<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
FORM 10-K
<TABLE>
<C> <S>
(MARK ONE)
/X/ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT
OF 1934 (FEE REQUIRED)
FOR THE FISCAL YEAR ENDED JUNE 30, 1995
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
ACT OF 1934. [NO FEE REQUIRED]
For the transition period from to
Commission file number 1-10667
</TABLE>
AMERICREDIT CORP.
(Exact name of Registrant as specified in its charter)
<TABLE>
<S> <C>
TEXAS 75-2291093
(State or other jurisdiction of I.R.S. Employer
incorporation or organization) Identification No.)
200 BAILEY AVENUE, FORT WORTH, TEXAS 76107
(Address of principal executive (Zip Code)
offices)
</TABLE>
Registrant's telephone number, including area code: (817) 332-7000
------------------------
SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:
<TABLE>
<CAPTION>
NAME OF EACH EXCHANGE ON
TITLE OF EACH CLASS WHICH REGISTERED
- -------------------------------------------------------- --------------------------------------------------------
<S> <C>
Common Stock, $.01 par value New York Stock Exchange
</TABLE>
Securities registered pursuant to Section 12(g) of the Act:
None
(Title of class)
------------------------
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes _X_ No ____
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of Registrant's knowledge in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. /X/
The aggregate market value of 26,494,594 shares of the Registrant's Common
Stock held by non-affiliates based upon the closing price of the Registrant's
Common Stock on the New York Stock Exchange on September 15, 1995 was
approximately $324,558,777. For purposes of this computation, all officers,
directors and 5 percent beneficial owners of the Registrant are deemed to be
affiliates. Such determination should not be deemed an admission that such
officers, directors and beneficial owners are, in fact, affiliates of the
Registrant.
There were 28,610,354 shares as of Common Stock, $.01 par value outstanding
as of September 15, 1995.
DOCUMENTS INCORPORATED BY REFERENCE
The Registrant's Annual Report to Shareholders for the year ended June 30,
1995 ("the Annual Report") furnished to the Commission pursuant to Rule 14a-3(b)
and the definitive Proxy Statement pertaining to the 1995 Annual Meeting of
Shareholders ("the Proxy Statement") and filed pursuant to Regulation 14A are
incorporated herein by reference into Parts II and IV, and Part III,
respectively.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
AMERICREDIT CORP.
INDEX TO FORM 10-K
<TABLE>
<CAPTION>
ITEM PAGE
NO. No.
- ---- ----
<S> <C> <C>
PART I
1. Business 3
2. Properties 14
3. Legal Proceedings 14
4. Submission of Matters to a Vote of Security Holders 14
PART II
5. Market for Registrant's Common Equity and Related Stockholder
Matters 15
6. Selected Financial Data 15
7. Management's Discussion and Analysis of Financial Condition
and Results of Operations 15
8. Financial Statements and Supplementary Data 15
9. Changes in and Disagreements with Accountants on Accounting
and Financial Disclosure 15
PART III
10. Directors and Executive Officers of the Registrant 16
11. Executive Compensation 16
12. Security Ownership of Certain Beneficial Owners and Management 16
13. Certain Relationships and Related Transactions 16
PART IV
14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K 17
SIGNATURES 18
</TABLE>
-2-
<PAGE>
PART I
ITEM 1. BUSINESS
GENERAL
AmeriCredit Corp. was incorporated in Texas on May 18, 1988 and succeeded to
the business, assets and liabilities of a predecessor corporation formed
under the laws of Texas on August 1, 1986. The Company's predecessor began
the Company's business in March 1987, and the business has been operated
continuously since that time. As used herein, the term "Company" refers to
the Company, its wholly owned subsidiaries and its predecessor corporation.
The Company's principal executive offices are located at 200 Bailey Avenue,
Fort Worth, Texas, 76107 and its telephone number is (817) 332-7000.
On July 22, 1992, the Company formed a subsidiary, AmeriCredit Financial
Services, Inc. ("AFSI"), a Delaware corporation, to engage in the indirect
consumer lending business. AFSI began operating in the indirect consumer
lending business in September 1992. Through AFSI's branch offices and
marketing representatives, the Company serves as a funding source for
franchised and independent dealers to finance their customers' purchases of
primarily used cars. The Company targets consumers who are typically unable
to obtain financing from traditional sources. Consumer finance contracts
originated by dealers which conform to the Company's credit policies are
purchased by the Company, generally for a non-refundable acquisition fee and
without recourse to the dealer. These consumer finance loans typically
range in amount from $6,000 to $12,000, with repayment terms usually ranging
from 24 to 60 months. The Company services its consumer loan portfolio at
its central facility using automated loan servicing and collection systems.
From April 1993 through January 1995, the Company, through another
subsidiary, financed insurance premiums for consumers purchasing car
insurance through independent insurance agents. The Company curtailed its
activities in this business in order to concentrate its resources on the core
indirect consumer lending business.
The Company previously operated a chain of "we finance" used car retail lots
in Texas, selling used cars and typically financing sales to its customers.
However, in connection with a restructuring during the year ended June 30,
1993, the Company withdrew from the retail used car sales business effective
December 31, 1992. The finance receivables originated in this previous
business are referred to as the direct lending portfolio and are being
liquidated over time as the contracts are collected or charged-off.
INDIRECT CONSUMER FINANCE OPERATIONS
-3-
<PAGE>
TARGET MARKET. The Company's indirect lending programs are designed to serve
consumers who have limited access to traditional car financing. The
Company's typical borrower may have had previous financial difficulties, but
is now attempting to re-establish credit, or may not yet have an established
credit history. Because the Company serves consumers who are unable to meet
the credit standards imposed by most traditional car financing sources, the
Company generally charges interest at rates which are higher than those
charged by traditional car financing sources. The Company also expects to
sustain a higher level of credit losses than that experienced by traditional
car financing sources since the Company provides financing in a relatively
high risk market.
DEALER RELATIONSHIPS. When buying a car, consumers are customarily directed
to a dealer's finance and insurance department to finalize their purchase
agreement and review potential financing sources. If the consumer elects to
pursue financing at a dealer, an application is taken for submission to the
dealer's financing sources. The dealers are generally familiar with the
lending policies of their financing sources and develop both traditional and
secondary financing sources. In the event that a consumer may not qualify
for traditional car financing, a dealer typically submits such buyer's
application to one or more secondary financing sources, such as the Company,
for approval and purchase.
Since the Company is an indirect lender, the Company's financing programs are
marketed directly to the dealers rather than to the consumer. The marketing
process involves personal contacts with the owners, general managers and
finance managers of the dealers and distribution of the Company's promotional
materials. The Company also establishes relationships with dealers through
referrals from other participating dealers.
The Company has established relationships with a variety of car dealers
located in the markets in which the Company has branch offices or marketing
representatives. While the Company occasionally finances purchases of new
cars, substantially all of the Company's finance receivables are originated
in connection with consumers' purchases of used cars. Of the finance
contracts purchased by the Company during the year ended June 30, 1995,
approximately 68% were originated by manufacturer-franchised dealers with
used car operations and 32% by independent dealers specializing in used car
sales. The Company purchased contracts from 1,861 dealers during the year
ended June 30, 1995. No dealer accounted for more than 10% of the total
volume of contracts purchased by the Company for the year ended June 30, 1995.
Prior to entering into a relationship with a dealer, the Company evaluates
the dealer's operating history. The credit profile and performance of
contracts purchased from a dealer are continually monitored to determine the
viability of the Company's relationship with the dealer. Dealer
relationships are maintained through frequent contacts by the Company's
representatives and by providing a high level of service, including prompt
and consistent credit application
-4-
<PAGE>
processing, timely contract funding and competitive financing terms and fees.
Finance contracts are generally purchased by the Company without recourse to
the dealer, and accordingly, the dealer usually has no liability to the
Company if the consumer defaults on the finance contract. To mitigate the
Company's risk from potential credit losses, the Company typically charges
the dealers an acquisition fee when purchasing finance contracts. Such
acquisition fees are negotiated with dealers on a contract-by-contract basis
and are non-refundable. Although finance contracts are purchased without
recourse to the dealer, the dealer typically makes certain representations as
to the validity of the contract and compliance with certain laws, and
indemnifies the Company against any claims, defenses and set-offs that may be
asserted against the Company because of assignment of the contract. Recourse
based upon such representations and indemnities would be limited in
circumstances in which the dealer has insufficient financial resources to
perform upon such representations and indemnities. The Company does not view
recourse against the dealer on these representations and indemnities to be of
material significance in its decision to purchase finance contracts from a
dealer.
BRANCH OFFICES. The Company's branch offices are responsible for
solicitation and development of dealer relationships and execution of credit
decisions. Branch locations are typically staffed by an area general manager,
an assistant manager, and one or more dealer and customer service
representatives. Larger branches may also have an additional assistant area
manager and/or a dealer marketing representative. Area general managers are
compensated with base salaries, annual incentives based on overall branch
performance and stock option grants. The area general managers report to a
regional vice president.
The Company's regional vice presidents monitor branch office compliance with
the Company's underwriting guidelines and review and approve transactions
that exceed the underwriting guidelines. The Company's automated application
processing system and loan accounting system provide the regional vice
presidents access to credit application information and finance contract
terms enabling them to consult with the area general managers on day to day
credit decisions. The regional vice presidents also make periodic visits to
the branch offices to conduct operating reviews. The regional vice
presidents report to a senior vice president who in turn report to the
Executive Vice President and Director of Consumer Finance Operations.
As of June 30, 1995, the Company operated 31 indirect consumer finance branch
offices in 20 states. The Company's branch offices are located in
Dallas-Fort Worth, Houston, San Antonio, Phoenix, Colorado Springs, Denver,
Salt Lake City, Atlanta, Chicago (2), Kansas City, San Jose, Indianapolis,
Detroit, Oklahoma City, Las Vegas, St. Louis, San Diego, Nashville, Raleigh,
Jacksonville, Norfolk, Baltimore, Tampa Bay, Charlotte, Greenville,
Cleveland, Marlton (N.J.), Cincinnati, Charleston, and Newport News.
-5-
<PAGE>
The Company selects markets for branch office locations based upon the
availability of qualified area general managers and evaluation of regulatory,
competitive and demographic factors. Branch offices are typically situated
in office buildings which are accessible to local car dealers.
MARKETING REPRESENTATIVES. The Company's marketing representatives are
responsible for solicitation and development of dealer relationships in
existing branch territories and in markets where the Company does not have a
branch presence. Unlike the Company's area general managers, the marketing
representatives do not have credit authority. Credit applications solicited
by the marketing representatives are underwritten either at the branch office
served by the marketing representatives or at the central purchasing office
in Fort Worth, Texas.
The Company's marketing representatives may be either employees or
independent contractors. After a training and development period, the
marketing representatives are compensated based primarily upon finance
contract originations.
FINANCE CONTRACT ACQUISITION. The Company purchases individual finance
contracts through its branch offices based on a decentralized credit approval
process tailored to local market conditions. The Company's central
purchasing office, which underwrites applications solicited by certain
marketing representatives, operates in a manner similar to the branch office
network.
All credit extensions are executed at the branch level. Each area general
manager has a specific credit authority based upon their experience and
historical loan portfolio results and credit scoring parameters. Extensions
of credit outside these limits are reviewed and approved by a regional vice
president. Although the credit approval process is decentralized, credit
decisions are guided by the Company's credit scoring strategies and overall
credit and underwriting policies and procedures.
The Company has implemented a credit scoring system across its branch network
to support the branch level judgmental credit approval process. The credit
scoring system was developed by Fair Isaac & Co., Inc. from the Company's
loan origination and portfolio databases. Credit scoring is used to
prioritize applications for processing and to tailor loan pricing and
structure to an empirical assessment of credit risk. While the Company
employs a credit scoring system in the credit approval process, credit
scoring does not eliminate credit risk. Adverse determinations at the branch
level in evaluating finance contracts for purchase could adversely affect the
credit quality of the Company's loan portfolio.
Loan application packages completed by prospective borrowers are received via
facsimile at the branch offices from dealers. Application data is entered
into
-6-
<PAGE>
the Company's automated application processing system. A credit bureau
report is automatically generated and a credit score is computed. Depending
on the credit quality of the applicant, a customer service representative may
then investigate the residence, employment and credit history of the
applicant or forward the application package directly to the area general
manager. In either case, the Company's credit policy requires that all
applications be investigated prior to loan funding. The area general manager
reviews the application package and determines whether to approve the
application, approve the application subject to conditions that must be met,
or deny the application. The area general manager considers many factors in
arriving at a credit decision, including the applicant's credit score,
capacity to pay, stability, character and intent to pay, the contract terms,
and collateral value. In certain cases, a regional vice president may review
and approve the area general manager's credit decision. The Company
estimates that approximately 50% of applicants are denied credit by the
Company typically because of their credit histories or because their income
levels are not sufficient to support the proposed level of monthly car
payments. Dealers are contacted regarding credit decisions by telefax and/or
telephone. Declined applicants are also provided with appropriate
notification of the decision.
Once a credit approval has been received from the Company and any other
financing sources to which the application package was submitted, the dealer
selects a financing source. The ability of the financing source to provide a
rapid credit decision and the amount of the contract fees and customer
advance are of primary importance to the dealer in choosing a financing
source. The interest rate in the finance contract is generally of secondary
importance.
Completed loan packages are sent by the dealers to the branch office. Loan
terms are generally reverified with the consumer by branch personnel and the
loan packages are forwarded to the Company's centralized loan services
department where the package is scanned to create an electronic copy. Key
original documents are stored in a fire-proof vault and the loan packages are
further processed in an electronic environment. The loans are reviewed for
proper documentation and regulatory compliance and are entered into the
Company's loan accounting system. A daily loan report is generated for a
final review by consumer finance operations management. Once cleared for
funding by consumer finance operations management, the loan services
department issues a check to the dealer. Upon funding of the contract, the
Company acquires a perfected security interest in the car that was financed.
All of the Company's finance contracts are fully amortizing with
substantially equal monthly installments. Consumers receive monthly billing
statements from the Company directing them to remit payments to the Company's
lockbox bank for deposit into the Company's lockbox account. Payment receipt
data is electronically transferred to the Company by the lockbox bank for
posting to the loan accounting system. All payment processing and customer
account maintenance is performed centrally by the loan services department.
-7-
<PAGE>
COLLECTIONS AND REPOSSESSIONS. Collection activity on finance contracts is
performed centrally by the Company's collection personnel ("collectors")
located in Fort Worth, Texas. The collectors follow standardized collection
policies and procedures. Collectors monitor the finance receivables
portfolio through a computer assisted collection system and typically take
action on delinquencies within a few days after delinquency occurs.
A collector's action is usually telephone contact with the consumer utilizing
the Company's automated predictive dialing system. This system dials
multiple telephone numbers simultaneously based upon parameters set by
management. When a telephone connection is made, the call is routed to a
collector and the delinquent consumer's account information is displayed on a
collector's computer terminal. The collector then attempts to work out the
delinquency with the consumer.
If a consumer continues to be delinquent, the Company's policy is to work out
suitable payment arrangements with the consumer. However, if the consumer
becomes seriously delinquent or deals in bad faith with the Company, the
Company may ultimately have to repossess the consumer's car and generally
will take prompt action to do so. Repossessions are handled by independent
repossession firms engaged by the Company. All repossessions are approved by
collection officers.
The Company follows prescribed legal procedures for repossessions, which
include peaceful repossession, one or more consumer notifications, a
prescribed waiting period prior to disposition of the repossessed car, and
return of personal items to the consumer.
Upon repossession and after any prescribed waiting period, the repossessed
car is typically sold at auction. The proceeds from the sale of the car at
auction and any other recoveries are credited against the balance of the
finance contract. Auction proceeds from the sale of repossessed cars and
other recoveries are usually not sufficient to cover the outstanding balance
of the finance contract, and the resulting deficiencies are charged-off
against the Company's allowance for losses. The Company may pursue
collection of deficiencies when it deems such action to be appropriate.
INSURANCE AND OTHER PRODUCTS. The Company requires all consumers to obtain
or provide evidence that they carry current comprehensive and collision
insurance. Through a third party administrator, the Company tracks the
insurance status of each finance contract and sends notices to consumers when
collateral becomes uninsured. If no action is taken by the borrower to
insure the collateral, continuing efforts are made to persuade the consumer
to comply with the insurance requirements of the finance contract. Although
it has the right, the Company rarely repossesses a car due to it being
uninsured. The Company also does not generally force place insurance
coverage and add the premium to the consumer's
-8-
<PAGE>
obligation, although it has the right to do so under the terms of the finance
contracts.
In the event that the consumer fails to maintain insurance as required by the
finance contract, the Company may be adversely affected in its ability to
realize auction proceeds from the sale of repossessed cars if the car
collateralizing the finance contract has been damaged or stolen. Further,
uninsured damage or theft of the cars serving as collateral under the finance
contracts can be expected to result in higher rates of default.
The Company will also finance other insurance products including credit life,
credit accident and health and extended service contracts at the option of
the consumer. The consumer may obtain such products from sources provided by
the Company, dealers or from other third parties. The Company may receive
commissions and fees related to these products, but the Company does not
assume any primary insurance risk.
RISK MANAGEMENT. With its decentralized credit approval process, the Company
has developed procedures to evaluate and supervise the operations of each
branch office. The Company's centralized risk management department is
responsible for monitoring the origination process and supporting the
supervisory role of consumer finance operations management. This group
tracks key variables via databases that contain loan applicant data, credit
bureau and credit score information, loan structures and terms and payment
histories. The residual value of the collateral underlying the Company's
loan portfolio is updated monthly with a loan by loan link to national
wholesale auction values. This data is used for evaluating collateral
disposition activities as well as for reserve analysis models.
The risk management department prepares a periodic credit indicator package
reviewing portfolio performance at various levels of detail including total
company, branch and dealer. A sample of loans underwritten by each branch
are reviewed periodically to audit compliance with policies and procedures.
Various daily reports and analytical data are also generated by the Company's
management information systems. This information is used to monitor credit
quality as well as to constantly refine the structure and mix of new loan
production. Projected portfolio returns are reviewed not only on a
consolidated basis, but also at the branch, dealer and transaction levels.
While the Company's risk management department is designed to minimize the
risks inherent in a decentralized credit approval process, the risk of
adverse contract purchases by the branch network cannot be eliminated.
FUNDING STRATEGY. The Company requires a significant amount of capital to
fund its indirect consumer finance lending activities. The primary sources
of such funding have been the Company's bank line of credit and the issuance
of automobile receivables-backed notes.
-9-
<PAGE>
As of June 30, 1995, the Company has a line of credit arrangement with a
group of banks under which the Company may borrow up to $125 million, subject
to a defined borrowing base. The Company's funding strategy is to utilize
the line of credit to fund new loan volume until the finance receivables
accumulate to a size that can be pooled to access the asset-backed securities
markets.
During fiscal 1995, the Company completed two private placements of
automobile receivables-backed notes. The Series 1994-A notes were issued in
December 1994 and aggregated $51 million. The notes bear interest at 8.19%,
are collateralized by a pool of indirect finance receivables originally
totalling $56.7 million and have a final maturity date of December 1999. The
Series 1995-A notes were issued in June 1995 and aggregated $99.2 million.
The notes bear interest at 6.55%, are collateralized by a pool of indirect
finance receivables originally totalling $106.7 million and have a final
maturity date of September 2000. Each series of notes was issued by a
wholly-owned special purpose subsidiary of the Company which holds the
related finance receivables. Principal and interest on the notes are payable
monthly from collections and recoveries on the specific pool of finance
receivables. Both note series are rated "Aaa" by Moody's Investors Services,
Inc. and "AAA" by Standard and Poor's Corp. Financial Security Assurance,
Inc. issued financial guaranty insurance policies for the benefit of the
noteholders of each series.
Since the private placements completed in fiscal 1995 were structured as debt
issuances by subsidiaries of the Company, the transactions were accounted for
as borrowings. Accordingly, the finance receivables collateralizing the
automobile receivables-backed notes remain on the Company's Consolidated
Balance Sheets and the associated finance charges on the receivables are
recognized as income over time as earned. The automobile receivables-backed
notes are shown as liabilities on the Company's Consolidated Balance Sheets
and the related interest paid to noteholders is recognized as expense over
time as accrued.
The Company anticipates that it will issue additional automobile
receivables-backed securities in fiscal 1996 in order to fund its indirect
consumer finance lending activities. The Company is considering structuring
future issuances of automobile receivables-backed securities as sales of
receivables to trust entities, which in turn would issue interest bearing
certificates to investors. Structuring future transactions in this manner
would result in recognition of a gain on sale of receivables based on the
discounted present value of the difference between cash collections on the
pool of finance receivables sold and costs and expenses such as servicing
fees, principal and interest paid to certificate holders and transaction
fees.
-10-
<PAGE>
While management is analyzing various alternatives, no decision has yet been
made as to the specific structure to be used for future transactions. There
can be no assurance that structuring future issuances of automobile-backed
receivables as sales of receivables would increase the Company's
profitability or otherwise be advantageous to the Company. Further,
regardless of the structure selected, there can be no assurance that funding
will be available to the Company through the issuance of automobile
receivables-backed securities, or if available, that it will be on terms
acceptable to the Company. In addition, since the Company's funding strategy
is dependent upon the issuance of interest bearing securities, increases in
interest rates would adversely affect the Company's profitability.
DISTRESSED RECEIVABLES JOINT VENTURES
During December 1993, the Company entered into certain joint venture
arrangements with third parties to acquire and collect distressed receivables
portfolios. While the Company's capital investment in these joint ventures is
not material, the Company has provided office facilities, computer systems
and administrative support to the joint ventures.
TRADE NAMES
The Company has obtained federal trademark protection for the "AmeriCredit"
name and the logo that incorporates the "AmeriCredit" name.
COMPETITION
The Company encounters strong competition in its segment of the market from
other local, regional and national consumer finance companies, some of which
have access to greater financial resources than the Company. As an indirect
lender, the Company's financing programs are marketed directly to car dealers
rather than to the consumer. The Company believes that there are numerous
competitors providing, or capable of providing, financing through dealers for
purchases of cars. Many of these competitors have long-standing
relationships with car dealers. The principal competitive factors affecting
a dealer's decision to offer finance contracts for sale to a particular
financing source are the level of service including promptness and
consistency of credit application processing, the timeliness of contract
funding, the competitiveness of financing terms and fees and the financial
stability of the funding source.
The Company plans to expand its indirect consumer finance business by adding
additional branch offices and expanding loan production capacity at existing
branches. The success of this strategy is dependent upon the Company's
ability to hire and retain qualified area general managers and other
personnel and
-11-
<PAGE>
develop relationships with more dealers. The Company confronts intense
competition in attracting key personnel and establishing relationships with
dealers. Dealers often already have favorable secondary financing sources,
which may restrict the Company's ability to develop dealer relationships and
delay the Company's growth. In addition, the competitive conditions in the
Company's markets may result in a reduction in the contract fees that the
Company charges the dealers or a decrease in contract acquisition volume,
which would adversely affect the Company's profitability.
Because the Company's target market consists of consumers who generally have
limited access to traditional financing sources, the Company usually does not
compete directly with banks, savings and loans, credit unions, the
manufacturers' captive finance companies and other traditional sources of
consumer credit. However, there can be no assurance that traditional
financial institutions will not, in the future, become more active in
providing financing to the Company's targeted customer base.
REGULATION
The Company's operations are subject to regulation, supervision, and
licensing under various federal, state and local statutes, ordinances and
regulations.
In most states in which the Company operates, a consumer credit regulatory
agency regulates and enforces laws relating to consumer lenders and sales
finance agencies such as the Company. Such rules and regulations generally
provide for licensing of sales finance agencies, limitations on the amount,
duration and charges, including interest rates, for various categories of
loans, requirements as to the form and content of finance contracts and other
documentation and restrictions on collection practices and creditors' rights.
In certain states, the Company's branch offices are subject to periodic
examination by state regulatory authorities. Some states in which the
Company operates do not require special licensing or provide extensive
regulation of the Company's business.
The Company is also subject to extensive federal regulation, including the
Truth in Lending Act, the Equal Credit Opportunity Act and the Fair Credit
Reporting Act. These laws require the Company to provide certain disclosures
to prospective borrowers and protect against discriminatory lending practices
and unfair credit practices. The principal disclosures required under the
Truth in Lending Act include the terms of repayment, the total finance charge
and the annual percentage rate charged on each loan. The Equal Credit
Opportunity Act prohibits creditors from discriminating against loan
applicants on the basis of race, color, sex, age or marital status. Pursuant
to Regulation B promulgated under the Equal Credit Opportunity Act, creditors
are required to make certain disclosures regarding consumer rights and advise
consumers whose credit applications are not approved of the reasons for the
rejection. In addition, the credit scoring system used by the Company must
comply with the requirements for
-12-
<PAGE>
such a system as set forth in the Equal Credit Opportunity Act and Regulation
B. The Fair Credit Reporting Act requires the Company to provide certain
information to consumers whose credit applications are not approved on the
basis of a report obtained from a consumer reporting agency.
The dealers who originate car loans purchased by the Company also must comply
with both state and federal credit and trade practice statutes and
regulations. Failure of the dealers to comply with such statutes and
regulations could result in consumers having rights of rescission and other
remedies that could have an adverse effect on the Company.
Management believes that it maintains all licenses and permits required for
its current operations and is in substantial compliance with all applicable
local, state, and federal regulations. There can be no assurance, however,
that the Company will be able to maintain all requisite licenses and permits
and the failure to satisfy those and other regulatory requirements could have
a material adverse effect on the operations of the Company. Further, the
adoption of additional, or the revision of existing rules and regulations
could have a material adverse effect on the Company's business.
As a consumer finance company, the Company is subject to various consumer
claims and litigation seeking damages and statutory penalties based upon,
among other theories of liability, usury, wrongful repossession, fraud and
discriminatory treatment of credit applicants. The Company, as the assignee
of car loans originated by dealers, may also be named as a co-defendant in
lawsuits filed by consumers principally against dealers. The damages and
penalties claimed by consumers in these types of matters can be substantial.
Management believes that the Company has taken prudent steps to address the
litigation risks associated with its business activities. However, there can
be no assurance that the Company will be able to successfully defend against
all such consumer claims, or that the determination of any such claim in a
manner adverse to the Company would not have a material adverse effect on the
Company's business.
EMPLOYEES
At June 30, 1995, the Company employed 256 persons.
EXECUTIVE OFFICERS
The following sets forth certain data concerning the executive officers of
the Company, all of whom are elected on an annual basis.
<TABLE>
<CAPTION>
Name Age Position
---- --- --------
<S> <C> <C>
Clifton H. Morris, Jr. 60 Chairman of the Board, Chief
Executive Officer and President
</TABLE>
-13-
<PAGE>
<TABLE>
<S> <C> <C>
Michael R. Barrington 36 Executive Vice President and Chief
Operating Officer of the Company,
President and Chief Operating
Officer of AFSI
Daniel E. Berce 41 Executive Vice President, Chief
Financial Officer and Treasurer
Chris A. Choate 32 Vice President, General Counsel and
Secretary
Edward H. Esstman 54 Senior Vice President and Chief
Credit Officer of the Company,
Executive Vice President,
Director of Consumer Finance
Operations of AFSI
Michael T. Miller 34 Senior Vice President, Risk
Management, Credit Policy and
Planning of AFSI
Preston A. Miller 31 Vice President and Controller
</TABLE>
CLIFTON H. MORRIS, JR. has been Chairman of the Board and Chief Executive
Officer of the Company since May 1988, and was also President of the Company
from such date until April 1991 and from April 1992 to the present. Mr.
Morris is also a director of Service Corporation International, a publicly
held company which owns and operates funeral homes and related businesses,
and Cash America International, Inc., a publicly held pawn brokerage company.
MICHAEL R. BARRINGTON has been President and Chief Operating Officer of AFSI
since AFSI's formation in July 1992. Mr. Barrington has also been Executive
Vice President and Chief Operating Officer of the Company since November 1994
and Vice President of the Company from May 1991 until November 1994. From
July 1989 until May 1991, Mr. Barrington was employed by the Company in
various capacities, most recently as Vice President, Credit and Finance
Operations.
DANIEL E. BERCE is a certified public accountant and has been Executive Vice
President, Chief Financial Officer and Treasurer for the Company since
November 1994 and Vice President, Chief Financial Officer and Treasurer for
the Company from May 1991 until November 1994. From May 1990 until May 1991,
Mr. Berce was Vice President, Chief Financial Officer for the Company.
CHRIS A. CHOATE has been Vice President, General Counsel and Secretary of the
Company since November 1994 and General Counsel and Secretary of the Company
from January 1993 until November 1994. From July 1991 until January 1993,
Mr. Choate
-14-
<PAGE>
was Assistant General Counsel. Prior to that, he was an associate with the
law firm of Jones, Day, Reaves & Pogue in Dallas, Texas from January 1990
until July 1991.
EDWARD H. ESSTMAN has been Executive Vice President, Director of Consumer
Finance Operations of AFSI since November 1994 and Senior Vice President,
Director of Consumer Finance of AFSI from AFSI's formation in July 1992 until
November 1994. Mr. Esstman has also been Senior Vice President and Chief
Credit Officer for the Company since November 1994. From April 1984 until
June 1992, Mr. Esstman acted in various management capacities at Mercury
Finance Company, most recently as Vice President of Administration.
MICHAEL T. MILLER has been Senior Vice President, Risk Management, Credit
Policy and Planning of AFSI since November 1994 and Vice President, Risk
Management, Credit Policy and Planning of AFSI from AFSI's formation in July
1992 until November 1994. From May 1991 until July 1992, Mr. Miller was
Manager of Credit Analysis of the Company. Prior to that, Mr. Miller was
Assistant Vice President of Financial Planning and Analysis of Citicorp
Mortgage and Acceptance Company and was with such Company for six years.
PRESTON A. MILLER has been Vice President and Controller of the Company since
November 1994 and was Controller of the Company from September 1989 until
November 1994.
-15-
<PAGE>
ITEM 2. PROPERTIES
The Company's executive offices are located at 200 Bailey Avenue, Fort Worth,
Texas, in a 43,000 square foot building purchased by the Company in February
1994. A substantial portion of the office space in this facility is utilized
by the Company for its collections, loan services, central purchasing, branch
support and administrative activities. There is no debt outstanding against
which the building has been pledged as collateral.
All of the Company's branch office facilities are leased under lease
agreements with original terms of two to four years. Such facilities are
typically located in a suburban office building and consist of between 1,000
and 1,500 square feet of space.
ITEM 3. LEGAL PROCEEDINGS
The Company is involved in various lawsuits in the normal course of business.
In the opinion of management, resolution of these matters will not have a
material adverse effect on the Company's consolidated financial position,
results of operations or liquidity.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
There were no matters submitted to a vote of the Company's security holders
during the fourth quarter ended June 30, 1995.
-16-
<PAGE>
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
The Company has never paid cash dividends on its common stock. The Company's
bank line of credit contains certain restrictions on the payment of
dividends. While the Company has an accumulated deficit at June 30, 1995, the
Company presently intends to retain future earnings, if any, for purposes of
funding operations.
Information contained under the caption "Common Stock Data" in the Annual
Report is incorporated herein by reference in further response to this Item 5.
ITEM 6. SELECTED FINANCIAL DATA
Information contained under the caption "Summary Financial and Operating
Information" in the Annual Report is incorporated herein by reference in
response to this Item 6.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Information contained under the caption "Financial Review" in the Annual
Report is incorporated herein by reference in response to this Item 7.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The Consolidated Financial Statements of the Company included in the Annual
Report and information contained under the caption "Quarterly Data" in the
Annual Report are incorporated herein by reference in response to this Item 8.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
The Company had no disagreements on accounting or financial disclosure
matters with its independent accountants to report under this Item 9.
-17-
<PAGE>
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Information contained under the caption "Election of Directors" in the Proxy
Statement is incorporated herein by reference in response to this Item 10.
See Item 1. "Business - Executive Officers" for information concerning
executive officers.
ITEM 11. EXECUTIVE COMPENSATION
Information contained under the captions "Executive Compensation" and
"Election of Directors", except the Report of the Compensation Committee on
Executive Compensation and the Performance Graph, in the Proxy Statement is
incorporated herein by reference in response to this Item 11.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Information contained under the caption "Principal Shareholders and Stock
Ownership of Management" in the Proxy Statement is incorporated herein by
reference in response to this Item 12.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
There is no information requiring disclosure pursuant to Item 404 of
Regulation S-K. Accordingly, no information is furnished in response to this
Item 13.
-18-
<PAGE>
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(1) The following Consolidated Financial Statements of the Company and Report
of Independent Accountants are contained in the Annual Report and are
incorporated herein by reference.
CONSOLIDATED FINANCIAL STATEMENTS:
Consolidated Balance Sheets as of June 30, 1995 and 1994.
Consolidated Statements of Operations for the years ended June 30, 1995,
1994 and 1993.
Consolidated Statements of Shareholders' Equity for the years ended June
30, 1995, 1994 and 1993.
Consolidated Statements of Cash Flows for the years ended June 30, 1995,
1994 and 1993.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
REPORT OF INDEPENDENT ACCOUNTANTS
(2) All schedules for which provision is made in the applicable accounting
regulation of the Securities and Exchange Commission are either not
required under the related instructions, are inapplicable, or the required
information is included elsewhere in the Consolidated Financial Statements
and incorporated herein by reference.
(3) The exhibits filed in response to Item 601 of Regulation S-K are listed
in the Index to Exhibits on pages 16 and 17.
(4) The Company did not file any reports on Form 8-K during the quarterly
period ended June 30, 1995.
-19-
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized, on September 27,
1995.
AmeriCredit Corp.
BY: /s/ Clifton H. Morris, Jr.
-----------------------------------
Clifton H. Morris, Jr.
Chairman of the Board, Chief
Executive Officer and President
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed by the following persons on behalf of the Registrant
and in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/s/ Clifton H. Morris, Jr. Chairman of the Board, September 27, 1995
- ---------------------------- Chief Executive Officer
Clifton H. Morris, Jr. and President
/s/ Daniel E. Berce Executive Vice President, September 27, 1995
- ---------------------------- Chief Financial Officer
Daniel E. Berce and Treasurer and Director
/s/ Michael R. Barrington Executive Vice President, September 27, 1995
- ---------------------------- Chief Operating Officer
Michael R. Barrington and Director
/s/ James H. Greer Director September 27, 1995
- ----------------------------
James H. Greer
/s/ Gerald W. Haddock Director September 27, 1995
- ----------------------------
Gerald W. Haddock
/s/ Kenneth H. Jones, Jr. Director September 27, 1995
- ----------------------------
Kenneth H. Jones, Jr.
</TABLE>
-20-
<PAGE>
INDEX TO EXHIBITS
The following documents are filed as a part of this report. Those exhibits
previously filed and incorporated herein by reference are identified below.
Exhibits not required for this report have been omitted.
<TABLE>
<CAPTION>
Exhibit
Number Description
------- -----------
<S> <C> <C>
*3.1 -- Articles of Incorporation of the Company, filed May 18,
1988, and Articles of Amendment to Articles of Incorporation,
filed August 24, 1988 (Exhibit 3.1)
*3.2 -- Amendment to Articles of Incorporation, filed October 18,
1989 (Exhibit 3.2)
##3.3 -- Articles of Amendment to the Articles of Incorporation of
the Company, filed November 12, 1992 (Exhibit 3.3)
*3.4 -- Bylaws of the Company (Exhibit 3.4)
#4.1 -- Specimen stock certificate evidencing the Common Stock
(Exhibit 4.1)
*10.1 -- 1989 Stock Option Plan for Non-Employee Directors of the
Company (Exhibit 10.4)
*10.2 -- 1989 Stock Option Plan (with Stock Appreciation Rights) for
the Company (Exhibit 10.5)
**10.3 -- Amendment No. 1 to the 1989 Stock Option Plan (with Stock
Appreciation Rights) for the Company (Exhibit 4.6)
*10.4 -- 1987 Incentive Stock Option Plan for the Company (Exhibit
10.6)
***10.5 -- 1990 Stock Option Plan for Non-Employee Directors of the
Company (Exhibit 10.14)
#10.6 -- 1991 Key Employee Stock Option Plan of the Company (Exhibit
10.10)
#10.7 -- 1991 Non-employee Director Stock Option Plan of the Company
(Exhibit 10.11)
#10.8 -- Executive Employment Agreement, dated January 30, 1991,
between the Company and Clifton H. Morris, Jr. (Exhibit 10.18)
#10.9 -- Executive Employment Agreement, dated January 30, 1991,
between the Company and Michael R. Barrington (Exhibit 10.19)
#10.10 -- Executive Employment Agreement, dated January 30, 1991,
between the Company and Daniel E. Berce (Exhibit 10.20)
##10.11 -- Executive Employment Agreement, dated May 20, 1993, between
the Company and Edward H. Esstman (Exhibit 10.18)
+10.12 -- Stock Option Purchase Agreement, dated April 4, 1994, between
AmeriCredit Corp. and Rainwater Management Partners, Ltd.
(Exhibit 10.16)
###10.13 -- Indenture, dated December 1, 1994, between AmeriCredit
Receivables Finance Corp. and LaSalle National Bank as Trustee
and Indenture Collateral Agent (Exhibit 10.1)
</TABLE>
-21-
<PAGE>
<TABLE>
<S> <C> <C>
###10.14 -- Sale and Servicing Agreement, dated December 1, 1994, between
AmeriCredit Receivables Finance Corp., AmeriCredit Financial
Services, Inc., AmeriCredit Receivables Corp. and LaSalle
National Bank as Backup Servicer (Exhibit 10.2)
@10.15 -- Indenture, dated June 1, 1995, between AmeriCredit Receivables
Finance Corp. 1995-A and LaSalle National Bank as Trustee and
Indenture Collateral Agent
</TABLE>
-22-
<PAGE>
INDEX TO EXHIBITS
(Continued)
<TABLE>
<S> <C> <C>
@10.16 -- Sale and Servicing Agreement, dated June 1, 1995, between
AmeriCredit Receivables Finance Corp. 1995-A, AmeriCredit
Financial Services, Inc., AmeriCredit Receivables Corp. and
LaSalle National Bank as Backup Servicer.
@10.17 -- Restated Revolving Credit Agreement, dated June 2, 1995,
between AmeriCredit Corp. and subsidiaries and First Interstate
Bank of Texas, N.A., Bank One, Texas, N.A., LaSalle National
Bank, The Daiwa Bank, Ltd., Harris Trust and Savings Bank, and
Comerica Bank - Texas.
++10.18 -- 1995 Omnibus Stock and Incentive Plan for AmeriCredit Corp.
@11.1 -- Schedule Re Computation of Per Share Earnings
@13.1 -- 1995 Annual Report to Shareholders of the Company
@21.1 -- Subsidiaries of the Company
@23.1 -- Consent of Coopers & Lybrand, L.L.P.
@27.1 -- Financial Data Schedule
<FN>
_____________________________________________________________________
* Incorporated by reference to the exhibit shown in parenthesis
included in Registration Statement No. 33-31220 on Form S-1 filed by
the Company with the Securities and Exchange Commission.
** Incorporated by reference to the exhibit shown in parenthesis
included in Registration Statement No. 33-41203 on Form S-8 filed by
the Company with the Securities and Exchange Commission.
*** Incorporated by reference to the exhibit shown in parenthesis
included in the Company's Annual Report on Form 10-K for the year
ended June 30, 1990 filed by the Company with the Securities and
Exchange Commission.
# Incorporated by reference to the exhibit shown in parenthesis
included in the Company's Annual Report on Form 10-K for the year
ended June 30, 1991 filed by the Company with the Securities and
Exchange Commission.
## Incorporated by reference to the exhibit shown in parenthesis included
in the Company's Annual Report on Form 10-K for the year ended June
30, 1993 filed by the Company with the Securities and Exchange
Commission.
### Incorporated by reference to the exhibit shown in parenthesis
included in the Company's Quarterly Report on Form 10-Q for the
quarterly period ended December 31, 1994 filed by the Company with
the Securities and Exchange Commission.
+ Incorporated by reference to the exhibit shown in parenthesis included
in the Company's Annual Report on Form 10-K for the year ended June
30, 1994 filed by the Company with the Securities and Exchange
Commission.
</TABLE>
-23-
<PAGE>
<TABLE>
<S> <C>
<FN>
++ Incorporated by reference from the Company's Proxy Statement, dated
September 28, 1995, for the year ended June 30, 1994 filed by the
Company with the Securities and Exchange Commission.
@ Filed herewith.
</TABLE>
<PAGE>
AMERICREDIT RECEIVABLES FINANCE CORP. 1995-A
6.55% Automobile Receivables-Backed Notes Series 1995-A
---------------------------
INDENTURE
Dated as of June 1, 1995
---------------------------
LaSalle National Bank
Trustee and Indenture Collateral Agent
<PAGE>
TABLE OF CONTENTS
PAGE
----
ARTICLE I Definitions and Incorporation by
Reference. . . . . . . . . . . . . . . . 3
SECTION 1.1. Definitions. . . . . . . . . . . . . . . 3
SECTION 1.2. Rules of Construction. . . . . . . . . . 12
ARTICLE II The Notes. . . . . . . . . . . . . . . . 13
SECTION 2.1. Form . . . . . . . . . . . . . . . . . . 13
SECTION 2.2. Execution, Authentication and Delivery . 13
SECTION 2.3. Temporary Notes. . . . . . . . . . . . . 14
SECTION 2.4. Registration; Registration of Transfer
and Exchange. . . . . . . . . . . . . 14
SECTION 2.6. Person Deemed Owner. . . . . . . . . . . 17
SECTION 2.7. Payment of Principal and Interest. . . . 17
SECTION 2.8. Cancellation . . . . . . . . . . . . . . 18
SECTION 2.9. Certain Transfer Restrictions. . . . . . 19
ARTICLE III Covenants. . . . . . . . . . . . . . . . 19
SECTION 3.1. Payment of Principal and Interest. . . . 19
SECTION 3.2. Maintenance of Office or Agency. . . . . 20
SECTION 3.3. Money for Payments To Be Held in Trust . 20
SECTION 3.4. Existence. . . . . . . . . . . . . . . . 22
SECTION 3.6. Opinions as to Trust Estate. . . . . . . 23
SECTION 3.7. Performance of Obligations; Servicing of
Receivables . . . . . . . . . . . . . 24
SECTION 3.8. Negative Covenants . . . . . . . . . . . 25
SECTION 3.9. Annual Statement as to Compliance. . . . 26
SECTION 3.10. Consolidation and Disposition
of
i
<PAGE>
Assets. . . . . . . . . . . . . . . . 26
SECTION 3.11. Transferee of Issuer . . . . . . . . . . 27
SECTION 3.12. No Other Business. . . . . . . . . . . . 27
SECTION 3.13. No Borrowing . . . . . . . . . . . . . . 27
SECTION 3.14. Servicer's Obligations . . . . . . . . . 27
SECTION 3.15. Guarantees, Loans, Advances and Other
Liabilities . . . . . . . . . . . . . 27
SECTION 3.16. Capital Expenditures . . . . . . . . . . 28
SECTION 3.17. Restricted Payments. . . . . . . . . . . 28
SECTION 3.18. Notice of Events of Default. . . . . . . 28
SECTION 3.19. Further Instruments and Acts . . . . . . 28
SECTION 3.20. Compliance with Laws . . . . . . . . . . 28
SECTION 3.21. Amendments of Sale and Servicing
Agreement . . . . . . . . . . . . . . 28
SECTION 3.22. Income Tax Characterization. . . . . . . 28
ARTICLE IV Satisfaction and Discharge . . . . . . . 29
SECTION 4.1. Satisfaction and Discharge of Indenture. 29
SECTION 4.2. Application of Trust Money . . . . . . . 30
SECTION 4.3. Payment of Moneys Held by Paying Agent . 30
ARTICLE V Remedies . . . . . . . . . . . . . . . . 31
SECTION 5.1. Events of Default. . . . . . . . . . . . 31
SECTION 5.2. Rights upon Event of Default . . . . . . 33
SECTION 5.3. Collection of Indebtedness and Suits for
Enforcement by Trustee; Authority
of Controlling Party. . . . . . . . . 34
SECTION 5.4. Remedies . . . . . . . . . . . . . . . . 37
SECTION 5.5. Optional Preservation of the
Receivables . . . . . . . . . . . . . 38
SECTION 5.6. Priorities . . . . . . . . . . . . . . . 38
SECTION 5.7. Limitation of Suits. . . . . . . . . . . 39
SECTION 5.8. Unconditional Rights of Noteholders To
Receive Principal and Interest. . . . 40
SECTION 5.9. Restoration of Rights and Remedies . . . 40
SECTION 5.10. Rights and Remedies Cumulative . . . . . 41
SECTION 5.11. Delay or Omission Not a Waiver . . . . . 41
ii
<PAGE>
SECTION 5.12. Control by Noteholders . . . . . . . . . 41
SECTION 5.13. Waiver of Past Defaults. . . . . . . . . 42
SECTION 5.14. Undertaking for Costs. . . . . . . . . . 42
SECTION 5.15. Waiver of Stay or Extension Laws . . . . 43
SECTION 5.16. Action on Notes. . . . . . . . . . . . . 43
SECTION 5.17. Performance and Enforcement of Certain
Obligations . . . . . . . . . . . . . 43
SECTION 5.18. Claims Under Policy. . . . . . . . . . . 44
SECTION 5.19. Preference Claims. . . . . . . . . . . . 46
ARTICLE VI The Trustee and the Indenture
Collateral Agent. . . . . . . . . . . 47
SECTION 6.1. Duties of Trustee. . . . . . . . . . . . 47
SECTION 6.2. Rights of Trustee. . . . . . . . . . . . 50
SECTION 6.3. Individual Rights of Trustee . . . . . . 51
SECTION 6.4. Trustee's Disclaimer . . . . . . . . . . 52
SECTION 6.5. Notice of Defaults . . . . . . . . . . . 52
SECTION 6.6. Reports by Trustee to Holders. . . . . . 52
SECTION 6.7. Compensation and Indemnity . . . . . . . 52
SECTION 6.8. Replacement of Trustee . . . . . . . . . 53
SECTION 6.9. Successor Trustee by Merger. . . . . . . 55
SECTION 6.10. Appointment of Co-Trustee or Separate
Trustee . . . . . . . . . . . . . . . 55
SECTION 6.11. Eligibility; Disqualification. . . . . . 57
SECTION 6.12. Appointment and Powers . . . . . . . . . 57
SECTION 6.13. Performance of Duties. . . . . . . . . . 58
SECTION 6.14. Limitation on Liability. . . . . . . . . 58
SECTION 6.15. Reliance upon Documents. . . . . . . . . 59
SECTION 6.16. Successor Indenture Collateral Agent . . 59
SECTION 6.17. Compensation and Indemnity . . . . . . . 61
SECTION 6.18. Representations and Warranties of the
Indenture Collateral Agent. . . . . . 62
SECTION 6.19. Waiver of Setoffs. . . . . . . . . . . . 63
SECTION 6.20. Control by the Controlling Party . . . . 63
ARTICLE VII Noteholders' Lists and Reports . . . . . 63
iii
<PAGE>
SECTION 7.1. Issuer to Furnish Trustee Names and
Addresses of Noteholders. . . . . . . 63
SECTION 7.2. Preservation of Information,
Communications to Noteholders . . . . 63
SECTION 7.3. Reports by Issuer. . . . . . . . . . . . 64
ARTICLE VIII Accounts, Disbursements and Releases . . 64
SECTION 8.1. Collection of Money. . . . . . . . . . . 64
SECTION 8.2. Trust Accounts . . . . . . . . . . . . . 64
SECTION 8.3. General Provisions Regarding Accounts. . 65
ARTICLE IX Supplemental Indentures. . . . . . . . . 65
SECTION 9.1. Supplemental Indentures Without Consent
of Noteholders. . . . . . . . . . . . 65
SECTION 9.2. Supplemental Indentures With Consent
of Noteholders. . . . . . . . . . . . 67
SECTION 9.3. Execution of Supplemental Indentures . . 68
SECTION 9.4. Effect of Supplemental Indenture . . . . 69
SECTION 9.5. Reference in Notes to Supplemental
Indentures. . . . . . . . . . . . . . 69
ARTICLE X Redemption of Notes. . . . . . . . . . . 69
SECTION 10.1. Redemption . . . . . . . . . . . . . . . 69
SECTION 10.2. Form of Redemption Notice. . . . . . . . 70
SECTION 10.3. Notes Payable on Redemption Date . . . . 70
ARTICLE XI Miscellaneous. . . . . . . . . . . . . . 70
SECTION 11.1. Compliance Certificates and Opinions,
etc . . . . . . . . . . . . . . . . . 70
SECTION 11.2. Form of Documents Delivered to Trustee . 73
SECTION 11.3. Acts of Noteholders. . . . . . . . . . . 74
iv
<PAGE>
SECTION 11.4. Notices, etc. . . . . . . . . . . . . . 74
SECTION 11.5. Notices to Noteholders; Waiver. . . . . 76
SECTION 11.6. Alternate Payment and Notice
Provisions. . . . . . . . . . . . . . 76
SECTION 11.7. Effect of Headings and Table of
Contents. . . . . . . . . . . . . . . 77
SECTION 11.8. Successors and Assigns. . . . . . . . . 77
SECTION 11.9. Severability. . . . . . . . . . . . . . 77
SECTION 11.10. Benefits of Indenture . . . . . . . . . 77
SECTION 11.11. Legal Holidays. . . . . . . . . . . . . 77
SECTION 11.12. GOVERNING LAW . . . . . . . . . . . . . 77
SECTION 11.13. Counterparts. . . . . . . . . . . . . . 78
SECTION 11.14. Recording of Indenture. . . . . . . . . 78
SECTION 11.15. Trust Obligation. . . . . . . . . . . . 78
SECTION 11.16. No Petition . . . . . . . . . . . . . . 78
SECTION 11.17. Inspection. . . . . . . . . . . . . . . 78
Exhibit A - Schedule of Receivables
Exhibit B - Form of Note
v
<PAGE>
INDENTURE, dated as of June 1, 1995, between AMERICREDIT RECEIVABLES
FINANCE CORP. 1995-A, a Delaware corporation (the "Issuer"), and LASALLE
NATIONAL BANK, a national banking association, in its capacities as trustee
(the "Trustee) and as Indenture Collateral Agent (as defined below) and not
in its individual capacity.
Each party agrees as follows for the benefit of the other party and for
the equal and ratable benefit of the Holders of the Issuer's 6.55% Automobile
Receivables-Backed Notes (the "Notes"):
As security for the payment and performance by the Issuer of its
obligations under this Indenture and the Notes, the Issuer has agreed to
assign the Indenture Collateral (as defined below) as collateral to the
Indenture Collateral Agent for the benefit of the Trustee on behalf of the
Noteholders.
Financial Security Assurance Inc. (the "Security Insurer") has issued
and delivered a financial guaranty insurance policy, dated the Closing Date
(with endorsements, the "Policy"), pursuant to which the Security Insurer
guarantees certain Scheduled Payments, as defined in the Policy.
As an inducement to the Security Insurer to issue and deliver the
Policy, the Issuer has executed and delivered the Insurance and Indemnity
Agreement, dated as of June 1, 1995 (as amended from time to time, the
"Insurance Agreement"), among the Security Insurer, the Issuer, AmeriCredit
Receivables Corp., AmeriCredit Financial Services, Inc. and AmeriCredit Corp.
As an additional inducement to the Security Insurer to issue the Policy,
and as security for the performance by the Issuer of the Insurer Issuer
Secured Obligations and as security for the performance by the Issuer of the
Trustee Issuer Secured Obligations, the Issuer has agreed to assign the
Indenture Collateral as collateral to the Indenture Collateral Agent for the
benefit of the Issuer Secured Parties, as their respective interests may
appear.
GRANTING CLAUSE
<PAGE>
The Issuer hereby Grants to the Indenture Collateral Agent at the
Closing Date, on behalf of and for the benefit of the Issuer Secured Parties
to secure the performance of the respective Issuer Secured Obligations, all
of the Issuer's right, title and interest in and to (a) the Receivables and
all moneys paid or payable thereon or in respect thereof after May 31, 1995;
(b) an assignment of the security interests of AFS in the Financed Vehicles;
(c) the Insurance Policies and any proceeds from any Insurance Policies
relating to the Receivables, the Obligors or the Financed Vehicles, including
rebates of premiums, all Collateral Insurance and any Force-Placed Insurance;
(d) rights of AFS or the Seller against Dealers with respect to the
Receivables under the Dealer Agreements and the Dealer Assignments; (e) all
items contained in the Receivable Files and any and all other documents that
AFS keeps on file in accordance with its customary procedures relating to the
Receivables, the Obligors or the Financed Vehicles, (f) property (including
the right to receive future Liquidation Proceeds) that secures a Receivable
and that has been acquired by or on behalf of the Seller or the Issuer
pursuant to liquidation of such Receivable; (g) all funds on deposit from
time to time in the Trust Accounts (as defined in the Sale and Servicing
Agreement) and in all investments and proceeds thereof (including all income
thereon and all amounts deposited in respect of Administrative Receivables
and Warranty Receivables); (h) the Purchase Agreement, including the right
assigned to the Issuer to cause AFS to repurchase Receivables from the Seller
under certain circumstances; (i) the Sale and Servicing Agreement (including
all rights of the Seller under the Purchase Agreement assigned to the Issuer
pursuant to the Sale and Servicing Agreement); (j) the Trust Accounts and (k)
all present and future claims, demands, causes and choses in action in
respect of any or all of the foregoing and all payments on or under and all
proceeds of every kind and nature whatsoever in respect of any or in lieu of
the foregoing, including all proceeds of the conversion, voluntary or
involuntary, into cash or other liquid property, all cash proceeds, accounts,
accounts receivable, notes, drafts, acceptances, chattel paper, checks,
deposit accounts, insurance proceeds, condemnation awards, rights to payment
of any and every kind and other forms of obligations and receivables,
instruments and other property which at any
2
<PAGE>
time constitute all or part of or are included in the proceeds of any of the
foregoing (collectively, the "Indenture Collateral").
The Indenture Collateral Agent, for the benefit of the Trustee on behalf
of the Holders of the Notes and for the benefit of the Security Insurer
acknowledges such Grant. The Trustee on behalf of the Holders of the Notes
accepts the trusts under this Indenture in accordance with the provisions of
this Indenture and agrees to perform its duties required in this Indenture to
the best of its ability to the end that the interests of the Holders of the
Notes may be adequately and effectively protected.
3
<PAGE>
ARTICLE I
DEFINITIONS AND INCORPORATION BY REFERENCE
SECTION 1.1. DEFINITIONS.
(a) Except as otherwise specified herein or as the context may
otherwise require, the following terms have the respective meanings set forth
below for all purposes of this Indenture.
"ACT" has the meaning specified in Section 11.3(a).
"ADMINISTRATIVE SERVICES AND FACILITIES AGREEMENT" means, the agreement
by and between AmeriCredit Financial Services, Inc. and the Issuer dated as
of June 1, 1995.
"AFFILIATE" means, with respect to any specified Person, any other
Person controlling or controlled by or under common control with such
specified Person. For the purposes of this definition, "control" when used
with respect to any specified Person means the power to direct the management
and policies of such Person, directly or indirectly, whether through the
ownership of voting securities, by contract or otherwise; and the terms
"controlling" and "controlled" have meanings correlative to the foregoing.
"AFS" means AmeriCredit Financial Services, Inc.
"AUTHORIZED OFFICER" means, with respect to the Issuer, any officer of
the Issuer who is authorized to act for the Issuer in matters relating to the
Issuer and who is identified on the list of Authorized Officers delivered by
the Issuer to the Trustee on the Closing Date (as such list may be modified
or supplemented from time to time thereafter).
"BUSINESS DAY" means any day other than a Saturday, Sunday, legal
holiday or other day on which commercial banking institutions in Fort Worth,
Texas, New York, New York, Chicago, Illinois, or the principal place of
business of any successor Servicer, successor Issuer, successor
4
<PAGE>
Trustee or successor Indenture Collateral Agent are authorized or obligated
by law, executive order or governmental decree to be closed.
"CLOSING DATE" means June 21, 1995.
"CODE" means the Internal Revenue Code of 1986, as amended from time to
time, and Treasury Regulations promulgated thereunder.
"CONTROLLING PARTY" means the Security Insurer, so long as no Insurer
Default shall have occurred and be continuing and the Trustee for the benefit
of the Noteholders, for so long as an Insurer Default shall have occurred and
be continuing.
"CORPORATE TRUST OFFICE" means the principal office of the Trustee at
which at any particular time its corporate trust business shall be
administered which office at date of the execution of this Indenture is
located at 135 S. LaSalle Street, Suite 200, Chicago, Illinois 60603-4105
Attention: Asset-Backed Securities Trust Services Department; or at such
other address as the Trustee may designate from time to time by notice to the
Noteholders, the Security Insurer and the Issuer, or the principal corporate
trust office of any successor Trustee (the address of which the successor
Trustee will notify the Noteholders, the Security Insurer and the Issuer).
"CUSTODIAN" means the AFS and any other Person named from time to time
as custodian in any Custodian Agreement acting as agent for the Indenture
Collateral Agent, which Person must be acceptable to the Controlling Party
(the Custodian as of the Closing Date is acceptable to the Security Insurer
as of the Closing Date).
"CUSTODIAN AGREEMENT" means any Custodian Agreement from time to time in
effect between the Custodian named therein and the Indenture Collateral
Agent, as the same may be amended, supplemented or otherwise modified from
time to time in accordance with the terms thereof, which Custodian Agreement
and any amendments, supplements or modifications thereto shall be acceptable
to the Controlling Party (the
5
<PAGE>
Custodian Agreement which is effective on the Closing Date is acceptable to
the Controlling Party).
"DEFAULT" means any occurrence that is, or with notice or the lapse of
time or both would become, an Event of Default.
"EVENT OF DEFAULT" has the meaning specified in Section 5.1.
"EXECUTIVE OFFICER" means, with respect to any corporation, the Chief
Executive Officer, Chief Operating Officer, Chief Financial Officer,
President, Executive Vice President, any Vice President, any Responsible
Officer, the Secretary or the Treasurer of such corporation; and with respect
to any partnership, any general partner thereof.
"FINAL SCHEDULED DISTRIBUTION DATE" means September 12, 2000 (or, if
such day is not a Business Day, the next Business Day thereafter).
"FINAL SCHEDULED MATURITY DATE" means April 30, 2000.
"GRANT" means mortgage, pledge, bargain, sell, warrant, alienate,
remise, release, convey, assign, transfer, create, and grant a lien upon and
a security interest in and right of set-off against, deposit, set over and
confirm pursuant to this Indenture. A Grant of the Indenture Collateral or
of any other agreement or instrument shall include all rights, powers and
options (but none of the obligations) of the Granting party thereunder,
including the immediate and continuing right to claim for, collect, receive
and give receipt for principal and interest payments in respect of the
Indenture Collateral and all other moneys payable thereunder, to give and
receive notices and other communications, to make waivers or other
agreements, to exercise all rights and options, to bring Proceedings in the
name of the Granting party or otherwise and generally to do and receive
anything that the Granting party is or may be entitled to do or receive
thereunder or with respect thereto.
"HOLDER" or "NOTEHOLDER" means the Person in whose name a Note is
registered on the Note Register.
6
<PAGE>
"INDEBTEDNESS" means, with respect to any Person at any time, (a)
indebtedness or liability of such Person for borrowed money whether or not
evidenced by bonds, debentures, notes or other instruments, or for the
deferred purchase price of property or services (including trade
obligations); (b) obligations of such Person as lessee under leases which
should have been or should be, in accordance with generally accepted
accounting principles, recorded as capital leases; (c) current liabilities of
such Person in respect of unfunded vested benefits under plans covered by
Title IV of ERISA; (d) obligations issued for or liabilities incurred on the
account of such Person; (e) obligations or liabilities of such Person arising
under acceptance facilities; (f) obligations of such Person under any
guarantees, endorsements (other than for collection or deposit in the
ordinary course of business) and other contingent obligations to purchase, to
provide funds for payment, to supply funds to invest in any Person or
otherwise to assure a creditor against loss; (g) obligations of such Person
secured by any Lien on property or assets of such Person, whether or not the
obligations have been assumed by such Person; or (h) obligations of such
Person under any interest rate or currency exchange agreement.
"INDENTURE" means this Indenture as amended or supplemented from time to
time.
"INDENTURE COLLATERAL" has the meaning specified in the Granting Clause
of this Indenture.
"INDENTURE COLLATERAL AGENT" means, initially, LaSalle National Bank, in
its capacity as collateral agent on behalf of the Issuer Secured Parties,
including its successors in interest, until and unless a successor Person
shall have become the Indenture Collateral Agent pursuant to Section 6.16
hereof, and thereafter "Indenture Collateral Agent" shall mean such successor
Person; provided however, that the Trustee and the Indenture Collateral Agent
shall always be the same Person.
"INDEPENDENT" means, when used with respect to any specified Person,
that the Person (a) is in fact independent of the Issuer, any other obligor
upon the Notes, the Seller and any Affiliate of any of the foregoing Persons,
(b) does
7
<PAGE>
not have any direct financial interest or any material indirect financial
interest in the Issuer, any such other obligor, the Seller or any Affiliate
of any of the foregoing Persons and (c) is not connected with the Issuer, any
such other obligor, the Seller or any Affiliate of any of the foregoing
Persons as an officer, employee, promoter, underwriter, trustee, partner,
director or person performing similar functions.
"INDEPENDENT CERTIFICATE" means a certificate or opinion to be delivered
to the Indenture Collateral Agent under the circumstances described in, and
otherwise complying with, the applicable requirements of Section 11.1, made
by an Independent appraiser or other expert appointed by an Issuer Order and
approved by the Indenture Collateral Agent in the exercise of reasonable
care, and such opinion or certificate shall state that the signer has read
the definition of "Independent" in this Indenture and that the signer is
Independent within the meaning thereof.
"INITIAL PURCHASE AGREEMENT" means the agreement dated as of June 1,
1995, between the Issuer and the initial purchaser of the Notes relating to
the initial purchase of the Notes.
"INSURANCE AGREEMENT" means the Insurance and Indemnity Agreement, dated
as of June 1, 1995, among the Security Insurer, the Issuer, the Seller, AFS
and AmeriCredit Corp.
"INSURANCE AGREEMENT INDENTURE CROSS DEFAULT" has the meaning specified
therefor in the Insurance Agreement.
"INSURER ISSUER SECURED OBLIGATIONS" means all amounts and obligations
which the Issuer may at any time owe to or on behalf of the Security Insurer
under this Indenture, the Insurance Agreement or any other Related Document.
"ISSUER" means the party named as such in this Indenture until a
successor replaces it and, thereafter, means the successor and, for purposes
of any provision contained herein each other obligor on the Notes.
8
<PAGE>
"ISSUER ORDER" and "ISSUER REQUEST" means a written order or request
signed in the name of the Issuer by any one of its Authorized Officers and
delivered to the Trustee.
"ISSUER SECURED OBLIGATIONS" means the Insurer Issuer Secured
Obligations and the Trustee Issuer Secured Obligations.
"ISSUER SECURED PARTIES" means each of the Trustee on behalf of the
Noteholders in respect of the Trustee Issuer Secured Obligations and the
Security Insurer in respect of the Insurer Issuer Secured Obligations.
"LETTER AGREEMENT" has the meaning specified in Section 6.7.
"LOCKBOX AGREEMENT" means the Tri-Party Remittance Processing Agreement,
dated as of June 1, 1995, by and among AFS, First Interstate Bank of Texas,
N.A., and the Indenture Collateral Agent, as such agreement may be amended or
supplemented from time to time, unless the Trustee hereunder shall cease to
be a party thereunder, or such agreement shall be terminated in accordance
with its terms, in which event "Lockbox Agreement" shall mean such other
agreement, in form and substance acceptable to the Controlling Party, among
the Servicer, the Issuer, the Trustee and the Lockbox Bank.
"MAJORITY NOTEHOLDER" means the holder of a Note Majority.
"1994-A ISSUER STOCK PLEDGE AGREEMENT" means the Stock Pledge Agreement,
dated as of June 1, 1995, among the Security Insurer, the Seller and the
Collateral Agent named therein, as the same may be amended from time to time.
"1995-A ISSUER STOCK PLEDGE AGREEMENT" means the Stock Pledge Agreement,
dated as of June 1, 1995, among the Security Insurer, the Seller and the
Collateral Agent named therein, as the same may be amended from time to time.
"NOTE" means any of the 6.55% Automobile Receivables-Backed Notes
Series 1995-A issued by the Issuer on the Closing Date.
9
<PAGE>
"NOTE INTEREST RATE" means 6.55% per annum (computed on the basis of a
360-day year of twelve 30-day months).
"NOTE REGISTER" and "NOTE REGISTRAR" have the respective meanings
specified in Section 2.4.
"NOTICE OF CLAIM" has the meaning specified in Section 5.18(b).
"OFFICERS' CERTIFICATE" means a certificate signed by any Authorized
Officer of the Issuer, under the circumstances described in, and otherwise
complying with, the applicable requirements of Section 11.1, and delivered
to, the Trustee. Unless otherwise specified, any reference in this Indenture
to an Officers' Certificate shall be to an Officers' Certificate of any
Authorized Officer of the Issuer.
"OPINION OF COUNSEL" means one or more written opinions of counsel who
may, except as otherwise expressly provided in this Indenture, be employees
of or counsel to the Issuer and who shall be satisfactory to the Trustee and,
if addressed to the Security Insurer, satisfactory to the Security Insurer,
and which shall comply with any applicable requirements of Section 11.1, and
shall be in form and substance satisfactory to the Trustee, and if addressed
to the Security Insurer, satisfactory to the Security Insurer.
"OUTSTANDING" means, as of the date of determination, all Notes
theretofore authenticated and delivered under this Indenture except:
(i) Notes theretofore canceled by the Note Registrar or delivered
to the Note Registrar for cancellation;
(ii) Notes or portions thereof the payment for which money in the
necessary amount has been theretofore deposited with the Trustee or any
Paying Agent in trust for the Holders of such Notes (provided, however,
that if such Notes are to be redeemed, notice of such redemption has been
duly given pursuant to this Indenture or provision therefor, satisfactory
to the Trustee, has been made); and
10
<PAGE>
(iii) Notes in exchange for or in lieu of other Notes which have been
authenticated and delivered pursuant to this Indenture unless proof
satisfactory to the Trustee is presented that any such Notes are held
by a bona fide purchaser;
PROVIDED, HOWEVER, that Notes which have been paid with proceeds of the
Policy shall continue to remain Outstanding for purposes of this Indenture
until the Security Insurer has been paid as subrogee hereunder or reimbursed
pursuant to the Insurance Agreement as evidenced by a written notice from the
Security Insurer delivered to the Trustee, and the Security Insurer shall be
deemed to be the Holder thereof to the extent of any payments thereon made by
the Security Insurer; PROVIDED, FURTHER, that in determining whether the
Holders of the requisite Outstanding Amount of the Notes have given any
request, demand, authorization, direction, notice, consent or waiver
hereunder or under any Related Document, Notes owned by the Issuer, any other
obligor upon the Notes, the Seller or any Affiliate of any of the foregoing
Persons shall be disregarded and deemed not to be Outstanding, except that,
in determining whether the Trustee shall be protected in relying upon any
such request, demand, authorization, direction, notice, consent or waiver,
only Notes that the Trustee knows to be so owned shall be so disregarded.
Notes so owned that have been pledged in good faith may be regarded as
Outstanding if the pledgee establishes to the satisfaction of the Trustee the
pledgee's right so to act with respect to such Notes and that the pledgee is
not the Issuer, any other obligor upon the Notes, the Seller or any Affiliate
of any of the foregoing Persons.
"OUTSTANDING AMOUNT" means the aggregate principal amount of all Notes
Outstanding at the date of determination.
"PAYING AGENT" means the Trustee or any other Person that meets the
eligibility standards for the Trustee specified in Section 6.11 and, so long
as no Insurer Default shall have occurred and be continuing, is consented to
by the Security Insurer and is authorized by the Issuer to make the
distributions from the Note Distribution Account, including payment of
principal of or interest on the Notes on behalf of the Issuer.
11
<PAGE>
"PAYMENT DATE" means a Distribution Date.
"PERSON" means any individual, corporation, estate, partnership, limited
liability company, joint venture, association, joint stock company, trust
(including any beneficiary thereof), unincorporated organization or
government or any agency or political subdivision thereof.
"POLICY" means the financial guaranty insurance policy issued by the
Security Insurer with respect to the Notes, including any endorsements
thereto, in the form of Exhibit E.
"POLICY CLAIM AMOUNT" has the meaning specified in Section 5.18(a).
"PREDECESSOR NOTE" means, with respect to any particular Note, every
previous Note evidencing all or a portion of the same debt as that evidenced
by such particular Note; and, for the purpose of this definition, any Note
authenticated and delivered under Section 2.5 in lieu of a mutilated, lost,
destroyed or stolen Note shall be deemed to evidence the same debt as the
mutilated, lost, destroyed or stolen Note.
"PREFERENCE CLAIM" has the meaning specified in Section 5.19.
"PROCEEDING" means any suit in equity, action at law or other judicial
or administrative proceeding.
"RATING AGENCY" means each of Moody's and Standard & Poor's, so long as
such Persons maintain a rating on the Notes; and if either Moody's or
Standard & Poor's no longer maintains a rating on the Notes, such other
nationally recognized statistical rating organization selected by the Issuer
and (so long as an Insurer Default shall not have occurred and be continuing)
acceptable to the Security Insurer.
"RATING AGENCY CONDITION" means, with respect to any action, that each
Rating Agency shall have been given 10 days prior notice thereof and that
each of the Rating Agencies shall have notified the Seller, the Servicer, the
12
<PAGE>
Security Insurer, the Trustee and the Issuer in writing that such action will
not result in a reduction or withdrawal of the then current rating of the
Notes and will not result in an increased capital charge to the Security
Insurer.
"RECEIVABLE" means any retail installment sale contract which shall
appear on Schedule A to this Indenture.
"RECEIVABLES PURCHASE AGREEMENT" means the Receivable Purchase Agreement
and Assignment dated as of June 1, 1995, between the AFS and the Seller.
"RECORD DATE" means, with respect to a Payment Date or Redemption Date,
the close of business on the last Business Day immediately preceding such
Payment Date or Redemption Date.
"REDEMPTION DATE" means in the case of a redemption of the Notes
pursuant to Section 10.1, the Payment Date specified by the Issuer pursuant
to Section 10.1.
"REDEMPTION PRICE" means in the case of a redemption of the Notes
pursuant to Section 10.1, an amount equal to the principal amount of the
Notes redeemed plus accrued and unpaid interest thereon at the Note Interest
Rate to but excluding the Redemption Date.
"REGISTERED HOLDER" means the Person in whose name a Note is registered
on the Note Register on the applicable Record Date.
"RELATED DOCUMENTS" means the Notes, the Receivables Purchase Agreement,
the Sale and Servicing Agreement, the Custodian Agreement, the Administrative
Services and Facilities Agreement, the Policy, the Spread Account Agreement,
the Spread Account Agreement Supplement, the Insurance Agreement, the
Indemnification Agreement (as defined in the Insurance Agreement), the
Lockbox Agreement, the Stock Pledge Agreement, the 1994-A Issuer Stock Pledge
Agreement, the 1995-A Issuer Stock Pledge Agreement and the Initial Purchase
Agreement. The Related Documents executed by any party are referred to
herein as "such party's Related Documents" "its Related Documents" or by a
similar expression.
13
<PAGE>
"RESPONSIBLE OFFICER" means, with respect to the Trustee, any officer of
the Trustee assigned by the Trustee to administer its corporate trust affairs
relating to the Trust Estate.
"SALE AND SERVICING AGREEMENT" means the Sale and Servicing Agreement,
dated as of June 1, 1995, among the Issuer, the Seller, AFS, in its
individual capacity and as the Servicer and the Backup Servicer.
"SCHEDULE OF RECEIVABLES" means the listing of the Receivables set forth
in Exhibit A.
"SCHEDULED PAYMENTS" has the meaning specified therefor in the Policy.
"SECURITIES ACT" means the Securities Act of 1933, as amended.
"SELLER" means Americredit Receivables Corp.
"SPREAD ACCOUNT AGREEMENT" means the Spread Account Agreement, dated as
of December 1, 1994, among the Security Insurer, the Seller, the Collateral
Agent and the trustees specified therein, as the same may be amended,
supplemented or otherwise modified in accordance with the terms thereof.
"SPREAD ACCOUNT AGREEMENT SUPPLEMENT" means the Series 1995-A Supplement
to Spread Account Agreement, dated as of June 1, 1995, among FSA, the Seller
and the Trustee.
"STATE" means any one of the 50 states of the United States of America
or the District of Columbia.
"STOCK PLEDGE AGREEMENT" means the Stock Pledge Agreement, dated as of
December 1, 1994, among the Security Insurer, AFS and the Collateral Agent
named therein, as the same may be amended from time to time.
"TERMINATION DATE" means the latest of (i) the expiration of the Policy
and the return of the Policy to the Security Insurer for cancellation, (ii)
the date on which the Security Insurer shall have received payment and
performance of all Insurer Issuer Secured Obligations and
14
<PAGE>
(iii) the date on which the Trustee shall have received payment and
performance of all Trustee Issuer Secured Obligations.
"TRUST ESTATE" means all money, instruments, rights and other property
that are subject or intended to be subject to the lien and security interest
of this Indenture for the benefit of the Noteholders (including without
limitation, the Indenture Collateral Granted to the Indenture Collateral
Agent), including all proceeds thereof.
"TRUSTEE" means LaSalle National Bank, a national banking association,
as Trustee under this Indenture, or any successor Trustee under this
Indenture.
"TRUSTEE ISSUER SECURED OBLIGATIONS" means all amounts and obligations
which the Issuer may at any time owe to or on behalf of the Trustee for the
benefit of the Noteholders under this Indenture or the Notes.
"UCC" means, unless the context otherwise requires, the Uniform
Commercial Code, as in effect in the relevant jurisdiction, as amended from
time to time.
(b) Capitalized terms used herein without definition shall have the
respective meanings assigned to such terms in the Sale and Servicing Agreement.
SECTION 1.2. RULES OF CONSTRUCTION. Unless otherwise specified:
(i) a term has the meaning assigned to it;
(ii) an accounting term not otherwise defined has the meaning assigned
to it in accordance with generally accepted accounting principles as in
effect from time to time;
(iii) "or" is not exclusive;
(iv) "including" means including without limitation;
15
<PAGE>
(v) words in the singular include the plural and words in the plural
include the singular; and
(vi) references to Sections, Subsections, Schedules and Exhibits
shall refer to such portions of this Indenture.
ARTICLE II
THE NOTES
SECTION 2.1. FORM. The Notes and the Trustee's certificate of
authentication shall be in substantially the forms set forth in Exhibit B,
with such appropriate insertions, omissions, substitutions and other
variations as are required or permitted by this Indenture and may have such
letters, numbers or other marks of identification and such legends or
endorsements placed thereon as may, consistently herewith, be determined by
the officers executing such Notes, as evidenced by their execution of the
Notes. Any portion of the text of any Note may be set forth on the reverse
thereof, with an appropriate reference thereto on the face of the Note.
