Agreement.
(iii) This Agreement shall have been duly executed and
delivered by the Trustee and this Agreement constitutes a legal, valid
and binding obligation of the Trustee enforceable in accordance with
its terms, subject to (x) applicable bankruptcy, insolvency,
reorganization, moratorium, and other similar laws affecting creditor's
rights generally and (y) general principles of equity.
SECTION 9.13. NO BANKRUPTCY PETITION. The Trustee covenants and agrees
that prior to the date which is one year and one day after the payment in full
of all securities issued by the Depositor or by a trust for which the Depositor
was the depositor it will not institute against, or join any other Person in
instituting against, the Depositor or the Trust any bankruptcy, reorganization,
arrangement, insolvency or liquidation proceedings, or other proceedings under
any Federal or State bankruptcy or similar law.
SECTION 9.14. TRUSTEE MAY ENFORCE CLAIMS WITHOUT POSSESSION OF
CERTIFICATES. All rights of action and claims under this Agreement or the
Certificates may be prosecuted and enforced by the Trustee without the
possession of any of the Certificates or the production thereof in any
proceeding relating thereto, and any such proceeding instituted by the Trustee
shall be brought in its own name as Trustee. Any recovery of judgment shall,
after provision for the payment of the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel, be for the
ratable benefit of the Certificateholders in respect of which such judgment has
been obtained.
SECTION 9.15. RIGHTS OF CERTIFICATE INSURER TO DIRECT TRUSTEE.
Subject to clause (iii) of Section 9.3, unless an Insurer Default shall have
occurred and be continuing, the Certificate Insurer, after giving written
notice to the Trustee, shall have the right to direct the time, method and
place at or by which the Trustee conducts any proceeding for any remedy
available to the Trustee, or exercises any such trust or power conferred upon
the Trustee; PROVIDED, HOWEVER, that subject to Section 9.1, the Trustee
shall have the right to decline to follow any such direction of the
Certificate Insurer if the Trustee, being advised by counsel, determines that
the action so directed may not lawfully be taken, or if the Trustee in good
faith shall, by a Responsible Officer of the Trustee, determine that the
proceedings so directed would be in violation of any Basic Document or
illegal or involve it in personal liability against which its has not been
provided indemnity in form and substance satisfactory to it or be unduly
prejudicial to the rights of Certificateholders; PROVIDED, that nothing in
this Agreement shall impair the right of the Trustee to take any action
deemed proper by the Trustee and which is not inconsistent with such
direction of the Certificate Insurer. Notwithstanding the foregoing, neither
the Trustee nor the Certificate Insurer has the right to liquidate the
Collateral under this Agreement or any other Basic Document.
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ARTICLE X
TERMINATION
SECTION 10.1. TERMINATION OF THE TRUST. The respective obligations and
responsibilities of LBAC, the Depositor, the Servicer, the Custodian and the
Trustee created hereby and the Trust created by this Agreement shall terminate
upon the payment to Certificateholders of all amounts required to be paid to
them pursuant to this Agreement, satisfaction of all Reimbursement Obligations,
and the expiration of any preference period related thereto and the disposition
of all property held as part of the Trust; PROVIDED, HOWEVER, in any case there
shall be delivered to the Trustee and the Certificate Insurer an Opinion of
Counsel that all applicable preference periods under federal, state and local
bankruptcy, insolvency and similar laws have expired with respect to the
payments pursuant to this Section 10.1; PROVIDED, FURTHER, HOWEVER, that in no
event shall the trust created by this Agreement continue beyond expiration of
21 years from the death of the last survivor of the descendants of Xxxxxx X.
Xxxxxxx, the late ambassador of the United States of America to the Court of St.
Xxxxx, living on the date of this Agreement. The Servicer shall promptly notify
the Trustee, the Depositor, each Rating Agency and the Certificate Insurer of
any prospective termination pursuant to this Section 10.1.
Notice of any termination, specifying the Distribution Date upon which
the Certificateholders may surrender their Certificates to the Trustee for
payment of the final distribution and cancellation, shall be given promptly by
the Trustee by letter to Certificateholders mailed not earlier than the 15th day
and not later than the 25th day of the month next preceding the specified
Distribution Date stating (A) the Distribution Date upon which final payment of
the Certificates shall be made upon presentation and surrender of the
Certificates at the office of the Trustee therein designated, (B) the amount of
any such final payment, and (C) if applicable, that the Record Date otherwise
applicable to such Distribution Date is not applicable, payments being made only
upon presentation and surrender of the Certificates at the office of the Trustee
therein specified. The Trustee shall give such notice to the Depositor and the
Certificate Registrar (if other than the Trustee) at the time such notice is
given to Certificateholders. Upon presentation and surrender of the
Certificates, the Trustee shall cause to be distributed to Certificateholders
amounts distributable on such Distribution Date pursuant to Section 4.6.
In the event that all of the Certificateholders shall not surrender
their Certificates for cancellation within six months after the date
specified in the above-mentioned written notice, the Trustee shall give a
second written notice to the remaining Certificateholders to surrender their
Certificates for cancellation and receive the final distribution with respect
thereto. If within one year after the second notice all the Certificates
shall not have been surrendered for cancellation, the Trustee shall take
appropriate steps, or may appoint an agent to take appropriate steps, to
contact the remaining Certificateholders concerning surrender of their
Certificates, and the cost thereof shall be paid out of the funds and other
assets that shall remain subject to this Agreement or, if none, from LBAC.
Notwithstanding the foregoing, any funds remaining on deposit in the
Certificate
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Account for the payment of the Certificates and not applied but remaining
unclaimed for two years after the date upon which principal and interest on such
Certificates shall have become due and payable, shall, at the election of the
Trustee or upon the written request of LBAC and unless otherwise required by
mandatory provisions of law, be paid to the National Stroke Council by the
Trustee, and the holder of any Certificate and the Certificate Insurer, shall,
unless otherwise required by mandatory provisions of law, thereafter look only
to LBAC for any payment which such Person may be entitled to collect, and all
liability of the Trustee with respect to such funds and all obligations (other
than obligations which by their express terms survive termination of the Trust)
of the Trustee under this Agreement shall thereupon cease.
SECTION 10.2. OPTIONAL PURCHASE OF ALL RECEIVABLES. On the last day of
any Collection Period as of which the Pool Balance shall be less than or equal
to the Optional Purchase Percentage multiplied by the sum of the Original Pool
Balance and the aggregate Principal Balance of all Subsequent Receivables
conveyed to the Trust as of the related Subsequent Cutoff Dates, the Originator
or the Servicer shall have the option to purchase the corpus of the Trust (with
the consent of the Certificate Insurer, if such purchase would result in a claim
on the Policy or would result in any amount owing to the Certificate Insurer or
to the Holders of the Class A Certificates remaining unpaid); PROVIDED, HOWEVER,
that if both the Originator and the Servicer desire to effect such purchase, the
Originator shall have the preferential right to effect such purchase; PROVIDED,
FURTHER, that neither the Originator nor the Servicer may effect any such
purchase unless the Originator shall have received an Opinion of Counsel, and
shall have delivered it to the Trustee to the effect that such purchase would
not constitute a fraudulent conveyance. The Originator or the Servicer, as
applicable, shall notify each Rating Agency of such purchase. To exercise such
option the Originator or the Servicer (or the Certificate Insurer, if
applicable) shall deposit pursuant to Section 4.5 in the Collection Account an
amount equal to the aggregate Purchase Amount for the Receivables (including
defaulted Receivables), plus the appraised value of any other property held by
the Trust, such value to be determined by an appraiser mutually agreed upon by
the Originator or the Servicer, as applicable, the Certificate Insurer and the
Trustee, and shall succeed to all interests in and to the Trust. For purposes of
this Section, the Purchase Amount shall not be less than the amount necessary to
permit the full distribution of the sum of the Class A Certificate Balance, the
Class B Certificate Balance, the then outstanding Class B Undistributed
Principal Amount and the accrued and unpaid Class B Interest Distributable
Amount, Class B Interest Carryover Shortfall, Class B Additional Interest
Distributable Amount and Class B Additional Interest Carryover Shortfall as of
such date of repurchase.
ARTICLE XI
MISCELLANEOUS PROVISIONS
SECTION 11.1. AMENDMENT. This Agreement may be amended from time to
time by the Depositor, the Servicer, and the Trustee with the consent of the
Certificate Insurer and with the consent (which consent of any Holder of a
Certificate given pursuant
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to this Section or pursuant to any other provision of this Agreement shall be
conclusive and binding on such Holder and on all future Holders of such
Certificate and of any Certificate issued upon the transfer thereof or in
exchange thereof or in lieu thereof whether or not notation of such consent is
made upon the Certificate) of the Holders of Class A Certificates evidencing not
less than 66-2/3% of the Class A Certificate Balance and the Holders of Class B
Certificates evidencing not less than 66-2/3% of the Class B Certificate Balance
for the purpose of adding any provisions to or changing in any manner or
eliminating any of the provisions of this Agreement, or of modifying in any
manner the rights of the Holders of Certificates; PROVIDED, HOWEVER, that no
such amendment shall (a) increase or reduce in any manner the amount of, or
accelerate or delay the timing of, or change the allocation or priority of,
collections of payments on Receivables or distributions that shall be required
to be made on any Certificate or change the Class A Pass-Through Rate or the
Class B Pass-Through Rate without the consent of each Certificateholder affected
thereby, (b) reduce the aforesaid percentage of the Class A Certificate Balance
or Class B Certificate Balance required to consent to any such amendment,
without the consent of the Holders of all Certificates of the applicable class
then outstanding or eliminate the right of the Excess Cash Flow
Certificateholder to consent to any change described in clause (a) affecting the
Excess Cash Flow Certificateholder without the consent of the Excess Cash Flow
Certificateholder, (c) result in a downgrade or withdrawal of the then current
rating of the Class A Certificates by either of the Rating Agencies without the
consent of all the Class A Certificateholders or (d) result in a downgrade or
withdrawal of the then current rating of the Class B Certificates by either of
the Rating Agencies without the consent of all the Class B Certificateholders.
The Trustee shall furnish prior notice of any such proposed amendment
to each Rating Agency and promptly after the execution of any such amendment or
consent, the Trustee shall furnish a copy of such amendment or consent to each
Certificateholder, each of the Rating Agencies and the Lock-Box Processor.
Prior to the execution of any amendment to this Agreement, the Trustee
shall be entitled to receive and rely upon an Opinion of Counsel stating that
the execution of such amendment is authorized or permitted by this Agreement and
the Opinion of Counsel referred to in Section 11.2(i)(1). The Trustee may, but
shall not be obligated to, enter into any such amendment which affects the
Trustee's own rights, duties or immunities under this Agreement or otherwise.
SECTION 11.2. PROTECTION OF TITLE TO TRUST. (a) Each of the Depositor,
as to itself, and the Servicer, as to itself, shall execute and file such
financing statements and cause to be executed and filed such continuation
statements, all in such manner and in such places as may be required by law
fully to preserve, maintain, and protect the interest of the Certificateholders,
the Trustee and the Certificate Insurer in its interest in the Receivables and
the other Trust Assets and in the proceeds thereof. Each of the Depositor, as to
itself, and the Servicer, as to itself, shall deliver (or cause to be delivered)
to the Trustee and the Certificate Insurer file-stamped copies of, or filing
receipts for, any document filed as provided above, as soon as available
following such filing.
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(b) Neither the Depositor nor the Servicer shall change its name,
identity, or corporate structure in any manner that would, could, or might
make any financing statement or continuation statement filed in accordance
with paragraph (a) above seriously misleading within the meaning of Section
9-402(7) of the UCC, unless it shall have given the Trustee, the Certificate
Insurer and the other party at least thirty days' prior written notice
thereof, shall have promptly filed appropriate amendments to all previously
filed financing statements or continuation statements and shall have
delivered an Opinion of Counsel (A) stating that, in the opinion of such
counsel, all amendments to all previously filed financing statements and
continuation statements have been executed and filed that are necessary fully
to preserve and protect the interest of the Trustee in the Receivables and
the other Trust Assets, and reciting the details of such filings, or (B)
stating that, in the opinion of such counsel, no such action shall be
necessary to preserve and protect such interest.
(c) Each of the Depositor and the Servicer shall have an obligation to
give the Trustee, the Certificate Insurer and the other party at least thirty
days' prior written notice of any relocation of its principal executive office
if, as a result of such relocation, the applicable provisions of the UCC would
require the filing of any amendment of any previously filed financing or
continuation statement or of any new financing statement, shall promptly file
any such amendment and shall deliver an Opinion of Counsel (A) stating that, in
the opinion of such counsel, all amendments to all previously filed financing
statements and continuation statements have been executed and filed that are
necessary fully to preserve and protect the interest of the Trustee in the
Receivables, and reciting the details of such filings, or (B) stating that, in
the opinion of such counsel, no such action shall be necessary to preserve and
protect such interest. The Servicer shall at all times maintain each office from
which it shall service Receivables, and its principal executive office, within
the United States of America.
(d) The Servicer shall maintain accounts and records as to each
Receivable accurately and in sufficient detail to permit (i) the reader thereof
to know at any time the status of such Receivable, including payments and
recoveries made and payments owing (and the nature of each) and (ii)
reconciliation between payments or recoveries on (or with respect to) each
Receivable and the amounts from time to time deposited in the Certificate
Account and Payahead Account in respect of such Receivable.
(e) The Servicer shall maintain its computer systems so that, from
and after the time of sale under this Agreement of the Receivables to the
Trustee, the Servicer's master computer records (including any back-up
archives) that refer to a Receivable shall indicate clearly the interest of
Long Beach Acceptance Auto Grantor Trust 1998-1 in such Receivable and that
such Receivable is owned by the Trust. Indication of the Trust's ownership of
a Receivable shall be deleted from or modified on the Servicer's computer
systems when, and only when, such Receivable shall have been paid in full or
repurchased.
(f) If at any time the Depositor or the Servicer shall propose to sell,
grant a security interest in, or otherwise transfer any interest in automotive
receivables to any prospective purchaser, lender, or other transferee, the
Servicer shall give to such
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prospective purchaser, lender, or other transferee computer tapes, records, or
printouts (including any restored from back-up archives) that, if they shall
refer in any manner whatsoever to any Receivable, shall indicate clearly that
such Receivable has been sold to and is owned by the Trust.
(g) The Servicer shall, upon reasonable notice, permit the Depositor,
the Trustee, the Back-up Servicer and the Certificate Insurer and its agents at
any time during normal business hours to inspect, audit, and make copies of and
abstracts from the Servicer's records regarding any Receivable.
(h) Upon request, the Servicer shall furnish to the Depositor, the
Trustee, the Back-up Servicer or to the Certificate Insurer, within five
Business Days, a list of all Receivables (by contract number and name of
Obligor) then held as part of the Trust, together with a reconciliation of such
list to the Schedule of Receivables and to each of the Servicer's Certificates
furnished before such request indicating removal of Receivables from the Trust.
(i) The Servicer shall deliver to the Trustee and the Certificate
Insurer:
(1) promptly after the execution and delivery of this
Agreement and of each amendment hereto and after the execution and
delivery of each amendment to any financing statement, an Opinion of
Counsel either (A) stating that, in the opinion of such counsel, all
financing statements and continuation statements have been executed and
filed that are necessary fully to preserve and protect the interest of
the Trustee in the Receivables, and reciting the details of such
filings or referring to prior Opinions of Counsel in which such details
are given, or (B) stating that, in the opinion of such counsel, no such
action shall be necessary to preserve and protect such interest; and
(2) within 90 days after the beginning of each calendar year
beginning with the first calendar year beginning more than three months
after the Initial Cutoff Date, an Opinion of Counsel, dated as of a
date during such 90-day period either (A) stating that, in the opinion
of such counsel, all financing statements and continuation statements
have been executed and filed that are necessary fully to preserve and
protect the interest of the Trustee in the Receivables, and reciting
the details of such filings or referring to prior Opinions of Counsel
in which such details are given or (B) stating that, in the opinion of
such counsel, no such action shall be necessary to preserve and
protect such interest.
Each Opinion of Counsel referred to in clause (i) (1) or (i) (2) above
shall specify any action necessary (as of the date of such opinion) to be taken
in the following year to preserve and protect such interest.
(j) For the purpose of facilitating the execution of this Agreement and
for other purposes, this Agreement may be executed simultaneously in any number
of
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counterparts, each of which counterparts shall be deemed to be an original, and
all of which counterparts shall constitute but one and the same instrument.
SECTION 11.3. LIMITATION ON RIGHTS OF CERTIFICATEHOLDERS. The death or
incapacity of any Certificateholder shall not operate to terminate this
Agreement or the Trust, nor entitle such Certificateholder's legal
representatives or heirs to claim an accounting or to take any action or
commence any proceeding in any court for a partition or winding up of the Trust,
nor otherwise affect the rights, obligations and liabilities of the parties to
this Agreement or any of them.
No Certificateholder shall have any right to vote (except as
specifically provided herein including in Section II.1) or in any manner
otherwise control the operation and management of the Trust, or the obligations
of the parties to this Agreement, nor shall anything in this Agreement set
forth, or contained in the terms of the Certificates, be construed so as to
constitute the Certificateholders from time to time as partners or members of an
association; nor shall any Certificateholder be under any liability to any third
person by reason of any action taken pursuant to any provision of this
Agreement.
So long as no Insurer Default has occurred and is continuing, except as
otherwise specifically provided herein, whenever Class A Certificateholder
action, consent or approval is required under this Agreement, such action,
consent or approval shall be deemed to have been taken or given on behalf of,
and shall be binding upon, all Class A Certificateholders if the Certificate
Insurer agrees to take such action or give such consent or approval.
If an Insurer Default shall have occurred and be continuing, no Class A
Certificateholder shall have any right by virtue or by availing itself of any
provisions of this Agreement to institute any suit, action, or proceeding in
equity or at law upon or under or with respect to this Agreement, unless such
Holder previously shall have given to the Trustee a written notice of default
and of the continuance thereof, and unless also the Holders of Class A
Certificates evidencing not less than 25% of the Class A Certificate Balance
shall have made written request upon the Trustee to institute such action, suit
or proceeding in its own name as Trustee under this Agreement and shall have
offered to the Trustee such reasonable indemnity as it may require against the
costs, expenses, and liabilities to be incurred therein or thereby and the
Trustee, for 30 days after its receipt of such notice, request, and offer of
indemnity, shall have neglected or refused to institute any such action, suit or
proceeding and during such 30-day period no request or waiver inconsistent with
such written request has been given to the Trustee pursuant to this Section or
Section 8.4; no one or more Holders of Class A Certificates shall have any right
in any manner whatever by virtue or by availing itself or themselves of any
provisions of this Agreement to affect, disturb, or prejudice the rights of the
Holders of any other of the Class A Certificates, or to obtain or seek to obtain
priority over or preference to any other such Holder, or to enforce any right,
under this Agreement except in the manner provided in this Agreement and for the
equal, ratable, and common benefit of all Class A Certificateholders. For the
protection and enforcement of the provisions of this Section II.3, each Class A
Certificateholder and the Trustee shall be entitled to such relief as can be
given either at law or in equity. Nothing
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in this Agreement shall be construed as giving the Class A Certificateholders
any direct right to make a claim on the Policy.
No Class B Certificateholder shall have any right by virtue or by
availing itself of any provisions of the Agreement to institute any suit,
action, proceeding in equity or at law upon or under or with respect to the
Agreement, unless it has the prior written consent of the Certificate Insurer
and, if any Class A Certificate shall remain outstanding, the prior written
consent of the Holders of Class A Certificates evidencing not less than 66-2/3%
of the Class A Certificate Balance; PROVIDED that, this sentence shall be
inoperative from and after such time as the Class A Certificates have been paid
in full and all outstanding Reimbursement Obligations and other amounts due to
the Certificate Insurer have been paid in full.
SECTION 11.4. GOVERNING LAW. THIS AGREEMENT SHALL BE CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, AND THE OBLIGATIONS, RIGHTS,
AND REMEDIES OF THE PARTIES UNDER THIS AGREEMENT SHALL BE DETERMINED IN
ACCORDANCE WITH SUCH LAWS WITHOUT REGARD TO CONFLICT OF LAWS PRINCIPLES (EXCEPT
WITH REGARD TO THE UCC).
SECTION 11.5. NOTICES. All demands, notices, and communications upon or
to the Depositor, the Servicer, the Trustee, the Certificate Insurer, Standard &
Poor's or Moody's under this Agreement shall be in writing, and delivered (i)
personally, (ii) by certified mail, return receipt requested, (iii) by Federal
Express or similar overnight courier service or (iv) by telecopy, and shall be
deemed to have been duly given upon receipt (a) in the case of the Depositor, at
the following address: 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 Depositor in a written notice to the Trustee, (b)
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, (c) in the case of the Trustee, at its principal Corporate Trust Office
(Telecopy: (000) 000-0000), (d) in the case of Standard & Poor's, at the
following address: 00 Xxxxxxxx, 00xx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention:
Asset Backed Surveillance Department, (e) in the case of Moody's, at the
following address: 00 Xxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention: ABS
Monitoring Department and (f) in the case of the Certificate Insurer, at the
following address: 000 Xxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention: Senior
Vice President, Surveillance, Re: Long Beach Acceptance Auto Grantor Trust
1998-1. Any notice required or permitted to be mailed to a Certificateholder
shall be given by Federal Express or similar overnight courier service, postage
prepaid, at the address of such Holder as shown in the Certificate Register. Any
notice so mailed within the time prescribed in this Agreement shall be
conclusively presumed to have been duly given, whether or not the
Certificateholder shall receive such notice.
The Trustee shall give prompt written notice to each of the Depositor,
the Rating Agencies and each Class A Certificateholder of (i) any amendments to
the Insurance Agreement or the Policy (upon receipt of written notice of any
such amendments from
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LBAC or the Servicer), (ii) any change in the identity of the Paying Agent and
(iii) any failure to make payment under the Policy.
SECTION 11.6. SEVERABILITY OF PROVISIONS. If any one or more of the
covenants, agreements, provisions, or terms of this Agreement shall be for any
reason whatsoever held invalid, then such covenants, agreements, provisions, or
terms shall be deemed severable from the remaining covenants, agreements,
provisions, or terms of this Agreement and shall in no way affect the validity
or enforceability of the other provisions of this Agreement or of the
Certificates or the rights of the Holders thereof.
SECTION 11.7. ASSIGNMENT. Notwithstanding anything to the contrary
contained herein, except as provided in Sections 6.3 and 8.3 and as provided in
the provisions of this Agreement concerning the resignation of the Servicer,
this Agreement may not be assigned by the Depositor or the Servicer without the
prior written consent of the Certificate Insurer, LBAC, the Trustee and the
Holders of Certificates evidencing not less than 51% of the Pool Balance, the
Holders of Class A Certificates evidencing not less than 66-2/3% of the Class A
Certificate Balance and the Holders of Class B Certificates evidencing not less
than 51% of the Class B Certificate Balance.
SECTION 11.8. CERTIFICATES NONASSESSABLE AND FULLY PAID.
Certificateholders shall not be personally liable for obligations of the Trust.
The interests represented by the Certificates shall be nonassessable for any
losses or expenses of the Trust or for any reason whatsoever, and upon
authentication thereof by the Trustee pursuant to Section 5.4 or 5.5,
Certificates shall be deemed fully paid.
SECTION 11.9. NONPETITION COVENANT. None of the Depositor, the
Servicer, the Trustee, the Custodian, the Back-up Servicer or LBAC shall, prior
to the date which is one year and one day after the termination of this
Agreement with respect to the Trust or the Depositor, petition or otherwise
invoke the process of any court or government authority for the purpose of
commencing or sustaining a case against the Trust or the Depositor under any
Federal or State bankruptcy, insolvency or similar law or appointing a receiver,
liquidator, assignee, trustee, custodian, sequestrator or other similar official
of the Trust or the Depositor or any substantial part of its property, or
ordering the winding up or liquidation of the affairs of the Trust or the
Depositor.
