UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended December 31, 1994
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission file number 1-10667
AmeriCredit Corp.
(Exact name of registrant as specified in its charter)
Texas 75-2291093
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identifiation No.)
200 Bailey Avenue, Fort Worth, Texas 76107
(Address of principal executive offices)
(Zip Code)
(817) 332-7000
(Registrant's telephone number, including area code)
(Former name, former address and former fiscal year, if changed
since last report)
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
There were 28,687,473 shares of common stock, $.01 par value outstanding
as of January 31, 1995.
<PAGE>
AMERICREDIT CORP.
INDEX TO FORM 10-Q
Part I. FINANCIAL INFORMATION
Item 1. Financial Statements Page
Consolidated Balance Sheets -
December 31, 1994 and June 30, 1994 . . . . . 3
Consolidated Income Statements -
Three Months and Six Months Ended
December 31, 1994 and 1993. . . . . . . . . . 4
Consolidated Statements of
Cash Flows - Six Months Ended
December 31, 1994 and 1993. . . . . . . . . . 5
Notes to Consolidated Financial
Statements. . . . . . . . . . . . . . . . . . 6
Item 2. Management's Discussion and
Analysis of Financial Condition
and Results of Operations . . . . . . . . 9
Part II. OTHER INFORMATION
Item 4. Submission of Matters to a Vote
of Security Holders . . . . . . . . . . . 19
Item 6. Exhibits and Reports on Form 8-K. . . . . 19
SIGNATURE . . . . . . . . . . . . . . . . . . . 21
<PAGE>
PART I - FINANCIAL INFORMATION
Item I. FINANCIAL STATEMENTS
AMERICREDIT CORP.
Consolidated Balance Sheets
(Unaudited, Dollars in Thousands)
<TABLE>
<CAPTION>
December 31, June 30,
1994 1994
------------ --------
<S> <C> <C>
ASSETS
Cash and cash equivalents $ 26,960 $ 15,756
Restricted cash 2,834
Investment securities 15,094 26,506
Finance receivables, net 124,195 72,150
Property and equipment, net 5,105 5,345
Other assets 3,224 2,458
------- -------
Total assets $177,412 $122,215
======= =======
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities:
Automobile receivables
-backed notes $ 51,000 $
Notes payable 306 388
Accrued taxes and expenses 2,486 2,326
------- -------
Total liabilities 53,792 2,714
------- -------
Shareholders' equity:
Common stock, $.01 par value
per share; 120,000,000 shares
authorized; 31,814,033 and
31,757,333 shares issued,
respectively 318 318
Additional paid-in capital 183,814 183,588
Accumulated deficit ( 51,824) ( 55,717)
------- -------
132,308 128,189
Treasury stock, at cost
(3,008,360 shares) ( 8,688) ( 8,688)
------- -------
Total shareholders' equity 123,620 119,501
------- -------
Total liabilities and
shareholders' equity $177,412 $122,215
======= =======
</TABLE>
The accompanying notes are an integral part
of these consolidated financial statements
<PAGE>
AMERICREDIT CORP.
Consolidated Income Statements
(Unaudited, Dollars in Thousands, Except Per Share Data)
<TABLE>
<CAPTION> Three Months Ended Six Months Ended
December 31, December 31,
1994 1993 1994 1993
------------------ ------------------
<S> <C> <C> <C> <C>
Revenue:
Finance charge
income $ 6,312 $ 3,006 $ 11,138 $ 5,902
Investment income 299 877 647 1,599
Other income 167 92 654 176
---------- ---------- ---------- ----------
6,778 3,975 12,439 7,677
---------- ---------- --------- ----------
Costs and expenses:
Operating expenses 3,396 2,323 6,517 4,567
Provision for
losses 883 264 1,537 552
Interest expense 364 54 413 89
---------- ---------- ---------- ----------
4,643 2,641 8,467 5,208
---------- ---------- ---------- ----------
Income before
income taxes 2,135 1,334 3,972 2,469
Provision for
income taxes 43 79
---------- ---------- ---------- ----------
Net income $ 2,092 $ 1,334 $ 3,893 $ 2,469
========== ========== ========== ==========
Earnings per share $ .07 $ .04 $ .13 $ .08
========== ========== ========== ==========
Weighted average
shares and share
equivalents 30,191,179 32,614,405 30,126,388 32,311,118
========== ========== ========== ==========
</TABLE>
The accompanying notes are an integral part
of these consolidated financial statements
<PAGE>
AMERICREDIT CORP.
Consolidated Statements of Cash Flows
(Unaudited, Dollars in Thousands)
<TABLE>
<CAPTION>
Six Months Ended
December 31,
1994 1993
------------------
<S> <C> <C>
Cash flows from operating activities:
Net income $ 3,893 $ 2,469
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation and amortization 642 631
Provision for losses 1,537 552
Changes in assets and liabilities:
Other assets ( 480) 516
Accrued taxes and expenses 160 ( 1,883)
------ ------
Net cash provided by operating activities 5,752 2,285
------ ------
Cash flows from investing activities:
Purchases and originations of finance
receivables ( 83,204) ( 27,457)
Principal collections and recoveries on
finance receivables 29,622 21,211
Purchases of property and equipment ( 748) ( 90)
Proceeds from disposition of property
and equipment 60 93
Purchases of investment securities ( 9,700)
Proceeds from sales and maturities of
investment securities 11,412 13,932
Increase in restricted cash ( 2,834)
Proceeds from sale of investment in affiliate 11,300
------ ------
Net cash provided (used) by
investing activities ( 45,692) 9,289
------ ------
Cash flows from financing activities:
Borrowings on bank line of credit 15,600
Repayments on bank line of credit ( 15,600)
Proceeds from issuance of automobile
receivables-backed notes 51,000
Payments on notes payable ( 82) ( 301)
Proceeds from issuance of common stock 226 111
------ ------
Net cash provided (used) by
financing activities 51,144 ( 190)
------ ------
Net increase in cash and cash equivalents 11,204 11,384
Cash and cash equivalents at beginning of period 15,756 33,268
------ ------
Cash and cash equivalents at end of period $26,960 $44,652
====== ======
</TABLE>
The accompanying notes are an integral part
of these consolidated financial statements
<PAGE>
AMERICREDIT CORP.
Notes to Consolidated Financial Statements
(Unaudited)
NOTE 1 - BASIS OF PRESENTATION
The accompanying consolidated financial statements include the accounts
of AmeriCredit Corp. and its wholly-owned subsidiaries ("the Company").
All significant intercompany accounts and transactions have been
eliminated in consolidation.
The consolidated financial statements as of December 31, 1994 and for the
periods ended December 31, 1994 and 1993 are unaudited, but in
management's opinion, include all adjustments, consisting only of normal
recurring adjustments, necessary for a fair presentation of the results
for such interim periods. The results for interim periods are not
necessarily indicative of results for a full year.
The interim period financial statements, including the notes thereto, are
condensed and do not include all disclosures required by generally
accepted accounting principles. Such interim period financial statements
should be read in conjunction with the Company's consolidated financial
statements which were included in the Company's 1994 Annual Report to
Shareholders.
<PAGE>
NOTE 2 - FINANCE RECEIVABLES
Finance receivables consist of the following (in thousands):
<TABLE>
<CAPTION>
December 31, June 30,
1994 1994
------------ --------
<S> <C> <C>
Indirect consumer lending:
Precomputed interest $104,593 $55,617
Simple interest 51,431 24,890
------- ------
156,024 80,507
Direct lending 2,656 8,467
Premium finance 3,929 6,631
------- -------
Total finance receivables 162,609 95,605
Less unearned finance charges and fees ( 25,380) ( 14,125)
------- ------
Principal amount of finance receivables 137,229 81,480
Less allowance for losses ( 13,034) ( 9,330)
------- ------
Finance receivables, net $124,195 $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.
