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SALE AND SERVICING AGREEMENT
among
LONG BEACH ACCEPTANCE AUTO RECEIVABLES TRUST 2004-B
Issuer
LONG BEACH ACCEPTANCE RECEIVABLES CORP.
Transferor
LONG BEACH ACCEPTANCE CORP.
Originator, Servicer and Custodian
and
XXXXX FARGO BANK, NATIONAL ASSOCIATION
Back-up Servicer and Trust Collateral Agent
Dated as of July 1, 2004
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TABLE OF CONTENTS
Page
ARTICLE I DEFINITIONS 1
SECTION 1.1. Definitions............................................................................1
SECTION 1.2. Other Definitional Provisions..........................................................1
SECTION 1.3. Calculations...........................................................................2
SECTION 1.4. Action by or Consent of Noteholders....................................................2
SECTION 1.5. Material Adverse Effect................................................................3
ARTICLE II CONVEYANCE OF RECEIVABLES..............................................................................3
SECTION 2.1. Conveyance of Initial Receivables......................................................3
SECTION 2.2. Conveyance of Subsequent Receivables...................................................4
SECTION 2.3. Transfer Intended as Sale; Precautionary Security Interest.............................9
SECTION 2.4. Assignment by Transferor..............................................................10
SECTION 2.5. Further Encumbrance of Trust Assets...................................................10
ARTICLE III THE RECEIVABLES......................................................................................10
SECTION 3.1. Representations and Warranties of Transferor..........................................10
SECTION 3.2. Repurchase upon Breach of Representations and Warranties of the
Transferor..........................................................................11
SECTION 3.3. Custody of Legal Files and Receivable Files...........................................12
SECTION 3.4. Legal File Deficiencies...............................................................12
SECTION 3.5. Access to Receivable Files; Servicer's Duties with Respect to
Receivable Files....................................................................13
SECTION 3.6. Issuer's Certificate..................................................................14
ARTICLE IV ADMINISTRATION AND SERVICING OF RECEIVABLES...........................................................14
SECTION 4.1. Duties of the Servicer................................................................14
SECTION 4.2. Collection and Allocation of Receivable Payments......................................15
SECTION 4.3. Realization upon Receivables..........................................................16
SECTION 4.4. Physical Damage Insurance; Other Insurance............................................17
SECTION 4.5. Maintenance of Security Interests in Financed Vehicles................................18
SECTION 4.6. Additional Covenants of Servicer......................................................19
SECTION 4.7. Purchase of Receivables Upon Breach...................................................20
SECTION 4.8. Servicing Fee.........................................................................20
SECTION 4.9. Servicer's Certificate................................................................21
SECTION 4.10. Annual Statement as to Compliance; Notice of Default..................................21
SECTION 4.11. Annual Independent Certified Public Accountant's Report...............................22
SECTION 4.12. Servicer Expenses.....................................................................23
SECTION 4.13. Retention and Termination of Servicer.................................................23
SECTION 4.14. Access to Certain Documentation and Information Regarding Receivables.................23
SECTION 4.15. Verification of Servicer's Certificate................................................24
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SECTION 4.16. Fidelity Bond.........................................................................25
SECTION 4.17. Delegation of Duties..................................................................25
SECTION 4.18. Delivery of Back-up Tapes of Back-up Servicer.........................................26
SECTION 4.19. Confidential Information..............................................................26
ARTICLE V ACCOUNTS; PAYMENTS; STATEMENTS TO NOTEHOLDERS..........................................................27
SECTION 5.1. Accounts; Lock-Box Account............................................................27
SECTION 5.2. Collections...........................................................................29
SECTION 5.3. Application of Collections............................................................29
SECTION 5.4. Intentionally Omitted.................................................................30
SECTION 5.5. Additional Deposits...................................................................30
SECTION 5.6. Payments; Policy Claims...............................................................30
SECTION 5.7. Statements to Noteholders; Tax Returns................................................35
SECTION 5.8. Reliance on Information from the Servicer.............................................38
SECTION 5.9. Optional Deposits by the Note Insurer.................................................38
SECTION 5.10. Spread Account........................................................................38
SECTION 5.11. Withdrawals from Spread Account.......................................................39
SECTION 5.12. Demand Note...........................................................................39
SECTION 5.13. Pre-Funding Account...................................................................40
SECTION 5.14. Capitalized Interest Account..........................................................41
SECTION 5.15. Securities Accounts...................................................................41
ARTICLE VI THE POLICY 42
SECTION 6.1. Policy................................................................................42
SECTION 6.2. Claims Under Policy...................................................................42
SECTION 6.3. Preference Claims; Direction of Proceedings...........................................43
SECTION 6.4. Surrender of Policy...................................................................44
ARTICLE VII THE TRANSFEROR.......................................................................................44
SECTION 7.1. Representations of the Transferor.....................................................44
SECTION 7.2. Liability of the Transferor...........................................................46
SECTION 7.3. Merger or Consolidation of, or Assumption of the Obligations of, the
Transferor..........................................................................46
SECTION 7.4. Limitation on Liability of the Transferor and Others..................................47
SECTION 7.5. Transferor May Own Notes..............................................................47
ARTICLE VIII THE SERVICER........................................................................................47
SECTION 8.1. Representations of Servicer...........................................................47
SECTION 8.2. Indemnities of Servicer...............................................................49
SECTION 8.3. Merger or Consolidation of, or Assumption of the Obligations of,
Servicer or Back-up Servicer........................................................51
SECTION 8.4. Limitation on Liability of Servicer and Others........................................52
SECTION 8.5. Servicer and Back-up Servicer Not to Resign...........................................53
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ARTICLE IX SERVICER TERMINATION EVENTS...........................................................................54
SECTION 9.1. Servicer Termination Events...........................................................54
SECTION 9.2. Appointment of Successor..............................................................57
SECTION 9.3. Notification to Noteholders...........................................................59
SECTION 9.4. Action Upon Certain Failures of the Servicer..........................................59
ARTICLE X THE TRUST COLLATERAL AGENT.............................................................................59
SECTION 10.1. Duties of the Trust Collateral Agent..................................................59
SECTION 10.2. Trust Collateral Agent to Act for the Class A Noteholders and Note
Insurer.............................................................................62
SECTION 10.3. Certain Matters Affecting the Trust Collateral Agent..................................62
SECTION 10.4. Trust Collateral Agent and Back-up Servicer Not Liable for Notes or
Receivables.........................................................................64
SECTION 10.5. Trust Collateral Agent and Back-up Servicer May Own Notes.............................65
SECTION 10.6. Indemnity of Trust Collateral Agent and Back-up Servicer..............................65
SECTION 10.7. Eligibility Requirements for Trust Collateral Agent...................................65
SECTION 10.8. Resignation or Removal of Trust Collateral Agent......................................65
SECTION 10.9. Successor Trust Collateral Agent......................................................67
SECTION 10.10. Merger or Consolidation of Trust Collateral Agent.....................................67
SECTION 10.11. Co-Trustee; Separate Trustee..........................................................67
SECTION 10.12. Representations and Warranties of Trust Collateral Agent..............................69
SECTION 10.13. Rights of Note Insurer to Direct Trust Collateral Agent...............................69
ARTICLE XI TERMINATION...........................................................................................70
SECTION 11.1. Termination...........................................................................70
ARTICLE XII ADMINISTRATIVE DUTIES OF THE SERVICER................................................................70
SECTION 12.1. Administrative Duties.................................................................70
SECTION 12.2. Records...............................................................................72
SECTION 12.3. Additional Information to be Furnished to the Issuer..................................72
SECTION 12.4. No Additional Compensation............................................................72
ARTICLE XIII MISCELLANEOUS PROVISIONS............................................................................72
SECTION 13.1. Amendment.............................................................................72
SECTION 13.2. Protection of Title...................................................................74
SECTION 13.3. Limitation on Rights of Noteholders...................................................76
SECTION 13.4. Governing Law.........................................................................77
SECTION 13.5. Notices...............................................................................77
SECTION 13.6. Severability of Provisions............................................................78
SECTION 13.7. Assignment to Indenture Trustee.......................................................78
SECTION 13.8. Limitation of Liability of Owner Trustee, Back-up Servicer and Trust
Collateral Agent....................................................................78
SECTION 13.9. Independence of the Servicer..........................................................79
SECTION 13.10. No Joint Venture......................................................................79
SECTION 13.11. Nonpetition Covenant..................................................................79
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SECTION 13.12. Third Party Beneficiaries.............................................................79
SECTION 13.13. Consent to Jurisdiction...............................................................80
SECTION 13.14. Headings..............................................................................80
SECTION 13.15. Trial by Jury Waived..................................................................81
SECTION 13.16. Entire Agreement......................................................................81
SECTION 13.17. Effect of Policy Expiration Date......................................................81
SECTION 13.18. Termination of Demand Note and/or Demand Note Guarantee...............................81
ANNEXES
Annex A Defined Terms
EXHIBITS
Exhibit A-1 Form of Issuer's Certificate
Exhibit A-2 Form of Issuer's Certificate
Exhibit B-1 Form of Servicer's Certificate
Exhibit B-2 Form of Loan Master File Layout
Exhibit C Intentionally Omitted
Exhibit D Payment Deferment and Due Date Change Policies
Exhibit E Documentation Checklist
Exhibit F Form of Transfer Agreement
SCHEDULES
Schedule A Schedule of Receivables
Schedule B Location of Receivable Files; Location of Legal Files
Schedule C Delivery Requirements
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SALE AND SERVICING AGREEMENT ("Agreement"), dated as of July 1, 2004,
among LONG BEACH ACCEPTANCE AUTO RECEIVABLES TRUST 2004-B, a Delaware statutory
trust, as issuer (the "Issuer"), LONG BEACH ACCEPTANCE RECEIVABLES CORP., a
Delaware corporation, as transferor (the "Transferor"), LONG BEACH ACCEPTANCE
CORP., a Delaware corporation, as originator of the receivables ("LBAC"), as
servicer (in such capacity, the "Servicer") and as custodian (in such capacity,
the "Custodian") and XXXXX FARGO BANK, NATIONAL ASSOCIATION, a national banking
association, as back-up servicer and trust collateral agent, (the "Back-up
Servicer" and the "Trust Collateral Agent", respectively).
WHEREAS the Issuer desires to acquire a portfolio of receivables
arising in connection with motor vehicle retail installment sale contracts
acquired by LBAC through motor vehicle dealers;
WHEREAS the Transferor has purchased such receivables from LBAC and
Long Beach Acceptance Receivables Corp. Warehouse I (collectively, the
"Sellers") and is willing to convey such receivables to the Issuer;
WHEREAS the Issuer desires to acquire, from time to time, additional
receivables arising in connection with motor vehicle retail installment sale
contracts to be acquired by LBAC;
WHEREAS the Transferor has agreed to purchase, from time to time, such
additional receivables from the Sellers and is willing to convey such
receivables to the Issuer; and
WHEREAS the Servicer is willing to service all such receivables.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants herein contained, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1. Definitions. Whenever used in this Agreement, capitalized
terms used and not otherwise defined herein shall have the meanings set forth in
Annex A attached hereto.
SECTION 1.2. Other Definitional Provisions.
(a) All terms defined in this Agreement (including Annex A hereto) shall
have the defined meanings when used in any instrument governed hereby and in any
certificate or other document made or delivered pursuant hereto unless otherwise
defined therein.
(b) As used in this Agreement, in any instrument governed hereby and in any
certificate or other document made or delivered pursuant hereto or thereto,
accounting terms not defined in this Agreement (including Annex A hereto) or in
any such instrument, certificate or
other document, and accounting terms partly defined in this Agreement (including
Annex A hereto) or in any such instrument, certificate or other document to the
extent not defined, shall have the respective meanings given to them under
generally accepted accounting principles as in effect on the date of this
Agreement or any such instrument, certificate or other document, as applicable.
To the extent that the definitions of accounting terms in this Agreement
(including Annex A hereto) or in any such instrument, certificate or other
document are inconsistent with the meanings of such terms under generally
accepted accounting principles, the definitions contained in this Agreement
(including Annex A hereto) or in any such instrument, certificate or other
document shall control.
(c) The words "hereof," "herein," "hereunder" and words of similar import
when used in this Agreement shall refer to this Agreement as a whole and not to
any particular provision of this Agreement; Section, Schedule and Exhibit
references contained in this Agreement are references to Sections, Schedules and
Exhibits in or to this Agreement unless otherwise specified; and the term
"including" shall mean "including without limitation."
(d) With respect to all terms in this Agreement, the singular includes the
plural and the plural the singular; words importing any gender include the other
genders; references to "writing" include printing, typing, lithography, and
other means of reproducing words in a visible form; references to agreements and
other contractual instruments include all subsequent amendments thereto or
changes therein entered into in accordance with their respective terms and not
prohibited by this Agreement; references to Persons include their permitted
successors and assigns; and the term "including" means "including without
limitation."
(e) Any agreement, instrument or statute defined or referred to herein or
in any instrument or certificate delivered in connection herewith means such
agreement, instrument or statute as from time to time amended, modified or
supplemented in accordance with the terms thereof and includes (in the case of
agreements or instruments) references to all attachments thereto and instruments
incorporated therein; references to a Person are also to its permitted
successors and assigns.
SECTION 1.3. Calculations. All calculations of the amount of the
Servicing Fee, the Back-up Servicer Fee, Custodian Fee and the Indenture Trustee
Fee shall be made on the basis of a 360-day year consisting of twelve 30-day
months. All references to the Principal Balance of a Receivable as of the last
day of a Collection Period shall refer to the close of business on such day.
SECTION 1.4. Action by or Consent of Noteholders. Whenever any
provision of this Agreement refers to action to be taken, or consented to, by
Noteholders, such provision shall be deemed to refer to Noteholders of record as
of the Record Date immediately preceding the date on which such action is to be
taken, or consent given, by Noteholders. Solely for the purposes of any action
to be taken or consented to by Noteholders, any Note registered in the name of
the Transferor, LBAC, the Servicer or any Affiliate thereof shall be deemed not
to be outstanding and shall not be taken into account in determining whether the
requisite interest necessary to effect any such action or consent has been
obtained; provided, however, that, solely for the purpose of determining whether
the Indenture Trustee or the Trust Collateral Agent is
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entitled to rely upon any such action or consent, only Notes which the Indenture
Trustee or the Trust Collateral Agent actually knows to be so owned shall be so
disregarded.
SECTION 1.5. Material Adverse Effect. Whenever a determination is to
be made under this Agreement as to whether a given event, action, course of
conduct or set of facts or circumstances could or would have a material adverse
effect on the Issuer or Noteholders (or any similar or analogous determination),
such determination shall be made without taking into account the insurance
provided by the Policy. Whenever a determination is to be made under this
Agreement whether a breach of a representation, warranty or covenant has or
could have a material adverse effect on a Receivable or the interest therein of
the Issuer, the Noteholders or the Note Insurer (or any similar or analogous
determination), such determination shall be made by the Controlling Party in its
sole discretion.
ARTICLE II
CONVEYANCE OF RECEIVABLES
SECTION 2.1. Conveyance of Initial Receivables.
In consideration of the Issuer's delivery of the Class R Certificate
to or upon the order of the Transferor on the Closing Date and the net proceeds
from the sale of the Notes and the other amounts to be distributed from time to
time to, or upon the order of, the Transferor in accordance with the terms of
this Agreement, the Transferor does hereby transfer, assign, set over and
otherwise convey to the Issuer, without recourse, all right, title and interest
of the Transferor in, to and under:
(i) the Initial Receivables listed in Schedule A hereto, all monies
received on the Initial Receivables after the Initial Cutoff Date and, with
respect to any Initial Receivables which are Precomputed Receivables, the
related Payahead Amount, and all Liquidation Proceeds and Recoveries
received with respect to such Initial Receivables;
(ii) the security interests in the related Financed Vehicles granted
by the related Obligors pursuant to the Initial Receivables and any other
interest of the Transferor in such Financed Vehicles, including the
certificates of title and any other evidence of ownership with respect to
such Financed Vehicles;
(iii) any proceeds from claims on any physical damage, credit life and
credit accident and health insurance policies or certificates or the VSI
Policy, if any, relating to the related Financed Vehicles or the related
Obligors, including any rebates and premiums;
(iv) property (including the right to receive future Liquidation
Proceeds) that secures an Initial Receivable and that has been acquired by
or on behalf of the Transferor pursuant to the liquidation of such Initial
Receivable;
(v) the Purchase Agreement including a direct right to cause LBAC to
purchase Initial Receivables from the Issuer upon the occurrence of a
breach of any of the representations and warranties contained in Section
3.03(b) of the Purchase Agreement or
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the failure of LBAC to timely comply with its obligations pursuant to
Section 5.05 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 Lock-Box Account, to the extent such amounts and property relate to
the Initial Receivables;
(ix) any proceeds from recourse against Dealers (other than any
Chargeback Obligations), including any Dealer Title Guaranties with respect
to the Initial Receivables, with respect to the sale of the Initial
Receivables; and
(x) the proceeds of any and all of the foregoing.
SECTION 2.2. Conveyance of Subsequent Receivables.
(a) Subject to the conditions set forth in Section 2.2(b) hereof and in the
related Transfer Agreement, in consideration of the Issuer's delivery to or upon
the order of the Transferor of the purchase price for the Subsequent
Receivables, in each case as described below and set forth in the related
Transfer Agreement, the Transferor shall on each Subsequent Transfer Date sell,
transfer, assign, set over and otherwise convey to the Issuer, without recourse,
all right, title and interest of the Transferor in, to and under:
(i) the Subsequent Receivables listed in Schedule A to the related
Transfer Agreement, all monies received on such Subsequent Receivables
after the related Subsequent Cutoff Date and, with respect to any such
Subsequent Receivables which are Precomputed Receivables, the related
Payahead Amount, and all Liquidation Proceeds and Recoveries received with
respect to such Subsequent Receivables;
(ii) the security interests in the related Financed Vehicles granted
by the related Obligors pursuant to such Subsequent Receivables and any
other interest of the Transferor in such Financed Vehicles, including the
certificates of title and any other evidence of ownership with respect to
such Financed Vehicles;
(iii) any proceeds from claims on any physical damage, credit life and
credit accident and health insurance policies or certificates or the VSI
Policy, if any, relating to the related Financed Vehicles or the related
Obligors, including any rebates and premiums;
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(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 Transferor pursuant to the liquidation of such
Subsequent Receivable;
(v) each Transfer Agreement and the Purchase Agreement, including a
direct right to cause LBAC to purchase Subsequent Receivables from the
Issuer upon the occurrence of a breach of any of the representations and
warranties contained in Section 4 of the related Transfer Agreement, or the
failure of LBAC to timely comply with its obligations pursuant to Section
5.05 of the Purchase Agreement;
(vi) refunds for the costs of extended service contracts with respect
to the related Financed Vehicles, refunds of unearned premiums with respect
to credit life and credit accident and health insurance policies or
certificates covering a related Obligor or the related Financed Vehicle or
his or her obligations with respect to a related Financed Vehicle and any
recourse to Dealers for any of the foregoing;
(vii) the Legal Files and the Receivable Files related to each such
Subsequent Receivable and any and all other documents that LBAC keeps on
file in accordance with its customary procedures relating to such
Subsequent Receivables, the related Obligors or the related Financed
Vehicles;
(viii) all amounts and property from time to time held in or credited
to the Lock-Box Account, to the extent such amounts and property relate to
such Subsequent Receivables;
(ix) any proceeds from recourse against Dealers (other than any
Chargeback Obligations), including any Dealer Title Guaranties with respect
to such Subsequent Receivables, with respect to the sale of such Subsequent
Receivables; and
(x) the proceeds of any and all of the foregoing.
The purchase price to be paid by the Issuer on each Subsequent
Transfer Date for the Subsequent Receivables so sold shall be set forth in the
related Transfer Agreement and shall be paid from monies released from the
Pre-Funding Account pursuant to Section 5.13(b). Such purchase price shall equal
the aggregate Principal Balance of such Subsequent Receivables as of the related
Subsequent Cutoff Date.
(b) The Transferor shall transfer to the Issuer the Subsequent Receivables
and the other property and rights related thereto described in Section 2.2(a)
only upon the prior written consent of the Note Insurer acting in its sole and
absolute discretion and the satisfaction of each of the following conditions on
or prior to the related Subsequent Transfer Date:
(i) the Transferor shall have provided the Indenture Trustee, the
Trust Collateral Agent, the Note Insurer, the Demand Note Provider and each
Rating Agency with an Addition Notice not later than five Business Days
prior to the related Subsequent Transfer Date and shall also have provided
the Indenture Trustee, the Trust Collateral Agent and the Note Insurer with
an electronic transmission of the information on the related Subsequent
Receivables set forth in such Addition Notice in a format acceptable
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to each of the Indenture Trustee, the Trust Collateral Agent and the Note
Insurer no later than such fifth Business Day prior to the related
Subsequent Transfer Date;
(ii) LBAC and LBARC-WI shall have each delivered to the Transferor, a
written Subsequent Assignment, which shall include a list of the Subsequent
Receivables so transferred attached thereto as Schedule A, and a copy
thereof to the Note Insurer;
(iii) the Transferor, the Sellers, the Trust and the Trust Collateral
Agent shall have executed a written Transfer Agreement, which shall include
a list of the Subsequent Receivables so transferred attached thereto as
Schedule A, and a copy thereof shall have been delivered to the Note
Insurer;
(iv) the Transferor shall have caused the Servicer to deposit in the
Collection Account all collections on or in respect of the Subsequent
Receivables (to the extent conveyed to the Trust as specified in Section
2.2(a)) received prior to the related Subsequent Transfer Date;
(v) the Transferor shall have deposited or caused to be deposited the
related Subsequent Spread Account Deposit into the Spread Account pursuant
to Section 5.10
(vi) as of each Subsequent Transfer Date, none of the Sellers, the
Servicer and the Transferor will be insolvent nor will either of them be
made insolvent by the related transfer nor shall any of them be aware of
any pending insolvency;
(vii) the Funding Period shall not have terminated;
(viii) the Transferor shall have delivered to the Indenture Trustee,
the Trust Collateral Agent, the Note Insurer, the Demand Note Provider and
each Rating Agency an Officer's Certificate confirming the satisfaction of
each condition precedent specified in this Section 2.2(b) and in Section 5
of the related Transfer Agreement and certifying that:
(A) such conveyance of Subsequent Receivables by the Transferor
to the Trust on the related Subsequent Transfer Date was made in good
faith for legitimate business purposes and was not made with intent to
hinder, delay or defraud any Person to which the Transferor has been,
is or will become, on or after the related Subsequent Transfer Date,
indebted;
(B) the Transferor did not receive less than a reasonably
equivalent value in exchange for the conveyance of the Subsequent
Receivables by the Transferor to the Issuer on the related Subsequent
Transfer Date pursuant to the related Transfer Agreement;
(C) the Transferor is not insolvent on the related Subsequent
Transfer Date and will not become insolvent as a result of the
conveyance of the Subsequent Receivables by the Transferor to the
Issuer on the related Subsequent Transfer Date pursuant to the related
Transfer Agreement;
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(D) the Transferor is not engaged in a business or transaction,
and is not about to engage in a business or transaction, for which any
property remaining with the Transferor after such business or
transaction would be an unreasonably small amount of capital; and
(E) the Transferor has not incurred, and does not believe that it
will incur, debts that would be beyond the Transferor's ability to pay
as such debts mature;
(ix) each Seller shall have delivered to the Indenture Trustee, the
Trust Collateral Agent, the Note Insurer, the Demand Note Provider and each
Rating Agency an Officer's Certificate confirming the satisfaction of each
condition precedent specified in this Section 2.2(b) and in Section 5 of
the related Transfer Agreement and certifying that:
(A) that such sale of Subsequent Receivables by such Seller to
the Transferor on the related Subsequent Transfer Date was made in
good faith for legitimate business purposes and was not made with
intent to hinder, delay or defraud any Person to which such Seller has
been, is or will become, on or after the related Subsequent Transfer
Date, indebted;
(B) such Seller did not receive less than a reasonably equivalent
value in exchange for the sale of the Subsequent Receivables by such
Seller to the Transferor on the related Subsequent Transfer Date
pursuant to the Purchase Agreement and the related Subsequent
Assignment;
(C) such Seller 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 such Seller to the Transferor on the
related Subsequent Transfer Date pursuant to the Purchase Agreement
and the related Subsequent Assignment;
(D) such Seller 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 such Seller after such business or transaction
would be an unreasonably small amount of capital; and
(E) such Seller has not incurred, and does not believe that it
will incur, debts that would be beyond such Seller's ability to pay as
such debts mature;
(x) the Transferor shall have delivered to each Rating Agency, the
Note Insurer, the Indenture Trustee and the Trust Collateral Agent Opinions
of Counsel with respect to the transfer of the Subsequent Receivables
substantially in the form of the Opinions of Counsel delivered to each
Rating Agency, the Note Insurer, the Indenture Trustee and the Trust
Collateral Agent on the Closing Date regarding true sale,
non-consolidation, perfection, and other such matters satisfactory in form
and substance to each of the Note Insurer, the Indenture Trustee and the
Trust Collateral Agent in its sole discretion;
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(xi) the Transferor shall have taken all action required to maintain
the first priority perfected security interest (as defined in the UCC) of
the Issuer in the Trust Assets;
(xii) no selection procedures believed by the Transferor or either
Seller to be adverse to the interests of the Noteholders or the Note
Insurer shall have been utilized in selecting the Subsequent Receivables;
(xiii) the conveyance of the Subsequent Receivables shall not result
in a qualification, modification or withdrawal of the then-current ratings
of the Notes; provided that written confirmation of such ratings shall not
be required from the Rating Agencies;
(xiv) the Transferor shall have provided the Indenture Trustee and the
Trust Collateral Agent with a supplement to the Schedule of Receivables
setting forth the Subsequent Receivables to be transferred on such
Subsequent Transfer Date;
(xv) the Transferor shall have caused a firm of independent
accountants to deliver to the Indenture Trustee, the Trust Collateral Agent
and the Note Insurer written confirmation that the Receivables, including
the related Subsequent Receivables, meet the following criteria, as of the
related Subsequent Cut-off Date:
(1) the weighted average remaining term of the Receivables will
be no more than 65 months and the weighted average original term for
the Receivables will be no more than 68 months;
(2) each Receivable will have a minimum APR of 3.9%;
(3) each Receivable will have an original term of no more than 72
months;
(4) no more than 38% or 12% of the Receivables will be originated
in California or Florida, respectively;
(5) the weighted average APR for the Receivables will be greater
than or equal to 10.000%;
(6) not less than 14.05% of the aggregate Principal Balance of
the Receivables will be Premium Receivables, not less than 27.63% of
the aggregate Principal Balance of the Receivables will be Elite
Receivables, not less than 22.90% of the aggregate Principal Balance
of the Receivables will be Superior Receivables, not less than 21.15%
of the aggregate Principal Balance of the Receivables will be
Preferred Receivables and not more than 10.58% of the aggregate
Principal Balance of the Receivables will be Classic Receivables; and
(7) not more than 0.25% of the aggregate Principal Balance of the
Receivables will represent loans purchased from G.M.W., Inc. d/b/a/
Auto-torium.
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(8) not more than 54.0% of the aggregate Principal Balance of the
Receivables will represent loans to finance the purchase of used
Financed Vehicles;
(xvi) the Transferor shall satisfy the document delivery requirements
for such Subsequent Receivables as specified in Section 3.3;
(xvii) the representations and warranties made by the Transferor and
the Servicer in Sections 7.1 and 8.1, respectively, shall be true and
correct on and as of such Subsequent Transfer Date and the representations
and warranties made by the Originator with respect to each such Subsequent
Receivable being transferred to the Trust on such Subsequent Transfer Date
in Section 4 of the related Transfer Agreement and Section 3.03(b) of the
Purchase Agreement shall be true and correct as of such Subsequent Transfer
Date;
(xviii) on or before such Subsequent Transfer Date, the Transferor
shall have provided any information reasonably requested by the Rating
Agencies, the Note Insurer, the Indenture Trustee or the Trust Collateral
Agent with respect to any Subsequent Receivables;
(xix) the Custodian shall confirm that it is in possession of a Legal
File for each Subsequent Receivable identified in the supplement to the
Schedule of Receivables attached as Schedule A to the related Transfer
Agreement; and
(xx) the Servicer shall deliver the loan master file and history
information and the information required to be set forth in the form
attached hereto as Exhibit B-2 as specified in Section 4.18.
SECTION 2.3. Transfer Intended as Sale; Precautionary Security
Interest. Each conveyance to the Issuer of the property set forth in Section 2.1
and Section 2.2 above is intended as a sale (for certain non-tax purposes) free
and clear of all Liens, and it is intended that the property of the Issuer shall
not be part of the Transferor's estate in the event of the filing of a
bankruptcy petition by or against the Transferor under any bankruptcy law. In
the event, however, that notwithstanding the intent of LBAC, the Transferor and
the Issuer, any transfer under this Agreement and/or under any Transfer
Agreement is held not to be a sale, this Agreement and/or under any Transfer
Agreement shall constitute a security agreement under the UCC (as defined in the
UCC as in effect in the State of New York) and applicable law, and the
Transferor hereby grants a security interest to the Issuer in, to and under the
property described in Section 2.1 and Section 2.2 above and all proceeds
thereof, for the benefit of the Noteholders and the Note Insurer as their
interests may appear herein, for the purpose of securing the payment and
performance of the Notes and the Certificate and the repayment of amounts owed
to the Issuer from the Transferor. The Transferor hereby authorizes the Issuer
or its agents to file such financing statements and continuation statements as
the Issuer may deem advisable in connection with the security interest granted
by the Transferor pursuant to the preceding sentence.
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SECTION 2.4. Assignment by Transferor. The Transferor does hereby
transfer, assign and otherwise convey unto the Issuer, for the benefit of the
Noteholders, the Certificateholder, the Demand Note Provider and the Note
Insurer, its right to any recourse to LBAC resulting from the occurrence of a
breach of any of their respective representations and warranties contained in
Section 3.03 of the Purchase Agreement and Section 4 of each Transfer Agreement
or from the failure of LBAC to comply with its obligations pursuant to Section
5.05 of the Purchase Agreement. The provisions of this Section 2.4 are intended
to grant the Issuer a direct right against LBAC to demand performance under the
terms of the Purchase Agreement.
SECTION 2.5. Further Encumbrance of Trust Assets.
(a) Immediately upon the conveyance to the Issuer by the Transferor of any
item of the Trust Assets pursuant to Section 2.1 or Section 2.2, all right,
title and interest of the Transferor in and to such item of Trust Assets shall
terminate, and all such right, title and interest shall vest in the Issuer, in
accordance with the Trust Agreement and Sections 3802 and 3805 of the Statutory
Trust Act (as defined in the Trust Agreement).
(b) Immediately upon the vesting of the Trust Assets in the Issuer, the
Issuer shall have the sole right to pledge or otherwise encumber, such Trust
Assets. Pursuant to the Indenture, the Issuer shall grant a security interest in
the Trust Assets to the Indenture Trustee to secure its obligations under the
Notes and all amounts due and owing to the Note Insurer, the Demand Note
Provider and the Demand Note Guarantor. The Class R Certificate shall represent
the beneficial ownership interest in the Trust Assets, and the Noteholders shall
be entitled to receive payments with respect thereto as set forth herein and
pursuant to the Indenture.
(c) Following the payment in full of the Notes and all amounts due and
owing to the Note Insurer, the Demand Note Provider and the Demand Note
Guarantor have been paid in full, and the release and discharge of the
Indenture, all covenants of the Issuer under Article III of the Indenture shall,
until payment in full of the Class R Certificate, remain as covenants of the
Issuer for the benefit of the Certificateholder, enforceable by the
Certificateholder to the same extent as such covenants were enforceable by the
Noteholders prior to the discharge of the Indenture. Any rights of the Indenture
Trustee under Article III of the Indenture, following the discharge of the
Indenture, shall vest in the Certificateholder.
(d) The Trust Collateral Agent shall, at such time as no Notes or the Class
R Certificate remain outstanding, the Policy has expired in accordance with its
terms and all sums due to (i) the Note Insurer hereunder or pursuant to the
Insurance Agreement, (ii) the Indenture Trustee pursuant to the Indenture, (iii)
the Trust Collateral Agent pursuant to this Agreement and (iv) the Demand Note
Provider and/or the Demand Note Guarantor pursuant to the Demand Note, the
Demand Note Guarantee or hereunder, as applicable, have been paid, release any
remaining portion of the Trust Assets to the Transferor.
ARTICLE III
THE RECEIVABLES
SECTION 3.1. Representations and Warranties of Transferor. The
Transferor hereby makes each of the representations and warranties made by LBAC
in Section 3.03(b) of
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the Purchase Agreement and Section 4 of each Transfer Agreement with respect to
the Receivables to the same extent as if such representations and warranties
were fully set forth herein. With respect to such representations and
warranties, the Issuer shall be deemed to have relied on such representations
and warranties in acquiring the Receivables, the Note Insurer is deemed to have
relied on such representations and warranties in issuing the Policy, the Demand
Note Provider and the Demand Note Guarantor are deemed to have relied on such
representations and warranties in issuing the Demand Note and the Demand Note
Guarantee, respectively, the Indenture Trustee is deemed to have relied on such
representations and warranties in issuing the Notes, the Noteholders are deemed
to have relied on such representations and warranties in purchasing the Notes
and the Owner Trustee is deemed to have relied on such representations and
warranties in entering into the Trust Agreement. Such representations and
warranties speak as of the execution and delivery of this Agreement and as of
the Closing Date in the case of the Initial Receivables, and as of the related
Subsequent Transfer Date in the case of the Subsequent Receivables, but shall
survive the transfer and assignment of the Receivables to the Issuer and the
subsequent pledge thereof to the Indenture Trustee pursuant to the Indenture.
SECTION 3.2. Repurchase upon Breach of Representations and Warranties
of the Transferor.
(a) The Transferor, the Servicer, the Note Insurer, the Demand Note
Provider, the Custodian, the Trust Collateral Agent or the Issuer, as the case
may be, shall inform the other parties to this Agreement promptly, by notice in
writing, upon the discovery of any breach of the Transferor's representations
and warranties made pursuant to Section 3.1. As of the last day of the second
Collection Period following the discovery by the Transferor or receipt by the
Transferor of notice of such breach, unless such breach is cured by such date,
the Transferor shall have an obligation to repurchase any Receivable in which
the interests of the Noteholders, the Demand Note Provider or the Note Insurer
are materially and adversely affected by any such breach as of such date. In
consideration of and simultaneously with the repurchase of the Receivable, the
Transferor shall remit, or cause LBAC to remit, to the Collection Account the
Purchase Amount in the manner specified in Section 5.5 and the Issuer shall
execute such assignments and other documents reasonably requested by such person
in order to effect such repurchase. The sole remedies of the Issuer, the Trust
Collateral Agent, the Indenture Trustee, the Demand Note Provider or the
Noteholders with respect to a breach of representations and warranties pursuant
to Section 3.1 shall be (i) the repurchase of Receivables pursuant to this
Section, subject to the conditions contained herein, or (ii) to enforce the
obligation of LBAC to the Transferor to repurchase such Receivables or to
indemnify for any such breach pursuant to the Purchase Agreement. Neither the
Owner Trustee, the Custodian, the Trust Collateral Agent, the Demand Note
Provider nor the Indenture Trustee shall have a duty to conduct any affirmative
investigation as to the occurrence of any conditions requiring the repurchase of
any Receivable pursuant to this Section.
