Exhibit 10.2
EXECUTION COPY
INDEMNIFICATION AGREEMENT
among
FINANCIAL SECURITY ASSURANCE INC.,
LONG BEACH ACCEPTANCE RECEIVABLES CORP.,
CITIGROUP GLOBAL MARKETS INC.
and
GREENWICH CAPITAL MARKETS, INC.
Dated as of September 20, 2006
Long Beach Acceptance Auto Receivables Trust 2006-B
$100,000,000 5.37% Asset Backed Notes, Class A-1,
$137,000,000 5.34% Asset Backed Notes, Class A-2,
$147,000,000 5.17% Asset Backed Notes, Class A-3,
$116,000,000 5.18% Asset Backed Notes, Class A-4
<PAGE>
Section 1. Definitions
...................................................... 1
Section 2.
Representations, Warranties and Agreements of
Financial Security
................................................3
Section 3.
Representations, Warranties and Agreements of
the Underwriters
..................................................6
Section 4.
Indemnification ..................................................
7
Section 5.
Indemnification Procedures .......................................
8
Section 6.
Contribution .....................................................
9
Section 7.
Miscellaneous ...................................................
10
EXHIBIT A - Opinion of Associate General Counsel
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INDEMNIFICATION AGREEMENT
INDEMNIFICATION AGREEMENT, dated as of September 20, 2006,
among
FINANCIAL SECURITY ASSURANCE INC. ("Financial Security"), LONG
BEACH ACCEPTANCE
RECEIVABLES CORP. (the "Company"), CITIGROUP GLOBAL MARKETS INC.,
("Citigroup")
and GREENWICH CAPITAL MARKETS, INC. ("RBS GC" and, together with
Citigroup, the
"Underwriters"):
Section 1. Definitions. For purposes of this Agreement, the
following terms shall have the meanings provided below:
"Agreement" means this Indemnification Agreement, as the same may
be
amended, supplemented or otherwise modified from time to time in
accordance with
the terms hereof.
"Commission" means the Securities and Exchange Commission.
"Company Party" means any of the Company, its parent,
subsidiaries
and affiliates and any shareholder, director, officer, employee,
agent or
"controlling person" (as such term is used in the Securities Act)
of any of the
foregoing.
"Federal Securities Laws" means the Securities Act, the
Securities
Exchange Act of 1934, the Trust Indenture Act of 1939, the
Investment Company
Act of 1940, the Investment Advisers Act of 1940 and the Public
Utility Holding
Company Act of 1935, each as amended from time to time, and the
rules and
regulations in effect from time to time under such Acts.
"Financial Security Agreements" means this Agreement, the
Spread
Account Agreement and the Insurance Agreement.
"Financial Security Information" has the meaning provided in
Section
2(g) hereof.
"Financial Security Party" means any of Financial Security, its
parent, subsidiaries and affiliates, and any shareholder, director,
officer,
employee, agent or "controlling person" (as such term is used in
the Securities
Act) of any of the foregoing.
"Free Writing Prospectus" means the Free Writing Prospectus
dated
September 18, 2006 relating to the Securities.
"Indemnified Party" means any party entitled to any
indemnification
pursuant to Section 4 hereof.
"Indemnifying Party" means any party required to provide
indemnification pursuant to Section 4 hereof.
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"Insurance Agreement" means the Insurance and Indemnity
Agreement,
dated as of September 1, 2006, among Financial Security, the
Company and LBAC,
and Long Beach Acceptance Auto Receivables Trust 2006-B as the same
may be
amended, supplemented or otherwise modified from time to time in
accordance with
the terms thereof.
"LBAC" means Long Beach Acceptance Corp., a Delaware
Corporation.
