Document:

Exhibit 10.34

 

RETROCESSIONAL MEMORANDUM

for a

CESSION OF REINSURED RISK

under the

ACE FACULTATIVE RETROCESSIONAL AGREEMENT

between

ACE BERMUDA INSURANCE LTD.,

AS RETROCEDENT

and

ACE CAPITAL RE INTERNATIONAL LTD.,

AS RETROCESSIONAIRE

 

	
  RETROCESSIONAL

  MEMORANDUM NO.:

  	
   

  	
  [ACE]1999-003.

  
	
   

  	
   

  	
   

  
	
  COVERED
  BUSINESS:

  	
   

  	
  The
  Aggregate Excess of Loss Reinsurance Agreement entered into between the
  Retrocedent and the Original Reinsured dated as of May 25, 1999 (the “Reinsurance Agreement”). A copy of the
  Reinsurance Agreement is attached hereto as Exhibit 1 and incorporated
  herein.

  
	
   

  	
   

  	
   

  
	
  ORIGINAL
  REINSURED:

  	
   

  	
  Centre
  Insurance International Company.

  
	
   

  	
   

  	
   

  
	
  TERM:

  	
   

  	
  Incepting
  and terminating simultaneously with and on the same basis as the Reinsurance
  Agreement.

  
	
   

  	
   

  	
   

  
	
  TYPE
  OF RETROCESSION:

  	
   

  	
  Quota
  Share.

  
	
   

  	
   

  	
   

  
	
  QUOTA
  SHARE

  PERCENTAGE:

  	
   

  	
  100%.

  
	
   

  	
   

  	
   

  
	
  LOSS
  ADJUSTMENT

  EXPENSES:

  	
   

  	
  Applicable.

  
	
   

  	
   

  	
   

  
	
  PREMIUM:

  	
   

  	
  The
  Quota Share Percentage of the Reinsurance Premium payable under the
  Reinsurance Agreement subject to adjustment as per the terms of the Reinsurance
  Agreement.

  
	
   

  	
   

  	
   

  
	
  CEDING
  COMMISSION:

  	
   

  	
  Nil.

  
	
   

  	
   

  	
   

  
	
  TAXES:

  	
   

  	
  N/A.

  
	
   

  	
   

  	
   

  
	
  REPORTS:

  	
   

  	
  The
  Retrocedent shall forward to the Retrocessionaire all reports provided to the
  Retrocedent under the Reinsurance Agreement within five business days of
  receipt thereof.

  
	
   

  	
   

  	
   

  
	
  CASH
  LOSS AMOUNT:

  	
   

  	
  Applicable
  for loss amounts in excess of $0.

  

 

 

	
  CURRENCY;
  EXCHANGE RATE:

  	
   

  	
  As
  per terms of Reinsurance Agreement.

  

 

The cession evidenced by this Retrocessional Memorandum shall be
subject to all the terms and conditions contained in the ACE Facultative
Retrocessional Agreement dated as of January 1, 1998 between the parties, which
the undersigned hereby acknowledge as being an agreement between and binding
upon the undersigned.

 

	
  SUBMITTED BY:

  	
  ACCEPTED
  BY:

  
	
   

  	
   

  
	
  ACE BERMUDA INSURANCE LTD.

  	
  ACE CAPITAL RE INTERNATIONAL LTD.

  
	
   

  	
   

  
	
   

  	
   

  
	
  BY:

  	
  /s/ Andrew M. Gibbs

  	
   

  	
  BY:

  	
  /s/ Stephen
  Donnarumme

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  NAME:

  	
  Andrew M. Gibbs

  	
   

  	
  NAME:

  	
  Stephen Donnarumme

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  TITLE:

  	
  CFO / COO

  	
   

  	
  TITLE:

  	
  COO

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  DATE:

  	
  Jan 22, 04

  	
   

  	
  DATE:

  	
  22 Jan 04Exhibit 10.35

 

QUOTA SHARE REINSURANCE AGREEMENT

(the “Agreement”)

 

between

 

JCJ INSURANCE COMPANY

(the “Company”)

 

and

 

KRE REINSURANCE LTD.

