EXECUTION COPY
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MBIA INSURANCE CORPORATION,
as Insurer
LONG BEACH ACCEPTANCE CORP.
and
GREENWICH CAPITAL MARKETS, INC.
and
BARCLAYS CAPITAL INC.
as the Underwriters
INDEMNIFICATION AGREEMENT
Long Beach Acceptance Auto Receivables Trust 2003-A
$45,500,000 1.2875% Asset-Backed Notes, Class A-1,
$65,000,000 1.4910% Asset-Backed Notes, Class A-2,
$68,000,000 2.0210% Asset-Backed Notes, Class A-3 and
$64,000,000 2.7730% Asset-Backed Notes, Class A-4
Dated as of March 13, 2003
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TABLE OF CONTENTS
Page
Section 1. Definitions...........................................................................1
Section 2. Representations and Warranties of the Insurer.........................................2
Section 3. Agreements, Representations and Warranties of the Underwriters........................4
Section 4. Agreements, Representations and Warranties of LBAC....................................4
Section 5. Indemnification.......................................................................4
Section 6. Notice To Be Given....................................................................5
Section 7. Contribution..........................................................................7
Section 8. Notices...............................................................................8
Section 9. Governing Law, Etc....................................................................8
Section 10. Insurance Agreement; Underwriting Agreement; Sale and Servicing Agreement.............8
Section 11. Limitations...........................................................................9
Section 12. Counterparts..........................................................................9
Section 13. Nonpetition...........................................................................9
TESTIMONIUM
SIGNATURES AND SEALS
INDEMNIFICATION AGREEMENT
This Agreement, dated as of March 13, 2003, is by and among MBIA
Insurance Corporation (the "Insurer"), as the Insurer under the Note Guaranty
Insurance Policy (the "Policy") issued in connection with the Offered Notes
described below, LONG BEACH ACCEPTANCE CORP. ("LBAC") and GREENWICH CAPITAL
MARKETS, INC. and BARCLAYS CAPITAL INC., as the Underwriters (each, an
"Underwriter").
SECTION 1. DEFINITIONS. As used in this Agreement, the following terms
shall have the respective meanings stated herein, unless the context clearly
requires otherwise, in both singular and plural form, as appropriate.
Capitalized terms used in this Agreement but not otherwise defined herein will
have the meanings ascribed to such terms in the Sale and Servicing Agreement (as
described below).
"Act" means the Securities Act of 1933, as amended, together with all
related rules and regulations.
"Agreement" means this Indemnification Agreement by and among the
Insurer, LBAC and the Underwriters.
"Indemnified Party" means any party entitled to any indemnification
pursuant to Section 5 below, as the context requires.
"Indemnifying Party" means any party required to provide
indemnification pursuant to Section 5 below, as the context requires.
"Indenture" means the Indenture dated March 1, 2003 between the Issuer
and the Indenture Trustee, as the same may be amended or supplemented from time
to time in accordance with the terms thereof.
"Insurance Agreement" means the Insurance Agreement, dated as of March
1, 2003, by and among the Insurer, the Issuer, the Servicer, the Originator, the
Back-up Servicer, the Indenture Trustee, the Trust Collateral Agent and the
Transferor.
"Insurer Party" means the Insurer and its respective parents,
subsidiaries and affiliates and any shareholder, director, officer, employee,
agent or any "controlling person" (as such term is used in the Act) of any of
the foregoing.
"LBAC Party" means Long Beach Acceptance Corp., each of its parents,
subsidiaries and affiliates and any shareholder, director, officer, employee,
agent or any "controlling person" (as such term is used in the Act) of any of
the foregoing.
"Losses" means (i) any actual out-of-pocket loss paid by the party
entitled to indemnification or contribution hereunder and (ii) any actual
out-of-pocket costs and expenses paid by such party, including reasonable fees
and expenses of its counsel, to the extent not paid, satisfied or reimbursed
from funds provided by any other Person (provided that the foregoing shall not
create or imply any obligation to pursue recourse against any such other
Person).
"Offered Notes" means the Long Beach Acceptance Auto Receivables Trust
2003-A, $45,500,000 1.2875% Asset-Backed Notes, Class A-1, $65,000,000 1.4910%
Asset-Backed Notes, Class A-2, $68,000,000 2.0210% Asset-Backed Notes, Class A-3
and $64,000,000 2.7730% Asset-Backed Notes, Class A-4, issued pursuant to the
Indenture.
