<PAGE>
As filed with the Securities and Exchange Commission on June 15, 1999
Registration No. 333-______
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_________________________________________________
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
_________________________________________________
AmeriCredit Corp.
(Exact name of registrant as specified in its charter)
Texas 75-2291093
(State or Other Jurisdiction (I.R.S. Employer
of Incorporation or Organization) Identification Number)
AmeriCredit Financial Services, Inc.
Delaware 75-2439888
(State or Other Jurisdiction (I.R.S. Employer
of Incorporation or Organization) Identification Number)
AmeriCredit Management Company
Delaware 75-2788787
(State or Other Jurisdiction (I.R.S. Employer
of Incorporation or Organization) Identification Number)
ACF Investment Corp.
Delaware 75-2442194
(State or Other Jurisdiction (I.R.S. Employer
of Incorporation or Organization) Identification Number)
Americredit Corporation of California
California 33-0011256
(State or Other Jurisdiction (I.R.S. Employer
of Incorporation or Organization) Identification Number)
AmeriCredit Financial Services of Canada Ltd.
Ontario, Canada 866121080
(State or Other Jurisdiction (Canadian Business
of Incorporation or Organization) Number)
6199
(Primary Standard Industrial
Classification Code Number)
______________________
200 Bailey Avenue
Fort Worth, Texas 76107
(817) 332-7000
(Address, including zip code, and telephone number, including
area code, of registrant's principal executive offices)
______________________
Daniel E. Berce
Chief Financial Officer
AmeriCredit Corp.
200 Bailey Avenue
Ft. Worth, Texas 76107
(817) 332-7000
(Name, address, including zip code, and telephone number,
including area code, of Agent for service)
Copies to:
L. Steven Leshin
Jenkens & Gilchrist,
a Professional Corporation
1445 Ross Avenue, Suite 3200
Dallas, Texas 75202
Approximate date of commencement of proposed sale to the public: As soon
as practicable after the effective date of this Registration Statement.
If the securities being registered on this Form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box. [_]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement of the earlier effective
registration statement for the same offering. [_]
If this Form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]
_____________________
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CALCULATION OF REGISTRATION FEE
=============================================================================================================================
Proposed maximum Proposed maximum
Title of each class of Amount to offering price per aggregate Amount of
Securities to be registered be registered unit (1) offering price (1) Registration fee
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
9.875% Senior Notes due 2006 $200,000,000 100% $200,000,000 $55,600
- -----------------------------------------------------------------------------------------------------------------------------
AmeriCredit Financial Services, Inc.
ACF Investment Corp.
Americredit Corporation of
California
AmeriCredit Financial Services of
Canada Ltd.
AmeriCredit Management Company
Guarantees (2)
$200,000,000 100% $200,000,000 (3)
=============================================================================================================================
</TABLE>
(1) Estimated solely for purposes of calculating the registration fee in
accordance with Rule 457(f) under the Securities Act of 1933, as amended.
(2) Each of these subsidiaries of AmeriCredit Corp. has guaranteed the Notes
being registered pursuant hereto.
(3) Pursuant to Rule 457(n), no separate fee is payable with respect to
guarantees of the Notes being registered.
===============================================================================
The Co-Registrants, hereby amend this Registration Statement on such date
or dates as may be necessary to delay its effective date until the Co-
Registrants shall file a further amendment that specifically states that this
Registration Statement shall thereafter become effective in accordance with
Section 8(a) of the Securities Act of 1933 or until the Registration Statement
shall become effective on such date as the Commission, acting pursuant to said
Section 8(a), may determine.
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THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. WE MAY
NOT SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS IS NOT AN
OFFER TO SELL THESE SECURITIES AND IT IS NOT SOLICITING AN OFFER TO BUY THESE
SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED.
SUBJECT TO COMPLETION, DATED JUNE 15, 1999
AMERICREDIT CORP.
OFFER TO EXCHANGE ALL
OUTSTANDING 9.875% SENIOR NOTES DUE 2006
($200,000,000 PRINCIPAL AMOUNT OUTSTANDING)
FOR
REGISTERED 9.875% SENIOR NOTES DUE 2006
We are offering to exchange all of our outstanding 9.875% Senior Notes due
2006 ("Old Notes") for our registered 9.875% Senior Notes due 2006 ("New
Notes"). The Old Notes and New Notes are collectively referred to as the
"Notes." The Old Notes were issued on April 20, 1999. The terms of the New
Notes are identical to the terms of the Old Notes except that the New Notes are
registered under the Securities Act of 1933, as amended, and therefore are
freely transferable.
Please Consider the Following:
- You should carefully review the risk factors beginning on page 10 of
this prospectus.
- Our offer to exchange Old Notes for New Notes will be open until 5:00
p.m., New York City time, on _________, 1999, unless we extend the
offer.
- You should also carefully review the procedures for tendering the Old
Notes beginning on page 23 of this prospectus.
- If you fail to tender your Old Notes, you will continue to hold
unregistered securities and your ability to transfer them could be
adversely affected.
- No public market currently exists for the Notes. We do not intend to
list the New Notes on any securities exchange and, therefore, no
active public market is anticipated.
Information about the Notes:
- The Notes will mature on April 15, 2006.
- We will pay interest on the Notes semi-annually on October 15 and
April 15 of each year, beginning October 15, 1999 at the rate of
9.875% per annum.
- We may redeem the Notes on or after April 15, 2003 at certain rates
set forth on page 66 of this prospectus.
- We also have the option until April 15, 2002, to redeem up to 33% of
the original aggregate principal amount of the Notes with the net
proceeds of certain equity offerings.
- The Notes are unsecured obligations and are subordinated to our
existing and future senior debt.
- The Notes are fully and unconditionally guaranteed on an unsecured
senior subordinated basis by certain of our subsidiaries.
- If we undergo a change of control or sell certain of our assets, we
may be required to offer to purchase Notes from you.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE
ADEQUACY OR ACCURACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
THE DATE OF THIS PROSPECTUS IS _________ __, 1999
<PAGE>
TABLE OF CONTENTS
<TABLE>
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Page
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<S> <C>
Where You Can Find More Information..................................................... ii
Incorporation of Certain Documents by Reference......................................... ii
Prospectus Summary...................................................................... 1
Summary Financial and Operating Information............................................. 8
Risk Factors............................................................................ 10
Use of Proceeds......................................................................... 19
The Exchange Offer...................................................................... 20
Capitalization.......................................................................... 28
Selected Consolidated Financial Data.................................................... 29
Management's Discussion and Analysis of Financial Condition and Results of Operations... 31
Business................................................................................ 45
Management.............................................................................. 55
Principal Shareholders.................................................................. 62
Description of the New Notes............................................................ 64
Description of Other Debt............................................................... 91
Certain United States Federal Income Tax Considerations................................. 97
Plan of Distribution.................................................................... 97
Legal Matters........................................................................... 98
Experts................................................................................. 98
Index to Consolidated Financial Statements.............................................. F-1
</TABLE>
(i)
<PAGE>
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and special reports, proxy statements and other
information with the Securities and Exchange Commission (the "Commission"). You
may read and copy any document we file at the Commission's public reference
rooms at 450 Fifth Street, N.W., Washington, D.C. 20549, 7 World Trade Center,
13th floor, New York, New York 10048, and Citicorp Center, 500 West Madison
Street, Suite 1400, Chicago, Illinois 60661-2511. Please call 1-800-SEC-0330 for
further information on the public reference rooms. Our filings are also
available to the public from commercial document retrieval services and at the
web site maintained by the Commission at "http://www.sec.gov." In addition,
reports, proxy statements, and certain other information concerning AmeriCredit
Corp., can be inspected at the New York Stock Exchange, Inc., 20 Broad Street,
New York, New York 10005.
We have filed with the Commission a registration statement on Form S-4
under the Securities Act with respect to our offering of New Notes. This
prospectus, which constitutes part of the registration statement, does not
contain all of the information in the registration statement on Form S-4. You
will find additional information about us and the New Notes in the registration
statement on Form S-4. All statements made in this prospectus concerning the
provisions of legal documents are not necessarily complete and you should read
the documents which are filed as exhibits to the registration statement or
otherwise filed by us with the Commission.
WE HAVE NOT AUTHORIZED ANYONE TO GIVE YOU ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS ABOUT THE MATTERS WE DISCUSS IN THIS PROSPECTUS OTHER THAN THOSE
CONTAINED HEREIN OR IN THE DOCUMENTS WE INCORPORATE HEREIN BY REFERENCE. IF YOU
ARE GIVEN ANY INFORMATION OR REPRESENTATIONS ABOUT THESE MATTERS THAT IS NOT
DISCUSSED OR INCORPORATED IN THIS PROSPECTUS, YOU MUST NOT RELY ON THAT
INFORMATION. THIS PROSPECTUS IS NOT AN OFFER TO SELL OR A SOLICITATION OF AN
OFFER TO BUY SECURITIES ANYWHERE OR TO ANYONE WHERE OR TO WHOM WE ARE NOT
PERMITTED TO OFFER OR SELL SECURITIES UNDER APPLICABLE LAW. OUR AFFAIRS MAY
HAVE CHANGED SINCE THE DATE OF THIS PROSPECTUS. WE CANNOT ASSURE YOU THAT THE
INFORMATION IN THIS PROSPECTUS OR IN THE DOCUMENTS WE INCORPORATE HEREIN BY
REFERENCE IS CORRECT AFTER THIS DATE.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
We "incorporate by reference" into this prospectus the information we file
with the Commission, which means that we can disclose important information to
you by referring you to those documents. The information incorporated by
reference is an important part of this prospectus and information that we file
subsequently with the Commission will automatically update and supersede this
prospectus. We have filed the following documents and incorporate them into and
as a part of this prospectus:
(1) our Annual Report on Form 10-K for the fiscal year ended June 30,
1998, as amended by Form 10-K/A filed on February 16, 1999;
(2) our Quarterly Reports on Form 10-Q for the quarters ended September
30, 1998 (as amended by Form 10-Q/A filed on February 16, 1999),
December 31, 1998, and March 31, 1999;
(3) our Current Reports on Form 8-K dated January 13, 1999, April 12,
1999, and April 16, 1999; and
(4) our Form 8-A, dated September 5, 1997.
Each document that we file pursuant to Section 13(a), 13(c), 14 and 15(d)
of the Securities Exchange Act of 1934 after the date of this prospectus and
prior to the termination of this exchange offer will be deemed to be
incorporated by reference in this prospectus and to be a part of this prospectus
from the date of filing of such document. Any statement contained in a document
incorporated or deemed to be incorporated by reference in this prospectus shall
be deemed to be modified or superseded for purposes of this prospectus to the
extent that a statement contained in this prospectus or in any other
subsequently filed document which also is or is deemed to be incorporated by
reference herein modifies or supersedes such statement. Any statement so
modified or superseded shall not be deemed, except as so modified or superseded,
to constitute a part of this prospectus.
(ii)
<PAGE>
You should not assume that the information in this prospectus is accurate
as of any date other than the date of this prospectus or the respective dates of
those documents we incorporate herein by reference, regardless of the time of
delivery of this prospectus. You should rely on the information incorporated by
reference or provided in this prospectus. We have not authorized anyone else to
provide you with different information.
We will provide without charge to each person to whom a copy of this
prospectus is delivered, on request, a copy of any or all of the foregoing
documents incorporated in this prospectus by reference, other than exhibits to
such documents (unless such exhibits are specifically incorporated by reference
in such documents). Written or telephone requests for such copies should be
directed to AmeriCredit Corp., 200 Bailey Avenue, Fort Worth, Texas 76107,
Attention: Daniel E. Berce, telephone: 817-332-7000.
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
This prospectus and the documents incorporated by reference contain certain
forward-looking statements about our financial condition, results of operations
and business. These statements may be made expressly in this document, or may
be "incorporated by reference" to other documents we have filed with the
Commission. You can find many of these statements by looking for words such as
"believes," "expects," "anticipates," "estimates," or similar expressions used
in this prospectus or documents incorporated in this prospectus.
These forward-looking statements are subject to numerous assumptions, risks
and uncertainties. Factors which may cause our actual results, performance or
achievements to be materially different from any future results, performance or
achievements expressed or implied by us in those statements include, among
others, the following:
- our ability to pay interest and principal on a large amount of debt;
- changes in our customers' demands;
- seasonal changes in customer demands;
- our ability, and the ability of our customers and vendors, to become
year 2000 compliant;
- the competitive nature of the automobile finance business; and
- general economic conditions and the interest rate environment.
Because such statements are subject to risks and uncertainties, actual
results may differ materially from those expressed or implied by the forward-
looking statements. You are cautioned not to place undue reliance on such
statements, which speak only as of the date of this prospectus or, in the case
of documents incorporated by reference, as of the date of such document.
We do not undertake any responsibility to release publicly any
revisions to these forward-looking statements to take into account events or
circumstances that occur after the date of this prospectus. Additionally, we do
not undertake any responsibility to update you on the occurrence of any
unanticipated events which may cause actual results to differ from those
expressed or implied by the forward-looking statements.
(iii)
<PAGE>
PROSPECTUS SUMMARY
IN THIS PROSPECTUS, THE WORDS "AMERICREDIT" AND "COMPANY" REFER TO
AMERICREDIT CORP., THE ISSUER OF THE OLD NOTES AND THE NEW NOTES, AND ITS
SUBSIDIARIES. THE FOLLOWING SUMMARY CONTAINS BASIC INFORMATION ABOUT THE COMPANY
AND THIS EXCHANGE OFFER. IT DOES NOT CONTAIN ALL THE INFORMATION THAT IS
IMPORTANT TO YOU. FOR A MORE COMPLETE UNDERSTANDING OF THIS EXCHANGE OFFER, WE
ENCOURAGE YOU TO READ THIS ENTIRE DOCUMENT AND THE DOCUMENTS WE HAVE REFERRED
YOU TO.
The Exchange Offer
We completed on April 20, 1999, the private offering of $200 million of
9.875% Senior Notes due 2006. We entered into a registration rights agreement
with the initial purchasers in the private offering of such Old Notes in which
we agreed, among other things, to deliver to you this prospectus and to complete
this exchange offer within 150 days of the original issuance of the Old Notes.
You are entitled to exchange in this exchange offer Old Notes that you hold for
registered New Notes with substantially identical terms. If this exchange offer
is not completed within 150 days of April 20, 1999, then the interest rates on
such Old Notes will increase initially by 0.50%. You should read the discussion
under the headings "-Summary of the Terms of the New Notes," "Description of the
New Notes" and "Registration Rights" for further information regarding the New
Notes.
We believe that the New Notes to be issued in this exchange offer may be
resold by you without compliance with the registration and prospectus delivery
provisions of the Securities Act, subject to certain conditions. You should
read the discussion under the headings "-Summary of the Terms of Exchange Offer"
and "The Exchange Offer" for further information regarding this exchange offer
and resale of the New Notes.
The Company
We are a consumer finance company specializing in purchasing, securitizing
and servicing retail automobile installment sales contracts originated by
franchised and select independent dealers in connection with the sale of late
model used and to a lesser extent new automobiles. We target borrowers with
limited credit histories, modest incomes or those who have experienced prior
credit difficulties ("Non-Prime Borrowers"). With the use of proprietary
credit scoring models, we underwrite contracts on a decentralized basis through
a branch office network. These credit scoring models, combined with experienced
underwriting personnel, enable us to implement a risk-based pricing approach to
structuring and underwriting individual contracts. Our centralized risk
management department monitors these underwriting strategies and portfolio
performance to balance credit quality and profitability objectives. We service
our loan portfolio at centralized facilities located in Fort Worth, Texas,
Tempe, Arizona and Charlotte, North Carolina using automated loan servicing and
collection systems.
We had 168 branch offices as of March 31, 1999. As a result of our
expansion strategy, we have been able to increase our aggregate volume of
automobile installment sales contracts purchased to $1,737.8 million in fiscal
1998 from $18.3 million in fiscal 1993. We have continued this growth during the
first nine months of fiscal 1999, with purchases aggregating $1,990.9 million,
compared to $1,176.7 million during the same period in fiscal 1998. For fiscal
1998, the average principal amount financed was $12,479 and the weighted average
APR of contracts we purchased was 19.1%.
We generate earnings and cash flow primarily through the purchase,
retention, securitization and servicing of automobile receivables. In each
securitization, we sell automobile receivables to a trust that, in turn, sells
asset-backed securities to investors. We recognize a gain on the sale of the
receivables to the trust and receive monthly excess cash flow distributions from
the trust resulting from the difference between the interest received from the
consumer obligors on the receivables and the interest on the asset-backed
securities paid to investors, net of losses and expenses. When we receive excess
cash flow distributions depends on the type of structure we use. Historically,
we have used a structure that involved a higher initial cash deposit and
resulted in receipt of excess cash flow distributions approximately seven to
nine months after the receivables were securitized. Since November 1997, we have
employed a structure that involves a lower initial cash deposit. Under this
structure we expect to begin to receive excess cash flow distributions
approximately 20 to 24 months after the receivables are securitized. We received
excess cash flow of $43.8 million from securitization trusts in fiscal 1998. Due
to the time delay associated with distributions of excess cash flow from
securitizations, we expect to receive increased cash flow distributions in
fiscal 2000 from trusts created as a result of
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securitization transactions occurring in fiscal 1998. Prior to the time when we
begin to receive excess cash flow, all excess cash flow is utilized to fund
credit enhancement requirements to secure financial guaranty insurance policies
issued by a monoline insurance company to protect investors in the asset-backed
securities from losses. Once predetermined credit enhancement requirements are
reached and maintained, excess cash flow is distributed to us. In addition to
excess cash flow, we earn servicing fees of 2.25% per annum of the outstanding
principal balance of receivables securitized. Over the four quarters ended March
31, 1999 we completed four securitization transactions totaling $2.425 billion.
We also completed a $1 billion securitization in May 1999.
According to CNW Marketing/Research, an independent automobile finance
market research firm, the automobile finance industry is the second largest
consumer finance industry in the United States with over $603 billion of loan
and lease originations during 1998. The industry is generally segmented
according to the type of car sold (new vs. used) and the credit characteristics
of the borrower (prime vs. non-prime). The non-prime segment of the market
accounted for approximately $188 billion of these originations.
Our principal objective is to continue to build upon our position as a
leading lender to Non-Prime Borrowers. To achieve this objective, we employ the
following key strategies:
Continued Expansion of Automobile Contract Purchase Volume. We seek to
continue to develop our automobile contract purchase volume. We intend to do
this through the continued expansion of our automobile finance branch network,
through increasing our market share in existing branch territories and through
marketing alliances with select automobile dealer groups and prime automotive
lenders, such as banks. We opened five branch offices in fiscal 1993, 13 in
fiscal 1994, 13 in fiscal 1995, 20 in fiscal 1996, 34 in fiscal 1997, 44 in
fiscal 1998, and 39 through March 31, 1999, bringing our branch office network
to 168 offices located in 41 states and one Canadian province as of March 31,
1999. We plan to open a minimum of six additional branch offices during the
remainder of fiscal 1999. As part of our goal of increasing the number of
dealers from whom we purchase automobile finance contracts, we have entered into
marketing alliances with certain automobile dealer groups and regional banks. In
addition, in March 1999 we announced a new marketing alliance with Chase
Manhattan Bank, USA, N.A., whereby we will provide non-prime automobile
financing programs to automobile dealers who currently have a relationship with
Chase.
Use of Proprietary Credit Scoring Models for Risk-based Pricing. We have
developed and implemented a credit scoring system across our branch office
network to support the branch level credit approval process. Our proprietary
credit scoring models are designed to enable us to tailor each loan's pricing
and structure to a statistical assessment of the underlying credit risk.
Sophisticated Risk Management Techniques. Our centralized risk management
department is responsible for monitoring the origination process, supporting
management's supervision of each branch office, tracking collateral values of
our receivables portfolio and monitoring portfolio returns. The risk management
department uses proprietary databases to identify concentrations of risk, to
price for the risk associated with selected market segments and to endeavor to
enhance the credit quality and profitability of the contracts purchased.
High Investment in Technology to Support Operating Efficiency and Growth.
The use of leading-edge technology in both loan origination and servicing has
enabled us to become a low-cost provider in the non-prime automobile finance
market. Our annualized ratio of operating expenses to average managed
receivables was 10.0% for fiscal 1995, 7.2% for fiscal 1996, 6.2% for fiscal
1997, 5.4% for fiscal 1998 and 5.0% for the nine months ended March 31, 1999.
Funding and Liquidity Through Securitizations. We sell automobile
receivables in securitization transactions in order to obtain a cost-effective
source of funds for the purchase of additional automobile finance contracts, to
reduce the risk of interest rate fluctuations and to utilize capital
efficiently. Since our first securitization transaction in December 1994, we
have securitized approximately $4.8 billion of automobile receivables in private
and public offerings of asset-backed securities through March 31, 1999. In
addition, we completed a $1 billion securitization in May 1999.
We were incorporated in Texas in 1988 and succeeded to the business, assets
and liabilities of a predecessor corporation formed under the laws of Texas in
1986. In November 1996, we acquired a small residential mortgage lender which
conducts business under the name AmeriCredit Mortgage Services. Our common stock
is traded on the New York Stock Exchange under the symbol "ACF. Our principal
executive offices are located at 200 Bailey Avenue, Fort Worth, Texas 76107 and
our telephone number is 817-332-7000.
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Summary of the Terms of the Exchange Offer
Securities to be Exchanged...... On April 20, 1999, we issued $200.0 million
aggregate principal amount of Old Notes to
the initial purchasers (the "Original
Offering") in a transaction exempt from the
registration requirements of the Securities
Act of 1933, as amended (the "Securities
Act"). The terms of the New Notes and the Old
Notes are substantially identical in all
material respects, except that the New Notes
will be freely transferable by the holders
except as otherwise provided in this
prospectus. See "Description of the New
Notes."
The Exchange Offer.............. $1,000 principal amount of New Notes in
exchange for each $1,000 principal amount of
Old Notes. As of the date hereof, Old Notes
representing $200.0 million aggregate
principal amount are outstanding.
Based on interpretations by the staff of the
Commission, as set forth in no-action letters
issued to certain third parties unrelated to
us, we believe that New Notes issued pursuant
to the exchange offer in exchange for Old
Notes may be offered for resale, resold or
otherwise transferred by holders thereof
(other than any holder which is an
"affiliate" of the Company or certain
subsidiaries of the Company (the
"Guarantors") within the meaning of Rule 405
under the Securities Act, or a broker-dealer
who purchased Old Notes directly from us to
resell pursuant to Rule 144A or any other
available exemption under the Securities
Act), without compliance with the
registration and prospectus delivery
requirements of the Securities Act, provided
that such New Notes are acquired in the
ordinary course of such holders' business and
such holders have no arrangement with any
person to engage in a distribution of New
Notes.
However, the Commission has not considered
the exchange offer in the context of a no-
action letter and we cannot be sure that the
staff of the Commission would make a similar
determination with respect to the exchange
offer as in such other circumstances.
Furthermore, each holder, other than a
broker-dealer, must acknowledge that is not
engaged in, and does not intend to engage or
participate in, a distribution of New Notes.
Each broker-dealer that receives New Notes
for his own account pursuant to the exchange
offer must acknowledge that it will comply
with the prospectus delivery requirements of
the Securities Act in connection with any
resale of such New Notes. Broker-dealers who
acquired Old Notes directly from us and not
as a result of market-making activities or
other trading activities may not rely on the
staff's interpretations discussed above or
participate in the exchange offer and must
comply with the prospectus delivery
requirements of the Securities Act in order
to resell the Old Notes.
Registration Rights Agreement... We sold the Old Notes on April 20, 1999, in a
private placement in reliance on Section 4(2)
of the Securities Act. The Old Notes were
immediately resold by the initial purchasers
in reliance on Rule 144A under the Securities
Act. In connection with the sale, we,
together with the Guarantors, entered into a
Registration Rights Agreement with the
initial purchasers (the "Registration
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Rights Agreement") requiring us to make
the exchange offer. The Registration
Rights Agreement further provides that
we must (i) cause the Registration
Statement with respect to the exchange
offer to be declared effective within
150 days of April 20, 1999, and (ii)
consummate the exchange offer on or
before the 180th business day following
April 20, 1999. See "The Exchange Offer-
Purpose and Effect."
Expiration Date ...................... The exchange offer will expire at 5:00
p.m., New York City time, __________,
1999 or a later date and time if we
extend it (the "Expiration Date").
Withdrawal............................ The tender of the Old Notes pursuant to
the exchange offer may be withdrawn at
any time prior to the Expiration Date.
Any Old Notes not accepted for exchange
for any reason will be returned without
expense as soon as practicable after the
expiration or termination of the
exchange offer.
Interest on the New Notes and
the Old Notes...................... Interest on the New Notes will accrue
from April 20, 1999 or from the date of
the last payment of interest on the Old
Notes, whichever is later. No additional
interest will be paid on Old Notes
tendered and accepted for exchange.
Conditions to the Exchange Offer...... The exchange offer is subject to certain
customary conditions, certain of which
may be waived by us. See "The Exchange
Offer-Conditions of the Exchange Offer."
Procedures for Tendering Old
Note.............................. Each holder of the Old Notes wishing to
accept the exchange offer must complete,
sign and date the letter of transmittal,
or a copy thereof, in accordance with
the instructions contained herein and
therein, and mail or otherwise deliver
the letter of transmittal, or the copy,
together with the Old Notes and any
other required documentation, to the
exchange agent at the address set forth
herein. Persons holding the Old Notes
through the Depository Trust Company
("DTC") and wishing to accept the
exchange offer must do so pursuant to
DTC's Automated Tender Offer Program, by
which each tendering participant will
agree to be bound by the letter of
transmittal. By executing or agreeing to
be bound by the letter of transmittal,
each holder will represent to us that,
among other things, (1) the New Notes
acquired pursuant to the exchange offer
are being obtained in the ordinary
course of business of the person
receiving such New Notes, (2) the holder
is not engaging in and does not intend
to engage in a distribution of such New
Notes, (3) the holder does not have an
arrangement or understanding with any
person to participate in the
distribution of such New Notes, and (4)
the holder is not an "affiliate," as
defined under Rule 405 promulgated under
the Securities Act, of the Company or
the Guarantors.
We will accept for exchange any and all
Old Notes which are properly tendered
(and not withdrawn) in the exchange
offer prior to the Expiration Date. The
New Notes will be delivered promptly
following the Expiration Date. See "The
Exchange Offer-Terms of the Exchange
Offer."
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<PAGE>
Exchange Agent................. Bank One, NA is serving as Exchange Agent
(the "Exchange Agent") in connection with the
exchange offer.
Federal Income Tax
Considerations.............. We believe the exchange of Old Notes for New
Notes pursuant to the exchange offer will not
constitute a sale or an exchange for federal
income tax purposes. See "Certain United
States Federal Income Tax Considerations."
Effect of Not Tendering........ Old Notes that are not tendered or that are
tendered but not accepted will, following the
completion of the exchange offer, continue to
be subject to the existing restrictions upon
transfer. We will have no further obligation
to provide for the registration under the
Securities Act of such Old Notes.
Summary of the Terms of the New Notes
Issuer......................... AmeriCredit Corp.
Securities Offered............. $200.0 million in aggregate principal amount
of 9.875% senior notes due 2006.
Maturity....................... April 15, 2006
Interest Rate.................. 9.875% per year.
Interest Payment Dates......... April 15 and October 15, beginning on October
15, 1999. Interest will accrue from April 20,
1999.
Subsidiary Guarantees.......... Each Guarantor is our subsidiary. However,
not all of our subsidiaries are guarantors of
the New Notes. If we cannot make payments on
the New Notes when they are due, the
Guarantors must make them instead.
If we create or acquire a new subsidiary, it
will guarantee the New Notes unless we
designate the subsidiary as an "unrestricted
subsidiary" under the indenture or the
subsidiary qualifies as a Securitization
Trust.
Ranking........................ The New Notes will be our unsecured senior
obligations and will rank pari passu to our
existing and future senior debt and senior to
our future subordinated debt. The guarantees
by our subsidiaries will be pari passu to
existing and future senior debt of our
subsidiaries, and senior to future
subordinated debt of our subsidiaries. We and
certain of our subsidiaries are parties to
warehouse facilities and credit agreements
which are secured by first priority liens on
the assets financed under such facilities.
The Notes are effectively subordinated to
these obligations. As of March 31, 1999, the
aggregate amount of secured indebtedness of
ours and our subsidiaries was approximately
$268.3 million, and approximately $76.3
million would have been available for
additional borrowing under our credit
agreement.
Optional Redemption............ We cannot redeem the New Notes until April
15, 2003. Thereafter we may redeem some or
all of the New Notes at the redemption prices
listed in the "Description of the New Notes"
5
<PAGE>
section under the heading "Optional
Redemption," plus accrued interest.
Optional Redemption after Public
Equity Offerings............. At any time (which may be more than once)
before April 15, 2002, we can choose to buy
back up to 33% of the outstanding Notes
(including New Notes) with money that we
raise in certain equity offerings, as long
as:
- we pay 109.875% of the face amount of the
Notes, plus accrued interest;
- we buy the Notes back within 45 days of
completing such equity offering; and
- at least 67% of the aggregate principal
amount of Notes issued remains outstanding
afterwards.
Change of Control Offer.......... If a change in control of the Company occurs,
we may be required to give holders of the New
Notes the opportunity to sell us their New
Notes at 101% of their face amount, plus
accrued interest.
We might not be able to pay you the required
price for New Notes you present to us at the
time of a change of control, because:
- we might not have enough funds at that
time; or
- the terms of our senior debt may prevent
us from paying.
Asset Sale Proceeds.............. If we engage in asset sales, we generally
must either invest the net cash proceeds from
such sales in our business within a period of
time, repay senior debt or make an offer to
purchase a principal amount of the New Notes
equal to the excess net cash proceeds. The
purchase price of the New Notes will be 100%
of their principal amount, plus accrued
interest.
Certain Indenture Provisions..... The indenture governing the New Notes will
contain covenants limiting our (and most or
all of our subsidiaries') ability to:
- incur additional debt or enter into sale
and leaseback transactions;
- pay dividends or distributions on capital
stock or repurchase capital stock;
- issue stock of subsidiaries;
- make certain investments;
- create liens on our assets to secure debt;
- enter into transactions with affiliates;
- merge or consolidate with another company;
and
6
<PAGE>
- transfer and sell assets.
These covenants are subject to a number of
important limitations and exceptions.
Risk Factors................... See "Risk Factors" beginning on page 10 for a
description of certain of the risks you
should consider.
7
<PAGE>
SUMMARY FINANCIAL AND OPERATING INFORMATION
(dollars in thousands, except per share data)
The following table presents summary financial data for the five most
recent fiscal years and the first nine months of the current and most recent
fiscal years, which is from our consolidated financial statements. Since the
information in this table is only a summary and does not provide all of the
information contained in our financial statements, including the related notes,
you should read "Management's Discussion and Analysis of Financial Condition and
Results of Operations" and our Consolidated Financial Statements contained
elsewhere in this prospectus.
<TABLE>
<CAPTION>
Year Ended
-----------------------------------------------------------------------------------------
June 30, June 30, June 30, June 30, June 30,
1994 1995 1996(1) 1997(1) 1998(1)
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Statement of Income Data:
Revenue:
Finance charge income........... $ 7,820 $ 29,039 $ 51,679 $ 44,910 $ 55,837
Gain on sale of receivables..... -- -- 21,405 52,323 103,194
Servicing fee income............ -- -- 3,892 23,492 47,910
Other income.................... 8,062 4,045 2,659 2,631 2,395
----------- ----------- ----------- ----------- -----------
Total revenue............... 15,882 33,084 79,635 123,356 209,336
Costs and expenses.............. 10,817 23,066 46,722 74,822 129,174
----------- ----------- ----------- ----------- -----------
Income before taxes............. 5,065 10,018 32,913 48,534 80,162
Provision (credit) for taxes(2). -- (18,875) 12,148 18,685 30,861
----------- ----------- ----------- ----------- -----------
Net income...................... $ 5,065 $ 28,893 $ 20,765 $ 29,849 $ 49,301
Diluted earnings per share...... $ .08 $ .48 $ .34 $ .48 $ .76
Weighted average shares
outstanding(3)................ 63,636,166 60,761,498 60,406,596 61,574,548 65,203,460
Cash Flow Data:
(Used in) Provided by
operating activities.......... $ 3,900 $ 14,637 $ 34,530 $ 36,003 $ 37,813
(Used in) Provided by
investing activities.......... (12,174) (144,512) (62,749) (92,947) (144,868)
(Used in) Provided by
financing activities.......... (9,238) 132,433 12,050 60,826 134,115
----------- ----------- ----------- ----------- -----------
Net increase (decrease) in
cash and cash equivalents..... $ (17,512) $ 2,558 $ (16,169) $ 3,882 $ 27,060
Other Data:
Auto receivable originations.... $ 65,929 $ 230,176 $ 432,442 $ 906,794 $ 1,737,813
Managed auto receivables........ $ 67,636 $ 240,491 $ 523,981 $ 1,138,255 $ 2,302,516
Average managed auto
receivables................... $ 37,507 $ 141,526 $ 357,966 $ 792,155 $ 1,649,416
Auto loans securitized.......... $ -- $ 150,170 $ 270,351 $ 817,500 $ 1,637,499
Number of branches.............. 18 31 51 85 129
Average principal amount per
managed auto receivable....... $ 7,215 $ 7,773 $ 8,746 $ 10,087 $ 10,782
Ratios:
Ratio of earnings to fixed
charges(4).................... 31.2 3.5 3.5 4.0 4.0
Percentage of total
indebtedness to total
capitalization................ 0.3% 47.9% 48.7% 51.8% 54.7%
Return on average common
equity(5)..................... 4.1% 23.1% 13.7% 16.4% 20.1%
Operating expenses as a
percentage of average......... 15.0% 10.0% 7.2% 6.2% 5.4%
managed auto
receivables (5)
Percentage of senior
unsecured debt to total
equity........................ 0.0% 0.0% 0.0% 60.0% 60.8%
Asset Quality Data:
Managed auto receivables
greater than 60 days
delinquent.................... $ 1,269 $ 4,907 $ 16,207 $ 36,421 $ 59,175
Delinquencies as a
percentage of managed
auto receivables.............. 1.9% 2.0% 3.1% 3.2% 2.6%
Net charge-offs................. $ 1,432 $ 6,409 $ 19,974 $ 43,231 $ 88,002
Net charge-offs as a
percentage of average
managed auto
receivables(5)................ 3.8% 4.5% 5.6% 5.5% 5.3%
<CAPTION>
Nine Months Ended
-------------------------------
March 31, March 31,
1998(1) 1999
----------- -----------
<S> <C> <C>
Statement of Income Data:
Revenue:
Finance charge income........... $ 40,052 $ 51,538
Gain on sale of receivables..... 71,838 116,551
Servicing fee income............ 34,389 61,702
Other income.................... 1,901 3,361
----------- -----------
Total revenue............... 148,180 233,152
Costs and expenses.............. 90,621 148,009
----------- -----------
Income before taxes............. 57,559 85,143
Provision (credit) for taxes(2). 22,159 32,780
----------- -----------
Net income...................... $ 35,400 $ 52,363
Diluted earnings per share...... $ .55 $ .78
Weighted average shares
outstanding(3)................ 64,644,030 66,822,426
Cash Flow Data:
(Used in) Provided by
operating activities.......... $ 11,162 $ 38,214
(Used in) Provided by
investing activities.......... (105,820) (129,225)
(Used in) Provided by
financing activities.......... 97,725 94,770
----------- -----------
Net increase (decrease) in
cash and cash equivalents..... $ 3,067 $ 3,759
Other Data:
Auto receivable originations.... $ 1,176,734 $ 1,990,893
Managed auto receivables........ $ 1,924,796 $ 3,553,208
Average managed auto
receivables................... $ 1,495,784 $ 2,892,752
Auto loans securitized.......... $ 1,117,499 $ 1,920,001
Number of branches.............. 119 168
Average principal amount per
managed auto receivable....... $ 10,584 $ 11,074
Ratios:
Ratio of earnings to fixed
charges(4).................... 4.0 4.3
Percentage of total
indebtedness to total
capitalization................ 55.3% 55.1%
Return on average common
equity(5)..................... 20.5% 21.3%
Operating expenses as a
percentage of average......... 5.5% 5.0%
managed auto
receivables (5)
Percentage of senior
unsecured debt to total
equity........................ 63.1% 48.5%
Asset Quality Data:
Managed auto receivables
greater than 60 days
delinquent.................... $ 50,653 $ 80,668
Delinquencies as a
percentage of managed
auto receivables.............. 2.6% 2.3%
Net charge-offs................. $ 60,918 $ 103,891
Net charge-offs as a
percentage of average
managed auto
receivables(5)................ 5.4% 4.8%
</TABLE>
8
<PAGE>
<TABLE>
<CAPTION>
March 31, 1999
-------------------------------
June 30, June 30, As
1997 1998 Actual Adjusted(6)
----------- ----------- ----------- ------------
<S> <C> <C> <C> <C>
Balance Sheet Data:
Cash and cash equivalents........................ $ 6,027 $ 33,087 $ 36,846 $ 36,846
Credit enhancement assets (7).................... 161,395 286,309 413,653 413,653
Auto receivables held for sale................... 275,249 334,110 400,722 400,722
Total assets..................................... 475,493 713,671 937,982 943,982
Credit Agreements................................ 71,700 -- 603 603
Mortgage Subsidiary Credit Agreement (8)......... 345 24,900 21,267 21,267
Warehouse Facilities............................. -- 140,708 233,661 39,661
Senior Notes..................................... 125,000 175,000 175,000 375,000
Other notes payable.............................. 27,206 6,410 12,759 12,759
Total debt....................................... 224,251 347,018 443,290 443,290
Shareholders' equity............................. 208,261 287,848 360,764 360,764
</TABLE>
____________________
(1) We restated our financial statements for the fiscal years ended June 30,
1996, 1997 and 1998 and interim periods within those fiscal years as a
result of a retroactive change in its method of measuring and accounting for
credit enhancement assets to the cash-out method from the cash-in method.
See Note 2 of Notes to Consolidated Financial Statements.
(2) We recognized an income tax benefit in fiscal 1995 equal to the expected
future tax savings from using our net operating loss carry forward and other
future tax benefits.
(3) All share data for the periods presented have been adjusted to retroactively
reflect the two-for-one stock split paid on September 30, 1998.
(4) Represents the ratio of the sum of income before taxes plus interest expense
for the period to interest expense.
(5) Data for the nine-month periods ended March 31, 1998 and 1999 have been
annualized.
(6) The as adjusted balance sheet data have been calculated giving effect to the
Original Offering and the application of the net proceeds therefrom as if
each occurred on March 31, 1999.
(7) Credit enhancement assets consist of restricted cash, investments in Trust
receivables and interest-only receivables. See Note 4 of Notes to
Consolidated Financial Statements.
(8) Fully guaranteed by us and certain of our Subsidiaries.
9
<PAGE>
RISK FACTORS
THIS PROSPECTUS INCLUDES "FORWARD-LOOKING STATEMENTS" WITHIN THE MEANING OF
SECTION 27A OF THE SECURITIES ACT AND SECTION 21E OF THE EXCHANGE ACT INCLUDING,
IN PARTICULAR, THE STATEMENTS ABOUT THE COMPANY'S PLANS, STRATEGIES, AND
PROSPECTS UNDER THE HEADINGS "PROSPECTUS SUMMARY," "MANAGEMENT'S DISCUSSION AND
ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS," AND "BUSINESS."
ALTHOUGH WE BELIEVE THAT OUR PLANS, INTENTIONS AND EXPECTATIONS REFLECTED IN OR
SUGGESTED BY SUCH FORWARD-LOOKING STATEMENTS ARE REASONABLE, WE CAN GIVE NO
ASSURANCE THAT SUCH PLANS, INTENTIONS OR EXPECTATIONS WILL BE ACHIEVED.
IMPORTANT FACTORS THAT COULD CAUSE ACTUAL RESULTS TO DIFFER MATERIALLY FROM THE
FORWARD-LOOKING STATEMENTS WE MAKE IN THIS PROSPECTUS ARE SET FORTH BELOW AND
ELSEWHERE IN THIS PROSPECTUS. ALL FORWARD-LOOKING STATEMENTS ATTRIBUTABLE TO
THE COMPANY OR PERSONS ACTING ON OUR BEHALF ARE EXPRESSLY QUALIFIED IN THEIR
ENTIRETY BY THE FOLLOWING CAUTIONARY STATEMENTS.
Failure to Exchange Old Notes-If You Do Not Properly Tender Your Old Notes, You
Will Continue to Hold Unregistered Old Notes and Your Ability to Transfer Old
Notes Will Be Adversely Affected.
We will only issue New Notes in exchange for Old Notes that are timely
received by the Exchange Agent together with all required documents, including a
properly completed and signed letter of transmittal. Therefore, you should allow
sufficient time to ensure timely delivery of the Old Notes and you should
carefully follow the instructions on how to tender your Old Notes. Neither we
nor the Exchange Agent are required to tell you of any defects or irregularities
with respect to your tender of the Old Notes. If you do not tender your Old
Notes properly, then, after we consummate the exchange offer, you may continue
to hold Old Notes that are subject to the existing transfer restrictions. In
addition, if you tender your Old Notes for the purpose of participating in a
distribution of the New Notes, you will be required to comply with the
registration and prospectus delivery requirements of the Securities Act in
connection with any resale of the New Notes. If you are a broker-dealer that
receives New Notes for your own account in exchange for Old Notes that you
acquired as a result of market-making activities or any other trading
activities, you will be required to acknowledge that you will deliver a
prospectus in connection with any resale of such New Notes. After the exchange
offer is consummated, if you continue to hold any Old Notes, you may have
difficulty selling them because there will be less Old Notes outstanding. In
addition, if a large amount of Old Notes are not tendered or are tendered
improperly, the limited amount of New Notes that would be issued and outstanding
after we consummate the exchange offer could lower the market price of such New
Notes.
Dependence on Funding Sources - Our Ability to Continue to Purchase Contracts
and to Fund Our Business is Dependent On a Number of Financing Sources.
Credit Facilities and Warehouse Facilities. We depend on credit facilities
and warehouse facilities with financial institutions to finance our purchase of
contracts pending securitization. At the date of this prospectus, we have five
credit and warehouse facilities with various banks providing for revolving
credit borrowings of up to a total of $845 million and $20 million Cdn., subject
to defined borrowing bases. We have a $505 million warehouse facility which
expires in October 1999 and a $150 million warehouse facility which expires in
March 2000. Our bank credit agreement, which provides for up to $115 million of
revolving borrowings (subject to a borrowing base), matures in March 2000 and
the $20 million Cdn. bank facility to fund Canadian auto receivables expires in
November 1999. Our mortgage subsidiary credit agreement, which provides for up
to $75 million of revolving borrowings (subject to a borrowing base), matures in
July 1999. We cannot assure you that any of these financing resources will
continue to be available to us on reasonable terms or at all. If we are unable
to extend or replace any of these facilities and arrange new credit or warehouse
facilities, we would have to curtail our contract purchasing activities, which
would have a material adverse effect on our financial position, liquidity and
results of operations.
Our credit and warehouse facilities contain extensive restrictions and
covenants and require us to maintain specified financial ratios and satisfy
specified financial tests. A breach of any of these covenants could result in an
event of default under these agreements. If an event of default occurs under
these agreements the lenders could elect to declare all amounts outstanding
under these agreements to be immediately due and payable and/or restrict our
ability to obtain additional borrowings under these agreements. Our ability to
meet those financial ratios and tests can be affected by events beyond our
control, and we cannot assure you that we will meet those financial ratios and
tests.
10
<PAGE>
Securitization Program. Since December 1994, we have relied upon our
ability to aggregate and sell receivables in the asset-backed securities market
to generate cash proceeds for repayment of credit and warehouse facilities and
to purchase additional contracts from automobile dealers. Further, gains on
sales generated by our securitizations currently represent the single largest
component of our revenues. We try to effect securitizations of our receivables
on at least a quarterly basis. Accordingly, adverse changes in our asset-backed
securities program or in the asset-backed securities market for automobile
receivables generally could materially adversely affect our ability to purchase
and resell loans on a timely basis and upon terms reasonably favorable to us.
Any delay in the sale of receivables beyond a quarter-end would eliminate the
gain on sale in that quarter and adversely affect our reported earnings for that
quarter. Any of these adverse changes or delays would have a material adverse
effect on our financial position, liquidity and results of operations.
Credit Enhancement. To date, all of our securitizations have utilized
credit enhancement in the form of financial guaranty insurance policies issued
by Financial Security Assurance Inc. in order to achieve "AAA/Aaa" ratings,
which reduces the costs of securitizations relative to alternative forms of
credit enhancement available to us. Financial Security Assurance is not required
to insure our securitizations and we can give you no assurance that it will
continue to do so or that our future securitizations will be similarly rated.
Likewise, we are not required to utilize financial guaranty insurance policies
issued by Financial Security Assurance or any other form of credit enhancement
in connection with our securitizations. We have recently begun to utilize
reinsurance and other credit enhancement alternatives to reduce our initial cash
deposit related to securitizations. A downgrading of Financial Security
Assurance's credit rating or Financial Security Assurance's withdrawal of credit
enhancement or the lack of availability of reinsurance or other alternative
credit enhancements could result in higher interest costs for our future
securitizations and larger initial cash deposit requirements. These events could
have a material adverse effect on our financial position, liquidity and results
of operations.
Ability to Service Debt - To Service Our Debt, We Will Require a Significant
Amount of Cash. Our Ability to Generate Cash Depends on Many Factors.
Our ability to make payments on and to refinance our indebtedness,
including the Notes, and to fund planned capital expenditures will depend on our
ability to generate cash in the future. This, to a certain extent, is subject
to general economic, financial, competitive, legislative, regulatory and other
factors that are beyond our control. We believe our cash flow from operating,
investing and financing activities will be adequate to meet our future liquidity
needs, for at least the next few years.
We require substantial amounts of cash to fund our contract purchase and
securitization activities. Although we recognize a gain on the sale of
receivables upon the closing of a securitization, we typically receive the cash
representing that gain over the actual life of the receivables securitized. We
also incur significant transaction costs in connection with a securitization and
incur both current and deferred tax liabilities as a result of the gains on
sale. Accordingly, our strategy of securitizing substantially all of our newly
purchased receivables and increasing the number of contracts purchased will
require substantial amounts of cash.
We expect to continue to require substantial amounts of cash as the volume
of our contract purchases increases and our securitization program grows. Our
primary cash requirements include the funding of:
. contract purchases pending their securitization and sale;
. credit enhancement requirements in connection with the securitization
and sale of the receivables;
. interest and principal payments under the warehouse facilities, the
credit agreement, the Canadian facility, the mortgage subsidiary
credit agreement, our notes and other indebtedness;
. fees and expenses incurred in connection with the securitization of
receivables and the servicing of them;
. ongoing operating expenses; and
. tax payments due on receipt of excess cash flows from securitization
trusts.
Our primary sources of liquidity in the future are expected to be:
. existing cash;
11
<PAGE>
. financings under the warehouse facilities, the credit agreement, the
Canadian facility, and the mortgage subsidiary credit agreement;
. sales of automobile receivables through securitizations;
. excess cash flow received from securitization trusts; and
. further issuances of debt or equity securities, depending on capital
market conditions.
Because our principal credit facilities are initially 360 days in length,
we must renew these facilities annually. In addition, because we expect to
continue to require substantial amounts of cash for the foreseeable future, we
anticipate that we will need to enter into debt or equity financings regularly,
in addition to quarterly securitizations. The type, timing and terms of
financing selected by us will be dependent upon our cash needs, the availability
of other financing sources and the prevailing conditions in the financial
markets. We cannot assure you that any of these sources will be available to us
at any given time or that the terms on which these sources may be available will
be favorable to us.
Holding Company Structure - As a Holding Company, We Depend on Our Subsidiaries
to Meet Our Financial Obligations.
AmeriCredit Corp. is a holding company with no significant assets other
than the stock of our subsidiaries. In order to meet our financial needs, we
will rely exclusively on repayments of interest and principal on intercompany
loans made by us to our operating subsidiaries and income from dividends and
other cash flow from such subsidiaries. We cannot assure you that our operating
subsidiaries will generate sufficient net income to pay upstream dividends or
cash flow to make payments of interest and principal to us in respect of our
intercompany loans.
Holding Company Structure - Because of Our Holding Company Structure and the
Security Interests Our Subsidiaries Have Granted in Their Assets, the Repayment
of the Notes Will Be Effectively Subordinated to Substantially All of Our Debt.
We derive substantially all of our revenues from our subsidiaries and from
our interests in securitization trusts. Holders of any secured indebtedness of
ours or our subsidiaries or the securitization trusts will have claims that are
prior to the claims of the holders of any debt securities issued by us with
respect to the assets securing most of our other indebtedness. Notably, we and
most of our subsidiaries, including the Guarantors, are parties to the credit
agreement, the Canadian facility and the mortgage subsidiary credit agreement
which are secured by liens on all of the receivables financed under them and
certain of ours and our subsidiaries' other assets. Any debt securities issued
by us, including the Notes, will be effectively subordinated to that secured
indebtedness. As of March 31, 1999, the aggregate amount of secured indebtedness
of ours and our subsidiaries was approximately $268.3 million and approximately
$76.3 million would have been available for additional borrowing under the
credit agreement, under the borrowing base requirements of that agreement. If we
defaulted under our obligations under the warehouse facilities, the credit
agreement, the Canadian facility or the mortgage subsidiary credit agreement,
the lenders could proceed against the collateral granted to them to secure that
indebtedness. If any senior indebtedness were to be accelerated, we cannot
assure you that our assets would be sufficient to repay in full that
indebtedness and the other indebtedness of ours, including any debt securities
issued by us.
Holding Company Structure - Your Right to Receive Payments on the Notes Could Be
Adversely Affected If Any of Our Non-Guarantor Subsidiaries Declares Bankruptcy,
Liquidates or Reorganizes.
Some but not all of our subsidiaries guarantee the Notes. In a bankruptcy,
liquidation or reorganization of any of the non-guarantor subsidiaries, holders
of their indebtedness and their trade creditors will generally be entitled to
payment of their claims from the assets of those subsidiaries before any assets
are made available for distribution to us.
In addition, a substantial portion of our business is conducted through
certain wholly-owned subsidiaries which are limited purpose entities and are
subject to substantial contractual restrictions (the "Non-Guarantor Special
Purpose Finance Vehicles"). The Non-Guarantor Special Purpose Finance Vehicles
will not be Guarantors with respect to any debt securities issued by us,
including the Notes. All financings by us under our warehouse facilities are
secured by a first priority lien on the receivables and related assets held by
our Non-Guarantor Special Purpose Finance Vehicles. The auto receivables owned
by the Non-Guarantor Special Purpose Finance Vehicles will not be available to
satisfy claims by our creditors, including any claims made under the Notes.
Because the Non-Guarantor
12
<PAGE>
Special Purpose Finance Vehicles are not Guarantors, any debt securities issued
by us will be structurally subordinated to all indebtedness and other
obligations of the Non-Guarantor Special Purpose Finance Vehicles.
AFS Funding Corp. is also subject to certain contingent claims by Financial
Security Assurance relating to the financial guarantee insurance policies issued
by Financial Security Assurance in connection with our securitizations. We have
agreed to reimburse Financial Security Assurance, on a limited recourse basis,
for amounts paid by Financial Security Assurance under these financial guarantee
insurance policies. In order to secure those reimbursement obligations, we have
granted to Financial Security Assurance a lien on the capital stock and some
assets of, AFS Funding Corp. Financial Security Assurance will have claims that
are prior to the claims of the holders of debt securities issued by us,
including the Notes, with respect to these assets and the debt securities issued
by us, including the Notes, will be effectively subordinated to all of these
reimbursement rights. Substantially all of AFS Funding Corp.'s other assets are
credit enhancement assets consisting of subordinated interests in our
securitizations that are effectively subordinated to the asset-backed securities
issued in such securitizations. As of March 31, 1999, credit enhancement assets
were approximately $413.7 million. We can give you no assurance that our
operations, independent of AFS Funding Corp., will generate sufficient cash flow
to support payment of interest or principal on any debt securities issued by us,
including the Notes, or that dividend distributions will be available from AFS
Funding Corp. to fund these payments.
Substantial Leverage - Our Substantial Indebtedness Could Adversely Affect the
Financial Health of the Company and Prevent Us from Fulfilling Our Obligations
Under the New Notes.
We currently have now, and after the offering, will continue to have a
significant amount of indebtedness. Our ability to make payments of principal
or interest on, or to refinance our indebtedness will depend on:
. our future operating performance; and
. our ability to enter into additional securitizations and debt and/or
equity financings, which to a certain extent is subject to economic,
financial, competitive and other factors beyond our control.
If we are unable to generate sufficient cash flow in the future to service
our debt, we may be required to refinance all or a portion of our existing debt
or to obtain additional financing. There can be no assurance that any such
refinancing would be possible or that any additional financing could be
obtained. The inability to obtain additional financing could have a material
adverse effect on us.
Our substantial indebtedness could have important consequences to the
holders of securities, including:
. we may be unable to satisfy our obligations under the Notes;
. we may be more vulnerable to adverse general economic and industry
conditions;
. we may find it more difficult to fund future working capital, capital
expenditures, acquisitions, general corporate purposes or other
purposes; and
. we will have to dedicate a substantial portion of our cash resources
to the payments on our indebtedness, thereby reducing the funds
available for operations and future business opportunities.
Substantial Leverage - Our Credit and Warehouse Facilities and Indentures
Restrict Our Operations.
Our indentures and our credit and warehouse facilities restrict our ability
and our subsidiaries' ability to, among other things:
. sell or transfer assets;
. incur additional debt;
. repay other debt;
. pay dividends;
. make certain investments or acquisitions;
. repurchase or redeem capital stock;
13
<PAGE>
. engage in mergers or consolidations; and
. engage in certain transactions with subsidiaries and affiliates.
The indentures and the credit and warehouse facilities also require us to
comply with certain financial ratios. These restrictions may interfere with our
ability to obtain financing or to engage in other necessary or desirable
business activities.
If we cannot comply with the requirements in our credit and warehouse
facilities, then the lenders may require us to repay immediately all of the
outstanding debt under our facilities. If our debt payments were accelerated,
our assets might not be sufficient to fully repay our debt. These lenders may
also require us to use all of our available cash to repay our debt or may
prevent us from making payments to other creditors on certain portions of our
outstanding debt.
We may not be able to obtain a waiver of these provisions or refinance our
debt, if needed. In such a case, our business, results of operations and
financial condition would suffer.
Additional Borrowings Available -- Despite Current Indebtedness Levels, We and
Our Subsidiaries May Still Be Able to Incur Substantially More Debt. This Could
Further Exacerbate the Risks Described Above.
We and our subsidiaries may be able to incur substantial additional
indebtedness in the future. The terms of the indenture do not fully prohibit us
or our subsidiaries from doing so. If new debt is added to our and our
subsidiaries' current debt levels, the related risks that we and they now face
could intensify.
See "Capitalization," "Selected Consolidated Financial Data" and
"Description of the New Notes --Repurchase at the Option of Holders--Change of
Control" and "Description of Other Debt."
Default and Prepayment Risks - Defaults and Prepayments on Contracts Purchased
By Us Could Adversely Affect Our Operations.
Our results of operations, financial condition and liquidity depend, to a
material extent, on the performance of contracts purchased and held by us prior
to their sale in a securitization transaction, as well as the subsequent
performance of receivables sold to securitization trusts. A portion of the loans
acquired by us may default or prepay during the period prior to their sale in a
securitization transaction or if they remain owned by us. We bear the full risk
of losses resulting from payment defaults during that period. In the event of a
payment default, the collateral value of the financed vehicle usually does not
cover the outstanding loan balance and costs of recovery. We maintain an
allowance for losses on loans held by us, which reflects management's estimates
of anticipated losses for these loans. If the allowance is inadequate, then we
would recognize as an expense the losses in excess of that allowance and results
of operations could be adversely affected. In addition, under the terms of our
credit agreements, we are not able to borrow against defaulted loans and loans
greater than 30 days delinquent held by us.
We also retain a substantial portion of the default and prepayment risk
associated with the receivables that we sell in our securitizations. A large
component of the gain recognized on these sales and the corresponding asset
recorded on our balance sheet are credit enhancement assets, which are based on
the present value of estimated future excess cash flows from the securitized
receivables which will be received by us. Accordingly, credit enhancement assets
are calculated on the basis of management's assumptions concerning, among other
things, defaults and prepayments. Actual defaults and prepayments may vary from
management's assumptions, possibly to a material degree. In addition, we are
required to deposit substantial amounts of the cash flows generated by our
interests in our securitizations ("restricted cash") into spread accounts
which are pledged to Financial Security Assurance as security for our obligation
to reimburse Financial Security Assurance for any amounts which may be paid out
on financial guarantee insurance policies.
We regularly measure our default, prepayment and other assumptions against
the actual performance of securitized receivables. If we were to determine, as
a result of that regular review or otherwise, that we underestimated defaults
and/or prepayments, or that any other material assumptions were inaccurate, we
would be required to adjust the carrying value of our credit enhancement assets
(which consist of restricted cash, investments in Trust receivables and
interest-only receivables) by making a charge to income and writing down the
carrying value of these assets on our balance sheet. Future cash flows from
securitization trusts may also be less than expected and our
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results of operations and liquidity would be adversely affected, possibly to a
material degree. In addition, an increase in prepayments and defaults would
reduce the size of our servicing portfolio which would reduce our servicing fee
income, further adversely affecting results of operations and cash flow. A
material write-down in credit enhancement assets and the corresponding decreases
in earnings and cash flow could limit our ability to service debt and to enter
into future securitizations and other financings. Although we believe that we
have made reasonable assumptions as to the future cash flows of the various
pools of receivables that have been sold in securitization transactions, actual
rates of default or prepayment may differ from those assumed and other
assumptions may be required to be revised upon future events.
As of March 31, 1999, credit enhancement assets totaled $413.7 million.
Depending on our growth, credit enhancement assets may become a larger share of
our overall assets.
Portfolio Performance - The Negative Performance of Auto Contracts In Our
Portfolio Could Adversely Affect Our Cash Flow and Servicing Rights.
Generally, the form of credit enhancement agreement we enter into in
connection with securitization transactions contains specified limits on the
delinquency, default and loss rates on the receivables included in each trust.
If, at any measuring date, the delinquency, default or loss rate with respect to
any trust were to exceed the specified limits, provisions of the credit
enhancement agreement would automatically increase the level of credit
enhancement requirements for that trust. During the period in which the
specified delinquency, default and loss rates were exceeded, excess cash flow,
if any, from the trust would be used to fund the increased credit enhancement
levels instead of being distributed to us, which would have an adverse effect on
our cash flow. Further, the credit enhancement requirements for each
securitization trust are cross-collateralized to the credit enhancement
requirements established in connection with each of our other securitization
trusts, so that excess cash flow from a performing securitization trust insured
by Financial Security Assurance may be used to support increased credit
enhancement requirements for a nonperforming securitization trust insured by
Financial Security Assurance, which would further restrict excess cash flow
available to us. We have on occasion exceeded these specified limits, however,
Financial Security Assurance has either waived each of these occurrences or
amended the agreements. We can give you no assurance that Financial Security
Assurance would waive any such future occurrence or amend the agreements. Any
refusal of Financial Security Assurance to waive any such future occurrence or
amend the agreements could have a material adverse effect on our financial
position, liquidity and results of operations.
The credit enhancement agreements we enter into in connection with
securitization transactions contain additional specified limits on the
delinquency, default and loss rates on the receivables included in each trust
which are higher than the limits referred to in the preceding paragraph. If, at
any measuring date, the delinquency, default or loss rate with respect to any
trust were to exceed these additional specified limits applicable to such trust,
provisions of the credit enhancement agreements permit Financial Security
Assurance to terminate our servicing rights to the receivables sold to that
trust. In addition, the servicing agreements are cross-defaulted so that a
default under one servicing agreement would allow Financial Security Assurance
to terminate our servicing rights under all of our servicing agreements.
Although we have never exceeded such delinquency, default or loss rates, we can
give you no assurance that our servicing rights with respect to the automobile
receivables in such trusts, or any other trust which exceeds the specified
limits in future periods, will not be terminated. Financial Security Assurance
has other rights to terminate us as servicer if:
. we breach our obligations under the servicing agreements;
. Financial Security Assurance was required to make payments under its
policy; or
. some bankruptcy or insolvency events were to occur.
As of the date of this prospectus, none of these termination events have
occurred with respect to any of the trusts formed by us.
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Implementation of Business Strategy - Failure to Implement Our Business Strategy
Could Adversely Affect Our Operations.
Our financial position and results of operations depend on our ability to
execute our business strategy. Our ability to execute our business strategy
depends on our ability:
. to obtain substantial additional financing;
. to expand our automobile contract purchase volume; and
. to attract and retain skilled employees and on the ability of our
officers and key employees to manage growth successfully.
Our failure or inability to execute our business strategy could materially
adversely affect our financial position, liquidity and results of operations.
Credit-Impaired Borrowers - There is a High Degree of Risk Associated With Non-
Prime Borrowers.
We specialize in purchasing, securitizing and servicing non-prime
receivables. Non-Prime Borrowers are associated with higher-than-average
delinquency and default rates. While we believe that we effectively manage these
risks with our proprietary credit scoring models, risk-based loan pricing and
other underwriting policies and collection methods, we can give you no assurance
that these criteria or methods will be effective in the future. In the event
that we underestimate the default risk or under-price contracts that we
purchase, our financial position, liquidity and results of operations would be
adversely affected, possibly to a material degree.
Economic Conditions - We Are Subject to General Economic Conditions Which are
Beyond Our Control.
General. Delinquencies, defaults, repossessions and losses generally
increase during periods of economic recession. These periods also may be
accompanied by decreased consumer demand for automobiles and declining values of
automobiles securing outstanding loans, which weakens collateral coverage and
increases the amount of a loss in the event of default. Significant increases in
the inventory of used automobiles during periods of economic recession may also
depress the prices at which repossessed automobiles may be sold or delay the
timing of these sales. Because we focus on Non-Prime Borrowers, the actual rates
of delinquencies, defaults, repossessions and losses on these loans could be
higher than those experienced in the general automobile finance industry and
could be more dramatically affected by a general economic downturn. In addition,
during an economic slow down or recession, our servicing costs may increase
without a corresponding increase in our servicing fee income. While we believe
that the underwriting criteria and collection methods we employ enable us to
manage the higher risks inherent in loans made to Non-Prime Borrowers, we can
give you no assurance that these criteria or methods will afford adequate
protection against these risks. Any sustained period of increased delinquencies,
defaults, repossessions or losses or increased servicing costs could also
adversely affect our ability to enter into future securitizations and
correspondingly, our financial position, liquidity and results of operations.
Interest Rates. Our profitability may be directly affected by the level of
and fluctuations in interest rates, which affect our ability to earn a gross
interest rate spread. As the level of interest rates increases, our gross
interest rate spread will generally decline since the rates charged on the
contracts we purchase from dealers are limited by statutory maximums, affording
us little opportunity to pass on any increased interest costs. Furthermore, our
future gains recognized upon the securitization of automobile receivables will
also be affected by interest rates. We recognize a gain in connection with our
securitizations based upon the estimated present value of projected future
excess cash flows from the securitization trusts, which is largely dependent
upon the gross interest rate spread. We believe that our profitability and
liquidity would be adversely affected during any period of higher interest
rates, possibly to a material degree. We monitor the interest rate environment
and employ pre-funding or other hedging strategies designed to mitigate the
impact of changes in interest rates. We can give you no assurance, however, that
pre-funding or other hedging strategies will mitigate the impact of changes in
interest rates.
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Competition - We May be Unable to Repay the New Notes if We Do Not Successfully
Compete in Our Industry.
Competition in the field of non-prime automobile finance is intense. The
automobile finance market is highly fragmented and is served by a variety of
financial entities including:
. the captive finance affiliates of major automotive manufacturers;
. banks;
. thrifts;
. credit unions; and
. independent finance companies.
Many of these competitors have substantially greater financial resources
and lower costs of funds than us. Many of these competitors also have long
standing relationships with automobile dealerships and may offer dealerships or
their customers other forms of financing, including dealer floor plan financing
and leasing, which are not provided by us. Providers of automobile financing
have traditionally competed on the bases of interest rate charged, the quality
of credit accepted, the flexibility of loan terms offered and the quality of
service provided to dealers and customers. In seeking to establish ourself as
one of the principal financing sources of the dealers we serve, we compete
predominately on the basis of our high level of dealer service and strong dealer
relationships and by offering flexible loan terms. There can be no assurance
that we will be able to compete successfully in this market or against these
competitors.
Fraudulent Conveyance Matters - Federal and State Statutes Allow Courts, Under
Specific Circumstances, to Void the New Notes and the Guarantees and Require
Noteholders to Return Payments Received from the Company or the Guarantors.
Under the federal bankruptcy law and comparable provisions of state
fraudulent transfer laws, the New Notes and the guarantees could be voided, or
claims in respect of the New Notes or the guarantees could be subordinated to
all other debts of the Company or any guarantor if, among other things, the
Company or such guarantor, at the time it incurred the indebtedness evidenced by
the New Notes or its guarantee:
. received less than reasonably equivalent value or fair consideration
for the incurrence of such indebtedness; or
. was insolvent or rendered insolvent by reason of such incurrence; or
. was engaged in a business or transaction for which the Company's or
such guarantor's remaining assets constituted unreasonably small
capital; or
. intended to incur, or believed that it would incur, debts beyond its
ability to pay such debts as they mature.
In addition, any payment by the Company or a guarantor pursuant to the New
Notes or a guarantee could be voided and required to be returned to the Company
or that guarantor, or to a fund for the benefit of the creditors of the Company
or that guarantor.
The measures of insolvency for purposes of these fraudulent transfer laws
will vary depending upon the law applied in any proceeding to determine whether
a fraudulent transfer has occurred. Generally, however, the Company or a
guarantor would be considered insolvent if:
. the sum of its debts, including contingent liabilities, were greater
than the fair saleable value of all of its assets,
. if the present fair saleable value of its assets were less than the
amount that would be required to pay its probable liability on its
existing debts, including contingent liabilities, as they become
absolute and mature, or
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. it could not pay its debts as they become due.
Based upon information currently available to us, we believe that the New
Notes and the guarantees are being incurred for proper purposes and in good
faith and that we, and each of the Guarantors:
. are solvent and will continue to be solvent after giving effect to the
issuance of the New Notes and the guarantees, as the case may be;
. will have enough capital for carrying on our business and the business
of each of the Guarantors after the issuance of the New Notes and the
guarantees, as the case may be; and
. will be able to pay our debts.
Regulation - Our Business Would Be Adversely Affected if We Lost Our Licenses or
if Future, More Onerous Government Regulations Were Enacted.
Our business is subject to numerous federal and state consumer protection
laws and regulations which, among other things:
. require us to obtain and maintain licenses and qualifications;
. limit the interest rates, fees and other charges we are allowed to
charge;
. limit or prescribe other terms of our automobile installment sales
contracts;
. require specific disclosures; and
. define our rights to repossess and sell collateral.
We believe we are in substantial compliance with all of these laws and
regulations, and that these laws and regulations have had no material adverse
effect on our ability to operate our business. Changes in existing laws or
regulations, or in the interpretation, or the promulgation of any additional
laws or regulations, could have a material adverse effect on our business. In
addition, we retain some of the regulatory risk on receivables sold in
securitizations as a result of representations and warranties made by us in
these transactions.
As a result of the consumer-oriented nature of the industry in which we
operate and uncertainties with respect to the application of various laws and
regulations in some circumstances, industry participants are named from time to
time as defendants in litigation involving alleged violations of federal and
state consumer lending or other similar laws and regulations. A significant
judgment against us in connection with any litigation could have a material
adverse affect on our financial condition and results of operations. In
addition, if it were determined that a material number of contracts purchased by
us involved violations of applicable lending laws by automobile dealers, our
financial condition and results of operations could be materially adversely
affected.
Financing Change of Control Offer-We May Not Have the Ability to Raise the Funds
Necessary to Finance the Change of Control Offer Required by the Indenture.
Upon the occurrence of certain specific kinds of change of control events,
we will be required to offer to repurchase all outstanding New Notes. However,
it is possible that we will not have sufficient funds at the time of the change
of control to make the required repurchase of New Notes or that restrictions in
our Credit Facilities will not allow such repurchases. In addition, certain
important corporate events, such as leveraged recapitalizations that would
increase the level of our indebtedness, would not constitute a "Change of
Control" under the indenture. See "Description of the New Notes-Repurchase at
the Option of Holders- Change of Control."
Year 2000 - Our Operations May Suffer from Year 2000 Computer Problems.
Year 2000 issues exists when computers record dates using two digits rather
than four, and then use the dates for arithmetic operations, comparisons or
sorting. A two-digit recording may recognize a date using "00" as 1900 rather
than 2000, which could cause computer systems to perform inaccurate computations
or fail to operate. Although we do not anticipate being subject to a material
impact in this area, if we and the companies with which we
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do business do not take adequate preventative action, then the Year 2000 problem
could damage our business, financial condition and results of operations.
No Prior Market for the New Notes-You Cannot Be Sure that an Active Trading
Market Will Develop for the New Notes.
The New Notes are a new issue of securities with no establishing trading
market and will not be listed on any securities exchange. The liquidity of the
trading market in the New Notes, and the market price quoted for the New Notes,
may be adversely affected by changes in the overall market for high yield
securities and by changes in our financial performance or prospects or in the
prospects for companies in our industry generally. As a result, you cannot be
sure that an active trading market will develop for the New Notes.
USE OF PROCEEDS
We will not receive any proceeds from the exchange offer.
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THE EXCHANGE OFFER
Purpose and Effect
We sold the Old Notes on April 20, 1999 to Salomon Smith Barney Inc., Bear,
Stearns & Co., Inc. and ING Baring Furman Selz LLC, as the initial purchasers,
pursuant to a purchase agreement. The initial purchasers subsequently resold the
Old Notes under Rule 144A under the Securities Act. As part of the offering of
the initial notes, we entered into a registration rights agreement
("Registration Rights Agreement"). The Registration Rights Agreement requires,
unless the exchange offer is not permitted by applicable law or Commission
policy, that we
. file a registration statement with the Commission under the Securities
Act with respect to the New Notes within 60 days of the execution of
the registration rights agreement;
. use our best efforts to cause the registration statement to become
effective within 150 days of the execution of the registration rights
agreement; and
. upon effectiveness of the registration statement, commence the
exchange offer and keep the exchange offer open for at least 20
business days and not more than 30 business days.
Except as provided below, upon the completion of the exchange offer, the
Company's obligations with respect to the registration of the Old Notes and the
New Notes will terminate. A copy of the Registration Rights Agreement has been
filed as an exhibit to the Registration Statement, of which this prospectus is a
part, and this summary of the material provisions of the Registration Rights
Agreement does not purport to be complete and is qualified in its entirety by
reference to the complete Registration Rights Agreement. As a result of the
timely filing and the effectiveness of the Registration Statement, the Company
will not have to pay certain additional interest on the Old Notes provided in
the Registration Rights Agreement. Following the completion of the exchange
offer (except as set forth in the paragraph immediately below), holders of Old
Notes not tendered will not have any further registration rights and those Old
Notes will continue to be subject to certain restrictions on transfer.
Accordingly, the liquidity of the market for the Old Notes could be adversely
affected upon consummation of the exchange offer.
In order to participate in the exchange offer, a holder must represent to
the Company, among other things, that (i) the New Notes acquired pursuant to the
exchange offer are being obtained in the ordinary course of business of the
holder, (ii) the holder is not engaging in and does not intend to engage in a
distribution of the New Notes, (iii) the holder does not have an arrangement or
understanding with any person to participate in the distribution of the New
Notes and (iv) the holder is not an "affiliate," as defined under Rule 405
promulgated under the Securities Act, of the Company or the Guarantors. Under
certain circumstances specified in the Registration Rights Agreement, the
Company may be required to file a "shelf" registration statement for a
continuous offering pursuant to Rule 415 under the Securities Act in respect of
the Old Notes. See "Registration Rights." For purposes of the foregoing,
"Transfer Restricted Securities" means each Old Note until (i) the date on which
such Note has been exchanged by a person other than a broker-dealer for an New
Note in the exchange offer, (ii) following the exchange by a broker-dealer in
the exchange offer of an Old Note for a New Note, the date on which such New
Note is sold to a purchaser who receives from such broker-dealer on or prior to
the date of such sale a copy of this prospectus, (iii) the date on which such
Old Note has been effectively registered under the Securities Act and disposed
of in accordance with such "shelf" registration statement or (iv) the date on
which such Old Note is distributed to the public pursuant to Rule 144 under the
Act or may be distributed to the public pursuant to Rule 144(k) under the Act.
See "-Procedures for Tendering Old Notes."
Based on an interpretation by the Commission's staff set forth in no-action
letters issued to third parties unrelated to the Company, the Company believes
that, with the exceptions set forth below, New Notes issued pursuant to the
exchange offer in exchange for Old Notes may be offered for resale, resold and
otherwise transferred by holders thereof (other than any holder which is an
"affiliate" of the Company within the meaning of Rule 405 promulgated under the
Securities Act, or a broker-dealer who purchased Old Notes directly from the
Company to resell pursuant to Rule 144A or any other available exemption
promulgated under the Securities Act) without compliance with the registration
and prospectus delivery provisions of the Securities Act, provided that the New
Notes are acquired in the ordinary course of business of the holder and the
holder does not have an arrangement or understanding with any person to
participate in the distribution of such New Notes. Any holder who tenders in the
exchange offer for the purpose of participating in a distribution of the New
Notes cannot rely on this interpretation by the Commission's staff
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and must comply with the registration and prospectus delivery requirements of
the Securities Act in connection with a secondary resale transaction. Each
broker-dealer that receives New Notes for its own account in exchange for Old
Notes, where such Old Notes were acquired by such broker-dealer as a result of
market-making activities or other trading activities, must acknowledge that it
will deliver a prospectus in connection with any resale of such New Notes. See
"Plan of Distribution." Broker-dealers who acquired Old Notes directly from us
and not as a result of market-making activities or other trading activities may
not rely on the staff's interpretations discussed above or participate in the
exchange offer and must comply with the prospectus delivery requirements of the
Securities Act in order to sell the Old Notes.
Consequences of Failure to Exchange Old Notes
Following the completion of the exchange offer, holders of Old Notes who
did not tender their Old Notes, or who did not properly tender their Old Notes,
will not have any further registration rights and such Old Notes will continue
to be subject to restrictions on transfer. Accordingly, the liquidity of the
market for a holder's Old Notes could be adversely affected upon expiration of
the exchange offer if such holder elects to not participate in the exchange
offer.
Terms of the Exchange Offer
Upon the terms and subject to the conditions set forth in this prospectus
and in the accompanying letter of transmittal, we will accept for exchange any
and all Old Notes that are validly tendered on or prior to 5:00 p.m. New York
City time, on the Expiration Date. We will issue $1,000 principal amount of New
Notes in exchange for each $1,000 principal amount of the outstanding Old Notes
accepted in the exchange offer. Holders who have tendered their Old Notes may
withdraw their tender of Old Notes at any time prior to 5:00 p.m., New York City
time, on the Expiration Date. The exchange offer is not conditioned upon any
minimum principal amount of Old Notes being tendered for exchange. However, the
exchange offer is subject to the terms and provisions of the Registration Rights
Agreement. See "--Conditions of the Exchange Offer."
Old Notes may be tendered only in multiples of $1,000. Subject to the
foregoing, holders of Old Notes may tender less than the aggregate principal
amount represented by the Old Notes they hold, provided that they appropriately
indicate this fact on the letter of transmittal accompanying the tendered Old
Notes.
The form and terms of the New Notes are substantially the same as the form
and terms of the Old Notes, except that the New Notes have been registered under
the Securities Act and will not bear legends restricting their transfer. The
New Notes will evidence the same debt as the Old Notes and will be issued
pursuant to, and entitled to the benefits of, the Indenture pursuant to which
the Old Notes were issued.
As of the date of this prospectus, $200 million in aggregate principal
amount of the Old Notes is outstanding. As of April 20, 1999, Cede & Co., was
the only registered holder of the Old Notes. Cede & Co. held the Old Notes for
______ of its participants. We have fixed the close of business on _______ __,
1999 as the record date for purposes of determining the persons to whom we will
mail this prospectus and the letter of transmittal initially. Only a holder of
the Old Notes, or such holder's legal representative or attorney-in-fact, may
participate in the exchange offer. We will not fix a record date for determining
holders of the Old Notes entitled to participate in the exchange offer. We
believe that, as of the date of this prospectus, no such holder is our
affiliate, as defined in Rule 405 under the Securities Act.
We will be deemed to have accepted validly tendered Old Notes when, as and
if we have given oral or written notice thereof to the exchange agent. The
exchange agent will act as agent for the tendering holders of Old Notes and for
the purpose of receiving the New Notes from us.
If any tendered Old Notes are not accepted for exchange because of an
invalid tender, the occurrence of other events set forth in this prospectus or
otherwise, the certificates for any such unaccepted Old Notes will be returned,
without expense, to the tendering holder as promptly as practicable after the
expiration date.
Holders who tender Old Notes in the exchange offer will not be required to
pay brokerage commissions or fees or, subject to the instructions in the letter
of transmittal, transfer taxes with respect to the exchange of Old Notes
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pursuant to the exchange offer. The Company will pay all charges and expenses,
other than certain applicable taxes, in connection with the exchange offer. See
"-Fees and Expenses."
Expiration Date; Extensions; Amendments
The expiration date shall be _____ __, 1999, at 5:00 p.m., New York City
time, unless we, in our sole discretion, extend the exchange offer, in which
case the expiration date shall be the latest date and time to which the exchange
offer is extended, but shall not be later than _____ __, 1999.
In order to extend the exchange offer, we will notify the exchange agent of
any extension by oral or written notice and will make a public announcement
thereof, each prior to 9:00 a.m., New York City time, on the next business day
after the previously scheduled expiration date.
We reserve the right, in our sole discretion,
. to delay accepting any Old Notes,
. to extend the exchange offer,
. if any of the conditions set forth below under "--Conditions of the
Exchange Offer" shall not have been satisfied, to terminate the
exchange offer, by giving oral or written notice of such delay,
extension, or termination to the exchange agent, and
. to amend the terms of the exchange offer in any manner.
If we amend the exchange offer in a manner we determine to constitute a material
change, we will promptly disclose such amendments by means of a prospectus
supplement that we will distribute to the registered holders of the Old Notes.
Modification of the exchange offer, including, but not limited to,
. extension of the period during which the exchange offer is open, and
. satisfaction of the conditions set forth below under "--Conditions of
the Exchange Offer"
may require that at least five business days remain in the exchange offer.
Conditions of the Exchange Offer
Notwithstanding any other provision of the exchange offer, the Company
shall not be required to accept for exchange, or to issue New Notes in exchange
for, any Old Notes and may terminate or amend the exchange offer if at any time
before the acceptance of such Old Notes for exchange or the exchange of the New
Notes for the Old Notes, the Company determines that the exchange offer violates
applicable law, any applicable interpretation of the staff of the Commission or
any order of any governmental agency or court of competent jurisdiction.
The foregoing conditions are for the sole benefit of the Company and may be
asserted by the Company regardless of the circumstances giving rise to any such
condition or may be waived by the Company in whole or in part at any time and
from time to time in its sole discretion. The failure by the Company at any
time to exercise any of the foregoing rights shall not be deemed a waiver of any
such right and each such right shall be deemed an ongoing right which may be
asserted at any time from time to time.
In addition, the Company will not accept for exchange any Old Notes
tendered, and no New Notes will be issued in exchange for any such Old Notes, if
at such time any stop order shall be threatened or in effect with respect to the
Registration Statement of which this prospectus constitutes a part or the
qualification of the Indenture under the Trust Indenture Act of 1939, as
amended. In any such event the Company is required to use every reasonable
effort to obtain the withdrawal of any stop order at the earliest possible time.
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Accrued Interest
The New Notes will bear interest at a rate equal to 9.875% per annum, which
interest shall accrue from April 20, 1999 or from the most recent interest
payment date with respect to the Old Notes to which interest was paid or duly
provided for. See "Description of the New Notes--Principal, Maturity and
Interest."
Procedures for Tendering Old Notes
Only a holder of Old Notes may tender the Old Notes in the exchange offer.
Except as set forth under "-Book Entry Transfer," to tender in the exchange
offer a holder must complete, sign, and date the letter of transmittal, or a
copy thereof, have the signatures thereon guaranteed if required by the letter
of transmittal, and mail or otherwise deliver the letter of transmittal or copy
to the Exchange Agent prior to the expiration date. In addition, (i)
certificates for the Old Notes must be received by the Exchange Agent along with
the letter of transmittal prior to the expiration date, (ii) a timely
confirmation of a book-entry transfer (a "Book-Entry Confirmation") of such Old
Notes, if that procedure is available, into the Exchange Agent's account at DTC
(the "Book-Entry Transfer Facility") pursuant to the procedure for book-entry
transfer described below, must be received by the Exchange Agent prior to the
expiration date or (iii) the holder must comply with the guaranteed delivery
procedures described below. To be tendered effectively, the letter of
transmittal and other required documents must be received by the Exchange Agent
at the address set forth under "The Exchange Agent; Assistance" prior to the
expiration date.
The tender by a holder that is not withdrawn before the expiration date
will constitute an agreement between that holder and the Company in accordance
with the terms and subject to the conditions set forth herein and in the letter
of transmittal.
THE METHOD OF DELIVERY OF OLD NOTES AND THE LETTER OF TRANSMITTAL AND ALL
OTHER REQUIRED DOCUMENTS TO THE EXCHANGE AGENT IS AT THE ELECTION AND RISK OF
THE HOLDER. INSTEAD OF DELIVERY BY MAIL, IT IS RECOMMENDED THAT HOLDERS USE AN
OVERNIGHT OR HAND DELIVERY SERVICE. IN ALL CASES, SUFFICIENT TIME SHOULD BE
ALLOWED TO ASSURE DELIVERY TO THE EXCHANGE AGENT BEFORE THE EXPIRATION DATE. NO
LETTER OF TRANSMITTAL OR OLD NOTES SHOULD BE SENT TO THE COMPANY. HOLDERS MAY
REQUEST THEIR RESPECTIVE BROKERS, DEALERS, COMMERCIAL BANKS, TRUSTS COMPANIES OR
NOMINEES TO EFFECT THESE TRANSACTIONS FOR SUCH HOLDERS.
Any beneficial owner whose Old Notes are registered in the name of a
broker-dealer, commercial bank, trust company, or other nominee and who wishes
to tender should contact the registered holder promptly and instruct the
registered holder to tender on the beneficial owner's behalf. If the beneficial
owner wishes to tender on the owner's own behalf, the owner must, prior to
completing and executing the letter of transmittal and delivering the owner's
Old Notes, either make appropriate arrangements to register ownership of the Old
Notes in the beneficial owner's name or obtain a properly completed bond power
from the registered holder. The transfer of registered ownership may take
considerable time.
Signatures on a letter of transmittal or a notice of withdrawal, as the
case may be, must be guaranteed by an Eligible Institution (as defined) unless
Old Notes tendered pursuant thereto are tendered (i) by a registered holder who
has not completed the box entitled "Special Registration Instructions" or
"Special Delivery Instructions" on the letter of transmittal or (ii) for the
account of an Eligible Institution. If signatures on a letter of transmittal or
a notice of withdrawal, as the case may be, are required to be guaranteed, the
guarantee must be by any eligible guarantor institution that is a member of or
participant in the Securities Transfer Agents Medallion Program, the New York
Stock Exchange Medallion Signature Program or an "eligible guarantor
institution" with the meaning on Rule 17Ad-15 under the Exchange Act (an
"Eligible Institution").
If the letter of transmittal is signed by a person other than the
registered holder of any Old Notes listed therein, the Old Notes must be
endorsed or accompanied by a properly completed bond power, signed by the
registered holder as that registered holder's name appears on the Old Notes.
If the letter of transmittal or any Old Notes or bond powers are signed by
trustees, executors, administrators, guardians, attorneys-in-fact, officers of
corporations, or others acting in a fiduciary or representative capacity, such
23
<PAGE>
persons should so indicate when signing, and evidence satisfactory to the
Company of their authority to so act must be submitted with the letter of
transmittal unless waived by the Company.
All questions as to the validity, form, eligibility (including time of
receipt), acceptance, and withdrawal of tendered Old Notes will be determined by
the Company in its sole discretion, which determination will be final and
binding. The Company reserves the absolute right to reject any and all Old Notes
not properly tendered or any Old Notes the Company's acceptance of which would,
in the opinion of counsel for the Company, be unlawful. The Company also
reserves the right to waive any defects, irregularities or conditions of tender
as to particular Old Notes. The Company's interpretation of the terms and
conditions of the exchange offer (including the instructions in the letter of
transmittal) will be final and binding on all parties. Unless waived, any
defects or irregularities in connection with tenders of Old Notes must be cured
within such time as the Company shall determine. Although the Company intends to
notify holders of defects or irregularities with respect to tenders of Old
Notes, neither the Company, the Exchange Agent, nor any other person shall incur
any liability for failure to give such notification. Tenders of Old Notes will
not be deemed to have been made until such defects or irregularities have been
cured or waived. Any Old Notes received by the Exchange Agent that are not
properly tendered and as to which the defects or irregularities have not been
cured or waived will be returned by the Exchange Agent to the tendering holders,
unless otherwise provided in the letter of transmittal, as soon as practicable
following ______, 1999, unless the exchange offer is extended.
In addition, the Company reserves the right in its sole discretion to
purchase or make offers for any Old Notes that remain outstanding after the
expiration date or, as set forth under "-Conditions to the Exchange Offer," to
terminate the exchange offer and, to the extent permitted by applicable law,
purchase Old Notes in the open market, in privately negotiated transactions, or
otherwise. The terms of any such purchases or offers could differ from the
terms of the exchange offer.
By tendering, each holder will represent to the Company that, among other
things, (i) the New Notes acquired pursuant to the exchange offer are being
obtained in the ordinary course of business of the person receiving such New
Notes, whether or not such person is the registered holder, (ii) the holder is
not engaging in and does not intend to engage in a distribution of such New
Notes, (iii) the holder does not have an arrangement or understanding with any
person to participate in the distribution of such New Notes and (iv) the holder
is not an "affiliate," as defined under Rule 405 of the Securities Act, of the
Company.
In all cases, issuance of New Notes for Old Notes that are accepted for
exchange pursuant to the exchange offer will be made only after timely receipt
by the Exchange Agent of certificates for such Old Notes or a timely Book-Entry
Confirmation of such Old Notes into the Exchange Agent's account at the Book-
Entry Transfer Facility, a properly completed and duly executed letter of
transmittal (or, with respect to the DTC and its participants, electronic
instructions in which the tendering holder acknowledges its receipt of an
agreement to be bound by the letter of transmittal), and all other required
documents. If any tendered Old Notes are not accepted for any reason set forth
in the terms and conditions of the exchange offer or if Old Notes are submitted
for a greater principal amount than the holder desires to exchange , such
unaccepted or non-exchanged Old Notes will be returned without expense to the
tendering holder thereof (or, in the case of Old Notes tendered, by book-entry
transfer into the Exchange Agent's account at the Book-Entry Transfer Facility
pursuant to the book-entry transfer procedures described below, such
nonexchanged Old Notes will be credited to an account maintained with such Book-
Entry Transfer Facility) as promptly as practicable after the expiration or
termination of the exchange offer.
Each broker-dealer that receives New Notes for its own account in exchange
for Old Notes, where such Old Notes were acquired by such broker-dealer as a
result of market-making activities or other trading activities, must acknowledge
that it will deliver a prospectus in connection with any resale of such New
Notes. See "Plan of Distribution."
Book-Entry Transfer
The Exchange Agent will make a request to establish an account with respect
to the Old Notes at the Book-Entry Transfer Facility for purposes of the
exchange offer within two business days after the date of this prospectus, and
any financial institution that is a participant in the Book-Entry Transfer
Facility's systems may make book-entry delivery of Old Notes being tendered by
causing the Book-Entry Transfer Facility to transfer such Old Notes into the
Exchange Agent's account at the Book-Entry Transfer Facility in accordance with
such Book-Entry Transfer Facility's procedures for transfer. However, although
delivery of Old Notes may be effected through book-entry transfer at the
24
<PAGE>
Book-Entry Transfer Facility, the letter of transmittal or copy thereof, with
any required signature guarantees and any other required documents, must, in any
case other than as set forth in the following paragraph, be transmitted to and
received by the Exchange Agent at the address set forth under "--Exchange Agent;
Assistance" on or prior to the expiration date or the guaranteed delivery
procedures described below must be complied with.
DTC's Automated Tender Offer Program ("ATOP") is the only method of
processing exchange offers through DTC. To accept the exchange offer through
ATOP, participants in DTC must send electronic instructions to DTC through DTC's
communication system in lieu of sending a signed, hard copy letter of
transmittal. DTC is obligated to communicate those electronic instructions to
the Exchange Agent. To tender Old Notes through ATOP, the electronic
instructions sent to DTC and transmitted by DTC to the Exchange Agent must
contain the character by which the participant acknowledges its receipt of and
agrees to be bound by the letter of transmittal.
Guaranteed Delivery Procedures
Holders who wish to tender their Old Notes and whose Old Notes are not
immediately available, or who cannot deliver their Old Notes or any other
documents required by the letter of transmittal to the Exchange Agent prior to
the expiration date, may tender their Old Notes according to the guaranteed
delivery procedures set forth in the letter of transmittal. Pursuant to such
procedures:
(1) the holder tenders through an eligible institution and signs a notice
of guaranteed delivery,
(2) on or prior to the Expiration Date, the Exchange Agent receives from
the holder and the eligible institution a written or facsimile copy of a
properly completed and duly executed notice of guaranteed delivery,
substantially in the form provided by the Company, setting forth the name and
address of the holder, the certificate number or numbers of the tendered Old
Notes, and the principal amount of tendered Old Notes, stating that the tender
is being made thereby and guaranteeing that, within five business days after the
date of delivery of the notice of guaranteed delivery, the tendered Old Notes, a
duly executed letter of transmittal and any other required documents will be
deposited by the eligible institution with the Exchange Agent, and
(3) such properly completed and executed documents required by the letter
of transmittal and the tendered Old Notes in proper form for transfer are
received by the Exchange Agent within five business days after the Expiration
Date.
Any holder who wishes to tender Old Notes pursuant to the guaranteed
delivery procedures described above must ensure that the Exchange Agent receives
the notice of guaranteed delivery and letter of transmittal relating to such Old
Notes prior to 5:00 p.m., New York City time, on the Expiration Date.
Acceptance of Old Notes for Exchange; Delivery of New Notes
Upon satisfaction or waiver of all the conditions to the exchange offer, we
will accept any and all Old Notes that are properly tendered in the exchange
offer prior to 5:00 p.m., New York City time, on the Expiration Date. The New
Notes issued pursuant to the exchange offer will be delivered promptly after
acceptance of the Old Notes. For purposes of the exchange offer, we shall be
deemed to have accepted validly tendered Old Notes, when, as, and if we have
given oral or written notice thereof to the Exchange Agent.
In all cases, issuances of New Notes for Old Notes that are accepted for
exchange pursuant to the exchange offer will be made only after the Exchange
Agent timely receives such Old Notes, a properly completed and duly executed
letter of transmittal and all other required documents; provided, however, we
reserve the absolute right to waive any defects or irregularities in the tender
or conditions of the exchange offer. If we do not accept any tendered Old Notes
for any reason, we will return such unaccepted Old Notes without expense to the
tendering holder thereof as promptly as practicable after the expiration or
termination of the exchange offer.
25
<PAGE>
Withdrawal Rights
Holders may withdraw tenders of Old Notes at any time prior to 5:00 p.m.,
New York City time, on the Expiration Date. For the withdrawal to be effective,
the Exchange Agent must receive a written notice of withdrawal at its address
set forth on the back cover page of this prospectus. The notice of withdrawal
must:
. specify the name of the person who tendered the Old Notes to be
withdrawn (the "Depositor");
. identify the Old Notes to be withdrawn, including the certificate
number or numbers and principal amount of withdrawn notes;
. be signed by the holder in the same manner as the original signature
on the letter of transmittal by which such Old Notes were tendered, including
any required signature guarantees, or be accompanied by a bond power in the name
of the person withdrawing the tender, in satisfactory form as determined by us
in our sole discretion, duly executed by the registered holder, with the
signature thereon guaranteed by an eligible institution together with the other
documents required upon transfer by the indenture; and
. specify the name in which such Old Notes are to be registered, if
different from the person who deposited the Old Notes, pursuant to such
documents of transfer.
We will determine all questions as to the validity, form and eligibility,
including time of receipt, of such notices in our sole discretion. The Old
Notes so withdrawn will be deemed not to have been validly tendered for exchange
for purposes of the exchange offer. Any Old Notes which have been tendered for
exchange but which are withdrawn will be returned to their holder without cost
to such holder as soon as practicable after withdrawal. Properly withdrawn Old
Notes may be retendered by following one of the procedures described under "The
Exchange Offer--Procedures for Tendering Old Notes" at any time on or prior to
the Expiration Date.
The Exchange Agent; Assistance
Bank One, N.A. is the Exchange Agent. All tendered Old Notes, executed
letters of transmittal and other related documents should be directed to the
Exchange Agent. Questions and requests for assistance and requests for
additional copies of this prospectus, the letter of transmittal and other
related documents should be addressed to the exchange agent as follows:
BY REGISTERED OR CERTIFIED MAIL:
Bank One, N.A.
235 West Schrock Road
Westerville, Ohio 43081
or
Bank One, N.A.
c/o First Chicago Trust
Company of New York
Attention: Corporate Trust Department
14 Wall Street
8th Floor, Window 2
New York, New York 10005
BY HAND OR OVERNIGHT COURIER:
Bank One, N.A.
235 West Schrock Road
Westerville, Ohio 43081
or
26
<PAGE>
Bank One, N.A.
c/o First Chicago Trust
Company of New York
Attention: Corporate Trust Department
14 Wall Street
8th Floor, Window 2
New York, New York 10005
BY FACSIMILE:
(614) 248-9987 (OH)
or
(212) 240-8941 (NY)
Confirm by Telephone: (212) 240-8938 (NY)
1-800-346-5153
Fees and Expenses
We will bear all expenses incident to the consummation of the exchange
offer and compliance with the Registration Rights Agreement, including, without
limitation: (1) all registration and filing fees, including fees and expenses of
compliance with state securities or Blue Sky laws; (2) printing expenses,
including expenses of printing certificates for the New Notes in a form eligible
for deposit with DTC and of printing prospectuses; (3) messenger, telephone and
delivery expenses; (4) fees and disbursements of our counsel; (5) fees and
disbursements of independent certified public accountants; (6) rating agency
fees; (7) our internal expenses, including all salaries and expenses of our
officers and employees performing legal or accounting duties; and (8) fees and
expenses, if any, incurred in connection with the listing of the New Notes on a
securities exchange.
We have not retained any dealer-manager in connection with the exchange
offer and will not make any payments to brokers, dealers or others soliciting
acceptance of the exchange offer. We, however, will pay the exchange agent
reasonable and customary fees for its services and will reimburse it for its
reasonable out-of-pocket expenses in connection therewith.
We will pay all transfer taxes, if any, applicable to the exchange of Old
Notes pursuant to the exchange offer. If, however, a transfer tax is imposed for
any reason other than the exchange of Old Notes pursuant to the exchange offer,
then the amount of any such transfer taxes (whether imposed on the registered
holder or any other persons) will be payable by the tendering holder. If
satisfactory evidence of payment of such taxes or exemption is not submitted
with the letter of transmittal, the amount of such transfer taxes will be billed
directly to such tendering holder.
Accounting Treatment
We will record the New Notes at the same carrying value as the Old Notes,
as reflected in our accounting records on the date of the exchange. Accordingly,
we will not recognize any gain or loss for accounting purposes. We will amortize
expenses of the exchange offer over the term of the New Notes.
27
<PAGE>
CAPITALIZATION
The following table sets forth certain information regarding our debt and
capitalization as of March 31, 1999, and as adjusted to give effect to the sale
by us of the Notes and application of the net proceeds therefrom. This table
should be read in conjunction with the Consolidated Financial Statements and
related notes thereto included elsewhere in this prospectus.
<TABLE>
<CAPTION>
March 31, 1999
-----------------------
Actual As Adjusted
--------- ------------
<S> <C> <C>
(in thousands)
Debt:
Credit Agreements........................................... $ 603 $ 603
Warehouse Facilities........................................ 233,661 39,661
Mortgage Subsidiary Credit Agreement........................ 21,267 21,267
Senior Notes................................................ 175,000 375,000
Other notes payable(1)...................................... 12,759 12,759
-------- --------
Total debt.............................................. 443,290 449,290
-------- --------
Shareholders' equity:
Preferred stock, $.01 par value per share, 20,000,000 shares
authorized; none issued................................. --
Common stock, $.01 par value per share; 120,000,000
shares authorized; 70,790,686 shares issued............. 708 708
Additional paid-in capital.................................. 244,194 244,194
Accumulated other comprehensive income...................... 13,319 13,319
Retained earnings........................................... 125,133 125,133
Treasury stock, at cost (7,486,585 shares).................. (22,590) (22,590)
-------- --------
Total shareholders' equity.............................. 360,764 360,764
-------- --------
Total capitalization................................. $804,054 $810,054
======== ========
</TABLE>
______________________
(1) Consists of certain capitalized equipment leases.
28
<PAGE>
SELECTED CONSOLIDATED FINANCIAL DATA
The following table presents our selected unaudited consolidated data. The
historical consolidated financial information under the captions "Statement of
Income Data," "Cash Flow Data" and "Balance Sheet Data" for each of the years in
the five-year period ended June 30, 1998 have been derived from our consolidated
financial statements, which have been audited by PricewaterhouseCoopers LLP,
independent accountants. The consolidated financial statements as of June 30,
1997 and June 30, 1998 and for each of the years in the three-year period ended
June 30, 1998, and the report thereon, are included elsewhere herein. The
historical consolidated financial information under the captions "Statement of
Income Data," "Cash Flow Data" and "Balance Sheet Data" as of March 31, 1998 and
March 31, 1999 and for the nine months then ended have been derived from the
unaudited consolidated financial statements which, except for the consolidated
balance sheet as of March 31, 1998, are included elsewhere herein; however, in
our opinion, such information reflects all adjustments (consisting only of
normal recurring adjustments) necessary for a fair presentation of the results
of operations for such periods. The results of operations for the nine months
ended March 31, 1999 are not necessarily indicative of the results to be
expected for the entire year. The selected financial information should be read
in conjunction with "Management's Discussion and Analysis of Financial Condition
and Results of Operations," "Description of Other Debt" and the Company's
Consolidated Financial Statements (including related notes thereto) included
elsewhere in this prospectus.