(the “Reinsurer”)

 

3.5% xs 8.5% Layer

 

For good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties agree as
follows:

 

ARTICLE 1.  REINSURANCE COVERAGE

 

The Company hereby cedes to the Reinsurer on
a quota share basis, and the Reinsurer hereby assumes from the Company on a
quota share basis, 100% of the liability of the Company under the Residual
Value Insurance Policy entered into between the Company (as insurer) and World
Omni Financial Corporation (as insured) (the “Original Insured”), a copy of
which is attached hereto as Annex A (as the same may be amended, modified or
assigned in accordance with the terms hereof, the “Policy”).

 

ARTICLE 2.  TERM

 

The term of this Agreement (the “Term”) shall
be coterminous with the term of the Policy.

 

ARTICLE 3.  PREMIUM

 

The premium payable to the Reinsurer
hereunder (the “Reinsurance Premium”) is $26,250,000. The Reinsurance Premium
is payable in three equal installments, as follows; (i) the first installment
is payable within 12 days following execution of this Agreement; (ii) the
second installment is payable on July 3, 2000 and (iii) the third installment
is payable on January 3, 2001.  For the
avoidance of doubt, the second and third installments of the Reinsurance
Premium shall be payable notwithstanding the termination of the Term prior to
the payment date for one or both of such installments. The Reinsurance Premium
shall be transmitted to the Reinsurer through Cooper Gay, 120 Wall Street, New
York, NY 10005.

 

 

ARTICLE
4.  REPORTS; ACCOUNTS AND REMITTANCES.

 

The Company shall forward to the Reinsurer
all accounts received by the Company pursuant to Article 5 of the Policy and
all reports received by the Company pursuant to Article 6 of the Policy.  Amounts payable by the Reinsurer to the
Company to reimburse the Company for the Reinsurer’s share of losses under the
Policy and for any other amounts due to the Company under this Agreement shall
be paid no later than the last day of the calendar quarter in which the
Reinsurer receives an accounting from the Company with respect to such amounts.
All amounts owing by the Reinsurer to the Company hereunder shall be
transmitted to the account of the Company specified in writing to the
Reinsurer.

 

ARTICLE
5.  ACCESS TO RECORDS

 

The Reinsurer, its authorized representatives
and its retrocessionaires shall have access to the books and records of the
Company at all reasonable times for the purpose of obtaining information
concerning this Agreement or its subject matter and the right to make copies
thereof (at its own expense).

 

The Company shall secure for the Reinsurer
rights of audit with respect to the Original Insured that are comparable to
those granted by the Original Insured to the Company under the Policy.

 

ARTICLE
6.  COVENANTS

 

The Company shall not amend, modify or
terminate, or waive any provision of, the Policy without the prior written
consent of the Reinsurer.

 

The Company shall enforce its rights under
the Policy to the fullest extent permitted by law.

 

The Company shall not consent to any
modification by the Original Insured of the Original Insured’s servicing,
remarketing or loss mitigation practices without the prior written consent of
the Reinsurer.

 

ARTICLE
7.  EXCLUSIONS

 

This Agreement does not cover (i) bad faith,
punitive damages or other extracontractual liability asserted against the
Company, its officers, directors, employees or agents, (ii) any payment by the
Company in excess of its contractual obligations under the Policy, and (iii)
office expenses of the Company and salaries of officials and employees of the
Company.

 

2

 

ARTICLE
8.  CREDIT FOR REINSURANCE

 

To the extent necessary to permit the Company to receive full credit in
the statutory statements it is required to file with the Vermont Insurance
Department for the outstanding loss reserves and unearned premium reserves
ceded hereunder (collectively, the “Obligations”), the Reinsurer shall,
promptly following receipt of a statement setting forth the Obligations, either
(at the option of the Reinsurer) (i) apply for and provide the Company with a
clean, unconditional and irrevocable letter of credit in the amount specified
in such statement with terms and issued by a bank acceptable to the Vermont
Insurance Department and reasonably acceptable to the Company, for the purpose
of credit for reinsurance (the “Letter of Credit”) or (ii) establish a trust
account for the benefit of the Company (the “Trust Account”) with a bank
acceptable to the Vermont Insurance Department and reasonably acceptable to the
Company and deposit in the Trust Account the amount specified in such
statement, for the purpose of credit for reinsurance. At intervals that are no
more frequent than once per calendar quarter, the Company shall prepare a
specific statement, for the sole purpose of amending the Letter of Credit or
adjusting the balance in the Trust Account, of the Obligations, and, to the
extent the Obligations reflected in such statement are greater than the amount
of the Letter of Credit or the balance of the Trust Account, the Reinsurer
shall secure an amendment of the Letter of Credit or shall deposit additional
assets in the Trust Account, as applicable. The cost of any Letter of Credit
(and amendments thereto) and/or Trust Account provided pursuant to this Article
shall be borne solely by the Company.

