exv4w3



 





EXHIBIT 4.3




SALE AND SERVICING

AGREEMENT




among




TRIAD AUTOMOBILE RECEIVABLES TRUST 2007-A,

Issuer,




TRIAD FINANCIAL SPECIAL PURPOSE LLC,

Depositor,




TRIAD FINANCIAL CORPORATION,

Servicer and Custodian




and




CITIBANK, N.A.,

Backup Servicer and Indenture Trustee




Dated as of May 30, 2007




 









 






TABLE OF CONTENTS




	 	 	 	 	 
	 	 	Page
	ARTICLE I Definitions
	 	 	1	 
	Section 1.1 Definitions
	 	 	1	 
	Section 1.2 Other Definitional Provisions
	 	 	18	 
	 
	 	 	 	 
	ARTICLE II Conveyance of Receivables
	 	 	19	 
	Section 2.1 Conveyance of Receivables
	 	 	19	 
	Section 2.2 [Reserved]
	 	 	20	 
	Section 2.3 Further Encumbrance of Trust Property
	 	 	20	 
	 
	 	 	 	 
	ARTICLE III The Receivables
	 	 	20	 
	Section 3.1 Representations and Warranties
	 	 	20	 
	Section 3.2 Repurchase upon Breach of Representations and Warranties
	 	 	21	 
	Section 3.3 Custody of Receivables Files
	 	 	22	 
	 
	 	 	 	 
	ARTICLE IV Administration and Servicing of Receivables
	 	 	24	 
	Section 4.1 Duties of the Servicer
	 	 	24	 
	Section 4.2 Collection of Receivable Payments; Modifications of Receivables; Blocked
Account Agreement
	 	 	25	 
	Section 4.3 Realization upon Receivables
	 	 	27	 
	Section 4.4 Insurance
	 	 	28	 
	Section 4.5 Maintenance of Security Interests in Vehicles
	 	 	29	 
	Section 4.6 Covenants, Representations, and Warranties of Servicer
	 	 	30	 
	Section 4.7 Purchase of Receivables Upon Breach of Covenant
	 	 	31	 
	Section 4.8 Total Servicing Fee; Payment of Certain Expenses by Servicer
	 	 	32	 
	Section 4.9 Servicer’s Certificate
	 	 	32	 
	Section 4.10 Annual Statement as to Compliance, Notice of Servicer Termination Event
	 	 	32	 
	Section 4.11 Annual Independent Accountants’ Report
	 	 	33	 
	Section 4.12 Access to Certain Documentation and Information Regarding Receivables
	 	 	33	 
	Section 4.13 Reserved
	 	 	34	 
	Section 4.14 Fidelity Bond and Errors and Omissions Policy
	 	 	34	 
	 
	 	 	 	 
	ARTICLE V Trust Accounts; Distributions; Statements to Noteholders
	 	 	34	 
	Section 5.1 Establishment of Trust Accounts
	 	 	34	 
	Section 5.2 [Reserved]
	 	 	37	 
	Section 5.3 Certain Reimbursements to the Servicer
	 	 	37	 
	Section 5.4 Application of Collections
	 	 	37	 
	Section 5.5 Spread Account
	 	 	37	 
	Section 5.6 Additional Deposits
	 	 	38	 
	Section 5.7 Distributions
	 	 	38	 
	Section 5.8 Note Distribution Account
	 	 	40	 
	Section 5.9 Reserved
	 	 	41	 
	Section 5.10 Statements to Noteholders
	 	 	41	 
	Section 5.11 Optional Deposits by the Insurer
	 	 	42	 






i









 






	 	 	 	 	 
	 	 	Page
	ARTICLE VI The Note Policy
	 	 	42	 
	Section 6.1 Claims Under Note Policy
	 	 	42	 
	Section 6.2 Preference Claims Under Note Policy
	 	 	43	 
	Section 6.3 Surrender of Note Policy
	 	 	44	 
	 
	 	 	 	 
	ARTICLE VII The Depositor
	 	 	44	 
	Section 7.1 Representations of Depositor
	 	 	44	 
	Section 7.2 Organizational Existence
	 	 	45	 
	Section 7.3 Liability of Depositor
	 	 	46	 
	Section 7.4 Merger or Consolidation of, or Assumption of the Obligations of,
Depositor
	 	 	46	 
	Section 7.5 Limitation on Liability of Depositor and Others
	 	 	46	 
	Section 7.6 Ownership of the Certificates or Notes
	 	 	46	 
	 
	 	 	 	 
	ARTICLE VIII The Servicer
	 	 	46	 
	Section 8.1 Representations of Servicer
	 	 	46	 
	Section 8.2 Liability of Servicer; Indemnities
	 	 	48	 
	Section 8.3 Merger or Consolidation of, or Assumption of the Obligations of the
Servicer or Backup Servicer
	 	 	48	 
	Section 8.4 Limitation on Liability of Servicer, Backup Servicer and Others
	 	 	49	 
	Section 8.5 Delegation of Duties
	 	 	50	 
	Section 8.6 Servicer and Backup Servicer Not to Resign
	 	 	50	 
	 
	 	 	 	 
	ARTICLE IX Default
	 	 	51	 
	Section 9.1 Servicer Termination Event
	 	 	51	 
	Section 9.2 Consequences of a Servicer Termination Event
	 	 	52	 
	Section 9.3 Appointment of Successor
	 	 	52	 
	Section 9.4 Notification to Noteholders
	 	 	53	 
	Section 9.5 Waiver of Past Defaults
	 	 	53	 
	 
	 	 	 	 
	ARTICLE X Termination
	 	 	54	 
	Section 10.1 Optional Purchase of All Receivables
	 	 	54	 
	 
	 	 	 	 
	ARTICLE XI Administrative Duties of the Servicer
	 	 	54	 
	Section 11.1 Administrative Duties
	 	 	54	 
	Section 11.2 Records
	 	 	56	 
	Section 11.3 Additional Information to be Furnished to the Issuer
	 	 	56	 
	 
	 	 	 	 
	ARTICLE XII Miscellaneous Provisions
	 	 	57	 
	Section 12.1 Amendment
	 	 	57	 
	Section 12.2 Protection of Title to Trust
	 	 	58	 
	Section 12.3 Notices
	 	 	59	 
	Section 12.4 Assignment
	 	 	60	 
	Section 12.5 Limitations on Rights of Others
	 	 	61	 
	Section 12.6 Severability
	 	 	61	 
	Section 12.7 Separate Counterparts
	 	 	61	 
	Section 12.8 Headings
	 	 	61	 
	Section 12.9 Governing Law
	 	 	61	 
	Section 12.10 Assignment to Indenture Trustee
	 	 	61	 






ii









 






	 	 	 	 	 
	 	 	Page
	Section 12.11 Nonpetition Covenants
	 	 	61	 
	Section 12.12 Limitation of Liability of Owner Trustee and Indenture Trustee
	 	 	62	 
	Section 12.13 Independence of the Servicer
	 	 	62	 
	Section 12.14 No Joint Venture
	 	 	62	 
	Section 12.15 Nonpublic Personal Information
	 	 	63	 
	Section 12.16 Regulation AB
	 	 	63	 
	Section 12.17 Replacement Swap Agreement
	 	 	64	 
	 
	 	 	 	 
	SCHEDULES
	 	 	 	 
	 
	 	 	 	 
	Schedule A Schedule of Receivables
	 	 	 	 
	Schedule B Representations and Warranties
	 	 	 	 
	Schedule C Servicing Policies and Procedures
	 	 	 	 
	Schedule D Custodian Third Party Vendors
	 	 	 	 
	 
	 	 	 	 
	EXHIBITS
	 	 	 	 
	 
	 	 	 	 
	Exhibit A Form of Servicer’s Certificate
	 	 	 	 
	Exhibit B Form of Financial Guaranty Insurance Policy
	 	 	 	 






iii









 






          SALE AND SERVICING AGREEMENT dated as of May 30, 2007, among TRIAD AUTOMOBILE RECEIVABLES
TRUST 2007-A, a Delaware statutory trust (the “Issuer”), TRIAD FINANCIAL SPECIAL PURPOSE
LLC, a Delaware limited liability company (the “Depositor”), and TRIAD FINANCIAL
CORPORATION, a California corporation (“Triad”, in its capacity as Servicer, the
“Servicer”, and in its capacity as Custodian, the “Custodian”), and CITIBANK, N.A.,
a national banking association organized under the laws of the United States, in its capacity as
Backup Servicer and Indenture Trustee (in such capacities, the “Backup Servicer” and the
“Indenture Trustee”, respectively).




          The Issuer desires to purchase the Receivables and Other Conveyed Property;




          The Depositor has purchased the Receivables and Other Conveyed Property from Triad and is
willing to sell the Receivables and Other Conveyed Property to the Issuer;




          The Servicer is willing to service the Receivables;




          The Custodian is willing to take custody of the Receivable Files.




          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, the following words and
phrases will have the following meanings:



          “Accounting Date” means, with respect to any Collection Period the last day of such
Collection Period.



          “Additional Funds Available” means, with respect to any Distribution Date, the sum of:
(i) the Spread Account Draw Amount, if any, received by the Indenture Trustee with respect to the
Distribution Date plus (ii) the Insurer Optional Deposit, if any, received by the Indenture
Trustee with respect to the Distribution Date.



          “Administrative Receivable” means, so long as Triad is the Servicer, with respect to
any Collection Period, a Receivable which the Servicer is required to purchase pursuant to
Section 4.7 on the Determination Date with respect to such Collection Period.



          “Affiliate” means, with respect to any specified Person, any other Person controlling
or controlled by or under common control with such specified Person. For the purposes of this
definition, “control” when used with respect to any Person means the power to direct the management
and policies of such Person, directly or indirectly, whether through the ownership of voting
securities, by contract or otherwise; and the terms “controlling” and “controlled” have meanings
correlative to the foregoing.



          “Aggregate Principal Balance” means, with respect to any date of determination, the
sum of the Principal Balances for all Receivables (other than (a) any Receivable that became a
Liquidated Receivable prior to the end of the preceding Collection Period and (b) any Receivable
that



1









 







became a Purchased Receivable prior to the end of the preceding Collection Period) as of the
date of determination.



          “Agreement” means this Sale and Servicing Agreement, as the same may be amended and
supplemented from time to time.



          “Amount Financed” means, with respect to a Receivable, the aggregate amount advanced
under such Receivable toward the purchase price of the Financed Vehicle and any related costs,
including amounts advanced at the time the Receivable is originated in respect of accessories,
insurance premiums, service contracts, car club and warranty contracts and other items customarily
financed as part of retail automobile installment sale contracts or promissory notes, and related
costs.



          “Annual Percentage Rate” or “APR” of a Receivable means the annual percentage
rate of finance charges or service charges, as stated in the related Contract.



          “Auto Loan Purchase and Sale Agreement” means any agreement between a Third-Party
Lender and Triad relating to the acquisition of Receivables from a Third Party Lender by Triad.



          “Available Funds” means, for any Collection Period, the sum of (a) the Collected Funds
for the Collection Period, (b) all Purchase Amounts deposited in the Collection Account with
respect to the Collection Period, plus income on investments held in the Collection Account,
including earnings transferred to the Collection Account pursuant to Section 5.1(b) hereof,
(c) the proceeds of any liquidation of the assets of the Issuer, other than Net Liquidation
Proceeds, and (d) any amounts received by the Indenture Trustee pursuant to the Swap Agreement with
respect to the Class A-4 Notes (less any amounts used to enter into a replacement swap agreement).



          “Backup Servicer” means Citibank, N.A.



          “Base Servicing Fee” means, with respect to any Collection Period, the fee payable to
the Servicer for services rendered during such Collection Period, which will be equal to
one-twelfth of the Servicing Fee Rate multiplied by the Pool Balance as of the opening of business
on the first day of such Collection Period.



          “Basic Documents” means this Agreement, the Certificate of Trust, the Trust Agreement,
the Purchase Agreement, the Insurance Agreement, the Swap Agreement, the Indenture, and the other
documents and certificates delivered in connection therewith.



          “Blocked Account Agreement” means the Blocked Account Agreement with Notice, dated as
of April 29, 2005, by and among Triad, the Processing Bank, Mellon Financial Services Corporation
#1, Triad Automobile Receivables Warehouse Trust and JPMorgan Chase Bank, N.A., as such agreement
may be amended or supplemented from time to time, unless JPMorgan Chase Bank, N.A. will cease to be
a party thereunder, or such agreement will be terminated in accordance with its terms, in which
event “Blocked Account Agreement” will mean such other agreement, in form and substance
acceptable to the Controlling Party, among the Servicer, the Indenture Trustee and the Processing
Bank.



          “Business Day” means a day other than a Saturday, a Sunday or other day on which
commercial banks located in the states of Delaware, California, or New York are authorized or
obligated to be closed.



2









 





          “Certificate” means the trust certificate evidencing the beneficial interest of the
Certificateholder in the Trust.



          “Certificateholders” means the Persons in whose name the Certificates are registered.



          “Class” means the Class A-1 Notes, the Class A-2 Notes, the Class A-3 Notes or the
Class A-4 Notes, as the context requires.



          “Class A Notes” means, collectively, the Class A-1 Notes, the Class A-2 Notes, the
Class A-3 Notes and the Class A-4 Notes.



          “Class A Noteholders” means the holders of the Class A Notes.



          “Class A Noteholders’ Accelerated Principal Amount” means, for any Distribution Date,
the lesser of: (a) the sum of (i) the excess, if any, of the amount of Available Funds on the
Distribution Date over the amounts payable on the Distribution Date under clauses (i) through (xi)
of Section 5.7(a) plus (ii) the amounts, if any, on deposit in the Spread Account
in excess of the Spread Account Requirement for the Distribution Date and (b) the excess, if any,
on the Distribution Date of (i) the Pro Forma Class A Note Balance for the Distribution Date
over (ii) the Required Pro Forma Class A Note Balance for the Distribution Date.



          “Class A Noteholders’ Interest Distributable Amount” means, for any Distribution Date,
the sum of the Class A Noteholders’ Monthly Interest Distributable Amount for each Class of Class A
Notes for such Distribution Date and the Class A Noteholders’ Interest Carryover Amount, if any,
for each Class of Class A Notes, calculated as of such Distribution Date.



          “Class A Noteholders’ Interest Carryover Amount” means, for any Class of Class A Notes
and any Determination Date, all or any portion of the Class A Noteholders’ Interest Distributable
Amount for the Class for the immediately preceding Distribution Date still unpaid as of the
Determination Date, plus, to the extent permitted by law, interest on the unpaid amount at the
interest rate paid on the Class of Notes from the preceding Distribution Date to but excluding the
related Distribution Date.



          “Class A Noteholders’ Monthly Interest Distributable Amount” means, for any
Distribution Date and any Class of Class A Notes, the interest accrued at the applicable Interest
Rates during the applicable Interest Period on the principal amount of the Notes of each Class of
the Class A Notes outstanding as of the end of the prior Distribution Date or, in the case of the
first Distribution Date, as of the Closing Date.



          “Class A Noteholders’ Monthly Principal Distributable Amount” means, with respect to
any Distribution Date, the amount, which will not be less than zero, equal to the excess, if any,
of (a) the sum of (i) the principal portion of all Collected Funds received during the immediately
preceding Collection Period (other than with respect to Liquidated Receivables), including any full
and partial principal prepayments during such Collection Period, (ii) the Principal Balance of all
Receivables that became Liquidated Receivables during the related Collection Period (other than
Purchased Receivables), (iii) the principal portion of any Purchase Amounts received with respect
to all Receivables that became Purchased Receivables during the related Collection Period, (iv) in
the sole discretion of the Insurer, the Principal Balance of all the Receivables that were required
to be purchased pursuant to Sections 3.2 and 4.7, during such Collection Period but
were not purchased,



3









 







(v) the aggregate amount of Cram Down Losses that occurred during the related Collection
Period, and (vi) if the Notes have been accelerated pursuant to Section 5.2 of the
Indenture, the amount of money or property collected in respect of principal collections pursuant
to Section 5.4 of the Indenture following such acceleration by the Indenture Trustee or
Controlling Party to the extent not used to pay interest to the Class A Notes pursuant to
Section 5.6 of the Indenture over (b) the sum of the Step-Down Amount, if any, for
such Distribution Date and amounts distributed under Section 5.7(a)(v), if any, for such
Distribution Date.



          “Class A Noteholders’ Parity Deficit Amount” means, for any Distribution Date, the
excess, if any, of (a) the aggregate remaining principal amount of the Class A Notes outstanding on
the Distribution Date after giving effect to all reductions in such aggregate principal amount from
sources other than the Note Policy over (b) the Pool Balance at the end of the prior
Collection Period.



          “Class A Noteholders’ Principal Carryover Amount” means, as of any Determination Date,
all or any portion of the Class A Noteholders’ Principal Distributable Amount from the immediately
preceding Distribution Date that remains unpaid.



          “Class A Noteholders’ Principal Distributable Amount” means, for any Distribution
Date, the sum of the Class A Noteholders’ Monthly Principal Distributable Amount for the
Distribution Date and the Class A Noteholders’ Principal Carryover Amount, if any, as of the
Distribution Date.



          “Class A-1 Notes” has the meaning assigned to such term in the Indenture.



          “Class A-2 Notes” has the meaning assigned to such term in the Indenture.



          “Class A-3 Notes” has the meaning assigned to such term in the Indenture.



          “Class A-4 Notes” has the meaning assigned to such term in the Indenture.



          “Closing Date” means May 30, 2007.



          “Collateral Insurance” has the meaning set forth in Section 4.4(a).



          “Collected Funds” means, with respect to any Collection Period, the amount of funds in
the Collection Account representing collections on the Receivables (other than Purchased
Receivables) during such Collection Period, including all Net Liquidation Proceeds collected during
such Collection Period (but excluding any Purchase Amounts).



          “Collection Account” means the account designated as such, established and maintained
pursuant to Section 5.1.



          “Collection Period” means, with respect to the first Distribution Date, the period
beginning on the close of business on April 30, 2007 and ending on the close of business on May 31,
2007. With respect to each subsequent Distribution Date, “Collection Period” means the period
beginning on the open of business on the first day of the immediately preceding calendar month and
ending on the close of business on the last day of the immediately preceding calendar month. Any
amount stated “as of the close of business of the last day of a Collection Period” will give effect
to the following calculations as determined as of the end of the day on such last day: (a) all
applications of collections and (b) all distributions.



4









 





          “Collection Records” means all manually prepared or computer generated records
relating to collection efforts or payment histories with respect to the Receivables.



          “Commission” means the U.S. Securities and Exchange Commission.



          “Computer Tape” means the computer tapes or other electronic media furnished by Triad
to the Issuer and its assigns describing certain characteristics of the Receivables as of the
Cutoff Date.



          “Contract” means a motor vehicle retail installment sale contract, installment loan
contract or note and security agreement.



          “Controlling Party” means the Insurer; provided; however, that if an
Insurer Default has occurred and is continuing, then the Controlling Party means the Indenture
Trustee acting at the direction of the Majority Noteholders.



          “Copies” has the meaning set forth in Section 3.3(c).



          “Corporate Trust Office” means (a) with respect to the Owner Trustee, the principal
corporate trust office of the Owner Trustee, which at the time of execution of this agreement is
Wilmington Trust Company, is 1100 N. Market Street, Wilmington, Delaware 19890 and (b) with respect
to the Indenture Trustee and the Backup Servicer, (i) solely for the purposes of the transfer,
surrender or exchange of Notes, 111 Wall Street, 15th Floor Window, New York, New York
10005, Attention: Corporate Trust Services — Triad 2007-A, and (ii) for all other purposes, the
principal office at which at any particular time its corporate trust business is administered,
which at the time of execution of this agreement is 388 Greenwich Street, 14th Floor,
New York, New York 10013, Attention: Structured Finance Agency and Trust — Triad 2007-A.



          “Cram Down Loss” means, for any Receivable (other than a Purchased Receivable or a
Liquidated Receivable), if a court of appropriate jurisdiction in an insolvency proceeding issued
an order reducing the amount owed on the Receivable or otherwise modifying or restructuring the
scheduled payments to be made on the Receivable, an amount equal to the excess of the Receivable’s
Principal Balance immediately prior to the order over the Receivable’s Principal Balance as
reduced.



          “Cumulative Net Losses” means with respect to any Determination Date, the aggregate
principal balance of all Net Liquidation Losses for each Collection Period from the Closing Date to
and including the last day of the related Collection Period.



          “Cumulative Net Loss Ratio” means, with respect to any Determination Date, the ratio,
expressed as a percentage, computed by dividing (a) Cumulative Net Losses as of such Determination
Date by (b) the Original Pool Balance.



          “Cumulative Net Loss Trigger Event” means, with respect to any Determination Date, the
Cumulative Net Loss Ratio with respect to such Determination Date exceeds the amounts set forth
below:



	 	 	 	 	 
	Distribution Date Occurring In:	 	Percentage:
	June 2007 through August 2007
	 	 	1.56	%
	September 2007 through November 2007
	 	 	3.12	%
	December 2007 through February 2008
	 	 	4.68	%






5









 






	 	 	 	 	 
	Distribution Date Occurring In:	 	Percentage:
	March 2008 through May 2008
	 	 	6.24	%
	June 2008 through August 2008
	 	 	8.06	%
	September 2008 through November 2008
	 	 	9.88	%
	December 2008 through February 2009
	 	 	11.70	%
	March 2009 through May 2009
	 	 	13.52	%
	June 2009 through August 2009
	 	 	15.08	%
	September 2009 through November 2009
	 	 	16.64	%
	December 2009 through February 2010
	 	 	18.20	%
	March 2010 through May 2010
	 	 	19.76	%
	June 2010 and thereafter
	 	 	20.00	%






          “Custodian” means Triad as custodian hereunder acting as agent for the Indenture
Trustee, or any other Person named from time to time as custodian hereunder, which Person must be
reasonably acceptable to the Controlling Party (the Custodian as of the Closing Date is acceptable
to the Insurer as of the Closing Date).



          “Cutoff Date” means April 30, 2007.



          “Dealer” means a dealer who sold a Financed Vehicle and who originated and assigned
the respective Receivable to Triad under a Dealer Agreement or pursuant to a Dealer Assignment.



          “Dealer Agreement” means any agreement between a Dealer and Triad relating to the
acquisition of Receivables from the Dealer by Triad.



          “Dealer Assignment” means, with respect to a Receivable, the executed assignment
executed by the Dealer conveying such Receivable to Triad.



          “Deficiency Amount” means, for any Distribution Date, an amount equal to the excess,
if any of (a) the Scheduled Payments with respect to such Distribution Date over (b) the sum,
without duplication, of (i) the amount actually deposited into the Note Distribution Account on
such related Distribution Date (excluding amounts to be drawn under the Note Policy) and (ii) the
Additional Funds Available, if any, for such Distribution Date.



          “Delinquency Rate” means, with respect to any Determination Date, a fraction,
expressed as a percentage, (a) the numerator of which is equal to the Aggregate Principal Balance
of all Receivables, other than Liquidated Receivables, for which 10% or more of a Scheduled
Receivables Payment was 60 or more days delinquent as of the last day of the related Collection
Period and (b) the denominator of which is equal to the Aggregate Principal Balance as of the last
day of the related Collection Period.



          “Depositor” means Triad Financial Special Purpose LLC, a Delaware limited liability
company.



          “Determination Date” means, with respect to any Collection Period, the third Business
Day preceding the Distribution Date in the next Collection Period.