(b) Pursuant to Section 2.1 and Section 2.2, the Transferor conveys to the
Issuer all of the Transferor's right, title and interest in its rights and
benefits, but none of its obligations or burdens, under the Purchase Agreement
including the Transferor's rights under the Purchase Agreement and the delivery
requirements, representations and warranties and the cure or repurchase and
indemnity obligations of LBAC thereunder. The Transferor hereby represents
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and warrants to the Issuer that such assignment is valid, enforceable and
effective to permit the Issuer to enforce such obligations of LBAC and the
Transferor under the Purchase Agreement.
SECTION 3.3. Custody of Legal Files and Receivable Files. In
connection with the sale, transfer and assignment of the Receivables and the
other Transferred Assets to the Trust pursuant to Section 2.1 and Section 2.2 of
this Agreement and simultaneously with the execution and delivery of this
Agreement, the Custodian shall enter into the Custodial Agreement with the
Indenture Trustee, the Note Insurer and the Issuer, dated as of July 1, 2004,
pursuant to which the Custodian shall agree to act as custodian for the
Indenture Trustee, on behalf of the Noteholders, the Demand Note Provider and
the Note Insurer, of the following documents or instruments in its possession on
or before the Closing Date (with respect to each Initial Receivable) or the
third Business Day immediately preceding the related Subsequent Transfer Date
(with respect to each Subsequent Receivable), as applicable:
(i) a copy of the fully executed original of the Receivable with a
copy of the fully executed assignment from the related Dealer to the
Originator (together with copies of any agreements modifying the
Receivable, including, without limitation, any extension agreements);
(ii) a copy of the original credit application fully executed by the
Obligor;
(iii) a copy of the Lien Certificate or Title Package, as applicable;
(iv) all other documents listed on the Documentation Checklist in
effect on the Cutoff Date or the related Subsequent Cutoff Date, as
applicable, relating to such Receivable; and
(v) any and all other documents that the Servicer or the Originator
shall keep on file, in accordance with its customary procedures, relating
to a Receivable, an Obligor or a Financed Vehicle;
provided, however that the Receivable Files shall contain a copy of
those documents the original of which constitutes a part of the Legal File.
SECTION 3.4. Legal File Deficiencies. The Custodian shall hold the
Legal Files subject to the terms and conditions of the Custodial Agreement. If
the Custodian finds during its review of the Legal Files required by the
Custodial Agreement or at any time thereafter that a Legal File for a Receivable
has not been received or that any of the documents referred to in the definition
of the term "Legal File" are not contained in a Legal File or, if applicable,
the related Dealer is not listed on the Dealer Title Addendum, the Custodian
shall promptly inform the Trust Collateral Agent, LBAC, the Transferor, the
Back-up Servicer and the Note Insurer promptly, in writing, of the failure to
receive a Legal File with respect to such Receivable (or of the failure of any
of the aforementioned documents to be included in the Legal File or the failure
of the related Dealer to be so listed) (it being understood that the Custodian's
obligation to review the contents of any Legal File and the Dealer Title
Addendum shall be limited as set forth in the Custodial Agreement). 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
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the purchase of the Receivable, LBAC shall remit the Purchase Amount, in the
manner specified in Section 5.5. The sole remedy of the Indenture Trustee, the
Trust Collateral Agent, the Issuer or the Noteholders with respect to a breach
pursuant to this Section 3.4 shall be to require LBAC to purchase the
Receivables pursuant to this Section 3.4. Upon receipt of the Purchase Amount
and written instructions from the Servicer, the Trust Collateral Agent shall
cause the Custodian to release to LBAC or its designee the related Legal File
and shall execute and deliver all reasonable instruments of transfer or
assignment, without recourse, as are prepared by LBAC and delivered to the Trust
Collateral Agent and are necessary to vest in LBAC or such designee the Issuer's
right, title and interest in the Receivable. On the date which is 90 days
following the Closing Date (with respect to the Initial Receivables) or the
related Subsequent Transfer Date (with respect to the Subsequent Receivables),
as applicable, or, if such date is not a Business Day, on the next succeeding
Business Day, the Custodian shall inform LBAC and the other parties to this
Agreement and the Note Insurer of any Receivable for which the related Legal
File on such date does not include a Lien Certificate, and LBAC shall repurchase
any such Receivable as of the last day of the Collection Period in which the
date, which is 150 days following the Closing Date (with respect to the Initial
Receivables) or the related Subsequent Transfer Date (with respect to the
Subsequent Receivables), as applicable, occurs, if the related Legal File does
not include a Lien Certificate as of the close of business on such 150th day. In
consideration of the purchase of such Receivable, LBAC shall remit the Purchase
Amount in the manner specified in Section 5.5. The Transferor shall have no
obligation to repurchase any Receivable upon a breach pursuant to this Section
3.4. The Transferor shall have no liability for any action taken or omitted to
be taken by LBAC pursuant to this Section 3.4.
SECTION 3.5. Access to Receivable Files; Servicer's Duties with
Respect to Receivable Files.
(a) The Servicer shall, upon reasonable notice, permit the Originator, the
Trust Collateral Agent, the Transferor, the Issuer, the Demand Note Provider and
the Note Insurer access to the Receivable Files at all reasonable times, upon
reasonable notice and during the Servicer's normal business hours. In addition,
the Servicer shall provide such access to any Noteholder upon reasonable notice
at all reasonable times during the Servicer's normal business hours in cases
where the Noteholders shall be required by applicable statutes or regulations to
review such documentation; provided, however, that the Servicer shall be
entitled to rely upon an Opinion of Counsel as to such fact. In each case, such
access shall be afforded without charge but only upon reasonable request. Each
Noteholder shall be deemed to have agreed by its acceptance of a Note to hold in
confidence all Confidential Information in accordance with the Federal Financial
Privacy Law and, to the extent more exacting, its then customary procedures;
provided that nothing herein shall prevent any Noteholder from delivering copies
of any financial statements and other documents whether or not constituting
Confidential Information, and disclosing other information, whether or not
Confidential Information, to (i) its directors, officers, employees, agents and
professional consultants, (ii) any other institutional investor that holds
Notes, (iii) any prospective institutional investor transferee in connection
with the contemplated transfer of a Note or any part thereof or participation
therein who is subject to confidentiality arrangements at least substantially
similar hereto, (iv) any governmental authority, (v) the National Association of
Insurance Commissioners or any similar organization, (vi) any nationally
recognized rating agency in connection with the rating of the Notes by such
agency or (vii) any other Person to which such delivery or disclosure may be
necessary or
13
appropriate (a) in compliance with any applicable law, rule, regulation or
order, (b) in response to any subpoena or other legal process, (c) in connection
with any litigation to which such Noteholder is a party, (d) in order to enforce
such Person's investment in any Note or (e) otherwise, in accordance with the
Federal Financial Privacy Law; provided, that, prior to any such disclosure,
such Noteholder shall inform each such party that receives Confidential
Information of the foregoing requirements and shall use its commercially
reasonable best efforts to cause such party to comply with such requirements.
(b) Upon instruction from the Trust Collateral Agent, the Servicer shall
release any Receivable Files to the Trust Collateral Agent, the Trust Collateral
Agent's agent or the Trust Collateral Agent's designee, as the case may be, at
such place or places as the Trust Collateral Agent may designate, as soon as
practicable; provided, however, that such Receivable Files may be, at the
discretion of the Servicer, in the form of electronic files or reproduced copies
of such electronic files. The Servicer shall not be responsible for the
safekeeping of such Receivable Files following such release to the Trust
Collateral Agent unless and until such Receivable Files are returned to the
Servicer.
SECTION 3.6. Issuer's Certificate. Within five Business Days after
each Payment Date on which Receivables shall be assigned to LBAC or the
Servicer, as applicable, pursuant to this Agreement, based on amounts deposited
to the Collection Account, notices received pursuant to this Agreement and the
information contained in the Servicer's Certificate for the related Collection
Period, identifying the Receivables purchased by LBAC pursuant to Section 3.4 or
purchased by the Servicer pursuant to Section 4.7, the Issuer shall execute an
Issuer's Certificate (in the form of Exhibit A-1 or A-2, as applicable), and
shall deliver such Issuer's Certificate, accompanied by a copy of the Servicer's
Certificate for such Collection Period, to LBAC or the Servicer, as the case may
be, with a copy to the Note Insurer and the Demand Note Provider. The Issuer's
Certificate submitted with respect to such Payment Date shall operate, as of
such Payment Date, as an assignment, without recourse, representation or
warranty, to LBAC or the Servicer, as the case may be, of all the Issuer's
right, title, and interest in and to such repurchased Receivable, and all
security and documents relating thereto, such assignment being an assignment
outright and not for security.
ARTICLE IV
ADMINISTRATION AND SERVICING OF RECEIVABLES
SECTION 4.1. Duties of the Servicer. The Servicer, as agent for the
Issuer (to the extent provided herein), and in such capacity, shall manage,
service, administer and make collections on the Receivables with reasonable
care, using that degree of skill and attention customary and usual for
institutions which service motor vehicle retail installment contracts similar to
the Receivables and, to the extent more exacting, that the Servicer exercises
with respect to all comparable automotive receivables that it services for
itself or others. The Servicer's duties shall include collection and posting of
all payments, responding to inquiries of Obligors on such Receivables,
investigating delinquencies, sending payment statements to Obligors, reporting
tax information to Obligors, accounting for collections, furnishing monthly and
annual statements to the Trust Collateral Agent, the Indenture Trustee, the
Back-up Servicer,
14
the Demand Note Provider and the Note Insurer with respect to payments and
complying with the terms of the Lock-Box Agreement. The Servicer shall also
administer and enforce all rights and responsibilities of the holders of the
Receivables provided for in the Dealer Agreements to the extent that such Dealer
Agreements relate to the Receivables, the Financed Vehicles or the Obligors.
Without limiting the generality of the foregoing, and subject to the servicing
standards set forth in this Agreement, the Servicer is authorized and empowered
by the Trust Collateral Agent to execute and deliver, on behalf of itself, the
Issuer, the Noteholders, or any of them, any and all instruments of satisfaction
or cancellation, or partial or full release or discharge, and all other
comparable instruments, with respect to such Receivables or to the Financed
Vehicles securing such Receivables and/or the certificates of title or other
evidence of ownership with respect to such Financed Vehicles; provided, however,
that notwithstanding the foregoing, the Servicer shall not release an Obligor
from payment of any unpaid amount under any Receivable or waive the right to
collect the unpaid balance of any Receivable from the Obligor, except (i)
pursuant to an order from a court of competent jurisdiction, (ii) in accordance
with its customary procedures or (iii) in accordance with Section 4.2. If the
Servicer shall commence a legal proceeding to enforce a Receivable, the Issuer
shall thereupon be deemed to have automatically assigned, solely for the purpose
of collection, such Receivable to the Servicer. If in any enforcement suit or
legal proceeding it shall be held that the Servicer may not enforce a Receivable
on the ground that it shall not be a real party in interest or a holder entitled
to enforce such Receivable, the Trust Collateral Agent shall, at the Servicer's
expense and written direction, take steps to enforce such Receivable, including
bringing suit in its name or the name of the Noteholders. The Servicer shall
prepare and furnish and the Trust Collateral Agent shall execute, any powers of
attorney and other documents reasonably necessary or appropriate to enable the
Servicer to carry out its servicing and administrative duties hereunder.
SECTION 4.2. Collection and Allocation of Receivable Payments.
Consistent with the standards, policies and procedures required by this
Agreement, the Servicer shall make reasonable efforts to collect all payments
called for under the terms and provisions of the Receivables as and when the
same shall become due and shall follow such collection procedures as it follows
with respect to all comparable automotive receivables that it services for
itself or others; provided, however, that the Servicer shall notify each Obligor
prior to the Closing Date, in the case of the Initial Receivables, and prior to
the related Subsequent Transfer Date, in the case of the Subsequent Receivables,
to make all payments with respect to the Receivables to the Lock-Box and shall
make reasonable efforts to cause Obligors to make all such payments to such
Lock-Box. The Servicer will provide each Obligor with a monthly statement in
order to notify such Obligors to make payments directly to the Lock-Box. The
Servicer shall allocate collections between principal and interest in accordance
with the customary servicing procedures it follows with respect to all
comparable automotive receivables that it services for itself or others and in
accordance with the terms of this Agreement. The Servicer, for so long as LBAC
is the Servicer, may grant extensions, rebates or adjustments on a Receivable in
accordance with the customary servicing procedures it follows with respect to
all comparable automotive receivables that it services for itself which shall
not modify the original due date of the Scheduled Receivable Payments on any
Receivable other than (a) in accordance with the Payment Deferment and Due Date
Change Policies, (b) in connection with a Deficient Liquidated Receivable, (c)
with the prior written consent of the Note Insurer, with respect to any other
Liquidated Receivable or (d) as otherwise required by applicable law.
Notwithstanding anything contained herein to the contrary, the Servicer may, at
its option, repurchase up to 25
15
Receivables and shall remit the Purchase Amount, in the manner specified in
Section 5.5 hereof and any such repurchased Receivable (an "Optional Repurchase
Receivable") shall not be deemed to be a Defaulted Receivable or a Liquidated
Receivable. The Servicer shall not modify the Payment Deferment and Due Date
Change Policies without the prior written consent of the Note Insurer. The
Servicer shall notify Xxxxx'x of any modification to the Payment Deferment and
Due Date Change Policies. If the Servicer is not LBAC, the Servicer may not make
any extension on a Receivable without the prior written consent of the Note
Insurer. The Servicer may in its discretion waive any late payment charge or any
other fees that may be collected in the ordinary course of servicing a
Receivable if it would forgo collection of such amount in accordance with its
customary procedures. Notwithstanding anything to the contrary contained herein,
the Servicer (i) shall not agree to any alteration of the interest rate on any
Receivable or of the amount of any Scheduled Receivable Payment on any
Receivable, except (a) as otherwise required by applicable law, (b) with respect
to a Deficient Liquidated Receivable and (c) with the prior written consent of
the Note Insurer, with respect to any other Liquidated Receivable, and (ii)
shall not agree to any modification that would result in a material adverse
effect on a Receivable (other than a Deficient Liquidated Receivable and, with
the prior written consent of the Note Insurer, any other Liquidated Receivable)
or the interest therein of the Issuer, the Noteholders, the Demand Note Provider
or the Note Insurer other than a modification in accordance with the Payment
Deferment and Due Date Change Policies.
On each Business Day, the Servicer shall prepare and transmit to the
Trust Collateral Agent and the Back-up Servicer in a form acceptable to the
Trust Collateral Agent and the Back-up Servicer, a record setting forth the
aggregate amount of collections on the Receivables processed by the Servicer on
the second preceding Business Day.
SECTION 4.3. Realization upon Receivables.
(a) On behalf of the Issuer, the Noteholders, the Demand Note Provider and
the Note Insurer, the Servicer shall use its best efforts, consistent with the
servicing procedures set forth herein, to repossess or otherwise convert the
ownership of the Financed Vehicle securing any Receivable as to which the
Servicer shall have determined eventual payment in full is unlikely. The
Servicer shall commence efforts to repossess or otherwise convert the ownership
of a Financed Vehicle on or prior to the date that an Obligor has not paid at
least 95% of a Scheduled Receivable Payment thereon for 120 consecutive days or
more; provided, however, that the Servicer may elect not to commence such
efforts within such time period if in its good faith judgment it determines
either that it would be impracticable to do so or that the proceeds ultimately
recoverable with respect to such Receivable would be increased by forbearance.
The Servicer shall follow such customary and usual practices and procedures as
it shall deem necessary or advisable in its servicing of automotive receivables,
consistent with the standards of care set forth in Section 4.1, which may
include reasonable efforts to realize upon any recourse to Dealers and selling
the Financed Vehicle at public or private sale. The foregoing shall be subject
to the provision that, in any case in which the Financed Vehicle shall have
suffered damage, the Servicer shall not expend funds in connection with the
repair or the repossession of such Financed Vehicle unless it shall determine in
its discretion that such repair and/or repossession will increase the proceeds
ultimately recoverable with respect to such Receivable by an amount greater than
the amount of such expenses. All Liquidation Proceeds and Recoveries received
shall be remitted directly by the Servicer to the Collection Account, without
16
deposit into any intervening account as soon as practicable, but in no event
later than the second Business Day after receipt thereof.
(b) The Servicer agrees that within 45 days from the Closing Date or the
related Subsequent Transfer Date, as applicable, it shall make such filings and
effect such notices as are necessary under Section 9-324(b) and 9-324(c) of the
New York UCC (or comparable section of the UCC of any applicable state) to
preserve the Trust's interest (or security interest, as the case may be) in any
repossessed Financed Vehicles delivered for sale to Dealers.
(c) Consistent with the standards, policies and procedures required by this
Agreement, the Servicer may use its best efforts to locate a third party
purchaser that is not affiliated with the Servicer, the Transferor or the Issuer
to purchase from the Issuer any Receivable that has become more than 60 days
delinquent, and shall have the right to direct the Issuer to sell any such
Receivable to the third-party purchaser; provided, that the Note Insurer and the
Demand Note Provider shall each have the right of first refusal to purchase such
Receivables (with the Note Insurer winning any tie bid); provided, further, that
no more than 20% of the initial number of Initial Receivables and the Subsequent
Receivables in the pool may be sold by the Issuer pursuant to this Section
4.3(c) in the aggregate; provided further, that the Servicer may elect not to
direct the Issuer to sell a Receivable that has become more than 60 days
delinquent if in its good faith judgment the Servicer determines that the
proceeds ultimately recoverable with respect to such Receivable would be
increased by forbearance. In selecting Receivables to be sold to a third party
purchaser pursuant to this Section 4.3(c), the Servicer shall use commercially
reasonable efforts to locate purchasers for the most delinquent Receivables
first. In any event, the Servicer shall not use any procedure in selecting
Receivables to be sold to third party purchasers which is materially adverse to
the interest of the Noteholders, the Demand Note Provider or the Note Insurer.
The Issuer shall sell each Sold Receivable for the greatest market price
possible; provided, however, that aggregate Sale Amounts received by the Issuer
for all Receivables sold to a single third-party purchaser on a single date must
be at least equal to the sum of the Minimum Sale Prices for all such
Receivables. The Servicer shall remit or cause the third-party purchaser to
remit all sale proceeds from the sale of Receivables directly to the Collection
Account without deposit into any intervening account as soon as practicable, but
in no event later than the Business Day after receipt thereof.
(d) 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 paragraph (b) 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 9-324(b) and 9-324 (c) of the New York
UCC (or comparable section of the applicable UCC) to preserve the Trust's
ownership interest (or security interest, as the case may be) in any such
repossessed Financed Vehicle.
SECTION 4.4. Physical Damage Insurance; Other Insurance.
(a) The Servicer shall continue to maintain the VSI Policy or another
collateral protection insurance policy providing physical damage insurance
coverage to at least the same
17
extent as the VSI Policy with respect to all Financed Vehicles, unless the
Servicer shall have received the prior written consent of the Note Insurer (and
if a draw has been made on the Demand Note pursuant to Section 5.12(b) hereof at
any time, with the prior written consent of the Demand Note Provider) allowing
the Servicer to no longer maintain any of such policies. The Servicer, in
accordance with the servicing procedures and standards set forth herein, shall
require that (i) each Obligor shall have obtained insurance covering the
Financed Vehicle, as of the date of the execution of the Receivable, insuring
against loss and damage due to fire, theft, transportation, collision and other
risks generally covered by comprehensive and collision coverage and each
Receivable requires the Obligor to maintain such physical loss and damage
insurance naming LBAC and its successors and assigns as an additional insured,
(ii) each Receivable that finances the cost of premiums for credit life and
credit accident and health insurance is covered by an insurance policy or
certificate naming LBAC as policyholder (creditor) and (iii) as to each
Receivable that finances the cost of an extended service contract, the
respective Financed Vehicle which secures the Receivable is covered by an
extended service contract.
(b) To the extent applicable, the Servicer shall not take any action which
would result in noncoverage under any of the insurance policies referred to in
Section 4.4(a) which, but for the actions of the Servicer, would have been
covered thereunder. The Servicer, on behalf of the Trust Collateral Agent, shall
take such reasonable action as shall be necessary to permit recovery under any
of the foregoing insurance policies. Any amounts collected by the Servicer under
any of the foregoing insurance policies shall be deposited in the Collection
Account pursuant to Section 5.2. In the event of the cancellation or non-renewal
of the insurance referred to in Section 4.4(a)(i) above with respect to any
Financed Vehicle, the Servicer will endeavor, in accordance with its customary
servicing standards and procedures, to cause the related Obligor to obtain a
replacement insurance policy. In no event shall the Servicer be required to
force place insurance on a Financed Vehicle.
SECTION 4.5. Maintenance of Security Interests in Financed Vehicles.
(a) Consistent with the policies and procedures required by this Agreement,
the Servicer shall take such steps as are necessary to maintain perfection of
the security interest created in the name of LBAC by each Receivable in the
related Financed Vehicle, including, but not limited to, obtaining the execution
by the Obligors and the recording, registering, filing, re-recording,
re-registering and refiling of all security agreements, financing statements and
continuation statements or instruments as are necessary to maintain the security
interest granted by Obligors under the respective Receivables. The Trust
Collateral Agent hereby authorizes the Servicer to take such steps as are
necessary to re-perfect or continue the perfection of such security interest on
behalf of the Issuer in the event of the relocation of a Financed Vehicle or for
any other reason.
(b) Upon the occurrence of an Insurance Agreement Event of Default, the
Note Insurer may (so long as a Note Insurer Default shall not have occurred and
be continuing) instruct in writing the Trust Collateral Agent and the Servicer
to take or cause to be taken, or, if a Note Insurer Default shall have occurred
and be continuing, upon the occurrence of a Servicer Termination Event, either
the Trust Collateral Agent or the Trust Collateral Agent acting at the written
direction of the Majorityholders shall direct the Servicer to take and the
Servicer shall
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take or cause to be taken such action as may, in the opinion of counsel to the
Note Insurer (or, if a Note Insurer Default shall have occurred and be
continuing, the Trust Collateral Agent), which opinion shall not be an expense
of the Note Insurer or the Trust Collateral Agent (as applicable), be necessary
to perfect or reperfect the security interests in the Financed Vehicles securing
the Receivables in the name of the Trust Collateral Agent on behalf of the
Issuer by amending the title documents of such Financed Vehicles to reflect the
security interest of the Trust Collateral Agent in the related Financed Vehicles
or by such other reasonable means as may, in the opinion of counsel to the Note
Insurer or the Trust Collateral Agent (as applicable), which opinion shall not
be an expense of the Note Insurer or the Trust Collateral Agent, be necessary or
prudent. The Servicer hereby agrees to pay all expenses related to such
perfection or reperfection and to take all action necessary therefor. In
addition, prior to the occurrence of an Insurance Agreement Event of Default,
the Note Insurer may (unless a Note Insurer Default shall have occurred and be
continuing) instruct in writing the Trust Collateral Agent and the Servicer to
take or cause to be taken such action as may, in the opinion of counsel to the
Note Insurer, be necessary to perfect or reperfect the security interest in the
Financed Vehicles securing the Receivables in the name of the Trust Collateral
Agent on behalf of the Issuer, including by amending the title documents of such
Financed Vehicles to reflect the security interest of the Trust Collateral Agent
in the related Financed Vehicle or by such other reasonable means as may, in the
opinion of counsel to the Note Insurer, be necessary or prudent; provided,
however, that if the Note Insurer requests that the title documents be amended
prior to the occurrence of an Insurance Agreement Event of Default, the
out-of-pocket expenses of the Servicer or the Trust Collateral Agent in
connection with such action shall be reimbursed to the Servicer or the Trust
Collateral Agent, as applicable, by the Note Insurer.
In addition to the foregoing, in the event any of the Servicer
Termination Events described in Section 9.1(iii) or (iv) shall have occurred, or
in the event LBAC shall have been removed or replaced as Servicer pursuant to
Section 8.3, Section 8.5, or otherwise pursuant to Section 9.1, then LBAC and/or
the Servicer shall immediately cause each Lien Certificate for a Financed
Vehicle to be marked to reflect the security interest of the Trust Collateral
Agent in the Financed Vehicle at the expense of LBAC.
The Servicer hereby makes, constitutes and appoints the Trust
Collateral Agent acting through its duly appointed officers or any of them, its
true and lawful attorney, for it and in its name and on its behalf, for the sole
and exclusive purpose of authorizing said attorney to execute and deliver as
attorney-in-fact or otherwise, any and all documents and other instruments and
to do or accomplish all other acts or things necessary or appropriate to show
the Trust Collateral Agent as lienholder or secured party on the related Lien
Certificates relating to a Financed Vehicle.
SECTION 4.6. Additional Covenants of Servicer. The Servicer hereby
makes the following covenants to the other parties hereto, the Demand Note
Provider and the Note Insurer on which the Trust Collateral Agent shall rely in
accepting the Receivables in trust, on which the Note Insurer shall rely in
issuing the Policy and on which the Demand Note Provider shall rely in issuing
the Demand Note: (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
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Noteholders, the Issuer, the Demand Note Provider or the Note Insurer in such
Receivables, (iii) the Servicer shall not modify a Receivable, except in
accordance with Section 4.2, (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 and (v) the Servicer shall not modify any Receivable in
accordance with the Payment Deferment and Due Date Change Policies, if as a
result of such modification, there would be negative amortization of such
Receivable.
SECTION 4.7. Purchase of Receivables Upon Breach. The Servicer, the
Transferor, the Issuer or the Trust Collateral Agent shall inform the other
parties hereto, the Demand Note Provider and the Note Insurer promptly, in
writing, upon the discovery by the Servicer, the Transferor, the Issuer or a
Responsible Officer of the Trust Collateral Agent or the Custodian, as the case
may be, of any breach of the provisions of Section 4.2 relating to modifications
of the Receivables, or any breach of Sections 4.4, 4.5 or 4.6; provided,
however, that the failure to give such notice shall not affect any obligation of
the Servicer hereunder. Unless the breach shall have been cured by the last day
of the second Collection Period following such discovery by or notice to the
Servicer of such breach, the Servicer shall purchase any Receivable with respect
to which such breach has a material adverse effect on such Receivable or the
interest therein of the Issuer, the Noteholders, the Demand Note Provider or the
Note Insurer. In consideration of the purchase of such Receivable, the Servicer
shall remit the Purchase Amount in the manner specified in Section 5.5. The sole
remedy of the Trust Collateral Agent, the Issuer, the Note Insurer, the Demand
Note Provider or the Noteholders with respect to a breach of the provisions of
Section 4.2 relating to modifications of the Receivables or any breach of
Sections 4.4, 4.5 or 4.6 shall be to require the Servicer to repurchase
Receivables pursuant to this Section 4.7; provided, however, that the Servicer
shall indemnify the Trust Collateral Agent, the Indenture Trustee, the
Collateral Agent, the Back-up Servicer, the Custodian, the Transferor, the Note
Insurer, the Demand Note Provider, the Issuer and the Noteholders and each of
their respective officers, employees, directors, agents and representatives
against all costs, expenses, losses, damages, claims and liabilities, including
reasonable fees and expenses of counsel, which may be asserted against or
incurred by any of them as a result of third party claims arising out of the
events or facts giving rise to such breach. The Transferor shall have no
obligation to repurchase the Receivables upon a breach of the provisions of
Section 4.2 relating to modifications of the Receivables, or any breach of
Sections 4.4, 4.5 or 4.6. The Transferor shall have no liability for actions
taken or omitted to be taken by the Servicer pursuant to this Section 4.7.
SECTION 4.8. Servicing Fee. The Servicing Fee for the initial Payment
Date shall equal the product of (a) one-twelfth of the Servicing Fee Rate and
(b) the Original Pool Balance. Thereafter, the Servicing Fee for a Payment Date
shall equal the product of (i) one-twelfth of the Servicing Fee Rate and (ii)
the Pool Balance as of the last day of the second preceding Collection Period.
The Servicing Fee shall in addition include all late fees, deferment fees,
prepayment charges including, in the case of a Precomputed Receivable that is
prepaid in full, to the extent not required by law to be remitted to the related
Obligor, the difference between the amounts received upon prepayment in full of
such Precomputed Receivable and the then outstanding Principal Balance of such
Precomputed Receivable and accrued interest thereon (calculated pursuant to the
Simple Interest Method) and other administrative fees or similar
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charges allowed by applicable law with respect to Receivables, collected (from
whatever source) on the Receivables.
SECTION 4.9. Servicer's Certificate.
(a) By 10:00 a.m., New York City time, on each Determination Date, the
Servicer shall deliver to the Issuer, the Trust Collateral Agent, the Indenture
Trustee, the Back-up Servicer, the Collateral Agent, the Transferor, the Note
Insurer, the Demand Note Provider and the Rating Agencies, a Servicer's
Certificate containing all information necessary to make the payments pursuant
to Section 5.6 (including, if required, the amount of withdrawals from the
Spread Account, the Demand Note Spread Account, if any, and draws on the Demand
Note, if any), for the Collection Period preceding the date of such Servicer's
Certificate and all information necessary for the Trust Collateral Agent to send
statements to Noteholders, the Demand Note Provider and the Note Insurer
pursuant to Section 5.7. Receivables to be purchased by the Servicer or to be
purchased by LBAC shall be identified by the Servicer by account number with
respect to such Receivable (as specified in the Schedule of Receivables).
(b) In addition to the information required by Section 4.9(a), the Servicer
shall include in the copy of the Servicer's Certificate delivered to the Note
Insurer and the Demand Note Provider (i) the Average Delinquency Ratio, the
Cumulative Default Rate, and the Cumulative Loss Rate (as such terms are defined
in the Spread Account Agreement), (ii) whether any Trigger Event (as such term
is defined in the Spread Account Agreement) has occurred as of such
Determination Date, (iii) whether any Trigger Event that may have occurred as of
a prior Determination Date is Deemed Cured (as defined in the Spread Account
Agreement) as of such Determination Date, (iv) whether to the knowledge of the
Servicer an Insurance Agreement Event of Default has occurred, (v) the number
and percentage of Receivables modified in accordance with the Loss Mitigation
Program and the General Payment Deferment Policy as set forth on Exhibit D
hereto and (vi) the Average Delinquency Ratio, the Cumulative Default Rate, and
the Cumulative Loss Rate (as such terms are defined in the Spread Account
Agreement), with respect to such modified Receivables. The Servicer shall in
addition give notice of the occurrence of any Trigger Event or any Insurance
Agreement Event of Default to each Rating Agency.
SECTION 4.10. Annual Statement as to Compliance; Notice of Default.
(a) The Servicer shall deliver to the Issuer, the Trust Collateral Agent,
the Indenture Trustee, the Back-up Servicer, the Collateral Agent, the
Transferor, the Issuer, the Demand Note Provider and the Note Insurer, on or
before March 31 of each year beginning March 31, 2005, an Officer's Certificate,
dated as of December 31 of the preceding calendar year, stating that (i) a
review of the activities of the Servicer during such preceding calendar year and
of its performance under this Agreement has been made under such officer's
supervision and (ii) to the best of such officer's knowledge, based on such
review, the Servicer has fulfilled all its obligations under this Agreement
throughout such year, or, if there has been a default in the fulfillment of any
such obligation, specifying each such default known to such officer and the
nature and status thereof. The Trust Collateral Agent shall send a copy of such
certificate to the Rating Agencies.
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(b) The Servicer shall deliver to the Issuer, the Trust Collateral Agent,
the Indenture Trustee, the Back-up Servicer, the Collateral Agent, the
Transferor, the Demand Note Provider, the Note Insurer and the Rating Agencies,
promptly after having obtained knowledge thereof, but in no event later than two
(2) Business Days after having obtained such knowledge, written notice in an
Officer's Certificate of any event which with the giving of notice or lapse of
time, or both, would become a Servicer Termination Event under Section 9.1.
SECTION 4.11. Annual Independent Certified Public Accountant's Report.
The Servicer shall cause a firm of nationally recognized independent certified
public accountants, who may also render other services to the Servicer or to the
Transferor, to deliver to the Issuer, the Trust Collateral Agent, the Indenture
Trustee, the Back-up Servicer, the Collateral Agent, the Demand Note Provider,
the Noteholders, the Note Insurer and each Rating Agency on or before April 30
of each year beginning April 30, 2005, a report dated as of December 31 of the
preceding calendar year and reviewing the Servicer's activities during such
preceding calendar year, addressed to the Board of Directors of the Servicer,
and to the Trust Collateral Agent, the Back-up Servicer, the Collateral Agent,
the Issuer, the Transferor, the Demand Note Provider and the Note Insurer, to
the effect that such firm has audited the financial statements of the Servicer
and issued its report therefor and that such audit (a) was made in accordance
with generally accepted auditing standards, and accordingly included such tests
of the accounting records and such other auditing procedures as such firm
considered necessary in the circumstances; (b) included tests relating to
automotive loans serviced for others in accordance with the requirements of the
Uniform Single Attestation Program for Mortgage Bankers (the "Program"), to the
extent the procedures in the Program are applicable to the servicing obligations
set forth in this Agreement; (c) included an examination of the delinquency and
loss statistics relating to the Servicer's portfolio of automobile, van, sport
utility vehicle and light duty truck installment sales contracts; and (d) except
as described in the report, disclosed no exceptions or errors in the records
relating to automobile, van, sport utility vehicle and light duty truck loans
serviced for others that, in the firm's opinion, the Program requires such firm
to report. The accountant's report shall further state that (1) a review in
accordance with agreed upon procedures was made of three randomly selected
Servicer's Certificates; (2) except as disclosed in the report, no exceptions or
errors in the Servicer's Certificates were found; and (3) the delinquency and
loss information relating to the Receivables contained in the Servicer's
Certificates were found to be accurate.
The report will also indicate that the firm is independent of the
Servicer within the meaning of the Code of Professional Ethics of the American
Institute of Certified Public Accountants.
In the event such independent certified public accountants require the
Indenture Trustee to agree to the procedures to be performed by such firm in any
of the reports required to be prepared pursuant to this Section 4.11, the
Servicer shall direct the Indenture Trustee in writing to so agree; it being
understood and agreed that the Indenture Trustee will deliver such letter of
agreement in conclusive reliance upon the direction of the Servicer, and the
Indenture Trustee has not made any independent inquiry or investigation as to,
and shall have no obligation or liability in respect of, the sufficiency,
validity or correctness of such procedures.
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SECTION 4.12. Servicer Expenses. The Servicer shall be required to pay
all expenses incurred by it in connection with its activities under this
Agreement (including taxes imposed on the Servicer, expenses incurred by the
Servicer in connection with payments and reports to Noteholders, the Trust
Collateral Agent, the Demand Note Provider and the Note Insurer and all other
fees and expenses of the Issuer including taxes levied or assessed against the
Issuer, and claims against the Issuer in respect of indemnification not
expressly stated under this agreement to be for the account of the Issuer).