<TABLE>
<CAPTION>
Year Ended Nine Months Ended
----------------------------------------------------------- -------------------------
June 30, June 30, June 30, June 30, June 30, March 31, March 31,
1994 1995 1996(1) 1997(1) 1998(1) 1998(1) 1999
---------- ---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Statement of Income Data:
Revenue:
Finance charge income................ $ 7,820 $ 29,039 $ 51,679 $ 44,910 $ 55,837 $ 40,052 $ 51,538
Gain on sale of receivables.......... -- -- 21,405 52,323 103,194 71,838 116,551
Servicing fee income................. -- -- 3,892 23,492 47,910 34,389 61,702
Other income......................... 8,062 4,045 2,659 2,631 2,395 1,901 3,361
---------- ---------- ---------- ---------- ---------- ---------- ----------
Total revenue..................... 15,882 33,084 79,635 123,356 209,336 148,180 233,152
Costs and expenses................... 10,817 23,066 46,722 74,822 129,174 90,621 148,009
---------- ---------- ---------- ---------- ---------- ---------- ----------
Income before taxes.................. 5,065 10,018 32,913 48,534 80,162 57,559 85,143
Provision (credit) for taxes(2)...... -- (18,875) 12,148 18,685 30,861 22,159 32,780
---------- ---------- ---------- ---------- ---------- ---------- ----------
Net income........................... $ 5,065 $ 28,893 $ 20,765 $ 29,849 $ 49,301 $ 35,400 $ 52,363
Diluted earnings (loss) per share.... $ .08 $ .48 $ .34 $ .48 $ .76 $ .55 $ .78
Weighted average shares
outstanding(3)...................... 63,636,166 60,761,498 60,406,596 61,574,548 65,203,460 64,644,030 66,822,426
Cash Flow Data:
(Used in) Provided by operating
activities.......................... $ 3,900 $ 14,637 $ 34,530 $ 36,003 $ 37,813 $ 11,162 $ 38,214
(Used in) Provided by investing
activities.......................... (12,174) (144,512) (62,749) (92,947) (144,868) (105,820) (129,225)
(Used in) Provided by financing
activities.......................... (9,238) 132,433 12,050 60,826 134,115 97,725 94,770
---------- ---------- ---------- ---------- ---------- ---------- ----------
Net increase (decrease) in cash and
cash equivalents.................... $ (17,512) $ 2,558 $ (16,169) $ 3,882 $ 27,060 $ 3,067 $ 3,759
Other Data:
Auto receivable originations......... $ 65,929 $ 230,176 $ 432,442 $ 906,794 $1,737,813 $1,176,734 $1,990,893
Managed auto receivables............. $ 67,636 $ 240,491 $ 523,981 $1,138,255 $2,302,516 $1,924,796 $3,553,208
Average managed auto originations.... $ 37,507 $ 141,526 $ 357,966 $ 792,155 $1,649,416 $1,495,784 $2,892,752
Auto loans securitized............... $ -- $ 150,170 $ 270,351 $ 817,500 $1,637,499 $1,117,499 $1,920,001
Number of branches................... 18 31 51 85 129 119 168
Average principal amount
per managed auto receivable......... $ 7,215 $ 7,773 $ 8,746 $ 10,087 $ 10,782 $ 10,584 $ 11,074
Ratios:
Ratio of earnings to fixed charges(4) 3.12 3.5 3.5 4.0 4.0 4.0 4.3
Percentage of total indebtedness to
total capitalization................ 0.3% 47.9% 48.7% 51.8% 54.7% 55.3% 55.1%
Return on average common equity(5)... 4.1% 23.1% 13.7% 16.4% 20.1% 20.5% 21.3%
Operating expenses as a percentage of
average managed auto receivables(5). 15.0% 10.0% 7.2% 6.2% 5.4% 5.5% 5.0%
Percentage of senior unsecured debt
to total equity..................... 0.0% 0.0% 0.0% 60.0% 60.8% 63.1% 48.5%
</TABLE>
29
<PAGE>
<TABLE>
<CAPTION>
Year Ended Nine Months Ended
----------------------------------------------------------- -------------------------
June 30, June 30, June 30, June 30, June 30, March 31, March 31,
1994 1995 1996(1) 1997(1) 1998(1) 1998(1) 1999
---------- ---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Asset Quality Data:
Managed auto receivables greater than
60 days delinquent................... $ 1,269 $ 4,907 $ 16,207 $ 36,421 $ 59,175 $ 50,653 $ 80,668
Delinquencies as a percentage of
managed auto receivables............. 1.9% 2.0% 3.1% 3.2% 2.6% 2.6% 2.3%
Net charge-offs....................... $ 1,432 $ 6,409 $ 19,974 $ 43,231 $ 88,002 $ 60,918 $ 103,891
Net charge-offs as a percentage of
average managed auto receivables(5).. 3.8% 4.5% 5.6% 5.5% 5.3% 5.4% 4.8%
Balance Sheet Data:
Cash and cash equivalents............. $ 15,756 $ 18,314 $ 2,145 $ 6,027 $ 33,087 $ 9,094 $ 36,846
Credit enhancement assets(6).......... -- -- 41,736 161,395 286,309 249,849 413,653
Auto receivables held for sale........ 67,636 240,491 264,086 275,249 334,110 299,335 400,722
Total assets.......................... 122,215 285,725 329,333 475,493 713,671 632,778 937,982
Credit Agreements..................... -- -- 86,000 71,700 -- -- 603
Mortgage Subsidiary Credit Agreement(7) -- -- -- 345 24,900 26,436 21,267
Warehouse Facilities.................. -- -- -- -- 140,708 97,592 233,661
Senior Notes.......................... -- -- -- 125,000 175,000 175,000 175,000
Other notes payable................... 388 135,236 68,265 27,206 6,410 16,923 12,759
Total debt............................ 388 135,236 154,265 224,251 347,018 315,951 443,290
Shareholders' equity.................. 119,501 147,226 162,399 208,261 287,848 254,873 360,764
</TABLE>
_____________________________
(1) We restated our financial statements for the fiscal years ended June 30,
1996, 1997 and 1998 and interim periods within those fiscal years as a
result of a retroactive change in its method of measuring and accounting
for credit enhancement assets to the cash-out method from the cash-in
method. See Note 2 of Notes to Consolidated Financial Statements.
(2) We recognized an income tax benefit in fiscal 1995 equal to the expected
future tax savings from using our net operating loss carry forward and
other future tax benefits.
(3) All share data for the periods presented have been adjusted to
retroactively reflect the two-for-one stock split paid on September 30,
1998.
(4) Represents the ratio of the sum of income before taxes plus interest
expense for the period to interest expense.
(5) Data for the nine-month periods ended March 31, 1998 and 1999 have been
annualized.
(6) Credit enhancement assets consist of restricted cash, investments in Trust
receivables and interest-only receivables. See Note 4 of Notes to
Consolidated Financial Statements.
(7) Fully guaranteed by us and certain of our Subsidiaries.
30
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
General
The Company generates earnings and cash flow primarily from the purchase,
securitization and servicing of auto receivables. The Company purchases auto
finance contracts from franchised and select independent automobile dealerships.
To fund the acquisition of receivables prior to securitization, the Company
utilizes borrowings under its warehouse and credit facilities. The Company
generates finance charge income on its receivables pending securitization
("receivables held for sale") and pays interest expense on borrowings under
its warehouse and credit facilities.
The Company, through one or more Non-Guarantor Special Purpose Finance
Vehicles, sells receivables to securitization trusts ("Trusts") that in turn
sell asset-backed securities to investors. By securitizing its receivables, the
Company is able to lock in the gross interest rate spread between the yield on
such receivables and the interest rate payable on the asset-backed securities.
The Company recognizes a gain on the sale of receivables to the Trusts which
represents the difference between the sale proceeds to the Company, net of
transaction costs, and its net carrying value of the receivables, plus the
present value of the estimated future excess cash flows to be received by the
Company over the life of the securitization. Excess cash flows result from the
difference between the interest received from the obligors on the receivables
and the interest paid to investors in the asset-backed securities, net of credit
losses and expenses.
Excess cash flows from the Trusts are initially utilized to fund credit
enhancement requirements to secure financial guaranty insurance policies issued
by an insurance company to protect investors in the asset-backed securities from
losses. Once predetermined credit enhancement requirements are reached and
maintained, excess cash flows are distributed to the Company. In addition to
excess cash flows, the Company earns monthly base servicing fee income of 2.25%
per annum of the outstanding principal balance of receivables securitized
("serviced receivables").
In November 1996, the Company acquired AmeriCredit Mortgage Services
("AMS"), which originates and sells mortgage loans. The Company accounted for
the acquisition as a purchase and the results of operations for AMS have been
included in the consolidated financial statements since the acquisition date.
Receivables originated in this business are referred to as mortgage receivables.
These receivables are generally packaged and sold for cash on a servicing
released whole-loan basis. The Company recognizes a gain at the time of sale.
The Company restated its financial statements for the fiscal years ended
June 30, 1996, 1997 and 1998 and interim periods within those fiscal years as a
result of a retroactive change in its method of measuring and accounting for
credit enhancement assets to the cash-out method from the cash-in method. See
Note 2 of Notes to Consolidated Financial Statements.
Results of Operations
Nine Months Ended March 31, 1998 as compared to Nine Months Ended March 31,
1999
Revenue
The Company's average managed receivables outstanding consisted of the
following (in thousands):
<TABLE>
<CAPTION>
Nine Months Ended
March 31,
----------------------
1998 1999
---------- ----------
<S> <C> <C>
Auto:
Held for sale......................... $ 244,218 $ 292,629
Serviced.............................. 1,251,566 2,600,123
---------- ----------
1,495,784 2,892,752
Mortgage................................... 14,635 24,903
---------- ----------
$1,510,419 $2,917,655
========== ==========
</TABLE>
31
<PAGE>
Average managed receivables outstanding increased by 93% as a result of
higher loan purchase volume. The Company purchased $1,176.7 million of auto
loans during the nine months ended March 31, 1998, compared to purchases of
$1,990.9 million during the nine months ended March 31, 1999. This growth
resulted from higher loan production at branches open during both periods as
well as expansion of the Company's loan production capacity. The Company
operated 119 auto lending branch offices as of March 31, 1998, compared to 168
as of March 31, 1999.
The Company originated $94.5 million of mortgage loans during the nine
months ended March 31, 1998, compared to $203.5 million during the nine months
ended March 31, 1999.
Finance charge income consisted of the following (in thousands):
<TABLE>
<CAPTION>
Nine Months Ended
March 31,
------------------
1998 1999
-------- --------
<S> <C> <C>
Auto......................................... $39,032 $49,798
Mortgage..................................... 1,020 1,740
------- -------
$40,052 $51,538
======= =======
</TABLE>
The increase in finance charge income is due primarily to an increase of
20% in average auto receivables held for sale in the nine months ended March 31,
1998 versus the nine months ended March 31, 1999. In addition, the Company's
effective yield on its auto receivables held for sale increased from 21.3% for
the nine months ended March 31, 1998 to 22.7% for the nine months ended March
31, 1999. The effective yield is higher than the contractual rates of the
Company's auto finance contracts as a result of finance charge income earned
between the date the automobile dealership originates the auto finance contract
and the date the Company funds the auto finance contract. The effective yield
rose for the nine months ended March 31, 1999 due to increased auto loan
purchases and correspondingly higher levels of finance charges earned between
the origination date and funding date.
The gain on sale of receivables consisted of the following (in thousands):
<TABLE>
<CAPTION>
Nine Months Ended
March 31,
-------------------
1998 1999
-------- ---------
<S> <C> <C>
Auto............................................. $68,828 $111,452
Mortgage......................................... 3,010 5,099
------- --------
$71,838 $116,551
======= ========
</TABLE>
The increase in gain on sale of auto receivables resulted from the sale of
$1,117.5 million of receivables in the nine months ended March 31, 1998 as
compared to $1,920.0 million of receivables sold in the nine months ended March
31, 1999. The gain as a percentage of the sales proceeds decreased from 6.2%
for the nine months ended March 31, 1998 to 5.8% for the nine months ended March
31, 1999 primarily as a result of lower gross interest rate spreads.
Significant assumptions used in determining the gain on sale of auto
receivables were as follows:
<TABLE>
<CAPTION>
Nine Months Ended
March 31,
-------------------
1998 1999
--------- --------
<S> <C> <C>
Cumulative credit losses....................... 10.4% 10.6%
Discount rate used to estimate present value:
Interest-only receivables from Trusts....... 12.0% 12.0%
Investments in Trust receivables............ 7.8% 7.8%
Restricted cash............................. 7.8% 7.8%
</TABLE>
The increase in the gain on sale of mortgage receivables resulted from the
sale of $70.7 million of receivables in the nine months ended March 31, 1998,
compared to $199.0 million of receivables sold in the nine months ended March
31, 1999. The average premium received on sales decreased from 4.3% for the nine
months
32
<PAGE>
ended March 31, 1998 to 2.6% for the nine months ended March 31, 1999 because of
lower prices for non-conforming mortgage loans in the secondary markets.
Servicing fee income increased from $34.4 million for the nine months ended
March 31, 1998, to $61.7 million for the nine months ended March 31, 1999.
Servicing fee income decreased as a percentage of average serviced auto
receivables from 3.7% for the nine months ended March 31, 1998 to 3.2% for the
nine months ended March 31, 1999, as a result of charges to increase credit loss
reserves. Servicing fee income represents accretion of the present value
discount on estimated future excess cash flows from the Trusts, base servicing
fees and other fees earned by the Company as servicer of the auto receivables
sold to the Trusts. Servicing fee income for the nine months ended March 31,
1998 and 1999 also includes charges of $4.4 million and $13.4 million,
respectively, to increase credit loss reserves related to certain of the
Company's fiscal 1996 and 1997 securitization transactions since the Company's
current estimates of cumulative credit losses for these transactions exceed the
original estimates. The Company has raised the assumptions for cumulative credit
losses for securitization transactions completed subsequent to fiscal 1997
compared to assumptions used for transactions completed in fiscal 1996 and 1997.
The growth in servicing fee income exclusive of the aforementioned charge is
attributable to the increase in average serviced auto receivables outstanding
for the nine months ended March 31, 1998 compared to the nine months ended March
31, 1999.
Costs and Expenses
Operating expenses as an annualized percentage of average managed
receivables outstanding decreased from 5.9% (5.5% excluding operating expenses
of $3.9 million relating to AMS) for the nine months ended March 31, 1998, to
5.3% (5.0% excluding operating expenses of $6.7 million relating to AMS) for
the nine months ended March 31, 1999. The ratio improved as a result of
economies of scale realized from a growing receivables portfolio and automation
of loan origination, processing and servicing functions. The dollar amount of
operating expenses increased by $49.7 million, or 75%, primarily due to the
addition of auto lending branch offices and management and auto loan processing
and servicing staff.
The provision for losses increased from $5.5 million for the nine months
ended March 31, 1998 to $6.6 million for the nine months ended March 31, 1999
due to higher average amounts of auto receivables held for sale. As a
percentage of average auto receivables held for sale, the provision for losses
was 3.0% for the nine months ended March 31, 1998 and 1999.
Interest expense increased from $19.0 million for the nine months ended
March 31, 1998 to $25.7 million for the nine months ended March 31, 1999 due to
higher debt levels. Average debt outstanding was $271.7 million and $396.0
million for the nine months ended March 31, 1998 and 1999, respectively. The
Company's effective rate of interest paid on its debt decreased from 9.3% to
8.6% as a result of larger amounts of debt outstanding under the Company's
warehouse and credit facilities for the nine months ended March 31, 1999.
Interest rates on the warehouse and credit facilities are lower than rates on
the senior notes the Company issued previously.
The Company's effective income tax rate was 38.5% for the nine months ended
March 31, 1998 and 1999.
33
<PAGE>
Year Ended June 30, 1997 as compared to Year Ended June 30, 1998
Revenue
The Company's average managed receivables outstanding consisted of the
following (in thousands):
<TABLE>
<CAPTION>
Year Ended
June 30,
--------------------
1997 1998
-------- ----------
<S> <C> <C>
Auto
Held for sale........................ $223,351 $ 250,304
Serviced............................. 568,804 1,399,112
-------- ----------
792,155 1,649,416
Mortgage.................................... 8,187 18,728
-------- ----------
$800,342 $1,668,144
======== ==========
</TABLE>
Average managed receivables outstanding increased by 108% as a result of
higher loan purchase volume. The Company purchased $906.8 million of auto loans
during fiscal 1997, compared to purchases of $1,737.8 million during fiscal
1998. This growth resulted from loan production at branches open during both
periods as well as expansion of the Company's loan production capacity. The
Company operated 85 auto lending branch offices as of June 30, 1997, compared to
129 as of June 30, 1998.
The Company originated $53.8 million of mortgage loans from the date of
acquisition of AMS through June 30, 1997 compared to $137.2 million during
fiscal 1998.
Finance charge income consisted of the following (in thousands):
<TABLE>
<CAPTION>
Year Ended June 30,
-------------------
1997 1998
-------- ---------
<S> <C> <C>
Auto........................................ $ 44,417 $ 54,125
Mortgage.................................... 493 1,712
-------- --------
$ 44,910 $ 55,837
======== ========
</TABLE>
The increase in finance charge income is due to an increase of 12% in
average auto receivables held for sale for fiscal 1997 versus fiscal 1998. In
addition, the Company's effective yield on its auto receivables held for sale
increased from 19.9% for fiscal 1997 to 21.6% for fiscal 1998. The effective
yield is higher than the contractual rates on the Company's auto finance
contracts as a result of finance charge income earned between the date the
automobile dealership originates the auto finance contract and the date the
Company funds the auto finance contract. The effective yield rose for fiscal
1998 due to increased auto loan purchases and correspondingly higher levels of
finance charges earned between the origination date and funding date.
The gain on sale of receivables consisted of the following (in thousands):
<TABLE>
<CAPTION>
Year Ended June
30,
------------------
1997 1998
-------- --------
<S> <C> <C>
Auto........................................ $49,405 $ 98,842
Mortgage.................................... 2,918 4,352
------- --------
$52,323 $103,194
======= ========
</TABLE>
The increase in gain on sale of auto receivables resulted from the sale of
$817.5 million of receivables in fiscal 1997 as compared to $1,637.5 million of
receivables sold in fiscal 1998. The gains amounted to 6% of the sales proceeds
for both fiscal 1997 and 1998.
34
<PAGE>
Significant assumptions used in determining the gain on sale of auto
receivables were as follows:
<TABLE>
<CAPTION>
Year Ended June 30,
-------------------
1997 1998
-------- --------
<S> <C> <C>
Cumulative credit losses........................ 9.2% 10.7%
Discount rate used to determine present value:
Interest-only receivables from Trusts......... 12.0% 12.0%
Investments in Trust receivables.............. 7.8% 7.8%
Restricted case............................... 7.8% 7.8%
</TABLE>
The discount rates used to estimate the present value of credit enhancement
assets are based on the relative risk of each asset type. Interest-only
receivables represent estimated future excess cash flows in the Trusts, which
involves a greater degree of risk than investments in Trust receivables and
restricted cash. Investments in Trust receivables and restricted cash represent
assets currently held by the Trustee and are senior to interest-only receivables
for credit enhancement purposes.
The increase in gain on sale of mortgage receivables resulted from the sale
of $52.5 million of receivables from the date of acquisition of AMS through June
30, 1997 compared to $119.7 million of receivables sold during fiscal 1998. The
average premium received on sales decreased from 5.6% for the period from the
date of acquisition of AMS through June 30, 1997 to 3.6% for fiscal 1998 because
of lower prices for non-conforming mortgage loans in the secondary markets.
Servicing fee income increased from $23.5 million for fiscal 1997, to $47.9
million for fiscal 1998. Servicing fee income decreased as a percentage of
average serviced auto receivables from 4.1% in fiscal 1997, to 3.4% in fiscal
1998, as a result of charges to increase credit loss reserves. Servicing fee
income represents accretion of the present value discount on estimated future
excess cash flows from the Trusts, base servicing fees and other fees the
Company earned as servicer of the receivables sold to the Trusts. Servicing fee
income for fiscal 1998 also includes an $8.9 million charge to increase credit
loss reserves related to certain of the Company's fiscal 1996 and 1997
securitization transactions since the Company's current estimates of cumulative
credit losses for these transactions exceed the original estimates. The Company
has raised the assumptions for cumulative credit losses for securitization
transactions completed in fiscal 1998 compared to assumptions used for
transactions completed in prior fiscal years. The growth in servicing fee income
exclusive of the aforementioned charge is attributable to the increase in
average serviced auto receivables outstanding for fiscal 1997 compared to fiscal
1998.
Costs and Expenses
Operating expenses as a percentage of average managed receivables
outstanding decreased from 6.6% (6.2% excluding operating expenses of $2.6
million relating to AMS) for fiscal 1997 to 5.7% (5.4% excluding operating
expenses of $5.1 million relating to AMS) for fiscal 1998. The ratio improved as
a result of economies of scale realized from a growing receivables portfolio and
automation of loan origination, processing and servicing functions. The dollar
amount of operating expenses increased by $42.6 million, or 82%, primarily due
to the addition of auto lending branch offices and management and auto loan
processing and servicing staff.
The provision for losses increased from $6.6 million for fiscal 1997 to
$7.6 million for fiscal 1998 due to higher average amounts of auto receivables
held for sale. As a percentage of average receivables held for sale, the
provision for losses was 3% for fiscal 1997 and 1998.
Interest expense increased from $16.3 million for fiscal 1997 to $27.1
million for fiscal 1998 due to higher debt levels and effective interest rates.
Average debt outstanding was $187.6 million and $297.6 million for fiscal 1997
and 1998, respectively. The Company's effective rate of interest paid on its
debt increased from 8.7% to 9.1% as a result of the issuance of senior notes in
February 1997 and January 1998.
The Company's effective income tax rate was 38.5% for fiscal 1997 and 1998.
35
<PAGE>
Year Ended June 30, 1996 as compared to Year Ended June 30, 1997
Revenue
The Company's average managed receivables outstanding consisted of the
following (in thousands):
<TABLE>
<CAPTION>
Year Ended June 30,
------------------
1996 1997
-------- --------
<S> <C> <C>
Auto:
Held for sale........................... $261,776 $223,351
Serviced................................ 96,190 568,804
-------- --------
357,966 792,155
Mortgage..................................... - 8,187
Other........................................ 443 -
-------- --------
$358,409 $800,342
======== ========
</TABLE>
Average managed receivables outstanding increased by 123% as a result of
higher loan purchase volume. The Company purchased $432.4 million of auto loans
during fiscal 1996, compared to purchases of $906.8 million during fiscal 1997.
This growth resulted from loan production at branches open during both periods
as well as expansion of the Company's loan production capacity. The Company
operated 51 branch offices as of June 30, 1996, compared to 85 as of June 30,
1997.
The Company originated $53.8 million of mortgage loans from the date of
acquisition of AMS through June 30, 1997.
Finance charge income consisted of the following (in thousands):
<TABLE>
<CAPTION>
Year Ended June 30,
-------------------
1996 1997
-------- --------
<S> <C> <C>
Auto......................................... $51,679 $44,417
Mortgage..................................... - 493
Other........................................ 27 -
------- -------
$51,706 $44,910
======= =======
</TABLE>
The decrease in finance charge income is due to a reduction of 15% in
average auto receivables held for sale for fiscal 1996 versus fiscal 1997. Prior
to December 1995, all of the auto finance contracts the Company purchased were
held on the Company's consolidated balance sheet. The Company began selling
auto receivables to the Trusts in December 1995, reducing average receivables
held for sale with corresponding increases in average serviced receivables. The
Company's effective yield on its auto receivables held for sale increased from
19.7% for fiscal 1996 to 19.9% for fiscal 1997.
The gain on sale of receivables consisted of the following (in thousands):
<TABLE>
<CAPTION>
Year Ended June 30,
-------------------
1997 1998
-------- --------
<S> <C> <C>
Auto......................................... $21,405 $ 49,405
Mortgage..................................... - 2,918
------- --------
$21,405 $ 52,323
======= ========
</TABLE>
The increase in gain on sale of auto receivables resulted from the sale of
$270.4 million of receivables in fiscal 1996 compared to $817.5 million of
receivables sold in fiscal 1997. The gains amounted to 7.9% and 6.0% of the
sales proceeds for fiscal 1996 and 1997, respectively.
36
<PAGE>
Significant assumptions used in determining the gain on sale of auto
receivables were as follows:
<TABLE>
<CAPTION>
Year Ended June 30,
-------------------
1996 1997
--------- --------
<S> <C> <C>
Cumulative credit losses........................ 9.3% 9.2%
Discount rate used to determine present value:
Interest-only receivables from Trusts......... 12.0% 12.0%
Investments in Trust receivables.............. 7.8% 7.8%
Restricted cash............................... 7.8% 7.8%
</TABLE>
The discounted rates used to determine the present value of credit
enhancement assets are based on the relative risks of each asset type. Interest-
only receivables represent estimated future excess cash flows in the Trusts,
which involves a greater degree of risk than investments in Trust receivables
and restricted cash. Investments in Trust receivables and restricted cash
represent assets currently held by the trustee and are senior to the interest-
only receivables for credit enhancement purposes.
The gain on sale of mortgage receivables resulted from the sale of $52.5
million of receivables from the date of acquisition of AMS through June 30,
1997.
Servicing fee income increased from $3.9 million for fiscal 1996 to $23.5
million for fiscal 1997. Servicing fee income increased as a percentage of
average serviced auto receivables from 4.0% in fiscal 1996 to 4.1% in fiscal
1997. Servicing fee income represents accretion of the present value discount on
estimated future excess cash flows from the Trusts, base servicing fees and
other fees the Company earns as servicer of the auto receivables sold to the
Trusts. The growth in servicing fee income is attributable to the increase in
serviced auto receivables outstanding for fiscal 1996 compared to fiscal 1997.
Costs and Expenses
Operating expenses as a percentage of average managed receivables
outstanding decreased from 7.2% for fiscal 1996 to 6.6% (6.2% excluding
operating expenses of $2.6 million related to AMS) for fiscal 1997. The ratio
improved as a result of economies of scale realized from a growing receivables
portfolio and automation of loan origination, processing and servicing
functions. The dollar amount of operating expenses increased by $26.2 million,
or 102%, primarily due to the addition of auto lending branch offices and
management and auto loan processing and servicing staff.
The provision for losses decreased from $7.9 million for fiscal 1996 to
$6.6 million for fiscal 1997 due to higher average amounts of receivables held
for sale. As a percentage of average receivables held for sale, the provision
for losses was 3% for fiscal 1996 and 1997.
Interest expense increased from $13.1 million for fiscal 1996 to $16.3
million for fiscal 1997 due to higher debt levels and effective interest rates.
Average debt outstanding was $156.4 million and $187.6 million for fiscal 1996
and 1997, respectively. The Company's effective rate of interest paid on its
debt increased from 8.4% to 8.7% as a result of the issuance of the Company's 9-
1/4% senior notes in February 1997.
The Company's effective income tax rate increased from 37.0% for fiscal
1996 to 38.5% for fiscal 1997 due to a larger portion of the Company's income
being generated in states which have higher tax rates.
Credit Quality
The Company provides financing in relatively high-risk markets and,
therefore, charge-offs are anticipated. The Company records a periodic provision
for losses as a charge to operations and a related allowance for losses in its
consolidated balance sheets as a reserve against estimated losses which may
occur in the receivables held for sale portfolio prior to the sale of such
receivables in securitization transactions. The Company typically purchases
individual finance contracts for a non-refundable acquisition fee on a non-
recourse basis. The Company records such acquisition fees in the consolidated
balance sheets as an allowance for losses. When the Company sells auto
37
<PAGE>
receivables to the Trusts, the Company reduces the calculation of the gain on
sale of receivables by an estimate of future cumulative credit losses over the
expected life of the auto receivables sold.
The Company sells mortgage receivables for cash on a servicing released,
whole-loan basis. The Company generally holds such receivables for less than 90
days. Accordingly, the Company provides no allowance for losses for the mortgage
receivables.
The Company reviews:
. static pool origination and charge-off relationships;
. charge-off experience factors;
. collection data;
. delinquency reports;
. estimates of the value of the underlying collateral;
. economic conditions and trends; and
. other information
in order to make the necessary judgments as to the appropriateness of the
assumptions for cumulative credit losses in securitization transactions,
provision for losses and allowance for losses. Although the Company uses many
resources to assess the adequacy of loss reserves, there is no precise method
for estimating the ultimate losses in the receivables portfolio.
The following tables present certain data related to the receivables
portfolio (dollars in thousands):
<TABLE>
<CAPTION>
March 31, 1999
------------------------------------------------------------------
Held For Sale Managed
------------------------------
Auto Auto
Auto Mortgage Total Serviced Portfolio (2)
--------- -------- --------- ---------- -------------
<S> <C> <C> <C> <C> <C>
Principal amount of receivables..................... $400,722 $25,248 $425,970 $3,152,486 $3,553,208
========== ==========
Allowance for losses................................ (10,549) (10,549) $ (299,017)(1) $ (309,566)
-------- ------- -------- ========== ==========
Receivables, net.................................... $390,173 $25,248 $415,421
======== ======= ========
Number of outstanding contracts..................... 30,495 279 290,368 320,863
======== ======= ========== ==========
Average amount of outstanding contract
(principal amount) (in dollars).................. $ 13,141 $90,495 $ 10,857 $ 11,074
======== ======= ========== ==========
Allowance for losses as a percentage of
receivables...................................... 2.6% 9.5% 8.7%
======== ========== ==========
</TABLE>
<TABLE>
<CAPTION>
June 30, 1998
------------------------------------------------------------------
Held For Sale Managed
--------------------------------
Auto Auto
Auto Mortgage Total Serviced Portfolio(2)
---------- -------- ---------- ---------- -------------
<S> <C> <C> <C> <C> <C>
Principal amount of receivables..................... $334,110 $ 21,499 $355,609 $1,968,406 $2,302,516
========== ==========
Allowance for losses................................ (12,756) (12,756) $ (179,359)(1) $ (192,115)
-------- -------- -------- ========== ==========
Receivables, net.................................... $321,354 $ 21,499 $342,853
======== ======== ========
Number of outstanding contracts..................... 26,035 187 187,514 213,549
======== ======== ========== ==========
Average amount of outstanding contract
(principal amount) (in dollars).................. $ 12,833 $114,968 $ 10,497 $ 10,782
======== ======== ========== ==========
Allowance for losses as a percentage of
receivables...................................... 3.8% 9.1% 8.3%
======== ========== ==========
</TABLE>
38
<PAGE>
<TABLE>
<CAPTION>
June 30, 1997
-------------------------------------------------------------------
Held for Sale Auto Managed
-------------------------------
Auto Mortgage Total Serviced Auto Portfolio(2)
--------- -------- ---------- ---------- -----------------
<S> <C> <C> <C> <C> <C>
Principal amount of receivables............. $275,249 $ 4,354 $279,603 $863,006 $1,138,255
======== ==========
Allowance for losses........................ (12,946) (12,946) $(74,925) (1) $ (87,871)
-------- ------- -------- ======== ==========
Receivables, net....................... $262,303 $ 4,354 $266,657
======== ======= ========
Number of outstanding contracts............. 25,757 48 87,090 112,847
======== ======= ======== ==========
Average amount of outstanding contract
(principal amount) (in dollars) $ 10,686 $90,708 $ 9,909 $ 10,087
======== ======= ======== ==========
Allowance for losses as a percentage of
receivables............................ 4.7% 8.7% 7.7%
======== ======== ==========
</TABLE>
__________________
(1) The allowance for losses relating to serviced auto receivables is netted
against interest-only receivables from Trusts in the Company's consolidated
balance sheets.
(2) Includes auto receivables only.
The following is a summary of managed auto receivables which are (1) more
than 30 days delinquent, but not in repossession, and (2) in repossession
(dollars in thousands):
<TABLE>
<CAPTION>
June 30, 1997 June 30, 1998 March 31, 1999
-------------------- ------------------- ------------------
Amount Percent Amount Percent Amount Percent
-------- -------- -------- --------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Delinquent contracts:
31-60 days...................... $ 73,197 6.4% $126,012 5.5% $220,022 6.2%
Greater than 60 days............ 36,421 3.2 59,175 2.6 80,668 2.3
-------- ---- -------- --- -------- ---
109,618 9.6 185,187 8.1 300,690 8.5
In repossession................. 14,471 1.3 18,818 0.8 31,431 0.9
-------- ---- -------- --- -------- ---
$124,089 10.9% $204,005 8.9% $332,121 9.4%
======== ==== ======== === ======== ===
</TABLE>
In accordance with its policies and guidelines, the Company at times offers
payment deferrals to consumers, whereby the consumer is allowed to move a
delinquent payment to the end of the loan by paying a fee (approximately the
interest portion of the payment deferred). Contracts receiving a payment
deferral as an average quarterly percentage of average managed auto receivables
outstanding were 1.9%, 4.3% and 4.5 % for fiscal 1996, 1997 and 1998,
respectively, and 4.5% and 4.6% for the nine months ended March 31, 1998 and
1999, respectively. The Company believes that payment deferrals granted
according to its policies and guidelines are an effective portfolio management
technique and result in higher ultimate cash collections from the portfolio.
The following table presents charge-off data with respect to the Company's
managed auto receivables portfolio (dollars in thousands):
<TABLE>
<CAPTION>
Nine Months Ended
Year Ended June 30, March 31,
---------------------------- -------------------
1996 1997 1998 1998 1999
-------- -------- -------- -------- ---------
<S> <C> <C> <C> <C> <C>
Net charge-offs:
Held for sale......................................... $18,322 $16,965 $ 9,140 $ 7,528 $ 5,708
Serviced.............................................. 1,652 26,266 78,862 53,390 98,183
------- ------- ------- ------- --------
$19,974 $43,231 $88,002 $60,918 $103,891
======= ======= ======= ======= ========
Net charge-offs as an annualized percentage of
average managed auto receivables outstanding 5.6% 5.5% 5.3% 5.4% 4.8%
======= ======= ======= ======= ========
Net recoveries as a percentage of gross repossession
charge-offs........................................... 52.5% 50.5% 50.6% 50.0% 51.4%
======= ======= ======= ======= ========
</TABLE>
39
<PAGE>
Delinquency and charge-offs typically fluctuate over time as a portfolio
matures. Accordingly, the delinquency and charge-off data above is not
necessarily indicative of delinquency and charge-off experience that could be
expected for a portfolio with a different level of seasoning.
Liquidity and Capital Resources
The Company's cash flows are summarized as follows (in thousands):
<TABLE>
<CAPTION>
Nine Months Ended
Year Ended June 30, March 31,
-------------------------------- ---------------------
1996 1997 1998 1998 1999
--------- --------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Operating activities.................................. $ 34,530 $ 36,003 $ 37,813 $ 11,162 $ 38,214
Investing activities.................................. (62,749) (92,947) (144,868) (105,820) (129,225)
Financing activities.................................. 12,050 60,826 134,115 97,725 94,770
-------- -------- --------- --------- ---------
Net increase (decrease) in cash and cash equivalents.. $(16,169) $ 3,882 $ 27,060 $ 3,067 $ 3,759
======== ======== ========= ========= =========
</TABLE>
The Company's primary sources of cash have been cash flows from operating
activities, including excess cash flow distributions from the Trusts, borrowings
under its warehouse and credit facilities, sales of auto receivables to Trusts
in securitization transactions, and the issuance of senior notes. The Company's
primary uses of cash have been purchases and originations of receivables and
funding credit enhancement requirements for securitization transactions.
The Company purchased $432.4 million, $906.8 million and $1,737.8 million
of auto finance contracts during fiscal 1996, 1997 and 1998 requiring cash of
$417.2 million, $896.7 million and $1,717.0 million, respectively, net of
acquisition fees and other items. The Company purchased $1,176.7 million and
$1,990.9 million of auto finance contracts during the nine months ended March
31, 1998 and 1999, respectively, requiring cash of $1,163.0 million and $1,983.8
million, respectively, net of acquisition fees and other items. The Company
initially funded these purchases utilizing warehouse and credit facilities and
subsequently through the sale of auto receivables in securitization
transactions.
In September 1998, the Company renewed its funding agreement with an
administrative agent on behalf of an institutionally managed commercial paper
conduit and a group of banks and increased the amount of structured warehouse
financing available under the agreement from $245 million to $505 million (the
"$505 Million Warehouse Facility"). The Company utilizes this facility to
fund auto receivables pending securitization. This facility matures in September
1999. A total of $233.7 million was outstanding under this facility as of March
31, 1999.
In March 1999, the Company entered into a funding agreement with a funding
agent on behalf of an institutionally managed commercial paper conduit and a
bank under which up to $150 million of structured warehouse financing is
available (the "$150 Million Warehouse Facility"). The Company utilizes this
facility to fund auto receivables pending securitization. There were no
outstanding balances under this agreement as of March 31, 1999. The facility
matures in March 2000.
In March 1999, the Company renewed its revolving credit agreement (the
"Credit Agreement") with a group of banks that provides for borrowings up to
$115 million, subject to a defined borrowing base. The Company utilizes the line
of credit to fund its auto lending activities and daily operations. The facility
matures in March 2000. There were no outstanding balances under the Credit
Agreement as of March 31, 1999.
The Company's Canadian subsidiary has a convertible revolving term credit
agreement (the "Canadian facility") with a bank that provides for borrowings
of up to $20 million Cdn., subject to a defined borrowing base. The Company
utilizes this facility to fund its Canadian auto lending activities. The
facility matures in November 1999. A total of $603,000 was outstanding under the
Canadian facility as of March 31, 1999.
In February 1999, the Company renewed its mortgage warehouse facility (the
"Mortgage Subsidiary Credit Agreement") with a bank under which it may borrow
up to $75 million, subject to a defined borrowing base, to fund mortgage loan
originations. The facility expires in July 1999. A total of $21.3 million was
outstanding under the mortgage facility as of March 31, 1999.
40
<PAGE>
As is customary in the Company's industry, its warehouse and credit
facilities need to be renewed on an annual basis. The Company has historically
been successful in renewing and expanding these facilities on an annual basis.
If the Company is unable to renew these facilities on acceptable terms it could
have a material adverse effect on its financial position, liquidity and results
of operation. See "Risk Factors--Dependence on Funding Sources" and "--
Ability to Service Debt."
The Company has completed 16 auto receivables securitization transactions
through March 31, 1999. The Company primarily used the proceeds from the
transactions to repay borrowings outstanding under its warehouse credit
facilities. A summary of these transactions is as follows:
<TABLE>
<CAPTION>
Balance at
Original Amount March 31, 1999
Transaction Date (in millions) (in millions)
----------- ------------- --------------- --------------
<S> <C> <C> <C>
1994-A December 1994 $ 51.0 Paid in full
1995-A June 1995 99.2 Paid in full
1995-B December 1995 65.0 Paid in full
1996-A March 1996 89.4 $ 8.6
1996-B May 1996 115.9 18.7
1996-C August 1996 175.0 26.5
1996-D November 1996 200.0 54.3
1997-A March 1997 225.0 76.4
1997-B May 1997 250.0 98.4
1997-C August 1997 325.0 153.7
1997-D November 1997 400.0 225.4
1998-A February 1998 425.0 272.0
1998-B May 1998 525.0 376.0
1998-C August 1998 575.0 463.9
1998-D November 1998 625.0 553.3
1999-A February 1999 700.0 675.4
---------- ------------
$ 4,845.5 $ 3,002.6
========== ============
</TABLE>
In connection with securitization transactions, the Company is required to
fund certain credit enhancement levels set by the insurer of the asset-backed
securities issued by the Trusts. The Company typically makes an initial deposit
to a restricted cash account and subsequently uses excess cash flows generated
by the Trusts to either increase the restricted cash account or repay the
outstanding asset-backed securities on an accelerated basis, thus creating
additional credit enhancement through over collateralization in the Trusts. When
the credit enhancement levels reach specified percentages of the Trust's pool of
receivables, excess cash flows are distributed to the Company.
When excess cash flow distributions are received depends on the type of
structure used. Historically, the Company has used a structure that involved a
higher initial cash deposit that resulted in receipt of excess cash flow
distributions approximately seven to nine months after the receivables were
securitized. Beginning in November 1997, the Company began to employ a structure
that involves a lower initial cash deposit and the use of reinsurance and other
alternative credit enhancements. Under this structure, the Company expects to
begin to receive excess cash flow distributions approximately 20 to 24 months
after receivables are securitized. For a description of the risks related to the
use of reinsurance and other alternative credit enhancements, see "Risk
Factors--Dependence on Funding Sources--Credit Enhancement."
Initial deposits to restricted cash accounts were $2.9 million, $71.4
million and $56.7 million for fiscal years 1996, 1997 and 1998, respectively,
and $43.4 million and $57.3 million for the nine months ended March 31, 1998 and
1999, respectively. Excess cash flows distributed to the Company were $1.2
million, $19.3 million and $43.8 million for fiscal years 1996, 1997 and 1998,
respectively, and $27.1 million and $35.2 million for the nine months ended
March 31, 1998 and 1999, respectively. In addition, the Company received $23.0
million representing a return of deposits from restricted cash accounts during
the nine months ended March 31, 1999.
41
<PAGE>
Certain agreements with the insurer provide that if delinquency, default
and net loss ratios in a Trust's pool of receivables exceed certain targets, the
specified credit enhancement levels would be increased. As of March 31, 1999,
none of the Company's securitizations had delinquency, default and net loss
ratios in excess of the targeted levels.
In February 1997 and January 1998, the Company issued $125 million and $50
million, respectively, of 9-1/4% Senior Notes which are due in February 2004.
Interest on the notes is payable semi-annually, in February and August. The
notes, which are unsecured, may be redeemed at the Company's option after
February 2001 at a premium declining to par in February 2003.
In April 1999, the Company issued $200 million of 9.875% Senior Notes which
are due in April 2006. Interest on the Notes is payable semi-annually, in April
and October. The notes, which are unsecured, may be redeemed at the Company's
option after April 2003 at a premium declining to par in April 2005.
The Company operated 168 auto lending branch offices as of March 31, 1999
and plans to open a minimum of six additional branches in the remainder of
fiscal 1999. The Company may also expand loan production capacity at existing
auto lending branch offices where appropriate. While the Company has been able
to establish and grow its finance businesses thus far, there can be no assurance
that future expansion will be successful due to competitive, regulatory, market,
economic or other factors.
As of March 31, 1999, the Company had $36.8 million in cash and cash
equivalents. The Company also had available borrowing capacity of $76.3 million
under its bank credit agreement pursuant to the borrowing base requirements of
such facility. The Company estimates that it will require additional external
capital for the remainder of fiscal 1999 in addition to these existing capital
resources in order to fund expansion of its lending activities. The Company
anticipates that such funding will be in the form of additional securitization
transactions and expansion of its warehouse and credit facilities. There can be
no assurance that funding will be available to the Company through these
sources, or if available, that it will be on terms acceptable to the Company.
Factors Affecting Future Liquidity
The Company's ability to make payments of principal of or interest on, or
to refinance its indebtedness (including the Notes) will depend on its future
operating performance, and its ability to enter into additional securitizations
and debt and/or equity financings, which to a certain extent is subject to
economic, financial, competitive and other factors beyond its control. If the
Company is unable to generate sufficient cash flow in the future to service our
debt, the Company may be required to refinance all or a portion of its existing
debt, including the Notes, or to obtain additional financing. There can be no
assurance that any such refinancing would be possible or that the Company could
obtain any additional financing. The inability to obtain additional financing
could have a material adverse effect on the Company.
The degree to which the Company is leveraged could have important
consequences to the holders of the Notes, including:
. the Company may be more vulnerable to adverse general economic and
industry conditions;
. the Company may find it more difficult to obtain additional financing
for future working capital, capital expenditures, acquisitions, general
corporate purposes or other purposes; and
. the Company will have to dedicate a substantial portion of its cash
resources to pay principal and interest on the Credit Agreement, the Mortgage
Subsidiary Credit Agreement and the Warehouse Facilities (all of which become
due prior to the maturity of the Notes), thereby reducing the funds available
for operations and future business opportunities.
In addition, the indentures under which the 9-1/4% Senior Notes due 2004
were issued, the Indenture, the Credit Agreement, the Warehouse Facilities, the
Canadian facility and the Mortgage Subsidiary Credit Agreement contain certain
covenants which could limit the Company's operating and financial flexibility.
See "Risk Factors."
42
<PAGE>
Interest Rate Risk
Since the Company's funding strategy is dependent upon the issuance of
interest-bearing securities and the incurrence of debt, fluctuations in interest
rates impact the Company's profitability. The Company utilizes several
strategies to minimize the risk of interest rate fluctuations including the use
of hedging instruments, the regular sale of auto receivables to the Trusts and
pre-funding securitizations, whereby the amount of asset-backed securities
issued in a securitization exceeds the amount of receivables initially sold to a
Trust. The proceeds from the pre-funded portion are held in an escrow account
until the Company sells additional receivables to the Trust in amounts up to the
balance of the pre-funded escrow account. In pre-funded securitizations, the
Company locks in the borrowing costs with respect to the loans it subsequently
delivers to the Trust. However, the Company incurs an expense in pre-funded
securitizations equal to the difference between the money market yields earned
on the proceeds held in escrow prior to subsequent delivery of receivables and
the interest rate paid on the asset-backed securities outstanding. There can be
no assurance that these strategies will be effective in minimizing interest rate
risk or that increases in interest rates will not have an adverse effect on the
Company's profitability.
The Company utilizes derivative financial instruments to manage the gross
interest rate spread on the Company's securitization transactions. The Company
sells fixed rate auto receivables to Trusts that, in turn, sell either fixed
rate or floating rate securities to investors. The fixed rates on securities
issued by the Trusts are indexed to rates on U.S. Treasury notes with similar
average maturities. The Company periodically uses forward U.S. Treasury rate
lock agreements to lock in the indexed rate for specific anticipated
securitization transactions. The floating rates on securities issued by the
Trusts are indexed to London Interbank Offered Rates (LIBOR). The Company uses
interest rate swap agreements to convert the floating rate exposures on these
securities to a fixed rate.
The Company made cash payments of $6.2 million and $5.8 million for the
nine months ended March 31, 1998 and 1999, respectively, to settle Forward U.S.
Treasury rate lock agreements. These amounts were included in the gain on sale
of receivables in securitization transactions and are recovered over time
through a higher gross interest rate spread on the related securitization
transaction. There were no outstanding Forward U.S. Treasury rate lock
agreements as of March 31, 1999.
All of the Company's interest rate swap agreements are associated with
securitization transactions completed prior to March 31, 1999 and the net market
risk to the Company is not material.
Recent Accounting Developments
In June 1997, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards No. 131, "Disclosures About
Segments of an Enterprise and Related Information" ("SFAS 131"). SFAS 131
establishes standards for the way companies report information about operating
segments in annual financial statements and requires that enterprises report
selected information about operating segments in interim financial reports. The
new pronouncement also establishes standards for related disclosures about
products and services, geographic areas and major customers. The statement is
effective for financial statements for periods beginning after December 15,
1997. The Company's auto finance business is currently the only segment
reportable under SFAS 131.
In June 1998, the FASB issued Statement of Financial Accounting Standards
No. 133, "Accounting for Derivative Instruments and Hedging Activities"
("SFAS 133"). SFAS 133 establishes accounting and reporting standards for
derivative instruments, including certain derivative instruments embedded in
other contracts, and for hedging activities. The new standard requires that all
derivatives be recognized as either assets or liabilities in the consolidated
balance sheets and that those instruments be measured at fair value. If certain
conditions are met, a derivative may be specifically designated as a hedging
instrument. The accounting for changes in the fair value of a derivative (that
is, gains and losses) depends on the intended use of the derivative and the
resulting designation. The statement is effective for all fiscal quarters of
fiscal years beginning after June 15, 2000. While the new standard will apply
to the Company's derivative financial instruments, the Company does not believe
that adoption of SFAS 133 will have a material effect on its consolidated
financial position or results of operations.
43
<PAGE>
Year 2000 Issue
The year 2000 issue is whether the Company or the Company's vendors'
computer systems will properly recognize date sensitive information when the
year changes to 2000. Systems that do not properly recognize such information
could generate erroneous data or fail.
The Company has developed a comprehensive project plan for achieving year
2000 readiness. The Company has completed an inventory of critical hardware and
software and the Company has assessed information technology components. This
assessment included major suppliers and business partners and the Company is
monitoring their continued progress toward year 2000 compliance; however, the
Company does not rely on any single supplier or partner to conduct business.
The Company has completed the process of renovating or replacing critical
systems. Integrated testing and installation of all renovated systems is
complete. In addition, the Company is currently developing contingency plans
for critical systems. Year 2000 project costs incurred through March 31, 1999
have been approximately $900,000. The Company expects to incur an additional
$100,000 of costs to fund year 2000 project efforts through the end of calendar
year 1999.
The Company presently believes that with modifications to existing
systems and/or conversion to new systems, the year 2000 issue will not pose
significant operational problems for the Company. However, there can be no
assurance that unforeseen problems in the Company's computer systems, or the
systems of third parties on which the Company's computers rely, would not have
an adverse effect on the Company's systems or operations.
44
<PAGE>
BUSINESS
General
We are a consumer finance company specializing in purchasing, securitizing
and servicing retail automobile installment sales contracts originated by
franchised and select independent dealers in connection with the sale of late
model used and to a lesser extent new automobiles. We target borrowers with
limited credit histories, modest incomes or those who have experienced prior
credit difficulties ("Non-Prime Borrowers"). With the use of proprietary
credit scoring models, we underwrite contracts on a decentralized basis through
a branch office network. These credit scoring models, combined with experienced
underwriting personnel, enable us to implement a risk-based pricing approach to
structuring and underwriting individual contracts. The Company's centralized
risk management department monitors these underwriting strategies and portfolio
performance to balance credit quality and profitability objectives. We service
our loan portfolio at centralized facilities located in Fort Worth, Texas,
Tempe, Arizona and Charlotte, North Carolina using automated loan servicing and
collection systems.
We had 168 branch offices as of March 31, 1999. As a result of our
expansion strategy, we have been able to increase our aggregate volume of
automobile installment sales contracts purchased to $1,737.8 million in fiscal
1998 from $18.3 million in fiscal 1993. We have continued this growth during the
first nine months of fiscal 1999, with purchases aggregating $1,990.9 million,
compared to $1,176.7 million during the same period in fiscal 1998. For fiscal
1998, the average principal amount financed was $12,479 and the weighted average
APR of contracts we purchased was 19.1%.
We generate earnings and cash flow primarily through the purchase,
retention, securitization and servicing of automobile receivables. In each
securitization, we sell automobile receivables to a trust that, in turn, sells
asset-backed securities to investors. We recognize a gain on the sale of the
receivables to the trust and receive monthly excess cash flow distributions from
the trust resulting from the difference between the interest received from the
consumer obligors on the receivables and the interest on the asset-backed
securities paid to investors, net of losses and expenses. When we receive excess
cash flow distributions depends on the type of structure we use. Historically,
we have used a structure that involved a higher initial cash deposit and
resulted in receipt of excess cash flow distributions approximately seven to
nine months after the receivables were securitized. Since November 1997, we have
employed a structure that involves a lower initial cash deposit. Under this
structure we expect to begin to receive excess cash flow distributions
approximately 20 to 24 months after the receivables are securitized. We received
excess cash flow of $43.8 million from securitization trusts in fiscal 1998. Due
to the time delay associated with distributions of excess cash flow from
securitizations, we expect to receive increased cash flow distributions in
fiscal 2000 from trusts created as a result of securitization transactions
occurring in fiscal 1998. Prior to the time when we begin to receive excess cash
flow, all excess cash flow is utilized to fund credit enhancement requirements
to secure financial guaranty insurance policies issued by a monoline insurance
company to protect investors in the asset-backed securities from losses. Once
predetermined credit enhancement requirements are reached and maintained, excess
cash flow is distributed to us. In addition to excess cash flow, we earn
servicing fees of 2.25% per annum of the outstanding principal balance of
receivables securitized. Over the four quarters ended March 31, 1999 we
completed four securitization transactions totaling $2.4 billion. We also
completed a $1 billion securitization in May 1999.
Business Strategy
Our principal objective is to continue to build upon our position as a
leading lender to Non-Prime Borrowers. To achieve this objective, we employ the
following key strategies:
Continued Expansion of Automobile Contract Purchase Volume. We seek to
continue to develop our automobile contract purchase volume. We intend to do
this through the continued expansion of our automobile finance branch network,
through increasing our market share in existing branch territories and through
marketing alliances with select automobile dealer groups and prime automotive
lenders, such as banks. We opened five branch offices in fiscal 1993, 13 in
fiscal 1994, 13 in fiscal 1995, 20 in fiscal 1996, 34 in fiscal 1997, 44 in
fiscal 1998, and 39 through March 31, 1999, bringing our branch office network
to 168 offices located in 41 states and one Canadian province as of March 31,
1999. We plan to open a minimum of six additional branch offices during the
remainder of fiscal 1999. As part of our goal of increasing the number of
dealers from whom we purchase automobile finance contracts, we have entered into
marketing alliances with certain automobile dealer groups and regional banks. In
addition, in March
45
<PAGE>
1999 we announced a new marketing alliance with Chase Manhattan Bank, USA, N.A.,
whereby we will provide non-prime automobile financing programs to automobile
dealers who currently have a relationship with Chase.
Use of Proprietary Credit Scoring Models for Risk-based Pricing. We have
developed and implemented a credit scoring system across our branch office
network to support the branch level credit approval process. Our proprietary
credit scoring models are designed to enable us to tailor each loan's pricing
and structure to a statistical assessment of the underlying credit risk.
Sophisticated Risk Management Techniques. Our centralized risk management
department is responsible for monitoring the origination process, supporting
management's supervision of each branch office, tracking collateral values of
our receivables portfolio and monitoring portfolio returns. The risk management
department uses proprietary databases to identify concentrations of risk, to
price for the risk associated with selected market segments and to endeavor to
enhance the credit quality and profitability of the contracts purchased.
High Investment in Technology to Support Operating Efficiency and Growth.
The use of leading-edge technology in both loan origination and servicing has
enabled us to become a low-cost provider in the non-prime automobile finance
market. Our annualized ratio of operating expenses to average managed
receivables was 10.0% for fiscal 1995, 7.2% for fiscal 1996, 6.2% for fiscal
1997, 5.4% for fiscal 1998 and 5.0% for the nine months ended March 31, 1999.
Funding and Liquidity Through Securitizations. We sell automobile
receivables in securitization transactions in order to obtain a cost-effective
source of funds for the purchase of additional automobile finance contracts, to
reduce the risk of interest rate fluctuations and to utilize capital
efficiently. Since our first securitization transaction in December 1994, we
have securitized approximately $4.8 billion of automobile receivables in private
and public offerings of asset-backed securities through March 31, 1999. In
addition, we completed a $1 billion securitization in May 1999.
Market and Competition
According to CNW Marketing/Research, an independent automobile finance
market research firm, the automobile finance industry is the second largest
consumer finance industry in the United States with over $603 billion of
franchised dealers loan and lease originations during 1998. The industry is
generally segmented according to the type of car sold (new vs. used) and the
credit characteristics of the borrower (prime vs. non-prime segment). The non-
prime segment of the market accounted for approximately $188 billion of these
originations.
Competition in the field of non-prime automobile finance is intense. The
automobile finance market is highly fragmented and is served by a variety of
financial entities including the captive finance affiliates of major automotive
manufacturers, banks, thrifts, credit unions and independent finance companies.
Many of these competitors have greater financial resources and lower costs of
funds than the Company. Many of these competitors also have long standing
relationships with automobile dealerships and may offer dealerships or their
customers other forms of financing, including dealer floor plan financing and
leasing, which are not provided by the Company. Providers of automobile
financing have traditionally competed on the basis of interest rates charged,
the quality of credit accepted, the flexibility of loan terms offered and the
quality of service provided to dealers and customers. In seeking to establish
itself as one of the principal financing sources at the dealers it serves, the
Company competes predominately on the basis of its high level of dealer service
and strong dealer relationships and by offering flexible loan terms. The Company
also seeks to offer rates that are competitive and that are consistent with its
goal of balancing risk and returns.
Operations
Target Market. Our indirect automobile lending programs are designed to
serve customers who have limited access to traditional automobile financing. Our
typical borrowers have experienced prior credit difficulties or have limited
credit histories. Because we serve consumers who are unable to meet the credit
standards imposed by most traditional automobile financing sources, we generally
charge interest at rates higher than those charged by traditional automobile
financing sources. We also expect to sustain a higher level of credit losses
than traditional automobile financing sources since we provide financing in a
relatively high risk market.
46
<PAGE>
Dealership Marketing. Since we are an indirect lender, we focus our
marketing activities on automobile dealerships. We are selective in choosing the
dealers with whom we conduct business. We primarily pursue manufacturer
franchised dealerships with used car operations and select independent
dealerships. We select these dealers because they sell the type of used cars we
prefer to finance, specifically later model, low mileage used cars. Of the
contracts we purchased during the fiscal year ended June 30, 1998, approximately
90% were originated by manufacturer franchised dealers with used car operations
and 10% by select independent dealers. We purchased contracts from 9,204 dealers
during the fiscal year ended June 30, 1998. No dealer accounted for more than 1%
of the total volume of contracts we purchased for that same period.
Our financing programs are marketed to dealers through branch office
personnel, including branch managers, assistant managers and in some cases
marketing representatives. We believe that the personal relationships our
branch managers and other branch office personnel establish with the dealership
personnel are an important factor in creating and maintaining productive
relationships with our dealership customer base. Branch office personnel are
responsible for the solicitation, enrollment and education of new dealers
regarding our financing programs. Branch office personnel visit dealerships to
present information regarding our financing programs and capabilities. These
personnel explain our underwriting philosophy, including our preference for non-
prime quality contracts secured by later model, lower mileage used vehicles and
our practice of underwriting in the local branch office.
Prior to entering into a relationship with a dealer, we consider the
dealer's operating history and reputation in the marketplace. We then maintain a
non-exclusive relationship with the dealer. We actively monitor this
relationship with the objective of maximizing the volume of applications
received from the dealer that meet our underwriting standards and profitability
objectives. Due to the non-exclusive nature of our relationships with
dealerships, the dealerships retain discretion to determine whether to obtain
financing from us or from another source for a customer seeking to finance a
vehicle purchase. Branch managers and other branch office personnel regularly
telephone and visit dealers to solicit new business and to answer any questions
dealers may have regarding our financing programs and capabilities. To increase
the effectiveness of these contacts, the branch managers and other branch office
personnel have access to our management information systems which detail current
information regarding the number of applications submitted by dealership, our
response and the reasons why we rejected a particular application.
We generally purchase finance contracts without recourse to the dealer, and
accordingly, the dealer usually has no liability to us if the consumer defaults
on the contract. To mitigate our risk from potential credit losses, we typically
charge dealers an acquisition fee when purchasing finance contracts. We
negotiate these acquisition fees with dealers on a contract-by-contract basis
and they are usually non-refundable. Although we purchase finance contracts
without recourse to the dealer, the dealer typically makes certain
representations as to the validity of the contract and compliance with certain
laws, and indemnifies us against any claims, defenses and set-offs that may be
asserted against us because of assignment of the contract. Recourse based upon
such representations and indemnities would be limited in circumstances in which
the dealer has insufficient financial resources to perform upon such
representations and indemnities. We do not view recourse against the dealer on
these representations and indemnities to be of material significance in its
decision to purchase finance contracts from a dealer.
Branch Office Network. We use a branch office network to market our
financing programs to selected dealers and develop relationships with dealers
throughout the country. Additionally, we use the branch office network for the
underwriting of contracts submitted by dealerships. We believe a local presence
enables us to more fully service dealers and be more responsive to dealer
concerns and local market conditions. We select markets for branch office
locations based upon numerous factors, including demographic trends and data,
competitive conditions and the regulatory environment in addition to the
availability of qualified personnel. Branch offices are typically situated in
suburban office buildings which are accessible to local dealers.
Each branch office solicits dealers for contracts and maintains our
relationship with the dealers in the geographic vicinity of that branch office.
Branch office locations are typically staffed by a branch manager, an assistant
manager and one or more dealer and customer service representatives. Larger
branch offices may also have an additional assistant manager and/or dealer
marketing representative. We compensate branch managers with base salaries and
annual incentives based on overall branch performance including factors such as
branch credit quality, loan pricing adequacy and loan volume objectives. We
typically pay the incentives in cash and stock option grants. The branch
managers report to regional vice presidents.
47
<PAGE>
Our regional vice presidents monitor branch office compliance with our
underwriting guidelines. Our management information systems provide the regional
vice presidents access to credit application information enabling them to
consult with the branch managers on daily credit decisions and review exceptions
to our underwriting guidelines. The regional vice presidents also make periodic
visits to the branch offices to conduct operating reviews.
The following table sets forth information with respect to the number of
branches, dollar volume of contracts purchased and number of producing
dealerships for the periods set forth below.
<TABLE>
<CAPTION>
Nine Months Ended
Year Ended June 30, March 31,
------------------------------- ------------------------
1996 1997 1998 1998 1999
-------- ------- ---------- --------- ---------
($ in thousands)
<S> <C> <C> <C> <C>
Number of branch offices...................... 51 85 129 119 168
Dollar volume of contracts purchased.......... $ 432.4 $ 906.8 $ 1,737.8 $ 1,176.7 $ 1,990.9
Number of producing dealerships(1)............ 3,262 5,657 9,204 7,763 10,991
</TABLE>
_________________
(1) A producing dealership refers to a dealership from which we have purchased
contracts in the relevant period.
We plan to expand our indirect automobile finance business by adding
additional branch offices and increasing dealer penetration at our existing
branch offices. The success of this strategy is dependent upon, among other
factors, our ability to hire and retain qualified branch managers and other
personnel and to develop relationships with more dealers. We confront intense
competition in attracting key personnel and establishing relationships with
dealers. Dealers often already have favorable non-prime financing sources, which
may restrict our ability to develop dealer relationships and delay our growth.
In addition, the competitive conditions in our markets may result in a reduction
in the profitability of the contracts that we purchase or a decrease in contract
acquisition volume, which would adversely affect our results of operations.
Underwriting and Purchasing of Contracts
Proprietary Credit Scoring System and Risk-based Pricing. We have
implemented a credit scoring system throughout our branch office network to
support the branch level credit approval process. The credit scoring system was
developed with the assistance of Fair, Isaac and Co., Inc. from our consumer
demographic and portfolio databases. We use credit scoring to differentiate
credit applicants and to rank order credit risk in terms of expected default
rates, which enables us to tailor loan pricing and structure according to this
statistical assessment of credit risk. For example, a consumer with a lower
score would indicate a higher probability of default and, therefore, we would
seek to compensate for this higher default risk through the structuring and
pricing of the transaction. While we employ a credit scoring system in the
credit approval process, credit scoring does not eliminate credit risk. Adverse
determinations in evaluating contracts for purchase could adversely affect the
credit quality of our receivables portfolio.
The credit scoring system contrasts the quality of credit applicant
profiles resulting in a statistical assessment of the most predictive
characteristics. Factors considered in any loan application include data
presented on the application, the credit bureau report and the type of loan the
applicant wishes to secure. Specifically, the credit scoring system considers
the applicant's residential and employment stability, financial history, current
financial capacity and integrity of meeting historical financial obligations as
well as the loan structure and credit bureau information. The scorecards take
these factors into account and produce a statistical assessment of these
attributes. This assessment is used to segregate applicant risk profiles and
determine whether risk is acceptable and the price we should charge for that
risk. The credit scorecards are validated on a monthly basis through the
comparison of actual versus projected performance by score. We endeavor to
refine our proprietary scorecards based on new information and identified
correlations relating to receivables performance.
48
<PAGE>
Through the use of our proprietary credit scoring system, branch office
personnel with credit authority are able to more efficiently review and
prioritize loan applications. Applications which receive a high score are
processed rapidly and credit decisions can be quickly faxed back to the dealer.
Applications receiving low scores can be quickly rejected without further
processing and review by us. This ability to prioritize applications allows for
a more effective allocation of resources to those applications requiring more
review.
Decentralized Loan Approval Process. We purchase individual contracts
through our branch offices based on a decentralized credit approval process
tailored to local market conditions. Each branch manager has a specific credit
authority based upon their experience and historical loan portfolio results as
well as established credit scoring parameters. In certain markets where a branch
office is not present and with respect to certain large dealer groups, we
purchase contracts through our regional purchasing offices. Although the credit
approval process is decentralized, all credit decisions are guided by our credit
scoring strategies, overall credit and underwriting policies and procedures and
daily monitoring process.
We receive loan application packages completed by prospective obligors via
facsimile at the branch offices from dealers. Application data are entered into
our automated application processing system. A credit bureau report is
automatically generated and credit scores are computed. Branch office personnel
with credit authority review the application package and determine whether to
approve the application, approve the application subject to conditions that must
be met or deny the application. These personnel consider many factors in
arriving at a credit decision, relying primarily on the applicant's credit
score, but also taking into account the applicant's capacity to pay, stability,
credit history, the contract terms and collateral value. We estimate that we
deny credit to approximately 60% to 65% of applicants typically because of their
credit histories or because their income levels are not sufficient to support
the proposed level of monthly payments. We contact dealers regarding credit
decisions by telefax and/or telephone. Declined and conditioned applicants are
also provided with appropriate notification of the decision.
Our underwriting and collateral guidelines as well as credit scoring
parameters form the basis for the branch level credit decision; however, the
qualitative judgment of the branch office personnel with credit authority with
respect to the credit quality of an applicant is a significant factor in the
final credit decision. Exceptions to credit policies and authorities must be
approved by a regional vice president or other designated credit officer.
The dealers send completed loan packages to the branch office. As part of
the credit decision process, a customer service representative investigates the
residence, employment and credit history of the applicant. Loan terms and
insurance coverages are generally reverified with the consumer by branch office
personnel and the loan packages are forwarded to our centralized loan services
department. All loan documentation is scanned to create electronic images and
key original documents are stored in a fire-resistant vault. The loans are
reviewed for proper documentation and regulatory compliance and are entered into
our loan accounting system. Daily loan reports are generated for final review by
senior operations management. Once cleared for funding, the loan services
department issues a check or electronically transfers funds to the dealer. Upon
funding of the contract, we require applicants to provide a perfected security
interest in the automobile that was financed. All of our contracts are fully
amortizing with substantially equal monthly installments.
Servicing and Collections Procedures
General. Our servicing activities consist of:
. collecting and processing customer payments,
. responding to customer inquiries,
. initiating contact with customers who are delinquent in payment of a
receivable installment,
. maintaining the security interest in the financed vehicle,
. maintaining physical damage insurance coverage of the financed
vehicle, and
. repossessing and liquidating collateral when necessary.
We utilize various automated systems to support our servicing and
collections activities. We use monthly billing statements to serve as a reminder
to customers as well as an early warning mechanism in the event a customer has
failed to notify us of an address change. Approximately 15 days before a
customer's first payment due date and each month thereafter, we mail the
customer a billing statement directing the customer to mail payments to a
lockbox
49
<PAGE>
bank for deposit in a lockbox account. Payment receipt data is electronically
transferred from our lockbox bank to us for posting to the loan accounting
system. We may also directly receive payments from customers. All payment
processing and customer account maintenance is performed centrally in Fort
Worth, Texas by the loan services department. We receive servicing fees for
servicing securitized receivables equal to 2.25% per annum of the outstanding
principal balance of such receivables.
Our collections activities are performed at regional centers located in
Fort Worth, Texas, Tempe, Arizona and Charlotte, North Carolina. We utilize a
predictive dialing system to make phone calls to customers whose payments are
past due. The predictive dialer is a computer-controlled telephone dialing
system which dials phone numbers of customers from a file of records extracted
from our database. Once a live voice responds to the automated dialer's call,
the system automatically transfers the call to a collector and the relevant
account information appears on the collector's computer screen. The system also
tracks and notifies collections management of phone numbers that the system has
been unable to reach within a specified number of days, thereby promptly
identifying for management all customers who cannot be reached by telephone. By
eliminating time wasted on attempting to reach customers, the system gives a
single collector the ability to speak with a larger number of accounts daily.
Once an account becomes more than 30 days delinquent, the account moves to
our mid-range collection unit. The objective of these collectors is to prevent
the account from becoming further delinquent. After a scheduled payment on an
account becomes approximately 60 to 90 days past due, we typically initiate
repossession of the financed vehicle. However, we may repossess it without
regard to the length of payment delinquency if:
. an account is deemed uncollectible,
. the financed vehicle is deemed by collection personnel to be in danger
of being damaged, destroyed or hidden,
. the customer deals in bad faith, or
. the customer voluntarily surrenders the financed vehicle.
At times, we offer payment deferrals to customers who have encountered
temporary financial difficulty, hindering their ability to pay as contracted,
and when other methods of assisting the customer in meeting the contract terms
and conditions have been exhausted. A deferral allows the customer to move a
delinquent payment to the end of the loan by paying a fee (approximately the
interest portion of the payment deferred). The collector must review the past
payment history and assess the customer's desire and capacity to make future
payments and, before agreeing to a deferral, must comply with our policies and
guidelines for deferrals. Exceptions to our policies and guidelines for
deferrals must be approved by a collections officer. The loan services
department processes deferment transactions. As of March 31, 1999,
approximately 13% of our managed receivables had received a deferral.
Repossessions. Repossessions are subject to prescribed legal procedures,
which include:
. peaceful repossession,
. one or more consumer notifications,
. a prescribed waiting period prior to disposition of the repossessed
automobile, and
. return of personal items to the consumer.
Some jurisdictions provide the consumer with reinstatement or redemption rights.
Legal requirements, particularly in the event of bankruptcy, may restrict our
ability to dispose of the repossessed vehicle. Repossessions are handled by
independent repossession firms engaged by us and must be approved by a
collections officer. Upon repossession and after any prescribed waiting period,
we sell the repossessed automobile at auction. We do not sell any vehicles on a
retail basis. We credit the proceeds from the sale of the automobile at auction,
and any other recoveries, against the balance of the contract. Auction proceeds
from the sale of the repossessed vehicle and other recoveries are usually not
sufficient to cover the outstanding balance of the contract, and the resulting
deficiency is charged-off. We may pursue collection of deficiencies when we
deem such action to be appropriate.
Charge-Off Policy. Our policy is to charge-off an account in the month in
which the account becomes 180 days contractually delinquent even if we have not
repossessed the related vehicle. On accounts less than 180 days delinquent, we
charge-off the account when the vehicle securing the delinquent contract is
repossessed and disposed of. The charge-off represents the difference between
the actual net sales proceeds and the amount of the delinquent
50
<PAGE>
contract, including accrued interest. Accrual of finance charge income is
suspended on accounts which are more than 60 days contractually delinquent.
Risk Management
Overview. We have developed procedures to evaluate and supervise the
operations of each branch office on a centralized basis. Our risk management
department is responsible for monitoring the contract purchase process and
supporting the supervisory role of senior operations management. This department
tracks via databases key variables, such as:
. loan applicant data,
. credit bureau and credit score information,
. loan structures and terms, and
. payment histories.
The risk management department also regularly reviews the performance of our
credit scoring system and is involved with third-party vendors in the
development and enhancement of our credit scorecards.
The risk management department also prepares regular credit indicator
packages reviewing portfolio performance at various levels of detail including
total Company, branch office and dealer. Various daily reports and analytical
data are also generated by our management information systems. We use this
information to monitor credit quality as well as to constantly refine the
structure and mix of new contract purchases. We review portfolio returns on a
consolidated basis, as well as at the branch office, dealer and contract levels.
Behavioral Scoring. We use statistically-based behavioral assessment
models to project the relative probability that an individual account will
default and to validate the credit scoring system after the receivable has aged
for a sufficient period of time (generally six to nine months). Default
probabilities are calculated for each account independent of the credit score.
Projected default rates from the behavioral assessment models and credit scoring
systems are compared and analyzed to monitor the effectiveness of our credit
strategies.
Collateral Value Management. The value of the collateral underlying our
receivables portfolio is updated monthly with a loan-by-loan link to national
wholesale auction values. This data, along with our own experience relative to
mileage and vehicle condition, are used for evaluating collateral disposition
activities as well as for reserve analysis models.
Compliance Audits. Our internal audit department conducts regular
compliance audits of branch office operations, loan services, collections and
other functional areas. The primary objective of the audits is to measure
compliance with our written policies and procedures as well as regulatory
matters. We conduct audits of branch office operations no less than every six
months and include a review of:
. compliance with underwriting policies;
. completeness of loan documentation;
. collateral value assessment; and
. extent of applicant data investigation.
Written audit reports are distributed to local branch office personnel and the
regional vice presidents for response and follow-up. Senior operations
management reviews copies of these reports. Audit results and responses are also
reviewed on a quarterly basis by an audit committee comprised of senior
executive management.
Securitization of Loans
Since December 1994, we have pursued a strategy of securitizing our
receivables to diversify our funding, improve liquidity and obtain a cost-
effective source of funds for the purchase of additional automobile finance
contracts. We apply the net proceeds from securitizations to pay down borrowings
under our credit and warehouse
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<PAGE>
facilities, thereby increasing availability thereunder for further contract
purchases. Through March 31, 1999, we have securitized approximately $4.8
billion of automobile receivables.
In our securitizations, we, through one or more wholly-owned subsidiaries,
transfer automobile receivables to newly-formed securitization trusts, which
issue one or more classes of asset-backed securities. The asset-backed
securities are in turn sold to investors, except for certain subordinated
interests which we may retain.
When we transfer receivables to securitization trusts in securitization
transactions, we recognize a gain on sale of receivables and continue to service
such receivables. The gain on sale of receivables represents the difference
between the sales proceeds, net of transaction costs, and our net carrying value
of the receivables sold, plus the present value of estimated excess cash flows.
The estimated excess cash flows are the difference between the cash collected
from obligors on securitized receivables and the sum of principal and interest
paid to investors in the asset-backed securities, contractual servicing fees,
defaults, net of recoveries, and other expenses such as trustee fees and
financial guarantee insurance premiums. Concurrently with recognizing the gain
on sale of receivables, we record a corresponding asset, interest-only
receivables from Trusts, which includes the present value of estimated excess
cash flows as described above.
The calculation of interest-only receivables includes estimates of future
losses and prepayment rates for the remaining term of the receivables sold since
these factors impact the amount and timing of future cash collected on the
receivables sold. We review the carrying value of interest-only receivables
quarterly on a disaggregated basis by Trust. If future losses or prepayment
rates exceed our original estimates, the asset will be adjusted through a charge
to operations. Favorable credit loss and prepayment experience compared to our
original estimates would result in additional income when realized. See "Risk
Factors--Default and Prepayment Risks."
In connection with our securitization program, we arrange for a financial
guaranty insurance policy to achieve a desired credit rating on the asset-backed
securities issued. The policies for each of our securitizations have been
provided by Financial Security Assurance, Inc., a monoline insurer, which
insures the timely payment of principal and interest due on the asset-backed
securities. We have limited reimbursement obligations to Financial Security
Assurance; however, credit enhancement requirements, including Financial
Security Assurance's encumbrance of certain restricted cash accounts and
subordinated interests in trusts, provide a source of funds to cover shortfalls
in collections (as described below) and to reimburse Financial Security
Assurance for any claims which may be made under the policies issued with
respect to our securitizations.
The credit enhancement requirements for any securitization include
restricted cash accounts which are generally established with an initial deposit
and, in some cases, reinsurance or other alternative forms of credit
enhancement, and subsequently funded through excess cash flows from securitized
receivables. Funds are withdrawn from the restricted cash accounts to cover any
shortfalls in amounts payable on the asset-backed securities. Funds are also
available to be withdrawn in an event of default to reimburse FSA for draws on
its financial guaranty insurance policy. In addition, the restricted cash
account for each securitization trust is cross-collateralized to the restricted
cash accounts established in connection with our other securitization trusts,
such that excess cash flow from a performing securitization trust insured by FSA
may be used to support cash flow shortfalls from a non-performing securitization
trust insured by FSA, thereby further restricting excess cash flow available to
us. We are entitled to receive amounts from the restricted cash accounts to the
extent the amounts deposited exceed predetermined required minimum levels.
FSA has taken a pledge of the stock of AFS Funding Corp., our wholly-owned
subsidiary that owns the restricted cash accounts, interest-only receivables,
and any subordinated interests in the Trusts, such that, if the pledge is
exercised in the event of a payment by FSA under one of its insurance policies
or certain material adverse changes in our business, FSA would control all of
the restricted cash accounts, interest-only receivables and any subordinated
interests in the Trusts. The terms of each securitization also provide that,
under certain tests relating to delinquencies, defaults and losses, cash may be
retained in the restricted cash account and not released to us until increased
minimum levels of credit enhancement requirements have been reached and
maintained.
Trade Names
We have obtained federal trademark protection for the "AmeriCredit" name
and the logo that incorporates the "AmeriCredit" name.
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<PAGE>
Regulation
Our operations are subject to regulation, supervision and licensing under
various federal, state and local statutes, ordinances and regulations.
In most states in which we operate, a consumer credit regulatory agency
regulates and enforces laws relating to consumer lenders and sales finance
agencies such as us. Such rules and regulations generally provide for licensing
of sales finance agencies, limitations on the amount, duration and charges,
including interest rates, for various categories of loans, requirements as to
the form and content of finance contracts and other documentation and
restrictions on collection practices and creditors' rights. In certain states,
our branch offices are subject to periodic examination by state regulatory
authorities. Some states in which we operate do not require special licensing or
provide extensive regulation of our business.
We are also subject to extensive federal regulation, including the Truth in
Lending Act, the Equal Credit Opportunity Act and the Fair Credit Reporting Act.
These laws require us to provide certain disclosures to prospective borrowers
and protect against discriminatory lending practices and unfair credit
practices. The principal disclosures required under the Truth in Lending Act
include the terms of repayment, the total finance charge and the annual
percentage rate charged on each loan. The Equal Credit Opportunity Act prohibits
creditors from discriminating against loan applicants on the basis of race,
color, sex, age or marital status. Pursuant to Regulation B promulgated under
the Equal Credit Opportunity Act, creditors are required to make certain
disclosures regarding consumer rights and advise consumers whose credit
applications are not approved of the reasons for the rejection. In addition, our
credit scoring system must comply with the requirements for such a system as set
forth in the Equal Credit Opportunity Act and Regulation B. The Fair Credit
Reporting Act requires us to provide certain information to consumers whose
credit applications are not approved on the basis of a report obtained from a
consumer reporting agency.
The dealers who originate automobile loans that we purchase also must
comply with both state and federal credit and trade practice statutes and
regulations. Failure of the dealers to comply with such statutes and regulations
could result in consumers having rights of rescission and other remedies that
could have an adverse effect on us.
Management believes that we maintain all material licenses and permits
required for our current operations and are in substantial compliance with all
applicable local, state and federal regulations. There can be no assurance,
however, that we will be able to maintain all requisite licenses and permits and
the failure to satisfy those and other regulatory requirements could have a
material adverse effect on our operations. Further, the adoption of additional,
or the revision of existing, rules and regulations could have a material adverse
effect on our business.
As a consumer finance company, we are subject to various consumer claims
and litigation seeking damages and statutory penalties based upon, among other
theories of liability, usury, disclosure inaccuracies, wrongful repossession,
fraud and discriminatory treatment of credit applicants, which could take the
form of a plaintiffs' class action complaint. We, as the assignee of finance
contracts originated by dealers, may also be named as a co-defendant in lawsuits
filed by consumers, principally against dealers. The damages and penalties
claimed by consumers in these types of matters can be substantial. Management
believes that we have taken prudent steps to address the litigation risks
associated with our business activities. However, there can be no assurance that
we will be able to successfully defend against all such consumer claims, or that
the determination of any such claim in a manner adverse to us would not have a
material adverse effect on our indirect automobile finance business.
Mortgage Loan Operations
In November 1996, we acquired AMS. AMS originates and acquires home equity
loans through a network of mortgage brokers. AMS sells its home equity loans and
the related servicing rights in the wholesale markets. AMS does not currently
represent a material portion of our assets or revenues.
Properties
Our executive offices are located at 200 Bailey Avenue, Fort Worth, Texas,
in a 43,000 square foot building we purchased in February 1994. We utilize this
building for branch office support and administrative activities. We
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also lease 67,000 square feet of office space in Tempe, Arizona under a ten year
agreement with renewal options, 56,000 square feet of office space in Charlotte,
North Carolina under a ten year agreement with renewal options, and 65,000
square feet of office space in Fort Worth, Texas under four year agreements.
These facilities are used for loan servicing and collections activities. We also
lease 32,000 square feet of office space in Fort Worth, Texas under a five year
agreement for various activities including our mortgage operations and regional
automobile contract purchasing office.
We generally lease branch office facilities under agreements with original
terms of three to five years. Such facilities are typically located in a
suburban office building and consist of between 1,000 and 2,000 square feet of
space.
Employees
At March 31, 1999, we employed approximately 2,200 persons.
Legal Proceedings
In the normal course of its business, we are named as a defendant in legal
proceedings. These cases include, among other things, claims for alleged truth-
in-lending violations, nondisclosures, misrepresentations, and deceptive trade
practices. The relief requested by the plaintiffs varies but includes requests
for compensatory, statutory and punitive damages. One proceeding in which we are
a defendant has been brought as a putative class action and is pending in the
State of California. A class has yet to be certified in this case, in which the
plaintiffs allege certain defects in our post-repossession notice forms in the
State of California, and no court date has been set, nor are any hearings
presently scheduled.
On April 8, 1999, a class action complaint was filed against us and certain
of our officers and directors alleging violations of Section 10(b) of the
Securities Exchange Act of 1934 arising from our use of the cash-in method of
measuring and accounting for credit enhancement assets in our financial
statements for the second, third and fourth quarters of fiscal year 1997, fiscal
year 1998 and the first quarter of fiscal year 1999. Although counsel for the
plaintiff issued a press release on June 2 concerning the commencement of the
lawsuit, a summons and complaint has yet to be served on us. In the opinion of
management, this litigation is without merit and we intend to vigorously defend
against the complaint.
In the opinion of management, the resolution of the proceedings described
in this section will not have a material adverse effect on our consolidated
financial position, results of operations or liquidity.
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MANAGEMENT
Directors and Executive Officers
The following table sets forth certain information regarding the current
directors and executive officers of the Company as of September 11, 1998:
<TABLE>
<CAPTION>
Name Age Position with the Company
---- --- -------------------------
<S> <C> <C>
Clifton H. Morris, Jr................ 63 Chairman of the Board and Chief Executive Officer
Michael R. Barrington................ 39 Vice Chairman of the Board, President and Chief
Operating Officer
Daniel E. Berce...................... 44 Vice Chairman of the Board and Chief Financial
Officer
Edward H. Esstman.................... 57 President and Chief Operating Officer of
AmeriCredit Financial Services, Inc., Executive
Vice President--Auto Finance Division and
Director
Chris A. Choate...................... 35 Senior Vice President, General Counsel and
Secretary
Cheryl L. Miller..................... 34 Executive Vice President, Director of Collections
and Customer Service of AmeriCredit Financial
Services, Inc.
Michael T. Miller.................... 37 Executive Vice President and Chief Credit Officer
Preston A. Miller.................... 34 Executive Vice President and Treasurer
A. R. Dike........................... 62 Director
James H. Greer....................... 71 Director
Douglas K. Higgins................... 48 Director
Kenneth H. Jones, Jr................. 63 Director
</TABLE>
Clifton H. Morris, Jr. has been Chairman of the Board and Chief Executive
Officer of the Company since May 1988, and was also President of the Company
from such date until April 1991 and from April 1992 to November 1996. Mr. Morris
is also a director of Service Corporation International, Inc., a publicly held
company which owns and operates funeral homes and related businesses, and Cash
America International, Inc., a publicly held pawn brokerage company.
Michael R. Barrington has been Vice Chairman, President and Chief Operating
Officer of the Company since November 1996 and was Executive Vice President and
Chief Operating Officer of the Company from November 1994 until November 1996.
Mr. Barrington was a Vice President of the Company from May 1991 until November
1994. From its formation in July 1992 until November 1996, Mr. Barrington was
also the President and Chief Operating Officer of AmeriCredit Financial
Services, Inc. ("AFSI"), a subsidiary of the Company.
Daniel E. Berce has been Vice Chairman and Chief Financial Officer of the
Company since November 1996 and was Executive Vice President, Chief Financial
Officer and Treasurer for the Company from November 1994 until November 1996.
Mr. Berce was Vice President, Chief Financial Officer and Treasurer of the
Company from May
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<PAGE>
1991 until November 1994. Mr. Berce is also a director of INSpire Insurance
Solutions, Inc., a publicly held company which provides policy and claims
administration services to the property and casualty insurance industry.
Edward H. Esstman has been President and Chief Operating Officer of AFSI
since November 1996. Mr. Esstman was Executive Vice President, Director of
Consumer Finance Operations of AFSI from November 1994 until November 1996 and
was Senior Vice President, Director of Consumer Finance of AFSI from AFSI's
formation in July 1992 until November 1994. Mr. Esstman has also been Executive
Vice President--Auto Finance Division for the Company since November 1996 and
Senior Vice President and Chief Credit Officer for the Company from November
1994 until November 1996.
Chris A. Choate has been Senior Vice President, General Counsel and
Secretary of the Company since November 1996 and was Vice President, General
Counsel and Secretary of the Company from November 1994 until November 1996 and
General Counsel and Secretary of the Company from January 1993 until November
1994. From July 1991 until January 1993, Mr. Choate was Assistant General
Counsel.
Cheryl L. Miller has been Executive Vice President, Director of Collections
and Customer Service of AFSI since July 1998 and was Senior Vice President,
Director of Collections and Customer Service of AFSI from March 1996 until July
1998 and Vice President, Director of Collections and Customer Service of AFSI
from October 1994 until March 1996. From May 1994 until October 1994, Ms. Miller
acted in other management capacities for AFSI. Prior to that, Ms. Miller was
with Ford Motor Credit Company, most recently as customer service supervisor of
the Dallas branch.
Michael T. Miller has been Executive Vice President and Chief Credit
Officer of the Company since July 1998 and was Senior Vice President and Chief
Credit Officer of the Company from November 1996 until July 1998. Mr. Miller was
Senior Vice President, Risk Management, Credit Policy and Planning and Chief of
Staff of AFSI since November 1994 until November 1996 and Vice President, Risk
Management, Credit Policy and Planning of AFSI from AFSI's formation in July
1992 until November 1994. Michael T. Miller is the brother of Cheryl L. Miller.
Preston A. Miller has been Executive Vice President and Treasurer of the
Company since July 1998 and was Senior Vice President and Treasurer of the
Company from November 1996 until July 1998. Mr. Miller was Vice President and
Controller of the Company from November 1994 until November 1996 and was
Controller of the Company from September 1989 until November 1994.
A.R. Dike has been President of Willis Corroon Life, Inc., of Texas (a
private insurance agency) since 1991. He was Chairman and Chief Executive
Officer of The Insurance Alliance, Inc. from January 1988 until September 1991.
Mr. Dike also serves on the Board of Directors of Cash America International,
Inc. and Hallmark Financial Services, Inc., a publicly held company engaged in
the insurance business.
James H. Greer is the Chairman of the Board of Shelton W. Greer Co., Inc.
which engineers, manufactures, fabricates and installs building specialty
products, and has been such for more than five years. Mr. Greer is also a
director of Service Corporation International, Inc., and Tanknology
Environmental, Inc., a publicly held company engaged in the environmental
services industry.
Douglas K. Higgins is a private investor and owner of Higgins & Associates
and has been in that position since July 1994. In 1983, Mr. Higgins founded H &
M Food Systems Company, Inc., a manufacturer of meat-based products for the food
service industry, and was employed by such company as President until his
retirement in July 1994.
Kenneth H. Jones, Jr. is Vice Chairman of KBK Capital Corporation, a
publicly held non-bank commercial finance company, and has been in that position
since January 1995. Prior to January 1995, Mr. Jones was a shareholder in the
Decker, Jones, McMackin, McClane, Hall & Bates, P.C. law firm in Fort Worth,
Texas, and was with that firm and its predecessor or otherwise involved in the
private practice of law in Fort Worth, Texas for more than five years. Mr. Jones
is also a director of Hallmark Financial Services, Inc. Until June 26, 1995, Mr.
Jones was Chairman of the Board of RVAC, Inc., a privately held company engaged
in manufacturing and installing air conditioning products on recreational
vehicles and manufactured housing. An involuntary Chapter 7 bankruptcy petition
was filed against RVAC, Inc. in December 1995.
56
<PAGE>
Employment Contracts, Termination of Employment and Change-in-Control
Arrangements
We have entered into employment agreements with all of our Named Executive
Officers. These agreements, as amended, contain terms that renew annually for
successive five year periods (ten years in the case of Mr. Morris), and the
compensation thereunder is determined annually by our Board of Directors,
subject to minimum annual compensation for Mr. Morris, $500,000; Messrs.
Barrington and Berce $345,000; Mr. Esstman, $300,000; and Mr. Miller, $255,000.
Included in each agreement is a covenant of the employee not to compete with us
during the term of his employment and for a period of three years thereafter.
The employment agreements also provide that if the employee is terminated other
than for cause, in the event the employee resigns or is terminated other than
for cause within twelve months after a "change in control" of us (as that term
is defined in the employment agreements), we will pay to the employee the
remainder of his current year's salary (undiscounted) plus the discounted
present value (employing an interest rate of 8%) of two additional years' salary
(for which purpose "salary" includes the annual rate of compensation
immediately prior to the "change in control" plus the average annual cash
bonus for the immediately preceding three year period).
In addition to the employment agreements described above, the terms of all
stock options granted to the Named Executive Officers provide that such options
will become immediately vested and exercisable upon the occurrence of a change
in control as defined in the stock option agreements evidencing such grants.
The provisions and terms contained in these employment and option
agreements could have the effect of increasing the cost of a change in control
of the Company and thereby delay or hinder such a change in control.
Board Committees and Meetings
Standing committees of the Board include the Audit Committee and the Stock
Option/Compensation Committee.
The Audit Committee's principal responsibilities consist of (1)
recommending the selection of independent auditors, (2) reviewing the scope of
the audit conducted by those auditors, as well as the audit itself, and (3)
reviewing the Company's internal audit activities and matters concerning
financial reporting, accounting and audit procedures, and policies generally.
Members consist of Messrs. Dike, Greer, Higgins and Jones.
The Stock Option/Compensation Committee (1) administers the Company's
employee stock option plans and reviews and approves the granting of stock
options and (2) reviews and approves compensation for executive officers.
Members consist of Messrs. Dike, Greer, Higgins and Jones.
The Board of Directors held five regularly scheduled meetings during the
fiscal year ended June 30, 1998. Various matters were also approved during the
last fiscal year by unanimous written consent of the Board of Directors. No
director attended fewer than 75% of the aggregate of (1) the total number of
meetings of the Board of Directors; and (2) the total number of meetings held by
all committees of the Board on which that director served.
Compensation of Directors
Members of the Board of Directors currently receive a $2,000 quarterly
retainer fee and an additional $3,500 fee for attendance at each meeting of the
Board. Members of Committees of the Board of Directors are paid $1,500 per
quarter for participation in all committee meetings held during that quarter.
At the 1990 Annual Meeting of Shareholders, we adopted the 1990 Stock
Option Plan for Non-Employee Directors of AmeriCredit Corp. (the "1990 Director
Plan"), which provides for grants to our nonemployee directors of nonqualified
stock options and reserves, in the aggregate, a total of 1,500,000 shares of
Common Stock for issuance upon exercise of stock options granted under such
plan. Under the 1990 Director Plan, each nonemployee director receives, upon
election as a Director and thereafter on the first business day after the date
of each annual meeting of shareholders of the Company, an option to purchase
20,000 shares of Common Stock at an exercise price equal to the fair market
value of the Common Stock on the date of grant. Each option is fully vested upon
the date of grant but may not be exercised prior to the expiration of six months
after the date of grant. On November 4, 1998, options to purchase 20,000 shares
of Common Stock were granted under the 1990 Director Plan to each of Messrs.
Dike, Greer,
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<PAGE>
Higgins and Jones at an exercise price of $14.88 per share. The exercise price
for the options granted to Messrs. Dike, Greer, Higgins and Jones is equal to
the last reported sale price of the Common Stock on the New York Stock Exchange
("NYSE") on the day preceding the date of grant.
Executive Compensation
Summary Compensation Table
The following sets forth information concerning the compensation of our
Chief Executive Officer and each of our other four most highly compensated
executive officers (the "Named Executive Officers") for the fiscal years
shown.
<TABLE>
<CAPTION>
Long Term
Compensation
Awards
-------------
Shares of
Annual Common Stock All Other
Compensation Underlying Stock Compensation
-------------------
Name and Principal Position Year Salary($) Bonus($) Options (#) ($)(1)
- --------------------------- ---- --------- -------- --------------- -------------
<S> <C> <C> <C> <C> <C>
Clifton H. Morris, Jr. ..... 1998 523,000 500,000 1,420,000 79,761
Chairman and CEO 1997 397,230 379,230 -- 101,241
1996 320,921 181,764 600,000 41,771
Michael R. Barrington....... 1998 381,750 458,767 1,420,000 43,681
Vice Chairman, President 1997 276,704 258,704 -- 43,326
and Chief Operating Officer 1996 223,832 123,506 400,000 5,758
Daniel E. Berce ............ 1998 381,750 458,767 1,420,000 44,381
Vice Chairman and 1997 276,704 258,704 -- 44,120
Chief Financial Officer 1996 223,832 123,506 400,000 6,620
Edward H. Esstman........... 1998 334,250 307,890 990,000 45,916
President and Chief 1997 246,473 171,355 -- 45,655
Operating Officer--AFSI 1996 186,758 91,385 300,000 10,305
Michael T. Miller........... 1998 165,000 123,750 518,400 4,941
Senior Vice President 1997 119,822 59,911 140,000 730
and Chief Credit Officer 1996 97,500 39,000 30,000 624
</TABLE>
- -------------
(1) The amounts disclosed in this column for fiscal 1998 include:
(a) Our contributions to 401(k) retirement plans on behalf of each
executive officer in the amount of $4,761;
(b) Payment by us of premiums for term life insurance on behalf of Mr.
Barrington, $1,420; Mr. Berce, $2,120; Mr. Esstman, $3,655; and Mr.
Miller, $180; and
(c) Annual premium payments under split-dollar life insurance policies on
Mr. Morris, $75,000; and Messrs. Barrington, Berce and Esstman,
$37,500 each.
58
<PAGE>
Option Grants in Last Fiscal Year
The following table shows all individual grants of stock options to our Named
Executive Officers during the fiscal year ended June 30, 1998.
<TABLE>
<CAPTION>
Shares of % of Total
Common Stock Options
Underlying Granted to Exercise Grant Date
Options Granted Employees in Price Expiration Present
(#) Fiscal Year ($/Sh) Date Value($)(1)
------------------ ------------- --------- ---------- --------------
<S> <C> <C> <C> <C> <C>
Clifton H. Morris, Jr. ......... 284,000(2) 3.45% $12.00 1/26/2005 $1,375,554
Chairman and CEO 1,136,000(3) 13.79% $12.00 1/26/2005 $5,502,216
Michael R. Barrington ......... 284,000(2) 3.45% $12.00 1/26/2005 $1,375,554
Vice Chairman, President and 1,136,000(3) 13.79% $12.00 1/26/2005 $5,502,216
Chief Operating Officer
Daniel E. Berce ................ 284,000(2) 3.45% $12.00 1/26/2005 $1,375,554
Vice Chairman and 1,136,000(3) 13.79% $12.00 1/26/2005 $5,502,216
Chief Financial Officer
Edward H. Esstman .............. 198,000(2) 2.40% $12.00 1/26/2005 $ 959,013
President and Chief 792,000(3) 9.61% $12.00 1/26/2005 $3,836,052
Operating Officer--AFSI
Michael T. Miller .............. 100,000(2) 1.21% $12.00 1/26/2005 $ 484,350
Executive Vice President and 400,000(3) 4.85% $12.00 1/26/2005 $1,937,400
Chief Credit Officer 18,400(4) 0.22% $16.38 4/28/2008 $ 166,888
</TABLE>
- ---------------
(1) As suggested by the Commission's rules on executive compensation disclosure,
we used the Black-Scholes model of option valuation to determine grant date
pre-tax present value. We do not advocate or necessarily agree that the
Black-Scholes model can properly determine the value of an option.
Calculations are based on a seven year option term for all grants (other
than the grant of 18,400 shares to Mr. Miller, which is based on a ten year
option term) and upon the following assumptions: annual dividend growth of 0
percent, volatility of approximately 32%, and a risk-free rate of return
based on the published Treasury yield curve effective on the grant date.
There can be no assurance that the amounts reflected in this column will be
achieved.
(2) These options were granted under the 1995 Omnibus Stock and Incentive Plan
for AmeriCredit Corp. The options, which were granted in January 1998 and
expire seven years after the date of grant, were accelerated and became
fully exercisable following our achievement of earnings per share of $0.76
for fiscal 1998, an amount that exceeded the earnings per share target
required for accelerated vesting of this grant.
(3) These options were granted under the terms of the 1998 Limited Stock Option
Plan for AmeriCredit Corp. (the "1998 Plan"). These options, which expire
seven years after the date of grant, become exercisable in full on January
1, 2005; provided, however, that the options will be accelerated and become
exercisable on a cumulative basis if we achieve specified earnings per share
targets over a four-year period according to the following schedule:
Earnings per Accelerated
Fiscal Year Share Target Vesting
----------- ------------ -------
June 30, 1999 ...................... $0.99 25%
June 30, 2000 ...................... 1.24 50%
June 30, 2001 ...................... 1.54 75%
June 30, 2002 ...................... 1.93 100%
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<PAGE>
The foregoing earnings per share targets require earnings per share growth of
30% in fiscal 1999 (as compared to earnings per share for fiscal 1998), and
earnings per share growth of 25% in each of fiscal years 2000, 2001, and 2002.
The options granted to Mr. Miller for 18,400 shares, which expire ten years
after the grant date, become exercisable 20% on April 28, 1998 and in 20%
increments thereafter on the anniversary date of the grant.
Aggregated Option Exercises in Last Fiscal Year
and FY-End Option Values
Shown below is information with respect to the Named Executive Officers
regarding option exercises during the fiscal year ended June 30, 1998, and the
value of unexercised options held as of September 11, 1998.
<TABLE>
<CAPTION>
Value of
Shares of Common Unexercised
Stock Underlying In-the-money
Unexercised Options at Options at
Shares Value Fy-end (#)(2) Fy-end ($)(2)
Acquired Realized Exercisable/ Exercisable/
on Exercise (#) ($)(1) Unexercisable Unexercisable
---------------- ---------- ---------------------- --------------
<S> <C> <C> <C> <C>
Clifton H. Morris, Jr........... -0- N/A 2,151,998/1,136,000 $13,519,024/$0
Chairman and CEO
Michael R. Barrington........... 200,000 $2,284,195 1,200,880/1,136,000 $ 5,273,298/$0
Vice Chairman and President
and Chief Operating Officer
Daniel E. Berce................. 100,000 $1,255,194 1,531,214/1,136,000 $ 8,397,933/$0
Vice Chairman and Chief
Financial Officer
Edward H. Esstman............... 160,000 $1,981,306 968,666/792,000 $ 5,106,151/$0
President and Chief Operating
Officer--AFSI
Michael T. Miller............... 155,000 $1,033,231 103,680/456,720 $ 0/$206,250
Senior Vice President and
Chief Credit Officer
</TABLE>
- ---------------
(1) The "value realized" represents the difference between the exercise price
of the option shares and the market price of the option shares on the date
the options were exercised. The value realized was determined without
considering any taxes which may have been owed.
(2) Values stated are pre-tax, net of cost and are based upon the closing price
of $11.75 per share of our common stock on the NYSE on September 11, 1998.
Compensation Committee Interlocks and Insider Participation
No member of the Stock Option/Compensation Committee is or has been an
officer or employee of us or any of our subsidiaries or had any relationship
requiring disclosure pursuant to Item 404 of Regulation S-K promulgated by the
Commission. No member of the Stock Option/Compensation Committee served on the
compensation committee, or as a director, of another corporation, one of whose
directors or executive officers served on the Stock Option/Compensation
Committee or whose executive officers served on our Board of Directors.
60
<PAGE>
Certain Transactions
On October 15, 1998, Michael R. Barrington, the Vice Chairman, President and
Chief Operating Officer of the Company, borrowed $400,000 from the Company. Mr.
Barrington repaid the entire loan 26 days later on November 10, 1998, together
with all accrued interest at a rate of approximately 8.25 percent.
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<PAGE>
PRINCIPAL SHAREHOLDERS
The following table and the notes thereto set forth certain information
regarding the beneficial ownership of our common stock as of February 28, 1999,
by (1) each current director of the Company; (2) each Named Executive Officer;
(3) all present executive officers and directors of the Company as a group; and
(4) each other person known to the Company to own beneficially more than five
percent of the presently outstanding Common Stock.
<TABLE>
<CAPTION>
Common Percent of
Stock Owned Class Owned
Beneficially(1) Beneficially(1)
---------------- ---------------
<S> <C> <C>
Regan Partners, L.P..................................... 4,920,500(2) 7.79%
Wanger Asset Management, L.P............................ 3,153,600(3) 5.00%
Clifton H. Morris, Jr................................... 2,345,894(4) 3.60%
Michael R. Barrington................................... 1,065,520(5) 1.66%
Daniel E. Berce......................................... 1,596,060(6) 2.47%
Edward H. Esstman....................................... 1,035,212(7) 1.61%
A. R. Dike.............................................. 66,476(8) *
James H. Greer.......................................... 460,000(9) *
Douglas K. Higgins...................................... 206,000(10) *
Kenneth H. Jones, Jr.................................... 300,000(11) *
Michael T. Miller....................................... 135,264(12) *
All Present Executive Officers and Directors (15 persons) 8,035,088 11.41%
</TABLE>
- -------------
* Less than 1%
(1) Except as otherwise indicated, the persons named in the table have sole
voting and investment power with respect to the shares of Common Stock
shown as beneficially owned by them. Beneficial ownership as reported in
the above table has been determined in accordance with Rule 13d-3 under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"). The
percentages are based upon 63,154,463 shares outstanding as of February 28,
1999, except for certain parties who hold options that are presently
exercisable or exercisable within 60 days of February 28, 1999. The
percentages for those parties who hold options that are presently
exercisable or exercisable within 60 days of February 28, 1999 are based
upon the sum of 63,154,463 shares outstanding plus the number of shares
subject to options that are presently exercisable or exercisable within 60
days of February 28, 1999 held by them, as indicated in the following
notes.
(2) A Form 13G filed with the Commission on February 9, 1999 reports that Regan
Partners, L.P. and Basil P. Regan hold an aggregate of 4,920,500 shares.
The address of Regan Partners and Basil P. Regan is 6 East 43rd Street, New
York, New York 10017.
(3) A Form 13G filed with the Commission dated February 8, 1999 reports that
Wanger Asset Management, L.P. and Wanger Asset Management, Ltd. hold an
aggregate of 3,153,600 shares. The address of Wanger Asset Management, L.P.
and Wanger Asset Management, Ltd. is 227 West Monroe Street, Suite 3000,
Chicago, Illinois 60606.
(4) This amount includes 2,066,666 shares subject to stock options that are
currently exercisable or exercisable within 60 days. This amount also
includes 76,272 shares of Common Stock in the name of Sheridan C. Morris,
Mr. Morris' wife.
(5) This amount includes 1,049,000 shares subject to stock options that are
currently exercisable or exercisable within 60 days.
(6) This amount includes 1,531,214 shares subject to stock options that are
currently exercisable or exercisable within 60 days.
(7) This amount includes 968,666 shares subject to stock options that are
currently exercisable or exercisable within 60 days.
(8) This amount includes 7,000 shares of Common Stock held in the name of Sara
B. Dike, Mr. Dike's wife.
(9) This amount consists of 460,000 shares subject to stock options that are
currently exercisable or exercisable within 60 days. This amount does not
include 39,212 shares of Common Stock held by Mr. Greer's wife as separate
property, as to which Mr. Greer disclaims any beneficial interest.