The Notes shall be typewritten, printed, lithographed or engraved or
produced by any combination of these methods (with or without steel engraved
borders), all as determined by the officers executing such Notes, as
evidenced by their execution of such Notes.
Each Note shall be dated the date of its authentication. The terms of
the Notes set forth in Exhibit B are part of the terms of this Indenture.
SECTION 2.2. EXECUTION, AUTHENTICATION AND DELIVERY. The Notes shall be
executed on behalf of the Issuer by any of its Authorized Officers. The
signature of any such Authorized Officer on the Notes may be manual or
facsimile.
Notes bearing the manual or facsimile signature of individuals who were
at any time Authorized Officers of the Issuer shall bind the Issuer,
notwithstanding that such individuals or any of them have ceased to hold such
offices
16
<PAGE>
prior to the authentication and delivery of such Notes or did not hold such
offices at the date of such Notes.
The Trustee shall upon receipt of the Policy and Issuer Order
authenticate and deliver Notes for original issue in an aggregate principal
amount of $99,170,000. The aggregate principal amount of Notes outstanding
at any time may not exceed that amount except as provided in Section 2.5.
Each Note shall be dated the date of its authentication. The Notes
shall be issuable as registered Notes in minimum denominations of $100,000
and in integral multiples of $1,000 in excess thereof.
No Note shall be entitled to any benefit under this Indenture or be
valid or obligatory for any purpose, unless there appears on such Note a
certificate of authentication substantially in the form provided for herein
executed by the Trustee by the manual signature of one of its authorized
signatories, and such certificate upon any Note shall be conclusive evidence,
and the only evidence, that such Note has been duly authenticated and
delivered hereunder.
SECTION 2.3. TEMPORARY NOTES. Pending the preparation of definitive
Notes, the Issuer may execute, and upon receipt of an Issuer Order the
Trustee shall authenticate and deliver, temporary Notes which are printed,
lithographed, typewritten, mimeographed or otherwise produced, of the tenor
of the definitive Notes in lieu of which they are issued and with such
variations not inconsistent with the terms of this Indenture as the officers
executing such Notes may determine, as evidenced by their execution of such
Notes.
If temporary Notes are issued, the Issuer will cause definitive Notes to
be prepared without unreasonable delay. After the preparation of definitive
Notes, the temporary Notes shall be exchangeable for definitive Notes upon
surrender of the temporary Notes at the office or agency of the Issuer to be
maintained as provided in Section 3.2, without charge to the Holder. Upon
surrender for cancellation of any one or more temporary Notes, the Issuer
shall execute and the Trustee shall authenticate and deliver in exchange
therefor a like principal amount of definitive
17
<PAGE>
Notes of authorized denominations. Until so exchanged, the temporary Notes
shall in all respects be entitled to the same benefits under this Indenture
as definitive Notes.
SECTION 2.4. REGISTRATION; REGISTRATION OF TRANSFER AND EXCHANGE. The
Issuer shall cause to be kept a register (the "Note Register") in which,
subject to such reasonable regulations as it may prescribe, the Issuer shall
provide for the registration of Notes and the registration of transfers of
Notes. The Trustee shall be "Note Registrar" for the purpose of registering
Notes and transfers of Notes as herein provided. Upon any resignation of any
Note Registrar, the Issuer shall promptly appoint a successor or, if it
elects not to make such an appointment, assume the duties of Note Registrar.
If a Person other than the Trustee is appointed by the Issuer as Note
Registrar, the Issuer will give the Trustee prompt written notice of the
appointment of such Note Registrar and of the location, and any change in the
location, of the Note Register, and the Trustee shall have the right to
inspect the Note Register at all reasonable times and to obtain copies
thereof, and the Trustee shall have the right to rely upon a certificate
executed on behalf of the Note Registrar by an Executive Officer thereof as
to the names and addresses of the Holders of the Notes and the principal
amounts and number of such Notes.
Upon surrender for registration of transfer of any Note at the office or
agency of the Issuer to be maintained as provided in Section 3.2, the Issuer
shall execute, and the Trustee shall authenticate and the Noteholder shall
obtain from the Trustee, in the name of the designated transferee or
transferees, one or more new Notes in any authorized denominations, of a like
aggregate principal amount.
At the option of the Holder, Notes may be exchanged for other Notes in
any authorized denominations, of a like aggregate principal amount, upon
surrender of the Notes to be exchanged at such office or agency. Whenever
any Notes are so surrendered for exchange, the Issuer shall execute, and the
Trustee shall authenticate and the Noteholder shall obtain from the Trustee,
the Notes which the Noteholder making the exchange is entitled to receive.
18
<PAGE>
All Notes issued upon any registration of transfer or exchange of Notes
shall be the valid obligations of the Issuer, evidencing the same debt, and
entitled to the same benefits under this Indenture, as the Notes surrendered
upon such registration of transfer or exchange.
Every Note presented or surrendered for registration of transfer or
exchange shall be duly endorsed by, or be accompanied by a written instrument
of transfer in form satisfactory to the Trustee duly executed by, the Holder
thereof or such Holder's attorney duly authorized in writing with such
signature guaranteed by a commercial bank or trust company located, or having
a correspondent located, in The City of New York or the city in which the
Corporate Trust Office is located, or by a member firm of a national
securities exchange, and such other documents as the Trustee may require.
No service charge shall be made to a Holder for any registration of
transfer or exchange of Notes, but the Issuer or the Trustee may require
payment of a sum sufficient to cover any tax or other governmental charge
that may be imposed in connection with any registration of transfer or
exchange of Notes, other than exchanges pursuant to Section 2.3 not involving
any transfer.
SECTION 2.5. MUTILATED, DESTROYED, LOST OR STOLEN NOTES. If (i) any
mutilated Note is surrendered to the Trustee, or the Trustee receives
evidence to its satisfaction of the destruction, loss or theft of any Note,
and (ii) there is delivered to the Trustee and the Security Insurer (unless
an Insurer Default shall have occurred and be continuing) such security or
indemnity as may be required by them to hold the Issuer, the Trustee and the
Security Insurer harmless (except, in the case of The Prudential Insurance
Company of America or any Affiliate thereof, a written agreement of indemnity
from such Noteholder shall satisfy such requirement) then, in the absence of
notice to the Issuer, the Note Registrar or the Trustee that such Note has
been acquired by a bona fide purchaser, the Issuer shall execute and upon its
request the Trustee shall authenticate and deliver, in exchange for or in
lieu of any such mutilated, destroyed, lost or stolen Note, a replacement
Note; PROVIDED, HOWEVER, that if any such destroyed, lost or
19
<PAGE>
stolen Note, but not a mutilated Note, shall have become or within seven days
shall be due and payable, or shall have been called for redemption, instead
of issuing a replacement Note, the Issuer may pay such destroyed, lost or
stolen Note when so due or payable or upon the Redemption Date without
surrender thereof. If, after the delivery of such replacement Note or
payment of a destroyed, lost or stolen Note pursuant to the proviso to the
preceding sentence, a bona fide purchaser of the original Note in lieu of
which such replacement Note was issued presents for payment such original
Note, the Issuer, the Security Insurer and the Trustee shall be entitled to
recover such replacement Note (or such payment) from the Person to whom it
was delivered or any Person taking such replacement Note from such Person to
whom such replacement Note was delivered or any assignee of such Person,
except a bona fide purchaser, and shall be entitled to recover upon the
security or indemnity provided therefor to the extent of any loss, damage,
cost or expense incurred by the Issuer or the Trustee in connection therewith.
Upon the issuance of any replacement Note under this Section, the Issuer
or the Trustee may require the payment by the Holder of such Note of a sum
sufficient to cover any tax or other governmental charge that may be imposed
in relation thereto and any other reasonable expenses (including the fees and
expenses of the Trustee or the Note Registrar) connected therewith.
Every replacement Note issued pursuant to this Section in replacement of
any mutilated, destroyed, lost or stolen Note shall constitute an original
additional contractual obligation of the Issuer, whether or not the
mutilated, destroyed, lost or stolen Note shall be at any time enforceable by
anyone, and shall be entitled to all the benefits of this Indenture equally
and proportionately with any and all other Notes duly issued hereunder.
The provisions of this Section are exclusive and shall preclude (to the
extent lawful) all other rights and remedies with respect to the replacement
or payment of mutilated, destroyed, lost or stolen Notes.
20
<PAGE>
SECTION 2.6. PERSON DEEMED OWNER. Prior to due presentment for
registration of transfer of any Note, the Issuer, the Trustee, the Security
Insurer and any agent of the Issuer, the Trustee or the Security Insurer may
treat the Person in whose name any Note is registered (as of the day of
determination) as the owner of such Note for the purpose of receiving
payments of principal of and interest, if any, on such Note and for all other
purposes whatsoever, whether or not such Note be overdue, and none of the
Issuer, the Security Insurer, the Trustee nor any agent of the Issuer or the
Trustee shall be affected by notice to the contrary.
SECTION 2.7. PAYMENT OF PRINCIPAL AND INTEREST.
(a) The Notes shall accrue interest as provided in the form of the Note
set forth in Exhibit B, and such interest shall be payable on each Payment
Date as specified therein. Any installment of interest or principal, if any,
payable on any Note which is punctually paid or duly provided for by the
Issuer on the applicable Payment Date shall be paid to the Person in whose
name such Note (or one or more Predecessor Notes) is registered on the Record
Date, by wire transfer (provided that the Noteholder has delivered to the
Trustee in writing instructions with respect to effecting a wire transfer to
such Noteholder) or if wire instructions have not been provided, by check
mailed first-class, postage prepaid to such Person's address as it appears on
the Note Register on such, Record Date, except for the final installment of
principal payable with respect to such Note on a Payment Date or on the Final
Scheduled Distribution Date (and except for the Redemption Price for any Note
called for redemption pursuant to Section 10.1) which shall be payable as
provided below. The funds represented by any such checks returned
undelivered shall be held in accordance with Section 3.3.
(b) The principal of each Note shall be payable in installments on each
Payment Date as provided in the form of Note set forth in Exhibit B.
Notwithstanding the foregoing the entire unpaid principal amount of the Notes
shall be due and payable, if not previously paid, on the date on which an
Event of Default shall have occurred and be continuing so long as an Insurer
Default shall not have occurred and be continuing or, if an Insurer Default
shall have occurred and be continuing on the date on which an Event of
Default shall have occurred and be
21
<PAGE>
continuing and the Trustee or a Note Majority have declared the Notes to be
immediately due and payable in the manner provided in Section 5.2. All
principal payments on the Notes shall be made pro rata to the Noteholders
entitled thereto. The Trustee shall notify the Person in whose name a Note
is registered at the close of business on the Record Date preceding the
Payment Date on which the Issuer expects that the final installment of
principal of and interest on such Note will be paid. Such notice shall be
mailed no later than five days prior to such final Payment Date and shall
specify that such final installment will be payable only upon presentation
and surrender of such Note and shall specify the place where such Note may be
presented and surrendered for payment of such installment; provided however,
if The Prudential Insurance Company of America or if any Affiliate thereof is
a Noteholder, the final installment shall be made without presentation and
surrender of the Note to the Trustee. By purchase and acceptance of the
Notes, the Prudential Insurance Company of America agrees to surrender the
Notes to the Trustee within a reasonable period of time after receipt of such
final installment. Notices in connection with redemptions of Notes shall be
mailed to Noteholders as provided in Section 10.2.
(c) Promptly following the date on which all principal of and interest
on the Notes has been paid in full and the Notes have been surrendered to the
Trustee, the Trustee shall, if the Security Insurer has paid any amount in
respect of the Notes under the Policy which has not been reimbursed to it,
deliver such surrendered Notes to the Security Insurer.
SECTION 2.8. CANCELLATION. Subject to Section 2.7(c), all Notes
surrendered for payment, registration of transfer, exchange or redemption
shall, if surrendered to any Person other than the Trustee, be delivered to
the Trustee and shall be promptly canceled by the Trustee. Subject to
Section 2.7(c), the Issuer may at any time deliver to the Trustee for
cancellation any Notes previously authenticated and delivered hereunder which
the Issuer may have acquired in any manner whatsoever, and all Notes so
delivered shall
22
<PAGE>
be promptly canceled by the Trustee. No Notes shall be authenticated in lieu
of or in exchange for any Notes canceled as provided in this Section, except
as expressly permitted by this Indenture. Subject to Section 2.7(c), all
canceled Notes may be held or disposed of by the Trustee in accordance with
its standard retention or disposal policy as in effect at the time unless the
Issuer shall direct by an Issuer Order that they be destroyed or returned to
it, provided that such Issuer Order is timely and the Notes have not been
previously disposed of by the Trustee.
SECTION 2.9. CERTAIN TRANSFER RESTRICTIONS.
No Note may be sold or transferred (including, without limitation,
by pledge or hypothecation) unless such sale or transfer is (i) pursuant to a
registration under the Securities Act and the securities laws of applicable
states, (ii) pursuant to Rule 144A of the Securities Act or (iii) exempt from
the registration requirements of the Securities Act of 1933, as amended, and
is exempt from registration under applicable state securities laws. The
Issuer shall require, prior to any sale or other transfer of a Note, in order
to assure compliance with the preceding sentence, that the Noteholder's
prospective transferee certify to the Issuer and the Trustee in writing the
facts surrounding such transfer in a representation letter in the form
attached as Exhibit A or Exhibit B to the Issuer's Private Placement
Memorandum dated June 21, 1995 or substantially in a form approved by the
Issuer and the Trustee from time to time, as appropriately modified to
reflect the facts applicable to such transfer and it being understood that
such certificate is not intended to create additional restrictions on
transfer of the Notes. Each such purchaser of the Notes shall be required to
represent in such certificate that it is acquiring its Notes for its own
account and not as nominee for undisclosed investors and not with a view to
any "distribution" within the meaning of the Securities Act of 1933, as
amended, and to agree in such certificate that it will not resell its Notes
except as set forth above, and subject to the limitation on the number of
Noteholders and other restrictions on transferability contained herein and in
the Indenture. Neither the Issuer nor the Trustee is obligated to register
the Notes under the Securities Act or any state securities laws.
23
<PAGE>
In determining compliance with the transfer restrictions contained in
this Section 2.9, the Trustee may rely upon an Opinion of Counsel, the cost
of obtaining which shall be an expense of the holder of the Note to be
transferred, provided, however, that no Opinion of Counsel shall be required
if a Representation Letter has been delivered.
ARTICLE III
COVENANTS
SECTION 3.1. PAYMENT OF PRINCIPAL AND INTEREST. The Issuer will duly
and punctually pay the principal and interest on the Notes in accordance with
the terms of the Notes and this Indenture. Without limiting the foregoing
the Issuer will cause to be distributed to the Noteholders all amounts on
deposit in the Note Distribution Account on a Payment Date. Amounts properly
withheld under the Code by any Person from a payment to any Noteholder of
interest and/or principal shall be considered as having been paid by the
Issuer to such Noteholder for all purposes of this Indenture.
SECTION 3.2. MAINTENANCE OF OFFICE OR AGENCY. The Issuer will maintain
in Dover, Delaware, an office or agency where Notes may be surrendered for
registration of transfer or exchange, and where notices and demands to or
upon the Issuer in respect of the Notes and this Indenture may be served.
The Issuer hereby initially appoints the Trustee to serve as its agent for
the foregoing purposes. The Issuer will give prompt written notice to the
Trustee of the location, and of any change in the location, of any such
office or agency. If at any time the Issuer shall fail to maintain any such
office or agency or shall fail to furnish the Trustee with the address
thereof, such surrenders, notices and demands may be made or served at the
Corporate Trust Office, and the Issuer hereby appoints the Trustee as its
agent to receive all such surrenders, notices and demands.
SECTION 3.3. MONEY FOR PAYMENTS TO BE HELD IN TRUST. As provided in
Section 8.2, all payments of amounts due and payable with respect to any
Notes that are to be made from
24
<PAGE>
amounts withdrawn from the Note Distribution Account pursuant to Section
8.2(b) shall be made on behalf of the Issuer by the Trustee or by another
Paying Agent, and no amounts so withdrawn from the Note Distribution Account
for payments of Notes shall be paid over to the Issuer.
On, or before each Payment Date and Redemption Date, the Issuer shall
deposit or cause to be deposited in the Note Distribution Account an
aggregate sum sufficient to pay the amounts then becoming due, such sum to be
held in trust for the benefit of the Persons entitled thereto and (unless the
Paying Agent is the Trustee) shall promptly notify the Trustee of its action
or failure so to act.
The Issuer will cause each Paying Agent other than the Trustee to
execute and deliver to the Trustee and the Security Insurer an instrument in
which such Paying Agent shall agree with the Trustee (and if the Trustee acts
as Paying Agent, it hereby so agrees), subject to the provisions of this
Section, that such Paying Agent will:
(i) hold all sums held by it for the payment of amounts due with
respect to the Notes in trust for the benefit of the Persons entitled
thereto until such sums shall be paid to such Persons or otherwise
disposed of as herein provided and pay such sums to such Persons as herein
provided;
(ii) give the Trustee notice of any default (of which it has actual
knowledge) by the Issuer (or any other obligor upon the Notes) in the
making of any payment required to be made with respect to the Notes;
(iii) at any time during the continuance of any such default, upon
the written request of the Trustee, forthwith pay to the Trustee all sums
so held in trust by such Paying Agent;
(iv) immediately resign as a Paying Agent and forthwith pay to the
Trustee all sums held by it in trust for the payment of Notes if at any
time it ceases to meet the standards required to be met by a Paying Agent
at the time of its appointment; and
25
<PAGE>
(v) on behalf of and at the direction of the Issuer, comply with all
requirements of the Code with respect to the withholding from any payments
made by it on any Notes of any applicable withholding taxes imposed thereon
and with respect to any applicable reporting requirements in connection
therewith.
The Issuer may at any time, for the purpose of obtaining the
satisfaction and discharge of this Indenture or for any other purpose, by
Issuer Order direct any Paying Agent to pay to the Trustee all sums held in
trust by such Paying Agent, such sums to be held by the Trustee upon the same
trusts as those upon which the sums were held by such Paying Agent; and upon
such payment by any Paying Agent to the Trustee, such Paying Agent shall be
released from all further liability with respect to such money.
Any money held by the Trustee or any Paying Agent in trust for the
payment of any amount due with respect to any Note and remaining unclaimed
for two years after such amount has become due and payable shall be
discharged from such trust and upon Issuer Request with the consent of the
Security Insurer (unless an Insurer Default shall have occurred and be
continuing) shall be deposited by the Trustee in the Collection Account; and
the Holder of such Note shall thereafter, as an unsecured general creditor,
look only to the Issuer for payment thereof, and all liability of the Trustee
or such Paying Agent with respect to such trust money shall thereupon cease;
PROVIDED, HOWEVER, that if such money or any portion thereof had been
previously deposited by the Security Insurer or the Indenture Collateral
Agent with the Trustee for the payment of principal or interest on the Notes,
to the extent any amounts are owing to the Security Insurer, such amounts
shall be paid promptly to the Security Insurer upon receipt of a written
request by the Security Insurer to such effect, and PROVIDED, FURTHER, that
the Trustee or such Paying Agent, before being required to make any such
repayment, may at the expense of the Issuer cause to be published once, in a
newspaper published in the English language, customarily published on each
Business Day and of general circulation in The City of New York, notice that
such money remains unclaimed and that, after a date specified therein, which
shall not be less than 30 days from the date of such
26
<PAGE>
publication, any unclaimed balance of such money then remaining will be
repaid to or for the account of the Issuer. The Trustee may also adopt and
employ, at the expense of the Issuer, any other reasonable means of
notification of such repayment (including, but not limited to, making notice
of such repayment to Holders whose Notes have been called but have not been
surrendered for redemption or whose right to or interest in moneys due and
payable but not claimed is determinable from the records of the Trustee or of
any Paying Agent, at the last address of record for each such Holder).
SECTION 3.4. EXISTENCE. The Issuer will keep in full effect its
existence, rights and franchises as a corporation under the laws of the State
of Delaware (unless it becomes, or any successor Issuer hereunder is or
becomes, organized under the laws of any other state or of the United States
of America, in which case the Issuer will keep in full effect its existence,
rights and franchises under the laws of such other jurisdiction) and will
obtain and preserve its qualification to do business in each jurisdiction in
which such qualification is or shall be necessary to protect the validity and
enforceability of this Indenture, the Notes, the Indenture Collateral and
each other instrument or agreement included in the Trust Estate.
SECTION 3.5. PROTECTION OF TRUST ESTATE. The Issuer intends the
security interest Granted pursuant to this Indenture in favor of the Issuer
Secured Parties to be prior to all other liens in respect of the Trust
Estate, and the Issuer shall take all actions necessary to obtain and
maintain, in favor of the Indenture Collateral Agent, for the benefit of the
Issuer Secured Parties, a first lien on and a first priority, perfected
security interest in the Trust Estate. The Issuer will from time to time
execute and deliver all such supplements and amendments hereto and all such
financing statements, continuation statements, instruments of further
assurance and other instruments, all as prepared by the Servicer and
delivered to the Issuer, and will take such other action necessary or
advisable to:
(i) grant more effectively all or any portion of the Trust Estate;
27
<PAGE>
(ii) maintain the Trust Estate free and clear of all liens;
(iii) maintain or preserve the lien and security interest (and the
priority thereof) in favor of the Indenture Collateral Agent for the
benefit of the Issuer Secured Parties created by this Indenture or carry
out more effectively the purposes hereof;
(iv) perfect, publish notice of or protect the validity of any Grant
made or to be made by this Indenture;
(v) enforce any of the Indenture Collateral;
(vi) preserve and defend title to the Trust Estate and the rights of
the Indenture Collateral Agent in such Trust Estate against the claims of
all persons and parties; and
(vii) pay all taxes or assessments levied or assessed upon the Trust
Estate when due.
The Issuer hereby designates the Indenture Collateral Agent its agent and
attorney-in-fact to execute any financing statement, continuation statement
or other instrument required by the Indenture Collateral Agent pursuant to
this Section.
SECTION 3.6. OPINIONS AS TO TRUST ESTATE.
(a) On the Closing Date the Issuer shall furnish to the Trustee, the
Indenture Collateral Agent and the Security Insurer an Opinion of Counsel
either stating that, in the opinion of such counsel, such action has been
taken with respect to the recording and filing of this Indenture, any
indentures supplemental hereto, and any other requisite documents and with
respect to the execution and filing of any financing statements and
continuation statements, as are necessary to perfect and make effective the
first priority lien and security interest in favor of the Indenture
Collateral Agent, for the benefit of the Issuer Secured Parties, created by
this Indenture and reciting the details of such action, or stating that, in
the opinion of such
28
<PAGE>
counsel, no such action is necessary to make such lien and security interest
effective.
(b) On or before July 1, in each calendar year, beginning in 1996, the
Issuer shall furnish to the Trustee, the Indenture Collateral Agent and the
Security Insurer an Opinion of Counsel with respect to each jurisdiction in
which a Uniform Commercial Code financing statement has been filed by the
Issuer either stating that, in the opinion of such counsel, such action has
been taken with respect to the recording, filing, re-recording and refiling
of this Indenture, any indentures supplemental hereto and any other requisite
documents and with respect to the execution and filing of any financing
statements and continuation statements as is necessary to maintain the first
priority lien and security interest created by this Indenture and reciting
the details of such action or stating that in the opinion of such counsel no
such action is necessary to maintain such lien and security interest. Such
Opinion of Counsel shall also describe the recording, filing, re-recording
and refiling of this Indenture, any indentures supplemental hereto and any
other requisite documents and the execution and filing of any financing
statements and continuation statements that will, in the opinion of such
counsel, be required to maintain the lien and security interest of this
Indenture until July 1 in the following calendar year.
SECTION 3.7. PERFORMANCE OF OBLIGATIONS; SERVICING OF RECEIVABLES.
(a) The Issuer will not take any action and will use its best efforts
not to permit any action to be taken by others that would release any Person
from any of such Person's material covenants or obligations under any
instrument or agreement included in the Trust Estate or that would result in
the amendment, hypothecation, subordination, termination or discharge of, or
impair the validity or effectiveness of, any such instrument or agreement,
except as expressly provided in this Indenture, the Sale and Servicing
Agreement or such other instrument or agreement.
(b) The Issuer may contract with other Persons acceptable to the
Controlling Party to assist it in
29
<PAGE>
performing its duties under this Indenture, and any performance of such
duties by a Person identified to the Trustee and the Security Insurer in an
Officers' Certificate of the Issuer shall be deemed to be action taken by the
Issuer. Initially, the Issuer has contracted with the Servicer to assist the
Issuer in performing its duties under this Indenture.
(c) The Issuer will punctually perform and observe all of its
obligations and agreements contained in this Indenture, the Related Documents
and in the instruments and agreements included in the Trust Estate, including
but not limited to filing or causing to be filed all UCC financing statements
and continuation statements required to be filed by the terms of this
Indenture and the Sale and Servicing Agreement in accordance with and within
the time periods provided for herein and therein.
(d) If the Issuer shall have knowledge of the occurrence of a Servicer
Termination Event under the Sale and Servicing Agreement, the Issuer shall
promptly notify the Trustee, the Security Insurer, the Noteholders, the Note
Majority and the Rating Agencies thereof, and shall specify in such notice
the action, if any, the Issuer is taking with respect thereto. If a Servicer
Termination Event shall arise from the failure of the Servicer to perform any
of its duties or obligations under the Sale and Servicing Agreement with
respect to the Receivables, the Issuer shall take all reasonable steps
available to it to remedy such failure.
(e) If an Insurer Default shall have occurred and be continuing and if
the Issuer has given notice of termination to the Servicer of the Servicer's
rights and powers pursuant to Section 8.2 of the Sale and Servicing
Agreement, as promptly as possible thereafter, the Issuer shall appoint, with
the consent of the Holders of 66 2/3% of the Outstanding Amount, a successor
servicer in accordance with Section 8.3 of the Sale and Servicing Agreement.
(f) Upon any termination of the Servicer's rights and powers pursuant
to the Sale and Servicing Agreement, the Issuer shall promptly notify the
Trustee. As soon as a successor Servicer is appointed, the Issuer shall
notify the
30
<PAGE>
Trustee of such appointment, specifying in such notice the name and address
of such successor Servicer.
(g) The Issuer agrees that it will not waive timely performance or
observance by the Servicer, the Backup Servicer, the Seller or AFS of their
respective duties under the Related Documents: (x) without the prior consent
of the Controlling Party or (y) if the effect thereof would adversely affect
the Holders of the Notes.
SECTION 3.8. NEGATIVE COVENANTS. Until the Termination Date, the
Issuer shall not:
(i) except as expressly permitted by this Indenture, the Purchase
Agreement or the Sale and Servicing Agreement, sell, transfer, exchange
or otherwise dispose of any of the properties or assets of the Issuer,
including those included in the Trust Estate, unless directed to do so
by the Controlling Party;
(ii) claim any credit on, or make any deduction from the principal
or interest payable in respect of, the Notes (other than amounts properly
withheld from such payments under the Code) or assert any claim against
any present or former Noteholder by reason of the payment of the taxes
levied or assessed upon any part of the Trust Estate; or
(iii) (A) permit the validity or effectiveness of this Indenture to
be impaired, or permit the lien in favor of the Indenture Collateral Agent
created by this Indenture to be amended, hypothecated, subordinated,
terminated or discharged, or permit any Person to be released from any
covenants or obligations with respect to the Notes under this Indenture
except as may be expressly permitted hereby, (B) permit any lien, charge,
excise, claim, security interest, mortgage or other encumbrance (other
than the lien in favor of the Indenture Collateral Agent created by this
Indenture) to be created on or extend to or otherwise arise upon or burden
the Trust Estate or any part thereof or any interest therein or the
proceeds thereof (other than tax liens, mechanics' liens and other liens
that arise
31
<PAGE>
by operation of law, in each case on a Financed Vehicle and arising solely
as a result of an action or omission of the related Obligor), (C) permit
the lien in favor of the Indenture Collateral Agent created by this
Indenture not to constitute a valid first priority (other than with respect
to any such tax, mechanics' or other lien) security interest in the Trust
Estate, or (D) amend, modify or fail to comply with the provisions of the
Related Documents without the prior written consent of the Controlling
Party.
SECTION 3.9. ANNUAL STATEMENT AS TO COMPLIANCE. The Issuer will
deliver to the Trustee, the Noteholders and the Security Insurer, within 120
days after the end of each fiscal year of the Issuer (commencing with the
fiscal year 1996), an Officers' Certificate stating, as to the Authorized
Officer signing such Officer's Certificate, that
(i) a review of the activities of the Issuer during such year and
of performance under this Indenture has been made under such Authorized
Officer's supervision; and
(ii) based on such review, the Issuer has complied with all conditions
and covenants under this Indenture throughout such year, or, if there has
been a default in the compliance of any such condition or covenant,
specifying each such default known to such Authorized Officer and the
nature and status thereof.
SECTION 3.10. CONSOLIDATION AND DISPOSITION OF ASSETS.
(a) The Issuer shall not consolidate or merge with or into any other
Person.
(b) The Issuer shall not convey or transfer all or substantially all of
its properties or assets, including those included in the Trust Estate, to
any Person (except as expressly permitted by this Indenture and the Related
Documents).
32
<PAGE>
SECTION 3.11. TRANSFEREE OF ISSUER.
Upon a conveyance or transfer of all the assets and properties of the
Issuer pursuant to Section 3.10(b), the Issuer will be released from every
covenant and agreement of this Indenture to be observed or performed on the
part of the Issuer with respect to the Notes immediately upon the delivery of
written notice to the Trustee stating that the Issuer is to be so released.
SECTION 3.12. NO OTHER BUSINESS. The Issuer shall not engage in any
business other than financing, purchasing, owning, selling and managing the
Receivables in the manner contemplated by this Indenture and the Related
Documents and activities incidental thereto. After the Closing Date, the
Issuer shall not fund the purchase of any new Receivables.
SECTION 3.13. NO BORROWING. The Issuer shall not issue, incur, assume,
guarantee or otherwise become liable, directly or indirectly, for any
Indebtedness except for (i) the Notes, (ii) obligations owing from time to
time to the Security Insurer under the Insurance Agreement and (iii) any
other Indebtedness permitted by or arising under the Issuer's Related
Documents. The proceeds of the Notes shall be used exclusively to fund the
Issuer's purchase of the Receivables and the other assets specified in the
Sale and Servicing Agreement, to fund the Spread Account and to pay the
Issuer's organizational, transactional and start-up expenses.
SECTION 3.14. SERVICER'S OBLIGATIONS. The Issuer shall cause the
Servicer to comply with Sections 3.9, 3.10 and 3.11 of the Sale and Servicing
Agreement.
SECTION 3.15. GUARANTEES, LOANS, ADVANCES AND OTHER LIABILITIES.
Except as contemplated by the Sale and Servicing Agreement or this Indenture,
the Issuer shall not make any loan or advance or credit to, or guarantee
(directly or indirectly or by an instrument having the effect of assuming
another's payment or performance on any obligation or capability of so doing
or otherwise), endorse or otherwise become contingently liable, directly or
indirectly, in connection with the obligations, stocks or dividends of, or
own, purchase, repurchase or acquire (or
33
<PAGE>
agree contingently to do so) any stock, obligations, assets or securities of,
any other interest in, or make any capital contribution to, any other Person.
SECTION 3.16. CAPITAL EXPENDITURES. The Issuer shall not make any
expenditure (by long-term or operating lease or otherwise) for capital assets
(either realty or personalty).
SECTION 3.17. RESTRICTED PAYMENTS. Except as expressly permitted by
this Indenture or the Sale and Servicing Agreement, the Issuer shall not,
directly or indirectly, (i) make any distribution (by reduction of capital or
otherwise), whether in cash, property, securities or a combination thereof,
to its shareholder or any owner of a beneficial interest in the Issuer or
otherwise with respect to any ownership or equity interest or security in or
of the Issuer or to the Servicer, (ii) redeem, purchase, retire or otherwise
acquire for value any such ownership or equity interest or security or (iii)
set aside or otherwise segregate any amounts for any such purpose. The
Issuer will not, directly or indirectly, make payments to or distributions
from the Collection Account except in accordance with this Indenture and the
Related Documents.
SECTION 3.18. NOTICE OF EVENTS OF DEFAULT. The Issuer agrees to give
the Trustee, the Security Insurer, the Noteholders and the Rating Agencies
prompt written notice of each Event of Default hereunder, each default on the
part of the Servicer or the Seller of its obligations under the Sale and
Servicing Agreement and each default on the part of AFS of its obligations
under the Purchase Agreement.
SECTION 3.19. FURTHER INSTRUMENTS AND ACTS. Upon request of the
Trustee or the Security Insurer, the Issuer will execute and deliver such
further instruments and do such further acts as may be reasonably necessary
or proper to carry out more effectively the purpose of this Indenture.
SECTION 3.20. COMPLIANCE WITH LAWS. The Issuer shall comply with the
requirements of all applicable laws, the non-compliance with which would,
individually or in the aggregate, materially and adversely affect the ability
of the Issuer to perform its obligations under the Notes, this Indenture or
any Related Document.
34
<PAGE>
SECTION 3.21. AMENDMENTS OF SALE AND SERVICING AGREEMENT. The Issuer
shall not agree to any amendment to Section 10.1 of the Sale and Servicing
Agreement to eliminate the requirements thereunder that the Trustee or the
Holders of the Notes consent to amendments thereto as provided therein.
SECTION 3.22. INCOME TAX CHARACTERIZATION. For purposes of federal
income, state and local income and franchise and any other income taxes, the
Issuer directs the Trustee to treat the Notes as debt of the Issuer.
ARTICLE IV
SATISFACTION AND DISCHARGE
SECTION 4.1. SATISFACTION AND DISCHARGE OF INDENTURE. This Indenture
shall cease to be of further effect with respect to the Notes except as to
(i) rights of registration of transfer and exchange, (ii) substitution of
mutilated, destroyed, lost or stolen Notes, (iii) rights of Noteholders to
receive payments of principal, interest and premium, if any, thereon, (iv)
Sections 3.3, 3.4, 3.5, 3.7, 3.8, 3.10, 3.12, 3.13, 3.20 and 3.21, (v) the
rights, obligations and immunities of the Trustee hereunder (including the
rights of the Trustee under Section 6.7 and the obligations of the Trustee
under Section 4.2, 5.18 and 5.19) and (vi) the rights of Noteholders as
beneficiaries hereof with respect to the property so deposited with the
Trustee payable to all or any of them, and the Trustee, on demand of and at
the expense of the Issuer, shall execute proper instruments acknowledging
satisfaction and discharge of this Indenture with respect to the Notes, when
(A) either
(1) all Notes theretofore authenticated and delivered (other
than (i) Notes that have been destroyed, lost or stolen and that
have been replaced or paid as provided in Section 2.5 and (ii) Notes
for whose payment money has theretofore been deposited in trust or
segregated and held in trust by the Issuer and thereafter repaid to
the
35
<PAGE>
Issuer or discharged from such trust, as provided in Section 3.3)
have been delivered to the Trustee for cancellation and the Policy has
expired and been returned to the Security Insurer for cancellation;
or
(2) all Notes not theretofore delivered to the Trustee for
cancellation
(i) have become due and payable, or
(ii) will become due and payable at the Final Scheduled
Distribution Date within one year, or
(iii) are to be called for redemption within one year under
arrangements satisfactory to the Trustee for the giving of notice
of redemption by the Trustee in the name, and at the expense, of
the Issuer,
and the Issuer, in the case of (i), (ii) or (iii) above, has
irrevocably deposited or caused to be irrevocably deposited with the
Indenture Collateral Agent as part of the Trust Estate cash or direct
obligations of or obligations guaranteed by the United States of
America (which will mature prior to the date such amounts are
payable), in trust in an Eligible Account in the name of the
Indenture Collateral Agent for such purpose, in an amount sufficient
to pay and discharge the entire indebtedness on such Notes not
theretofore delivered to the Trustee for cancellation when due to the
Final Scheduled Distribution Date or Redemption Date (if Notes shall
have been called for redemption pursuant to Section 10.1), as the case
may be;
(B) the Issuer has paid or caused to be paid all Insurer Issuer Secured
Obligations and all Trustee Issuer Secured Obligations; and
(C) the Issuer has delivered to the Trustee, the Indenture Collateral
Agent and the Security Insurer an
36
<PAGE>
Officers' Certificate, an Opinion of Counsel and (if required by the Trustee,
the Indenture Collateral Agent and the Security Insurer) an Independent
Certificate from a firm of certified public accountants, each meeting the
applicable requirements of Section 11.1(a) and each stating that all
conditions precedent herein provided for relating to the satisfaction and
discharge of this Indenture have been complied with and the Rating Agency
Condition has been satisfied.
SECTION 4.2. APPLICATION OF TRUST MONEY. All moneys deposited with the
Trustee pursuant to Section 4.1 hereof shall be held in trust and applied by
it, in accordance with the provisions of the Notes and this Indenture, to the
payment, either directly or through any Paying Agent, as the Trustee may
determine, to the Holders of the particular Notes for the payment or
redemption of which such moneys have been deposited with the Trustee, of all
sums due and to become due thereon for principal and interest, but such
moneys need not be segregated from other funds except to the extent required
herein or in the Sale and Servicing Agreement or required by law and shall be
held by the Trustee uninvested or invested in Eligible Investments which meet
the criteria specified in (a)(i) of the definition of Eligible Investments.
SECTION 4.3. PAYMENT OF MONEYS HELD BY PAYING AGENT. In connection with
the satisfaction and discharge of this Indenture with respect to the Notes,
all moneys then held by any Paying Agent other than the Trustee under the
provisions of this Indenture with respect to such Notes shall, upon demand of
the Issuer, be paid to the Trustee to be held and applied according to
Section 3.3 and thereupon such Paying Agent shall be released from all
further liability with respect to such moneys.
SECTION 4.4. RELEASE OF TRUST ESTATE. The Indenture Collateral Agent
shall, on or after the Termination Date, release any remaining portion of the
Trust Estate from the lien created by this Indenture and deposit in the
Collection Account any funds then on deposit in any other Trust Account. The
Indenture Collateral Agent shall release property from the lien created by
this Indenture pursuant to this Section 4.4 only upon receipt of a written
request of
37
<PAGE>
the Issuer accompanied by an Officer's Certificate and an Opinion of Counsel.
The Trustee shall surrender the Policy to the Security Insurer upon the
expiration of the Term of the Policy (as defined in Section 1 of the Policy).
ARTICLE V
REMEDIES
SECTION 5.1. EVENTS OF DEFAULT. "Event of Default," wherever used
herein, means any one of the following events (whatever the reason for such
Event of Default and whether it shall be voluntary or involuntary or be
effected by operation of law or pursuant to any judgment, decree or order of
any court or any order, rule or regulation of any administrative or
governmental body):
(i) default in the payment of any interest on any Note when the
same becomes due and payable, and such default shall continue for a period
of five days (solely for purposes of this clause, a payment on the Notes
funded by the Security Insurer or the Indenture Collateral Agent shall be
deemed to be a payment made by the Issuer); or
(ii) default in the payment of the principal of or any
installment of the principal of any Note when the same becomes due and
payable (solely for purposes of this clause, a payment on the Notes
funded by the Security Insurer or the Indenture Collateral Agent shall be
deemed to be a payment made by the Issuer); or
(iii) so long as an Insurer Default shall not have occurred and
be continuing an Insurance Agreement Event of Default shall have occurred;
PROVIDED, HOWEVER, that the occurrence of an Insurance Agreement Event of
Default may not form the basis of an Event of Default unless the Security
Insurer shall, upon prior written notice to the Rating Agencies, have
delivered to the Issuer and the Trustee and not rescinded a written
38
<PAGE>
notice specifying that such Insurance Agreement Event of Default
constitutes an Event of Default under this Indenture;
(iv) so long as an Insurer Default shall have occurred and be
continuing, default in the observance or performance of any covenant or
agreement of the Issuer made in this Indenture (other than a covenant or
agreement, a default in the observance or performance of which is
elsewhere in this Section specifically dealt with), or any representation
or warranty of the Issuer made in this Indenture or in any certificate or
other writing delivered pursuant hereto or in connection herewith proving
to have been incorrect in any material respect as of the time when the
same shall have been made, and such default shall continue or not be
cured, or the circumstance or condition in respect of which such
misrepresentation or warranty was incorrect shall not have been eliminated
or otherwise cured, for a period of 30 days after knowledge thereof by the
Issuer or there shall have been given, by registered or certified mail, to
the Issuer by the Trustee or to the Issuer and the Trustee by the Holders
of at least 25% of the Outstanding Amount of the Notes, a written notice
specifying such default or incorrect representation or warranty and
requiring it to be remedied and stating that such notice is a "Notice of
Default" hereunder; or
(v) so long as an Insurer Default shall have occurred and be
continuing, the filing of a decree or order for relief by a court having
jurisdiction in the premises in respect of the Issuer or any substantial
part of the Trust Estate in an involuntary case under any applicable
Federal or state bankruptcy, insolvency or other similar law now or
hereafter in effect, or appointing a receiver, liquidator, assignee,
custodian, trustee, sequestrator or similar official of the Issuer or for
any substantial part of the Trust Estate, or ordering the winding-up or
liquidation of the Issuer's affairs, and such
39
<PAGE>
decree or order shall remain unstayed and in effect for a period of 60
consecutive days; or
(vi) so long as an Insurer Default shall have occurred and be
continuing, the commencement by the Issuer of a voluntary case under any
applicable Federal or state bankruptcy, insolvency or other similar law
now or hereafter in effect, or the consent by the Issuer to the entry of an
order for relief in an involuntary case under any such law, or the consent
by the Issuer to the appointment or taking possession by a receiver,
liquidator, assignee, custodian, trustee, sequestrator or similar Official
of the Issuer or for any substantial part of the Trust Estate, or the
making by the Issuer of any general assignment for the benefit of
creditors, or the failure by the Issuer generally to pay its debts as such
debts become due, or the taking of action by the Issuer in furtherance of
any of the foregoing.
The Issuer shall deliver to the Trustee, the Noteholders and the
Security Insurer, within five days after obtaining knowledge of the
occurrence thereof, written notice in the form of an Officers' Certificate of
any event which with the giving of notice and the lapse of time would become
an Event of Default under clause (iii), its status and what action the Issuer
is taking or proposes to take with respect thereto.
SECTION 5.2. RIGHTS UPON EVENT OF DEFAULT.
(a) If an Insurer Default shall not have occurred and be continuing and
an Event of Default shall have occurred and be continuing the Notes shall
become immediately due and payable at one hundred percent (100%) of their
outstanding principal balance, together with accrued interest thereon. In
the event of any acceleration of the Notes by operation of this Section 5.2,
the Trustee shall continue to be entitled to make claims under the Policy
pursuant to Section 5.18 hereof for Scheduled Payments on the Notes.
Payments under the Policy following acceleration of the Notes shall be
applied by the Trustee:
40
<PAGE>
FIRST: to Noteholders for amounts due and unpaid on the Notes for
interest, ratably, without preference or priority of any kind, according
to the amounts due and payable on the Notes for interest, and
SECOND: to Noteholders for amounts due and unpaid on the Notes for
principal, ratably, without preference or priority of any kind, according
to the amounts due and payable on the Notes for principal.
(b) In the event the Notes are accelerated due to an Event of Default,
the Security Insurer shall have the right (in addition to its obligation to
pay Scheduled Payments on the Notes in accordance with the Policy), but not
the obligation, to make payments under the Policy or otherwise of interest
and principal due on the Notes, in whole or in part, on any date or dates
following such acceleration as the Security Insurer, in its sole discretion,
shall elect. In no event may the Security Insurer make distributions with
respect to the Notes later than required by the Security Insurer's obligation
to pay Scheduled Payments on the Notes in accordance with the Policy.
(c) If an Insurer Default shall have occurred and be continuing and an
Event of Default shall have occurred and be continuing the Trustee in its
discretion may, or if so requested in writing by Holders holding Notes
representing at least 66-2/3% of the aggregate outstanding principal amount
of the Notes shall, upon prior written notice to the Rating Agencies, declare
by written notice to the Issuer that the Notes become, whereupon they shall
become, immediately due and payable at one hundred percent (100%) of their
outstanding principal balance, together with accrued interest thereon.
Notwithstanding anything to the contrary in this paragraph (c), if an Event
of Default specified in Section 5.1(v) and (vi) shall occur and be continuing
when an Insurer Default has occurred and is continuing the Notes shall become
immediately due and payable at par, together with accrued interest thereon.
41
<PAGE>
SECTION 5.3. COLLECTION OF INDEBTEDNESS AND SUITS FOR ENFORCEMENT BY
TRUSTEE; AUTHORITY OF CONTROLLING PARTY.
(a) The Issuer covenants that if the Notes are accelerated following
the occurrence of an Event of Default, the Issuer will, upon demand of the
Trustee, pay to it, for the benefit of the Holders of the Notes, the whole
amount then due and payable on such Notes for principal and interest, with
interest upon the overdue principal, and, to the extent payment at such rate
of interest shall be legally enforceable, upon overdue installments of
interest, at the Note Interest Rate and in addition thereto such further
amount as shall be sufficient to cover the costs and expenses of collection,
including the reasonable compensation, expenses, disbursements and advances
of the Trustee and its agents and counsel.
(b) Each Issuer Secured Party hereby irrevocably and unconditionally
appoints the Controlling Party as the true and lawful attorney-in-fact of
such Issuer Secured Party for so long as such Issuer Secured Party is not the
Controlling Party, with full power of substitution, to execute, acknowledge
and deliver any notice, document, certificate, paper, pleading or instrument
and to do in the name of the Controlling Party as well as in the name, place
and stead of such Issuer Secured Party such acts, things and deeds for or on
behalf of and in the name of such Issuer Secured Party under this Indenture
(including specifically under Section 5.4) and under the Related Documents
which such Issuer Secured Party could or might do or which may be necessary,
desirable or convenient in such Controlling Party's sole discretion to effect
the purposes contemplated hereunder and under the Related Documents and,
without limitation, following the occurrence of an Event of Default, exercise
full right, power and authority to take, or defer from taking, any and all
acts with respect to the administration, maintenance or disposition of the
Trust Estate.
(c) If an Event of Default occurs and is continuing, the Trustee may
at the direction of the Controlling Party (except as provided in Section
5.3(d) below), proceed to protect and enforce its rights and the rights of
the Noteholders, by such appropriate Proceedings
42
<PAGE>
as the Trustee shall deem most effective to protect and enforce any such
rights, whether for the specific enforcement of any covenant or agreement in
this Indenture or in aid of the exercise of any power granted herein, or to
enforce any other proper remedy or legal or equitable right vested in the
Trustee by this Indenture or by law.
(d) In case there shall be pending, relative to the Issuer or any
other obligor upon the Notes or any Person having or claiming an ownership
interest in the Trust Estate, Proceedings under Title 11 of the United States
Code or any other applicable Federal or state bankruptcy, insolvency or other
similar law, or in case a receiver, assignee or trustee in bankruptcy or
reorganization, liquidator, sequestrator or similar official shall have been
appointed for or taken possession of the Issuer or its Property or such other
obligor or Person, or in case of any other comparable judicial Proceedings
relative to the Issuer or other obligor upon the Notes, or to the creditors
or property of the Issuer or such other obligor, the Trustee, irrespective of
whether the principal of any Notes shall then be due and payable as therein
expressed or by declaration or otherwise and irrespective of whether the
Trustee shall have made any demand pursuant to the provisions of this
Section, shall be entitled and empowered, by intervention in such Proceedings
or otherwise:
(i) to file and prove a claim or claims for the whole amount of
principal, interest and premium, if any, owing and unpaid in respect of
the Notes and to file such other papers or documents as may be necessary or
advisable in order to have the claims of the Trustee (including any claim
for reasonable compensation to the Trustee and each predecessor Trustee,
and their respective agents, attorneys and counsel, and for reimbursement
of all expenses and liabilities incurred, and all advances made, by the
Trustee and each predecessor Trustee, except as a result of negligence or
bad faith) and of the Noteholders allowed in such Proceedings;
(ii) unless prohibited by applicable law and regulations, to vote
on behalf of the Holders
43
<PAGE>
of Notes in any election of a trustee, a standby trustee or Person
performing similar functions in any such Proceedings;
(iii) to collect and receive any moneys or other property payable or
deliverable on any such claims and to distribute all amounts received with
respect to the claims of the Noteholders and of the Trustee on their
behalf; and
(iv) to file such proofs of claim and other papers or documents as
may be necessary or advisable in order to have the claims of the Trustee
or the Holders of Notes allowed in any judicial proceedings relative to
the Issuer, its creditors and its property;
and any trustee, receiver, liquidator, custodian or other similar official in
any such Proceeding is hereby authorized by each of such Noteholders to make
payments to the Trustee, and, in the event that the Trustee shall consent to
the making of payments directly to such Noteholders, to pay to the Trustee
such amounts as shall be sufficient to cover reasonable compensation to the
Trustee, each predecessor Trustee and their respective agents, attorneys and
counsel, and all other expenses and liabilities incurred, and all advances
made, by the Trustee and each predecessor Trustee except as a result of
negligence or bad faith.
(e) Nothing herein contained shall be deemed to authorize the Trustee
to authorize or consent to or vote for or accept or adopt on behalf of any
Noteholder any plan of reorganization, arrangement, adjustment or composition
affecting the Notes or the rights of any Holder thereof or to authorize the
Trustee to vote in respect of the claim of any Noteholder in any such
proceeding except, as aforesaid, to vote for the election of a trustee in
bankruptcy or similar Person.
(f) All rights of action and of asserting claims under this Indenture
or under any of the Notes or, if an Insurer Default shall have occurred and
be continuing, under the Spread Account Agreement, may be enforced by the
Trustee without the possession of any of the Notes or the production
44
<PAGE>
thereof in any trial or other Proceedings relative thereto, and any such
action or Proceedings instituted by the Trustee shall be brought in its own
name as trustee of an express trust, and any recovery of judgment, subject to
the payment of the expenses, disbursements and compensation of the Trustee,
each predecessor Trustee and their respective agents and attorneys, shall be
for the ratable benefit of the Holders of the Notes.
(g) In any Proceedings brought by the Trustee (including any
Proceedings involving the interpretation of any provision of this Indenture
or, if an Insurer Default shall have occurred and be continuing, under the
Spread Account Agreement), the Trustee shall be held to represent all the
Holders of the Notes, and it shall not be necessary to make any Noteholder a
party to any such Proceedings.
SECTION 5.4. REMEDIES. (a) If an Event of Default shall have occurred
and be continuing the Controlling Party may (subject to Section 5.5):
(i) institute Proceedings in its own name and as or on behalf of
a trustee of an express trust for the collection of all amounts then
payable on the Notes or under this Indenture with respect thereto, whether
by declaration or otherwise, enforce any judgment obtained, and
collect from the Issuer and any other obligor upon such Notes moneys
adjudged due,
(ii) institute Proceedings from time to time for the complete or
partial foreclosure of this Indenture with respect to the Trust Estate;
(iii) exercise any remedies of a secured party under the UCC and any
other remedy available to the Trustee and take any other appropriate action
to protect and enforce the rights and remedies of the Issuer Secured
Parties; and
(iv) direct the Indenture Collateral Agent to sell the Trust Estate
or any portion thereof or rights or interest therein, at one or more public
or private sales called and conducted
45
<PAGE>
in any manner permitted by law; PROVIDED, HOWEVER, that, if the Trustee is
the Controlling Party, the Trustee may not sell or otherwise liquidate the
Trust Estate following an Event of Default, other than an Event of Default
described in Section 5.1(i) or (ii), unless (A) the Holders of 100% of the
Outstanding Amount of the Notes consent thereto, (B) the proceeds of such
sale or liquidation distributable to the Noteholders are sufficient to
discharge in full all amounts then due and unpaid upon such Notes for
principal and interest or (C) the Trustee determines that the Trust Estate
will not continue to provide sufficient funds for the payment of principal
of and interest on the Notes as they would have become due if the Notes
had not been declared due and payable, and the Trustee provides prior
written notice to the Rating Agencies and obtains the consent of Holders
of 66-2/3% of the Outstanding Amount of the Notes. In determining such
sufficiency or insufficiency with respect to clause (B) and (C), the
Trustee may, but need not, obtain and rely upon an opinion of an
Independent investment banking or accounting firm of national reputation
as to the feasibility of such proposed action and as to the sufficiency of
the Trust Estate for such purpose.
SECTION 5.5. OPTIONAL PRESERVATION OF THE RECEIVABLES. If the Trustee
is Controlling Party and if the Notes have been declared to be due and
payable under Section 5.2 following an Event of Default and such declaration
and its consequences have not been rescinded and annulled, the Trustee may,
but need not, elect to maintain possession of the Trust Estate. It is the
desire of the parties hereto and the Noteholders that there be at all times
sufficient funds for the payment of principal of and interest on the Notes,
and the Trustee shall take such desire into account when determining whether
or not to maintain possession of the Trust Estate. In determining whether to
maintain possession of the Trust Estate, the Trustee may, but need not,
obtain and rely upon an opinion of an Independent investment banking or
accounting firm of national reputation
46
<PAGE>
as to the feasibility of such proposed action and as to the sufficiency of
the Trust Estate for such purpose.
SECTION 5.6. PRIORITIES.
(a) If the Trustee collects any money or property pursuant to this
Article V (excluding any payments made under the Policy), or if the Indenture
Collateral Agent delivers any money or property in respect of liquidation of
the Trust Estate to the Trustee pursuant to Section 5.4(a)(iv), the Trustee
shall pay out the money or property in the following order:
FIRST: amounts due and owing and required to be distributed to the
Servicer, the Trustee, the Lockbox Bank, the Custodian, the Backup
Servicer, the Collateral Agent and the Indenture Collateral Agent,
respectively, pursuant to priorities (i) and (ii) of Section 4.6 of the
Sale and Servicing Agreement and not previously distributed, in the order
of such priorities and without preference or priority of any kind within
such priorities;
SECOND: to Noteholders for amounts due and unpaid on the Notes for
interest, ratably, without preference or priority of any kind, according
to the amounts due and payable on the Notes for interest;
THIRD: to Noteholders for amounts due and unpaid on the Notes for
principal, ratably, without preference or priority of any kind, according
to the amounts due and payable on the Notes for principal;
FOURTH: amounts due and owing and required to be distributed to the
Security Insurer pursuant to priority (v) of Section 4.6 of the Sale and
Servicing Agreement and not previously distributed; and
47
<PAGE>
FIFTH: to the Collateral Agent to be applied as provided in the
Spread Account Agreement.
The Trustee may fix a record date and payment date for any payment to
Noteholders pursuant to this Section. At least 15 days before such record
date, the Issuer shall mail to each Noteholder and the Trustee a notice that
states the record date, the payment date and the amount to be paid.
SECTION 5.7. LIMITATION OF SUITS. No Holder of any Note shall have any
right to institute any Proceeding, judicial or otherwise, with respect to
this Indenture, or for the appointment of a receiver or trustee, or for any
other remedy hereunder, unless:
(i) such Holder has previously given written notice to the Trustee
of a continuing Event of Default,
(ii) the Holders of not less than 20% of the Outstanding Amount of
the Notes have made written request to the Trustee to institute such
Proceeding in respect of such Event of Default in its own name as Trustee
hereunder;
(iii) such Holder or Holders have offered to the Trustee reasonable
indemnity against the costs, expenses and liabilities to be incurred in
complying with such request,
(iv) the Trustee for 30 days after its receipt of such notice,
request and offer of indemnity has failed to institute such Proceedings;
(v) no direction inconsistent with such written request has been
given to the Trustee during such 30-day period by the Holders of 66 2/3%
of the Outstanding Amount of the Notes; and
(vi) an Insurer Default shall have occurred and be continuing;
it being understood and intended that no one or more Holders of Notes shall
have any right in any manner whatever by
48
<PAGE>
virtue of, or by availing of, any provision of this Indenture to affect,
disturb or prejudice the rights of any other Holders of Notes or to obtain or
to seek to obtain priority or preference over any other Holders or to enforce
any right under this Indenture, except in the manner herein provided.
In the event the Trustee shall receive conflicting or inconsistent
requests and indemnity from two or more groups of Holders of Notes, each
representing less than a majority of the Outstanding Amount of the Notes, the
Trustee in its sole discretion may determine what action, if any, shall be
taken, notwithstanding any other provisions of this Indenture.
SECTION 5.8. UNCONDITIONAL RIGHTS OF NOTEHOLDERS TO RECEIVE PRINCIPAL
AND INTEREST. Notwithstanding any other provisions in this Indenture, the
Holder of any Note shall have the right, which is absolute and unconditional,
to receive payment of the principal of and interest on such Note on or after
the respective due dates thereof expressed in such Note or in this Indenture
(or, in the case of redemption, on or after the Redemption Date) and to
institute suit for the enforcement of any such payment, and such right shall
not be impaired without the consent of such Holder; PROVIDED, HOWEVER, that
so long as an Insurer Default shall not have occurred and be continuing no
such suit shall be instituted.
SECTION 5.9. RESTORATION OF RIGHTS AND REMEDIES. If the Controlling
Party or any Noteholder has instituted any Proceeding to enforce any right or
remedy under this Indenture and such Proceeding has been discontinued or
abandoned for any reason or has been determined adversely to the Trustee or
to such Noteholder, then and in every such case the Issuer, the Trustee and
the Noteholders shall, subject to any determination in such Proceeding be
restored severally and respectively to their former positions hereunder, and
thereafter all rights and remedies of the Trustee and the Noteholders shall
continue as though no such Proceeding had been instituted.
SECTION 5.10. RIGHTS AND REMEDIES CUMULATIVE. No right or remedy
herein conferred upon or reserved to the
49
<PAGE>
Controlling Party or to the Noteholders is intended to be exclusive of any
other right or remedy, and every right and remedy shall, to the extent
permitted by law, be cumulative and in addition to every other right and
remedy given hereunder or now or hereafter existing at law or in equity or
otherwise. The assertion or employment of any right or remedy hereunder, or
otherwise, shall not prevent the concurrent assertion or employment of any
other appropriate right or remedy.
SECTION 5.11. DELAY OR OMISSION NOT A WAIVER. No delay or omission of
the Controlling Party or any Holder of any Note to exercise any right or
remedy accruing upon any Default or Event of Default shall impair any such
right or remedy or constitute a waiver of any such Default or Event of
Default or an acquiescence therein. Every right and remedy given by this
Article V or by law to the Trustee or to the Noteholders may be exercised
from time to time, and as often as may be deemed expedient, by the Trustee or
by the Noteholders, as the case may be.
SECTION 5.12. CONTROL BY NOTEHOLDERS. If the Trustee is the
Controlling Party, the Holders of 66 2/3% of the Outstanding Amount of the
Notes shall have the right to direct the time, method and place of conducting
any Proceeding for any remedy available to the Trustee with respect to the
Notes or exercising any trust or power conferred on the Trustee; provided that
(i) such direction shall not be in conflict with any rule of law
or with this Indenture;
(ii) subject to the express terms of Section 5.4, any direction to
the Trustee to sell or liquidate the Trust Estate shall be by the Holders
of Notes representing not less than 100% of the Outstanding Amount of the
Notes;
(iii) if the conditions set forth in Section 5.5 have been satisfied
and the Trustee elects to retain the Trust Estate pursuant to such
Section, then any direction to the Trustee by Holders of Notes representing
less than 100% of the Outstanding Amount
50
<PAGE>
of the Notes to sell or liquidate the Trust Estate shall be of no force and
effect; and
(iv) the Trustee may take any other action deemed proper by the
Trustee that is not inconsistent with such direction; PROVIDED, HOWEVER,
that, subject to Section 6.1, the Trustee need not take any action that it
determines might involve it in liability or might materially adversely
affect the rights of any Noteholders not consenting to such action.
SECTION 5.13. WAIVER OF PAST DEFAULTS. If an Insurer Default shall
have occurred and be continuing, the Holders of Notes of not less than
66 2/3% of the Outstanding Amount of the Notes may waive any past Default or
Event of Default and its consequences except a Default (a) in payment of
principal of or interest on any of the Notes or (b) in respect of a covenant
or provision hereof which cannot be modified or amended without the consent
of the Holder of each Note. In the case of any such waiver, the Issuer, the
Trustee and the Holders of the Notes shall be restored to their former
positions and rights hereunder, respectively; but no such waiver shall extend
to any subsequent or other Default or Event of Default or impair any right
consequent thereto.
Upon any such waiver, such Default shall cease to exist and be deemed to
have been cured and not to have occurred, and any Event of Default arising
therefrom shall be deemed to have been cured and not to have occurred, for
every purpose of this Indenture; but no such waiver shall extend to any
subsequent or other Default or Event of Default or impair any right
consequent thereto.
SECTION 5.14. UNDERTAKING FOR COSTS. All parties to this Indenture
agree, and each Holder of any Note by such Holder's acceptance thereof shall
be deemed to have agreed, that any court may in its discretion require, in
any suit for the enforcement of any right or remedy under this Indenture, or
in any suit against the Trustee for any action taken, suffered or omitted by
it as Trustee, the filing by any party litigant in such suit of an
undertaking to pay the costs of such suit and that such court may in its
discretion assess reasonable costs, including reasonable attorneys'
51
<PAGE>
fees, against any party litigant in such suit, having due regard to the
merits and good faith of the claims or defenses made by such party litigant;
but the provisions of this Section shall not apply to (a) any suit instituted
by the Trustee, (b) any suit instituted by any Noteholder, or group of
Noteholders, in each case holding in the aggregate more than 10% of the
Outstanding Amount of the Notes or (c) any suit instituted by any Noteholder
for the enforcement of the payment of principal of or interest on any Note on
or after the respective due dates expressed in such Note and in this
Indenture (or, in the case of redemption, on or after the Redemption Date).
SECTION 5.15. WAIVER OF STAY OR EXTENSION LAWS. The Issuer covenants
(to the extent that it may lawfully do so) that it will not at any time
insist upon, or plead or in any manner whatsoever, claim or take the benefit
or advantage of, any stay or extension law wherever enacted, now or at any
time hereafter in force, that may affect the covenants or the performance of
this Indenture; and the Issuer (to the extent that it may lawfully do so)
hereby expressly waives all benefit or advantages of any such law, and
covenants that it will not hinder, delay or impede the execution of any power
herein granted to the Trustee, but will suffer and permit the execution of
every such power as though no such law had been enacted.
SECTION 5.16. ACTION ON NOTES. The Trustee's right to seek and recover
judgment on the Notes or under this Indenture shall not be affected by the
seeking, obtaining or application of any other relief under or with respect
to this Indenture. Neither the lien of this Indenture nor any rights or
remedies of the Trustee or the Noteholders shall be impaired by the recovery
of any judgment by the Trustee against the Issuer or by the levy of any
execution under such judgment upon any portion of the Trust Estate or upon
any of the assets of the Issuer.
52
<PAGE>
SECTION 5.17. PERFORMANCE AND ENFORCEMENT OF CERTAIN OBLIGATIONS.
(a) Promptly following a request from the Trustee to do so and at the
Seller's expense, the Issuer agrees to take all such lawful action as the
Trustee may request to compel or secure the performance and observance by the
Seller, the Servicer and AFS, as applicable of each of their obligations to
the Issuer under or in connection with the Sale and Servicing Agreement or to
the Seller under or in connection with the Purchase Agreement in accordance
with the terms thereof, and to exercise any and all rights, remedies, powers
and privileges lawfully available to the Issuer under or in connection with
the Sale and Servicing Agreement to the extent and in the manner directed by
the Trustee, including the transmission of notices of default on the part of
the Seller or the Servicer thereunder and the institution of legal or
administrative actions or proceedings to compel or secure performance by the
Seller or the Servicer of each of their obligations under the Sale and
Servicing Agreement.
(b) If the Trustee is Controlling Party and if an Event of Default has
occurred and is continuing the Trustee may, and at the direction (which
direction shall be in writing, including facsimile) of the Holders of 66-2/3%
of the Outstanding Amount of the Notes shall, exercise all rights, remedies,
powers, privileges and claims of the Issuer against the Seller or the
Servicer under or in connection with the Sale and Servicing Agreement,
including the right or power to take any action to compel or secure
performance or observance by the Seller or the Servicer of each of their
obligations to the Issuer thereunder and to give any consent, request,
notice, direction, approval, extension or waiver under the Sale and Servicing
Agreement, and any right of the Issuer to take such action shall be suspended.
(c) Promptly following a request from the Trustee to do so and at the
Seller's expense, the Issuer agrees to take all such lawful action as the
Trustee may request to compel or secure the performance and observance by AFS
of each of its obligations to the Seller under or in connection with the
Purchase Agreement in accordance with the terms
53
<PAGE>
thereof, and to exercise any and all rights, remedies, powers and privileges
lawfully available to the Issuer under or in connection with the Purchase
Agreement to the extent and in the manner directed by the Trustee, including
the transmission of notices of default on the part of the Seller thereunder
and the institution of legal or administrative actions or proceedings to
compel or secure performance by AFS of each of its obligations under the
Purchase Agreement.
(d) If the Trustee is Controlling Party and if an Event of Default has
occurred and is continuing the Trustee may, and at the direction (which
direction shall be in writing, including facsimile) of the Holders of 66-2/3%
of the Outstanding Amount of the Notes shall, exercise all rights, remedies,
powers, privileges and claims of the Seller against AFS under or in
connection with the Purchase Agreement, including the right or power to take
any action to compel or secure performance or observance by AFS of each of
its obligations to the Seller thereunder and to give any consent, request,
notice, direction, approval, extension or waiver under the Purchase
Agreement, and any right of the Seller to take such action shall be suspended.
SECTION 5.18. CLAIMS UNDER POLICY.
(a) In the event that the Trustee has delivered a Deficiency Notice
with respect to any Determination Date pursuant to Section 5.1 of the Sale
and Servicing Agreement, the Trustee shall determine on the related Draw Date
whether the sum of (i) the amount of Available Funds with respect to such
Determination Date (as stated in the Servicer's Certificate with respect to
such Determination Date), and (ii) the amount of the Deficiency Claim Amount,
if any, distributed by the Collateral Agent pursuant to the Spread Account
Agreement to the Trustee 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 to the Collateral Agent pursuant
to Section 3.03(a) of the Spread Account Agreement) would be insufficient,
after giving effect to the distributions required by Section 4.6(i)-(ii) of
the Sale and Servicing Agreement, to pay the sum of the Noteholders' Interest
Distributable Amount and the Noteholders' Principal Distributable Amount for
the related Payment Date, then in
54
<PAGE>
such event the Trustee shall furnish to the Security 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
Noteholders' Interest Distributable Amount and the Noteholders' Principal
Distributable Amount with respect to such Payment Date (the amount of any
such shortfall being hereinafter referred to as the "Policy Claim Amount").
Amounts paid by the Security Insurer pursuant to a claim submitted under this
Section 5.18(a) shall be deposited by the Trustee into the Note Distribution
Account for payment to Noteholders on the related Payment Date.
(b) Any notice delivered by the Trustee to the Security Insurer
pursuant to subsection 5.18(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 Security Insurer is
required to pay to the Trustee the Policy Claim Amount properly claimed
thereunder by 12:00 noon, New York City time, on the later of (i) the third
Business Day following receipt on a Business Day of the Notice of Claim, and
(ii) the applicable Payment Date. Any payment made by the Security Insurer
under the Policy shall be applied solely to the payment of the Notes, and for
no other purpose.
(c) The Trustee shall (i) receive as attorney-in-fact of each
Noteholder any Policy Claim Amount from the Security Insurer and (ii) deposit
the same in the Note Distribution Account for distribution to Noteholders as
provided in Section 3.1 or Section 5.2 of this Indenture. Any and all Policy
Claim Amounts disbursed by the Trustee from claims made under the Policy
shall not be considered payment by the Issuer or from the Spread Account with
respect to such Notes, and shall not discharge the obligations of the Issuer
with respect thereto. The Security Insurer shall, to the extent it makes any
payment with respect to the Notes, become subrogated to the rights of the
recipients of such payments to the extent of such payments. Subject to and
conditioned upon any payment with respect to the Notes by or on behalf of the
Security Insurer, the Trustee shall assign to the Security Insurer all rights
to the payment of interest or principal with
55
<PAGE>
respect to the Notes which are then due for payment to the extent of all
payments made by the Security Insurer and the Security Insurer may exercise
any option, vote, right, power or the like with respect to the Notes to the
extent that it has made payment pursuant to the Policy. To evidence such
subrogation, the Note Registrar shall note the Security Insurer's rights as
subrogee upon the register of Noteholders upon receipt from the Security
Insurer of proof of payment by the Security Insurer of any Noteholders'
Interest Distributable Amount or Noteholders' Principal Distributable Amount
and upon the surrender or presentment of any Note for payment, the Trustee
shall stamp on such Note the legend "$[insert applicable amount] paid by
Financial Security and the balance hereof has been cancelled and reissued."
The foregoing subrogation shall in all cases be subject to the rights of the
Noteholders to receive all Scheduled Payments in respect of the Notes.
(d) The Trustee shall keep a complete and accurate record of all funds
deposited by the Security Insurer into the Note Distribution Account and the
allocation of such funds to payment of interest on and principal paid in
respect of any Note. The Security Insurer shall have the right to inspect
such records at reasonable times upon one Business Day's prior notice to the
Trustee.
(e) The Trustee shall be entitled to enforce on behalf of the
Noteholders the obligations of the Security Insurer under the Policy.
Notwithstanding any other provision of this Indenture or any Related
Document, the Noteholders are not entitled to institute proceedings directly
against the Security Insurer.
SECTION 5.19. PREFERENCE CLAIMS.
(a) In the event that the Trustee has received a certified copy of an
order of the appropriate court that any Scheduled Payments paid on a Note has
been avoided in whole or in part as a preference payment under applicable
bankruptcy law, the Trustee shall so notify the Security Insurer, shall
comply with the provisions of the Policy to obtain payment by the Security
Insurer of such avoided payment, and shall, at the time it provides notice to
the
56
<PAGE>
Security Insurer, notify Holders of the Notes by mail that, in the event that
any Noteholder's payment is so recoverable, such Noteholder will be entitled
to payment pursuant to the terms of the Policy. The Trustee shall furnish to
the Security Insurer its records evidencing the payments of principal of and
interest on the Notes, if any, which have been made by the Trustee so
recoverable or recoverable or recovered from Noteholders, and the dates on
which such payments were made. Pursuant to the terms of the Policy, the
Security Insurer will make such payment on behalf of the Noteholders to the
receiver, conservator, debtor-in-possession or trustee in bankruptcy named in
the Order (as defined in the Policy) and not to the Trustee or any Noteholder
directly (unless a Noteholder has previously paid such payment to the
receiver, conservator, debtor-in-possession or trustee in bankruptcy, in
which case the Security Insurer will make such payment to the Trustee for
distribution to such Noteholder upon proof of such payment reasonably
satisfactory to the Security Insurer).
(b) The Trustee shall promptly notify the Security Insurer of any
proceeding or the institution of any action (of which the Trustee has actual
knowledge) seeking the avoidance as a preferential transfer under applicable
bankruptcy, insolvency, receivership, rehabilitation or similar law (a
"Preference Claim") of any distribution made with respect to the Notes. Each
Holder, by its purchase of Notes, and the Trustee hereby agree that so long
as an Insurer Default shall not have occurred and be continuing, the Security
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
Security Insurer, but subject to reimbursement as provided in the Insurance
Agreement. In addition, and without limitation of the foregoing, as set
forth in Section 5.18(c), the Security Insurer shall be subrogated to, and
each Noteholder and the Trustee hereby delegate and assign, to the fullest
extent permitted by law, the rights of the Trustee and each Noteholder in the
conduct of any proceeding with respect to a Preference Claim, including,
without limitation, all rights of any party to an
57
<PAGE>
adversary proceeding action with respect to any court order issued in
connection with any such Preference Claim.
ARTICLE VI
THE TRUSTEE AND THE INDENTURE COLLATERAL AGENT
SECTION 6.1. DUTIES OF TRUSTEE.
(a) If an Event of Default has occurred and is continuing, the Trustee
shall exercise the rights and powers vested in it by this Indenture and in
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 such person's own
affairs.
(b) Except during the continuance of an Event of Default:
(i) the Trustee undertakes to perform such duties and only such
duties as are specifically set forth in this Indenture and no implied
covenants or obligations shall be read into this Indenture against the
Trustee; and
(ii) in the absence of bad faith on its part, the Trustee may
conclusively rely, as to the truth of the statements and the correctness
of the opinions expressed therein, upon certificates or opinions furnished
to the Trustee and conforming to the requirements of this Indenture;
however, the Trustee shall examine the certificates and opinions to
determine whether or not they conform on their face to the requirements
of this Indenture and, if applicable, the Spread Account Agreement and the
Trustee's other Related Documents.
(c) The Trustee may not be relieved from liability for its own grossly
negligent action, its own grossly negligent failure to act or its own wilful
misconduct, except that:
58
<PAGE>
(i) this paragraph does not limit the effect of paragraph (b) of
this Section;
(ii) the Trustee shall not be liable for any error of judgment made
in good faith by a Responsible Officer unless it is proved that the
Trustee was negligent in ascertaining the pertinent facts; and
(iii) the Trustee shall not be liable with respect to any action it
takes or omits to take in good faith in accordance with a direction
received by it pursuant to any provision of this Indenture.
(d) Every provision of this Indenture that in any way relates to the
Trustee is subject to paragraphs (a), (b) and (c) of this Section.
(e) The Trustee shall not be liable for interest on any money received
by it except as the Trustee may agree in writing with the Issuer.
(f) Money held in trust by the Trustee need not be segregated from
other funds except to the extent required by law or the terms of this
Indenture or the Sale and Servicing Agreement.
(g) No provision of this Indenture shall require the Trustee 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, if it shall have reasonable grounds to believe that
repayments of such funds or adequate indemnity against such risk or liability
is not reasonably assured to it.
(h) Every provision of this Indenture relating to the conduct or
affecting the liability of or affording protection to the Trustee shall be
subject to the provisions of this Section.
(i) The Trustee shall, upon one Business Day's prior notice to the
Trustee, permit any representative of the Noteholders, Security Insurer, or
the Issuer, during the
59
<PAGE>
Trustee's normal business hours, to examine all books of account, records,
reports and other papers of the Trustee relating to the Notes, to make copies
and extracts therefrom and to discuss the Trustee's affairs and actions, as
such affairs and actions relate to the Trustee's duties with respect to the
Notes, with the Trustee's officers and employees responsible for carrying out
the Trustee's duties with respect to the Notes.
(j) In no event shall the Trustee be required to perform, or be
responsible for the manner of performance of, any of the obligations of the
Servicer, or any other party, under the Sale and Servicing Agreement except
that LaSalle National Bank solely in its capacity as Backup Servicer shall
perform and be responsible for such obligations during such time, if any, as
the Backup Servicer shall be the successor to, and be vested with the rights,
powers, duties and privileges of the Servicer in accordance with the terms of
the Sale and Servicing Agreement.
(k) The Trustee shall, and hereby agrees that it will, perform all of
the obligations and duties required of it under the Sale and Servicing
Agreement.
