Execution Copy
 

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SALE AND SERVICING AGREEMENT
 
among
 
LONG BEACH ACCEPTANCE AUTO RECEIVABLES TRUST 2007-A
 
Issuer
 
LONG BEACH ACCEPTANCE RECEIVABLES CORP.
 
Transferor
 
LONG BEACH ACCEPTANCE CORP.
 
Originator, Servicer and Custodian
 
and
 
WELLS FARGO BANK, NATIONAL ASSOCIATION
 
Back-up Servicer and Trust Collateral Agent
 
Dated as of March 1, 2007
 

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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 or the Class C Certificateholder
 
2
SECTION 1.5.
 
Material Adverse Effect
 
3
     
ARTICLE II CONVEYANCE OF RECEIVABLES
 
3
         
SECTION 2.1.
 
Conveyance of Initial Receivables.
 
3
SECTION 2.2.
 
Conveyance of Subsequent Receivables
 
4
SECTION 2.3.
 
Transfer Intended as Sale; Precautionary Security Interest.
 
9
SECTION 2.4.
 
Assignment by Transferor
 
9
SECTION 2.5.
 
Further Encumbrance of Trust Assets
 
10
     
ARTICLE III THE RECEIVABLES
 
10
         
SECTION 3.1.
 
Representations and Warranties of Transferor
 
10
SECTION 3.2.
 
Repurchase upon Breach of Representations and Warranties of the Transferor
 
11
SECTION 3.3.
 
Custody of Legal Files and Receivable Files
 
11
SECTION 3.4.
 
Legal File Deficiencies
 
12
SECTION 3.5.
 
Access to Receivable Files; Servicer's Duties with Respect to Receivable Files
 
13
SECTION 3.6.
 
Issuer’s Certificate
 
14
     
ARTICLE IV ADMINISTRATION AND SERVICING OF RECEIVABLES
 
14
         
SECTION 4.1.
 
Duties of the Servicer
 
14
SECTION 4.2.
 
Collection and Allocation of Receivable Payments
 
15
SECTION 4.3.
 
Realization upon Receivables
 
16
SECTION 4.4.
 
Physical Damage Insurance; Other Insurance
 
17
SECTION 4.5.
 
Maintenance of Security Interests in Financed Vehicles
 
18
SECTION 4.6.
 
Additional Covenants of Servicer
 
19
SECTION 4.7.
 
Purchase of Receivables Upon Breach
 
19
SECTION 4.8.
 
Servicing Fee
 
20
SECTION 4.9.
 
Servicer's Certificate
 
20
SECTION 4.10.
 
Annual Statement as to Compliance; Notice of Default
 
21
SECTION 4.11.
 
Annual Independent Certified Public Accountant's Report
 
22
SECTION 4.12.
 
Servicer Expenses
 
22
SECTION 4.13.
 
Retention and Termination of Servicer
 
23
SECTION 4.14.
 
Access to Certain Documentation and Information Regarding Receivables
 
23

 
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SECTION 4.15.
 
Verification of Servicer's Certificate
 
23
SECTION 4.16.
 
Fidelity Bond
 
25
SECTION 4.17.
 
Delegation of Duties
 
25
SECTION 4.18.
 
Delivery of Back-up Tapes of Back-up Servicer
 
26
SECTION 4.19.
 
Confidential Information
 
26
     
ARTICLE V ACCOUNTS; PAYMENTS; STATEMENTS TO NOTEHOLDERS
 
27
         
SECTION 5.1.
 
Accounts; Lock-Box Account
 
27
SECTION 5.2.
 
Collections
 
29
SECTION 5.3.
 
Application of Collections
 
29
SECTION 5.4.
 
Intentionally Omitted.
 
29
SECTION 5.5.
 
Additional Deposits
 
29
SECTION 5.6.
 
Payments; Policy Claims
 
30
SECTION 5.7.
 
Statements to Noteholders and the Class C Certificateholder; Tax Returns
 
35
SECTION 5.8.
 
Reliance on Information from the Servicer
 
38
SECTION 5.9.
 
Optional Deposits by the Note Insurer
 
38
SECTION 5.10.
 
Spread Account
 
38
SECTION 5.11.
 
Withdrawals from Supplemental Enhancement Account and Spread Account
 
39
SECTION 5.12.
 
Supplemental Enhancement Account
 
39
SECTION 5.13.
 
Pre-Funding Account
 
40
SECTION 5.14.
 
Securities Accounts
 
40
     
ARTICLE VI THE POLICY
 
41
         
SECTION 6.1.
 
Policy
 
41
SECTION 6.2.
 
Claims Under Policy
 
41
SECTION 6.3.
 
Preference Claims; Direction of Proceedings
 
42
SECTION 6.4.
 
Surrender of Policy
 
43
     
ARTICLE VII THE TRANSFEROR
 
43
         
SECTION 7.1.
 
Representations of the Transferor
 
43
SECTION 7.2.
 
Liability of the Transferor
 
45
SECTION 7.3.
 
Merger or Consolidation of, or Assumption of the Obligations of, the Transferor
 
45
SECTION 7.4.
 
Limitation on Liability of the Transferor and Others
 
46
SECTION 7.5.
 
Transferor May Own Notes
 
46
     
ARTICLE VIII THE SERVICER
 
46
         
SECTION 8.1.
 
Representations of Servicer
 
46
SECTION 8.2.
 
Indemnities of Servicer
 
48
SECTION 8.3.
 
Merger or Consolidation of, or Assumption of the Obligations of, Servicer or
Back-up Servicer
 
50
SECTION 8.4.
 
Limitation on Liability of Servicer and Others
 
51
SECTION 8.5.
 
Servicer and Back-up Servicer Not to Resign
 
52

 
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ARTICLE IX SERVICER TERMINATION EVENTS
 
52
         
SECTION 9.1.
 
Servicer Termination Events
 
52
SECTION 9.2.
 
Appointment of Successor
 
56
SECTION 9.3.
 
Notification to Noteholders and the Class C Certificateholder
 
58
SECTION 9.4.
 
Action Upon Certain Failures of the Servicer
 
58
     
ARTICLE X THE TRUST COLLATERAL AGENT
 
58
         
SECTION 10.1.
 
Duties of the Trust Collateral Agent
 
58
SECTION 10.2.
 
Trust Collateral Agent to Act for the Class A Noteholders, the Class C
Certificateholder and Note Insurer
 
61
SECTION 10.3.
 
Certain Matters Affecting the Trust Collateral Agent
 
61
SECTION 10.4.
 
Trust Collateral Agent and Back-up Servicer Not Liable for Notes or Receivables
 
63
SECTION 10.5.
 
Trust Collateral Agent and Back-up Servicer May Own Notes
 
64
SECTION 10.6.
 
Indemnity of Trust Collateral Agent and Back-up Servicer
 
64
SECTION 10.7.
 
Eligibility Requirements for Trust Collateral Agent
 
64
SECTION 10.8.
 
Resignation or Removal of Trust Collateral Agent
 
64
SECTION 10.9.
 
Successor Trust Collateral Agent
 
66
SECTION 10.10.
 
Merger or Consolidation of Trust Collateral Agent
 
66
SECTION 10.11.
 
Co-Trustee; Separate Trustee.
 
66
SECTION 10.12.
 
Representations and Warranties of Trust Collateral Agent
 
68
SECTION 10.13.
 
Rights of Note Insurer to Direct Trust Collateral Agent
 
68
     
ARTICLE XI TERMINATION
 
69
         
SECTION 11.1.
 
Termination
 
69
     
ARTICLE XII ADMINISTRATIVE DUTIES OF THE SERVICER
 
69
         
SECTION 12.1.
 
Administrative Duties
 
69
SECTION 12.2.
 
Records
 
71
SECTION 12.3.
 
Additional Information to be Furnished to the Issuer
 
71
SECTION 12.4.
 
No Additional Compensation
 
71
     
ARTICLE XIII MISCELLANEOUS PROVISIONS
 
71
         
SECTION 13.1.
 
Amendment
 
71
SECTION 13.2.
 
Protection of Title
 
73
SECTION 13.3.
 
Limitation on Rights of Noteholders and the Class C Certificateholder
 
75
SECTION 13.4.
 
Governing Law
 
76
SECTION 13.5.
 
Notices
 
76
SECTION 13.6.
 
Severability of Provisions
 
77
SECTION 13.7.
 
Assignment to Indenture Trustee
 
77
SECTION 13.8.
 
Limitation of Liability of Owner Trustee, Back-up Servicer and Trust Collateral
Agent
 
77
SECTION 13.9.
 
Independence of the Servicer
 
77
SECTION 13.10.
 
No Joint Venture
 
78

 
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SECTION 13.11.
 
Nonpetition Covenant
 
78
SECTION 13.12.
 
Third Party Beneficiaries
 
78
SECTION 13.13.
 
Consent to Jurisdiction.
 
78
SECTION 13.14.
 
Headings
 
79
SECTION 13.15.
 
Trial by Jury Waived
 
79
SECTION 13.16.
 
Entire Agreement
 
80
SECTION 13.17.
 
Effect of Policy Expiration Date
 
80

 
ANNEXES

 
Annex
 
A
 
Defined Terms

 
EXHIBITS
 
Exhibit
 
A-1
 
Form of Issuer's Certificate
Exhibit
 
A-2
 
Form of Issuer's Certificate
Exhibit
 
B-1
 
Form of Servicer's Certificate
Exhibit
 
B-2
 
Form of Loan Master File Layout
Exhibit
 
C
 
Intentionally Omitted
Exhibit
 
D
 
Payment Deferment and Due Date Change Policies
Exhibit
 
E
 
Documentation Checklist
Exhibit
 
F
 
Form of Transfer Agreement
SCHEDULES
Schedule
 
A
 
Schedule of Receivables
Schedule
 
B
 
Location of Receivable Files; Location of Legal Files
Schedule
 
C
 
Delivery Requirements

 
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SALE AND SERVICING AGREEMENT ("Agreement"), dated as of March 1, 2007, among
LONG BEACH ACCEPTANCE AUTO RECEIVABLES TRUST 2007-A, 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 WELLS FARGO BANK, NATIONAL ASSOCIATION, a national banking
association, as back-up servicer and trust collateral agent, (the "Back-up
Servicer" and the "Trust Collateral Agent", respectively).
 
WHEREAS the Issuer desires to acquire a portfolio of receivables arising in
connection with motor vehicle retail installment sale contracts acquired by LBAC
through motor vehicle dealers;
 
WHEREAS the Transferor has purchased such receivables from LBAC and Long Beach
Acceptance Receivables Corp. Warehouse I (collectively, the "Sellers") and is
willing to convey such receivables to the Issuer;
 
WHEREAS the Issuer desires to acquire, from time to time, additional receivables
arising in connection with motor vehicle retail installment sale contracts to be
acquired by LBAC;
 
WHEREAS the Transferor has agreed to purchase, from time to time, such
additional receivables from the Sellers and is willing to convey such
receivables to the Issuer; and
 
WHEREAS the Servicer is willing to service all such receivables.
 
NOW, THEREFORE, in consideration of the premises and the mutual covenants herein
contained, the parties hereto agree as follows:
 
ARTICLE I
DEFINITIONS
 
SECTION 1.1.   Definitions. Whenever used in this Agreement, capitalized terms
used and not otherwise defined herein shall have the meanings set forth in Annex
A attached hereto.
 
SECTION 1.2.   Other Definitional Provisions.
 
(a)  All terms defined in this Agreement (including Annex A hereto) shall have
the defined meanings when used in any instrument governed hereby and in any
certificate or other document made or delivered pursuant hereto unless otherwise
defined therein.
 
(b)  As used in this Agreement, in any instrument governed hereby and in any
certificate or other document made or delivered pursuant hereto or thereto,
accounting terms not defined in this Agreement (including Annex A hereto) or in
any such instrument, certificate or other document, and accounting terms partly
defined in this Agreement (including Annex A hereto) or in any such instrument,
certificate or other document to the extent not defined, shall have the
respective meanings given to them under generally accepted accounting principles
as in effect on the date of this Agreement or any such instrument, certificate
or other document, as applicable. To the extent that the definitions of
accounting terms in this Agreement (including Annex A hereto) or in any such
instrument, certificate or other document are inconsistent with the meanings of
such terms under generally accepted accounting principles, the definitions
contained in this Agreement (including Annex A hereto) or in any such
instrument, certificate or other document shall control.
 
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(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 or the Class C
Certificateholder. Whenever any provision of this Agreement refers to action to
be taken, or consented to, by Noteholders or the Class C Certificateholder, such
provision shall be deemed to refer to Noteholders or the Class C
Certificateholder of record as of the Record Date immediately preceding the date
on which such action is to be taken, or consent given, by Noteholders or the
Class C Certificateholder. Solely for the purposes of any action to be taken or
consented to by Noteholders or the Class C Certificateholder, 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.
 
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SECTION 1.5.   Material Adverse Effect. Whenever a determination is to be made
under this Agreement as to whether a given event, action, course of conduct or
set of facts or circumstances could or would have a material adverse effect on
the Issuer or Noteholders (or any similar or analogous determination), such
determination shall be made without taking into account the insurance provided
by the Policy. Whenever a determination is to be made under this Agreement
whether a breach of a representation, warranty or covenant has or could have a
material adverse effect on a Receivable or the interest therein of the Issuer,
the Noteholders or the Note Insurer (or any similar or analogous determination),
such determination shall be made by the Controlling Party in its sole
discretion.
 
ARTICLE II
CONVEYANCE OF RECEIVABLES
 
SECTION 2.1.   Conveyance of Initial Receivables.
 
In consideration of the Issuer's delivery of the Class R Certificate to or upon
the order of the Transferor on the Closing Date and the net proceeds from the
sale of the Notes and the other amounts to be distributed from time to time to,
or upon the order of, the Transferor in accordance with the terms of this
Agreement, the Transferor does hereby transfer, assign, set over and otherwise
convey to the Issuer, without recourse, all right, title and interest of the
Transferor in, to and under:
 
(i) the Initial Receivables listed in Schedule A hereto, all monies received on
the Initial Receivables after the Initial Cutoff Date and, with respect to any
Initial Receivables which are Precomputed Receivables, the related Payahead
Amount, and all Liquidation Proceeds and Recoveries received with respect to
such Initial Receivables;
 
(ii) the security interests in the related Financed Vehicles granted by the
related Obligors pursuant to the Initial Receivables and any other interest of
the Transferor in such Financed Vehicles, including the certificates of title
and any other evidence of ownership with respect to such Financed Vehicles;
 
(iii) any proceeds from claims on any physical damage, credit life and credit
accident and health insurance policies or certificates or the VSI Policy, if
any, relating to the related Financed Vehicles or the related Obligors,
including any rebates and premiums;
 
(iv) property (including the right to receive future Liquidation Proceeds) that
secures an Initial Receivable and that has been acquired by or on behalf of the
Transferor pursuant to the liquidation of such Initial Receivable;
 
(v) the Purchase Agreement including a direct right to cause LBAC to purchase
Initial Receivables from the Issuer upon the occurrence of a breach of any of
the representations and warranties contained in Section 3.03(b) of the Purchase
Agreement or the failure of LBAC to timely comply with its obligations pursuant
to Section 5.05 of the Purchase Agreement;
 
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(vi) refunds for the costs of extended service contracts with respect to the
related Financed Vehicles, refunds of unearned premiums with respect to credit
life and credit accident and health insurance policies or certificates covering
a related Obligor or Financed Vehicle or his or her obligations with respect to
such Financed Vehicle and any recourse to Dealers for any of the foregoing;
 
(vii) the Legal Files and the Receivable Files related to each Initial
Receivable and any and all other documents that LBAC keeps on file in accordance
with its customary procedures relating to the Initial Receivables, the related
Obligors or the related Financed Vehicles;
 
(viii) all amounts and property from time to time held in or credited to the
Lock-Box Account, to the extent such amounts and property relate to the Initial
Receivables;
 
(ix) any proceeds from recourse against Dealers (other than any Chargeback
Obligations), including any Dealer Title Guaranties with respect to the Initial
Receivables, with respect to the sale of the Initial Receivables; and
 
(x) the proceeds of any and all of the foregoing.
 
SECTION 2.2.   Conveyance of Subsequent Receivables.
 
(a)  Subject to the conditions set forth in Section 2.2(b) hereof and in the
related Transfer Agreement, in consideration of the Issuer's delivery to or upon
the order of the Transferor of the purchase price for the Subsequent
Receivables, in each case as described below and set forth in the related
Transfer Agreement, the Transferor shall on each Subsequent Transfer Date sell,
transfer, assign, set over and otherwise convey to the Issuer, without recourse,
all right, title and interest of the Transferor in, to and under:
 
(i) the Subsequent Receivables listed in Schedule A to the related Transfer
Agreement, all monies received on such Subsequent Receivables after the related
Subsequent Cutoff Date and, with respect to any such Subsequent Receivables
which are Precomputed Receivables, the related Payahead Amount, and all
Liquidation Proceeds and Recoveries received with respect to such Subsequent
Receivables;
 
(ii) the security interests in the related Financed Vehicles granted by the
related Obligors pursuant to such Subsequent Receivables and any other interest
of the Transferor in such Financed Vehicles, including the certificates of title
and any other evidence of ownership with respect to such Financed Vehicles;
 
(iii) any proceeds from claims on any physical damage, credit life and credit
accident and health insurance policies or certificates or the VSI Policy, if
any, relating to the related Financed Vehicles or the related Obligors,
including any rebates and premiums;
 
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(iv) property (including the right to receive future Liquidation Proceeds) that
secures a Subsequent Receivable and that has been acquired by or on behalf of
the Transferor pursuant to the liquidation of such Subsequent Receivable;
 
(v) each Transfer Agreement and the Purchase Agreement, including a direct right
to cause LBAC to purchase Subsequent Receivables from the Issuer upon the
occurrence of a breach of any of the representations and warranties contained in
Section 4 of the related Transfer Agreement, or the failure of LBAC to timely
comply with its obligations pursuant to Section 5.05 of the Purchase Agreement;
 
(vi) refunds for the costs of extended service contracts with respect to the
related Financed Vehicles, refunds of unearned premiums with respect to credit
life and credit accident and health insurance policies or certificates covering
a related Obligor or the related Financed Vehicle or his or her obligations with
respect to a related Financed Vehicle and any recourse to Dealers for any of the
foregoing;
 
(vii) the Legal Files and the Receivable Files related to each such Subsequent
Receivable and any and all other documents that LBAC keeps on file in accordance
with its customary procedures relating to such Subsequent Receivables, the
related Obligors or the related Financed Vehicles;
 
(viii) all amounts and property from time to time held in or credited to the
Lock-Box Account, to the extent such amounts and property relate to such
Subsequent Receivables;
 
(ix) any proceeds from recourse against Dealers (other than any Chargeback
Obligations), including any Dealer Title Guaranties with respect to such
Subsequent Receivables, with respect to the sale of such Subsequent Receivables;
and
 
(x) the proceeds of any and all of the foregoing.
 
The purchase price to be paid by the Issuer on each Subsequent Transfer Date for
the Subsequent Receivables so sold shall be set forth in the related Transfer
Agreement and shall be paid from monies released from the Pre-Funding Account
pursuant to Section 5.13(b). Such purchase price shall equal the aggregate
Principal Balance of such Subsequent Receivables as of the related Subsequent
Cutoff Date.
 
(b)  The Transferor shall transfer to the Issuer the Subsequent Receivables and
the other property and rights related thereto described in Section 2.2(a) only
upon the prior written consent of the Note Insurer acting in its sole and
absolute discretion and the satisfaction of each of the following conditions on
or prior to the related Subsequent Transfer Date:
 
(i) the Transferor shall have provided the Indenture Trustee, the Trust
Collateral Agent, the Note Insurer, the Class C Certificateholder and each
Rating Agency with an Addition Notice not later than five Business Days prior to
the related Subsequent Transfer Date and shall also have provided the Indenture
Trustee, the Trust Collateral Agent and the Note Insurer with an electronic
transmission of the information on the related Subsequent Receivables set forth
in such Addition Notice in a format acceptable to each of the Indenture Trustee,
the Trust Collateral Agent and the Note Insurer no later than such fifth
Business Day prior to the related Subsequent Transfer Date;
 
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(ii) LBAC and LBARC-WI shall have each delivered to the Transferor, a written
Subsequent Assignment, which shall include a list of the Subsequent Receivables
so transferred attached thereto as Schedule A, and a copy thereof to the Note
Insurer;
 
(iii) the Transferor, the Sellers, the Trust and the Trust Collateral Agent
shall have executed a written Transfer Agreement, which shall include a list of
the Subsequent Receivables so transferred attached thereto as Schedule A, and a
copy thereof shall have been delivered to the Note Insurer;
 
(iv) the Transferor shall have caused the Servicer to deposit in the Collection
Account all collections on or in respect of the Subsequent Receivables (to the
extent conveyed to the Trust as specified in Section 2.2(a)) received prior to
the related Subsequent Transfer Date;
 
(v) the Transferor shall have deposited or caused to be deposited the related
Subsequent Spread Account Deposit into the Spread Account pursuant to Section
5.10;
 
(vi) as of each Subsequent Transfer Date, none of the Sellers, the Servicer and
the Transferor will be insolvent nor will either of them be made insolvent by
the related transfer nor shall any of them be aware of any pending insolvency;
 
(vii) the Funding Period shall not have terminated;
 
(viii) the Transferor shall have delivered to the Indenture Trustee, the Trust
Collateral Agent, the Note Insurer, the Class C Certificateholder and each
Rating Agency an Officer's Certificate confirming the satisfaction of each
condition precedent specified in this Section 2.2(b) and in Section 5 of the
related Transfer Agreement and certifying that:
 
(A)  such conveyance of Subsequent Receivables by the Transferor to the Trust on
the related Subsequent Transfer Date was made in good faith for legitimate
business purposes and was not made with intent to hinder, delay or defraud any
Person to which the Transferor has been, is or will become, on or after the
related Subsequent Transfer Date, indebted;
 
(B)  the Transferor did not receive less than a reasonably equivalent value in
exchange for the conveyance of the Subsequent Receivables by the Transferor to
the Issuer on the related Subsequent Transfer Date pursuant to the related
Transfer Agreement;
 
(C)  the Transferor is not insolvent on the related Subsequent Transfer Date and
will not become insolvent as a result of the conveyance of the Subsequent
Receivables by the Transferor to the Issuer on the related Subsequent Transfer
Date pursuant to the related Transfer Agreement;
 
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(D)  the Transferor is not engaged in a business or transaction, and is not
about to engage in a business or transaction, for which any property remaining
with the Transferor after such business or transaction would be an unreasonably
small amount of capital; and
 
(E)  the Transferor has not incurred, and does not believe that it will incur,
debts that would be beyond the Transferor's ability to pay as such debts mature;
 
