EXHIBIT 10.1
[Execution Version]
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SALE AND SERVICING AGREEMENT
among
LONG BEACH ACCEPTANCE AUTO RECEIVABLES TRUST 2003-C
Issuer
LONG BEACH ACCEPTANCE RECEIVABLES CORP.
Transferor
LONG BEACH ACCEPTANCE CORP.
Originator, Servicer and Custodian
and
JPMORGAN CHASE BANK
Back-up Servicer and Trust Collateral Agent
Dated as of October 1, 2003
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TABLE OF CONTENTS
Page
ARTICLE I DEFINITIONS............................................................................................ 1
SECTION 1.1. Definitions............................................................................1
SECTION 1.2. Other Definitional Provisions..........................................................1
SECTION 1.3. Calculations...........................................................................2
SECTION 1.4. Action by or Consent of Noteholders....................................................2
SECTION 1.5. Material Adverse Effect................................................................2
ARTICLE II CONVEYANCE OF RECEIVABLES..............................................................................3
SECTION 2.1. Conveyance of Receivables..............................................................3
SECTION 2.2. Transfer Intended as Sale; Precautionary Security Interest.............................4
SECTION 2.3. Assignment by Transferor...............................................................4
SECTION 2.4. [Reserved].............................................................................4
SECTION 2.5. Further Encumbrance of Trust Assets....................................................4
ARTICLE III THE RECEIVABLES.......................................................................................5
SECTION 3.1. Representations and Warranties of Transferor...........................................5
SECTION 3.2. Repurchase upon Breach of Representations and Warranties of the
Transferor...........................................................................6
SECTION 3.3. Custody of Legal Files and Receivable Files............................................6
SECTION 3.4. Legal File Deficiencies................................................................7
SECTION 3.5. Access to Receivable Files; Servicer's Duties with Respect to
Receivable Files.....................................................................8
SECTION 3.6. Issuer's Certificate...................................................................8
ARTICLE IV ADMINISTRATION AND SERVICING OF RECEIVABLES............................................................9
SECTION 4.1. Duties of the Servicer.................................................................9
SECTION 4.2. Collection and Allocation of Receivable Payments......................................10
SECTION 4.3. Realization upon Receivables..........................................................11
SECTION 4.4. Physical Damage Insurance; Other Insurance............................................12
SECTION 4.5. Maintenance of Security Interests in Financed Vehicles................................13
SECTION 4.6. Additional Covenants of Servicer......................................................14
SECTION 4.7. Purchase of Receivables Upon Breach...................................................14
SECTION 4.8. Servicing Fee.........................................................................15
SECTION 4.9. Servicer's Certificate................................................................15
SECTION 4.10. Annual Statement as to Compliance; Notice of Default..................................16
SECTION 4.11. Annual Independent Certified Public Accountant's Report...............................16
SECTION 4.12. Servicer Expenses.....................................................................17
SECTION 4.13. Retention and Termination of Servicer.................................................17
SECTION 4.14. Access to Certain Documentation and Information Regarding Receivables.................17
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SECTION 4.15. Verification of Servicer's Certificate................................................18
SECTION 4.16. Fidelity Bond.........................................................................19
SECTION 4.17. Delegation of Duties..................................................................19
SECTION 4.18. Delivery of Back-up Tapes of Back-up Servicer.........................................20
SECTION 4.19. Confidential Information..............................................................20
ARTICLE V ACCOUNTS; PAYMENTS; STATEMENTS TO NOTEHOLDERS..........................................................21
SECTION 5.1. Accounts; Lock-Box Account............................................................21
SECTION 5.2. Collections...........................................................................23
SECTION 5.3. Application of Collections............................................................23
SECTION 5.4. Intentionally Omitted.................................................................24
SECTION 5.5. Additional Deposits...................................................................24
SECTION 5.6. Payments; Policy Claims...............................................................24
SECTION 5.7. Statements to Noteholders; Tax Returns................................................28
SECTION 5.8. Reliance on Information from the Servicer.............................................31
SECTION 5.9. Optional Deposits by the Note Insurer.................................................31
SECTION 5.10. Spread Account........................................................................31
SECTION 5.11. Withdrawals from Spread Account.......................................................31
SECTION 5.12. Demand Note...........................................................................32
SECTION 5.13. Securities Accounts...................................................................33
ARTICLE VI THE POLICY............................................................................................33
SECTION 6.1. Policy................................................................................33
SECTION 6.2. Claims Under Policy...................................................................33
SECTION 6.3. Preference Claims; Direction of Proceedings...........................................35
SECTION 6.4. Surrender of Policy...................................................................35
ARTICLE VII THE TRANSFEROR.......................................................................................36
SECTION 7.1. Representations of the Transferor.....................................................36
SECTION 7.2. Liability of the Transferor...........................................................38
SECTION 7.3. Merger or Consolidation of, or Assumption of the Obligations of, the
Transferor..........................................................................38
SECTION 7.4. Limitation on Liability of the Transferor and Others..................................38
SECTION 7.5. Transferor May Own Notes..............................................................39
ARTICLE VIII THE SERVICER........................................................................................39
SECTION 8.1. Representations of Servicer...........................................................39
SECTION 8.2. Indemnities of Servicer...............................................................41
SECTION 8.3. Merger or Consolidation of, or Assumption of the Obligations of,
Servicer or Back-up Servicer........................................................43
SECTION 8.4. Limitation on Liability of Servicer and Others........................................44
SECTION 8.5. Servicer and Back-up Servicer Not to Resign...........................................44
ARTICLE IX SERVICER TERMINATION EVENTS...........................................................................45
SECTION 9.1. Servicer Termination Events...........................................................45
SECTION 9.2. Appointment of Successor..............................................................48
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SECTION 9.3. Notification to Noteholders...........................................................50
SECTION 9.4. Action Upon Certain Failures of the Servicer..........................................50
ARTICLE X THE TRUST COLLATERAL AGENT.............................................................................50
SECTION 10.1. Duties of the Trust Collateral Agent..................................................50
SECTION 10.2. Trust Collateral Agent to Act for the Class A Noteholders and Note
Insurer.............................................................................53
SECTION 10.3. Certain Matters Affecting the Trust Collateral Agent..................................53
SECTION 10.4. Trust Collateral Agent and Back-up Servicer Not Liable for Notes or
Receivables.........................................................................55
SECTION 10.5. Trust Collateral Agent and Back-up Servicer May Own Notes.............................56
SECTION 10.6. Indemnity of Trust Collateral Agent and Back-up Servicer..............................56
SECTION 10.7. Eligibility Requirements for Trust Collateral Agent...................................56
SECTION 10.8. Resignation or Removal of Trust Collateral Agent......................................56
SECTION 10.9. Successor Trust Collateral Agent......................................................57
SECTION 10.10. Merger or Consolidation of Trust Collateral Agent.....................................58
SECTION 10.11. Co-Trustee; Separate Trustee..........................................................58
SECTION 10.12. Representations and Warranties of Trust Collateral Agent..............................60
SECTION 10.13. Rights of Note Insurer to Direct Trust Collateral Agent...............................60
ARTICLE XI TERMINATION...........................................................................................60
SECTION 11.1. Termination...........................................................................60
ARTICLE XII ADMINISTRATIVE DUTIES OF THE SERVICER................................................................61
SECTION 12.1. Administrative Duties.................................................................61
SECTION 12.2. Records...............................................................................63
SECTION 12.3. Additional Information to be Furnished to the Issuer..................................63
SECTION 12.4. No Additional Compensation............................................................63
ARTICLE XIII MISCELLANEOUS PROVISIONS............................................................................63
SECTION 13.1. Amendment.............................................................................63
SECTION 13.2. Protection of Title...................................................................65
SECTION 13.3. Limitation on Rights of Noteholders...................................................67
SECTION 13.4. Governing Law.........................................................................68
SECTION 13.5. Notices...............................................................................68
SECTION 13.6. Severability of Provisions............................................................69
SECTION 13.7. Assignment to Indenture Trustee.......................................................69
SECTION 13.8. Limitation of Liability of Owner Trustee, Back-up Servicer and Trust
Collateral Agent....................................................................69
SECTION 13.9. Independence of the Servicer..........................................................69
SECTION 13.10. No Joint Venture......................................................................70
SECTION 13.11. Nonpetition Covenant..................................................................70
SECTION 13.12. Third Party Beneficiaries.............................................................70
SECTION 13.13. Consent to Jurisdiction...............................................................70
SECTION 13.14. Headings..............................................................................71
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SECTION 13.15. Trial by Jury Waived..................................................................71
SECTION 13.16. Entire Agreement......................................................................72
SECTION 13.17. Effect of Policy Expiration Date......................................................72
SECTION 13.18. Termination of Demand Note and/or Demand Note Guarantee...............................72
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
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 October 1,
2003, among LONG BEACH ACCEPTANCE AUTO RECEIVABLES TRUST 2003-C, 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 JPMORGAN CHASE BANK, a New York banking
corporation, as back-up servicer and trust collateral agent, ("Back-up Servicer"
and "Trust Collateral Agent", respectively).