<PAGE>
A summary of the allowance for losses is as follows (in thousands):
<TABLE>
<CAPTION>
Three Months Six Months
Ended Ended
December 31, December 31,
1994 1993 1994 1993
------------- ------------
<S> <C> <C> <C> <C>
Balance at beginning
of period $10,875 $10,212 $ 9,330 $12,581
Provision for losses 883 264 1,537 552
Acquisition fees on
indirect consumer
lending contracts 2,876 927 5,216 1,866
Net charge-offs ( 1,600) ( 2,193) ( 3,049) ( 5,789)
------ ------ ------ ------
Balance at end of period $13,034 $ 9,210 $13,034 $ 9,210
====== ====== ====== ======
</TABLE>
NOTE 3 - CREDIT AGREEMENT
In September 1994, the Company entered into a revolving credit agreement
with a group of banks under which the Company may borrow up to $75
million, subject to a defined borrowing base. No borrowings were
outstanding as of December 31, 1994. Borrowings under the credit
agreement are collateralized by the indirect finance receivables
portfolio and bear interest, based upon the Company's option, at either
the reference prime rate plus 1/2% or various market London Interbank
Offered Rates plus 2-1/4%. 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 November 1995,
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.
NOTE 4 - AUTOMOBILE RECEIVABLES-BACKED NOTES
In December 1994, the Company completed a private placement of $51
million of automobile receivables-backed notes. The issue, Series 1994-
A, was priced at par to yield 8.19% to the noteholders and is
collateralized by a pool of indirect finance receivables originally
totalling $56.7 million. The notes were 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
<PAGE>
receivables. Financial Security Assurance Inc. ("FSA") issued a
financial guaranty insurance policy for the benefit of the noteholders.
In connection with the issuance of the financial guaranty insurance
policy by FSA, the Company was required to establish a cash account with
a trustee for the benefit of FSA and the noteholders. Such cash account
is 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 will
be added to the restricted cash account until the balance reaches a
specified percentage of the pool of finance receivables, and thereafter
will be distributed to the Company. In the event that monthly
collections and recoveries from the pool of finance receivables are
insufficient to make required principal and interest payments on the
notes, any shortfall will be drawn from the restricted cash account.
Certain agreements with FSA contain restrictive covenants relating to
delinquency, default and net loss ratios in the pool of finance
receivables which collateralize the automobile receivables-backed notes.
NOTE 5 - INCOME TAXES
The Company's effective income tax rate on income before income taxes
differs from the U.S. statutory tax rate as follows:
<TABLE>
<CAPTION>
Three Months Six Months
Ended Ended
December 31, December 31,
1994 1993 1994 1993
------------ ------------
<S> <C> <C> <C> <C>
U.S. statutory tax rate 34% 34% 34% 34%
Utilization of net operating
loss carryforward ( 34 ) ( 34 ) ( 34 ) ( 34 )
State income taxes 2 2
-- -- -- --
2% 0% 2% 0%
== == == ==
</TABLE>
At June 30, 1994, the Company has net operating loss carryforwards of
$52,000,000 for income tax reporting purposes which expire between 2007
and 2009 and an alternative minimum tax carryforward of $900,000 with no
expiration date.
NOTE 6 - SUPPLEMENTAL CASH FLOW INFORMATION
<PAGE>
Cash payments for interest costs consist of the following (in thousands):
<TABLE>
<CAPTION> Six Months
Ended
December 31,
1994 1993
------------
<S> <C> <C>
Interest costs (none capitalized) $309 $89
</TABLE>
During the six months ended December 31, 1994, the Company sold certain
property and equipment for cash and a note receivable of $184,000.
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
----------------------------------------------------------
RESULTS OF OPERATIONS
General
Since September 1992, the Company has been in the business of purchasing
finance contracts originated by franchised and independent car dealers,
generally referred to as indirect consumer lending.
Since April 1993, the Company has also financed insurance premiums for
consumers purchasing car insurance through independent insurance agents.
However, the Company has recently curtailed its activities in this
business in order to concentrate its resources on the core indirect
consumer lending business.
The Company previously engaged in the retail used car sales and finance
business. However, in connection with a restructuring, 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.
Three Months Ended December 31, 1994 as compared to
Three Months Ended December 31, 1993
----------------------------------------------------
Revenue:
The Company's overall finance charge income consisted of the following
(in thousands):
<PAGE>
<TABLE>
<CAPTION> Three Months
Ended
December 31,
1994 1993
---------------------------------
<S> <C> <C> <C> <C>
Indirect consumer lending $ 5,925 94% $ 1,624 54%
Direct lending 146 2 1,076 36
Premium financing 241 4 306 10
------ --- ------ ---
$ 6,312 100% $ 3,006 100%
====== === ====== ===
</TABLE>
The increase in finance charge income for the indirect consumer lending
business is due to growth in average net finance receivables outstanding.
The indirect consumer lending portfolio was $131.0 million at December
31, 1994, compared to $34.3 million at December 31, 1993. The Company
purchased $46.7 million of indirect loans during the three months ended
December 31, 1994, compared to $11.0 million during the three months
ended December 31, 1993. This increased lending activity is a result of
additional loan production at branches open during both periods as well
as expansion of the Company's loan production capacity. The Company
operated 24 branch offices as of December 31, 1994, compared to 13 as of
December 31, 1993.
The decrease in direct lending finance charge income is due to
liquidation of the direct lending portfolio.
The Company's overall effective yield on its finance receivables
increased to 20.8% from 20.6% 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 20.9% for the three months ended December 31, 1994.
Investment income decreased as a result of lower average cash and cash
equivalents and investment securities balances for the three months ended
December 31, 1994. The Company's yield on its cash and cash equivalents
and investment securities was 5.2% for the three months ended December
31, 1994 as compared to 4.6% for the three months ended December 31,
1993.
Other income for the three months ended December 31, 1994 included
$32,000 related to the Company's participation in certain joint ventures
which acquire and collect distressed receivables portfolios. These joint
ventures were formed during December 1993.
<PAGE>
Costs and Expenses:
Operating expenses as an annualized percentage of average net finance
receivables outstanding decreased to 11.2% for the three months ended
December 31, 1994 as compared to 15.9% for the three months ended
December 31, 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 increased
by $1.1 million, or 46% primarily due to the addition of branch offices,
marketing representatives, branch supervisory personnel and portfolio
servicing and analysis staff.
The provision for losses increased to $883,000 as compared to $264,000.
Further discussion concerning the provison for losses is included under
the caption, "Finance Receivables".
Interest expense for the three months ended December 31, 1994 resulted
from borrowings on the Company's bank line of credit and issuance of $51
million of automobile receivables-backed notes on December 22, 1994. The
Company did not have any bank borrowings during the three months ended
December 31, 1993.
Six Months Ended December 31, 1994 as compared to
Six Months Ended December 31, 1993
-------------------------------------------------
Revenue:
The Company's overall finance charge income consisted of the following
(in thousands):
<TABLE>
<CAPTION> Six Months
Ended
December 31,
1994 1993
----------------------------
<S> <C> <C> <C> <C>
Indirect consumer lending $10,152 91% $2,721 46%
Direct lending 396 4 2,630 45
Premium financing 590 5 551 9
------ --- ----- ---
$11,138 100% $5,902 100%
====== === ===== ===
</TABLE>
The increase in finance charge income for the indirect consumer lending
business is due to growth in average net finance receivables
outstanding. The indirect consumer lending portfolio was $131.0 million
at December 31, 1994, compared to $34.3 million at December 31, 1993.
The Company purchased $83.5 million of indirect loans during the six
<PAGE>
months ended December 31, 1994, compared to $22.6 million during the six
months ended December 31, 1993. This increased lending activity is a
result of additional loan production at branches open during both periods
as well as expansion of the Company's loan production capacity. The
Company operated 24 branch offices as of December 31, 1994, compared to
13 as of December 31, 1993.
The decrease in direct lending finance charge income is due to
liquidation of the direct lending portfolio.
The Company's overall effective yield on its finance receivables
increased to 20.7% from 20.6% 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 six months ended December 31, 1994.
Investment income decreased as a result of lower average cash and cash
equivalents and investment securities balances for the six months ended
December 31, 1994. The Company's yield on its cash and cash equivalents
and investment securities was 4.8% for the six months ended December 31,
1994 as compared to 4.4% for the six months ended December 31, 1993.
Other income for the six months ended December 31, 1994 included $392,000
related to the Company's participation in certain joint ventures which
acquire and collect distressed receivables portfolios. These joint
ventures were formed during December 1993.