(ix) each Seller shall have delivered to the Indenture Trustee, the Trust
Collateral Agent, the Note Insurer, the Class C Certificateholder and each
Rating Agency an Officer's Certificate confirming the satisfaction of each
condition precedent specified in this Section 2.2(b) and in Section 5 of the
related Transfer Agreement and certifying that:
 
(A)  such sale of Subsequent Receivables by such Seller to the Transferor on the
related Subsequent Transfer Date was made in good faith for legitimate business
purposes and was not made with intent to hinder, delay or defraud any Person to
which such Seller has been, is or will become, on or after the related
Subsequent Transfer Date, indebted;
 
(B)  such Seller did not receive less than a reasonably equivalent value in
exchange for the sale of the Subsequent Receivables by such Seller to the
Transferor on the related Subsequent Transfer Date pursuant to the Purchase
Agreement and the related Subsequent Assignment;
 
(C)  such Seller is not insolvent on the related Subsequent Transfer Date and
will not become insolvent as a result of the sale of the Subsequent Receivables
by such Seller to the Transferor on the related Subsequent Transfer Date
pursuant to the Purchase Agreement and the related Subsequent Assignment;
 
(D)  such Seller is not engaged in a business or transaction, and is not about
to engage in a business or transaction, for which any property remaining with
such Seller after such business or transaction would be an unreasonably small
amount of capital; and
 
(E)  such Seller has not incurred, and does not believe that it will incur,
debts that would be beyond such Seller's ability to pay as such debts mature;
 
(x) the Transferor shall have delivered to each Rating Agency, the Note Insurer,
the Indenture Trustee and the Trust Collateral Agent Opinions of Counsel with
respect to the transfer of the Subsequent Receivables substantially in the form
of the Opinions of Counsel delivered to each Rating Agency, the Note Insurer,
the Indenture Trustee and the Trust Collateral Agent on the Closing Date
regarding true sale, non-consolidation, perfection, and other such matters
satisfactory in form and substance to each of the Note Insurer, the Indenture
Trustee and the Trust Collateral Agent in its sole discretion;
 
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(xi) the Transferor shall have taken all action required to maintain the first
priority perfected security interest (as defined in the UCC) of the Issuer in
the Trust Assets;
 
(xii) no selection procedures believed by the Transferor or either Seller to be
adverse to the interests of the Noteholders or the Note Insurer shall have been
utilized in selecting the Subsequent Receivables;
 
(xiii) the conveyance of the Subsequent Receivables shall not result in a
qualification, modification or withdrawal of the then-current ratings of the
Notes; provided that written confirmation of such ratings shall not be required
from the Rating Agencies;
 
(xiv) the Transferor shall have provided the Indenture Trustee and the Trust
Collateral Agent with a supplement to the Schedule of Receivables setting forth
the Subsequent Receivables to be transferred on such Subsequent Transfer Date;
 
(xv) the Transferor shall have caused a firm of independent accountants to
deliver to the Indenture Trustee, the Trust Collateral Agent and the Note
Insurer written confirmation that the Receivables, including the related
Subsequent Receivables, meet the following criteria, as of the related
Subsequent Cut-off Date:
 
(1)  the weighted average remaining term of the Receivables will be no more than
67 months and the weighted average original term for the Receivables will be no
more than 69 months;
 
(2)  each Receivable will have a minimum APR of 3.0%;
 
(3)  each Receivable will have an original term of no more than 72 months;
 
(4)  no more than 44%, 13% or 13% of the Receivables will be originated in
California, Arizona or Florida, respectively;
 
(5)  the weighted average APR for the Receivables will be greater than or equal
to 12.23%;
 
(6)  not less than 15.10% of the aggregate Principal Balance of the Receivables
will be Premium Receivables, not less than 19.74% of the aggregate Principal
Balance of the Receivables will be Elite Receivables, not less than 17.86% of
the aggregate Principal Balance of the Receivables will be Superior Receivables,
not less than 18.90% of the aggregate Principal Balance of the Receivables will
be Preferred Receivables and not more than 19.86% of the aggregate Principal
Balance of the Receivables will be Classic Receivables; and
 
(7)  not more than 63% of the aggregate Principal Balance of the Receivables
will represent loans to finance the purchase of used Financed Vehicles;
 
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(xvi) the Transferor shall satisfy the document delivery requirements for such
Subsequent Receivables as specified in Section 3.3;
 
(xvii) the representations and warranties made by the Transferor and the
Servicer in Sections 7.1 and 8.1, respectively, shall be true and correct on and
as of such Subsequent Transfer Date and the representations and warranties made
by the Originator with respect to each such Subsequent Receivable being
transferred to the Trust on such Subsequent Transfer Date in Section 4 of the
related Transfer Agreement shall be true and correct as of such Subsequent
Transfer Date;
 
(xviii) on or before such Subsequent Transfer Date, the Transferor shall have
provided any information reasonably requested by the Rating Agencies, the Note
Insurer, the Indenture Trustee or the Trust Collateral Agent with respect to any
Subsequent Receivables;
 
(xix) the Custodian shall confirm that it is in possession of a Legal File for
each Subsequent Receivable identified in the supplement to the Schedule of
Receivables attached as Schedule A to the related Transfer Agreement; and
 
(xx) the Servicer shall deliver the loan master file and history information and
the information required to be set forth in the form attached hereto as Exhibit
B-2 as specified in Section 4.18.
 
SECTION 2.3.   Transfer Intended as Sale; Precautionary Security Interest. Each
conveyance to the Issuer of the property set forth in Section 2.1 and Section
2.2 above is intended as a sale (for certain non-tax purposes) free and clear of
all Liens, and it is intended that the property of the Issuer shall not be part
of the Transferor's estate in the event of the filing of a bankruptcy petition
by or against the Transferor under any bankruptcy law. In the event, however,
that notwithstanding the intent of LBAC, the Transferor and the Issuer, any
transfer under this Agreement and/or under any Transfer Agreement is held not to
be a sale, this Agreement and/or under any Transfer Agreement shall constitute a
security agreement under the UCC (as defined in the UCC as in effect in the
State of New York) and applicable law, and the Transferor hereby grants a
security interest to the Issuer in, to and under the property described in
Section 2.1 and Section 2.2 above and all proceeds thereof, for the benefit of
the Noteholders and the Note Insurer as their interests may appear herein, for
the purpose of securing the payment and performance of the Notes and the
Certificates 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 2.4.   Assignment by Transferor. The Transferor does hereby transfer,
assign and otherwise convey unto the Issuer, for the benefit of the Noteholders,
the Certificateholders and the Note Insurer, its right to any recourse to LBAC
resulting from the occurrence of a breach of any of their respective
representations and warranties contained in Section 3.03 of the Purchase
Agreement and Section 4 of each Transfer Agreement or from the failure of LBAC
to comply with its obligations pursuant to Section 5.05 of the Purchase
Agreement. The provisions of this Section 2.4 are intended to grant the Issuer a
direct right against LBAC to demand performance under the terms of the Purchase
Agreement.
 
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SECTION 2.5.   Further Encumbrance of Trust Assets.
 
(a)  Immediately upon the conveyance to the Issuer by the Transferor of any item
of the Trust Assets pursuant to Section 2.1 or Section 2.2, all right, title and
interest of the Transferor in and to such item of Trust Assets shall terminate,
and all such right, title and interest shall vest in the Issuer, in accordance
with the Trust Agreement and Sections 3802 and 3805 of the Statutory Trust Act
(as defined in the Trust Agreement).
 
(b)  Immediately upon the vesting of the Trust Assets in the Issuer, the Issuer
shall have the sole right to pledge or otherwise encumber, such Trust Assets.
Pursuant to the Indenture, the Issuer shall grant a security interest in the
Trust Assets to the Indenture Trustee to secure its obligations under the Notes
and the Class C Certificate and the payment of all amounts due and owing to the
Note Insurer. The Class R Certificate shall represent the beneficial ownership
interest in the Trust Assets, and the Noteholders and the Class C
Certificateholder 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 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
each Certificate, remain as covenants of the Issuer for the benefit of the
Certificateholders, enforceable by each 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
Certificateholders.
 
(d)  The Trust Collateral Agent shall, at such time as there are no Notes or
Certificates 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 Class C
Certificateholder pursuant to the Trust Agreement, have been paid, release any
remaining portion of the Trust Assets to the Transferor.
 
ARTICLE III
THE RECEIVABLES
 
SECTION 3.1.   Representations and Warranties of Transferor. The Transferor
hereby makes each of the representations and warranties made by LBAC in Section
3.03(b) of the Purchase Agreement and Section 4 of each Transfer Agreement with
respect to the Receivables to the same extent as if such representations and
warranties were fully set forth herein. With respect to such representations and
warranties, the Issuer shall be deemed to have relied on such representations
and warranties in acquiring the Receivables, the Note Insurer is deemed to have
relied on such representations and warranties in issuing the Policy, the
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, the Class C
Certificateholder is deemed to have relied on such representations and
warranties in purchasing the Class C Certificate and the Owner Trustee is deemed
to have relied on such representations and warranties in entering into the Trust
Agreement. Such representations and warranties speak as of the execution and
delivery of this Agreement and as of the Closing Date in the case of the Initial
Receivables, and as of the related Subsequent Transfer Date in the case of the
Subsequent Receivables, but shall survive the transfer and assignment of the
Receivables to the Issuer and the subsequent pledge thereof to the Indenture
Trustee pursuant to the Indenture.
 
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SECTION 3.2.   Repurchase upon Breach of Representations and Warranties of the
Transferor.
 
(a)  The Transferor, the Servicer, the Custodian, the Trust Collateral Agent or
the Issuer, as the case may be, shall inform the other parties to this Agreement
and the Note Insurer 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 Class C Certificateholder 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 Class C Certificateholder 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 nor the Indenture Trustee shall have a
duty to conduct any affirmative investigation as to the occurrence of any
conditions requiring the repurchase of any Receivable pursuant to this Section.
 
(b)  Pursuant to Section 2.1 and Section 2.2, the Transferor conveys to the
Issuer all of the Transferor's right, title and interest in its rights and
benefits, but none of its obligations or burdens, under the Purchase Agreement
including the Transferor's rights under the Purchase Agreement and the delivery
requirements, representations and warranties and the cure or repurchase and
indemnity obligations of LBAC thereunder. The Transferor hereby represents and
warrants to the Issuer that such assignment is valid, enforceable and effective
to permit the Issuer to enforce such obligations of LBAC and the Transferor
under the Purchase Agreement.
 
SECTION 3.3.   Custody of Legal Files and Receivable Files.  In connection with
the sale, transfer and assignment of the Receivables and the other Transferred
Assets to the Trust pursuant to Section 2.1 and Section 2.2 of this Agreement
and simultaneously with the execution and delivery of this Agreement, the
Custodian shall enter into the Custodial Agreement with the Indenture Trustee,
the Note Insurer and the Issuer, dated as of March 1, 2007, pursuant to which
the Custodian shall agree to act as custodian for the Indenture Trustee, on
behalf of the Noteholders, the Class C Certificateholder and the Note Insurer,
of the following documents or instruments in its possession on or before the
Closing Date (with respect to each Initial Receivable) or the third Business Day
immediately preceding the related Subsequent Transfer Date (with respect to each
Subsequent Receivable), as applicable:
 
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(i) a copy of the fully executed original of the Receivable; and
 
(ii) a copy of the Lien Certificate or Title Package, as applicable.
 
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 (with respect to the Initial Receivables) or the
related Subsequent Transfer Date (with respect to the Subsequent Receivables),
as applicable, or, if such date is not a Business Day, on the next succeeding
Business Day, the Custodian shall inform LBAC and the other parties to this
Agreement and the Note Insurer of any Receivable for which the related Legal
File on such date does not include a Lien Certificate, and LBAC shall repurchase
any such Receivable as of the last day of the Collection Period in which the
date, which is 150 days following the Closing Date (with respect to the Initial
Receivables) or the related Subsequent Transfer Date (with respect to the
Subsequent Receivables), as applicable, occurs, if the related Legal File does
not include a Lien Certificate as of the close of business on such 150th day. In
consideration of the purchase of such Receivable, LBAC shall remit the Purchase
Amount in the manner specified in Section 5.5. The Transferor shall have no
obligation to repurchase any Receivable upon a breach pursuant to this Section
3.4. The Transferor shall have no liability for any action taken or omitted to
be taken by LBAC pursuant to this Section 3.4.
 
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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 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 or the Class C Certificateholder upon
reasonable notice at all reasonable times during the Servicer's normal business
hours in cases where the Noteholders or the Class C Certificateholder 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.
 
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SECTION 3.6.   Issuer’s Certificate.
 
Within five Business Days after each Payment Date on which Receivables shall be
assigned to LBAC or the Servicer, as applicable, pursuant to this Agreement,
based on amounts deposited to the Collection Account, notices received pursuant
to this Agreement and the information contained in the Servicer's Certificate
for the related Collection Period, identifying the Receivables purchased by LBAC
pursuant to Section 3.4 or purchased by the Servicer pursuant to Section 4.7,
the Issuer shall execute an Issuer's Certificate (in the form of Exhibit A-1 or
A-2, as applicable), and shall deliver such Issuer's Certificate, accompanied by
a copy of the Servicer's Certificate for such Collection Period, to LBAC or the
Servicer, as the case may be, with a copy to the Note Insurer and the Class C
Certificateholder. The Issuer's Certificate submitted with respect to such
Payment Date shall operate, as of such Payment Date, as an assignment, without
recourse, representation or warranty, to LBAC or the Servicer, as the case may
be, of all the Issuer's right, title, and interest in and to such repurchased
Receivable, and all security and documents relating thereto, such assignment
being an assignment outright and not for security.
 
ARTICLE IV
ADMINISTRATION AND SERVICING OF RECEIVABLES
 
SECTION 4.1.   Duties of the Servicer. The Servicer, as agent for the Issuer (to
the extent provided herein), and in such capacity, shall manage, service,
administer and make collections on the Receivables with reasonable care, using
that degree of skill and attention customary and usual for institutions which
service motor vehicle retail installment contracts similar to the Receivables
and, to the extent more exacting, that the Servicer exercises with respect to
all comparable automotive receivables that it services for itself or others. The
Servicer's duties shall include collection and posting of all payments,
responding to inquiries of Obligors on such Receivables, investigating
delinquencies, sending payment statements to Obligors, reporting tax information
to Obligors, accounting for collections, furnishing monthly and annual
statements to the Trust Collateral Agent, the Indenture Trustee, the Back-up
Servicer 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,
the Class C Certificateholder 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 or the Class C Certificateholder. 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, in the case of the Initial Receivables, and prior to the related
Subsequent Transfer Date, in the case of the Subsequent Receivables, to make all
payments with respect to the Receivables to the Lock-Box and shall make
reasonable efforts to cause Obligors to make all such payments to such Lock-Box.
The Servicer will provide each Obligor with a monthly statement in order to
notify such Obligors to make payments directly to the Lock-Box. The Servicer
shall allocate collections between principal and interest in accordance with the
customary servicing procedures it follows with respect to all comparable
automotive receivables that it services for itself or others and in accordance
with the terms of this Agreement. The Servicer, for so long as LBAC is the
Servicer, may grant extensions, rebates or adjustments on a Receivable in
accordance with the customary servicing procedures it follows with respect to
all comparable automotive receivables that it services for itself which shall
not modify the original due date of the Scheduled Receivable Payments on any
Receivable other than (a) in accordance with the Payment Deferment and Due Date
Change Policies, (b) in connection with a Deficient Liquidated Receivable, (c)
with the prior written consent of the Note Insurer, with respect to any other
Liquidated Receivable or (d) as otherwise required by applicable law.
Notwithstanding anything contained herein to the contrary, the Servicer may, at
its option, repurchase up to 25 Receivables and shall remit the Purchase Amount,
in the manner specified in Section 5.5 hereof and any such repurchased
Receivable (an "Optional Repurchase Receivable") shall not be deemed to be a
Defaulted Receivable or a Liquidated Receivable. The Servicer shall not modify
the Payment Deferment and Due Date Change Policies without the prior written
consent of the Note Insurer. The Servicer shall notify Moody's 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 Class C Certificateholder or the Note Insurer other than a
modification in accordance with the Payment Deferment and Due Date Change
Policies.
 
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On each Business Day, the Servicer shall prepare and transmit to the Trust
Collateral Agent and the Back-up Servicer in a form acceptable to the Trust
Collateral Agent and the Back-up Servicer, a record setting forth the aggregate
amount of collections on the Receivables processed by the Servicer on the second
preceding Business Day.
 
SECTION 4.3.   Realization upon Receivables.
 
(a)  On behalf of the Issuer, the Noteholders, the Class C Certificateholder 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 or the
related Subsequent Transfer Date, as applicable, it shall make such filings and
effect such notices as are necessary under Section 9-324(b) and 9-324 (c) of the
New York UCC (or comparable section of the UCC of any applicable state) to
preserve the Trust’s interest (or security interest, as the case may be) in any
repossessed Financed Vehicles delivered for sale to Dealers.
 
(c)  Consistent with the standards, policies and procedures required by this
Agreement, the Servicer may use its best efforts to locate a third party
purchaser that is not affiliated with the Servicer, the Transferor or the Issuer
to purchase from the Issuer any Receivable that has become more than 60 days
delinquent, and shall have the right to direct the Issuer to sell any such
Receivable to the third-party purchaser; provided, that the Note Insurer shall
have the right of first refusal to purchase such Receivables; provided further,
that no more than 20% of the initial number of Initial Receivables and the
Subsequent Receivables in the pool may be sold by the Issuer pursuant to this
Section 4.3(c) in the aggregate; provided further, that the Servicer may elect
not to direct the Issuer to sell a Receivable that has become more than 60 days
delinquent if in its good faith judgment the Servicer determines that the
proceeds ultimately recoverable with respect to such Receivable would be
increased by forbearance. In selecting Receivables to be sold to a third party
purchaser pursuant to this Section 4.3(c), the Servicer shall use commercially
reasonable efforts to locate purchasers for the most delinquent Receivables
first. In any event, the Servicer shall not use any procedure in selecting
Receivables to be sold to third party purchasers which is materially adverse to
the interest of the Noteholders, the Class C Certificateholder 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 allowing the Servicer to no longer maintain any of
such policies. The Servicer, in accordance with the servicing procedures and
standards set forth herein, shall require that (i) each Obligor shall have
obtained insurance covering the Financed Vehicle, as of the date of the
execution of the Receivable, insuring against loss and damage due to fire,
theft, transportation, collision and other risks generally covered by
comprehensive and collision coverage and each Receivable requires the Obligor to
maintain such physical loss and damage insurance naming LBAC and its successors
and assigns as an additional insured, (ii) each Receivable that finances the
cost of premiums for credit life and credit accident and health insurance is
covered by an insurance policy or certificate naming LBAC as policyholder
(creditor) and (iii) as to each Receivable that finances the cost of an extended
service contract, the respective Financed Vehicle which secures the Receivable
is covered by an extended service contract.
 
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(b)  To the extent applicable, the Servicer shall not take any action which
would result in noncoverage under any of the insurance policies referred to in
Section 4.4(a) which, but for the actions of the Servicer, would have been
covered thereunder. The Servicer, on behalf of the Trust Collateral Agent, shall
take such reasonable action as shall be necessary to permit recovery under any
of the foregoing insurance policies. Any amounts collected by the Servicer under
any of the foregoing insurance policies shall be deposited in the Collection
Account pursuant to Section 5.2. In the event of the cancellation or non-renewal
of the insurance referred to in Section 4.4(a)(i) above with respect to any
Financed Vehicle, the Servicer will endeavor, in accordance with its customary
servicing standards and procedures, to cause the related Obligor to obtain a
replacement insurance policy. In no event shall the Servicer be required to
force place insurance on a Financed Vehicle.
 
SECTION 4.5.   Maintenance of Security Interests in Financed Vehicles.
 
(a)  Consistent with the policies and procedures required by this Agreement, the
Servicer shall take such steps as are necessary to maintain perfection of the
security interest created in the name of LBAC by each Receivable in the related
Financed Vehicle, including, but not limited to, obtaining the execution by the
Obligors and the recording, registering, filing, re-recording, re-registering
and refiling of all security agreements, financing statements and continuation
statements or instruments as are necessary to maintain the security interest
granted by Obligors under the respective Receivables. The Trust Collateral Agent
hereby authorizes the Servicer to take such steps as are necessary to re-perfect
or continue the perfection of such security interest on behalf of the Issuer in
the event of the relocation of a Financed Vehicle or for any other reason.
 
(b)  Upon the occurrence of an Insurance Agreement Event of Default, the Note
Insurer may (so long as a Note Insurer Default shall not have occurred and be
continuing) instruct in writing the Trust Collateral Agent and the Servicer to
take or cause to be taken, or, if a Note Insurer Default shall have occurred and
be continuing, upon the occurrence of a Servicer Termination Event, either the
Trust Collateral Agent or the Trust Collateral Agent acting at the written
direction of the Majorityholders shall direct the Servicer to take and the
Servicer shall 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.
 
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In addition to the foregoing, in the event any of the Servicer Termination
Events described in Section 9.1(iii) or (iv) shall have occurred, or in the
event LBAC shall have been removed or replaced as Servicer pursuant to Section
8.3, Section 8.5, or otherwise pursuant to Section 9.1, then LBAC and/or the
Servicer shall immediately cause each Lien Certificate for a Financed Vehicle to
be marked to reflect the security interest of the Trust Collateral Agent in the
Financed Vehicle at the expense of LBAC.
 
The Servicer hereby makes, constitutes and appoints the Trust Collateral Agent
acting through its duly appointed officers or any of them, its true and lawful
attorney, for it and in its name and on its behalf, for the sole and exclusive
purpose of authorizing said attorney to execute and deliver as attorney-in-fact
or otherwise, any and all documents and other instruments and to do or
accomplish all other acts or things necessary or appropriate to show the Trust
Collateral Agent as lienholder or secured party on the related Lien Certificates
relating to a Financed Vehicle.
 
SECTION 4.6.   Additional Covenants of Servicer. The Servicer hereby makes the
following covenants to the other parties hereto and the Note Insurer on which
the Trust Collateral Agent shall rely in accepting the Receivables in trust and
on which the Note Insurer shall rely in issuing the Policy: (i) the Servicer
shall not release the Financed Vehicle securing any Receivable from the security
interest granted by such Receivable in whole or in part except in the event of
payment in full by the Obligor thereunder or repossession or other liquidation
of such Financed Vehicle, (ii) the Servicer shall not impair the rights of the
Noteholders or the Class C Certificateholder, the Issuer 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 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 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 Class C Certificateholder 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, the Class C Certificateholder 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 plus, without duplication, the aggregate Principal Balance
of any Subsequent Receivables (as of the related Subsequent Cutoff Date)
purchased prior to the first Payment Date multiplied by the number of days
during the related Collection Period that such Subsequent Receivables were owned
by the Issuer divided by 360. 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
plus, without duplication, the aggregate Principal Balance of any Subsequent
Receivables purchased since the immediately preceding Payment Date multiplied by
the number of days during the related Collection Period that such Subsequent
Receivables were owned by the Issuer divided by 360. 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,
GCFP and the Rating Agencies, a Servicer's Certificate containing all
information necessary to make the payments pursuant to Section 5.6 (including,
(i) if required, the amount of withdrawals from the Spread Account and the
Supplemental Enhancement Account and (ii) the remaining Pre-Funded Amount, 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 Class C Certificateholder 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).
 