6









 





          “Distribution Date” means, with respect to each Collection Period, the 12th day of the
following Collection Period, or, if such day is not a Business Day, the immediately following
Business Day, commencing June 12, 2007.



          “Electronic Ledger” means the electronic master record of the motor vehicle retail
installment sale contracts, installment loan contracts and note and security agreements of the
Servicer.



          “Eligible Deposit Account” means a segregated trust account with the corporate trust
department of a depository institution acceptable to the Insurer organized under the laws of the
United States of America or any one of the states thereof or the District of Columbia (or any
domestic branch of a foreign bank), having corporate trust powers and acting as trustee for funds
deposited in such account, so long as any of the securities of such depository institution and its
corporate parent have a credit rating from each Rating Agency in one of its generic rating
categories which signifies investment grade and a rating of at least A-1 by Standard & Poor’s
and/or P-1 by Moody’s.



          “Eligible Investments” means book-entry securities, negotiable instruments or
securities, in each case denominated in United States dollars, represented by instruments in bearer
or registered form which evidence:



          (a) direct obligations of, and obligations fully guaranteed as to timely payment by, the
United States of America;



          (b) demand deposits, time deposits or certificates of deposit of any depository institution or
trust company incorporated under the laws of the United States of America or any state thereof or
the District of Columbia (or any domestic branch of a foreign bank) and subject to supervision and
examination by federal or state banking or depository institution authorities (including depository
receipts issued by any such institution or trust company as custodian with respect to any
obligation referred to in clause (a) above or portion of such obligation for the benefit of the
holders of such depository receipts); provided, however, that at the time of the
investment or contractual commitment to invest therein (which will be deemed to be made again each
time funds are reinvested following each Distribution Date), the commercial paper or other
short-term senior unsecured debt obligations (other than such obligations the rating of which is
based on the credit of a Person other than such depository institution or trust company) of such
depository institution or trust company will have a credit rating from Standard & Poor’s of A-1+
and from Moody’s of P-1;



          (c) commercial paper and demand notes investing solely in commercial paper having, at the time
of the investment or contractual commitment to invest therein, a rating from Standard & Poor’s of
A-1+ and from Moody’s of P-1;



          (d) investments in money market funds (including funds for which the Indenture Trustee or the
Owner Trustee in each of their individual capacities or any of their respective Affiliates is
investment manager, controlling party or advisor) having a rating from Standard & Poor’s of AAA and
from Moody’s of Aaa;



          (e) bankers’ acceptances issued by any depository institution or trust company referred to in
clause (b) above;



7









 





          (f) repurchase obligations with respect to any security that is a direct obligation of, or
fully guaranteed by, the United States of America or any agency or instrumentality thereof the
obligations of which are backed by the full faith and credit of the United States of America, in
either case entered into with a depository institution or trust company (acting as principal)
referred to in clause (b) above;



          (g) any other investment which would satisfy the Rating Agency Condition and is consistent
with the ratings of the Securities and which, so long as no Insurer Default has occurred and is
continuing, has been approved by the Insurer, or any other investment that by its terms converts to
cash within a finite period, if the Rating Agency Condition is satisfied with respect thereto; and



          (h) cash.



          Any of the foregoing Eligible Investments may be purchased by or through the Owner Trustee or
the Indenture Trustee or any of their respective Affiliates. None of the Eligible Investments may
have an “r” subscript as part of its S&P rating. Each of the Eligible Investments must have a
predetermined fixed dollar amount that is due at maturity.



          “Eligible Servicer” means Triad Financial Corporation, as Servicer, Citibank, N.A., as
Backup Servicer, or another Person which at the time of its appointment as Servicer or Backup
Servicer, (a) is servicing a portfolio of motor vehicle retail installment sale contracts and/or
motor vehicle installment loan contracts, (b) is legally qualified and has the capacity to service
the Receivables, (c) has demonstrated, the ability professionally and competently to service a
portfolio of motor vehicle retail installment sale contracts and/or motor vehicle installment loan
contracts similar to the Receivables with reasonable skill and care, (d) is qualified and entitled
to use, pursuant to a license or other written agreement, and agrees to maintain the
confidentiality of, the software which the Servicer uses in connection with performing its duties
and responsibilities under this Agreement or otherwise has available software which is adequate to
perform its duties and responsibilities under this Agreement, and (e) so long as no Insurer Default
has occurred and is continuing, is reasonably acceptable to the Insurer.



          “Exchange Act” means the Securities Exchange Act of 1934, as amended.



          “FDIC” means the Federal Deposit Insurance Corporation.



          “Final Scheduled Distribution Date” means, with respect to (a) the Class A-1 Notes,
the June 12, 2008 Distribution Date, (b) the Class A-2 Notes, the March 14, 2011 Distribution Date,
(c) the Class A-3 Notes, the February 13, 2012 Distribution Date and (d) the Class A-4 Notes, the
February 12, 2014 Distribution Date.



          “Financed Vehicle” means an automobile or light-duty truck, together with all
accessions thereto, securing an Obligor’s indebtedness under the respective Receivable.



          “Indenture” means the Indenture dated as of May 30, 2007, between the Issuer and
Citibank, N.A., as Indenture Trustee, as the same may be amended and supplemented from time to
time.



8









 





          “Indenture Trustee” means Citibank, N.A., its successors in interest and any successor
trustee hereunder and under the Indenture.



          “Indenture Trustee Fee” means, with respect to any Collection Period, the fee payable
to the Indenture Trustee by the Servicer for services rendered during such Collection Period.



          “Independent Accountants” has the meaning set forth in Section 4.11.



          “Insolvency Event” means, with respect to a specified Person, (a) the filing of a
petition against such Person or the entry of a decree or order for relief by a court having
jurisdiction in the premises in respect of such Person or any substantial part of its property in
an involuntary case under any applicable federal or state bankruptcy, insolvency or other similar
law now or hereafter in effect, or appointing a receiver, liquidator, assignee, custodian, trustee,
sequestrator, or similar official for such Person or for any substantial part of its property, or
ordering the winding-up or liquidation or such Person’s affairs, and such petition, decree or order
will remain unstayed and in effect for a period of 60 consecutive days or (b) the commencement by
such Person of a voluntary case under any applicable federal or state bankruptcy, insolvency or
other similar law now or hereafter in effect, or the consent by such Person to the entry of an
order for relief in an involuntary case under any such law, or the consent by such Person to the
appointment of or taking possession by, a receiver, liquidator, assignee, custodian, trustee,
sequestrator, or similar official for such Person or for any substantial part of its property, or
the making by such Person of any general assignment for the benefit of creditors, or the failure by
such Person generally to pay its debts as such debts become due, or the taking of action by such
Person in furtherance of any of the foregoing.



          “Insolvency Proceeds” has the meaning set forth in Section 10.1(b).



          “Insurance Agreement” means the Insurance and Indemnity Agreement, dated as of May 30,
2007, among the Insurer, the Trust, the Depositor, Triad and the Indenture Trustee.



          “Insurance Agreement Event of Default” means an “Event of Default” as defined
in the Insurance Agreement.



          “Insurance Policy” means, with respect to a Receivable, any insurance policy
(including the insurance policies described in Section 4.4) benefiting the holder of the
Receivable providing loss or physical damage, credit life, credit disability, theft, mechanical
breakdown or similar coverage with respect to the Financed Vehicle or the Obligor.



          “Insurer” means Financial Security Assurance Inc., a stock insurance company
incorporated under the laws of the State of New York, or any successor thereto, as issuer of the
Note Policy and the Swap Policy.



          “Insurer Default” means the occurrence and continuance of any of the following events:



          (a) the Insurer failing to make a payment required under the Note Policy in accordance with
its terms;



          (b) the Insurer (i) filing a petition or commencing any case or proceeding under any provision
or chapter of the United States Bankruptcy Code or any other similar federal or state law relating
to insolvency, bankruptcy, rehabilitation, liquidation or reorganization, (ii) making a general



9









 







assignment for the benefit of its creditors, or (iii) having an order for relief entered
against it under the United States Bankruptcy Code or any other similar federal or state law
relating to insolvency, bankruptcy, rehabilitation, liquidation or reorganization which is final
and nonappealable; or



          (c) a court of competent jurisdiction, the New York State Insurance Department or other
competent regulatory authority has entered a final and nonappealable order, judgment or decree (i)
appointing a custodian, trustee, agent or receiver for the Insurer or for all or any material
portion of its property or (ii) authorizing the taking of possession of all or any material portion
of the property of the Insurer by a custodian, trustee, agent or receiver.



          “Insurer Optional Deposit” means, for any Distribution Date, an amount other than a
Scheduled Payment delivered by the Insurer, at its sole option, for deposit into the Collection
Account for any of the following purposes: to provide funds to pay the fees or expenses of any of
the Issuer’s service providers for the Distribution Date; or to include those amounts as part of
Additional Funds Available for the Distribution Date to the extent that without them a draw would
be required to be made on the Note Policy and the Swap Policy.



          “Interest Period” means, with respect to any Distribution Date, (a) with respect to
the Class A-1 Notes, the period from and including the preceding Distribution Date (or in the case
of the first Distribution Date, from and including the Closing Date) to, but excluding, such
Distribution Date and (b) with respect to the Class A-2 Notes, the Class A-3 Notes and the Class
A-4 Notes, the period from and including the 12th day of the prior calendar month (or in the case
of the first Distribution Date, from and including the Closing Date) to, but excluding, the 12th
day of the calendar month in which such Distribution Date occurs.



          “Interest Rate” means, with respect to (a) the Class A-1 Notes, 5.3032% per annum, (b)
the Class A-2 Notes, 5.35% per annum, (c) the Class A-3 Notes, 5.28% per annum, and (d) the Class
A-4 Notes, LIBOR + 0.06% per annum (in the case of the Class A-1 Notes and the Class A-4 Notes,
computed on the basis of a 360 day year and the actual number of days in the related Interest
Period and in the case of the Class A-2 Notes and Class A-3 Notes computed on the basis of a
360-day year consisting of twelve 30-day months).



          “Investment Earnings” means, with respect to any date of determination and Trust
Account, the investment earnings on amounts on deposit in such Trust Account on such date.



          “Issuer” means Triad Automobile Receivables Trust 2007-A, a Delaware statutory trust.



          “LIBOR” means the rate for deposits in U.S. Dollars for a period of one month which
appears on the Reuters Telerate Successor Page 3750 as of 11:00 a.m., London time, as reported by
Bloomberg Financial Markets Commodities News, on the day that is two LIBOR Business Days prior to
the preceding Distribution Date or, in the case of the initial Distribution Date, on the day that
is two LIBOR Business Days prior to the Closing Date. If that rate does not appear on the Reuters
Telerate Successor Page 3750 as of 11:00 a.m., London time, as reported by Bloomberg Financial
Markets Commodities News or any other page as may replace that page on Bloomberg Financial Markets
Commodities News, or if that service is no longer offered on Bloomberg Financial Markets
Commodities News, any other service for displaying LIBOR or comparable rates as may be selected by
the Indenture Trustee after consultation with the Depositor, then LIBOR will be the Reference Bank
Rate.



10









 





          “LIBOR Business Day” means any day other than a Saturday, Sunday or any other day on
which banks in London are required or authorized to be closed.



          “Lien” means a security interest, lien, charge, pledge, equity, or encumbrance of any
kind, other than tax liens, mechanics’ liens and any liens that attach to the respective Receivable
by operation of law as a result of any act or omission by the related Obligor.



          “Lien Certificate” means, with respect to a Financed Vehicle, an original certificate
of title, certificate of lien or other notification issued by the Registrar of Titles of the
applicable state to a secured party which indicates that the lien of the secured party on the
Financed Vehicle is recorded on the original certificate of title. In any jurisdiction in which
the original certificate of title is required to be given to the Obligor, the term “Lien
Certificate” will mean only a certificate or notification issued to a secured party.



          “Liquidated Receivable” means, with respect to any Collection Period, any Receivable
with respect to which any of the following has occurred: (a) 10% or more of any Scheduled
Receivable Payment is 120 days or more past due, except Receivables with respect to which the
related Financed Vehicle has been repossessed within such 120 days, (b) the earlier of (i) 90 days
have elapsed since the Servicer repossessed the Financed Vehicle and (ii) the sale of the related
Financed Vehicle, or (c) the Servicer has determined in good faith that it has received all amounts
it expects to recover.



          “Lockbox Account” means an account maintained by the Processing Bank pursuant to
Section 4.2(d).



          “Majority Noteholders” has the meaning set forth in the Indenture.



          “Monthly Extension Rate” means, with respect to any Accounting Date, the fraction,
expressed as a percentage, the numerator of which is the aggregate Principal Balance of Receivables
whose payments were extended during the related Collection Period and the denominator of which is
the Aggregate Principal Balance as of the immediately preceding Accounting Date.



          “Monthly Records” means all records and data maintained by the Servicer with respect
to the Receivables, including the following with respect to each Receivable: the account number;
the originating Dealer; Obligor name; Obligor address; Obligor home phone number; Obligor business
phone number, if any; original Principal Balance; original term; Annual Percentage Rate; current
Principal Balance; current remaining term; origination date; first payment date; final scheduled
payment date; next payment due date; new/used classification; collateral description; days
currently delinquent; number of contract extensions (months) to date; amount of Scheduled
Receivables Payment; and past due late charges.



          “Moody’s” means Moody’s Investors Service, Inc., or its successor.



          “Net Liquidation Losses” means, with respect to any Determination Date, the amount, if
any, by which (a) the sum of (i) the Principal Balance of all Receivables which became Liquidated
Receivables during the related Collection Period, and (ii) the aggregate of all Cram Down Losses
that occurred during such Collection Period, exceeds (b) the Net Liquidation Proceeds received
during the related Collection Period in respect of all Liquidated Receivables.



11









 





          “Net Liquidation Proceeds” means, with respect to a Liquidated Receivable, (a)
proceeds from the disposition of the underlying Financed Vehicle, plus (b) any related
insurance proceeds, plus (c) other monies received from the Obligor that are allocable to
principal and interest due under the Receivable, minus (d) the Servicer’s reasonable
out-of-pocket costs, including repossession and resale expenses not already deducted from the
proceeds, and any amounts required to be remitted to the Obligor by law.



          “Net Loss Rate” means, with respect to a Collection Period, the fraction, expressed as
a percentage, the numerator of which is equal to the aggregate of the Net Liquidation Losses for
such Collection Period and the denominator of which is the Aggregate Principal Balance as of the
first day of such Collection Period.



          “Note Distribution Account” means the account designated as such, established and
maintained pursuant to Section 5.1.



          “Note Policy” means the financial guaranty insurance policy issued by the Insurer to
the Indenture Trustee for the benefit of the Class A Noteholders.



          “Note Pool Factor” means, for each Class of Notes as of the close of business on any
date of determination, a seven-digit decimal figure equal to (a) the outstanding principal amount
of such Class of Notes divided by (b) the original principal amount of such Class of Notes.



          “Note Preference Claim” has the meaning set forth in Section 6.2(b).



          “Noteholders” means the holders of the Class A Notes.



          “Notes” means the Class A Notes.



          “Obligor” on a Receivable means the purchaser or co-purchaser(s) of a Financed Vehicle
and any other Person who owes payments under the Receivable.



          “Officer’s Certificate” means a certificate signed by the chairman of the board, the
president, any executive vice president or any vice president, any treasurer, assistant treasurer,
secretary or assistant secretary of the Servicer, as appropriate.



          “Opinion of Counsel” means a written opinion of counsel reasonably acceptable to the
Insurer, which opinion is satisfactory in form and substance to the Indenture Trustee and, if such
opinion or a copy thereof is required by the provisions of this Agreement to be delivered to the
Insurer, to the Insurer.



          “Original Pool Balance” means, as of any date of determination, $847,114,961.01 (which
is the Pool Balance as of the Cutoff Date).



          “Originator” means Triad.



          “Other Conveyed Property” means all property conveyed by the Depositor to the Trust
pursuant to Section 2.1(b) through (h).



          “Overcollateralization Target Percentage” means 13.00%; provided,
however, that, if no Spread Cap Event (as defined in the Insurance Agreement) and no
Insurance Agreement Event of



12









 







Default shall have occurred on the 12th Distribution Date and the Cumulative Net
Losses are equal to or less than 4.00% of the Original Pool Balance on such Distribution Date, the
Overcollateralization Target Percentage shall decline to 12.00%, beginning on such Distribution
Date; provided, further, that, if no Spread Cap Event (as defined in the Insurance
Agreement) and no Insurance Agreement Event of Default shall have occurred on the 18th Distribution
Date and the Cumulative Net Losses are equal to or less than 6.75% of the Original Pool Balance on
such Distribution Date, the Overcollateralization Target Percentage shall decline to 11.00%,
beginning on such Distribution Date; provided, further, that, if no Spread Cap
Event (as defined in the Insurance Agreement) and no Insurance Agreement Event of Default shall
have occurred on the 24th Distribution Date and the Cumulative Net Losses are equal to
or less than 8.75% of the Original Pool Balance on such Distribution Date, the
Overcollateralization Target Percentage shall decline to 10.00%, beginning on such Distribution
Date; provided, further, that, if no Spread Cap Event (as defined in the Insurance
Agreement) and no Insurance Agreement Event of Default shall have occurred on the 30th
Distribution Date and the Cumulative Net Losses are equal to or less than 10.75% of the Original
Pool Balance on such Distribution Date, the Overcollateralization Target Percentage shall decline
to 9.00%, beginning on such Distribution Date.



          “Owner Trust Estate” has the meaning assigned to such term in the Trust Agreement.



          “Owner Trustee” means Wilmington Trust Company, not in its individual capacity but
solely as Owner Trustee under the Trust Agreement, its successors in interest or any successor
Owner Trustee under the Trust Agreement.



          “Owner Trustee Fee” means with respect to any Collection Period, the fee payable to
the Owner Trustee for services rendered during such Collection Period, which will be equal to $250.



          “Person” means any individual, corporation, estate, partnership, joint venture,
association, joint stock company, trust (including any beneficiary thereof), unincorporated
organization or government or any agency or political subdivision thereof.



          “Pool Balance” means, as of any date of determination, the Aggregate Principal Balance
at the end of the preceding Collection Period.



          “Premium” means the premium payable to the Insurer, as specified in the Insurance
Agreement.



          “Principal Balance” means, for any Receivable as of any date of determination, (a) the
Amount Financed, minus (b) the sum of (i) that portion of all amounts received on or prior
to that date and allocable to principal according to the Receivable’s terms and (ii) any Cram Down
Losses for the Receivable accounted for as of that date.



          “Processing Bank” means, initially, Mellon Bank, N.A. and its successors in interest,
and thereafter a depository institution named by the Servicer and approved by the Insurer (so long
as no Insurer Default has occurred and is continuing) which provides a lockbox as part of its
normal and customary services at which the Lockbox Account is established and maintained as of such
date; provided, however, that upon the occurrence of a Servicer Termination Event,
the Controlling Party may, in its sole discretion, cause the Lockbox Account to be established at
another bank.



13









 





          “Pro Forma Class A Note Balance” means, for any Distribution Date, the aggregate
remaining principal amount of the Class A Notes outstanding on the Distribution Date, after giving
effect to distributions to be made on such Distribution Date under clauses (i) through
(xi) of Section 5.7(a).



          “Purchase Agreement” means the Purchase Agreement between the Depositor and Triad,
dated as of May 30, 2007, as such Purchase Agreement may be amended from time to time.



          “Purchase Amount” means, with respect to a Receivable, the sum of (a) the Principal
Balance as of the date of purchase and (b) an amount of interest accrued thereon at the related
Annual Percentage Rate from the end of the prior Collection Period through the last day of the
month of purchase.



          “Purchased Receivable” means, with respect to any Collection Period, a Receivable
purchased as of the close of business on the last day of the Collection Period by Triad or the
Servicer so long as Citibank, N.A. is not acting as Servicer, as the result of a breach of a
covenant or as an exercise of its optional redemption right.



          “Rating Agency” means Moody’s and Standard & Poor’s. If no such organization or
successor maintains a rating on the Securities, “Rating Agency” will mean a nationally
recognized statistical rating organization or other comparable Person designated by the Issuer and
reasonably acceptable to the Insurer (so long as no Insurer Default has occurred and is
continuing), notice of which designation will be given by the Issuer to the Indenture Trustee, the
Owner Trustee and the Servicer.



          “Rating Agency Condition” means, with respect to any action, that each Rating Agency
has been given 10 days (or such shorter period as will be acceptable to each Rating Agency) prior
notice thereof and that each of the Rating Agencies has notified the Depositor, the Servicer, the
Insurer, the Indenture Trustee, the Owner Trustee and the Issuer in writing that such action will
not result in a reduction or withdrawal of the then current rating of the Notes.



          “Receivable” means any Contract listed on Schedule A (which Schedule may be in the
form of microfiche or a disk).



          “Receivable Files” means the documents specified in Section 3.3.



          “Record Date” has the meaning set forth in the Indenture.



          “Reference Bank Rate” means, for any distribution date, a rate determined on the basis
of the rates at which deposits in U.S. dollars are offered by reference banks as of 11:00 a.m.,
London time, on the day that is two LIBOR Business Days prior to the immediately preceding
Distribution Date to prime banks in the London interbank market for a period of one month, in
amounts approximately equal to the then outstanding principal amount of the applicable class or
tranche of floating rate notes. The reference banks will be four major banks that are engaged in
transactions in the London interbank market, selected by the Indenture Trustee after consultation
with the depositor. The Indenture Trustee will request the principal London office of each of the
reference banks to provide a quotation of its rate. If at least two quotations are provided, the
rate will be the arithmetic mean of the quotations, rounded upwards to the nearest one-sixteenth of
one percent. If on that date fewer than two quotations are provided as requested, the rate will be
the



14









 







arithmetic mean, rounded upwards to the nearest one-sixteenth of one percent, of the rates
quoted by one or more major banks in New York City, selected by the Indenture Trustee after
consultation with the depositor, as of 11:00 a.m., New York City time, on that date to leading
European banks for U.S. dollar deposits for a period of one month in amounts approximately equal to
the principal amount of the then outstanding floating rate notes. If no quotation can be obtained,
then LIBOR will be the rate from the prior Distribution Date.



          “Registrar of Titles” means, with respect to any state, the governmental agency or
body responsible for the registration of, and the issuance of certificates of title relating to,
motor vehicles and liens thereon.



          “Regulation AB” means Subpart 229.1100 — Asset Backed Securities (Regulation AB), 17
C.F.R. §§229.1100-229.1123, as such may be amended from time to time and subject to such
clarification and interpretation as have been provided by the Commission in the adopting release
(Asset Backed Securities, Securities Act Release No. 33-8518.70 Fed. Reg. 1,506, 1,531 (January 7,
2005)) or by the staff of the Commission, or as may be provided by the Commission or its staff from
time to time.



          “Required Pro Forma Class A Note Balance” means, with respect to any Distribution
Date, a dollar amount equal to the product of (a) the difference between (i) 100% and (ii) the
Overcollateralization Target Percentage for that Distribution Date and (b) the Pool Balance as of
the end of the prior Collection Period.



          “Schedule of Receivables” means the schedule of all motor vehicle retail installment
sale contracts, installment loan contracts and note and security agreements originally held as part
of the Trust which is attached as Schedule A.



          “Schedule of Representations” means the Schedule of Representations and Warranties
attached as Schedule B.



          “Scheduled Payments” has the meaning set forth in the Note Policy.