(10) This amount includes 60,000 shares subject to stock options that are
currently exercisable or exercisable within 60 days. This amount does not
include 34,000 shares held in trust for the benefit of certain family
members of Mr. Higgins, as to which Mr. Higgins disclaims any beneficial
interest.
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<PAGE>
(11) This amount includes 260,000 shares subject to stock options that are
currently exercisable or exercisable within 60 days.
(12) This amount includes 131,040 shares subject to stock options that are
currently exercisable or exercisable within 60 days.
63
<PAGE>
DESCRIPTION OF THE NEW NOTES
General
You can find the definitions of certain terms used in this description
under the subheading "Certain Definitions." In this description, the words
"Company" and "AmeriCredit" refer only to AmeriCredit Corp and not to any of its
subsidiaries.
The Old Notes were, and the New Notes will be, issued by AmeriCredit under
the Indenture dated April 20, 1999 (the "Indenture") among itself, the
Guarantors and Bank One, N.A., as trustee (the "Trustee"). The terms of the Old
Notes and the New Notes (collectively, the "Notes") include those stated in the
Indenture and those made part of the Indenture by reference to the Trust
Indenture Act of 1939, as amended (the "Trust Indenture Act"). The New Notes
are substantially identical to the terms and provisions of the Old Notes, except
for certain transfer restrictions and registration rights relating to the Old
Notes. The term "Notes" refers to both the Old Notes and the New Notes.
The following description is a summary of the material provisions of the
Indenture. It does not restate the Indenture in its entirety. Because this is
a summary, we urge you to read the Indenture and the relevant portions of the
Trust Indenture Act because they, and not this description, define your rights
as holders of the Notes. We have filed copies of the Indenture as an exhibit to
the registration statement which includes this prospectus.
Brief Description of the Notes and the Guarantees
The Notes are:
. general obligations of the Company;
. rank equally in right of payment with the Original Notes, the
Secondary Notes and all current and future unsecured senior
Indebtedness of the Company;
. effectively subordinated to the secured Indebtedness of the Company
and its Subsidiaries;
. effectively subordinated to the Indebtedness of the Securitization
Trusts and certain obligations under Credit Enhancement Agreements;
and
. unconditionally guaranteed by the Guarantors.
These Notes are guaranteed by the following subsidiaries of the Company:
. AmeriCredit Financial Services, Inc.;
. ACF Investment Corporation;
. Americredit Corporation of California;
. AmeriCredit Management Company; and
. AmeriCredit Financial Services of Canada Ltd.
The operations of the Company are conducted through its Subsidiaries and,
therefore, the Company is dependent upon the cash flow of its Subsidiaries to
meet its obligations, including its obligations under the Notes. All of the
Company's current and future Restricted Subsidiaries, other than:
. AFS Funding Corp.;
. CP Funding Corp.;
. AmeriCredit Funding Corp.; and
. AmeriCredit Warehouse Trust
will guarantee the Company's payment obligations under the Notes on a senior
unsecured basis. AFS Funding Corp., CP Funding Corp., AmeriCredit Funding Corp.
and AmeriCredit Warehouse Trust hold substantial assets.
See "Risk Factors--Holding Company Structure."
As of the date of the Indenture, all of the Company's Subsidiaries will be
Restricted Subsidiaries. However, under certain circumstances, the Company will
be able to designate current or future Subsidiaries as Unrestricted
64
<PAGE>
Subsidiaries. Unrestricted Subsidiaries will not be subject to many of the
restrictive covenants set forth in the Indenture.
Principal, Maturity and Interest
The Company issued the Old Notes with an aggregate principal amount of $200
million. The Company will issue Notes in denominations of $1,000 and integral
multiples of $1,000. The Notes will mature on April 15, 2006.
Interest on the Notes will accrue at the rate of 9.875% per annum and will
be payable semi-annually in arrears on April 15 and October 15, commencing on
October 15, 1999. The Company will make each interest payment to Holders of
record on the immediately preceding April 1 and October 1.
Interest on the Notes will accrue from the most recent date to which
interest has been paid or, if no interest has been paid, from the date of
original issuance. Interest will be computed on the basis of a 360-day year
comprised of twelve 30-day months.
Methods of Receiving Payments on the Notes
If a Holder has given wire transfer instructions to the Company, the
Company will make all principal, premium and interest payments on those Notes in
accordance with those instructions. All other payments on these Notes will be
made at the office or agency of the Paying Agent and Registrar within the City
and State of New York unless the Company elects to make interest payments by
check mailed to the Holders at their address set forth in the register of
Holders.
Paying Agent and Registrar for the Notes
The Trustee will initially act as Paying Agent and Registrar. The Company
may change the Paying Agent or Registrar without prior notice to the Holders of
the Notes, and the Company or any of its Subsidiaries may act as Paying Agent or
Registrar.
Transfer and Exchange
A Holder may transfer or exchange Notes in accordance with the Indenture.
The Registrar and the Trustee may require a Holder, among other things, to
furnish appropriate endorsements and transfer documents and the Company may
require a Holder to pay any taxes and fees required by law or permitted by the
Indenture. The Company is not required to transfer or exchange any Note selected
for redemption. Also, the Company is not required to transfer or exchange any
Note for a period of 15 days before a selection of Notes to be redeemed.
The registered Holder of a Note will be treated as the owner of it for all
purposes.
Subsidiary Guarantees
The Guarantors will jointly and severally guarantee the Company's
obligations under the Notes. The Subsidiary Guarantees will rank equally with
the Original Guarantees and the Secondary Guarantees. The obligations of each
Guarantor under its Subsidiary Guarantee will be limited as necessary to prevent
that Subsidiary Guarantee from constituting a fraudulent conveyance under
applicable law. See, "Risk Factors--Fraudulent Conveyance Matters."
A Guarantor may not consolidate with or merge with or into (whether or not
such Guarantor is the surviving Person), another corporation, Person or entity
whether or not affiliated with such Guarantor unless:
(1) subject to the provisions of the following paragraph, the Person
formed by or surviving any such consolidation or merger (if other
than such Guarantor) assumes all the obligations of that Guarantor
pursuant to a supplemental indenture satisfactory to the Trustee;
(2) immediately after giving effect to such transaction, no Default or
Event of Default exists;
65
<PAGE>
(3) such Guarantor, or any Person formed by or surviving any such
consolidation or merger, would have Consolidated Net Worth
(immediately after giving effect to such transaction), equal to or
greater than the Consolidated Net Worth of such Guarantor immediately
preceding the transaction; and
(4) the Company would be permitted by virtue of the Company's pro forma
Consolidated Leverage Ratio, immediately after giving effect to such
transaction, to incur at least $1.00 of additional Indebtedness
pursuant to the Consolidated Leverage Ratio test set forth in the
covenant described below under the caption "--Incurrence of
Indebtedness and Issuance of Preferred Stock."
The Subsidiary Guarantee of a Guarantor will be released:
(1) in connection with the sale of other disposition of all of the assets
of that Guarantor (including by way of merger or consolidation), if
the Company applies the Net Proceeds of that sale or other
disposition in accordance with the applicable provisions of the
Indenture; or
(2) in connection with the sale or of other disposition of all of the
capital stock of that Guarantor, if the Company applies the Net
Proceeds of that sale or of the disposition in accordance with the
applicable provisions of the Indenture.
See "Repurchase at the Option of Holders-Asset Sales."
Optional Redemption
During the first 36 months after April 15, 1999, AmeriCredit may on any one
or more occasions redeem up to $66.67 million of the aggregate principal amount
of Notes at a redemption price of 109.875% of the principal amount thereof, plus
accrued and unpaid interest and liquidated damages, if any, to the redemption
date, with the net cash proceeds of a public offering of the Company's common
stock; provided that:
(1) at least $133.33 million in aggregate principal amount of Notes
remain outstanding immediately after the occurrence of such
redemption; and
(2) the redemption shall occur within 45 days of the date of the closing
of the public offering of common stock.
Except pursuant to the preceding paragraph, the Company will not be able to
redeem the Notes prior to April 15, 2003. After April 15, 2003 the Company may
redeem all or part of the Notes upon not less than 30 nor more than 60 days
notice at the redemption prices (expressed as percentages of principal amount)
set forth below plus accrued and unpaid interest and liquidated damages to the
redemption date, if redeemed during the twelve-month period beginning on April
15 of the years indicated below:
Year Percentage
---- ----------
2003 ......................................... 104.938%
2004 ......................................... 102.469%
2005 and thereafter .......................... 100.000%
Selection and Notice
If the Company redeems less than all of the Notes at any time, the Trustee
will select the Notes for redemption as follows:
(1) If the Notes are listed, in compliance with the requirements of the
principal national securities exchange on which the Notes are listed;
or,
(2) if the Notes are not so listed, on a pro rata basis, by lot or by
such method as the Trustee shall deem fair and appropriate.
66
<PAGE>
No Notes of $1,000 or less shall be redeemed in part. Notices of
redemption shall be mailed by first class mail at least 30 but not more than 60
days before the redemption date to each Holder of Notes to be redeemed at its
registered address. Notices of redemption may not be conditional.
If any Note is to be redeemed in part only, the notice of redemption that
relates to that Note shall state the portion of the principal amount thereof to
be to be redeemed. A new Note in principal amount equal to the unredeemed
portion thereof will be issued in the name of the Holder thereof upon
cancellation of the original Note. Notes called for redemption become due on
the date fixed for redemption. On and after the redemption date, interest
ceases to accrue on Notes or portions of them called for redemption.
Mandatory Redemption
Except as set forth below under "Repurchase at the Option of Holders,"
the Company is not required to make mandatory redemption or sinking fund
payments with respect to the Notes.
Repurchase at the Option of Holders
Change of Control
If a Change of Control occurs, each Holder of Notes will have the right to
require the Company to repurchase all or any part (equal to $1,000 or an
integral multiple of $1,000) of that Holder's Notes pursuant to the Change of
Control Offer. In the Change of Control Offer, the Company will offer a cash
payment equal to 101% of the aggregate principal amount of Notes repurchased
plus accrued and unpaid interest and Liquidated Damages thereon, if any, to the
date of purchase. Within ten days following any Change of Control, the Company
will mail a notice to each Holder describing the transaction or transactions
that constitute the Change of Control and offering to repurchase Notes on the
Change of Control Payment Date specified in that notice, pursuant to the
procedures required by the Indenture and described in that notice. The Company
will comply with the requirements of Rule 14e-1 under the Exchange Act and any
other securities laws and regulations thereunder to the extent such laws and
regulations are applicable in connection with the repurchase of the Notes as a
result of a Change of Control.
On the Change of Control Payment Date, the Company will, to the extent
lawful:
(1) accept for payment all Notes or portions thereof properly tendered
pursuant to the Change of Control Offer;
(2) deposit with the Paying Agent an amount equal to the Change of
Control Payment in respect of all Notes or portions of the Notes so
tendered; and
(3) deliver or cause to be delivered to the Trustee the Notes so accepted
together with an Officers' Certificate stating the aggregate
principal amount of Notes or portions thereof being purchased by the
Company.
The Paying Agent will promptly mail to each Holder of Notes so tendered the
Change of Control Payment for such Notes, and the Trustee will promptly
authenticate and mail (or cause to be transferred by book entry) to each Holder
a new Note equal in principal amount to any unpurchased portion of the Notes
surrendered, if any; provided that each such new Note will be in a principal
amount of $1,000 or an integral multiple thereof. The Company will publicly
announce the results of the Change of Control Offer on or as soon as practicable
after the Change of Control Payment Date.
The provisions described above that require the Company to make Change of
Control Offer following a Change of Control will be applicable regardless of
whether or not any other provisions of the Indenture are applicable. Except as
described above with respect to a Change of Control, the Indenture does not
contain provisions that permit the Holders of the Notes to require that the
Company repurchase or redeem the Notes in the event of a takeover,
recapitalization or similar transaction.
67
<PAGE>
The Company's other senior Indebtedness contains prohibitions of certain
events that would constitute a Change of Control. In addition, the exercise by
the Holders of Notes of their right to require the Company to repurchase the
Notes could cause a default under such other senior Indebtedness due to the
financial effect of such repurchases on the Company even if the Change of
Control itself does not. Finally, the Company's ability to pay cash to the
Holders of Notes upon a repurchase may be limited by the Company's then existing
financial resources. See "Risk Factors--Financing Change of Control Offer."
The Company will not be required to make a Change of Control Offer upon a
Change of Control if a third party makes the Change of Control Offer in the
manner, at the times and otherwise in compliance with the requirements set forth
in the Indenture applicable to a Change of Control Offer made by the Company and
purchases all Notes validly tendered and not withdrawn under such Change of
Control Offer.
The definition of Change of Control includes a phrase relating to the sale,
all or substantially all" of the assets of the Company and its Subsidiaries
taken as a whole. Although there is a limited body of case law interpreting the
phrase "substantially all," there is no precise established definition of the
phrase under applicable law. Accordingly, the ability of a Holder of Notes to
require the Company to repurchase such Notes as a result of a sale, lease,
transfer, conveyance or other disposition of less than all of the assets of the
Company and its Subsidiaries taken as a whole to another Person or group may be
uncertain.
Asset Sales
The Company will not, and will not permit any of its Restricted
Subsidiaries to, consummate an Asset Sale unless:
(1) the Company (or the Restricted Subsidiary, as the case may be)
receives consideration at the time of such Asset Sale at least equal
to the fair market value of the assets or Equity Interests issued or
sold or otherwise disposed of; and
(2) such fair market value is determined by the Company's Board of
Directors and evidenced by a resolution of the Board of Directors set
forth in an Officer's Certificate delivered to the Trustee;
(3) at least 85% of the consideration therefor received by the Company or
such Restricted Subsidiary is in the form of cash; provided that
(a) any liabilities (as shown on the Company's or such Restricted
Subsidiary's most recent balance sheet) of the Company or any
Restricted Subsidiary (other than contingent liabilities and
liabilities that are by their terms subordinated to the Notes or
any Guarantee) that are assumed by the transferee of any such
assets pursuant to a customary novation agreement that releases
the Company or such Restricted Subsidiary from further
liability; and
(b) any securities, notes or other obligations received by the
Company or any such Restricted Subsidiary from such transferee
that are immediately converted by the Company or such Restricted
Subsidiary into cash (to the extent of the cash received), shall
be deemed to be cash for purposes of this provision.
Within 180 days after the receipt of any Net Proceeds from an Asset Sale,
the Company may apply such Net Proceeds at its option:
(a) permanently reduce the Specified Senior Indebtedness of the
Company and its Restricted Subsidiaries including the Original
Notes and the Secondary Notes; provided, however, that the
Company shall apply such Net Proceeds to all Specified Senior
Indebtedness of the Company and its Restricted Subsidiaries on a
pro rata basis, or
(b) to an Investment;
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<PAGE>
(c) to make a capital expenditure or;
(d) to acquire Receivables or other tangible assets, in each case,
in or with respect to a Permitted Business.
Pending the final application of any such Net Proceeds, the Company may
temporarily reduce Indebtedness under Credit Facilities and/or Warehouse
Facilities or otherwise invest such Net Proceeds in any manner that is not
prohibited by the Indenture.
Any Net Proceeds from Asset Sales that are not applied or invested as
provided in the preceding paragraph will constitute Excess Proceeds. When the
aggregate amount of Excess Proceeds exceeds $10.0 million, the Company will make
an Asset Sale Offer to all Holders of Original Notes to purchase the maximum
principal amount of Original Notes that may be purchased out of the Excess
Proceeds. The offer price will be equal to 100% of the principal amount plus
accrued and unpaid interest and Liquidated Damages, if any, to the date of
purchase and will be payable in cash.
If the Holders of Original Notes tender an aggregate amount of Original
Notes that is less than the Excess Proceeds, the Company will make a Secondary
Asset Sale Offer to all Holders of Secondary Notes to purchase the maximum
principal amount of Secondary Notes that may be purchased out of Excess
Proceeds. The offer price will be equal to 100% of the principal amount plus
accrued and unpaid interest and Liquidated Damages, if any, to the date of
purchase, and will be payable in cash.
If the Holders of Secondary Notes tender an aggregate amount of Secondary
Notes that is less than the Excess Proceeds, the Company will make a Third Asset
Sale Offer to all Holders of Notes to purchase the maximum principal amount of
Notes that may be purchased out of Excess Proceeds. The offer price will be
equal to 100% of the principal amount plus accrued and unpaid interest and
Liquidated Damages, if any, to the date of purchase, and will be payable in
cash.
If any Excess Proceeds remain after the consummation of the Third Asset
Sale Offer, the Company may use such Excess Proceeds for general corporate
purposes. If the aggregate principal amount of Original Notes, Secondary Notes
or Notes tendered into such Asset Sale Offer exceeds the amount of Excess
Proceeds, the Trustee shall select the Original Notes, Secondary Notes or Notes
to be purchased on a pro rata basis. Upon completion of such offer to purchase
Notes, the amount of Excess Proceeds shall be reset at zero.
Certain Covenants
Restricted Payments
The Company will not, and will not permit any of its Restricted
Subsidiaries to, directly or indirectly:
(1) declare or pay any dividend or make any other payment or distribution
on account of the Company's or any of its Restricted Subsidiaries'
Equity Interests (including, without limitation, any payment in
connection with any merger or consolidation involving the Company) or
to the direct or indirect holders of the Company's or any of its
Restricted Subsidiaries' Equity Interests in their capacity as such
(other than dividends or distributions payable in Equity Interests
(other than Disqualified Stock) of the Company);
(2) purchase, redeem or otherwise acquire or retire for value (including,
without limitation, in connection with any merger or consolidation
involving the Company) any Equity Interests of the Company or any
direct or indirect parent of the Company or other Affiliate of the
Company (other than any such Equity Interests owned by the Company or
any Wholly-Owned Restricted Subsidiary of the Company);
(3) make any payment on or with respect to, or purchase, redeem, defease
or otherwise acquire or retire for value any Indebtedness that is
subordinated to the Notes, except a payment of interest or principal
at Stated Maturity; or
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(4) make any Restricted Investment (all such payments and other actions
set forth in clauses (1) through (4) above being collectively
referred to as "Restricted Payments"),
unless, at the time of and after giving effect to such Restricted Payment:
(1) no Default or Event of Default shall have occurred and be continuing
or would occur as a consequence thereof; and
(2) the Company would, at the time of such Restricted Payment and after
giving pro forma effect thereto, have been permitted to incur at
least $1.00 of additional Indebtedness pursuant to the Consolidated
Leverage Ratio test set forth in the first paragraph of the covenant
described below under the caption "--Incurrence of Indebtedness and
Issuance of Preferred Stock;" and
(3) such Restricted Payment, together with the aggregate amount of all
other Restricted Payments made by the Company and its Subsidiaries
after February 4, 1997 (excluding Restricted Payments permitted by
clause (b) of the next succeeding paragraph), is less than the sum
of:
(a) 25% of the aggregate cumulative Consolidated Net Income of the
Company for the period (taken as one accounting period) from
March 31, 1997 to the end of the Company's most recently ended
fiscal quarter for which internal financial statements are
available at the time of such Restricted Payment (or, if such
Consolidated Net Income for such period is a deficit, less 100%
of such deficit); plus
(b) 100% of the aggregate net cash proceeds received by the Company
from the issue or sale since February 4, 1997 of Equity
Interests of the Company (other than Disqualified Stock) or from
the issue or sale of Disqualified Stock or debt securities of
the Company that have been converted into such Equity Interests
(other than Equity Interests (or Disqualified Stock or
convertible debt securities) sold to a Subsidiary of the Company
and other than Disqualified Stock or convertible debt securities
that have been converted into Disqualified Stock), plus
(c) to the extent that any Restricted Investment that was made after
February 4, 1997 is sold for cash or otherwise liquidated or
repaid for cash, the lesser of (i) the cash return of capital
with respect to such Restricted Investment (less the cost of
disposition, if any); and (ii) the initial amount of such
Restricted Investment.
The preceding provisions will not prohibit:
(1) the payment of any dividend within 60 days after the date of
declaration thereof, if at said date of declaration such payment would
have complied with the provisions of the Indenture;
(2) the redemption, repurchase, retirement, defeasance or other
acquisition of any subordinated Indebtedness or Equity Interests of
the Company in exchange for, or out of the net cash proceeds of the
substantially concurrent sale (other than to a Subsidiary of the
Company) of, other Equity Interests of the Company (other than any
Disqualified Stock); provided that the amount of any such net cash
proceeds that are utilized for any such redemption, repurchase,
retirement, defeasance or other acquisition shall be excluded from
clause (3)(b) of the preceding paragraph;
(3) the defeasance, redemption, repurchase or other acquisition of
subordinated Indebtedness with the net cash proceeds from an
incurrence of Permitted Refinancing Indebtedness;
(4) the payment of any dividend by a Restricted Subsidiary of the Company
to the holders of its common Equity Interests on a pro rata basis; and
(5) the repurchase, redemption or other acquisition or retirement for
value of any Equity Interests of the Company or any Restricted
Subsidiary of the Company held by any member of the Company's (or any
of
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its Restricted Subsidiaries') management pursuant to any management
equity subscription agreement or stock option agreement in effect as
of the date of the Indenture; provided that the aggregate price paid
for all such repurchased, redeemed, acquired or retired Equity
Interests shall not exceed $250,000 in any twelve-month period and no
Default or Event of Default shall have occurred and be continuing
immediately after such transaction.
The Board of Directors of the Company may designate any Restricted Subsidiary
to be an Unrestricted Subsidiary if such designation would not cause a Default;
provided that in no event shall the business currently operated by AmeriCredit
Financial Services, Inc. be transferred to or held by an Unrestricted
Subsidiary. For purposes of making such determination, all outstanding
Investments by the Company and its Restricted Subsidiaries (except to the extent
repaid in cash) in the Subsidiary so designated will be deemed to be Restricted
Payments at the time of such designation and will reduce the amount available
for Restricted Payments under the first paragraph of this covenant. All such
outstanding Investments will be deemed to constitute Investments in an amount
equal to the greater of:
(1) the net book value of such Investments at the time of such designation;
or
(2) the fair market value of such Investments at the time of such
designation. Such designation will only be permitted if such Restricted
Payment would be permitted at such time and if such Restricted
Subsidiary otherwise meets the definition of an Unrestricted Subsidiary.
The amount of all Restricted Payments (other than cash) shall be the fair
market value on the date of the Restricted Payment of the asset(s) or securities
proposed to be transferred or issued by the Company or such Restricted
Subsidiary, as the case may be, pursuant to the Restricted Payment. The fair
market value of any assets or securities that are required to be valued by this
covenant shall be determined by the Board of Directors of the Company whose
resolution with respect thereto shall be delivered to the Trustee. The Board of
Directors' determination must be based upon an opinion or appraisal issued by an
accounting, appraisal or investment banking firm of national standing if such
fair market value exceeds $10.0 million. Not later than 15 days after the end
of any fiscal quarter during which any Restricted Payment is made, the Company
shall deliver to the Trustee an Officers' Certificate stating that Restricted
Payment is permitted and setting forth the basis upon which the calculations
required by this "Restricted Payments" covenant were computed, together with a
copy of any fairness opinion or appraisal required by the Indenture.
Incurrence of Indebtedness and Issuance of Preferred Stock
The Company will not, and will not permit any of its Subsidiaries to,
directly or indirectly, create, incur, issue, assume, guarantee or otherwise
become directly or indirectly liable, contingently or otherwise, with respect to
(collectively, "incur") any Indebtedness (including Acquired Debt) and the
Company will not issue any Disqualified Stock and will not permit any of its
Subsidiaries to issue any shares of preferred stock; provided, however, that the
Company and the Guarantors may incur Indebtedness (including Acquired Debt), and
the Company and the Guarantors may issue Disqualified Stock or preferred stock
if the Consolidated Leverage Ratio of the Company, determined on a pro forma
basis after giving effect to the incurrence or issuance of the additional
Indebtedness to be incurred or the Disqualified Stock or preferred stock to be
issued, would have been less than 2.0 to 1.
The provisions of the first paragraph of this covenant will not prohibit the
incurrence of any of the following items of Indebtedness (collectively,
"Permitted Debt"):
(1) the existence of Credit Facilities and the Guarantees thereof by the
Guarantors and the incurrence by the Company and any Guarantor of
revolving credit Indebtedness pursuant to one or more Credit Facilities
if the proceeds are applied to purchase or originate Receivables;
provided that the aggregate principal amount of all revolving credit
Indebtedness outstanding under all Credit Facilities after giving effect
to such incurrence, including all Permitted Refinancing Indebtedness
incurred to refund, refinance, defease, renew or replace any
Indebtedness incurred pursuant to this clause (1) and with letters of
credit being deemed to have a principal amount equal to the maximum
potential liability of the Company and its Restricted Subsidiaries
thereunder], does not at any time exceed the amount of the Borrowing
Base (any such outstanding Indebtedness that exceeds the amount of the
Borrowing Base as of the close of
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any Business Day shall cease to be Permitted Debt pursuant to this
clause (1) as of the close of business on the third Business Day
thereafter and shall be deemed to be an incurrence of such Indebtedness
that is not permitted by this clause (1) by the Company or such
Guarantor, as applicable, as of such third Business Day);
(2) the existence of Warehouse Facilities, regardless of amount, and the
incurrence by the Company or any of its Restricted Subsidiaries of
Permitted Warehouse Debt in an aggregate principal amount at any time
outstanding (with letters of credit being deemed to have a principal
amount equal to the maximum potential liability of the Company and its
Restricted Subsidiaries thereunder) not to exceed 100% of the aggregate
principal amount (exclusive of Acquisition Fees included therein) of all
Eligible Receivables owned by the Company and its Restricted
Subsidiaries (or such Warehouse Facilities in the case of Permitted
Warehouse Debt in the form of repurchase agreements) at such time;
(3) the incurrence by the Company and its Restricted Subsidiaries of the
Existing Indebtedness;
(4) the incurrence by the Company of Indebtedness represented by the
Original Notes, the Secondary Notes and the Notes and the incurrence by
the Guarantors of the Original Guarantees, the Secondary Guarantees and
the Subsidiary Guarantees;
(5) obligations of the Company and its Restricted Subsidiaries under Credit
Enhancement Agreements;
(6) the incurrence by the Company or any of its Restricted Subsidiaries of
Permitted Refinancing Indebtedness in exchange for, or the net proceeds
of which are used to refund, refinance, defease, renew or replace any
Indebtedness (other than Permitted Warehouse Debt or intercompany
Indebtedness) that was permitted by the Indenture to be incurred;
(7) the incurrence by the Company or any of its Restricted Subsidiaries of
intercompany Indebtedness between or among the Company and any of the
Guarantors; provided, however, that
(a) if the Company is the obligor on such Indebtedness, such
Indebtedness is expressly subordinated to the prior payment in full
in cash of all Obligations with respect to the Notes and
(b) (i) any subsequent issuance or transfer of Equity Interests that
results in any such Indebtedness being held by a Person other than
the Company or a Guarantor and (ii) any sale or other transfer of
any such Indebtedness to a Person that is not either the Company or
a Guarantor shall be deemed, in each case, to constitute an
incurrence of such Indebtedness by the Company or such Restricted
Subsidiary, as the case may be, that was not permitted by this
clause (7);
(8) the issuance by a Restricted Subsidiary of preferred stock to the
Company or to any of the Guarantors; provided, however, that any
subsequent event or issuance or transfer of any Capital Stock that
results in the owner of such preferred stock ceasing to be a Guarantor
of the Company or any subsequent transfer of such preferred stock to a
Person other than the Company or any of the Guarantors, shall be deemed
to be an issuance of preferred stock by such Restricted Subsidiary that
was not permitted by this clause (8);
(9) the incurrence by the Company or any of its Restricted Subsidiaries of
Hedging Obligations that are incurred:
(a) for the purpose of fixing or hedging interest rate risk with respect
to any floating rate Indebtedness that is permitted by the terms of
this Indenture to be outstanding; or
(b) for the purpose of hedging, fixing or capping interest rate risk in
connection with any completed or pending Securitization;
(10) the guarantee by the Company or any of the Guarantors of Indebtedness of
the Company or a Restricted Subsidiary of the Company that was permitted
to be incurred by another provision of this covenant;
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(11) the incurrence by the Company's Unrestricted Subsidiaries of Non-
Recourse Debt, provided, however, that if any such Indebtedness ceases
to be Non-Recourse Debt of an Unrestricted Subsidiary, such event shall
be deemed to constitute an incurrence of Indebtedness by a Restricted
Subsidiary of the Company that was not permitted by this clause (11);
and
(12) the incurrence by the Company of additional Indebtedness in an aggregate
principal amount (or accredit value, as applicable) at any time
outstanding, including all Permitted Refinancing Indebtedness incurred
to refund, refinance or replace any other Indebtedness incurred pursuant
to this clause (12), not to exceed $5.0 million.
For purposes of determining compliance with this covenant, in the event that
an item of Indebtedness meets the criteria of more than one of the categories of
Permitted Debt described in clauses (1) through (12) above or is entitled to be
incurred pursuant to the first paragraph of this covenant, the Company shall, in
its sole discretion, classify such item of Indebtedness in any manner that
complies with this covenant and such item of Indebtedness will be treated as
having been incurred pursuant to only one of such clauses or pursuant to the
first paragraph hereof.
Limitation on Senior Subordinated Debt
The Company will not, and will not permit any of its Restricted Subsidiaries
to incur any Indebtedness that is contractually subordinated to any Indebtedness
of the Company or any such Restricted Subsidiary unless such Indebtedness is
also contractually subordinated to the Notes, or the Subsidiary Guarantee of
such Restricted Subsidiary (as applicable), on substantially identical terms;
provided, however, that no Indebtedness shall be deemed to be contractually
subordinated to any other Indebtedness solely by virtue of being unsecured.
Liens
The Company will not, and will not permit any of its Restricted Subsidiaries
to, create, incur, assume or suffer to exist any Lien of any kind upon any of
their property or assets, now owned or hereafter acquired, unless all payments
due under the Indenture and the Notes are secured on an equal and ratable basis
with the obligations so secured until such time as such obligations are no
longer secured by a Lien, except Permitted Liens.
Dividend and Other Payment Restrictions Affecting Subsidiaries
The Company will not, and will not permit any of its Restricted Subsidiaries
to, directly or indirectly, create or permit to exist or become effective any
encumbrance or restriction on the ability of any Restricted Subsidiary to:
(1) pay dividends or make any other distributions on its Capital Stock to
the Company or any of the Company's Restricted Subsidiaries; or with
respect to any other interest or participation in, or measured by, its
profits, or pay any Indebtedness owed to the Company or any of the
Company's Restricted Subsidiaries;
(2) make loans or advances to the Company or any of its Restricted
Subsidiaries; or
(3) transfer any of its properties or assets to the Company or any of its
Restricted Subsidiaries, except for such encumbrances or restrictions
existing under or by reason of:
(a) the Indenture and the Notes;
(b) applicable law;
(c) any instrument governing Indebtedness or Capital Stock of a Person
acquired by the Company or any of its Restricted Subsidiaries as in
effect at the time of such acquisition (except to the extent such
Indebtedness was incurred in connection with or in contemplation of
such acquisition), which encumbrance or restriction is not
applicable to any Person, or the properties or assets of any
Person, other than the Person, or the property or assets of the
Person, so acquired, provided that, in
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the case of Indebtedness, such Indebtedness was permitted by the
terms of the Indenture to be incurred;
(d) customary non-assignment provisions in leases entered into in the
ordinary course of business and consistent with past practices;
(e) purchase money obligations for property acquired in the ordinary
course of business that impose restrictions on the property so
acquired of the nature described in clause (3) above;
(f) Permitted Refinancing Indebtedness, provided that the
restrictions contained in the agreements governing such Permitted
Refinancing Indebtedness are no more restrictive than those
contained in the agreements governing the Indebtedness being
refinanced;
(g) the requirements of any Securitization that are exclusively
applicable to any bankruptcy remote special purpose Restricted
Subsidiary of the Company formed in connection with such
Securitization;
(h) the requirements of any Credit Enhancement Agreement; or
(i) in the case of clause (3) above, Liens otherwise permitted to be
incurred under the Indenture.
Merger, Consolidation, or Sale of Assets
The Company may not; (1) consolidate or merge with or into another Person
(whether or not the Company is the surviving corporation); (2) or sell, assign,
transfer, lease, convey or otherwise dispose of all or substantially all of its
properties or assets in one or more related transactions, to another Person
unless:
(1) either (a) the Company is the surviving corporation; or (b) the Person
formed by or surviving any such consolidation or merger (if other than
the Company) or to which such sale, assignment, transfer, lease,
conveyance or other disposition shall have been made is a corporation
organized or existing under the laws of the United States, any state
thereof or the District of Columbia ;
(2) the Person formed by or surviving any such consolidation or merger (if
other than the Company) or the entity or Person to which such sale,
assignment, transfer, lease, conveyance or other disposition shall
have been made assumes all the obligations of the Company under the
Notes and the Indenture pursuant to a supplemental indenture
reasonably satisfactory to the Trustee ;
(3) immediately before and after such transaction no Default or Event of
Default exists; and
(4) the Company or Person formed by or surviving any such consolidation or
merger (if other than the Company), or the Company or Person to which
such sale, assignment, transfer, lease, conveyance or other
disposition shall have been made:
(a) will have Consolidated Net Worth immediately after the
transaction equal to or greater than the Consolidated Net Worth
of the Company immediately preceding the transaction and
(b) will, at the time of such transaction after giving pro forma
effect thereto as if such transaction had occurred at the end of
the applicable four quarter period, be permitted to incur at
least $1.00 of additional Indebtedness pursuant to the
Consolidated Leverage Ratio test set forth in the first paragraph
of the covenant described above under the caption "--Incurrence
of Indebtedness and Issuance of Preferred Stock." This "Merger,
Consolidation, or Sale of Assets" covenant will not apply to a
sale, assignment, transfer, lease, conveyance or other
disposition of assets between or among the Company and any of its
Wholly-Owned Subsidiaries.
Transactions with Affiliates
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The Company will not, and will not permit any of its Restricted
Subsidiaries to, make any payment to, or sell, lease, transfer or otherwise
dispose of any of its properties or assets to, or purchase any property or
assets from, or enter into or make or amend any transaction, contract,
agreement, understanding, loan, advance or guarantee with, or for the benefit
of, any Affiliate (each an "Affiliate Transaction"), unless;
(1) such Affiliate Transaction is on terms that are no less favorable to
the Company or the relevant Restricted Subsidiary than those that
would have been obtained in a comparable transaction by the Company or
such Restricted Subsidiary with an unrelated Person; and
(2) the Company delivers to the Trustee:
(a) with respect to any Affiliate Transaction or series of related
Affiliate Transactions involving aggregate consideration in
excess of $1.0 million, a resolution of the Board of Directors
set forth in an Officers' Certificate certifying that such
Affiliate Transaction complies with this covenant and that such
Affiliate Transaction has been approved by a majority of the
disinterested members of the Board of Directors; and
(b) with respect to any Affiliate Transaction or series of related
Affiliate Transactions involving aggregate consideration in
excess of $5.0 million, an opinion as to the fairness to the
Holders of such Affiliate Transaction from a financial point of
view issued by an accounting, appraisal or investment banking
firm of national standing.
The following items shall not be deemed to be Affiliate Transactions and,
therefore, will not be subject to the provisions of the prior paragraph:
(1) any employment agreement entered into by the Company or any of its
Restricted Subsidiaries in the ordinary course of business and
consistent with the past practice of the Company or such Restricted
Subsidiary;
(2) transactions between or among the Company and/or its Restricted
Subsidiaries; and
(3) Restricted Payments that are permitted by the provisions of the
Indenture described above under the caption "--Restricted Payments."
Limitation on Issuances and Sales of Capital Stock of Wholly-Owned
Restricted Subsidiaries
The Company will not, and will not permit any Wholly-Owned Restricted
Subsidiary of the Company to:
(1) transfer, convey, sell, lease or otherwise dispose of any Capital
Stock of any Wholly-Owned Restricted Subsidiary of the Company to any
Person (other than the Company or a Wholly-Owned Restricted Subsidiary
of the Company that is a Guarantor), unless:
(a) such transfer, conveyance, sale, lease or other disposition is of
all the Capital Stock of such Wholly-Owned Restricted Subsidiary
and
(b) the cash Net Proceeds from such transfer, conveyance, sale, lease
or other disposition are applied in accordance with the covenant
described above under the caption "--Asset Sales," and
(2) will not permit any Wholly-Owned Restricted Subsidiary of the Company
to issue any of its Equity Interests (other than, if necessary, shares
of its Capital Stock constituting directors' qualifying shares) to any
Person other than to the Company or a Wholly-Owned Restricted
Subsidiary of the Company.
Additional Subsidiary Guarantees
If the Company or any of its Subsidiaries acquires or creates another
Subsidiary after the date of the Indenture, then that newly acquired or created
Subsidiary must become a Guarantor and execute a Subsidiary Guarantee and
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deliver an opinion of counsel, in accordance with the terms of the Indenture.
This covenant shall not apply to Subsidiaries that (1) have properly been
designated as Unrestricted Subsidiaries in accordance with the Indenture for so
long as they continue to constitute Unrestricted Subsidiaries; or (2) qualify as
Securitization Trusts for so long as they continue to constitute Securitization
Trusts.
Business Activities
The Company will not permit any Restricted Subsidiary to engage in any
business other than Permitted Businesses, unless such business would not be
material to the Company and its Subsidiaries taken as a whole.
Payments for Consent
The Company will not, and will not permit any of its Subsidiaries to,
directly or indirectly, pay or cause to be paid any consideration, to or for the
benefit of to any Holder of Notes for or as an inducement to any consent, waiver
or amendment of any of the terms or provisions of the Indenture or the Notes
unless such consideration is offered to be paid or is paid to all Holders of the
Notes that consent, waive or agree to amend in the time frame set forth in the
solicitation documents relating to such consent, waiver or agreement.
Reports
Whether or not required by the Commission, so long as any Notes are
outstanding, the Company will furnish to the Holders of Notes within the time
periods specified in the Commission's rules and regulations:
(1) all quarterly and annual financial information that would be required
to be contained in a filing with the Commission on Forms 10-Q and 10-K
if the Company were required to file such Forms, including a
"Management's Discussion and Analysis of Financial Condition and
Results of Operations" and, with respect to the annual information
only, a report on the annual financial statements by the Company's
certified independent accountants; and
(2) all current reports that would be required to be filed with the
Commission on Form 8-K if the Company were required to file such
reports.
In addition, whether or not required by the Commission, the Company will
file a copy of all of the information and reports referred to in clauses (1) and
(2) above with the Commission for public availability (unless the Commission
will not accept such a filing) and make such information available to securities
analysts and prospective investors upon request. In addition, the Company and
the Guarantors will furnish the information required to be delivered pursuant to
Rule 144A(d)(4) under the Securities Act to the Holders, securities analysts and
prospective investors upon request so long as any Notes remain outstanding.
Limitation on Investment Company Status
The Company will not, and its Subsidiaries will not, take any action, or
otherwise permit to exist any circumstance, that would require the Company to
register as an "investment company" under the Investment Company Act of 1940,
as amended.
Events of Default and Remedies
Each of the following is an Event of Default:
(1) default for 30 days in the payment when due of interest on, or
Liquidated Damages with respect to, the Notes;
(2) default in payment when due of the principal of or premium, if any, on
the Notes;
(3) failure by the Company or any of its Subsidiaries to comply with the
provisions described under the cap--Repurchase at the Option
of Holders," "--Certain Covenants--Incurrence of Indebtedness
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and Issuance of Preferred Stock," or "--Dividend and Other Payment
Restrictions Affecting Subsidiaries;"
(4) failure by the Company or any of its Subsidiaries for 30 days after
written notice by the Trustee or the holders of at least 25% in
principal amount of the then outstanding Notes to comply with any of
the other covenants or agreements in the Indenture;
(5) default under any mortgage, indenture or instrument under which there
may be issued or by which there may be secured or evidenced any
Indebtedness for money borrowed by the Company or any of its
Subsidiaries (or the payment of which is guaranteed by the Company or
any of its Subsidiaries) whether such Indebtedness or guarantee now
exists, or is created after the date of the Indenture, if that
default:
(a) is caused by a failure to pay principal of or premium, if any, or
interest on such Indebtedness prior to the expiration of the grace
period provided in such Indebtedness on the date of such default (a
"Payment Default"); or
(b) results in the acceleration of such Indebtedness prior to its
express maturity
and, in each case, the principal amount of any such Indebtedness,
together with the principal amount of any other such Indebtedness
under which there has been a Payment Default or the maturity of which
has been so accelerated, aggregates $5.0 million or more;
(6) failure by the Company or any of its Subsidiaries to pay final
judgments aggregating in excess of $2.0 million, which judgments are
not paid, discharged or stayed for a period of 60 days;
(7) except as permitted by the Indenture, any Subsidiary Guarantee shall
be held in a judicial proceeding to be unenforceable or invalid or
shall cease for any reason to be in full force and effect or any
Guarantor, or any Person acting in behalf of any Guarantor, shall deny
or disaffirm its obligations under its Subsidiary Guarantee; and
(8) certain events of bankruptcy or insolvency with respect to the Company
or any of its Subsidiaries.
In the case of an Event of Default arising from certain events of
bankruptcy or insolvency, with respect to the Company, any Subsidiary that is a
Significant Subsidiary or any group of Subsidiaries that, taken together, would
constitute a Significant Subsidiary, all outstanding Notes will become due and
payable without further action or notice. If any other Event of Default occurs
and is continuing, the Trustee or the Holders of at least 25% in principal
amount of the then outstanding Notes may declare all the Notes to be due and
payable immediately.
Holders of the Notes may not enforce the Indenture or the Notes except as
provided in the Indenture. Subject to certain limitations, Holders of a majority
in principal amount of the then outstanding Notes may direct the Trustee in its
exercise of any trust or power. The Trustee may withhold from Holders of the
Notes notice of any continuing Default or Event of Default (except a Default or
Event of Default relating to the payment of principal or interest) if it
determines that withholding notice is in their interest.
The Holders of a majority in aggregate principal amount of the Notes then
outstanding by notice to the Trustee may on behalf of the Holders of all of the
Notes waive any existing Default or Event of Default and its consequences under
the Indenture, except a continuing Default or Event of Default in the payment of
interest on, or the principal of, the Notes.
In the case of any Event of Default occurring by reason of any willful
action or inaction taken or not taken by or on behalf of the Company with the
intention of avoiding payment of the premium that the Company would have had to
pay if the Company then had elected to redeem the Notes pursuant to the optional
redemption provisions of the Indenture, an equivalent premium shall also become
and be immediately due and payable to the extent permitted by law upon the
acceleration of the Notes. If an Event of Default occurs prior to April 15, 2003
by reason of any willful action (or inaction) taken (or not taken) by or on
behalf of the Company with the intention of avoiding the prohibition
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on redemption of the Notes prior to April 15, 2003, then the premium specified
in the Indenture shall also become immediately due and payable to the extent
permitted by law upon the acceleration of the Notes.
The Company is required to deliver to the Trustee annually a statement
regarding compliance with the Indenture. Upon becoming aware of any Default or
Event of Default, the Company is required to deliver to the Trustee a statement
specifying such Default or Event of Default.
No Personal Liability of Directors, Officers, Employees and Stockholders
No director, officer, employee, incorporator or stockholder of the Company,
as such, shall have any liability for any obligations of the Company under the
Notes, the Indenture or the Registration Rights Agreement or for any claim based
on, in respect of, or by reason of, such obligations or their creation. Each
Holder of Notes by accepting a Note waives and releases all such liability. The
waiver and release are part of the consideration for issuance of the Notes. The
waiver may not be effective to waive liabilities under the federal securities
laws.
Legal Defeasance and Covenant Defeasance
The Company may, at its option and at any time, elect to have all of its
obligations discharged with respect to the outstanding Notes ("Legal
Defeasance") except for;
(1) the rights of Holders of outstanding Notes to receive payments in
respect of the principal of, premium, if any, and interest and
Liquidated Damages on such Notes when such payments are due from the
trust referred to below;
(2) the Company's obligations with respect to the Notes concerning issuing
temporary Notes, registration of Notes, mutilated, destroyed, lost or
stolen Notes and the maintenance of an office or agency for payment
and money for security payments held in trust;
(3) the rights, powers, trusts, duties and immunities of the Trustee, and
the Company's obligations in connection therewith; and
(4) the Legal Defeasance provisions of the Indenture.
In addition, the Company may, at its option and at any time, elect to have
the obligations of the Company released with respect to certain covenants that
are described in the Indenture ("Covenant Defeasance") and thereafter any
omission to comply with shall not constitute a Default or Event of Default with
respect to the Notes. In the event Covenant Defeasance occurs, certain events
(not including non-payment, bankruptcy, receivership, rehabilitation and
insolvency events) described under "Events of Default" will no longer constitute
an Event of Default with respect to the Notes.
In order to exercise either Legal Defeasance or Covenant Defeasance:
(1) the Company must irrevocably deposit with the Trustee, in trust, for
the benefit of the Holders of the Notes, cash in U.S. dollars, non-
callable Government Securities, or a combination thereof, in such
amounts as will be sufficient, in the opinion of a nationally
recognized firm of independent public accountants, to pay the
principal of, premium, if any, and interest and Liquidated Damages on
the outstanding Notes on the stated maturity or on the applicable
redemption date, as the case may be, and the Company must specify
whether the Notes are being defeased to maturity or to a particular
redemption date;
(2) in the case of Legal Defeasance, the Company shall have delivered to
the Trustee an opinion of counsel in the United States reasonably
acceptable to the Trustee confirming that:
(a) the Company has received from, or there has been published by,
the Internal Revenue Service a ruling; or
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(b) since the date of the Indenture, there has been a change in the
applicable federal income tax law, in either case to the effect
that, and based thereon such Opinion of Counsel shall confirm
that, the Holders of the outstanding Notes will not recognize
income, gain or loss for federal income tax purposes as a result
of such Legal Defeasance and will be subject to federal income
tax on the same amounts, in the same manner and at the same times
as would have been the case if such Legal Defeasance had not
occurred;
(3) in the case of Covenant Defeasance, the Company shall have delivered
to the Trustee an Opinion of Counsel reasonably acceptable to the
Trustee confirming that the Holders of the outstanding Notes will not
recognize income, gain or loss for federal income tax purposes as a
result of such Covenant Defeasance and will be subject to federal
income tax on the same amounts, in the same manner and at the same
times as would have been the case if such Covenant Defeasance had not
occurred;
(4) no Default or Event of Default shall have occurred and be continuing
either:
(a) on the date of such deposit (other than a Default or Event of
Default resulting from the borrowing of funds to be applied to
such deposit); or
(b) insofar as Events of Default from bankruptcy or insolvency events
are concerned, at any time in the period ending on the 91st day
after the date of deposit;
(5) such Legal Defeasance or Covenant Defeasance will not result in a
breach or violation of, or constitute a default under any material
agreement or instrument (other than the Indenture) to which the
Company or any of its Subsidiaries is a party or by which the Company
or any of its Subsidiaries is bound;
(6) the Company must have delivered to the Trustee an opinion of counsel
to the effect that after the 91st day following the deposit, the trust
funds will not be subject to the effect of any applicable bankruptcy,
insolvency, reorganization or similar laws affecting creditors' rights
generally;
(7) the Company must deliver to the Trustee an Officers' Certificate
stating that the deposit was not made by the Company with the intent
of preferring the Holders of Notes over the other creditors of the
Company with the intent of defeating, hindering, delaying or
defrauding creditors of the Company or others; and
(8) the Company must deliver to the Trustee an Officers' Certificate and
an opinion of counsel, each stating that all conditions precedent
provided for relating to the Legal Defeasance or the Covenant
Defeasance have been complied with.
Amendment, Supplement and Waiver
The Indenture or the Notes may be amended or supplemented with the consent
of the Holders of at least a majority in principal amount of the Notes then
outstanding (including, without limitation, consents obtained in connection with
a purchase of, or tender offer or exchange offer for, Notes), and any existing
default or compliance with any provision of the Indenture or the Notes may be
waived with the consent of the Holders of a majority in principal amount of the
then outstanding Notes (including consents obtained in connection with a tender
offer or exchange offer for Notes).
However, without the consent of each Holder affected, an amendment or
waiver may not (with respect to any Notes held by a non-consenting Holder):
(1) reduce the principal amount of Notes whose Holders must consent to an
amendment, supplement or waiver;
(2) reduce the principal of or change the fixed maturity of any Note or
alter the provisions with respect to the redemption of the Notes
(other than provisions relating to the covenants described above under
the caption "--Repurchase at the Option of Holders");
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(3) reduce the rate of or change the time for payment of interest on any
Note;
(4) waive a Default or Event of Default in the payment of principal of or
premium, if any, or interest on the Notes (except a rescission of
acceleration of the Notes by the Holders of at least a majority in
aggregate principal amount of the Notes and a waiver of the payment
default that resulted from such acceleration),
(5) make any Note payable in money other than that stated in the Notes;
(6) make any change in the provisions of the Indenture relating to waivers
of past Defaults or the rights of Holders of Notes to receive payments
of principal of or premium, if any, or interest on the Notes;
(7) waive a redemption payment with respect to any Note (other than a
payment required by one of the covenants described above under the
caption "--Repurchase at the Option of Holders"); or
(8) make any change in the foregoing amendment and waiver provisions.
Notwithstanding the preceding, without the consent of any Holder of Notes,
the Company and the Trustee may amend or supplement the Indenture or the Notes:
(1) to cure any ambiguity, defect or inconsistency;
(2) to provide for uncertificated Notes in addition to or in place of
certificated Notes;
(3) to provide for the assumption of the Company's obligations to Holders
of Notes in the case of a merger or consolidation;
(4) to make any change that would provide any additional rights or
benefits to the Holders of Notes or that does not adversely affect the
legal rights under the Indenture of any such Holder; or
(5) to comply with requirements of the Commission in order to effect or
maintain the qualification of the Indenture under the Trust Indenture
Act.
Concerning the Trustee
If the Trustee becomes a creditor of the Company, the Indenture limits its
rights to obtain payment of claims in certain cases, or to realize on certain
property received in respect of any such claim as security or otherwise. The
Trustee will be permitted to engage in other transactions; however, if it
acquires any conflicting interest it must eliminate such conflict within 90
days, apply to the Commission for permission to continue or resign.
The Holders of a majority in principal amount of the then outstanding Notes
will have the right to direct the time, method and place of conducting any
proceeding for exercising any remedy available to the Trustee, subject to
certain exceptions. The Indenture provides that in case an Event of Default
shall occur and be continuing, the Trustee will be required, in the exercise of
its power, to use the degree of care of a prudent man in the conduct of his own
affairs. Subject to such provisions, the Trustee will be under no obligation to
exercise any of its rights or powers under the Indenture at the request of any
Holder of Notes, unless such Holder shall have offered to the Trustee security
and indemnity satisfactory to it against any loss, liability or expense.
Book-Entry, Delivery and Form
The New Notes will initially be issued as one Global Note (the "Global
Note") but, as described below, may be exchanged for "Certified Securities".
Accordingly Cede & Co. as nominee of the Depository Trust Company will initially
be the sole registered holder of the Notes for all purposes under the Indenture.
Notes that were issued as described below under "Certificated Securities,"
will be issued in the form of registered definitive certificates (the
"Certificated Securities"). Upon the transfer to a qualified institutional buyer
of Certificated Securities initially issued to a Non-Global Purchaser, such
Certificated Securities may, unless the Global
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Note has previously been exchanged for Certificated Securities, be exchanged for
an interest in the Global Note representing the principal amount of Notes being
transferred.
The Depository is a limited-purpose trust company that was created to hold
securities for its participating organizations (collectively, the "Participants"
or the "Depository's Participants") and to facilitate the clearance and
settlement of transactions in such securities between Participants through
electronic book-entry changes in accounts of its Participants. The Depository's
Participants include securities brokers and dealers (including the Initial
Purchasers), banks and trust companies, clearing corporations and certain other
organizations. Access to the Depository's system is also available to other
entities such as banks, brokers, dealers and trust companies (collectively, the
"Indirect Participants" or the "Depository's Indirect Participants") that clear
through or maintain a custodial relationship with a Participant, either directly
or indirectly. Persons who are not Participants may beneficially own securities
held by or on behalf of the Depository only through the Depository's
Participants or the Depository's Indirect Participants.
The Company expects that pursuant to procedures established by the
Depository:
(1) upon deposit of the Global Note, the Depository will credit the
accounts of Participants designated by the Initial Purchasers with
portions of the principal amount of the Global Note and
(2) ownership of the Notes evidenced by the Global Note will be shown on,
and the transfer of ownership thereof will be effected only through,
records maintained by the Depository (with respect to the interests of
the Depository's Participants), the Depository's Participants and the
Depository's Indirect Participants.
Prospective purchasers are advised that the laws of some states require that
certain Persons take physical delivery in definitive form of securities that
they own. Consequently, the ability to transfer Notes evidenced by the Global
Note will be limited to such extent.
So long as the Global Note Holder is the registered owner of any Notes, the
Global Note Holder will be considered the sole Holder under the Indenture of any
Notes evidenced by the Global Note. Beneficial owners of Notes evidenced by the
Global Note will not be considered the owners or Holders thereof under the
Indenture for any purpose, including with respect to the giving of any
directions, instructions or approvals to the Trustee thereunder. Neither the
Company nor the Trustee will have any responsibility or liability for any aspect
of the records of the Depository or for maintaining, supervising or reviewing
any records of the Depository relating to the Notes.
Payments in respect of the principal of, premium, if any, interest and
Liquidated Damages, if any, on any Notes registered in the name of the Global
Note Holder on the applicable record date will be payable by the Trustee to or
at the direction of the Global Note Holder in its capacity as the registered
Holder under the Indenture. Under the terms of the Indenture, the Company and
the Trustee may treat the Persons in whose names Notes, including the Global
Note, are registered as the owners thereof for the purpose of receiving such
payments. Consequently, neither the Company nor the Trustee has or will have any
responsibility or liability for the payment of such amounts to beneficial owners
of Notes. The Company believes, however, that it is currently the policy of the
Depository to immediately credit the accounts of the relevant Participants with
such payments, in amounts proportionate to their respective holdings of
beneficial interests in the relevant security as shown on the records of the
Depository. Payments by the Depository's Participants and the Depository's
Indirect Participants to the beneficial owners of Notes will be governed by
standing instructions and customary practice and will be the responsibility of
the Depository's Participants or the Depository's Indirect Participants.
Certificated Securities
Subject to certain conditions, any Person having a beneficial interest in
the Global Note may, upon request to the Trustee, exchange such beneficial
interest for Notes in the form of Certificated Securities. Upon any such
issuance, the Trustee is required to register such Certificated Securities in
the name of, and cause the same to be delivered to, such Person or Persons (or
the nominee of any thereof). In addition, if
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(1) the Company notifies the Trustee in writing that the Depository is no
longer willing or able to act as a depositary and the Company is
unable to locate a qualified successor within 90 days or
(2) the Company, at its option, notifies the Trustee in writing that it
elects to cause the issuance of Notes in the form of Certificated
Securities under the Indenture,
then, upon surrender by the Global Note Holder of its Global Note, Notes in such
form will be issued to each Person that the Global Note Holder and the
Depository identify as being the beneficial owner of the related Notes.
Neither the Company nor the Trustee will be liable for any delay by the
Global Note Holder or the Depository in identifying the beneficial owners of
Notes and the Company and the Trustee may conclusively relying on, and will be
protected in relying on, instructions from the Global Note Holder or the
Depository for all purposes.
Same Day Settlement and Payment
The Indenture will require that payments in respect of the Notes
represented by the Global Note (including principal, premium, if any, interest
and Liquidated Damages, if any) be made by wire transfer of immediately
available (same day) funds to the accounts specified by the Global Note Holder.
With respect to Certificated Securities, the Company will make all payments of
principal, premium, if any, interest and Liquidated Damages, if any, by wire
transfer of immediately available (same day) funds to the accounts specified by
the Holders thereof or, if no such account is specified, by mailing a check to
each such Holder's registered address. The Company expects that secondary
trading in the Certificated Securities will also be settled in immediately
available funds.
Certain Definitions
Set forth below are certain defined terms used in the Indenture. Reference
is made to the Indenture for a full disclosure of all such terms, as well as any
other capitalized terms used herein for which no definition is provided.
"Acquired Debt" means, with respect to any specified Person, (i)
Indebtedness of any other Person existing at the time such other Person is
merged with or into or became a Subsidiary of such specified Person, including,
without limitation, Indebtedness incurred in connection with, or in
contemplation of, such other Person merging with or into or becoming a
Subsidiary of such specified Person, and (ii) Indebtedness secured by a Lien
encumbering any asset acquired by such specified Person.
"Acquisition Fees" means, with respect to any Eligible Receivables as of
any date, the discount or cash payments received by the Company from dealers and
other Persons with respect to the Eligible Receivables purchased from such
dealer or other Person and owned by the Company or its Restricted Subsidiaries
as of such date.
"Affiliate" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For purposes of this definition, "control"
(including, with correlative meanings, the terms "controlling," "controlled by"
and "under common control with"), as used with respect to any Person, shall mean
the possession, directly or indirectly, of the power to direct or cause the
direction of the management or policies of such Person, whether through the
ownership of voting securities, by agreement or otherwise; provided that
beneficial ownership of 10% or more of the voting securities of a Person shall
be deemed to be control.
"Asset Sale" means (i) the sale, lease, conveyance or other disposition of
any assets or rights (including, without limitation, by way of a sale and
leaseback) other than sales of Receivables in connection with Securitizations,
Warehouse Facilities or Credit Facilities in the ordinary course of business
consistent with past practices (provided that the sale, lease, conveyance or
other disposition of all or substantially all of the assets of the Company and
its Subsidiaries taken as a whole will be governed by the provisions of the
Indenture described above under the caption "--Change of Control" and/or the
provisions described above under the caption "--Merger, Consolidation or Sale of
Assets" and not by the provisions of the Asset Sale covenant), and (ii) the
issue or sale by the Company or any of its Subsidiaries of Equity Interests of
any of the Company's Subsidiaries, in the case of either clause (i) or (ii),
whether in a single transaction or a series of related transactions (a) that
have a fair market value in excess of $500,000 or (b) for net proceeds in excess
of $500,000. Notwithstanding the foregoing: (i) a transfer of assets by the
Company to a
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Wholly-Owned Restricted Subsidiary or by a Wholly-Owned Restricted Subsidiary to
the Company or to another Wholly-Owned Restricted Subsidiary, (ii) an issuance
of Equity Interests by a Wholly-Owned Restricted Subsidiary to the Company or to
another Wholly-Owned Restricted Subsidiary, and (iii) a Restricted Payment that
is permitted by the covenant described above under the caption "--Restricted
Payments" will not be deemed to be Asset Sales.
"Board of Directors" means the Board of Directors or other governing body
charged with the ultimate management of any Person, or any duly authorized
committee thereof.
"Borrowing Base" means, as of any date, an amount equal to the sum of (i)
80% of the aggregate amount of Receivables (other than loans secured by
residential mortgages) owned by the Company and its Wholly-Owned Restricted
Subsidiaries as of such date that are not in default, excluding (A) any
Receivables that were acquired or originated with Permitted Warehouse Debt, (B)
any Receivables that are held by a Securitization Trust, and (C) any Receivables
that are subject to Liens other than Liens securing Obligations under Credit
Facilities; (ii) 60% of the book value (determined on a consolidated basis in
accordance with GAAP) of interests in portfolios of securitized Receivables that
are owned by the Company and its Wholly-Owned Restricted Subsidiaries as of such
date and that are not subject to any Liens other than Liens to secure
Obligations under Credit Facilities; and (iii) 98% of the aggregate amount of
Receivables that consist of loans secured by residential mortgages owned by the
Company and its Wholly-Owned Restricted Subsidiaries as of such date that are
not in default, excluding (A) any such loans that were acquired or originated
with Permitted Warehouse Debt, (B) any such loans that are held by a
Securitization Trust, and (C) any such loans that are subject to Liens other
than Liens securing Obligations under Credit Facilities.
"Capital Lease Obligation" means, at the time any determination thereof is
to be made, the amount of the liability in respect of a capital lease that would
at such time be required to be capitalized on a balance sheet in accordance with
GAAP.
"Capital Stock" means (i) in the case of a corporation, corporate stock,
(ii) in the case of an association or business entity, any and all shares,
interests, participations, rights or other equivalents (however designated) of
corporate stock, (iii) in the case of a partnership or limited liability
company, partnership or membership interests (whether general or limited) and
(iv) any other interest or participation that confers on a Person the right to
receive a share of the profits and losses of, or distributions of assets of, the
issuing Person.
"Cash Equivalents" means (i) United States dollars, (ii) securities issued
or directly and fully guaranteed or insured by the United States government or
any agency or instrumentality thereof having maturities of not more than six
months from the date of acquisition, (iii) certificates of deposit and
Eurodollar time deposits with maturities of six months or less from the date of
acquisition, bankers' acceptances with maturities not exceeding six months and
overnight bank deposits, in each case with any domestic commercial bank having
capital and surplus in excess of $500 million and a Keefe Bank Watch Rating of
"B" or better, (iv) repurchase obligations with a term of not more than seven
days for underlying securities of the types described in clauses (ii) and (iii)
above entered into with any financial institution meeting the qualifications
specified in clause (iii) above and (v) commercial paper having the highest
rating obtainable from Moody's Investors Service, Inc. or Standard & Poor's
Corporation and in each case maturing within six months after the date of
acquisition.
"Change of Control" means the occurrence of any of the following: (i) the
sale, lease, transfer, conveyance or other disposition (other than by way of
merger or consolidation), in one or a series of related transactions, of all or
substantially all of the assets of the Company and its Restricted Subsidiaries
taken as a whole to any "person" (as such term is used in Section 13(d)(3) of
the Exchange Act) other than in the ordinary course of business; (ii) the
adoption of a plan relating to the liquidation or dissolution of the Company;
(iii) the consummation of any transaction (including, without limitation, any
merger or consolidation) the result of which is that any "person" (as defined
above), becomes the "beneficial owner" (as such term is defined in Rule 13d-3
and Rule 13d-5 under the Exchange Act, except that a person shall be deemed to
have "beneficial ownership" of all securities that such person has the right to
acquire, whether such right is currently exercisable or is exercisable only upon
the occurrence of a subsequent condition), directly or indirectly, of more than
50% of the Voting Stock of the Company (measured by voting power rather than
number of shares); (iv) the first day on which a majority of the members of the
Board of Directors of the Company are not Continuing Directors; or (v) the
Company consolidates with, or merges with or into, any Person, or any Person
consolidates with, or merges with or into, the Company, in any such event
pursuant to a transaction in which any of the outstanding Voting Stock of the
Company is converted into or exchanged for cash, securities or other
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property, other than any such transaction where the Voting Stock of the Company
outstanding immediately prior to such transaction is converted into or exchanged
for Voting Stock (other than Disqualified Stock) of the surviving or transferee
Person constituting a majority of the outstanding shares of such Voting Stock of
such surviving or transferee Person (immediately after giving effect to such
issuance); provided, however, that this clause (v) shall not apply to any such
consolidation or merger if, immediately after the consummation of such
transaction and after giving effect thereto, the ratings assigned to the Notes
by Moody's Investors Service, Inc. and Standard & Poor's Ratings Group are equal
to or higher than Baa3 (or the equivalent) and BBB- (or the equivalent),
respectively.
"Consolidated Indebtedness" means, with respect to any Person as of any
date of determination, the sum, without duplication, of (i) the total amount of
Indebtedness of such Person and its Restricted Subsidiaries, plus (ii) the total
amount of Indebtedness of any other Person, to the extent that such Indebtedness
has been Guaranteed by the referent Person or one or more of its Restricted
Subsidiaries, plus (iii) the aggregate liquidation value of all Disqualified
Stock of such Person and all preferred stock of Restricted Subsidiaries of such
Person, in each case, determined on a consolidated basis in accordance with
GAAP.
"Consolidated Leverage Ratio" means, with respect to any Person, as of any
date of determination, the ratio of (i) the Consolidated Indebtedness of such
Person as of such date, excluding, however, all (A) borrowings under Credit
Facilities that constitute Permitted Debt, (B) Permitted Warehouse Debt and (C)
Hedging Obligations that constitute Permitted Debt to (ii) the Consolidated Net
Worth of such Person as of such date.
"Consolidated Net Income" means, with respect to any Person for any period,
the aggregate of the Net Income of such Person and its Restricted Subsidiaries
(for such period, on a consolidated basis, determined in accordance with GAAP)
provided that (i) the Net Income (but not loss) of any Person that is not a
Restricted Subsidiary or that is accounted for by the equity method of
accounting shall be included only to the extent of the amount of dividends or
distributions paid in cash to the referent Person or a Wholly-Owned Restricted
Subsidiary thereof, (ii) the Net Income of any Restricted Subsidiary shall be
excluded to the extent that the declaration or payment of dividends or similar
distributions by that Restricted Subsidiary of that Net Income is not at the
date of determination permitted without any prior governmental approval (that
has not been obtained) or, directly or indirectly, by operation of the terms of
its charter or any agreement, instrument, judgment, decree, order, statute, rule
or governmental regulation applicable to that Restricted Subsidiary or its
stockholders, (iii) the Net Income of any Person acquired in a pooling of
interests transaction for any period prior to the date of such acquisition shall
be excluded, and (iv) the cumulative effect of a change in accounting principles
shall be excluded.
"Consolidated Net Worth" means, with respect to any Person as of any date,
the sum of (i) the consolidated equity of the common stockholders of such Person
and its consolidated Subsidiaries as of such date plus (ii) the respective
amounts reported on such Person's balance sheet as of such date with respect to
any series of preferred stock (other than Disqualified Stock) that by its terms
is not entitled to the payment of dividends unless such dividends may be
declared and paid only out of net earnings in respect of the year of such
declaration and payment, but only to the extent of any cash received by such
Person upon issuance of such preferred stock, less (x) all write-ups (other than
write-ups resulting from foreign currency translations and write-ups of tangible
assets of a going concern business made within 12 months after the acquisition
of such business) subsequent to the date of the Indenture in the book value of
any asset owned by such Person or a consolidated Subsidiary of such Person, (y)
all investments as of such date in unconsolidated Subsidiaries and in Persons
that are not Subsidiaries (except, in each case, Permitted Investments), and (z)
all unamortized debt discount and expense and unamortized deferred charges as of
such date, all of the foregoing determined in accordance with GAAP.
"Continuing Directors" means, as of any date of determination, any member
of the Board of Directors of the Company who: (i) was a member of such Board of
Directors on the date of the Indenture or (ii) was nominated for election or
elected to such Board of Directors with the approval of a majority of the
Continuing Directors who were members of such Board at the time of such
nomination or election.
"Credit Agreement" means the Restated Revolving Credit Agreement, dated as
of October 3, 1997, as amended, by and among the Company, certain of its
Restricted Subsidiaries and the several banks named therein, providing for up to
$115 million of revolving credit borrowings, including all related notes,
Guarantees, security agreements, collateral documents, and other instruments and
agreements executed in connection therewith.
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"Credit Enhancement Agreements" means, collectively, any documents,
instruments or agreements entered into by the Company, any of its Restricted
Subsidiaries or any of the Securitization Trusts exclusively for the purpose of
providing credit support for the Securitization Trusts or any of their
respective Indebtedness or asset-backed securities.
"Credit Facilities" means, with respect to the Company or any of its
Restricted Subsidiaries, one or more debt facilities (including, without
limitation, the Credit Agreement) with banks or other institutional lenders
providing for revolving credit loans; provided that in no event will any such
facility that constitutes a Warehouse Facility be deemed to qualify as a Credit
Facility.
"Default" means any event that is or with the passage of time or the giving
of notice or both would be an Event of Default.
"Disqualified Stock" means any Capital Stock that, by its terms (or by the
terms of any security into which it is convertible or for which it is
exchangeable), or upon the happening of any event, matures or is mandatorily
redeemable, pursuant to a sinking fund obligation or otherwise, or redeemable at
the option of the Holder thereof, in whole or in part, on or prior to the date
that is 91 days after the date on which the Notes mature.
"Eligible Receivables" means, at any time, all Receivables owned by the
Company or any of its Restricted Subsidiaries that meet the sale or loan
eligibility criteria set forth in the Warehouse Facility pursuant to which the
applicable Receivables were financed; excluding, however, any Receivables that
are pledged to secure, or were acquired or originated with, borrowings under a
Credit Facility and excluding any such Receivables held by a Securitization
Trust.
"Equity Interests" means Capital Stock and all warrants, options or other
rights to acquire Capital Stock (but excluding any debt security that is
convertible into, or exchangeable for, Capital Stock).
"Existing Indebtedness" means up to $11.0 million in aggregate principal
amount of Indebtedness of the Company and its Subsidiaries (other than
Indebtedness under the Credit Agreement, the Original Notes, the Secondary Notes
and the Original Guarantees and the Secondary Guarantees) in existence on
December 31, 1998, until such amounts are repaid.
"GAAP" means generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board or in such other statements by such
other entity as have been approved by a significant segment of the accounting
profession, which are in effect from time to time and consistently applied.
"Guarantee" means a guarantee (other than by endorsement of negotiable
instruments for collection in the ordinary course of business), direct or
indirect, in any manner (including, without limitation, letters of credit and
reimbursement agreements in respect thereof), of all or any part of any
Indebtedness.
"Guarantors" means each of (i) AmeriCredit Financial Services, Inc., a
Delaware corporation, ACF Investment Corp., a Delaware corporation, Americredit
Corporation of California, a California corporation, AmeriCredit Management
Company, a Delaware corporation and AmeriCredit Financial Services of Canada
Ltd., a Canadian corporation chartered in the Province of Ontario and (ii) any
other subsidiary that executes a Subsidiary Guarantee in accordance with the
provisions of the Indenture, and their respective successors and assigns.
"Hedging Obligations" means, with respect to any Person, the obligations of
such Person under (i) interest rate swap agreements, interest rate cap
agreements and interest rate collar agreements and (ii) other agreements or
arrangements designed to protect such Person against fluctuations in interest
rates.
"Indebtedness" means, with respect to any Person, any indebtedness of such
Person, whether or not contingent, in respect of borrowed money or evidenced by
bonds, notes, debentures or similar instruments or letters of credit (or
reimbursement agreements in respect thereof) or banker's acceptances or
representing Capital Lease Obligations or the balance deferred and unpaid of the
purchase price of any property or representing any Hedging Obligations, except
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any such balance that constitutes an accrued expense or trade payable, if and to
the extent any of the foregoing indebtedness (other than letters of credit and
Hedging Obligations) would appear as a liability upon a balance sheet of such
Person prepared in accordance with GAAP, as well as all indebtedness of others
secured by a Lien on any asset of such Person (whether or not such indebtedness
is assumed by such Person) and, to the extent not otherwise included, the
Guarantee by such Person of any indebtedness of any other Person. The amount of
any Indebtedness outstanding as of any date shall be (i) the accreted value
thereof, in the case of any Indebtedness that does not require current payments
of interest, and (ii) the principal amount thereof, together with any interest
thereon that is more than 30 days past due, in the case of any other
Indebtedness.
"Investments" means, with respect to any Person, all investments by such
Person in other Persons (including Affiliates) in the forms of direct or
indirect loans (including Guarantees of Indebtedness or other obligations),
advances or capital contributions (excluding commission, travel and similar
advances to officers and employees made in the ordinary course of business),
purchases or other acquisitions for consideration of Indebtedness, Equity
Interests or other securities, together with all items that are or would be
classified as investments on a balance sheet prepared in accordance with GAAP.
If the Company or any Subsidiary of the Company sells or otherwise disposes of
any Equity Interests of any direct or indirect Subsidiary of the Company such
that, after giving effect to any such sale or disposition, such Person is no
longer a Subsidiary of the Company, the Company shall be deemed to have made an
Investment on the date of any such sale or disposition equal to the fair market
value of the Equity Interests of such Subsidiary not sold or disposed of in an
amount determined as provided in the final paragraph of the covenant described
above under the caption "--Restricted Payments."
"Lien" means, with respect to any asset, any mortgage, lien, pledge,
charge, security interest or encumbrance of any kind in respect of such asset,
whether or not filed, recorded or otherwise perfected under applicable law
(including any conditional sale or other title retention agreement, any lease in
the nature thereof, any option or other agreement to sell or give a security
interest in and any filing of or agreement to give any financing statement under
the Uniform Commercial Code (or equivalent statutes) of any jurisdiction).
"Net Income" means, with respect to any Person, the net income (loss) of
such Person, determined in accordance with GAAP and before any reduction in
respect of preferred stock dividends, excluding, however, (i) any gain (but not
loss), together with any related provision for taxes on such gain (but not
loss), realized in connection with (a) any Asset Sale (including, without
limitation, dispositions pursuant to sale and leaseback transactions) or (b) the
disposition of any securities by such Person or any of its Restricted
Subsidiaries or the extinguishment of any Indebtedness of such Person or any of
its Restricted Subsidiaries and (ii) any extraordinary or nonrecurring gain (but
not loss), together with any related provision for taxes on such extraordinary
or nonrecurring gain (but not loss).
"Net Proceeds" means the aggregate cash proceeds received by the Company or
any of its Restricted Subsidiaries in respect of any Asset Sale (including,
without limitation, any cash received upon the sale or other disposition of any
non-cash consideration received in any Asset Sale), net of the direct costs
relating to such Asset Sale (including, without limitation, legal, accounting
and investment banking fees, and sales commissions) and any relocation expenses
incurred as a result thereof, taxes paid or payable as a result thereof (after
taking into account any available tax credits or deductions and any tax sharing
arrangements), amounts required to be applied to the repayment of Indebtedness
secured by a Lien on the asset or assets that were the subject of such Asset
Sale and any reserve for adjustment in respect of the sale price of such asset
or assets established in accordance with GAAP.
"Non-Recourse Debt" means Indebtedness (i) as to which neither the Company
nor any of its Restricted Subsidiaries (a) provides credit support of any kind
(including any undertaking, agreement or instrument that would constitute
Indebtedness), (b) is directly or indirectly liable (as a guarantor or
otherwise), or (c) constitutes the lender; and (ii) no default with respect to
which (including any rights that the holders thereof may have to take
enforcement action against an Unrestricted Subsidiary) would permit (upon
notice, lapse of time or both) any holder of any other Indebtedness (other than
the Notes being offered hereby) of the Company or any of its Restricted
Subsidiaries to declare a default on such other Indebtedness or cause the
payment thereof to be accelerated or payable prior to its stated maturity; and
(iii) as to which the lenders have been notified in writing that they will not
have any recourse to the stock or assets of the Company or any of its Restricted
Subsidiaries.
"Obligations" means any principal, interest, penalties, fees,
indemnifications, reimbursements, damages and other liabilities payable under
the documentation governing any Indebtedness.
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"Original Guarantees" means each of the Guarantees of the Original Notes by
the Guarantors pursuant to the Original Indenture.
"Original Indenture" means the Indenture, dated as of February 4, 1997,
among the Company, Bank One, NA, as trustee, and the Guarantors, with respect to
the Original Notes and the Original Guarantees.
"Original Notes" means the $125,000,000 in aggregate principal amount of
the Company's 9-1/4% Senior Notes due 2004, issued pursuant to the Original
Indenture on February 4, 1997.
"Permitted Business" means the business of purchasing, originating,
brokering and marketing, pooling and selling, securitizing and servicing
Receivables, and entering into agreements and engaging in transactions
incidental to the foregoing.
"Permitted Investments" means (a) any Investment in the Company or in a
Wholly-Owned Restricted Subsidiary of the Company that is a Guarantor; (b) any
Investment in Cash Equivalents; (c) any Investment by the Company or any
Subsidiary of the Company in a Person, if as a result of such Investment (i)
such Person becomes a Wholly-Owned Restricted Subsidiary of the Company and a
Guarantor that is engaged in a Permitted Business or (ii) such Person is merged,
consolidated or amalgamated with or into, or transfers or conveys substantially
all of its assets to, or is liquidated into, the Company or a Wholly-Owned
Restricted Subsidiary of the Company that is a Guarantor and that is engaged in
a Permitted Business; (d) any Restricted Investment made as a result of the
receipt of non-cash consideration from an Asset Sale that was made pursuant to
and in compliance with the covenant described above under the caption "--
Repurchase at the Option of Holders--Asset Sales;" (e) any acquisition of assets
solely in exchange for the issuance of Equity Interests (other than Disqualified
Stock) of the Company; (f) Investments by the Company or any of its Subsidiaries
in Securitization Trusts in the ordinary course of business in connection with
or arising out of Securitizations; (g) purchases of all remaining outstanding
asset-backed securities of any Securitization Trust for the purpose of relieving
the Company or a Subsidiary of the Company of the administrative expense of
servicing such Securitization Trust, but only if 90% or more of the aggregate
principal amount of the original asset-backed securities of such Securitization
Trust have previously been retired; and (h) other Investments by the Company or
any of its Subsidiaries in any Person (other than an Affiliate of the Company
that is not also a Subsidiary of the Company) that do not exceed $5.0 million in
the aggregate at any one time outstanding (measured as of the date made and
without giving effect to subsequent changes in value).
"Permitted Liens" means (i) Liens existing on the date of the Indenture;
(ii) Liens on Eligible Receivables and the proceeds thereof to secure Permitted
Warehouse Debt or permitted Guarantees thereof; (iii) Liens to secure revolving
credit borrowings under Credit Facilities, provided that such borrowings were
permitted by the Indenture to be incurred; (iv) Liens on Receivables and the
proceeds thereof incurred in connection with Securitizations or permitted
Guarantees thereof; (v) Liens on spread accounts and credit enhancement assets,
Liens on the stock of Restricted Subsidiaries of the Company substantially all
of the assets of which are spread accounts and credit enhancement assets and
Liens on interests in Securitization Trusts, in each case incurred in connection
with Credit Enhancement Agreements; (vi) Liens on property of a Person existing
at the time such Person is merged into or consolidated with the Company or any
Restricted Subsidiary of the Company; provided that such Liens were in existence
prior to the contemplation of such merger or consolidation and do not extend to
any assets other than those of the Person merged into or consolidated with the
Company; (vii) Liens on property existing at the time of acquisition thereof by
the Company or any Restricted Subsidiary of the Company, provided that such
Liens were in existence prior to the contemplation of such acquisition; (viii)
Liens securing Indebtedness incurred to finance the construction or purchase of
property of the Company or any of its Wholly-Owned Restricted Subsidiaries (but
excluding Capital Stock of another Person); provided, however, that any such
Lien may not extend to any other property owned by the Company or any of its
Restricted Subsidiaries at the time the Lien is incurred, and the Indebtedness
secured by the Lien may not be incurred more than 180 days after the latter of
the acquisition or completion of construction of the property subject to the
Lien; provided, further, that the Amount of Indebtedness secured by such Liens
do not exceed the fair market value (as evidenced by a resolution of the Board
of Directors of the Company set forth in an Officers' Certificate delivered to
the Trustee) of the property purchased or constructed with the proceeds of such
Indebtedness; (ix) Liens to secure any Permitted Refinancing Indebtedness
incurred to refinance any Indebtedness secured by any Lien referred to in the
foregoing clauses (i) through (viii), provided, however, that such new Lien
shall be limited to all or part of the same property that secured the original
Lien and the Indebtedness secured by such Lien at such time is not increased to
any amount greater than the outstanding principal amount or, if greater,
committed amount of the
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Indebtedness described under clauses (i) through (viii), as the case may be, at
the time the original Lien became a permitted Lien; (x) Liens in favor of the
Company; (xi) Liens incurred in the ordinary course of business of the Company
or any Restricted Subsidiary of the Company with respect to obligations that do
not exceed $1.0 million in the aggregate at any one time outstanding; (xii)
Liens to secure the performance of statutory obligations, surety or appeal
bonds, performance bonds or other obligations of a like nature incurred in the
ordinary course of business (including, without limitation, landlord Liens on
leased properties); (xiii) Liens for taxes, assessments or governmental charges
or claims that are not yet delinquent or that are being contested in good faith
by appropriate proceedings promptly instituted and diligently concluded,
provided that any reserve or other appropriate provision as shall be required in
conformity with GAAP shall have been made therefor; (xiv) Liens on assets of
Guarantors to secure Senior Guarantor Debt of such Guarantors that, was
permitted by the Indenture to be incurred; and (xv) Liens on assets of
Unrestricted Subsidiaries that secure Non-Recourse Debt of Unrestricted
Subsidiaries.
"Permitted Refinancing Indebtedness" means any Indebtedness of the Company
or any of its Restricted Subsidiaries issued in exchange for, or the net
proceeds of which are used to extend, refinance, renew, replace, defease or
refund other Indebtedness of the Company or any of its Restricted Subsidiaries
(other than Permitted Warehouse Debt or intercompany Indebtedness); provided
that: (i) the principal amount (or accreted value, if applicable) of such
Permitted Refinancing Indebtedness does not exceed the principal amount of (or
accreted value, if applicable), plus accrued interest on, the Indebtedness so
extended, refinanced, renewed, replaced, defeased or refunded (plus the amount
of reasonable expenses incurred in connection therewith); (ii) such Permitted
Refinancing Indebtedness has a final maturity date later than the final maturity
date of, and has a Weighted Average Life to Maturity equal to or greater than
the Weighted Average Life to Maturity of, the Indebtedness being extended,
refinanced, renewed, replaced, defeased or refunded; (iii) if the Indebtedness
being extended, refinanced, renewed, replaced, defeased or refunded is
subordinated in right of payment to the Notes, such Permitted Refinancing
Indebtedness has a final maturity date later than the final maturity date of,
and is subordinated in right of payment to, the Notes on terms at least as
favorable to the Holders of Notes as those contained in the documentation
governing the Indebtedness being extended, refinanced, renewed, replaced,
defeased or refunded; and (iv) such Indebtedness is incurred either by the
Company or by the Restricted Subsidiary who is the obligor on the Indebtedness
being extended, refinanced, renewed, replaced, defeased or refunded.
"Permitted Warehouse Debt" means Indebtedness of the Company or a
Restricted Subsidiary of the Company outstanding under one or more Warehouse
Facilities; provided, however, that (i) the assets purchased with proceeds of
such warehouse debt are or, prior to any funding under the Warehouse Facility
with respect to such assets, were eligible to be recorded as held for sale on
the consolidated balance sheet of the Company in accordance with GAAP, (ii) such
warehouse debt will be deemed Permitted Warehouse Debt (a) in the case of a
Purchase Facility, only to the extent the holder of such warehouse debt has no
contractual recourse to the Company and/or its Restricted Subsidiaries to
satisfy claims in respect of such warehouse debt in excess of the realizable
value of the Receivables financed thereby, and (b) in the case of any other
Warehouse Facility, only to the lesser of (A) the amount advanced by the lender
with respect to the Receivables financed under such Warehouse Facility, and (B)
the principal amount of such Receivables and (iii) any such Indebtedness has not
been outstanding in excess of 364 days.
"Person" means an individual, partnership, corporation, limited liability
company, unincorporated organization, trust, joint venture, or a governmental
agency or political subdivision thereof.
"Purchase Facility" means any Warehouse Facility in the form of a purchase
and sale facility pursuant to which the Company or any of its Subsidiaries sells
Receivables to a financial institution and retains the right of first refusal
upon the subsequent resale of such Receivables by such financial institution.
"Receivables" means (i) consumer installment sale contracts and loans
evidenced by promissory notes secured by new and used automobiles and light
trucks, (ii) other consumer installment sale contracts or lease contracts and
(iii) loans secured by residential mortgages, in the case of each of the clauses
(i), (ii) and (iii), that are purchased or originated in the ordinary course of
business by the Company or any Restricted Subsidiary of the Company; provided,
however, that for purposes of determining the amount of a Receivable at any
time, such amount shall be determined in accordance with GAAP, consistently
applied, as of the most recent practicable date.
"Restricted Investment" means an Investment other than a Permitted
Investment.
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"Restricted Subsidiary" of a Person means any Subsidiary of the referent
Person that is not an Unrestricted Subsidiary.
"Secondary Guarantees" means each of the Guarantees of the Secondary Notes
by the Guarantors pursuant to the Secondary Indenture.
"Secondary Indenture" means the Indenture, dated as of January 29, 1998,
among the Company, Bank One, NA, as trustee, and the Guarantors, with respect to
the Secondary Notes and the Secondary Guarantees.
"Secondary Notes" means the $50,000,000 in aggregate principal amount of
the Company's 9-1/4% Senior Notes due 2004, issued pursuant to the Secondary
Indenture on January 29, 1998.
"Securitization" means a public or private transfer of Receivables in the
ordinary course of business and by which the Company or any of its Restricted
Subsidiaries directly or indirectly securitizes a pool of specified Receivables
including any such transaction involving the sale of specified Receivables to a
Securitization Trust.
"Securitization Trust" means any Person (whether or not a Subsidiary of the
Company) (i) established exclusively for the purpose of issuing securities in
connection with any Securitization, the obligations of which are without
recourse to the Company or any of the Guarantors and (ii) any special purpose
Subsidiary of the Company formed exclusively for the purpose of satisfying the
requirements of Credit Enhancement Agreements and regardless of whether such
Subsidiary is an issuer of securities, provided that such Person is not an
obligor with respect to any Indebtedness of the Company or any Guarantor other
than under Credit Enhancement Agreements. As of the date of the Indenture, AFS
Funding Corp., CP Funding Corp., AmeriCredit Funding Corp. and AmeriCredit
Warehouse Trust shall be deemed to satisfy the requirements of the foregoing
definition.
"Significant Subsidiary" means any Subsidiary that would be a "significant
subsidiary" as defined in Article 1, Rule 1-02 of Regulation S-X, promulgated
pursuant to the Act, as such Regulation is in effect on the date hereof.
"Specified Senior Indebtedness" means (i) the Indebtedness of any Person,
whether outstanding on the date of the Indenture or thereafter incurred and (ii)
accrued and unpaid interest (including interest accruing on or after the filing
of any petition in bankruptcy or for reorganization relating to such Person to
the extent post filing interest is allowed in such proceeding) in respect of (A)
Indebtedness of such Person for money borrowed and (B) Indebtedness evidenced by
notes, debentures, bonds or other similar instruments for the payment of which
such Person is responsible or liable unless, in the case of either clause (i) or
(ii), in the instrument creating or evidencing the same pursuant to which the
same is outstanding, it is provided that such obligations are subordinate in
right of payment to the Notes; provided, however that Specified Senior
Indebtedness shall not include (1) any obligation of such Person to any
Subsidiary of such Person, (2) any liability for Federal, state, local or other
taxes owed or owing by such Person, (3) any accounts payable or other liability
to trade creditors arising in the ordinary course of business (including
Guarantees thereof or instruments evidencing such liabilities), (4) any
obligations in respect of Capital Stock of such Person or (5) that portion of
any Indebtedness which at the time of incurrence is incurred in violation of the
Indenture.
"Stated Maturity" means, with respect to any installment of interest or
principal on any series of Indebtedness, the date on which such payment of
interest or principal was scheduled to be paid in the original documentation
governing such Indebtedness, and shall not include any contingent obligations to
repay, redeem or repurchase any such interest or principal prior to the date
originally scheduled for the payment thereof.
"Subsidiary" means, with respect to any Person, (i) any corporation,
association or other business entity of which more than 50% of the total voting
power of shares of Capital Stock entitled (without regard to the occurrence of
any contingency) to vote in the election of directors, managers or trustees
thereof is at the time owned or controlled, directly or indirectly, by such
Person or one or more of the other Subsidiaries of that Person (or a combination
thereof) and (ii) any partnership (a) the sole general partner or the managing
general partner of which is such Person or a Subsidiary of such Person or (b)
the only general partners of which are such Person or of one or more
Subsidiaries of such Person (or any combination thereof).
"Unrestricted Subsidiary" means (i) any Subsidiary that is designated by
the Board of Directors of the Company as an Unrestricted Subsidiary pursuant to
a Board Resolution; but only to the extent that such Subsidiary:
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(a) has no Indebtedness other than Non-Recourse Debt; (b) is not party to any
agreement, contract, arrangement or understanding with the Company or any
Restricted Subsidiary of the Company unless the terms of any such agreement,
contract, arrangement or understanding are no less favorable to the Company or
such Restricted Subsidiary than those that might be obtained at the time from
Persons who are not Affiliates of the Company; (c) is a Person with respect to
which neither the Company nor any of its Restricted Subsidiaries has any direct
or indirect obligation (x) to subscribe for additional Equity Interests or (y)
to maintain or preserve such Person's financial condition or to cause such
Person to achieve any specified levels of operating results; (d) has not
guaranteed or otherwise directly or indirectly provided credit support for any
Indebtedness of the Company or any of its Restricted Subsidiaries; and (e) has
at least one director on its board of directors that is not a director or
executive officer of the Company or any of its Restricted Subsidiaries and has
at least one executive officer that is not a director or executive officer of
the Company or any of its Restricted Subsidiaries. Any such designation by the
Board of Directors of the Company shall be evidenced to the Trustee by filing
with the Trustee a certified copy of the Board Resolution giving effect to such
designation and an Officers' Certificate certifying that such designation
complied with the foregoing conditions and was permitted by the covenant
described above under the caption "Certain Covenants--Restricted Payments." If,
at any time, any Unrestricted Subsidiary would fail to meet the foregoing
requirements as an Unrestricted Subsidiary, it shall thereafter cease to be an
Unrestricted Subsidiary for purposes of the Indenture and any Indebtedness of
such Subsidiary shall be deemed to be incurred by a Restricted Subsidiary of the
Company as of such date (and, if such Indebtedness is not permitted to be
incurred as of such date under the covenant described under the caption
"Incurrence of Indebtedness and Issuance of Preferred Stock," the Company shall
be in default of such covenant). The Board of Directors of the Company may at
any time designate any Unrestricted Subsidiary to be a Restricted Subsidiary;
provided that such designation shall be deemed to be an incurrence of
Indebtedness by a Restricted Subsidiary of the Company of any outstanding
Indebtedness of such Unrestricted Subsidiary and such designation shall only be
permitted if (i) such Indebtedness is permitted under Consolidated Leverage
Ratio test set forth in the first paragraph of the covenant described under the
caption "Certain Covenants--Incurrence of Indebtedness and Issuance of Preferred
Stock," calculated on a pro forma basis as if such designation had occurred at
the end of the applicable fiscal quarter, and (ii) no Default or Event of
Default would be in existence following such designation.
"Voting Stock" of any Person as of any date means the Capital Stock of such
Person that is at the time entitled to vote in the election of the Board of
Directors of such Person.
"Warehouse Facility" means any funding arrangement with a financial
institution or other lender or purchaser to the extent (and only to the extent)
funding thereunder is used exclusively to finance or refinance the purchase or
origination of Receivables by the Company or a Restricted Subsidiary of the
Company for the purpose of (i) pooling such Receivables prior to Securitization
or (ii) sale, in each case in the ordinary course of business, including
Purchase Facilities.
"Weighted Average Life to Maturity" means, when applied to any Indebtedness
at any date, the number of years obtained by dividing (i) the sum of the
products obtained by multiplying (a) the amount of each then remaining
installment, sinking fund, serial maturity or other required payments of
principal, including payment at final maturity, in respect thereof, by (b) the
number of years (calculated to the nearest one-twelfth) that will elapse between
such date and the making of such payment, by (ii) the then outstanding principal
amount of such Indebtedness.
"Wholly-Owned Restricted Subsidiary" of any Person means a Restricted
Subsidiary of such Person all of the outstanding Capital Stock or other
ownership interests of which (other than directors' qualifying shares) shall at
the time be owned by such Person or by one or more Wholly-Owned Restricted
Subsidiaries of such Person.
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DESCRIPTION OF OTHER DEBT
The $505 Million Warehouse Facility
We have a $505 million warehouse facility (the "$505 Million Warehouse
Facility") which expires in September 1999. Under the $505 Million Warehouse
Facility, AmeriCredit Financial Services, Inc., our subsidiary, sells
receivables to CP Funding Corp., a special purpose subsidiary which is treated
as a Securitization Trust under the Indenture. AmeriCredit Financial Services,
Inc. in turn agrees to manage, service, administer and make collections on such
auto receivables. CP Funding Corp. finances the purchase of the auto receivables
with borrowings under the $505 Million Warehouse Facility.
The amount of financing available under the $505 Million Warehouse Facility
is governed by an advance formula subject to downward adjustment upon certain
defined financial performance ("Trigger Events"). Aggregate borrowings of $233.7
million were outstanding as of March 31, 1999. All financings under the $505
Million Warehouse Facility are secured by a first priority security lien on the
receivables and related assets held by CP Funding Corp. and bear interest at
rates based on the funding source plus specified fees. While CP Funding Corp. is
a consolidated subsidiary of the Company, CP Funding Corp. is a separate legal
entity and is not a guarantor of the Notes and the auto receivables sold to CP
Funding Corp. and other assets of CP Funding Corp. are legally owned by CP
Funding Corp. and are not available to satisfy the claims of creditors of
AmeriCredit or its other subsidiaries.
The $150 Million Warehouse Facility
The Company has a $150 million warehouse facility (the "$150 Million
Warehouse Facility") which expires in March 2000. Under the $150 Million
Warehouse Facility, AmeriCredit Corporation of California, AmeriCredit Funding
Corp. and AmeriCredit Financial Services, Inc. sell receivables to AmeriCredit
Warehouse Trust, a special purpose subsidiary. AmeriCredit Financial Services,
Inc. will manage, service, administer and make collections on such auto
receivables. AmeriCredit Warehouse Trust finances the purchase of the auto
receivables with borrowings under the $150 Million Warehouse Facility.
The amount of financing available under the $150 Million Warehouse Facility
is governed by an advance formula subject to Trigger Events. As of March 31,
1999, there were no outstanding borrowings under the $150 Million Warehouse
Facility. All financings under the $150 Million Warehouse Facility are secured
by a first priority security interest in the receivables and related assets held
by AmeriCredit Warehouse Trust and bear interest at rates based on the funding
source plus specified fees. While AmeriCredit Warehouse Trust is a subsidiary of
the Company, AmeriCredit Warehouse Trust is a separate legal entity and is not a
guarantor of the Notes and the receivables sold to AmeriCredit Warehouse Trust
and other assets of AmeriCredit Warehouse Trust are legally owned by AmeriCredit
Warehouse Trust and are not available to satisfy the claims of creditors of the
Company or its other subsidiaries.
The Credit Agreement
AmeriCredit, AmeriCredit Financial Services, Inc., and Americredit
Corporation of California are the borrowers under the Credit Agreement, pursuant
to which the borrowers may borrow up to $115 million on a revolving basis for
the acquisition of automobile finance contracts, working capital and general
corporate purposes, subject to a borrowing base limitation based on a percentage
of the aggregate eligible finance receivables owned by AmeriCredit and certain
of its subsidiaries. Borrowings under the Credit Agreement are guaranteed by
certain subsidiaries of AmeriCredit and are secured by certain of the assets of
the borrowers and the Company's principal operating subsidiaries and the pledge
by AmeriCredit of all of its equity interests in and loans to its subsidiaries,
except for the Non-Guarantor Special Purpose Finance Vehicles and certain other
subsidiaries. The Credit Agreement matures in March 2000. As of March 31, 1999,
there were no outstanding borrowings under the Credit Agreement. Approximately
$76.3 million was available for borrowing under the Credit Agreement pursuant to
the terms of such agreement in accordance with borrowing base requirements.
The Credit Agreement contains covenants and provisions that will restrict,
among other things, any of the borrowers' ability to:
. merge or consolidate with another entity;
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. incur liens on its property other than Permitted Liens (as defined in the
Credit Agreement);
. engage in certain asset sales or other dispositions;
. engage in material acquisitions and other investments;
. pay dividends, repurchase stock or make other restricted payments;
. engage in certain transactions with affiliates;
. make certain changes in its line of business; and
. enter into any negative pledges, subject to the extent permitted by the
Credit Agreement.
The Credit Agreement also requires the satisfaction of certain financial
performance criteria, including:
. that the ratio of recourse indebtedness to tangible net worth not exceed
2.5 to 1.0;
. that the sum of EBIT (as defined in the Credit Agreement) and the
amortization of credit enhancement assets less the gain on sale of
receivables divided by interest expense on a trailing 12-month basis not
be less than 1.85 to 1.0;
. that we not incur a net loss on a consolidated basis during any calendar
quarter;
. that the ratio of Net Credit Losses (as defined in the Credit Agreement)
for any 12-month period to the sum of month end balances of Net Indirect
Loans (as defined in the Credit Agreement) over the prior 13 months
divided by 13 be less than 0.10 to 1.0; and
. that the ratio of Delinquent and Repossessed Loans (as defined in the
Credit Agreement) to Net Indirect Loans be less than 0.075 to 1.0.
Additional borrowings under the Credit Agreement are subject to the
absence of a default under such covenants.
Events of default under the Credit Agreement include, among other things:
. any failure of the borrowers to pay principal, interest or fees
thereunder when due;
. payment default or other default under other Indebtedness;
. noncompliance with or breach of certain covenants contained in the Credit
Agreement and certain related documents;
. material inaccuracy of any representation or warranty when made by
borrowers in the Credit Agreement and certain related documents;
. certain events of bankruptcy or insolvency; and
. imposition of judgment or ERISA liens.
The Canadian Facility
Our subsidiary, AmeriCredit Financial Services of Canada Ltd., has a
convertible revolving term credit facility. The borrower may convert the
facility to a non-revolving term credit facility with a maturity of two years
from the effective date of the conversion. The agreement provides borrowings of
up to $20 million Cdn., subject to specified borrowing base restrictions, to
fund the general corporate purposes of the borrower. Borrowings under this
facility are secured by a first lien security interest on the qualified finance
contracts and related assets, and are guaranteed by the Company. The borrower
will cause any subsidiary acquired or incorporated after the date of the
agreement to execute and deliver a guarantee in favor of the lender for the
indebtedness and obligations under the facility. As of March 31, 1999, there was
$0.6 million of borrowings outstanding under the Canadian facility.
The Canadian facility contains covenants that restricts the borrower's
ability to, among other things, create liens on collateral owned or acquired,
including the right to receive income from the collateral. The facility matures
in November 1999, unless extended or converted to a non-revolving term credit
facility.
The Mortgage Subsidiary Credit Agreement
Our subsidiary, AMS, has a credit agreement (the "Mortgage Subsidiary
Credit Agreement") with a bank, which provides AMS with revolving credit
borrowings of up to $75 million, subject to specified borrowing base
requirements, to fund AMS's origination and acquisition of mortgage loans until
those loans are sold in the secondary market. Borrowings by AMS under this
facility are collateralized by a first lien security interest on the mortgage
loans and related assets originated or acquired by AMS, and are guaranteed by us
and certain of our Subsidiaries. Aggregate borrowings of $21.3 million were
outstanding as of March 31, 1999. The facility expires in November 1999.
92
<PAGE>
The Mortgage Subsidiary Credit Agreement contains covenants and provisions
typical of a revolving credit facility, including restrictions on AMS's ability
to:
. incur additional indebtedness, including guarantees,
. incur liens on its properties,
. make loans and advances to and investments in entities other than
affiliates,
. pay dividends and other distributions to entities other than affiliates,
. merge or consolidate,
. liquidate or otherwise dispose of its assets,
. engage in transactions with affiliates, or
. engage in any new business.
The Mortgage Subsidiary Credit Agreement also contains covenants which require
AMS to satisfy certain financial criteria.
Financial Guarantee Insurance Policies
We have procured financial guarantee insurance policies from FSA for the
benefit of the holders of the asset-backed securities issued in Company-
sponsored securitizations in order to reduce the cost of such securitizations by
enhancing their credit ratings. We have agreed to reimburse FSA, on a limited
recourse basis, for amounts paid by FSA under such financial guarantee insurance
policies. In order to secure such reimbursement obligations, we have granted to
FSA a lien on the capital stock of, and certain assets of, AFS Funding Corp.,
most notably the spread accounts and the restricted cash required to be
deposited therein. Our obligations to FSA with respect to each individual
securitization are cross-collateralized to all of the collateral pledged to FSA.
As a result, the restricted cash in the spread accounts from all of the Company-
sponsored securitizations, as well as the capital stock of AFS Funding Corp.
(which owns all of the spread accounts and all of the credit enhancement assets
associated with all such securitizations) is available to reimburse FSA in
connection with any individual Company-sponsored securitizations.
In addition, AFS Funding Corp. is a limited purpose corporation that we
established to facilitate Company-sponsored securitizations and the credit
enhancement thereof and our ability to pay dividends is effectively restricted
to a substantial degree by the terms of the Company-sponsored securitizations
and the FSA financial guarantee arrangements. Specifically, AFS Funding Corp.
has agreed to be last in the order of payment priority with respect to cash
distributions from Company-sponsored securitizations and is not entitled to
receive any cash from Company-sponsored securitizations or access restricted
cash in the spread accounts until the asset-backed security holders, FSA and
others have received all amounts due to them and the spread accounts have the
requisite amounts of restricted cash deposited therein. FSA will have claims
that are prior to the claims of the holders of the Notes with respect to the
assets securing its reimbursement rights and the Notes will be effectively
subordinated to all such reimbursement rights. As of March 31, 1999, restricted
cash was approximately $82.8 million (all of which was held in spread accounts
owned by AFS Funding Corp.) and AFS Funding Corp.'s other principal assets,
investment in Trust receivables and interest-only receivables, were $157.2
million and $173.6 million, respectively. See "Risk Factors--AmeriCredit Corp.
as a Holding Company."