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(b)  In addition to the information required by Section 4.9(a), the Servicer
shall include in the copy of the Servicer's Certificate delivered to the Note
Insurer (i) the Average Delinquency Ratio, the Cumulative Default Rate, and the
Cumulative Loss Rate (as such terms are defined in the Spread Account
Agreement), (ii) whether any Trigger Event (as such term is defined in the
Spread Account Agreement) has occurred as of such Determination Date, (iii)
whether any Trigger Event that may have occurred as of a prior Determination
Date is Deemed Cured (as defined in the Spread Account Agreement) as of such
Determination Date, (iv) whether to the knowledge of the Servicer an Insurance
Agreement Event of Default has occurred, (v) the number and percentage of
Receivables modified in accordance with the Loss Mitigation Program and the
General Payment Deferment Policy as set forth on Exhibit D hereto and (vi) the
Average Delinquency Ratio, the Cumulative Default Rate, and the Cumulative Loss
Rate (as such terms are defined in the Spread Account Agreement), with respect
to such modified Receivables. The Servicer shall in addition give notice of the
occurrence of any Trigger Event or any Insurance Agreement Event of Default to
each Rating Agency.
 
SECTION 4.10.   Annual Statement as to Compliance; Notice of Default.
 
(a)  To the extent required by Section 1123 of Regulation AB, the Servicer shall
deliver to the Issuer, the Trust Collateral Agent, the Indenture Trustee, the
Back-up Servicer, the Collateral Agent, the Transferor and the Note Insurer, on
or before March 31 of each year beginning March 31, 2008, 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 in all material respects all
its obligations under this Agreement throughout such year, or, if there has been
a failure to fulfill any such obligation in any material respect, identifying
each such failure known to such officer and the nature and status of such
failure. 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 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.
 
(c)  The Servicer will deliver to the Issuer, on or before March 31 of each year
beginning on March 31, 2008, a report regarding the Servicer's assessment of
compliance with the Servicing Criteria during the immediately preceding calendar
year, as required under Rules 13a-18 and 15d-18 of the Exchange Act and Item
1122 of Regulation AB.
 
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SECTION 4.11.   Annual Independent Certified Public Accountant's Report.
 
(a)  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 Noteholders,
the Note Insurer and each Rating Agency on or before March 31 of each year
beginning March 31, 2008, 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, providing
such information as is required under Item 1122(b) of Regulation AB.
 
(b)  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 Trust Collateral Agent, the Back-up
Servicer, the Collateral Agent, the Issuer, the Transferor and the Note Insurer,
on or before March 31 of each year beginning March 31, 2008, a report dated as
of December 31 of the preceding calendar year, to the effect that such firm has
audited the consolidated financial statements of AmeriCredit and issued its
report therefor and that such audit (i) 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; (ii) included tests relating to automotive loans
serviced for others in accordance with the Servicing Criteria; (iii) 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 (iv) except as described in the report,
disclosed no exceptions or errors in the records relating to automobile, van,
sport utility vehicle and light duty truck loans serviced for others that, in
the firm's opinion, the Program requires such firm to report. The accountant's
report shall further state that (1) a review in accordance with agreed upon
procedures was made of three randomly selected Servicer's Certificates; (2)
except as disclosed in the report, no exceptions or errors in the Servicer's
Certificates were found; and (3) the delinquency and loss information relating
to the Receivables contained in the Servicer's Certificates were found to be
accurate.
 
The report will also indicate that the firm is independent of the Servicer
within the meaning of the Code of Professional Ethics of the American Institute
of Certified Public Accountants.
 
The Servicer shall file, or cause to be filed, the reports furnished pursuant to
Section 4.10 and this Section 4.11 as exhibits to the Issuer's annual report on
Form 10-K.
 
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 and the Class C
Certificateholder, the Trust Collateral Agent and the Note Insurer and all other
fees and expenses of the Issuer including taxes levied or assessed against the
Issuer, and claims against the Issuer in respect of indemnification not
expressly stated under this agreement to be for the account of the Issuer).
 
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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 June 30, 2007 which term shall be
extendible by the Note Insurer for successive quarterly terms ending on each
successive September 30, December 31, March 31 and June 30, (or, pursuant to
revocable written standing instructions from time to time to the Servicer and
the Trust Collateral Agent, for any specified number of terms greater than one),
until the termination of the Issuer. Each such notice (including each notice
pursuant to standing instructions, which shall be deemed delivered at the end of
successive quarterly terms for so long as such instructions are in effect) (a
"Servicer Extension Notice") shall be delivered by the Note Insurer to the Trust
Collateral Agent and the Servicer. The Servicer hereby agrees that, as of the
date hereof and upon its receipt of any such Servicer Extension Notice, the
Servicer shall become bound, for the initial term beginning on the date hereof
and for the duration of the term covered by such Servicer Extension Notice, to
continue as the Servicer subject to and in accordance with the other provisions
of this Agreement. Until such time as a Note Insurer Default shall have occurred
and be continuing, the Trust Collateral Agent agrees that if as of the fifteenth
day prior to the last day of any term of the Servicer, the Trust Collateral
Agent shall not have received any Servicer Extension Notice from the Note
Insurer, the Trust Collateral Agent will, within five days thereafter, give
written notice of such non-receipt to the Note Insurer, the Back-up Servicer (or
any alternate successor servicer appointed by the Note Insurer pursuant to
Section 8.5) and the Servicer and the Servicer's terms shall not be extended
unless a Servicer Extension Notice is received on or before the last day of such
term. Following a Note Insurer Default, this Section 4.13 shall no longer apply
and the Servicer shall be deemed to be retained for the term of this Agreement,
unless otherwise removed pursuant to Article 9.
 
SECTION 4.14.   Access to Certain Documentation and Information Regarding
Receivables. The Servicer shall provide to representatives of the Indenture
Trustee, the Trust Collateral Agent, the Collateral Agent, the Back-up Servicer,
the Transferor, the Issuer and the Note Insurer reasonable access to
documentation and computer systems and information regarding the Receivables and
shall provide such access to Noteholders or the Class C Certificateholder, as
the case may be, in such cases where the Noteholders or the Class C
Certificateholder is required by applicable law or regulation to review such
documentation. In each case, such access shall be afforded without charge but
only upon reasonable request and during normal business hours. Nothing in this
Section 4.14 shall derogate from the obligation of the Servicer to observe any
applicable law prohibiting disclosure of information regarding the Obligors, and
the failure of the Servicer to provide access as provided in this Section 4.14
as a result of such obligation shall not constitute a breach of this Section
4.14.
 
SECTION 4.15.   Verification of Servicer's Certificate.
 
(a)  On or before the fifth Business Day of each month, the Servicer will
deliver to the Trust Collateral Agent and the Back-up Servicer a computer
diskette (or other electronic transmission) in a format acceptable to the Trust
Collateral Agent and the Back-up Servicer containing such information with
respect to the Receivables as of the close of business on the last day of the
preceding Collection Period as is necessary for preparation of the Servicer's
Certificate. The Back-up Servicer shall use such computer diskette (or other
electronic transmission) to verify the information specified in Section
4.15(b)(iii) contained in the Servicer's Certificate delivered by the Servicer,
and the Back-up Servicer shall certify to the Note Insurer that it has verified
the Servicer's Certificate in accordance with this Section 4.15 and shall notify
the Servicer, the Note Insurer and the Trust Collateral Agent of any
discrepancies, in each case, on or before the related Deficiency Claim Date. In
the event that the Back-up Servicer reports any discrepancies, the Servicer and
the Back-up Servicer shall attempt to reconcile such discrepancies prior to the
related Deficiency Claim Date, but in the absence of a reconciliation, the
Servicer's Certificate shall control for the purpose of calculations and
payments with respect to the related Payment Date. In the event that the Back-up
Servicer and the Servicer are unable to reconcile discrepancies with respect to
a Servicer's Certificate by the related Payment Date, (i) the Back-up Servicer
will notify the Note Insurer and the Trust Collateral Agent, and (ii) the
Servicer shall cause a firm of independent certified public accountants, at the
Servicer's expense, to audit the Servicer's Certificate and, prior to the fifth
calendar day of the following month, reconcile the discrepancies. The effect, if
any, of such reconciliation shall be reflected in the Servicer's Certificate for
such next succeeding Determination Date. In addition, the Servicer shall, if so
requested by the Note Insurer (unless a Note Insurer Default shall have occurred
and be continuing) deliver to the Back-up Servicer (i) within five (5) Business
Days of demand therefor a computer tape containing as of the close of business
on the date of demand all of the data maintained by the Servicer in computer
format in connection with servicing the Receivables and (ii) within fifteen (15)
Business Days of demand therefor a copy of such other information as is
reasonably requested by the Note Insurer for the purpose of reconciling such
discrepancies. Other than the duties specifically set forth in this Agreement,
the Back-up Servicer shall have no obligations hereunder, including, without
limitation, to supervise, verify, monitor or administer the performance of the
Servicer. The Back-up Servicer shall have no liability for any actions taken or
omitted by the Servicer. The duties and obligations of the Back-up Servicer
shall be determined solely by the express provisions of this Agreement and no
implied covenants or obligations shall be read into this Agreement against the
Back-up Servicer.
 
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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 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
Pre-Funding Amount, the Class A-1 Interest Payment Amount, the Class A-2
Interest Payment Amount, the Class A-3 Interest Payment Amount, the Class A-4
Interest Payment Amount, the Class C Interest Payment Amount, the Class C
Principal Deficiency Amount, the Class C Interest Carryover Shortfall, if any,
the Class C Supplemental Interest Payment Amount, if any, 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 Supplemental
Enhancement Account and the Premium in the Servicer's Certificate based solely
on the balances and calculations specifically set forth in the Servicer's
Certificate, compare such calculations to those set forth in the Servicer's
Certificate. To the extent of any discrepancy, the Back-up Servicer shall give
notice thereof to the Note Insurer. The Back-up Servicer's obligation shall be
limited to the mathematical recalculation of the amounts set forth in this
Section 4.15(b)(iii) based on the Servicer's Certificate.
 
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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 any Affiliate of AmeriCredit or to
sub-contractors who are in the business of servicing automotive receivables with
the prior written consent of the Controlling Party; provided, however, that no
such delegation or sub-contracting of duties by the Servicer shall relieve the
Servicer of its responsibility with respect to such duties. In the event the
Servicer shall for any reason no longer be the servicer of the Receivables
(including by reason of a Servicer Termination Event), the Back-up Servicer, its
designee or any successor Servicer shall assume all of the rights and
obligations of the predecessor Servicer under one or more subservicing
agreements that may have been entered into by the predecessor Servicer by giving
notice of such assumption to the related subservicer or subservicers within ten
(10) Business Days of the termination of the Servicer as servicer of the
Receivables; provided, however, that the Back-up Servicer may elect to terminate
a subservicing agreement with the prior written consent of the Note Insurer, so
long as no Note Insurer Default is then continuing. If the Back-up Servicer does
not elect to assume any subservicing agreement, any and all costs of termination
shall be at the predecessor Servicer's expense. Upon the giving of such notice,
the Back-up Servicer, its designee or the successor Servicer shall be deemed to
have assumed all of the predecessor Servicer's interest therein and to have
replaced the predecessor Servicer as a party to the subservicing agreement to
the same extent as if the subservicing agreement had been assigned to the
assuming party except that the predecessor Servicer and the subservicer, if any,
shall not thereby be relieved of any liability or obligations accrued up to the
date of the replacement of the Servicer under the subservicing agreement and the
subservicer, if any, shall not be relieved of any liability or obligation to the
predecessor Servicer that survives the assignment or termination of the
subservicing agreement. The Back-up Servicer shall notify each Rating Agency and
the Note Insurer if any subservicing agreement is assumed by the Back-up
Servicer, its designee or the successor Servicer. The predecessor Servicer
shall, upon request of the Trust Collateral Agent, the Back-up Servicer or any
successor Servicer, but at the expense of the predecessor Servicer, deliver to
the assuming party all documents and records relating to the subservicing
agreement and the Receivables then being serviced and an accounting of amounts
collected and held by it and otherwise use its reasonable efforts to effect the
orderly and efficient transfer of the subservicing agreement to the assuming
party.
 
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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 in the case of the Initial
Receivables, and on or prior to the related Subsequent Transfer Date in the case
of Subsequent Receivables, which loan master file and history information shall
be sufficiently detailed to enable the Back-up Servicer to maintain records
sufficient to assume the role of successor Servicer pursuant to this Agreement.
 
(b)  In addition to the information required to be delivered by the Servicer to
the Back-up Servicer or its designated agent on or before the fifth Business Day
of each month pursuant to Section 4.15(a) and on or prior to the Closing Date
and each Subsequent Transfer Date pursuant to Section 4.18(a), the Servicer
shall deliver the loan master file and history information to the Back-up
Servicer or its designated agent on the Determination Date occurring in June
2007 (with respect to the period from and including the Initial Cutoff Date to
the last day of the related Collection Period) and on the Determination Date
occurring every six months thereafter in the form attached hereto as Exhibit B-2
in writing and on a computer diskette (or other electronic transmission) in a
format acceptable to the Back-up Servicer or its designated agent, as the case
may be, and as at such other times as may be requested by the Note Insurer or
the Back-up Servicer upon prior written notice to the Servicer, provided that
the Back-up Servicer shall deliver a copy of any such notice by the Back-up
Servicer to the Note Insurer simultaneously with its delivery of such notice to
the Servicer.
 
SECTION 4.19.   Confidential Information. 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 or
the Note Insurer to the extent that such Noteholder, Certificateholder 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, each
Certificateholder 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 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.
 
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ARTICLE V
ACCOUNTS; PAYMENTS;
STATEMENTS TO NOTEHOLDERS
 
SECTION 5.1.   Accounts; Lock-Box Account.
 
(a)  The Servicer has established the Lock-Box Account as two Eligible Accounts,
one established with 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 Noteholders and the Class C
Certificateholder for servicing and administering the Receivables and the other
Trust Assets in accordance with provisions of this Agreement without diminution
of such obligation or liability by virtue thereof.
 
In the event the Servicer shall for any reason no longer be acting as such, the
Lock-Box Agreement shall terminate in accordance with its terms 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, (i) the Collection Account and the Note Account, in the
name of the Issuer for the benefit of the Indenture Trustee, the Trust
Collateral Agent, the Noteholders and the Insurer, the Pre-Funding Account in
the name of the Issuer for the benefit of the Noteholders, the Class C
Certificateholder and the Note Insurer, (ii) the Policy Payments Account in the
name of the Issuer for the benefit of the Noteholders and (iii) the Supplemental
Enhancement Account in the name of the Issuer for the benefit of the Noteholders
and the Class C Certificateholder. The Collection Account, the Note Account, the
Pre-Funding Account, the Policy Payments Account and the Supplemental
Enhancement Account, shall be Eligible Accounts initially established with the
Trust Collateral Agent; provided, however, if any of such accounts shall cease
to be an Eligible Account, the Servicer, with the consent of the Note Insurer
(so long as no Note Insurer Default has occurred and is continuing), within five
(5) Business Days shall, cause such accounts to be moved to an institution so
that such account meets the definition of Eligible Account. The Servicer shall
promptly notify the Rating Agencies and the Transferor of any change in the
location of any of the aforementioned accounts.
 
All amounts held in the Collection Account, the Supplemental Enhancement Account
and the Pre-Funding Account shall be invested by the Trust Collateral Agent at
the written direction of the Transferor (or, in the case of the Supplemental
Enhancement Account, at the direction of the Class C Certificateholder) 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, or if such investment
direction is given, such funds shall be retained uninvested. In no event shall
the Trust Collateral Agent be liable for any insufficiency in the Collection
Account and the Supplemental Enhancement Account resulting from any investment
loss in any Eligible Account. Such written direction shall certify that any such
investment is authorized by this Section. No investment may be sold prior to its
maturity. Amounts in the Note Account and the Policy Payments Account shall not
be invested. The amount of earnings on investments of funds in the Collection
Account during the Collection Period related to each Payment Date shall be
deposited into the Note Account on each Payment Date, and shall be available for
payment pursuant to Section 5.6(c). The amount of earnings on investments of
funds in the Supplemental Enhancement Account during the Collection Period
related to each Payment Date shall be paid to the Class C Certificateholder as
the Supplemental Enhancement Account Investment Earnings Amount on each Payment
Date, pursuant to Section 5.6(c)(vii) hereof. For purposes of this paragraph,
the Trust Collateral Agent will take delivery of the Eligible Investments in
accordance with Schedule C.
 
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SECTION 5.2.   Collections. The Servicer shall use reasonable efforts to cause
the Lock-Box Processor to transfer any payments in respect of the Receivables
from or on behalf of Obligors received in the Lock-Box to the Lock-Box Account
on the Business Day on which such payments are received, pursuant to the
Lock-Box Agreement. Within two Business Days of receipt of such funds into the
Lock-Box Account, the Servicer shall cause the Lock-Box Bank to transfer
available funds related to the Receivables from the Lock-Box Account to the
Collection Account, and if such funds are not available funds, as soon
thereafter as they clear (i.e., become available for withdrawal from the
Lock-Box Account). In addition, the Servicer shall remit all payments by or on
behalf of the Obligors received by the Servicer with respect to the Receivables
(other than Purchased Receivables), and all Liquidation Proceeds no later than
the second Business Day following receipt into the Lock-Box Account or the
Collection Account.
 
SECTION 5.3.   Application of Collections. All collections for each Collection
Period shall be applied by the Servicer as follows:
 
With respect to each Receivable (other than a Purchased Receivable), payments
actually received from or on behalf of the Obligor shall be applied hereunder,
first, to interest and principal in accordance with the Simple Interest Method
to the extent necessary to bring such Receivable current, second, in connection
with the redemption of a defaulted Receivable, to reimburse the Servicer for
reasonable and customary out-of-pocket expenses incurred by the Servicer in
connection with such Receivable, third, to late fees and fourth, to principal in
accordance with the Simple Interest Method. Notwithstanding anything herein to
the contrary, no amount applied as interest accrued on any Precomputed
Receivable for any single Collection Period will exceed 30 days' interest
accrued thereon assuming a 360-day year of twelve 30-day months.
 
SECTION 5.4.   Intentionally Omitted.
 
SECTION 5.5.   Additional Deposits. The following additional deposits shall be
made in immediately available funds on the dates indicated: (i) on the Business
Day immediately preceding each Determination Date, the Servicer or LBAC, as the
case may be, shall deposit or cause to be deposited in the Collection Account
the aggregate Purchase Amount with respect to Purchased Receivables, (ii) on the
Business Day immediately preceding each Determination Date, the Trust Collateral
Agent shall deposit in the Collection Account all amounts to be paid under
Section 11.1, (iii) on the Determination Date immediately succeeding the date on
which the Funding Period ends (or, if the Funding Period ends on or after the
Determination Date immediately preceding the Final Funding Period Payment Date,
on the date on which the Funding Period ends), the Trust Collateral Agent shall
transfer the remaining Pre-Funded Amount on deposit in the Pre-Funding Account
to the Note Account pursuant to Section 5.13(c), (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 withdrawn
from the Supplemental Enhancement Account in accordance with Section 5.12 and
(v) on the Closing Date, LBAC shall deposit or cause to be deposited to the
Collection Account the September Principal Collections Amount.
 
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SECTION 5.6.   Payments; Policy Claims.
 
(a)  The Trust Collateral Agent (based solely on the information set forth in
the Servicer's Certificate for the related Payment Date upon which the Trust
Collateral Agent may conclusively rely) shall transfer, on each Payment Date,
from the Collection Account to the Note Account, in immediately available funds,
an amount equal to the sum of (a) all funds that were deposited in the
Collection Account, plus (b) earnings on investments of funds in the Collection
Account pursuant to Section 5.1(b), for the related Collection Period;
 
(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
Payment Amount, the Class A-1 Interest Payment Amount, the Class A-2 Payment
Amount, the Class A-2 Interest Payment Amount, the Class A-3 Payment Amount, the
Class A-3 Interest Payment Amount, the Class A-4 Payment Amount, the Class A-4
Interest Payment Amount, the Class C Interest Payment Amount, the Class C
Principal Deficiency Amount, the Supplemental Enhancement Account Investment
Earnings Amount, the Class C Interest Carryover Shortfall, if any, the Class C
Supplemental Interest Payment Amount, if any, the Monthly Dealer Participation
Fee Payment Amount, and, based on the Available Funds and the other amounts
available for payment on such Payment Date, determine the amount payable to the
Noteholders, the Class C Certificateholder and the Class R Certificateholder.
 