SECTION 4.13. Retention and Termination of Servicer. The Servicer
hereby covenants and agrees to act as such under this Agreement for an initial
term, commencing on the Closing Date and ending on September 30, 2004 which term
shall be extendible by the Note Insurer for successive quarterly terms ending on
each successive December 31, March 31, June 30 and September 30 (or, pursuant to
revocable written standing instructions from time to time to the Servicer and
the Trust Collateral Agent, for any specified number of terms greater than one),
until the termination of the Issuer. Each such notice (including each notice
pursuant to standing instructions, which shall be deemed delivered at the end of
successive quarterly terms for so long as such instructions are in effect) (a
"Servicer Extension Notice") shall be delivered by the Note Insurer to the Trust
Collateral Agent and the Servicer. The Servicer hereby agrees that, as of the
date hereof and upon its receipt of any such Servicer Extension Notice, the
Servicer shall become bound, for the initial term beginning on the date hereof
and for the duration of the term covered by such Servicer Extension Notice, to
continue as the Servicer subject to and in accordance with the other provisions
of this Agreement. Until such time as a Note Insurer Default shall have occurred
and be continuing, the Trust Collateral Agent agrees that if as of the fifteenth
day prior to the last day of any term of the Servicer, the Trust Collateral
Agent shall not have received any Servicer Extension Notice from the Note
Insurer, the Trust Collateral Agent will, within five days thereafter, give
written notice of such non-receipt to the Note Insurer, the Demand Note
Provider, the Back-up Servicer (or any alternate successor servicer appointed by
the Note Insurer pursuant to Section 8.5) and the Servicer and the Servicer's
terms shall not be extended unless a Servicer Extension Notice is received on or
before the last day of such term. Following a Note Insurer Default, this Section
4.13 shall no longer apply and the Servicer shall be deemed to be retained for
the term of this Agreement, unless otherwise removed pursuant to Article 9.
SECTION 4.14. Access to Certain Documentation and Information
Regarding Receivables. The Servicer shall provide to representatives of the
Indenture Trustee, the Trust Collateral Agent, the Collateral Agent, the Back-up
Servicer, the Transferor, the Issuer, the Demand Note Provider and the Note
Insurer reasonable access to documentation and computer systems and information
regarding the Receivables and shall provide such access to Noteholders in such
cases where the Noteholders are required by applicable law or regulation to
review such documentation. In each case, such access shall be afforded without
charge but only upon reasonable request and during normal business hours.
Nothing in this Section 4.14 shall derogate from the obligation of the Servicer
to observe any applicable law prohibiting disclosure of information regarding
the Obligors, and the failure of the Servicer to provide access as provided in
this Section 4.14 as a result of such obligation shall not constitute a breach
of this Section 4.14.
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SECTION 4.15. Verification of Servicer's Certificate.
(a) On or before the fifth Business Day of each month, the Servicer will
deliver to the Trust Collateral Agent and the Back-up Servicer a computer
diskette (or other electronic transmission) in a format acceptable to the Trust
Collateral Agent and the Back-up Servicer containing such information with
respect to the Receivables as of the close of business on the last day of the
preceding Collection Period as is necessary for preparation of the Servicer's
Certificate. The Back-up Servicer shall use such computer diskette (or other
electronic transmission) to verify the information specified in Section
4.15(b)(iii) contained in the Servicer's Certificate delivered by the Servicer,
and the Back-up Servicer shall certify to the Note Insurer and the Demand Note
Provider that it has verified the Servicer's Certificate in accordance with this
Section 4.15 and shall notify the Servicer, the Note Insurer, the Demand Note
Provider and the Trust Collateral Agent of any discrepancies, in each case, on
or before the related Deficiency Claim Date. In the event that the Back-up
Servicer reports any discrepancies, the Servicer and the Back-up Servicer shall
attempt to reconcile such discrepancies prior to the related Deficiency Claim
Date, but in the absence of a reconciliation, the Servicer's Certificate shall
control for the purpose of calculations and payments with respect to the related
Payment Date. In the event that the Back-up Servicer and the Servicer are unable
to reconcile discrepancies with respect to a Servicer's Certificate by the
related Payment Date, (i) the Back-up Servicer will notify the Note Insurer, the
Demand Note Provider and the Trust Collateral Agent, and (ii) the Servicer shall
cause a firm of independent certified public accountants, at the Servicer's
expense, to audit the Servicer's Certificate and, prior to the fifth calendar
day of the following month, reconcile the discrepancies. The effect, if any, of
such reconciliation shall be reflected in the Servicer's Certificate for such
next succeeding Determination Date. In addition, the Servicer shall, if so
requested by the Note Insurer (unless a Note Insurer Default shall have occurred
and be continuing) deliver to the Back-up Servicer (i) within five (5) Business
Days of demand therefor a computer tape containing as of the close of business
on the date of demand all of the data maintained by the Servicer in computer
format in connection with servicing the Receivables and (ii) within fifteen (15)
Business Days of demand therefor a copy of such other information as is
reasonably requested by the Note Insurer for the purpose of reconciling such
discrepancies. Other than the duties specifically set forth in this Agreement,
the Back-up Servicer shall have no obligations hereunder, including, without
limitation, to supervise, verify, monitor or administer the performance of the
Servicer. The Back-up Servicer shall have no liability for any actions taken or
omitted by the Servicer. The duties and obligations of the Back-up Servicer
shall be determined solely by the express provisions of this Agreement and no
implied covenants or obligations shall be read into this Agreement against the
Back-up Servicer.
(b) The Back-up Servicer shall review each Servicer's Certificate delivered
pursuant to Section 4.15(a) and shall, based upon the information provided from
the Servicer under Section 4.15(a):
(i) confirm that such Servicer's Certificate is complete on its face;
(ii) load the computer diskette (which shall be in a format acceptable
to the Back-up Servicer) received from the Servicer pursuant to Section
4.15(a) hereof, confirm that such computer diskette is in a readable form
and calculate the aggregate Principal Balance of the Receivables (as set
forth in such Servicer's Certificate) and the aggregate
24
principal payment for such Receivables (as set forth in such Servicer's
Certificate) and compare such calculation to that set forth in the
Servicer's Certificate (and give notice of any discrepancy to the Note
Insurer); and
(iii) recalculate the Available Funds, the Principal Payment Amount,
the Class A-1 Interest Payment Amount, the Class A-2 Interest Payment
Amount, the Class A-3 Interest Payment Amount, the Class A-4 Interest
Payment Amount, the Back-up Servicer Fee, the Servicing Fee, the Indenture
Trustee Fee, the Custodian Fee, the amount on deposit in the Spread
Account, the amount on deposit in the Demand Note Spread Account, the
Demand Note Amount, the Demand Note Interest Payment Amount, the Demand
Note Supplemental Interest Payment Amount and the Premium in the Servicer's
Certificate based solely on the balances and calculations specifically set
forth in the Servicer's Certificate, compare such calculations to those set
forth in the Servicer's Certificate. To the extent of any discrepancy, the
Back-up Servicer shall give notice thereof to the Note Insurer. The Back-up
Servicer's obligation shall be limited to the mathematical recalculation of
the amounts set forth in this Section 4.15(b)(iii) based on the Servicer's
Certificate.
SECTION 4.16. Fidelity Bond. The Servicer shall maintain a fidelity
bond in such form and amount as is customary for entities acting as custodian of
funds and documents in respect of consumer contracts on behalf of institutional
investors.
SECTION 4.17. Delegation of Duties. The Servicer may at any time
delegate duties under this Agreement to sub-contractors who are in the business
of servicing automotive receivables with the prior written consent of the
Controlling Party and notice to the Demand Note Provider; provided, however,
that no such delegation or sub-contracting of duties by the Servicer shall
relieve the Servicer of its responsibility with respect to such duties. In the
event the Servicer shall for any reason no longer be the servicer of the
Receivables (including by reason of a Servicer Termination Event), the Back-up
Servicer, its designee or any successor Servicer shall assume all of the rights
and obligations of the predecessor Servicer under one or more subservicing
agreements that may have been entered into by the predecessor Servicer by giving
notice of such assumption to the related subservicer or subservicers within ten
(10) Business Days of the termination of the Servicer as servicer of the
Receivables; provided, however, that the Back-up Servicer may elect to terminate
a subservicing agreement with the prior written consent of the Note Insurer, so
long as no Note Insurer Default is then continuing. If the Back-up Servicer does
not elect to assume any subservicing agreement, any and all costs of termination
shall be at the predecessor Servicer's expense. Upon the giving of such notice,
the Back-up Servicer, its designee or the successor Servicer shall be deemed to
have assumed all of the predecessor Servicer's interest therein and to have
replaced the predecessor Servicer as a party to the subservicing agreement to
the same extent as if the subservicing agreement had been assigned to the
assuming party except that the predecessor Servicer and the subservicer, if any,
shall not thereby be relieved of any liability or obligations accrued up to the
date of the replacement of the Servicer under the subservicing agreement and the
subservicer, if any, shall not be relieved of any liability or obligation to the
predecessor Servicer that survives the assignment or termination of the
subservicing agreement. The Back-up Servicer shall notify each Rating Agency,
the Demand Note Provider and the Note Insurer if any subservicing agreement is
assumed by the Back-up Servicer, its designee or the successor Servicer. The
25
predecessor Servicer shall, upon request of the Trust Collateral Agent, the
Back-up Servicer or any successor Servicer, but at the expense of the
predecessor Servicer, deliver to the assuming party all documents and records
relating to the subservicing agreement and the Receivables then being serviced
and an accounting of amounts collected and held by it and otherwise use its
reasonable efforts to effect the orderly and efficient transfer of the
subservicing agreement to the assuming party.
SECTION 4.18. Delivery of Back-up Tapes of Back-up Servicer.
(a) In addition to the information to be delivered by the Servicer to the
Back-up Servicer on or before the fifth Business Day of each month pursuant to
Section 4.15(a), the Servicer shall deliver to the Back-up Servicer, or its
designated agent, a computer diskette (or other electronic transmission), in a
format acceptable to the Back-up Servicer or its designated agent, as the case
may be, with the loan master file and history information in the form attached
hereto as Exhibit B-2 on or prior to the Closing Date in the case of the Initial
Receivables, and on or prior to the related Subsequent Transfer Date in the case
of Subsequent Receivables, which loan master file and history information shall
be sufficiently detailed to enable the Back-up Servicer to maintain records
sufficient to assume the role of successor Servicer pursuant to this Agreement.
(b) In addition to the information required to be delivered by the Servicer
to the Back-up Servicer or its designated agent on or before the fifth Business
Day of each month pursuant to Section 4.15(a) and on or prior to the Closing
Date and each Subsequent Transfer Date pursuant to Section 4.18(a), the Servicer
shall deliver the loan master file and history information to the Back-up
Servicer or its designated agent on the Determination Date occurring in August
2004 (with respect to the period from and including the Initial Cutoff Date to
the last day of the related Collection Period) and on the Determination Date
occurring every six months thereafter in the form attached hereto as Exhibit B-2
in writing and on a computer diskette (or other electronic transmission) in a
format acceptable to the Back-up Servicer or its designated agent, as the case
may be, and as at such other times as may be requested by the Note Insurer or
the Back-up Servicer upon prior written notice to the Servicer, provided that
the Back-up Servicer shall deliver a copy of any such notice by the Back-up
Servicer to the Note Insurer simultaneously with its delivery of such notice to
the Servicer.
SECTION 4.19. Confidential Information.(a) The Back-up Servicer, each
subservicer and any successor Servicer shall hold in confidence all Confidential
Information in accordance with the Federal Financial Privacy Law and, to the
extent more exacting, its then customary procedures, and each represents and
warrants that it has in place, and will continue to maintain, sufficient systems
and procedures to do so; provided that nothing herein shall prevent the Back-up
Servicer, any subservicer or any successor Servicer 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 to the extent necessary to carry on the Back-up
Servicer's, such subservicer's or such successor Servicer's business, as
applicable, in the ordinary course, (ii) any Noteholder, Certificateholder, the
Demand Note Provider or the Note Insurer to the extent that such Noteholder,
Certificateholder, the Demand Note Provider or the Note Insurer is entitled to
such information under this Agreement or any other Basic
26
Document, but not otherwise, (iii) any governmental authority which specifically
requests (or as to which applicable regulations require) such information, (iv)
any nationally recognized rating agency in connection with the rating of the
Notes by such agency, or (v) any other Person to which such delivery or
disclosure may be necessary or appropriate (a) in compliance with any applicable
law, rule, regulation or order, (b) in response to any subpoena or other legal
process, (c) in connection with any litigation to which the Back-up Servicer,
such subservicer or such successor Servicer, as applicable, is a party, (d) in
order to enforce the rights of the Noteholders, the Certificateholder, the
Demand Note Provider and the Note Insurer hereunder or under any other Basic
Document, or (e) otherwise, in accordance with the Federal Financial Privacy
Law; provided, that, prior to any such disclosure, the Back-up Servicer, such
subservicer or such successor Servicer, as applicable, shall inform each such
party (other than any Noteholder, Certificateholder, the Demand Note Provider,
the Note Insurer or any other party to the Basic Documents) that receives
Confidential Information of the foregoing requirements and shall use its
commercially reasonable best efforts to cause such party to comply with such
requirements.
ARTICLE V
ACCOUNTS; PAYMENTS;
STATEMENTS TO NOTEHOLDERS
SECTION 5.1. Accounts; Lock-Box Account.
(a) The Servicer has established the Lock-Box Account as two Eligible
Accounts, one established with Bank of America National Trust and Savings
Association entitled "Long Beach Acceptance Corp., JPMorgan Chase, Agent
Account--Auto Loan Programs," account number 1457202900, and one established
with JPMorgan Chase entitled "Long Beach Acceptance Corp., JPMorgan Chase, Agent
Account -- Auto Loan Programs," account number 530097095; provided, that the
Servicer, with the prior written consent of the Note Insurer and prior notice to
the Demand Note Provider, may from time to time (a) establish additional or
substitute Lock-Box Accounts, each of which shall be an Eligible Account, and
(b) close or terminate the use of any of the aforementioned accounts or any
subsequently established accounts, each of which accounts, at such time, shall
no longer be deemed to be a Lock-Box Account; provided, further, that pursuant
to the Lock-Box Agreement, the Lock-Box Processor and no other person, save the
Trust Collateral Agent or the Servicer, has authority to direct disposition of
funds related to the Receivables on deposit in the Lock-Box Account consistent
with the provisions of this Agreement and the Lock-Box Agreement. The Trust
Collateral Agent shall have no liability or responsibility with respect to the
Lock-Box Processor's or the Servicer's directions or activities as set forth in
the preceding sentence. The Lock-Box Account shall be established pursuant to
and maintained in accordance with the Lock-Box Agreement and shall be a demand
deposit account into which Obligors will be directed to make payments due under
Receivables and which shall at all times be an Eligible Account, initially
established and maintained with JPMorgan Chase or, at the request of the Note
Insurer, an Eligible Account satisfying clause (i) of the definition thereof.
The Servicer has established and shall maintain the Lock-Box at a United States
Post Office Branch. Notwithstanding the Lock-Box Agreement or any of the
provisions of this Agreement relating to the Lock-Box and the Lock-Box
Agreement, the Servicer shall remain obligated and liable to the Trust
Collateral Agent, the Demand Note Provider and the Noteholders for servicing and
administering the Receivables and the other Trust
27
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 with
respect to the Receivables or, upon the occurrence and continuance of a Servicer
Termination Event, the Note Insurer may direct the Indenture Trustee in writing
to terminate the Lock-Box Agreement with respect to the Receivables, and, in any
such case, funds on deposit in the Lock-Box Account shall be distributed by
JPMorgan Chase, as agent for the beneficial owners of funds in the Lock-Box
Account at such time (including the Issuer), and JPMorgan Chase shall deposit
any such funds relating to the Receivables to such other account as shall be
identified by the Back-up Servicer or successor Servicer for deposit therein;
provided, however, that the outgoing Servicer shall not thereby be relieved of
any liability or obligations on the part of the outgoing Servicer to the
Lock-Box Bank under such Lock-Box Agreement. The outgoing Servicer shall, upon
request of the Trust Collateral Agent, but at the expense of the outgoing
Servicer, deliver to the successor Servicer all documents and records relating
to the Lock-Box Agreement and an accounting of amounts collected and held in the
Lock-Box Account or held by the Lock-Box Processor in respect of the Receivables
and otherwise use its best efforts to effect the orderly and efficient transfer
of any Lock-Box Agreement to the successor Servicer. In the event that the
Lock-Box Account fails at any time to qualify as an Eligible Account, the
Servicer, at its expense, shall cause the Lock-Box Bank to deliver, at the
direction of the Controlling Party to the Trust Collateral Agent or a successor
Lock-Box Bank, all documents and records relating to the Receivables and all
amounts held (or thereafter received) on deposit in the Lock Box Account or held
by the Lock-Box Processor in respect of the Receivables (together with an
accounting of such amounts) and shall otherwise use its best efforts to effect
the orderly and efficient transfer of the lock-box arrangements, and the
Servicer shall promptly notify the Obligors to make payments to any new
Lock-Box.
(b) In addition to the Lock-Box Account, the Trust Collateral Agent shall
establish, with itself, the Collection Account and the Note Account in the name
of the Issuer for the benefit of the Noteholders, the Demand Note Provider and
the Note Insurer, the Pre-Funding Account in the name of the Issuer for the
benefit of the Noteholders and the Note Insurer, the Capitalized Interest
Account in the name of the Issuer for the benefit of the Noteholders and the
Note Insurer and the Policy Payments Account in the name of the Issuer for the
benefit of the Noteholders. The Collection Account, the Note Account, the
Pre-Funding Account, the Capitalized Interest Account and the Policy Payments
Account shall be Eligible Accounts initially established with the Trust
Collateral Agent; provided, however, if any of such accounts shall cease to be
an Eligible Account, the Servicer, with the consent of the Note Insurer (so long
as no Note Insurer Default has occurred and is continuing), within five (5)
Business Days shall, cause such accounts to be moved to an institution so that
such account meets the definition of Eligible Account. The Servicer shall
promptly notify the Rating Agencies and the Transferor of any change in the
location of any of the aforementioned accounts.
All amounts held in the Collection Account, the Pre-Funding Account
and the Capitalized Interest Account shall be invested by the Trust Collateral
Agent at the written direction of the Transferor in Eligible Investments in the
name of the Trust Collateral Agent on behalf of the Issuer and shall mature no
later than one Business Day immediately preceding the
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Payment Date next succeeding the date of such investment. In no event shall the
Trust Collateral Agent be liable for any insufficiency in the Collection Account
resulting from any investment loss in any Eligible Account. Such written
direction shall certify that any such investment is authorized by this Section.
No investment may be sold prior to its maturity. Amounts in the Note Account and
the Policy Payments Account shall not be invested. The amount of earnings on
investments of funds in the Collection Account during the Collection Period
related to each Payment Date shall be deposited into the Note Account on each
Payment Date, and shall be available for payment pursuant to Section 5.6(c). The
amount of earnings on investments of funds in the Pre-Funding Account during the
Collection Period related to each Payment Date shall be deposited in the Note
Account on each Payment Date in an amount not to exceed the Pre-Funding Interest
Amount, and such amount shall be available for distribution pursuant to Section
5.6(c), and any remaining investment earnings on the funds in the Pre-Funding
Account shall remain on deposit in the Pre-Funding Account and shall be
distributed by the Trust Collateral Agent to the Transferor on the Final Funding
Period Payment Date to the extent not otherwise paid to Noteholders as a
component of the Pre-Funding Interest Amount on such Payment Date. The amount of
earnings on investments of funds in the Capitalized Interest Account during each
Collection Period shall be deposited into the Capitalized Interest Account on
the Payment Date relating to such Collection Period prior to making any transfer
from the Capitalized Interest Account to the Note Account pursuant to Section
5.6 (a)(iii). For purposes of this paragraph, the Trust Collateral Agent will
take delivery of the Eligible Investments in accordance with Schedule C.
SECTION 5.2. Collections. The Servicer shall use reasonable efforts to
cause the Lock-Box Processor to transfer any payments in respect of the
Receivables from or on behalf of Obligors received in the Lock-Box to the
Lock-Box Account on the Business Day on which such payments are received,
pursuant to the Lock-Box Agreement. Within two Business Days of receipt of such
funds into the Lock-Box Account, the Servicer shall cause the Lock-Box Bank to
transfer available funds related to the Receivables from the Lock-Box Account to
the Collection Account, and if such funds are not available funds, as soon
thereafter as they clear (i.e., become available for withdrawal from the
Lock-Box Account). In addition, the Servicer shall remit all payments by or on
behalf of the Obligors received by the Servicer with respect to the Receivables
(other than Purchased Receivables), and all Liquidation Proceeds no later than
the second Business Day following receipt into the Lock-Box Account or the
Collection Account.
SECTION 5.3. Application of Collections. All collections for each
Collection Period shall be applied by the Servicer as follows:
With respect to each Receivable (other than a Purchased Receivable),
payments actually received from or on behalf of the Obligor shall be applied
hereunder, first, to interest and principal in accordance with the Simple
Interest Method to the extent necessary to bring such Receivable current,
second, in connection with the redemption of a defaulted Receivable, to
reimburse the Servicer for reasonable and customary out-of-pocket expenses
incurred by the Servicer in connection with such Receivable, third, to late fees
and fourth, to principal in accordance with the Simple Interest Method.
Notwithstanding anything herein to the contrary, no amount applied as interest
accrued on any Precomputed Receivable for any single Collection Period will
exceed 30 days' interest accrued thereon assuming a 360-day year of twelve
30-day months.
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SECTION 5.4. Intentionally Omitted.
SECTION 5.5. Additional Deposits. The following additional deposits
shall be made in immediately available funds on the dates indicated: (i) on the
Business Day immediately preceding each Determination Date, the Servicer or
LBAC, as the case may be, shall deposit or cause to be deposited in the
Collection Account the aggregate Purchase Amount with respect to Purchased
Receivables, (ii) on the Business Day immediately preceding each Determination
Date, the Trust Collateral Agent shall deposit in the Collection Account all
amounts to be paid under Section 11.1, (iii) on the Determination Date
immediately succeeding the date on which the Funding Period ends (or, if the
Funding Period ends on or after the Determination Date immediately preceding the
Final Funding Period Payment Date, on the date on which the Funding Period
ends), the Trust Collateral Agent shall transfer the remaining Pre-Funded Amount
on deposit in the Pre-Funding Account to the Note Account pursuant to Section
5.13(c) and (iv) on or before each Draw Date, the Trust Collateral Agent shall
transfer to the Collection Account any amounts transferred to the Trust
Collateral Agent by the Collateral Agent from the Spread Account or the Demand
Note Spread Account, if applicable, and (v) on or before each Draw Date, the
Trust Collateral Agent shall, pursuant to the Servicer's written instructions,
transfer to the Collection Account any amounts to be drawn on the Demand Note or
the Demand Note Guarantee in accordance with Section 5.12.
SECTION 5.6. Payments; Policy Claims.
(a) The Trust Collateral Agent (based solely on the information set forth
in the Servicer's Certificate for the related Payment Date upon which the Trust
Collateral Agent may conclusively rely) shall transfer,
(i) on each Payment Date, from the Collection Account to the Note
Account, in immediately available funds, an amount equal to the sum of (a)
all funds that were deposited in the Collection Account, plus (b) earnings
on investments of funds in the Collection Account pursuant to Section
5.1(b), for the related Collection Period;
(ii) on each Payment Date during the Funding Period and on the Final
Funding Period Payment Date, from the Pre-Funding Account to the Note
Account, in immediately available funds, earnings on investments of funds
in the Pre-Funding Account for the related Collection Period, to the extent
required pursuant to Section 5.1(b);
(iii) on each Payment Date occurring in August 2004, September 2004
and October 2004, from the Capitalized Interest Account to the Note
Account, an amount equal to the Negative Carry Amount for the related
Collection Period, if any; and
(iv) on each Payment Date occurring in August 2004, September 2004 and
October 2004, from the Capitalized Interest Account to the Transferor, an
amount equal to the excess, if any, of (x) the amount remaining on deposit
in the Capitalized Interest Account after giving effect to the withdrawal,
if any, on such Payment Date pursuant to Section 5.6(a)(iii) above, over
(y) the Capitalized Interest Requirement for such Payment Date.
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(b) Prior to each Payment Date, the Servicer shall on the related
Determination Date calculate the Available Funds, the Principal Payment Amount,
the Class A-1 Interest Payment Amount, the Class A-2 Interest Payment Amount,
the Class A-3 Interest Payment Amount and the Class A-4 Interest Payment Amount,
the Demand Note Interest Payment Amount, the Demand Note Supplemental Interest
Payment Amount, if any, the Monthly Dealer Participation Fee Payment Amount,
and, based on the Available Funds and the other amounts available for payment on
such Payment Date, determine the amount payable to the Noteholders.
(c) On each Payment Date, the Trust Collateral Agent shall (x) distribute
all amounts delivered by the Note Insurer to the Trust Collateral Agent for
deposit into the Collection Account pursuant to Section 5.9 for payment in the
amounts and priority as directed by the Note Insurer, and (y) (based on the
information contained in the Servicer's Certificate delivered on the related
Determination Date pursuant to Section 4.9 upon which the Trust Collateral Agent
may conclusively rely) subject to subsection (e) hereof, make the following
distributions from the Available Funds withdrawn from the Note Account and from
the other sources described below in the following order of priority:
(i) first, to LBAC, the Monthly Dealer Participation Fee Payment
Amount and all unpaid Monthly Dealer Participation Fee Payment Amounts from
prior Collection Periods and second, to the Servicer, from ------ the
Available Funds (as such Available Funds have been reduced by payments made
pursuant to subclause first of this clause (i)), the Servicing Fee and all
unpaid Servicing Fees from prior Collection Periods and, if the Available
Funds are insufficient to pay such Servicing Fees from prior Collection
Periods, the Servicer will receive such deficiency from the Deficiency
Claim Amount with respect to such Payment Date, if any, from amounts on
deposit in the Spread Account (including the Demand Note), to the extent
received by the Trust Collateral Agent from the Collateral Agent;
(ii) to the Indenture Trustee, the Custodian and the Back-up Servicer
from the Available Funds (as such Available Funds have been reduced by
payments made pursuant to clause (i) above), the Indenture Trustee Fee, the
Custodian Fee and the Back-up Servicer Fee, respectively, and all unpaid
Indenture Trustee Fees, Custodian Fees and Back-up Servicer Fees from prior
Collection Periods and, if the Available Funds are insufficient to pay such
amounts, the Indenture Trustee, the Custodian and the Back-up Servicer will
receive such deficiency from the remaining portion of the Deficiency Claim
Amount with respect to such Payment Date, if any, from amounts on deposit
in the Spread Account (including the Demand Note), to the extent received
by the Trust Collateral Agent from the Collateral Agent, after application
thereof pursuant to clause (i) above;
(iii) to the Class A-1 Noteholders, the Class A-2 Noteholders, the
Class A-3 Noteholders and the Class A-4 Noteholders, pro rata based on the
interest due on each such class of Notes, from the Available Funds (as such
Available Funds have been reduced by payments made pursuant to clauses (i)
and (ii) above), an amount equal to the Class A-1 Note Interest, the Class
A-2 Note Interest, the Class A-3 Note Interest and the Class A-4 Note
Interest (calculated (i) with respect to the Class A-1 Notes on each
Payment Date, on the basis of the actual number of days elapsed during such
Accrual
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Period based on a 360 day year, or with respect to the first Payment Date,
31 days) and (ii) with respect to the Class A-2 Notes, the Class A-3 Notes
and the Class A-4 Notes on each Payment Date, on the basis of a 360-day
year consisting of twelve 30-day months or, with respect to the first
Payment Date, 29 days), respectively, with respect to such Payment Date
(plus (without duplication) interest on any outstanding Class A-1 Interest
Carryover Shortfall, Class A-2 Interest Carryover Shortfall, Class A-3
Interest Carryover Shortfall or Class A-4 Interest Carryover Shortfall, if
any, to the extent permitted by applicable law, at the Class A-1 Note Rate,
the Class A-2 Note Rate, the Class A-3 Note Rate or the Class A-4 Note
Rate, as applicable, for the related Accrual Period (calculated (i) with
respect to the Class A-1 Notes on each Payment Date, on the basis of the
actual number of days elapsed during such Accrual Period based on a 360 day
year and (ii) with respect to the Class A-2 Notes, the Class A-3 Notes and
the Class A-4 Notes on each Payment Date, on the basis of a 360-day year
consisting of twelve 30-day months) and, if the Available Funds are
insufficient to pay such amounts, the Class A Noteholders will receive such
deficiency from the following sources in the following order of priority:
(A) from the remaining portion of the Deficiency Claim Amount with respect
to such Payment Date, if any, from amounts on deposit in the Spread Account
(including the Demand Note), to the extent received by the Trust Collateral
Agent from the Collateral Agent, after application thereof pursuant to
clauses (i) and (ii) above and (B) from the Policy Claim Amount with
respect to such Payment Date, if any, received by the Trust Collateral
Agent from the Note Insurer;
(iv) from the Available Funds (as such Available Funds have been
reduced by payments made pursuant to clauses (i) through (iii) above) and,
if such Payment Date is the Final Funding Period Payment Date, from the
Mandatory Special Redemption, if any, first, to the Class A-1 Noteholders,
until the Class A-1 Note Balance has been reduced to zero, an amount equal
to the Principal Payment Amount with respect to such Payment Date, second,
to the Class A-2 Noteholders, after the Class A-1 Note Balance has been
reduced to zero, an amount equal to the remaining Principal Payment Amount
with respect to such Payment Date, if any, third, to the Class A-3
Noteholders, after the Class A-2 Note Balance has been reduced to zero, an
amount equal to the remaining Principal Payment Amount with respect to such
Payment Date, if any, and fourth, to the Class A-4 Noteholders, after the
Class A-3 Note Balance has been reduced to zero, an amount equal to the
remaining Principal Payment Amount with respect to such Payment Date, if
any, and, if the Available Funds are insufficient to pay such amounts, the
Class A Noteholders will receive such deficiency from the following sources
in the following order of priority: (A) from the remaining portion of the
Deficiency Claim Amount with respect to such Payment Date, if any, from
amounts on deposit in the Spread Account (including the Demand Note), to
the extent received by the Trust Collateral Agent 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 Payment Date, if any, after application thereof pursuant to
clause (iii) above;
(v) to the Note Insurer, from the Available Funds (as such Available
Funds have been reduced by payments made pursuant to clauses (i) through
(iv) above), an amount equal to the Reimbursement Obligations (other than
any accrued and unpaid Premium) and, if the Available Funds are
insufficient to pay such Reimbursement
32
Obligations, the Note Insurer shall receive such deficiency from the
remaining portion of the Deficiency Claim Amount with respect to such
Payment Date, if any, from amounts on deposit in the Spread Account
(including the Demand Note), to the extent received by the Trust Collateral
Agent from the Collateral Agent, after application thereof pursuant to
clauses (i) through (iv) above;
(vi) to the Note Insurer, from the Available Funds (as such Available
Funds have been reduced by payments made pursuant to clauses (i) through
(v) above), any accrued and unpaid Premium and, if the Available Funds are
insufficient the Note Insurer shall receive such deficiency from the
remaining portion of the Deficiency Claim Amount with respect to such
Payment Date, if any, from amounts on deposit in the Spread Account
(including the Demand Note), to the extent received by the Trust Collateral
Agent from the Collateral Agent, after application thereof pursuant to
clauses (i) through (v) above;
(vii) to the Demand Note Provider, from the Available Funds (as such
Available Funds have been reduced by payments made pursuant to clauses (i)
through (vi) above), the scheduled Demand Note Interest Payment Amount;
(viii) to the Demand Note Provider or the Demand Note Guarantor, as
applicable, from the Available Funds (as such Available Funds have been
reduced by payments made pursuant to clauses (i) through (vii) above),
reimbursement for any current and previously unreimbursed draws on the
Demand Note or the Demand Note Guarantee, as applicable, pursuant to
Section 5.12(b) hereof; provided, however, that if the Demand Note Spread
Account has been funded in accordance with Section 5.12(c) hereof and the
Spread Account Agreement, any reimbursed amounts shall instead be
distributed to the Collateral Agent for deposit in the Demand Note Spread
Account;
(ix) first, to the Trust Collateral Agent, the Indenture Trustee, the
Back-up Servicer and the Custodian, as applicable, from the Available Funds
(as such Available Funds have been reduced by payments made pursuant to
clauses (i) through (viii) above) all reasonable out-of-pocket expenses of
the Trust Collateral Agent, the Indenture Trustee, the Back-up Servicer and
the Custodian (including, but not limited to, reasonable counsel fees and
expenses), including, without limitation, costs and expenses required to be
paid by the Servicer to the Back-up Servicer under Section 9.2(a), to the
extent not paid by the Servicer, and all unpaid reasonable out-of-pocket
expenses of the Trust Collateral Agent, the Indenture Trustee, the Back-up
Servicer and the Custodian (including, but not limited to, reasonable
counsel fees and expenses) from prior Collection Periods; provided,
however, that unless an Event of Default shall have occurred and be
continuing, expenses payable to the Trust Collateral Agent, the Indenture
Trustee, the Back-up Servicer and the Custodian pursuant to this subclause
first of clause (ix) shall be limited to a combined aggregate amount of
$50,000 per annum, and second to the Back-up Servicer, from the Available
Funds (as such Available Funds have been reduced by payments made pursuant
to clauses (i) through (viii) above and subclause first of this clause
(ix)), in the event that the Back-up Servicer shall have assumed the
obligations of Servicer pursuant to Section 9.2(a) and the Servicer fails
to pay the Back-
33
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;
(x) to the Collateral Agent, from the Available Funds (as such
Available Funds have been reduced by payments made pursuant to clauses (i)
through (ix) above), for deposit in the Spread Account, the remaining
Available Funds (as such Available Funds have been reduced by payments
pursuant to clauses (i) through (ix) above), if any, until the amount on
deposit in the Spread Account (not including the Demand Note) is equal to
the Requisite Amount;
(xi) from the Available Funds (as such Available Funds have been
reduced by payments made pursuant to clauses (i) through (x) above), until
the Overcollateralization Amount is equal to the Required
Overcollateralization Target, first, to the Class A-1 Noteholders, in
reduction of the Class A-1 Note Balance, until the Class A-1 Note Balance
has been reduced to zero, second, once the Class A-1 Note Balance has been
reduced to zero, to the Class A-2 Noteholders, in reduction of the Class
A-2 Note Balance, third, once the Class A-2 Note Balance has been reduced
to zero, to the Class A-3 Noteholders, in reduction of the Class A-3 Note
Balance, and fourth, once the Class A-3 Note Balance has been reduced to
zero, to the Class A-4 Noteholders, in reduction of the Class A-4 Note
Balance, until the Class A-4 Note Balance has been reduced to zero;
(xii) to the Demand Note Provider, from the Available Funds (as such
Available Funds have been reduced by payments made pursuant to clauses (i)
through (xi) above), the Demand Note Supplemental Interest Payment Amount;
and
(xiii) to the Certificateholder, any remaining Available Funds (as
such Available Funds have been reduced by payments made pursuant to clauses
(i) through (xii) above).
(d) In addition, on each Payment Date, after giving effect to the payments
specified in clauses (i) through (xiii) of Section 5.6(c), the Trust Collateral
Agent (based on the information contained in the Servicer's Certificate
delivered on the related Determination Date pursuant to Section 4.9 upon which
the Trust Collateral Agent may conclusively rely) shall distribute the Spread
Account Release Amount, if any, to the Certificateholder.
