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                                                             [Execution Version]







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                          SALE AND SERVICING AGREEMENT

                                      among

               LONG BEACH ACCEPTANCE AUTO RECEIVABLES TRUST 2003-B

                                     Issuer

                     LONG BEACH ACCEPTANCE RECEIVABLES CORP.

                                   Transferor

                           LONG BEACH ACCEPTANCE CORP.

                       Originator, Servicer and Custodian

                                       and

                               JPMORGAN CHASE BANK

                   Back-up Servicer and Trust Collateral Agent

                            Dated as of June 1, 2003


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                                TABLE OF CONTENTS

                                                                            Page

ARTICLE I DEFINITIONS 1

     SECTION 1.1.    Definitions...............................................1
     SECTION 1.2.    Other Definitional Provisions.............................1
     SECTION 1.3.    Calculations..............................................2
     SECTION 1.4.    Action by or Consent of Noteholders.......................2
     SECTION 1.5.    Material Adverse Effect...................................2

ARTICLE II CONVEYANCE OF RECEIVABLES...........................................3

     SECTION 2.1.    Conveyance of Receivables.................................3
     SECTION 2.2.    Transfer Intended as Sale; Precautionary
                       Security Interest.......................................4
     SECTION 2.3.    Assignment by Transferor..................................4
     SECTION 2.4.    The Legal Files Are Not "Financial Assets"................4
     SECTION 2.5.    Further Encumbrance of Trust Assets.......................4

ARTICLE III THE RECEIVABLES....................................................5

     SECTION 3.1.    Representations and Warranties of Transferor..............5
     SECTION 3.2.    Repurchase upon Breach of Representations and Warranties
                       of the Transferor.......................................6
     SECTION 3.3.    Custody of Legal Files and Receivable Files...............6
     SECTION 3.4.    Legal File Deficiencies...................................7
     SECTION 3.5.    Access to Receivable Files; Servicer's Duties with
                       Respect to Receivable Files.............................8
     SECTION 3.6.    Issuer's Certificate......................................8

ARTICLE IV ADMINISTRATION AND SERVICING OF RECEIVABLES.........................9

     SECTION 4.1.    Duties of the Servicer....................................9
     SECTION 4.2.    Collection and Allocation of Receivable Payments.........10
     SECTION 4.3.    Realization upon Receivables.............................11
     SECTION 4.4.    Physical Damage Insurance; Other Insurance...............12
     SECTION 4.5.    Maintenance of Security Interests in Financed Vehicles...13
     SECTION 4.6.    Additional Covenants of Servicer.........................14
     SECTION 4.7.    Purchase of Receivables Upon Breach......................14
     SECTION 4.8.    Servicing Fee............................................15
     SECTION 4.9.    Servicer's Certificate...................................15
     SECTION 4.10.   Annual Statement as to Compliance; Notice of Default.....16
     SECTION 4.11.   Annual Independent Certified Public Accountant's Report..16
     SECTION 4.12.   Servicer Expenses........................................17
     SECTION 4.13.   Retention and Termination of Servicer....................17
     SECTION 4.14.   Access to Certain Documentation and Information
                       Regarding Receivables..................................17
     SECTION 4.15.   Verification of Servicer's Certificate...................18

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     SECTION 4.16.   Fidelity Bond............................................19
     SECTION 4.17.   Delegation of Duties.....................................19
     SECTION 4.18.   Delivery of Back-up Tapes of Back-up Servicer............20
     SECTION 4.19.   Confidential Information.................................20

ARTICLE V ACCOUNTS; PAYMENTS; STATEMENTS TO NOTEHOLDERS.......................21

     SECTION 5.1.    Accounts; Lock-Box Account...............................21
     SECTION 5.2.    Collections..............................................23
     SECTION 5.3.    Application of Collections...............................23
     SECTION 5.4.    Intentionally Omitted....................................23
     SECTION 5.5.    Additional Deposits......................................23
     SECTION 5.6.    Payments; Policy Claims..................................24
     SECTION 5.7.    Statements to Noteholders; Tax Returns...................29
     SECTION 5.8.    Reliance on Information from the Servicer................31
     SECTION 5.9.    Optional Deposits by the Note Insurer....................32
     SECTION 5.10.   Spread Account...........................................32
     SECTION 5.11.   Withdrawals from Supplemental Enhancement Account and
                       Spread Account.........................................32
     SECTION 5.12.   Supplemental Enhancement Account.........................33
     SECTION 5.13.   [Reserved]...............................................33
     SECTION 5.14.   Securities Accounts......................................34

ARTICLE VI THE POLICY 34

     SECTION 6.1.    Policy...................................................34
     SECTION 6.2.    Claims Under Policy......................................34
     SECTION 6.3.    Preference Claims; Direction of Proceedings..............35
     SECTION 6.4.    Surrender of Policy......................................36

ARTICLE VII THE TRANSFEROR....................................................36

     SECTION 7.1.    Representations of the Transferor........................36
     SECTION 7.2.    Liability of the Transferor..............................38
     SECTION 7.3.    Merger or Consolidation of, or Assumption of the
                       Obligations of, the Transferor.........................38
     SECTION 7.4.    Limitation on Liability of the Transferor and Others.....39
     SECTION 7.5.    Transferor May Own Notes.................................39

ARTICLE VIII THE SERVICER.....................................................40

     SECTION 8.1.    Representations of Servicer..............................40
     SECTION 8.2.    Indemnities of Servicer..................................41
     SECTION 8.3.    Merger or Consolidation of, or Assumption of the
                       Obligations of, Servicer or Back-up Servicer...........43
     SECTION 8.4.    Limitation on Liability of Servicer and Others...........45
     SECTION 8.5.    Servicer and Back-up Servicer Not to Resign..............45

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ARTICLE IX SERVICER TERMINATION EVENTS........................................46

     SECTION 9.1.    Servicer Termination Events..............................46
     SECTION 9.2.    Appointment of Successor.................................49
     SECTION 9.3.    Notification to Noteholders and the Class C
                       Certificateholder......................................50
     SECTION 9.4.    Action Upon Certain Failures of the Servicer.............50

ARTICLE X THE TRUST COLLATERAL AGENT..........................................51

     SECTION 10.1.   Duties of the Trust Collateral Agent.....................51
     SECTION 10.2.   Trust Collateral Agent to Act for the Class A
                       Noteholders, the Class C Certificateholder and
                       Note Insurer...........................................54
     SECTION 10.3.   Certain Matters Affecting the Trust Collateral Agent.....54
     SECTION 10.4.   Trust Collateral Agent and Back-up Servicer Not Liable
                       for Notes or Receivables...............................55
     SECTION 10.5.   Trust Collateral Agent and Back-up Servicer May
                       Own Notes..............................................56
     SECTION 10.6.   Indemnity of Trust Collateral Agent and Back-up
                       Servicer...............................................56
     SECTION 10.7.   Eligibility Requirements for Trust Collateral Agent......57
     SECTION 10.8.   Resignation or Removal of Trust Collateral Agent.........57
     SECTION 10.9.   Successor Trust Collateral Agent.........................58
     SECTION 10.10.  Merger or Consolidation of Trust Collateral Agent........59
     SECTION 10.11.  Co-Trustee; Separate Trustee.............................59
     SECTION 10.12.  Representations and Warranties of Trust Collateral
                       Agent..................................................60
     SECTION 10.13.  Rights of Note Insurer to Direct Trust Collateral
                       Agent..................................................61

ARTICLE XI TERMINATION........................................................61

     SECTION 11.1.   Termination..............................................61

ARTICLE XII ADMINISTRATIVE DUTIES OF THE SERVICER.............................62

     SECTION 12.1.   Administrative Duties....................................62
     SECTION 12.2.   Records..................................................63
     SECTION 12.3.   Additional Information to be Furnished to the Issuer.....64
     SECTION 12.4.   No Additional Compensation...............................64

ARTICLE XIII MISCELLANEOUS PROVISIONS.........................................64

     SECTION 13.1.   Amendment................................................64
     SECTION 13.2.   Protection of Title......................................65
     SECTION 13.3.   Limitation on Rights of Noteholders and the Class C
                       Certificateholder......................................67
     SECTION 13.4.   Governing Law............................................68
     SECTION 13.5.   Notices..................................................69
     SECTION 13.6.   Severability of Provisions...............................69
     SECTION 13.7.   Assignment to Indenture Trustee..........................69
     SECTION 13.8.   Limitation of Liability of Owner Trustee, Back-up
                       Servicer and Trust Collateral Agent....................70
     SECTION 13.9.   Independence of the Servicer.............................70
     SECTION 13.10.  No Joint Venture.........................................70

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     SECTION 13.11.  Nonpetition Covenant.....................................70
     SECTION 13.12.  Third Party Beneficiaries................................71
     SECTION 13.13.  Consent to Jurisdiction..................................71
     SECTION 13.14.  Headings.................................................72
     SECTION 13.15.  Trial by Jury Waived.....................................72
     SECTION 13.16.  Entire Agreement.........................................72
     SECTION 13.17.  Effect of Policy Expiration Date.........................72






                                     ANNEXES

Annex    A       Defined Terms

                                    EXHIBITS

Exhibit  A-1     Form of Issuer's Certificate
Exhibit  A-2     Form of Issuer's Certificate
Exhibit  B-1     Form of Servicer's Certificate
Exhibit  B-2     Form of Loan Master File Layout
Exhibit  C       Intentionally Omitted
Exhibit  D       Payment Deferment and Due Date Change Policies
Exhibit  E       Documentation Checklist

                                    SCHEDULES

Schedule A       Schedule of Receivables
Schedule B       Location of Receivable Files; Location of Legal Files
Schedule C       Delivery Requirements


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         SALE AND SERVICING AGREEMENT ("Agreement"), dated as of June 1, 2003,
among LONG BEACH ACCEPTANCE AUTO RECEIVABLES TRUST 2003-B, a Delaware statutory
trust, as issuer (the "Issuer"), LONG BEACH ACCEPTANCE RECEIVABLES CORP., a
Delaware corporation, as transferor (the "Transferor"), LONG BEACH ACCEPTANCE
CORP., a Delaware corporation, as originator of the receivables ("LBAC"), as
servicer (in such capacity, the "Servicer") and as custodian (in such capacity,
the "Custodian") and JPMORGAN CHASE BANK, a New York banking corporation, as
back-up servicer and trust collateral agent, ("Back-up Servicer" and "Trust
Collateral Agent", respectively).

         WHEREAS the Issuer desires to acquire a portfolio of receivables
arising in connection with motor vehicle retail installment sale contracts
acquired by LBAC through motor vehicle dealers;

         WHEREAS the Transferor has purchased such receivables from LBAC and
Long Beach Acceptance Receivables Corp. Warehouse I (collectively, the
"Sellers") and is willing to convey such receivables to the Issuer; and

         WHEREAS the Servicer is willing to service all such receivables.

         NOW, THEREFORE, in consideration of the premises and the mutual
covenants herein contained, the parties hereto agree as follows:

                                    ARTICLE I
                                   DEFINITIONS

         SECTION 1.1. Definitions. Whenever used in this Agreement, capitalized
terms used and not otherwise defined herein shall have the meanings set forth in
Annex A attached hereto.

         SECTION 1.2. Other Definitional Provisions.

     (a) All terms defined in this Agreement (including Annex A hereto) shall
have the defined meanings when used in any instrument governed hereby and in any
certificate or other document made or delivered pursuant hereto unless otherwise
defined therein.

     (b) As used in this Agreement, in any instrument governed hereby and in any
certificate or other document made or delivered pursuant hereto or thereto,
accounting terms not defined in this Agreement (including Annex A hereto) or in
any such instrument, certificate or other document, and accounting terms partly
defined in this Agreement (including Annex A hereto) or in any such instrument,
certificate or other document to the extent not defined, shall have the
respective meanings given to them under generally accepted accounting principles
as in effect on the date of this Agreement or any such instrument, certificate
or other document, as applicable. To the extent that the definitions of
accounting terms in this Agreement (including Annex A hereto) or in any such
instrument, certificate or other document are inconsistent with the meanings of
such terms under generally accepted accounting principles, the definitions

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contained in this Agreement (including Annex A hereto) or in any such
instrument, certificate or other document shall control.

     (c) The words "hereof," "herein," "hereunder" and words of similar import
when used in this Agreement shall refer to this Agreement as a whole and not to
any particular provision of this Agreement; Section, Schedule and Exhibit
references contained in this Agreement are references to Sections, Schedules and
Exhibits in or to this Agreement unless otherwise specified; and the term
"including" shall mean "including without limitation."