 

If the Reinsurer elects to establish a Trust Account, the trustee of
the Trust Account and the trust agreement shall comply with all applicable
requirements of regulatory authorities having jurisdiction over the
Company.  The assets deposited in the
Trust Account shall be valued according to their current fair market value, and
shall consist only of cash (United States legal tender), certificates of
deposit issued by a United States bank and payable in United States legal
tender, and investments of the type permitted by the Vermont Insurance Code, or
any combination of the above, provided that such investments are issued by an
institution that is not the Reinsurer or the Company or the parent, subsidiary
or affiliate of either the Reinsurer or the Company. Prior to depositing assets
with the trustee, the Reinsurer shall execute assignments, endorsements in
blank, or transfer legal title to the trustee of all shares, obligations or any
other assets requiring assignments, in order that the Company, or the trustee
upon the direction of the Company, may whenever necessary negotiate any such
assets without consent or signature from the Reinsurer or any other entity. All
settlements of account between the Company and the Reinsurer shall be made in
cash or its equivalent.

 

If the Reinsurer has established a Trust Account and the statement
shows that the Obligations are less than the balance of the Trust Account as of
the statement date, the Reinsurer shall have the right to seek approval from
the Company to withdraw from the Trust Account all or any part of the assets
contained therein and transfer such assets to the Reinsurer, provided that,
after such withdrawal and transfer, the market value of the assets in the Trust
Account is not less than 102 percent of the Obligations. In addition, the
Reinsurer shall have the right to seek approval from the Company to withdraw
from the Trust Account all or any part of the assets contained therein and
transfer such assets to the Reinsurer, provided that the Reinsurer shall, at
the time of such withdrawal, replace

 

3

 

the withdrawn assets with other assets meeting the above requirements
and having a market value at least equal to the market value of the assets
withdrawn so as to maintain at all times the deposit in the required amount.
The Company shall be the sole judge as to the application of this provision,
but shall not unreasonably or arbitrarily withhold its approval.

 

Notwithstanding any other provision of this Agreement, the Company or
any successor by operation of law of the Company including, without limitation,
any liquidator, rehabilitator, receiver or conservator of the Company, may draw
upon the Letter of Credit or withdraw assets from the Trust Account, without
diminution because of the insolvency of any party hereto, at any time and
undertake to use and apply the sum drawn for one or more of the following
purposes only:

 

1.                                       To
reimburse the Company for the Reinsurer’s share of premiums returned to the
Original Insured on account of cancellation of the Policy;

2.                                       To
reimburse the Company for the Reinsurer’s share of losses paid by the Company
under the terms and provisions of the Policy;

3.                                       To
fund an account with the Company in an amount at least equal to the deduction,
for reinsurance ceded, from the Company’s liabilities for the reinsurance ceded
hereunder (such amounts shall include, but not be limited to, amounts for
outstanding losses and unearned premium reserves); and

4.                                       To
pay any other amounts the Company claims are under this Agreement.

 

The Company shall pay interest at the prime rate of
interest on amounts held pursuant to paragraph 3 above. The Company shall
return to the Reinsurer amounts drawn in excess of the actual amounts required
for paragraphs 1, 2 and 3 above and, with respect to paragraph 4 above, any
amounts that are subsequently determined not to be due.

 

ARTICLE
9.  GENERAL PROVISIONS

 

1.              Insolvency.  In the event of the insolvency of the
Company, this reinsurance shall be payable directly to the Company, or its
liquidator, receiver, conservator or statutory successor, on the basis of the
liability of the Company without diminution because of the insolvency of the
Company or because the liquidator, receiver, conservator or statutory successor
of the Company has failed to pay all or a portion of any claim. It is agreed,
however, that the liquidator, receiver, conservator or statutory successor of
the Company shall give written notice to the Reinsurer of the pendency of each
claim against the Company with respect to which the Reinsurer may have
liability under this Agreement within a reasonable time after such claim is
filed in the conservation or liquidation proceeding or in the receivership.
During the pendency of such claim, the Reinsurer may investigate such claim and
interpose, at its own expense, in the proceeding where such claim is to be
adjudicated, any defense or defenses that it may deem available to the Company
or its liquidator, receiver, conservator or statutory successor. The expense
thus incurred by the Reinsurer shall be chargeable, subject to the approval of
the court, against the Company as part of the expense of conservation or
liquidation to the extent of a pro rata share of the benefit which may accrue
to the Company solely as a result of the defense undertaken by the Reinsurer.