SECTION 11.10. THIRD PARTY BENEFICIARIES. Except as otherwise
specifically provided herein with respect to Certificateholders, the parties to
this Agreement hereby manifest their intent that no third party other than the
Certificate Insurer and the Custodian with respect to the indemnification
provisions set forth herein, shall be deemed a third party beneficiary of this
Agreement, and specifically that the Obligors are not third party beneficiaries
of this Agreement. The Certificate Insurer and its successors and assigns shall
be a third-party beneficiary to the provisions of this Agreement, and shall be
entitled to rely upon and directly enforce such provisions of this Agreement so
long as no Insurer Default shall have occurred and be continuing. Except as
expressly stated otherwise herein or in the Basic Documents, any right of the
Certificate Insurer to direct, appoint, consent to, approve of, or take any
action under this Agreement, shall be a right exercised by the Certificate
Insurer in its sole and absolute discretion. The Certificate
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Insurer may disclaim any of its rights and powers under this Agreement (but not
its duties and obligations under the Policy) upon delivery of a written notice
to the Trustee.
SECTION 11.11. CERTIFICATE INSURER AS CONTROLLING PARTY. Each
Certificateholder by purchase of the Certificates held by it acknowledges that
each such Certificateholder and the Trustee, as partial consideration of the
issuance of the Policy, have agreed that the Certificate Insurer shall have
certain rights hereunder for so long as no Insurer Default shall have occurred
and be continuing. So long as an Insurer Default has occurred and is continuing,
any provision giving the Certificate Insurer the right to direct, appoint or
consent to, approve of, or take any action under this Agreement shall be
inoperative during the period of such Insurer Default and such right shall
instead vest in the Trustee acting at the direction of the Holders of Class A
Certificates evidencing, unless otherwise specified, not less than 66-2/3% of
the Class A Certificate Balance. From and after such time as the Class A
Certificates have been paid in full and all outstanding Reimbursement
Obligations and other amounts due to the Certificate Insurer have been paid in
full, any provision giving the Certificate Insurer or the Class A
Certificateholders the right to direct, appoint or consent to, approve of, or
take any action under this Agreement shall be inoperative and such right shall
instead vest in the Trustee acting at the direction of the Holders of Class B
Certificates evidencing, unless otherwise specified, not less than 51% of the
Class B Certificate Balance. The Certificate Insurer may disclaim any of its
rights and powers under this Agreement (but not its duties and obligations under
the Policy) upon delivery of a written notice to the Trustee. The Certificate
Insurer may give or withhold any consent hereunder in its sole and absolute
discretion.
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IN WITNESS WHEREOF, the Depositor, the Originator, the Servicer, the
Trustee, the Back-up Servicer, the Custodian and the Collateral Agent have
caused this
Pooling and Servicing Agreement to be duly executed by their
respective officers as of the day and year first above written.
LONG BEACH ACCEPTANCE RECEIVABLES
CORP, as Deposit
By: /s/ Xxxxxx X. Xxxxxxxxx
-------------------------------------
Name: Xxxxxx X. Xxxxxxxx
Title: Executive Vice President
LONG BEACH ACCEPTANCE CORP.,
as Originator and Servicer
By: /s/ Xxxxxx X. Xxxxxxxxx
-------------------------------------
Name: Xxxxxx X. Xxxxxxxx
Title: Executive Vice President
CHASE BANK OF TEXAS, NATIONAL ASSOCIATION,
as Trustee, Back-up Servicer, Custodian
and Collateral Agent
By: /s/ Xxxx Xxxxxx
-------------------------------------
Name: Xxxx Xxxxxx
Title: Asst Vice President
[Signature Page to the
Pooling and Servicing Agreement]
EXHIBIT A: FORM OF CLASS A CERTIFICATE SEE REVERSE FOR
CERTAIN
DEFINITIONS
[UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE TRUSTEE OR ITS
AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY CERTIFICATE
ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO
CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.]
THIS CERTIFICATE HAS NOT BEEN AND WILL NOT BE REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED, OR THE APPLICABLE SECURITIES LAWS OF ANY STATE.
ACCORDINGLY, TRANSFER OF THIS CERTIFICATE IS SUBJECT TO CERTAIN RESTRICTIONS SET
FORTH IN SECTION 5.5(a) OF THE AGREEMENT. BY ITS ACCEPTANCE OF THIS CERTIFICATE
THE HOLDER OF THIS CERTIFICATE IS DEEMED TO REPRESENT TO THE DEPOSITOR AND THE
TRUSTEE [THAT IT IS AN INSTITUTIONAL INVESTOR THAT IS AN "ACCREDITED INVESTOR"
AS DEFINED IN RULE 501(A)(1), (2), (3) OR (7) OF REGULATION D PROMULGATED UNDER
THE SECURITIES ACT (AN "INSTITUTIONAL ACCREDITED INVESTOR") AND THAT IT IS
ACQUIRING THIS CERTIFICATE FOR ITS OWN ACCOUNT (AND NOT FOR THE ACCOUNT OF
OTHERS) OR AS A FIDUCIARY OR AGENT FOR OTHERS (WHICH OTHERS ALSO ARE
INSTITUTIONAL ACCREDITED INVESTORS UNLESS THE HOLDER IS A BANK ACTING IN ITS
FIDUCIARY CAPACITY) FOR INVESTMENT AND NOT WITH A VIEW TO, OR FOR OFFER OR SALE
IN CONNECTION WITH, THE PUBLIC DISTRIBUTION HEREOF] [THAT IT IS A "QUALIFIED
INSTITUTIONAL BUYER" AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT AND IS
ACQUIRING THIS "CERTIFICATE FOR ITS OWN ACCOUNT (AND NOT FOR THE ACCOUNT OF
OTHERS) OR AS A FIDUCIARY OR AGENT FOR OTHERS (WHICH OTHERS ALSO ARE QUALIFIED
INSTITUTIONAL BUYERS)].
NO SALE, PLEDGE OR OTHER TRANSFER OF THIS CERTIFICATE MAY BE MADE BY ANY PERSON
UNLESS EITHER (I) SUCH SALE, PLEDGE OR OTHER TRANSFER IS MADE TO THE DEPOSITOR,
(II) [SUCH SALE, PLEDGE OR OTHER TRANSFER IS MADE TO AN INSTITUTIONAL ACCREDITED
INVESTOR THAT EXECUTES A CERTIFICATE, SUBSTANTIALLY IN THE FORM SPECIFIED IN THE
AGREEMENT, TO THE EFFECT THAT IT IS AN INSTITUTIONAL ACCREDITED INVESTOR ACTING
FOR ITS OWN ACCOUNT
A-1
(AND NOT FOR THE ACCOUNT OF OTHERS) OR AS A FIDUCIARY OR AGENT FOR OTHERS (WHICH
OTHERS ALSO ARE INSTITUTIONAL ACCREDITED INVESTORS UNLESS THE HOLDER IS A BANK
ACTING IN ITS FIDUCIARY CAPACITY),] [SO LONG AS THIS CERTIFICATE IS ELIGIBLE FOR
RESALE PURSUANT TO RULE 144A UNDER THE SECURITIES ACT, SUCH SALE, PLEDGE OR
OTHER TRANSFER IS MADE TO A PERSON WHO THE TRANSFEROR REASONABLY BELIEVES AFTER
DUE INQUIRY IS A "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A),
ACTING FOR ITS OWN ACCOUNT (AND NOT FOR THE ACCOUNT OF OTHERS) OR AS A FIDUCIARY
OR AGENT FOR OTHERS (WHICH OTHERS ALSO ARE QUALIFIED INSTITUTIONAL BUYERS) TO
WHOM NOTICE IS GIVEN THAT THE SALE, PLEDGE OR TRANSFER IS BEING MADE IN RELIANCE
ON RULE 144A,] OR (III) SUCH SALE, PLEDGE OR OTHER TRANSFER IS OTHERWISE MADE IN
A TRANSACTION EXEMPT FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT,
IN WHICH CASE (A) THE TRUSTEE SHALL REQUIRE THAT BOTH THE PROSPECTIVE TRANSFEROR
AND THE PROSPECTIVE TRANSFEREE CERTIFY TO THE TRUSTEE AND THE DEPOSITOR IN
WRITING THE FACTS SURROUNDING SUCH TRANSFER, WHICH CERTIFICATION SHALL BE IN
FORM AND SUBSTANCE SATISFACTORY TO THE TRUSTEE AND THE DEPOSITOR, AND (B) THE
TRUSTEE MAY REQUIRE A WRITTEN OPINION OF COUNSEL (WHICH SHALL NOT BE AT THE
EXPENSE OF THE DEPOSITOR OR THE TRUSTEE) SATISFACTORY TO THE DEPOSITOR AND THE
TRUSTEE TO THE EFFECT THAT SUCH TRANSFER WILL NOT VIOLATE THE SECURITIES ACT. NO
SALE, PLEDGE OR OTHER TRANSFER MAY BE MADE TO ANY ONE PERSON FOR CERTIFICATES
WITH A FACE AMOUNT OF LESS THAN $50,000 AND, IN THE CASE OF ANY PERSON ACTING ON
BEHALF OF ONE OR MORE THIRD PARTIES (OTHER THAN A BANK (AS DEFINED IN SECTION
3(A)(2) OF THE SECURITIES ACT) ACTING IN ITS FIDUCIARY CAPACITY), FOR
CERTIFICATES WITH A FACE AMOUNT OF LESS THAN $50,000 FOR EACH SUCH THIRD PARTY.
LONG BEACH ACCEPTANCE AUTO GRANTOR TRUST 1998-1
6.19% ASSET BACKED CERTIFICATE
CLASS A
evidencing a beneficial ownership interest in the Trust, as defined below, the
property of which includes a pool of retail installment sale contracts secured
by new and used automobiles, vans, sport utility vehicles and light duty trucks
and sold to the Trust by Long Beach Acceptance Receivables Corp.
(This Certificate does not represent an interest in or obligation of Long Beach
Acceptance Receivables Corp., Long Beach Acceptance Corp., the Trustee or any of
their respective affiliates, except to the extent described below.)
NUMBER R-____________ CUSIP NO. 542389AEI
$129,000,000 (of Final Scheduled
A-2
$129,000,000 issued) Distribution Date:
January 25, 2005
THIS CERTIFIES THAT ____________________ is the registered owner of
a One Hundred Twenty-Nine Million Dollars ($129,000,000) nonassessable,
fully-paid, beneficial ownership interest in the Long Beach Acceptance Auto
Grantor Trust 1998-1 (the "Trust") formed by Long Beach Acceptance
Receivables Corp., a Delaware corporation (the "Depositor"). The Trust was
created pursuant to a
Pooling and Servicing Agreement dated as of January 1,
1998 (the "Agreement") among the Depositor, Long Beach Acceptance Corp., as
originator and as servicer (the "Servicer") and Chase Bank of Texas, National
Association, as trustee (the "Trustee"), Custodian, Collateral Agent and
Back-up Servicer, a summary of certain of the pertinent provisions of which
is set forth below. To the extent not otherwise defined herein, the
capitalized terms used herein have the meanings assigned to them in the
Agreement. This Certificate is one of the duly authorized Certificates
designated as "6.19% Asset Backed Certificates, Class A" (herein called the
"Class A Certificates"). Also issued under the Agreement are Certificates
designated as "12.00% Asset Backed Certificates, Class B" (the "Class B
Certificates") and "Excess Cash Flow Certificates" (the "Excess Cash Flow
Certificates"). The Class B Certificates, the Class A Certificates and the
Excess Cash Flow Certificates are hereinafter collectively called the
"Certificates". The aggregate beneficial ownership interests in the Trust
evidenced by all Class A Certificates is 83.50%. This Class A Certificate is
issued under and is subject to the terms, provisions, and conditions of the
Agreement, to which Agreement the Holder of this Class A Certificate by
virtue of the acceptance hereof assents and by which such Holder is bound.
The property of the Trust includes (i) a pool of retail installment sale
contracts for new and used automobiles, vans, sport utility vehicles and
light duty trucks (the "Receivables"), and with respect to Precomputed
Receivables, all monies received thereon after the close of business on
December 31, 1997 (the "Initial Cutoff Date") in the case of the Initial
Receivables, or the related Subsequent Cutoff Date in the case of the
Subsequent Receivables (including in each case Scheduled Payments due or to
become due thereon on and after the Initial Cutoff Date in the case of the
Initial Receivables, or the related Subsequent Cutoff Date in the case of the
Subsequent Receivables, and Scheduled Payments due prior to the Initial
Cutoff Date in the case of the Initial Receivables, or the related Subsequent
Cutoff Date in the case of the Subsequent Receivables, but received on or
after the Initial Cutoff Date in the case of the Initial Receivables, or the
related Subsequent Cutoff Date in the case of the Subsequent Receivables),
principal prepayments relating to such Scheduled Payments due on or after the
Initial Cutoff Date in the case of the Initial Receivables, or the related
Subsequent Cutoff Date in the case of the Subsequent Receivables, but
received by the Depositor or LBAC before the Initial Cutoff Date in the case
of the Initial Receivables, and any Payaheads received with respect to
payments due on the Initial Receivables on or after the Initial Cutoff Date
(which Payaheads shall be held in the Payahead Account until the Collection
Period in which such payments are actually due with respect to the related
Receivable, at which time such Payaheads shall be applied as a component of
the Total Distribution Amount), or the related Subsequent Cutoff Date in the
case of the Subsequent Receivables, and with respect to Simple Interest
Receivables, all monies received thereunder on and after the Initial Cutoff
Date in the case of the
A-3
Initial Receivables, or the related Subsequent Cutoff Date in the case of the
Subsequent Receivables (including in each case Scheduled Payments due before the
Initial Cutoff Date in the case of the Initial Receivables, or the related
Subsequent Cutoff Date in the case of the Subsequent Receivables, but received
by the Depositor or LBAC on or after the Initial Cutoff Date in the case of the
Initial Receivables, or the related Subsequent Cutoff Date in the case of the
Subsequent Receivables), security interests in the vehicles financed thereby,
proceeds from claims on certain insurance policies and certain other rights
under the Agreement, certain bank accounts and the proceeds thereof, all right,
title and interest of the Depositor in and to the Purchase Agreement, all right,
title and interest of the Depositor in and to certain refunds, the Receivable
Files related to each Receivable and the proceeds of any or all of the
foregoing; and (ii) a Financial Guaranty Insurance Policy issued for the benefit
of the Class A Certificateholders by Financial Security Assurance Inc. (the
"Policy").
Under the Agreement, there will be distributed on the 25th day of each
month or, if such 25th day is not a Business Day, the next Business Day (the
"Distribution Date"), commencing on February 25, 1998, to the person in whose
name this Class A Certificate is registered at the close of business on the last
day of the calendar month immediately preceding the month in which such
Distribution Date occurs (or with respect to the initial Distribution Date,
February 10, 1998) (the "Record Date"), such Class A Certificateholder's
percentage interest (determined by dividing the denominations of this Class A
Certificate by the aggregate original denomination of all Class A Certificates)
in the amounts distributed to Class A Certificateholders pursuant to the
Agreement.
Full and complete payment of the Class A Distributable Amount on each
Distribution Date is unconditionally and irrevocably guaranteed pursuant to the
Policy.
Distributions on this Class A Certificate will be made by the Trustee
by (i) wire transfer, in immediately available funds to the account of such
Class A Certificateholder at a bank or other entity having appropriate
facilities therefor, if such Class A Certificateholder is the Clearing Agency or
such Class A Certificateholder's Class A Certificates in the aggregate evidence
a denomination of at least $ 1,000,000, and, if such Class A Certificateholder
shall have provided to the Trustee appropriate instructions prior to such
Distribution Date, or (ii) by check mailed to the Class A Certificateholder of
record in the Certificate Register without the presentation or surrender of this
Class A Certificate or the making of any notation hereon. Except as otherwise
provided in the Agreement and notwithstanding the above, the final distribution
on this Class A Certificate will be made after due notice by the Trustee of the
pendency of such distribution and only upon presentation and surrender of this
Class A Certificate at the office or agency maintained for that purpose by the
Trustee specified in such notice.
Under the Agreement, the Trustee and Certificateholders agree that the
Certificate Insurer shall be subrogated to all of the rights to payment of the
Class A Certificateholders or in relation thereto to the extent that any payment
of principal or interest was made to such Class A Certificateholders with
payments made under the Policy by the Certificate Insurer.
A-4
As provided in the Agreement, so long as no Insurer Default has
occurred and is continuing, with certain exceptions whenever Class A
Certificateholder action, consent or approval is required under the Agreement,
such action, consent or approval shall be deemed to have been taken or given on
behalf of, and shall be binding upon, all Class A Certificateholders if the
Certificate Insurer agrees to take such action or give such consent or approval.
If an Insurer Default shall have occurred and is continuing, no
Certificateholder shall have any right by virtue or by availing itself of any
provisions of the Agreement to institute any suit, action, or proceeding in
equity or at law upon or under or with respect to the Agreement, unless such
Holder previously shall have given to the Trustee a written notice of default
and of the continuance thereof, as provided in the Agreement and unless also the
Holders of Certificates evidencing not less than 51% of the sum of the Class A
Certificate Balance or, if there are no Class A Certificates then outstanding,
by Holders of Class B Certificates evidencing not less than 51% of the Class B
Certificate Balance shall have made written request upon the trustee to
institute such action, suit or proceeding in its own name as trustee under the
Agreement. The rights of the Class A Certificateholders are subject to certain
limitations as set forth in Section 11.3 of the Agreement.
Reference is hereby made to the further provisions of this Class A
Certificate set forth on the reverse hereof, which further provisions shall for
all purposes have the same effect as if set forth at this place.
Unless the certificate of authentication hereon shall have been
executed by an authorized officer of the Trustee, by manual signature, this
Class A Certificate shall not entitle the Holder hereof to any benefit under the
Agreement or be valid for any purpose.
IN WITNESS WHEREOF, the Trustee on behalf of the Trust and not in its
individual capacity has caused this Class A Certificate to be duly executed.
LONG BEACH ACCEPTANCE AUTO GRANTOR TRUST 1998-1
By: Chase Bank of Texas, National Association,
not in its individual capacity but solely in
its capacity as Trustee
By:
-------------------------------------------------
Authorized Signatory
Dated: , 1998
----------- ---
This is one of the Class A Certificates referred to
in the within-mentioned Agreement.
Chase Bank of Texas, National Association, not in its
individual capacity but solely in its capacity as
Trustee
By:
-------------------------------------------------
Authorized Signatory
A-5
[REVERSE OF CERTIFICATE]
The Certificates do not represent an obligation of, or an interest in,
the Depositor, LBAC, the Servicer, the Trustee or any affiliate of any of them.
The Class A Certificates are limited in right of payment to certain collections
and recoveries respecting the Receivables and claims made under the Policy, all
as more specifically set forth in the Agreement. A copy of the Agreement may be
examined during normal business hours at the principal office of the Depositor,
and at such other places, if any, designated by the Depositor, by any
Certificateholder upon request.
The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Depositor and the rights of the Certificateholders under the Agreement at any
time by the Depositor, the Servicer and the Trustee with the consent of the
Certificate Insurer and with the consent of the Holders of Certificates
evidencing not less than 66-2/3% of the Class A Certificate Balance and 66-2/3%
of the Class B Certificate Balance. Any such consent by the Holder of this
Certificate shall be conclusive and binding on such Holder and on all future
Holders of this Certificate and of any Certificate issued upon the transfer
hereof or in exchange hereof or in lieu hereof whether or not notation of such
consent is made upon this Certificate.
As provided in the Agreement and subject to certain limitations set
forth therein, the transfer of this Certificate is registrable in the
Certificate Register upon surrender of this Certificate for registration of
transfer at the offices or agencies maintained by the Trustee in its capacity as
Certificate Registrar or by any successor Certificate Registrar, in the Borough
of Manhattan, The City of New York, accompanied by a written instrument of
transfer in form satisfactory to the Trustee and the Certificate Registrar duly
executed by the Holder hereof or such Holder's attorney duly authorized in
writing, and thereupon one or more new Certificates of authorized denominations
evidencing the same aggregate interest in the Trust will be issued to the
designated transferee.
The Class A Certificates are issuable only as registered Certificates
without coupons in minimum denominations of $50,000 and integral multiples of
$1,000 in excess thereof. As provided in the Agreement and subject to certain
limitations set forth therein, Certificates are exchangeable for new
Certificates of authorized denominations evidencing the same aggregate
denomination, as requested by the Holder surrendering the same. No service
charge will be made for any such registration of transfer or exchange, but the
Trustee may require payment of a sum sufficient to cover any tax or governmental
charges payable in connection therewith.
The Trustee, the Certificate Registrar, and any agent of the Trustee or
the Authenticating Agent may treat the person in whose name this Certificate is
registered as the owner hereof for all purposes, and neither the Trustee, the
Certificate Registrar, nor any such agent shall be affected by any notice to the
contrary.
A-6
The obligations and responsibilities created by the Agreement and
the Trust created thereby shall terminate upon the payment to
Certificateholders of all amounts required to be paid to them pursuant to the
Agreement, the payment of all Reimbursement Obligations, and the expiration
of any preference period with respect thereto and the disposition of all
property held as part of the Trust. The Originator or the Servicer of the
Receivables may at its option purchase the corpus of the Trust at a price
specified in the Agreement, and such purchase of the Receivables and other
property of the Trust will effect early retirement of the Certificates;
however, such right of purchase is exercisable only as of the last day of any
Collection Period as of which the Pool Balance is less than or equal to 10%
of the sum of the original aggregate Principal Balance of the Initial
Receivables and the aggregate Principal Balance of all Subsequent Receivables
conveyed to the Trust as of the related Subsequent Cutoff Dates.
A-7
ASSIGNMENT
FOR VALUE RECEIVED the undersigned hereby sells, assigns and transfers
unto
PLEASE INSERT SOCIAL SECURITY
OR OTHER IDENTIFYING NUMBER
OF ASSIGNEE
--------------------------------------------------------------------------------
(Please print or typewrite name and address, including postal zip code, of
assignee)
--------------------------------------------------------------------------------
the within Certificate, and all rights thereunder, hereby irrevocably
constituting and appointing
------------------------------------------ Attorney to transfer said
Certificate on the books of the Certificate Registrar, with full power of
substitution in the premises.
Dated:
---------------------------------------*
---------------------------------------*
*NOTICE: The signature to this assignment must correspond with the name as it
appears upon the face of the within Certificate in every particular, without
alteration, enlargement or any change whatever.
A-8
EXHIBIT B: FORM OF CLASS B CERTIFICATE SEE REVERSE FOR
CERTAIN
DEFINITIONS
THIS CERTIFICATE IS SUBORDINATED IN RIGHT OF PAYMENT AS DESCRIBED IN THE
AGREEMENT REFERRED TO HEREIN.
THIS CERTIFICATE HAS NOT BEEN AND WILL NOT BE REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED, OR THE APPLICABLE SECURITIES LAWS OF ANY STATE.
ACCORDINGLY, TRANSFER OF THIS CERTIFICATE IS SUBJECT TO CERTAIN RESTRICTIONS SET
FORTH IN SECTION 5.5(a) OF THE AGREEMENT. BY ITS ACCEPTANCE OF THIS CERTIFICATE
THE HOLDER OF THIS CERTIFICATE IS DEEMED TO REPRESENT TO THE DEPOSITOR AND THE
TRUSTEE (I) THAT IT IS AN INSTITUTIONAL INVESTOR THAT IS AN "ACCREDITED
INVESTOR" AS DEFINED IN RULE 501(A)(1), (2), (3) OR (7) OF REGULATION D
PROMULGATED UNDER THE SECURITIES ACT (AN "INSTITUTIONAL ACCREDITED INVESTOR")
AND THAT IT IS ACQUIRING THIS CERTIFICATE FOR ITS OWN ACCOUNT (AND NOT FOR THE
ACCOUNT OF OTHERS) OR AS A FIDUCIARY OR AGENT FOR OTHERS (WHICH OTHERS ALSO ARE
INSTITUTIONAL ACCREDITED INVESTORS UNLESS THE HOLDER IS A BANK ACTING IN ITS
FIDUCIARY CAPACITY) FOR INVESTMENT AND NOT WITH A VIEW TO, OR FOR OFFER OR SALE
IN CONNECTION WITH, THE PUBLIC DISTRIBUTION HEREOF OR (II) THAT IT IS A
"QUALIFIED INSTITUTIONAL BUYER" AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT
AND IS ACQUIRING THIS CERTIFICATE FOR ITS OWN ACCOUNT (AND NOT FOR THE ACCOUNT
OF OTHERS) OR AS A FIDUCIARY OR AGENT FOR OTHERS (WHICH OTHERS ALSO ARE
QUALIFIED INSTITUTIONAL BUYERS).