(c)  On each Payment Date, the Trust Collateral Agent shall (x) distribute all
amounts delivered by the Note Insurer to the Trust Collateral Agent for deposit
into the Collection Account pursuant to Section 5.9 for payment in the amounts
and priority as directed by the Note Insurer, and (y) (based on the information
contained in the Servicer's Certificate delivered on the related Determination
Date pursuant to Section 4.9 upon which the Trust Collateral Agent may
conclusively rely) subject to subsection (e) hereof, make the following
distributions from the Available Funds withdrawn from the Note Account and from
the other sources described below in the following order of priority:
 
(i) first, to LBAC, the Monthly Dealer Participation Fee Payment Amount and all
unpaid Monthly Dealer Participation Fee Payment Amounts from prior Collection
Periods and second, to the Servicer, from the Available Funds (as such Available
Funds have been reduced by payments made pursuant to subclause first of this
clause (i)), the Servicing Fee, the Supplemental Servicing Fee and all unpaid
Servicing Fees and Supplemental Servicing Fees from prior Collection Periods
and, if the Available Funds are insufficient to pay such Servicing Fees and
Supplemental 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, in the following order of priority, first, from amounts on
deposit in the Spread Account, to the extent received by the Trust Collateral
Agent from the Collateral Agent, and second, from amounts on deposit in the
Supplemental Enhancement Account, to the extent withdrawn by the Trust
Collateral Agent and deposited into the Collection Account;
 
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(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, in the following order of priority, first, from amounts on deposit
in the Spread Account, to the extent received by the Trust Collateral Agent from
the Collateral Agent, and second, from amounts on deposit in the Supplemental
Enhancement Account, to the extent withdrawn by the Trust Collateral Agent and
deposited into the Collection Account, after application thereof pursuant to
clause (i) above;
 
(iii) to the Class A-1 Noteholders, the Class A-2 Noteholders, the Class A-3
Noteholders and the Class A-4 Noteholders, pro rata based on the interest due on
each such class of Notes, from the Available Funds (as such Available Funds have
been reduced by payments made pursuant to clauses (i) and (ii) above), an amount
equal to the Class A-1 Note Interest, the Class A-2 Note Interest, the Class A-3
Note Interest and the Class A-4 Note Interest (calculated (i) with respect to
the Class A-1 Notes on each Payment Date, on the basis of the actual number of
days elapsed during such Accrual Period based on a 360 day year, or with respect
to the first Payment Date, 30 days and (ii) with respect to the Class A-2 Notes,
the Class A-3 Notes and the Class A-4 Notes on each Payment Date, on the basis
of a 360-day year consisting of twelve 30-day months, with respect to such
Payment Date (plus (without duplication) interest on any outstanding Class A-1
Interest Carryover Shortfall, Class A-2 Interest Carryover Shortfall, Class A-3
Interest Carryover Shortfall or Class A-4 Interest Carryover Shortfall, if any,
to the extent permitted by applicable law, at the Class A-1 Note Rate, the Class
A-2 Note Rate, the Class A-3 Note Rate or the Class A-4 Note Rate, as
applicable, for the related Accrual Period (calculated (i) with respect to the
Class A-1 Notes on each Payment Date, on the basis of the actual number of days
elapsed during such Accrual Period based on a 360 day year (or, with respect to
the first Payment Date, 30 days) and (ii) with respect to the Class A-2 Notes,
the Class A-3 Notes and the Class A-4 Notes on each Payment Date, on the basis
of a 360-day year consisting of twelve 30-day months 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, in the following order of priority, first, from amounts on
deposit in the Spread Account, to the extent received by the Trust Collateral
Agent from the Collateral Agent, and second, from amounts on deposit in the
Supplemental Enhancement Account, to the extent withdrawn by the Trust
Collateral Agent and deposited into the Collection Account, 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;
 
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(iv) from the Available Funds (as such Available Funds have been reduced by
payments made pursuant to clauses (i) through (iii) above) and, if such Payment
Date is the Final Funding Period Payment Date, from the Mandatory Special
Redemption, if any, first, to the Class A-1 Noteholders, until the Class A-1
Note Balance has been reduced to zero, an amount equal to the Principal Payment
Amount with respect to such Payment Date, second, to the Class A-2 Noteholders,
after the Class A-1 Note Balance has been reduced to zero, an amount equal to
the remaining Principal Payment Amount with respect to such Payment Date, if
any, third, to the Class A-3 Noteholders, after the Class A-2 Note Balance has
been reduced to zero, an amount equal to the remaining Principal Payment Amount
with respect to such Payment Date, if any, and fourth, to the Class A-4
Noteholders, after the Class A-3 Note Balance has been reduced to zero, an
amount equal to the remaining Principal Payment Amount with respect to such
Payment Date, if any, and, if the Available Funds are insufficient to pay such
amounts, the Class A Noteholders will receive such deficiency from the following
sources in the following order of priority: (A) from the remaining portion of
the Deficiency Claim Amount with respect to such Payment Date, if any, in the
following order of priority, first, from amounts on deposit in the Spread
Account, to the extent received by the Trust Collateral Agent from the
Collateral Agent, and second, from amounts on deposit in the Supplemental
Enhancement Account, to the extent withdrawn by the Trust Collateral Agent and
deposited into the Collection Account after application thereof pursuant to
clauses (i) through (iii) above, plus, (B) the remaining portion of the Policy
Claim Amount with respect to such Payment Date, if any, after application
thereof pursuant to clause (iii) above;
 
(v) to the Note Insurer, from the Available Funds (as such Available Funds have
been reduced by payments made pursuant to clauses (i) through (iv) above), an
amount equal to the Reimbursement Obligations (other than any accrued and unpaid
Premium) and, if the Available Funds are insufficient to pay such Reimbursement
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, in the following order of priority, first, from amounts on deposit in the
Spread Account to the extent received by the Trust Collateral Agent from the
Collateral Agent, and second, from amounts on deposit in the Supplemental
Enhancement Account, to the extent withdrawn by the Trust Collateral Agent and
deposited into the Collection Account, 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, in the
following order of priority, first, from amounts on deposit in the Spread
Account to the extent received by the Trust Collateral Agent from the Collateral
Agent, and second, from amounts on deposit in the Supplemental Enhancement
Account, to the extent withdrawn by the Trust Collateral Agent and deposited
into the Collection Account, after application thereof pursuant to clauses (i)
through (v) above;
 
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(vii)  to the Class C Certificateholder (a) from the Available Funds (as such
Available Funds have been reduced by payments made pursuant to clauses (i)
through (vi) above), an amount equal to the Class C Interest Payment Amount and
(b) from the Supplemental Enhancement Account, the Supplemental Enhancement
Account Investment Earnings Amount;
 
(viii) to the Collateral Agent, for deposit in the Supplemental Enhancement
Account, from the Available Funds (as such Available Funds have been reduced by
payments made pursuant to clauses (i) through (vii) above) reimbursement for any
previous unreimbursed withdrawals from such account (other than (x) Supplemental
Enhancement Account Investment Earnings Amounts distributed to the Class C
Certificateholder pursuant to clause (vii) above on such Payment Date or prior
Payment Dates and (y) Supplemental Enhancement Account Release Amounts
distributed to the Class C Certificateholder pursuant to clause (xi) below on
prior Payment Dates);
 
(ix) first, to the Trust Collateral Agent, the Indenture Trustee, the Back-up
Servicer and the Custodian, as applicable, from the Available Funds (as such
Available Funds have been reduced by payments made pursuant to clauses (i)
through (viii) above) all reasonable out-of-pocket expenses of the Trust
Collateral Agent, the Indenture Trustee, the Back-up Servicer and the Custodian
(including, but not limited to, reasonable counsel fees and expenses),
including, without limitation, costs and expenses required to be paid by the
Servicer to the Back-up Servicer under Section 9.2(a), to the extent not paid by
the Servicer, and all unpaid reasonable out-of-pocket expenses of the Trust
Collateral Agent, the Indenture Trustee, the Back-up Servicer and the Custodian
(including, but not limited to, reasonable counsel fees and expenses) from prior
Collection Periods; provided, however, that unless an Event of Default shall
have occurred and be continuing, expenses payable to the Trust Collateral Agent,
the Indenture Trustee, the Back-up Servicer and the Custodian pursuant to this
subclause first of clause (ix) shall be limited to a combined aggregate amount
of $50,000 per annum, and second to the Back-up Servicer, from the Available
Funds (as such Available Funds have been reduced by payments made pursuant to
clauses (i) through (viii) above and subclause first of this clause (ix)), in
the event that the Back-up Servicer shall have assumed the obligations of
Servicer pursuant to Section 9.2(a) and the Servicer fails to pay the Back-up
Servicer for system conversion expenses as required by said section, an
aggregate amount not to exceed $100,000 in payment of such system conversion
expenses;
 
(x) to the Collateral Agent, 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; and
 
(xi) to the Class C Certificateholder, from the Supplemental Enhancement
 Account Release Amount, until the Class C Certificate Balance is reduced to
zero and (without duplication) any Class C Principal Deficiency Amount has been
paid in full.
 
(d)  In addition, on each Payment Date, after giving effect to the payments
specified in clauses (i) through (x) 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 make the following
payments, from the Spread Account Release Amount, if any, in the following order
of priority:
 
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(i)  first, to the Class A-1 Noteholders, until the Class A-1 Note Balance has
been reduced to zero, second, to the Class A-2 Noteholders, after the Class A-1
Note Balance has been reduced to zero, third, to the Class A-3 Noteholders,
after the Class A-2 Note Balance has been reduced to zero, and fourth, to the
Class A-4 Noteholders, after the Class A-3 Note Balance has been reduced to
zero, in reduction of the Class A-1 Note Balance, the Class A-2 Note Balance,
the Class A-3 Note Balance and the Class A-4 Note Balance, as applicable, until
the Overcollateralization Amount is equal to the Required Overcollateralization
Target;
 
(ii) to the Class C Certificateholder, from the remaining Spread Account Release
Amount (as such Spread Account Release Amount has been reduced by payments
pursuant to clause (i) above), the Class C Interest Carryover Shortfall and any
Class C Supplemental Interest;
 
(iii) if the Total Enhancement Amount exceeds the Required Total Enhancement
Amount after the distributions pursuant to Sections 5.6(c)(i) through (xi) have
been made first, to the Class C Certificateholder, from any remaining amounts,
any amounts due and unpaid on the Class C Certificate, and second, to the Class
R Certificateholder.
 
(e)  Each Noteholder, by its acceptance of its Note, will be deemed to have
consented to the provisions of Sections 5.6(c) and 5.6(d) relating to the
priority of payments, and will be further deemed to have acknowledged that no
property rights in any amount or the proceeds of any such amount shall vest in
such Noteholder until such amounts have been distributed to such Noteholder
pursuant to such provisions; provided, that the foregoing shall not restrict the
right of any Noteholder, upon compliance with the provisions hereof from seeking
to compel the performance of the provisions hereof by the parties hereto. Each
Noteholder, by its acceptance of its Note, will be deemed to have further agreed
that withdrawals of funds by the Collateral Agent from the Spread Account for
application hereunder, shall be made in accordance with the provisions of the
Spread Account Agreement.
 
In furtherance of and not in limitation of the foregoing, each 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),
5.6(d) and 5.12 (in the case of the Class C Certificateholder) above for payment
to such Certificateholder. Each 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 Supplemental Enhancement Account
or 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 (other than any Supplemental
Enhancement Account Investment Earnings Amounts, which are being held in trust
for the exclusive benefit of the Class C Certificateholder) prior to such
release.
 
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(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 Class R
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 Class R 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, the Class A-2 Interest Payment Amount, the Class A-3 Interest Payment
Amount and the Class A-4 Interest Payment Amount, as applicable, to be paid to
such Class of Notes in accordance with the Servicer's Certificate.
 
SECTION 5.7.   Statements to Noteholders and the Class C Certificateholder; Tax
Returns.
 
(a)  With each payment from the Note Account to the Noteholders and Class C
Certificateholder made on a Payment Date, the Servicer shall provide to the Note
Insurer, the Transferor, the Indenture Trustee, each Rating Agency and the Trust
Collateral Agent (the Trust Collateral Agent to make available to each
Noteholder and the Class C Certificateholder of record on its website at
www.CTSLink.com or through such other means as the Trust Collateral Agent
believes will make the distribution more convenient and/or accessible with the
consent of the Note Insurer (such consent not to be unreasonably withheld) and
the Trust Collateral Agent shall provide timely and adequate notification to all
Noteholders and the Class C Certificateholder regarding any such changes) the
Servicer's Certificate substantially in the form of Exhibit B-1 hereto, setting
forth, at least the following information as to the Notes and the Class C
Certificate, to the extent applicable:
 
(i) the amount of the payment allocable to principal of the Class A-1 Notes, the
Class A-2 Notes, the Class A-3 Notes and the Class A-4 Notes, respectively, and
in the aggregate with respect to all classes of Notes;
 
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(ii) the amount of the payment, if any, allocable from the Supplemental
Enhancement Account to principal of the Class C Certificate, including any Class
C Principal Deficiency Amounts;
 
(iii) the amount of the payment allocable to interest on the Class A-1 Notes,
the Class A-2 Notes, the Class A-3 Notes and the Class A-4 Notes, respectively,
and in the aggregate with respect to each class of Notes;
 
(iv) the amount of the payment allocable to interest and any Supplemental
Enhancement Account Investment Earnings Amounts on the Class C Certificate;
 
(v) the number of Receivables, the weighted average APR of the Receivables, the
weighted average maturity of the Receivables, the Pool Balance, the Class A-1
Pool Factor, the Class A-2 Pool Factor, the Class A-3 Pool Factor and the Class
A-4 Pool Factor, as of the close of business on the last day of the preceding
Collection Period;
 
(vi) the Class A-1 Note Balance, the Class A-2 Note Balance, the Class A-3 Note
Balance, the Class A-4 Note Balance, the Note Balance, the Class C Certificate
Balance and the outstanding Class C Principal Deficiency Amount, if any, 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;
 
(vii) 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;
 
(viii) the amount of the Class A-1 Interest Carryover Shortfall, if applicable,
the Class A-2 Interest Carryover Shortfall, if applicable, the Class A-3
Interest Carryover Shortfall, if applicable, the Class A-4 Interest Carryover
Shortfall, if applicable, the Class C Interest Carryover Shortfall, if
applicable, and the Class C Supplemental Interest Payment Amount, if applicable,
on such Payment Date and the change in such amounts from the prior Payment Date;
 
(ix) the amount paid, if any, to the Class A Noteholders under the Policy for
such Payment Date;
 
(x) the amount paid to the Note Insurer on such Payment Date in respect of
Premium and Reimbursement Obligations;
 
(xi) the amount in the Spread Account;
 
(xii) the amount in the Supplemental Enhancement Account;
 
(xiii) the number of Receivables and the aggregate outstanding principal amount
scheduled to be paid thereon, for which the related Obligors are delinquent in
making Scheduled 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;
 
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(xiv) the number and the aggregate Purchase Amount of Receivables repurchased by
the Originator or purchased by the Servicer during the related Collection
Period;
 
(xv) the cumulative number and amount of Liquidated Receivables (including the
cumulative number and amount of Sold Receivables), the cumulative amount of any
Liquidation Proceeds and Recoveries, since the Initial Cutoff Date to the last
day of the related Collection Period, the number and amount of Liquidated
Receivables for the related Collection Period and the amount of Recoveries in
the related Collection Period;
 
(xvi) 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;
 
(xvii) whether any Trigger Event has occurred as of such Determination Date;
 
(xviii) whether any Trigger Event that may have occurred as of a prior
Determination Date is Deemed Cured (as such term is defined in the Spread
Account Agreement) or otherwise waived as of such Determination Date;
 
(xix) whether an Insurance Agreement Event of Default has occurred;
 
(xx) the number and amount of Cram Down Losses, the number and dollar amount of
repossessions, the aging of repossession inventory and the dollar amount of
Recoveries;
 
(xxi) for Payment Dates occurring prior to the end of the Funding Period and on
the Final Funding Period Payment Date, the amount withdrawn from the Pre-Funding
Account to purchase Subsequent Receivables during the related Collection Period
and the remaining Pre-Funded Amount on deposit in the Pre-Funding Account; and
 
(xxii) for the Final Funding Period Payment Date, the amount of any Mandatory
Special Redemption distributed as a payment of principal to Noteholders on such
Payment Date.
 
Each amount set forth pursuant to subclauses (i), (ii), (iii), (iv), (vii) and
(viii) 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,
2008, 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 the
Class C Certificateholder and 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 or a Class C Certificateholder, and (b) such
information as may be reasonably requested by the Noteholders or the Class C
Certificateholder or as may be required by the Code and regulations thereunder,
to enable such Holder to prepare its 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, (ii) to distribute as a component of the Principal
Payment Amount to the extent that the Note Balance as of the Determination Date
preceding such Payment Date exceeds the sum of the Pool Balance as of such
Determination Date and the remaining Pre-Funded Amount or (iii) to include such
amount as part of the Payment Amount for such Payment Date to the extent that
without such amount a draw would be required to be made on the Policy.
 
SECTION 5.10.   Spread Account. The Transferor agrees, simultaneously with the
execution and delivery of this Agreement, to execute and deliver the Spread
Account Agreement and, pursuant to the terms thereof, to deposit the Initial
Spread Account Deposit in the Spread Account on the Closing Date. In addition,
on each Subsequent Transfer Date, pursuant to the terms of the Spread Account
Agreement, the Transferor shall deposit the related Subsequent Spread Account
Deposit in the Spread Account. Although the Transferor as Class R
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.
 
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SECTION 5.11.   Withdrawals from Supplemental Enhancement Account and Spread
Account.
 
(a)  In the event that the Servicer's Certificate with respect to any
Determination Date shall state that the amount of the Available Funds with
respect to such Determination Date are less than the sum of the amounts payable
on the related Payment Date pursuant to clauses (i) through (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
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 (i) 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 and (ii) if not sufficient, set forth the
amount to be withdrawn by the Trust Collateral Agent from the Supplemental
Enhancement Account pursuant to Section 5.12 hereof; provided, that no
Deficiency Claim Amount shall be paid for any principal payable pursuant to
clause (iv) of Section 5.6(c) unless the Overcollateralization Amount is less
than zero or such Payment Date is a Final Scheduled Payment Date for any class
of Class A Notes.
 
Any Deficiency Notice shall be delivered by 12:00 p.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.   Supplemental Enhancement Account. In order to enhance the
amounts available to make required payments to the Class A Noteholders and to
make principal payments to the holder of the Class C Certificate, there shall be
established and maintained with the Trust Collateral Agent an Eligible Account
entitled, "Supplemental Enhancement Account--Long Beach Acceptance Auto
Receivables Trust 2007-A", which will include the money and other property
deposited and held therein pursuant to Section 5.6(c)(viii), and this Section
5.12.
 
(a)  On the Closing Date, the Transferor shall deposit the Supplemental
Enhancement Account Deposit into the Supplemental Enhancement Account.
 
(b)  The amounts on deposit in the Supplemental Enhancement Account shall be
available for payment in accordance with and subject to Section 5.6(c) above and
5.12(c) below. Upon termination of this Agreement and the payment of all amounts
due under this Agreement to the Class A Noteholders, any remaining amounts in
the Supplemental Enhancement Account will be distributed to the Class C
Certificateholder. Upon any such payment to the Class C Certificateholder, the
Class A Noteholders shall not have any further rights in, or claims to, such
amounts.
 
(c)  If on any Payment Date (based on the Servicer's Certificate delivered on
the related Determination Date by the Servicer pursuant to Section 4.9, upon
which the Trust Collateral Agent may conclusively rely) the Available Funds,
together with 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 withdraw from the Supplemental Enhancement Account
an amount equal to such insufficiency and deliver the amount so withdrawn to the
Trust Collateral Agent for deposit in the Note 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. On any Payment
Date (after making all distributions pursuant to Section 5.6(c)(i) through (x)
on such Payment Date) on which the Total Enhancement Amount exceeds the Required
Total Enhancement Amount, the Trust Collateral Agent shall withdraw the amount
of such excess from the Supplemental Enhancement Account and distribute such
amount to the Class C Certificateholder.
 

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SECTION 5.13.   Pre-Funding Account.

 
(a)  Pursuant to Section 5.1(b), the Trust Collateral Agent shall establish and
maintain the Pre-Funding Account as an Eligible Account in the name of the Trust
for the benefit of the Noteholders, the Class C Certificateholder and the Note
Insurer.
 
(b)  On the Closing Date, the Transferor will deposit in the Pre-Funding Account
an amount equal to the Original Pre-Funded Amount from the proceeds of the sale
of the Notes. On each Subsequent Transfer Date, the Servicer shall instruct the
Trust Collateral Agent in writing to withdraw from the Pre-Funding Account an
amount equal to the aggregate Principal Balance of the Subsequent Receivables
(as of the related Subsequent Cutoff Date) conveyed to the Trust on such
Subsequent Transfer Date and pay such amount to or upon the order of the
Transferor upon satisfaction of the conditions set forth in this Agreement and
in the related Transfer Agreement with respect to such transfer.
 
(c)  If (i) the Pre-Funded Amount has not been reduced to zero by the close of
business on the last day of the Funding Period, after giving effect to any
reductions in the Pre-Funded Amount on such last day of the Funding Period
pursuant to Section 5.13(b), the Servicer shall instruct the Trust Collateral
Agent in writing to withdraw such remaining portion of the Pre-Funded Amount
from the Pre-Funding Account and deposit it in the Note Account on the Final
Funding Period Payment Date to be applied as a partial redemption of the Notes,
in addition to the payment of principal and interest that otherwise would be
payable with respect to such Notes on such Payment Date, in accordance with
Section 5.6(c)(iv).
 
SECTION 5.14.   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 parties hereto agree that the
Supplemental Enhancement Account shall be governed by the laws of the State of
New York, and regardless of any provision in any other agreement, the
"securities intermediary's jurisdiction" (within the meaning of Section 8-110 of
the UCC) shall be the State of New York. The Trust Collateral Agent acknowledges
and agrees that (a) each item of property (whether investment property,
financial asset, security, instrument or cash) credited to the Supplemental
Enhancement 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 the
Supplemental Enhancement Account, the Trust Collateral Agent shall comply with
such entitlement order without further consent by LBAC or any other person.
 
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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) plus (iii) the amount of the remaining
Deficiency Claim Amount, if any, available to be withdrawn from the Supplemental
Enhancement Amount would be insufficient, after giving effect to the payments
required by Section 5.6(c)(i) and (ii), to pay the Scheduled Payments for the
related Payment Date, then in such event the Trust Collateral Agent shall
furnish to the Note Insurer no later than 12:00 noon New York City time on the
related Draw Date a completed Notice of Claim in the amount of the shortfall in
amounts so available to pay the Scheduled Payments with respect to such Payment
Date (the amount of any such shortfall being hereinafter referred to as the
"Policy Claim Amount"). Amounts paid by the Note Insurer under the Policy shall
be deposited by the Trust Collateral Agent into the Policy Payments Account and
thereafter into the Note Account for payment to Class A Noteholders on the
related Payment Date (or promptly following payment on a later date as set forth
in the Policy).
 
(b)  Any notice delivered by the Trust Collateral Agent to the Note Insurer
pursuant to Section 6.2(a) shall specify the Policy Claim Amount claimed under
the Policy and shall constitute a "Notice of Claim" under the Policy. In
accordance with the provisions of the Policy, the Note Insurer is required to
pay to the Trust Collateral Agent the Policy Claim Amount properly claimed
thereunder by 12:00 noon, New York City time, on the later of (i) the third
Business Day (as defined in the Policy) following receipt on a Business Day (as
defined in the Policy) of the Notice of Claim, and (ii) the applicable Payment
Date. Any payment made by the Note Insurer under the Policy shall be applied
solely to the payment of the Class A Notes, and for no other purpose.
 
(c)  The Trust Collateral Agent shall (i) receive as attorney-in-fact of each
Class A Noteholder any Policy Claim Amount from the Note Insurer and (ii)
deposit the same in the Policy Payments Account for disbursement to the
Noteholders as set forth in clauses (iii) and (iv) 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.
 
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(d)  The Trust Collateral Agent shall be entitled, but not obligated, to enforce
on behalf of the Class A Noteholders the obligations of the Note Insurer under
the Policy. Notwithstanding any other provision of this Agreement, the Class A
Noteholders are not entitled to institute proceedings directly against the Note
Insurer.
 
SECTION 6.3.   Preference Claims; Direction of Proceedings.
 