          “Scheduled Receivables Payment” means, with respect to any Collection Period for any
Receivable, the amount set forth in the Receivable as required to be paid by the Obligor in the
Collection Period. If, after the Closing Date, the Obligor’s obligation under a Receivable with
respect to a Collection Period is modified so as to differ from the amount specified in the
Receivable as a result of (a) the order of a court in an insolvency proceeding involving the
Obligor, (b) pursuant to the Servicemembers Civil Relief Act or (c) modifications or extensions of
the Receivable permitted by Section 4.2(b), the Scheduled Receivables Payment with respect
to such Collection Period will refer to the Obligor’s payment obligation with respect to the
Collection Period as so modified.



          “Securities” means, collectively, the Class A Notes and the Certificates.



          “Securities Act” means the Securities Act of 1933, as amended.



          “Service Contract” means, with respect to a Financed Vehicle, the agreement, if any,
financed under the related Receivable that provides for the repair of the Financed Vehicle.



15









 





          “Servicer” means Triad as the servicer of the Receivables, and each successor Servicer
pursuant to Section 9.3.



          “Servicer Termination Event” means an event specified in Section 9.1.



          “Servicer’s Certificate” means an Officer’s Certificate delivered pursuant to
Section 4.9, substantially in the form of Exhibit A.



          “Servicing Fee” has the meaning specified in Section 4.8.



          “Servicing Fee Rate” means 2.25% per annum.



          “Servicing Policies and Procedures” has the meaning specified in Section 4.1.



          “Simple Interest Method” means the method of allocating a fixed level payment on an
obligation between principal and interest, pursuant to which the portion of the payment that is
allocated to interest is equal to the product of the fixed rate of interest on the obligation
multiplied by the period of time expressed as a fraction of a year, based on the actual number of
days elapsed since the preceding payment under the obligation was made and 365 days in the calendar
year.



          “Spread Account” means the account designated as such, established and maintained
pursuant to Section 5.5.



          “Spread Account Draw Amount” means, for any Determination Date, the amount, after
taking into account the application on the Distribution Date of Available Funds for the related
Collection Period, equal to any shortfall in the payment of amounts described in clauses
(i) through (vii) of Section 5.7(a).



          “Spread Account Initial Deposit” means $16,942,299.22.



          “Spread Account Requirement” means, with respect to the Closing Date and for
any Distribution Date, a dollar amount equal to: the Spread Account Initial Deposit or, if a
Spread Cap Event (as such term is defined in the Insurance Agreement) has occurred and is
continuing, 3.00% of the Original Pool Balance.



          “Standard & Poor’s” means Standard & Poor’s Ratings Services, a division of The
McGraw-Hill Companies, Inc., or its successor.



          “Statutory Trust Statute” means Chapter 38 of Title 12 of the Delaware Code, 12 Del.
Code § 3801 et seq., as the same may be amended from time to time.



          “Step-Down Amount” means, with respect to any Distribution Date, the excess, if any,
of (a) the Required Pro Forma Class A Note Balance over (b) the Pro Forma Class A Note
Balance on such Distribution Date, calculated for this definition only without deduction for any
Step-Down Amount (i.e., assuming that the entire amount described in clause (a) of the definition
of “Class A Noteholders’ Monthly Principal Distributable Amount” is distributed as principal on the
Class A Notes).



          “Supplemental Servicing Fee” means, with respect to any Collection Period, all
administrative fees, expenses and charges paid by or on behalf of Obligors, including late fees,



16









 







prepayment fees, extension fees and liquidation fees collected on the Receivables during the
Collection Period and any expenses incurred by the Servicer in connection with repossession and
liquidation of the Financed Vehicle.



          “Swap Account” has the meaning specified in Section 5.1(g).



          “Swap Agreement” means the ISDA Master Agreement, dated May 30, 2007, between the
Issuer and the Swap Counterparty, including the Schedule thereto, the Confirmation relating to the
Class A-4 Notes, together with any replacement swap agreement (which replacement swap agreement has
been approved by the Insurer in accordance with Section 12.17); provided, that no
additional swap agreement shall be a “Swap Agreement” under the Basic Documents for so long as the
Swap Agreement is outstanding without the prior, written consent of the Swap Counterparty unless
the Swap Agreement has terminated.



          “Swap Counterparty” means Goldman Sachs Capital Markets, L.P., with respect to the
Class A-4 Notes, together with any replacement Swap Counterparty (which must be approved by the
Insurer in accordance with Section 12.17).



          “Swap Policy” means the interest swap insurance policy issued by the Insurer to the
Swap Counterparty with respect to the Swap Agreement, including any endorsements thereto.



          “Swap Termination Account” has the meaning specified in Section 5.1(a)(iv).



          “Swap Termination Payment” means payments due to the Swap Counterparty by the Issuer
or due to the Issuer by the Swap Counterparty, as applicable, including interest that may accrue
thereon, under the Swap Agreement due to a termination of the Swap Agreement due to the occurrence
of an “event of default” or a “termination event” under the Swap Agreement.



          “Third-Party Lender” means an entity that originated a loan to a consumer or was the
original assignee of a motor vehicle retail installment sale contract from a dealer for the
purchase of a motor vehicle and sold the loan or motor vehicle retail installment sale contract to
Triad pursuant to an Auto Loan Purchase and Sale Agreement.



          “Third-Party Lender Assignment” means, with respect to a Receivable, the assignment
executed by a Third-Party Lender conveying the Receivable to Triad.



          “Triad” means Triad Financial Corporation, a California corporation, and its
successors and assigns.



          “Trust” means the Issuer.



          “Trust Account Property” means the Trust Accounts, all amounts and investments held
from time to time in any Trust Account (whether in the form of deposit accounts, physical property,
book-entry securities, uncertificated securities or otherwise), and all proceeds of the foregoing.



          “Trust Accounts” has the meaning assigned thereto in Section 5.1.



17









 





          “Trust Agreement” means the Trust Agreement dated as of March 27, 2007 among Triad, as
the Administrator, the Depositor and the Owner Trustee, as amended and restated as of May 30, 2007
as the same may be amended and supplemented from time to time.



          “Trust Officer” means (a) in the case of the Indenture Trustee, the chairman or
vice-chairman of the board of directors, any managing director, the chairman or vice-chairman of
the executive committee of the board of directors, the president, any vice president, assistant
vice president, the secretary, any assistant secretary, the treasurer, any assistant treasurer, the
cashier, any assistant cashier, any trust officer or assistant trust officer, the controller and
any assistant controller or any other officer of the Indenture Trustee customarily performing
functions similar to those performed by any of the above designated officers and also means, with
respect to a particular corporate trust matter, any other officer to whom such matter is referred
because of such officer’s knowledge of and familiarity with the particular subject and (b) in the
case of the Owner Trustee, any officer in the corporate trust office of the Owner Trustee or any
agent of the Owner Trustee under a power of attorney with direct responsibility for the
administration of any of the Basic Documents on behalf of the Owner Trustee.



          “Trust Property” means all right, title and interest of the Trust in and to the
property and rights assigned to the Trust pursuant to Section 2.1 hereof, all funds on
deposit from time to time in the Trust Accounts (including all Eligible Investments therein and all
proceeds therefrom) and all other property of the Trust from time to time, including any rights of
the Owner Trustee and the Trust under this Agreement.



          “UCC” means, unless the context otherwise requires, the Uniform Commercial Code, as in
effect in the relevant jurisdiction, as amended from time to time.



     Section 1.2 Other Definitional Provisions.



          (a) Capitalized terms used herein and not otherwise defined herein have the meanings assigned
to them in the Indenture, or, if not defined therein, in the Trust Agreement.



          (b) All terms defined in this Agreement will 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.



          (c) 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 or in any such instrument, certificate or other document, and accounting terms partly
defined in this Agreement or in any such instrument, certificate or other document to the extent
not defined, will have the respective meanings given to them under U.S. 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 or in any such instrument, certificate or other document are inconsistent
with the meanings of such terms under U.S. generally accepted accounting principles, the
definitions contained in this Agreement or in any such instrument, certificate or other document
will control.



          (d) The words “hereof,” “herein,” “hereunder” and words of similar
import when used in this Agreement will 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



18









 







to Sections, Schedules and Exhibits in or to this Agreement unless otherwise specified; and
the term “including” means “including without limitation.”



          (e) The definitions contained in this Agreement are applicable to the singular as well as the
plural forms of such terms and to the masculine as well as to the feminine and neuter genders of
such terms.



          (f) 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 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.



ARTICLE II




Conveyance of Receivables




     Section 2.1 Conveyance of Receivables. In consideration of the Issuer’s delivery to
or upon the order of the Depositor on the Closing Date of the Notes and the Certificates and the
other amounts to be distributed from time to time to the order of the Depositor in accordance with
the terms of this Agreement, the Depositor does hereby sell, transfer, assign, set over and
otherwise convey to the Issuer, without recourse, all right, title and interest of the Depositor in
and to:



          (a) the Receivables and all moneys received thereon after the Cutoff Date;



          (b) the security interests in the Financed Vehicles granted by Obligors pursuant to the
Receivables and any other interest of the Originator or the Depositor in such Financed Vehicles;



          (c) any proceeds and the right to receive proceeds with respect to the Receivables from claims
on any physical damage, credit life or disability insurance policies covering Financed Vehicles or
Obligors and any proceeds from the liquidation of the Receivables;



          (d) the right to cause the related Dealer or Third-Party Lender to repurchase Receivables
pursuant to a Dealer Agreement or an Auto Loan Purchase and Sale Agreement, respectively, as a
result of a breach of representation or warranty in the related Dealer Agreement or Auto Loan
Purchase and Sale Agreement, respectively;



          (e) all rights, if any, to refunds for the costs of Service Contracts on the related Financed
Vehicles;



          (f) the related Receivable Files;



          (g) all of the Depositor’s right, title and interest in its rights and benefits, but none of
its obligations or burdens, under the Purchase Agreement, including the Depositor’s rights under
the Purchase Agreement, to enforce the delivery requirements, representations and warranties and
the cure and repurchase obligations of Triad under the Purchase Agreement; and



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



19









 





          It is the intention of the Depositor that the transfer and assignment contemplated by this
Agreement constitutes a sale of the Receivables and Other Conveyed Property from the Depositor to
the Issuer and the beneficial interest in and title to the Receivables and the Other Conveyed
Property will not be part of the Depositor’s estate in the event of the filing of a bankruptcy
petition by or against the Depositor under any bankruptcy law. In the event that, notwithstanding
the intent of the Depositor, the transfer and assignment contemplated hereby is held by a court of
competent jurisdiction not to be a sale, this Agreement will constitute a grant by the Depositor of
a security interest in all of its right, title and interest, whether now owned or existing or
hereafter acquired or arising, in the property referred to in this Section to the Issuer for the
benefit of the Indenture Trustee, the Noteholders and the Insurer.



     Section 2.2 [Reserved].
 

     Section 2.3  Further Encumbrance of Trust Property.



          (a) Immediately upon the conveyance to the Trust by the Depositor of the Trust Property, all
right, title and interest of the Depositor in and to such item of Trust Property will terminate,
and all such right, title and interest will vest in the Trust, in accordance with the Trust
Agreement and the Statutory Trust Statute.



          (b) Immediately upon the vesting of the Trust Property in the Trust, the Trust will have the
sole right to pledge or otherwise encumber such Trust Property. Pursuant to the Indenture, the
Trust will grant a security interest in the Trust Property to the Indenture Trustee securing the
repayment of the Notes and the Issuer’s obligations to the Insurer. The Certificates will
represent the beneficial ownership interest in the Trust Property, and the Certificateholders will
be entitled to receive distributions with respect thereto as set forth herein.



          (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 will, until payment in full of the
Certificates, remain as covenants of the Issuer for the benefit of the Certificateholders,
enforceable by the Certificateholders 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, will vest in
Certificateholders.



          (d) The Indenture Trustee will, at such time as there are no Notes outstanding and all sums
due to the Indenture Trustee, the Insurer and the Backup Servicer pursuant to the Indenture and
this Agreement have been paid, release any remaining portion of the Trust Property to the
Certificateholders.



ARTICLE III




The Receivables




     Section 3.1 Representations and Warranties. The Depositor hereby conveys to the
Issuer its rights, title and interest in and to the representations and warranties made by the
Originator in respect of the Receivables pursuant to the Purchase Agreement. In addition, the
Depositor makes the following representations and warranties, on which the Issuer relies in
accepting the Receivables and delivering the Securities. Such representations and warranties speak
as of the Closing Date, but shall



20









 




survive the transfer and assignment of the Receivables by the Depositor to the Issuer and the
pledge thereof to the Indenture Trustee in accordance with the terms of the Indenture:




          (a) Title. The Depositor shall convey to the Issuer all right, title and interest of
the Depositor in and to the Receivables, including all right, title and interest of the Depositor
in and to the security interests in the related Financed Vehicles.



          (b) All Filings Made. The Depositor has caused all filings (including UCC filings) to
be made in Delaware with respect to the sale of the Receivables to the Issuer and the pledge
contemplated in the Basic Documents to the Indenture Trustee.



          (c) Liens. The Depositor has not taken any actions to create, incur or suffer to
exist any Lien on or restriction on transferability of any Receivable except for the Lien of the
Indenture and the restrictions on transferability imposed by this Agreement.



     Section 3.2 Repurchase upon Breach of Representations and Warranties.



          (a) The Depositor, the Servicer, the Insurer, the Indenture Trustee or the Trust, as the case
may be, will inform the other parties to this Agreement and Triad promptly, by notice in writing,
upon the discovery of any breach of the representations and warranties referenced in Section
3.1 and in Schedule B hereto. As of the last day of the second (or, if Triad so
elects, the first) month following the discovery by Triad or receipt by Triad of notice of such
breach, unless such breach is cured by such date, Triad will repurchase any Receivable in which the
interests of the Noteholders or the Insurer are materially and adversely affected by any such
breach as of such date. The “second month” will mean the month following the month in which
discovery occurs or notice is given, and the “first month” will mean the month in which discovery
occurs or notice is given.



          In consideration of and simultaneously with the repurchase of the Receivable, Triad will remit
to the Collection Account the Purchase Amount in the manner specified in Section 5.6 and
the Issuer and the Indenture Trustee will execute such assignments and other documents reasonably
requested by such person in order to effect such repurchase. The Issuer and the Indenture Trustee
will take such steps in assigning such Receivable to Triad as are described in Section 5.2
of the Purchase Agreement.



          The sole remedy of the Issuer, the Owner Trustee, the Indenture Trustee or the Noteholders
with respect to a breach of representations and warranties pursuant to Section 3.1 and the
agreement contained in this Section will be the repurchase of Receivables pursuant to this Section,
subject to the conditions contained herein or to enforce the obligation of Triad to repurchase such
Receivables pursuant to the Purchase Agreement. Neither the Owner Trustee nor the Indenture
Trustee will 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.



          In addition to the foregoing and notwithstanding whether the related Receivable has been
purchased by Triad, Triad will indemnify the Trust, the Indenture Trustee, the Backup Servicer, and
the officers, directors, agents and employees thereof, the Insurer, the Certificateholders and the
Noteholders 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.



21









 





          (b) Pursuant to Section 2.1, the Depositor conveyed to the Trust all of the
Depositor’s right, title and interest in its rights and benefits, but none of its obligations or
burdens, under the Purchase Agreement including the Depositor’s rights under the Purchase Agreement
to enforce the delivery requirements, representations and warranties, indemnities and the cure or
repurchase obligations of Triad thereunder. The Depositor hereby represents and warrants to the
Trust that such assignment is valid and enforceable against the Depositor.



     Section 3.3 Custody of Receivables Files.



          (a) In connection with the sale, transfer and assignment of the Receivables and the Other
Conveyed Property to the Trust pursuant to this Agreement, the Indenture Trustee hereby revocably
appoints the Custodian, and the Custodian hereby accepts such appointment, to act as the agent of
the Indenture Trustee as custodian of the following documents or instruments in its possession or
in the possession of third party vendors on behalf of the Custodian which will be delivered to the
Custodian as agent of the Indenture Trustee on or before the Closing Date (with respect to each
Receivable):



               (i) the fully executed original of the Contract related to such Receivable (together with any
agreements modifying the Receivable, including any extension agreements);



               (ii) the original certificate of title (when received) indicating that the Financed Vehicle is
owned by the Obligor and subject to the interest of Triad as first lienholder or secured party
(including any Lien Certificate received by Triad) or that it has been assigned to Triad as first
lienholder or secured party, or, if such original certificate of title has not yet been received, a
copy of the application therefor, showing Triad as secured party and otherwise such related
documents, if any, that Triad keeps on file in accordance with its customary procedures; and



               (iii) in connection with Receivable Files pertaining to retail installment sale contracts, the
original credit application, or a copy thereof (collectively, the “Receivable Files”).



          (b) Upon payment in full of any Receivable, the Servicer will notify the Custodian pursuant to
a certificate of an officer of the Servicer (which certificate will include a statement to the
effect that all amounts received in connection with such payments which are required to be
deposited in the Collection Account pursuant to Section 4.1 have been so deposited) and
will request delivery of the Receivable File to the Servicer. From time to time as appropriate for
servicing and enforcing any Receivable, the Custodian will, upon written request of an officer of
the Servicer and delivery to the Custodian of a receipt signed by such officer, cause the related
Receivable File to be released to the Servicer. The Servicer’s receipt of a Receivable File will
obligate the Servicer to return the Receivable File to the Custodian when its need by the Servicer
has ceased unless the Receivable is repurchased as described in Section 3.2 or 4.7.



          (c) The Custodian, or its third-party vendor, will hold the Receivable Files on behalf of the
Indenture Trustee and will maintain such accurate and complete accounts, records and computer
systems pertaining to each Receivable File as will enable the Indenture Trustee to comply with the
terms and conditions of this Agreement. For so long as Triad is the Custodian, the Custodian will
maintain the Receivable Files at (i) its office located at 7711 Center Avenue, Suite 100,
Huntington Beach, California 92647, (ii) with a third-party service provider identified on Schedule
D hereto, as it may be modified from time to time by the Custodian with the consent of the Insurer,
which will not be unreasonably withheld, or (iii) subject to the prior written consent of the



22









 







Insurer, so long as no Insurer Default has occurred and is continuing, at such other office as
will from time to time be identified to the Indenture Trustee and the Insurer. Each Receivable
will be identified on the books and records of the Custodian in a manner that (i) indicates that
the Receivables are held by the Custodian on behalf of the Indenture Trustee and (ii) is otherwise
necessary, as reasonably determined by the Custodian. So long as Citibank, N.A. is not the
Custodian, the Custodian will conduct, or cause to be conducted, periodic physical inspections of
the Receivable Files held by it, and of the related accounts, records and computer systems, in such
a manner as will enable the Indenture Trustee, the Insurer and the Custodian to verify the accuracy
of the Custodian’s inventory and recordkeeping. Such inspections will be conducted at such times,
in such manner and by such persons including independent accountants, as the Insurer or the
Indenture Trustee may reasonably request and the cost of such inspections will be borne directly by
the Custodian, so long as Citibank, N.A. is not the Custodian, and not by the Insurer or the
Indenture Trustee, but such inspections are not to take place more than once per year. The
Custodian will promptly report to the Insurer and the Indenture Trustee any failure on its part to
hold the Receivable Files and maintain its accounts, records and computer systems as herein
provided and promptly take appropriate action to remedy any such failure. Upon request, the
Custodian will, at the expense of the party making such request, make copies or other electronic
file records (e.g., diskettes, CDs, etc.) (the “Copies”) of the Receivable Files and will
deliver such Copies to the Indenture Trustee and the Indenture Trustee will hold such Copies on
behalf of the Issuer Secured Parties.



          (d) The Custodian will, subject only to the Custodian’s security requirements applicable to
its own employees having access to similar records held by the Custodian, which requirements will
be consistent with the practices of an institution that maintains custody of Receivable Files for
its own account, and at such times as may be reasonably imposed by the Custodian, permit only the
Insurer and the Indenture Trustee or their duly authorized representatives, attorneys or auditors
to inspect the Receivable Files and the related accounts, records, and computer systems maintained
by the Custodian pursuant hereto at such times as the Insurer or the Indenture Trustee may
reasonably request during normal business hours.



          (e) The Custodian will be deemed to have received proper instructions with respect to the
Receivable Files upon its receipt of written instructions signed by a Responsible Officer of the
Indenture Trustee. Such instructions may be general or specific in terms. The Indenture Trustee
will provide a copy of any such instructions to the Insurer.



          (f) The Custodian will indemnify the Issuer, the Owner Trustee, the Backup Servicer, the
Insurer, the Noteholders, the Certificateholders and the Indenture Trustee for any and all
liabilities, obligations, losses, damage, payments, costs or expenses of any kind whatsoever
(including the fees and expenses of counsel) that may be imposed on, incurred or asserted against
such Persons and their respective officers, directors, employees, agents, attorneys and successors
and assigns as the result of any act or omission in any way relating to the maintenance and custody
by the Custodian or any third-party vendor of the Receivable Files; provided,
however, that the Custodian will not be liable for any portion of any such liabilities,
obligations, losses, damages, payments, costs or expenses due to the willful misfeasance, bad faith
or gross negligence of the Issuer, the Owner Trustee, the Backup Servicer, the Insurer or the
Indenture Trustee or the officers, directors, employees and agents thereof. In no event will the
Custodian be liable to any third party for acts or omissions of the Custodian other than as
specifically set forth in this Section.



23









 





ARTICLE IV




Administration and Servicing of Receivables




     Section 4.1 Duties of the Servicer.



          (a) The Servicer is hereby authorized to act as agent for the Trust and in such capacity will
manage, service, administer and make collections on the Receivables (other than Purchased
Receivables after the date of purchase thereof by Triad or the Servicer), and perform the other
actions required by the Servicer under this Agreement. The Servicer agrees that its servicing of
the Receivables will be carried out in accordance with customary and usual procedures of
institutions which service motor vehicle retail installment sales contracts and, to the extent more
exacting, the degree of skill and attention that the Servicer exercises from time to time with
respect to all comparable motor vehicle receivables that it services for itself or others. In
performing such duties, so long as Triad is the Servicer, it will substantially comply with the
policies and procedures described on Schedule C (the “Servicing Policies and Procedures”),
as such policies and procedures may be updated from time to time. The Servicer’s duties will
include collection and posting of all payments, responding to inquiries of Obligors on the
Receivables, investigating delinquencies, sending payment coupons or statements to Obligors,
reporting any required tax information to Obligors, monitoring the collateral, complying with the
terms of the Blocked Account Agreement, accounting for collections and furnishing monthly and
annual statements to the Indenture Trustee and the Insurer with respect to distributions, and
performing the other duties specified herein.



          (b) The Servicer will also administer and enforce all rights and responsibilities of the
holder of the Receivables provided for in the Dealer Agreements and Auto Loan Purchase and Sale
Agreements (and will maintain possession of the Dealer Agreements and Auto Loan Purchase and Sale
Agreements, to the extent it is necessary to do so), the Dealer Assignments, the Third-Party Lender
Assignments and the Insurance Policies, to the extent that such Dealer Agreements, Auto Loan
Purchase and Sale Agreements, Dealer Assignments, Third-Party Lender Assignments and Insurance
Policies relate to the Receivables, the Financed Vehicles or the Obligors. To the extent
consistent with the standards, policies and procedures otherwise required hereby, the Servicer will
follow its customary standards, policies, and procedures and will have full power and authority,
acting alone, to do any and all things in connection with such managing, servicing, administration
and collection that it may deem necessary or desirable. Without limiting the generality of the
foregoing, the Servicer is hereby authorized and empowered by the Trust to execute and deliver, on
behalf of the Trust, any and all instruments of satisfaction or cancellation, or of partial or full
release or discharge, and all other comparable instruments, with respect to the Receivables and
with respect to the Financed Vehicles; provided, however, that notwithstanding the
foregoing, the Servicer will not, except pursuant to an order from a court of competent
jurisdiction, 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 in accordance
with the Servicer’s customary practices.