WHEREAS the Issuer desires to acquire a portfolio of receivables
arising in connection with motor vehicle retail installment sale contracts
acquired by LBAC through motor vehicle dealers;
WHEREAS the Transferor has purchased such receivables from LBAC and
Long Beach Acceptance Receivables Corp. Warehouse I (collectively, 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 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.
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ARTICLE II
CONVEYANCE OF RECEIVABLES
SECTION 2.1. Conveyance of 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 and to:
(i) the Receivables listed in Schedule A hereto, all monies
received on the Receivables after the Cutoff Date and, with respect to
any Receivables which are Precomputed Receivables, the related Payahead
Amount, and all Liquidation Proceeds and Recoveries received with
respect to such Receivables;
(ii) the security interests in the related Financed Vehicles
granted by the related Obligors pursuant to the Receivables and any
other interest of the Transferor in such Financed Vehicles, including,
without limitation, the certificates of title and any other evidence of
ownership with respect to such Financed Vehicles;
(iii) any proceeds from claims on any physical damage, credit
life and credit accident and health insurance policies or certificates
or the VSI Policy, if any, relating to the related Financed Vehicles or
the related Obligors, including any rebates and premiums;
(iv) property (including the right to receive future
Liquidation Proceeds) that secures a Receivable and that has been
acquired by or on behalf of the Issuer pursuant to the liquidation of
such Receivable;
(v) the Purchase Agreement including, without limitation, a
direct right to cause LBAC to purchase Receivables from the Issuer upon
the occurrence of a breach of any of the representations and warranties
contained in Section 3.03(b) of the Purchase 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 Financed Vehicle
or his or her obligations with respect to such Financed Vehicle and any
recourse to Dealers for any of the foregoing;
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(vii) the Legal Files and the Receivable Files related to each
Receivable and any and all other documents that LBAC keeps on file in
accordance with its customary procedures relating to the Receivables,
the related Obligors or the related Financed Vehicles;
(viii) all amounts and property from time to time held in or
credited to the Lock-Box Account, to the extent such amounts and
property relate to the Receivables;
(ix) any proceeds from recourse against Dealers (other than
any Chargeback Obligations), including, without limitation, any Dealer
Title Guaranties with respect to the Receivables, with respect to the
sale of the Receivables; and
(x) the proceeds of any and all of the foregoing.
SECTION 2.2. Transfer Intended as Sale; Precautionary Security
Interest. The conveyance to the Issuer of the property set forth in Section 2.1
above is intended as a sale (for certain non-tax purposes) free and clear of all
Liens, and it is intended that the property of the Issuer shall not be part of
the Transferor's estate in the event of the filing of a bankruptcy petition by
or against the Transferor under any bankruptcy law. In the event, however, that
notwithstanding the intent of LBAC, the Transferor and the Issuer, any transfer
under this Agreement is held not to be a sale, this Agreement shall constitute a
security agreement under the UCC (as defined in the UCC as in effect in the
State of New York) and applicable law, and the Transferor hereby grants a
security interest to the Issuer in, to and under the property described in
Section 2.1 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.
SECTION 2.3. 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 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 2.3 are intended to grant the Issuer a direct right
against LBAC to demand performance under the terms of the Purchase Agreement.
SECTION 2.4. [Reserved]
SECTION 2.5. Further Encumbrance of Trust Assets.
(a) Immediately upon the conveyance to the Issuer by the Transferor of
any item of the Trust Assets pursuant to Section 2.1, all right, title and
interest of the Transferor in and to such item of Trust Assets shall terminate,
and all such right, title and interest shall vest in the Issuer, in accordance
with the Trust Agreement and Sections 3802 and 3805 of the Statutory Trust Act
(as defined in the Trust Agreement).
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(b) Immediately upon the vesting of the Trust Assets in the Issuer, the
Issuer shall have the sole right to pledge or otherwise encumber, such Trust
Assets. Pursuant to the Indenture, the Issuer shall grant a security interest in
the Trust Assets to the Indenture Trustee to secure the repayment of the Notes
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 the Purchase Agreement with respect to the Receivables to
the same extent as if such representations and warranties were fully set forth
herein. With respect to such representations and warranties, the Issuer is
deemed to have relied on such representations and warranties in acquiring the
Receivables, the Note Insurer 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
issuing the Class R Certificate. Such representations and warranties speak as of
the execution and delivery of this Agreement and as of the Closing Date, but
shall survive the transfer and assignment of the Receivables to the Issuer and
the subsequent pledge thereof to the Indenture Trustee pursuant to the
Indenture.
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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, 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 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 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 October 1, 2003, 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 Receivable):
(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);
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(ii) a copy of the original credit application fully executed
by the Obligor;
(iii) a copy of the Lien Certificate or Title Package, as
applicable;
(iv) all other documents listed on the Documentation Checklist
in effect on the Cutoff Date relating to such Receivable; 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 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 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 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.
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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 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. 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.
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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, 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.
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SECTION 4.2. Collection and Allocation of Receivable Payments.
Consistent with the standards, policies and procedures required by this
Agreement, the Servicer shall make reasonable efforts to collect all payments
called for under the terms and provisions of the Receivables as and when the
same shall become due and shall follow such collection procedures as it follows
with respect to all comparable automotive receivables that it services for
itself or others; provided, however, that the Servicer shall notify each Obligor
prior to the Closing Date to make all payments with respect to the Receivables
to the Lock-Box and shall make reasonable efforts to cause Obligors to make all
such payments to such Lock-Box. The Servicer will provide each Obligor with a
monthly statement in order to notify such Obligors to make payments directly to
the Lock-Box. The Servicer shall allocate collections between principal and
interest in accordance with the customary servicing procedures it follows with
respect to all comparable automotive receivables that it services for itself or
others and in accordance with the terms of this Agreement. The Servicer, for so
long as LBAC is the Servicer, may grant extensions, rebates or adjustments on a
Receivable in accordance with the customary servicing procedures it follows with
respect to all comparable automotive receivables that it services for itself
which shall not modify the original due date of the Scheduled Receivable
Payments on any Receivable other than (a) in accordance with the Payment
Deferment and Due Date Change Policies, (b) in connection with a Deficient
Liquidated Receivable, (c) with the prior written consent of the Note Insurer,
with respect to any other Liquidated Receivable or (d) as otherwise required by
applicable law. Notwithstanding anything contained herein to the contrary, the
Servicer may, at its option, repurchase up to 25 Receivables in a manner
consistent with Section 5.5 hereof and any such repurchased Receivable (an
"Optional Repurchase Receivable") shall not be deemed to be a Defaulted
Receivable or a Liquidated Receivable. The Servicer shall not modify the Payment
Deferment and Due Date Change Policies without the prior written consent of the
Note Insurer. The Servicer shall notify 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.