"Person" means any individual, partnership, joint venture,
corporation, trust or unincorporated organization or any government or agency or
political subdivision thereof.
"Prospectus" means the prospectus (included in Registration Statement
No. 333-75958) dated January 18, 2002.
"Prospectus Supplement" means the form of final Prospectus Supplement,
dated March 6, 2003.
"Registration Statement" means the registration statement on Form S-3
relating to the Offered Notes.
"Sale and Servicing Agreement" means the Sale and Servicing Agreement,
dated as of March 1, 2003, by and among the Issuer, the Transferor, the
Originator, the Servicer, the Back-up Servicer, the Custodian and the Trust
Collateral Agent, as the same may be amended or supplemented from time to time
in accordance with the terms thereof.
"Servicer" means Long Beach Acceptance Corp.
"Transferor" means Long Beach Acceptance Receivables Corp. II.
"Underwriter Party" means each Underwriter and its respective parent,
subsidiaries and affiliates and any shareholder, director, officer, employee,
agent or "controlling person" (as such term is used in the Act) of any of the
foregoing.
"Underwriters" means Greenwich Capital Markets, Inc. and Barclays
Capital Inc.
"Underwriting Agreement" means the Underwriting Agreement among LBAC,
the Transferor and the Underwriters, dated March 6, 2003.
SECTION 2. REPRESENTATIONS AND WARRANTIES OF THE INSURER. The Insurer
represents and warrants to the Underwriters and LBAC as follows:
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(a) Organization and Licensing. The Insurer is a duly
incorporated and existing New York stock insurance company licensed to
do business in the State of New York and is in good standing under the
laws of such state.
(b) Corporate Power. The Insurer has the corporate power and
authority to issue the Policy and execute and deliver this Agreement,
the Insurance Agreement and the Spread Account Agreement and to
perform all of its obligations hereunder and thereunder.
(c) Authorization; Approvals. The issuance of the Policy and
the execution, delivery and performance of this Agreement, the
Insurance Agreement and the Spread Account Agreement have been duly
authorized by all necessary corporate proceedings. No further
approvals or filings of any kind, including, without limitation, any
further approvals of or further filings with any governmental agency
or other governmental authority, or any approval of the Insurer's
board of directors or stockholders, are necessary for the Policy, this
Agreement, the Insurance Agreement and the Spread Account Agreement to
constitute the legal, valid and binding obligations of the Insurer.
(d) Enforceability. The Policy, when issued, and this
Agreement, the Insurance Agreement and the Spread Account Agreement
will each constitute legal, valid and binding obligations of the
Insurer, enforceable in accordance with their terms, subject to
applicable laws affecting the enforceability of creditors' rights
generally and general equitable principles and public policy
considerations as to rights of indemnification for violations of
federal securities laws.
(e) Financial Information. The consolidated financial
statements of the Insurer as of December 31, 2001 and December 31,
2000 and for the three years ended December 31, 2001 incorporated by
reference in the Prospectus Supplement (the "Insurer Audited Financial
Statements") fairly present in all material respects the financial
condition of the Insurer as of such date and for the period covered by
such statements in accordance with generally accepted accounting
principles consistently applied. The consolidated financial statements
of the Insurer and its subsidiaries as of September 30, 2002
incorporated by reference in the Prospectus Supplement (the "Insurer
Unaudited Financial Statements") present fairly in all material
respects the financial condition of the Insurer as of such date and
for the period covered by such statements in accordance with generally
accepted accounting principles applied in a manner consistent with the
accounting principles used in preparing the Insurer Audited Financial
Statements, and, since September 30, 2002 there has been no material
change in such financial condition of the Insurer which would
materially and adversely affect its ability to perform its obligations
under the Policy.
(f) Insurer Information. The information in the Prospectus
Supplement as of the date hereof under the caption "THE INSURER AND
THE FINANCIAL GUARANTY
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INSURANCE POLICY" (the "Insurer Information") is limited and does not
purport to provide the scope of disclosure required to be included in
a prospectus for a registrant under the Securities Act of 1933, in
connection with the public offer and sale of securities of such
registrant. Within such limited scope of disclosure, the Insurer
Information does not contain any untrue statement of a material fact
or omit to state a material fact necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading.