          (c) The Servicer is hereby authorized to commence, in its own name or in the name of the
Trust, a legal proceeding to enforce a Receivable pursuant to Section 4.3 or to commence or
participate in any other legal proceeding (including a bankruptcy proceeding) relating to or
involving a Receivable, an Obligor or a Financed Vehicle. If the Servicer commences or
participates in such a legal proceeding in its own name, the Trust will thereupon be deemed to have
automatically assigned such Receivable to the Servicer solely for purposes of commencing or
participating in any such proceeding as a party or claimant, and the Servicer is authorized and
empowered by the Trust to



24









 







execute and deliver in the Servicer’s name any notices, demands, claims, complaints,
responses, affidavits or other documents or instruments in connection with any such proceeding.
The Indenture Trustee and the Owner Trustee will furnish the Servicer with any limited powers of
attorney and other documents which the Servicer may reasonably request and which the Servicer deems
necessary or appropriate and take any other steps which the Servicer may deem necessary or
appropriate to enable the Servicer to carry out its servicing and administrative duties under this
Agreement.



     Section 4.2 Collection of Receivable Payments; Modifications of Receivables; Blocked
Account Agreement.



          (a) Consistent with the standards, policies and procedures required by this Agreement, the
Servicer will make reasonable efforts to collect all payments called for under the terms and
provisions of the Receivables as and when the same will become due, and will follow such collection
procedures as it follows with respect to all comparable motor vehicle receivables that it services
for itself or others and otherwise act with respect to the Receivables, the Dealer Agreements, the
Dealer Assignments, the Auto Loan Purchase and Sale Agreements, the Third-Party Lender Assignments,
the Insurance Policies and the Other Conveyed Property in such manner as will, in the reasonable
judgment of the Servicer, maximize the amount to be received by the Trust with respect thereto.
The Servicer is authorized in its discretion to waive any prepayment charge, late payment charge or
any other similar fees that may be collected in the ordinary course of servicing any Receivable.



          (b) The Servicer may at any time agree to a modification or amendment of a Receivable (i) in
order to change the Obligor’s regular due date in accordance with its Servicing Policies and
Procedures, (ii) in order to re-amortize the Scheduled Receivables Payments on the Receivable
following a partial prepayment of principal or (iii) as may be required by law, in accordance with
its customary procedures if the Servicer believes in good faith that such extension, modification
or amendment is necessary to avoid a default on such Receivable, will maximize the amount to be
received by the Trust with respect to such Receivable, and is otherwise in the best interests of
the Trust; provided, however, that in no event may a Receivable be extended beyond
the Collection Period immediately preceding the last Final Scheduled Distribution Date.



          (c) The Servicer may grant payment extensions on, or other modifications or amendments to, a
Receivable (in addition to those modifications permitted by Section 4.2(b)) in accordance
with the Servicing Policies and Procedures if the Servicer believes in good faith that such
extension, modification or amendment is necessary to avoid a default on such Receivable, will
maximize the amount to be received by the Trust with respect to such Receivable, and is otherwise
in the best interests of the Trust; provided, however, that:



               (i) The aggregate period of all extensions on a Receivable does not exceed eight months;



               (ii) In no event may a Receivable be extended beyond the Collection Period immediately
preceding the latest Final Scheduled Distribution Date;



               (iii) The average Monthly Extension Rate for any three consecutive Collection Periods does not
exceed 4%;



25









 





               (iv) The Servicer may not amend or modify a Receivable (except as provided in Section
4.2(b) and this Section 4.2(c) or as otherwise required by law) without the consent of
the Insurer, so long as no Insurer Default has occurred and is continuing, or the Majority
Noteholders (if an Insurer Default has occurred and is continuing); and



               (v) In no event may a Receivable be extended more than once within a twelve-month period.



          With respect to Section 4.2(c)(iii), in the event the average of the Monthly Extension
Rates calculated with respect to three consecutive Collection Periods exceeds 4% (which information
will be set forth in the related Servicer’s Certificate), the Servicer will, so long as the
Servicer is not Citibank, N.A., acting as Backup Servicer, on the third such Accounting Date,
purchase from the Trust the Receivables with respect to which payment had been extended (starting
with the Receivables most recently so extended) in an aggregate Principal Balance equal to the
product of (i) the excess of such average of Monthly Extension Rates over 4% and (ii) the Aggregate
Principal Balance, and pay the related Purchase Amount on the related Determination Date;
provided, however, that in the event the Backup Servicer will be acting as Servicer
hereunder, the foregoing sentence will apply only in respect of Receivables as to which payments
had been extended by such Backup Servicer.



          (d) The Servicer will use its best efforts to notify or direct Obligors to make all payments
on the Receivables, whether by check or by direct debit of the Obligor’s bank account, to be made
directly to one or more Processing Banks pursuant to a Blocked Account Agreement. The Servicer
will use its best efforts to notify or direct any Processing Bank to deposit all payments on the
Receivables in the Lockbox Account no later than the Business Day after receipt, and to cause all
amounts credited to the Lockbox Account on account of such payments to be transferred to the
Collection Account no later than the second Business Day after receipt of available funds with
respect to such payments. The Lockbox Account will be a demand deposit account held by the
Processing Bank.



          On the Closing Date, the Servicer will deposit or cause to be deposited in immediately
available funds into the Collection Account all amounts collected with respect to the Receivables
from the Cutoff Date to the fourth (4th) Business Day preceding the Closing Date. As soon as
possible thereafter and in accordance with the provisions of this Agreement, all amounts collected
with respect to the Receivables from such date to the Closing Date will be deposited into the
Collection Account.



          Notwithstanding any Blocked Account Agreement, or any of the provisions of this Agreement
relating to the Blocked Account Agreement, the Servicer will remain obligated and liable to the
Trust, the Indenture Trustee and Noteholders for servicing and administering the Receivables and
the Other Conveyed Property in accordance with the provisions of this Agreement without diminution
of such obligation or liability by virtue thereof; provided, however, that the
foregoing will not apply to any Backup Servicer for so long as a Processing Bank is performing its
obligations pursuant to the terms of a Blocked Account Agreement.



          If the Servicer is terminated, the successor Servicer will assume all of the rights and
obligations of the outgoing Servicer under the Blocked Account Agreement subject to the terms
hereof. In such event, the successor Servicer will be deemed to have assumed all of the outgoing
Servicer’s interest therein and to have replaced the outgoing Servicer as a party to each such
Blocked



26









 







Account Agreement to the same extent as if such Blocked Account Agreement had been assigned to
the successor Servicer, except that the outgoing Servicer will not thereby be relieved of any
liability or obligations on the part of the outgoing Servicer to the Processing Bank under such
Blocked Account Agreement. The outgoing Servicer will, upon request of the Indenture Trustee, but
at the expense of the outgoing Servicer, deliver to the successor Servicer all documents and
records relating to each such Blocked Account Agreement and an accounting of amounts collected and
held by the Processing Bank and otherwise use its best efforts to effect the orderly and efficient
transfer of any Blocked Account Agreement to the successor Servicer. In the event that the Insurer
(so long as no Insurer Default has occurred and is continuing) or the Majority Noteholders (if an
Insurer Default has occurred and is continuing) elects to change the identity of the Processing
Bank, the outgoing Servicer, at its expense, will cause the Processing Bank to deliver, at the
direction of the Insurer (so long as no Insurer Default has occurred and is continuing) or the
Majority Noteholders (if an Insurer Default has occurred and is continuing) to the Indenture
Trustee or a successor Processing Bank, all documents and records relating to the Receivables and
all amounts held (or thereafter received) by the Processing Bank (together with an accounting of
such amounts) and will otherwise use its best efforts to effect the orderly and efficient transfer
of the lockbox arrangements and the Servicer will notify the Obligors to make payments to the
Lockbox established by the successor.



          (e) The Servicer will remit all payments by or on behalf of the Obligors received in the form
of checks with payment coupons directly by the Servicer to the Processing Bank for deposit into the
Collection Account, in either case, and as soon as practicable, but in no event later than the
second Business Day after receipt thereof. Other payments received by each of the Servicer, Triad
and the Depositor will be deposited into a local servicing account for processing immediately upon
receipt, and then transferred in immediately available funds to the Lockbox Account for deposit to
the Collection Account no later than the second (2nd) Business Day after receipt of available
amounts.



     Section 4.3 Realization upon Receivables.



          (a) Consistent with the standards, policies and procedures required by this Agreement, the
Servicer will use commercially reasonable efforts to repossess (or otherwise comparably convert the
ownership of) and liquidate any Financed Vehicle securing a Receivable with respect to which the
Servicer has determined that payments thereunder are not likely to be resumed, as soon as is
practicable after default on such Receivable but in no event later than the date on which 10% or
more of a Scheduled Receivables Payment has become 91 days delinquent; provided,
however, that the Servicer may elect not to repossess a Financed Vehicle within such time
period if in its good faith judgment it determines that the proceeds ultimately recoverable with
respect to such Receivable would be increased by forbearance. The Servicer is authorized to follow
such customary practices and procedures as it will deem necessary or advisable, consistent with the
standard of care required by Section 4.1, which practices and procedures may include
reasonable efforts to realize upon any recourse to Dealers and Third-Party Lenders, the sale of the
related Financed Vehicle at public or private sale, the submission of claims under an Insurance
Policy and other actions by the Servicer in order to realize upon such a Receivable. The Servicer
will have the discretion to retain or sell to a third-party any of the Liquidated Receivables. The
foregoing is subject to the provision that, in any case in which the Financed Vehicle will have
suffered damage, the Servicer will not expend funds in connection with any repair or towards the
repossession of such Financed Vehicle unless it will determine in its discretion that such repair
and/or repossession will increase the proceeds of liquidation of the related Receivable by an
amount greater than the amount of such expenses. All amounts received upon liquidation of a
Financed Vehicle will be remitted by



27









 







the Servicer to the Collection Account as soon as practicable, but in no event later than the
second Business Day after receipt of available funds thereof. The Servicer will be entitled to
recover all reasonable expenses incurred by it in the course of repossessing and liquidating a
Financed Vehicle into cash proceeds, as provided in Section 5.7(a) or out of the cash
proceeds of such Financed Vehicle, any deficiency obtained from the Obligor or any amounts received
from the related Dealer or Third-Party Lender, which amounts in reimbursement may be retained by
the Servicer (and will not be required to be deposited as provided in Section 4.2(e)) to
the extent of such expenses. The Servicer will pay on behalf of the Trust any personal property
taxes assessed on repossessed Financed Vehicles. The Servicer will be entitled to reimbursement of
any such tax from Net Liquidation Proceeds with respect to such Receivable.



          (b) If the Servicer elects to commence a legal proceeding to enforce a Dealer Agreement, Auto
Loan Purchase and Sale Agreement, Dealer Assignment or Third-Party Lender Assignment, the act of
commencement will be deemed to be an automatic assignment from the Trust to the Servicer of the
rights under such Dealer Agreement, Auto Loan Purchase and Sale Agreement, Dealer Assignment or
Third-Party Lender Assignment for purposes of collection only. If, however, in any enforcement
suit or legal proceeding it is held that the Servicer may not enforce a Dealer Agreement, Auto Loan
Purchase and Sale Agreement, Dealer Assignment or Third-Party Lender Assignment on the grounds that
it is not a real party in interest or a Person entitled to enforce the Dealer Agreement, Auto Loan
Purchase and Sale Agreement, Dealer Assignment or Third-Party Lender Assignment, the Owner Trustee
and/or the Indenture Trustee, at the Servicer’s expense, will take such steps as the Servicer deems
reasonably necessary to enforce the Dealer Agreement, Auto Loan Purchase and Sale Agreement, Dealer
Assignment or Third-Party Lender Assignment, including bringing suit in its name or the name of the
Trust and the Owner Trustee and/or the Indenture Trustee for the benefit of the Issuer Secured
Parties. All amounts recovered will be remitted directly by the Servicer as provided in
Section 4.2(e).



     Section 4.4 Insurance.



          (a) The Servicer will require, in accordance with the Servicing Policies and Procedures, that
each Financed Vehicle be insured by the related Obligor under the Insurance Policies referred to in
Paragraph 24 of the Schedule of Representations and Warranties. Each Receivable requires the
Obligor to maintain such physical loss and damage insurance, naming Triad and its successors and
assigns as additional insureds, and permits the holder of such Receivable to obtain physical loss
and damage insurance at the expense of the Obligor if the Obligor fails to maintain such insurance.
If the Servicer determines that an Obligor has failed to obtain or maintain a physical loss and
damage Insurance Policy covering the related Financed Vehicle as described in Paragraph 24
(including during the repossession of such Financed Vehicle) the Servicer may enforce the rights of
the holder of the Receivable under the Receivable to require the Obligor to obtain such physical
loss and damage insurance in accordance with the Servicing Policies and Procedures. The Servicer
may, at its sole option, maintain a vendor’s single interest or other collateral protection
insurance policy with respect to all Financed Vehicles (“Collateral Insurance”) which
policy by its terms insures against physical loss and damage in the event any Obligor fails to
maintain physical loss and damage insurance with respect to the related Financed Vehicle. The
parties acknowledge that the Servicer does not now have, nor does it intend to obtain, Collateral
Insurance. All policies of Collateral Insurance will be endorsed with clauses providing for loss
payable to the Servicer. Costs incurred by the Servicer in maintaining such Collateral Insurance
will be paid by the Servicer.



28









 





          (b) The Servicer may, at its sole option, if an Obligor fails to obtain or maintain a physical
loss and damage Insurance Policy, obtain insurance with respect to the related Financed Vehicle and
advance on behalf of such Obligor, as required under the terms of the insurance policy, the
premiums for such “force-placed” insurance. The parties hereto acknowledge that the Servicer does
not now have, nor does it intend to obtain, force-placed insurance. All policies of force-placed
insurance will be endorsed with clauses providing for loss payable to the Servicer. Any cost
incurred by the Servicer in maintaining such force-placed insurance will only be recoverable out of
premiums paid by the Obligors or Net Liquidation Proceeds with respect to the Receivable, as
provided in Section 4.4(c).



          In connection with any force-placed insurance obtained hereunder, the Servicer may, in the
manner and to the extent permitted by applicable law, require the Obligors to repay the entire
premium to the Servicer. In no event will the Servicer include the amount of the premium in the
Amount Financed under the Receivable. “Insurance add-on amounts,” which are the premiums charged to
Obligors in the event that the Servicer obtains force-placed insurance, with respect to any
Receivable will be treated as a separate obligation of the Obligor and will not be added to the
Principal Balance of such Receivable, and amounts allocable thereto will not be available for
distribution on the Notes and the Certificates. The Servicer will retain and separately administer
the right to receive payments from Obligors with respect to insurance add-on amounts or rebates of
force-placed insurance premiums. If an Obligor makes a payment with respect to a Receivable having
force-placed insurance, but the Servicer is unable to determine whether the payment is allocable to
the Receivable or to the insurance add-on amount, the payment will be applied first to any unpaid
Scheduled Receivables Payments and then to the insurance add-on amount. Net Liquidation Proceeds
on any Receivable will be used first to pay the Principal Balance and accrued interest on such
Receivable and then to pay the related insurance add-on amount. If an Obligor under a Receivable
with respect to which the Servicer has placed force-placed insurance fails to make scheduled
payments of such insurance add-on amount as due, and the Servicer has determined that eventual
payment of the insurance add-on amount is unlikely, the Servicer may, but will not be required to,
purchase such Receivable from the Trust for the Purchase Amount on any subsequent Determination
Date. Any such Receivable, and any Receivable with respect to which the Servicer has placed
force-placed insurance, which insurance has been paid in full (excluding any insurance add-on
amounts) will be assigned to the Servicer.



          (c) The Servicer may sue to enforce or collect upon the Insurance Policies, in its own name,
if possible, or as agent of the Trust. If the Servicer elects to commence a legal proceeding to
enforce an Insurance Policy, the act of commencement will be deemed to be an automatic assignment
of the rights of the Trust under such Insurance Policy to the Servicer for purposes of collection
only. If, however, in any enforcement suit or legal proceeding it is held that the Servicer may
not enforce an Insurance Policy on the grounds that it is not a real party in interest or a holder
entitled to enforce the Insurance Policy, the Owner Trustee and/or the Indenture Trustee, at the
Servicer’s expense, will take such steps as the Servicer deems necessary to enforce such Insurance
Policy, including bringing suit in its name or the name of the Trust and the Owner Trustee and/or
the Indenture Trustee for the benefit of the Noteholders.



          (d) The Servicer will cause itself and may cause the Indenture Trustee to be named as named
insured under all policies of Collateral Insurance.



     Section 4.5 Maintenance of Security Interests in Vehicles.



29









 





          (a) Consistent with the policies and procedures required by this Agreement, the Servicer will
take such steps on behalf of the Trust as are necessary to maintain perfection of the security
interest created by each Receivable in the related Financed Vehicle, including obtaining the
execution by the Obligors and the recording, registering, filing, re-recording, re-filing, and
re-registering of all security agreements, financing statements and continuation statements as are
necessary to maintain the security interest granted by the Obligors under the respective
Receivables. The Indenture Trustee hereby authorizes the Servicer, and the Servicer agrees, to
take any and all steps necessary to re-perfect such security interest on behalf of the Trust as
necessary because of the relocation of a Financed Vehicle or for any other reason. In the event
that the assignment of a Receivable to the Trust is insufficient, without a notation on the related
Financed Vehicle’s certificate of title, or without fulfilling any additional administrative
requirements under the laws of the state in which the Financed Vehicle is located, to perfect a
security interest in the related Financed Vehicle in favor of the Trust, the Servicer agrees that
Triad’s designation as the secured party on the certificate of title is in its capacity as Servicer
as agent of the Trust.



          (b) Upon the occurrence of an Insurance Agreement Event of Default, the Insurer may (so long
as no Insurer Default has occurred and is continuing) instruct the Indenture Trustee and the
Servicer to take or cause to be taken, or, if an Insurer Default has occurred and is continuing,
upon the occurrence of a Servicer Termination Event, the Indenture Trustee and the Servicer will
take or cause to be taken such action as may, in the opinion of counsel to the Controlling Party,
be necessary to perfect or re-perfect the security interests in the Financed Vehicles securing the
Receivables in the name of the Trust by amending the title documents of such Financed Vehicles or
by such other reasonable means as may, in the opinion of counsel to the Controlling Party, be
necessary or prudent.



          Triad 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 Controlling Party may instruct the Servicer to take or cause to be taken such
action as may, in the opinion of counsel to the Controlling Party, be necessary to perfect or
re-perfect the security interest in the Financed Vehicles underlying the Receivables in the name of
the Trust, including by amending the title documents of such Financed Vehicles or by such other
reasonable means as may, in the opinion of counsel to the Controlling Party, be necessary or
prudent; provided, however, that if the Controlling Party 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 Indenture Trustee in connection with such action will
be reimbursed to the Servicer or the Indenture Trustee, as applicable, by the Controlling Party.
Triad hereby appoints the Indenture Trustee as its attorney-in-fact to execute certificates of
title or any other documents, prepared by the Servicer, in the name and stead of Triad (it being
understood that and agreed that the Indenture Trustee has no obligation to take such steps with
respect to any perfection or reperfection, except as pursuant to the Basic Documents to which it is
a party and for which Triad has paid all expenses) and the Indenture Trustee hereby accepts such
appointment.



          (c) Upon the occurrence of a Servicer Termination Event, at the option of the Controlling
Party, Triad shall be terminated as Custodian and all original receivable contracts and related
title documents must be transferred to a successor custodian acceptable to the Controlling Party.



     Section 4.6 Covenants, Representations, and Warranties of Servicer. By its execution
and delivery of this Agreement, the Servicer makes the following representations, warranties and



30









 







covenants on which the Issuer relies in accepting the Receivables, on which the Indenture
Trustee relies in authenticating the Notes and on which the Insurer relies in issuing the Note
Policy.



          (a) The Servicer covenants as follows:



               (i) Liens in Force. The Financed Vehicle securing each Receivable will not be
released in whole or in part from the security interest granted by the Receivable, except upon
payment in full of the Receivable or as otherwise contemplated herein;



               (ii) No Impairment. The Servicer will do nothing to impair the rights of the Trust or
the Noteholders in the Receivables, the Dealer Agreements, the Auto Loan Purchase and Sale
Agreements, the Dealer Assignments, the Third-Party Lender Assignments, the Insurance Policies or
the Other Conveyed Property except as otherwise expressly provided herein;



               (iii) No Amendments. The Servicer will not extend or otherwise amend the terms of any
Receivable, except in accordance with Section 4.2; and



               (iv) Restrictions on Liens. The Servicer will not (i) create, incur or suffer to
exist, or agree to create, incur or suffer to exist, or consent to cause or permit in the future
(upon the happening of a contingency or otherwise) the creation, incurrence or existence of any
Lien or restriction on transferability of the Receivables except for the Lien in favor of the
Indenture Trustee for the benefit of the Noteholders and the Insurer, and the restrictions on
transferability imposed by this Agreement or (ii) sign or file under the UCC of any jurisdiction
any financing statement which names Triad or the Servicer as a debtor, or sign any security
agreement authorizing any secured party thereunder to file such financing statement, with respect
to the Receivables or Other Conveyed Property, except in each case any such instrument solely
securing the rights and preserving the Lien of the Indenture Trustee, for the benefit of the
Noteholders and the Insurer.



          (b) The Servicer represents, warrants and covenants as of the Closing Date as to itself that
the representations and warranties set forth on the Schedule of Representations attached hereto as
Schedule B are true and correct; provided, however, that such representations and
warranties contained therein and herein will not apply to any entity other than Triad.



     Section 4.7 Purchase of Receivables Upon Breach of Covenant. Upon discovery by any of
the Servicer, the Insurer, the Trust or a Responsible Officer of the Indenture Trustee of a breach
of any of the representations, warranties and covenants set forth in Sections 4.5(a) or
4.6, the party discovering such breach will give prompt written notice to the others;
provided, however, that the failure to give any such notice will not affect any
obligation of Triad as Servicer under this Section 4.7. As of the second Accounting Date
following its discovery or receipt of notice of any breach of any representation, warranty or
covenant set forth in Sections 4.5(a) or 4.6 which materially and adversely affects
the interests of the Noteholders or the Insurer in any Receivable (including any Liquidated
Receivable) (or, at Triad’s election, the first Accounting Date so following) or the related
Financed Vehicle, Triad will, unless such breach has been cured in all material respects, purchase
from the Trust the Receivable affected by such breach and, on the related Determination Date, Triad
will pay the related Purchase Amount. It is understood and agreed that the obligation of Triad to
purchase any Receivable (including any Liquidated Receivable) with respect to which such a breach
has occurred and is continuing will, if such obligation is fulfilled, constitute the sole remedy
against Triad for such breach available to the Insurer, the Noteholders, the Owner Trustee or the
Indenture Trustee; provided, however, that Triad will indemnify the Trust, the
Backup Servicer, the Insurer, the



31









 







Owner Trustee, the Indenture Trustee, the Certificateholders and the Noteholders from and
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 indemnification
provided pursuant to this section will survive the removal or resignation of the Indenture Trustee
and or the Backup Servicer. In no event shall Citibank, N.A., in its capacity as the Backup
Servicer or successor Servicer, be obligated to repurchase any Receivable pursuant to this
Section 4.7.