     (d) With respect to all terms in this Agreement, the singular includes the
plural and the plural the singular; words importing any gender include the other
genders; references to "writing" include printing, typing, lithography, and
other means of reproducing words in a visible form; references to agreements and
other contractual instruments include all subsequent amendments thereto or
changes therein entered into in accordance with their respective terms and not
prohibited by this Agreement; references to Persons include their permitted
successors and assigns; and the term "including" means "including without
limitation."

     (e) Any agreement, instrument or statute defined or referred to herein or
in any instrument or certificate delivered in connection herewith means such
agreement, instrument or statute as from time to time amended, modified or
supplemented in accordance with the terms thereof and includes (in the case of
agreements or instruments) references to all attachments thereto and instruments
incorporated therein; references to a Person are also to its permitted
successors and assigns.

         SECTION 1.3. Calculations. All calculations of the amount of the
Servicing Fee, the Back-up Servicer Fee, Custodian Fee and the Indenture Trustee
Fee shall be made on the basis of a 360-day year consisting of twelve 30-day
months. All references to the Principal Balance of a Receivable as of the last
day of a Collection Period shall refer to the close of business on such day.

         SECTION 1.4. Action by or Consent of Noteholders 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.

         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

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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 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 Class C Certificate and the other amounts to
be distributed from time to time to, or upon the order of, the Transferor in
accordance with the terms of this Agreement, the Transferor does hereby
transfer, assign, set over and otherwise convey to the Issuer, without recourse,
all right, title and interest of the Transferor in and to:

         (i) the Receivables listed in Schedule A hereto, all monies received on
     the Receivables after the Cutoff Date and, with respect to any Receivables
     which are Precomputed Receivables, the related Payahead Amount, and all
     Liquidation Proceeds and Recoveries received with respect to such
     Receivables;

         (ii) the security interests in the related Financed Vehicles granted by
     the related Obligors pursuant to the Receivables and any other interest of
     the Transferor in such Financed Vehicles, including, without limitation,
     the certificates of title and any other evidence of ownership with respect
     to such Financed Vehicles;

         (iii) any proceeds from claims on any physical damage, credit life and
     credit accident and health insurance policies or certificates or the VSI
     Policy, if any, relating to the related Financed Vehicles or the related
     Obligors, including any rebates and premiums;

         (iv) property (including the right to receive future Liquidation
     Proceeds) that secures a Receivable and that has been acquired by or on
     behalf of the Issuer pursuant to the liquidation of such Receivable;

         (v) the Purchase Agreement including, without limitation, a direct
     right to cause LBAC to purchase Receivables from the Issuer upon the
     occurrence of a breach of any of the representations and warranties
     contained in Section 3.03(b) of the Purchase Agreement or the failure of
     LBAC to timely comply with its obligations pursuant to Section 5.05 of the
     Purchase Agreement;

         (vi) refunds for the costs of extended service contracts with respect
     to the related Financed Vehicles, refunds of unearned premiums with respect
     to credit life and credit accident and health insurance policies or
     certificates covering a related Obligor or

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     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
     Receivable and any and all other documents that LBAC keeps on file in
     accordance with its customary procedures relating to the Receivables, the
     related Obligors or the related Financed Vehicles;

         (viii) all amounts and property from time to time held in or credited
     to the Lock-Box Account, to the extent such amounts and property relate to
     the Receivables;

         (ix) any proceeds from recourse against Dealers (other than any
     Chargeback Obligations), including, without limitation, any Dealer Title
     Guaranties with respect to the Receivables, with respect to the sale of the
     Receivables; and

         (x) the proceeds of any and all of the foregoing.

         SECTION 2.2. Transfer Intended as Sale; Precautionary Security
Interest. The conveyance to the Issuer of the property set forth in Section 2.1
above is intended as a sale (for certain non-tax purposes) free and clear of all
Liens, and it is intended that the property of the Issuer shall not be part of
the Transferor's estate in the event of the filing of a bankruptcy petition by
or against the Transferor under any bankruptcy law. In the event, however, that
notwithstanding the intent of LBAC, the Transferor and the Issuer, any transfer
under this Agreement is held not to be a sale, this Agreement shall constitute a
security agreement under the UCC (as defined in the UCC as in effect in the
State of New York) and applicable law, and the Transferor hereby grants a
security interest to the Issuer in, to and under the property described in
Section 2.1 above and all proceeds thereof, for the benefit of the Noteholders
and the Note Insurer as their interests may appear herein, for the purpose of
securing the payment and performance of the Notes and the Certificates and the
repayment of amounts owed to the Issuer from the Transferor.

         SECTION 2.3. Assignment by Transferor. The Transferor does hereby
transfer, assign and otherwise convey unto the Issuer, for the benefit of the
Noteholders, the 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 or from the failure of LBAC to comply with its obligations
pursuant to Section 5.05 of the Purchase Agreement. The provisions of this
Section 2.3 are intended to grant the Issuer a direct right against LBAC to
demand performance under the terms of the Purchase Agreement.

         SECTION 2.4. [Reserved]

         SECTION 2.5. Further Encumbrance of Trust Assets.

     (a) Immediately upon the conveyance to the Issuer by the Transferor of any
item of the Trust Assets pursuant to Section 2.1, all right, title and interest
of the Transferor in and to such item of Trust Assets shall terminate, and all
such right, title and interest shall vest in the

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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 the repayment of the Notes.
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 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 and (iii) the
Trust Collateral Agent pursuant to this 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 with respect to the Receivables to
the same extent as if such representations and warranties were fully set forth
herein. With respect to such representations and warranties, the Issuer is
deemed to have relied on such representations and warranties in acquiring the
Receivables, the Note Insurer shall be 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 issuing the Certificates. Such representations
and warranties speak as of the execution and delivery of this Agreement and as
of the Closing Date, but shall survive the transfer and assignment of the
Receivables to the Issuer and the subsequent pledge thereof to the Indenture
Trustee pursuant to the Indenture.

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         SECTION 3.2. Repurchase upon Breach of Representations and Warranties
of the Transferor.

     (a) The Transferor, the Servicer, the Note Insurer, the Custodian, the
Trust Collateral Agent or the Issuer, as the case may be, shall inform the other
parties to this Agreement promptly, by notice in writing, upon the discovery of
any breach of the Transferor's representations and warranties made pursuant to
Section 3.1. As of the last day of the second Collection Period following the
discovery by the Transferor or receipt by the Transferor of notice of such
breach, unless such breach is cured by such date, the Transferor shall have an
obligation to repurchase any Receivable in which the interests of the
Noteholders, the 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, the Transferor conveys to the Issuer all of
the Transferor's right, title and interest in its rights and benefits, but none
of its obligations or burdens, under the Purchase Agreement including the
Transferor's rights under the Purchase Agreement and the delivery requirements,
representations and warranties and the cure or repurchase and indemnity
obligations of LBAC thereunder. The Transferor hereby represents and warrants to
the Issuer that such assignment is valid, enforceable and effective to permit
the Issuer to enforce such obligations of LBAC and the Transferor under the
Purchase Agreement.

         SECTION 3.3. Custody of Legal Files and Receivable Files.In connection
with the sale, transfer and assignment of the Receivables and the other
Transferred Assets to the Trust pursuant to Section 2.1 of this Agreement and
simultaneously with the execution and delivery of this Agreement, the Custodian
shall enter into the Custodial Agreement with the Indenture Trustee, the Note
Insurer and the Issuer, dated as of June 1, 2003, 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 Receivable):

     (i) a copy of the fully executed original of the Receivable with a copy of
the fully executed assignment from the related Dealer to the Originator
(together with copies of any agreements modifying the Receivable, including,
without limitation, any extension agreements);

     (ii) a copy of the original credit application fully executed by the
Obligor;

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     (iii) a copy of the Lien Certificate or Title Package, as applicable;

     (iv) all other documents listed on the Documentation Checklist in effect on
the Cutoff Date relating to such Receivable; and

     (v) any and all other documents that the Servicer or the Originator shall
keep on file, in accordance with its customary procedures, relating to a
Receivable, an Obligor or a Financed Vehicle;

         provided, however that the Receivable Files shall contain a copy of
those documents the original of which constitutes a part of the Legal File.

         SECTION 3.4. Legal File Deficiencies. The Custodian shall hold the
Legal Files subject to the terms and conditions of the Custodial Agreement. If
the Custodian finds during its review of the Legal Files required by the
Custodial Agreement or at any time thereafter that a Legal File for a Receivable
has not been received or that any of the documents referred to in the definition
of the term "Legal File" are not contained in a Legal File or, if applicable,
the related Dealer is not listed on the Dealer Title Addendum, the Custodian
shall promptly inform the Trust Collateral Agent, LBAC, the Transferor, the
Back-up Servicer and the Note Insurer promptly, in writing, of the failure to
receive a Legal File with respect to such Receivable (or of the failure of any
of the aforementioned documents to be included in the Legal File or the failure
of the related Dealer to be so listed) (it being understood that the Custodian's
obligation to review the contents of any Legal File and the Dealer Title
Addendum shall be limited as set forth in the Custodial Agreement). Unless any
such defect with respect to such Receivable shall have been cured by the last
day of the second Collection Period following discovery thereof by the
Custodian, LBAC shall repurchase any such Receivable as of such last day. In
consideration of the purchase of the Receivable, LBAC shall remit the Purchase
Amount, in the manner specified in Section 5.5. The sole remedy of the Indenture
Trustee, the Trust Collateral Agent, the Issuer or the Noteholders with respect
to a breach pursuant to this Section 3.4 shall be to require LBAC to purchase
the Receivables pursuant to this Section 3.4. Upon receipt of the Purchase
Amount and written instructions from the Servicer, the Trust Collateral Agent
shall cause the Custodian to release to LBAC or its designee the related Legal
File and shall execute and deliver all reasonable instruments of transfer or
assignment, without recourse, as are prepared by LBAC and delivered to the Trust
Collateral Agent and are necessary to vest in LBAC or such designee the Issuer's
right, title and interest in the Receivable. On the date which is 90 days
following the Closing Date or, if such date is not a Business Day, on the next
succeeding Business Day, the Custodian shall inform LBAC and the other parties
to this Agreement and the Note Insurer of any Receivable for which the related
Legal File on such date does not include a Lien Certificate, and LBAC shall
repurchase any such Receivable as of the last day of the Collection Period in
which the date, which is 150 days following the Closing Date occurs, if the
related Legal File does not include a Lien Certificate as of the close of
business on such 150th day. In consideration of the purchase of such Receivable,
LBAC shall remit the Purchase Amount in the manner specified in Section 5.5. The
Transferor shall have no obligation to repurchase any Receivable upon a breach
pursuant to this Section 3.4. The Transferor shall have no liability for any
action taken or omitted to be taken by LBAC pursuant to this Section 3.4.

                                       7
<PAGE>

         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.

         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

                                       8
<PAGE>

Receivables purchased by LBAC pursuant to Section 3.4 or purchased by the
Servicer pursuant to Section 4.7, the Issuer shall execute an Issuer's
Certificate (in the form of Exhibit A-1 or A-2, as applicable), and shall
deliver such Issuer's Certificate, accompanied by a copy of the Servicer's
Certificate for such Collection Period, to LBAC or the Servicer, as the case may
be, with a copy to the Note Insurer. The Issuer's Certificate submitted with
respect to such Payment Date shall operate, as of such Payment Date, as an
assignment, without recourse, representation or warranty, to LBAC or the
Servicer, as the case may be, of all the Issuer's right, title, and interest in
and to such repurchased Receivable, and all security and documents relating
thereto, such assignment being an assignment outright and not for security.

                                   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

                                       9
<PAGE>

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.

         SECTION 4.2. Collection and Allocation of Receivable Payments.
Consistent with the standards, policies and procedures required by this
Agreement, the Servicer shall make reasonable efforts to collect all payments
called for under the terms and provisions of the Receivables as and when the
same shall become due and shall follow such collection procedures as it follows
with respect to all comparable automotive receivables that it services for
itself or others; provided, however, that the Servicer shall notify each Obligor
prior to the Closing Date to make all payments with respect to the Receivables
to the Lock-Box and shall make reasonable efforts to cause Obligors to make all
such payments to such Lock-Box. The Servicer will provide each Obligor with a
monthly statement in order to notify such Obligors to make payments directly to
the Lock-Box. The Servicer shall allocate collections between principal and
interest in accordance with the customary servicing procedures it follows with
respect to all comparable automotive receivables that it services for itself or
others and in accordance with the terms of this Agreement. The Servicer, for so
long as LBAC is the Servicer, may grant extensions, rebates or adjustments on a
Receivable in accordance with the customary servicing procedures it follows with
respect to all comparable automotive receivables that it services for itself
which shall not modify the original due date of the Scheduled Receivable
Payments on any Receivable other than (a) in accordance with the Payment
Deferment and Due Date Change Policies, (b) in connection with a Deficient
Liquidated Receivable, (c) with the prior written consent of the Note Insurer,
with respect to any other Liquidated Receivable or (d) as otherwise required by
applicable law. Notwithstanding anything contained herein to the contrary, the
Servicer may, at its option, repurchase up to 25 Receivables in a manner
consistent with Section 5.5 hereof and any such repurchased Receivable (an
"Optional Repurchase Receivable") shall not be deemed to be a Defaulted
Receivable or a Liquidated Receivable. The Servicer shall not modify the Payment
Deferment and Due Date Change Policies without the prior written consent of the
Note Insurer. The Servicer shall notify 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.

