Document:

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                         NOTE GUARANTY INSURANCE POLICY

OBLIGATIONS:      $242,500,000                              POLICY NUMBER: 40604
                  Long Beach Acceptance Auto Receivables Trust 2003-A
                  Asset-Backed Notes, Class A

         MBIA Insurance Corporation (the "Insurer"), in consideration of the
payment of the premium and subject to the terms of this Note Guaranty Insurance
Policy (this "Policy"), hereby unconditionally and irrevocably guarantees to any
Owner that an amount equal to each full and complete Insured Payment will be
received from the Insurer by JPMorgan Chase Bank, or its successors, as trustee
for the Owners (the "Trust Collateral Agent"), on behalf of the Owners, for
distribution by the Trust Collateral Agent to each Owner of each Owner's
proportionate share of the Insured Payment. The Insurer's obligations hereunder
with respect to a particular Insured Payment shall be discharged to the extent
funds equal to the applicable Insured Payment are received by the Trust
Collateral Agent, whether or not such funds are properly applied by the Trust
Collateral Agent. Insured Payments shall be made only at the time set forth in
this Policy and no accelerated Insured Payments shall be made regardless of any
acceleration of the Obligations, unless such acceleration is at the sole option
of the Insurer.

         Notwithstanding the foregoing paragraph, this Policy does not cover
shortfalls, if any, attributable to the liability of the Trust or the Trust
Collateral Agent for withholding taxes, if any (including interest and penalties
in respect of any such liability).

         The Insurer will pay any Insured Payment that is a Preference Amount on
the Business Day following receipt on a Business Day by the Fiscal Agent (as
described below) of (i) a certified copy of the order requiring the return of a
preference payment, (ii) an opinion of counsel satisfactory to the Insurer that
such order is final and not subject to appeal, (iii) an assignment in such form
as is reasonably required by the Insurer, irrevocably assigning to the Insurer
all rights and claims of the Owner relating to or arising under the Obligations
against the debtor which made such preference payment or otherwise with respect
to such preference payment and (iv) appropriate instruments to effect the
appointment of the Insurer as agent for such Owner in any legal proceeding
related to such preference payment, such instruments being in a form
satisfactory to the Insurer, provided that if such documents are received after
12:00 noon New York City time on such Business Day, they will be deemed to be
received on the following Business Day. Such payments shall be disbursed to the
receiver or trustee in bankruptcy named in the final order of the court
exercising jurisdiction on behalf of the Owner and not to any Owner directly
unless such Owner has returned principal or interest paid on the Obligations to
such receiver or trustee in bankruptcy, in which case such payment shall be
disbursed to such Owner.

         The Insurer will pay any other amount payable hereunder no later than
12:00 noon New York City time on the later of the Payment Date on which the
related Policy Claim Amount is due or the third Business Day following receipt
in New York, New York on a Business Day by U.S. Bank Trust National Association,
as Fiscal Agent for the Insurer or any successor fiscal

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agent appointed by the Insurer (the "Fiscal Agent") of a Notice (as described
below); provided that if such Notice is received after 12:00 noon New York City
time on such Business Day, it will be deemed to be received on the following
Business Day. If any such Notice received by the Fiscal Agent is not in proper
form or is otherwise insufficient for the purpose of making claim hereunder it
shall be deemed not to have been received by the Fiscal Agent for purposes of
the paragraph, and the Insurer or the Fiscal Agent, as the case may be, shall
promptly so advise the Trust Collateral Agent and the Trust Collateral Agent may
submit an amended Notice.

         Insured Payments due hereunder unless otherwise stated herein will be
disbursed by the Fiscal Agent to the Trust Collateral Agent on behalf of the
Owners by wire transfer of immediately available funds in the amount of the
Insured Payment less, in respect of Insured Payments related to Preference
Amounts, any amount held by the Trust Collateral Agent for the payment of such
Insured Payment and legally available therefor.

         The Fiscal Agent is the agent of the Insurer only and the Fiscal Agent
shall in no event be liable to Owners for any acts of the Fiscal Agent or any
failure of the Insurer to deposit or cause to be deposited, sufficient funds to
make payments due under this Policy.

         Subject to the terms of the Agreement, the Insurer shall be subrogated
to the rights of each Owner to receive payments under the Obligations to the
extent of any payment by the Insurer hereunder.

         As used herein, the following terms shall have the following meanings:

         "Agreement" means the Sale and Servicing Agreement dated as of March 1,
2003 among Long Beach Acceptance Auto Receivables Trust 2003-A, as Issuer, Long
Beach Acceptance Receivables Corp. II, as Transferor, Long Beach Acceptance
Corp., as Originator and Servicer and JPMorgan Chase Bank, as Back-up Servicer,
Custodian and Trust Collateral Agent, without regard to any amendment or
supplement thereto.

         "Business Day" means any day other than (a) a Saturday or a Sunday or
(b) a day on which banking institutions in New York City, the State of New
Jersey or in the city in which the corporate trust office of the Trust
Collateral Agent under the Agreement is located are authorized or obligated by
law or executive order to close.

          "Insured Payment" means (i) as of any Payment Date, any Policy Claim
Amount and (ii) any Preference Amount.

         "Notice" means the telephonic or telegraphic notice, promptly confirmed
in writing by facsimile substantially in the form of Exhibit A attached hereto,
the original of which is subsequently delivered by registered or certified mail,
from the Trust Collateral Agent specifying the Insured Payment which shall be
due and owing on the applicable Payment Date.

         "Owner" means each Holder (as defined in the Agreement) who, on the
applicable Payment Date, is entitled under the terms of the applicable Class A
Notes to payment thereunder.

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         "Policy Claim Amount" means, on any Payment Date, the sum of (i) the
amount by which the Class A Note Interest exceeds the sum of (x) the Available
Funds remaining on deposit in the the Collection Account after the payment of
clauses (i) through (ii) of Section 5.6(c) of the Agreement and, without
duplication, (y) the amount on deposit in the Spread Account remaining on such
Payment Date after taking into account any prior withdrawals therefrom, plus
(ii) the amount by which the Class A Note Balance (after taking into account all
distributions of principal to be made on such Payment Date including, without
limitation, from amounts withdrawn from the Spread Account) exceeds the Pool
Balance as of the last day of the related Collection Period, plus (iii) if such
Payment Date is also the Final Scheduled Payment Date for any class of Notes,
the amount by which the applicable Class A Note Balance (after taking into
account all distributions of principal to be made with respect to such class of
Class A Notes on such Payment Date) exceeds the sum of (x) the Available Funds
remaining in the Collection Account after the payment of clauses (i) through
(iv) under Section 5.6(c) of the Agreement and, without duplication, (y) the
amount on deposit in the Spread Account remaining on such Payment Date, after
taking into account any prior withdrawals therefrom.

         "Preference Amount" means any amount previously distributed to an Owner
on the Obligations that is recoverable and sought to be recovered as a voidable
preference by a trustee in bankruptcy pursuant to the United States Bankruptcy
Code (11 U.S.C.), as amended from time to time, in accordance with a final
nonappealable order of a court having competent jurisdiction.

         Capitalized terms used herein and not otherwise defined herein shall
have the respective meanings set forth in Annex A to the Agreement as of the
date of execution of this Policy, without giving effect to any subsequent
amendment to or modification of the Agreement unless such amendment or
modification has been approved in writing by the Insurer.

         No defenses, set-offs and counterclaims of any kind available to the
Insurer so as to deny payment of any amount due in respect of this Policy will
be valid and the Insurer hereby waives and agrees not to assert any and all such
defenses (including fraud in inducement or fact or any other circumstances that
would have the effect of discharging a surety at law or in equity), set-offs and
counterclaims so as to deny payment of any amount due in respect of this Policy,
including without limitation, any such rights acquired by subrogation,
assignment or otherwise.

         Any notice hereunder or service of process on the Fiscal Agent may be
made at the address listed below for the Fiscal Agent or such other address as
the Insurer shall specify in writing to the Trust Collateral Agent.

         The notice address of the Fiscal Agent is 61 Broadway, 15th Floor, New
York, New York 10006 Attention: Municipal Registrar and Paying Agency, or such
other address as the Fiscal Agent shall specify to the Trust Collateral Agent in
writing.

         This Policy is being issued under and pursuant to, and shall be
construed under, the laws of the State of New York, without giving effect to the
conflict of laws principles thereof.

                                       3
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         The insurance provided by this Policy is not covered by the
Property/Casualty Insurance Security Fund specified in Article 76 of the New
York Insurance Law.

         This Policy is not cancelable for any reason. The premium on this
Policy is not refundable for any reason including payment, or provision being
made for payment, prior to maturity of the Obligations.

         IN WITNESS WHEREOF, the Insurer has caused this Policy to be executed
and attested the 13th day of March, 2003.

                                     MBIA INSURANCE CORPORATION

                                     By
                                        -----------------------------------
                                     Title: President

                                     Attest:

                                     By
                                        -----------------------------------
                                     Title: Assistant Secretary

                                       4
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                                    EXHIBIT A

                        TO NOTE GUARANTY INSURANCE POLICY
                                  NUMBER: 40604

                           NOTICE UNDER NOTE GUARANTY
                         INSURANCE POLICY NUMBER: 40604

U.S. Bank Trust National Association, as Fiscal Agent
 for MBIA Insurance Corporation
61 Broadway, 15th Floor
New York, NY  10006
Attention: Municipal Registrar and
                  Paying Agency

MBIA Insurance Corporation
113 King Street
Armonk, NY  10504

The undersigned, a duly authorized officer of [NAME OF TRUSTEE], as trustee (the
"Trust Collateral Agent"), hereby certifies to U.S. Bank Trust National
Association (the "Fiscal Agent") and MBIA Insurance Corporation (the "Insurer"),
with reference to Note Guaranty Insurance Policy Number: 40604 (the "Policy")
issued by the Insurer in respect of the $242,500,000 Long Beach Acceptance Auto
Receivables Trust 2003-A, Asset-Backed Notes, Class A (the "Obligations"), that:

          (i) The Trust Collateral Agent is the trust collateral agent under the
     Sale and Servicing Agreement dated as of March 1, 2003 among Long Beach
     Acceptance Auto Receivables Trust 2003-A, as Issuer, Long Beach Acceptance
     Receivables Corp. II, as Transferor, Long Beach Acceptance Corp., as
     Originator and Servicer and JPMorgan Chase Bank, as Back-up Servicer,
     Custodian and Trust Collateral Agent;

          (ii) the amount due under clause (i) of the definition of Policy Claim
     Amount for the Payment Date occurring on _______ (the "Applicable Payment
     Date") is $_______;

          (iii) the amount due under clause (ii) of the definition of Policy
     Claim Amount for the Applicable Distribution Date is $_______;

          (iv) the amount due under clause (iii) of the definition of Policy
     Claim Amount for the Applicable Distribution Date is $_______;

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          (v) the sum of the amounts listed in paragraphs (ii), (iii) and (iv)
     above is $_______ (the "Policy Claim Amount");

          (vi) the amount of previously distributed payments on the Obligations
     that is recoverable and sought to be recovered as a voidable preference by
     a trustee in bankruptcy pursuant to the Bankruptcy Code in accordance with
     a final nonappealable order of a court having competent jurisdiction is
     $_______ (the "Preference Amount");

          (vii) the total Insured Payment due is $_______, which amount equals
     the sum of the Policy Claim Amount and the Preference Amount;

          (viii) the Trust Collateral Agent is making a claim under and pursuant
     to the terms of the Policy for the dollar amount of the Insured Payment set
     forth in (v) above to be applied to the payment of the Policy Claim Amount
     for the Applicable Payment Date in accordance with the Agreement and for
     the dollar amount of the Insured Payment set forth in (vi) above to be
     applied to the payment of any Preference Amount; and

          (ix) the Trust Collateral Agent directs that payment of the Insured
     Payment be made to the following account by bank wire transfer of federal
     or other immediately available funds in accordance with the terms of the
     Policy: [TRUST COLLATERAL AGENT'S ACCOUNT NUMBER].

          Any capitalized term used in this Notice and not otherwise defined
     herein shall have the meaning assigned thereto in the Policy.

          Any Person Who Knowingly And With Intent To Defraud Any Insurance
Company Or Other Person Files An Application For Insurance Or Statement Of Claim
Containing Any Materially False Information, Or Conceals For The Purpose Of
Misleading, Information Concerning Any Fact Material Thereto, Commits A
Fraudulent Insurance Act, Which Is A Crime, And Shall Also Be Subject To A Civil
Penalty Not To Exceed Five Thousand Dollars And The Stated Value Of The Claim
For Each Such Violation.

          IN WITNESS WHEREOF, the Trustee has executed and delivered the Notice
under this Policy as of the           day of          .

                                     JPMORGAN CHASE BANK,
                                     as Trust Collateral Agent

                                     By
                                        ------------------------------------
                                     Title
                                           ---------------------------------

                                       2<PAGE>

================================================================================

                          SALE AND SERVICING AGREEMENT

                                      among

               LONG BEACH ACCEPTANCE AUTO RECEIVABLES TRUST 2003-A

                                     Issuer

                   LONG BEACH ACCEPTANCE RECEIVABLES CORP. II

                                   Transferor

                           LONG BEACH ACCEPTANCE CORP.

                             Originator and Servicer

                                       and

                               JPMORGAN CHASE BANK

             Back-up Servicer, Custodian and Trust Collateral Agent

                            Dated as of March 1, 2003

================================================================================

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                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                                                                Page
<S>          <C>                                                                                                 <C>
ARTICLE I DEFINITIONS ............................................................................................1

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

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

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

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

     SECTION 3.1.     Representations and Warranties of Transferor................................................5
     SECTION 3.2.     Repurchase upon Breach of Representations and Warranties of the Transferor..................5
     SECTION 3.3.     Delivery of Legal Files and Receivable Files................................................6
     SECTION 3.4.     Acceptance of Legal Files by Custodian......................................................7
     SECTION 3.5.     Access to Receivable Files and Legal Files; Servicer's Duties with Respect to
                             Receivable Files; Custodian's Duties with Respect to Legal Files.....................8
     SECTION 3.6.     Covenants of the Custodian..................................................................9
     SECTION 3.7.     Issuer's Certificate.......................................................................11

ARTICLE IV ADMINISTRATION AND SERVICING OF RECEIVABLES...........................................................11

     SECTION 4.1.     Duties of the Servicer.....................................................................11
     SECTION 4.2.     Collection and Allocation of Receivable Payments...........................................12
     SECTION 4.3.     Realization upon Receivables...............................................................13
     SECTION 4.4.     Physical Damage Insurance; Other Insurance.................................................14
     SECTION 4.5.     Maintenance of Security Interests in Financed Vehicles.....................................15
     SECTION 4.6.     Additional Covenants of Servicer...........................................................16
     SECTION 4.7.     Purchase of Receivables Upon Breach........................................................16
     SECTION 4.8.     Servicing Fee..............................................................................17
     SECTION 4.9.     Servicer's Certificate.....................................................................17
     SECTION 4.10.    Annual Statement as to Compliance; Notice of Default.......................................18
     SECTION 4.11.    Annual Independent Certified Public Accountant's Report....................................18
     SECTION 4.12.    Servicer Expenses..........................................................................19
     SECTION 4.13.    Retention and Termination of Servicer............................ERROR! BOOKMARK NOT DEFINED.

                                       i
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     SECTION 4.14.    Access to Certain Documentation and Information Regarding Receivables......................19
     SECTION 4.15.    Verification of Servicer's Certificate.....................................................19
     SECTION 4.16.    Fidelity Bond..............................................................................21
     SECTION 4.17.    Delegation of Duties.......................................................................21
     SECTION 4.18.    Delivery of Back-up Tapes of Back-up Servicer..............................................22
     SECTION 4.19.    Confidential Information...................................................................22

ARTICLE V ACCOUNTS; PAYMENTS; STATEMENTS TO NOTEHOLDERS..........................................................23

     SECTION 5.1.     Accounts; Lock-Box Account.................................................................23
     SECTION 5.2.     Collections................................................................................24
     SECTION 5.3.     Application of Collections.................................................................25
     SECTION 5.4.     Intentionally Omitted......................................................................25
     SECTION 5.5.     Additional Deposits........................................................................25
     SECTION 5.6.     Payments; Policy Claims....................................................................25
     SECTION 5.7.     Statements to Noteholders; Tax Returns.....................................................30
     SECTION 5.8.     Reliance on Information from the Servicer..................................................33
     SECTION 5.9.     Optional Deposits by the Note Insurer......................................................33
     SECTION 5.10.    Spread Account.............................................................................33
     SECTION 5.11.    Withdrawals from Spread Account............................................................33
     SECTION 5.12.    Simple Interest............................................................................34
     SECTION 5.13.    Class B Reserve Account....................................................................34
     SECTION 5.14.    Securities Accounts........................................................................35

ARTICLE VI THE POLICY ...........................................................................................35

     SECTION 6.1.     Policy ....................................................................................35
     SECTION 6.2.     Claims Under Policy........................................................................35
     SECTION 6.3.     Preference Claims; Direction of Proceedings................................................36
     SECTION 6.4.     Surrender of Policy........................................................................37

ARTICLE VII THE TRANSFEROR.......................................................................................37

     SECTION 7.1.     Representations of the Transferor..........................................................37
     SECTION 7.2.     Liability of the Transferor................................................................39
     SECTION 7.3.     Merger or Consolidation of, or Assumption of the Obligations of, the Transferor............39
     SECTION 7.4.     Limitation on Liability of the Transferor and Others.......................................40
     SECTION 7.5.     Transferor May Own Notes...................................................................40

ARTICLE VIII THE SERVICER........................................................................................41

     SECTION 8.1.     Representations of Servicer................................................................41
     SECTION 8.2.     Indemnities of Servicer....................................................................42
     SECTION 8.3.     Merger or Consolidation of, or Assumption of the Obligations of, Servicer or
                             Back-up Servicer....................................................................44
     SECTION 8.4.     Limitation on Liability of Servicer and Others.............................................46
     SECTION 8.5.     Servicer and Back-up Servicer Not to Resign................................................46

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ARTICLE IX SERVICER TERMINATION EVENTS...........................................................................47

     SECTION 9.1.     Servicer Termination Events................................................................47
     SECTION 9.2.     Appointment of Successor...................................................................50
     SECTION 9.3.     Notification to Noteholders................................................................51
     SECTION 9.4.     Action Upon Certain Failures of the Servicer...............................................51

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

     SECTION 10.1.    Duties of the Trust Collateral Agent and the Custodian.....................................51
     SECTION 10.2.    Trust Collateral Agent to Act for the Class A Noteholders and Note Insurer.................55
     SECTION 10.3.    Certain Matters Affecting the Trust Collateral Agent and the Custodian.....................55
     SECTION 10.4.    Trust Collateral Agent, Back-up Servicer and Custodian Not Liable for Notes or
                        Receivables..............................................................................56
     SECTION 10.5.    Trust Collateral Agent, Back-up Servicer and Custodian May Own Notes.......................58
     SECTION 10.6.    Indemnity of Trust Collateral Agent, Back-up Servicer and Custodian........................58
     SECTION 10.7.    Eligibility Requirements for Trust Collateral Agent and the Custodian......................58
     SECTION 10.8.    Resignation or Removal of Trust Collateral Agent or Custodian..............................58
     SECTION 10.9.    Successor Trust Collateral Agent or Custodian..............................................60
     SECTION 10.10.   Merger or Consolidation of Trust Collateral Agent or Custodian.............................60
     SECTION 10.11.   Co-Trustee; Separate Trustee...............................................................61
     SECTION 10.12.   Representations and Warranties of Trust Collateral Agent and the Custodian.................62
     SECTION 10.13.   Rights of Note Insurer to Direct Trust Collateral Agent....................................62

ARTICLE XI TERMINATION...........................................................................................63

     SECTION 11.1.    Termination................................................................................63

ARTICLE XII ADMINISTRATIVE DUTIES OF THE SERVICER................................................................63

     SECTION 12.1.    Administrative Duties......................................................................63
     SECTION 12.2.    Records....................................................................................65
     SECTION 12.3.    Additional Information to be Furnished to the Issuer.......................................65
     SECTION 12.4.    No Additional Compensation.................................................................65

ARTICLE XIII MISCELLANEOUS PROVISIONS............................................................................65

     SECTION 13.1.    Amendment..................................................................................65
     SECTION 13.2.    Protection of Title........................................................................66
     SECTION 13.3.    Limitation on Rights of Noteholders........................................................69
     SECTION 13.4.    Governing Law..............................................................................70
     SECTION 13.5.    Notices....................................................................................70
     SECTION 13.6.    Severability of Provisions.................................................................71
     SECTION 13.7.    Assignment to Indenture Trustee............................................................71
</TABLE>

                                       iii
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<TABLE>
<CAPTION>
<S>                   <C>                                                                                       <C>      <C>
     SECTION 13.8.    Limitation of Liability of Owner Trustee, Custodian and Trust Collateral Agent.............71
     SECTION 13.9.    Independence of the Servicer...............................................................71
     SECTION 13.10.   No Joint Venture...........................................................................72
     SECTION 13.11.   Nonpetition Covenant.......................................................................72
     SECTION 13.12.   Third Party Beneficiaries..................................................................72
     SECTION 13.13.   Consent to Jurisdiction....................................................................72
     SECTION 13.14.   Headings...................................................................................73
     SECTION 13.15.   Trial by Jury Waived.......................................................................73
     SECTION 13.16.   Entire Agreement...........................................................................73
     SECTION 13.17.   Effect of Policy Expiration Date...........................................................74
</TABLE>

                                     ANNEXES

Annex    A       Defined Terms

                                    EXHIBITS

Exhibit  A-1  Form of Issuer's Certificate
Exhibit  A-2  Form of Issuer's Certificate
Exhibit  B-1  Form of Servicer's Certificate
Exhibit  B-2  Form of Loan Master File Layout
Exhibit  C    Intentionally Omitted
Exhibit  D    Payment Deferment and Due Date Change Policies
Exhibit  E    Documentation Checklist
Exhibit  F    Form of Request for Transfer of Possession
Exhibit  G    Form of Custodial Letter

                                 SCHEDULES

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

                                       iv
<PAGE>

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

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

                  WHEREAS the Transferor has purchased such receivables from
LBAC and is willing to convey such receivables to the Issuer; and

                  WHEREAS the Servicer is willing to service all such
receivables.

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

                                    ARTICLE I
                                   DEFINITIONS

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

                  SECTION 1.2. Other Definitional Provisions.

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

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

<PAGE>

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

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

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

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

                  SECTION 1.4. Action by or Consent of Noteholders. Whenever any
provision of this Agreement refers to action to be taken, or consented to, by
Noteholders, such provision shall be deemed to refer to Noteholders of record as
of the Record Date immediately preceding the date on which such action is to be
taken, or consent given, by Noteholders. Solely for the purposes of any action
to be taken or consented to by Noteholders, any Note registered in the name of
the Transferor, LBAC, the Servicer or any Affiliate thereof shall be deemed not
to be outstanding and shall not be taken into account in determining whether the
requisite interest necessary to effect any such action or consent has been
obtained; provided, however, that, solely for the purpose of determining whether
the Indenture Trustee or the Trust Collateral Agent is entitled to rely upon any
such action or consent, only Notes which the Indenture Trustee or the Trust
Collateral Agent actually knows to be so owned shall be so disregarded.

                  SECTION 1.5. Material Adverse Effect. Whenever a determination
is to be made under this Agreement as to whether a given event, action, course
of conduct or set of facts or circumstances could or would have a material
adverse effect on the Issuer or Noteholders (or any similar or analogous
determination), such determination shall be made without taking into account the
insurance provided by the Policy. Whenever a determination is to be made under
this Agreement whether a breach of a representation, warranty or covenant has or
could have a material adverse effect on a Receivable or the interest therein of
the Issuer, the Noteholders or

                                       2
<PAGE>

the Note Insurer (or any similar or analogous determination), such determination
shall be made by the Controlling Party in its sole discretion.

                                   ARTICLE II
                            CONVEYANCE OF RECEIVABLES

                  SECTION 2.1. Conveyance of Receivables.

                  In consideration of the Issuer's delivery of the Certificate
to or upon the order of the Transferor on the Closing Date and the net proceeds
from the sale of the Notes and the other amounts to be distributed from time to
time to, or upon the order of, the Transferor in accordance with the terms of
this Agreement, the Transferor does hereby transfer, assign, set over and
otherwise convey to the Issuer, without recourse, all right, title and interest
of the Transferor in and to:

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

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

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

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

                  (v) the Purchase Agreement and the Guarantee including,
          without limitation, a direct right to cause LBAC to purchase
          Receivables from the Issuer upon the occurrence of a breach of any of
          the representations and warranties contained in Section 3.2(b) of the
          Purchase Agreement or the failure of LBAC to timely comply with its
          obligations pursuant to Section 5.5 of the Purchase Agreement;

                  (vi) refunds for the costs of extended service contracts with
          respect to the related Financed Vehicles, refunds of unearned premiums
          with respect to credit life and credit accident and health insurance
          policies or certificates covering a related Obligor or Financed
          Vehicle or his or her obligations with respect to such Financed
          Vehicle and any recourse to Dealers for any of the foregoing;

                                       3
<PAGE>

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

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

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

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

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

                  SECTION 2.3. Assignment by Transferor. The Transferor does
hereby transfer, assign and otherwise convey unto the Issuer, for the benefit of
the Noteholders, the Certificateholder and the Note Insurer, its right to any
recourse to LBAC resulting from the occurrence of a breach of any of their
respective representations and warranties contained in Section 3.2 of the
Purchase Agreement or from the failure of LBAC to comply with its obligations
pursuant to Section 5.5 of the Purchase Agreement. The provisions of this
Section 2.3 are intended to grant the Issuer a direct right against LBAC to
demand performance under the terms of the Purchase Agreement.

                  SECTION 2.4. The Legal Files Are Not "Financial Assets". The
parties (for themselves, their successors, trustees, receivers and assigns)
acknowledge and agree that the Legal Files held pursuant to this Agreement are
not "financial assets" within the meaning of (section)8.102(a)(9) of the Texas
Business & Commerce Code (the "Texas UCC").

                  SECTION 2.5. Further Encumbrance of Trust Assets.

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

                                       4
<PAGE>

Issuer, in accordance with the Trust Agreement and Sections 3802 and 3805 of the
Statutory Trust Act (as defined in the Trust Agreement).

                  (b) Immediately upon the vesting of the Trust Assets in the
Issuer, the Issuer shall have the sole right to pledge or otherwise encumber,
such Trust Assets. Pursuant to the Indenture, the Issuer shall grant a security
interest in the Trust Assets to the Indenture Trustee to secure the repayment of
the Notes. The Certificate shall represent the beneficial ownership interest in
the Trust Assets, and the Noteholders shall be entitled to receive payments with
respect thereto as set forth herein and pursuant to the Indenture.