(l) The Trustee 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. The Trustee will deliver
to the Rating Agency notice of any change made to the Policy prior to the
Termination Date.
(m) Without limiting the generality of this Section 6.1, the Trustee,
in its capacity as Trustee, shall have no duty (i) to see to any recording,
filing or depositing of this Indenture 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
60
<PAGE>
part of the Trust, (iv) to confirm or verify the contents of any reports or
certificates delivered to the Trustee pursuant to this Indenture or the Sale
and Servicing Agreement believed by the Trustee 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 Seller'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
the Custodian Agreement.
SECTION 6.2. RIGHTS OF TRUSTEE.
(a) The Trustee may rely on any document believed by it to be genuine
and to have been signed or presented by the proper person. The Trustee need
not investigate any fact or matter stated in the document.
(b) Other than with respect to actions required to be taken by the
Trustee pursuant to Section 5.18 and 5.19, before the Trustee acts or
refrains from acting, it may require an Officers' Certificate (with respect
to factual matters) or an Opinion of Counsel, as applicable. The Trustee
shall not be liable for any action it takes or omits to take in good faith in
reliance on the Officers' Certificate or Opinion of Counsel, as applicable,
or as directed by the requisite amount of Noteholders as provided herein.
(c) The Trustee may execute any of the trusts or powers hereunder or
perform any duties hereunder either directly or by or through agents or
attorneys or a custodian or nominee, and the Trustee shall not be responsible
for any misconduct or negligence on the part of, or for the supervision of,
any such agent, attorney, custodian or nominee appointed with due care by it
hereunder.
(d) The Trustee shall not be liable for any action it takes or omits
to take in good faith which it believes to be authorized or within its rights
or powers; PROVIDED, HOWEVER, that the Trustee's conduct does not constitute
wilful misconduct, gross negligence or bad faith.
61
<PAGE>
(e) The Trustee may consult with counsel experienced in such matters,
and the advice or opinion of counsel with respect to legal matters relating
to this Indenture and the Notes shall be full and complete authorization and
protection from liability in respect to any action taken, omitted or suffered
by it hereunder in good faith and in accordance with the advice or opinion of
such counsel.
(f) The Trustee shall be under no obligation to institute, conduct or
defend any litigation under this Indenture or in relation to this Indenture,
at the request, order or direction of any of the Holders of Notes or the
Controlling Party, pursuant to the provisions of this Indenture, unless such
Holders of Notes or the Controlling Party shall have offered to the Trustee
reasonable security or indemnity against the costs, expenses and liabilities
that may be incurred therein or thereby; PROVIDED, HOWEVER, that the Trustee
shall, upon the occurrence of an Event of Default (that has not been cured),
exercise the rights and powers vested in it by this Indenture with reasonable
care and skill.
(g) The Trustee shall not 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, unless requested in writing to do so by the
Security Insurer (so long as no Insurer Default shall have occurred and be
continuing) or (if an Insurer Default shall have occurred and be continuing)
by the Holders of Notes evidencing not less than 25% of the Outstanding
Amount thereof, PROVIDED, HOWEVER, that if the payment within a reasonable
time to the Trustee of the costs, expenses or liabilities likely to be
incurred by it in the making of such investigation is, in the opinion of the
Trustee, not reasonably assured to the Trustee by the security afforded to it
by the terms of this Indenture or the Sale and Servicing Agreement, the
Trustee may require reasonable indemnity 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 Trustee, shall be reimbursed by the Person making such request upon
demand.
62
<PAGE>
SECTION 6.3. INDIVIDUAL RIGHTS OF TRUSTEE. The Trustee in its
individual or any other capacity may become the owner or pledgee of Notes and
may otherwise deal with the Issuer or its Affiliates with the same rights it
would have if it were not Trustee. Any Paying Agent, Note Registrar,
co-registrar or copaying agent may do the same with like rights. However,
the Trustee is required to comply with Sections 6.11 and 6.12.
SECTION 6.4. TRUSTEE'S DISCLAIMER. The Trustee shall not be
responsible for and makes no representation as to the validity or adequacy of
this Indenture, the Trust Estate or the Notes, it shall not be accountable
for the Issuer's use of the proceeds from the Notes, and it shall not be
responsible for any statement of the Issuer in the Indenture or in any
document issued in connection with the sale of the Notes or in the Notes
other than the Trustee's certificate of authentication.
SECTION 6.5. NOTICE OF DEFAULTS. If a Default occurs and is continuing
and if it is known to a Responsible Officer of the Trustee, the Trustee shall
mail to each Noteholder and the Security Insurer notice of the Default within
30 days after the Default becomes known to a Responsible Officer. Except in
the case of a Default in payment of principal of or interest on any Note
(including payments pursuant to the mandatory redemption provisions of such
Note), the Trustee may withhold the notice if and so long as a committee of
its Responsible Officers in good faith determines that withholding the notice
is in the interests of Noteholders.
SECTION 6.6. REPORTS BY TRUSTEE TO HOLDERS. The Trustee shall deliver
to each Noteholder such information as the Issuer may direct it to provide
and which information shall be provided to the Trustee by the Servicer to
enable each Noteholder to prepare its federal and state income tax returns.
SECTION 6.7. COMPENSATION AND INDEMNITY.
(a) AFS, in a separate letter agreement (the "Letter Agreement"), has
covenanted and agreed to pay to the Trustee, and the Trustee shall be
entitled to, certain
63
<PAGE>
annual fees, which shall not be limited by any law on compensation of a
trustee of an express trust. In the Letter Agreement, AFS has also agreed to
reimburse the Trustee for all reasonable out-of-pocket expenses incurred or
made by it, including costs of collection, in addition to the compensation
for its services. Such expenses shall include the reasonable compensation
and expenses, disbursements and advances of the Trustee's agents, counsel,
accountants and experts. Pursuant to the Letter Agreement, AFS has agreed to
indemnify the Trustee against any and all loss, liability or expense
(including attorneys' fees) incurred by it in connection with the
administration of this trust and the performance of its duties hereunder.
(b) If notwithstanding the provisions of the Letter Agreement, AFS
fails to pay any fee due to the Trustee pursuant to the terms of the Letter
Agreement, the Trustee shall be entitled to a distribution in respect of such
amount pursuant to Section 4.6(ii) of the Sale and Servicing Agreement. If
notwithstanding the provisions of the Letter Agreement, AFS fails to make any
payment or reimbursement due to the Trustee for any expense or claim for
indemnification to which the Trustee is entitled pursuant to the terms of the
Letter Agreement or this Indenture, the Trustee shall be entitled to a
distribution in respect of such amount pursuant to priority SIXTH of Section
3.03(b) of the Spread Account Agreement (unless the Trustee is the
Controlling Party). AFS' payment obligations to the Trustee pursuant to the
Letter Agreement and this Section shall survive the discharge of this
Indenture. When the Trustee incurs expenses after the occurrence of a
Default specified in Section 5.1(v) or (vi) with respect to the Issuer, the
expenses are intended to constitute expenses of administration under Title 11
of the United States Code or any other applicable Federal or state
bankruptcy, insolvency or similar law. Notwithstanding anything else set
forth in this Indenture or the Related Documents, the Trustee agrees that the
obligations of the Issuer (but not AFS) to the Trustee hereunder and under
the Related Documents shall be recourse to the Trust Estate only and
specifically shall not be recourse to the assets of the Issuer. In addition,
the Trustee agrees that its recourse to the Issuer, the Trust Estate, the
Seller and amounts held pursuant to the Spread Account Agreement shall be
limited to
64
<PAGE>
the right to receive the distributions referred to in the first two sentences
of this Section 6.7(b).
SECTION 6.8. REPLACEMENT OF TRUSTEE. The Trustee may resign at any time
by so notifying the Issuer, the Noteholders (if there is an Insurer Default)
and the Security Insurer. The Issuer, may, with the consent of the
Controlling Party, and, at the request of the Controlling Party shall, remove
the Trustee, if:
(i) the Trustee fails to comply with Section 6.11;
(ii) a court having jurisdiction in the premises in respect of the
Trustee in an involuntary case or proceeding under federal or state
banking or bankruptcy laws, as now or hereafter constituted, or any other
applicable federal or state bankruptcy, insolvency or other similar law,
shall have entered a decree or order granting relief or appointing a
receiver, liquidator, assignee, custodian, trustee, conservator,
sequestrator (or similar official) for the Trustee or for any substantial
part of the Trustee's property, or ordering the winding-up or liquidation
of the Trustee's affairs, provided any such decree or order shall have
continued unstayed and in effect for a period of 60 consecutive days;
(iii) the Trustee commences a voluntary case under any federal or
state banking or bankruptcy laws, as now or hereafter constituted, or any
other applicable federal or state bankruptcy, insolvency or other similar
law, or consents to the appointment of or taking possession by a receiver,
liquidator, assignee, custodian, trustee, conservator, sequestrator (or
other similar official) for the Trustee or for any substantial part of the
Trustee's property, or makes any assignment for the benefit of creditors
or fails generally to pay its debts as such debts become due or takes any
corporate action in furtherance of any of the foregoing;
65
<PAGE>
(iv) the Trustee otherwise becomes incapable of acting; or
(v) the rating assigned to the long-term unsecured debt
obligations of the Trustee (or the holding company thereof) by the Rating
Agencies shall be lowered below the rating of "BBB", "Baa3" or equivalent
rating or be withdrawn by either of the Rating Agencies.
If the Trustee resigns or is removed or if a vacancy exists in the
office of Trustee for any reason (the Trustee in such event being referred to
herein as the retiring Trustee), the Issuer shall promptly provide written
notice of such event to the Rating Agency and shall appoint a successor
Trustee acceptable to the Controlling Party. If the Issuer fails to appoint
such a successor Trustee, the Controlling Party may appoint a successor
Trustee.
A successor Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee and to the Issuer. Thereupon the
resignation or removal of the retiring Trustee shall become effective, and
the successor Trustee shall have all the rights, powers and duties of the
Trustee under this Indenture. The successor Trustee shall mail a notice of
its succession to Noteholders. The retiring Trustee shall promptly transfer
all property held by it as Trustee to the successor Trustee.
If a successor Trustee does not take office within 60 days after the
retiring Trustee resigns or is removed, the retiring Trustee, the Controlling
Party, the Issuer or the Holders of a majority in Outstanding Amount of the
Notes may petition any court of competent jurisdiction for the appointment of
a successor Trustee.
Any resignation or removal of the Trustee and appointment of a successor
Trustee pursuant to any of the provisions of this Section shall not become
effective until acceptance of appointment by the successor Trustee pursuant
to this Section and payment of all fees and expenses owed to the outgoing
Trustee. Notwithstanding the replacement of the Trustee pursuant to this
Section, the retiring Trustee
66
<PAGE>
shall be entitled to payment or reimbursement of such amounts as such Person
is entitled pursuant to Section 6.7.
SECTION 6.9. SUCCESSOR TRUSTEE BY MERGER. If the Trustee consolidates
with, merges or converts into, or transfers all or substantially all its
corporate trust business or assets to, another corporation or banking
association, the resulting, surviving or transferee corporation without any
further act shall be the successor Trustee, provided however, that such
successor to the Trustee shall be subject to Section 6.8 of this Indenture
and shall meet the minimum rating required by Section 6.8(v) and the
eligibility requirements of Section 6.11 of this Indenture as of the date of
such succession. If such surviving or transferee corporation does not meet
such eligibility requirements, it may be removed pursuant to Section 6.8(i)
hereof. The Trustee shall provide the Rating Agencies prompt notice of any
such transaction.
In case at the time such successor or successors by merger, conversion
or consolidation to the Trustee shall succeed to the trusts created by this
Indenture any of the Notes shall have been authenticated but not delivered,
any such successor to the Trustee may adopt the certificate of authentication
of any predecessor trustee, and deliver such Notes so authenticated; and in
case at that time any of the Notes shall not have been authenticated, any
successor to the Trustee may authenticate such Notes either in the name of
any predecessor hereunder or in the name of the successor to the Trustee; and
in all such cases such certificates shall have the full force which it is
anywhere in the Notes or in this Indenture provided that the certificate of
the Trustee shall have.
SECTION 6.10. APPOINTMENT OF CO-TRUSTEE OR SEPARATE TRUSTEE.
(a) Notwithstanding any other provisions of this Indenture, at any
time, for the purpose of meeting any legal requirement of any jurisdiction in
which any part of the Trust may at the time be located, the Trustee, with the
consent of the Controlling Party and subject to the disqualifying conditions
of Section 6.8 of this Indenture, shall have the power and may execute and
deliver all
67
<PAGE>
instruments to appoint one or more Persons to act as a co-trustee or
co-trustees, or separate trustee or separate trustees, of all or any part of
the Trust, and to vest in such Person or Persons, in such capacity and for
the benefit of the Noteholders, such title to the Trust, or any part hereof,
and, subject to the other provisions of this Section, such powers, duties,
obligations, rights and trusts as the Trustee may consider necessary or
desirable, provided, however, that any such Person shall meet the minimum
rating required by Section 6.8(v) of this Indenture as of the date of such
appointment. No co-trustee or separate trustee hereunder shall be required
to meet the terms of eligibility as a successor Trustee under Section 6.11
and no notice to Noteholders of the appointment of any co-trustee or separate
trustee shall be required under Section 6.8 hereof.
(b) Every 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 Trustee shall be conferred or imposed upon and exercised
or performed by the Trustee 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 Trustee 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 the Trustee 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 Trust
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 Trustee;
(ii) no trustee hereunder shall be personally liable by reason of
any act or omission of any other trustee hereunder; and
68
<PAGE>
(iii) the Trustee may at any time accept the resignation of or remove
any separate trustee or co-trustee.
(c) Any notice, request or other writing given to the Trustee shall be
deemed to have been given to each of the 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 Indenture
and the conditions of this Article VI. 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 Trustee or separately, as may be provided therein, subject to all the
provisions of this Indenture, specifically including every provision of this
Indenture relating to the conduct of, affecting the liability of, or
affording protection to, the Trustee. Every such instrument shall be filed
with the Trustee.
(d) Any separate trustee or co-trustee may at any time constitute the
Trustee, 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 Indenture 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 Trustee, to the extent permitted by law, without the
appointment of a new or successor trustee.
SECTION 6.11. ELIGIBILITY; DISQUALIFICATION. The Trustee shall have a
combined capital and surplus of at least $50,000,000 as set forth in its most
recent published annual report of condition and have a rating on its
long-term unsecured debt obligations at or above the level specified in
Section 6.8(v) of this Indenture. The Trustee shall provide copies of such
reports to the Security Insurer upon request.
SECTION 6.12. APPOINTMENT AND POWERS. Subject to the terms and
conditions hereof, each of the Issuer Secured Parties hereby appoints LaSalle
National Bank as the Indenture Collateral Agent with respect to the Indenture
69
<PAGE>
Collateral, and LaSalle National Bank hereby accepts such appointment and
agrees to act as Indenture Collateral Agent with respect to the Indenture
Collateral for the Issuer Secured Parties, to maintain custody and possession
of such Indenture Collateral (except as otherwise provided hereunder) and to
perform the other duties of the Indenture Collateral Agent in accordance with
the provisions of this Indenture. Each Issuer Secured Party hereby
authorizes the Indenture Collateral Agent to take such action on its behalf,
and to exercise such rights, remedies, powers and privileges hereunder, as
the Controlling Party may direct and as are specifically authorized to be
exercised by the Indenture Collateral Agent by the terms hereof, together
with such actions, rights, remedies, powers and privileges as are reasonably
incidental thereto. The Indenture Collateral Agent shall act upon and in
compliance with the written instructions of the Controlling Party delivered
pursuant to this Indenture promptly following receipt of such written
instructions; provided that the Indenture Collateral Agent shall not act in
accordance with any instructions for which the Indenture Collateral Agent has
not received reasonable indemnity. Receipt of such instructions shall not be
a condition to the exercise by the Indenture Collateral Agent of its express
duties hereunder, except where this Indenture provides that the Indenture
Collateral Agent is permitted to act only following and in accordance with
such instructions.
SECTION 6.13. PERFORMANCE OF DUTIES. The Indenture Collateral Agent
shall have no duties or responsibilities except those expressly set forth in
this Indenture and the other Related Documents to which the Indenture
Collateral Agent is a party or as directed by the Controlling Party in
accordance with this Indenture. The Indenture Collateral Agent shall not be
required to take any action hereunder except at the written direction and
with the indemnification of the Controlling Party. The Indenture Collateral
Agent shall, and hereby agrees that it will, perform all of the duties and
obligations required of it under the Sale and Servicing Agreement.
SECTION 6.14. LIMITATION ON LIABILITY. Neither the Indenture
Collateral Agent nor any of its directors, officers or employees, shall be
liable for any action taken
70
<PAGE>
or omitted to be taken by it or them hereunder, or in connection herewith,
except that the Indenture Collateral Agent shall be liable for its gross
negligence, bad faith or willful misconduct; nor shall the Indenture
Collateral Agent be responsible for the validity, effectiveness, value,
sufficiency or enforceability against the Issuer of this Indenture or any of
the Indenture Collateral (or any part thereof). Notwithstanding any term or
provision of this Indenture, the Indenture Collateral Agent shall incur no
liability to Issuer or the Issuer Secured Parties for any action taken or
omitted by the Indenture Collateral Agent in connection with the Indenture
Collateral, except for the gross negligence or willful misconduct on the part
of the Indenture Collateral Agent, and, further, shall incur no liability to
the Issuer Secured Parties except for gross negligence or willful misconduct
in carrying out its duties to the Issuer Secured Parties. Subject to Section
6.15, the Indenture Collateral Agent shall be protected and shall incur no
liability to any such party in relying upon the accuracy, acting in reliance
upon the contents, and assuming the genuineness of any notice, demand,
certificate, signature, instrument or other document reasonably believed by
the Indenture Collateral Agent to be genuine and to have been duly executed
by the appropriate signatory, and (absent actual knowledge to the contrary)
the Indenture Collateral Agent shall not be required to make any independent
investigation with respect thereto. The Indenture Collateral Agent shall at
all times be free independently to establish to its reasonable satisfaction,
but shall have no duty to independently verify, the existence or nonexistence
of facts that are a condition to the exercise or enforcement of any right or
remedy hereunder or under any of the Related Documents. The Indenture
Collateral Agent may consult with counsel, and shall not be liable for any
action taken or omitted to be taken by it hereunder in good faith and in
accordance with the written advice of such counsel. The Indenture Collateral
Agent shall not be under any obligation to exercise any of the remedial
rights or powers vested in it by this Indenture or to follow any direction
from the Controlling Party unless it shall have received reasonable security
or indemnity satisfactory to the Indenture Collateral Agent against the
costs, expenses and liabilities which might be incurred by it.
71
<PAGE>
SECTION 6.15. RELIANCE UPON DOCUMENTS. In the absence of bad faith or
negligence on its part, the Indenture Collateral Agent shall be entitled to
rely on any communication, instrument, paper or other document reasonably
believed by it to be genuine and correct and to have been signed or sent by
the proper Person or Persons and shall have no liability in acting, or
omitting to act, where such action or omission to act is in reasonable
reliance upon any statement or opinion contained in any such document or
instrument.
SECTION 6.16. SUCCESSOR INDENTURE COLLATERAL AGENT.
(a) MERGER. Any Person into which the Indenture Collateral Agent may
be converted or merged, or with which it may be consolidated, or to which it
may sell or transfer its trust business and assets as a whole or
substantially as a whole, or any Person resulting from any such conversion,
merger, consolidation, sale or transfer to which the Indenture Collateral
Agent is a party, shall (provided it is otherwise qualified to serve as the
Indenture Collateral Agent hereunder) be and become a successor Indenture
Collateral Agent hereunder and be vested with all of the title to and
interest in the Indenture Collateral and all of the trusts, powers,
discretions, immunities, privileges and other matters as was its predecessor
without the execution or filing of any instrument or any further act, deed or
conveyance on the part of any of the parties hereto, anything herein to the
contrary notwithstanding, except to the extent, if any, that any such action
is necessary to perfect, or continue the perfection of, the security interest
of the Issuer Secured Parties in the Indenture Collateral, provided however,
that the Trustee and the Indenture Collateral Agent shall always be the same
Person.
(b) RESIGNATION. The Indenture Collateral Agent and any successor
Indenture Collateral Agent may resign at any time by so notifying the Issuer
and the Security Insurer.
(c) REMOVAL. The Indenture Collateral Agent may be removed by the
Controlling Party at any time, with or without cause, by an instrument or
concurrent instruments in writing delivered to the Indenture Collateral
Agent, the
72
<PAGE>
other Issuer Secured Party and the Issuer. A temporary successor may be
removed at any time to allow a successor Indenture Collateral Agent to be
appointed pursuant to subsection (d) below. Any removal pursuant to the
provisions of this subsection (c) shall take effect only upon the date which
is the latest of (i) the effective date of the appointment of a successor
Indenture Collateral Agent and the acceptance in writing by such successor
Indenture Collateral Agent of such appointment and of its obligation to
perform its duties hereunder in accordance with the provisions hereof, and
(ii) receipt by the Controlling Party of an Opinion of Counsel to the effect
described in Section 3.6.
(d) ACCEPTANCE BY SUCCESSOR. The Controlling Party shall have the
sole right to appoint each successor Indenture Collateral Agent. Every
temporary or permanent successor Indenture Collateral Agent appointed
hereunder shall execute, acknowledge and deliver to its predecessor and to
the Trustee, each Issuer Secured Party and the Issuer an instrument in
writing accepting such appointment hereunder and the relevant predecessor
shall execute, acknowledge and deliver such other documents and instruments
as will effectuate the delivery of all Indenture Collateral to the successor
Indenture Collateral Agent, whereupon such successor, without any further
act, deed or conveyance, shall become fully vested with all the estates,
properties, rights, powers, duties and obligations of its predecessor. Such
predecessor shall, nevertheless, on the written request of either Issuer
Secured Party or the Issuer, execute and deliver an instrument transferring
to such successor all the estates, properties, rights and powers of such
predecessor hereunder. In the event that any instrument in writing from the
Issuer or an Issuer Secured Party is reasonably required by a successor
Indenture Collateral Agent to more fully and certainly vest in such successor
the estates, properties, rights, powers, duties and obligations vested or
intended to be vested hereunder in the Indenture Collateral Agent, any and
all such written instruments shall, at the request of the temporary or
permanent successor Indenture Collateral Agent, be forthwith executed,
acknowledged and delivered by the Trustee or the Issuer, as the case may be.
The designation of any successor Indenture Collateral Agent and the
instrument or instruments removing any Indenture
73
<PAGE>
Collateral Agent and appointing a successor hereunder, together with all
other instruments provided for herein, shall be maintained with the records
relating to the Indenture Collateral and, to the extent required by
applicable law, filed or recorded by the successor Indenture Collateral Agent
in each place where such filing or recording is necessary to effect the
transfer of the Indenture Collateral to the successor Indenture Collateral
Agent or to protect or continue the perfection of the security interests
granted hereunder.
SECTION 6.17. COMPENSATION AND INDEMNITY.
(a) AFS, in a separate letter agreement or in the Letter Agreement
(the "ICA Letter Agreement") has covenanted and agreed to pay to the
Indenture Collateral Agent, and the Indenture Collateral Agent shall be
entitled to certain annual fees, which shall not be limited by any law on
compensation of an Indenture Collateral Agent of an express trust. In the
ICA Letter Agreement, AFS has also agreed to reimburse the Indenture
Collateral Agent for all reasonable out-of-pocket expenses incurred or made
by it, including costs of collection, in addition to the compensation for its
services. Such expenses shall include the reasonable compensation and
expenses, disbursements and advances of the Indenture Collateral Agent's
agents, counsel, accountants and experts. Pursuant to the ICA Letter
Agreement, AFS has agreed to indemnify the Indenture Collateral Agent against
any and all loss, liability or expense (including attorneys' fees) incurred
by it in connection with the administration of this trust and the performance
of its duties hereunder.
(b) If notwithstanding the provisions of the ICA Letter
Agreement, AFS fails to pay any fee due to the Indenture
Collateral Agent pursuant to the terms of the ICA Letter
Agreement, the Indenture Collateral Agent shall be entitled to
a distribution in respect of such amount pursuant to Section 4.6(ii)
of the Sale and Servicing Agreement. If notwithstanding the
provisions of the ICA Letter Agreement, AFS fails to make any
payment or reimbursement due to the Indenture Collateral Agent
for any expense or claim for indemnification to which the
Indenture Collateral Agent is entitled pursuant to the terms
of the ICA Letter Agreement, the Indenture Collateral Agent shall
74
<PAGE>
be entitled to a distribution in respect of such amount
pursuant either to priority SIXTH or priority SEVENTH of
Section 3.03(b) of the Spread Account Agreement in accordance
with the terms thereof (unless the Trustee is the Controlling
Party). AFS's payment obligations to the Indenture Collateral
Agent pursuant to the ICA Letter Agreement and this Section
shall survive the discharge of this Indenture. When the
Indenture Collateral Agent incurs expenses after the
occurrence of a Default specified in Section 5.1(v) or (vi)
with respect to the Issuer, the expenses are intended to
constitute expenses of administration under Title 11 of the
United States Code or any other applicable Federal or state
bankruptcy, insolvency or similar law. Notwithstanding
anything else set forth in this Indenture or the Related
Documents, the Indenture Collateral Agent agrees that the
obligations of the Issuer to the Indenture Collateral Agent
hereunder and under the Related Documents shall be limited
recourse to amounts payable to the Indenture Collateral Agent
pursuant to Section 4.6(ii) of the Sale and Service Agreement.
In addition, the Indenture Collateral Agent agrees that its
recourse to the Seller and amounts held pursuant to the Spread
Account Agreement shall be limited to the right to receive the
distributions referred to in the second sentence of this
Section 6.17(b).
SECTION 6.18. REPRESENTATIONS AND WARRANTIES OF THE INDENTURE
COLLATERAL AGENT. The Indenture Collateral Agent represents and warrants to
the Issuer and to each Issuer Secured Party as follows:
(a) DUE ORGANIZATION. The Indenture Collateral Agent is a national
banking association, duly organized, validly existing and in good standing
under the laws of the United States and is duly authorized and licensed under
applicable law to conduct its business as presently conducted.
(b) CORPORATE POWER. The Indenture Collateral Agent has all requisite
right, power and authority to execute and deliver this Indenture and to
perform all of its duties as Indenture Collateral Agent hereunder.
75
<PAGE>
(c) DUE AUTHORIZATION. The execution and delivery by the Indenture
Collateral Agent of this Indenture and the other Transaction Documents to
which it is a party, and the performance by the Indenture Collateral Agent of
its duties hereunder and thereunder, have been duly authorized by all
necessary corporate proceedings and no further approvals or filings,
including any governmental approvals, are required for the valid execution
and delivery by the Indenture Collateral Agent, or the performance by the
Indenture Collateral Agent, of this Indenture and such other Related
Documents.
(d) VALID AND BINDING INDENTURE. The Indenture Collateral Agent has
duly executed and delivered this Indenture and each other Related Document to
which it is a party, and each of this Indenture and each such other Related
Document constitutes the legal, valid and binding obligation of the Indenture
Collateral Agent, enforceable against the Indenture Collateral Agent in
accordance with its terms, except as (i) such enforceability may be limited
by bankruptcy, insolvency, reorganization and similar laws relating to or
affecting the enforcement of creditors' rights generally and (ii) the
availability of equitable remedies may be limited by equitable principles of
general applicability.
SECTION 6.19. WAIVER OF SETOFFS. The Indenture Collateral Agent hereby
expressly waives any and all rights of setoff that the Indenture Collateral
Agent may otherwise at any time have under applicable law with respect to any
Trust Account and agrees that amounts in the Trust Accounts shall at all
times be held and applied solely in accordance with the provisions hereof.
SECTION 6.20. CONTROL BY THE CONTROLLING PARTY. The Indenture
Collateral Agent shall comply with notices and instructions given by the
Issuer only if accompanied by the written consent of the Controlling Party,
except that if any Event of Default shall have occurred and be continuing,
the Indenture Collateral Agent shall act upon and comply with, notices and
instructions given by the Controlling Party alone in the place and stead of
the Issuer.
76
<PAGE>
ARTICLE VII
NOTEHOLDERS' LISTS AND REPORTS
SECTION 7.1. ISSUER TO FURNISH TRUSTEE NAMES AND ADDRESSES OF
NOTEHOLDERS. The Issuer will furnish or cause to be furnished to the Trustee
(a) on the Closing Date, a list, in such form as the Trustee may reasonably
require, of the names and addresses of the Holders of Notes as of the Closing
Date, (b) at such other times as the Trustee may request in writing within 30
days after receipt by the Issuer of any such request, a list of similar form
and content as of a date not more than 10 days prior to the time such list is
furnished; PROVIDED, HOWEVER, that so long as the Trustee is the Note
Registrar, no such list shall be required to be furnished. The Trustee or,
if the Trustee is not the Note Registrar, the Issuer shall furnish to the
Security Insurer in writing on an annual basis on each March 31 and at such
other times as the Security Insurer may request a copy of the list.
SECTION 7.2. PRESERVATION OF INFORMATION, COMMUNICATIONS TO NOTEHOLDERS.
(a) The Trustee shall preserve, in as current a form as is reasonably
practicable, the names and addresses of the Holders of Notes contained in the
most recent list furnished to the Trustee as provided in Section 7.1 and the
names and addresses of Holders of Notes received by the Trustee in its
capacity as Note Registrar. The Trustee may destroy any list furnished to it
as provided in such Section 7.1 upon receipt of a new list so furnished. The
Trustee shall make such list available to the Noteholders and the Security
Insurer upon request.
(b) Noteholders may communicate with other Noteholders with respect to
their rights under this Indenture or under the Notes.
77
<PAGE>
SECTION 7.3. REPORTS BY ISSUER.
(a) The Issuer shall supply to the Trustee for mailing by the Trustee
to all Noteholders, any information pertaining to the Issuer as the Issuer
may determine to be reasonably necessary to afford Noteholders the ability to
sell or transfer Notes pursuant to Rule 144A of the Securities Act.
(b) Unless the Issuer otherwise determines, the fiscal year of the
Issuer shall end on June 30 of each year.
ARTICLE VIII
ACCOUNTS, DISBURSEMENTS AND RELEASES
SECTION 8.1. COLLECTION OF MONEY. Except as otherwise expressly
provided herein, the Trustee may demand payment or delivery of, and shall
receive and collect, directly and without intervention or assistance of any
fiscal agent or other intermediary, all money and other property payable to
or receivable by the Trustee pursuant to this Indenture. The Trustee shall
apply all such money received by it as provided in this Indenture. Except as
otherwise expressly provided in this Indenture, if any default occurs in the
making of any payment or performance under any agreement or instrument that
is part of this Indenture or the Notes, the Trustee may take such action as
may be appropriate to enforce such payment or performance, including the
institution and prosecution of appropriate Proceedings. Any such action
shall be without prejudice to any right to claim a Default or Event of
Default under this Indenture and any right to proceed thereafter as provided
in Article V.
SECTION 8.2. TRUST ACCOUNTS.
(a) On or prior to the Closing Date, the Indenture Collateral Agent
shall establish and maintain, in the name of the Indenture Collateral Agent,
for the benefit of the Noteholders, the Trust Accounts as provided in Section
4.1 of the Sale and Servicing Agreement.
78
<PAGE>
(b) On each Payment Date and Redemption Date, the Trustee shall
distribute amounts on deposit in the Note Distribution Account to Noteholders
in respect of the Notes to the extent of amounts due and unpaid on the Notes
for principal and interest, first to pay all accrued and unpaid interest, and
then to pay principal on the Notes until the outstanding amount of the Notes
is reduced to zero.
SECTION 8.3. GENERAL PROVISIONS REGARDING ACCOUNTS.
(a) So long as no Default or Event of Default shall have occurred and
be continuing all or a portion of the funds in the Trust Accounts shall be
invested and reinvested by the Indenture Collateral Agent on behalf of the
Issuer in Eligible Investments in accordance with the provisions of Section
4.1(c) of the Sale and Servicing Agreement.
(b) Subject to Section 6.1(c), the Indenture Collateral Agent shall
not in any way be held liable by reason of any insufficiency in any of the
Trust Accounts resulting from any loss on any Eligible Investment included
therein except for losses attributable to the Indenture Collateral Agent's
failure to make payments on such Eligible Investments issued by the Indenture
Collateral Agent, in its commercial capacity as principal obligor and not as
Indenture Collateral Agent, in accordance with their terms.
ARTICLE IX
SUPPLEMENTAL INDENTURES
SECTION 9.1. SUPPLEMENTAL INDENTURES WITHOUT CONSENT OF NOTEHOLDERS.
(a) Without the consent of the Holders of any Notes but with the
consent of the Security Insurer (unless an Insurer Default shall have
occurred and be continuing) and with prior notice to the Rating Agencies, the
Issuer and the Trustee, when authorized by an Issuer Order, at any time and
from time to time, may enter into one or more indentures
79
<PAGE>
supplemental hereto, in form satisfactory to the Trustee, for any of the
following purposes:
(i) to correct or amplify the description of any property at any
time subject to the lien of this Indenture, or better to assure, convey
and confirm unto the Indenture Collateral Agent any property subject or
required to be subjected to the lien created by this Indenture, or to
subject to the lien created by this Indenture additional property;
(ii) to evidence the succession, in compliance with the applicable
provisions hereof, of another Person to the Issuer, and the assumption by
any such successor of the covenants of the Issuer herein and in the Notes
contained;
(iii) to add to the covenants of the Issuer, for the benefit of the
Holders of the Notes, or to surrender any right or power herein conferred
upon the Issuer,
(iv) to convey, transfer, assign, mortgage or pledge any property
to or with the Indenture Collateral Agent;
(v) to cure any ambiguity, to correct or supplement any provision
herein or in any supplemental indenture which may be inconsistent with any
other provision herein or in any supplemental indenture or to make any
other provisions with respect to matters or questions arising under this
Indenture or in any supplemental indenture; PROVIDED that such action shall
not adversely affect the interests of the Holders of the Notes; or
(vi) to evidence and provide for the acceptance of the appointment
hereunder by a successor trustee with respect to the Notes and to add to
or change any of the provisions of this Indenture as shall be necessary to
facilitate the administration of the
80
<PAGE>
trusts hereunder by more than one trustee, pursuant to the requirements
of Article VI.
The Trustee is hereby authorized to join in the execution of any such
supplemental indenture and to make any further appropriate agreements and
stipulations that may be therein contained.
(b) The Issuer and the Trustee, when authorized by an Issuer Order,
may, also without the consent of any of the Holders of the Notes but with the
consent of the Security Insurer (unless an Insurer Default shall have
occurred and be continuing) and with prior notice to the Rating Agencies,
enter into an indenture or indentures supplemental hereto for the purpose of
adding any provisions to, or changing in any manner or eliminating any of the
provisions of, this Indenture or of modifying in any manner the rights of the
Holders of the Notes under this Indenture; PROVIDED, HOWEVER, that such
action shall not, as evidenced by an Opinion of Counsel, adversely affect in
any material respect the interests of any Noteholder.
SECTION 9.2. SUPPLEMENTAL INDENTURES WITH CONSENT OF NOTEHOLDERS. The
Issuer and the Trustee, when authorized by an Issuer Order, also may, with
prior notice to the Rating Agencies, with the consent of the Controlling
Party enter into an indenture or indentures supplemental hereto for the
purpose of adding any provisions to, or changing in any manner or eliminating
any of the provisions of, this Indenture or of modifying in any manner the
rights of the Holders of the Notes under this Indenture, PROVIDED, HOWEVER,
that, subject to the express rights of the Security Insurer under the Related
Documents, including its rights to agree to certain modifications of the
Receivables pursuant to Section 3.2 of the Sale and Servicing Agreement and
its rights referred to in Section 5.2(c), no such supplemental indenture
shall, without the consent of the Holder of each Outstanding Note affected
thereby:
(i) change the date of payment of any installment of principal of
or interest on any Note, or reduce the principal amount thereof, the
interest rate
81
<PAGE>
thereon or the Redemption Price with respect thereto, change the provision
of this Indenture relating to the application of collections on, or the
proceeds of the sale of, the Trust Estate to payment of principal of or
interest on the Notes, or change any place of payment where, or the coin or
currency in which, any Note or the interest thereon is payable, or impair
the right to institute suit for the enforcement of the provisions of this
Indenture requiring the application of funds available therefor, as
provided in Article V, to the payment of any such amount due on the Notes
on or after the respective due dates thereof (or, in the case of
redemption, on or after the Redemption Date);
(ii) reduce the percentage of the Outstanding Amount of the Notes,
the consent of the Holders of which is required for any such supplemental
indenture, or the consent of the Holders of which is required for any
waiver of compliance with certain provisions of this Indenture or certain
defaults hereunder and their consequences provided for in this Indenture;
(iii) modify or alter the provisions of the second proviso to the
definition of the term "Outstanding";
(iv) reduce the percentage of the Outstanding Amount of the Notes
required to direct the Trustee to direct the Issuer to sell or liquidate
the Trust Estate pursuant to Section 5.4;
(v) modify any provision of this Section except to increase any
percentage specified herein or to provide that certain additional
provisions of this Indenture or the Related Documents cannot be modified
or waived without the consent of the Holder of each Outstanding Note
affected thereby;
(vi) modify any of the provisions of this Indenture in such manner
as to affect the calculation of the amount of any payment of interest or
principal due on any Note on any Payment Date (including the
82
<PAGE>
calculation of any of the individual components of such calculation) or to
affect the rights of the Holders of Notes to the benefit of any provisions
for the mandatory redemption of the Notes contained herein; or
(vii) permit the creation of any lien ranking prior to or on a parity
with the lien created by this Indenture with respect to any part of the
Trust Estate or, except as otherwise permitted or contemplated herein,
terminate the lien created by this Indenture on any property at any time
subject hereto or deprive the Holder of any Note of the security provided
by the lien created by this Indenture.
The Trustee may in its discretion determine whether or not any Notes
would be affected by any supplemental indenture and any such determination
shall be conclusive upon the Holders of all Notes, whether theretofore or
thereafter authenticated and delivered hereunder. The Trustee shall not be
liable for any such determination made in good faith.
Promptly after the execution by the Issuer and the Trustee of any
supplemental indenture pursuant to this Section, the Trustee shall mail to
the Holders of the Notes to which such amendment or supplemental indenture
relates a notice setting forth in general terms the substance of such
supplemental indenture, and including a copy of such supplemental indenture.
Any failure of the Trustee to mail such notice, or any defect therein, shall
not, however, in any way impair or affect the validity of any such
supplemental indenture.
SECTION 9.3. EXECUTION OF SUPPLEMENTAL INDENTURES. In executing, or
permitting the additional trusts created by, any supplemental indenture
permitted by this Article IX or the modifications thereby of the trusts
created by this Indenture, the Trustee shall be entitled to receive, and
subject to Sections 6.1 and 6.2 shall be fully protected in relying upon, an
Opinion of Counsel stating that the execution of such supplemental indenture
is authorized or permitted by this Indenture. The Trustee may, but shall not
83
<PAGE>
be obligated to, enter into any such supplemental indenture that affects the
Trustee's own rights, duties, liabilities or immunities under this Indenture
or otherwise.
SECTION 9.4. EFFECT OF SUPPLEMENTAL INDENTURE. Upon the execution of
any supplemental indenture pursuant to the provisions hereof, this Indenture
shall be and be deemed to be modified and amended in accordance therewith
with respect to the Notes affected thereby, and the respective rights,
limitations of rights, obligations, duties, liabilities and immunities under
this Indenture of the Trustee, the Issuer and the Holders of the Notes shall
thereafter be determined, exercised and enforced hereunder subject in all
respects to such modifications and amendments, and all the terms and
conditions of any such supplemental indenture shall be and be deemed to be
part of the terms and conditions of this Indenture for any and all purposes.
SECTION 9.5. REFERENCE IN NOTES TO SUPPLEMENTAL INDENTURES. Notes
authenticated and delivered after the execution of any supplemental indenture
pursuant to this Article IX may, and if required by the Trustee shall, bear a
notation in form approved by the Trustee as to any matter provided for in
such supplemental indenture. If the Issuer or the Trustee shall so
determine, new notes so modified as to conform, in the opinion of the Trustee
and the Issuer, to any such supplemental indenture may be prepared and
executed by the Issuer and authenticated and delivered by the Trustee in
exchange for Outstanding Notes.
ARTICLE X
REDEMPTION OF NOTES
SECTION 10.1. REDEMPTION. In the event that the Servicer pursuant to
Section 9.1 of the Sale and Servicing Agreement purchases the Receivables,
the Notes are subject to redemption in whole, but not in part, on the Payment
Date on which such repurchase occurs, for a purchase price equal to the
Redemption Price. The Seller, the Servicer or the Issuer shall furnish the
Security Insurer and the Rating
84
<PAGE>
Agencies notice of such redemption. If the Notes are to be redeemed pursuant
to this Section 10.1, the Issuer shall furnish notice of such election to the
Trustee and to each Noteholder not later than 25 days prior to the Redemption
Date and the Issuer shall deposit with the Trustee in the Note Distribution
Account not less than seven days prior to the applicable Redemption Date, the
Redemption Price of the Notes to be redeemed whereupon all such Notes shall
be due and payable on the Redemption Date upon the furnishing of a notice
complying with Section 10.2 to each Holder of the Notes.
SECTION 10.2. FORM OF REDEMPTION NOTICE. Notice of redemption under
Section 10.1 shall be given by the Trustee by first-class mail, postage
prepaid, mailed not less than five days prior to the applicable Redemption
Date to each Holder of Notes (or, upon request by a Noteholder which
purchased the Notes on the Closing Date, by facsimile), as of the close of
business on the Record Date preceding the applicable Redemption Date, at such
Holder's address appearing in the Note Register.
All notices of redemption shall state:
(i) the Redemption Date;
(ii) the Redemption Price; and
(iii) the place where such Notes are to be surrendered for payment
of the Redemption Price (which shall be the office or agency of the Issuer
to be maintained as provided in Section 3.2).
Notice of redemption of the Notes shall be given by the Trustee in the
name and at the expense of the Issuer. Failure to give notice of redemption,
or any defect therein, to any Holder of any Note shall not impair or affect
the validity of the redemption of any other Note.
SECTION 10.3. NOTES PAYABLE ON REDEMPTION DATE. The Notes to be
redeemed shall, following notice of redemption (if any) as required by
Section 10.2, on the Redemption Date
85
<PAGE>
become due and payable at the Redemption Price and (unless the Issuer shall
default in the payment of the Redemption Price) no interest shall accrue on
the Redemption Price for any period after the date to which accrued interest
is calculated for purposes of calculating the Redemption Price.
ARTICLE XI
MISCELLANEOUS
SECTION 11.1. COMPLIANCE CERTIFICATES AND OPINIONS, ETC.
(a) Upon an application or request by the Issuer to the Trustee or the
Indenture Collateral Agent to take any action under any provision of this
Indenture, the Issuer shall furnish to the Trustee or the Indenture
Collateral Agent, as the case may be, and to the Security Insurer if the
application or request is made to the Indenture Collateral Agent (i) an
Officers' Certificate stating that all conditions precedent, if any, provided
for in this Indenture relating to the proposed action have been complied
with, and (ii) an Opinion of Counsel stating that in the opinion of such
counsel all such conditions precedent, if any, have been complied with,
except that, in the case of any such application or request as to which the
furnishing of such documents is specifically required by any provision of
this Indenture, no additional certificate or opinion need be furnished.
Every certificate or opinion with respect to compliance with a condition
or covenant provided for in this Indenture shall include:
(i) a statement that each signatory of such certificate or opinion
has read or has caused to be read such covenant or condition and the
definitions herein relating thereto;
(ii) a brief statement as to the nature and scope of the examination
or investigation upon which
86
<PAGE>
the statements or opinions contained in such certificate or opinion are
based;
(iii) a statement that, in the opinion of each such signatory, such
signatory has made such examination or investigation as is necessary to
enable such signatory to express an informed opinion as to whether or not
such covenant or condition has been complied with; and
(iv) a statement as to whether, in the opinion of each such
signatory, such condition or covenant has been complied with.
(b) (i) Prior to the deposit of any Indenture Collateral or other
property or securities with the Indenture Collateral Agent that is to be made
the basis for the release of any property subject to the lien created by this
Indenture, the Issuer shall, in addition to any obligation imposed in Section
11.1(a) or elsewhere in this Indenture, furnish to the Indenture Collateral
Agent and the Security Insurer (so long as no Insurer Default shall have
occurred and be continuing) an Officers' Certificate certifying or stating
the opinion of each person signing such certificate as to the fair value
(within 90 days of such deposit) to the Issuer of the Indenture Collateral or
other property or securities to be so deposited.
(ii) Whenever the Issuer is required to furnish to the Indenture
Collateral Agent and the Security Insurer an Officers' Certificate certifying
or stating the opinion of any signer thereof as to the matters described in
clause (i) above, the Issuer shall also deliver to the Indenture Collateral
Agent and the Security Insurer an Independent Certificate as to the same
matters, if the fair value to the Issuer of the property to be so deposited
and of all other such property made the basis of any such withdrawal or
release since the commencement of the then current fiscal year of the Issuer,
as set forth in the certificates delivered pursuant to clause (i) above and
this clause (ii), is 10% or more of the Outstanding Amount of the Notes, but
such a certificate need not be furnished with respect to any
87
<PAGE>
property so deposited, if the fair value thereof to the Issuer as set forth
in the related Officers' Certificate is less than $25,000 or less than one
percent of the Outstanding Amount of the Notes.
(iii) Other than with respect to any release described in clause
(A) or (B) of Section 11.1(b)(v), whenever any property or securities are to
be released from the lien created by this Indenture, the Issuer shall also
furnish to the Indenture Collateral Agent and the Security Insurer (so long
as no Insurer Default shall have occurred and be continuing) an Officers'
Certificate certifying or stating the opinion of each person signing such
certificate as to the fair value (within 90 days of such release) of the
property or securities proposed to be released and stating that in the
opinion of such person the proposed release will not impair the security
created by this Indenture in contravention of the provisions hereof.
(iv) Whenever the Issuer is required to furnish to the Trustee
and the Security Insurer an Officers' Certificate certifying or stating the
opinion of any signer thereof as to the matters described in clause (iii)
above, the Issuer shall also furnish to the Indenture Collateral Agent and
the Security Insurer an Independent Certificate as to the same matters if the
fair value of the property or securities and of all other property or
securities (other than property described in clauses (A) or (B) of Section
11.1(b)(v)) released from the lien created by this Indenture since the
commencement of the then current fiscal year, as set forth in the
certificates required by clause (iii) above and this clause (iv), equals 10%
or more of the Outstanding Amount of the Notes, but such certificate need not
be furnished in the case of any release of property or securities if the fair
value thereof as set forth in the related Officers' Certificate is less than
$25,000 or less than one percent of the then Outstanding Amount of the Notes.
(v) Notwithstanding any other provision of this Section, the
Issuer may without compliance with the other provisions of this Section (A)
collect, liquidate, sell or
88
<PAGE>
otherwise dispose of Receivables as and to the extent permitted or required
by the Related Documents (including as provided in Section 3.1 of the Sale
and Servicing Agreement) and (B) make cash payments out of the Trust Accounts
as and to the extent permitted or required by the Related Documents.
SECTION 11.2. FORM OF DOCUMENTS DELIVERED TO TRUSTEE. In any case where
several matters are required to be certified by, or covered by an opinion of,
any specified Person, it is not necessary that all such matters be certified
by, or covered by the opinion of, only one such Person, or that they be so
certified or covered by only one document, but one such Person may certify or
give an opinion with respect to some matters and one or more other such
Persons as to other matters, and any such Person may certify or give an
opinion as to such matters in one or several documents.
Any certificate or opinion of an Authorized Officer of the Issuer may be
based, insofar as it relates to legal matters, upon a certificate or opinion
of, or representations by, counsel, unless such officer knows, or in the
exercise of reasonable care should know, that the certificate or opinion or
representations with respect to the matters upon which his certificate or
opinion is based are erroneous. Any such certificate of an Authorized
Officer or Opinion of Counsel may be based, insofar as it relates to factual
matters, upon a certificate or opinion of, or representations by, an officer
or officers of the Servicer, the Seller or the Issuer, stating that the
information with respect to such factual matters is in the possession of the
Servicer, the Seller or the Issuer, unless such counsel knows, or in the
exercise of reasonable care should know, that the certificate or opinion or
representations with respect to such matters are erroneous.
Where any Person is required to make, give or execute two or more
applications, requests, consents, certificates, statements, opinions or other
instruments under this Indenture, they may, but need not, be consolidated and
form one instrument.
89
<PAGE>
Whenever in this Indenture, in connection with any application or
certificate or report to the Trustee, it is provided that the Issuer shall
deliver any document as a condition of the granting of such application, or
as evidence of the Issuer's compliance with any term hereof, it is intended
that the truth and accuracy, at the time of the granting of such application
or at the effective date of such certificate or report (as the case may be),
of the facts and opinions stated in such document shall in such case be
conditions precedent to the right of the Issuer to have such application
granted or to the sufficiency of such certificate or report. The foregoing
shall not, however, be construed to affect the Trustees right to rely upon
the truth and accuracy of any statement or opinion contained in any such
document as provided in Article VI.
SECTION 11.3. ACTS OF NOTEHOLDERS.
(a) Any request, demand, authorization, direction, notice, consent,
waiver or other action provided by this Indenture to be given or taken by
Noteholders may be embodied in and evidenced by one or more instruments of
substantially similar tenor signed by such Noteholders in person or by agents
duly appointed in writing; and except as herein otherwise expressly provided
such action shall become effective when such instrument or instruments are
delivered to the Trustee, and, where it is hereby expressly required, to the
Issuer. Such instrument or instruments (and the action embodied therein and
evidenced thereby) are herein sometimes referred to as the "Act" of the
Noteholders signing such instrument or instruments. Proof of execution of
any such instrument or of a writing appointing any such agent shall be
sufficient for any purpose of this Indenture and (subject to Section 6.1)
conclusive in favor of the Trustee and the Issuer, if made in the manner
provided in this Section.
(b) The fact and date of the execution by any person of any such
instrument or writing may be proved in any manner that the Trustee deems
sufficient.
90
<PAGE>
(c) The ownership of Notes shall be proved by the Note Register.
(d) Any request, demand, authorization, direction, notice, consent,
waiver or other action by the Holder of any Notes shall bind the Holder of
every Note issued-upon the registration thereof or in exchange therefor or in
lieu thereof, in respect of anything done, omitted or suffered to be done by
the Trustee or the Issuer in reliance thereon, whether or not notation of
such action is made upon such Note.
SECTION 11.4. NOTICES, ETC., TO TRUSTEE, ISSUER AND RATING AGENCIES.
Any request, demand, authorization, direction, notice, consent, waiver or Act
of Noteholders or other documents provided or permitted by this Indenture to
be made upon, given or furnished to or filed with:
(a) the Trustee by any Noteholder or by the Issuer shall be sufficient
for every purpose hereunder if made, given, furnished or filed in writing to
or with the Trustee at its Corporate Trust Office,
(b) the Issuer by the Trustee or by any Noteholder shall be sufficient
for every purpose hereunder if in writing and mailed, first class, postage
prepaid, to the Issuer addressed to: AmeriCredit Receivables Finance Corp.
1995-A, 200 Bailey Avenue, Fort Worth, Texas 76107-1220, Attention: Chief
Financial Officer, or at any other address previously furnished in writing to
the Trustee by Issuer. The Issuer shall promptly transmit any notice
received by it from the Noteholders to the Trustee, or
(c) the Security Insurer by the Issuer or the Trustee shall be
sufficient for any purpose hereunder if in writing and mailed by registered
mail or personally delivered or telexed or telecopied to the recipient as
follows:
91
<PAGE>
To the Security Insurer:
Financial Security Assurance Inc.
350 Park Avenue
New York, NY 10022
Attention: Surveillance Department
Telex No.: (212) 688-3101
Confirmation: (212) 826-0100
Telecopy Nos.: (212) 339-3518
(212) 339-3529
(In each case in which notice or other communication to the Security Insurer
refers to an Event of Default, a claim on the Policy or with respect to which
failure on the part of the Security Insurer to respond shall be deemed to
constitute consent or acceptance, then a copy of such notice or other
communication should also be sent to the attention of the General Counsel and
the Head-Financial Guaranty Group "URGENT MATERIAL ENCLOSED.")
Notices required to be given to the Rating Agencies by the Issuer
or the Trustee shall be in writing, personally delivered or mailed by
certified mail, return receipt requested to (i) in the case of Moody's,
at the following address: Moody's Investors Service, Inc., ABS Monitoring
Department, 99 Church Street, New York, New York 10007 and (ii) in the
case of Standard & Poor's, at the following address: Standard & Poor's
Corporation, 26 Broadway (20th Floor), New York, New York 10004, Attention
of Asset Backed Surveillance Department; or as to each of the foregoing, at
such other address as shall be designated by written notice to the other
parties.
SECTION 11.5. NOTICES TO NOTEHOLDERS; WAIVER. Where this Indenture
provides for notice to Noteholders of any event, such notice shall be
sufficiently given (unless otherwise herein expressly provided) if in writing
and mailed, first-class, postage prepaid to each Noteholder affected by such
event, at his address as it appears on the Note Register, not later than the
latest date, and not earlier than the earliest date, prescribed for the
giving of
92
<PAGE>
such notice. In any case where notice to Noteholders is given by mail,
neither the failure to mail such notice nor any defect in any notice so
mailed to any particular Noteholder shall affect the sufficiency of such
notice with respect to other Noteholders, and any notice that is mailed in
the manner herein provided shall conclusively be presumed to have been duly
given.
Where this Indenture provides for notice in any manner, such notice may
be waived in writing by any Person entitled to receive such notice, either
before or after the event, and such waiver shall be the equivalent of such
notice. Waivers of notice by Noteholders shall be filed with the Trustee but
such filing shall not be a condition precedent to the validity of any action
taken in reliance upon such a waiver.
In case, by reason of the suspension of regular mail service as a result
of a strike, work stoppage or similar activity, it shall be impractical to
mail notice of any event to Noteholders when such notice is required to be
given pursuant to any provision of this Indenture, then any manner of giving
such notice as shall be satisfactory to the Trustee shall be deemed to be a
sufficient giving of such notice.
When this Indenture provides for notice to the Rating Agencies, failure
to give such notice shall not affect any other rights or obligations created
hereunder, and shall not under any circumstance constitute a Default or Event
of Default.
SECTION 11.6. ALTERNATE PAYMENT AND NOTICE PROVISIONS. Notwithstanding
any provision of this Indenture or any of the Notes to the contrary, the
Issuer may enter into any agreement with any Holder of a Note providing for a
method of payment, or notice by the Trustee or any Paying Agent to such
Holder, that is different from the methods provided for in this Indenture for
such payments or notices. The Issuer will furnish to the Trustee a copy of
each such agreement and the Trustee will cause payments to be made and
notices to be given in accordance with such agreements.
93
<PAGE>
SECTION 11.7. EFFECT OF HEADINGS AND TABLE OF CONTENTS. The Article
and Section headings herein and the Table of Contents are for convenience
only and shall not affect the construction hereof.
SECTION 11.8. SUCCESSORS AND ASSIGNS. All covenants and agreements in
this Indenture and the Notes by the Issuer shall bind its successors and
assigns, whether so expressed or not. All agreements of the Trustee in this
Indenture shall bind its successors.
SECTION 11.9. SEVERABILITY. In case any provision in this Indenture or
in the Notes shall be invalid, illegal or unenforceable, the validity,
legality, and enforceability of the remaining provisions shall not in any way
be affected or impaired thereby.
SECTION 11.10. BENEFITS OF INDENTURE. The Security Insurer and its
successors and assigns shall be a third-party beneficiary to the provisions
of this Indenture, and shall be entitled to rely upon and directly to enforce
such provisions of this Indenture so long as no Insurer Default shall have
occurred and be continuing. Nothing in this Indenture or in the Notes,
express or implied, shall give to any Person, other than the parties hereto
and their successors hereunder, and the Noteholders, and any other party
secured hereunder, and any other Person with an ownership interest in any
part of the Trust Estate, any benefit or any legal or equitable right, remedy
or claim under this Indenture. The Security Insurer may disclaim any of its
rights and powers under this Indenture (in which case the Trustee may
exercise such right or power hereunder), but not its duties and obligations
under the Policy, upon delivery of a written notice to the Trustee.
SECTION 11.11. LEGAL HOLIDAYS. In any case where the date on which any
payment is due shall not be a Business Day, then (notwithstanding any other
provision of the Notes or this Indenture) payment need not be made on such
date, but may be made on the next succeeding Business Day with the same force
and effect as if made on the date on which
94
<PAGE>
nominally due, and no interest shall accrue for the period from and after any
such nominal date.
SECTION 11.12. GOVERNING LAW. THIS INDENTURE SHALL BE CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REFERENCE TO ITS
CONFLICT OF LAW PROVISIONS, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE
PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
SECTION 11.13. COUNTERPARTS. This Indenture may be executed in any
number of counterparts, each of which so executed shall be deemed to be an
original, but all such counterparts shall together constitute but one and the
same instrument.
SECTION 11.14. RECORDING OF INDENTURE. If this Indenture is subject to
recording in any appropriate public recording offices, such recording is to
be effected by the Issuer and at its expense accompanied by an Opinion of
Counsel (which may be counsel to the Trustee or any other counsel reasonably
acceptable to the Trustee, and the Controlling Party) to the effect that such
recording is necessary either for the protection of the Noteholders or any
other Person secured hereunder or for the enforcement of any right or remedy
granted to the Trustee or the Indenture Collateral Agent under this Indenture
or the Collateral Agent under the Spread Account Agreement.
SECTION 11.15. TRUST OBLIGATION. No recourse may be taken, directly or
indirectly, with respect to the obligations of the Issuer or the Trustee on
the Notes or under this Indenture or any certificate or other writing
delivered in connection herewith or therewith, against (i) the Trustee in its
individual capacity, (ii) any owner of a beneficial interest in the Issuer or
(iii) any partner, owner, beneficiary, agent, officer, director, employee or
agent of the Trustee in its individual capacity, any holder of a beneficial
interest in the Issuer or the Trustee or of any successor or assign of the
Trustee in its individual capacity, except as any such Person may have
expressly agreed (it being understood that the Trustee has no such
obligations in its individual capacity) and except that any
95
<PAGE>
such partner, owner or beneficiary shall be fully liable, to the extent
provided by applicable law, for any unpaid consideration for stock, unpaid
capital contribution or failure to pay any installment or call owing to such
entity.
SECTION 11.16. NO PETITION. The Trustee and the Indenture Collateral
Agent, by entering into this Indenture, and each Noteholder, by accepting a
Note, hereby covenant and agree that they will not at any time institute
against the Seller or the Issuer, or join in any institution against the
Seller or the Issuer of, any bankruptcy, reorganization, arrangement,
insolvency or liquidation proceedings, or other proceedings under any United
States Federal or state bankruptcy or similar law in connection with any
obligations relating to the Notes, this Indenture or any of the Related
Documents.
SECTION 11.17. INSPECTION. The Issuer agrees that, on reasonable prior
notice, it will permit any representative of the Trustee or of the
Security Insurer, during the Issuer's normal business hours, to examine all
the books of account, records, reports, and other papers of the Issuer, to
make copies and extracts therefrom, to cause such books to be audited by
independent certified public accountants, and to discuss the Issuer's
affairs, finances and accounts with the Issuer's officers, employees, and
independent certified public accountants, all at such reasonable times and as
often as may be reasonably requested. The Trustee shall and shall cause its
representatives to hold in confidence all such information except to the
extent disclosure may be required by law (and all reasonable applications for
confidential treatment are unavailing) and except to the extent that the
Trustee may reasonably determine that such disclosure is consistent with its
obligations hereunder.
IN WITNESS WHEREOF, the Issuer and the Trustee have caused this
Indenture to be duly executed by their respective officers, thereunto duly
authorized, all as of the day and year first above written.
96
<PAGE>
AMERICREDIT RECEIVABLES
FINANCE CORP. 1995-A
By:
--------------------------
Name: Preston A. Miller
Title: Vice President and
Controller
LASALLE NATIONAL BANK,
not in its individual capacity
but solely as Trustee and
Indenture Collateral Agent
By:
--------------------------
Name: Shashank Mishra
Title: Vice President
97
<PAGE>
SALE AND SERVICING AGREEMENT
among
AMERICREDIT RECEIVABLES FINANCE CORP. 1995-A
Issuer
AMERICREDIT FINANCIAL SERVICES, INC.
In its individual capacity and as Servicer
AMERICREDIT RECEIVABLES CORP.
Seller
and
LASALLE NATIONAL BANK
Backup Servicer
dated as of
June 1, 1995
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS
SECTION 1.1. Definitions. . . . . . . . . . . . . . . . . . . . . . . . 1
SECTION 1.2. Usage of Terms . . . . . . . . . . . . . . . . . . . . . . 15
SECTION 1.3. Calculations . . . . . . . . . . . . . . . . . . . . . . . 16
SECTION 1.4. Section References . . . . . . . . . . . . . . . . . . . . 16
SECTION 1.5. No Recourse. . . . . . . . . . . . . . . . . . . . . . . . 16
SECTION 1.6. Material Adverse Effect. . . . . . . . . . . . . . . . . . 16
ARTICLE II
CONVEYANCE OF RECEIVABLES
SECTION 2.1. Conveyance of Receivables. . . . . . . . . . . . . . . . . 16
SECTION 2.2. Custody of Receivable Files. . . . . . . . . . . . . . . . 17
SECTION 2.3. Conditions to Issuance by Issuer . . . . . . . . . . . . . 18
SECTION 2.4. Representations and Warranties of Seller . . . . . . . . . 18
SECTION 2.5. Repurchase of Receivables Upon Breach of Warranty. . . . . 20
SECTION 2.6. Nonpetition Covenant . . . . . . . . . . . . . . . . . . . 21
SECTION 2.7. Collecting Lien Certificates Not Delivered on the
Closing Date . . . . . . . . . . . . . . . . . . . . . . 21
SECTION 2.8. Issuer's Assignment of Administrative Receivables
and Warranty Receivables . . . . . . . . . . . . . . . . 21
ARTICLE III
ADMINISTRATION AND SERVICING OF RECEIVABLES
SECTION 3.1. Duties of the Servicer . . . . . . . . . . . . . . . . . . 23
SECTION 3.2. Collection of Receivable Payments; Modifications of
Receivables; Lockbox Agreements. . . . . . . . . . . . . 24
SECTION 3.3. Realization Upon Receivables . . . . . . . . . . . . . . . 27
SECTION 3.4. Insurance. . . . . . . . . . . . . . . . . . . . . . . . . 28
SECTION 3.5. Maintenance of Security Interests in Vehicles. . . . . . . 29
SECTION 3.6. Covenants, Representations, and Warranties of Servicer . . 30
SECTION 3.7. Purchase of Receivables Upon Breach of Covenant. . . . . . 32
i
<PAGE>
SECTION 3.8. Total Servicing Fee; Payment of Certain Expenses
by Servicer. . . . . . . . . . . . . . . . . . . . . . . 33
SECTION 3.9. Servicer's Certificate . . . . . . . . . . . . . . . . . . 33
SECTION 3.10. Annual Statement as to Compliance, Notice of
Servicer Termination Event . . . . . . . . . . . . . . . 34
SECTION 3.11. Annual Independent Accountants' Report . . . . . . . . . . 34
SECTION 3.12. Access to Certain Documentation and
Information Regarding Receivables. . . . . . . . . . . . 35
SECTION 3.13. Monthly Tape . . . . . . . . . . . . . . . . . . . . . . . 35
SECTION 3.14. Retention and Termination of Servicer. . . . . . . . . . . 36
SECTION 3.15. Duties of the Servicer under the Indenture . . . . . . . . 36
SECTION 3.16. Fidelity Bond and Errors and Omissions Policy. . . . . . . 37
ARTICLE IV
DISTRIBUTIONS; STATEMENTS TO NOTEHOLDERS
SECTION 4.1. Trust Accounts . . . . . . . . . . . . . . . . . . . . . . 38
SECTION 4.2. Collections. . . . . . . . . . . . . . . . . . . . . . . . 39
SECTION 4.3. Application of Collections . . . . . . . . . . . . . . . . 39
SECTION 4.4. Net Deposits . . . . . . . . . . . . . . . . . . . . . . . 40
SECTION 4.5. Additional Deposits. . . . . . . . . . . . . . . . . . . . 40
SECTION 4.6. Distributions. . . . . . . . . . . . . . . . . . . . . . . 40
SECTION 4.7. Trustee as Agent . . . . . . . . . . . . . . . . . . . . . 41
SECTION 4.8. Statements to Noteholders. . . . . . . . . . . . . . . . . 41
SECTION 4.9. Eligible Accounts. . . . . . . . . . . . . . . . . . . . . 42
SECTION 4.10. Optional Deposits by the Security Insurer. . . . . . . . . 42
ARTICLE V
THE SPREAD ACCOUNT
SECTION 5.1. Withdrawals from Spread Account in
respect of Deficiency Claim Amount . . . . . . . . . . . 43
SECTION 5.2. Withdrawals from Spread Account in
respect of Noteholders' Excess Principal
Distributable Amount or following the occurrence
of an Insurer Default. . . . . . . . . . . . . . . . . . 43
ARTICLE VI
THE SELLER
SECTION 6.1. Liability of Seller. . . . . . . . . . . . . . . . . . . . 44
ii
<PAGE>
SECTION 6.2. Merger or Consolidation of, or Assumption of the
Obligations of Seller; Amendment of Certificate
of Incorporation . . . . . . . . . . . . . . . . . . . . 44
SECTION 6.3. Limitation on Liability of Seller and Others . . . . . . . 45
SECTION 6.4. Seller May Own Notes . . . . . . . . . . . . . . . . . . . 45
ARTICLE VII
SERVICER
SECTION 7.1. Liability of Servicer; Indemnities . . . . . . . . . . . . 45
SECTION 7.2. Merger or Consolidation of, or Assumption of the
Obligations of the Servicer or Backup Servicer . . . . . 46
SECTION 7.3. Limitation on Liability of Servicer,
Backup Servicer and Others . . . . . . . . . . . . . . . 47
SECTION 7.4. Delegation of Duties . . . . . . . . . . . . . . . . . . . 48
SECTION 7.5. Servicer and Backup Servicer Not to Resign . . . . . . . . 48
ARTICLE VIII
SERVICER TERMINATION EVENTS
SECTION 8.1. Servicer Termination Event . . . . . . . . . . . . . . . . 49
SECTION 8.2. Consequences of a Servicer Termination Event . . . . . . . 50
SECTION 8.3. Appointment of Successor . . . . . . . . . . . . . . . . . 51
SECTION 8.4. Notification to Noteholders. . . . . . . . . . . . . . . . 52
SECTION 8.5. Waiver of Past Defaults. . . . . . . . . . . . . . . . . . 52
ARTICLE IX
TERMINATION
SECTION 9.1. Optional Purchase of All Receivables . . . . . . . . . . . 53
ARTICLE X
MISCELLANEOUS PROVISIONS
SECTION 10.1. Amendment. . . . . . . . . . . . . . . . . . . . . . . . . 53
SECTION 10.2. Protection of Title to the Receivables and Other
Conveyed Property. . . . . . . . . . . . . . . . . . . . 54
SECTION 10.3. Governing Law. . . . . . . . . . . . . . . . . . . . . . . 56
SECTION 10.4. Severability of Provisions . . . . . . . . . . . . . . . . 56
SECTION 10.5. Assignment . . . . . . . . . . . . . . . . . . . . . . . . 56
iii
<PAGE>
SECTION 10.6. Third-Party Beneficiaries. . . . . . . . . . . . . . . . . 56
SECTION 10.7. Disclaimer by Security Insurer . . . . . . . . . . . . . . 56
SECTION 10.8. Counterparts . . . . . . . . . . . . . . . . . . . . . . . 56
SECTION 10.9. Notices. . . . . . . . . . . . . . . . . . . . . . . . . . 57
Schedule A Schedule of Receivables
Schedule B Representations and Warranties of Seller and AFS
Schedule C Servicing Policies and Procedures
iv
<PAGE>
THIS SALE AND SERVICING AGREEMENT, dated as of June 1, 1995,
is made among AmeriCredit Receivables Finance Corp. 1995-A, a
Delaware corporation, as Issuer (the "Issuer"), AmeriCredit
Receivables Corp., a Delaware corporation, as Seller (the
"Seller"), AmeriCredit Financial Services, Inc., a Delaware
corporation, in its individual capacity and as Servicer (in its
individual capacity, "AFS"; in its capacity as Servicer, the
"Servicer") and LaSalle National Bank, a national banking
association, as Backup Servicer (the "Backup Servicer").
In consideration of the mutual agreements herein contained,
and of other good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, the parties agree as
follows:
ARTICLE I
DEFINITIONS
Section 1.1. DEFINITIONS. All terms defined in the Spread
Account Agreement or the Indenture (each as defined below) shall
have the same meaning in this Agreement. Whenever capitalized
and used in this Agreement, the following words and phrases,
unless the context otherwise requires, shall have the following
meanings:
1994-A ISSUER STOCK PLEDGE AGREEMENT: The Stock Pledge
Agreement, dated as of June 1, 1995, among the Security Insurer,
the Seller and the Collateral Agent named therein, as the same
may be amended from time to time.
1995-A ISSUER STOCK PLEDGE AGREEMENT: The Stock Pledge
Agreement, dated as of June 1, 1995, among the Security Insurer,
the Seller and the Collateral Agent named therein, as the same
may be amended from time to time.
ACCOUNTANTS' REPORT: The report of a firm of nationally
recognized independent accountants described in Section 3.11.
ACCOUNTING DATE: With respect to a Distribution Date, the
last day of the Monthly Period immediately preceding such
Distribution Date.
ADMINISTRATIVE RECEIVABLE: With respect to any Monthly
Period, a Receivable which the Servicer is required to purchase
pursuant to Section 3.7 or which the Servicer has elected to
<PAGE>
purchase pursuant to Section 3.4(c) on the Deposit Date with
respect to such Monthly Period.
ADMINISTRATIVE SERVICES AND FACILITIES AGREEMENTS: The
agreement by and between AFS and the Issuer dated June 1, 1995
and the agreement by and between AFS and the Seller dated as of
December 1, 1994.
AFFILIATE: With respect to any Person, any other Person
directly or indirectly controlling, controlled by, or under
direct or indirect common control with such specified Person.
For the purposes of this definition, "control" when used with
respect to any specified Person, means the power to direct the
management and policies of such Person, directly or indirectly,
whether through the ownership of voting securities, by contract
or otherwise; and the terms "controlling" and "controlled" have
meanings correlative to the foregoing.
AGGREGATE PRINCIPAL BALANCE: With respect to the Closing
Date, the Cutoff Date Principal Balance, and with respect to any
Determination Date, the sum of the Principal Balances (computed
as of the related Accounting Date) for all Receivables (other
than (i) any Receivable that became a Liquidated Receivable
during the related Monthly Period and (ii) any Receivable that
the Seller or the Servicer is required to repurchase prior to the
next Distribution Date).
AGREEMENT OR "THIS AGREEMENT": This Sale and Servicing
Agreement, all amendments and supplements thereto and all
exhibits and schedules to any of the foregoing.
AMOUNT FINANCED: With respect to a Receivable, the
aggregate amount initially advanced under such Receivable toward
the purchase price of the Financed Vehicle and related costs,
including amounts advanced in respect of accessories, insurance
premiums, service and warranty contracts, other items customarily
financed as part of retail automobile installment sale contracts
or promissory notes, and related costs. The term "Amount
Financed" shall not include any Insurance Add-On Amounts.
ANNUAL PERCENTAGE RATE OR APR. With respect to a
Receivable, the rate per annum of finance charges stated in such
Receivable as the "annual percentage rate" (within the meaning of
the Federal Truth-in-Lending Act). If after the Closing Date,
the rate per annum with respect to a Receivable as of the Closing
Date is
2
<PAGE>
reduced as a result of (i) an insolvency proceeding involving
the Obligor or (ii) pursuant to the Soldiers' and Sailors' Civil
Relief Act of 1940, Annual Percentage Rate or APR shall refer to
such reduced rate.
AVAILABLE FUNDS: With respect to any Determination Date,
the sum of (i) the Collected Funds for such Determination Date,
(ii) all Purchase Amounts deposited in the Collection Account as
of the related Deposit Date, and (iii) all income from
investments of funds in the Trust Accounts during the prior
Monthly Period.
BACKUP SERVICER: LaSalle National Bank, or its successor in
interest pursuant to Section 8.2, or such Person as shall have
been appointed as Backup Servicer or successor Servicer pursuant
to Section 8.3.
BASIC SERVICING FEE: With respect to any Monthly Period,
the fee payable to the Servicer for services rendered during such
Monthly Period, which shall be equal to one-twelfth of the Basic
Servicing Fee Rate multiplied by the Aggregate Principal Balance
with respect to the Determination Date falling in such Monthly
Period.
BASIC SERVICING FEE RATE: 2.50% per annum, payable monthly
at one-twelfth of the annual rate.
BUSINESS DAY: Any day other than a Saturday, Sunday, legal
holiday or other day on which commercial banking institutions in
Fort Worth, Texas, New York, New York, Chicago, Illinois, or the
principal place of business of any successor Servicer, successor
Issuer, successor Trustee, successor Collateral Agent or
successor Indenture Collateral Agent, are authorized or obligated
by law, executive order or governmental decree to be closed.
CALENDAR QUARTER: In any given year, the three month period
beginning with the first day of the first month of such three
month period and ending on the last day of the last month of such
three month period, provided, that such three month period shall
be any of January through March, April through June, July through
September or October through December.
CLOSING DATE: June 21, 1995.
3
<PAGE>
COLLATERAL AGENT: The Collateral Agent named in the Spread
Account Agreement, and any successor thereto pursuant to the
terms of the Spread Account Agreement.
COLLATERAL INSURANCE: The meaning set forth in Section
3.4(a).
COLLECTED FUNDS: With respect to any Determination Date,
the amount of funds in the Collection Account representing
collections on the Receivables during the related Monthly Period,
including all Liquidation Proceeds collected during the related
Monthly Period (but excluding any Purchase Amounts).
COLLECTION ACCOUNT: The account designated as the
Collection Account in, and which is established and maintained
pursuant to, Section 4.1(a) hereof.
COLLECTION RECORDS: All manually prepared or computer
generated records relating to collection efforts or payment
histories with respect to the Receivables.
COMPUTER TAPE: The computer tape generated on behalf of the
Seller which provides information relating to the Receivables and
which was used by the Seller and AFS in selecting the Receivables
conveyed to the Issuer hereunder.
CORPORATE TRUST OFFICE: The principal office of the Trustee
at which at any particular time its corporate trust business
shall be administered, which office at the Closing Date is
located at 135 S. LaSalle Street, Suite 200, Chicago, Illinois
60603, Attention: Asset Backed Securities Trust Administration;
the telecopy number for the Corporate Trust Office of the Trustee
on the date of the execution of this Agreement is (312) 904-2084.