     Section 4.8 Total Servicing Fee; Payment of Certain Expenses by Servicer. On each
Distribution Date, the Servicer will be entitled to receive out of the Collection Account the Base
Servicing Fee and any Supplemental Servicing Fee for the related Collection Period (together, the
“Servicing Fee”) pursuant to Section 5.7. The Servicer will 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 in connection with distributions and reports made by the
Servicer to Noteholders or the Insurer and, to the extent not provided for pursuant to Section
5.7, all other fees and out-of-pocket expenses of the Owner Trustee, the Backup Servicer, and
the Indenture Trustee, except taxes levied or assessed against the Trust, the Owner Trustee, the
Backup Servicer or the Indenture Trustee, and claims against the Trust, the Owner Trustee, the
Backup Servicer or the Indenture Trustee in respect of indemnification, which taxes and claims in
respect of indemnification against the Trust are expressly stated to be for the account of Triad).
The Servicer will, to the extent not provided for pursuant to Section 5.7, be liable for
the fees and out-of-pocket expenses of the Owner Trustee, the Backup Servicer, the Indenture
Trustee, the Custodian, the Processing Bank (and any fees under the Blocked Account Agreement) and
the Independent Accountants, except taxes levied or assessed against such parties. Notwithstanding
the foregoing, if the Servicer is not Triad, a successor to Triad as Servicer including the Backup
Servicer permitted by Section 9.3 will not be liable for taxes levied or assessed against
the Trust or claims against the Trust in respect of indemnification, or the fees and expenses
referred to above.



     Section 4.9 Servicer’s Certificate. No later than 11:00 a.m. New York City time on
each Determination Date, the Servicer will deliver (facsimile delivery being acceptable; and in the
case of the Servicer’s Certificate to be delivered to the Indenture Trustee, the Depositor and the
Backup Servicer, an e-mail in a computer file, the format of which will be agreed upon between the
Servicer and such parties) to the Indenture Trustee, the Owner Trustee, the Backup Servicer, the
Insurer, the Swap Counterparty and each Rating Agency a Servicer’s Certificate containing among the
other things set forth in Exhibit A, (i) all information necessary to enable the Indenture Trustee
to give any notice required by Section 6.1 and to make the distributions required by
Section 5.7, (ii) a listing of all Purchased Receivables and Administrative Receivables
purchased as of the related Accounting Date, (iii) all information necessary to enable the
Indenture Trustee to send the statements to Noteholders and the Insurer required by Section
5.10, (iv) the Delinquency Rate, Net Loss Rate and Cumulative Net Loss Ratio for such
Determination Date, and (v) whether to the knowledge of the Servicer an Insurance Agreement Event
of Default, a Spread Cap Event (as defined in the Insurance Agreement) or a Trigger Event (as
defined in the Insurance Agreement) has occurred. Receivables purchased by the Servicer or by
Triad on the related Accounting Date and each Receivable that became a Liquidated Receivable or
that was paid in full during the related Collection Period will be identified by account number (as
set forth in the Schedule of Receivables).



     Section 4.10 Annual Statement as to Compliance, Notice of Servicer Termination Event.



32









 





          (a) To the extent required by Regulation AB, the Servicer will deliver to the Indenture
Trustee, the Owner Trustee, the Backup Servicer, the Insurer and each Rating Agency, on or before
March 31 of each year (or 90 days after the end of each calendar year), beginning on March 31,
2008, an Officer’s Certificate, dated as of December 31 (or other applicable date) of the preceding
year, stating that (i) a review of the Servicer’s activities during the preceding calendar year (or
such other period as has elapsed from the Closing Date to the date of the first such certificate)
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 in all material respects throughout such reporting period, or,
if there has been a failure to fulfill any such obligation in any material respect, specifying each
such failure known to such officer and the nature and status thereof.



          (b) The Servicer will deliver to the Indenture Trustee, the Owner Trustee, the Backup
Servicer, the Insurer and each Rating Agency, on or before March 31 of each year (or 90 days after
the end of each calendar year), beginning on March 31, 2008, a report, dated as of December 31 (or
other applicable date) of the preceding year, on its assessment of compliance with the minimum
servicing criteria during the preceding calendar year, including disclosure of any material
instance of non-compliance identified by the Servicer, as required by Rule 13a-18 and 15d-18 of the
Exchange Act and Item 1122 of Regulation AB.



          (c) If the Issuer is not required to file periodic reports under the Exchange Act or any other
law, the reports referred to in this section may be delivered on or before April 30 of each
calendar year (or 120 days after the end of each calendar year), beginning April 30, 2009.



          (d) The Servicer will deliver to the Indenture Trustee, the Owner Trustee, the Backup
Servicer, the Insurer, and each Rating Agency, promptly after having obtained knowledge thereof,
but in no event later than two (2) Business Days thereafter, 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 Accountants’ Report.



          (a) The Servicer will cause a firm of independent certified public accountants (the
“Independent Accountants”), who may also render other services to the Servicer or to its
Affiliates, to deliver to the Indenture Trustee, the Owner Trustee, the Backup Servicer, the
Insurer and each Rating Agency, on or before March 31 (or 90 days after the end of the Servicer’s
fiscal year, if other than December 31) of each year, beginning on March 31, 2008, a report, dated
as of December 31 of the preceding calendar year, addressed to the board of directors of the
Servicer, providing its assessment of compliance with the minimum servicing criteria during the
preceding calendar year, including disclosure of any material instance of non-compliance, as
required by Rule 13a-18 and 15d-18 of the Exchange Act and Item 1122(b) of Regulation AB. Such
attestation will be in accordance with Rules 1-02(a)(3) and 2-02(g) of Regulation S-X under the
Securities Act and the Exchange Act.



          (b) If the Issuer is not required to file periodic reports under the Exchange Act or any other
law, the reports referred to in this section may be delivered on or before April 30 of each
calendar year (or 120 days after the end of calendar year), beginning April 30, 2009.



     Section 4.12 Access to Certain Documentation and Information Regarding Receivables.
The Servicer will upon reasonable prior notice provide to representatives of the Indenture Trustee,



33









 







the Owner Trustee, the Backup Servicer and the Insurer reasonable access to the documentation
regarding the Receivables. In each case, such access will be afforded without charge but only upon
reasonable request and during normal business hours. Any expense incident to the exercise by the
Indenture Trustee, Owner Trustee, Backup Servicer or the Insurer will be borne by the Servicer to
the extent such visits and examinations are not more frequent than once in any twelve-month period,
or a Servicer Termination Event has occurred and is continuing. Nothing in this Section will
affect 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 4.12 as a result of such obligation will not constitute a breach of this
Section 4.12.



     Section 4.13 Reserved.



     Section 4.14 Fidelity Bond and Errors and Omissions Policy. The Servicer will not be
required to maintain an errors and omissions policy. The Servicer will maintain a fidelity bond of
a type and in an amount customary for servicers engaged in the business of servicing motor vehicle
receivables.



ARTICLE V




Trust Accounts; Distributions; Statements to Noteholders




     Section 5.1 Establishment of Trust Accounts.



          (a) (i) The Indenture Trustee, on behalf of the Noteholders and the Insurer, will establish
and maintain in its own name one or more Eligible Deposit Accounts (collectively, the
“Collection Account”), bearing a designation clearly indicating that the funds deposited
therein are held for the benefit of the Indenture Trustee on behalf of the Noteholders and the
Insurer. The Collection Account will initially be established with the Indenture Trustee.



               (ii) The Indenture Trustee, on behalf of the Noteholders and the Insurer, will establish and
maintain in its own name an Eligible Deposit Account (the “Note Distribution Account”),
bearing a designation clearly indicating that the funds deposited therein are held for the benefit
of the Indenture Trustee on behalf of the Noteholders and the Insurer. The Note Distribution
Account will initially be established with the Indenture Trustee.



               (iii) The Indenture Trustee, on behalf of the Noteholders and the Insurer, will establish and
maintain in its own name an Eligible Deposit Account (the “Spread Account”), bearing a
designation clearly indicating that the funds deposited therein are held in trust for the benefit
of the Indenture Trustee on behalf of the Noteholders and the Insurer. The Spread Account will
initially be established with the Indenture Trustee.



               (iv) Upon receipt by the Issuer of a Swap Termination Payment, the Indenture Trustee, on
behalf of the Noteholders and the Insurer, shall establish and maintain an Eligible Deposit Account
(the “Swap Termination Account”), bearing a designation clearly indicating that the funds
deposited therein are held for the benefit of the Indenture Trustee on behalf of the Noteholders
and the Insurer.



               (v) Funds on deposit in the Collection Account, the Note Distribution Account (but only to
the extent of deposits therein for more than one Business Day), the Spread
Account, the Swap Account and the Swap Termination Account (collectively, the “Trust
Accounts”)



34









 







will be invested by the Indenture Trustee (or any custodian with respect to funds on
deposit in any such account) in Eligible Investments selected in writing by the Servicer (pursuant
to standing instructions or otherwise). All such Eligible Investments will be held by or on behalf
of the Indenture Trustee for the benefit of the Noteholders and the Insurer, as their interests
arise. Funds on deposit in any Trust Account will be invested in Eligible Investments that will
mature so that such funds will be available at the close of business on the Business Day
immediately preceding the following Distribution Date. However, if each of the Rating Agencies
confirms that it would not affect the ratings assigned to the Notes and the Insurer consents, funds
on deposit in the Spread Account may be invested in Eligible Investments that will mature so that
funds will be available on the following Distribution Date. All Eligible Investments will be held
to maturity.



          (b) All investment earnings of moneys deposited in the Trust Accounts will be deposited (or
caused to be deposited) by the Indenture Trustee in the Collection Account, and any loss resulting
from such investments will be charged to the applicable Trust Account. The Servicer will not
direct the Indenture Trustee to make any investment of any funds held in any of the Trust Accounts
unless the security interest granted and perfected in such account will continue to be perfected in
such investment, in either case without any further action by any Person.



          (c) The Indenture Trustee will not in any way be held liable by reason of any insufficiency in
any of the Trust Accounts resulting from any loss on any Eligible Investment included therein
except for losses attributable to the Indenture Trustee’s negligence or bad faith or its failure to
make payments on such Eligible Investments issued by the Indenture Trustee, in its commercial
capacity as principal obligor and not as trustee, in accordance with their terms.



          (d) If (i) the Servicer fails to give investment directions in writing for any funds on
deposit in the Trust Accounts to the Indenture Trustee by 1:00 p.m. New York City Time (or such
other time as may be agreed by the Issuer and Indenture Trustee) on any Business Day; or (ii) a
Default or Event of Default has occurred and is continuing with respect to the Notes but the Notes
have not been declared due and payable, or, if such Notes will have been declared due and payable
following an Event of Default, amounts collected or receivable from the Trust Property are being
applied as if there had not been such a declaration; then the Indenture Trustee will, to the
fullest extent practicable, invest and reinvest funds in the Trust Accounts in the investment
described in clause (d) of the definition of Eligible Investments.



          (e) (i) The Indenture Trustee will possess all right, title and interest in all funds on
deposit from time to time in the Trust Accounts and in all proceeds thereof and all such funds,
investments, proceeds and income will be part of the Owner Trust Estate. Except as otherwise
provided herein, the Trust Accounts will be under the sole dominion and control of the Indenture
Trustee for the benefit of the Noteholders and the Insurer. If, at any time, any of the Trust
Accounts ceases to be an Eligible Deposit Account, the Indenture Trustee (or the Servicer on its
behalf) will within ten Business Days (or such longer period as to which each Rating Agency and the
Insurer may consent) establish a new Trust Account as an Eligible Deposit Account and will transfer
any cash and/or any investments to such new Trust Account. In connection with the foregoing, the
Servicer agrees that, in the event that any of the Trust Accounts are not accounts with the
Indenture Trustee, the Servicer will notify the Indenture Trustee and the Insurer in writing
promptly upon any of such Trust Accounts ceasing to be an Eligible Deposit Account.



               (ii) With respect to the Trust Account Property, the Indenture Trustee agrees that:



35









 





                    (A) any Trust Account Property that is held in deposit accounts will be held solely in the
Eligible Deposit Accounts; and, except as otherwise provided herein, each such Eligible Deposit
Account will be subject to the exclusive custody and control of the Indenture Trustee, and the
Indenture Trustee will have sole signature authority with respect thereto;



                    (B) any Trust Account Property that constitutes “securities entitlements” will be delivered to
the Indenture Trustee in accordance with the UCC and will be held, pending maturity or disposition,
solely by the Indenture Trustee or a securities intermediary (as such term is defined in Section
8-102(14) of the UCC) acting solely for the Indenture Trustee; and



                    (C) the “securities intermediary’s jurisdiction,” for purposes of Section 8-110 of the
UCC, shall be the State of New York.



          (f) The Servicer will have the power, revocable by the Insurer or, with the consent of the
Insurer, by the Indenture Trustee, to instruct the Indenture Trustee to make withdrawals and
payments from the Trust Accounts for the purpose of permitting the Servicer and the Indenture
Trustee to carry out its respective duties hereunder.



          (g) The Indenture Trustee acknowledges that, pursuant to the provisions of the Swap Agreement,
the Swap Counterparty may be required to post collateral with the Indenture Trustee to secure the
Swap Counterparty’s obligations under the Swap Agreement. The Indenture Trustee, on behalf of the
Noteholders and the Insurer, agrees to establish and maintain an Eligible Deposit Account (the
“Swap Account”), bearing a designation clearly indicating that the funds deposited therein
are held for the benefit of the Indenture Trustee on behalf of the Noteholders and the Insurer, to
hold such collateral, at the direction of the Servicer or the Controlling Party if the Swap
Counterparty is required to post collateral to secure the obligations under the Swap Agreement.
The Indenture Trustee further agrees to follow such written instructions relating to the
administration of, and transfers from, such account, as may be delivered by (i) the Servicer (with
the consent of the Controlling Party) or (ii) the Controlling Party, in each case subject to and in
accordance with the terms of the Swap Agreement.



          (h) To the extent that (i) the funds available in the Swap Termination Account exceed the cost
of entering into a replacement Swap Agreement or (ii) the Issuer determines with the consent of the
Insurer not to replace the Swap Agreement and the Rating Agency Condition is met with respect to
such determination, the amounts in the Swap Termination Account (other than funds used to pay the
costs of entering into a replacement Swap Agreement, if applicable) shall be deposited in the
Collection Account, included in Available Funds and allocated in accordance with the priorities set
forth in Section 5.7(a) on the following Distribution Date. In any other situation, amounts
on deposit in the Swap Termination Account at any time shall be invested pursuant to Section
5.1(a)(v) and on each Distribution Date after the creation of a Swap Termination Account, the
funds therein shall be included in Available Funds to cover any shortfalls in the amounts payable
under clauses (i) through (iv) of Section 5.7(a) (prior to any withdrawal
from the Spread Account); provided, that in no event will the amount withdrawn from the
Swap Termination Account on such Distribution Date exceed the amount of net swap payments that
would have been required to be paid on such Distribution Date under the terminated Swap Agreement
had there been no termination of such transaction. Any amounts remaining in the Swap Termination
Account after payment in full of the
Class A-4 Notes shall be included in Available Funds and allocated in accordance with the
order of priority specified in Section 5.7(a) on the following Distribution Date.



36









 





     Section 5.2 [Reserved].



     Section 5.3 Certain Reimbursements to the Servicer. The Servicer will be entitled to
be reimbursed from amounts on deposit in the Collection Account with respect to a Collection Period
for amounts previously deposited in the Collection Account but later determined by the Servicer to
have resulted from mistaken deposits or postings or checks returned for insufficient funds. To the
extent that such amounts are owed to the Processing Bank, the Servicer will cause such amounts to
be returned to the Processing Bank. The amount to be reimbursed hereunder will be paid to the
Servicer on the related Distribution Date pursuant to Section 5.7(a)(i) upon certification
by the Servicer of such amounts and the provision of such information to the Indenture Trustee and
the Insurer as may be necessary in the opinion of the Insurer to verify the accuracy of such
certification; provided, however, that the Servicer must provide such clarification
within 12 months of such mistaken deposit, posting, or returned check. In the event that the
Insurer has not received evidence satisfactory to it of the Servicer’s entitlement to reimbursement
pursuant to this Section 5.3, the Insurer will (unless an Insurer Default has occurred and
is continuing) give the Indenture Trustee notice in writing to such effect, following receipt of
which the Indenture Trustee will not make a distribution to the Servicer in respect of such amount
pursuant to Section 5.7, or if the Servicer prior thereto has been reimbursed pursuant to
Section 5.7, the Indenture Trustee will withhold such amounts from amounts otherwise
distributable to the Servicer on the next succeeding Distribution Date. The Servicer will
additionally be entitled to receive from amounts on deposit in the Collection Account with respect
to a Collection Period any amounts paid by Obligors that were collected in the Lockbox Account but
that do not relate to (i) principal and interest payments due on the Receivables and (ii) any
Supplemental Servicing Fees.



     Section 5.4 Application of Collections. All collections for the Collection Period
will be applied by the Servicer as follows:



          With respect to each Receivable (other than a Purchased Receivable), payments by or on behalf
of the Obligor (other than Supplemental Servicing Fees with respect to such Receivable, to the
extent collected) will be applied to interest and principal in accordance with the Simple Interest
Method.




          All amounts collected that are payable to the Servicer as Supplemental Servicing Fees
hereunder will be deposited in the Collection Account and paid to the Servicer in accordance with
Section 5.7(a).




     Section 5.5 Spread Account.



          (a) On or prior to the Closing Date, the Depositor will deposit an amount equal to the Spread
Account Initial Deposit into the Spread Account from the proceeds of the Notes. On each
Distribution Date, to the extent of funds available therefor pursuant to the priority of payments,
amounts will be deposited into the Spread Account in accordance with Section 5.7(a)(x)
until the amount on deposit therein is equal to the Spread Account Requirement.



          (b) In the event that the Servicer’s Certificate with respect to any Determination Date states
that there is a Spread Account Draw Amount, then on the related Distribution Date, the
Indenture Trustee will withdraw such Spread Account Draw Amount from the Spread Account to the
extent of funds on deposit therein and deposit such amount into the Collection Account for
distribution in accordance with Section 5.7(a).



37









 





          (c) After considering all required distributions made on a Distribution Date, amounts on
deposit in the Spread Account on that Distribution Date that are in excess of the Spread Account
Requirement for that Distribution Date will be applied by the Indenture Trustee in accordance with
Section 5.7(a)(viii), then 5.7(a)(xi) through (xiv).



     Section 5.6 Additional Deposits.



          (a) The Servicer and Triad, as applicable, will deposit or cause to be deposited in the
Collection Account on the Determination Date on which such obligations are due the aggregate
Purchase Amount with respect to Purchased Receivables.



          (b) The proceeds of any sale of the assets of the Trust described in Section 10.1 will
be deposited in the Collection Account on the date of such sale.



          (c) Net payments received from the Swap Counterparty (other than Swap Termination Payments),
if any, will be deposited by the Indenture Trustee in the Collection Account.



          (d) If the Indenture Trustee receives any Additional Funds Available of the type described in
clause (2) of the definition thereof it will deposit them into the Collection Account and on each
Distribution Date it will transfer any such funds to the Note Distribution Account.



     Section 5.7 Distributions.



          (a) On each Distribution Date, unless payments are required to be made in accordance with
Article V of the Indenture, the Indenture Trustee will (based solely on the information contained
in the Servicer’s Certificate delivered with respect to the related Determination Date) distribute
the following amounts from Available Funds on deposit in the Collection Account unless otherwise
specified, to the extent of the sources of funds stated to be available therefor, and in the
following order of priority:



               (i) to the Servicer, the Servicing Fee for the related Collection Period, and, to the extent
the Servicer has not reimbursed itself or to the extent not retained by the Servicer, other amounts
relating to mistaken deposits, postings or checks returned for insufficient funds, and to the
extent available, any amounts paid by the Obligors during the preceding Collection Period that were
collected in the Collection Account but that do not relate to principal payments or interest
payments, such as late fees, prepayment charges and other administrative charges;



               (ii) to the Owner Trustee, the Indenture Trustee and the Backup Servicer, the Owner Trustee
Fee, the Indenture Trustee Fee, the Backup Servicer fee, if any, and any accrued and unpaid
servicer transition expenses of any incoming servicer then due to the Indenture Trustee, the Backup
Servicer or any other successor servicer, up to a maximum amount of $200,000 in the aggregate;



               (iii) to the Swap Counterparty, net payments (excluding Swap Termination Payments) due to it
under the Swap Agreement;



               (iv) to the Note Distribution Account, the Class A Noteholders’ Interest Distributable Amount;



38









 





               (v) to the Note Distribution Account, to make a payment of principal on the Class A Notes to
the extent necessary to reduce the Class A Note principal balance to the Pool Balance;



               (vi) to the Note Distribution Account, on the Final Scheduled Distribution Date for any class
of Class A Notes to make a payment of the remaining principal balance of such class of Class A
Notes;



               (vii) to the Insurer, any unpaid amounts owed to the Insurer under the Insurance Agreement
with respect to unpaid Premiums and unreimbursed draws on the Note Policy and the Swap Policy;



               (viii) to the Insurer, so long as no Insurer Default has occurred and is continuing, any other
unpaid amounts owed to the Insurer under the Insurance Agreement;



               (ix) to the Note Distribution Account, to make a payment of the Class A Noteholders’ Principal
Distributable Amount;



               (x) to the Spread Account, any amount required to increase the amount in the Spread Account to
the Spread Account Requirement;



               (xi) to the Insurer, if an Insurer Default has occurred or is continuing, any other unpaid
amounts owed to the Insurer under the Insurance Agreement;



               (xii) to the Note Distribution Account, to make a payment of the Class A Noteholders’
Accelerated Principal Amount; provided, however, that if a Cumulative Net Loss
Trigger Event or an Insurance Agreement Event of Default has occurred and is continuing, all
remaining Available Funds shall be applied to pay principal on the Class A Notes until they have
been paid in full, in either case, for payment to the Class A Noteholders;



               (xiii) to the Swap Counterparty, any other amounts owed under the Swap Agreement, including
Swap Termination Payments, if any, then due; and



               (xiv) to make a payment of all remaining amounts to the Certificateholders.



          (b) On each Distribution Date, the Indenture Trustee will (based solely on the information
contained in the Servicer’s Certificate delivered with respect to the related Determination Date,
unless the Insurer has notified the Indenture Trustee in writing of any errors or deficiencies with
respect thereto) distribute from the Collection Account the Additional Funds Available, if any,
plus any amounts paid by the Insurer under the terms of the Note Policy, if any, in each case then
on deposit in the Collection Account, and deposit in the Note Distribution Account the excess, if
any, of the Scheduled Payments due on such Distribution Date over the amount of all Available Funds
previously deposited in the Note Distribution Account with respect to the related Distribution
Date, which amount will be applied solely to the payment of amounts then due and unpaid on the
Class A Notes in accordance with the priorities set forth in Section 5.8(a).



          (c) In the event that the Collection Account is maintained with an institution other than the
Indenture Trustee, the Servicer will instruct and cause such institution to make all deposits and
distributions pursuant to Sections 5.7(a) and 5.7(b) on the related Distribution
Date.



39









 





     Section 5.8 Note Distribution Account.