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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
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 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 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.
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(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 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 polices. The Servicer, in accordance with the servicing procedures and
standards set forth herein, shall require that (i) each Obligor shall have
obtained insurance covering the Financed Vehicle, as of the date of the
execution of the Receivable, insuring against loss and damage due to fire,
theft, transportation, collision and other risks generally covered by
comprehensive and collision coverage and each Receivable requires the Obligor to
maintain such physical loss and damage insurance naming LBAC and its successors
and assigns as an additional insured, (ii) each Receivable that finances the
cost of premiums for credit life and credit accident and health insurance is
covered by an insurance policy or certificate naming LBAC as policyholder
(creditor) and (iii) as to each Receivable that finances the cost of an extended
service contract, the respective Financed Vehicle which secures the Receivable
is covered by an extended service contract.
(b) To the extent applicable, the Servicer shall not take any action
which would result in noncoverage under any of the insurance policies referred
to in Section 4.4(a) which, but for the actions of the Servicer, would have been
covered thereunder. The Servicer, on behalf of the Trust Collateral Agent, shall
take such reasonable action as shall be necessary to permit recovery under any
of the foregoing insurance policies. Any amounts collected by the Servicer under
any of the foregoing insurance policies shall be deposited in the Collection
Account pursuant to Section 5.2. In the event of the cancellation or non-renewal
of the insurance referred to in Section 4.4(a)(i) above with respect to any
Financed Vehicle, the Servicer will endeavor, in accordance with its customary
servicing standards and procedures, to cause the related Obligor to obtain a
replacement insurance policy. In no event shall the Servicer be required to
force place insurance on a Financed Vehicle.
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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 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.
13
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 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 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.
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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 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.
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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, 2004, an Officer's Certificate,
dated as of December 31 of the preceding calendar year, stating that (i) a
review of the activities of the Servicer during such preceding calendar year and
of its performance under this Agreement has been made under such officer's
supervision and (ii) to the best of such officer's knowledge, based on such
review, the Servicer has fulfilled all its obligations under this Agreement
throughout such year, or, if there has been a default in the fulfillment of any
such obligation, specifying each such default known to such officer and the
nature and status thereof. The Trust Collateral Agent shall send a copy of such
certificate to the Rating Agencies.
(b) The Servicer shall deliver to the Issuer, the Trust Collateral
Agent, the Indenture Trustee, the Back-up Servicer, the Collateral Agent, the
Transferor, the 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, 2004, 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.
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The report will also indicate that the firm is independent of the
Servicer within the meaning of the Code of Professional Ethics of the American
Institute of Certified Public Accountants.
SECTION 4.12. Servicer Expenses. The Servicer shall be required to pay
all expenses incurred by it in connection with its activities under this
Agreement (including taxes imposed on the Servicer, expenses incurred by the
Servicer in connection with payments and reports to Noteholders, the Trust
Collateral Agent, 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 December 31, 2003 which term
shall be extendible by the Note Insurer for successive quarterly terms ending on
each successive March 31, June 30, September 30 and December 31 (or, pursuant to
revocable written standing instructions from time to time to the Servicer and
the Trust Collateral Agent, for any specified number of terms greater than one),
until the termination of the Issuer. Each such notice (including each notice
pursuant to standing instructions, which shall be deemed delivered at the end of
successive quarterly terms for so long as such instructions are in effect) (a
"Servicer Extension Notice") shall be delivered by the Note Insurer to the Trust
Collateral Agent and the Servicer. The Servicer hereby agrees that, as of the
date hereof and upon its receipt of any such Servicer Extension Notice, the
Servicer shall become bound, for the initial term beginning on the date hereof
and for the 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.
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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.
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.
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(b) The Back-up Servicer shall review each Servicer's Certificate
delivered pursuant to Section 4.15(a) and shall, based upon the information
provided from the Servicer under Section 4.15(a):
(i) confirm that such Servicer's Certificate is complete on
its face;
(ii) load the computer diskette (which shall be in a format
acceptable to the Back-up Servicer) received from the Servicer pursuant
to Section 4.15(a) hereof, confirm that such computer diskette is in a
readable form and calculate the Principal Balance of each Receivable
based on the Principal Balance of such Receivable as of the preceding
Payment Date (as set forth in such Servicer's Certificate) and the
current principal payment for such Receivable (as set forth in such
Servicer's Certificate) and compare such calculation to that set forth
in the Servicer's Certificate (and give notice of any discrepancy to
the Note Insurer); and
(iii) recalculate the Available Funds, the Principal Payment
Amount, the Class A-1 Interest Payment Amount, the Class A-2 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
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.
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SECTION 4.18. Delivery of Back-up Tapes of Back-up Servicer.
(a) In addition to the information to be delivered by the Servicer to
the Back-up Servicer on or before the fifth Business Day of each month pursuant
to Section 4.15(a), the Servicer shall deliver to the Back-up Servicer, or its
designated agent, a computer diskette (or other electronic transmission), in a
format acceptable to the Back-up Servicer or its designated agent, as the case
may be, with the loan master file and history information in the form attached
hereto as Exhibit B-2 on or prior to the Closing Date which loan master file and
history information shall be sufficiently detailed to enable the Back-up
Servicer to maintain records sufficient to assume the role of successor Servicer
pursuant to this Agreement.
(b) In addition to the information required to be delivered by the
Servicer to the Back-up Servicer or its designated agent on or before the fifth
Business Day of each month pursuant to Section 4.15(a) and on or prior to the
Closing Date pursuant to Section 4.18(a), the Servicer shall deliver the loan
master file and history information to the Back-up Servicer or its designated
agent on the Determination Date occurring in November 2003 (with respect to the
period from and including the Cutoff Date to the last day of the related
Collection Period) and on the Determination Date occurring every six months
thereafter in the form attached hereto as Exhibit B-2 in writing and on a
computer diskette (or other electronic transmission) in a format acceptable to
the Back-up Servicer or its designated agent, as the case may be, and as at such
other times as may be requested by the Note Insurer or the Back-up Servicer upon
prior written notice to the Servicer, provided that the Back-up Servicer shall
deliver a copy of any such notice by the Back-up Servicer to the Note Insurer
simultaneously with its delivery of such notice to the Servicer.
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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 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. Notwithstanding
anything herein to the contrary, except as reasonably necessary to comply with
applicable securities laws, each Person may disclose to any person or entity any
information with respect to the United States federal income "tax treatment" and
"tax structure" (in each case within the meaning of Treasury Regulation Section
1.6011-4) of the transactions contemplated by the Basic Documents and all
materials of any kind (including opinions or other tax analyses) that are
provided to such Person relating to such tax treatment and tax structure. To the
extent not inconsistent with the immediately preceding sentence, this
authorization does not extend to disclosure of any other information, including
without limitation, the identities of participants or potential participants in
such transactions, the existence or status of negotiation or any other term,
information, documents or other materials not related to the tax treatment or
tax structure of the transactions contemplated by the Basic Documents.