CRAM DOWN LOSS: With respect to a Receivable, if a court of
appropriate jurisdiction in an insolvency proceeding shall have
issued an order reducing the Principal Balance of such
Receivable, the amount of such reduction. A "Cram Down Loss"
shall be deemed to have occurred on the date of issuance of such
order.
CREDIT ENHANCEMENT FEE: With respect to any Distribution
Date, the amount to be paid to the Seller pursuant to Section
4.6(vi).
4
<PAGE>
CUSTODIAN: AFS and any other Person named from time to time
as custodian in any Custodian Agreement acting as agent for the
Indenture Collateral Agent, which Person must be acceptable to
the Controlling Party (the Custodian as of the Closing Date is
acceptable to the Security Insurer as of the Closing Date).
CUSTODIAN AGREEMENT: Any Custodian Agreement from time to
time in effect between the Custodian named therein and the
Indenture Collateral Agent, substantially in the form of
Exhibit B hereto, as the same may be amended, supplemented or
otherwise modified from time to time in accordance with the terms
thereof, which Custodian Agreement and any amendments,
supplements or modifications thereto shall be acceptable to the
Controlling Party (the Custodian Agreement which is effective on
the Closing Date is acceptable to the Controlling Party).
CUTOFF DATE: May 31, 1995.
CUTOFF DATE PRINCIPAL BALANCE: $107,793,984.35.
DEALER: A seller of new or used automobiles or light trucks
that originated one or more of the Receivables and sold the
respective Receivable, directly or indirectly, to AFS under a
Dealer Assignment.
DEALER AGREEMENT: An agreement between AFS and a Dealer
relating to the sale of retail installment sale contracts and
installment notes to AFS and all documents and instruments
relating thereto.
DEALER ASSIGNMENT: With respect to a Receivable, the
executed assignment executed by a Dealer conveying such
Receivable to AFS.
DEFICIENCY CLAIM AMOUNT: As defined in Section 5.1(a).
DEFICIENCY CLAIM DATE: With respect to any Distribution
Date, the fourth Business Day immediately preceding such
Distribution Date.
DEFICIENCY NOTICE: As defined in Section 5.1(a).
DEPOSIT DATE: With respect to any Monthly Period, the
Business Day immediately preceding the related Determination
Date.
5
<PAGE>
DETERMINATION DATE: With respect to any Monthly Period, the
earlier of (i) the fourth Business Day preceding the Distribution
Date in the next calendar month, and (ii) the 5th day of the next
calendar month, or if such 5th day is not a Business Day, the
next succeeding Business Day.
DISTRIBUTION AMOUNT: With respect to a Distribution Date,
the sum of (i) the Available Funds for such Distribution Date and
(ii) the Deficiency Claim Amount, if any, received by the Trustee
with respect to such Distribution Date.
DISTRIBUTION DATE: The 12th day of each calendar month, or
if such 12th day is not a Business Day, the next succeeding
Business Day, commencing July 12, 1995 and including the Final
Scheduled Distribution Date.
DRAW DATE: With respect to any Distribution Date, the third
Business Day immediately preceding such Distribution Date.
ELECTRONIC LEDGER: The electronic master record of the
retail installment sales contracts or installment loans of AFS.
ELIGIBLE ACCOUNT: (i) A segregated trust account that is
maintained with the corporate trust department of a depository
institution acceptable to the Controlling Party, or (ii) a
segregated direct deposit account maintained with a depository
institution or trust company organized under the laws of the
United States of America, or any of the States thereof, or the
District of Columbia, having a certificate of deposit, short term
deposit or commercial paper rating of at least "A-l+" by Standard
& Poor's and "P-1" by Moody's and acceptable to the Controlling
Party.
ELIGIBLE INVESTMENTS: Any one or more of the following
types of investments:
(a) (i) direct interest-bearing obligations of, and
interest-bearing obligations guaranteed as to timely payment of
principal and interest by, the United States or any agency or
instrumentality of the United States the obligations of which are
backed by the full faith and credit of the United States; and
(ii) direct interest-bearing obligations of, and interest-bearing
obligations guaranteed as to timely payment of principal and
interest by, the Federal National Mortgage Association or the
Federal Home Loan Mortgage Corporation, but only if, at the time
of investment, such
6
<PAGE>
obligations are assigned the highest credit rating by each Rating Agency;
(b) demand or time deposits in, certificates of deposit of,
demand notes of, or bankers' acceptances issued by any depository
institution or trust company organized under the laws of the
United States or any State and subject to supervision and
examination by federal and/or State banking authorities
(including, if applicable, the Trustee, the Issuer or any agent
of either of them acting in their respective commercial
capacities); provided that the short-term unsecured debt
obligations of such depository institution or trust company at
the time of such investment, or contractual commitment providing
for such investment, are assigned the highest credit rating by
each Rating Agency;
(c) repurchase obligations pursuant to a written agreement
(i) with respect to any obligation described in clause (a) above,
where the Indenture Collateral Agent has taken actual or
constructive delivery of such obligation in accordance with
Section 4.1, and (ii) entered into with the corporate trust
department of a depository institution or trust company organized
under the laws of the United States or any State thereof, the
deposits of which are insured by the Federal Deposit Insurance
Corporation and the short-term unsecured debt obligations of
which are rated "A-l+" by Standard & Poor's and "P-1" by Moody's
(including, if applicable, the Trustee, or any agent of the
Trustee acting in its commercial capacity);
(d) securities bearing interest or sold at a discount
issued by any corporation incorporated under the laws of the
United States or any State whose long-term unsecured debt
obligations are assigned the highest credit rating by each Rating
Agency at the time of such investment or contractual commitment
providing for such investment; PROVIDED, HOWEVER, that securities
issued by any particular corporation will not be Eligible
Investments to the extent that an investment therein will cause
the then outstanding principal amount of securities issued by
such corporation and held in the Trust Accounts to exceed 10% of
the Eligible Investments held in the Trust Accounts (with
Eligible Investments held in the Trust Accounts valued at par);
(e) commercial paper that (i) is payable in United States
dollars and (ii) is rated in the highest credit rating category
by each Rating Agency;
7
<PAGE>
(f) units of money market funds rated in the highest credit
rating category by each Rating Agency; provided that all Eligible
Investments shall be held in the name of the Indenture Collateral
Agent; or
(g) any other demand or time deposit, obligation, security
or investment as may be acceptable to the Rating Agencies and the
Controlling Party, as evidenced by the prior written consent of
the Controlling Party and the Rating Agencies, as may from time
to time be confirmed in writing to the Trustee by the Controlling
Party; PROVIDED, HOWEVER, that securities issued by any entity
(except as provided in paragraph (a)) will not be Eligible
Investments to the extent that an investment therein will cause
the then outstanding principal amount of securities issued by
such entity and held in the Trust Accounts to exceed $10 million
(with Eligible Investments held in the Trust Accounts valued at
par).
Eligible Investments may be purchased by or through the Indenture
Collateral Agent or any of its Affiliates.
ELIGIBLE SERVICER: AFS, the Backup Servicer or another
Person which at the time of its appointment as Servicer (i) is
servicing a portfolio of motor vehicle retail installment sales
contracts and/or motor vehicle installment loans, (ii) is legally
qualified and has the capacity to service the Receivables, (iii)
has demonstrated the ability professionally and competently to
service a portfolio of motor vehicle retail installment sales
contracts and/or motor vehicle installment loans similar to the
Receivables with reasonable skill and care, (iv) is qualified and
entitled to use, pursuant to a license or other written
agreement, and agrees to maintain the confidentiality of, the
software which the Servicer uses in connection with performing
its duties and responsibilities under this Agreement or otherwise
has available software which is adequate to perform its duties
and responsibilities under this Agreement and (v) has a minimum
net worth of $50,000,000.
EXCESS AMOUNTS: As determined with respect to Series 1995-A
pursuant to the terms of the Spread Account Agreement.
FINAL SCHEDULED DISTRIBUTION DATE: September 12, 2000 (or,
if such day is not a Business Day, the next succeeding Business
Day thereafter).
FINAL SCHEDULED MATURITY DATE: April 30, 2000.
8
<PAGE>
FINANCED VEHICLE: A new or used automobile or light truck,
together with all accessories thereto, securing an Obligor's
indebtedness under a Receivable.
FORCE-PLACED INSURANCE: The meaning set forth in Section
3.4(b).
Indenture: The Indenture, dated as of June 1, 1995, between
the Issuer, the Trustee and the Indenture Collateral Agent, as
the same may be amended and supplemented from time to time.
INDENTURE COLLATERAL AGENT: The Person acting as Indenture
Collateral Agent under the Indenture, its successors in interest
and any successor Indenture Collateral Agent under the Indenture.
INDEPENDENT ACCOUNTANTS: As defined in Section 3.11(a).
INITIAL PURCHASE AGREEMENT: The Purchase Agreement, dated
as of June 9, 1995 between the Issuer and the Representative.
INITIAL PURCHASERS: The purchasers named in the Initial
Purchase Agreement.
INSOLVENCY EVENT: With respect to a specified Person, (a)
the filing of a decree or order for relief by a court having
jurisdiction in the premises in respect of such Person or any
substantial part of its property in an involuntary case under any
applicable Federal or state bankruptcy, insolvency or other
similar law now or hereafter in effect, or appointing a receiver,
liquidator, assignee, custodian, trustee, sequestrator or similar
official for such Person or for any substantial part of its
property, or ordering the winding-up or liquidation of such
Person's affairs, and such decree or order shall remain unstayed
and in effect for a period of 60 consecutive days; or (b) the
commencement by such Person of a voluntary case under any
applicable Federal or state bankruptcy, insolvency or other
similar law now or hereafter in effect, or the consent by such
Person to the entry of an order for relief in an involuntary case
under any such law, or the consent by such Person to the
appointment of or taking possession by a receiver, liquidator,
assignee, custodian, trustee, sequestrator or similar official
for such Person or for any substantial part of its property, or
the making by such Person of any general assignment for the
benefit of creditors, or the failure by such Person generally to
pay its debts as such debts
9
<PAGE>
become due, or the taking of action by such Person in furtherance
of any of the foregoing.
INSURANCE ADD-ON AMOUNT: The premium charged to the Obligor
in the event that the Servicer obtains Force-Placed Insurance
pursuant to Section 3.4.
INSURANCE AGREEMENT: The Insurance and Indemnity Agreement,
dated as of June 1, 1995, among the Security Insurer, the Issuer,
the Seller, AFS and AmeriCredit Corp.
INSURANCE AGREEMENT EVENT OF DEFAULT: An "Event of Default"
as defined in the Insurance Agreement.
INSURANCE POLICY: With respect to a Receivable, any
insurance policy benefiting the holder of the Receivable
providing loss or physical damage, credit life, credit
disability, theft, mechanical breakdown or similar coverage with
respect to the Financed Vehicle or the Obligor.
INSURER DEFAULT: The occurrence and continuance of any of
the following:
(a) the Security Insurer shall have failed to make a
payment required under the Policy;
(b) The Security Insurer shall have (i) filed a petition or
commenced any case or proceeding under any provision or chapter
of the United States Bankruptcy Code, the New York State
Insurance Law, or any other similar federal or state law relating
to insolvency, bankruptcy, rehabilitation, liquidation or
reorganization, (ii) made a general assignment for the benefit of
its creditors, or (iii) had an order for relief entered against
it under the United States Bankruptcy Code, the New York State
Insurance Law, or any other similar federal or state law relating
to insolvency, bankruptcy, rehabilitation, liquidation or
reorganization which is final and nonappealable; or
(c) a court of competent jurisdiction, the New York
Department of Insurance or other competent regulatory authority
shall have entered a final and nonappealable order, judgment or
decree (i) appointing a custodian, trustee, agent or receiver for
the Security Insurer or for all or any material portion of its
property or (ii) authorizing the taking of possession by a
custodian, trustee, agent or receiver of the Security Insurer (or
10
<PAGE>
the taking of possession of all or any material portion of the
property of the Security Insurer).
LIEN: Any security interest, lien, charge, pledge,
preference, equity or encumbrance of any kind, including tax
liens, mechanics' liens and any liens that attach by operation of
law.
LIEN CERTIFICATE: With respect to a Financed Vehicle, an
original certificate of title, certificate of lien or other
notification issued by the Registrar of Titles of the applicable
state to a secured party which indicates that the lien of the
secured party on the Financed Vehicle is recorded on the original
certificate of title. In any jurisdiction in which the original
certificate of title is required to be given to the Obligor, the
term "Lien Certificate" shall mean only a certificate or
notification issued to a secured party.
LIQUIDATED RECEIVABLE: With respect to any Monthly Period,
a Receivable as to which (i) 90 days have elapsed since the
Servicer repossessed the Financed Vehicle, (ii) the Servicer has
determined in good faith that all amounts it expects to recover
have been received, or (ill) all or any portion of a Scheduled
Payment shall have become 120 days or more delinquent.
LIQUIDATION PROCEEDS: With respect to a Liquidated
Receivable, all amounts realized with respect to such Receivable
(other than amounts withdrawn from the Spread Account or drawn,
under the Policy) net of (i) reasonable expenses incurred by the
Servicer in connection with the collection of such Receivable and
the repossession and disposition of the Financed Vehicle and (ii)
amounts that are required to be refunded to the Obligor on such
Receivable; PROVIDED, HOWEVER, that the Liquidation Proceeds with
respect to any Receivable shall in no event be less than zero.
LOCKBOX ACCOUNT: The segregated account maintained on
behalf of the Issuer by the Lockbox Bank in accordance with
Section 3.2(d).
LOCKBOX AGREEMENT: The Tri-Party Remittance Processing
Agreement, dated as of June 1, 1995, by and among AFS, First
Interstate Bank of Texas, N.A., and the Indenture Collateral
Agent, as such agreement may be amended or supplemented from time
to time, unless the Trustee hereunder shall cease to be a party
thereunder, or such agreement shall be terminated in accordance
with its terms, in which event "Lockbox Agreement" shall mean
such other agreement,
11
<PAGE>
in form and substance acceptable to the Controlling Party, among
the Servicer, the Issuer, the Trustee and the Lockbox Bank.
LOCKBOX BANK: A depository institution named by the
Servicer and acceptable to the Controlling Party.
MONTHLY PERIOD: With respect to a Distribution Date, the
calendar month preceding the month in which such Distribution
Date occurs (such calendar month being referred to as the
"related" Monthly Period with respect to such Distribution Date).
With respect to an Accounting Date, the calendar month in which
such Accounting Date occurs is referred to herein as the
"related" Monthly Period to such Accounting Date.
MONTHLY RECORDS: All records and data maintained by the
Servicer with respect to the Receivables, including the following
with respect to each Receivable: the account number; the
identity of the originating Dealer; Obligor name, Obligor
address; Obligor home phone number; Obligor business phone
number; original Principal Balance; original term; Annual
Percentage Rate; current Principal Balance; current remaining
term; origination date; first payment date; final scheduled
payment date, next payment due date, date of most recent payment,
new/used classification; collateral description; days currently
delinquent; number of contract extensions (months) to date;
amount, if any, of Force-Placed Insurance payable monthly; amount
of the Scheduled Payment; current Insurance Policy expiration
date; and past due late charges, if any.
MOODY'S: Moody's Investors Service, Inc., or any successor
thereto.
NOTE BALANCE: As of any date of determination, the
aggregate outstanding principal balance of the Notes, unless
otherwise specified, after giving effect to any distribution in
respect of principal on the Notes on such date.
NOTE DISTRIBUTION ACCOUNT: The account designated as such,
established and maintained pursuant to Section 4.1(c).
NOTE INTEREST RATE: 6.55% per annum (computed on the basis
of a 360-day year of twelve 30-day months).
NOTE MAJORITY: Noteholders representing 66 2/3% of the
outstanding principal balance of the Notes.
12
<PAGE>
NOTE POOL FACTOR: With respect to any Distribution Date, an
eight-digit decimal figure equal to the outstanding principal
balance of the Notes as of such Distribution Date (after giving
effect to all distributions on such date) divided by the original
outstanding principal balance of the Notes as of the Closing
Date.
NOTEHOLDERS: registered holder of Notes
NOTEHOLDERS' EXCESS PRINCIPAL DISTRIBUTABLE AMOUNT: With
respect to each Distribution Date (so long as an Insurer Default
shall not have occurred and be continuing) to the extent of
Excess Amounts with respect to such Distribution Date: (1) if
such Distribution Date is a Trigger Date but an Insurance
Agreement Event of Default has not occurred as of such
Distribution Date, the lesser of (i) the amount such that the
Aggregate Principal Balance as of the related Determination Date,
PLUS the amount on deposit in the Spread Account on such
Distribution Date after giving effect to deposits required to be
made to and distributions to be made from the Spread Account on
such Distribution Date in accordance with the terms of the Spread
Account Agreement MINUS the Note Balance (after giving effect to
distribution of the Noteholders' Principal Distributable Amount
with respect to such Distribution Date) IS EQUAL to 20% of the
Aggregate Principal Balance as of the related Determination Date
and (ii) the Note Balance (after giving effect to distribution of
the Noteholders' Principal Distributable Amount with respect to
such Distribution Date); (2) if an Insurance Agreement Event of
Default has occurred as of such Distribution Date, the Note
Balance (after giving effect to distribution of the Noteholders'
Principal Distributable Amount with respect to such Distribution
Date); and (3) if such Distribution Date is not a Trigger Date,
0.
NOTEHOLDERS' INTEREST CARRYOVER SHORTFALL: With respect to
any Distribution Date, the excess of the Noteholders' Monthly
Interest Distributable Amount for the preceding Distribution Date
and any outstanding Noteholders' Interest Carryover Shortfall on
such preceding Distribution Date, over the amount in respect of
interest that is actually deposited in the Note Distribution
Account on such preceding Distribution Date, plus interest on the
amount of interest due but not paid to Noteholders on the
preceding Distribution Date, to the extent permitted by law, at
the Note Interest Rate from such preceding Distribution Date
through the current Distribution Date.
13
<PAGE>
NOTEHOLDERS' INTEREST DISTRIBUTABLE AMOUNT: With respect to
any Distribution Date, the sum of the Noteholders' Monthly
Interest Distributable Amount for such Distribution Date and the
Noteholders' Interest Carryover Shortfall for such Distribution
Date.
NOTEHOLDERS' MONTHLY INTEREST DISTRIBUTABLE AMOUNT: With
respect to any Distribution Date, 30 days of interest (or, in the
case of the first Distribution Date, interest accrued from and
including the Closing Date to but excluding such Distribution
Date) at the Note Interest Rate on the outstanding principal
balance of the Notes on the immediately preceding Distribution
Date, after giving effect to all distributions of principal to
Noteholders on such Distribution Date (or, in the case of the
first Distribution Date, on the Closing Date).
NOTEHOLDERS' MONTHLY PRINCIPAL DISTRIBUTABLE AMOUNT: With
respect to any Distribution Date, the amount equal to 92% of the
sum of the following amounts with respect to the immediately
preceding Monthly Period, in each case computed in accordance
with the Simple Interest Method: (i) that portion of all
collections on Receivables (other than Liquidated Receivables and
Purchased Receivables) allocable to principal, including all full
and partial principal prepayments, (ii) the Principal Balance (as
of the related Accounting Date) of all Receivables that became
Liquidated Receivables during the related Monthly Period or
Monthly Periods (other than Purchased Receivables), (iii) the
portion of the Purchase Amount allocable to principal of all
Receivables that became Purchased Receivables as of the
immediately preceding Accounting Date, and, in the sole
discretion of the Security Insurer, provided no Insurer Default
shall have occurred and be continuing, the Principal Balance as
of the immediately preceding Accounting Date of all Receivables
that were required to be purchased as of the immediately
preceding Accounting Date but were not so purchased, and (iv) the
aggregate amount of Cram Down Losses that shall have occurred
during the related Monthly Period or Monthly Periods.
NOTEHOLDERS' PRINCIPAL CARRYOVER SHORTFALL: As of the
close of any Distribution Date, the excess of the sum of the
Noteholders' Monthly Principal Distributable Amount and any
outstanding Noteholders' Principal Carryover Shortfall from the
preceding Distribution Date over the amount in respect of
principal that is actually deposited in the Note Distribution
Account on such Distribution Date.
14
<PAGE>
NOTEHOLDERS' PRINCIPAL DISTRIBUTABLE AMOUNT: With respect
to any Distribution Date (other than the Final Scheduled
Distribution Date and so long as an Insurer Default shall not
have occurred and be continuing), the sum of the Noteholders'
Monthly Principal Distributable Amount for such Distribution
Date, and any outstanding Noteholders' Principal Carryover
Shortfall as of the close of business on the preceding
Distribution Date; PROVIDED, HOWEVER, the Noteholders' Principal
Distributable Amount shall not exceed the Note Balance prior to
the distribution on such Distribution Date. The "Noteholders'
Principal Distributable Amount" on the Final Scheduled
Distribution Date will equal the Note Balance on the Final
Scheduled Distribution Date prior to the distribution on such
Distribution Date.
NOTEHOLDERS' SPECIAL PRINCIPAL DISTRIBUTABLE AMOUNT: With
respect to any Distribution Date while an Insurer Default shall
have occurred and be continuing (other than the Final Scheduled
Distribution Date), the sum of 100% of the sum of the amounts
referred to in clauses (i) through (iv) of the definition of
Noteholders' Monthly Principal Distributable Amount, PLUS, any
outstanding Noteholders' Principal Carryover Shortfall as of the
close of business on the preceding Distribution Date; PROVIDED,
HOWEVER, the Noteholders' Special Principal Distributable Amount
shall not exceed the Note Balance prior to the distribution on
such Distribution Date. The "Noteholders' Special Principal
Distributable Amount" on the Final Scheduled Distribution Date
will equal the Note Balance on the Final Scheduled Distribution
Date prior to the distribution on such Distribution Date.
NOTES: 6.55% Automobile Receivables-Backed Notes issued
pursuant to the Indenture.
OBLIGOR: The purchaser or the co-purchasers of the Financed
Vehicle and any other Person or Persons who are primarily or
secondarily obligated to make payments under a Receivable.
OPINION OF COUNSEL: A written opinion of counsel (who may
be counsel to or an employee of the Servicer) acceptable in form
and substance and from counsel acceptable to the Issuer and, if
such opinion or a copy thereof is required to be delivered to the
Trustee or the Security Insurer, acceptable to the Trustee or the
Security Insurer, as applicable.
ORIGINAL POOL BALANCE: As of any date, the Cutoff Date
Principal Balance.
15
<PAGE>
OTHER CONVEYED PROPERTY: All property conveyed by the
Seller to the Issuer pursuant to this Agreement other than the
Receivables.
PERSON: Any legal person, including any individual,
corporation, partnership, limited liability company, joint
venture, estate, association, joint stock company, trust,
unincorporated organization or government or any agency or
political subdivision thereof, or any other entity.
POLICY: The financial guaranty insurance policy issued by
the Security Insurer to the Trustee on behalf of the Noteholders,
Policy No. 50376-N, including any endorsements thereto.
PRINCIPAL BALANCE: With respect to any Receivable, as of
any date, the Amount Financed minus (i) that portion of all
amounts received on or prior to such date and allocable to
principal in accordance with the Simple Interest Method, and (ii)
any Cram Down Loss in respect of such Receivable.
PURCHASE AGREEMENT: The Receivables Purchase Agreement and
Assignment, dated as of June 1, 1995 between AFS and the Seller.
PURCHASE AMOUNT: With respect to a Receivable, the
Principal Balance and all accrued and unpaid interest on the
Receivable as of the Accounting Date on which the obligation to
purchase such Receivable arises.
PURCHASED RECEIVABLE: As of any Accounting Date, any
Receivable (including any Liquidated Receivable) that became a
Warranty Receivable or Administrative Receivable as of such
Accounting Date (or which AFS or the Servicer has elected to
purchase as of an earlier Accounting Date, as permitted by
Section 2.5 or 3.7), and as to which the Purchase Amount has been
deposited in the Collection Account by the Seller, AFS or the
Servicer, as applicable, on or before the related Deposit Date.
RATING AGENCY: Each of Moody's and Standard & Poor's, so
long as such Persons maintain a rating on the Notes; and if
either Moody's or Standard & Poor's no longer maintains a rating
on the Notes, such other nationally recognized statistical rating
organization selected by the Seller, the Note Majority and (so
long as an Insurer Default shall not have occurred and be
continuing) acceptable to the Security Insurer.
16
<PAGE>
RECEIVABLE: A retail installment sale contract or
promissory note (and related security agreement) for a new or
used automobile or light truck (and all accessories thereto) that
is included in the Schedule of Receivables, and all rights and
obligations under such a contract or note, but not including (i)
any Liquidated Receivable (other than for purposes of calculating
Noteholders' Distributable Amounts hereunder and for the purpose
of determining the obligations pursuant to Section 2.5 and 3.7 to
purchase Receivables), or (ii) any Purchased Receivable on or
after the Accounting Date immediately preceding the Deposit Date
on which payment of the Purchase Amount is made in connection
therewith pursuant to Section 4.5.
RECEIVABLE FILE: The documents, electronic entries,
instruments and writings listed in Section 2.2 pertaining to a
particular Receivable.
REGISTRAR OF TITLES: With respect to any state, the
governmental agency or body responsible for the registration of,
and the issuance of certificates of title relating to, motor
vehicles and liens thereon.
RELATED DOCUMENTS: The Indenture, the Notes, the Purchase
Agreement, the Custodian Agreement, the Policy, the Spread
Account Agreement, the Insurance Agreement, the Lockbox
Agreement, the Stock Pledge Agreement, the 1994-A Issuer Stock
Pledge Agreement, the 1995-A Issuer Stock Pledge Agreement, the
Spread Account Agreement Supplement and the Initial Purchase
Agreement. The Related Documents executed by any party are
referred to herein as "such party's Related Documents," "its
Related Documents" or by a similar expression.
REPRESENTATIVE: CS First Boston Corporation, as
representative of the Initial Purchasers.
REPURCHASE EVENTS: The occurrence of a breach of any of
AFS', the Seller's or the Servicer's representations and
warranties in this Agreement or in the Purchase Agreement which
requires the repurchase of a Receivable by AFS or the Seller
pursuant to Section 2.5 or by the Servicer pursuant to Section
3.7.
REQUIRED DEPOSIT RATING: A rating on short-term unsecured
debt obligations of "P-1" by Moody's and at least "A-l+" by
Standard & Poor's (or such other rating as may be acceptable to
the Rating Agencies and the Controlling Party).
17
<PAGE>
RESPONSIBLE OFFICER: When used with respect to any Person
that is not an individual, the President, any Vice-President or
Assistant Vice-President or the Controller of such Person, or any
other officer or employee having similar functions.
SCHEDULE OF RECEIVABLES: The schedule of all retail
installment sales contracts and promissory notes sold and
transferred to the Issuer pursuant to this Agreement which is
attached hereto as Schedule A, as such schedule may be amended
from time to time, to reflect purchases and repurchases of
Receivables.
SCHEDULE OF REPRESENTATIONS: The Schedule of
Representations and Warranties attached hereto as Schedule B.
SCHEDULED PAYMENT: With respect to any Monthly Period for
any Receivable, the amount set forth in such Receivable as
required to be paid by the Obligor in such Monthly Period. If
after the Closing Date, the Obligor's obligation under a
Receivable with respect to a Monthly Period has been modified so
as to differ from the amount specified in such Receivable as a
result of (i) the order of a court in an insolvency proceeding
involving the Obligor, (ii) pursuant to the Soldiers' and
Sailors' Civil Relief Act of 1940 or (iii) modifications or
extensions of the Receivable permitted by Section 3.2(b), the
Scheduled Payment with respect to such Monthly Period shall refer
to the Obligor's payment obligation with respect to such Monthly
Period as so modified.
SECURITY INSURER: Financial Security Assurance Inc., a
monoline insurance company incorporated under the laws of the
State of New York, or any successor thereto, as issuer of the
Policy.
SELLER: AmeriCredit Receivables Corp., a Delaware
corporation, or its successor in interest pursuant to Section
6.2.
SERIES: Any series of securities issued by the purchaser of
additional pools of Receivables from the Seller.
SERVICER: AmeriCredit Financial Services, Inc., a Delaware
corporation, its successor in interest pursuant to Section 8.2
or, after any termination of the Servicer upon a Servicer
Termination Event, the Backup Servicer or any other successor
Servicer.
SERVICER EXTENSION NOTICE: The notice delivered pursuant to
Section 3.14.
18
<PAGE>
SERVICER TERMINATION EVENT: An event described in Section
8.1.
SERVICER'S CERTIFICATE: With respect to each Determination
Date, a certificate, completed by and executed on behalf of the
Servicer, in accordance with Section 3.9, substantially in the
form attached hereto as Exhibit E.
SIMPLE INTEREST METHOD: The method of allocating a fixed
level payment on an obligation between principal and interest,
pursuant to which the portion of such payment that is allocated
to interest is equal to the product of the fixed rate of interest
on such obligation multiplied by the period of time (expressed as
a fraction of a year, based on the actual number of days in the
calendar month and 365 days in the calendar year) elapsed since
the preceding payment under the obligation was made.
SIMPLE INTEREST RECEIVABLE: A Receivable under which the
portion of the payment allocable to interest and the portion
allocable to principal is determined in accordance with the
Simple Interest Method.
SPREAD ACCOUNT: The Series 1995-A Spread Account
established and maintained pursuant to the Spread Account
Agreement.
SPREAD ACCOUNT AGREEMENT: The Spread Account Agreement,
dated as of December 1, 1994, among the Security Insurer, the
Seller, the Collateral Agent and the trustees specified therein,
as the same may be amended, supplemented or otherwise modified in
accordance with the terms thereof.
SPREAD ACCOUNT AGREEMENT SUPPLEMENT: The Spread Account
Agreement Supplement means the Series 1995-A Supplement to Spread
Account Agreement dated as of June 1, 1995, among Security
Insurer, the Seller and the Trustee.
STANDARD & POOR'S: Standard & Poor's Rating Group, or any
successor thereto.
STOCK PLEDGE AGREEMENT: The Stock Pledge Agreement, dated
as of December 1, 1994, among the Security Insurer, AFS and the
Collateral Agent named therein, as the same may be amended from
time to time.
19
<PAGE>
SUBCOLLECTION ACCOUNT: The account designated as the
Subcollection Account in, and which is established and maintained
pursuant to Section 4.2(a).
SUPPLEMENTAL SERVICING FEE: With respect to any Monthly
Period, all administrative fees, expenses and charges paid by or
on behalf of Obligors collected on the Receivables during such
Monthly Period, including late fees and other amounts deposited
into the Collection Account in respect of the prepayment in full
of a Receivable in excess of the sum of (i) the Principal Balance
of such Receivable plus (ii) any amounts required to be remitted
to Obligors in respect of such prepayment.
TOTAL SERVICING FEE: The sum of the Basic Servicing Fee and
the Supplemental Servicing Fee.
TRIGGER DATE: A Distribution Date which occurs (i) on or
after the date of occurrence of a Trigger Event and prior to the
date, if any, on which such Trigger Event is Deemed Cured or
(ii) on or after the date of occurrence of an Insurance Agreement
Event of Default.
TRIGGER NOTICE: As specified in Section 5.2.
TRUST ACCOUNTS: The meaning specified in 4.1(c).
TRUSTEE: The Person acting as Trustee under the Indenture,
its successors in interest and any successor Trustee under the
Indenture.
UCC: The Uniform Commercial Code as in effect in the
relevant jurisdiction.
WARRANTY RECEIVABLE: With respect to any Monthly Period, a
Receivable which AFS has become obligated to repurchase pursuant
to Section 2.5 on the Deposit Date with respect to such Monthly
Period.
Section 1.2. USAGE OF TERMS. With respect to all terms
used in this Agreement, the singular includes the plural and the
plural the singular, words importing any gender include the other
gender, 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
20
<PAGE>
with their respective terms and not prohibited by this Agreement;
references to Persons include their permitted successors and assigns;
and the terms "include" or "including" mean "include without limitation"
or "including without limitation."
Section 1.3. CALCULATIONS. All calculations of the
amount of interest accrued on the Notes and all calculations of the
amount of the Basic Servicing 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 an Accounting Date
shall refer to the close of business on such day.
Section 1.4. SECTION REFERENCES. All references to
Articles, Sections, paragraphs, subsections, exhibits and
schedules shall be to such portions of this Agreement unless
otherwise specified.
Section 1.5. NO RECOURSE. No recourse may be taken,
directly or indirectly, under this Agreement or any certificate
or other writing delivered in connection herewith or therewith,
against any stockholder, officer, or director, as such, of the
Seller, AFS, the Servicer, the Trustee, the Backup Servicer or
the Issuer or of any predecessor or successor of the Seller, AFS,
the Servicer, the Trustee, the Backup Servicer or the Issuer.
Section 1.6. 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 the Noteholders (or any similar or analogous
determination), such determination shall be made without taking
into account the insurance provided by the Policy.
ARTICLE II
CONVEYANCE OF RECEIVABLES
Section 2.1. CONVEYANCE OF RECEIVABLES. Subject to the
terms and conditions of this Agreement, the Seller, pursuant to
the mutually agreed upon terms contained herein, hereby sells,
transfers, assigns, and otherwise conveys to the Issuer, without
recourse (but without limitation of its obligations in this
Agreement), all of the right, title and interest of the Seller in
and to the Receivables, all monies payable thereon or in respect
thereof after the Cutoff Date, the security interests of AFS in
the
21
<PAGE>
related Financed Vehicles, the Insurance Policies and any
proceeds from any Insurance Policies relating to the Receivables,
the Obligors or the related Financed Vehicles, including rebates
of premiums, all Collateral Insurance and any Force-Placed
Insurance relating to the Receivables, rights of AFS or the
Seller against Dealers with respect to the Receivables under the
Dealer Agreements and the Dealer Assignments, all items contained
in the related Receivable Files, any and all other documents that
AFS keeps on file in accordance with its customary procedures
relating to the Receivables, the Obligors or the related Financed
Vehicles, the rights of the Seller under the Purchase Agreement,
property (including the right to receive future Liquidation
Proceeds) that secures a Receivable and that has been acquired by
or on behalf of the Seller or the Issuer pursuant to liquidation
of such Receivable, all funds on deposit from time to time in the
Trust Accounts (including all income thereon and all amounts
deposited in respect of Administrative Receivables and Warranty
Receivables) and all investments therein and proceeds thereof,
all proceeds and investments of any of the foregoing, all present
and future claims, demands, causes and choses in action in
respect of any or all of the foregoing and all payments on or
under and all proceeds of every kind and nature whatsoever in
respect of any or in lieu of the foregoing, including all
proceeds of the conversion, voluntary or involuntary, into cash
or other liquid property, all cash proceeds, accounts, accounts
receivable, notes, drafts, acceptances, chattel paper, checks,
deposit accounts, insurance proceeds, condemnation awards, rights
to payment of any and every kind and other forms of obligations
and receivables, instruments and other property which at any time
constitute all or part of or are included in the proceeds of any
of the foregoing. It is the intention of the Seller that the
transfer and assignment contemplated by this Agreement shall
constitute a sale of the Receivables and Other Conveyed Property
from the Seller to the Issuer and the beneficial interest in and
title to the Receivables and the Other Conveyed Property shall
not be part of the Seller's estate in the event of the filing of
a bankruptcy petition by or against the Seller under any
bankruptcy law. In the event that, notwithstanding the intent of
the Seller, the transfer and assignment contemplated hereby is
held not to be a sale, this Agreement shall constitute a grant of
a first priority security interest to the Issuer in the property
referred to in this Section 2.1 for the benefit of the
Noteholders.
22
<PAGE>
Section 2.2. CUSTODY OF RECEIVABLE FILES.
(a) In connection with the sale, transfer and assignment of the
Receivables and the Other Conveyed Property to the Issuer pursuant to this
Agreement and simultaneously with the execution and delivery of this
Agreement, the Indenture Collateral Agent shall enter into the Custodian
Agreement with the Custodian, dated as of June 1, 1995, pursuant to which the
Indenture Collateral Agent shall revocably appoint the Custodian, and the
Custodian shall accept such appointment, to act as the agent of the Indenture
Collateral Agent as custodian of the following documents or instruments in
its possession which shall be delivered to the Custodian as agent of the
Indenture Collateral Agent on or before the Closing Date (with respect to
each Receivable):
(i) The fully executed original of the Receivable
(together with any agreements modifying the Receivable,
including without limitation any extension agreements);
(ii) The original credit application, or a copy
thereof, of each Obligor, fully executed by each such
Obligor on AFS's customary form, or on a form approved by
AFS, for such application, and
(iii) The original certificate of title (when
received) and otherwise such documents, if any, that AFS
keeps on file in accordance with its customary procedures
indicating that the Financed Vehicle is owned by the Obligor
and subject to the interest of AFS as first lienholder or
secured party (including any Lien Certificate received by
AFS), or, if such original certificate of title has not yet
been received, a copy of the application therefor, showing
AFS as secured party.
The Trustee may act as the Custodian, in which case the
Trustee shall be deemed to have assumed the obligations of the
Custodian specified in the Custodian Agreement, and the terms of
Exhibit B shall be deemed incorporated by reference herein.
(b) Upon payment in full of any Receivable, the Servicer will
notify the Custodian pursuant to a certificate of an officer of the Servicer
(which certificate shall include a statement to the effect that all amounts
received in connection with such payments which are required to be deposited
in the Collection Account pursuant to Section 3.1 have been so deposited) and
shall request delivery of
23
<PAGE>
the Receivable and Receivable File to the Servicer. From time to time as
appropriate for servicing and enforcing any Receivable, the Custodian shall,
upon written request of an officer of the Servicer and delivery to the
Custodian of a receipt signed by such officer, cause the original Receivable
and the related Receivable File to be released to the Servicer. The
Servicer's receipt of a Receivable and/or Receivable File shall obligate the
Servicer to return the original Receivable and the related Receivable File to
the Custodian when its need by the Servicer has ceased unless the Receivable
is repurchased as described in Section 2.5 or 3.7.
Section 2.3. CONDITIONS TO ISSUANCE BY ISSUER. As conditions to
Issuer's execution and delivery of the Notes on the Closing Date, the Issuer
shall have received the following on or before the Closing Date:
(a) The Schedule of Receivables certified by the
President, Controller or Treasurer of the Seller;
(b) The acknowledgement of the Custodian that it holds
the Receivable File relating to each Receivable;
(c) Copies of resolutions of the Board of Directors of
the Seller approving the execution, delivery and performance
of this Agreement, the Related Documents and the
transactions contemplated hereby and thereby, certified by a
Secretary or an Assistant Secretary of the Seller;
(d) Copies of resolutions of the Board of Directors of
AFS approving the execution, delivery and performance of
this Agreement, the Related Documents and the transactions
contemplated hereby and thereby, certified by a Secretary or
an Assistant Secretary of AFS;
(e) Evidence that all filings (including, without
limitation, UCC filings) required to be made by any Person
and actions required to be taken or performed by any Person
in any jurisdiction to give the Indenture Collateral Agent a
first priority perfected lien on, or ownership interest in,
the Receivables and the Other Conveyed Property have been
made, taken or performed; and
(f) An executed copy of the Policy and Spread Account
Agreement.
24
<PAGE>
Section 2.4. REPRESENTATIONS AND WARRANTIES OF SELLER. By
its execution of this Agreement, the Seller makes the following
representations and warranties on which the Issuer relies in
accepting the Receivables and the Other Conveyed Property and in
issuing the Notes and upon which the Security Insurer relies in
issuing the Policy. Unless otherwise specified, such
representations and warranties speak as of the Closing Date, but
shall survive the sale, transfer, and assignment of the
Receivables to the Issuer.
(a) SCHEDULE OF REPRESENTATIONS. The representations and
warranties set forth on the Schedule of Representations attached
hereto as Schedule B are true and correct.
(b) ORGANIZATION AND GOOD STANDING. The Seller has been
duly organized and is validly existing as a corporation in good
standing under the laws of the State of Delaware, with power and
authority to own its properties and to conduct its business as
such properties are currently owned and such business is
currently conducted, and had at all relevant times, and now has,
power, authority and legal right to acquire, own and sell the
Receivables and the Other Conveyed Property transferred to the
Issuer.
(c) DUE QUALIFICATION. The Seller is duly qualified to do
business as a foreign corporation in good standing and has
obtained all necessary licenses and approvals in all
jurisdictions where the failure to do so would materially and
adversely affect Seller's ability to transfer the Receivables and
the Other Conveyed Property to the Issuer pursuant to this
Agreement, or the validity or enforceability of the Receivables
and the Other Conveyed Property or to perform Seller's
obligations hereunder and under the Seller's Related Documents.
(d) POWER AND AUTHORITY. The Seller has the power and
authority to execute and deliver this Agreement and its Related
Documents and to carry out its terms and their terms,
respectively; the Seller has full power and authority to sell and
assign the Receivables and the Other Conveyed Property to be sold
and assigned to and deposited with the Issuer by it 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 Seller's Related Documents
have been duly authorized by the Seller by all necessary
corporate action.
25
<PAGE>
(e) VALID SALE, BINDING OBLIGATIONS. This Agreement effects
a valid sale, transfer and assignment of the Receivables and the
Other Conveyed Property, enforceable against the Seller and
creditors of and purchasers from the Seller; and this Agreement
and the Seller's Related Documents, when duly executed and
delivered, shall constitute legal, valid and binding obligations
of the Seller enforceable in accordance with their respective
terms, except as enforceability may be limited by bankruptcy,
insolvency, reorganization or other similar laws affecting the
enforcement of creditors' rights generally and by equitable
limitations on the availability of specific remedies, regardless
of whether such enforceability is considered in a proceeding in
equity or at law.
(f) NO VIOLATION. The consummation of the transactions
contemplated by this Agreement and the Related Documents and the
fulfillment of the terms of this Agreement and the Related
Documents shall not conflict with, result in any breach of any of
the terms and provisions of or constitute (with or without
notice, lapse of time or both) a default under the certificate of
incorporation or by-laws of the Seller, or any indenture,
agreement, mortgage, deed of trust or other instrument to which
the Seller is a party or by which it is bound, or result in the
creation or imposition of any Lien upon any of its properties
pursuant to the terms of any such indenture, agreement, mortgage,
deed of trust or other instrument, other than this Agreement, or
violate any law, order, rule or regulation applicable to the
Seller of any court or of any federal or state regulatory body,
administrative agency or other governmental instrumentality
having jurisdiction over the Seller or any of its properties.
(g) NO PROCEEDINGS. There are no proceedings or
investigations pending or, to the Seller's knowledge, threatened
against the Seller or AFS, before any court, regulatory body,
administrative agency or other tribunal or governmental
instrumentality having jurisdiction over the Seller or its
properties (A) asserting the invalidity of this Agreement or any
of the Related Documents, (B) seeking to prevent the issuance of
the Notes or the consummation of any of the transactions
contemplated by this Agreement or any of the Related Documents,
(C) seeking any determination or ruling that might materially and
adversely affect the performance by the Seller of its obligations
under, or the validity or enforceability of, this Agreement or
any of the Related Documents, or (D) seeking to adversely affect
the federal income tax or other federal, state or local tax
attributes of the Notes.
26
<PAGE>
(h) CHIEF EXECUTIVE OFFICE. The chief executive office of
the Seller is at 200 Bailey Avenue, Fort Worth, Texas 76107-1220.
Section 2.5. REPURCHASE OF RECEIVABLES UPON BREACH OF
WARRANTY. Concurrently with the execution and delivery of this Agreement,
AFS and the Seller have entered into the Purchase Agreement the rights of the
Seller under which have been assigned by the Seller to the Issuer. Under the
Purchase Agreement AFS has made the same representations and warranties to
the Seller with respect to the Receivables as those made by Seller pursuant
to the Schedule of Representations, upon which the Issuer has relied in
accepting the Other Conveyed Property and executing the Notes and upon which
the Security Insurer has relied in issuing the Policy and upon which the
Trustee has relied in authenticating the Notes. Upon discovery by any of
AFS, the Seller, the Servicer, the Security Insurer, the Trustee or the
Issuer of a breach of any of the representations and warranties of the Seller
contained in Section 2.4 or of AFS in the Purchase Agreement, the Security
Insurer or the Issuer in any Receivable (including any Liquidated
Receivable), the party discovering such breach shall give prompt written
notice to the others; PROVIDED, HOWEVER, that the failure to give any such
notice shall not affect any obligation of AFS or the Seller. As of the
second Accounting Date (or, at AFS's election, the first Accounting Date)
following its discovery or its receipt of notice of any breach of the
representations and warranties set forth on the Schedule of Representations
which materially and adversely affects the interests of the Noteholders, the
Security Insurer or the Issuer in any Receivable (including any Liquidated
Receivable) AFS or the Seller shall, unless such breach shall have been cured
in all material respects, purchase such Receivable from the Issuer and, on or
before the related Deposit Date, AFS shall pay the Purchase Amount to the
Issuer pursuant to Section 4.5. It is understood and agreed that, except as
set forth in this Section 2.5, the obligation of AFS to repurchase any
Receivable as to which a breach has occurred and is continuing shall, if such
obligation is fulfilled, constitute the sole remedy against AFS or the Seller
for such breach available to the Security Insurer, the Trustee on behalf of
the Noteholders or the Issuer.
In addition to the foregoing and notwithstanding whether the
related Receivable shall have been purchased by the Seller or
AFS, AFS shall indemnify the Issuer, the Trustee, the Backup
Servicer, the Collateral Agent, the Security Insurer, the
Indenture Collateral Agent, the Issuer and the Noteholders
against all costs, expenses, losses, damages, claims and
liabilities, including
27
<PAGE>
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.
Section 2.6. NONPETITION COVENANT. None of the Seller, the
Servicer, the Issuer, the Backup Servicer nor AFS shall petition or otherwise
invoke the process of any court or government authority for the purpose of
commencing or sustaining a case against the Issuer under any federal or state
bankruptcy, insolvency or similar law or appointing a receiver, liquidator,
assignee, trustee, custodian, sequestrator or other similar official of the
Issuer or any substantial part of its property, or ordering the winding up or
liquidation of the affairs of the Issuer.
Section 2.7. COLLECTING LIEN CERTIFICATES NOT DELIVERED ON THE
CLOSING DATE. In the case of any Receivable in respect of which written
evidence from the Dealer selling the related Financed Vehicle that the Lien
Certificate for such Financed Vehicle showing AFS as first lienholder has
been applied for from the Registrar of Titles was delivered to the Custodian
on the Closing Date in lieu of a Lien Certificate, the Servicer shall use its
best efforts to collect such Lien Certificate from the Registrar of Titles as
promptly as practicable. If such Lien Certificate showing AFS as first
lienholder is not received by the Custodian within 180 days after the Closing
Date then the representation and warranty in paragraph 5 of the Schedule of
Representations in respect of such Receivable shall be deemed to have been
incorrect in a manner that materially and adversely affects the Noteholders,
the Security Insurer and the Issuer.
Section 2.8. ISSUER'S ASSIGNMENT OF ADMINISTRATIVE RECEIVABLES
AND WARRANTY RECEIVABLES. With respect to all Administrative Receivables and
all Warranty Receivables purchased by the Servicer, the Seller or AFS, the
Issuer shall take any and all actions reasonably requested by the Seller, AFS
or Servicer, at the expense of the requesting party, to assign, without
recourse, representation or warranty, to the Seller, AFS or the Servicer, as
applicable, all the Issuer's right, title and interest in and to such
purchased Receivable, all monies due thereon, the security interests in the
related Financed Vehicles, proceeds from any Insurance Policies, proceeds
from recourse against Dealers on such Receivables and the interests of the
Issuer in certain rebates of premiums and other amounts relating to the
Insurance Policies and any documents relating thereto, such assignment being
an assignment
28
<PAGE>
outright and not for security; and the Seller, AFS or the Servicer, as
applicable, shall thereupon own such Receivable, and all such security and
documents, free of any further obligation to the Issuer, the Trustee, the
Security Insurer, the Indenture Collateral Agent, the Noteholders or the
Issuer with respect thereto.
Section 2.9. SPECIAL PURPOSE ENTITY.
(a) The Seller shall conduct its business solely in its own name
through its duly authorized officers or agents so as not to mislead others as
to the identity of the entity with which those others are concerned, and
particularly will use its best efforts to avoid the appearance of conducting
business on behalf of any affiliate thereof or that the assets of the Seller
are available to pay the creditors of AFS or AmeriCredit Corp. or any
affiliate thereof. Without limiting the generality of the foregoing, all
oral and written communications, including, without limitation, letters,
invoices, purchase orders, contracts, statements and loan applications, will
be made solely in the name of the Seller.
(b) The Seller shall maintain corporate records and books of
account separate from those of AFS and AmeriCredit Corp., and the affiliates
thereof. The Seller's books and records shall clearly reflect the transfer
of the Receivables to the Issuer.
(c) The Seller shall obtain proper authorization from its Board
of Directors of all corporate action requiring such authorization, meetings
of the Board of Directors of the Seller shall be held not less frequently
than one time per annum.
(d) The Seller shall obtain proper authorization from its
shareholders of all corporate action requiring shareholder approval, meetings
of the shareholders of the Seller shall be held not less frequently than one
time per annum.
(e) Although the organizational expenses of the Seller have been
paid by AFS, the Seller shall pay its own operating expenses and liabilities
from its own funds.
(f) The annual financial statements of the Seller shall disclose
the effects of the Seller's transactions in accordance with generally
accepted accounting principles and shall disclose that the assets of the
Seller are not available to pay creditors of AmeriCredit Corp. or the AFS or
any affiliate thereof.
29
<PAGE>
(g) The resolutions, agreements and other instruments of the
Seller underlying the transactions described in the Insurance Agreement and
in the other Transaction Documents shall be continuously maintained by the
Seller as official records of the Seller, separately identified and held
apart from the records of AmeriCredit Corp. and AFS and each affiliate
thereof.
(h) The Seller shall maintain an arm's-length relationship with
AmeriCredit Corp. and AFS and the affiliates thereof, and will not hold
itself out as being liable for the debts of AmeriCredit Corp. or AFS or any
affiliate thereof.
(i) The Seller shall keep its assets and liabilities wholly
separate from those of all other entities, including, but not limited to
AmeriCredit Corp. and AFS and the affiliates thereof.
(j) The books and records of the Seller will be maintained at
the address designated herein for receipt of notices, unless the Seller shall
otherwise advise the parties hereto in writing.
Section 2.10. RESTRICTIONS ON LIENS. The Seller shall not (i)
create, incur or suffer to exist, or agree to create, incur or suffer to
exist, or consent to cause or permit in the future (upon the happening of a
contingency or otherwise) the creation, incurrence or existence of any Lien
or restriction on transferability of the Receivables except for the Lien in
favor of the Trustee for the benefit of the Noteholders and Financial
Security, the Lien imposed by the Spread Account Agreement in favor of the
Indenture Collateral Agent for the benefit of the Trustee and Financial
Security, and the restrictions on transferability imposed by this Agreement
or (ii) sign or file under the Uniform Commercial Code of any jurisdiction
any financing statement which names AFS, the Seller or the Issuer as a
debtor, or sign any security agreement authorizing any secured party
thereunder to file such financing statement, with respect to the Receivables,
except in each case any such instrument solely securing the rights and
preserving the Lien of the Indenture Collateral Agent, for the benefit of the
Trustee for the Noteholders and Financial Security.
Section 2.11. CREATION OF INDEBTEDNESS; GUARANTEES. The Seller
shall not create, incur, assume or suffer to exist any indebtedness other
than indebtedness guaranteed or approved in writing by Financial Security
other than the Transaction Documents. Without the prior written consent in
writing of Financial Security, the Seller shall not assume guarantee, endorse
or otherwise be or
30
<PAGE>
become directly or contingently liable for the obligations of any Person by,
among other things, agreeing to purchase any obligation of another Person,
agreeing to advance funds to such Person or causing or assisting such Person
to maintain any amount of capital.
Section 2.12. OTHER ACTIVITIES. The Seller shall not:
(a) sell, transfer, exchange or otherwise dispose of any of its
assets except as permitted under the Transaction Documents; or
(b) engage in any business or activity other than in connection
with this Agreement, the Spread Account Agreement and as permitted by its
certificate of incorporation.
ARTICLE III
ADMINISTRATION AND SERVICING OF RECEIVABLES
Section 3.1. DUTIES OF THE SERVICER. The Servicer is hereby
authorized to act as agent for the Issuer and in such capacity shall manage,
service, administer and make collections on the Receivables, and perform the
other actions required by the Servicer under this Agreement. The Servicer
agrees that its servicing of the Receivables shall be carried out in
accordance with customary and usual procedures of institutions which service
motor vehicle retail installment sales contracts and, to the extent more
exacting, the degree of skill and attention that the Servicer exercises from
time to time with respect to all comparable motor vehicle receivables that it
services for itself or others. In performing such duties, so long as AFS is
the Servicer, it shall comply with the policies and procedures attached
hereto as Schedule C. The Servicer's duties shall include, without
limitation, collection and posting of all payments, responding to inquiries
of Obligors on the Receivables, investigating delinquencies, sending payment
coupons to Obligors, reporting any required tax information to Obligors,
monitoring the collateral, complying with the terms of the Lockbox Agreement,
accounting for collections and furnishing monthly and annual statements to
the Issuer, the Trustee and the Security Insurer with respect to
distributions, monitoring the status of Insurance Policies with respect to
the Financed Vehicles and performing the other duties specified herein. The
Servicer shall also administer and enforce all rights and responsibilities of
the holder of the Receivables provided for in the Dealer Agreements (and
shall maintain possession of the Dealer Agreements, to the extent it is
necessary to do so), the Dealer Assignments and
31
<PAGE>
the Insurance Policies, to the extent that such Dealer Agreements, Dealer
Assignments and Insurance Policies relate to the Receivables, the Financed
Vehicles or the Obligors. To the extent consistent with the standards,
policies and procedures otherwise required hereby, the Servicer shall follow
its customary standards, policies, and procedures and shall have full power
and authority, acting alone, to do any and all things in connection with such
managing, servicing, administration and collection that it may deem necessary
or desirable. Without limiting the generality of the foregoing, the Servicer
is hereby authorized and empowered by the Issuer to execute and deliver, on
behalf of the Issuer, any and all instruments of satisfaction or
cancellation, or of partial or full release or discharge, and all other
comparable instruments, with respect to the Receivables and with respect to
the Financed Vehicles; PROVIDED, HOWEVER, that notwithstanding the foregoing,
the Servicer shall not, except pursuant to an order from a court of competent
jurisdiction, release an Obligor from payment of any unpaid amount under any
Receivable or waive the right to collect the unpaid balance of any Receivable
from the Obligor. The Servicer is hereby authorized to commence, in its own
name or in the name of the Issuer (provided the Servicer has obtained the
Issuer's consent, which consent shall not be unreasonably withheld), a legal
proceeding to enforce a Receivable pursuant to Section 3.3 or to commence or
participate in any other legal proceeding (including, without limitation, a
bankruptcy proceeding) relating to or involving a Receivable, an Obligor or a
Financed Vehicle. If the Servicer commences or participates in such a legal
proceeding in its own name, the Issuer shall thereupon be deemed to have
automatically assigned such Receivable to the Servicer solely for purposes of
commencing or participating in any such proceeding as a party or claimant,
and the Servicer is authorized and empowered by the Issuer to execute and
deliver in the Servicer's name any notices, demands, claims, complaints,
responses, affidavits or other documents or instruments in connection with
any such proceeding. The Issuer shall furnish the Servicer with any powers
of attorney and other documents which the Servicer may reasonably request and
which the Servicer deems necessary or appropriate and take any other steps
which the Servicer may deem necessary or appropriate to enable the Servicer
to carry out its servicing and administrative duties under this Agreement.
32
<PAGE>
Section 3.2. COLLECTION OF RECEIVABLE PAYMENTS; MODIFICATIONS
OF RECEIVABLES; LOCKBOX AGREEMENTS.
(a) 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 automobile
receivables that it services for itself or others and otherwise act with
respect to the Receivables, the Dealer Agreements, the Dealer Assignments,
the Insurance Policies and the Other Conveyed Property in such manner as
will, in the reasonable judgment of the Servicer, maximize the amount to be
received by the Issuer with respect thereto. The Servicer is authorized in
its discretion to waive any prepayment charge, late payment charge or any
other similar fees that may be collected in the ordinary course of servicing
any Receivable.
(b) The Servicer may at any time agree to a modification or
amendment of a Receivable in order to (i) change the Obligor's regular due
date to a date within the Monthly Period in which such due date occurs or
(ii) re-amortize the scheduled payments on the Receivable following a partial
prepayment of principal.
(c) The Servicer may grant payment extensions on, or other
modifications or amendments to, a Receivable (in addition to those
modifications permitted by Section 3.2(b)) in accordance with its customary
procedures if the Servicer believes in good faith that such extension,
modification or amendment is necessary to avoid a default on such Receivable,
will maximize the amount to be received by the Issuer with respect to such
Receivable, and is otherwise in the best interests of the Issuer; PROVIDED,
HOWEVER, that:
(i) The aggregate period of all extensions on a
Receivable shall not exceed four months;
(ii) In no event may a Receivable be extended beyond
the Monthly Period immediately preceding the Final Scheduled
Distribution Date;
(iii) So long as an Insurer Default shall not have
occurred and be continuing, the Servicer shall not amend or
modify a Receivable (except as provided in Section 3.2(b)
and this Section 3.2(c)) without the consent of the Security
33
<PAGE>
Insurer or a Note Majority (if an Insurer Default shall have
occurred and be continuing);
(iv) The aggregate Principal Balance of Receivables
which may be extended during any Calendar Quarter shall not
exceed 4.0% of the aggregate Principal Balance of
Receivables as of the Accounting Date immediately prior to
the first day of such Calendar Quarter; and
(v) No such extension, modification or amendment shall
be granted more than 90 days after the Closing Date if such
action would have the effect of causing such Receivable to
be deemed to have been exchanged for another Receivable
within the meaning of Section 1001 of the Internal Revenue
Code of 1986, as amended, or any proposed, temporary or
final Treasury Regulations issued thereunder.
(d) The Servicer shall use its best efforts to cause Obligors to
make all payments on the Receivables, whether by check or by direct debit of
the Obligor's bank account, to be made directly to one or more Lockbox Banks,
acting as agent for the Issuer pursuant to a Lockbox Agreement. The Servicer
shall use its best efforts to cause any Lockbox Bank to deposit all payments
on the Receivables in the Lockbox Account no later than the Business Day
after receipt, and to cause all amounts credited to the Lockbox Account on
account of such payments to be transferred to the Collection Account no later
than the second Business Day after receipt of such payments. The Lockbox
Account shall be a demand deposit account held by the Lockbox Bank, or at the
request of the Controlling Party, an Eligible Account satisfying clause (i)
of the definition thereof.
Prior to the Closing Date, the Servicer shall have notified each
Obligor that makes its payments on the Receivables by check to make such
payments thereafter directly to the Lockbox Bank (except in the case of
Obligors that have already been making such payments to the Lockbox Bank),
and shall have provided each such Obligor with remittance advices in order to
enable such Obligors to make such payments directly to the Lockbox Bank for
deposit into the Lockbox Account, and the Servicer will continue, not less
often than every three months, to so notify those Obligors who have failed to
make payments to the Lockbox Bank. If and to the extent requested by the
Controlling Party, the Servicer shall request each Obligor that makes payment
on the Receivables by direct debit of such Obligor's bank account, to execute
a new authorization for
34
<PAGE>
automatic payment which in the judgment of the Controlling Party is
sufficient to authorize direct debit by the Lockbox Bank on behalf of the
Issuer. If at any time, the Lockbox Bank is unable to directly debit an
Obligor's bank account that makes payment on the Receivables by direct debit
and if such inability is not cured within 15 days or cannot be cured by
execution by the Obligor of a new authorization for automatic payment, the
Servicer shall notify such Obligor that it cannot make payment by direct
debit and must thereafter make payment by check.
Notwithstanding any Lockbox Agreement, or any of the provisions of
this Agreement relating to the Lockbox Agreement, the Servicer shall remain
obligated and liable to the Issuer, Trustee and Noteholders for servicing and
administering the Receivables and the Other Conveyed Property in accordance
with the provisions of this Agreement without diminution of such obligation
or liability by virtue thereof, PROVIDED, HOWEVER, that the foregoing shall
not apply to any Backup Servicer for so long as a Lockbox Bank is performing
its obligations pursuant to the terms of a Lockbox Agreement.
In the event of a termination of the Servicer, the successor
Servicer shall assume all of the rights and obligations of the outgoing
Servicer under the Lockbox Agreement. In such event, the successor Servicer
shall be deemed to have assumed all of the outgoing Servicer's interest
therein and to have replaced the outgoing Servicer as a party to each such
Lockbox Agreement to the same extent as if such Lockbox Agreement had been
assigned to the successor Servicer, except that the outgoing Servicer shall
not thereby be relieved of any liability or obligations on the part of the
outgoing Servicer to the Lockbox Bank under such Lockbox Agreement. The
outgoing Servicer shall, upon request of the Issuer, but at the expense of
the outgoing Servicer, deliver to the successor Servicer all documents and
records relating to each such Lockbox Agreement and an accounting of amounts
collected and held by the Lockbox Bank and otherwise use its best efforts to
effect the orderly and efficient transfer of any Lockbox Agreement to the
successor Servicer. In the event that the Security Insurer (so long as an
Insurer Default shall not have occurred and be continuing) or a Note Majority
(if an Insurer Default shall have occurred and be continuing) elects to
change the identity of the Lockbox Bank, the outgoing Servicer, at its
expense, shall cause the Lockbox Bank to deliver, at the direction of the
Security Insurer (so long as an Insurer Default shall not have occurred and
be continuing) or a Note Majority (if an Insurer Default shall have
35
<PAGE>
occurred and be continuing) to the Issuer or a successor Lockbox Bank, all
documents and records relating to the Receivables and all amounts held (or
thereafter received) by the Lockbox Bank (together with an accounting of such
amounts) and shall otherwise use its best efforts to effect the orderly and
efficient transfer of the lockbox arrangements and the Servicer shall notify
the Obligors to make payments to the Lockbox established by the successor.
(e) The Servicer shall remit all payments by or on behalf of the
Obligors received directly by the Servicer to the Subcollection Account or to
the Lockbox Bank for deposit into the Collection Account, in either case,
without deposit into any intervening account and as soon as practicable, but
in no event later than the Business Day after receipt thereof.
Section 3.3. REALIZATION UPON RECEIVABLES.
(a) Consistent with the standards, policies and procedures
required by this Agreement, the Servicer shall use its best efforts to
repossess (or otherwise comparably convert the ownership of) and liquidate
any Financed Vehicle securing a Receivable with respect to which the Servicer
has determined that payments thereunder are not likely to be resumed, as soon
as is practicable after default on such Receivable but in no event later than
the date on which all or any portion of a Scheduled Payment has become 91
days delinquent; provided, however, that the Servicer may elect not to
repossess a Financed Vehicle within such time period if in its good faith
judgment it determines that the proceeds ultimately recoverable with respect
to such Receivable would be increased by forbearance. The Servicer is
authorized to follow such customary practices and procedures as it shall deem
necessary or advisable, consistent with the standard of care required by
Section 3.1, which practices and procedures may include reasonable efforts to
realize upon any recourse to Dealers, the sale of the related Financed
Vehicle at public or private sale, the submission of claims under an
Insurance Policy and other actions by the Servicer in order to realize upon
such a Receivable. The foregoing is 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 any repair or towards the
repossession of such Financed Vehicle unless it shall determine in its
discretion that such repair and/or repossession shall increase the proceeds
of liquidation of the related Receivable by an amount greater than the amount
of such expenses. All amounts received upon liquidation of a Financed
Vehicle shall be remitted directly by the Servicer to
36
<PAGE>
the Subcollection Account without deposit into any intervening account as
soon as practicable, but in no event later than the Business Day after
receipt thereof. The Servicer shall be entitled to recover all reasonable
expenses incurred by it in the course of repossessing and liquidating a
Financed Vehicle into cash proceeds, but only out of the cash proceeds of
such Financed Vehicle, any deficiency obtained from the Obligor or any
amounts received from the related Dealer, which amounts in reimbursement may
be retained by the Servicer (and shall not be required to be deposited as
provided in Section 3.2(e)) to the extent of such expenses. The Servicer
shall pay on behalf of the Issuer any personal property taxes assessed on
repossessed Financed Vehicles. The Servicer shall be entitled to
reimbursement of any such tax from Liquidation Proceeds with respect to such
Receivable.
(b) If the Servicer elects to commence a legal proceeding to
enforce a Dealer Agreement or Dealer Assignment, the act of commencement
shall be deemed to be an automatic assignment from the Issuer to the Servicer
of the rights under such Dealer Agreement and Dealer Assignment for purposes
of collection only. If, however, in any enforcement suit or legal proceeding
it is held that the Servicer may not enforce a Dealer Agreement or Dealer
Assignment on the grounds that it is not a real party in interest or a Person
entitled to enforce the Dealer Agreement or Dealer Assignment, the Issuer, at
the Servicer's expense, or the Seller, at the Seller's expense, shall take
such steps as the Servicer deems necessary to enforce the Dealer Agreement or
Dealer Assignment, including bringing suit in its name or the name of the
Seller or of the Issuer and the Indenture Collateral Agent for the benefit of
the Issuer Secured Parties. All amounts recovered shall be remitted directly
by the Servicer as provided in Section 3.2(e).
Section 3.4. INSURANCE.
(a) The Servicer shall require, in accordance with its customary
servicing policies and procedures, that each Financed Vehicle be insured by
the related Obligor under the Insurance Policies referred to in Paragraph 24
of the Schedule of Representations and Warranties and shall monitor the
status of such physical loss and damage insurance coverage thereafter, in
accordance with its customary servicing procedures. Each Receivable requires
the Obligor to maintain such physical loss and damage insurance, naming AFS
and its successors and assigns as additional insureds, and permits the holder
of such Receivable to obtain physical loss and damage insurance at the
expense of the
37
<PAGE>
Obligor if the Obligor fails to maintain such insurance. If the Servicer
shall determine that an Obligor has failed to obtain or maintain a physical
loss and damage Insurance Policy covering the related Financed Vehicle which
satisfies the conditions set forth in clause (i)(a) of such Paragraph 24
(including, without limitation, during the repossession of such Financed
Vehicle) the Servicer may enforce the rights of the holder of the Receivable
under the Receivable to require the Obligor to obtain such physical loss and
damage insurance in accordance with its customary servicing policies and
procedures. The Servicer may maintain a vendor's single interest or other
collateral protection insurance policy with respect to all Financed Vehicles
("Collateral Insurance") which policy shall by its terms insure against
physical loss and damage in the event any Obligor fails to maintain physical
loss and damage insurance with respect to the related Financed Vehicle. All
policies of Collateral Insurance shall be endorsed with clauses providing for
loss payable to the Servicer. Costs incurred by the Servicer in maintaining
such Collateral Insurance shall be paid by the Servicer.
(b) The Servicer may, if an Obligor fails to obtain or maintain
a physical loss and damage Insurance Policy, obtain insurance with respect to
the related Financed Vehicle and advance on behalf of such Obligor, as
required under the terms of the insurance policy, the premiums for such
insurance (such insurance being referred to herein as "Force-Placed
Insurance"). All policies of Force-Placed Insurance shall be endorsed with
clauses providing for loss payable to the Servicer. Any cost incurred by the
Servicer in maintaining such Force-Placed Insurance shall only be recoverable
out of premiums paid by the Obligors or Liquidation Proceeds with respect to
the Receivable, as provided in Section 3.4(c).
(c) In connection with any Force-Placed Insurance obtained
hereunder, the Servicer may, in the manner and to the extent permitted by
applicable law, require the Obligors to repay the entire premium to the
Servicer. In no event shall the Servicer include the amount of the premium
in the Amount Financed under the Receivable. For all purposes of this
Agreement, the Insurance Add-On Amount with respect to any Receivable having
Force-Placed Insurance will be treated as a separate obligation of the
Obligor and will not be added to the Principal Balance of such Receivable,
and amounts allocable thereto will not be available for distribution on the
Notes. The Servicer shall retain and separately administer the right to
receive payments from Obligors
38
<PAGE>
with respect to Insurance Add-On Amounts or rebates of Forced-Placed
insurance premiums. If an Obligor makes a payment with respect to a
Receivable having Force-Placed Insurance, but the Servicer is unable to
determine whether the payment is allocable to the Receivable or to the
Insurance Add-On Amount, the payment shall be applied first to any unpaid
Scheduled Payments and then to the Insurance Add-On Amount. Liquidation
Proceeds on any Receivable will be used first to pay the Principal Balance
and accrued interest on such Receivable and then to pay the related Insurance
Add-On Amount. If an Obligor under a Receivable with respect to which the
Servicer has placed Force-Placed Insurance fails to make scheduled payments
of such Insurance Add-On Amount as due, and the Servicer has determined that
eventual payment of the Insurance Add-On Amount is unlikely, the Servicer
may, but shall not be required to, purchase such Receivable from the Issuer
for the Purchase Amount on any subsequent Deposit Date. Any such Receivable,
and any Receivable with respect to which the Servicer has placed Force-Placed
Insurance which has been paid in full (excluding any Insurance Add-On
Amounts) will be assigned to the Servicer.
(d) The Servicer may sue to enforce or collect upon the
Insurance Policies, in its own name, if possible, or as agent of the Issuer.
If the Servicer elects to commence a legal proceeding to enforce an Insurance
Policy, the act of commencement shall be deemed to be an automatic assignment
of the rights of the Issuer under such Insurance Policy to the Servicer for
purposes of collection only. If, however, in any enforcement suit or legal
proceeding it is held that the Servicer may not enforce an Insurance Policy
on the grounds that it is not a real party in interest or a holder entitled
to enforce the Insurance Policy, the Issuer, at the Servicer's expense, or
the Seller, at the Seller's expense, shall take such steps as the Servicer
deems necessary to enforce such Insurance Policy, including bringing suit in
its name or the name of the Issuer and the Indenture Collateral Agent for the
benefit of the Issuer Secured Parties.
(e) The Servicer will cause itself and may cause the Issuer to
be named as named insured under all policies of Collateral Insurance.
Section 3.5. MAINTENANCE OF SECURITY INTERESTS IN VEHICLES.
(a) Consistent with the policies and procedures required by
this Agreement, the Servicer shall take such steps on behalf of
the Issuer as are necessary to maintain perfection of the
security
39
<PAGE>
interest created 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-filing, and re-registering
of all security agreements, financing statements and continuation statements
as are necessary to maintain the security interest granted by the Obligors
under the respective Receivables. The Indenture Collateral Agent hereby
authorizes the Servicer, and the Servicer agrees, to take any and all steps
necessary to re-perfect such security interest on behalf of the Issuer as
necessary because of the relocation of a Financed Vehicle or for any other
reason. In the event that the assignment of a Receivable to the Issuer is
insufficient, without a notation on the related Financed Vehicle's
certificate of title, or without fulfilling any additional administrative
requirements under the laws of the state in which the Financed Vehicle is
located, to perfect a security interest in the related Financed Vehicle in
favor of the Indenture Collateral Agent, the Servicer hereby agrees that
AFS's designation as the secured party on the certificate of title is in its
capacity as agent of the Indenture Collateral Agent.
(b) Upon the occurrence of an Insurance Agreement Event of
Default, the Security Insurer may (so long as an Insurer Default shall not
have occurred and be continuing) instruct the Trustee and the Servicer to
take or cause to be taken, or, if an Insurer Default shall have occurred,
upon the occurrence of a Servicer Termination Event, the Trustee and the
Servicer shall take or cause to be taken such action as may, in the opinion
of counsel to the Controlling Party, be necessary to perfect or re-perfect
the security interests in the Financed Vehicles securing the Receivables in
the name of the Issuer by amending the title documents of such Financed
Vehicles or by such other reasonable means as may, in the opinion of counsel
to the Controlling Party, be necessary or prudent. AFS hereby agrees to pay
all expenses related to such perfection or reperfection and to take all
action necessary therefor. In addition, prior to the occurrence of an
Insurance Agreement Event of Default, the Controlling Party may instruct the
Trustee and the Servicer to take or cause to be taken such action as may, in
the opinion of counsel to the Controlling Party, be necessary to perfect or
re-perfect the security interest in the Financed Vehicles underlying the
Receivables in the name of the Issuer, including by amending the title
documents of such Financed Vehicles or by such other reasonable means as may,
in the opinion of counsel to the Controlling Party, be necessary or prudent;
PROVIDED, HOWEVER, that if the Controlling Party requests
40
<PAGE>
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
Trustee in connection with such action shall be reimbursed to the Servicer or
the Trustee, as applicable, by the Controlling Party. AFS hereby appoints
the Trustee as its attorney-in-fact to take any and all steps required to be
performed by AFS pursuant to this Section 3.5(b), including execution of
certificates of title or any other documents in the name and stead of AFS,
and the Trustee hereby accepts such appointment.
Section 3.6. COVENANTS, REPRESENTATIONS, AND WARRANTIES OF
SERVICER. By its execution and delivery of this Agreement, the
Servicer makes the following representations, warranties and
covenants on which the Issuer relies in accepting the Receivables
and issuing the Notes, on which the Trustee relies in
authenticating the Notes and on which the Security Insurer relies
in issuing the Policy.
(a) The Servicer covenants as follows:
(i) LIENS IN FORCE. The Financed Vehicle securing
each Receivable shall not be released in whole or in part
from the security interest granted by the Receivable, except
upon payment in full of the Receivable or as otherwise
contemplated herein;
(ii) NO IMPAIRMENT. The Servicer shall do nothing to
impair the rights of the Issuer or the Noteholders in the
Receivables, the Dealer Agreements, the Dealer Assignments,
the Insurance Policies or the Other Conveyed Property; and
(iii) NO AMENDMENTS. The Servicer shall not extend
or otherwise amend the terms of any Receivable, except in
accordance with Section 3.2.
(iv) RESTRICTIONS ON LIENS. The Servicer shall not
(i) create, incur or suffer to exist, or agree to create,
incur or suffer to exist, or consent to cause or permit in
the future (upon the happening of a contingency or
otherwise) the creation, incurrence or existence of any Lien
or restriction on transferability of the Receivables except
for the Lien in favor of the Trustee for the benefit of the
Noteholders and Financial Security, the Lien imposed by the
Spread Account Agreement in favor of the Indenture
Collateral Agent for the benefit of the Trustee and
Financial Security, and the
41
<PAGE>
restrictions on transferability imposed by this Agreement or (ii)
sign or file under the Uniform Commercial Code of any jurisdiction
any financing statement which names AFS, the Servicer or the Issuer
as a debtor, or sign any security agreement authorizing any
secured party thereunder to file such financing statement,
with respect to the Receivables, except in each case any
such instrument solely securing the rights and preserving
the Lien of the Indenture Collateral Agent, for the benefit
of the Trustee for the Noteholders and Financial Security.
