EXECUTION COPY
INDEMNIFICATION AGREEMENT
among
FINANCIAL SECURITY ASSURANCE
INC.,
LONG BEACH ACCEPTANCE RECEIVABLES
CORP.,
GREENWICH CAPITAL MARKETS,
INC.
and
CITIGROUP GLOBAL MARKETS
INC.
Dated as of March 13,
2007
Long Beach Acceptance Auto
Receivables Trust 2007-A
$100,000,000 5.335% Asset Backed
Notes, Class A-1,
$145,000,000 5.150% Asset Backed
Notes, Class A-2,
$98,000,000 4.972% Asset Backed
Notes, Class A-3,
$143,000,000 5.025% Asset Backed
Notes, Class A-4
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Section
1.
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Definitions
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1
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Section
2.
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Representations, Warranties and Agreements of
Financial Security
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3
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Section
3.
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Representations, Warranties and Agreements of
the Underwriters
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6
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Section
4.
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Indemnification
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7
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Section
5.
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Indemnification
Procedures
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8
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Section
6.
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Contribution
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9
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Section
7.
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Miscellaneous
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10
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EXHIBIT A
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Opinion of
Associate General Counsel
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INDEMNIFICATION AGREEMENT
INDEMNIFICATION AGREEMENT, dated as of March 13,
2007, among FINANCIAL SECURITY ASSURANCE INC. (“ Financial
Security ”), LONG BEACH ACCEPTANCE RECEIVABLES CORP. (the
“ Company ”), GREENWICH CAPITAL MARKETS, INC.
(“ RBS GC ”) and CITIGROUP GLOBAL MARKETS INC.,
(“ Citigroup ” and, together with RBS GC, 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 March 12, 2007 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.
“ Insurance Agreement ” means
the Insurance and Indemnity Agreement, dated as of March 1, 2007,
among Financial Security, the Company and LBAC, and Long Beach
Acceptance Auto Receivables Trust 2007-A 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; provided, however, the Summary Free
Writing Prospectus dated March 12, 2007, in respect of the
Securities shall not be included in this definition of
“Offering Document”.
“ 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 March 19, 2007 relating to
the Securities.
“ Rating Agencies ” has the
meaning provided in the last paragraph of Section 2
hereof.
“ Representative ” means RBS
GC as representative of the Underwriters.
“ Securities ” means the Long
Beach Acceptance Auto Receivables Trust $100,000,000 5.335% Asset
Backed Notes, Class A-1, $145,000,000 5.150% Asset Backed Notes,
Class A-2, $98,000,000 4.972% Asset Backed Notes, Class A-3,
$143,000,000 5.025% 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 March 1,
2007 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 RBS GC
and Citigroup.
“ 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 March 13, 2007 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 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 September 30, 2006 and September 30, 2005, 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 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 condition (i) at the expense of the
Person specified in the Insurance Agree