         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

                                       10
<PAGE>

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 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 no more than 20% of the
initial number of Receivables in the pool may be sold by the Issuer pursuant to
this Section 4.3(c) in the aggregate; provided further, that the Servicer may
elect not to direct the Issuer to sell a Receivable that has become more than 60
days delinquent if in its good faith judgment the Servicer determines that the
proceeds ultimately recoverable with respect to such Receivable would be
increased by forbearance. In selecting Receivables to be sold to a third party
purchaser pursuant to this Section 4.3(c), the Servicer shall use commercially
reasonable efforts to locate purchasers for the most delinquent Receivables
first. In any event, the Servicer shall not use any procedure in selecting
Receivables to be sold to third party purchasers which is materially

                                       11
<PAGE>

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.

     (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 polices. The Servicer, in accordance with the servicing procedures and
standards set forth herein, shall require that (i) each Obligor shall have
obtained insurance covering the Financed Vehicle, as of the date of the
execution of the Receivable, insuring against loss and damage due to fire,
theft, transportation, collision and other risks generally covered by
comprehensive and collision coverage and each Receivable requires the Obligor to
maintain such physical loss and damage insurance naming LBAC and its successors
and assigns as an additional insured, (ii) each Receivable that finances the
cost of premiums for credit life and credit accident and health insurance is
covered by an insurance policy or certificate naming LBAC as policyholder
(creditor) and (iii) as to each Receivable that finances the cost of an extended
service contract, the respective Financed Vehicle which secures the Receivable
is covered by an extended service contract.

     (b) To the extent applicable, the Servicer shall not take any action which
would result in noncoverage under any of the insurance policies referred to in
Section 4.4(a) which, but for the actions of the Servicer, would have been
covered thereunder. The Servicer, on behalf of the Trust Collateral Agent, shall
take such reasonable action as shall be necessary to permit recovery under any
of the foregoing insurance policies. Any amounts collected by the Servicer under
any of the foregoing insurance policies shall be deposited in the Collection
Account pursuant to Section 5.2. In the event of the cancellation or non-renewal
of the insurance referred to in Section 4.4(a)(i) above with respect to any
Financed Vehicle, the Servicer will endeavor, in accordance with its customary
servicing standards and procedures, to cause the related Obligor to

                                       12
<PAGE>

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.

                                       13
<PAGE>

         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, and (iv) the Servicer shall
service the Receivables as required by the terms of this Agreement and in
material compliance with its current servicing procedures for servicing of all
its other comparable motor vehicle receivables.

         SECTION 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

                                       14
<PAGE>

representatives against all costs, expenses, losses, damages, claims and
liabilities, including reasonable fees and expenses of counsel, which may be
asserted against or incurred by any of them as a result of third party claims
arising out of the events or facts giving rise to such breach. The Transferor
shall have no obligation to repurchase the Receivables upon a breach of the
provisions of Section 4.2 relating to modifications of the Receivables, or any
breach of Sections 4.4, 4.5 or 4.6. The Transferor shall have no liability for
actions taken or omitted to be taken by the Servicer pursuant to this Section
4.7.

         SECTION 4.8. Servicing Fee. The Servicing Fee for the initial Payment
Date shall equal the product of (a) one-twelfth of the Servicing Fee Rate and
(b) the Original Pool Balance. Thereafter, the Servicing Fee for a Payment Date
shall equal the product of (i) one-twelfth of the Servicing Fee Rate and (ii)
the Pool Balance as of the last day of the second preceding Collection Period.
The Servicing Fee shall in addition include all late fees, 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,
if required, withdrawals from the Spread Account and the Supplemental Interest
Account), 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 and the Note Insurer pursuant to Section 5.7.
Receivables to be purchased by the Servicer or to be purchased by LBAC shall be
identified by the Servicer by account number with respect to such Receivable (as
specified in the Schedule of Receivables).

     (b) In addition to the information required by Section 4.9(a), the Servicer
shall include in the copy of the Servicer's Certificate delivered to the Note
Insurer (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 and (iv) whether to the knowledge of the Servicer an
Insurance Agreement Event of Default has occurred. The Servicer shall in
addition give notice of the occurrence of any Trigger Event or any Insurance
Agreement Event of Default to each Rating Agency.

                                       15
<PAGE>

         SECTION 4.10. Annual Statement as to Compliance; Notice of Default.

     (a) The Servicer shall deliver to the Issuer, the Trust Collateral Agent,
the Indenture Trustee, the Back-up Servicer, the Collateral Agent, the
Transferor, the Issuer and the Note Insurer, on or before March 31 of each year
beginning March 31, 2004, an Officer's Certificate, dated as of December 31 of
the preceding calendar year, stating that (i) a review of the activities of the
Servicer during such preceding calendar year and of its performance under this
Agreement has been made under such officer's supervision and (ii) to the best of
such officer's knowledge, based on such review, the Servicer has fulfilled all
its obligations under this Agreement throughout such year, or, if there has been
a default in the fulfillment of any such obligation, specifying each such
default known to such officer and the nature and status thereof. The Trust
Collateral Agent shall send a copy of such certificate to the Rating Agencies.

     (b) The Servicer shall deliver to the Issuer, the Trust Collateral Agent,
the Indenture Trustee, the Back-up Servicer, the Collateral Agent, the
Transferor, the Issuer, the Note Insurer and the Rating Agencies, promptly after
having obtained knowledge thereof, but in no event later than two (2) Business
Days after having obtained such knowledge, written notice in an Officer's
Certificate of any event which with the giving of notice or lapse of time, or
both, would become a Servicer Termination Event under Section 9.1.

         SECTION 4.11. Annual Independent Certified Public Accountant's Report.
The Servicer shall cause a firm of nationally recognized independent certified
public accountants, who may also render other services to the Servicer or to the
Transferor, to deliver to the Issuer, the Trust Collateral Agent, the Indenture
Trustee, the Back-up Servicer, the Collateral Agent, the Issuer, the
Noteholders, the Note Insurer and each Rating Agency on or before April 30 of
each year beginning April 30, 2004, a report dated as of December 31 of the
preceding calendar year and reviewing the Servicer's activities during such
preceding calendar year, addressed to the Board of Directors of the Servicer,
and to the Trust Collateral Agent, the Back-up Servicer, the Collateral Agent,
the Issuer, the Transferor and the Note Insurer, to the effect that such firm
has audited the financial statements of the Servicer and issued its report
therefor and that such audit (a) was made in accordance with generally accepted
auditing standards, and accordingly included such tests of the accounting
records and such other auditing procedures as such firm considered necessary in
the circumstances; (b) included tests relating to automotive loans serviced for
others in accordance with the requirements of the Uniform Single Attestation
Program for Mortgage Bankers (the "Program"), to the extent the procedures in
the Program are applicable to the servicing obligations set forth in this
Agreement; (c) included an examination of the delinquency and loss statistics
relating to the Servicer's portfolio of automobile, van, sport utility vehicle
and light duty truck installment sales contracts; and (d) except as described in
the report, disclosed no exceptions or errors in the records relating to
automobile, van, sport utility vehicle and light duty truck loans serviced for
others that, in the firm's opinion, the Program requires such firm to report.
The accountant's report shall further state that (1) a review in accordance with
agreed upon procedures was made of three randomly selected Servicer's
Certificates; (2) except as disclosed in the report, no exceptions or errors in
the Servicer's Certificates were found; and (3) the delinquency and loss
information relating to the Receivables contained in the Servicer's Certificates
were found to be accurate.

                                       16
<PAGE>

         The report will also indicate that the firm is independent of the
Servicer within the meaning of the Code of Professional Ethics of the American
Institute of Certified Public Accountants.

         SECTION 4.12. Servicer Expenses. The Servicer shall be required to pay
all expenses incurred by it in connection with its activities under this
Agreement (including taxes imposed on the Servicer, expenses incurred by the
Servicer in connection with payments and reports to Noteholders 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).

         SECTION 4.13. Retention and Termination of Servicer. The Servicer
hereby covenants and agrees to act as such under this Agreement for an initial
term, commencing on the Closing Date and ending on September 30, 2003 which term
shall be extendible by the Note Insurer for successive quarterly terms ending on
each successive December 31, March 31, June 30 and September 30 (or, pursuant to
revocable written standing instructions from time to time to the Servicer and
the Trust Collateral Agent, for any specified number of terms greater than one),
until the termination of the Issuer. Each such notice (including each notice
pursuant to standing instructions, which shall be deemed delivered at the end of
successive quarterly terms for so long as such instructions are in effect) (a
"Servicer Extension Notice") shall be delivered by the Note Insurer to the Trust
Collateral Agent and the Servicer. The Servicer hereby agrees that, as of the
date hereof and upon its receipt of any such Servicer Extension Notice, the
Servicer shall become bound, for the initial term beginning on the date hereof
and for the duration of the term covered by such Servicer Extension Notice, to
continue as the Servicer subject to and in accordance with the other provisions
of this Agreement. Until such time as a Note Insurer Default shall have occurred
and be continuing, the Trust Collateral Agent agrees that if as of the fifteenth
day prior to the last day of any term of the Servicer, the Trust Collateral
Agent shall not have received any Servicer Extension Notice from the Note
Insurer, the Trust Collateral Agent will, within five days thereafter, give
written notice of such non-receipt to the Note Insurer, the 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

         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 and the Class C
Certificateholder are required by applicable law or regulation to review such
documentation. In each case, such access shall be afforded without charge but
only upon reasonable request and during normal business hours. Nothing in this
Section 4.14 shall derogate from the obligation of the Servicer to observe any
applicable law prohibiting disclosure of information regarding the Obligors, and
the failure of the Servicer to provide access as provided in this Section 4.14
as a result of such obligation shall not constitute a breach of this Section
4.14.

                                       17
<PAGE>

         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.

     (b) The Back-up Servicer shall review each Servicer's Certificate delivered
pursuant to Section 4.15(a) and shall, based upon the information provided from
the Servicer under Section 4.15(a):

         (i) confirm that such Servicer's Certificate is complete on its face;

         (ii) load the computer diskette (which shall be in a format acceptable
     to the Back-up Servicer) received from the Servicer pursuant to Section
     4.15(a) hereof, confirm that such computer diskette is in a readable form
     and calculate the Principal Balance of each Receivable based on the
     Principal Balance of such Receivable as of the preceding

                                       18
<PAGE>

     Payment Date (as set forth in such Servicer's Certificate) and the current
     principal payment for such Receivable (as set forth in such Servicer's
     Certificate) and compare such calculation to that set forth in the
     Servicer's Certificate (and give notice of any discrepancy to the Note
     Insurer); and

         (iii) recalculate the Available Funds, the Principal Payment Amount,
     the Class A-1 Interest Payment Amount, the Class A-2 Interest Payment
     Amount, the 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.

         SECTION 4.16. Fidelity Bond. The Servicer shall maintain a fidelity
bond in such form and amount as is customary for entities acting as custodian of
funds and documents in respect of consumer contracts on behalf of institutional
investors.

         SECTION 4.17. Delegation of Duties. The Servicer may at any time
delegate duties under this Agreement to sub-contractors who are in the business
of servicing automotive receivables with the prior written consent of the
Controlling Party; 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

                                       19
<PAGE>

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.

         SECTION 4.18. Delivery of Back-up Tapes of Back-up Servicer.

     (a) In addition to the information to be delivered by the Servicer to the
Back-up Servicer on or before the fifth Business Day of each month pursuant to
Section 4.15(a), the Servicer shall deliver to the Back-up Servicer, or its
designated agent, a computer diskette (or other electronic transmission), in a
format acceptable to the Back-up Servicer or its designated agent, as the case
may be, with the loan master file and history information in the form attached
hereto as Exhibit B-2 on or prior to the Closing Date which loan master file and
history information shall be sufficiently detailed to enable the Back-up
Servicer to maintain records sufficient to assume the role of successor Servicer
pursuant to this Agreement.