(e) Each Noteholder, by its acceptance of its Note, will be deemed to have
consented to the provisions of Sections 5.6(c) and 5.6(d) relating to the
priority of payments, and will be further deemed to have acknowledged that no
property rights in any amount or the proceeds of any such amount shall vest in
such Noteholder until such amounts have been distributed to such Noteholder
pursuant to such provisions; provided, that the foregoing shall not restrict the
right of any Noteholder, upon compliance with the provisions hereof, from
seeking to compel the performance of the provisions hereof by the parties
hereto. Each Noteholder, by its acceptance of its Note, will be deemed to have
further agreed that withdrawals of funds by the Collateral Agent from the Spread
Account for application hereunder shall be made in accordance with the
provisions of the Spread Account Agreement.
In furtherance of and not in limitation of the foregoing, the
Certificateholder by acceptance of its Certificate, specifically acknowledges
that no amounts shall be received by it,
34
nor shall it have any right to receive any amounts, unless and until such
amounts have been distributed pursuant to Sections 5.6(c) and 5.6(d) above for
payment to such Certificateholder. The Certificateholder, by its acceptance of
its Certificate, further specifically acknowledges that it has no right to or
interest in any moneys at any time held in the Spread Account prior to the
release of such moneys as aforesaid, such moneys being held in trust for the
benefit of the Class A Noteholders and the Note Insurer as their interests may
appear prior to such release.
(f) Notwithstanding the foregoing, in the event that it is ever determined
that any property held in the Spread Account constitutes a pledge of collateral,
then the provisions of this Agreement and the Spread Account Agreement shall be
considered to constitute a security agreement and the Transferor and the
Certificateholder hereby grant to the Collateral Agent and to the Trust
Collateral Agent, respectively, a first priority perfected security interest in
such amounts, to be applied as set forth in Section 3.03(b) of the Spread
Account Agreement. In addition, the Certificateholder, by acceptance of its
Certificate, hereby appoints the Transferor as its agent to pledge a first
priority perfected security interest in the Spread Account, and any property
held therein from time to time to the Collateral Agent for the benefit of the
Trust Collateral Agent and the Note Insurer pursuant to the Spread Account
Agreement and agrees to execute and deliver such instruments of conveyance,
assignment, grant, confirmation, etc., as well as any financing statements, in
each case as the Note Insurer shall consider reasonably necessary in order to
perfect the Collateral Agent's Security Interest in the Collateral (as such
terms are defined in the Spread Account Agreement).
(g) Subject to Section 11.1 respecting the final payment upon retirement of
each Note, the Servicer shall on each Payment Date instruct the Trust Collateral
Agent in writing to distribute to each Noteholder of record on the preceding
Record Date either (i) by wire transfer, in immediately available funds to the
account of such Holder at a bank or other entity having appropriate facilities
therefor, if such Noteholder is the Clearing Agency or such Holder's Notes in
the aggregate evidence an original Note Balance of at least $1,000,000, and if
such Noteholder shall have provided to the Trust Collateral Agent appropriate
instructions prior to the Record Date for such Payment Date, or (ii) by check
mailed to such Noteholder at the address of such Holder appearing in the Note
Register, such Holder's pro rata share (based on the outstanding Note Balance)
of (i) the Principal Payment Amount plus (ii) the Class A-1 Interest Payment
Amount, the Class A-2 Interest Payment Amount, the Class A-3 Interest Payment
Amount or the Class A-4 Interest Payment Amount, as applicable, to be paid to
such Class of Notes in accordance with the Servicer's Certificate.
SECTION 5.7. Statements to Noteholders; Tax Returns.
(a) With each payment from the Note Account to the Noteholders made on a
Payment Date, the Servicer shall provide to the Note Insurer, the Demand Note
Provider, the Transferor, the Indenture Trustee, each Rating Agency and the
Trust Collateral Agent (the Trust Collateral Agent to make available to each
Noteholder of record on its website at xxx.XXXXxxx.xxx or through such other
means as the Trust Collateral Agent believes will make the distribution more
convenient and/or accessible and the Trust Collateral Agent shall provide timely
and adequate notification to all Noteholders regarding any such changes) the
Servicer's Certificate substantially in the form of Exhibit B-1 hereto, setting
forth at least the following information as to the Notes, to the extent
applicable:
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(i) the amount of the payment allocable to principal of the Class A-1
Notes, the Class A-2 Notes, the Class A-3 Notes and the Class A-4 Notes,
respectively, and in the aggregate with respect to all classes of Notes;
(ii) the amount of the payment allocable to interest on the Class A-1
Notes, the Class A-2 Notes, the Class A-3 Notes and the Class A-4 Notes,
respectively, and in the aggregate with respect to all classes of Notes;
(iii) the number of Receivables, the weighted average APR of the
Receivables, the weighted average maturity of the Receivables, the Pool
Balance, the Class A-1 Pool Factor, the Class A-2 Pool Factor, the Class
A-3 Pool Factor and the Class A-4 Pool Factor as of the close of business
on the last day of the preceding Collection Period;
(iv) the Class A-1 Note Balance, the Class A-2 Note Balance, the Class
A-3 Note Balance and the Class A-4 Note Balance, as of the close of
business on the last day of the preceding Collection Period, after giving
effect to payments allocated to principal reported under clause (i) above;
(v) the amount of the Monthly Dealer Participation Fee Payment Amount
paid to LBAC, the amount of the Servicing Fee paid to the Servicer and the
amount of the Back-up Servicer Fee paid to the Back-up Servicer with
respect to the related Collection Period, the amount of any unpaid
Servicing Fees and any unpaid Back-up Servicer Fees and the change in such
amounts from the prior Payment Date;
(vi) the amount of the Class A-1 Interest Carryover Shortfall, if
applicable, the Class A-2 Interest Carryover Shortfall, if applicable, the
Class A-3 Interest Carryover Shortfall, if applicable, and the Class A-4
Interest Carryover Shortfall, if applicable, on such Payment Date and the
change in such amounts from the prior Payment Date;
(vii) the amount paid, if any, to the Class A Noteholders under the
Policy for such Payment Date;
(viii) the amount paid to the Note Insurer on such Payment Date in
respect of Premium and Reimbursement Obligations;
(ix) the amount in the Spread Account;
(x) the Demand Note Amount;
(xi) the amount paid to the Demand Note Provider and/or the Demand
Note Guarantor, as applicable, in respect of any current and previously
unreimbursed draws on the Demand Note, the Demand Note Interest Payment
Amount and the Demand Note Supplemental Interest Payment Amount;
(xii) the number of Receivables and the aggregate outstanding
principal amount scheduled to be paid thereon, for which the related
Obligors are delinquent in making Scheduled Receivable Payments between 30
and 59 days, 60 and 89 days, 90 and 119 days and 120 days or more (in each
case calculated on the basis of a 360-day year
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consisting of twelve 30-day months), and the percentage of the aggregate
principal amount which such delinquencies represent;
(xiii) the number and the aggregate Purchase Amount of Receivables
repurchased by the Originator or purchased by the Servicer during the
related Collection Period;
(xiv) the cumulative number and amount of Liquidated Receivables
(including the cumulative number and amount of Sold 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;
(xv) the Average Delinquency Ratio, the Cumulative Default Rate and
the Cumulative Loss Rate (as such terms are defined in the Spread Account
Agreement) for such Payment Date;
(xvi) whether any Trigger Event has occurred as of such Determination
Date;
(xvii) 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;
(xviii) whether an Insurance Agreement Event of Default has occurred;
(xix) the number and amount of Cram Down Losses, the number and dollar
amount of repossessions, the aging of repossession inventory and the dollar
amount of Recoveries;
(xx) for Payment Dates during the Funding Period and on the Final
Funding Period Payment Date, the amount withdrawn from the Pre-Funding
Account to purchase Subsequent Receivables during the related Collection
Period and the remaining Pre-Funded Amount on deposit in the Pre-Funding
Account;
(xxi) for Payment Dates during the Funding Period and on the Final
Funding Period Payment Date, the Negative Carry Amount in respect of the
related Collection Period withdrawn from the Capitalized Interest Account,
the amount in excess of the Capitalized Interest Requirement, if any,
withdrawn from the Capitalized Interest Account and the amount remaining on
deposit in the Capitalized Interest Account; and
(xxii) for the Final Funding Period Payment Date, the amount of any
Mandatory Special Redemption distributed as a payment of principal to
Noteholders on such Payment Date.
Each amount set forth pursuant to subclauses (i), (ii), (vi) and
(xxii) above shall be expressed in the aggregate and as a dollar amount per
$1,000 of original principal balance of a Note or Certificate, as applicable.
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(b) No later than January 31 of each calendar year, commencing January 31,
2005, the Servicer shall send to the Indenture Trustee and the Trust Collateral
Agent, and the Trust Collateral Agent shall, provided it has received the
necessary information from the Servicer, promptly thereafter furnish to each
Person who at any time during the preceding calendar year was a Noteholder of
record and received any payment thereon (a) a report (prepared by the Servicer)
as to the aggregate of amounts reported pursuant to subclauses (i), (ii), (iii),
(iv), (vii) and (viii) of Section 5.7(a) for such preceding calendar year or
applicable portion thereof during which such person was a Noteholder, and (b)
such information as may be reasonably requested by the Noteholders or required
by the Code and regulations thereunder, to enable such Holders to prepare their
Federal and State income tax returns. The obligation of the Trust Collateral
Agent set forth in this paragraph shall be deemed to have been satisfied to the
extent that substantially comparable information shall be provided by the
Servicer pursuant to any requirements of the Code.
(c) The Servicer, at its own expense, shall cause a firm of nationally
recognized accountants to prepare any tax returns required to be filed by the
Issuer, and the Issuer shall execute and file such returns if requested to do so
by the Servicer. The Trust Collateral Agent, upon request, will furnish the
Servicer with all such information actually known to the Trust Collateral Agent
as may be reasonably requested by the Servicer in connection with the
preparation of all tax returns of the Issuer.
SECTION 5.8. Reliance on Information from the Servicer.
Notwithstanding anything to the contrary contained in this Agreement, all
payments from any of the accounts described in this Article V and any transfer
of amounts between such accounts shall be made by the Trust Collateral Agent
based on the information provided to the Trust Collateral Agent by the Servicer
in writing, whether by way of a Servicer's Certificate or otherwise (upon which
the Trust Collateral Agent may conclusively rely).
SECTION 5.9. Optional Deposits by the Note Insurer. The Note Insurer
shall at any time, and from time to time, with respect to a Payment Date, have
the option to deliver amounts to the Trust Collateral Agent for deposit into the
Collection Account for any of the following purposes: (i) to provide funds in
respect of the payment of fees or expenses of any provider of services to the
Issuer with respect to such Payment Date, (ii) to distribute as a component of
the Principal Payment Amount to the extent that the Note Balance as of the
Determination Date preceding such Payment Date exceeds the sum of the Pool
Balance as of such Determination Date and the remaining Pre-Funded Amount or
(iii) to include such amount as part of the Payment Amount for such Payment Date
to the extent that without such amount a draw would be required to be made on
the Policy.
SECTION 5.10. Spread Account. The Transferor agrees, simultaneously
with the execution and delivery of this Agreement, to execute and deliver the
Spread Account Agreement and, pursuant to the terms thereof, to deposit the
Initial Spread Account Deposit in the Spread Account on the Closing Date. In
addition, on each Subsequent Transfer Date, pursuant to the terms of the Spread
Account Agreement, the Transferor shall deposit the related Subsequent Spread
Account Deposit in the Spread Account. Although the Transferor as
Certificateholder, has pledged the Spread Account to the Collateral Agent,
pursuant to the
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Spread Account Agreement, the Spread Account shall not under any circumstances
be deemed to be a part of or otherwise includible in the Issuer or the Trust
Assets.
SECTION 5.11. Withdrawals from Spread Account. In the event that the
Servicer's Certificate with respect to any Determination Date shall state that
the amount of the Available Funds with respect to such Determination Date are
less than the sum of the amounts payable on the related Payment Date pursuant to
clauses (i) through (vi) of Section 5.6(c) (such deficiency being a "Deficiency
Claim Amount") then on the Deficiency Claim Date immediately preceding such
Payment Date, the Trust Collateral Agent shall deliver to the Collateral Agent,
the Note Insurer, the Demand Note Provider, the Fiscal Agent (as such term is
defined in the Insurance Agreement), if any, the Servicer, by hand delivery,
telex or facsimile transmission, a written notice (a "Deficiency Notice")
specifying the Deficiency Claim Amount for such Payment Date. Such Deficiency
Notice shall direct the Collateral Agent to remit such Deficiency Claim Amount
(to the extent of the funds available to be distributed pursuant to the Spread
Account Agreement to the Trust Collateral Agent for deposit in the Collection
Account; provided, that no Deficiency Claim Amount shall be paid for any
principal payable pursuant to clause (iv) of Section 5.6(c) unless the
Overcollateralization Amount is less than zero or such Payment Date is a Final
Scheduled Payment Date for any class of Class A Notes.
Any Deficiency Notice shall be delivered by 10:00 a.m., New York City
time, on the related Deficiency Claim Date. The amounts distributed by the
Collateral Agent to the Trust Collateral Agent pursuant to a Deficiency Notice
shall be deposited by the Trust Collateral Agent into the Collection Account
pursuant to Section 5.5 and 5.12.
SECTION 5.12. Demand Note. (a) On or before the Closing Date the
Issuer shall deliver the Demand Note to the Collateral Agent for the benefit of
the Trust Collateral Agent and the Note Insurer, in an amount equal to the
Demand Note Amount. The Demand Note shall be an Eligible Investment of the
Spread Account. Such Demand Note shall remain in full force and effect for so
long as (i) this Agreement and the Indenture remain in full force and effect or
(ii) until the Demand Note Amount is reduced to zero and all amounts due and
owing to the Demand Note Provider and/or Demand Note Guarantor, as applicable,
have been paid in full. Upon termination of the Demand Note, the Trust
Collateral Agent shall direct the Collateral Agent to surrender the Demand Note
to the Demand Note Provider.
(b) If on any Determination Date (based on the Servicer's Certificate
delivered on such Determination Date by the Servicer pursuant to Section 4.9,
upon which the Trust Collateral Agent may conclusively rely) the Available
Funds, together with other amounts on deposit in the Spread Account (other than
the Demand Note), are insufficient to pay the full amount described in clauses
(i) through (vi) of Section 5.6(c), the Trust Collateral Agent shall direct the
Collateral Agent (i) to submit to the Demand Note Provider a completed demand
certificate, substantially in the form of Exhibit A to the Demand Note,
demanding payment from the Demand Note Provider and the Demand Note Guarantor,
by not later than 5:00 p.m. (New York time) on the Business Day following the
Business Day on which the Demand Note Provider receives such demand certificate,
of the Remaining Deficiency Claim Amount and (ii) to deliver such Remaining
Deficiency Claim Amount to the Trust Collateral Agent for deposit in the
Collection Account, for application in respect of such insufficiency; provided,
that no Deficiency Claim Amount shall be paid for any principal payable pursuant
to clause (iv) of Section 5.6(c) unless
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the Overcollateralization Amount is less than zero or such Payment Date is a
Final Scheduled Payment Date for any class of Class A Notes. If the Demand Note
Provider shall fail to make any payment when required above, the Demand Note
Guarantor shall be required to make such payment by 10:00 a.m. on the Business
Day following the date such payment was due. Notwithstanding the foregoing, if
the Demand Note Spread Account has been funded in accordance with Section
5.12(c) or (e) and the Spread Account Agreement, the Trust Collateral Agent
shall instead direct the Collateral Agent to withdraw the Remaining Deficiency
Claim Amount from the Demand Note Spread Account.
(c) If at any time while the Notes are outstanding, the Applicable Demand
Note Person shall cease to be an Eligible Person, the Issuer shall (unless
otherwise consented to in writing by the Controlling Party) within 10 days of
the date on which the Applicable Demand Note Person was downgraded, replace the
existing Demand Note or Demand Note Guarantee, as applicable, with a substitute
Demand Note or Demand Note Guarantee, as applicable, from an Eligible Person. If
the Issuer shall fail to deliver such replacement Demand Note or Demand Note
Guarantee, as applicable, within 10 days of the date on which the Applicable
Demand Note Person was downgraded, the Collateral Agent shall, upon written
instructions from the Note Insurer, submit to the existing Demand Note or Demand
Note Guarantor, as applicable, a completed demand certificate for the remaining
Demand Note Amount. Any amounts received as a result of such claim shall be
deposited into the Series 2004-B Demand Note Spread Account to be distributed in
accordance with Section 5.6 hereof and with the Spread Account Agreement. Upon
receipt by the Collateral Agent of a replacement Demand Note or Demand Note
Guarantee, as applicable, in accordance with this Section 5.12(c), the
Collateral Agent shall surrender the original of the replaced Demand Note or
Demand Note Guarantee, as applicable, to the issuer thereof.
(d) The Demand Note and/or the Demand Note Guarantee shall be returned to
the Demand Note Provider at the times and subject to the conditions described in
this Section 5.12.
(e) If at any time while the Notes are outstanding a Demand Note Event
shall have occurred and be continuing, the Collateral Agent shall, upon written
direction from the Note Insurer, submit to the Demand Note Provider a completed
demand certificate for the remaining Demand Note Amount. Any amounts received as
a result of such claim shall be deposited into the Series 2004-B Demand Note
Spread Account to be distributed in accordance with Section 5.6 hereof and with
the Spread Account Agreement.
SECTION 5.13. Pre-Funding Account.
(a) Pursuant to Section 5.1(b), the Trust Collateral Agent shall establish
and maintain the Pre-Funding Account as an Eligible Account in the name of the
Trust for the benefit of the Noteholders and the Note Insurer.
(b) On the Closing Date, the Transferor will deposit in the Pre-Funding
Account an amount equal to the Original Pre-Funded Amount from the proceeds of
the sale of the Notes. On each Subsequent Transfer Date, the Servicer shall
instruct the Trust Collateral Agent in writing to withdraw from the Pre-Funding
Account an amount equal to the aggregate Principal Balance
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of the Subsequent Receivables (as of the related Subsequent Cutoff Date)
conveyed to the Trust on such Subsequent Transfer Date and pay such amount to or
upon the order of the Transferor upon satisfaction of the conditions set forth
in this Agreement and in the related Transfer Agreement with respect to such
transfer.
(c) If (i) the Pre-Funded Amount has not been reduced to zero by the close
of business on the last day of the Funding Period after giving effect to any
reductions in the Pre-Funded Amount on such last day of the Funding Period
pursuant to Section 5.13(b), the Servicer shall instruct the Trust Collateral
Agent in writing to withdraw such remaining portion of the Pre-Funded Amount
from the Pre-Funding Account and deposit it in the Note Account on the Final
Funding Period Payment Date to be applied as a partial redemption of the Notes,
in addition to the payment of principal and interest that otherwise would be
payable with respect to such Notes on such Payment Date, in accordance with
Section 5.6(c)(iv).
SECTION 5.14. Capitalized Interest Account.
(a) Pursuant to Section 5.1(b), the Capitalized Interest Account shall be
an Eligible Account established and maintained by the Trust Collateral Agent in
the name of the Trust for the benefit of the Noteholders and the Note Insurer.
On the Closing Date, the Transferor will deposit in the Capitalized Interest
Account an amount equal to $193,560.88 (such amount, the "Capitalized Interest
Account Deposit").
(b) On each Payment Date occurring during the Funding Period and on the
Final Funding Period Payment Date, the amounts on deposit in the Capitalized
Interest Account shall be available for deposit to the Note Account pursuant to
Section 5.6(a)(iii) for distribution as provided in Section 5.6(c). On each
Payment Date occurring during the Funding Period, the amount on deposit in the
Capitalized Interest Account in excess of the Capitalized Interest Requirement
for such Payment Date shall be distributed to the Transferor. On the Final
Funding Period Payment Date, any remaining amounts in the Capitalized Interest
Account, after giving effect to the transfer specified in Section 5.6(a)(iii) on
such Payment Date, will be paid directly to the Transferor. Upon any
distribution to the Transferor of amounts on deposit in the Capitalized Interest
Account in accordance with the two preceding sentences, the Noteholders and the
Certificateholder will have no further rights in, or claims to, such amounts.
(c) Amounts held in the Capitalized Interest Account shall be invested by
the Trust Collateral Agent in Eligible Investments which shall mature no later
than the Business Day immediately preceding the next Payment Date in accordance
with written instructions from the Transferor and such investments shall not be
sold or disposed of prior to their maturity. The Trust Collateral Agent shall
have no liability for any losses incurred in connection with the investment of
the funds in the Capitalized Interest Account.
SECTION 5.15. Securities Accounts. The Trust Collateral Agent
acknowledges that any account held by it hereunder is a "securities account" as
defined in the Uniform Commercial Code as in effect in New York (the "New York
UCC"), and that it shall be acting as a "securities intermediary" of the
Indenture Trustee with respect to each such account held by it. The Trust
Collateral Agent acknowledges and agrees that (a) each item of property (whether
investment property, financial asset, security, instrument or cash) credited to
any such
41
account shall be treated as a "financial asset" within the meaning of Section
8-102(a)(9) of the New York UCC and (b) if at any time the Trust Collateral
Agent shall receive any entitlement order from the Indenture Trustee directing
transfer or redemption of any financial asset relating to any such account, the
Trust Collateral Agent shall comply with such entitlement order without further
consent by LBAC or any other person.
ARTICLE VI
THE POLICY
SECTION 6.1. Policy. The Originator agrees, simultaneously with the
execution and delivery of this Agreement, to cause the Note Insurer to issue the
Policy for the benefit of the Class A Noteholders in accordance with the terms
thereof.
SECTION 6.2. Claims Under Policy.
(a) In the event that the Trust Collateral Agent has delivered a Deficiency
Notice with respect to any Determination Date, the Trust Collateral Agent shall
determine on the related Draw Date whether the sum of (i) the amount of
Available Funds with respect to such Determination Date (as stated in the
Servicer's Certificate with respect to such Determination Date) plus (ii) the
amount of the Deficiency Claim Amount, if any, available to be distributed
pursuant to the Spread Account Agreement by the Collateral Agent to the Trust
Collateral Agent pursuant to a Deficiency Notice delivered with respect to such
Payment Date (as stated in the certificate delivered on the immediately
preceding Deficiency Claim Date by the Collateral Agent pursuant to Section
3.03(a) of the Spread Account Agreement) would be insufficient, after giving
effect to the payments required by Section 5.6(c)(i) and (ii), to pay the
Scheduled Payments for the related Payment Date, then in such event the Trust
Collateral Agent shall furnish to the Note Insurer no later than 12:00 noon New
York City time on the related Draw Date a completed Notice of Claim in the
amount of the shortfall in amounts so available to pay the Scheduled Payments
with respect to such Payment Date (the amount of any such shortfall being
hereinafter referred to as the "Policy Claim Amount"). Amounts paid by the Note
Insurer under the Policy shall be deposited by the Trust Collateral Agent into
the Policy Payments Account and thereafter into the Note Account for payment to
Class A Noteholders on the related Payment Date (or promptly following payment
on a later date as set forth in the Policy).
(b) Any notice delivered by the Trust Collateral Agent to the Note Insurer
pursuant to Section 6.2(a) shall specify the Policy Claim Amount claimed under
the Policy and shall constitute a "Notice of Claim" under the Policy. In
accordance with the provisions of the Policy, the Note Insurer is required to
pay to the Trust Collateral Agent the Policy Claim Amount properly claimed
thereunder by 12:00 noon, New York City time, on the later of (i) the third
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 Payment
Date. Any payment made by the Note Insurer under the Policy shall be applied
solely to the payment of the Class A Notes, and for no other purpose.
(c) The Trust Collateral Agent shall (i) receive as attorney-in-fact of
each Class A Noteholder any Policy Claim Amount from the Note Insurer and (ii)
deposit the same in the Policy Payments Account for disbursement to the
Noteholders as set forth in clauses (iii) and (iv)
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of Section 5.6(c). Any and all Policy Claim Amounts disbursed by the Trust
Collateral Agent from claims made under the Policy shall not be considered
payment by the Issuer or from the Spread Account with respect to such Class A
Notes, and shall not discharge the obligations of the Issuer with respect
thereto. The Note Insurer shall, to the extent it makes any payment with respect
to the Class A Notes, become subrogated to the rights of the recipients of such
payments to the extent of such payments. Subject to and conditioned upon any
payment with respect to the Class A Notes by or on behalf of the Note Insurer,
each Class A Noteholder shall be deemed, without further action, to have
directed the Trust Collateral Agent to assign to the Note Insurer all rights to
the payment of interest or principal with respect to the Class A Notes which are
then due for payment to the extent of all payments made by the Note Insurer and
the Note Insurer may exercise any option, vote, right, power or the like with
respect to the Class A Notes 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 5.6(c) shall not be modified by this clause (c). To
evidence such subrogation, the Note Registrar shall note the Note Insurer's
rights as subrogee upon the register of Class A Noteholders upon receipt from
the Note Insurer of proof of payment by the Note Insurer of any Scheduled
Payment for that class.
(d) The Trust Collateral Agent shall be entitled, but not obligated, to
enforce on behalf of the Class A Noteholders the obligations of the Note Insurer
under the Policy. Notwithstanding any other provision of this Agreement, the
Class A Noteholders are not entitled to institute proceedings directly against
the Note Insurer.
SECTION 6.3. Preference Claims; Direction of Proceedings.
(a) In the event that the Trust Collateral Agent has received a certified
copy of an order of the appropriate court that any Scheduled Payment paid on a
Class A Note has been avoided in whole or in part as a preference payment under
applicable bankruptcy law, the Trust Collateral Agent shall so notify the Note
Insurer, shall comply with the provisions of the Policy to obtain payment by the
Note Insurer of such avoided payment, and shall, at the time it provides notice
to the Note Insurer, comply with the provisions of the Policy to obtain payment
by the Note Insurer, notify Holders of the Class A Notes by mail that, in the
event that any Class A Noteholder's payment is so recoverable, such Class A
Noteholder will be entitled to payment pursuant to the terms of the Policy.
Pursuant to the terms of the Policy, the Note Insurer will make such payment on
behalf of the Class A Noteholder to the receiver, conservator,
debtor-in-possession or trustee in bankruptcy named in the Order (as defined in
the Policy) and not to the Trust Collateral Agent or any Class A Noteholder
directly (unless a Class A Noteholder has previously paid such payment to the
receiver, conservator, debtor-in-possession or trustee in bankruptcy, in which
case the Note Insurer will make such payment to the Trust Collateral Agent for
payment, in accordance with the instructions to be provided by the Note Insurer,
to such Class A Noteholder upon proof of such payment reasonably satisfactory to
the Note Insurer).
(b) Each Notice of Claim shall provide that the Trust Collateral Agent, on
its behalf and on behalf of the Class A Noteholders, thereby appoints the Note
Insurer as agent and attorney-in-fact for the Trust Collateral Agent and each
Class A Noteholder in any legal proceeding with respect to the Class A Notes.
The Trust Collateral Agent shall promptly notify the Note Insurer of any
proceeding or the institution of any action (of which a Responsible Officer of
the Trust Collateral Agent has actual knowledge) seeking the avoidance as a
43
preferential transfer under applicable bankruptcy, insolvency, receivership,
rehabilitation or similar law (a "Preference Claim") of any payment made with
respect to the Class A Notes. Each Holder of Class A Notes, by its purchase of
Class A Notes, and the Trust Collateral Agent hereby agree that so long as a
Note Insurer Default shall not have occurred and be continuing, the Note Insurer
may at any time during the continuation of any proceeding relating to a
Preference Claim direct all matters relating to such Preference Claim including,
without limitation, (i) the direction of any appeal of any order relating to any
Preference Claim and (ii) the posting of any surety, supersedeas or performance
bond pending any such appeal at the expense of the Note Insurer, but subject to
reimbursement as provided in the Insurance Agreement. In addition, and without
limitation of the foregoing, as set forth in Section 6.2(c), the Note Insurer
shall be subrogated to, and each Class A Noteholder and the Trust Collateral
Agent hereby delegate and assign, to the fullest extent permitted by law, the
rights of the Trust Collateral Agent and each Class A Noteholder in the conduct
of any proceeding with respect to a Preference Claim, including, without
limitation, all rights of any party to an adversary proceeding action with
respect to any court order issued in connection with any such Preference Claim.
SECTION 6.4. Surrender of Policy. The Trust Collateral Agent shall
surrender the Policy to the Note Insurer for cancellation upon its expiration in
accordance with the terms thereof.
ARTICLE VII
THE TRANSFEROR
SECTION 7.1. Representations of the Transferor. The Transferor makes
the following representations on which the Note Insurer shall be deemed to have
relied in executing and delivering the Policy, on which the Demand Note Provider
shall be deemed to have relied on in issuing the Demand Note and on which the
Issuer is deemed to have relied in acquiring the Receivables and on which the
Indenture Trustee, the Owner Trustee, the Collateral Agent, Trust Collateral
Agent and Back-up Servicer may rely. The representations speak as of the
execution and delivery of this Agreement and as of the Closing Date, in the case
of the Initial Receivables, and as of the related Subsequent Transfer Date, in
the case of the Subsequent Receivables, and shall survive the conveyance of the
Receivables to the Issuer and the subsequent pledge thereof to the Indenture
Trustee pursuant to the Indenture.
(a) Organization and Good Standing. The Transferor has been duly organized
and is validly existing as a corporation in good standing under the laws of the
State of Delaware, with the corporate power and authority to conduct its
business as such business is presently conducted and to execute, deliver and
perform its obligations under this Agreement and the other Basic Documents to
which it is a party.
(b) Due Qualification. The Transferor is duly qualified to do business as a
foreign corporation in good standing, and has obtained all necessary licenses
and approvals in all jurisdictions required for the performance of its
obligations under this Agreement and the other Basic Documents to which it is a
party other than where the failure to obtain such license or approval or
qualification would not have a material adverse effect on the ability of the
Transferor
44
to perform such obligations or on any Receivable or on the interest therein of
the Issuer, the Noteholders or the Note Insurer.
(c) Power and Authority. The Transferor has the corporate power and
authority to execute and deliver this Agreement and the other Basic Documents to
which it is a party and to carry out their respective terms; the Transferor has
full corporate power and authority to sell and assign the property sold and
assigned to and deposited with the Issuer and has duly authorized such sale and
assignment to the Issuer by all necessary corporate action; and the execution,
delivery, and performance of this Agreement and the other Basic Documents to
which it is a party have been duly authorized by the Transferor by all necessary
corporate action.
(d) Valid Sale; Binding Obligation. This Agreement effects a valid sale,
transfer and assignment of the Initial Receivables and the other property
conveyed to the Issuer pursuant to Section 2.1, and upon execution of the
related Transfer Agreement and satisfaction of the conditions set forth in
Section 2.2(b) hereof and in such Transfer Agreement, this Agreement, and the
related Transfer Agreement will effect a valid sale, transfer and assignment of
the related Subsequent Receivables and the other related property to be conveyed
to the Issuer pursuant to Section 2.2 on the related Subsequent Transfer Date,
in each case, enforceable against creditors of and purchasers from the
Transferor; and this Agreement and the other Basic Documents to which the
Transferor is a party shall constitute legal, valid and binding obligations of
the Transferor enforceable in accordance with their respective terms except as
enforceability may be limited by bankruptcy, insolvency, reorganization or other
similar laws affecting the enforcement of creditors' rights generally and by
equitable limitations on the availability of specific remedies, regardless of
whether such enforceability is considered in a proceeding in equity or at law.
(e) No Violation. The execution, delivery and performance by the Transferor
of this Agreement and the other Basic Documents to which the Transferor is a
party and the consummation of the transactions contemplated hereby and thereby
and the fulfillment of the terms hereof and thereof do not conflict with, result
in any breach of any of the terms and provisions of, nor constitute (with or
without notice or lapse of time) a default under, the certificate of
incorporation or by-laws of the Transferor, or any material indenture,
agreement, mortgage, deed of trust, or other instrument to which the Transferor
is a party or by which it is bound or any of its properties are subject; nor
result in the creation or imposition of any material lien upon any of its
properties pursuant to the terms of any such indenture, agreement, mortgage,
deed of trust, or other instrument (other than the Basic Documents and the
Master Loan Agreement); nor violate any law, order, rule, or regulation
applicable to the Transferor of any court or of any Federal or State regulatory
body, administrative agency, or other governmental instrumentality having
jurisdiction over the Transferor or its properties.
(f) No Proceedings. There are no proceedings or investigations pending, or
to the Transferor's best knowledge, threatened, before any court, regulatory
body, administrative agency, or other governmental instrumentality having
jurisdiction over the Transferor or its properties: (A) asserting the invalidity
of this Agreement or the other Basic Documents to which the Transferor is a
party or the Notes, (B) seeking to prevent the issuance of the Notes or the
Certificate or the consummation of any of the transactions contemplated by this
Agreement or the other Basic Documents to which the Transferor is a party, (C)
seeking any determination or ruling that might materially and adversely affect
the performance by the Transferor of its
45
obligations under, or the validity or enforceability of, this Agreement or the
other Basic Documents to which the Transferor is a party or the Notes, (D)
relating to the Transferor and which might adversely affect the Federal or State
income, excise, franchise or similar tax attributes of the Notes or (E) that
could have a material adverse effect on the Receivables.
(g) No Consents. No consent, approval, authorization or order of or
declaration or filing with any governmental authority is required to be obtained
by the Transferor for the issuance or sale of the Notes or the Certificate or
the consummation of the other transactions contemplated by this Agreement and
the other Basic Documents to which the Transferor is a party, except such as
have been duly made or obtained or where the failure to obtain such consent,
approval, authorization, order or declaration, or to make such filing, would not
have a material adverse effect on the ability of the Transferor to perform its
obligations under the Basic Documents to which it is a party and would not have
a material adverse effect on any Receivable or the interest therein of the
Issuer, the Noteholders, the Demand Note Provider or the Note Insurer.
(h) Chief Executive Office. The Transferor hereby represents and warrants
to the Trust Collateral Agent that the Transferor's principal place of business
and chief executive office is, and for the four months preceding the date of
this Agreement, has been, located at Xxx Xxxx Xxxxxx Xxxxx, Xxxxxxx, Xxx Xxxxxx
00000.
(i) Transferor's Intention. The Initial Receivables and other Transferred
Property are being transferred, and the Subsequent Receivables and other
Subsequent Transferred Property will be transferred, with the intention of
removing them from the Transferor's estate pursuant to Xxxxxxx 000 xx xxx Xxxxxx
Xxxxxx Bankruptcy Code, as the same may be amended from time to time.
SECTION 7.2. Liability of the Transferor. The Transferor shall be
liable only to the extent of the obligations specifically undertaken by the
Transferor under this Agreement and the representations made by the Transferor
in this Agreement.