                  (c) Following the payment in full of the Notes and the release
and discharge of the Indenture, all covenants of the Issuer under Article III of
the Indenture shall, until payment in full of the Certificate, remain as
covenants of the Issuer for the benefit of the Certificateholder, enforceable by
the Certificateholder to the same extent as such covenants were enforceable by
the Noteholders prior to the discharge of the Indenture. Any rights of the
Indenture Trustee under Article III of the Indenture, following the discharge of
the Indenture, shall vest in the Certificateholder.

                  (d) The Trust Collateral Agent shall, at such time as there
are no Notes or Certificates outstanding, the Policy has expired in accordance
with its terms and all sums due to (i) the Note Insurer hereunder or pursuant to
the Insurance Agreement, (ii) the Indenture Trustee pursuant to the Indenture
and (iii) the Trust Collateral Agent pursuant to this Agreement, have been paid,
release any remaining portion of the Trust Assets to the Transferor.

                                   ARTICLE III
                                 THE RECEIVABLES

                  SECTION 3.1. Representations and Warranties of Transferor. The
Transferor hereby makes each of the representations and warranties made by LBAC
in Section 3.2(b) of the Purchase Agreement with respect to the Receivables to
the same extent as if such representations and warranties were fully set forth
herein. With respect to such representations and warranties, the Issuer is
deemed to have relied on such representations and warranties in acquiring the
Receivables, the Note Insurer shall be deemed to have relied on such
representations and warranties in issuing the Policy, the Indenture Trustee is
deemed to have relied on such representations and warranties in issuing the
Notes, the Noteholders are deemed to have relied on such representations and
warranties in purchasing the Notes and the Owner Trustee is deemed to have
relied on such representations and warranties in issuing the Certificate. Such
representations and warranties speak as of the execution and delivery of this
Agreement and as of the Closing Date, but shall survive the transfer and
assignment of the Receivables to the Issuer and the subsequent pledge thereof to
the Indenture Trustee pursuant to the Indenture.

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

                  (a) The Transferor, the Servicer, the Note Insurer, the
Custodian, the Trust Collateral Agent or the Issuer, as the case may be, shall
inform the other parties to this Agreement promptly, by notice in writing, upon
the discovery of any breach of the Transferor's

                                       5
<PAGE>

representations and warranties made pursuant to Section 3.1. As of the last day
of the second Collection Period following the discovery by the Transferor or
receipt by the Transferor of notice of such breach, unless such breach is cured
by such date, the Transferor shall have an obligation to repurchase any
Receivable in which the interests of the Noteholders or the Note Insurer are
materially and adversely affected by any such breach as of such date. In
consideration of and simultaneously with the repurchase of the Receivable, the
Transferor shall remit, or cause LBAC to remit, to the Collection Account the
Purchase Amount in the manner specified in Section 5.5 and the Issuer shall
execute such assignments and other documents reasonably requested by such person
in order to effect such repurchase. The sole remedies of the Issuer, the Trust
Collateral Agent, the Indenture Trustee or the Noteholders with respect to a
breach of representations and warranties pursuant to Section 3.1 shall be (i)
the repurchase of Receivables pursuant to this Section, subject to the
conditions contained herein, or (ii) to enforce the obligation of LBAC to the
Transferor to repurchase such Receivables or to indemnify for any such breach
pursuant to the Purchase Agreement. Neither the Owner Trustee, the Custodian,
the Trust Collateral Agent nor the Indenture Trustee shall have a duty to
conduct any affirmative investigation as to the occurrence of any conditions
requiring the repurchase of any Receivable pursuant to this Section.

                  (b) Pursuant to Section 2.1, the Transferor conveys to the
Issuer all of the Transferor's right, title and interest in its rights and
benefits, but none of its obligations or burdens, under the Purchase Agreement
including the Transferor's rights under the Purchase Agreement and the delivery
requirements, representations and warranties and the cure or repurchase and
indemnity obligations of LBAC thereunder. The Transferor hereby represents and
warrants to the Issuer that such assignment is valid, enforceable and effective
to permit the Issuer to enforce such obligations of LBAC and the Transferor
under the Purchase Agreement.

                  SECTION 3.3. Delivery of Legal Files and Receivable Files.

                  (a) On or prior to the Closing Date the Transferor shall
transfer and deliver to the Custodian at the offices specified in Schedule B to
this Agreement the Legal Files with respect to each Receivable.

                  (b) On or prior to the Closing Date the Transferor shall
transfer and deliver to the Servicer with respect to each Receivable the
following, either in hard copy or in an electronic format:

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

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

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

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

                                       6
<PAGE>

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

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

                  SECTION 3.4. Acceptance of Legal Files by Custodian. The
          Custodian acknowledges receipt of files which the Transferor has
          represented are the Legal Files relating to the Receivables. The
          Custodian shall hold the Legal Files subject to the terms and
          conditions of this Agreement. The Custodian may perform its duties in
          respect of custody of the Legal Files by or through its agents or
          employees. The Custodian has reviewed the Legal Files relating to the
          Receivables and hereby acknowledges that it has determined that it has
          received a file for each Receivable identified in Schedule A to this
          Agreement. The Custodian declares that it holds and will continue to
          hold such files and any amendments, replacements or supplements
          thereto and all other Trust Assets as custodian, agent and bailee for
          the Trust Collateral Agent in trust for the use and benefit of all
          present and future Noteholders and, after the Notes are retired and
          the Note Insurer has been paid all amounts due to it, for the
          Certificateholder. The Custodian shall review each Legal File
          delivered to it no later than the Closing Date to determine whether
          such Legal Files contain the documents referred to in the definition
          of the term "Legal File" and shall certify on the Closing Date to such
          effect. In addition, in the case of any Legal File which does not
          contain either an original Lien Certificate, an application for a
          certificate of title or a Dealer Title Guaranty for the related
          Financed Vehicle, the Custodian shall certify that the related Dealer
          is listed on the Dealer Title Addendum. If the Custodian finds during
          its review of the Legal Files or at any time thereafter that a Legal
          File for a Receivable has not been received or that any of the
          documents referred to in the definition of the term "Legal File" are
          not contained in a Legal File or, if applicable, the related Dealer is
          not listed on the Dealer Title Addendum, the Custodian shall promptly
          inform the Trust Collateral Agent (if at such time the Trust
          Collateral Agent is not also the Custodian hereunder), LBAC, the
          Transferor, the Back-up Servicer and the Note Insurer promptly, in
          writing, of the failure to receive a Legal File with respect to such
          Receivable (or of the failure of any of the aforementioned documents
          to be included in the Legal File or the failure of the related Dealer
          to be so listed) (it being understood that the Custodian's obligation
          to review the contents of any Legal File and the Dealer Title Addendum
          shall be limited as set forth in the preceding sentence). Unless any
          such defect with respect to such Receivable shall have been cured by
          the last day of the second Collection Period following discovery
          thereof by the Custodian, LBAC shall repurchase any such Receivable as
          of such last day. In consideration of the purchase of the Receivable,
          LBAC shall remit the Purchase Amount, in the manner specified in
          Section 5.5. The sole remedy of the Indenture Trustee, the Trust
          Collateral Agent, the Issuer or the Noteholders with respect to a
          breach pursuant to this Section 3.4 shall be to require LBAC to
          purchase the Receivables pursuant to this Section 3.4. Upon receipt of
          the Purchase Amount and written instructions from the Servicer, the
          Trust Collateral Agent shall cause the Custodian to release to LBAC or
          its designee the related Legal File and shall execute and deliver all
          reasonable instruments of transfer or assignment, without recourse, as
          are prepared by LBAC and delivered to the Trust Collateral Agent and
          are necessary to vest in LBAC or such designee the Issuer's right,
          title and interest in the Receivable. The Custodian shall make a list
          of Receivables for which an application for a certificate of title or
          a Dealer Title Guaranty but not a Lien Certificate is included in the
          Legal File as of the date of its

                                       7
<PAGE>

          review of the Legal Files and deliver a copy of such list to the
          Servicer, the Trust Collateral Agent and the Note Insurer. On the date
          which is 90 days following the Closing Date or, if such date is not a
          Business Day, on the next succeeding Business Day, the Custodian shall
          inform LBAC and the other parties to this Agreement and the Note
          Insurer of any Receivable for which the related Legal File on such
          date does not include a Lien Certificate, and LBAC shall repurchase
          any such Receivable as of the last day of the Collection Period in
          which the date, which is 150 days following the Closing Date occurs,
          if the related Legal File does not include a Lien Certificate as of
          the close of business on such 150th day. In consideration of the
          purchase of such Receivable, LBAC shall remit the Purchase Amount in
          the manner specified in Section 5.5. The Transferor shall have no
          obligation to repurchase any Receivable upon a breach pursuant to this
          Section 3.4. The Transferor shall have no liability for any action
          taken or omitted to be taken by LBAC pursuant to this Section 3.4.

                  SECTION 3.5. Access to Receivable Files and Legal Files;
Servicer's Duties with Respect to Receivable Files; Custodian's Duties with
Respect to Legal Files.

          (a) The Servicer and the Custodian shall, upon reasonable notice,
permit the Originator, the Trust Collateral Agent, the Transferor, the Issuer
and the Note Insurer access to the Receivable Files and the Legal Files,
respectively, at all reasonable times, upon reasonable notice and during the
Servicer's or the Custodian's normal business hours, as the case may be. In
addition, the Servicer and the Custodian shall provide such access to any
Noteholder upon reasonable notice at all reasonable times during the Servicer's
or the Custodian's normal business hours, as the case may be, in cases where the
Noteholders shall be required by applicable statutes or regulations to review
such documentation; provided, however, that the Servicer or the Custodian shall
be entitled to rely upon an Opinion of Counsel as to such fact. In each case,
such access shall be afforded without charge but only upon reasonable request.
Each Noteholder shall be deemed to have agreed by its acceptance of a Note to
hold in confidence all Confidential Information in accordance with the Federal
Financial Privacy Law and, to the extent more exacting, its then customary
procedures; provided that nothing herein shall prevent any Noteholder from
delivering copies of any financial statements and other documents whether or not
constituting Confidential Information, and disclosing other information, whether
or not Confidential Information, to (i) its directors, officers, employees,
agents and professional consultants, (ii) any other institutional investor that
holds Notes, (iii) any prospective institutional investor transferee in
connection with the contemplated transfer of a Note or any part thereof or
participation therein who is subject to confidentiality arrangements at least
substantially similar hereto, (iv) any governmental authority, (v) the National
Association of Insurance Commissioners or any similar organization, (vi) any
nationally recognized rating agency in connection with the rating of the Notes
by such agency or (vii) any other Person to which such delivery or disclosure
may be necessary or appropriate (a) in compliance with any applicable law, rule,
regulation or order, (b) in response to any subpoena or other legal process, (c)
in connection with any litigation to which such Noteholder is a party, (d) in
order to enforce such Person's investment in any Note or (e) otherwise, in
accordance with the Federal Financial Privacy Law; provided, that, prior to any
such disclosure, such Noteholder shall inform each such party that receives
Confidential Information of the foregoing requirements and shall use its
commercially reasonable best efforts to cause such party to comply with such
requirements.

                                       8
<PAGE>

          (b) Upon instruction from the Trust Collateral Agent, the Servicer
shall release any Receivable Files to the Trust Collateral Agent, the Trust
Collateral Agent's agent or the Trust Collateral Agent's designee, as the case
may be, at such place or places as the Trust Collateral Agent may designate, as
soon as practicable; provided, however, that such Receivable Files may be, at
the discretion of the Servicer, in the form of electronic files or reproduced
copies of such electronic files. The Servicer shall not be responsible for the
safekeeping of such Receivable Files following such release to the Trust
Collateral Agent unless and until such Receivable Files are returned to the
Servicer.

          (c) The Custodian shall, within two Business Days of the request of
the Servicer, the Trust Collateral Agent or the Note Insurer, execute such
documents and instruments as are prepared by the Servicer, the Trust Collateral
Agent or the Note Insurer and delivered to the Custodian, as the Servicer, the
Trust Collateral Agent or the Note Insurer deems necessary to permit the
Servicer, in accordance with its customary servicing procedures, to enforce the
Receivable on behalf of the Issuer and any related insurance policies (including
the VSI Policy, if any) covering the Obligor, the Receivable or Financed
Vehicle. The Custodian shall not be obligated to release any document from any
Legal File unless it receives a request for transfer of possession signed, or,
if such request is transmitted electronically, transmitted by a Servicing
Officer in the form of Exhibit F to this Agreement and a custodial letter
signed, or, if such request is transmitted electronically, transmitted by a
Servicing Officer in the form of Exhibit G to this Agreement (the "Custodial
Letter"). Such Custodial Letter shall obligate the Servicer to return such
document(s) to the Custodian when the need therefor no longer exists. At all
times while any Legal File is in the Servicer's possession, the Servicer shall
hold such Legal File in trust on behalf of the Issuer, the Indenture Trustee,
the Trust Collateral Agent and the Note Insurer.

                  SECTION 3.6. Covenants of the Custodian.

          (a) The Custodian, either directly or by acting through an agent or
nominee (which agent shall not be the Originator or any Affiliate thereof,
except as provided in Section 10.8(e) hereof), shall hold the Legal File and all
other documents relating to any Receivable that comes into its possession for
the exclusive use and benefit of the Issuer and shall make disposition thereof
only in accordance with the provisions of this Agreement. The Custodian shall
maintain continuous custody of the Legal File and such other documents received
by it in secure facilities in accordance with customary standards for such
custody and shall not release such documents or transfer such documents to any
other party, including any subcustodian, except as otherwise expressly provided
herein.

          (b) The Custodian covenants and warrants to the Issuer, the Trust
Collateral Agent, the Servicer and the Note Insurer that to the knowledge of its
Responsible Officers, as of the related date on which the Custodian makes the
certification required under Section 3.4 with respect to the Legal Files, it
holds no adverse interest, by way of security or otherwise, in any Receivable.

          (c) Instructions to the Custodian relating to this Agreement will be
carried out by the Custodian, in accordance with the terms and provisions of
this Agreement. The Custodian is authorized to conclusively rely on any such
instruction that it believes in good faith to have been

                                       9
<PAGE>

given by the Servicer pursuant to and in accordance with the terms and
provisions of this Agreement. The Custodian may record any such instructions
given by telephone, and any other telephone discussions with respect to this
Agreement.

          (d) The Custodian shall not by reason of this Agreement have a
fiduciary relationship in respect of the Servicer or LBAC or any Affiliate
thereof, and nothing in this Agreement, express or implied, is intended to or
shall be so construed so as to impose upon the Custodian any obligations in
respect of this Agreement except as expressly set forth in it. The Custodian,
acting as custodian, shall have no responsibility for (i) ascertaining or taking
action with respect to exchanges, maturities, tenders or other matters relative
to any Receivables, whether or not the Custodian has or is deemed to have
knowledge of such matters or (ii) taking any necessary steps to preserve rights
against any parties with respect to any Receivables, except as otherwise
expressly set forth herein in its capacity as Custodian. The Custodian does not
assume and shall have no responsibility for, and makes no representations as to,
monitoring the value of the Receivables and the related Legal Files. The
Custodian may rely upon the validity of documents delivered to it, without
investigation as to their authority or legal effectiveness.

          (e) Each of the Servicer, the Issuer, the Transferor and LBAC
acknowledges and agrees that the Custodian:

                  (i) shall not be responsible for any of the agreements set
          forth in the Purchase Agreement or any other documents or instruments
          other than this Agreement, including its Exhibits, but shall be
          obligated only for the performance of such duties as are specifically
          set forth in this Agreement;

                  (ii) shall not be under any obligation to exercise any of the
          rights or powers vested in it by this Agreement, or to institute,
          conduct, or defend any litigation under this Agreement or in relation
          to this Agreement, at the request, order or direction of any of the
          Noteholders or the Note Insurer pursuant to the provisions of this
          Agreement, unless such Noteholders or the Note Insurer shall have
          offered to the Custodian reasonable security or indemnity in form and
          substance reasonably satisfactory to the Custodian, against the costs,
          expenses and liabilities that may be incurred therein or thereby;

                  (iii) may rely and shall be protected in acting or refraining
          from acting upon any resolution, Officer's Certificate, Servicer's
          Certificate, certificate of auditors, or any other certificate,
          statement, instrument, opinion, report, notice, request, consent,
          order, appraisal, bond, or other paper or document believed by it to
          be genuine and to have been signed or presented by the proper party or
          parties, and shall have no responsibility for determining the accuracy
          thereof (except pursuant to Section 10.3(iv)); and

                  (iv) may consult with counsel, and any Advice of such counsel
          or Opinion of Counsel shall be full and complete authorization and
          protection in respect of any action taken or suffered or omitted by it
          under this Agreement in good faith and in accordance with such Advice
          or Opinion of Counsel.

          (f) If the Custodian shall request instructions from the Servicer or
LBAC with respect to any act or action (including failure to act) in connection
with this Agreement, the Custodian

                                       10
<PAGE>

shall be entitled to refrain from such act or taking such action unless and
until the Custodian shall have received instructions from such Person; and the
Custodian shall not incur liability to such Person or any other Person by reason
of so refraining. Without limiting the foregoing, neither the Servicer, nor
LBAC, nor any other Person shall have any right of action whatsoever against the
Custodian as a result of the Custodian's acting or refraining from acting in
accordance with the Servicer's instructions hereunder, other than any such
action arising out of the Custodian's negligence, bad faith or willful
misconduct in so acting or refraining from acting.

          (g) The Custodian shall physically segregate the Legal Files for the
Receivables from all other instruments similar in nature to such Legal Files in
its possession, and shall hold the Legal Files so as to reflect the ownership of
the Issuer. The Custodian shall mark its books, accounts and records to reflect
such fact. At its own expense, the Custodian shall maintain at all times during
which this Agreement is in effect, fidelity insurance in amounts customary for
similar transactions. Such insurance may be maintained by the Custodian in the
form of self-insurance.

          SECTION 3.7. Issuer's Certificate. Within five Business Days after
each Payment Date on which Receivables shall be assigned to LBAC or the
Servicer, as applicable, pursuant to this Agreement, based on amounts deposited
to the Collection Account, notices received pursuant to this Agreement and the
information contained in the Servicer's Certificate for the related Collection
Period, identifying the Receivables purchased by LBAC pursuant to Section 3.4 or
purchased by the Servicer pursuant to Section 4.7, the Issuer shall execute an
Issuer's Certificate (in the form of Exhibit A-1 or A-2, as applicable), and
shall deliver such Issuer's Certificate, accompanied by a copy of the Servicer's
Certificate for such Collection Period, to LBAC or the Servicer, as the case may
be, with a copy to the Note Insurer. The Issuer's Certificate submitted with
respect to such Payment Date shall operate, as of such Payment Date, as an
assignment, without recourse, representation or warranty, to LBAC or the
Servicer, as the case may be, of all the Issuer's right, title, and interest in
and to such repurchased Receivable, and all security and documents relating
thereto, such assignment being an assignment outright and not for security.

                                   ARTICLE IV
                   ADMINISTRATION AND SERVICING OF RECEIVABLES

                  SECTION 4.1. Duties of the Servicer. The Servicer, as agent
for the Issuer (to the extent provided herein), and in such capacity, shall
manage, service, administer and make collections on the Receivables with
reasonable care, using that degree of skill and attention customary and usual
for institutions which service motor vehicle retail installment contracts
similar to the Receivables and, to the extent more exacting, that the Servicer
exercises with respect to all comparable automotive receivables that it services
for itself or others. The Servicer's duties shall include collection and posting
of all payments, responding to inquiries of Obligors on such Receivables,
investigating delinquencies, sending payment statements to Obligors, reporting
tax information to Obligors, accounting for collections, furnishing monthly and
annual statements to the Trust Collateral Agent, the Indenture Trustee, the
Back-up Servicer and the Note Insurer with respect to payments and complying
with the terms of the Lock-Box Agreement. The Servicer shall also administer and
enforce all rights and responsibilities of the holders of the Receivables
provided for in the Dealer Agreements to the extent that such Dealer

                                       11
<PAGE>

Agreements relate to the Receivables, the Financed Vehicles or the Obligors.
Without limiting the generality of the foregoing, and subject to the servicing
standards set forth in this Agreement, the Servicer is authorized and empowered
by the Trust Collateral Agent to execute and deliver, on behalf of itself, the
Issuer, the Noteholders or any of them, any and all instruments of satisfaction
or cancellation, or partial or full release or discharge, and all other
comparable instruments, with respect to such Receivables or to the Financed
Vehicles securing such Receivables and/or the certificates of title or other
evidence of ownership with respect to such Financed Vehicles; provided, however,
that notwithstanding the foregoing, the Servicer shall not release an Obligor
from payment of any unpaid amount under any Receivable or waive the right to
collect the unpaid balance of any Receivable from the Obligor, except (i)
pursuant to an order from a court of competent jurisdiction, (ii) in accordance
with its customary procedures or (iii) in accordance with Section 4.2. If the
Servicer shall commence a legal proceeding to enforce a Receivable, the Issuer
shall thereupon be deemed to have automatically assigned, solely for the purpose
of collection, such Receivable to the Servicer. If in any enforcement suit or
legal proceeding it shall be held that the Servicer may not enforce a Receivable
on the ground that it shall not be a real party in interest or a holder entitled
to enforce such Receivable, the Trust Collateral Agent shall, at the Servicer's
expense and direction, take steps to enforce such Receivable, including bringing
suit in its name or the name of the Noteholders. The Servicer shall prepare and
furnish and the Trust Collateral Agent shall execute, any powers of attorney and
other documents reasonably necessary or appropriate to enable the Servicer to
carry out its servicing and administrative duties hereunder.

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

                                       12
<PAGE>

Deferment and Due Date Change Policies. If the Servicer is not LBAC, the
Servicer may not make any extension on a Receivable without the prior written
consent of the Note Insurer. The Servicer may in its discretion waive any late
payment charge or any other fees that may be collected in the ordinary course of
servicing a Receivable if it would forgo collection of such amount in accordance
with its customary procedures. Notwithstanding anything to the contrary
contained herein, the Servicer (i) shall not agree to any alteration of the
interest rate on any Receivable or of the amount of any Scheduled Receivable
Payment on any Receivable, except (a) as otherwise required by applicable law,
(b) with respect to a Deficient Liquidated Receivable and (c) with the prior
written consent of the Note Insurer, with respect to any other Liquidated
Receivable, and (ii) shall not agree to any modification that would result in a
material adverse effect on a Receivable (other than a Deficient Liquidated
Receivable and, with the prior written consent of the Note Insurer, any other
Liquidated Receivable) or the interest therein of the Issuer, the Noteholders or
the Note Insurer other than a modification in accordance with the Payment
Deferment and Due Date Change Policies.

                  On each Business Day, the Servicer shall prepare and transmit
to the Trust Collateral Agent and the Back-up Servicer in a form acceptable to
the Trust Collateral Agent and the Back-up Servicer, a record setting forth the
aggregate amount of collections on the Receivables processed by the Servicer on
the second preceding Business Day.

          SECTION 4.3. Realization upon Receivables.

          (a) On behalf of the Issuer, the Noteholders and the Note Insurer, the
Servicer shall use its best efforts, consistent with the servicing procedures
set forth herein, to repossess or otherwise convert the ownership of the
Financed Vehicle securing any Receivable as to which the Servicer shall have
determined eventual payment in full is unlikely. The Servicer shall commence
efforts to repossess or otherwise convert the ownership of a Financed Vehicle on
or prior to the date that an Obligor has not paid at least 95% of a Scheduled
Receivable Payment thereon for 120 consecutive days or more; provided, however,
that the Servicer may elect not to commence such efforts within such time period
if in its good faith judgment it determines either that it would be
impracticable to do so or that the proceeds ultimately recoverable with respect
to such Receivable would be increased by forbearance. The Servicer shall follow
such customary and usual practices and procedures as it shall deem necessary or
advisable in its servicing of automotive receivables, consistent with the
standards of care set forth in Section 4.1, which may include reasonable efforts
to realize upon any recourse to Dealers and selling the Financed Vehicle at
public or private sale. The foregoing shall be subject to the provision that, in
any case in which the Financed Vehicle shall have suffered damage, the Servicer
shall not expend funds in connection with the repair or the repossession of such
Financed Vehicle unless it shall determine in its discretion that such repair
and/or repossession will increase the proceeds ultimately recoverable with
respect to such Receivable by an amount greater than the amount of such
expenses. All Liquidation Proceeds and Recoveries received shall be remitted
directly by the Servicer to the Collection Account, without deposit into any
intervening account as soon as practicable, but in no event later than the
second Business Day after receipt thereof.

          (b) The Servicer agrees that within 45 days from the Closing Date it
shall make such filings and effect such notices as are necessary under Section
9-324(b) of the New York UCC (or comparable section of the UCC of any applicable
state) to preserve its ownership interest (or

                                       13
<PAGE>

security interest, as the case may be) in any repossessed Financed Vehicles
delivered for sale to Dealers.

          (c) Consistent with the standards, policies and procedures required by
this Agreement, the Servicer may use its best efforts to locate a third party
purchaser that is not affiliated with the Servicer, the Transferor or the Issuer
to purchase from the Issuer any Receivable that has become more than 60 days
delinquent, and shall have the right to direct the Issuer to sell any such
Receivable to the third-party purchaser; provided, that no more than 20% of the
initial number of Receivables in the pool may be sold by the Issuer pursuant to
this Section 4.3(c) in the aggregate; provided further, that the Servicer may
elect not to direct the Issuer to sell a Receivable that has become more than 60
days delinquent if in its good faith judgment the Servicer determines that the
proceeds ultimately recoverable with respect to such Receivable would be
increased by forbearance. In selecting Receivables to be sold to a third party
purchaser pursuant to this Section 4.3(c), the Servicer shall use commercially
reasonable efforts to locate purchasers for the most delinquent Receivables
first. In any event, the Servicer shall not use any procedure in selecting
Receivables to be sold to third party purchasers which is materially adverse to
the interest of the Noteholders or the Note Insurer. The Issuer shall sell each
Sold Receivable for the greatest market price possible; provided, however, that
aggregate Sale Amounts received by the Issuer for all Receivables sold to a
single third-party purchaser on a single date must be at least equal to the sum
of the Minimum Sale Prices for all such Receivables. The Servicer shall remit or
cause the third-party purchaser to remit all sale proceeds from the sale of
Receivables directly to the Collection Account without deposit into any
intervening account as soon as practicable, but in no event later than the
Business Day after receipt thereof.