(g) No Litigation. There are no actions, suits, proceedings or
investigations pending or, to the best of the Insurer's knowledge,
threatened against it at law or in equity or before or by any court,
governmental agency, board or commission or any arbitrator which, if
decided adversely, would materially and adversely affect its condition
(financial or otherwise) or its operations or would materially and
adversely affect its ability to perform its obligations under this
Agreement, the Policy, the Insurance Agreement or the Spread Account
Agreement.
SECTION 3. AGREEMENTS, REPRESENTATIONS AND WARRANTIES OF THE
UNDERWRITERS. The Underwriters represent and warrant to and agree with LBAC and
the Insurer that the statements in the Prospectus Supplement made in reliance
upon and in conformity with written information relating to the Underwriters
furnished to LBAC specifically for use in the preparation of the Prospectus
Supplement, and acknowledged in writing (referred to herein as the "Underwriter
Information"), are true and correct in all material respects.
SECTION 4. AGREEMENTS, REPRESENTATIONS AND WARRANTIES OF LBAC. LBAC
represents, warrants to and agrees with the Insurer and the Underwriters that:
(a) Registration Statement. The information in the
Registration Statement, the Prospectus and the Prospectus Supplement,
other than the Insurer Information and the Underwriter Information, is
true and correct in all material respects and does not contain any
untrue statement of a fact that is material or omit to state a
material fact necessary to make the statements therein, in light of
the circumstances under which they were made, not misleading.
(b) Representations and Warranties. Each of the
representations and warranties of LBAC contained in the Insurance
Agreement is true and correct in all material respects, and LBAC
hereby makes each such representation and warranty to, and for the
benefit of, the Insurer as if the same were set forth in full herein.
SECTION 5. INDEMNIFICATION.
(a) The Insurer hereby agrees, upon the terms and subject to
the conditions of this Agreement, to indemnify, defend and hold
harmless each LBAC Party and each Underwriter Party against any and
all Losses incurred by them with respect to
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the offer and sale of any of the Offered Notes and resulting from the
Insurer's breach of any of its representations and warranties set
forth in Section 2 of this Agreement.
(b) Each Underwriter, hereby agrees, severally and not
jointly, upon the terms and subject to the conditions of this
Agreement, to indemnify, defend and hold harmless each Insurer Party
against any and all Losses incurred by it with respect to the offer
and sale of any of the Offered Notes and resulting from such
Underwriter's breach of any of its representations and warranties set
forth in Section 3 of this Agreement.
(c) LBAC hereby agrees, upon the terms and subject to the
conditions of this Agreement, to indemnify, defend and hold harmless
each Insurer Party against any and all Losses incurred by it with
respect to the offer and sale of any of the Offered Notes and
resulting from LBAC's breach of any of its representations and
warranties set forth in Section 4 of this Agreement.
(d) Upon the incurrence of any Losses entitled to
indemnification hereunder, the Indemnifying Party shall reimburse the
Indemnified Party promptly upon establishment by the Indemnified Party
to the Indemnifying Party of the Losses incurred.
SECTION 6. NOTICE TO BE GIVEN.
(a) Except as provided in Section 7 below with respect to
contribution, the indemnification provided herein by the Indemnifying
Party shall be the exclusive remedy of each Indemnified Party for the
Losses resulting from the Indemnifying Party's breach of a
representation, warranty or agreement hereunder; provided, however,
that each Indemnified Party shall be entitled to pursue any other
remedy at law or in equity for any such breach so long as the damages
sought to be recovered shall not exceed the Losses incurred thereby
resulting from such breach.
(b) In the event that any action or regulatory proceeding
shall be commenced or claim asserted which may entitle an Indemnified
Party to be indemnified under this Agreement, such party shall give
the Indemnifying Party written or facsimile notice of such action or
claim reasonably promptly after receipt of written notice thereof.
(c) Upon request of the Indemnified Party, the Indemnifying
Party shall retain counsel reasonably satisfactory to the Indemnified
Party to represent the Indemnified Party and any others the
Indemnifying Party may designate in such proceeding and shall pay the
fees and disbursements of such counsel related to such proceeding. The
Indemnifying Party may, at its option, at any time upon written notice
to the Indemnified Party, assume the defense of any proceeding and may
designate counsel reasonably satisfactory to the Indemnified Party in
connection therewith, provided that the counsel so designated would
have no actual or potential conflict of interest in connection with
such representation. Unless it shall assume the defense of any
proceeding the Indemnifying Party shall not be liable for any
settlement of any proceeding, effected
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without its written consent, but if settled with such consent or if
there be a final judgment for the plaintiff, the Indemnifying Party
agrees to indemnify the Indemnified Party from and against any loss or
liability by reason of such settlement or judgment. The Indemnifying
Party shall be entitled to participate in the defense of any such
action or claim in reasonable cooperation with, and with the
reasonable cooperation of, each Indemnified Party.