SECTION 7.3. Merger or Consolidation of, or Assumption of the
Obligations of, the Transferor. Any Person (a) into which the Transferor may be
merged or consolidated, (b) which may result from any merger or consolidation to
which the Transferor shall be a party or (c) which may succeed to the properties
and assets of the Transferor substantially as a whole, which person in any of
the foregoing cases executes an agreement of assumption to perform every
obligation of the Transferor under this Agreement, shall be the successor to the
Transferor hereunder without the execution or filing of any document or any
further act by any of the parties to this Agreement; provided, however, as a
condition to the consummation of any of the transactions referred to in clauses
(a), (b) or (c) above, (i) immediately after giving effect to such transaction,
(x) no representation or warranty made pursuant to Section 7.1 would have been
breached (for purposes hereof, such representations and warranties shall speak
as of the date of the consummation of such transaction) and (y) no event that,
after notice or lapse of time, or both, would become a Servicer Termination
Event shall have happened and be continuing, (ii) the Transferor shall have
delivered to the Note Insurer, the Demand Note Provider, the Indenture Trustee,
the Trust Collateral Agent and the Issuer an Officer's Certificate and an
Opinion of Counsel each stating that such consolidation, merger, or succession
and such agreement or
46
assumption comply with this Section 7.3 and that all conditions precedent, if
any, provided for in this Agreement relating to such transaction have been
complied with, (iii) the Transferor shall have delivered to the Note Insurer,
the Demand Note Provider, the Indenture Trustee, the Trust Collateral Agent and
the Issuer an Opinion of Counsel either (A) stating that, in the opinion of such
counsel, all financing statements and continuation statements and amendments
thereto have been filed that are necessary fully to preserve and protect the
interest of the Issuer in the Receivables, and reciting the details of such
filings, or (B) stating that, in the opinion of such counsel, no such action
shall be necessary to preserve and protect such interest, (iv) immediately after
giving effect to such transaction, no Insurance Agreement Event of Default and
no event that, after notice or lapse of time, or both, would become an Insurance
Agreement Event of Default shall have happened and be continuing, (v) the
organizational documents of the Person surviving or resulting from such
transaction shall contain provisions similar to those of the Transferor's
certificate of incorporation in respect of the issuance of debt, independent
directors and bankruptcy remoteness and (vi) the Transferor shall have received
confirmation from each Rating Agency that the then current rating of the Notes
will not be downgraded as a result of such merger, consolidation or succession.
A copy of such confirmation shall be provided to the Trust Collateral Agent.
Notwithstanding anything herein to the contrary, the execution of the foregoing
agreement of assumption and compliance with clause (i), (ii), (iii) or (iv)
above shall be conditions to the consummation of the transactions referred to in
clause (a), (b) or (c) above.
SECTION 7.4. Limitation on Liability of the Transferor and Others. The
Transferor and any director or officer or employee or agent of the Transferor
may rely in good faith on the advice of counsel or on any document of any kind,
prima facie properly executed and submitted by any Person respecting any matters
arising hereunder. The Transferor shall not be under any obligation to appear
in, prosecute or defend any legal action that shall not be incidental to its
obligations under this Agreement, and that in its opinion may involve it in any
expense or liability.
SECTION 7.5. Transferor May Own Notes. The Transferor and any Person
controlling, controlled by, or under common control with the Transferor may in
its individual or any other capacity become the owner or pledgee of Notes with
the same rights as it would have if it were not the Transferor or an affiliate
thereof, except as otherwise provided in the definition of "Noteholder" set
forth in Annex A hereto and as specified in Section 1.4. Notes so owned by or
pledged to the Transferor or such controlling or commonly controlled Person
shall have an equal and proportionate benefit under the provisions of this
Agreement, without preference, priority, or distinction as among all of the
Notes except as otherwise provided herein or by the definition of Noteholder.
ARTICLE VIII
THE SERVICER
SECTION 8.1. Representations of Servicer. The Servicer, in its
capacity as Servicer and Custodian (each reference to "Servicer" in this Section
8.1 includes the Servicer in its capacity as Custodian) makes the following
representations on which the Note Insurer shall be deemed to have relied in
executing and delivering the Policy, on which the Demand Note Provider shall be
deemed to have relied in issuing and delivering the Demand Note and on which the
Issuer is deemed to have relied in acquiring the Receivables and on which the
Indenture
47
Trustee is deemed to have relied on in accepting the pledge of the Receivables.
The representations speak as of the execution and delivery of this Agreement and
as of the Closing Date, in the case of the Initial Receivables, and as of the
related Subsequent Transfer Date, in the case of the Subsequent Receivables, and
shall survive the conveyance of the Receivables to the Issuer and the subsequent
pledge thereof to the Indenture Trustee pursuant to the Indenture.
(i) Organization and Good Standing. The Servicer is duly organized and
validly existing as a corporation in good standing under the laws of the
State of Delaware, with the corporate power and authority to own its
properties and to conduct its business as such properties shall be
currently owned and such business is presently conducted, and had at all
relevant times, and has, the corporate power, authority, and legal right to
acquire, own, sell and service the Receivables and to hold the Receivable
Files as custodian.
(ii) Due Qualification. The Servicer is duly qualified to do business
as a foreign corporation in good standing, and has obtained all necessary
licenses and approvals in all jurisdictions in which the ownership or lease
of property or the conduct of its business (including the servicing of the
Receivables as required by this Agreement and the performance of its other
obligations under this Agreement and the other Basic Documents to which it
is a party) shall require such qualifications.
(iii) Power and Authority. The Servicer has the power and authority to
execute and deliver this Agreement and the other Basic Documents to which
it is a party and to carry out their respective terms; and the execution,
delivery, and performance of this Agreement and the other Basic Documents
to which it is a party have been duly authorized by the Servicer by all
necessary corporate action.
(iv) Binding Obligation. This Agreement and the other Basic Documents
to which it is a party constitute legal, valid and binding obligations of
the Servicer enforceable in accordance with their respective terms except
as enforceability may be 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
48
any court or of any Federal or State regulatory body, administrative
agency, or other governmental instrumentality having jurisdiction over the
Servicer or its properties.
(vi) No Proceedings. There are no proceedings or investigations
pending, or to the Servicer's best knowledge, threatened, before any court,
regulatory body, administrative agency, or other governmental
instrumentality having jurisdiction over the Servicer or its properties:
(A) asserting the invalidity of this Agreement or the other Basic Documents
to which the Servicer is a party, the Notes or the Certificate, (B) seeking
to prevent the issuance of the Notes or the Certificate or the consummation
of any of the transactions contemplated by this Agreement, the Notes, the
Certificate, or the other Basic Documents to which the Servicer is a party,
(C) seeking any determination or ruling that might materially and adversely
affect the performance by the Servicer of its obligations under, or the
validity or enforceability of, this Agreement, the Notes, the Certificate
or the other Basic Documents to which the Servicer is a party, (D) relating
to the Servicer and which might adversely affect the Federal or State
income, excise, franchise or similar tax attributes of the Notes or the
Certificate or (E) that could have a material adverse effect on the
Receivables.
(vii) No Consents. No consent, approval, authorization or order of or
declaration or filing with any governmental authority is required to be
obtained by the Servicer for the issuance or sale of the Notes or the
Certificate or the consummation of the other transactions contemplated by
this Agreement and the other Basic Documents to which the Servicer is a
party, except such as have been duly made or obtained.
(viii) Taxes. The Servicer has filed on a timely basis all tax returns
required to be filed by it and paid all taxes, to the extent that such
taxes have become due.
(ix) Chief Executive Office. The Servicer hereby represents and
warrants to the Trust Collateral Agent that the Servicer's principal place
of business and chief executive office is, and for the four months
preceding the date of this Agreement, has been, located at Xxx Xxxx Xxxxxx
Xxxxx, Xxxxxxx, Xxx Xxxxxx 00000.
SECTION 8.2. Indemnities of Servicer.
(a) The Servicer shall be liable in accordance herewith only to the extent
of the obligations specifically undertaken by the Servicer under this Agreement
and the representations made by the Servicer herein.
(i) The Servicer shall defend, indemnify and hold harmless the
Indenture Trustee, the Trust Collateral Agent, the Owner Trustee, the
Collateral Agent, the Back-up Servicer, the Custodian, the Issuer, the
Certificateholder, the Note Insurer, the Demand Note Provider, the
Noteholders and the Transferor, and their respective officers, directors,
agents and employees from and against any and all costs, expenses, losses,
damages, claims, and liabilities, arising out of or resulting from the use,
ownership or operation by the Servicer or any affiliate thereof of a
Financed Vehicle.
(ii) The Servicer shall indemnify, defend and hold harmless the
Indenture Trustee, the Trust Collateral Agent, the Owner Trustee, the
Collateral Agent, the Back-up
49
Servicer, the Custodian, the Issuer, the Note Insurer, the Demand Note
Provider and the Transferor, and their respective officers, directors,
agents and employees from and against any taxes (other than net income,
gross receipts, franchise or other similar taxes) that may at any time be
asserted against the Indenture Trustee, the Trust Collateral Agent, the
Owner Trustee, the Collateral Agent, the Back-up Servicer, the Custodian,
the Issuer, the Note Insurer, the Demand Note Provider or the Transferor,
with respect to the transactions contemplated herein, including, without
limitation, any sales, general corporation, tangible personal property,
privilege, or license taxes and costs and expenses in defending against the
same.
(iii) The Servicer shall indemnify, defend and hold harmless the
Indenture Trustee, the Trust Collateral Agent, the Owner Trustee, the
Collateral Agent, the Back-up Servicer, the Transferor, the Note Insurer,
the Demand Note Provider, the Issuer, the Certificateholder and the
Noteholders, and their respective officers, directors, agents and employees
from and against any and all costs, expenses, losses, claims, damages and
liabilities to the extent that such cost, expense, loss, claim, damage or
liability arose out of, or was imposed upon the Indenture Trustee, the
Trust Collateral Agent, the Owner Trustee, the Collateral Agent, the
Back-up Servicer, the Custodian, the Issuer, the Transferor, the Demand
Note Provider, the Note Insurer, the Issuer, the Certificateholder or the
Noteholders, and their respective officers, directors, agents and employees
through the negligence, willful misfeasance or bad faith of the Servicer in
the performance of its duties under this Agreement or any other Basic
Document to which it is a party or by reason of reckless disregard of its
obligations and duties under this Agreement or any other Basic Document to
which it is a party.
(iv) The Servicer shall indemnify, defend and hold harmless the
Indenture Trustee, the Trust Collateral Agent, the Owner Trustee, the
Collateral Agent, the Back-up Servicer, the Transferor, the Issuer, the
Custodian, the Demand Note Provider, the Note Insurer and their respective
officers, directors, agents and employees from and against all costs,
expenses, losses, claims, damages and liabilities arising out of or
incurred in connection with the acceptance or performance of the trusts and
duties contained herein or in any other Basic Document to which it is a
party, if any, except to the extent that such cost, expense, loss, claim,
damage or liability: (a) shall be due to the willful misfeasance, bad
faith, or negligence of the Indenture Trustee, the Trust Collateral Agent,
the Owner Trustee, the Collateral Agent, the Back-up Servicer, the
Transferor, the Issuer, the Custodian, the Demand Note Provider or the Note
Insurer, as applicable; (b) relates to any tax other than the taxes with
respect to which the Servicer shall be required to indemnify the Indenture
Trustee, the Trust Collateral Agent, the Owner Trustee, the Collateral
Agent, the Back-up Servicer, the Transferor, the Issuer, the Custodian, the
Demand Note Provider or the Note Insurer; or (c) shall arise from the Trust
Collateral Agent's breach of any of its representations or warranties set
forth in Section 10.12.
(v) The Servicer shall indemnify the Owner Trustee and WTC (as defined
in the Trust Agreement) and its officers, directors, successors, assigns,
agents and servants (collectively, the "Indemnified Parties") from and
against, any and all liabilities, obligations, losses, damages, taxes,
claims, actions and suits, and any and all reasonable costs, expenses and
disbursements (including reasonable legal fees and expenses) of any
50
kind and nature whatsoever (collectively, "Expenses") which may at any time
be imposed on, incurred by, or asserted against the Owner Trustee, WTC or
any Indemnified Party in any way relating to or arising out of this
Agreement, the Basic Documents, the Owner Trust Estate (as defined in the
Trust Agreement), the administration of the Owner Trust Estate or the
action or inaction of the Owner Trustee under the Trust Agreement, except
only that the Servicer shall not be liable for or required to indemnify the
Owner Trustee from and against Expenses arising or resulting from any of
the matters described in the third sentence of Section 6.1 of the Trust
Agreement. The indemnities contained in this Section shall survive the
resignation or termination of the Owner Trustee or the termination of the
Trust Agreement. In any event of any claim, action or proceeding for which
indemnity will be sought pursuant to this Section, the Owner Trustee's
choice of legal counsel shall be subject to the approval of the Transferor
which approval shall not be unreasonably withheld.
(vi) Notwithstanding the foregoing, the Servicer shall not be
obligated to defend, indemnify, and hold harmless any Noteholder for any
losses, claims, damages or liabilities incurred by any Noteholders arising
out of claims, complaints, actions and allegations relating to Section 406
of ERISA or Section 4975 of the Code as a result of the purchase or holding
of a Note by such Noteholder with the assets of a plan subject to such
provisions of ERISA or the Code or the servicing, management and operation
of the Issuer.
(b) For purposes of this Section, in the event of the termination of the
rights and obligations of a Servicer (or any successor thereto pursuant to
Section 8.3) as Servicer pursuant to Section 9.1, or a resignation by such
Servicer pursuant to this Agreement, such Servicer shall be deemed to be the
Servicer pending appointment of a successor Servicer pursuant to Section 9.2.
The provisions of this Section 8.2(b) shall in no way affect the survival
pursuant to Section 8.2(c) of the indemnification by the outgoing Servicer
provided by Section 8.2(a).
(c) Indemnification under this Section 8.2 shall survive the termination of
this Agreement and any resignation or removal of LBAC as Servicer and shall
include reasonable fees and expenses of counsel and expenses of litigation. If
the Servicer shall have made any indemnity payments pursuant to this Section 8.2
and the recipient thereafter collects any of such amounts from others, the
recipient shall promptly repay such amounts to the Servicer, without interest.
(d) In no event shall the Servicer be liable under this Agreement to any
Person for the acts or omissions of any successor Servicer, nor shall any
successor Servicer be liable under this Agreement to any Person for any acts or
omissions of a predecessor Servicer.
SECTION 8.3. Merger or Consolidation of, or Assumption of the
Obligations of, Servicer or Back-up Servicer.
(a) The Servicer shall not merge or consolidate with any other Person,
convey, transfer or lease substantially all its assets as an entirety to another
Person, or permit any other Person to become the successor to the Servicer's
business unless, after the merger, consolidation, conveyance, transfer, lease or
succession, the successor or surviving entity shall be an Eligible
51
Servicer and shall be capable of fulfilling the duties of the Servicer contained
in this Agreement and the other Basic Documents to which the Servicer is a
party. Any Person (a) into which the Servicer may be merged or consolidated, (b)
which may result from any merger or consolidation to which the Servicer shall be
a party, (c) which may succeed to the properties and assets of the Servicer
substantially as a whole or (d) or succeeding to the business of the Servicer
shall execute an agreement of assumption to perform every obligation of the
Servicer hereunder, and whether or not such assumption agreement is executed,
shall be the successor to the Servicer under this Agreement without further act
on the part of any of the parties to this Agreement; provided, however, that
nothing contained herein shall be deemed to release the Servicer from any
obligation hereunder; provided, further, however, that (i) immediately after
giving effect to such transaction, no representation or warranty made pursuant
to Section 8.1 hereof or made by the Servicer in the Purchase Agreement shall
have been breached (for purposes hereof, such representations and warranties
shall speak as of the date of the consummation of such transaction), no Servicer
Termination Event or Insurance Agreement Event of Default, and no event which,
after notice or lapse of time, or both, would become a Servicer Termination
Event or Insurance Agreement Event of Default shall have occurred and be
continuing, (ii) the Servicer shall have delivered to the Indenture Trustee, the
Trust Collateral Agent, the Demand Note Provider and the Note Insurer an
Officer's Certificate and an Opinion of Counsel in form and substance
satisfactory to the Indenture Trustee, the Trust Collateral Agent and the Note
Insurer each stating that such consolidation, merger or succession and such
agreement of assumption comply with this Section 8.3 and that all conditions
precedent provided for in this Agreement relating to such transaction have been
complied with, (iii) the Servicer shall have delivered to the Indenture Trustee,
the Trust Collateral Agent, the Demand Note Provider and the Note Insurer an
Opinion of Counsel either (A) stating that, in the opinion of such counsel, all
financing statements and continuation statements and amendments thereto have
been filed that are necessary fully to preserve and protect the interest of the
Issuer in the Receivables and reciting the details of such filings or (B)
stating that, in the opinion of such counsel, no such action shall be necessary
to preserve and protect such interest and (iv) nothing herein shall be deemed to
release the Servicer from any obligation. The Servicer shall provide written
notice of any merger, consolidation or succession pursuant to this Section
8.3(a) to the Indenture Trustee, the Trust Collateral Agent, the Issuer, the
Back-up Servicer, the Collateral Agent, the Demand Note Provider, the Note
Insurer, the Noteholders and each Rating Agency. Notwithstanding anything herein
to the contrary, the execution of the foregoing agreement of assumption and
compliance with clauses (i), (ii) or (iii) above shall be conditions to the
consummation of the transactions referred to in clause (a), (b) or (c) above.
(b) Any Person (a) into which the Back-up Servicer may be merged or
consolidated, (b) which may result from any merger or consolidation to which the
Back-up Servicer shall be a party, (c) which may succeed to the properties and
assets of the Back-up Servicer substantially as a whole or (d) succeeding to the
business of the Back-up Servicer, shall execute an agreement of assumption to
perform every obligation of the Back-up Servicer hereunder, and whether or not
such assumption agreement is executed, shall be the successor to the Back-up
Servicer under this Agreement without further act on the part of any of the
parties to this Agreement; provided, however, that nothing herein shall be
deemed to release the Back-up Servicer from any obligation.
SECTION 8.4. Limitation on Liability of Servicer and Others.
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(a) Neither the Servicer nor any of the directors or officers or employees
or agents of the Servicer shall be under any liability to the Indenture Trustee,
the Trust Collateral Agent, the Owner Trustee, the Collateral Agent, the Back-up
Servicer, the Custodian, the Issuer, the Demand Note Provider, the Note Insurer,
the Transferor, the Noteholders or the Certificateholder, except as provided
under this Agreement, for any action taken or for refraining from the taking of
any action pursuant to this Agreement; provided, however, that this provision
shall not protect the Servicer or any such person against any liability that
would otherwise be imposed by reason of a breach of this Agreement or willful
misfeasance, bad faith, or negligence in the performance of duties or by reason
of reckless disregard of obligations and duties under this Agreement. The
Servicer and any director or officer or employee or agent of the Servicer may
rely in good faith on any document of any kind prima facie properly executed and
submitted by any Person respecting any matters arising under this Agreement.
(b) Except as provided in this Agreement, the Servicer shall not be under
any obligation to appear in, prosecute or defend any legal action that shall not
be incidental to its duties to service the Receivables in accordance with this
Agreement, and that in its opinion may involve it in any expense or liability.
SECTION 8.5. Servicer and Back-up Servicer Not to Resign. Subject to
the provisions of Section 8.3, neither the Servicer nor the Back-up Servicer may
resign from the obligations and duties hereby imposed on it as Servicer or
Back-up Servicer, as the case may be, under this Agreement except upon
determination that by reason of a change in legal requirements the performance
of its duties under this Agreement would cause it to be in violation of such
legal requirements in a manner which would result in a material adverse effect
on the Servicer or Back-up Servicer, as the case may be, and the Note Insurer
does not elect to waive the obligations of the Servicer or Back-up Servicer, as
the case may be, to perform the duties which render it legally unable to act or
does not elect to delegate those duties to another Person. Notice of any such
determination permitting the resignation of the Servicer or Back-up Servicer, as
the case may be, shall be communicated to the Transferor, the Indenture Trustee,
the Trust Collateral Agent, the Issuer, the Note Insurer, the Demand Note
Provider, and each Rating Agency at the earliest practicable time (and, if such
communication is not in writing, shall be confirmed in writing at the earliest
practicable time) and any such determination by the Servicer or Back-up
Servicer, as the case may be, shall be evidenced by an Opinion of Counsel to
such effect delivered to and satisfactory to the Transferor, the Indenture
Trustee, the Trust Collateral Agent, the Issuer and the Note Insurer
concurrently with or promptly after such notice. No such resignation of the
Servicer shall become effective until a successor servicer shall have assumed
the responsibilities and obligations of LBAC in accordance with Section 9.2 and
the Servicing Assumption Agreement, if applicable. No such resignation of the
Back-up Servicer shall become effective until an entity acceptable to the Note
Insurer shall have assumed the responsibilities and obligations of the Back-up
Servicer; provided, however, that if no such entity shall have assumed such
responsibilities and obligations of the Back-up Servicer within 120 days of the
resignation of the Back-up Servicer, the Back-up Servicer may petition a court
of competent jurisdiction for the appointment of a successor to the Back-up
Servicer.
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ARTICLE IX
SERVICER TERMINATION EVENTS
SECTION 9.1. Servicer Termination Events. (a) If any one of the
following events ("Servicer Termination Events") shall occur and be continuing:
(i) Any failure by the Servicer or, for so long as LBAC is the
Servicer, the Transferor, to deliver to the Trust Collateral Agent for
payment to Noteholders or Certificateholder or deposit in the Spread
Account any proceeds or payment required to be so delivered under the terms
of the Notes, the Certificate, the Purchase Agreement, any Transfer
Agreement or this Agreement (including deposits of Purchase Amounts) that
shall continue unremedied for a period of two Business Days after written
notice is received by the Servicer from the Trust Collateral Agent or the
Note Insurer or after discovery of such failure by the Servicer (but in no
event later than the five Business Days after the Servicer is required to
make such delivery or deposit); or
(ii) The Servicer's Certificate required by Section 4.9 shall not have
been delivered to the Trust Collateral Agent and the Note Insurer within
one Business Day of the date such Servicer's Certificate is required to be
delivered; or the statement required by Section 4.10 or the report required
by Section 4.11 shall not have been delivered within five (5) days after
the date such statement or report, as the case may be, is required to be
delivered; or
(iii) Failure on the part of the Servicer to observe its covenants and
agreements set forth in Section 8.3 or, for so long as LBAC is the
Servicer, failure on the part of the Transferor to observe its covenants
and agreements set forth in Section 7.3; or
(iv) Failure on the part of LBAC, the Servicer or, for so long as LBAC
is the Servicer, the Transferor, as the case may be, duly to observe or to
perform in any material respect any other covenants or agreements of LBAC,
the Servicer, the Custodian or the Transferor (as the case may be) set
forth in the Notes, the Certificate, the Purchase Agreement, any Transfer
Agreement or this Agreement, which failure shall continue unremedied for a
period of 30 days after the date on which written notice of such failure
requiring the same to be remedied, shall have been given (1) to LBAC, the
Servicer or the Transferor (as the case may be), by the Note Insurer or the
Trust Collateral Agent, or (2) to LBAC, the Servicer or the Transferor (as
the case may be), and to the Trust Collateral Agent and the Note Insurer by
the Class A Noteholders evidencing not less than 25% of the Class A Note
Balance; or
(v) The entry of a decree or order for relief by a court or regulatory
authority having jurisdiction in respect of LBAC or the Servicer (or, so
long as LBAC is the Servicer, the Transferor, or any of the Servicer's
other Affiliates, if the Servicer's ability to service the Receivables is
adversely affected thereby) in an involuntary case under the federal
bankruptcy laws, as now or hereafter in effect, or another present or
future, federal or state, bankruptcy, insolvency or similar law, or
appointing a receiver, liquidator, assignee, trustee, custodian,
sequestrator or other similar official of LBAC, the
54
Servicer (or the Transferor or any other Affiliate of LBAC, if applicable)
or of any substantial part of their respective properties or ordering the
winding up or liquidation of the affairs of LBAC or the Servicer (or the
Transferor or any other Affiliate of LBAC, if applicable) or the
commencement of an involuntary case under the federal or state bankruptcy,
insolvency or similar laws, as now or hereafter in effect, or another
present or future, federal or state bankruptcy, insolvency or similar law
with respect to LBAC or the Servicer (or the Transferor or any other
Affiliate of LBAC, if applicable) and such case is not dismissed within 60
days; or
(vi) The commencement by LBAC or the Servicer (or, so long as LBAC is
the Servicer, the Transferor or any of the Servicer's other Affiliates, if
the Servicer's ability to service the Receivables is adversely affected
thereby) of a voluntary case under the federal bankruptcy laws, as now or
hereafter in effect, or any other present or future, federal or state,
bankruptcy, insolvency or similar law, or the consent by LBAC or the
Servicer (or the Transferor or any other Affiliate of LBAC, if applicable)
to the appointment of or taking possession by a receiver, liquidator,
assignee, trustee, custodian, sequestrator or other similar official of
LBAC or the Servicer (or the Transferor or any other Affiliate of LBAC, if
applicable) or of any substantial part of its property or the making by
LBAC or the Servicer (or the Transferor or any other Affiliate of LBAC, if
applicable) of an assignment for the benefit of creditors or the failure by
LBAC or the Servicer (or the Transferor or any other Affiliate of LBAC, if
applicable) generally to pay its debts as such debts become due or the
taking of corporate action by LBAC or the Servicer (or the Transferor or
any other Affiliate of LBAC, if applicable) in furtherance of any of the
foregoing; or
(vii) Any representation, warranty or statement of LBAC or the
Servicer or, for so long as LBAC is the Servicer, the Transferor, made in
this Agreement and, with respect to LBAC and the Transferor, the Purchase
Agreement or any Transfer Agreement, or in each case any certificate,
report or other writing delivered pursuant hereto shall prove to be
incorrect as of the time when the same shall have been made (excluding,
however, any representation or warranty set forth in Section 3.03(b) of the
Purchase Agreement or Section 4 of the related Transfer Agreement), and the
incorrectness of such representation, warranty or statement has a material
adverse effect on the Issuer and, within 30 days after written notice
thereof shall have been given (1) to LBAC, the Servicer or the Transferor
(as the case may be) by the Trust Collateral Agent or the Note Insurer or
(2) to LBAC, the Servicer or the Transferor (as the case may be), and to
the Trust Collateral Agent and the Note Insurer by the Class A Noteholders
evidencing not less than 25% of the Class A Note Balance, 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;
(ix) A claim is made under the Policy; or
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(x) So long as a Note Insurer Default shall not have occurred and be
continuing, the Note Insurer shall not have delivered a Servicer Extension
Notice pursuant to Section 4.13;
then, and in each and every case, so long as a Servicer Termination Event
shall not have been remedied; provided, (i) no Note Insurer Default shall
have occurred and be continuing, the Note Insurer in its sole and absolute
discretion, or (ii) if a Note Insurer Default shall have occurred and be
continuing, then either the Trust Collateral Agent or the Trust Collateral
Agent acting at the written direction of the Majorityholders, by notice
then given in writing to the Servicer (and to the Trust Collateral Agent if
given by the Note Insurer or by the Noteholders) or by the Note Insurer's
failure to deliver a Servicer Extension Notice pursuant to Section 4.13,
may terminate all of the rights and obligations of the Servicer under this
Agreement. The Servicer shall be entitled to its pro rata share of the
Servicing Fee for the number of days in the Collection Period prior to the
effective date of its termination. On or after the receipt by the Servicer
of such written notice, all authority and power of the Servicer under this
Agreement, whether with respect to the Notes, Certificate or the
Receivables or otherwise, shall without further action, pass to and be
vested in (i) the Back-up Servicer or (ii) such successor Servicer as may
be appointed under Section 9.2; provided, however, that the successor
Servicer shall have no liability with respect to any obligation which was
required to be performed by the predecessor Servicer prior to the date the
successor Servicer becomes the Servicer or any claim of a third party
(including a Noteholder) based on any alleged action or inaction of the
predecessor Servicer as Servicer; and, without limitation, the Trust
Collateral Agent is hereby authorized and empowered to execute and deliver,
on behalf of the predecessor Servicer, as attorney-in-fact or otherwise,
any and all documents and other instruments, and to do or accomplish all
other acts or things necessary or appropriate to effect the purposes of
such notice of termination, whether to complete the transfer and
endorsement of the Receivables and related documents, or otherwise.
Notwithstanding anything contained in this Agreement to the contrary, Xxxxx
Fargo as successor Servicer is authorized to accept and rely on all of the
accounting, records (including computer records) and work of the prior
Servicer relating to the Notes (collectively, the "Predecessor Servicer
Work Product") without any audit or other examination thereof, and Xxxxx
Fargo shall have no duty, responsibility, obligation or liability for the
acts and omissions of the prior Servicer. In the event that Xxxxx Fargo
becomes aware of any error, inaccuracy, omission or incorrect or
non-standard practice or procedure (collectively, "Errors") exist in any
Predecessor Servicer Work Product and such Errors make it materially more
difficult to service or should cause or materially contribute to Xxxxx
Fargo making or continuing any Errors (collectively, "Continued Errors"),
Xxxxx Fargo shall, with the prior consent of the Note Insurer, use its best
efforts to reconstruct and reconcile such data as are commercially
reasonable to correct such Errors and Continued Errors and to prevent
future Continued Errors. Xxxxx Fargo shall be entitled to recover its costs
thereby expended in accordance with Section 5.6(c)(ix) hereof. The
predecessor Servicer shall cooperate with the successor Servicer and the
Trust Collateral Agent in effecting the termination of the responsibilities
and rights of the predecessor Servicer under this Agreement, including the
transfer to the successor Servicer for administration by it of all cash
amounts that shall at the time be held or should have been held by the
predecessor Servicer for deposit, or shall thereafter be received with
respect
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to a Receivable and the delivery to the successor Servicer of all files and
records concerning the Receivables and a computer tape in readable form
containing all information necessary to enable the successor Servicer to
service the Receivables and the other property of the Issuer. All
reasonable costs and expenses (including attorneys' fees) incurred in
connection with transferring the Receivable Files to the successor Servicer
and amending this Agreement to reflect such succession as Servicer pursuant
to this Section 9.1 shall be paid by the predecessor Servicer upon
presentation of reasonable documentation of such costs and expenses. In
addition, any successor Servicer shall be entitled to payment from the
immediate predecessor Servicer for reasonable transition expenses incurred
in connection with acting as successor Servicer, and in connection with
system conversion costs, an aggregate amount not to exceed for such
conversion costs of $100,000, and to the extent not so paid, such payment
shall be made pursuant to Section 5.6(c)(ix) hereof. Upon receipt of
written notice of the occurrence of a Servicer Termination Event, the Trust
Collateral Agent shall give notice thereof to the Rating Agencies, the
Issuer and the Transferor. The predecessor Servicer shall grant the
Transferor, the Trust Collateral Agent, the Back-up Servicer and the Note
Insurer reasonable access to the predecessor Servicer's premises, computer
files, personnel, records and equipment at the predecessor Servicer's
expense. If requested by the Note Insurer, the Back-up Servicer or
successor Servicer shall terminate any arrangements relating to (i) the
Lock-Box Account with the Lock-Box Bank, (ii) the Lock-Box or (iii) the
Lock-Box Agreement, and direct the Obligors to make all payments under the
Receivables directly to the Servicer at the predecessor Servicer's expense
(in which event the successor Servicer shall process such payments
directly, or, through a Lock-Box Account with a Lock-Box Bank at the
direction of the Note Insurer). The Trust Collateral Agent shall send
copies of all notices given pursuant to this Section 9.1 to the Note
Insurer so long as no Note Insurer Default shall have occurred and be
continuing, to the Noteholders if a Note Insurer Default shall have
occurred and be continuing and to the Demand Note Provider so long as no
Demand Note Event shall have occurred and be continuing.
(b) In the event that the Custodian is acting as Servicer and the Servicer
is terminated pursuant to this Section 9.1, the Custodian may also be terminated
in accordance with the terms of the Custodial Agreement.
SECTION 9.2. Appointment of Successor.
(a) Upon the Servicer's receipt of notice of termination pursuant to
Section 9.1 or the Servicer's resignation in accordance with the terms of this
Agreement, the predecessor Servicer shall continue to perform its functions as
Servicer under this Agreement, in the case of termination, only until the date
specified in such termination notice or, if no such date is specified in a
notice of termination, until receipt of such notice, and, in the case of
resignation, until the later of (x) the date 45 days from the delivery to the
Trust Collateral Agent of written notice of such resignation (or written
confirmation of such notice) in accordance with the terms of this Agreement and
(y) the date upon which the predecessor Servicer shall become unable to act as
Servicer, as specified in the notice of resignation and accompanying Opinion of
Counsel. In the event of termination of the Servicer, the Back-up Servicer,
shall assume the obligations of Servicer hereunder on the date specified in such
written notice (the "Assumption Date") pursuant
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to the Servicing Assumption Agreement or, in the event that the Note Insurer
shall have determined that a Person other than the Back-up Servicer shall be the
successor Servicer in accordance with Section 9.2(c), on the date of the
execution of a written assumption agreement by such Person to serve as successor
Servicer. In the event of assumption of the duties of Servicer by the Back-up
Servicer, the Back-up Servicer shall be entitled to be paid by the Servicer for
the system conversion costs, an amount not to exceed $100,000. In the event that
such amount shall not have been timely paid by the Servicer, such amount shall
be paid under Section 5.6(c)(ix) hereof; provided, however, the payment of such
amount pursuant to Section 5.6(c)(ix) shall not relieve the Servicer of any
obligation or liability to pay such amount. Notwithstanding the Back-up
Servicer's assumption of, and its agreement to perform and observe, all duties,
responsibilities and obligations of LBAC as Servicer under this Agreement
arising on and after the Assumption Date, the Back-up Servicer shall not be
deemed to have assumed or to become liable for, or otherwise have any liability
for, any duties, responsibilities, obligations or liabilities of LBAC, the
Transferor or any predecessor Servicer arising on or before the Assumption Date,
whether provided for by the terms of this Agreement, arising by operation of law
or otherwise, including, without limitation, any liability for, any duties,
responsibilities, obligations or liabilities of LBAC, the Transferor or any
predecessor Servicer arising on or before the Assumption Date under Sections 4.7
or 8.2 of this Agreement, regardless of when the liability, duty, responsibility
or obligation of LBAC, the Transferor or any predecessor Servicer therefor
arose, whether provided by the terms of this Agreement, arising by operation of
law or otherwise. In addition, if the Back-up Servicer shall be legally unable
to act as Servicer or shall have delivered a notice of resignation pursuant to
Section 8.5 hereof and a Note Insurer Default shall have occurred and be
continuing, the Back-up Servicer, the Trust Collateral Agent or the Class A
Noteholders evidencing not less than 66-2/3% of the Class A Note Balance or the
Demand Note Provider may petition a court of competent jurisdiction to appoint
any successor to the Servicer. Pending appointment pursuant to the preceding
sentence, the Back-up Servicer shall act as successor Servicer unless it is
legally unable to do so, in which event the predecessor Servicer shall continue
to act as Servicer until a successor has been appointed and accepted such
appointment. In the event that a successor Servicer has not been appointed at
the time when the predecessor Servicer has ceased to act as Servicer in
accordance with this Section 9.2, then the Note Insurer, in accordance with
Section 9.2(c) shall appoint, or petition a court of competent jurisdiction to
appoint a successor to the Servicer under this Agreement.
(b) Upon appointment, the successor Servicer shall be the successor in all
respects to the predecessor Servicer and shall be subject to all the
responsibilities, duties, and liabilities arising thereafter relating thereto
placed on the predecessor Servicer, and shall be entitled to the Servicing Fee
and all of the rights granted to the predecessor Servicer, by the terms and
provisions of this Agreement.
(c) So long as no Note Insurer Default has occurred and is continuing, the
Note Insurer may exercise at any time its right to appoint as Back-up Servicer
or as successor Servicer a Person other than the Person serving as Back-up
Servicer at the time, and shall have no liability to the Trust Collateral Agent,
the Issuer, LBAC, the Transferor, the Person then serving as Back-up Servicer,
any Noteholder or any other person if it does so. Subject to Section 8.5, no
provision of this Agreement shall be construed as relieving the Back-up Servicer
of its obligation to succeed as successor Servicer upon the termination of the
Servicer pursuant to Section 9.1 or
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resignation of the Servicer pursuant to Section 8.5. If upon any such
resignation or termination, the Note Insurer appoints a successor Servicer other
than the Back-up Servicer, the Back-up Servicer shall not be relieved of its
duties as Back-up Servicer hereunder.