Existing Notes
On February 4, 1997, we issued $125 million in aggregate principal amount
of 9-1/4% Senior Notes, due 2004, pursuant to an indenture, among us, the
Guarantors and Bank One, Columbus, N.A., as trustee. On January 29, 1998, we
issued an additional $50 million in aggregate principal amount of 9-1/4% Senior
Notes, due 2004, on substantially the same terms as the 9-1/4% Senior Notes
issued on February 4, 1997. All of these 9-1/4% Senior Notes are guaranteed on a
senior unsecured basis by each of the Guarantors.
On April 20, 1999, we issued $200 million in aggregate principal amount of
9.875% Senior Notes, due 2006, pursuant to an indenture, among us, the
Guarantors and Bank One, Columbus, N.A., as trustee. All of these 9.875% Senior
Notes are guaranteed on a senior unsecured basis by each of the Guarantors.
93
<PAGE>
Capitalized Equipment Leases
We have, from time to time, financed the acquisition of data processing and
telecommunications equipment with capitalized equipment leases. As of March 31,
1999, such leases totaled $12.8 million.
REGISTRATION RIGHTS
THE SUMMARY SET FORTH BELOW OF CERTAIN PROVISIONS OF THE REGISTRATION
RIGHTS AGREEMENT DOES NOT PURPORT TO BE COMPLETE AND IS SUBJECT TO, AND IS
QUALIFIED IN ITS ENTIRETY BY, ALL THE PROVISIONS OF THE REGISTRATION RIGHTS
AGREEMENT, A COPY OF WHICH HAS BEEN FILED AS AN EXHIBIT TO THE REGISTRATION
STATEMENT.
The Company, the Guarantors and the Initial Purchasers entered into the
Registration Rights Agreement on April 20, 1999 (the "Issue Date") pursuant to
which each of the Company and the Guarantors agreed that they will, at their
expense, for the benefit of holders of the Old Notes (the "Holders"), (i) within
60 days after the Issue Date (the "Filing Date"), file a registration statement
on an appropriate registration form (the "Exchange Offer Registration
Statement") with respect to a registered offer (the "Exchange Offer") to
exchange the Old Notes for these New Notes, guaranteed on a senior subordinated
basis by the Guarantors, which New Notes will have terms substantially identical
in all material respects to the Old Notes (except that the New Notes will not
contain terms with respect to transfer restrictions) and (ii) cause the Exchange
Offer Registration Statement to be declared effective under the Securities Act
within 150 days after the Issue Date. Upon the Exchange Offer Registration
Statement being declared effective, the Company will offer these New Notes (and
related securities) in exchange for surrender of the Old Notes. The Company will
keep the Exchange Offer open for not less than 30 days (or longer if required by
applicable law) after the date notice of the Exchange Offer is mailed to the
Holders. For each of the Old Notes surrendered to the Company pursuant to the
Exchange Offer, the Holder who surrendered such Old Note will receive a New Note
having a principal amount equal to that of the surrendered Old Note. Interest on
each New Note will accrue (a) from the later of (i) the last interest payment
date on which interest was paid on the Old Note surrendered in exchange
therefor, or (ii) if the Old Note is surrendered for exchange on a date in a
period which includes the record date for an interest payment date to occur on
or after the date of such exchange and as to which interest will be paid, the
date of such interest payment date or (b) if no interest has been paid on such
Old Note, from the Issue Date.
Based on an interpretation by the Commission's staff set forth in no-action
letters issued to third parties unrelated to the Company, the Company believes
that, with the exceptions set forth below, New Notes issued pursuant to the
Exchange Offer in exchange for Old Notes may be offered for resale, resold and
otherwise transferred by Holders thereof (other than any holder which is an
"affiliate" of the Company within the meaning of Rule 405 promulgated under the
Securities Act, or a broker-dealer who purchased Old Notes directly from the
Company to resell pursuant to Rule 144A or any other available exemption
promulgated under the Securities Act) without compliance with the registration
and prospectus delivery provisions of the Securities Act, provided that the New
Notes are acquired in the ordinary course of business of the Holder and the
Holder does not have an arrangement or understanding with any person to
participate in the distribution of such New Notes. Any holder who tenders in the
Exchange Offer for the purpose of participating in a distribution of the New
Notes cannot rely on this interpretation by the Commission's staff and must
comply with the registration and prospectus delivery requirements of the
Securities Act in connection with a secondary resale transaction. Each broker-
dealer that receives New Notes for its own account in exchange for Old Notes,
where such Old Notes were acquired by such broker-dealer as a result of market-
making activities or other trading activities, must acknowledge that it will
deliver a prospectus in connection with any resale of such New Notes. See "Plan
of Distribution." Broker-dealers who acquired Old Notes directly from us and not
as a result of market-making activities or other trading activities may not rely
on the staff's interpretations discussed above or participate in the Exchange
Offer and must comply with the prospectus delivery requirements of the
Securities Act in order to sell the Old Notes.
If, (i) because of any change in law or in currently prevailing
interpretations of the Staff of the Commission, the Company is not permitted to
effect an exchange offer, (ii) the Exchange Offer is not consummated within 150
days of the Issue Date or (iii) in certain circumstances, certain holders of
unregistered Old Notes so request, or (iv) in the case of any Holder that
participates in the Exchange Offer, such Holder does not receive New Notes on
the date of the exchange that may be sold without restriction under state and
federal securities laws (other than due solely to the status of such Holder as
an affiliate of the Company within the meaning of the Securities Act), then in
each case, the
94
<PAGE>
Company will (x) promptly deliver to the Holders and the Trustee written notice
thereof and (y) at its sole expense, (a) as promptly as practicable, file a
shelf registration statement covering resales of the Old Notes (the "Shelf
Registration Statement"); and (b) use their best efforts to keep effective the
Shelf Registration Statement until the earlier of two years after its effective
date or such time as all of the applicable Old Notes have been sold thereunder.
The Company will, in the event that a Shelf Registration Statement is filed,
provide to each Holder copies of the prospectus that is a part of the Shelf
Registration Statement, notify each such Holder when the Shelf Registration
Statement for the Old Notes has become effective and take certain other actions
as are required to permit unrestricted resales of the Old Notes. A Holder that
sells Old Notes pursuant to the Shelf Registration Statement will be required to
be named as a selling security holder in the related prospectus and to deliver a
prospectus to purchasers, will be subject to certain of the civil liability
provisions under the Securities Act in connection with such sales and will be
bound by the provisions of the Registration Rights Agreement that are applicable
to such a Holder (including certain indemnification rights and obligations).
If the Company fails to comply with the above provisions or if the Exchange
Offer Registration Statement or the Shelf Registration Statement fails to become
effective, then, as liquidated damages, additional interest (the "Additional
Interest") shall become payable in respect of the Old Notes as follows:
(i) if (a) neither the Exchange Offer Registration Statement or Shelf
Registration Statement is filed with the Commission on or prior to the
applicable filing date or (b) notwithstanding that the Company has consummated
or will consummate an exchange offer, the Company is required to file a Shelf
Registration Statement and such Shelf Registration Statement is not filed on or
prior to the date required by the Registration Rights Agreement, then commencing
on the day after either such required filing date, Additional Interest shall
accrue on the principal amount of the Old Notes at a rate of 0.50% per annum for
the first 90 days immediately following each such filing date, such Additional
Interest rate increasing an additional 0.50% per annum at the beginning of each
subsequent 90-day period; or
(ii) if (a) neither the Exchange Offer Registration Statement nor a Shelf
Registration Statement is declared effective by the Commission on or prior to 90
days after the applicable filing deadline set for such filing in the
Registration Rights Agreement or (b) notwithstanding that the Company has
consummated or will consummate an exchange offer, the Company is required to
file a Shelf Registration Statement and such Shelf Registration Statement is not
declared effective by the Commission on or prior to the 90th day following the
filing date deadline set for such filing in the Registration Rights Agreement,
then, commencing on the day after such 90th day following the filing deadline
set for such filing in the Registration Rights Agreement, Additional Interest
shall accrue on the principal amount of the Old Notes at a rate of 0.50% per
annum for the first 90 days immediately following such date, such Additional
Interest rate increasing by an additional 0.50% per annum at the beginning of
each subsequent 90-day period; or
(iii) if (a) the Company has not exchanged New Notes for all Old Notes
validly tendered in accordance with the terms of the Exchange Offer on or prior
to the 150th day after the Issue Date or (b) if applicable, the Shelf
Registration Statement ceases to be effective at any time prior to the second
anniversary of the Issue Date (other than after such time as all Old Notes have
been disposed of thereunder), then Additional Interest shall accrue on the
principal amount of the Old Notes at a rate of 0.50% per annum for the first 90
days commencing on (x) the 150th day after the Issue Date, in the case of (a)
above, or (y) the day such Shelf Registration Statement ceases to be effective
in the case of (b) above, such Additional Interest rate increasing by an
additional 0.50% per annum at the beginning of each subsequent 90-day period;
provided, however, that the Additional Interest rate on the Old Notes may not
accrue under more than one of the foregoing clauses (i)-(iii) at any one time
and at no time shall the aggregate amount of Additional Interest accruing exceed
in the aggregate 1.0% per annum; provided, further, however, that (1) upon the
filing of the Exchange Offer Registration Statement or a Shelf Registration
Statement (in the case of clause (i) above), (2) upon the effectiveness of the
Exchange Offer Registration Statement or a Shelf Registration Statement (in the
case of clause (ii) above), or (3) upon the exchange of New Notes for all Old
Notes tendered (in the case of clause (iii)(a) above), or upon the effectiveness
of the Shelf Registration Statement which had ceased to remain effective (in the
case of clause (iii)(b) above), Additional Interest on the Old Notes as a result
of such clause (or the relevant subclause thereof), as the case may be, shall
cease to accrue.
95
<PAGE>
Any amounts of Additional Interest due pursuant to clause (i), (ii) or
(iii) above will be payable in cash on the original interest payment dates for
the Old Notes.
96
<PAGE>
CERTAIN UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS
The following general discussion summarizes the material United States
federal income tax aspects of the exchange offer to holders of the Old Notes.
This discussion is for general information only and does not consider all
aspects of exchange offer that might impact owners of the Old Notes in light of
such holder's personal circumstances. This discussion deals only with Old Notes
held as "capital assets" within the meaning of Section 1221 of the Internal
Revenue Code of 1986, as amended (the "Code") (generally property held for
investment and not for sale to customers in the ordinary course of a trade or
business). This discussion also does not address the U.S. federal income tax
consequences to holders subject to special treatment under the U.S. federal
income tax laws, such as dealers in securities, or foreign currency, tax-exempt
entities, banks, thrifts, insurance companies, persons that hold the Old Notes
as part of a "straddle", a "hedge" against currency risk or a "conversion
transaction"; persons that have a "functional currency" other than the U.S.
dollar, and investors in pass-through entities. In addition, this discussion
does not address any of the United States federal income tax consequences of
owning or disposing of New Notes, nor does it address any tax consequences
arising out of the tax laws of any state, local or foreign jurisdiction.
This discussion is based upon the Internal Revenue Code of 1986, as
amended, existing and proposed regulations thereunder, Internal Revenue Service
("IRS") rulings and pronouncements, reports of congressional committees,
judicial decisions and current administrative rulings and practice, all as in
effect on the date hereof, all of which are subject to change at any time, and
any such change may be applied retroactively in a manner that could adversely
affect the tax consequences described below. The Company has not and will not
seek any rulings or opinions from the IRS or counsel with respect to the matters
discussed below. There can be no assurance that the IRS will not take positions
concerning the tax consequences of the exchange offer which are different from
those discussed herein.
The exchange of Old Notes for New Notes pursuant to the exchange offer
should not constitute a taxable exchange. As a result, a holder (1) should not
recognize taxable gain or loss as a result of exchanging Old Notes for New
Notes pursuant to the exchange offer, (2) the holding period of the New Notes
should include the holding period of the Old Notes exchanged therefor and (3)
the adjusted tax basis of the New Notes should be the same as the adjusted tax
basis of the Old Notes exchanged therefore immediately before the exchange.
THE FEDERAL TAX DISCUSSION SET FORTH ABOVE IS INCLUDED FOR GENERAL
INFORMATION ONLY AND MAY NOT BE APPLICABLE DEPENDING UPON A HOLDER'S PARTICULAR
SITUATION. HOLDERS OF OLD NOTES ARE URGED TO CONSULT THEIR OWN TAX ADVISORS WITH
RESPECT TO THE APPLICATION OF THE TAX CONSIDERATIONS DISCUSSED ABOVE IN LIGHT OF
THEIR PARTICULAR SITUATIONS AS WELL AS THE APPLICATION OF ANY STATE, LOCAL,
FOREIGN AND OTHER TAX LAWS, INCLUDING THE EFFECTS OF CHANGES IN SUCH LAWS.
PLAN OF DISTRIBUTION
Each broker-dealer that receives New Notes for its own account pursuant to
the exchange offer must acknowledge that it will deliver a prospectus in
connection with any resale of such New Notes. This prospectus, as it may be
amended or supplemented from time to time, may be used by a broker-dealer in
connection with resales of New Notes received in exchange for Old Notes where
such Old Notes were acquired as a result of market-making activities or other
trading activities. We have agreed that, starting on the expiration date and
ending on the close of business one year after the expiration date, we will make
this prospectus, as amended or supplemented, available to any broker-dealer for
use in connection with any such resale. In addition, until ____________, 1999,
all dealers effecting transactions in the New Notes may be required to deliver a
prospectus.
We will not receive any proceeds from any sales of New Notes by broker-
dealers. New Notes received by broker-dealers for their own account pursuant to
the exchange offer may be sold from time to time in one or more transactions in
the over-the-counter market, in negotiated transactions, through the writing of
options on the New Notes or a combination of such methods of resale, at market
prices prevailing at the time of resale, at prices related to such prevailing
market prices or negotiated prices. Any such resale may be made directly to
purchasers or to or through brokers or dealers who may receive compensation in
the form of commissions or concessions from any such broker-dealer and/or the
purchasers of any such New Notes. Any broker-dealer that resells New Notes that
were received by it for its own account pursuant to the exchange offer and any
broker or dealer that participates in a
97
<PAGE>
distribution of such New Notes may be deemed to be an "underwriter" within the
meaning of the Securities Act and any profit of any such resale of New Notes and
any commissions or concessions received by such persons may be deemed to be
underwriting compensation under the Securities Act. The letter of transmittal
states that by acknowledging that it will deliver and by delivering a
prospectus, a broker-dealer will not be deemed to admit that it is an
"underwriter" within the meaning of the securities act.
We have agreed to pay all expenses incident to our performance of, or
compliance with, the Registration Rights Agreement and will indemnify the
holders of Old Notes (including any broker-dealers), and certain parties related
to such holders, against certain liabilities, including liabilities under the
Securities Act.
LEGAL MATTERS
The legality of the Notes offered hereby will be passed upon for the
Company and the Guarantors by Jenkens & Gilchrist, a Professional Corporation,
Dallas, Texas, who will rely on the opinion of Latham & Watkins as to matters of
New York law. Certain legal matters in connection with the Offering will be
passed upon for the initial purchasers by Latham & Watkins, New York, New York.
EXPERTS
The consolidated balance sheets as of June 30, 1997 and 1998 and the
consolidated statements of income, shareholders' equity, and cash flows for each
of the three years in the period ended June 30, 1998 included in this
Registration Statement have been included herein in reliance on the report of
PricewaterhouseCoopers LLP, independent accountants, given on the authority of
that firm as experts in accounting and auditing.
98
<PAGE>
AMERICREDIT CORP.
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
Report of Independent Accountants....................................................................... F-2
Consolidated Balance Sheets as of June 30, 1997 and 1998........................................ F-3
Consolidated Statements of Income for the years ended June 30, 1996, 1997 and 1998.............. F-4
Consolidated Statements of Shareholders' Equity for the years ended June 30, 1996, 1997 and 1998 F-5
Consolidated Statements of Cash Flows for the years ended June 30, 1996, 1997 and 1998.......... F-6
Notes to Consolidated Financial Statements...................................................... F-7
Consolidated Balance Sheets as of June 30, 1998 and March 31, 1999 (unaudited).......................... F-22
Consolidated Statements of Income and Comprehensive Income for the nine months ended
March 31, 1998 and 1999 (unaudited).................................................................... F-23
Consolidated Statements of Cash Flows for the nine months ended March 31, 1998 and 1999
(unaudited)............................................................................................ F-24
Notes to Consolidated Financial Statements (unaudited).................................................. F-25
Consolidating Financial Information..................................................................... F-35
Report of Independent Accountants on Supplementary Information.......................................... F-36
Consolidating Balance Sheets as of June 30, 1997 and 1998....................................... F-37
Consolidating Statements of Income for the years ended June 30, 1996, 1997 and 1998............. F-39
Consolidating Statements of Cash Flows for the years ended June 30, 1996, 1997 and 1998......... F-42
</TABLE>
F-1
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
Board of Directors and Shareholders
AmeriCredit Corp.
We have audited the accompanying consolidated balance sheets of AmeriCredit
Corp. as of June 30, 1998 and 1997, and the related consolidated statements of
income, shareholders' equity, and cash flows for each of the three years in the
period ended June 30, 1998. These financial statements are the responsibility of
the Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of AmeriCredit Corp.
as of June 30, 1998 and 1997, and the consolidated results of its operations and
its cash flows for each of the three years in the period ended June 30, 1998, in
conformity with generally accepted accounting principles.
As discussed in Note 1 to the consolidated financial statements, in 1997,
AmeriCredit Corp. changed its method of accounting for transfers and servicing
of financial assets and extinguishment of liabilities.
As discussed in Note 2 to the consolidated financial statements, AmeriCredit
Corp. retroactively changed its method of measuring and accounting for credit
enhancement assets.
PricewaterhouseCoopers LLP
Fort Worth, Texas
August 4, 1998, except as to the information presented in Note 14 for which the
date is September 30, 1998 and except as to the information presented in Note 2
for which the date is January 14, 1999.
F-2
<PAGE>
AMERICREDIT CORP.
CONSOLIDATED BALANCE SHEETS
(dollars in thousands)
<TABLE>
<CAPTION>
June 30, June 30,
1997 1998
--------- ---------
ASSETS
<S> <C> <C>
Cash and cash equivalents................................................... $ 6,027 $ 33,087
Receivables held for sale, net.............................................. 266,657 342,853
Interest-only receivables from Trusts....................................... 53,465 131,694
Investments in Trust receivables............................................ 50,788 98,857
Restricted cash............................................................. 57,142 55,758
Property and equipment, net................................................. 13,884 23,385
Other assets................................................................ 27,530 28,037
--------- ---------
Total assets.............................................................. $ 475,493 $ 713,671
========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities:
Warehouse credit facilities.............................................. $ 72,045 $ 165,608
Senior notes............................................................. 125,000 175,000
Other notes payable...................................................... 27,206 6,410
Accrued taxes and expenses............................................... 34,858 47,132
Deferred income taxes.................................................... 8,123 31,673
--------- ---------
Total liabilities........................................................ 267,232 425,823
--------- ---------
Commitments and contingencies (Note 7)
Shareholders' equity:
Preferred stock, $.01 par value per share, 20,000,000 shares authorized;
none issued..............................................................
Common stock, $.01 par value per share, 120,000,000 shares authorized;
and 66,510,346 and 69,272,948 shares issued.............................. 667 693
Additional paid-in capital................................................ 203,531 230,269
Unrealized gain on credit enhancement assets, net of income taxes......... 4,355 7,234
Retained earnings......................................................... 23,469 72,770
--------- ---------
232,022 310,966
Treasury stock, at cost (7,918,142 and 7,667,318 shares).................. (23,761) (23,118)
--------- ---------
Total shareholders' equity................................................ 208,261 287,848
--------- ---------
Total liabilities and shareholders' equity................................ $ 475,493 $ 713,671
========= =========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
F-3
<PAGE>
AMERICREDIT CORP.
CONSOLIDATED STATEMENTS OF INCOME
(dollars in thousands, except per share data)
<TABLE>
<CAPTION>
Years Ended
-------------------------------------
June 30, June 30, June 30,
1996 1997 1998
----------- ----------- -----------
<S> <C> <C> <C>
Revenue:
Finance charge income................................... $ 51,706 $ 44,910 $ 55,837
Gain on sale of receivables............................. 21,405 52,323 103,194
Servicing fee income.................................... 3,892 23,492 47,910
Other income............................................ 2,632 2,631 2,395
----------- ----------- -----------
79,635 123,356 209,336
----------- ----------- -----------
Costs and expenses:
Operating expenses...................................... 25,681 51,915 94,484
Provision for losses.................................... 7,912 6,595 7,555
Interest expense........................................ 13,129 16,312 27,135
----------- ----------- -----------
46,722 74,822 129,174
----------- ----------- -----------
Income before income taxes................................. 32,913 48,534 80,162
Income tax provision....................................... 12,148 18,685 30,861
----------- ----------- -----------
Net income................................................. $ 20,765 $ 29,849 $ 49,301
=========== =========== ===========
Earnings per share:
Basic.................................................... $ 0.36 $ 0.52 $ 0.82
=========== =========== ===========
Diluted.................................................. $ 0.34 $ 0.48 $ 0.76
=========== =========== ===========
Weighted average shares outstanding........................ 57,049,142 57,774,724 60,188,788
=========== =========== ===========
Weighted average shares and assumed incremental............ 60,406,596 61,574,548 65,203,460
shares.................................................... =========== =========== ===========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
F-4
<PAGE>
AMERICREDIT CORP.
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
(dollars in thousands)
<TABLE>
<CAPTION>
Retained
Common Stock Paid-in Unrealized Earnings Treasury Stock
------------------ --------------------
Shares Amount Capital Gain (Deficit) Shares Amount
---------- ------ --------- ---------- ---------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance at July 1, 1995.............................. 64,234,402 $ 643 $ 185,572 $ $ (27,145) 6,800,078 $ (11,844)
Common stock issued on exercise of options........... 1,047,524 10 3,040
Income tax benefit from exercise of options.......... 1,387
Purchase of treasury stock........................... 1,658,000 (10,710)
Common stock issued for employee benefit plans....... (217,112) 681
Net income........................................... 20,765
---------- ------ --------- ---------- ---------- --------- ---------
Balance at June 30, 1996............................. 65,281,926 653 189,999 (6,380) 8,240,966 (21,873)
Common stock issued on exercise of options........... 1,228,420 14 5,639
Common stock issued for acquisition.................. 4,700 (800,000) 2,400
Income tax benefit from exercise of options.......... 2,652
Unrealized gain on credit enhancement assets,
net of income taxes of $2,726 ..................... 4,355
Purchase of treasury stock........................... 630,400 (4,387)
Common stock issued for employee benefit plans....... 541 (153,224) 99
Net income........................................... 29,849
---------- ------ --------- ---------- ---------- --------- ---------
Balance at June 30, 1997 ........................... 66,510,346 667 203,531 4,355 23,469 7,918,142 (23,761)
Common stock issued on exercise of options........... 2,762,602 26 15,994
Income tax benefit from exercise of options.......... 9,575
Unrealized gain on credit enhancement assets,
net of income taxes of $1,845 ..................... 2,879
Common stock issued for employee benefit plans....... 1,169 (250,824) 643
Net income........................................... 49,301
---------- ------ --------- ---------- ---------- --------- ---------
Balance at June 30, 1998............................. 69,272,948 $ 693 $ 230,269 $ 7,234 $ 72,770 7,667,318 $ (23,118)
========== ====== ========= ========== ========== ========= =========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
F-5
<PAGE>
AMERICREDIT CORP.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(dollars in thousands)
<TABLE>
<CAPTION>
Years Ended
------------------------------------
June 30, June 30, June 30,
1996 1997 1998
---------- ---------- ------------
<S> <C> <C> <C>
Cash flows from operating activities:
Net income............................................................. $ 20,765 $ 29,849 $ 49,301
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation and amortization........................................ 1,528 2,203 4,498
Provision for losses................................................. 7,912 6,595 7,555
Deferred income taxes................................................ 11,164 18,886 30,974
Non-cash servicing fee income........................................ (1,079) (7,991) (10,867)
Non-cash gain on sale of auto receivables............................ (15,417) (52,534) (96,405)
Distributions from Trusts............................................ 1,235 19,347 43,807
Changes in assets and liabilities:
Other assets.................................................... (984) (2,341) (3,324)
Accrued taxes and expenses...................................... 9,406 21,989 12,274
--------- --------- -----------
Net cash provided by operating activities.................. 34,530 36,003 37,813
--------- --------- -----------
Cash flows from investing activities:
Purchases of auto receivables........................................ (417,235) (896,711) (1,717,006)
Originations of mortgage receivables................................. (53,770) (137,169)
Principal collections and recoveries on receivables.................. 94,948 64,389 18,384
Net proceeds from sale of auto receivables........................... 262,243 814,107 1,632,357
Net proceeds from sale of mortgage receivables....................... 52,489 119,683
Initial deposits to restricted cash.................................. (2,939) (71,400) (56,725)
Purchases of property and equipment.................................. (3,162) (4,511) (9,456)
Decrease in other assets............................................. 3,396 2,460 5,064
--------- --------- -----------
Net cash provided by investing activities.................. (62,749) (92,947) (144,868)
--------- --------- -----------
Cash flows from financing activities:
Net change in warehouse credit facilities............................ 86,000 (17,264) 93,563
Proceeds from issuance of senior notes............................... 120,894 47,762
Payments on other notes payable...................................... (66,971) (44,710) (25,042)
Proceeds from issuance of common stock............................... 3,731 6,293 17,832
Purchase of treasury stock........................................... (10,710) (4,387)
--------- ---------
Net cash provided by financing activities.................. 12,050 60,826 134,115
--------- --------- -----------
Net increase (decrease) in cash and cash equivalents...................... (16,169) 3,882 27,060
Cash and cash equivalents at beginning of year............................ 18,314 2,145 6,027
--------- --------- -----------
Cash and cash equivalents at end of year.................................. $ 2,145 $ 6,027 $ 33,087
========= ========= ===========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
F-6
<PAGE>
AMERICREDIT CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. Summary of Significant Accounting Policies
History and Operations
AmeriCredit Corp. ("the Company") was formed on August 1, 1986 and,
since September 1992, has been in the business of purchasing, securitizing and
servicing automobile sales finance contracts. The Company operated 129 auto
lending branch offices in 36 states as of June 30, 1998. The Company also
acquired a subsidiary in November 1996 which originates and sells mortgage
loans.
Basis of Presentation
The consolidated financial statements include the accounts of the Company
and its wholly-owned subsidiaries. All significant intercompany transactions and
accounts have been eliminated in consolidation. Certain prior year amounts have
been reclassified to conform to the current year presentation.
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions which affect the reported amounts of assets and liabilities and the
disclosures of contingent assets and liabilities as of the date of the financial
statements and the amount of revenue and costs and expenses during the reporting
periods. Actual results could differ from those estimates. These estimates
include, among other things, assumptions for cumulative credit losses, timing of
cash flows, discount rates and to a lesser extent, anticipated prepayments on
receivables sold in securitization transactions and the determination of the
allowance for losses on receivables held for sale.
Cash Equivalents
Investments in highly liquid securities with original maturities of 90
days or less are included in cash and cash equivalents.
Receivables Held for Sale
Receivables held for sale are carried at the lower of cost or fair value.
Finance charge income related to receivables held for sale is recognized using
the interest method. Accrual of finance charge income is suspended on accounts
which are more than 60 days delinquent. Fees and commissions received and direct
costs of originating loans are deferred and amortized over the term of the
related receivables using the interest method.
Provisions for losses are charged to operations in amounts sufficient to
maintain the allowance for losses at a level considered adequate to cover
estimated losses in the receivables held for sale portfolio. Automobile sales
finance contracts are typically purchased by the Company for a non-refundable
acquisition fee on a non-recourse basis, and such acquisition fees are also
added to the allowance for losses. The Company reviews historical origination
and charge-off relationships, charge-off experience factors, collection data,
delinquency reports, estimates of the value of the underlying collateral,
economic conditions and trends and other information in order to make the
necessary judgments as to the appropriateness of the provision for losses and
the allowance for losses. Receivables are charged-off to the allowance for
losses when the Company repossesses and disposes of the collateral or the
account is otherwise deemed uncollectible.
Credit Enhancement Assets
The Company periodically sells auto receivables to certain special
purpose financing trusts (the "Trusts"), and the Trusts in turn issue asset-
backed securities to investors. The Company retains an interest in the
receivables sold in the form of a residual or interest-only strip and may also
retain other subordinated interests in the receivables sold to the Trusts. The
residual or interest-only strips represent the present value of future excess
cash flows resulting from the difference between the finance charge income
received from the obligors on the receivables and the interest paid to the
investors in the asset-backed securities, net of credit losses, servicing fees
and other expenses.
F-7
<PAGE>
AMERICREDIT CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
Upon the transfer of receivables to the Trusts, the Company removes the
net book value of the receivables sold from its consolidated balance sheets and
allocates such carrying value between the assets transferred and the interests
retained, based upon their relative fair values at the settlement date. The
difference between the sales proceeds, net of transaction costs, and the
allocated basis of the assets transferred is recognized as a gain on sale of
receivables.
The allocated basis of the interests retained is classified as either
interest-only receivables from Trusts, investments in Trust receivables or
restricted cash in the Company's consolidated balance sheets depending upon the
form of interest retained by the Company. These interests are collectively
referred to as credit enhancement assets.
Since the interests retained by the Company can be contractually prepaid
or otherwise settled in such a way that the holder would not recover all of its
recorded investment, these assets are classified as available for sale and are
measured at fair value. Unrealized holding gains or temporary holding losses are
reported net of income tax effects as a separate component of shareholders'
equity until realized. If a decline in fair value is deemed other than
temporary, the assets are written down through a charge to operations.
The fair value of credit enhancement assets is estimated by calculating
the present value of the excess cash flows from the Trusts using discount rates
commensurate with the risks involved. Such calculations include estimates of
cumulative credit losses and prepayment rates for the remaining term of the
receivables transferred to the Trusts since these factors impact the amount and
timing of future excess cash flows. If cumulative credit losses and prepayment
rates exceed the Company's original estimates, the assets are written down
through a charge to operations. Favorable credit loss and prepayment experience
compared to the Company's original estimates would result in additional earnings
when realized.
A financial guaranty insurance company (the "Insurer") has provided a
financial guaranty insurance policy for the benefit of the investors in each
series of asset-backed securities issued by the Trusts. In connection with the
issuance of the policies, the Company is required to establish a separate cash
account with a trustee for the benefit of the Insurer for each series of
securities and related receivables pools. Monthly cash collections from the
pools of receivables in excess of required principal and interest payments on
the asset-backed securities and servicing fees and other expenses are either
added to the restricted cash accounts or used to repay the outstanding asset-
backed securities on an accelerated basis, thus creating additional credit
enhancement through over-collateralization in the Trusts. This over
collateralization is recognized as investments in Trust receivables in the
Company's consolidated balance sheets. When the credit enhancement levels reach
specified percentages of the pools of receivables, excess cash flows are
distributed to the Company. In the event that monthly cash collections from any
pool of receivables are insufficient to make required principal and interest
payments to the investors and pay servicing fees and other expenses, any
shortfall would be drawn from the restricted cash accounts.
Certain agreements with the Insurer provide that if delinquency, default
and net loss ratios in the pools of receivables supporting the asset-backed
securities exceed certain targets, the specified levels of credit enhancement
would be increased and, in certain cases, the Company would be removed as
servicer of the receivables.
Property and Equipment
Property and equipment are carried at cost. Depreciation is generally
provided on a straight-line basis over the estimated useful lives of the assets.
The cost of assets sold or retired and the related accumulated depreciation are
removed from the accounts at the time of disposition and any resulting gain or
loss is included in operations. Maintenance, repairs and minor replacements are
charged to operations as incurred; major replacements and betterments are
capitalized.
Off Balance Sheet Financial Instruments
The Company periodically enters into arrangements to manage the gross
interest rate spread on its securitization transactions. These arrangements
include the use of Forward U.S. Treasury rate lock and interest rate swap
agreements. The face amount and terms of the Forward U.S. Treasury rate lock
agreements generally
F-8
<PAGE>
AMERICREDIT CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
correspond to the principal amount and average maturities of receivables
expected to be sold to the Trusts and the related asset-backed securities to be
issued by the Trusts. Gains or losses on these agreements are deferred and
recognized as a component of the gain on sale of receivables at the time that
receivables are transferred to the Trusts. The Interest Rate Swap Agreements are
used to convert the interest rates on floating rate securities issued by the
Trusts to a fixed rate. The notional amounts of these agreements approximate the
outstanding balance of certain floating rate securities. The estimated
differential payments required under these agreements are recognized as a
component of the gain on sale of receivables at the time that receivables are
transferred to the Trusts.
Income Taxes
Deferred income taxes are provided in accordance with the asset and
liability method of accounting for income taxes to recognize the tax effects of
temporary differences between financial statement and income tax accounting.
Earnings Per Share
The Company adopted the requirements of Statement of Financial Accounting
Standards No. 128, "Earnings per Share" ("SFAS 128") effective for periods
ended December 31, 1997 and thereafter. SFAS 128 establishes new standards for
computing and presenting earnings per share, replacing existing accounting
standards. The new standard requires dual presentation of basic and diluted
earnings per share and a reconciliation between the two amounts. Basic earnings
per share excludes dilution and diluted earnings per share reflects the
potential dilution that could occur if securities or other contracts to issue
common stock were exercised and converted into common stock. All prior period
earnings per share and related weighted average share amounts have been restated
to conform to the requirements of SFAS 128.
Recent Accounting Developments
Effective January 1, 1997, the Company adopted Statement of Financial
Accounting Standards No. 125, "Accounting for Transfers and Servicing of
Financial Assets and Extinguishments of Liabilities" ("SFAS 125"). SFAS 125
established accounting and reporting standards for transfers of financial assets
and applies to the Company's sales of auto receivables to the Trusts. Adoption
of SFAS 125, which was applied prospectively to transactions occurring
subsequent to December 1996, resulted in increases of $2,577,000 in credit
enhancement assets, $992,000 in deferred income taxes and $1,585,000 in
shareholders' equity as of June 30, 1997.
In June 1997, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards No. 130, "Reporting Comprehensive
Income" ("SFAS 130"). SFAS 130 establishes standards for reporting comprehensive
income and its components in a full set of financial statements. The new
standard requires that all items that are required to be recognized under
accounting standards as components of comprehensive income, including an amount
representing total comprehensive income, be reported in a financial statement
that is displayed with the same prominence as other financial statements.
Pursuant to SFAS 130, the Company will be required to display total
comprehensive income, including net income and changes in the unrealized gain on
interest-only receivables, in its consolidated financial statements for the year
ending June 30, 1999 and thereafter.
In June 1997, the FASB issued Statement of Financial Accounting Standards
No. 131, "Disclosures about Segments of an Enterprise and Related Information"
("SFAS 131"). SFAS 131 establishes standards for the way companies report
information about operating segments in annual financial statements and requires
that enterprises report selected information about operating segments in interim
financial reports. The new pronouncement also establishes standards for related
disclosures about products and services, geographic areas and major customers.
The statement is effective for financial statements for periods beginning after
December 15, 1997. The Company's auto finance business is currently the only
segment reportable under SFAS 131.
In June 1998, the FASB issued Statement of Financial Accounting Standards
No. 133, "Accounting for Derivative Instruments and Hedging Activities" ("SFAS
133"). SFAS 133 establishes accounting and reporting
F-9
<PAGE>
AMERICREDIT CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
standards for derivative instruments, including certain derivative instruments
embedded in other contracts, and for hedging activities. The new standard
requires that all derivatives be recognized as either assets or liabilities in
the consolidated balance sheets and that those instruments be measured at fair
value. If certain conditions are met, a derivative may be specifically
designated as a hedging instrument. The accounting for changes in the fair value
of a derivative (that is, gains and losses) depends on the intended use of the
derivative and the resulting designation. The statement is effective for all
fiscal quarters of fiscal years beginning after June 15, 1999. While the new
standard will apply to the Company's derivative financial instruments, the
Company does not believe that adoption of SFAS 133 will have a material effect
on the Company's consolidated financial position or results of operations.
2. Restatement
On January 14, 1999, the Company issued a press release reporting a
restatement of its financial statements for the fiscal years ended June 30,
1996, 1997 and 1998. As required by the FASB Special Report, "A Guide to
Implementation of Statement 125 on Accounting for Transfers and Servicing of
Financial Assets and Extinguishments of Liabilities, Second Edition," dated
December 1998, and related guidance set forth in statements made by the staff of
the Securities and Exchange Commission ("SEC") on December 8, 1998, the Company
retroactively changed its method of measuring and accounting for credit
enhancement assets to the cash-out method from the cash-in method.
Initial deposits to restricted cash accounts and subsequent cash flows
received by securitization trusts sponsored by the Company accumulate as credit
enhancement assets until certain targeted levels are achieved, after which cash
is distributed to the Company on an unrestricted basis. Under the cash-in method
previously used by the Company, (i) the assumed discount period for measuring
the present value of credit enhancement assets ended when cash flows were
received by the securitization trusts and (ii) initial deposits to restricted
cash accounts were recorded at face value. Under the cash-out method required by
the FASB and SEC, the assumed discount period for measuring the present value of
credit enhancement assets ends when cash, including return of the initial
deposits, is distributed to the Company on an unrestricted basis.
The change to the cash-out method results only in a difference in the
timing of revenue recognition from a securitization and has no effect on the
total cash flows of such transactions. While the total amount of revenue
recognized over the term of a securitization transaction is the same under
either method, the cash-out method results in (i) lower initial gains on the
sale of receivables due to the longer discount period and (ii) higher subsequent
servicing fee income from accretion of the additional cash-out discount.
F-10
<PAGE>
AMERICREDIT CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
The restatement resulted in the following changes to prior period financial
statements:
<TABLE>
<CAPTION>
Years Ended
-------------------------------------
June 30, June 30, June 30,
1996 1997 1998
--------- --------- ---------
<S> <C> <C> <C>
Revenue
Previous.............................................................. $ 80,978 $ 137,747 $ 227,940
As restated........................................................... 79,635 123,356 209,336
Net Income
Previous.............................................................. $ 21,591 $ 38,699 $ 60,741
As restated........................................................... 20,765 29,849 49,301
Earnings per share
Previous.............................................................. $ 0.36 $ 0.63 $ 0.93
As restated........................................................... 0.34 0.48 0.76
Credit enhancement assets (end of period)
Previous.............................................................. $ 43,079 $ 179,355 $ 321,199
As restated........................................................... 41,736 161,395 286,309
Shareholders' equity (end of period)
Previous.............................................................. $ 163,225 $ 216,536 $ 306,161
As restated........................................................... 162,399 208,261 287,848
</TABLE>
3. Receivables Held for Sale
Receivables held for sale consist of the following (in thousands):
<TABLE>
<CAPTION>
June 30, June 30,
1997 1998
--------- ---------
<S> <C> <C>
Auto receivables................................................ $ 275,249 $ 334,110
Less allowance for losses....................................... (12,946) (12,756)
--------- ---------
Auto receivables, net........................................... 262,303 321,354
Mortgage receivables............................................ 4,354 21,499
--------- ---------
$ 266,657 $ 342,853
========= =========
</TABLE>
Auto receivables are collateralized by vehicle titles and the Company has
the right to repossess the vehicle in the event that the consumer defaults on
the payment terms of the contract. Mortgage receivables are collateralized by
liens on real property and the Company has the right to foreclose in the event
that the consumer defaults on the payment terms of the contract.
The accrual of finance charge income has been suspended on $12,704,000 and
$8,729,000 of delinquent auto receivables as of June 30, 1997 and 1998,
respectively.
A summary of the allowance for losses is as follows (in thousands):
<TABLE>
<CAPTION>
Years Ended
---------------------------------
June 30, June 30, June 30,
1996 1997 1998
--------- --------- ---------
<S> <C> <C> <C>
Balance at beginning of year......................................... $ 19,951 $ 13,602 $ 12,946
Provision for losses................................................. 7,912 6,595 7,555
Acquisition fees..................................................... 18,097 30,688 49,859
Allowance related to receivables sold to Trusts...................... (13,461) (20,974) (48,464)
Net charge-offs-auto receivables..................................... (18,322) (16,965) (9,140)
Net charge-offs-other................................................ (575)
--------- --------- ---------
Balance at end of year............................................ $ 13,602 $ 12,946 $ 12,756
========= ========= =========
</TABLE>
F-11
<PAGE>
AMERICREDIT CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
4. Credit Enhancement Assets
As of June 30, 1997 and 1998, the Company was servicing $863.0 million and
$1,968.4 million, respectively, of auto receivables which have been sold to the
Trusts. The Company has retained an interest in these receivables in the form of
credit enhancement assets.
Credit enhancement assets consist of the following (in thousands):
<TABLE>
<CAPTION>
June 30, June 30,
1997 1998
--------- ---------
<S> <C> <C>
Interest-only receivables from Trusts........................................ $ 53,465 $ 131,694
Investments in trust receivables............................................. 50,788 98,857
Restricted cash.............................................................. 57,142 55,758
--------- ---------
$ 161,395 $ 286,309
========= =========
</TABLE>
A summary of credit enhancement assets is as follows (in thousands):
<TABLE>
<CAPTION>
Years Ended
--------------------------------------
June 30, June 30, June 30,
1996 1997 1998
--------- --------- ---------
<S> <C> <C> <C>
Balance at beginning of year............................................ $ $ 41,736 $ 161,395
Non-cash gain on sale of auto receivables............................... 15,417 52,534 96,405
Accretion of present value discount..................................... 1,079 7,991 19,717
Initial deposits to restricted cash..................................... 2,939 71,400 56,725
Change in unrealized gain............................................... 7,081 4,724
Distributions from Trusts............................................... (1,235) (19,347) (43,807)
Retained certificates................................................... 23,536
Permanent impairment write-down......................................... (8,850)
--------- --------- ---------
Balance at end of year................................................ $ 41,736 $ 161,395 $ 286,309
========= ========= =========
</TABLE>
A summary of the allowance for losses included as a component of the
interest-only receivables is as follows (in thousands):
<TABLE>
<CAPTION>
Years Ended
------------------------------
June 30, June 30, June 30,
1996 1997 1998
-------- -------- --------
<S> <C> <C> <C>
Balance at beginning of year............................................. $ $ 25,616 $ 74,925
Assumptions for cumulative credit losses................................. 27,268 75,575 174,446
Permanent impairment write-down.......................................... 8,850
Net charge-offs.......................................................... (1,652) (26,266) (78,862)
-------- -------- --------
Balance at end of year................................................... $ 25,616 $ 74,925 $179,359
======== ======== ========
</TABLE>
5. Warehouse Credit Facilities
Warehouse credit facilities consist of the following (in thousands):
<TABLE>
<CAPTION>
June 30, June 30,
1997 1998
-------- --------
<S> <C> <C>
Commercial paper facility................................................... $140,708
Bank credit agreement....................................................... $ 71,700
Mortgage facility........................................................... 345 24,900
-------- --------
$ 72,045 $165,608
======== ========
</TABLE>
F-12
<PAGE>
AMERICREDIT CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
The Company has a funding agreement with an administrative agent on behalf
of an institutionally managed commercial paper conduit and a group of banks
under which up to $245 million of structured warehouse financing is available.
Under the funding agreement, the Company transfers auto receivables to CP
Funding Corp. ("CPFC"), a special purpose finance subsidiary of the Company, and
CPFC in turn issues a note, collateralized by such auto receivables, to the
agent. The agent provides funding under the note to CPFC pursuant to an advance
formula and CPFC forwards the funds to the Company in consideration for the
transfer of auto receivables. While CPFC is a consolidated subsidiary of the
Company, CPFC is a separate legal entity and the auto receivables transferred to
CPFC and the other assets of CPFC are legally owned by CPFC and not available to
creditors of AmeriCredit Corp. or its other subsidiaries. Advances under the
note bear interest at commercial paper, London Interbank Offered Rates ("LIBOR")
or prime rates plus specified fees depending upon the source of funds provided
by the agent to CPFC. The funding agreement, which expires in October 1998,
contains various covenants requiring certain minimum financial ratios and
results.
The Company has a revolving credit agreement with a group of banks under
which the Company may borrow up to $265 million, subject to a defined borrowing
base. Borrowings under the credit agreement are collateralized by certain auto
receivables and bear interest, based upon the Company's option, at either the
prime rate (8.5% as of June 30, 1998) or LIBOR plus 1.25%. The Company is also
required to pay an annual commitment fee equal to 1/4% of the unused portion of
the credit agreement. The credit agreement, which expires in April 1999,
contains various restrictive covenants requiring certain minimum financial
ratios and results and placing certain limitations on the incurrence of
additional debt, capital expenditures, cash dividends and repurchase of common
stock.
The Company also has a mortgage warehouse facility with a bank under which
the Company may borrow up to $75 million, subject to a defined borrowing base.
Borrowings under the facility are collateralized by certain mortgage receivables
and bear interest, based upon the Company's option, at either the prime rate or
LIBOR plus 1%. The Company is also required to pay an annual commitment fee
equal to 1/8 of the unused portion of the facility. The facility expires in
February 1999.
6. Senior Notes
The Company has outstanding $175 million of senior notes which are due in
February 2004. Interest on the notes is payable semi-annually at a rate of 9
1/4% per annum. The notes, which are uncollateralized, may be redeemed at the
option of the Company after February 2001 at a premium declining to par in
February 2003. The Indenture pursuant to which the notes were issued contains
restrictions including limitations on the Company's ability to incur additional
indebtedness other than certain collateralized indebtedness, pay cash dividends
and repurchase common stock. Debt issuance costs are being amortized over the
term of the notes, and unamortized costs of $3,983,000 and $5,478,000 as of June
30, 1997 and 1998, respectively, are included in other assets in the
consolidated balance sheets.
F-13
<PAGE>
AMERICREDIT CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
7. Commitments and Contingencies
Leases
Branch lending offices are generally leased for terms of up to five years
with certain rights to extend for additional periods. The Company also leases
office space for its loan servicing facilities and other operations under leases
with terms up to ten years with renewal options. Lease expense was $875,000,
$2,132,000 and $4,206,000 for the years ended June 30, 1996, 1997 and 1998,
respectively. Lease commitments for years ending June 30 are as follows (in
thousands):
<TABLE>
<S> <C>
1999............................................ $ 5,608
2000............................................ 5,218
2001............................................ 4,557
2002............................................ 3,638
2003............................................ 2,461
Thereafter...................................... 5,744
--------
$ 27,226
========
</TABLE>
Derivative Financial Instruments
As of June 30, 1998, the Company had Forward U.S. Treasury rate lock
agreements to sell $150 million of U.S. Treasury Notes due August 2001 and $150
million of U.S. Treasury Notes due November 2001. The agreements expire August
20, 1998 and November 20, 1998, respectively. Any gain or loss on these
agreements will be recognized as a component of the gain on sale of receivables
upon transfers of receivables to the Trusts subsequent to June 30, 1998.
Concentrations of Credit Risk
Financial instruments which potentially subject the Company to
concentrations of credit risk are primarily cash equivalents, restricted cash,
derivative financial instruments and managed auto receivables, which include
auto receivables held for sale and auto receivables serviced by the Company on
behalf of the Trusts. The Company's cash equivalents and restricted cash
represent investments in highly rated securities placed through various major
financial institutions. The counterparties to the Company's derivative financial
instruments are various major financial institutions. Managed auto receivables
represent contracts with consumers residing throughout the United States, with
borrowers located in California and Texas accounting for 14% and 11%,
respectively, of the managed auto receivables portfolio as of June 30, 1998. No
other state accounted for more than 10% of managed auto receivables.
Legal Proceedings
In the normal course of its business, the Company is named as a defendant
in legal proceedings. These cases include claims for alleged truth-in-lending
violations, nondisclosures, misrepresentations and deceptive trade practices,
among other things. The relief requested by the plaintiffs varies but includes
requests for compensatory, statutory and punitive damages. In the opinion of
management, the resolution of these proceedings will not have a material adverse
effect on the consolidated financial position, results of operations or
liquidity of the Company.
8. Stock Options
General
The Company has certain stock-based compensation plans for employees, non-
employee directors and key executive officers.
F-14
<PAGE>
AMERICREDIT CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
A total of 18,000,000 shares have been authorized for grants of options
under the employee plans, of which 3,617,144 shares remain available for future
grants as of June 30, 1998. The exercise price of each option must equal the
market price of the Company's stock on the date of grant and the maximum term of
each option is ten years. The vesting period is typically four years. Option
grants, vesting periods and the term of each option are determined by a
committee of the Company's Board of Directors.
A total of 2,605,000 shares have been authorized for grants of options
under the non-employee director plans, of which 960,000 shares remain available
for future grants as of June 30, 1998. The exercise price of each option must
equal the market price of the Company's stock on the date of grant and the
maximum term of each option is ten years. Option grants, vesting periods and the
term of each option are established by the terms of the plans.
A total of 1,700,000 shares have been authorized for grants of options
under the key executive officer plan, none of which remain available for future
grants as of June 30, 1998. The exercise price of each option under this plan is
$8 per share and the term of each option is seven years. These options became
fully vested when the Company's common stock traded above certain targeted price
levels for a specified time period.
The Company has elected not to adopt the fair value-based method of
accounting for stock based awards and, accordingly, no compensation expense has
been recognized for options granted under the plans described above. Had
compensation expense for the Company's plans been determined using the fair
value-based method, pro forma net income would have been $14,398,000,
$24,367,000 and $45,598,000 and pro forma diluted earnings per share would have
been $0.24, $0.40 and $0.70 for the years ended June 30, 1996, 1997 and 1998,
respectively.
F-15
<PAGE>
AMERICREDIT CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
The following tables present information related to the Company's stock-
based compensation plans. The fair value of each option grant was estimated
using the Black-Scholes option-pricing model with the following weighted-average
assumptions:
<TABLE>
<CAPTION>
Years Ended
-------------------------------
June 30, June 30, June 30,
1996 1997 1998
--------- --------- ---------
<S> <C> <C> <C>
Expected dividends................................................... 0 0 0
Expected volatility.................................................. 20% 20% 32%
Risk-free interest rate.............................................. 5.87% 5.87% 5.68%
Expected life........................................................ 5 Years 5 Years 5 Years
</TABLE>
Employee Plans
A summary of stock option activity under the Company's employee plans is as
follows (shares in thousands):
<TABLE>
<CAPTION>
Years Ended
-------------------------------------------------------
June 30, June 30, June 30,
1996 1997 1998
----------------- ----------------- -----------------
Weighted Weighted Weighted
Average Average Average
Exercise Exercise Exercise
Shares Price Shares Price Shares Price
------- -------- ------- -------- ------- --------
<S> <C> <C> <C> <C> <C> <C>
Outstanding at beginning of year............................ 6,820 $ 2.50 7,328 $ 3.61 8,752 $ 4.68
Granted..................................................... 1,344 6.80 2,502 7.74 3,640 13.14
Exercised................................................... (746) 2.61 (846) 3.96 (2,034) 5.29
Forfeited................................................... (90) 3.48 (232) 5.84 (288) 8.31
------- -------- ------- -------- ------- --------
Outstanding at end of year.................................. 7,328 $ 3.61 8,752 $ 4.68 10,070 $ 7.51
======= ======== ======= ======== ======= ========
Options exercisable at end of year.......................... 5,622 $ 2.26 6,322 $ 3.89 6,030 $ 5.11
======= ======== ======= ======== ======= ========
Weighted average fair value of options granted during year.. $ 1.86 $ 2.11 $ 5.06
======== ======== ========
</TABLE>
A summary of options outstanding under employee plans as of June 30, 1998
is as follows (shares in thousands):
<TABLE>
<CAPTION>
Options Outstanding Options Exercisable
------------------------------------ ---------------------
Weighted
Average Years Weighted Weighted
of Remaining Average Average
Number Contractual Exercise Number Exercise
Range of Exercise Prices Outstanding Life Price Outstanding Price
- -------------------------- ----------- ------------- -------- ----------- --------
<S> <C> <C> <C> <C> <C>
$1.25 to 2.32.......................................... 1,754 3.14 $ 1.68 1,754 $ 1.68
$2.75 to 4.57.......................................... 2,280 6.34 3.68 2,198 3.67
$5.50 to 7.88.......................................... 1,988 7.32 6.98 1,146 6.88
$8.19 to 9.19.......................................... 582 8.53 8.39 216 8.34
$10.13 to 13.07........................................ 2,114 9.46 11.63 244 11.20
$13.38 to 16.38........................................ 1,352 9.71 15.69 472 15.64
----------- -----------
10,070 6,030
=========== ===========
</TABLE>
F-16
<PAGE>
AMERICREDIT CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
Non-employee Director Plans
A summary of stock option activity under the Company's non-employee
director plans is as follows (shares in thousands):
<TABLE>
<CAPTION>
Years Ended
------------------------------------------------------------------------
June 30, 1996 June 30, 1997 June 30, 1998
---------------------- ---------------------- ----------------------
Weighted Weighted Weighted
Average Average Average
Exercise Exercise Exercise
Shares Price Shares Price Shares Price
-------- ----------- -------- ----------- -------- -----------
<S> <C> <C> <C> <C> <C> <C>
Outstanding at beginning of year...................... 1,892 $ 1.40 1,826 $ 1.80 1,708 $ 2.21
Granted............................................... 80 6.44 80 9.38 80 14.63
Exercised............................................. (146) 1.40 (198) 1.40 (262) 2.17
-------- ----------- -------- ----------- -------- -----------
Outstanding at end of year............................ 1,826 $ 1.80 1,708 $ .21 1,526 $ 2.87
======== =========== ======== =========== ======== ===========
Options exercisable at end of year.................... 1,746 $ 1.77 1,708 $ 2.21 1,526 $ 2.87
======== =========== ======== =========== ======== ===========
Weighted average fair value of options granted
during year........................................... $ 1.77 $ 2.57 $ 5.66
=========== =========== ===========
</TABLE>
A summary of options outstanding under non-employee director plans as
of June 30, 1998 is as follows (shares in thousands):
<TABLE>
<CAPTION>
Options Outstanding
-------------------------------------------------------------------------------
Weighted
Average
Years of Weighted Weighted
Remaining Average Average
Range of Exercise Prices Number Contractual Exercise Number Exercise
Outstanding Life Price Outstanding Price
------------- ------------- ---------- ------------- ----------
<S> <C> <C> <C> <C> <C>
$1.40 to 3.25....................... 1,306 3.05 $ 1.58 1,306 $ 1.58
$6.44 to 9.38....................... 140 7.97 8.14 140 8.14
$14.63.............................. 80 9.35 14.63 80 14.63
--------- ---------
1,526 1,526
========= =========
</TABLE>
Key Executive Officer Plan
A summary of stock option activity under the Company's key executive
officer plan is as follows (shares in thousands):
<TABLE>
<CAPTION>
Years Ended
------------------------------------------------------------------------
June 30, 1996 June 30, 1997 June 30, 1998
---------------------- ---------------------- ----------------------
Weighted Weighted Weighted
Average Average Average
Exercise Exercise Exercise
Shares Price Shares Price Shares Price
-------- ----------- -------- ----------- -------- -----------
<S> <C> <C> <C> <C> <C> <C>
Outstanding at beginning of year...................... 1,700 $8.00 1,700 $8.00
Granted............................................... 1,700 $8.00
------- ---------- ------- ---------- ------- ----------
Outstanding at end of year............................ 1,700 $8.00 1,700 $8.00 1,700 $8.00
======= ========== ======= ========== ======= ==========
Options exercisable at end of year.................... 1,700 $8.00
======= ==========
Weighted average fair value of options granted
during year.......................................... $2.19
==========
</TABLE>
F-17
<PAGE>
A summary of options outstanding under the key executive officer plan as of
June 30, 1998 is as follows (shares in thousands):
<TABLE>
<CAPTION>
Options Outstanding
---------------------------------------------
Weighted Weighted
Average Years Average
Range of Number of Remaining Exercise
Exercise Prices Outstanding Contractual Life Price
----------------- ----------- ---------------- ----------
<S> <C> <C> <C>
$8.00............... 1,700 4.81 $8.00
</TABLE>
9. Employee Benefit Plans
The Company has a defined contribution retirement plan covering
substantially all employees. The Company's contributions to the plan were
$133,000, $201,000 and $358,000 for the years ended June 30, 1996, 1997 and
1998, respectively.
The Company also has an employee stock purchase plan that allows
participating employees to purchase, through payroll deductions, shares of the
Company's common stock at 85% of the market value at specified dates. A total of
1,000,000 shares have been reserved for issuance under the plan. Shares
purchased under the plan were 194,286, 208,430 and 260,892 for the years ended
June 30, 1996, 1997 and 1998, respectively.
10. Income Taxes
The income tax provision consists of the following (in thousands):
<TABLE>
<CAPTION>
Years Ended
------------------------------------
June 30, June 30, June 30,
1996 1997 1998
---------- ---------- ----------
<S> <C> <C> <C>
Current......................................... $ 984 $ (201) $ (113)
Deferred........................................ 11,164 18,886 30,974
--------- --------- ---------
$ 12,148 $ 18,685 $30,861
========= ========= =========
</TABLE>
The Company's effective income tax rate on income before income taxes
differs from the U.S. statutory tax rate as follows:
<TABLE>
<CAPTION>
Years Ended
------------------------------------
June 30, June 30, June 30,
1996 1997 1998
---------- ---------- ----------
<S> <C> <C> <C>
U.S statutory tax rate.......................... 35.0% 35.0% 35.0%
Other........................................... 2.0 3.5 3.5
------ ------ ------
37.0% 38.5% 38.5%
====== ====== ======
</TABLE>
The deferred income tax provision consists of the following (in thousands):
<TABLE>
<CAPTION>
Years Ended
------------------------------------
June 30, June 30, June 30,
1996 1997 1998
---------- ---------- ----------
<S> <C> <C> <C>
Net operating loss carry forward................ $ 8,387 $ 5,501 $(9,051)
Allowance for losses............................ 1,556 (1,046) 993
Gain on sale of receivables..................... (517) 9,282 32,606
Change in valuation allowance................... (320)
Other........................................... 2,058 5,149 6,426
--------- --------- ---------
$11,164 $18,886 $30,974
========= ========= =========
</TABLE>
F-18
<PAGE>
AMERICREDIT CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
The tax effects of temporary differences that give rise to deferred tax
liabilities and assets are as follows (in thousands):
<TABLE>
<CAPTION>
June 30, June 30,
1997 1998
--------- ----------
<S> <C> <C>
Deferred tax liabilities:
Gain on sale of receivables.................................. $ (8,766) $ (41,372)
Unrealized gain on credit enhancement assets................. (2,726) (4,571)
Other........................................................ (2,613) (2,340)
--------- ----------
(14,105) (48,283)
--------- ----------
Deferred tax assets:
Net operating loss carry forward............................. 3,468 12,519
Alternative minimum tax credits.............................. 1,873 1,567
Other........................................................ 641 2,524
--------- ----------
5,982 16,610
--------- ----------
Net deferred tax liability..................................... $ (8,123) $ (31,673)
========= ==========
</TABLE>
As of June 30, 1998, the Company has a net operating loss carry forward of
approximately $28,700,000 for federal income tax reporting purposes which
expires between June 30, 2008 and 2013 and an alternative minimum tax credit
carry forward of approximately $1,600,000 with no expiration date.
11. Earnings Per Share
A reconciliation of weighted average shares used to compute basic and
diluted earnings per share is as follows:
<TABLE>
<CAPTION>
Years Ended
--------------------------------------
June 30, June 30, June 30,
1996 1997 1998
---------- ---------- ----------
<S> <C> <C> <C>
Weighted average shares outstanding..................................... 57,049,142 57,774,724 60,188,788
Incremental shares resulting from assumed exercise of stock options..... 3,357,454 3,799,824 5,014,672
---------- ---------- ----------
Weighted average shares and assumed incremental shares.................. 60,406,596 61,574,548 65,203,460
========== ========== ==========
</TABLE>
Basic earnings per share have been computed by dividing net income by the
weighted average shares outstanding. Diluted earnings per share have been
computed by dividing net income by the weighted average shares and assumed
incremental shares.
12. Supplemental Information
Cash payments for interest costs and income taxes consist of the following
(in thousands):
<TABLE>
<CAPTION>
Years Ended
----------------------------
June 30, June 30, June 30,
1996 1997 1998
-------- -------- --------
<S> <C> <C> <C>
Interest costs (none capitalized)...................................... $ 12,179 $ 15,196 $ 26,369
Income taxes........................................................... 1,447 599 14,804
</TABLE>
F-19
<PAGE>
AMERICREDIT CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
During the years ended June 30, 1997 and 1998, the Company entered into
lease agreements for property and equipment of $3,651,000 and $4,246,000,
respectively.
13. Fair Value of Financial Instruments
Statement of Financial Accounting Standards No. 107, "Disclosures about
Fair Value of Financial Instruments" ("SFAS 107"), requires disclosure of
fair value information about financial instruments, whether or not recognized in
the Company's consolidated balance sheets. Fair values are based on estimates
using present value or other valuation techniques in cases where quoted market
prices are not available. Those techniques are significantly affected by the
assumptions used, including the discount rate and the estimated timing and
amount of future cash flows. Therefore, the estimates of fair value may differ
substantially from amounts which ultimately may be realized or paid at
settlement or maturity of the financial instruments. SFAS 107 excludes certain
financial instruments and all non-financial instruments from its disclosure
requirements. Accordingly, the aggregate fair value amounts presented do not
represent the underlying value of the Company.
Estimated fair values, carrying values and various methods and assumptions
used in valuing the Company's financial instruments are set forth below (in
thousands):
<TABLE>
<CAPTION>
June 30, 1999 June 30, 1998
-------------------- --------------------
Carrying Estimated Carrying Estimated
Value Fair Value Value Fair Value
-------- ---------- -------- ----------
<S> <C> <C> <C> <C> <C>
Financial assets
Cash and cash equivalents............................... (a) $ 6,027 $ 6,027 $ 33,087 $ 33,087
Receivables held for sale, net.......................... (b) 266,657 283,386 342,853 367,613
Interest-only receivables from Trusts................... (c) 53,465 53,465 131,694 131,694
Investments in Trust receivables........................ (c) 50,788 50,788 98,857 98,857
Restricted cash......................................... (c) 57,142 57,142 55,758 55,758
Financial liabilities:
Warehouse credit facilities............................. (d) 72,045 72,045 165,608 165,608
Senior notes............................................ (e) 125,000 123,825 175,000 177,625
Other notes payable..................................... (f) 27,206 28,299 6,410 6,410
Interest rate swaps..................................... (g) 735 236 (269) 170
Unrecognized financial instruments:
Forward U.S. Treasury Note sales........................ (h) 164 473
Forward interest rate swaps............................. (g) 489
</TABLE>
- ---------------
(a) The carrying value of cash and cash equivalents is considered to be a
reasonable estimate of fair value since these investments bear interest at
market rates and have maturities of less than 90 days.
(b) Since the Company periodically sells its receivables, fair value is
estimated by discounting future net cash flows expected to be realized from
the sale of the receivables using interest rate, prepayment and credit loss
assumptions similar to the Company's historical experience.
(c) The fair value of interest-only receivables from Trusts, investments in
Trust receivables and restricted cash is estimated by discounting the
associated future net cash flows using discount rate, prepayment and credit
loss assumptions similar to the Company's historical experience.
(d) The warehouse credit facilities have variable rates of interest and
maturities of less than one year. Therefore, carrying value is considered
to be a reasonable estimate of fair value.
(e) The fair value of the senior notes is based on the quoted market price.
(f) The fair value of other notes payable is estimated based on rates currently
available for debt with similar terms and remaining maturities.
(g) The fair value of the interest rate swaps is based on the quoted
termination cost.
(h) The fair value of the forward U.S. Treasury Note sales are estimated based
upon market prices for similar financial instruments.
F-20
<PAGE>
AMERICREDIT CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
14. Stock Split
On August 6, 1998, the Company's Board of Directors approved a two for one
stock split to be effected in the form of a 100% stock dividend for shareholders
of record on September 11, 1998, paid on September 30, 1998. All share data for
the periods presented, except shares authorized, have been adjusted to reflect
the stock split on a retroactive basis.
F-21
<PAGE>
AMERICREDIT CORP.
CONSOLIDATED BALANCE SHEETS
(Unaudited, Dollars in Thousands)
<TABLE>
<CAPTION>
June 30, March 31,
1998 1999
---------- ----------
ASSETS
<S> <C> <C>
Cash and cash equivalents..................................................... $ 33,087 $ 36,846
Receivables held for sale, net............................................. 342,853 415,421
Interest-only receivables from Trusts...................................... 131,694 173,643
Investments in Trust receivables.............................................. 98,857 157,201
Restricted cash............................................................ 55,758 82,809
Property and equipment, net................................................... 23,385 34,115
Other assets............................................................... 28,037 37,947
---------- ----------
Total assets........................................................... $ 713,671 $ 937,982
========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities:
Warehouse credit facilities................................................ $ 165,608 $ 255,531
Senior notes............................................................... 175,000 175,000
Other notes payable........................................................ 6,410 12,759
Accrued taxes and expenses................................................. 47,132 72,396
Deferred income taxes...................................................... 31,673 61,532
---------- ----------
Total liabilities...................................................... 425,823 577,218
---------- ----------
Shareholders' equity:
Preferred stock, $.01 par value per share;
20,000,000 authorized, none issued..................................... - -
Common stock, $.01 par value per share; 120,000,000 shares authorized;
69,272,948 and 70,790,686 issued....................................... 693 708
Additional paid-in capital................................................. 230,269 244,194
Accumulated other comprehensive income..................................... 7,234 13,319
Retained earnings.......................................................... 72,770 125,133
---------- ----------
310,966 383,354
Treasury stock, at cost (7,667,318 and 7,486,585 shares)..................... (23,118) (22,590)
---------- ----------
Total shareholders' equity............................................. 287,848 360,764
---------- ----------
Total liabilities and shareholders' equity............................. $ 713,671 $ 937,982
========== ==========
</TABLE>
The accompanying notes are an integral part
of these consolidated financial statements.
F-22
<PAGE>
AMERICREDIT CORP.
CONSOLIDATED STATEMENTS OF INCOME
AND COMPREHENSIVE INCOME
(Unaudited, Dollars in Thousands, Except Per Share Data)
<TABLE>
<CAPTION>
Nine Months Ended
March 31,
-------------------------
1998 1999
------------ -----------
<S> <C> <C>
Revenues:
Finance charge income............................ $ 40,052 $ 51,538
Gain on sale of receivables...................... 71,838 116,551
Servicing fee income............................. 34,389 61,702
Other income..................................... 1,901 3,361
----------- -----------
148,180 233,152
----------- -----------
Costs and expenses:
Operating expenses.............................. 66,102 115,760
Provision for losses............................ 5,546 6,589
Interest expense................................ 18,973 25,660
----------- -----------
90,621 148,009
----------- -----------
Income before income taxes............................. 57,559 85,143
Income tax provision................................... 22,159 32,780
----------- -----------
Net income............................................. 35,400 52,363
----------- -----------
Other comprehensive income:
Unrealized gain on credit enhancement assets.... (1,487) 9,895
Less related income tax provision............... 572 (3,810)
----------- -----------
Comprehensive income............................ $ 34,485 $ 58,448
=========== ===========
Earnings per share:
Basic........................................... $ .59 $ .83
=========== ===========
Diluted......................................... $ .55 $ .78
=========== ===========
Weighted average shares................................ 59,732,984 62,872,858
=========== ===========
Weighted average shares and assumed incremental shares. 64,644,030 66,822,426
=========== ===========
</TABLE>
The accompanying notes are an integral part
of these consolidated financial statements.
F-23
<PAGE>
AMERICREDIT CORP.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited, Dollars in Thousands)
<TABLE>
<CAPTION>
Nine Months Ended
March 31,
-------------------------
1998 1999
----------- ------------
<S> <C> <C>
Cash flows from operating activities:
Net income................................................................ $ 35,400 $ 52,363
Adjustments to reconcile net income to net cash provided by operating
activities:
Depreciation and amortization...................................... 3,084 6,902
Provision for losses............................................... 5,546 6,589
Deferred income taxes.............................................. 1,561 33,041
Non-cash servicing fee income...................................... (9,246) (10,739)
Non-cash gain on sale of auto receivables.......................... (64,378) (107,642)
Distributions from Trusts.......................................... 27,083 35,182
Changes in assets and liabilities:
Other assets................................................... (6,162) (2,746)
Accrued taxes and expenses..................................... 18,274 25,264
----------- -----------
Net cash provided by operating activities.................................... 11,162 38,214
----------- -----------
Cash flows from investing activities:
Purchases of auto receivables............................................. (1,162,952) (1,983,758)
Originations of mortgage receivables...................................... (94,537) (203,518)
Principal collections and recoveries on receivables....................... 30,187 14,783
Net proceeds from sale of auto receivables................................ 1,102,614 1,894,383
Net proceeds from sale of mortgage receivables............................ 70,729 198,953
Initial deposits to restricted cash....................................... (43,400) (57,250)
Return of deposits from restricted cash................................... 23,000
Purchases of property and equipment....................................... (5,971) (8,431)
Increase in other assets.................................................. (2,490) (7,387)
----------- -----------
Net cash used by investing activities........................................ (105,820) (129,225)
----------- -----------
Cash flows from financing activities:
Net change in warehouse credit facilities................................. 51,983 89,923
Proceeds from issuance of senior notes.................................... 47,762
Payments on other notes payable........................................... (13,857) (2,629)
Proceeds from issuance of common stock.................................... 11,837 7,476
----------- -----------
Net cash provided by financing activities.................................... 97,725 94,770
----------- -----------
Net increase in cash and cash equivalents.................................... 3,067 3,759
Cash and cash equivalents at beginning of period............................. 6,027 33,087
----------- -----------
Cash and cash equivalents at end of period................................... $ 9,094 $ 36,846
=========== ===========
</TABLE>
The accompanying notes are an integral part
of these consolidated financial statements.
F-24
<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 March 31, 1999 and for the periods
ended March 31, 1998 and 1999 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.
Certain prior year amounts have been reclassified to conform to the current
period presentation. 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. These interim period financial statements should be read
in conjunction with the Company's consolidated financial statements which are
included in the Company's Annual Report on Form 10-K/A for the year ended June
30, 1998.
The Company's Board of Directors approved a two for one stock split on August
6, 1998 which was effected in the form of a 100% stock dividend for shareholders
of record on September 11, 1998 and paid on September 30, 1998. In connection
with the stock split, $347,000 was transferred from retained earnings to common
stock representing the par value of the additional shares issued. All share data
for the periods presented, except shares authorized, have been adjusted to
reflect the stock split on a retroactive basis.
The Company adopted the requirements of Statement of Financial Accounting
Standards No. 130, "Reporting Comprehensive Income" ("SFAS 130"), effective
July 1, 1998. SFAS 130 establishes standards for reporting comprehensive income
and its components in a full set of financial statements. The new standard
requires that all items that are required to be recognized under accounting
standards as components of comprehensive income, including an amount
representing total comprehensive income, be reported in a financial statement
that is displayed with the same prominence as other financial statements.
Pursuant to SFAS 130, the Company has reported comprehensive income in the
accompanying Consolidated Statements of Income and Comprehensive Income. All
prior periods presented have been restated to conform to the requirements of
SFAS 130.
NOTE 2 -- RESTATEMENT
On January 14, 1999, the Company issued a press release reporting a
restatement of its financial statements for the fiscal years ended June 30,
1996, 1997, and 1998 as well as for the first quarter of fiscal 1999. Interim
periods in the fiscal years ended June 30, 1996, 1997 and 1998 were also
restated. As required by the Financial Accounting Standards Board's ("FASB")
Special Report, "A Guide to Implementation of Statement 125 on Accounting for
Transfers and Servicing of Financial Assets and Extinguishments of Liabilities,
Second Edition", dated December 1998, and related guidance set forth in
statements made by the staff of the Securities and Exchange Commission ("SEC")
on December 8, 1998, the Company retroactively changed its method of measuring
and accounting for credit enhancement assets to the cash-out method from the
cash-in method.
Initial deposits to restricted cash accounts and subsequent cash flows
received by securitization trusts sponsored by the Company accumulate as credit
enhancement assets until certain targeted levels are achieved, after which cash
is distributed to the Company on an unrestricted basis. Under the cash-in method
previously used by the Company, (i) the assumed discount period for measuring
the present value of credit enhancement assets ended when cash flows were
received by the securitization trusts and (ii) initial deposits to restricted
cash accounts were recorded at face value. Under the cash-out method required by
the FASB and SEC, the assumed discount period for measuring the present value of
credit enhancement assets ends when cash, including return of the initial
deposits, is distributed to the Company on an unrestricted basis.
F-25
<PAGE>
AMERICREDIT CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
UNAUDITED
The change to the cash-out method results only in a difference in the timing
of revenue recognition from a securitization and has no effect on the total cash
flows of such transactions. While the total amount of revenue recognized over
the term of a securitization transaction is the same under either method, the
cash-out method results in (i) lower initial gains on the sale of receivables
due to the longer discount period and (ii) higher subsequent servicing fee
income from accretion of the additional cash-out discount.
NOTE 3 -- RECEIVABLES HELD FOR SALE
Receivables held for sale consist of the following (in thousands):
<TABLE>
<CAPTION>
June 30, March 31,
1998 1999
---------- ----------
<S> <C> <C>
Auto receivables..................................... $ 334,110 $ 400,722
Less allowance for losses............................ (12,756) (10,549)
---------- ----------
Auto receivables, net................................ 321,354 390,173
Mortgage receivables................................. 21,499 25,248
---------- ----------
$ 342,853 $ 415,421
========== ==========
</TABLE>
The Company has established an allowance for losses with respect to auto
receivables held for sale to provide for potential credit losses on such
receivables prior to their sale in a securitization transaction.
A summary of the allowance for losses is as follows (in thousands):
<TABLE>
<CAPTION>
Nine Months Ended
March 31,
---------------------
1998 1999
--------- ---------
<S> <C> <C>
Balance at beginning of period....................... $ 12,946 $ 12,756
Provision for losses................................. 5,546 6,589
Acquisition fees..................................... 35,545 44,614
Allowance related to auto receivables sold to Trusts. (34,030) (47,702)
Net charge-offs...................................... (7,528) (5,708)
--------- ---------
Balance at end of period............................. $ 12,479 $ 10,549
========= =========
</TABLE>
NOTE 4 -- CREDIT ENHANCEMENT ASSETS
As of June 30, 1998 and March 31, 1999, the Company was servicing $1,968.4
million and $3,152.5 million, respectively, of auto receivables which have been
sold to certain special purpose financing trusts (the "Trusts"). The Company
has retained an interest in these receivables in the form of credit enhancement
assets.
Credit enhancement assets consist of the following (in thousands):
<TABLE>
<CAPTION>
June 30, March 31,
1998 1999
--------- ---------
<S> <C> <C>
Interest-only receivables from Trusts................ $131,694 $173,643
Investments in Trust receivables..................... 98,857 157,201
Restricted cash...................................... 55,758 82,809
--------- ---------
$286,309 $413,653
========= =========
</TABLE>
F-26
<PAGE>
AMERICREDIT CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
UNAUDITED
A summary of credit enhancement assets is as follows (in thousands):
<TABLE>
<CAPTION>
Nine Months Ended
March 31,
----------------------
1998 1999
---------- ----------
<S> <C> <C>
Balance at beginning of period..................... $161,395 $286,309
Non-cash gain on sale of auto receivables.......... 64,378 107,642
Accretion of present value discount................ 13,646 24,139
Initial deposits to restricted cash................ 43,400 57,250
Return of deposits from restricted cash............ (23,000)
Change in unrealized gain.......................... (1,487) 9,895
Distributions from Trusts.......................... (27,083) (35,182)
Permanent impairment write-down.................... (4,400) (13,400)
---------- ----------
Balance at end of period........................... $249,849 $413,653
========== ==========
</TABLE>
A summary of the allowance for losses included as a component of the
interest-only receivables is as follows (in thousands):
<TABLE>
<CAPTION>
Nine Months Ended
March 31,
----------------------
1998 1999
---------- ----------
<S> <C> <C>
Balance at beginning of period..................... $ 74,925 $ 179,359
Assumptions for cumulative credit losses........... 116,192 204,441
Permanent impairment write-down.................... 4,400 13,400
Net charge-offs.................................... (53,390) (98,183)
---------- ----------
Balance at end of period........................... $ 142,127 $ 299,017
========== ==========
</TABLE>
NOTE 5 -- WAREHOUSE CREDIT FACILITIES
Warehouse credit facilities consist of the following (in thousands):
<TABLE>
<CAPTION>
June 30, March 31,
1998 1999
---------- ----------
<S> <C> <C>
Bank lines of credit............................... $ 603
Commercial paper facilities........................ $140,708 233,661
Mortgage facility.................................. 24,900 21,267
---------- ----------
$165,608 $ 255,531
========== ==========
</TABLE>
In September 1998, the Company renewed its funding agreement with an
administrative agent on behalf of an institutionally managed commercial paper
conduit and a group of banks and increased the amount of structured warehouse
financing available under the agreement from $245 million to $505 million.
Under the funding agreement, the Company transfers auto receivables to CP
Funding Corp. ("CPFC"), a special purpose finance subsidiary of the Company, and
CPFC in turn issues a note, collateralized by such auto receivables, to the
agent. The agent provides funding under the note to CPFC pursuant to an advance
formula and CPFC forwards the funds to the Company in consideration for the
transfer of auto receivables. While CPFC is a consolidated subsidiary of the
Company, CPFC is a separate legal entity and the auto receivables transferred to
CPFC and the other assets of CPFC are legally owned by CPFC and not available to
creditors of AmeriCredit Corp. or its other subsidiaries. Advances under the
note bear interest at commercial paper, London Interbank Offered Rates ("LIBOR")
or prime rates plus specified fees depending upon the source of funds provided
by the agent to CPFC. The funding agreement, which expires in September 1999,
contains various covenants requiring certain minimum financial ratios and
results. Borrowings of $233,661,000 were outstanding under this agreement as of
March 31, 1999.
F-27
<PAGE>
AMERICREDIT CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
UNAUDITED
In March 1999, the Company entered into a funding agreement with an
administrative agent on behalf of an institutionally managed commercial paper
conduit and a bank under which up to $150 million of structured warehouse
financing is available. Advances under the facility bear interest at commercial
paper rates plus specified fees. The funding agreement, which expires in March
2000, contains various covenants requiring certain minimum financial ratios and
results. There were no outstanding balances under this agreement as of March
31, 1999.
In March 1999, the Company renewed its revolving credit agreement with a
group of banks under which the Company may borrow up to $115 million, subject to
a defined borrowing base. Borrowings under the credit agreement are
collateralized by certain auto receivables and bear interest, based upon the
Company's option, at either the prime rate or LIBOR plus 1.25%. The credit
agreement, which expires in April 2000, contains various restrictive covenants
requiring certain minimum financial ratios and results and placing certain
limitations on the incurrence of additional debt, capital expenditures, cash
dividends and repurchase of common stock. There were no outstanding balances
under the credit agreement as of March 31, 1999.
In November 1998, the Company's Canadian subsidiary entered into a revolving
credit agreement with a bank under which the Company may borrow up to (Cdn)$20
million, subject to a defined borrowing base. Borrowings under the credit
facility are collateralized by certain Canadian auto receivables and bear
interest at the Canadian prime rate. The credit agreement, which expires in
November 1999, contains various restrictive covenants requiring certain minimum
financial ratios and results and placing certain limitations on the incurrence
of additional debt, capital expenditures, cash dividends and repurchase of
common stock. Borrowings of (U.S.) $603,000 were outstanding under this
agreement as of March 31, 1999.
In February 1999, the Company renewed its mortgage warehouse facility with a
bank under which the Company may borrow up to $75 million, subject to a defined
borrowing base. Borrowings under the facility are collateralized by certain
mortgage receivables and bear interest, based upon the Company's option, at
either the prime rate or LIBOR plus 1.50%. The facility expires in July 1999.
Borrowings of $21,267,000 were outstanding under this agreement as of March 31,
1999.
NOTE 6 - SUPPLEMENTAL INFORMATION
Cash payments for interest costs and income taxes consist of the following (in
thousands):
<TABLE>
<CAPTION>
Nine Months Ended
March 31,
-------------------
1998 1999
-------- ---------
<S> <C> <C>
Interest costs (none capitalized)...................... $22,577 $ 29,237
Income taxes........................................... 14,520 (14,000)
</TABLE>
During the nine months ended March 31, 1998 and 1999, the Company entered into
lease agreements for property and equipment of $3,574,000 and $8,978,000,
respectively.
NOTE 7 - SUBSEQUENT EVENT
In April 1999, the Company issued $200 million of senior notes which are due
in April 2006. Interest on the notes is payable semi-annually at the rate of
9.875% per annum, commencing in October 1999. The notes, which are unsecured,
may be redeemed at the option of the Company after April 2003 at a premium
declining to par in April 2005. The Indenture pursuant to which the notes were
issued contains restrictions including limitations on the Company's ability to
incur additional indebtedness other than certain secured indebtedness, pay cash
dividends and repurchase common stock.
F-28
<PAGE>
AMERICREDIT CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
UNAUDITED
NOTE 8 -- GUARANTOR CONSOLIDATING FINANCIAL STATEMENTS
The payment of principal, premium, if any, and interest on the Company's
Senior Notes is guaranteed by certain of the Company's subsidiaries (the
"Subsidiary Guarantors"). The separate financial statements of the Subsidiary
Guarantors are not included herein because the Subsidiary Guarantors are wholly-
owned consolidated subsidiaries of the Company and are jointly, severally and
unconditionally liable for the obligations represented by the Senior Notes. The
Company believes that the condensed consolidating financial information for the
Company, the combined Subsidiary Guarantors and the combined Non-Guarantor
Subsidiaries provide information that is more meaningful in understanding the
financial position of the Subsidiary Guarantors than separate financial
statements of the Subsidiary Guarantors. Therefore, the separate financial
statements of the Subsidiary Guarantors are not deemed material.
The following supplemental schedules present consolidating financial
information for (i) AmeriCredit Corp. (on a parent only basis), (ii) the
combined Subsidiary Guarantors, (iii) the combined Non-Guarantor Subsidiaries,
(iv) an elimination column for adjustments to arrive at the information for the
Company and its subsidiaries on a consolidated basis and (v) the Company and its
subsidiaries on a consolidated basis.
Investments in subsidiaries are accounted for by the parent company on the
equity method for purposes of the presentation set forth below. Earnings of
subsidiaries are therefore reflected in the parent company's investment accounts
and earnings. The principal elimination entries set forth below eliminate
investments in subsidiaries and intercompany balances and transactions.
F-29
<PAGE>
AMERICREDIT CORP.
CONSOLIDATING BALANCE SHEET
March 31, 1999
(Unaudited, Dollars in Thousands)
<TABLE>
<CAPTION>
AmeriCredit Non-
Corp. Guarantors Guarantors Eliminations Consolidated
----------- ---------- ---------- ------------ ------------
<S> <C> <C> <C> <C> <C>
ASSETS
Cash and cash equivalents.............. $ $ 30,955 $ 5,891 $ $ 36,846
Receivables held for sale, net......... 50,354 365,067 415,421
Interest-only receivables from Trusts.. (661) 1,730 172,574 173,643
Investments in Trust receivables....... 564 156,637 157,201
Restricted cash........................ (87) 82,896 82,809
Property and equipment, net............ 34,115 34,115
Other assets........................... 7,145 23,686 7,116 37,947
Due (to) from affiliates............... 347,248 (148,776) (198,472)
Investment in affiliates............... 173,331 13,921 2 (187,254)
----------- ---------- ---------- ------------ ------------
Total assets........................ $ 527,063 $ 6,462 $ 591,711 $ (187,254) $ 937,982
=========== ========== ========== ============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities:
Warehouse credit facilities............ $ $ 21,870 $ 233,661 $ $ 255,531
Senior notes........................... 175,000 175,000
Other notes payable.................... 12,737 22 12,759
Accrued taxes and expenses............. 4,979 66,873 544 72,396
Deferred income taxes.................. (26,417) (35,707) 123,656 61,532
----------- ---------- ---------- ------------ ------------
Total liabilities................... 166,299 53,058 357,861 577,218
----------- ---------- ---------- ------------ ------------
Shareholders' equity:
Common stock........................... 708 203 3 (206) 708
Additional paid-in capital............. 244,194 108,485 13,921 (122,406) 244,194
Accumulated other comprehensive income. 13,319 13,319 (13,319) 13,319
Retained earnings...................... 125,133 (155,284) 206,607 (51,323) 125,133
----------- ---------- ---------- ------------ ------------
383,354 (46,596) 233,850 (187,254) 383,354
Treasury stock......................... (22,590) (22,590)
----------- ---------- ---------- ------------ ------------
Total shareholders' equity.......... 360,764 (46,596) 233,850 (187,254) 360,764
----------- ---------- ---------- ------------ ------------
Total liabilities and shareholders'
equity ............................ $ 527,063 $ 6,462 $ 591,711 ($ 187,254) $ 937,982
=========== ========== ========== ============ ============
</TABLE>
F-30
<PAGE>
AMERICREDIT CORP.
CONSOLIDATING INCOME STATEMENT
Nine Months Ended March 31, 1998
(Unaudited, Dollars in Thousands)
<TABLE>
<CAPTION>
AmeriCredit Non-
Corp. Guarantors Guarantors Eliminations Consolidated
------------ ----------- ----------- ------------- ------------
<S> <C> <C> <C> <C> <C>
Revenue:
Finance charge income.......... $ $ 29,421 $ 10,631 $ $ 40,052
Gain on sale of receivables.... (5,199) 1,653 75,384 71,838
Servicing fee income........... 65,131 9,513 (40,255) 34,389
Other income................... 22,335 965 627 (22,026) 1,901
Equity in income of affiliates. 36,111 (36,111)
----------- ---------- ---------- ------------ ------------
53,247 97,170 96,155 (98,392) 148,180
----------- ---------- ---------- ------------ ------------
Costs and expenses:
Operating expenses............. 7,801 98,566 (10) (40,255) 66,102
Provision for losses........... 5,546 5,546
Interest expense............... 10,325 17,923 12,751 (22,026) 18,973
----------- ---------- ---------- ------------ ------------
18,126 122,035 12,741 (62,281) 90,621
----------- ---------- ---------- ------------ ------------
Income before income taxes...... 35,121 (24,865) 83,414 (36,111) 57,559
Income tax provision............ (279) (7,991) 30,429 22,159
----------- ---------- ---------- ------------ ------------
Net income...................... $ 35,400 $ (16,874) $ 52,985 $ (36,111) $ 35,400
=========== ========== ========== ============ ============
</TABLE>
F-31
<PAGE>
AMERICREDIT CORP.
CONSOLIDATING INCOME STATEMENT
Nine Months Ended March 31, 1999
(Unaudited, Dollars in Thousands)
<TABLE>
<CAPTION>
AmeriCredit Non-
Corp. Guarantors Guarantors Eliminations Consolidated
----------- ---------- ---------- ------------ ------------
<S> <C> <C> <C> <C> <C>
Revenue:
Finance charge income............ $ $ 27,503 $ 24,035 $ $ 51,538
Gain on sale of receivables...... (6,394) 3,202 119,743 116,551
Servicing fee income............. 80,403 7,975 (26,676) 61,702
Other income..................... 22,134 2,657 584 (22,014) 3,361
Equity in income of affiliates... 56,474 (56,474)
----------- ---------- ---------- ------------ ------------
72,214 113,765 152,337 (105,164) 233,152
----------- ---------- ---------- ------------ ------------
Costs and expenses:
Operating expenses............... 7,513 134,886 37 (26,676) 115,760
Provision for losses............. 2,471 4,118 6,589
Interest expense................. 13,566 16,918 17,190 (22,014) 25,660
----------- ---------- ---------- ------------ ------------
21,079 154,275 21,345 (48,690) 148,009
----------- ---------- ---------- ------------ ------------
Income before income taxes........ 51,135 (40,510) 130,992 (56,474) 85,143
Income tax provision.............. (1,228) (18,654) 52,662 32,780
----------- ---------- ---------- ------------ ------------
Net income........................ $ 52,363 $ (21,856) $ 78,330 $ (56,474) $ 52,363
=========== ========== ========== ============ ============
</TABLE>
F-32
<PAGE>
AMERICREDIT CORP.
CONSOLIDATING STATEMENT OF CASH FLOW
Nine Months Ended March 31, 1998
(Unaudited, Dollars in Thousands)
<TABLE>
<CAPTION>
AmeriCredit Non-
Corp. Guarantors Guarantors Eliminations Consolidated
------------ ------------ ------------ ------------- -------------
<S> <C> <C> <C> <C> <C>
Cash flow from operating activities:
Net income................................. $ 35,400 $ (16,874) $ 52,985 $ (36,111) $ 35,400
Adjustment to reconcile net income to
net cash provided by operating activities:
Depreciation and amortization........... 35 3,049 3,084
Provision for losses.................... 5,546 5,546
Deferred income taxes................... (14,830) (8,298) 24,689 1,561
Non-cash servicing fee income........... (9,246) (9,246)
Non-cash gain on sale of auto
receivables.......................... (64,378) (64,378)
Distributions from Trusts............... 27,083 27,083
Equity in income of affiliates.......... (36,111) 36,111
Changes in assets and liabilities:
Other assets......................... (953) (2,216) (2,993) (6,162)
Accrued taxes and expenses........... 473 16,359 1,442 18,274
------------ ------------ ------------ ------------- -------------
Net cash provided by operating activities... (15,986) (2,434) 29,582 11,162
------------ ------------ ------------ ------------- -------------
Cash flows from investing activities:
Purchases of auto receivables........... (1,162,952) (1,356,973) 1,356,973 (1,162,952)
Originations of mortgage receivables.... (94,537) (94,537)
Principal collections and recoveries
on receivables....................... (23,328) 53,515 30,187
Net proceeds from sale of auto
receivables.......................... 1,356,973 1,102,614 (1,356,973) 1,102,614
Net proceeds from sale of mortgage
receivables.......................... 70,729 70,729
Initial deposits to restricted cash..... (43,400) (43,400)
Purchases of property and equipment..... (53) (5,918) (5,971)
Net change in investment in affiliates.. (9,998) (3,921) (2) 13,921
Increase in other assets................ (2,490) (2,490)
------------ ------------ ------------ ------------- -------------
Net cash used by investing activities....... (10,051) 137,046 (246,736) 13,921 (105,820)
------------ ------------ ------------ ------------- -------------
Cash flows from financing activities:
Net change in warehouse credit
facilities........................... (45,609) 97,592 51,983
Proceeds from issuance of senior
notes................................ 47,762 47,762
Payments on other notes payable......... (888) (5) (12,964) (13,857)
Proceeds from issuance of common
stock................................ 11,837 13,921 (13,921) 11,837
Net change in due (to) from
affiliates............................ (32,674) (85,430) 118,104
------------ ------------ ------------ ------------- -------------
Net cash provided by financing activities... 26,037 (131,044) 216,653 (13,921) 97,725
------------ ------------ ------------ ------------- -------------
Net increase in cash and cash equivalents... 3,568 (501) 3,067
Cash and cash equivalents at beginning of
period.................................... 3,988 2,039 6,027
------------ ------------ ------------ ------------- -------------
Cash and cash equivalents at end of period.. $ $ 7,556 $ 1,538 $ $ 9,094
============ ============ ============ ============= =============
</TABLE>
F-33
<PAGE>
AMERICREDIT CORP.
CONSOLIDATING STATEMENT OF CASH FLOW
Nine Months Ended March 31, 1999
(Unaudited, Dollars in Thousands)
<TABLE>
<CAPTION>
AmeriCredit Non-
Corp. Guarantors Guarantors Eliminations Consolidated
------------ ------------ ------------ ------------- -------------
<S> <C> <C> <C> <C> <C>
Cash flow from operating activities:
Net income............................... $ 52,363 $ (21,856) $ 78,330 $ (56,474) $ 52,363
Adjustment to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization............ 41 6,861 6,902
Provision for losses..................... 2,471 4,118 6,589
Deferred income taxes.................... (955) (19,070) 53,066 33,041
Non-cash servicing fee income............ (10,739) (10,739)
Non-cash gain on sale of auto
receivables............................ (107,642) (107,642)
Distributions from Trusts................ 35,182 35,182
Equity in income of affiliates........... (56,474) 56,474
Changes in assets and liabilities:
Other assets........................... 1,766 (6,811) 2,299 (2,746)
Accrued taxes and expenses............. 7,259 12,923 5,082 25,264
------------ ------------ ------------ ------------- -------------
Net cash provided by operating activities.... 4,000 ( 25,482) 59,696 38,214
------------ ------------ ------------ ------------- -------------
Cash flows from investing activities:
Purchases of auto receivables............ (1,983,758) (2,121,174) 2,121,174 (1,983,758)
Originations of mortgage
receivables............................ (203,518) (203,518)
Principal collections and recoveries
on receivables......................... (6,744) 21,527 14,783
Net proceeds from sale of auto
receivables............................ 2,121,174 1,894,383 (2,121,174) 1,894,383
Net proceeds from sale of mortgage
receivables............................ 198,953 198,953
Initial deposits to restricted cash...... (57,250) (57,250)
Return of deposits from restricted
cash................................... 23,000 23,000
Purchase of property and
equipment.............................. 134 (8,565) (8,431)
Increase in other assets................. (4,094) (3,293) (7,387)
------------ ------------ ------------ ------------- -------------
Net cash used by investing activities........ 134 113,448 (242,807) (129,225)
------------ ------------ ------------ ------------- -------------
Cash flows from financing activities:
Net change in warehouse credit
facilities............................. (3,030) 92,953 89,923
Payments on other notes payable.......... (2,625) (4) (2,629)
Proceeds from issuance of common
stock.................................. 7,327 149 7,476
Net change in due (to) from
affiliates.............................. (8,836) (84,283) 93,119
------------ ------------ ------------ ------------- -------------
Net cash provided by financing activities.... (4,134) (87,168) 186,072 94,770
------------ ------------ ------------ ------------- -------------
Net increase in cash and cash equivalents.... 798 2,961 3,759
Cash and cash equivalents at beginning of
period...................................... 30,157 2,930 33,087
------------ ------------ ------------ ------------- -------------
Cash and cash equivalents at end of period... $ $ 30,955 $ 5,891 $ $ 36,846
============ ============ ============ ============= =============
</TABLE>
F-34
<PAGE>
CONSOLIDATING FINANCIAL INFORMATION
The payment of principal, premium, if any, and interest on the Company's 9
1/4% Senior Notes is guaranteed by certain of the Company's subsidiaries (the
"Subsidiary Guarantors"). The separate financial statements of the Subsidiary
Guarantors are not included herein because the Subsidiary Guarantors are wholly-
owned consolidated subsidiaries of the Company and are jointly, severally and
unconditionally liable for the obligations represented by the 9 1/4% Senior
Notes. The Company believes that the condensed consolidating financial
information for the Company, the combined Subsidiary Guarantors and the combined
Non-Guarantor Subsidiaries provide information that is more meaningful in
understanding the financial position of the Subsidiary Guarantors than separate
financial statements of the Subsidiary Guarantors. Therefore, the separate
financial statements of the Subsidiary Guarantors are not deemed material.
The following supplementary information presents consolidating financial data
for (i) the Company (on a parent only basis), (ii) the combined Subsidiary
Guarantors, (iii) the combined Non-Guarantor Subsidiaries, (iv) an elimination
column for adjustments to arrive at the information for the Company and its
subsidiaries on a consolidated basis and (v) the Company and its subsidiaries on
a consolidated basis as of June 30, 1998 and 1997 and for each of the three
years in the period ended June 30, 1998.
Investments in subsidiaries are accounted for by the parent company on the
equity method for purposes of the presentation set forth below. Earnings of
subsidiaries are therefore reflected in the parent company's investment accounts
and earnings. The principal elimination entries set forth below eliminate
investments in subsidiaries and intercompany balances and transactions.
F-35
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS ON SUPPLEMENTARY INFORMATION
Board of Directors and Shareholders
AmeriCredit Corp.
Our report on the audits of the consolidated financial statements of AmeriCredit
Corp. as of June 30, 1998 and 1997 and for the three years ended June 30, 1998,
1997 and 1996 is included on page F-2. These audits were conducted for the
purpose of forming an opinion on the basic financial statements taken as a
whole. The supplementary information appearing on pages F-37 to F-44 is
presented for purposes of additional analysis and is not a required part of the
basic financial statements. Such supplementary information has been subjected to
the auditing procedures applied in the audits of the basic financial statements
and, in our opinion, is fairly stated, in all material respects, when considered
in relation to the basic financial statements taken as a whole.
PricewaterhouseCoopers LLP
Fort Worth, Texas
August 4, 1998, except as to Note 14 and Note 2
to the consolidated financial statements for which
the dates are September 30, 1998 and January 14, 1999,
respectively.
F-36
<PAGE>
AMERICREDIT CORP.
SUPPLEMENTARY INFORMATION
CONSOLIDATING BALANCE SHEET
June 30, 1997
(Dollars in Thousands)
<TABLE>
<CAPTION>
AmeriCredit Non-
Corp. Guarantors Guarantors Eliminations Consolidated
------------ ----------- ----------- ------------- -------------
<S> <C> <C> <C> <C> <C>
ASSETS
Cash and cash equivalents................. $ 3,988 $ 2,039 $ 6,027
Receivables held for sale, net............ 240,912 25,745 266,657
Interest-only receivables from Trusts..... $ (777) 4,136 50,106 53,465
Investments in Trust receivables.......... 7,432 43,356 50,788
Restricted cash........................... 57,142 57,142
Property and equipment, net............... 136 13,748 13,884
Other assets.............................. 10,947 12,564 4,019 27,530
Due (to) from affiliates.................. 277,369 (197,957) (79,412)
Investment in affiliates.................. 47,567 $(47,567)
-------- --------- -------- -------- --------
Total assets.......................... $335,242 $ 84,823 $102,995 $(47,567) $475,493
======== ========= ======== ======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities:
Warehouse credit facilities............... $ 72,045 $ 72,045
Senior notes.............................. $125,000 125,000
Other notes payable....................... 3,484 33 $ 23,689 27,206
Accrued taxes and expenses................ 8,088 27,987 (1,217) 34,858
Deferred income taxes..................... (9,591) (4,811) 22,525 8,123
-------- --------- -------- -------- --------
Total liabilities..................... 126,981 95,254 44,997 267,232
-------- --------- -------- -------- --------
Shareholders' equity:
Common stock.............................. 667 203 3 $ (206) 667
Additional paid-in capital................ 203,531 98,336 (98,336) 203,531
Unrealized gain on credit enhancement
assets................................... 4,355 4,355 (4,355) 4,355
Retained earnings......................... 23,469 (108,970) 53,640 55,330 23,469
-------- --------- -------- -------- --------
232,022 (10,431) 57,998 (47,567) 232,022
Treasury stock............................ (23,761) (23,761)
-------- --------- -------- -------- --------
Total shareholders' equity............... 208,261 (10,431) 57,998 (47,567) 208,261
-------- --------- -------- -------- --------
Total liabilities and shareholders'
equity .............................. $335,242 $ 84,823 $102,995 $(47,567) $475,493
======== ========= ======== ======== ========
</TABLE>
F-37
<PAGE>
AMERICREDIT CORP.
SUPPLEMENTARY INFORMATION
CONSOLIDATING BALANCE SHEET
June 30, 1998
(Dollars in Thousands)
<TABLE>
<CAPTION>
AmeriCredit Non-
Corp. Guarantors Guarantors Eliminations Consolidated
------------ ----------- ----------- ------------- -------------
<S> <C> <C> <C> <C> <C>
ASSETS
Cash and cash equivalents................. $ 30,157 $ 2,930 $ 33,087
Receivables held for sale, net............ 178,219 164,634 342,853
Interest-only receivables from Trusts ... $ (2,151) 3,623 130,222 131,694
Investments in Trust receivables.......... 2,109 96,748 98,857
Restricted cash........................... 55,758 55,758
Property and equipment, net............... 175 23,210 23,385
Other assets.............................. 8,911 13,003 6,123 28,037
Due (to) from affiliates.................. 330,924 (226,892) (104,032)
Investment in affiliates.................. 110,623 13,921 2 $(124,546)
-------- --------- --------- --------- --------
Total assets....................... $448,482 $ 37,350 $ 352,385 $(124,546) $713,671
======== ========= ========= ========= ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities:
Warehouse credit facilities............... $ 24,900 $ 140,708 $ $165,608
Senior notes.............................. $175,000 175,000
Other notes payable....................... 6,384 26 6,410
Accrued taxes and expenses................ (2,280) 53,950 (4,538) 47,132
Deferred income taxes..................... (18,470) (16,637) 66,780 31,673
-------- --------- --------- --------- --------
Total liabilities........................ 160,634 62,239 202,950 425,823
-------- --------- --------- --------- --------
Shareholders' equity:
Common stock.............................. 693 203 3 (206) 693
Additional paid-in capital................ 230,269 108,336 13,921 (122,257) 230,269
Unrealized gain on credit enhancement
assets................................... 7,234 7,234 (7,234) 7,234
Retained earnings......................... 72,770 (133,428) 128,277 5,151 72,770
-------- --------- --------- --------- --------
310,966 (24,889) 149,435 (124,546) 310,966
Treasury stock............................ (23,118) (23,118)
-------- --------- --------- --------- --------
Total shareholders' equity ............. 287,848 (24,889) 149,435 (124,546) 287,848
-------- --------- --------- --------- --------
Total liabilities and shareholders'
equity ............................ $448,482 $ 37,350 $ 352,385 $(124,546) $713,671
======== ========= ========= ========= ========
</TABLE>
F-38
<PAGE>
AMERICREDIT CORP.