NO SALE, PLEDGE OR OTHER TRANSFER OF THIS CERTIFICATE MAY BE MADE BY ANY PERSON
UNLESS EITHER (I) SUCH SALE, PLEDGE OR OTHER TRANSFER IS MADE TO THE DEPOSITOR,
(II) SUCH SALE, PLEDGE OR OTHER TRANSFER IS MADE TO AN INSTITUTIONAL ACCREDITED
INVESTOR THAT EXECUTES A CERTIFICATE, SUBSTANTIALLY IN THE FORM SPECIFIED IN THE
AGREEMENT, TO THE EFFECT THAT IT IS AN INSTITUTIONAL ACCREDITED INVESTOR ACTING
FOR ITS OWN ACCOUNT (AND NOT FOR THE ACCOUNT OF OTHERS) OR AS A FIDUCIARY OR
AGENT FOR OTHERS (WHICH OTHERS ALSO ARE INSTITUTIONAL ACCREDITED INVESTORS
UNLESS THE HOLDER IS A BANK ACTING IN ITS FIDUCIARY CAPACITY), (III) SO LONG AS
THIS CERTIFICATE IS ELIGIBLE FOR RESALE PURSUANT TO RULE 144A UNDER THE
SECURITIES ACT, SUCH SALE, PLEDGE OR OTHER TRANSFER IS MADE TO A PERSON WHO THE
TRANSFEROR REASONABLY BELIEVES AFTER DUE INQUIRY IS A "QUALIFIED
B-1
INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A), ACTING FOR ITS OWN ACCOUNT (AND
NOT FOR THE ACCOUNT OF OTHERS) OR AS A FIDUCIARY OR AGENT FOR OTHERS (WHICH
OTHERS ALSO ARE QUALIFIED INSTITUTIONAL BUYERS) TO WHOM NOTICE IS GIVEN THAT THE
SALE, PLEDGE OR TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A, OR (IV) SUCH
SALE, PLEDGE OR OTHER TRANSFER IS OTHERWISE MADE IN A TRANSACTION EXEMPT FROM
THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, IN WHICH CASE (A) THE
TRUSTEE SHALL REQUIRE THAT BOTH THE PROSPECTIVE TRANSFEROR AND THE PROSPECTIVE
TRANSFEREE CERTIFY TO THE TRUSTEE AND THE DEPOSITOR IN WRITING THE FACTS
SURROUNDING SUCH TRANSFER, WHICH CERTIFICATION SHALL BE IN FORM AND SUBSTANCE
SATISFACTORY TO THE TRUSTEE AND THE DEPOSITOR, AND (B) THE TRUSTEE MAY REQUIRE A
WRITTEN OPINION OF COUNSEL (WHICH SHALL NOT BE AT THE EXPENSE OF THE DEPOSITOR
OR THE TRUSTEE) SATISFACTORY TO THE DEPOSITOR AND THE TRUSTEE TO THE EFFECT THAT
SUCH TRANSFER WILL NOT VIOLATE THE SECURITIES ACT. NO SALE, PLEDGE OR OTHER
TRANSFER MAY BE MADE TO ANY ONE PERSON FOR CERTIFICATES WITH A FACE AMOUNT OF
LESS THAN $100,000 AND, IN THE CASE OF ANY PERSON ACTING ON BEHALF OF ONE OR
MORE THIRD PARTIES (OTHER THAN A BANK (AS DEFINED IN SECTION 3(A)(2) OF THE
SECURITIES ACT) ACTING IN ITS FIDUCIARY CAPACITY), FOR CERTIFICATES WITH A FACE
AMOUNT OF LESS THAN $100,000 FOR EACH SUCH THIRD PARTY.
THIS CLASS B CERTIFICATE MAY NOT BE ACQUIRED BY OR WITH THE ASSETS OF (I) AN
"EMPLOYEE BENEFIT PLAN" (AS DEFINED IN SECTION 3(3) OF THE EMPLOYEE RETIREMENT
INCOME SECURITY ACT OF 1974, AS AMENDED ("ERISA")) THAT IS SUBJECT TO THE
PROVISIONS OF TITLE I OF ERISA, (II) A "PLAN" (AS DEFINED IN SECTION 4975(e)(1)
OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE "CODE")) THAT IS SUBJECT
TO THE SECTION 4975 OF THE CODE OR (III) ANY ENTITY WHOSE UNDERLYING ASSETS
INCLUDE ASSETS OF A PLAN DESCRIBED IN (I) OR (II) ABOVE BY REASON OF SUCH PLAN'S
INVESTMENT IN THE ENTITY (EACH, A "BENEFIT PLAN"), UNLESS THE PERSON ACQUIRING
THIS CERTIFICATE IS AN INSURANCE COMPANY INVESTING THE ASSETS OF ITS GENERAL
ACCOUNT AND THE EXEMPTIVE RELIEF PROVIDED BY SECTIONS I AND III OF DEPARTMENT OF
LABOR PROHIBITED TRANSACTION CLASS EXEMPTION 95-60, 60 FED. REG. 35925 (JULY 12,
1995) ("PTE 95-60") IS AVAILABLE WITH RESPECT TO THE PURCHASE AND HOLDING OF
THIS CERTIFICATE. NO TRANSFER OF THIS CERTIFICATE SHALL BE PERMITTED TO BE MADE
TO ANY PERSON UNLESS THE TRUSTEE HAS RECEIVED A CERTIFICATE FROM SUCH TRANSFEREE
TO THE EFFECT THAT EITHER (I) IT IS NOT A BENEFIT PLAN AND IS NOT USING THE
ASSETS OF A BENEFIT PLAN TO ACQUIRE THIS CERTIFICATE OR (II) IT
B-2
IS AN INSURANCE COMPANY INVESTING ASSETS OF ITS GENERAL ACCOUNT AND SECTIONS I
AND III OF PTE 95-60 APPLY TO THE TRANSFEREE'S ACQUISITION AND HOLDING OF THIS
CERTIFICATE.
TRANSFER OF THIS CERTIFICATE IS SUBJECT TO CERTAIN RESTRICTIONS SET FORTH IN
SECTION 5.5(c) OF THE AGREEMENT.
LONG BEACH ACCEPTANCE AUTO GRANTOR TRUST 1998-1
12.00% ASSET BACKED CERTIFICATE
CLASS B
evidencing a beneficial ownership interest in the Trust, as defined below, the
property of which includes a pool of retail installment sale contracts secured
by new and used automobiles, vans, sport utility vehicles and light duty trucks
and sold to the Trust by Long Beach Acceptance Receivables Corp.
(This Certificate does not represent an interest in or obligation of Long Beach
Acceptance Receivables Corp., Long Beach Acceptance Corp., the Trustee or any of
their respective affiliates, except to the extent described below.)
NUMBER R- CUSIP No. 000000XX0
----------------- Final Scheduled
$25,491,017.96 (of Distribution Date:
$25,491,017.96 issued) January 25, 2005
THIS CERTIFIES THAT _________________ is the registered owner of a
Twenty-Five Million, Four Hundred Ninety-One Thousand, Seventeen Dollars and
Ninety-Six Cents ($25,491,017.96) nonassessable, fully-paid, beneficial
ownership interest in the Long Beach Acceptance Auto Grantor Trust 1998-1 (the
"Trust") formed by Long Beach Acceptance Receivables Corp., a Delaware
corporation (the "Depositor"). The Trust was created pursuant to a
Pooling and
Servicing Agreement dated as of January 1, 1998 (the "Agreement") among the
Depositor, Long Beach Acceptance Corp., as originator and as servicer (the
"Servicer") and Chase Bank of Texas, National Association, as trustee (the
"Trustee"), Custodian, Collateral Agent and Back-up Servicer, a summary of
certain of the pertinent provisions of which is set forth below. To the extent
not otherwise defined herein, the capitalized terms used herein have the
meanings assigned to them in the Agreement. This Certificate is one of the duly
authorized Certificates designated as "12.00% Asset Backed Certificates, Class
B" (herein called the "Class B Certificates"). Also issued under the Agreement
are Certificates designated as "6.19% Asset Backed Certificates, Class A" (the
"Class A Certificates") and "Excess Cash Flow Certificates" (the "Excess Cash
Flow Certificates"). The Class A Certificates, the Class B Certificates and the
Excess Cash Flow Certificates are hereinafter collectively called the
"Certificates." The aggregate beneficial ownership interests in the Trust
evidenced by all Class B Certificates is 16.50%. This Class B Certificate is
issued under and is subject to the terms, provisions, and conditions of the
Agreement, to which Agreement the Holder of this Class B Certificate by virtue
of the acceptance hereof assents and by which such Holder is bound.
B-3
The property of the Trust includes (i) a pool of retail installment sale
contracts for new and used automobiles, vans, sport utility vehicles and
light duty trucks (the "Receivables"), and with respect to Precomputed
Receivables, all monies received thereon after the close of business on
December 31, 1997 (the "Initial Cutoff Date") in the case of the Initial
Receivables, or the related Subsequent Cutoff Date in the case of the
Subsequent Receivables (including in each case Scheduled Payments due or to
become due thereon on and after the Initial Cutoff Date in the case of the
Initial Receivables, or the related Subsequent Cutoff Date in the case of the
Subsequent Receivables, and Scheduled Payments due prior to the Initial
Cutoff Date in the case of the Initial Receivables, or the related Subsequent
Cutoff Date in the case of the Subsequent Receivables, but received on or
after the Initial Cutoff Date in the case of the Initial Receivables, or the
related Subsequent Cutoff Date in the case of the Subsequent Receivables),
principal prepayments relating to such Scheduled Payments due on or after the
Initial Cutoff Date in the case of the Initial Receivables, or the related
Subsequent Cutoff Date in the case of the Subsequent Receivables, but
received by the Depositor or LBAC before the Initial Cutoff Date in the case
of the Initial Receivables, or the related Subsequent Cutoff Date in the case
of the Subsequent Receivables, and any Payaheads received with respect to
payments due on the Receivables on or after the Initial Cutoff Date in the
case of the Initial Receivables, or the related Subsequent Cutoff Date in the
case of the Subsequent Receivables (which Payaheads shall be held in the
Payahead Account until the Collection Period in which such payments are
actually due with respect to the related Receivable, at which time such
Payaheads shall be applied as a component of the Total Distribution Amount),
and with respect to Simple Interest Receivables, all monies received
thereunder on and after the Initial Cutoff Date in the case of the Initial
Receivables, or the related Subsequent Cutoff Date in the case of the
Subsequent Receivables (including in each case Scheduled Payments due before
the Initial Cutoff Date in the case of the Initial Receivables, or the
related Subsequent Cutoff Date in the case of the Subsequent Receivables, but
received by the Depositor or LBAC on or after the Initial Cutoff Date in the
case of the Initial Receivables, or the related Subsequent Cutoff Date in the
case of the Subsequent Receivables), security interests in the vehicles
financed thereby, proceeds from claims on certain insurance policies and
certain other rights under the Agreement, certain bank accounts and the
proceeds thereof, all right, title and interest of the Depositor in and to
the Purchase Agreement, all right, title and interest of the Depositor in and
to certain refunds, the Receivable Files related to each Receivable and the
proceeds of any or all of the foregoing; and (ii) a Financial Guaranty
Insurance Policy issued for the benefit of the Class A Certificateholders by
Financial Security Assurance Inc. (the "Policy").
Under the Agreement, the rights of the Class B Certificateholders to
receive distributions of interest and principal in respect of the Class B
Certificates on a Distribution Date are subordinated to the payment of the
amounts due to the Servicer, the Trustee, the Back-up Servicer, the Custodian,
the Certificate Insurer and the Class A Certificateholders, distributable
pursuant to Sections 4.6(c)(i) through (vi) of the Agreement, except as
otherwise set forth in the Agreement. At such time as the Class A Certificates
are paid in full and the Certificate Insurer has received payment in full for
any outstanding Reimbursement Obligations or any other amounts owed to the
Certificate
B-4
Insurer, the Class B Certificateholders shall be entitled to exercise all rights
granted to the Class A Certificateholders under the Agreement.
Under the Agreement, there will be distributed on the 25th day of
each month or, if such 25th day is not a Business Day, the next Business Day
(the "Distribution Date"), commencing on February 25, 1998, to the person in
whose name this Class B Certificate is registered at the close of business on
the last day of the calendar month immediately preceding the month in which
such Distribution Date occurs (or with respect to the initial Distribution
Date, February 10, 1998 (the "Record Date"), such Class B Certificateholder's
percentage interest (determined by dividing the denominations of this Class B
Certificate by the aggregate original denomination of all Class B
Certificates) in the amounts distributed to Class B Certificateholders
pursuant to the Agreement.
Any distributions on this Class B Certificate will be made by the
Trustee by (i) wire transfer, in immediately available funds to the account of
such Class B Certificateholder at a bank or other entity having appropriate
facilities therefor, if such Class B Certificateholder's Class B Certificates in
the aggregate evidence a denomination of at least $1,000,000, and, if such Class
B Certificateholder shall have provided to the Trustee appropriate instructions
prior to such Distribution Date, or (ii) by check mailed to the Class B
Certificateholder of record in the Certificate Register without the presentation
or surrender of this Class B Certificate or the making of any notation hereon.
Except as otherwise provided in the Agreement and notwithstanding the above, the
final distribution on this Class B Certificate will be made after due notice by
the Trustee of the pendency of such distribution and only upon presentation and
surrender of this Class B Certificate at the office or agency maintained for
that purpose by the Trustee specified in such notice.
Each Certificateholder by purchase of the Certificates held by it
acknowledges that the Trustee, as partial consideration of the issuance of
the Policy, has agreed that the Certificate Insurer shall have certain rights
hereunder for so long as no Insurer Default shall have occurred and be
continuing. So long as an Insurer Default has occurred and is continuing, any
provision giving the Certificate Insurer the right to direct, appoint or
consent to, approve of, or take any action under the Agreement shall be
inoperative during the period of such Insurer Default and such right shall
instead vest in the Trustee acting at the direction of the Class A
Certificateholders or Class B Certificateholders, as the case may be. The
Certificate Insurer may disclaim any of its rights and powers under the
Agreement (but not its duties and obligations under the Policy) upon delivery
of a written notice to the Trustee. The Certificate Insurer may give or
withhold any consent under the Agreement in its sole and absolute discretion.
By acceptance of this Certificate, the Holder hereof acknowledges and
agrees that (i) it shall be bound by the terms and provisions of the Agreement,
a copy of which may be obtained from the Trustee upon request; (ii) no amounts
shall be received by such Holder, nor shall such Holder have any property rights
in or any right to receive any amounts, unless and until such amounts are (a)
available from remaining Total Distribution Amount pursuant to Section 4.6(c) of
the Agreement, (b) are released pursuant to priority SEVENTH of Section 3.03(b)
of the Spread Account Agreement for
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distribution to such Holder pursuant to Section 4.6(c) of the Agreement, (c)
are otherwise available from amounts on deposit in the Class B Reserve
Account or the Excess Cash Flow Sub-account for distribution to such Holder
pursuant to clause (A), (C) and (E) of the last paragraph of Section 4.6(c),
or (d) are otherwise available from amounts on deposit in the Class B
Sub-account for distribution to such Holder pursuant to clause (B) of the
last paragraph of Section 4.6(c); (iii) such Holder has no right to or
interest in any moneys at any time held pursuant to the Spread Account
Agreement or the Agreement prior to the release of such moneys as aforesaid,
such moneys being held in trust for the benefit of the Class A
Certificateholders and the Certificate Insurer, and with respect to any
moneys held in the Class B Reserve Account, for the benefit of the Class B
Certificateholders, as their interests may appear prior to such release; (iv)
in the event that it is ever determined that any property held in the Spread
Account constitutes property of the Holder, then the provisions of the
Agreement and the Spread Account Agreement shall be considered to constitute
a security agreement and the Holder hereby grants to the Collateral Agent and
the Trustee, respectively, a first priority perfected security interest in
such amounts, to be applied as set forth in Section 3.03(b) of the Spread
Account Agreement; (v) in the event that it is ever determined that the
moneys held in the Class B Reserve Account constitute a pledge of collateral,
then the provisions of the Agreement shall be considered to constitute a
security agreement and the Holder hereby grants to the Trustee, as collateral
agent for the Class B Reserve Account, a first priority perfected security
interest in such amounts to be applied as set forth in Sections 4.6 and 4.7
of the Agreement; (vi) such Holder hereby appoints the Depositor as its agent
to pledge a first priority perfected security interest in the Class B
Sub-account, the Excess Cash Flow Sub-account and any amounts held therein
from time to time to the Collateral Agent for the benefit of the Trustee and
the Certificate Insurer pursuant to the Spread Account Agreement and agrees
to execute and deliver such instruments of conveyance, assignment, grant,
confirmation, etc., as well as any financing statements, in each case as the
Certificate Insurer shall consider reasonably necessary in order to perfect
the Collateral Agent's Security Interest in the Collateral (as such terms are
defined in the Spread Account Agreement); and (vii) such Holder hereby
appoints the Servicer as its agent to pledge a first priority perfected
security interest in the Class B Reserve Account and any amounts held therein
from time to time to the Trustee as collateral agent for the benefit of the
Trustee and the Class B Certificateholders pursuant to the 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 Trustee as collateral agent for the benefit of the Trustee and the
Class B Certificateholders shall consider reasonably necessary in order to
perfect such collateral agent's security interest in amounts in the Class
Reserve Account.
Reference is hereby made to the further provisions of this Class B
Certificate set forth on the reverse hereof, which further provisions shall for
all purposes have the same effect as if set forth at this place.
Unless the certificate of authentication hereon shall have been
executed by an authorized officer of the Trustee, by manual signature, this
Class B Certificate shall not entitle the Holder hereof to any benefit under
the Agreement or be valid for any purpose.
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IN WITNESS WHEREOF, the Trustee on behalf of the Trust and not in
its individual capacity has caused this Class B Certificate to be duly
executed.
LONG BEACH ACCEPTANCE AUTO
GRANTOR TRUST 1998-1
By: Chase Bank of Texas, National
Association, not in its individual
capacity but solely in its capacity
as Trustee
By:______________________________________
Authorized Signatory
Dated:_________________, 1998
This is one of the Class B Certificates referred to
in the within-mentioned Agreement.
Chase Bank of Texas, National Association,
not in its individual capacity but solely in
its capacity as Trustee
By:______________________________________
Authorized Signatory
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[REVERSE OF CERTIFICATE]
The Certificates do not represent an obligation of, or an interest in,
the Depositor, the Servicer, the Trustee or any affiliate of any of them. The
Class B Certificates are limited in right of payment to certain collections and
recoveries respecting the Receivables, all as more specifically set forth in the
Agreement. A copy of the Agreement may be examined during normal business hours
at the principal office of the Depositor, and at such other places, if any,
designated by the Depositor, by any Certificateholder upon request.
The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Depositor and the rights of the Certificateholders under the Agreement at any
time by the Depositor, the Servicer and the Trustee with the consent of the
Certificate Insurer and with the consent of the Holders of Certificates
evidencing not less than 66-2/3% of the Class B Certificate Balance and 66-2/3%
of the Class A Certificate Balance. Any such consent by the Holder of this
Certificate shall be conclusive and binding on such Holder and on all future
Holders of this Certificate and of any Certificate issued upon the transfer
hereof or in exchange hereof or in lieu hereof whether or not notation of such
consent is made upon this Certificate.
As provided in the Agreement and subject to certain limitations set
forth therein, the transfer of this Certificate is registrable in the
Certificate Register upon surrender of this Certificate for registration of
transfer at the offices or agencies maintained by the Trustee in its capacity as
Certificate Registrar, or by any successor Certificate Registrar, in the Borough
of Manhattan, The City of New York, accompanied by a written instrument of
transfer in form satisfactory to the Trustee and the Certificate Registrar duly
executed by the Holder hereof or such Holder's attorney duly authorized in
writing, and thereupon one or more new Certificates of authorized denominations
evidencing the same aggregate interest in the Trust will be issued to the
designated transferee.
The Class B Certificates are issuable only as registered Certificates
without coupons in minimum denominations of $500,000 and integral multiples of
$1,000 in excess thereof; PROVIDED, HOWEVER, that a limited number of Class B
Certificates are issuable in minimum denominations of $250,000 and $100,000 as
provided in the Agreement, and in each case integral multiples of $1,000 in
excess thereof. As provided in the Agreement and subject to certain limitations
set forth therein, Certificates are exchangeable for new Certificates of
authorized denominations evidencing the same aggregate denomination, as
requested by the Holder surrendering the same. No service charge will be made
for any such registration of transfer or exchange, but the Trustee may require
payment of a sum sufficient to cover any tax or governmental charges payable in
connection therewith.
The Trustee, the Certificate Registrar, and any agent of the Trustee or
the Authenticating Agent may treat the person in whose name this Certificate is
registered as the owner hereof for all purposes, and neither the Trustee, the
Certificate Registrar, nor any such agent shall be affected by any notice to the
contrary. Transfer of this Certificate
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may be denied if this transfer would cause there to be more than 100 holders of
the Class B Certificates and the Excess Cash Flow Certificate and any purchasers
of this Certificate that are partnerships or other tax-transparent vehicles must
certify either (i) Class B Certificates and the Excess Cash Flow Certificate
make up less than 50% of their assets by value or (ii) the number of equity
holders in such vehicles.
The obligations and responsibilities created by the Agreement and the
Trust created thereby shall terminate upon the payment to Certificateholders of
all amounts required to be paid to them pursuant to the Agreement, the payment
of all Reimbursement Obligations, and the expiration of any preference period
with respect thereto and the disposition of all property held as part of the
Trust. The Originator or the Servicer of the Receivables may at its option
purchase the corpus of the Trust at a price specified in the Agreement, and such
purchase of the Receivables and other property of the Trust will effect early
retirement of the Certificates; however, such right of purchase is exercisable
only as of the last day of any Collection Period as of which the Pool Balance is
less than or equal to 10% of the sum of the original aggregate Principal Balance
of the Initial Receivables and the aggregate Principal Balance of all Subsequent
Receivables conveyed to the Trust as of the related Subsequent Cutoff Dates.
B-9
ASSIGNMENT
FOR VALUE RECEIVED the undersigned hereby sells, assigns and transfers
unto
PLEASE INSERT SOCIAL SECURITY
OR OTHER IDENTIFYING NUMBER
OF ASSIGNEE
_______________________________________________________________________________
(Please print or typewrite name and address, including postal zip code, of
assignee)
_______________________________________________________________________________
the within Certificate, and all rights thereunder, hereby irrevocably
constituting and appointing
__________________________________________Attorney to transfer said Certificate
on the books of the Certificate Registrar, with full power of substitution in
the premises.
Dated:
_______________________________________*
_______________________________________*
*NOTICE: The signature to this assignment must correspond with the name as it
appears upon the face of the within Certificate in every particular, without
alteration, enlargement or any change whatever.
B-10
EXHIBIT C: FORM OF EXCESS CASH SEE REVERSE FOR
FLOW CERTIFICATE CERTAIN
DEFINITIONS
THIS CERTIFICATE IS SUBORDINATED IN RIGHT OF PAYMENT AS DESCRIBED IN THE
AGREEMENT REFERRED TO HEREIN.