SECTION 9.3. Notification to Noteholders. Upon any termination of, or
appointment of a successor to, the Servicer pursuant to this Article IX, the
Trust Collateral Agent shall give prompt written notice thereof to Noteholders
at their respective addresses appearing in the Note Register or the Certificate
Register, as applicable, and to the Demand Note Provider and each of the Rating
Agencies.
SECTION 9.4. Action Upon Certain Failures of the Servicer. In the
event that a Responsible Officer of the Trust Collateral Agent shall have
knowledge of any failure of the Servicer specified in Section 9.1 which would
give rise to a right of termination under such Section upon the Servicer's
failure to remedy the same after notice, the Trust Collateral Agent shall give
notice thereof to the Transferor, the Servicer, the Demand Note Provider and the
Note Insurer. For all purposes of this Agreement, the Trust Collateral Agent
shall not be deemed to have knowledge of any failure of the Servicer as
specified in Section 9.1 unless notified thereof in writing by the Transferor,
the Servicer, the Note Insurer, the Demand Note Provider or by a Noteholder. The
Trust Collateral Agent shall be under no duty or obligation to investigate or
inquire as to any potential failure of the Servicer specified in Section 9.1.
ARTICLE X
THE TRUST COLLATERAL AGENT
SECTION 10.1. Duties of the Trust Collateral Agent.
(a) The Trust Collateral Agent, prior to the occurrence of an Event of
Default and after an Event of Default shall have been cured or waived, shall
undertake to perform such duties and only such duties as are specifically set
forth in this Agreement. If an Event of Default shall have occurred and shall
not have been cured or waived, the Trust Collateral Agent may, and at the
written direction of the Note Insurer (or, if a Note Insurer Default shall have
occurred and is continuing, the Majorityholders), shall exercise such of the
rights and powers vested in it by this Agreement and shall use the same degree
of care and skill in their exercise, as a prudent person would exercise or use
under the circumstances in the conduct of its own affairs.
(b) The Trust Collateral Agent, upon receipt of all resolutions,
certificates, statements, opinions, reports, documents, orders or other
instruments furnished to the Trust Collateral Agent that shall be specifically
required to be furnished pursuant to any provision of this Agreement, shall
examine them to determine whether they conform to the requirements of this
Agreement; provided, however, that, the Trust Collateral Agent shall not be
responsible for the accuracy or content of any such resolution, certificate,
statement, opinion, report, document, order or other instrument. If any such
instrument is found not to conform in any material respect to the requirements
of this Agreement, the Trust Collateral Agent shall notify the Note Insurer and
the Noteholders of such instrument in the event that the Trust Collateral Agent,
after so requesting, does not receive a satisfactorily corrected instrument.
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(c) The Trust Collateral Agent shall take and maintain custody of the
Schedule of Receivables included as Schedule A to this Agreement and shall
retain copies of all Servicer's Certificates prepared hereunder.
(d) No provision of this Agreement shall be construed to relieve the Trust
Collateral Agent from liability for its own negligent action, its own negligent
failure to act, or its own bad faith; provided, however, that:
(i) Prior to the occurrence of an Event of Default and after the
curing or waiving of all such Events of Default that may have occurred, the
duties and obligations of the Trust Collateral Agent shall be determined
solely by the express provisions of this Agreement, the Trust Collateral
Agent 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 Trust Collateral Agent and, in the absence of bad faith on the part of
the Trust Collateral Agent, the Trust Collateral Agent, may conclusively
rely on the truth of the statements and the correctness of the opinions
expressed in any certificates or opinions furnished to the Trust Collateral
Agent and conforming to the requirements of this Agreement;
(ii) The Trust Collateral Agent shall not be liable for an error of
judgment made in good faith by a Responsible Officer unless it shall be
proved that the Trust Collateral Agent shall have been negligent in
ascertaining the pertinent facts;
(iii) The Trust Collateral Agent 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 written direction of the Note
Insurer or, after a Note Insurer Default, the Class A Noteholders
evidencing not less than 25% of the Class A Note Balance and the Demand
Note Provider, relating to the time, method, and place of conducting any
proceeding for any remedy available to the Trust Collateral Agent, or
exercising any trust or power conferred upon the Trust Collateral Agent,
under this Agreement;
(iv) The Trust Collateral Agent shall not be charged with knowledge of
any Servicer Termination Event or Event of Default, unless a Responsible
Officer assigned to the Trust Collateral Agent's Corporate Trust Office
receives written notice of such Servicer Termination Event or Event of
Default from the Servicer, the Transferor, the Note Insurer or, after a
Note Insurer Default, the Class A Noteholders evidencing not less than 25%
of the Class A Note Balance and the Demand Note Provider (such notice shall
constitute actual knowledge of a Servicer Termination Event or Event of
Default by the Trust Collateral Agent); and
(v) The Trust Collateral Agent 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.
(e) The Trust Collateral Agent 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
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indemnity against such risk or liability in form and substance satisfactory to
the Trust Collateral Agent and none of the provisions contained in this
Agreement shall in any event require the Trust Collateral Agent to perform, or
be responsible for the manner of performance of, any of the obligations of the
Servicer under this Agreement except during such time, if any, as the Trust
Collateral Agent, in its capacity as Back-up Servicer, shall be the successor
to, and be vested with the rights, duties, powers, and privileges of, the
Servicer in accordance with the terms of this Agreement.
(f) Except for actions expressly authorized by this Agreement, the Trust
Collateral Agent shall not take action reasonably likely to impair the security
interests created or existing under any Receivable or Financed Vehicle or to
impair the value of any Receivable or Financed Vehicle.
(g) All information obtained by the Trust Collateral Agent regarding the
Obligors and the Receivables, whether upon the exercise of its rights under this
Agreement or otherwise, shall be maintained by the Trust Collateral Agent, in
confidence and shall not be disclosed to any other Person, all in accordance
with the Federal Financial Privacy Law; provided that, nothing herein shall
prevent the Trust Collateral Agent from delivering copies of such information
whether or not constituting Confidential Information, and disclosing other
information, whether or not Confidential Information, to (i) its directors,
officers, employees, agents and professional consultants to the extent necessary
to carry on the Trust Collateral Agent's business in the ordinary course, (ii)
any Noteholder, the Demand Note Provider or the Note Insurer to the extent that
such Noteholder, the Demand Note Provider or the Note Insurer is entitled to
such information under this Agreement or any other Basic Document, but not
otherwise, (iii) any governmental authority which specifically requests (or as
to which applicable regulations require) such information, (iv) any nationally
recognized rating agency in connection with the rating of the Notes by such
agency, or (v) any other Person to which such delivery or disclosure may be
necessary or appropriate (a) in compliance with any applicable law, rule,
regulation or order, (b) in response to any subpoena or other legal process, (c)
in connection with any litigation to which the Trust Collateral Agent is a
party, (d) in order to enforce the rights of the Noteholders and the Note
Insurer hereunder or under any other Basic Document, or (e) otherwise, in
accordance with the Federal Financial Privacy Law; provided, that, prior to any
such disclosure, the Trust Collateral Agent shall inform each such party (other
than any Noteholder, the Demand Note Provider, the Note Insurer or any other
party to the Basic Documents) that receives Confidential Information of the
foregoing requirements and shall use its commercially reasonable best efforts to
cause such party to comply with such requirements.
(h) Money held in trust by the Trust Collateral Agent need not be
segregated from other funds except to the extent required by law or the terms of
this Agreement or the Indenture.
(i) Every provision of this Agreement relating to the conduct or affecting
the liability of or affording protection to the Trust Collateral Agent shall be
subject to the provisions of this Section 10.1.
(j) The Trust Collateral Agent shall, and hereby agrees that it will,
perform all of the obligations and duties required of it under this Agreement.
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(k) The Trust Collateral Agent shall, and hereby agrees that it will, hold
the Policy in trust, and will hold any proceeds of any claim on the Policy in
trust, solely for the use and benefit of the Noteholders.
(l) Without limiting the generality of this Section 10.1, the Trust
Collateral Agent shall have no duty (i) to see to any recording, filing or
depositing of this Agreement or any agreement referred to herein or any
financing statement evidencing a security interest in the Financed Vehicles, or
to see to the maintenance of any such recording or filing or depositing or to
any recording, refiling or redepositing of any thereof, (ii) to see to any
insurance of the Financed Vehicles or Obligors or to effect or maintain any such
insurance, (iii) to see to the payment or discharge of any tax, assessment or
other governmental charge or any Lien or encumbrance of any kind owing with
respect to, assessed or levied against any part of the Pledged Property, (iv) to
confirm or verify the contents of any reports or certificates delivered to the
Trust Collateral Agent or the Servicer pursuant to this Agreement or the Trust
Agreement believed by the Trust Collateral Agent to be genuine and to have been
signed or presented by the proper party or parties, or (v) to inspect the
Financed Vehicles at any time or ascertain or inquire as to the performance or
observance of any of the Issuer's, the Transferor's or the Servicer's
representations, warranties or covenants or the Servicer's duties and
obligations as servicer and as custodian of the Receivable Files under this
Agreement.
(m) In no event shall Xxxxx Fargo Bank, National Association, in any of its
capacities hereunder, be deemed to have assumed any duties of the Owner Trustee
under the Delaware Statutory Trust Act, common law, or the Trust Agreement.
(n) The Trust Collateral Agent shall not be required to give any bond or
surety in respect of the powers granted to it under this Agreement.
SECTION 10.2. Trust Collateral Agent to Act for the Class A
Noteholders and Note Insurer. Prior to the payment in full of the Class A Notes
and the Reimbursement Obligations and the expiration of the term of the Policy,
the Trust Collateral Agent shall act solely for the benefit of the Class A
Noteholders, the Demand Note Provider and the Note Insurer, as their interests
may appear herein.
SECTION 10.3. Certain Matters Affecting the Trust Collateral Agent.
Except as otherwise provided in the second paragraph of Section 10.1:
(i) The Trust Collateral Agent may rely and shall be protected in
acting or refraining from acting upon any resolution, Officer's
Certificate, Servicer's Certificate, certificate of auditors, or any other
certificate, statement, instrument, opinion, report, notice, request,
consent, order, appraisal, bond, or other paper or document believed by it
to be genuine and to have been signed or presented by the proper party or
parties.
(ii) The Trust Collateral Agent may consult with counsel, and any
written advice or Opinion of Counsel shall be full and complete
authorization and protection in respect of any action taken or suffered or
omitted by it under this Agreement in good faith and in accordance with
such written advice or Opinion of Counsel.
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(iii) The Trust Collateral Agent shall not be under any obligation to
exercise any of the rights or powers vested in it by this Agreement, or to
institute, conduct, or defend any litigation under this Agreement or in
relation to this Agreement, at the request, order or direction of any of
the Noteholders or the Note Insurer pursuant to the provisions of this
Agreement, unless such Noteholders or the Note Insurer shall have offered
to the Trust Collateral Agent reasonable security or indemnity in form and
substance reasonably satisfactory to the Trust Collateral Agent against the
costs, expenses and liabilities that may be incurred therein or thereby.
Nothing contained in this Agreement, however, shall relieve the Trust
Collateral Agent of the obligations, upon the occurrence of a Servicer
Termination Event or Event of Default (that shall not have been cured or
waived), to exercise such of the rights and powers vested in it by this
Agreement, and to use the same degree of care and skill in their exercise
as a prudent person would exercise or use under the circumstances in the
conduct of its own affairs.
(iv) The Trust Collateral Agent 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 unless requested
in writing to do so by the Note Insurer (if no Note Insurer Default shall
have occurred or be continuing), the Transferor or the Class A Noteholders
evidencing not less than 25% of the Class A Note Balance and the Demand
Note Provider; provided, however, that, if the payment within a reasonable
time to the Trust Collateral Agent of the costs, expenses or liabilities
likely to be incurred by it in the making of such investigation shall be,
in the opinion of the Trust Collateral Agent, not reasonably assured to the
Trust Collateral Agent by the security afforded to it by the terms of this
Agreement, the Trust Collateral Agent may require indemnity in form and
substance satisfactory to it against such cost, expense or liability as a
condition to so proceeding. The reasonable expense of every such
examination shall be paid by the Person making such request or, if paid by
the Trust Collateral Agent, shall be reimbursed by the Person making such
request upon demand.
(v) The Trust Collateral Agent 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. The Trust Collateral Agent shall not be
responsible for any misconduct or negligence of any such agent appointed
with due care by it hereunder, or of any agent of the Servicer in its
capacity as Servicer or custodian or otherwise.
(vi) Except as may be expressly required by Sections 3.4, subsequent
to the sale of the Receivables by the Transferor to the Issuer, the Trust
Collateral Agent shall not have any duty of independent inquiry, and the
Trust Collateral Agent may rely upon the representations and warranties and
covenants of the Transferor and the Servicer contained in this Agreement
with respect to the Receivables and the Receivable Files.
(vii) The Trust Collateral Agent may rely, as to factual matters
relating to the Transferor or the Servicer, on an Officer's Certificate of
the Transferor or Servicer, respectively.
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(viii) The Trust Collateral Agent 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
Trust Collateral Agent to take action, if the Trust Collateral Agent 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) applicable law.
SECTION 10.4. Trust Collateral Agent and Back-up Servicer Not Liable
for Notes or Receivables. The recitals contained herein shall be taken as the
statements of the Issuer, the Transferor or the Servicer, as the case may be,
and neither the Trust Collateral Agent nor the Back-up Servicer assumes any
responsibility for the correctness thereof. Neither the Trust Collateral Agent
nor the Back-up Servicer shall make any representations as to the validity or
sufficiency of this Agreement or of the Notes, or of any Receivable or related
document. Neither the Trust Collateral Agent nor the Back-up Servicer shall at
any time have any responsibility or liability for or with respect to the
legality, validity and enforceability of any security interest in any Financed
Vehicle or any Receivable, or the perfection and priority of such a security
interest or the maintenance of any such perfection and priority, or for or with
respect to the efficacy of the Issuer or its ability to generate the payments to
be distributed to Noteholders under this Agreement, including, without
limitation: the existence, condition, location, and ownership of any Financed
Vehicle; the existence and enforceability of any physical damage insurance
thereon; except as required by Section 3.4, the existence, contents and
completeness of any Receivable or any Receivable Files or any computer or other
record thereof; the validity of the assignment of any Receivable to the Issuer
or of any intervening assignment; except as required by Section 3.4, the
performance or enforcement of any Receivable; the compliance by the Transferor
or the Servicer with any warranty or representation made under this Agreement or
in any related document and the accuracy of any such warranty or representation
prior to the Trust Collateral Agent's or the Back-up Servicer's receipt of
written notice or other actual knowledge by a Responsible Officer of any
noncompliance therewith or any breach thereof; any investment of monies by or at
the direction of the Servicer or the Note Insurer or any loss resulting
therefrom (it being understood that the Trust Collateral Agent and the Back-up
Servicer shall each remain responsible for any Trust Assets that it may hold);
the acts or omissions of the Issuer, the Transferor, the Servicer, or any
Obligor; any action of the Servicer taken in the name of the Trust Collateral
Agent; or any action by the Trust Collateral Agent taken at the instruction of
the Servicer; provided, however, that the foregoing shall not relieve either the
Trust Collateral Agent or the Back-up Servicer of its obligation to perform its
duties under this Agreement. Except with respect to a claim based on the failure
of the Trust Collateral Agent or the Back-up Servicer to perform its duties
under this Agreement or based on the Trust Collateral Agent's or the Back-up
Servicer's negligence or willful misconduct, no recourse shall be had for any
claim based on any provision of this Agreement, the Notes, or any Receivable or
assignment thereof against the Trust Collateral Agent or the Back-up Servicer in
their respective individual capacities, neither the Trust Collateral Agent nor
the Back-up Servicer shall have any personal obligation, liability, or duty
whatsoever to any Noteholder or any other Person with respect to any such claim,
and any such claim shall be asserted solely against the Issuer or any indemnitor
who shall furnish indemnity as provided in this Agreement. Neither the Trust
Collateral Agent nor the Back-up Servicer shall be accountable for the use or
application by the Issuer of any of the Notes or of the proceeds of such Notes,
or for the use or application of any funds paid to the Servicer in respect of
the Receivables. The Issuer hereby certifies to the
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Trust Collateral Agent and the Back-up Servicer that the Rating Agencies rating
the Notes are Standard & Poor's and Xxxxx'x and that their addresses are as set
forth in Section 13.5. The Trust Collateral Agent and the Back-up Servicer may
rely on the accuracy of such certification until it receives from the Issuer an
Officer's Certificate superseding such certification. All references above to
the Back-up Servicer shall be deemed to refer to the Back-up Servicer only so
long as it is acting in such capacity hereunder.
SECTION 10.5. Trust Collateral Agent and Back-up Servicer May Own
Notes. The Trust Collateral Agent and the Back-up Servicer in their respective
individual or any other capacities may become the owner or pledgee of Notes and
may deal with the Transferor and the Servicer in banking transactions with the
same rights as it would have if it were not Trust Collateral Agent or Back-up
Servicer, as applicable.
SECTION 10.6. Indemnity of Trust Collateral Agent and Back-up
Servicer. The Servicer shall indemnify the Trust Collateral Agent, the Back-up
Servicer and each officer, director and employee of the Trust Collateral Agent
and the Back-up Servicer for, and hold each such Person harmless against, any
loss, liability, or expense incurred without willful misfeasance, negligence, or
bad faith on its part, arising out of or in connection with the acceptance or
administration of this Agreement, including the costs and expenses of defending
itself against any claim or liability in connection with the exercise or
performance of any of its powers or duties under this Agreement. The provisions
of this Section 10.6 shall survive the termination of this Agreement or any
resignation or removal of LBAC as Servicer.
SECTION 10.7. Eligibility Requirements for Trust Collateral Agent. The
Trust Collateral Agent under this Agreement shall at all times be organized and
doing business under the laws of the United States; authorized under such laws
to exercise corporate trust powers; having a combined capital and surplus of at
least $50,000,000 and subject to supervision or examination by Federal or State
authorities satisfactory to the Note Insurer; and having a rating, both with
respect to long-term and short-term unsecured obligations, of not less than
investment grade by each Rating Agency. If such corporation shall publish
reports of condition at least annually, pursuant to law or to the requirements
of the aforesaid supervising or examining authority, then for the purpose of
this Section 10.7, the combined capital and surplus of such corporation shall be
deemed to be its combined capital and surplus as set forth in its most recent
report of condition so published. In case at any time the Trust Collateral Agent
shall cease to be eligible in accordance with the provisions of this Section
10.7, the Trust Collateral Agent shall resign immediately in the manner and with
the effect specified in Section 10.8.
SECTION 10.8. Resignation or Removal of Trust Collateral Agent.
(a) The Trust Collateral Agent may at any time resign and be discharged
from the trusts hereby created by giving 30 days' prior written notice thereof
to the Servicer. To the extent that the Trust Collateral Agent resigns
hereunder, the Indenture Trustee shall also resign under the Indenture and the
Collateral Agent shall resign under the Spread Account Agreement. Upon receiving
such notice of resignation, with the prior written consent of the Note Insurer
(or, if a Note Insurer Default shall have occurred or is continuing, the Class A
Noteholders evidencing not less than 25% of the Class A Note Balance and the
Demand Note Provider), the Servicer shall promptly appoint a successor Trust
Collateral Agent by written instrument, in
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duplicate, one copy of which instrument shall be delivered to the resigning
Trust Collateral Agent and one copy to the successor Trust Collateral Agent. If
no successor Trust Collateral Agent shall have been so appointed and have
accepted appointment within 30 days after the giving of such notice of
resignation, the Note Insurer (or, if a Note Insurer Default shall have occurred
or is continuing, the Class A Noteholders evidencing not less than 25% of the
Class A Note Balance and the Demand Note Provider) may appoint a successor Trust
Collateral Agent by written instrument, in duplicate, one copy of which
instrument shall be delivered to the resigning Trust Collateral Agent and one
copy to the successor Trust Collateral Agent. If no successor Trust Collateral
Agent shall have been so appointed and have accepted appointment within 60 days
after the giving of such notice of resignation, the resigning Trust Collateral
Agent may petition any court of competent jurisdiction for the appointment of a
successor Trust Collateral Agent. The Trust Collateral Agent may be removed at
any time by written demand of the Note Insurer delivered to the Trust Collateral
Agent and the Servicer.
(b) If at any time (i) the Trust Collateral Agent shall cease to be
eligible in accordance with the provisions of Section 10.7 and shall fail to
resign after written request therefor by the Servicer, (ii) the Trust Collateral
Agent shall be legally unable to act, (iii) the Trust Collateral Agent and the
Indenture Trustee shall be the same Person and the Indenture Trustee shall have
resigned or been removed pursuant to Section 6.8 of the Indenture, or (iv) the
Trust Collateral Agent shall be adjudged bankrupt or insolvent, or a receiver,
conservator or liquidator of the Trust Collateral Agent or of any of its
property shall be appointed, or any public officer shall take charge or control
of the Trust Collateral Agent or of its property or affairs for the purpose of
rehabilitation, conservation or liquidation, then the Note Insurer shall (so
long as no Note Insurer Default shall have occurred and be continuing), or the
Servicer may (if a Note Insurer Default shall have occurred and be continuing)
remove the Trust Collateral Agent. If the Note Insurer or the Servicer shall
remove the Trust Collateral Agent under the authority of the immediately
preceding sentence, the Servicer or the Note Insurer, as the case may be, shall
promptly appoint a successor Trust Collateral Agent by written instrument, in
duplicate, one copy of which instrument shall be delivered to the Trust
Collateral Agent so removed and one copy to the successor Trust Collateral
Agent, and pay all fees and expenses owed to the outgoing Trust Collateral
Agent, provided that any successor Trust Collateral Agent appointed by the
Servicer shall be acceptable to the Note Insurer.
(c) Any resignation or removal of the Trust Collateral Agent and
appointment of a successor Trust Collateral Agent pursuant to any of the
provisions of this Section 10.8 shall not become effective until acceptance of
appointment by the successor Trust Collateral Agent, pursuant to Section 10.9
and payment of all fees and expenses owed to the outgoing Trust Collateral
Agent. The Servicer shall provide written notice of such resignation or removal
of the Trust Collateral Agent to each of the Rating Agencies, the Demand Note
Provider and the Transferor.
(d) If the Trust Collateral Agent and the Back-up Servicer shall be the
same Person and the rights and obligations of the Back-up Servicer shall have
been terminated pursuant to this Section 10.8, then the Note Insurer (or, if a
Note Insurer Default shall have occurred and be continuing, the Majorityholders)
shall have the option, by 60 days' prior notice in writing to the Servicer and
the Trust Collateral Agent, to remove the Trust Collateral Agent, and the Note
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Insurer shall not have any liability to the Trust Collateral Agent, LBAC, the
Transferor, the Servicer, the Issuer or any Noteholder in connection with such
removal.
SECTION 10.9. Successor Trust Collateral Agent. Any successor Trust
Collateral Agent appointed pursuant to Section 10.8 shall execute, acknowledge
and deliver to the Transferor, the Servicer, the Note Insurer and to its
predecessor Trust Collateral Agent an instrument accepting such appointment
under this Agreement, and thereupon the resignation or removal of the
predecessor Trust Collateral Agent shall become effective and such successor
Trust Collateral Agent, without any further act, deed or conveyance, shall
become fully vested with all the rights, powers, duties, and obligations of its
predecessor under this Agreement, with like effect as if originally named as
Trust Collateral Agent. The predecessor Trust Collateral Agent shall upon
payment of its fees and expenses deliver to the successor Trust Collateral Agent
all documents and statements and monies held by it under this Agreement; and the
Servicer, the Note Insurer and the predecessor Trust Collateral Agent shall
execute and deliver such instruments and do such other things as may reasonably
be required for fully and certainly vesting and confirming in the successor
Trust Collateral Agent all such rights, powers, duties, and obligations.
No successor Trust Collateral Agent shall accept appointment as
provided in this Section 10.9 unless at the time of such acceptance such
successor Trust Collateral Agent shall be eligible pursuant to Section 10.7.
Upon acceptance of appointment by a successor Trust Collateral Agent
pursuant to this Section 10.9, the Servicer shall mail notice of the successor
of such Trust Collateral Agent under this Agreement to all Holders of Notes at
their addresses as shown in the Note Register, the Transferor, the Demand Note
Provider and to the Rating Agencies. If the Servicer shall fail to mail such
notice within ten (10) days after acceptance of appointment by the successor
Trust Collateral Agent, the successor Trust Collateral Agent shall cause such
notice to be mailed at the expense of the Servicer.
SECTION 10.10. Merger or Consolidation of Trust Collateral Agent. Any
corporation into which the Trust Collateral Agent may be merged or converted or
with which it may be consolidated, or any corporation resulting from any merger,
conversion or consolidation to which the Trust Collateral Agent shall be a
party, or any corporation succeeding to all or substantially all of the
corporate trust business of the Trust Collateral Agent shall be the successor of
the Trust Collateral Agent hereunder, provided such corporation shall be
eligible pursuant to Section 10.7, without the execution or filing of any
instrument or any further act on the part of any of the parties hereto, anything
herein to the contrary notwithstanding.
SECTION 10.11. Co-Trustee; Separate Trustee.
(a) Notwithstanding any other provisions of this Agreement, at any time,
for the purpose of meeting any legal requirements of any jurisdiction in which
any part of the Issuer or any Financed Vehicle may at the time be located, the
Servicer, the Note Insurer (provided a Note Insurer Default shall not have
occurred and be continuing) and the Trust Collateral Agent acting jointly shall
have the power and shall execute and deliver all instruments to appoint one or
more persons approved by the Trust Collateral Agent to act as co-trustee,
jointly with the Trust
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Collateral Agent, or separate trustee or separate trustees, of all or any part
of the Issuer, and to vest in such Person, in such capacity and for the benefit
of the Noteholders, such title to the Issuer, or any part thereof, and, subject
to the other provisions of this Section 10.11, such powers, duties, obligations,
rights, and trusts as the Servicer, the Note Insurer and the Trust Collateral
Agent may consider necessary or desirable. If the Servicer and the Note Insurer
shall not have joined in such appointment within fifteen (15) days after the
receipt by it of a request so to do, or in the case an Event of Default shall
have occurred and be continuing, the Trust Collateral Agent alone shall have the
power to make such appointment. No co-trustee or separate trustee under this
Agreement shall be required to meet the terms of eligibility as a successor
Trust Collateral Agent pursuant to Section 10.7, except that the co-trustee or
its parent shall comply with the rating requirements set forth therein, and no
notice of a successor Trust Collateral Agent pursuant to Section 10.9 and no
notice to Noteholders of the appointment of any co-trustee or separate trustee
shall be required pursuant to Section 10.9.
(b) Each separate trustee and co-trustee shall, to the extent permitted by
law, be appointed and act subject to the following provisions and conditions:
(i) All rights, powers, duties, and obligations conferred or imposed
upon the Trust Collateral Agent shall be conferred upon and exercised or
performed by the Trust Collateral Agent and such separate trustee or
co-trustee jointly (it being understood that such separate trustee or
co-trustee is not authorized to act separately without the Trust Collateral
Agent joining in such act), except to the extent that under any law of any
jurisdiction in which any particular act or acts are to be performed
(whether as Trust Collateral Agent under this Agreement or, in its capacity
as Back-up Servicer, as successor to the Servicer under this Agreement),
the Trust Collateral Agent shall be incompetent or unqualified to perform
such act or acts, in which event such rights, powers, duties, and
obligations (including the holding of title to the Issuer or any portion
thereof in any such jurisdiction) shall be exercised and performed singly
by such separate trustee or co-trustee, but solely at the direction of the
Trust Collateral Agent;
(ii) No trustee under this Agreement shall be personally liable by
reason of any act or omission of any other trustee under this Agreement;
and
(iii) Provided no Note Insurer Default shall have occurred and be
continuing, the Note Insurer may, and, in the event a Note Insurer Default
shall have occurred and be continuing, then, the Servicer and the Trust
Collateral Agent acting jointly may, at any time accept the resignation of
or remove any separate trustee or co-trustee.
(c) Any notice, request or other writing given to the Trust Collateral
Agent shall be deemed to have been given to each of the other then separate
trustees and co-trustees, as effectively as if given to each of them. Every
instrument appointing any separate trustee or co-trustee shall refer to this
Agreement and the conditions of this Article X. Each separate trustee and
co-trustee, upon its acceptance of the trusts conferred, shall be vested with
the estates or property specified in its instrument of appointment, either
jointly with the Trust Collateral Agent or separately, as may be provided
therein, subject to all the provisions of this Agreement, specifically including
every provision of this Agreement relating to the conduct of, affecting the
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liability of, or affording protection to, the Trust Collateral Agent. Each such
instrument shall be filed with the Trust Collateral Agent and a copy thereof
given to the Servicer.
(d) Any separate trustee or co-trustee may at any time appoint the Trust
Collateral Agent, its agent or attorney-in-fact with full power and authority,
to the extent not prohibited by law, to do any lawful act under or in respect of
this Agreement on its behalf and in its name. If any separate trustee or
co-trustee shall die, become incapable of acting, resign or be removed, all of
its estates, properties, rights, remedies and trusts shall vest in and be
exercised by the Trust Collateral Agent, to the extent permitted by law, without
the appointment of a new or successor Trust Collateral Agent.
SECTION 10.12. Representations and Warranties of Trust Collateral
Agent. The Trust Collateral Agent shall make the following representations and
warranties with respect to itself on which the Transferor, the Servicer, the
Originator, the Issuer, the Note Insurer, the Demand Note Provider and the
Noteholders shall rely:
(i) The Trust Collateral Agent is a national banking association, duly
organized, validly existing, and in good standing under the laws of the
United States.
(ii) The Trust Collateral Agent 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 has been duly executed and delivered by the Trust
Collateral Agent and constitutes a legal, valid and binding obligation of
the Trust Collateral Agent, enforceable in accordance with its terms,
subject to (x) applicable bankruptcy, insolvency, reorganization,
moratorium and other similar laws affecting creditors' rights generally and
(y) general principals of equity.
SECTION 10.13. Rights of Note Insurer to Direct Trust Collateral
Agent. Subject to clause (iii) of Section 10.3, unless a Note Insurer Default
shall have occurred and be continuing, the Note Insurer, after giving written
notice to the Trust Collateral Agent, shall have the right to direct in writing
the time, method and place at or by which the Trust Collateral Agent conducts
any proceeding for any remedy available to the Trust Collateral Agent, or
exercises any such trust or power conferred upon the Trust Collateral Agent;
provided, however, that subject to Section 10.1, the Trust Collateral Agent
shall have the right to decline to follow any such direction of the Note Insurer
if the Trust Collateral Agent, being advised by counsel, determines that the
action so directed may not lawfully be taken, or if the Trust Collateral Agent
in good faith shall, by a Responsible Officer of the Trust Collateral Agent,
determine that the proceedings so directed would be in violation of any Basic
Document or involve it in personal liability against which it has not been
provided indemnity in form and substance satisfactory to it or be unduly
prejudicial to the rights of Noteholders; provided, that nothing in this
Agreement shall impair the right of the Trust Collateral Agent to take any
action deemed proper by the Trust Collateral Agent and which is not inconsistent
with such direction of the Note Insurer.
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ARTICLE XI
TERMINATION
SECTION 11.1. Termination.
(a) The respective obligations and responsibilities of LBAC, the
Transferor, the Issuer, the Servicer, the Custodian and the Trust Collateral
Agent created hereby shall terminate upon the payment to Noteholders and the
Certificateholder of all amounts required to be paid to them pursuant to this
Agreement, the Indenture and the Trust Agreement, satisfaction of all
Reimbursement Obligations and all amounts due and owing to the Demand Note
Provider and the Demand Note Guarantor hereunder, and the expiration of any
preference period related thereto and the disposition of all property held as
part of the Trust Assets; provided, however, in any case there shall be
delivered to the Trust Collateral Agent and the Note Insurer an Opinion of
Counsel that all applicable preference periods under federal, state and local
bankruptcy, insolvency and similar laws have expired with respect to the
payments pursuant to this Section 11.1. The Servicer shall promptly notify the
Trust Collateral Agent, the Transferor, the Issuer, each Rating Agency, the
Demand Note Provider and the Note Insurer of any prospective termination
pursuant to this Section 11.1.
(b) Upon any sale of the assets of the Issuer pursuant to Section 8.1 of
the Trust Agreement, the Servicer shall instruct the Trust Collateral Agent in
writing to deposit the proceeds from such sale after all payments and reserves
therefrom (including the expenses of such sale) have been made (the "Insolvency
Proceeds") in the Collection Account.
(c) Written notice of any termination of the Issuer shall be given by the
Servicer to the Owner Trustee, the Trust Collateral Agent, the Collateral Agent,
the Back-up Servicer, the Indenture Trustee, the Demand Note Provider, the Note
Insurer and the Rating Agencies as soon as practicable after the Servicer has
received notice thereof.
(d) Following the satisfaction and discharge of the Indenture and the
payment in full of the principal of and interest on the Notes, the
Certificateholder will succeed to the rights of the Noteholders hereunder.
ARTICLE XII
ADMINISTRATIVE DUTIES OF THE SERVICER
SECTION 12.1. Administrative Duties.
(a) Duties with Respect to the Indenture. The Servicer shall take all
necessary action that is the duty of the Issuer to take pursuant to the
Indenture, pursuant to Sections 2.9 (with respect to the notice provisions
contained therein), 3.4, 3.5, 3.6, 3.7, 3.9, 3.10, 3.17, 3.19, 6.8, 7.1, 7.3,
8.3, 9.1, 9.2, 9.3, 11.1 and 11.14 of the Indenture (in each case, excluding any
duty to make payments to the Noteholders, the Demand Note Provider and the Note
Insurer). In addition, the Servicer shall consult with the Owner Trustee as the
Servicer deems appropriate regarding the duties of the Issuer under the
Indenture. The Servicer shall monitor the performance of the Issuer and shall
advise the Owner Trustee when action is necessary to comply with the Issuer's
duties under the Indenture. The Servicer shall prepare for execution by
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the Issuer or shall cause the preparation by other appropriate Persons of all
such documents, reports, filings, instruments, certificates and opinions as it
shall be the duty of the Issuer to prepare, file or deliver pursuant to the
Indenture.
(b) Duties with Respect to the Issuer.
(i) In addition to the duties of the Servicer set forth in this
Agreement or any of the Basic Documents, the Servicer shall perform such
calculations and shall prepare for execution by the Issuer or the Owner
Trustee or shall cause the preparation by other appropriate Persons of all
such documents, reports, filings, instruments, certificates and opinions as
it shall be the duty of the Issuer or the Owner Trustee to prepare, file or
deliver pursuant to this Agreement or any of the Basic Documents or under
state and federal tax and securities laws, including, without limitation
the Xxxxxxxx-Xxxxx Act of 2002, and at the request of the Owner Trustee
shall take all appropriate action that it is the duty of the Issuer to take
pursuant to this Agreement. In accordance with the directions of the Issuer
or the Owner Trustee, the Servicer shall administer, perform or supervise
the performance of such other activities in connection with the Trust
Assets (including the Basic Documents) as are not covered by any of the
foregoing provisions and as are expressly requested by the Issuer or the
Owner Trustee and are reasonably within the capability of the Servicer.