(a)  In the event that the Trust Collateral Agent has received a certified copy
of an order of the appropriate court that any Scheduled Payment paid on a Class
A Note has been avoided in whole or in part as a preference payment under
applicable bankruptcy law, the Trust Collateral Agent shall so notify the Note
Insurer, shall comply with the provisions of the Policy to obtain payment by the
Note Insurer of such avoided payment, and shall, at the time it provides notice
to the Note Insurer, comply with the provisions of the Policy to obtain payment
by the Note Insurer, notify Holders of the Class A Notes by mail that, in the
event that any Class A Noteholder's payment is so recoverable, such Class A
Noteholder will be entitled to payment pursuant to the terms of the Policy.
Pursuant to the terms of the Policy, the Note Insurer will make such payment on
behalf of the Class A Noteholder to the receiver, conservator,
debtor-in-possession or trustee in bankruptcy named in the Order (as defined in
the Policy) and not to the Trust Collateral Agent or any Class A Noteholder
directly (unless a Class A Noteholder has previously paid such payment to the
receiver, conservator, debtor-in-possession or trustee in bankruptcy, in which
case the Note Insurer will make such payment to the Trust Collateral Agent for
payment, in accordance with the instructions to be provided by the Note Insurer,
to such Class A Noteholder upon proof of such payment reasonably satisfactory to
the Note Insurer).
 
(b)  Each Notice of Claim shall provide that the Trust Collateral Agent, on its
behalf and on behalf of the Class A Noteholders, thereby appoints the Note
Insurer as agent and attorney-in-fact for the Trust Collateral Agent and each
Class A Noteholder in any legal proceeding with respect to the Class A Notes.
The Trust Collateral Agent shall promptly notify the Note Insurer of any
proceeding or the institution of any action (of which a Responsible Officer of
the Trust Collateral Agent has actual knowledge) seeking the avoidance as a
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.
 
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SECTION 6.4.   Surrender of Policy. The Trust Collateral Agent shall surrender
the Policy to the Note Insurer for cancellation upon its expiration in
accordance with the terms thereof.
 
ARTICLE VII
THE TRANSFEROR
 
SECTION 7.1.   Representations of the Transferor. The Transferor makes the
following representations on which the Note Insurer shall be deemed to have
relied in executing and delivering the Policy, on which the Class C
Certificateholder shall be deemed to have relied on in purchasing the Class C
Certificate and on which the Issuer is deemed to have relied in acquiring the
Receivables and on which the Indenture Trustee, the Owner Trustee, the
Collateral Agent, Trust Collateral Agent and Back-up Servicer may rely. The
representations speak as of the execution and delivery of this Agreement and as
of the Closing Date, in the case of the Initial Receivables, and as of the
related Subsequent Transfer Date, in the case of the Subsequent Receivables, and
shall survive the conveyance of the Receivables to the Issuer and the subsequent
pledge thereof to the Indenture Trustee pursuant to the Indenture.
 
(a)  Organization and Good Standing. The Transferor has been duly organized and
is validly existing as a corporation in good standing under the laws of the
State of Delaware, with the corporate power and authority to conduct its
business as such business is presently conducted and to execute, deliver and
perform its obligations under this Agreement and the other Basic Documents to
which it is a party.
 
(b)  Due Qualification. The Transferor is duly qualified to do business as a
foreign corporation in good standing, and has obtained all necessary licenses
and approvals in all jurisdictions required for the performance of its
obligations under this Agreement and the other Basic Documents to which it is a
party other than where the failure to obtain such license or approval or
qualification would not have a material adverse effect on the ability of the
Transferor to perform such obligations or on any Receivable or on the interest
therein of the Issuer, the Noteholders or the Note Insurer.
 
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(c)  Power and Authority. The Transferor has the corporate power and authority
to execute and deliver this Agreement and the other Basic Documents to which it
is a party and to carry out their respective terms; the Transferor has full
corporate power and authority to sell and assign the property sold and assigned
to and deposited with the Issuer and has duly authorized such sale and
assignment to the Issuer by all necessary corporate action; and the execution,
delivery, and performance of this Agreement and the other Basic Documents to
which it is a party have been duly authorized by the Transferor by all necessary
corporate action.
 
(d)  Valid Sale; Binding Obligation. This Agreement effects a valid sale,
transfer and assignment of the Initial Receivables and the other property
conveyed to the Issuer pursuant to Section 2.1, and upon execution of the
related Transfer Agreement and satisfaction of the conditions set forth in
Section 2.2(b) hereof and in such Transfer Agreement, this Agreement, and the
related Transfer Agreement will effect a valid sale, transfer and assignment of
the related Subsequent Receivables and the other related property to be conveyed
to the Issuer pursuant to Section 2.2 on the related Subsequent Transfer Date,
in each case, enforceable against creditors of and purchasers from the
Transferor; and this Agreement and the other Basic Documents to which the
Transferor is a party shall constitute legal, valid and binding obligations of
the Transferor enforceable in accordance with their respective terms except as
enforceability may be limited by bankruptcy, insolvency, reorganization or other
similar laws affecting the enforcement of creditors' rights generally and by
equitable limitations on the availability of specific remedies, regardless of
whether such enforceability is considered in a proceeding in equity or at law.
 
(e)  No Violation. The execution, delivery and performance by the Transferor of
this Agreement and the other Basic Documents to which the Transferor is a party
and the consummation of the transactions contemplated hereby and thereby and the
fulfillment of the terms hereof and thereof do not conflict with, result in any
breach of any of the terms and provisions of, nor constitute (with or without
notice or lapse of time) a default under, the certificate of incorporation or
by-laws of the Transferor, or any material indenture, agreement, mortgage, deed
of trust, or other instrument to which the Transferor is a party or by which it
is bound or any of its properties are subject; nor result in the creation or
imposition of any material lien upon any of its properties pursuant to the terms
of any such indenture, agreement, mortgage, deed of trust, or other instrument
(other than the Basic Documents and the 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 or any Certificates, (B) seeking to prevent the issuance of the Notes or
any Certificates 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 or any Certificates, (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 any Certificates or
(E) that could have a material adverse effect on the Receivables.
 
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(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 Certificates 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 Class C Certificateholder 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 One Mack Centre Drive, Paramus, New Jersey
07652.
 
(i)  Transferor's Intention. The Initial Receivables and other Transferred
Property are being transferred, and the Subsequent Receivables and other
Subsequent Transferred Property will be transferred, with the intention of
removing them from the Transferor's estate pursuant to Section 541 of the United
States Bankruptcy Code, as the same may be amended from time to time.
 
SECTION 7.2.   Liability of the Transferor. The Transferor shall be liable only
to the extent of the obligations specifically undertaken by the Transferor under
this Agreement and the representations made by the Transferor in this Agreement.
 
SECTION 7.3.   Merger or Consolidation of, or Assumption of the Obligations of,
the Transferor. Any Person (a) into which the Transferor may be merged or
consolidated, (b) which may result from any merger or consolidation to which the
Transferor shall be a party or (c) which may succeed to the properties and
assets of the Transferor substantially as a whole, which person in any of the
foregoing cases executes an agreement of assumption to perform every obligation
of the Transferor under this Agreement, shall be the successor to the Transferor
hereunder without the execution or filing of any document or any further act by
any of the parties to this Agreement; provided, however, as a condition to the
consummation of any of the transactions referred to in clauses (a), (b) or (c)
above, (i) immediately after giving effect to such transaction, (x) no
representation or warranty made pursuant to Section 7.1 would have been breached
(for purposes hereof, such representations and warranties shall speak as of the
date of the consummation of such transaction) and (y) no event that, after
notice or lapse of time, or both, would become a Servicer Termination Event
shall have happened and be continuing, (ii) the Transferor shall have delivered
to the Note Insurer, the Indenture Trustee, the Trust Collateral Agent and the
Issuer an Officer's Certificate and an Opinion of Counsel each stating that such
consolidation, merger, or succession and such agreement or assumption comply
with this Section 7.3 and that all conditions precedent, if any, provided for in
this Agreement relating to such transaction have been complied with, (iii) the
Transferor shall have delivered to the Note Insurer, the Indenture Trustee, the
Trust Collateral Agent and the Issuer an Opinion of Counsel either (A) stating
that, in the opinion of such counsel, all financing statements and continuation
statements and amendments thereto have been 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.
 
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SECTION 7.4.   Limitation on Liability of the Transferor and Others. The
Transferor and any director or officer or employee or agent of the Transferor
may rely in good faith on the advice of counsel or on any document of any kind,
prima facie properly executed and submitted by any Person respecting any matters
arising hereunder. The Transferor shall not be under any obligation to appear
in, prosecute or defend any legal action that shall not be incidental to its
obligations under this Agreement, and that in its opinion may involve it in any
expense or liability.
 
SECTION 7.5.   Transferor May Own Notes. The Transferor and any Person
controlling, controlled by, or under common control with the Transferor may in
its individual or any other capacity become the owner or pledgee of Notes with
the same rights as it would have if it were not the Transferor or an affiliate
thereof, except as otherwise provided in the definition of "Noteholder" set
forth in Annex A hereto and as specified in Section 1.4. Notes so owned by or
pledged to the Transferor or such controlling or commonly controlled Person
shall have an equal and proportionate benefit under the provisions of this
Agreement, without preference, priority, or distinction as among all of the
Notes except as otherwise provided herein or by the definition of Noteholder.
 
ARTICLE VIII
THE SERVICER
 
SECTION 8.1.   Representations of Servicer. The Servicer, in its capacity as
Servicer and Custodian (each reference to “Servicer” in this Section 8.1
includes the Servicer in its capacity as Custodian) makes the following
representations on which the Note Insurer shall be deemed to have relied in
executing and delivering the Policy and on which the Issuer is deemed to have
relied in acquiring the Receivables and on which the Indenture Trustee is deemed
to have relied on in accepting the pledge of the Receivables. The
representations speak as of the execution and delivery of this Agreement and as
of the Closing Date, in the case of the Initial Receivables, and as of the
related Subsequent Transfer Date, in the case of the Subsequent Receivables, and
shall survive the conveyance of the Receivables to the Issuer and the subsequent
pledge thereof to the Indenture Trustee pursuant to the Indenture.
 
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(i) Organization and Good Standing. The Servicer is duly organized and validly
existing as a corporation in good standing under the laws of the State of
Delaware, with the corporate power and authority to own its properties and to
conduct its business as such properties shall be currently owned and such
business is presently conducted, and had at all relevant times, and has, the
corporate power, authority, and legal right to acquire, own, sell and service
the Receivables and to hold the Receivable Files as custodian.
 
(ii) Due Qualification. The Servicer is duly qualified to do business as a
foreign corporation in good standing, and has obtained all necessary licenses
and approvals in all jurisdictions in which the ownership or lease of property
or the conduct of its business (including the servicing of the Receivables as
required by this Agreement and the performance of its other obligations under
this Agreement and the other Basic Documents to which it is a party) shall
require such qualifications.
 
(iii) Power and Authority. The Servicer has the power and authority to execute
and deliver this Agreement and the other Basic Documents to which it is a party
and to carry out their respective terms; and the execution, delivery, and
performance of this Agreement and the other Basic Documents to which it is a
party have been duly authorized by the Servicer by all necessary corporate
action.
 
(iv) Binding Obligation. This Agreement and the other Basic Documents to which
it is a party constitute legal, valid and binding obligations of the Servicer
enforceable in accordance with their respective terms except as enforceability
may be limited by bankruptcy, insolvency, reorganization or other similar laws
affecting the enforcement of creditors' rights generally and by equitable
limitations on the availability of specific remedies, regardless of whether such
enforceability is considered a proceeding in equity or at law.
 
(v) No Violation. The execution, delivery and performance by the Servicer of
this Agreement and the other Basic Documents to which the Servicer is a party
and the consummation of the transactions contemplated hereby and thereby and the
fulfillment of the terms hereof and thereof do not conflict with, result in any
breach of any of the terms and provisions of, or constitute (with or without
notice or lapse of time) a default under, the certificate of incorporation or
by-laws of the Servicer, or any material indenture, agreement, mortgage, deed of
trust, or other instrument to which the Servicer is a party or by which it is
bound or any of its properties are subject; or result in the creation or
imposition of any material lien upon any of its properties pursuant to the terms
of any indenture, agreement, mortgage, deed of trust, or other instrument (other
than this Agreement); or violate any law, order, rule, or regulation applicable
to the Servicer of any court or of any Federal or State regulatory body,
administrative agency, or other governmental instrumentality having jurisdiction
over the Servicer or its properties.
 
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(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 any Certificates, (B) seeking to prevent the issuance of the Notes or
any Certificates or the consummation of any of the transactions contemplated by
this Agreement, the Notes, any Certificates, 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, any Certificates or the other Basic Documents to which the Servicer is a
party, (D) relating to the Servicer and which might adversely affect the Federal
or State income, excise, franchise or similar tax attributes of the Notes or any
Certificates or (E) that could have a material adverse effect on the
Receivables.
 
(vii) No Consents. No consent, approval, authorization or order of or
declaration or filing with any governmental authority is required to be obtained
by the Servicer for the issuance or sale of the Notes or the Certificates or the
consummation of the other transactions contemplated by this Agreement and the
other Basic Documents to which the Servicer is a party, except such as have been
duly made or obtained.
 
(viii) Taxes. The Servicer has filed on a timely basis all tax returns required
to be filed by it and paid all taxes, to the extent that such taxes have become
due.
 
(ix) Chief Executive Office. The Servicer hereby represents and warrants to the
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 One Mack Centre Drive, Paramus, New Jersey
07652.
 
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, each Certificateholder, the
Note Insurer, the Noteholders and the Transferor, and their respective officers,
directors, agents and employees from and against any and all costs, expenses,
losses, damages, claims, and liabilities, arising out of or resulting from the
use, ownership or operation by the Servicer or any affiliate thereof of a
Financed Vehicle.
 
(ii) The Servicer shall indemnify, defend and hold harmless the Indenture
Trustee, the Trust Collateral Agent, the Owner Trustee, the Collateral Agent,
the Back-up Servicer, the Custodian, the Issuer, the Note Insurer and the
Transferor, and their respective officers, directors, agents and employees from
and against any taxes (other than net income, gross receipts, franchise or other
similar taxes) that may at any time be asserted against the Indenture Trustee,
the Trust Collateral Agent, the Owner Trustee, the Collateral Agent, the Back-up
Servicer, the Custodian, the Issuer, the Note Insurer or the Transferor, with
respect to the transactions contemplated herein, including, without limitation,
any sales, general corporation, tangible personal property, privilege, or
license taxes and costs and expenses in defending against the same.
 
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(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 Issuer, each
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 Note
Insurer or the Noteholders, and their respective officers, directors, agents and
employees through the negligence, willful misfeasance or bad faith of the
Servicer in the performance of its duties under this Agreement or any other
Basic Document to which it is a party or by reason of reckless disregard of its
obligations and duties under this Agreement or any other Basic Document to which
it is a party.
 
(iv) The Servicer shall indemnify, defend and hold harmless the Indenture
Trustee, the Trust Collateral Agent, the Owner Trustee, the Collateral Agent,
the Back-up Servicer, the Transferor, the Issuer, the Custodian, the Note
Insurer and their respective officers, directors, agents and employees from and
against all costs, expenses, losses, claims, damages and liabilities arising out
of or incurred in connection with the acceptance or performance of the trusts
and duties contained herein or in any other Basic Document to which it is a
party, if any, except to the extent that such cost, expense, loss, claim, damage
or liability: (a) shall be due to the willful misfeasance, bad faith, or
negligence of the Indenture Trustee, the Trust Collateral Agent, the Owner
Trustee, the Collateral Agent, the Back-up Servicer, the Transferor, the Issuer,
the Custodian or the Note Insurer, as applicable; (b) relates to any tax other
than the taxes with respect to which the Servicer shall be required to indemnify
the Indenture Trustee, the Trust Collateral Agent, the Owner Trustee, the
Collateral Agent, the Back-up Servicer, the Transferor, the Issuer, the
Custodian or the Note Insurer; or (c) shall arise from the Trust Collateral
Agent's breach of any of its representations or warranties set forth in Section
10.12.
 
(v) The Servicer shall indemnify the Owner Trustee and WTC (as defined in the
Trust Agreement) and its officers, directors, successors, assigns, agents and
servants (collectively, the "Indemnified Parties") from and against, any and all
liabilities, obligations, losses, damages, taxes, claims, actions and suits, and
any and all reasonable costs, expenses and disbursements (including reasonable
legal fees and expenses) of any kind and nature whatsoever (collectively,
"Expenses") which may at any time be imposed on, incurred by, or asserted
against the Owner Trustee, WTC or any Indemnified Party in any way relating to
or arising out of this Agreement, the Basic Documents, the Owner Trust Estate
(as defined in the Trust Agreement), the administration of the Owner Trust
Estate or the action or inaction of the Owner Trustee under the Trust Agreement,
except only that the Servicer shall not be liable for or required to indemnify
the Owner Trustee from and against Expenses arising or resulting from any of the
matters described in the third sentence of Section 6.1 of the Trust Agreement.
The indemnities contained in this Section shall survive the resignation or
termination of the Owner Trustee or the termination of the Trust Agreement. In
any event of any claim, action or proceeding for which indemnity will be sought
pursuant to this Section, the Owner Trustee's choice of legal counsel shall be
subject to the approval of the Transferor which approval shall not be
unreasonably withheld.
 
(vi) 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.
 
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(b)  For purposes of this Section, in the event of the termination of the rights
and obligations of a Servicer (or any successor thereto pursuant to Section 8.3)
as Servicer pursuant to Section 9.1, or a resignation by such Servicer pursuant
to this Agreement, such Servicer shall be deemed to be the Servicer pending
appointment of a successor Servicer pursuant to Section 9.2. The provisions of
this Section 8.2(b) shall in no way affect the survival pursuant to Section
8.2(c) of the indemnification by the outgoing Servicer provided by Section
8.2(a).
 
(c)  Indemnification under this Section 8.2 shall survive the termination of
this Agreement and any resignation or removal of LBAC as Servicer and shall
include reasonable fees and expenses of counsel and expenses of litigation. If
the Servicer shall have made any indemnity payments pursuant to this Section 8.2
and the recipient thereafter collects any of such amounts from others, the
recipient shall promptly repay such amounts to the Servicer, without interest.
 
(d)  In no event shall the Servicer be liable under this Agreement to any Person
for the acts or omissions of any successor Servicer, nor shall any successor
Servicer be liable under this Agreement to any Person for any acts or omissions
of a predecessor Servicer.
 
SECTION 8.3.   Merger or Consolidation of, or Assumption of the Obligations of,
Servicer or Back-up Servicer.
 
(a)  The Servicer shall not merge or consolidate with any other Person, convey,
transfer or lease substantially all its assets as an entirety to another Person,
or permit any other Person to become the successor to the Servicer's business
unless, after the merger, consolidation, conveyance, transfer, lease or
succession, the successor or surviving entity shall be an Eligible 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 and the Note
Insurer an Officer's Certificate and an Opinion of Counsel in form and substance
satisfactory to the Indenture Trustee, the Trust Collateral Agent and the Note
Insurer each stating that such consolidation, merger or succession and such
agreement of assumption comply with this Section 8.3 and that all conditions
precedent provided for in this Agreement relating to such transaction have been
complied with, (iii) the Servicer shall have delivered to the Indenture Trustee,
the Trust Collateral Agent and the Note Insurer an Opinion of Counsel either (A)
stating that, in the opinion of such counsel, all financing statements and
continuation statements and amendments thereto have been 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 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 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.
 
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(b)  Except as provided in this Agreement, the Servicer shall not be under any
obligation to appear in, prosecute or defend any legal action that shall not be
incidental to its duties to service the Receivables in accordance with this
Agreement, and that in its opinion may involve it in any expense or liability.
 
SECTION 8.5.   Servicer and Back-up Servicer Not to Resign. Subject to the
provisions of Section 8.3, neither the Servicer nor the Back-up Servicer may
resign from the obligations and duties hereby imposed on it as Servicer or
Back-up Servicer, as the case may be, under this Agreement except upon
determination that by reason of a change in legal requirements the performance
of its duties under this Agreement would cause it to be in violation of such
legal requirements in a manner which would result in a material adverse effect
on the Servicer or Back-up Servicer, as the case may be, and the Note Insurer
does not elect to waive the obligations of the Servicer or Back-up Servicer, as
the case may be, to perform the duties which render it legally unable to act or
does not elect to delegate those duties to another Person. Notice of any such
determination permitting the resignation of the Servicer or Back-up Servicer, as
the case may be, shall be communicated to the Transferor, the Indenture Trustee,
the Trust Collateral Agent, the Issuer, the Note Insurer, and each Rating Agency
at the earliest practicable time (and, if such communication is not in writing,
shall be confirmed in writing at the earliest practicable time) and any such
determination by the Servicer or Back-up Servicer, as the case may be, shall be
evidenced by an Opinion of Counsel to such effect delivered to and satisfactory
to the Transferor, the Indenture Trustee, the Trust Collateral Agent, the Issuer
and the Note Insurer concurrently with or promptly after such notice. No such
resignation of the Servicer shall become effective until a successor servicer
shall have assumed the responsibilities and obligations of LBAC in accordance
with Section 9.2 and the Servicing Assumption Agreement, if applicable. No such
resignation of the Back-up Servicer shall become effective until an entity
acceptable to the Note Insurer shall have assumed the responsibilities and
obligations of the Back-up Servicer; provided, however, that if no such entity
shall have assumed such responsibilities and obligations of the Back-up Servicer
within 120 days of the resignation of the Back-up Servicer, the Back-up Servicer
may petition a court of competent jurisdiction for the appointment of a
successor to the Back-up Servicer.
 
ARTICLE IX
 
SERVICER TERMINATION EVENTS
 
SECTION 9.1.   Servicer Termination Events. 
 