(d) The Indemnified Party will have the right to employ its
own counsel in any such action, but the fees and expenses of such
counsel will be at the expense of such Indemnified Party unless (i)
the employment of counsel by the Indemnified Party at the Indemnifying
Party's expense has been authorized in writing by the Indemnifying
Party, (ii) the Indemnifying Party has not in fact employed counsel to
assume the defense of such action within a reasonable time after
receiving notice of the commencement of the action or (iii) the named
parties to any such action include the Indemnifying Party on the one
hand and, on the other hand, the Indemnified Party, and representation
of both parties by the same counsel would be inappropriate due to
actual or potential differing interests between them (in which case if
such Indemnified Party notifies the Indemnifying Party in writing that
it elects to employ separate counsel at the expense of the
Indemnifying Party, the Indemnifying Party shall not have the right to
assume the defense of such action or proceeding on such Indemnified
Party's behalf), in each of which cases the reasonable fees and
expenses of counsel (including local counsel) will be at the expense
of the Indemnifying Party, and all such fees and expenses will be
reimbursed promptly as they are incurred. In the event that any
expenses so paid by the Indemnifying Party are subsequently determined
not to be required to be borne by the Indemnifying Party hereunder,
the party which received such payment shall promptly refund to the
Indemnifying Party the amount so paid by such Indemnifying Party.
Notwithstanding the foregoing, in connection with any one action or
separate but substantially similar or related actions in the same
jurisdiction arising out of the same general allegations or
circumstances, the Indemnifying Party shall not be liable for the fees
and expenses of more than one counsel for all LBAC Parties, more than
one counsel for all Underwriter Parties and more than one counsel for
all Insurer Parties, as applicable.
(e) The Indemnified Parties shall cooperate with the
Indemnifying Parties in resolving any event which would give rise to
an indemnity obligation pursuant to Section 5 hereof in the most
efficient manner.
(f) No settlement of any such claim or action shall be entered
into without the consent of each Indemnified Party who is subject to
such claim or action, on the one hand, and each Indemnifying Party who
is subject to such claim or action, on the other hand; provided,
however, that the consent of such Indemnified Party shall not be
required if such settlement fully discharges, with prejudice against
the plaintiff, the claim or action against such Indemnified Party.
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(g) Any failure by an Indemnified Party to comply with the
provisions of this Section shall relieve the Indemnifying Party of
liability only if such failure is materially prejudicial to any legal
pleadings, grounds, defenses or remedies in respect thereof or the
Indemnifying Party's financial liability hereunder, and then only to
the extent of such prejudice.
SECTION 7. CONTRIBUTION.
(a) To provide for just and equitable contribution if the
indemnification provided by the Insurer is determined to be
unavailable for an Underwriter Party (other than pursuant to Section 5
or 6 of this Agreement), or if the indemnification provided by any
Underwriter is determined to be unavailable for any Insurer Party
(other than pursuant to Section 5 or 6 of this Agreement), the Insurer
and each Underwriter shall contribute to the aggregate costs of
liabilities arising from any breach of their respective
representations and warranties set forth in this Agreement on the
basis of the relative fault of all Insurer Parties and all related
Underwriter Parties.
(b) To provide for just and equitable contribution if the
indemnification provided by the Insurer is determined to be
unavailable for any LBAC Party (other than pursuant to Section 5 or 6
of this Agreement), or if the indemnification provided by LBAC is
determined to be unavailable for any Insurer Party (other than
pursuant to Section 5 or 6 of this Agreement), the Insurer and LBAC
shall contribute to the aggregate cost of liabilities arising from any
breach of their respective representations and warranties set forth in
this Agreement on the basis of the relative fault of all Insurer
Parties and all LBAC Parties.
(c) The relative fault of each Indemnifying Party, on the one
hand, and of each Indemnified Party, on the other hand, shall be
determined by reference to, among other things, whether the breach of,
or alleged breach of, any of its representations and warranties set
forth in Section 2, 3 or 4 of this Agreement relates to information
supplied by, or action within the control of, the Indemnifying Party
or the Indemnified Party and the Parties' relative intent, knowledge,
access to information and opportunity to correct or prevent such
breach.