Costs and Expenses:
Operating expenses as an annualized percentage of average net finance
receivables outstanding decreased to 12.1% for the six months ended
December 31, 1994 as compared to 15.9% for the six months ended December
31, 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 increased by $1.9
million, or 43% primarily due to the addition of branch offices,
marketing representatives, branch supervisory personnel and portfolio
servicing and analysis staff.
The provision for losses increased to $1,537,000 as compared to $552,000.
Further discussion concerning the provison for losses is included under
the caption, "Finance Receivables".
Interest expense for the six months ended December 31, 1994 resulted from
borrowings on the Company's bank line of credit and issuance of $51
million of automobile receivables-backed notes on December 22, 1994. The
Company did not have any bank borrowings during the six months ended
<PAGE>
December 31, 1993.
FINANCE RECEIVABLES
Net finance receivables represented 70.0% of the Company's total assets
at December 31, 1994. The following table presents certain data related
to the finance receivables portfolio (dollars in thousands):
<TABLE>
<CAPTION> December 31,
1994
Indirect Direct Premium Total
-----------------------------------
<S> <C> <C> <C> <C>
Gross finance receivables $156,024 $2,656 $ 3,929 $162,609
Unearned finance charges
and fees ( 25,041)( 132) ( 207) ( 25,380)
------- ----- ------ -------
Finance receivables
(principal amount) 130,983 2,524 3,722 137,229
Allowance for losses ( 12,154) ( 556)( 324) ( 13,034)
------- ----- ------ -------
Finance receivables, net $118,829 $1,968 $ 3,398 $124,195
======= ===== ====== =======
Number of outstanding
contracts 17,222 1,778 10,320 29,320
======= ===== ====== =======
Allowance for losses as a
percentage of finance
receivables (principal
amount) 9.3% 22.0% 8.7% 9.5%
======= ===== ====== =======
Average amount of out-
standing contract
(principal amount)
(in dollars) $ 7,606 $1,420 $ 361 $ 4,680
======= ===== ====== =======
</TABLE>
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 future 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
also recorded in the consolidated balance sheet as an allowance for
losses. The Company reviews historical origination and charge-off
relationships, charge-off experience factors, collections information,
<PAGE>
delinquency reports, estimates of the value of the underlying collateral,
economic conditions and trends and other information in order to make the
necessary judgements 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 estimating the ultimate losses in the
finance receivables portfolio.
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> December 31,
1994 1993
------------------
<S> <C> <C>
Principal amount of delinquent contracts $2,947 $710
Principal amount of delinquent contracts
as a percentage of total net indirect
finance receivables outstanding 2.3% 2.1%
</TABLE>
The following presents charge-off data with respect to the Company's
indirect finance receivables portfolio (dollars in thousands):
<TABLE>
<CAPTION> Three Months Six Months
Ended Ended
December 31, December 31,
1994 1993 1994 1993
------------ ------------
<S> <C> <C> <C> <C>
Net charge-offs $1,353 $ 256 $2,233 $ 400
Net charge-offs as an
annualized percentage
of average net indirect
finance receivables
outstanding 4.8% 3.4% 4.6% 3.2%
</TABLE>
The Company recorded periodic provisions for losses as charges to
operations of $844,000 and $1,450,000 related to its indirect finance
receivables portfolio for the three and six month periods ended December
31, 1994, respectively. The provisions for losses were $228,000 and
$482,000 for the three and six month periods ended December 31, 1993,
respectively. The increased loss provisions are a result of higher
average net indirect finance receivables balances. The Company also
accounts for acquisition fees on indirect consumer lending contracts as
additional allowances for losses.
<PAGE>
The Company began its indirect consumer lending business in September
1992 and has grown its receivables portfolio to $131.0 million as of
December 31, 1994. The Company expects that its aggregate portfolio
delinquency and charge-offs will increase over time as its portfolio
gains more maturity. Delinquency and charge-offs typically tend to occur
after a loan has been outstanding for several months. 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, biweekly or
semi-monthly, and 60 days delinquent if payment terms are monthly
(dollars in thousands):
<TABLE>
<CAPTION> December 31,
1994 1993
-----------------
<S> <C> <C>
Number of delinquent contracts 231 749
Number of delinquent contracts
as a percentage of the total
number of contracts outstanding 13.0% 9.3%
Amount of delinquent contracts * $436 $2,564
Amount of delinquent contracts as
a percentage of total gross
direct finance receivables
outstanding * 16.4% 11.5%
</TABLE>
* Includes unearned finance charges
<PAGE>
The following table presents repossession and charge-off data with
respect to the Company's direct finance receivables portfolio:
<TABLE>
<CAPTION>
Three Months Six Months
Ended Ended
December 31, December 31,
1994 1993 1994 1993
------------ ------------
<S> <C> <C> <C> <C>
Repossessions and other
charge-offs 167 669 427 1,665
Repossessions and other
charge-offs as an
annualized percentage
of the average number of
contracts outstanding 29.8% 30.1% 29.6% 34.0%
Net charge-offs
(in thousands) $ 167 $1,936 $ 617 $5,381
Average net charge-off $1,000 $2,894 $1,445 $3,232
Net charge-offs as an
annualized percentage of
average direct finance
receivables outstanding,
less unearned finance
charges 19.8% 32.3% 26.0% 37.4%
</TABLE>
Net charge-offs as an annualized percentage of the average direct finance
receivables outstanding has decreased as the portfolio has become more
seasoned and average outstanding contract balances have decreased. The
Company did not record any periodic provisions for losses related to its
direct finance receivables portfolio for the three and six month periods
ended December 31, 1994 and 1993.
Premium Finance Receivables:
Premium finance loans made by the Company are collateralized by the
unearned premium value of the car insurance policies financed. If the
consumer defaults on the payment terms of the loan, the Company has the
right to cancel the insurance policy and obtain a refund of the unearned
premium from the insurance carrier. While the Company generally requires
a sufficient down payment and limits the terms of loans so that the
unearned premium value typically exceeds the outstanding principal
balance of the loan, charge-offs may still result from untimely policy
cancellations, short rate insurance premium refunds, non-refundable
policy fees, insurance company or agency insolvencies or other factors.
The Company recorded periodic provisions for losses of $39,000 and
$87,000 related to its premium finance receivables portfolio for the
<PAGE>
three month and six month periods ended December 31, 1994, respectively.
The provisions for losses were $36,000 and $70,000 for the three and six
month periods ended December 31, 1993, respectively.
The following table presents charge-off data with respect to the
Company's premium finance receivables portfolio (dollars in thousands):
<TABLE>
<CAPTION> Three Months Six Months
Ended Ended
December 31, December 31,
1994 1993 1994 1993
------------ ------------
<S> <C> <C> <C> <C>
Net charge-offs $ 80 $ 1 $ 199 $ 8
Net charge-offs as an
annualized percentage
of average net premium
finance receivables
outstanding 6.5% .1% 7.1% .9%
</TABLE>
LIQUIDITY AND CAPITAL RESOURCES
The Company's cash flows are summarized as follows (in thousands):
<TABLE>
<CAPTION> Six Months Ended
December 31,
1994 1993
----------------
<S> <C> <C>
Operating activities $ 5,752 $ 2,285
Investing activities ( 45,692) 9,289
Financing activities 51,144 ( 190)
------ -------
Net increase in cash and cash equivalents $11,204 $11,384
====== ======
</TABLE>
In addition to the net change in cash and cash equivalents shown above,
the Company also had net decreases in investment securities of $11.4
million and $4.2 million for the six months ended December 31, 1994 and
1993, respectively. 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 in December 1994 of automobile
receivables-backed notes. The Company also received proceeds from the
sale of its interest in Pacific Automart Inc. of $11.3 million in August
1993.
<PAGE>
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 $131.0 million as of December 31, 1994. The Company
operated 24 indirect consumer lending branches in seventeen states and
had a group of marketing representatives as of December 31, 1994. The
Company plans to open six additional consumer lending branches, add
marketing representatives and expand loan production capacity at existing
branch offices in the remainder of fiscal 1995. 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 3,017,300
shares of common stock had been purchased pursuant to this program
through December 31, 1994. The Company purchased an additional 128,200
shares at an aggregate price of $699,000 in January 1995.