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, 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
Assets in accordance with provisions of this Agreement without diminution of
such obligation or liability by virtue thereof.
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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.
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(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 and the Policy Payments Account in the name of the Issuer
for the benefit of the Noteholders. The Collection Account, the Note Account and
the Policy Payments Account shall be Eligible Accounts initially established
with the Trust Collateral Agent; provided, however, if any of such accounts
shall cease to be an Eligible Account, the Servicer, with the consent of the
Note Insurer (so long as no Note Insurer Default has occurred and is
continuing), within five (5) Business Days shall, cause such accounts to be
moved to an institution so that such account meets the definition of Eligible
Account. The Servicer shall promptly notify the Rating Agencies and the
Transferor of any change in the location of any of the aforementioned accounts.
All amounts held in the Collection Account shall be invested by the
Trust Collateral Agent at the written direction of the Transferor in Eligible
Investments in the name of the Trust Collateral Agent on behalf of the Issuer
and shall mature no later than one Business Day immediately preceding the
Payment Date next succeeding the date of such investment. In no event shall the
Trust Collateral Agent be liable for any insufficiency in the Collection Account
resulting from any investment loss in any Eligible Account. Such written
direction shall certify that any such investment is authorized by this Section.
No investment may be sold prior to its maturity. Amounts in the Note Account and
the Policy Payments Account shall not be invested. The amount of earnings on
investments of funds in the Collection Account during the Collection Period
related to each Payment Date shall be deposited into the Note Account on each
Payment Date, and shall be available for payment pursuant to Section 5.6(c).
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 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 (iv) 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, on each Payment
Date, from the Collection Account to the Note Account, in immediately available
funds, an amount equal to the excess of the sum of (a) all funds that were
deposited in the Collection Account, plus (b) earnings on investments of funds
in the Collection Account pursuant to Section 5.1(b), for the related Collection
Period over all funds transferred from the Collection Account with respect to
such Collection Period pursuant to Section 5.6(c).
(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, and the Class A-2 Interest Payment
Amount, the Demand Note Interest Payment Amount, the Demand Note Supplemental
Interest Payment Amount 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:
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(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 and the Class A-2
Noteholders, pro rata based on the Note Interest due on each such class
of Notes, from the Available Funds (as such Available Funds have been
reduced by payments made pursuant to clauses (i) and (ii) above), an
amount equal to the Class A-1 Note Interest and Class A-2 Note
Interest, respectively, with respect to such Payment Date (plus
(without duplication) interest on any outstanding Class A-1 Interest
Carryover Shortfall or Class A-2 Interest Carryover Shortfall, if any,
to the extent permitted by applicable law, at the Class A-1 Note Rate
or the Class A-2 Note Rate, as applicable, for the related Accrual
Period (calculated, in each case, 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), 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 and 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, 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;
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(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 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) or (e) 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
reasonable counsel fees and expenses), including, without limitation,
costs and expenses required to be paid by the Servicer to the Back-up
Servicer under Section 9.2(a), to the extent not paid by the Servicer,
and all unpaid reasonable out-of-pocket expenses of the Trust
Collateral Agent, the Indenture Trustee, the Back-up Servicer and the
Custodian (including reasonable counsel fees and expenses) from prior
Collection Periods; provided, however, that unless an Event of Default
shall have occurred and be continuing, expenses payable to the Trust
Collateral Agent, the Indenture Trustee, the Back-up Servicer and the
Custodian pursuant to this subclause 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-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;
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(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 and 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;
(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.
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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, nor shall it have any right to receive
any amounts, unless and until such amounts have been distributed pursuant to
Sections 5.6(c) 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 Class R 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 or the Class A-2 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.XXXXXXXX.XXX\SFR 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, among 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, 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 and the Class A-2 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 and the Class A-2 Pool Factor
as of the close of business on the last day of the preceding Collection
Period;
(iv) the Class A-1 Note Balance and the Class A-2 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) or clause (ii) 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 and the Class A-2 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;
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(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 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 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; and
(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.
Each amount set forth pursuant to subclauses (i), (ii) and (vi) 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.
(b) No later than January 31 of each calendar year, commencing January
31, 2004, 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.
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(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 or (ii) 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.
Although the Transferor as Certificateholder, has pledged the Spread Account to
the Collateral Agent, pursuant to the Spread Account Agreement, the Spread
Account shall not under any circumstances be deemed to be a part of or otherwise
includible in the Issuer or the Trust Assets.
SECTION 5.11. Withdrawals from Spread Account. 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.
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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, 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 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 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.
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(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.
SECTION 5.13. Securities Accounts. The Trust Collateral Agent
acknowledges that any account held by it hereunder is a "securities account" as
defined in the Uniform Commercial Code as in effect in New York (the "New York
UCC"), and that it shall be acting as a "securities intermediary" of the
Indenture Trustee with respect to each such account held by it. 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 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).
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(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) 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.
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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
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.
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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 and shall
survive the conveyance of the Receivables to the Issuer and the subsequent
pledge thereof to the Indenture Trustee pursuant to the Indenture.
(a) Organization and Good Standing. The Transferor has been duly
organized and is validly existing as a corporation in good standing under the
laws of the State of Delaware, with the corporate power and authority to conduct
its business as such business is presently conducted and to execute, deliver and
perform its obligations under this Agreement and the other Basic Documents to
which it is a party.
(b) Due Qualification. The Transferor is duly qualified to do business
as a foreign corporation in good standing, and has obtained all necessary
licenses and approvals in all jurisdictions required for the performance of its
obligations under this Agreement and the other Basic Documents to which it is a
party other than where the failure to obtain such license or approval or
qualification would not have a material adverse effect on the ability of the
Transferor to perform such obligations or on any Receivable or on the interest
therein of the Issuer, the Noteholders or the Note Insurer.
(c) Power and Authority. The Transferor has the corporate power and
authority to execute and deliver this Agreement and the other Basic Documents to
which it is a party and to carry out their respective terms; the Transferor has
full corporate power and authority to sell and assign the property sold and
assigned to and deposited with the Issuer and has duly authorized such sale and
assignment to the Issuer by all necessary corporate action; and the execution,
delivery, and performance of this Agreement and the other Basic Documents to
which it is a party have been duly authorized by the Transferor by all necessary
corporate action.
(d) Valid Sale; Binding Obligation. This Agreement effects a valid
sale, transfer and assignment of the Receivables and the other property conveyed
to the Issuer pursuant to Section 2.1, enforceable against creditors of and
purchasers from the Transferor; and this Agreement and the other Basic Documents
to which the Transferor is a party shall constitute legal, valid and binding
obligations of the Transferor enforceable in accordance with their respective
terms except as enforceability may be limited by bankruptcy, insolvency,
reorganization or other similar laws affecting the enforcement of creditors'
rights generally and by equitable limitations on the availability of specific
remedies, regardless of whether such enforceability is considered in a
proceeding in equity or at law.
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(e) No Violation. The execution, delivery and performance by the
Transferor of this Agreement and the other Basic Documents to which the
Transferor is a party and the consummation of the transactions contemplated
hereby and thereby and the fulfillment of the terms hereof and thereof do not
conflict with, result in any breach of any of the terms and provisions of, nor
constitute (with or without notice or lapse of time) a default under, the
certificate of incorporation or by-laws of the Transferor, or any material
indenture, agreement, mortgage, deed of trust, or other instrument to which the
Transferor is a party or by which it is bound or any of its properties are
subject; nor result in the creation or imposition of any material lien upon any
of its properties pursuant to the terms of any such indenture, agreement,
mortgage, deed of trust, or other instrument (other than the Basic Documents and
the Credit and Security Agreement); nor violate any law, order, rule, or
regulation applicable to the Transferor of any court or of any Federal or State
regulatory body, administrative agency, or other governmental instrumentality
having jurisdiction over the Transferor or its properties.