(ii) In carrying out the foregoing duties or any of its other
obligations under this Agreement, the Servicer may enter into transactions
with or otherwise deal with any of its Affiliates; provided, however, that
the terms of any such transactions or dealings shall be in accordance with
any directions received from the Issuer and shall be, in the Servicer's
opinion, no less favorable to the Issuer in any material respect.
(c) Non-Ministerial Matters. With respect to matters that in the reasonable
judgment of the Servicer are non-ministerial, the Servicer shall not take any
action pursuant to this Article XII unless within a reasonable time before the
taking of such action, the Servicer shall have notified the Owner Trustee, the
Note Insurer, the Demand Note Provider and the Trust Collateral Agent of the
proposed action and the Owner Trustee and, with respect to items (i), (ii),
(iii) and (iv) below, the Trust Collateral Agent shall not have withheld consent
or provided an alternative direction. For the purpose of the preceding sentence,
"non-ministerial matters" shall include:
(i) the amendment of or any supplement to the Indenture;
(ii) the initiation of any claim or lawsuit by the Issuer and the
compromise of any action, claim or lawsuit brought by or against the Issuer
(other than in connection with the collection of the Receivables);
(iii) the amendment, change or modification of this Agreement or any
of the Basic Documents;
(iv) the appointment of successor Note Registrars, successor Note
Paying Agents and successor Indenture Trustees pursuant to the Indenture or
the appointment of Successor Servicers or the consent to the assignment by
the Note Registrar, Paying Agent or Trustee of its obligations under the
Indenture; and
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(v) the removal of the Trust Collateral Agent or the Indenture
Trustee.
(d) Exceptions. Notwithstanding anything to the contrary in this Agreement,
except as expressly provided herein or in the other Basic Documents, the
Servicer, in its capacity hereunder, shall not be obligated to, and shall not,
(1) make any payments to the Noteholders under the Basic Documents, (2) sell the
Pledged Property pursuant to Section 5.5 of the Indenture, (3) take any other
action that the Issuer directs the Servicer not to take on its behalf or (4) in
connection with its duties hereunder assume any indemnification obligation of
any other Person.
SECTION 12.2. Records. The Servicer shall maintain appropriate books
of account and records relating to services performed under this Agreement,
which books of account and records shall be accessible for inspection by the
Issuer at any time during normal business hours.
SECTION 12.3. Additional Information to be Furnished to the Issuer.
The Servicer shall furnish to the Issuer from time to time such additional
information regarding the Trust Assets as the Issuer shall reasonably request.
SECTION 12.4. No Additional Compensation. The Servicing Fee payable to
the Servicer pursuant to Section 5.6(c)(i) shall be the only amount payable to
the Servicer for its services hereunder.
ARTICLE XIII
MISCELLANEOUS PROVISIONS
SECTION 13.1. Amendment.
(a) This Agreement may be amended from time to time by the Issuer, the
Transferor, the Originator, the Servicer, the Trust Collateral Agent, the
Back-up Servicer and the Custodian and, (i) unless a Note Insurer Default has
occurred and is continuing or the Policy Expiration Date has occurred, with the
prior written consent of the Note Insurer and, (ii) if a Note Insurer Default
has occurred and is continuing or the Policy Expiration Date has occurred with
the consent of the Majorityholders, which consent given pursuant to this Section
or pursuant to any other provision of this Agreement shall be conclusive and
binding on all Holders and on all future Holders of Notes and of any Notes
issued upon the transfer thereof or in exchange thereof or in lieu thereof
whether or not notation of such consent is made upon the Notes, for the purpose
of adding any provisions to or changing in any manner or eliminating any of the
provisions of this Agreement, or of modifying in any manner the rights of the
Holders of Notes; provided, however, that, in the case of either clause (i) or
(ii) above, no such amendment shall (a) increase or reduce in any manner the
amount of, or accelerate or delay the timing of, or change the allocation or
priority of, collections of payments on Receivables or payments that shall be
required to be made on any Note or the Certificate or change the applicable Note
Rate without the consent of each Noteholder or Certificateholder, as applicable,
affected thereby, (b) reduce the aforesaid percentage of the Note Balance
required to consent to any such amendment, without the consent of the Holders of
all Notes then outstanding or eliminate the right of the Noteholder or the
Certificateholder to consent to any change described in clause (a) affecting the
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Noteholder or the Certificateholder without the consent of the Noteholder or the
Certificateholder, as applicable; or (c) result in a downgrade or withdrawal of
the then current rating of the Notes by either of the Rating Agencies without
the consent of all the Noteholders; provided, further that in the case of clause
(ii) above, this Agreement may be amended from time to time by the Issuer, the
Transferor, the Originator, the Servicer, the Trust Collateral Agent, the
Back-up Servicer and the Custodian, with the prior written consent of the Note
Insurer (unless a Note Insurer Default has occurred and is continuing or the
Policy Expiration Date has occurred) for any of the following purposes:
(x) to correct or amplify the description of any property at any time
conveyed to the Issuer hereunder or under any Transfer Agreement, or better
to assure, convey and confirm unto the property conveyed pursuant hereto or
pursuant to any Transfer Agreement;
(y) to add to the covenants of the Transferor, the Originator or the
Servicer, for the benefit of the Holders of the Notes and the Note Insurer;
or
(z) to cure any ambiguity, to correct or supplement any provision
herein or in any Transfer Agreement which may be inconsistent with any
other provision herein or in any Transfer Agreement or to make any other
provisions with respect to matters or questions arising under this
Agreement or under any Transfer Agreement; provided that such action
pursuant to this subclause (z) shall not adversely affect in any material
respect the interests of the Holders of the Notes, as evidenced by
satisfaction of the Rating Agency Condition with respect to such amendment
(b) None of Article II or Sections 4.4, 4.5, 4.6, 5.6 (as such Section
relates to payments to be made to the Demand Note Provider), 5.12 or 5.15 of
this Agreement shall be amended or modified without the prior written consent of
the Demand Note Provider (for so long as the Demand Note is outstanding and all
amounts due and owing to the Demand Note Provider hereunder have not been paid
in full), which consent shall not be unreasonably withheld, unless the Demand
Note Provider has received an opinion of counsel addressed to the Demand Note
Provider from Xxxxx Xxxxxxxxxx LLP, Xxxxxxx Xxxxxxxx & Xxxx LLP, Sidley, Austin,
Xxxxx & Wood LLP or Weil, Gotshal & Xxxxxx LLP, (which opinion shall not be at
the expense of the Demand Note Provider, the Indenture Trustee, the Trust
Collateral Agent, the Note Insurer or the Owner Trustee) that such amendment or
modification will not have a material adverse affect on the Demand Note
Provider. Notwithstanding the foregoing, no provision of this Agreement nor any
provision of any other Basic Document shall be amended or modified without the
prior written consent of the Demand Note Provider (for so long as the Demand
Note is outstanding and all amounts due and owing to the Demand Note Provider
hereunder have not been paid in full), if the result of such amendment or
modification is (a) to reduce or change the priority of payments payable to or
by the Demand Note Provider; (b) to accelerate or postpone the scheduled date of
payments payable to or by the Demand Note Provider or (c) to accelerate or
postpone the date of any notice with respect to any payments payable to or by
the Demand Note Provider.
(c) The Trust Collateral Agent shall furnish prior notice of any such
proposed amendment to each Rating Agency and the Demand Note Provider and
promptly after the
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execution of any such amendment or consent, the Trust Collateral Agent shall
furnish a copy of such amendment and/or consent, if applicable, to each
Noteholder, each of the Rating Agencies and the Lock-Box Processor.
(d) Prior to the execution of any amendment to this Agreement, the Trust
Collateral Agent shall be entitled to receive and rely upon an Opinion of
Counsel stating that the execution of such amendment is authorized or permitted
by this Agreement and the Opinion of Counsel referred to in Section 13.2(i)(1).
The Trust Collateral Agent may, but shall not be obligated to, enter into any
such amendment which affects the Trust Collateral Agent's own rights, duties or
immunities under this Agreement or otherwise.
SECTION 13.2. Protection of Title.
(a) Each of the Transferor, as to itself, and the Servicer, as to itself,
shall file such financing statements and cause to be filed such continuation
statements, all in such manner and in such places as may be required by law
fully to preserve, maintain, and protect the interest of the Indenture Trustee
on behalf of the Noteholders, the Trust Collateral Agent, the Demand Note
Provider and the Note Insurer in its interest in the Receivables and the other
Trust Assets and in the proceeds thereof. Each of the Transferor, as to itself,
and the Servicer, as to itself, shall deliver (or cause to be delivered) to the
Trust Collateral Agent, the Owner Trustee, the Demand Note Provider and the Note
Insurer file-stamped copies of, or filing receipts for, any document filed as
provided above, as soon as available following such filing.
(b) Neither the Transferor nor the Servicer shall change its name, identity
or corporate structure in any manner that would, could, or might make any
financing statement or continuation statement filed in accordance with paragraph
(a) above seriously misleading within the meaning of ss. 9-507(c) of the UCC,
unless it shall have given the Trust Collateral Agent, the Owner Trustee, the
Note Insurer and the other party at least thirty days' prior written notice
thereof, shall have promptly filed appropriate amendments to all previously
filed financing statements or continuation statements and shall have delivered
an Opinion of Counsel (A) stating that, in the opinion of such counsel, all
amendments to all previously filed financing statements and continuation
statements have been filed that are necessary fully to preserve and protect the
interest of the Trust Collateral Agent in the Receivables and the other Trust
Assets, and reciting the details of such filings or (B) stating that, in the
opinion of such counsel, no such action shall be necessary to preserve and
protect such interest.
(c) Each of the Transferor and the Servicer shall have an obligation to
give the Trust Collateral Agent, the Owner Trustee, the Note Insurer, the Demand
Note Provider and the other party at least thirty days' prior written notice of
any relocation of its principal executive office or change in its state of
incorporation if, as a result of such relocation or change, the applicable
provisions of the UCC would require the filing of any amendment of any
previously filed financing or continuation statement or of any new financing
statement, shall promptly file any such amendment and shall deliver an Opinion
of Counsel (A) stating that, in the opinion of such counsel, all amendments to
all previously filed financing statements and continuation statements have been
filed that are necessary fully to preserve and protect the interest of the Trust
Collateral Agent in the Receivables, and reciting the details of such filings or
(B) stating that, in the opinion of such counsel, no such action shall be
necessary to preserve and protect such interest. The
74
Servicer shall at all times maintain each office from which it shall service
Receivables, and its principal executive office, within the United States of
America.
(d) The Servicer shall maintain accounts and records as to each Receivable
accurately and in sufficient detail to permit (i) the reader thereof to know at
any time the status of such Receivable, including payments and recoveries made
and payments owing (and the nature of each) and (ii) reconciliation between
payments or recoveries on (or with respect to) each Receivable and the amounts
from time to time deposited in the Collection Account in respect of such
Receivable.
(e) The Servicer shall maintain its computer systems so that, from and
after the time of conveyance under this Agreement of the Receivables to the
Issuer, the Servicer's master computer records (including any back-up archives)
that refer to a Receivable shall indicate clearly the interest of Long Beach
Acceptance Auto Receivables Trust 2004-B in such Receivable and that such
Receivable is owned by the Issuer. Indication of the Issuer's ownership of a
Receivable shall be deleted from or modified on the Servicer's computer systems
when, and only when, such Receivable shall have been paid in full or
repurchased.
(f) If at any time the Transferor or the Servicer shall propose to sell,
grant a security interest in, or otherwise transfer any interest in automotive
receivables to any prospective purchaser, lender, or other transferee, the
Servicer shall give to such prospective purchaser, lender, or other transferee
computer tapes, records, or printouts (including any restored from back-up
archives) that, if they shall refer in any manner whatsoever to any Receivable,
shall indicate clearly that such Receivable has been conveyed to and is owned by
the Issuer.
(g) The Servicer shall, upon reasonable notice, permit the Transferor, the
Trust Collateral Agent, the Back-up Servicer, the Owner Trustee, the Demand Note
Provider and the Note Insurer and its agents at any time during normal business
hours to inspect, audit, and make copies of and abstracts from the Servicer's
records regarding any Receivable.
(h) Upon request, the Servicer shall furnish to the Transferor, the Trust
Collateral Agent, the Back-up Servicer, the Owner Trustee or to the Note
Insurer, within five Business Days, a list of all Receivables (by contract
number and name of Obligor) then held as part of the Issuer, together with a
reconciliation of such list to the Schedule of Receivables and to each of the
Servicer's Certificates furnished before such request indicating removal of
Receivables from the Issuer.
(i) The Servicer shall deliver to the Trust Collateral Agent, the Owner
Trustee and the Note Insurer:
(1) promptly after the execution and delivery of this Agreement
and of each amendment hereto and after the execution and delivery of
each amendment to any financing statement, an Opinion of Counsel
either (A) stating that, in the opinion of such counsel, all financing
statements and continuation statements have been filed that are
necessary fully to preserve and protect the interest of the Trust
Collateral Agent in the Receivables, and reciting the details of such
filings or referring to prior Opinions of Counsel in which such
details are given or (B)
75
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 filed that are necessary fully to preserve and
protect the interest of the Trust Collateral Agent in the Receivables,
and reciting the details of such filings or referring to prior
Opinions of Counsel in which such details are given or (B) stating
that, in the opinion of such counsel, no such action shall be
necessary to preserve and protect such interest.
Each Opinion of Counsel referred to in clause (i) (1) or (i) (2) above shall
specify any action necessary (as of the date of such opinion) to be taken in the
following year to preserve and protect such interest.
(j) For the purpose of facilitating the execution of this Agreement and for
other purposes, this Agreement may be executed simultaneously in any number of
counterparts, each of which counterparts shall be deemed to be an original, and
all of which counterparts shall constitute but one and the same instrument.
SECTION 13.3. Limitation on Rights of Noteholders.
(a) The death or incapacity of any Noteholder shall not operate to
terminate this Agreement or the Issuer, nor entitle such Noteholder's or
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 Issuer, nor otherwise affect the rights, obligations and
liabilities of the parties to this Agreement or any of them.
(b) No Noteholder shall have any right to vote (except as specifically
provided herein including in Section 13.1) or in any manner otherwise control
the operation and management of the Issuer, or the obligations of the parties to
this Agreement, nor shall anything in this Agreement set forth, or contained in
the terms of the Notes be construed so as to constitute the Noteholders from
time to time as partners or members of an association; nor shall any Noteholder
be under any liability to any third person by reason of any action taken
pursuant to any provision of this Agreement.
(c) So long as no Note Insurer Default has occurred and is continuing,
except as otherwise specifically provided herein, whenever Noteholder action,
consent or approval is required under this Agreement, such action, consent or
approval shall be deemed to have been taken or given on behalf of, and shall be
binding upon, all Noteholders if the Note Insurer agrees to take such action or
give such consent or approval.
(d) If a Note Insurer Default shall have occurred and be continuing, no
Noteholder shall have any right by virtue or by availing itself of any
provisions of this Agreement to institute any suit, action, or proceeding in
equity or at law upon or under or with respect to this Agreement, unless such
Holder previously shall have given to the Trust Collateral Agent a
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written notice of default and of the continuance thereof, and unless also the
Class A Noteholders evidencing not less than 25% of the Class A Note Balance
shall have made written request upon the Trust Collateral Agent to institute
such action, suit or proceeding in its own name as trustee under this Agreement
and shall have offered to the Trust Collateral Agent such reasonable indemnity
as it may require against the costs, expenses, and liabilities to be incurred
therein or thereby and the Trust Collateral Agent, for 30 days after its receipt
of such notice, request, and offer of indemnity, shall have neglected or refused
to institute any such action, suit or proceeding and during such 30-day period
no request or waiver inconsistent with such written request has been given to
the Trust Collateral Agent pursuant to this Section or Section 8.4; no one or
more Holders of Notes shall have any right in any manner whatever by virtue or
by availing itself or themselves of any provisions of this Agreement to affect,
disturb, or prejudice the rights of the Holders of any other of the Notes, or to
obtain or seek to obtain priority over or preference to any other such Holder,
or to enforce any right, under this Agreement except in the manner provided in
this Agreement and for the equal, ratable, and common benefit of all
Noteholders. For the protection and enforcement of the provisions of this
Section 13.3, each Noteholder and the Trust Collateral Agent shall be entitled
to such relief as can be given either at law or in equity. Nothing in this
Agreement shall be construed as giving the Noteholders any direct right to make
a claim on the Policy.
SECTION 13.4. Governing Law. THIS AGREEMENT SHALL BE CONSTRUED IN
ACCORDANCE WITH, AND THIS AGREEMENT AND ALL MATTERS ARISING OUT OF OR RELATING
IN ANY WAY TO THIS AGREEMENT SHALL BE GOVERNED BY, THE LAWS OF THE STATE OF NEW
YORK, WITHOUT REGARD TO CONFLICT OF LAWS PRINCIPLES (EXCEPT WITH REGARD TO THE
UCC).
SECTION 13.5. Notices.
(a) All demands, notices, instructions, directions and communications upon
or to the Issuer, the Transferor, the Servicer, the Trust Collateral Agent, the
Note Insurer, the Demand Note Provider, the Demand Note Guarantor, Standard &
Poor's or Xxxxx'x under this Agreement shall be in writing, and delivered (i)
personally, (ii) by certified mail, return receipt requested, (iii) by Federal
Express or similar overnight courier service or (iv) by telecopy (with telephone
confirmation), and shall be deemed to have been duly given upon receipt (A) in
the case of the Issuer, in care of the Owner Trustee at the following address:
Xxxxxx Square North, 0000 Xxxxx Xxxxxx Xxxxxx, Xxxxxxxxxx, Xxxxxxxx 00000-0000,
Attention: Corporate Trust Administration (Telecopy: (000) 000-0000), (B) in the
case of the Transferor, at the following address: Xxx Xxxx Xxxxxx Xxxxx,
Xxxxxxx, Xxx Xxxxxx 00000 (Telecopy: (000) 000-0000), Attention: General
Counsel, or at such other address as shall be designated by the Transferor in a
written notice to the Trust Collateral Agent, (C) in the case of the Servicer or
the Custodian, at the following address: Xxx Xxxx Xxxxxx Xxxxx, Xxxxxxx, Xxx
Xxxxxx 00000 (Telecopy: (000) 000-0000), Attention: General Counsel, (D) in the
case of the Trust Collateral Agent, at the Corporate Trust Office (Telecopy:
(000) 000-0000), (E) in the case of Standard & Poor's, at the following address:
00 Xxxxx Xxxxxx, 00xx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention: Asset Backed
Surveillance Department, (F) in the case of Xxxxx'x, at the following address:
00 Xxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention: ABS Monitoring Department
(G) in the case of the Note Insurer, at the following address: at 000 Xxxx
Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention: Transaction Oversight, Re: Long
Beach Acceptance Auto Receivables Trust
77
2004-B, (H) in the case of the Demand Note Provider, at the following address:
CIGPF I Corp, 000 Xxxxxxxxx Xxxxxx, 0xx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000,
Attention: Chief Financial Officer - Principal Finance and Xxx Xxxxxxxxx
(Telecopy: (000) 000-0000) and (I) in the case of the Demand Note Guarantor, at
the following address: Citigroup Global Markets Holdings Inc., 000 Xxxxxxxxx
Xxxxxx, 0xx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention: Chief Financial Officer
- Principal Finance and Xxx Xxxxxxxxx (Telecopy: (000) 000-0000). Any notice
required or permitted to be mailed to a Noteholder or shall be given by Federal
Express or similar overnight courier service, postage prepaid, at the address of
such Holder as shown in the Note Register or the Certificate Register, as
applicable. Any notice so mailed within the time prescribed in this Agreement
shall be conclusively presumed to have been duly given, whether or not the
Noteholder shall receive such notice.
(b) The Trust Collateral Agent shall give prompt written notice to each of
the Transferor, the Rating Agencies, the Demand Note Provider and each
Noteholder of (i) any amendments to the Insurance Agreement or the Policy (upon
receipt of written notice of any such amendments from LBAC or the Servicer),
(ii) any change in the identity of the Note Paying Agent and (iii) any failure
to make payment under the Policy.
SECTION 13.6. Severability of Provisions. If any one or more of the
covenants, agreements, provisions, or terms of this Agreement shall be for any
reason whatsoever held invalid, then such covenants, agreements, provisions, or
terms shall be deemed severable from the remaining covenants, agreements,
provisions, or terms of this Agreement and shall in no way affect the validity
or enforceability of the other provisions of this Agreement or of the Notes or
the rights of the Holders thereof.
SECTION 13.7. Assignment to Indenture Trustee. The Transferor hereby
acknowledges and consents to any mortgage, pledge, assignment and grant of a
security interest by the Issuer to the Indenture Trustee pursuant to the
Indenture for the benefit of the Noteholders, the Demand Note Provider and the
Note Insurer of all right, title and interest of the Issuer in, to and under the
Receivables and/or the assignment of any or all of the Issuer's rights and
obligations hereunder to the Indenture Trustee.
SECTION 13.8. Limitation of Liability of Owner Trustee, Back-up
Servicer and Trust Collateral Agent.
(a) Notwithstanding anything contained herein to the contrary, this
Agreement has been countersigned by Wilmington Trust Company not in its
individual capacity but solely in its capacity as Owner Trustee of the Issuer
and in no event shall Wilmington Trust Company in its individual capacity or,
except as expressly provided in the Trust Agreement, as Owner Trustee, have any
liability for the representations, warranties, covenants, agreements or other
obligations of the Issuer hereunder or in any of the certificates, notices or
agreements of the Issuer delivered pursuant hereto, as to all of which recourse
shall be had solely to the assets of the Issuer. For all purposes of this
Agreement, in the performance of its duties or obligations hereunder or in the
performance of any duties or obligations of the Issuer hereunder, the Owner
Trustee shall be subject to, and entitled to the benefits of, the terms and
provisions of the Trust Agreement.
78
(b) Notwithstanding anything contained herein to the contrary, this
Agreement has been executed and delivered by Xxxxx Fargo, not in its individual
capacity but solely as Back-up Servicer and Trust Collateral Agent and in no
event shall Xxxxx Fargo have any liability for the representations, warranties,
covenants, agreements or other obligations of the Issuer hereunder or in any of
the certificates, notices or agreements of the Issuer delivered pursuant hereto,
as to all of which recourse shall be had solely to the assets of the Issuer.
SECTION 13.9. Independence of the Servicer. For all purposes of this
Agreement, the Servicer shall be an independent contractor and shall not be
subject to the supervision of the Issuer, the Trust Collateral Agent, the
Back-up Servicer or the Owner Trustee with respect to the manner in which it
accomplishes the performance of its obligations hereunder. Unless expressly
authorized by this Agreement, the Servicer shall have no authority to act for or
represent the Issuer or the Owner Trustee in any way and shall not otherwise be
deemed an agent of the Issuer or the Owner Trustee.
SECTION 13.10. No Joint Venture. Nothing contained in this Agreement
(i) shall constitute the Servicer and either of the Issuer or the Owner Trustee
as members of any partnership, joint venture, association, syndicate,
unincorporated business or other separate entity, (ii) shall be construed to
impose any liability as such on any of them or (iii) shall be deemed to confer
on any of them any express, implied or apparent authority to incur any
obligation or liability on behalf of the others.
SECTION 13.11. Nonpetition Covenant. None of the Transferor, the
Servicer, the Trust Collateral Agent, the Custodian, the Back-up Servicer, the
Demand Note Provider or LBAC shall, prior to the date which is one year and one
day after the termination of this Agreement with respect to the Issuer or the
Transferor, petition or otherwise invoke the process of any court or government
authority for the purpose of commencing or sustaining a case against the Issuer
or the Transferor under any Federal or State bankruptcy, insolvency or similar
law or appointing a receiver, liquidator, assignee, trustee, custodian,
sequestrator or other similar official of the Issuer or the Transferor or any
substantial part of its property, or ordering the winding up or liquidation of
the affairs of the Issuer or the Transferor.
SECTION 13.12. Third Party Beneficiaries. Except as otherwise
specifically provided herein with respect to Noteholders and the
Certificateholder, the parties to this Agreement hereby manifest their intent
that no third party other than the Note Insurer, the Demand Note Provider and
the Owner Trustee 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. Each of the Note Insurer, the Demand Note Provider and their
respective successors and assigns shall be a third-party beneficiary to the
provisions of this Agreement, and shall be entitled to rely upon and directly
enforce such provisions of this Agreement so long as no Note Insurer Default or
Demand Note Event, as applicable, shall have occurred and be continuing. Except
as expressly stated otherwise herein or in the Basic Documents, any right of the
Note Insurer or the Demand Note Provider to direct, appoint, consent to, approve
of or take any action under this Agreement, shall be a right exercised by the
Note Insurer or the Demand Note Provider, as applicable, in its sole and
absolute discretion. Each of the Note Insurer and the Demand Note Provider may
disclaim any of its rights and powers under this Agreement (but not its duties
and obligations under the
79
Policy or the Demand Note, as applicable) upon delivery of a written notice to
the Trust Collateral Agent.
SECTION 13.13. Consent to Jurisdiction.
(a) TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, THE PARTIES HERETO
HEREBY IRREVOCABLY SUBMIT TO THE JURISDICTION OF THE UNITED STATES DISTRICT
COURT FOR THE SOUTHERN DISTRICT OF NEW YORK AND ANY COURT IN THE STATE OF NEW
YORK LOCATED IN THE CITY AND COUNTY OF NEW YORK, AND ANY APPELLATE COURT FROM
ANY THEREOF, IN ANY ACTION, SUIT OR PROCEEDING BROUGHT AGAINST IT AND TO OR IN
CONNECTION WITH ANY OF THE TRANSACTION DOCUMENTS OR THE TRANSACTION OR FOR
RECOGNITION OR ENFORCEMENT OF ANY JUDGMENT, AND THE PARTIES HERETO HEREBY
IRREVOCABLY AND UNCONDITIONALLY AGREE THAT ALL CLAIMS IN RESPECT OF ANY SUCH
ACTION OR PROCEEDING MAY BE HEARD OR DETERMINED IN SUCH NEW YORK STATE COURT OR
IN SUCH FEDERAL COURT. THE PARTIES HERETO AGREE THAT A FINAL JUDGMENT IN ANY
SUCH ACTION, SUIT OR PROCEEDING SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN OTHER
JURISDICTIONS BY SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER PROVIDED BY LAW. TO
THE EXTENT PERMITTED BY APPLICABLE LAW, THE PARTIES HERETO HEREBY WAIVE AND
AGREE NOT TO ASSERT BY WAY OF MOTION, AS A DEFENSE OR OTHERWISE IN ANY SUCH
SUIT, ACTION OR PROCEEDING, ANY CLAIM THAT IT IS NOT PERSONALLY SUBJECT TO THE
JURISDICTION OF SUCH COURTS, THAT THE SUIT, ACTION OR PROCEEDING IS BROUGHT IN
AN INCONVENIENT FORUM, THAT THE VENUE OF THE SUIT, ACTION OR PROCEEDING IS
IMPROPER OR THAT THE RELATED DOCUMENTS OR THE SUBJECT MATTER THEREOF MAY NOT BE
LITIGATED IN OR BY SUCH COURTS.
(b) To the extent permitted by applicable law, the parties hereto shall not
seek and hereby waive the right to any review of the judgment of any such court
by any court of any other nation or jurisdiction which may be called upon to
grant an enforcement of such judgment.
(c) Each of LBAC and the Transferor hereby agree that until such time as
the Notes, the Demand Note and the Reimbursement Obligations have been paid in
full and the Policy has expired in accordance with its terms, each of LBAC and
the Transferor shall have appointed, with prior written notice to the Note
Insurer, an agent registered with the Secretary of State of the State of New
York, with an office in the County of New York in the State of New York, as its
true and lawful attorney and duly authorized agent for acceptance of service of
legal process (which as of the date hereof is National Registered Agents, Inc.,
whose address is 000 Xxxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 10007). Each of LBAC
and the Transferor agrees that service of such process upon such Person shall
constitute personal service of such process upon it.
SECTION 13.14. Headings. The headings of articles and sections and the
table of contents contained in this Agreement are provided for convenience only.
They form no part of this Agreement and shall not affect its construction or
interpretation. Unless otherwise
80
indicated, all references to articles and sections in this Agreement refer to
the corresponding articles and sections of this Agreement.
SECTION 13.15. Trial by Jury Waived. EACH PARTY HERETO HEREBY WAIVES,
TO THE FULLEST EXTENT PERMITTED BY LAW, ANY RIGHT TO A TRIAL BY JURY IN RESPECT
OF ANY LITIGATION ARISING DIRECTLY OR INDIRECTLY OUT OF, UNDER OR IN CONNECTION
WITH ANY OF THE TRANSACTION DOCUMENTS OR THE TRANSACTION. EACH PARTY HERETO (A)
CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY PARTY HERETO HAS
REPRESENTED, EXPRESSLY OR OTHERWISE, THAT IT WOULD NOT, IN THE EVENT OF
LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT
HAS BEEN INDUCED TO ENTER INTO THE TRANSACTION DOCUMENTS TO WHICH IT IS A PARTY
BY, AMONG OTHER THINGS, THIS WAIVER.
SECTION 13.16. Entire Agreement. This Agreement sets forth the entire
agreement between the parties with respect to the subject matter hereof, and
this Agreement supersedes and replaces any agreement or understanding that may
have existed between the parties prior to the date hereof in respect of such
subject matter.
SECTION 13.17. Effect of Policy Expiration Date. Notwithstanding
anything to the contrary set forth herein, all references to any right of the
Note Insurer to direct, appoint, consent to, accept, approve of, take or omit to
take any action under this Agreement or any other Basic Document shall be
inapplicable at all times after the Policy Expiration Date, and (i) if such
reference provides for another party or parties to take or omit to take any such
action following a Note Insurer Default, such party or parties shall also be
entitled to take or omit to take such action following the Policy Expiration
Date and (ii) if such reference does not provide for another party or parties to
take or omit to take any such action following a Note Insurer Default, then the
Indenture Trustee acting at the written direction of the Majorityholders shall
have the right to take or omit to take any such action following the Policy
Expiration Date. In addition, any other provision of this Agreement or any other
Basic Document which is operative based in whole or in part on whether a Note
Insurer Default has or has not occurred shall, at all times on or after the
Policy Expiration Date, be deemed to refer to whether or not the Policy
Expiration Date has occurred.
SECTION 13.18. Termination of Demand Note and/or Demand Note
Guarantee. All rights to notice, consent or waiver of the Demand Note Provider
or the Demand Note Guarantor, as applicable, under this Agreement shall cease to
be effective upon payment in full of all amounts due and owing to the Demand
Note Provider and the Demand Note Guarantor hereunder and termination of the
Demand Note or Demand Note Guarantee, as applicable, in accordance with its
terms.
81
IN WITNESS WHEREOF, the Issuer, the Transferor, the Originator, the
Servicer, the Trust Collateral Agent, the Back-up Servicer and the Custodian
have caused this Sale and Servicing Agreement to be duly executed by their
respective officers as of the day and year first above written.
LONG BEACH ACCEPTANCE
RECEIVABLES CORP., as Transferor
By:
---------------------------------
Name:
Title:
LONG BEACH ACCEPTANCE CORP.,
as Originator, Servicer and Custodian
By:
---------------------------------
Name:
Title:
XXXXX FARGO BANK , NATIONAL
ASSOCIATION,
as Back-up Servicer and Trust
Collateral Agent
By:
---------------------------------
Name:
Title:
LONG BEACH ACCEPTANCE AUTO
RECEIVABLES TRUST 2004-B, as Issuer
By: Wilmington Trust Company, not in
its individual capacity, but
solely as Owner Trustee
By:
---------------------------------
Name:
Title:
[Sale and Servicing Agreement]
Annex A
DEFINED TERMS
Annex A
EXHIBIT A-1
Issuer's Certificate
pursuant to Section 3.4
of the Sale and Servicing
Agreement
Reference is made to the Sale and Servicing Agreement (the "Agreement"), dated
as of July 1, 2004, among Long Beach Acceptance Receivables Corp., Long Beach
Acceptance Corp., as originator, as servicer and as custodian, Xxxxx Fargo Bank,
National Association, as trust collateral agent and back-up servicer and Long
Beach Acceptance Auto Receivables Trust 2004-B, as issuer (the "Issuer"). The
Issuer does hereby sell, transfer, assign, and otherwise convey to LBAC, without
recourse, representation, or warranty, all of the Issuer's right, title, and
interest in and to all of the Receivables (as defined in the Agreement)
identified in the attached Servicer's Certificate as "Purchased Receivables,"
which are to be repurchased by LBAC pursuant to Section 3.4 of the Agreement,
and all security and documents relating thereto.
IN WITNESS WHEREOF I have hereunto set my hand this __ day of ___________, ___.
-----------------------------------
X-0-0
XXXXXXX X-0
Issuer's Certificate
pursuant to Section 4.7
of the Sale and Servicing
Agreement
Reference is made to the Sale and Servicing Agreement (the "Agreement"), dated
as of July 1, 2004, among Long Beach Acceptance Receivables Corp., Long Beach
Acceptance Corp., as originator, as servicer and as custodian, Xxxxx Fargo Bank,
National Association, as trust collateral agent and back-up servicer and Long
Beach Acceptance Auto Receivables Trust 2004-B, as issuer (the "Issuer"). The
Issuer does hereby sell, transfer, assign, and otherwise convey to the Servicer,
without recourse, representation, or warranty, all of the Issuer's right, title,
and interest in and to all of the Receivables (as defined in the Agreement)
identified in the attached Servicer's Certificate as "Purchased Receivables,"
which are to be purchased by the Servicer pursuant to Section 4.7 of the
Agreement, and all security and documents relating thereto.
IN WITNESS WHEREOF I have hereunto set my hand this __ day of __________, ____.
-----------------------------------
X-0-0
XXXXXXX X-0
SERVICER'S CERTIFICATE
LONG BEACH ACCEPTANCE AUTO RECEIVABLES TRUST 2004-B
1.57625% ASSET-BACKED NOTES, CLASS A-1
2.65% ASSET-BACKED NOTES, CLASS A-2
3.46% ASSET-BACKED NOTES, CLASS A-3
4.05% ASSET-BACKED NOTES, CLASS X-0
X-0-0
EXHIBIT B-2
Form of Loan Master File Layout
B-2-1
EXHIBIT C
Intentionally Omitted
---------------------
C-1
EXHIBIT D
PAYMENT DEFERMENT POLICY
A. LOSS MITIGATION PROGRAM
This program, which involves temporary payment modifications, is intended to
assist Obligors who are experiencing temporary financial hardships that would
otherwise lead to voluntary surrenders of their vehicles and resulting losses to
LBAC. In order to be eligible for this program, an Obligor must first have
indicated an intent to surrender his or her vehicle. LBAC will determine
individual Obligor eligibility for and the viability of this program as an
effective loss mitigation option on a case-by-case basis. Any arrangement
between an Obligor and LBAC for a temporary payment modification under this
program must be approved by LBAC's President or an Executive Vice President.
o LBAC may agree to a temporary payment modification, provided that the
modified payment amount may not be less than 60% of the contractual
payment amount. The contractual interest rate of the Receivable must
remain unchanged.
o The total number of payments modified may not exceed 9 over the entire
term of the Receivable.
o The terms of any payment modification must be set forth in a written
modification agreement between the Obligor and LBAC, and the agreement
must be included in the Legal File for the Receivable.
o The modification agreement must specify that contractual arrearages
resulting from the payment modification will be satisfied by the
Obligor either by making a balloon payment due on the maturity date of
the Receivable or by making additional payments following the maturity
date, resulting in a term extension, provided that any term extension
may not exceed 6 months beyond the current maturity date of the
Receivable.
o Prior to allowing any payment modification under this program, LBAC
must conduct a financial analysis of each candidate to determine
whether there is a reasonable probability that the Obligor will
satisfy the terms and conditions of the arrangement and that the
Receivable will be viable at the expiration of the payment
modification period.
o No deferments or due date adjustments may be granted during the
modification period.
o Payment modification arrangements which do not meet the above criteria
may be agreed to on an exception basis by LBAC's President or an
Executive Vice President.
o As of July 1, 2004, and the first day of each calendar month
thereafter, the aggregate number of Receivables the terms of which are
currently modified under this program may not exceed one - half of one
percent (0.5%) of the number of Receivables transferred as of the
Closing Date.