(b) The Servicer represents, warrants and covenants as of the
Closing Date as to itself:
(i) REPRESENTATIONS AND WARRANTIES. The
representations and warranties set forth on the Schedule of
Representations attached hereto as Schedule B are true and
correct, provided that such representations and warranties
contained therein and herein shall not apply to any entity
other than AFS;
(ii) ORGANIZATION AND GOOD STANDING. The Servicer has
been duly organized and is validly existing and in good
standing under the laws of its jurisdiction of organization,
with power, authority and legal right to own its properties
and to conduct its business as such properties are currently
owned and such business is currently conducted, and had at
all relevant times, and now has, power, authority and legal
right to enter into and perform its obligations under this
Agreement;
(iii) 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) requires or shall require such qualification;
(iv) POWER AND AUTHORITY. The Servicer has the power
and authority to execute and deliver this Agreement and its
Related Documents and to carry out its terms and their
terms, respectively, and the execution, delivery and
performance of this Agreement and the Servicer's Related
Documents have been duly authorized by the Servicer by all
necessary corporate action;
42
<PAGE>
(v) BINDING OBLIGATION. This Agreement and the
Servicer's Related Documents shall constitute legal, valid
and binding obligations of the Servicer enforceable in
accordance with their respective terms, except as
enforceability may be limited by bankruptcy, insolvency,
reorganization, or other similar laws affecting the
enforcement of creditors' rights generally and by equitable
limitations on the availability of specific remedies,
regardless of whether such enforceability is considered in a
proceeding in equity or at law;
(vi) NO VIOLATION. The consummation of the
transactions contemplated by this Agreement and the
Servicer's Related Documents, and the fulfillment of the
terms of this Agreement and the Servicer's Related
Documents, shall not conflict with, result in any breach of
any of the terms and provisions of, or constitute (with or
without notice or lapse of time) a default under, the
articles of incorporation or bylaws of the Servicer, or any
indenture, agreement, mortgage, deed of trust or other
instrument to which the Servicer is a party or by which it
is bound, or result in the creation or imposition of any
Lien upon any of its properties pursuant to the terms of any
such indenture, agreement, mortgage, deed of trust or other
instrument, other than 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 any of its
properties;
(vii) NO PROCEEDINGS. There are no proceedings or
investigations pending or, to the Servicer's knowledge,
threatened against the Servicer, before any court,
regulatory body, administrative agency or other tribunal or
governmental instrumentality having jurisdiction over the
Servicer or its properties (A) asserting the invalidity of
this Agreement or any of the Related Documents, (B) seeking
to prevent the issuance of the Notes or the consummation of
any of the transactions contemplated by this Agreement or
any of the Related Documents, or (C) seeking any
determination or ruling that might materially and adversely
affect the performance by the Servicer of its obligations
under, or the validity or enforceability of, this Agreement
or any of the Related Documents or (D) seeking to adversely
affect the federal income tax or other federal, state or
local tax attributes of the Notes;
43
<PAGE>
(viii) NO CONSENTS. The Servicer is not required to
obtain the consent of any other party or any consent,
license, approval or authorization, or registration or
declaration with, any governmental authority, bureau or
agency in connection with the execution, delivery,
performance, validity or enforceability of this Agreement
which has not already been obtained.
Section 3.7. PURCHASE OF RECEIVABLES UPON BREACH OF COVENANT.
Upon discovery by any of the Servicer, the Security Insurer, the Issuer or
the Trustee of a breach of any of the covenants set forth in Sections 3.5(a)
or 3.6(a), the party discovering such breach shall give prompt written notice
to the others; PROVIDED, HOWEVER, that the failure to give any such notice
shall not affect any obligation of AFS as Servicer under this Section 3.7.
As of the second Accounting Date following its discovery or receipt of notice
of any breach of any covenant set forth in Sections 3.5(a) or 3.6(a) which
materially and adversely affects the interests of the Noteholders, the Issuer
or the Security Insurer in any Receivable (including any Liquidated
Receivable) (or, at AFS's election, the first Accounting Date so following),
AFS shall, unless such breach shall have been cured in all material respects,
purchase from the Issuer the Receivable affected by such breach and, on the
related Deposit Date, AFS shall pay the related Purchase Amount. It is
understood and agreed that the obligation of AFS to purchase any Receivable
(including any Liquidated Receivable) with respect to which such a breach has
occurred and is continuing shall, if such obligation is fulfilled, constitute
the sole remedy against AFS for such breach available to the Security
Insurer, the Noteholders, the Issuer or the Trustee on behalf of Noteholders;
PROVIDED, HOWEVER, that AFS shall indemnify the Issuer, the Backup Servicer,
the Collateral Agent, the Security Insurer, the Trustee and the Noteholders
against all costs, expenses, losses, damages, claims and liabilities,
including reasonable fees and expenses of counsel, which may be asserted
against or incurred by any of them as a result of third party claims arising
out of the events or facts giving rise to such breach.
Section 3.8. TOTAL SERVICING FEE; PAYMENT OF CERTAIN
EXPENSES BY SERVICER. On each Distribution Date, the Servicer
shall be entitled to receive out of the Collection Account the
Basic Servicing Fee and any Supplemental Servicing Fee for the
related Monthly Period pursuant to Section 4.6. The Servicer
shall be required to pay all expenses incurred by it in
connection with
44
<PAGE>
its activities under this Agreement (including taxes imposed on the Servicer,
expenses incurred in connection with distributions and reports made by the
Servicer to Noteholders or the Security Insurer and all other fees and
expenses of the Issuer, except taxes levied or assessed against the Issuer,
and claims against the Issuer in respect of indemnification, which taxes and
claims in respect of indemnification against the Issuer are expressly stated
to be for the account of AFS). The Servicer shall be liable for the fees and
expenses of the Issuer, the Indenture Collateral Agent, the Trustee, the
Custodian, the Backup Servicer, the Collateral Agent, the Lockbox Bank (and
any fees under the Lockbox Agreement) and the Independent Accountants.
Notwithstanding the foregoing if the Servicer shall not be AFS, a successor
to AFS as Servicer permitted by Section 7.2 shall not be liable for taxes
levied or assessed against the Issuer or claims against the Issuer in respect
of indemnification.
Section 3.9. SERVICER'S CERTIFICATE. No later than 10:00 am.
New York City time on each Determination Date, the Servicer shall deliver to
the Issuer, the Trustee, the Backup Servicer, the Security Insurer, the
Collateral Agent and each Rating Agency a Servicer's Certificate executed by
a Responsible Officer of the Servicer containing among other things, (i) all
information necessary to enable the Trustee to make any withdrawal and
deposit required by Section 5.1, to give any notice required by Section
5.1(b), to make the distributions required by Sections 4.6, (ii) all
information necessary to enable the Trustee to send the statements to
Noteholders and the Security Insurer required by Section 4.8, (iii) a listing
of all Warranty Receivables and Administrative Receivables purchased as of
the related Deposit Date, identifying the Receivables so purchased and (iv)
all information necessary to enable the Trustee to reconcile all deposits to,
and withdrawals from, the Collection Account for the related Monthly Period
and Distribution Date, including the accounting required by Section 4.8.
Receivables purchased by the Servicer or by the Seller or AFS on the related
Deposit Date and each Receivable which became a Liquidated Receivable or
which was paid in full during the related Monthly Period shall be identified
by account number (as set forth in the Schedule of Receivables). A copy of
such certificate may be obtained by any Noteholder by a request in writing to
the Trustee addressed to the Corporate Trust Office. In addition to the
information set forth in the preceding sentence, the Servicer's Certificate
delivered to the Security Insurer, the Collateral Agent and the Trustee on
the Determination Date shall also contain the following information: (a) the
45
<PAGE>
Delinquency Ratio, Average Delinquency Ratio, Default Ratio, Average Default
Ratio, Net Loss Ratio and Average Net Loss Ratio for such Determination Date;
(b) whether any Trigger Event has occurred as of such Determination Date; (c)
whether any Trigger Event that may have occurred as of a prior Determination
Date is Deemed Cured as of such Determination Date; and (d) whether to the
knowledge of the Servicer an Insurance Agreement Event of Default has
occurred.
Section 3.10. ANNUAL STATEMENT AS TO COMPLIANCE, NOTICE OF
SERVICER TERMINATION EVENT.
(a) The Servicer shall deliver to the Issuer, the Trustee, the
Backup Servicer, the Security Insurer, the Noteholders and each Rating
Agency, on or before October 31 (or 120 days after the end of the Servicer's
fiscal year, if other than June 30) of each year, beginning on October 31,
1996, an officer's certificate signed by any Responsible Officer of the
Servicer, dated as of June 30 (or other applicable date) of such year,
stating that (i) a review of the activities of the Servicer during the
preceding 12-month period (or such other period as shall have elapsed from
the Closing Date to the date of the first such certificate) and of its
performance under this Agreement has been made under such officer's
supervision, and (ii) to such officer's knowledge, based on such review, the
Servicer has fulfilled all its obligations under this Agreement throughout
such period, 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.
(b) The Servicer shall deliver to the Issuer, the Trustee, the
Backup Servicer, the Security Insurer, the Noteholders, the Collateral Agent,
and each Rating Agency, promptly after having obtained knowledge thereof, but
in no event later than two (2) Business Days thereafter, written notice in an
officer's certificate of any event which with the giving of notice or lapse
of time, or both, would become a Servicer Termination Event under Section
8.1(a). The Seller or the Servicer shall deliver to the Issuer, the Trustee,
the Backup Servicer, the Security Insurer, the Collateral Agent, the Servicer
or the Seller (as applicable) and each Rating Agency promptly after having
obtained knowledge thereof, but in no event later than two (2) Business Days
thereafter, written notice in an officer's certificate of any event which
with the giving of notice or lapse of time, or both, would become a Servicer
Termination Event under any other clause of Section 8.1.
46
<PAGE>
Section 3.11. ANNUAL INDEPENDENT ACCOUNTANTS' REPORT.
(a) The Servicer shall cause a firm of nationally recognized
independent certified public accountants (the "Independent Accountants"), who
may also render other services to the Servicer or to the Seller, to deliver
to the Issuer, the Trustee, the Backup Servicer, the Security Insurer and
each Rating Agency, on or before October 31 (or 120 days after the end of the
Servicer's fiscal year, if other than June 30) of each year, beginning on
October 31, 1996, with respect to the twelve months ended the immediately
preceding June 30 (or other applicable date) (or such other period as shall
have elapsed from the Closing Date to the date of such certificate), a
statement (the "Accountants' Report") addressed to the Board of Directors of
the Servicer, to the Issuer, the Trustee, the Backup Servicer and to the
Security Insurer, to the effect that such firm has audited the books and
records of the Servicer and issued its report thereon in connection with the
audit report on the financial statements of AmeriCredit Corp. and that (1)
such audit 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;
(2) the firm is independent of the Seller and the Servicer within the meaning
of the Code of Professional Ethics of the American Institute of Certified
Public Accountants, and (3) a review in accordance with agreed upon
procedures was made of three randomly selected Servicer's Certificates
including the delinquency, default and loss statistics required to be
specified therein and except as disclosed in the Accountants' Report, no
exceptions or errors in the Servicer's Certificates were found.
(b) A copy of the Accountants' Report may be obtained by any
Noteholder by a request in writing to the Trustee addressed to the Corporate
Trust Office.
Section 3.12. ACCESS TO CERTAIN DOCUMENTATION AND
INFORMATION REGARDING RECEIVABLES. The Servicer shall provide to
representatives of the Issuer, Trustee, the Backup Servicer, the
Noteholders and the Security Insurer reasonable access to the
documentation regarding the Receivables. In each case, such
access shall be afforded without charge but only upon reasonable
request and during normal business hours. Nothing in this
Section 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
47
<PAGE>
provided in this Section as a result of such obligation shall not constitute
a breach of this Section.
Section 3.13. MONTHLY TAPE. On or before the third Business
Day, but in no event later than the fifth calendar day, of each month, the
Servicer will deliver to the Trustee and the Backup Servicer a computer tape
and a diskette (or any other electronic transmission acceptable to the
Trustee and the Backup Servicer) in a format acceptable to the Trustee and
the Backup Servicer containing the information with respect to the
Receivables as of the preceding Accounting Date necessary for preparation of
the Servicer's Certificate relating to the immediately succeeding
Determination Date and necessary to determine the application of collections
as provided in Section 4.3. The Backup Servicer shall use such tape or
diskette (or other electronic transmission acceptable to the Trustee and the
Backup Servicer) to verify the Servicer's Certificate delivered by the
Servicer, and the Backup Servicer shall certify to the Controlling Party that
it has verified the Servicer's Certificate in accordance with this Section
3.13 and shall notify the Servicer and the Controlling Party of any
discrepancies, in each case, on or before the second Business Day following
the Determination Date. In the event that the Backup Servicer reports any
discrepancies, the Servicer and the Backup Servicer shall attempt to
reconcile such discrepancies prior to the related Distribution Date, but in
the absence of a reconciliation, the Servicer's Certificate shall control for
the purpose of calculations and distributions with respect to the related
Distribution Date. In the event that the Backup Servicer and the Servicer
are unable to reconcile discrepancies with respect to a Servicer's
Certificate by the related Distribution Date, the Servicer shall cause the
Independent Accountants, at the Servicer's expense, to audit the Servicer's
Certificate and, prior to the third Business Day, but in no event later than
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, upon the occurrence of a Servicer Termination Event the Servicer
shall, if so requested by the Controlling Party deliver to the Backup
Servicer its Collection Records and its Monthly Records within 15 days after
demand therefor and 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. Other than the duties
specifically set forth in this Agreement, the Backup Servicer shall have no
obligations hereunder, including, without limitation, to
48
<PAGE>
supervise, verify, monitor or administer the performance of the Servicer.
The Backup Servicer shall have no liability for any actions taken or omitted
by the Servicer.
Section 3.14. RETENTION AND TERMINATION OF SERVICER. The
Servicer hereby covenants and agrees to act as such under this Agreement for
an initial term, commencing on the Closing Date and ending on September 30,
1995, which term shall be extendible by the Controlling Party for successive
quarterly terms ending on each successive December 31, March 31, June 30 and
September 30 (or, pursuant to revocable written standing instructions from
time to time to the Servicer, the Trustee and the Issuer, for any specified
number of terms greater than one), until the Notes are paid in full. Each
such notice (including each notice pursuant to standing instructions, which
shall be deemed delivered at the end of successive quarterly terms for so
long as such instructions are in effect) (a "Servicer Extension Notice")
shall be delivered by the Security Insurer to the Issuer, the Trustee and the
Servicer. The Servicer hereby agrees that, as of the date hereof and upon
its receipt of any such Servicer Extension Notice, the Servicer shall become
bound, for the initial term beginning on the Closing Date and for the
duration of the term covered by such Servicer Extension Notice, to continue
as the Servicer subject to and in accordance with the other provisions of
this Agreement. Until such time as an Insurer Default shall have occurred
and be continuing the Trustee agrees that if as of the fifteenth day prior to
the last day of any term of the Servicer the Trustee shall not have received
any Servicer Extension Notice from the Security Insurer, the Trustee will,
within five days thereafter, give written notice of such non-receipt to the
Issuer, the Security Insurer and the Servicer.
Section 3.15. DUTIES OF THE SERVICER UNDER THE INDENTURE. The
Servicer (or AFS, as noted below if it is not the Servicer hereunder) shall,
and hereby agrees that it will, perform on behalf of the Issuer the following
duties of the Issuer under the Indenture (references are to the applicable
Sections in the Indenture):
(a) the direction to the Paying Agents, if any, to deposit
moneys with the Trustee (Section 3.3);
(b) the Servicer, or AFS if AFS is not the Servicer hereunder,
with respect to the obtaining and preservation of the Issuer's qualification
to do business in each jurisdiction in which such qualification is or shall
be necessary to protect the validity
49
<PAGE>
and enforceability of the Indenture, the Notes, the Indenture Collateral and
each other instrument and agreement included in the Trust Estate (Section
3.4);
(c) the preparation of all supplements, amendments, financing
statements, continuation statements, instruments of further assurance and
other instruments, in accordance with Section 3.5 of the Indenture, necessary
to protect the Trust Estate (Section 3.5);
(d) the delivery of the Opinion of Counsel on the Closing Date
and the annual delivery of Opinions of Counsel, in accordance with Section
3.6 of the Indenture, as to the Trust Estate, and the annual delivery of the
Officers' Certificate and certain other statements, in accordance with
Section 3.9 of the Indenture, as to compliance with the Indenture (Sections
3.6 and 3.9);
(e) the preparation and obtaining of documents and instruments
required for the release of the Issuer from its obligations under the
Indenture (Section 3.10(b));
(f) the monitoring of the Issuer's obligations as to the
satisfaction and discharge of the Indenture and the preparation of an
Officers' Certificate and the obtaining of the Opinion of Counsel and the
Independent Certificate relating thereto (Section 4.1);
(g) the preparation of any written instruments required to
confirm more fully the authority of any co-trustee or separate trustee and
any written instruments necessary in connection with the resignation or
removal of any co-trustee or separate trustee (Sections 6.8 and 6.10);
(h) the preparation of Issuer Orders, Officers' Certificates and
Opinions of Counsel and all other actions necessary with respect to
investment and reinvestment of funds in the Trust Accounts (Sections 8.2 and
8.3);
(i) the preparation of Issuer Orders and the obtaining of
Opinions of Counsel with respect to the execution of supplemental indentures
(Sections 9.1, 9.2 and 9.3);
(j) the preparation of all Officers' Certificates, Opinions of
Counsel and Independent Certificates with respect to any requests by the
Issuer to the Trustee or the Indenture Collateral Agent to take any action
under the Indenture (Section 11.1(a));
50
<PAGE>
(k) the preparation and delivery of Officers' Certificates and
the obtaining of Independent Certificates, if necessary, for the release of
property from the lien of the Indenture (Section 11.1(b)); and
(l) the recording of the Indenture, if applicable (Section
11.15).
Section 3.16. FIDELITY BOND AND ERRORS AND OMISSIONS POLICY.
The Servicer has obtained, and shall continue to maintain in full force and
effect, a Fidelity Bond and Errors and Omissions Policy of a type and in such
amount as is customary for servicers engaged in the business of servicing
automobile receivables.
ARTICLE IV
DISTRIBUTIONS; STATEMENTS TO NOTEHOLDERS
Section 4.1. TRUST ACCOUNTS.
(a) The Indenture Collateral Agent shall establish the
Collection Account in the name of the Indenture Collateral Agent for the
benefit of the Issuer Secured Parties (as defined in the Indenture). The
Collection Account shall be a segregated trust account established by the
Indenture Collateral Agent with a depository institution acceptable to the
Controlling Party, and initially maintained with the Indenture Collateral
Agent.
(b) The Indenture Collateral Agent shall establish the Note
Distribution Account in the name of the Indenture Collateral Agent for the
benefit of the Issuer Secured Parties. The Note Distribution Account shall
be a segregated trust account established by the Indenture Collateral Agent
with a depository institution acceptable to the Controlling Party, and
initially maintained with the Indenture Collateral Agent.
(c) All amounts held in the Collection Account and the Note
Distribution Account (collectively, the "Trust Accounts") shall,
to the extent permitted by applicable laws, rules and
regulations, be invested by the Indenture Collateral Agent, as
directed by the Servicer (or, if the Servicer fails to so direct,
as directed by the Controlling Party), in Eligible Investments
that, in the case of amounts held in the Collection Account and
the Note Distribution Account mature not later than one Business
Day prior to the Distribution Date for the Monthly Period to
which such amounts
51
<PAGE>
relate. Any such written direction shall certify that any such investment is
authorized by this Section 4.1. Investments in Eligible Investments shall be
made in the name of the Indenture Collateral Agent on behalf of the Issuer,
and such investments shall not be sold or disposed of prior to their
maturity. Any investment of funds in the Trust Accounts shall be made in
Eligible Investments held by a financial institution with respect to which
(a) such institution has noted the Indenture Collateral Agent's interest
therein by book entry or otherwise and (b) a confirmation of the Indenture
Collateral Agent's interest has been sent to the Indenture Collateral Agent
by such institution, provided that such Eligible Investments are (i) specific
certificated securities (as such term is used in the Texas UCC, and (ii)
either (A) in the possession of such institution or (B) in the possession of
a clearing corporation as such term is used in the New York UCC and the Texas
UCC, registered in the name of such clearing corporation, not endorsed for
collection or surrender or any other purpose not involving transfer, not
containing any evidence of a right or interest inconsistent with the
Indenture Collateral Agent's security interest therein, and held by such
clearing corporation in an account of such institution. Subject to the other
provisions hereof, the Indenture 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 be delivered
directly to the Indenture Collateral Agent or its agent, together with each
document of transfer, if any, necessary to transfer title to such investment
to the Indenture Collateral Agent in a manner which complies with this
Section 4.1. All interest, dividends, gains upon sale and other income from,
or earnings on, investments of funds in the Trust Accounts shall be deposited
in the Collection Account and distributed on the next Distribution Date
pursuant to Section 4.6 hereof. The Servicer shall deposit in the applicable
Trust Account an amount equal to any net loss on such investments immediately
as realized.
(d) On the Closing Date, the Servicer shall deliver to the
Trustee for deposit in the Collection Account (i) all Scheduled Payments and
prepayments of Receivables received by the Servicer after the Cutoff Date and
on or prior to the Business Day immediately preceding the Closing Date or
received by the Lockbox Bank after the Cutoff Date and on or prior to the
second Business Day immediately preceding the Closing Date and (ii) all
Liquidation Proceeds and proceeds of Insurance Policies realized in respect
of a Financed Vehicle and applied by the Servicer after the Cutoff Date.
52
<PAGE>
Section 4.2. COLLECTIONS.
(a) The Servicer shall establish the Subcollection Account in
the name of the Indenture Collateral Agent for the benefit of the
Noteholders. The Subcollection Account shall be an Eligible Account
satisfying clause (i) of the definition of "Eligible Account," and shall
initially be established with First Interstate Bank, N.A. The Servicer shall
remit directly to the Subcollection Account without deposit into any
intervening account all payments by or on behalf of the Obligors on the
Receivables and all Liquidation Proceeds received by the Servicer, in each
case, as soon as practicable, but in no event later than the Business Day
after receipt thereof. Within two days of deposit of payments into the
Subcollection Account, the Servicer shall cause all amounts credited to the
Subcollection Account on account of such payments to be transferred to the
Collection Account. Amounts in the Subcollection Account shall not be
invested.
(b) Notwithstanding the provisions of subsection (a) hereof, the
Servicer will be entitled to be reimbursed from amounts on deposit in the
Collection Account with respect to a Monthly Period for amounts previously
deposited in the Collection Account but later determined by the Servicer or
the Lockbox Bank to have resulted from mistaken deposits or postings or
checks returned for insufficient funds. The amount to be reimbursed
hereunder shall be paid to the Servicer on the related Distribution Date
pursuant to Section 4.6(i) upon certification by the Servicer of such amounts
and the provision of such information to the Trustee and the Security Insurer
as may be necessary in the opinion of the Trustee and the Security Insurer to
verify the accuracy of such certification. In the event that the Security
Insurer has not received evidence satisfactory to it of the Servicer's
entitlement to reimbursement pursuant to this Section 4.2(b), the Security
Insurer shall (unless an Insurer Default shall have occurred and be
continuing) give the Trustee notice to such effect, following receipt of
which the Trustee shall not make a distribution to the Servicer in respect of
such amount pursuant to Section 4.6, or if the Servicer prior thereto has
been reimbursed pursuant to Section 4.6 or Section 4.8, the Trustee shall
withhold such amounts from amounts otherwise distributable to the Servicer on
the next succeeding Distribution Date.
Section 4.3. APPLICATION OF COLLECTIONS. For the purposes of
this Agreement, all collections for a Monthly Period shall be applied by the
Servicer as follows:
53
<PAGE>
(a) With respect to each Receivable, payments by or on behalf of
the Obligor thereof (other than of Supplemental Servicing Fees with respect
to such Receivable, to the extent collected) shall be applied to interest and
principal with respect to such Receivable in accordance with the Simple
Interest Method, whether or not such Receivable is a Simple Interest
Receivable. With respect to each Liquidated Receivable, Liquidation Proceeds
shall be applied to interest and principal with respect to such Receivable in
accordance with the Simple Interest Method. The Servicer shall not be
entitled to any Supplemental Servicing Fees with respect to a Liquidated
Receivable.
(b) With respect to each Receivable that has become a Purchased
Receivable on any Deposit Date, the Purchase Amount shall be applied, for
purposes of this Agreement only, to interest and principal on the Receivable
in accordance with the Simple Interest Method as if the Purchase Amount had
been paid by the Obligor on the Accounting Date. The Servicer shall not be
entitled to any Supplemental Servicing Fees with respect to a Purchased
Receivable. Nothing contained herein shall relieve any Obligor of any
obligation relating to any Receivable.
(c) All amounts collected that are payable to the Servicer as
Supplemental Servicing Fees hereunder shall be deposited in the Collection
Account and paid to the Servicer in accordance with Section 4.6(i).
(d) All payments by or on behalf of an Obligor received with
respect to any Purchased Receivable after the Accounting Date immediately
preceding the Deposit Date on which the Purchase Amount was paid by the
Seller, AFS or the Servicer shall be paid to the Seller, AFS or the Servicer,
respectively, and shall not be included in the Available Funds.
Section 4.4. NET DEPOSITS. Subject to payment by the
Servicer of amounts otherwise payable pursuant to Section 4.6(ii)
and provided that no Servicer Termination Event shall have
occurred and be continuing with respect to such Servicer, the
Servicer may make the remittances to be made by it pursuant to
Sections 4.2, 4.3 and 4.5 net of amounts (which amounts may be
netted prior to any such remittance for a Monthly Period) to be
distributed to it pursuant to Sections 3.8,4.2(b) and 4.6(i);
PROVIDED, HOWEVER, that the Servicer shall account for all of
such amounts in the related Servicer's Certificate as if such
amounts were deposited and distributed separately, and, PROVIDED,
FURTHER that if an error is
54
<PAGE>
made by the Servicer in calculating the amount to be deposited or retained by
it, with the result that an amount less than required is deposited in the
Collection Account, the Servicer shall make a payment of the deficiency to
the Collection Account, immediately upon becoming aware, or receiving notice
from the Trustee, of such error.
Section 4.5. ADDITIONAL DEPOSITS. On or before each Deposit
Date, the Servicer, the Seller or AFS shall deposit in the Collection Account
the aggregate Purchase Amounts with respect to Administrative Receivables and
Warranty Receivables, respectively. All such deposits of Purchase Amounts
shall be made in immediately available funds. On or before each Draw Date,
the Trustee shall deposit in the Collection Account any amounts delivered to
the Trustee by the Collateral Agent pursuant to Section 5.1.
Section 4.6. DISTRIBUTIONS. On each Distribution Date, the
Trustee shall (based on the information contained in the Servicer's
Certificate delivered on the related Determination Date) distribute the
following amounts and in the following order of priority:
(i) first, from the Distribution Amount, to the
Servicer, the Basic Servicing Fee for the related Monthly
Period, any Supplemental Servicing Fees for the related
Monthly Period, and any amounts specified in Section 4.2(b);
(ii) second, from the Distribution Amount, to the
Trustee, any accrued and unpaid fees and expenses of the
Trustee in accordance with the Indenture; to any Lockbox
Bank, Custodian, Backup Servicer, Collateral Agent, or
Indenture Collateral Agent (including the Issuer or Trustee
if acting in any such additional capacity), any accrued and
unpaid fees and expenses (in each case, to the extent such
Person has not previously received such amount from the
Servicer or AFS);
(iii) third, from the Distribution Amount, to the
Note Distribution Account, an amount equal to the
Noteholders' Interest Distributable Amount for such
Distribution Date;
(iv) fourth, from the Distribution Amount, to the Note
Distribution Account, an amount equal to the Noteholders'
Principal Distributable Amount for such Distribution Date
or, when an Insurer Default shall have occurred and be
continuing the Noteholders' Special Principal Distributable
Amount for such Distribution Date;
55
<PAGE>
(v) fifth, from the Distribution Amount, to the
Security Insurer, to the extent of any amounts owing to the
Security Insurer under the Insurance Agreement and not paid,
whether or not AFS is also obligated to pay such amounts;
and
(vi) sixth, any remaining Available Funds to the
Collateral Agent for deposit in the Spread Account, such
amounts representing the Credit Enhancement Fee payable on a
subordinated basis to the Seller.
Section 4.7. TRUSTEE AS AGENT. The Trustee, in making
distributions as provided in this Agreement, shall act solely on behalf of
and as agent for the Noteholders.
SECTION 4.8. STATEMENTS TO NOTEHOLDERS. On each Distribution
Date, the Trustee shall include with each distribution to each Noteholder, a
statement (which statement shall also be provided to the Security Insurer and
to each Rating Agency) based on information in the Servicer's Certificate
delivered on the related Determination Date pursuant to Section 3.9, setting
forth for the Monthly Period relating to such Distribution Date the following
information:
(i) the amount of such distribution allocable to
principal;
(ii) the amount of such distribution allocable to
interest;
(iii) the amount of such distribution payable out
of amounts withdrawn from the Spread Account or pursuant to
a claim on the Policy and the amount remaining in the Spread
Account;
(iv) the outstanding principal balance of the Notes
(after giving effect to distributions made on such Payment
Date);
(v) the amount of fees paid by the Trustee with
respect to such Monthly Period;
(vi) the Note Pool Factor (after giving effect to
distributions made on such Distribution Date);
56
<PAGE>
(vii) the Delinquency Ratio, Average Delinquency
Ratio, Default Ratio, Average Default Ratio, Net Loss Ratio
and Average Net Loss Ratio for such Determination Date;
(viii) whether any Trigger Event has occurred as of
such Determination Date;
(ix) whether any Trigger Event that may have occurred
as of a prior Determination Date is Deemed Cured as of such
Determination Date;
(x) whether to the knowledge of the Servicer an
Insurance Agreement Event of Default has occurred.
Each amount set forth pursuant to subclauses (i) through (iv) above may be
expressed as a dollar amount per $1,000 of original principal balance of a
Note.
Section 4.9. ELIGIBLE ACCOUNTS. Any account which is required
to be established as an Eligible Account pursuant to this Agreement and which
ceases to be an Eligible Account shall within 5 Business Days (or such longer
period, not to exceed 30 days, as to which each Rating Agency and the
Security Insurer may consent) be established as a new account which shall be
an Eligible Account and any cash and/or any investments shall be transferred
to such new account.
Section 4.10. OPTIONAL DEPOSITS BY THE SECURITY INSURER. The
Security Insurer shall at any time, and from time to time, have the option
(but shall not be required) to deliver amounts to the Trustee for any of the
following purposes as specified to the Trustee: (1) to provide funds in
respect of the payment of fees or expenses of any Person referenced in
Section 4.6(ii), (2) as a component of Available Funds for distribution on a
Distribution Date in reduction of the Note Balance to the extent that but for
such distribution the Note Balance would exceed the Aggregate Principal
Balance as of the related Determination Date, and (3) as a component of
Available Funds for distribution on a Distribution Date in respect of the
Noteholders' Interest Distributable Amount or Noteholders' Principal
Distributable Amount for such Distribution Date, to the extent that without
such distribution a draw would be made on the Policy on such Distribution
Date.
57
<PAGE>
ARTICLE V
THE SPREAD ACCOUNT
Section 5.1. WITHDRAWALS FROM SPREAD ACCOUNT IN RESPECT OF
DEFICIENCY CLAIM AMOUNT.
(a) In the event that the Servicer's Certificate with respect to
any Determination Date shall state that the sum of the amount of the
Available Funds deposited in the Collection Account with respect to such
Determination Date is less than the sum of the amounts payable on the related
Distribution Date pursuant to clauses (i) through (v) of Section 4.6 for the
related Distribution Date (such deficiency being a "Deficiency Claim Amount")
then on the Deficiency Claim Date immediately preceding such Distribution
Date, the Trustee shall deliver to the Collateral Agent, the Security
Insurer, the Issuer and the Servicer, by hand delivery, telex or facsimile
transmission, a written notice (a "Deficiency Notice") specifying the
Deficiency Claim Amount for such Distribution Date.
(b) Any Deficiency Notice shall be delivered by 10:00 am., New
York City time, on the Deficiency Claim Date immediately preceding such
Distribution Date. The Deficiency Claim Amount (to the extent of the funds
available to be distributed pursuant to the Spread Account Agreement)
distributed by the Collateral Agent to the Trustee pursuant to a Deficiency
Notice shall be deposited by the Trustee into the Collection Account pursuant
to Section 4.5 on such Deficiency Claim Date.
Section 5.2. WITHDRAWALS FROM SPREAD ACCOUNT IN RESPECT OF
NOTEHOLDERS' EXCESS PRINCIPAL DISTRIBUTABLE AMOUNT OR FOLLOWING
THE OCCURRENCE OF AN INSURER DEFAULT.
(a) So long as an Insurer Default shall not have occurred and be
continuing, in the event that the Servicer's Certificate with respect to any
Determination Date shall state that the next succeeding Distribution Date is
a Trigger Date, or in the event that the Trustee has received notice from the
Security Insurer of the occurrence of an Insurance Agreement Event of
Default, no later than 10 a.m. New York City time on the Deficiency Claim
Date immediately preceding such Distribution Date, the Trustee shall deliver
to the Collateral Agent, the Security Insurer, the Issuer and the Servicer,
by hand delivery, telex or facsimile transmission, a written notice (a
"Trigger Notice"). Such Trigger
58
<PAGE>
Notice shall state that such Distribution Date is a Trigger Date, and for the
purpose of the Collateral Agent's calculation of the Noteholders' Excess
Principal Distributable Amount, shall state the Aggregate Principal Balance
as of the related Determination Date and the Note Balance (after giving
effect to distribution of the Noteholders' Principal Distributable Amount
with respect to such Distribution Date). Upon receipt of the Noteholders'
Excess Principal Distributable Amount, the Trustee shall deposit such amount
directly into the Note Distribution Account.
(b) So long as an Insurer Default shall have occurred and be
continuing, no later than 10 a.m. New York City time on each Deficiency Claim
Date, the Trustee shall deliver to the Collateral Agent, the Security
Insurer, the Issuer and the Servicer, by hand delivery, telex or facsimile
transmission, a notice requesting the Collateral Agent to deliver on the next
succeeding Distribution Date to the Trustee all amounts, if any, on deposit
in the Spread Account, including amounts, if any, deposited into the Spread
Account on such Distribution Date. Upon receipt of any such amounts, the
Trustee shall deposit such amounts directly into the Note Distribution
Account.
ARTICLE VI
THE SELLER
Section 6.1. LIABILITY OF SELLER.
(a) The Seller shall be liable hereunder only to the extent of
the obligations in this Agreement specifically undertaken by the Seller and
the representations made by the Seller.
Section 6.2. MERGER OR CONSOLIDATION OF, OR ASSUMPTION OF THE
OBLIGATIONS OF SELLER; AMENDMENT OF CERTIFICATE OF INCORPORATION.
(a) The Seller shall not merge or consolidate with any other
Person or permit any other Person to become the successor to the Seller's
business without the prior written consent of the Controlling Party. The
certificate of incorporation of any corporation (i) into which the Seller may
be merged or consolidated, (ii) resulting from any merger or consolidation to
which the Seller shall be a party, or (iii) succeeding to the business of
Seller, shall contain provisions relating to limitations on business and
other matters substantively identical
59
<PAGE>
to those contained in the Seller's certificate of incorporation. Any such
successor corporation shall execute an agreement of assumption of every
obligation of the Seller under this Agreement and each Related Document and,
whether or not such assumption agreement is executed, shall be the successor
to the Seller under this Agreement without the execution or filing of any
document or any further act on the part of any of the parties to this
Agreement. The Seller shall provide prompt notice of any merger,
consolidation or succession pursuant to this Section 6.2 to the Issuer, the
Trustee, the Security Insurer, the Noteholders and the Rating Agencies.
Notwithstanding the foregoing, the Seller shall not merge or consolidate with
any other Person or permit any other Person to become a successor to the
Seller's business, unless (x) immediately after giving effect to such
transaction, no representation or warranty made pursuant to Section 2.4 shall
have been breached (for purposes hereof, such representations and warranties
shall speak as of the date of the consummation of such transaction) and no
event that, after notice or lapse of time, or both, would become a Servicer
Termination Event shall have occurred and be continuing, (y) the Seller shall
have delivered to the Issuer, the Trustee and the Security Insurer an
officer's certificate and an Opinion of Counsel each stating that such
consolidation, merger or succession and such agreement of assumption comply
with this Section 6.2 and that all conditions precedent, if any, provided for
in this Agreement relating to such transaction have been complied with, and
(z) the Seller shall have delivered to the Issuer, the Trustee and the
Security Insurer an Opinion of Counsel, stating, in the opinion of such
counsel, either (A) all financing statements and continuation statements and
amendments thereto have been executed and filed that are necessary to
preserve and protect the interest of the Issuer in the Receivables and the
Other Conveyed Property and reciting the details of the filings or (B) no
such action shall be necessary to preserve and protect such interest.
(b) The Seller hereby agrees that it shall not (i) take any
action prohibited by Article XVI of its certificate of incorporation or (ii)
without the prior written consent of the Issuer and the Trustee and the
Controlling Party and without giving prior written notice to the Rating
Agencies, amend Article III, Article IX, Article XIV or Article XVI of its
certificate of incorporation.
Section 6.3. LIMITATION ON LIABILITY OF SELLER AND OTHERS. The
Seller and any director or officer or employee or agent of the
60
<PAGE>
Seller may rely in good faith on the advice of counsel or on any document of
any kind prima facie properly executed and submitted by any Person respecting
any matters arising under this Agreement. The Seller shall not be under any
obligation to appear in, prosecute or defend any legal action that is not
incidental to its obligations as Seller of the Receivables under this
Agreement and that in its opinion may involve it in any expense or liability.
Section 6.4. SELLER MAY OWN NOTES. Each of the Seller and any
Affiliate of the Seller 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 Seller or an Affiliate thereof except as otherwise specifically
provided herein or in the Related Documents. Notes so owned by or pledged to
the Seller or such Affiliate shall have an equal and proportionate benefit
under the provisions of this Agreement or any Related Document, without
preference, priority, or distinction as among all of the Notes, PROVIDED THAT
any Notes owned by the Seller or any Affiliate thereof, during the time such
Notes are owned by them, shall be without voting rights for any purpose set
forth in this Agreement or any Related Document. The Seller shall notify the
Issuer, the Trustee and the Security Insurer promptly after it or any of its
Affiliates become the owner or pledgee of a Note.
ARTICLE VII
SERVICER
Section 7.1. LIABILITY OF SERVICER; INDEMNITIES.
(a) The Servicer (in its capacity as such and, in the case of
AFS, without limitation of its obligations under the Purchase Agreement)
shall be liable hereunder only to the extent of the obligations in this
Agreement specifically undertaken by the Servicer and the representations
made by the Servicer.
(b) The Servicer shall defend, indemnify and hold harmless the
Issuer, the Trustee, the Indenture Collateral Agent, the Backup Servicer, the
Security Insurer, their respective officers, directors, agents and employees,
and the Noteholders from and against any and all costs, expenses, losses,
damages, claims and liabilities, including reasonable fees and expenses of
counsel and expenses of litigation arising out of or resulting from the use,
ownership or operation by the Servicer or any Affiliate thereof of any
Financed Vehicle;
61
<PAGE>
(c) The Servicer shall indemnify, defend and hold harmless the
Issuer, the Trustee, the Indenture Collateral Agent, the Backup Servicer, the
Security Insurer, their respective officers, directors, agents and employees
and the Noteholders from and against any taxes that may at any time be
asserted against any of such parties with respect to the transactions
contemplated in this Agreement, including, without limitation, any sales,
gross receipts, tangible or intangible personal property, privilege or
license taxes (but not including any federal or other income taxes, including
franchise taxes asserted with respect to, and as of the date of, the sale of
the Receivables and the Other Conveyed Property to the Issuer or the issuance
and original sale of the Notes) and costs and expenses in defending against
the same; and
(d) The Servicer shall indemnify, defend and hold harmless the
Issuer, the Trustee, the Indenture Collateral Agent, the Backup Servicer,
the Security Insurer, their respective officers, directors, agents and
employees and the Noteholders 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 Issuer, the Trustee, the Backup Servicer, the Security Insurer or the
Noteholders by reason of the breach of this Agreement by the Servicer, the
negligence, misfeasance, or bad faith of the Servicer in the performance of
its duties under this Agreement or by reason of reckless disregard of its
obligations and duties under this Agreement.
(e) Indemnification under this Article shall include, without
limitation, reasonable fees and expenses of counsel and expenses of
litigation. If the Servicer has made any indemnity payments pursuant to this
Article and the recipient thereafter collects any of such amounts from
others, the recipient shall promptly repay such amounts collected to the
Servicer, without interest.
(f) AFS, in its individual capacity, hereby acknowledges that
the indemnification provisions in the Purchase Agreement benefiting the
Issuer, the Trustee and the Backup Servicer are enforceable by each hereunder.
Section 7.2. MERGER OR CONSOLIDATION OF, OR ASSUMPTION OF THE
OBLIGATIONS OF THE SERVICER OR BACKUP SERVICER.
(a) AFS shall not merge or consolidate with any other
person, convey, transfer or lease substantially all its assets as an
62
<PAGE>
entirety to another Person, or permit any other Person to become the
successor to AFS's business unless, after the merger, consolidation,
conveyance, transfer, lease or succession, the successor or surviving entity
shall be capable of fulfilling the duties of AFS contained in this Agreement
and shall be acceptable to the Controlling Party, and, if an Insurer Default
shall have occurred and be continuing, shall be an Eligible Servicer. Any
corporation into which AFS may be merged or consolidated, (ii) resulting from
any merger or consolidation to which AFS shall be a party, (iii) which
acquires by conveyance, transfer, or lease substantially all of the assets of
AFS, or (iv) succeeding to the business of AFS, in any of the foregoing cases
shall execute an agreement of assumption to perform every obligation of AFS
under this Agreement and, whether or not such assumption agreement is
executed, shall be the successor to AFS under this Agreement without the
execution or filing of any paper or any further act on the part of any of the
parties to this Agreement, anything in this Agreement to the contrary
notwithstanding; PROVIDED, HOWEVER, that nothing contained herein shall be
deemed to release AFS from any obligation. AFS shall provide notice of any
merger, consolidation or succession pursuant to this Section 7.2(a) to the
Issuer, the Trustee, the Noteholders, the Security Insurer and each Rating
Agency. Notwithstanding the foregoing, AFS shall not merge or consolidate
with any other Person or permit any other Person to become a successor to
AFS's business, unless (x) immediately after giving effect to such
transaction, no representation or warranty made pursuant to Section 3.6 shall
have been breached (for purposes hereof, such representations and warranties
shall speak as of the date of the consummation of such transaction) and no
event that, after notice or lapse of time, or both, would become an Insurance
Agreement Event of Default shall have occurred and be continuing, (y) AFS
shall have delivered to the Issuer, the Trustee and the Security Insurer an
Officer's Certificate and an Opinion of Counsel each stating that such
consolidation, merger or succession and such agreement of assumption comply
with this Section 7.2(a) and that all conditions precedent, if any, provided
for in this Agreement relating to such transaction have been complied with,
and (z) AFS shall have delivered to the Issuer, the Trustee and the Security
Insurer an Opinion of Counsel, stating in the opinion of such counsel, either
(A) all financing statements and continuation statements and amendments
thereto have been executed and filed that are necessary to preserve and
protect the interest of the Issuer in the Receivables and the Other Conveyed
Property and reciting the details of the filings or (B) no such action shall
be necessary to preserve and protect such interest.
63
<PAGE>
(b) Any corporation (i) into which the Backup Servicer may be
merged or consolidated, (ii) resulting from any merger or consolidation to
which the Backup Servicer shall be a party, (iii) which acquires by
conveyance, transfer or lease substantially all of the assets of the Backup
Servicer, or (iv) succeeding to the business of the Backup Servicer, in any
of the foregoing cases shall execute an agreement of assumption to perform
every obligation of the Backup Servicer under this Agreement and, whether or
not such assumption agreement is executed, shall be the successor to the
Backup Servicer under this Agreement without the execution or filing of any
paper or any further act on the part of any of the parties to this Agreement,
anything in this Agreement to the contrary notwithstanding; PROVIDED,
HOWEVER, that nothing contained herein shall be deemed to release the Backup
Servicer from any obligation.
Section 7.3. LIMITATION ON LIABILITY OF SERVICER, BACKUP
SERVICER AND OTHERS.
(a) Neither AFS, the Backup Servicer nor any of the directors or
officers or employees or agents of AFS or Backup Servicer shall be under any
liability to the Issuer or the Noteholders, except as provided in this
Agreement, for any action taken or for refraining from the taking of any
action pursuant to this Agreement; PROVIDED, HOWEVER, that this provision
shall not protect AFS, the Backup Servicer or any such person against any
liability that would otherwise be imposed by reason of a breach of this
Agreement or willful misfeasance, bad faith or negligence (excluding errors
in judgment) in the performance of duties; PROVIDED FURTHER that this
provision shall not affect any liability to indemnify the Issuer and the
Trustee for costs, taxes, expenses, claims, liabilities, losses or damages
paid by the Issuer or the Trustee, each in its individual capacity. AFS, the
Backup Servicer and any director, officer, employee or agent of AFS or Backup
Servicer may rely in good faith on the written advice of counsel or on any
document of any kind prima facie properly executed and submitted by any
Person respecting any matters arising under this Agreement.
(b) The Backup Servicer shall not be liable for any obligation
of the Servicer contained in this Agreement, and the Issuer, the Trustee, the
Seller, the Security Insurer and the Noteholders shall look only to the
Servicer to perform such obligations.
64
<PAGE>
(c) The parties expressly acknowledge and consent to
LaSalle National Bank acting in the possible dual capacity of
Backup Servicer or successor Servicer and in the capacities as
Trustee and Indenture Collateral Agent. LaSalle National Bank
may, in such dual capacity, discharge its separate functions
fully, without hinderance or regard to conflict of interest
principles, duty of loyalty principles or other breach of
fiduciary duties to the extent that any such conflict or breach
arises from the performance by LaSalle of express duties set
forth in the this Agreement in any of such capacities, all of
which defenses, claims or assertions are hereby expressly waived
by the other parties hereto except in the case of gross
negligence and willful misconduct by LaSalle National Bank .
Section 7.4. DELEGATION OF DUTIES. The Servicer may
delegate duties under this Agreement to an Affiliate of AFS with
the prior written consent of the Security Insurer (unless an
Insurer Default shall have occurred and be continuing), the
Trustee, the Issuer and the Backup Servicer. The Servicer also
may at any time perform the specific duty of repossession of
Financed Vehicles through sub-contractors who are in the business
of servicing automotive receivables and the specific duty of
tracking Financed Vehicles' insurance through sub-contractors, in
each case, without the consent of the Security Insurer and may
perform other specific duties through such sub-contractors in
accordance with Servicer's customary servicing policies and
procedures, with the prior consent of the Security Insurer;
PROVIDED, HOWEVER, that no such delegation or sub-contracting
duties by the Servicer shall relieve the Servicer of its
responsibility with respect to such duties. So long as no
Insurer Default shall have occurred and be continuing neither AFS
or any party acting as Servicer hereunder shall appoint any
subservicer hereunder without the prior written consent of the
Security Insurer, the Trustee, the Issuer and the Backup
Servicer.
Section 7.5. SERVICER AND BACKUP SERVICER NOT TO RESIGN.
Subject to the provisions of Section 7.2, neither the Servicer
nor the Backup Servicer shall resign from the obligations and
duties imposed on it by this Agreement as Servicer or Backup
Servicer except upon a determination that by reason of a change
in legal requirements the performance of its duties under this
Agreement would cause it to be in violation of such legal
requirements in a manner which would have a material adverse
effect on the Servicer or the Backup Servicer, as the case may
be, and the Security Insurer (so long as an Insurer Default shall
not have occurred and
65
<PAGE>
be continuing) or a Note Majority (if an Insurer Default shall
have occurred and be continuing) does not elect to waive the
obligations of the Servicer or the Backup Servicer, as the case
may be, to perform the duties which render it legally unable to
act or to delegate those duties to another Person. Any such
determination permitting the resignation of the Servicer or Backup
Servicer shall be evidenced by an Opinion of Counsel to such effect
delivered and acceptable to the Issuer, the Trustee and the Security
Insurer (unless an Insurer Default shall have occurred and be
continuing). No resignation of the Servicer shall become effective
until, so long as no Insurer Default shall have occurred and be
continuing the Backup Servicer or an entity acceptable to the
Security Insurer shall have assumed the responsibilities and
obligations of the Servicer or, if an Insurer Default shall have
occurred and be continuing, the Backup Servicer or a successor
Servicer that is an Eligible Servicer shall have assumed the
responsibilities and obligations of the Servicer. No resignation
of the Backup Servicer shall become effective until, so long as no
Insurer Default shall have occurred and be continuing, an entity
acceptable to the Security Insurer shall have assumed the
responsibilities and obligations of the Backup Servicer or, if an
Insurer Default shall have occurred and be continuing a Person that
is an Eligible Servicer shall have assumed the responsibilities and
obligations of the Backup Servicer; PROVIDED, HOWEVER, that in the
event a successor Backup Servicer is not appointed within 60 days
after the Backup Servicer has given notice of its resignation and
has provided the Opinion of Counsel required by this Section 7.5,
the Backup Servicer may petition a court for its removal.
ARTICLE VIII
SERVICER TERMINATION EVENTS
Section 8.1. SERVICER TERMINATION EVENT. For purposes of
this Agreement, each of the following shall constitute a
"Servicer Termination Event":
(a) Any failure by the Servicer to deliver to the Trustee
for distribution to Noteholders any proceeds or payment required
to be so delivered under the terms of this Agreement (or, if AFS
is the Servicer, the Purchase Agreement) that continues
unremedied for a period of two Business Days (one Business Day
with respect to payment of Purchase Amounts) after written notice
is received by the Servicer from the Trustee or (unless an
Insurer Default shall
66
<PAGE>
have occurred and be continuing) the Security Insurer or after
discovery of such failure by a Responsible Officer of the Servicer;
(b) Failure by the Servicer to deliver to the Trustee, the
Issuer and (so long as an Insurer Default shall not have occurred
and be continuing) the Security Insurer the Servicer's
Certificate by the fourth Business Day prior to the Distribution
Date, or failure on the part of the Servicer to observe its
covenants and agreements set forth in Section 7.2(a);
(c) Failure on the part of the Servicer duly to observe or
perform any other covenants or agreements of the Servicer set
forth in this Agreement (or, if AFS is the Servicer, the Purchase
Agreement), which failure (i) materially and adversely affects
the rights of Noteholders (determined without regard to the
availability of funds under the Policy), or of the Security
Insurer (unless an Insurer Default shall have occurred and be
continuing), and (ii) continues unremedied for a period of 30
days after knowledge thereof by the Servicer or after the date on
which written notice of such failure, requiring the same to be
remedied, shall have been given to the Servicer by the Issuer,
the Trustee or the Security Insurer (or, if an Insurer Default
shall have occurred and be continuing any Noteholder);
(d) The entry of a decree or order for relief by a
court or regulatory authority having jurisdiction in respect of the
Servicer in an involuntary case under the federal bankruptcy
laws, as now or hereafter in effect, or another present or
future, federal bankruptcy, insolvency or similar law, or
appointing a receiver, liquidator, assignee, trustee, custodian,
sequestrator or other similar official of the Servicer or of any
substantial part of its property or ordering the winding up or
liquidation of the affairs of the Servicer and the continuance of
any such decree or order unstayed and in effect for a period of
60 consecutive days or the commencement of an involuntary case
under the federal bankruptcy laws, as now or hereinafter in
effect, or another present or future federal or state bankruptcy,
insolvency or similar law and such case is not dismissed within
60 days; or
(e) The commencement by the Servicer 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 the Servicer to the
appointment of or taking possession by a receiver, liquidator,
assignee, trustee, custodian, sequestrator or other similar
67
<PAGE>
official of the Servicer or of any substantial part of its
property or the making by the Servicer of an assignment for the
benefit of creditors or the failure by the Servicer generally to
pay its debts as such debts become due or the taking of corporate
action by the Servicer in furtherance of any of the foregoing; or
(f) Any representation, warranty or statement of the
Servicer made in this Agreement or any certificate, report or
other writing delivered pursuant hereto shall prove to be
incorrect in any material respect as of the time when the same
shall have been made (excluding, however, any representation or
warranty set forth in Section 2.4(a)), and the incorrectness of
such representation, warranty or statement has a material adverse
effect on the Issuer and, within 30 days after knowledge thereof
by the Servicer or after written notice thereof shall have been
given to the Servicer by the Issuer, the Trustee or the Security
Insurer (or, if an Insurer Default shall have occurred and be
continuing, a Noteholder), the circumstances or condition in
respect of which such representation, warranty or statement was
incorrect shall not have been eliminated or otherwise cured; or
(g) So long as an Insurer Default shall not have occurred
and be continuing, the Security Insurer shall not have delivered
a Servicer Extension Notice pursuant to Section 3.14; or
(h) So long as an Insurer Default shall not have occurred
and be continuing, an Insurance Agreement Event of Default or
under any other Insurance and Indemnity Agreement relating to any
Series an Event of Default thereunder shall have occurred; or
(i) A claim is made under the Policy.
Section 8.2. CONSEQUENCES OF A SERVICER TERMINATION EVENT.
If a Servicer Termination Event shall occur and be continuing,
the Security Insurer (or, if an Insurer Default shall have
occurred and be continuing either the Trustee, (to the extent it
has knowledge thereof) the Issuer or a Note Majority), by notice
given in writing to the Servicer (and to the Trustee and the
Issuer if given by the Security Insurer or the Noteholders) or by
non-extension of the term of the Servicer as referred to in
Section 3.14 may terminate all of the rights and obligations of
the Servicer under this Agreement. On or after the receipt by
the Servicer of such written notice or upon termination of the
term of the Servicer, all authority, power, obligations and
responsibilities of the Servicer under this Agreement, whether
with respect to the Notes or the
68
<PAGE>
Other Conveyed Property or otherwise, automatically shall pass
to, be vested in and become obligations and responsibilities
of the Backup Servicer (or such other successor Servicer
appointed by the Controlling Party); PROVIDED, HOWEVER, that
the successor Servicer shall have no liability with respect to
any obligation which was required to be performed by the
terminated Servicer prior to the date that the successor
Servicer becomes the Servicer or any claim of a third party
based on any alleged action or inaction of the terminated
Servicer. The successor Servicer is authorized and empowered
by this Agreement to execute and deliver, on behalf of the
terminated Servicer, as attorney-in-fact or otherwise, any and
all documents and other instruments and to do or accomplish
all other acts or things necessary or appropriate to effect
the purposes of such notice of termination, whether to
complete the transfer and endorsement of the Receivables and
the Other Conveyed Property and related documents to show the
Issuer as lienholder or secured party on the related Lien
Certificates, or otherwise. The terminated Servicer agrees to
cooperate with the successor Servicer in effecting the
termination of the responsibilities and rights of the
terminated Servicer under this Agreement, including, without
limitation, the transfer to the successor Servicer for
administration by it of all cash amounts that shall at the
time be held by the terminated Servicer for deposit, or have
been deposited by the terminated Servicer, in the Collection
Account or thereafter received with respect to the Receivables
and the delivery to the successor Servicer of all Receivable
Files, Monthly Records and Collection Records and a computer
tape in readable form as of the most recent Business Day
containing all information necessary to enable the successor
Servicer or a successor Servicer to service the Receivables
and the Other Conveyed Property. If requested by the
Controlling Party, the successor Servicer shall terminate the
Lockbox Agreement and direct the Obligors to make all payments
under the Receivables directly to the successor Servicer (in
which event the successor Servicer shall process such payments
in accordance with Section 3.2(e)), or to a lockbox
established by the successor Servicer at the direction of the
Controlling Party, at the successor Servicer's expense. The
terminated Servicer shall grant the Issuer, the Trustee, the
successor Servicer and the Controlling Party reasonable access
to the terminated Servicer's premises at the terminated
Servicer's expense.
Section 8.3. APPOINTMENT OF SUCCESSOR.
(a) On and after the time the Servicer receives a notice
of termination pursuant to Section 8.2, upon non-extension of the
69
<PAGE>
servicing term as referred to in Section 3.14, or upon the
resignation of the Servicer pursuant to Section 7.5, the
Backup Servicer (unless the Security Insurer shall have
exercised its option pursuant to Section 8.3(b) to appoint an
alternate successor Servicer) shall be the successor in all
respects to the Servicer in its capacity as servicer under
this Agreement and the transactions set forth or provided for
in this Agreement, and shall be subject to all the rights,
responsibilities, restrictions, duties, liabilities and
termination provisions relating thereto placed on the Servicer
by the terms and provisions of this Agreement except as
otherwise stated herein. The Issuer and such successor shall
take such action, consistent with this Agreement, as shall be
necessary to effectuate any such succession. If a successor
Servicer is acting as Servicer hereunder, it shall be subject
to term-to-term servicing as referred to in Section 3.14 and
to termination under Section 8.2 upon the occurrence of any
Servicer Termination Event applicable to it as Servicer.
(b) The Controlling Party may exercise at any time its
right to appoint as Backup Servicer or as successor to the
Servicer a Person other than the Person serving as Backup
Servicer at the time, and (without limiting its obligations under
the Policies) shall have no liability to the Issuer, the Trustee,
AFS, the Seller, the Person then serving as Backup Servicer, any
Noteholders or any other Person if it does so. Notwithstanding
the above, if the Backup Servicer shall be legally unable or
unwilling to act as Servicer, and an Insurer Default shall have
occurred and be continuing, the Backup Servicer, the Trustee, a
Note Majority or the Issuer may petition a court of competent
jurisdiction to appoint any Eligible Servicer as the successor to
the Servicer. Pending appointment pursuant to the preceding
sentence, the Backup Servicer shall act as successor Servicer
unless it is legally unable to do so, in which event the outgoing
Servicer shall continue to act as Servicer until a successor has
been appointed and accepted such appointment. Subject to Section
7.5, no provision of this Agreement shall be construed as
relieving the Backup Servicer of its obligation to succeed as
successor Servicer upon the termination of the Servicer pursuant
to Section 8.2, the resignation of the Servicer pursuant to
Section 7.5 or the non-extension of the servicing term of the
Servicer, as referred to in Section 3.14. If upon the
termination of the Servicer pursuant to Section 8.2 or the
resignation of the Servicer pursuant to Section 7.5, the
Controlling Party appoints a successor Servicer other than the
Backup Servicer, the Backup Servicer shall not be relieved of its
duties as Backup Servicer hereunder.
70
<PAGE>
(c) Any successor Servicer shall be entitled to such
compensation (whether payable out of the Collection Account or
otherwise) as the Servicer would have been entitled to under this
Agreement if the Servicer had not resigned or been terminated
hereunder. If any successor Servicer is appointed as a result of
the Backup Servicer's refusal (in breach of the terms of this
Agreement) to act as Servicer although it is legally able to do
so, the Security Insurer and such successor Servicer may agree on
reasonable additional compensation to be paid to such successor
Servicer by the Backup Servicer, which additional compensation
shall be paid by such breaching Backup Servicer in its individual
capacity and solely out of its own funds. If any successor
Servicer is appointed for any reason other than the Backup
Servicer's refusal to act as Servicer although legally able to do
so, the Security Insurer and such successor Servicer may agree on
additional compensation to be paid to such successor Servicer,
which additional compensation shall be payable as provided in the
Spread Account Agreement and shall in no event exceed $150,000.
In addition, any successor Servicer shall be entitled, as
provided in the Spread Account Agreement, to reasonable
transition expenses incurred in acting as successor Servicer.
Section 8.4. NOTIFICATION TO NOTEHOLDERS. Upon any
termination of, or appointment of a successor to, the Servicer
pursuant to this Article VIII, the Issuer shall give prompt
written notice thereof to each Rating Agency, and the Trustee
shall give prompt written notice thereof to Noteholders at their
respective addresses appearing in the Note Register.
Section 8.5. WAIVER OF PAST DEFAULTS. The Security
Insurer or (if an Insurer Default shall have occurred and be
continuing) a Note Majority may, on behalf of all Holders of
Notes, waive any default by the Servicer in the performance of
its obligations hereunder and its consequences. Upon any such
waiver of a past default, such default shall cease to exist, and
any Servicer Termination Event arising therefrom shall be deemed
to have been remedied for every purpose of this Agreement. No
such waiver shall extend to any subsequent or other default or
impair any right consequent thereon.
71
<PAGE>
ARTICLE IX
TERMINATION
Section 9.1. OPTIONAL PURCHASE OF ALL RECEIVABLES. On
each Determination Date as of which the outstanding principal
balance of the Notes is equal to or less than 10% of the original
principal amount of the Notes, the Servicer shall have the option
to purchase the Receivables (with the consent of the Security
Insurer, if a claim has previously been made under the Policy or
if such purchase would result in a claim on the Policy or if such
purchase would result in any amount owing and remaining unpaid
under the Transaction Documents to the Security Insurer or any
other Person). To exercise such option, the Servicer shall pay
the aggregate Purchase Amounts for the Receivables and shall
succeed to all interests in and to the Receivables; PROVIDED,
HOWEVER, that the amount to be paid for such purchase (as set
forth in the following sentence) shall be sufficient to pay the
full amount of principal and interest then due and payable on the
Notes. The party exercising such option to repurchase shall
deposit the aggregate Purchase Amounts for the Receivables into
the Collection Account, and the Trustee shall distribute the
amounts so deposited in accordance with Section 4.6.
ARTICLE X
MISCELLANEOUS PROVISIONS
Section 10.1. AMENDMENT.
(a) This Agreement may be amended by the Seller, the
Servicer and the Issuer, with the prior written consent of the
Trustee and the Security Insurer (so long as an Insurer Default
shall not have occurred and be continuing) but without the
consent of any of the Noteholders, (i) to cure any ambiguity,
(ii) to correct or supplement any provisions in this Agreement or
(iii) for the purpose of adding any provision to or changing in
any manner or eliminating any provision of this Agreement or of
modifying in any manner the rights of the Noteholders; PROVIDED,
HOWEVER, that such action shall not, as evidenced by an Opinion
of Counsel, adversely affect in any material respect the
interests of the Noteholders.
(b) This Agreement may also be amended from time
to time by the Seller, the Servicer and the Issuer with the
prior written consent of the Trustee and the Security Insurer
(so long as an Insurer Default shall not have occurred and be
continuing) and with
72
<PAGE>
the consent of a Note Majority (which consent of any Holder of
a Note given pursuant to this Section or pursuant to any other
provision of this Agreement shall be conclusive and binding on
such Holder and on all future Holders of such Note and of any
Note issued upon the transfer thereof or in exchange thereof
or in lieu thereof whether or not notation of such consent is
made upon the Note) for the purpose of adding any provisions
to or changing in any manner or eliminating any of the
provisions of this Agreement, or of modifying in any manner
the rights of the Holders of Notes; PROVIDED, HOWEVER, that,
subject to the express rights of the Security Insurer under
the Related Documents, including its rights to agree to
certain modifications of the Receivables pursuant to Section
3.2 and its rights to cause the Indenture Collateral Agent to
liquidate the Collateral under the circumstances and subject
to the provisions of Section 5.04 of the Indenture, no such
amendment shall (a) increase or reduce in any manner the
amount of, or accelerate or delay the timing of, collections
of payments on Receivables or distributions required to be
made on any Note or the Note Interest Rate, (b) amend any
provisions of Section 4.6 in such a manner as to affect the
priority of payment of interest or principal to Noteholders,
or (c) reduce the aforesaid percentage required to consent to
any such amendment or any waiver hereunder, without the
consent of the Holders of all Notes then outstanding.
(c) Prior to the execution of any such amendment or
consent, the Issuer shall furnish written notification of the
substance of such amendment or consent to each Rating Agency.
(d) Promptly after the execution of any such amendment or
consent, the Issuer shall furnish written notification of the
substance of such amendment or consent to the Trustee.
(e) Prior to the execution of any amendment to this
Agreement, the Issuer 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, in
addition to the Opinion of Counsel referred to in Section
10.2(i). The Issuer may, but shall not be obligated to, enter
into any such amendment which affects the Issuer's own rights,
duties or immunities under this Agreement or otherwise.
Section 10.2. PROTECTION OF TITLE TO THE RECEIVABLES AND
OTHER CONVEYED PROPERTY.
73
<PAGE>
(a) The Servicer shall execute and file such financing
statements and cause to be executed and filed such continuation
and other statements, all in such manner and in such places as
may be required by law fully to preserve, maintain and protect
the interest of the Issuer and the Indenture Collateral Agent in
the Receivables and Other Conveyed Property and in the proceeds
thereof. The Servicer shall deliver (or cause to be delivered)
to the Issuer, the Indenture Collateral Agent and the Security
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 Seller, the Servicer nor the Issuer shall
change its name, identity or corporate structure in any manner
that would, could or might make any financing statement or
continuation statement filed by the Seller in accordance with
paragraph (a) above seriously misleading within the meaning of
Section 9-402(7) of the UCC, unless it shall have given the
Issuer, the Trustee and the Security Insurer (so long as an
Insurer Default shall not have occurred and be continuing) at
least 60 days prior written notice thereof, and shall promptly
file appropriate amendments to all previously filed financing
statements and continuation statements.
(c) Each of the Seller, the Servicer and the Issuer shall
give the Trustee and the Security Insurer at least 60 days' prior
written notice of any relocation of its principal executive
office if, as a result of such relocation, 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. The Servicer shall at all times
maintain each office from which it services 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 sale under this Agreement of the
Receivables to the Issuer, the Servicer's master computer records
(including any backup archives) that refer to any Receivable
74
<PAGE>
indicate clearly (with reference to the Issuer) that the
Receivable is owned by the Issuer. Indication of the Issuer's
ownership of a Receivable shall be deleted from or modified on
the Servicer's computer systems when, and only when, the
Receivable has been paid in full or repurchased by the Seller
or Servicer.
(f) If at any time the Seller or the Servicer
proposes 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 backup archives) that, if they
refer in any manner whatsoever to any Receivable, indicate
clearly that such Receivable has been sold and is owned by the
Issuer unless such Receivable has been paid in full or
repurchased by the Seller or Servicer.
(g) The Servicer shall permit the Issuer, the
Trustee, the Backup Servicer, the Noteholders, the Security
Insurer and their respective agents, at any time to inspect,
audit and make copies of and abstracts from the Servicer's
records regarding any Receivables or any other portion of the
Other Conveyed Property.
(h) The Servicer shall furnish to the Issuer, the
Trustee, the Backup Servicer and the Security Insurer at any
time upon request a list of all Receivables then held by
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. Upon request, the Servicer
shall furnish a copy of any list to the Seller. The Issuer
shall hold any such list and Schedule of Receivables for
examination by interested parties during normal business hours
at the offices of the Servicer upon reasonable notice by such
Persons of their desire to conduct an examination.
(i) The Seller and the Servicer shall deliver to the
Issuer, the Trustee and the Security Insurer simultaneously with
the execution and delivery of this Agreement and of each
amendment thereto and upon the occurrence of the events giving
rise to an obligation to give notice pursuant to Section 10.2(b)
or (c), 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
Issuer and the Indenture Collateral Agent in the Receivables and
the Other Conveyed Property, and
75
<PAGE>
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
is necessary to preserve and protect such interest.
(j) The Servicer shall deliver to the Issuer, the
Trustee and the Security Insurer, on or before July 1 of each
calendar year commencing in 1996, 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 Issuer and the Indenture
Collateral Agent in the Receivables and the Other Conveyed
Property, and reciting the details of such filings or
referring to prior Opinions of Counsel in which such details
are given, or (b) stating that, in the opinion of such
counsel, no action shall be necessary to preserve and protect
such interest.
Section 10.3. GOVERNING LAW. This Agreement shall be
governed by and construed in accordance with the laws of the
State of New York without regard to the principles of conflicts
of laws thereof and the obligations, rights and remedies of the
parties under this Agreement shall be determined in accordance
with such laws.
Section 10.4. 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 10.5. ASSIGNMENT. Notwithstanding anything to the
contrary contained in this Agreement, except as provided in
Section 7.2 or Section 8.2 (and as provided in the provisions of
the Agreement concerning the resignation of the Servicer and the
Backup Servicer), this Agreement may not be assigned by the
Seller or the Servicer without the prior written consent of the
Issuer, the Trustee and the Security Insurer (or, if an Insurer
Default shall have occurred and be continuing, the Issuer, the
Trustee and a Note Majority).
Section 10.6. THIRD-PARTY BENEFICIARIES. This Agreement
shall inure to the benefit of and be binding upon the parties
76
<PAGE>
hereto and their respective successors and permitted assigns.
The Security 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 to enforce such
provisions of this Agreement so long as no Insurer Default shall
have occurred and be continuing. Nothing in this Agreement,
express or implied, shall give to any Person, other than the
parties hereto and their successors hereunder and permitted
assigns, any benefit or any legal or equitable right, remedy or
claim under this Agreement. Except as expressly stated otherwise
herein or in the Related Documents, any right of the Security
Insurer to direct, appoint, consent to, approve of, or take any
action under this Agreement, shall be a right exercised by the
Security Insurer in its sole and absolute discretion.
Section 10.7. DISCLAIMER BY SECURITY INSURER. The Security
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 Issuer and the Trustee.
Section 10.8. COUNTERPARTS. For the purpose of
facilitating its execution 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 10.9. NOTICES. All demands, notices and
communications under this Agreement shall be in writing,
personally delivered or mailed by certified mail-return receipt
requested, and shall be deemed to have been duly given upon
receipt (a) in the case of AFS, the Seller or the Servicer, at
the following address: AmeriCredit Receivables Finance Corp.
1995-A, 200 Bailey Avenue, Fort Worth, Texas 76107-1220,
Attention: Chief Financial Officer, (b) in the case of the
Trustee and, for so long as the Trustee is the Backup Servicer or
the Collateral Agent, at LaSalle National Bank, 135 S. LaSalle
Street, Suite 200, Chicago, Illinois 60603-4105, Attention:
Asset-Backed Securities Trust Services Department, (c) in the
case of each Rating Agency, 99 Church Street, New York, New York
10007, Attention: ABS Monitoring Department (for Moody's) and 26
Broadway, New York, New York 10004 (for Standard & Poor's),
Attention: Asset-Backed Surveillance), and (d) in the case of the
Security Insurer, Financial Security Assurance Inc., 350 Park
Avenue, New York, New York 10022, Attention: Surveillance
Department, Telex No.: (212) 688-3103, Confirmation: (212) 826-0100,
77
<PAGE>
Telecopy Nos.: (212)339-3518, (212)339-3529, (in each case
in which notice or other communication to Financial Security
refers to an Event of Default, a claim on the Policy or with
respect to which failure on the part of Financial Security to
respond shall be deemed to constitute consent or acceptance, then
a copy of such notice or other communication should also be sent
to the attention of the General Counsel and the Head-Financial
Guaranty Group "URGENT MATERIAL ENCLOSED"), or at such other
address as shall be designated by any such party in a written
notice to the other parties. Any notice required or permitted to
be mailed to a Noteholder shall be given by first class mail,
postage prepaid, at the address of such Holder as shown in the
Note Register (as the case may be), and 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 receives such notice.
78
<PAGE>
IN WITNESS WHEREOF, the Issuer, the Seller, AFS, the
Servicer and the Backup Servicer have caused this Sale and
Servicing Agreement to be duly executed by their respective
officers as of the day and year first above written.
ISSUER:
AMERICREDIT RECEIVABLES FINANCE
CORP. 1995-A
By _______________________________________
Name: Preston A. Miller
Title: Vice President and Controller
SELLER:
AMERICREDIT RECEIVABLES CORP.
By _______________________________________
Name: Preston A. Miller
Title: Vice President and Controller
AMERICREDIT FINANCIAL SERVICES, INC.
In its individual capacity and as
Servicer
By _______________________________________
Name: Preston A. Miller
Title: Vice President and Controller
BACKUP SERVICER:
LASALLE NATIONAL BANK
By _______________________________________
Name: ____________________________________
Title: Corporate Trust Officer
79
<PAGE>
80
<PAGE>
Acknowledged and Accepted:
LASALLE NATIONAL BANK,
not in individual capacity but as Trustee,
By ___________________________________
Name:
Title: Corporate Trust Officer
FINANCIAL SECURITY ASSURANCE INC.
By ___________________________________
Name:
Title: Authorized Officer
81
<PAGE>
SCHEDULE A
SCHEDULE OF RECEIVABLES
A-1
<PAGE>
SCHEDULE B
REPRESENTATIONS AND WARRANTIES OF SELLER AND AFS
1. CHARACTERISTICS OF RECEIVABLES. Each Receivable (A) was
originated by a Dealer for the retail sale of a Financed Vehicle in the
ordinary course of such Dealer's business in accordance with AFS's credit
policies and such Dealer had all necessary licenses and permits to originate
Receivables in the state where such Dealer was located, was fully and
properly executed by the parties thereto, was purchased by AFS from such
Dealer under an existing Dealer Agreement or pursuant to a Dealer Assignment
with AFS and was validly assigned by such Dealer to AFS pursuant to a Dealer
Assignment, (B) was purchased by the Seller from AFS and was validly assigned
by AFS to the Seller pursuant to the Purchase Agreement, (C) contains
customary and enforceable provisions such as to render the rights and
remedies of the holder thereof adequate for realization against the
collateral security, (D) is a Receivable which provides for level monthly
payments (provided that the period in the first Monthly Period and the
payment in the final Monthly Period of the Receivable may be minimally
different from the normal period and level payment) which, if made when due,
shall fully amortize the Amount Financed over the original term and (E) has
not been amended or collections with respect to which waived, other than as
evidenced in the Receivable File relating thereto.
2. NO FRAUD OR MISREPRESENTATION. Each Receivable was
originated by a Dealer and was sold by the Dealer to AFS without any fraud or
misrepresentation on the part of such Dealer in either case.
3. COMPLIANCE WITH LAW. All requirements of applicable
federal, state and local laws, and regulations thereunder (including, without
limitation, usury laws, the Federal Truth-in-Lending Act, the Equal Credit
Opportunity Act, the Fair Credit Billing Act, the Fair Credit Reporting Act,
the Fair Debt Collection Practices Act, the Federal Trade Commission Act, the
Moss-Magnuson Warranty Act, the Federal Reserve Board's Regulations "B" and
"Z", the Soldiers' and Sailors' Civil Relief Act of 1940, each applicable
state Motor Vehicle Retail Installment Sales Act, and state adaptations of
the National Consumer Act and of the Uniform Consumer Credit Code and other
consumer credit laws and equal credit opportunity and disclosure laws) in
respect of the Receivables and the Financed Vehicles, have been complied with
in all material respects, and each Receivable and the sale of the
B-1
<PAGE>
Financed Vehicle evidenced by each Receivable complied at the time it was
originated or made and now complies in all material respects with all
applicable legal requirements.
4. ORIGINATION. Each Receivable was originated in the United
States.
5. BINDING OBLIGATION. Each Receivable represents the genuine,
legal, valid and binding payment obligation of the Obligor thereon,
enforceable by the holder thereof in accordance with its terms, except (A) as
enforceability may be limited by bankruptcy, insolvency, reorganization or
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
and (B) as such Receivable may be modified by the application after the
Cutoff Date of the Soldiers' and Sailors' Civil Relief Act of 1940, as
amended; and all parties to each Receivable had full legal capacity to
execute and deliver such Receivable and all other documents related thereto
and to grant the security interest purported to be granted thereby.