"Losses" means (a) any actual out-of-pocket damages incurred by
the
party entitled to indemnification or contribution hereunder, (b)
any actual
out-of-pocket costs or expenses incurred by such party, including
reasonable
fees or expenses of its counsel and other expenses incurred in
connection with
investigating or defending any claim, action or other proceeding
which entitle
such party to be indemnified hereunder (subject to the limitations
set forth in
Section 5 hereof), to the extent not paid, satisfied or reimbursed
from funds
provided by any other Person other than an affiliate of such party
(provided
that the foregoing shall not create or imply any obligation to
pursue recourse
against any such other Person), plus (c) interest on the amount
paid by the
party entitled to indemnification or contribution from the date of
such payment
to the date of payment by the party who is obligated to indemnify
or contribute
hereunder at the statutory rate applicable to judgments for breach
of contract.
"Offering Document" means the Prospectus, Prospectus Supplement,
the
Free Writing Prospectus and any other material or documents
delivered by the
Underwriters or any Underwriter Party to any Person in connection
with the offer
or sale of the Securities.
"Person" means any
individual, partnership, joint venture,
corporation, trust, unincorporated organization, limited liability
company,
limited liability partnership or other organization or entity
(whether
governmental or private).
"Policy" means the financial guaranty insurance policy delivered
by
Financial Security with respect to the Securities.
"Prospectus" means, collectively, the Prospectus relating to
the
Securities dated March 31, 2006, and the Prospectus Supplement.
"Prospectus Supplement" means the Prospectus Supplement dated
September 25, 2006 relating to the Securities.
"Rating Agencies" has the meaning provided in the last paragraph
of
Section 2 hereof.
"Representative" means Citigroup as representative of the
Underwriters.
"Securities" means the Long Beach Acceptance Auto Receivables
Trust
2006-B $100,000,000 5.37% Asset Backed Notes, Class A-1,
$137,000,000 5.34%
Asset
2
<PAGE>
Backed Notes, Class A-2, $147,000,000 5.17% Asset Backed Notes,
Class A-3, and
$116,000,000 5.18% Asset Backed Notes, Class A-4, each as described
in the
Prospectus Supplement and covered by the Policy.
"Securities Act" means the Securities Act of 1933, as amended
from
time to time, and any rule or regulation in effect from time to
time under such
Act.
"Spread Account Agreement" means the Master Spread Account
Agreement, dated as of September 1, 2006 among the Company, the
Collateral Agent
specified therein, Financial Security and the Trustee specified
therein, as the
same may be amended, supplemented or otherwise modified from time
to time in
accordance with the terms thereof.
"Underwriters" means Citigroup and RBS GC.
"Underwriter Information" has the meaning provided in Section
3(c)
hereof.
"Underwriter Party" means any of the Underwriters, its
respective
parent, subsidiaries and affiliates and any shareholder, director,
officer,
employee, or agent of the "controlling person" (as such item is
used in the
Securities Act) of any of the foregoing.
"Underwriting Agreement" means the Underwriting Agreement dated
as
of September 20, 2006 among the Company, LBAC and the Underwriters
with respect
to the offer and sale of the Securities, as the same may be
amended,
supplemented or otherwise modified from time to time in accordance
with the
terms thereof.
Section 2. Representations, Warranties and Agreements of
Financial
Security. Financial Security represents, warrants and agrees with
the parties
hereto as follows:
(a) Organization, Etc. Financial Security is a stock insurance
company duly organized, validly existing and authorized to
transact
financial guaranty insurance business under the laws of the State
of
New York.
(b) Authorization, Etc. The Policy and the Financial Security
Agreements have been duly authorized, executed and delivered by
Financial Security.
(c) Validity, Etc. The Policy and the Financial Security
Agreements constitute valid and binding obligations of
Financial
Security, enforceable against Financial Security in accordance
with
their terms, subject, as to the enforcement of remedies, to
bankruptcy, insolvency, reorganization, rehabilitation,
moratorium
and other similar laws affecting the enforceability of
creditors'
rights generally applicable in the event
3
<PAGE>
of the bankruptcy or insolvency of Financial Security and to
the
application of general principles of equity and subject, in the
case
of this
Agreement, to principles of public policy limiting the right
to enforce the indemnification provisions contained herein.