THIS CERTIFICATE HAS NOT BEEN AND WILL NOT BE REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED, OR THE APPLICABLE SECURITIES LAWS OF ANY STATE.
ACCORDINGLY, TRANSFER OF THIS CERTIFICATE IS SUBJECT TO CERTAIN RESTRICTIONS SET
FORTH IN SECTION 5.5(a) OF THE AGREEMENT. BY ITS ACCEPTANCE OF THIS CERTIFICATE
THE HOLDER OF THIS CERTIFICATE IS DEEMED TO REPRESENT TO THE DEPOSITOR AND THE
TRUSTEE (I) THAT IT IS AN INSTITUTIONAL INVESTOR THAT IS AN "ACCREDITED
INVESTOR" AS DEFINED IN RULE 501(A)(1), (2),(3) OR (7) OF REGULATION D
PROMULGATED UNDER THE SECURITIES ACT (AN "INSTITUTIONAL ACCREDITED INVESTOR")
AND THAT IT IS ACQUIRING THIS CERTIFICATE FOR ITS OWN ACCOUNT (AND NOT FOR THE
ACCOUNT OF OTHERS) OR AS A FIDUCIARY OR AGENT FOR OTHERS (WHICH OTHERS ALSO ARE
INSTITUTIONAL ACCREDITED INVESTORS UNLESS THE HOLDER IS A BANK ACTING IN ITS
FIDUCIARY CAPACITY) FOR INVESTMENT AND NOT WITH A VIEW TO, OR FOR OFFER OR SALE
IN CONNECTION WITH, THE PUBLIC DISTRIBUTION HEREOF OR (II) THAT IT IS A
"QUALIFIED INSTITUTIONAL BUYER" AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT
AND IS ACQUIRING THIS CERTIFICATE FOR ITS OWN ACCOUNT (AND NOT FOR THE ACCOUNT
OF OTHERS) OR AS A FIDUCIARY OR AGENT FOR OTHERS (WHICH OTHERS ALSO ARE
QUALIFIED INSTITUTIONAL BUYERS).
NO SALE, PLEDGE OR OTHER TRANSFER OF THIS CERTIFICATE MAY BE MADE BY ANY PERSON
UNLESS EITHER (I) SUCH SALE, PLEDGE OR OTHER TRANSFER IS MADE TO THE DEPOSITOR,
(II) SUCH SALE, PLEDGE OR OTHER TRANSFER IS MADE TO AN INSTITUTIONAL ACCREDITED
INVESTOR THAT EXECUTES A CERTIFICATE, SUBSTANTIALLY IN THE FORM SPECIFIED IN THE
AGREEMENT, TO THE EFFECT THAT IT IS AN INSTITUTIONAL ACCREDITED INVESTOR ACTING
FOR ITS OWN ACCOUNT (AND NOT FOR THE ACCOUNT OF OTHERS) OR AS A FIDUCIARY OR
AGENT FOR OTHERS (WHICH OTHERS ALSO ARE INSTITUTIONAL ACCREDITED INVESTORS
UNLESS THE HOLDER IS A BANK ACTING IN ITS FIDUCIARY CAPACITY), (III) SO LONG AS
THIS CERTIFICATE IS ELIGIBLE FOR RESALE PURSUANT TO RULE 144A UNDER THE
SECURITIES ACT, SUCH SALE, PLEDGE OR OTHER TRANSFER IS MADE TO A PERSON WHO THE
TRANSFEROR REASONABLY BELIEVES AFTER DUE INQUIRY IS A "QUALIFIED
C-1
INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A), ACTING FOR ITS OWN ACCOUNT (AND
NOT FOR THE ACCOUNT OF OTHERS) OR AS A FIDUCIARY OR AGENT FOR OTHERS (WHICH
OTHERS ALSO ARE QUALIFIED INSTITUTIONAL BUYERS) TO WHOM NOTICE IS GIVEN THAT THE
SALE, PLEDGE OR TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A, OR (IV) SUCH
SALE, PLEDGE OR OTHER TRANSFER IS OTHERWISE MADE IN A TRANSACTION EXEMPT FROM
THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, IN WHICH CASE (A) THE
TRUSTEE SHALL REQUIRE THAT BOTH THE PROSPECTIVE TRANSFEROR AND THE PROSPECTIVE
TRANSFEREE CERTIFY TO THE TRUSTEE AND THE DEPOSITOR IN WRITING THE FACTS
SURROUNDING SUCH TRANSFER, WHICH CERTIFICATION SHALL BE IN FORM AND SUBSTANCE
SATISFACTORY TO THE TRUSTEE AND THE DEPOSITOR, AND (B) THE TRUSTEE MAY REQUIRE A
WRITTEN OPINION OF COUNSEL (WHICH SHALL NOT BE AT THE EXPENSE OF THE DEPOSITOR
OR THE TRUSTEE) SATISFACTORY TO THE DEPOSITOR AND THE TRUSTEE TO THE EFFECT THAT
SUCH TRANSFER WILL NOT VIOLATE THE SECURITIES ACT. NO SALE, PLEDGE OR OTHER
TRANSFER MAY BE MADE TO ANY ONE PERSON FOR CERTIFICATES WITH A FACE AMOUNT OF
LESS THAN $100,000 AND, IN THE CASE OF ANY PERSON ACTING ON BEHALF OF ONE OR
MORE THIRD PARTIES (OTHER THAN A BANK (AS DEFINED IN SECTION 3(A)(2) OF THE
SECURITIES ACT) ACTING IN ITS FIDUCIARY CAPACITY), FOR CERTIFICATES WITH A FACE
AMOUNT OF LESS THAN $100,000 FOR EACH SUCH THIRD PARTY.
THIS EXCESS CASH FLOW CERTIFICATE MAY NOT BE ACQUIRED BY OR WITH THE ASSETS OF
(I) AN "EMPLOYEE BENEFIT PLAN" (AS DEFINED IN SECTION 3(3) OF THE EMPLOYEE
RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED ("ERISA")) THAT IS SUBJECT TO
THE PROVISIONS OF TITLE I OF ERISA, (II) A "PLAN" (AS DEFINED IN SECTION
4975(e)(1) OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE "CODE")) THAT
IS SUBJECT TO SECTION 4975 OF THE CODE OR (III) ANY ENTITY WHOSE UNDERLYING
ASSETS INCLUDE ASSETS OF A PLAN DESCRIBED IN (I) OR (II) ABOVE BY REASON OF SUCH
PLAN'S INVESTMENT IN THE ENTITY (EACH, A "BENEFIT PLAN"), UNLESS THE PERSON
ACQUIRING THIS CERTIFICATE IS AN INSURANCE COMPANY INVESTING THE ASSETS OF ITS
GENERAL ACCOUNT AND THE EXEMPTIVE RELIEF PROVIDED BY SECTIONS I AND III OF
DEPARTMENT OF LABOR PROHIBITED TRANSACTION CLASS EXEMPTION 95-60, 60 FED. REG.
35925 (JULY 12, 1995) ("PTE 95-60") IS AVAILABLE WITH RESPECT TO THE PURCHASE
AND HOLDING OF THIS CERTIFICATE. NO TRANSFER OF THIS CERTIFICATE SHALL BE
PERMITTED TO BE MADE TO ANY PERSON UNLESS THE TRUSTEE HAS RECEIVED A CERTIFICATE
FROM SUCH TRANSFEREE TO THE EFFECT THAT EITHER (I) IT IS NOT A BENEFIT PLAN AND
IS NOT USING THE ASSETS OF A BENEFIT PLAN TO ACQUIRE THIS CERTIFICATE OR (II) IT
C-2
IS AN INSURANCE COMPANY INVESTING ASSETS OF ITS GENERAL ACCOUNT AND SECTIONS I
AND III OF PTE 95-60 APPLY TO THE TRANSFEREE'S ACQUISITION AND HOLDING OF THIS
CERTIFICATE.
THE HOLDER OF THIS EXCESS CASH FLOW CERTIFICATE REPRESENTS, BY VIRTUE OF ITS
ACCEPTANCE HEREOF, (I) THAT IT IS ACQUIRING THE EXCESS CASH FLOW CERTIFICATE FOR
ITS OWN BEHALF AND IS NOT ACTING AS AGENT OR CUSTODIAN FOR ANY OTHER PERSON OR
ENTITY IN CONNECTION WITH SUCH ACQUISITION, (II) IF THE HOLDER IS A PARTNERSHIP,
GRANTOR TRUST OR S CORPORATION FOR FEDERAL INCOME TAX PURPOSES (A "FLOW-THROUGH
ENTITY"), ANY EXCESS CASH FLOW CERTIFICATES OWNED BY SUCH FLOW-THROUGH ENTITY
WILL REPRESENT LESS THAN 50% OF THE VALUE OF ALL THE ASSETS OWNED BY SUCH
FLOW-THROUGH ENTITY AND NO SPECIAL ALLOCATION OF INCOME, GAIN, LOSS, DEDUCTION
OR CREDIT FROM SUCH EXCESS CASH FLOW CERTIFICATES WILL BE MADE AMONG THE
BENEFICIAL OWNERS OF SUCH FLOW-THROUGH ENTITY, AND (III) THE HOLDER IS A UNITED
STATES PERSON WITHIN THE MEANING OF THE CODE.
TRANSFER OF THIS CERTIFICATE IS SUBJECT TO CERTAIN RESTRICTIONS SET FORTH IN
SECTION 5.5(d) OF THE AGREEMENT.
LONG BEACH ACCEPTANCE AUTO GRANTOR TRUST 1998-1
EXCESS CASH FLOW CERTIFICATE
evidencing a beneficial ownership interest in the Trust, as defined below, the
property of which includes a pool of retail installment sale contracts secured
by new and used automobiles, vans, sport utility vehicles and light duty trucks
and sold to the Trust by Long Beach Acceptance Receivables Corp.
(This Certificate does not represent an interest in or obligation of Long Beach
Acceptance Receivables Corp., Long Beach Acceptance Corp., the Trustee or any of
their respective affiliates, except to the extent described below.)
NUMBER R-_____________
Percentage Interest: 100%
THIS CERTIFIES THAT __________________ is the registered owner of a
100% nonassessable, fully-paid, interest in the Excess Cash Flow Certificate,
which Excess Cash Flow Certificate represents a beneficial ownership interest in
the Long Beach Acceptance Auto Grantor Trust 1998-1 (the "Trust") formed by Long
Beach Acceptance Receivables Corp., a Delaware corporation (the "Depositor").
The Trust was created pursuant to a
Pooling and Servicing Agreement dated as of
January 1, 1998 (the "Agreement") among the Depositor, Long Beach Acceptance
Corp., as originator and as
C-3
servicer (the "Servicer") and Chase Bank of Texas, National Association, as
trustee (the "Trustee"), Custodian, Collateral Agent and Back-up Servicer, a
summary of certain of the pertinent provisions of which is set forth below. To
the extent not otherwise defined herein, the capitalized terms used herein have
the meanings assigned to them in the Agreement. This Certificate is one of the
duly authorized Certificates designated as "Excess Cash Flow Certificates"
(herein called the "Excess Cash Flow Certificates"). Also issued under the
Agreement are Certificates designated as "6.19% Asset Backed Certificates, Class
A" (the "Class A Certificates") and "12.00% Asset Backed Certificates, Class B"
(the "Class B Certificates"). The Class A Certificates, the Class B Certificates
and the Excess Cash Flow Certificates are hereinafter collectively called the
"Certificates." This Excess Cash Flow Certificate is issued under and is subject
to the terms, provisions, and conditions of the Agreement, to which Agreement
the Holder of this Excess Cash Flow Certificate by virtue of the acceptance
hereof assents and by which such Holder is bound. The property of the Trust
includes (i) a pool of retail installment sale contracts for new and used
automobiles, vans, sport utility vehicles and light duty trucks (the
"Receivables"), and with respect to Precomputed Receivables, all monies received
thereon after the close of business on December 31, 1997 (the "Initial Cutoff
Date") in the case of the Initial Receivables, or the related Subsequent Cutoff
Date in the case of the Subsequent Receivables (including in each case Scheduled
Payments due or to become due thereon on and after the Initial Cutoff Date in
the case of the Initial Receivables, or the related Subsequent Cutoff Date in
the case of the Subsequent Receivables, and Scheduled Payments due prior to the
Initial Cutoff Date in the case of the Initial Receivables, or the related
Subsequent Cutoff Date in the case of the Subsequent Receivables, but received
on or after the Initial Cutoff Date in the case of the Initial Receivables, or
the related Subsequent Cutoff Date in the case of the Subsequent Receivables),
principal prepayments relating to such Scheduled Payments due on or after the
Initial Cutoff Date in the case of the Initial Receivables, or the related
Subsequent Cutoff Date in the case of the Subsequent Receivables, but received
by the Depositor or LBAC before the Initial Cutoff Date in the case of the
Initial Receivables, or the related Subsequent Cutoff Date in the case of the
Subsequent Receivables, and any Payaheads received with respect to payments due
on the Receivables on or after the Initial Cutoff Date in the case of the
Initial Receivables, or the related Subsequent Cutoff Date in the case of the
Subsequent Receivables (which Payaheads shall be held in the Payahead Account
until the Collection Period in which such payments are actually due with respect
to the related Receivable, at which time such Payaheads shall be applied as a
component of the Total Distribution Amount), and with respect to Simple Interest
Receivables, all monies received thereunder on and after the Initial Cutoff Date
in the case of the Initial Receivables, or the related Subsequent Cutoff Date in
the case of the Subsequent Receivables (including in each case Scheduled
Payments due before the Initial Cutoff Date in the case of the Initial
Receivables, or the related Subsequent Cutoff Date in the case of the
Subsequent Receivables, but received by the Depositor or LBAC on or after the
Initial Cutoff Date in the case of the Initial Receivables, or the related
Subsequent Cutoff Date in the case of the Subsequent Receivables), security
interests in the vehicles financed thereby, proceeds from claims on certain
insurance policies and certain other rights under the Agreement, certain bank
accounts and the proceeds thereof, all right, title and interest of the
Depositor in and to the Purchase Agreement, all right, title and interest
C-4
of the Depositor in and to certain refunds, the Receivable Files related to each
Receivable and the proceeds of any or all of the foregoing; and (ii) a Financial
Guaranty Insurance Policy issued for the benefit of the Class A
Certificateholders by Financial Security Assurance Inc. (the "Policy").
Under the Agreement, the rights of the Excess Cash Flow
Certificateholders to receive distributions and principal in respect of the
Excess Cash Flow Certificates on a Distribution Date are subordinated to the
payment of the amounts due to the Servicer, the Trustee, the Back-up Servicer,
the Collateral Agent, the Custodian, the Certificate Insurer, the Class A
Certificateholders, the Class B Certificateholders, the Class A Subaccount and
the Class B Reserve Account distributable pursuant to Sections 4.6(c)(i) through
(x) of the Agreement, except as otherwise set forth in the Agreement.
Under the Agreement, there will be distributed on the 25th day of each
month or, if such 25th day is not a Business Day, the next Business Day (the
"Distribution Date"), commencing on February 25, 1998, to the person in whose
name this Excess Cash Flow Certificate is registered at the close of business on
the last day of the calendar month immediately preceding the month in which such
Distribution Date occurs (or with respect to the initial Distribution Date,
February 10, 1998) (the "Record Date"), such Excess Cash Flow
Certificateholder's percentage interest (set forth above) in the amounts
distributed to Excess Cash Flow Certificateholders pursuant to the Agreement.
Any distributions on this Excess Cash Flow Certificate will be made by
the Trustee by (i) wire transfer, in immediately available funds to the account
of such Excess Cash Flow Certificateholder at a bank or other entity having
appropriate facilities therefor, if such Excess Cash Flow Certificateholder
shall have provided to the Trustee appropriate instructions prior to such
Distribution Date, or (ii) by check mailed to the Excess Cash Flow
Certificateholder of record in the Certificate Register without the presentation
or surrender of this Excess Cash Flow Certificate or the making of any notation
hereon. Except as otherwise provided in the Agreement and notwithstanding the
above, the final distribution on this Excess Cash Flow Certificate will be made
after due notice by the Trustee of the pendency of such distribution and only
upon presentation and surrender of this Excess Cash Flow Certificate at the
office or agency maintained for that purpose by the Trustee specified in such
notice.
Each Certificateholder by purchase of the Certificates held by it
acknowledges that the Trustee, as partial consideration of the issuance of the
Policy, has agreed that the Certificate Insurer shall have certain rights
hereunder for so long as no Insurer Default shall have occurred and be
continuing. So long as an Insurer Default has occurred and is continuing, any
provision giving the Certificate Insurer the right to direct, appoint or consent
to, approve of, or take any action under the Agreement shall be inoperative
during the period of such Insurer Default and such right shall instead vest in
the Trustee acting at the direction of the Class A Certificateholders or Class B
Certificateholders, as the case may be. The Certificate Insurer may disclaim any
of its rights and powers under the Agreement (but not its duties and obligations
under the Policy) upon delivery of a written notice to the Trustee. The
Certificate Insurer may give or withhold any consent hereunder in its sole and
absolute discretion.
C-5
By acceptance of this Certificate, the Holder hereof acknowledges and
agrees that (i) it shall be bound by the terms and provisions of the Agreement,
a copy of which may be obtained from the Trustee upon request; (ii) no amounts
shall be received by such Holder, nor shall such Holder have any property rights
in or any right to receive any amounts unless and until such amounts are (a)
available for distribution to such Holder pursuant to Section 4.6(c) of the
Agreement, (b) are released pursuant to priority SEVENTH of Section 3.03(b) of
the Spread Account Agreement for distribution to such Holder pursuant to Section
4.6(c) of the Agreement or (d) are otherwise available from amounts on deposit
in the Excess Cash Flow Sub-account for distribution to such Holder pursuant to
Clause (E) of the last paragraph of Section 4.6(c); (iii) such Holder has no
right to or interest in any moneys at any time held pursuant to the Spread
Account Agreement or the Agreement prior to the release of such moneys as
aforesaid, such moneys being held in trust for the benefit of the Class A
Certificateholders and the Certificate Insurer (with respect to any moneys held
in the Spread Account) and the Class B Certificateholders (with respect to any
moneys held in the Class B Reserve Account), as their interests may appear prior
to such release; (iv) in the event that it is ever determined that any property
held in the Spread Account constitutes property of the Holder, then pursuant to
Section 2.03 of the Spread Account Agreement the Depositor as agent for such
purpose for the Excess Cash Flow Certificateholders has granted to the
Collateral Agent for the benefit of Financial Security and the Trustee on behalf
of the Certificateholders a first priority perfected security interest in such
amounts, to be applied as set forth in Section 3.03(b) of the Spread Account
Agreement; (v) in the event that it is ever determined that any property held in
the Class B Reserve Account constitutes property of the Holder, then the
provisions of the Agreement shall be considered to constitute a security
agreement and the Holder hereby grants to the Trustee, as collateral agent for
the Class B Reserve Account, a first priority perfected security interest in
such amounts, to be applied as set forth in Sections 4.6 and 4.7 of the
Agreement; (vi) the Holder hereof hereby appoints the Depositor as its agent to
pledge a first priority perfected security interest in the Excess Cash Flow
Sub-account and any amounts held therein from time to time to the Collateral
Agent for the benefit of the Trustee and the Certificate Insurer pursuant to the
Spread Account Agreement and agrees to execute and deliver such instruments of
conveyance, assignment, grant, confirmation, etc., as well as any financing
statements, in each case as the Certificate Insurer shall consider reasonably
necessary in order to perfect the Collateral Agent's Security Interest in the
Collateral (as such terms are defined in the Spread Account Agreement) and (vii)
such Holder hereby appoints the Servicer as its agent to pledge a first priority
perfected security interest in the Class B Reserve Account and any amounts held
therein from time to time to the Trustee as collateral agent for the benefit of
the Trustee and the Class B Certificateholders pursuant to the 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
Trustee as collateral agent for the benefit of the Trustee and the Class B
Certificateholders shall consider reasonably necessary in order to perfect such
collateral agent's security interest in amounts in the Class B Reserve Account.
Reference is hereby made to the further provisions of this Excess Cash
Flow Certificate set forth on the reverse hereof, which further provisions shall
for all purposes have the same effect as if set forth at this place.
C-6
Unless the certificate of authentication hereon shall have been
executed by an authorized officer of the Trustee, by manual signature, this
Excess Cash Flow Certificate shall not entitle the Holder hereof to any benefit
under the Agreement or be valid for any purpose. No transfer of this Certificate
may be made if the transfer would cause there to be more than 100 holders of the
Excess Cash Flow Certificate and Class B Certificates and any purchasers of this
Certificate that are partnerships or other tax-transparent vehicles must
certify either (i) the Excess Cash Flow Certificate and Class B Certificates
make up less than 50% of their assets by value or (ii) the number of equity
holders in such vehicles.
C-7
IN WITNESS WHEREOF, the Trustee on behalf of the Trust and not in its
individual capacity has caused this Excess Cash Flow Certificate to be duly
executed.
LONG BEACH ACCEPTANCE AUTO GRANTOR TRUST 1998-1
By: Chase Bank of Texas, National Association,
not in its individual capacity but solely in
its capacity as Trustee
By:
-------------------------------------------
Authorized Signatory
Dated: , 1998
--------------
This is one of the Excess Cash Flow Certificates referred to
in the within-mentioned Agreement.
Chase Bank of Texas, National Association,
not in its individual capacity but solely in
its capacity as Trustee
By:
-------------------------------------------
Authorized Signatory
C-8
[REVERSE OF CERTIFICATE]
The Certificates do not represent an obligation of, or an interest
in, the Depositor, the Servicer, the Trustee or any affiliate of any of them.
This Excess Cash Flow Certificate is limited in right of payment to certain
collections and recoveries respecting the Receivables, all as more
specifically set forth in the Agreement. A copy of the Agreement may be
examined during normal business hours at the principal office of the
Depositor, and at such other places, if any, designated by the Depositor, by
any Certificateholder upon request.
The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Depositor and the rights of the Certificateholders under the Agreement at any
time by the Depositor, the Servicer and the Trustee with the consent of the
Certificate Insurer and with the consent of the Holders of Certificates
evidencing not less than 66-2/3% of the Class B Certificate Balance and 66-2/3%
of the Class A Certificate Balance; PROVIDED, that, the consent of each Excess
Cash Flow Certificateholder is required to increase or reduce in any manner the
amount of, or accelerate or delay the timing of, or change the allocation or
priority of, collection of payments on Receivables if such change would affect
the Excess Cash Flow Certificateholder. Any such consent by the Holder of this
Certificate shall be conclusive and binding on such Holder and on all future
Holders of this Certificate and of any Certificate issued upon the transfer
hereof or in exchange hereof or in lieu hereof whether or not notation of such
consent is made upon this Certificate.
As provided in the Agreement and subject to certain limitations set
forth therein, the transfer of this Certificate is registrable in the
Certificate Register upon surrender of this Certificate for registration of
transfer at the offices or agencies maintained by the Trustee in its capacity as
Certificate Registrar, or by any successor Certificate Registrar, in the Borough
of Manhattan, The City of New York, accompanied by a written instrument of
transfer in form satisfactory to the Trustee and the Certificate Registrar duly
executed by the Holder hereof or such Holder's attorney duly authorized in
writing, and thereupon one or more new Certificates of authorized denominations
evidencing the same aggregate interest in the Trust will be issued to the
designated transferee.
The Excess Cash Flow Certificates are issuable only as registered
Certificates without coupons and shall be registered in the name of a single
Holder at all times. As provided in the Agreement and subject to certain
limitations set forth therein, Certificates are exchangeable for new
Certificates of authorized denominations evidencing the same aggregate
denomination, as requested by the Holder surrendering the same. No service
charge will be made for any such registration of transfer or exchange, but
the Trustee may require payment of a sum sufficient to cover any tax or
governmental charges payable in connection therewith.