6. NO GOVERNMENT OBLIGOR. No Obligor is the United States of
America or any State or any agency, department, subdivision or
instrumentality thereof.
7. OBLIGOR BANKRUPTCY. At the Cutoff Date no Obligor had been
identified on the records of AFS as being the subject of a current bankruptcy
proceeding.
8. SCHEDULE OF RECEIVABLES. The information set forth in the
Schedule of Receivables has been produced from the Electronic Ledger and was
true and correct in all material respects as of the close of business on the
Cutoff Date.
9. MARKING RECORDS. By the Closing Date, AFS and the Seller
will have caused the portions of the Electronic Ledger relating to the
Receivables to be clearly and unambiguously marked to show that the
Receivables have been sold to Seller by AFS, resold by Seller to the Issuer
and pledged by the Issuer to the Indenture Collateral Agent in accordance
with the terms of the Indenture.
10. COMPUTER TAPE. The Computer Tape made available by AFS and
the Seller to the Issuer on the Closing Date was complete and
B-2
<PAGE>
accurate as of the Cutoff Date and includes a description of the same
Receivables that are described in the Schedule of Receivables.
11. ADVERSE SELECTION. No selection procedures adverse to the
Noteholders were utilized in selecting the Receivables from those receivables
owned by AFS which met the selection criteria contained in the Sale and
Servicing Agreement.
12. CHATTEL PAPER. The Receivables constitute chattel paper
within the meaning of the UCC as in effect in the States of Texas and New
York.
13. ONE ORIGINAL. There is only one original executed copy of
each Receivable.
14. RECEIVABLE FILES COMPLETE. There exists a Receivable File
pertaining to each Receivable and such Receivable File contains (a) a fully
executed original of the Receivable, (b) the original executed credit
application, or a copy thereof and (c) the original Lien Certificate or
application therefor. Each of such documents which is required to be signed
by the Obligor has been signed by the Obligor in the appropriate spaces. All
blanks on any form have been properly filled in and each form has otherwise
been correctly prepared. The complete Receivable File for each Receivable
currently is in the possession of the Custodian.
15. RECEIVABLES IN FORCE. No Receivable has been satisfied,
subordinated or rescinded, and the Financed Vehicle securing each such
Receivable has not been released from the lien of the related Receivable in
whole or in part. No terms of any Receivable have been waived, altered or
modified in any respect since its origination, except by instruments or
documents identified in the Receivable File. No Receivable has been modified
as a result of application of the Soldiers' and Sailors' Civil Relief Act of
1940, as amended.
16. LAWFUL ASSIGNMENT. No Receivable was originated in, or is
subject to the laws of, any jurisdiction the laws of which would make
unlawful, void or voidable the sale, transfer and assignment of such
Receivable under this Agreement or pursuant to transfers of the Notes.
17. GOOD TITLE. Immediately prior to the conveyance of the
Receivables pursuant to the Purchase Agreement, AFS was the sole owner of and
had good and indefeasible title thereto, free and
B-3
<PAGE>
clear of any Lien; immediately prior to the conveyance of the Receivables to
the Issuer pursuant to this Agreement, the Seller was the sole owner thereof
and had good and indefeasible title thereto, free of any Lien and, upon
execution and delivery of this Agreement by the Seller, and the pledge of the
Receivables by the Issuer under the Indenture, the Indenture Collateral Agent
shall have good and indefeasible title to and will be the sole owner of such
Receivables, free of any Lien. No Dealer has a participation in, or other
right to receive, proceeds of any Receivable. Neither AFS nor the Seller has
taken any action to convey any right to any Person that would result in such
Person having a right to payments received under the related Insurance
Policies or the related Dealer Agreements or Dealer Assignments or to
payments due under such Receivables.
18. SECURITY INTEREST IN FINANCED VEHICLE. Each Receivable
created or shall create a valid, binding and enforceable first priority
security interest in favor of AFS in the Financed Vehicle. The Lien
Certificate and original certificate of title for each Financed Vehicle show,
or if a new or replacement Lien Certificate is being applied for with respect
to such Financed Vehicle the Lien Certificate will be received within 180
days of the Closing Date and will show AFS named as the original secured
party under each Receivable as the holder of a first priority security
interest in such Financed Vehicle. With respect to each Receivable for which
the Lien Certificate has not yet been returned from the Registrar of Titles,
AFS has received written evidence from the related Dealer that such Lien
Certificate showing AFS as first lienholder has been applied for. AFS's
security interest has been validly assigned by AFS to the Seller and by the
Seller to the Issuer pursuant to this Agreement. Immediately after the sale,
transfer and assignment thereof by the Seller to the Issuer and the
subsequent pledge thereof by the Issuer to the Indenture Collateral Agent,
each Receivable will be secured by an enforceable and perfected first
priority security interest in the Financed Vehicle in favor of the Indenture
Collateral Agent as secured party, which security interest is prior to all
other Liens upon and security interests in such Financed Vehicle which now
exist or may hereafter arise or be created (except, as to priority, for any
lien for taxes, labor or materials affecting a Financed Vehicle). As of the
Cutoff Date there were no Liens or claims for taxes, work, labor or materials
affecting a Financed Vehicle which are or may be Liens prior or equal to the
Liens of the related Receivable.
B-4
<PAGE>
19. ALL FILINGS MADE. All filings (including, without
limitation, UCC filings) required to be made by any Person and actions
required to be taken or performed by any Person in any jurisdiction to give
the Indenture Collateral Agent a first priority perfected lien on, or
ownership interest in, the Receivables and the proceeds thereof and the Other
Conveyed Property have been made, taken or performed.
20. NO IMPAIRMENT. Neither AFS nor the Seller has done anything
to convey any right to any Person that would result in such Person having a
right to payments due under the Receivable or otherwise to impair the rights
of the Issuer, the Security Insurer, the Indenture Collateral Agent, the
Trustee and the Noteholders in any Receivable or the proceeds thereof.
21. RECEIVABLE NOT ASSUMABLE. No Receivable is assumable by
another Person in a manner which would release the Obligor thereof from such
Obligor's obligations to the Seller with respect to such Receivable.
22. NO DEFENSES. No Receivable is subject to any right of
rescission, setoff, counterclaim or defense and no such right has been
asserted or threatened with respect to any Receivable.
23. NO DEFAULT. There has been no default, breach, violation or
event permitting acceleration under the terms of any Receivable (other than
payment delinquencies of not more than 30 days), and no condition exists or
event has occurred and is continuing that with notice, the lapse of time or
both would constitute a default, breach, violation or event permitting
acceleration under the terms of any Receivable, and there has been no waiver
of any of the foregoing. As of the Cutoff Date no Financed Vehicle had been
repossessed.
24. INSURANCE. At the time of a purchase of a Receivable by AFS
from a Dealer, each Financed Vehicle is required to be covered by a
comprehensive and collision insurance policy (i) in an amount at least equal
to the lesser of (a) its maximum insurable value or (b) the principal amount
due from the Obligor under the related Receivable, (ii) naming AFS as loss
payee and (iii) insuring against loss and damage due to fire, theft,
transportation, collision and other risks generally covered by comprehensive
and collision coverage. Each Receivable requires the Obligor to maintain
physical loss and damage insurance, naming AFS and its successors and assigns
as additional insured parties, and each
B-5
<PAGE>
Receivable permits the holder thereof to obtain physical loss and damage
insurance at the expense of the Obligor if the Obligor fails to do so. No
Financed Vehicle is insured under a policy of Force-Placed Insurance on the
Cutoff Date.
25. PAST DUE. At the Cutoff Date no Receivable was more than 30
days past due.
26. REMAINING PRINCIPAL BALANCE. At the Cutoff Date each
Receivable had a remaining principal balance equal to or greater than $250.00
and the Principal Balance of each Receivable set forth in the Schedule of
Receivables is true and accurate in all material respects.
27. FINAL SCHEDULED PAYMENT DATE. No Receivable has a final
scheduled payment date after April 30, 2000.
28. CERTAIN CHARACTERISTICS. (A) Each Receivable had a
remaining maturity, as of the Cutoff Date, of not more than 59 months; (B)
each Receivable had an original maturity of not more than 60 months; (C) each
Receivable had a remaining Principal Balance as of the Cutoff Date of at
least $250.00 and not more than $28,000; (D) each Receivable has an Annual
Percentage Rate of at least 14.0% and not more than 33.0%; (E) no Receivable
was more than 30 days past due as of the Cutoff Date and (F) no funds have
been advanced by the Seller, AFS, any Dealer, or anyone acting on behalf of
any of them in order to cause any Receivable to qualify under clause (E)
above.
B-6
<PAGE>
SCHEDULE C
SERVICING POLICIES AND PROCEDURES
NOTE: APPLICABLE TIME PERIODS WILL VARY BY STATE
COMPLIANCE WITH STATE COLLECTION LAWS IS REQUIRED OF ALL AMERICREDIT
COLLECTION PERSONNEL. ADDITIONALLY, AMERICREDIT HAS CHOSEN TO FOLLOW THE
GUIDELINES OF THE FEDERAL FAIR DEBT COLLECTION PRACTICES ACT (FDCPA).
THE COLLECTION PROCESS
Customer is issued a monthly billing statement 16 to 20 days
before payment is due.
A. All accounts are issued to the Computer Assisted Collection
System (CACS) at 5 days delinquent or at such other dates of
delinquency as determined by historical payment patterns of
the account.
B. Accounts are then segregated into two groups, those less
than 30 days delinquent and those over 30 days delinquent.
C. Accounts less than 30 days delinquent are further segregated
into accounts that have good residential and business phone
numbers and those that do not.
D. For those that have good phone numbers, they are assigned to
the Melita Group.
E. For those without good phone numbers, they are assigned to
the front-end collector.
F. In both groups, all reasonable collection efforts are made
to avoid the account rolling over 30 days delinquent,
including the use of collection letters. Collection Letters
may be utilized between 15 and 25 days delinquent.
G. At the time the account reaches 31 days delinquent, it is
assigned to a mid-range collector. At this time the
collector identifies the necessity of any default
notification required by state law.
C-1
<PAGE>
H. Once the account exceeds 60 days in delinquency, it is
assigned to a hard-core collector. The hard-core collector
then continues the collection effort. If the account cannot
be resolved through normal collection efforts, i.e.
satisfactory payment arrangements, then the account may be
submitted for repossession approval, either voluntary or by
an approved outside contractor or if necessary for
sequestration approval. All repossessions and
sequestrations must be approved by the Director of
Collections or an Assistant Vice President.
I. CACS allows the individual collector to accurately document
and update each account pertaining to telephone calls and
correspondence created as a result of contact with the
customer.
REPOSSESSIONS
If repossession of the collateral occurs, whether voluntary or involuntary,
the following steps are taken:
A. Notification of repossession to proper authorities when
necessary.
B. Inventory of all personal property is taken and a condition
report is done on the vehicle. Pictures are also taken of
the vehicle.
C. Written notification, as required by state law, to
customer(s) concerning their rights of redemption or
reinstatement along with information on how to obtain any
personal property that was in the vehicle at the time of
repossession.
D. Written request to the originating dealer for all refunds
due for dealer adds.
E. Collateral disposition through public or private sale,
(dictated by state law), in a commercially reasonable
manner, whenever possible through a Manheim or Adessa Auto
Auction.
F. After the collateral is liquidated, the debtor(s) is
notified in writing of the deficiency balance owed, if any.
USE OF DUE DATE CHANGES
C-2
<PAGE>
Due dates may be changed subject to the following conditions:
A. The account is contractually current or will be brought
current with the due date change.
B. Due date changes cannot exceed the total of 15 days over the
life of the contract.
C. The first installment payment has been paid in full.
D. Only one date change in a twelve month period.
E. Any exceptions to the above stated policy must be approved
by the Director of Collections or an Assistant Vice
President.
USE OF PAYMENT DEFERMENTS
A payment deferral is offered to customers who have encountered
TEMPORARY financial difficulties.
A. Minimum of six payments have been made on the account.
B. The account will be brought current with the deferment, but
not paid ahead.
C. A deferment fee is collected on all transactions.
D. Only one deferment transaction can be performed in a twelve
month period.
E. No more than two payments may be deferred in a twelve month
period, and no more than eight total payments may be
deferred over the life of the loan.
F. Any exceptions to the above stated policy must be approved
by the Director of Collections or Assistant Vice President.
CHARGE-OFFS
A. When a Post Repossession Notice is generated on an account,
the account is partially charged-off on the date that the
notice legally expires. The partial charge-off calculation
is based on the expected residual value of the vehicle at
time of sale. Adjustments to the account are made once
final liquidation of the vehicle occurs.
C-3
<PAGE>
B. It is AmeriCredit's policy that any account that is not
successfully recovered by 180 days delinquent is submitted
to the Director of Collections for approval and charge-off.
C. The current AmeriCredit policy on bankrupt accounts is to
carry the account until 365 days delinquent and then submit
to the Director of Collections for approval and charge-off.
We are currently modifying the bankruptcy policy to reflect
a partial charge-off of the unsecured portion in a Chapter
13 bankruptcy at the time of confirmation of the plan or
180 days delinquent, whichever comes first.
DEFICIENCY COLLECTIONS
A. Contact is made with the customer in an attempt to establish
acceptable payment arrangements or settlements on the
account.
B. If the customer is unwilling to do so, AmeriCredit may
invoke any legal collection remedy that the state allows,
i.e., judgements, garnishments, etc.
C-4
<PAGE>
RESTATED REVOLVING CREDIT AGREEMENT
This Restated Revolving Credit Agreement (this "Loan Agreement") is
entered into by and among AMERICREDIT CORP., a Texas corporation ("Company"),
AMERICREDIT FINANCIAL SERVICES, INC., a Delaware corporation, AMERICREDIT
OPERATING CO., INC., a Delaware corporation, AMERICREDIT PREMIUM FINANCE,
INC., a Delaware corporation, and ACF INVESTMENT CORP., a Delaware
corporation, and FIRST INTERSTATE BANK OF TEXAS, N.A., BANK ONE, TEXAS,
N.A., LASALLE NATIONAL BANK, THE DAIWA BANK, LTD., HARRIS TRUST AND SAVINGS
BANK, and COMERICA BANK-TEXAS (collectively, the "Banks"), FIRST INTERSTATE
BANK OF TEXAS, N.A., as agent for the Banks ("Agent") and BANK ONE, TEXAS,
N.A. ("Co-Agent").
W I T N E S S E T H:
WHEREAS, AmeriCredit Corp., AmeriCredit Financial Services, Inc., Agent
and certain of Banks entered into that one certain Revolving Credit Agreement
dated September 21, 1994 (the "Prior Loan Agreement"); and
WHEREAS, AmeriCredit Corp., AmeriCredit Financial Services, Inc.,
AmeriCredit Operating Co., Inc. (individually, a "Borrower" and collectively,
the "Borrowers"), Guarantors, Agent and Banks have agreed to amend and
restate the Prior Loan Agreement in its entirety.
NOW, THEREFORE, in consideration of the mutual promises herein contained
and for other valuable consideration, the parties hereto do hereby agree to
amend and restate the Prior Loan Agreement in its entirety as follows:
ARTICLE I
DEFINITION OF TERMS
For the purposes of this Loan Agreement, unless the context requires
otherwise, the following terms shall have the respective meanings assigned to
them in this Article I below:
"ADJUSTED INTERBANK RATE" shall, with respect to each
Interest Period, mean on any day thereof the quotient of (a) the
Interbank Offered Rate with respect to such Interest Period,
DIVIDED BY (b) the remainder of 1.00 MINUS the Eurodollar Reserve
Requirement in effect on such day.
"ADVANCE" shall have the meaning assigned to it in Section 2.01 hereof.
"AFFILIATE" of any designated Person means any Person that has a
relationship with the designated Person whereby either of such Persons
directly or indirectly controls or is controlled by or is under common
control with the other, or holds or beneficially owns five percent (5%) or
more of any class of voting securities of the other. For this purpose,
"control" means the power, direct or indirect, of one Person to direct or
cause direction of the management and policies of another, whether by
contract, through voting securities or otherwise. Notwithstanding the
foregoing, no Person shall be deemed to be an Affiliate of another solely by
reason of such Person's being a participant in a joint operating group or
joint undivided ownership group.
"ARBITRATION PROGRAM" shall have the meaning assigned to it in Article
XI hereof.
<PAGE>
"BANKS" shall mean First Interstate Bank of Texas, N.A. and all other
banks which are parties to this Loan Agreement or any amendment thereto.
"BORROWERS" shall mean AmeriCredit Corp., a Texas corporation,
AmeriCredit Financial Services, Inc., a Delaware corporation, and AmeriCredit
Operating Co., Inc., a Delaware corporation.
"BUSINESS DAY" shall mean a day upon which business is transacted by
national banks in Fort Worth, Texas and New York, New York.
"CAPITAL EXPENDITURES" shall mean, for any specified period, the
aggregate of all gross expenditures during such period for any assets, or for
improvements, replacements, substitutions or additions therefor or thereto,
which are capitalized on the consolidated balance sheet of the Company,
including the balance sheet amount of any capitalized lease obligations
incurred during such period.
"CAPITAL LEASE" shall mean, as of any date, any lease of property, real
or personal, which would be capitalized on a balance sheet of the lessee
prepared as of such date, in accordance with GAAP.
"CAPITAL LEASE OBLIGATION" shall mean any rental obligation which, under
GAAP, is or will be required to be capitalized on the books of the Company
or any Subsidiary, taken at the amount thereof accounted for as indebtedness
(net of interest expense) in accordance with GAAP.
"CASH FLOW" shall mean, for any period, the sum of Net Income,
depreciation and amortization.
"CONSEQUENTIAL LOSS" shall, with respect to the payment by any of
Borrowers or any of Guarantors of all or any portion of the then outstanding
principal amount of any Bank's Eurodollar Advance on a day other than the
last day of the Interest Period related thereto, mean any loss, cost or
expense incurred by such Bank as a result of the timing of such payment or in
redepositing such principal amount, including the sum of (i) the interest
which, but for such payment, such Bank would have earned in respect of such
principal amount so paid, for the remainder of the Interest Period applicable
to such sum, reduced, if such Bank is able to redeposit such principal amount
so paid for the balance of such Interest Period, by the interest earned by
such Bank as a result of so redepositing such principal amount PLUS (ii) any
expense or penalty incurred by such Bank on redepositing such principal
amount.
"CONSOLIDATED" shall mean the consolidation of any Person, in accordance
with GAAP, with its properly consolidated subsidiaries. References herein to
a Person's Consolidated financial statements, financial position, financial
condition, liabilities, etc., refer to the consolidated financial statements,
financial position, financial condition, liabilities, etc. of such Person and
its properly consolidated subsidiaries.
"CONTROLLED GROUP" shall mean (i) the controlled group of corporations
as defined in section 1563 of the United States Internal Revenue Code of
1986, as amended, or (ii) the group of trades or business under common
control as defined in section 414(c) of the United States Internal Revenue
Code of 1986, as amended, of which Company is part or may become a part.
"DEALER" shall mean a retail vendor of motor vehicles from which
AmeriCredit Financial Services, Inc. acquires Finance Contracts which is not
an Affiliate of any of Borrowers.
"DEALER DISCOUNT" shall mean, with respect to a Finance Contract, the
amount equal to the difference between (i) the face amount of the Finance
Contract, less unearned interest or finance charges and fees, and (ii) the
amount of cash advanced to the Dealer for the purchase of such Finance
Contract.
-2-
<PAGE>
"DELINQUENT LOANS" shall mean Indirect Loans having an installment
payment or final payment which is more than 60 days past due (without regard
to any grace period) on a contractual basis prior to any repossession of the
related vehicle.
"DIVIDENDS" , in respect of any corporation, shall mean:
(1) Cash distributions or any other distributions
on, or in respect of, any class of capital
stock of such corporation, except for
distributions made solely in shares of stock
of the same class; and
(2) Any and all funds, cash or other payments
made in respect of the redemption, repurchase
or acquisition of such stock, unless such
stock shall be redeemed or acquired through
the exchange of such stock with stock of the
same class.
"DOLLARS" and the sign "$" shall mean lawful currency of the United
States of America.
"DOMESTIC FINANCE CONTRACT" shall mean a Finance Contract that is
denominated and payable only in Dollars.
"ELIGIBLE FINANCE CONTRACT" shall mean a Finance Contract,
(i) that is secured by an Eligible Vehicle,
(ii) that represents a Domestic Finance Contract to
an Obligor (other than an Affiliate of Borrower),
(iii) that was originated by a Dealer unless
otherwise consented to in writing by the Agent (which
consent shall not be unreasonably withheld),
(iv) that is not delinquent (without regard to any
stated grace period) more than thirty (30) days on a
contractual basis prior to any repossession of the related
Eligible Vehicle,
(v) that has not been modified in any respect, unless
the Finance Contract constitutes an Eligible Modified
Finance Contract,
(vi) in respect of which the related Eligible Vehicle
has not been repossessed,
(vii) that is not a Stayed Loan,
(viii) that, as set forth in a written opinion, in
form and substance, and from legal counsel, reasonably
satisfactory to the Agent, constitutes chattel paper in
which a security interest may be perfected under the UCC of
the applicable jurisdiction by filing financing statements
and making a notation of the security interests on the
chattel paper and without taking possession of either the
agreements evidencing such Finance Contract or related
certificates of title.
(ix) that is not subject to a Lien in favor of a Person
other than the Agent on behalf of the Banks and that is not
subject to a Securitization; and
(x) in respect of which the representations and
warranties set forth in the Security Agreement are true.
-3-
<PAGE>
"ELIGIBLE MODIFIED FINANCE CONTRACT" shall mean a Finance Contract
that has been modified in any way which affects the contractual timing or
amount of any installment payment due under such Finance Contract and which
satisfies each of the following conditions: (1) no installment payment was
more than sixty (60) days past due at the time of any modification, (2) no
modification extended the original maturity date by more than ninety (90)
days, (3) no modification caused a permanent reduction in any monthly
installment payment by more than five percent (5%), (4) the modification did
not permit the deferral of more than two (2) installment payments, (5) not
more than one (1) modification involving the deferral of two (2) installment
payments or not more than two (2) modifications involving the deferral of one
(1) installment payment has occurred during any twelve (12) month period, and
(6) is otherwise an Eligible Finance Contract.
"ELIGIBLE VEHICLE" shall mean a new or used motor vehicle that (i) to
the best of any Borrower's knowledge is not acquired for use in a commercial
enterprise or as part of a fleet, and (ii) in respect of which any of
Borrowers (a) has, within forty five (45) days following the date of a
Finance Contract, properly filed an application seeking to obtain legal title
or a first priority lien under the applicable provisions of the motor vehicle
or other similar law of the applicable jurisdiction and (b) has or obtains,
within one hundred fifty (150) days following the date of a Finance Contract,
legal title or a first priority lien under applicable provisions of the motor
vehicle or other similar law of the applicable jurisdiction.
"ERISA" shall mean the Employee Retirement Income Security
Act of 1974, as amended, together with all regulations issued
pursuant thereto.
"ENVIRONMENTAL CLAIM" shall mean any written notice by any Person
alleging potential liability or responsibility for (a) any removal or
remedial action, including, without limitation, any clean-up, removal or
treatment of any Hazardous Material or any action to prevent or minimize the
release or movement of any Hazardous Materials through or in the air, soil,
surface water, ground water or other property, (b) damage to the environment,
or costs with respect thereto, or (c) personal injury (including sickness,
disease or death), resulting from or based upon (i) the presence, release or
movement (including sudden or nonsudden, accidental or nonaccidental, leaks
or spills) of any Hazardous Material at, in or from the environment or any
property, whether or not owned by the Company, or (ii) circumstances forming
the basis of any violation, or alleged violation, of any Environmental Law or
any permit issued to Company or any of its Subsidiaries pursuant to any
Environmental Law.
"ENVIRONMENTAL LAWS" shall mean the Comprehensive Environmental
Response, Compensation, and Liability Act (42 U.S.C. Section 9601 ET SEQ.),
the Hazardous Material Transportation Act (49 U.S.C. Section 1801 ET SEQ.),
the Recourse Conservation and Recovery Act (42 U.S.C. Section 6901 ET SEQ.),
the Federal Water Pollution Control Act (33 U.S.C. Section 1251 ET SEQ.), the
Clean Air Act (42 U.S.C. Section 7401 ET SEQ.), the Toxic Substances Control
Act (15 U.S.C. Section 2601 ET SEQ.), and the Occupational Safety and Health
Act (29 U.S.C. Section 651 ET SEQ.), as such laws have been or hereafter may
be amended or supplemented, and any and all analogous future federal, or
present and future state or local laws, and similar laws of jurisdictions
other than the United States, to which Company or any of its Subsidiaries or
any of its or their properties are subject.
"EURODOLLAR ADVANCE" shall mean any principal amount under a Note with
respect to which the interest rate is calculated by reference to the Adjusted
Interbank Rate for a particular Interest Period.
"EURODOLLAR BORROWING" shall mean any Borrowing composed of Eurodollar
Advances.
"EURODOLLAR BUSINESS DAY" shall mean a Business Day on which dealings
in Dollars are carried out in the London Interbank market.
"EURODOLLAR RESERVE REQUIREMENT" shall, on any day, mean that
percentage (expressed as a decimal fraction rounded up to the nearest
1/100th) which is in effect on such day, as provided by the Board of
Governors of the Federal Reserve System (or any successor governmental body)
applied for determining the maximum reserve requirements (including without
limitation, basic, supplemental, marginal and emergency reserves) under
Regulation D with respect to "Eurocurrency liabilities" as currently defined
in Regulation D, or under any similar or successor regulation with respect
-4-
<PAGE>
to Eurocurrency liabilities or Eurocurrency funding. Each determination by
Agent of the Eurodollar Reserve Requirement shall, in the absence of manifest
error, be conclusive and binding.
"EVENT OF DEFAULT" shall have the meaning assigned to it in Article X
hereof.
"FDIC" shall mean the Federal Deposit Insurance Corporation (or any
successor thereof).
"FEDERAL FUNDS RATE" shall mean, for any period, a fluctuating interest
rate per annum equal for each day during such period to the weighted average
of the rates on overnight Federal funds transactions with members of the
Federal Reserve System arranged by Federal funds brokers, as published for
such day (or, if such day is not a Business Day, for the next preceding
Business Day) by the Federal Reserve Bank of New York, or, if such rate is
not so published for any day which is a Business Day, the average of the
quotations for such day on such transactions received by the Agent from three
Federal funds brokers of recognized standing selected by Agent.
"FINANCE CONTRACT" shall mean a motor vehicle installment sales
contract assigned to AmeriCredit Financial Services, Inc. that is secured by
title to, security interests in, or liens on a motor vehicle under applicable
provisions of the motor vehicle or other similar law of the jurisdiction in
which the motor vehicle is titled and registered by the purchaser at the time
the contract is originated.
"FIXED CHARGE COVERAGE RATIO" shall mean Net Income before interest,
taxes, depreciation and amortization plus rental expense under operating
leases less Investment Income DIVIDED BY the sum of interest expense and
rental expense under operating leases less Investment Income.
"FLOATING BASE ADVANCE" shall mean any principal amount under a Note
with respect to which the interest rate is calculated by reference to the
Floating Base Rate.
"FLOATING BASE BORROWING" shall mean any Borrowing composed of Floating
Base Advances.
"FLOATING BASE RATE" shall mean the greater of (a) the Floating Prime
Rate in effect from day to day or (b) the Federal Funds Rate plus one half of
one percent (.5%).
"FLOATING PRIME RATE" shall mean, on any date, the rate of interest per
annum quoted by First Interstate Bank of Texas, N.A., from time to time as
its prime commercial rate of interest (it being understood that Banks may
from time to time extend credit to other borrowers at rates of interest
varying from, and having no relationship to, such prime commercial rate).
"GENERALLY ACCEPTED ACCOUNTING PRINCIPLES" or "GAAP" shall mean those
generally accepted accounting principles and practices which are recognized
as such by the American Institute of Certified Public Accountants pursuant to
its Statement on Auditing Standards No. 69 and which are consistently applied
for all periods after the date hereof so as to properly reflect the financial
condition, and the results of operations and cash flows of Company on a
consolidated basis, except that any accounting principle or practice required
to be changed by the American Institute of Certified Public Accountants in
order to continue as a generally accepted accounting principle or practice
may so be changed.
"GUARANTOR" shall mean any of the Guarantors.
"GUARANTORS" shall mean AmeriCredit Premium Finance, Inc., a Delaware
corporation, and ACF Investment Corp., a Delaware corporation, and any other
corporation which executes a Guaranty Agreement after the date of this Loan
Agreement.
-5-
<PAGE>
"GUARANTY" of any Person shall mean any contract, agreement or
understanding of such Person pursuant to which such Person guarantees, or in
effect guarantees, any Indebtedness of any other Person (the "Primary
Obligor") in any manner, whether directly or indirectly, including without
limitation agreements:
(1) to purchase such Indebtedness or any property
constituting security therefor;
(2) to advance or supply funds (a) for the purchase or
payment of such Indebtedness, or (b) to maintain
working capital or other balance sheet conditions, or
otherwise to advance or make available funds for the
purchase or payment of such Indebtedness;
(3) to purchase property, securities or services primarily
for the purpose of assuring the holder of such
Indebtedness of the ability of the Primary Obligor to
make payment of the Indebtedness; or
(4) otherwise to assure the holder of the Indebtedness of
the Primary Obligor against loss in respect thereof;
EXCEPT THAT "Guaranty" shall not include the
endorsement by Company or a Subsidiary in the ordinary
course of business of negotiable instruments or
documents for deposit or collection.
"GUARANTY AGREEMENT" shall mean the guaranty agreement executed by the
Guarantors, in the form of EXHIBIT C hereto, as the same may be amended or
supplemented from time to time.
"HAZARDOUS MATERIALS" shall mean those substances which are regulated
by or form the basis of liability under any Environmental Laws.
"INDEBTEDNESS" shall mean, with respect to any person, all
indebtedness, obligations and liabilities of such Person, including without
limitation:
(1) all "liabilities" which would be reflected on
a balance sheet of such Person, prepared in
accordance with Generally Accepted Accounting
Principles;
(2) all obligations of such Person in respect of
any Capital Lease; and
(3) all obligations of such Person in respect of
any Guaranty.
"INDIRECT LOAN" shall mean any Finance Contract or promissory note
received for or in connection with the financing of the sale of a motor
vehicle by a third party Dealer.
"INTERBANK OFFERED RATE" shall mean, with respect to each Interest
Period, that rate of interest determined by Agent on the basis of the offered
rates for deposits in Dollars commencing on the first day of such Interest
Period which appear on the Reuters Screen LIBO Page as of 11:00 a.m., London
time two (2) Eurodollar Business Days preceding the first day of such
Interest Period, such deposits being for a period of time equal to or
comparable to such Interest Period and in an amount equal to or comparable to
the principal amount of the Eurodollar Loan to which such Interest Period
relates. If at least two (2) such offered rates appear on the Reuters Screen
LIBO Page, the rate in respect to the applicable Interest Period will be the
arithmetic mean of such offered rates. If fewer than two (2) offered rates
appear, the rate in respect of such Interest Period will be determined on the
basis of the rates at which deposits in Dollars are offered by Agent (at
approximately 11:00 a.m. London time, on the day that is two (2) Eurodollar
Business Days prior to the first day of such Interest Period) to first-class
banks in the London Interbank eurodollar market for delivery on the first day
of such Interest Period, such deposits being for a period of time equal or
comparable to such Interest Period and in an amount equal to or comparable to
the principal amount of the Eurodollar Loan to which such Interest Period
relates.
-6-
<PAGE>
"INTEREST PERIOD" shall mean, with respect to a Eurodollar Advance, a
period commencing:
(i) on the borrowing date of such Eurodollar
Advance made pursuant to Section 2.02 of this
Loan Agreement; or
(ii) on the Conversion Date pertaining to such
Eurodollar Advance, if such Eurodollar
Advance is made pursuant to a conversion as
described in Section 2.02(c) hereof; or
(iii) on the date of borrowing specified
in the Request for Borrowing in the
case of a rollover to a successive
Interest Period,
and ending one (1), two (2) or three (3) months thereafter (in
the case of a Eurodollar Advance), as Company shall elect in
accordance with Section 2.02(c) of this Loan Agreement; provided,
that:
(A) any Interest Period which would otherwise end on a day
which is not a Eurodollar Business Day shall be
extended to the next succeeding Eurodollar Business Day
UNLESS such Eurodollar Business Day falls in another
calendar month in which case such Interest Period shall
end on the next preceding Eurodollar Business Day;
(B) any Interest Period which begins on the last Eurodollar
Business Day of a calendar month (or on a day for which
there is no numerically corresponding day in the
calendar month or at the end of such Interest Period)
shall, subject to clause (A) above, end on the last
Eurodollar Business Day of a calendar month; and
(C) if the Interest Period for any Eurodollar Advance would
otherwise end after the Revolving Credit Termination
Date such Interest Period shall end on the Revolving
Credit Termination Date.
"INVESTMENT" shall mean any direct or indirect purchase or other
acquisition of, or a beneficial interest in, capital stock or other
securities of any other Person, or any direct or indirect loan, advance
(other than advances to employees for moving and travel expenses, drawing
accounts and similar expenditures in the ordinary course of business) or
capital contribution to or investment in any other Person, including without
limitation the incurrence or sufferance of Indebtedness or accounts
receivable of any other Person which are not current assets or do not arise
from sales to that other Person in the ordinary course of business.
"INVESTMENT INCOME" shall mean interest and dividends on the Company's
cash, cash equivalents, restricted cash or investment securities as recorded
on Company's Consolidated balance sheet.
"LAW" shall mean all statutes, laws, ordinances, rules, regulations,
orders, writs, injunctions or decrees of any Tribunal.
"LIEN" shall mean any mortgage, pledge, security interest, encumbrance,
lien or charge of any kind, including without limitation, any agreement to
give any of the foregoing, any conditional sale or other title retention
agreement, any lease in the nature thereof, and the filing of or agreement to
give any financing statement or other similar form of public notice under the
Laws of any jurisdiction.
"LOAN DOCUMENTS" shall mean this Loan Agreement, the Notes, (including
any renewals, extensions and refundings thereof), the Security Agreement, the
Guaranty Agreement, and any agreements or documents (and with respect to this
Loan Agreement, and such other agreements and documents, any amendments or
supplements thereto or modifications thereof) executed or delivered pursuant
to the terms of this Loan Agreement.
-7-
<PAGE>
"LOAN LOSS RESERVE" shall mean the allowance for losses relating to
Indirect Loans as shown on the Consolidated financial statements of the
Company prepared in accordance with Generally Accepted Accounting Principles.
"MAJORITY BANKS" shall mean, at any time, Banks holding Notes
representing at least sixty-six and 2/3 percent (66 2/3%) of the aggregate
unpaid principal amount of the aggregate Revolving Credit Loans or if no
Revolving Credit Loans are at the time outstanding, Banks having at least
sixty-six and 2/3 percent (66 2/3%) of the Total Revolving Credit Commitment.
"MATERIAL ADVERSE EFFECT" shall mean any act, circumstance, or event
that (i) could have any adverse effect whatsoever upon the validity or
enforceability of the Loan Documents, (ii) causes or, with notice or lapse of
time, or both, could cause an Event of Default under this Loan Agreement,
(iii) is or reasonably could be expected to be material and adverse to the
financial condition or business operations of the Company and its
Subsidiaries on a Consolidated basis, or (iv) could reasonably be expected to
impair the ability of any of Borrowers to perform their respective
obligations under the Loan Documents in any material respect.
"MAXIMUM RATE" shall mean, on any day, the highest nonusurious rate of
interest (if any) permitted by applicable law on such day. Banks hereby
notify Borrowers that, and disclose to Borrowers that, for purposes of Tex.
Rev. Civ. Stat. Ann. Art. 5069-1.04, as it may from time to time be amended,
the "applicable rate ceiling" shall be the "indicated rate" ceiling from time
to time in effect as limited by Art. 5069-1.04(b); provided, however, that to
the extent permitted by applicable law, Banks reserve the right to change the
"applicable rate ceiling" from time to time by further notice and disclosure
to Borrowers; and, provided further, that the "highest nonusurious rate of
interest permitted by applicable law" for purposes of this Loan Agreement and
the Notes shall not be limited to the applicable rate ceiling under Art.
5069-1.04 if federal laws or other state laws now or hereafter in effect and
applicable to this Loan Agreement and the Notes (and the interest contracted
for, charged and collected hereunder or thereunder) shall permit a higher
rate of interest.
"NET AMOUNT" shall mean with respect to Eligible Finance Contracts, as
of any date, the outstanding face amount thereof as of such date,
MINUS (1) (without duplication) to the extent included in the face amount
thereof, unearned interest or finance charges with respect to future periods
(or reserves with respect to unearned interest or finance charges) and (2)
the aggregate amount by which the aggregate unpaid principal balance of
Eligible Finance Contracts which have been modified during the preceding
three (3) month period exceeds three and one-half percent (3.5%) of the
aggregate unpaid principal balance of all Eligible Finance Contracts.
"NET CREDIT LOSSES" shall mean, for any period, the actual aggregate
amount of principal of Indirect Loans charged off prior to the application of
the Dealer Discount or reserves during such period LESS the aggregate amount
of Recoveries on Indirect Loans during such period.
"NET INCOME" or "NET LOSS" shall mean, with respect to any period, the
consolidated net earnings or net loss, as the case may be, of Company and its
Subsidiaries for such period as determined in accordance with GAAP.
"NET INDIRECT LOANS" shall mean the aggregate amount of all Indirect
Loans LESS the amount of unearned finance charges.
"NOTES" shall mean the promissory notes executed by Borrowers and
delivered pursuant to the terms of this Loan Agreement, together with any
renewals, extensions or modifications thereof. "Note" shall mean any of the
Notes.
"OBLIGATIONS" shall mean all present and future indebtedness,
obligations, and liabilities of Borrowers to Banks or any of Banks, and all
renewals and extensions thereof, or any part thereof, arising pursuant to
this Loan Agreement or represented by the Notes, and all interest accruing
thereon, and reasonable attorneys' fees incurred in the enforcement or
collection thereof, regardless of whether such indebtedness, obligations and
liabilities
-8-
<PAGE>
are direct, indirect, fixed, contingent, joint, several or joint and several;
together with all indebtedness, obligations and liabilities of Borrowers
evidenced or arising pursuant to any of the other Loan Documents, and all
renewals and extensions thereof, or part thereof.
"OBLIGOR" shall mean any one or more individuals (other than a Dealer)
who are liable in whole or in part on a Finance Contract (determined without
regard to limitations, if any, on recourse).
"OFFICER'S CERTIFICATE" shall mean a certificate signed in the name of
the Company by its Chief Executive Officer, President, one of its Executive
Vice Presidents, its Chief Financial Officer or its Controller.
"PAST DUE RATE" shall mean the lesser of (a) the Floating Base Rate in
effect from day-to-day, plus five percent (5.0%), or (b) the Maximum Rate.
"PBGC" shall mean the Pension Benefit Guaranty Corporation, and any
successor to all or any of the Pension Benefit Guaranty Corporation's
functions under ERISA.
"PERCENTAGE" shall mean, with respect to any Bank, such Bank's
proportionate share of the Total Revolving Credit Commitment, as set forth in
Section 2.01 opposite its name under the heading "Revolving Commitment
Percentage."
"PERMITTED LIENS" shall mean: (i) Liens on equipment and fixed assets,
including purchase money Liens, relating to or securing obligations in an
aggregate amount not to exceed one million dollars ($1,000,000); (ii) pledges
or deposits made to secure payment of Worker's Compensation (or to
participate in any fund in connection with Worker's Compensation),
unemployment insurance, pensions or social security programs; (iii) Liens
imposed by mandatory provisions of law such as for materialmen's, mechanics,
warehousemen's and other like Liens arising in the ordinary course of
business, securing Indebtedness whose payment is not yet due unless the same
are being contested in good faith and for which adequate reserves have been
provided; (iv) Liens for taxes, assessments and governmental charges or
levies imposed upon a Person or upon such Person's income or profits or
property, if the same are not yet due and payable or if the same are being
contested in good faith and as to which adequate reserves have been provided;
(v) good faith deposits in connection with tenders, leases, real estate bids
or contracts (other than contracts involving the borrowing of money unless
such Liens are otherwise Permitted Liens), pledges or deposits to secure
public or statutory obligations, deposits to secure (or in lieu of) surety,
stay, appeal or customs bonds and deposits to secure the payment of taxes,
assessments, customs duties or other similar charges; and (vi) encumbrances
consisting of zoning restrictions, easements, or other restrictions on the
use of real property, provided that such do not impair the use of such
property for the uses intended, and none of which is violated by Company or
any of its Subsidiaries in connection with existing or proposed structures or
land use.
"PERSON" shall mean and include an individual, partnership, joint
venture, corporation, trust, Tribunal, unincorporated organization or
government or any department, agency or political subdivision thereof.
"PLAN" shall mean an employee benefit plan or other plan maintained by
Company for employees of Company and any of its Subsidiaries and/or covered
by Title IV of ERISA, or subject to the minimum funding standards under
Section 412 of the Internal Revenue Code of 1986, as amended.
"RECOVERIES" shall mean amounts realized on the sale of collateral,
rebates on ancillary products and collections on charged-off deficiencies and
proceeds of insurance claims related to the collateral less direct costs of
repossession.
"REGULATION U" shall mean Regulation U promulgated by the Board of
Governors of the Federal Reserve System, 12 C.F.R. Part 221, or any other
regulation hereafter promulgated by said Board to replace the prior
Regulation U and having substantially the same function.
-9-
<PAGE>
"REGULATION X" shall mean Regulation X promulgated by the Board of
Governors of the Federal Reserve System, 12 C.F.R. Part 224, or any other
regulation hereafter promulgated by said Board to replace the prior
Regulation X and having substantially the same function.
"REGULATORY DEFECT" shall mean (i) any failure of any of Borrowers or
any of the Guarantors to comply with any of the rules, regulations and other
requirements as contemplated in Section 7.11 hereof which would have a
Material Adverse Effect, and/or (ii) any unfavorable examination report shall
be received by any of Borrowers or any of the Guarantors from any regulatory
or similar Tribunal regarding any of the businesses or activities in which
the Borrowers and Guarantors are engaged, if such report would have a
Material Adverse Effect.
"REVOLVING COMMITMENT" shall have the meaning assigned to it in Section
2.01 hereof.
"REVOLVING CREDIT BORROWING BASE" shall mean, as of any date of
calculation, an amount equal to eighty percent (80%) of the Net Amount of
Eligible Finance Contracts pledged to the Agent for the benefit of the Banks
pursuant to the Security Agreement; provided, however, if the ratio of the
aggregate Dealer Discount to Net Indirect Loans originated in a trailing
three (3) month period exceeds eight percent (8.0%), such Revolving Credit
Borrowing Base advance rate percentage of the Net Amount of Eligible Finance
Contracts shall be reduced by two percentage points for each full percentage
point that the ratio of the aggregate Dealer Discount to Net Indirect Loans
originated in a trailing three (3) month period, as of any date of
calculation, exceeds eight percent (8.0%).
"REVOLVING CREDIT LOANS" shall have the meaning assigned to it in
Section 2.01 hereof.
"REVOLVING CREDIT TERMINATION DATE" shall mean May 31, 1996.
"SECURITIZATION" shall mean a transaction wherein an identified pool of
Finance Contracts and related documents are sold, pledged or conveyed by
AmeriCredit Financial Services, Inc., or an Affiliate thereof, to a trustee,
grantor trust or other special purpose financing entity as collateral
security for the issuance by AmeriCredit Financial Services, Inc. or such
Affiliate of notes, certificates or other evidence of indebtedness.
"SECURITY AGREEMENT" shall mean the Restated Security Agreement, dated
as of June 2, 1995, delivered by Borrowers to the Agent for the benefit of
the Banks, granting the security interests in certain of the properties and
assets of each of Borrowers described therein, as amended or supplemented
from time to time.
"STAYED LOAN" shall mean a Finance Contract:
(i) as to which an Obligor obligated on such Finance
Contract (any such Obligor, together with its Subsidiaries,
herein, collectively, the "Applicable Obligor"), shall file
a petition or seek relief under or take advantage of any
insolvency law; make an assignment for the benefit of its
creditors; commence a proceeding for the appointment of a
receiver, trustee, liquidator, custodian or conservator of
itself or of the whole or substantially all of its property;
file or consent to a petition under any chapter of the
United States Bankruptcy Code, as amended (11 U.S.C. Section 101
ET SEQ.), or file a petition or seek relief under or take
advantage of any other similar law or statute of the United
States of America, any state thereof or any foreign country;
or
(ii) as to which a court of competent jurisdiction
shall enter an order, judgment or decree appointing or
authorizing a receiver, trustee, liquidator, custodian or
conservator of the Applicable Obligor or of the whole or
substantially all of its property, or enter an order for
relief against the Applicable Obligor in any case commenced
under any chapter of the United States Bankruptcy Code, as amended,
-10-
<PAGE>
or grant relief under any similar law or statute of the
United States of America, any state thereof or any foreign
country; or as to which, under the provisions of any
law for the relief or aid of debtors, a court of competent
jurisdiction or a receiver, trustee, liquidator, custodian
or conservator shall assume custody or control or take
possession of the Applicable Obligor or of the whole or
substantially all of its property; or as to which there is
commenced against the Applicable Obligor any proceeding for
any of the foregoing relief or as to which a petition is
filed against the Applicable Obligor under any chapter of
the United States Bankruptcy Code, as amended, or under any
other similar law or statute of the United States of America
or any state thereof or any foreign country and such
proceeding or petition remains undismissed for a period of
60 days; or as to which the applicable Obligor by any act
indicates its consent to, approval of or acquiescence in any
such proceeding or petition;
PROVIDED, HOWEVER, that a Finance Contract shall cease to be
a Stayed Loan at such time as so long as (A) all principal,
interest and other amounts theretofore due and payable
according to the terms of such Finance Contract (as such
terms have been approved, adjusted and/or confirmed pursuant
to court order or otherwise in any proceeding referred to in
clause (i) or (ii) of this definition) have been irrevocably
paid to or collected or received by Borrower and all such
amounts thereafter due and payable shall be paid to or
collected or received by the Borrower when due (or within
any stated grace period) and (B) such Finance Contract shall
be secured to the same extent as before such Finance
Contract first became a Stayed Loan and no dispute regarding
the existence, validity or priority of such security shall
be pending in any court or asserted in any pending appeal.
"SUBSIDIARY" shall mean, as to any particular parent corporation, any
corporation of which more than fifty percent (by number of votes) of the
Voting Stock shall be owned by such parent corporation and/or one or more
corporations which themselves have more than fifty percent (by number of
votes) of their Voting Stock owned by such parent corporation. As used
herein, the term "Subsidiary" shall also mean any "Subsidiary" of the Company.
"TAXES" shall mean all taxes, levies, assessments, fees, withholdings
or other charges at any time imposed by any Laws or Tribunal.
"TANGIBLE NET WORTH" shall mean, as of any date, the total
shareholders' equity (including capital stock both common and preferred,
additional paid-in capital and retained earnings after deducting treasury
stock) which would appear on a consolidated balance sheet of Company prepared
as of such date in accordance with Generally Accepted Accounting Principles
LESS intangible assets which would appear on a consolidated balance sheet of
Company prepared as of such date in accordance with General Accepted
Accounting Principles.
"TRIBUNAL" shall mean any municipal, state, commonwealth, federal,
foreign, territorial or other court, governmental body, subdivision, agency,
department, commission, board or bureau or instrumentality.
"UCC" shall mean, with respect to any jurisdiction, the Uniform
Commercial Code as then in effect in that jurisdiction. References to terms
defined in the UCC shall mean such terms in the UCC as in effect in such
jurisdiction.
"VOTING STOCK" shall mean, with respect to any Subsidiary, any shares
of any class of stock of such Subsidiary having general voting power under
ordinary circumstances to elect a majority of the Board of Directors of such
Subsidiary irrespective of whether at the time stock of any other class or
classes shall have or might have voting power by reason of the happening of
any contingency.
OTHER DEFINITIONAL PROVISIONS.
(a) All terms defined in this Loan Agreement shall
have the above-defined meanings when used in the Notes or any
Loan Documents, certificate, report or other document made or
delivered pursuant to this Loan Agreement, unless the context
therein shall otherwise require.
-11-
<PAGE>
(b) Defined terms used herein in the singular shall import
the plural and VICE VERSA.
(c) The words "hereof," "herein," "hereunder" and similar
terms when used in this Loan Agreement shall refer to this Loan
Agreement as a whole and not to any particular provision of this
Loan Agreement.
(d) All financial and other accounting terms not otherwise
defined herein shall be defined and calculated in accordance with
Generally Accepted Accounting Principles consistently applied.
-12-
<PAGE>
ARTICLE II
REVOLVING CREDIT LOANS
2.01. REVOLVING CREDIT COMMITMENT.
(a) REVOLVING LOAN COMMITMENTS. Subject to the terms and
conditions of this Loan Agreement and the Revolving Credit
Borrowing Base limitation in Section 2.01(b), each Bank severally
agrees to extend to Borrowers, from the date hereof through the
Revolving Credit Termination Date (the "Revolving Credit
Period"), a revolving line of credit which shall not exceed at
any one time outstanding the amount set forth opposite its name
below (for each Bank, such amount is hereinafter referred to as
its "Revolving Commitment"):
Revolving
Commitment
Revolving Percentage
Banks Commitment (Rounded)
----- ---------- ----------
First Interstate Bank of Texas, N.A. $35,000,000 28.0%
Bank One, Texas, N.A. 30,000,000 24.0%
LaSalle National Bank 20,000,000 16.0%
The Daiwa Bank, Ltd. 15,000,000 12.0%
Harris Trust and Savings Bank 10,000,000 8.0%
Comerica Bank-Texas 15,000,000 12.0%
$125,000,000 100.00%
============ =======
No Bank shall be obligated to make any Advance under this
Section 2.01 and Section 2.02 if, immediately after giving
effect thereto, the aggregate amount of all indebtedness and
obligations of Borrowers to such Bank under Section 2.01 and
Section 2.02 exceeds the lesser of (a) such Bank's Revolving
Commitment or (b) an amount equal to such Bank's Percentage
TIMES the Revolving Credit Borrowing Base in effect at such
time.
Within the limits of this Section 2.01, during the
Revolving Credit Period, Borrowers may borrow, prepay pursuant
to Section 3.03 hereof and reborrow under this Section 2.01;
provided, however, the total number of unpaid Eurodollar
Borrowings shall not exceed five (5) at any time. Each
Borrowing pursuant to this Section 2.01 and Section 2.02 shall
be funded ratably by Banks in proportion to their respective
Percentages. Each advance made by a Bank under Section 2.01
and Section 2.02 is herein called an "Advance"; all
Advances made by a Bank hereunder are herein collectively
called a "Revolving Credit Loan"; the aggregate unpaid
principal balance of all Advances made by Banks hereunder are
herein collectively called the "Revolving Credit Loans"; and
the combined Advances made by Banks on any given day are
herein collectively called a "Revolving Borrowing". The
"Total Revolving Credit Commitment" shall be one hundred
twenty-five million dollars ($125,000,000).
(b) BORROWING BASE LIMITATION. The maximum aggregate
amount outstanding at any time under the Revolving Credit Loans
shall not exceed the Revolving Credit Borrowing Base then in
effect.
(c) BORROWING BASE DEFICIENCY. If the aggregate unpaid
principal balance of the Revolving Credit Loans shall at any time
exceed the Revolving Credit Borrowing Base then in effect (the
"Borrowing Base Deficiency"), Borrowers shall pay to Agent within
one (1) Business Day
-13-
<PAGE>
of the date of the earlier of the most recent Borrowing Base
Certificate which discloses a Borrowing Base Deficiency or the
date of notification to Borrowers by Agent of the existence of
a Borrowing Base Deficiency an amount equal to such Borrowing
Base Deficiency so that the aggregate unpaid principal balance
of the Revolving Credit Loans (after giving effect to such
payment) is not in excess of the Revolving Credit Borrowing
Base then in effect.
(d) LOAN ORIGINATION FEE. At the time of execution of this
Agreement, Borrowers shall pay to each Bank, including Agent, a
loan origination fee in an amount equal to three sixteenths of
one percent (.1875%) of the Revolving Commitment of each such
Bank.
(e) UNUSED LINE FEE. In addition to the payments provided
for in Article III hereof, Borrowers shall pay to Agent, for the
account of each Bank, on the first day of each fiscal quarter of
Company beginning July 1, 1995 during the period ending on the
Revolving Credit Termination Date a loan commitment fee at the
rate of three eighths of one percent (.375%) per annum
(calculated on the basis of a year consisting of 360 days) of the
average daily amount of each such Bank's Revolving Credit
Commitment which was unused during the immediately preceding
fiscal quarter of Company. Borrowers and Banks acknowledge and
agree that the commitment fees payable hereunder are bona fide
commitment fees and are intended as reasonable compensation to
Banks for committing to make funds available to Borrowers as
described herein and for no other purpose.
2.02. MANNER OF REVOLVING BORROWING.
(a) REQUEST FOR REVOLVING BORROWING. Each request by
Company to Agent for a Revolving Borrowing under Section 2.01
hereof (a "Request for Revolving Borrowing") shall be in writing
and specify the aggregate amount of such requested Revolving
Borrowing, the requested date of such Revolving Borrowing, and,
when the Request for Revolving Borrowing specifies a Eurodollar
Borrowing, the Interest Period which shall be applicable thereto;
provided, however, that the aggregate number of unpaid Eurodollar
Borrowings shall not exceed five (5) at any time. Company shall
furnish to Agent the Request for Revolving Borrowing by at least
11:00 a.m. (Fort Worth time) three (3) Eurodollar Business Days
prior to the requested Eurodollar Borrowing date (which must be a
Eurodollar Business Day) and by at least 11:00 a.m. (Fort Worth
time) on the requested borrowing date (which must be a Business
Day) for a Floating Base Advance. Any Request for Revolving
Borrowing shall: (i) in the case of a Floating Base Borrowing,
be in the form attached hereto as EXHIBIT "C," and (ii) in the
case of a Eurodollar Borrowing, be in the form attached hereto as
EXHIBIT "D." Each Floating Base Borrowing shall be in an
aggregate principal amount of one hundred thousand dollars
($100,000.00) or any integral multiple of one hundred thousand
dollars ($100,000.00). Each Eurodollar Borrowing shall be in an
amount of at least one million dollars ($1,000,000.00) or any
higher integral multiple of $1,000,000.00.
Prior to making a Request for Revolving Borrowing, Company
may (without specifying whether the anticipated Revolving
Borrowing shall be a Floating Base Borrowing or Eurodollar
Borrowing) request that Agent provide Company with the most
recent InterBank Offered Rate available to Agent. Agent shall
endeavor to provide such quoted rates to Company on the date of
such request.
Each Request for Revolving Borrowing shall be irrevocable
and binding on Borrowers and, in respect of the Revolving
Borrowing specified in such Request for Revolving Borrowing,
Borrowers shall indemnify each Bank against any cost, loss or
expense incurred by such Bank as a result of any failure to
fulfill, on or before the date specified for such Revolving
Borrowing, the conditions to such Advance set forth herein,
including without limitation, any cost, loss or expense incurred
by reason of the liquidation or reemployment of deposits or other
funds acquired by Bank to fund the Advance to be made by Bank as
part of such Revolving Borrowing when such Advance, as a result
of such failure, is not made on such date.
After receiving a Request for Revolving Borrowing in the
manner provided herein, Agent shall promptly notify each Bank by
telephone (confirmed immediately by telecopy, telex or cable),
telecopy, telex or cable of the amount of the Revolving Borrowing
and such Bank's pro rata share of such Revolving Borrowing, the
date on which the Revolving Borrowing is to be made, the interest
option selected and, if applicable, the Interest Period selected.
-14-
<PAGE>
(b) FUNDING. Each Bank shall, before 1:00 P.M. (Fort Worth
time) on the date of such Revolving Borrowing specified in the
notice received from Agent pursuant to Section 2.02(a), deposit
such Bank's ratable portion of such Revolving Borrowing in
immediately available funds to Agent's account. Upon fulfillment
of all applicable conditions set forth herein and after receipt
by Agent of such funds, Agent shall pay or deliver such proceeds
to or upon the order of Company at the principal office of Agent
in immediately available funds. The failure of any Bank to make
any Advance required to be made by it hereunder shall not relieve
any other Bank of its obligation to make its Advance hereunder.
If any Bank shall fail to provide its ratable portion of such
funds and if all conditions to such Revolving Borrowing shall
have been satisfied, the Agent will make available such funds as
shall have been received by it from the other Banks, in
accordance with this Section 2.02(b). Neither Agent nor any Bank
shall be responsible for the performance by any other Bank of its
obligations hereunder. In the event of any failure by a Bank to
make an Advance required hereunder, the other Banks may (but
shall not be required to) purchase (on a pro rata basis,
according to their respective Percentages) such Bank's Revolving
Credit Note. Upon the failure of a Bank to make an Advance
required to be made by it hereunder, the Agent shall use good
faith efforts to obtain one or more banks, acceptable to
Borrowers and Agent, to replace such Bank, but neither the Agent
nor any other Bank shall have any liability or obligation
whatsoever as a result of the failure to obtain a replacement for
such Bank.
Unless the Agent shall have received notice from a Bank
prior to the date of any Revolving Borrowing that such Bank will
not make available to the Agent such Bank's ratable portion of
such Revolving Borrowing, the Agent may assume that such Bank has
made such portion available to the Agent on the date of such
Revolving Borrowing in accordance with Section 2.02(b) and the
Agent may, in reliance upon such assumption, make available to or
on behalf of Borrowers on such date a corresponding amount. If
and to the extent such Bank shall not have so made such ratable
portion available to the Agent, such Bank severally agrees to
repay to the Agent forthwith on demand such corresponding amount
together with interest thereon, for each day from the date such
amount is made available to or on behalf of Company until the
date such amount is repaid to the Agent at the rate per annum
equal to the Federal Funds Rate. If such Bank shall repay to the
Agent such corresponding amount, such amount so repaid shall
constitute such Bank's Advance as part of such Revolving
Borrowing for purposes of this Agreement.
(c) SELECTION OF INTEREST OPTION. Upon making a Request
for Revolving Borrowing under Section 2.02(a) hereof, Company
shall advise Agent as to whether the Borrowing shall be (i) a
Eurodollar Borrowing, in which case Company shall specify the
applicable Interest Period therefor, or (ii) a Floating Base
Borrowing. At least three (3) Eurodollar Business Days prior to
the termination of each Interest Period with respect to a
Eurodollar Borrowing (whether such termination occurs before or
after the Revolving Credit Termination Date) Company shall give
Agent written notice (the "Rollover Notice") of the interest
option which shall be applicable to such Borrowing upon the
expiration of such Interest Period. If Company shall specify
that such Borrowing shall be a Eurodollar Borrowing, such
Rollover Notice shall also specify the length of the succeeding
Interest Period selected by Company with respect to such
Borrowing. Each Rollover Notice shall be irrevocable and
effective upon notification thereof to Agent. If the required
Rollover Notice shall not have been timely received by Agent
prior to the expiration of the then relevant Interest Period,
then Borrowers shall be deemed to have elected to have such
Borrowing be a Floating Base Borrowing. With respect to any
Floating Base Borrowing, Borrowers shall have the right, on any
Eurodollar Business Day (a "Conversion Date") to convert such
Floating Base Borrowing to a Eurodollar Borrowing by giving Agent
a Rollover Notice of such selection at least three (3) Eurodollar
Business Days prior to such Conversion Date.
Notwithstanding anything to the contrary contained herein,
Company shall have no right to request a Eurodollar Borrowing if
(1) an Event of Default has occurred and is continuing or (2) the
interest rate applicable thereto under Section 2.03 hereof would
exceed the Maximum Rate in effect on the first day of the
Interest Period applicable to such Eurodollar Borrowing.
2.03. INTEREST RATE. The unpaid principal of each Floating
Base Advance shall bear interest from the date of advance until
paid at a rate per annum which shall from day to day, be equal to
the lesser of: (a) the Floating Base Rate or (b) the Maximum
Rate. The unpaid principal of each Eurodollar Advance shall bear
interest from the date of advance until paid at a rate per annum
which shall be equal to the lesser of (a) the sum of the Adjusted
Interbank Rate for the applicable Interest Period, plus one and
65/100 percent (1.65%) or (b) the Maximum Rate. All past due
principal of, and to the extent permitted by applicable law,
interest on the Notes shall bear interest at the Past Due Rate.
Notwithstanding
-15-
<PAGE>
the foregoing, the unpaid principal balance of the Notes shall
bear interest as provided in Section 3.04(b) hereof, upon the
occurrence of the circumstances described in such section.
ARTICLE III
NOTES AND INTEREST RATE PAYMENTS
3.01. PROMISSORY NOTES. The Advances under Section 2.02(a)
and Section 2.02(b) hereof by a Bank shall be evidenced by a
promissory note (each a "Note" and collectively, the "Notes") of
Borrowers, which Note shall (i) be dated the date hereof, (ii) be
in the amount of such Bank's Revolving Credit Commitment,
(iii) be payable to the order of such Bank at the office of
Agent, (iv) bear interest in accordance with Section 2.03 hereof,
and (v) be in the form of EXHIBIT "A" attached hereto with blanks
appropriately completed in conformity herewith. Notwithstanding
the principal amount of any Bank's Note as stated on the face
thereof, the amount of principal actually owing on such Note at
any given time shall be in the aggregate of all Advances
theretofore made to Borrowers hereunder, less all payments of
principal theretofore actually received hereunder by Bank. Each
Bank is authorized, but is not required, to endorse on the
schedule attached to its Note appropriate notations evidencing
the date and amount of each Advance as well as the amount of each
payment made by Borrowers hereunder.
3.02. PRINCIPAL PAYMENTS ON REVOLVING CREDIT LOANS.
Subject to Article X, the unpaid principal amount of each Note,
and all accrued but unpaid interest thereon, shall be due and
payable on the Revolving Credit Termination Date.
3.03. PREPAYMENTS.
(a) OPTIONAL PREPAYMENTS. Borrowers may, without premium
or penalty, prepay the principal of the Notes then outstanding,
in whole or in part, at any time or from time to time; provided,
however, that (i) each prepayment of less than the full
outstanding principal balance of the Note shall be in an amount
equal to one hundred thousand dollars ($100,000.00) or an
integral multiple thereof, and (ii) if Borrowers shall prepay the
principal of any Eurodollar Advance on any date other than the
last day of the Interest Period applicable thereto, Borrowers
shall make the payments required by Section 4.05 hereof.
(b) GENERAL PREPAYMENT PROVISIONS. Any prepayment of a
Note hereunder shall be (i) made together with interest accrued
(through the date of such prepayment) on the principal amount
prepaid, and (ii) applied first to accrued interest and then to
principal.
3.04. PAYMENT OF INTEREST ON THE NOTES.
(a) REVOLVING CREDIT NOTES. The interest on the unpaid
principal amount of each Floating Base Advance under each Note
shall be payable monthly as it accrues on the first Business Day
of each month commencing July 1, 1995, and on the Revolving
Credit Termination Date. Interest on the unpaid principal amount
of each Eurodollar Advance under each Note shall be payable on
the last day of such Interest Period. Should any installment of
interest become due and payable on a day other than a Business
Day, the maturity thereof shall be extended to the next
succeeding Business Day.
(b) RECAPTURE RATE. If, on any interest payment date,
Agent does not receive interest (for the account of any Bank) on
such Bank's Note computed (as if no Maximum Rate limitations were
applicable) at the applicable contract rate described herein,
because the applicable contract rate exceeds or has exceeded the
Maximum Rate, then Borrowers shall, upon the written demand of
Agent or such Bank, pay to such Bank, in addition to interest
otherwise required hereunder, on each interest payment date
thereafter, the Excess Interest Amount (hereinafter defined)
calculated as of such later interest payment date; provided,
however, that in no event shall Borrowers be required to pay, for
any appropriate computation period, interest at
-16-
<PAGE>
a rate exceeding the Maximum Rate effective during such
period. The term "Excess Interest Amount" shall mean, on any
date, with respect to the Note of any Bank, the amount by
which (a) the amount of all interest which would have accrued
prior to such date on the principal of such Note (had the
applicable contract rate(s) described herein at all times been
in effect, without limitation by the Maximum Rate) EXCEEDS (b)
the aggregate amount of interest actually paid to such Bank on
such Note on or prior to such date.
3.05. CALCULATION OF INTEREST RATES. Interest on the
unpaid principal of each Eurodollar Advance shall be calculated
on the basis of the actual days elapsed in a year consisting of
360 days. Interest on the unpaid principal of each Floating Base
Advance shall be calculated on the basis of the actual days
elapsed in a year consisting of 360 days.
3.06. MANNER AND APPLICATION OF PAYMENTS. All payments of
principal of, and interest on, any Note shall be made by
Borrowers to Agent before 11:00 a.m. (Fort Worth time), in
Federal or other immediately available funds at Agent's principal
banking office in Fort Worth. Should the principal of, or any
installment of the principal or interest on, any Note, become due
and payable on a day other than a Business Day or a Eurodollar
Business Day, as the case may be, the maturity thereof shall be
extended to the next succeeding Business Day or Eurodollar
Business Day, as the case may be. Each payment received by the
Agent hereunder for the account of a Bank shall be promptly
distributed by Agent to such Bank. All payments made on any Note
shall be credited, to the extent of the amount thereof, in the
following manner: (i) first, against the amount of interest
accrued and unpaid on the Note as of the date of such payment;
(ii) second, against all principal (if any) due and owing on the
Note; (iii) third, as a prepayment of outstanding Floating Prime
Advances under the Note; and (iv) fourth, as a prepayment of
outstanding Eurodollar Advances under the Note. Subject to the
foregoing, payments and prepayments of principal of the Notes
shall be applied to such outstanding Floating Base Advances and
Eurodollar Advances under the Notes as Borrowers shall select;
provided, however, that Borrowers shall select Floating Base
Advances and Eurodollar Advances to be repaid in a manner
designated to minimize the Consequential Loss, if any, resulting
from such payments; and provided further that, if Borrowers shall
fail to select the Floating Base Advances and Eurodollar Advances
to which such payments are to be applied, or if an Event of
Default has occurred and is continuing at the time of such
payment, then Agent shall apply the payment first to Floating
Base Advances and then to Eurodollar Advances.
3.07. PRO RATA TREATMENT. Each payment received by Agent
hereunder for account of Banks or any of them on the Notes shall
be distributed to each Bank entitled to share in such payment,
PRO RATA in proportion to the then unpaid principal balance of
the Note of each Bank. Unless Agent shall have received notice
from Borrowers prior to the date on which any payment is due to
Banks hereunder that Borrowers will not make such payment in
full, Agent may assume that Borrowers have made such payment in
full to Agent on such date and Agent may, in reliance upon such
assumption, cause to be distributed to each Bank on such due date
an amount equal to the amount then due such Bank. If and to the
extent Borrowers shall not have so made such payment in full to
Agent, each Bank shall repay to Agent forthwith on demand such
amount distributed to such Bank together with interest thereon,
for each day from the date such amount is distributed to such
Bank until the date such Bank repays such amount to Agent, at the
Federal Funds Rate.
3.08. LENDING OFFICE. Each Bank may (a) designate its
principal office or a foreign branch, subsidiary or affiliate of
such Bank as its lending office (and the office to whose accounts
payments are to be credited) for any Eurodollar Advance, (b)
designate its principal office or a domestic branch, subsidiary
or affiliate as its lending office (and the office to whose
accounts payments are to be credited) for any Floating Base
Advance and (c) change its lending offices from time to time by
notice to Agent and Borrowers; provided, however, no Bank shall
designate a foreign branch without the consent of Borrowers if
such designation would subject interest payments hereunder to
withholding for Taxes. In such event, such Bank shall continue
to hold the Note evidencing its loans for the benefit and account
of such foreign branch, subsidiary or affiliate. Each Bank shall
be entitled to fund all or any portion of its Revolving Credit
Loan in any manner that it deems appropriate, but for the
purposes of this Agreement such Bank shall, regardless of such
Bank's actual means of funding, be deemed to have funded its Loan
in accordance with the interest option from time to time selected
by Borrowers for such Borrowing.
-17-
<PAGE>
3.09. TAXES.
(a) Any and all payments by Borrowers hereunder or under
the Notes shall be made, in accordance with Section 3.06, free
and clear of and without deduction for any and all present or
future Taxes, excluding, in the case of each Bank and Agent,
taxes imposed on its income, and franchise taxes imposed on it,
by the jurisdiction under the laws of which such Bank or Agent
(as the case may be) is organized or is or should be qualified to
do business or any political subdivision thereof and, in the case
of each Bank Taxes imposed on its income and franchise taxes
imposed on it by the jurisdiction of such Bank's lending office
or any political subdivision thereof. If Borrowers shall be
required by law to deduct any Taxes (i.e., Taxes for which any
Borrower is responsible under the preceding sentence) from or in
respect of any sum payable hereunder or under any Note to any
Bank or Agent, (i) the sum payable shall be increased as may be
necessary so that after making all required deductions (including
deductions applicable to additional sums payable under this
Section 3.09) such Bank or Agent receives an amount equal to the
sum it would have received had no such deductions been made,
(ii) Borrowers shall make such deductions and (iii) Borrowers
shall pay the full amount deducted to the relevant taxation
authority or other authority in accordance with applicable law.
(b) In addition, Borrowers agree to pay any present or
future stamp or documentary taxes or any other excise or property
taxes, charges or similar levies which arise from any payment
made hereunder or under the Loan Documents from the execution,
delivery, or registration of, or otherwise with respect to, this
Agreement or the other Loan Documents (hereinafter referred to as
"Other Taxes").
(c) Borrowers will indemnify each Bank and Agent for the
full amount of Taxes or Other Taxes (including, without
limitation, any Taxes or Other Taxes imposed by any jurisdiction
on amounts payable under this Section 3.09) paid by such Bank or
Agent (as the case may be) or any liability (including penalties
and interest) arising therefrom or with respect thereto, whether
or not such Taxes or Other Taxes were correctly or legally
asserted. This indemnification shall be made within thirty (30)
days from the date such Bank or Agent makes written demand
therefor.
(d) Within thirty (30) days after the date of any payment
of Taxes, Borrowers will furnish to Agent, at its address
referred to in Section 13.02, the original or a certified copy of
a receipt evidencing payment thereof.
(e) Without prejudice to the survival of any other
agreement of Company hereunder, the agreements and obligations of
Borrowers contained in this Section 3.09 shall survive the
payment in full of the Obligation.
(f) Each Bank agrees to use good faith efforts to carry out
its obligations under this Loan Agreement in such a way as to
reduce the amount of Taxes attributable to the Revolving Credit
Loans, including the use of a different lending office, as long
as in the good faith opinion of such Bank such actions would not
have a material adverse effect upon it.
3.10. SHARING OF PAYMENTS. If any Bank shall obtain any
payment (whether voluntary, involuntary, through the exercise of
any right of set-off, or otherwise) on account of the Advances
made by it in excess of its ratable share of payments on account
of the Advances make by all Banks, such Bank shall forthwith
purchase from the other Banks such participations in the Advances
made by them as shall be necessary to cause such purchasing Bank
to share the excess payment ratably with each of them, PROVIDED,
HOWEVER, that if all or any portion of such excess payment is
thereafter recovered from such purchasing Bank, such purchase
from each Bank shall be rescinded and such Bank shall repay to
the purchasing Bank the purchase price to the extent of such
recovery together with an amount equal to such Bank's ratable
share (according to the proportion of (i) the amount of such
Bank's required repayment, to (ii) the total amount so recovered
from the purchasing Bank) of any interest or other amount paid or
payable by the purchasing Bank in respect of the total amount
recovered. Borrowers agree that any Bank so purchasing a
participation from another Bank pursuant to this Section 3.10
may, to the fullest extent permitted by law exercise all of its
rights of payment (including the right of set-off) with respect
to such participation as fully as if such Bank were the direct
creditor of Borrowers in the amount of such participation.
-18-
<PAGE>
ARTICLE IV
SPECIAL PROVISIONS FOR EURODOLLAR LOANS
4.01. INADEQUACY OF EURODOLLAR LOAN PRICING. If with
respect to an Interest Period for any Eurodollar Borrowing:
(i) Agent determines that, by reason of circumstances
affecting the Interbank Eurodollar market generally,
deposits in Dollars (in the applicable amounts) are not
being offered to Banks in the Interbank Eurodollar
market for such Interest Period, or
(ii) Majority Banks advise Agent that the Interbank Offered
Rate as determined by Agent will not adequately and
fairly reflect the cost to such Banks of maintaining or
funding the Eurodollar Borrowing for such Interest
Period,
then Agent shall forthwith give notice thereof to Borrowers,
whereupon, until Agent notifies Borrowers that the circumstances
giving rise to such suspension no longer exist, (a) the
obligation of Banks to make Eurodollar Advances shall be
suspended and (b) Borrowers shall either (i) repay in full the
then outstanding principal amount of the Eurodollar Advances,
together with accrued interest thereon on the last day of the
then current Interest Period applicable to such Eurodollar
Advances, or (ii) convert such Eurodollar Advances to Floating
Base Advances in accordance with Section 2.02(c) of this Loan
Agreement on the last day of the then current Interest Period
applicable to each such Eurodollar Advance.
4.02. ILLEGALITY. If, after the date of this Loan
Agreement, the adoption of any applicable law, rule or
regulation, or any change therein, or any change in the
interpretation or administration thereof by any Tribunal, central
bank or comparable agency charged with the interpretation or
administration thereof, or compliance by any Bank with any
request or directive (whether or not having the force of law) of
any such authority, central bank or comparable agency shall make
it unlawful or impossible for any Bank to make, maintain or fund
its Eurodollar Advances, and such Bank shall so notify Agent,
Agent shall forthwith give notice thereof to Banks and Borrowers.
Before giving any notice pursuant to this Subsection, such Bank
shall designate a different Eurodollar lending office if such
designation will avoid the need for giving such notice and will
not be materially disadvantageous to such Bank (as determined in
good faith by such Bank). Upon receipt of such notice, Borrowers
shall either (i) repay in full the then outstanding principal
amount of the Eurodollar Advance of such Bank, together with
accrued interest thereon, or (ii) convert such Eurodollar Advance
to a Floating Prime Advance, in either case on (a) the last day
of the then current Interest Period applicable to such Eurodollar
Advance if such Bank may lawfully continue to maintain and fund
such Eurodollar Advance to such day or (b) immediately if such
Bank may not lawfully continue to fund and maintain such
Eurodollar Advance to such day.