SUPPLEMENTARY INFORMATION
CONSOLIDATING STATEMENT OF INCOME
Year Ended June 30, 1996
(Dollars in Thousands)
<TABLE>
<CAPTION>
AmeriCredit Non-
Corp. Guarantors Guarantors Eliminations Consolidated
----------- ---------- ---------- ------------- ------------
<S> <C> <C> <C> <C> <C>
Revenue:
Finance charge income.............. $32,050 $19,656 $51,706
Gain on sale of receivables........ 11,459 9,946 21,405
Servicing fee income............... 26,398 161 $(22,667) 3,892
Other income....................... $11,499 1,780 653 (11,300) 2,632
Equity in income of affiliates..... 24,571 (24,571)
------- ------- ------- -------- -------
36,070 71,687 30,416 (58,538) 79,635
------- ------- ------- -------- -------
Costs and expenses:
Operating expenses ............... 3,700 41,359 3,289 (22,667) 25,681
Provision for losses............... 7,912 7,912
Interest expense................... 371 15,212 8,846 (11,300) 13,129
------- ------- ------- -------- -------
4,071 64,483 12,135 (33,967) 46,722
------- ------- ------- -------- -------
Income before income taxes.......... 31,999 7,204 18,281 (24,571) 32,913
Income tax provision................ 11,234 914 12,148
------- ------- ------- -------- -------
Net income.......................... $20,765 $ 6,290 $18,281 $(24,571) $20,765
======= ======= ======= ======== =======
</TABLE>
F-39
<PAGE>
AMERICREDIT CORP.
SUPPLEMENTARY INFORMATION
CONSOLIDATING STATEMENT OF INCOME
Year Ended June 30, 1997
(Dollars in Thousands)
<TABLE>
<CAPTION>
AmeriCredit Non-
Corp. Guarantors Guarantors Eliminations Consolidated
------------ ----------- ---------- ------------- ------------
<S> <C> <C> <C> <C> <C>
Revenue:
Finance charge income.................... $ 36,633 $ 8,277 $ 44,910
Gain on sale of receivables.............. $ (855) 2,939 50,239 52,323
Servicing fee income..................... 56,343 6,230 $(39,081) 23,492
Other income............................. 18,348 1,280 914 (17,911) 2,631
Equity in income of affiliates........... 24,119 (24,119)
------- -------- ------- -------- --------
41,612 97,195 65,660 (81,111) 123,356
------- -------- ------- -------- --------
Costs and expenses:
Operating expenses....................... 5,282 83,997 1,717 (39,081) 51,915
Provision for losses..................... 6,595 6,595
Interest expense......................... 5,116 17,202 11,905 (17,911) 16,312
------- -------- ------- -------- --------
10,398 107,794 13,622 (56,992) 74,822
------- -------- ------- -------- --------
Income before income taxes................ 31,214 (10,599) 52,038 (24,119) 48,534
Income tax provision...................... 1,365 (2,481) 19,801 18,685
------- -------- ------- -------- --------
Net income................................ $29,849 $ (8,118) $32,237 $(24,119) $ 29,849
======= ======== ======= ======== ========
</TABLE>
F-40
<PAGE>
AMERICREDIT CORP.
SUPPLEMENTARY INFORMATION
CONSOLIDATING STATEMENT OF INCOME
Year Ended June 30, 1996
(Dollars in Thousands)
<TABLE>
<CAPTION>
AmeriCredit Non-
Corp. Guarantors Guarantors Eliminations Consolidated
------------ ----------- ---------- ------------- ------------
<S> <C> <C> <C> <C> <C>
Revenue:
Finance charge income...................... $ 39,114 $ 16,723 $ 55,837
Gain on sale of receivables................ $(6,729) 1,350 108,573 103,194
Servicing fee income....................... 91,682 9,822 $(53,594) 47,910
Other income............................... 31,029 1,268 741 (30,643) 2,395
Equity in income of affiliates............. 50,179 (50,179)
------- -------- -------- -------- --------
74,479 133,414 135,859 134,416 209,336
------- -------- -------- -------- --------
Costs and expenses:
Operating expenses......................... 10,800 137,273 5 (53,594) 94,484
Provision for losses....................... 7,555 7,555
Interest expense........................... 14,776 24,192 18,810 (30,643) 27,135
------- -------- -------- -------- --------
25,576 169,020 18,815 (84,237) 129,174
------- -------- -------- -------- --------
Income before income taxes.................. 48,903 (35,606) 117,044 (50,179) 80,162
Income tax provision........................ (398) (11,148) 42,407 30,861
------- -------- -------- -------- --------
Net income.................................. $49,301 $(24,458) $ 74,637 $(50,179) $ 49,301
======= ======== ======== ======== ========
</TABLE>
F-41
<PAGE>
AMERICREDIT CORP.
SUPPLEMENTARY INFORMATION
CONSOLIDATING STATEMENT OF CASH FLOWS
Year Ended June 30, 1996
(Dollars in Thousands)
<TABLE>
<CAPTION>
AmeriCredit Non-
Corp. Guarantors Guarantors Eliminations Consolidated
------------ ----------- ----------- ------------- -------------
<S> <C> <C> <C> <C> <C>
Cash flows from operating activities
Net income................................................ $ 20,765 $ 6,290 $ 18,281 $ (24,571) $ 20,765
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization............................. 49 1,479 1,528
Provision for losses...................................... 7,912 7,912
Deferred income taxes..................................... 13,596 (2,432) 11,164
Non-cash servicing fee income............................. (1,079) (1,079)
Non-cash gain on sale of auto
receivables............................................... 1,014 (16,431) (15,417)
Distributions from Trusts................................. 1,235 1,235
Equity in income of affiliates............................ (24,571) 24,571
Changes in assets and liabilities
Other assets......................................... 362 (1,857) 511 (984)
Accrued taxes and expenses........................... 1,273 8,606 (473) 9,406
-------- --------- --------- ------------ ---------
Net cash provided by operating activities........... 11,474 21,012 2,044 34,530
-------- --------- --------- ------------ ---------
Cash flows from investing activities
Purchases of auto receivables............................. (417,235) (115,646) 115,646 (417,235)
Principal collections and recoveries on
receivables.......................................... 37,894 57,054 94,948
Net proceeds from sale of auto
receivables.......................................... 262,243 115,646 (115,646) 262,243
Initial deposits to restricted cash....................... (2,939) (2,939)
Purchases of property and equipment....................... 2,536 (5,698) (3,162)
Decrease in other assets.................................. 3,707 (311) 3,396
Net change in investment in affiliates.................... (2,746) 2,743 3
-------- --------- --------- ------------ ---------
Net cash used by investment activities.................... 3,497 (120,053) 53,807 (62,749)
-------- --------- --------- ------------ ---------
Cash flows from financing activities
Net change in warehouse credit facilities................. 86,000 86,000
Payments on other notes payable........................... (298) (66,673) (66,971)
Proceeds from issuance of common stock............ 3,731 3,731
Purchase of treasury stock................................ (10,710) (10,710)
Net change in due (to) from affiliates.................... (29,794) 19,348 10,446
-------- --------- --------- ------------ ---------
Net cash provided by financing activities................. (37,071) 105,348 (56,227) 12,050
-------- --------- --------- ------------ ---------
Net increase (decrease) in cash and cash
equivalents.......................................... (22,100) 6,307 (376) (16,169)
Cash and cash equivalents at beginning of year....... 17,187 (6,394) 7,521 18,314
-------- --------- --------- ------------ ---------
Cash and cash equivalents at end of year............. $ (4,913) $ (87) $ 7,145 $ $ 2,145
======== ========= ========= ============ =========
</TABLE>
F-42
<PAGE>
AMERICREDIT CORP.
SUPPLEMENTARY INFORMATION
CONSOLIDATING STATEMENT OF CASH FLOWS
Year Ended June 30, 1997
(Dollars in Thousands)
<TABLE>
<CAPTION>
AmeriCredit Non-
Corp. Guarantors Guarantors Eliminations Consolidated
----------- ----------- ----------- ------------- -------------
<S> <C> <C> <C> <C> <C>
Cash flows from operating activities
Net income................................... $ 29,849 $ (8,118) $ 32,237 $ (24,119) $ 29,849
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization................ 28 2,175 2,203
Provision for losses ....................... 6,595 6,595
Deferred income taxes........................ 135 (1,048) 19,799 18,886
Non-cash servicing fee income................ (7,991) (7,991)
Non-cash gain on sale of auto
receivables............................. (52,534) (52,534)
Distributions from Trusts.................... 19,347 19,347
Equity in income of affiliates............... (24,119) 24,119
Changes in assets and liabilities
Other assets............................ 917 (3,083) (175) (2,341)
Accrued taxes and expenses.............. 4,835 18,278 (1,124) 21,989
----------- ----------- ----------- ------------- -------------
Net cash provided by operating activities..... 11,645 (37,735) 62,093 36,003
----------- ----------- ----------- ------------- -------------
Cash flows from investing activities
Purchases of auto receivables................ (896,711) (814,107) 814,107 (896,711)
Originations of mortgage receivables......... (53,770) (53,770)
Principal collections and recoveries on
receivables............................. 22,672 41,717 64,389
Net proceeds from sale of auto
receivables............................. 814,107 814,107 (814,107) 814,107
Net proceeds from sale of mortgage
receivables............................. 52,489 52,489
Initial deposits to restricted cash.......... (71,400) (71,400)
Decrease in other assets..................... 58 2,402 2,460
Purchases of property and equipment.......... (81) (4,430) (4,511)
Net change in investment in affiliates........ 25,605 (22,981) (2,624)
----------- ----------- ----------- ------------- -------------
Net cash used by investment activities....... 25,582 (88,624) (29,905) (92,947)
----------- ----------- ----------- ------------- -------------
Cash flows from financing activities
Net change in warehouse credit facilities.... (17,264) (17,264)
Proceeds from issuance of senior notes....... 120,894 120,894
Payments on other notes payable.............. (552) (44,158) (44,710)
Purchase of treasury stock................... (4,387) (4,387)
Proceeds from issuance of common
stock................................... 6,293 6,293
Net change in due (to) from affiliates....... (154,562) 147,698 6,864
----------- ----------- ----------- ------------- -------------
Net cash provided by financing activities.... (32,314) 130,434 (37,294) 60,826
----------- ----------- ----------- ------------- -------------
Net increase (decrease) in cash and cash
equivalents.................................. 4,913 4,075 (5,106) 3,882
Cash and cash equivalents at beginning of
year......................................... (4,913) (87) 7,145 2,145
----------- ----------- ----------- ------------ -------------
Cash and cash equivalents at end of year...... $ $ 3,988 $ 2,039 $ $ 6,027
=========== =========== =========== ============ =============
</TABLE>
F-43
<PAGE>
AMERICREDIT CORP.
SUPPLEMENTARY INFORMATION
CONSOLIDATING STATEMENT OF CASH FLOWS
Year Ended June 30, 1998
(Dollars in Thousands)
<TABLE>
<CAPTION>
AmeriCredit Non-
Corp. Guarantors Guarantors Eliminations Consolidated
------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Cash flows from operating activities
Net income................................ $ 49,301 $ (24,458) $ 74,637 $ (50,179) $ 49,301
Adjustments to reconcile net income to
net cash provided by operating
activities:
Depreciation and amortization............. 50 4,448 4,498
Provision for losses...................... 7,555 7,555
Deferred income taxes..................... 390 (11,826) 42,410 30,974
Non-cash servicing fee income............. (10,867) (10,867)
Non-cash gain on sale of auto
receivables.......................... (96,405) (96,405)
Distributions from Trusts................. 43,807 43,807
Equity in income of affiliates............ (50,179) 50,179
Changes in assets and liabilities
Other assets......................... (420) (739) (2,165) (3,324)
Accrued taxes and expenses........... (10,368) 25,963 (3,321) 12,274
------------ ----------- ------------ ------------ ------------
Net cash provided by operating activities.. (11,226) 943 48,096 37,813
------------ ----------- ------------ ------------ ------------
Cash flows from investing activities
Purchases of auto receivables............. (1,717,006) (1,777,748) 1,777,748 (1,717,006)
Originations of mortgage receivables...... (137,169) (137,169)
Principal collections and recoveries on
receivables............................... 11,984 6,400 18,384
Net proceeds from sale of auto
receivables............................ 1,777,748 1,632,357 (1,777,748) 1,632,357
Net proceeds from sale of mortgage
receivables............................. 119,683 119,683
Initial deposits to restricted cash....... (56,725) (56,725)
Purchases of property and equipment....... 11 (9,467) (9,456)
Decrease in other assets.................. 5,000 64 5,064
Net change in investment in affiliates.... (9,998) (3,921) (2) 13,921
------------ ----------- ------------ ------------ ------------
Net cash used by investment activities.... (4,987) 41,852 (195,654) 13,921 (144,868)
------------ ----------- ------------ ------------ ------------
Cash flows from financing activities
Net change in warehouse credit
facilities.............................. (47,145) 140,708 93,563
Proceeds from issuance of senior notes.... 47,762 47,762
Payments on other notes payable........... (1,346) (7) (23,689) (25,042)
Proceeds from issuance of common
stock................................... 17,832 13,921 (13,921) 17,832
Net change in due (to) from affiliates.... (48,035) 30,526 17,509
------------ ----------- ------------ ------------
Net cash provided by financing............ 16,213 (16,626) 148,449 (13,921) 134,115
activities............................... ------------ ----------- ------------ ------------ ------------
Net increase (decrease) in cash and cash
equivalents............................. 26,169 891 27,060
Cash and cash equivalents at beginning of
year.................................... 3,988 2,039 6,027
------------ ------------ ------------ ------------- ----------
Cash and cash equivalents at end of year... $ $ 30,157 $ 2,930 $ $ 33,087
============ ============ ============ ============= ==========
</TABLE>
F-44
<PAGE>
All tendered Old Notes, executed letters of transmittal and other related
documents should be directed to the Exchange Agent. Questions and requests for
assistance and requests for additional copies of the Prospectus, the letter of
transmittal and other related documents should be addressed to the Exchange
Agent as follows:
BY REGISTERED OR CERTIFIED MAIL:
Bank One, N.A.
235 West Schrock Road
Westerville, Ohio 43081
or
Bank One, N.A.
c/o First Chicago Trust
Company of New York
Attention: Corporate Trust Department
14 Wall Street
8th Floor, Window 2
New York, New York 10005
BY HAND OR OVERNIGHT COURIER:
Bank One, N.A.
235 West Schrock Road
Westerville, Ohio 43081
or
Bank One, N.A.
c/o First Chicago Trust
Company of New York
Attention: Corporate Trust Department
14 Wall Street
8th Floor, Window 2
New York, New York 10005
BY FACSIMILE:
(614) 248-5088 (OH)
or
(212) 240-8938 (NY)
Confirm by Telephone: (212) 240-8841 (NY)
1-800-346-5153
(Originals of all documents submitted by facsimile should be sent promptly
by hand, overnight courier, or registered or certified mail)
We have not authorized anyone to give you any information or to make any
representations about the transactions we discussed in this prospectus other
than those contained herein or in the documents we incorporate herein by
reference. If you are given any information or representations about these
matters that is not discussed or incorporated in this prospectus, you must not
rely on that information. This prospectus is not an offer to sell or a
solicitation of an offer to buy securities anywhere or to anyone where or to
whom we are not permitted to offer or sell securities under applicable law. The
delivery of this prospectus offered hereby does not, under any circumstances,
mean that there has not been a change in our affairs since the date hereof. It
also does not mean that the information in this prospectus or in the documents
we incorporate herein by reference is correct after this date.
OFFER TO EXCHANGE ALL
OUTSTANDING 9.875% SENIOR NOTES DUE 2006
($200,000,000 PRINCIPAL AMOUNT OUTSTANDING)
FOR REGISTERED 9.875% SENIOR NOTES DUE 2006
AMERICREDIT CORP.
- - - - - - - - - - - - - - - -
PROSPECTUS
- - - - - - - - - - - - - - - -
___________________________, 1999
<PAGE>
Part II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS; LIMITATION OF LIABILITY FOR
MONETARY DAMAGES
(a) The Articles of Incorporation, as amended to date (the "Articles of
Incorporation"), of AmeriCredit Corp. (the "Company"), together with its Bylaws,
provide that the Company shall indemnify officers and directors, and may
indemnify its other employees and agents, to the fullest extent permitted by
law. The laws of the State of Texas permit, and in some cases require,
corporations to indemnify officers, directors, agents and employees who are or
have been a party to or are threatened to be made a party to litigation against
judgements, fines, settlements and reasonable expenses under certain
circumstances.
(b) The Company has also adopted provisions in its Articles of
Incorporation that limit the liability of its directors to the fullest extent
permitted by the laws of the State of Texas. Under the company's Articles of
Incorporation, and as permitted by the laws of the State of Texas, a director is
not liable to the Company or its shareholders for breach of fiduciary duty. Such
limitation does not affect liability for: (i) a breach of the director's duty of
loyalty to the Company or its shareholders or members; (ii) an act or omission
not in good faith that constitutes a breach of duty of the director to the
Company or an act or omission that involves intentional misconduct or a knowing
violation of the law; (iii) a transaction from which the director received an
improper benefit, whether or not the benefit resulted from an action taken with
the scope of the directors office; or (iv) an act or omission for which the
liability of a director is expressly provided by an applicable statute.
II-1
<PAGE>
ITEM 21. EXHIBITS.
(a) Exhibits.
Exhibit No. Description
3.1 (1) -- Articles of Incorporation of the Company, filed May 18, 1988,
and Articles of Amendment to Articles of Incorporation, filed
August 24, 1988 (Exhibit 3.1)
3.2 (1) -- Amendment to Articles of Incorporation, filed October 18, 1989
(Exhibit 3.2)
3.3 (5) -- Articles of Amendment to Articles of Incorporation of the
Company, filed November 12, 1992 (Exhibit 3.3)
3.4 (8) -- Bylaws of the Company, as amended (Exhibit 3.4)
4.1 (4) -- Specimen stock certificate evidencing the Common Stock
(Exhibit 4.1)
4.2 (10) -- Rights Agreement, dated August 28, 1997, between the Company
and ChaseMellon Shareholder Services, L.L.C. (Exhibit 1)
4.3 (17) -- Indenture, dated as of April 20, 1999, between AmeriCredit
Corp. and subsidiaries and Bank One, Columbus, NA, with form
of 9.875% Senior Notes due 2006
5.1 (17) -- Opinion of Jenkens & Gilchrist, a Professional Corporation
10.1 (1) -- 1989 Stock Option Plan (with Stock Appreciation Rights) for
the Company (Exhibit 10.5)
10.2 (2) -- Amendment No. 1 to the 1989 Stock Option Plan (with Stock
Appreciation Rights) for the Company (Exhibit 4.6)
10.3 (3) -- 1990 Stock Option Plan for Non-Employee Directors of the
Company (Exhibit 10.14)
10.4 (4) -- 1991 Key Employee Stock Option Plan of the Company (Exhibit
10.10)
10.5 (4) -- 1991 Non-employee Director Stock Option Plan of the Company
(Exhibit 10.11)
10.6 (4) -- Executive Employment Agreement, dated January 30, 1991,
between the Company and Clifton H. Morris, Jr. (Exhibit 10.18)
10.6.1 (8) -- Amendment No. 1 to Executive Employment Agreement, dated May
1, 1997, between the Company and Clifton H. Morris, Jr.
(Exhibit 10.7.1)
10.7 (4) -- Executive Employment Agreement, dated January 30, 1991,
between the Company and Michael R. Barrington (Exhibit 10.19)
10.7.1 (8) -- Amendment No. 1 to Executive Employment Agreement, dated May
1, 1997, between the Company and Michael R. Barrington
(Exhibit 10.8.1)
10.8 (4) -- Executive Employment Agreement, dated January 30, 1991 between
the Company and Daniel E. Berce (Exhibit 10.20)
10.8.1 (8) -- Amendment No. 1 to Executive Employment Agreement, dated May
1, 1997, between the Company and Daniel E. Berce (Exhibit
10.9.1)
10.9 (8) -- Amended and Restated Employment Agreement, dated October 15,
1996, between the Company and Edward H. Esstman (Exhibit
10.10)
10.9.1 (8) -- Amendment No. 1 to Amended and Restated Employment Agreement,
dated May 1, 1997, between the Company and Edward H. Esstman
(Exhibit 10.10.1)
10.10 (8) -- Amended and Restated Employment Agreement, dated July 1, 1997,
between the Company and Michael T. Miller (Exhibit 10.11)
10.10.1 (14) -- Amendment No. 1 to Amended and Restated Employment Agreement,
dated as of August 1, 1998, between the Company and Michael T.
Miller
10.11 (11) -- Sale and Servicing Agreement, dated as of October 8, 1997,
between CP Funding Corp., AmeriCredit Financial Services, Inc.
and The Chase Manhattan Bank (Exhibit 10.2)
10.11.1 (17) -- Amendment No. 1 to Sale and Servicing Agreement, dated as of
September 29, 1998, between CP Funding Corp., AmeriCredit
Financial Services, Inc. and The Chase Manhattan Bank
10.12 (11) -- Funding Agreement, dated as of October 8, 1997, between CP
Funding Corp., Park Avenue Receivables Corporation, The Chase
Manhattan Bank and other financial institutions named therein
(Exhibit 10.3)
II-2
<PAGE>
10.12.1 (17) -- Extension, Consent and Amendment Agreement, dated as of
September 29, 1998, between CP Funding Corp., Park Avenue
Receivables Corporation, The Chase Manhattan Bank and other
financial institutions named therein
10.13 (11) -- Restated Revolving Credit Agreement, dated October 3, 1997,
between AmeriCredit Corp. and subsidiaries and Wells Fargo
Bank (Texas), National Association, Bank One, Texas, N.A. and
other banks named therein (Exhibit 10.1)
10.13.1 (14) -- First Amendment to Restated Revolving Credit Agreement, dated
January 21, 1998, between AmeriCredit Corp. and subsidiaries
and Wells Fargo Bank (Texas), National Association, Bank One,
Texas, N.A. and other banks named therein (Exhibit 10.13.1)
10.13.2 (14) -- Second Amendment to Restated Revolving Credit Agreement, dated
April 30, 1998, between AmeriCredit Corp. and subsidiaries and
Wells Fargo Bank (Texas), National Association, Bank One,
Texas, N.A. and other banks named therein (Exhibit 10.13.2)
10.13.3 (14) -- Third Amendment to Restated Revolving Credit Agreement, dated
August 31, 1998, between AmeriCredit Corp. and subsidiaries
and Wells Fargo Bank (Texas), National Association and other
banks named therein (Exhibit 10.13.3)
10.13.4 (17) -- Fourth Amendment to Restated Revolving Credit Agreement, dated
April 1, 1999, between AmeriCredit Corp. and subsidiaries and
Wells Fargo Bank (Texas), National Association and other banks
named therein
10.14 (12) -- Indenture, dated February 4, 1997, between AmeriCredit Corp.
and subsidiaries and Bank One, Columbus, NA, with respect to
Series A and Series B 9 1/4% Senior Notes due 2004 (Exhibit
10.2)
10.15 (12) -- Purchase Agreement, dated January 30, 1997, between
AmeriCredit Corp. and subsidiaries and Smith Barney Inc.,
Montgomery Securities, Piper Jaffray Inc. and Wheat First
Butcher Singer (Exhibit 10.3)
10.16 (12) -- A/B Exchange Registration Rights Agreement, dated February 4,
1997, between AmeriCredit Corp. and subsidiaries and Smith
Barney Inc., Montgomery Securities, Piper Jaffray Inc., and
Wheat First Butcher Singer (Exhibit 10.4)
10.17 (6) -- 1995 Omnibus Stock and Incentive Plan for AmeriCredit Corp.
10.18 (9) -- Amendment No. 1 to 1995 Omnibus Stock and Incentive Plan for
AmeriCredit Corp.
10.19 (7) -- 1996 Limited Stock Option Plan for AmeriCredit Corp.
10.20 (13) -- Indenture, dated January 29, 1998, between AmeriCredit Corp.
and subsidiaries and Bank One, N.A., with respect to Series C
and Series D 9 1/4% Senior Notes due 2004 (Exhibit 10.24)
10.21 (13) -- Purchase Agreement, dated January 26, 1998, between
AmeriCredit Corp. and subsidiaries and Salomon Brothers, Inc.
and Credit Suisse First Boston Corporation (Exhibit 10.25)
10.22 (13) -- C/D Exchange Registration Rights Agreement, dated as of
January 29, 1998, between AmeriCredit Corp. and subsidiaries
and Salomon Brothers, Inc., and Credit Suisse First Boston
Corporation (Exhibit 10.26)
10.23 (15) -- 1998 Limited Stock Option Plan for AmeriCredit Corp.
10.24 (17) -- Receivables Financing Agreement, dated as of March 31, 1999,
among AmeriCredit Warehouse Trust, AmeriCredit Financial
Services, Inc., AmeriCredit Funding Corp., Americredit
Corporation of California, Credit Suisse First Boston, New
York Branch, and Bank One, N.A.
10.25 (17) -- Master Receivables Purchase Agreement, dated as of March 31,
1999, among AmeriCredit Warehouse Trust, AmeriCredit Financial
Services, Inc., AmeriCredit Funding Corp., Americredit
Corporation of California and Bank One, N.A.
10.26 (17) -- Security and Collateral Agent Agreement, dated as of March 31,
1999, among Credit Suisse First Boston, New York Branch, Bank
One, N.A., AmeriCredit Financial Services, Inc. and
AmeriCredit Warehouse Trust
10.27 (17) -- Purchase Agreement, dated as of April 15, 1999, between
AmeriCredit Corp. and subsidiaries and Salomon Smith Barney
Inc., Bear, Stearns & Co. Inc. and ING Baring Furman Selz LLC
10.28 (17) -- A/B Exchange Registration Rights Agreement, dated as of April
20, 1999, between AmeriCredit Corp. and subsidiaries and
Salomon Smith Barney Inc., Bear, Stearns & Co. Inc., and ING
Baring Furman Selz LLC
11.1 (16) -- Statement Re Computation of Per Share Earnings
12.1 (17) -- Statement Re Computation of Ratios
21.1 (17) -- Subsidiaries of the Company
23.1 (17) -- Consent of PricewaterhouseCoopers LLP
23.2 (17) -- Consent of Jenkens & Gilchrist, a Professional Corporation
(included in its opinion filed in Exhibit 5.1)
24.1 (17) -- Power of Attorney (included on signature page hereto)
25.1 (17) -- Statement of Eligibility under the Trust Indenture Act of 1939
on Form T-1
27.1 (16) -- Financial Data Schedule
II-3
<PAGE>
________________________________________________________________________________
(1) Incorporated by reference to the exhibit shown in parenthesis included
in Registration Statement No. 33-31220 on Form S-1 filed by the Company
with the Securities and Exchange Commission.
(2) Incorporated by reference to the exhibit shown in parenthesis included
in Registration Statement No. 33-41203 on Form S-8 filed by the Company
with the Securities and Exchange Commission.
(3) Incorporated by reference to the exhibit shown in parenthesis included
in the Company's Annual Report on Form 10-K for the year ended June 30,
1990 filed by the Company with the Securities and Exchange Commission.
(4) Incorporated by reference to the exhibit shown in parenthesis included
in the Company's Annual Report on Form 10-K for the year ended June 30,
1991, filed by the Company with the Securities and Exchange Commission.
(5) Incorporated by reference to the exhibit shown in parenthesis included
in the Company's Annual Report on Form 10-K for the year ended June 30,
1993, filed by the Company with the Securities and Exchange Commission.
(6) Incorporated by reference from the Company's Proxy Statement for the
year ended June 30, 1995, filed by the Company with the Securities and
Exchange Commission.
(7) Incorporated by reference from the Company's Proxy Statement for the
year ended June 30, 1996, filed by the Company with the Securities and
Exchange Commission.
(8) Incorporated by reference to exhibit shown in parenthesis included in
the Company's Annual Report on Form 10-K for the period ended June 30,
1997, filed by the Company with the Securities and Exchange Commission.
(9) Incorporated by reference from the Company's Proxy Statement for the
year ended June 30, 1997, filed by the Company with the Securities and
Exchange Commission.
(10) Incorporated by reference to the exhibit shown in parenthesis included
in the Company's Report on Form 8-K, dated August 28, 1997, filed by the
Company with the Securities and Exchange Commission.
(11) Incorporated by reference to the exhibit shown in parenthesis included
in the Company's Quarterly Report on Form 10-Q for the quarterly period
ended December 31, 1997 filed by the Company with the Securities and
Exchange Commission.
(12) Incorporated by reference to the exhibit shown in parenthesis included
in the Company's Quarterly Report on Form 10-Q for the quarterly period
ended March 31, 1997 filed by the Company with the Securities and
Exchange Commission.
(13) Incorporated by reference to the exhibit shown in parenthesis included
in the Company's Registration Statement on Form S-4, dated March 26,
1998, filed by the Company with the Securities and Exchange Commission.
(14) Incorporated by reference to the exhibit shown in parenthesis included
in the Company's Annual Report as Form 10-K for the period ended June
30, 1998, filed by the Company with the Securities and Exchange
Commission.
(15) Incorporated by reference from the Company's Proxy Statement for the
year ended June 30, 1998, filed by the Company with the Securities and
Exchange Commission.
(16) Incorporated by reference from the Company's Quarterly Report on Form
10-Q for the quarterly period ended March 31, 1999 filed by the Company
with the Securities and Exchange Commission
(17) Filed herewith.
II-4
<PAGE>
ITEM 22. UNDERTAKINGS
(a) Insofar as indemnification for liabilities arising under the Securities
Act of 1933, as amended (the "Securities Act") may be permitted to directors,
officers and controlling persons of the registrant pursuant to the foregoing
provisions, or otherwise, the registrant has been advised that in the opinion of
the Securities and Exchange Commission such indemnification is against public
policy as expressed in the Securities Act and is, therefore, unenforceable. In
the event that a claim for indemnification against such liabilities (other than
the payment by the registrant of expenses incurred or paid by a director,
officer or controlling person of the registrant in the successful defense of any
action, suit or proceeding) is asserted by such director, officer or controlling
person in connection with the securities being registered, the registrant will,
unless in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the
Securities Act and will be governed by the final adjudication of such issue.
(b) The undersigned registrant hereby undertakes to respond to requests for
information that is incorporated by reference into the prospectus pursuant to
Items 4, 10(b), 11, or 13 of this Form, within one business day of receipt of
such request, and to send the incorporated documents by first class mail or
other equally prompt means. This includes information contained in documents
filed subsequent to the effective date of the registration statement through the
date of responding to the request.
(c) The undersigned registrant hereby undertakes to supply by means of a
post-effective amendment all information concerning a transaction, and the
company being acquired involved therein, that was not the subject of and
included in the registration statement when it became effective.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended,
the Company has duly caused this registration statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the County of Tarrant,
State of Texas on June 7, 1999.
AMERICREDIT CORP.
By: /s/ CLIFTON H. MORRIS, JR.
-------------------------------------
Clifton H. Morris, Jr.
Chairman of the Board and Chief
Executive Officer
Each individual whose signature appears below hereby designates and
appoints Clifton H. Morris, Jr., Daniel E. Berce, Chris A. Choate, and each of
them, any one of whom may act without the joinder of the other, as such person's
true and lawful attorney-in-fact and agents (the "Attorneys-in-Fact") with full
power of substitution and resubstitution, for such person and in such person's
name, place and stead, in any and all capacities, to sign any and all amendments
(including post-effective amendments) to this Registration Statement, which
amendments may make such changes in this Registration Statement as any Attorney-
in-Fact deems appropriate, and any registration statement relating to the same
offering filed pursuant to Rule 462(b) under the Securities Act of 1933 and
requests to accelerate the effectiveness of such registration statements, and to
file each such amendment with all exhibits thereto, and all documents in
connection therewith, with the Securities and Exchange Commission, granting unto
such Attorneys-in-Fact and each of them, full power and authority to do and
perform each and every act and thing requisite and necessary to be done in and
about the premises, as fully to all intents and purposes as such person might or
could do in person, hereby ratifying and confirming all that such Attorney's-in-
Fact or either of them, or their substitute or substitutes, may lawfully do or
cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, as amended,
this registration statement has been signed below by the following persons in
their capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/s/ CLIFTON H. MORRIS, JR. June 7, 1999
- ----------------------------
Clifton H. Morris, Jr. Chairman of the Board and Chief
Executive Officer
(Principal Executive Officer)
/s/ MICHAEL R. BARRINGTON June 7, 1999
- ----------------------------
Michael R. Barrington Vice Chairman of the Board, Chief
Operating Officer and President
Vice Chairman of the Board and
President
/s/ DANIEL E. BERCE June 7, 1999
- ----------------------------
Daniel E. Berce Chief Financial Officer
(Principal Financial and Accounting
Officer)
/s/ EDWARD H. ESSTMAN June 7, 1999
- ----------------------------
Edward H. Esstman President of AmeriCredit Financial
Services, Inc., Executive Vice
President-Auto Finance Division and
Director
/s/ A.R. DIKE June 7, 1999
- ----------------------------
A.R. Dike Director
/s/ JAMES H. GREER June 7, 1999
- ----------------------------
James H. Greer Director
June __, 1999
- ----------------------------
Douglas K. Higgins Director
/s/ KENNETH H. JONES, JR. June 7, 1999
- ----------------------------
Kenneth H. Jones, Jr. Director
</TABLE>
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the
Company has duly caused this registration statement to be signed on its behalf
by the undersigned, thereunto duly authorized, in the County of Tarrant, State
of Texas on June 7, 1999.
AMERICREDIT FINANCIAL SERVICES, INC.
By: /s/ MICHAEL R. BARRINGTON
-------------------------------------
Michael R. Barrington
Vice Chairman of the Board and Chief
Executive Officer
Each individual whose signature appears below hereby designates and
appoints Clifton H. Morris, Jr., Daniel E. Berce, Chris A. Choate, and each of
them, any one of whom may act without the joinder of the other, as such person's
true and lawful attorney-in-fact and agents (the "Attorneys-in-Fact") with full
power of substitution and resubstitution, for such person and in such person's
name, place and stead, in any and all capacities, to sign any and all amendments
(including post-effective amendments) to this Registration Statement, which
amendments may make such changes in this Registration Statement as any Attorney-
in-Fact deems appropriate, and any registration statement relating to the same
offering filed pursuant to Rule 462(b) under the Securities Act of 1933 and
requests to accelerate the effectiveness of such registration statements, and to
file each such amendment with all exhibits thereto, and all documents in
connection therewith, with the Securities and Exchange Commission, granting unto
such Attorneys-in-Fact and each of them, full power and authority to do and
perform each and every act and thing requisite and necessary to be done in and
about the premises, as fully to all intents and purposes as such person might or
could do in person, hereby ratifying and confirming all that such Attorney's-in-
Fact or either of them, or their substitute or substitutes, may lawfully do or
cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, as amended,
this registration statement has been signed below by the following persons in
their capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/s/ MICHAEL R. BARRINGTON Vice Chairman of the Board June 7, 1999
- ------------------------- and Chief Executive Officer
Michael R. Barrington (Principal Executive Officer)
/s/ DANIEL E. BERCE Vice Chairman of the Board June 7, 1999
- ------------------------- and Chief Financial Officer
Daniel E. Berce (Principal Financial and
Accounting Officer)
/s/ EDWARD H. ESSTMAN President, Chief Operating June 7, 1999
- ------------------------- Officer and Director
Edward H. Esstman
/s/ CLIFTON H. MORRIS, JR. Chairman of the Board June 7, 1999
- -------------------------
Clifton H. Morris, Jr.
</TABLE>
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the
Company has duly caused this registration statement to be signed on its behalf
by the undersigned, thereunto duly authorized, in the County of Tarrant, State
of Texas on June 7, 1999.
AMERICREDIT MANAGEMENT COMPANY
By: /s/ MICHAEL R. BARRINGTON
--------------------------------------
Michael R. Barrington
Vice Chairman of the Board,
Chief Operating Officer and President
Each individual whose signature appears below hereby designates and
appoints Clifton H. Morris, Jr., Daniel E. Berce, Chris A. Choate, and each of
them, any one of whom may act without the joinder of the other, as such person's
true and lawful attorney-in-fact and agents (the "Attorneys-in-Fact") with full
power of substitution and resubstitution, for such person and in such person's
name, place and stead, in any and all capacities, to sign any and all amendments
(including post-effective amendments) to this Registration Statement, which
amendments may make such changes in this Registration Statement as any Attorney-
in-Fact deems appropriate, and any registration statement relating to the same
offering filed pursuant to Rule 462(b) under the Securities Act of 1933 and
requests to accelerate the effectiveness of such registration statements, and to
file each such amendment with all exhibits thereto, and all documents in
connection therewith, with the Securities and Exchange Commission, granting unto
such Attorneys-in-Fact and each of them, full power and authority to do and
perform each and every act and thing requisite and necessary to be done in and
about the premises, as fully to all intents and purposes as such person might or
could do in person, hereby ratifying and confirming all that such Attorney's-in-
Fact or either of them, or their substitute or substitutes, may lawfully do or
cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, as amended,
this registration statement has been signed below by the following persons in
their capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/s/ MICHAEL R. BARRINGTON Vice Chairman of the Board, June 7, 1999
- -------------------------- Chief Operating Officer and
Michael R. Barrington President
/s/ DANIEL E. BERCE Vice Chairman of the Board June 7, 1999
- ------------------------- and Chief Financial Officer
Daniel E. Berce
/s/ CLIFTON H. MORRIS, JR. Chairman of the Board June 7, 1999
- -------------------------
Clifton H. Morris, Jr.
</TABLE>
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the
Company has duly caused this registration statement to be signed on its behalf
by the undersigned, thereunto duly authorized, in the County of Tarrant, State
of Texas on June 7, 1999.
ACF INVESTMENT CORP.
By: /s/ CLIFTON H. MORRIS, JR.
------------------------------------------
Clifton H. Morris, Jr.
Chairman of the Board and Chief Executive
Officer
Each individual whose signature appears below hereby designates and
appoints Clifton H. Morris, Jr., Daniel E. Berce, Chris A. Choate, and each of
them, any one of whom may act without the joinder of the other, as such person's
true and lawful attorney-in-fact and agents (the "Attorneys-in-Fact") with full
power of substitution and resubstitution, for such person and in such person's
name, place and stead, in any and all capacities, to sign any and all amendments
(including post-effective amendments) to this Registration Statement, which
amendments may make such changes in this Registration Statement as any Attorney-
in-Fact deems appropriate, and any registration statement relating to the same
offering filed pursuant to Rule 462(b) under the Securities Act of 1933 and
requests to accelerate the effectiveness of such registration statements, and to
file each such amendment with all exhibits thereto, and all documents in
connection therewith, with the Securities and Exchange Commission, granting unto
such Attorneys-in-Fact and each of them, full power and authority to do and
perform each and every act and thing requisite and necessary to be done in and
about the premises, as fully to all intents and purposes as such person might or
could do in person, hereby ratifying and confirming all that such Attorney's-in-
Fact or either of them, or their substitute or substitutes, may lawfully do or
cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, as amended,
this registration statement has been signed below by the following persons in
their capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/s/ CLIFTON H. MORRIS, JR. Chairman of the Board and June 7, 1999
- ------------------------- Chief Executive Officer
Clifton H. Morris, Jr. (Principal Executive Officer)
/s/ DANIEL E. BERCE Vice Chairman of the Board June 7, 1999
- ------------------------- and Chief Financial Officer
Daniel E. Berce (Principal Financial and
Accounting Officer)
/s/ MICHAEL R. BARRINGTON Vice Chairman of the Board, June 7, 1999
- ------------------------- President and Chief Operating
Michael R. Barrington Officer
</TABLE>
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the
Company has duly caused this registration statement to be signed on its behalf
by the undersigned, thereunto duly authorized, in the County of Tarrant, State
of Texas on June 7, 1999.
AMERICREDIT FINANCIAL SERVICES OF CANADA LTD.
By: /s/ MICHAEL R. BARRINGTON
----------------------------------
Michael R. Barrington
Chief Executive Officer
Each individual whose signature appears below hereby designates and
appoints Clifton H. Morris, Jr., Daniel E. Berce, Chris A. Choate, and each of
them, any one of whom may act without the joinder of the other, as such person's
true and lawful attorney-in-fact and agents (the "Attorneys-in-Fact") with full
power of substitution and resubstitution, for such person and in such person's
name, place and stead, in any and all capacities, to sign any and all amendments
(including post-effective amendments) to this Registration Statement, which
amendments may make such changes in this Registration Statement as any Attorney-
in-Fact deems appropriate, and any registration statement relating to the same
offering filed pursuant to Rule 462(b) under the Securities Act of 1933 and
requests to accelerate the effectiveness of such registration statements, and to
file each such amendment with all exhibits thereto, and all documents in
connection therewith, with the Securities and Exchange Commission, granting unto
such Attorneys-in-Fact and each of them, full power and authority to do and
perform each and every act and thing requisite and necessary to be done in and
about the premises, as fully to all intents and purposes as such person might or
could do in person, hereby ratifying and confirming all that such Attorney's-in-
Fact or either of them, or their substitute or substitutes, may lawfully do or
cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, as amended,
this registration statement has been signed below by the following persons in
their capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/s/ MICHAEL R. BARRINGTON Chief Executive Officer June 7, 1999
- ------------------------
Michael R. Barrington
/s/ NORMAN E. MAY Director June 7, 1999
- ------------------------
Norman E. May
</TABLE>
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the
Company has duly caused this registration statement to be signed on its behalf
by the undersigned, thereunto duly authorized, in the County of Tarrant, State
of Texas on June 7, 1999.
AMERICREDIT CORPORATION OF CALIFORNIA
By: /s/ MICHAEL R. BARRINGTON
--------------------------------
Michael R. Barrington
Vice Chairman of the Board
Each individual whose signature appears below hereby designates and
appoints Clifton H. Morris, Jr., Daniel E. Berce, Chris A. Choate, and each of
them, any one of whom may act without the joinder of the other, as such person's
true and lawful attorney-in-fact and agents (the "Attorneys-in-Fact") with full
power of substitution and resubstitution, for such person and in such person's
name, place and stead, in any and all capacities, to sign any and all amendments
(including post-effective amendments) to this Registration Statement, which
amendments may make such changes in this Registration Statement as any Attorney-
in-Fact deems appropriate, and any registration statement relating to the same
offering filed pursuant to Rule 462(b) under the Securities Act of 1933 and
requests to accelerate the effectiveness of such registration statements, and to
file each such amendment with all exhibits thereto, and all documents in
connection therewith, with the Securities and Exchange Commission, granting unto
such Attorneys-in-Fact and each of them, full power and authority to do and
perform each and every act and thing requisite and necessary to be done in and
about the premises, as fully to all intents and purposes as such person might or
could do in person, hereby ratifying and confirming all that such Attorney's-in-
Fact or either of them, or their substitute or substitutes, may lawfully do or
cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, as amended,
this registration statement has been signed below by the following persons in
their capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/s/ CLIFTON H. MORRIS, JR. Chairman of the Board June 7, 1999
- --------------------------
Clifton H. Morris, Jr.
/s/ MICHAEL R. BARRINGTON Vice Chairman of the Board June 7, 1999
- -------------------------- (Principal Executive Officer)
Michael R. Barrington
/s/ DANIEL E. BERCE Vice Chairman of the Board June 7, 1999
- -------------------------- and Chief Financial Officer
Daniel E. Berce (Principal Financial and
Accounting Officer)
President, Chief Operating June __, 1999
- -------------------------- Officer and Director
Robert J. Frye
</TABLE>
<PAGE>
EXHIBIT 4.3
================================================================================
_____________________________________
AmeriCredit Corp.
As Issuer
AmeriCredit Financial Services, Inc.,
AmeriCredit Management Company,
Americredit Corporation of California,
ACF Investment Corp., and
AmeriCredit Financial Services of Canada Ltd.
As Guarantors
_____________________________________
$200,000,000
SERIES A AND SERIES B
97/8% SENIOR NOTES DUE 2006
______________________________
INDENTURE
Dated as of April 20, 1999
______________________________
______________________________
Bank One, N.A.
As Trustee
______________________________
================================================================================
<PAGE>
CROSS-REFERENCE TABLE*
<TABLE>
<CAPTION>
Trust Indenture
Act Section Indenture Section
<S> <C>
310 (a)(1)....................................................................... 7.10
(a)(2)....................................................................... 7.10
(a)(3)....................................................................... N.A.
(a)(4)....................................................................... N.A.
(a)(5)....................................................................... 7.10
(b).......................................................................... 7.10
(c).......................................................................... N.A.
311 (a).......................................................................... 7.11
(b).......................................................................... 7.11
(c).......................................................................... N.A.
312 (a).......................................................................... 2.05
(b).......................................................................... 11.03
(c).......................................................................... 11.03
313 (a).......................................................................... 7.06
(b)(2)....................................................................... 7.07
(c).......................................................................... 7.06; 11.02
(d).......................................................................... 7.06
314 (a).......................................................................... 4.03; 11.02
(c)(1)....................................................................... 11.04
(c)(2)....................................................................... 11.04
(c)(3)....................................................................... N.A.
(e).......................................................................... 11.05
(f).......................................................................... N.A.
315 (a).......................................................................... 7.01
(b).......................................................................... 7.05,11.02
(c).......................................................................... 7.01
(d).......................................................................... 7.01
(e).......................................................................... 6.11
316 (a)(last sentence) 2.09
(a)(1)(A).................................................................... 6.05
(a)(1)(B).................................................................... 6.04
(a)(2)....................................................................... N.A.
(b).......................................................................... 6.07
(c).......................................................................... 2.12
317 (a)(1)....................................................................... 6.08
(a)(2)....................................................................... 6.09
(b).......................................................................... 2.04
318 (a).......................................................................... 11.01
(b).......................................................................... N.A.
(c).......................................................................... 11.01
</TABLE>
N.A. means not applicable.
*This Cross-Reference Table is not part of the Indenture.
<PAGE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS
Page
<S> <C>
ARTICLE 1. DEFINITIONS AND INCORPORATION BY REFERENCE............................................................ 1
Section 1.01. Definitions................................................................................... 1
Section 1.02. Other Definitions............................................................................. 14
Section 1.03. Incorporation by Reference of Trust Indenture Act............................................. 14
Section 1.04. Rules of Construction......................................................................... 15
ARTICLE 2. THE NOTES............................................................................................. 15
Section 2.01. Form and Dating............................................................................... 15
Section 2.02. Execution and Authentication.................................................................. 15
Section 2.03. Registrar and Paying Agent.................................................................... 16
Section 2.04. Paying Agent to Hold Money in Trust........................................................... 16
Section 2.05. Holder Lists.................................................................................. 17
Section 2.06. Transfer and Exchange......................................................................... 17
Section 2.07. Replacement Notes............................................................................. 22
Section 2.08. Outstanding Notes............................................................................. 22
Section 2.09. Treasury Notes................................................................................ 23
Section 2.10. Temporary Notes............................................................................... 23
Section 2.11. Cancellation.................................................................................. 23
Section 2.12. Defaulted Interest............................................................................ 23
ARTICLE 3. REDEMPTION AND PREPAYMENT............................................................................. 23
Section 3.01. Notices to Trustee............................................................................ 23
Section 3.02. Selection of Notes to be Redeemed............................................................. 24
Section 3.03. Notice of Redemption.......................................................................... 24
Section 3.04. Effect of Notice of Redemption................................................................ 25
Section 3.05. Deposit of Redemption Price................................................................... 25
Section 3.06. Notes Redeemed in Part........................................................................ 25
Section 3.07. Optional Redemption........................................................................... 25
Section 3.08. Mandatory Redemption.......................................................................... 26
Section 3.09. Offer to Purchase by Application of Excess Proceeds........................................... 26
ARTICLE 4. COVENANTS............................................................................................. 27
Section 4.01. Payment of Notes.............................................................................. 27
Section 4.02. Maintenance of Office or Agency............................................................... 28
Section 4.03. Reports....................................................................................... 28
Section 4.04. Compliance Certificate........................................................................ 29
Section 4.05. Taxes......................................................................................... 29
Section 4.06. Stay, Extension and Usury Laws................................................................ 29
Section 4.07. Restricted Payments........................................................................... 30
Section 4.08. Dividend and Other Payment Restrictions Affecting Subsidiaries................................ 31
Section 4.09. Incurrence of Indebtedness and Issuance of Preferred Stock.................................... 32
Section 4.10. Asset Sales................................................................................... 34
Section 4.11. Transactions with Affiliates.................................................................. 35
Section 4.12. Liens......................................................................................... 35
Section 4.13. Line of Business.............................................................................. 36
Section 4.14. Corporate Existence........................................................................... 36
Section 4.15. Offer to Repurchase Upon Change of Control.................................................... 36
Section 4.16. Limitation on Issuances and Sales of Capital Stock of Wholly Owned
Subsidiaries............................................................................... 37
Section 4.17. Payments for Consent.......................................................................... 38
Section 4.18. Limitation on Investment Company Status....................................................... 38
Section 4.19. Additional Subsidiary Guarantees.............................................................. 38
</TABLE>
i
<PAGE>
<TABLE>
<S> <C>
ARTICLE 5. SUCCESSORS............................................................................................ 38
Section 5.01. Merger, Consolidation, or Sale of Assets...................................................... 38
Section 5.02. Successor Corporation Substituted............................................................. 39
ARTICLE 6. DEFAULTS AND REMEDIES................................................................................. 39
Section 6.01. Events of Default............................................................................. 39
Section 6.02. Acceleration.................................................................................. 41
Section 6.03. Other Remedies................................................................................ 41
Section 6.04. Waiver of Past Defaults....................................................................... 41
Section 6.05. Control by Majority........................................................................... 42
Section 6.06. Limitation on Suits........................................................................... 42
Section 6.07. Rights of Holders of Notes to Receive Payment................................................. 42
Section 6.08. Collection Suit by Trustee.................................................................... 42
Section 6.09. Trustee May File proofs of Claim.............................................................. 43
Section 6.10. Priorities.................................................................................... 43
Section 6.11. Undertaking for Costs......................................................................... 43
ARTICLE 7. TRUSTEE............................................................................................... 44
Section 7.01. Duties of Trustee............................................................................. 44
Section 7.02. Rights of Trustee............................................................................. 45
Section 7.03. Individual Rights of Trustee.................................................................. 45
Section 7.04. Trustee's Disclaimer.......................................................................... 45
Section 7.05. Notice of Defaults............................................................................ 45
Section 7.06. Reports by Trustee to Holders of the Notes.................................................... 46
Section 7.07. Compensation and Indemnity.................................................................... 46
Section 7.08. Replacement of Trustee........................................................................ 47
Section 7.09. Successor Trustee by Merger, etc.............................................................. 47
Section 7.10. Eligibility; Disqualification................................................................. 48
Section 7.11. Preferential Collection of Claims Against Company............................................. 48
ARTICLE 8. LEGAL DEFEASANCE AND COVENANT DEFEASANCE.............................................................. 48
Section 8.01. Option to Effect Legal Defeasance or Covenant Defeasance...................................... 48
Section 8.02. Legal Defeasance and Discharge................................................................ 48
Section 8.03. Covenant Defeasance........................................................................... 48
Section 8.04. Conditions to Legal or Covenant Defeasance.................................................... 49
Section 8.05. Deposited Money and Government Securities to be Held in Trust; Other
Miscellaneous Provisions................................................................... 50
Section 8.06. Repayment to Company.......................................................................... 50
Section 8.07. Reinstatement................................................................................. 51
ARTICLE 9. AMENDMENT, SUPPLEMENT AND WAIVER...................................................................... 51
Section 9.01. Without Consent of Holders of Notes........................................................... 51
Section 9.02. With Consent of Holders of Notes.............................................................. 52
Section 9.03. Compliance with Trust Indenture Act........................................................... 53
Section 9.04. Revocation and Effect of Consents............................................................. 53
Section 9.05. Notation on or Exchange of Notes.............................................................. 53
Section 9.06. Trustee to Sign Amendments, etc............................................................... 53
ARTICLE 10. SUBSIDIARY GUARANTEES................................................................................ 53
Section 10.01. Subsidiary Guarantees........................................................................ 53
Section 10.02. Execution and Delivery of Subsidiary Guarantees.............................................. 54
Section 10.03. Guarantors May Consolidate, etc., on Certain Terms........................................... 55
Section 10.04. Releases Following Sale of Assets............................................................ 55
Section 10.05. Limitation on Guarantor Liability............................................................ 56
Section 10.06. "Trustee"to Include Paying Agent............................................................. 56
</TABLE>
ii
<PAGE>
<TABLE>
<S> <C>
ARTICLE 11. MISCELLANEOUS........................................................................................ 56
Section 11.01. Trust Indenture Act Controls................................................................. 56
Section 11.02. Notices...................................................................................... 56
Section 11.03. Communication by Holders of Notes with Other Holders of Notes................................ 57
Section 11.04. Certificate and Opinion as to Conditions Precedent........................................... 58
Section 11.05. Statements Required in Certificate or Opinion................................................ 58
Section 11.06. Rules by Trustee and Agents.................................................................. 58
Section 11.07. No Personal Liability of Directors, Officers, Employees and Stockholders..................... 58
Section 11.08. Governing Law................................................................................ 58
Section 11.09. No Adverse Interpretation of Other Agreements................................................ 59
Section 11.10. Successors................................................................................... 59
Section 11.11. Severability................................................................................. 59
Section 11.12. Counterpart Originals........................................................................ 59
Section 11.13. Table of Contents, Headings, etc............................................................. 59
</TABLE>
iii
<PAGE>
EXHIBITS
Exhibit A FORM OF NOTE
Exhibit B FORM OF CERTIFICATE OF TRANSFER
Exhibit C FORM OF SUBSIDIARY GUARANTEE
iv
<PAGE>
INDENTURE dated as of April 20, 1999 between AmeriCredit Corp., a Texas
corporation (the "Company"), AmeriCredit Financial Services, Inc., a Delaware
corporation, ACF Investment Corp., a Delaware corporation, AmeriCredit
Management Company, a Delaware corporation, Americredit Corporation of
California, a California corporation and AmeriCredit Financial Services of
Canada Ltd., a Canadian corporation chartered in the Province of Ontario
(together with all other Persons who execute a Subsidiary Guarantee pursuant to
the terms of this Indenture, the "Guarantors") and Bank One, N.A., as trustee
(the "Trustee").
The Company, the Guarantors and the Trustee agree as follows for the
benefit of each other and for the equal and ratable benefit of the Holders of
the 97/8% Series A Senior Notes due 2006 (the "Series A Notes") and the 97/8%
Series B Senior Notes due 2006 (the "Series B Notes" and, together with the
Series A Notes, the "Notes"):
ARTICLE 1.
DEFINITIONS AND INCORPORATION
BY REFERENCE
Section 1.01. Definitions.
"accreted value" means, with respect to discount Indebtedness, as of any
date of determination prior to the end of the "discount" or "zero coupon" period
for such discount Indebtedness, the sum of (a) the initial offering price of
such Indebtedness and (b) that portion of the excess of the principal amount at
maturity of such Indebtedness over such initial offering price as shall have
been accreted thereon from the date of issuance of such discount Indebtedness
through the date of determination.
"Acquired Debt" means, with respect to any specified Person, (i)
Indebtedness of any other Person existing at the time such other Person is
merged with or into or became a Subsidiary of such specified Person, including,
without limitation, Indebtedness incurred in connection with, or in
contemplation of, such other Person merging with or into or becoming a
Subsidiary of such specified Person, and (ii) Indebtedness secured by a Lien
encumbering any asset acquired by such specified Person.
"Acquisition Fees" means, with respect to any Eligible Receivables as of
any date, the discount or cash payments received by the Company from dealers and
other Persons with respect to the Eligible Receivables purchased from such
dealer or other Person and owned by the Company or its Restricted Subsidiaries
as of such date.
"Affiliate" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For purposes of this definition, "control"
(including, with correlative meanings, the terms "controlling," "controlled by"
and "under common control with"), as used with respect to any Person, shall mean
the possession, directly or indirectly, of the power to direct or cause the
direction of the management or policies of such Person, whether through the
ownership of voting securities, by agreement or otherwise; provided that
beneficial ownership of 10% or more of the voting securities of a Person shall
be deemed to be control.
"Agent" means any Registrar, Paying Agent or co-registrar.
"Applicable Procedures" means, with respect to any transfer or exchange of
or for beneficial interests in any Global Note, the rules and procedures of the
Depository that apply to such transfer or exchange.
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"Asset Sale" means (i) the sale, lease, conveyance or other disposition of
any assets or rights (including, without limitation, by way of a sale and
leaseback) other than sales of Receivables in connection with Securitizations,
Warehouse Facilities or Credit Facilities in the ordinary course of business
consistent with past practices (provided that the sale, lease, conveyance or
other disposition of all or substantially all of the assets of the Company and
its Subsidiaries taken as a whole will be governed by Section 4.15 hereof and/or
Section 5.01 hereof and not by the provisions of Section 4.10 hereof), and (ii)
the issue or sale by the Company or any of its Subsidiaries of Equity Interests
of any of the Company's Subsidiaries, in the case of either clause (i) or (ii),
whether in a single transaction or a series of related transactions (a) that
have a fair market value in excess of $500,000 or (b) for net proceeds in excess
of $500,000. Notwithstanding the foregoing: (i) a transfer of assets by the
Company to a Wholly-Owned Restricted Subsidiary or by a Wholly-Owned Restricted
Subsidiary to the Company or to another Wholly-Owned Restricted Subsidiary, (ii)
an issuance of Equity Interests by a Wholly-Owned Restricted Subsidiary to the
Company or to another Wholly-Owned Restricted Subsidiary, and (iii) a Restricted
Payment that is permitted by Section 4.07 hereof will not be deemed to be Asset
Sales.
"Bankruptcy Law" means Title 11, U.S. Code or any similar federal or state
law for the relief of debtors.
"Board of Directors" means the Board of Directors or other governing body
charged with the ultimate management of any Person, or any duly authorized
committee thereof.
"Borrowing Base" means, as of any date, an amount equal to the sum of (i)
80% of the aggregate amount of Receivables (other than loans secured by
residential mortgages) owned by the Company and its Wholly-Owned Restricted
Subsidiaries as of such date that are not in default, excluding (A) any
Receivables that were acquired or originated with Permitted Warehouse Debt, (B)
any Receivables that are held by a Securitization Trust, and (C) any Receivables
that are subject to Liens other than Liens securing Obligations under Credit
Facilities; (ii) 60% of the book value (determined on a consolidated basis in
accordance with GAAP) of interests in portfolios of securitized Receivables that
are owned by the Company and its Wholly-Owned Restricted Subsidiaries as of such
date and that are not subject to any Liens other than Liens to secure
Obligations under Credit Facilities; and (iii) 98% of the aggregate amount of
Receivables that consist of loans secured by residential mortgages owned by the
Company and its Wholly-Owned Restricted Subsidiaries as of such date that are
not in default, excluding (A) any such loans that were acquired or originated
with Permitted Warehouse Debt, (B) any such loans that are held by a
Securitization Trust, and (C) any such loans that are subject to Liens other
than Liens securing Obligations under Credit Facilities.
"Business Day" means any day other than a Legal Holiday.
"Capital Lease Obligation" means, at the time any determination thereof is
to be made, the amount of the liability in respect of a capital lease that would
at such time be required to be capitalized on a balance sheet in accordance with
GAAP.
"Capital Stock" means (i) in the case of a corporation, corporate stock,
(ii) in the case of an association or business entity, any and all shares,
interests, participations, rights or other equivalents (however designated) of
corporate stock, (iii) in the case of a partnership or limited liability
company, partnership or membership interests (whether general or limited) and
(iv) any other interest or participation that confers on a Person the right to
receive a share of the profits and losses of, or distributions of assets of, the
issuing Person.
"Cash Equivalents" means (i) United States dollars, (ii) securities issued
or directly and fully guaranteed or insured by the United States government or
any agency or instrumentality thereof having
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maturities of not more than six months from the date of acquisition, (iii)
certificates of deposit and Eurodollar time deposits with maturities of six
months or less from the date of acquisition, bankers' acceptances with
maturities not exceeding six months and overnight bank deposits, in each case
with any domestic commercial bank having capital and surplus in excess of $500
million and a Keefe Bank Watch Rating of "B" or better, (iv) repurchase
obligations with a term of not more than seven days for underlying securities of
the types described in clauses (ii) and (iii) above entered into with any
financial institution meeting the qualifications specified in clause (iii) above
and (v) commercial paper having the highest rating obtainable from Moody's
Investors Service, Inc. or Standard & Poor's Corporation and in each case
maturing within six months after the date of acquisition.
"Change of Control" means the occurrence of any of the following: (i) the
sale, lease, transfer, conveyance or other disposition (other than by way of
merger or consolidation), in one or a series of related transactions, of all or
substantially all of the assets of the Company and its Restricted Subsidiaries
taken as a whole to any "person" (as such term is used in Section 13(d)(3) of
the Exchange Act) other than in the ordinary course of business; (ii) the
adoption of a plan relating to the liquidation or dissolution of the Company;
(iii) the consummation of any transaction (including, without limitation, any
merger or consolidation) the result of which is that any "person" (as defined
above), becomes the "beneficial owner" (as such term is defined in Rule 13d-3
and Rule 13d-5 under the Exchange Act, except that a person shall be deemed to
have "beneficial ownership" of all securities that such person has the right to
acquire, whether such right is currently exercisable or is exercisable only upon
the occurrence of a subsequent condition), directly or indirectly, of more than
50% of the Voting Stock of the Company (measured by voting power rather than
number of shares); (iv) the first day on which a majority of the members of the
Board of Directors of the Company are not Continuing Directors; or (v) the
Company consolidates with, or merges with or into, any Person, or any Person
consolidates with, or merges with or into, the Company, in any such event
pursuant to a transaction in which any of the outstanding Voting Stock of the
Company is converted into or exchanged for cash, securities or other property,
other than any such transaction where the Voting Stock of the Company
outstanding immediately prior to such transaction is converted into or exchanged
for Voting Stock (other than Disqualified Stock) of the surviving or transferee
Person constituting a majority of the outstanding shares of such Voting Stock of
such surviving or transferee Person (immediately after giving effect to such
issuance); provided, however, that this clause (v) shall not apply to any such
consolidation or merger if, immediately after the consummation of such
transaction and after giving effect thereto, the ratings assigned to the Notes
by Moody's Investors Service, Inc. and Standard & Poor's Ratings Group are equal
to or higher than Baa3 (or the equivalent) and BBB- (or the equivalent),
respectively.
"Consolidated Indebtedness" means, with respect to any Person as of any
date of determination, the sum, without duplication, of (i) the total amount of
Indebtedness of such Person and its Restricted Subsidiaries, plus (ii) the total
amount of Indebtedness of any other Person, to the extent that such Indebtedness
has been Guaranteed by the referent Person or one or more of its Restricted
Subsidiaries, plus (iii) the aggregate liquidation value of all Disqualified
Stock of such Person and all preferred stock of Restricted Subsidiaries of such
Person, in each case, determined on a consolidated basis in accordance with
GAAP.
"Consolidated Leverage Ratio" means, with respect to any Person, as of any
date of determination, the ratio of (i) the Consolidated Indebtedness of such
Person as of such date, excluding, however, all (A) borrowings under Credit
Facilities that constitute Permitted Debt, (B) Permitted Warehouse Debt and (C)
Hedging Obligations that constitute Permitted Debt to (ii) the Consolidated Net
Worth of such Person as of such date.
"Consolidated Net Income" means, with respect to any Person for any period,
the aggregate of the Net Income of such Person and its Restricted Subsidiaries
(for such period, on a consolidated basis,
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determined in accordance with GAAP); provided that (i) the Net Income (but not
loss) of any Person that is not a Restricted Subsidiary or that is accounted for
by the equity method of accounting shall be included only to the extent of the
amount of dividends or distributions paid in cash to the referent Person or a
Wholly-Owned Restricted Subsidiary thereof, (ii) the Net Income of any
Restricted Subsidiary shall be excluded to the extent that the declaration or
payment of dividends or similar distributions by that Restricted Subsidiary of
that Net Income is not at the date of determination permitted without any prior
governmental approval (that has not been obtained) or, directly or indirectly,
by operation of the terms of its charter or any agreement, instrument, judgment,
decree, order, statute, rule or governmental regulation applicable to that
Restricted Subsidiary or its stockholders, (iii) the Net Income of any Person
acquired in a pooling of interests transaction for any period prior to the date
of such acquisition shall be excluded, and (iv) the cumulative effect of a
change in accounting principles shall be excluded.
"Consolidated Net Worth" means, with respect to any Person as of any date,
the sum of (i) the consolidated equity of the common stockholders of such Person
and its consolidated Subsidiaries as of such date plus (ii) the respective
amounts reported on such Person's balance sheet as of such date with respect to
any series of preferred stock (other than Disqualified Stock) that by its terms
is not entitled to the payment of dividends unless such dividends may be
declared and paid only out of net earnings in respect of the year of such
declaration and payment, but only to the extent of any cash received by such
Person upon issuance of such preferred stock, less (x) all write-ups (other than
write-ups resulting from foreign currency translations and write-ups of tangible
assets of a going concern business made within 12 months after the acquisition
of such business) subsequent to the date of this Indenture in the book value of
any asset owned by such Person or a consolidated Subsidiary of such Person, (y)
all investments as of such date in unconsolidated Subsidiaries and in Persons
that are not Subsidiaries (except, in each case, Permitted Investments), and (z)
all unamortized debt discount and expense and unamortized deferred charges as of
such date, all of the foregoing determined in accordance with GAAP.
"Continuing Directors" means, as of any date of determination, any member
of the Board of Directors of the Company who (i) was a member of such Board of
Directors on the date of this Indenture or (ii) was nominated for election or
elected to such Board of Directors with the approval of a majority of the
Continuing Directors who were members of such Board at the time of such
nomination or election.
"Corporate Trust Office of the Trustee" shall be at the address of the
Trustee specified in Section 11.02 hereof or such other address as to which the
Trustee may give notice to the Company.
"Credit Agreement" means the Restated Revolving Credit Agreement, dated as
of October 3, 1997, as amended, by and among the Company, certain of its
Restricted Subsidiaries and the several banks named therein, providing for up to
$115 million of revolving credit borrowings, including all related notes,
Guarantees, security agreements, collateral documents, and other instruments and
agreements executed in connection therewith.
"Credit Enhancement Agreements" means, collectively, any documents,
instruments or agreements entered into by the Company, any of its Restricted
Subsidiaries or any of the Securitization Trusts exclusively for the purpose of
providing credit support for the Securitization Trusts or any of their
respective Indebtedness or asset-backed securities.
"Credit Facilities" means, with respect to the Company or any of its
Restricted Subsidiaries, one or more debt facilities (including, without
limitation, the Credit Agreement) with banks or other institutional lenders
providing for revolving credit loans; provided that in no event will any such
facility that constitutes a Warehouse Facility be deemed to qualify as a Credit
Facility.
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"Default" means any event that is or with the passage of time or the giving
of notice or both would be an Event of Default.
"Definitive Note" means a certificated Note registered in the name of the
Holder thereof and issued in accordance with Section 2.06 hereof, substantially
in the form of Exhibit A hereto, except that such Note shall not have the
information called for by footnotes 1 and 2 thereof.
"Depository" means, with respect to the Notes issuable or issued in whole
or in part in global form, the Person specified in Section 2.03 hereof as the
Depository with respect to the Notes, until a successor shall have been
appointed and become such pursuant to the applicable provision of this
Indenture, and, thereafter, "Depository" shall mean or include such successor.
"Disqualified Stock" means any Capital Stock that, by its terms (or by the
terms of any security into which it is convertible or for which it is
exchangeable), or upon the happening of any event, matures or is mandatorily
redeemable, pursuant to a sinking fund obligation or otherwise, or redeemable at
the option of the Holder thereof, in whole or in part, on or prior to the date
that is 91 days after the date on which the Notes mature.
"Eligible Receivables" means, at any time, all Receivables owned by the
Company or any of its Restricted Subsidiaries that meet the sale or loan
eligibility criteria set forth in the Warehouse Facility pursuant to which the
applicable Receivables were financed; excluding, however, any Receivables that
are pledged to secure, or were acquired or originated with, borrowings under a
Credit Facility and excluding any such Receivables held by a Securitization
Trust.
"Equity Interests" means Capital Stock and all warrants, options or other
rights to acquire Capital Stock (but excluding any debt security that is
convertible into, or exchangeable for, Capital Stock).
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Exchange Offer" has the meaning set forth in the Registration Rights
Agreement.
"Exchange Offer Registration Statement" has the meaning set forth in the
Registration Rights Agreement.
"Existing Indebtedness" means up to $11.0 million in aggregate principal
amount of Indebtedness of the Company and its Subsidiaries (other than
Indebtedness under the Credit Agreement, the Original Notes, the Secondary Notes
and the Original Guarantees and the Secondary Guarantees) in existence on
December 31, 1998, until such amounts are repaid.
"GAAP" means generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board or in such other statements by such
other entity as have been approved by a significant segment of the accounting
profession, which are in effect from time to time and consistently applied.
"Global Note" means the global note in the form of Exhibit A hereto bearing
the Private Placement Legend and deposited with and registered in the name of
the Depository or its nominee that will be issued in a denomination equal to the
outstanding principal amount of the Notes sold in reliance on Rule 144A.
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"Government Securities" means direct obligations of, or obligations
guaranteed by, the United States of America for the payment of which guarantee
or obligations the full faith and credit of the United States is pledged.
"Guarantee" means a guarantee (other than by endorsement of negotiable
instruments for collection in the ordinary course of business), direct or
indirect, in any manner (including, without limitation, letters of credit and
reimbursement agreements in respect thereof), of all or any part of any
Indebtedness.
"Guarantors" means each of (i) AmeriCredit Financial Services, Inc., a
Delaware corporation, ACF Investment Corp., a Delaware corporation, Americredit
Corporation of California, a California corporation, AmeriCredit Management
Company, a Delaware corporation and AmeriCredit Financial Services of Canada
Ltd., a Canadian corporation chartered in the Province of Ontario and (ii) any
other subsidiary that executes a Subsidiary Guarantee in accordance with the
provisions of Section 4.19 hereof, and their respective successors and assigns.
"Hedging Obligations" means, with respect to any Person, the obligations of
such Person under (i) interest rate swap agreements, interest rate cap
agreements and interest rate collar agreements and (ii) other agreements or
arrangements designed to protect such Person against fluctuations in interest
rates.
"Holder" means a Person in whose name a Note is registered.
"Indebtedness" means, with respect to any Person, any indebtedness of such
Person, whether or not contingent, in respect of borrowed money or evidenced by
bonds, notes, debentures or similar instruments or letters of credit (or
reimbursement agreements in respect thereof) or banker's acceptances or
representing Capital Lease Obligations or the balance deferred and unpaid of the
purchase price of any property or representing any Hedging Obligations, except
any such balance that constitutes an accrued expense or trade payable, if and to
the extent any of the foregoing indebtedness (other than letters of credit and
Hedging Obligations) would appear as a liability upon a balance sheet of such
Person prepared in accordance with GAAP, as well as all indebtedness of others
secured by a Lien on any asset of such Person (whether or not such indebtedness
is assumed by such Person) and, to the extent not otherwise included, the
Guarantee by such Person of any indebtedness of any other Person. The amount of
any Indebtedness outstanding as of any date shall be (i) the accreted value
thereof, in the case of any Indebtedness that does not require current payments
of interest, and (ii) the principal amount thereof, together with any interest
thereon that is more than 30 days past due, in the case of any other
Indebtedness.
"Indenture" means this Indenture, as amended or supplemented from time to
time.
"Indirect Participant" means a Person who holds a beneficial interest in a
Global Note through a Participant.
"Institutional Accredited Investor" means an institution that is an
"accredited investor" as defined in Rule 501(a)(l), (2), (3) or (7) under the
Securities Act.
"Investments" means, with respect to any Person, all investments by such
Person in other Persons (including Affiliates) in the forms of direct or
indirect loans (including Guarantees of Indebtedness or other obligations),
advances or capital contributions (excluding commission, travel and similar
advances to officers and employees made in the ordinary course of business),
purchases or other acquisitions for consideration of Indebtedness, Equity
Interests or other securities, together with all items that are or would be
classified as investments on a balance sheet prepared in accordance with GAAP.
If the
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Company or any Subsidiary of the Company sells or otherwise disposes of any
Equity Interests of any direct or indirect Subsidiary of the Company such that,
after giving effect to any such sale or disposition, such Person is no longer a
Subsidiary of the Company, the Company shall be deemed to have made an
Investment on the date of any such sale or disposition equal to the fair market
value of the Equity Interests of such Subsidiary not sold or disposed of in an
amount determined in accordance with Section 4.07 hereof.
"Legal Holiday" means a Saturday, a Sunday or a day on which banking
institutions in the City of New York or at a place of payment are authorized by
law, regulation or executive order to remain closed. If a payment date is a
Legal Holiday at a place of payment, payment may be made at that place on the
next succeeding day that is not a Legal Holiday, and no interest shall accrue
for the intervening period.
"Lien" means, with respect to any asset, any mortgage, lien, pledge,
charge, security interest or encumbrance of any kind in respect of such asset,
whether or not filed, recorded or otherwise perfected under applicable law
(including any conditional sale or other title retention agreement, any lease in
the nature thereof, any option or other agreement to sell or give a security
interest in and any filing of or agreement to give any financing statement under
the Uniform Commercial Code (or equivalent statutes) of any jurisdiction).
"Liquidated Damages" means all liquidated damages then owing pursuant to
Section 5 of the Registration Rights Agreement.
"Net Income" means, with respect to any Person, the net income (loss) of
such Person, determined in accordance with GAAP and before any reduction in
respect of preferred stock dividends, excluding, however, (i) any gain (but not
loss), together with any related provision for taxes on such gain (but not
loss), realized in connection with (a) any Asset Sale (including, without
limitation, dispositions pursuant to sale and leaseback transactions) or (b) the
disposition of any securities by such Person or any of its Restricted
Subsidiaries or the extinguishment of any Indebtedness of such Person or any of
its Restricted Subsidiaries and (ii) any extraordinary or nonrecurring gain (but
not loss), together with any related provision for taxes on such extraordinary
or nonrecurring gain (but not loss).
"Net Proceeds" means the aggregate cash proceeds received by the Company or
any of its Restricted Subsidiaries in respect of any Asset Sale (including,
without limitation, any cash received upon the sale or other disposition of any
non-cash consideration received in any Asset Sale), net of the direct costs
relating to such Asset Sale (including, without limitation, legal, accounting
and investment banking fees, and sales commissions) and any relocation expenses
incurred as a result thereof, taxes paid or payable as a result thereof (after
taking into account any available tax credits or deductions and any tax sharing
arrangements), amounts required to be applied to the repayment of Indebtedness
secured by a Lien on the asset or assets that were the subject of such Asset
Sale and any reserve for adjustment in respect of the sale price of such asset
or assets established in accordance with GAAP.
"Non-Recourse Debt" means Indebtedness (i) as to which neither the Company
nor any of its Restricted Subsidiaries (a) provides credit support of any kind
(including any undertaking, agreement or instrument that would constitute
Indebtedness), (b) is directly or indirectly liable (as a guarantor or
otherwise), or (c) constitutes the lender; and (ii) no default with respect to
which (including any rights that the holders thereof may have to take
enforcement action against an Unrestricted Subsidiary) would permit (upon
notice, lapse of time or both) any holder of any other Indebtedness (other than
the Notes) of the Company or any of its Restricted Subsidiaries to declare a
default on such other Indebtedness or cause the payment thereof to be
accelerated or payable prior to its stated maturity; and (iii) as to which
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the lenders have been notified in writing that they will not have any recourse
to the stock or assets of the Company or any of its Restricted Subsidiaries.
"Non-U.S. Person" means a person who is not a U.S. Person.
"Note Custodian" means the Trustee, as custodian with respect to the Notes
in global form, or any successor entity thereto.
"Obligations" means any principal, interest, penalties, fees,
indemnifications, reimbursements, damages and other liabilities payable under
the documentation governing any Indebtedness.
"Offering" means the Offering of the Notes by the Company.
"Officer" means, with respect to any Person, the Chairman of the Board, the
Chief Executive Officer, the President, the Chief Operating Officer, the Chief
Financial Officer, the Treasurer, any Assistant Treasurer, the Controller, the
Secretary or any Vice-President of such Person.
"Officers' Certificate" means a certificate signed on behalf of the Company
by two Officers of the Company, one of whom must be the principal executive
officer, a vice chairman, the principal financial officer, the treasurer or the
principal accounting officer of the Company, that meets the requirements of
Section 11.05 hereof.
"Opinion of Counsel" means an opinion from legal counsel who is reasonably
acceptable to the Trustee, that meets the requirements of Section 11.05 hereof.
The counsel may be an employee of or counsel to the Company, any Subsidiary of
the Company or the Trustee.
"Original Guarantees" means each of the Guarantees of the Original Notes by
the Guarantors pursuant to the Original Indenture.
"Original Indenture" means the Indenture, dated as of February 4, 1997,
among the Company, Bank One, N.A., as trustee, and the Guarantors, with respect
to the Original Notes and the Original Guarantees.
"Original Notes" means the $125,000,000 in aggregate principal amount of
the Company's 9 1/4% Senior Notes due 2004, issued pursuant to the Original
Indenture on February 4, 1997.
"Participant" means, with respect to DTC, a Person who has an account with
DTC.
"Permitted Business" means the business of purchasing, originating,
brokering and marketing, pooling and selling, securitizing and servicing
Receivables, and entering into agreements and engaging in transactions
incidental to the foregoing.
"Permitted Investments" means (a) any Investment in the Company or in a
Wholly-Owned Restricted Subsidiary of the Company that is a Guarantor; (b) any
Investment in Cash Equivalents; (c) any Investment by the Company or any
Subsidiary of the Company in a Person, if as a result of such Investment (i)
such Person becomes a Wholly-Owned Restricted Subsidiary of the Company and a
Guarantor that is engaged in a Permitted Business or (ii) such Person is merged,
consolidated or amalgamated with or into, or transfers or conveys substantially
all of its assets to, or is liquidated into, the Company or a Wholly-Owned
Restricted Subsidiary of the Company that is a Guarantor and that is engaged in
a Permitted Business; (d) any Restricted Investment made as a result of the
receipt of non-cash consideration from an Asset Sale that was made pursuant to
and in compliance with Section 4.10 hereof; (e) any acquisition of assets solely
in exchange for the issuance of Equity Interests (other than
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Disqualified Stock) of the Company; (f) Investments by the Company or any of its
Subsidiaries in Securitization Trusts in the ordinary course of business in
connection with or arising out of Securitizations; (g) purchases of all
remaining outstanding asset-backed securities of any Securitization Trust for
the purpose of relieving the Company or a Subsidiary of the Company of the
administrative expense of servicing such Securitization Trust, but only if 90%
or more of the aggregate principal amount of the original asset-backed
securities of such Securitization Trust have previously been retired; and (h)
other Investments by the Company or any of its Subsidiaries in any Person (other
than an Affiliate of the Company that is not also a Subsidiary of the Company)
that do not exceed $5.0 million in the aggregate at any one time outstanding
(measured as of the date made and without giving effect to subsequent changes in
value).
"Permitted Liens" means (i) Liens existing on the date of this Indenture;
(ii) Liens on Eligible Receivables and the proceeds thereof to secure Permitted
Warehouse Debt or permitted Guarantees thereof; (iii) Liens to secure revolving
credit borrowings under Credit Facilities, provided that such borrowings were
permitted by this Indenture to be incurred; (iv) Liens on Receivables and the
proceeds thereof incurred in connection with Securitizations or permitted
Guarantees thereof; (v) Liens on spread accounts and credit enhancement assets,
Liens on the stock of Restricted Subsidiaries of the Company substantially all
of the assets of which are spread accounts and credit enhancement assets and
Liens on interests in Securitization Trusts, in each case incurred in connection
with Credit Enhancement Agreements; (vi) Liens on property of a Person existing
at the time such Person is merged into or consolidated with the Company or any
Restricted Subsidiary of the Company; provided that such Liens were in existence
prior to the contemplation of such merger or consolidation and do not extend to
any assets other than those of the Person merged into or consolidated with the
Company; (vii) Liens on property existing at the time of acquisition thereof by
the Company or any Restricted Subsidiary of the Company, provided that such
Liens were in existence prior to the contemplation of such acquisition; (viii)
Liens securing Indebtedness incurred to finance the construction or purchase of
property of the Company or any of its Wholly-Owned Restricted Subsidiaries (but
excluding Capital Stock of another Person); provided, however, that any such
Lien may not extend to any other property owned by the Company or any of its
Restricted Subsidiaries at the time the Lien is incurred, and the Indebtedness
secured by the Lien may not be incurred more than 180 days after the latter of
the acquisition or completion of construction of the property subject to the
Lien; provided, further, that the Amount of Indebtedness secured by such Liens
do not exceed the fair market value (as evidenced by a resolution of the Board
of Directors of the Company set forth in an Officers' Certificate delivered to
the Trustee) of the property purchased or constructed with the proceeds of such
Indebtedness; (ix) Liens to secure any Permitted Refinancing Indebtedness
incurred to refinance any Indebtedness secured by any Lien referred to in the
foregoing clauses (i) through (viii), provided, however, that such new Lien
shall be limited to all or part of the same property that secured the original
Lien and the Indebtedness secured by such Lien at such time is not increased to
any amount greater than the outstanding principal amount or, if greater,
committed amount of the Indebtedness described under clauses (i) through (viii),
as the case may be, at the time the original Lien became a permitted Lien; (x)
Liens in favor of the Company; (xi) Liens incurred in the ordinary course of
business of the Company or any Restricted Subsidiary of the Company with respect
to obligations that do not exceed $1.0 million in the aggregate at any one time
outstanding; (xii) Liens to secure the performance of statutory obligations,
surety or appeal bonds, performance bonds or other obligations of a like nature
incurred in the ordinary course of business (including, without limitation,
landlord Liens on leased properties); (xiii) Liens for taxes, assessments or
governmental charges or claims that are not yet delinquent or that are being
contested in good faith by appropriate proceedings promptly instituted and
diligently concluded, provided that any reserve or other appropriate provision
as shall be required in conformity with GAAP shall have been made therefor;
(xiv) Liens on assets of Guarantors to secure Senior Guarantor Debt of such
Guarantors that was permitted by this Indenture to be incurred; and (xv) Liens
on assets of Unrestricted Subsidiaries that secure Non-Recourse Debt of
Unrestricted Subsidiaries.
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"Permitted Refinancing Indebtedness" means any Indebtedness of the Company
or any of its Restricted Subsidiaries issued in exchange for, or the net
proceeds of which are used to extend, refinance, renew, replace, defease or
refund other Indebtedness of the Company or any of its Restricted Subsidiaries
(other than Permitted Warehouse Debt or intercompany Indebtedness); provided
that: (i) the principal amount (or accreted value, if applicable) of such
Permitted Refinancing Indebtedness does not exceed the principal amount of (or
accreted value, if applicable), plus accrued interest on, the Indebtedness so
extended, refinanced, renewed, replaced, defeased or refunded (plus the amount
of reasonable expenses incurred in connection therewith); (ii) such Permitted
Refinancing Indebtedness has a final maturity date later than the final maturity
date of, and has a Weighted Average Life to Maturity equal to or greater than
the Weighted Average Life to Maturity of, the Indebtedness being extended,
refinanced, renewed, replaced, defeased or refunded; (iii) if the Indebtedness
being extended, refinanced, renewed, replaced, defeased or refunded is
subordinated in right of payment to the Notes, such Permitted Refinancing
Indebtedness has a final maturity date later than the final maturity date of,
and is subordinated in right of payment to, the Notes on terms at least as
favorable to the Holders of Notes as those contained in the documentation
governing the Indebtedness being extended, refinanced, renewed, replaced,
defeased or refunded; and (iv) such Indebtedness is incurred either by the
Company or by the Restricted Subsidiary who is the obligor on the Indebtedness
being extended, refinanced, renewed, replaced, defeased or refunded.
"Permitted Warehouse Debt" means Indebtedness of the Company or a
Restricted Subsidiary of the Company outstanding under one or more Warehouse
Facilities; provided, however, that (i) the assets purchased with proceeds of
such warehouse debt are or, prior to any funding under the Warehouse Facility
with respect to such assets, were eligible to be recorded as held for sale on
the consolidated balance sheet of the Company in accordance with GAAP, (ii) such
warehouse debt will be deemed Permitted Warehouse Debt (a) in the case of a
Purchase Facility, only to the extent the holder of such warehouse debt has no
contractual recourse to the Company and/or its Restricted Subsidiaries to
satisfy claims in respect of such warehouse debt in excess of the realizable
value of the Receivables financed thereby, and (b) in the case of any other
Warehouse Facility, only to the lesser of (A) the amount advanced by the lender
with respect to the Receivables financed under such Warehouse Facility, and (B)
the principal amount of such Receivables and (iii) any such Indebtedness has not
been outstanding in excess of 364 days.
"Person" means an individual, partnership, corporation, limited liability
company, unincorporated organization, trust, joint venture, or a governmental
agency or political subdivision thereof.
"Private Placement Legend" means the legend set forth in Section 2.06(g)(i)
to be placed on all Notes issued under this Indenture except as otherwise
permitted by the provisions of this Indenture.
"Purchase Facility" means any Warehouse Facility in the form of a purchase
and sale facility pursuant to which the Company or any of its Subsidiaries sells
Receivables to a financial institution and retains the right of first refusal
upon the subsequent resale of such Receivables by such financial institution.
"Receivables" means (i) consumer installment sale contracts and loans
evidenced by promissory notes secured by new and used automobiles and light
trucks, (ii) other consumer installment sale contracts or lease contracts and
(iii) loans secured by residential mortgages, in the case of each of the clauses
(i), (ii) and (iii), that are purchased or originated in the ordinary course of
business by the Company or any Restricted Subsidiary of the Company; provided,
however, that for purposes of determining the amount of a Receivable at any
time, such amount shall be determined in accordance with GAAP, consistently
applied, as of the most recent practicable date.
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"Registration Rights Agreement" means the Registration Rights Agreement,
dated as of April 20, 1999, by and among the Company, the Guarantors and the
other parties named on the signature pages thereof, as such agreement may be
amended, modified or supplemented from time to time.
"Regulation S" means Regulation S promulgated under the Securities Act.
"Responsible Officer," when used with respect to the Trustee, means any
officer within the Corporate Trust Administration of the Trustee (or any
successor group of the Trustee) or any other officer of the Trustee customarily
performing functions similar to those performed by any of the above designated
officers and also means, with respect to a particular corporate trust matter,
any other officer to whom such matter is referred because of his knowledge of
and familiarity with the particular subject.
"Restricted Investment" means an Investment other than a Permitted
Investment.
"Restricted Subsidiary" of a Person means any Subsidiary of the referent
Person that is not an Unrestricted Subsidiary.
"Rule 144" means Rule 144 under the Securities Act.
"Rule 144A" means Rule 144A under the Securities Act.
"SEC" means the Securities and Exchange Commission.
"Secondary Guarantees" means each of the Guarantees of the Secondary Notes
by the Guarantors pursuant to the Secondary Indenture.
"Secondary Indenture" means the Indenture, dated as of January 29, 1998,
among the Company, Bank One, NA, as trustee, and the Guarantors, with respect to
the Secondary Notes and the Secondary Guarantees.
"Secondary Notes" means the $50,000,000 in aggregate principal amount of
the Company's 9 1/4% Senior Notes due 2004, issued pursuant to the Secondary
Indenture on January 29, 1998.
"Securities Act" means the Securities Act of 1933, as amended.
"Securitization" means a public or private transfer of Receivables in the
ordinary course of business and by which the Company or any of its Restricted
Subsidiaries directly or indirectly securitizes a pool of specified Receivables
including any such transaction involving the sale of specified Receivables to a
Securitization Trust.
"Securitization Trust" means any Person (whether or not a Subsidiary of the
Company) (i) established exclusively for the purpose of issuing securities in
connection with any Securitization, the obligations of which are without
recourse to the Company or any of the Guarantors and (ii) any special purpose
Subsidiary of the Company formed exclusively for the purpose of satisfying the
requirements of Credit Enhancement Agreements and regardless of whether such
Subsidiary is an issuer of securities, provided that such Person is not an
obligor with respect to any Indebtedness of the Company or any Guarantor other
than under Credit Enhancement Agreements. As of the date of this Indenture, AFS
Funding Corp., CP Funding Corp., AmeriCredit Funding Corp. and AmeriCredit
Warehouse Trust shall be deemed to satisfy the requirements of the foregoing
definition.
"Shelf Registration Statement" means the Shelf Registration Statement as
defined in the Registration Rights Agreement.
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"Significant Subsidiary" means any Subsidiary that would be a "significant
subsidiary" as defined in Article 1, Rule I-02 of Regulation S-X, promulgated
pursuant to the Securities Act, as such Regulation is in effect on the date
hereof.
"Specified Senior Indebtedness" means (i) the Indebtedness of any Person,
whether outstanding on the date of this Indenture or thereafter incurred and
(ii) accrued and unpaid interest (including interest accruing on or after the
filing of any petition in bankruptcy or for reorganization relating to such
Person to the extent post filing interest is allowed in such proceeding) in
respect of (A) Indebtedness of such Person for money borrowed and (B)
Indebtedness evidenced by notes, debentures, bonds or other similar instruments
for the payment of which such Person is responsible or liable unless, in the
case of either clause (i) or (ii), in the instrument creating or evidencing the
same pursuant to which the same is outstanding, it is provided that such
obligations are subordinate in right of payment to the Notes; provided, however,
that Specified Senior Indebtedness shall not include (1) any obligation of such
Person to any Subsidiary of such Person, (2) any liability for Federal, state,
local or other taxes owed or owing by such Person, (3) any accounts payable or
other liability to trade creditors arising in the ordinary course of business
(including Guarantees thereof or instruments evidencing such liabilities), (4)
any obligations in respect of Capital Stock of such Person or (5) that portion
of any Indebtedness which at the time of incurrence is incurred in violation of
this Indenture.
"Stated Maturity" means, with respect to any installment of interest or
principal on any series of Indebtedness, the date on which such payment of
interest or principal was scheduled to be paid in the original documentation
governing such Indebtedness, and shall not include any contingent obligations to
repay, redeem or repurchase any such interest or principal prior to the date
originally scheduled for the payment thereof.
"Subsidiary" means, with respect to any Person, (i) any corporation,
association or other business entity of which more than 50% of the total voting
power of shares of Capital Stock entitled (without regard to the occurrence of
any contingency) to vote in the election of directors, managers or trustees
thereof is at the time owned or controlled, directly or indirectly, by such
Person or one or more of the other Subsidiaries of that Person (or a combination
thereof) and (ii) any partnership (a) the sole general partner or the managing
general partner of which is such Person or a Subsidiary of such Person or (b)
the only general partners of which are such Person or of one or more
Subsidiaries of such Person (or any combination thereof).
"Subsidiary Guarantee" means the Guarantee of the Notes by each of the
Guarantors pursuant to Article 11 hereof and in the form of Guarantee attached
hereto as Exhibit C and any additional Guarantee of the Notes to be executed by
any Restricted Subsidiary pursuant to Section 4.19 hereof.
"TIA" means the Trust Indenture Act of 1939 (15 U.S.C. (S)(S) 77aaa-77bbbb)
as in effect on the date on which this Indenture is qualified under the TIA.
"Transfer Restricted Securities" means securities that bear or are required
to bear the legend set forth in Section 2.06(g) hereof.
"Trustee" means the party named as such above until a successor replaces it
in accordance with the applicable provisions of this Indenture and thereafter
means the successor serving hereunder.
"Unrestricted Global Note" means one or more global Notes that do not and
are not required to bear the Private Placement Legend and are deposited with and
registered in the name of the Depository or its nominee.
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<PAGE>
"Unrestricted Definitive Note" means one or more Definitive Notes that do
not and are not required to bear the Private Placement Legend.
"Unrestricted Subsidiary" means (i) any Subsidiary that is designated by
the Board of Directors of the Company as an Unrestricted Subsidiary pursuant to
a Board Resolution; but only to the extent that such Subsidiary: (a) has no
Indebtedness other than Non-Recourse Debt; (b) is not party to any agreement,
contract, arrangement or understanding with the Company or any Restricted
Subsidiary of the Company unless the terms of any such agreement, contract,
arrangement or understanding are no less favorable to the Company or such
Restricted Subsidiary than those that might be obtained at the time from Persons
who are not Affiliates of the Company; (c) is a Person with respect to which
neither the Company nor any of its Restricted Subsidiaries has any direct or
indirect obligation (x) to subscribe for additional Equity Interests or (y) to
maintain or preserve such Person's financial condition or to cause such Person
to achieve any specified levels of operating results; (d) has not guaranteed or
otherwise directly or indirectly provided credit support for any Indebtedness of
the Company or any of its Restricted Subsidiaries; and (e) has at least one
director on its board of directors that is not a director or executive officer
of the Company or any of its Restricted Subsidiaries and has at least one
executive officer that is not a director or executive officer of the Company or
any of its Restricted Subsidiaries. Any such designation by the Board of
Directors of the Company shall be evidenced to the Trustee by filing with the
Trustee a certified copy of the Board Resolution giving effect to such
designation and an Officers' Certificate certifying that such designation
complied with the foregoing conditions and was permitted by the covenant in
Section 4.07 hereof. If, at any time, any Unrestricted Subsidiary would fail to
meet the foregoing requirements as an Unrestricted Subsidiary, it shall
thereafter cease to be an Unrestricted Subsidiary for purposes of this Indenture
and any Indebtedness of such Subsidiary shall be deemed to be incurred by a
Restricted Subsidiary of the Company as of such date (and, if such Indebtedness
is not permitted to be incurred as of such date under the covenant in Section
4.09, the Company shall be in default of such covenant). The Board of Directors
of the Company may at any time designate any Unrestricted Subsidiary to be a
Restricted Subsidiary; provided that such designation shall be deemed to be an
incurrence of Indebtedness by a Restricted Subsidiary of the Company of any
outstanding Indebtedness of such Unrestricted Subsidiary and such designation
shall only be permitted if (i) such Indebtedness is permitted under Consolidated
Leverage Ratio test set forth in the first paragraph of Section 4.09, calculated
on a pro forma basis as if such designation had occurred at the end of the
applicable fiscal quarter, and (ii) no Default or Event of Default would be in
existence following such designation.
"U.S. Person" means a U.S. person as defined in Rule 902(o) under the
Securities Act.
"Voting Stock" of any Person as of any date means the Capital Stock of such
Person that is at the time entitled to vote in the election of the Board of
Directors of such Person.
"Warehouse Facility" means any funding arrangement with a financial
institution or other lender or purchaser to the extent (and only to the extent)
funding thereunder is used exclusively to finance or refinance the purchase or
origination of Receivables by the Company or a Restricted Subsidiary of the
Company for the purpose of (i) pooling such Receivables prior to Securitization
or (ii) sale, in each case in the ordinary course of business, including
Purchase Facilities.
"Weighted Average Life to Maturity" means, when applied to any Indebtedness
at any date, the number of years obtained by dividing (i) the sum of the
products obtained by multiplying (a) the amount of each then remaining
installment, sinking fund, serial maturity or other required payments of
principal, including payment at final maturity, in respect thereof, by (b) the
number of years (calculated to the nearest one-twelfth) that will elapse between
such date and the making of such payment, by (ii) the then outstanding principal
amount of such Indebtedness.
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"Wholly-Owned Restricted Subsidiary" of any Person means a Restricted
Subsidiary of such Person all of the outstanding Capital Stock or other
ownership interests of which (other than directors' qualifying shares) shall at
the time be owned by such Person or by one or more Wholly-Owned Restricted
Subsidiaries of such Person.
Section 1.02. Other Definitions.
<TABLE>
<CAPTION>
Term Defined in
Section
<S> <C>
"Affiliate Transaction".............................................. 4.11
"Asset Sale Offer"................................................... 3.09
"Change of Control Offer"............................................ 4.15
"Change of Control Payment".......................................... 4.15
"Change of Control Payment Date"..................................... 4.15
"Covenant Defeasance"................................................ 8.03
"DTC"................................................................ 2.03
"Event of Default"................................................... 6.01
"Excess Proceeds".................................................... 4.10
"incur".............................................................. 4.09
"insolvent".......................................................... 10.05
"Legal Defeasance"................................................... 8.02
"Offer Amount"....................................................... 3.09
"Offer Period"....................................................... 3.09
"Paying Agent"....................................................... 2.03
"Permitted Debt"..................................................... 4.09
"Purchase Date"...................................................... 3.09
"Registrar".......................................................... 2.03
"Restricted Payments"................................................ 4.07
</TABLE>
Section 1.03. Incorporation by Reference of Trust Indenture Act.
Whenever this Indenture refers to a provision of the TIA, the provision is
incorporated by reference in and made a part of this Indenture.
The following TIA terms used in this Indenture have the following meanings:
"indenture securities" means the Notes;
"indenture security Holder" means a Holder of a Note;
"indenture to be qualified" means this Indenture;
"indenture trustee" or "institutional trustee" means the Trustee;
"obligor" on the Notes means the Company and any successor obligor upon the
Notes.
All other terms used in this Indenture that are defined by the TIA, defined
by TIA reference to another statute or defined by SEC rule under the TIA have
the meanings so assigned to them.
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Section 1.04. Rules of Construction.
Unless the context otherwise requires:
(1) a term has the meaning assigned to it;
(2) an accounting term not otherwise defined has the meaning assigned to it
in accordance with GAAP;
(3) "or" is not exclusive;
(4) words in the singular include the plural, and in the plural include the
singular;
(5) provisions apply to successive events and transactions; and
(6) references to sections of or rules under the Securities Act shall be
deemed to include substitute, replacement of successor sections or rules
adopted by the SEC from time to time.
ARTICLE 2.
THE NOTES
Section 2.01. Form and Dating.
The Notes and the Trustee's certificate of authentication shall be
substantially in the form of Exhibit A hereto. The Notes may be issued in the
form of Definitive Notes or Global Notes, as specified by the Company. The Notes
may have notations, legends or endorsements required by law, stock exchange rule
or usage. Each Note shall be dated the date of its authentication. The Notes
shall be in denominations of $1,000 and integral multiples thereof.
The terms and provisions contained in the Notes shall constitute, and are
hereby expressly made, a part of this Indenture and the Company and the Trustee,
by their execution and delivery of this Indenture, expressly agree to such terms
and provisions and to be bound thereby. However, to the extent any provision of
any Note conflicts with the express provisions of this Indenture, the provisions
of this Indenture shall govern and be controlling.
Notes issued in global form shall be substantially in the form of Exhibit A
attached hereto (including the text referred to in footnote 1 and 2 thereto).
Notes issued in definitive form shall be substantially in the form of Exhibit A
attached hereto (but without including the text referred to in footnote 1 and 2
thereto). Each Global Note shall represent such of the outstanding Notes as
shall be specified therein and each shall provide that it shall represent the
aggregate principal amount of outstanding Notes from time to time endorsed
thereon and that the aggregate principal amount of outstanding Notes represented
thereby may from time to time be reduced or increased, as appropriate, to
reflect exchanges and redemptions. Any endorsement of a Global Note to reflect
the amount of any increase or decrease in the aggregate principal amount of
outstanding Notes represented thereby shall be made by the Trustee or the Note
Custodian, at the direction of the Trustee, in accordance with instructions
given by the Holder thereof as required by Section 2.06 hereof.
Section 2.02. Execution and Authentication.
Two Officers shall sign the Notes for the Company by manual or facsimile
signature. The Company's seal shall be reproduced on the Notes and may be in
facsimile form.
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If an Officer whose signature is on a Note no longer holds that office at
the time a Note is authenticated, the Note shall nevertheless be valid.
A Note shall not be valid until authenticated by the manual signature of
the Trustee. The signature shall be conclusive evidence that the Note has been
authenticated under this Indenture.
The Trustee shall, upon a written order of the Company signed by two
Officers, authenticate Notes for original issue up to the aggregate principal
amount stated in paragraph 4 of the Notes. Notes to be so issued shall be either
Definitive Notes or Global Notes, as specified by the Company in such order. The
aggregate principal amount of Notes outstanding at any time may not exceed such
amount except as provided in Section 2.07 hereof.
The Trustee may appoint an authenticating agent acceptable to the Company
to authenticate Notes. An authenticating agent may authenticate Notes whenever
the Trustee may do so. Each reference in this Indenture to authentication by the
Trustee includes authentication by such agent. An authenticating agent has the
same rights as an Agent to deal with Holders or an Affiliate of the Company.
Section 2.03. Registrar and Paying Agent.
The Company shall maintain an office or agency where Notes may be presented
for registration of transfer or for exchange ("Registrar") and an office or
agency where Notes may be presented for payment ("Paying Agent"). The Registrar
shall keep a register of the Notes and of their transfer and exchange. The
Company may appoint one or more co-registrars and one or more additional paying
agents. The term "Registrar" includes any co-registrar and the term "Paying
Agent" includes any additional paying agent. The Company may change any Paying
Agent or Registrar without notice to any Holder. The Company shall notify the
Trustee in writing of the name and address of any Agent not a party to this
Indenture. If the Company fails to appoint or maintain another entity as
Registrar or Paying Agent, the Trustee shall act as such. The Company or any of
its Subsidiaries may act as Paying Agent or Registrar.