          (d) The Servicer agrees that at any time after 45 days from the
Closing Date there will be (a) no more than 25 repossessed Financed Vehicles in
the aggregate delivered for sale to any Dealer and (b) no more than 50
repossessed Financed Vehicles in the aggregate delivered for the sale to all
Dealers with respect to which the actions referred to in (b)(1) above have not
been effected. The Servicer agrees that prior to delivering additional Financed
Vehicles for sale to any such Dealer, it shall make such filings and effect such
notices as are necessary under Section 9-324(b) of the New York UCC (or
comparable section of the applicable UCC) to preserve the Trust's ownership
interest (or security interest, as the case may be) in any such repossessed
Financed Vehicle.

                  SECTION 4.4. Physical Damage Insurance; Other Insurance.

          (a) The Servicer shall continue to maintain the VSI Policy or another
collateral protection insurance policy providing physical damage insurance
coverage to at least the same extent as the VSI Policy with respect to all
Financed Vehicles, unless the Servicer shall have received the prior written
consent of the Note Insurer allowing the Servicer to no longer maintain any of
such polices. The Servicer, in accordance with the servicing procedures and
standards set forth herein, shall require that (i) each Obligor shall have
obtained insurance covering the Financed Vehicle, as of the date of the
execution of the Receivable, insuring against loss and damage due to fire,
theft, transportation, collision and other risks generally covered by
comprehensive and collision coverage and each Receivable requires the Obligor to
maintain such physical loss and damage insurance naming LBAC and its successors
and assigns as an

                                       14
<PAGE>

additional insured, (ii) each Receivable that finances the cost of premiums for
credit life and credit accident and health insurance is covered by an insurance
policy or certificate naming LBAC as policyholder (creditor) and (iii) as to
each Receivable that finances the cost of an extended service contract, the
respective Financed Vehicle which secures the Receivable is covered by an
extended service contract.

          (b) To the extent applicable, the Servicer shall not take any action
which would result in noncoverage under any of the insurance policies referred
to in Section 4.4(a) which, but for the actions of the Servicer, would have been
covered thereunder. The Servicer, on behalf of the Trust Collateral Agent, shall
take such reasonable action as shall be necessary to permit recovery under any
of the foregoing insurance policies. Any amounts collected by the Servicer under
any of the foregoing insurance policies shall be deposited in the Collection
Account pursuant to Section 5.2. In the event of the cancellation or non-renewal
of the insurance referred to in Section 4.4(a)(i) above with respect to any
Financed Vehicle, the Servicer will endeavor, in accordance with its customary
servicing standards and procedures, to cause the related Obligor to obtain a
replacement insurance policy. In no event shall the Servicer be required to
force place insurance on a Financed Vehicle.

                  SECTION 4.5. Maintenance of Security Interests in Financed
Vehicles.

          (a) Consistent with the policies and procedures required by this
Agreement, the Servicer shall take such steps as are necessary to maintain
perfection of the security interest created in the name of LBAC by each
Receivable in the related Financed Vehicle, including, but not limited to,
obtaining the execution by the Obligors and the recording, registering, filing,
re-recording, re-registering and refiling of all security agreements, financing
statements and continuation statements or instruments as are necessary to
maintain the security interest granted by Obligors under the respective
Receivables. The Trust Collateral Agent hereby authorizes the Servicer to take
such steps as are necessary to re-perfect or continue the perfection of such
security interest on behalf of the Issuer in the event of the relocation of a
Financed Vehicle or for any other reason.

          (b) Upon the occurrence of an Insurance Agreement Event of Default,
the Note Insurer may (so long as a Note Insurer Default shall not have occurred
and be continuing) instruct the Trust Collateral Agent and the Servicer to take
or cause to be taken, or, if a Note Insurer Default shall have occurred and be
continuing, upon the occurrence of a Servicer Termination Event, either the
Trust Collateral Agent or the Trust Collateral Agent acting at the direction of
the Majorityholders shall direct the Servicer to take and the Servicer shall
take or cause to be taken such action as may, in the opinion of counsel to the
Note Insurer (or, if a Note Insurer Default shall have occurred and be
continuing, the Trust Collateral Agent), which opinion shall not be an expense
of the Note Insurer or the Trust Collateral Agent (as applicable), be necessary
to perfect or reperfect the security interests in the Financed Vehicles securing
the Receivables in the name of the Trust Collateral Agent on behalf of the
Issuer by amending the title documents of such Financed Vehicles to reflect the
security interest of the Trust Collateral Agent in the related Financed Vehicles
or by such other reasonable means as may, in the opinion of counsel to the Note
Insurer or the Trust Collateral Agent (as applicable), which opinion shall not
be an expense of the Note Insurer or the Trust Collateral Agent, be necessary or
prudent. The Servicer hereby agrees to pay all expenses related to such
perfection or reperfection and to

                                       15
<PAGE>

take all action necessary therefor. In addition, prior to the occurrence of an
Insurance Agreement Event of Default, the Note Insurer may (unless a Note
Insurer Default shall have occurred and be continuing) instruct the Trust
Collateral Agent and the Servicer to take or cause to be taken such action as
may, in the opinion of counsel to the Note Insurer, be necessary to perfect or
reperfect the security interest in the Financed Vehicles securing the
Receivables in the name of the Trust Collateral Agent on behalf of the Issuer,
including by amending the title documents of such Financed Vehicles to reflect
the security interest of the Trust Collateral Agent in the related Financed
Vehicle or by such other reasonable means as may, in the opinion of counsel to
the Note Insurer, be necessary or prudent; provided, however, that if the Note
Insurer requests that the title documents be amended prior to the occurrence of
an Insurance Agreement Event of Default, the out-of-pocket expenses of the
Servicer or the Trust Collateral Agent in connection with such action shall be
reimbursed to the Servicer or the Trust Collateral Agent, as applicable, by the
Note Insurer.

                  In addition to the foregoing, in the event any of the Servicer
Termination Events described in Section 9.1(iii) or (iv) shall have occurred, or
in the event LBAC shall have been removed or replaced as Servicer pursuant to
Section 8.3, Section 8.5, or otherwise pursuant to Section 9.1, then LBAC and/or
the Servicer shall immediately cause each Lien Certificate for a Financed
Vehicle to be marked to reflect the security interest of the Trust Collateral
Agent in the Financed Vehicle at the expense of LBAC.

                  The Servicer hereby makes, constitutes and appoints the Trust
Collateral Agent acting through its duly appointed officers or any of them, its
true and lawful attorney, for it and in its name and on its behalf, for the sole
and exclusive purpose of authorizing said attorney to execute and deliver as
attorney-in-fact or otherwise, any and all documents and other instruments and
to do or accomplish all other acts or things necessary or appropriate to show
the Trust Collateral Agent as lienholder or secured party on the related Lien
Certificates relating to a Financed Vehicle.

                  SECTION 4.6. Additional Covenants of Servicer. The Servicer
hereby makes the following covenants to the other parties hereto and the Note
Insurer on which the Trust Collateral Agent shall rely in accepting the
Receivables in trust and on which the Note Insurer shall rely in issuing the
Policy: (i) the Servicer shall not release the Financed Vehicle securing any
Receivable from the security interest granted by such Receivable in whole or in
part except in the event of payment in full by the Obligor thereunder or
repossession or other liquidation of such Financed Vehicle, (ii) the Servicer
shall not impair the rights of the Noteholders, the Issuer or the Note Insurer
in such Receivables, (iii) the Servicer shall not modify a Receivable, except in
accordance with Section 4.2, and (iv) the Servicer shall service the Receivables
as required by the terms of this Agreement and in material compliance with its
current servicing procedures for servicing of all its other comparable motor
vehicle receivables.

                  SECTION 4.7. Purchase of Receivables Upon Breach. The
Servicer, the Transferor, the Issuer, the Custodian or the Trust Collateral
Agent shall inform the other parties hereto and the Note Insurer promptly, in
writing, upon the discovery by the Servicer, the Transferor, the Issuer or a
Responsible Officer of the Trust Collateral Agent or the Custodian, as the case
may be, of any breach of the provisions of Section 4.2 relating to modifications
of the Receivables, or any breach of Sections 4.4, 4.5 or 4.6; provided,
however, that the failure to give

                                       16
<PAGE>

such notice shall not affect any obligation of the Servicer hereunder. Unless
the breach shall have been cured by the last day of the second Collection Period
following such discovery by or notice to the Servicer of such breach, the
Servicer shall purchase any Receivable with respect to which such breach has a
material adverse effect on such Receivable or the interest therein of the
Issuer, the Noteholders or the Note Insurer. In consideration of the purchase of
such Receivable, the Servicer shall remit the Purchase Amount in the manner
specified in Section 5.5. For purposes of this Section, the Purchase Amount
shall, whenever applicable, consist in part of a release by the Servicer of all
rights to receive Simple Interest Excess with respect to the related Receivable.
The sole remedy of the Trust Collateral Agent, the Issuer, the Note Insurer or
the Noteholders with respect to a breach of the provisions of Section 4.2
relating to modifications of the Receivables or any breach of Sections 4.4, 4.5
or 4.6 shall be to require the Servicer to repurchase Receivables pursuant to
this Section 4.7; provided, however, that the Servicer shall indemnify the Trust
Collateral Agent, the Indenture Trustee, the Collateral Agent, the Back-up
Servicer, the Custodian, the Transferor, the Note Insurer, the Issuer and the
Noteholders and each of their respective officers, employees, directors, agents
and representatives against all costs, expenses, losses, damages, claims and
liabilities, including reasonable fees and expenses of counsel, which may be
asserted against or incurred by any of them as a result of third party claims
arising out of the events or facts giving rise to such breach. The Transferor
shall have no obligation to repurchase the Receivables upon a breach of the
provisions of Section 4.2 relating to modifications of the Receivables, or any
breach of Sections 4.4, 4.5 or 4.6. The Transferor shall have no liability for
actions taken or omitted to be taken by the Servicer pursuant to this Section
4.7.

                  SECTION 4.8. Servicing Fee. The Servicing Fee for the initial
Payment Date shall equal the product of (a) one-twelfth of the Servicing Fee
Rate and (b) the Original Pool Balance. Thereafter, the Servicing Fee for a
Payment Date shall equal the product of (i) one-twelfth of the Servicing Fee
Rate and (ii) the Pool Balance as of the last day of the second preceding
Collection Period. The Servicing Fee shall in addition include all late fees,
prepayment charges including, in the case of a Precomputed Receivable that is
prepaid in full, to the extent not required by law to be remitted to the related
Obligor, the difference between the amounts received upon prepayment in full of
such Precomputed Receivable and the then outstanding Principal Balance of such
Precomputed Receivable and accrued interest thereon (calculated pursuant to the
Simple Interest Method) and other administrative fees or similar charges allowed
by applicable law with respect to Receivables, collected (from whatever source)
on the Receivables.

                  SECTION 4.9. Servicer's Certificate.

          (a) By 10:00 a.m., New York City time, on each Determination Date, the
Servicer shall deliver to the Issuer, the Trust Collateral Agent, the Indenture
Trustee, the Back-up Servicer, the Collateral Agent, the Transferor, the Note
Insurer, GCFP and the Rating Agencies, a Servicer's Certificate containing all
information necessary to make the payments pursuant to Section 5.6 (including,
if required, withdrawals from the Spread Account), for the Collection Period
preceding the date of such Servicer's Certificate and all information necessary
for the Trust Collateral Agent to send statements to Noteholders and the Note
Insurer pursuant to Section 5.7. Receivables to be purchased by the Servicer or
to be purchased by LBAC shall be

                                       17
<PAGE>

identified by the Servicer by account number with respect to such Receivable (as
specified in the Schedule of Receivables).

          (b) In addition to the information required by Section 4.9(a), the
Servicer shall include in the copy of the Servicer's Certificate delivered to
the Note Insurer (i) the Average Delinquency Ratio, the Cumulative Default Rate,
and the Cumulative Loss Rate (as such terms are defined in the Spread Account
Agreement), (ii) whether any Trigger Event (as such term is defined in the
Spread Account Agreement) has occurred as of such Determination Date, (iii)
whether any Trigger Event that may have occurred as of a prior Determination
Date is Deemed Cured (as defined in the Spread Account Agreement) as of such
Determination Date and (iv) whether to the knowledge of the Servicer an
Insurance Agreement Event of Default has occurred. The Servicer shall in
addition give notice of the occurrence of any Trigger Event or any Insurance
Agreement Event of Default to each Rating Agency.

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

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

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

                  SECTION 4.11. Annual Independent Certified Public Accountant's
Report. The Servicer shall cause a firm of nationally recognized independent
certified public accountants, who may also render other services to the Servicer
or to the Transferor, to deliver to the Issuer, the Trust Collateral Agent, the
Indenture Trustee, the Back-up Servicer, the Collateral Agent, the Issuer, the
Noteholders, the Note Insurer and each Rating Agency on or before April 30 of
each year beginning April 30, 2004, a report dated as of December 31 of the
preceding calendar year and reviewing the Servicer's activities during such
preceding calendar year, addressed to the Board of Directors of the Servicer,
and to the Trust Collateral Agent, the Back-up Servicer, the Collateral Agent,
the Issuer, the Transferor and the Note Insurer, to the effect that such firm
has audited the financial statements of the Servicer and issued its report
therefor and that such audit (a) was made in accordance with generally accepted
auditing standards, and accordingly included such tests of the accounting
records and such other auditing procedures as such firm considered necessary in
the circumstances; (b) included tests relating to automotive loans

                                       18
<PAGE>

serviced for others in accordance with the requirements of the Uniform Single
Attestation Program for Mortgage Bankers (the "Program"), to the extent the
procedures in the Program are applicable to the servicing obligations set forth
in this Agreement; (c) included an examination of the delinquency and loss
statistics relating to the Servicer's portfolio of automobile, van, sport
utility vehicle and light duty truck installment sales contracts; and (d) except
as described in the report, disclosed no exceptions or errors in the records
relating to automobile, van, sport utility vehicle and light duty truck loans
serviced for others that, in the firm's opinion, the Program requires such firm
to report. The accountant's report shall further state that (1) a review in
accordance with agreed upon procedures was made of three randomly selected
Servicer's Certificates; (2) except as disclosed in the report, no exceptions or
errors in the Servicer's Certificates were found; and (3) the delinquency and
loss information relating to the Receivables contained in the Servicer's
Certificates were found to be accurate.

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

                  SECTION 4.12. Servicer Expenses. The Servicer shall be
required to pay all expenses incurred by it in connection with its activities
under this Agreement (including taxes imposed on the Servicer, expenses incurred
by the Servicer in connection with payments and reports to Noteholders, the
Trust Collateral Agent and the Note Insurer and all other fees and expenses of
the Issuer including taxes levied or assessed against the Issuer, and claims
against the Issuer in respect of indemnification not expressly stated under this
agreement to be for the account of the Issuer).

                  SECTION 4.13. [Reserved]

                  SECTION 4.14. Access to Certain Documentation and Information
Regarding Receivables. The Servicer shall provide to representatives of the
Indenture Trustee, the Trust Collateral Agent, the Collateral Agent, the Back-up
Servicer, the Transferor, the Issuer and the Note Insurer reasonable access to
documentation and computer systems and information regarding the Receivables and
shall provide such access to Noteholders in such cases where the Noteholders are
required by applicable law or regulation to review such documentation. In each
case, such access shall be afforded without charge but only upon reasonable
request and during normal business hours. Nothing in this Section 4.14 shall
derogate from the obligation of the Servicer to observe any applicable law
prohibiting disclosure of information regarding the Obligors, and the failure of
the Servicer to provide access as provided in this Section 4.14 as a result of
such obligation shall not constitute a breach of this Section 4.14.

                  SECTION 4.15. Verification of Servicer's Certificate.

          (a) On or before the fifth Business Day of each month, the Servicer
will deliver to the Trust Collateral Agent and the Back-up Servicer a computer
diskette (or other electronic transmission) in a format acceptable to the Trust
Collateral Agent and the Back-up Servicer containing such information with
respect to the Receivables as of the close of business on the last day of the
preceding Collection Period as is necessary for preparation of the Servicer's
Certificate. The Back-up Servicer shall use such computer diskette (or other
electronic

                                       19
<PAGE>

transmission) to verify the information specified in Section 4.15(b)(iii)
contained in the Servicer's Certificate delivered by the Servicer, and the
Back-up Servicer shall certify to the Note Insurer that it has verified the
Servicer's Certificate in accordance with this Section 4.15 and shall notify the
Servicer, the Note Insurer and the Trust Collateral Agent of any discrepancies,
in each case, on or before the related Deficiency Claim Date. In the event that
the Back-up Servicer reports any discrepancies, the Servicer and the Back-up
Servicer shall attempt to reconcile such discrepancies prior to the related
Deficiency Claim Date, but in the absence of a reconciliation, the Servicer's
Certificate shall control for the purpose of calculations and payments with
respect to the related Payment Date. In the event that the Back-up Servicer and
the Servicer are unable to reconcile discrepancies with respect to a Servicer's
Certificate by the related Payment Date, (i) the Back-up Servicer will notify
the Note Insurer and the Trust Collateral Agent, and (ii) the Servicer shall
cause a firm of independent certified public accountants, at the Servicer's
expense, to audit the Servicer's Certificate and, prior to the fifth calendar
day of the following month, reconcile the discrepancies. The effect, if any, of
such reconciliation shall be reflected in the Servicer's Certificate for such
next succeeding Determination Date. In addition, the Servicer shall, if so
requested by the Note Insurer (unless a Note Insurer Default shall have occurred
and be continuing) deliver to the Back-up Servicer (i) within five (5) Business
Days of demand therefor a computer tape containing as of the close of business
on the date of demand all of the data maintained by the Servicer in computer
format in connection with servicing the Receivables and (ii) within fifteen (15)
Business Days of demand therefor a copy of such other information as is
reasonably requested by the Note Insurer for the purpose of reconciling such
discrepancies. Other than the duties specifically set forth in this Agreement,
the Back-up Servicer shall have no obligations hereunder, including, without
limitation, to supervise, verify, monitor or administer the performance of the
Servicer. The Back-up Servicer shall have no liability for any actions taken or
omitted by the Servicer. The duties and obligations of the Back-up Servicer
shall be determined solely by the express provisions of this Agreement and no
implied covenants or obligations shall be read into this Agreement against the
Back-up Servicer.

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

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

                  (ii) load the computer diskette (which shall be in a format
          acceptable to the Back-up Servicer) received from the Servicer
          pursuant to Section 4.15(a) hereof, confirm that such computer
          diskette is in a readable form and calculate the Principal Balance of
          each Receivable based on the Principal Balance of such Receivable as
          of the preceding Payment Date (as set forth in such Servicer's
          Certificate) and the current principal payment for such Receivable (as
          set forth in such Servicer's Certificate) and compare such calculation
          to that set forth in the Servicer's Certificate (and give notice of
          any discrepancy to the Note Insurer); and

                  (iii) recalculate the Available Funds, the Principal Payment
          Amount, the Class A Principal Amount, the Class B Principal Payment
          Amount, the Class A-1 Interest Payment Amount, the Class A-2 Interest
          Payment Amount, the Class A-3 Interest

                                       20
<PAGE>

          Payment Amount, the Class A-4 Interest Payment Amount, the Class B
          Interest Payment Amount, the Senior Strip, the Back-up Servicer Fee,
          the Servicing Fee, the Senior Strip, the Indenture Trustee Fee, the
          Custodian Fee, the amount on deposit in the Spread Account, the amount
          on deposit in the Class B Reserve Account and the Premium in the
          Servicer's Certificate based solely on the balances and calculations
          specifically set forth in the Servicer's Certificate, compare such
          calculations to those set forth in the Servicer's Certificate. To the
          extent of any discrepancy, the Back-up Servicer shall give notice
          thereof to the Note Insurer. The Back-up Servicer's obligation shall
          be limited to the mathematical recalculation of the amounts set forth
          in this Section 4.15(b)(iii) based on the Servicer's Certificate.

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

                  SECTION 4.17. Delegation of Duties. The Servicer may at any
time delegate duties under this Agreement to sub-contractors who are in the
business of servicing automotive receivables with the prior written consent of
the Controlling Party; provided, however, that no such delegation or
sub-contracting of duties by the Servicer shall relieve the Servicer of its
responsibility with respect to such duties. In the event the Servicer shall for
any reason no longer be the servicer of the Receivables (including by reason of
a Servicer Termination Event), the Back-up Servicer, its designee or any
successor Servicer shall assume all of the rights and obligations of the
predecessor Servicer under one or more subservicing agreements that may have
been entered into by the predecessor Servicer by giving notice of such
assumption to the related subservicer or subservicers within ten (10) Business
Days of the termination of the Servicer as servicer of the Receivables;
provided, however, that the Back-up Servicer may elect to terminate a
subservicing agreement with the prior written consent of the Note Insurer, so
long as no Note Insurer Default is then continuing. If the Back-up Servicer does
not elect to assume any subservicing agreement, any and all costs of termination
shall be at the predecessor Servicer's expense. Upon the giving of such notice,
the Back-up Servicer, its designee or the successor Servicer shall be deemed to
have assumed all of the predecessor Servicer's interest therein and to have
replaced the predecessor Servicer as a party to the subservicing agreement to
the same extent as if the subservicing agreement had been assigned to the
assuming party except that the predecessor Servicer and the subservicer, if any,
shall not thereby be relieved of any liability or obligations accrued up to the
date of the replacement of the Servicer under the subservicing agreement and the
subservicer, if any, shall not be relieved of any liability or obligation to the
predecessor Servicer that survives the assignment or termination of the
subservicing agreement. The Back-up Servicer shall notify each Rating Agency and
the Note Insurer if any subservicing agreement is assumed by the Back-up
Servicer, its designee or the successor Servicer. The predecessor Servicer
shall, upon request of the Trust Collateral Agent, the Back-up Servicer or any
successor Servicer, but at the expense of the predecessor Servicer, deliver to
the assuming party all documents and records relating to the subservicing
agreement and the Receivables then being serviced and an accounting of amounts
collected and held by it and otherwise use its reasonable efforts to effect the
orderly and efficient transfer of the subservicing agreement to the assuming
party.

                                       21
<PAGE>

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

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

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

                  SECTION 4.19. Confidential Information.(a) The Back-up
Servicer, each subservicer and any successor Servicer shall hold in confidence
all Confidential Information in accordance with the Federal Financial Privacy
Law and, to the extent more exacting, its then customary procedures; provided
that nothing herein shall prevent the Back-up Servicer, any subservicer or any
successor Servicer from delivering copies of any financial statements and other
documents whether or not constituting Confidential Information, and disclosing
other information, whether or not Confidential Information, to (i) its
directors, officers, employees, agents and professional consultants to the
extent necessary to carry on the Back-up Servicer's, such subservicer's or such
successor Servicer's business, as applicable, in the ordinary course, (ii) any
Noteholder or the Note Insurer to the extent that such Noteholder or the Note
Insurer is entitled to such information under this Agreement or any other Basic
Document, but not otherwise, (iii) any governmental authority which specifically
requests (or as to which applicable regulations require) such information, (iv)
any nationally recognized rating agency in connection with the rating of the
Notes by such agency, or (v) any other Person to which such delivery or
disclosure may be necessary or appropriate (a) in compliance with any applicable
law, rule, regulation or order, (b) in response to any subpoena or other legal
process, (c) in connection with any litigation to which the Back-up Servicer,
such subservicer or such successor Servicer, as applicable, is a party, (d) in
order to enforce the rights of the Noteholders, the Certificateholder and the
Note Insurer hereunder or under any other Basic Document, or (e) otherwise, in
accordance with the Federal Financial Privacy Law; provided, that, prior to any
such disclosure, the Back-up Servicer, such subservicer or such successor
Servicer, as applicable, shall inform each such party (other than any
Noteholder, the Note Insurer or any other party to the Basic

                                       22
<PAGE>

Documents) that receives Confidential Information of the foregoing requirements
and shall use its commercially reasonable best efforts to cause such party to
comply with such requirements.

                                    ARTICLE V
                               ACCOUNTS; PAYMENTS;
                            STATEMENTS TO NOTEHOLDERS

                  SECTION 5.1. Accounts; Lock-Box Account.

          (a) The Servicer has established the Lock-Box Account as two Eligible
Accounts, one established with Bank of America National Trust and Savings
Association entitled "Long Beach Acceptance Corp., JPMorgan Chase, Agent
Account--Auto Loan Programs," account number 1457202900, and one established
with JPMorgan Chase entitled "Long Beach Acceptance Corp., JPMorgan Chase, Agent
Account -- Auto Loan Programs," account number 530097095; provided, that the
Servicer, with the prior written consent of the Note Insurer, may from time to
time (a) establish additional or substitute Lock-Box Accounts, each of which
shall be an Eligible Account, and (b) close or terminate the use of any of the
aforementioned accounts or any subsequently established accounts, each of which
accounts, at such time, shall no longer be deemed to be a Lock-Box Account;
provided, further, that pursuant to the Lock-Box Agreement, the Lock-Box
Processor and no other person, save the Trust Collateral Agent or the Servicer,
has authority to direct disposition of funds related to the Receivables on
deposit in the Lock-Box Account consistent with the provisions of this Agreement
and the Lock-Box Agreement. The Trust Collateral Agent shall have no liability
or responsibility with respect to the Lock-Box Processor's or the Servicer's
directions or activities as set forth in the preceding sentence. The Lock-Box
Account shall be established pursuant to and maintained in accordance with the
Lock-Box Agreement and shall be a demand deposit account into which Obligors
will be directed to make payments due under Receivables and which shall at all
times be an Eligible Account, initially established and maintained with JPMorgan
Chase or, at the request of the Note Insurer, an Eligible Account satisfying
clause (i) of the definition thereof. The Servicer has established and shall
maintain the Lock-Box at a United States Post Office Branch. Notwithstanding the
Lock-Box Agreement or any of the provisions of this Agreement relating to the
Lock-Box and the Lock-Box Agreement, the Servicer shall remain obligated and
liable to the Trust Collateral Agent and the Noteholders for servicing and
administering the Receivables and the other Trust Assets in accordance with
provisions of this Agreement without diminution of such obligation or liability
by virtue thereof.