The Trustee, the Certificate Registrar, and any agent of the Trustee or
the Authenticating Agent may treat the person in whose name this Certificate is
registered as the owner hereof for all purposes, and neither the Trustee, the
Certificate Registrar, nor any such agent shall be affected by any notice to the
contrary.
C-9
The obligations and responsibilities created by the Agreement and the
Trust created thereby shall terminate upon the payment to Certificateholders of
all amounts required to be paid to them pursuant to the Agreement, the payment
of all Reimbursement Obligations, and the expiration of any preference period
with respect thereto and the disposition of all property held as part of the
Trust. The Originator or the Servicer of the Receivables may at its option
purchase the corpus of the Trust at a price specified in the Agreement, and such
purchase of the Receivables and other property of the Trust will effect early
retirement of the Certificates; however, such right of purchase is exercisable
only as of the last day of any Collection Period as of which the Pool Balance is
less than or equal to 10% of the sum of the original aggregate Principal Balance
of the Initial Receivables and the aggregate Principal Balance of all Subsequent
Receivables conveyed to the Trust as of the related Subsequent Cutoff Dates.
C-10
ASSIGNMENT
FOR VALUE RECEIVED the undersigned hereby sells, assigns and transfers
unto
PLEASE INSERT SOCIAL SECURITY
OR OTHER IDENTIFYING NUMBER
OF ASSIGNEE
_______________________________________________________________________________
(Please print or typewrite name and address, including postal zip code, of
assignee)
_______________________________________________________________________________
the within Certificate, and all rights thereunder, hereby irrevocably
constituting and appointing
_________________________________________ Attorney to transfer said Certificate
on the books of the Certificate Registrar, with full power of substitution in
the premises.
Dated:
__________________________________*
__________________________________*
*NOTICE: The signature to this assignment must correspond with the name as it
appears upon the face of the within Certificate in every particular, without
alteration, enlargement or any change whatever.
C-11
Exhibit D- I
Trustee's Certificate
pursuant to Section 2.7
of the
Pooling and Servicing
Agreement
Chase Bank of Texas, National Association, as trustee (the "Trustee")
of Long Beach Acceptance Auto Grantor Trust 1998-1 created pursuant to the
Pooling and Servicing Agreement (the "Agreement"), dated as of January 1, 1998
among Long Beach Acceptance Receivables Corp. (the "Depositor"), Long Beach
Acceptance Corp. ("LBAC"), as originator and as servicer and the Trustee, does
hereby sell, transfer, assign, and otherwise convey to LBAC, without recourse,
representation, or warranty, all of the Trustee's right, title, and interest in
and to all of the Receivables (as defined in the Agreement) identified in the
attached Servicer's Certificate as "Purchased Receivables," which are to be
repurchased by LBAC pursuant to Section 2.7 of the Agreement, and all security
and documents relating thereto.
IN WITNESS WHEREOF I have hereunto set my hand this ___ day of
______________, 199__.
______________________________________
X-0-0
Xxxxxxx X-0
Trustee's Certificate
pursuant to Section 3.7 or 10.2
of the Pooling and Servicing
Agreement
Chase Bank of Texas, National Association, as trustee (the "Trustee")
of Long Beach Acceptance Auto Grantor Trust 1998-1 created pursuant to the
Pooling and Servicing Agreement (the "Agreement"), dated as of January 1, 1998
among Long Beach Acceptance Receivables Corp., Long Beach Acceptance Corp., as
originator and as Servicer (the "Servicer") and the Trustee, does hereby sell,
transfer, assign, and otherwise convey to the Servicer, without recourse,
representation, or warranty, all of the Trustee's right, title, and interest in
and to all of the Receivables (as defined in the Agreement) identified in the
attached Servicer's Certificate as "Purchased Receivables," which are to be
purchased by the Servicer pursuant to Section 3.7 or 10.2 of the Agreement, and
all security and documents relating thereto.
IN WITNESS WHEREOF I have hereunto set my hand this ____ day of
______________, 199__.
______________________________________
D-1-2
EXHIBIT E-1
MONTHLY CERTIFICATEHOLDER STATEMENT
LONG BEACH ACCEPTANCE AUTO GRANTOR TRUST 1998-1
6.19% CLASS A ASSET-BACKED CERTIFICATES
12.00% CLASS B ASSET-BACKED CERTIFICATES
E-1-1
EXHIBIT E-2
Form of Loan Master File Layout
E-2-1
EXHIBIT F-1
[FORM OF "QUALIFIED INSTITUTIONAL BUYER"
TRANSFEREE'S CERTIFICATE]
[date]
Long Beach Acceptance Receivables Corp.
Xxx Xxxx Xxxxxx Xxxxx
Xxxxxxx, Xxx Xxxxxx 00000
Chase Bank of Texas, National Association
000 Xxxxxx Xxxxxx, 0xx Xxxxx
Xxxxxxx, Xxxxx 00000
Attention: Global Trust Services - Long Beach
Acceptance Auto Grantor Trust 1998-1
Re: Long Beach Acceptance Auto Grantor Trust 1998-1
Asset Backed Certificates
------------------------------------------------
Dear Sirs:
In connection with the proposed purchase by the buyer listed below
(the "Buyer") of Certificates (the "Certificates") issued pursuant to the
Pooling and Servicing Agreement dated as of January 1, 1998 (the "Pooling and
Servicing Agreement") among Long Beach Acceptance Receivables Corp., as
depositor (the "Depositor"), Long Beach Acceptance Corp., as Originator and
Servicer, and Chase Bank of Texas, National Association, as trustee (the
"Trustee"), Custodian, Collateral Agent and Back-up Servicer relating to Long
Beach Acceptance Auto Grantor Trust 1998-1 Asset Backed Certificates (the
"Certificates"), the Buyer advises you as follows: (i) the Buyer is a
"qualified institutional buyer" as that term is defined in Rule 144A under
the Securities Act of 1933, as amended (the "1933 Act") and is acquiring
beneficial ownership of the Certificates for its own account or for the
account of not more than __ persons, each of which is a "qualified
institutional buyer"; and (ii) the Buyer satisfies the requirements of
paragraph (a)(2)(ii) of Rule 3a-7 under the Investment Company Act of 1940,
as amended (the "1940 Act"). In addition to the foregoing, you may rely on
the information provided in Annex 1 or 2, as applicable, attached hereto and
incorporated herein.
The Buyer understands that the Certificates have not been registered
under the 1933 Act or the securities laws of any state. The Buyer acknowledges
that it has independently conducted such investigation and evaluation of the
merits and the risks involved in an investment in the Certificates and has
received such information (whether from the Depositor, the Servicer, the
transferor from which it proposes to purchase Certificates, or from any other
source) as the Buyer has deemed necessary and advisable in order to make its
investment decision. The Buyer has had any questions arising from such
investigation and evaluation answered by the Depositor to the satisfaction of
the
F-1-1
Buyer. The Buyer is a sophisticated institutional investor, having such
knowledge and experience in financial and business matters generally, and with
respect to asset-backed securities and investments in "non-prime" automobile
loans specifically, that it is capable of independently evaluating the merits
and risks of investment in the Certificates. In the normal course of its
business, the Buyer invests in or purchases securities similar to the
Certificates. The Buyer is aware that it may be required to bear the economic
risk of an investment in the Certificates for an indefinite period of time, and
it is able to bear such risk for an indefinite period.
Very truly yours,
[BUYER]
By:
---------------------------------------
Name:
Title:
Taxpayer ID:
---------------------------
Name in which Certificate is to be
Registered:
----------------------------
Address for Notices:
-------------------
-------------------
-------------------
Payment Instructions:
F-1-2
ANNEX 1 TO EXHIBIT F-1
QUALIFIED INSTITUTIONAL BUYER STATUS UNDER SEC RULE 144A
[For Buyers Other Than Registered Investment Companies]
The undersigned hereby certifies as follows to the parties listed in
the "Qualified Institutional Buyer" Transferee's Certificate to which this
certification relates with respect to the Rule 144A Securities described
therein:
(a) As indicated below, the undersigned is the President, Chief
Financial Officer, Senior Vice President or other executive officer of the
Buyer.
(b) In connection with purchases by the Buyer, the Buyer is a
"qualified institutional buyer" as that term is defined in Rule 144A under
the Securities Act of 1933 ("Rule 144A") because (i) the Buyer owned and/or
invested on a discretionary basis $_________(1) in securities (except for the
excluded securities referred to below) as of the end of the Buyer's most
recent fiscal year (such amount being calculated in accordance with Rule
144A) and (ii) the Buyer satisfies the criteria in the category marked below.
_____ CORPORATION, ETC. The Buyer is a corporation (other
than a bank, savings and loan association or similar
institution), Massachusetts or similar business trust,
partnership, or charitable organization described in
Section 501(c)(3) of the Internal Revenue Code of 1986,
as amended.
_____ BANK. The Buyer (a) is a national bank or banking
institution organized under the laws of any State, territory
or the District of Columbia, the business of which is
substantially confined to banking and is supervised by the
State or territorial banking commission or similar official
or is a foreign bank or equivalent institution, and (b) has
an audited net worth of at least $25,000,000 as demonstrated
in its latest annual financial statements, a copy of which is
attached hereto.
_____ SAVINGS AND LOAN. The Buyer (a) is a savings and loan
association, building and loan association, cooperative bank,
homestead association or similar institution, which is
supervised and examined by a State or Federal authority having
supervision over any such institutions or is a foreign savings
and loan association or equivalent institution and (b) has an
audited net worth of at least $25,000,000 as demonstrated in
its latest annual financial statements, a copy of which is
attached hereto.
--------------
(1) Buyer must own and/or invest on a discretionary basis at least $100,000,000
in securities unless Buyer is a dealer, and, in that case, Buyer must own
and/or invest on a discretionary basis at least $10,000,000 in securities.
F-1-3
_____ BROKER-DEALER. The Buyer is a dealer registered
pursuant to Section 15 of the Securities Exchange Act of 1934.
_____ INSURANCE COMPANY. The Buyer is an insurance company
whose primary and predominant business activity is the
writing of insurance or the reinsuring of risks underwritten
by insurance companies and which is subject to supervision by
the insurance commissioner or a similar official or agency of
a State, territory or the District of Columbia.
_____ STATE OR LOCAL PLAN. The Buyer is a plan established and
maintained by a State, its political subdivisions, or any
agency or instrumentality of the State or its political
subdivisions, for the benefit of its employees.
_____ ERISA PLAN. The Buyer is an employee benefit plan
within the meaning of Title I of the Employee Retirement
Income Security Act of 1974.
_____ INVESTMENT ADVISOR. The Buyer is an investment advisor
registered under the Investment Advisers Act of 1940.
_____ SMALL BUSINESS INVESTMENT COMPANY. Buyer is a small
business investment company licensed by the U.S. Small
Business Administration under Section 301(c) or (d) of the
Small Business Investment Act of 1958.
_____ BUSINESS DEVELOPMENT COMPANY. Buyer is a business
development company as defined in Section 202(a)(22) of the
Investment Advisors Act of 1940.
_____ TRUST FUND. The Buyer is a trust fund whose trustee
is a bank or trust company and whose participants are
exclusively State or Local Plans or ERISA Plans as defined
above, and no participant of the Buyer is an individual
retirement account or an H.R. 10 (Xxxxx) plan.
(c) The term "securities" as used herein does not include (i)
securities of issuers that are affiliated with the Buyer, (ii) securities that
are part of an unsold allotment to or subscription by the Buyer, if the Buyer is
a dealer, (iii) bank deposit notes and certificates of deposit, (iv) loan
participations, (v) repurchase agreements, (vi) securities owned but subject to
a repurchase agreement and (vii) currency, interest rate and commodity swaps.
(d) For purposes of determining the aggregate amount of securities
owned and/or invested on a discretionary basis by the Buyer, the Buyer used the
cost of such securities to the Buyer and did not include any of the securities
referred to in the preceding paragraph, except (i) where the Buyer reports its
securities holdings in its financial statements on the basis of their market
value, and (ii) no current information with respect to the cost of those
securities has been published. If clause (ii) in the preceding sentence applies,
the securities may be valued at market. Further, in determining such aggregate
amount, the Buyer may have included securities owned by subsidiaries of the
Buyer, but only if such subsidiaries are consolidated with the Buyer in its
financial statements
F-1-4
prepared in accordance with generally accepted accounting principles and if the
investments of such subsidiaries are managed under the Buyer's direction.
However, such securities were not included if the Buyer is a majority-owned,
consolidated subsidiary of another enterprise and the Buyer is not itself a
reporting company under the Securities Exchange Act of 1934.
(e) The Buyer acknowledges that it is familiar with Rule 144A and
understands that the seller to it and other parties related to the Certificates
are relying and will continue to rely on the statements made herein because one
or more sales to the Buyer may be in reliance on Rule 144A.
(f) Until the date of purchase of the Rule 144A Securities, the Buyer
will notify each of the parties to which this certification is made of any
changes in the information and conclusions herein. Until such notice is given,
the Buyer's purchase of Rule 144A Securities will constitute a reaffirmation of
this certification as of the date of such purchase. In addition, if the Buyer is
a Bank or Savings and Loan as provided above, the Buyer agrees that it will
furnish to such parties updated annual financial statements promptly after they
become available.
------------------------------------------
Print Name of Buyer
By:
---------------------------------------
Name:
Title:
Date:
-------------------------------------
F-1-5
ANNEX 2 TO EXHIBIT F-1
QUALIFIED INSTITUTIONAL BUYER STATUS UNDER SEC RULE 144A
[For Buyers that are Registered Investment Companies]
The undersigned hereby certifies as follows to the parties listed in
the "Qualified Institutional Buyer" Transferee's Certificate to which this
certification relates with respect to the Rule 144A Securities described
therein:
(a) As indicated below, the undersigned is the President, Chief
Financial Officer or Senior Vice President of the Buyer or, if the Buyer is a
"qualified institutional buyer" as that term is defined in Rule 144A under the
Securities Act of 1933 ("Rule 144A") because Buyer is part of a Family of
Investment Companies (as defined below), is such an officer of the Adviser.
(b) In connection with purchases by Buyer, the Buyer is a "qualified
institutional buyer" as defined in SEC Rule 144A because (i) the Buyer is an
investment company registered under the Investment Company Act of 1940, and (ii)
as marked below, the Buyer alone, or the Buyer's Family of Investment Companies,
owned at least $100,000,000 in securities (other than the excluded securities
referred to below) as of the end of the Buyer's most recent fiscal year. For
purposes of determining the amount of securities owned by the Buyer or the
Buyer's Family of Investment Companies, the cost of such securities was used,
except (i) where the Buyer or the Buyer's Family of Investment Companies
reports its securities holdings in its financial statements on the basis of
their market value, and (ii) no current information with respect to the cost of
those securities has been published. If clause (ii) in the preceding sentence
applies, the securities may be valued at market.
_____ The Buyer owned $______________ in securities (other
than the excluded securities referred to below) as of the end
of the Buyer's most recent fiscal year (such amount being
calculated in accordance with Rule 144A).
_____ The Buyer is part of a Family of Investment Companies
which owned in the aggregate $_______________ in securities
(other than the excluded securities referred to below) as of
the end of the Buyer's most recent fiscal year (such amount
being calculated in accordance with Rule 144A).
(c)The term "Family of Investment Companies" as used herein means two
or more registered investment companies (or series thereof) that have the same
investment adviser or investment advisers that are affiliated (by virtue of
being majority owned subsidiaries of the same parent or because one investment
adviser is a majority owned subsidiary of the other).
(d) The term "securities" as used herein does not include (i)
securities of issuers that are affiliated with the Buyer or are part of the
Buyer's Family of Investment Companies, (ii) bank deposit notes and certificates
of deposit, (iii) loan participations,
F-1-6
(iv) repurchase agreements, (v) securities owned but subject to a repurchase
agreement and (vi) currency, interest rate and commodity swaps.
(e) The Buyer is familiar with Rule 144A and understands that the
parties listed in the Qualified Institutional Buyer Transferee's Certificate to
which this certification relates are relying and will continue to rely on the
statements made herein because one or more sales to the Buyer will be in
reliance on Rule 144A. In addition, the Buyer will only purchase for the Buyer's
own account.
(f) Until the date of purchase of the Rule 144A Securities, the
undersigned will notify each of the parties to which this certification is made
of any changes in the information and conclusions herein. Until such notice is
given, the Buyer's purchase of Rule 144A Securities will constitute a
reaffirmation of this certification by the undersigned as of the date of such
purchase.
------------------------------------------
Print Name of Buyer or Adviser
By:
----------------------------------------
Name:
Title:
IF AN ADVISER:
------------------------------------------
Print Name of Buyer
Date:
--------------------------------------
F-1-7
EXHIBIT F-2
[FORM OF "ACCREDITED INVESTOR" TRANSFEREE'S CERTIFICATE]
[date]
Long Beach Acceptance Receivables Corp.
Xxx Xxxx Xxxxxx Xxxxx
Xxxxxxx, Xxx Xxxxxx 00000
Chase Bank of Texas, National Association
000 Xxxxxx Xxxxxx, 0xx Xxxxx
Xxxxxxx, Xxxxx 00000
Attention: Global Trust Services - Long Beach
Acceptance Auto Grantor Trust 1998-1
Re: Long Beach Acceptance Auto Grantor Trust 1998-1
ASSET BACKED CERTIFICATES
Dear Sirs:
In connection with the proposed purchase by the buyer listed below
(the "Buyer") of Certificates (the "Certificates") issued pursuant to the
Pooling and Servicing Agreement dated as of January 1, 1998 (the "Pooling and
Servicing Agreement") among Long Beach Acceptance Receivables Corp., as
depositor (the "Depositor"), Long Beach Acceptance Corp., as Originator and
Servicer and Chase Bank of Texas, National Association, as trustee (the
"Trustee"), Custodian, Collateral Agent and Back-up Servicer, relating to
Long Beach Acceptance Auto Grantor Trust 1998-1 Asset Backed Certificates
(the "Certificates"), the Buyer confirms that:
(a) The Buyer understands that the Certificates have not been
registered under the Securities Act of 1933, as amended (the "1933
Act"), and may not be sold except as permitted in the following
sentence. The Buyer agrees, on its own behalf and on behalf of any
accounts for which it is acting as hereinafter stated, that such
Certificates may be resold, pledged or transferred only: (i) so long as
such Certificates are eligible for resale pursuant to Rule 144A under
the 1933 Act ("Rule 144A"), to a person who the Buyer reasonably
believes is a "qualified institutional buyer" as defined in Rule 144A
(a "QIB") that purchases for its own account or for the account of a
QIB, to whom notice is given that the resale, pledge or transfer is
being made in reliance on Rule 144A, (ii) pursuant to an exemption from
registration under the 1933 Act provided by Rule 144 (if applicable)
under the 1933 Act or (iii) to an institution that is an "Accredited
Investor" as defined in Rule 501 (a)(1), (2), (3) or (7) under the 1933
Act (an "Accredited Investor") that is acquiring the Certificates for
investment purposes and not for distribution, in each case in
accordance with any applicable securities laws of any state of the
United States, and the Buyer will notify any purchaser of the
Certificates from it of the above resale restrictions. The Buyer
further understands that in connection with any transfer of the
Certificates to an Accredited Investor by it that the Depositor or
Trustee may request, and if so
F-2-1
requested the Buyer will furnish, such certificates and other
information as they may reasonably require to confirm any such transfer
with the foregoing restrictions.
(b) The Buyer is an institutional investor which is an
Accredited Investor or, if the Certificates are to be purchased for one
or more institutional accounts ("investor accounts") for which it is
acting as fiduciary or agent (except if it is a bank as defined in
Section 3(a)(2) of the 1933 Act, or a savings and loan association or
other institution as described in Section 3(a)(5)(A) of the 1933 Act,
whether acting in its individual or in a fiduciary capacity), each such
investor account is an institutional investor and an Accredited
Investor on a like basis. In the normal course of its business, the
Buyer invests in or purchases securities similar to the Certificates.
(c) The Buyer satisfies the requirements of paragraph
(a)(2)(i) of Rule 3a-7 of the Investment Company Act of 1940.
(d) The Buyer acknowledges that it has independently conducted
such investigation and evaluation of the merits and the risks involved
in an investment in the Certificates and has received such information
(whether from the Depositor, the Servicer, the transferor from which it
proposes to purchase Certificates, or from any other source) as the
Buyer has deemed necessary and advisable in order to make its
investment decision. The Buyer has had any questions arising from such
investigation and evaluation answered by the Depositor to the
satisfaction of the Buyer. The Buyer is a sophisticated institutional
investor, having such knowledge and experience in financial and
business matters generally, and with respect to asset-backed securities
and investments in "non-prime" automobile loans specifically, that it
is capable of independently evaluating the merits and risks of
investment in the Certificates. In the normal course of its business,
the Buyer invests in or purchases securities similar to the
Certificates. The Buyer is aware that it (or any investor account) may
be required to bear the economic risk of an investment in the
Certificates for an indefinite period of time, and it (or such account)
is able to bear such risk for an indefinite period.
Very truly yours,
[BUYER]
By: ________________________________
Name:
Title:
F-2-2
EXHIBIT F-3
[FORM OF "REGISTERED CERTIFICATE" TRANSFEREE'S CERTIFICATE]
Date:
Long Beach Acceptance Receivables Corp.
Xxx Xxxx Xxxxxx Xxxxx
Xxxxxxx, Xxx Xxxxxx 00000
Chase Bank of Texas, National Association
000 Xxxxxx Xxxxxx, 0xx Xxxxx
Xxxxxxx, Xxxxx 00000
Attention: Global Trust Services - Long Beach
Acceptance Auto Grantor Trust 1998-1
Re: Long Beach Acceptance Auto Grantor Trust 1998-1
ASSET BACKED CERTIFICATES
Dear Sirs:
In connection with the proposed purchase by the buyer listed below
(the "Buyer") of Certificates (the "Certificates") issued pursuant to the
Pooling and Servicing Agreement dated as of January 1, 1998 (the "Pooling and
Servicing Agreement") among Long Beach Acceptance Receivables Corp., as
depositor (the "Depositor"), Long Beach Acceptance Corp., as Originator and
Servicer and Chase Bank of Texas, National Association, as trustee (the
"Trustee"), relating to Long Beach Acceptance Auto Grantor Trust 1998-1 Asset
Backed Certificates (the "Certificates"), the Buyer confirms that it
satisfies the requirements set forth in paragraph (a)(2) of Rule 3a-7 of the
Investment Company Act of 1940, as amended.
Very truly yours,
[BUYER]
By: ____________________________________
Name:
Title:
Taxpayer ID: ___________________________
Name in which
Certificate is
to be Registered: ______________________
Address for Notices:____________________
_________________
_________________
Payment Instructions:
F-3-1
EXHIBIT F-4
[FORM OF TRANSFEROR'S CERTIFICATE]
Date:
Long Beach Acceptance Receivables Corp.
Xxx Xxxx Xxxxxx Xxxxx
Xxxxxxx, Xxx Xxxxxx 00000
Chase Bank of Texas, National Association
000 Xxxxxx Xxxxxx, 0xx Xxxxx
Xxxxxxx, Xxxxx 00000
Attention: Global Trust Services - Long Beach
Acceptance Auto Grantor Trust 1998-1
Re: Long Beach Acceptance Auto Grantor Trust 1998-1
ASSET BACKED CERTIFICATES
Ladies and Gentlemen:
In connection with the disposition by the transferor listed below
(the "Transferor") of Certificates (the "Certificates") issued pursuant to
the Pooling and Servicing Agreement dated as of January 1, 1998 (the "Pooling
and Servicing Agreement") among Long Beach Acceptance Receivables Corp., as
depositor (the "Depositor"), Long Beach Acceptance Corp., as Originator and
Servicer and Chase Bank of Texas, National Association, as trustee (the
"Trustee"), relating to Long Beach Acceptance Auto Grantor Trust 1998-1 Asset
Backed Certificates (the "Certificates"), the Transferor certifies that:
(a) the Transferor understands that the Certificates have not
been registered under the Securities Act of 1933, as amended (the "1933
Act"), and are being disposed of by the Transferor in a transaction
that is exempt from the registration requirements of the 1933 Act; and
(b) the Transferor has not offered or sold any Certificates
to, or solicited offers to buy any Certificates from, any person, or
otherwise approached or negotiated with any person with respect
thereto, in a manner that would be deemed, or taken any other action
which would result in, a violation of Section 5 of the 1933 Act.