(f) No Proceedings. There are no proceedings or investigations pending,
or to the Transferor's best knowledge, threatened, before any court, regulatory
body, administrative agency, or other governmental instrumentality having
jurisdiction over the Transferor or its properties: (A) asserting the invalidity
of this Agreement or the other Basic Documents to which the Transferor is a
party or the Notes, (B) seeking to prevent the issuance of the Notes or the
consummation of any of the transactions contemplated by this Agreement or the
other Basic Documents to which the Transferor is a party, (C) seeking any
determination or ruling that might materially and adversely affect the
performance by the Transferor of its obligations under, or the validity or
enforceability of, this Agreement or the other Basic Documents to which the
Transferor is a party or the Notes, (D) relating to the Transferor and which
might adversely affect the Federal or State income, excise, franchise or similar
tax attributes of the Notes or (E) that could have a material adverse effect on
the Receivables.
(g) No Consents. No consent, approval, authorization or order of or
declaration or filing with any governmental authority is required to be obtained
by the Transferor for the issuance or sale of the Notes or the 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 Receivables and other Transferred
Property are being 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.
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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 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 executed and filed that are
necessary fully to preserve and protect the interest of the Issuer in the
Receivables, and reciting the details of such filings, or (B) stating that, in
the opinion of such counsel, no such action shall be necessary to preserve and
protect such interest, (iv) immediately after giving effect to such transaction,
no Insurance Agreement Event of Default and no event that, after notice or lapse
of time, or both, would become an Insurance Agreement Event of Default shall
have happened and be continuing, (v) the organizational documents of the Person
surviving or resulting from such transaction shall contain provisions similar to
those of the Transferor's certificate of incorporation in respect of the
issuance of debt, independent directors and bankruptcy remoteness and (vi) the
Transferor shall have received confirmation from each Rating Agency that the
then current rating of the Notes will not be downgraded as a result of such
merger, consolidation or succession. A copy of such confirmation shall be
provided to the Trust Collateral Agent. Notwithstanding anything herein to the
contrary, the execution of the foregoing agreement of assumption and compliance
with clause (i), (ii), (iii) or (iv) above shall be conditions to the
consummation of the transactions referred to in clause (a), (b) or (c) above.
SECTION 7.4. Limitation on Liability of the Transferor and Others. The
Transferor and any director or officer or employee or agent of the Transferor
may rely in good faith on the advice of counsel or on any document of any kind,
prima facie properly executed and submitted by any Person respecting any matters
arising hereunder. The Transferor shall not be under any obligation to appear
in, prosecute or defend any legal action that shall not be incidental to its
obligations under this Agreement, and that in its opinion may involve it in any
expense or liability.
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SECTION 7.5. Transferor May Own Notes. The Transferor and any Person
controlling, controlled by, or under common control with the Transferor may in
its individual or any other capacity become the owner or pledgee of Notes with
the same rights as it would have if it were not the Transferor or an affiliate
thereof, except as otherwise provided in the definition of "Noteholder" set
forth in Annex A hereto and as specified in Section 1.4. Notes so owned by or
pledged to the Transferor or such controlling or commonly controlled Person
shall have an equal and proportionate benefit under the provisions of this
Agreement, without preference, priority, or distinction as among all of the
Notes except as otherwise provided herein or by the definition of Noteholder.
ARTICLE VIII
THE SERVICER
SECTION 8.1. Representations of Servicer. The Servicer makes the
following representations on which the Note Insurer shall be deemed to have
relied in executing and delivering the 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 Trustee is deemed to have relied on in accepting the pledge
of the Receivables. The representations speak as of the execution and delivery
of this Agreement and as of the Closing Date and shall survive the conveyance of
the Receivables to the Issuer and the subsequent pledge thereof to the Indenture
Trustee pursuant to the Indenture.
(i) Organization and Good Standing. The Servicer is duly
organized and validly existing as a corporation in good standing under
the laws of the State of Delaware, with the corporate power and
authority to own its properties and to conduct its business as such
properties shall be currently owned and such business is presently
conducted, and had at all relevant times, and has, the corporate power,
authority, and legal right to acquire, own, sell and service the
Receivables and to hold the Receivable Files as custodian.
(ii) Due Qualification. The Servicer is duly qualified to do
business as a foreign corporation in good standing, and has obtained
all necessary licenses and approvals in all jurisdictions in which the
ownership or lease of property or the conduct of its business
(including the servicing of the Receivables as required by this
Agreement and the performance of its other obligations under this
Agreement and the other Basic Documents to which it is a party) shall
require such qualifications.
(iii) Power and Authority. The Servicer has the power and
authority to execute and deliver this Agreement and the other Basic
Documents to which it is a party and to carry out their respective
terms; and the execution, delivery, and performance of this Agreement
and the other Basic Documents to which it is a party have been duly
authorized by the Servicer by all necessary corporate action.
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(iv) Binding Obligation. This Agreement and the other Basic
Documents to which it is a party constitute legal, valid and binding
obligations of the Servicer enforceable in accordance with their
respective terms except as enforceability may be limited by bankruptcy,
insolvency, reorganization or other similar laws affecting the
enforcement of creditors' rights generally and by equitable limitations
on the availability of specific remedies, regardless of whether such
enforceability is considered a proceeding in equity or at law.
(v) No Violation. The execution, delivery and performance by
the Servicer of this Agreement and the other Basic Documents to which
the Servicer is a party and the consummation of the transactions
contemplated hereby and thereby and the fulfillment of the terms hereof
and thereof do not conflict with, result in any breach of any of the
terms and provisions of, or constitute (with or without notice or lapse
of time) a default under, the certificate of incorporation or by-laws
of the Servicer, or any material indenture, agreement, mortgage, deed
of trust, or other instrument to which the Servicer is a party or by
which it is bound or any of its properties are subject; or result in
the creation or imposition of any material lien upon any of its
properties pursuant to the terms of any indenture, agreement, mortgage,
deed of trust, or other instrument (other than this Agreement); or
violate any law, order, rule, or regulation applicable to the Servicer
of any court or of any Federal or State regulatory body, administrative
agency, or other governmental instrumentality having jurisdiction over
the Servicer or its properties.
(vi) No Proceedings. There are no proceedings or
investigations pending, or to the Servicer's best knowledge,
threatened, before any court, regulatory body, administrative agency,
or other governmental instrumentality having jurisdiction over the
Servicer or its properties: (A) asserting the invalidity of this
Agreement or the other Basic Documents to which the Servicer is a
party, the Notes or the Certificate, (B) seeking to prevent the
issuance of the Notes or the Certificate or the consummation of any of
the transactions contemplated by this Agreement, the Notes, the
Certificate, or the other Basic Documents to which the Servicer is a
party, (C) seeking any determination or ruling that might materially
and adversely affect the performance by the Servicer of its obligations
under, or the validity or enforceability of, this Agreement, the Notes,
the Certificate or the other Basic Documents to which the Servicer is a
party, (D) relating to the Servicer and which might adversely affect
the Federal or State income, excise, franchise or similar tax
attributes of the Notes or the Certificate or (E) that could have a
material adverse effect on the Receivables.