                  In the event the Servicer shall for any reason no longer be
acting as such, the Lock-Box Agreement shall terminate in accordance with its
terms with respect to the Receivables or, upon the occurrence and continuance of
a Servicer Termination Event, the Note Insurer may direct the Indenture Trustee
to terminate the Lock-Box Agreement with respect to the Receivables, and, in any
such case, funds on deposit in the Lock-Box Account shall be distributed by
JPMorgan Chase, as agent for the beneficial owners of funds in the Lock-Box
Account at such time (including the Issuer), and JPMorgan Chase shall deposit
any such funds relating to the Receivables to such other account as shall be
identified by the Back-up Servicer or successor Servicer for deposit therein;
provided, however, that the outgoing Servicer shall not thereby be relieved of
any liability or obligations on the part of the outgoing Servicer to the
Lock-Box Bank under such Lock-Box Agreement. The outgoing Servicer shall, upon
request of

                                       23
<PAGE>

the Trust Collateral Agent, but at the expense of the outgoing Servicer, deliver
to the successor Servicer all documents and records relating to the Lock-Box
Agreement and an accounting of amounts collected and held in the Lock-Box
Account or held by the Lock-Box Processor in respect of the Receivables and
otherwise use its best efforts to effect the orderly and efficient transfer of
any Lock-Box Agreement to the successor Servicer. In the event that the Lock-Box
Account fails at any time to qualify as an Eligible Account, the Servicer, at
its expense, shall cause the Lock-Box Bank to deliver, at the direction of the
Controlling Party to the Trust Collateral Agent or a successor Lock-Box Bank,
all documents and records relating to the Receivables and all amounts held (or
thereafter received) on deposit in the Lock Box Account or held by the Lock-Box
Processor in respect of the Receivables (together with an accounting of such
amounts) and shall otherwise use its best efforts to effect the orderly and
efficient transfer of the lock-box arrangements, and the Servicer shall promptly
notify the Obligors to make payments to any new Lock-Box.

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

                  All amounts held in the Collection Account shall be invested
by the Trust Collateral Agent at the written direction of the Transferor in
Eligible Investments in the name of the Trust Collateral Agent on behalf of the
Issuer and shall mature no later than one Business Day immediately preceding the
Payment Date next succeeding the date of such investment. In no event shall the
Trust Collateral Agent be liable for any insufficiency in the Collection Account
resulting from any investment loss in any Eligible Account. Such written
direction shall certify that any such investment is authorized by this Section.
No investment may be sold prior to its maturity. Amounts in the Note Account and
the Policy Payments Account shall not be invested. The amount of earnings on
investments of funds in the Collection Account during the Collection Period
related to each Payment Date shall be deposited into the Note Account on each
Payment Date, and shall be available for payment pursuant to Section 5.6(c).

          (c) The Trust Collateral Agent, pursuant to the Servicer's written
instruction, shall on or prior to each Payment Date (and prior to the transfer
from the Collection Account to the Note Account described in Section 5.6(a))
transfer from the Collection Account to the Servicer, as additional servicing
compensation, the amount, if any, required to be paid to the Servicer pursuant
to Section 5.12.

                  SECTION 5.2. Collections. The Servicer shall use reasonable
efforts to cause the Lock-Box Processor to transfer any payments in respect of
the Receivables from or on behalf of Obligors received in the Lock-Box to the
Lock-Box Account on the Business Day on which

                                       24
<PAGE>

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

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

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

                  SECTION 5.4. Intentionally Omitted.

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

                  SECTION 5.6. Payments; Policy Claims.

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

                                       25
<PAGE>

          (b) Prior to each Payment Date, the Servicer shall on the related
Determination Date calculate the Available Funds, the Principal Payment Amount,
the Class A Principal Payment Amount, the Class B Principal Payment Amount, the
Class A-1 Payment Amount, the Class A-1 Interest Payment Amount, the Class A-2
Payment Amount, the Class A-2 Interest Payment Amount, the Class A-3 Payment
Amount, the Class A-3 Interest Payment Amount, the Class A-4 Payment Amount, the
Class A-4 Interest Payment Amount, the Class B Interest Payment Amount, the
Monthly Dealer Participation Fee Payment Amount, the Senior Strip, the amount,
if any, required to be withdrawn from the Collection Account and paid to the
Servicer as additional servicing compensation or contributed to the Spread
Account on behalf of the Servicer, in each case pursuant to Section 5.12 and,
based on the Available Funds and the other amounts available for payment on such
Payment Date, determine the amount payable to the Noteholders.

          (c) On each Payment Date, the Trust Collateral Agent shall (x)
distribute all amounts delivered by the Note Insurer to the Trust Collateral
Agent for deposit into the Collection Account pursuant to Section 5.9 for
payment in the amounts and priority as directed by the Note Insurer, and (y)
(based on the information contained in the Servicer's Certificate delivered on
the related Determination Date pursuant to Section 4.9 upon which the Trust
Collateral Agent may conclusively rely) subject to subsection (e) hereof, make
the following payments from the Available Funds withdrawn from the Note Account
and from the other sources described below in the following order of priority:

                  (i) first, to LBAC, the Monthly Dealer Participation Fee
          Payment Amount and all unpaid Monthly Dealer Participation Fee Payment
          Amounts from prior Collection Periods, second, to the Servicer, from
          the Available Funds (as such Available Funds have been reduced by
          payments made pursuant to subclause first of this clause (i)), the
          Servicing Fee and all unpaid Servicing Fees from prior Collection
          Periods and, if the Available Funds are insufficient to pay such
          Servicing Fees from prior Collection Periods, the Servicer will
          receive such deficiency from the Deficiency Claim Amount with respect
          to such Payment Date, if any, to the extent such Deficiency Claim
          Amount is received by the Trust Collateral Agent from the Collateral
          Agent, and third, the Senior Strip (i) for application pursuant to
          clause (vi) below, with any remainder of the Senior Strip being
          deposited in the Class B Reserve Account, or (ii) if the Class B Note
          Balance has been reduced to zero and all accrued interest has been
          paid thereon, to LBAC;

                  (ii) to the Note Insurer, the Indenture Trustee, the Custodian
          and the Back-up Servicer from the Available Funds (as such Available
          Funds have been reduced by payments made pursuant to clause (i)
          above), the Premium, the Indenture Trustee Fee, the Custodian Fee and
          the Back-up Servicer Fee, respectively, and all unpaid Premiums,
          Indenture Trustee Fees, Custodian Fees and Back-up Servicer Fees from
          prior Collection Periods and, if the Available Funds are insufficient
          to pay such amounts, the Note Insurer, the Indenture Trustee, the
          Custodian and the Back-up Servicer will receive such deficiency from
          the remaining portion of the Deficiency Claim Amount with respect to
          such Payment Date, if any, to the extent such Deficiency Claim Amount
          is received by the Trust Collateral Agent from the Collateral Agent,
          after application thereof pursuant to clause (i) above;

                                       26
<PAGE>

                  (iii) to the Class A-1 Noteholders, the Class A-2 Noteholders,
          the Class A-3 Noteholders and the Class A-4 Noteholders, pro rata
          based on the Note Interest due on each such class of Notes, from the
          Available Funds (as such Available Funds have been reduced by payments
          made pursuant to clauses (i) and (ii) above), an amount equal to the
          Class A-1 Note Interest, Class A-2 Note Interest, the Class A-3 Note
          Interest and the Class A-4 Note Interest, respectively, with respect
          to such Payment Date (plus (without duplication) interest on any
          outstanding Class A-1 Interest Carryover Shortfall, Class A-2 Interest
          Carryover Shortfall, Class A-3 Interest Carryover Shortfall or Class
          A-4 Interest Carryover Shortfall, if any, to the extent permitted by
          applicable law, at the Class A-1 Note Rate, the Class A-2 Note Rate,
          the Class A-3 Note Rate or the Class A-4 Note Rate, as applicable, for
          the related Accrual Period (calculated (i) with respect to the Class
          A-1 Notes on each Payment Date, on the basis of the actual number of
          days elapsed during such Accrual Period based on a 360 day year (or,
          with respect to the initial Payment Date, 33 days) and (ii) with
          respect to the Class A-2 Notes, the Class A-3 Notes and the Class A-4
          Notes on each Payment Date, on the basis of a 360-day year consisting
          of twelve 30-day months (or, with respect to the initial Payment Date,
          32 days))) and, if the Available Funds are insufficient to pay such
          amounts, the Class A Noteholders will receive such deficiency from the
          following sources in the following order of priority: (A) from the
          remaining portion of the Deficiency Claim Amount with respect to such
          Payment Date, if any, to the extent such Deficiency Claim Amount is
          received by the Trust Collateral Agent from the Collateral Agent,
          after application thereof pursuant to clauses (i) and (ii) above and
          (B) from the Policy Claim Amount with respect to such Payment Date, if
          any, received by the Trust Collateral Agent from the Note Insurer;

                  (iv) from the Available Funds (as such Available Funds have
          been reduced by payments made pursuant to clauses (i) through (iii)
          above), first, to the Class A-1 Noteholders, until the Class A-1 Note
          Balance has been reduced to zero, an amount equal to the sum of the
          Principal Payment Amount with respect to such Payment Date and any
          Principal Carryover Shortfall as of the close of business on the
          preceding Payment Date, second, to the Class A-2 Noteholders, after
          the Class A-1 Note Balance has been reduced to zero, an amount equal
          to the sum of the remaining Principal Payment Amount with respect to
          such Payment Date, if any, and the remaining Principal Carryover
          Shortfall, if any, as of the close of business on the preceding
          Payment Date, third, to the Class A-3 Noteholders, after the Class A-1
          Note Balance and the Class A-2 Note Balance have been reduced to zero,
          an amount equal to the sum of the remaining Principal Payment Amount,
          if any, with respect to such Payment Date and the remaining Principal
          Carryover Shortfall, if any, as of the close of business on the
          preceding Payment Date, and fourth, to the Class A-4 Noteholders,
          after the Class A-1 Note Balance, the Class A-2 Note Balance and the
          Class A-3 Note Balance have been reduced to zero, an amount equal to
          the sum of the remaining Principal Payment Amount, if any, with
          respect to such Payment Date and the remaining Principal Carryover
          Shortfall, if any, as of the close of business on the preceding
          Payment Date and, if the Available Funds are insufficient to pay such
          amounts, the Class A Noteholders will receive such deficiency from the
          following sources in the following order of priority: (A) from the
          remaining portion of the Deficiency Claim Amount with respect to such
          Payment Date, if any, after application thereof pursuant to clauses
          (i) through (iii) above, plus, (B) the remaining portion of the Policy
          Claim

                                       27
<PAGE>

          Amount with respect to such Payment Date, if any, after application
          thereof pursuant to clause (iii) above;

                  (v) first, to the Note Insurer, from the Available Funds (as
          such Available Funds have been reduced by payments made pursuant to
          clauses (i) through (iv) above), an amount equal to the Reimbursement
          Obligations and, if the Available Funds are insufficient to pay such
          Reimbursement Obligations, the Note Insurer shall receive such
          deficiency from the remaining portion of the Deficiency Claim Amount
          with respect to such Payment Date, if any, to the extent received by
          the Trust Collateral Agent from the Collateral Agent, after
          application thereof pursuant to clauses (i) through (iv) above,
          second, to the Trust Collateral Agent, the Indenture Trustee, the
          Back-up Servicer and the Custodian, as applicable, from the Available
          Funds (as such Available Funds have been reduced by payments made
          pursuant to clauses (i) through (iv) above and subclause first of this
          clause (v)), all reasonable out-of-pocket expenses of the Trust
          Collateral Agent, the Indenture Trustee, the Back-up Servicer and the
          Custodian (including reasonable counsel fees and expenses), including,
          without limitation, costs and expenses required to be paid by the
          Servicer to the Back-up Servicer under Section 9.2(a), to the extent
          not paid by the Servicer, and all unpaid reasonable out-of-pocket
          expenses of the Trust Collateral Agent, the Indenture Trustee, the
          Back-up Servicer and the Custodian (including reasonable counsel fees
          and expenses) from prior Collection Periods; provided, however, that
          unless an Event of Default shall have occurred and be continuing,
          expenses payable to the Trust Collateral Agent, the Indenture Trustee,
          the Back-up Servicer and the Custodian pursuant to this subclause
          second of clause (v) shall be limited to a combined aggregate amount
          of $50,000 per annum, and third to the Back-up Servicer, from the
          Available Funds (as such Available Funds have been reduced by payments
          made pursuant to clauses (i) through (iv) above and subclauses first
          and second of this clause (v)), in the event that the Back-up Servicer
          shall have assumed the obligations of Servicer pursuant to Section
          9.2(a) and the Servicer fails to pay the Back-up Servicer for system
          conversion expenses as required by said section, an aggregate amount
          not to exceed $100,000 in payment of such system conversion expenses;
          and

                  (vi) to the Class B Noteholders, from the Available Funds (as
          such Available Funds have been reduced by payments made pursuant to
          clauses (i) through (v) above) and the Senior Strip, an amount equal
          to the Class B Interest Payment Amount with respect to such Payment
          Date (plus (without duplication) interest on any outstanding Class B
          Interest Carryover Shortfall for the related Accrual Period
          (calculated on the basis of a 360-day year consisting of twelve 30-day
          months (or, with respect to the initial Payment Date, 32 days))) and,
          if the Senior Strip and remaining Available Funds are insufficient to
          pay such amounts, the Class B Noteholders will receive such deficiency
          from the Class B Reserve Account Draw;

                  (vii) to the Collateral Agent, for deposit in the Spread
          Account, the remaining Available Funds (as such Available Funds have
          been reduced by payments pursuant to clauses (i) through (vi) above),
          if any, for application in accordance with provisions of the Spread
          Account Agreement.

                                       28
<PAGE>

          (d) In addition, on each Payment Date, after giving effect to the
payments specified in clauses (i) through (vii) of Section 5.6(c), the Trust
Collateral Agent (based on the information contained in the Servicer's
Certificate delivered on the related Determination Date pursuant to Section 4.9
upon which the Trust Collateral Agent may conclusively rely) shall pay the
following amounts, from the following sources and in the following order of
priority:

                  (i) to the Collateral Agent for deposit in the Class B Reserve
          Account, from amounts on deposit in the Spread Account, the Current
          Spread Account Release Amount with respect to such Payment Date, if
          any;

                  (ii) to the Class B Noteholders, until the Class B Note
          Balance has been reduced to zero, from the remaining Class B Reserve
          Account Release Amount after reduction thereof pursuant to Section
          5.6(c)(vi), if any, with respect to such Payment Date, an amount equal
          to the Class B Principal Payment Amount with respect to such Payment
          Date; and

                  (iii) to the Certificateholder, the remaining Class B Reserve
          Account Release Amount (after making the payment required pursuant to
          clause (ii) above), if any.

          (e) Each Noteholder, by its acceptance of its Note, will be deemed to
have consented to the provisions of Sections 5.6(c) and 5.6(d) relating to the
priority of payments, and will be further deemed to have acknowledged that no
property rights in any amount or the proceeds of any such amount shall vest in
such Noteholder until such amounts have been distributed to such Noteholder
pursuant to such provisions; provided, that the foregoing shall not restrict the
right of any Noteholder, upon compliance with the provisions hereof from seeking
to compel the performance of the provisions hereof by the parties hereto. Each
Noteholder, by its acceptance of its Note, will be deemed to have further agreed
that withdrawals of funds by the Collateral Agent from the Spread Account for
application hereunder, shall be made in accordance with the provisions of the
Spread Account Agreement.

          (f) In furtherance of and not in limitation of the foregoing, each
Class B Noteholder by its acceptance of a Class B Note, specifically
acknowledges that (A) interest pursuant to clause (vi) of Section 5.6(c) will be
subordinated to the prior payment in full of all amounts payable pursuant to
clauses (i) through (v) of Section 5.6(c) (provided, that such Class B Note
Interest may be paid on each Payment Date using the Senior Strip and, if the
Senior Strip is insufficient, from amounts on deposit in the Class B Reserve
Account, if any, on each Payment Date) and (B) no amounts shall be applied as
principal on the Class B Notes, unless and until such amounts have been
distributed pursuant to Section 5.6(d)(ii) above for payment to such Class B
Noteholder.

                  In furtherance of and not in limitation of the foregoing, the
Certificateholder by acceptance of the Certificate, specifically acknowledges
that no amounts shall be received by it, nor shall it have any right to receive
any amounts, unless and until such amounts have been distributed pursuant to
Section 5.6(d) above for payment to the Certificateholder. Each Class B
Noteholder, by its acceptance of a Class B Note, and the Certificateholder, by
its acceptance of the Certificate, further specifically acknowledges that it has
no right to or interest in any moneys

                                       29
<PAGE>

at any time held pursuant to the Spread Account Agreement prior to the release
of such moneys as aforesaid, such moneys being held in trust for the benefit of
the Class A Noteholders and the Note Insurer as their interests may appear prior
to such release.

          (g) Notwithstanding the foregoing, in the event that it is ever
determined that any property held in the Spread Account constitute a pledge of
collateral, then the provisions of this Agreement and the Spread Account
Agreement shall be considered to constitute a security agreement and the
Transferor and the Certificateholder hereby grant to the Collateral Agent and to
the Trust Collateral Agent, respectively, a first priority perfected security
interest in such amounts, to be applied as set forth in Section 3.03(b) of the
Spread Account Agreement. In addition, the Certificateholder, by acceptance of
its Certificate, hereby appoints the Transferor as its agent to pledge a first
priority perfected security interest in the Spread Account, and any property
held therein from time to time to the Collateral Agent for the benefit of the
Trust Collateral Agent and the Note Insurer pursuant to the Spread Account
Agreement and agrees to execute and deliver such instruments of conveyance,
assignment, grant, confirmation, etc., as well as any financing statements, in
each case as the Note Insurer shall consider reasonably necessary in order to
perfect the Collateral Agent's Security Interest in the Collateral (as such
terms are defined in the Spread Account Agreement).

          (h) Subject to Section 11.1 respecting the final payment upon
retirement of each Note, the Servicer shall on each Payment Date instruct the
Trust Collateral Agent to distribute to each Noteholder of record on the
preceding Record Date either (i) by wire transfer, in immediately available
funds to the account of such Holder at a bank or other entity having appropriate
facilities therefor, if such Noteholder is the Clearing Agency or such Holder's
Notes in the aggregate evidence an original Note Balance of at least $1,000,000,
and if such Noteholder shall have provided to the Trust Collateral Agent
appropriate instructions prior to the Record Date for such Payment Date, or (ii)
by check mailed to such Noteholder at the address of such Holder appearing in
the Note Register, such Holder's pro rata share (based on the outstanding Note
Balance) of the Class A-1 Payment Amount, the Class A-2 Payment Amount, the
Class A-3 Payment Amount, the Class A-4 Payment Amount or the Class B Payment
Amount, as applicable, to be paid to such Class of Notes in accordance with the
Servicer's Certificate.

                  SECTION 5.7. Statements to Noteholders; Tax Returns.

          (a) With each payment from the Note Account to the Noteholders made on
a Payment Date, the Servicer shall provide to the Note Insurer, the Transferor,
the Indenture Trustee, each Rating Agency and the Trust Collateral Agent (the
Trust Collateral Agent to forward to each Noteholder of record) the Servicer's
Certificate substantially in the form of Exhibit B-1 hereto, setting forth,
among at least the following information as to the Notes, to the extent
applicable:

                  (i) the amount of the payment allocable to principal of the
          Class A-1 Notes, the Class A-2 Notes, the Class A-3 Notes, the Class
          A-4 Notes and the Class B Notes, respectively, and in the aggregate
          with respect to all classes of Notes;

                                       30
<PAGE>

                  (ii) the amount of the payment allocable to interest on the
          Class A-1 Notes, the Class A-2 Notes, the Class A-3 Notes, the Class
          A-4 Notes and the Class B Notes, respectively, and in the aggregate
          with respect to all classes of Notes;

                  (iii) the number of Receivables, the weighted average APR of
          the Receivables, the weighted average maturity of the Receivables, the
          Pool Balance, the Class A-1 Pool Factor, the Class A-2 Pool Factor,
          the Class A-3 Pool Factor , the Class A-4 Pool Factor and the Class B
          Pool Factor as of the close of business on the last day of the
          preceding Collection Period;

                  (iv) the Class A-1 Note Balance, the Class A-2 Note Balance,
          the Class A-3 Note Balance, the Class A-4 Note Balance, the Class B
          Note Balance and the Note Balance as of the close of business on the
          last day of the preceding Collection Period, after giving effect to
          payments allocated to principal reported under clause (i) above;

                  (v) the amount of the Monthly Dealer Participation Fee Payment
          Amount paid to LBAC, the amount of the Senior Strip with respect to
          such Payment Date, the amount of the Servicing Fee paid to the
          Servicer and the amount of the Back-up Servicer Fee paid to the
          Back-up Servicer with respect to the related Collection Period, the
          amount of any unpaid Servicing Fees and any unpaid Back-up Servicer
          Fees and the change in such amounts from the prior Payment Date;

                  (vi) the amount of the Class A-1 Interest Carryover Shortfall,
          if applicable, the Class A-2 Interest Carryover Shortfall, if
          applicable, the Class A-3 Interest Carryover Shortfall, if applicable,
          the Class A-4 Interest Carryover Shortfall, if applicable, the Class B
          Interest Carryover Shortfall, if applicable, and the Class A Principal
          Carryover Shortfall, if applicable, on such Payment Date and the
          change in such amounts from the prior Payment Date;

                  (vii) the amount paid, if any, to the Class A Noteholders
          under the Policy for such Payment Date;

                  (viii) the amount paid to the Note Insurer on such Payment
          Date in respect of Premium and Reimbursement Obligations;

                  (ix) the amount in the Spread Account;

                  (x) the amount in the Class B Reserve Account;

                  (xi) the number of Receivables and the aggregate outstanding
          principal amount scheduled to be paid thereon, for which the related
          Obligors are delinquent in making Scheduled Receivable Payments
          between 30 and 59 days, 60 and 89 days, 90 and 119 days and 120 days
          or more (in each case calculated on the basis of a 360-day year
          consisting of twelve 30-day months), and the percentage of the
          aggregate principal amount which such delinquencies represent;

                                       31
<PAGE>

                  (xii) the number and the aggregate Purchase Amount of
          Receivables repurchased by the Originator or purchased by the Servicer
          during the related Collection Period;

                  (xiii) the cumulative number and amount of Liquidated
          Receivables (including the cumulative number and amount of Sold
          Receivables), the cumulative amount of any Liquidation Proceeds and
          Recoveries, since the Cutoff Date to the last day of the related
          Collection Period, the number and amount of Liquidated Receivables for
          the related Collection Period and the amount of Recoveries in the
          related Collection Period;

                  (xiv) the Average Delinquency Ratio, the Cumulative Default
          Rate and the Cumulative Loss Rate (as such terms are defined in the
          Spread Account Agreement) for such Payment Date;

                  (xv) whether any Trigger Event has occurred as of such
          Determination Date;

                  (xvi) whether any Trigger Event that may have occurred as of a
          prior Determination Date is Deemed Cured (as such term is defined in
          the Spread Account Agreement) or otherwise waived as of such
          Determination Date;

                  (xvii) whether an Insurance Agreement Event of Default has
          occurred; and

                  (xviii) the number and amount of Cram Down Losses, the number
          and dollar amount of repossessions, the aging of repossession
          inventory and the dollar amount of Recoveries.

                  Each amount set forth pursuant to subclauses (i), (ii), (iv)
and (vi) above shall be expressed in the aggregate and as a dollar amount per
$1,000 of original principal balance of a Note.

          (b) No later than January 31 of each calendar year, commencing January
31, 2004, the Servicer shall send to the Indenture Trustee and the Trust
Collateral Agent, and the Trust Collateral Agent shall, provided it has received
the necessary information from the Servicer, promptly thereafter furnish to each
Person who at any time during the preceding calendar year was a Noteholder of
record and received any payment thereon (a) a report (prepared by the Servicer)
as to the aggregate of amounts reported pursuant to subclauses (i), (ii), (v)
and (vi) of Section 5.7(a) for such preceding calendar year or applicable
portion thereof during which such person was a Noteholder, and (b) such
information as may be reasonably requested by the Noteholders or required by the
Code and regulations thereunder, to enable such Holders to prepare their Federal
and State income tax returns. The obligation of the Trust Collateral Agent set
forth in this paragraph shall be deemed to have been satisfied to the extent
that substantially comparable information shall be provided by the Servicer
pursuant to any requirements of the Code.

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

                                       32
<PAGE>

Collateral Agent as may be reasonably requested by the Servicer in connection
with the preparation of all tax returns of the Issuer.

                  SECTION 5.8. Reliance on Information from the Servicer.
Notwithstanding anything to the contrary contained in this Agreement, all
payments from any of the accounts described in this Article V and any transfer
of amounts between such accounts shall be made by the Trust Collateral Agent
based on the information provided to the Trust Collateral Agent by the Servicer
in writing, whether by way of a Servicer's Certificate or otherwise (upon which
the Trust Collateral Agent may conclusively rely).

                  SECTION 5.9. Optional Deposits by the Note Insurer. The Note
Insurer shall at any time, and from time to time, with respect to a Payment
Date, have the option to deliver amounts to the Trust Collateral Agent for
deposit into the Collection Account for any of the following purposes: (i) to
provide funds in respect of the payment of fees or expenses of any provider of
services to the Issuer with respect to such Payment Date, (ii) to distribute as
a component of the Principal Payment Amount to the extent that the Note Balance
as of the Determination Date preceding such Payment Date exceeds the Pool
Balance as of such Determination Date or (iii) to include such amount as part of
the Payment Amount for such Payment Date to the extent that without such amount
a draw would be required to be made on the Policy.

                  SECTION 5.10. Spread Account. The Transferor agrees,
simultaneously with the execution and delivery of this Agreement, to execute and
deliver the Spread Account Agreement and, pursuant to the terms thereof, to
deposit the Initial Spread Account Deposit in the Spread Account on the Closing
Date. Although the Transferor as Certificateholder, has pledged the Spread
Account to the Collateral Agent, pursuant to the Spread Account Agreement, the
Spread Account shall not under any circumstances be deemed to be a part of or
otherwise includible in the Issuer or the Trust Assets.

                  SECTION 5.11. Withdrawals from Spread Account.

          (a) In the event that the Servicer's Certificate with respect to any
Determination Date shall state that the amount of the Available Funds with
respect to such Determination Date are less than the sum of the amounts payable
on the related Payment Date pursuant to clauses (i) through (iv) and subclause
first of clause (v) of Section 5.6(c) (such deficiency being a "Deficiency Claim
Amount") then on the Deficiency Claim Date immediately preceding such Payment
Date, the Trust Collateral Agent shall deliver to the Collateral Agent, the Note
Insurer, the Fiscal Agent (as such term is defined in the Insurance Agreement),
if any, the Servicer, by hand delivery, telex or facsimile transmission, a
written notice (a "Deficiency Notice") specifying the Deficiency Claim Amount
for such Payment Date. Such Deficiency Notice shall direct the Collateral Agent
to remit such Deficiency Claim Amount (to the extent of the funds available to
be distributed pursuant to the Spread Account Agreement) to the Trust Collateral
Agent for deposit in the Collection Account.

                  Any Deficiency Notice shall be delivered by 10:00 a.m., New
York City time, on the related Deficiency Claim Date. The amounts distributed by
the Collateral Agent to the Trust

                                       33
<PAGE>

Collateral Agent pursuant to a Deficiency Notice shall be deposited by the Trust
Collateral Agent into the Collection Account pursuant to Section 5.5.