Very truly yours,
__________________________________
Name of Transferor
By: ______________________________
Name: ____________________________
Title: ___________________________
F-4-1
EXHIBIT G
[Form of ERISA Representation Letter]
[date]
Long Beach Acceptance Receivables Corp.
Xxx Xxxx Xxxxxx Xxxxx
Xxxxxxx, Xxx Xxxxxx 00000
Chase Bank of Texas, National Association
000 Xxxxxx Xxxxxx, 0xx Xxxxx
Xxxxxxx, Xxxxx 00000
Attention: Global Trust Services - Long Beach
Acceptance Auto Grantor Trust 1998-1
Re: Long Beach Acceptance Auto Grantor Trust 1998-1
ASSET BACKED CERTIFICATES
Ladies and Gentlemen:
[NAME OF OFFICER] _______________________________________ hereby certifies that:
1. That he [she] is [Title of Officer] __________________ of
[Name of Transferee] ____________________________ (the "Transferee"), a
[savings institution] [corporation] duly organized and existing under the
laws of [the State of _______________________ ] [the United States], on
behalf of which he [she] makes this affidavit.
2.The Transferee (i) is not, and on ________________________
[insert date of transfer of Certificate to Transferee] will not be, and on
such date will not be investing the funds of, (a) an "employee benefit plan"
(as defined in Section 3(3) of the Employee Retirement Income Security Act of
1974, as amended ("ERISA")) that is subject to the provisions of Title I of
ERISA, (b) a "plan" (as defined in Section 4975(e)(1) of the Internal Revenue
Code of 1986, as amended (the "Code")) that is subject to Section 4975 of the
Code or (c) an entity whose underlying assets are deemed to be assets of a
plan described in (a) or (b) above by reason of such plan's investment in the
entity (each, a "Benefit Plan") or (ii) is an insurance company investing
assets of its general account and the exemptive relief provided by Sections I
and III of Department of Labor Prohibited Transaction Class Exemption 95-60,
60 Fed. Reg. 35925 (July 12, 1995) (the "Exemption") is available with
respect to the transferee's acquisition and holding of such Certificate.
3. The Transferee hereby acknowledges that under the terms of the
Pooling and Servicing Agreement (the "Agreement") among Long Beach Acceptance
Receivables Corp., as depositor (the "Depositor"), Long Beach Acceptance
Corp., as Originator and servicer (the "Servicer") and Chase Bank of Texas,
National Association, as Trustee, Back-up Servicer and Custodian and
Collateral Agent (the "Trustee") dated as of January 1, 1998 no transfer of
any Certificate (as defined in the Agreement) shall be
G-1
permitted to be made to any person unless the Trustee has received a
certificate from such transferee to the effect that such transferee (A) is
not a Benefit Plan and is not using the assets of any such Benefit Plan to
acquire any such Class B Certificate or (B) is an insurance company investing
assets of its general account and Sections I and III of the Exemption apply
to the transferee's acquisition and holding of such Class B Certificate;
PROVIDED, HOWEVER, that the Trustee will not require such certificate in the
event that, as a result of change of law or otherwise, counsel satisfactory
to the Trustee, the Servicer and the Depositor has rendered an opinion to the
effect that the purchase and holding of any such Class B Certificate by a
Benefit Plan or a person using the assets of a Benefit Plan will not
constitute or result in a prohibited transaction under ERISA or Section 4975
of the Code.
[4. The Certificates shall be registered in the name of
______________________________ as nominee for the Transferee.]
IN WITNESS WHEREOF, the Transferee has caused this instrument to be
executed on its behalf, pursuant to authority of its Board of Directors, by its
[Title of Officer] __________________________________, this ___ day of
_________, 199_.
____________________________________
[name of Transferee]
By: __________________________________
Name:
Title:
G-2
The undersigned hereby acknowledges that it is holding and will hold
the Certificates at the exclusive direction of and as nominee of the Investor
named above.
______________________________________
[name of nominee]
By: __________________________________
Name:
Title:
X-0
XXXXXXX X
Xxxx xx Xxxxxxxxxx Agreement
H-1
EXHIBIT I
PAYMENT APPLICATION PROCEDURES
The following procedures will be followed when funds in excess of the Scheduled
Payment have been received:
- At the Lock-Box--
Regardless of loan type, funds received at the Lock-Box will be applied
to accounts as normal monthly installments, paying interest and principal and,
when 95% of a full payment has been received, advancing the date next due.
However, if funds received at the Lock-Box are in excess of three monthly
installments, the Lock-Box will forward the item to LBAC for In-House
processing.
- In-House--
Regardless of loan type, funds received directly at LBAC from the
customer or forwarded from the Lock-Box, which are less than $1,000.00, will be
processed as monthly installments, paying interest and principal and, when 95%
of a full payment has been received, advancing the date next due.
Funds which total $1,000.00 or more will require further information
before processing. Procedures will vary according to loan type.
- Daily Simple Interest--
Funds received which total $1,000.00 or more for this loan type will be
handled in the following manner:
Funds will first be applied to outstanding installments in order to
bring the loan current, then to late charges and miscellaneous fees. Any
remaining excess funds will be applied to reduce the outstanding principal
amount without advancing the date next due.
Any refunded portion of extended warranty protection plan costs or of
physical damage, credit life or disability insurance premiums in the Amount
Financed (otherwise referred to as Rebates), will be applied to the customer
accounts as a principal reduction without advancing the due date.
All funds, including principal, interest, late charges, miscellaneous
fees and Rebates which have been applied to the customer accounts, will be
passed through to the appropriate Collection account(s) within 48 hours of
posting. Those same funds, including funds which have advanced the due date
beyond the current month, will be passed through to the Investor(s) with their
monthly distribution for the current collection period.
- Precomputed Actuarial and Rule of 78s--
Funds received which total $1,000.00 or more for these loan types will
be handled in the following manner:
Funds will first be applied to outstanding installments in order to
bring the loan current, then to late charges and miscellaneous fees. Any
remaining excess funds will be categorized as follows:
I-1
Payahead Funds: Funds which have advanced the date next due and will be passed
through to the Investor(s) when they become Scheduled Payments due.
Payable Funds: Funds which have not advanced the date next due as these
funds were not intended to be used as Scheduled Payments (for example, Rebates).
All funds received will be passed through to the appropriate Collection
account(s) within 48 hours of posting. On the distribution date, all actually
collected Scheduled Payments due will be passed through to the Investor(s) for
the current collection period.
Excess funds received from or on behalf of the obligor will be held in
the Collection account or in an account designated as the Payahead/Payable
account until such time that they become due. Funds received to specifically
reduce the outstanding principal balance or any Rebate received will not be
considered due to the Investor(s) until such time that the loan closes out of
this pool.
- All customers, regardless of loan type--
Monthly, customers will receive statements showing the effect of the
excess funds to their loan balances. The statements will reflect $0.00 due for
the current monthly installment if their date next due was advanced until such
time that a current monthly installment is due.
- Precomputed Actuarial and Rule of 78s--
LBAC will, upon request, supply the investor with an analysis of funds
paid in advance.
I-2
EXHIBIT J
PAYMENT DEFERMENT POLICY
- LBAC may grant a payment deferment provided that the deferment 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, an Executive Vice
President or the California Regional Manager).
- Not more than 1 deferment may be granted during any 12-month period.
- The aggregate of all deferment periods during the term of a Receivable
may not exceed the lesser of 8 months or 50% of the weighted average
life of the original term of the Receivable.
- At least 6 payments must be made before a deferment may be granted.
- A request for a deferment must be made in writing, stating the reason
for the request.
- The deferment must bring the account current, so that after the
deferment is processed no payment is then due.
- Except as otherwise set forth in this policy, deferments must be
granted in writing by the Collection Manager or someone of equal or
higher rank.
- A deferment fee will be collected for each deferment if allowed by
applicable law and may be waived only by the President, an Executive
Vice President or the California Regional Manager; PROVIDED, HOWEVER,
that no deferment will be granted unless the Servicer believes in
good faith that the account probably would default in the reasonably
foreseeable future if a deferment is not approved.
- Deferments which do not meet the above criteria may be granted in
writing on an exception basis (e.g., when required by law) by the
President, an Executive Vice President or the California Regional
Manager.
- Not more than 8 payment deferments may be granted with respect to any
Receivable over the life of such Receivable (including both before and
after the related Cut-Off Date).
- As of April 1, 1998 and each month thereafter, the aggregate number of
Receivables the terms of which have been extended during the preceding
3-month period shall not exceed 3% of the number of Receivables at the
beginning of the preceding 3-month period.
J-1
- 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 Distribution Date.
DUE DATE CHANGE POLICY
- LBAC may grant a due date change, PROVIDED that the new due date is
within 29 days of the current due date.
- Not more than 2 due date changes may be granted over the term of a
Receivable.
- If 2 due date changes are granted, the total number of days by which
the maturity date is extended may not exceed 29.
- A request for a due date change must be made in writing, stating the
reason for the request.
- The account must be current at the time the request is received.
- Due date changes must be granted in writing by the Collection Manager
or someone of equal or higher rank.
- No due date change may be granted if the aggregate of all delinquent
periods and the requested due date change would exceed the lesser of 8
months or 50% of the original term of the Receivable.
J-2
EXHIBIT K
DOCUMENTATION CHECKLIST
CUSTOMER:_______________________________________________________________________
ACCOUNT
NUMBER:_________________________________________________________________________
This funding package contains the following initialed items:
1. Installment contract with proper
signatures and Dealer endorsements 1.___________
2. Copy of signed credit application 2.___________
3. References as described in the Program Guidelines 3.___________
4. Proof of income as described in the
Program Guidelines 4.___________
5. Copy of driver's license for all
licensed signors 5.___________
6. Title information (application and
copy of existing title, receipt of registration,
or title copy already received) with lien notation
thereon, or Dealer Title Guaranty 6.___________
7. Invoice or copy of computer screen
printout showing NADA value, NADA
book page, 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
K-1
insurance policy copies, as
applicable 12.__________
13. Signed purchase order from dealer to
customer 13.__________
K-2
EXHIBIT L
[Form of Request for Transfer of Possession]
_______________, 19___
Chase Bank of Texas, National Association,
as Custodian
000 Xxxxx Xxxxx Xxxxxx, 00xx Xxxxx
Xxxxxx, Xxxxx 00000
Attention: ______________
Telephone: _______________
Telecopy:________________
Ladies and Gentlemen:
Reference is made to the Pooling and Servicing Agreement dated as of
January 1, 1998 (the "Pooling and Servicing Agreement"), among LONG BEACH
ACCEPTANCE RECEIVABLES CORP., a Delaware corporation, as depositor, LONG BEACH
ACCEPTANCE CORP., a Delaware corporation, as originator and servicer, and CHASE
BANK OF TEXAS, NATIONAL ASSOCIATION, a national banking association, as trustee,
back-up servicer and custodian (the "Custodian"). Capitalized terms used but not
defined in this letter have the meanings set forth in the Pooling and Servicing
Agreement.
The Servicer hereby requests that the Custodian transfer possession of
the Legal Files, or such portion of the Legal Files as is identified herein,
relating to the Receivables listed in Annex A hereto to [the Servicer]
[_____________________as subservicer (the "Subservicer") for the Servicer] [for
purposes of collection or presentation, renewal or registration of transfer
(unless the related Receivables' Owner objects to this request to the Custodian
(i) by 5:00 PM on the same Business Day this request is made if it is made by
1:00 PM, or (ii) by 11:00 AM on the next Business Day if this request is made
after 1:00 PM] [for purposes of correcting deficiencies in the Legal Files], the
possession of which is transferred pursuant to this request will be transferred
subject to a Custodial Letter duly executed by [the Servicer] [the Subservicer]
and a Transfer Notice duly executed by the Custodian. [The portion of the Legal
Files requested for transfer of possession hereunder is __________________.]
Very truly yours,
LONG BEACH ACCEPTANCE CORP.
By: ____________________________
Name: __________________________
Title: _________________________
L-1
EXHIBIT M
[Form of Custodial Letter]
_______________, 19___
Chase Bank of Texas, National Association,
as Custodian
000 Xxxxx Xxxxx Xxxxxx, 00xx Xxxxx
Xxxxxx, Xxxxx 00000
Attention: ______________
Telephone: _______________
Telecopy:________________
Ladies and Gentlemen:
Reference is made to the Pooling and Servicing Agreement dated as of
January 1, 1998 (the "Pooling and Servicing Agreement"), among LONG BEACH
ACCEPTANCE RECEIVABLES CORP., a Delaware corporation, as depositor, LONG BEACH
ACCEPTANCE CORP., a Delaware corporation, as originator and servicer, and CHASE
BANK OF TEXAS, NATIONAL ASSOCIATION, a national banking association, as trustee
(the "Trustee"), back-up servicer and custodian (the "Custodian"). Capitalized
terms used but not defined in this letter have the meanings set forth in the
Pooling and Servicing Agreement.
[The Servicer] [_______________________, as Subservicer (the
"Subservicer") for the Servicer] acknowledges that the Trust is owner of all
Receivables (and their proceeds). The Agreement provides that the Servicer, or
the Subservicer, may request from time to time that possession of all or a
portion of the Legal Files delivered to and held by the Custodian pursuant to
the Pooling and Servicing Agreement be transferred to [the Servicer] [the
Subservicer] [for purposes of collection, or presentation, renewal or
registration of transfer] [for purposes of correcting deficiencies in the Legal
Files]. Subject to the terms of the Pooling and Servicing Agreement, the
Custodian is authorized to so transfer possession of such Legal Files, or
portion thereof, such transfer of possession to be accomplished pursuant to a
Transfer Notice substantially in the form of Annex A to this Custodial Letter.
[The Servicer] [The Subservicer] hereby agrees as follows:
(a) [The Servicer] [The Subservicer] acknowledges that the possession
of any such Legal Files will be so transferred subject to this Custodial Letter
and that they are and will continue to be the sole property of the Trust.
(b) [The Servicer] [The Subservicer] agrees that such Legal Files will
be returned to the Custodian immediately upon notice by the Custodian or the
Trustee that sixty (60) days have elapsed from the date of such transfer;
PROVIDED, that instead of sixty (60) days, the time limit applicable to any
certificate of title is one hundred twenty (120) days.
M-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 Trust, the Trustee and the Certificate Insurer.
(e) [The Servicer] [The Subservicer] will include this Custodial Letter
and each Transfer Notice in its business records.
(f) [The Servicer] [The Subservicer] will not deliver the Legal
Files to any person other than the Custodian except with the prior written
consent of the Trustee.
This Custodial Letter shall be governed by and construed in accordance
with the laws of the State of Texas.
LONG BEACH ACCEPTANCE CORP.
By: ____________________________
Name: __________________________
Title: _________________________
[SUBSERVICER'S NAME]
By: ____________________________
Name: __________________________
Title: _________________________
M-2
EXHIBIT M - ANNEX A to Custodial Letter
[Form of Transfer Notice]
[Long Beach Acceptance Corp.
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 Pooling and Servicing Agreement dated as of
January 1, 1998 (the "Pooling and Servicing Agreement"), among LONG BEACH
ACCEPTANCE RECEIVABLES CORP., a Delaware corporation, LONG BEACH ACCEPTANCE
CORP., a Delaware corporation, and CHASE BANK OF TEXAS, NATIONAL ASSOCIATION, a
national banking association, as trustee, back-up servicer and custodian.
Capitalized terms used but not defined in this letter have the meanings set
forth in the Pooling and Servicing Agreement.
The possession of the Legal Files relating to the Receivables listed in
Annex A is transferred to you IN TRUST for the Trust, the Trustee and the
Certificate Insurer, subject to the terms and provisions of the Pooling and
Servicing Agreement, and subject to the Custodial Letter you executed pursuant
to Section 2.8(c) of the Pooling and Servicing Agreement.
Very truly yours,
CHASE BANK OF TEXAS, NATIONAL
ASSOCIATION
By: ____________________________
Name: __________________________
Title: _________________________
M-3
EXHIBIT M - ANNEX A to Transfer Notice
Receivable Amount of Name of
Number Receivable Receivable Borrower
---------- ---------- -------------------
M-4
EXHIBIT N
FORM OF TRANSFER AGREEMENT
TRANSFER NO.________________________OF SUBSEQUENT
RECEIVABLES, dated as of _____________________, 1998,
among LONG BEACH ACCEPTANCE AUTO GRANTOR TRUST 0000-0
(xxx "Xxxxx"), XXXX XXXXX ACCEPTANCE CORP., a Delaware
corporation ("LBAC" or the "Originator"), LONG BEACH
ACCEPTANCE RECEIVABLES CORP., a Delaware corporation
(the "Depositor"), and CHASE BANK OF TEXAS, NATIONAL
ASSOCIATION, a national banking association, as trustee
(in such capacity, the "Trustee"), back-up servicer,
custodian and collateral agent pursuant to the Pooling
and Servicing Agreement referred to below.
WITNESSETH:
WHEREAS, LBAC, the Depositor and the Trustee are parties to the Pooling
and Servicing Agreement, dated as of January 1, 1998 (the "Pooling and Servicing
Agreement");
WHEREAS, LBAC, the Depositor and Ameriquest Mortgage Company are
parties to the Purchase Agreement, dated as of January 1, 1998 (the "Purchase
Agreement");
WHEREAS, pursuant to the Purchase Agreement LBAC desires to convey
certain Subsequent Receivables to the Depositor and pursuant to the Pooling and
Servicing Agreement and this Agreement the Depositor desires to convey such
Subsequent Receivables to the Trust; and
WHEREAS, the Trustee is willing to accept such conveyance subject to
the terms and conditions hereof.
NOW, THEREFORE, the Trustee, the Depositor and LBAC hereby agree as
follows:
Section 1. DEFINED TERMS. Capitalized terms used herein that are not
otherwise defined shall have the meanings ascribed thereto in the Pooling and
Servicing Agreement.
"Agreement" means this Transfer Agreement and all amendments hereof and
supplements hereto.
"Class B Reserve Account Subsequent Deposit" means $_____________.
"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 ________________,1998.
N-1
"Subsequent Receivables" means the Receivables identified on the
supplement to the Schedule of Receivables attached as Schedule A hereto.
"Subsequent Receivables Purchase Price" means $_______________.
"Subsequent Spread Account Deposit" means $______________.
"Subsequent Transfer Date" means, with respect to the Subsequent
Receivables conveyed hereby, _________________, 1998.
"Subsequent Transferred Property" shall have the meaning specified in
Section 2.3(a) of the Purchase Agreement.
Section 2. SCHEDULE OF SUBSEQUENT RECEIVABLES. Annexed hereto as
Schedule A is a supplement to the Schedule of Receivables listing the Subsequent
Receivables to be conveyed by the Depositor to the Trust pursuant to this
Agreement and the Pooling and Servicing Agreement on the Subsequent Transfer
Date.
Section 3. CONVEYANCE OF SUBSEQUENT RECEIVABLES. Subject to the
conditions set forth in Section 5 hereof, in consideration of the payment of the
Subsequent Receivables Purchase Price to or upon the written order of the
Depositor, the Depositor does hereby sell, transfer, assign, set over and
otherwise convey to the Trustee, in trust for the benefit of the
Certificateholders, without recourse, all right, title and interest of the
Depositor in and to:
(1) the Subsequent Receivables listed in Schedule A hereto and
(A) with respect to any such Subsequent Receivables that are
Precomputed Receivables, all monies received thereon on and after the
Subsequent Cutoff Date (including Scheduled Payments due or to become
due thereon on and after the Subsequent Cutoff Date and Scheduled
Payments due prior to the Subsequent Cutoff Date but received on or
after the Subsequent Cutoff Date), principal prepayments relating to
Scheduled Payments due on or after the Subsequent Cutoff Date but
received by the Depositor or LBAC before the Subsequent Cutoff Date,
and any Payaheads received with respect to payments due on the
Subsequent Receivables on or after the related Subsequent Cutoff Date
(which Payaheads shall be held in the Payahead Account until the
Collection Period in which such payments are actually due with respect
to the related Receivable, at which time such Payaheads shall be
applied as a component of the Total Distribution Amount), (B) with
respect to any such Subsequent Receivables that are Simple Interest
Receivables, all monies received thereunder on and after the Subsequent
Cutoff Date (including Scheduled Payments due before the Subsequent
Cutoff Date but received by the Depositor or LBAC on or after the
Subsequent Cutoff Date) and (C) all Liquidation Proceeds and Recoveries
received with respect to such Subsequent Receivables;
(2) the security interests in the Financed Vehicles granted by
Obligors pursuant to the Subsequent Receivables and any other interest
of the Depositor in such Financed Vehicles, including, without
limitation, the
N-2
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 relating to the related Financed Vehicles or the
related Obligors, including any rebates and premiums;
(4) property (including the right to receive future
Liquidation Proceeds) that secures a Subsequent Receivable and that has
been acquired by or on behalf of the Trust pursuant to the liquidation
of such Subsequent Receivable;
(5) this Agreement, the Purchase Agreement and the Guaranty,
including, without limitation, a direct right to cause LBAC to purchase
Subsequent Receivables from the Trust upon the occurrence of a breach
of any of the representations and warranties contained in Section 3.1
of the Purchase Agreement, or Section 4 of this Agreement or the
failure of LBAC to timely comply with its obligations pursuant to
Section 5.5 of the Purchase Agreement or this Agreement;
(6) refunds for the costs of extended service contracts with
respect to the related Financed Vehicles, refunds of unearned premiums
with respect to credit life and credit accident and health insurance
policies or certificates covering a related Obligor or Financed Vehicle
or his or her obligations with respect to a related Financed Vehicle
and any recourse to Dealers for any of the foregoing;
(7) the Legal Files and the Receivable Files related to each
such Subsequent Receivable and any and all other documents that LBAC
keeps on file in accordance with its customary procedures relating to
such Subsequent Receivables, the Obligors or the Financed Vehicles;
(8) all amounts and property from time to time held in or
credited to the Lock-Box Account, to the extent such amounts and
property relate to the Subsequent Receivables;
(9) any proceeds from recourse against the Dealers (other than
any Chargeback Obligations), including, without limitation, any Dealer
Title Guaranties with respect to such Subsequent Receivables, with
respect to the sale of such Subsequent Receivables; and
(10) the proceeds of any and all of the foregoing.
Section 4. REPRESENTATIONS AND WARRANTIES OF THE ORIGINATOR. The
Originator makes the following representations and warranties as to the
Subsequent Receivables and the other Transferred Property relating thereto on
which the Depositor relies in accepting the Subsequent Receivables and the other
Transferred Property relating thereto and on which the Certificate Insurer will
rely in issuing the Policy. Such representations and
N-3
warranties speak as of the execution and delivery of this Agreement, but shall
survive the sale, transfer, and assignment of the Subsequent Receivables and the
other Transferred Property relating thereto to the Depositor and the subsequent
assignment and transfer pursuant to the Pooling and Servicing Agreement:
(1) ORIGINATION DATE. Each Subsequent Receivable has an
Origination Date on or after ________________, 199__.
(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 12 months
and not more than [72] months; the weighted average original term to
maturity of the Subsequent Receivables is [___] months as of the
Subsequent Cutoff Date; the remaining term to maturity of each
Subsequent Receivable was __ months or less as of the Subsequent Cutoff
Date; the weighted average remaining term to maturity of the Subsequent
Receivables was [___] months as of the Subsequent Cutoff Date.