          (a) On each Distribution Date (based solely on the information contained in the Servicer’s
Certificate) the Indenture Trustee will distribute all amounts on deposit in the Note Distribution
Account to Noteholders in respect of the Notes to the extent of amounts due and unpaid on the Notes
for principal and interest in the following amounts:




           • From amounts transferred pursuant to Section 5.7(a)(iv), accrued and
unpaid interest on the Class A Notes; provided, however, that if such amount
is insufficient to pay the entire amount of accrued and unpaid interest then due on each
Class of Class A Notes, the amount in the Note Distribution Account will be applied to the
payment of such interest on each Class of Class A Notes pro rata on the basis of the amount
of accrued and unpaid interest due on each Class of Class A Notes.




 • From amounts transferred pursuant to Section 5.7(a)(v), (vi),
(ix), and (xii), in the following order of priority:




     (1) to the holders of the Class A-1 Notes, the total amount paid out on each
Distribution Date until the outstanding principal balance of the Class A-1 Notes has
been reduced to zero;




     (2) to the holders of the Class A-2 Notes, the total amount paid out on each
Distribution Date until the outstanding principal balance of the Class A-2 Notes has
been reduced to zero;




     (3) to the holders of the Class A-3 Notes, the total amount paid out on each
Distribution Date until the outstanding principal balance of the Class A-3 Notes has
been reduced to zero; and




     (4) to the holders of the Class A-4 Notes, the total amount paid out on each
Distribution Date until the outstanding principal balance of the Class A-4 Notes is
reduced to zero;


provided, however, that after the acceleration of the Notes following the
occurrence of an Event of Default under the Indenture, payments of principal on the Notes will be
made, instead of as provided above after payment of all amounts owing to the Indenture Trustee
pursuant to Section 6.7 of the Indenture, first to the Class A-1 Notes until the
Class A-1 Notes have been paid in full, and second to the other Classes of Class A Notes
pro rata until they are paid in full.




          (b) On each Distribution Date, the Indenture Trustee will post on its website at
http://www.sf.citidirect.com., which posting will be accessible to each Noteholder and to the
Insurer, the statement provided to the Indenture Trustee by the Servicer pursuant to Section
5.10 hereof on such Distribution Date.



          (c) In the event that any withholding tax is imposed on the Trust’s payment (or allocations of
income) to a Noteholder, such tax will reduce the amount otherwise distributable to the Noteholder
in accordance with this Section 5.8. The Indenture Trustee is hereby authorized and
directed to retain from amounts otherwise distributable to the Noteholders sufficient funds for the
payment of any withholding tax attributable to the Trust (but such authorization will not prevent the



40









 







Indenture Trustee from contesting any such tax in appropriate proceedings, and withholding
payment of such tax, if permitted by law, pending the outcome of such proceedings). The amount of
any withholding tax imposed with respect to a Noteholder will be treated as cash distributed to
such Noteholder at the time it is withheld by the Trust and remitted to the appropriate taxing
authority. If there is a possibility that withholding tax is payable with respect to a
distribution (such as a distribution to a non-U.S. Noteholder), the Indenture Trustee may in its
sole discretion withhold such amounts in accordance with this Section 5.8(c). In the event
that a Noteholder wishes to apply for a refund of any such withholding tax, the Indenture Trustee
will reasonably cooperate with such Noteholder in making such claim so long as such Noteholder
agrees to reimburse the Indenture Trustee for any out-of-pocket expenses (including legal fees and
expenses) incurred.



          (d) Distributions required to be made to Noteholders on any Distribution Date will be made to
each Noteholder of record on the related Record Date either by wire transfer, or by check mailed to
such Noteholder, as provided in Section 2.7 of the Indenture.



          (e) Subject to Section 5.1 and this Section 5.8, monies received by the
Indenture Trustee hereunder need not be segregated in any manner except to the extent required by
law and may be deposited under such general conditions as may be prescribed by law, and the
Indenture Trustee will not be liable for any interest thereon.



     Section 5.9 Reserved.



     Section 5.10 Statements to Noteholders.



          (a) On each Distribution Date, the Indenture Trustee will make available to each Noteholder
and to the Insurer and the Rating Agencies a statement setting forth at least the following
information (which will be included in the Servicer’s Certificate delivered to the Indenture
Trustee) to the extent applicable:



               (i) the amount of such distribution allocable to principal of each Class of Notes;



               (ii) the amount of such distribution allocable to interest on or with respect to each Class of
Notes;



               (iii) the amount of such distribution payable out of amounts withdrawn from the Spread Account
or pursuant to a claim on the Note Policy;



               (iv) the Pool Balance as of the close of business on the last day of the preceding Collection
Period;



               (v) the Interest Rate for the next Interest Period for the Class A-4 Notes;



               (vi) the aggregate outstanding principal amount of each Class of the Notes and the Note Pool
Factor for each such Class after giving effect to payments allocated to principal reported under
Section 5.10(a)(i);



               (vii) the amount of the Servicing Fee paid to the Servicer with respect to the related
Collection Period and/or due but unpaid with respect to such Collection Period or prior Collection
Periods, as the case may be;



41









 





               (viii) the Class A Noteholders’ Interest Carryover Amount and the Class A Noteholders’
Principal Carryover Amount, if any;



               (ix) the Delinquency Rate with respect to such Distribution Date;



               (x) the Net Loss Rate and Cumulative Net Loss Ratio with respect to such Distribution Date;
and



               (xi) the aggregate Purchase Amounts for Receivables, if any, that were repurchased by Triad or
the Servicer on or prior to the related Determination Date.


Each amount set forth pursuant to Section 5.10(a)(i), (ii), (iii),
(vii) and (viii) will be expressed as a dollar amount per $1,000 of the initial
principal balance of the Notes (or Class thereof).




          (b) The Indenture Trustee will make the statements referred to in Section 5.10(a)
(and, at its option, any additional files containing the same information in an alternative format)
available each month via the Indenture Trustee’s internet website, which is presently located at
http://www.sf.citidirect.com. Persons that are entitled to receive such statements but are unable
to use the above website are entitled to have a paper copy mailed to them via first class mail by
calling the Indenture Trustee at 1-800-422-2066. The Indenture Trustee will have the right to
change the way the statements referred to in Section 5.10(a) are distributed in order to
make such distribution more convenient and/or more accessible to the parties entitled to receive
such statements. The Indenture Trustee will provide notification of any such change to all parties
entitled to receive such statements in the manner described in Section 12.3, Section
11.4 of the Indenture or Section 11.5 of the Indenture, as appropriate.



     Section 5.11 Optional Deposits by the Insurer. The Insurer will at any time, and from
time to time, with respect to a Distribution Date, have the option (but will not be required,
except in accordance with the terms of the Note Policy) to deliver an Insurer Optional Deposit to
the Indenture Trustee for deposit into the Collection Account.



ARTICLE VI




The Note Policy 




     Section 6.1 Claims Under Note Policy.



          (a) In the event that the Servicer’s Certificate with respect to any Determination Date states
that there is a Deficiency Amount with respect to the related Distribution Date which is greater
than zero, the Indenture Trustee shall furnish to the Insurer no later than 12:00 noon New York
City time on the second Business Day immediately preceding such Distribution Date a completed
Notice of Claim (as defined in (b) below) in the amount of the Deficiency Amount. Amounts paid by
the
Insurer pursuant to a claim submitted under this Section shall be deposited by the Indenture
Trustee into the Note Distribution Account for payment to Holders (as defined in the Note Policy)
on the related Distribution Date.



          (b) Any notice delivered by the Indenture Trustee to the Insurer in the form attached as
Exhibit A to the Note Policy pursuant to Section 6.1(a) shall specify the Deficiency Amount
claimed under the Note Policy and shall constitute a “Notice of Claim” under the Note
Policy. In accordance with the provisions of the Note Policy, the Insurer is required to pay to
the Indenture



42









 







Trustee the Deficiency Amount properly claimed thereunder by 12:00 noon, New York
City time, on the later of (i) the second Business Day following receipt in New York, New York on a
Business Day of the Notice of Claim, or (ii) the applicable Distribution Date. Any payment made by
the Insurer under the Note Policy shall be applied solely to the payment of the Notes, and for no
other purpose.



          (c) The Indenture Trustee shall (i) receive as attorney-in-fact of each Noteholder any
Deficiency Amount from the Insurer and (ii) deposit the same in the Note Distribution Account for
distribution to Holders. Any and all Deficiency Amounts disbursed by the Indenture Trustee from
claims made under the Note Policy shall not be considered payment by the Issuer or from the Spread
Account with respect to such Notes, and shall not discharge the obligations of the Issuer with
respect thereto. The Insurer shall, to the extent it makes any payment with respect to the 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 Notes by or on behalf of the
Insurer, the Indenture Trustee shall assign to the Insurer all rights to the payment of interest or
principal with respect to the Notes which are then due for payment to the extent of all payments
made by the Insurer, and the Insurer may exercise any option, vote, right, power or the like with
respect to the Notes to the extent that it has made payment pursuant to the Note Policy. To
evidence such subrogation, the Note Registrar shall note the Insurer’s rights as subrogee upon the
register of Noteholders upon receipt from the Insurer of proof of payment by the Insurer of any
Deficiency Amount. The foregoing subrogation shall in all cases be subject to the rights of the
Holders to receive all Scheduled Payments in respect of the Notes.



          (d) The Indenture Trustee shall keep a complete and accurate record of all funds deposited
into the Note Distribution Account with respect to the Note Policy and the allocation of such funds
to payment of interest on and principal paid in respect of any Note. The Insurer shall have the
right to inspect such records at reasonable times upon one Business Day’s prior notice to the
Indenture Trustee.



          (e) The Indenture Trustee shall be entitled to enforce on behalf of the Noteholders the
obligations of the Insurer under the Note Policy. Notwithstanding any other provision of this
Agreement or any Basic Document, the Noteholders are not entitled to institute proceedings directly
against the Insurer.



     Section 6.2 Preference Claims Under Note Policy.



          (a) In the event that the Indenture Trustee has received a certified copy of an order of the
appropriate court that any payment paid on a Note has been avoided in whole or in part as a
preference payment under applicable bankruptcy law pursuant to a final nonappealable order of a
court having competent jurisdiction, the Indenture Trustee shall so notify the Insurer, shall
comply with the provisions of the Note Policy to obtain payment by the Insurer of such avoided
payment, and shall, at the time it provides notice to the Insurer, notify Holders of the Notes by
mail that, in the
event that any Holder’s payment is so recoverable, such Holder will be entitled to payment
pursuant to the terms of the Note Policy. The Indenture Trustee shall furnish to the Insurer its
records evidencing the payments of principal of and interest on Notes, if any, which have been made
by the Indenture Trustee and subsequently recovered from Holders, and the dates on which such
payments were made. Pursuant to the terms of the Note Policy, the Insurer will make such payment
on behalf of the Holder to the receiver, conservator, debtor-in-possession or trustee in bankruptcy
named in the order and not to the Indenture Trustee or any Holder directly (unless a Holder has
previously paid such payment to the receiver, conservator, debtor-in-possession or trustee in
bankruptcy, in which



43









 







case the Insurer will make such payment to the Indenture Trustee for
distribution to such Holder upon proof of such payment reasonably satisfactory to the Insurer).



          (b) The Indenture Trustee shall promptly notify the Insurer of any proceeding or the
institution of any action (of which a Responsible Officer of the Indenture Trustee has actual
knowledge) seeking the avoidance as a preferential transfer under applicable bankruptcy,
insolvency, receivership, rehabilitation or similar law of any distribution made with respect to
the Notes (a “Note Preference Claim”). Each Holder, by its purchase of Notes, and the
Indenture Trustee hereby agree that so long as an Insurer Default shall not have occurred and be
continuing, the Insurer may at any time during the continuation of any proceeding relating to a
Note Preference Claim direct all matters relating to such Note Preference Claim, including (i) the
direction of any appeal of any order relating to any Note Preference Claim and (ii) the posting of
any surety, supersedeas or performance bond pending any such appeal at the expense of the Insurer,
but subject to reimbursement as provided in the Insurance Agreement. In addition, and without
limitation of the foregoing, as set forth in Section 6.1(c), the Insurer shall be
subrogated to, and each Holder and the Indenture Trustee hereby delegate and assign, to the fullest
extent permitted by law, the rights of the Indenture Trustee and each Holder in the conduct of any
proceeding with respect to a Note Preference Claim, including all rights of any party to an
adversary proceeding action with respect to any court order issued in connection with any such Note
Preference Claim.



     Section 6.3 Surrender of Note Policy. The Indenture Trustee will surrender the Note
Policy to the Insurer for cancellation upon the expiration of such policy in accordance with the
terms thereof.



ARTICLE VII




The Depositor




     Section 7.1 Representations of Depositor. The Depositor makes the following
representations on which the Insurer will be deemed to have relied in executing and delivering the
Note Policy and on which the Issuer is deemed to have relied in acquiring the Receivables and on
which the Indenture Trustee and Backup Servicer may rely. The representations are true and correct
as of the execution and delivery of this Agreement and as of the Closing Date, in the case of
Receivables, and will survive the sale of the Receivables to the Issuer and the pledge thereof to
the Indenture Trustee pursuant to the Indenture.



          (a) Organization and Good Standing. The Depositor has been duly organized and is
validly existing as a limited liability company in good standing under the laws of the State of
Delaware, with power and authority to own its properties and to conduct its business as such
properties are currently owned and such business is currently conducted, and had at all relevant
times, and now has, limited liability company power, authority and legal right to acquire,
own and sell the Receivables and the Other Conveyed Property transferred to the Trust.



          (b) Due Qualification. The Depositor is duly qualified to do business as a foreign
limited liability company in good standing and has obtained all necessary licenses and approvals in
all jurisdictions where the failure to do so would materially and adversely affect the Depositor’s
ability to transfer the Receivables and the Other Conveyed Property to the Trust pursuant to this
Agreement, or the validity or enforceability of the Receivables and the Other Conveyed Property or
to perform the Depositor’s obligations under the Basic Documents to which it is a party.



44









 





          (c) Power and Authority. The Depositor has the power and authority to execute and
deliver the Basic Documents to which it is a party and to carry out their respective terms; the
Depositor has full power and authority to sell and assign the Receivables and the Other Conveyed
Property to be sold and assigned to and deposited with the Trust by it and has duly authorized such
sale and assignment to the Trust by all necessary action; and the execution, delivery and
performance of the Basic Documents to which it is a party have been duly authorized by the
Depositor by all necessary action.



          (d) Valid Sale, Binding Obligations. This Agreement effects a valid sale, transfer
and assignment of the Receivables and the Other Conveyed Property, enforceable against the
Depositor and creditors of and purchasers from the Depositor; and the Basic Documents to which the
Depositor is a party, when duly executed and delivered, will constitute legal, valid and binding
obligations of the Depositor 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 consummation of the transactions contemplated by the Basic
Documents and the fulfillment of the terms of the Basic Documents to which the Depositor is a party
will not conflict with, result in any breach of any of the terms and provisions of or constitute
(with or without notice, lapse of time or both) a default under the limited liability company
agreement or operating agreement of the Depositor, or any material indenture, agreement, mortgage,
deed of trust or other instrument to which the Depositor is a party or by which it is bound, or
result in the creation or imposition of any 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, or violate any law, order, rule or regulation applicable to the Depositor of any court
or of any federal or state regulatory body, administrative agency or other governmental
instrumentality having jurisdiction over the Depositor or any of its properties.



          (f) No Proceedings. There are no proceedings or investigations pending or, to the
Depositor’s best knowledge, threatened against the Depositor, before any court, regulatory body,
administrative agency or other tribunal or governmental instrumentality having jurisdiction over
the Depositor or its properties (A) asserting the invalidity of any of the Basic Documents, (B)
seeking to prevent the issuance of the Securities or the consummation of any of the transactions
contemplated by this Agreement or any of the Basic Documents, or (C) seeking any determination or
ruling that might materially and adversely affect the performance by the Depositor of its
obligations under, or the validity or enforceability of, any of the Basic Documents.



          (g) True Sale. The Receivables are being transferred with the intention of removing
them from the Depositor’s estate pursuant to Section 541 of the Bankruptcy Code, as the same may be
amended from time to time.



     Section 7.2 Organizational Existence. During the term of this Agreement, the
Depositor will keep in full force and effect its existence, rights and franchises as a limited
liability company under the laws of Delaware and will obtain and preserve its qualification to do
business in each jurisdiction in which such qualification is or will be necessary to protect the
validity and enforceability of the Basic Documents and each other instrument or agreement necessary
or appropriate to the proper administration of this Agreement and the transactions contemplated
hereby.



45









 





     Section 7.3 Liability of Depositor. The Depositor will be liable in accordance
herewith only to the extent of the obligations specifically undertaken by the Depositor under this
Agreement.



     Section 7.4 Merger or Consolidation of, or Assumption of the Obligations of,
Depositor. Any Person (a) into which the Depositor may be merged or consolidated, (b) which
may result from any merger or consolidation to which the Depositor will be a party or (c) which may
succeed to the properties and assets of the Depositor substantially as a whole, which Person in any
of the foregoing cases executes an agreement of assumption to perform every obligation of the
Depositor under this Agreement, will be the successor to the Depositor hereunder without the
execution or filing of any document or any further act by any of the parties to this Agreement;
provided, however, that the Depositor will have delivered to the Owner Trustee, the
Backup Servicer, the Indenture Trustee and the Insurer an Opinion of Counsel stating that, in the
opinion of such counsel, either (A) 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 and the Indenture Trustee, respectively, in the Receivables and the
Other Conveyed Property and reciting the details of such filings or (B) no such action will be
necessary to preserve and protect such interest.



     Section 7.5 Limitation on Liability of Depositor and Others. The Depositor and any
director or manager or officer or employee or agent of the Depositor 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 under any Basic Document. The Depositor will not be
under any obligation to appear in, prosecute or defend any legal action that will not be incidental
to its obligations under this Agreement, and that in its opinion may involve it in any expense or
liability.



     Section 7.6 Ownership of the Certificates or Notes. The Depositor may in its
individual or any other capacity become the owner or pledgee of Certificates or Notes with the same
rights as it would have if it were not the Depositor, except as expressly provided herein or in any
Basic Document. Notes or Certificates so owned by the Depositor will have an equal and
proportionate benefit under the provisions of the Basic Documents, without preference, priority, or
distinction as among all of the Notes or Certificates, except as expressly provided herein or in
any Basic Document.



ARTICLE VIII




The Servicer




     Section 8.1 Representations of Servicer. The Servicer makes the following
representations on which the Insurer is deemed to have relied in executing and delivering the Note
Policy and on
which the Issuer is deemed to have relied in acquiring the Receivables and on which the
Indenture Trustee and the Backup Servicer may rely. The representations are true and correct as of
the execution and delivery of this Agreement and as of the Closing Date, in the case of the
Receivables, and will survive the sale of the Receivables to the Issuer and the pledge thereof to
the Indenture Trustee pursuant to the Indenture.



          (a) Representations and Warranties. The representations and warranties set forth on
the Schedule of Representations attached hereto as Schedule B are true and correct;



          (b) Organization and Good Standing. The Servicer has been duly organized and is
validly existing and in good standing under the laws of California, with corporate power,
authority



46









 







and legal right to own its properties and to conduct its business as such properties are
currently owned and such business is currently conducted, and had at all relevant times, and now
has, power, authority and legal right to enter into and perform its obligations under the Basic
Documents to which it is a party;



          (c) 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 of
servicing the Receivables as required by this Agreement requires or will require such
qualification;



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



          (e) Binding Obligation. The Basic Documents to which the Servicer 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 in a proceeding in equity or at law;



          (f) No Violation. The consummation of the transactions contemplated by the Basic
Documents, and the fulfillment of the terms of the Basic Documents, will 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 articles of incorporation or bylaws of the Servicer, or any
indenture, agreement, mortgage, deed of trust or other instrument to which the Servicer is a party
or by which it is bound, or result in the creation or imposition of any 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, 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 any of its
properties;



          (g) No Proceedings. There are no proceedings or investigations pending or, to the
Servicer’s best knowledge, threatened against the Servicer, before any court, regulatory body,
administrative agency or other tribunal or governmental instrumentality having jurisdiction over
the Servicer or its properties (A) asserting the invalidity of any of the Basic Documents, (B)
seeking to prevent the issuance of the Securities or the consummation of any of the transactions
contemplated
by any of the Basic Documents, or (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, any of the Basic Documents or (D) seeking to adversely affect the
federal income tax or other federal, state or local tax attributes of the Securities;



          (h) No Consents. The Servicer is not required to obtain the consent of any other
party or any consent, license, approval or authorization, or registration or declaration with, any
governmental authority, bureau or agency in connection with the execution, delivery, performance,
validity or enforceability of this Agreement which has not already been obtained.



47









 





     Section 8.2 Liability of Servicer; Indemnities.



          (a) The Servicer (in its capacity as such) will be liable hereunder only to the extent of the
obligations in this Agreement specifically undertaken by the Servicer and the representations made
by the Servicer.



          (b) The Servicer will defend, indemnify and hold harmless the Trust, the Depositor, the
Indenture Trustee, the Owner Trustee, the Backup Servicer, the Insurer, their respective officers,
directors, agents and employees, the Certificateholders and the Noteholders from and against any
and all costs, expenses, losses, damages, claims and liabilities, including reasonable fees and
expenses of counsel and expenses of litigation (i) arising out of or resulting from the use,
ownership or operation by the Servicer or any Affiliate thereof of any Financed Vehicle or (ii) to
the extent that such cost, expense, loss, claim, damage, or liability arose out of, or was imposed
upon the Trust, the Indenture Trustee, the Depositor, the Owner Trustee, the Backup Servicer, the
Insurer, the Certificateholders or the Noteholders by reason of the breach of this Agreement by the
Servicer, the negligence (other than errors in judgment), misfeasance, or bad faith of the Servicer
in the performance of its duties under this Agreement or by reason of reckless disregard of its
obligations and duties under this Agreement.



          (c) Indemnification under this Section 8.2 will include, without limitation,
reasonable fees and expenses of counsel and expenses of litigation. If the Servicer has made any
indemnity payments pursuant to this Section 8.2 and the recipient thereafter collects any
of such amounts from others, the recipient will promptly repay such amounts collected to the
Servicer, without interest.



          (d) The Servicer will pay, reimburse and indemnify the Indenture Trustee and the Backup
Servicer in accordance with Section 6.7 of the Indenture.



     Section 8.3 Merger or Consolidation of, or Assumption of the Obligations of the Servicer
or Backup Servicer.