In December 1994, the Company completed a private placement of $51
million of automobile receivables-backed notes. The issue, Series 1994-
A, was priced at par to yield 8.19% to the noteholders and is
collateralized by a pool of indirect finance receivables originally
totalling $56.7 million. The notes were 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. The notes are rated "Aaa" by Moody's Investors Services
Inc. and "AAA" by Standard & Poor's Corp. Financial Security Assurance
Inc. ("FSA") issued a financial guaranty insurance policy for the benefit
of the noteholders.
As of December 31, 1994, the Company had $42.1 million in cash and cash
equivalents and investment securities. The Company also has a revolving
credit agreement with a group of banks under which the Company may borrow
up to $75 million. No borrowings were outstanding under this facility at
December 31, 1994. The Company estimates that it will require additional
external capital in calendar year 1995 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, any additional stock repurchases,
and other costs and expenses.
The Company anticipates that such funding will be in the form of an
expanded bank line of credit and 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
<PAGE>
acceptable to the Company.
<PAGE>
PART II. OTHER INFORMATION
Item 1. LEGAL PROCEEDINGS
Not Applicable
Item 2. CHANGES IN SECURITIES
Not Applicable
Item 3. DEFAULTS UPON SENIOR SECURITIES
Not Applicable
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
On November 9, 1994, the Company held its Annual
Meeting of Shareholders. The shareholders voted upon the
election of six directors, the approval and adoption of the
AmeriCredit Corp. Employee Stock Purchase Plan, and the
ratification of the appointment of the Company's independent
auditors. Each of the six nominees identified in the
Company's proxy statement, filed pursuant to Rule 14a-6 of
the Securities Exchange Act of 1934, were elected at the
meeting to hold office until the next annual meeting or until
their successors are duly elected and qualified. The
shareholders approved and adopted the AmeriCredit Corp.
Employee Stock Purchase Plan, with 21,689,087 shares voting
in favor, 355,501 shares voting against and 62,569 shares
withheld. The Company's selection of independent auditors
was also ratified.
Item 5. OTHER INFORMATION
Not Applicable
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
(A) Exhibits:
10.1 - Indenture, dated December 1, 1994, between
AmeriCredit Receivables Finance Corp. and LaSalle
National Bank as Trustee and Indenture Collateral
Agent.
10. 2 - Sale and Servicing Agreement, dated December 1,
1994, between AmeriCredit Receivables Finance Corp.,
<PAGE>
AmeriCredit Financial Services, Inc., AmeriCredit
Receivables Corp. and LaSalle National Bank as
Backup Servicer.
11.1 - Statement Re Computation of Per Share
Earnings
27.1 - Financial Data Schedule
(B) Reports on Form 8-K
The Company did not file any reports on Form
8-K during the quarterly period ended December 31,
1994.
<PAGE>
SIGNATURE
Pursuant to the requirements 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.
AmeriCredit Corp.
(Registrant)
Date: February 10, 1994 By: /s/ Daniel E. Berce
(Signature)
Daniel E. Berce
Chief Financial Officer
EXECUTION DRAFT
AMERICREDIT RECEIVABLES FINANCE CORP.
8.19% Automobile Receivables-Backed Notes Series 1994-A
INDENTURE
Dated as of December 1, 1994
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. . . . . . . . . . . . . . . . 10
ARTICLE II The Notes . . . . . . . . . . . . . . . . . . . . . . . . . . 11
SECTION 2.1. Form . . . . . . . . . . . . . . . . . . . . . . . . 11
SECTION 2.2. Execution, Authentication and Delivery . . . . . . . 11
SECTION 2.3. Temporary Notes. . . . . . . . . . . . . . . . . . . 12
SECTION 2.4. Registration; Registration of Transfer
and Exchange . . . . . . . . . . . . . . . . . . . . . . . . . 12
SECTION 2.6. Person Deemed Owner. . . . . . . . . . . . . . . . . 14
SECTION 2.7. Payment of Principal and Interest. . . . . . . . . . 15
SECTION 2.8. Cancellation . . . . . . . . . . . . . . . . . . . . 16
SECTION 2.9. Certain Transfer Restrictions. . . . . . . . . . . . 16
ARTICLE III Covenants. . . . . . . . . . . . . . . . . . . . . . . . . . 17
SECTION 3.1. Payment of Principal and Interest. . . . . . . . . . 17
SECTION 3.2. Maintenance of Office or Agency. . . . . . . . . . . 17
SECTION 3.3. Money for Payments To Be Held in Trust . . . . . . . 18
SECTION 3.4. Existence. . . . . . . . . . . . . . . . . . . . . . 19
SECTION 3.6. Opinions as to Trust Estate. . . . . . . . . . . . . 20
SECTION 3.7. Performance of Obligations; Servicing of
Receivables. . . . . . . . . . . . . . . . . . . . . 21
SECTION 3.8. Negative Covenants . . . . . . . . . . . . . . . . . 22
SECTION 3.9. Annual Statement as to Compliance. . . . . . . . . . 23
SECTION 3.10. Consolidation and Disposition of Assets. . . . . . . 23
SECTION 3.11. Transferee of Issuer . . . . . . . . . . . . . . . . 24
SECTION 3.12. No Other Business. . . . . . . . . . . . . . . . . . 24
SECTION 3.13. No Borrowing . . . . . . . . . . . . . . . . . . . . 24
SECTION 3.14. Servicer's Obligations . . . . . . . . . . . . . . . 24
SECTION 3.15. Guarantees, Loans, Advances and Other
Liabilities. . . . . . . . . . . . . . . . . . . . . 24
SECTION 3.16. Capital Expenditures . . . . . . . . . . . . . . . . 24
SECTION 3.17. Restricted Payments. . . . . . . . . . . . . . . . . 25
SECTION 3.18. Notice of Events of Default. . . . . . . . . . . . . 25
SECTION 3.19. Further Instruments and Acts . . . . . . . . . . . . 25
SECTION 3.20. Compliance with Laws . . . . . . . . . . . . . . . . 25
SECTION 3.21. Amendments of Sale and Servicing
Agreement. . . . . . . . . . . . . . . . . . . . . . 25
SECTION 3.22. Income Tax Characterization. . . . . . . . . . . . . 25
ARTICLE IV Satisfaction and Discharge. . . . . . . . . . . . . . . . . . 26
SECTION 4.1. Satisfaction and Discharge of Indenture. . . . . . . 26
SECTION 4.2. Application of Trust Money . . . . . . . . . . . . . 27
SECTION 4.3. Payment of Moneys Held by Paying Agent . . . . . . . 27
<PAGE>
ARTICLE V Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
SECTION 5.1. Events of Default. . . . . . . . . . . . . . . . . . 28
SECTION 5.2. Rights upon Event of Default . . . . . . . . . . . . 30
SECTION 5.3. Collection of Indebtedness and Suits for
Enforcement by Trustee; Authority of
Controlling Party. . . . . . . . . . . . . . . . . . . . . . . 31
SECTION 5.4. Remedies . . . . . . . . . . . . . . . . . . . . . . 33
SECTION 5.5. Optional Preservation of the
Receivables. . . . . . . . . . . . . . . . . . . . . . . . . . 34
SECTION 5.6. Priorities . . . . . . . . . . . . . . . . . . . . . 34
SECTION 5.7. Limitation of Suits. . . . . . . . . . . . . . . . . 35
SECTION 5.8. Unconditional Rights of Noteholders To
Receive Principal and Interest . . . . . . . . . . . . . . . . 36
SECTION 5.9. Restoration of Rights and Remedies . . . . . . . . . 36
SECTION 5.10. Rights and Remedies Cumulative . . . . . . . . . . . 37
SECTION 5.11. Delay or Omission Not a Waiver . . . . . . . . . . . 37
SECTION 5.12. Control by Noteholders . . . . . . . . . . . . . . . 37
SECTION 5.13. Waiver of Past Defaults. . . . . . . . . . . . . . . 37
SECTION 5.14. Undertaking for Costs. . . . . . . . . . . . . . . . 38
SECTION 5.15. Waiver of Stay or Extension Laws . . . . . . . . . . 38
SECTION 5.16. Action on Notes. . . . . . . . . . . . . . . . . . . 38
SECTION 5.17. Performance and Enforcement of Certain
Obligations. . . . . . . . . . . . . . . . . . . . . . . . . . 39
SECTION 5.18. Claims Under Policy. . . . . . . . . . . . . . . . . 40
SECTION 5.19. Preference Claims. . . . . . . . . . . . . . . . . . 42
ARTICLE VI The Trustee and the Indenture Collateral
Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
SECTION 6.1. Duties of Trustee. . . . . . . . . . . . . . . . . . 43
SECTION 6.2. Rights of Trustee. . . . . . . . . . . . . . . . . . 45
SECTION 6.3. Individual Rights of Trustee . . . . . . . . . . . . 46
SECTION 6.4. Trustee's Disclaimer . . . . . . . . . . . . . . . . 46
SECTION 6.5. Notice of Defaults . . . . . . . . . . . . . . . . . 47
SECTION 6.6. Reports by Trustee to Holders. . . . . . . . . . . . 47
SECTION 6.7. Compensation and Indemnity . . . . . . . . . . . . . 47
SECTION 6.8. Replacement of Trustee . . . . . . . . . . . . . . . 48