                  SECTION 5.12. Simple Interest. On each Determination Date, the
Servicer shall determine the amount, if any, of any Simple Interest Shortfall or
Simple Interest Excess for the related Collection Period. If the Servicer
determines that there is a Simple Interest Shortfall for such related Collection
Period, the Servicer shall make an advance (a "Simple Interest Advance") in the
amount of such Simple Interest Shortfall and deposit such Simple Interest
Advance into the Collection Account on or before the Business Day immediately
preceding the next succeeding Payment Date. If, however, the Servicer determines
that there is a Simple Interest Excess for such Collection Period, the Trust
Collateral Agent shall withdraw the amount of such Simple Interest Excess from
the Collection Account on the next Payment Date and pay the amount of such
Simple Interest Excess to the Servicer as additional servicing compensation.
Notwithstanding the immediately preceding sentence, to the extent that the
aggregate amount of Simple Interest Advances made by the Servicer with respect
to all prior Collection Periods does not exceed the aggregate amount of all
Simple Interest Excesses with respect to such prior Collection Periods, such
excess shall be deposited pursuant to Section 5.6(b) into the Spread Account and
shall be treated as a contribution to the Spread Account by the Servicer for the
benefit of the Certificateholder for federal income tax purposes. All references
in this Section 5.12 to the Servicer shall be deemed to refer to the Servicer
only so long as LBAC is acting in such capacity hereunder.

                  SECTION 5.13. Class B Reserve Account. In order to effectuate
the subordination provided for herein and to enhance the amounts available to
make required payments to the Class B Noteholders, there shall be established
and maintained with the Trust Collateral Agent an Eligible Account entitled,
"Class B Reserve Account--Long Beach Acceptance Auto Receivables Trust 2003-A",
which will include the money and other property deposited and held therein
pursuant to Section 5.6(c)(i), Section 5.6(d)(i) and this Section 5.13.

          (a) On the Closing Date, the Transferor shall deposit the Class B
Reserve Account Deposit into the Class B Reserve Account.

          (b) The amounts on deposit in the Class B Reserve Account shall be
available for payment in accordance with and subject to Section 5.6(d). Upon
termination of this Agreement and the Class B Noteholders having been paid all
amounts due under this Agreement, any remaining amounts in the Class B Reserve
Account will be distributed to the Certificateholder. Upon any such payment to
the Certificateholder, the Class B Noteholders shall not have any further rights
in, or claims to, such amounts.

          (c) Amounts held in the Class B Reserve Account shall be invested in
Eligible Investments which shall mature no later than the Business Day
immediately preceding the next Payment Date in accordance with written
instructions from the Transferor and such investments shall not be sold or
disposed of prior to their maturity. All income and gain recognition on such
investments shall be solely for the benefit of the Certificateholder. In no
event shall the Trust Collateral Agent be liable for any insufficiencies therein
resulting from an investment loss in any Eligible Investment.

                                       34
<PAGE>

          (d) If on any Payment Date (based on the Servicer's Certificate
delivered on the related Determination Date by the Servicer pursuant to Section
4.9, upon which the Trust Collateral Agent may conclusively rely) the Available
Funds, together with the Senior Strip, are insufficient to pay the full amount
described in clause (vi) of Section 5.6(c), the Trust Collateral Agent shall
withdraw the Class B Reserve Account Draw from the Class B Reserve Account equal
to such insufficiency and deliver the amount so withdrawn to the Trust
Collateral Agent for deposit in the Note Account for application in respect of
such insufficiency. In addition, if on the Class B Final Scheduled Payment Date,
the Available Funds, together with the Senior Strip, are insufficient to retire
the Class B Notes, the Trust Collateral Agent shall withdraw the Class B Reserve
Account Draw from the Class B Reserve Account for deposit in the Note Account
for application in respect of such insufficiency.

                  SECTION 5.14. Securities Accounts. The Trust Collateral Agent
acknowledges that any account held by it hereunder is a "securities account" as
defined in the Uniform Commercial Code as in effect in New York (the "New York
UCC"), and that it shall be acting as a "securities intermediary" of the
Indenture Trustee with respect to each such account held by it. The Trust
Collateral Agent acknowledges and agrees that (a) each item of property (whether
investment property, financial asset, security, instrument or cash) credited to
the Class B Reserve Account shall be treated as a "financial asset" within the
meaning of Section 8-102(a)(9) of the New York UCC and (b) if at any time the
Trust Collateral Agent shall receive any entitlement order from the Indenture
Trustee directing transfer or redemption of any financial asset relating to the
Class B Reserve Account, the Trust Collateral Agent shall comply with such
entitlement order without further consent by LBAC or any other person.

                                   ARTICLE VI
                                   THE POLICY

                  SECTION 6.1. Policy. The Originator agrees, simultaneously
with the execution and delivery of this Agreement, to cause the Note Insurer to
issue the Policy for the benefit of the Class A Noteholders in accordance with
the terms thereof.

                  SECTION 6.2. Claims Under Policy.

          (a) In the event that the Trust Collateral Agent has delivered a
Deficiency Notice with respect to any Determination Date, the Trust Collateral
Agent shall determine on the related Draw Date whether the sum of (i) the amount
of Available Funds, net of the Senior Strip, with respect to such Determination
Date (as stated in the Servicer's Certificate with respect to such Determination
Date) plus (ii) the amount of the Deficiency Claim Amount, if any, available to
be distributed pursuant to the Spread Account Agreement by the Collateral Agent
to the Trust Collateral Agent pursuant to a Deficiency Notice delivered with
respect to such Payment Date (as stated in the certificate delivered on the
immediately preceding Deficiency Claim Date by the Collateral Agent pursuant to
Section 3.03(a) of the Spread Account Agreement) would be insufficient, after
giving effect to the payments required by Section 5.6(c)(i) and (ii), to pay the
Insured Payments for the related Payment Date, then in such event the Trust
Collateral Agent shall furnish to the Note Insurer no later than 12:00 noon New
York City time on the related Draw Date a completed Notice of Claim in the
amount of the shortfall in amounts so available to pay the Insured Payments with
respect to such Payment Date (the amount of any such shortfall

                                       35
<PAGE>

being hereinafter referred to as the "Policy Claim Amount"). Amounts paid by the
Note Insurer under the Policy shall be deposited by the Trust Collateral Agent
into the Policy Payments Account and thereafter into the Note Account for
payment to Class A Noteholders on the related Payment Date (or promptly
following payment on a later date as set forth in the Policy).

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

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

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

                  SECTION 6.3. Preference Claims; Direction of Proceedings.

          (a) In the event that the Trust Collateral Agent has received a
certified copy of an order of the appropriate court that any Insured Payment
paid on a Class A Note has been avoided in whole or in part as a preference
payment under applicable bankruptcy law, the Trust Collateral Agent shall so
notify the Note Insurer, shall comply with the provisions of the Policy to
obtain payment by the Note Insurer of such avoided payment, and shall, at the
time it provides notice to

                                       36
<PAGE>

the Note Insurer, comply with the provisions of the Policy to obtain payment by
the Note Insurer, notify Holders of the Class A Notes by mail that, in the event
that any Class A Noteholder's payment is so recoverable, such Class A Noteholder
will be entitled to payment pursuant to the terms of the Policy. Pursuant to the
terms of the Policy, the Note Insurer will make such payment on behalf of the
Class A Noteholder to the receiver, conservator, debtor-in-possession or trustee
in bankruptcy named in the Order (as defined in the Policy) and not to the Trust
Collateral Agent or any Class A Noteholder directly (unless a Class A Noteholder
has previously paid such payment to the receiver, conservator,
debtor-in-possession or trustee in bankruptcy, in which case the Note Insurer
will make such payment to the Trust Collateral Agent for payment, in accordance
with the instructions to be provided by the Note Insurer, to such Class A
Noteholder upon proof of such payment reasonably satisfactory to the Note
Insurer).

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

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

                                   ARTICLE VII
                                 THE TRANSFEROR

                  SECTION 7.1. Representations of the Transferor. The Transferor
makes the following representations on which the Note Insurer shall be deemed to
have relied in executing and delivering the Policy and on which the Issuer is
deemed to have relied in acquiring the Receivables and on which the Indenture
Trustee, the Owner Trustee, the Collateral Agent, Trust Collateral Agent and
Back-up Servicer may rely. The representations speak as of the execution

                                       37
<PAGE>

and delivery of this Agreement and as of the Closing Date and shall survive the
conveyance of the Receivables to the Issuer and the subsequent pledge thereof to
the Indenture Trustee pursuant to the Indenture.

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

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

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

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

          (e) No Violation. The execution, delivery and performance by the
Transferor of this Agreement and the other Basic Documents to which the
Transferor is a party and the consummation of the transactions contemplated
hereby and thereby and the fulfillment of the terms hereof and thereof do not
conflict with, result in any breach of any of the terms and provisions of, nor
constitute (with or without notice or lapse of time) a default under, the
certificate of incorporation or by-laws of the Transferor, or any material
indenture, agreement, mortgage, deed of trust, or other instrument to which the
Transferor is a party or by which it is bound or any of its properties are
subject; nor result in the creation or imposition of any material lien upon any
of its properties pursuant to the terms of any such indenture, agreement,
mortgage, deed of trust, or other instrument (other than the Basic Documents and
the Credit and Security Agreement); nor violate any law, order, rule, or
regulation applicable to the Transferor of any

                                       38
<PAGE>

court or of any Federal or State regulatory body, administrative agency, or
other governmental instrumentality having jurisdiction over the Transferor or
its properties.

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

          (g) No Consents. No consent, approval, authorization or order of or
declaration or filing with any governmental authority is required to be obtained
by the Transferor for the issuance or sale of the Notes or the consummation of
the other transactions contemplated by this Agreement and the other Basic
Documents to which the Transferor is a party, except such as have been duly made
or obtained or where the failure to obtain such consent, approval,
authorization, order or declaration, or to make such filing, would not have a
material adverse effect on the ability of the Transferor to perform its
obligation under the Basic Documents to which it is a party and would not have a
material adverse effect on any Receivable or the interest therein of the Issuer,
the Noteholders or the Note Insurer.

          (h) Chief Executive Office. The Transferor hereby represents and
warrants to the Trust Collateral Agent that the Transferor's principal place of
business and chief executive office is, and for the four months preceding the
date of this Agreement, has been, located at One Mack Centre Drive, Paramus, New
Jersey 07652.

          (i) Transferor's Intention. The Receivables and other Transferred
Property are being transferred with the intention of removing them from the
Transferor's estate pursuant to Section 541 of the United States Bankruptcy
Code, as the same may be amended from time to time.

                  SECTION 7.2. Liability of the Transferor. The Transferor shall
be liable only to the extent of the obligations specifically undertaken by the
Transferor under this Agreement and the representations made by the Transferor
in this Agreement.

                  SECTION 7.3. Merger or Consolidation of, or Assumption of the
Obligations of, the Transferor. Any Person (a) into which the Transferor may be
merged or consolidated, (b) which may result from any merger or consolidation to
which the Transferor shall be a party or (c) which may succeed to the properties
and assets of the Transferor substantially as a whole, which person in any of
the foregoing cases executes an agreement of assumption to perform every
obligation of the Transferor under this Agreement, shall be the successor to the
Transferor hereunder without the execution or filing of any document or any
further act by any of the parties to this Agreement; provided, however, as a
condition to the consummation of any of the

                                       39
<PAGE>

transactions referred to in clauses (a), (b) or (c) above, (i) immediately after
giving effect to such transaction, (x) no representation or warranty made
pursuant to Section 7.1 would have been breached (for purposes hereof, such
representations and warranties shall speak as of the date of the consummation of
such transaction) and (y) no event that, after notice or lapse of time, or both,
would become a Servicer Termination Event shall have happened and be continuing,
(ii) the Transferor shall have delivered to the Note Insurer, the Indenture
Trustee, the Trust Collateral Agent and the Issuer an Officer's Certificate and
an Opinion of Counsel each stating that such consolidation, merger, or
succession and such agreement or assumption comply with this Section 7.3 and
that all conditions precedent, if any, provided for in this Agreement relating
to such transaction have been complied with, (iii) the Transferor shall have
delivered to the Note Insurer, the Indenture Trustee, the Trust Collateral Agent
and the Issuer an Opinion of Counsel either (A) stating that, in the opinion of
such counsel, all financing statements and continuation statements and
amendments thereto have been executed and filed that are necessary fully to
preserve and protect the interest of the Issuer in the Receivables, and reciting
the details of such filings, or (B) stating that, in the opinion of such
counsel, no such action shall be necessary to preserve and protect such
interest, (iv) immediately after giving effect to such transaction, no Insurance
Agreement Event of Default and no event that, after notice or lapse of time, or
both, would become an Insurance Agreement Event of Default shall have happened
and be continuing, (v) the organizational documents of the Person surviving or
resulting from such transaction shall contain provisions similar to those of the
Transferor's certificate of incorporation in respect of the issuance of debt,
independent directors and bankruptcy remoteness and (vi) the Transferor shall
have received confirmation from each Rating Agency that the then current rating
of the Notes will not be downgraded as a result of such merger, consolidation or
succession. A copy of such confirmation shall be provided to the Trust
Collateral Agent. Notwithstanding anything herein to the contrary, the execution
of the foregoing agreement of assumption and compliance with clause (i), (ii),
(iii) or (iv) above shall be conditions to the consummation of the transactions
referred to in clause (a), (b) or (c) above.

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

                  SECTION 7.5. Transferor May Own Notes. The Transferor and any
Person controlling, controlled by, or under common control with the Transferor
may in its individual or any other capacity become the owner or pledgee of Notes
with the same rights as it would have if it were not the Transferor or an
affiliate thereof, except as otherwise provided in the definition of
"Noteholder" set forth in Annex A hereto and as specified in Section 1.4. Notes
so owned by or pledged to the Transferor or such controlling or commonly
controlled Person shall have an equal and proportionate benefit under the
provisions of this Agreement, without preference, priority, or distinction as
among all of the Notes except as otherwise provided herein or by the definition
of Noteholder.

                                       40
<PAGE>

                                  ARTICLE VIII
                                  THE SERVICER

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

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

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

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

                  (iv) Binding Obligation. This Agreement and the other Basic
          Documents to which it is a party constitute legal, valid and binding
          obligations of the Servicer enforceable in accordance with their
          respective terms except as enforceability may be limited by
          bankruptcy, insolvency, reorganization or other similar laws affecting
          the enforcement of creditors' rights generally and by equitable
          limitations on the availability of specific remedies, regardless of
          whether such enforceability is considered a proceeding in equity or at
          law.

                  (v) No Violation. The execution, delivery and performance by
          the Servicer of this Agreement and the other Basic Documents to which
          the Servicer is a party and the consummation of the transactions
          contemplated hereby and thereby and the fulfillment of the terms
          hereof and thereof do not conflict with, result in any breach of any
          of the terms and provisions of, or constitute (with or without notice
          or lapse of time) a default under, the certificate of incorporation or
          by-laws of the Servicer, or any material indenture, agreement,
          mortgage, deed of trust, or other instrument to which the Servicer is
          a party or

                                       41
<PAGE>

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

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

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

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

                  (ix) Chief Executive Office. The Servicer hereby represents
          and warrants to the Trust Collateral Agent that the Servicer's
          principal place of business and chief executive office is, and for the
          four months preceding the date of this Agreement, has been, located at
          One Mack Centre Drive, Paramus, New Jersey 07652.

                  SECTION 8.2. Indemnities of Servicer.

          (a) The Servicer shall be liable in accordance herewith only to the
extent of the obligations specifically undertaken by the Servicer under this
Agreement and the representations made by the Servicer herein.

                  (i) The Servicer shall defend, indemnify and hold harmless the
          Indenture Trustee, the Trust Collateral Agent, the Owner Trustee, the
          Collateral Agent, the Back-up Servicer, the Custodian, the Issuer, the
          Certificateholder, the Note Insurer, the Noteholders and the
          Transferor, and their respective officers, directors, agents and
          employees from and against any and all costs, expenses, losses,
          damages, claims, and

                                       42
<PAGE>

          liabilities, arising out of or resulting from the use, ownership or
          operation by the Servicer or any affiliate thereof of a Financed
          Vehicle.

                  (ii) The Servicer shall indemnify, defend and hold harmless
          the Indenture Trustee, the Trust Collateral Agent, the Owner Trustee,
          the Collateral Agent, the Back-up Servicer, the Custodian, the Issuer,
          the Note Insurer and the Transferor, and their respective officers,
          directors, agents and employees from and against any taxes (other than
          net income, gross receipts, franchise or other similar taxes) that may
          at any time be asserted against the Indenture Trustee, the Trust
          Collateral Agent, the Owner Trustee, the Collateral Agent, the Back-up
          Servicer, the Custodian, the Issuer, the Note Insurer or the
          Transferor, with respect to the transactions contemplated herein,
          including, without limitation, any sales, general corporation,
          tangible personal property, privilege, or license taxes and costs and
          expenses in defending against the same.

                  (iii) The Servicer shall indemnify, defend and hold harmless
          the Indenture Trustee, the Trust Collateral Agent, the Owner Trustee,
          the Collateral Agent, the Custodian, the Back-up Servicer, the
          Transferor, the Note Insurer, the Issuer, the Certificateholder and
          the Noteholders, and their respective officers, directors, agents and
          employees from and against any and all costs, expenses, losses,
          claims, damages and liabilities to the extent that such cost, expense,
          loss, claim, damage or liability arose out of, or was imposed upon the
          Indenture Trustee, the Trust Collateral Agent, the Owner Trustee, the
          Collateral Agent, the Back-up Servicer, the Custodian, the Issuer, the
          Transferor, the Note Insurer, the Issuer or the Noteholders, and their
          respective officers, directors, agents and employees through the
          negligence, willful misfeasance or bad faith of the Servicer in the
          performance of its duties under this Agreement or any other Basic
          Document to which it is a party or by reason of reckless disregard of
          its obligations and duties under this Agreement or any other Basic
          Document to which it is a party.

                  (iv) The Servicer shall indemnify, defend and hold harmless
          the Indenture Trustee, the Trust Collateral Agent, the Owner Trustee,
          the Collateral Agent, the Back-up Servicer, the Transferor, the
          Issuer, the Custodian, the Note Insurer and their respective officers,
          directors, agents and employees from and against all costs, expenses,
          losses, claims, damages and liabilities arising out of or incurred in
          connection with the acceptance or performance of the trusts and duties
          contained herein or in any other Basic Document to which it is a
          party, if any, except to the extent that such cost, expense, loss,
          claim, damage or liability: (a) shall be due to the willful
          misfeasance, bad faith, or negligence of the Indenture Trustee, the
          Trust Collateral Agent, the Owner Trustee, the Collateral Agent, the
          Back-up Servicer, the Transferor, the Issuer, the Custodian or the
          Note Insurer, as applicable; (b) relates to any tax other than the
          taxes with respect to which the Servicer shall be required to
          indemnify the Indenture Trustee, the Trust Collateral Agent, the Owner
          Trustee, the Collateral Agent, the Back-up Servicer, the Transferor,
          the Issuer, the Custodian or the Note Insurer; or (c) shall arise from
          the Trust Collateral Agent's breach of any of its representations or
          warranties set forth in Section 10.12.

                  (v) The Servicer shall indemnify the Owner Trustee and WTC (as
          defined in the Trust Agreement) and its officers, directors,
          successors, assigns, agents and servants

                                       43
<PAGE>

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

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

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

          (c) Indemnification under this Section 8.2 shall survive the
termination of this Agreement and any resignation or removal of LBAC as Servicer
and shall include reasonable fees and expenses of counsel and expenses of
litigation. If the Servicer shall have made any indemnity payments pursuant to
this Section 8.2 and the recipient thereafter collects any of such amounts from
others, the recipient shall promptly repay such amounts to the Servicer, without
interest.

          (d) In no event shall the Servicer be liable under this Agreement to
any Person for the acts or omissions of any successor Servicer, nor shall any
successor Servicer be liable under this Agreement to any Person for any acts or
omissions of a predecessor Servicer.

                  SECTION 8.3. Merger or Consolidation of, or Assumption of the
Obligations of, Servicer or Back-up Servicer.

                                       44
<PAGE>

          (a) The Servicer shall not merge or consolidate with any other Person,
convey, transfer or lease substantially all its assets as an entirety to another
Person, or permit any other Person to become the successor to the Servicer's
business unless, after the merger, consolidation, conveyance, transfer, lease or
succession, the successor or surviving entity shall be an Eligible Servicer and
shall be capable of fulfilling the duties of the Servicer contained in this
Agreement and the other Basic Documents to which the Servicer is a party. Any
Person (a) into which the Servicer may be merged or consolidated, (b) which may
result from any merger or consolidation to which the Servicer shall be a party,
(c) which may succeed to the properties and assets of the Servicer substantially
as a whole or (d) or succeeding to the business of the Servicer shall execute an
agreement of assumption to perform every obligation of the Servicer hereunder,
and whether or not such assumption agreement is executed, shall be the successor
to the Servicer under this Agreement without further act on the part of any of
the parties to this Agreement; provided, however, that nothing contained herein
shall be deemed to release the Servicer from any obligation hereunder; provided,
further, however, that (i) immediately after giving effect to such transaction,
no representation or warranty made pursuant to Section 8.1 hereof or made by the
Servicer in the Purchase Agreement shall have been breached (for purposes
hereof, such representations and warranties shall speak as of the date of the
consummation of such transaction), no Servicer Termination Event or Insurance
Agreement Event of Default, and no event which, after notice or lapse of time,
or both, would become a Servicer Termination Event or Insurance Agreement Event
of Default shall have occurred and be continuing, (ii) the Servicer shall have
delivered to the Indenture Trustee, the Trust Collateral Agent and the Note
Insurer an Officer's Certificate and an Opinion of Counsel in form and substance
satisfactory to the Indenture Trustee, the Trust Collateral Agent and the Note
Insurer each stating that such consolidation, merger or succession and such
agreement of assumption comply with this Section 8.3 and that all conditions
precedent provided for in this Agreement relating to such transaction have been
complied with, (iii) the Servicer shall have delivered to the Indenture Trustee,
the Trust Collateral Agent and the Note Insurer an Opinion of Counsel either (A)
stating that, in the opinion of such counsel, all financing statements and
continuation statements and amendments thereto have been executed and filed that
are necessary fully to preserve and protect the interest of the Issuer in the
Receivables and reciting the details of such filings or (B) stating that, in the
opinion of such counsel, no such action shall be necessary to preserve and
protect such interest and (iv) nothing herein shall be deemed to release the
Servicer from any obligation. The Servicer shall provide notice of any merger,
consolidation or succession pursuant to this Section 8.3(a) to the Indenture
Trustee, the Trust Collateral Agent, the Issuer, the Back-up Servicer, the
Collateral Agent, the Note Insurer, the Noteholders and each Rating Agency.
Notwithstanding anything herein to the contrary, the execution of the foregoing
agreement of assumption and compliance with clauses (i), (ii) or (iii) above
shall be conditions to the consummation of the transactions referred to in
clause (a), (b) or (c) above.

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

                                       45
<PAGE>

however, that nothing herein shall be deemed to release the Back-up Servicer
from any obligation.

                  SECTION 8.4. Limitation on Liability of Servicer and Others.

          (a) Neither the Servicer nor any of the directors or officers or
employees or agents of the Servicer shall be under any liability to the
Indenture Trustee, the Trust Collateral Agent, the Owner Trustee, the Collateral
Agent, the Back-up Servicer, the Custodian, the Issuer, the Note Insurer, the
Transferor or the Noteholders, except as provided under this Agreement, for any
action taken or for refraining from the taking of any action pursuant to this
Agreement; provided, however, that this provision shall not protect the Servicer
or any such person against any liability that would otherwise be imposed by
reason of a breach of this Agreement or willful misfeasance, bad faith, or
negligence in the performance of duties or by reason of reckless disregard of
obligations and duties under this Agreement. The Servicer and any director or
officer or employee or agent of the Servicer may rely in good faith on any
document of any kind prima facie properly executed and submitted by any Person
respecting any matters arising under this Agreement.

          (b) Except as provided in this Agreement, the Servicer shall not be
under any obligation to appear in, prosecute or defend any legal action that
shall not be incidental to its duties to service the Receivables in accordance
with this Agreement, and that in its opinion may involve it in any expense or
liability.

                  SECTION 8.5. Servicer and Back-up Servicer Not to Resign.
Subject to the provisions of Section 8.3, neither the Servicer nor the Back-up
Servicer may resign from the obligations and duties hereby imposed on it as
Servicer or Back-up Servicer, as the case may be, under this Agreement except
upon determination that by reason of a change in legal requirements the
performance of its duties under this Agreement would cause it to be in violation
of such legal requirements in a manner which would result in a material adverse
effect on the Servicer or Back-up Servicer, as the case may be, and the Note
Insurer does not elect to waive the obligations of the Servicer or Back-up
Servicer, as the case may be, to perform the duties which render it legally
unable to act or does not elect to delegate those duties to another Person.
Notice of any such determination permitting the resignation of the Servicer or
Back-up Servicer, as the case may be, shall be communicated to the Transferor,
the Indenture Trustee, the Trust Collateral Agent, the Issuer, the Note Insurer,
and each Rating Agency at the earliest practicable time (and, if such
communication is not in writing, shall be confirmed in writing at the earliest
practicable time) and any such determination by the Servicer or Back-up
Servicer, as the case may be, shall be evidenced by an Opinion of Counsel to
such effect delivered to and satisfactory to the Transferor, the Indenture
Trustee, the Trust Collateral Agent, the Issuer and the Note Insurer
concurrently with or promptly after such notice. No such resignation of the
Servicer shall become effective until a successor servicer shall have assumed
the responsibilities and obligations of LBAC in accordance with Section 9.2 and
the Servicing Assumption Agreement, if applicable. No such resignation of the

                                       46
<PAGE>

Back-up Servicer shall become effective until an entity acceptable to the Note
Insurer shall have assumed the responsibilities and obligations of the Back-up
Servicer; provided, however, that if no such entity shall have assumed such
responsibilities and obligations of the Back-up Servicer within 120 days of the
resignation of the Back-up Servicer, the Back-up Servicer may petition a court
of competent jurisdiction for the appointment of a successor to the Back-up
Servicer.