 

4

 

2.              Errors and
Omissions.  Any inadvertent delay,
omission or error shall not be held to relieve either party hereto from any
liability that would attach to it under this Agreement if such delay, omission
or error had not been made, provided such delay, omission or error is rectified
as soon as possible after discovery thereof.

 

3.              Recoveries.  The Company shall credit the Reinsurer with
its pro rata share of any recoveries or reimbursements received by the Company
under the Policy.

 

4.              Arbitration.  Should an irreconcilable difference of
opinion or dispute arise between the parties to this Agreement as to the
interpretation of this Agreement, or as to transactions with respect to this
Agreement, such differences or dispute shall, before bringing any action or
suit hereunder, first be submitted to the decision of a board of arbitration
composed of two arbiters and an umpire, meeting in New York, New York, except
as hereinafter provided or unless otherwise agreed in writing by the parties.

 

To initiate arbitration,
either party shall notify the other party in writing of its desire to
arbitrate, stating the nature of its dispute, the remedy sought and the
identity of its chosen arbiter, and shall request that the responding party
appoint and identify its own arbiter.

 

The members of the board
of arbitration shall be active or retired disinterested officials of insurance
or reinsurance companies and may not be a present or former officer, attorney
or consultant of either party. After each party appoints its arbiter, the two
arbiters shall choose an umpire before instituting the hearing. If the
respondent fails to appoint its arbiter within four weeks after being requested
to do so by the claimant, the latter shall also appoint the second arbiter. If
the two arbiters fail to agree on the appointment of an umpire within four
weeks after their nomination, the umpire shall by chosen by the President of
the American Arbitration Association and shall be a person meeting the
qualifications set forth above.

 

Claimant shall submit its
initial brief within 20 days from the employment of the umpire. The respondent
shall submit its brief within 20 days thereafter, and the claimant may submit a
reply brief within 10 days after the filing of the respondent’s brief. The
board shall make its decision with regard to the customary usage of the
insurance and reinsurance business. The board is released from all judicial
formalities and may abstain from the strict rules of the law, interpreting this
Agreement as an honorable undertaking, rather than merely a legal obligation.
The board shall make its decision, describing its reasons therefor in writing,
within 30 days following the termination of the hearings, unless the parties
consent to an extension.  A majority
decision of the board shall be final and binding upon the parties to the
proceedings.  The judgment upon the
award entered by the arbiters may be entered in any court of proper
jurisdiction and may be enforced in any such court. By agreement between two
members of the board, the time intervals contained in this Article will be
extended.

 

Each party shall bear the
expense of its own arbiter and shall jointly and equally bear with the other
party the expense of the umpire. The remaining costs of the arbitration
proceedings shall be allocated by the board.

 

5

 

This Article shall
survive the termination of this Agreement.

 

5.              Offset. The
Company and the Reinsurer have the right to offset any balance(s) due from one
to the other under this Agreement or under any other agreements between the
parties. In the event of the insolvency of the Company or the Reinsurer,
offsets shall only be allowed in accordance with applicable law.

 

6.              Taxes. The
Reinsurer shall have no liability for any taxes payable with respect to this
Agreement or the Policy.

 

7.              Governing Law.
This Agreement shall be interpreted in accordance with the laws of the State of
New York, without giving effect to the conflict of law rules thereof.

 

8.              Follow the
Fortunes; Honorable Undertaking; No Third Party Rights.  Except as otherwise specifically provided in
this Agreement, this Agreement shall be subject to the same rates, terms,
conditions, interpretations, waivers, the exact proportion of premiums paid to
the Company and to the same modifications, alterations and cancellations as the
Policy, the true intent of this Agreement being that the Reinsurer shall, in
every case to which this Agreement applies and in the proportion specified in
this Agreement, follow the fortunes of the Company.  This Agreement shall be construed as an honorable undertaking
between the Company and the Reinsurer and shall not be defeated by technical
legal constructions.  However, nothing
in this Agreement shall be construed to expand the liability of the Reinsurer
beyond what is specifically assumed thereunder by creating rights of any third
party, including any insured of the Company, in or under this Agreement.