SECTION 6.9. Successor Trustee by Merger. . . . . . . . . . . . . 49
SECTION 6.10. Appointment of Co-Trustee or Separate
Trustee. . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
SECTION 6.11. Eligibility; Disqualification. . . . . . . . . . . . 51
SECTION 6.12. Appointment and Powers . . . . . . . . . . . . . . . 51
SECTION 6.13. Performance of Duties. . . . . . . . . . . . . . . . 52
SECTION 6.14. Limitation on Liability. . . . . . . . . . . . . . . 52
SECTION 6.15. Reliance upon Documents. . . . . . . . . . . . . . . 53
SECTION 6.16. Successor Indenture Collateral Agent . . . . . . . . 53
SECTION 6.17. Compensation and Indemnity . . . . . . . . . . . . . 55
SECTION 6.18. Representations and Warranties of the
Indenture Collateral Agent . . . . . . . . . . . . . . . . . . 56
SECTION 6.19. Waiver of Setoffs. . . . . . . . . . . . . . . . . . 56
<PAGE>
SECTION 6.20. Control by the Controlling Party . . . . . . . . . . 57
ARTICLE VII Noteholders' Lists and Reports . . . . . . . . . . . . . . . 57
SECTION 7.1. Issuer to Furnish Trustee Names and
Addresses to Noteholders . . . . . . . . . . . . . . . . . . . 57
SECTION 7.2. Preservation of Information,
Communications to Noteholders. . . . . . . . . . . . . . . . . 57
SECTION 7.3. Reports by Issuer. . . . . . . . . . . . . . . . . . 57
ARTICLE VIII Accounts, Disbursements and Releases. . . . . . . . . . . . 58
SECTION 8.1. Collection of Money. . . . . . . . . . . . . . . . . 58
SECTION 8.2. Trust Accounts . . . . . . . . . . . . . . . . . . . 58
SECTION 8.3. General Provisions Regarding Accounts. . . . . . . . 58
ARTICLE IX Supplemental Indentures . . . . . . . . . . . . . . . . . . . 59
SECTION 9.1. Supplemental Indentures Without Consent
of Noteholders . . . . . . . . . . . . . . . . . . . . . . . . 59
SECTION 9.2. Supplemental Indentures With Consent of
Noteholders. . . . . . . . . . . . . . . . . . . . . . . . . . 60
SECTION 9.3. Execution of Supplemental Indentures . . . . . . . . 62
SECTION 9.4. Effect of Supplemental Indenture . . . . . . . . . . 62
SECTION 9.5. Reference in Notes to Supplemental
Indentures . . . . . . . . . . . . . . . . . . . . . . . . . . 62
ARTICLE X Redemption of Notes. . . . . . . . . . . . . . . . . . . . . . 62
SECTION 10.1. Redemption . . . . . . . . . . . . . . . . . . . . . 62
SECTION 10.2. Form of Redemption Notice. . . . . . . . . . . . . . 63
SECTION 10.3. Notes Payable on Redemption Date . . . . . . . . . . 63
ARTICLE XI Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . . 63
SECTION 11.1. Compliance Certificates and Opinions,
etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
SECTION 11.2. Form of Documents Delivered to Trustee . . . . . . . 65
SECTION 11.3. Acts of Noteholders. . . . . . . . . . . . . . . . . 66
SECTION 11.4. Notices, etc . . . . . . . . . . . . . . . . . . . . 67
SECTION 11.5. Notices to Noteholders; Waiver . . . . . . . . . . . 68
SECTION 11.6. Alternate Payment and Notice Provisions. . . . . . . 69
SECTION 11.7. Effect of Headings and Table of
Contents . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
SECTION 11.8. Successors and Assigns . . . . . . . . . . . . . . . 69
SECTION 11.9. Severability . . . . . . . . . . . . . . . . . . . . 69
SECTION 11.10. Benefits of Indenture. . . . . . . . . . . . . . . . 69
SECTION 11.11. Legal Holidays . . . . . . . . . . . . . . . . . . . 70
SECTION 11.12. GOVERNING LAW. . . . . . . . . . . . . . . . . . . . 70
SECTION 11.13. Counterparts . . . . . . . . . . . . . . . . . . . . 70
SECTION 11.14. Recording of Indenture . . . . . . . . . . . . . . . 70
SECTION 11.15. Trust Obligation . . . . . . . . . . . . . . . . . . 70
SECTION 11.16. No Petition. . . . . . . . . . . . . . . . . . . . . 71
SECTION 11.17. Inspection . . . . . . . . . . . . . . . . . . . . . 71
<PAGE>
INDENTURE, dated as of December 1, 1994, between
AMERICREDIT RECEIVABLES FINANCE CORP., 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 8.19% 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 December 1,
1994 (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
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
<PAGE>
respect thereof after October 31, 1994; (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; (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 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 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.
<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 Agreements"
means, the agreements by and between AmeriCredit Financial
Services, Inc. and each of the Issuer and the Seller,
respectively, dated as of December 1, 1994.
"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 any other location of any
successor Servicer, successor Issuer, successor Trustee or
successor Indenture Collateral Agent are authorized or
obligated by law, executive order or governmental decree to
remain closed.
"Closing Date" means December 22, 1994.
<PAGE>
"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).
"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 December 15,
1999 (or, if such day is not a Business Day, the next
Business Day thereafter).
"Final Scheduled Maturity Date" means July 31, 1999.
"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,
<PAGE>
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.
"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
<PAGE>
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
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.
"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.
"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.
<PAGE>
"Issuer Secured Parties" means each of the Trustee 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.
"Majority Noteholder" means the holder of a Note
Majority.
"Note" means any of the 8.19% Automobile Receivable -
Backed Notes Series 1994-A issued by the Issuer on the
Closing Date.
"Note Interest Rate" means 8.19% 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 for its benefit and
for the benefit of the Noteholders 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 for its benefit and for the benefit of the
Noteholders, 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:
<PAGE>
(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
(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.
<PAGE>
"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.
"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.
"Placement Agreement" means the agreement dated as of
December 1, 1994, relating to the private placement of the
Notes.
"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
<PAGE>
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 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.
"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 Purchase
Agreement, the Sale and Servicing Agreement, the Custodian
Agreement, the Administrative Services and Facilities
Agreements, the Policy, the Spread Account Agreement, the
Insurance Agreement, the Indemnification Agreement (as
defined in the Insurance Agreement), the Lockbox Agreement,
the Stock Pledge Agreement and the Placement Agent Agreement
between the Issuer, the Seller and AFS and the placement
agent of the Notes. 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.
"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.
<PAGE>
"Sale and Servicing Agreement" means the Sale and
Servicing Agreement, dated as of December 1, 1994, among the
Issuer, the Seller, AFS, in its individual capacity and as
the Servicer and the Backup Servicer, in the form of Exhibit
B.
"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.
"State" means any one of the 50 states of the United
States of America or the District of Columbia.
"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 (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.
<PAGE>
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;
(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 D, 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 D are part of the
terms of this Indenture.
<PAGE>
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
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 $51,000,000. 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
<PAGE>
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
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.