4.03. INCREASED COSTS FOR EURODOLLAR LOANS. If any
Tribunal, central bank or other comparable authority, shall at
any time after the date of this Agreement impose, modify or deem
applicable any reserve (including, without limitation, any
imposed by the Board of Governors of the Federal Reserve System
but excluding any reserve requirement included in the Eurodollar
Reserve Requirement of such Bank), special deposit or similar
requirement against assets of, deposits with or for the account
of, or credit extended by, any Bank, or shall impose on any Bank
(or its Eurodollar lending office) or the Interbank eurodollar
market any other condition affecting its Eurodollar Advances, any
Note, or its obligation to make Eurodollar Advances; and the
result of any of the foregoing is to increase the cost to such
Bank of making or maintaining its Eurodollar Advances, or to
reduce the amount of any sum received or receivable by such Bank
under this Agreement or the Note by an amount reasonably deemed
by such Bank to be material; then, within five (5) days after
demand by such Bank (with a copy to Agent), Borrowers shall pay
to Agent, for the account of such Bank, such additional amount or
amounts as will compensate such Bank for such increased cost or
reduction. Each Bank will promptly notify Borrowers and Agent of
any event of which it has knowledge, occurring after the date
hereof, which will entitle such Bank to compensation pursuant to
this Section. A certificate of any Bank claiming compensation
under this Section and setting forth the additional amount or
amounts to be paid to it hereunder shall be conclusive in the
absence of manifest error. If any Bank demands compensation
under this Section, then Borrowers may at any time, upon at least
five (5) Business Days' prior notice to such Bank through Agent,
either (i) repay in full the then outstanding Eurodollar Advances
of such Bank, together with accrued interest thereon to the date
of prepayment or (ii) convert such Eurodollar Advances to
Floating Base Advances in accordance with the provisions of this
Loan Agreement; provided, however, that Borrowers shall be liable
for any Consequential Loss arising pursuant to such
-19-
<PAGE>
actions. Each Bank agrees to use good faith efforts to carry out its
obligations under this Loan Agreement in such a way as to reduce
the amount of Taxes attributable to the Revolving Credit Loans,
including the use of a different lending office, as long as in
the good faith opinion of such Bank such actions would not have a
material adverse effect upon it.
4.04. EFFECT ON INTEREST OPTIONS. If notice has been given
pursuant to Section 4.02 or Section 4.03 requiring the Eurodollar
Advances of any Bank to be repaid or converted, then unless and
until such Bank notifies Borrowers that the circumstances giving
rise to such repayment no longer apply, all Advances shall be
Floating Prime Advances. If such Bank notifies Borrowers that
the circumstances giving rise to such repayment no longer apply,
Borrowers may thereafter select Advances to be Eurodollar
Advances in accordance with Section 2.02(c) of this Loan
Agreement.
4.05. PAYMENTS NOT AT END OF INTEREST PERIOD. If Borrowers
make any payment of principal with respect to any Eurodollar
Borrowing on any day other than the last day of an Interest
Period applicable to such Eurodollar Borrowing, then Borrowers
shall reimburse each Bank on demand the Consequential Loss
incurred by it as a result of the timing of such payment. A
certificate of each Bank setting forth the basis for the
determination of the amount of Consequential Loss shall be
delivered to Borrowers through Agent and shall, in the absence of
manifest error, be conclusive and binding. Any conversion of a
Eurodollar Borrowing to a Floating Base Borrowing on any day
other than the last day of the Interest Period for such
Eurodollar Borrowing shall be deemed a payment for purposes of
this Section.
ARTICLE V
SECURITY
5.01. LIENS AND SECURITY INTERESTS. The Obligations and the
Notes shall be secured by a first priority security interest in
all Finance Contracts evidencing Indirect Loans (except Finance
Contracts subject to a Securitization which has been approved by
Majority Banks) and the proceeds of the Finance Contracts
received by Borrowers as a result of a Securitization.
5.02. GUARANTY DOCUMENTS. To secure the Obligations and the
Notes, each of the Guarantors shall execute and deliver to Agent
the Guaranty Agreements.
ARTICLE VI
CONDITIONS PRECEDENT
6.01. INITIAL ADVANCES. The obligation of each Bank to
make the Revolving Credit Loan herein provided for and the
initial Advances thereunder is subject to the condition precedent
that, on or before the date of such Advance, Agent shall have
received for each Bank the following, each dated the date of such
Advance, in form and substance satisfactory to Agent and such
Bank:
(a) REVOLVING CREDIT NOTES. A duly executed promissory
note, drawn to the order of each Bank, in the form of EXHIBIT A
attached hereto with appropriate insertions.
(b) SECURITY AGREEMENT. Security agreement executed by
Borrowers covering all now existing and hereafter arising Finance
Contracts evidencing Indirect Loans except Finance Contracts
subject to a Securitization which has been approved by Majority
Banks.
(c) FINANCING STATEMENTS. Financing statements executed by
each of Borrowers covering all now existing and hereafter arising
Finance Contracts evidencing Indirect Loans except Finance
Contracts subject to a Securitization which has been approved by
Majority Banks.
-20-
<PAGE>
(d) GUARANTY AGREEMENT. The Guaranty Agreement in the form
of EXHIBIT B executed by AmeriCredit Premium Finance, Inc. and
ACF Investment Corp.
(e) AGENT'S FEE AGREEMENT. Agent's fee agreement between
Borrowers and Agent and the agent's fee payable to Agent.
(f) BORROWING BASE. A borrowing base certificate
satisfying the requirements of Section 8.01.
(g) ARTICLES OF INCORPORATION OF BORROWERS. A copy of the
Articles of Incorporation of each of Borrowers and all amendments
thereto.
(h) BYLAWS OF BORROWERS. A certified copy of the bylaws of
each of Borrowers.
(i) RESOLUTIONS OF BORROWERS. Resolutions of each of
Borrowers authorizing the execution of this Loan Agreement duly
adopted by the Board of Directors of each of Borrowers and
accompanied by a certificate of the Secretary of Company stating
that such resolutions are true and correct, have not been altered
or repealed and are in full force and effect.
(j) INCUMBENCY CERTIFICATE OF BORROWERS. An incumbency
certificate with respect to each of Borrowers executed by the
appropriate officers of such Borrower.
(k) CERTIFICATES OF EXISTENCE AND ACCOUNT STATUS FOR
BORROWERS. A current certificate of existence and good standing
from the State of incorporation of each of Borrowers and a
current certificate of account status from the Comptroller of
Public Accounts of the State of Texas.
(l) AUTHORITY TO TRANSACT BUSINESS. Certificate evidencing
the authority of each of Borrowers to conduct or transact
business in the State of Texas and in all other states in which
any of them conducts or transacts business.
(m) ARTICLES OF INCORPORATION OF THE GUARANTORS. A copy of
the Articles of Incorporation of each of the Guarantors and all
amendments thereto.
(n) BYLAWS OF EACH GUARANTOR. A certified copy of the
bylaws of each of the Guarantors.
(o) RESOLUTIONS OF EACH GUARANTOR. Resolutions of each one
of the Guarantors approving the execution of the Guaranty
Agreement duly adopted by the Board of Directors of each of such
Guarantors and accompanied by a certificate of the Secretary of
each of such Guarantors stating that such resolutions are true
and correct, have not been altered or repealed and are in full
force and effect.
(p) INCUMBENCY CERTIFICATES OF GUARANTORS. An incumbency
certificate with respect to each Guarantor executed by the
appropriate officers of each such Guarantor.
(q) CERTIFICATES OF EXISTENCE AND ACCOUNT STATUS FOR EACH
GUARANTOR. A current certificate of existence from the state of
incorporation of each Guarantor and a certificate of account
status from the Comptroller of Public Accounts of the State of
Texas for each Guarantor.
(r) AUTHORITY TO TRANSACT BUSINESS. Certificate evidencing
the authority of each Guarantor to conduct or transact business
in each state in which each such Guarantor conducts or transacts
business.
(s) OPINION OF COUNSEL. An executed opinion of counsel to
Borrowers and each of the Guarantors.
-21-
<PAGE>
(t) LOAN ORIGINATION FEES. The loan origination fees
described in Section 2.01(d).
6.02. ALL ADVANCES. The obligations of each Bank to
make any Advance under this Loan Agreement (including the initial
Advance) shall be subject to the following conditions precedent:
(a) NO DEFAULTS. As of the date of the making of such
Advance, there exists no Event of Default or event which with
notice or lapse of time or both could constitute an Event of
Default.
(b) COMPLIANCE WITH LOAN AGREEMENT. Company shall have
performed and complied in all material respects with all
agreements and conditions contained herein and in the Loan
Documents which are required to be performed or complied with by
Company before or at the date of such Advance or conversion.
(c) REQUEST FOR BORROWING. In the case of any Borrowing,
Agent shall have received from Company a Request for Borrowing in
the form of EXHIBIT "C" or EXHIBIT "D" attached hereto, dated as
of the date of such Advance and signed by an authorized officer
of Company, all of the statements of which shall be true and
correct, certifying that, as of the date thereof, (i) all of the
representations and warranties of Borrowers contained in this
Loan Agreement and each of the Loan Documents executed by
Borrowers are true and correct, (ii) no event has occurred and is
continuing, or would result from the Advance, which constitutes
an Event of Default or which, with the lapse of time or giving of
notice or both, would constitute an Event of Default, and
(iii) such other facts as Agent may reasonably request.
(d) NO MATERIAL ADVERSE CHANGE. As of the date of making
such Advance, no change has occurred in the business or financial
condition of the Company and its Subsidiaries on a Consolidated
basis which causes or could cause a Material Adverse Effect.
(e) REPRESENTATIONS AND WARRANTIES. The representations
and warranties contained in Article VII (other than the
representations and warranties contained in Section 7.07) hereof
shall be true in all material respects on the date of making of
such Advance, with the same force and effect as though made on
and as of that date.
(f) BANKRUPTCY PROCEEDINGS. No proceeding or case under
the United States Bankruptcy Code shall have been commenced by or
against any of Borrowers or any Guarantor.
(g) FINANCING STATEMENTS. If requested and prepared by
Agent but not less frequently than monthly, AmeriCredit Financial
Services, Inc. shall have executed and delivered to Agent
financing statements covering all Finance Contracts evidencing
Indirect Loans except Finance Contracts subject to a
Securitization which has been approved by Majority Banks or a
Lien in favor of a Person other than Agent for the benefit of
Banks.
ARTICLE VII
REPRESENTATIONS AND WARRANTIES
To induce Banks to make the Revolving Credit Loans,
Borrowers represent and warrant to Banks that:
7.01. ORGANIZATION AND GOOD STANDING OF BORROWERS. Each of
Borrowers is a corporation duly organized and existing in good
standing under the laws of the state of its incorporation, is
duly qualified as a foreign corporation and in good standing in
all states in which the failure to so qualify would have a Material
Adverse Effect and has the corporate power and authority to own its
properties and assets and to transact the business in which
-22-
<PAGE>
it is engaged and is or will be qualified in those states
wherein it will transact business in the future and where the
failure to so qualify would have a Material Adverse Effect.
7.02. ORGANIZATION AND GOOD STANDING OF THE GUARANTORS.
Each of the Guarantors is a corporation duly organized and
existing in good standing under the laws of the state of its
incorporation, is duly qualified as a foreign corporation and in
good standing in all states in which the failure to so qualify
would have a Material Adverse Effect and has the corporate power
and authority to own its properties and assets and to transact
the business in which it is engaged and is or will be qualified
in those states wherein it will transact business in the future
and where the failure to so qualify would have a Material Adverse
Effect.
7.03. AUTHORIZATION AND POWER. Each of Borrowers has the
corporate power and requisite authority to execute, deliver and
perform this Loan Agreement and the other Loan Documents to be
executed by such Borrower; each of Borrowers is duly authorized
to, and has taken all corporate action necessary to authorize
such Borrower to, execute, deliver and perform this Loan
Agreement, the Notes and such other Loan Documents and is and
will continue to be duly authorized to perform this Agreement,
the Notes and such other Loan Documents. Each of the Guarantors
has the corporate power and requisite authority to execute,
deliver and perform the Guaranty Agreement.
7.04. NO CONFLICTS OR CONSENTS. Neither the execution and
delivery of this Loan Agreement, the Notes, the Guaranty
Agreement or the other Loan Documents, nor the consummation of
any of the transactions herein or therein contemplated, nor
compliance with the terms and provisions hereof or with the terms
and provisions thereof, will contravene or materially conflict
with any provision of law, statute or regulation to which any of
Borrowers or any of the Guarantors is subject or any judgment,
license, order or permit applicable to any of Borrowers or any of
the Guarantors, or any indenture, loan agreement, mortgage, deed
of trust, or other agreement or instrument to which any of
Borrowers or any of the Guarantors is a party or by which any of
Borrowers or any of the Guarantors may be bound, or to which any
of Borrowers or any of the Guarantors may be subject, or violate
any provision of the Charter or Bylaws of any of Borrowers or any
of the Guarantors. No consent, approval, authorization or order
of any court or governmental authority or third party is required
in connection with the execution and delivery by any of Borrowers
or any of the Guarantors of the Loan Documents or to consummate
the transactions contemplated hereby or thereby.
7.05. ENFORCEABLE OBLIGATIONS. This Loan Agreement, the
Notes, the Security Agreement, the Guaranty Agreement and the
other Loan Documents are the legal and binding obligations of the
corporation executing such Loan Documents, enforceable in
accordance with their respective terms, except as limited by
bankruptcy, insolvency or other laws of general application
relating to the enforcement of creditors' rights.
7.06. NO LIENS. Except for Permitted Liens, all of the
properties and assets of Company and each of its Subsidiaries are
free and clear of all mortgages, liens, encumbrances and other
adverse claims of any nature, and such corporation has and will
have good and marketable title to such properties and assets.
7.07. FINANCIAL CONDITION. Company has delivered to Agent
copies of the Consolidated balance sheet of Company and its
Subsidiaries as of March 31, 1995, and the related consolidated
statements of income, shareholders' equity and cash flows for the
period ended such date; such financial statements are true and
correct in all material respects, fairly present the financial
condition of Company and its Subsidiaries as of such date and
have been prepared in accordance with Generally Accepted
Accounting Principles applied on a basis consistent with that of
prior periods except for the exclusion of footnotes and normal
adjustments; as of the date hereof, there are no obligations,
liabilities or indebtedness (including contingent and indirect
liabilities and obligations or unusual forward or long-term
commitments) of Company and its Subsidiaries which are
(separately or in the aggregate) material and are not reflected
in such financial statements or disclosed in writing to Agent; no
changes having a Material Adverse Effect have occurred in the
financial condition or business of any Borrower since March 31,
1995.
7.08. FULL DISCLOSURE. There is no material fact that
Borrowers have not disclosed to Agent and Banks which could have
a Material Adverse Effect on the properties, business, prospects
or condition (financial or otherwise) of any of Borrowers or any
of the Guarantors. Neither the financial statements referred to
in Section 7.07 hereof, nor any certificate or statement
delivered herewith or heretofore by any of Borrowers to Banks
-23-
<PAGE>
in connection with negotiation of this Loan Agreement, contains any
untrue statement of a material fact or omits to state any
material fact necessary to keep the statements contained herein
or therein from being misleading in any material respect.
7.09. NO DEFAULT. No event has occurred and is continuing
which constitutes an Event of Default or which, with the lapse of
time or giving of notice or both, would constitute an Event of
Default.
7.10. NO LITIGATION. Except as described in EXHIBIT E
attached hereto, there are no actions, suits or legal, equitable,
arbitration or administrative proceedings pending, or to the
knowledge of Borrowers threatened, against any of Borrowers or
any of the Guarantors that would, if adversely determined, have a
Material Adverse Effect.
7.11. REGULATORY DEFECTS. As of the date hereof, Borrowers
have advised Banks, in writing, of all Regulatory Defects of
which any of Borrowers has been advised or has knowledge.
7.12. USE OF PROCEEDS; MARGIN STOCK. The proceeds of the
Revolving Credit Loans will be used by the Borrowers and the
Guarantors solely for working capital for and general corporate
purposes of AmeriCredit Corp., AmeriCredit Financial Services,
Inc. and AmeriCredit Operating Co., Inc. None of such proceeds
will be used for the purpose of purchasing or carrying any
"margin stock" as defined in Regulation U or G of the Board of
Governors of the Federal Reserve System (12 C.F.R. Part 221 and
207), or for the purpose of reducing or retiring any indebtedness
which was originally incurred to purchase or carry a margin stock
or for any other purpose which might constitute this transaction
a "purpose credit" within the meaning of such Regulation U or G.
No Borrower is engaged in the business of extending credit for
the purpose of purchasing or carrying margin stocks. No Borrower
nor any Person acting on behalf of Borrowers has taken or will
take any action which might cause the Notes or any of the other
Loan Documents, including this Loan Agreement, to violate
Regulations U or G or any other regulations of the Board of
Governors of the Federal Reserve System or to violate Section 7
of the Securities Exchange Act of 1934 or any rule or regulation
thereunder, in each case as now in effect or as the same may
hereinafter be in effect. Borrowers do not own any "margin
stock" except for that described in the financial statements
referred to in Section 7.07 hereof and, as of the date hereof,
the aggregate value of all "margin stock" owned by Company and
its Subsidiaries does not exceed 25% of the aggregate value of
all of the assets of Company and its Subsidiaries.
7.13. NO FINANCING OF CORPORATE TAKEOVERS. Except as
permitted by Section 9.07, no proceeds of the Revolving Credit
Loans will be used to acquire any security in any transaction
which is subject to Section 13 or 14 of the Securities Exchange
Act of 1934, including particularly (but without limitation)
Sections 13(d) and 14(d) thereof.
7.14. TAXES. Except as previously disclosed to Bank, all
tax returns required to be filed by Company and its Subsidiaries
in any jurisdiction have been filed or will be filed prior to the
date on which the tax payable with respect to such return will
become delinquent and all taxes (including mortgage recording
taxes), assessments, fees and other governmental charges upon
Company or any of its Subsidiaries or upon any of its or their
properties, income or franchises have been paid prior to the time
that such taxes could give rise to a lien thereon. To the best
of each Borrower's knowledge, there is no proposed tax assessment
against any of Borrowers except as disclosed to Banks.
7.15. PRINCIPAL OFFICE, ETC. The principal office, chief
executive office and principal place of business of each of
Borrowers is at 200 Bailey Avenue, Fort Worth, Tarrant County,
Texas 76107, and Borrowers maintain their principal records and
books at such address.
7.16. ERISA. (a) No Reportable Event has occurred and is
continuing with respect to any Plan; (b) PBGC has not instituted
proceedings to terminate any Plan; (c) neither the Borrowers, any
member of the Controlled Group, nor any duly appointed
administrator of a Plan (i) has incurred any liability to PBGC
with respect to any Plan other than for premiums not yet due or
payable or (ii) has instituted or intends to institute
proceedings to terminate any Plan under Section 4041 or 4041A of
ERISA or withdraw from any Multi-Employer Pension Plan (as that
-24-
<PAGE>
term is defined in Section 3(37) of ERISA); and (d) each Plan of
Company or its Subsidiaries has been maintained and funded in all
material respects in accordance with its terms and with all
provisions of ERISA applicable thereto.
7.17. COMPLIANCE WITH LAW. Except as described on EXHIBIT F,
Company and each of its Subsidiaries are in compliance in all
material respects with all laws, rules, regulations, ordinances,
orders and decrees which are applicable to Company, any of its
Subsidiaries or any of their respective properties or business,
the failure to comply with which could have a Material Adverse
Effect, including all Environmental Laws. Neither Company nor
any Subsidiary has been notified by any Governmental Authority
that Company or any Subsidiary has failed to comply with any such
laws, rules, regulations, orders or decrees, the failure to
comply with which would result in a Material Adverse Effect, nor
has Company or any Subsidiary been notified of any Environmental
Claim except as described in EXHIBIT G.
7.18. GOVERNMENT REGULATION. No Borrower nor any of the
Guarantors are subject to regulation under the Public Utility
Holding Company Act of 1935, the Federal Power Act, the
Investment Company Act of 1940, the Interstate Commerce Act (as
any of the preceding acts have been amended), or any other law
(other than Regulation X) which regulates the incurring by
Company or any of its Subsidiaries of indebtedness, including but
not limited to laws relating to common contract carriers or the
sale of electricity, gas, steam, water, or other public utility
services.
7.19. INSIDER. Company is not, and no Person having
"control" (as that term is defined in 12 U.S.C. Section 375(b)(5)
or in regulations promulgated pursuant thereto) of Company is,
an "executive officer", "director", or "person who directly or
indirectly or in concert with one or more persons owns, controls,
or has the power to vote more than 10% of any class of voting
securities" (as those terms are defined in 12 U.S.C. Section 375(b)
or in regulations promulgated pursuant thereto) of any Bank, of a
bank holding company of which any Bank is a subsidiary, or of any
subsidiary of a bank holding company of which Bank is a subsidiary,
or of any bank at which Bank maintains a correspondent account, or
of any bank which maintains a correspondent account with any Bank.
7.20. SUBSIDIARIES. Company directly owns all of the
capital stock of AmeriCredit Financial Services, Inc.,
AmeriCredit Operating Co., Inc., AmeriCredit Premium Finance,
Inc. and ACF Investment Corp., in each case free and clear from
all liens, security interests, charges and encumbrances.
7.21. SOLVENCY. Excluding intercompany indebtedness,
Company and each of its Subsidiaries now have capital sufficient
to carry on their businesses and transactions and all business
and transactions in which they are about to engage, and for which
they have projected, and are now solvent and able to pay their
debts as they mature and each of Company and its Subsidiaries now
owns property having a value, both at fair valuation and at
present fair saleable value greater than the amount required to
pay its respective debts. Excluding intercompany indebtedness
and without giving effect to the Guaranty Agreement, no Guarantor
is "insolvent" on the date hereof (that is, the sum of such
Guarantor's absolute and contingent liabilities does not exceed
the fair market value of such Guarantor's assets). Each
Guarantor has received or will receive good and fair
consideration for its liability and obligations incurred in
connection with the Guaranty Agreement, and the incurrence of its
liability under the Guaranty Agreement in return for such
consideration may reasonably be expected to benefit each
Guarantor, directly or indirectly.
7.22. ENVIRONMENTAL MATTERS. Except as described in
EXHIBIT "G" attached hereto, none of the properties of Company or
its Subsidiaries which are presently owned has been used at any
time during their ownership to generate, manufacture, refine,
transport, treat, store, handle, dispose, transfer, produce,
process, or in any manner deal with Hazardous Materials. Except
as described in EXHIBIT "G" attached hereto, there are no past,
pending or, to the best of Company's knowledge, threatened or
potential Environmental Claims against Company or any of its
Subsidiaries or with respect to any properties presently owned or
controlled by Company or any of its Subsidiaries. Except as
described in EXHIBIT "G" attached hereto, there are no
underground storage tanks located on any of the properties
presently owned or controlled by Company or any of its
Subsidiaries and, to Company's best knowledge, there never have
been any underground storage tanks located on any of the
properties presently owned or controlled by Company or any
-25-
<PAGE>
of its Subsidiaries, and the Company has received no actual
(as contrasted with constructive) notification of any
Environmental Claims relating to any property contiguous to
any property owned or controlled by Company or any of its
Subsidiaries.
7.23. ENDORSEMENT OF INDIRECT LOANS. Borrowers have
endorsed to Agent all Finance Contracts evidencing Indirect Loans
except Finance Contracts that are subject to a Securitization
approved by Majority Banks or subject to a security interest in
favor of a Person other than Agent for the benefit of Banks.
7.24. REPRESENTATIONS AND WARRANTIES. Each Request for
Borrowing shall constitute, without the necessity of specifically
containing a written statement, a representation and warranty by
Borrowers that no Event of Default, or any event which with the
giving of notice or lapse of time or both would constitute,
mature into or become an Event of Default, shall have occurred
and be continuing and that all representations and warranties
contained in this ARTICLE VII (other than in Section 7.07) or in
any other Loan Document are true and correct at and as of the
date the Advance is to be made.
7.25. SURVIVAL OF REPRESENTATIONS, ETC. All
representations and warranties made herein are true and
correct when made by Borrowers and shall survive delivery of
the Notes and the Guaranty Agreement and the making of the
Revolving Credit Loan and any investigation at any time made
by or on behalf of Agent or any Bank shall not diminish Agent
or such Bank's right to rely thereon.
ARTICLE VIII
AFFIRMATIVE COVENANTS
So long as Banks have any commitment to make Advances
hereunder and until payment in full of the Notes and the
Obligation, Borrowers agree and covenant that Borrowers will
(unless Majority Banks shall otherwise consent in writing):
8.01. BORROWING BASE CERTIFICATE. Within thirty (30)
days after the end of each month, Borrowers shall furnish to
Agent a certificate in form satisfactory to Agent executed by the
chief financial officer or controller of each of Borrowers
reflecting in detail a computation of the Revolving Credit
Borrowing Base as of the end of such month.
8.02. COMPLIANCE CERTIFICATES. Within thirty (30) days
after the end of each calendar month hereafter, Borrowers shall
deliver to Agent a certificate executed by the chief financial
officer or controller of each of Borrowers stating that a review
of its activities during such month has been made under his
supervision and that such Borrower has observed, performed and
fulfilled each and every obligation and covenant contained herein
and is not in default under any of the same or, if any such
default shall have occurred, specifying the nature and status
thereof. At the same time compliance and other certificates are
furnished to the collateral agent for each Securitization,
Borrowers shall deliver to Agent copies of the compliance and
other certificates furnished such collateral agent for each such
Securitization.
8.03. MONTHLY STATEMENTS. Within thirty (30) days after
the end of each calendar month, Company shall furnish Agent
copies of the consolidated balance sheet of Company and its
Subsidiaries as of the close of such calendar month, and
consolidated statements of income and of cash flow of Company and
its Subsidiaries for the portion of the year then ended, in each
case setting forth in comparative form the figures for the
preceding year.
8.04. QUARTERLY STATEMENTS. Within forty five (45) days
after the end of each fiscal quarter of Company, Company shall
furnish to Agent copies of the consolidated and consolidating
balance sheet of Company and its Subsidiaries as of the close of
such fiscal quarter and consolidated and consolidating statements
of income and of cash flow of Company and its Subsidiaries for
the portion of the year then ended.
-26-
<PAGE>
8.05. AUDITED ANNUAL STATEMENTS. As soon as available and in any
event within one hundred twenty (120) days after the close of each fiscal
year of Company, Company shall furnish to each of Banks copies of the
Consolidated balance sheet of Company and its Subsidiaries as of the close of
such fiscal year and Consolidated statements of income, shareholders' equity
and the statement of cash flow of Company and its Subsidiaries for such
fiscal year, in each case setting forth in comparative form the figures for
the preceding fiscal year, all in reasonable detail and accompanied by an
opinion thereon (which shall not be qualified by reason of any limitation
imposed by Company) of independent public accountants of recognized national
standing selected by Company and satisfactory to Agent, to the effect that
such financial statements have been prepared in accordance with Generally
Accepted Accounting Principles and that the examination of such accounts in
connection with such financial statements has been made in accordance with
generally accepted auditing standards.
8.06. SEC AND OTHER REPORTS. Promptly upon transmission thereof,
Company shall furnish Agent with copies of all financial statements, proxy
statements, notices and reports which Company sends to its public security
holders and copies of all registration statements (without exhibits) and all
reports which it files with the Securities and Exchange Commission (or any
governmental body or agency succeeding to the functions of the Securities and
Exchange Commission).
8.07. DELINQUENCIES. Within thirty (30) days after the end of each
month, Borrowers shall furnish to Agent (a) a summary report reflecting the
amount of all delinquencies and charge-offs for Indirect Loans, the
percentage of Indirect Loans which are delinquent, and the percentage of
Indirect Loans which have been charged off and (b) a summary report
reflecting the amount of all Indirect Loans that are past due by cycle.
8.08. LIST OF INDIRECT LOANS. Within thirty (30) days after the
end of each calendar month, Borrowers shall furnish to Agent two (2) copies
of a list of all Finance Contracts and promissory notes evidencing Indirect
Loans (other than Finance Contracts subject to a Securitization which has
been approved by Majority Banks) that reflects the name, address and account
number of each Obligor and the unpaid principal balance of each Finance
Contract and promissory note as of the end of such preceding calendar month.
8.09. CHARGE OFF VINTAGE REPORTS. Within thirty (30) days after
the end of each month, Borrowers shall furnish Agent with a delinquency and
charge-off vintage report reflecting the percentage of Indirect Loans which
are delinquent and which have been charged off by month of origination
accompanied by the supporting data.
8.10. ROLLFORWARD REPORT. Within thirty (30) days after the end of
each month, Borrowers shall furnish to Agent with a notes receivable
rollforward report reflecting all originations, collections, charge-offs,
pay-offs and ending balances for Indirect Loans.
8.11. REPOSSESSIONS. Within thirty (30) days after the end of each
month, Borrowers shall furnish to Agent a summary report reflecting the
aggregate principal amount of Finance Contracts in respect of which the
related motor vehicle has been repossessed, excluding Finance Contracts which
have been charged off.
8.12. MODIFIED CONTRACTS. Within thirty (30) days after the end of
each month, Borrowers shall furnish to Agent a summary report reflecting the
principal amount of all Finance Contracts that have been modified in any way
which affects the contractual timing or amount of any installment payment due
under such Finance Contract.
8.13. MATERIAL EVENTS. Each of the Borrowers shall promptly notify
Agent of (i) any Material Adverse Effect in its financial condition or
business; (ii) any material default under any material agreement, contract or
other instrument to which such Borrower is a party or by which any of its
properties are bound, or any acceleration of any maturity of any Indebtedness
owing by such Borrower, (iii) any material adverse claim against or affecting
such Borrower or any of its properties which might or could reasonably be
expected to have a Material Adverse Effect; (iv) any litigation,
-27-
<PAGE>
or any claim or controversy which might become the subject of litigation,
against such Borrower or affecting any of such Borrower's property, if such
litigation or potential litigation might be expected to have or could
reasonably be expected to have, in the event of any unfavorable outcome, a
Material Adverse Effect on such Borrower's financial condition or business or
might or could reasonably be expected to cause an Event of Default; and (v)
any material change in underwriting standards or criteria and (vi) a change
in the executive officers of any of Borrowers.
8.14. INSURANCE. Each Borrower shall maintain on its properties
insurance of responsible and reputable companies in such amounts and covering
such risks as is prudent and is usually carried by companies engaged in
businesses similar to that of such Borrower; each Borrower shall furnish
Agent, on request, with certified copies of insurance policies or other
appropriate evidence of compliance with the foregoing covenant.
8.15. LICENSES. Borrowers shall preserve and maintain all material
licenses, privileges, franchises, certificates and the like necessary for the
operation of their respective business.
8.16. COMPLIANCE WITH LOAN DOCUMENTS. Borrowers will comply in all
material respects with any and all covenants and provisions of this Loan
Agreement, the Notes and all other of the Loan Documents.
8.17. COMPLIANCE WITH MATERIAL AGREEMENTS. Borrowers will comply in
all material respects with all material agreements, indentures, mortgages or
documents binding on it or affecting their properties or business where the
failure to so comply would have a Material Adverse Effect.
8.18. OPERATIONS AND PROPERTIES. Borrowers will act prudently and
in accordance with customary industry standards in managing or operating its
assets, properties, business and investments; Borrowers will keep in good
working order and condition, ordinary wear and tear excepted, all of their
respective assets and properties which are necessary to the conduct of its
business except for worn out or obsolete assets which have been replaced.
8.19. BOOKS AND RECORDS; ACCESS. Upon prior written notice,
Borrowers will give any representative of any Bank access during all business
hours to, and permit such representative to examine, copy or make excerpts
from, any and all books, records and documents in the possession of Borrowers
and relating to its affairs, and to inspect any of the properties of
Borrowers. Borrowers will maintain complete and accurate books and records of
its transactions in accordance with good accounting practices.
8.20. COMPLIANCE WITH LAW. Company will comply with and will cause
each Subsidiary to comply with all applicable laws, rules, regulations, and
all orders of any Governmental Authority applicable to it or any of its
property, business operations or transactions, a breach of which could have a
Material Adverse Effect on Company's or any Subsidiary's financial condition,
business or credit.
8.21. ERISA COMPLIANCE. Each Borrower shall (a) at all times, make
prompt payment of all contributions required under all Plans and required to
meet the minimum funding standard set forth in ERISA with respect to its
Plans; (b) notify each Bank immediately of any fact, including, but not
limited to, any Reportable event arising in connection with any of its Plans,
which might constitute grounds for termination thereof by the PBGC or for the
appointment by the appropriate United States District Court of a trustee to
administer such Plan, together with a statement, if requested by a Bank, as
to the reason therefor and the action, if any, proposed to be taken with
respect thereto; and (c) furnish to each Bank, upon its request, such
additional information concerning any of its Plans as may be reasonably
requested.
8.22. ADDITIONAL INFORMATION. Borrowers shall promptly furnish to
Agent, at Agent's request, such additional financial or other information
concerning assets, liabilities, operations and transactions of Borrowers as
Agent may from time to time reasonably request.
8.23. PRINCIPAL DEPOSITORY. Borrowers shall use Agent as their
principal depository; Borrowers shall use the lockbox services of Agent.
-28-
<PAGE>
8.24. GUARANTY OF SUBSIDIARY CORPORATIONS. Company shall cause each
Subsidiary formed after the date of this Agreement to execute a Guaranty of
the Notes within ten (10) days after the date of formation of such Subsidiary
except any special purpose Subsidiary formed solely for the purpose of
consummating a Securitization approved by Majority Banks.
8.25. FINANCING STATEMENTS. If requested by Agent, each of
Borrowers shall execute and deliver to Agent new financing statements in form
satisfactory to Agent at the time it commences conducting business in any
state in which it has not previously conducted business.
8.26. FIELD TESTS. Borrowers shall from time to time permit Banks
to conduct field examinations at the expense of Banks. Borrowers shall
permit Agent to conduct a field examination annually at the expense of
Borrowers.
8.27. DELIVERY OF INDIRECT LOANS. At the request of Agent or
Majority Banks after the occurrence of an Event of Default, Borrowers shall
promptly deliver to Agent all Finance Contracts and promissory notes
evidencing Indirect Loans duly endorsed or assigned to Agent.
8.28. INSPECTION OF INDIRECT LOANS. Borrowers shall permit Agent
and its officers and representatives to inspect all Finance Contracts and
promissory notes evidencing Indirect Loans once each month during normal
business hours.
8.29. FURTHER ASSURANCES. Upon request of the Agent, Borrowers
agree to promptly cure any defects in the creation, issuance, execution and
delivery of this Loan Agreement or in the Loan Documents. Each of Borrowers,
at their expense, will further promptly execute and deliver to Agent upon
request all such other and further documents, agreements and instruments in
compliance with or accomplishment of the covenants and agreements of
Borrowers hereunder, or to further evidence and more fully describe the
obligations of Borrowers hereunder, or to correct any omissions herein, or to
more fully state the obligations set out herein.
ARTICLE IX
NEGATIVE COVENANTS
So long as Banks have any commitment to make Advances hereunder, and
until full payment of the Notes and the performance of the Obligation,
Company covenants and agrees that neither Company nor any of its Subsidiaries
will, unless Majority Banks otherwise consent in writing:
9.01. RATIO OF INDEBTEDNESS TO TANGIBLE NET WORTH. Permit the ratio
of the difference between the total amount of the Indebtedness and cash
balances of Company and its Subsidiaries to the Tangible Net Worth of Company
and its Subsidiaries on a Consolidated basis to be more than 1.8 to 1.0 at
any time; or
9.02. CASH FLOW. Permit its Cash Flow to be less than eight million
dollars ($8,000,000) during any twelve (12) month period; or
9.03. FIXED CHARGE COVERAGE RATIO. Permit the Fixed Charge Coverage
Ratio computed on a trailing twelve (12) month basis to be less than 2.2 to
1.0 at any time; or
9.04. CAPITAL EXPENDITURES. Permit the aggregate amount of all
Capital Expenditures of Company and its Subsidiaries to exceed $2,500,000
during any trailing 12 month period; or
-29-
<PAGE>
9.05. LOSS. Incur any net loss on a consolidated basis determined
in accordance with GAAP during any trailing three (3) month period; or
9.06. LIMITATION ON ADDITIONAL INDEBTEDNESS. Incur or assume or
permit any of its Subsidiaries to incur or assume any Indebtedness for
borrowed money, except for (i) the indebtedness evidenced by the Notes; (ii)
trade debt incurred in the ordinary course of business; (iii) up to but not
exceeding one million dollars ($1,000,000) in the aggregate at any time; and
(iv) indebtedness arising from Securitizations approved by Majority Banks; or
9.07. RESTRICTIONS ON DIVIDENDS ON CAPITAL STOCK. Pay any
dividends or make any distributions on or with respect to its outstanding
capital stock or purchase, redeem or purchase any of it capital stock in
excess of the lesser of fifty percent (50%) of Net Income or $6,000,000 in
the aggregate during any trailing 12 month period; or
9.08. LOSSES TO NET INDIRECT LOANS. Permit the ratio of Net Credit
Losses during the prior 12 months to the sum of month end balances of Net
Indirect Loans over the prior 13 months DIVIDED BY 13 to be greater than .10
to 1.0 at any time; or
9.09. DELINQUENT LOANS TO NET INDIRECT LOANS. Permit the ratio of
Delinquent Loans to Net Indirect Loans to be greater than .045 to 1.0 at any
time; or
9.10. LIQUIDATION, MERGERS, CONSOLIDATION AND DISPOSITION OF
SUBSTANTIAL ASSETS. Liquidate, dissolve or reorganize; or merge or
consolidate with any other corporation or entity; or acquire or permit any of
its Subsidiaries to acquire all or substantially all of the assets of, any
other company, firm or association except for the purchase of loans or
Finance Contracts; or make or permit any of its Subsidiaries to make any
other substantial change in its capitalization or its business other than a
Securitization approved by Majority Banks; or
9.11. ENTER INTO TRANSACTION WITH AFFILIATES. Enter into, or be a
party to, any transaction with any Affiliate, Subsidiary or shareholder of
Company, except (i) as permitted by this Agreement, (ii) in the ordinary
course of and pursuant to the reasonable requirements of Company's business
and upon fair and reasonable terms which are fully disclosed to Agent or
(iii) sales of equity securities to its current shareholders other than
management in connection with future financing upon fair and reasonable terms
which are fully disclosed to Agent which are no less favorable to Company
than would be in an arm's length transaction with Person's not an Affiliate;
or
9.12. BUSINESS ACQUISITIONS. Purchase, lease or otherwise acquire
all or substantially all of the assets of any other corporation, partnership
or person except the purchase of loans or Finance Contracts; or
9.13. NEGATIVE PLEDGE. Create or suffer to exist any mortgage, pledge,
security interest, conditional sale or other title retention agreement,
charge, encumbrance or other Lien (whether such interest is based on common
law, statute, other law or contract) upon any of its property or assets, now
owned or hereafter acquired, except for Permitted Liens and Liens in favor of
Agent; or
9.14. NO GRANT OF NEGATIVE PLEDGE. Agree with any Person not to create
or suffer to exist any mortgage, pledge, security interest or encumbrance or
Lien upon any of its property or assets now owned or hereafter acquired; or
9.15. SALE OF ACCOUNTS RECEIVABLE. Sell or permit any Subsidiary to
sell any of its accounts receivable, with or without recourse; or
9.16. SECURITIZATION AGREEMENT. Enter into any Securitization or
similar agreement; or
-30-
<PAGE>
9.17. LOAN LOSS RESERVE RATIO. Permit the ratio of the Loan Loss
Reserve to Net Indirect Loans to be less than .06 to 1.0 at any time.
If any action or failure to act by Company or any Subsidiary violates any
covenant or obligations of Borrowers contained herein, then such violation
shall not be excused by the fact that such action or failure to act would
otherwise be required or permitted by any covenant (or exception to any
covenant) other than the covenant violated.
ARTICLE X
EVENTS OF DEFAULT; REMEDIES UPON EVENT OF DEFAULT
10.01. EVENTS OF DEFAULT. An "Event of Default" shall exist if any one
or more of the following events (herein collectively called "Events of
Default") shall occur and be continuing:
(a) Borrowers shall fail to pay when due any principal of, or interest
on any Note, or any other fee or payment due hereunder or under any of the
Loan Documents; or
(b) Any representation or warranty made under this Loan Agreement, or
any of the Loan Documents or in any certificate or statement furnished to or
made to Banks pursuant hereto or in connection herewith shall prove to be
untrue or inaccurate in any material respect as of the date on which such
representation or warranty is made; or
(c) Failure of any of Borrowers to observe, keep and perform any of the
covenants or agreements in Sections 8.01, 8.02, 8.03, 8.04, 8.05, 8.06, 8.07,
8.08, 8.09, 8.10, 8.11 or 8.12 and the continuance of such failure for a
period of at least ten (10) days after receipt of written notice from Agent
to Borrowers specifying such failure; or
(d) Failure or refusal of any of Borrowers to observe, keep and perform
any of the covenants, agreements and obligations hereunder or any of the Loan
Documents (except the covenants in Sections 8.01, 8.02, 8.03, 8.04, 8.05,
8.06, 8.07, 8.08, 8.09, 8.10, 8.11 and 8.12) and the continuance of such
failure or refusal for a period of twenty (20) days after receipt of written
notice from Agent to Borrowers specifying such failure; or
(e) Company or any of its Subsidiaries shall (i) apply for or consent
to the appointment of a receiver, custodian, trustee, intervenor or
liquidator of all or a substantial part of its assets, (ii) voluntarily
become the subject of a bankruptcy, reorganization or insolvency proceeding
or be insolvent or admit in writing that it is unable to pay its debts as
they become due, (iii) make a general assignment for the benefit of
creditors, (iv) file a petition or answer seeking reorganization or an
arrangement with creditors or to take advantage of any bankruptcy or
insolvency laws, (v) file an answer admitting the material allegations of, or
consent to, or default in answering, a petition filed against it in any
bankruptcy, reorganization or insolvency proceeding, or (vi) become the
subject of an order for relief under any bankruptcy, reorganization or
insolvency proceeding; or
(f) An order, judgment or decree shall be entered by any court of
competent jurisdiction or other competent authority approving a petition
appointing a receiver, custodian, trustee, intervenor or liquidator of
Company or any of its Subsidiaries or of all or substantially all of its
assets, and such order, judgment or decree shall continue unstayed and in
effect for a period of sixty (60) days; or a complaint or petition shall be
filed against Company or any of its Subsidiaries seeking or instituting a
bankruptcy, insolvency, reorganization, rehabilitation or receivership
proceeding of Company or any of its Subsidiaries, and such petition or
complaint shall not have been dismissed within sixty (60) days; or
-31-
<PAGE>
(g) Any final judgment(s) for the payment of money in excess of the sum
of two hundred thousand dollars ($200,000) in the aggregate shall be rendered
against Company or any Subsidiary and such judgment or judgments shall not be
satisfied or discharged at least ten (10) days prior to the date on which any
of its assets could be lawfully sold to satisfy such judgment; or
(h) There shall occur any change in the condition (financial or
otherwise) of Company or any Subsidiary which, in the reasonable opinion of
Majority Banks, has a Material Adverse Effect; or
(i) The occurrence of a default or an event of default under any
Securitization or similar agreement to which Company or any of its
Subsidiaries is a party; or
(j) Default shall occur under any Indebtedness for borrowed money
issued, assumed or guaranteed by the Company or any of its Subsidiaries or
under any indenture, agreement or other instrument under which the same may
be issued and such default shall continue for a period of time sufficient to
permit the acceleration of maturity of such Indebtedness or any such
Indebtedness shall not be paid when due.
10.02. REMEDIES UPON EVENT OF DEFAULT. If an Event of Default shall
have occurred and be continuing, then Agent shall, at the request of Majority
Banks, exercise any one or more of the following rights and remedies, and any
other remedies in any of the Loan Documents, as Majority Banks in their sole
discretion, may deem necessary or appropriate: (i) declare the principal of,
and all interest then accrued on, the Notes and any other liabilities
hereunder to be forthwith due and payable, whereupon the same shall forthwith
become due and payable without presentment, demand, protest, notice of
default, notice of acceleration or notice of intention to accelerate or other
notice of any kind, all of which Borrowers hereby expressly waive, anything
contained herein or in the Notes to the contrary notwithstanding, (ii) refuse
to make any additional Advances under the Notes, (iii) reduce any claim to
judgment, (iv) apply to the payment of the Notes all collections received in
the lockbox with Agent to which payments on the Eligible Finance Contracts
pledged to Agent and Banks are sent and/or (v) without notice of default or
demand, pursue and enforce any of Banks' rights and remedies under the Loan
Documents or otherwise provided under or pursuant to any applicable law or
agreement. Notwithstanding the foregoing, in the event of the occurrence of
an Event of Default under Section 10.01(e) or Section 10.01(f), the entire
amount of principal of, and interest then accrued on, the Notes shall
automatically be immediately due and payable, without demand, notice of
default, notice of acceleration or notice of any kind, all of which Borrowers
hereby expressly waive and the Revolving Commitment of each of the Banks
shall terminate.
Borrowers hereby designate and appoint Agent as its attorney-in-fact to
endorse to Agent for the benefit of Banks after the occurrence of an Event of
Default all checks deposited in the lockbox with Agent to which payments on
the Eligible Finance Contracts pledged to Agent and Banks are sent. This
power of attorney is irrevocable and is coupled with an interest.
10.03. PERFORMANCE BY BANKS. Should any of Borrowers fail to perform
in any material respect any covenant, duty or agreement contained herein or
in any of the Loan Documents, Agent or Banks may, at their option, perform
or attempt to perform such covenant, duty or agreement on behalf of the
Borrowers following written notice to Borrowers of such intention to perform.
In such event, Borrowers shall, at the request of Agent or Banks, promptly
pay any amount reasonably expended by Agent or Banks in performance or
attempted performance to Agent at its principal office in Fort Worth, Texas,
together with interest thereon at the Past Due Rate from the date of such
expenditure until paid. Notwithstanding the foregoing, it is expressly
understood that neither Banks nor Agent assume any liability or
responsibility (except liability attributable to their gross negligence or
willful misconduct) for the performance of any duties of Borrowers hereunder
or under any of the Loan Documents or other control over the management and
affairs of the Borrowers.
10.04. REMEDIES CUMULATIVE. All covenants, conditions, provisions,
warranties, indemnities and other undertakings of Borrowers contained in this
Agreement, or in any document referred to herein or in any agreement
supplementary hereto or in any of the Loan Documents shall be deemed
cumulative to and not in derogation or substitution of any of the terms,
covenants, conditions or agreements of Borrowers contained herein. The
failure
-32-
<PAGE>
or delay of Agent or Banks to exercise or enforce any rights, liens, powers
or remedies hereunder or under any of the aforesaid agreements or other
documents against any security shall not operate as a waiver of such liens,
rights, powers and remedies, but all such rights, powers and remedies shall
continue in full force and effect until the loans evidenced by the Notes and
the entire Obligation of Borrowers to Banks shall have been fully satisfied,
and all rights, liens, powers and remedies herein provided for are cumulative
and none are exclusive.
ARTICLE XI
ARBITRATION PROGRAM
11.01. BINDING ARBITRATION. Upon the demand of any party, whether made
before or after the institution of any judicial proceeding, any Dispute (as
defined below) shall be resolved by binding arbitration in accordance with
the terms of this Arbitration Program. A "Dispute" shall include any action,
dispute, claim, or controversy of any kind (e.g., whether in contract or in
tort, statutory or common law, legal or equitable, or otherwise) now existing
or hereafter arising between the parties in any way arising out of,
pertaining to or in connection with (1) the agreement, document or instrument
to which this Arbitration Program is attached or in which it is referred to
or any related agreements, documents, or instruments (the "Documents"), (2)
all past, present or future loans, notes instruments, drafts, credits,
accounts, deposit accounts, safe deposit boxes, safekeeping agreements,
guarantees, letters of credit, goods or services, or other transactions,
contracts or agreements of any kind whatsoever, (3) any past, present or
future incidents, omissions, acts, practices, or occurrences causing injury
to either party whereby the other party or its agents, employees, or
representatives may be liable, in whole or in part, or (4) any aspect of the
past, present or future relationships of the parties including any agency,
independent contractor or employment relationship but excluding claims for
workers' compensation and unemployment benefits ("Relationship"). Any party
to this Arbitration Program may, by summary proceedings (e.g., a plea in
abatement or motion to stay further proceedings), bring any action in court
to compel arbitration of any Disputes. Any party who fails or refuses to
submit to binding arbitration following a lawful demand by the opposing party
shall bear all costs and expenses incurred by the opposing party in
compelling arbitration of any Dispute. The parties agree that by engaging in
activities with or involving each other as described above, they are
participating in transactions involving interstate commerce.
11.02. GOVERNING RULES. All Disputes between the parties shall be
resolved by binding arbitration administered by the American Arbitration
Association (the "AAA") in accordance with, and in the following priority:
(1) the terms of this Arbitration Program, (2) the Commercial Arbitration
Rules of the AAA, (3) the Federal Arbitration Act (Title 9 of the United
States Code) and (4) to the extent the foregoing are inapplicable,
unenforceable or invalid, the laws of the State of Texas. The validity and
enforceability of this Arbitration Program shall be determined in accordance
with this same order of priority. In the event of any inconsistency between
this Arbitration Program and such rules and statutes, this Arbitration
Program shall control. Judgment upon any award rendered hereunder may be
entered in any court having jurisdiction; provided, however, that nothing
contained herein shall be deemed to be a waiver by any party that is a bank
of the protections afforded to it under 12 U.S.C. Section 91 or Texas Banking
Code Art. 342-609.
11.03. NO WAIVER; PRESERVATION OF REMEDIES; MULTIPLE PARTIES. No
provision of, nor the exercise of any rights under, this Arbitration Program
shall limit the right of any party, during any Dispute to seek, use, and
employ ancillary or preliminary remedies, judicial or otherwise, for the
purpose of realizing upon, preserving, protecting, foreclosing or proceeding
under forcible entry and detainer for possession of any real or personal
property, and any such action shall not be deemed an election of remedies.
Such rights shall include, without limitation, rights and remedies relating
to (1) foreclosing against any real or personal property collateral or other
security by the exercise of a power of sale under a deed of trust, mortgage,
or other security agreement or instrument, or applicable law, (2) exercising
self-help remedies (including setoff rights) or (3) obtaining provisional or
ancillary remedies such as injunctive relief, sequestration, attachment,
garnishment, or the appointment of a receiver from a court having
jurisdiction. Such rights can be exercised at any time except to the extent
such action is contrary to a final award or decision in any arbitration
proceeding. The institution and maintenance of an action for judicial relief
or pursuit of provisional or ancillary remedies or exercise of self-help
remedies shall not constitute a waiver of the right of any party, including
the plaintiff, to submit the Dispute to arbitration nor render inapplicable
the compulsory arbitration provisions hereof.
-33-
<PAGE>
In Disputes involving indebtedness or other monetary obligations, each party
agrees that the other party may proceed against all liable persons, jointly
and severally, or against one or more of them, less than all, without
impairing rights against other liable persons. No party shall be required to
join the principal obligor or any other liable persons (e.g., sureties or
guarantors) in any proceeding against a particular person. A party may
release or settle with one or more liable persons as the party deems fit
without releasing or impairing rights to proceed against any persons not so
released.
11.04. STATUTE OF LIMITATIONS. All statutes of limitation shall apply
to any proceeding in accordance with this Arbitration Program.
11.05. ARBITRATOR POWERS AND QUALIFICATIONS; AWARDS; MODIFICATION OR
VACATION OF AWARD. Arbitrators are empowered to resolve Disputes by summary
rulings substantially similar to summary judgments and motions to dismiss.
Arbitrators shall resolve all Disputes in accordance with the applicable
substantive law. Any arbitrator selected shall be required to be a
practicing attorney licensed to practice law in the State of Texas and shall
be required to be experienced and knowledgeable in the substantive laws
applicable to the subject matter of the Dispute. With respect to a Dispute
in which the claims or amounts in controversy do not exceed $1,000,000, a
single arbitrator shall be chosen and shall resolve the Dispute. In such
case, the arbitrator shall be required to make specific, written findings of
fact, and shall have authority to render an award up to but not to exceed
$1,000,000, including all damages of any kind whatsoever, including costs,
fees and expenses. A Dispute involving claims or amounts in controversy
exceeding $1,000,000 shall be decided by a majority vote of a panel of three
arbitrators (an "Arbitration Panel"), the determination of any two of the
three arbitrators constituting the determination of the Arbitration Panel,
provided, however, that all three Arbitrators on the Arbitration Panel must
actively participate in all hearings and deliberations. Arbitrators,
including any Arbitration Panel, may grant any remedy or relief deemed just
and equitable and within the scope of this Arbitration Program and may also
grant such ancillary relief as is necessary to make effective any award.
Arbitration Panels shall be required to make specific, written findings of
fact and conclusions of law, and in such proceedings before an Arbitration
Panel only, the parties shall have the additional right to seek vacation or
modification of any award of an Arbitration Panel that is based in whole, or
in part, on an incorrect or erroneous ruling of law by appeal to a Federal or
State Court of Appeals, following the entry of judgment on the award in
Federal or State District Court, as appropriate. For these purposes, the
award and judgment entered by the Federal or State District Court shall be
considered to be the same as the award and judgment of the Arbitration Panel.
All requirements applicable to appeals from any Federal or State District
Court judgment shall be applicable to appeals from judgments entered on
decisions rendered by Arbitration Panels. The Appellate Courts shall have
the power and authority to vacate or modify an award based upon a
determination that there has been an incorrect or erroneous ruling of law.
The Appellate Court shall also have the power to reverse and/or remand the
decision of an Arbitration Panel. Subject to the foregoing, the determination
of an Arbitrator or Arbitration Panel shall be binding on all parties and
shall not be subject to further review or appeal except as otherwise allowed
by applicable law.
11.06. OTHER MATTERS AND MISCELLANEOUS. To the maximum extent
practicable, the AAA, the Arbitrator (or the Arbitration Panel, as
appropriate) and the parties shall take any action necessary to require that
an arbitration proceeding hereunder be concluded within 180 days of the
filing of the Dispute with the AAA. Arbitration proceedings hereunder shall
be conducted at one of the following locations in the State of Texas agreed
to in writing by the parties or, in the absence of such agreement, selected
by the AAA: (1) Dallas; or (2) Fort Worth. Arbitrators shall be empowered to
impose sanctions and to take such other actions as they deem necessary to the
same extent a judge could do pursuant to the Federal Rules of Civil
Procedure, the Texas Rules of Civil Procedure and applicable law. With
respect to any Dispute, each party agrees that all discovery activities shall
be expressly limited to matters directly relevant to the Dispute and any
Arbitrator, Arbitration Panel and the AAA shall be required to fully enforce
this requirement. This Arbitration Program constitutes the entire agreement
of the parties with respect to its subject matter and supersedes all prior
discussions, arrangements, negotiations, and other communications on dispute
resolution. The provisions of this Arbitration Program shall survive any
termination, amendment, or expiration of the Documents or the Relationship,
unless the parties otherwise expressly agree in writing. To the extent
permitted by applicable law, Arbitrators, including any Arbitration Panel,
shall have the power to award recovery of all costs and fees (including
attorneys' fees, administrative fees, and arbitrators' fees) to the
prevailing party. This Arbitration Program may be amended, changed, or
modified only by the express provisions of a writing which specifically
refers to this Arbitration Program and which is signed by all the parties
hereto. If any term, covenant, condition, or provision of this Arbitration
Program is found to be unlawful, invalid or unenforceable, such illegality or
invalidity
-34-
<PAGE>
or unenforceability shall not affect the legality, validity, or
enforceability of the remaining parts of this Arbitration Program, and all
such remaining parts hereof shall be valid and enforceable and have full
force and effect as if the illegal, invalid, or unenforceable part had not
been included. The captions or headings in this Arbitration Program are for
convenience of reference only and are not intended to constitute any part of
the body or text of this Arbitration Program. Each party agrees to keep all
Disputes and arbitration proceedings strictly confidential, except for
disclosures of information required in the ordinary course of business of the
parties or by applicable law or regulation. To the maximum extent permitted
by law, this Arbitration Program modifies and supersedes any and all prior
agreements for arbitration between the parties.
ARTICLE XII
THE AGENT
12.01. APPOINTMENT AND AUTHORIZATION. Each Bank hereby irrevocably
appoints and authorizes Agent to take such action on its behalf and to
exercise such powers under the Loan Documents as are delegated to Agent by
the terms thereof, together with such powers as are reasonably incidental
thereto. With respect to its Commitment, the Advances made by it and the
Notes issued to it, Agent shall have the same rights and powers under this
Agreement as any other Bank and may exercise the same as though it were not
Agent; and the term "Bank" or "Banks" shall, unless otherwise expressly
indicated, include the Agent in its capacity as a Bank. The Agent and its
affiliates may accept deposits from, lend money to, act as trustee under
indentures of, and generally engage in any kind of business with, Borrowers,
and any Person which may do business with Borrowers, all as if Agent were not
Agent hereunder and without any duty to account therefor to Banks.
12.02. NOTE HOLDERS. Agent may treat the payee of any Note as the
holder thereof until written notice of transfer shall have been filed with it
signed by such payee and in form satisfactory to Agent.
12.03. CONSULTATION WITH COUNSEL. Banks agree that Agent may consult
with legal counsel selected by it and shall not be liable for any action
taken or suffered in good faith by them in accordance with the advice of such
counsel.
12.04. DOCUMENTS. Agent shall not be under a duty to examine or pass
upon the validity, effectiveness, enforceability, genuineness or value of any
of the Loan Documents or any other instrument or document furnished pursuant
thereto or in connection therewith, and Agent shall be entitled to assume
that the same are valid, effective, enforceable and genuine and what they
purport to be.
12.05. RESIGNATION OR REMOVAL OF AGENT. Subject to the appointment and
acceptance of a successor Agent as provided below, the Agent may resign at
any time by giving written notice thereof to Banks and Borrowers and the
Agent may be removed at any time with or without cause by Majority Banks.
Upon any such resignation or removal, Majority Banks shall have the right to
appoint a successor Agent. If no successor Agent shall have been so
appointed by Majority Banks and shall have accepted such appointment within
30 days after the retiring Agent's giving of notice of resignation or
Majority Banks' removal of the retiring Agent, then the retiring Agent may,
on behalf of the Banks, appoint a successor Agent. Upon the acceptance of
any appointment as Agent hereunder by a successor Agent, such successor Agent
shall thereupon succeed to and become vested with all the rights, powers,
privileges and duties of the retiring Agent, and the retiring Agent shall be
discharged from its duties and obligations hereunder. After any retiring
Agent's resignation or removal hereunder as Agent, the provisions of this
Article 12 shall continue in effect for its benefit in respect to any actions
taken or omitted to be taken by it while it was acting as Agent.
12.06. RESPONSIBILITY OF AGENT. It is expressly understood and agreed
that the obligations of Agent under the Loan Documents are only those
expressly set forth in the Loan Documents and that Agent shall be entitled to
assume that no Event of Default or event which, with the giving of notice or
lapse of time, or both, would constitute an Event of Default has occurred and
is continuing, unless Agent has actual knowledge of such fact or has received
notice from a Bank that such Bank considers that an Event of Default or such
event has occurred and is continuing and
-35-
<PAGE>
specifying the nature thereof. Agent shall furnish to each of Banks within
five (5) Business Days receipt copies of the documents, statements and
reports furnished to Agent pursuant to Sections 8.01, 8.02, 8.03, 8.04, 8.05,
8.06, 8.07, 8.09, 8.10, 8.11 and 8.12. Banks recognize and agree, that for
purposes of Section 2.02(b) hereof, Agent shall not be required to determine
independently whether the conditions described in Sections 6.02(a), (b), (c),
(d) and (e) have been satisfied and, in disbursing funds to Borrowers, may
rely fully upon statements contained in the relevant Request for Borrowing.
Neither Agent nor any of its directors, officers or employees shall be liable
for any action taken or omitted to be taken by it under or in connection with
the Loan Documents, except for its own gross negligence or willful
misconduct. Agent shall incur no liability under or in respect of any of the
Loan Documents by acting upon any notice, consent, certificate, warranty or
other paper or instrument believed by it to be genuine or authentic or to be
signed by the proper party or parties, or with respect to anything which it
may do or refrain from doing in the reasonable exercise of its judgment, or
which may seem to it to be necessary or desirable in the premises.
The relationship between Agent and each of the Banks is only that of
agent and principal and has no fiduciary aspects, and Agent's duties
hereunder are acknowledged to be only ministerial and not involving the
exercise of discretion on its part. Nothing in this Loan Agreement or
elsewhere contained shall be construed to impose on Agent any duties or
responsibilities other than those for which express provision is herein made.
In performing its duties and functions hereunder, Agent does not assume and
shall not be deemed to have assumed, and hereby expressly disclaims, any
obligation or responsibility toward or any relationship of agency or trust
with or for, Borrowers. As to any matters not expressly provided for by this
Loan Agreement (including, without limitation, enforcement or collection of
the Notes), Agent shall not be required to exercise any discretion or take
any action, but shall be required to act or to refrain from acting (and shall
be fully protected in so acting or refraining from acting) upon the
instructions of Majority Banks and such instructions shall be binding upon
all Banks and all holders of Notes; PROVIDED, HOWEVER, that Agent shall not
be required to take any action which exposes Agent to personal liability or
which is contrary to this Loan Agreement or applicable law.
12.07. NOTICES OF EVENT OF DEFAULT. In the event that Agent shall have
acquired actual knowledge of any Event of Default or of an event which, with
the giving of notice or the lapse of time, or both, would constitute an Event
of Default, Agent shall promptly give written notice thereof to the other
Banks.
12.08. INDEPENDENT INVESTIGATION. Each of the Banks severally
represents and warrants to Agent that it has made its own independent
investigation and assessment of the financial condition and affairs of the
Borrowers in connection with the making and continuation of its participation
in the Loans hereunder and has not relied exclusively on any information
provided to such Bank by Agent in connection herewith, and each Bank
represents, warrants and undertakes to Agent that it shall continue to make
its own independent appraisal of the creditworthiness of the Borrowers while
the Loans are outstanding or its commitment hereunder is in force.
12.09. INDEMNIFICATION. Banks agree to indemnify Agent (to the extent
not reimbursed by Borrowers), ratably according to the proportion that the
respective principal amounts of the Note held by each of them bears to the
sum of the aggregate principal amount of the Notes, from and against any and
all liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses, or disbursements of any kind or nature whatsoever
which may be imposed on, incurred by or asserted against Agent in any way
relating to or arising out of the Loan Documents or any action taken or
omitted by Agent under the Loan Documents, provided that no Bank shall be
liable for any portion of such liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements
resulting from Agent's gross negligence or willful misconduct.
12.10. BENEFIT OF ARTICLE XII. The agreements contained in this
Article XII are solely for the benefit of Agent and the Banks, and are not
for the benefit of, or to be relied upon by, the Borrowers, or any third
party.
12.11. NOT A LOAN TO AGENT; NO DUTY TO REPURCHASE. No amount paid by
any Bank hereunder shall be considered a loan by Agent. Agent shall have no
obligation to repurchase any interest from any Bank.
-36-
<PAGE>
12.12. BANK'S REPRESENTATIONS. Each Bank represents and warrants to
Agent and the other Banks that: (a) it is engaged in the business of
entering into commercial lending transactions (including transactions of the
nature contemplated herein) and can bear the economic risk related to the
same; and (b) it does not consider the obligations hereunder to constitute
the "purchase" or "sale" of a "security" within the meaning of any federal or
state securities statute or law, or any rule or regulation under any of the
foregoing.
12.13 Co-Agent. It is expressly understood and agreed that BANK ONE,
TEXAS, N.A. shall have no responsibility or obligations as a co-agent
hereunder other than its obligations as a Bank under this Loan Agreement.
ARTICLE XIII
MISCELLANEOUS
13.01. WAIVER. No failure to exercise, and no delay in exercising, on
the part of any Bank, any right hereunder shall operate as a waiver thereof,
nor shall any single or partial exercise thereof preclude any other further
exercise thereof or the exercise of any other right. The rights of Banks
hereunder and under the Loan Documents shall be in addition to all other
rights provided by law. No notice or demand given in any case shall
constitute a waiver of the right to take other action in the same, similar or
other instances without such notice or demand.
13.02. NOTICES. Any notices or other communications required or
permitted to be given by this Agreement or any other documents relating to
the loans evidenced by the Notes (the "Loan Documents") must be given in
writing and personally delivered, sent by telecopy or telex (answerback
received) or mailed by prepaid certified or registered mail, return receipt
requested, to the party to whom such notice or communication is directed at
the address of such party as follows:
Borrowers: AmeriCredit Corp.
200 Bailey Avenue
Fort Worth, Texas 76107
Attn: Chief Financial Officer
FAX No. (817) 336-9519
AmeriCredit Financial Services, Inc.
200 Bailey Avenue
Fort Worth, Texas 76107
Attn: Chief Financial Officer
FAX No. (817) 336-9519
AmeriCredit Operating Co., Inc.
200 Bailey Avenue
Fort Worth, Texas 76107
Attn: Chief Financial Officer
FAX No. (817) 336-9519
Agent: First Interstate Bank of Texas, N.A.
309 W. Seventh Street, Suite 1100
Fort Worth, Texas 76102
Attn: Kim White
-37-
<PAGE>
FAX No. (817) 885-1110
Any such notice or other communication shall be deemed to have been given on
the date it is personally delivered or sent by telecopy or telex as aforesaid
or, if mailed, on the second day after it is mailed as aforesaid (whether
actually received or not). Any party may change its address for purposes of
this Loan Agreement by giving notice of such change to all other parties
pursuant to this Section 13.02. Any notice given hereunder by Borrowers to
Agent shall constitute notice to all of the Banks.
13.03. PAYMENT OF EXPENSES. Borrowers agree to pay all costs and
expenses of Banks (including, without limitation, the reasonable attorneys'
fees of Banks' outside legal counsel) incurred by Banks in connection with
the preservation and enforcement of Banks' rights under this Loan Agreement,
the Notes, and/or the other Loan Documents, and all reasonable costs and
expenses of Banks (including without limitation the reasonable fees and
expenses of Banks' outside legal counsel) in connection with the negotiation,
preparation, execution and delivery of this Loan Agreement, the Notes, and
the other Loan Documents and any and all amendments, modifications and
supplements thereof or thereto.
13.04. MAXIMUM INTEREST RATE. Regardless of any provisions contained
in this Loan Agreement, the Notes or in any of the other Loan Documents,
Banks shall never be deemed to have contracted for or be entitled to receive,
collect or apply as interest on the Notes any amount in excess of the Maximum
Rate, and, in the event any Bank ever receives, collects or applies as
interest any such excess, such amount which would be excessive interest shall
be deemed to be a partial prepayment of principal and treated hereunder as
such, and, if the principal amount of the Obligations is paid in full, any
remaining excess shall forthwith be paid to Borrowers. In determining
whether or not the interest paid or payable under any specific contingency
exceeds the Maximum Rate, Borrowers and Banks shall, to the maximum extent
permitted by applicable law, (i) characterize any nonprincipal payments
(other than payments which are expressly designated as interest payments
hereunder) as an expense, fee, or premium, rather than as interest, (ii)
exclude voluntary prepayments and the effect thereof, and (iii) amortize,
prorate, allocate and spread, in equal parts, the total amount of interest
throughout the entire contemplated term of the indebtedness so that interest
paid by Borrowers does not exceed
-38-
<PAGE>
the Maximum Rate; provided that, if a Note is paid and performed in full
prior to the end of the full contemplated term thereof, and if the interest
received for the actual period of existence thereof exceeds the Maximum Rate,
Banks shall refund to Borrowers the amount of such excess or credit the
amount of such excess against the principal amount of the Notes and, in such
event, Banks shall not be subject to the penalties provided by any laws for
contracting for, charging, taking, reserving or receiving interest in excess
of the Maximum Rate.
13.05. AMENDMENTS, WAIVERS, ETC. Agent may enter into any amendment or
modification of, or may waive compliance with the terms of, any of the Loan
Documents with the written direction of the Majority Banks; PROVIDED THAT the
consent of all Banks shall be required before Agent may take or omit to take
any action under any of the Loan Documents directly affecting (a) the
extension of the maturity of or the postponement of the payment of any
portion of the principal of or interest on Revolving Credit Loans or any fees
relating thereto, (b) a reduction of or increase in the principal amount of
or rate of interest payable on Revolving Credit Loans or any fees related
thereto, (c) the release of any of Borrowers, (d) the release of any of the
Guarantors, (e) the release of any collateral except in the case of a
Securitization approved by Majority Banks or (f) any material change in the
definition of Revolving Credit Borrowing Base, in the definition of Net
Amount or in the definition of Eligible Finance Contract. Nor shall any of
the following occur without the consent of all Banks: (a) any amendment to
the definition of Majority Banks, or (b) any amendment to this Section 13.05.
The Commitment of a Bank shall not be increased without the consent of such
Bank. If any Bank is unwilling to consent to any amendment or modification
of, or waiver of compliance with, the Loan Agreement (where the consent of
such Bank is required), the consenting Majority Banks shall have the right,
but not the obligation, to repurchase such Bank's Percentage of the
Obligation at such time for a purchase price equal to Bank's Percentage of
any and all unpaid Advances made by Agent to the Borrowers under the Loan
Agreement, any and all unpaid interest thereon and unpaid accrued fees or
other amounts owing to such Bank.
13.06. GOVERNING LAW. This Loan Agreement has been prepared, is being
executed and delivered, and is intended to be performed in the State of
Texas, and the substantive laws of such state and the
-39-
<PAGE>
applicable federal laws of the United States of America shall govern the
validity, construction, enforcement and interpretation of this Loan Agreement
and all of the other Loan Documents.
13.07. INVALID PROVISIONS. If any provision of any Loan Document is
held to be illegal, invalid or unenforceable under present or future laws
during the term of this Loan Agreement, such provision shall be fully
severable; such Loan Document shall be construed and enforced as if such
illegal, invalid or unenforceable provision had never comprised a part of
such Loan Document; and the remaining provisions of such Loan Document shall
remain in full force and effect and shall not be affected by the illegal,
invalid or unenforceable provision or by its severance from such Loan
Document. Furthermore, in lieu of each such illegal, invalid or
unenforceable provision shall be added as part of such Loan Document a
provision mutually agreeable to Borrowers, Agent and Majority Banks as
similar in terms to such illegal, invalid or unenforceable provision as may
be possible and be legal, valid and enforceable. In the event Borrowers,
Agent and Majority Banks are unable to agree upon a provision to be added to
the Loan Document within a period of ten (10) Business Days after a provision
of the Loan Document is held to be illegal, invalid or unenforceable, then a
provision reasonably acceptable to Agent and Majority Banks as similar in
terms to the illegal, invalid or unenforceable provision as is possible and
be legal, valid and enforceable shall be added automatically to such Loan
Document. In either case, the effective date of the added provision shall be
the date upon which the prior provision was held to be illegal, invalid or
unenforceable.
13.08. HEADINGS. Section headings are for convenience of reference
only and shall in no way affect the interpretation of this Loan Agreement.
13.09. PARTICIPATION AGREEMENTS AND ASSIGNMENTS. (a)(i) Subject to
Section 13.09(a)(ii), each Bank may assign to one or more Eligible Assignees
all or a portion of its rights and obligations under this Loan Agreement
(including, without limitation, all or a portion of its Commitment, the Loan
owing to it and the Note held by it) and the other Loan Documents; provided,
however, that (A) no such assignment shall be made except to an Affiliate
unless such assignment and assignee have been approved by the Agent and, so
long as no Events of Default exists, the Borrowers, such approvals not to be
unreasonably withheld, (B) each
-40-
<PAGE>
such assignment shall be of a constant, and not a varying, percentage of all
rights and obligations of the assignor under this Loan Agreement and the
other Loan Documents, and no assignment shall be made unless it covers a pro
rata share of all rights and obligations of such assignor under this Loan
Agreement and the other Loan Documents, (C) the amount of the Commitment of
the assigning Bank being assigned pursuant to each such assignment
(determined as of the date of the Assignment and Acceptance substantially in
the form of EXHIBIT H (hereinafter referred to as the "Assignment and
Acceptance") with respect to such assignment) shall, unless otherwise agreed
to by the Agent, in no event be less than $10,000,000 or, if less, the
entirety of its Commitment and shall be an integral multiple of $1,000,000,
(D) each such assignment shall be to an Eligible Assignee (defined below),
(E) the parties to each such assignment shall execute and deliver to the
Agent, for its acceptance and recording in the Register (defined below), an
Assignment and Acceptance, together with any Note subject to such assignment
and (F) Agent receives a fee from the assignor in the amount of $2,500. Upon
such execution, delivery, acceptance and recording, from and after the
effective date specified in each Assignment and Acceptance, (1) the assignee
thereunder shall be a party hereto and, to the extent that rights and
obligations under the Loan Documents have been assigned to it pursuant to
such Assignment and Acceptance, have the rights and obligations of a Bank
under the Loan Documents, (2) the assigning Bank thereunder shall, to the
extent that rights and obligations under the Loan Documents have been
assigned by it pursuant to such Assignment and Acceptance, relinquish its
rights and be released from its obligations under the Loan Documents (and, in
the case of an Assignment and Acceptance covering all or the remaining
portion of an assigning Bank's rights and obligations under this Loan
Agreement, such Bank shall cease to be a party hereto), and (3) Section
2.01(a) shall be deemed to have been automatically amended to reflect the
revised Commitments. As used herein, "Eligible Assignee" shall mean (a) any
Bank or any Affiliate of any Bank; (b) a commercial bank organized under the
laws of the United States, or any state thereof, and having total assets in
excess of $1,000,000,000 and having deposits rated in either of the two
highest generic letter rating categories (without regard to subcategories)
from either Standard & Poor's Corporation or Moody's Investors Service, Inc.;
(c) a commercial bank organized under the laws of any other country which is
a member of the Organization for Economic Cooperation and Development
("OECD"), or a political
-41-
<PAGE>
subdivision of any such country, and having total assets in excess of
$1,000,000,000, provided that such bank is acting through a branch or agency
located in the country in which it is organized or another country which is
also a member of the OECD; (d) the central bank of any country which is a
member of the OECD; and (e) any other financial institution approved by the
Agent.
(ii) In the event any Bank desires to transfer all or any portion of
its rights and obligations under the Loan Documents, it shall give the
Borrowers and the Agent prior written notice of the identity of such
transferee and the terms and conditions of such transfer (a "TRANSFER
NOTICE"). So long as no Event of Default has occurred and is continuing, the
Borrowers may, no later than ten (10) days following receipt of such Transfer
Notice, designate an alternative transferee and such Bank shall thereupon be
obligated to sell the interests specified in such Transfer Notice to such
alternative transferee, subject to the following: (A) such transfer shall be
made on the same terms and conditions outlined in such Transfer Notice, (B)
such transfer shall otherwise comply with the terms and conditions of the
Loan Documents (including Section 13.09(a)(i), and (C) such alternative
transferee must be an Eligible Assignee approved by the Agent. If the
Borrowers shall fail to designate an alternative transferee within such ten
(10) day period, such Bank shall, subject to compliance with the other terms
and provisions hereof, be free to consummate the transfer described in such
Transfer Notice.