 

9.              Notices.  All notices, requests, demands or other
communications required or permitted to be given under this Agreement shall be
hand delivered, sent by confirmed facsimile transmission, mailed by first class
certified mail, return receipt requested, or sent by an overnight delivery
service, addressed to the party at its address set forth below or to such other
address as such party may designate in writing:

 

If
to the Company:

 

JCJ
Insurance Company

Harborside
Professional Building

85
Prim Road

PO
Box 450

Colchester,
VT 05446

Attn:  K. WESTOVER

Fax:  802-863-2198

 

6

 

If
to the Reinsurer:

 

KRE
Reinsurance Ltd.

Victoria
Hall

PO
Box HM  1826

Hamilton,
Bermuda HM HX

Telecopier
No.: 441-292-1563

Attn:
Corporate Secretary

 

with
a copy to;

 

Capital
Re Solutions Incorporated

1325
Avenue of the Americas

New
York, NY 10019

Telecopier
No.; 212-581-3268

Attn:
General Counsel

 

10.        Assignment.  This Agreement shall be binding upon and
inure to the benefit of the Company and Reinsurer and their respective
successors and  assigns. This Agreement
may not be assigned by either party without the prior written consent of the
other party.

 

11.        Amendment.  No amendment or modification of this
Agreement shall be effective unless in writing and signed by a duly authorized
officer of each party.

 

12.        Headings.  The headings used in this Agreement are
intended and inserted solely for convenience of reference and shall not effect
the meaning, interpretation, construction or effect of this Agreement.

 

13.        Counterparts.  This Agreement may be executed by the
parties in separate counterparts, each of which when so executed and delivered
shall be an original, but all such counterparts together shall constitute one
and the same instrument. Each counterpart may consist of a number of copies
hereof signed by less than both, but together signed by both, of the parties
hereto.

 

14.        Entire Agreement.  This Agreement constitutes the entire
agreement between the parties with respect to the contents of this Agreement,
and supersedes prior agreements, understandings and negotiations, oral and
written, with respect hereto.

 

15.        Waiver.  No waiver of this Agreement shall be
effective unless in writing and signed by a duly authorized officer of the
party granting the waiver. The failure of a party to enforce any provision of
this Agreement shall not constitute a waiver by such party of such provision.
The past waiver of a provision by a party shall not constitute a course of
conduct or waiver in the future of that same provision.

 

7

 

16.        Cancellation. 
This Agreement may be canceled by the Reinsurer for non-payment of the
Reinsurance Premium, but shall not be cancelable for any other reason by either
party.

 

IN WITNESS WHEREOF, the parties have caused
this Agreement to be executed by their duly authorized officers as of
December [ 29 ], 1999.

 

 

KRE REINSURANCE LTD.

 

 

	
  By:

  	
  /s/ Rebecca L Carne

  	
   

  
	
   

  	
  Name: 
  REBECCA L CARNE

  	
   

  
	
   

  	
  Title:  Asst. Sec.

  	
   

  
	
   

  
	
  JCJ
  INSURANCE COMPANY

  
	
   

  
	
  By:

  	
  /s/ Gerald M. Florence

  	
   

  
	
   

  	
  Name:  Gerald M. Florence

  
	
   

  	
  Title:  Vice President

  

 

8

 

AMENDED AND RESTATED

RESIDUAL VALUE INSURANCE POLICY

 

between

 

WORLD
OMNI FINANCIAL CORP

(the “Insured”)

 

and

 

JCJ
INSURANCE COMPANY

(the “Insurer”)

 

3.5% xs
8.5% Layer

 

Policy number LRV0002

 

This Amended and Restated Residual Value Insurance Policy (this
“Policy”) amends and restates in its entirety the Residual Value Insurance
Policy dated as of December 29, 1999 entered into by and between the Insured
and the Insurer. In consideration of the Premium and in reliance upon the
information provided by the Insured to the Insurer, the parties agree as
follows:

 

ARTICLE
1.  TERM OF POLICY

 

The Policy shall be effective as of July 1, 1999 (the
“Effective Date”) and shall continue in force until the last Scheduled Lease
Termination Date or, if applicable, the last Revised Lease Termination Date to
occur with respect to the Covered Leases (the “Term”).

 

ARTICLE
2.  PREMIUM

 

The premium payable to
the Insurer hereunder (the “Premium”) is $26,250,000. The Premium is net of all
taxes and brokerage commissions. The Premium is payable in three equal
installments, as follows: (i) the first installment is payable within 10 days
following execution of this Policy; (ii) the second installment is payable on
July 1, 2000 and (iii) the third installment is payable on January 1, 2001.