(vii) No Consents. No consent, approval, authorization or
order of or declaration or filing with any governmental authority is
required to be obtained by the Servicer for the issuance or sale of the
Notes or the consummation of the other transactions contemplated by
this Agreement and the other Basic Documents to which the Servicer is a
party, except such as have been duly made or obtained.
(viii) Taxes. The Servicer has filed on a timely basis all tax
returns required to be filed by it and paid all taxes, to the extent
that such taxes have become due.
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(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 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 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.
41
(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 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).
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(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 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 executed and filed that are
necessary fully to preserve and protect the interest of the Issuer in the
Receivables and reciting the details of such filings or (B) stating that, in the
opinion of such counsel, no such action shall be necessary to preserve and
protect such interest and (iv) nothing herein shall be deemed to release the
Servicer from any obligation. The Servicer shall provide 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.
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(b) Any Person (a) into which the Back-up Servicer may be merged or
consolidated, (b) which may result from any merger or consolidation to which the
Back-up Servicer shall be a party, (c) which may succeed to the properties and
assets of the Back-up Servicer substantially as a whole or (d) succeeding to the
business of the Back-up Servicer, shall execute an agreement of assumption to
perform every obligation of the Back-up Servicer hereunder, and whether or not
such assumption agreement is executed, shall be the successor to the Back-up
Servicer under this Agreement without further act on the part of any of the
parties to this Agreement; provided, however, that nothing herein shall be
deemed to release the Back-up Servicer from any obligation.
SECTION 8.4. Limitation on Liability of Servicer and Others.
(a) Neither the Servicer nor any of the directors or officers or
employees or agents of the Servicer shall be under any liability to the
Indenture Trustee, the Trust Collateral Agent, the Owner Trustee, the Collateral
Agent, the Back-up Servicer, the Custodian, the Issuer, the Demand Note
Provider, the Note Insurer, the Transferor or the Noteholders, except as
provided under this Agreement, for any action taken or for refraining from the
taking of any action pursuant to this Agreement; provided, however, that this
provision shall not protect the Servicer or any such person against any
liability that would otherwise be imposed by reason of a breach of this
Agreement or willful misfeasance, bad faith, or negligence in the performance of
duties or by reason of reckless disregard of obligations and duties under this
Agreement. The Servicer and any director or officer or employee or agent of the
Servicer may rely in good faith on any document of any kind prima facie properly
executed and submitted by any Person respecting any matters arising under this
Agreement.
(b) Except as provided in this Agreement, the Servicer shall not be
under any obligation to appear in, prosecute or defend any legal action that
shall not be incidental to its duties to service the Receivables in accordance
with this Agreement, and that in its opinion may involve it in any expense or
liability.
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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.
ARTICLE IX
SERVICER TERMINATION EVENTS
SECTION 9.1. Servicer Termination Events. If any one of the following
events ("Servicer Termination Events") shall occur and be continuing:
(i) Any failure by the Servicer or, for so long as LBAC is the
Servicer, the Transferor, to deliver to the Trust Collateral Agent for
payment to Noteholders or 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 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
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(iv) Failure on the part of LBAC, the Servicer or, for so long
as LBAC is the Servicer, the Transferor, as the case may be, duly to
observe or to perform in any material respect any other covenants or
agreements of LBAC, the Servicer or the Transferor (as the case may be)
set forth in the Notes, the Certificate, the Purchase Agreement or in
this Agreement, which failure shall continue unremedied for a period of
30 days after the date on which written notice of such failure
requiring the same to be remedied, shall have been given (1) to LBAC,
the Servicer or the Transferor (as the case may be), by the Note
Insurer or the 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 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
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(vii) Any representation, warranty or statement of LBAC or the
Servicer or, for so long as LBAC is the Servicer, the Transferor, made
in this Agreement and, with respect to LBAC and the Transferor, the
Purchase Agreement or in each case any certificate, report or other
writing delivered pursuant hereto shall prove to be incorrect as of the
time when the same shall have been made (excluding, however, any
representation or warranty set forth in Section 3.2(b) of the Purchase
Agreement), and the incorrectness of such representation, warranty or
statement has a material adverse effect on the Issuer and, within 30
days after written notice thereof shall have been given (1) to LBAC,
the Servicer or the Transferor (as the case may be) by the Trust
Collateral Agent or the Note Insurer or (2) to LBAC, the Servicer or
the Transferor (as the case may be), and to the Trust Collateral Agent
and the Note Insurer by the 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
(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;
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and, without limitation, the Trust Collateral Agent is hereby
authorized and empowered to execute and deliver, on behalf of the
predecessor Servicer, as attorney-in-fact or otherwise, any and all
documents and other instruments, and to do or accomplish all other acts
or things necessary or appropriate to effect the purposes of such
notice of termination, whether to complete the transfer and endorsement
of the Receivables and related documents, or otherwise. The predecessor
Servicer shall cooperate with the successor Servicer and the Trust
Collateral Agent in effecting the termination of the responsibilities
and rights of the predecessor Servicer under this Agreement, including
the transfer to the successor Servicer for administration by it of all
cash amounts that shall at the time be held or should have been held by
the predecessor Servicer for deposit, or shall thereafter be received
with respect to a Receivable and the delivery to the successor Servicer
of all files and records concerning the Receivables and a computer tape
in readable form containing all information necessary to enable the
successor Servicer to service the Receivables and the other property of
the Issuer. All reasonable costs and expenses (including attorneys'
fees) incurred in connection with transferring the Receivable Files to
the successor Servicer and amending this Agreement to reflect such
succession as Servicer pursuant to this Section 9.1 shall be paid by
the predecessor Servicer upon presentation of reasonable documentation
of such costs and expenses. In addition, any successor Servicer shall
be entitled to payment from the immediate predecessor Servicer for
reasonable transition expenses incurred in connection with acting as
successor Servicer, and in connection with system conversion costs, an
aggregate amount not to exceed for such conversion costs of $100,000,
and to the extent not so paid, such payment shall be made pursuant to
Section 5.6(c)(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.
SECTION 9.2. Appointment of Successor.
(a) Upon the Servicer's receipt of notice of termination pursuant to
Section 9.1 or the Servicer's resignation in accordance with the terms of this
Agreement, the predecessor Servicer shall continue to perform its functions as
Servicer under this Agreement, in the case of termination, only until the date
specified in such termination notice or, if no such date is specified in a
notice of termination, until receipt of such notice, and, in the case of
resignation, until the later of (x) the date 45 days from the delivery to the
Trust Collateral Agent of written notice of such resignation (or written
confirmation of such notice) in accordance with the terms of this Agreement and
(y) the date upon which the predecessor Servicer shall become unable to act as
Servicer, as specified in the notice of resignation and accompanying Opinion of
Counsel. In the event of termination of the Servicer, the Back-up Servicer,
shall assume the obligations of Servicer hereunder on the date specified in such
written notice (the "Assumption Date") pursuant to the Servicing Assumption
Agreement or, in the event that the Note Insurer shall have determined that a
Person other than the Back-up Servicer shall be the successor Servicer in
accordance with Section 9.2(c), on the date of the execution of a written
assumption agreement by such Person to serve as successor Servicer.
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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 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.
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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.
(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.
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(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 or an officer of the Custodian receives written
notice of such Servicer Termination Event or Event of Default from the
Servicer, the Transferor, the Note Insurer or, after a Note Insurer
Default, the Class A Noteholders evidencing not less than 25% of the
Class A Note Balance 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 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.
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(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 or the Custodian, as applicable,
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.
(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.