(b) By executing and delivering an Assignment and Acceptance
substantially in the form of EXHIBIT H, the assigning Bank thereunder and the
assignee thereunder confirm to and agree with each other and the other
parties hereto as follows: (i) other than as provided in such Assignment and
Acceptance, such assigning Bank makes no representation or warranty and
assumes no responsibility with respect to any statements, warranties or
representations made in or in connection with the Loan Documents or the
execution, legality, validity, enforceability, genuineness, sufficiency or
value of this Loan Agreement or any other instrument or document furnished
pursuant hereto, (ii) such assigning Bank makes no representation or warranty
and assumes no responsibility with respect to the financial condition of the
Borrowers or the performance or observance by the Borrowers of any of its
obligations under this Loan Agreement or any other instrument or document
furnished pursuant hereto; (iii) such assignee confirms
-42-
<PAGE>
that it has received a copy of this Loan Agreement and the other Loan
Documents, together with copies of the financial statements referred to in
Section 7.07 and such other documents and information as it has deemed
appropriate to make its own credit analysis and decision to enter into such
Assignment and Acceptance; (iv) such assignee will, independently and without
reliance upon any of the Banks (including such assigning Bank) and based on
such documents and information as it shall deem appropriate at the time,
continue to make its own credit decisions in taking or not taking action
under this Loan Agreement; (v) such assignee confirms that it is an Eligible
Assignee; (vi) such assignee appoints and authorizes the Agent to take such
action on its behalf and to exercise such powers under this Loan Agreement
and the other Loan Documents as are delegated to such Person by the terms
thereof, together with such powers as are reasonably incidental thereto; and
(vii) such assignee agrees that it will perform in accordance with their
terms all of the obligations which by the terms of this Loan Agreement and
the other Loan Documents are required to be performed by it as a Bank.
(c) The Agent shall maintain a copy of each Assignment and Acceptance
delivered to and accepted by it and a register for the recordation of the
names and addresses of the Banks and the Commitment of, and principal amount
of the Notes owing to, each Bank from time to time (the "REGISTER"). The
entries in the Register shall be conclusive and binding for all purposes,
absent manifest error, and the Borrowers and each of the Banks may treat each
Person whose name is recorded in the Register as a Bank hereunder for all
purposes of this Loan Agreement. The Register shall be available for
inspection by the Borrowers or any of the Banks at any reasonable time and
from time to time upon reasonable prior notice.
(d) Upon its receipt of an Assignment and Acceptance
executed by an assigning Bank and an assignee representing that
it is an Eligible Assignee, together with any Note subject to
such assignment, the Agent shall, if such Assignment and
Acceptance has been completed and is in substantially the form of
EXHIBIT H hereto and satisfies all other requirements set forth
in this Section 13.09, (i) accept such Assignment and Acceptance,
(ii) record the information contained therein in the Register and
(iii) give prompt notice thereof to the Borrowers and the other
Banks. Within five (5) Business Days after its receipt of such
notice, the Borrowers,
-43-
<PAGE>
at their own expense, shall execute and deliver to the Agent, in exchange for
the surrendered Note, a new Note to the order of such Eligible Assignee in an
amount corresponding to the Commitment assumed by such Eligible Assignee
pursuant to such Assignment and Acceptance and, if the assigning Bank has
retained a Commitment hereunder, a new Note to the order of the assigning
Bank in an amount corresponding to the Commitment retained by it hereunder.
Such new Notes shall be in an aggregate principal amount equal to the
aggregate principal amount of such surrendered Notes, shall be dated the
effective date of such Assignment and Acceptance and shall otherwise be in
substantially the form prescribed by EXHIBIT H hereto.
(e) Each Bank may sell participations to one or more banks or other
entities in or to all or a portion of its rights and obligations under this
Loan Agreement and the other Loan Documents (including, without limitation,
all or a portion of its Commitment and the Notes owing to it); PROVIDED,
HOWEVER, that (i) such Bank's obligations under this Loan Agreement
(including, without limitation, its Commitment to the Borrowers hereunder)
and the other Loan Documents shall remain unchanged, (ii) such Bank shall
remain solely responsible to the other parties hereto for the performance of
such obligations, and the participating banks or other entities shall not be
considered a "Bank" for purposes of the Loan Documents, (iii) the
participating banks or other entities shall be entitled to the cost
protection provision contained in Section 4.03 and Section 4.05, in each case
to the same extent that the Bank from which such participating bank or other
entity acquired its participations would be entitled to the benefit of such
cost protection provisions and (iv) the Borrowers and the other Banks shall
continue to deal solely and directly with such Bank in connection with such
Bank's rights and obligations under this Loan Agreement and the other Loan
Documents, and such Bank shall retain the sole right to enforce the
obligations of the Borrowers relating to the Loans and to approve any
amendment, modification or waiver of any provision of this Loan Agreement
(other than amendments, modifications or waivers with respect to the amounts
of any fees payable hereunder or the amount of principal of or the rate at
which interest is payable on the Notes, or the dates fixed for payments of
principal or interest on the Notes).
-44-
<PAGE>
(f) Any Bank may, in connection with any assignment or participation or
proposed assignment or participation pursuant to this Section 13.09, disclose
to the assignee or participant or proposed assignee or participant, any
information relating to the Borrowers furnished to such Bank by or on behalf
of the Borrowers; provided that prior to any such disclosure, each such
assignee or participant or proposed assignee or participant shall agree
(subject to customary exceptions) to preserve the confidentiality of any
confidential information relating to the Borrowers received from such Bank.
(g) The obligations of the Banks in this Loan Agreement,
the Notes and any other Loan Documents shall not be assignable or
transferable by Borrowers and any purported assignment or
transfer shall, as to the Agent and Banks, be of no force and
effect.
13.10. ARTICLE 15.10(b). Borrowers and Banks hereby agree that, except
for Article 15.10(b) thereof, the provisions of Charter 15 of Title 79 of the
Revised Civil Statutes of Texas, 1925, as amended (regulating certain
revolving credit loans and revolving triparty accounts) shall not apply to
the Loan Documents.
13.11. SURVIVAL. All representations and warranties made by Borrowers
herein shall survive delivery of the Notes and the making of the Revolving
Credit Loans.
13.12. NO THIRD PARTY BENEFICIARY. The parties do not intend the
benefits of this Agreement to inure to any third party, nor shall this Loan
Agreement be construed to make or render Banks liable to any materialman,
supplier, contractor, subcontractor, purchaser or lessee of any property
owned by Borrowers, or for debts or claims accruing to any such persons
against Borrowers. Notwithstanding anything contained herein or in the
Notes, or in any other Loan Document, or any conduct or course of conduct by
any or all of the parties hereto, before or after signing this Loan Agreement
or any of the other Loan Documents, neither this Loan Agreement nor any other
Loan Document shall be construed as creating any right, claim or cause of
action against Banks, or any of its officers, directors, agents or employees,
in favor of any materialman, supplier, contractor, subcontractor, purchaser
or lessee of any property owned by Borrowers, nor to any other person or
entity other than Borrowers.
-45-
<PAGE>
13.13. COUNTERPARTS. This Loan Agreement may be executed by one or
more of the parties to this Loan Agreement on any number of separate
counterparts (including by facsimile transmission), and all of said
counterparts taken together shall be deemed to constitute one and the same
instrument. A set of the copies of this Loan Agreement signed by all the
parties shall be lodged with the Borrowers and the Agent.
13.14. FINAL AGREEMENT. THIS WRITTEN AGREEMENT REPRESENTS THE FINAL
AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF
PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE
ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
EXECUTED effective as of the 2nd day of June 1995.
AMERICREDIT CORP., a Texas
corporation
By: __________________________
Daniel E. Berce, Executive
Vice President
AMERICREDIT FINANCIAL SERVICES,
INC., a Delaware corporation
By: __________________________
Daniel E. Berce, Vice President
AMERICREDIT OPERATING CO., INC., a
Delaware corporation
By: __________________________
Daniel E. Berce, Vice President
BORROWERS
AMERICREDIT PREMIUM FINANCE,
INC., a Delaware corporation
-46-
<PAGE>
By: __________________________
Daniel E. Berce, President
ACF INVESTMENT CORP., a Delaware
corporation
By: __________________________
Daniel E. Berce, Vice President
GUARANTORS
FIRST INTERSTATE BANK OF TEXAS, N.A.
By: __________________________
Kimberly K. White, Assistant
Vice President
BANK ONE, TEXAS, N.A.
By: __________________________
J. Michael Wilson, Vice
President
LASALLE NATIONAL BANK
By: __________________________
Terry M. Keating, First Vice
President
THE DAIWA BANK, LTD.
By: __________________________
James T. Wang, Vice President
and Manager
-47-
<PAGE>
By: __________________________
Kirk L. Stites, Vice President
HARRIS TRUST AND SAVINGS BANK
By: __________________________
Jerome P. Crokin, Vice
President
COMERICA BANK-TEXAS
By: __________________________
Jeffrey A. Moten, Vice
President
BANKS
FIRST INTERSTATE BANK OF TEXAS, N.A.
By: __________________________
Kimberly K. White, Assistant
Vice President
-48-
<PAGE>
AGENT
BANK ONE, TEXAS, N.A.
By: __________________________
J. Michael Wilson, Vice
President
CO-AGENT
-49-
<PAGE>
-50-
<PAGE>
EXHIBIT 11.1
AMERICREDIT CORP.
STATEMENT RE COMPUTATION OF PER SHARE EARNINGS
(dollars in thousands, except per share amounts)
<TABLE>
<CAPTION>
Years Ended
-----------------------------------------
June 30, June 30, June 30,
1995 1994 1993
---------- ---------- ----------
<S> <C> <C> <C>
PRIMARY:
Average common shares
outstanding . . . . . . . 28,730,151 29,067,323 29,267,419
Common share equivalents
resulting from
assumed exercise
of stock options
and warrants. . . . . . . 1,650,598 2,750,760
---------- ---------- ----------
Average common shares
and share equivalents
outstanding . . . . . . . 30,380,749 31,818,083 29,267,419
========== ========== ==========
FULLY DILUTED:
Average common shares
outstanding . . . . . . . 28,730,151 29,067,323 29,267,419
Common share equivalents
resulting from
assumed exercise
of stock options
and warrants. . . . . . . 2,405,317 2,750,760
---------- ---------- ----------
Average common shares
and share equivalents
outstanding . . . . . . . 31,135,468 31,818,083 29,267,419
========== ========== ==========
NET INCOME (LOSS). . . . . $ 28,893 $ 5,065 $ (19,366)
========== ========== ==========
EARNINGS (LOSS) PER SHARE:
Primary . . . . . . . . . $ .95 $ .16 $ (.66)
========== ========== ==========
Fully diluted . . . . . . $ .93 $ .16 $ (.66)
========== ========== ==========
</TABLE>
Primary earnings (loss) per share has been computed by dividing net income
(loss) by the average common shares and share equivalents outstanding.
Common share
<PAGE>
equivalents were computed using the treasury stock method. The average
common stock market price for the period was used to determine the number of
common share equivalents.
Fully diluted earnings (loss) per share has been computed in the same manner
as primary earnings (loss) per share except that the higher of the average or
end of period common stock market price was used to determine the number of
common share equivalents.
<PAGE>
CORPORATE PROFILE
AmeriCredit Corp. is a national consumer finance company specializing in
purchasing automobile sales finance contracts. The Company is headquartered
in Fort Worth, Texas, and its common shares are traded on the New York Stock
Exchange.
Through its branch offices and marketing representatives, the Company serves
as a funding source for franchised and independent dealers to finance their
customers' purchases of primarily used automobiles. The Company targets
consumers who are typically unable to obtain financing from traditional
sources. Consumer finance contracts originated by dealers which conform to
the Company's credit policies are purchased by the Company, generally for a
non-refundable acquisition fee and without recourse to the dealer. These
consumer finance loans typically range in amounts from $6,000 to $12,000,
with repayment terms usually ranging from 24 to 60 months. The Company
services its consumer loan portfolio at its central facility using automated
loan servicing and collection systems.
<PAGE>
LETTER TO SHAREHOLDERS
Fiscal 1995 was a prosperous year for AmeriCredit Corp. The Company more
than doubled in size as measured by finance charge income, finance
receivables and total assets. Operating income increased 98% from fiscal
1994. We arranged $275 million in debt financing to fund expansion. But
most importantly, we continued to invest in our people and systems to
strengthen dealer and customer service and ensure that the infrastructure is
in place to posture AmeriCredit for future growth.
FISCAL 1995 RESULTS
AmeriCredit earned $28,893,000, or $.95 per share for the fiscal year ended
June 30, 1995. These results include an income tax benefit of $18,875,000.
On a pre-tax or operating income basis, earnings for the fiscal year ended
June 30, 1995 were $10,018,000, or $.33 per share. Net income and pre-tax
income for fiscal 1994 was $5,065,000, or $.16 per share.
The income tax benefit included in net income for fiscal 1995 resulted from
recognition of a deferred tax asset equal to the expected future tax savings
from using our net operating loss carryforward and other future tax benefits.
Based on the Company's trend of positive operating results since entering the
indirect consumer lending business and future expectations, management
determined that it is more likely than not that the net operating loss
carryforward and other future tax benefits will be fully utilized prior to
expiration of the carryforward periods. Although the Company will not
actually pay regular federal income taxes until the net operating loss
carryforward and other future tax benefits are used, AmeriCredit will report
fully taxed earnings starting in fiscal 1996.
RECEIVABLES GROWTH
AmeriCredit achieved indirect loan portfolio growth of 256% during fiscal
1995, increasing indirect finance receivables to $240.5 million at June 30,
1995 from $67.6 million at June 30, 1994. This growth resulted from branch
expansion as well as added loan production from branch offices open for the
full year.
A total of 13 new locations were opened in fiscal 1995, bringing our branch
network to 31 offices in 20 states at June 30, 1995. Including loan
production from marketing representatives, AmeriCredit was doing business in
36 states at
Page -2-
<PAGE>
fiscal year end. We plan to open 15 new branches in fiscal 1996, and
continue to focus on increasing market penetration in existing branch
territories.
Indirect loan purchases amounted to $230.2 million in fiscal 1995, a 249%
increase over fiscal 1994 loan volume of $65.9 million. Our dealer network
included 822 automobile dealers at fiscal year end, compared to 319 dealers a
year ago. The AmeriCredit Dealer Stock Option Plan proved to be a successful
marketing tool as 165 of our highest-volume dealers were awarded options to
purchase AmeriCredit stock. Looking forward to fiscal 1996, we have
developed a comprehensive dealer marketing strategy which will include print
media and direct mail campaigns.
OPERATING EFFICIENCY
While experiencing significant growth in loan volume, our operating
efficiency also improved. The Company's ratio of operating expenses to
average net finance receivables outstanding decreased to 10% for fiscal 1995
from 15% for fiscal 1994. This ratio should improve further as we continue
to realize economies of scale from our centralized branch support and loan
servicing operations.
FINANCE ACTIVITY
Several major financing transactions were completed in fiscal 1995. In
December 1994, we issued $51 million of automobile receivables-backed notes
with an interest rate of 8.19%. Taking advantage of lower interest rates and
enhanced recognition of AmeriCredit in the asset-backed securities markets,
another $99.2 million of notes was issued in June with an interest rate of
6.55%. Each note series is covered by a financial guaranty insurance policy
issued by Financial Security Assurance Inc. and is rated Aaa by Moody's
Investors Service, Inc. and AAA by Standard & Poor's Corporation.
In June, we expanded our bank line of credit to $125 million and reduced the
cost of borrowings under the agreement. Although no borrowings were
outstanding under this credit facility at year end, our strategy is to
utilize the line of credit to fund new loan volume until the receivables
accumulate to a size that can be pooled to access the asset-backed securities
markets.
The Company repurchased 433,200 shares of stock in fiscal 1995 at an
aggregate price of $3.4 million or $7.88 per share. An additional 185,000
shares have been repurchased between July 1 and September 15, 1995. The
Company's stock buyback
Page -3-
<PAGE>
program, authorized by the Board of Directors, allows the repurchase of
another 2,400,000 shares.
NEW INVESTMENTS
As mentioned above, our rapid growth in fiscal 1995 has been supported by
continued investments in our people and systems. The AmeriCredit Corp.
Employee Stock Purchase Plan was introduced in November with approximately
75% of our employees electing to participate and become shareholders. Our
accelerated management training program is now producing manager candidates
for new branch locations.
AmeriCredit remains at the forefront of technology in the sub-prime auto
finance sector. In the first quarter, we implemented a credit scoring system
developed by Fair Isaac & Co., Inc. from our loan origination and portfolio
databases. Credit scoring enables us to target a wider range of the
sub-prime automobile finance market by tailoring loan pricing and structure
to an empirical assessment of credit risk. We are currently pursuing the
development of an even more predictive scorecard for introduction in fiscal
1996.
Among other information systems enhancements, an optical scanning system has
been installed to automate processing and storage of loan documents. In an
effort to contain collection expenses, behavioral scoring methods are being
developed to statistically determine when delinquent accounts should enter
the collection process. In early fiscal 1996, we plan to upgrade the
predictive dialing system used in the collection process and install a voice
response package to streamline customer service.
OUTLOOK
A number of sub-prime automobile lenders have recently raised capital in the
public equity and debt markets, creating the perception of increased
competition in our business. Our business has always been intensely
competitive. We face competition in each of our markets and for virtually
every loan we purchase. Despite these competitive pressures, our emphasis on
superior dealer service has enabled us to grow our receivables base.
The used car finance industry is very large and is experiencing favorable
growth trends. In addition, the business is highly fragmented geographically
as well
Page -4-
<PAGE>
as by credit segment. All sub-prime lenders are not necessarily competing
within the same consumer niche. Significant growth opportunities exist in
our business as the industry consolidates. Our ability to target a wide
spectrum of the market through risk-adjusted pricing should provide us an
advantage in this environment.
We believe that AmeriCredit is well positioned for the future. The strength
and experience of our people combined with our investments in systems and
technology give us the confidence that we can continue to prosper.
We appreciate your continued interest and support.
Sincerely,
Clifton H. Morris, Jr.
Chairman of the Board, Chief
Executive Officer & President
September 15, 1995
Page -5-
<PAGE>
AMERICREDIT CORP.
SUMMARY FINANCIAL AND OPERATING INFORMATION
(dollars in thousands, except per share data)
<TABLE>
<CAPTION>
Years Ended
-------------------------------------------------------------
June 30, June 30, June 30, June 30, June 30,
1995 (a) 1994 1993 (b) 1992 1991
------ -------- ------ ------- -------
<S> <C> <C> <C> <C> <C>
Operating Data:
Finance charge income $ 30,249 $ 12,788 $ 13,904 $ 23,989 $ 30,737
Sales 8,271 48,454 155,924
Income (loss) before
income taxes 10,018 5,065 (19,366) (23,257) (47,226)
Net income (loss) 28,893 5,065 (19,366) (24,201) (36,188)
Earnings (loss) per
share .95 .16 (.66) (.77) (1.15)
Weighted average shares
and share equivalents 30,380,749 31,818,083 29,267,419 31,482,225 31,388,686
</TABLE>
<TABLE>
<CAPTION>
June 30, June 30, June 30, June 30, June 30,
1995 1994 1993 (a) 1992 1991
------- ------- ------- ------- --------
<S> <C> <C> <C> <C> <C>
Balance Sheet Data:
Cash and cash equivalents
and investment
securities $ 33,586 $ 42,262 $ 68,425 $ 39,303 $ 14,255
Finance receivables,
net 221,888 72,150 43,889 69,527 115,399
Total assets 285,725 122,215 131,127 153,564 181,388
Total liabilities 138,499 2,714 8,343 6,224 9,486
Shareholders' equity 147,226 119,501 122,784 147,340 171,902
<FN>
(a) As further described in the Financial Review, the Company recognized an income tax
benefit in fiscal 1995 equal to the expected future tax savings from using its net
operating loss carryforward and other future tax benefits.
(b) As further described in the Financial Review, the Company withdrew from the retail
used car sales business effective December 31, 1992.
</TABLE>
-6-
<PAGE>
FINANCIAL REVIEW
GENERAL
Since September 1992, the Company has been in the business of purchasing
automobile sales finance contracts originated by franchised and independent
car dealers, generally referred to as indirect consumer lending.
The Company previously engaged in the retail used car sales and finance
business. However, in connection with a restructuring during the year ended
June 30, 1993, the Company withdrew from the retail used car sales business
effective December 31, 1992. The finance receivables originated in this
previous business are referred to as the direct lending portfolio and are
being liquidated over time as the contracts are collected or charged-off.
From April 1993 through January 1995, the Company also financed insurance
premiums for consumers purchasing car insurance through independent insurance
agents. The Company curtailed its activities in this business in order to
concentrate its resources on the core indirect consumer lending business.
RESULTS OF OPERATIONS
YEAR ENDED JUNE 30, 1995 AS COMPARED TO
YEAR ENDED JUNE 30, 1994
REVENUE:
The Company's overall finance charge income consisted of the following (in
thousands):
<TABLE>
<CAPTION>
Years Ended
--------------------------------
June 30, June 30,
1995 1994
----------- -----------
<S> <C> <C> <C> <C>
Indirect consumer lending $29,039 96% $ 7,820 61%
Direct lending 500 2 3,711 29
Premium finance 710 2 1,257 10
------- --- ------ ---
$30,249 100% $12,788 100%
======= === ======= ===
</TABLE>
The increase in finance charge income for the indirect consumer lending
business is due to growth of 277% in average net indirect finance receivables
outstanding. Average net indirect finance receivables outstanding were $141.5
million for the year ended June 30, 1995 compared to $37.5 million for the
year ended June 30, 1994. The Company purchased $230.2 million of indirect
loans during fiscal 1995 versus $65.9 million during fiscal 1994. This growth
resulted from loan
-7-
<PAGE>
production at branches open at the beginning of the fiscal year as well as
expansion of the Company's loan production capacity. The Company opened
thirteen branch offices in fiscal 1995 bringing the total number of branches
to thirty-one as of June 30, 1995.
The decrease in direct lending and premium financing finance charge income is
due to the ongoing liquidation of these portfolios.
The Company's overall effective yield on its finance receivables was 20.4% for
both fiscal years. The effective yield on indirect consumer lending
receivables was 20.5% for the year ended June 30, 1995 and 20.8% for the year
ended June 30, 1994.
Investment income decreased as a result of lower average cash and cash
equivalents and investment securities balances in fiscal 1995. The Company's
yield on its cash and cash equivalents and investment securities was 5.3% for
the year ended June 30, 1995 as compared to 3.8% for the year ended June 30,
1994.
Other income for the years ended June 30, 1995 and 1994 included $964,000 and
$105,000, respectively, related to the Company's participation in certain
joint ventures which acquire and collect distressed receivables portfolios.
These joint ventures were formed in December 1993.
COSTS AND EXPENSES:
Operating expenses as a percentage of average net finance receivables
outstanding decreased to 10.0% for the year ended June 30, 1995 as compared to
15.0% for the year ended June 30, 1994. The ratio improved as a result of the
Company's ability to leverage its fixed overhead costs by growing its finance
receivables portfolio. The dollar amount of operating expenses increased by
$5.4 million, or 57%, primarily due to the addition of branch offices and home
office supervisory and portfolio servicing staff.
The provision for losses increased to $4.3 million as compared to $1.2
million. Further discussion concerning the provision for losses is included
under the caption, "Finance Receivables".
Interest expense of $4.0 million for the year ended June 30, 1995 resulted
from borrowings on the Company's bank line of credit and the issuance of $51
million and $99.2 million of automobile receivables-backed notes in December
1994 and June 1995, respectively. The Company did not have any bank
borrowings during the year ended June 30, 1994.
-8-
<PAGE>
The income tax benefit in fiscal 1995 resulted from the Company's recognition
of a deferred tax asset equal to the expected future tax savings from using
its net operating loss carryforward and other future tax benefits. Based on
the Company's trend of positive operating results since entering the indirect
consumer lending business in September 1992 and future expectations, the
Company determined in the fourth quarter of fiscal 1995 that it is more likely
than not that its net operating loss carryforward and other future tax
benefits will be fully utilized prior to expiration of the carryforward
periods. The Company's net operating loss carryforward was approximately $50
million as of June 30, 1995 and expires between 2007 and 2009. Prior to the
fourth quarter of fiscal 1995, the Company had offset the deferred tax asset
associated with its net operating loss carryforward and other future tax
benefits with a valuation allowance. The deferred tax asset will be expensed
through a non-cash income tax provision against the Company's future earnings
as the net operating loss carryforward and other future tax benefits are
utilized. The Company will not pay regular federal income taxes until the net
operating loss carryforward and other future tax benefits have been fully
recovered.
YEAR ENDED JUNE 30, 1994 AS COMPARED TO
YEAR ENDED JUNE 30, 1993
REVENUE:
The Company's overall finance charge income consisted of the following (in
thousands):
<TABLE>
<CAPTION>
Years Ended
--------------------------------
June 30, June 30,
1994 1993
----------- -----------
<S> <C> <C> <C> <C>
Indirect consumer lending $ 7,820 61% $ 1,125 8%
Direct lending 3,711 29 12,718 92
Premium finance 1,257 10 61
------- --- ------- ---
$12,788 100% $13,904 100%
======= === ======= ===
</TABLE>
The increase in finance charge income for the indirect consumer lending
business is a result of growth of 443% in average net indirect finance
receivables outstanding. Average net indirect finance receivables
outstanding were $37.5 million for the year ended June 30, 1994 compared to
$6.9 million for the year ended June 30, 1993. The Company purchased $65.9
million of indirect loans during fiscal 1994 versus $18.4 million during
fiscal 1993. This growth resulted from loan production at branches open at
the beginning of the fiscal year as well as expansion of the Company's loan
production capacity. The Company
-9-
<PAGE>
opened thirteen branch offices in fiscal 1994 compared to five new locations
opened during fiscal 1993.
The decrease in direct lending finance charge income is due to the ongoing
liquidation of the direct lending portfolio.
The Company's overall effective yield on its finance receivables increased to
20.4% from 18.5% primarily as a result of higher finance charge rates
realized in the Company's indirect consumer lending business. The effective
yield on indirect consumer lending receivables was 20.8% for the year ended
June 30, 1994, while the effective yield on direct lending receivables was
17.6% for the same period.
Investment income increased as a result of higher average cash and cash
equivalents and investment securities balances in fiscal 1994. The Company's
yield on its cash and cash equivalents and investment securities was 3.8% for
the year ended June 30, 1994 as compared to 3.6% for the year ended June 30,
1993.
Other income for the year ended June 30, 1994 included $105,000 related to
the Company's participation in certain joint ventures which acquire and
collect distressed receivables portfolios. These joint ventures were formed
in December 1993.
As described under the caption "General" above, the Company exited the retail
used car sales business effective December 31, 1992, and thus did not have
sales or cost of sales in fiscal 1994.
The Company's share of operating results of its former affiliate, Pacific
Automart Inc., resulted in income of $392,000 for the year ended June 30,
1993. The Company sold its entire interest in Pacific Automart Inc. for
$11,300,000 in cash on August 3, 1993. No gain or loss was recognized on the
sale.
COSTS AND EXPENSES:
Operating expenses as a percentage of average net finance receivables
outstanding decreased to 15.0% for the year ended June 30, 1994 as compared
to 18.2% for the year ended June 30, 1993. The ratio improved as a result of
the Company's ability to leverage its fixed overhead costs by growing its
finance receivables portfolio. The dollar amount of operating expenses
decreased by $4.3 million, or 31%, primarily due to the Company's exit from
the retail used car sales business.
The provision for losses decreased to $1.2 million as compared to $8.0
million.
-10-
<PAGE>
Further discussion concerning the provision for losses is included in the
paragraph below and under the caption, "Finance Receivables".
The restructuring charges of $15.4 million in the year ended June 30, 1993
related to the Company's exit from the retail used car sales business. These
restructuring charges included an accrual of future retail lease and other
facility costs, a write-down of used car inventories, a write-down of property
and equipment and other assets and an accrual of other costs necessary to
complete the liquidation of the retail sales operations. In addition, the
Company recorded an additional provision for losses of $5.0 million in light
of the impact that closure of the Company's retail sales locations has on the
Company's direct finance customer base.
FINANCE RECEIVABLES
The Company provides financing in relatively high-risk markets, and therefore,
charge-offs and related losses are anticipated. The Company records a
periodic provision for losses as a charge to operations and a related
allowance for losses in the consolidated balance sheet as a reserve against
estimated losses in the finance receivables portfolio. In the indirect
consumer lending business, the Company typically purchases individual finance
contracts for a non-refundable acquisition fee on a non-recourse basis, and
such acquisition fees are recorded in the consolidated balance sheet as an
allowance for losses. The Company reviews historical origination and charge-
off relationships, charge-off experience factors, delinquency reports,
estimates of the value of the underlying collateral, economic conditions and
trends and other information in order to make the necessary judgments as to
the appropriateness of the periodic provision for losses and the allowance for
losses. Although the Company uses many resources to assess the adequacy of
the allowance for losses, there is no precise method for accurately
determining the ultimate losses in the finance receivables portfolio.
Net finance receivables represented 77.7% and 59.0% of the Company's total
assets at June 30, 1995 and 1994, respectively. The following tables present
certain data related to the finance receivables portfolio (dollars in
thousands):
-11-
<PAGE>
<TABLE>
<CAPTION>
June 30,
1995
----------------------------------------
Indirect Direct Premium Total
-------- ------- ------- --------
<S> <C> <C> <C> <C>
Gross finance receivables $287,360 $ 552 $ 821 $288,733
Unearned finance charges
and fees (46,869) (19) (6) (46,894)
-------- ------- ------ --------
Finance receivables
(principal amount) 240,491 533 815 241,839
Allowance for losses (19,376) (387) (188) (19,951)
-------- ------- ------ --------
Finance receivables, net $221,115 $ 146 $ 627 $221,888
======== ======= ====== ========
Number of outstanding
contracts 30,941 503 5,827 37,271
======== ======= ====== ========
Allowance for losses as a
percentage of finance
receivables (principal
amount) 8.1% 72.6% 23.1% 8.2%
======== ======= ====== ========
Average amount of
outstanding contract
principal amount
(in dollars) $ 7,773 $ 1,060 $ 140 $ 6,489
======== ======= ====== ========
</TABLE>
<TABLE>
<CAPTION>
June 30,
1994
----------------------------------------
Indirect Direct Premium Total
-------- ------- ------- --------
<S> <C> <C> <C> <C>
Gross finance receivables $ 80,507 $ 8,467 $ 6,631 $ 95,605
Unearned finance charges
and fees (12,871) (770) (484) (14,125)
-------- ------- ------- --------
Finance receivables
(principal amount) 67,636 7,697 6,147 81,480
Allowance for losses (7,721) (1,173) (436) (9,330)
-------- ------- ------- --------
Finance receivables, net $ 59,915 $ 6,524 $ 5,711 $ 72,150
======== ======= ======= ========
Number of outstanding
contracts 9,375 4,232 11,867 25,474
======== ======= ======= ========
-12-
<PAGE>
Allowance for losses as a
percentage of finance
receivables (principal
amount) 11.4% 15.2% 7.1% 11.5%
======== ======= ======= ========
Average amount of
outstanding contract
principal amount
(in dollars) $ 7,215 $ 1,819 $ 518 $ 3,199
======== ======= ======= ========
</TABLE>
Indirect Finance Receivables:
The following is a summary of indirect consumer lending contracts which are
more than 60 days delinquent (dollars in thousands):
<TABLE>
<CAPTION>
June 30, June 30,
1995 1994
-------- --------
<S> <C> <C>
Principal amount of delinquent contracts $4,907 $1,269
Principal amount of delinquent contracts as
a percentage of total net indirect finance
receivables outstanding 2.0% 1.9%
</TABLE>
The following table presents charge-off data with respect to the Company's
indirect finance receivables portfolio (dollars in thousands):
<TABLE>
<CAPTION>
Years Ended
-------------------------------
June 30, June 30, June 30,
1995 1994 1993
-------- -------- --------
<S> <C> <C> <C>
Net charge-offs $6,409 $1,432 $49
Net charge-offs as a
percentage of average
net indirect finance
receivables outstanding 4.5% 3.8% 0.7%
</TABLE>
The Company recorded periodic provisions for losses as charges to operations
of $4,156,000, $1,062,000 and $435,000 related to its indirect finance
receivables portfolio for the years ended June 30, 1995, 1994 and 1993,
respectively. The increased loss provisions are a result of higher average
net indirect receivables balances. The Company also accounts for acquisition
fees on indirect consumer lending contracts as additional allowances for
losses.
The Company began its indirect consumer lending business in September 1992
and
-13-
<PAGE>
has grown its indirect finance receivables portfolio to $240.5 million as of
June 30, 1995. The Company expects that its delinquency and charge-offs will
increase over time as the portfolio gains more maturity. Accordingly, the
delinquency and charge-off data above is not necessarily indicative of
delinquency and charge-off experience that could be expected for a more
seasoned portfolio.
Direct Finance Receivables:
The following is a summary of direct lending contracts which are more than
three payments delinquent if payment terms are weekly, bi-weekly or
semi-monthly, and 60 days delinquent if payment terms are monthly (dollars in
thousands):
-14-
<PAGE>
<TABLE>
<CAPTION>
June 30, June 30,
1995 1994
-------- --------
<S> <C> <C>
Number of delinquent contracts 92 319
Number of delinquent contracts as a percentage
of the total number of contracts outstanding 18.3% 7.5%
Amount of delinquent contracts * $ 145 $ 897
Amount of delinquent contracts as a percentage
of total gross direct finance receivables
outstanding * 26.3% 10.6%
<FN>
*Includes unearned finance charges
</TABLE>
The following table presents repossession and charge-off data with respect to
the Company's direct finance receivables portfolio:
<TABLE>
<CAPTION>
Years Ended
-------------------------------
June 30, June 30, June 30,
1995 1994 1993
-------- -------- --------
<S> <C> <C> <C>
Repossessions and other charge-offs 636 2,613 7,780
Repossessions and other charge-offs
as a percentage of the average
number of contracts outstanding 31.8% 32.9% 49.4%
Net charge-offs (in thousands) $ 786 $7,626 $34,191
Average net charge-off $1,236 $2,918 $ 4,395
Net charge-offs as a percentage of
average direct finance receivables
outstanding, less unearned finance
charges 25.3% 36.2% 49.0%
</TABLE>
Net charge-offs as a percentage of average direct finance receivables
outstanding has decreased as the portfolio has become more seasoned and
average outstanding contract balances have decreased.
The Company recorded provisions for losses of $7,522,000 related to its
direct lending portfolio for the year ended June 30, 1993. No provision for
losses was recorded for the years ended June 30, 1995 and 1994. As of June
30, 1994, the Company reassigned $2,000,000 of allowances for losses from the
direct lending portfolio to the indirect consumer lending and premium finance
portfolios based upon an evaluation of the level of reserves necessary for
the remaining liquidation of the direct lending finance receivables.
Premium Finance Receivables:
The Company recorded periodic provisions for losses of $122,000, $187,000 and
$7,000 related to its premium finance receivables portfolio for the years
ended June 30, 1995, 1994 and 1993, respectively.
-15-
<PAGE>
The following table presents charge-off data with respect to the Company's
premium finance receivables portfolio (dollars in thousands):
<TABLE>
<CAPTION>
Years Ended
------------------
June 30, June 30,
1995 1994
-------- --------
<S> <C> <C>
Net charge-offs $370 $158
Net charge-offs as a percentage of
average net premium finance
receivables outstanding 9.7% 3.7%
</TABLE>
LIQUIDITY AND CAPITAL RESOURCES
The Company's cash flows are summarized as follows (in thousands):
<TABLE>
<CAPTION> Years Ended
-------------------------------
June 30, June 30, June 30,
1995 1994 1993
-------- -------- --------
<S> <C> <C> <C>
Operating activities $ 14,637 $ 3,900 $17,332
Investing activities (144,512) (12,174) (8,121)
Financing activities 132,433 (9,238) (5,705)
-------- ------- -------
Net increase (decrease) in cash
and cash equivalents $ 2,558 ($17,512) $ 3,506
======== ========= =======
</TABLE>
In addition to the net change in cash and cash equivalents shown above, the
Company also had net decreases in investment securities of $16.2 million and
$8.7 million for the years ended June 30, 1995 and 1994, respectively, and a
net increase of $25.6 million for the year ended June 30, 1993. Such amounts
are included as investing activities in the above table.
The Company's primary sources of cash have been collections and recoveries on
its finance receivables portfolio, borrowings under its bank line of credit
and the issuance of automobile receivables-backed notes.
The Company has a line of credit arrangement with a group of banks under which
the Company may borrow up to $125 million, subject to a defined borrowing
base. Although the Company utilized the line of credit at various times
during fiscal 1995 to fund its lending activities, no borrowings were
outstanding as of June 30, 1995.
-16-
<PAGE>
During fiscal 1995, the Company completed two private placements of automobile
receivables-backed notes. The Series 1994-A notes were issued in December
1994 and aggregated $51 million. The notes bear interest at 8.19%, are
collateralized by a pool of indirect finance receivables originally totalling
$56.7 million and have a final maturity date of December 1999. The Series
1995-A notes were issued in June 1995 and aggregated $99.2 million. The notes
bear interest at 6.55%, are collateralized by a pool of indirect finance
receivables originally totalling $106.7 million and have a final maturity date
of September 2000. Each series of notes was issued by a wholly-owned special
purpose subsidiary of the Company which holds the related finance receivables.
Principal and interest on the notes are payable monthly from collections and
recoveries on the specific pool of finance receivables. Both note series are
rated "Aaa" by Moody's Investors Services Inc. and "AAA" by Standard & Poor's
Corp. Financial Security Assurance Inc. issued financial guaranty insurance
policies for the benefit of the noteholders of each series.
The Company's primary use of cash has been purchases and originations of
finance receivables. The Company entered the indirect consumer lending
business in September 1992 and has grown the indirect finance receivables
portfolio to $240.5 million as of June 30, 1995. The Company operated 31
indirect consumer lending branches in 20 states and had a group of marketing
representatives doing business in both branch territories and other states as
of June 30, 1995. The Company plans to open fifteen additional consumer
lending branches and expand loan production capacity at existing branch
offices in fiscal 1996. While the Company has been able to establish and grow
this business thus far, there can be no assurance that future expansion will
be successful due to competitive, regulatory, market, economic or other
factors.
The Company's Board of Directors has authorized the repurchase of up to
6,000,000 shares of the Company's common stock. A total of 3,450,500 shares
of common stock at an aggregate purchase price of $12,155,000 had been
purchased pursuant to this program through June 30, 1995.
As of June 30, 1995, the Company had $28.6 million in cash and cash
equivalents and investment securities. The Company also has available
borrowing capacity of up to $125 million under its bank line of credit. The
Company estimates that it will require substantial additional external capital
in fiscal 1996 in addition to these existing capital resources and collections
and recoveries on its finance receivables portfolio in order to fund expansion
of its indirect consumer lending business, capital expenditures, additional
common stock repurchases and other costs and expenses.
The Company anticipates that such funding will be in the form of additional
issuances of automobile receivables-backed notes. There can be no assurance
that external funding will be available, or if available, that it will be on
terms acceptable to the Company.
-17-
<PAGE>
AMERICREDIT CORP.
CONSOLIDATED BALANCE SHEETS
(dollars in thousands)
ASSETS
<TABLE>
<CAPTION>
June 30, June 30,
1995 1994
-------- --------
<S> <C> <C>
Cash and cash equivalents $ 18,314 $ 15,756
Restricted cash 5,007
Investment securities 10,265 26,506
Finance receivables, net 221,888 72,150
Property and equipment, net 6,036 5,345
Other assets 4,427 2,458
Deferred income taxes 19,788
-------- --------
Total assets $285,725 $122,215
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities:
Automobile receivables-backed notes $134,520 $
Notes payable 716 388
Accrued taxes and expenses 3,263 2,326
-------- ------
Total liabilities 138,499 2,714
-------- ------
Commitments and contingencies
Shareholders' equity:
Preferred stock, $.01 par value per share,
20,000,000 shares authorized; none issued
Common stock, $.01 par value per share,
120,000,000 shares authorized;
32,117,201 and 31,757,333 shares issued 321 318
Additional paid-in capital 185,573 183,588
Accumulated deficit (26,824) (55,717)
-------- ---------
159,070 128,189
Treasury stock, at cost (3,400,039 and
3,008,360 shares) (11,844) (8,688)
-------- --------
Total shareholders' equity 147,226 119,501
-------- --------
Total liabilities and shareholders'
equity $285,725 $122,215
======== ========
</TABLE>
The accompanying notes are an integral part
of these consolidated financial statements
-18-
<PAGE>
AMERICREDIT CORP.
CONSOLIDATED STATEMENTS OF OPERATIONS
(dollars in thousands, except per share data)
<TABLE>
<CAPTION>
Years Ended
-------------------------------------
June 30, June 30, June 30,
1995 1994 1993
----------- ----------- -----------
<S> <C> <C> <C>
Revenue:
Finance charge income $30,249 $12,788 $ 13,904
Investment income 1,284 2,550 2,052
Other income 1,551 544 262
Sales 8,271
Equity in income of affiliate 392
------- ------- --------
33,084 15,882 24,881
------- ------- --------
Costs and expenses:
Operating expenses 14,773 9,400 13,672
Provision for losses 4,278 1,249 7,964
Interest expense 4,015 168 221
Cost of sales 6,986
Restructuring charges 15,404
------- ------- --------
23,066 10,817 44,247
------- ------- --------
Income (loss) before income
taxes 10,018 5,065 (19,366)
Income tax benefit 18,875
------- ------- --------
Net income (loss) $28,893 $ 5,065 ($19,366)
======= ======= ========
Earnings (loss) per share $ .95 $ .16 ($ .66)
======= ======= ========
Weighted average shares and
share equivalents 30,380,749 31,818,083 29,267,419
========== ========== ==========
</TABLE>
The accompanying notes are an integral part
of these consolidated financial statements
-19-
<PAGE>
AMERICREDIT CORP.
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
(dollars in thousands)
<TABLE>
<CAPTION>
Common Stock Treasury Stock Additional
--------------- ------------------- Paid-in Accumulated
Shares Amount Shares Amount Capital Deficit
------ ------ ------ ------ ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Balance at July 1, 1992 31,501,566 $315 220,500 ($594) $189,035 ($41,416)
Common stock issued on
exercise of options 222,167 2 660
Purchase of treasury stock 2,393,700 (5,852)
Net loss (19,366)
---------- ---- --------- -------- -------- --------
Balance at June 30, 1993 31,723,733 317 2,614,200 (6,446) 189,695 (60,782)
Common stock issued on
exercise of options 33,600 1 130
Purchase of treasury stock 403,100 (2,297)
Purchase and cancellation
of stock option (6,237)
Common stock issued for
employee benefit plan (8,940) 55
Net income 5,065
---------- ---- --------- -------- -------- --------
Balance at June 30, 1994 31,757,333 318 3,008,360 (8,688) 183,588 (55,717)
Common stock issued on
exercise of options 359,868 3 1,302
Income tax benefit from
exercise of options 683
Purchase of treasury stock 433,200 (3,412)
Common stock issued for
employee benefit plans (41,521) 256
Net income 28,893
---------- ---- --------- -------- -------- --------
Balance at June 30, 1995 32,117,201 $321 3,400,039 ($11,844) $185,573 ($26,824)
========== ==== ========= ======== ======== ========
</TABLE>
The accompanying notes are an integral part
of these consolidated financial statements
-20-
<PAGE>
AMERICREDIT CORP.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(dollars in thousands)
<TABLE>
<CAPTION>
Years Ended
---------------------------------
June 30, June 30, June 30,
1995 1994 1993
--------- -------- ---------
<S> <C> <C> <C>
Cash flows from operating activities:
Net income (loss) $ 28,893 $ 5,065 ($19,366)
Adjustments to reconcile net income (loss)
to net cash provided by operating activities:
Depreciation and amortization 1,317 1,274 1,862
Provision for losses 4,278 1,249 7,964
Equity in income of affiliate (392)
Deferred income taxes (18,954)
Restructuring charges 2,401
Changes in assets and liabilities:
(Increase) decrease in other assets (1,834) 1,051 22,229
Increase (decrease) in
accrued taxes and expenses 937 (4,739) 2,634
--------- -------- ---------
Net cash provided by operating
activities 14,637 3,900 17,332
--------- -------- ---------
Cash flows from investing activities:
Purchases and originations of finance receivables (225,350) (76,208) (24,716)
Principal collections and recoveries on finance
receivables 71,334 46,698 42,390
Purchases of property and equipment (1,791) (3,255) (544)
Proceeds from disposition of property
and equipment 61 640 365
Purchases of investment securities (19,183) (31,692)
Proceeds from sales and maturities of
investment securities 16,241 27,834 6,076
Increase in restricted cash (5,007)
Proceeds from sale of investment in affiliate 11,300
--------- -------- ---------
Net cash used by investing activities (144,512) (12,174) (8,121)
--------- -------- --------
Cash flows from financing activities:
Borrowings on bank line of credit 83,900
Repayments on bank line of credit (83,900)
Proceeds from issuance of automobile
receivables-backed notes 150,170
Repayments on automobile receivables-backed notes (15,650)
Payments on notes payable (236) (890) (515)
Proceeds from issuance of common stock 1,561 186 662
Purchase of treasury stock (3,412) (2,297) (5,852)
Purchase and cancellation of stock option (6,237)
--------- -------- ---------
Net cash provided (used)
by financing activities 132,433 (9,238) (5,705)
--------- -------- ---------
Net increase (decrease) in cash and cash equivalents 2,558 (17,512) 3,506
Cash and cash equivalents at beginning of year 15,756 33,268 29,762
--------- -------- ---------
Cash and cash equivalents at end of year $ 18,314 $15,756 $33,268
========= ======== =========
</TABLE>
The accompanying notes are an integral part
of these consolidated financial statements
-21-
<PAGE>
AMERICREDIT CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
HISTORY AND OPERATIONS
AmeriCredit Corp. ("the Company") was formed on August 1, 1986 and began
operations in March 1987. Since September 1992, the Company has been in the
business of purchasing automobile sales finance contracts originated by
franchised and independent car dealers, generally referred to as indirect
consumer lending. The Company operated 31 indirect consumer lending branch
offices in 20 states as of June 30, 1995 and also had a group of marketing
representatives doing business in both branch territories and other states.
The Company previously engaged in the retail used car sales and finance
business. However, in connection with a restructuring during the year ended
June 30, 1993 (see Note 10), the Company withdrew from the retail used car
sales business effective December 31, 1992. The finance receivables
originated in this previous business are referred to as the direct lending
portfolio and are being liquidated over time as the contracts are collected
or charged-off.
From April 1993 through January 1995, the Company also financed insurance
premiums for consumers purchasing car insurance through independent insurance
agents. The Company curtailed its activities in this business in order to
concentrate its resources on the core indirect consumer lending business.
CONSOLIDATION
The consolidated financial statements include the accounts of the Company and
its wholly-owned subsidiaries. All significant intercompany transactions and
accounts have been eliminated in consolidation.
CASH EQUIVALENTS
Investments in highly liquid securities with original maturities of 90 days
or less are included in cash and cash equivalents.
INVESTMENT SECURITIES
Investment securities are considered held-to-maturity and are carried at
amortized cost.
FINANCE RECEIVABLES
Finance charge income related to finance receivables is recognized using the
interest method. Accrual of finance charge income is suspended on finance
contracts which are more than 60 days delinquent. Fees and commissions
received and direct costs of originating loans are deferred and amortized
over the term of the related finance contracts also using the interest method.
-22-
<PAGE>
AMERICREDIT CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, continued:
Provisions for losses are charged to operations in amounts sufficient to
maintain the allowance for losses at a level considered adequate to cover
estimated losses in the existing finance receivables portfolio. In the
indirect lending business, the Company typically purchases individual finance
contracts for a non-refundable acquisition fee on a non-recourse basis, and
such acquisition fees are also added to the allowance for losses. The
Company reviews charge-off experience, delinquency reports, estimates of the
value of the underlying collateral, economic conditions and trends and other
information in order to make the necessary judgments as to the
appropriateness of the periodic provision for losses and the allowance for
losses. Finance contracts are charged-off to the allowance for losses when
the Company repossesses the collateral or the account is otherwise deemed
uncollectible.
PROPERTY AND EQUIPMENT
Property and equipment are carried at cost. Depreciation is generally
provided on a straight-line basis over the estimated useful lives of the
assets.
The cost of assets sold or retired and the related accumulated depreciation
are removed from the accounts at the time of disposition, and any resulting
gain or loss is included in operations. Maintenance, repairs, and minor
replacements are charged to operations as incurred; major replacements and
betterments are capitalized.
INCOME TAXES
Deferred income taxes are provided, when appropriate, in accordance with the
asset and liability method of accounting for income taxes as prescribed by
Statement of Financial Accounting Standards No. 109, "Accounting for Income
Taxes", to recognize the tax effects of temporary differences between
financial statement and income tax accounting.
EARNINGS (LOSS) PER SHARE
Earnings (loss) per share is based upon the weighted average number of shares
outstanding during each year, adjusted for any dilutive effect of warrants
and options using the treasury stock method.
2. INVESTMENT SECURITIES
The amortized cost and estimated fair value of investment securities as of
June 30, 1995, by issuer type, are as follows (in thousands):
-23-
<PAGE>
AMERICREDIT CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, continued:
2. INVESTMENT SECURITIES, continued:
<TABLE>
<CAPTION>
Gross Gross Estimated
Amortized Unrealized Unrealized Fair
Cost Gains Losses Value
--------- ---------- ---------- ---------
<S> <C> <C> <C> <C>
U.S. Government
obligations $ 5,000 $ $220 $4,780
Corporate debt
securities 1,000 1,000
Mortgage-backed
securities 4,265 4 122 4,147
------- -- ---- ------
$10,265 $4 $342 $9,927
======= == ==== ======
</TABLE>
The amortized cost and estimated fair value of investment securities as of
June 30, 1994, by issuer type, are as follows (in thousands):
<TABLE>
<CAPTION>
Gross Gross Estimated
Amortized Unrealized Unrealized Fair
Cost Gains Losses Value
--------- ---------- ---------- ---------
<S> <C> <C> <C> <C>
U.S. Government
obligations $ 5,600 $ $347 $ 5,253
State and local
government
obligations 550 550
Corporate debt
securities 10,152 30 10,122
Mortgage-backed
securities 10,204 3 188 10,019
------- -- ---- -------
$26,506 $3 $565 $25,944
======= == ==== =======
</TABLE>
The amortized cost and estimated fair value of investment securities as of
June 30, 1995, by contractual maturity, are shown below. Expected maturities
will differ from contractual maturities because borrowers may have the right
to call or prepay obligations with or without call or prepayment penalties.
<TABLE>
<CAPTION>
Estimated
Amortized Fair
Cost Value
--------- ---------
<S> <C> <C>
Due in one year or less $ 1,000 $1,000
Due after one year through three years 5,000 4,780
------- ------
6,000 5,780
Mortgage-backed securities 4,265 4,147
------- ------
$10,265 $9,927
======= ======
</TABLE>
-24-
<PAGE>
AMERICREDIT CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, continued:
2. INVESTMENT SECURITIES, continued:
Proceeds from the sale of investment securities during the years ended June
30, 1994 and 1993 were $1,857,000 and $942,000, respectively. No material
gain or loss was realized on those sales.
3. FINANCE RECEIVABLES
Finance receivables consist of the following (in thousands):
<TABLE>
<CAPTION>
June 30, June 30,
1995 1994
-------- --------
<S> <C> <C>
Indirect consumer lending:
Precomputed interest $191,700 $55,617
Simple interest 95,660 24,890
-------- -------
287,360 80,507
Direct lending 552 8,467
Premium finance 821 6,631
-------- -------
Total finance receivables 288,733 95,605
Less unearned finance charges and fees (46,894) (14,125)
-------- -------
Principal amount of finance receivables 241,839 81,480
Less allowance for losses (19,951) (9,330)
-------- -------
Finance receivables, net $221,888 $72,150
======== =======
</TABLE>
The Company's finance contracts typically provide for finance charges on
either a precomputed or simple interest basis. Precomputed interest finance
receivables include principal and unearned finance charges. Simple interest
finance receivables include principal only. All direct lending and premium
finance contracts are precomputed interest finance receivables.
Direct and indirect consumer lending finance contracts are collateralized by
car titles and the Company has the right to repossess the car in the event
that the consumer defaults on the payment terms of the contract.
Approximately 24% of such finance receivables are with consumers located in
the state of Texas.
The accrual of finance charge income has been suspended on $7,863,000 and
$2,244,000 of delinquent finance contracts as of June 30, 1995 and 1994,
respectively.
-25-
<PAGE>
AMERICREDIT CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, continued:
3. FINANCE RECEIVABLES, continued:
Contractual maturities of finance receivables for years ending June 30 are as
follows (in thousands):
<TABLE>
<S> <C>
1996 $ 71,969
1997 70,475
1998 56,465
1999 33,599
2000 9,331
--------
$241,839
========
</TABLE>
The Company's experience has been that a portion of the scheduled payments
will be received prior to contractual maturity dates.
A summary of the allowance for losses is as follows (in thousands):
<TABLE>
<CAPTION>
Years Ended
-----------------------------------
June 30, June 30, June 30,
1995 1994 1993
-------- -------- --------
<S> <C> <C> <C>
Balance at beginning of year $ 9,330 $12,581 $ 37,468
Provision for losses 4,278 1,249 7,964
Acquisition fees on indirect
consumer lending contracts 13,908 4,716 1,389
Net charge-offs (7,565) (9,216) (34,240)
------- ------- --------
Balance at end of year $19,951 $ 9,330 $ 12,581
======= ======= ========
</TABLE>
4. PROPERTY AND EQUIPMENT
Property and equipment consists of the following (in thousands):
<TABLE>
<CAPTION>
June 30, June 30,
1995 1994
-------- --------
<S> <C> <C>
Land $ 600 $ 700
Buildings and improvements 1,903 2,279
Equipment 6,230 5,307
Furniture and fixtures 1,003 867
------- -------
9,736 9,153
Less accumulated depreciation and amortization (3,700) (3,808)
------- -------
$ 6,036 $ 5,345
======= =======
</TABLE>
-26-
<PAGE>
AMERICREDIT CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, continued:
5. INVESTMENT IN AFFILIATE
The Company had a joint venture arrangement with certain entities and
individuals for the purpose of establishing and operating retail used car
sales lots in the state of California. The joint venture entity, Pacific
Automart Inc., was owned 50% by the Company and 50% by the other investors.
On August 3, 1993, the Company sold its entire interest in the joint venture
to Pacific Automart Inc. for $11,300,000 in cash. No gain or loss was
recognized on the sale.
The joint venture investment was being accounted for using the equity method,
whereby the Company recorded its 50% share of earnings or losses of the joint
venture in its consolidated financial statements.
6. DEBT
Automobile receivables-backed notes consist of the following (in thousands):
<TABLE>
<CAPTION>
June 30,
1995
--------
<S> <C>
Series 1994-A notes, interest at 8.19%,
collateralized by certain finance receivables
in the principal amount of $36,657, final maturity
in December 1999 $ 35,350
Series 1995-A notes, interest at 6.55%,
collateralized by certain finance receivables
in the principal amount of $104,524, final maturity
in September 2000 99,170
--------
$134,520
========
</TABLE>
The Series 1994-A notes were issued in December 1994 and initially aggregated
$51,000,000. The Series 1995-A notes were issued in June 1995 and initially
aggregated $99,170,000. Each series of notes was issued by a wholly-owned
special purpose subsidiary of the Company which holds the related finance
receivables. Principal and interest on the notes are payable monthly from
collections and recoveries on the specific pools of finance receivables.
Financial Security Assurance Inc. ("FSA") issued financial guaranty insurance
policies for the benefit of the noteholders of each series.
In connection with the issuance of the financial guaranty insurance policies
by FSA, the Company was required to establish a cash account for each note
series with a trustee for the benefit of FSA and the noteholders. Such cash
accounts are shown as restricted cash on the Company's consolidated balance
sheets. Monthly collections and recoveries from the pool of finance
receivables in excess of required principal and interest payments on the
notes are added to the restricted cash accounts until the balance reaches a
specified percentage of the pool of finance receivables, and thereafter are
distributed to the Company. In the event that monthly collections and
recoveries from the pool of finance
-27-
<PAGE>
AMERICREDIT CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, continued:
6. DEBT, continued:
receivables are insufficient to make required principal and interest payments
on the notes, any shortfall would be drawn from the restricted cash accounts.
Certain agreements with FSA contain restrictive covenants relating to
delinquency, default and net loss ratios in the pools of finance receivables
which collateralize the automobile receivables-backed notes.
Maturities of the automobile receivables-backed notes, based on the
contractual maturities of the underlying finance receivables, for years ending
June 30 are as follows (in thousands):
<TABLE>
<S> <C>
1996 $ 69,788
1997 43,043
1998 15,396
1999 4,179
2000 2,114
--------
$134,520
========
</TABLE>
The Company's experience has been that a portion of the scheduled payments on
the underlying finance receivables will be received prior to the contractual
maturity dates. Accordingly, scheduled payments shown above for the
automobile receivables-backed notes would also be paid prior to the dates
indicated.
The Company has a revolving credit agreement with a group of banks under which
the Company may borrow up to $125 million, subject to a defined borrowing
base. No borrowings were outstanding as of June 30, 1995. Borrowings under
the credit agreement are collateralized by certain indirect finance
receivables and bear interest, based upon the Company's option, at either the
reference prime rate (9.0% as of June 30, 1995) or various market London
Interbank Offered Rates plus 1.65%. The Company is also required to pay an
annual commitment fee equal to 3/8% of the unused portion of the credit
agreement. The credit agreement, which expires in May 1996, contains various
restrictive covenants requiring certain minimum financial ratios and results
and placing certain limitations on the incurrence of additional debt, capital
expenditures and repurchase of common stock.
7. COMMITMENTS AND CONTINGENCIES
Indirect consumer lending branch offices are generally leased for terms of up
to three years with certain rights to extend for additional periods. Lease
expense, including amounts related to the retail sales locations prior to the
Company's exit from the retail used car sales business, was $422,000, $419,000
and $1,259,000 for the years ended June 30, 1995, 1994, and 1993,
respectively. Lease commitments for years ending June 30 are as follows (in
thousands):
-28-
<PAGE>
AMERICREDIT CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, continued:
7. COMMITMENTS AND CONTINGENCIES, continued:
<TABLE>
<S> <C>
1996 $ 513
1997 415
1998 178
1999 64
2000 12
------
$1,182
======
</TABLE>
The Company is involved in various lawsuits arising in the normal course of
business. In the opinion of management, the resolution of these matters will
not have a material adverse effect on the Company's consolidated financial
position, results of operations or liquidity.
8. STOCK OPTIONS
The Company has certain stock option plans for key employees, marketing
representatives and non-employee directors. The employee and marketing
representative plans generally provide for options to be granted, become
exercisable, and terminate upon terms established by a committee of the Board
of Directors. The 1995 Omnibus Stock and Incentive Plan also provides for
the issuance of other stock-based awards to key employees. Except for the
1989 Stock Option Plan for Non-Employee Directors which has been terminated
as to future grants, the terms under which non-employee director options are
to be granted, become exercisable and terminate are established by the plans.
The Company also has a stock option plan for car dealers that become part of
the Company's dealership network and refer business to the Company. Dealer
options are granted based upon the volume of finance contracts purchased by
the Company from such dealer and terminate three years from the date of grant.
A summary of stock option activity under these plans is as follows:
<TABLE>
<CAPTION>
Options Outstanding
Options -------------------------
Available Shares Price Per Share
--------- -------------------------
<S> <C> <C> <C>
Balance at July 1, 1992
(634,133 shares exercisable) 2,434,337 3,475,798 1.80 - 14.50
Granted (545,000) 545,000 3.00 - 4.26
Canceled 396,300 (741,100) 2.88 - 4.38
Exercised (222,167) 1.80 - 4.63
--------- --------- ------------
Balance at June 30, 1993
(1,893,400 shares exercisable) 2,285,637 3,057,531 2.50 - 14.50
Granted (814,880) 814,880 5.63 - 7.50
Canceled 78,900 (78,900) 2.88 - 14.50
Exercised (33,600) 2.50 - 5.75
--------- --------- ------------
</TABLE>
-29-
<PAGE>
AMERICREDIT CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, continued:
8. STOCK OPTIONS, continued:
<TABLE>
<CAPTION>
Options Outstanding
Options ---------------------------
Available Shares Price Per Share
---------- --------- ---------------
<S> <C> <C> <C>
Balance at June 30, 1994
(2,259,465 shares exercisable) 1,549,657 3,759,911 2.50 - 14.50
Granted (1,346,490) 1,346,490 5.50 - 14.50
Canceled 162,100 (162,100) 3.00 - 14.50
Exercised (359,868) 2.80 - 8.13
Adoption of plans 4,000,000
---------- --------- ------------
Balance at June 30, 1995
(3,247,084 shares exercisable) 4,365,267 4,584,433 2.50 - 14.50
========== ========= ============
</TABLE>
On April 24, 1991, the Company entered into a management services agreement
with Rainwater Management Partners, Ltd. ("RMP"). As part of the transaction,
the Company issued to RMP a stock option to purchase 3,500,000 shares of its
common stock at an exercise price of $3.218 per share. On April 4, 1994, the
Company purchased and cancelled this stock option for $1.782 per option share,
or $6,237,000. The management services agreement with RMP was also
terminated.
9. EMPLOYEE BENEFIT PLANS
Effective July 1993, the Company established a defined contribution retirement
plan covering substantially all employees. The Company's contributions to the
plan, which were made in Company common stock, were $99,000 and $55,000 for
the years ended June 30, 1995 and 1994, respectively.
In November 1994, the Company established an employee stock purchase plan that
allows participating employees to purchase, through payroll deductions, shares
of the Company's common stock at 85% of the fair market value at specified
dates.
A total of 500,000 shares have been reserved for issuance under the plan. As
of June 30, 1995, 31,361 shares had been purchased for an aggregate price of
$157,000.
10. RESTRUCTURING CHARGES
Restructuring charges consist of the following for the year ended June 30,
1993 (in thousands):
<TABLE>
<S> <C>
Facility closing costs $ 4,892
Write-down of inventories 4,123
Write-down of retail car sales assets 2,401
Severance pay and other retail car sales phase
out costs 1,813
Other 2,175
-------
$15,404
=======
</TABLE>
-30-
<PAGE>
AMERICREDIT CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, continued:
11. INCOME TAXES
The income tax benefit consists of the following for the year ended June 30,
1995 (in thousands):
<TABLE>
<S> <C>
Current ($ 79)
Deferred 18,954
--------
$18,875
========
</TABLE>
The Company's effective income tax rate on income (loss) before income taxes
differs from the U.S. statutory tax rate as follows:
<TABLE>
<CAPTION>
Years Ended
-----------------------------
June 30, June 30, June 30,
1995 1994 1993
-------- -------- --------
<S> <C> <C> <C>
U.S. statutory tax rate 35% 35% (35%)
Change in valuation allowance (226) (35) 35
Other 3
---- --- ---
(188%) 0% 0%
==== === ===
</TABLE>
The deferred income tax benefit consists of the following (in thousands):
<TABLE>
<CAPTION>
Years Ended
-----------------------------
June 30, June 30, June 30,
1995 1994 1993
-------- -------- --------
<S> <C> <C> <C>
Change in valuation allowance $22,615 $ 1,606 ($ 7,019)
Net operating loss carryforwards (2,266) 2,447 13,768
Allowance for losses (32) (2,278) (8,271)
Other (1,363) (1,775) 1,522
------- ------- -------
$18,954 $ 0 $ 0
======= ======= =======
</TABLE>
The deferred tax asset consists of the following (in thousands):
<TABLE>
<CAPTION>
June 30, June 30,
1995 1994
-------- --------
<S> <C> <C>
Net operating loss carryforwards $17,356 $19,622
Allowance for losses 1,151 1,183
Alternative minimum tax credits 1,047 896
Other, net 554 1,234
------- -------
20,108 22,935
Valuation allowance (320) (22,935)
------- -------
$19,788 $ 0
======= =======
</TABLE>
-31-
<PAGE>
AMERICREDIT CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, continued:
11. INCOME TAXES, continued:
The Company reduced the valuation allowance in the fourth quarter of the year
ended June 30, 1995 after re-evaluating the realizability of the deferred tax
asset. Based on the Company's trend of positive operating results since
entering the indirect consumer lending business in September 1992 and future
expectations, the Company determined that it is more likely than not that its
net operating loss carryforward and other future tax benefits will be fully
utilized prior to expiration of the carryforward periods.
As of June 30, 1995, the Company has a net operating loss carryforward of
approximately $50,000,000 for income tax reporting purposes which expires
between 2007 and 2009 and an alternative minimum tax carryforward of
$1,047,000 with no expiration date.
12. SUPPLEMENTAL INFORMATION
Cash payments (receipts) for interest costs and income taxes consist of the
following (in thousands):
<TABLE>
<CAPTION>
Years Ended
-----------------------------
June 30, June 30, June 30,
1995 1994 1993
-------- -------- --------
<S> <C> <C> <C>
Interest costs (none capitalized) $5,167 $ 168 $ 221
Income taxes 151 (10,546)
</TABLE>
During the year ended June 30, 1995, the Company sold certain property for
cash and a note receivable of $184,000.
During the year ended June 30, 1995, a capital lease obligation of $564,000
was incurred when the Company entered into a lease for equipment.
During the year ended June 30, 1994, the Company sold certain property and
equipment for cash and a note receivable of $740,000.
-32-
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
Board of Directors and Shareholders
AmeriCredit Corp.
We have audited the accompanying consolidated balance sheets of
AmeriCredit Corp. as of June 30, 1995 and 1994, and the related consolidated
statements of operations, shareholders' equity, and cash flows for each of the
three years in the period ended June 30, 1995. These financial statements are
the responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the consolidated financial position of AmeriCredit
Corp. as of June 30, 1995 and 1994, and the consolidated results of its
operations and its cash flows for each of the three years in the period ended
June 30, 1995, in conformity with generally accepted accounting principles.
COOPERS & LYBRAND L.L.P.
Fort Worth, Texas
August 10, 1995
-33-
<PAGE>
AMERICREDIT CORP.
Common Stock Data
The Company's common stock trades on the New York Stock Exchange under the
symbol ACF. There were 28,717,162 shares of common stock outstanding as of
June 30, 1995.
The following table sets forth the range of the high, low and closing sale
prices for the Company's common stock as reported on the Composite Tape of New
York Stock Exchange Listed Issues.
Fiscal year ended June 30, 1995: High Low Close
------ ------ ------
First Quarter $ 6.75 $ 5.25 $ 6.75
Second Quarter 7.25 5.50 6.00
Third Quarter 8.25 5.25 8.13
Fourth Quarter 11.13 8.13 11.13
Fiscal year ended June 30, 1994: High Low Close
------ ------ ------
First Quarter $ 6.50 $ 5.00 $ 5.88
Second Quarter 8.00 5.75 7.75
Third Quarter 8.13 5.38 6.50
Fourth Quarter 6.50 5.13 5.88
As of June 30, 1995, there were approximately 700 shareholders of record of
the Company's common stock.
-34-
<PAGE>
AMERICREDIT CORP.
Quarterly Data
(Unaudited)
(dollars in thousands, except per share data)
<TABLE>
<CAPTION>
Fiscal year ended First Second Third Fourth
June 30, 1995: Quarter Quarter Quarter Quarter
- ------------------ ------- ------- ------- -------
<S> <C> <C> <C> <C>
Finance charge income $ 4,826 $ 6,312 $ 8,237 $ 10,874
Income before income taxes 1,837 2,135 2,650 3,396
Net income 1,801 2,092 2,650 22,350
Earnings per share .06 .07 .09 .73
Weighted average shares
share equivalents 30,122,210 30,191,179 30,259,850 30,809,604
</TABLE>
<TABLE>
<CAPTION>
Fiscal year ended First Second Third Fourth
June 30, 1994: Quarter Quarter Quarter Quarter
- ------------------ ------- ------- ------- -------
<S> <C> <C> <C> <C>
Finance charge income $ 2,896 $ 3,006 $ 3,099 $ 3,787
Income before income taxes 1,135 1,334 1,210 1,386
Net income 1,135 1,334 1,210 1,386
Earnings per share .04 .04 .04 .05
Weighted average shares
share equivalents 31,842,088 32,614,405 32,487,816 30,345,589
</TABLE>
-35-
<PAGE>
SHAREHOLDER INFORMATION
CORPORATE HEADQUARTERS:
200 Bailey Avenue
Fort Worth, Texas 76107
(817) 332-7000
INVESTOR RELATIONS INFORMATION:
For financial/investment data and general information about AmeriCredit Corp.,
write the Investor Relations Department at the above address, or telephone
(817) 882-7009.
SHAREHOLDER SERVICES:
For shareholder account information and other shareholder services, write the
Corporate Secretary at the above address, or telephone (817) 882-7009.
ANNUAL MEETING:
The Annual Meeting of the Company will be held on November 14, 1995 at 10:00
a.m. at Colonial Country Club, 3735 Country Club Circle, Fort Worth, Texas.
All shareholders are cordially invited to attend.
TRANSFER AGENT AND REGISTRAR:
First Interstate Bank
Trust Services
1445 Ross Avenue
Dallas, Texas 75202
Direct Dial (800) 882-6559
INDEPENDENT ACCOUNTANTS:
Coopers & Lybrand L.L.P.
301 Commerce Street, Suite 1900
Fort Worth, Texas 76102-4119
FORM 10-K:
SHAREHOLDERS MAY OBTAIN WITHOUT CHARGE A COPY OF THE COMPANY'S ANNUAL REPORT
ON FORM 10-K, AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, BY WRITING
TO THE INVESTOR RELATIONS DEPARTMENT AT THE CORPORATE HEADQUARTERS ADDRESS.
-36-
<PAGE>
DIRECTORS
Clifton H. Morris, Jr.
CHAIRMAN OF THE BOARD,
CHIEF EXECUTIVE OFFICER AND PRESIDENT
AmeriCredit Corp.
Michael R. Barrington
EXECUTIVE VICE PRESIDENT AND CHIEF OPERATING OFFICER
AmeriCredit Corp.
PRESIDENT AND CHIEF OPERATING OFFICER
AmeriCredit Financial Services, Inc.
Daniel E. Berce
EXECUTIVE VICE PRESIDENT,
CHIEF FINANCIAL OFFICER AND TREASURER
AmeriCredit Corp.
James H. Greer
CHAIRMAN OF THE BOARD
Shelton W. Greer Co., Inc.
Gerald W. Haddock
PRESIDENT AND CHIEF OPERATING OFFICER
Crescent Real Estate Equities Limited, L.P.
Kenneth H. Jones, Jr.
VICE CHAIRMAN
KBK Financial, Inc.
-37-
<PAGE>
OFFICERS
AMERICREDIT CORP.:
Clifton H. Morris, Jr.
CHAIRMAN OF THE BOARD,
CHIEF EXECUTIVE OFFICER AND PRESIDENT
Michael R. Barrington
EXECUTIVE VICE PRESIDENT AND CHIEF OPERATING OFFICER
Daniel E. Berce
EXECUTIVE VICE PRESIDENT,
CHIEF FINANCIAL OFFICER AND TREASURER
Chris A. Choate
VICE PRESIDENT, GENERAL COUNSEL AND SECRETARY
Edward H. Esstman
SENIOR VICE PRESIDENT AND CHIEF CREDIT OFFICER
Preston A. Miller
VICE PRESIDENT AND CONTROLLER
AMERICREDIT FINANCIAL SERVICES, INC.:
Michael R. Barrington
PRESIDENT AND CHIEF OPERATING OFFICER
Edward H. Esstman
EXECUTIVE VICE PRESIDENT, DIRECTOR OF CONSUMER FINANCE OPERATIONS
Michael T. Miller
SENIOR VICE PRESIDENT, RISK MANAGEMENT, CREDIT POLICY AND PLANNING
Christopher M. Barry
SENIOR VICE PRESIDENT, CONSUMER FINANCE OPERATIONS
Malia C. Bingham
SENIOR VICE PRESIDENT, CONSUMER FINANCE OPERATIONS
Randy K. Benefield
VICE PRESIDENT, DIRECTOR OF MANAGEMENT INFORMATION SERVICES
Patricia A. Jones
VICE PRESIDENT, DIRECTOR OF HUMAN RESOURCES
Cheryl L. Miller
VICE PRESIDENT, DIRECTOR OF COLLECTIONS AND CUSTOMER SERVICE
Cinde Perales
VICE PRESIDENT, DIRECTOR OF LOAN SERVICES
-38-
<PAGE>
EXHIBIT 21.1
AMERICREDIT CORP.
SUBSIDIARIES OF THE COMPANY
<TABLE>
<CAPTION>
State of
Subsidiary Ownership % Incorporation
---------- ----------- -------------
<S> <C> <C>
AmeriCredit Operating Co., Inc. 100% Delaware
Crestpointe General Agency, Inc. 100% Texas
AmeriCredit Financial Services, Inc. 100% Delaware
ACF Investment Corp. 100% Delaware
AmeriCredit Premium Finance, Inc. 100% Delaware
URCARCO Enterprises, Inc. 100% Texas
AmeriCredit Receivables Finance Corp. 100% Delaware
AmeriCredit Receivables Corp. 100% Delaware
AmeriCredit Receivables Finance Corp. 100% Delaware
1995-A
</TABLE>
<PAGE>
EXHIBIT 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in the registration statements
of AmeriCredit Corp. on Form S-8 (File Nos. 33-41203, 33-48162 and 33-56501)
and Form S-3 (File Nos. 33-57517 and 33-52679) of our report dated August 10,
1995, on our audits of the consolidated financial statements as of June 30,
1995 and 1994, and for the years ended June 30, 1995, 1994 and 1993, which
report is incorporated by reference in this Annual Report on Form 10-K.
COOPERS & LYBRAND L.L.P.
Fort Worth, Texas
September 27, 1995
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED FINANCIAL STATEMENTS OF AMERICREDIT CORP. INCORPORATED BY
REFERENCE INTO THE COMPANY'S ANNUAL REPORT ON FORM 10-K FOR THE YEAR ENDED
JUNE 30, 1995 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> JUN-30-1995
<PERIOD-START> JUL-01-1994
<PERIOD-END> JUN-30-1995
<CASH> 23,321
<SECURITIES> 10,265
<RECEIVABLES> 241,839
<ALLOWANCES> (19,951)
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 9,736
<DEPRECIATION> (3,700)
<TOTAL-ASSETS> 285,725
<CURRENT-LIABILITIES> 0
<BONDS> 135,236
<COMMON> 321
0
0
<OTHER-SE> 146,905
<TOTAL-LIABILITY-AND-EQUITY> 285,725
<SALES> 0
<TOTAL-REVENUES> 33,084
<CGS> 0
<TOTAL-COSTS> 14,773
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 4,278
<INTEREST-EXPENSE> 4,015
<INCOME-PRETAX> 10,018
<INCOME-TAX> (18,875)
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 28,893
<EPS-PRIMARY> .95
<EPS-DILUTED> .93
</TABLE>