                                   ARTICLE IX

                           SERVICER TERMINATION EVENTS

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

                  (i) Any failure by the Servicer or, for so long as LBAC is the
          Servicer, the Transferor, to deliver to the Trust Collateral Agent for
          payment to Noteholders or deposit in the Spread Account any proceeds
          or payment required to be so delivered under the terms of the Notes,
          the Purchase Agreement or this Agreement (including deposits of
          Purchase Amounts) that shall continue unremedied for a period of two
          Business Days after written notice is received by the Servicer from
          the Trust Collateral Agent or the Note Insurer or after discovery of
          such failure by the Servicer (but in no event later than the five
          Business Days after the Servicer is required to make such delivery or
          deposit); or

                  (ii) The Servicer's Certificate required by Section 4.9 shall
          not have been delivered to the Trust Collateral Agent and the Note
          Insurer within one Business Day of the date such Servicer's
          Certificate is required to be delivered; or the statement required by
          Section 4.10 or the report required by Section 4.11 shall not have
          been delivered within five (5) days after the date such statement or
          report, as the case may be, is required to be delivered; or

                  (iii) Failure on the part of the Servicer to observe its
          covenants and agreements set forth in Section 8.3 or, for so long as
          LBAC is the Servicer, failure on the part of the Transferor to observe
          its covenants and agreements set forth in Section 7.3; or

                  (iv) Failure on the part of LBAC, the Servicer or, for so long
          as LBAC is the Servicer, the Transferor, as the case may be, duly to
          observe or to perform in any material respect any other covenants or
          agreements of LBAC, the Servicer or the Transferor (as the case may
          be) set forth in the Notes, the Purchase Agreement or in this
          Agreement, which failure shall continue unremedied for a period of 30
          days after the date on which written notice of such failure requiring
          the same to be remedied, shall have been given (1) to LBAC, the
          Servicer or the Transferor (as the case may be), by the Note Insurer
          or the Trust Collateral Agent, or (2) to LBAC, the Servicer or the
          Transferor (as the case may be), and to the Trust Collateral Agent and
          the Note Insurer by the Class A Noteholders evidencing not less than
          25% of the Class A Note Balance or, after the Policy Expiration Date,
          by the Class B Noteholders, evidencing not less than 25% of the Class
          B Note Balance; or

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

                                       47
<PAGE>

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

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

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

                  (viii) The occurrence of an Insurance Agreement Event of
          Default;

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<PAGE>

then, and in each and every case, so long as a Servicer Termination Event shall
not have been remedied; provided, (i) no Note Insurer Default shall have
occurred and be continuing, the Note Insurer in its sole and absolute
discretion, or (ii) if a Note Insurer Default shall have occurred and be
continuing, then either the Trust Collateral Agent or the Trust Collateral Agent
acting at the direction of the Majorityholders, by notice then given in writing
to the Servicer (and to the Trust Collateral Agent if given by the Note Insurer
or by the Noteholders) or by the Note Insurer's failure to deliver a Servicer
Extension Notice pursuant to Section 4.13, may terminate all of the rights and
obligations of the Servicer under this Agreement. The Servicer shall be entitled
to its pro rata share of the Servicing Fee for the number of days in the
Collection Period prior to the effective date of its termination. On or after
the receipt by the Servicer of such written notice, all authority and power of
the Servicer under this Agreement, whether with respect to the Notes or the
Receivables or otherwise, shall without further action, pass to and be vested in
(i) the Back-up Servicer or (ii) such successor Servicer as may be appointed
under Section 9.2; provided, however, that the successor Servicer shall have no
liability with respect to any obligation which was required to be performed by
the predecessor Servicer prior to the date the successor Servicer becomes the
Servicer or any claim of a third party (including a Noteholder) based on any
alleged action or inaction of the predecessor Servicer as Servicer; and, without
limitation, the Trust Collateral Agent is hereby authorized and empowered to
execute and deliver, on behalf of the predecessor Servicer, as attorney-in-fact
or otherwise, any and all documents and other instruments, and to do or
accomplish all other acts or things necessary or appropriate to effect the
purposes of such notice of termination, whether to complete the transfer and
endorsement of the Receivables and related documents, or otherwise. The
predecessor Servicer shall cooperate with the successor Servicer and the Trust
Collateral Agent in effecting the termination of the responsibilities and rights
of the predecessor Servicer under this Agreement, including the transfer to the
successor Servicer for administration by it of all cash amounts that shall at
the time be held or should have been held by the predecessor Servicer for
deposit, or shall thereafter be received with respect to a Receivable and the
delivery to the successor Servicer of all files and records concerning the
Receivables and a computer tape in readable form containing all information
necessary to enable the successor Servicer to service the Receivables and the
other property of the Issuer. All reasonable costs and expenses (including
attorneys' fees) incurred in connection with transferring the Receivable Files
to the successor Servicer and amending this Agreement to reflect such succession
as Servicer pursuant to this Section 9.1 shall be paid by the predecessor
Servicer upon presentation of reasonable documentation of such costs and
expenses. In addition, any successor Servicer shall be entitled to payment from
the immediate predecessor Servicer for reasonable transition expenses incurred
in connection with acting as successor Servicer, and in connection with system
conversion costs, an aggregate amount not to exceed for such conversion costs of
$100,000, and to the extent not so paid, such payment shall be made pursuant to
Section 5.6(c)(v) hereof. Upon receipt of notice of the occurrence of a Servicer
Termination Event, the Trust Collateral Agent shall give notice thereof to the
Rating Agencies, the Issuer and the Transferor. The predecessor Servicer shall
grant the Transferor, the Trust Collateral Agent, the Back-up Servicer and the
Note Insurer reasonable access to the predecessor Servicer's premises, computer
files, personnel, records and equipment at the predecessor Servicer's expense.
If requested by the Note Insurer, the Back-up Servicer or successor Servicer
shall terminate any arrangements relating to (i) the Lock-Box Account with the
Lock-Box Bank, (ii) the Lock-Box or (iii) the Lock-Box Agreement, and direct the
Obligors to make all payments under the Receivables directly to the Servicer at
the predecessor Servicer's expense (in which

                                       49
<PAGE>

event the successor Servicer shall process such payments directly, or, through a
Lock-Box Account with a Lock-Box Bank at the direction of the Note Insurer). The
Trust Collateral Agent shall send copies of all notices given pursuant to this
Section 9.1 to the Note Insurer so long as no Note Insurer Default shall have
occurred and be continuing, and to the Noteholders if a Note Insurer Default
shall have occurred and be continuing.

                  SECTION 9.2. Appointment of Successor.

          (a) Upon the Servicer's receipt of notice of termination pursuant to
Section 9.1 or the Servicer's resignation in accordance with the terms of this
Agreement, the predecessor Servicer shall continue to perform its functions as
Servicer under this Agreement, in the case of termination, only until the date
specified in such termination notice or, if no such date is specified in a
notice of termination, until receipt of such notice, and, in the case of
resignation, until the later of (x) the date 45 days from the delivery to the
Trust Collateral Agent of written notice of such resignation (or written
confirmation of such notice) in accordance with the terms of this Agreement and
(y) the date upon which the predecessor Servicer shall become unable to act as
Servicer, as specified in the notice of resignation and accompanying Opinion of
Counsel. In the event of termination of the Servicer, the Back-up Servicer,
shall assume the obligations of Servicer hereunder on the date specified in such
written notice (the "Assumption Date") pursuant to the Servicing Assumption
Agreement or, in the event that the Note Insurer shall have determined that a
Person other than the Back-up Servicer shall be the successor Servicer in
accordance with Section 9.2(c), on the date of the execution of a written
assumption agreement by such Person to serve as successor Servicer. In the event
of assumption of the duties of Servicer by the Back-up Servicer, the Back-up
Servicer shall be entitled to be paid by the Servicer for the system conversion
costs, an amount not to exceed $100,000. In the event that such amount shall not
have been timely paid by the Servicer, such amount shall be paid under Section
5.6(c)(v) hereof; provided, however, the payment of such amount pursuant to
Section 5.6(c)(v) shall not relieve the Servicer of any obligation or liability
to pay such amount. Notwithstanding the Back-up Servicer's assumption of, and
its agreement to perform and observe, all duties, responsibilities and
obligations of LBAC as Servicer under this Agreement arising on and after the
Assumption Date, the Back-up Servicer shall not be deemed to have assumed or to
become liable for, or otherwise have any liability for, any duties,
responsibilities, obligations or liabilities of LBAC, the Transferor or any
predecessor Servicer arising on or before the Assumption Date, whether provided
for by the terms of this Agreement, arising by operation of law or otherwise,
including, without limitation, any liability for, any duties, responsibilities,
obligations or liabilities of LBAC, the Transferor or any predecessor Servicer
arising on or before the Assumption Date under Sections 4.7 or 8.2 of this
Agreement, regardless of when the liability, duty, responsibility or obligation
of LBAC, the Transferor or any predecessor Servicer therefor arose, whether
provided by the terms of this Agreement, arising by operation of law or
otherwise. In addition, if the Back-up Servicer shall be legally unable to act
as Servicer or shall have delivered a notice of resignation pursuant to Section
8.5 hereof and a Note Insurer Default shall have occurred and be continuing, the
Back-up Servicer, the Trust Collateral Agent or the Class A Noteholders
evidencing not less than 66-2/3% of the Class A Note Balance or, after the Class
A Notes have been paid in full, by the Class B Noteholders, evidencing not less
than 51% of the Class B Note Balance may petition a court of competent
jurisdiction to appoint any successor to the Servicer. Pending appointment
pursuant to the preceding sentence, the Back-up Servicer shall act as successor
Servicer unless it is legally

                                       50
<PAGE>

unable to do so, in which event the predecessor Servicer shall continue to act
as Servicer until a successor has been appointed and accepted such appointment.
In the event that a successor Servicer has not been appointed at the time when
the predecessor Servicer has ceased to act as Servicer in accordance with this
Section 9.2, then the Note Insurer, in accordance with Section 9.2(c) shall
appoint, or petition a court of competent jurisdiction to appoint a successor to
the Servicer under this Agreement.

          (b) Upon appointment, the successor Servicer shall be the successor in
all respects to the predecessor Servicer and shall be subject to all the
responsibilities, duties, and liabilities arising thereafter relating thereto
placed on the predecessor Servicer, and shall be entitled to the Servicing Fee
and all of the rights granted to the predecessor Servicer, by the terms and
provisions of this Agreement.

          (c) So long as no Note Insurer Default has occurred and is continuing,
the Note Insurer may exercise at any time its right to appoint as Back-up
Servicer or as successor Servicer a Person other than the Person serving as
Back-up Servicer at the time, and shall have no liability to the Trust
Collateral Agent, the Issuer, LBAC, the Transferor, the Person then serving as
Back-up Servicer, any Noteholder or any other person if it does so. Subject to
Section 8.5, no provision of this Agreement shall be construed as relieving the
Back-up Servicer of its obligation to succeed as successor Servicer upon the
termination of the Servicer pursuant to Section 9.1 or resignation of the
Servicer pursuant to Section 8.5. If upon any such resignation or termination,
the Note Insurer appoints a successor Servicer other than the Back-up Servicer,
the Back-up Servicer shall not be relieved of its duties as Back-up Servicer
hereunder.

                  SECTION 9.3. Notification to Noteholders. Upon any termination
of, or appointment of a successor to, the Servicer pursuant to this Article IX,
the Trust Collateral Agent shall give prompt written notice thereof to
Noteholders at their respective addresses appearing in the Note Register and to
each of the Rating Agencies.

                  SECTION 9.4. Action Upon Certain Failures of the Servicer. In
the event that a Responsible Officer of the Trust Collateral Agent shall have
knowledge of any failure of the Servicer specified in Section 9.1 which would
give rise to a right of termination under such Section upon the Servicer's
failure to remedy the same after notice, the Trust Collateral Agent shall give
notice thereof to the Transferor, the Servicer and the Note Insurer. For all
purposes of this Agreement, the Trust Collateral Agent shall not be deemed to
have knowledge of any failure of the Servicer as specified in Section 9.1 unless
notified thereof in writing by the Transferor, the Servicer, the Note Insurer or
by a Noteholder. The Trust Collateral Agent shall be under no duty or obligation
to investigate or inquire as to any potential failure of the Servicer specified
in Section 9.1.

                                    ARTICLE X
                  THE TRUST COLLATERAL AGENT AND THE CUSTODIAN

                  SECTION 10.1. Duties of the Trust Collateral Agent and the
Custodian.

          (a) The Trust Collateral Agent and the Custodian, both prior to the
occurrence of an Event of Default and after an Event of Default shall have been
cured or waived, shall undertake

                                       51
<PAGE>

to perform such duties and only such duties as are specifically set forth in
this Agreement. If an Event of Default shall have occurred and shall not have
been cured or waived, the Trust Collateral Agent and the Custodian may, and at
the direction of the Note Insurer (or, if a Note Insurer Default shall have
occurred and is continuing, the Majorityholders), shall exercise such of the
rights and powers vested in it by this Agreement and shall use the same degree
of care and skill in their exercise, as a prudent person would exercise or use
under the circumstances in the conduct of its own affairs.

          (b) The Trust Collateral Agent and the Custodian, upon receipt of all
resolutions, certificates, statements, opinions, reports, documents, orders or
other instruments furnished to the Trust Collateral Agent and the Custodian that
shall be specifically required to be furnished pursuant to any provision of this
Agreement, shall examine them to determine whether they conform to the
requirements of this Agreement; provided, however, that, neither the Trust
Collateral Agent nor the Custodian shall be responsible for the accuracy or
content of any such resolution, certificate, statement, opinion, report,
document, order or other instrument. If any such instrument is found not to
conform in any material respect to the requirements of this Agreement, the Trust
Collateral Agent or the Custodian, as applicable, shall notify the Note Insurer
and the Noteholders of such instrument in the event that the Trust Collateral
Agent or the Custodian, after so requesting, does not receive a satisfactorily
corrected instrument.

          (c) The Trust Collateral Agent shall take and maintain custody of the
Schedule of Receivables included as Schedule A to this Agreement and shall
retain copies of all Servicer's Certificates prepared hereunder.

          (d) No provision of this Agreement shall be construed to relieve the
Trust Collateral Agent or the Custodian from liability for its own negligent
action, its own negligent failure to act, or its own bad faith; provided,
however, that:

                  (i) Prior to the occurrence of an Event of Default and after
          the curing or waiving of all such Events of Default that may have
          occurred, the duties and obligations of the Trust Collateral Agent and
          the Custodian shall be determined solely by the express provisions of
          this Agreement, neither the Trust Collateral Agent nor the Custodian
          shall be liable except for the performance of such duties and
          obligations as shall be specifically set forth in this Agreement, no
          implied covenants or obligations shall be read into this Agreement
          against the Trust Collateral Agent or the Custodian and, in the
          absence of bad faith on the part of the Trust Collateral Agent or the
          Custodian, the Trust Collateral Agent and the Custodian, as
          applicable, may conclusively rely on the truth of the statements and
          the correctness of the opinions expressed in any certificates or
          opinions furnished to the Trust Collateral Agent or the Custodian and
          conforming to the requirements of this Agreement;

                  (ii) Neither the Trust Collateral Agent nor the Custodian
          shall be liable for an error of judgment made in good faith by a
          Responsible Officer or officer of the Custodian, respectively, unless
          it shall be proved that the Trust Collateral Agent or the Custodian,
          respectively shall have been negligent in ascertaining the pertinent
          facts;

                                       52
<PAGE>

                  (iii) Neither the Trust Collateral Agent nor the Custodian
          shall be liable with respect to any action taken, suffered, or omitted
          to be taken in good faith in accordance with this Agreement or at the
          direction of the Note Insurer or, after a Note Insurer Default, the
          Class A Noteholders evidencing not less than 25% of the Class A Note
          Balance or, after the Policy Expiration Date, by the Class B
          Noteholders evidencing not less than 25% of the Class B Note Balance,
          relating to the time, method, and place of conducting any proceeding
          for any remedy available to the Trust Collateral Agent or the
          Custodian, or exercising any trust or power conferred upon the Trust
          Collateral Agent or the Custodian, as applicable, under this
          Agreement;

                  (iv) Neither the Trust Collateral Agent nor the Custodian
          shall be charged with knowledge of any Servicer Termination Event or
          Event of Default, unless a Responsible Officer assigned to the Trust
          Collateral Agent's Corporate Trust Office or an officer of the
          Custodian receives written notice of such Servicer Termination Event
          or Event of Default from the Servicer, the Transferor, the Note
          Insurer or, after a Note Insurer Default, the Class A Noteholders
          evidencing not less than 25% of the Class A Note Balance or, after the
          Policy Expiration Date, by the Class B Noteholders evidencing not less
          than 25% of the Class B Note Balance (such notice shall constitute
          actual knowledge of a Servicer Termination Event or Event of Default
          by the Trust Collateral Agent); and

                  (v) Neither the Trust Collateral Agent nor the Custodian shall
          be liable for any action taken, suffered or omitted by it in good
          faith and reasonably believed by it to be authorized or within the
          discretion or rights or powers conferred upon it by this Agreement.

          (e) The Trust Collateral Agent and the Custodian may, but shall not be
required to, expend or risk its own funds or otherwise incur financial liability
in the performance of any of its duties hereunder, or in the exercise of any of
its rights or powers, unless it shall have been provided with indemnity against
such risk or liability in form and substance satisfactory to the Trust
Collateral Agent or Custodian, as applicable, and none of the provisions
contained in this Agreement shall in any event require the Trust Collateral
Agent or Custodian to perform, or be responsible for the manner of performance
of, any of the obligations of the Servicer under this Agreement except during
such time, if any, as the Trust Collateral Agent, in its capacity as Back-up
Servicer, shall be the successor to, and be vested with the rights, duties,
powers, and privileges of, the Servicer in accordance with the terms of this
Agreement.

          (f) Except for actions expressly authorized by this Agreement, neither
the Trust Collateral Agent nor the Custodian shall take action reasonably likely
to impair the security interests created or existing under any Receivable or
Financed Vehicle or to impair the value of any Receivable or Financed Vehicle.

          (g) All information obtained by the Trust Collateral Agent or the
Custodian regarding the Obligors and the Receivables, whether upon the exercise
of its rights under this Agreement or otherwise, shall be maintained by the
Trust Collateral Agent or the Custodian, as applicable, in confidence and shall
not be disclosed to any other Person, all in accordance with the Federal
Financial Privacy Law; provided that, nothing herein shall prevent the Trust
Collateral Agent or Custodian from delivering copies of such information whether
or not constituting Confidential

                                       53
<PAGE>

Information, and disclosing other information, whether or not Confidential
Information, to (i) its directors, officers, employees, agents and professional
consultants to the extent necessary to carry on the Trust Collateral Agent's or
the Custodian's business in the ordinary course, (ii) any Noteholder or the Note
Insurer to the extent that such Noteholder or the Note Insurer is entitled to
such information under this Agreement or any other Basic Document, but not
otherwise, (iii) any governmental authority which specifically requests (or as
to which applicable regulations require) such information, (iv) any nationally
recognized rating agency in connection with the rating of the Notes by such
agency, or (v) any other Person to which such delivery or disclosure may be
necessary or appropriate (a) in compliance with any applicable law, rule,
regulation or order, (b) in response to any subpoena or other legal process, (c)
in connection with any litigation to which the Trust Collateral Agent or the
Custodian is a party, (d) in order to enforce the rights of the Noteholders and
the Note Insurer hereunder or under any other Basic Document, or (e) otherwise,
in accordance with the Federal Financial Privacy Law; provided, that, prior to
any such disclosure, the Trust Collateral Agent or the Custodian, as applicable,
shall inform each such party (other than any Noteholder, the Note Insurer or any
other party to the Basic Documents) that receives Confidential Information of
the foregoing requirements and shall use its commercially reasonable best
efforts to cause such party to comply with such requirements.

          (h) Money held in trust by the Trust Collateral Agent or the Custodian
need not be segregated from other funds except to the extent required by law or
the terms of this Agreement or the Indenture.

          (i) Every provision of this Agreement relating to the conduct or
affecting the liability of or affording protection to the Trust Collateral Agent
or the Custodian shall be subject to the provisions of this Section 10.1.

          (j) The Trust Collateral Agent and the Custodian each shall, and each
hereby agrees that it will, perform all of the obligations and duties required
of it under this Agreement.

          (k) The Trust Collateral Agent shall, and hereby agrees that it will,
hold the Policy in trust, and will hold any proceeds of any claim on the Policy
in trust, solely for the use and benefit of the Noteholders.

          (l) Without limiting the generality of this Section 10.1, the Trust
Collateral Agent and the Custodian each shall have no duty (i) to see to any
recording, filing or depositing of this Agreement or any agreement referred to
herein or any financing statement evidencing a security interest in the Financed
Vehicles, or to see to the maintenance of any such recording or filing or
depositing or to any recording, refiling or redepositing of any thereof, (ii) to
see to any insurance of the Financed Vehicles or Obligors or to effect or
maintain any such insurance, (iii) to see to the payment or discharge of any
tax, assessment or other governmental charge or any Lien or encumbrance of any
kind owing with respect to, assessed or levied against any part of the Pledged
Property, (iv) to confirm or verify the contents of any reports or certificates
delivered to the Trust Collateral Agent or the Servicer pursuant to this
Agreement or the Trust Agreement believed by the Trust Collateral Agent or the
Custodian, as applicable, to be genuine and to have been signed or presented by
the proper party or parties, or (v) to inspect the Financed Vehicles at any time
or ascertain or inquire as to the performance or observance of any of the
Issuer's, the

                                       54
<PAGE>

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

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

          (n) Neither the Trust Collateral Agent nor the Custodian shall be
required to give any bond or surety in respect of the powers granted to it under
this Agreement.

                  SECTION 10.2. Trust Collateral Agent to Act for the Class A
Noteholders and Note Insurer. Prior to the payment in full of the Class A Notes
and the Reimbursement Obligations and the expiration of the term of the Policy,
the Trust Collateral Agent shall act solely for the benefit of the Class A
Noteholders and the Note Insurer, as their interests may appear herein.

                  SECTION 10.3. Certain Matters Affecting the Trust Collateral
Agent and the Custodian. Except as otherwise provided in the second paragraph of
Section 10.1:

                  (i) The Trust Collateral Agent and the Custodian may rely and
          shall be protected in acting or refraining from acting upon any
          resolution, Officer's Certificate, Servicer's Certificate, certificate
          of auditors, or any other certificate, statement, instrument, opinion,
          report, notice, request, consent, order, appraisal, bond, or other
          paper or document believed by it to be genuine and to have been signed
          or presented by the proper party or parties.

                  (ii) The Trust Collateral Agent and the Custodian may consult
          with counsel, and any written advice or Opinion of Counsel shall be
          full and complete authorization and protection in respect of any
          action taken or suffered or omitted by it under this Agreement in good
          faith and in accordance with such written advice or Opinion of
          Counsel.

                  (iii) Neither the Trust Collateral Agent nor the Custodian
          shall be under any obligation to exercise any of the rights or powers
          vested in it by this Agreement, or to institute, conduct, or defend
          any litigation under this Agreement or in relation to this Agreement,
          at the request, order or direction of any of the Noteholders or the
          Note Insurer pursuant to the provisions of this Agreement, unless such
          Noteholders or the Note Insurer shall have offered to the Trust
          Collateral Agent or the Custodian, as applicable, reasonable security
          or indemnity in form and substance reasonably satisfactory to the
          Trust Collateral Agent or the Custodian, as applicable, against the
          costs, expenses and liabilities that may be incurred therein or
          thereby. Nothing contained in this Agreement, however, shall relieve
          the Trust Collateral Agent or the Custodian of the obligations, upon
          the occurrence of a Servicer Termination Event or Event of Default
          (that shall not have been cured or waived), to exercise such of the
          rights and powers vested in it by this Agreement, and to use the same
          degree of care and skill in their exercise as a prudent person would
          exercise or use under the circumstances in the conduct of its own
          affairs.

                                       55
<PAGE>

                  (iv) Neither the Trust Collateral Agent nor the Custodian
          shall be bound to make any investigation into the facts or matters
          stated in any resolution, certificate, statement, instrument, opinion,
          report, notice, request, consent, order, approval, bond, or other
          paper or document (other than for the duties of the Custodian pursuant
          to Section 3.4), unless requested in writing to do so by the Note
          Insurer (if no Note Insurer Default shall have occurred or be
          continuing), the Transferor or the Class A Noteholders evidencing not
          less than 25% of the Class A Note Balance or, after the Policy
          Expiration Date, by the Class B Noteholders evidencing not less than
          25% of the Class B Note Balance; provided, however, that, if the
          payment within a reasonable time to the Trust Collateral Agent or the
          Custodian of the costs, expenses or liabilities likely to be incurred
          by it in the making of such investigation shall be, in the opinion of
          the Trust Collateral Agent or the Custodian, not reasonably assured to
          the Trust Collateral Agent or the Custodian by the security afforded
          to it by the terms of this Agreement, the Trust Collateral Agent or
          the Custodian, as applicable, may require indemnity in form and
          substance satisfactory to it against such cost, expense or liability
          as a condition to so proceeding. The reasonable expense of every such
          examination shall be paid by the Person making such request or, if
          paid by the Trust Collateral Agent or the Custodian, shall be
          reimbursed by the Person making such request upon demand.

                  (v) The Trust Collateral Agent and the Custodian may execute
          any of the trusts or powers hereunder or perform any duties under this
          Agreement either directly or by or through agents or attorneys.
          Neither the Trust Collateral Agent nor the Custodian shall be
          responsible for any misconduct or negligence of any such agent
          appointed with due care by it hereunder, or of any agent of the
          Servicer in its capacity as Servicer or custodian or otherwise.

                  (vi) Except as may be expressly required by Sections 3.4,
          subsequent to the sale of the Receivables by the Transferor to the
          Issuer, neither the Trust Collateral Agent nor the Custodian shall
          have any duty of independent inquiry, and the Trust Collateral Agent
          and the Custodian may rely upon the representations and warranties and
          covenants of the Transferor and the Servicer contained in this
          Agreement with respect to the Receivables and the Receivable Files.

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

                  (viii) Neither the Trust Collateral Agent nor the Custodian
          shall be required to take any action or refrain from taking any action
          under this Agreement, or any related documents referred to herein, nor
          shall any provision of this Agreement, or any such related document be
          deemed to impose a duty on the Trust Collateral Agent or the Custodian
          to take action, if the Trust Collateral Agent or the Custodian shall
          have been advised by counsel that such action is contrary to (i) the
          terms of this Agreement, (ii) any such related document or (iii)
          applicable law.