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(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 JPMorgan Chase Bank, 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.
(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.
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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 Trust Collateral Agent and
the Back-up Servicer that the Rating Agencies rating the Notes are Standard &
Poor's and Moody's and that their addresses are as set forth in Section 13.5.
The Trust Collateral Agent 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.
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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 State of New York; 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 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 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.
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(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
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.
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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 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.
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(b) Each separate trustee and co-trustee shall, to the extent permitted
by law, be appointed and act subject to the following provisions and conditions:
(i) All rights, powers, duties, and obligations conferred or
imposed upon the Trust Collateral Agent shall be conferred upon and
exercised or performed by the Trust Collateral Agent and such separate
trustee or co-trustee jointly (it being understood that such separate
trustee or co-trustee is not authorized to act separately without the
Trust Collateral Agent joining in such act), except to the extent that
under any law of any jurisdiction in which any particular act or acts
are to be performed (whether as Trust Collateral Agent under this
Agreement or, in its capacity as Back-up Servicer, as successor to the
Servicer under this Agreement), the Trust Collateral Agent shall be
incompetent or unqualified to perform such act or acts, in which event
such rights, powers, duties, and obligations (including the holding of
title to the Issuer or any portion thereof in any such jurisdiction)
shall be exercised and performed singly by such separate trustee or
co-trustee, but solely at the direction of the Trust Collateral Agent;
(ii) No trustee under this Agreement shall be personally
liable by reason of any act or omission of any other trustee under this
Agreement; and
(iii) Provided no Note Insurer Default shall have occurred and
be continuing, the Note Insurer may, and, in the event a Note Insurer
Default shall have occurred and be continuing, then, the Servicer and
the Trust Collateral Agent acting jointly may, at any time accept the
resignation of or remove any separate trustee or co-trustee.
(c) Any notice, request or other writing given to the Trust Collateral
Agent shall be deemed to have been given to each of the other then separate
trustees and co-trustees, as effectively as if given to each of them. Every
instrument appointing any separate trustee or co-trustee shall refer to this
Agreement and the conditions of this Article X. Each separate trustee and
co-trustee, upon its acceptance of the trusts conferred, shall be vested with
the estates or property specified in its instrument of appointment, either
jointly with the Trust Collateral Agent or separately, as may be provided
therein, subject to all the provisions of this Agreement, specifically including
every provision of this Agreement relating to the conduct of, affecting the
liability of, or affording protection to, the Trust Collateral Agent. Each such
instrument shall be filed with the Trust Collateral Agent and a copy thereof
given to the Servicer.
(d) Any separate trustee or co-trustee may at any time appoint the
Trust Collateral Agent, its agent or attorney-in-fact with full power and
authority, to the extent not prohibited by law, to do any lawful act under or in
respect of this Agreement on its behalf and in its name. If any separate trustee
or co-trustee shall die, become incapable of acting, resign or be removed, all
of its estates, properties, rights, remedies and trusts shall vest in and be
exercised by the Trust Collateral Agent, to the extent permitted by law, without
the appointment of a new or successor Trust Collateral Agent.
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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 New York banking
corporation, duly organized, validly existing, and in good standing
under the laws of the State of New York and has the corporate power,
authority and legal right to hold the Legal Files.
(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.
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.
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(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 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.
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(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
(v) the removal of the Trust Collateral Agent or the Indenture
Trustee.
(d) Exceptions. Notwithstanding anything to the contrary in this
Agreement, except as expressly provided herein or in the other Basic Documents,
the Servicer, in its capacity hereunder, shall not be obligated to, and shall
not, (1) make any payments to the Noteholders under the Basic Documents, (2)
sell the Pledged Property pursuant to Section 5.5 of the Indenture, (3) take any
other action that the Issuer directs the Servicer not to take on its behalf or
(4) in connection with its duties hereunder assume any indemnification
obligation of any other Person.
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SECTION 12.2. Records. The Servicer shall maintain appropriate books of
account and records relating to services performed under this Agreement, which
books of account and records shall be accessible for inspection by the Issuer at
any time during normal business hours.
SECTION 12.3. Additional Information to be Furnished to the Issuer. The
Servicer shall furnish to the Issuer from time to time such additional
information regarding the Trust Assets as the Issuer shall reasonably request.
SECTION 12.4. No Additional Compensation. The Servicing Fee payable to
the Servicer pursuant to Section 5.6(c)(i) 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 affected thereby, (b) reduce the
aforesaid percentage of the Note Balance required to consent to any such
amendment, without the consent of the Holders of all Notes then outstanding or
eliminate the right of the Noteholder or the Certificateholder to consent to any
change described in clause (a) affecting the Noteholder or the Certificateholder
without the consent of the Noteholder or the Certificateholder, as applicable;
or (c) result in a downgrade or withdrawal of the then current rating of the
Notes by either of the Rating Agencies without the consent of all the
Noteholders; provided, further that in the case of clause (ii) above, this
Agreement may be amended from time to time by the Issuer, the Transferor, the
Originator, the Servicer, the Trust Collateral Agent, the Back-up Servicer and
the Custodian, 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:
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(x) to correct or amplify the description of any property at
any time conveyed to the Issuer hereunder, or better to assure, convey
and confirm unto the property conveyed pursuant hereto;
(y) to add to the covenants of the Transferor, the Originator
or the Servicer, for the benefit of the Holders of the Notes and the
Note Insurer; or
(z) to cure any ambiguity, to correct or supplement any
provision herein or to make any other provisions with respect to
matters or questions arising under this Agreement; provided that such
action pursuant to this subclause (z) shall not adversely affect in any
material respect the interests of the Holders of the Notes, as
evidenced by satisfaction of the Rating Agency Condition with respect
to such amendment
(b) None of Article II or Sections 4.4, 4.5, 4.6, 5.12 or 5.13 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, Mayer, Brown, Xxxx & Mawe 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 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.
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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 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
executed and filed that are necessary fully to preserve and protect the interest
of the Trust Collateral Agent in the Receivables, and reciting the details of
such filings or (B) stating that, in the opinion of such counsel, no such action
shall be necessary to preserve and protect such interest. The Servicer shall at
all times maintain each office from which it shall service Receivables, and its
principal executive office, within the United States of America.
(d) The Servicer shall maintain accounts and records as to each
Receivable accurately and in sufficient detail to permit (i) the reader thereof
to know at any time the status of such Receivable, including payments and
recoveries made and payments owing (and the nature of each) and (ii)
reconciliation between payments or recoveries on (or with respect to) each
Receivable and the amounts from time to time deposited in the Collection Account
in respect of such Receivable.
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(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 2003-C 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 executed and
filed that are necessary fully to preserve and protect the interest of
the Trust Collateral Agent in the Receivables, and reciting the details
of such filings or referring to prior Opinions of Counsel in which such
details are given or (B) stating that, in the opinion of such counsel,
no such action shall be necessary to preserve and protect such
interest; and
(2) within 90 days after the beginning of each calendar year
beginning with the first calendar year beginning more than three months
after the Cutoff Date, an Opinion of Counsel, dated as of a date during
such 90-day period either (A) stating that, in the opinion of such
counsel, all financing statements and continuation statements have been
executed and filed that are necessary fully to preserve and protect the
interest of the Trust Collateral Agent in the Receivables, and reciting
the details of such filings or referring to prior Opinions of Counsel
in which such details are given or (B) stating that, in the opinion of
such counsel, no such action shall be necessary to preserve and protect
such interest.
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Each Opinion of Counsel referred to in clause (i) (1) or (i) (2) above shall
specify any action necessary (as of the date of such opinion) to be taken in the
following year to preserve and protect such interest.