 

ARTICLE
3.  INSURING CLAUSE; COINSURANCE

 

The Insurer shall pay 90%
of Covered Losses in excess of the Attachment Point up to the Limit of
Liability.

 

The Insured shall retain net for its account and not
insure (i) Covered Losses up to the Attachment Point and (ii) 10% of Covered
Losses in excess of the Attachment Point up to the Limit of Liability.

 

 

ARTICLE
4.  DEFINITIONS

 

The following terms shall have the respective
meanings ascribed to them below;

 

Actual Termination

Date:                                                                                                                    With respect to a lease transaction, the date
that is 31 days after the date on which the final lease payment thereunder is
required to be made; provided, if the final lease payment is prepaid, “Actual
Termination Date” shall mean the date on which the final lease payment is made.

 

Adjusted Black

Book Wholesale

Average
Value:                                                              The “average wholesale” value established by
the Black Book Used Car Market Guide, provided monthly by National Auto
Research. This publication sets forth the current market value at the Scheduled
Lease Termination Date for each Covered Lease by make, model and optional
equipment.

 

Attachment
Point:                                               Covered Losses equal to $423,665,329 (i.e.,
8.5% of the In-force Aggregate Residual Value).

 

Covered
Lease:                                                              Each lease transaction with respect to an
automobile included in the Data Base that (i) is outstanding as of the
Effective Date, (ii) has a Disposal Date that is no later than 90 days
after the Actual Termination Date for such lease transaction and (iii) actually
terminates no earlier than 60 days prior to its Scheduled Lease Termination
Date and no later than six months after its Scheduled Lease Termination Date;
provided, however, a lease transaction that terminates within 180 days prior to
its Scheduled Lease Termination Date shall also be included as a Covered
Lease if, and only if, clauses (i) and (ii) above are satisfied and Loss
arising from such lease transaction is no greater than 90% of the
Expected Loss for such lease transaction, and provided that only 30,802
lease transactions may be included as Covered Leases pursuant to this proviso
(each lease transaction meeting the criteria of this proviso is referred to herein
as an “Early Termination Covered Lease”); provided, further, a lease
transaction that terminates more than six months after its Scheduled Lease
Termination Date shall also be included as a Covered Lease if, and only if,
clauses (i) and (ii) above are satisfied and (x) a Lease Extension is made with
respect to such Covered Lease, (y) Loss arising from such lease transaction is
less than the Expected Loss for such lease transaction and (z) such lease
transaction actually terminates no earlier than its Revised Lease Termination
Date.

 

2

 

Covered
Losses:                                                       Quarterly Losses paid by the Insured with
respect to Covered Leases.

 

Data
Base:                                                                                       The electronic files provided to Capital Re
Solutions Incorporated by the Insured on December 10, 1999 entitled
“LeMansAcctDetail” and “ALGAcctDetail” that satisfy the “PORT2” ABS Field (a
total of 308,028 records).

 

Depreciation:                                                                         With respect to an automobile that is the
subject of a Lease Extension, an amount equal to the Revised Lease Payment for
such Lease Extension less interest at an annual rate of 7.75% on the WOFCO
Residual Value for such automobile.

 

Disposal
Date:                                                                  With respect to a lease transaction, the date
on which the automobile covered by such lease is sold.

 

Early
Termination

Covered
Lease:                                                              See definition of Covered Lease.

 

Excess
Damage:                                                           With respect to a Covered Lease, the amount
payable by the lessee under such Covered Lease to the Insured to restore the
automobile which is the subject of such Covered Lease to the Insured’s standard
for normal wear and tear (whether or not actually recovered).

 

Excess
Mileage:                                                           With respect to a Covered Lease, the cost
associated with excess mileage calculated in accordance with the terms of such
Covered Lease (whether or not actually recovered).

 

Expected
Loss:                                                                With respect to an automobile included in the
Data Base, the amount set forth in the Data Base with respect to such
automobile under the column headed [GAIN_LOSS].

 

Gain:
                                                                                                                  With respect to an automobile included in the
Data Base, an amount equal to Net Realized Value for such automobile less WOFCO
Residual Value for such automobile; provided, if such calculation results in a
negative amount, Gain with respect to such automobile shall equal zero.

 

In-force Aggregate

Residual
Value:                                                              $4,984,297,988.