          (a) The Servicer will 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 will be capable of
fulfilling the duties of the Servicer contained in this Agreement and, subject to Section
4.6 of the Insurance Agreement, will be acceptable to the Controlling Party, and, if an Insurer
Default has occurred or is continuing, will be an Eligible Servicer. Any corporation (i) into
which the Servicer may be merged or consolidated, (ii) resulting from any merger or consolidation
to which the Servicer will be a party, (iii) which acquires by conveyance, transfer, or lease
substantially all of the assets of the Servicer, or (iv) succeeding to the business of the
Servicer, in any of the foregoing cases will
execute an agreement of assumption to perform every obligation of the Servicer under this
Agreement and, whether or not such assumption agreement is executed, will be the successor to the
Servicer under this Agreement without the execution or filing of any paper or any further act on
the part of any of the parties to this Agreement, anything in this Agreement to the contrary
notwithstanding; provided, however, that nothing contained herein will be deemed to
release the Servicer from any obligation. The Servicer will provide notice of any merger,
consolidation or succession pursuant to this Section 8.3 to the Owner Trustee, the
Depositor, the Indenture Trustee, the Noteholders, the Insurer and each Rating Agency.
Notwithstanding the foregoing, the Servicer will not merge or consolidate with any other Person or
permit any other Person to become a successor to the Servicer’s business, unless (x) immediately
after giving effect to such transaction, no



48









 







representation or warranty made pursuant to Section
4.6 will have been breached (for purposes hereof, such representations and warranties will be
true and correct as of the date of the consummation of such transaction) and no Servicer
Termination Event has occurred and is continuing other than in connection with a change in control
as provided in the Insurance Agreement, (y) the Servicer will have delivered to the Owner Trustee,
the Indenture Trustee, Backup Servicer, the Rating Agencies and the Insurer an Officer’s
Certificate and an Opinion of Counsel each stating that such consolidation, merger or succession
and such agreement of assumption comply with this Section 8.3 and that all conditions
precedent, if any, provided for in this Agreement relating to such transaction have been complied
with, and (z) the Servicer will have delivered to the Owner Trustee, the Indenture Trustee, the
Rating Agencies and the Insurer an Opinion of Counsel, stating in the opinion of such counsel,
either (A) all financing statements and continuation statements and amendments thereto have been
executed and filed that are necessary to preserve and protect the interest of the Trust in the
Receivables and the Other Conveyed Property and reciting the details of the filings or (B) no such
action will be necessary to preserve and protect such interest.



          (b) Any corporation (i) into which the Backup Servicer may be merged or consolidated, (ii)
resulting from any merger or consolidation to which the Backup Servicer will be a party, (iii)
which acquires by conveyance, transfer or lease substantially all of the assets of the Backup
Servicer, or (iv) succeeding to the business of the Backup Servicer, in any of the foregoing cases
will execute an agreement of assumption to perform every obligation of the Backup Servicer under
this Agreement and, whether or not such assumption agreement is executed, will be the successor to
the Backup Servicer under this Agreement without the execution or filing of any paper or any
further act on the part of any of the parties to this Agreement, anything in this Agreement to the
contrary notwithstanding; provided, however, that nothing contained herein will be deemed
to release the Backup Servicer from any obligation.



     Section 8.4 Limitation on Liability of Servicer, Backup Servicer and Others.



          (a) Neither the Servicer, the Backup Servicer nor any of the directors or officers or
employees or agents of the Servicer or Backup Servicer will be liable to the Trust or the
Noteholders, except as provided in this Agreement, for any action taken or for refraining from the
taking of any action pursuant to this Agreement; provided, however, that this
provision will not protect the Servicer, the Backup 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 (excluding errors in judgment) in the performance of duties;
provided further that this provision will not affect any liability of Triad to
indemnify the Indenture Trustee and the Owner Trustee for costs, taxes, expenses, claims,
liabilities, losses or damages paid by the Indenture Trustee and the Owner Trustee, in their
individual capacities pursuant to the Purchase Agreement. The Servicer, the Backup Servicer and
any director, officer, employee or agent of the Servicer or Backup Servicer may rely in
good faith on the written advice of counsel or on any document of any kind prima facie
properly executed and submitted by any Person respecting any matters arising under this Agreement.



          (b) The Backup Servicer will not be liable for any obligation of the Servicer contained in
this Agreement or for any errors of the Servicer contained in any computer file, certificate or
other data or document delivered to the Backup Servicer hereunder or on which the Backup Servicer
must rely in order to perform its obligations hereunder, and the Owner Trustee, the Indenture
Trustee, the Backup Servicer, the Depositor and the Insurer and the Noteholders will look only to
the Servicer to perform such obligations. The Backup Servicer, the Indenture Trustee, the Owner
Trustee and the Custodian will have no responsibility and will not be in default hereunder or



49









 







incur
any liability for any failure, error, malfunction or any delay in carrying out any of their
respective duties under this Agreement if such failure or delay results from the Backup Servicer
acting in accordance with information prepared or supplied by a Person other than the Backup
Servicer (or contractual agents of the Backup Servicer) or the failure of any such other Person to
prepare or provide such information. The Backup Servicer will have no responsibility, will not be
in default and will incur no liability for (i) any act or failure to act of any third party (other
than its contractual agents), including the Servicer or the Controlling Party, (ii) any inaccuracy
or omission in a notice or communication received by the Backup Servicer from any third party
(other than its contractual agents), (iii) the invalidity or unenforceability of any Receivable
under applicable law, (iv) the breach or inaccuracy of any representation or warranty made with
respect to any Receivable, or (v) the acts or omissions of any successor Backup Servicer. The
provisions of this Section 8.4(b) will not limit the Backup Servicer’s obligations pursuant
to Section 4.14.



          (c) The parties expressly acknowledge and consent to Citibank, N.A. acting in the possible
dual capacity of Backup Servicer or successor Servicer and in the capacity as Indenture Trustee.
Citibank, N.A. may, in such dual or other capacity, discharge its separate functions fully, without
hindrance or regard to conflict of interest principles, duty of loyalty principles or other breach
of fiduciary duties to the extent that any such conflict or breach arises from the performance by
Citibank, N.A. of express duties set forth in this Agreement in any of such capacities, all of
which defenses, claims or assertions are hereby expressly waived by the other parties hereto and
the Noteholders except in the case of gross negligence and willful misconduct by Citibank, N.A.



     Section 8.5 Delegation of Duties. The Servicer may delegate duties under this
Agreement to an Affiliate of Triad with the prior written consent of the Insurer (unless an Insurer
Default has occurred and is continuing). The Servicer also may at any time perform through
sub-contractors the specific duties of (i) repossession of Financed Vehicles, (ii) tracking
Financed Vehicles’ Lien Certificates and (iii) pursuing the collection of deficiency balances or
other amounts due on certain Liquidated Receivables, in each case, without the consent of the
Insurer and may perform other specific collection and repossession duties through such
sub-contractors in accordance with Servicer’s customary servicing policies and procedures;
provided, however, that no such delegation or sub-contracting of duties by the
Servicer will relieve the Servicer of its responsibility with respect to such duties. So long as
no Insurer Default has occurred and is continuing neither Triad nor any party acting as Servicer
hereunder will appoint any subservicer hereunder without the prior written consent of the Insurer.



     Section 8.6 Servicer and Backup Servicer Not to Resign. Subject to Section
8.3, neither the Servicer nor the Backup Servicer may resign from the obligations and duties
imposed on it by this Agreement as Servicer or Backup Servicer except upon a 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 have a material adverse effect on
the Servicer or the Backup Servicer, as the case may be, and the Insurer (so long as an Insurer
Default has not occurred) or the Majority Noteholders (if an Insurer Default has occurred and is
continuing) does not elect to waive the obligations of the Servicer or the Backup Servicer, as the
case may be, to perform the duties which render it legally unable to act or to delegate those
duties to another Person. Any such determination permitting the resignation of the Servicer or
Backup Servicer will be evidenced by an Opinion of Counsel to such effect delivered at other than
the Indenture Trustee’s expense, and acceptable to the Indenture Trustee, the Owner Trustee and the
Insurer (unless an Insurer Default has occurred and is continuing). No resignation of the Servicer
will become effective until, so long as no Insurer Default has occurred and is continuing, the
Backup Servicer or an entity



50









 







acceptable to the Insurer has assumed the responsibilities and
obligations of the Servicer or, if an Insurer Default has occurred and is continuing, the Backup
Servicer or a successor Servicer that is an Eligible Servicer has assumed the responsibilities and
obligations of the Servicer. No resignation of the Backup Servicer will become effective until, so
long as no Insurer Default has occurred and is continuing, an entity acceptable to the Insurer has
assumed the responsibilities and obligations of the Backup Servicer or, if an Insurer Default has
occurred and is continuing, a Person that is an Eligible Servicer has assumed the responsibilities
and obligations of the Backup Servicer; provided, however, that (i) in the event a
successor Backup Servicer is not appointed within 60 days after the Backup Servicer has given
notice of its resignation and has provided the Opinion of Counsel required by this Section
8.6, the Backup Servicer may petition a court for its removal, (ii) the Backup Servicer may
resign with the written consent of the Insurer and (iii) notwithstanding anything to the contrary,
if Citibank, N.A. resigns or is removed as the Indenture Trustee under the Indenture it will no
longer be the Backup Servicer.



ARTICLE IX




Default




     Section 9.1 Servicer Termination Event. For purposes of this Agreement, each of the
following will constitute a “Servicer Termination Event”:



          (a) Any failure by the Servicer to deliver to the Indenture Trustee for distribution to
Noteholders any proceeds or payment required to be so delivered under this Agreement that continues
unremedied for a period of two Business Days (one Business Day with respect to payment of Purchase
Amounts) after written notice is received by the Servicer from the Indenture Trustee or (unless an
Insurer Default has occurred and is continuing) the Insurer or after discovery of such failure by a
Responsible Officer of the Servicer;



          (b) Failure by the Servicer to deliver the Servicer’s Certificate by the Determination Date;



          (c) Failure on the part of the Servicer duly to observe or perform any other covenants or
agreements of the Servicer set forth in this Agreement or, if the Servicer is Triad, failure of
Triad duly to perform any other covenants or agreements of Triad set forth in the Purchase
Agreement which failure (i) materially and adversely affects the rights of Noteholders (determined
without regard to the availability of funds under the Note Policy), or of the Insurer (unless an
Insurer Default has occurred and is continuing), and (ii) continues unremedied for a period of 30
days after the date on which written notice of such failure, requiring the same to be remedied, has
been given to the
Servicer by the Indenture Trustee, the Issuer or the Insurer (or, if an Insurer Default has
occurred and is continuing, by any Noteholder);



          (d) An Insolvency Event has occurred with respect to the Servicer;



          (e) Any representation, warranty or statement of the Servicer made in this Agreement or any
certificate, report or other writing delivered pursuant hereto will prove to be incorrect in any
material respect as of the time when the same will have been made, and the incorrectness of such
representation, warranty or statement has a material adverse effect on the Trust, the Insurer or
the Noteholders’ interests and, within 30 days after knowledge thereof by the Servicer or after
written notice thereof will have been given to the Servicer by the Indenture Trustee or the Insurer
(or, if an



51









 







Insurer Default has occurred and is continuing, a Noteholder), the circumstances or
conditions in respect of which such representation, warranty or statement was incorrect will not
have been eliminated or otherwise cured;



          (f) So long as no Insurer Default has occurred and is continuing, an Insurance Agreement Event
of Default occurs;



          (g) A claim is made under the Note Policy; or



          (h) The occurrence of a Trigger Event under the Insurance Agreement.



     Section 9.2 Consequences of a Servicer Termination Event. If a Servicer Termination
Event has occurred and is continuing, the Insurer may (or, if an Insurer Default has occurred and
is continuing, the Indenture Trustee (to the extent it has knowledge thereof) may, and will at the
direction of the Majority Noteholders), by notice given in writing to the Servicer (and to the
Indenture Trustee if given by the Insurer) terminate all of the rights and obligations of the
Servicer under this Agreement; provided, however, that if no Insurer Default has
occurred and is continuing, neither the Indenture Trustee nor the Majority Noteholders may deliver
such notice, and termination will be in the Insurer’s sole and absolute discretion. On or after
the receipt by the Servicer of such written notice all authority, power, obligations and
responsibilities of the Servicer under this Agreement, whether with respect to the Notes, the
Certificates or the Other Conveyed Property or otherwise, automatically will pass to, be vested in
and become obligations and responsibilities of the Backup Servicer (or such other successor
Servicer appointed by the Controlling Party); provided, however, that the successor
Servicer will have no liability with respect to any obligation which was required to be performed
by the terminated Servicer prior to the date that the successor Servicer becomes the Servicer or
any claim of a third party based on any alleged action or inaction of the terminated Servicer. The
successor Servicer is authorized and empowered by this Agreement to execute and deliver, on behalf
of the terminated 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 the Other Conveyed Property and related documents to show the Trust as lienholder
or secured party on the related Lien Certificates, or otherwise. The terminated Servicer agrees to
cooperate with the Controlling Party and the successor Servicer in effecting the termination of the
responsibilities and rights of the terminated Servicer under this Agreement, including the transfer
to the successor Servicer for administration by it of all cash amounts that will at the time be
held by the terminated Servicer for deposit, or have been deposited by the terminated Servicer, in
the Collection Account or thereafter received with respect to the Receivables and the delivery to
the successor Servicer of all Receivable Files, Monthly Records and Collection Records
and a computer tape in readable form as of the most recent Business Day containing all
information necessary to enable the successor Servicer to service the Receivables and the Other
Conveyed Property. If requested by the Controlling Party, the successor Servicer will terminate
the Blocked Account Agreement and direct the Obligors to make all payments under the Receivables
directly to the successor Servicer (in which event the successor Servicer will process such
payments in accordance with Section 4.2(e)), or to a lockbox established by the successor
Servicer at the direction of the Controlling Party, at the successor Servicer’s expense. The
terminated Servicer will grant the Indenture Trustee, the successor Servicer and the Controlling
Party reasonable access to the terminated Servicer’s premises at the terminated Servicer’s expense.



     Section 9.3 Appointment of Successor.



52









 





          (a) On and after the time the Servicer receives a notice of termination pursuant to
Section 9.2, or upon the resignation of the Servicer pursuant to Section 8.6, the
Backup Servicer (unless the Controlling Party will have exercised its option pursuant to
Section 9.3(b) to appoint an alternate successor Servicer) will be the successor in all
respects to the Servicer in its capacity as servicer under this Agreement and the transactions set
forth or provided for in this Agreement, and will be subject to all the rights, responsibilities,
restrictions, duties, liabilities and termination provisions relating thereto placed on the
Servicer by the terms and provisions of this Agreement except as otherwise stated herein. The
Indenture Trustee and such successor will take such action, consistent with this Agreement, as will
be necessary to effectuate any such succession. If a successor Servicer is acting as Servicer
hereunder, it will be subject to termination under Section 9.2 upon the occurrence of any
Servicer Termination Event applicable to it as Servicer.



          (b) The Controlling Party may exercise at any time its right to appoint as Backup Servicer or
as successor to the Servicer a Person other than the Person serving as Backup Servicer at the time,
and (without limiting its obligations under the Note Policy) will have no liability to the
Indenture Trustee, Triad, the Depositor, the Person then serving as Backup Servicer, any
Noteholders or any other Person if it does so. Notwithstanding the above, if the Backup Servicer
will be legally unable or unwilling to act as Servicer, and an Insurer Default has occurred and is
continuing, the Backup Servicer, the Indenture Trustee or the Majority Noteholders may petition a
court of competent jurisdiction to appoint any Eligible Servicer as the successor to the Servicer.
Pending appointment pursuant to the preceding sentence, the Backup Servicer, subject to Section
8.6(iii), will act as successor Servicer unless it is legally unable to do so, in which event
the outgoing Servicer will continue to act as Servicer until a successor has been appointed and
accepted such appointment. Subject to Section 8.6, no provision of this Agreement will be
construed as relieving the Backup Servicer of its obligation to succeed as successor Servicer upon
the termination of the Servicer pursuant to Section 9.2 or the resignation of the Servicer
pursuant to Section 8.6. If upon the termination of the Servicer pursuant to Section
9.2 or the resignation of the Servicer pursuant to Section 8.6, the Controlling Party
appoints a successor Servicer other than the Backup Servicer, the Backup Servicer will not be
relieved of its duties as Backup Servicer hereunder.



          (c) Any successor Servicer will be entitled to such compensation (whether payable out of the
Collection Account or otherwise) as the Servicer would have been entitled to under this Agreement
if the Servicer had not resigned or been terminated hereunder. The Insurer, if the Class A Notes
are outstanding and no Insurer Default has occurred and is continuing, and such successor Servicer
may agree on additional compensation to be paid to such successor Servicer, which additional
compensation will be payable as provided herein and will in no event exceed $150,000 in the
aggregate over the successor Servicer’s term and which will be deemed to be part of the
“Servicing Fee” described in Section 4.8. The Backup Servicer will not be liable for
any Servicing Fee, additional compensation or other amounts to be paid to such successor Servicer
in connection with its assumption and performance of the servicing duties described herein.



     Section 9.4 Notification to Noteholders. Upon any termination of, or appointment of a
successor to, the Servicer, the Indenture Trustee will give prompt written notice thereof to each
Noteholder, the Swap Counterparty and to the Rating Agencies.



     Section 9.5 Waiver of Past Defaults. So long as no Insurer Default has occurred and
is continuing, the Insurer (or, if an Insurer Default has occurred and is continuing, the Majority
Noteholders) may, on behalf of all Noteholders, waive any default by the Servicer in the
performance of its obligations hereunder and its consequences. Upon any such waiver of a past
default, such



53









 







default will cease to exist, and any Servicer Termination Event arising therefrom
will be deemed to have been remedied for every purpose of this Agreement. No such waiver will
extend to any subsequent or other default or impair any right consequent thereto.



ARTICLE X




Termination




     Section 10.1 Optional Purchase of All Receivables.



          (a) On any Distribution Date after the last day of any Collection Period as of which the Pool
Balance will be less than or equal to 10% of the Original Pool Balance, the Servicer will have the
option to purchase the Owner Trust Estate, other than the Trust Accounts (with the consent of the
Insurer if such purchase would result in a claim on the Note Policy or would result in any amount
owing to the Swap Counterparty under the Swap Agreement or the Swap Policy or to the Insurer under
the Insurance Agreement remaining unpaid); provided, however, that the amount to be
paid for such purchase (as set forth in the following sentence) will be sufficient to pay the full
amount of principal, premium, if any, and interest due and payable on the Notes on such
Distribution Date and amounts due and unpaid under the Swap Agreement. To exercise such option,
the Servicer will deposit at least two Business Days prior to such Distribution Date pursuant to
Section 5.6 in the Collection Account an amount equal to the aggregate Purchase Amount for
the Receivables (other than Receivables that became Liquidated Receivables on or before the last
day of the Collection Period preceding such Distribution Date), plus the appraised value of any
other property held by the Trust (other than the Trust Accounts), such value to be determined by an
appraiser mutually agreed upon by the Servicer, the Insurer and the Indenture Trustee, and will
succeed to all interests in and to the Trust.



          (b) Upon any sale of the assets of the Trust pursuant to Section 8.1 of the Trust
Agreement, the Servicer will instruct the Indenture Trustee 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) Notice of any termination of the Trust will be given by the Servicer to the Owner Trustee,
the Indenture Trustee, the Backup Servicer, the 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 and the Trust will succeed to the rights of, and assume the obligations of,
the Indenture Trustee pursuant to this Agreement.



ARTICLE XI




Administrative Duties of the Servicer




     Section 11.1 Administrative Duties.



          (a) Duties with Respect to the Basic Documents. The Servicer will perform all its
duties and the duties of the Issuer under the Basic Documents. In addition, the Servicer will
consult with the Owner Trustee as the Servicer deems appropriate regarding the duties of the Issuer
under the



54









 







Basic Documents. The Servicer will monitor the performance of the Issuer and will advise
the Owner Trustee when action is necessary to comply with the Issuer’s duties under the Basic
Documents. The Servicer will prepare for execution by the Issuer or will cause the preparation by
other appropriate Persons of all such documents, reports, filings, instruments, certificates and
opinions as it will be the duty of the Issuer to prepare, file or deliver pursuant to the Basic
Documents. In furtherance of the foregoing, the Servicer will take all necessary action that is
the duty of the Issuer to take pursuant to the Indenture, including pursuant to Sections
2.7, 3.5, 3.6, 3.7, 3.9, 3.10, 3.17,
4.1, 5.4, 7.3, 8.3, 9.2, 9.3, 11.1 and
11.15 of the Indenture.



          (b) Duties with Respect to the Issuer.



               (i) In addition to the duties of the Servicer set forth in the Basic Documents, the Servicer
will perform such calculations and will prepare for execution by the Issuer or the Owner Trustee or
will cause the preparation by other appropriate Persons of all such documents, reports, filings,
instruments, certificates and opinions as it will be the duty of the Issuer or the Owner Trustee to
prepare, file or deliver pursuant to any of the Basic Documents or under state and federal tax and
securities laws, and at the request of the Owner Trustee will take all appropriate action that it
is the duty of the Issuer to take pursuant to any of the Basic Documents. In accordance with the
directions of the Issuer or the Owner Trustee, the Servicer will administer, perform or supervise
the performance of such other activities in connection with the Collateral (including the Basic
Documents) as are not covered by any of the foregoing provisions and as are expressly requested by
the Issuer or the Owner Trustee and are reasonably within the capability of the Servicer.



               (ii) Notwithstanding anything in any of the Basic Documents to the contrary, the Servicer will
be responsible for promptly notifying the Owner Trustee, the Indenture Trustee and the Insurer in
the event that any withholding tax is imposed on the Issuer’s payments (or allocations of income)
to an Owner (as defined in the Trust Agreement) as contemplated in this Agreement. Any such notice
will be in writing and specify the amount of any withholding tax required to be withheld by the
Owner Trustee or the Indenture Trustee pursuant to such provision.



               (iii) Notwithstanding anything in the Basic Documents to the contrary, the Servicer will be
responsible for performance of any duties of the Issuer set forth in any amended Trust Agreement
(as contemplated by Section 2.12 of the Trust Agreement) with respect to, among other
things, accounting and reports to Certificateholders (as defined in the Trust Agreement);
provided, however, that once prepared by the Servicer the Owner Trustee will retain
responsibility
for the distribution of the Schedule K-1s upon request of the Certificateholders in order to
enable the Certificateholders to prepare its federal and state income tax returns.



               (iv) The Servicer will perform the duties of the Servicer specified in Section 9.2 of
the Trust Agreement required to be performed in connection with the resignation or removal of the
Owner Trustee, and any other duties expressly required to be performed by the Servicer under any of
the Basic Documents.



               (v) 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 will be in
accordance with any directions received from the Issuer and will be, in the Servicer’s opinion, no
less favorable to the Issuer in any material respect.



55









 





          (c) Tax Matters. The Servicer will prepare and file, on behalf of the Trust, all tax
returns, tax elections, financial statements and such annual or other reports attributable to the
activities engaged in by the Issuer as are necessary for preparation of tax reports, including
forms 1099. All tax returns will be signed by the Servicer unless applicable law requires a
Certificateholder to sign such documents.



          (d) Non-Ministerial Matters. With respect to matters that in the reasonable judgment
of the Servicer are non-ministerial, the Servicer will not take any action pursuant to this Article
XI unless within a reasonable time before the taking of such action, the Servicer will have
notified the Owner Trustee, the Indenture Trustee and the Insurer of the proposed action and the
Owner Trustee and, with respect to items (A), (B), (C) and (D) below, the Indenture Trustee and, so
long as no Insurer Default has occurred and is continuing, the Insurer will not have withheld
consent or provided an alternative direction. For the purpose of the preceding sentence,
“non-ministerial matters” include:



                    (A) the amendment of or any supplement to the Indenture;



                    (B) 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);



                    (C) the amendment, change or modification of any of the Basic Documents;



                    (D) the appointment of successor Note Registrars, successor 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 Indenture Trustee of its
obligations under the Indenture; and



                    (E) the removal of the Indenture Trustee.



          (e) Exceptions. Except as expressly set forth herein, the Servicer, in its capacity
hereunder, will not be obligated to, and will not (i) make any payments to the Noteholders or
Certificateholders under the Basic Documents, (ii) sell the Trust Estate pursuant to Section
5.5 of the Indenture, (iii) take any other action that the Issuer directs the Servicer not to
take on its behalf or
(iv) in connection with its duties hereunder, assume any indemnification obligation of any
other Person.