The Company initially appoints The Depository Trust Company ("DTC") to act
as Depository with respect to the Global Notes.
The Company initially appoints the Trustee to act as the Registrar and
Paying Agent and to act as Note Custodian with respect to the Global Notes.
Section 2.04. Paying Agent to Hold Money in Trust.
The Company shall require each Paying Agent other than the Trustee to agree
in writing that the Paying Agent will hold in trust for the benefit of Holders
or the Trustee all money held by the Paying Agent for the payment of principal,
premium or Liquidated Damages, if any, or interest on the Notes, and will notify
the Trustee of any default by the Company in making any such payment. While any
such default continues, the Trustee may require a Paying Agent to pay all money
held by it to the Trustee. The Company at any time may require a Paying Agent to
pay all money held by it to the Trustee. Upon payment over to the Trustee, the
Paying Agent (if other than the Company or a Subsidiary) shall have no further
liability for the money. If the Company or a Subsidiary acts as Paying Agent, it
shall segregate and hold in a separate trust fund for the benefit of the Holders
all money held by it as Paying Agent. Upon any bankruptcy or reorganization
proceedings relating to the Company, the Trustee shall serve as Paying Agent for
the Notes.
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Section 2.05. Holder Lists.
The Trustee shall preserve in as current a form as is reasonably
practicable the most recent list available to it of the names and addresses of
all Holders and shall otherwise comply with TIA (S) 3 12(a). If the Trustee is
not the Registrar, the Company shall furnish to the Trustee at least seven
Business Days before each interest payment date and at such other times as the
Trustee may request in writing, a list in such form and as of such date as the
Trustee may reasonably require of the names and addresses of the Holders of
Notes and the Company shall otherwise comply with TIA (S) 3 12(a).
Section 2.06. Transfer and Exchange.
(a) Transfer and Exchange of Definitive Notes. When Definitive Notes are
presented by a Holder to the Registrar with a request:
(x) to register the transfer of the Definitive Notes; or
(y) to exchange such Definitive Notes for an equal principal amount of
Definitive Notes of other authorized denominations,
the Registrar shall register the transfer or make the exchange as requested if
its requirements for such transactions are met; provided, however, that the
Definitive Notes presented or surrendered for register of transfer or exchange:
(i) shall be duly endorsed or accompanied by a written instruction of
transfer in form satisfactory to the Registrar duly executed by
such Holder or by his attorney, duly authorized in writing; and
(ii) in the case of a Definitive Note that is a Transfer Restricted
Security, such request shall be accompanied by the following
additional information and documents, as applicable:
(A) if such Transfer Restricted Security is being delivered to
the Registrar by a Holder for registration in the name of
such Holder, without transfer, a certification to that
effect from such Holder (in substantially the form of
Exhibit B hereto); or
(B) if such Transfer Restricted Security is being transferred to
a "qualified institutional buyer" (as defined in Rule 144A
under the Securities Act) in accordance with Rule 144A under
the Securities Act or pursuant to an exemption from
registration in accordance with Rule 144 or Rule 904 under
the Securities Act or pursuant to an effective registration
statement under the Securities Act, a certification to that
effect from such Holder (in substantially the form of
Exhibit B hereto); or
(C) if such Transfer Restricted Security is being transferred in
reliance on another exemption from the registration
requirements of the Securities Act, a certification to that
effect from such Holder (in substantially the form of
Exhibit B hereto) and an Opinion of Counsel from such Holder
or the transferee reasonably acceptable to the Company and
to the Registrar to the effect that such transfer is in
compliance with the Securities Act.
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<PAGE>
(b) Transfer of a Definitive Note for a Beneficial Interest in a Global
Note. A Definitive Note may not be exchanged for a beneficial interest in a
Global Note except upon satisfaction of the requirements set forth below. Upon
receipt by the Trustee of a Definitive Note, duly endorsed or accompanied by
appropriate instruments of transfer, in form satisfactory to the Trustee,
together with:
(i) if such Definitive Note is a Transfer Restricted Security, a
certification from the Holder thereof (in substantially the form
of Exhibit B hereto) to the effect that such Definitive Note is
being transferred by such Holder to a "qualified institutional
buyer" (as defined in Rule 144A under the Securities Act) in
accordance with Rule 144A under the Securities Act; and
(ii) whether or not such Definitive Note is a Transfer Restricted
Security, written instructions from the Holder thereof directing
the Trustee to make, or to direct the Note Custodian to make, an
endorsement on the Global Note to reflect an increase in the
aggregate principal amount of the Notes represented by the Global
Note,
in which case the Trustee shall cancel such Definitive Note in accordance with
Section 2.11 hereof and cause, or direct the Note Custodian to cause, in
accordance with the standing instructions and procedures existing between the
Depository and the Note Custodian, the aggregate principal amount of Notes
represented by the Global Note to be increased accordingly. If no Global Notes
are then outstanding, the Company shall issue and, upon receipt of an
authentication order in accordance with Section 2.02 hereof, the Trustee shall
authenticate a new Global Note in the appropriate principal amount.
(c) Transfer and Exchange of Global Notes. The transfer and exchange of
Global Notes or beneficial interests therein shall be effected through the
Depository, in accordance with this Indenture and the procedures of the
Depository therefor, which shall include restrictions on transfer comparable to
those set forth herein to the extent required by the Securities Act.
(d) Transfer of a Beneficial Interest in a Global Note for a Definitive
Note.
(i) Any Person having a beneficial interest in a Global Note may upon
request exchange such beneficial interest for a Definitive Note.
Upon receipt by the Trustee of written instructions or such other
form of instructions as is customary for the Depository, from the
Depository or its nominee on behalf of any Person having a
beneficial interest in a Global Note, and, in the case of a
Transfer Restricted Security, the following additional
information and documents (all of which may be submitted by
facsimile):
(A) if such beneficial interest is being transferred to the
Person designated by the Depository as being the beneficial
owner, a certification to that effect from such Person (in
substantially the form of Exhibit B hereto); or
(B) if such beneficial interest is being transferred to a
"qualified institutional buyer" (as defined in Rule 144A
under the Securities Act) in accordance with Rule 144A under
the Securities Act or pursuant to an exemption from
registration in accordance with Rule 144 or Rule 904 under
the Securities Act or pursuant to an effective registration
statement under the Securities Act, a certification to that
effect from the transferor (in substantially the form of
Exhibit B hereto); or
18
<PAGE>
(C) if such beneficial interest is being transferred in reliance
on another exemption from the registration requirements of
the Securities Act, a certification to that effect from the
transferor (in substantially the form of Exhibit B hereto)
and an Opinion of Counsel from the transferee or transferor
reasonably acceptable to the Company and to the Registrar to
the effect that such transfer is in compliance with the
Securities Act,
in which case the Trustee or the Note Custodian, at the direction
of the Trustee, shall, in accordance with the standing
instructions and procedures existing between the Depository and
the Note Custodian, cause the aggregate principal amount of
Global Notes to be reduced accordingly and, following such
reduction, the Company shall execute and, upon receipt of an
authentication order in accordance with Section 2.02 hereof, the
Trustee shall authenticate and deliver to the transferee a
Definitive Note in the appropriate principal amount.
(ii) Definitive Notes issued in exchange for a beneficial interest in
a Global Note pursuant to this Section 2.06(d) shall be
registered in such names and in such authorized denominations as
the Depository, pursuant to instructions from its direct or
indirect participants or otherwise, shall instruct the Trustee.
The Trustee shall deliver such Definitive Notes to the Persons in
whose names such Notes are so registered.
(e) Restrictions on Transfer and Exchange of Global Notes. Notwithstanding
any other provision of this Indenture (other than the provisions set forth in
subSection (f) of this Section 2.06), a Global Note may not be transferred as a
whole except by the Depository to a nominee of the Depository or by a nominee of
the Depository to the Depository or another nominee of the Depository or by the
Depository or any such nominee to a successor Depository or a nominee of such
successor Depository.
(f) Authentication of Definitive Notes in Absence of Depository. If at any
time:
(i) the Depository for the Notes notifies the Company that the
Depository is unwilling or unable to continue as Depository for
the Global Notes and a successor Depository for the Global Notes
is not appointed by the Company within 90 days after delivery of
such notice; or
(ii) the Company, at its sole discretion, notifies the Trustee in
writing that it elects to cause the issuance of Definitive Notes
under this Indenture,
then the Company shall execute, and the Trustee shall, upon receipt of an
authentication order in accordance with Section 2.02 hereof, authenticate and
deliver, Definitive Notes in an aggregate principal amount equal to the
principal amount of the Global Notes in exchange for such Global Notes.
(g) Legends. The following legend shall appear on the face of all Global
Notes and Definitive Notes issued under this Indenture unless specifically
stated otherwise in the applicable provisions of this Indenture.
(i) Private Placement Legend.
(A) Except as permitted by subparagraphs (ii) and (iii) below,
each Global Note and each Definitive Note (and all Notes
issued in exchange
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therefor or substitution thereof) shall bear the legend in
substantially the following form:
"THE SECURITY (OR ITS PREDECESSOR) EVIDENCED HEREBY WAS
ORIGINALLY ISSUED IN A TRANSACTION EXEMPT FROM REGISTRATION
UNDER SECTION 5 OF THE UNITED STATES SECURITIES ACT OF 1933
(THE "SECURITIES ACT"), AND THE SECURITY EVIDENCED HEREBY
MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED IN THE
ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE EXEMPTION
THEREFROM. EACH PURCHASER OF THE SECURITY EVIDENCED HEREBY
IS HEREBY NOTIFIED THAT THE SELLER MAY BE RELYING ON THE
EXEMPTION FROM THE PROVISIONS OF SECTION 5 OF THE SECURITIES
ACT PROVIDED BY RULE 144A THEREUNDER. THE HOLDER OF THE
SECURITY EVIDENCED HEREBY AGREES FOR THE BENEFIT OF THE
COMPANY THAT (A) SUCH SECURITY MAY BE RESOLD, PLEDGED OR
OTHERWISE TRANSFERRED, ONLY (1) (a) TO A PERSON WHO THE
SELLER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL
BUYER (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) IN
A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, (b) IN
A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144 UNDER THE
SECURITIES ACT, (c) OUTSIDE THE UNITED STATES TO A NON-U.S.
PERSON IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 904
UNDER THE SECURITIES ACT, OR (d) IN ACCORDANCE WITH ANOTHER
EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT (AND BASED UPON AN OPINION OF COUNSEL IF THE
COMPANY SO REQUESTS), (2) TO THE COMPANY, OR (3) PURSUANT TO
AN EFFECTIVE REGISTRATION STATEMENT AND, IN EACH CASE, IN
ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE
OF THE UNITED STATES OR ANY OTHER APPLICABLE JURISDICTION
AND (B) THE HOLDER WILL, AND EACH SUBSEQUENT HOLDER IS
REQUIRED TO, NOTIFY ANY PURCHASER FROM IT OF THE SECURITY
EVIDENCED HEREBY OF THE RESALE RESTRICTIONS SET FORTH IN (A)
ABOVE."
(ii) Upon any sale or transfer of a Transfer Restricted Security
(including any Transfer Restricted Security represented by a
Global Note) pursuant to Rule 144 under the Securities Act or
pursuant to an effective registration statement under the
Securities Act:
(A) in the case of any Transfer Restricted Security that is a
Definitive Note, the Registrar shall permit the Holder
thereof to exchange such Transfer Restricted Security for a
Definitive Note that does not bear the first legend set
forth in (i) above and rescind any restriction on the
transfer of such Transfer Restricted Security; and
(B) in the case of any Transfer Restricted Security represented
by a Global Note, such Transfer Restricted Security shall
not be required to bear the
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<PAGE>
first legend set forth in (i) above, but shall continue to
be subject to the provisions of Section 2.06(c) hereof;
provided, however, that with respect to any request for an
exchange of a Transfer Restricted Security that is
represented by a Global Note for a Definitive Note that does
not bear the first legend set forth in (i) above, which
request is made in reliance upon Rule 144, the Holder
thereof shall certify in writing to the Registrar that such
request is being made pursuant to Rule 144 (such
certification to be substantially in the form of Exhibit B
hereto).
(iii) Notwithstanding the foregoing, upon consummation of the Exchange
Offer, the Company shall issue and, upon receipt of an
authentication order in accordance with Section 2.02 hereof, the
Trustee shall authenticate Series B Notes in exchange for Series
A Notes accepted for exchange in the Exchange Offer, which
Series B Notes shall not bear the legend set forth in (i) above,
and the Registrar shall rescind any restriction on the transfer
of such Notes, in each case unless the Holder of such Series A
Notes is either (A) a broker-dealer, (B) a Person participating
in the distribution of the Series A Notes or (C) a Person who is
an affiliate (as defined in Rule 144A) of the Company.
(h) Cancellation and/or Adjustment of Global Notes. At such time as all
beneficial interests in Global Notes have been exchanged for Definitive Notes,
redeemed, repurchased or cancelled, all Global Notes shall be returned to or
retained and cancelled by the Trustee in accordance with Section 2.11 hereof. At
any time prior to such cancellation, if any beneficial interest in a Global Note
is exchanged for Definitive Notes, redeemed, repurchased or cancelled, the
principal amount of Notes represented by such Global Note shall be reduced
accordingly and an endorsement shall be made on such Global Note, by the Trustee
or the Note Custodian, at the direction of the Trustee, to reflect such
reduction.
(i) General Provisions Relating to Transfers and Exchanges.
(i) To permit registrations of transfers and exchanges, the Company
shall execute and the Trustee shall authenticate Definitive
Notes and Global Notes at the Registrar's request.
(ii) No service charge shall be made to a Holder for any registration
of transfer or exchange, but the Company may require payment of
a sum sufficient to cover any transfer tax or similar
governmental charge payable in connection therewith (other than
any such transfer taxes or similar governmental charge payable
upon exchange or transfer pursuant to Sections 3.07, 4.10, 4.15
and 9.05 hereto).
(iii) The Registrar shall not be required to register the transfer of
or exchange any Note selected for redemption in whole or in
part, except the unredeemed portion of any Note being redeemed
in part.
(iv) All Definitive Notes and Global Notes issued upon any
registration of transfer or exchange of Definitive Notes or
Global Notes shall be the valid obligations of the Company,
evidencing the same debt, and entitled to the same benefits
under this Indenture, as the Definitive Notes or Global Notes
surrendered upon such registration of transfer or exchange.
(v) The Company shall not be required:
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<PAGE>
(A) to issue, to register the transfer of or to exchange Notes
during a period beginning at the opening of business 15 days
before the day of any selection of Notes for redemption
under Section 3.02 hereof and ending at the close of
business on the day of selection; or
(B) to register the transfer of or to exchange any Note so
selected for redemption in whole or in part, except the
unredeemed portion of any Note being redeemed in part; or
(C) to register the transfer of or to exchange a Note between a
record date and the next succeeding interest payment date.
(vi) Prior to due presentment for the registration of a transfer of
any Note, the Trustee, any Agent and the Company may deem and
treat the Person in whose name any Note is registered as the
absolute owner of such Note for the purpose of receiving payment
of principal of and interest on such Notes, and neither the
Trustee, any Agent nor the Company shall be affected by notice
to the contrary.
(vii) The Trustee shall authenticate Definitive Notes and Global Notes
in accordance with the provisions of Section 2.02 hereof.
Section 2.07. Replacement Notes.
If any mutilated Note is surrendered to the Trustee, or the Company and the
Trustee receives evidence to its satisfaction of the destruction, loss or theft
of any Note, the Company shall issue and the Trustee, upon the written order of
the Company signed by two Officers of the Company, shall authenticate a
replacement Note if the Trustee's requirements are met. If required by the
Trustee or the Company, an indemnity bond must be supplied by the Holder that is
sufficient in the judgment of the Trustee and the Company to protect the
Company, the Trustee, any Agent and any authenticating agent from any loss that
any of them may suffer if a Note is replaced. The Company may charge for its
expenses in replacing a Note.
Every replacement Note is an additional obligation of the Company and shall
be entitled to all of the benefits of this Indenture equally and proportionately
with all other Notes duly issued hereunder.
Section 2.08. Outstanding Notes.
The Notes outstanding at any time are all the Notes authenticated by the
Trustee except for those cancelled by it, those delivered to it for
cancellation, those reductions in the interest in a Global Note effected by the
Trustee in accordance with the provisions hereof, and those described in this
Section as not outstanding. Except as set forth in Section 2.09 hereof, a Note
does not cease to be outstanding because the Company or an Affiliate of the
Company holds the Note.
If a Note is replaced pursuant to Section 2.07 hereof, it ceases to be
outstanding unless the Trustee receives proof satisfactory to it that the
replaced Note is held by a bona fide purchaser.
If the principal amount of any Note is considered paid under Section 4.01
hereof, it ceases to be outstanding and interest on it ceases to accrue.
If the Paying Agent (other than the Company, a Subsidiary or an Affiliate
of any thereof) holds, on a redemption date or maturity date, money sufficient
to pay Notes payable on that date, then on and after that date such Notes shall
be deemed to be no longer outstanding and shall cease to accrue interest.
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<PAGE>
Section 2.09. Treasury Notes.
In determining whether the Holders of the required principal amount of
Notes have concurred in any direction, waiver or consent, Notes owned by the
Company, or by any Person directly or indirectly controlling or controlled by or
under direct or indirect common control with the Company, shall be considered as
though not outstanding, except that for the purposes of determining whether the
Trustee shall be protected in relying on any such direction, waiver or consent,
only Notes that a Trustee knows are so owned shall be so disregarded.
Section 2.10. Temporary Notes.
Until definitive Notes are ready for delivery, the Company may prepare and
the Trustee shall authenticate temporary Notes upon a written order of the
Company signed by two Officers of the Company. Temporary Notes shall be
substantially in the form of definitive Notes but may have variations that the
Company considers appropriate for temporary Notes and as shall be reasonably
acceptable to the Trustee. Without unreasonable delay, the Company shall prepare
and the Trustee shall authenticate definitive Notes in exchange for temporary
Notes.
Holders of temporary Notes shall be entitled to all of the benefits of this
Indenture.
Section 2.11. Cancellation.
The Company at any time may deliver Notes to the Trustee for cancellation.
The Registrar and Paying Agent shall forward to the Trustee any Notes
surrendered to them for registration of transfer, exchange or payment. The
Trustee and no one else shall cancel all Notes surrendered for registration of
transfer, exchange, payment, replacement or cancellation and shall destroy
cancelled Notes (subject to the record retention requirement of the Exchange
Act). Certification of the destruction of all cancelled Notes shall be delivered
to the Company. The Company may not issue new Notes to replace Notes that it has
paid or that have been delivered to the Trustee for cancellation.
Section 2.12. Defaulted Interest.
If the Company defaults in a payment of interest on the Notes, it shall pay
the defaulted interest in any lawful manner plus, to the extent lawful, interest
payable on the defaulted interest, to the Persons who are Holders on a
subsequent special record date, in each case at the rate provided in the Notes
and in Section 4.01 hereof. The Company shall notify the Trustee in writing of
the amount of defaulted interest proposed to be paid on each Note and the date
of the proposed payment. The Company shall fix or cause to be fixed each such
special record date and payment date, provided that no such special record date
shall be less than 10 days prior to the related payment date for such defaulted
interest. At least 15 days before the special record date, the Company (or, upon
the written request of the Company, the Trustee in the name and at the expense
of the Company) shall mail or cause to be mailed to Holders a notice that states
the special record date, the related payment date and the amount of such
interest to be paid.
ARTICLE 3.
REDEMPTION AND PREPAYMENT
Section 3.01. Notices to Trustee.
If the Company elects to redeem Notes pursuant to the optional redemption
provisions of Section 3.07 hereof, it shall furnish to the Trustee, at least 30
days but not more than 60 days before a redemption date, an Officers'
Certificate setting forth (a) the clause of this Indenture pursuant to which
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<PAGE>
the redemption shall occur, (b) the redemption date, (c) the principal amount of
Notes to be redeemed and (d) the redemption price.
Section 3.02. Selection of Notes to be Redeemed.
If less than all of the Notes are to be redeemed at any time, the Trustee
shall select the Notes to be redeemed among the Holders of the Notes in
compliance with the requirements of the principal national securities exchange,
if any, on which the Notes are listed or, if the Notes are not so listed, on a
pro rata basis, by lot or in accordance with any other method the Trustee
considers fair and appropriate. In the event of partial redemption by lot, the
particular Notes to be redeemed shall be selected, unless otherwise provided
herein, not less than 30 nor more than 60 days prior to the redemption date by
the Trustee from the outstanding Notes not previously called for redemption.
The Trustee shall promptly notify the Company in writing of the Notes
selected for redemption and, in the case of any Note selected for partial
redemption, the principal amount thereof to be redeemed. Notes and portions of
Notes selected shall be in amounts of $1,000 or whole multiples of $1,000;
except that if all of the Notes of a Holder are to be redeemed, the entire
outstanding amount of Notes held by such Holder, even if not a multiple of
$1,000, shall be redeemed. Except as provided in the preceding sentence,
provisions of this Indenture that apply to Notes called for redemption also
apply to portions of Notes called for redemption.
Section 3.03. Notice of Redemption.
Subject to the provisions of Section 3.09 hereof, at least 30 days but not
more than 60 days before a redemption date, the Company shall mail or cause to
be mailed, by first class mail, a notice of redemption to each Holder whose
Notes are to be redeemed at its registered address.
The notice shall identify the Notes to be redeemed and shall state:
(a) the redemption date;
(b) the redemption price;
(c) if any Note is being redeemed in part, the portion of the principal
amount of such Note to be redeemed and that, after the redemption date upon
surrender of such Note, a new Note or Notes in principal amount equal to the
unredeemed portion shall be issued upon cancellation of the original Note;
(d) the name and address of the Paying Agent;
(e) that Notes called for redemption must be surrendered to the Paying
Agent to collect the redemption price;
(f) that, unless the Company defaults in making such redemption payment,
interest on Notes called for redemption ceases to accrue on and after the
redemption date;
(g) the paragraph of the Notes and/or Section of this Indenture pursuant
to which the Notes called for redemption are being redeemed; and
(h) that no representation is made as to the correctness or accuracy of
the CUSIP number, if any, listed in such notice or printed on the Notes.
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<PAGE>
At the Company's request, the Trustee shall give the notice of redemption
in the Company's name and at its expense; provided, however, that the Company
shall have delivered to the Trustee, at least 45 days prior to the redemption
date, an Officers' Certificate requesting that the Trustee give such notice and
setting forth the information to be stated in such notice as provided in the
preceding paragraph.
Section 3.04. Effect of Notice of Redemption.
Once notice of redemption is mailed in accordance with Section 3.03 hereof,
Notes called for redemption become irrevocably due and payable on the redemption
date at the redemption price. A notice of redemption may not be conditional.
Section 3.05. Deposit of Redemption Price.
One Business Day prior to the redemption date, the Company shall deposit
with the Trustee or with the Paying Agent money sufficient to pay the redemption
price of and accrued interest on all Notes to be redeemed on that date. The
Trustee or the Paying Agent shall promptly return to the Company any money
deposited with the Trustee or the Paying Agent by the Company in excess of the
amounts necessary to pay the redemption price of, and accrued interest on, all
Notes to be redeemed.
If the Company complies with the provisions of the preceding paragraph, on
and after the redemption date, interest shall cease to accrue on the Notes or
the portions of Notes called for redemption. If a Note is redeemed on or after
an interest record date but on or prior to the related interest payment date,
then any accrued and unpaid interest shall be paid to the Person in whose name
such Note was registered at the close of business on such record date. If any
Note called for redemption shall not be so paid upon surrender for redemption
because of the failure of the Company to comply with the preceding paragraph,
interest shall be paid on the unpaid principal, from the redemption date until
such principal is paid, and to the extent lawful on any interest not paid on
such unpaid principal, in each case at the rate provided in the Notes and in
Section 4.01 hereof.
Section 3.06. Notes Redeemed in Part.
Upon surrender of a Note that is redeemed in part, the Company shall issue
and, upon the Company's written request, the Trustee shall authenticate for the
Holder at the expense of the Company a new Note equal in principal amount to the
unredeemed portion of the Note surrendered.
Section 3.07. Optional Redemption.
(a) Except as set forth in clause (b) of this Section 3.07, the Company
shall not have the option to redeem the Notes pursuant to this Section 3.07
prior to April 15, 2003. Thereafter, the Company shall have the option to redeem
the Notes, in whole or in part, at the redemption prices (expressed as
percentages of principal amount) set forth below plus accrued and unpaid
interest and Liquidated Damages thereon, if any, to the applicable redemption
date, if redeemed during the twelve-month period beginning on April 15 of the
years indicated below:
<TABLE>
<CAPTION>
Year Percentage
---- ----------
<S> <C>
2003........................................................... 104.938%
2004........................................................... 102.469%
2005 and thereafter............................................ 100.000%
</TABLE>
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<PAGE>
(b) Notwithstanding the provisions of clause (a) of this Section 3.07, at
any time prior to April 15, 2002, the Company may on any one or more occasions
redeem up to an aggregate of $66.67 million in principal amount of Notes at a
redemption price of 109.875% of the principal amount thereof, plus accrued and
unpaid interest and Liquidated Damages thereon, if any, to the redemption date,
with the net cash proceeds of a public offering of common stock of the Company;
provided that at least $133.33 million in aggregate principal amount of Notes
remain outstanding immediately after the occurrence of such redemption; and
provided, further, that such redemption shall occur within 45 days of the date
of the closing of such public offering.
(c) Any redemption of Notes pursuant to this Section 3.07 shall be made
pursuant to the provisions of Section 3.01 through 3.06 hereof.
Section 3.08. Mandatory Redemption.
Except as set forth under Sections 4.10 and 4.15 hereof, the Company shall
not be required to make mandatory redemption payments with respect to the Notes.
Section 3.09. Offer to Purchase by Application of Excess Proceeds.
In the event that, pursuant to Section 4.10 hereof, the Company shall be
required to commence an offer to all Holders to purchase Notes (an "Asset Sale
Offer"), it shall follow the procedures specified below.
The Asset Sale Offer shall remain open for a period of 20 Business Days
following its commencement and no longer, except to the extent that a longer
period is required by applicable law (the "Offer Period"). No later than five
Business Days after the termination of the Offer Period (the "Purchase Date"),
the Company shall purchase the principal amount of Notes required to be
purchased pursuant to Section 4.10 hereof (the "Offer Amount") or, if less than
the Offer Amount has been tendered, all Notes tendered in response to the Asset
Sale Offer. Payment for any Notes so purchased shall be made in the same manner
as interest payments are made.
If the Purchase Date is on or after an interest record date and on or
before the related interest payment date, any accrued and unpaid interest shall
be paid to the Person in whose name a Note is registered at the close of
business on such record date, and no additional interest shall be payable to
Holders who tender Notes pursuant to the Asset Sale Offer.
Upon the commencement of an Asset Sale Offer, the Company shall send, by
first class mail, a notice to the Trustee and each of the Holders, with a copy
to the Trustee. The notice shall contain all instructions and materials
necessary to enable such Holders to tender Notes pursuant to the Asset Sale
Offer. The Asset Sale Offer shall be made to all Holders. The notice, which
shall govern the terms of the Asset Sale Offer, shall state:
(a) that the Asset Sale Offer is being made pursuant to this Section 3.09
and Section 4.10 hereof and the length of time the Asset Sale Offer shall remain
open;
(b) the Offer Amount, the purchase price and the Purchase Date;
(c) that any Note not tendered or accepted for payment shall continue to
accrue interest;
(d) that, unless the Company defaults in making such payment, any Note
accepted for payment pursuant to the Asset Sale Offer shall cease to accrue
interest after the Purchase Date;
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<PAGE>
(e) that Holders electing to have a Note purchased pursuant to an Asset
Sale Offer may only elect to have all of such Note purchased and may not elect
to have only a portion of such Note purchased;
(f) that Holders electing to have a Note purchased pursuant to any Asset
Sale Offer shall be required to surrender the Note, with the form entitled
"Option of Holder to Elect Purchase" on the reverse of the Note completed, or
transfer by book-entry transfer, to the Company, a depository, if appointed by
the Company, or a Paying Agent at the address specified in the notice at least
three days before the Purchase Date;
(g) that Holders shall be entitled to withdraw their election if the
Company, the depository or the Paying Agent, as the case may be, receives, not
later than the expiration of the Offer Period, a telegram, telex, facsimile
transmission or letter setting forth the name of the Holder, the principal
amount of the Note the Holder delivered for purchase and a statement that such
Holder is withdrawing his election to have such Note purchased;
(h) that, if the aggregate principal amount of Notes surrendered by Holders
exceeds the Offer Amount, the Company shall select the Notes to be purchased on
a pro rata basis (with such adjustments as may be deemed appropriate by the
Company so that only Notes in denominations of $1,000, or integral multiples
thereof, shall be purchased); and
(i) that Holders whose Notes were purchased only in part shall be issued
new Notes equal in principal amount to the unpurchased portion of the Notes
surrendered (or transferred by book-entry transfer).
On or before the Purchase Date, the Company shall, to the extent lawful,
accept for payment, on a oro rata basis to the extent necessary, the Offer
Amount of Notes or portions thereof tendered pursuant to the Asset Sale Offer,
or if less than the Offer Amount has been tendered, all Notes tendered, and
shall deliver to the Trustee an Officers' Certificate stating that such Notes or
portions thereof were accepted for payment by the Company in accordance with the
terms of this Section 3.09. The Company, the Depository or the Paying Agent, as
the case may be, shall promptly (but in any case not later than five days after
the Purchase Date) mail or deliver to each tendering Holder an amount equal to
the purchase price of the Notes tendered by such Holder and accepted by the
Company for purchase, and the Company shall promptly issue a new Note, and the
Trustee, upon written request from the Company shall authenticate and mail or
deliver such new Note to such Holder, in a principal amount equal to any
unpurchased portion of the Note surrendered. Any Note not so accepted shall be
promptly mailed or delivered by the Company to the Holder thereof. The Company
shall publicly announce the results of the Asset Sale Offer on the Purchase
Date.
Other than as specifically provided in this Section 3.09, any purchase
pursuant to this Section 3.09 shall be made pursuant to the provisions of
Sections 3.01 through 3.06 hereof.
ARTICLE 4.
COVENANTS
Section 4.01. Payment of Notes.
The Company shall pay or cause to be paid the principal of, premium, if
any, and interest on the Notes on the dates and in the manner provided in the
Notes. Principal, premium, if any, and interest shall be considered paid on the
date due if the Paying Agent, if other than the Company or a Subsidiary thereof,
holds as of 10:00 am. Eastern Time on the due date money deposited by the
Company in
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<PAGE>
immediately available funds and designated for and sufficient to pay all
principal, premium, if any, and interest then due. The Company shall pay all
Liquidated Damages, if any, in the same manner on the dates and in the amounts
set forth in the Registration Rights Agreement.
The Company shall pay interest (including post-petition interest in any
proceeding under any Bankruptcy Law) on overdue principal at the rate equal to 1
% per annum in excess of the then applicable interest rate on the Notes to the
extent lawful; it shall pay interest (including post-petition interest in any
proceeding under any Bankruptcy Law) on overdue installments of interest and
Liquidated Damages (without regard to any applicable grace period) at the same
rate to the extent lawful.
Section 4.02. Maintenance of Office or Agency.
The Company shall maintain in the Borough of Manhattan, the City of New
York, an office or agency (which may be an office of the Trustee or an affiliate
of the Trustee, Registrar or co-registrar) where Notes may be surrendered for
registration of transfer or for exchange and where notices and demands to or
upon the Company in respect of the Notes and this Indenture may be served. The
Company shall give prompt written notice to the Trustee of the location, and any
change in the location, of such office or agency. If at any time the Company
shall fail to maintain any such required office or agency or shall fail to
furnish the Trustee with the address thereof, such presentations, surrenders,
notices and demands may be made or served at the Corporate Trust Office of the
Trustee.
The Company may also from time to time designate one or more other offices
or agencies where the Notes may be presented or surrendered for any or all such
purposes and may from time to time rescind such designations; provided, however,
that no such designation or rescission shall in any manner relieve the Company
of its obligation to maintain an office or agency in the Borough of Manhattan,
the City of New York for such purposes. The Company shall give prompt written
notice to the Trustee of any such designation or rescission and of any change in
the location of any such other office or agency.
The Company hereby designates the Corporate Trust Office of the Trustee as
one such office or agency of the Company in accordance with Section 2.03.
Section 4.03. Reports.
(a) Whether or not the Company is required by the rules and regulations of
the SEC, so long as any Notes are outstanding, the Company shall furnish to the
Holders of Notes (i) all quarterly and annual financial information that would
be required to be contained in a filing with the SEC on Forms 10-Q and 10-K if
the Company were required to file such Forms, including a "Management's
Discussion and Analysis of Financial Condition and Results of Operations" that
describes the financial condition and results of operations of the Company and
its consolidated Subsidiaries (showing in reasonable detail, either on the face
of the financial statements or in the footnotes thereto and in Management's
Discussion and Analysis of Financial Condition and Results of Operations, the
financial condition and results of operations of the Company and its Restricted
Subsidiaries separately from the financial condition and results of operations
of the Unrestricted Subsidiaries of the Company) and, with respect to the annual
information only, a report thereon by the Company's certified independent
accountants and (ii) all current reports that would be required to be filed with
the SEC on Form 8-K if the Company were required to file such reports. In
addition, whether or not required by the rules and regulations of the SEC, the
Company shall file a copy of all such information and reports with the SEC for
public availability (unless the SEC will not accept such a filing) and make such
information available to securities analysts and prospective investors upon
request.
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(b) For so long as any Notes remain outstanding, the Company and the
Subsidiary Guarantors shall furnish to the Holders and to securities analysts
and prospective investors, upon their request, the information required to be
delivered pursuant to Rule 144A(d)(4) under the Securities Act.
Section 4.04. Compliance Certificate.
(a) The Company shall deliver to the Trustee, within 90 days after the end
of each fiscal year, an Officers' Certificate stating that a review of the
activities of the Company and its Subsidiaries during the preceding fiscal year
has been made under the supervision of the signing Officers with a view to
determining whether the Company has kept, observed, performed and fulfilled its
obligations under this Indenture, and further stating, as to each such Officer
signing such certificate, that to the best of his or her knowledge the Company
has kept, observed, performed and fulfilled each and every covenant contained in
this Indenture and is not in default in the performance or observance of any of
the terms, provisions and conditions of this Indenture (or, if a Default or
Event of Default shall have occurred, describing all such Defaults or Events of
Default of which he or she may have knowledge and what action the Company is
taking or proposes to take with respect thereto) and that to the best of his or
her knowledge no event has occurred and remains in existence by reason of which
payments on account of the principal of or interest, if any, on the Notes is
prohibited or if such event has occurred, a description of the event and what
action the Company is taking or proposes to take with respect thereto.
(b) So long as not contrary to the then current recommendations of the
American Institute of Certified Public Accountants, the year-end financial
statements delivered pursuant to Section 4.03(a) above shall be accompanied by a
written statement of the Company's independent public accountants (who shall be
a firm of established national reputation) that in making the examination
necessary for certification of such financial statements, nothing has come to
their attention that would lead them to believe that the Company has violated
any provisions of Article 4 or Article 5 hereof or, if any such violation has
occurred, specifying the nature and period of existence thereof, it being
understood that such accountants shall not be liable directly or indirectly to
any Person for any failure to obtain knowledge of any such violation.
(c) The Company shall, so long as any of the Notes are outstanding, deliver
to the Trustee, forthwith upon any Officer becoming aware of any Default or
Event of Default, an Officers' Certificate specifying such Default or Event of
Default and what action the Company is taking or proposes to take with respect
thereto.
Section 4.05. Taxes.
The Company shall pay, and shall cause each of its Subsidiaries to pay,
prior to delinquency, all material taxes, assessments, and governmental levies
except such as are contested in good faith and by appropriate proceedings or
where the failure to effect such payment is not adverse in any material respect
to the Holders of the Notes.
Section 4.06. Stay, Extension and Usury Laws.
The Company covenants (to the extent that it may lawfully do so) that it
shall not at any time insist upon, plead, or in any manner whatsoever claim or
take the benefit or advantage of, any stay, extension or usury law wherever
enacted, now or at any time hereafter in force, that may affect the covenants or
the performance of this Indenture; and the Company (to the extent that it may
lawfully do so) hereby expressly waives all benefit or advantage of any such
law, and covenants that it shall not, by resort to any such law, hinder, delay
or impede the execution of any power herein granted to the Trustee, but shall
suffer and permit the execution of every such power as though no such law has
been enacted.
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Section 4.07. Restricted Payments.
The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, directly or indirectly: (i) declare or pay any dividend or make
any other payment or distribution on account of the Company's or any of its
Restricted Subsidiaries' Equity Interests (including, without limitation, any
payment in connection with any merger or consolidation involving the Company) or
to the direct or indirect holders of the Company's or any of its Restricted
Subsidiaries' Equity Interests in their capacity as such (other than dividends
or distributions payable in Equity Interests (other than Disqualified Stock) of
the Company); (ii) purchase, redeem or otherwise acquire or retire for value
(including, without limitation, in connection with any merger or consolidation
involving the Company) any Equity Interests of the Company or any direct or
indirect parent of the Company or other Affiliate of the Company (other than any
such Equity Interests owned by the Company or any Wholly-Owned Restricted
Subsidiary of the Company); (iii) make any payment on or with respect to, or
purchase, redeem, defease or otherwise acquire or retire for value any
Indebtedness that is subordinated to the Notes, except a payment of interest or
principal at Stated Maturity; or (iv) make any Restricted Investment (all such
payments and other actions set forth in clauses (i) through (iv) above being
collectively referred to as "Restricted Payments"), unless, at the time of and
after giving effect to such Restricted Payment:
(a) no Default or Event of Default shall have occurred and be continuing or
would occur as a consequence thereof; and
(b) the Company would, at the time of such Restricted Payment and after
giving pro forma effect thereto, have been permitted to incur at least $1.00 of
additional Indebtedness pursuant to the Consolidated Leverage Ratio test set
forth in the first paragraph of Section 4.09 hereof; and
(c) such Restricted Payment, together with the aggregate amount of all
other Restricted Payments made by the Company and its Subsidiaries after
February 4, 1997 (excluding Restricted Payments permitted by clause (ii) of the
next succeeding paragraph), is less than the sum of (i) 25% of the aggregate
cumulative Consolidated Net Income of the Company for the period (taken as one
accounting period) from and after March 31, 1997 to the end of the Company's
most recently ended fiscal quarter for which internal financial statements are
available at the time of such Restricted Payment (or, if such Consolidated Net
Income for such period is a deficit, less 100% of such deficit), plus (ii) 100%
of the aggregate net cash proceeds received by the Company from the issue or
sale since February 4, 1997 of Equity Interests of the Company (other than
Disqualified Stock) or of Disqualified Stock or debt securities of the Company
that have been converted into such Equity Interests (other than Equity Interests
(or Disqualified Stock or convertible debt securities) sold to a Subsidiary of
the Company and other than Disqualified Stock or convertible debt securities
that have been converted into Disqualified Stock), plus (iii) to the extent that
any Restricted Investment that was made after February 4, 1997 is sold for cash
or otherwise liquidated or repaid for cash, the lesser of (A) the cash return of
capital with respect to such Restricted Investment (less the cost of
disposition, if any) and (B) the initial amount of such Restricted Investment.
The foregoing provisions shall not prohibit (i) the payment of any dividend
within 60 days after the date of declaration thereof, if at said date of
declaration such payment would have complied with the provisions of this
Indenture; (ii) the redemption, repurchase, retirement, defeasance or other
acquisition of any subordinated Indebtedness or Equity Interests of the Company
in exchange for, or out of the net cash proceeds of the substantially concurrent
sale (other than to a Subsidiary of the Company) of, other Equity Interests of
the Company (other than any Disqualified Stock); provided that the amount of any
such net cash proceeds that are utilized for any such redemption, repurchase,
retirement, defeasance or other acquisition shall be excluded from clause (c)
(ii) of the preceding paragraph; (iii) the defeasance, redemption, repurchase or
other acquisition of subordinated Indebtedness with the net cash proceeds
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from an incurrence of Permitted Refinancing Indebtedness; (iv) the payment of
any dividend by a Restricted Subsidiary of the Company to the holders of its
common Equity Interests on a pro rata basis; and (v) the repurchase, redemption
or other acquisition or retirement for value of any Equity Interests of the
Company or any Restricted Subsidiary of the Company held by any member of the
Company's (or any of its Restricted Subsidiaries') management pursuant to any
management equity subscription agreement or stock option agreement in effect as
of the date of this Indenture; provided that the aggregate price paid for all
such repurchased, redeemed, acquired or retired Equity Interests shall not
exceed $250,000 in any twelve-month period and no Default or Event of Default
shall have occurred and be continuing immediately after such transaction.
The Board of Directors of the Company may designate any Restricted
Subsidiary to be an Unrestricted Subsidiary if such designation would not cause
a Default; provided that in no event shall the business currently operated by
AmeriCredit Financial Services, Inc. be transferred to or held by an
Unrestricted Subsidiary. For purposes of making such determination, all
outstanding Investments by the Company and its Restricted Subsidiaries (except
to the extent repaid in cash) in the Subsidiary so designated shall be deemed to
be Restricted Payments at the time of such designation and shall reduce the
amount available for Restricted Payments under the first paragraph of this
covenant. All such outstanding Investments shall be deemed to constitute
Investments in an amount equal to the greater of (y) the net book value of such
Investments at the time of such designation or (z) the fair market value of such
Investments at the time of such designation. Such designation shall only be
permitted if such Restricted Payment would be permitted at such time and if such
Restricted Subsidiary otherwise meets the definition of an Unrestricted
Subsidiary.
The amount of all Restricted Payments (other than cash) shall be the fair
market value on the date of the Restricted Payment of the asset(s) or securities
proposed to be transferred or issued by the Company or such Restricted
Subsidiary, as the case may be, pursuant to the Restricted Payment. The fair
market value of any non-cash Restricted Payment shall be determined by the Board
of Directors of the Company whose resolution with respect thereto shall be
delivered to the Trustee, such determination to be based upon an opinion or
appraisal issued by an accounting, appraisal or investment banking firm of
national standing if such fair market value exceeds $10.0 million. Not later
than 15 days after the end of any fiscal quarter during which any Restricted
Payment is made, the Company shall deliver to the Trustee an Officers'
Certificate stating that all Restricted Payments made during such fiscal quarter
were permitted and setting forth the basis upon which the calculations required
by this Section 4.07 hereof were computed, together with a copy of any fairness
opinion or appraisal required by this Indenture.
Section 4.08. Dividend and Other Payment Restrictions Affecting Subsidiaries.
The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, directly or indirectly, create or otherwise cause or suffer to
exist or become effective any encumbrance or restriction on the ability of any
Restricted Subsidiary to (i)(a) pay dividends or make any other distributions to
the Company or any of its Restricted Subsidiaries (1) on its Capital Stock or
(2) with respect to any other interest or participation in, or measured by, its
profits, or (b) pay any Indebtedness owed to the Company or any of its
Restricted Subsidiaries, (ii) make loans or advances to the Company or any of
its Restricted Subsidiaries or (iii) transfer any of its properties or assets to
the Company or any of its Restricted Subsidiaries, except for such encumbrances
or restrictions existing under or by reason of (a) this Indenture and the Notes,
(b) applicable law, (c) any instrument governing Indebtedness or Capital Stock
of a Person acquired by the Company or any of its Restricted Subsidiaries as in
effect at the time of such acquisition (except to the extent such Indebtedness
was incurred in connection with or in contemplation of such acquisition), which
encumbrance or restriction is not applicable to any Person, or the properties or
assets of any Person, other than the Person, or the property or assets of the
Person, so acquired, provided that, in the case of Indebtedness, such
Indebtedness was permitted by the terms of this
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Indenture to be incurred, (d) by reason of customary non-assignment provisions
in leases entered into in the ordinary course of business and consistent with
past practices, (e) purchase money obligations for property acquired in the
ordinary course of business that impose restrictions of the nature described in
clause (iii) above on the property so acquired, (f) Permitted Refinancing
Indebtedness, provided that the restrictions contained in the agreements
governing such Permitted Refinancing Indebtedness are no more restrictive than
those contained in the agreements governing the Indebtedness being refinanced,
(g) the requirements of any Securitization that are exclusively applicable to
any bankruptcy remote special purpose Restricted Subsidiary of the Company
formed in connection therewith, (h) the requirements of any Credit Enhancement
Agreement or (i) in the case of clause (iii) above, restrictions contained in
security agreements securing Indebtedness of Guarantors relating to the
properties or assets of Guarantors subject to the Liens created thereby,
provided that such Liens were otherwise permitted to be incurred under this
Indenture.
Section 4.09. Incurrence of Indebtedness and Issuance of Preferred Stock.
The Company shall not, and shall not permit any of its Subsidiaries to,
directly or indirectly, create, incur, issue, assume, guarantee or otherwise
become directly or indirectly liable, contingently or otherwise, with respect to
(collectively, "incur") any Indebtedness (including Acquired Debt) and the
Company shall not issue any Disqualified Stock and shall not permit any of its
Subsidiaries to issue any shares of preferred stock; provided, however, that the
Company and the Guarantors may incur Indebtedness (including Acquired Debt) or
issue shares of Disqualified Stock or preferred stock if the Consolidated
Leverage Ratio of the Company, calculated on a pro forma basis after giving
effect to the incurrence or issuance of the additional Indebtedness to be
incurred or the Disqualified Stock or preferred stock to be issued, would have
been less than 2.0 to 1.
The provisions of the first paragraph of this covenant shall not apply to
the incurrence of any of the following items of Indebtedness (collectively,
"Permitted Debt"):
(i) the existence of Credit Facilities and the Guarantees thereof by
the Guarantors and the incurrence by the Company and/or any of the
Guarantors of revolving credit Indebtedness pursuant to one or more Credit
Facilities the proceeds of which are applied to purchase or originate
Receivables; provided that the aggregate principal amount of all revolving
credit Indebtedness outstanding under all Credit Facilities after giving
effect to such incurrence, including all Permitted Refinancing Indebtedness
incurred to refund, refinance, defease, renew or replace any Indebtedness
incurred pursuant to this clause (i) and with letters of credit being
deemed to have a principal amount equal to the maximum potential liability
of the Company and its Restricted Subsidiaries thereunder, does not at any
time exceed the amount of the Borrowing Base (any such outstanding
Indebtedness that exceeds the amount of the Borrowing Base as of the close
of any Business Day shall cease to be Permitted Debt pursuant to this
clause (i) as of the close of business on the third Business Day thereafter
and shall be deemed to be an incurrence of such Indebtedness that is not
permitted by this clause (i) by the Company or such Guarantor, as
applicable, as of such third Business Day);
(ii) the existence of Warehouse Facilities, regardless of amount, and
the incurrence by the Company or any of its Restricted Subsidiaries of
Permitted Warehouse Debt in an aggregate principal amount at any time
outstanding (with letters of credit being deemed to have a principal amount
equal to the maximum potential liability of the Company and its Restricted
Subsidiaries thereunder) not to exceed 100% of the aggregate principal
amount (exclusive of Acquisition Fees included therein) of all Eligible
Receivables owned by the Company and its Restricted Subsidiaries (or such
Warehouse Facilities in the case of Permitted Warehouse Debt in the form of
repurchase agreements) at such time;
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(iii) the incurrence by the Company and its Restricted Subsidiaries
of the Existing Indebtedness;
(iv) the incurrence by the Company of Indebtedness represented by
the Original Notes, the Secondary Notes and the Notes and the incurrence by
the Guarantors of the Original Guarantees, the Secondary Guarantees and the
Subsidiary Guarantees;
(v) obligations of the Company and its Restricted Subsidiaries
under Credit Enhancement Agreements;
(vi) the incurrence by the Company or any of its Restricted
Subsidiaries of Permitted Refinancing Indebtedness in exchange for, or the
net proceeds of which are used to refund, refinance, defease, renew or
replace any Indebtedness (other than Permitted Warehouse Debt or
intercompany Indebtedness) that was permitted by this Indenture to be
incurred;
(vii) the incurrence by the Company or any of its Restricted
Subsidiaries of intercompany Indebtedness between or among the Company and
any of the Guarantors; provided, however, that (i) if the Company is the
obligor on such Indebtedness, such Indebtedness is expressly subordinated
to the prior payment in full in cash of all Obligations with respect to the
Notes and (ii)(A) any subsequent issuance or transfer of Equity Interests
that results in any such Indebtedness being held by a Person other than the
Company or a Guarantor and (B) any sale or other transfer of any such
Indebtedness to a Person that is not either the Company or a Guarantor
shall be deemed, in each case, to constitute an incurrence of such
Indebtedness by the Company or such Restricted Subsidiary, as the case may
be, that was not permitted by this clause (vii);
(viii) the issuance by a Restricted Subsidiary of preferred stock to
the Company or to any of the Guarantors; provided, however, that any
subsequent event or issuance or transfer of any Capital Stock that results
in the owner of such preferred stock ceasing to be a Guarantor of the
Company or any subsequent transfer of such preferred stock to a Person
other than the Company or any of the Guarantors, shall be deemed to be an
issuance of preferred stock by such Restricted Subsidiary that was not
permitted by this clause (viii);
(ix) the incurrence by the Company or any of its Restricted
Subsidiaries of Hedging Obligations that are incurred (y) for the purpose
of fixing or hedging interest rate risk with respect to any floating rate
Indebtedness that is permitted by the terms of this Indenture to be
outstanding or (z) for the purpose of hedging, fixing or capping interest
rate risk in connection with any completed or pending Securitization;
(x) the guarantee by the Company or any of the Guarantors of
Indebtedness of the Company or a Restricted Subsidiary of the Company that
was permitted to be incurred by another provision of this Section 4.09;
(xi) the incurrence by the Company's Unrestricted Subsidiaries of
Non-Recourse Debt, provided, however, that if any such Indebtedness ceases
to be Non-Recourse Debt of an Unrestricted Subsidiary, such event shall be
deemed to constitute an incurrence of Indebtedness by a Restricted
Subsidiary of the Company that was not permitted by this clause (xi); and
(xii) the incurrence by the Company of additional Indebtedness in an
aggregate principal amount (or accreted value, as applicable) at any time
outstanding, including all
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Permitted Refinancing Indebtedness incurred to refund, refinance or replace
any other Indebtedness incurred pursuant to this clause (xii), not to
exceed $5.0 million.
The Company shall not, and shall not permit any Restricted Subsidiary of
the Company to, incur any Indebtedness that is contractually subordinated to any
Indebtedness of the Company or any such Restricted Subsidiary unless such
Indebtedness is also contractually subordinated to the Notes, or the Subsidiary
Guarantee of such Restricted Subsidiary (as applicable), on substantially
identical terms; provided, however, that no Indebtedness shall be deemed to be
contractually subordinated to any other Indebtedness solely by virtue of being
unsecured.
For purposes of determining compliance with this covenant, in the event
that an item of Indebtedness meets the criteria of more than one of the
categories of Permitted Debt described in clauses (i) through (xii) above or is
entitled to be incurred pursuant to the first paragraph of this covenant, the
Company shall, in its sole discretion, classify such item of Indebtedness in any
manner that complies with this covenant and such item of Indebtedness shall be
treated as having been incurred pursuant to only one of such clauses or pursuant
to the first paragraph hereof.
Section 4.10. Asset Sales.
The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, consummate an Asset Sale unless (i) the Company (or the
Restricted Subsidiary, as the case may be) receives consideration at the time of
such Asset Sale at least equal to the fair market value (evidenced by a
resolution of the Board of Directors of the Company set forth in an Officers'
Certificate delivered to the Trustee) of the assets or Equity Interests issued
or sold or otherwise disposed of and (ii) at least 85% of the consideration
therefor received by the Company or such Restricted Subsidiary is in the form of
cash; provided that the amount of (x) any liabilities (as shown on the Company's
or such Restricted Subsidiary's most recent balance sheet), of the Company or
any Restricted Subsidiary (other than contingent liabilities and liabilities
that are by their terms subordinated to the Notes or any Guarantee thereof) that
are assumed by the transferee of any such assets pursuant to a customary
novation agreement that releases the Company or such Restricted Subsidiary from
further liability and (y) any securities, notes or other obligations received by
the Company or any such Restricted Subsidiary from such transferee that are
immediately converted by the Company or such Restricted Subsidiary into cash (to
the extent of the cash received), shall be deemed to be cash for purposes of
this provision.
Within 180 days after the receipt of any Net Proceeds from an Asset Sale,
the Company may apply such Net Proceeds (a) to permanently reduce Specified
Senior Indebtedness of the Company and its Restricted Subsidiaries including the
Original Notes and the Secondary Notes; provided, however, that such Net
Proceeds shall be applied to all Specified Senior Indebtedness of the Company
and its Restricted Subsidiaries on a pro rata basis, or (b) to an Investment,
the making of a capital expenditure or the acquisition of Receivables or other
tangible assets, in each case, in or with respect to a Permitted Business.
Pending the final application of any such Net Proceeds, the Company may
temporarily reduce Indebtedness under Credit Facilities and/or Warehouse
Facilities or otherwise invest such Net Proceeds in any manner that is not
prohibited by this Indenture. Any Net Proceeds from Asset Sales that are not
applied or invested as provided in the first sentence of this paragraph shall be
deemed to constitute "Excess Proceeds." When the aggregate amount of Excess
Proceeds exceeds $10.0 million, the Company shall be required to make an offer
to all Holders of Original Notes (an "Asset Sale Offer") to purchase the maximum
principal amount of Original Notes that may be purchased out of the Excess
Proceeds, at an offer price in cash in an amount equal to 100% of the principal
amount thereof plus accrued and unpaid interest and Liquidated Damages thereon,
if any, to the date of purchase, in accordance with the procedures set forth in
the Original Indenture. To the extent that the aggregate amount of Original
Notes tendered pursuant to an Asset Sale Offer is less than the Excess Proceeds,
the Company will be required
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to make an offer to all Holders of Secondary Notes ("Secondary Asset Sale
Offer") to purchase the maximum principal amount of Secondary Notes that may be
purchased out of the Excess Proceeds, at an offer price in cash in an amount
equal to 100% of the principal amount thereof plus accrued and unpaid interest
and Liquidated Damages thereon, if any, to the date of purchase, in accordance
with the procedures set forth in the Secondary Indenture. To the extent that the
aggregate amount of Secondary Notes tendered pursuant to a Secondary Asset Sale
Offer is less than the Excess Proceeds, the Company will be required to make an
offer to all Holders of Notes ("Third Asset Sale Offer") to purchase the maximum
principal amount of Notes that may be purchased out of the Excess Proceeds, at
an offer price in cash in an amount equal to 100% of the principal amount
thereof plus accrued and unpaid interest and Liquidated Damages thereon, if any,
to the date of purchase, in accordance with the procedures set forth in the
Indenture. To the extent that the aggregate amount of Notes tendered pursuant to
a Third Asset Sale Offer is less than the remaining Excess Proceeds, the Company
may use any remaining Excess Proceeds for general corporate purposes. If the
aggregate principal amount of Original Notes, Secondary Notes or Notes
surrendered by Holders thereof exceeds the amount of Excess Proceeds, the
Trustee shall select the Original Notes, Secondary Notes or Notes to be
purchased on a pro rata basis. Upon completion of such offer to purchase Notes,
the amount of Excess Proceeds shall be reset at zero.
Section 4.11. Transactions with Affiliates.
The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, make any payment to, or sell, lease, transfer or otherwise
dispose of any of its properties or assets to, or purchase any property or
assets from, or enter into or make or amend any transaction, contract,
agreement, understanding, loan, advance or Guarantee with, or for the benefit
of, any Affiliate (each of the foregoing, an "Affiliate Transaction"), unless
(i) such Affiliate Transaction is on terms that are no less favorable to the
Company or the relevant Restricted Subsidiary than those that would have been
obtained in a comparable transaction by the Company or such Restricted
Subsidiary with an unrelated Person and (ii) the Company delivers to the Trustee
(a) with respect to any Affiliate Transaction or series of related Affiliate
Transactions involving aggregate consideration in excess of $1.0 million, a
resolution of the Board of Directors of the Company set forth in an Officers'
Certificate certifying that such Affiliate Transaction complies with clause (i)
above and that such Affiliate Transaction has been approved by a majority of the
disinterested members of the Board of Directors of the Company and (b) with
respect to any Affiliate Transaction or series of related Affiliate Transactions
involving aggregate consideration in excess of $5.0 million, an opinion as to
the fairness to the Holders of such Affiliate Transaction from a financial point
of view issued by an accounting, appraisal or investment banking firm of
national standing; provided that (x) any employment agreement entered into by
the Company or any of its Restricted Subsidiaries in the ordinary course of
business and consistent with the past practice of the Company or such Restricted
Subsidiary, (y) transactions between or among the Company and/or its Restricted
Subsidiaries and (z) Restricted Payments that are permitted by Section 4.07
hereof, in each case, shall not be deemed Affiliate Transactions.
Section 4.12. Liens.
The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, create, incur, assume or otherwise cause or suffer to exist or
become effective any Lien of any kind (other than Permitted Liens) upon any of
their property or assets, now owned or hereafter acquired, unless all payments
due under this Indenture and the Notes are secured on an equal and ratable basis
with the obligations so secured until such time as such obligations are no
longer secured by a Lien.
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Section 4.13. Line of Business.
The Company shall not, and shall not permit any Restricted Subsidiaries to,
engage in any business other than Permitted Businesses, except to such extent as
would not be material to the Company and its Subsidiaries taken as a whole.
Section 4.14. Corporate Existence.
Subject to Article 5 hereof, the Company shall do or cause to be done all
things necessary to preserve and keep in full force and effect (i) its corporate
existence, and the corporate, partnership or other existence of each of its
Subsidiaries, in accordance with the respective organizational documents (as the
same may be amended from time to time) of the Company or any such Subsidiary and
(ii) the rights (charter and statutory), licenses and franchises of the Company
and its Subsidiaries; provided, however, that the Company shall not be required
to preserve any such right, license or franchise, or the corporate, partnership
or other existence of any of its Subsidiaries, if the Board of Directors shall
determine that the preservation thereof is no longer desirable in the conduct of
the business of the Company and its Subsidiaries, taken as a whole, and that the
loss thereof is not adverse in any material respect to the Holders of the Notes.
Section 4.15. Offer to Repurchase Upon Change of Control.
(a) Upon the occurrence of a Change of Control, each Holder of Notes shall
have the right to require the Company to repurchase all or any part (equal to
$1,000 or an integral multiple thereof) of such Holder's Notes pursuant to the
offer described below (the "Change of Control Offer") at an offer price in cash
equal to 101 % of the aggregate principal amount thereof plus accrued and unpaid
interest and Liquidated Damages thereon, if any, to the date of purchase (the
"Change of Control Payment"). Within ten days following any Change of Control,
the Company shall mail a notice to each Holder describing the transaction or
transactions that constitute the Change of Control and offering to repurchase
Notes on the date specified in such notice, which date shall be no earlier than
30 days and no later than 60 days from the date such notice is mailed (the
"Change of Control Payment Date"). The notice, which shall govern the terms of
the Change of Control Offer, shall state:
(1) that the Change of Control Offer is being made pursuant to this
Section 4.15 and that all Notes tendered will be accepted for
payment;
(2) the amount of the Change of Control Payment and the Change of
Control Payment Date, which date shall be no earlier than 30 days
nor later than 60 days from the date such notice is mailed;
(3) that any Notes not tendered will continue to accrue interest in
accordance with the terms of the Indenture;
(4) that, unless the Company defaults in the payment of the Change of
Control Payment, all Notes accepted for payment pursuant to the
Change of Control Offer shall cease to accrue interest after the
Change of Control Payment Date;
(5) that Holders electing to have Securities purchased pursuant to
the Change of Control Offer will be required to surrender their
Notes, with the form entitled "Option of Holder to Elect
Purchase" on the reverse of the Notes completed, to the Paying
Agent at the address specified in the notice prior to the close
of business on the Business Day preceding the Change of Control
Payment Date;
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(6) that Holders will be entitled to withdraw their election if the
Paying Agent receives, not later than the close of business on
the Business Day preceding the Change of Control Payment Date, a
telegram, telex, facsimile transmission or letter setting forth
the name of the Holder, the principal amount of the Notes the
Holder delivered for purchase, and a statement that such Holder
is withdrawing its election to have such Notes purchased;
(7) that Holders whose Notes are being purchased only in part will be
issued new Notes equal in principal amount to the unpurchased
portion of the Notes surrendered, which unpurchased portion must
be equal to $1,000 in principal amount or an integral multiple
thereof; and
(8) the circumstances and relevant facts regarding such Change of
Control (including, but not limited to, if available, information
which respect to pro forma historical and projected financial
information after giving effect to such Change of Control,
information regarding the Person or Persons acquiring control and
such Person's or Persons' business plans going forward).
The Company shall comply with the requirements of Rule 14e-l under the
Exchange Act and any other securities laws and regulations thereunder to the
extent such laws and regulations are applicable in connection with the
repurchase of the Notes as a result of a Change of Control.
(b) On the Change of Control Payment Date, the Company shall, to the extent
lawful, (1) accept for payment all Notes or portions thereof properly tendered
pursuant to the Change of Control Offer, (2) deposit with the Paying Agent an
amount equal to the Change of Control Payment in respect of all Notes or
portions thereof so tendered and (3) deliver or cause to be delivered to the
Trustee the Notes so accepted together with an Officers' Certificate stating the
aggregate principal amount of Notes or portions thereof being purchased by the
Company. The Paying Agent shall promptly mail to each Holder of Notes so
tendered the Change of Control Payment for such Notes, and the Trustee shall
promptly authenticate and mail (or cause to be transferred by book entry) to
each Holder a new Note equal in principal amount to any unpurchased portion of
the Notes surrendered, if any; provided that each such new Note shall be in a
principal amount of $1,000 or an integral multiple thereof. The Company shall
publicly announce the results of the Change of Control Offer on or as soon as
practicable after the Change of Control Payment Date.
(c) The Company shall not be required to make a Change of Control Offer
upon a Change of Control if a third party makes the Change of Control Offer in
the manner, at the times and otherwise in compliance with the requirements set
forth in this Indenture applicable to a Change of Control Offer made by the
Company and purchases all Notes validly tendered and not withdrawn under such
Change of Control Offer.
Section 4.16. Limitation on Issuances and Sales of Capital Stock of Wholly
Owned Subsidiaries.
The Company (i) shall not, and shall not permit any Wholly-Owned Restricted
Subsidiary of the Company to, transfer, convey, sell, lease or otherwise dispose
of any Capital Stock of any Wholly-Owned Restricted Subsidiary of the Company to
any Person (other than the Company or a Wholly-Owned Restricted Subsidiary of
the Company that is a Guarantor), unless (a) such transfer, conveyance, sale,
lease or other disposition is of all the Capital Stock of such Wholly-Owned
Restricted Subsidiary and (b) the cash Net Proceeds from such transfer,
conveyance, sale, lease or other disposition are applied in accordance with
Section 4.10 hereof, and (ii) shall not permit any Wholly-Owned Restricted
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Subsidiary of the Company to issue any of its Equity Interests (other than, if
necessary, shares of its Capital Stock constituting directors' qualifying
shares) to any Person other than to the Company or a Wholly-Owned Restricted
Subsidiary of the Company.
Section 4.17. Payments for Consent.
Neither the Company nor any of its Subsidiaries shall, directly or
indirectly, pay or cause to be paid any consideration, whether by way of
interest, fee or otherwise, to any Holder of any Notes for or as an inducement
to any consent, waiver or amendment of any of the terms or provisions of this
Indenture or the Notes unless such consideration is offered to be paid or is
paid to all Holders of the Notes that consent, waive or agree to amend in the
time frame set forth in the solicitation documents relating to such consent,
waiver or agreement.
Section 4.18. Limitation on Investment Company Status.
The Company and its Subsidiaries shall not take any action, or otherwise
permit to exist any circumstance, that would require the Company to register as
an "investment company" under the Investment Company Act of 1940, as amended.
Section 4.19. Additional Subsidiary Guarantees.
If the Company or any of its Subsidiaries shall acquire or create another
Subsidiary after the date of this Indenture, then such newly acquired or created
Subsidiary shall execute a Subsidiary Guarantee and deliver an opinion of
counsel, in accordance with the terms of this Indenture; provided, that the
foregoing shall not apply to Subsidiaries that (i) have properly been designated
as Unrestricted Subsidiaries in accordance with this Indenture for so long as
they continue to constitute Unrestricted Subsidiaries or (ii) qualify as
Securitization Trusts for so long as they continue to constitute Securitization
Trusts.
ARTICLE 5.
SUCCESSORS
Section 5.01. Merger, Consolidation, or Sale of Assets.
The Company shall not consolidate or merge with or into (whether or not the
Company is the surviving corporation), or sell, assign, transfer, lease, convey
or otherwise dispose of all or substantially all of its properties or assets in
one or more related transactions, to another corporation, Person or entity
unless (i) the Company is the surviving corporation or the entity or the Person
formed by or surviving any such consolidation or merger (if other than the
Company) or to which such sale, assignment, transfer, lease, conveyance or other
disposition shall have been made is a corporation organized or existing under
the laws of the United States, any state thereof or the District of Columbia;
(ii) the entity or Person formed by or surviving any such consolidation or
merger (if other than the Company) or the entity or Person to which such sale,
assignment, transfer, lease, conveyance or other disposition shall have been
made assumes all the obligations of the Company under the Notes and this
Indenture pursuant to a supplemental indenture in a form reasonably satisfactory
to the Trustee; (iii) immediately before and after such transaction no Default
or Event of Default exists; and (iv) except in the case of a merger of the
Company with or into a Wholly-Owned Restricted Subsidiary of the Company, the
Company or the entity or Person formed by or surviving any such consolidation or
merger (if other than the Company), or to which such sale, assignment, transfer,
lease, conveyance or other disposition shall have been made (A) will have
Consolidated Net Worth immediately after the transaction equal to or greater
than the Consolidated Net Worth of the Company immediately preceding the
transaction and (B) will, at the time
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of such transaction and after giving pro forma effect thereto as if such
transaction had occurred at the end of the applicable fiscal quarter, be
permitted to incur at least $1.00 of additional Indebtedness pursuant to the
Consolidated Leverage Ratio test set forth in the first paragraph of Section
4.09 hereof.
Section 5.02. Successor Corporation Substituted.
Upon any consolidation or merger, or any sale, assignment, transfer, lease,
conveyance or other disposition of all or substantially all of the assets of the
Company in accordance with Section 5.01 hereof, the successor corporation formed
by such consolidation or into or with which the Company is merged or to which
such sale, assignment, transfer, lease, conveyance or other disposition is made
shall succeed to, and be substituted for (so that from and after the date of
such consolidation, merger, sale, lease, conveyance or other disposition, the
provisions of this Indenture referring to the "Company" shall refer instead to
the successor corporation and not to the Company), and may exercise every right
and power of the Company under this Indenture with the same effect as if such
successor Person had been named as the Company herein; provided, however, that
the predecessor Company shall not be relieved from the obligation to pay the
principal of and interest on the Notes except in the case of a sale of all or
substantially all of the Company's assets that meets the requirements of Section
5.01 hereof.
ARTICLE 6.
DEFAULTS AND REMEDIES
Section 6.01. Events of Default.
Each of the following constitutes an "Event of Default:"
(i) default for 30 days in the payment when due of interest on, or
Liquidated Damages with respect to, the Notes;
(ii) default in payment when due of the principal of or premium, if
any, on the Notes;
(iii) failure by the Company or any of its Subsidiaries to comply
with its obligations in the covenants or other agreements
contained in Sections 4.08, 4.09, 4.10 or 4.15 hereof;
(iv) failure by the Company or any of its Subsidiaries for 30 days
after notice from the Trustee or the Holders of at least 25% in
aggregate principal amount of the Notes then outstanding to
comply with any of the other covenants or agreements in this
Indenture;
(v) default under any mortgage, indenture or instrument under which
there may be issued or by which there may be secured or
evidenced any Indebtedness for money borrowed by the Company or
any of its Subsidiaries (or the payment of which is guaranteed
by the Company or any of its Subsidiaries) whether such
Indebtedness or Guarantee now exists, or is created after the
date of this Indenture, which default:
(a) is caused by a failure to pay principal of or premium, if
any, or interest on such Indebtedness prior to the
expiration of the grace period provided in such Indebtedness
on the date of such default (a "Payment Default"), or
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(b) results in the acceleration of such Indebtedness prior to
its express maturity and, in each case, the principal amount
of any such Indebtedness, together with the principal amount
of any other such Indebtedness under which there has been a
Payment Default or the maturity of which has been so
accelerated, aggregates $5.0 million or more;
(vi) failure by the Company or any of its Subsidiaries to pay final
judgments aggregating in excess of $2.0 million, which
judgments are not paid, discharged or stayed for a period of 60
days;
(vii) any Subsidiary Guarantee shall be held in an judicial
proceeding to be unenforceable or invalid or shall cease for
any reason to be in full force and effect or any Guarantor, or
any Person acting in behalf of any Guarantor, shall deny or
disaffirm its obligations under its Subsidiary Guarantee; and
(viii) the Company or any of its Subsidiaries pursuant to or within
the meaning of Bankruptcy Law:
(a) commences a voluntary case,
(b) consents to the entry of an order for relief against it in
an involuntary case,
(c) consents to the appointment of a custodian of it or for
all or substantially all of its property,
(d) makes a general assignment for the benefit of its
creditors, or
(e) generally is not paying its debts as they become due; or
(ix) a court of competent jurisdiction enters an order or decree
under any Bankruptcy Law that:
(a) is for relief against the Company or any of its
Subsidiaries in an involuntary case;
(b) appoints a custodian of the Company or any of its
Subsidiaries or for all or substantially all of the
property of the Company or any of its Subsidiaries; or
(c) orders the liquidation of the Company or any of its
Subsidiaries;
and the order or decree remains unstayed and in effect for 60 consecutive
days; or
The Holders of a majority in aggregate principal amount of the Notes then
outstanding by notice to the Trustee may on behalf of the Holders of all of the
Notes waive any existing Default or Event of Default and its consequences under
this Indenture except a continuing Default or Event of Default in the payment of
interest on, or the principal of, the Notes.
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Section 6.02. Acceleration.
If any Event of Default occurs and is continuing, the Trustee or the
Holders of at least 25% in principal amount of the then outstanding Notes may
declare all the Notes to be due and payable immediately. Notwithstanding the
foregoing, in the case of an Event of Default arising under clauses (viii) and
(ix) of Section 6.01 hereof with respect to the Company, any Significant
Subsidiary or any group of Subsidiaries that, taken together, would constitute a
Significant Subsidiary, all outstanding Notes shall become due and payable
without further action or notice. Holders of the Notes shall not enforce this
Indenture or the Notes except as provided in this Indenture. Subject to the
limitations set forth in this Indenture, Holders of a majority in principal
amount of the then outstanding Notes may direct the Trustee in its exercise of
any trust or power. The Trustee may withhold from Holders of the Notes notice of
any continuing Default or Event of Default (except a Default or Event of Default
relating to the payment of principal or interest) if it determines that
withholding notice is in their interest.
In the case of any Event of Default occurring by reason of any willful
action (or inaction) taken (or not taken) by or on behalf of the Company with
the intention of avoiding payment of the premium that the Company would have had
to pay if the Company then had elected to redeem the Notes pursuant to the
optional redemption provisions of this Indenture, an equivalent premium shall
also become and be immediately due and payable to the extent permitted by law
upon the acceleration of the Notes. If an Event of Default occurs prior to April
15, 2003 by reason of any willful action (or inaction) taken (or not taken) by
or on behalf of the Company with the intention of avoiding the prohibition on
redemption of the Notes prior to April 15, 2003, then the premium specified in
below shall also become immediately due and payable to the extent permitted by
law upon the acceleration of the Notes.
<TABLE>
<CAPTION>
Year Percentage
---- ----------
<S> <C>
1999..................................................... 117.283%
2000..................................................... 114.814%
2001..................................................... 112.345%
2002..................................................... 109.876%
2003..................................................... 107.407%
</TABLE>
Section 6.03. Other Remedies.
If an Event of Default occurs and is continuing, the Trustee may pursue any
available remedy to collect the payment of principal, premium, if any, and
interest on the Notes or to enforce the performance of any provision of the
Notes or this Indenture.
The Trustee may maintain a proceeding even if it does not possess any of
the Notes or does not produce any of them in the proceeding. A delay or omission
by the Trustee or any Holder of a Note in exercising any right or remedy
accruing upon an Event of Default shall not impair the right or remedy or
constitute a waiver of or acquiescence in the Event of Default. All remedies are
cumulative to the extent permitted by law.
Section 6.04. Waiver of Past Defaults.
Holders of not less than a majority in aggregate principal amount of the
then outstanding Notes by notice to the Trustee may on behalf of the Holders of
all of the Notes waive an existing Default or Event of Default and its
consequences hereunder, except a continuing Default or Event of Default in the
payment of the principal of, premium and Liquidated Damages, if any, or interest
on, the Notes (including in connection with an offer to purchase) (provided,
however, that the Holders of a majority in aggregate principal amount of the
then outstanding Notes may rescind an acceleration and its
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consequences, including any related payment default that resulted from such
acceleration). Upon any such waiver, such Default shall cease to exist, and any
Event of Default arising therefrom shall be deemed to have been cured for every
purpose of this Indenture; but no such waiver shall extend to any subsequent or
other Default or impair any right consequent thereon.
Section 6.05. Control by Majority.
Holders of a majority in principal amount of the then outstanding Notes may
direct the time, method and place of conducting any proceeding for exercising
any remedy available to the Trustee or exercising any trust or power conferred
on it. However, the Trustee may refuse to follow any direction that conflicts
with law or this Indenture that the Trustee determines may be unduly prejudicial
to the rights of other Holders of Notes or that may involve the Trustee in
personal liability.
Section 6.06. Limitation on Suits.
A Holder of a Note may pursue a remedy with respect to this Indenture or
the Notes only if:
(a) the Holder of a Note gives to the Trustee written notice of a
continuing Event of Default;
(b) the Holders of at least 25% in principal amount of the then outstanding
Notes make a written request to the Trustee to pursue the remedy;
(c) such Holder of a Note or Holders of Notes offer and, if requested,
provide to the Trustee indemnity satisfactory to the Trustee against any loss,
liability or expense;
(d) the Trustee does not comply with the request within 60 days after
receipt of the request and the offer and, if requested, the provision of
indemnity; and
(e) during such 60-day period the Holders of a majority in principal amount
of the then outstanding Notes do not give the Trustee a direction inconsistent
with the request.
A Holder of a Note may not use this Indenture to prejudice the rights of another
Holder of a Note or to obtain a preference or priority over another Holder of a
Note.
Section 6.07. Rights of Holders of Notes to Receive Payment.
Notwithstanding any other provision of this Indenture, the right of any
Holder of a Note to receive payment of principal, premium and Liquidated
Damages, if any, and interest on the Note, on or after the respective due dates
expressed in the Note (including in connection with an offer to purchase), or to
bring suit for the enforcement of any such payment on or after such respective
dates, shall not be impaired or affected without the consent of such Holder.
Section 6.08. Collection Suit by Trustee.
If an Event of Default specified in Section 6.01(i) or (ii) occurs and is
continuing, the Trustee is authorized to recover judgment in its own name and as
trustee of an express trust against the Company for the whole amount of
principal of, premium and Liquidated Damages, if any, and interest remaining
unpaid on the Notes and interest on overdue principal and, to the extent lawful,
interest and 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, its agents and counsel.
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Section 6.09. Trustee May File Proofs of Claim.
The Trustee is authorized 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 (including any claim for the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel) and the
Holders of the Notes allowed in any judicial proceedings relative to the Company
(or any other obligor upon the Notes), its creditors or its property and shall
be entitled and empowered to collect, receive and distribute any money or other
property payable or deliverable on any such claims and any custodian in any such
judicial proceeding is hereby authorized by each Holder to make such payments to
the Trustee, and in the event that the Trustee shall consent to the making of
such payments directly to the Holders, to pay to the Trustee any amount due to
it for the reasonable compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel, and any other amounts due the Trustee under
Section 7.07 hereof. To the extent that the payment of any such compensation,
expenses, disbursements and advances of the Trustee, its agents and counsel, and
any other amounts due the Trustee under Section 7.07 hereof out of the estate in
any such proceeding, shall be denied for any reason, payment of the same shall
be secured by a Lien on, and shall be paid out of, any and all distributions,
dividends, money, securities and other properties that the Holders may be
entitled to receive in such proceeding whether in liquidation or under any plan
of reorganization or arrangement or otherwise. Nothing herein contained shall be
deemed to authorize the Trustee to authorize or consent to or accept or adopt on
behalf of any Holder any plan of reorganization, arrangement, adjustment or
composition affecting the Notes or the rights of any Holder, or to authorize the
Trustee to vote in respect of the claim of any Holder in any such proceeding.
Section 6.10. Priorities.
If the Trustee collects any money pursuant to this Article, it shall pay
out the money in the following order:
First: to the Trustee, its agents and attorneys for amounts due under
Section 7.07 hereof, including payment of all compensation, expense and
liabilities incurred, and all advances made, by the Trustee and, the costs and
expenses of collection;
Second: to Holders of Notes for amounts due and unpaid on the Notes for
principal, premium and Liquidated Damages, if any, and interest, ratably,
without preference or priority of any kind, according to the amounts due and
payable on the Notes for principal, premium and Liquidated Damages, if any, and
interest, respectively; and
Third: to the Company or to such party as a court of competent
jurisdiction shall direct.
The Trustee may fix a record date and payment date for any payment to
Holders of Notes pursuant to this Section 6.10.
Section 6.11. Undertaking for Costs.
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 or omitted by it as a
Trustee, a court in its discretion may require the filing by any party litigant
in the suit of an undertaking to pay the costs of the suit, and the court in its
discretion may assess reasonable costs, including reasonable attorneys' fees,
against any party litigant in the suit, having due regard to the merits and good
faith of the claims or defenses made by the party litigant. This Section does
not apply to a suit by the Trustee, a suit by a Holder of a Note pursuant to
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Section 6.07 hereof, or a suit by Holders of more than 10% in principal amount
of the then outstanding Notes.
ARTICLE 7.
TRUSTEE
Section 7.01. Duties of Trustee.
(a) If an Event of Default has occurred and is continuing, the Trustee
shall exercise such of the rights and powers vested in it by this Indenture, and
use the same degree of care and skill in its exercise, as a prudent man would
exercise or use under the circumstances in the conduct of his own affairs.
(b) Except during the continuance of an Event of Default:
(i) the duties of the Trustee shall be determined solely by the
express provisions of this Indenture and the Trustee need
perform only those duties that are specifically set forth in
this Indenture and no others, 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 to the requirements of this Indenture.
(c) The Trustee may not be relieved from liabilities for its own negligent
action, its own negligent failure to act, or its own willful misconduct, except
that:
(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 Section 6.05 hereof.
(d) Whether or not therein expressly so provided, 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) No provision of this Indenture shall require the Trustee to expend or
risk its own funds or incur any liability. The Trustee shall be under no
obligation to exercise any of its rights and powers under this Indenture at the
request of any Holders, unless such Holders shall have offered to the Trustee
security and indemnity satisfactory to it against any loss, liability or
expense.
(f) The Trustee shall not be liable for interest on any money received by
it except as the Trustee may agree in writing with the Company. Money held in
trust by the Trustee need not be segregated from other funds except to the
extent required by law.
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Section 7.02. Rights of Trustee.
(a) The Trustee may conclusively rely upon 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) Before the Trustee acts or refrains from acting, it may require an
Officers' Certificate or an Opinion of Counsel or both. The Trustee shall not be
liable for any action it takes or omits to take in good faith in reliance on
such Officers' Certificate or Opinion of Counsel. The Trustee may consult with
counsel and the written advice of such counsel or any Opinion of Counsel shall
be full and complete authorization and protection from liability in respect of
any action taken, suffered or omitted by it hereunder in good faith and in
reliance thereon.
(c) The Trustee may act through its attorneys and agents and shall not be
responsible for the misconduct or negligence of any agent appointed with due
care.
(d) The Trustee shall not be liable for any action it takes or omits to
take in good faith that it believes to be authorized or within the rights or
powers conferred upon it by this Indenture.
(e) Unless otherwise specifically provided in this Indenture, any demand,
request, direction or notice from the Company shall be sufficient if signed by
an Officer of the Company.
(f) The Trustee shall be under no obligation to exercise any of the rights
or powers vested in it by this Indenture at the request or direction of any of
the Holders unless such Holders shall have offered to the Trustee security and
indemnity satisfactory to it against any loss, liability or expenses that might
be incurred by it in compliance with such request or direction.
Section 7.03. 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 Company or any Affiliate of the
Company with the same rights it would have if it were not Trustee. However, in
the event that the Trustee acquires any conflicting interest it must eliminate
such conflict within 90 days, apply to the SEC for permission to continue as
trustee or resign. Any Agent may do the same with like rights and duties. The
Trustee is also subject to Sections 7.10 and 7.11 hereof.
Section 7.04. Trustee's Disclaimer.
The Trustee shall not be responsible for and makes no representation as to
the validity or adequacy of this Indenture or the Notes, it shall not be
accountable for the Company's use of the proceeds from the Notes or any money
paid to the Company or upon the Company's direction under any provision of this
Indenture, it shall not be responsible for the use or application of any money
received by any Paying Agent other than the Trustee, and it shall not be
responsible for any statement or recital herein or any statement in the Notes or
any other document in connection with the sale of the Notes or pursuant to this
Indenture other than its certificate of authentication.
Section 7.05. Notice of Defaults.
If a Default or Event of Default occurs and is continuing and if it is
known to the Trustee, the Trustee shall mail to Holders of Notes a notice of the
Default or Event of Default within 90 days after it occurs. Except in the case
of a Default or Event of Default in payment of principal of, premium, if any, or
interest on any Note, the Trustee may withhold the notice if and so long as a
committee of its
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Responsible Officers in good faith determines that withholding the notice is in
the interests of the Holders of the Notes.
Section 7.06. Reports by Trustee to Holders of the Notes.
Within 60 days after each May 15 beginning with the May 15 following the
date of this Indenture, and for so long as Notes remain outstanding, the Trustee
shall mail to the Holders of the Notes a brief report dated as of such reporting
date that complies with TIA (S) 313(a) (but if no event described in TIA (S)
313(a) has occurred within the twelve months preceding the reporting date, no
report need be transmitted). The Trustee also shall comply with TIA (S)
313(b)(2). The Trustee shall also transmit by mail all reports as required by
TIA (S) 313(c).
A copy of each report at the time of its mailing to the Holders of Notes
shall be mailed to the Company and filed with the SEC and each stock exchange on
which the Notes are listed in accordance with TIA (S) 313(d). The Company shall
promptly notify the Trustee when the Notes are listed on any stock exchange.
Section 7.07. Compensation and Indemnity.
The Company shall pay to the Trustee from time to time reasonable
compensation for its acceptance of this Indenture and services hereunder. The
Trustee's compensation shall not be limited by any law on compensation of a
trustee of an express trust. The Company shall reimburse the Trustee promptly
upon request for all reasonable disbursements, advances and expenses incurred or
made by it in addition to the compensation for its services. Such expenses shall
include the reasonable compensation, disbursements and expenses of the Trustee's
agents and counsel.
The Company shall indemnify the Trustee against any and all losses,
liabilities or expenses incurred by it arising out of or in connection with the
acceptance or administration of its duties under this Indenture, including the
costs and expenses of enforcing this Indenture against the Company (including
this Section 7.07) and defending itself against any claim (whether asserted by
the Company or any Holder or any other person) or liability in connection with
the exercise or performance of any of its powers or duties hereunder, except to
the extent any such loss, liability or expense may be attributable to its
negligence or bad faith. The Trustee shall notify the Company promptly of any
claim for which it may seek indemnity. Failure by the Trustee to so notify the
Company shall not relieve the Company of its obligations hereunder. The Company
shall defend the claim and the Trustee shall cooperate in the defense. The
Trustee may have separate counsel and the Company shall pay the reasonable fees
and expenses of such counsel. The Company need not pay for any settlement made
without its consent, which consent shall not be unreasonably withheld.
The obligations of the Company under this Section 7.07 shall survive the
satisfaction and discharge of this Indenture.
To secure the Company's payment obligations in this Section, the Trustee
shall have a Lien prior to the Notes on all money or property held or collected
by the Trustee, except that held in trust to pay principal and interest on
particular Notes. Such Lien shall survive the satisfaction and discharge of this
Indenture.
When the Trustee incurs expenses or renders services after an Event of
Default specified in Section 6.01(viii) or (ix) hereof occurs, the expenses and
the compensation for the services (including the fees and expenses of its agents
and counsel) are intended to constitute expenses of administration under any
Bankruptcy Law.
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The Trustee shall comply with the provisions of TIA (S) 313(b)(2) to the
extent applicable.
Section 7.08. Replacement of Trustee.
A resignation or removal of the Trustee and appointment of a successor
Trustee shall become effective only upon the successor Trustee's acceptance of
appointment as provided in this Section.
The Trustee may resign in writing at any time and be discharged from the
trust hereby created by so notifying the Company. The Holders of Notes of a
majority in principal amount of the then outstanding Notes may remove the
Trustee by so notifying the Trustee and the Company in writing. The Company may
remove the Trustee if:
(a) the Trustee fails to comply with Section 7.10 hereof;
(b) the Trustee is adjudged a bankrupt or an insolvent or an order for
relief is entered with respect to the Trustee under any Bankruptcy Law;
(c) a custodian or public officer takes charge of the Trustee or its
property; or
(d) the Trustee becomes incapable of acting.
If the Trustee resigns or is removed or if a vacancy exists in the office
of Trustee for any reason, the Company shall promptly appoint a successor
Trustee. Within one year after the successor Trustee takes office, the Holders
of a majority in principal amount of the then outstanding Notes may appoint a
successor Trustee to replace the successor Trustee appointed by the Company.
If a successor Trustee does not take office within 60 days after the
retiring Trustee resigns or is removed, the retiring Trustee, the Company, or
the Holders of Notes of at least 10% in principal amount of the then outstanding
Notes may petition any court of competent jurisdiction for the appointment of a
successor Trustee.
If the Trustee, after written request by any Holder of a Note who has been
a Holder of a Note for at least six months, fails to comply with Section 7.10,
such Holder of a Note may petition any court of competent jurisdiction for the
removal of the Trustee and the appointment of a successor Trustee.
A successor Trustee shall deliver a written acceptance of its appointment
to the retiring Trustee and to the Company. 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
Holders of the Notes. The retiring Trustee shall promptly transfer all property
held by it as Trustee to the successor Trustee, provided all sums owing to the
Trustee hereunder have been paid and subject to the Lien provided for in Section
7.07 hereof. Notwithstanding replacement of the Trustee pursuant to this Section
7.08, the Company's obligations under Section 7.07 hereof shall continue for the
benefit of the retiring Trustee.
Section 7.09. Successor Trustee by Merger, etc.
If the Trustee consolidates, merges or converts into, or transfers all or
substantially all of its corporate trust business to, another corporation, the
successor corporation without any further act shall be the successor Trustee.
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Section 7.10. Eligibility; Disqualification.
There shall at all times be a Trustee hereunder that is a corporation
organized and doing business under the laws of the United States of America or
of any state thereof that is authorized under such laws to exercise corporate
trustee power, that is subject to supervision or examination by federal or state
authorities and that has a combined capital and surplus of at least $100 million
as set forth in its most recent published annual report of condition.
This Indenture shall always have a Trustee who satisfies the requirements
of TIA (S) 310(a)(1), (2) and (5). The Trustee is subject to TIA (S) 3 10(b).
Section 7.11. Preferential Collection of Claims Against Company.
The Trustee is subject to TIA (S) 311(a), excluding any creditor
relationship listed in TIA (S) 311(b). A Trustee who has resigned or been
removed shall be subject to TIA (S) 311(a) to the extent indicated therein.
ARTICLE 8.
LEGAL DEFEASANCE AND COVENANT DEFEASANCE
Section 8.01. Option to Effect Legal Defeasance or Covenant Defeasance.
The Company may, at the option of its Board of Directors evidenced by a
resolution set forth in an Officers' Certificate, at any time, elect to have
either Section 8.02 or 8.03 hereof be applied to all outstanding Notes upon
compliance with the conditions set forth below in this Article 8.
Section 8.02. Legal Defeasance and Discharge.
Upon the Company's exercise under Section 8.01 hereof of the option
applicable to this Section 8.02, the Company shall, subject to the satisfaction
of the conditions set forth in Section 8.04 hereof, be deemed to have been
discharged from its obligations with respect to all outstanding Notes on the
date the conditions set forth below are satisfied (hereinafter, "Legal
Defeasance"). For this purpose, Legal Defeasance means that the Company shall be
deemed to have paid and discharged the entire Indebtedness represented by the
outstanding Notes, which shall thereafter be deemed to be "outstanding" only for
the purposes of Section 8.05 hereof and the other Sections of this Indenture
referred to in (a) and (b) below, and to have satisfied all its other
obligations under such Notes and this Indenture (and the Trustee, on demand of
and at the expense of the Company, shall execute proper instruments
acknowledging the same), except for the following provisions which shall survive
until otherwise terminated or discharged hereunder: (a) the rights of Holders of
outstanding Notes to receive solely from the trust fund described in Section
8.04 hereof, and as more fully set forth in such Section, payments in respect of
the principal of, premium, if any, and interest on such Notes when such payments
are due, (b) the Company's obligations with respect to such Notes under Article
2 and Section 4.02 hereof, (c) the rights, powers, trusts, duties and immunities
of the Trustee hereunder and the Company's obligations in connection therewith
and (d) this Article 8. Subject to compliance with this Article 8, the Company
may exercise its option under this Section 8.02 notwithstanding the prior
exercise of its option under Section 8.03 hereof.
Section 8.03. Covenant Defeasance.
Upon the Company's exercise under Section 8.01 hereof of the option
applicable to this Section 8.03, the Company shall, subject to the satisfaction
of the conditions set forth in Section 8.04
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hereof, be released from its obligations under the covenants contained in
Sections 4.07, 4.08, 4.09, 4.10, 4.11, 4.12, 4.13, 4.15 and 4.16 hereof with
respect to the outstanding Notes on and after the date the conditions set forth
below are satisfied (hereinafter, "Covenant Defeasance"), and the Notes shall
thereafter be deemed not "outstanding" for the purposes of any direction,
waiver, consent or declaration or act of Holders (and the consequences of any
thereof) in connection with such covenants, but shall continue to be deemed
"outstanding" for all other purposes hereunder (it being understood that such
Notes shall not be deemed outstanding for accounting purposes). For this
purpose, Covenant Defeasance means that, with respect to the outstanding Notes,
the Company may omit to comply with and shall have no liability in respect of
any term, condition or limitation set forth in any such covenant, whether
directly or indirectly, by reason of any reference elsewhere herein to any such
covenant or by reason of any reference in any such covenant to any other
provision herein or in any other document and such omission to comply shall not
constitute a Default or an Event of Default under Section 6.01 hereof, but,
except as specified above, the remainder of this Indenture and such Notes shall
be unaffected thereby. In addition, upon the Company's exercise under Section
8.01 hereof of the option applicable to this Section 8.03 hereof, subject to the
satisfaction of the conditions set forth in Section 8.04 hereof, Sections
6.01(iv) through 6.0l(ix) hereof shall not constitute Events of Default.
Section 8.04. Conditions to Legal or Covenant Defeasance.
The following shall be the conditions to the application of either Section
8.02 or 8.03 hereof to the outstanding Notes:
In order to exercise either Legal Defeasance or Covenant Defeasance:
(a) the Company must irrevocably deposit with the Trustee, in trust, for
the benefit of the Holders, cash in United States dollars, non-callable
Government Securities, or a combination thereof, in such amounts as will be
sufficient, in the opinion of a nationally recognized firm of independent public
accountants, to pay the principal of, premium and Liquidated Damages, if any,
and interest on the outstanding Notes on the stated date for payment thereof or
on the applicable redemption date, as the case may be;
(b) in the case of an election under Section 8.02 hereof, the Company shall
have delivered to the Trustee an Opinion of Counsel in the United States
reasonably acceptable to the Trustee confirming that (A) the Company has
received from, or there has been published by, the Internal Revenue Service a
ruling or (B) since the date of this Indenture, there has been a change in the
applicable federal income tax law, in either case to the effect that, and based
thereon such Opinion of Counsel shall confirm that, the Holders of the
outstanding Notes will not recognize income, gain or loss for federal income tax
purposes as a result of such Legal Defeasance and will be subject to federal
income tax on the same amounts, in the same manner and at the same times as
would have been the case if such Legal Defeasance had not occurred;
(c) in the case of an election under Section 8.03 hereof, the Company shall
have delivered to the Trustee an Opinion of Counsel in the United States
reasonably acceptable to the Trustee confirming that the Holders of the
outstanding Notes will not recognize income, gain or loss for federal income tax
purposes as a result of such Covenant Defeasance and will be subject to federal
income tax on the same amounts, in the same manner and at the same times as
would have been the case if such Covenant Defeasance had not occurred;
(d) no Default or Event of Default shall have occurred and be continuing on
the date of such deposit (other than a Default or Event of Default resulting
from the incurrence of Indebtedness all or a portion of the proceeds of which
will be used to defease the Notes pursuant to this Article 8 concurrently
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with such incurrence) or insofar as Sections 6.0l(viii) or 6.01(ix) hereof is
concerned, at any time in the period ending on the 91st day after the date of
deposit;
(e) such Legal Defeasance or Covenant Defeasance shall not result in a
breach or violation of, or constitute a default under, any material agreement or
instrument (other than this Indenture) to which the Company or any of its
Subsidiaries is a party or by which the Company or any of its Subsidiaries is
bound;
(f) the Company shall have delivered to the Trustee an Opinion of Counsel
to the effect that on the 91st day following the deposit, the trust funds will
not be subject to the effect of any applicable bankruptcy, insolvency,
reorganization or similar laws affecting creditors' rights generally;
(g) the Company shall have delivered to the Trustee an Officers'
Certificate stating that the deposit was not made by the Company with the intent
of preferring the Holders over any other creditors of the Company or with the
intent of defeating, hindering, delaying or defrauding any other creditors of
the Company; and
(h) the Company shall have delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that all conditions
precedent provided for or relating to the Legal Defeasance or the Covenant
Defeasance have been complied with.
Section 8.05. Deposited Money and Government Securities to be Held in Trust;
Other Miscellaneous Provisions.
Subject to Section 8.06 hereof, all money and non-callable Government
Securities (including the proceeds thereof) deposited with the Trustee (or other
qualifying trustee, collectively for purposes of this Section 8.05, the
"Trustee") pursuant to Section 8.04 hereof in respect of the outstanding Notes
shall be held in trust and applied by the Trustee, in accordance with the
provisions of such Notes and this Indenture, to the payment, either directly or
through any Paying Agent (including the Company acting as Paying Agent) as the
Trustee may determine, to the Holders of such Notes of all sums due and to
become due thereon in respect of principal, premium, if any, and interest, but
such money need not be segregated from other funds except to the extent required
by law.
The Company shall pay and indemnify the Trustee against any tax, fee or
other charge imposed on or assessed against the cash or non-callable Government
Securities deposited pursuant to Section 8.04 hereof or the principal and
interest received in respect thereof other than any such tax, fee or other
charge which by law is for the account of the Holders of the outstanding Notes.
Anything in this Article 8 to the contrary notwithstanding, the Trustee
shall deliver or pay to the Company from time to time upon the request of the
Company any money or non-callable Government Securities held by it as provided
in Section 8.04 hereof which, in the opinion of a nationally recognized firm of
independent public accountants expressed in a written certification thereof
delivered to the Trustee (which may be the opinion delivered under Section
8.04(a) hereof), are in excess of the amount thereof that would then be required
to be deposited to effect an equivalent Legal Defeasance or Covenant Defeasance.
Section 8.06. Repayment to Company.
Any money deposited with the Trustee or any Paying Agent, or then held by
the Company, in trust for the payment of the principal of, premium, if any, or
interest on any Note and remaining unclaimed for two years after such principal,
and premium, if any, or interest has become due and
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payable shall be paid to the Company on its request or (if then held by the
Company) shall be discharged from such trust; and the Holder of such Note shall
thereafter, as an unsecured creditor, look only to the Company for payment
thereof, and all liability of the Trustee or such Paying Agent with respect to
such trust money, and all liability of the Company as trustee thereof, shall
thereupon cease; provided, however, that the Trustee or such Paying Agent,
before being required to make any such repayment, may at the expense of the
Company cause to be published once, in the New York Times and The Wall Street
Journal (national edition), 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 notification or publication, any unclaimed balance of such money
then remaining will be repaid to the Company.
Section 8.07. Reinstatement.
If the Trustee or Paying Agent is unable to apply any United States dollars
or non-callable Government Securities in accordance with Section 8.02 or 8.03
hereof, as the case may be, by reason of any order or judgment of any court or
governmental authority enjoining, restraining or otherwise prohibiting such
application, then the Company's obligations under this Indenture and the Notes
shall be revived and reinstated as though no deposit had occurred pursuant to
Section 8.02 or 8.03 hereof until such time as the Trustee or Paying Agent is
permitted to apply all such money in accordance with Section 8.02 or 8.03
hereof, as the case may be; provided, however, that, if the Company makes any
payment of principal of, premium, if any, or interest on any Note following the
reinstatement of its obligations, the Company shall be subrogated to the rights
of the Holders of such Notes to receive such payment from the money held by the
Trustee or Paying Agent.
ARTICLE 9.
AMENDMENT, SUPPLEMENT AND WAIVER
Section 9.01. Without Consent of Holders of Notes.
Notwithstanding Section 9.02 of this Indenture, the Company and the Trustee
may amend or supplement this Indenture or the Notes without the consent of any
Holder of a Note:
(a) to cure any ambiguity, defect or inconsistency;
(b) to provide for uncertificated Notes in addition to or in place of
certificated Notes;
(c) to provide for the assumption of the Company's obligations to the
Holders of the Notes in the case of a merger or consolidation pursuant to
Article 5 hereof;
(d) to make any change that would provide any additional rights or benefits
to the Holders of the Notes or that does not adversely affect the legal rights
hereunder of any Holder of the Notes; or
(e) to comply with requirements of the SEC in order to effect or maintain
the qualification of this Indenture under the TIA.
Upon the request of the Company accompanied by a resolution of its Board of
Directors authorizing the execution of any such amended or supplemental
Indenture, and upon receipt by the Trustee of the documents described in Section
7.02 hereof, the Trustee shall join with the Company in the execution of any
amended or supplemental Indenture authorized or permitted by the terms of this
Indenture and to make any further appropriate agreements and stipulations that
may be therein contained, but the Trustee shall not be obligated to enter into
such amended or supplemental Indenture that affects its own rights, duties or
immunities under this Indenture or otherwise.
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Section 9.02. With Consent of Holders of Notes.
Except as provided below in this Section 9.02, the Company and the Trustee
may amend or supplement this Indenture (including Section 3.09, 4.10 and 4.15
hereof) and the Notes may be amended or supplemented with the consent of the
Holders of at least a majority in principal amount of the Notes then outstanding
(including, without limitation, consents obtained in connection with a tender
offer or exchange offer for the Notes), and, subject to Sections 6.04 and 6.07
hereof, any existing Default or Event of Default (other than a Default or Event
of Default in the payment of the principal of, premium, if any, or interest on
the Notes, except a payment default resulting from an acceleration that has been
rescinded) or compliance with any provision of this Indenture or the Notes may
be waived with the consent of the Holders of a majority in principal amount of
the then outstanding Notes (including consents obtained in connection with a
tender offer or exchange offer for the Notes).
Upon the request of the Company accompanied by a resolution of its Board of
Directors authorizing the execution of any such amended or supplemental
Indenture, and upon the filing with the Trustee of evidence satisfactory to the
Trustee of the consent of the Holders of Notes as aforesaid, and upon receipt by
the Trustee of the documents described in Section 7.02 hereof, the Trustee shall
join with the Company in the execution of such amended or supplemental Indenture
unless such amended or supplemental Indenture affects the Trustee's own rights,
duties or immunities under this Indenture or otherwise, in which case the
Trustee may in its discretion, but shall not be obligated to, enter into such
amended or supplemental Indenture.
It shall not be necessary for the consent of the Holders of Notes under
this Section 9.02 to approve the particular form of any proposed amendment or
waiver, but it shall be sufficient if such consent approves the substance
thereof.
After an amendment, supplement or waiver under this Section becomes
effective, the Company shall mail to the Holders of Notes affected thereby a
notice briefly describing the amendment, supplement or waiver. Any failure of
the Company to mail such notice, or any defect therein, shall not, however, in
any way impair or affect the validity of any such amended or supplemental
Indenture or waiver. Subject to Sections 6.04 and 6.07 hereof, the Holders of a
majority in aggregate principal amount of the Notes then outstanding may waive
compliance in a particular instance by the Company with any provision of this
Indenture or the Notes. However, without the consent of each Holder affected, an
amendment or waiver may not (with respect to any Notes held by a non-consenting
Holder):
(a) reduce the principal amount of Notes whose Holders must consent to an
amendment, supplement or waiver;
(b) reduce the principal of or change the fixed maturity of any Note or
alter or waive any of the provisions with respect to the redemption of the Notes
except as provided above with respect to Sections 3.09, 4.10 and 4.15 hereof;
(c) reduce the rate of or change the time for payment of interest,
including default interest, on any Note;
(d) waive a Default or Event of Default in the payment of principal of or
premium, if any, or interest on the Notes (except a rescission of acceleration
of the Notes by the Holders of at least a majority in aggregate principal amount
of the then outstanding Notes and a waiver of the payment default that resulted
from such acceleration);
(e) make any Note payable in money other than that stated in the Notes;
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(f) make any change in the provisions of this Indenture relating to waivers
of past Defaults or the rights of Holders of Notes to receive payments of
principal of or premium, if any, or interest on the Notes;
(g) waive a redemption payment with respect to any Note other than a
payment required by Sections 3.09, 4.10 and 4.15; or
(h) make any change in the foregoing amendment and waiver provisions.