 

Lease
Extension:                                                       The extension of a lease transaction for
periods of 12 to 47 months.

 

Limit of

Liability:                                                                                                  Covered Losses equal to $157,005,386 (i.e.,
90% of 3.5% of In-force Aggregate Residual Value).

 

3

Loss:                                                                                                                   (i) With respect to an automobile included in
the Data Base other than an automobile described in clause (ii) below, an
amount equal to WOFCO Residual Value for such automobile less Net Realized
Value for such automobile; provided, if the calculation described in this
clause (i) results in a negative amount, Loss with respect to such automobile
shall equal zero, and (ii) with respect to an automobile leased pursuant to an
Early Termination Covered Lease, an amount equal to the lesser of (A) 75% of
Expected Loss for such automobile and (B) an amount equal to WOFCO
Residual Value for such automobile less Net Realized Value for such automobile;
provided, if the calculation described in this sub clause (B) results in a
negative amount, Loss with respect to such automobile shall equal zero.

 

Net Realized

Value:                                                                                                               With respect to an automobile included in the
Data Base, the greater of the following:

 

•              Adjusted
Black Book Wholesale Average Value for such automobile; and

 

•              Net
Sales Price for such automobile plus Excess Mileage and Excess Damage.

 

Net
Sales Price:                                                              With respect to an automobile included in the
Data Base, the price actually received in a commercially reasonable sale of
such automobile, net of any reasonable expenses to affect such sale.

 

Quarterly
Loss:                                                              With respect to any calendar quarter during
the Term, the sum of all Losses with respect to Covered Leases that terminate
in such calendar quarter less the sum of all Gains with respect to Covered
Leases that terminate in such calendar quarter.

 

Revised
Lease

Payment:                                                                                               With respect to a Lease Extension, the
greater of (i) the monthly amount payable under such Lease Extension and (ii)
87.5%, 77.5% or 72.5% (with respect to a 12-23 month, 24-35 month and
36-47 month extension, respectively) of the original monthly lease payment.

 

4

 

Revised Lease

Termination
Date:                                                 With respect to a Covered Lease which is the
subject of a Lease Extension, the date that is 31 days after the date scheduled
for the final lease payment to be made under such Lease Extension; provided, if
the final lease payment is prepaid, “Revised Lease Termination Date” shall mean
the date on which the final lease payment is made.

 

Scheduled Lease

Termination
Date:                                                 With respect to a Covered Lease, the date
that is 31 days after the date originally scheduled for the final lease payment
to be made under such Covered Lease; provided, if the final lease payment is
prepaid, “Scheduled Termination Date” shall mean the date on which the final
lease payment is made.

 

WOFCO Residual

Value;                                                                                                              With respect to an automobile included in the
Data Base, the amount set forth in the Data Base with respect to such
automobile under the column headed [WOFC-RESID]; provided, however, with
respect to an automobile included in the Data Base that is the subject of a
Lease Extension, WOFCO Residual Value means the amount set forth in the Data
Base with respect to such automobile under the column headed [WOFC_RESID] less
the portion of the Revised Lease Payment that represents Depreciation of such
automobile.

 

ARTICLE 5.  ACCOUNTS AND
REMITTANCES

 

Within 30 calendar days following the close of each calendar quarter,
the Insured will provide the Insurer with a statement of Quarterly Losses for
such calendar quarter. Once the Attachment Point has been reached, to the
extent Quarterly Losses is a positive amount, the Insurer shall pay 90% of
Quarterly Losses, subject to the Limit of Liability, no later than the last day
of the calendar quarter in which such Quarterly Statement is received. To the
extent Quarterly Losses is a negative amount, the absolute value of such amount
will be considered excess Gain and shall be carried forward and included in the
calculation of Quarterly Loss for the following calendar quarter. All amounts
payable by one party hereto to the other party hereto shall be transmitted
through McGriff, Seibels & Williams, Inc., 2211 7th Avenue
South, Birmingham, Alabama 35233.

 

5

 

ARTICLE 6.  REPORTS; ACCESS TO RECORDS

 

Within 30 days following the end of each calendar month during the
Term, the Insured shall send the Insurer a report (which may be in electronic
format) containing the information in the format described in Schedule 1
hereto.

 

The Insurer, its authorized representatives and its retrocessionaires
shall have access to the books and records of the Insured at all reasonable
times for the purpose of obtaining information concerning this Policy or its
subject matter and the right to make copies thereof (at its own expense).