<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 or 9.6 not involving any transfer.
The preceding provisions of this section
notwithstanding, the Issuer shall not be required to make and
the Note Registrar need not register transfers or exchanges
of Notes selected for redemption or of any Note for a period
of 15 days preceding the due date for any payment with
respect to the Note.
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,
<PAGE>
destroyed, lost or stolen Note, a replacement Note; provided,
however, that if any such destroyed, lost or 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.
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
<PAGE>
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 D, 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 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(a)) 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 D. 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 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
<PAGE>
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 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.
(a) 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
<PAGE>
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 certificate in the form attached as Exhibit A
to the Placement Agreement or substantially in a form
approved by the Issuer 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.
(b) No Note may be issued, sold or transferred if
such issuance, sale or transfer would result in 25% or more
of the value of securities issued by the Issuer being held by
persons who are benefit plan investors as defined in
paragraph (f)(2) of the Department of Labor Reg. 2510.3-101.
The foregoing sentence shall be administered and interpreted
in accordance with such regulation to prevent the assets of
the Issuer from being treated as "plan assets" under such
regulations and the Employee Retirement Income Security Act
of 1974, as amended (ERISA).
(c) No Note may be issued, sold or transferred
unless such issue, sale or transfer does not constitute a
"prohibited transaction" under Section 4975 of the Code or
Section 406 of ERISA. If the certificate of the transferee
certifies that funds of an employee benefit plan subject to
ERISA will be used to acquire a Note, the Trustee or the
Issuer shall require, prior to any sale or transfer of a
Note, the certificates of appropriate Persons establishing
that no such prohibited transaction shall exist or an Opinion
<PAGE>
of Counsel addressed to the Trustee and the Issuer to the
effect that such sale or transfer does not constitute such a
prohibited transaction in order to assure compliance with the
preceding sentence.
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.
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 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
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
<PAGE>
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
(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.
<PAGE>
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 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
<PAGE>
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;
(ii) 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;
(iii) perfect, publish notice of or protect the
validity of any Grant made or to be made by this
Indenture;
(iv) enforce any of the Indenture Collateral;
(v) 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
<PAGE>
(vi) 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
counsel, no such action is necessary to make such lien and
security interest effective.
(b) On or before April 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
<PAGE>
interest of this Indenture until April 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
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.
<PAGE>
(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
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
<PAGE>
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 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
1995), 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).
<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 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.
<PAGE>
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.
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.
<PAGE>
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
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
<PAGE>
(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(a)), as the
case may be;
(B) the Issuer has paid or caused to be paid all
Insurer Issuer 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
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.
<PAGE>
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 an Issuer Request 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
<PAGE>
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
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
<PAGE>
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 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 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
<PAGE>
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:
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.
(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
<PAGE>
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.
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
<PAGE>
protect and enforce its rights and the rights of the
Noteholders, by such appropriate Proceedings 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 of
Notes in any election of a trustee, a standby
trustee or Person performing similar functions in
any such Proceedings;
<PAGE>
(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
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.
<PAGE>
(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 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
<PAGE>
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 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;
<PAGE>
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
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,
<PAGE>
(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
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,
<PAGE>
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
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
<PAGE>
direction to the Trustee by Holders of Notes
representing less than 100% of the Outstanding Amount 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' 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
<PAGE>
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.
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
<PAGE>
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 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
<PAGE>
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
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.
<PAGE>
(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 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 Collection 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.
<PAGE>
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
Noteholders' Interest Distributable Amount or Noteholders'
Principal Distributable Amount 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 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
<PAGE>
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
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 negligent action, its own grossly negligent failure
to act or its own wilful misconduct, except that:
<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
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
<PAGE>
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 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.
<PAGE>
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, negligence or bad faith.
(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
<PAGE>
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.
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
<PAGE>
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 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).
<PAGE>
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
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
<PAGE>
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;
(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
<PAGE>
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 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. 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
instruments to appoint one or more Persons to act as a co-
trustee or co-trustees, or separate trustee or separate
<PAGE>
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
(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
<PAGE>
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
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
<PAGE>
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 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
<PAGE>
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.
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
<PAGE>
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 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
<PAGE>
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 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
<PAGE>
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 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.
(c) Due Authorization. The execution and delivery by
the Indenture Collateral Agent of this Indenture and the
<PAGE>
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.
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) not more than five days
after the earlier of (i) each Record Date and (ii) three
months after the last Record Date, a list, in such form as
<PAGE>
the Trustee may reasonably require, of the names and
addresses of the Holders of Notes as of such Record 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.
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 may be reasonably necessary, based upon an
Opinion of Counsel, 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.
<PAGE>
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.
(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
<PAGE>
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 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
<PAGE>
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 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 thereon or
the Redemption Price with respect thereto, change the
<PAGE>
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 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
<PAGE>
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
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
<PAGE>
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 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
<PAGE>
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 or portions thereof to be redeemed shall, following
notice of redemption (if any) as required by Section 10.2, on
the Redemption Date 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;
<PAGE>
(ii) a brief statement as to the nature and scope
of the examination or investigation upon which 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
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
<PAGE>
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
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
<PAGE>
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.
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
<PAGE>
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.
(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., 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:
<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
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
<PAGE>
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.
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
<PAGE>
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 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
<PAGE>
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 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.
<PAGE>
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.
AMERICREDIT RECEIVABLES FINANCE
CORP.
By:
Name:
Title:
LASALLE NATIONAL BANK,
not in its individual capacity
but solely as Trustee and
Indenture Collateral Agent,
By:
Name:
Title: Corporate Trust
Officer
THIS SALE AND SERVICING AGREEMENT, dated as of
December 1, 1994, is made among AmeriCredit Receivables
Finance Corp., 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:
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 purchase pursuant to Section 3.4(c).
Administrative Services and Facilities Agreements: The
agreements by and between AmeriCredit Financial Services,
Inc. and each of the Issuer 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
<PAGE>
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 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.
<PAGE>
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 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: December 22, 1994.
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.
<PAGE>
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).
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: October 31,1994.
Cutoff Date Principal Balance: $56,679,030.65.
<PAGE>
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.
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
8th day of the next calendar month, or if such 8th 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 15th day of each calendar month,
or if such 15th day is not a Business Day, the next
succeeding Business Day, commencing January 17,1995 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.
<PAGE>
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 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 Trustee 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
<PAGE>
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;
(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
Trustee; 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
Trustee 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
<PAGE>
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
1994-A pursuant to the terms of the Spread Account Agreement.
Final Scheduled Distribution Date: December 15, 1999
(or, if such day is not a Business Day, the next succeeding
Business Day thereafter).
Final Scheduled Maturity Date: July 31, 1999.
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 December 1, 1994,
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).
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
<PAGE>
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 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 December 1, 1994, 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
<PAGE>
(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 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).
<PAGE>
Lockbox Agreement: The Tri-Party Remittance Processing
Agreement, dated as of the date hereof, by and among AFS,
First Interstate Bank of Texas, N.A., and the Indenture
Collateral Agent, as such agreement may be amended 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.
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).
<PAGE>
Note Interest Rate: 8.19% per annum (computed on the
basis of a 360-day year of twelve 30-day months).
Note Majority: Holders of Notes representing 66 2/3% of
the outstanding principal balance of the Notes.
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' 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
less the Note Balance (after giving effect to distribution of
the Noteholders' Principal Distributable Amount with respect
to such Distribution Date) less such amount is equal to 28%
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
<PAGE>
Rate from such preceding Distribution Date through the
current Distribution Date.
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
90% of the sum of the following amounts with respect to the
immediately preceding Monthly Period (or in the case of the
first Distribution Date, the preceding two Monthly Periods),
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
(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.
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
<PAGE>
principal that is actually deposited in the Note Distribution
Account on such Distribution Date.
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: 8.19% 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.
<PAGE>
Original Pool Balance: As of any date, the Cutoff Date
Principal Balance.
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. 50339-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 the date hereof 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
<PAGE>
have occurred and be continuing) acceptable to the Security
Insurer.
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 and the
Placement Agreement among the Issuer, the Seller and AFS and
the private placement agent of the Notes. 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.
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).
Responsible Officer: When used with respect to any
Person that is not an individual, the President, any Vice-
<PAGE>
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.