(j) For the purpose of facilitating the execution of this Agreement and
for other purposes, this Agreement may be executed simultaneously in any number
of counterparts, each of which counterparts shall be deemed to be an original,
and all of which counterparts shall constitute but one and the same instrument.
SECTION 13.3. Limitation on Rights of Noteholders.
(a) The death or incapacity of any Noteholder shall not operate to
terminate this Agreement or the Issuer, nor entitle such Noteholder's legal
representatives or heirs to claim an accounting or to take any action or
commence any proceeding in any court for a partition or winding up of the
Issuer, nor otherwise affect the rights, obligations and liabilities of the
parties to this Agreement or any of them.
(b) No Noteholder shall have any right to vote (except as specifically
provided herein including in Section 13.1) or in any manner otherwise control
the operation and management of the Issuer, or the obligations of the parties to
this Agreement, nor shall anything in this Agreement set forth, or contained in
the terms of the Notes be construed so as to constitute the Noteholders from
time to time as partners or members of an association; nor shall any Noteholder
be under any liability to any third person by reason of any action taken
pursuant to any provision of this Agreement.
(c) So long as no Note Insurer Default has occurred and is continuing,
except as otherwise specifically provided herein, whenever Noteholder action,
consent or approval is required under this Agreement, such action, consent or
approval shall be deemed to have been taken or given on behalf of, and shall be
binding upon, all Noteholders if the Note Insurer agrees to take such action or
give such consent or approval.
(d) If a Note Insurer Default shall have occurred and be continuing, no
Noteholder shall have any right by virtue or by availing itself of any
provisions of this Agreement to institute any suit, action, or proceeding in
equity or at law upon or under or with respect to this Agreement, unless such
Holder previously shall have given to the Trust Collateral Agent a written
notice of default and of the continuance thereof, and unless also the 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.
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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
(h) 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 2003-C, (i) 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 (j) 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.
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(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.
(b) Notwithstanding anything contained herein to the contrary, this
Agreement has been executed and delivered by JPMorgan Chase, not in its
individual capacity but solely as Back-up Servicer and Trust Collateral Agent
and in no event shall JPMorgan Chase 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.
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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 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 Policy or the
Demand Note, as applicable) upon delivery of a written notice to the Trust
Collateral Agent.
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SECTION 13.13. Consent to Jurisdiction.
(a) TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, THE PARTIES
HERETO HEREBY IRREVOCABLY SUBMIT TO THE JURISDICTION OF THE UNITED STATES
DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK AND ANY COURT IN THE STATE
OF NEW YORK LOCATED IN THE CITY AND COUNTY OF NEW YORK, AND ANY APPELLATE COURT
FROM ANY THEREOF, IN ANY ACTION, SUIT OR PROCEEDING BROUGHT AGAINST IT AND TO OR
IN CONNECTION WITH ANY OF THE TRANSACTION DOCUMENTS OR THE TRANSACTION OR FOR
RECOGNITION OR ENFORCEMENT OF ANY JUDGMENT, AND THE PARTIES HERETO HEREBY
IRREVOCABLY AND UNCONDITIONALLY AGREE THAT ALL CLAIMS IN RESPECT OF ANY SUCH
ACTION OR PROCEEDING MAY BE HEARD OR DETERMINED IN SUCH NEW YORK STATE COURT OR
IN SUCH FEDERAL COURT. THE PARTIES HERETO AGREE THAT A FINAL JUDGMENT IN ANY
SUCH ACTION, SUIT OR PROCEEDING SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN OTHER
JURISDICTIONS BY SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER PROVIDED BY LAW. TO
THE EXTENT PERMITTED BY APPLICABLE LAW, THE PARTIES HERETO HEREBY WAIVE AND
AGREE NOT TO ASSERT BY WAY OF MOTION, AS A DEFENSE OR OTHERWISE IN ANY SUCH
SUIT, ACTION OR PROCEEDING, ANY CLAIM THAT IT IS NOT PERSONALLY SUBJECT TO THE
JURISDICTION OF SUCH COURTS, THAT THE SUIT, ACTION OR PROCEEDING IS BROUGHT IN
AN INCONVENIENT FORUM, THAT THE VENUE OF THE SUIT, ACTION OR PROCEEDING IS
IMPROPER OR THAT THE RELATED DOCUMENTS OR THE SUBJECT MATTER THEREOF MAY NOT BE
LITIGATED IN OR BY SUCH COURTS.
(b) To the extent permitted by applicable law, the parties hereto shall
not seek and hereby waive the right to any review of the judgment of any such
court by any court of any other nation or jurisdiction which may be called upon
to grant an enforcement of such judgment.
(c) Each of LBAC and the Transferor hereby agree that until such time
at the Notes and the Reimbursement Obligations have been paid in full and the
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 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.
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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.
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IN WITNESS WHEREOF, the Issuer, the Transferor, the Originator, the
Servicer, the Trust Collateral Agent, the Back-up Servicer and the Custodian
have caused this Sale and Servicing Agreement to be duly executed by their
respective officers as of the day and year first above written.
LONG BEACH ACCEPTANCE
RECEIVABLES CORP., as Transferor
By:
Name:_____________________________________
Title:
LONG BEACH ACCEPTANCE CORP.,
as Originator, Servicer and Custodian
By:
Name:_____________________________________
Title:
JPMORGAN CHASE BANK,
as Back-up Servicer and Trust Collateral Agent
By:
Name:_____________________________________
Title:
LONG BEACH ACCEPTANCE AUTO
RECEIVABLES TRUST 2003-C, 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 October 1, 2003, among Long Beach Acceptance Receivables Corp., Long Beach
Acceptance Corp., as originator, as servicer and as custodian, JPMorgan Chase
Bank, as trust collateral agent and back-up servicer and Long Beach Acceptance
Auto Receivables Trust 2003-C, 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 October 1, 2003, among Long Beach Acceptance Receivables Corp., Long Beach
Acceptance Corp., as originator, as servicer and as custodian, JPMorgan Chase
Bank, as trust collateral agent and back-up servicer and Long Beach Acceptance
Auto Receivables Trust 2003-C, 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 2003-C
1.70% ASSET-BACKED NOTES, CLASS A-1
3.29% 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 October 1, 2003, 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.
D-1
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 February 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-2 Final Scheduled Payment Date.
D-2
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:
----------------------------------------------------------------------------------------------------------
ACCOUNT NUMBER:
----------------------------------------------------------------------------------------------------
This funding package contains the following initialed items:
1. Installment contract with proper signatures and Dealer endorsements 1.__________________
2. Copy of signed credit application 2.__________________
3. References as described in the Program Guidelines 3.__________________
4. Proof of income as described in the Program Guidelines 4.__________________
5. Copy of driver's license for all licensed signors 5.__________________
6. Title information (application and copy of existing title, receipt
of registration, or title copy already received) with lien
notation thereon, or Dealer Title Guaranty 6.__________________
7. Invoice or copy of computer screen printout showing NADA value,
NADA book page, Xxxxxx printout or Xxxxxx Blue Book page 7.__________________
8. In the case of a used Financed Vehicle, odometer statement (if not
on title info) 8.__________________
9. Signed agreement to provide insurance and verification paper or
other evidence of verification of insurance coverage 9.__________________
10. Notice to cosignor, if required 10._________________
11. Service contract or warranty papers 11._________________
12. Life, accident, health and GAP insurance policy copies, as applicable 12._________________
13. Signed purchase order from dealer to customer 13._________________
E-1
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