     (b) In addition to the information required to be delivered by the Servicer
to the Back-up Servicer or its designated agent on or before the fifth Business
Day of each month pursuant to Section 4.15(a) and on or prior to the Closing
Date pursuant to Section 4.18(a), the Servicer shall deliver the loan master
file and history information to the Back-up Servicer or its designated agent on
the Determination Date occurring in July 2003 (with respect to the period from
and including the Cutoff Date to the last day of the related Collection Period)
and on the Determination Date occurring every six months thereafter in the form
attached hereto as Exhibit B-2 in writing and on a computer diskette (or other
electronic transmission) in a format acceptable to the Back-up Servicer or its
designated agent, as the case may be, and as at such other times as may be
requested by the Note Insurer or the Back-up Servicer upon prior written notice
to the Servicer, provided that the Back-up Servicer shall deliver a copy of any
such notice by the Back-up Servicer to the Note Insurer simultaneously with its
delivery of such notice to the Servicer.

         SECTION 4.19. Confidential Information.(a) The Back-up Servicer, each
subservicer and any successor Servicer shall hold in confidence all Confidential
Information in accordance with the Federal Financial Privacy Law and, to the
extent more exacting, its then customary procedures, and each represents and
warrants that it has in place, and will continue to maintain, sufficient systems
and procedures to do so; provided that nothing herein shall prevent the Back-up
Servicer, any subservicer or any successor Servicer from delivering copies of
any financial statements and other documents whether or not constituting
Confidential Information, and disclosing other information, whether or not
Confidential Information, to (i) its directors, officers, employees, agents and
professional consultants to the extent necessary to carry on the Back-up
Servicer's, such subservicer's or such successor Servicer's business, as
applicable, in the ordinary course, (ii) any Noteholder, Certificateholder 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

                                       20
<PAGE>

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.

                                    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

                                       21
<PAGE>

Receivables or, upon the occurrence and continuance of a Servicer Termination
Event, the Note Insurer may direct the Indenture Trustee in writing to terminate
the Lock-Box Agreement with respect to the Receivables, and, in any such case,
funds on deposit in the Lock-Box Account shall be distributed by JPMorgan Chase,
as agent for the beneficial owners of funds in the Lock-Box Account at such time
(including the Issuer), and JPMorgan Chase shall deposit any such funds relating
to the Receivables to such other account as shall be identified by the Back-up
Servicer or successor Servicer for deposit therein; provided, however, that the
outgoing Servicer shall not thereby be relieved of any liability or obligations
on the part of the outgoing Servicer to the Lock-Box Bank under such Lock-Box
Agreement. The outgoing Servicer shall, upon request of the Trust Collateral
Agent, but at the expense of the outgoing Servicer, deliver to the successor
Servicer all documents and records relating to the Lock-Box Agreement and an
accounting of amounts collected and held in the Lock-Box Account or held by the
Lock-Box Processor in respect of the Receivables and otherwise use its best
efforts to effect the orderly and efficient transfer of any Lock-Box Agreement
to the successor Servicer. In the event that the Lock-Box Account fails at any
time to qualify as an Eligible Account, the Servicer, at its expense, shall
cause the Lock-Box Bank to deliver, at the direction of the Controlling Party to
the Trust Collateral Agent or a successor Lock-Box Bank, all documents and
records relating to the Receivables and all amounts held (or thereafter
received) on deposit in the Lock Box Account or held by the Lock-Box Processor
in respect of the Receivables (together with an accounting of such amounts) and
shall otherwise use its best efforts to effect the orderly and efficient
transfer of the lock-box arrangements, and the Servicer shall promptly notify
the Obligors to make payments to any new Lock-Box.

     (b) In addition to the Lock-Box Account, the Trust Collateral Agent shall
establish, with itself, the Collection Account and the Note Account in the name
of the Issuer for the benefit of the Noteholders, the Class C Certificateholder
and the Note Insurer and the Policy Payments Account in the name of the Issuer
for the benefit of the Noteholders. The Collection Account, the Note Account and
the Policy Payments Account shall be Eligible Accounts initially established
with the Trust Collateral Agent; provided, however, if any of such accounts
shall cease to be an Eligible Account, the Servicer, with the consent of the
Note Insurer (so long as no Note Insurer Default has occurred and is
continuing), within five (5) Business Days shall, cause such accounts to be
moved to an institution so that such account meets the definition of Eligible
Account. The Servicer shall promptly notify the Rating Agencies and the
Transferor of any change in the location of any of the aforementioned accounts.

         All amounts held in the Collection Account and the Supplemental
Enhancement Account shall be invested by the Trust Collateral Agent at the
written direction of the Transferor in Eligible Investments in the name of the
Trust Collateral Agent on behalf of the Issuer and shall mature no later than
one Business Day immediately preceding the Payment Date next succeeding the date
of such investment. In no event shall the Trust Collateral Agent be liable for
any insufficiency in the Collection Account 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 and the Supplemental Enhancement
Account during the Collection Period related to each Payment Date shall be

                                       22
<PAGE>

deposited into the Note Account on each Payment Date, and shall be available for
payment pursuant to Section 5.6(c).

         SECTION 5.2. Collections. The Servicer shall use reasonable efforts to
cause the Lock-Box Processor to transfer any payments in respect of the
Receivables from or on behalf of Obligors received in the Lock-Box to the
Lock-Box Account on the Business Day on which such payments are received,
pursuant to the Lock-Box Agreement. Within two Business Days of receipt of such
funds into the Lock-Box Account, the Servicer shall cause the Lock-Box Bank to
transfer available funds related to the Receivables from the Lock-Box Account to
the Collection Account, and if such funds are not available funds, as soon
thereafter as they clear (i.e., become available for withdrawal from the
Lock-Box Account). In addition, the Servicer shall remit all payments by or on
behalf of the Obligors received by the Servicer with respect to the Receivables
(other than Purchased Receivables), and all Liquidation Proceeds no later than
the second Business Day following receipt into the Lock-Box Account or the
Collection Account.

         SECTION 5.3. Application of Collections. All collections for each
Collection Period shall be applied by the Servicer as follows:

         With respect to each Receivable (other than a Purchased Receivable),
payments actually received from or on behalf of the Obligor shall be applied
hereunder, first, to interest and principal in accordance with the Simple
Interest Method to the extent necessary to bring such Receivable current,
second, in connection with the redemption of a defaulted Receivable, to
reimburse the Servicer for reasonable and customary out-of-pocket expenses
incurred by the Servicer in connection with such Receivable, third, to late fees
and fourth, to principal in accordance with the Simple Interest Method.
Notwithstanding anything herein to the contrary, no amount applied as interest
accrued on any Precomputed Receivable for any single Collection Period will
exceed 30 days' interest accrued thereon assuming a 360-day year of twelve
30-day months.

         SECTION 5.4. Intentionally Omitted.

         SECTION 5.5. Additional Deposits. The following additional deposits
shall be made in immediately available funds on the dates indicated: (i) on the
Business Day immediately preceding each Determination Date, the Servicer or
LBAC, as the case may be, shall deposit or cause to be deposited in the
Collection Account the aggregate Purchase Amount with respect to Purchased
Receivables, (ii) on the Business Day immediately preceding each Determination
Date, the Trust Collateral Agent shall deposit in the Collection Account all
amounts to be paid under Section 11.1, (iii) on or before each Draw Date, the
Trust Collateral Agent shall transfer to the Collection Account any amounts
transferred to the Trust Collateral Agent by the Collateral Agent from the
Spread Account and (iv) on or before each Draw Date, the Trust Collateral Agent
shall, pursuant to the Servicer's written instructions, transfer to the
Collection Account any amounts to be withdrawn from the Supplemental Enhancement
Account in accordance with Section 5.12.

                                       23
<PAGE>

         SECTION 5.6. Payments; Policy Claims.

     (a) The Trust Collateral Agent (based solely on the information set forth
in the Servicer's Certificate for the related Payment Date upon which the Trust
Collateral Agent may conclusively rely) shall transfer, on each Payment Date,
from the Collection Account to the Note Account, in immediately available funds,
an amount equal to the excess of the sum of (a) all funds that were deposited in
the Collection Account, plus (b) earnings on investments of funds in the
Collection Account pursuant to Section 5.1(b), for the related Collection Period
over all funds transferred from the Collection Account with respect to such
Collection Period pursuant to Section 5.1(c).

     (b) Prior to each Payment Date, the Servicer shall on the related
Determination Date calculate the Available Funds, the Principal Payment Amount,
the Class A-1 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 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 and the Class C 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
payments from the Available Funds withdrawn from the Note Account and from the
other sources described below in the following order of priority:

         (i) first, to LBAC, the Monthly Dealer Participation Fee Payment Amount
     and all unpaid Monthly Dealer Participation Fee Payment Amounts from prior
     Collection Periods and second, to the Servicer, from the Available Funds
     (as such Available Funds have been reduced by payments made pursuant to
     subclause first of this clause (i)), the Servicing Fee and all unpaid
     Servicing Fees from prior Collection Periods and, if the Available Funds
     are insufficient to pay such Servicing Fees from prior Collection Periods,
     the Servicer will receive such deficiency from the Deficiency Claim Amount
     with respect to such Payment Date, if any, 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;

         (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-

                                       24
<PAGE>

     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
     Note Interest due on each such class of Notes, from the Available Funds (as
     such Available Funds have been reduced by payments made pursuant to clauses
     (i) and (ii) above), an amount equal to the Class A-1 Note Interest, Class
     A-2 Note Interest, the Class A-3 Note Interest and the Class A-4 Note
     Interest, respectively, with respect to such Payment Date (plus (without
     duplication) interest on any outstanding Class A-1 Interest Carryover
     Shortfall, Class A-2 Interest Carryover Shortfall, Class A-3 Interest
     Carryover Shortfall or Class A-4 Interest Carryover Shortfall, if any, to
     the extent permitted by applicable law, at the Class A-1 Note Rate, the
     Class A-2 Note Rate, the Class A-3 Note Rate or the Class A-4 Note Rate, as
     applicable, for the related Accrual Period (calculated (i) with respect to
     the Class A-1 Notes on each Payment Date, on the basis of the actual number
     of days elapsed during such Accrual Period based on a 360 day year (or,
     with respect to the initial Payment Date, 20 days) and (ii) with respect to
     the Class A-2 Notes, the Class A-3 Notes and the Class A-4 Notes on each
     Payment Date, on the basis of a 360-day year consisting of twelve 30-day
     months (or, with respect to the initial Payment Date, 20 days))) 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;

         (iv) from the Available Funds (as such Available Funds have been
     reduced by payments made pursuant to clauses (i) through (iii) above),
     first, to the Class A-1 Noteholders, until the Class A-1 Note Balance has
     been reduced to zero, an amount equal to the sum of the Principal Payment
     Amount with respect to such Payment Date and any Principal Carryover
     Shortfall as of the close of business on the preceding 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 sum of the remaining Principal
     Payment Amount with respect to such Payment Date, if any, and the remaining
     Principal Carryover Shortfall, if any, as of the close of business on the
     preceding Payment Date, third, to the Class A-3

                                       25
<PAGE>

     Noteholders, after the Class A-1 Note Balance and the Class A-2 Note
     Balance have been reduced to zero, an amount equal to the sum of the
     remaining Principal Payment Amount, if any, with respect to such Payment
     Date and the remaining Principal Carryover Shortfall, if any, as of the
     close of business on the preceding Payment Date, and fourth, to the Class
     A-4 Noteholders, after the Class A-1 Note Balance, the Class A-2 Note
     Balance and the Class A-3 Note Balance have been reduced to zero, an amount
     equal to the sum of the remaining Principal Payment Amount, if any, with
     respect to such Payment Date and the remaining Principal Carryover
     Shortfall, if any, as of the close of business on the preceding Payment
     Date 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;

         (vii) to the Class C Certificateholder, 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;

                                       26
<PAGE>

         (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 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 reasonable counsel fees and expenses), including,
     without limitation, costs and expenses required to be paid by the Servicer
     to the Back-up Servicer under Section 9.2(a), to the extent not paid by the
     Servicer, and all unpaid reasonable out-of-pocket expenses of the Trust
     Collateral Agent, the Indenture Trustee, the Back-up Servicer and the
     Custodian (including reasonable counsel fees and expenses) from prior
     Collection Periods; provided, however, that unless an Event of Default
     shall have occurred and be continuing, expenses payable to the Trust
     Collateral Agent, the Indenture Trustee, the Back-up Servicer and the
     Custodian pursuant to this subclause first of clause (ix) shall be limited
     to a combined aggregate amount of $50,000 per annum, and second to the
     Back-up Servicer, from the Available Funds (as such Available Funds have
     been reduced by payments made pursuant to clauses (i) through (viii) above
     and subclause first of this clause (ix)), in the event that the Back-up
     Servicer shall have assumed the obligations of Servicer pursuant to Section
     9.2(a) and the Servicer fails to pay the Back-up Servicer for system
     conversion expenses as required by said section, an aggregate amount not to
     exceed $100,000 in payment of such system conversion expenses;

         (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:

         (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-1 Note Balance and the Class A-2
     Note Balance have been reduced to zero, and fourth, to

                                       27
<PAGE>

     the Class A-4 Noteholders, after the Class A-1 Note Balance, the Class A-2
     Note Balance and the Class A-3 Note Balance have 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 5.4(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) 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 prior to such release.