 
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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 Certificateholders or deposit in the Spread Account or the Supplemental
Enhancement Account any proceeds or payment required to be so delivered under
the terms of the Notes, the Certificates, the Purchase Agreement, any Transfer
Agreement or this Agreement (including deposits of Purchase Amounts) that shall
continue unremedied for a period of two Business Days after written notice is
received by the Servicer from the Trust Collateral Agent or the Note Insurer or
after discovery of such failure by the Servicer (but in no event later than the
five Business Days after the Servicer is required to make such delivery or
deposit); or
 
(ii) The Servicer's Certificate required by Section 4.9 shall not have been
delivered to the Trust Collateral Agent and the Note Insurer within one Business
Day of the date such Servicer's Certificate is required to be delivered; or the
statement required by Section 4.10 or the report required by Section 4.11 shall
not have been delivered within five (5) days after the date such statement or
report, as the case may be, is required to be delivered; or
 
(iii) Failure on the part of the Servicer to observe its covenants and
agreements set forth in Section 8.3 or, for so long as LBAC is the Servicer,
failure on the part of the Transferor to observe its covenants and agreements
set forth in Section 7.3; or
 
(iv) Failure on the part of LBAC, the Servicer or, for so long as LBAC is the
Servicer, the Transferor, as the case may be, duly to observe or to perform in
any material respect any other covenants or agreements of LBAC, the Servicer or
the Transferor (as the case may be) set forth in the Notes, the Certificates,
the Purchase Agreement, any Transfer Agreement or in this Agreement, which
failure shall continue unremedied for a period of 30 days after the date on
which written notice of such failure requiring the same to be remedied, shall
have been given (1) to LBAC, the Servicer or the 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, if a Note Insurer Event of Default has occurred
and is continuing; 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
 
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(vi) The commencement by LBAC or the Servicer (or, so long as LBAC is the
Servicer, the Transferor or any of the Servicer's other Affiliates, if the
Servicer's ability to service the Receivables is adversely affected thereby) of
a voluntary case under the federal bankruptcy laws, as now or hereafter in
effect, or any other present or future, federal or state, bankruptcy, insolvency
or similar law, or the consent by LBAC or the Servicer (or the Transferor or any
other Affiliate of LBAC, if applicable) to the appointment of or taking
possession by a receiver, liquidator, assignee, trustee, custodian, sequestrator
or other similar official of LBAC or the Servicer (or the Transferor or any
other Affiliate of LBAC, if applicable) or of any substantial part of its
property or the making by LBAC or the Servicer (or the Transferor or any other
Affiliate of LBAC, if applicable) of an assignment for the benefit of creditors
or the failure by LBAC or the Servicer (or the Transferor or any other Affiliate
of LBAC, if applicable) generally to pay its debts as such debts become due or
the taking of corporate action by LBAC or the Servicer (or the Transferor or any
other Affiliate of LBAC, if applicable) in furtherance of any of the foregoing;
or
 
(vii) Any representation, warranty or statement of LBAC or the Servicer or, for
so long as LBAC is the Servicer, the Transferor, made in this Agreement and,
with respect to LBAC and the Transferor, the Purchase Agreement or any Transfer
Agreement, or in each case any certificate, report or other writing delivered
pursuant hereto shall prove to be incorrect as of the time when the same shall
have been made (excluding, however, any representation or warranty set forth in
Section 3.03(b) of the Purchase Agreement or Section 4 of the related Transfer
Agreement), and the incorrectness of such representation, warranty or statement
has a material adverse effect on the Issuer and, within 30 days after written
notice thereof shall have been given (1) to LBAC, the Servicer or the Transferor
(as the case may be) by the Trust Collateral Agent or the Note Insurer or (2) to
LBAC, the Servicer or the Transferor (as the case may be), and to the Trust
Collateral Agent and the Note Insurer by the Class A Noteholders evidencing not
less than 25% of the Class A Note Balance or the Class C Certificateholder, the
circumstances or condition in respect of which such representation, warranty or
statement was incorrect shall not have been eliminated or otherwise cured; or
 
(viii) The occurrence of an Insurance Agreement Event of Default; or
 
(ix) A claim is made under the Policy; or
 
(x) So long as 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;
 
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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 the Class C Certificateholder) 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, Certificates or the Receivables or otherwise, shall
without further action, pass to and be vested in (i) the Back-up Servicer or
(ii) such successor Servicer as may be appointed under Section 9.2; provided,
however, that the successor Servicer shall have no liability with respect to any
obligation which was required to be performed by the predecessor Servicer prior
to the date the successor Servicer becomes the Servicer or any claim of a third
party (including a Noteholder) based on any alleged action or inaction of the
predecessor Servicer as Servicer; and, without limitation, the Trust Collateral
Agent is hereby authorized and empowered to execute and deliver, on behalf of
the predecessor Servicer, as attorney-in-fact or otherwise, any and all
documents and other instruments, and to do or accomplish all other acts or
things necessary or appropriate to effect the purposes of such notice of
termination, whether to complete the transfer and endorsement of the Receivables
and related documents, or otherwise. Notwithstanding anything contained in this
Agreement to the contrary, Wells Fargo as successor Servicer is authorized to
accept and rely on all of the accounting, records (including computer records)
and work of the prior Servicer relating to the Notes (collectively, the
“Predecessor Servicer Work Product”) without any audit or other examination
thereof, and Wells Fargo shall have no duty, responsibility, obligation or
liability for the acts and omissions of the prior Servicer. In the event that
Wells Fargo becomes aware that any errors, inaccuracies, omissions or incorrect
or non-standard practices or procedures (collectively, “Errors”) exist in any
Predecessor Servicer Work Product and such Errors make it materially more
difficult to service or could reasonably cause or materially contribute to Wells
Fargo making or continuing any Errors (collectively, “Continued Errors”), Wells
Fargo shall, with prior notice to and consent of the Note Insurer, use its best
efforts to reconstruct and reconcile such data as are commercially reasonable to
correct such Errors and Continued Errors and to prevent future Continued Errors.
Wells Fargo shall be entitled to recover its costs thereby expended in
accordance with Section 5.6(c)(ix) hereof. The predecessor Servicer shall
cooperate with the successor Servicer and the Trust Collateral Agent in
effecting the termination of the responsibilities and rights of the predecessor
Servicer under this Agreement, including the transfer to the successor Servicer
for administration by it of all cash amounts that shall at the time be held or
should have been held by the predecessor Servicer for deposit, or shall
thereafter be received with respect 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, and to the Noteholders and the Class C Certificateholder if a Note
Insurer Default shall have occurred and be continuing.
 
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(b) In the event that the Custodian is acting as Servicer and the Servicer is
terminated pursuant to this Section 9.1, the Custodian may also be terminated in
accordance with the terms of the Custodial Agreement.
 
SECTION 9.2.   Appointment of Successor.
 
(a)  Upon the Servicer's receipt of notice of termination pursuant to Section
9.1 or the Servicer's resignation in accordance with the terms of this
Agreement, the predecessor Servicer shall continue to perform its functions as
Servicer under this Agreement, in the case of termination, only until the date
specified in such termination notice or, if no such date is specified in a
notice of termination, until receipt of such notice, and, in the case of
resignation, until the later of (x) the date 45 days from the delivery to the
Trust Collateral Agent of written notice of such resignation (or written
confirmation of such notice) in accordance with the terms of this Agreement and
(y) the date upon which the predecessor Servicer shall become unable to act as
Servicer, as specified in the notice of resignation and accompanying Opinion of
Counsel. In the event of termination of the Servicer, the Back-up Servicer,
shall assume the obligations of Servicer hereunder on the date specified in such
written notice (the "Assumption Date") pursuant to the Servicing Assumption
Agreement or, in the event that the Note Insurer shall have determined that a
Person other than the Back-up Servicer shall be the successor Servicer in
accordance with Section 9.2(c), on the date of the execution of a written
assumption agreement by such Person to serve as successor Servicer. In the event
of assumption of the duties of Servicer by the Back-up Servicer, the Back-up
Servicer shall be entitled to be paid by the Servicer for the system conversion
costs, an amount not to exceed $100,000. In the event that such amount shall not
have been timely paid by the Servicer, such amount shall be paid under Section
5.6(c)(ix) hereof; provided, however, the payment of such amount pursuant to
Section 5.6(c)(ix) shall not relieve the Servicer of any obligation or liability
to pay such amount. Notwithstanding the Back-up Servicer's assumption of, and
its agreement to perform and observe, all duties, responsibilities and
obligations of LBAC as Servicer under this Agreement arising on and after the
Assumption Date, the Back-up Servicer shall not be deemed to have assumed or to
become liable for, or otherwise have any liability for, any duties,
responsibilities, obligations or liabilities of LBAC, the Transferor or any
predecessor Servicer arising on or before the Assumption Date, whether provided
for by the terms of this Agreement, arising by operation of law or otherwise,
including, without limitation, any liability for, any duties, responsibilities,
obligations or liabilities of LBAC, the Transferor or any predecessor Servicer
arising on or before the Assumption Date under Sections 4.7 or 8.2 of this
Agreement, regardless of when the liability, duty, responsibility or obligation
of LBAC, the Transferor or any predecessor Servicer therefor arose, whether
provided by the terms of this Agreement, arising by operation of law or
otherwise. In addition, if the Back-up Servicer shall be legally unable to act
as Servicer or shall have delivered a notice of resignation pursuant to Section
8.5 hereof and a Note Insurer Default shall have occurred and be continuing, the
Back-up Servicer, the Trust Collateral Agent or the Class A Noteholders
evidencing not less than 66-2/3% of the Class A Note Balance or the Class C
Certificateholder 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.
 
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(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 and the Class C Certificateholder.
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 and the Class C Certificateholder at their respective
addresses appearing in the Note Register or the Certificate Register, as
applicable, and to each of the Rating Agencies.
 
SECTION 9.4.   Action Upon Certain Failures of the Servicer. In the event that a
Responsible Officer of the Trust Collateral Agent shall have knowledge of any
failure of the Servicer specified in Section 9.1 which would give rise to a
right of termination under such Section upon the Servicer's failure to remedy
the same after notice, the Trust Collateral Agent shall give notice thereof to
the Transferor, the Servicer and the Note Insurer. For all purposes of this
Agreement, the Trust Collateral Agent shall not be deemed to have knowledge of
any failure of the Servicer as specified in Section 9.1 unless notified thereof
in writing by the Transferor, the Servicer, the Note Insurer or by a Noteholder
or a Class C Certificateholder. 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 Class C Certificateholder, 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 applicable 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 Class C Certificateholder (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 Class C Certificateholder or the Note Insurer to the extent
that such Noteholder, such Class C Certificateholder 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, the Class C
Certificateholder 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 Class C Certificateholder, 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 Wells Fargo 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, the
Class C Certificateholder 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 Class C Certificateholder 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.
 
(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.
 
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(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 Class C Certificateholder; 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 Section 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 United States thereof; 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 (i) if a
Note Insurer Default shall have occurred or is continuing, the Class A
Noteholders evidencing not less than 25% of the Class A Note Balance or, if no
Class A Notes are outstanding, the Class C Certificateholder, or (ii) if no
Class A Notes are outstanding and the Policy Expiration Date has occurred, the
Class C Certificateholder) 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 (or (i) if a
Note Insurer Default shall have occurred or is continuing, the Class A
Noteholders evidencing not less than 25% of the Class A Note Balance or, if no
Class A Notes are outstanding, the Class C Certificateholder, or (ii) if no
Class A Notes are outstanding and the Policy Expiration Date has occurred, the
Class C Certificateholder) 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 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, any Noteholder or the Class C
Certificateholder 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 Class C Certificateholder, the Transferor,
and to the Rating Agencies. If the Servicer shall fail to mail such notice
within ten (10) days after acceptance of appointment by the successor Trust
Collateral Agent, the successor Trust Collateral Agent 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.
 
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(d)  Any separate trustee or co-trustee may at any time appoint the Trust
Collateral Agent, its agent or attorney-in-fact with full power and authority,
to the extent not prohibited by law, to do any lawful act under or in respect of
this Agreement on its behalf and in its name. If any separate trustee or
co-trustee shall die, become incapable of acting, resign or be removed, all of
its estates, properties, rights, remedies and trusts shall vest in and be
exercised by the Trust Collateral Agent, to the extent permitted by law, without
the appointment of a new or successor Trust Collateral Agent.
 
SECTION 10.12.   Representations and Warranties of Trust Collateral Agent. The
Trust Collateral Agent shall make the following representations and warranties
with respect to itself on which the Transferor, the Servicer, the Originator,
the Issuer, the Note Insurer, Noteholders and the Class C Certificateholder
shall rely:
 
(i) The Trust Collateral Agent is a national banking association, duly
organized, validly existing, and in good standing under the laws of the United
States 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 or the Class C Certificateholder; provided, that
nothing in this Agreement shall impair the right of the Trust Collateral Agent
to take any action deemed proper by the Trust Collateral Agent and which is not
inconsistent with such direction of the Note Insurer.
 
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ARTICLE XI
TERMINATION
 
SECTION 11.1.   Termination.
 
(a)  The respective obligations and responsibilities of LBAC, the Transferor,
the Issuer, the Servicer, the Custodian and the Trust Collateral Agent created
hereby shall terminate upon the payment to Noteholders and each
Certificateholder of all amounts required to be paid to them pursuant to this
Agreement, the Indenture and the Trust Agreement, satisfaction of all
Reimbursement Obligations, and the expiration of any preference period related
thereto and the disposition of all property held as part of the 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 and the Note Insurer of any prospective termination
pursuant to this Section 11.1.
 
(b)  Upon any sale of the assets of the Issuer pursuant to Section 8.1 of the
Trust Agreement, the Servicer shall instruct the Trust Collateral Agent in
writing to deposit the proceeds from such sale after all payments and reserves
therefrom (including the expenses of such sale) have been made (the "Insolvency
Proceeds") in the Collection Account.
 
(c)  Written notice of any termination of the Issuer shall be given by the
Servicer to the Owner Trustee, the Trust Collateral Agent, the Collateral Agent,
the Back-up Servicer, the Indenture Trustee, the Note Insurer and the Rating
Agencies as soon as practicable after the Servicer has received notice thereof.
 
(d)  Following the satisfaction and discharge of the Indenture and the payment
in full of the principal of and interest on the Notes, the Certificateholders
will succeed to the rights of the Noteholders hereunder.
 
ARTICLE XII
ADMINISTRATIVE DUTIES OF THE SERVICER
 
SECTION 12.1.   Administrative Duties.
 
(a)  Duties with Respect to the Indenture. The Servicer shall take all necessary
action that is the duty of the Issuer to take pursuant to the Indenture,
pursuant to Sections 2.9 (with respect to the notice provisions contained
therein), 3.4, 3.5, 3.6, 3.7, 3.9, 3.10, 3.17, 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 Class C Certificateholder 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 Sarbanes-Oxley 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 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.
 
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(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 or the Class C Certificateholder under
the Basic Documents, (2) sell the Pledged Property pursuant to Section 5.5 of
the Indenture, (3) take any other action that the Issuer directs the Servicer
not to take on its behalf or (4) in connection with its duties hereunder assume
any indemnification obligation of any other Person.
 
SECTION 12.2.   Records. The Servicer shall maintain appropriate books of
account and records relating to services performed under this Agreement, which
books of account and records shall be accessible for inspection by the Issuer at
any time during normal business hours.
 
SECTION 12.3.   Additional Information to be Furnished to the Issuer. The
Servicer shall furnish to the Issuer from time to time such additional
information regarding the Trust Assets as the Issuer shall reasonably request.
 
SECTION 12.4.   No Additional Compensation. The Servicing Fee payable to the
Servicer pursuant to Section 5.6(c)(i) shall be the only amount payable to the
Servicer for its services hereunder.
 
ARTICLE XIII
MISCELLANEOUS PROVISIONS
 
SECTION 13.1.   Amendment.
 
(a)  This Agreement may be amended from time to time by the Issuer, the
Transferor, the Originator, the Servicer, the Trust Collateral Agent, the
Back-up Servicer and the Custodian and, (i) unless a Note Insurer Default has
occurred and is continuing or the Policy Expiration Date has occurred, with the
prior written consent of the Note Insurer and, (ii) if a Note Insurer Default
has occurred and is continuing or the Policy Expiration Date has occurred with
the consent of the Majorityholders, which consent given pursuant to this Section
or pursuant to any other provision of this Agreement shall be conclusive and
binding on all Holders and on all future Holders of Notes and of any Notes
issued upon the transfer thereof or in exchange thereof or in lieu thereof
whether or not notation of such consent is made upon the Notes, for the purpose
of adding any provisions to or changing in any manner or eliminating any of the
provisions of this Agreement, or of modifying in any manner the rights of the
Holders of Notes or the Class C Certificate; 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 any Certificate or
change the applicable Note Rate, the Class C Certificate Rate or the Class C
Supplemental Interest Rate without the consent of each Noteholder and
Certificateholder affected thereby, (b) reduce the aforesaid percentage of the
Note Balance required to consent to any such amendment, without the consent of
the Holders of all Notes or the Class C Certificate 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 under any Transfer Agreement, or better to assure,
convey and confirm unto the property conveyed pursuant hereto or pursuant to any
Transfer Agreement;
 
(y) to add to the covenants of the Transferor, the Originator or the Servicer,
for the benefit of the Holders of the Notes, the Class C Certificateholder and
the Note Insurer; or
 
(z) to cure any ambiguity, to correct or supplement any provision herein or in
any Transfer Agreement which may be inconsistent with any other provision herein
or in any Transfer Agreement or to make any other provisions with respect to
matters or questions arising under this Agreement or under any Transfer
Agreement; provided that such action pursuant to this subclause (z) shall not
adversely affect in any material respect the interests of the Holders of the
Notes, as evidenced by satisfaction of the Rating Agency Condition with respect
to such amendment
 
(b)  This Agreement shall not be amended or modified without the prior written
consent of the Class C Certificateholder (to the extent the Class C Certificate
has 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 the Class C
Certificateholder; (b) to accelerate or postpone the scheduled date of payment
payable to the Class C Certificateholder; or (c) to modify any of the Basic
Documents which would have the effect of any of the foregoing; or (d) to amend
any part of Article II or Sections 4.4, 4.5, 4.6, 5.12 or 5.14 hereof, unless,
with respect to this clause (d), the Class C Certificateholder has received an
opinion of counsel that such amendment will not have a material adverse affect
on the Class C Certificateholder.
 
(c)  The Trust Collateral Agent shall furnish prior notice of any such proposed
amendment to each Rating Agency and promptly after the execution of any such
amendment or consent, the Trust Collateral Agent shall furnish a copy of such
amendment and/or consent, if applicable, to each Noteholder, each of the Rating
Agencies and the Lock-Box Processor.
 
(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 Class C Certificateholder, the Trust
Collateral Agent and the Note Insurer in its interest in the Receivables and the
other Trust Assets and in the proceeds thereof. Each of the Transferor, as to
itself, and the Servicer, as to itself, shall deliver (or cause to be delivered)
to the Trust Collateral Agent, the Owner Trustee and the Note Insurer
file-stamped copies of, or filing receipts for, any document filed as provided
above, as soon as available following such filing.
 
(b)  Neither the Transferor nor the Servicer shall change its name, identity or
corporate structure in any manner that would, could, or might make any financing
statement or continuation statement filed in accordance with paragraph (a) above
seriously misleading within the meaning of § 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 and the other
party at least thirty days' prior written notice of any relocation of its
principal executive office or change in its state of incorporation if, as a
result of such relocation or change, the applicable provisions of the UCC would
require the filing of any amendment of any previously filed financing or
continuation statement or of any new financing statement, shall promptly file
any such amendment and shall deliver an Opinion of Counsel (A) stating that, in
the opinion of such counsel, all amendments to all previously filed financing
statements and continuation statements have been filed that are necessary fully
to preserve and protect the interest of the Trust Collateral Agent in the
Receivables, and reciting the details of such filings or (B) stating that, in
the opinion of such counsel, no such action shall be necessary to preserve and
protect such interest. The 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 2007-A in such Receivable and that such
Receivable is owned by the Issuer. Indication of the Issuer's ownership of a
Receivable shall be deleted from or modified on the Servicer's computer systems
when, and only when, such Receivable shall have been paid in full or
repurchased.
 
(f)  If at any time the Transferor or the Servicer shall propose to sell, grant
a security interest in, or otherwise transfer any interest in automotive
receivables to any prospective purchaser, lender, or other transferee, the
Servicer shall give to such prospective purchaser, lender, or other transferee
computer tapes, records, or printouts (including any restored from back-up
archives) that, if they shall refer in any manner whatsoever to any Receivable,
shall indicate clearly that such Receivable has been conveyed to and is owned by
the Issuer.
 
(g)  The Servicer shall, upon reasonable notice, permit the Transferor, the
Trust Collateral Agent, the Back-up Servicer, the Owner Trustee and the Note
Insurer and its agents at any time during normal business hours to inspect,
audit, and make copies of and abstracts from the Servicer's records regarding
any Receivable.
 
(h)  Upon request, the Servicer shall furnish to the Transferor, the Trust
Collateral Agent, the Back-up Servicer, the Owner Trustee or to the Note
Insurer, within five Business Days, a list of all Receivables (by contract
number and name of Obligor) then held as part of the Issuer, together with a
reconciliation of such list to the Schedule of Receivables and to each of the
Servicer's Certificates furnished before such request indicating removal of
Receivables from the Issuer.
 
(i)  The Servicer shall deliver to the Trust Collateral Agent, the Owner Trustee
and the Note Insurer:
 
(1)  promptly after the execution and delivery of this Agreement and of each
amendment hereto and after the execution and delivery of each amendment to any
financing statement, an Opinion of Counsel either (A) stating that, in the
opinion of such counsel, all financing statements and continuation statements
have been filed that are necessary fully to preserve and protect the interest of
the Trust Collateral Agent in the Receivables, and reciting the details of such
filings or referring to prior Opinions of Counsel in which such details are
given or (B) stating that, in the opinion of such counsel, no such action shall
be necessary to preserve and protect such interest; and
 
(2)  within 90 days after the beginning of each calendar year beginning with the
first calendar year beginning more than three months after the Initial Cutoff
Date, an Opinion of Counsel, dated as of a date during such 90-day period either
(A) stating that, in the opinion of such counsel, all financing statements and
continuation statements have been filed that are necessary fully to preserve and
protect the interest of the Trust Collateral Agent in the Receivables, and
reciting the details of such filings or referring to prior Opinions of Counsel
in which such details are given or (B) stating that, in the opinion of such
counsel, no such action shall be necessary to preserve and protect such
interest.
 
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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 and the Class C
Certificateholder.
 
(a)  The death or incapacity of any Noteholder or Certificateholder shall not
operate to terminate this Agreement or the Issuer, nor entitle such Noteholder's
or such Certificateholder’s legal representatives or heirs to claim an
accounting or to take any action or commence any proceeding in any court for a
partition or winding up of the 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
or the Class C Certificateholder 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 and the
Class C Certificateholder 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 or the Class C
Certificateholder 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, the Class C Certificateholder 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, Standard & Poor's or Moody's under this Agreement shall be in
writing, and delivered (i) personally, (ii) by certified mail, return receipt
requested, (iii) by Federal Express or similar overnight courier service, (iv)
by telecopy (with telephone confirmation) or (v) with respect to Standard &
Poor’s only, by electronic delivery, 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: 1100 North Market Street, Wilmington, Delaware 19890-0001,
Attention: Corporate Trust Administration (Telecopy: (302) 651-8882), (b) in the
case of the Transferor, at the following address: One Mack Centre Drive,
Paramus, New Jersey 07652 (Telecopy: (201) 262-6868), 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: One Mack Centre Drive, Paramus, New
Jersey 07652 (Telecopy: (201) 262-6868), Attention: General Counsel, (d) in the
case of the Trust Collateral Agent, at the applicable Corporate Trust Office
(Telecopy: (612) 667-3464), (e) in the case of Standard & Poor's, with respect
to all information available in electronic format, via electronic delivery to
Servicer_reports@sandp.com and, with respect to any information not available in
electronic format, at the following address: 55 Water Street, 40th Floor, New
York, New York 10041, Attention: Asset Backed Surveillance Department, (f) in
the case of Moody's, at the following address: 99 Church Street, New York, New
York 10007, Attention: ABS Monitoring Department, and (g) in the case of the
Note Insurer, at the following address: at 31 West 52nd Street, New York, New
York 10019, Attention: Transaction Oversight, Re: Long Beach Acceptance Auto
Receivables Trust 2007-A. Any notice required or permitted to be mailed to a
Noteholder or the Class C Certificateholder 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 or
the Class C Certificateholder 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 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 Class C Certificate or the rights of the
Holders thereof.
 