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.
Servicer Termination Event: An event described in
Section 8.1.
<PAGE>
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 1994-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.
Standard & Poor's: Standard & Poor's Corporation, or any
successor thereto.
Stock Pledge Agreement: The Stock Pledge Agreement,
dated as of the date hereof, among the Security Insurer, AFS
and the Collateral Agent named therein, as the same may be
amended from time to time.
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
<PAGE>
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.
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 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.
<PAGE>
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 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
<PAGE>
Receivable and that has been acquired by or on behalf of 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.
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 the Closing Date,
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):
<PAGE>
(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 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:
<PAGE>
(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.
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,
<PAGE>
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.
(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
<PAGE>
(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.
(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 contained in Section 2.4, the Security Insurer or
<PAGE>
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, the Security Insurer or the
Issuer in any Receivable (including any Liquidated
Receivable) AFS 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. The obligations of the Seller with respect to
any such breach of representations and warranties shall be
limited to taking any and all actions necessary to enable the
Issuer to enforce directly the obligations of AFS under the
Purchase Agreement. 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 Issuer 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 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
<PAGE>
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 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.
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
<PAGE>
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 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,
<PAGE>
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.
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,
<PAGE>
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 Insurer;
(iv) So long as an Insurer Default shall not have
occurred and be continuing, 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;
(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; and
(vi) If an Insurer Default shall have occurred and
be continuing, the Servicer may not extend or modify any
Receivable (other than as permitted by Section 3.2(b)
and 3.2(c)).
(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
<PAGE>
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 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
<PAGE>
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 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
<PAGE>
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 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
<PAGE>
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 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 (1)(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-
<PAGE>
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 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
<PAGE>
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 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
<PAGE>
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 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
<PAGE>
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.
(b) The Servicer represents, warrants and covenants as
of the Closing Date as to itself:
(i) The representations and warranties set forth
on the Schedule of Representations attached hereto as
Schedule B are true and correct, provided that such
representations 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;
(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
<PAGE>
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;
(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
<PAGE>
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 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
<PAGE>
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 Noteholders, 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
Noteholders, the Collateral Agent and the Trustee on the
Determination Date shall also contain the following
information: (a) the 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
<PAGE>
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
31,1995, 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 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 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.
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
<PAGE>
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 31,1995, 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
"Accountant's 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 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 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 fifth
Business Day, but in no event later than the seventh 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
<PAGE>
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 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 March 31,1995, which term shall be
<PAGE>
extendible by the Controlling Party for successive quarterly
terms ending on each successive March 31, June 30, September
30 and December 31 (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 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);
<PAGE>
(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));
(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
<PAGE>
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 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
<PAGE>
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.
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
<PAGE>
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:
(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.
<PAGE>
(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 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 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
<PAGE>
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 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
(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
the Noteholders' Special Principal Distributable Amount for
such Distribution Date;
(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
holding all funds in the Trust Accounts and in making
distributions as provided in this Agreement, shall act solely
on behalf of and as agent for the Noteholders.
<PAGE>
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; and
(vi) the Note Pool Factor (after giving effect to
distributions made on such Distribution Date).
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
<PAGE>
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.
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
<PAGE>
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 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
<PAGE>
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 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
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 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 (so long as an Insurer Default
shall not have occurred and be continuing) the Security
<PAGE>
Insurer 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 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
<PAGE>
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;
(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
<PAGE>
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) The Servicer shall not merge or consolidate with
any other person, convey, transfer or lease substantially all
its assets as an entirety to another Person, or permit any
other Person to become the successor to the Servicer's
business unless, after the merger, consolidation, conveyance,
transfer, lease or succession, the successor or surviving
entity shall be capable of fulfilling the duties of the
Servicer 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 the Servicer may be
merged or consolidated, (ii) resulting from any merger or
consolidation to which the Servicer shall be a party, (iii)
which acquires by conveyance, transfer, or lease
substantially all of the assets of the Servicer, or (iv)
succeeding to the business of the Servicer, in any of the
foregoing cases shall execute an agreement of assumption to
perform every obligation of the Servicer under this Agreement
and, whether or not such assumption agreement is executed,
shall be the successor to the 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 Servicer from any obligation. The
Servicer 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, the Servicer
shall not merge or consolidate with any other Person or
permit any other Person to become a successor to the
Servicer'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) the Servicer 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
<PAGE>
this Agreement relating to such transaction have been
complied with, and (z) the Servicer 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 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) 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 the Servicer, the Backup Servicer nor any
of the directors or officers or employees or agents of the
Servicer 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 the Servicer,
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. The Servicer, the Backup Servicer and any
director, officer, employee or agent of the Servicer or
Backup Servicer may rely in good faith on the advice of
counsel or on any document of any kind prima facie properly
<PAGE>
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.
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 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
<PAGE>
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
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
<PAGE>
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 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
<PAGE>
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 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 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
<PAGE>
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
Controllling 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 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 responsibilities, restrictions, duties, liabilities
and termination provisions relating thereto placed on the
<PAGE>
Servicer by the terms and provisions of this Agreement. 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.
(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 the 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
<PAGE>
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.
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); 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
<PAGE>
amount of principal and interest then due and payable on the
Notes. 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. 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 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
<PAGE>
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.
(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
<PAGE>
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 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
<PAGE>
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
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 April 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 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
<PAGE>
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 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, 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
<PAGE>
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., 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, 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.
<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.
By
Name:
Title:
SELLER:
AMERICREDIT RECEIVABLES CORP.
By
Name:
Title:
AMERICREDIT FINANCIAL SERVICES,
INC.
In its individual capacity and as
Servicer
By
Name:
Title:
BACKUP SERVICER:
LASALLE NATIONAL BANK
By
Name:
Title: Corporate Trust Officer
<PAGE>
Acknowledged and Accepted:
LaSalle National Bank,
not in individual capacity but as Trustee,
By
Name:
Title: Corporate Trust Officer
<PAGE>
SCHEDULE A
SCHEDULE OF RECEIVABLES
<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 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 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.
<PAGE>
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 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.
<PAGE>
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 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
<PAGE>
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.
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.
<PAGE>
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 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 $1,000.00 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 on or before December 31, 1994, or
after July 29, 1999.
<PAGE>
28. Certain Characteristics. (A) Each Receivable had a
remaining maturity, as of the Cutoff Date, of not more than 58
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 $1,000.00
and not more than $25,878.06; (D) each Receivable has an Annual
Percentage Rate of at least 7.50% and not more than 36.0%; (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.
<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.
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 28 days delinquent, it is
assigned to a front-end collector. At this time the
collector identifies the necessity of any default
notification required by state law.
H. Once the account exceeds 30 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
<PAGE>
and sequestrations must be approved by the Director of
Collections.
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. Send 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. Dispose of collateral through public or private sale,
(dictated by state law), in a commercially reasonable
manner, whenever possible through a Manheim 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
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. First installment payment has been paid in full.
D. Only one date change in a twelve month period.
<PAGE>
E. Any exceptions to the above stated policy must be approved
by the Director of Collections.
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 four 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.
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.
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.
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. 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
AmeriCredit has established an in-house P&L Department.
<PAGE>
A. Contract 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.
<PAGE>
SALE AND SERVICING AGREEMENT
among
AMERICREDIT RECEIVABLES FINANCE CORP.