     (f) Notwithstanding the foregoing, in the event that it is ever determined
that any property held in the Spread Account constitutes a pledge of collateral,
then the provisions of this Agreement and, the Spread Account Agreement shall be
considered to constitute a security agreement and the Transferor and the 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

                                       28
<PAGE>

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 the Class A-1 Payment Amount, the Class A-2 Payment Amount, the Class A-3
Payment Amount or the Class A-4 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
Certificateholders 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 Class C Certificateholder of record on its website at
www.jpmorgan.com\sfr or through such other means as the Trust Collateral Agent
believes will make the distribution more convenient and/or accessible and the
Trust Collateral Agent shall provide timely and adequate notification to all
Noteholders and Class C Certificateholders regarding any such changes) the
Servicer's Certificate substantially in the form of Exhibit B-1 hereto, setting
forth, among at least the following information as to the Notes, the Class C
Certificates, 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;

         (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 all classes of Notes;

         (iv) the amount of the payment allocable to interest on the Class C
     Certificates;

                                       29
<PAGE>

         (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 and 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 A Principal
     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;

         (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
     Cutoff Date to the last day of the related

                                       30
<PAGE>

     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; and

         (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.

         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,
2004, the Servicer shall send to the Indenture Trustee and the Trust Collateral
Agent, and the Trust Collateral Agent shall, provided it has received the
necessary information from the Servicer, promptly thereafter furnish to 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 required by the Code and regulations thereunder, to enable
such Holders to prepare their Federal and State income tax returns. The
obligation of the Trust Collateral Agent set forth in this paragraph shall be
deemed to have been satisfied to the extent that substantially comparable
information shall be provided by the Servicer pursuant to any requirements of
the Code.

     (c) The Servicer, at its own expense, shall cause a firm of nationally
recognized accountants to prepare any tax returns required to be filed by the
Issuer, and the Issuer shall execute and file such returns if requested to do so
by the Servicer. The Trust Collateral Agent, upon request, will furnish the
Servicer with all such information actually known to the Trust Collateral Agent
as may be reasonably requested by the Servicer in connection with the
preparation of all tax returns of the Issuer.

         SECTION 5.8. Reliance on Information from the Servicer. Notwithstanding
anything to the contrary contained in this Agreement, all payments from any of
the accounts described in this Article V and any transfer of amounts between
such accounts shall be made by

                                       31
<PAGE>

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 Pool Balance as of
such Determination Date 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.
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.

         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
withdrawal from the Supplemental Enhancement Account with respect to any
Deficiency Claim Amount payable pursuant to clauses (v) and (vi) of Section
5.6(c) may be made by the Trust Collateral Agent without the prior written
consent of the Class C Certificateholder; and provided further, 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.

                                       32
<PAGE>

         Any Deficiency Notice shall be delivered by 10:00 a.m., New York City
time, on the related Deficiency Claim Date. The amounts distributed by the
Collateral Agent to the Trust Collateral Agent pursuant to a Deficiency Notice
shall be deposited by the Trust Collateral Agent into the Collection Account
pursuant to Section 5.5 and 5.12.

         SECTION 5.12. Supplemental Enhancement Account. In order to enhance the
amounts available to make required payments to the Class A Noteholders and to
make principal payments on the Class C Certificates, there shall be established
and maintained with the Trust Collateral Agent an Eligible Account entitled,
"Supplemental Enhancement Account--Long Beach Acceptance Auto Receivables Trust
2003-B", 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 the remaining Deficiency Claim Amount from
the Supplemental Enhancement Account 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
withdrawal from the Supplemental Enhancement Account with respect to any
Deficiency Claim Amount for the Premium payable pursuant to clause (vi) of
Section 5.6(c) may be made by the Trust Collateral Agent without the prior
written consent of the Class C Certificateholder; and provided further, 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.(d) 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.

         SECTION 5.13. [Reserved]

                                       33
<PAGE>

         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.

                                   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).

                                       34
<PAGE>

     (b) Any notice delivered by the Trust Collateral Agent to the Note Insurer
pursuant to Section 6.2(a) shall specify the Policy Claim Amount claimed under
the Policy and shall constitute a "Notice of Claim" under the Policy. In
accordance with the provisions of the Policy, the Note Insurer is required to
pay to the Trust Collateral Agent the Policy Claim Amount properly claimed
thereunder by 12:00 noon, New York City time, on the later of (i) the third
Business Day (as defined in the Policy) following receipt on a Business Day (as
defined in the Policy) of the Notice of Claim, and (ii) the applicable Payment
Date. Any payment made by the Note Insurer under the Policy shall be applied
solely to the payment of the Class A Notes, and for no other purpose.

     (c) The Trust Collateral Agent shall (i) receive as attorney-in-fact of
each Class A Noteholder any Policy Claim Amount from the Note Insurer and (ii)
deposit the same in the Policy Payments Account for disbursement to the
Noteholders as set forth in clauses (iii) and (iv) of Section 5.6(c). Any and
all Policy Claim Amounts disbursed by the Trust Collateral Agent from claims
made under the Policy shall not be considered payment by the Issuer or from the
Spread Account with respect to such Class A Notes, and shall not discharge the
obligations of the Issuer with respect thereto. The Note Insurer shall, to the
extent it makes any payment with respect to the Class A Notes, become subrogated
to the rights of the recipients of such payments to the extent of such payments.
Subject to and conditioned upon any payment with respect to the Class A Notes by
or on behalf of the Note Insurer, each Class A Noteholder shall be deemed,
without further action, to have directed the Trust Collateral Agent to assign to
the Note Insurer all rights to the payment of interest or principal with respect
to the Class A Notes which are then due for payment to the extent of all
payments made by the Note Insurer and the Note Insurer may exercise any option,
vote, right, power or the like with respect to the Class A Notes to the extent
that it has made payment pursuant to the Policy. Notwithstanding the foregoing,
the order of priority of payments to be made pursuant to Section 5.6(c) shall
not be modified by this clause (c). To evidence such subrogation, the Note
Registrar shall note the Note Insurer's rights as subrogee upon the register of
Class A Noteholders upon receipt from the Note Insurer of proof of payment by
the Note Insurer of any Scheduled Payment for that class.

     (d) The Trust Collateral Agent shall be entitled, but not obligated, to
enforce on behalf of the Class A Noteholders the obligations of the Note Insurer
under the Policy. Notwithstanding any other provision of this Agreement, the
Class A Noteholders are not entitled to institute proceedings directly against
the Note Insurer.

         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-

                                       35
<PAGE>

possession or trustee in bankruptcy named in the Order (as defined in the
Policy) and not to the Trust Collateral Agent or any Class A Noteholder directly
(unless a Class A Noteholder has previously paid such payment to the receiver,
conservator, debtor-in-possession or trustee in bankruptcy, in which case the
Note Insurer will make such payment to the Trust Collateral Agent for payment,
in accordance with the instructions to be provided by the Note Insurer, to such
Class A Noteholder upon proof of such payment reasonably satisfactory to the
Note Insurer).

     (b) Each Notice of Claim shall provide that the Trust Collateral Agent, on
its behalf and on behalf of the Class A Noteholders, thereby appoints the Note
Insurer as agent and attorney-in-fact for the Trust Collateral Agent and each
Class A Noteholder in any legal proceeding with respect to the Class A Notes.
The Trust Collateral Agent shall promptly notify the Note Insurer of any
proceeding or the institution of any action (of which a Responsible Officer of
the Trust Collateral Agent has actual knowledge) seeking the avoidance as a
preferential transfer under applicable bankruptcy, insolvency, receivership,
rehabilitation or similar law (a "Preference Claim") of any payment made with
respect to the Class A Notes. Each Holder of Class A Notes, by its purchase of
Class A Notes, and the Trust Collateral Agent hereby agree that so long as a
Note Insurer Default shall not have occurred and be continuing, the Note Insurer
may at any time during the continuation of any proceeding relating to a
Preference Claim direct all matters relating to such Preference Claim including,
without limitation, (i) the direction of any appeal of any order relating to any
Preference Claim and (ii) the posting of any surety, supersedeas or performance
bond pending any such appeal at the expense of the Note Insurer, but subject to
reimbursement as provided in the Insurance Agreement. In addition, and without
limitation of the foregoing, as set forth in Section 6.2(c), the Note Insurer
shall be subrogated to, and each Class A Noteholder and the Trust Collateral
Agent hereby delegate and assign, to the fullest extent permitted by law, the
rights of the Trust Collateral Agent and each Class A Noteholder in the conduct
of any proceeding with respect to a Preference Claim, including, without
limitation, all rights of any party to an adversary proceeding action with
respect to any court order issued in connection with any such Preference Claim.

         SECTION 6.4. Surrender of Policy. The Trust Collateral Agent shall
surrender the Policy to the Note Insurer for cancellation upon its expiration in
accordance with the terms thereof.

                                   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 and on which the Issuer is deemed
to have relied in acquiring the Receivables and on which the Indenture Trustee,
the Owner Trustee, the Collateral Agent, Trust Collateral Agent and Back-up
Servicer may rely. The representations speak as of the execution and delivery of
this Agreement and as of the Closing Date and shall survive the conveyance of
the Receivables to the Issuer and the subsequent pledge thereof to the Indenture
Trustee pursuant to the Indenture.

                                       36
<PAGE>

     (a) Organization and Good Standing. The Transferor has been duly organized
and is validly existing as a corporation in good standing under the laws of the
State of Delaware, with the corporate power and authority to conduct its
business as such business is presently conducted and to execute, deliver and
perform its obligations under this Agreement and the other Basic Documents to
which it is a party.

     (b) Due Qualification. The Transferor is duly qualified to do business as a
foreign corporation in good standing, and has obtained all necessary licenses
and approvals in all jurisdictions required for the performance of its
obligations under this Agreement and the other Basic Documents to which it is a
party other than where the failure to obtain such license or approval or
qualification would not have a material adverse effect on the ability of the
Transferor to perform such obligations or on any Receivable or on the interest
therein of the Issuer, the Noteholders or the Note Insurer.

     (c) Power and Authority. The Transferor has the corporate power and
authority to execute and deliver this Agreement and the other Basic Documents to
which it is a party and to carry out their respective terms; the Transferor has
full corporate power and authority to sell and assign the property sold and
assigned to and deposited with the Issuer and has duly authorized such sale and
assignment to the Issuer by all necessary corporate action; and the execution,
delivery, and performance of this Agreement and the other Basic Documents to
which it is a party have been duly authorized by the Transferor by all necessary
corporate action.

     (d) Valid Sale; Binding Obligation. This Agreement effects a valid sale,
transfer and assignment of the Receivables and the other property conveyed to
the Issuer pursuant to Section 2.1, enforceable against creditors of and
purchasers from the Transferor; and this Agreement and the other Basic Documents
to which the Transferor is a party shall constitute legal, valid and binding
obligations of the Transferor enforceable in accordance with their respective
terms except as enforceability may be limited by bankruptcy, insolvency,
reorganization or other similar laws affecting the enforcement of creditors'
rights generally and by equitable limitations on the availability of specific
remedies, regardless of whether such enforceability is considered in a
proceeding in equity or at law.

     (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.

                                       37
<PAGE>

     (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 the Class C Certificate, (B) seeking to prevent the
issuance of the Notes or the Class C Certificate or the consummation of any of
the transactions contemplated by this Agreement or the other Basic Documents to
which the Transferor is a party, (C) seeking any determination or ruling that
might materially and adversely affect the performance by the Transferor of its
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 the
Class C Certificate, (D) relating to the Transferor and which might adversely
affect the Federal or State income, excise, franchise or similar tax attributes
of the Notes and the Class C Certificates or (E) that could have a material
adverse effect on the Receivables.