SECTION 13.7.   Assignment to Indenture Trustee. The Transferor hereby
acknowledges and consents to any mortgage, pledge, assignment and grant of a
security interest by the Issuer to the Indenture Trustee pursuant to the
Indenture for the benefit of the Noteholders and the Note Insurer of all right,
title and interest of the Issuer in, to and under the Receivables and/or the
assignment of any or all of the Issuer's rights and obligations hereunder to the
Indenture Trustee.
 
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 Wells Fargo, not in its individual capacity
but solely as Back-up Servicer and Trust Collateral Agent and in no event shall
Wells Fargo have any liability for the representations, warranties, covenants,
agreements or other obligations of the Issuer hereunder or in any of the
certificates, notices or agreements of the Issuer delivered pursuant hereto, as
to all of which recourse shall be had solely to the assets of the Issuer.
 
SECTION 13.9.   Independence of the Servicer. For all purposes of this
Agreement, the Servicer shall be an independent contractor and shall not be
subject to the supervision of the Issuer, the Trust Collateral Agent, the
Back-up Servicer or the Owner Trustee with respect to the manner in which it
accomplishes the performance of its obligations hereunder. Unless expressly
authorized by this Agreement, the Servicer shall have no authority to act for or
represent the Issuer or the Owner Trustee in any way and shall not otherwise be
deemed an agent of the Issuer or the Owner Trustee.
 
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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 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 Certificateholders, 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. The Note Insurer and its successors and assigns shall be a
third-party beneficiary to the provisions of this Agreement, and shall be
entitled to rely upon and directly enforce such provisions of this Agreement so
long as no Note Insurer Default shall have occurred and be continuing. Except as
expressly stated otherwise herein or in the Basic Documents, any right of the
Note Insurer to direct, appoint, consent to, approve of or take any action under
this Agreement, shall be a right exercised by the Note Insurer in its sole and
absolute discretion. The Note Insurer may disclaim any of its rights and powers
under this Agreement (but not its duties and obligations under the Policy) upon
delivery of a written notice to the Trust Collateral Agent.
 
SECTION 13.13.   Consent to Jurisdiction.
 
(a)  TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, THE PARTIES HERETO
HEREBY IRREVOCABLY SUBMIT TO THE JURISDICTION OF THE UNITED STATES DISTRICT
COURT FOR THE SOUTHERN DISTRICT OF NEW YORK AND ANY COURT IN THE STATE OF NEW
YORK LOCATED IN THE CITY AND COUNTY OF NEW YORK, AND ANY APPELLATE COURT FROM
ANY THEREOF, IN ANY ACTION, SUIT OR PROCEEDING BROUGHT AGAINST IT AND TO OR IN
CONNECTION WITH ANY OF THE TRANSACTION DOCUMENTS OR THE TRANSACTION OR FOR
RECOGNITION OR ENFORCEMENT OF ANY JUDGMENT, AND THE PARTIES HERETO HEREBY
IRREVOCABLY AND UNCONDITIONALLY AGREE THAT ALL CLAIMS IN RESPECT OF ANY SUCH
ACTION OR PROCEEDING MAY BE HEARD OR DETERMINED IN SUCH NEW YORK STATE COURT OR
IN SUCH FEDERAL COURT. THE PARTIES HERETO AGREE THAT A FINAL JUDGMENT IN ANY
SUCH ACTION, SUIT OR PROCEEDING SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN OTHER
JURISDICTIONS BY SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER PROVIDED BY LAW. TO
THE EXTENT PERMITTED BY APPLICABLE LAW, THE PARTIES HERETO HEREBY WAIVE AND
AGREE NOT TO ASSERT BY WAY OF MOTION, AS A DEFENSE OR OTHERWISE IN ANY SUCH
SUIT, ACTION OR PROCEEDING, ANY CLAIM THAT IT IS NOT PERSONALLY SUBJECT TO THE
JURISDICTION OF SUCH COURTS, THAT THE SUIT, ACTION OR PROCEEDING IS BROUGHT IN
AN INCONVENIENT FORUM, THAT THE VENUE OF THE SUIT, ACTION OR PROCEEDING IS
IMPROPER OR THAT THE RELATED DOCUMENTS OR THE SUBJECT MATTER THEREOF MAY NOT BE
LITIGATED IN OR BY SUCH COURTS.
 
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(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 105 Chambers Street, New York, New York 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.
 
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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:   /s/ Michael Butler  

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Name: Michael Butler
Title: Vice President and Treasurer

 

       
LONG BEACH ACCEPTANCE CORP.,
as Originator, Servicer and Custodian
 
   
   
          By:   /s/ Michael Butler  

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Name: Michael Butler  
Title: Vice President and Treasurer 

 

       
WELLS FARGO BANK, NATIONAL ASSOCIATION
as Back-up Servicer and Trust Collateral Agent
 
   
   
          By:   /s/ Marianna C. Stershic  

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Name: Marianna C. Stershic
 
Title: Vice President

 

        LONG BEACH ACCEPTANCE AUTO RECEIVABLES TRUST 2007-A, as Issuer        
   
By:  
Wilmington Trust Company, not in its individual capacity, but solely as Owner
Trustee               By:   /s/ Michele C. Harra  

--------------------------------------------------------------------------------

Name: Michele C. Harra
 
Title: Financial Services Officer

 
[Sale and Servicing Agreement]
 

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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 March 1, 2007, among Long Beach Acceptance Receivables Corp., Long Beach
Acceptance Corp., as originator, as servicer and as custodian, Wells Fargo Bank,
National Association, as trust collateral agent and back-up servicer and Long
Beach Acceptance Auto Receivables Trust 2007-A, 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 ________________,
___.
        _________________________________________________________________
 
A-1-1

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EXHIBIT A-2
 
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 March 1, 2007, among Long Beach Acceptance Receivables Corp., Long Beach
Acceptance Corp., as originator, as servicer and as custodian, Wells Fargo Bank,
National Association, as trust collateral agent and back-up servicer and Long
Beach Acceptance Auto Receivables Trust 2007-A, 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 ________________,
____.
_________________________________________________________________
 
A-2-1

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EXHIBIT B-1
 
SERVICER'S CERTIFICATE
LONG BEACH ACCEPTANCE AUTO RECEIVABLES TRUST 2007-A
5.335% ASSET-BACKED NOTES, CLASS A-1
5.150% ASSET-BACKED NOTES, CLASS A-2
4.972% ASSET-BACKED NOTES, CLASS A-3
5.025% ASSET-BACKED NOTES, CLASS A-4
 
B-1-1

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EXHIBIT B-2
 
Form of Loan Master File Layout
 

B-2-1

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EXHIBIT C
 
Intentionally Omitted
 
C-1

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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.
 

 
·
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.

 

 
·
The total number of payments modified may not exceed 9 over the entire term of
the Receivable.

 

 
·
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.

 

 
·
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.

 

 
·
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.

 

 
·
No deferments or due date adjustments may be granted during the modification
period.

 

 
·
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.

 

 
·
As of March 1, 2007, 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.

 
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B. General Payment Deferment Policy
 
In addition to its Loss Mitigation Program, LBAC may defer certain payments
under the following conditions and circumstances.
 
·
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, an Executive Vice President or
a Regional Manager).

 
·
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.

 
·
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).

 
·
At least 6 payments must be made before a deferment may be granted.

 
·
A request for a deferment must be made in writing.

 
·
The deferment must bring the account current, so that after the deferment is
processed no payment is then due.

 
·
Except as otherwise set forth in this policy, deferments must be granted in
writing by the Collection Manager or someone of equal or higher rank.

 
·
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.

 
·
As of July 1, 2007, 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.

 
·
No deferment may extend the date for final payment of a Receivable beyond the
last day of the record Collection Period preceding the Class A-4 Final Scheduled
Payment Date.

 
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DUE DATE CHANGE POLICY
 
In addition to its Payment Deferment Policy, LBAC may grant due date changes
under the following conditions and circumstances.
 
·
LBAC may grant a due date change, provided that the new due date is within 20
days of the current due date.

 
·
Not more than 2 due date changes may be granted over the term of a Receivable.

 
·
If 2 due date changes are granted, the total number of days by which the
maturity date is extended may not exceed 20.

 
·
A request for a due date change must be made in writing.

 
·
The account must be current at the time the request is granted.

 
·
Due date changes must be granted in writing by the Assistant Collection Manager
or someone of equal or higher rank.

 
·
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.

 
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EXHIBIT E
 
Documentation Checklist
 
CUSTOMER:__________________________________________________________________________________
 
ACCOUNT
NUMBER:___________________________________________________________________________
 
This funding package contains the following initialed items:

 
1.
Installment contract with proper authentications and Dealer endorsements
 
1. _________________
           
2.
Copy of authenticated credit application
 
2. _________________
           
3.
References as described in the Program Guidelines
 
3. _________________
           
4.
Proof of income as described in the Program Guidelines
 
4. _________________
           
5.
Title information (application and copy of existing title, receipt of
registration, or title copy already received) with lien notation thereon, or
Dealer Title Guaranty
 
5. _________________
           
6.
Invoice or copy of computer screen printout showing NADA value, NADA book page,
Kelley printout or Kelley Blue Book page
 
6. _________________
           
7.
In the case of a used Financed Vehicle, odometer statement (if not on title
info)
 
7. _________________
           
8.
Agreement to provide insurance and verification paper or other documentation
allowable under the definition of “Legal Files.”
 
8. _________________
           
9.
Service contract or warranty papers
 
10. ________________
           
10.
Life, accident, health and GAP insurance policy copies, as applicable
 
11. ________________
           
11.
Authenticated purchase order from dealer to customer
 
12. ________________

 
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EXHIBIT F
FORM OF TRANSFER AGREEMENT
 
TRANSFER NO. __________ OF SUBSEQUENT RECEIVABLES, dated as of ___________,
200_, among LONG BEACH ACCEPTANCE AUTO RECEIVABLES TRUST 2007-A, a Delaware
statutory trust (the "Issuer"), LONG BEACH ACCEPTANCE RECEIVABLES CORP., a
Delaware corporation (the "Transferor"), LONG BEACH ACCEPTANCE CORP., a Delaware
corporation ("LBAC" or the "Originator"), LONG BEACH ACCEPTANCE RECEIVABLES
CORP. WAREHOUSE I ("LBARC-WI") and WELLS FARGO BANK, NATIONAL ASSOCIATION, a
national banking association (the "Trust Collateral Agent), as back-up servicer
and trust collateral agent pursuant to the Sale and Servicing Agreement referred
to below.
 
WITNESSETH:
 
WHEREAS, LBAC, the Transferor, the Issuer and the Trust Collateral Agent are
parties to the Sale and Servicing Agreement, dated as of March 1, 2007 (the
"Sale and Servicing Agreement");
 
WHEREAS, LBAC, LBARC-WI and the Transferor are parties to the Purchase
Agreement, dated as of March 1, 2007 (the "Purchase Agreement");
 
WHEREAS, pursuant to the Purchase Agreement and the Subsequent Assignment, LBAC
and LBARC-WI desire to convey certain Subsequent Receivables to the Transferor
and pursuant to the Sale and Servicing Agreement and this Agreement the
Transferor desires to convey such Subsequent Receivables to the Issuer; and
 
WHEREAS, the Issuer is willing to accept such conveyance subject to the terms
and conditions hereof.
 
NOW, THEREFORE, the Issuer, the Transferor, the Trust Collateral Agent, LBARC-WI
and LBAC hereby agree as follows:
 
Section 1. Defined Terms. Capitalized terms used herein that are not otherwise
defined shall have the meanings ascribed thereto in the Sale and Servicing
Agreement.
 
"Agreement" means this Transfer Agreement and all amendments hereof and
supplements hereto.
 
"Subsequent Cutoff Date" means, with respect to each Subsequent Receivable
conveyed hereby, the later of (i) the date of origination of such Subsequent
Receivable or (ii) the close of business of the last day of the calendar month
immediately preceding the Subsequent Transfer Date, which date is
_______________.
 
"Subsequent Receivables" means the Receivables identified on the supplement to
the Schedule of Receivables attached as Schedule A hereto.
 
"Subsequent Receivables Purchase Price" means $__________.
 
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"Subsequent Spread Account Deposit" means $__________.
 
"Subsequent Transfer Date" means, with respect to the Subsequent Receivables
conveyed hereby, _________________.
 
"Subsequent Transferred Property" shall have the meaning specified in Section
2.3(a) of the Purchase Agreement.
 
Section 2. Schedule of Subsequent Receivables. Annexed hereto as Schedule A is a
supplement to the Schedule of Receivables listing the Subsequent Receivables to
be conveyed by the Transferor to the Issuer pursuant to this Agreement and the
Sale and Servicing Agreement on the Subsequent Transfer Date.
 
Section 3. Conveyance of Subsequent Receivables. Subject to the conditions set
forth in Section 5 hereof, in consideration of the payment of the Subsequent
Receivables Purchase Price to or upon the written order of the Transferor, the
Transferor does hereby sell, transfer, assign, set over and otherwise convey to
the Issuer, in trust for the benefit of the Noteholders and the Note Insurer,
without recourse, all right, title and interest of the Transferor in and to:
 
(1) the Subsequent Receivables listed in Schedule A hereto, all monies received
on such Subsequent Receivables after the Subsequent Cutoff Date and, with
respect to any Subsequent Receivables which are Precomputed Receivables, the
related Payahead Amount, and all Liquidation Proceeds and Recoveries received
with respect to such Subsequent Receivables;
 
(2) the security interests in the Financed Vehicles granted by the related
Obligors pursuant to the Subsequent Receivables and any other interest of the
Transferor in such Financed Vehicles, including, without limitation, the
certificates of title and any other evidence of ownership with respect to such
Financed Vehicles;
 
(3) any proceeds from claims on any physical damage, credit life and credit
accident and health insurance policies or certificates or the VSI Policy, if
any, relating to the related Financed Vehicles or the related Obligors,
including any rebates and premiums;
 
(4) property (including the right to receive future Liquidation Proceeds) that
secures a Subsequent Receivable and that has been acquired by or on behalf of
the Trust pursuant to the liquidation of such Subsequent Receivable;
 
(5) this Agreement and the Purchase Agreement, including, without limitation, a
direct right to cause LBAC to purchase Subsequent Receivables from the Trust
upon the occurrence of a breach of any of the representations and warranties
contained in Section 4 of this Agreement or the failure of LBAC to timely comply
with its obligations pursuant to Section 5.5 of the Purchase Agreement;
 
(6) refunds for the costs of extended service contracts with respect to the
related Financed Vehicles, refunds of unearned premiums with respect to credit
life and credit accident and health insurance policies or certificates covering
a related Obligor or a related Financed Vehicle or his or her obligations with
respect to a related Financed Vehicle and any recourse to Dealers for any of the
foregoing;
 
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(7) the Legal Files and the Receivable Files related to each Subsequent
Receivable and any and all other documents that LBAC keeps on file in accordance
with its customary procedures relating to the Subsequent Receivables, the
related Obligors or the related Financed Vehicles;
 
(8) all amounts and property from time to time held in or credited to the
Lock-Box Account, to the extent such amounts and property relate to the
Subsequent Receivables;
 
(9) any proceeds from recourse against the Dealers (other than any Chargeback
Obligations), including, without limitation, any Dealer Title Guaranties with
respect to the Subsequent Receivables, with respect to the sale of the
Subsequent Receivables; and
 
(10) the proceeds of any and all of the foregoing.
 
The Transferor represents and warrants that the Subsequent Receivables and other
Transferred Property are being transferred with the intention of removing them
from the Transferor's estate pursuant to Section 541 of the Bankruptcy Code, as
the same may be amended from time to time.
 
Section 4. Representations and Warranties of the Originator. The Originator
makes the following representations and warranties as to the Subsequent
Receivables and the other Transferred Property relating thereto on which the
Transferor relies in accepting the Subsequent Receivables and the other
Transferred Property relating thereto and on which the Note Insurer will rely in
issuing the Policy. Such representations and warranties speak as of the
execution and delivery of this Agreement, but shall survive the sale, transfer,
and assignment of the Subsequent Receivables and the other Transferred Property
relating thereto to the Transferor and the subsequent assignment and transfer
pursuant to the Sale and Servicing Agreement:
 
(1) Origination Date. Each Subsequent Receivable has an Origination Date on or
after __________________.
 
(2) Principal Balance/Number of Contracts. As of the Subsequent Cutoff Date, the
total aggregate Principal Balance of the Subsequent Receivables was
$_______________. The Subsequent Receivables are evidenced by _______ retail
installment sale contracts.
 
(3) Maturity of Subsequent Receivables. Each Subsequent Receivable has an
original term to maturity of not less than [__] months and not more than [__]
months; the weighted average original term to maturity of the Subsequent
Receivables is [___] months as of the Subsequent Cutoff Date; the remaining term
to maturity of each Subsequent Receivable was __ months or less as of the
Subsequent Cutoff Date; the weighted average remaining term to maturity of the
Subsequent Receivables was [___] months as of the Subsequent Cutoff Date.
 
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(4) Characteristics of Subsequent Receivables. (A) Each Subsequent Receivable
(1) has been originated in the United States of America by a Dealer for the
retail sale of a Financed Vehicle in the ordinary course of such Dealer's
business, such Dealer had all necessary licenses and permits to originate such
Subsequent Receivables in the State where such Dealer was located, has been
fully and properly executed by the parties thereto and has been purchased by
LBAC from such Dealer under an existing Dealer Agreement with LBAC, in
connection with the sale of Financed Vehicles by the Dealers, and was validly
assigned by such Dealer to LBAC in accordance with its terms, (2) has created a
valid, subsisting and enforceable first priority security interest in favor of
LBAC in the Financed Vehicle, which security interest is assignable and has been
validly assigned by LBAC to the Transferor (or, in the case of the LBARC-WI
Receivables, by LBAC to LBARC-WI and subsequently by LBARC-WI to the
Transferor), which in turn has been validly pledged by the Transferor to the
Trust pursuant to the Sale and Servicing Agreement, which in turn has been
validly assigned by the Issuer to the Indenture Trustee pursuant to the
Indenture, (3) contains customary and enforceable provisions such that the
rights and remedies of the holder or assignee thereof shall be adequate for
realization against the collateral of the benefits of the security, (4) provides
for level monthly payments that fully amortize the Amount Financed over the
original term (except for the first or last payment, which may be minimally
different from the level payment) and yield interest at the Annual Percentage
Rate, (5) has an Annual Percentage Rate of not less than ____%, (6) in the case
of a Subsequent Receivable that is a Precomputed Receivable, in the event that
such Subsequent Receivable is prepaid, provides for a prepayment that fully pays
the Principal Balance and includes, unless prohibited by applicable law, a full
month's interest, in the month of prepayment, at the Annual Percentage Rate, (7)
is a Precomputed Receivable or a Simple Interest Receivable, and (8) was
originated by a Dealer to an Obligor and was sold by the Dealer to LBAC without
any fraud or misrepresentation on the part of such Dealer or on the part of the
Obligor; and (B) approximately [ ]% of the aggregate Principal Balance of the
Subsequent Receivables, constituting [ ]% of the number of contracts, as of the
Subsequent Cutoff Date, represents financing of used automobiles, vans, sport
utility vehicles or light duty trucks; the remainder of the Subsequent
Receivables represent financing of new automobiles, vans, sport utility vehicles
or light duty trucks; approximately [ ]% of the aggregate Principal Balance of
the Subsequent Receivables as of the Subsequent Cutoff Date were originated
under the LBAC Premium program; approximately [ ]% of the aggregate Principal
Balance of the Subsequent Receivables as of the Subsequent Cutoff Date were
originated under the LBAC Elite program; approximately [ ] of the aggregate
Principal Balance of the Subsequent Receivables as of the Subsequent Cutoff Date
were originated under the LBAC Superior program; approximately [ ]% of the
aggregate Principal Balance of the Subsequent Receivables as of the Subsequent
Cutoff Date were originated under the LBAC Preferred program; approximately [ ]%
of the aggregate Principal Balance of the Subsequent Receivables as of the
Subsequent Cutoff Date were originated under the LBAC Classic program; no
Subsequent Receivable shall have a payment that is more than 29 days overdue
(calculated on the basis of a 360-day year of twelve 30-day months) as of the
Subsequent Cutoff Date; [ ]% of the Subsequent Receivables are Precomputed
Receivables and [ ]% of the Subsequent Receivables are Simple Interest
Receivables; each Subsequent Receivable shall have a final scheduled payment due
no later than _____________, 200__; and each Subsequent Receivable was
originated on or before the Subsequent Cutoff Date.
 
(5) Scheduled Payments. Each Subsequent Receivable had an original Principal
Balance of not less than $______ nor more than $__________, has an outstanding
Principal Balance as of the Subsequent Cutoff Date of not less than $_______ and
not more than $__________ and has a first Scheduled Payment due, in the case of
Precomputed Receivables, or a scheduled due date, in the case of Simple Interest
Receivables, on or prior to ____________, ____.
 
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(6) No Bankruptcies. No Obligor was bankrupt at the time of origination of the
related Subsequent Receivable and no Obligor on any Subsequent Receivable as of
the Subsequent Cutoff Date was noted in the related Receivable File as having
filed for bankruptcy since origination of the Subsequent Receivable and neither
discharged, dismissed nor reaffirmed.
 
(7) Origination of Subsequent Receivables. Based on the location of the Dealers
and the Principal Balances as of the Subsequent Cutoff Date, approximately [ ]%
of the Subsequent Receivables were originated in California and the remaining [
]% of the Subsequent Receivables were originated in other States.
 
(8) Lockbox. Prior to the Subsequent Transfer Date, the Transferor will notify
each Obligor to make payments with respect to its respective Subsequent
Receivable after the Subsequent Cutoff Date directly to the Lockbox, and will
provide each Obligor with a monthly statement in order to enable such Obligor to
make payments directly to the Lockbox.
 
(9) Location of Legal Files; One Original. A complete Legal File with respect to
each Subsequent Receivable is in the possession of the Custodian at the location
listed in the Custodial Agreement. There is only one original executed copy of
each Subsequent Receivable. The Custodian has stamped each Subsequent Receivable
to state that "This contract has been sold or pledged to "Secured Party"
identified on the attached allonge (deemed a part hereof). Do not accept
delivery of this contract in violation of the rights of the "Secured Party. "
The Custodian has attached an allonge to each Subsequent Receivable specifying
the contract to which it relates by date, name of seller and name of customer
and indicating that such contract is subject to a security interest in favor of
the Indenture Trustee. The foregoing stamp, together with the allonge, is
effective under the provisions of the UCC to give notice to third party
purchasers, including "bona fide purchasers for value" that the Indenture
Trustee has a security interest in such Subsequent Receivable and such third
party's attempt to claim an interest in such Subsequent Receivable would violate
the Indenture Trustee’s rights therein.
 