 

ARTICLE 7.  COVENANTS

 

The Insured shall not modify or terminate any end-of-term servicing or
remarketing arrangements without the prior written consent of the Insurer,

 

The Insured shall not sell all or substantially all of the Covered
Leases without the written consent of the Insurer, which consent shall not be
unreasonably withheld.

 

Without the prior written consent of the Insurer, the Insured shall not
modify its current or committed servicing, remarketing or loss mitigation
practices with respect to the Covered Leases; shall continue to exercise the
level of diligence in connection with such practices as it currently exercises;
and in all events shall conduct such servicing, remarketing and loss mitigation
as if no insurance existed hereunder.

 

ARTICLE 8.  GENERAL PROVISIONS

 

1.                                       Offset.  The Insured and the Insurer have the right
to offset any balance(s) due from one to the other hereunder. In the event of
the insolvency of a party hereto, offsets shall only be allowed in accordance
with applicable law.

 

2.                                       Governing
Law.  This Policy shall be governed
by and interpreted in accordance with the laws of the State of New York,
without regard to its conflict of law principles.

 

3.                                       Assignment.  This Policy shall be binding upon and inure
to the benefit of the Insurer and the Insured and their respective successors
and assigns. This Policy may not be assigned by either party without the prior
written consent of the other party.

 

4.                                       Amendment.  No amendment or modification of this Policy
shall be effective unless in writing and signed by a duly authorized officer of
each party.

 

5.                                       Insolvency.  The Insurer’s liability hereunder shall not
increase or decrease as a result of the receivership, insolvency or inability
to pay of the Insured.

 

6

 

6.                                       Headings.  The headings used in this Policy are
intended and inserted solely for convenience of reference and shall not effect
the meaning, interpretation, construction or effect of this Policy.

 

7.                                       Counterparts.  This Policy may be executed by the parties
in separate counterparts; each of which when so executed and delivered shall be
an original, but all such counterparts together shall constitute one and the
same instrument. Each counterpart may consist of a number of copies hereof
signed by less than both, but together signed by both, of the parties hereto.

 

8.                                       Entire
Agreement.  This Policy constitutes
the entire agreement between the parties with respect to the contents of this
Policy, and supersedes prior agreements, understandings and negotiations, oral
and written, with respect hereto.

 

9.                                       Waiver.  No waiver of this Policy shall be effective
unless in writing and signed by a duly authorized officer of the party granting
the waiver.  The failure of a party to
enforce any provision of this Policy shall not constitute a waiver by such
party of such provision.  The past
waiver of a provision by a party shall not constitute a course of conduct or
waiver in the future of that same provision.

 

10.                                 Taxes.  Any taxes payable with respect to this
Policy shall be borne by the Insured and shall be paid directly by the Insured.

 

11.                                 Cancellation.  This Policy may be canceled by the Insurer
for non-payment of the Premium, but shall not be cancelable for any other
reason by either party.

 

IN WITNESS WHEREOF, the parties have caused this Policy to be executed
by their duly authorized officers as of December 30, 1999.

 

WORLD OMNI
FINANCIAL CORP

 

 

	
  By:

  	
  /s/ Alan Browdy

  	
   

  
	
   

  	
  Name:  Alan
  Browdy

  
	
   

  	
  Title:    Vice
  President

  
	
   

  	
   

  
	
  JCJ
  INSURANCE COMPANY

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
  /s/ Kathryn Westover

  	
   

  
	
   

  	
  Name:  Kathryn
  Westover

  
	
   

  	
  Title:    ARS
  Management

  
	
   

  	
  02 as Managers

  

 

7

 

Schedule
1

 

The following information shall be provided
by the Insured to the Insurer within thirty days following the end of each
month during the Term:

 

a)    Number of Units;

b)    Amount of Loss under the Agreement;

c)    WOFCO Residual Value;

d)    ALG Projected Gain/(Loss) Value;

 

The information shall be summarized by Scheduled
Termination Month for each of the 21 Term Group Codes. Summaries shall
also be provided for each Scheduled Termination Year and in total.

 

The ALG Projected
Gain/(Loss) Value shall be determined from the ALG Gain_Loss Column for the
ALGAcctDetails electronic file. For those records contained in the
LeMansAcctDetail file, the ALG Projected Gain/(Loss) shall be calculated as the
product of the WOFC_MSRP and the ALG_PCT less the WOFC_RESID.

 

8

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