(d) The parties agree that the Insurer shall be solely
responsible for the Insurer Information and for the Insurer Financial
Statements, that each Underwriter shall be solely responsible for the
Underwriter Information relating to such Underwriter provided by the
Underwriters in writing for use in the Prospectus Supplement and that
LBAC shall be responsible for all other information in the
Registration Statement and in the Prospectus Supplement.
(e) No person guilty of fraudulent misrepresentation (within
the meaning of Section 11(f) of the Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation.
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(f) The indemnity and contribution agreements contained in
this Agreement shall remain operative and in full force and effect,
regardless of (i) any investigation made by or on behalf of any
Underwriter Party, any LBAC Party or any Insurer Party, (ii) the
issuance of any Offered Notes or the Policy or (iii) any termination
of this Agreement.
(g) Upon the incurrence of any Losses entitled to contribution
hereunder, the contributor shall reimburse the party entitled to
contribution promptly upon establishment by the party entitled to
contribution to the contributor of the Losses incurred.
SECTION 8. NOTICES. All notices and other communications provided for
under this Agreement shall be addressed to the address set forth below as to
each party or at such other address as shall be designated by a party in a
written notice to the other party.
If to the Insurer: MBIA Insurance Corporation
000 Xxxx Xxxxxx
Xxxxxx, XX 00000
Attention: Insured Portfolio Management--
Structured Finance (IPM-SF)
If to LBAC: Long Beach Acceptance Corp.
Xxx Xxxx Xxxxxx Xxxxx
Xxxxxxx, XX 00000
Attention: General Counsel
If to the Underwriters: Greenwich Capital Markets, Inc.
000 Xxxxxxxxx Xxxx
Xxxxxxxxx, XX 00000
Attention: Legal Department
Barclays Capital Inc.
000 Xxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Mr. Xxxxxxx Xxxx
SECTION 9. GOVERNING LAW, ETC. This Agreement shall be deemed to be a
contract under the laws of the State of New York and shall be governed by and
construed in accordance with the laws of the State of New York without regard to
its conflicts of laws provisions. This Agreement may not be assigned by any
party without the express written consent of each other party. Amendments of
this Agreement shall be in writing signed by each party. This Agreement shall
not be effective until executed by each of the Insurer, LBAC and the
Underwriters.
SECTION 10. INSURANCE AGREEMENT; UNDERWRITING AGREEMENT; SALE AND
SERVICING AGREEMENT. This Agreement in no way limits or otherwise affects the
indemnification obligations of LBAC under (a) the Insurance Agreement, (b) the
Underwriting Agreement or
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(c) the Sale and Servicing Agreement. To the extent that this Agreement
conflicts with or does not address the relative rights of the Underwriters and
LBAC as between themselves as set forth in the Underwriting Agreement, the
Underwriting Agreement shall govern.
SECTION 11. LIMITATIONS. Nothing in this Agreement shall be construed
as a representation or undertaking by the Insurer concerning maintenance of the
rating currently assigned to its claims-paying ability by Xxxxx'x Investors
Service, Inc. ("Moody's") and/or Standard & Poor's Ratings Services, a division
of The XxXxxx-Xxxx Companies, Inc. ("S&P") or any other rating agency
(collectively, the "Rating Agencies").
SECTION 12. COUNTERPARTS. This Agreement may be executed in any number
of counterparts, each of which shall together constitute but one and the same
instrument.
SECTION 13. NONPETITION. So long as the Insurance Agreement is in
effect, and for one year following its termination, none of the parties hereto
will file any involuntary petition or otherwise institute any bankruptcy,
reorganization, arrangement, insolvency or liquidation proceeding or other
proceeding under any federal or state bankruptcy or similar law against the
Issuer.
[Remainder of this page intentionally left blank.]
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IN WITNESS WHEREOF, the parties hereto have caused this Indemnification
Agreement to be duly executed and delivered by their respective officers
thereunto duly authorized, all as of the date first above written.
MBIA INSURANCE CORPORATION
By
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Assistant Secretary
LONG BEACH ACCEPTANCE CORP.
By
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Title
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GREENWICH CAPITAL MARKETS, INC.
By
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Title
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BARCLAYS CAPITAL INC.
By
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Title
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Long Beach Acceptance Auto Receivables Trust 2003-A
Indemnification Agreement Signature Page