          (f) The Backup Servicer or any successor Servicer will not be responsible for any obligations
or duties of the Servicer under this Section 11.1.



     Section 11.2 Records. The Servicer will maintain appropriate books of account and
records relating to services performed under this Agreement, which books of account and records
will be accessible for inspection by the Issuer and the Insurer at any time during normal business
hours upon reasonable prior notice.



     Section 11.3 Additional Information to be Furnished to the Issuer. The Servicer will
furnish to the Issuer and, so long as no Insurer Default has occurred and is continuing, the
Insurer,



56









 







from time to time such additional information regarding the Collateral as the Issuer and,
so long as no Insurer Default has occurred and is continuing, the Insurer, will reasonably request.



ARTICLE XII




Miscellaneous Provisions




     Section 12.1 Amendment.



          (a) This Agreement may be amended from time to time by the parties hereto, with the consent of
the Indenture Trustee (which consent may not be unreasonably withheld) and, so long as no Insurer
Default has occurred and is continuing, with the prior written consent of the Insurer (which
consent will not be unreasonably withheld) but without the consent of any of the Noteholders or the
Swap Counterparty, to cure any ambiguity, to correct or supplement any provisions in this
Agreement, to comply with any changes in the Code, or to make any other provisions with respect to
matters or questions arising under this Agreement which will not be inconsistent with the
provisions of this Agreement or the Insurance Agreement; provided, however, that
such action will not, as evidenced by an Opinion of Counsel delivered to Owner Trustee, the
Indenture Trustee and the Insurer, adversely affect in any material respect the interests of any
Noteholder; provided, further, that such amendment shall not materially and
adversely affect the rights or obligations of the Swap Counterparty under this Sale and Servicing
Agreement unless the Swap Counterparty shall have consented in writing to such amendment (and such
consent shall be deemed to have been given if the Swap Counterparty does not object in writing
within ten (10) Business Days after receipt of a written request for such consent);
provided, further, that if an Insurer Default has occurred and is continuing, such
action will not materially adversely affect the interests of the Insurer.



          (b) This Agreement may also be amended from time to time by the parties hereto, with the
consent of the Insurer, the consent of the Indenture Trustee, and the consent of the Noteholders
evidencing not less than a majority of the outstanding principal amount of the Notes but without
the consent of the Swap Counterparty 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 Noteholders; provided, however, that no such amendment will (i)
increase or reduce in any manner the amount of, or accelerate or delay the timing of, collections
of payments on Receivables or distributions that will be required to be made for the benefit of the
Noteholders or (ii) reduce the aforesaid percentage of the outstanding principal amount of the
Notes, the Noteholders of which are required to consent to any such amendment, without the consent
of the
Noteholders of all the outstanding Notes of each class affected thereby; provided,
further, that such amendment shall not materially and adversely affect the rights or
obligations of the Swap Counterparty under this Sale and Servicing Agreement unless the Swap
Counterparty shall have consented in writing to such amendment (and such consent shall be deemed to
have been given if the Swap Counterparty does not object in writing within ten (10) Business Days
after receipt of a written request for such consent); provided, further, that if an
Insurer Default has occurred and is continuing, such action will not materially adversely affect
the interest of the Insurer.



          (c) The party requesting such amendment will furnish written notification of the substance of
such amendment or consent to the Rating Agencies before the execution thereof and the Indenture
Trustee will furnish written notification of the substance of such amendment or consent to each
Noteholder and the Swap Counterparty promptly after the execution thereof.



57









 





          (d) It will not be necessary for the consent of Noteholders pursuant to this Section
12.1 to approve the particular form of any proposed amendment or consent, but it will be
sufficient if such consent will approve the substance thereof. The manner of obtaining such
consents (and any other consents of Noteholders provided for in this Agreement) and of evidencing
the authorization of any action by Noteholders will be subject to such reasonable requirements as
the Indenture Trustee or the Owner Trustee, as applicable, may prescribe.



          (e) Prior to the execution of any amendment to this Agreement, the Owner Trustee, the
Indenture Trustee, the Insurer and Backup Servicer will be entitled to receive and conclusively
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 12.2(h) has
been delivered. The Owner Trustee, the Backup Servicer and the Indenture Trustee may, but will not
be obligated to, enter into any such amendment which affects the Issuer’s, the Owner Trustee’s, the
Backup Servicer’s or the Indenture Trustee’s, as applicable, own rights, duties or immunities under
this Agreement or otherwise.



     Section 12.2 Protection of Title to Trust.



          (a) Triad will cause to be executed and filed such financing statements and 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 Issuer and the interests of the Indenture Trustee in the
Receivables, the Other Conveyed Property and in the proceeds thereof. Triad will deliver (or cause
to be delivered) to the Insurer, the Owner Trustee and the Indenture Trustee file-stamped copies
of, or filing receipts for, any document filed as provided above, as soon as available following
such filing.



          (b) Neither the Depositor nor the Servicer will change its name, identity, corporate structure
or jurisdiction of formation or take any action that would, could or might make any financing
statement or continuation statement filed in accordance with Section 12.2(a) ineffective to
continue the first priority perfected security interest in that portion of the Trust Property in
which a security interest may be perfected by filing under the applicable Uniform Commercial Code.
If any refiling is required, the Depositor or Servicer, as the case may be, will promptly give
notice and file new financing statements or amendments thereto or continuation statements thereof.
Promptly upon such filing, the Depositor or the Servicer, as the case may be, will deliver an
Opinion of Counsel in form and substance reasonably satisfactory to the Insurer, stating either (i)
all financing statements and continuation statements have been executed and filed that are
necessary fully to preserve and
protect the interest of the Trust and the Indenture Trustee in the Receivables and Other
Conveyed Property, and reciting the details of such filings or referring to prior Opinions of
Counsel in which such details are given or (ii) no such action will be necessary to preserve and
protect such interest.



          (c) The Servicer will at all times maintain each office from which it will service
Receivables, and its principal executive office, within the United States of America.



          (d) The Servicer will 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.



58









 





          (e) The Servicer will maintain its computer systems so that, from and after the time of sale
under this Agreement of the Receivables to the Issuer, the Servicer’s master computer records
(including any backup archives) that refer to a Receivable will indicate clearly the interest of
the Trust in such Receivable and that such Receivable is owned by the Trust. Indication of the
Trust’s interest in a Receivable will be deleted from or modified on the Servicer’s computer
systems when, and only when, the related Receivable will have been paid in full or repurchased.



          (f) If at any time the Servicer proposes to sell, grant a security interest in or otherwise
transfer any interest in motor vehicle receivables to any prospective purchaser, lender or other
transferee, the Servicer will give to such prospective purchaser, lender or other transferee
computer tapes, records or printouts (including any restored from backup archives) that, if they
refer in any manner whatsoever to any Receivable, indicate clearly that such Receivable has been
sold and is owned by the Trust unless such Receivable has been paid in full or repurchased.



          (g) Upon request, the Servicer will furnish to the Insurer, the Owner Trustee or to the
Indenture Trustee, within five Business Days, a list of all Receivables (by contract number and
name of Obligor) then held as part of the Trust, 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 Trust.



          (h) The Servicer will deliver to the Insurer, the Owner Trustee and the Indenture Trustee
promptly after the execution and delivery of the Agreement and, if required pursuant to Section
12.1, of each amendment, an Opinion of Counsel stating that, in the opinion of such counsel, in
form and substance reasonably satisfactory to the Insurer, either (i) all financing statements and
continuation statements have been executed and filed that are necessary fully to preserve and
protect the interest of the Trust and the Indenture Trustee in the Receivables and the Other
Conveyed Property, and reciting the details of such filings or referring to prior Opinions of
Counsel in which such details are given or (ii) no such action will be necessary to preserve and
protect such interest. Each Opinion of Counsel referred to in this paragraph (h) will specify any
action necessary (as of the date of such opinion) to be taken in the following year to preserve and
protect such interest.



     Section 12.3 Notices. All demands, notices and communications hereunder will be in
writing and will be deemed to have been duly given to the addressee if mailed, by first-class
registered mail, postage prepaid service, confirmed facsimile transmission, or a nationally
recognized express courier, as follows:



	 	 	 	 	 
	 

	 	If to the Depositor:
	 	Triad Financial Special Purpose LLC
	 

	 	 	 	7711 Center Avenue, Suite 390
	 

	 	 	 	Huntington Beach, California 92647
	 

	 	 	 	Attention: Chief Financial Officer
	 
	 	 	 	 
	 

	 	If to the Servicer:
	 	Triad Financial Corporation
	 

	 	 	 	7711 Center Avenue, Suite 100
	 

	 	 	 	Huntington Beach, California 92647
	 

	 	 	 	Attention: Chief Financial Officer
	 
	 	 	 	 
	 

	 	If to the Issuer or	 	 
	 

	 	Owner Trustee:
	 	Wilmington Trust Company
	 

	 	 	 	1100 N. Market Street
	 

	 	 	 	Wilmington, Delaware 19890
	 

	 	 	 	Attn: Corporate Trust Administration
	 
	 	 	 	 






59









 






	 	 	 	 	 
	 

	 	If to the Indenture Trustee:
	 	Citibank, N.A.
	 

	 	 	 	388 Greenwich Street, 14th Floor
	 

	 	 	 	New York, New York 10013
	 

	 	 	 	Attention: Structured Finance Agency and
	 

	 	 	 	Trust — Triad 2007-A
	 
	 	 	 	 
	 

	 	If to the Insurer:
	 	Financial Security Assurance Inc.
	 

	 	 	 	31 West 52nd Street
	 

	 	 	 	New York, New York 10019





In each case in which notice or other communication to the Insurer refers to a Servicer Termination
Event, a claim on the Note Policy, a claim on the Swap Policy, or with respect to which failure on
the part of the Insurer to respond will be deemed to constitute consent or acceptance, then a copy
of such notice or other communication should also be sent to the attention of General Counsel and
will be marked to indicate “URGENT MATERIAL ENCLOSED.”




	 	 	 	 	 
	 

	 	If to the Swap Counterparty:
	 	Goldman Sachs Capital Markets, L.P.
	 

	 	 	 	85 Broad Street
	 

	 	 	 	New York, New York 10004
	 

	 	 	 	Attention: Swap Administration
	 
	 	 	 	 
	 

	 	If to Moody’s:
	 	Moody’s Investors Service, Inc.
	 

	 	 	 	ABS Monitoring Department
	 

	 	 	 	99 Church Street
	 

	 	 	 	New York, New York 10007
	 
	 	 	 	 
	 

	 	If to Standard & Poor’s:
	 	Standard & Poor’s Ratings Group
	 

	 	 	 	55 Water Street
	 

	 	 	 	New York, New York 10041
	 

	 	 	 	Attention: Asset Backed Surveillance Department





Any such demand, notice or communication hereunder will be deemed to have been received on the date
delivered to or received at the premises of the addressee as evidenced by the date noted on the
return receipt.




          Subject to Section 5.10(b) hereof, any notice required or permitted to be mailed to a
Noteholder will be given by first class mail, postage prepaid, at the address of such Noteholder as
shown in the Note Register. Any notice so mailed within the time prescribed in the Agreement will
be conclusively presumed to have been duly given, whether or not the Noteholder receives such
notice.




     Section 12.4 Assignment. This Agreement will inure to the benefit of and be binding
upon the parties hereto and their respective successors and permitted assigns. Notwithstanding
anything to the contrary contained herein, except as provided in Sections 7.4 and
8.3 and as provided in the provisions of this Agreement concerning the resignation of the
Servicer, this Agreement may not be



60









 







assigned by the Depositor or the Servicer without the prior
written consent of the Trust, the Backup Servicer, the Indenture Trustee and the Insurer (or if an
Insurer Default has occurred and is continuing the consent of Noteholders evidencing not less than
66-2/3% of the principal amount of the outstanding Notes).



     Section 12.5 Limitations on Rights of Others. The provisions of this Agreement are
solely for the benefit of the parties hereto, the Indenture Trustee, the Swap Counterparty, the
Owner Trustee, the Certificateholders and the Noteholders, as third-party beneficiaries. The
Insurer and its successors and assigns will be a third-party beneficiary to the provisions of this
Agreement, and will be entitled to rely upon and directly enforce such provisions of this Agreement
so long as no Insurer Default has occurred and is continuing. Except as expressly stated
otherwise herein, any right of the Insurer to direct, appoint, consent to, approve of, or take any
action under this Agreement, will be a right exercised by the Insurer in its sole and absolute
discretion. The Insurer may disclaim any of its rights and powers under this Agreement (but not
its duties and obligations under the Note Policy or the Swap Policy) upon delivery of a written
notice to the Owner Trustee. Except as provided in this Agreement, no other Person will have any
legal or equitable right, remedy or claim in the Owner Trust Estate or under or in respect of this
Agreement or any covenants, conditions or provisions contained herein.



     Section 12.6 Severability. Any provision of this Agreement that is prohibited or
unenforceable in any jurisdiction will, as to such jurisdiction, be ineffective to the extent of
such prohibition or unenforceability without invalidating the remaining provisions hereof, and any
such prohibition or unenforceability in any jurisdiction will not invalidate or render
unenforceable such provision in any other jurisdiction.



     Section 12.7 Separate Counterparts. This Agreement may be executed by the parties
hereto in separate counterparts, each of which when so executed and delivered will be an original,
but all such counterparts will together constitute but one and the same instrument.



     Section 12.8 Headings. The headings of the various Articles and Sections herein are
for convenience of reference only and will not define or limit any of the terms or provisions
hereof.



     Section 12.9 Governing Law. THIS AGREEMENT WILL BE CONSTRUED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF NEW YORK, WITHOUT REFERENCE TO ITS CONFLICT OF LAW PROVISIONS, AND THE
OBLIGATIONS, RIGHTS AND
REMEDIES OF THE PARTIES HEREUNDER WILL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.



     Section 12.10 Assignment to Indenture Trustee. The Depositor 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 Insurer of
all right, title and interest of the Issuer in, to and under the Receivables and the Other Conveyed
Property and/or the assignment of any or all of the Issuer’s rights and obligations hereunder to
the Indenture Trustee.



     Section 12.11 Nonpetition Covenants.



          (a) Notwithstanding any termination of this Agreement, the Servicer, the Backup Servicer, the
Indenture Trustee and the Depositor will not, prior to the date that is one year and one



61









 







day after
the termination of this Agreement, acquiesce, petition or otherwise invoke or cause the Issuer to
invoke the process of any court or government authority for the purpose of commencing or sustaining
a case against the Issuer 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 any substantial part of its property, or ordering the winding up or
liquidation of the affairs of the Issuer.



          (b) Notwithstanding any termination of this Agreement, the Issuer, the Servicer, the Backup
Servicer and the Indenture Trustee will not, prior to the date that is one year and one day after
the termination of this Agreement with respect to the Depositor, acquiesce to, petition or
otherwise invoke or cause the Depositor to invoke the process of any court or government authority
for the purpose of commencing or sustaining a case against the Depositor under any federal or state
bankruptcy, insolvency or similar law, appointing a receiver, liquidator, assignee, trustee,
custodian, sequestrator, or other similar official of the Depositor or any substantial part of its
property, or ordering the winding up or liquidation of the affairs of the Depositor.



     Section 12.12 Limitation of Liability of Owner Trustee and Indenture Trustee.



          (a) Notwithstanding anything contained herein to the contrary, this Agreement has been
executed by Wilmington Trust Company not in its individual capacity but solely in its capacity as
Owner Trustee of the Issuer and in no event will 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 delivered pursuant hereto, as
to all of which recourse will 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 will be subject to, and entitled
to the benefits of, the terms and provisions of Articles V, VI and VII of the Trust Agreement.



          (b) Notwithstanding anything contained herein to the contrary, this Agreement has been
executed and delivered by Citibank, N.A., not in its individual capacity but solely as Indenture
Trustee and Backup Servicer and in no event will Citibank, N.A. 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 delivered pursuant hereto, as to all of which
recourse will be had solely to the assets of the Issuer.



          (c) In no event will Citibank, N.A., in any of its capacities hereunder, be deemed to have
assumed any duties of the Owner Trustee under the Delaware Statutory Trust Statute, common law, or
the Trust Agreement.



     Section 12.13 Independence of the Servicer. For all purposes of this Agreement, the
Servicer will be an independent contractor and will not be subject to the supervision of the
Issuer, the Indenture Trustee and Backup 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 will have no authority to act for or represent the Issuer or the
Owner Trustee in any way and will not otherwise be deemed an agent of the Issuer or the Owner
Trustee.



     Section 12.14 No Joint Venture. Nothing contained in this Agreement (i) will
constitute the Servicer and either of the Issuer or the Owner Trustee as members of any
partnership, joint venture,



62









 







association, syndicate, unincorporated business or other separate
entity, (ii) will be construed to impose any liability as such on any of them or (iii) will be
deemed to confer on any of them any express, implied or apparent authority to incur any obligation
or liability on behalf of the others.



     Section 12.15 Nonpublic Personal Information. In the course of carrying out their
duties under this Agreement, the Indenture Trustee, the Backup Servicer, the Issuer and the
Depositor shall develop or receive certain information regarding the “consumers” and “customers” of
the Servicer, including but not limited to “nonpublic personal information,” (as those terms are
defined in Title V of the Gramm-Leach-Bliley Act and the privacy regulations adopted thereunder).
Notwithstanding any other provision of the Agreement, with respect to nonpublic personal
information about the customers and consumers of the Servicer, each of the Indenture Trustee, the
Backup Servicer, the Issuer and the Depositor agrees as follows: (i) except as may be reasonably
necessary in the ordinary course of business to carry out the activities to be performed by the
Indenture Trustee, the Backup Servicer, the Issuer or the Depositor under this Agreement or as may
be required by law or legal process, each such party will not disclose any nonpublic personal
information to any third party; (ii) each such party will not use any nonpublic personal
information other than to carry out the purposes for which it was disclosed to the Indenture
Trustee, the Backup Servicer, the Issuer or the Depositor, as applicable, unless such other use is
expressly permitted by a written agreement executed by the Servicer or required by law or legal
process; (iii) each such party shall restrict disclosure of the nonpublic personal information
solely to those of its employees with a need to know and will advise employees who receive the
information of the obligation of confidentiality hereunder; and (iv) each such party will take all
reasonable measures, including without limitation such measures as it takes to safeguard its own
confidential information, to ensure the security and confidentiality of all nonpublic personal
information, to protect against anticipated threats or hazards to the security or integrity of
nonpublic personal information and to protect against unauthorized access to or use of nonpublic
personal information. The Servicer shall have access (during normal business hours, upon
reasonable prior notice) to review such books and records of the Indenture Trustee, the Backup
Servicer, Issuer and the Depositor as may be necessary to assess compliance with the requirements
of this Section 12.15. All costs and expenses of such a review shall be borne solely by
the Servicer, unless the results of such review indicate a breach of this Section 12.15 by
the Indenture Trustee, the Backup Servicer, the Issuer or the Depositor. The Indenture Trustee,
the Backup Servicer, the Issuer or the Depositor, as applicable, shall promptly notify the Servicer
upon receipt of any complaint or notice concerning a violation of privacy rights or upon becoming
aware of a breach of customer data security. Upon termination of this Agreement, the Indenture
Trustee, the Backup Servicer, the Issuer and the Depositor shall return or destroy all nonpublic
personal information, without retaining any copies of such documents and records.



     Section 12.16 Regulation AB. The Depositor and the Servicer acknowledge and agree
that the purpose of this Section 12.16 is to facilitate compliance by the Depositor with
the provisions of Regulation AB and related rules and regulations of the Commission. The Depositor
shall not exercise its right to request delivery of information or other performance under these
provisions other than in good faith, or for purposes other than compliance with the Securities Act,
the Exchange Act and the rules and regulations of the Commission under the Securities Act and the
Exchange Act. The Servicer acknowledges that interpretations of the requirements of Regulation AB
may change over time, whether due to interpretive guidance provided by the Commission or its staff,
consensus among participants in the asset-backed securities market, advice of counsel, or
otherwise, and agrees to comply with requests made by the Depositor in good faith for delivery of
information under these provisions on the basis of evolving interpretations of Regulation AB. The
Servicer shall cooperate fully with the Depositor to deliver to the Depositor (including any of its
assignees or designees) any



63









 







and all statements, reports, certifications, records and any other
information necessary in the good faith determination of the Depositor to permit the Depositor to
comply with the provisions of Regulation AB, together with such disclosures relating to the
Servicer and the Receivables, reasonably believed by the Servicer to be necessary in order to
effect such compliance.



     Section 12.17 Replacement Swap Agreement. Upon a request by the Insurer pursuant to
Section 4.6 of the Insurance Agreement, the Issuer shall enter into a Replacement Swap Agreement
(as such term is defined in Section 4.6 of the Insurance Agreement) with a replacement Swap
Counterparty or replacement Swap Counterparties in form and substance satisfactory to the Insurer.
With the consent of the Controlling Party, amounts may be withdrawn first, from the Swap
Termination Account to fund any up-front payments that are owed to a replacement Swap Counterparty
and second, if amounts in the Swap Termination Account are insufficient to fund such payments, from
the Collection Account.



[Signature page to follow]




64









 








     IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed and
delivered by their respective duly authorized officers as of the day and the year first written
above.



	 	 	 	 	 	 	 
	 	 	TRIAD AUTOMOBILE RECEIVABLES TRUST 2007-A	 	 
	 
	 	 	 	 	 	 
	 	 	By: WILMINGTON TRUST COMPANY, not in its individual
capacity but solely as Owner Trustee of the Trust	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Robert J. Perkins	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	Name: Robert J. Perkins	 	 
	 

	 	 	 	Title: Senior Financial Services Officer	 	 
	 
	 	 	 	 	 	 
	 	 	TRIAD FINANCIAL SPECIAL PURPOSE LLC, as Depositor	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Mike L. Wilhelms	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	Name: Mike L. Wilhelms	 	 
	 

	 	 	 	Title: Chief Financial Officer	 	 
	 
	 	 	 	 	 	 
	 	 	TRIAD FINANCIAL CORPORATION, as Servicer and
Custodian	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Mike L. Wilhelms	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	Name: Mike L. Wilhelms	 	 
	 

	 	 	 	Title: Senior Vice President and Chief Financial Officer	 	 
	 
	 	 	 	 	 	 
	 	 	CITIBANK, N.A., as Backup Servicer	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ John Hannon	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	Name: John Hannon	 	 
	 

	 	 	 	Title: Vice President	 	 






Acknowledged and accepted by

CITIBANK, N.A.,

not in its individual capacity but solely as Indenture Trustee




	 	 	 	 	 	 	 
	 

	 	By:
	 	/s/ John Hannon	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	Name: John Hannon	 	 
	 

	 	 	 	Title: Vice President	 	 






 









 






SCHEDULE A




SCHEDULE OF RECEIVABLES




[See Schedule A to the Purchase Agreement]




 









 





SCHEDULE B




REPRESENTATIONS AND WARRANTIES




[See Schedule B to the Purchase Agreement]




 









 





SCHEDULE C




SERVICING POLICIES AND PROCEDURES




Note: Applicable Time Periods Will Vary by State








 









 








SCHEDULE D




CUSTODIAN THIRD PARTY VENDORS




Arcus Data Security Inc., an Iron Mountain Company




FDI Computer Consulting, Inc.




 









 





EXHIBIT A




SERVICER’S CERTIFICATE





 









 





EXHIBIT B




FORM OF FINANCIAL GUARANTY INSURANCE POLICY