     (g) No Consents. No consent, approval, authorization or order of or
declaration or filing with any governmental authority is required to be obtained
by the Transferor for the issuance or sale of the Notes or the 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 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 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

                                       38
<PAGE>

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 executed and filed that are necessary fully to preserve and protect the
interest of the Issuer in the Receivables, and reciting the details of such
filings, or (B) stating that, in the opinion of such counsel, no such action
shall be necessary to preserve and protect such interest, (iv) immediately after
giving effect to such transaction, no Insurance Agreement Event of Default and
no event that, after notice or lapse of time, or both, would become an Insurance
Agreement Event of Default shall have happened and be continuing, (v) the
organizational documents of the Person surviving or resulting from such
transaction shall contain provisions similar to those of the Transferor's
certificate of incorporation in respect of the issuance of debt, independent
directors and bankruptcy remoteness and (vi) the Transferor shall have received
confirmation from each Rating Agency that the then current rating of the Notes
will not be downgraded as a result of such merger, consolidation or succession.
A copy of such confirmation shall be provided to the Trust Collateral Agent.
Notwithstanding anything herein to the contrary, the execution of the foregoing
agreement of assumption and compliance with clause (i), (ii), (iii) or (iv)
above shall be conditions to the consummation of the transactions referred to in
clause (a), (b) or (c) above.

         SECTION 7.4. Limitation on Liability of the Transferor and Others. The
Transferor and any director or officer or employee or agent of the Transferor
may rely in good faith on the advice of counsel or on any document of any kind,
prima facie properly executed and submitted by any Person respecting any matters
arising hereunder. The Transferor shall not be under any obligation to appear
in, prosecute or defend any legal action that shall not be incidental to its
obligations under this Agreement, and that in its opinion may involve it in any
expense or liability.

         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.

                                       39
<PAGE>

                                  ARTICLE VIII
                                  THE SERVICER

         SECTION 8.1. Representations of Servicer. The Servicer makes the
following representations on which the Note Insurer shall be deemed to have
relied in executing and delivering the Policy and on which the Issuer is deemed
to have relied in acquiring the Receivables and on which the Indenture Trustee
is deemed to have relied on in accepting the pledge of the Receivables. The
representations speak as of the execution and delivery of this Agreement and as
of the Closing Date and shall survive the conveyance of the Receivables to the
Issuer and the subsequent pledge thereof to the Indenture Trustee pursuant to
the Indenture.

         (i) Organization and Good Standing. The Servicer is duly organized and
     validly existing as a corporation in good standing under the laws of the
     State of Delaware, with the corporate power and authority to own its
     properties and to conduct its business as such properties shall be
     currently owned and such business is presently conducted, and had at all
     relevant times, and has, the corporate power, authority, and legal right to
     acquire, own, sell and service the Receivables and to hold the Receivable
     Files as custodian.

         (ii) Due Qualification. The Servicer is duly qualified to do business
     as a foreign corporation in good standing, and has obtained all necessary
     licenses and approvals in all jurisdictions in which the ownership or lease
     of property or the conduct of its business (including the servicing of the
     Receivables as required by this Agreement and the performance of its other
     obligations under this Agreement and the other Basic Documents to which it
     is a party) shall require such qualifications.

         (iii) Power and Authority. The Servicer has the power and authority to
     execute and deliver this Agreement and the other Basic Documents to which
     it is a party and to carry out their respective terms; and the execution,
     delivery, and performance of this Agreement and the other Basic Documents
     to which it is a party have been duly authorized by the Servicer by all
     necessary corporate action.

         (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

                                       40
<PAGE>

     by which it is bound or any of its properties are subject; or result in the
     creation or imposition of any material lien upon any of its properties
     pursuant to the terms of any indenture, agreement, mortgage, deed of trust,
     or other instrument (other than this Agreement); or violate any law, order,
     rule, or regulation applicable to the Servicer of any court or of any
     Federal or State regulatory body, administrative agency, or other
     governmental instrumentality having jurisdiction over the Servicer or its
     properties.

         (vi) No Proceedings. There are no proceedings or investigations
     pending, or to the Servicer's best knowledge, threatened, before any court,
     regulatory body, administrative agency, or other governmental
     instrumentality having jurisdiction over the Servicer or its properties:
     (A) asserting the invalidity of this Agreement or the other Basic Documents
     to which the Servicer is a party, the Notes or the Certificates, (B)
     seeking to prevent the issuance of the Notes or the Certificates or the
     consummation of any of the transactions contemplated by this Agreement, the
     Notes, the 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, the
     Certificates or the other Basic Documents to which the Servicer is a party,
     (D) relating to the Servicer and which might adversely affect the Federal
     or State income, excise, franchise or similar tax attributes of the Notes
     or the Certificates or (E) that could have a material adverse effect on the
     Receivables.

         (vii) No Consents. No consent, approval, authorization or order of or
     declaration or filing with any governmental authority is required to be
     obtained by the Servicer for the issuance or sale of the Notes or the
     consummation of the other transactions contemplated by this Agreement and
     the other Basic Documents to which the Servicer is a party, except such as
     have been duly made or obtained.

         (viii) Taxes. The Servicer has filed on a timely basis all tax returns
     required to be filed by it and paid all taxes, to the extent that such
     taxes have become due.

         (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

                                       41
<PAGE>

     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.

         (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, the Issuer or the
     Noteholders, and their respective officers, directors, agents and employees
     through the negligence, willful misfeasance or bad faith of the Servicer in
     the performance of its duties under this Agreement or any other Basic
     Document to which it is a party or by reason of reckless disregard of its
     obligations and duties under this Agreement or any other Basic Document to
     which it is a party.

         (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

                                       42
<PAGE>

     (collectively, the "Indemnified Parties") from and against, any and all
     liabilities, obligations, losses, damages, taxes, claims, actions and
     suits, and any and all reasonable costs, expenses and disbursements
     (including reasonable legal fees and expenses) of any kind and nature
     whatsoever (collectively, "Expenses") which may at any time be imposed on,
     incurred by, or asserted against the Owner Trustee, WTC or any Indemnified
     Party in any way relating to or arising out of this Agreement, the Basic
     Documents, the Owner Trust Estate (as defined in the Trust Agreement), the
     administration of the Owner Trust Estate or the action or inaction of the
     Owner Trustee under the Trust Agreement, except only that the Servicer
     shall not be liable for or required to indemnify the Owner Trustee from and
     against Expenses arising or resulting from any of the matters described in
     the third sentence of Section 6.1 of the Trust Agreement. The indemnities
     contained in this Section shall survive the resignation or termination of
     the Owner Trustee or the termination of the Trust Agreement. In any event
     of any claim, action or proceeding for which indemnity will be sought
     pursuant to this Section, the Owner Trustee's choice of legal counsel shall
     be subject to the approval of the Transferor which approval shall not be
     unreasonably withheld.

         (vi) Notwithstanding the foregoing, the Servicer shall not be obligated
     to defend, indemnify, and hold harmless any Noteholder for any losses,
     claims, damages or liabilities incurred by any Noteholders arising out of
     claims, complaints, actions and allegations relating to Section 406 of
     ERISA or Section 4975 of the Code as a result of the purchase or holding of
     a Note by such Noteholder with the assets of a plan subject to such
     provisions of ERISA or the Code or the servicing, management and operation
     of the Issuer.

     (b) For purposes of this Section, in the event of the termination of the
rights and obligations of a Servicer (or any successor thereto pursuant to
Section 8.3) as Servicer pursuant to Section 9.1, or a resignation by such
Servicer pursuant to this Agreement, such Servicer shall be deemed to be the
Servicer pending appointment of a successor Servicer pursuant to Section 9.2.
The provisions of this Section 8.2(b) shall in no way affect the survival
pursuant to Section 8.2(c) of the indemnification by the outgoing Servicer
provided by Section 8.2(a).

     (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.

                                       43
<PAGE>

     (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 executed and filed that
are necessary fully to preserve and protect the interest of the Issuer in the
Receivables and reciting the details of such filings or (B) stating that, in the
opinion of such counsel, no such action shall be necessary to preserve and
protect such interest and (iv) nothing herein shall be deemed to release the
Servicer from any obligation. The Servicer shall provide written notice of any
merger, consolidation or succession pursuant to this Section 8.3(a) to the
Indenture Trustee, the Trust Collateral Agent, the Issuer, the Back-up Servicer,
the Collateral Agent, the Note Insurer, the Noteholders and each Rating Agency.
Notwithstanding anything herein to the contrary, the execution of the foregoing
agreement of assumption and compliance with clauses (i), (ii) or (iii) above
shall be conditions to the consummation of the transactions referred to in
clause (a), (b) or (c) above.

     (b) Any Person (a) into which the Back-up Servicer may be merged or
consolidated, (b) which may result from any merger or consolidation to which the
Back-up Servicer shall be a party, (c) which may succeed to the properties and
assets of the Back-up Servicer substantially as a whole or (d) succeeding to the
business of the Back-up Servicer, shall execute an agreement of assumption to
perform every obligation of the Back-up Servicer hereunder, and whether or not
such assumption agreement is executed, shall be the successor to the Back-up
Servicer under this Agreement without further act on the part of any of the
parties to this Agreement; provided,

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<PAGE>

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.

     (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

                                       45
<PAGE>

Back-up Servicer, the Back-up Servicer may petition a court of competent
jurisdiction for the appointment of a successor to the Back-up Servicer.

                                   ARTICLE IX

                           SERVICER TERMINATION EVENTS

         SECTION 9.1. Servicer Termination Events.If any one of the following
events ("Servicer Termination Events") shall occur and be continuing:

         (i) Any failure by the Servicer or, for so long as LBAC is the
     Servicer, the Transferor, to deliver to the Trust Collateral Agent for
     payment to Noteholders or 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 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 or in this Agreement, which
     failure shall continue unremedied for a period of 30 days after the date on
     which written notice of such failure requiring the same to be remedied,
     shall have been given (1) to LBAC, the Servicer or the Transferor (as the
     case may be), by the Note Insurer or the Trust Collateral Agent, or (2) to
     LBAC, the Servicer or the Transferor (as the case may be), and to the Trust
     Collateral Agent and the Note Insurer by the Class A Noteholders evidencing
     not less than 25% of the Class A Note Balance; or

         (v) The entry of a decree or order for relief by a court or regulatory
     authority having jurisdiction in respect of LBAC or the Servicer (or, so
     long as LBAC is the Servicer, the Transferor, or any of the Servicer's
     other Affiliates, if the Servicer's ability to service the Receivables is
     adversely affected thereby) in an involuntary case under the federal
     bankruptcy laws, as now or hereafter in effect, or another present or
     future,

                                       46
<PAGE>

     federal or state, bankruptcy, insolvency or similar law, or appointing a
     receiver, liquidator, assignee, trustee, custodian, sequestrator or other
     similar official of LBAC, the Servicer (or the Transferor or any other
     Affiliate of LBAC, if applicable) or of any substantial part of their
     respective properties or ordering the winding up or liquidation of the
     affairs of LBAC or the Servicer (or the Transferor or any other Affiliate
     of LBAC, if applicable) or the commencement of an involuntary case under
     the federal or state bankruptcy, insolvency or similar laws, as now or
     hereafter in effect, or another present or future, federal or state
     bankruptcy, insolvency or similar law with respect to LBAC or the Servicer
     (or the Transferor or any other Affiliate of LBAC, if applicable) and such
     case is not dismissed within 60 days; or

         (vi) The commencement by LBAC or the Servicer (or, so long as LBAC is
     the Servicer, the Transferor or any of the Servicer's other Affiliates, if
     the Servicer's ability to service the Receivables is adversely affected
     thereby) of a voluntary case under the federal bankruptcy laws, as now or
     hereafter in effect, or any other present or future, federal or state,
     bankruptcy, insolvency or similar law, or the consent by LBAC or the
     Servicer (or the Transferor or any other Affiliate of LBAC, if applicable)
     to the appointment of or taking possession by a receiver, liquidator,
     assignee, trustee, custodian, sequestrator or other similar official of
     LBAC or the Servicer (or the Transferor or any other Affiliate of LBAC, if
     applicable) or of any substantial part of its property or the making by
     LBAC or the Servicer (or the Transferor or any other Affiliate of LBAC, if
     applicable) of an assignment for the benefit of creditors or the failure by
     LBAC or the Servicer (or the Transferor or any other Affiliate of LBAC, if
     applicable) generally to pay its debts as such debts become due or the
     taking of corporate action by LBAC or the Servicer (or the Transferor or
     any other Affiliate of LBAC, if applicable) in furtherance of any of the
     foregoing; or

         (vii) Any representation, warranty or statement of LBAC or the Servicer
     or, for so long as LBAC is the Servicer, the Transferor, made in this
     Agreement and, with respect to LBAC and the Transferor, the Purchase
     Agreement or in each case any certificate, report or other writing
     delivered pursuant hereto shall prove to be incorrect as of the time when
     the same shall have been made (excluding, however, any representation or
     warranty set forth in Section 3.2(b) of the Purchase Agreement), and the
     incorrectness of such representation, warranty or statement has a material
     adverse effect on the Issuer and, within 30 days after written notice
     thereof shall have been given (1) to LBAC, the Servicer or the Transferor
     (as the case may be) by the Trust Collateral Agent or the Note Insurer or
     (2) to LBAC, the Servicer or the Transferor (as the case may be), and to
     the Trust Collateral Agent and the Note Insurer by the Class A Noteholders
     evidencing not less than 25% of the Class A Note Balance 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;

         (ix) A claim is made under the Policy; or

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<PAGE>

         (x) So long as a Note Insurer Default shall not have occurred and be
     continuing, the Note Insurer shall not have delivered a Servicer Extension
     Notice pursuant to Section 4.13;

     then, and in each and every case, so long as a Servicer Termination Event
     shall not have been remedied; provided, (i) no Note Insurer Default shall
     have occurred and be continuing, the Note Insurer in its sole and absolute
     discretion, or (ii) if a Note Insurer Default shall have occurred and be
     continuing, then either the Trust Collateral Agent or the Trust Collateral
     Agent acting at the written direction of the Majorityholders, by notice
     then given in writing to the Servicer (and to the Trust Collateral Agent if
     given by the Note Insurer or by the Noteholders or 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. 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

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<PAGE>

     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.