                  SECTION 10.4. Trust Collateral Agent, Back-up Servicer and
Custodian Not Liable for Notes or Receivables. The recitals contained herein
shall be taken as the statements of

                                       56
<PAGE>

the Issuer, the Transferor or the Servicer, as the case may be, and neither the
Trust Collateral Agent, the Back-up Servicer nor the Custodian assumes any
responsibility for the correctness thereof. Neither the Trust Collateral Agent,
the Back-up Servicer nor the Custodian shall make any representations as to the
validity or sufficiency of this Agreement or of the Notes, or of any Receivable
or related document. Neither the Trust Collateral Agent, the Back-up Servicer
nor the Custodian shall at any time have any responsibility or liability for or
with respect to the legality, validity and enforceability of any security
interest in any Financed Vehicle or any Receivable, or the perfection and
priority of such a security interest or the maintenance of any such perfection
and priority, or for or with respect to the efficacy of the Issuer or its
ability to generate the payments to be distributed to Noteholders under this
Agreement, including, without limitation: the existence, condition, location,
and ownership of any Financed Vehicle; the existence and enforceability of any
physical damage insurance thereon; except as required by Section 3.4, the
existence, contents and completeness of any Receivable or any Receivable Files
or any computer or other record thereof; the validity of the assignment of any
Receivable to the Issuer or of any intervening assignment; except as required by
Section 3.4, the performance or enforcement of any Receivable; the compliance by
the Transferor or the Servicer with any warranty or representation made under
this Agreement or in any related document and the accuracy of any such warranty
or representation prior to the Trust Collateral Agent's, the Back-up Servicer's
or Custodian's receipt of notice or other actual knowledge by a Responsible
Officer of any noncompliance therewith or any breach thereof; any investment of
monies by or at the direction of the Servicer or the Note Insurer or any loss
resulting therefrom (it being understood that the Trust Collateral Agent, the
Back-up Servicer and the Custodian shall each remain responsible for any Trust
Assets that it may hold); the acts or omissions of the Issuer, the Transferor,
the Servicer, or any Obligor; any action of the Servicer taken in the name of
the Trust Collateral Agent or the Custodian; or any action by the Trust
Collateral Agent or the Custodian taken at the instruction of the Servicer;
provided, however, that the foregoing shall not relieve either the Trust
Collateral Agent, the Back-up Servicer or the Custodian of its obligation to
perform its duties under this Agreement. Except with respect to a claim based on
the failure of the Trust Collateral Agent, the Back-up Servicer or the Custodian
to perform its duties under this Agreement or based on the Trust Collateral
Agent's, the Back-up Servicer's or the Custodian's negligence or willful
misconduct, no recourse shall be had for any claim based on any provision of
this Agreement, the Notes, or any Receivable or assignment thereof against the
Trust Collateral Agent, the Back-up Servicer or Custodian in their respective
individual capacities, neither the Trust Collateral Agent, the Back-up Servicer
nor the Custodian shall have any personal obligation, liability, or duty
whatsoever to any Noteholder or any other Person with respect to any such claim,
and any such claim shall be asserted solely against the Issuer or any indemnitor
who shall furnish indemnity as provided in this Agreement. Neither the Trust
Collateral Agent, the Back-up Servicer nor the Custodian shall be accountable
for the use or application by the Issuer of any of the Notes or of the proceeds
of such Notes, or for the use or application of any funds paid to the Servicer
in respect of the Receivables. The Issuer hereby certifies to the Trust
Collateral Agent, the Back-up Servicer and the Custodian that the Rating
Agencies rating the Notes are Standard & Poor's and Moody's and that their
addresses are as set forth in Section 13.5. The Trust Collateral Agent, the
Back-up Servicer and the Custodian may rely on the accuracy of such
certification until it receives from the Issuer an Officer's Certificate
superseding such certification. All references above to the Back-up Servicer
shall be deemed to refer to the Back-up Servicer only so long as it is acting in
such capacity hereunder.

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                  SECTION 10.5. Trust Collateral Agent, Back-up Servicer and
Custodian May Own Notes. The Trust Collateral Agent, the Back-up Servicer and
the Custodian in their respective individual or any other capacities may become
the owner or pledgee of Notes and may deal with the Transferor and the Servicer
in banking transactions with the same rights as it would have if it were not
Trust Collateral Agent, Back-up Servicer or Custodian, as applicable.

                  SECTION 10.6. Indemnity of Trust Collateral Agent, Back-up
Servicer and Custodian. The Servicer shall indemnify the Trust Collateral Agent,
the Back-up Servicer, the Custodian and each officer, director and employee of
the Trust Collateral Agent, the Back-up Servicer and the Custodian for, and hold
each such Person harmless against, any loss, liability, or expense incurred
without willful misfeasance, negligence, or bad faith on its part, arising out
of or in connection with the acceptance or administration of this Agreement, the
performance of duties as Custodian of the Legal Files including the costs and
expenses of defending itself against any claim or liability in connection with
the exercise or performance of any of its powers or duties under this Agreement.
The provisions of this Section 10.6 shall survive the termination of this
Agreement or any resignation or removal of LBAC as Servicer.

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

                  SECTION 10.8. Resignation or Removal of Trust Collateral Agent
or Custodian.

          (a) The Trust Collateral Agent and the Custodian may at any time
resign and be discharged from the trusts hereby created by giving 30 days' prior
written notice thereof to the Servicer. To the extent that the Trust Collateral
Agent and the Custodian resign hereunder, the Indenture Trustee shall also
resign under the Indenture and the Collateral Agent shall resign under the
Spread Account Agreement. Upon receiving such notice of resignation, with the
prior written consent of the Note Insurer (or, if a Note Insurer Default shall
have occurred or is continuing, the Class A Noteholders evidencing not less than
25% of the Class A Note Balance or, after the Policy Expiration Date, by the
Class B Noteholders evidencing not less than 25% of the Class B Note Balance),
the Servicer shall promptly appoint a successor Trust Collateral Agent or
Custodian, as applicable, by written instrument, in duplicate, one copy of which
instrument shall be delivered to the resigning Trust Collateral Agent or
Custodian, as applicable, and one copy to the successor Trust Collateral Agent
or successor Custodian. If no successor

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Trust Collateral Agent or successor Custodian shall have been so appointed and
have accepted appointment within 30 days after the giving of such notice of
resignation, the Note Insurer may appoint a successor Trust Collateral Agent or
Custodian, as applicable, by written instrument, in duplicate, one copy of which
instrument shall be delivered to the resigning Trust Collateral Agent or
Custodian and one copy to the successor Trust Collateral Agent or Custodian. If
no successor Trust Collateral Agent or Custodian shall have been so appointed
and have accepted appointment within 60 days after the giving of such notice of
resignation, the resigning Trust Collateral Agent or Custodian may petition any
court of competent jurisdiction for the appointment of a successor Trust
Collateral Agent or Custodian, as applicable. The Trust Collateral Agent or the
Custodian may be removed at any time by written demand of the Note Insurer
delivered to the Trust Collateral Agent or the Custodian, as applicable, and the
Servicer.

          (b) If at any time (i) the Trust Collateral Agent or the Custodian
shall cease to be eligible in accordance with the provisions of Section 10.7 and
shall fail to resign after written request therefor by the Servicer, (ii) the
Trust Collateral Agent or the Custodian, as applicable, shall be legally unable
to act, (iii) the Trust Collateral Agent and the Indenture Trustee shall be the
same Person and the Indenture Trustee shall have resigned or been removed
pursuant to Section 6.8 of the Indenture, or (iv) the Trust Collateral Agent or
the Custodian shall be adjudged bankrupt or insolvent, or a receiver,
conservator or liquidator of the Trust Collateral Agent, the Custodian or of any
of their respective property shall be appointed, or any public officer shall
take charge or control of the Trust Collateral Agent or Custodian or of its
property or affairs for the purpose of rehabilitation, conservation or
liquidation, then the Note Insurer shall (so long as no Note Insurer Default
shall have occurred and be continuing), or the Servicer may (if a Note Insurer
Default shall have occurred and be continuing) remove the Trust Collateral Agent
or Custodian. If the Note Insurer or the Servicer shall remove the Trust
Collateral Agent or Custodian under the authority of the immediately preceding
sentence, the Servicer or the Note Insurer, as the case may be, shall promptly
appoint a successor Trust Collateral Agent or Custodian, as applicable, by
written instrument, in duplicate, one copy of which instrument shall be
delivered to the Trust Collateral Agent or Custodian so removed and one copy to
the successor Trust Collateral Agent or successor Custodian, and pay all fees
and expenses owed to the outgoing Trust Collateral Agent or Custodian, provided
that any successor Trust Collateral Agent or any successor Custodian appointed
by the Servicer shall be acceptable to the Note Insurer.

          (c) Any resignation or removal of the Trust Collateral Agent or the
Custodian and appointment of a successor Trust Collateral Agent or Custodian
pursuant to any of the provisions of this Section 10.8 shall not become
effective until acceptance of appointment by the successor Trust Collateral
Agent or Custodian, as applicable, pursuant to Section 10.9 and payment of all
fees and expenses owed to the outgoing Trust Collateral Agent or Custodian. The
Servicer shall provide notice of such resignation or removal of the Trust
Collateral Agent or Custodian to each of the Rating Agencies and the Transferor.

          (d) If the Trust Collateral Agent and the Back-up Servicer shall be
the same Person and the rights and obligations of the Back-up Servicer shall
have been terminated pursuant to this Section 10.8, then the Note Insurer (or,
if a Note Insurer Default shall have occurred and be continuing, the
Majorityholders) shall have the option, by 60 days' prior notice in writing to
the Servicer and the Trust Collateral Agent, to remove the Trust Collateral
Agent, and the Note

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Insurer shall not have any liability to the Trust Collateral Agent, LBAC, the
Transferor, the Servicer, the Issuer or any Noteholder in connection with such
removal.

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

                  SECTION 10.9. Successor Trust Collateral Agent or Custodian.
Any successor Trust Collateral Agent or Custodian appointed pursuant to Section
10.8 shall execute, acknowledge and deliver to the Transferor, the Servicer, the
Note Insurer and to its predecessor Trust Collateral Agent or predecessor
Custodian, as applicable, an instrument accepting such appointment under this
Agreement, and thereupon the resignation or removal of the predecessor Trust
Collateral Agent or predecessor Custodian shall become effective and such
successor Trust Collateral Agent or successor Custodian, without any further
act, deed or conveyance, shall become fully vested with all the rights, powers,
duties, and obligations of its predecessor under this Agreement, with like
effect as if originally named as Trust Collateral Agent or Custodian. The
predecessor Trust Collateral Agent or predecessor Custodian shall upon payment
of its fees and expenses deliver to the successor Trust Collateral Agent or
successor Custodian all documents and statements and monies held by it under
this Agreement; and the Servicer, the Note Insurer and the predecessor Trust
Collateral Agent or predecessor Custodian shall execute and deliver such
instruments and do such other things as may reasonably be required for fully and
certainly vesting and confirming in the successor Trust Collateral Agent or
successor Custodian all such rights, powers, duties, and obligations.

                  No successor Trust Collateral Agent or successor Custodian
shall accept appointment as provided in this Section 10.9 unless at the time of
such acceptance such successor Trust Collateral Agent or successor Custodian
shall be eligible pursuant to Section 10.7.

                  Upon acceptance of appointment by a successor Trust Collateral
Agent or successor Custodian pursuant to this Section 10.9, the Servicer shall
mail notice of the successor of such Trust Collateral Agent or Custodian under
this Agreement to all Holders of Notes at their addresses as shown in the Note
Register, the Transferor, and to the Rating Agencies. If the Servicer shall fail
to mail such notice within ten (10) days after acceptance of appointment by the
successor Trust Collateral Agent, the successor Trust Collateral Agent or
successor Custodian shall cause such notice to be mailed at the expense of the
Servicer.

                  SECTION 10.10. Merger or Consolidation of Trust Collateral
Agent or Custodian. Any corporation into which the Trust Collateral Agent or the
Custodian may be merged or converted or with which it may be consolidated, or
any corporation resulting from any merger, conversion or consolidation to which
the Trust Collateral Agent or the Custodian shall be a party, or any corporation
succeeding to all or substantially all of the corporate trust business of the
Trust Collateral Agent or the Custodian, shall be the successor of the Trust
Collateral Agent or Custodian, as applicable, hereunder, provided such
corporation shall be eligible pursuant to Section 10.7, without the execution or
filing of any instrument or any further act on the part of any of the parties
hereto, anything herein to the contrary notwithstanding.

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                  SECTION 10.11. Co-Trustee; Separate Trustee.

          (a) Notwithstanding any other provisions of this Agreement, at any
time, for the purpose of meeting any legal requirements of any jurisdiction in
which any part of the Issuer or any Financed Vehicle may at the time be located,
the Servicer, the Note Insurer (provided a Note Insurer Default shall not have
occurred and be continuing) and the Trust Collateral Agent acting jointly shall
have the power and shall execute and deliver all instruments to appoint one or
more persons approved by the Trust Collateral Agent to act as co-trustee,
jointly with the Trust Collateral Agent, or separate trustee or separate
trustees, of all or any part of the Issuer, and to vest in such Person, in such
capacity and for the benefit of the Noteholders, such title to the Issuer, or
any part thereof, and, subject to the other provisions of this Section 10.11,
such powers, duties, obligations, rights, and trusts as the Servicer, the Note
Insurer and the Trust Collateral Agent may consider necessary or desirable. If
the Servicer and the Note Insurer shall not have joined in such appointment
within fifteen (15) days after the receipt by it of a request so to do, or in
the case an Event of Default shall have occurred and be continuing, the Trust
Collateral Agent alone shall have the power to make such appointment. No
co-trustee or separate trustee under this Agreement shall be required to meet
the terms of eligibility as a successor Trust Collateral Agent pursuant to
Section 10.7, except that the co-trustee or its parent shall comply with the
rating requirements set forth therein, and no notice of a successor Trust
Collateral Agent pursuant to Section 10.9 and no notice to Noteholders of the
appointment of any co-trustee or separate trustee shall be required pursuant to
Section 10.9.

          (b) Each separate trustee and co-trustee shall, to the extent
permitted by law, be appointed and act subject to the following provisions and
conditions:

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

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

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

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

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

                  SECTION 10.12. Representations and Warranties of Trust
Collateral Agent and the Custodian. The Custodian and the Trust Collateral Agent
shall make the following representations and warranties with respect to itself
on which the Transferor, the Servicer, the Originator, the Issuer, the Note
Insurer and Noteholders shall rely:

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

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

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

                  SECTION 10.13. Rights of Note Insurer to Direct Trust
Collateral Agent. Subject to clause (iii) of Section 10.3, unless a Note Insurer
Default shall have occurred and be continuing, the Note Insurer, after giving
written notice to the Trust Collateral Agent, shall have the right to direct the
time, method and place at or by which the Trust Collateral Agent conducts any
proceeding for any remedy available to the Trust Collateral Agent, or exercises
any such trust or power conferred upon the Trust Collateral Agent; provided,
however, that subject to Section 10.1, the Trust Collateral Agent shall have the
right to decline to follow any such

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<PAGE>

direction of the Note Insurer if the Trust Collateral Agent, being advised by
counsel, determines that the action so directed may not lawfully be taken, or if
the Trust Collateral Agent in good faith shall, by a Responsible Officer of the
Trust Collateral Agent, determine that the proceedings so directed would be in
violation of any Basic Document or involve it in personal liability against
which it has not been provided indemnity in form and substance satisfactory to
it or be unduly prejudicial to the rights of Noteholders; provided, that nothing
in this Agreement shall impair the right of the Trust Collateral Agent to take
any action deemed proper by the Trust Collateral Agent and which is not
inconsistent with such direction of the Note Insurer.

                                   ARTICLE XI
                                   TERMINATION

                  SECTION 11.1. Termination.

          (a) The respective obligations and responsibilities of LBAC, the
Transferor, the Issuer, the Servicer, the Custodian and the Trust Collateral
Agent created hereby shall terminate upon the payment to Noteholders and the
Certificateholder of all amounts required to be paid to them pursuant to this
Agreement, the Indenture and the Trust Agreement, satisfaction of all
Reimbursement Obligations, and the expiration of any preference period related
thereto and the disposition of all property held as part of the Trust Assets;
provided, however, in any case there shall be delivered to the Trust Collateral
Agent and the Note Insurer an Opinion of Counsel that all applicable preference
periods under federal, state and local bankruptcy, insolvency and similar laws
have expired with respect to the payments pursuant to this Section 11.1. The
Servicer shall promptly notify the Trust Collateral Agent, the Transferor, the
Issuer, each Rating Agency and the Note Insurer of any prospective termination
pursuant to this Section 11.1.

          (b) Upon any sale of the assets of the Issuer pursuant to Section 8.1
of the Trust Agreement, the Servicer shall instruct the Trust Collateral Agent
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 Issuer shall be given by the
Servicer to the Owner Trustee, the Trust Collateral Agent, the Collateral Agent,
the Back-up Servicer, the Indenture Trustee, the Note Insurer and the Rating
Agencies as soon as practicable after the Servicer has received notice thereof.

          (d) Following the satisfaction and discharge of the Indenture and the
payment in full of the principal of and interest on the Notes, the
Certificateholders will succeed to the rights of the Noteholders hereunder.

                                   ARTICLE XII
                      ADMINISTRATIVE DUTIES OF THE SERVICER

                  SECTION 12.1. Administrative Duties.

          (a) Duties with Respect to the Indenture. The Servicer shall take all
necessary action that is the duty of the Issuer to take pursuant to the
Indenture, pursuant to Sections 2.9 (with

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<PAGE>

respect to the notice provisions contained therein), 3.4, 3.5, 3.6, 3.7, 3.9,
3.10, 3.17, 3.19, 6.8, 7.1, 7.3, 8.3, 9.1, 9.2, 9.3, 11.1 and 11.14 of the
Indenture (in each case, excluding any duty to make payments to the Noteholders
and the Note Insurer). In addition, the Servicer shall consult with the Owner
Trustee as the Servicer deems appropriate regarding the duties of the Issuer
under the Indenture. The Servicer shall monitor the performance of the Issuer
and shall advise the Owner Trustee when action is necessary to comply with the
Issuer's duties under the Indenture. The Servicer shall prepare for execution by
the Issuer or shall cause the preparation by other appropriate Persons of all
such documents, reports, filings, instruments, certificates and opinions as it
shall be the duty of the Issuer to prepare, file or deliver pursuant to the
Indenture.

          (b) Duties with Respect to the Issuer.

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

                  (ii) In carrying out the foregoing duties or any of its other
          obligations under this Agreement, the Servicer may enter into
          transactions with or otherwise deal with any of its Affiliates;
          provided, however, that the terms of any such transactions or dealings
          shall be in accordance with any directions received from the Issuer
          and shall be, in the Servicer's opinion, no less favorable to the
          Issuer in any material respect.

          (c) Non-Ministerial Matters. With respect to matters that in the
reasonable judgment of the Servicer are non-ministerial, the Servicer shall not
take any action pursuant to this Article XII unless within a reasonable time
before the taking of such action, the Servicer shall have notified the Owner
Trustee, the Note Insurer and the Trust Collateral Agent of the proposed action
and the Owner Trustee and, with respect to items (i), (ii), (iii) and (iv)
below, the Trust Collateral Agent shall not have withheld consent or provided an
alternative direction. For the purpose of the preceding sentence,
"non-ministerial matters" shall include:

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

                  (ii) the initiation of any claim or lawsuit by the Issuer and
          the compromise of any action, claim or lawsuit brought by or against
          the Issuer (other than in connection with the collection of the
          Receivables);

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<PAGE>

                  (iii) the amendment, change or modification of this Agreement
          or any of the Basic Documents;

                  (iv) the appointment of successor Note Registrars, successor
          Note Paying Agents and successor Indenture Trustees pursuant to the
          Indenture or the appointment of Successor Servicers or the consent to
          the assignment by the Note Registrar, Paying Agent or Trustee of its
          obligations under the Indenture; and

                  (v) the removal of the Trust Collateral Agent or the Indenture
          Trustee.

          (d) Exceptions. Notwithstanding anything to the contrary in this
Agreement, except as expressly provided herein or in the other Basic Documents,
the Servicer, in its capacity hereunder, shall not be obligated to, and shall
not, (1) make any payments to the Noteholders under the Basic Documents, (2)
sell the Pledged Property pursuant to Section 5.5 of the Indenture, (3) take any
other action that the Issuer directs the Servicer not to take on its behalf or
(4) in connection with its duties hereunder assume any indemnification
obligation of any other Person.

                  SECTION 12.2. Records. The Servicer shall maintain appropriate
books of account and records relating to services performed under this
Agreement, which books of account and records shall be accessible for inspection
by the Issuer at any time during normal business hours.

                  SECTION 12.3. Additional Information to be Furnished to the
Issuer. The Servicer shall furnish to the Issuer from time to time such
additional information regarding the Trust Assets as the Issuer shall reasonably
request.

                  SECTION 12.4. No Additional Compensation. The Servicing Fee
payable to the Servicer pursuant to Section 5.6(c)(i) and the Simple Interest
Excess, if any, payable to the Servicer, so long as LBAC is the Servicer,
pursuant to Section 5.12 shall be the only amounts payable to the Servicer for
its services hereunder.

                                  ARTICLE XIII
                            MISCELLANEOUS PROVISIONS

                  SECTION 13.1. Amendment.

          (a) This Agreement may be amended from time to time by the Issuer, the
Transferor, the Originator, the Servicer, the Trust Collateral Agent, the
Back-up Servicer and the Custodian and, (i) so long as no Note Insurer Default
has occurred and is continuing or the Policy Expiration Date has not occurred,
with the prior written consent of the Note Insurer and, (ii) if a Note Insurer
Default has occurred and is continuing or the Policy Expiration Date has
occurred with the consent of the Majorityholders, which consent given pursuant
to this Section or pursuant to any other provision of this Agreement shall be
conclusive and binding on all Holders and on all future Holders of Notes and of
any Notes issued upon the transfer thereof or in exchange thereof or in lieu
thereof whether or not notation of such consent is made upon the Notes, for the
purpose of adding any provisions to or changing in any manner or eliminating any
of the

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<PAGE>

provisions of this Agreement, or of modifying in any manner the rights of the
Holders of Notes; provided, however, that, in the case of either clause (i) or
(ii) above, no such amendment shall (a) increase or reduce in any manner the
amount of, or accelerate or delay the timing of, or change the allocation or
priority of, collections of payments on Receivables or payments that shall be
required to be made on any Note or the Certificate or change the applicable Note
Rate without the consent of each Noteholder and Certificateholder affected
thereby, (b) reduce the aforesaid percentage of the Note Balance required to
consent to any such amendment, without the consent of the Holders of all Notes
then outstanding or eliminate the right of the Noteholder or the
Certificateholder to consent to any change described in clause (a) affecting the
Noteholder or the Certificateholder without the consent of the Noteholder or the
Certificateholder, as applicable, (c) result in a downgrade or withdrawal of the
then current rating of the Notes by either of the Rating Agencies without the
consent of all the Noteholders or (d) have a material adverse effect on the
Class B Noteholders, without the consent of each Class B Noteholder affected
thereby; provided, further that in the case of clause (ii) above, this Agreement
may be amended from time to time by the Issuer, the Transferor, the Originator,
the Servicer, the Trust Collateral Agent, the Back-up Servicer and the
Custodian, for any of the following purposes:

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

                  (y) to add to the covenants of the Transferor, the Originator
          or the Servicer, for the benefit of the Holders of the Notes and the
          Note Insurer; or

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

          (b) The Trust Collateral Agent shall furnish prior notice of any such
proposed amendment to each Rating Agency and promptly after the execution of any
such amendment or consent, the Trust Collateral Agent shall furnish a copy of
such amendment and/or consent, if applicable, to each Noteholder, each of the
Rating Agencies and the Lock-Box Processor.

          (c) Prior to the execution of any amendment to this Agreement, the
Trust Collateral Agent shall be entitled to receive and rely upon an Opinion of
Counsel stating that the execution of such amendment is authorized or permitted
by this Agreement and the Opinion of Counsel referred to in Section 13.2(i)(1).
The Trust Collateral Agent may, but shall not be obligated to, enter into any
such amendment which affects the Trust Collateral Agent's own rights, duties or
immunities under this Agreement or otherwise.

                  SECTION 13.2. Protection of Title.

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

                                       66
<PAGE>

protect the interest of the Indenture Trustee on behalf of the Noteholders, the
Trust Collateral Agent and the Note Insurer in its interest in the Receivables
and the other Trust Assets and in the proceeds thereof. Each of the Transferor,
as to itself, and the Servicer, as to itself, shall deliver (or cause to be
delivered) to the Trust Collateral Agent, the Owner Trustee and the Note Insurer
file-stamped copies of, or filing receipts for, any document filed as provided
above, as soon as available following such filing.

          (b) Neither the Transferor nor the Servicer shall change its name,
identity or corporate structure in any manner that would, could, or might make
any financing statement or continuation statement filed in accordance with
paragraph (a) above seriously misleading within the meaning of (section)9-507(C)
of the UCC, unless it shall have given the Trust Collateral Agent, the Owner
Trustee, the Note Insurer and the other party at least thirty days' prior
written notice thereof, shall have promptly filed appropriate amendments to all
previously filed financing statements or continuation statements and shall have
delivered an Opinion of Counsel (A) stating that, in the opinion of such
counsel, all amendments to all previously filed financing statements and
continuation statements have been executed and filed that are necessary fully to
preserve and protect the interest of the Trust Collateral Agent in the
Receivables and the other Trust Assets, and reciting the details of such filings
or (B) stating that, in the opinion of such counsel, no such action shall be
necessary to preserve and protect such interest.

          (c) Each of the Transferor and the Servicer shall have an obligation
to give the Trust Collateral Agent, the Owner Trustee, the Note Insurer and the
other party at least thirty days' prior written notice of any relocation of its
principal executive office or change in its state of incorporation if, as a
result of such relocation or change, the applicable provisions of the UCC would
require the filing of any amendment of any previously filed financing or
continuation statement or of any new financing statement, shall promptly file
any such amendment and shall deliver an Opinion of Counsel (A) stating that, in
the opinion of such counsel, all amendments to all previously filed financing
statements and continuation statements have been executed and filed that are
necessary fully to preserve and protect the interest of the Trust Collateral
Agent in the Receivables, and reciting the details of such filings or (B)
stating that, in the opinion of such counsel, no such action shall be necessary
to preserve and protect such interest. The Servicer shall at all times maintain
each office from which it shall service Receivables, and its principal executive
office, within the United States of America.

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

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

                                       67
<PAGE>

of a Receivable shall be deleted from or modified on the Servicer's computer
systems when, and only when, such Receivable shall have been paid in full or
repurchased.

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

          (g) The Servicer shall, upon reasonable notice, permit the Transferor,
the Trust Collateral Agent, the Back-up Servicer, the Owner Trustee and the Note
Insurer and its agents at any time during normal business hours to inspect,
audit, and make copies of and abstracts from the Servicer's records regarding
any Receivable.

          (h) Upon request, the Servicer shall furnish to the Transferor, the
Trust Collateral Agent, the Back-up Servicer, the Owner Trustee or to the Note
Insurer, within five Business Days, a list of all Receivables (by contract
number and name of Obligor) then held as part of the Issuer, together with a
reconciliation of such list to the Schedule of Receivables and to each of the
Servicer's Certificates furnished before such request indicating removal of
Receivables from the Issuer.