Section 9.03. Compliance with Trust Indenture Act.
Every amendment or supplement to this Indenture or the Notes shall be set
forth in a amended or supplemental Indenture that complies with the TIA as then
in effect.
Section 9.04. Revocation and Effect of Consents.
Until an amendment, supplement or waiver becomes effective, a consent to it
by a Holder of a Note is a continuing consent by the Holder of a Note and every
subsequent Holder of a Note or portion of a Note that evidences the same debt as
the consenting Holder's Note, even if notation of the consent is not made on any
Note. However, any such Holder of a Note or subsequent Holder of a Note may
revoke the consent as to its Note if the Trustee receives written notice of
revocation before the date the waiver, supplement or amendment becomes
effective. An amendment, supplement or waiver becomes effective in accordance
with its terms and thereafter binds every Holder.
Section 9.05. Notation on or Exchange of Notes.
The Trustee may place an appropriate notation about an amendment,
supplement or waiver on any Note thereafter authenticated. The Company in
exchange for all Notes may issue and the Trustee shall authenticate new Notes
that reflect the amendment, supplement or waiver.
Failure to make the appropriate notation or issue a new Note shall not
affect the validity and effect of such amendment, supplement or waiver.
Section 9.06. Trustee to Sign Amendments, etc.
The Trustee shall sign any amended or supplemental Indenture authorized
pursuant to this Article 9 if the amendment or supplement does not adversely
affect the rights, duties, liabilities or immunities of the Trustee. The Company
may not sign an amendment or supplemental Indenture until the Board of Directors
approves it. In executing any amended or supplemental indenture, the Trustee
shall be entitled to receive and (subject to Section 7.01 hereof) shall be fully
protected in relying upon, an Officer's Certificate and an Opinion of Counsel
stating that the execution of such amended or supplemental indenture is
authorized or permitted by this Indenture.
ARTICLE 10.
SUBSIDIARY GUARANTEES
Section 10.01. Subsidiary Guarantees.
Each of the Guarantors hereby, jointly and severally, unconditionally
guarantees to each Holder of a Note authenticated and delivered by the Trustee
and to the Trustee and its successors and assigns, irrespective of the validity
and enforceability of this Indenture, the Notes or the Obligations of the
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Company hereunder or thereunder, that: (a) the principal of and interest and
Liquidated Damages, if any, on the Notes shall be promptly paid in full when
due, whether at maturity, by acceleration, redemption, repurchase or otherwise,
and interest on the overdue principal of and interest and Liquidated Damages, if
any, on the Notes, if lawful, and all other Obligations of the Company to the
Holders or the Trustee hereunder or thereunder shall be promptly paid in full or
performed, all in accordance with the terms hereof and thereof; and (b) in case
of any extension of time of payment or renewal of any Notes or any of such other
Obligations, that same shall be promptly paid in full when due or performed in
accordance with the terms of the extension or renewal, whether at stated
maturity, by acceleration, redemption, repurchase or otherwise. Failing payment
when due of any amount so guaranteed or any performance so guaranteed for
whatever reason, the Guarantors shall be jointly and severally obligated to pay
the same immediately. The Guarantors hereby agree that their Obligations
hereunder shall be unconditional, irrespective of the validity, regularity or
enforceability of the Notes or this Indenture, the absence of any action to
enforce the same, any waiver or consent by any Holder of the Notes with respect
to any provisions hereof or thereof, the recovery of any judgment against the
Company, any action to enforce the same or any other circumstance which might
otherwise constitute a legal or equitable discharge or defense of a Guarantor.
Each Guarantor hereby waives diligence, presentment, demand of payment, filing
of claims with a court in the event of insolvency or bankruptcy of the Company,
any right to require a proceeding first against the Company, protest, notice and
all demands whatsoever and covenant that this Subsidiary Guarantee shall not be
discharged except by complete performance of the Obligations contained in the
Notes and this Indenture. If any Holder of Notes or the Trustee is required by
any court or otherwise to return to the Company or Guarantors, or any custodian,
Trustee, liquidator or other similar official acting in relation to either the
Company or Guarantors, any amount paid either to the Trustee or such Holder,
this Subsidiary Guarantee, to the extent theretofore discharged, shall be
reinstated in full force and effect. Each Guarantor agrees that it shall not be
entitled to any right of subrogation in relation to the Holders of Notes in
respect of any Obligations guaranteed hereby until payment in full of all
Obligations guaranteed hereby. Each Guarantor further agrees that, as between
the Guarantors, on the one hand, and the Holders and the Trustee, on the other
hand, (x) the maturity of the Obligations guaranteed hereby may be accelerated
as provided in Article 6 hereof for the purposes of this Subsidiary Guarantee,
notwithstanding any stay, injunction or other prohibition preventing such
acceleration in respect of the Obligations guaranteed hereby and (y) in the
event of any declaration of acceleration of such Obligations as provided in
Article 6 hereof, such Obligations (whether or not due and payable) shall
forthwith become due and payable by the Guarantors for the purpose of this
Subsidiary Guarantee. The Guarantors shall have the right to seek contribution
from any non-paying Guarantor so long as the exercise of such right does not
impair the rights of the Holders under the Subsidiary Guarantees.
Section 10.02. Execution and Delivery of Subsidiary Guarantees.
To evidence its Subsidiary Guarantee set forth in Section 10.01 hereof,
each Guarantor hereby agrees that a notation of such Subsidiary Guarantee
substantially in the form of Exhibit C (executed by the manual or facsimile
signature of one of its Officers) shall be endorsed by an Officer of such
Guarantor on each Note authenticated and delivered by the Trustee and that this
Indenture shall be executed on behalf of such Guarantor by an Officer of such
Guarantor.
Each Guarantor hereby agrees that its Subsidiary Guarantee set forth in
Section 10.01 hereof shall remain in full force and effect notwithstanding any
failure to endorse on each Note a notation of such Subsidiary Guarantee.
If an Officer whose signature is on this Indenture or on the Subsidiary
Guarantee no longer holds that office at the time the Trustee authenticates the
Note on which a Subsidiary Guarantee is endorsed, the Subsidiary Guarantee shall
be valid nevertheless.
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The delivery of any Note by the Trustee, after the authentication thereof
hereunder, shall constitute due delivery of the Subsidiary Guarantee set forth
in this Indenture on behalf of the Guarantors.
Section 10.03. Guarantors May Consolidate, etc., on Certain Terms.
(a) Except as set forth in Articles 4 and 5 hereof, nothing contained in
this Indenture or in any of the Notes shall prevent any consolidation or merger
of a Guarantor with or into the Company or another Guarantor or shall prevent
any sale or conveyance of the property of a Guarantor, as an entirety or
substantially as an entirety, to the Company.
(b) Except as provided in Section 10.03(a) hereof or in a transaction
referred to in Section 10.04 hereof, no Guarantor may consolidate with or merge
with or into (whether or not such Guarantor is the surviving Person) another
corporation, Person or entity whether or not affiliated with such Guarantor, or
sell, assign, transfer, lease, convey or otherwise dispose of all or
substantially all of its assets to, another corporation, Person or entity
unless: (i) subject to the provisions of Section 10.04 hereof, the Person formed
by or surviving any such consolidation or merger (if other than such Guarantor)
shall assume all the Obligations of such Guarantor pursuant to a supplemental
indenture in form and substance reasonably satisfactory to the Trustee, under
the Notes and this Indenture; (ii) immediately after giving effect to such
transaction, no Default or Event of Default exists; (iii) such Guarantor, or any
Person formed by or surviving and such consolidation or merger, would have a
Consolidated Net Worth (immediately after giving effect to such transaction)
equal to or greater than the Consolidated Net Worth of such Guarantor
immediately prior to such transaction; and (iv) the Company would be permitted
by virtue of the Company's pro forma Consolidated Leverage Ratio, immediately
after giving effect to such transaction, to incur at least $1.00 of additional
Indebtedness (other than Permitted Debt) pursuant to Section 4.09 hereof Subject
to Section 10.04 hereof, in case of any such consolidation, merger, sale or
conveyance and upon the assumption by the successor corporation, by supplemental
indenture, executed and delivered to the Trustee and satisfactory in form to the
Trustee, of the Subsidiary Guarantee endorsed upon the Notes and the due and
punctual performance of all of the covenants and conditions of this Indenture to
be performed by the Guarantor, such successor corporation shall succeed to and
be substituted for the Guarantor with the same effect as if it had been named
herein as a Guarantor. Such successor corporation thereupon may cause to be
signed any or all of the Subsidiary Guarantees to be endorsed upon all of the
Notes issuable hereunder which theretofore shall not have been signed by the
Company and delivered to the Trustee. All the Subsidiary Guarantees so issued
shall in all respects have the same legal rank and benefit under this Indenture
as the Subsidiary Guarantees theretofore and thereafter issued in accordance
with the terms of this Indenture as though all of such Subsidiary Guarantees had
been issued at the date of the execution hereof.
Section 10.04. Releases Following Sale of Assets.
Concurrently with any sale of assets of any Guarantor (including, if
applicable, all of the Capital Stock of any Guarantor), any Liens in favor of
the Trustee in the assets sold thereby shall be released; provided that in the
event of an Asset Sale, the Net Proceeds from such sale or other disposition are
treated in accordance with the provisions of Section 4.10 hereof In the event of
a sale or other disposition of all of the assets of any Guarantor, by way of
merger, consolidation or otherwise, or a sale or other disposition of all of the
Capital Stock of any Guarantor, then such Guarantor (in the event of a sale or
other disposition, by way of such a merger, consolidation or otherwise, of all
of the Capital Stock of such Guarantor in accordance with the provisions of this
Indenture) or the corporation acquiring the property (in the event of a sale or
other disposition of all of the assets of such Guarantor), shall be released and
relieved of its Obligations under its Subsidiary Guarantee and Section 10.03
hereof; provided that in the event of an Asset Sale, the Net Proceeds from such
sale or other disposition are treated in accordance
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with the provisions of Section 4.10 hereof Upon delivery by the Company to the
Trustee of an Officers' Certificate and an Opinion of Counsel to the effect that
such sale or other disposition was made by the Company in accordance with the
provisions of this Indenture, including, without limitation, Section 4.10
hereof, the Trustee shall execute any documents reasonably required in order to
evidence the release of any Guarantor from its Obligations under its Subsidiary
Guarantee. Any Guarantor not released from its Obligations under its Subsidiary
Guarantee shall remain liable for the full amount of principal of and interest
and Liquidated Damages, if any, on the Notes and for the other Obligations of
any Guarantor under this Indenture as provided in this Article 10. The release
of any Guarantor pursuant to this Section 10.04 shall be effective whether or
not such release shall be noted on any Note then outstanding or thereafter
authenticated and delivered.
Section 10.05. Limitation on Guarantor Liability.
For purposes hereof, each Guarantor's liability shall be that amount from
time to time equal to the aggregate liability of such Guarantor thereunder, but
shall be limited to the lesser of (i) the aggregate amount of the Obligations of
the Company under the Notes and this Indenture and (ii) the amount, if any,
which would not have (A) rendered such Guarantor "insolvent" (as such term is
defined in the federal Bankruptcy Law and in the debtor and creditor law of the
State of New York) or (B) left it with unreasonably small capital at the time
its Subsidiary Guarantee was entered into, after giving effect to the incurrence
of existing Indebtedness immediately prior to such time; provided that, it shall
be a presumption in any lawsuit or other proceeding in which such Guarantor is a
party that the amount guaranteed pursuant to its Subsidiary Guarantee is the
amount set forth in clause (i) above unless any creditor, or representative of
creditors of such Guarantor, or debtor in possession or trustee in bankruptcy of
such Guarantor, otherwise proves in such a lawsuit that the aggregate liability
of such Guarantor is limited to the amount set forth in clause (ii). In making
any determination as to the solvency or sufficiency of capital of a Guarantor in
accordance with the previous sentence, the right of such Guarantor to
contribution from other Guarantors and any other rights such Guarantor may have,
contractual or otherwise, shall be taken into account.
Section 10.06. "Trustee" to Include Paying Agent.
In case at any time any Paying Agent other than the Trustee shall have been
appointed by the Company and be then acting hereunder, the term "Trustee" as
used in this Article 10 shall in such case (unless the context shall otherwise
require) be construed as extending to and including such Paying Agent within its
meaning as fully and for all intents and purposes as if such Paying Agent were
named in this Article 10 in place of the Trustee.
ARTICLE 11.
MISCELLANEOUS
Section 11.01. Trust Indenture Act Controls.
If any provision of this Indenture limits, qualifies or conflicts with the
duties imposed by TIA (S)318(c), the imposed duties shall control.
Section 11.02. Notices.
Any notice or communication by the Company or the Trustee to the others is
duly given if in writing and delivered in person or mailed by first class mail
(registered or certified, return receipt requested), telex, telecopier or
overnight air courier guaranteeing next day delivery, to the others' address:
56
<PAGE>
If to the Company or any Guarantor:
AmeriCredit Corp.
200 Bailey Avenue
Fort Worth, TX 76107
Telecopier No.: (817) 882-7101
Attention: Chief Financial Officer
With a copy to:
Jenkens & Gilchrist, P.C.
1445 Ross Avenue, Suite 3200
Dallas, TX 75202
Telecopier No.: (214) 855-4300
Attention: L. Steven Leshin
If to the Trustee:
Bank One, N.A.
c/o Banc One Trust Company, NA
100 East Broad Street, 8th Floor
Columbus, OH 43215
Telecopier No.: (614) 248-5195
Attention: Corporate Trust Department
The Company or the Trustee, by notice to the others may designate
additional or different addresses for subsequent notices or communications.
All notices and communications (other than those sent to Holders) shall be
deemed to have been duly given: at the time delivered by hand, if personally
delivered; five Business Days after being deposited in the mail, postage
prepaid, if mailed; when answered back, if telexed; when receipt acknowledged,
if telecopied; and the next Business Day after timely delivery to the courier,
if sent by overnight air courier guaranteeing next day delivery.
Any notice or communication to a Holder shall be mailed by first class
mail, certified or registered, return receipt requested, or by overnight air
courier guaranteeing next day delivery to its address shown on the register kept
by the Registrar. Any notice or communication shall also be so mailed to any
Person described in TIA (S) 313(c), to the extent required by the TIA. Failure
to mail a notice or communication to a Holder or any defect in it shall not
affect its sufficiency with respect to other Holders.
If a notice or communication is mailed in the manner provided above within
the time prescribed, it is duly given, whether or not the addressee receives it.
If the Company mails a notice or communication to Holders, it shall mail a
copy to the Trustee and each Agent at the same time.
Section 11.03. Communication by Holders of Notes with Other Holders of Notes.
Holders may communicate pursuant to TIA (S) 312(b) with other Holders with
respect to their rights under this Indenture or the Notes. The Company, the
Trustee, the Registrar and anyone else shall have the protection of TIA (S)
312(c).
57
<PAGE>
Section 11.04. Certificate and Opinion as to Conditions Precedent.
Upon any request or application by the Compa~y to the Trustee to take any
action under this Indenture, the Company shall furnish to the Trustee:
(a) an Officers' Certificate in form and substance reasonably satisfactory
to the Trustee (which shall include the statements set forth in Section 11.05
hereof) stating that, in the opinion of the signers, all conditions precedent
and covenants, if any, provided for in this Indenture relating to the proposed
action have been satisfied; and
(b) an Opinion of Counsel in form and substance reasonably satisfactory to
the Trustee (which shall include the statements set forth in Section 11.05
hereof) stating that, in the opinion of such counsel, all such conditions
precedent and covenants have been satisfied.
Section 11.05. Statements Required in Certificate or Opinion.
Each certificate or opinion with respect to compliance with a condition or
covenant provided for in this Indenture (other than a certificate provided
pursuant to TIA (S) 314(a)(4)) shall comply with the provisions of TIA (S)
314(e) and shall include:
(a) a statement that the Person making such certificate or opinion has read
such covenant or condition;
(b) 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;
(c) a statement that, in the opinion of such Person, he or she has made
such examination or investigation as is necessary to enable him to express an
informed opinion as to whether or not such covenant or condition has been
satisfied; and
(d) a statement as to whether or not, in the opinion of such Person, such
condition or covenant has been satisfied.
Section 11.06. Rules by Trustee and Agents.
The Trustee may make reasonable rules for action by or at a meeting of
Holders. The Registrar or Paying Agent may make reasonable rules and set
reasonable requirements for its functions.
Section 11.07. No Personal Liability of Directors, Officers, Employees and
Stockholders.
No past, present or future director, officer, employee, incorporator or
stockholder of the Company, as such, shall have any liability for any
obligations of the Company under the Notes, this Indenture or for any claim
based on, in respect of, or by reason of, such obligations or their creation.
Each Holder by accepting a Note waives and releases all such liability. The
waiver and release are part of the consideration for issuance of the Notes.
Section 11.08. Governing Law.
THE INTERNAL LAW OF THE STATE OF NEW YORK SHALL GOVERN AND BE USED TO
CONSTRUE THIS INDENTURE, THE NOTES AND THE SUBSIDIARY GUARANTEES.
58
<PAGE>
Section 11.09. No Adverse Interpretation of Other Agreements.
This Indenture may not be used to interpret any other indenture, loan or
debt agreement of the Company or its Subsidiaries or of any other Person. Any
such indenture, loan or debt agreement may not be used to interpret this
Indenture.
Section 11.10. Successors.
All agreements of the Company and each Guarantor in this Indenture and the
Notes shall bind their respective successors, except as expressly provided
otherwise herein. All agreements of the Trustee in this Indenture shall bind its
successors.
Section 11.11. 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 11.12. Counterpart Originals.
The parties may sign any number of copies of this Indenture. Each signed
copy shall be an original, but all of them together represent the same
agreement.
Section 11.13. Table of Contents, Headings, etc.
The Table of Contents, Cross-Reference Table and Headings of the Articles
and Sections of this Indenture have been inserted for convenience of reference
only, are not to be considered a part of this Indenture and shall in no way
modify or restrict any of the terms or provisions hereof.
[signature page follows]
59
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first written above.
<TABLE>
<S> <C>
AmeriCredit Corp. AmeriCredit Management Company
By /s/ By /s/
--------------------------------------- ---------------------------------------
Daniel E. Berce Daniel E. Berce
Vice Chairman and Chief Financial Officer Vice Chairman and Chief Financial
Officer
AmeriCredit Financial Services, Inc. Americredit Corporation of California
By /s/ By /s/
--------------------------------------- ---------------------------------------
Daniel E. Berce Daniel E. Berce
Vice Chairman and Chief Financial Officer Vice Chairman and Chief Financial Officer
AmeriCredit Financial Services of Canada Ltd. ACF Investment Corp.
By /s/ By /s/
--------------------------------------- ---------------------------------------
Daniel E. Berce Daniel E. Berce
Chief Financial Officer Vice Chairman and Chief Financial Officer
</TABLE>
BANK ONE, N.A.
By /s/
--------------------------------------
Name:
Title:
60
<PAGE>
EXHIBIT A
(Face of Note)
================================================================================
CUSIP/CINS ____________
97/8% [Series A] [Series B] Senior Notes due 2006
No. ___ $_________
AMERICREDIT CORP.
promises to pay to _______________________________________________
or registered assigns,
the principal sum of ____________________________________________
Dollars on April 15, 2006.
Interest Payment Dates: April 15, and October 15
Record Dates: April 1, and October 1
Dated: ________________, 199__
AMERICREDIT CORP.
By:___________________________
Name:
Title:
(SEAL)
By:___________________________
Name:
Title:
(SEAL)
This is one of the [Global]
Notes referred to in the
within-mentioned Indenture:
Bank One, N.A.
as Trustee
By:______________________________
Name:
Title:
================================================================================
A-1
<PAGE>
(Back of Note)
9 7/8% [Series A][Series B] Senior Notes due 2006
[Unless and until it is exchanged in whole or in part for Notes in
definitive form, this Note may not be transferred except as a whole by the
Depository to a nominee of the Depository or by a nominee of the Depository to
the Depository or another nominee of the Depository or by the Depository or any
such nominee to a successor Depository or a nominee of such successor
Depository. Unless this certificate is presented by an authorized representative
of The Depository Trust Company (55 Water Street, New York, New York) ("DTC"),
to the issuer or its agent for registration of transfer, exchange or payment,
and any certificate issued is registered in the name of Cede & Co. or such other
name as may be requested by an authorized representative of DTC (and any payment
is made to Cede & Co. or such other entity as may be requested by an authorized
representative of DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the registered owner
hereof, Cede & Co., has an interest herein.]/1/
[Insert the Private Placement Legend, if applicable pursuant to the provisions
of the Indenture]
Capitalized terms used herein shall have the meanings assigned to them in
the Indenture referred to below unless otherwise indicated.
1. Interest. AmeriCredit Corp., a Texas corporation (the "Company"),
promises to pay interest on the principal amount of this Note at 9 7/8% per
annum from and including April 20, 1999 until maturity and shall pay the
Liquidated Damages payable pursuant to Section 5 of the Registration Rights
Agreement referred to below. The Company will pay interest and Liquidated
Damages semi-annually on April 15 and October 15 of each year, or if any such
day is not a Business Day, on the next succeeding Business Day (each an
"Interest Payment Date"). Interest on the Notes will accrue from the most recent
date to which interest has been paid or, if no interest has been paid, from the
date of issuance; provided that if there is no existing Default in the payment
of interest, and if this Note is authenticated between a record date referred to
on the face hereof and the next succeeding Interest Payment Date, interest shall
accrue from such next succeeding Interest Payment Date; provided, further, that
the first Interest Payment Date shall be October 15, 1999. The Company shall pay
interest (including post-petition interest in any proceeding under any
Bankruptcy Law) on overdue principal and premium, if any, from time to time on
demand at a rate that is 1% per annum in excess of the rate then in effect; it
shall pay interest (including post-petition interest in any proceeding under any
Bankruptcy Law) on overdue installments of interest and Liquidated Damages
(without regard to any applicable grace periods) from time to time on demand at
the same rate to the extent lawful. Interest will be computed on the basis of a
360-day year of twelve 30-day months.
2. Method of Payment. The Company will pay interest on the Notes (except
defaulted interest) and Liquidated Damages to the Persons who are registered
Holders of Notes at the close of business on the April 1 or October 1 next
preceding the Interest Payment Date, even if such Notes are cancelled after such
record date and on or before such Interest Payment Date, except as provided in
Section 2.12 of the Indenture with respect to defaulted interest. The Notes will
be payable as to principal, premium and Liquidated Damages, if any, and interest
at the office or agency of the Company maintained for such purpose within or
without the City and State of New York, or, at the option of the Company,
payment of interest and Liquidated Damages may be made by check mailed to the
Holders at their addresses set forth in the register of Holders, and provided
that payment by wire transfer of immediately available funds will be required
with respect to principal of and interest, premium and
_________________
/1/ This paragraph should be included only if the Note is issued in global
form.
A-2
<PAGE>
Liquidated Damages on, all Global Notes and all other Notes the Holders of which
shall have provided wire transfer instructions to the Company or the Paying
Agent. Such payment shall be in such coin or currency of the United States of
America as at the time of payment is legal tender for payment of public and
private debts
3. Paying Agent and Registrar. Initially, Bank One, N.A., the Trustee
under the Indenture, will act as Paying Agent and Registrar. The Company may
change any Paying Agent or Registrar without notice to any Holder. The Company
or any of its Subsidiaries may act in any such capacity.
4. Indenture. The Company issued the Notes under an Indenture dated as of
April 20, 1999 ("Indenture") between the Company, the Guarantors named therein
and the Trustee. The terms of the Notes include those stated in the Indenture
and those made part of the Indenture by reference to the Trust Indenture Act of
1939, as amended (15 U.S. Code (S)(S) 77aaa-77bbbb). The Notes are subject to
all such terms, and Holders are referred to the Indenture and such Act for a
statement of such terms. To the extent any provision of this Note conflicts with
the express provisions of the Indenture, the provisions of the Indenture shall
govern and be controlling. The Notes are general unsecured obligations of the
Company limited to $200 million in aggregate principal amount, plus amounts, if
any, sufficient to pay interest, premium and Liquidated Damages on outstanding
Notes as set forth in Paragraph 2 hereof.
5. Optional Redemption.
(a) Except as set forth in clause (b) of this Paragraph 5, the Company
shall not have the option to redeem the Notes prior to April 15, 2003.
Thereafter, the Company shall have the option to redeem the Notes, in whole or
in part, upon not less than 30 nor more than 60 days' notice, at the redemption
prices (expressed as percentages of principal amount) set forth below plus
accrued and unpaid interest thereon to the applicable redemption date, if
redeemed during the twelve-month period beginning on April 15 of the years
indicated below:
Year Percentage
---- ----------
2003............................................ 104.938%
2004............................................ 102.469%
2005 and thereafter............................. 100.000%
(b) Notwithstanding the provisions of clause (a) of this paragraph 5, at
any time prior to April 15, 2002, the Company may on any one or more occasions
redeem up to an aggregate of $66.67 million in principal amount of Notes at a
redemption price of 109.875% of the principal amount thereof, plus accrued and
unpaid interest and Liquidated Damages thereon, if any, to the redemption date,
with the net cash proceeds of a public offering of common stock of the Company;
provided that at least $133.33 million in aggregate principal amount of Notes
remain outstanding immediately after the occurrence of such redemption; and
provided, further, that such redemption shall occur within 45 days of the date
of the closing of such public offering.
6. Mandatory Redemption.
Except as set forth in paragraph 7 below, the Company shall not be required
to make mandatory redemption payments with respect to the Notes.
A-3
<PAGE>
7. Repurchase at Option of Holder.
(a) If there is a Change of Control, the Company shall be required to make
an offer (a "Change of Control Offer") to repurchase all or any part (equal to
$1,000 or an integral multiple thereof) of each Holder's Notes at a purchase
price equal to 101% of the aggregate principal amount thereof plus accrued and
unpaid interest and Liquidated Damages, if any, to the date of purchase. Within
10 days following any Change of Control, the Company shall mail a notice to each
Holder as required by the Indenture.
(b) If the Company or a Subsidiary consummates any Asset Sales and the
aggregate amount of Excess Proceeds exceeds $10 million, the Company shall
commence an offer to all Holders of Original Notes (an "Asset Sale Offer")
pursuant to Section 3.09 of the Indenture to purchase the maximum principal
amount of Original Notes that may be purchased out of the Excess Proceeds at an
offer price in cash in an amount equal to 100% of the principal amount thereof
plus accrued and unpaid interest and Liquidated Damages, if any, to the date
fixed for the closing of such offer, in accordance with the procedures set forth
in the Original Indenture. To the extent that the aggregate amount of Original
Notes tendered pursuant to an Asset Sale Offer is less than the Excess Proceeds,
the Company will be required to make an offer to all Holders of Secondary Notes
("Secondary Asset Sale Offer") to purchase the maximum principal amount of
Secondary Notes that may be purchased out of the Excess Proceeds, at an offer
price in cash in an amount equal to 100% of the principal amount thereof plus
accrued and unpaid interest and Liquidated Damages thereon, if any, to the date
of purchase, in accordance with the procedures set forth in the Secondary
Indenture. To the extent that the aggregate amount of Secondary Notes tendered
pursuant to a Secondary Asset Sale Offer is less than the Excess Proceeds, the
Company will be required to make an offer to all Holders of Notes ("Third Asset
Sale Offer") to purchase the maximum principal amount of Notes that may be
purchased out of the Excess Proceeds, at an offer price in cash in an amount
equal to 100% of the principal amount thereof plus accrued and unpaid interest
and Liquidated Damages thereon, if any, to the date of purchase, in accordance
with the procedures set forth in the Indenture. To the extent that the
aggregate amount of Notes tendered pursuant to a Third Asset Sale Offer is less
than the remaining Excess Proceeds, the Company may use any remaining Excess
Proceeds for general corporate purposes. If the aggregate principal amount of
Original Notes or Notes surrendered by Holders thereof exceeds the amount of
Excess Proceeds, the Trustee shall select the Original Notes or Notes to be
purchased on a pro rata basis. Holders of Notes that are the subject of an offer
to purchase will receive an Asset Sale Offer from the Company prior to any
related purchase date and may elect to have such Notes purchased by completing
the form entitled "Option of Holder to Elect Purchase" on the reverse of the
Notes.
(c) The Company shall not be required to make a Change of Control Offer
upon a Change of Control if a third party makes the Change of Control Offer in
the manner, at the times and otherwise in compliance with the requirements set
forth in the Indenture applicable to a Change of Control Offer made by the
Company and purchases all Notes validly tendered and not withdrawn under such
Change of Control Offer.
8. Notice Of Redemption. Notice of redemption will be mailed at least 30
days but not more than 60 days before the redemption date to each Holder whose
Notes are to be redeemed at its registered address. Notes in denominations
larger than $1,000 may be redeemed in part but only in whole multiples of
$1,000, unless all of the Notes held by a Holder are to be redeemed. On and
after the redemption date interest ceases to accrue on Notes or portions thereof
called for redemption.
9. Denominations, Transfer, Exchange. The Notes are in registered form
without coupons in denominations of $1,000 and integral multiples of $1,000. The
transfer of Notes may be registered and Notes may be exchanged as provided in
the Indenture. The Registrar and the Trustee may
A-4
<PAGE>
require a Holder, among other things, to furnish appropriate endorsements and
transfer documents and the Company may require a Holder to pay any taxes and
fees required by law or permitted by the Indenture. The Company need not
exchange or register the transfer of any Note or portion of a Note selected for
redemption, except for the unredeemed portion of any Note being redeemed in
part. Also, it need not exchange or register the transfer of any Notes for a
period of 15 days before a selection of Notes to be redeemed or during the
period between a record date and the corresponding Interest Payment Date.
10. Persons Deemed Owners. The registered Holder of a Note may be treated
as its owner for all purposes.
11. Amendment, Supplement And Waiver. Subject to certain exceptions, the
Indenture or the Notes may be amended or supplemented with the consent of the
Holders of at least a majority in principal amount of the then outstanding
Notes, and any existing default or compliance with any provision of the
Indenture or the Notes may be waived with the consent of the Holders of a
majority in principal amount of the then outstanding Notes. Without the consent
of any Holder of a Note, the Indenture or the Notes may be amended or
supplemented to cure any ambiguity, defect or inconsistency, to provide for
uncertificated Notes in addition to or in place of certificated Notes, to
provide for the assumption of the Company's obligations to Holders of the Notes
in case of a merger or consolidation, to make any change that would provide any
additional rights or benefits to the Holders of the Notes or that does not
adversely affect the legal rights under the Indenture of any such Holder, or to
comply with the requirements of the SEC in order to effect or maintain the
qualification of the Indenture under the Trust Indenture Act.
12. Defaults And Remedies. Each of the following constitutes an Event of
Default: (i) default for 30 days in the payment when due of interest on, or
Liquidated Damages with respect to, the Notes; (ii) default in payment when due
of the principal of or premium, if any, on the Notes; (iii) failure by the
Company or any of its Subsidiaries to comply with its obligations under
covenants and agreements set forth in Sections 4.08, 4.09, 4.10 or 4.15 of the
Indenture; (iv) failure by the Company or any of its Subsidiaries for 30 days
after notice from the Trustee or the Holders of at least 25% in aggregate
principal amount of the Notes then outstanding to comply with any of the other
covenants or agreements in the Indenture; (v) default under any mortgage,
indenture or instrument under which there may be issued or by which there may be
secured or evidenced any Indebtedness for money borrowed by the Company or any
of its Subsidiaries (or the payment of which is guaranteed by the Company or any
of its Subsidiaries) whether such Indebtedness or Guarantee now exists, or is
created after the date of the Indenture, which default (a) is caused by a
failure to pay principal of or premium, if any, or interest on such Indebtedness
prior to the expiration of the grace period provided in such Indebtedness on the
date of such default (a "Payment Default") or (b) results in the acceleration of
such Indebtedness prior to its express maturity and, in each case, the principal
amount of any such Indebtedness, together with the principal amount of any other
such Indebtedness under which there has been a Payment Default or the maturity
of which has been so accelerated, aggregates $5.0 million or more; (vi) failure
by the Company or any of its Subsidiaries to pay final judgments aggregating in
excess of $2.0 million, which judgments are not paid, discharged or stayed for a
period of 60 days; (vii) except as permitted by the Indenture, any Subsidiary
Guarantee shall be held in an judicial proceeding to be unenforceable or invalid
or shall cease for any reason to be in full force and effect or any Guarantor,
or any Person acting in behalf of any Guarantor, shall deny or disaffirm its
obligations under its Subsidiary Guarantee; and (viii) certain events of
bankruptcy or insolvency with respect to the Company or any of its Subsidiaries.
If any Event of Default occurs and is continuing, the Trustee or the Holders of
at least 25% in principal amount of the then outstanding Notes may declare all
the Notes to be due and payable immediately. Notwithstanding the foregoing, in
the case of an Event of Default arising from certain events of bankruptcy or
insolvency, with respect to the Company, any Significant Subsidiary or any group
of Subsidiaries that, taken together, would constitute a Significant Subsidiary,
all outstanding Notes will become due and payable
A-5
<PAGE>
without further action or notice. Holders of the Notes may not enforce the
Indenture or the Notes except as provided in the Indenture. Subject to certain
limitations, Holders of a majority in principal amount of the then outstanding
Notes may direct the Trustee in its exercise of any trust or power. The Trustee
may withhold from Holders of the Notes notice of any continuing Default or Event
of Default (except a Default or Event of Default relating to the payment of
principal or interest) if it determines that withholding notice is in their
interest. The Holders of a majority in aggregate principal amount of the Notes
then outstanding by notice to the Trustee may on behalf of the Holders of all of
the Notes waive any existing Default or Event of Default and its consequences
under the Indenture except a continuing Default or Event of Default in the
payment of interest on, or the principal of, the Notes. The Company is required
to deliver to the Trustee annually a statement regarding compliance with the
Indenture, and the Company is required upon becoming aware of any Default or
Event of Default, to deliver to the Trustee a statement specifying such Default
or Event of Default.
13. Trustee Dealings With Company. The Trustee, in its individual or any
other capacity, may make loans to, accept deposits from, and perform services
for the Company or its Affiliates, and may otherwise deal with the Company or
its Affiliates, as if it were not the Trustee.
14. No Recourse Against Others. A director, officer, employee,
incorporator or stockholder, of the Company, as such, shall not have any
liability for any obligations of the Company under the Notes or the Indenture or
for any claim based on, in respect of, or by reason of, such obligations or
their creation. Each Holder by accepting a Note waives and releases all such
liability. The waiver and release are part of the consideration for the issuance
of the Notes.
15. Authentication. This Note shall not be valid until authenticated by
the manual signature of the Trustee or an authenticating agent.
16. Abbreviations. Customary abbreviations may be used in the name of a
Holder or an assignee, such as: TEN COM (= tenants in common), TEN ENT (=
tenants by the entireties), JT TEN (= joint tenants with right of survivorship
and not as tenants in common), CUST (= Custodian), and U/G/M/A (= Uniform Gifts
to Minors Act).
17. Additional Rights Of Holders Of Transfer Restricted Securities. In
addition to the rights provided to Holders of Notes under the Indenture, Holders
of Transferred Restricted Securities shall have all the rights set forth in the
C/D Exchange Registration Rights Agreement dated as of April 20, 1999, between
the Company, the Guarantors and the other parties named on the signature pages
thereof (the "Registration Rights Agreement").
18. CUSIP Numbers. Pursuant to a recommendation promulgated by the
Committee on Uniform Security Identification Procedures, the Company has caused
CUSIP numbers to be printed on the Notes and the Trustee may use CUSIP numbers
in notices of redemption as a convenience to Holders. No representation is made
as to the accuracy of such numbers either as printed on the Notes or as
contained in any notice of redemption and reliance may be placed only on the
other identification numbers placed thereon.
The Company will furnish to any Holder upon written request and without
charge a copy of the Indenture and/or the Registration Rights Agreement.
Requests may be made to:
AmeriCredit Corp.
200 Bailey Avenue
Fort Worth, TX 76107
Attention: Chief Financial Officer
A-6
<PAGE>
Assignment Form
To assign this Note, fill in the form below: (I) or (we) assign and
transfer this Note to
________________________________________________________________________________
(Insert assignee's soc. sec. or tax I.D. no.)
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(Print or type assignee's name, address and zip code)
and irrevocably appoint_________________________________________________________
to transfer this Note on the books of the Company. The agent may substitute
another to act for him.
Date: __________
Your Signature: _____________________________
(Sign exactly as your name appears on the
face of this Note)
Signature Guarantee.
A-7
<PAGE>
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Note purchased by the Company pursuant to
Section 4.10 or 4.15 of the Indenture, check the box below:
[_] Section 4.10 [_] Section 4.15
If you want to elect to have only part of the Note purchased by the Company
pursuant to Section 4.10 or Section 4.15 of the Indenture, state the amount you
elect to have purchased: $_____________
Date: ______________ Your Signature:_____________________
(Sign exactly as your name appears
on the Note)
Tax Identification No.: _____________
Signature Guarantee.
A-8
<PAGE>
SCHEDULE OF EXCHANGES OF INTERESTS IN THE GLOBAL NOTE/2/
The following exchanges of a part of this Global Note for an interest in
another Global Note or for a Definitive Note, or exchanges of a part of another
Global Note or Definitive Note for an interest in this Global Note, have been
made:
<TABLE>
<CAPTION>
Amount of Principal Amount Signature of
decrease in Amount of increase of this Global authorized officer of
Principal Amount in Principal Note following such Trustee or Note
Date of Exchange of this Global Note Amount of this Global Note decrease (or increase) Custodian
- ---------------- ------------------- -------------------------- ---------------------- ---------------------
<S> <C> <C> <C> <C>
</TABLE>
_______________________
/2/ This Should Be Included Only If The Note Is Issued In Global Form.
A-9
<PAGE>
EXHIBIT B
CERTIFICATE TO BE DELIVERED UPON EXCHANGE OR REGISTRATION OF TRANSFER OF NOTES
Re: 9 7/8% Senior Notes due 2006 of AmeriCredit Corp.
This Certificate relates to $_____ principal amount of Notes held in
*__________ book-entry or *_______ definitive form by __________________ (the
"Transferor").
The Transferor:
Check Applicable Box.
[_] has requested the Trustee by written order to deliver in exchange for
its beneficial interest in the Global Note held by the Depository a Note or
Notes in definitive, registered form of authorized denominations in an aggregate
principal amount equal to its beneficial interest in such Global Note (or the
portion thereof indicated above); or
[_] has requested the Trustee by written order to exchange or register the
transfer of a Note or Notes.
In connection with such request and in respect of each such Note, the
Transferor does hereby certify that Transferor is familiar with the Indenture
relating to the above captioned Notes and as provided in Section 2.06 of such
Indenture, the transfer of this Note does not require registration under the
Securities Act (as defined below) because:*
[_] Such Note is being acquired for the Transferor's own account, without
transfer (in satisfaction of Section 2.06(a)(ii)(A) or Section 2.06(d)(i)(A) of
the Indenture).
[_] Such Note is being transferred to a "qualified institutional buyer"
(as defined in Rule 144A under the Securities Act of 1933, as amended (the
"Securities Act")) in reliance on Rule 144A (in satisfaction of Section
2.06(a)(ii)(B), Section 2.06(b)(A) or Section 2.06(d)(i) (B) of the Indenture)
or pursuant to an exemption from registration in accordance with Rule 904 under
the Securities Act (in satisfaction of Section 2.06(a)(ii)(B) or Section
2.06(d)(i)(B) of the Indenture.)
[_] Such Note is being transferred in accordance with Rule 144 under the
Securities Act, or pursuant to an effective registration statement under the
Securities Act (in satisfaction of Section 2.06(a)(ii)(B) or Section
2.06(d)(i)(B) of the Indenture).
________________________
. Check applicable box.
B-1
<PAGE>
[_] Such Note is being transferred in reliance on and in compliance with
an exemption from the registration requirements of the Securities Act, other
than Rule 144A, 144 or Rule 904 under the Securities Act. An Opinion of Counsel
to the effect that such transfer does not require registration under the
Securities Act accompanies this Certificate (in satisfaction of Section
2.06(a)(ii)(C) or Section 2.06(d)(i)(C) of the Indenture).
_______________________________________
[INSERT NAME OF TRANSFEROR]
By:____________________________________
Date: __________________
B-2
<PAGE>
EXHIBIT C
SUBSIDIARY GUARANTEE
Each Guarantor hereby, jointly and severally, unconditionally guarantees to
each Holder of Notes authenticated and delivered by the Trustee and to the
Trustee and its successors and assigns, irrespective of the validity and
enforceability of the Indenture, the Notes or the Obligations of the Company to
the Holders or the Trustee under the Notes or under the Indenture, that: (a) the
principal of, and premium and Liquidated Damages, if any, and interest on the
Notes shall be promptly paid in full when due, whether at maturity, by
acceleration, redemption, repurchase or otherwise, and interest on overdue
principal of interest and Liquidated Damages if any, on any Note, if any, if
lawful and all other Obligations of the Company to the Holders or the Trustee
under the Indenture or under the Notes shall be promptly paid in full or
performed, all in accordance with the terms thereof; and (b) in case of any
extension of time of payment or renewal of any Notes or any of such other
Obligations, the same will be promptly paid in full when due in accordance with
the terms of the extension or renewal, whether at stated maturity, by
acceleration or otherwise. Failing payment when due of any amount so guaranteed,
for whatever reason, the Guarantors will be jointly and severally obligated to
pay the same immediately.
The Obligations of the Guarantors to the Holders of Notes and to the
Trustee pursuant to this Subsidiary Guarantee and the Indenture are expressly
set forth in Article 10 of the Indenture, and reference is hereby made to such
Indenture for the precise terms of this Subsidiary Guarantee. The terms of
Article 10 of the Indenture are incorporated herein by reference.
No director, officer, employee, incorporator or stockholder, as such, past,
present or future, of each of the Guarantors shall have any personal liability
under this Subsidiary Guarantee by reason of its status as such director,
officer, employee incorporator or stockholder.
This is a continuing Subsidiary Guarantee and shall remain in full force
and effect and shall be binding upon each Guarantor and its respective
successors and assigns to the extent set forth in the Indenture until full and
final payment of all of the Company's Obligations under the Notes and the
Indenture and shall inure to the benefit of the successors and assigns of the
Trustee and the Holders of Notes and, in the event of any transfer or assignment
of rights by any Holder of Notes or the Trustee, the rights and privileges
herein conferred upon that party shall automatically extend to and be vested in
such transferee or assignee, all subject to the terms and conditions hereof.
In certain circumstances more fully described in the Indenture, any
Guarantor may be released from its liability under this Subsidiary Guarantee,
and any such release will be effective whether or not noted hereon.
This Subsidiary Guarantee shall not be valid or obligatory for any purpose
until the certificate of authentication on the Note upon which this Subsidiary
Guarantee is noted shall have been executed by the Trustee under the Indenture
by the manual signature of one of its authorized officers.
For purposes hereof, each Guarantor's liability will be that amount from
time to time equal to the aggregate liability of such Guarantor hereunder, but
shall be limited to the lesser of (i) the aggregate amount of the Obligations of
the Company under the Notes and the Indenture and (ii) the amount, if any, which
would not have (A) rendered such Guarantor "insolvent" (as such term is defined
in the federal Bankruptcy Law and in the debtor and creditor law of the State of
New York) or (B) left it with unreasonably small capital at the time its
Subsidiary Guarantee of the Notes was entered into, after giving effect to the
incurrence of existing Indebtedness immediately prior to such time; provided
that, it shall be a presumption in any lawsuit or other proceeding in which such
Guarantor is a party that the
C-1
<PAGE>
amount guaranteed pursuant to its Subsidiary Guarantee is the amount set forth
in clause (i) above unless any creditor, or representative of creditors of such
Guarantor, or debtor in possession or trustee in bankruptcy of such Guarantor,
otherwise proves in such a lawsuit that the aggregate liability of such
Guarantor is limited to the amount set forth in clause (ii). The Indenture
provides that, in making any determination as to the solvency or sufficiency of
capital of a Guarantor in accordance with the previous sentence, the right of
such Guarantor to contribution from other Guarantors and any other rights such
Guarantor may have, contractual or otherwise, shall be taken into account.
Capitalized terms used herein have the same meanings given in the Indenture
unless otherwise indicated.
Americredit Management Company
By__________________________________
Daniel E. Berce
Vice Chairman and
Chief Financial Officer
Americredit Financial Services, InC. Americredit Corporation Of California
By__________________________________ By____________________________________
Daniel E. Berce Daniel E. Berce
Vice Chairman and Chief Financial Vice Chairman and Chief Financial
Officer Officer
Americredit Financial Services Of Acf Investment Corp.
Canada Ltd.
By__________________________________ By____________________________________
Daniel E. Berce Daniel E. Berce
Chief Financial Officer Vice Chairman and Chief Financial
Officer
C-2
<PAGE>
Exhibit 5.1
June 14, 1999
AmeriCredit Corp.
200 Bailey Avenue
Fort Worth, Texas 76107
Re: Registration Statement on Form S-4; $200,000,000 Aggregate Principal
Amount of 9.875% Senior Notes due 2006
Dear Ladies and Gentlemen:
In connection with the registration of $200,000,000 aggregate principal
amount of 9.875% Senior Notes due 2006 (the "Notes") by AmeriCredit Corp. (the
"Company") under the Securities Act of 1933, as amended (the "Act"), on Form S-4
filed with the Securities and Exchange Commission on June 27, 1999 (the
"Registration Statement") and the concurrent registration of guarantees (the
"Subsidiary Guarantees") of the Notes by AmeriCredit Financial Services, Inc.,
AmeriCredit Management Company, ACF Investment Corp., Americredit Corporation of
California and AmeriCredit Financial Services of Canada Ltd. (collectively, the
"Guarantors"), you have requested our opinion with respect to the matters set
forth below. The Notes and Subsidiary Guarantees will be issued pursuant to an
indenture (the "Indenture") among the Company, the Guarantors and Bank One,
N.A., as Trustee (the "Trustee").
In our capacity as your special counsel in connection with such
registration, we are familiar with the proceedings taken and proposed to be
taken by the Company and the Guarantors in connection with the authorization and
issuance of the Notes and Subsidiary Guarantees, and, for the purposes of this
opinion, have assumed such proceedings will be timely completed in the manner
presently proposed. In addition, we have made such legal and factual
examinations and inquiries, including an examination of originals or copies,
certified or otherwise identified to our satisfaction, of such documents,
corporate records and instruments, as we have deemed necessary or appropriate
for purposes of this opinion.
In our examination, we have assumed the genuineness of all signatures, the
authenticity of all documents submitted to us as originals, and the conformity
to authentic original documents of all documents submitted to us as copies.
<PAGE>
AmeriCredit Corp.
June 14, 1999
Page 2
We are opining herein as to the effect on the subject transaction only of
the internal laws of the State of Texas and the Delaware General Corporation
Law, and we express no opinion with respect to the applicability thereto, or the
effect thereon, of the laws of any other jurisdiction or as to any matters of
municipal law or the laws of any other local agencies within any state.
Subject to the foregoing and the other matters set forth herein, it is our
opinion that, as of the date hereof:
1. When executed and delivered by or on behalf of the Company and
authenticated by the Trustee in accordance with the terms of the Indenture, the
Notes will constitute valid and binding obligations of the Company, enforceable
against the Company in accordance with their terms.
2. When executed and delivered by or on behalf of the Guarantors, the
Subsidiary Guarantees will constitute valid and binding obligations of the
Guarantors, enforceable against the Guarantors in accordance with their terms.
The opinions rendered in paragraphs 1 and 2 above relating to the
enforceability of the Notes and Subsidiary Guarantees are subject to the
following exceptions, limitations and qualifications: (i) the effect of
bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance or
other similar laws now or hereafter in effect relating to or affecting the
rights and remedies of creditors generally; (ii) the effect of general
principles of equity, whether enforcement is considered in a proceeding in
equity or at law, and the discretion of the court before which any proceeding
therefor may be brought; and (iii) we express no opinion concerning the
enforceability of any waivers of rights or defenses or indemnification
provisions of the Indenture where such waivers or provisions are contrary to
public policy.
To the extent that the obligations of the Company and the Guarantors under
the Indenture may be dependent upon such matters, we assume for purposes of this
opinion that the Trustee is duly organized, validly existing and in good
standing under the laws of its jurisdiction of organization; that the Trustee is
duly qualified to engage in the activities contemplated by the Indenture; that
the Indenture has been duly authorized, executed and delivered by the Trustee
and constitutes the legally valid and binding obligation of the Trustee,
enforceable against the Trustee in accordance with its terms; that the Trustee
is in compliance, generally and with respect to acting as a trustee under the
Indenture, with all applicable laws and regulations; and that the Trustee has
the requisite organizational and legal power and authority to perform its
obligations under the Indenture.
<PAGE>
AmeriCredit Corp.
June 14, 1999
Page 3
We hereby consent to the filing of this opinion as Exhibit 5.1 to the
Registration Statement and to the use of our name under the caption "Legal
Matters" in the Registration Statement and in the Prospectus included therein.
In giving such consent, we do not admit that we come within the category of
persons whose consent is required by Section 7 of the Act or the rules and
regulations of the Securities and Exchange Commission thereunder.
Very truly yours,
JENKENS & GILCHRIST,
A Professional Corporation
/s/ L. Steven Leshin
---------------------------------------
By: L. Steven Leshin
GSJ/dc
<PAGE>
EXHIBIT 10.11.1
AMENDMENT NO. 1 TO SALE AND SERVICING AGREEMENT
AMENDMENT NO. 1 (this "Amendment"), dated as of September 29, 1998, to
---------
the SALE AND SERVICING AGREEMENT, dated as of October 8, 1997 (together
with the Schedules and Exhibits thereto, and together with Annex A ("Annex A"),
-------
the schedule of defined terms, thereto, the "Sale and Servicing Agreement"),
----------------------------
between CP FUNDING CORP., a Nevada corporation, as borrower (the "Borrower"),
--------
AMERICREDIT FINANCIAL SERVICES, INC., a Delaware corporation ("AFS"), as seller
---
and as servicer (in such capacities, the "Seller" and the "Servicer",
------ --------
respectively), and THE CHASE MANHATTAN BANK, a New York banking corporation
("Chase"), as backup servicer and as funding agent (in such capacities, the
- -------
"Backup Servicer" and the "Funding Agent", respectively).
- ---------------- -------------
W I T N E S S E T H :
--------------------
WHEREAS, the Borrower, AFS, as Seller and as Servicer, and Chase, as
Backup Servicer and as Funding Agent, have entered into the Sale and Servicing
Agreement in connection with certain purchases, from time to time, by the
Borrower from AFS of motor vehicle retail installment sales contracts and a
funding facility (the "Funding Facility") for such purchases by the Borrower
----------------
with Park Avenue Receivables Corporation ("PARCO") and a syndicate of bank
-----
lenders party thereto (the "APA Banks"); and
---------
WHEREAS, the parties wish to amend the Sale and Servicing Agreement to
combine, for administrative convenience, the Reserve Account and the Collection
Account and in the other respects hereinafter provided.
NOW, THEREFORE, in consideration of the foregoing and of the mutual
covenants herein contained, the parties hereto hereby agree as follows:
1. SECTION Defined Terms.
-------------
2.
3. "Effective Date" means the date of this Amendment, which shall not be
--------------
a date prior to the date on which all conditions precedent to the effectiveness
hereof, set forth in Section 5 hereof, shall have been satisfied.
4.
5. Unless otherwise defined herein, the terms used herein shall have the
meanings assigned to such terms in Annex A to the Sale and Servicing Agreement.
<PAGE>
1. SECTION Amendments to Sale and Servicing Agreement. The Sale and
------------------------------------------
Servicing Agreement is hereby amended as follows:
2.
(A) The reference to "three Business Days" in each of subparagraph
(i) and subparagraph (ii) of Section 3.2(a) shall be amended to "one (1)
Business Day"; provided, however, that nothing contained herein is intended to
-----------------
override the requirement set forth in Section 2.1 of the Funding Agreement that
a request by the Borrower for a Eurodollar Funding be made at least three (3)
Business Days in advance.
(B) Subparagraph (xiv) of Section 3.2 shall be deleted in its
entirety and shall be replaced by the following:
(C) on each Receivables Sale Date after the Initial Receivables Sale
Date, the Borrower shall transfer to the Funding Agent for deposit in the
Collection Account for allocation to the Collection Account Reserve, the
amount of the Collection Account Reserve Shortfall Amount, if any, required
to be made in connection with such sale (provided, that such payment may be
--------
made by the Borrower out of the proceeds of the Funding made on such date);
(D) The reference to "66 months" in subparagraph (ii) of Section
5.2(c) shall be amended to "78 months".
(E) Section 5.6 shall be amended by adding the following subparagraph
(v) thereto:
(v) Year 2000 Compliance. The Servicer agrees that it is exercising
--------------------
reasonable best efforts to be Year 2000 Compliant, with respect to its own
operations and those of its subsidiaries and other entities for which it
acts as a servicer by June 30, 1999. The Servicer will promptly notify the
Funding Agent in the event the Servicer discovers or determines that any
computer application (including those of its suppliers, vendors and
customers) (i) that is necessary for the origination, collection,
management, or servicing of the Receivables will not be Year 2000 Compliant
on or before June 30, 1999 and thereafter, or (ii) that is material to its
or any of its subsidiaries' business and operations (other than as
expressly described in clause (i)) will not be Year 2000 Compliant on a
timely basis, except to the extent that, in the case of this clause (ii),
such failure could not reasonably be expected (a) to have a material
adverse effect on the Servicer or on the transactions contemplated by this
Agreement, or (b) to result in a Termination Event.
<PAGE>
Further, the Servicer will deliver simultaneously with any quarterly
or annual financial statements or reports to be delivered under the
Agreement, a certificate signed by an Authorized Officer that no material
event, problems or conditions have occurred which in the opinion of
management would (i) prevent or materially delay the Servicer's plan to
become Year 2000 Compliant or (ii) cause or be likely to cause the
Servicer's representations and warranties with respect to being or becoming
Year 2000 Compliant to no longer be true.
(F) The reference to "five (5) Business Days" in subparagraph (b) of
Section 5.9 shall be amended to "three (3) Business Days".
(G) Section 5.11(b) shall be amended by adding the following thereto:
Notwithstanding anything to the contrary in this Section 5.11(b), from
and after the date of Amendment No. 1 to this Agreement, the data integrity
review referenced in this Section 5.11(b) shall be semi-annual with the
report of the Independent Accountants due within 20 days following the end
of each of the fourth and tenth months of each calendar year.
(H) Subparagraph (a) of Section 6.1 shall be amended by adding the
following thereto:
Notwithstanding the foregoing, on the effective date of Amendment No.
1 to this Agreement, funds then on deposit in the Reserve Account shall be
transferred to the Collection Account and, together with any additional
funds required to be deposited by the Borrower on such date to achieve the
Collection Account Reserve Minimum, shall constitute the initial Collection
Account Reserve; and from and after such date, there shall be no
requirement of a separate Reserve Account.
(I) The first sentence of subparagraph (b) of Section 6.1 shall be
deleted in its entirety and shall be replaced by the following:
Funds on deposit in the Collection Account and/or any other account
established pursuant to Section 6.1(f)(i) (each such account, a "Pledged
-------
Account"), in excess of $25,000 shall be invested by the Funding Agent in
-------
Eligible Investments selected by the Funding Agent in its discretion among
Eligible Investments specified in standing written instructions of the
Borrower, or, in the absence of such instructions, solely in the discretion
of the Funding Agent.
<PAGE>
(J) Section 6.2 shall be deleted in its entirety and shall be
replaced by the following:
SECTION 6.2 Collection Account Reserve.
--------------------------
(a) On the effective date of Amendment No. 1 to this Agreement, the
Funding Agent shall transfer any amounts then on deposit in the Reserve
Account to the Collection Account for allocation to the Collection Account
Reserve, and the Borrower shall transfer to the Funding Agent for deposit
in the Collection Account any additional amount necessary to achieve the
Collection Account Reserve Minimum.
(b) At all times during the term of the Facility, the Borrower shall
maintain the Collection Account Reserve Minimum. In the event that the
Collection Account Reserve shall fall below the Collection Account Reserve
Minimum, then, as promptly as possible and in no event later than five
Business Days following such event (or, if sooner, the next contemplated
Funding Date pursuant to the Funding Agreement), the Borrower shall pay to
the Funding Agent, for deposit in the Collection Account and allocation to
the Collection Account Reserve, the amount of any such shortfall in
immediately available funds (such amount, the "Collection Account Reserve
--------------------------
Shortfall Amount"; it being understood that the deposit of any required
----------------
Collection Account Reserve Shortfall Amount by the Borrower shall be a
condition precedent to the occurrence of any Funding on such contemplated
Funding Date).
(c) Prior to the occurrence of a Termination Event or the Commitment
Expiry Date (or the occurrence and continuation of a Pool Seasoning Event),
on any Distribution Date, after application of Available Funds as set forth
in clauses (i) through (xii) of Section 6.8(a) hereof, funds on deposit in
the Collection Account that are allocated to the Collection Account Reserve
and that are in excess of the higher of (i) the Collection Account Reserve
Minimum and (ii) 6.00% of the VFN Balance, shall be available for
distribution to the Borrower in accordance with Section 6.8(a) hereof.
Further, in connection with an Optional Prepayment of the VFN (as described
in Section 2.1(f) of the Funding Agreement), and after payment of (i) all
obligations to PARCO required in connection with such prepayment and (ii)
all other costs and expenses related to such prepayment (and provided that
no Termination Event is then in existence, that no Pool Seasoning Event is
or would be in existence after giving effect to such Optional Prepayment
and that the Commitment Expiry Date has not occurred), then, funds on
deposit in the Collection Account that are allocated to the Collection
Account Reserve and that are in excess of the Collection Account Reserve
Minimum
<PAGE>
may be released to the Borrower in an amount determined as follows: the
product of (A) the Collection Account Reserve and (B) a fraction, the
numerator of which is the Principal Balance of Receivables released in
connection with the prepayment that had been included in the Pool Balance,
and the denominator of which is the Pool Balance before giving effect to
the prepayment; provided, that the Collection Account Reserve shall be
--------
maintained in an amount at least equal to the Collection Account Reserve
Minimum after such distribution.
Following the occurrence of a Termination Event, all amounts allocated
to the Collection Account Reserve shall be applied in accordance with
Section 6.8(a).
(K) Section 6.6 shall be deleted in its entirety and shall be
replaced by the following:
SECTION 6.6 Application of Funds From the Collection Account Reserve;
---------------------------------------------------------
Special Withdrawals from the Collection Account.
-----------------------------------------------
(a) In the event that the Servicer's Determination Date Certificate
with respect to any Determination Date shall state that the amount of the
Available Funds 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 (xii) of Section 6.8(a) (such amount, an "Available
---------
Funds Deficiency"), then, on the Business Day preceding the related
----------------
Distribution Date, the Funding Agent shall allocate to the payment of such
amounts an amount equal to such Available Funds Deficiency, to the extent
that funds are available, from the Collection Account Reserve.
(b) Notwithstanding anything in this Agreement or any other Basic
Agreement to the contrary, to the extent that PARCO (or the Administrative
Agent on its behalf) notifies the Funding Agent with respect to any date
other than a Distribution Date that PARCO has insufficient funds on hand to
pay any portion of the Carrying Costs representing Accrued Discount payable
on such date, then the Funding Agent may immediately withdraw the necessary
amount from the Collection Account, including, if necessary, from the
Collection Account Reserve, and make available such amounts for
distribution to PARCO on such date. The Funding Agent shall give notice to
the Borrower and the Servicer by telephone as promptly as practicable and
in any event no later than the Business Day following such withdrawal, such
notice to be promptly confirmed in writing.
<PAGE>
(L) Clause (v)(A) of Section 6.8(a) is hereby amended by restating
the parenthetical clause therein as follows:
(After giving effect, in the case of Accrued Discount, to any portion
thereof paid since the previous Distribution Date, whether from the
proceeds of newly issued Commercial Paper, or as contemplated by
Section 6.6(b) hereof)
(M) Subparagraph (x) of Section 6.8(a) shall be deleted in its
entirety and shall be replaced by the following:
(x) prior to the occurrence of the Commitment Expiry Date, a
Termination Event, or the occurrence and continuation of a Pool
Seasoning Event, the balance, if any, will first be allocated to the
Collection Account Reserve, until the Collection Account Reserve is
equal to the greater of (i) 6.00% of the VFN Balance and (ii) the
Collection Account Reserve Minimum;
(N) Section 8.1 shall be amended by adding the following as
subparagraph (x):
(x) Year 2000 Compliance. The Servicer has (i) initiated a review
--------------------
and assessment of all areas within its and each of its subsidiaries'
business and operations (including those affected by suppliers, vendors and
customers) that could be adversely affected by the "Year 2000 Problem"
-----------------
(that is, the risk that computer applications used by the Servicer or any
of its subsidiaries (or suppliers, vendors and customers) may be unable to
recognize and perform properly date-sensitive functions involving certain
dates prior to and any date after December 31, 1999), (ii) developed a plan
and timeline for addressing the Year 2000 Problem on a timely basis, and
(iii) to date, implemented that plan in accordance with that timetable.
Based on the foregoing, the Servicer believes that all computer
applications (including those of its suppliers, vendors and customers) that
are material to its or any of its subsidiaries' business and operations are
reasonably expected on a timely basis to be able to perform properly date-
sensitive functions for all dates before and after January 1, 2000 (that
is, be "Year 2000 Compliant"), except to the extent that a failure to do so
-------------------
could not reasonably be expected (a) to have a material adverse effect on
the Servicer or on the transaction documented under this Agreement, or (b)
to result in a Termination Event.
The Servicer (i) has completed a review and assessment of all computer
applications (including, but not limited to those of its suppliers,
vendors, customers and any third party servicers), which are related to or
in-
<PAGE>
volved in the origination, collection, management or servicing of the
Receivables and (ii) has determined that such origination, collection,
management or servicing applications are Year 2000 Compliant or will be
Year 2000 Compliant on or before June 30, 1999 and thereafter.
The costs of all assessment, remediation, testing and integration related
to the Servicer's plan for becoming Year 2000 Compliant will not have a
material adverse effect on the financial condition or operations of the
Servicer.
SECTION 3. Amendments to Schedule B. Schedule B is hereby amended by
------------------------
deleting from each of clauses (h)(i) and (h)(ii) thereof the number "60", and
substituting therefor the number "72"; and from and after the Effective Date,
unless the context otherwise requires, any reference to Schedule B in any Basic
Agreement, and any statement of representations or warranties that incorporates
such Schedule B, shall mean Schedule B as hereby amended.
SECTION 4. Amendments to Annex A. Annex A is hereby amended as
---------------------
follows and a conformed copy of Annex A, as amended, is attached to this
Amendment as "Amended Annex A" (and from and after the Effective Date, unless
the context otherwise requires, any reference to Annex A in any Basic Agreement
shall mean Annex A as hereby amended):
(A) The following definitions shall be added by inserting the same in
alphabetical order therein:
Amendment No. 1 means Amendment No. 1, dated as of September 29, 1998, to
---------------
the Sale and Servicing Agreement.
Available Funds Deficiency has the meaning assigned in Section 6.6 of the
--------------------------
Sale and Servicing Agreement, as amended by Amendment No. 1.
Collection Account Reserve means the amount from time to time allocated to
--------------------------
the Collection Account Reserve on the books and records of the Funding
Agent, determined as follows (each Section reference in the following is a
reference to a Section of the Sale and Servicing Agreement as amended by
Amendment No. 1 thereto): (i) the amount of the Collection Account Reserve
Minimum established on the Effective Date of Amendment No. 1 to the Sale
and Servicing Agreement; plus (ii) each allocation to the Collection
----
Account Reserve pursuant to Section 6.8(a)(x); plus (iii) each allocation
----
of amounts deposited in the Collection Account as Collection Account
Reserve Shortfall Amounts; minus (iv) each release of funds from the
-----
Collection Account Reserve pursuant to Section 6.2(c); and minus (v) each
-----
application of funds from the Collection Account Reserve pursuant to
Section 6.6.
<PAGE>
Collection Account Reserve Minimum means $5,050,000.
----------------------------------
Collection Account Reserve Shortfall Amount has the meaning assigned in
-------------------------------------------
Section 6.2(b) of the Sale and Servicing Agreement as amended by Amendment
No. 1.
Sale and Servicing Agreement means the Sale and Servicing
----------------------------
Agreement, dated as of October 8, 1997 (together with the Schedules and
Exhibits thereto, and together with Annex A, the schedule of defined terms,
thereto), between the Borrower, the Seller and Servicer, the Funding Agent
and the Backup Servicer, as the same may be amended, supplemented or
otherwise modified and in effect from time to time.
"Securitization Trust" means any person (whether or not a subsidiary of
--------------------
AmeriCredit Corp.) established exclusively for the purpose of issuing
securities in connection with any securitization of receivables arising
from consumer installment sales contracts or loans, or residential
mortgages, by AmeriCredit Corp. or certain of its subsidiaries, the
obligations of which are without recourse to AmeriCredit Corp. or such
subsidiaries.
Year 2000 Compliant has the meaning assigned in Section 8.1(x) of the Sale
-------------------
and Servicing Agreement as amended by Amendment No. 1.
Year 2000 Problem has the meaning assigned in Section 8.1(x) of the Sale
-----------------
and Servicing Agreement as amended by Amendment No. 1.
(B) The definition of "Available Funds" is hereby amended by adding
the following parenthetical clause thereto:
(for the avoidance of doubt, "Available Funds" does not include funds
allocated to the Collection Account Reserve).
(C) Clause (v) of the definition of "Commitment Expiry Date" is
hereby deleted in its entirety and the following substituted therefor:
(v) September 28, 1999 (as may be extended for an additional 364 days from
time to time in writing at the option of PARCO, the Funding Agent and the
APA Banks).
(D) The definition of "Eligible Investments" is hereby amended by
deleting the following language from the last two lines thereof:
<PAGE>
"And that have at least 95 percent of their assets continuously
invested in "exempted securities" within the meaning of the Securities
Exchange Act of 1934, as amended."
(E) The first sentence of the definition of "Excess Spread" shall be
deleted in its entirety and shall be replaced with the following:
Excess Spread means, with respect to the Receivables constituting the
-------------
Pool Balance, the Weighted Average Coupon thereof minus the sum of (i)
-----
7.00% (representing the deemed maximum rate of interest under the
Funding Agreement, after taking into account amounts payable to the
Borrower pursuant to the Hedge Contract(s)); and (ii) 2.00%
(representing the fees of the Servicer and other transaction fees and
expenses).
(F) The definition of "Facility Limit" is hereby amended by deleting
the amount "$245,000,000" and substituting therefor, the amount "$505,000,000".
(G) The definition of "Fee Letters" is hereby amended by deleting the
words "dated as of October 8, 1997" and substituting therefor the following:
"dated on or about October 8, 1997".
(H) The definition of "Interest Coverage Ratio" is hereby amended by
deleting the first sentence thereof, and substituting the following therefor:
Interest Coverage Ratio means, at any time, with respect to AmeriCredit
-----------------------
Corp., (a) the sum of EBIT and the excess cash flow generated by the
Securitization Trusts less the non-cash gain on sale of Finance
Contracts divided by (b) total interest expense.
(I) The definition of "Minimum Excess Spread" is hereby amended by
deleting the figure "9.50%" and substituting therefor, the figure 8.75%.
(J) The definition of "Minimum Reserve Account Balance" is hereby
deleted in its entirety .
(K) The definition of "Net Investment" is hereby amended by inserting
in the third line thereof after the words "Funding Agreement," and before the
words "as such," the following: "as such amount may be increased by the amount
of the Interest Component of Commercial Paper that is repaid on the maturity
date thereof from the proceeds of newly issued Commercial Paper, and . . .".
(L) The definition of "Pool Limitations" is hereby amended as
follows:
<PAGE>
(i) by inserting in the second line thereof, following the word
"criteria" and before the word "as", the following: "and other
specified limits"; and
(ii) by adding the following clause (iv) thereto:
The Principal Balance of Receivables representing Contracts
having an original maturity of more than 60 months shall not
exceed 15% of the Pool Balance.
(M) The definition of "Principal Collections" is hereby amended by
adding the following parenthetical clause thereto:
(for the avoidance of doubt, "Principal Collections" does not include
funds allocated to the Collection Account Reserve).
(N) The definition of "Receivables Sale Date" is hereby amended by
deleting the words "once a week" and substituting therefor the words "twice a
week".
(O) The definition of "Reserve Account" is hereby deleted in its
entirety.
(P) The definition of "Reserve Account Initial Deposit" is hereby
deleted in its entirety .
(Q) The definition of "Servicer's Determination Date Certificate" is
-----------------------------------------
hereby amended by inserting the following, after the words "substantially in the
form of Exhibit B thereto": "As such form may from time to time be revised by
the Servicer with the approval of the Funding Agent to conform to amendments of
the Basic Agreements or otherwise to clarify the required reporting."
(R) The definition of "Servicer's Receivables Sale Date Certificate"
--------------------------------------------
is hereby amended by inserting the following, after the words "substantially in
the form of Exhibit D thereto": "As such form may from time to time be revised
by the Servicer with the approval of the Funding Agent to conform to amendments
of the Basic Agreements or otherwise to clarify the required reporting."
(S) The definition of "Servicer's VFN Prepayment Date Certificate" is
------------------------------------------
hereby amended by inserting the following, after the words "substantially in the
form of Exhibit B-1 thereto": "As such form may from time to time be revised by
the Servicer with the approval of the Funding Agent to conform to amendments of
the Basic Agreements or otherwise to clarify the required reporting."
<PAGE>
(T) The definition of "Servicing Fee Rate" is hereby amended by
deleting the reference to the figure "2.25%" and substituting therefor the
figure "1.75%".
(U) The definition of "Subsequent Reserve Account Deposit" is hereby
deleted in its entirety.
(V) Clause (vi) of the definition of "Termination Event" is hereby
amended by deleting the first two lines thereof and substituting the following
therefor:
The amount allocated to the Collection Account Reserve shall fall
below the Collection Account Reserve Minimum and such deficiency shall
remain...
(W) Clause (x) of the definition of "Termination Event" is hereby
deleted in its entirety and the following substituted therefor:
The Interest Coverage Ratio of AmeriCredit Corp. computed on a
trailing twelve month basis shall be less than 1.75 to 1.0 at any time
and such failure shall continue for a period of 20 days;
(X) The definition of "Total Investment" is hereby amended as
follows:
(i) by inserting in the fourth line thereof, after the words "may be"
and before the words "reduced by", the following: "as such amount
may be increased by the amount of the Interest Component of
Commercial Paper that is repaid on the maturity date thereof from
the proceeds of newly issued Commercial Paper, and . . ."; and
(ii) by deleting the parenthetical clause contained therein and
substituting the following therefor: "(including Discount on
Commercial Paper)".
(Y) The definition of "VFN Balance" is hereby deleted and the
following substituted therefor:
VFN Balance means the principal amount from time to time outstanding on
-----------
the VFN, which shall be increased by (i) the amount of each Advance made
pursuant to the Funding Agreement, and (ii) the amount of each payment of
the Interest Component on Commercial Paper that is made from the proceeds
of the issuance of Commercial Paper, and which shall be decreased only by
the application of principal payments.
<PAGE>
SECTION 5. Conditions Precedent to Effectiveness of this Amendment.
-------------------------------------------------------
The effectiveness of this Amendment is subject to the following conditions
precedent:
the Borrower and the Funding Agent shall have received, satisfactory in
form and substance to each of them, each of the documents, certificates and
opinions set forth in Schedule 1 attached to this Amendment;
without limiting the foregoing, the Funding Agent shall have received and
found satisfactory in form and substance the Hedge Contract(s) to be
effective as of the Effective Date which shall, among other things, (A) be
in an aggregate notional amount equal to the Facility Limit; (B) be a 5.75%
LIBOR cap with the entire consideration payable by the Borrower thereunder
to be paid in full on the Effective Date; (C) provide for a term at least
equal to the initial term of the Facility, with an amortization schedule in
the event of a Termination Event or non-renewal of the Facility
satisfactory to the Funding Agent and the Rating Agencies; and (D) provide
for any payments by the Hedge Counterparty thereunder to be payable on the
last Business Day of each calendar month; and
the Collection Account Reserve Minimum, after taking into account the funds
transferred to the Collection Account by the Funding Agent from the Reserve
Account, shall have been received by the Funding Agent from the Borrower
for deposit to the Collection Account and allocation to the Collection
Account Reserve.
SECTION 6. Representations of Seller and Servicer.
(a) The Seller hereby affirms that each representation and warranty
made by it Section 7.1 of the Sale and Servicing Agreement is true and correct
on the date hereof, with the same force and effect as if made on the date
hereof, and that each of such representations and warranties made with respect
to the Sale and Servicing Agreement remains true and correct with respect to
said agreement as hereby amended.
(b) The Servicer hereby affirms that: (i) each representation and
warranty made by it in Section 8.1 of the Sale and Servicing Agreement is true
and correct on the date hereof, with the same force and effect as if made on the
date hereof, and that each of such representations and warranties made with
respect to the Sale and Servicing Agreement remains true and correct with
respect to said agreement as hereby amended; and (ii) no Termination Event or
Potential Termination Event is in existence on the date of this Amendment.
<PAGE>
SECTION 7. Execution in Counterparts. This Amendment may be executed
-------------------------
in any number of counterparts and by different parties hereto on separate
counterparts, each of which counterparts, when so executed and delivered, shall
be deemed to be an original and all of which counterparts, taken together, shall
constitute but one and the same Amendment.
SECTION 8. Governing Law. This Amendment shall be governed by and
-------------
construed in accordance with the laws of the State of New York.
SECTION 9. Severability of Provisions. Any provision of this
--------------------------
Amendment which is prohibited or unenforceable in any jurisdiction shall, as to
such jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof or
affecting the validity or enforceability of such provision in any other
jurisdiction.
SECTION 10. Captions. The captions in this Amendment are for
--------
convenience of reference only and shall not define or limit any of the terms or
provisions hereof.
SECTION 11. Agreement to Remain in Full Force and Effect. Except as
--------------------------------------------
expressly amended hereby, the Sale and Servicing Agreement shall remain in full
force and effect and, as so amended, is hereby ratified, adopted and confirmed
in all respects. From and after the Effective Date, all references in the Sale
and Servicing Agreement to "this Agreement", "hereunder", "hereof", "herein", or
words of like import, and all references to the Sale and Servicing Agreement in
any other agreement or document shall be deemed to refer to the Sale and
Servicing Agreement as amended hereby.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to
be executed as of the date and year first above written.
CP FUNDING CORP.,
as Borrower
By /s/
---------------------------------------
Name:
Title:
AMERICREDIT FINANCIAL SERVICES, INC.,
as Seller
By /s/
---------------------------------------
Name:
Title:
AMERICREDIT FINANCIAL SERVICES, INC.,
as Servicer
By /s/
---------------------------------------
Name:
Title:
THE CHASE MANHATTAN BANK,
as not in its individual capacity, but
solely as Backup Servicer
By /s/
---------------------------------------
Name:
Title:
THE CHASE MANHATTAN BANK,
as Funding Agent on behalf of the Secured
Parties
By /s/
---------------------------------------
Name:
Title:
<PAGE>
Schedule 1 to
Amendment No. 1 to the
Sale and Servicing Agreement
----------------------------
CONDITIONS PRECEDENT
In addition to the receipt of documents and satisfaction of other
conditions set forth in Section 5 of the Amendment No. 1 to the Sale and
Servicing Agreement, the following shall have been delivered, and shall be
satisfactory in form and substance, to the Funding Agent and the Borrower:
1. A Borrower Officer's Certificate, including as attachments thereto:
a. Resolutions of the Board of Directors of the Borrower duly
authorizing the execution, delivery and performance by the Borrower of
each of the Amendments to the Basic Agreements, as applicable, to
which it is a party and any other documents executed by or on behalf
of the Borrower in connection with the transactions contemplated
thereby;
b. Certified Certificate of Incorporation of the Borrower; and
c. By-laws of the Borrower.
1. An Incumbency Certificate of the Borrower setting forth the names,
titles and signatures of the officers of the Borrower who are
authorized to execute documents, give instructions and otherwise to
take actions in connection with the contemplated transactions.
1. A Borrower Good Standing Certificate.
1. AFS Officer's Certificate, including as attachments thereto:
a. Resolutions of the Board of Directors duly authorizing the
execution, delivery and performance by the Seller and the Servicer of
each of the Amendments to the Basic Agreements, as applicable, to
which each is a party and any other documents executed by or on behalf
of the Seller and the Servicer in connection with the transactions
contemplated thereby;
b. Certified Certificate of Incorporation; and
c. By-laws.
<PAGE>
1. An Incumbency Certificate of AFS setting forth the names, titles and
signatures of the officers of AFS who are authorized to execute
documents, give instructions and otherwise take actions on behalf of
AFS in connection with the contemplated transactions, in its roles as
Seller and as Servicer.
1. A Good Standing Certificate of AFS.
1. Opinions of special counsel to the Seller and the Borrower as to true
sale and nonconsolidation matters.
1. An Opinion of special counsel to the Seller, the Servicer and the
Borrower with respect to the validity and enforceability of certain
transaction documents.
1. The Opinion of Chris A. Choate, General Counsel to AmeriCredit Corp.,
AFSI, and Borrower, with respect to corporate matters for each of the
Seller, the Servicer and the Borrower.
1. Rating Letters:
a. Letter from each of Standard & Poor's and Moody's confirming
PARCO's A-1/P-1 commercial paper ratings; and
b. Letter from Moody's confirming the VFN rating.
<PAGE>
EXHIBIT 10.12.1
EXTENSION, CONSENT AND AMENDMENT AGREEMENT
------------------------------------------
This EXTENSION, CONSENT AND AMENDMENT AGREEMENT (this "Amendment"), dated
---------
as of September 29, 1998, is made in respect of the FUNDING AGREEMENT (the
"Funding Agreement"), dated as of October 8, 1997, between CP FUNDING CORP., a
- ------------------
Nevada corporation, as borrower (the "Borrower"), PARK AVENUE RECEIVABLES
--------
CORPORATION, a Delaware corporation ("PARCO"), as lender (in such capacity, the
-----
"Lender"), THE CHASE MANHATTAN BANK, a New York banking corporation ("Chase"),
------ -----
as funding agent for PARCO and the several APA Banks (in such capacity, the
"Funding Agent") and THE SEVERAL FINANCIAL INSTITUTIONS PARTY THERETO FROM TIME
- --------------
TO TIME (the "APA Banks").
---------
W I T N E S S E T H :
--------------------
WHEREAS, the Borrower, the Lender, the Funding Agent and the APA Banks
(collectively, the "Parties") have entered into the Funding Agreement for the
-------
financing of certain purchases, from time to time, by the Borrower from
AmeriCredit Financial Services, Inc. ("AFS") of motor vehicle retail installment
---
sales contracts pursuant to the Sale and Servicing Agreement (as defined below);
and
WHEREAS, the Borrower has requested the APA Banks party to the Funding
Agreement on the date hereof to extend the Commitment Expiry Date and to consent
to certain amendments of the Funding Agreement and certain other Basic
Agreements; and
WHEREAS, certain of such APA Banks are willing to enter into such extended
and increased commitments and to consent to such other amendments; and
WHEREAS certain other financial institutions will cease to become APA Banks
or will become APA Banks, as the case may be, on the Effective Date (as defined
below);
NOW, THEREFORE, in consideration of the foregoing and of the mutual
covenants herein contained, the parties hereto hereby agree as follows:
1. SECTION Defined Terms.
-------------
2.
3. "Effective Date" means the date of this Amendment as set forth above,
--------------
which shall not be a date prior to the date on which the Funding Agent shall
have determined that
<PAGE>
each of the conditions to the effectiveness of this Amendment set forth in
Section 5 hereof shall have been satisfied.
4.
5. "Sale and Servicing Agreement" means the Sale and Servicing Agreement,
----------------------------
dated as of October 8, 1997 (together with the Schedules and Exhibits thereto,
and together with Annex A, the schedule of defined terms, thereto), between the
Borrower, AFS as Seller and as Servicer, and Chase, as Funding Agent and as
Backup Servicer, as the same may be amended, supplemented or otherwise modified
and in effect from time to time.
6.
7. Unless otherwise defined herein, capitalized terms used herein shall
have the meanings assigned to such terms in Annex A to the Sale and Servicing
Agreement and as amended.
8.
9. SECTION Amendments to Funding Agreement. The Funding Agreement is
-------------------------------
hereby amended, as follows:
10.
11. (A) Notwithstanding anything to the contrary in Section 2.1 (a), the
Borrower shall be permitted to request up to two Fundings per calendar week, and
up to 9 Fundings per calendar month.
12.
13. (B) Section 2.1(b) is hereby amended as follows:
14.
(i) by inserting the following parenthetical at the end of clause
(i) thereof, prior to the semicolon:
(it being understood that, for purposes of determining
whether the Interest Component on Commercial Paper may be
paid from the proceeds of Commercial Paper issued on the
maturity date thereof, the amount of such capitalized
Interest Component shall constitute a "Funding"); and
(ii) by deleting clause (iv) thereof, and substituting the following
therefor:
(iv) the Borrower shall have deposited in the Collection
Account, or shall have given irrevocable instructions to
the Funding Agent to withhold from the proceeds of such
Funding and to deposit in the Collection Account, as the
case may be, in each case for allocation to the Collection
Account Reserve, an amount equal to (x) on the Effective
Date of that certain Extension, Consent and Amendment
Agreement, dated as of September 29, 1998, the Collection
Account Reserve Minimum (which may include amounts
transferred by the Funding Agent to the Collection Account
from the Reserve
<PAGE>
Account, for allocation to the Collection Account Reserve,
on such Effective Date) and (y) in the case of any
Subsequent Funding, the Collection Account Reserve
Shortfall Amount, if any;
(C) Section 2.1(c) is hereby amended as follows:
(i) by restating the parenthetical in clause (1) thereof to read
as follows:
(such term meaning, for purposes of this Section 2.1(c),
(i) a "Trigger Event" as defined in any public asset-
backed transaction beginning with and including the
AmeriCredit Automobile Receivables Trust 1996-D
transaction; or (ii), if applicable, any comparable
"spread capture event" in any automobile receivables
transaction conducted by any Securitization Trust, whether
or not defined in such transaction as a "Trigger Event"
and whether or not such transaction is a public
transaction)
(ii) by inserting in clause (2) thereof, after the words
"related transaction documentation": "(and such Trigger
Event shall be deemed unwaived if there is no Person or
Persons entitled to so waive)"; and
(iii) by deleting from clause (3) thereof the parenthetical:
"(rounded to the nearest 1%)".
(D) Section 2.1(f)(ii) is hereby amended by deleting the reference to
"five (5) Business Days" that appears in clauses "1" and "2" thereof, and
substituting therefor a reference to "three (3) Business Days".
(E) Section 2.1(g) is hereby amended by deleting therefrom, as a
condition to each Funding Date, clause (xii) thereof.
(F) Section 2.4(f) is hereby amended by inserting in the third line
thereof, after the word "Date" and before the proviso, the following: "and, if
-------
applicable, upon each Interest Payment Date following the Commitment Expiry
Date".
(G) Section 2.5 is hereby amended by deleting the reference to "sixty-
six (66) months" in the last line thereof and substituting therefor "seventy-
eight (78) months".
(H) Section 4.4 is hereby amended by inserting in the third line
thereof, between the word "PARCO" and the word "and", the following: "each APA
Bank".
<PAGE>
(I) Section 8.1(b) is hereby amended by restating clause (ii) in the
second proviso thereof, as follows:
(ii) reduce the amount of any payments due and owing to PARCO or any
APA Bank hereunder, under the other Basic Agreements or under
any Fee Letter, without the prior written consent of PARCO, and
each APA Bank affected thereby, as applicable,
(J) Section 8.5(b) is hereby amended by correcting, in the proviso
clause of the next to last sentence thereof, the reference to the "first proviso
of Section 8.1(b)" to refer instead to the "second proviso of Section 8.1(b)".
1. SECTION Amended VFN. In connection with this Amendment, the
-----------
Borrower shall deliver an amended VFN, substantially in the form of Exhibit A
hereto, which shall reflect (i) the increased Facility Limit, (ii) the extension
of the maturity of the VFN from the Distribution Date occurring in the calendar
month that is sixty-six (66) months following the Commitment Expiry Date, to the
Distribution Date occurring in the calendar month that is seventy-eight (78)
months following the Commitment Expiry Date (unless otherwise accelerated
pursuant to the terms of the Basic Agreements), and (iii) that the Interest
Component of Commercial Paper may be paid from the proceeds of Commercial Paper
issued on the maturity date thereof. The amended VFN is delivered in
substitution for the VFN, dated as of October 8, 1997, originally executed and
delivered pursuant to the Funding Agreement, merely to reflect the amendments
effected hereby, and shall, in no event, be deemed to cancel or extinguish, or
in any other respect to affect the rights of the Secured Parties with respect
to, amounts outstanding under the VFN prior to such substitution.
2.
3. SECTION Additional APA Banks; Exiting APA Bank;
---------------------------------------
4. The Commitments; Consent
------------------------
5.
(a) As of the Effective Date, each of BankBoston, N.A., Bank of America,
National Trust and Savings Association and Bayerische Hypo- und Vereinsbank AG,
New York Branch, shall, by its execution and delivery of this Amendment, become
an APA Bank party to the Funding Agreement (as hereby amended) for all purposes
thereof as if originally a party thereto and each of them hereby agrees to be
bound by all of the terms and provisions contained therein.
(b) As of the Effective Date, the Commitment of Credit Suisse First
Boston, New York Branch ("CSFB"), shall be terminated and CSFB shall no longer
be a party to the Funding Agreement.
(c) As of the Effective Date, each APA Bank shall have the respective
Commitment set forth opposite its name on Schedule I to this Amendment (which
is hereby
<PAGE>
substituted for Annex I to the Funding Agreement) until the Commitment Expiry
Date (after giving effect to the amendment to such term made pursuant to
Amendment No. 1 to the Sale and Servicing Agreement).
(d) Each of the Funding Agent, PARCO and each APA Bank hereby consents
to the execution and delivery by the respective parties thereto, of Amendment
No. 1 to the Sale and Servicing Agreement, and of Amendment No. 1 to the
Security Agreement, substantially in the form, respectively, of Exhibits B and C
hereto.
(e) Each APA Bank hereby makes or restates, as the case may be, the
representations and warranties set forth in Section 6.1 of the Funding
Agreement, and confirms that such representations and warranties remain true and
correct with respect to the Funding Agreement as hereby amended.
6. SECTION Conditions to Effectiveness. The effectiveness of this
---------------------------
Amendment shall be subject to the following conditions precedent:
7.
(1) the prior or concurrent satisfaction of each condition precedent to
the effectiveness of Amendment No. 1 to the Sale and Servicing Agreement and
the delivery to the Funding Agent of a counterpart or copy, as appropriate, of
each document or instrument described in Schedule 1 to such Amendment No. 1;
(2) the Funding Agent shall have received the amended VFN, substantially
in the form of Exhibit A hereto, executed by the Borrower;
(3) the Funding Agent shall have received completed and signed I.R.S.
Forms 4224 or 1001, as applicable, from each APA Bank that is not organized
under the laws of the United States or of a state thereof; and
(4) the Funding Agent shall have received an opinion of local (Federal
Republic of Germany) counsel to Bayerische Hypo- und Vereinsbank AG, New York
Branch, with respect to enforceability and to such other matters as are
customary in similar financings, and shall have received from each new APA
Bank an opinion of counsel under New York law or an officer's certificate from
a senior credit officer as to authority, incumbency and other corporate
matters, in each case satisfactory in form and substance to the Funding Agent.
SECTION 6. Representations and Warranties of The Borrower. The
----------------------------------------------
Borrower hereby affirms that each representation and warranty made by it in
Article III of the Funding Agreement is true and correct on the date hereof,
with the same force and effect as if made on the date hereof (except to the
extent any such representation or warranty by its terms relates to a specific
date) and, without limiting the foregoing, that (x) each of the representations
and warranties made with respect to the Funding Agreement remains true and
<PAGE>
correct with respect to said agreement as hereby amended, and (y) each of the
representations and warranties made with respect to the other Basic Agreements
to which the Borrower is a party remains true and correct with respect to the
Sale and Servicing Agreement, as amended by Amendment No. 1 thereto of even date
herewith, and with respect to the Security Agreement, as amended by Amendment
No. 1 thereto of even date herewith.
SECTION 7. Execution in Counterparts. This Amendment may be executed
-------------------------
in any number of counterparts and by different parties hereto on separate
counterparts, each of which counterparts, when so executed and delivered, shall
be deemed to be an original and all of which counterparts, taken together, shall
constitute but one and the same Amendment.
SECTION 8. Binding Effect. This Amendment shall be binding upon, and
--------------
inure to the benefit of, the parties hereto and their respective successors and
assigns.
SECTION 9. Governing Law. This Amendment shall be governed by and
-------------
construed in accordance with the laws of the State of New York.
SECTION 10. Severability of Provisions. Any provision of this
--------------------------
Amendment which is prohibited or unenforceable in any jurisdiction shall, as to
such jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof or
affecting the validity or enforceability of such provision in any other
jurisdiction.
SECTION 11. Captions. The captions in this Amendment are for
--------
convenience of reference only and shall not define or limit any of the terms or
provisions hereof.
SECTION 12. Funding Agreement to Remain in Full Force and Effect.
----------------------------------------------------
Except as expressly amended hereby, the Funding Agreement shall remain in full
force and effect and, as so amended, is hereby ratified, adopted and confirmed
in all respects. From and after the Effective Date, all references in the
Funding Agreement to "this Agreement", "hereunder", "hereof", "herein", or words
of like import, and all references to the Funding Agreement in any other
agreement or document shall be deemed to refer to the Funding Agreement as
amended hereby.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to
be executed as of the date and year first above written.
CP FUNDING CORP.,
as Borrower
By /s/
----------------------
Name:
Title:
PARK AVENUE RECEIVABLES
CORPORATION,
as Lender
By /s/
----------------------
Name:
Title:
THE CHASE MANHATTAN BANK,
as APA Bank
By /s/
----------------------
Name:
Title:
THE CHASE MANHATTAN BANK,
as Funding Agent on behalf of the Secured
Parties
By /s/
----------------------
Name:
Title:
<PAGE>
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION,
as APA Bank
By /s/
--------------------------
Name:
Title:
<PAGE>
BANKBOSTON, N.A., as APA Bank
By /s/
--------------------------
Name:
Title:
<PAGE>
THE BANK OF NOVA SCOTIA, as APA Bank
By /s/
---------------------
Name:
Title:
<PAGE>
BANK OF TOKYO-MITSUBISHI
(DALLAS), as APA Bank
By /s/
------------------------
Name:
Title:
<PAGE>
BAYERISCHE HYPO- UND VEREINSBANK AG,
NEW YORK BRANCH, as APA Bank
By /s/
---------------------------
Name:
Title:
By /s/
---------------------------
Name:
Title:
<PAGE>
ING (U.S.) CAPITAL CORPORATION,
as APA Bank
By /s/
---------------------------
Name:
Title:
<PAGE>
SCHEDULE I
COMMITMENTS
200,000,000
The Chase Manhattan Bank -----------
75,000,000
Bank of America National Trust -----------
and Savings Association
25,000,000
BankBoston, N.A. -----------
25,000,000
The Bank of Nova Scotia, Atlanta Agency -----------
20,000,000
The Bank of Tokyo-Mitsubishi, -----------
Houston Agency
35,000,000
Bayerische Hypo- und Vereinsbank AG, -----------
New York Branch
125,000,000
ING (U.S.) Capital Corporation -----------
Aggregate Commitment 505,000,000
===========
Date: September 29, 1998
<PAGE>
Exhibit 10.13.4
FOURTH AMENDMENT TO
-------------------
RESTATED REVOLVING CREDIT AGREEMENT
-----------------------------------
This Fourth Amendment To Restated Revolving Credit Agreement (this "Fourth
Amendment") is made by and among AMERICREDIT CORP., a Texas corporation
("Company"), AMERICREDIT FINANCIAL SERVICES, INC., a Delaware corporation,
AMERICREDIT CORPORATION OF CALIFORNIA, a California corporation, (individually,
a "Borrower" and collectively, the "Borrowers"), ACF INVESTMENT CORP., a
Delaware corporation, AMERICREDIT MANAGEMENT COMPANY, a Delaware corporation
(individually a "Guarantor", and collectively, the "Guarantors"), and WELLS
FARGO BANK (TEXAS), NATIONAL ASSOCIATION, LASALLE NATIONAL BANK, BANK OF
AMERICA, COMERICA BANK-TEXAS and THE LONG-TERM CREDIT BANK OF JAPAN LIMITED
(collectively, the "Banks"), WELLS FARGO BANK (TEXAS), NATIONAL ASSOCIATION, as
agent for the Banks ("Agent") and LASALLE NATIONAL BANK ("Co-Agent").
WHEREAS, on October 3, 1997, the parties entered into that one certain
Restated Revolving Credit Agreement (the "Credit Agreement") providing for a
revolving credit facility to Borrowers in the maximum amount of $310,000,000 at
any one time outstanding; and
WHEREAS, the parties entered into a First Amendment To Restated Revolving
Credit Agreement dated January 21, 1998 (the "First Amendment"); and
WHEREAS, the parties entered into a Second Amendment To Restated Revolving
Credit Agreement dated April 30, 1998 (the "Second Amendment"); and
WHEREAS, the parties entered into a Third Amendment To Restated Revolving
Credit Agreement dated August 31, 1998 (the "Third Amendment"); and
WHEREAS, the parties have agreed to amend the Credit Agreement in certain
respects.
NOW THEREFORE, for good and valuable consideration, the receipt and total
sufficiency of which is hereby acknowledged, it is agreed by and among the
parties as follows:
1.
The definitions of "Borrowers", "Delinquent Loans", "Eligible Finance
Contract", "Finance Contract", "Guarantors", Intercreditor Agreement", "Mortgage
Subsidiary", "Net Credit Losses", "Permitted Liens", "Senior Notes" and
"Termination Date" in Article I of the Credit Agreement are amended to read in
their entirety as follows:
"Borrowers" shall mean AmeriCredit Corp., a Texas corporation,
---------
AmeriCredit Financial Services, Inc., a Delaware corporation, and
AmeriCredit Corporation of California, a California corporation.
<PAGE>
"Delinquent Loans"shall mean Net Indirect Loans having five percent
----------------
(5.0%) or more of an installment payment which is more than 60 days past
due (without regard to any grace period) on a contractual basis except Net
Indirect Loans and Net Direct Loans which were secured by a motor vehicle
that has been repossessed.
"Eligible Finance Contract" shall mean a Finance Contract,
-------------------------
(i) that is secured by an Eligible Vehicle,
(ii) that represents a Domestic Finance Contract with an Obligor
(other than an Affiliate of Borrower),
(iii) that is a Direct Loan or an Indirect Loan unless otherwise
consented to in writing by the Agent (which consent shall not be
unreasonably withheld),
(iv) that is not delinquent in the payment of any monthly
installment (without regard to any stated grace period) more than thirty
(30) days on a contractual basis prior to any repossession of the related
Eligible Vehicle,
(v) that has not been modified in any respect, unless the Finance
Contract constitutes an Eligible Modified Finance Contract,
(vi) in respect of which the related Eligible Vehicle has not been
repossessed,
(vii) that is not a Stayed Loan,
(viii) that, as set forth in a written opinion, in form and substance,
and from legal counsel, reasonably satisfactory to the Agent, constitutes
chattel paper in which a security interest may be perfected under the UCC
of the applicable jurisdiction by filing financing statements and making a
notation of a security interest on the chattel paper and without taking
possession of either the agreements evidencing such Finance Contract or
related certificates of title,
(ix) that is not subject to a Lien in favor of a Person other than
the Agent on behalf of the Banks and that is not subject to a Lien created
in conjunction with a Securitization or an Additional Warehouse Facility;
(x) in respect of which good funds have been received from Borrower
in payment of the Finance Contract; and
(xi) in respect of which the representations and warranties set
forth in the Security Agreement are true.
"Finance Contract" shall mean a motor vehicle installment sales
----------------
contract or promissory note assigned to or originated by AmeriCredit
Financial Services, Inc. or an Affiliate of AmeriCredit Financial Services,
Inc. that is secured by title to, security interests in, or liens on a
motor vehicle under applicable provisions of the motor vehicle or other
similar law of the jurisdiction in which the motor vehicle is titled and
registered by the purchaser at the time the contract is originated.
<PAGE>
"Guarantors" shall mean AmeriCredit Management Company, a Delaware
----------
corporation, ACF Investment Corp., a Delaware corporation, and any other
corporation which executes a Guaranty Agreement after the date of this Loan
Agreement.
"Intercreditor Agreement" shall mean that one certain Intercreditor
-----------------------
Agreement dated October 3, 1997 by and among Chase Manhattan Bank, Wells
Fargo Bank (Texas), National Association, CP Funding Corp. and AmeriCredit
Financial Services, Inc. and that one certain Intercreditor Agreement by
and among Credit Suisse First Boston, New York Branch, Wells Fargo Bank
(Texas), National Association and AmeriCredit Warehouse Trust.
"Mortgage Subsidiary" shall mean AmeriCredit Corporation of California
-------------------
and any other subsidiary of Company (whether now existing or hereafter
formed or acquired) engaged in the business of making, originating or
taking assignments of residential mortgage loans to consumer borrowers.
"Net Credit Losses" shall mean, for any period, the actual aggregate
-----------------
amount of principal of Indirect Loans and Direct Loans charged off prior to
the application of the Dealer Discount or reserves during such period less
----
the aggregate amount of Recoveries on Indirect Loans and Direct Loans
during such period.
"Permitted Liens" shall mean: (i) Liens on equipment and fixed
---------------
assets, including purchase money Liens, relating to or securing obligations
in an aggregate amount not to exceed the positive difference between (a)
twenty million dollars ($20,000,000) and (b) the aggregate amount of Liens
described in (viii) below at any time; (ii) pledges or deposits made to
secure payment of Worker's Compensation (or to participate in any fund in
connection with Worker's Compensation), unemployment insurance, pensions or
social security programs; (iii) Liens imposed by mandatory provisions of
law such as for materialmen's, mechanics, warehousemen's and other like
Liens arising in the ordinary course of business, securing Indebtedness
whose payment is not yet due unless the same are being contested in good
faith and for which adequate reserves have been provided; (iv) Liens for
taxes, assessments and governmental charges or levies imposed upon a Person
or upon such Person's income or profits or property, if the same are not
yet due and payable or if the same are being contested in good faith and as
to which adequate reserves have been provided; (v) Liens with respect to
good faith deposits in connection with tenders, leases, real estate bids or
contracts (other than contracts involving the borrowing of money unless
such Liens are otherwise Permitted Liens), pledges or deposits to secure
public or statutory obligations, deposits to secure (or in lieu of) surety,
stay, appeal or customs bonds and deposits to secure the payment of taxes,
assessments, customs duties or other similar charges; (vi) encumbrances
consisting of zoning restrictions, easements, or other restrictions on the
use of real property, provided that such do not impair the use of such
property for the uses intended, and none of which is violated by Company or
any of its Subsidiaries in connection with existing or proposed structures
or land use; (vii) Liens and encumbrances created and existing in
connection with Securitizations and any Additional Warehouse Facility;
(viii) Liens on short term investments pledged to the provider of a
warehouse credit facility to AmeriCredit Corporation of California in an
amount not to exceed three percent (3.0%) of the amount of such credit
facility; (ix) Liens on Credit Enhancement Assets in Securitization; and
(x) Liens on property or assets of a Non-Domestic Subsidiary.
<PAGE>
"Senior Notes" shall mean (i) the $125,000,000 of senior unsecured
------------
notes of the Company due 2004 and all Guarantees thereof by the other
Borrowers, Guarantors and the Mortgage Subsidiary issued pursuant to an
Indenture dated as of February 4, 1997 between the Company and the trustee
named therein, (ii) those senior unsecured notes of Company due 2004 and
all Guarantees thereof by the other Borrowers, Guarantors and the Mortgage
Subsidiary to be sold pursuant to a Preliminary Offering Memorandum dated
January 21, 1998 and issued or to be issued pursuant to an Indenture
between the Company and the trustee named therein, (iii) any new issue of
debt securities of the Company and all Guarantees thereof by the other
Borrowers, Guarantors and the Mortgage Subsidiary with the same terms
issued in exchange for any of such senior unsecured notes, and (iv) any new
issue of debt securities that is unsecured and is equal in priority of
payment to the aforementioned notes; or
"Termination Date" shall mean March 30, 2000.
----------------
1.