(4) CHARACTERISTICS OF SUBSEQUENT RECEIVABLES. (A) Each
Subsequent Receivable (1) has been originated in the United States of
America by a Dealer for the retail sale of a Financed Vehicle in the
ordinary course of such Dealer's business, such Dealer had all
necessary licenses and permits to originate such Subsequent Receivables
in the State where such Dealer was located, has been fully and properly
executed by the parties thereto and has been purchased by LBAC from
such Dealer under an existing Dealer Agreement with LBAC, in connection
with the sale of Financed Vehicles by the Dealers, and was validly
assigned by such Dealer to LBAC in accordance with its terms, (2) has
created a valid, subsisting, and enforceable first priority security
interest in favor of LBAC in the Financed Vehicle, which security
interest is assignable and has been validly assigned by LBAC to the
Depositor, which in turn has been validly assigned by the Depositor to
the Trustee pursuant to the Pooling and Servicing Agreement, (3)
contains customary and enforceable provisions such that the rights and
remedies of the holder or assignee thereof shall be adequate for
realization against the collateral of the benefits of the security,
(4) provides for level monthly payments that fully amortize the Amount
Financed over the original term (except for the first or last payment,
which may be minimally different from the level payment) and yield
interest at the Annual Percentage Rate, (5) has an Annual Percentage
Rate of not less than 9.75%, (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
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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; the remainder of the Subsequent Receivables as of the
Subsequent Cutoff Date were originated under the LBAC limited credit
program; no Subsequent Receivable shall have a payment that is more
than 29 days overdue (calculated on the basis of a 360-day year of
twelve 30-day months) as of the Subsequent Cutoff Date; [ ]% of the
Subsequent Receivables are Precomputed Receivables and [ ]% of the
Subsequent Receivables are Simple Interest Receivables; each Subsequent
Receivable shall have a final scheduled payment due no later than
_________, 200_; each Subsequent Receivable has an original term to
maturity of at least 12 months and not more than __ months and a
remaining term to maturity of not less than __ months nor greater
than __ months; and each Subsequent Receivable was originated on or
before the Subsequent Cutoff Date.
(5) SCHEDULED PAYMENTS. Each Subsequent Receivable had an
original Principal Balance of not less than $__________ nor more than
$_________, has an outstanding Principal Balance as of the Subsequent
Cutoff Date of not less than $__________ and not more than $ ________
and has a first Scheduled Payment due, in the case of Precomputed
Receivables, or a scheduled due date, in the case of Simple Interest
Receivables, on or prior to __________, 1998.
(6) NO BANKRUPTCIES. No Obligor was bankrupt at the time of
origination of the related Subsequent Receivable and no Obligor on any
Subsequent Receivable as of the Subsequent Cutoff Date was noted in the
related Receivable File as having filed for bankruptcy since
origination of the Subsequent Receivable.
(7) ORIGINATION OF SUBSEQUENT RECEIVABLES. Based on the
location of the Dealers and the Principal Balances as of the Subsequent
Cutoff Date, approximately [ ]% of the Subsequent Receivables were
originated in California, approximately [ ]% of the Subsequent
Receivables were originated in Illinois and the remaining [ ]% of the
Subsequent Receivables were originated in other States.
(8) LOCKBOX. Prior to the Subsequent Transfer Date, the
Depositor will notify each Obligor to make payments with respect to its
respective Subsequent
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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 Pooling and Servicing Agreement.
There is only one original executed copy of each Subsequent Receivable.
(10) SCHEDULE OF SUBSEQUENT RECEIVABLES; SELECTION PROCEDURES.
The information with respect to the Subsequent Receivables set forth in
the Schedule A to this Agreement is true and correct in all material
respects as of the close of business on the Subsequent Cutoff Date and
the Subsequent Transfer Date, and no selection procedures adverse to
the Trust, the Certificateholders or to the Certificate Insurer have
been utilized in selecting the Subsequent Receivables. The computer
tape or other listing regarding the Subsequent Receivables made
available to the Depositor and its assigns is true and correct as of
the Subsequent Cutoff Date and the Subsequent Transfer Date in all
respects. By the Subsequent Transfer Date, LBAC will have caused the
portions of LBAC's servicing records relating to the Subsequent
Receivables to be clearly and unambiguously marked to show that the
Subsequent Receivables constitute part of the Trust Assets and are
owned by the Trust in accordance with the terms of the Pooling and
Servicing Agreement.
(11) COMPLIANCE WITH LAW. Each Subsequent Receivable, the sale
of the Financed Vehicle and the sale of any physical damage, credit
life and credit accident and health insurance and any extended service
contracts complied at the time the related Subsequent Receivable was
originated or made and at the execution of this Agreement complies in
all material respects with all requirements of applicable Federal,
State and local laws, and regulations thereunder including, without
limitation, usury laws, the Federal Truth-in-Lending Act, the Equal
Credit Opportunity Act, the Fair Credit Reporting Act, the Fair Debt
Collection Practices Act, the Federal Trade Commission Act, the
Xxxxxxxx-Xxxx Warranty Act, the Federal Reserve Board's Regulations B
and Z, the Soldiers' and Sailors' Civil Relief Act of 1940, as amended,
the California Automobile Sales Finance Act, the Texas Credit Code, and
state adaptations of the National Consumer Act and of the Uniform
Consumer Credit Code, and other consumer credit laws and equal credit
opportunity and disclosure laws.
(12) BINDING OBLIGATION. Each Subsequent Receivable represents
the genuine, legal, valid and binding payment obligation in writing of
the Obligor, enforceable by the holder thereof in accordance with its
terms and all parties to each Subsequent Receivable had full legal
capacity to execute and deliver such Subsequent Receivable and all
other documents related thereto and to grant the security interest
purported to be granted thereby.
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(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 tax
liens or mechanics' liens which may arise after the Subsequent Transfer
Date), and either (i) all necessary and appropriate actions have been
taken that would result in the valid perfection of a first priority
security interest in the Financed Vehicle in favor of LBAC as secured
party, and the Lien Certificate for each Financed Vehicle shows, or if
a new or replacement Lien Certificate is being applied for a new or
replacement Lien Certificate will be received within 150 days of the
Subsequent Transfer Date and will show LBAC named as the original
secured party under any such Subsequent Receivable and the holder of a
first priority security interest in such Financed Vehicle, or (ii) a
Dealer Title Guaranty has been obtained with respect to such Financed
Vehicle. With respect to each Subsequent Receivable for which the Lien
Certificate has not yet been submitted to, or returned from, the
Registrar of Titles, LBAC has received either (i) written evidence from
the related Dealer that such Lien Certificate showing LBAC as the first
lienholder has been applied for or (ii) a Dealer Title Guaranty with
respect to such Financed Vehicle. Immediately after the sale, transfer
and assignment thereof to the Trust, each Subsequent Receivable will be
secured by an enforceable first priority security interest in the
Financed Vehicle in favor of the Trust as secured party, which security
interest is prior to all other liens upon and security interests in
such Financed Vehicle which now exist or may hereafter arise or be
created (except, as to priority, for any lien for taxes, labor or
materials affecting a Financed Vehicle arising subsequent to the
Subsequent Transfer Date).
(15) SUBSEQUENT RECEIVABLES IN FORCE. No Subsequent Receivable
has been satisfied, subordinated or rescinded, nor has any Financed
Vehicle been released from the lien granted by the related Subsequent
Receivable in whole or in part. No provisions of any Subsequent
Receivable have been waived, altered or modified in any respect since
its origination, except by instruments or documents identified in the
related Legal File on the Subsequent Transfer Date. No Subsequent
Receivable has been modified as a result of application of the
Soldiers' and Sailors' Civil Relief Act of 1940, as amended.
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(16) NO WAIVER. No provision of a Subsequent Receivable has
been waived.
(17) NO AMENDMENTS. No Subsequent Receivable has been amended
except to the extent reflected in the related Legal File on the
Subsequent Transfer Date.
(18) NO DEFENSES. As of the Subsequent Transfer Date, no right
of rescission, setoff, counterclaim or defense exists or has been
asserted or threatened with respect to any Subsequent Receivable. The
operation of the terms of any Subsequent Receivable or the exercise of
any right thereunder will not render such Subsequent Receivable
unenforceable in whole or in part or subject to any such right of
rescission, setoff, counterclaim, or defense.
(19) NO LIENS. As of the Subsequent Transfer Date, there are
no liens or claims existing or which have been filed for work, labor,
storage, materials or taxes relating to a Financed Vehicle that shall
be liens prior to, or equal or coordinate with, the security interest
in the Financed Vehicle granted by the Subsequent Receivable.
(20) NO DEFAULT; REPOSSESSION. Except for payment
delinquencies continuing for a period of not more than twenty-nine days
(calculated on the basis of a 360-day year of twelve 30-day months), as
of the Subsequent Cutoff Date, no default, breach, violation or event
permitting acceleration under the terms of any Subsequent Receivable
has occurred and not been cured; and no continuing condition that with
notice or the lapse of time would constitute a default, breach,
violation, or event permitting acceleration under the terms of any
Subsequent Receivable has arisen; and LBAC shall not waive and has not
waived any of the foregoing; and no Financed Vehicle shall have been
repossessed as of the Subsequent Cutoff Date.
(21) INSURANCE; OTHER. (A) Each Obligor has obtained insurance
covering the Financed Vehicle as of the execution of the Subsequent
Receivable insuring against loss and damage due to fire, theft,
transportation, collision and other risks generally covered by
comprehensive and collision coverage which is in an amount at least
equal to the lesser of (x) its maximum insurable value or (y) the
principal amount due from the Obligor under the related Subsequent
Receivable and names LBAC and its successors and assigns as loss payee
and each Subsequent Receivable requires the Obligor to obtain and
maintain such insurance naming LBAC and its successors and assigns as
an additional insured, (B) each Subsequent Receivable that finances the
cost of premiums for credit life and credit accident or health
insurance is covered by an insurance policy and certificate of
insurance naming LBAC as policyholder (creditor) under each such
insurance policy and certificate of insurance, (C) as to each
Subsequent Receivable that finances the cost of an extended service
contract, the respective Financed Vehicle which secures the Subsequent
Receivable is covered by an extended service contract and (D) LBAC has
obtained a vendor's single interest
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physical damage insurance policy as required by its underwriting
guidelines and such policy is in full force and effect.
(22) TITLE. It is the intention of LBAC that the transfer and
assignment of the Subsequent Receivables contemplated in the Purchase
Agreement constitute a sale of the Subsequent Receivables from LBAC to
the Depositor and that the beneficial interest in and title to such
Subsequent Receivables not be part of the debtor's estate in the event
of the filing of a bankruptcy petition by or against LBAC under any
bankruptcy law. No Subsequent Receivable has been sold, transferred,
assigned, or pledged by LBAC to any Person other than the Depositor or
by the Depositor to any Person other than the Trustee except with
respect to any such pledge that has been released on or prior to the
Subsequent Transfer Date. Immediately prior to the transfer and
assignment of the Subsequent Receivables contemplated in the Purchase
Agreement, LBAC had good and marketable title to each Subsequent
Receivable, and was the sole owner thereof, free and clear of all
Liens, claims, encumbrances, security interests, and rights of others
and, immediately upon the transfer thereof, the Depositor shall have
good and marketable title to each such Subsequent Receivable, and will
be the sole owner thereof, free and clear of all Liens, encumbrances,
security interests, and rights of others, and each such transfer has
been perfected under the UCC. Immediately prior to the transfer and
assignment by the Depositor to the Trust contemplated by this Agreement
and the Pooling and Servicing Agreement, the Depositor shall have good
and marketable title to each Subsequent Receivable, and shall be the
sole owner thereof, free and clear of all Liens, claims, encumbrances,
security interests, and rights of others and, immediately upon the
transfer thereof pursuant to this Agreement and the Pooling and
Servicing Agreement, the Trust shall have good and marketable title to
each such Subsequent Receivable, and will be the sole owner thereof,
free and clear of all Liens, encumbrances, security interests and
rights of others, and each such transfer has been perfected under the
UCC. Without limiting the generality of the foregoing, no Dealer has
any right, title or interest in respect of any Subsequent Receivable.
Neither the Depositor nor LBAC has taken any action to convey any right
to any Person that would result in such Person having a right to
payments received under any insurance policies related to the
Subsequent Receivables or the Financed Vehicles or the related Dealer
Agreements or to payments due under such Subsequent Receivables.
(23) LAWFUL ASSIGNMENT. No Subsequent Receivable has been
originated in, or is subject to the laws of, any jurisdiction under
which the sale, transfer, and assignment of such Subsequent Receivable
under the Purchase Agreement, this Agreement or the Pooling and
Servicing Agreement shall be unlawful, void, or voidable. LBAC has not
entered into any agreement with any account debtor that prohibits,
restricts or conditions the assignment of any portion of the Subsequent
Receivables.
(24) ALL FILINGS MADE. All filings (including, without
limitation, UCC filings) necessary in any jurisdiction to give the
Trustee a first priority perfected ownership interest in the Subsequent
Receivables and the proceeds thereof and
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the other Transferred Property (other than the Financed Vehicles) have
been made.
(25) CHATTEL PAPER. Each Subsequent Receivable constitutes
"chattel paper" under the UCC.
(26) VALID AND BINDING OBLIGATION OF OBLIGOR. Each Subsequent
Receivable is the legal, valid and binding obligation of the Obligor
thereunder and is enforceable in accordance with its terms, except only
as such enforcement may be limited by bankruptcy, insolvency or similar
laws affecting the enforcement of creditors' rights generally, and all
parties to such contract had full legal capacity to execute and deliver
such contract and all other documents related thereto and to grant the
security interest purported to be granted thereby.
(27) TAX LIENS. As of the Subsequent Transfer Date, there is
no lien against the related Financed Vehicle for delinquent taxes.
(28) TITLE DOCUMENTS. (A) If the Subsequent Receivable was
originated in a State in which notation of security interest on the
title document of the related Financed Vehicle is required or permitted
to perfect such security interest, the title document for such
Subsequent Receivable shows, or if a new or replacement title document
is being applied for with respect to such Financed Vehicle, the title
document will be received within 180 days following the Subsequent
Transfer Date and will show, LBAC named as the original secured party
under the related Subsequent Receivable as the holder of a first
priority security interest in such Financed Vehicle and (B) if the
Subsequent Receivable was originated in a State in which the filing of
a financing statement under the UCC is required to perfect a security
interest in motor vehicles, such filings or recordings have been duly
made and show LBAC named as the original secured party under the
related Subsequent Receivable, and in either case, the Trustee has the
same rights as such secured party has or would have (if such secured
party were still the owner of the Subsequent Receivable) against all
parties claiming an interest in such Financed Vehicle. With respect to
each Subsequent Receivable for which the relevant Dealer is temporarily
unable to furnish either an original Lien Certificate or satisfactory
evidence that the appropriate lien has been recorded on the related
certificate of title or documentation has been submitted to the
appropriate state motor vehicle authority to record such lien on such
certificate of title, LBAC has received the related Dealer Title
Guaranty.
(29) CASUALTY. As of the Subsequent Cutoff Date, no Financed
Vehicle related to a Subsequent Receivable has suffered a Casualty.
(30) OBLIGATION TO DEALERS OR OTHERS. The Depositor and its
assignees will assume no obligation to Dealers or other originators or
holders of the Subsequent Receivables (including, but not limited to
under dealer reserves) as a result of its purchase of the Subsequent
Receivables.
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(31) FULL AMOUNT FINANCED ADVANCED. The full Amount Financed
of each Subsequent Receivable has been advanced to or on behalf of each
Obligor, and there are no requirements for future advances thereunder.
The Obligor with respect to the Subsequent Receivable does not have any
option under the Subsequent Receivable to borrow from any person
additional funds secured by the Financed Vehicle.
(32) NO IMPAIRMENT. Neither LBAC nor the Depositor has done
anything to convey any right to any Person that would result in such
Person having a right to payments due under the Subsequent Receivables
or otherwise to impair the rights of the Trust, the Certificateholders
or the Certificate Insurer in any Subsequent Receivable or the proceeds
thereof.
(33) SUBSEQUENT RECEIVABLES NOT ASSUMABLE. No Subsequent
Receivable is assumable by another Person in a manner which would
release the Obligor thereof from such Obligor's obligations to the
Depositor or LBAC with respect to such Subsequent Receivable.
(34) SERVICING. The servicing of each Subsequent Receivable
and the collection practices relating thereto have been lawful and in
accordance with the standards set forth in the Pooling and Servicing
Agreement; other than LBAC and any Back-up Servicer arrangement that
has been entered into, no other person has the right to service the
Subsequent Receivable.
(35) ILLINOIS SUBSEQUENT RECEIVABLES. (a) LBAC does not own a
substantial interest in the business of a Dealer within the meaning of
Illinois Sales Finance Agency Act Rules and Regulations, Section
160.230(l) and (b) with respect to each Subsequent Receivable
originated in the State of Illinois, (i) the printed or typed portion
of the related Form of Subsequent Receivable complies with the
requirements of 815 ILCS 375/3(b) and (ii) LBAC has not, and for so
long as such Subsequent Receivable is outstanding shall not, place or
cause to be placed on the related Financed Vehicle any collateral
protection insurance in violation of 815 ILCS 180/10.
(36) CALIFORNIA SUBSEQUENT RECEIVABLES. Each Subsequent
Receivable originated in the State of California has been, and at all
times during the term of the Pooling and Servicing Agreement will be,
serviced by the Servicer in compliance with Cal. Civil Code
Section 2981, et seq.
(37) TEXAS SUBSEQUENT RECEIVABLES. No required or requested
insurance has been sold or procured by LBAC in respect of any
Subsequent Receivable originated in the State of Texas, other than any
such insurance the premiums for which have been fixed or approved by
the State Board of Insurance of the State of Texas.
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:
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(a) REPRESENTATIONS AND WARRANTIES. (i) Each of the
representations and warranties made by LBAC in Section 3.2 of the
Purchase Agreement and Section 4 of this Agreement and (ii) each of the
representations and warranties made by the Depositor in Section 6.1 of
the Pooling and Servicing Agreement and Section 3.1 of the Purchase
Agreement, shall be true and correct as of the date of this Agreement
and as of the Subsequent Transfer Date.
(b) POOLING AND SERVICING AGREEMENT CONDITIONS. Each of the
conditions set forth in Section 2.2(c) to the Pooling and Servicing
Agreement shall have been satisfied.
(c) PURCHASE AGREEMENT CONDITIONS. LBAC shall have complied
with the requirements of Section 4.1 of the Purchase Agreement and
shall have delivered all documents required to be delivered pursuant to
Section 5.5 of the Purchase Agreement.
(d) SECURITY INTEREST PERFECTION. In connection with the
conveyance contemplated by this Agreement, the Depositor agrees to
record and file, at its own expense, a financing statement with respect
to the related Subsequent Receivables now existing and hereafter
created for the sale of chattel paper (as defined in the UCC as in
effect in the State of New Jersey) meeting the requirements of
applicable state law in such manner as is sufficient to perfect the
sale and assignment of such Subsequent Receivables to the Trust, and
the proceeds thereof (and any continuation statements as are required
by applicable state law), and to deliver a file-stamped copy of each
such financing statement (or continuation statement) or other evidence
of such filings (which may, for purposes of this Section, consist of
telephone confirmation of such filing with the file stamped copy of
each such filing to be provided to the Trustee in due course), as soon
as is practicable after the Depositor's receipt thereof.
In connection with such conveyance, the Depositor further
agrees, at its own expense, on or prior to the Subsequent Transfer Date
(i) to annotate and indicate in its computer files that the Subsequent
Receivables have been transferred to the Trust pursuant to the Pooling
and Servicing Agreement and this Agreement and (ii) to deliver to the
Trustee a computer file printed or microfiche list containing a true
and complete list of all such Subsequent Receivables, identified by
account number and by the Principal Balance of each Subsequent
Receivable as of the Subsequent Cutoff Date.
(e) ADDITIONAL INFORMATION. The Depositor shall have delivered
or caused to be delivered to the Trustee on behalf of the Trust and the
Certificate Insurer such information as was reasonably requested by the
Trustee on behalf of the Trust or the Certificate Insurer to satisfy
itself as to (i) the accuracy of the representations and warranties set
forth in Section 4 of this Agreement and Section 6.1 of the Pooling and
Servicing Agreement and (ii) the satisfaction of the conditions set
forth in this Section.
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(f) DEPOSITS TO ACCOUNTS. On or prior to the Subsequent
Transfer Date, the Depositor shall deposit or cause to be deposited:
(1) the Class B Reserve Account Subsequent Deposit
into the Class B Reserve Account;
(2) the Subsequent Spread Account Deposit into the
Excess Cash Flow Sub-Account; and
(3) $ ____________, which represents all monies
received pursuant to Section 3(l)(A) and (B), into the
Collection Account.
Section 6. RATIFICATION OF AGREEMENT. As supplemented by this
Agreement, the Pooling and Servicing Agreement is in all respects ratified and
confirmed and the Pooling and Servicing Agreement as so supplemented by this
Agreement shall be read, taken and construed as one and the same instrument.
Section 7. THIRD PARTY BENEFICIARIES. Except as otherwise specifically
provided herein with respect to Certificateholders, the parties to this
Agreement hereby manifest their intent that no third party other than the
Certificate Insurer shall be deemed a third party beneficiary of this Agreement,
and specifically that the Obligors are not third party beneficiaries of this
Agreement. The Certificate Insurer and its successors and assigns shall be a
third- party beneficiary to the provisions of this Agreement, and shall be
entitled to rely upon and directly enforce the provisions of this Agreement so
long as no Insurer Default shall have occurred and be continuing. Except as
expressly stated otherwise herein or in the Basic Documents, any right of the
Certificate Insurer to direct, appoint, consent to, approve of, or take any
action under this Agreement, shall be a right exercised by the Certificate
Insurer in its sole and absolute discretion. The Certificate Insurer may
disclaim any of its rights and powers under this Agreement (but not its duties
and obligations under the Policy) upon delivery of a written notice to the
Trustee.
Section 8. GOVERNING LAW. THIS AGREEMENT SHALL BE CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, AND THE OBLIGATIONS, RIGHTS,
AND REMEDIES OF THE PARTIES UNDER THIS AGREEMENT SHALL BE DETERMINED IN
ACCORDANCE WITH SUCH LAWS WITHOUT REGARD TO CONFLICT OF LAWS PRINCIPLES (EXCEPT
WITH REGARD TO THE UCC).
Section 9. AMENDMENTS. This Agreement may be amended from time to time
by a written amendment duly executed and delivered by the Trust, LBAC, the
Depositor and the Trustee with the prior written consent of the Certificate
Insurer.
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IN WITNESS WHEREOF, the Trustee, LBAC and the Depositor have caused
this Agreement to be duly executed and delivered by their respective duly
authorized officers as of the day and the year first above written.
LONG BEACH ACCEPTANCE CORP.
By:
------------------------------------
Name:
Title:
LONG BEACH ACCEPTANCE RECEIVABLES CORP.
By:
------------------------------------
Name:
Title:
CHASE BANK OF TEXAS, NATIONAL
ASSOCIATION, as Trustee
By:
------------------------------------
Name:
Title:
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Schedule A
Schedule of Receivables
A-1
Schedule C
Delivery Requirements
The Trustee shall have sole control over each such investment and the
income thereon, and any certificate or other instrument evidencing any such
investment, if any shall, except for clearing corporation securities, be
delivered directly to the Trustee or its agent, together with each document of
transfer, if any, necessary to transfer title to such investment to the Trustee
in a manner that complies with this Agreement and the requirements of the
definition of Eligible Investments.
C-1
=======================================================
AMENDMENT NO. 1
Dated as of November 25, 1998
to
POOLING AND SERVICING AGREEMENT
Dated as of January 1, 1998
among
LONG BEACH ACCEPTANCE RECEIVABLES CORP.
Depositor,
LONG BEACH ACCEPTANCE CORP.