         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

                                       49
<PAGE>

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.

     (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.

         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 the Class C Certificateholder. The Trust

                                       50
<PAGE>

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.

     (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;

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<PAGE>

         (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 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.

     (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

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<PAGE>

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, 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, 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.

     (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

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<PAGE>

representations, warranties or covenants or the Servicer's duties and
obligations as servicer and as custodian of the Receivable Files under this
Agreement.

     (m) In no event shall JPMorgan Chase Bank, in any of its capacities
hereunder, be deemed to have assumed any duties of the Owner Trustee under the
Delaware Statutory Trust Act, common law, or the Trust Agreement.

     (n) The Trust Collateral Agent shall not be required to give any bond or
surety in respect of the powers granted to it under this Agreement.

         SECTION 10.2. Trust Collateral Agent to Act for the Class A
Noteholders, 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.

         (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

                                       54
<PAGE>

     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 Sections 3.4, subsequent to
     the sale of the Receivables by the Transferor to the Issuer, the Trust
     Collateral Agent shall not have any duty of independent inquiry, and the
     Trust Collateral Agent may rely upon the representations and warranties and
     covenants of the Transferor and the Servicer contained in this Agreement
     with respect to the Receivables and the Receivable Files.

         (vii) The Trust Collateral Agent may rely, as to factual matters
     relating to the Transferor or the Servicer, on an Officer's Certificate of
     the Transferor or Servicer, respectively.

         (viii) The Trust Collateral Agent shall not be required to take any
     action or refrain from taking any action under this Agreement, or any
     related documents referred to herein, nor shall any provision of this
     Agreement, or any such related document be deemed to impose a duty on the
     Trust Collateral Agent to take action, if the Trust Collateral Agent shall
     have been advised by counsel that such action is contrary to (i) the terms
     of this Agreement, (ii) any such related document or (iii) applicable law.

         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,

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<PAGE>

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.

         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

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<PAGE>

itself against any claim or liability in connection with the exercise or
performance of any of its powers or duties under this Agreement. The provisions
of this Section 10.6 shall survive the termination of this Agreement or any
resignation or removal of LBAC as Servicer.

         SECTION 10.7. Eligibility Requirements for Trust Collateral Agent. The
Trust Collateral Agent under this Agreement shall at all times be organized and
doing business under the laws of the State of New York; authorized under such
laws to exercise corporate trust powers; having a combined capital and surplus
of at least $50,000,000 and subject to supervision or examination by Federal or
State authorities satisfactory to the Note Insurer; and having a rating, both
with respect to long-term and short-term unsecured obligations, of not less than
investment grade by each Rating Agency. If such corporation shall publish
reports of condition at least annually, pursuant to law or to the requirements
of the aforesaid supervising or examining authority, then for the purpose of
this Section 10.7, the combined capital and surplus of such corporation shall be
deemed to be its combined capital and surplus as set forth in its most recent
report of condition so published. In case at any time the Trust Collateral Agent
shall cease to be eligible in accordance with the provisions of this Section
10.7, the Trust Collateral Agent shall resign immediately in the manner and with
the effect specified in Section 10.8.

         SECTION 10.8. Resignation or Removal of Trust Collateral Agent.

     (a) The Trust Collateral Agent may at any time resign and be discharged
from the trusts hereby created by giving 30 days' prior written notice thereof
to the Servicer. To the extent that the Trust Collateral Agent resigns
hereunder, the Indenture Trustee shall also resign under the Indenture and the
Collateral Agent shall resign under the Spread Account Agreement. Upon receiving
such notice of resignation, with the prior written consent of the Note Insurer
(or, if a Note Insurer Default shall have occurred or is continuing, the Class A
Noteholders evidencing not less than 25% of the Class A Note Balance), the
Servicer shall promptly appoint a successor Trust Collateral Agent by written
instrument, in duplicate, one copy of which instrument shall be delivered to the
resigning Trust Collateral Agent and one copy to the successor Trust Collateral
Agent. If no successor Trust Collateral Agent shall have been so appointed and
have accepted appointment within 30 days after the giving of such notice of
resignation, the Note Insurer may appoint a successor Trust Collateral Agent by
written instrument, in duplicate, one copy of which instrument shall be
delivered to the resigning Trust Collateral Agent and one copy to the successor
Trust Collateral Agent. If no successor Trust Collateral Agent shall have been
so appointed and have accepted appointment within 60 days after the giving of
such notice of resignation, the resigning Trust Collateral Agent may petition
any court of competent jurisdiction for the appointment of a successor Trust
Collateral Agent. The Trust Collateral Agent may be removed at any time by
written demand of the Note Insurer delivered to the Trust Collateral Agent and
the Servicer.

     (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

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<PAGE>

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.

     (e) At any time following the Closing Date the Servicer may assume the
duties of Custodian under this Agreement; provided, that (i) the Note Insurer
provides its prior written consent to the Trust Collateral Agent (which consent
shall be granted or withheld by the Note Insurer in its sole discretion) and
(ii) the Rating Agency Condition has been satisfied.

         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.

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         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.

     (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:

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<PAGE>

         (i) All rights, powers, duties, and obligations conferred or imposed
     upon the Trust Collateral Agent shall be conferred upon and exercised or
     performed by the Trust Collateral Agent and such separate trustee or
     co-trustee jointly (it being understood that such separate trustee or
     co-trustee is not authorized to act separately without the Trust Collateral
     Agent joining in such act), except to the extent that under any law of any
     jurisdiction in which any particular act or acts are to be performed
     (whether as Trust Collateral Agent under this Agreement or, in its capacity
     as Back-up Servicer, as successor to the Servicer under this Agreement),
     the Trust Collateral Agent shall be incompetent or unqualified to perform
     such act or acts, in which event such rights, powers, duties, and
     obligations (including the holding of title to the Issuer or any portion
     thereof in any such jurisdiction) shall be exercised and performed singly
     by such separate trustee or co-trustee, but solely at the direction of the
     Trust Collateral Agent;

         (ii) No trustee under this Agreement shall be personally liable by
     reason of any act or omission of any other trustee under this Agreement;
     and

         (iii) Provided no Note Insurer Default shall have occurred and be
     continuing, the Note Insurer may, and, in the event a Note Insurer Default
     shall have occurred and be continuing, then, the Servicer and the Trust
     Collateral Agent acting jointly may, at any time accept the resignation of
     or remove any separate trustee or co-trustee.

     (c) Any notice, request or other writing given to the Trust Collateral
Agent shall be deemed to have been given to each of the other then separate
trustees and co-trustees, as effectively as if given to each of them. Every
instrument appointing any separate trustee or co-trustee shall refer to this
Agreement and the conditions of this Article X. Each separate trustee and
co-trustee, upon its acceptance of the trusts conferred, shall be vested with
the estates or property specified in its instrument of appointment, either
jointly with the Trust Collateral Agent or separately, as may be provided
therein, subject to all the provisions of this Agreement, specifically including
every provision of this Agreement relating to the conduct of, affecting the
liability of, or affording protection to, the Trust Collateral Agent. Each such
instrument shall be filed with the Trust Collateral Agent and a copy thereof
given to the Servicer.

     (d) Any separate trustee or co-trustee may at any time appoint the Trust
Collateral Agent, its agent or attorney-in-fact with full power and authority,
to the extent not prohibited by law, to do any lawful act under or in respect of
this Agreement on its behalf and in its name. If any separate trustee or
co-trustee shall die, become incapable of acting, resign or be removed, all of
its estates, properties, rights, remedies and trusts shall vest in and be
exercised by the Trust Collateral Agent, to the extent permitted by law, without
the appointment of a new or successor Trust Collateral Agent.

         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:

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         (i) The Trust Collateral Agent is a New York banking corporation, duly
     organized, validly existing, and in good standing under the laws of the
     State of New York and has the corporate power, authority and legal right to
     hold the Legal Files.

         (ii) The Trust Collateral Agent has full corporate power authority and
     legal right to execute, deliver, and perform this Agreement and shall have
     taken all necessary action to authorize the execution, delivery and
     performance by it of this Agreement.

         (iii) This Agreement has been duly executed and delivered by the Trust
     Collateral Agent and constitutes a legal, valid and binding obligation of
     the Trust Collateral Agent, enforceable in accordance with its terms,
     subject to (x) applicable bankruptcy, insolvency, reorganization,
     moratorium and other similar laws affecting creditors' rights generally and
     (y) general principals of equity.

         SECTION 10.13. Rights of Note Insurer to Direct Trust Collateral Agent.
Subject to clause (iii) of Section 10.3, unless a Note Insurer Default shall
have occurred and be continuing, the Note Insurer, after giving written notice
to the Trust Collateral Agent, shall have the right to direct in writing the
time, method and place at or by which the Trust Collateral Agent conducts any
proceeding for any remedy available to the Trust Collateral Agent, or exercises
any such trust or power conferred upon the Trust Collateral Agent; provided,
however, that subject to Section 10.1, the Trust Collateral Agent shall have the
right to decline to follow any such direction of the Note Insurer if the Trust
Collateral Agent, being advised by counsel, determines that the action so
directed may not lawfully be taken, or if the Trust Collateral Agent in good
faith shall, by a Responsible Officer of the Trust Collateral Agent, determine
that the proceedings so directed would be in violation of any Basic Document or
involve it in personal liability against which it has not been provided
indemnity in form and substance satisfactory to it or be unduly prejudicial to
the rights of Noteholders 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.

                                   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.

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<PAGE>

     (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.

     (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

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     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.

     (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.

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         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:

         (x) to correct or amplify the description of any property at any time
     conveyed to the Issuer hereunder, or better to assure, convey and confirm
     unto the property conveyed pursuant hereto;

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         (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 to make any other provisions with respect to matters or questions
     arising under this Agreement; provided that such action pursuant to this
     subclause (z) shall not adversely affect in any material respect the
     interests of the Holders of the Notes, as evidenced by satisfaction of the
     Rating Agency Condition with respect to such amendment

     (b) The Sale and Servicing Agreement shall not be amended or modified
without the prior written consent of the Class C Certificateholder (to the
extent such 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.

         SECTION 13.2. Protection of Title.

     (a) Each of the Transferor, as to itself, and the Servicer, as to itself,
shall execute and file such financing statements and cause to be executed and
filed such continuation statements, all in such manner and in such places as may
be required by law fully to preserve, maintain, and protect the interest of the
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

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<PAGE>

the meaning of (Section) 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 executed and
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 executed and filed that are
necessary fully to preserve and protect the interest of the Trust Collateral
Agent in the Receivables, and reciting the details of such filings or (B)
stating that, in the opinion of such counsel, no such action shall be necessary
to preserve and protect such interest. The Servicer shall at all times maintain
each office from which it shall service Receivables, and its principal executive
office, within the United States of America.

     (d) The Servicer shall maintain accounts and records as to each Receivable
accurately and in sufficient detail to permit (i) the reader thereof to know at
any time the status of such Receivable, including payments and recoveries made
and payments owing (and the nature of each) and (ii) reconciliation between
payments or recoveries on (or with respect to) each Receivable and the amounts
from time to time deposited in the Collection Account in respect of such
Receivable.