(d) Exemption From Registration. The Policy is exempt from
registration under the Securities Act.
(e) No Conflicts. Neither the execution or delivery by
Financial Security of the Policy or the Financial Security
Agreements, nor the performance by Financial Security of its
obligations thereunder, will conflict with any provision of the
certificate of incorporation or the bylaws of Financial Security
nor
result in a breach of, or constitute a default under, any
material
agreement or other instrument to which Financial Security is a
party
or by which any of its property is bound nor violate any
judgment,
order or decree applicable to Financial Security of any
governmental
or regulatory body, administrative agency, court or arbitrator
having jurisdiction over Financial Security (except that, in
the
published opinion of the Securities and Exchange Commission,
the
indemnification provisions of this Agreement, insofar as they
relate
to indemnification for liabilities arising under the Securities
Act,
are against public policy as expressed in the Securities Act and
are
therefore unenforceable).
(f) Financial Information. The consolidated balance sheets of
Financial Security as of December 31, 2005 and December 31, 2004
and
the related consolidated statements of income, changes in
shareholder's equity and cash flows for the fiscal years then
ended,
and the interim consolidated balance sheets for Financial
Security
as of March 31, 2006 and June 30, 2006, and the related
statements
of income, changes in shareholders equity and cash flows for
the
interim period then ended, furnished by Financial Security to
the
Underwriters fairly present in all material respects the
financial
condition of Financial Security as of such dates and for such
periods in accordance with generally accepted accounting
principles
consistently applied (subject as to interim statements to
normal
year-end adjustments) and since the date of the most current
interim
consolidated balance sheet referred to above there has been no
change in the financial condition of Financial Security which
would
materially and adversely affect its ability to perform its
obligations under the Policy.
(g) Financial Security Information. The information in the
Prospectus Supplement set forth under the caption "THE INSURER"
(as
revised from time to time in accordance with the provisions
hereof,
the "Financial Security Information") is limited and does not
purport to provide the scope of disclosure required to be
included
in a prospectus
4
<PAGE>
with respect to a registrant in connection with the offer and
sale
of securities of such registrant registered under the
Securities
Act. Within such limited scope of disclosure, however, as of
the
date of the Prospectus Supplement and as of the date hereof,
the
Financial Security Information does not contain any untrue
statement
of a material fact, or omit to state a material fact necessary
to
make the statements contained therein, in the light of the
circumstances under which they were made, not misleading.
(h) Additional Information. Financial Security will furnish to
the Underwriters or the Company, upon request of the Underwriters
or
the Company, as the case may be, copies of Financial Security's
most
recent
financial statements (annual or interim, as the case may be)
which fairly present in all material respects the financial
condition of Financial Security as of the dates and for the
periods
indicated, in accordance with generally accepted accounting
principles consistently applied except as noted therein (subject,
as
to interim statements, to normal year-end adjustments). In
addition,
if the delivery of a Prospectus relating to the Securities is
required at any time prior to the expiration of nine months
after
the time of issuance of the Prospectus in connection with the
offering or sale of the Securities, the Company or the
Underwriters
will notify Financial Security of such requirement to deliver a
Prospectus and Financial Security will promptly provide the
Underwriters and the Company with any revisions to the
Financial
Security Information that are in the judgment of Financial
Security
reasonably necessary to prepare a supplement to the Prospectus.
(i) Opinion of Counsel. Financial Security will furnish to the
Underwriters and the Company, on the closing date for the sale
of
the Securities, an opinion of its Assistant General Counsel, to
the
effect set forth in Exhibit A attached hereto, dated such
closing
date and addressed to the Company and the Underwriters.
(j) Consents and Reports of Independent Accountants. Financial
Security will furnish to the Underwriters and the Company, upon
request, as comfort from its independent accountants in respect
of
its financial