B. GENERAL PAYMENT DEFERMENT POLICY
In addition to its Loss Mitigation Program, LBAC may defer certain payments
under the following conditions and circumstances.
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o LBAC may grant a payment deferment provided that the deferment period
does not exceed 1 month (2 months if 12 or more payments have been
made and if the deferment is granted in writing by the President, or
an Executive Vice President, or the National Collections Manager, or a
Regional Manager).
o Not more than 1 deferment event (which may consist of a 2 month
deferment according to the exceptions included in the policy) may be
granted during any 12-month period.
o The aggregate of all deferment periods during the term of a Receivable
may not exceed the lesser of 8 months or 50% of the weighted average
life of the original term of the Receivable (including deferments
granted both before and after the related Cutoff Date).
o At least 6 payments must be made before a deferment may be granted.
o A request for a deferment must be made in writing.
o The deferment must bring the account current, so that after the
deferment is processed no payment is then due.
o Except as otherwise set forth in this policy, deferments must be
granted in writing by the Collection Manager or someone of equal or
higher rank.
o A deferment fee will be collected for each deferment if allowed by
applicable law and may be waived or deferred only by the President, or
an Executive Vice President, or the National Collections Manager, or a
Regional Manager; provided, however, that no deferment will be granted
unless LBAC believes in good faith that the account probably would
default in the reasonably foreseeable future if a deferment is not
approved.
o Deferments which do not meet the above criteria may be granted in
writing on an exception basis (e.g., when required by law) by the
President, or an Executive Vice President, or the National Collections
Manager, or a Regional Manager.
o As of October 1, 2004, and the first day of each calendar quarter
thereafter, the aggregate number of Receivables the terms of which
have been extended during the preceding calendar quarter shall not
exceed 4% of the number of Receivables at the beginning of the
preceding calendar quarter.
o No deferment may extend the date for final payment of a Receivable
beyond the last day of the record Collection Period preceding the
Class A-4 Final Scheduled Payment Date.
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DUE DATE CHANGE POLICY
In addition to its Payment Deferment Policy, LBAC may grant due date changes
under the following conditions and circumstances.
o LBAC may grant a due date change, provided that the new due date is
within 20 days of the current due date.
o Not more than 2 due date changes may be granted over the term of a
Receivable.
o If 2 due date changes are granted, the total number of days by which
the maturity date is extended may not exceed 20.
o A request for a due date change must be made in writing.
o The account must be current at the time the request is received.
o Due date changes must be granted in writing by the Collection Manager
or someone of equal or higher rank.
o No due date change may be granted if the aggregate of all deferment
periods and the requested due date change would exceed the lesser of 8
months or 50% of the original term of the Receivable.
D-3
EXHIBIT E
Documentation Checklist
CUSTOMER:
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ACCOUNT NUMBER:
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This funding package contains the following initialed items:
1. Installment contract with proper signatures and
Dealer endorsements 1.__________
2. Copy of signed credit application 2.__________
3. References as described in the Program Guidelines 3.__________
4. Proof of income as described in the Program
Guidelines 4.__________
5. Copy of driver's license for all licensed signors 5.__________
6. Title information (application and copy of
existing title, receipt of registration, or title
copy already received) with lien notation thereon,
or Dealer Title Guaranty 6.__________
7. Invoice or copy of computer screen printout
showing NADA value, NADA book page, Xxxxxx
printout or Xxxxxx Blue Book page 7.__________
8. In the case of a used Financed Vehicle, odometer
statement (if not on title info) 8.__________
9. Signed agreement to provide insurance and
verification paper or other evidence of
verification of insurance coverage 9.__________
10. Notice to cosignor, if required 10._________
11. Service contract or warranty papers 11._________
12. Life, accident, health and GAP insurance policy
copies, as applicable 12._________
13. Signed purchase order from dealer to customer 13._________
E-1
EXHIBIT F
FORM OF TRANSFER AGREEMENT
TRANSFER NO. __________ OF SUBSEQUENT RECEIVABLES, dated as of
___________, 200_, among LONG BEACH ACCEPTANCE AUTO RECEIVABLES TRUST 2004-B, a
Delaware statutory trust (the "Issuer"), LONG BEACH ACCEPTANCE RECEIVABLES
CORP., a Delaware corporation (the "Transferor"), LONG BEACH ACCEPTANCE CORP., a
Delaware corporation ("LBAC" or the "Originator"), LONG BEACH ACCEPTANCE
RECEIVABLES CORP. WAREHOUSE I ("LBARC-WI") and XXXXX FARGO BANK , NATIONAL
ASSOCIATION, a national banking association (the "Trust Collateral Agent), as
back-up servicer and trust collateral agent pursuant to the Sale and Servicing
Agreement referred to below.
W I T N E S S E T H:
WHEREAS, LBAC, the Transferor, the Issuer and the Trust Collateral
Agent are parties to the Sale and Servicing Agreement, dated as of July 1, 2004
(the "Sale and Servicing Agreement");
WHEREAS, LBAC, LBARC-WI and the Transferor are parties to the Purchase
Agreement, dated as of July 1, 2004 (the "Purchase Agreement");
WHEREAS, pursuant to the Purchase Agreement and the Subsequent
Assignment, LBAC and LBARC-WI desire to convey certain Subsequent Receivables to
the Transferor and pursuant to the Sale and Servicing Agreement and this
Agreement the Transferor desires to convey such Subsequent Receivables to the
Issuer; and
WHEREAS, the Issuer is willing to accept such conveyance subject to
the terms and conditions hereof.
NOW, THEREFORE, the Issuer, the Transferor, the Trust Collateral
Agent, LBARC-WI and LBAC hereby agree as follows:
SECTION 1. DEFINED TERMS. Capitalized terms used herein that are not otherwise
defined shall have the meanings ascribed thereto in the Sale and Servicing
Agreement.
"Agreement" means this Transfer Agreement and all amendments hereof
and supplements hereto.
"Subsequent Cutoff Date" means, with respect to the Subsequent
Receivables conveyed hereby, the close of business of the last day of the
calendar month immediately preceding the Subsequent Transfer Date, which date is
_______________.
"Subsequent Receivables" means the Receivables identified on the
supplement to the Schedule of Receivables attached as Schedule A hereto.
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"Subsequent Receivables Purchase Price" means $__________.
"Subsequent Spread Account Deposit" means $__________.
"Subsequent Transfer Date" means, with respect to the Subsequent
Receivables conveyed hereby, _________________.
"Subsequent Transferred Property" shall have the meaning specified in
Section 2.3(a) of the Purchase Agreement.
SECTION 2. SCHEDULE OF SUBSEQUENT RECEIVABLES. Annexed hereto as Schedule A is a
supplement to the Schedule of Receivables listing the Subsequent Receivables to
be conveyed by the Transferor to the Issuer pursuant to this Agreement and the
Sale and Servicing Agreement on the Subsequent Transfer Date.
SECTION 3. CONVEYANCE OF SUBSEQUENT RECEIVABLES. Subject to the conditions set
forth in Section 5 hereof, in consideration of the payment of the Subsequent
Receivables Purchase Price to or upon the written order of the Transferor, the
Transferor does hereby sell, transfer, assign, set over and otherwise convey to
the Issuer, in trust for the benefit of the Noteholders and the Note Insurer,
without recourse, all right, title and interest of the Transferor in and to:
(1) the Subsequent Receivables listed in Schedule A hereto, all monies
received on such Subsequent Receivables after the Subsequent Cutoff Date and,
with respect to any Subsequent Receivables which are Precomputed Receivables,
the related Payahead Amount, and all Liquidation Proceeds and Recoveries
received with respect to such Subsequent Receivables;
(2) the security interests in the Financed Vehicles granted by the
related Obligors pursuant to the Subsequent Receivables and any other interest
of the Transferor in such Financed Vehicles, including, without limitation, the
certificates of title and any other evidence of ownership with respect to such
Financed Vehicles;
(3) any proceeds from claims on any physical damage, credit life and
credit accident and health insurance policies or certificates or the VSI Policy,
if any, relating to the related Financed Vehicles or the related Obligors,
including any rebates and premiums;
(4) property (including the right to receive future Liquidation
Proceeds) that secures a Subsequent Receivable and that has been acquired by or
on behalf of the Trust pursuant to the liquidation of such Subsequent
Receivable;
(5) this Agreement and the Purchase Agreement, including, without
limitation, a direct right to cause LBAC to purchase Subsequent Receivables from
the Trust upon the occurrence of a breach of any of the representations and
warranties contained in Section 4 of this Agreement or the failure of LBAC to
timely comply with its obligations pursuant to Section 5.5 of the Purchase
Agreement;
(6) refunds for the costs of extended service contracts with respect
to the related Financed Vehicles, refunds of unearned premiums with respect to
credit life and credit
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accident and health insurance policies or certificates covering a related
Obligor or a related Financed Vehicle or his or her obligations with respect to
a related Financed Vehicle and any recourse to Dealers for any of the foregoing;
(7) the Legal Files and the Receivable Files related to each
Subsequent Receivable and any and all other documents that LBAC keeps on file in
accordance with its customary procedures relating to the Subsequent Receivables,
the related Obligors or the related Financed Vehicles;
(8) all amounts and property from time to time held in or credited to
the Lock-Box Account, to the extent such amounts and property relate to the
Subsequent Receivables;
(9) any proceeds from recourse against the Dealers (other than any
Chargeback Obligations), including, without limitation, any Dealer Title
Guaranties with respect to the Subsequent Receivables, with respect to the sale
of the Subsequent Receivables; and
(10) the proceeds of any and all of the foregoing.
The Transferor represents and warrants that the Subsequent Receivables
and other Transferred Property are being transferred with the intention of
removing them from the Transferor's estate pursuant to Section 541 of the
Bankruptcy Code, as the same may be amended from time to time.
SECTION 4. REPRESENTATIONS AND WARRANTIES OF THE ORIGINATOR. The Originator
makes the following representations and warranties as to the Subsequent
Receivables and the other Transferred Property relating thereto on which the
Transferor relies in accepting the Subsequent Receivables and the other
Transferred Property relating thereto and on which the Note Insurer will rely in
issuing the Policy. Such representations and warranties speak as of the
execution and delivery of this Agreement, but shall survive the sale, transfer,
and assignment of the Subsequent Receivables and the other Transferred Property
relating thereto to the Transferor and the subsequent assignment and transfer
pursuant to the Sale and Servicing Agreement:
(1) Origination Date. Each Subsequent Receivable has an Origination
Date on or after __________________.
(2) Principal Balance/Number of Contracts. As of the Subsequent Cutoff
Date, the total aggregate Principal Balance of the Subsequent Receivables was
$_______________. The Subsequent Receivables are evidenced by _______ retail
installment sale contracts.
(3) Maturity of Subsequent Receivables. Each Subsequent Receivable has
an original term to maturity of not less than [__] months and not more than [__]
months; the weighted average original term to maturity of the Subsequent
Receivables is [___] months as of the Subsequent Cutoff Date; the remaining term
to maturity of each Subsequent Receivable was __ months or less as of the
Subsequent Cutoff Date; the weighted average remaining term to maturity of the
Subsequent Receivables was [___] months as of the Subsequent Cutoff Date.
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(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 Transferor (or, in the case of the
LBARC-WI Receivables, by LBAC to LBARC-WI and subsequently by LBARC-WI to the
Transferor), which in turn has been validly pledged by the Transferor to the
Trust pursuant to the Sale and Servicing Agreement, which in turn has been
validly assigned by the Issuer to the Indenture Trustee pursuant to the
Indenture, (3) contains customary and enforceable provisions such that the
rights and remedies of the holder or assignee thereof shall be adequate for
realization against the collateral of the benefits of the security, (4) provides
for level monthly payments that fully amortize the Amount Financed over the
original term (except for the first or last payment, which may be minimally
different from the level payment) and yield interest at the Annual Percentage
Rate, (5) has an Annual Percentage Rate of not less than ____%, (6) in the case
of a Subsequent Receivable that is a Precomputed Receivable, in the event that
such Subsequent Receivable is prepaid, provides for a prepayment that fully pays
the Principal Balance and includes, unless prohibited by applicable law, a full
month's interest, in the month of prepayment, at the Annual Percentage Rate, (7)
is a Precomputed Receivable or a Simple Interest Receivable, and (8) was
originated by a Dealer to an Obligor and was sold by the Dealer to LBAC without
any fraud or misrepresentation on the part of such Dealer or on the part of the
Obligor; and (B) approximately [ ]% of the aggregate Principal Balance of the
Subsequent Receivables, constituting [ ]% of the number of contracts, as of the
Subsequent Cutoff Date, represents financing of used automobiles, vans, sport
utility vehicles or light duty trucks; the remainder of the Subsequent
Receivables represent financing of new automobiles, vans, sport utility vehicles
or light duty trucks; approximately [ ]% of the aggregate Principal Balance of
the Subsequent Receivables as of the Subsequent Cutoff Date were originated
under the LBAC Premium program; approximately []% of the aggregate Principal
Balance of the Subsequent Receivables as of the Subsequent Cutoff Date were
originated under the LBAC Elite program; approximately [ ]% of the aggregate
Principal Balance of the Subsequent Receivables as of the Subsequent Cutoff Date
were originated under the LBAC Superior program; approximately [ ]% of the
aggregate Principal Balance of the Subsequent Receivables as of the Subsequent
Cutoff Date were originated under the LBAC Preferred program; approximately [ ]%
of the aggregate Principal Balance of the Subsequent Receivables as of the
Subsequent Cutoff Date were originated under the LBAC Classic program; no
Subsequent Receivable shall have a payment that is more than 29 days overdue
(calculated on the basis of a 360-day year of twelve 30-day months) as of the
Subsequent Cutoff Date; [ ]% of the Subsequent Receivables are Precomputed
Receivables and [ ]% of the Subsequent Receivables are Simple Interest
Receivables; each Subsequent Receivable shall have a final scheduled payment due
no later than _____________, 200__; and each Subsequent Receivable was
originated on or before the Subsequent Cutoff Date.
F-4
(5) Scheduled Payments. Each Subsequent Receivable had an original
Principal Balance of not less than $______ nor more than $__________, has an
outstanding Principal Balance as of the Subsequent Cutoff Date of not less than
$_______ and not more than $__________ and has a first Scheduled Payment due, in
the case of Precomputed Receivables, or a scheduled due date, in the case of
Simple Interest Receivables, on or prior to ____________, ____.
(6) No Bankruptcies. No Obligor was bankrupt at the time of
origination of the related Subsequent Receivable and no Obligor on any
Subsequent Receivable as of the Subsequent Cutoff Date was noted in the related
Receivable File as having filed for bankruptcy since origination of the
Subsequent Receivable and neither discharged, dismissed nor reaffirmed.
(7) Origination of Subsequent Receivables. Based on the location of
the Dealers and the Principal Balances as of the Subsequent Cutoff Date,
approximately [ ]% of the Subsequent Receivables were originated in California
and the remaining [ ]% of the Subsequent Receivables were originated in other
States.
(8) Lockbox. Prior to the Subsequent Transfer Date, the Transferor
will notify each Obligor to make payments with respect to its respective
Subsequent Receivable after the Subsequent Cutoff Date directly to the Lockbox,
and will provide each Obligor with a monthly statement in order to enable such
Obligor to make payments directly to the Lockbox.
(9) Location of Legal Files; One Original. A complete Legal File with
respect to each Subsequent Receivable is in the possession of the Custodian at
the location listed in the Custodial Agreement. There is only one original
executed copy of each Subsequent Receivable. The Custodian has stamped each
Subsequent Receivable to state that "This contract has been sold or pledged to
"Secured Party" identified on the attached allonge (deemed a part hereof). Do
not accept delivery of this contract in violation of the rights of the "Secured
Party. " The Custodian has attached an allonge to each Subsequent Receivable
specifying the contract to which it relates by date, name of seller and name of
customer and indicating that such contract is subject to a security interest in
favor of the Indenture Trustee. The foregoing stamp, together with the allonge,
is effective under the provisions of the UCC to give notice to third party
purchasers, including "bona fide purchasers for value" that the Indenture
Trustee has a security interest in such Subsequent Receivable and such third
party's attempt to claim an interest in such Subsequent Receivable would violate
the Indenture Trustee's rights therein.
(10) Schedule of Subsequent Receivables; Selection Procedures. The
information with respect to the Subsequent Receivables set forth in the Schedule
A to this Agreement is true and correct in all material respects as of the close
of business on the Subsequent Cutoff Date and the Subsequent Transfer Date, and
no selection procedures adverse to the Trust, the Noteholders or to the Note
Insurer have been utilized in selecting the Subsequent Receivables. The computer
tape or other listing regarding the Subsequent Receivables made available to the
Transferor and its assigns is true and correct as of the Subsequent Cutoff Date
and the Subsequent Transfer Date in all respects. By the Subsequent Transfer
Date, LBAC will have caused the portions of LBAC's servicing records relating to
the Subsequent Receivables to be clearly and unambiguously marked to show that
the Subsequent
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Receivables constitute part of the Trust Assets and are owned by the Trust in
accordance with the terms of the Sale and Servicing Agreement.
(11) Compliance with Law. Each Subsequent Receivable, the sale of the
Financed Vehicle and the sale of any physical damage, credit life and credit
accident and health insurance and any extended service contracts complied at the
time the related Subsequent Receivable was originated or made and at the
execution of this Agreement complies in all material respects with all
requirements of applicable Federal, State and local laws, and regulations
thereunder including, without limitation, usury laws, the Federal
Truth-in-Lending Act, the Equal Credit Opportunity Act, the Fair Credit
Reporting Act, the Fair Debt Collection Practices Act, the Federal Trade
Commission Act, the Xxxxxxxx-Xxxx Warranty Act, the Federal Reserve Board's
Regulations B and Z (including amendments to the Federal Reserve's Official
Staff Commentary to Regulation Z effective October 1, 1998 concerning negative
equity loans), the Servicemembers Civil Relief Act, the California Automobile
Sales Finance Act, and state adaptations of the National Consumer Act and of the
Uniform Consumer Credit Code, and all other applicable 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, 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 each
Subsequent Receivable had full legal capacity to execute and deliver such
Subsequent Receivable and all other documents related thereto and to grant the
security interest purported to be granted thereby.
(13) No Government, Corporate or Fleet Obligor. None of the Subsequent
Receivables is due from the United States of America or any State or from any
agency, department, or instrumentality of the United States of America or any
State. All of the Subsequent Receivables are due from Obligors who are natural
persons or, if any Obligor is not a natural person, (a) such entity is an
obligor with respect to five or fewer Financed Vehicles and (b) the related
Subsequent Receivable or Subsequent Receivables have the benefit of the personal
guaranty of a natural person or persons. No Subsequent Receivable has been
included in a "fleet" sale (i.e., a sale to any single Obligor of more than five
Financed Vehicles).
(14) Security Interest in Financed Vehicle. Immediately prior to the
sale, assignment, and transfer thereof, each Subsequent Receivable shall be
secured by a validly perfected first priority security interest in the Financed
Vehicle in favor of LBAC as secured party, and such security interest is prior
to all other liens upon and security interests in such Financed Vehicle which
now exist or may hereafter arise or be created (except, as to priority, for any
lien for taxes, labor or materials affecting such Financed Vehicle arising
subsequent to the Subsequent Transfer Date), and either (i) all necessary and
appropriate actions have been taken that would result in the valid perfection of
a first priority security interest in the Financed Vehicle in favor of LBAC as
secured party, and the Lien Certificate for each Financed Vehicle shows, or if a
new or replacement Lien Certificate is being applied for such 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
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been obtained with respect to such Financed Vehicle. With respect to each
Subsequent Receivable for which the Lien Certificate has not yet been submitted
to, or returned from, the Registrar of Titles, LBAC has received either (i)
written evidence from the related Dealer that such Lien Certificate showing LBAC
as the first lienholder has been applied for or (ii) a Dealer Title Guaranty
with respect to such Financed Vehicle. Immediately after the sale, transfer and
assignment thereof to the Trust, each Subsequent Receivable will be secured by
an enforceable first priority security interest in the Financed Vehicle in favor
of the Trust as secured party, which security interest is prior to all other
liens upon and security interests in such Financed Vehicle which now exist or
may hereafter arise or be created (except, as to priority, for the lien of the
Indenture and for any lien for taxes, labor or materials affecting such 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,
amended or modified in any respect since its origination, except by instruments
or documents identified in the related Legal File on the Subsequent Transfer
Date.
(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) Monthly Dealer Participation Fee Receivables. [None of the
Subsequent Receivables are of Monthly Dealer Participation Fee Receivables].
(19) 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.
(20) 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.
(21) 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.
F-7
(22) Insurance; Other. (A) Each Obligor has obtained insurance
covering the Financed Vehicle as of the execution of the Subsequent Receivable
insuring against loss and damage due to fire, theft, transportation, collision
and other risks generally covered by comprehensive and collision coverage which
is in an amount at least equal to the lesser of (x) its maximum insurable value
or (y) the principal amount due from the Obligor under the related Subsequent
Receivable and names LBAC and its successors and assigns as loss payee and each
Subsequent Receivable requires the Obligor to obtain and maintain such insurance
naming LBAC and its successors and assigns as an additional insured, (B) each
Subsequent Receivable that finances the cost of premiums for credit life and
credit accident or health insurance is covered by an insurance policy and
certificate of insurance naming LBAC as policyholder (creditor) under each such
insurance policy and certificate of insurance and (C) as to each Subsequent
Receivable that finances the cost of an extended service contract, the
respective Financed Vehicle which secures the Subsequent Receivable is covered
by an extended service contract.
(23) Title. It is the intention of each Seller that the transfer and
assignment of the Subsequent Receivables contemplated in the Purchase Agreement
constitute a sale of the Subsequent Receivables from such Seller to the
Transferor and that the beneficial interest in and title to such Subsequent
Receivables not be part of the debtor's estate in the event of the filing of a
bankruptcy petition by or against LBAC or LBARC-WI, as applicable, under any
bankruptcy law. No Subsequent Receivable has been sold, transferred, assigned,
or pledged by LBAC or LBARC-WI, as applicable, to any Person other than the
Transferor or by the Transferor to any Person other than the Trust except with
respect to any such pledge that has been released on or prior to the Subsequent
Transfer Date. Immediately prior to the transfer and assignment of the
Subsequent Receivables contemplated in the Purchase Agreement, LBAC or LBARC-WI,
as applicable, had good and marketable title to each Subsequent Receivable, and
was the sole owner thereof, free and clear of all Liens, claims, encumbrances,
security interests, and rights of others and, immediately upon the transfer
thereof, the Transferor shall have good and marketable title to each such
Subsequent Receivable, and will be the sole owner thereof, free and clear of all
Liens, encumbrances, security interests, and rights of others other than the
Lien of the Indenture, and each such transfer has been perfected under the UCC.
Immediately prior to the transfer and assignment by the Transferor to the Trust
contemplated by this Agreement and the Sale and Servicing Agreement, the
Transferor shall have good and marketable title to each Subsequent Receivable,
and shall be the sole owner thereof, free and clear of all Liens, claims,
encumbrances, security interests, and rights of others other than the Lien of
the Indenture and, immediately upon the transfer thereof pursuant to this
Agreement and the Sale and Servicing Agreement, the Trust shall have good and
marketable title to each such Subsequent Receivable, and will be the sole owner
thereof, free and clear of all Liens, encumbrances, security interests and
rights of others other than the Lien of the Indenture, and each such transfer
has been perfected under the UCC. Immediately prior to the pledge by the Issuer
to the Indenture Trustee contemplated by the Indenture, the Issuer 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 such pledge 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. None of the
Transferor, LBAC or LBARC-WI has taken any action to convey any right to any
Person that would result in such Person having a
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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.
(24) 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 other Basic Documents shall be unlawful, void,
voidable or shall render such Receivable unenforceable in any respect or subject
to rescission. Neither Seller has entered into any agreement with any account
debtor that prohibits, restricts or conditions the assignment of any portion of
the Subsequent Receivables.
(25) All Filings Made. All filings (including, without limitation, UCC
filings) necessary in any jurisdiction to give the Indenture Trustee a first
priority perfected ownership interest in the Subsequent Receivables and the
proceeds thereof and the other Transferred Property (other than the Financed
Vehicles) have been made.
(26) Chattel Paper. Each Subsequent Receivable (A) constitutes
"tangible chattel paper" under the UCC and (B) shall be maintained in its
original "tangible" form, unless the Note Insurer has consented in writing to
such chattel paper being maintained in another form or medium.
(27) 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.
(28) Tax Liens. As of the Subsequent Transfer Date, there is no lien
or claims existing or which have been filed against the related Financed Vehicle
for delinquent taxes.
(29) Title Documents. (A) If a Subsequent Receivable was originated in
a State in which notation of security interest on the title document of the
related Financed Vehicle is required or permitted to perfect such security
interest, the title document for such Subsequent Receivable shows, or if a new
or replacement title document is being applied for with respect to such Financed
Vehicle, the title document will be received within 150 days following the
Subsequent Transfer Date and will show, LBAC named as the secured party under
the related Subsequent Receivable as the holder of a first priority security
interest in such Financed Vehicle and (B) if the Subsequent Receivable was
originated in a State in which the filing of a financing statement under the UCC
is required to perfect a security interest in motor vehicles, such filings or
recordings have been duly made and show LBAC or LBARC-WI, as applicable, named
as the secured party under the related Subsequent Receivable, and in either
case, the Trust has the same rights as such secured party has or would have (if
such secured party were still the owner of the Subsequent Receivable) against
all parties claiming an interest in such Financed Vehicle. With respect to each
Subsequent Receivable for which the relevant Dealer is temporarily unable to
furnish either an original Lien Certificate or satisfactory evidence that the
appropriate lien has
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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.
(30) Casualty. As of the Subsequent Cutoff Date, no Financed Vehicle
related to a Subsequent Receivable has suffered a Casualty.
(31) Obligation to Dealers or Others. The Transferor and its assignees
will assume no obligation to Dealers or other originators or holders of the
Subsequent Receivables (including, but not limited to under dealer reserves) as
a result of its purchase of the Subsequent Receivables.
(32) 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.
(33) No Impairment. Neither of the Sellers nor the Transferor has done
anything to convey any right to any Person that would result in such Person
having a right to payments due under the Subsequent Receivables or otherwise to
impair the rights of the Trust, the Noteholders, the Certificateholder or the
Note Insurer in any Subsequent Receivable or the proceeds thereof.
(34) Subsequent Receivables Not Assumable. No Subsequent Receivable is
assumable by another Person in a manner which would release the Obligor thereof
from such Obligor's obligations to the Transferor, LBAC or LBARC-WI with respect
to such Subsequent Receivable.
(35) Servicing. The servicing of each Subsequent Receivable and the
collection practices relating thereto have been lawful and in accordance with
the standards set forth in the Sale and Servicing Agreement; other than LBAC and
any Back-up Servicer arrangement that has been entered into, no other person has
the right to service any Subsequent Receivable.
(36) Illinois Subsequent Receivables. (a) Neither Seller owns 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) Neither Seller has,
and for so long as such Subsequent Receivable is outstanding shall, place or
cause to be placed on the related Financed Vehicle any collateral protection
insurance in violation of 815 ILCS 180/10.
(37) California Subsequent Receivables. Each Subsequent Receivable
originated in the State of California has been, and at all times during the term
of the Sale and
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Servicing Agreement will be, serviced by the Servicer in compliance with Cal.
Civil Code ss.2981, et seq.
(38) No Negative Amortization. The Payment Deferment and Due Date
Change Policies, as set forth on Exhibit D to the Sale and Servicing Agreement,
will not result in the negative amortization of any Subsequent Receivables
modified in accordance with such Payment Deferment and Due Date Change Policies.
SECTION 5. CONDITIONS PRECEDENT. The obligation of the Trust to acquire the
Subsequent Receivables hereunder is subject to the satisfaction, on or prior to
the Subsequent Transfer Date, of the following conditions precedent:
(a) Representations and Warranties. (i) Each of the representations
and warranties made by LBAC in Section 3.2 of the Purchase Agreement and
Section 4 of this Agreement and (ii) each of the representations and
warranties made by the Transferor in Section 3.1 of the Sale and Servicing
Agreement and Section 3.1 of the Purchase Agreement, shall be true and
correct as of the date of this Agreement and as of the Subsequent Transfer
Date.
(b) Sale and Servicing Agreement Conditions. Each of the conditions
set forth in Section 2.2(b) to the Sale and Servicing Agreement shall have
been satisfied.
(c) Purchase Agreement Conditions. LBAC shall have complied with the
requirements of Section 4.1 of the Purchase Agreement and shall have
delivered all documents required to be delivered pursuant to Section 5.5 of
the Purchase Agreement.
(d) Security Interest Perfection. In connection with the conveyance
contemplated by this Agreement, the Transferor agrees to record and file,
at its own expense, a financing statement with respect to the Subsequent
Receivables now existing and hereafter created for the sale of chattel
paper (as defined in the UCC as in effect in the State of New Jersey)
meeting the requirements of applicable state law in such manner as is
sufficient to perfect the sale and assignment of such Subsequent
Receivables to the Trust, and the proceeds thereof (and any continuation
statements as are required by applicable state law), and to deliver a
file-stamped copy of each such financing statement (or continuation
statement) or other evidence of such filings (which may, for purposes of
this Section, consist of telephone confirmation of such filing with the
file stamped copy of each such filing to be provided to the Trust
Collateral Agent in due course), as soon as is practicable after the
Transferor's receipt thereof.
In connection with such conveyance, the Transferor further agrees, at
its own expense, on or prior to the Subsequent Transfer Date (i) to
annotate and indicate in its computer files that the Subsequent Receivables
have been transferred to the Trust pursuant to the Sale and Servicing
Agreement and this Agreement and (ii) to deliver to the Trust Collateral
Agent a computer file printed or microfiche list containing a true and
complete list of all such Subsequent Receivables, identified by account
number and by the Principal Balance of each Subsequent Receivable as of the
Subsequent Cutoff Date.
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(e) Additional Information. The Transferor shall have delivered or
caused to be delivered to the Trust Collateral Agent on behalf of the
Noteholders and the Note Insurer such information as was reasonably
requested by the Trust on behalf of the Noteholders or the Note Insurer to
satisfy itself as to (i) the accuracy of the representations and warranties
set forth in Section 4 of this Agreement and Section 7.1 of the Sale and
Servicing Agreement and (ii) the satisfaction of the conditions set forth
in this Section.
(f) Deposits to Accounts. On or prior to the Subsequent Transfer Date,
the Transferor shall deposit or cause to be deposited:
(1) the Subsequent Spread Account Deposit into the Spread
Account; and
(2) $__________, which represents all monies received pursuant to
clause (1) of Section 3 hereof (other than Liquidation Proceeds and
Recoveries), into the Collection Account.
SECTION 6. RATIFICATION OF AGREEMENT. As supplemented by this Agreement, the
Sale and Servicing Agreement is in all respects ratified and confirmed and the
Sale and Servicing Agreement as so supplemented by this Agreement shall be read,
taken and construed as one and the same instrument.
SECTION 7. THIRD PARTY BENEFICIARIES. Except as otherwise specifically provided
herein with respect to Noteholders, the parties to this Agreement hereby
manifest their intent that no third party other than the Note Insurer shall be
deemed a third party beneficiary of this Agreement, and specifically that the
Obligors are not third party beneficiaries of this Agreement. The Note Insurer
and its successors and assigns shall be a third-party beneficiary to the
provisions of this Agreement, and shall be entitled to rely upon and directly
enforce the provisions of this Agreement so long as no Note Insurer Default
shall have occurred and be continuing. Except as expressly stated otherwise
herein or in the Basic Documents, any right of the Note Insurer to direct,
appoint, consent to, approve of, or take any action under this Agreement, shall
be a right exercised by the Note Insurer in its sole and absolute discretion.
The Note Insurer may disclaim any of its rights and powers under this Agreement
(but not its duties and obligations under the Policy) upon delivery of a written
notice to the Trust Collateral Agent.
SECTION 8. GOVERNING LAW. THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF NEW YORK, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF
THE PARTIES UNDER THIS AGREEMENT SHALL BE DETERMINED IN ACCORDANCE WITH SUCH
LAWS WITHOUT REGARD TO CONFLICT OF LAWS PRINCIPLES (EXCEPT WITH REGARD TO THE
UCC).
SECTION 9. AMENDMENTS. This Agreement may be amended from time to time by a
written amendment duly executed and delivered by the Issuer, LBAC, LBARC-WI, the
Transferor and the Trust Collateral Agent with the prior written consent of the
Note Insurer.
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IN WITNESS WHEREOF, the Issuer, LBAC, LBARC-WI, the Transferor and the
Trust Collateral Agent have caused this Agreement to be duly executed and
delivered by their respective duly authorized officers as of the day and the
year first above written.
LONG BEACH ACCEPTANCE AUTO RECEIVABLES
TRUST 2004-B, as Issuer
By: Wilmington Trust Company, not
in its individual capacity, but
solely as Owner Trustee
By:
----------------------------------
Name:
Title:
LONG BEACH ACCEPTANCE CORP.
By:
----------------------------------
Name:
Title:
LONG BEACH ACCEPTANCE
RECEIVABLES CORP. WAREHOUSE I
By:
----------------------------------
Name:
Title:
LONG BEACH ACCEPTANCE
RECEIVABLES CORP.
By:
----------------------------------
Name:
Title:
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XXXXX FARGO BANK, NATIONAL ASSOCIATION
as Trust Collateral Agent.
By:
----------------------------------
Name:
Title:
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SCHEDULE A
SCHEDULE OF RECEIVABLES
-----------------------
Schedule A-1
SCHEDULE B
Location of Receivable Files
Xxx Xxxx Xxxxxx Xxxxx
Xxxxxxx, Xxx Xxxxxx 00000
Location of Legal Files
Xxx Xxxx Xxxxxx Xxxxx
Xxxxxxx, Xxx Xxxxxx 00000
Schedule B-1
SCHEDULE C
Delivery Requirements
The Trust Collateral Agent shall have sole control over each such investment and
the income thereon, and any certificate or other instrument evidencing any such
investment, if any shall, except for clearing corporation securities, be
delivered directly to the Trust Collateral Agent or its agent, together with
each document of transfer, if any, necessary to transfer title to such
investment to the Trust Collateral Agent in a manner that complies with this
Agreement and the requirements of the definition of Eligible Investments.
Schedule C-1