          (i) The Servicer shall deliver to the Trust Collateral Agent, the
Owner Trustee and the Note Insurer:

                  (1) promptly after the execution and delivery of this
          Agreement and of each amendment hereto and after the execution and
          delivery of each amendment to any financing statement, an Opinion of
          Counsel either (A) stating that, in the opinion of such counsel, all
          financing statements and continuation statements have been executed
          and filed that are necessary fully to preserve and protect the
          interest of the Trust Collateral Agent in the Receivables, and
          reciting the details of such filings or referring to prior Opinions of
          Counsel in which such details are given or (B) stating that, in the
          opinion of such counsel, no such action shall be necessary to preserve
          and protect such interest; and

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

                                       68
<PAGE>

Each Opinion of Counsel referred to in clause (i) (1) or (i) (2) above shall
specify any action necessary (as of the date of such opinion) to be taken in the
following year to preserve and protect such interest.

          (j) For the purpose of facilitating the execution of this Agreement
and for other purposes, this Agreement may be executed simultaneously in any
number of counterparts, each of which counterparts shall be deemed to be an
original, and all of which counterparts shall constitute but one and the same
instrument.

                  SECTION 13.3. Limitation on Rights of Noteholders.

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

          (b) No Noteholder shall have any right to vote (except as specifically
provided herein including in Section 13.1) or in any manner otherwise control
the operation and management of the Issuer, or the obligations of the parties to
this Agreement, nor shall anything in this Agreement set forth, or contained in
the terms of the Notes, be construed so as to constitute the Noteholders from
time to time as partners or members of an association; nor shall any Noteholder
be under any liability to any third person by reason of any action taken
pursuant to any provision of this Agreement.

          (c) So long as no Note Insurer Default has occurred and is continuing,
except as otherwise specifically provided herein, whenever Noteholder action,
consent or approval is required under this Agreement, such action, consent or
approval shall be deemed to have been taken or given on behalf of, and shall be
binding upon, all Noteholders if the Note Insurer agrees to take such action or
give such consent or approval.

          (d) If a Note Insurer Default shall have occurred and be continuing,
no Noteholder shall have any right by virtue or by availing itself of any
provisions of this Agreement to institute any suit, action, or proceeding in
equity or at law upon or under or with respect to this Agreement, unless such
Holder previously shall have given to the Trust Collateral Agent a written
notice of default and of the continuance thereof, and unless also the Class A
Noteholders evidencing not less than 25% of the Class A Note Balance or, after
the Policy Expiration Date, the Class B Noteholders evidencing not less than 25%
of the Class B Note Balance shall have made written request upon the Trust
Collateral Agent to institute such action, suit or proceeding in its own name as
Trustee under this Agreement and shall have offered to the Trust Collateral
Agent such reasonable indemnity as it may require against the costs, expenses,
and liabilities to be incurred therein or thereby and the Trust Collateral
Agent, for 30 days after its receipt of such notice, request, and offer of
indemnity, shall have neglected or refused to institute any such action, suit or
proceeding and during such 30-day period no request or waiver inconsistent with
such written request has been given to the Trust Collateral Agent pursuant to
this Section or Section 8.4; no one or more Holders of Notes shall have any
right in any manner whatever by virtue or by availing itself or themselves of
any provisions of this Agreement to affect, disturb, or

                                       69
<PAGE>

prejudice the rights of the Holders of any other of the Notes, or to obtain or
seek to obtain priority over or preference to any other such Holder, or to
enforce any right, under this Agreement except in the manner provided in this
Agreement and for the equal, ratable, and common benefit of all Noteholders. For
the protection and enforcement of the provisions of this Section 13.3, each
Noteholder and the Trust Collateral Agent shall be entitled to such relief as
can be given either at law or in equity. Nothing in this Agreement shall be
construed as giving the Noteholders any direct right to make a claim on the
Policy.

                  SECTION 13.4. Governing Law. THIS AGREEMENT SHALL BE CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, AND THE OBLIGATIONS,
RIGHTS, AND REMEDIES OF THE PARTIES UNDER THIS AGREEMENT SHALL BE DETERMINED IN
ACCORDANCE WITH SUCH LAWS WITHOUT REGARD TO CONFLICT OF LAWS PRINCIPLES (EXCEPT
WITH REGARD TO THE UCC).

                  SECTION 13.5. Notices.

          (a) All demands, notices and communications upon or to the Issuer, the
Transferor, the Servicer, the Trust Collateral Agent, the Note Insurer, Standard
& Poor's or Moody's under this Agreement shall be in writing, and delivered (i)
personally, (ii) by certified mail, return receipt requested, (iii) by Federal
Express or similar overnight courier service or (iv) by telecopy, and shall be
deemed to have been duly given upon receipt (a) in the case of the Issuer, in
care of the Owner Trustee at the following address: Rodney Square North, 1100
North Market Street, Wilmington, Delaware 19890-0001, Attention: Corporate Trust
Administration (Telecopy: (302) 651-8882), (b) in the case of the Transferor, at
the following address: One Mack Centre Drive, Paramus, New Jersey 07652
(Telecopy: (201) 262-6868), Attention: General Counsel, or at such other address
as shall be designated by the Transferor in a written notice to the Trust
Collateral Agent, (c) in the case of the Servicer, at the following address: One
Mack Centre Drive, Paramus, New Jersey 07652 (Telecopy: (201) 262-6868),
Attention: General Counsel, (d) in the case of the Trust Collateral Agent, at
the Corporate Trust Office (Telecopy: (212) 946-3916), (e) in the case of the
Custodian, at the Corporate Trust Office (Telecopy: (212) 946-3916), (f) in the
case of Standard & Poor's, at the following address: 44 Water Street, 40th
Floor, New York, New York 10041, Attention: Asset Backed Surveillance
Department, (g) in the case of Moody's, at the following address: 99 Church
Street, New York, New York 10007, Attention: ABS Monitoring Department and (h)
in the case of the Note Insurer, at the following address: 113 King Street,
Armonk, NY 10504, Attention: Insured Portfolio Management-Structured Finance
(IPM-SF), Re: Long Beach Acceptance Auto Receivables Trust 2003-A. Any notice
required or permitted to be mailed to a Noteholder shall be given by Federal
Express or similar overnight courier service, postage prepaid, at the address of
such Holder as shown in the Note Register. Any notice so mailed within the time
prescribed in this Agreement shall be conclusively presumed to have been duly
given, whether or not the Noteholder shall receive such notice.

          (b) The Trust Collateral Agent shall give prompt written notice to
each of the Transferor, the Rating Agencies and each Noteholder of (i) any
amendments to the Insurance Agreement or the Policy (upon receipt of written
notice of any such amendments from LBAC or

                                       70
<PAGE>

the Servicer), (ii) any change in the identity of the Note Paying Agent and
(iii) any failure to make payment under the Policy.

                  SECTION 13.6. Severability of Provisions. If any one or more
of the covenants, agreements, provisions, or terms of this Agreement shall be
for any reason whatsoever held invalid, then such covenants, agreements,
provisions, or terms shall be deemed severable from the remaining covenants,
agreements, provisions, or terms of this Agreement and shall in no way affect
the validity or enforceability of the other provisions of this Agreement or of
the Notes or the rights of the Holders thereof.

                  SECTION 13.7. Assignment to Indenture Trustee. The Transferor
hereby acknowledges and consents to any mortgage, pledge, assignment and grant
of a security interest by the Issuer to the Indenture Trustee pursuant to the
Indenture for the benefit of the Noteholders and the Note Insurer of all right,
title and interest of the Issuer in, to and under the Receivables and/or the
assignment of any or all of the Issuer's rights and obligations hereunder to the
Indenture Trustee.

                  SECTION 13.8. Limitation of Liability of Owner Trustee,
Custodian and Trust Collateral Agent.

          (a) Notwithstanding anything contained herein to the contrary, this
Agreement has been countersigned by Wilmington Trust Company not in its
individual capacity but solely in its capacity as Owner Trustee of the Issuer
and in no event shall Wilmington Trust Company in its individual capacity or,
except as expressly provided in the Trust Agreement, as Owner Trustee, have any
liability for the representations, warranties, covenants, agreements or other
obligations of the Issuer hereunder or in any of the certificates, notices or
agreements of the Issuer delivered pursuant hereto, as to all of which recourse
shall be had solely to the assets of the Issuer. For all purposes of this
Agreement, in the performance of its duties or obligations hereunder or in the
performance of any duties or obligations of the Issuer hereunder, the Owner
Trustee shall be subject to, and entitled to the benefits of, the terms and
provisions of the Trust Agreement.

          (b) Notwithstanding anything contained herein to the contrary, this
Agreement has been executed and delivered by JPMorgan Chase, not in its
individual capacity but solely as Back-up Servicer, Custodian and Trust
Collateral Agent and in no event shall JPMorgan Chase have any liability for the
representations, warranties, covenants, agreements or other obligations of the
Issuer hereunder or in any of the certificates, notices or agreements of the
Issuer delivered pursuant hereto, as to all of which recourse shall be had
solely to the assets of the Issuer.

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

                                       71
<PAGE>

                  SECTION 13.10. No Joint Venture. Nothing contained in this
Agreement (i) shall constitute the Servicer and either of the Issuer or the
Owner Trustee as members of any partnership, joint venture, association,
syndicate, unincorporated business or other separate entity, (ii) shall be
construed to impose any liability as such on any of them or (iii) shall be
deemed to confer on any of them any express, implied or apparent authority to
incur any obligation or liability on behalf of the others.

                  SECTION 13.11. Nonpetition Covenant. None of the Transferor,
the Servicer, the Trust Collateral Agent, the Custodian, the Back-up Servicer or
LBAC shall, prior to the date which is one year and one day after the
termination of this Agreement with respect to the Issuer or the Transferor,
petition or otherwise invoke the process of any court or government authority
for the purpose of commencing or sustaining a case against the Issuer or the
Transferor under any Federal or State bankruptcy, insolvency or similar law or
appointing a receiver, liquidator, assignee, trustee, custodian, sequestrator or
other similar official of the Issuer or the Transferor or any substantial part
of its property, or ordering the winding up or liquidation of the affairs of the
Issuer or the Transferor.

                  SECTION 13.12. Third Party Beneficiaries. Except as otherwise
specifically provided herein with respect to Noteholders and the
Certificateholder, the parties to this Agreement hereby manifest their intent
that no third party other than the Note Insurer, the Owner Trustee and the
Custodian with respect to the indemnification provisions set forth herein, shall
be deemed a third party beneficiary of this Agreement, and specifically that the
Obligors are not third party beneficiaries of this Agreement. The Note Insurer
and its successors and assigns shall be a third-party beneficiary to the
provisions of this Agreement, and shall be entitled to rely upon and directly
enforce such provisions of this Agreement so long as no Note Insurer Default
shall have occurred and be continuing. Except as expressly stated otherwise
herein or in the Basic Documents, any right of the Note Insurer to direct,
appoint, consent to, approve of or take any action under this Agreement, shall
be a right exercised by the Note Insurer in its sole and absolute discretion.
The Note Insurer may disclaim any of its rights and powers under this Agreement
(but not its duties and obligations under the Policy) upon delivery of a written
notice to the Trust Collateral Agent.

                  SECTION 13.13. Consent to Jurisdiction.

          (a) TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, THE PARTIES
HERETO HEREBY IRREVOCABLY SUBMIT TO THE JURISDICTION OF THE UNITED STATES
DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK AND ANY COURT IN THE STATE
OF NEW YORK LOCATED IN THE CITY AND COUNTY OF NEW YORK, AND ANY APPELLATE COURT
FROM ANY THEREOF, IN ANY ACTION, SUIT OR PROCEEDING BROUGHT AGAINST IT AND TO OR
IN CONNECTION WITH ANY OF THE TRANSACTION DOCUMENTS OR THE TRANSACTION OR FOR
RECOGNITION OR ENFORCEMENT OF ANY JUDGMENT, AND THE PARTIES HERETO HEREBY
IRREVOCABLY AND UNCONDITIONALLY AGREE THAT ALL CLAIMS IN RESPECT OF ANY SUCH
ACTION OR PROCEEDING MAY BE HEARD OR DETERMINED IN SUCH NEW YORK STATE COURT OR
IN SUCH FEDERAL COURT. THE PARTIES HERETO AGREE THAT A FINAL JUDGMENT IN ANY
SUCH ACTION, SUIT OR PROCEEDING SHALL BE CONCLUSIVE AND MAY BE

                                       72
<PAGE>

ENFORCED IN OTHER JURISDICTIONS BY SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER
PROVIDED BY LAW. TO THE EXTENT PERMITTED BY APPLICABLE LAW, THE PARTIES HERETO
HEREBY WAIVE AND AGREE NOT TO ASSERT BY WAY OF MOTION, AS A DEFENSE OR OTHERWISE
IN ANY SUCH SUIT, ACTION OR PROCEEDING, ANY CLAIM THAT IT IS NOT PERSONALLY
SUBJECT TO THE JURISDICTION OF SUCH COURTS, THAT THE SUIT, ACTION OR PROCEEDING
IS BROUGHT IN AN INCONVENIENT FORUM, THAT THE VENUE OF THE SUIT, ACTION OR
PROCEEDING IS IMPROPER OR THAT THE RELATED DOCUMENTS OR THE SUBJECT MATTER
THEREOF MAY NOT BE LITIGATED IN OR BY SUCH COURTS.

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

          (c) Each of LBAC and the Transferor hereby agree that until such time
at the Notes and the Reimbursement Obligations have been paid in full and the
Policy has expired in accordance with its terms, each of LBAC and the Transferor
shall have appointed, with prior written notice to the Note Insurer, an agent
registered with the Secretary of State of the State of New York, with an office
in the County of New York in the State of New York, as its true and lawful
attorney and duly authorized agent for acceptance of service of legal process
(which as of the date hereof is National Registered Agents, Inc., whose address
is 105 Chambers Street, New York, New York 10007). Each of LBAC and the
Transferor agrees that service of such process upon such Person shall constitute
personal service of such process upon it.

                  SECTION 13.14. Headings. The headings of articles and sections
and the table of contents contained in this Agreement are provided for
convenience only. They form no part of this Agreement and shall not affect its
construction or interpretation. Unless otherwise indicated, all references to
articles and sections in this Agreement refer to the corresponding articles and
sections of this Agreement.

                  SECTION 13.15. Trial by Jury Waived. EACH PARTY HERETO HEREBY
WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY RIGHT TO A TRIAL BY JURY IN
RESPECT OF ANY LITIGATION ARISING DIRECTLY OR INDIRECTLY OUT OF, UNDER OR IN
CONNECTION WITH ANY OF THE TRANSACTION DOCUMENTS OR THE TRANSACTION. EACH PARTY
HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY PARTY
HERETO HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT IT WOULD NOT, IN THE EVENT
OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT
HAS BEEN INDUCED TO ENTER INTO THE TRANSACTION DOCUMENTS TO WHICH IT IS A PARTY
BY, AMONG OTHER THINGS, THIS WAIVER.

                  SECTION 13.16. Entire Agreement. This Agreement sets forth the
entire agreement between the parties with respect to the subject matter hereof,
and this Agreement supersedes and replaces any agreement or understanding that
may have existed between the parties prior to the date hereof in respect of such
subject matter.

                                       73
<PAGE>

                  SECTION 13.17. Effect of Policy Expiration Date.
Notwithstanding anything to the contrary set forth herein, all references to any
right of the Note Insurer to direct, appoint, consent to, accept, approve of,
take or omit to take any action under this Agreement or any other Basic Document
shall be inapplicable at all times after the Policy Expiration Date, and (i) if
such reference provides for another party or parties to take or omit to take any
such action following a Note Insurer Default, such party or parties shall also
be entitled to take or omit to take such action following the Policy Expiration
Date and (ii) if such reference does not provide for another party or parties to
take or omit to take any such action following a Note Insurer Default, then the
Indenture Trustee acting at the direction of the Majorityholders shall have the
right to take or omit to take any such action following the Policy Expiration
Date. In addition, any other provision of this Agreement or any other Basic
Document which is operative based in whole or in part on whether a Note Insurer
Default has or has not occurred shall, at all times on or after the Policy
Expiration Date, be deemed to refer to whether or not the Policy Expiration Date
has occurred.

                                       74
<PAGE>

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

                         LONG BEACH ACCEPTANCE RECEIVABLES CORP. II, as
                         Transferor

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

                         LONG BEACH ACCEPTANCE CORP.,
                         as Originator and Servicer

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

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

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

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

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

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

                         [Sale and Servicing Agreement]

<PAGE>

                                                                         ANNEX A

                                  DEFINED TERMS

                                     ANNEX A

<PAGE>

                                                                     EXHIBIT A-1

                              Issuer's Certificate
                             pursuant to Section 3.4
                            of the Sale and Servicing
                                    Agreement

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

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

                                                       _________________________

                                      A-1-1

<PAGE>

                                                                     EXHIBIT A-2

                              Issuer's Certificate
                             pursuant to Section 4.7
                            of the Sale and Servicing
                                    Agreement

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

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

                                                       _________________________

                                      A-2-1

<PAGE>

                                                                     EXHIBIT B-1

                             SERVICER'S CERTIFICATE
               LONG BEACH ACCEPTANCE AUTO RECEIVABLES TRUST 2003-A
                      1.2875%  ASSET-BACKED NOTES, CLASS A-1
                      1.4910%  ASSET-BACKED NOTES, CLASS A-2
                      2.0210%  ASSET-BACKED NOTES, CLASS A-3
                      2.7730%  ASSET-BACKED NOTES, CLASS A-4
                      8.5000%  ASSET-BACKED NOTES, CLASS B

                                      B-1-1

<PAGE>

                                                                     EXHIBIT B-2

                         Form of Loan Master File Layout

                                      B-2-1

<PAGE>

                                                                       EXHIBIT C

                              Intentionally Omitted

                                       C-1
<PAGE>

                                                                       EXHIBIT D

                            PAYMENT DEFERMENT POLICY

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

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

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

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

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

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

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

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

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

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

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

                                       D-1

<PAGE>

                             DUE DATE CHANGE POLICY

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

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

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

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

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

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

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

                                       D-2
<PAGE>

                                                                       EXHIBIT E

                             Documentation Checklist

CUSTOMER:_______________________________________________________________________

ACCOUNT NUMBER:_________________________________________________________________

<TABLE>
<CAPTION>

This funding package contains the following initialed items:

<S>                                                                         <C>
   1.  Installment contract with proper signatures and Dealer endorsements  1.__________________

   2.  Copy of signed credit application                                    2.__________________

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

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

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

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

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

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

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

   10. Notice to cosignor, if required                                      10._________________

   11. Service contract or warranty papers                                  11._________________

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

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

</TABLE>

                                       E-1

<PAGE>

                                                                       EXHIBIT F

                  [Form of Request for Transfer of Possession]

                                ___________, 20__

JPMorgan Chase Bank
4 New York Plaza, 6th Floor
New York, NY 10004
Attention: Capital Markets Fiduciary Services
Telephone: ___________
Telecopy: ____________

Ladies and Gentlemen:

Reference is made to the Sale and Servicing Agreement, dated as of March 1, 2003
(the "Sale and Servicing Agreement"), among LONG BEACH ACCEPTANCE RECEIVABLES
CORP. II, a Delaware corporation, as transferor, LONG BEACH ACCEPTANCE CORP., a
Delaware corporation, as originator and servicer, LONG BEACH ACCEPTANCE AUTO
RECEIVABLES TRUST 2003-A, a Delaware statutory trust, as issuer (the "Issuer"),
JPMORGAN CHASE BANK, a New York banking corporation, as trust collateral agent,
back-up servicer and custodian (in such capacity, the "Custodian"). Capitalized
terms used but not defined in this letter have the meanings set forth in the
Sale and Servicing Agreement.

The Servicer hereby requests that the Custodian transfer possession of the Legal
Files, or such portion of the Legal Files as is identified herein, relating to
the Receivables listed in Annex A hereto to [the Servicer] [________________ as
subservicer (the "Subservicer") for the Servicer] [for purposes of collection or
presentation, renewal or registration of transfer (unless the related
Receivables' Owner objects to this request to the Custodian (i) by 5:00 PM on
the same Business Day this request is made if it is made by 1:00 PM or (ii) by
11:00 AM on the next Business Day if this request is made after 1:00 PM] [for
purposes of correcting deficiencies in the Legal Files], the possession of which
is transferred pursuant to this request will be transferred subject to a
Custodial Letter duly executed by [the Servicer] [the Subservicer] and a
Transfer Notice duly executed by the Custodian. [The portion of the Legal Files
requested for transfer of possession hereunder is ___________.]

                                 Very truly yours,

                                 LONG BEACH ACCEPTANCE CORP.

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

                                       F-1
<PAGE>

                                                                       EXHIBIT G

                           [Form of Custodial Letter]

                                ___________, 20__

JPMorgan Chase Bank
4 New York Plaza, 6th Floor
New York, NY 10004
Attention:  Capital Markets Fiduciary Services
Telephone:  ___________
Telecopy:  ____________

Ladies and Gentlemen:

Reference is made to the Sale and Servicing Agreement, dated as of March 1, 2003
(the "Sale and Servicing Agreement"), among LONG BEACH ACCEPTANCE RECEIVABLES
CORP. II, a Delaware corporation, as transferor, LONG BEACH ACCEPTANCE CORP., a
Delaware corporation, as originator and servicer, LONG BEACH ACCEPTANCE AUTO
RECEIVABLES TRUST 2003-A, a Delaware statutory trust, as issuer (the "Issuer"),
JPMORGAN CHASE BANK, a New York banking corporation, as trust collateral agent,
custodian and back-up servicer. Capitalized terms used but not defined in this
letter have the meanings set forth in the Sale and Servicing Agreement.

[The Servicer] [_____________________, as Subservicer (the "Subservicer") for
the Servicer] acknowledges that the Issuer is owner of all Receivables (and
their proceeds). The Agreement provides that the Servicer, or the Subservicer,
may request from time to time that possession of all or a portion of the Legal
Files delivered to and held by the Custodian pursuant to the Sale and Servicing
Agreement be transferred to [the Servicer] [the Subservicer] [for purposes of
collection, or presentation, renewal or registration of transfer] [for purposes
of correcting deficiencies in the Legal Files]. Subject to the terms of the Sale
and Servicing Agreement, the Custodian is authorized to so transfer possession
of such Legal Files, or portion thereof, such transfer of possession to be
accomplished pursuant to a Transfer Notice substantially in the form of Annex A
to this Custodial Letter.

[The Servicer] [The Subservicer] hereby agrees as follows:

(a) [The Servicer] [The Subservicer] acknowledges that the possession of any
such Legal Files will be so transferred subject to this Custodial Letter and
that they are and will continue to be the sole property of the Issuer.

(b) [The Servicer] [The Subservicer] agrees that such Legal Files will be
returned to the Custodian immediately upon notice by the Custodian or the Trust
Collateral Agent that sixty (60) days have elapsed from the date of such
transfer; provided, that instead of sixty (60) days, the time limit applicable
to any certificate of title is one hundred twenty (120) days.

                                       G-1
<PAGE>

(c) The Legal Files will not be used for any purpose other than that for which
[the Servicer] [the Subservicer] hereby requests such transfer of possession.

(d) At all times while the Legal Files are in [the Servicer's] [the
Subservicer's] possession, [the Servicer] [the Subservicer] will hold the Legal
Files IN TRUST for the Indenture Trustee, the Issuer, the Noteholders and the
Note Insurer.

(e) [The Servicer] [The Subservicer] will include this Custodial Letter and each
Transfer Notice in its business records.

(f) [The Servicer] [The Subservicer] will not deliver the Legal Files to any
person other than the Custodian except with the prior written consent of the
Trust Collateral Agent.

This Custodial Letter shall be governed by and construed in accordance with the
laws of the State of Texas.

                                 LONG BEACH ACCEPTANCE CORP.

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

                                 [SUBSERVICER'S NAME]

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

                                       G-2

<PAGE>

                                         EXHIBIT G - ANNEX A to Custodial Letter

                            [Form of Transfer Notice]

[Long Beach Acceptance Corp.
One Mack Centre Drive
Paramus, New Jersey 07652
Telecopy:  (201) 262-6868]

[Subservicer (the "Subservicer")
Address
Address
Telecopy:_______________________]

Ladies and Gentlemen:

Reference is made to the Sale and Servicing Agreement, dated as of March 1, 2003
(the "Sale and Servicing Agreement"), among LONG BEACH ACCEPTANCE RECEIVABLES
CORP. II, a Delaware corporation, as transferor, LONG BEACH ACCEPTANCE CORP., a
Delaware corporation, as originator and servicer, LONG BEACH ACCEPTANCE AUTO
RECEIVABLES TRUST 2003-A, a Delaware statutory trust, as issuer (the "Issuer"),
JPMORGAN CHASE BANK, a New York banking corporation, as trust collateral agent,
back-up servicer and custodian. Capitalized terms used but not defined in this
letter have the meanings set forth in the Sale and Servicing Agreement.

The possession of the Legal Files relating to the Receivables listed in Annex A
is transferred to you IN TRUST for the Issuer, the Indenture Trustee, the Note
Holders and the Note Insurer, subject to the terms and provisions of the Sale
and Servicing Agreement, and subject to the Custodial Letter you executed
pursuant to Section 3.5(c) of the Sale and Servicing Agreement.

                                 Very truly yours,

                                 JPMORGAN CHASE BANK

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

                                       G-3
<PAGE>

                                          EXHIBIT G - ANNEX A to Transfer Notice

<TABLE>
<CAPTION>

              Receivable                             Amount of                              Name of
                Number                              Receivable                        Receivable Borrower
--------------------------------------  -----------------------------------  --------------------------------------
<S>                                     <C>                                   <C>

</TABLE>

                                       G-4
<PAGE>

                                                                      SCHEDULE A

                             SCHEDULE OF RECEIVABLES

                                  Schedule A-1
<PAGE>

                                                                      SCHEDULE B

Location of Receivable Files

One Mack Centre Drive
Paramus, New Jersey 07652

Location of Legal Files

1111 Fannin
12th Floor
Houston, Texas 77002
Attention: Loan Document
           Custody - Long Beach Acceptance
           Auto Receivables Trust 2003-A

                                  Schedule B-1
<PAGE>

                                                                      SCHEDULE C

                              Delivery Requirements

The Trust Collateral Agent shall have sole control over each such investment and
the income thereon, and any certificate or other instrument evidencing any such
investment, if any shall, except for clearing corporation securities, be
delivered directly to the Trust Collateral Agent or its agent, together with
each document of transfer, if any, necessary to transfer title to such
investment to the Trust Collateral Agent in a manner that complies with this
Agreement and the requirements of the definition of Eligible Investments.s

                                  Schedule C-1

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