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
December 1, 1994
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS
Section 1.1. Definitions. . . . . . . . . . . . . . . . . 1
Section 1.2. Usage of Terms . . . . . . . . . . . . . . . 15
Section 1.3. Calculations . . . . . . . . . . . . . . . . 15
Section 1.4. Section References . . . . . . . . . . . . . 15
Section 1.5. No Recourse. . . . . . . . . . . . . . . . . 15
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 . . . . . . 17
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 . . . . . . . . . . . . 20
Section 2.7. Collecting Lien Certificates Not
Delivered on the Closing Date. . . . . . . . . . . . . 20
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 . . . . . . . . . . . 21
Section 3.2. Collection of Receivable Payments;
Modifications of Receivables; Lockbox
Agreements . . . . . . . . . . . . . . . . . . . . . . 22
Section 3.3. Realization Upon Receivables . . . . . . . . 25
Section 3.4. Insurance. . . . . . . . . . . . . . . . . . 26
Section 3.5. Maintenance of Security Interests in
Vehicles . . . . . . . . . . . . . . . . . . . . . . . 27
Section 3.6. Covenants, Representations, and
Warranties of Servicer . . . . . . . . . . . . . . . . 28
Section 3.7. Purchase of Receivables Upon Breach of
Covenant . . . . . . . . . . . . . . . . . . . . . . . 30
Section 3.8. Total Servicing Fee; Payment of Certain
Expenses by Servicer . . . . . . . . . . . . . . . . . 30
Section 3.9. Servicer's Certificate . . . . . . . . . . . 31
Section 3.10. Annual Statement as to Compliance,
Notice of Servicer Termination Event . . . . . . . . . 31
Section 3.11. Annual Independent Accountants' Report . . . 32
<PAGE>
Section 3.12. Access to Certain Documentation and
Information Regarding Receivables. . . . . . . . . . . 32
Section 3.13. Monthly Tape . . . . . . . . . . . . . . . . 33
Section 3.14. Retention and Termination of Servicer. . . . 33
Section 3.15. Duties of the Servicer under the
Indenture. . . . . . . . . . . . . . . . . . . . . . . 34
Section 3.16. Fidelity Bond and Errors and Omissions
Policy.. . . . . . . . . . . . . . . . . . . . . . . . 35
ARTICLE IV
DISTRIBUTIONS; STATEMENTS TO NOTEHOLDERS
Section 4.1. Trust Accounts . . . . . . . . . . . . . . . 35
Section 4.2. Collections. . . . . . . . . . . . . . . . . 36
Section 4.3. Application of Collections . . . . . . . . . 37
Section 4.4. Net Deposits . . . . . . . . . . . . . . . . 38
Section 4.5. Additional Deposits. . . . . . . . . . . . . 38
Section 4.6. Distributions. . . . . . . . . . . . . . . . 38
Section 4.7. Trustee as Agent . . . . . . . . . . . . . . 39
Section 4.8. Statements to Noteholders. . . . . . . . . . 39
Section 4.9. Eligible Accounts. . . . . . . . . . . . . . 39
Section 4.10. Optional Deposits by the Security
Insurer. . . . . . . . . . . . . . . . . . . . . . . . 39
ARTICLE V
THE SPREAD ACCOUNT
Section 5.1. Withdrawals from Spread Account in
respect of Deficiency Claim Amount . . . . . . . . . . 40
Section 5.2. Withdrawals from Spread Account in
respect of Noteholders' Excess Principal
Distributable Amount or following the
occurrence of an Insurer Default . . . . . . . . . . . 40
ARTICLE VI
THE SELLER
Section 6.1. Liability of Seller. . . . . . . . . . . . . 41
Section 6.2. Merger or Consolidation of, or
Assumption of the Obligations of Seller;
Amendment of Certificate of
Incorporation. . . . . . . . . . . . . . . . . . . . . 41
Section 6.3. Limitation on Liability of Seller and
Others . . . . . . . . . . . . . . . . . . . . . . . . 42
Section 6.4. Seller May Own Notes . . . . . . . . . . . . 42
ARTICLE VII
SERVICER
Section 7.1. Liability of Servicer; Indemnities . . . . . 42
<PAGE>
Section 7.2. Merger or Consolidation of, or
Assumption of the Obligations of the
Servicer or Backup Servicer. . . . . . . . . . . . . . 43
Section 7.3. Limitation on Liability of Servicer,
Backup Servicer and Others . . . . . . . . . . . . . . 44
Section 7.4. Delegation of Duties . . . . . . . . . . . . 45
Section 7.5. Servicer and Backup Servicer Not to
Resign . . . . . . . . . . . . . . . . . . . . . . . . 45
ARTICLE VIII
SERVICER TERMINATION EVENTS
Section 8.1. Servicer Termination Event . . . . . . . . . 46
Section 8.2. Consequences of a Servicer Termination
Event. . . . . . . . . . . . . . . . . . . . . . . . . 47
Section 8.3. Appointment of Successor . . . . . . . . . . 48
Section 8.4. Notification to Noteholders. . . . . . . . . 49
Section 8.5. Waiver of Past Defaults. . . . . . . . . . . 49
ARTICLE IX
TERMINATION
Section 9.1. Optional Purchase of All Receivables . . . . 49
ARTICLE X
MISCELLANEOUS PROVISIONS
Section 10.1. Amendment. . . . . . . . . . . . . . . . . . 50
Section 10.2. Protection of Title to the Receivables
and Other Conveyed Property. . . . . . . . . . . . . . 51
Section 10.3. Governing Law. . . . . . . . . . . . . . . . 53
Section 10.4. Severability of Provisions . . . . . . . . . 53
Section 10.5. Assignment . . . . . . . . . . . . . . . . . 53
Section 10.6. Third-Party Beneficiaries. . . . . . . . . . 53
Section 10.7. Disclaimer by Security Insurer . . . . . . . 53
Section 10.8. Counterparts . . . . . . . . . . . . . . . . 53
Section 10.9. Notices. . . . . . . . . . . . . . . . . . . 53
Schedule A Schedule of Receivables
Schedule B Representations and Warranties of Seller and AFS
Schedule C Servicing Policies and Procedures
EXHIBIT 11.1
AMERICREDIT CORP.
STATEMENT RE COMPUTATION OF PER SHARE EARNINGS
(dollars in thousands, except per share amounts)
<TABLE>
<CAPTION> Three Months Six Months
Ended Ended
December 31, December 31,
1994 1993 1994 1993
------------ ------------
<S> <C> <C> <C> <C>
PRIMARY:
Average common shares
outstanding. . . . . 28,759,553 29,133,174 28,754,502 29,131,625
Common share equivalents
resulting from
assumed exercise of
stock options and
warrants . . . . . . 1,431,626 3,481,231 1,371,886 3,179,493
---------- ---------- ---------- ----------
Average common shares
and share equivalents
outstanding. . . . . 30,191,179 32,614,405 30,126,388 32,311,118
========== ========== ========== ==========
FULLY DILUTED:
Average common shares
outstanding. . . . . 28,759,553 29,133,174 28,754,502 29,131,625
Common share equivalents
resulting from
assume exercise of
stock options and
warrants . . . . . . 1,431,626 3,709,347 1,371,886 3,710,274
---------- ---------- ---------- ----------
Average common shares
and share equivalents
outstanding . . . . 30,191,179 32,842,521 30,126,388 32,841,899
========== ========== ========== ==========
NET INCOME . . . . . $ 2,092 $ 1,334 $ 3,893 $ 2,469
========== ========== ========== ==========
EARNINGS PER SHARE:
Primary. . . . . . . $ .07 $ .04 $ .13 $ .08
========== ========== ========== ==========
Fully diluted. . . . $ .07 $ .04 $ .13 $ .08
========== ========== ========== ==========
</TABLE>
<PAGE>
Primary earnings per share has been computed by dividing net income by the
average common shares and share equivalents outstanding. Common share
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 per share has been computed in the same manner as primary
earnings 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.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
The Schedule contains summary financial information extracted from the
consoldiated financial statements of AmeriCredit Corp. included in its quarterly
report on Form 10-Q and is qualified in its entirety by reference to such
financial statements.
</LEGEND>
<CIK> 0000804269
<NAME> AMERICREDIT CORP.
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JUN-30-1995
<PERIOD-START> JUL-01-1994
<PERIOD-END> DEC-31-1994
<CASH> 26960
<SECURITIES> 15094
<RECEIVABLES> 137229
<ALLOWANCES> (13034)
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 8667
<DEPRECIATION> (3562)
<TOTAL-ASSETS> 177412
<CURRENT-LIABILITIES> 0
<BONDS> 51306
<COMMON> 318
0
0
<OTHER-SE> 123302
<TOTAL-LIABILITY-AND-EQUITY> 177412
<SALES> 0
<TOTAL-REVENUES> 12439
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 1537
<INTEREST-EXPENSE> 413
<INCOME-PRETAX> 3972
<INCOME-TAX> 79
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3893
<EPS-PRIMARY> .13
<EPS-DILUTED> .13
</TABLE>