     (e) The Servicer shall maintain its computer systems so that, from and
after the time of conveyance under this Agreement of the Receivables to the
Issuer, the Servicer's master computer records (including any back-up archives)
that refer to a Receivable shall indicate clearly the interest of Long Beach
Acceptance Auto Receivables Trust 2003-B in such Receivable and that such
Receivable is owned by the Issuer. Indication of the Issuer's ownership of a
Receivable shall be deleted from or modified on the Servicer's computer systems
when, and only when, such Receivable shall have been paid in full or
repurchased.

     (f) If at any time the Transferor or the Servicer shall propose to sell,
grant a security interest in, or otherwise transfer any interest in automotive
receivables to any prospective purchaser, lender, or other transferee, the
Servicer shall give to such prospective purchaser, lender, or other transferee
computer tapes, records, or printouts (including any restored from back-up
archives) that, if they shall refer in any manner whatsoever to any Receivable,
shall indicate clearly that such Receivable has been conveyed to and is owned by
the Issuer.

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     (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 executed and filed
         that are necessary fully to preserve and protect the interest of the
         Trust Collateral Agent in the Receivables, and reciting the details of
         such filings or referring to prior Opinions of Counsel in which such
         details are given or (B) stating that, in the opinion of such counsel,
         no such action shall be necessary to preserve and protect such
         interest; and

               (2) within 90 days after the beginning of each calendar year
         beginning with the first calendar year beginning more than three months
         after the Cutoff Date, an Opinion of Counsel, dated as of a date during
         such 90-day period either (A) stating that, in the opinion of such
         counsel, all financing statements and continuation statements have been
         executed and filed that are necessary fully to preserve and protect the
         interest of the Trust Collateral Agent in the Receivables, and reciting
         the details of such filings or referring to prior Opinions of Counsel
         in which such details are given or (B) stating that, in the opinion of
         such counsel, no such action shall be necessary to preserve and protect
         such interest.

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.

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<PAGE>

         SECTION 13.3. Limitation on Rights of Noteholders and the Class C
Certificateholder.

     (a) The death or incapacity of any Noteholder shall not operate to
terminate this Agreement or the Issuer, nor entitle such Noteholder's legal
representatives or heirs to claim an accounting or to take any action or
commence any proceeding in any court for a partition or winding up of the
Issuer, nor otherwise affect the rights, obligations and liabilities of the
parties to this Agreement or any of them.

     (b) No Noteholder shall have any right to vote (except as specifically
provided herein including in Section 13.1) or in any manner otherwise control
the operation and management of the Issuer, or the obligations of the parties to
this Agreement, nor shall anything in this Agreement set forth, or contained in
the terms of the Notes be construed so as to constitute the Noteholders from
time to time as partners or members of an association; nor shall any Noteholder
or any 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 any 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, 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 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 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 or (iv)
by telecopy, 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:
Rodney Square North, 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,
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 Corporate Trust Office (Telecopy: (212)
946-3916), (e) in the case of the Custodian, at the Corporate Trust Office
(Telecopy: (212) 946-3916), (f) in the case of Standard & Poor's, at the
following address: 44 Water Street, 40th Floor, New York, New York 10041,
Attention: Asset Backed Surveillance Department, (g) in the case of Moody's, at
the following address: 99 Church Street, New York, New York 10007, Attention:
ABS Monitoring Department and (h) in the case of the Note Insurer, at the
following address: at 350 Park Avenue, New York, New York 10022, Attention:
Transaction Oversight, Re: Long Beach Acceptance Auto Receivables Trust 2003-B.
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.

     (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

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<PAGE>

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 JPMorgan Chase, not in its
individual capacity but solely as Back-up Servicer and Trust Collateral Agent
and in no event shall JPMorgan Chase have any liability for the representations,
warranties, covenants, agreements or other obligations of the Issuer hereunder
or in any of the certificates, notices or agreements of the Issuer delivered
pursuant hereto, as to all of which recourse shall be had solely to the assets
of the Issuer.

         SECTION 13.9. Independence of the Servicer. For all purposes of this
Agreement, the Servicer shall be an independent contractor and shall not be
subject to the supervision of the Issuer, the Trust Collateral Agent, the
Back-up Servicer or the Owner Trustee with respect to the manner in which it
accomplishes the performance of its obligations hereunder. Unless expressly
authorized by this Agreement, the Servicer shall have no authority to act for or
represent the Issuer or the Owner Trustee in any way and shall not otherwise be
deemed an agent of the Issuer or the Owner Trustee.

         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.

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         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,

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ACTION OR PROCEEDING IS IMPROPER OR THAT THE RELATED DOCUMENTS OR THE SUBJECT
MATTER THEREOF MAY NOT BE LITIGATED IN OR BY SUCH COURTS.

     (b) To the extent permitted by applicable law, the parties hereto shall not
seek and hereby waive the right to any review of the judgment of any such court
by any court of any other nation or jurisdiction which may be called upon to
grant an enforcement of such judgment.

     (c) Each of LBAC and the Transferor hereby agree that until such time at
the Notes and the Reimbursement Obligations have been paid in full and the
Policy has expired in accordance with its terms, each of LBAC and the Transferor
shall have appointed, with prior written notice to the Note Insurer, an agent
registered with the Secretary of State of the State of New York, with an office
in the County of New York in the State of New York, as its true and lawful
attorney and duly authorized agent for acceptance of service of legal process
(which as of the date hereof is National Registered Agents, Inc., whose address
is 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.

         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

                                       72
<PAGE>

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.





                                       73
<PAGE>

         IN WITNESS WHEREOF, the Issuer, the Transferor, the Originator, the
Servicer, the Trust Collateral Agent, the Back-up Servicer and the Custodian
have caused this Sale and Servicing Agreement to be duly executed by their
respective officers as of the day and year first above written.



                                        LONG BEACH ACCEPTANCE
                                        RECEIVABLES CORP., as Transferor


                                        By:
                                           ------------------------------------
                                           Name:
                                           Title:

                                        LONG BEACH ACCEPTANCE CORP.,
                                        as Originator, Servicer and Custodian


                                        By:
                                           ------------------------------------
                                           Name:
                                           Title:

                                        JPMORGAN CHASE BANK,
                                        as Back-up Servicer and Trust Collateral
                                        Agent


                                        By:
                                           ------------------------------------
                                           Name:
                                           Title:

                                        LONG BEACH ACCEPTANCE AUTO
                                        RECEIVABLES TRUST 2003-B, as Issuer

                                        By: Wilmington Trust Company, not in its
                                            individual capacity, but solely as
                                            Owner Trustee


                                        By:
                                           ------------------------------------
                                           Name:
                                           Title:





                         [Sale and Servicing Agreement]

<PAGE>

                                                                         ANNEX A

                                  DEFINED TERMS














                                    Annex A
<PAGE>

                                                                     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 June 1, 2003, among Long Beach Acceptance Receivables Corp., Long Beach
Acceptance Corp., as originator, as servicer and as custodian, JPMorgan Chase
Bank, as trust collateral agent and back-up servicer and Long Beach Acceptance
Auto Receivables Trust 2003-B, as issuer (the "Issuer"). The Issuer does hereby
sell, transfer, assign, and otherwise convey to LBAC, without recourse,
representation, or warranty, all of the Issuer's right, title, and interest in
and to all of the Receivables (as defined in the Agreement) identified in the
attached Servicer's Certificate as "Purchased Receivables," which are to be
repurchased by LBAC pursuant to Section 3.4 of the Agreement, and all security
and documents relating thereto.

IN WITNESS  WHEREOF I have  hereunto set my hand this __ day of ___________, __.


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




                                     A-1-1
<PAGE>

                                                                     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 June 1, 2003, among Long Beach Acceptance Receivables Corp., Long Beach
Acceptance Corp., as originator, as servicer and as custodian, JPMorgan Chase
Bank, as trust collateral agent and back-up servicer and Long Beach Acceptance
Auto Receivables Trust 2003-B, as issuer (the "Issuer"). The Issuer does hereby
sell, transfer, assign, and otherwise convey to the Servicer, without recourse,
representation, or warranty, all of the Issuer's right, title, and interest in
and to all of the Receivables (as defined in the Agreement) identified in the
attached Servicer's Certificate as "Purchased Receivables," which are to be
purchased by the Servicer pursuant to Section 4.7 of the Agreement, and all
security and documents relating thereto.

IN WITNESS  WHEREOF I have  hereunto set my hand this __ day of ___________, __.


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





                                     A-2-1
<PAGE>
                                                                     EXHIBIT B-1

                             SERVICER'S CERTIFICATE
               LONG BEACH ACCEPTANCE AUTO RECEIVABLES TRUST 2003-B
                       0.990 ASSET-BACKED NOTES, CLASS A-1
                       1.114 ASSET-BACKED NOTES, CLASS A-2
                       1.575 ASSET-BACKED NOTES, CLASS A-3
                       2.178 ASSET-BACKED NOTES, CLASS A-4













                                     B-1-1
<PAGE>


                                                                     EXHIBIT B-2

                         Form of Loan Master File Layout















                                     B-2-1
<PAGE>

                                                                       EXHIBIT C

                              Intentionally Omitted
                              ---------------------















                                      C-1
<PAGE>

                                                                       EXHIBIT D

                            PAYMENT DEFERMENT POLICY

o    LBAC may grant a payment deferment provided that the deferment period does
     not exceed 1 month (2 months if 12 or more payments have been made and if
     the deferment is granted in writing by the President, or an Executive Vice
     President, or the National Collections Manager, or a Regional Manager).

o    Not more than 1 deferment event (which may consist of a 2 month deferment
     according to the exceptions included in the policy) may be granted during
     any 12-month period.

o    The aggregate of all deferment periods during the term of a Receivable may
     not exceed the lesser of 8 months or 50% of the weighted average life of
     the original term of the Receivable (including deferments granted both
     before and after the related Cutoff Date).

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

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

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

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

o    A deferment fee will be collected for each deferment if allowed by
     applicable law and may be waived or deferred only by the President, or an
     Executive Vice President, or the National Collections Manager, or a
     Regional Manager; provided, however, that no deferment will be granted
     unless the Servicer believes in good faith that the account probably would
     default in the reasonably foreseeable future if a deferment is not
     approved.

o    Deferments which do not meet the above criteria may be granted in writing
     on an exception basis (e.g., when required by law) by the President, or an
     Executive Vice President, or the National Collections Manager, or a
     Regional Manager.

o    As of October 1, 2003, and the first day of each calendar quarter
     thereafter, the aggregate number of Receivables the terms of which have
     been extended during the preceding calendar quarter shall not exceed 4% of
     the number of Receivables at the beginning of the preceding calendar
     quarter.

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


                                      D-1
<PAGE>


                             DUE DATE CHANGE POLICY
                             ----------------------

o    LBAC may grant a due date change, provided that the new due date is within
     20 days of the current due date.

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

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

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

o    The account must be current at the time the request is received.

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

o    No due date change may be granted if the aggregate of all deferment periods
     and the requested due date change would exceed the lesser of 8 months or
     50% of the original term of the Receivable.




                                       D-2
<PAGE>



                                                                       EXHIBIT E

                             Documentation Checklist
                             -----------------------


CUSTOMER: ______________________________________________________________________

ACCOUNT NUMBER: ________________________________________________________________

This funding package contains the following initialed items:

  1.   Installment contract with proper signatures and Dealer
       endorsements                                                1.___________

  2.   Copy of signed credit application                           2.___________

  3.   References as described in the Program Guidelines           3.___________

  4.   Proof of income as described in the Program Guidelines      4.___________

  5.   Copy of driver's license for all licensed signors           5.___________

  6.   Title information (application and copy of existing
       title, receipt of registration, or title copy already
       received) with lien notation thereon, or Dealer Title
       Guaranty                                                    6.___________

  7.   Invoice or copy of computer screen printout showing
       NADA value, NADA book page, Kelley printout or Kelley
       Blue Book page                                              7.___________

  8.   In the case of a used Financed Vehicle, odometer
       statement (if not on title info)                            8.___________

  9.   Signed agreement to provide insurance and verification
       paper or other evidence of verification of insurance
       coverage                                                    9.___________

  10.  Notice to cosignor, if required                             10.__________

  11.  Service contract or warranty papers                         11.__________

  12.  Life, accident, health and GAP insurance policy copies,
       as applicable                                               12.__________

  13.  Signed purchase order from dealer to customer               13.__________


                                       E-1
<PAGE>


f

















                                      G-1

<PAGE>

                                                                      SCHEDULE A

                             SCHEDULE OF RECEIVABLES
                             -----------------------

















                                  Schedule A-1
<PAGE>

                                                                      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
<PAGE>


                                                                      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