(10) Schedule of Subsequent Receivables; Selection Procedures. The information
with respect to the Subsequent Receivables set forth in the Schedule A to this
Agreement is true and correct in all material respects as of the close of
business on the Subsequent Cutoff Date and the Subsequent Transfer Date, and no
selection procedures adverse to the Trust, the Noteholders or to the Note
Insurer have been utilized in selecting the Subsequent Receivables. The computer
tape or other listing regarding the Subsequent Receivables made available to the
Transferor and its assigns is true and correct as of the Subsequent Cutoff Date
and the Subsequent Transfer Date in all respects. By the Subsequent Transfer
Date, LBAC will have caused the portions of LBAC's servicing records relating to
the Subsequent Receivables to be clearly and unambiguously marked to show that
the Subsequent Receivables constitute part of the Trust Assets and are owned by
the Trust in accordance with the terms of the Sale and Servicing Agreement.
 
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(11) Compliance with Law. Each Subsequent Receivable, the sale of the Financed
Vehicle and the sale of any physical damage, credit life and credit accident and
health insurance and any extended service contracts complied at the time the
related Subsequent Receivable was originated or made and at the execution of
this Agreement complies in all material respects with all requirements of
applicable Federal, State and local laws, and regulations thereunder including,
without limitation, usury laws, the Federal Truth-in-Lending Act, the Equal
Credit Opportunity Act, the Fair Credit Reporting Act, the Fair Debt Collection
Practices Act, the Federal Trade Commission Act, the Magnuson-Moss Warranty Act,
the Federal Reserve Board's Regulations B and Z (including amendments to the
Federal Reserve's Official Staff Commentary to Regulation Z effective October 1,
1998 concerning negative equity loans), the Servicemembers Civil Relief Act, the
California Automobile Sales Finance Act, and state adaptations of the National
Consumer Act and of the Uniform Consumer Credit Code, and all other applicable
consumer credit laws and equal credit opportunity and disclosure laws.
 
(12) Binding Obligation. Each Subsequent Receivable represents the genuine,
legal, valid and binding payment obligation in writing of the Obligor,
enforceable by the holder thereof in accordance with its terms, except only as
such enforcement may be limited by bankruptcy, insolvency or similar laws
affecting the enforcement of creditors' rights generally and all parties to each
Subsequent Receivable had full legal capacity to execute and deliver such
Subsequent Receivable and all other documents related thereto and to grant the
security interest purported to be granted thereby.
 
(13) No Government, Corporate or Fleet Obligor. None of the Subsequent
Receivables is due from the United States of America or any State or from any
agency, department, or instrumentality of the United States of America or any
State. All of the Subsequent Receivables are due from Obligors who are natural
persons or, if any Obligor is not a natural person, (a) such entity is an
obligor with respect to five or fewer Financed Vehicles and (b) the related
Subsequent Receivable or Subsequent Receivables have the benefit of the personal
guaranty of a natural person or persons. No Subsequent Receivable has been
included in a "fleet" sale (i.e., a sale to any single Obligor of more than five
Financed Vehicles).
 
(14) Security Interest in Financed Vehicle. Immediately prior to the sale,
assignment, and transfer thereof, each Subsequent Receivable shall be secured by
a validly perfected first priority security interest in the Financed Vehicle in
favor of LBAC as secured party, and such security interest is prior to all other
liens upon and security interests in such Financed Vehicle which now exist or
may hereafter arise or be created (except, as to priority, for any lien for
taxes, labor or materials affecting such Financed Vehicle arising subsequent to
the Subsequent Transfer Date), and either (i) all necessary and appropriate
actions have been taken that would result in the valid perfection of a first
priority security interest in the Financed Vehicle in favor of LBAC as secured
party, and the Lien Certificate for each Financed Vehicle shows, or if a new or
replacement Lien Certificate is being applied for such new or replacement Lien
Certificate will be received within 150 days of the Subsequent Transfer Date and
will show LBAC named as the original secured party under any such Subsequent
Receivable and the holder of a first priority security interest in such Financed
Vehicle, or (ii) a Dealer Title Guaranty has been obtained with respect to such
Financed Vehicle. With respect to each Subsequent Receivable for which the Lien
Certificate has not yet been submitted to, or returned from, the Registrar of
Titles, LBAC has received either (i) written evidence from the related Dealer
that such Lien Certificate showing LBAC as the first lienholder has been applied
for or (ii) a Dealer Title Guaranty with respect to such Financed Vehicle.
Immediately after the sale, transfer and assignment thereof to the Trust, each
Subsequent Receivable will be secured by an enforceable first priority security
interest in the Financed Vehicle in favor of the Trust as secured party, which
security interest is prior to all other liens upon and security interests in
such Financed Vehicle which now exist or may hereafter arise or be created
(except, as to priority, for the lien of the Indenture and for any lien for
taxes, labor or materials affecting such Financed Vehicle arising subsequent to
the Subsequent Transfer Date).
 
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(15) Subsequent Receivables in Force. No Subsequent Receivable has been
satisfied, subordinated or rescinded, nor has any Financed Vehicle been released
from the lien granted by the related Subsequent Receivable in whole or in part.
No provisions of any Subsequent Receivable have been waived, altered, amended or
modified in any respect since its origination, except by instruments or
documents identified in the related Legal File on the Subsequent Transfer Date.
 
(16) No Waiver. No provision of a Subsequent Receivable has been waived.
 
(17) No Amendments. No Subsequent Receivable has been amended except to the
extent reflected in the related Legal File on the Subsequent Transfer Date.
 
(18) Monthly Dealer Participation Fee Receivables. [None of the Subsequent
Receivables are of Monthly Dealer Participation Fee Receivables].
 
(19) No Defenses. As of the Subsequent Transfer Date, no right of rescission,
setoff, counterclaim or defense exists or has been asserted or threatened with
respect to any Subsequent Receivable. The operation of the terms of any
Subsequent Receivable or the exercise of any right thereunder will not render
such Subsequent Receivable unenforceable in whole or in part or subject to any
such right of rescission, setoff, counterclaim or defense.
 
(20) No Liens. As of the Subsequent Transfer Date, there are no liens or claims
existing or which have been filed for work, labor, storage, materials or taxes
relating to a Financed Vehicle that shall be liens prior to, or equal or
coordinate with, the security interest in the Financed Vehicle granted by the
Subsequent Receivable.
 
(21) No Default; Repossession. Except for payment delinquencies continuing for a
period of not more than twenty-nine days (calculated on the basis of a 360-day
year of twelve 30-day months), as of the Subsequent Cutoff Date, no default,
breach, violation or event permitting acceleration under the terms of any
Subsequent Receivable has occurred and not been cured; and no continuing
condition that with notice or the lapse of time would constitute a default,
breach, violation, or event permitting acceleration under the terms of any
Subsequent Receivable has arisen; and LBAC shall not waive and has not waived
any of the foregoing; and no Financed Vehicle shall have been repossessed as of
the Subsequent Cutoff Date.
 
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(22) Insurance; Other. (A) Each Obligor has obtained insurance covering the
Financed Vehicle as of the execution of the Subsequent Receivable insuring
against loss and damage due to fire, theft, transportation, collision and other
risks generally covered by comprehensive and collision coverage which is in an
amount at least equal to the lesser of (x) its maximum insurable value or (y)
the principal amount due from the Obligor under the related Subsequent
Receivable and names LBAC and its successors and assigns as loss payee and each
Subsequent Receivable requires the Obligor to obtain and maintain such insurance
naming LBAC and its successors and assigns as an additional insured, (B) each
Subsequent Receivable that finances the cost of premiums for credit life and
credit accident or health insurance is covered by an insurance policy and
certificate of insurance naming LBAC as policyholder (creditor) under each such
insurance policy and certificate of insurance and (C) as to each Subsequent
Receivable that finances the cost of an extended service contract, the
respective Financed Vehicle which secures the Subsequent Receivable is covered
by an extended service contract.
 
(23) Title. It is the intention of each Seller that the transfer and assignment
of the Subsequent Receivables contemplated in the Purchase Agreement constitute
a sale of the Subsequent Receivables from such Seller to the Transferor and that
the beneficial interest in and title to such Subsequent Receivables not be part
of the debtor's estate in the event of the filing of a bankruptcy petition by or
against LBAC or LBARC-WI, as applicable, under any bankruptcy law. No Subsequent
Receivable has been sold, transferred, assigned, or pledged by LBAC or LBARC-WI,
as applicable, to any Person other than the Transferor or by the Transferor to
any Person other than the Trust except with respect to any such pledge that has
been released on or prior to the Subsequent Transfer Date. Immediately prior to
the transfer and assignment of the Subsequent Receivables contemplated in the
Purchase Agreement, LBAC or LBARC-WI, as applicable, had good and marketable
title to each Subsequent Receivable, and was the sole owner thereof, free and
clear of all Liens, claims, encumbrances, security interests, and rights of
others and, immediately upon the transfer thereof, the Transferor shall have
good and marketable title to each such Subsequent Receivable, and will be the
sole owner thereof, free and clear of all Liens, encumbrances, security
interests, and rights of others other than the Lien of the Indenture, and each
such transfer has been perfected under the UCC. Immediately prior to the
transfer and assignment by the Transferor to the Trust contemplated by this
Agreement and the Sale and Servicing Agreement, the Transferor shall have good
and marketable title to each Subsequent Receivable, and shall be the sole owner
thereof, free and clear of all Liens, claims, encumbrances, security interests,
and rights of others other than the Lien of the Indenture and, immediately upon
the transfer thereof pursuant to this Agreement and the Sale and Servicing
Agreement, the Trust shall have good and marketable title to each such
Subsequent Receivable, and will be the sole owner thereof, free and clear of all
Liens, encumbrances, security interests and rights of others other than the Lien
of the Indenture, and each such transfer has been perfected under the UCC.
Immediately prior to the pledge by the Issuer to the Indenture Trustee
contemplated by the Indenture, the Issuer shall have good and marketable title
to each Subsequent Receivable, and shall be the sole owner thereof, free and
clear of all Liens, claims, encumbrances, security interests, and rights of
others and such pledge has been perfected under the UCC. Without limiting the
generality of the foregoing, no Dealer has any right, title or interest in
respect of any Subsequent Receivable. None of the Transferor, LBAC or LBARC-WI
has taken any action to convey any right to any Person that would result in such
Person having a right to payments received under any insurance policies related
to the Subsequent Receivables or the Financed Vehicles or the related Dealer
Agreements or to payments due under such Subsequent Receivables.
 
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(24) Lawful Assignment. No Subsequent Receivable has been originated in, or is
subject to the laws of, any jurisdiction under which the sale, transfer, and
assignment of such Subsequent Receivable under the Purchase Agreement, this
Agreement or the other Basic Documents shall be unlawful, void, voidable or
shall render such Receivable unenforceable in any respect or subject to
rescission. Neither Seller has entered into any agreement with any account
debtor that prohibits, restricts or conditions the assignment of any portion of
the Subsequent Receivables.
 
(25) All Filings Made. All filings (including, without limitation, UCC filings)
necessary in any jurisdiction to give the Indenture Trustee a first priority
perfected security interest in the Subsequent Receivables and the proceeds
thereof and the other Transferred Property (other than the Financed Vehicles)
have been made.
 
(26) Chattel Paper. Each Subsequent Receivable (A) constitutes "tangible chattel
paper" under the UCC and (B) shall be maintained in its original "tangible"
form, unless the Note Insurer has consented in writing to such chattel paper
being maintained in another form or medium.
 
(27) Valid and Binding Obligation of Obligor. Each Subsequent Receivable is the
legal, valid and binding obligation of the Obligor thereunder and is enforceable
in accordance with its terms, except only as such enforcement may be limited by
bankruptcy, insolvency or similar laws affecting the enforcement of creditors'
rights generally, and all parties to such contract had full legal capacity to
execute and deliver such contract and all other documents related thereto and to
grant the security interest purported to be granted thereby.
 
(28) Tax Liens. As of the Subsequent Transfer Date, there is no lien or claims
existing or which have been filed against the related Financed Vehicle for
delinquent taxes.
 
(29) Title Documents. (A) If a Subsequent Receivable was originated in a State
in which notation of security interest on the title document of the related
Financed Vehicle is required or permitted to perfect such security interest, the
title document for such Subsequent Receivable shows, or if a new or replacement
title document is being applied for with respect to such Financed Vehicle, the
title document will be received within 150 days following the Subsequent
Transfer Date and will show, LBAC named as the secured party under the related
Subsequent Receivable as the holder of a first priority security interest in
such Financed Vehicle and (B) if the Subsequent Receivable was originated in a
State in which the filing of a financing statement under the UCC is required to
perfect a security interest in motor vehicles, such filings or recordings have
been duly made and show LBAC or LBARC-WI, as applicable, named as the secured
party under the related Subsequent Receivable, and in either case, the Issuer
has the same rights as such secured party has or would have (if such secured
party were still the owner of the Subsequent Receivable) against all parties
claiming an interest in such Financed Vehicle. With respect to each Subsequent
Receivable for which the relevant Dealer is temporarily unable to furnish either
an original Lien Certificate or satisfactory evidence that the appropriate lien
has been recorded on the related certificate of title or documentation has been
submitted to the appropriate state motor vehicle authority to record such lien
on such certificate of title, LBAC has received the related Dealer Title
Guaranty.
 
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(30) Casualty. As of the Subsequent Cutoff Date, no Financed Vehicle related to
a Subsequent Receivable has suffered a Casualty.
 
(31) Obligation to Dealers or Others. The Transferor and its assignees will
assume no obligation to Dealers or other originators or holders of the
Subsequent Receivables (including, but not limited to under dealer reserves) as
a result of its purchase of the Subsequent Receivables.
 
(32) Full Amount Financed Advanced. The full Amount Financed of each Subsequent
Receivable has been advanced to or on behalf of each Obligor, and there are no
requirements for future advances thereunder. The Obligor with respect to the
Subsequent Receivable does not have any option under the Subsequent Receivable
to borrow from any person additional funds secured by the Financed Vehicle.
 
(33) No Impairment. Neither of the Sellers nor the Transferor has done anything
to convey any right to any Person that would result in such Person having a
right to payments due under the Subsequent Receivables or otherwise to impair
the rights of the Issuer, the Noteholders, the Certificateholder or the Note
Insurer in any Subsequent Receivable or the proceeds thereof.
 
(34) Subsequent Receivables Not Assumable. No Subsequent Receivable is assumable
by another Person in a manner which would release the Obligor thereof from such
Obligor's obligations to the Transferor, LBAC or LBARC-WI with respect to such
Subsequent Receivable.
 
(35) Servicing. The servicing of each Subsequent Receivable and the collection
practices relating thereto have been lawful and in accordance with the standards
set forth in the Sale and Servicing Agreement; other than LBAC and any Back-up
Servicer arrangement that has been entered into, no other person has the right
to service any Subsequent Receivable.
 
(36) Illinois Subsequent Receivables. (a) Neither Seller owns a substantial
interest in the business of a Dealer within the meaning of Illinois Sales
Finance Agency Act Rules and Regulations, Section 160.230(l) and (b) with
respect to each Subsequent Receivable originated in the State of Illinois, (i)
the printed or typed portion of the related Form of Subsequent Receivable
complies with the requirements of 815 ILCS 375/3(b) and (ii) neither Seller has,
and for so long as such Subsequent Receivable is outstanding shall, place or
cause to be placed on the related Financed Vehicle any collateral protection
insurance in violation of 815 ILCS 180/10.
 
(37) California Subsequent Receivables. Each Subsequent Receivable originated in
the State of California has been, and at all times during the term of the Sale
and Servicing Agreement will be, serviced by the Servicer in compliance with
Cal. Civil Code § 2981, et seq. Each Subsequent Receivable originated in the
State of California dated on or after July 1, 2006 will be originated in
compliance with the California Car Buyer's Bill of Rights (2005 Cal. Stat. Chp.
128).
 
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(38) No Negative Amortization. The Payment Deferment and Due Date Change
Policies, as set forth on Exhibit D to the Sale and Servicing Agreement, will
not result in the negative amortization of any Subsequent Receivables modified
in accordance with such Payment Deferment and Due Date Change Policies.
 
Section 5. Conditions Precedent. The obligation of the Issuer to acquire the
Subsequent Receivables hereunder is subject to the satisfaction, on or prior to
the Subsequent Transfer Date, of the following conditions precedent:
 
(a) Representations and Warranties. (i) Each of the representations and
warranties made by LBAC in Section 3.2 of the Purchase Agreement and Section 4
of this Agreement and (ii) each of the representations and warranties made by
the Transferor in Section 3.1 of the Sale and Servicing Agreement and Section
3.1 of the Purchase Agreement, shall be true and correct as of the date of this
Agreement and as of the Subsequent Transfer Date.
 
(b) Sale and Servicing Agreement Conditions. Each of the conditions set forth in
Section 2.2(b) to the Sale and Servicing Agreement shall have been satisfied.
 
(c) Purchase Agreement Conditions. LBAC shall have complied with the
requirements of Section 4.1 of the Purchase Agreement and shall have delivered
all documents required to be delivered pursuant to Section 5.5 of the Purchase
Agreement.
 
(d) Security Interest Perfection. In connection with the conveyance contemplated
by this Agreement, the Transferor agrees to record and file, at its own expense,
a financing statement with respect to the Subsequent Receivables now existing
and hereafter created for the sale of chattel paper (as defined in the UCC as in
effect in the State of New Jersey) meeting the requirements of applicable state
law in such manner as is sufficient to perfect the sale and assignment of such
Subsequent Receivables to the Issuer, and the proceeds thereof (and any
continuation statements as are required by applicable state law), and to deliver
a file-stamped copy of each such financing statement (or continuation statement)
or other evidence of such filings (which may, for purposes of this Section,
consist of telephone confirmation of such filing with the file stamped copy of
each such filing to be provided to the Trust Collateral Agent in due course), as
soon as is practicable after the Transferor's receipt thereof.
 
In connection with such conveyance, the Transferor further agrees, at its own
expense, on or prior to the Subsequent Transfer Date (i) to annotate and
indicate in its computer files that the Subsequent Receivables have been
transferred to the Issuer pursuant to the Sale and Servicing Agreement and this
Agreement and (ii) to deliver to the Trust Collateral Agent a computer file
printed or microfiche list containing a true and complete list of all such
Subsequent Receivables, identified by account number and by the Principal
Balance of each Subsequent Receivable as of the Subsequent Cutoff Date.
 
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(e) Additional Information. The Transferor shall have delivered or caused to be
delivered to the Trust Collateral Agent on behalf of the Noteholders and the
Note Insurer such information as was reasonably requested by the Issuer on
behalf of the Noteholders or the Note Insurer to satisfy itself as to (i) the
accuracy of the representations and warranties set forth in Section 4 of this
Agreement and Section 7.1 of the Sale and Servicing Agreement and (ii) the
satisfaction of the conditions set forth in this Section.
 
(f) Deposits to Accounts. On or prior to the Subsequent Transfer Date, the
Transferor shall deposit or cause to be deposited:
 
(1) the Subsequent Spread Account Deposit into the Spread Account; and
 
(2) $__________, which represents all monies received pursuant to clause (1) of
Section 3 hereof (other than Liquidation Proceeds and Recoveries), into the
Collection Account.
 
Section 6. Ratification of Agreement. As supplemented by this Agreement, the
Sale and Servicing Agreement is in all respects ratified and confirmed and the
Sale and Servicing Agreement as so supplemented by this Agreement shall be read,
taken and construed as one and the same instrument.
 
Section 7. Third Party Beneficiaries. Except as otherwise specifically provided
herein with respect to Noteholders, the parties to this Agreement hereby
manifest their intent that no third party other than the Note Insurer shall be
deemed a third party beneficiary of this Agreement, and specifically that the
Obligors are not third party beneficiaries of this Agreement. The Note Insurer
and its successors and assigns shall be a third-party beneficiary to the
provisions of this Agreement, and shall be entitled to rely upon and directly
enforce the provisions of this Agreement so long as no Note Insurer Default
shall have occurred and be continuing. Except as expressly stated otherwise
herein or in the Basic Documents, any right of the Note Insurer to direct,
appoint, consent to, approve of, or take any action under this Agreement, shall
be a right exercised by the Note Insurer in its sole and absolute discretion.
The Note Insurer may disclaim any of its rights and powers under this Agreement
(but not its duties and obligations under the Policy) upon delivery of a written
notice to the Trust Collateral Agent.
 
Section 8. Governing Law. THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF NEW YORK, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF
THE PARTIES UNDER THIS AGREEMENT SHALL BE DETERMINED IN ACCORDANCE WITH SUCH
LAWS WITHOUT REGARD TO CONFLICT OF LAWS PRINCIPLES (EXCEPT WITH REGARD TO THE
UCC).
 
Section 9. Amendments. This Agreement may be amended from time to time by a
written amendment duly executed and delivered by the Issuer, LBAC, LBARC-WI, the
Transferor and the Trust Collateral Agent with the prior written consent of the
Note Insurer.
 

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IN WITNESS WHEREOF, the Issuer, LBAC, LBARC-WI, the Transferor and the Trust
Collateral Agent have caused this Agreement to be duly executed and delivered by
their respective duly authorized officers as of the day and the year first above
written.
 

      LONG BEACH ACCEPTANCE AUTO RECEIVABLES TRUST 2007-A, as Issuer        
By:  Wilmington Trust Company, not in its individual capacity, but solely as
Owner Trustee

 

       
LONG BEACH ACCEPTANCE CORP.
 
   
   
 
By:
 

--------------------------------------------------------------------------------

Name:
 
Title:

 

       
LONG BEACH ACCEPTANCE RECEIVABLES CORP. WAREHOUSE I
 
   
   
 
By:
 

--------------------------------------------------------------------------------

Name:
 
Title:

       
LONG BEACH ACCEPTANCE RECEIVABLES CORP.
 
   
   
 
By:
 

--------------------------------------------------------------------------------

Name:
 
Title:

       
WELLS FARGO BANK, NATIONAL ASSOCIATION, not in its individual capacity but
solely as Trust Collateral Agent.
 
   
   
 
By:
 

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Name:
 
Title:

[Signature Page to the Sale and Servicing Agreement]
 
F-13

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SCHEDULE A
 
SCHEDULE OF RECEIVABLES
 
Schedule A-1

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SCHEDULE B
 
Location of Receivable Files
 
One Mack Centre Drive
Paramus, New Jersey 07652

Location of Legal Files

One Mack Centre Drive
Paramus, New Jersey 07652
 
Schedule B-1

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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

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