Originator and Servicer
and
CHASE BANK OF TEXAS, NATIONAL ASSOCIATION
Trustee, Back-up Servicer, Custodian and Collateral Agent
$154,491,017.96
Long Beach Acceptance Auto Grantor Trust 1998-1
$129,000,000.00 6.19% Class A Certificates
$25,491,017.96 12.00% Class B Certificates
=======================================================
AMENDMENT NO. 1, dated as of November 25, 1998 (the "AMENDMENT"), to
the POOLING AND SERVICING AGREEMENT, dated as of January 1, 1998 (the "POOLING
AND SERVICING AGREEMENT"), among Long Beach Acceptance Receivables Corp., a
Delaware corporation, as depositor (the "DEPOSITOR"), Long Beach Acceptance
Corp., a Delaware corporation, as originator of the receivables ("LBAC"), and as
servicer (in such capacity, the "SERVICER"), and Chase Bank of Texas, National
Association, a national banking association, as trustee, back-up servicer,
custodian and collateral agent (the "TRUSTEE", "BACK-UP SERVICER", "CUSTODIAN",
and "COLLATERAL AGENT", respectively).
W I T N E S S E T H
WHEREAS, the Depositor, LBAC, the Servicer, the Trustee, the Back-up
Servicer, the Custodian and the Collateral Agent entered into the Pooling and
Servicing Agreement;
WHEREAS, the parties to the Pooling and Servicing Agreement desire to
amend certain provisions of the Pooling and Servicing Agreement as set forth in
this Amendment;
WHEREAS, Section 11.1 of the Pooling and Servicing Agreement permits
the amendment thereof by the Depositor, the Servicer and the Trustee with the
consent of the Certificate Insurer and of the Holders of Class A Certificates
and Holders of Class B Certificates evidencing not less than 66-2/3% of the
Class A Certificate Balance and the Class B Certificate Balance, respectively,
and, with respect to any amendment that shall have any of the effects set forth
in clause (a) of Section 11.1, with the consent of each of the
Certificateholders affected thereby; and
WHEREAS, Section 11.3 of the Pooling and Servicing Agreement provides
that, so long as no Insurer Default has occurred and is continuing, Class A
Certificateholder consent shall be deemed to be given on behalf of all Class A
Certificateholders if the Certificate Insurer agrees to give such consent.
NOW, THEREFORE, in consideration of the recitals set forth above,
and for other good and valuable consideration, the adequacy, receipt and
sufficiency of which are hereby acknowledged by the parties hereto, the
parties hereto hereby agree as follows:
SECTION 1. DEFINED TERMS.
For purposes of this Amendment, unless the context clearly requires
otherwise, all capitalized terms which are used but not otherwise defined herein
shall have the respective meanings ascribed to such terms in the Pooling and
Servicing Agreement.
1
SECTION 2. THE AMENDMENT.
(a) The definition of "Lock-Box" is hereby amended and
restated in its entirety to read as follows:
"LOCK-BOX" means the post-office box or boxes,
maintained pursuant to Section 4.1, into which the Servicer
shall direct each Obligor under each Receivable to forward all
payments in respect of such Receivable.
(b) The definition of "Lockbox Account" is hereby amended and
restated in its entirety to read as follows:
"LOCK-BOX ACCOUNT" means the segregated account or
accounts designated as such, established and maintained
pursuant to Section 4.1.
(c) The definition of "Lockbox Bank" is hereby amended and
restated in its entirety to read as follows:
"LOCK-BOX BANK" means, as of any date, each
depository institution named by the Servicer and acceptable to
the Certificate Insurer at which a Lock-Box Account is
established and maintained as of such date.
(d) The first sentence of Section 4.1(a) is hereby amended
and restated in its entirety to read as follows:
The Servicer has established the Lock-Box Account as
two Eligible Accounts, one established with the Trustee
entitled "Long Beach Acceptance Corp., Chase Bank of Texas
Agent Account -- Auto Loan Programs," account number
00100916395, and the other established with Bank of America
National Trust and Savings Association entitled "Long Beach
Acceptance Corp., Chase Bank of Texas Agent Account -- Auto
Loan Programs," account number 14572-02900; PROVIDED, that
the Servicer, with the prior written consent of the
Certificate Insurer, may from time to time (a) establish
additional or substitute Lock-Box Accounts, each of which
shall be an Eligible Account, and (b) close or terminate the
use of any of the aforementioned accounts or any subsequently
established accounts, each of which accounts, at such time,
shall no longer be deemed to be a Lock-Box Account; PROVIDED,
FURTHER, that pursuant to the Lock-Box Agreement, the Lock-Box
Processor and no other person, save the Trustee or the
Servicer, has authority to direct disposition of funds related
to the Receivables on deposit
2
in the Lock-Box Account consistent with the provisions of this
Agreement and the Lock-Box Agreement.
SECTION 3. EFFECT OF AMENDMENT.
This Amendment to the Pooling and Servicing Agreement shall be
effective and the Pooling and Servicing Agreement shall be deemed to be modified
and amended in accordance herewith upon the later to occur of (a) the receipt by
the Certificate Insurer of counterparts hereof executed and delivered on behalf
of each of the parties hereto, the Class B Certificateholders and the Excess
Cash Flow Certificateholders and the execution by the Certificate Insurer of a
counterpart hereof pursuant to Sections 11.1 and 11.3 of the Pooling and
Servicing Agreement and (b) the receipt by each of the Rating Agencies of prior
written notice with respect to this Amendment and by the Certificate Insurer of
a copy of such notice. This Amendment, once effective, shall be effective as of
the date first set forth above. The respective rights, limitations, obligations,
duties, liabilities and immunities of the Depositor, the Servicer, LBAC, the
Trustee, the Back-up Servicer, the Custodian, the Collateral Agent, the
Certificate Insurer and the Certificateholders shall hereafter be determined,
exercised and enforced subject in all respects to such modifications and
amendments, and all the terms and conditions of this Amendment shall be and be
deemed to be part of the terms and conditions of the Pooling and Servicing
Agreement for any and all purposes. The Pooling and Servicing Agreement, as
amended hereby, is hereby ratified and confirmed in all respects.
SECTION 4. GOVERNING LAW.
THIS AMENDMENT 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 AMENDMENT SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS, WITHOUT REGARD
TO CONFLICT OF LAWS PRINCIPLES (EXCEPT WITH REGARD TO THE UCC).
SECTION 5. SEVERABILITY OF PROVISIONS.
If any one or more of the covenants, agreements, provisions or terms of
this Amendment 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 Amendment and shall
in no way affect the validity or enforceability of the other provisions of this
Amendment or of the Certificates or the rights of the Holders thereof.
SECTION 6. BINDING EFFECT.
The provisions of this Amendment shall be binding upon and inure to the
benefit of the respective successors and assigns of the parties hereto, and all
such provisions shall inure to the benefit of the Trustee and the related
Holders of Certificates.
3
SECTION 7. THIRD PARTY BENEFICIARIES.
The parties to this amendment hereby manifest their intent that no
third party shall be deemed to be a third party beneficiary of this Amendment.
SECTION 8. SECTION HEADINGS.
The section headings herein are for convenience of reference only, and
shall not limit or otherwise affect the meaning hereof.
SECTION 9. COUNTERPARTS.
This Amendment may be executed in several counterparts, each of which
shall be an original and all of which shall constitute but one and the same
instrument.
4
IN WITNESS WHEREOF, the Depositor, the Originator, the Servicer, the
Trustee, the Back-up Servicer, the Custodian and the Collateral Agent have
caused this Amendment to be duly executed by their respective officers as of the
day and year first above written.
LONG BEACH ACCEPTANCE
RECEIVABLES CORP., as Depositor
By: /s/ Xxxxx X. Xxxxxxxxxxx
------------------------------------
Name: Xxxxx X. Xxxxxxxxxxx
Title: Assistant Vice President -
Treasurer
LONG BEACH ACCEPTANCE CORP.,
as Originator and Servicer
By: /s/ Xxxxx X. Xxxxxxxxxxx
------------------------------------
Name: Xxxxx X. Xxxxxxxxxxx
Title: Assistant Vice President -
Treasurer
CHASE BANK OF TEXAS, NATIONAL
ASSOCIATION, as Trustee, Back-up
Servicer, Custodian and Collateral
Agent
By: /s/ Xxxx Xxxxxx
------------------------------------
Name: Xxxx Xxxxxx
Title: Vice President
Financial Security Assurance Inc., as Certificate
Insurer, hereby consents to the foregoing
Amendment pursuant to Sections 11.1 and 11.3
of the Pooling and Servicing Agreement.
FINANCIAL SECURITY ASSURANCE INC.
By: /s/ Xxxxx Xxxxxx
---------------------------------
Name: Xxxxx Xxxxxx
Title: Managing Director
Long Beach Acceptance Auto Business Trust 1998-1, as sole Class B
Certificateholder, hereby consents to the foregoing Amendment.
LONG BEACH ACCEPTANCE AUTO
BUSINESS TRUST 1998-1
by Wilmington Trust Company, not in its in
individual capacity but solely as Delaware Trustee
By: /s/ Xxxxxx X. Xxxx
----------------------------------
Name: XXXXXX X. XXXX
Title: Financial Services Officer
Long Beach Acceptance Receivables Corp., as
sole Excess Cash Flow Certificateholder, hereby
consents to the foregoing Amendment.
LONG BEACH ACCEPTANCE RECEIVABLES CORP.
By: /s/ Xxxxx X. Xxxxxxxxxxx
------------------------------------
Name: Xxxxx X. Xxxxxxxxxxx
Title: Assistant Vice President - Treasurer
AMENDMENT NO. 2
Dated as of December 16, 1998
to
POOLING AND SERVICING AGREEMENT
Dated as of January 1, 1998
among
LONG BEACH ACCEPTANCE RECEIVABLES CORP.
Depositor,
LONG BEACH ACCEPTANCE CORP.
Originator and Servicer
and
CHASE BANK OF TEXAS, NATIONAL ASSOCIATION
Trustee, Back-up Servicer, Custodian and Collateral Agent
$154,491,017.96
Long Beach Acceptance Auto Grantor Trust 1998-1
$129,000,000.00 6.19% Class A Certificates
$25,491,017.96 12.00% Class B Certificates
AMENDMENT NO. 2, dated as of December 16, 1998 (the "AMENDMENT"), to
the POOLING AND SERVICING AGREEMENT, dated as of January 1, 1998 (as amended as
of the date hereof, the "POOLING AND SERVICING AGREEMENT"), among Long Beach
Acceptance Receivables Corp., a Delaware corporation, as depositor (the
"DEPOSITOR"), Long Beach Acceptance Corp., a Delaware corporation, as originator
of the receivables ("LBAC"), and as servicer (in such capacity, the "SERVICER"),
and Chase Bank of Texas, National Association, a national banking association,
as trustee, back-up servicer, custodian and collateral agent (the "TRUSTEE",
"BACK-UP SERVICER", "Custodian", and "COLLATERAL AGENT", respectively).
WITNESSETH
WHEREAS, the Depositor, LBAC, the Servicer, the Trustee, the Back-up
Servicer, the Custodian and the Collateral Agent entered into the Pooling and
Servicing Agreement;
WHEREAS, the parties to the Pooling and Servicing Agreement desire to
amend certain provisions of the Pooling and Servicing Agreement as set forth in
this Amendment;
WHEREAS, Section 11.1 of the Pooling and Servicing Agreement permits
the amendment thereof by the Depositor, the Servicer and the Trustee with the
consent of the Certificate Insurer and of the Holders of Class A Certificates
and Holders of Class B Certificates evidencing not less than 66-2/3% of the
Class A Certificate Balance and the Class B Certificate Balance, respectively,
and, with respect to any amendment that shall have any of the effects set forth
in clause (a) of Section 11.1, with the consent of each of the
Certificateholders affected thereby; and
WHEREAS, Section 11.3 of the Pooling and Servicing Agreement provides
that, so long as no Insurer Default has occurred and is continuing, Class A
Certificateholder consent shall be deemed to be given on behalf of all Class A
Certificateholders if the Certificate Insurer agrees to give such consent.
NOW, THEREFORE, in consideration of the recitals set forth above, and
for other good and valuable consideration, the adequacy, receipt and sufficiency
of which are hereby acknowledged by the parties hereto, the parties hereto
hereby agree as follows:
SECTION 1. DEFINED TERMS.
For purposes of this Amendment, unless the context clearly requires
otherwise, all capitalized terms which are used but not otherwise defined herein
shall have the respective meanings ascribed to such terms in the Pooling and
Servicing Agreement.
1
SECTION 2. THE AMENDMENT.
(a) The definition of "Back-up Servicer Fee Rate" is hereby
amended and restated in its entirety to read as follows:
"BACK-UP SERVICER FEE RATE" shall be 0.0225% per
annum, payable monthly.
(b) The following definition of "Deficient Liquidated
Receivable" is hereby added following the definition of "Deficiency
Notice":
"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 Finance 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.
(c) The definition of "Liquidation Proceeds" is hereby amended
and restated in its entirety to read as follows:
"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.
(d) The definition of "Recoveries" is hereby amended and
restated in its entirety to read as follows:
"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
2
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.
(e) The second sentence of Section 2.8(c) is hereby amended
and restated in its entirety to read as follows:
The Custodian shall not be obligated to release any document
from any Legal File unless it receives a request for transfer
of possession signed, or, if such request is transmitted
electronically, transmitted by a Servicing Officer in the form
of Exhibit L to this Agreement and a custodial letter signed,
or, if such request is transmitted electronically, transmitted
by a Servicing Officer in the form of Exhibit M to this
Agreement (the "Custodial Letter").
(f) The fourth sentence of Section 3.2 is hereby amended and
restated in its entirety to read as follows:
The Servicer, for so long as LBAC is the Servicer, may grant
extensions, rebates or adjustments on a Receivable in
accordance with the customary servicing procedures it follows
with respect to all comparable automotive receivables that it
services for itself, which shall not modify the original due
date of the Scheduled Payments on any Receivable other than
(i) in accordance with the Payment Deferment and Due Date
Change Policies, (ii) with respect to a Deficient Liquidated
Receivable or (iii) with the prior written consent of the
Certificate Insurer, with respect to any other Liquidated
Receivable.
(g) The eighth sentence of Section 3.2 is hereby amended and
restated in its entirety to read as follows:
Notwithstanding anything to the contrary contained herein,
the Servicer (i) shall not agree to any alteration of the
interest rate on any Receivable or of the amount of any
Scheduled Payment on any Receivable, except (a) as otherwise
required by applicable law, (b) with respect to a Deficient
Liquidated Receivable or (c) with the prior written consent of
the Certificate Insurer, with respect to any other Liquidated
Receivable, and (ii) shall not agree to any modification that
would result in a material adverse effect on a Receivable
(other than a Deficient Liquidated Receivable and, with the
prior written consent of the Certificate Insurer, any other
Liquidated Receivable) or the interest therein of the Trust,
the
3
Certificateholders or the Certificate Insurer other than a
modification in accordance with the Payment Deferment and Due
Date Change Policies or would constitute reinvestment
adversely affecting the status of the Trust as a grantor trust
for Federal income tax purposes including, without limitation,
any modification that would result in a "deemed exchange" of a
Receivable under Section 1001 of the Code on account of such
modification being made at a time when the obligations of the
Obligor under the Receivable neither are in default nor, in
the reasonable good faith judgment of the Servicer, probably
will be in default in the reasonably foreseeable future.
(h) Section 3.6 is hereby amended and restated in its entirety
to read as follows:
The Servicer hereby makes the following covenants to the other
parties hereto and the Certificate Insurer on which the
Trustee shall rely in accepting the Receivables in trust and
issuing the Certificates and on which the Certificate Insurer
shall rely in issuing the Policy: (i) the Servicer shall not
release the Financed Vehicle securing any Receivable from the
security interest granted by such Receivable in whole or in
part except in the event of payment in full by the Obligor
thereunder or repossession or other liquidation of such
Financed Vehicle, (ii) the Servicer shall not impair the
rights of the Certificateholders, the Trust or the Certificate
Insurer in such Receivables, (iii) the Servicer shall not
amend a Receivable (other than a Deficient Liquidated
Receivable and, with the prior written consent of the
Certificate Insurer, any other Liquidated Receivable), except
that modifications may be made in accordance with Section 3.2,
and (iv) the Servicer shall service the Receivables as
required by the terms of this Agreement and in material
compliance with its current servicing procedures for servicing
of all its other comparable motor vehicle receivables.
(i) Section 4.8(a)(xvi) is hereby amended replacing the
reference to "Delinquency Ratio" with "Average Delinquency Ratio".
(j) The eleventh item listed in Exhibit J under the heading
"Payment Deferment Policy" is hereby amended and restated in its
entirety to read as follows:
As of January 1, 1999 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 such preceding calendar
quarter.
4
SECTION 3. EFFECT OF AMENDMENT.
This Amendment to the Pooling and Servicing Agreement shall be
effective and the Pooling and Servicing Agreement shall be deemed to be modified
and amended in accordance herewith upon the later to occur of (a) the receipt by
the Certificate Insurer of counterparts hereof executed and delivered on behalf
of each of the parties hereto, the Class B Certificateholders and the Excess
Cash Flow Certificateholders and the execution by the Certificate Insurer of a
counterpart hereof pursuant to Sections 11.1 and 11.3 of the Pooling and
Servicing Agreement and (b) the receipt by each of the Rating Agencies of prior
written notice with respect to this Amendment and by the Certificate Insurer of
a copy of such notice. This Amendment, once effective, shall be effective as of
the date first set forth above. The respective rights, limitations, obligations,
duties, liabilities and immunities of the Depositor, the Servicer, LBAC, the
Trustee, the Back-up Servicer, the Custodian, the Collateral Agent, the
Certificate Insurer and the Certificateholders shall hereafter be determined,
exercised and enforced subject in all respects to such modifications and
amendments, and all the terms and conditions of this Amendment shall be and be
deemed to be part of the terms and conditions of the Pooling and Servicing
Agreement for any and all purposes. The Pooling and Servicing Agreement, as
amended hereby, is hereby ratified and confirmed in all respects.
SECTION 4. GOVERNING LAW.
THIS AMENDMENT 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 AMENDMENT SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS, WITHOUT REGARD
TO CONFLICT OF LAWS PRINCIPLES (EXCEPT WITH REGARD TO THE UCC).
SECTION 5. SEVERABILITY OF PROVISIONS.
If any one or more of the covenants, agreements, provisions or terms of
this Amendment 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 Amendment and shall
in no way affect the validity or enforceability of the other provisions of this
Amendment or of the Certificates or the rights of the Holders thereof.
SECTION 6. BINDING EFFECT.
The provisions of this Amendment shall be binding upon and inure to the
benefit of the respective successors and assigns of the parties hereto, and all
such provisions shall inure to the benefit of the Trustee and the related
Holders of Certificates.
5
SECTION 7. THIRD PARTY BENEFICIARIES.
The parties to this Amendment hereby manifest their intent that no
third party other than the Certificate Insurer shall be deemed a third party
beneficiary of this Amendment, and specifically that the Obligors are not third
party beneficiaries of this Amendment. The Certificate Insurer and its
successors and assigns shall be a third-party beneficiary to the provisions of
this Amendment, and shall be entitled to rely upon and directly enforce such
provisions of this Amendment so long as no Insurer Default shall have occurred
and be continuing. Except as expressly stated otherwise herein or in the Basic
Documents, any right of the Certificate Insurer to direct, appoint, consent to,
approve of, or take any action under this Amendment, shall be a right exercised
by the Certificate Insurer in its sole and absolute discretion. The Certificate
Insurer may disclaim any of its rights and powers under this Amendment (but not
its duties and obligations under the Policy) upon delivery of a written notice
to the Trustee.
SECTION 8. SECTION HEADINGS.
The section headings herein are for convenience of reference only, and
shall not limit or otherwise affect the meaning hereof.
SECTION 9. COUNTERPARTS.
This Amendment may be executed in several counterparts, each of which
shall be an original and all of which shall constitute but one and the same
instrument.
6
IN WITNESS WHEREOF, the Depositor, the Originator, the Servicer, the
Trustee, the Back-up Servicer, the Custodian and the Collateral Agent have
caused this Amendment to be duly executed by their respective officers as of the
day and year first above written.
LONG BEACH ACCEPTANCE
RECEIVABLES CORP., as Depositor
By: /s/ Xxxxxxx X. Xxxxxx
---------------------------------
Name: Xxxxxxx X. Xxxxxx
Title: Vice President-Finance
LONG BEACH ACCEPTANCE CORP., as
Originator and Servicer
By: /s/ Xxxxxxx X. Xxxxxx
---------------------------------
Name: Xxxxxxx X. Xxxxxx
Title: Vice President-Finance
CHASE BANK OF TEXAS, NATIONAL
ASSOCIATION, as Trustee, Back-up
Servicer, Custodian and Collateral
Agent
By: /s/ Xxxx Xxxxxx
---------------------------------
Name: Xxxx Xxxxxx
Title: Vice President
Financial Security Assurance Inc., as Certificate
Insurer, hereby consents to the foregoing
Amendment pursuant to Sections 11.1 and 11.3
of the Pooling and Servicing Agreement.
FINANCIAL SECURITY ASSURANCE INC.
By: /s/ Xxxxx Xxx
---------------------------------
Name: Xxxxx Xxx
Title: Managing Director
Long Beach Acceptance Auto Business Trust 1998-1, as sole Class B
Certificateholder, hereby consents to the foregoing Amendment.
LONG BEACH ACCEPTANCE AUTO
BUSINESS TRUST 1998-1
by Wilmington Trust Company, not in
its in individual capacity but solely as
Delaware Trustee
By: /s/ Xxxxxx X. Xxxx
------------------------------------
Name: XXXXXX X. XXXX
Title: Financial Services Officer
Long Beach Acceptance Receivables Corp., as
sole Excess Cash Flow Certificateholder, hereby
consents to the foregoing Amendment.
LONG BEACH ACCEPTANCE
RECEIVABLES CORP.
By: /s/ Xxxxx X. Xxxxxxxxxxx
------------------------------------
Name: Xxxxx X. Xxxxxxxxxxx
Title: Assistant Vice President-Treasurer
AUTHORIZATION LETTER
December 16, 1998
Wilmington Trust Company
Xxxxxx Square North
0000 Xxxxx Xxxxxx Xxxxxx
Xxxxxxxxxx, Xxxxxxxx 00000-0000
Attn: Corporate Trust Administration
Re: LONG BEACH ACCEPTANCE AUTO GRANTOR TRUST 1998-1
AND LONG BEACH ACCEPTANCE AUTO BUSINESS TRUST 1998-1
Ladies and Gentlemen:
The undersigned is the beneficial owner of 100% of the
Certificates issued by Long Beach Acceptance Grantor Trust 1998-1 (the "Trust"),
pursuant to that certain Trust Agreement, dated as of January 30, 1998 (the
"Trust Agreement"), between Long Beach Acceptance Receivables Corp., a Delaware
corporation ("Long Beach"), as depositor (the "Depositor") and Wilmington Trust
Company, a Delaware banking corporation (the "Owner Trustee").
Pursuant to Amendment No. 2, dated as of December 16, 1998
(the "Amendment") to the Pooling and Servicing Agreement, dated as of January 1,
1998 (as amended as of the date hereof, the "Pooling and Servicing"), among the
Depositor, Long Beach Acceptance Corp., as Originator and Servicer and Chase
Bank of Texas, National Association, as Trustee, Back-up Servicer, Custodian and
Collateral Agent, the parties thereto desire to amend certain provisions of the
Pooling and Servicing Agreement as set forth therein, which amendment requires
the execution of the Trust.
Pursuant to Trust Agreement, the undersigned, as Beneficial
Owner of the Trust, hereby authorizes the Owner Trustee to execute on behalf of
the Trust, the Amendment, a copy of which is attached hereto as Exhibit A, and
to take any and all additional action as may be required by such amendment.
Capitalized terms used herein and not otherwise defined are
used as defined in the Trust Agreement.
Very truly yours,
GREENWICH CAPITAL MARKETS, INC.
By: /s/ [ILLEGIBLE]
Name: [ILLEGIBLE]
Title: Vice President