The following new definitions of "Direct Loan" and "Net Direct Loan" are
added to Article I of the Credit Agreement:
"Direct Loan" shall mean any Finance Contract or promissory note
-----------
received for or in connection with a loan made directly to an Obligor by a
Borrower with respect to the sale or refinancing of a motor vehicle.
"Net Direct Loan" shall mean the aggregate amount of all Direct Loans
---------------
less the amount of unearned finance charges relating to such Direct Loans.
----
1.
Section 2.01(a) of the Credit Agreement is amended to read in its entirety
as follows:
2.01. Revolving Credit Commitment.
---------------------------
(a) Revolving Loan Commitments. Subject to the terms and conditions
--------------------------
of this Loan Agreement and the Revolving Credit Borrowing Base limitation
in Section 2.01(b), each Bank severally agrees to extend to Borrowers, from
the date hereof through the Termination Date (the "Revolving Credit
Period"), a revolving line of credit which shall not exceed at any one time
outstanding the amount set forth opposite its name below (for each Bank,
such amount is hereinafter referred to as its "Commitment"):
<PAGE>
Commitment
Percentage
Banks Commitment (Rounded)
----- ---------- ---------
Wells Fargo Bank (Texas), $35,000,000 30.434782608%
National Association
LaSalle National Bank $25,000,000 21.739130435%
Bank of America $25,000,000 21.739130435%
Comerica Bank-Texas $15,000,000 13.043478261%
The Long-Term Credit Bank of $15,000,000 13.043478261%
----------- ------------
Japan, Limited
$115,000,000 100.00000000000%
============ ================
No Bank shall be obligated to make any Advance under this Section 2.01 and
Section 2.02 if, immediately after giving effect thereto, the aggregate amount
of all indebtedness and obligations of Borrowers to such Bank under Section
2.01, Section 2.02 and Section 2.03 exceeds the lesser of (a) such Bank's
Commitment or (b) an amount equal to such Bank's Percentage times the Revolving
-----
Credit Borrowing Base in effect at such time.
Within the limits of this Section 2.01, during the Revolving Credit Period,
Borrowers may borrow, prepay pursuant to Section 3.03 hereof and reborrow under
this Section 2.01; provided, however, the total number of unpaid Eurodollar
Borrowings shall not exceed five (5) at any time. Each Borrowing pursuant to
this Section 2.01 and Section 2.02 shall be funded ratably by Banks in
proportion to their respective Percentages. Each advance made by a Bank under
Section 2.01 and Section 2.02 is herein called an "Advance"; all Advances made
by a Bank hereunder are herein collectively called a "Revolving Credit Loan";
the aggregate unpaid principal balance of all Advances made by Banks hereunder
are herein collectively called the "Revolving Credit Loans"; and the combined
Advances made by Banks on any given day are herein collectively called a
"Borrowing". The "Total Commitment" shall be one hundred fifteen million dollars
($115,000,000).
1.
Section 7.12 of the Credit Agreement is amended to read as follows:
<PAGE>
7.12. Use of Proceeds; Margin Stock. The proceeds of the Revolving
-----------------------------
Credit Loans will be used by the Borrowers and the Guarantors solely for
acquiring Finance Contracts and general corporate purposes of AmeriCredit
Corp. and AmeriCredit Financial Services, Inc.. None of such proceeds will
be used for the purpose of purchasing or carrying any "margin stock" as
defined in Regulation U or G of the Board of Governors of the Federal
Reserve System (12 C.F.R. Part 221 and 207), or for the purpose of reducing
or retiring any indebtedness which was originally incurred to purchase or
carry a margin stock or for any other purpose which might constitute this
transaction a "purpose credit" within the meaning of such Regulation U or
G. No Borrower is engaged in the business of extending credit for the
purpose of purchasing or carrying margin stocks. No Borrower nor any Person
acting on behalf of Borrowers has taken or will take any action which might
cause the Notes or any of the other Loan Documents, including this Loan
Agreement, to violate Regulations U or G or any other regulations of the
Board of Governors of the Federal Reserve System or to violate Section 7 of
the Securities Exchange Act of 1934 or any rule or regulation thereunder,
in each case as now in effect or as the same may hereinafter be in effect.
None of Borrowers own any "margin stock" except for that described in the
financial statements referred to in Section 7.07 hereof and, as of the date
hereof, the aggregate value of all "margin stock" owned by Borrowers and
their Subsidiaries does not exceed 25% of the aggregate value of all of the
assets of Company and its Subsidiaries.
1.
Section 7.20 of the Credit Agreement is amended to read as follows:
7.20. Subsidiaries. Company directly owns all of the capital stock of
------------
AmeriCredit Financial Services, Inc., AmeriCredit Operating Co., Inc.,
AmeriCredit Corporation of California, AmeriCredit Management Company and
ACF Investment Corp., in each case free and clear from all liens, security
interests, charges and encumbrances.
1.
Sections 9.05 and 9.06 of the Credit Agreement are amended to read as
follows:
9.05. Losses to Net Loans. Permit the ratio of Net Credit Losses
-------------------
during the prior 12 months to the sum of month end balances of Net Indirect
Loans and Net Direct Loans over the prior 13 months divided by 13 to be
----------
greater than .10 to 1.0 at any time; or
9.06. Delinquent and Repossessed Loans to Net Loans. Permit the ratio
---------------------------------------------
of the sum of Delinquent Loans and Repossessed Loans to the sum of Net
Indirect Loans and Net Direct Loans to be greater than .075 to 1.0 at any
time; or
1.
A new section 12.13 is added to the Credit Agreement which shall read as
follows:
12.13 Co-Agent. It is expressly understood and agreed that LaSalle
--------
National Bank shall have no responsibility or obligations as a co-agent
hereunder other than its obligations as a Bank under this Loan Agreement.
<PAGE>
1.
Except as amended above and by the First Amendment, the Second Amendment
and the Third Amendment, the Credit Agreement is ratified and confirmed and
shall remain in full force and effect.
7
<PAGE>
1.
At the time of execution of this Fourth Amendment, Borrowers agree to pay
to Agent, for the pro rata benefit of Banks, a fee in the amount of $86,250.00.
1.
The effectiveness of this Fourth Amendment shall be contingent upon the
receipt by Agent of each of the following:
(a) The fee described in section 9 above;
(b) audited financial statements of Borrowers for the year ended June 30,
1998;
(c) Form 10Q of Borrowers for the period ended December 31, 1998;
(d) a collateral audit satisfactory to Agent; and
(e) all representations and warranties in Article VII of the Credit
Agreement shall be true and correct.
1.
Borrowers agree to pay all costs and expenses incurred by Banks in
connection with this Fourth Amendment (including all attorney's fees and the
cost of the collateral audit).
1.
This Fourth Amendment may be executed in multiple counterparts, each of
which shall constitute an original.
1.
This Fourth Amendment shall be binding upon and inure to the benefit of the
parties and their respective successors and assigns.
1.
THIS WRITTEN AGREEMENT REPRESENTS THE FINAL AGREEMENT AMONG THE PARTIES
RELATING TO THE SUBJECT MATTER HEREOF AND MAY NOT BE CONTRADICTED BY EVIDENCE OF
PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE
NO UNWRITTEN ORAL AGREEMENTS AMONG THE PARTIES.
<PAGE>
Executed to be effective as of April 1, 1999.
AMERICREDIT CORP., a Texas corporation
By: /s/ Preston Miller
----------------------------------------
Preston Miller, Executive Vice President
AMERICREDIT FINANCIAL SERVICES,
INC., a Delaware corporation
By: /s/ Preston Miller
----------------------------------------
Preston Miller, Executive Vice President
AMERICREDIT CORPORATION OF CALIFORNIA,
a California corporation
By: /s/ Preston Miller
----------------------------------------
Preston Miller, Executive Vice President
BORROWERS
AMERICREDIT MANAGEMENT COMPANY,
INC., a Delaware corporation
By: /s/ Preston Miller
----------------------------------------
Preston Miller, Executive Vice President
ACF INVESTMENT CORP., a Delaware
corporation
By: /s/ Preston Miller
----------------------------------------
Preston Miller, Executive Vice President
GUARANTOR
WELLS FARGO BANK (TEXAS), NATIONAL
ASSOCIATION
By: /s/ Susan B. Sheffield
----------------------------------------
Susan B. Sheffield, Vice President
9
<PAGE>
LASALLE NATIONAL BANK
By: /s/
------------------------------------
Lisa Mun, Assistant Vice President
BANK OF AMERICA
By: /s/
------------------------------------
Kevin Corcoran, Vice President
COMERICA BANK-TEXAS
By: /s/
------------------------------------
Ty Maxfield, Assistant Vice President
THE LONG-TERM CREDIT BANK OF
JAPAN, LIMITED
By: /s/
------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
BANKS
WELLS FARGO BANK (TEXAS), NATIONAL
ASSOCIATION
By: /s/
------------------------------------
Susan B. Sheffield, Vice President
AGENT
LASALLE NATIONAL BANK
By: /s/
------------------------------------
Lisa Mun, Assistant Vice President
CO-AGENT
10
<PAGE>
Page 1
EXHIBIT 10.24
RECEIVABLES FINANCING AGREEMENT
dated as of March 31, 1999
among
AMERICREDIT WAREHOUSE TRUST,
as Borrower
AMERICREDIT FINANCIAL SERVICES, INC.,
individually and as Servicer and Custodian,
AMERICREDIT FUNDING CORP.,
AMERICREDIT CORPORATION OF CALIFORNIA,
THE LENDERS PARTIES HERETO,
CREDIT SUISSE FIRST BOSTON, NEW YORK BRANCH,
as Agent,
and
BANK ONE, N.A.,
as Backup Servicer and Collateral Agent
<PAGE>
Page 2
RECEIVABLES FINANCING AGREEMENT
-------------------------------
THIS RECEIVABLES FINANCING AGREEMENT is made and entered into as of March
31, 1999, among AMERICREDIT WAREHOUSE TRUST, a Delaware business trust (the
"Borrower"), AMERICREDIT FINANCIAL SERVICES, INC., a Delaware corporation,
- ---------
individually ("AFS") and as initial Servicer and Custodian, AMERICREDIT FUNDING
---
CORP., a Delaware corporation ("AFC"), AMERICREDIT CORPORATION OF CALIFORNIA, a
---
California corporation ("ACC"), each NONCOMMITTED LENDER (as hereinafter
---
defined) FROM TIME TO TIME PARTY HERETO, each COMMITTED LENDER (as hereinafter
defined) FROM TIME TO TIME PARTY HERETO, CREDIT SUISSE FIRST BOSTON, NEW YORK
BRANCH ("CSFB"), as agent (the "Agent") for the Lenders (as hereinafter
---- -----
defined), and BANK ONE, N.A., a national banking association as Backup Servicer
and Collateral Agent.
BACKGROUND
1. The Borrower desires that the Lenders extend financing to the Borrower
on the terms and conditions set forth herein.
2. The Lenders are willing to provide such financing on the terms and
conditions set forth in this Agreement.
NOW, THEREFORE, in consideration of the premises and the mutual agreements
herein contained, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1 Defined Terms. As used in this Agreement, the following terms
-------------
have the following meanings:
"ACC" has the meaning set forth in the Preamble.
--- --------
"Accountants' Report" has the meaning set forth in Section 8.11(a).
------------------- ---------------
"Accrued Expenses" means, on any day, the aggregate of all Yield, Usage
----------------
Fee, Backup Servicer Fee and Servicing Fee accrued and unpaid on such day.
"Adjusted Commitment Percentage" means, for a Committed Lender with respect
------------------------------
to a specific Noncommitted Lender, the Commitment of such Committed Lender as a
percentage of the Maximum Purchase Amount of such Noncommitted Lender.
"Advance" means any amount disbursed by any Lender to the Borrower under
-------
this
<PAGE>
Page 3
Agreement.
"Advance Date" means the date any Advance is made under Section 2.3.
------------ -----------
"Advance Request" has the meaning set forth in Section 2.2.
--------------- -----------
"Adverse Claim" means any claim of ownership or any Lien, title retention,
-------------
trust or other charge or encumbrance, or other type of preferential arrangement
having the effect or purpose of creating a Lien, other than the security
interest created under this Agreement.
"AFC" has the meaning set forth in the Preamble.
--- --------
"Affected Person" has the meaning set forth in Section 6.1(a).
--------------- --------------
"Affiliate" of any Person means any other Person that directly or
---------
indirectly controls, is controlled by or is under common control with such
Person (excluding any trustee under, or any committee with responsibility for
administering, any employee benefit plan). A Person shall be deemed to be
"controlled by" any other Person if such other Person controls such Person
within the meaning of Section 15 of the Securities Act of 1933, as amended, or
Section 20 of the Exchange Act.
"AFS" has the meaning set forth in the Preamble.
--- --------
"Agent" has the meaning set forth in the Preamble.
----- --------
"Agent's Account" has the meaning set forth in Section 5.1.
--------------- -----------
"Aggregate Outstanding Principal Balance" means, with respect to any group
---------------------------------------
of Receivables as of any day, the sum of the outstanding Principal Balances of
all such Receivables as at the close of business on the immediately preceding
day.
"Agreement" means this Receivables Financing Agreement (including the Fee
---------
Letter and the Joinder Supplements hereto), as it may be amended, supplemented
or otherwise modified from time to time.
"Allocations" has the meaning set forth in Section 3.3(a).
----------- --------------
"Alpine Base Rate" means a fluctuating rate per annum as shall be in effect
----------------
from time to time, which rate shall be at all times equal to the highest of:
(a) the rate of interest announced publicly by the Alpine
Funding Agent in New York, New York, from time to time
as the Alpine Funding Agent's base commercial lending
rate;
<PAGE>
Page 4
(b) 1/2 of one percent above the latest three-week moving
average of secondary market morning offering rates in
the United States for three-month certificates of
deposit of major United States money market banks, such
three-week moving average being determined weekly on
each Monday (or, if such day is not a business day, on
the next succeeding business day) for the three-week
period ending on the previous Friday by the Alpine
Funding Agent on the basis of such rates reported by
certificate of deposit dealers to and published by the
Federal Reserve Bank of New York or, if such
publication shall be suspended or terminated, on the
basis of quotations for such rates received by the
Alpine Funding Agent from three New York, New York
certificate of deposit dealers of recognized standing
selected by the Alpine Funding Agent, in either case
adjusted to the nearest 1/4 of one percent or, if there
is no nearest 1/4 of one percent, to the next higher
1/4 of one percent; and
(c) 1/2 of one percent above the Alpine Federal Funds Rate.
"Alpine Federal Funds Rate" means, for any period, a fluctuating rate per
-------------------------
annum equal for each day during such period to the weighted average of the rates
on overnight federal funds transactions with members of the Federal Reserve
System arranged by federal funds brokers, as published for such day (or, if such
day is not a Business Day, for the next preceding Business Day) by the Federal
Reserve Bank of New York, or, if such rate is not so published for any day which
is a Business Day, the average of the quotations for such day on such
transactions received by the Alpine Funding Agent from three federal funds
brokers of recognized standing selected by it.
"Alpine LIBOR Rate" means, for any Accrual Period, a rate per annum equal
-----------------
to the rate for deposits in Dollars for a term equal to such Accrual Period
(commencing on the first day of such Fixed Period) which appears on Telerate
Page 3750 as of 11:00 A.M. (London time) on the second Business Day prior to the
commencement of such Accrual Period. If such rate does not appear on Telerate
Page 3750, a rate per annum at which deposits in Dollars are offered by the
principal office of Credit Suisse First Boston in London, England to prime banks
in the London interbank market at 11:00 A.M. (London time) two Business Days
before the first day of such Accrual Period for delivery on such first day and
for a period equal to such Accrual Period.
"AmeriCredit Corp." means AmeriCredit Corp., a Texas corporation.
-----------------
"AmeriCredit Score" means, with respect to a Receivable, the credit score
-----------------
for the related Obligor, determined in accordance with the Servicing Procedures
and Credit Manual (as in effect from time to time).
<PAGE>
Page 5
"Amount Financed" means, with respect to a Receivable, the aggregate amount
---------------
of credit extended under such Receivable to pay, or to refinance the purchase
price of the Financed Vehicle and related costs, including amounts advanced in
respect of accessories, insurance premiums (subject to Section 8.4(c)), service
--------------
and warranty contracts, other items customarily financed as part of retail
automobile installment sale contracts or promissory notes, and related costs.
"Annual Percentage Rate" or "APR" means, 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 applicable Purchase Date, the rate per annum with respect to a
Receivable as of such Purchase Date is reduced as a result of (a) an insolvency
proceeding involving the relevant Obligor or (b) pursuant to the Soldiers' and
Sailors' Civil Relief Act of 1940, the "Annual Percentage Rate" or "APR" shall
refer to such reduced rate.
"Available Purchase Amount" of a Noncommitted Lender means the aggregate of
-------------------------
the unutilized Commitments of the Committed Lenders with respect to such
Noncommitted Lender.
"Average Servicing Portfolio" means as of any date, the average of the
---------------------------
Servicing Portfolio for the six preceding Collection Periods.
"Backup Servicer" means Bank One, N.A. solely in its capacity as Backup
---------------
Servicer, together with its permitted successors and assigns in such capacity.
"Backup Servicer Fee" means, for any Distribution Date, the amount payable
-------------------
to each of the Backup Servicer and Collateral Agent as its regular fee on such
Distribution Date pursuant to the Backup Servicer/Collateral Agent Fee Letter.
"Backup Servicer/Collateral Agent Fee Letter" means (a) that certain
-------------------------------------------
schedule of fees of Bank One, N.A., acknowledged by AFS and the Borrower, and
consented to by the Agent, as the same may be amended, supplemented or otherwise
modified by the parties thereto with the consent of the Agent and (b) any letter
agreement(s) or schedule of fees entered into by AFS and the Borrower, with the
consent of the Agent, with a substitute Backup Servicer and/or Collateral Agent
in replacement of the schedule of fees referred to in clause (a) above relating
to fees payable to such substitute Backup Servicer and/or Collateral Agent, as
the case may be.
"Backup Servicing/Collateral Agent Fee Rate" has the meaning set forth in
------------------------------------------
the Backup Servicer/Collateral Agent Fee Letter.
"Bank Rate" for any Advance means a rate per annum equal to 1.25% per annum
---------
above the Eurodollar Rate for each Advance or portion thereof; provided,
--------
however, that
- -------
<PAGE>
Page 6
in the case of
(a) any Fixed Period on or after the first day on which a Committed
Lender shall have notified the Agent that the introduction of or any
change in or in the interpretation of any law or regulation makes it
unlawful, or any central bank or other governmental authority asserts
that it is unlawful, for such Committed Lender to fund such Advance at
the Bank Rate set forth above (and such Committed Lender shall not have
subsequently notified the Agent that such circumstances no longer
exist),
(b) any Fixed Period of one to (and including) 29 days, in the event
the Eurodollar Rate is not reasonably available to the Agent for such a
Fixed Period,
(c) any Fixed Period as to which the related Advance will not be
funded by issuance of commercial paper, as determined by the Agent (on
behalf of a Noncommitted Lender) later than 12:00 noon (New York City
time) on the second Business Day preceding the first day of such Fixed
Period, or
(d) any Fixed Period for an Advance the principal amount of which
allocated to the Committed Lenders in the aggregate is less than
$1,000,000,
the "Bank Rate" shall be a floating rate per annum equal to the Alternate Base
---------
Rate in effect on each day of such Fixed Period; provided, further, that the
-------- -------
Agent (with the consent of the Lenders) and the Borrower may agree in writing
from time to time upon a different "Bank Rate."
---------
"Bank Rate Allocation" has the meaning set forth in Section 3.3(a).
-------------------- --------------
"Bankruptcy Code" means the Bankruptcy Code, 11 U.S.C. (S) 101, et seq., as
--------------- -- ---
amended.
"Borrower" has the meaning set forth in the Preamble.
-------- --------
"Borrower Account Collateral" has the meaning set forth in Section 9.1(c).
--------------------------- --------------
"Borrower Assigned Agreements" has the meaning set forth in Section 9.1(b).
---------------------------- --------------
"Borrowing Base" means, on any day, the excess of (a) the sum of (i) the
--------------
Aggregate Outstanding Principal Balance as of such day of all Transferred
Receivables which are Eligible Receivables on such day, plus (ii) the amount on
----
deposit in the Collateral Account on such day, plus (iii) (without duplication)
----
the aggregate of the amount on deposit in the Collection Account available for
distribution pursuant to Section 3 of the Security Agreement on such day and the
amount on deposit in the Lockbox Account on such day, over (b) the Required
----
Holdback in effect on such day.
<PAGE>
Page 7
"Borrowing Base Confirmation" has the meaning set forth in Section 7.3(g).
--------------------------- --------------
"Borrowing Base Deficiency" has the meaning set forth in Section 14.1(e).
------------------------- ---------------
"Borrower Collateral" has the meaning set forth in Section 9.1.
------------------- -----------
"Business Day" shall mean any day on which (a) commercial banks in New York
------------
City, New York, Columbus, Ohio or Fort Worth, Texas are not authorized or
required to be closed, and (b) in the case of a Business Day which relates to a
Eurodollar Advance, dealings are carried on in the London interbank Eurodollar
market.
"Certificates" has the meaning ascribed to such term in the Trust
------------
Agreement.
"Change of Control" means a change resulting when any Unrelated Person or
-----------------
any Unrelated Persons, acting together, that would constitute a Group together
with any Affiliates or Related Persons thereof (in each case also constituting
Unrelated Persons) shall at any time either (i) Beneficially Own more than 30%
of the aggregate voting power of all classes of Voting Stock of AmeriCredit
Corp. or (ii) succeed in having sufficient of its or their nominees elected to
the Board of Directors of AmeriCredit Corp. such that such nominees when added
to any existing director remaining on the Board of Directors of AmeriCredit
Corp. after such election who is an Affiliate or Related Person of such Person
or Group, shall constitute a majority of the Board of Directors of AmeriCredit
Corp. As used herein, (a) "Beneficially Own" shall mean "beneficially own" as
----------------
defined in Rule 13d-3 of the Exchange Act, or any successor provision thereto;
provided, however, that, for purposes of this definition, a Person shall not be
deemed to Beneficially Own securities tendered pursuant to a tender or exchange
offer made by or on behalf of such Person or any of such Person's Affiliates
until such tendered securities are accepted for purchase or exchange; (b)
"Group" shall mean a "group" for purposes of Section 13(d) of the Exchange Act;
-----
(c) "Unrelated Person" shall mean at any time any Person other than AmeriCredit
----------------
Corp. or any of its Subsidiaries and other than any trust for any employee
benefit plan of AmeriCredit Corp. or any of its Subsidiaries; (d) "Related
-------
Person" of any Person shall mean any other Person owning (1) 5% or more of the
- ------
outstanding common stock of such Person or (2) 5% or more of the Voting Stock of
such Person; and (e) "Voting Stock" of any Person shall mean the capital stock
------------
or other indicia of equity rights of such Person which at the time has the power
to vote for the election of one or more members of the Board of Directors (or
other governing body) of such Person.
"Clean-Up Period" shall mean the period commencing on the date of the
---------------
initial Advance hereunder and ending on June 30, 1999 and thereafter, each
calendar quarter.
"Clean-Up Requirement" means the obligation of the Borrower to reduce to
--------------------
zero
<PAGE>
Page 8
the outstanding principal amount of all Advances for 5 consecutive days during
each Clean-Up Period.
"Closing Date" means the Effective Date.
------------
"Collateral" means the Transferred Receivables in the Total Receivables
----------
Pool together with the Other Conveyed Property.
"Collateral Account" means the account designated as the Collateral Account
------------------
in, and which is established and maintained pursuant to, Section 8.17(c).
---------------
"Collateral Agent" means Bank One, N.A. solely in its capacity as
----------------
Collateral Agent, together with its permitted successors and assigns in such
capacity.
"Collateral Insurance" means a vendor's single interest or other collateral
--------------------
protection insurance policy with respect to Financed Vehicles, which policy by
its terms insures against physical damage in the event any Obligor fails to
maintain physical damage insurance with respect to the related Financed Vehicle.
"Collateral Receipt" means a Custodian's Acknowledgment in the form of
------------------
Exhibit A to the Custodian Agreement.
- ---------
"Collected Funds" means, with respect to any Determination Date, the amount
---------------
of funds in the Collection Account representing collections on the Total
Receivables Pool during the related Collection Period, including all Recoveries
with respect thereto collected during the related Collection Period (but
excluding any Purchase Amounts).
"Collection Account" means the account designated as the Collection Account
------------------
in, and which is established and maintained pursuant to, Section 8.17(a).
---------------
"Collection Period" means any calendar month and, with respect to a
-----------------
Determination Date or a Distribution Date, the calendar month preceding the
month in which such Determination Date or Distribution Date occurs (such
calendar month being referred to as the "related" Collection Period with respect
to such Determination Date or Distribution Date) or, in the case of the initial
Distribution Date and Determination Date, the period commencing at the opening
of business on the Closing Date and ending at the end of the calendar month
following the calendar month in which the Closing Date occurs. Any amount stated
"as of the close of business on the last day of a Collection Period" shall give
effect to the following calculations as determined as of the end of the day on
such last day: (i) all applications of Collected Funds and Purchase Amounts, and
(ii) all distributions.
"Collection Records" means all manually prepared or computer generated
------------------
records relating to collection efforts or payment histories with respect to the
Transferred
<PAGE>
Page 9
Receivables.
"Commercial Paper Rate" for Advances means, to the extent a Noncommitted
---------------------
Lender funds such Advances by issuing commercial paper, the sum of (a) the
weighted average of the rates at which commercial paper notes of such
Noncommitted Lender issued to fund such Advances may be sold by any placement
agent or commercial paper dealer selected by such Noncommitted Lender, as agreed
in good faith between each such agent or dealer and such Noncommitted Lender;
provided if the rate (or rates) as agreed between any such agent or dealer and
- --------
such Noncommitted Lender is a discount rate (or rates), then such rate shall be
the rate (or if more than one rate, the weighted average of the rates) resulting
from converting such discount rate (or rates) to an interest-bearing equivalent
rate per annum plus (b) any and all commissions of placement agents and
----
commercial paper dealers in respect of commercial paper issued to fund the
making or maintenance of any Advance plus (c) any and all reasonable costs and
----
expenses of any issuing and paying agent or other Person responsible for the
administration of such Noncommitted Lender's commercial paper program in
connection with the preparation, completion, issuance, delivery or payment of
commercial paper issued to fund the making or maintenance of any Advance. Each
Noncommitted Lender shall notify the Agent of its Commercial Paper Rate
applicable to any Advance promptly after the determination thereof.
"Commitment" means, for any Committed Lender, the maximum amount of such
----------
Committed Lender's commitment to fund Advances hereunder, as set forth on the
Joinder Supplement or in the assignment documentation by which such Committed
Lender became a party to this Agreement or assumed the Commitment (or a portion
thereof) of another Committed Lender, as such amount may be adjusted from time
to time pursuant to Section 2.5 or pursuant to assignment documentation executed
-----------
by such Committed Lender and its assignee and delivered pursuant to Section 16.2
------------
of this Agreement. In the event that a Committed Lender maintains a portion of
its Commitment hereunder with respect to more than one Noncommitted Lender, such
Committed Lender shall be deemed to hold separate Commitments hereunder in each
such capacity.
"Commitment Percentage" means, for a Committed Lender, such Committed
---------------------
Lender's Commitment as a percentage of the aggregate Commitments of all
Committed Lenders.
"Commitment Termination Date" means March 29, 2000, as such date may be
---------------------------
extended from time to time as agreed in writing between the Borrower, the
Servicer, the Agent and the Lenders.
"Committed Lender" means, with respect to a Noncommitted Lender, each
----------------
financial institution party to a Joinder Supplement which Joinder Supplement
designates such financial institution as a "Committed Lender" with respect to
such Noncommitted
<PAGE>
Page 10
Lender, and any assignee of such Committed Lender pursuant to Article XVI to the
-----------
extent such assignee has assumed a portion of the Commitment of such Committed
Lender.
"Contingent Liability" means any agreement, undertaking or arrangement by
--------------------
which any Person guarantees, endorses or otherwise becomes or is contingently
liable upon (by direct or indirect agreement, contingent or otherwise, to
provide funds for payment, to supply funds to, or otherwise to invest in, a
debtor, or otherwise to assure a creditor against loss) the indebtedness,
obligation or any other liability of any other Person (other than by
endorsements of instruments in the course of collection), or guarantees the
payment of dividends or other distributions upon the shares of any other Person.
The amount of any Person's obligation under any Contingent Liability shall
(subject to any limitation set forth therein) be deemed to be the outstanding
principal amount (or maximum outstanding principal amount, if larger) of the
debt, obligation or other liability guaranteed thereby.
"CP Allocation" has the meaning set forth in Section 3.3(a).
------------- --------------
"Cram Down Loss" means, with respect to a Receivable, if a court of
--------------
appropriate jurisdiction in an insolvency proceeding shall have issued an order
reducing the amount owed on such Receivable or otherwise modifying or
restructuring the scheduled payments to be made on such Receivable, an amount
equal to the excess of the principal balance of such Receivable immediately
prior to such order, over the principal balance of such Receivable as so
----
reduced. A "Cram Down Loss" shall be deemed to have occurred on the date of
issuance of such order.
"CSFB" has the meaning set forth in the Preamble.
---- --------
"CSFB Roles" has the meaning set forth in Section 18.11.
---------- -------------
"Custodial Fee Rate" means (a) if AFS is the Custodian, 0% and (b) if a
------------------
Person other than AFS is the Custodian, a rate agreed to by such Person and the
Agent.
"Custodian" means AFS in its capacity as Custodian under the Custodian
---------
Agreement, and its permitted successors and assigns in such capacity.
"Custodian Agreement" means the Custodian Agreement dated as of the date
-------------------
hereof among the Custodian, the Collateral Agent and the Agent, including all
permitted amendments, modifications and supplements thereto.
"Dealer" means a seller of new or used automobiles, light duty trucks,
------
minivans or sport utility vehicles that originated one or more of the
Receivables in the Total Receivables Pool and sold the respective Receivable,
directly or indirectly, to a Seller.
<PAGE>
Page 11
"Dealer Agreement" means an agreement by and among a Seller and a Dealer
----------------
relating to the sale of Receivables to such Seller and all documents and
instruments relating thereto.
"Dealer Assignment" means, with respect to a Transferred Receivable, the
-----------------
executed assignment executed by a Dealer conveying such Receivable to a Seller.
"Default Rate" means a rate per annum equal to the Alternate Base Rate (but
------------ --- -----
not less than the Yield (if any) in effect for the related monetary obligation),
plus a margin of 2%.
- ----
"Defaulted Receivable" means, with respect to a Transferred Receivable as
--------------------
of any date, a Receivable with respect to which (i) all or any portion in excess
of 5% of a Scheduled Payment is more than 90 days past due, (ii) the Servicer
has repossessed the related Financed Vehicle (and any applicable redemption
period has expired), (iii) the Obligor has been identified in the records of the
Servicer as being the subject of a current bankruptcy proceeding or (iv) such
Receivable is in default and the Servicer has charged-off such Receivable in
accordance with its standard policies or otherwise has determined in good faith
that payments thereunder are not likely to be resumed.
"Deficiency Amount" means, as of any date, an amount equal to the product
-----------------
of (x) the Deficiency Percentage, (y) the Aggregate Outstanding Principal
Balance of Eligible Receivables in the Total Receivables Pool as of such date
and (z) 2.0.
"Deficiency Percentage" means, as of any date, the positive excess (rounded
---------------------
upward to the nearest 1.0%), if any, of (a) the sum of (i) 8.75% plus (ii) the
----
Total Expense Percentage plus (iii) the weighted (on the basis of notional
----
amounts) average Interest Rate Cap Strike Prices for the Interest Rate Hedges in
effect on such date plus (iv) 1.25%, over (b) the weighted average APR for all
---- ----
Receivables in the Total Receivables Pool.
"Delinquency Ratio" means, as of any date, the ratio (expressed as a
-----------------
percentage) computed by dividing:
(a) the sum of (i) the Aggregate Outstanding Principal Balance
of Receivables in the Total Receivables Pool which were
Defaulted Receivables as of the close of business on
the last day of the Collection Period immediately
preceding such date plus (ii) without duplication of
----
amounts included in (i), the Aggregate Outstanding
Principal Balance of Receivables in the Total
Receivables Pool which were Delinquent Receivables as
of the close of business on the last day of such
immediately preceding Collection Period
<PAGE>
Page 12
by
--
(b) the sum of the Aggregate Outstanding Principal Balance of
all Receivables in the Total Receivables Pool as of the
close of business on the last day of such immediately
preceding Collection Period plus, without duplication,
----
if a Take-Out Securitization has occurred during such
immediately preceding Collection Period, the Aggregate
Outstanding Principal Balance of all Transferred
Receivables which were included in such Take-Out
Securitization.
The Delinquency Ratio shall be determined on each Determination Date and shall
remain in effect until recalculated on the next succeeding Determination Date;
provided that, on any date that no Advances are outstanding and no Yield is
owing, the Delinquency Ratio on such date shall be deemed to be zero.
"Delinquent Receivable" means a Receivable with respect to which more than
---------------------
5% of a Scheduled Payment is more than 30 days past due.
"Determination Date" means, with respect to a Collection Period, the fourth
------------------
Business Day prior to the related Distribution Date.
"Distribution Date" means the 15th day of each calendar month, or if such
-----------------
15th day is not a Business Day, the next succeeding Business Day, commencing May
17, 1999.
"Dollar(s)" and the sign "$" mean lawful money of the United States of
--------- -
America.
"Effective Date" has the meaning set forth in Section 7.1.
-------------- -----------
"Eligible Account" means (i) a segregated trust account or (ii) a
----------------
segregated direct deposit account, in each case, 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-1+ by Standard & Poor's and P-1 by Moody's. In either case, such
depository institution or trust company shall (x) be CSFB or Bank One, N.A. or
(y) have been approved by the Agent, acting in its discretion, by written notice
to the Servicer.
"Eligible Assignee" has the meaning set forth in Section 16.1.
----------------- ------------
"Eligible Receivable" means a Receivable that (i) was originated by AFS or
-------------------
ACC directly or by a Dealer for the retail sale or refinancing of a Financed
Vehicle in the ordinary course of its business and such Seller or Dealer (as the
case may be) had all necessary licenses and permits to originate Receivables in
the applicable state, and, if
<PAGE>
Page 13
originated by a Dealer, was purchased by AFS or ACC from such Dealer under a
Dealer Agreement or pursuant to a Dealer Assignment and was validly assigned by
such Dealer to such Seller, or, with respect to any Receivable sold to the
Borrower by AFC, was purchased by AFC from AFS or ACC, (ii) has created or shall
create a valid, subsisting and enforceable first priority perfected security
interest in favor of AFS or ACC in the related Financed Vehicle (which security
interest has been assigned to the Borrower and shall be validly assignable by
the Borrower to the Collateral Agent on behalf of the Secured Parties), except
as enforceability may be limited by bankruptcy, insolvency, reorganization or
similar laws affecting the enforcement of creditors' rights generally, (iii) was
fully and properly executed by the parties thereto and contains customary and
enforceable provisions such as to render the rights and remedies of the holder
thereof adequate for realization against the collateral security, (iv) is a
Simple Interest Receivable or Pre-Computed Receivable which provides for level
monthly payments (provided that the payment in the first monthly period and the
--------
final monthly period of the life of the Receivable may be minimally different
from the level payment) which, if made when due, shall fully amortize the Amount
Financed over the original term, (v) provides for, in the event that such
contract is prepaid, a prepayment that fully pays the principal balance and
includes accrued but unpaid interest through the date of prepayment in an amount
at least equal to the Annual Percentage Rate, and (vi) except to the extent
permitted by this Agreement, has not been amended, waived or rewritten or
collections with respect thereto deferred or waived; and
(a) with respect to which 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 Magnuson-Moss Warranty Act, the
Federal Reserve Board's Regulations "B" and "Z", the Soldiers' and
Sailors' Civil Relief Act of 1940, 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 such Receivable, the sale of the Financed Vehicle
related thereto and the sale of credit life and credit accident and
health insurance and any extended service contracts, if any, in
connection with such Receivable, have been complied with in all
material respects;
(b) that is a Dollar obligation of an Obligor domiciled in the
United States of America and that was originated and, if originated by
a Dealer, was sold by the Dealer to AFS or ACC, without any fraud or
material misrepresentation on the part of such Dealer or on the part
of the Obligor;
(c) which 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
<PAGE>
Page 14
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
of the Soldiers' and Sailors' Civil Relief Act of 1940, as amended;
and all parties to such 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;
(d) which is not due from the United States of America or any
State or from any agency, department, subdivision or instrumentality
thereof;
(e) with respect to which the information set forth in the
Schedule of Receivables has been produced from AFS's and, to the
extent it maintains separate computer records, AFC's or ACC's (as the
case may be) electronic ledger and was true and correct in all
material respects, and is a complete and accurate description, on the
relevant Purchase Date, of the Receivables sold to the Borrower on
such date; and with respect to which, on or prior to the relevant
Purchase Date, AFS and, to the extent it maintains separate computer
records, AFC or ACC (as the case may be) has appropriately marked its
computer records to indicate the sale to the Borrower of the
Receivables sold on such date and with respect to which the Monthly
Tape delivered by the Servicer to the Backup Servicer from time to
time was complete and accurate as of the date delivered and consistent
with the information set forth in the Schedule of Receivables with
respect to such Receivable;
(f) which (i) as of the related Advance Date, (A) had an
original maturity of at least 6 months but not more than 72 months,
(B) had an original Amount Financed of at least $1,000 and not more
than $50,000, (C) had an Annual Percentage Rate of at least 7.75% and
not more than 27.0%, and (D) was not more than 30 days past due; and
(ii) with respect to which no funds have been advanced with respect to
such Receivable by the Borrower, a Seller, the Servicer, any Dealer,
or anyone acting on behalf of any of them in order to cause such
Receivable to qualify under subclause (i)(D) of this clause (f);
---------------- ----------
(g) which has not been satisfied, subordinated or rescinded, and
the Financed Vehicle securing such Receivable has not been released
from the Lien of such Receivable in whole or in part;
(h) with respect to which no provision has been waived (except
to the extent permitted by this Agreement);
(i) except for any Lien granted by the Wells Fargo Documents (as
defined in the Intercreditor Agreement) which Lien shall be released
on the
<PAGE>
Page 15
applicable Purchase Date, as to which neither any Seller nor the
Borrower has done anything to convey any right to any Person that
would result in such Person having a right to payments due under such
Receivable or otherwise to impair the rights of the Collateral Agent
on behalf of the Secured Parties in such Receivable or the proceeds
thereof;
(j) which has not been sold, transferred, assigned or pledged by
the Borrower to any Person other than hereunder; and no Dealer has a
participation in, or other right to receive, proceeds of such
Receivable and with respect to which neither AFS nor the Borrower has
taken any action to convey any right to any Person (other than
hereunder) that would result in such Person having a right to payments
received under the related Insurance Policy or the related Dealer
Agreement or Dealer Assignment or to payments due under such
Receivable;
(k) which is not subject to any right of rescission, setoff,
counterclaim or defense and no such right has been asserted or, to the
knowledge of the Borrower or of any Seller, threatened with respect
thereto;
(l) with respect to which no liens or claims have been filed for
work, labor or materials relating to a Financed Vehicle that are liens
prior to or equal or coordinate with, the security interest in the
Financed Vehicle granted by such Receivable;
(m) with respect to which no default, breach, violation or event
permitting acceleration thereof has occurred, and none of the
Borrower, the Servicer or any Seller has waived any of the foregoing;
(n) at the time of the origination of which the related Financed
Vehicle was covered by a comprehensive and collision insurance policy
(i) in an amount at least equal to the lesser of (a) its maximum
insurable value and (b) the Amount Financed, (ii) naming AFS or ACC,
as applicable, 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 and with
respect to which the Obligor is required to maintain physical loss and
damage insurance, naming AFS or ACC and its successors and assigns as
an additional insured party, and such Receivable permits the holder
thereof to obtain Force-Placed Insurance at the expense of the Obligor
if the Obligor fails to do so unless otherwise prohibited by the law
of the state in which the related contract was entered into;
(o) with respect to which, (i) immediately prior to the sale
thereof to the Borrower, the applicable Seller had, and has conveyed
to the Borrower, good and marketable title free and clear of all
liens, encumbrances, security interests
<PAGE>
Page 16
and rights of others, and (ii) the sale and assignment thereof to the
Borrower has been perfected under the UCC;
(p) with respect to each of which a Receivable File is in the
possession of the Custodian and such Receivable File contains (i) the
fully executed original of such Receivable, (ii) a certificate of
insurance, an application form for insurance signed by the related
Obligor, or a signed representation letter from the Obligor named in
such Receivable pursuant to which such Obligor has agreed to obtain
physical damage insurance for the related Financed Vehicle, or copies
thereof, or a documented verbal confirmation by an insurance agent for
such Obligor of a policy number for an insurance policy for the
Financed Vehicle, (iii) the original Lien Certificate (indicating AFS
or ACC as first lienholder) or application therefor or a letter from
the applicable Dealer agreeing unconditionally to repurchase the
related Receivable if the certificate of title is not received by the
Servicer within 180 days (provided that the Lien Certificate is
--------
delivered to the Custodian within 180 days), and (iv) a credit
application or file of credit information regarding the Obligor, or a
copy thereof; each of such documents (if any) which is required to be
signed by the Obligor has been signed by the Obligor in the
appropriate spaces; and all blanks on any form have been properly
filled in and each form has otherwise been correctly prepared;
(q) which was not originated in, or is subject to the laws of,
any jurisdiction the laws of which would make unlawful, void or
voidable the sale, pledge, transfer and assignment of such Receivable
under this Agreement and with respect to which a Seller has not
entered into any agreement with any account debtor that prohibits,
restricts or conditions the assignment of any portion of such
Receivable;
(r) as to which all filings (including, without limitation, UCC
filings but subject to clause (p) above in the case of the applicable
----------
Lien Certificate) required to be made by any Person and actions
required to be taken or performed by any Person in any jurisdiction to
give the Collateral Agent, on behalf of the Secured Parties, a first
priority perfected Lien on such Receivable and the proceeds thereof
and the other Collateral related thereto have been made, taken or
performed;
(s) of which there is only one original executed copy;
(t) which constitutes chattel paper within the meaning of
the UCC;
(u) as to which no selection procedures adverse to the Investors
have been utilized in selecting such Receivable from all other similar
Receivables owned or originated by AFS and its Affiliates;
<PAGE>
Page 17
(v) with respect to which, by the related Date and on each
relevant date thereafter, AFS or ACC or, to the extent it maintains
such records, AFC (as the case may be) will have caused the portions
of its servicing and other records relating to such Receivable to be
clearly and unambiguously marked to show that such Receivable
constitutes part of the Collateral and is subject to the Lien of the
Collateral Agent on behalf of the Secured Parties;
(w) which is not assumable by another Person in a manner which
would release the Obligor thereof from such Obligor's obligations to
the Borrower with respect to such Receivable;
(x) with respect to which the related Financed Vehicle had not
been repossessed;
(y) with respect to which the following is true:
The Lien Certificate for the related Financed Vehicle shows, 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 related Purchase Date and will show,
AFS or ACC, as the case may be, named as the original secured party
under such Receivable and, accordingly, AFS or ACC, as the case may
be, will be 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 or ACC, as the case may be, has received written evidence from the
related Dealer or the Obligor that such Lien Certificate showing such
Seller as first lienholder has been applied for. If the Receivable was
originated in a state in which a filing or recording is required of
the secured party to perfect a security interest in motor vehicles,
such filings or recordings have been duly made to show AFS or ACC, as
the case may be, named as the original secured party under the related
Receivable;
(z) which is not a Defaulted Receivable;
(aa) which is not a Delinquent Receivable;
(bb) which is not secured by vehicles which are financed
repossessions; and
(cc) which was originated in the United States of America and, at
the time of origination, materially conformed to all requirements of
the Servicing Procedures and Credit Manual applicable to such
Receivable.
For purposes of this Agreement (including the computation from time to
time of
<PAGE>
Page 18
the Borrowing Base), the eligibility of Receivables will be determined from time
to time, such that a Receivable that was an Eligible Receivable at one time but
that subsequently fails to meet all applicable eligibility requirements will no
longer be an Eligible Receivable (unless and until it again meets all applicable
eligibility requirements).
"Eligible Servicer" means 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 Transferred
Receivables, (iii) has demonstrated the ability professionally and competently
to service a portfolio of motor vehicle retail installment sales contracts
and/or motor vehicle installment loans similar to the Transferred Receivables
with reasonable skill and care, and (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.
"ERISA" means the U.S. Employee Retirement Income Security Act of 1974, as
-----
amended from time to time.
"Eurocurrency liabilities" has the meaning assigned to that term in
------------------------
Regulation D of the Board of Governors of the Federal Reserve System, as in
effect from time to time.
"Eurodollar Advance" means any Advance (or portion thereof) that bears
------------------
Yield computed by reference to the Eurodollar Rate.
"Eurodollar Rate Reserve Percentage" of any Lender for any Fixed Period in
----------------------------------
respect of which Yield is computed by reference to the Eurodollar Rate means the
reserve percentage applicable two Business Days before the first day of such
Fixed Period under regulations issued from time to time by the Board of
Governors of the Federal Reserve System (or any successor) (or if more than one
such percentage shall be applicable, the daily average of such percentages for
those days in such Fixed Period during which any such percentage shall be so
applicable) for determining the maximum reserve requirement (including, without
limitation, any emergency, supplemental or other marginal reserve requirement)
for such Lender with respect to liabilities or assets consisting of or including
Eurocurrency liabilities (or with respect to any other category of liabilities
that includes deposits by reference to which the yield rate on Eurocurrency
liabilities is determined) having a term equal to such Fixed Period.
"Event of Bankruptcy" shall be deemed to have occurred with respect to a
-------------------
Person if either:
(a) a case or other proceeding shall be commenced, without the
<PAGE>
Page 19
application or consent of such Person, in any court, seeking the
liquidation, reorganization, debt arrangement, dissolution, winding up, or
composition or readjustment of debts of such Person, the appointment of a
trustee, receiver, custodian, liquidator, assignee, sequestrator or the
like for such Person or all or substantially all of its assets, or any
similar action with respect to such Person under any law relating to
bankruptcy, insolvency, reorganization, winding up or composition or
adjustment of debts, and such case or proceeding shall continue
undismissed, or unstayed and in effect, for a period of 60 consecutive
days; or an order for relief in respect of such Person shall be entered in
an involuntary case under the federal bankruptcy laws or other similar laws
now or hereafter in effect; or
(b) such Person shall commence a voluntary case or other proceeding
under any applicable bankruptcy, insolvency, reorganization, debt
arrangement, dissolution or other similar law now or hereafter in effect,
or shall consent to the appointment of or taking possession by a receiver,
liquidator, assignee, trustee, custodian, sequestrator (or other similar
official) for such Person or for any substantial part of its property, or
shall make any general assignment for the benefit of creditors, or shall
fail to, or admit in writing its inability to, pay its debts generally as
they become due, or, if a corporation or similar entity, its board of
directors shall vote to implement any of the foregoing.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
------------
"Face Amount" means, with respect to outstanding commercial paper, (i) the
-----------
face amount of any such commercial paper issued on a discount basis, and (ii)
the principal amount of, plus the amount of all interest accrued and to accrue
thereon to the stated maturity date of, any commercial paper issued on an
interest-bearing basis.
"Facility" has the meaning set forth in Section 2.1.
-------- -----------
"Facility Fee Rate" has the meaning set forth in the Fee Letter.
-----------------
"Facility Limit" means, on any day, the lesser of (x) $300,000,000 and (y)
--------------
the Total Commitment in effect on such day, as such Total Commitment may be
reduced or increased pursuant to Section 2.5. References to the unused portion
-----------
of the Facility Limit shall mean, at any time, the Facility Limit in effect at
such time, minus the sum of the then outstanding principal amount of Advances
-----
under this Agreement.
"Facility Termination Date" means the earliest to occur of (i) the date of
-------------------------
any termination of the Total Commitment, in whole, by the Borrower pursuant to
Section 2.5, (ii) the effective date on which the Facility is terminated
- -----------
pursuant to Section 14.2, and (iii) the Commitment Termination Date.
------------
<PAGE>
Page 20
"Facility Termination Event" means any of the events described in Section
-------------------------- -------
14.1.
- ----
"Fee Letter" has the meaning set forth in Section 3.4.
---------- -----------
"Fees" means all fees and other amounts payable to the Agent, on behalf of
----
itself, the Lenders and the Liquidity Providers, pursuant to the Fee Letter.
"Financed Vehicle" means any automobile, light duty truck, van, minivan or
----------------
sport utility vehicle, together with all accessories, additions and parts
constituting a part thereof and all accessions thereto.
"Fixed Period" means with respect to any Advance (or portion thereof):
------------
(a) the period commencing on the date of the initial funding of such
Advance (or such portion) and ending such number of days (not to exceed 69
days) thereafter as the Agent shall select in accordance with Section
-------
3.3(b), after consultation to the extent practicable with the Borrower; and
------
(b) thereafter, each period commencing on the last day of the
immediately preceding Fixed Period for such Advance (or such portion) and
ending such number of days (not to exceed 69 days) thereafter as the Agent
shall then select in accordance with Section 3.3(b), after consultation to
--------------
the extent practicable with the Borrower;
provided, however, that:
- -------- -------
(i) any Fixed Period in respect of which Yield is computed by
reference to the Bank Rate shall be a period of from one to and
including 29 days (if reasonably available to the Agent), or a period
of one, two or three months, as the Borrower may select by written
notice to the Agent furnished not later than 12:00 noon (New York City
time) on the second Business Day preceding the first day of such Fixed
Period;
(ii) any such Fixed Period (other than a Fixed Period consisting
of one day) that would otherwise end on a day that is not a Business
Day shall be extended to the next succeeding Business Day (unless the
related Advance shall be accruing Yield at a rate determined by
reference to the Eurodollar Rate and the Fixed Period is one, two or
three months, in which case if such succeeding Business Day is in a
different calendar month, such Fixed Period shall instead be shortened
to the next preceding Business Day);
(iii) in the case of Fixed Periods of one day, (A) the initial
Fixed Period shall be the day of the initial funding of such Advance,
and (B) any
<PAGE>
Page 21
subsequently occurring Fixed Period that is one day shall, if the
immediately preceding Fixed Period is more than one day, be the last
day of such immediately preceding Fixed Period, and if the immediately
preceding Fixed Period is one day, shall be the next day following
such immediately preceding Fixed Period; and
(iv) if any Fixed Period for any Advance that commences before
the Facility Termination Date would otherwise end on a date occurring
after the Facility Termination Date, such Fixed Period shall end on
the Facility Termination Date and the duration of each such Fixed
Period that commences on or after the Facility Termination Date, if
--
any, shall be of such duration as shall be selected by the Agent.
---
"Force-Placed Insurance" has the meaning set forth in Section 8.4(b).
---------------------- --------------
"GAAP" means generally accepted accounting principles set forth in the
----
opinions and pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board or in such other statements by such
other entity as may be approved by a significant segment of the accounting
profession, which are applicable to the circumstances as of any date of
determination.
"Indebtedness" of any Person means, without duplication:
------------
(a) all obligations of such Person for borrowed money and all
obligations of such Person evidenced by bonds, debentures, notes or other
similar instruments;
(b) all obligations, contingent or otherwise, relative to the face
amount of all letters of credit, whether or not drawn, and banker's
acceptances issued for the account of such Person;
(c) all obligations of such Person as lessee under leases that have
been or should be, in accordance with GAAP, recorded as capitalized lease
liabilities;
(d) all other items that, in accordance with GAAP, would be included
as liabilities on the liability side of the balance sheet of such Person as
of the date at which Indebtedness is to be determined;
(e) whether or not so included as liabilities in accordance with GAAP,
all obligations of such Person to pay the deferred purchase price of
property or services, and indebtedness (excluding prepaid interest thereon)
secured by a lien on property owned or being purchased by such Person
(including
<PAGE>
Page 22
indebtedness arising under conditional sales or other title retention
agreements), whether or not such indebtedness shall have been assumed by
such Person or is limited in recourse; and
(f) all Contingent Liabilities of such Person in respect of any of the
foregoing.
"Indemnified Amounts" has the meaning set forth in Section 17.1.
------------------- ------------
"Indemnified Party" has the meaning set forth in Section 17.1.
----------------- ------------
"Independent Accountants" has the meaning set forth in Section 8.11(a).
----------------------- ---------------
"Insurance Add-On Amount" means the premium charged to the Obligor if the
-----------------------
Servicer obtains Force-Placed Insurance pursuant to Section 8.4.
-----------
"Insurance Policies" means, with respect to a Receivable, any insurance
------------------
policy (including the insurance policies described in clause (n) of the
----------
definition of "Eligible Receivable") 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.
"Intercreditor Agreement" means the Intercreditor Agreement dated as of the
-----------------------
date hereof among the Agent, Wells Fargo, the Borrower, the Collateral Agent and
AFS, including all permitted amendments, modifications and supplements thereto.
"Interest Rate Cap Strike Price" means, with respect to an Interest Rate
------------------------------
Hedge, the "strike price" set forth in such Interest Rate Hedge.
"Interest Rate Hedge" means any interest rate cap or other hedging
-------------------
mechanism which satisfies the requirements of Section 11.6.
------------
"Interest Rate Hedge Assignment Acknowledgment" means an acknowledgment in
---------------------------------------------
substantially the form of Exhibit C hereto executed by a counterparty to an
---------
Interest Rate Hedge (if other than CSFB) in favor of the Agent and the
Collateral Agent.
"Interim Distribution Date" means any Settlement Date, other than a
-------------------------
Distribution Date, on which the Collateral Agent shall pay principal, Yield and
certain other amounts in accordance with this Agreement and the Security
Agreement.
"Investor" means (i) all Lenders, (ii) all other owners by assignment (in
--------
accordance with Section 16.1) of an Advance and, to the extent of the undivided
------------
interests so purchased, all Participants (in accordance with Section 16.9) and
------------
(iii) the Agent and any subsequent holders of the Note (in accordance with
Section 16.5).
- ------------
<PAGE>
Page 23
"Joinder Supplement" means an agreement among a Noncommitted Lender or
------------------
Committed Lender (as the case may be), the Borrower, AFS and the Agent in the
form of Exhibit F hereto (appropriately completed).
---------
"Lender" means any Noncommitted Lender or Committed Lender, and "Lenders"
------ -------
means, collectively, all Noncommitted Lenders and Committed Lenders.
"Level I Trigger Event" means, as of any date, that (x) a Portfolio Trigger
---------------------
Event has occurred on or prior to such date or (y) a Portfolio Default has
occurred prior to such date and such Portfolio Default has been cured or waived
in accordance with the related transaction documents.
"Level II Trigger Event" means, as of any date, the existence of a
----------------------
Portfolio Default on such date. A "Level II Trigger Event" shall be deemed to
exist so long as the underlying Portfolio Default is not cured or waived in
accordance with the related transaction documents.
"Level III Trigger Event" means, on any date, that the Servicer Delinquency
-----------------------
Ratio exceeds 14% on such date and a Level IV Trigger Event is not in effect on
such date; provided that such 14% shall be reduced to 12% with respect to
computations of the Servicer Delinquency Ratios as of the last day of the
February through September (inclusive) Collection Periods.
"Level IV Trigger Event" means, on any date, that the Servicer Delinquency
----------------------
Ratio exceeds 15% on such date; provided that such 15% shall be reduced to 13%
with respect to computations of the Servicer Delinquency Ratios as of the last
day of the February through September (inclusive) Collection Periods.
"Level V Trigger Event" means, on any date, that the Portfolio Net Loss
---------------------
Ratio exceeds 7% on such date and a Level VI Trigger Event is not in effect on
such date.
"Level VI Trigger Event" means, on any date, that the Portfolio Net Loss
----------------------
Ratio exceeds 7.5% on such date.
"Lien" means 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" means, 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
<PAGE>
Page 24
Certificate" shall mean only a certificate or notification issued to a secured
party.
"Liquidity Provider" means each Person who provides liquidity, credit
------------------
enhancement or a "back-stop" purchase facility to a Noncommitted Lender under a
Noncommitted Lender Liquidity Arrangement.
"Lockbox Account" has the meaning set forth in Section 8.2(d).
--------------- --------------
"Lockbox Agreement" means the Tri-Party Remittance Processing Agreement,
-----------------
dated as of the date hereof, by and among the Lockbox Bank, the Servicer and
Bank One, N.A., as Collateral Agent, as such agreements may be amended from time
to time in accordance with the provisions hereof and thereof, unless 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 Agent, among the Servicer, the Collateral Agent and the
Lockbox Bank.
"Lockbox Bank" means Bank One, Texas, N.A. or any other depository
------------
institution named by the Servicer and acceptable to the Agent.
"Maximum Interest Rate Cap Strike Price" means 5.75% per annum.
--------------------------------------
"Maximum Purchase Amount" of a Noncommitted Lender means the aggregate
-----------------------
Commitment of the Committed Lenders with respect to such Noncommitted Lender.
"Minimum Reserve Account Amount" means, on any date, the greater of (a)
------------------------------
$300,000 and (b) the product of 1.0% and the greater of (x) the Facility Limit
in effect on such date and (y) the sum of (i) the aggregate unpaid principal
amount of all Advances on such date plus (ii) the Required Holdback in effect on
----
such date.
"Monthly Extension Rate" means, with respect to any Determination Date, the
----------------------
fraction, expressed as a percentage, the numerator of which is the Aggregate
Outstanding Principal Balance of all Receivables in the Servicing Portfolio
whose payments are extended during the related Collection Period and the
denominator of which is the Aggregate Outstanding Principal Balance of all
Receivables in the Servicing Portfolio as of the close of business on the last
day of the Collection Period immediately preceding such related Collection
Period.
"Monthly Records" means all records and data maintained by the Servicer
---------------
with respect to the Transferred Receivables, including the following with
respect to each Transferred Receivable: the account number; 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; origination date; first payment
date; next payment due date; date of most recent payment; new/used
classification; collateral description; days currently delinquent;
<PAGE>
Page 25
number of contract extensions (months) to date; amount of Scheduled Payment;
and, once available, current remaining term and current Insurance Policy
expiration date and past due late charges.
"Monthly Tape" means the computer tape or listing generated on behalf of
------------
the Borrower which contains the information set forth in the definition of
"Monthly Records" above and in a format acceptable to the Backup Servicer.
"Moody's" means Moody's Investors Service, Inc.
-------
"Noncommitted Lender" means each Structured Lender which shall become a
-------------------
party hereto pursuant to a Joinder Supplement duly executed by all parties
thereto.
"Noncommitted Lender Liquidity Arrangement" means each liquidity, credit
-----------------------------------------
enhancement or "back-stop" purchase or loan facility for a Noncommitted Lender
relating to this Agreement.
"Noncommitted Percentage" means, for a Noncommitted Lender, such
-----------------------
Noncommitted Lender's Maximum Purchase Amount as a percentage of the Facility
Limit.
"Note" means the promissory grid note, in the form of Exhibit B, made
---- ---------
payable to the order of the Agent, on behalf of the Investors.
"Note Register" has the meaning set forth in Section 16.5(a).
------------- ---------------
"Note Registrar" has the meaning set forth in Section 16.5(a).
-------------- ---------------
"Obligations" means all obligations (monetary or otherwise) of the Borrower
-----------
to the Lenders, the Agent, the Collateral Agent or any other Affected Person
arising under or in connection with this Agreement, the Note and each other
Transaction Document.
"Obligor" means a Person obligated to make payments with respect to a
-------
Transferred Receivable.
"Officer's Certificate" means, with respect to any Person which is not an
---------------------
individual, a certificate signed by the President, the Chief Financial Officer,
the Treasurer, any Assistant Treasurer or any Vice President of such Person.
"Official Body" means any government or political subdivision or any
-------------
agency, authority, regulatory body, bureau, central bank, commission, department
or instrumentality of any such government or political subdivision, or any
court, tribunal, grand jury or arbitrator, in each case whether foreign or
domestic.
<PAGE>
Page 26
"Opinion of Counsel" means a written opinion of counsel reasonably
------------------
acceptable to the Agent which, unless otherwise provided herein, may be an
employee of the Person delivering such opinion.
"Other Conveyed Property" has the meaning set forth in the Purchase
-----------------------
Agreement.
"Participant" has the meaning set forth in Section 16.9.
----------- ------------
"Permitted Investment" means 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, or
bankers' acceptances issued by any depository institution or trust company
organized under the laws of the United States or any State thereof
(including any federal or state branch or agency of a foreign depository
institution or trust company) and subject to supervision and examination by
federal and/or state banking authorities (including, if applicable, the
Collateral Agent, the Agent or any agent thereof acting in its commercial
capacity); 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
Collateral Agent has taken actual or constructive delivery of such
obligation, and (ii) entered into with (x) CSFB or (y) 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-1+" by Standard & Poor's
and "P-1" by Moody's (including, if applicable, the Collateral Agent, the
Agent or any agent thereof acting in its commercial capacity);
(d) securities bearing interest or sold at a discount issued by any
<PAGE>
Page 27
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 Permitted
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 Collection Account and the Reserve Account to exceed 10% of the
value of Permitted Investments held in such accounts (with Permitted
Investments held in such 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; or
(g) any other demand or time deposit, obligation, security or
investment (including, without limitation, a hedging arrangement) as may be
acceptable to the Agent, as evidenced by a writing to that effect (with a
copy to each Rating Agency).
Permitted Investments may be purchased by or through the Collateral Agent or any
of its Affiliates. All Permitted Investments shall be held in the name of the
Collateral Agent. No Permitted Investment shall have a "r" highlighter affixed
to its S&P rating.
"Person" means an individual, partnership, corporation (including a
------
business trust), joint stock company, trust, unincorporated association, joint
venture, government or any agency or political subdivision thereof or any other
entity.
"Portfolio Default" means the occurrence, with respect to securities issued
-----------------
on or after April 1, 1998, which are backed by automobile installment sales
contracts ("receivables") and with respect to which AFS or any Affiliate of AFS
is the servicer, of an "event of default" or similar event under any applicable
enhancement or insurance agreement or an "amortization event", "pay-out event"
or similar event under any applicable sale and servicing agreement or indenture
which event has the potential consequence, inter alia, under the related
----- ----
agreements of requiring the acceleration or early amortization of the related
securities or permitting the realization upon the receivables and/or other
collateral.
"Portfolio Net Losses" means with respect to any Collection Period, the
--------------------
aggregate amount of gross charge-offs of Receivables in the Servicing Portfolio
during such Collection Period net of all Recoveries with respect to any such
Receivables (including post-disposition amounts received on previously charged-
off Receivables), calculated in a manner consistent with the calculations of net
losses in AmeriCredit Corp.'s quarterly
<PAGE>
Page 28
report on Form 10-Q for the period ended September 30, 1998.
"Portfolio Net Loss Ratio" means, as of any date, a fraction, expressed as
------------------------
a percentage, the numerator of which equals the product of 2.0 times the sum of
the Portfolio Net Losses for the six (6) preceding Collection Periods and the
denominator of which equals the Average Servicing Portfolio as of such date. The
Portfolio Net Loss Ratio shall be determined on each Determination Date and
shall remain in effect until recalculated on the next succeeding Determination
Date.
"Portfolio Trigger Event" means the occurrence of a "trigger event" or any
-----------------------
other event however denominated, with respect to securities issued on or after
April 1, 1998, which are backed by automobile installment sales contracts
("receivables") and with respect to which AFS or any Affiliate of AFS is the
servicer, which event is based on the performance of such receivables and has
the potential consequence under the related agreements of causing the amount
required to be retained in any related spread or reserve account or the level of
any other enhancement to be increased.
"Pre-Computed Receivable" means any Receivable under which the portion of a
-----------------------
payment allocable to earned interest (which may be referred to in the related
Receivable as an add-on finance charge) and the portion allocable to the Amount
Financed is determined according to the sum of periodic balances or the sum of
monthly balances or any equivalent method or are monthly actuarial receivables.
"Principal Balance" means, with respect to any Receivable, as of any date,
-----------------
the sum of the Amount Financed minus that portion of all amounts received by the
-----
Servicer with respect to such Receivable on or prior to such date and allocable
to principal in accordance with the terms of such Receivable minus any Cram Down
-----
Loss in respect of such Receivable plus the accrued and unpaid interest on such
----
Receivable.
"Purchase Amount" means, with respect to a Warranty Receivable purchased by
---------------
the Servicer or AFS pursuant to Section 8.7 or under the Purchase Agreement or a
-----------
Receivable which the Servicer purchased pursuant to Section 8.4, the Principal
-----------
Balance of such Receivable (including all accrued and unpaid interest on such
Receivable) as of the date of such purchase.
"Purchase Agreement" means the Master Receivables Purchase Agreement dated
------------------
as of the date hereof by and among the Borrower and the Sellers, including all
permitted amendments, modifications and supplements thereto.
"Purchase Date" has the meaning assigned to the term "Receivables Transfer
-------------
Date" in the Purchase Agreement.
"Rating Agencies" means Standard & Poor's and Moody's.
---------------
<PAGE>
Page 29
"Receivable" means any right to payment from a Person, and includes without
----------
limitation the right to payment of any interest or finance charges and other
obligations of such Person with respect thereto.
"Receivable File" means, with respect to each Receivable in the Total
---------------
Receivables Pool, the documents, electronic entries, instruments and writings
set forth in clause (p) of the definition of "Eligible Receivable" herein.
----------
"Record Date" means, with respect to any Determination Date or Distribution
-----------
Date, the last day of the immediately preceding calendar month.
"Recoveries" means, with respect to any Defaulted Receivable, monies
----------
collected in respect thereof (other than Scheduled Payments collected from the
related Obligor which cause such Receivable to be no longer a Defaulted
Receivable), from whatever source, during any Collection Period, net of the sum
of any reasonable expenses incurred by the Servicer in connection with the
collection, repossession and disposition of the related Financed Vehicle and any
amounts required by law to be remitted to the related Obligor; provided that
--------
Recoveries with respect to any Defaulted Receivable shall in no event be less
than zero.
"Registrar of Titles" means, 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.
"Replacement Person" has the meaning set forth in Section 6.4.
------------------ -----------
"Required Holdback" means, as of any date, the sum of (i) the greater of
-----------------
(a) the product of (1) the Required Percentage and (2) the sum of (x) the
Aggregate Outstanding Principal Balance of Eligible Receivables in the Total
Receivables Pool on such date plus (y) the amount on deposit in the Collection
----
Account on such date plus (z) the amount on deposit in the Lockbox Account on
----
such date, and (b) $2,000,000, provided that the amount set forth in this clause
--------
(b) shall be deemed to be zero during any period that no Advances are
outstanding; plus (ii) the Deficiency Amount for such date.
----
"Required Lenders" means, at any time, (a) Noncommitted Lenders holding
----------------
Advances aggregating at least 51% of all Advances then owing to Noncommitted
Lenders, and (b) Committed Lenders having Commitments or, if no Commitments are
in effect, Advances, aggregating at least 51% of the Total Commitment or
Advances owing to Committed Lenders (as the case may be).
"Required Percentage" means 12%.
-------------------
"Required Reserve Account Amount" means, on any date, the greater of (a)
-------------------------------
the
<PAGE>
Page 30
Minimum Reserve Account Amount and (b) the product of the Stated Percentage in
effect on such date and the sum of (i) the aggregate unpaid principal amount of
all Advances on such date plus (ii) the Required Holdback in effect on such
----
date.
"Reserve Account" means the account designated as the Reserve Account in,
---------------
and which is established and maintained pursuant to, Section 8.17(b).
---------------
"Reserve Account Shortfall" means, as of any date, an amount (if positive)
-------------------------
equal to the Required Reserve Account Amount on such date minus the amount on
-----
deposit in the Reserve Account on such date.
"Responsible Officer" means, with respect to any Person that is not an
-------------------
individual, the President, any Vice-President or Assistant Vice-President,
Corporate Trust Officer, the Treasurer or Assistant Treasurer, or the Controller
or Assistant Controller or Warehouse Manager of such Person, or any other
officer or employee having similar functions.
"Schedule of Receivables" has the meaning ascribed to such term in the
-----------------------
Purchase Agreement.
"Scheduled Payment" means, with respect to any Receivable, the periodic
-----------------
payment set forth in such Receivable (excluding, however, any portion of such
payment that represents late payment charges and payments in respect of taxes,
licenses or similar items).
"Secured Parties" means, collectively, the Agent, each Lender, the
---------------
Collateral Agent, each other Affected Person and their respective successors and
assigns.
"Security Agreement" means the Security and Collateral Agent Agreement
------------------
dated as of the date hereof among the Agent, the Collateral Agent, AFS and the
Borrower, including all amendments, modifications and supplements thereto.
"Seller" means each of AFS, AFC and ACC in its capacity as a Seller under
------
the Purchase Agreement, and "Sellers" means, collectively, AFS, AFC and ACC,
-------
each in such capacity.
"Servicer" means AFS or, as applicable, any successor servicer appointed
--------
pursuant to Section 13.3.
------------
"Servicer Delinquency Ratio" means, as of the last day of a Collection
--------------------------
Period, the ratio, expressed as a percentage, computed by dividing (i) the
Aggregate Outstanding Principal Balance on such date of each Receivable in the
Servicing Portfolio which is a Delinquent Receivable or a Receivable for which
the Financed Vehicle has been repossessed and the proceeds thereof have not been
realized by the Servicer by (ii) the
<PAGE>
Page 31
Aggregate Outstanding Principal Balance of all Receivables in the Servicing
Portfolio on the last day of such Collection Period.
"Servicer Extension Notice" has the meaning set forth in Section 8.14.
------------------------- ------------
"Servicer Termination Event" has the meaning set forth in Section 13.1.
-------------------------- ------------
"Servicer's Certificate" means, with respect to each Determination Date, a
----------------------
certificate, completed by and executed on behalf of the Servicer, in accordance
with Section 8.9, substantially in the form attached hereto as Exhibit E.
----------- ---------
"Servicing Fee" means, as of any Distribution Date, an amount equal to the
-------------
product of (i) 1/12 of the Servicing Fee Rate and (ii) the average Aggregate
Outstanding Principal Balance of Receivables in the Total Receivables Pool for
each day during the Collection Period immediately preceding such Distribution
Date.
"Servicing Fee Rate" means 2%.
------------------
"Servicing Portfolio" means as of any date, the Aggregate Outstanding
-------------------
Principal Balance of all Receivables (whether or not thereafter sold or disposed
of) which are serviced by the Servicer or any of its Affiliates at such time,
calculated in a manner consistent with the calculation of the components of
Average Servicing Portfolio in the most recent Form 10-K or Form 10-Q of
AmeriCredit Corp.
"Servicing Procedures and Credit Manual" means AFS's written credit,
--------------------------------------
servicing and collections procedures delivered to the Agent prior to the Closing
Date, as amended from time to time in accordance herewith.
"Settlement Date" means, with respect to any Advance, (a) each Distribution
---------------
Date, (b) at the option of the Agent or the Borrower, the last day of the
current Fixed Period of such Advance or (c) the date on which the Borrower shall
prepay such Advance pursuant to Section 4.1 hereof.
-----------
"Simple Interest Method" means 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" means 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.
<PAGE>
Page 32
"Standard & Poor's" or "S&P" means Standard & Poor's Ratings Services, a
----------------- ---
division of The McGraw-Hill Companies, Inc.
"Stated Percentage" means, on any date, the sum of (a) 4% plus (b) the
----------------- ----
lesser of (x) 6% and (y) the aggregate of each Percentage Add-On in effect on
- ------
such date (if any) as computed below:
If on such date (i) a Level I Trigger Event exists, the Percentage
Add-On related thereto shall be 2%; (ii) a Level II Trigger Event exists,
the Percentage Add-On related thereto shall be 6%; (iii) a Level III
Trigger Event exists, the Percentage Add-On related thereto shall be 2%;
(iv) a Level IV Trigger Event exits, the Percentage Add-On related thereto
shall be 6%; (v) a Level V Trigger Event exists, the Percentage Add-On
related thereto shall be 2%; and (vi) a Level VI Trigger Event exists, the
Percentage Add-On related thereto shall be 6%.
"Structured Lender" shall mean any Person whose principal business consists
-----------------
of issuing commercial paper, medium term notes or other securities to fund its
acquisition and maintenance of receivables, accounts, instruments, chattel
paper, general intangibles and other similar assets or interests therein and
which is required by any nationally recognized rating agency which is rating
such securities to obtain from its principal debtors an agreement such as that
set forth in Section 18.12(a) of this Agreement in order to maintain such
----------------
rating.
"Subsidiary" means, with respect to any Person, a corporation of which such
----------
Person and/or its other Subsidiaries own, directly or indirectly, such number of
outstanding shares as have more than 50% of the ordinary voting power for the
election of directors.
"Supplement" has the meaning ascribed to such term in the Purchase
----------
Agreement.
"Take-Out Securitization" means (a) a financing transaction of any sort
-----------------------
undertaken by the Borrower or any Affiliate of the Borrower secured, directly or
indirectly, by any Transferred Receivables or (b) any other asset
securitization, secured loans or similar transactions involving any Transferred
Receivables or any beneficial interest therein.
"Tangible Net Worth" means, with respect to any Person, the net worth of
------------------
such Person calculated in accordance with GAAP after subtracting therefrom the
aggregate amount of such Person's intangible assets, including, without
limitation, goodwill, franchises, licenses, patents, trademarks, tradenames,
copyrights and service marks.
"Taxes" has the meaning set forth in Section 5.1(b).
----- --------------
"Total Commitment" means the aggregate of the Commitments of all Committed
----------------
<PAGE>
Page 33
Lenders.
"Total Expense Percentage" means, as of any date, the sum of (a) the
------------------------
Servicing Fee Rate plus (b) the Custodial Fee Rate plus (c) the Backup
---- ----
Servicing/Collateral Agent Fee Rate plus (d) the Facility Fee Rate.
----
"Total Receivables Pool" means all Receivables owned by the Borrower.
----------------------
"Transaction Documents" means this Agreement, the Note, the Fee Letter, the
---------------------
Custodian Agreement, the Purchase Agreement, the Lockbox Agreement, the
Intercreditor Agreement, the Security Agreement, the Trust Agreement, each
Interest Rate Hedge, and the other documents to be executed and delivered in
connection with this Agreement.
"Transferred Receivable" means each Receivable which appears on any
----------------------
Schedule of Receivables at any time hereafter submitted to the Borrower pursuant
to the Purchase Agreement, whether purchased by the Borrower or contributed to
the capital of the Borrower. Once a Receivable appears on any such Schedule of
Receivables it shall remain a Transferred Receivable; provided, however, that
-------- -------
any Receivable that is released from the Lien granted to the Collateral Agent
for the benefit of the Secured Parties pursuant to Section 9.5(f) shall not be a
--------------
"Transferred Receivable" after such Receivable is so released.
----------------------
"Transfer Request" has the meaning set forth in Section 9.5(a).
---------------- --------------
"Transition Costs" means any documented expenses and allocated cost of
----------------
personnel reasonably incurred by the Backup Servicer in connection with a
transfer of servicing from the Servicer to the Backup Servicer as the successor
Servicer in an amount not to exceed $100,000.
"Trust Agreement" means the Trust Agreement dated as of the date hereof
---------------
among AFS, AFC and Bankers Trust (Delaware), as Trustee, which, inter alia,
----- ----
establishes the Borrower, including all permitted amendments, modifications and
supplements thereto.
"Trust Trustee" means the Trustee under the Trust Agreement.
-------------
"UCC" means the Uniform Commercial Code as from time to time in effect in
---
the applicable jurisdiction or jurisdictions.
"Unmatured Facility Termination Event" means any event that, if it
------------------------------------
continues uncured, will, with lapse of time or notice or lapse of time and
notice, constitute a Facility Termination Event.
"Usage Fee" has the meaning set forth in the Fee Letter.
---------
<PAGE>
Page 34
"Warranty Receivable" means, with respect to any Collection Period, a
-------------------
Receivable that the Servicer or AFS has become obligated to purchase or
repurchase pursuant to Section 8.7 or under the Purchase Agreement.
-----------
"Wells Fargo" means Wells Fargo Bank (Texas), National Association.
-----------
"written" or "in writing" (and other variations thereof) means any form of
------- ----------
written communication or a communication by means of telex, telecopier device,
telegraph or cable.
"Year 2000 Compliant" means, with regard to any Person, that all software,
-------------------
embedded microchips, and other processing capabilities utilized by, and material
to the business or servicing operations or financial condition of such Person,
are able to interpret and manipulate data involving all calendar dates correctly
and without causing any abnormal ending scenario, including dates in and after
the year 2000.
"Yield" means, with respect to any period, the sum of the following:
-----
(i) without duplication of the amount set forth in the immediately
following clause (ii), the sum of the daily interest accrued on the
commercial paper issued by each Noncommitted Lender to fund or maintain any
Advance outstanding on each day during such period equal, for any such day,
to the product of (x) the outstanding principal amount of such commercial
paper on such day, (y) the applicable Commercial Paper Rate and (z) 1/360,
plus
----
(ii) if any commercial paper has been issued by a Noncommitted Lender
during such period to fund the interest component on any other commercial
paper maturing on a date other than a Settlement Date, the sum of the daily
interest accrued on such additional commercial paper outstanding on each
day during such period equal, for any such day, to the product of (x) the
outstanding principal amount of such additional commercial paper on such
day, (y) the applicable Commercial Paper Rate and (z) 1/360, plus
----
(iii) the sum of the daily interest accrued on Advances funded or
maintained other than through the issuance of commercial paper on each day
during such period equal, for any such day, to the product of (x) the
outstanding principal amount of such Advances on such day, (y) the Bank
Rate and (z) the applicable computation period determined in accordance
with Section 3.5 of this Agreement, minus
----------- -----
(iv) the amount of Yield paid on all Interim Distribution Dates
during such period.
<PAGE>
Page 35
Notwithstanding clauses (i), (ii) and (iii) above, after the date any principal
amount of any Advance is due and payable (whether on the Facility Termination
Date, upon acceleration or otherwise) or after any other monetary obligation of
the Borrower or the Servicer arising under this Agreement shall become due and
payable, the Borrower or the Servicer, as the case may be, shall pay (to the
extent permitted by law, if in respect of any unpaid amounts representing Yield)
Yield (after as well as before judgment) on such amounts, payable on demand, at
a rate per annum equal to the Default Rate.
--- -----
SECTION 1.2 Other Definitional Provisions.
-----------------------------
(a) Unless otherwise specified therein, all terms defined in this
Agreement have the meanings as so defined herein when used in the Note or any
other Transaction Document, certificate, report or other document made or
delivered pursuant hereto.
(b) Each term defined in the singular form in Section 1.1 or elsewhere in
-----------
this Agreement shall mean the plural thereof when the plural form of such term
is used in this Agreement, the Note or any other Transaction Document,
certificate, report or other document made or delivered pursuant hereto, and
each term defined in the plural form in Section 1.1 shall mean the singular
-----------
thereof when the singular form of such term is used herein or therein.
(c) The words "hereof," "herein," "hereunder" and similar terms when used
in this Agreement shall refer to this agreement as a whole and not to any
particular provision of this Agreement, and article, section, subsection,
schedule and exhibit references herein are references to articles, sections,
subsections, schedules and exhibits to this Agreement unless otherwise
specified.
ARTICLE II
THE FACILITY, ADVANCE PROCEDURES AND NOTE
SECTION 2.1 Facility. On the terms and subject to the conditions set forth
--------
in this Agreement, each Noncommitted Lender may, in its sole discretion, make
Advances (to the extent of its Available Purchase Amount) to the Borrower on a
revolving basis from time to time during the period commencing on the Effective
Date and ending on the Facility Termination Date, in each case in such amounts
as may be requested by the Borrower pursuant to Section 2.2. If on any day there
-----------
shall be more than one Noncommitted Lender, any Advance requested by the
Borrower on such day shall be allocated among the Noncommitted Lenders pro rata
--- ----
on the basis of their respective Noncommitted Percentages and each Noncommitted
Lender may, in its sole and absolute discretion, determine whether to make an
Advance in its allocated amount. If a Noncommitted Lender elects not to make a
requested Advance, each of the Committed Lenders with respect to such
Noncommitted Lender shall make Advances (in an
<PAGE>
Page 36
aggregate amount equal to the requested Advance) to the Borrower (to the extent
of the unutilized Commitment of each such Committed Lender and pro rata among
--- ----
such Committed Lenders in accordance with their respective Adjusted Commitment
Percentages) on a revolving basis from time to time during the period commencing
on the Effective Date and ending on the Commitment Termination Date. The lending
arrangement made available to the Borrower pursuant to the preceding sentences
of this Section 2.1 is herein called the "Facility". The aggregate principal
----------- --------
amount of all Advances from time to time outstanding hereunder shall not exceed
the lesser of (a) the Facility Limit and (b) the Borrowing Base. In addition,
under no circumstances shall any Lender make any Advance if after giving effect
thereto the aggregate outstanding principal balance of all Advances owing to
such Lender would exceed (i) if such Lender is a Noncommitted Lender, its
Maximum Purchase Amount or (ii) if such Lender is a Committed Lender, its
applicable Commitment. Within the limits of the Facility, the Borrower may
borrow, prepay and reborrow under this Section 2.1.
-----------
SECTION 2.2 Advance Procedures. The Borrower may request an Advance
------------------
hereunder by giving notice to the Agent and the Collateral Agent of a proposed
Advance not later than 1:00 P.M., New York time, one Business Day prior to the
proposed date of such Advance. Each such notice (herein called an "Advance
-------
Request") shall be in the form of Exhibit A and shall include the date and
- ------- ---------
amount of such proposed Advance, the desired duration of the Fixed Period for
such Advance and the Supplement and Schedule of Receivables setting forth the
information required therein with respect to the Receivables to be acquired by
the Borrower with the proceeds of the proposed Advance. Any Advance Request
given by the Borrower pursuant to this Section 2.2 shall be irrevocable and
-----------
binding on the Borrower.
SECTION 2.3 Funding. Subject to the satisfaction of the conditions
-------
precedent set forth in Article VII with respect to such Advance and the
-----------
limitations set forth in Section 2.1, the Lenders shall make the proceeds of
-----------
such requested Advance available as follows: first, to the extent the amount on
-----
deposit in the Reserve Account is less than the Minimum Reserve Account Amount
(computed after giving effect to the proposed Advance) on the proposed date of
the Advance, an amount equal to such deficiency shall be deposited by the
Lenders in the Reserve Account (by wire to account no. 6800007801 maintained at
the Collateral Agent (ABA # 044000037) for further credit to account no.
980218675); and second, all amounts of the Advance in excess of the required
------
deposit in the Reserve Account shall be made available to the Borrower by
deposit to such account as may be designated by the Borrower in the related
Advance Request in same day funds no later than 3:00 p.m., New York City time,
on the proposed date of the Advance. Each Advance shall be on a Business Day and
shall be in an amount of at least $5,000,000 (or an integral multiple of $1,000
in excess thereof).
SECTION 2.4 Representation and Warranty. Each request for an Advance
---------------------------
pursuant to Section 2.2 shall automatically constitute a representation and
-----------
warranty by the Borrower to the Agent and the Lenders that, on the requested
date of such
<PAGE>
Page 37
Advance, (a) the representations and warranties contained in Article X will be
---------
true and correct as of such date as though made on such date, (b) no Facility
Termination Event or Unmatured Facility Termination Event has occurred and is
continuing or will result from the making of such Advance, and (c) after giving
effect to such requested Advance, the aggregate principal balance of the
outstanding Advances hereunder will not exceed the lesser of the Facility Limit
and the Borrowing Base.
SECTION 2.5 Voluntary Termination of Facility; Reduction and Increase of
------------------------------------------------------------
Facility Limit.
- --------------
(a) At any time the Borrower may, upon at least five Business Days' prior
written notice to the Agent, terminate in whole or reduce the Total Commitment.
Upon any termination in whole of the Total Commitment, the Facility Limit and
the Maximum Purchase Amount of each Noncommitted Lender shall be reduced to
zero. Each partial reduction shall be in an aggregate amount of $5,000,000 or
integral multiples of $1,000,000 in excess thereof. Partial reductions of the
Total Commitment pursuant to this Section 2.5(a) shall be allocated to the
--------------
Commitment of each Committed Lender (thus reducing the Maximum Purchase Amount
of each Noncommitted Lender and the Facility Limit) pro rata based on the
--- ----
Commitment Percentage represented by such Commitment. Any termination or
reduction of the Total Commitment shall require (i) in the event of a partial
reduction and after giving effect to any such partial reduction and any prior
partial reduction, that the remaining Facility Limit be not less than
$50,000,000, and (ii) in connection therewith that the Borrower comply with
Section 3.2(b), Section 4.l(b) and Section 6.3. The Agent shall promptly provide
- -------------- -------------- -----------
copies of any such notice of termination or reduction received by it to each
Lender together with a computation of the amount by which its Commitment (if
any) has been reduced.
(b) The Total Commitment (and Maximum Purchase Amounts and Facility Limit)
may be increased from time to time by (i) the increase of the Commitment of one
or more Committed Lenders (by amendment of its Joinder Supplement), (ii) the
addition of one or more Committed Lenders (by execution and delivery of
appropriate Joinder Supplements) or (iii) the addition of one or more
Noncommitted Lenders concurrently with the addition of one or more Committed
Lenders for such Noncommitted Lenders (by execution and delivery of appropriate
Joinder Supplements); provided, however, that no such increase shall become
-------- -------
effective unless (i) the Agent, AFS, the related Noncommitted Lender (in the
case of actions described in (i) and (ii) affecting its Committed Lenders) and
the Borrower shall have given their written consent thereto, and (ii) such
conditions, if any, as the Agent shall have required in connection with its
consent shall have been satisfied. Notwithstanding the foregoing, at no time may
the Facility Limit exceed $300,000,000.
SECTION 2.6 Note. All Advances shall be evidenced by a Note, with
----
appropriate insertions, payable to the order of the Agent, on behalf of the
Investors. The Borrower hereby irrevocably authorizes the Agent to make (or
cause to be made) appropriate
<PAGE>
Page 38
notations on the grid attached to the Note (or on any continuation of such grid,
or at the Agent's option, in its records), which notations, if made, shall
evidence, inter alia, the date of, the outstanding principal of, and the yield
----- ----
rate(s) and Fixed Period(s) applicable to the Advances evidenced thereby. Such
notations shall be rebuttably presumptive evidence of the subject matter thereof
absent manifest error; provided, however, that the failure to make any such
-------- -------
notations shall not limit or otherwise affect any of the Obligations.
ARTICLE III
YIELD, FEES, ETC.
SECTION 3.1 Yield. The Borrower hereby promises to pay Yield on the unpaid
-----
principal amount of each Advance (or each portion thereof) for the period
commencing on the date of such Advance until such Advance is paid in full. No
provision of this Agreement or the Note shall require the payment or permit the
collection of Yield in excess of the maximum permitted by applicable law.
SECTION 3.2 Yield Payment Dates. Yield accrued on each Advance shall be
-------------------
payable, without duplication:
(a) on the Facility Termination Date;
(b) on the date of any payment or prepayment, in whole or in part, of
principal outstanding on such Advance; and
(c) on each Distribution Date; provided that Yield relating to such
--------
Advance may be payable, at the option of the Agent or the Borrower, on the
related Interim Distribution Date.
SECTION 3.3 Yield Allocations; Selection of Fixed Periods, etc.
--------------------------------------------------
(a) The Agent, from time to time in its sole discretion exercised in good
faith, shall determine after consultation with each Noncommitted Lender whether
Yield in respect of the Advances then outstanding, or any portion thereof, shall
be calculated by reference to such Lender's Commercial Paper Rate (such portion
being herein called a "CP Allocation") or the Bank Rate (such portion being
-------------
herein called a "Bank Rate Allocation", and together with a CP Allocation
--------------------
individually called an "Allocation", and collectively, "Allocations"); provided,
---------- ----------- --------
however, that the Agent may determine, at any time and in its sole discretion
- -------
exercised in good faith, that the Commercial Paper Rate is unavailable or
otherwise not desirable, in which case the Advances will be allocated to a Bank
Rate Allocation (unless the Default Rate is in effect). The Agent shall provide
the Borrower with reasonably prompt notice of the Allocations made by it
pursuant to this Section 3.3(a).
--------------
<PAGE>
Page 39
(b) The Agent, in its sole discretion exercised in good faith after
consultation with each Noncommitted Lender and the Borrower, shall select the
duration of the initial and each subsequent Fixed Period relating to each
Advance, provided that any Fixed Period selected by the Agent applicable to an
Advance owing to a Noncommitted Lender shall have been approved (in writing or
by telephone promptly confirmed in writing) by such Lender. In selecting such
Fixed Period, the Agent shall use reasonable efforts, taking into consideration
market conditions, to accommodate the Borrower's preferences; provided, however,
-------- -------
that the Agent shall have the ultimate authority to make all such selections.
Unless consented to or directed by the Agent, the aggregate number of Fixed
Periods for all Advances outstanding at any one time hereunder shall not exceed
25, it being understood that if necessary to match the funding requirement of a
Noncommitted Lender, any Advance may be divided into portions having different
Fixed Periods.
SECTION 3.4 Fees. The Borrower agrees to pay to the Agent, on behalf of
----
itself, the Lenders and the Liquidity Providers, certain fees in the amounts and
on the dates set forth in the letter agreement among CSFB, AFS and the Borrower
dated as of the date hereof (as the same may be amended, supplemented or
otherwise modified, the "Fee Letter").
----------
SECTION 3.5 Computation of Yield and Fees. All Yield and Fees shall be
-----------------------------
computed on the basis of the actual number of days (including the first day but
excluding the last day) occurring during the period for which such Yield or Fee
is payable over a year comprised of 360 days (or, in the case of Yield on an
Advance bearing Yield at the Alternate Base Rate, 365 days or, if appropriate,
366 days).
ARTICLE IV
REPAYMENTS AND PREPAYMENTS
SECTION 4.1 Repayments and Prepayments. The Borrower shall repay in full
--------------------------
the unpaid principal amount of each Advance on the Facility Termination Date.
Prior thereto, the Borrower:
(a) may, from time to time on any Business Day, make a prepayment, in
whole or in part, of the outstanding principal amount of any Advance;
provided, however, that
-------- -------
(i) all such voluntary prepayments shall require at least
two but no more than five Business Days' prior written notice to the
Agent; and
(ii) all such voluntary partial prepayments shall be in a
minimum amount of $1,000,000 and an integral multiple of $500,000;
<PAGE>
Page 40
(b) shall, on each date when any reduction in the Facility Limit
shall become effective pursuant to Section 2.5, make a prepayment of the
-----------
Advances in an amount equal to the excess, if any, of the aggregate
outstanding principal amount of the Advances over the Facility Limit as so
reduced;
(c) shall, immediately upon any acceleration of the maturity date of
the Advances pursuant to Section 14.2, repay all Advances in full, unless,
------------
pursuant to Section 14.2(a), only a portion of all Advances is so
---------------
accelerated, in which event the Borrower shall repay the accelerated
portion of the Advances;
(d) shall, on the date the Borrower receives any proceeds from any
Take-Out Securitization (after deducting all costs and expenses of such
Take-Out Securitization), make a prepayment of the Advances in an amount
substantially equal to such net proceeds or, if less, the total outstanding
amount of Advances; and
(e) shall prepay the Advances in full (in the manner set forth in
Section 4.1(a)) in order to comply with the Clean-Up Requirement during
---------------
each Clean-Up Period.
Each such prepayment or payment shall be subject to the payment of any
amounts required by Section 6.3 resulting from a prepayment or payment of an
-----------
Advance prior to the end of the Fixed Period with respect thereto.
ARTICLE V
PAYMENTS; TAXES
SECTION 5.1 Making of Payments; Taxes.
-------------------------
(a) Subject to, and in accordance with, the provisions of the Security
Agreement, all payments of principal of, or Yield on, the Advances and of all
Fees and other amounts shall be made by the Borrower no later than 2:00 p.m.,
New York time, on the day when due in lawful money of the United States of
America in immediately available funds to the Agent, at its account (account
number - 8900387025; and account name - CSFBNY - Loan Clearing) maintained at
the office of Bank of New York, New York, New York (ABA # 021-000-018),
reference: AmeriCredit 1999 Warehouse, with telephone notice (including wire
number) to the Asset Finance Department of the Agent (telephone number 212-325-
----- ------- ----------
9075), or such other account as the Agent shall designate in writing to the
Borrower and the Collateral Agent (the "Agent's Account"). Payments received by
---------------
the Agent after 2:00 p.m., New York time, on any day will be deemed to have been
received by the Agent on its next following Business Day. The Agent shall, upon
receipt of such payments, promptly remit such
<PAGE>
Page 41
payments (in the same type of funds received by the Agent) to each
Lender which has an interest in such payments hereunder and pro rata
--- ----
among the Lenders with such interests on the basis of the respective
amounts owing to such Lenders of the Obligations to which such
payments relate.All payments described in Section 5.1(a) and all other
--------------
payments made by or on behalf of the Borrower, a Seller, AFS or the
Servicer to the Agent for the benefit of itself or the Lenders or to
any other Affected Person under this Agreement and any other
Transaction Document shall be made free and clear of, and without
deduction or withholding for or on account of, any present or future
income, stamp or other taxes, levies, imposts, duties, charges, fees,
deductions or withholdings, now or hereafter imposed, levied,
collected, withheld or assessed by any Official Body (excluding (i)
---------
taxes imposed on the net income of the Agent or such other Affected
Person, however denominated, and (ii) franchise taxes imposed on the
net income of the Agent or such other Affected Person in each case
imposed: (1) by the United States or any political subdivision or
taxing authority thereof or therein; (2) by any jurisdiction under the
laws of which the Agent or such Affected Person or its applicable
lending office is organized or located, managed or controlled or in
which its principal office is located or any political subdivision or
taxing authority thereof or therein; or (3) by reason of any
connection between the jurisdiction imposing such tax and the Agent,
such Affected Person or such lending office other than a connection
arising solely from this Agreement or any other Transaction Document
or any transaction hereunder or thereunder) (all such non-excluded
taxes, levies, imposts, duties, charges, fees, deductions or
withholdings, collectively or individually, "Taxes"). If any such
-----
Taxes are required to be withheld from any amounts payable to the
Agent or any other Affected Person hereunder or under any other
Transaction Document, the amounts so payable to the Agent or such
Affected Person shall be increased to the extent necessary to yield to
the Agent or such Affected Person (after payment of all Taxes) all
amounts payable hereunder or thereunder at the rates or in the amounts
specified in this Agreement and the other Transaction Documents. The
Borrower (or the party required to "gross-up" the applicable payment)
shall indemnify the Agent or any such Affected Person for the full
amount of any such Taxes on the Settlement Date occurring after the
date of written demand therefor by the Agent; provided that no Person
--------
shall be indemnified pursuant to this Section 5.1(b) to the extent the
--------------
reason for such indemnification relates to, or arises from, the
failure by such Person to comply with the provisions of Section
-------
5.1(c).
-----
(c) Each Affected Person that is not incorporated under the laws
of the United States of America or a state thereof or the District of
Columbia shall:
(i) prior to becoming a party to, or acquiring an
interest in, any Transaction Document, deliver to the
Borrower and the Agent (A) two duly completed copies of IRS
Form 1001 or Form 4224, or successor applicable form, as the
case may be, and (B) an IRS Form W-8 or W-9, or successor
applicable form, as the case may be;and
<PAGE>
Page 42
(ii) deliver to the Borrower and the Agent two (2)
further copies of any such form or certification on or before
the date that any such form or certification expires or
becomes obsolete and after the occurrence of any event
requiring a change in the most recent form previously
delivered by it to the Borrower and the Agent;
unless, in any such case, an event (including, without limitation, any change in
- ------
treaty, law or regulation) has occurred after the Closing Date and prior to the
date on which any such delivery would otherwise be required which renders all
such forms inapplicable or which would prevent such Affected Person from duly
completing and delivering any such form with respect to it, and such Affected
Person so advises the Borrower and the Agent. Each such Affected Person so
organized shall certify (i) in the case of an IRS Form 1001 or IRS Form 4224,
that it is entitled to receive payments under the this Agreement and the other
Transaction Documents without deduction or withholding of any United States
federal income taxes and (ii) in the case of an IRS Form W-8 or IRS Form W-9,
that it is entitled to an exemption from United States backup withholding tax.
Each Person that desires to become an additional party to a Noncommitted Lender
Liquidity Arrangement, shall prior to the effectiveness of such addition, be
required to provide all of the forms and statements required pursuant to this
Section 5.1(c).
- --------------
SECTION 5.2 Application of Certain Payments. Each payment of principal of
-------------------------------
the Advances shall be applied to such Advances as the Borrower shall direct or,
in the absence of such notice or during the existence of a Facility Termination
Event or after the Facility Termination Date, as the Agent shall determine, in
its discretion.
SECTION 5.3 Due Date Extension. If any payment of principal or Yield with
------------------
respect to any Advance falls due on a day which is not a Business Day, then such
due date shall be extended to the next following Business Day, and additional
Yield shall accrue and be payable for the period of such extension at the rate
applicable to such Advance.
ARTICLE VI
INCREASED COSTS, ETC.
SECTION 6.1. Increased Costs.
---------------
(a) If due to the introduction of or any change in or in the
interpretation of any law or regulation occurring or issued after the date
hereof, the Agent, any Lender or other Investor, any Liquidity Provider, or any
of their respective Affiliates (each an "Affected Person") determines that
---------------
compliance with any law or regulation or any guideline or request from any
central bank or other Official Body (whether or not having
<PAGE>
Page 43
the force of law) affects or would affect the amount of capital required or
expected to be maintained by such Affected Person and such Affected Person
determines that the amount of such capital is increased by or based upon the
existence of its obligations or commitments hereunder or with respect hereto or
to the funding thereof and other obligations or commitments of the same type,
then, upon demand by such Affected Person (with a copy to the Agent) (which
- ----
demand shall be accompanied by a statement setting forth the basis for the
calculations of the amount being claimed), the Borrower shall immediately pay to
the Agent, for the account of such Affected Person (as a third-party
beneficiary), from time to time as specified by such Affected Person, additional
amounts sufficient to compensate such Affected Person in the light of such
circumstances, to the extent that such Affected Person reasonably determines
such increase in capital to be allocable to the existence of any of such
obligations, commitments or fundings. Such written statement shall, in the
absence of manifest error, be rebuttably presumptive evidence of the subject
matter thereof. Any Affected Person claiming any additional amounts payable
pursuant to this Section 6.1(a) agrees to use reasonable efforts (consistent
-------------
with legal and regulatory restrictions) to designate a different office or
branch of such Affected Person as its lending office if the making of such a
designation would avoid the need for, or reduce the amount of, any such
additional amounts and would not, in the reasonable judgment of such Affected
Person, be otherwise disadvantageous to such Affected Person.
(b) If, due to either (i) the introduction of or any change (other than
any change by way of imposition or increase of reserve requirements referred to
in Section 6.2) in or in the interpretation of any law or regulation or (ii)
-----------
compliance with any guideline or request from any central bank or other Official
Body (whether or not having the force of law) issued after the date hereof,
there shall be any increase in the cost to a Lender of agreeing to make Advances
in respect of which Yield is computed by reference to the Eurodollar Rate, then,
----
upon demand by such Lender (with a copy to the Agent) (which demand shall be
accompanied by a statement setting forth the basis for the amount being
claimed), the Borrower shall immediately pay to the Agent, for the account of
such Lender (as a third-party beneficiary), from time to time as specified by
such Lender, additional amounts sufficient to compensate such Lender for such
increased costs. Such written statement shall, in the absence of manifest error,
be rebuttably presumptive evidence of the subject matter thereof. Any Affected
Person claiming any additional amounts payable pursuant to this Section 6.1(b)
-------------
agrees to use reasonable efforts (consistent with legal and regulatory
restrictions) to designate a different office or branch of such Affected Person
as its lending office if the making of such a designation would avoid the need
for, or reduce the amount of, any such additional amounts and would not, in the
reasonable judgment of such Affected Person, be otherwise disadvantageous to
such Affected Person.
SECTION 6.2 Additional Yield on Advances Bearing a Eurodollar Rate. The
------------------------------------------------------
Borrower shall pay to any Lender, so long as such Lender shall be required under
regulations of the Board of Governors of the Federal Reserve System to maintain
<PAGE>
Page 44
reserves with respect to liabilities or assets consisting of or
including Eurocurrency liabilities, additional Yield on the unpaid
Advances of such Lender during each Fixed Period in respect of which
Yield is computed by reference to the Eurodollar Rate, for such Fixed
Period, at a rate per annum equal at all times during such Fixed
Period to the remainder obtained by subtracting (i) the Eurodollar
Rate for such Fixed Period from (ii) the rate obtained by dividing
such Eurodollar Rate referred to in clause (i) above by that
percentage equal to 100% minus the Eurodollar Rate Reserve Percentage
-----
of such Lender for such Fixed Period, payable on each date on which
Yield is payable on such Advances. Such additional Yield shall be
determined by such Lender and notice thereof (accompanied by a
statement setting forth the basis for the amount being claimed) given
to the Borrower through the Agent within 30 days after any Yield
payment is made with respect to which such additional Yield is
requested. Such written statement shall, in the absence of manifest
error, be rebuttably presumptive evidence of the subject matter
thereof. Any Affected Person claiming any additional amounts payable
pursuant to this Section 6.2 agrees to use reasonable efforts
-----------
(consistent with legal and regulatory restrictions) to designate a
different office or branch of such Affected Person as its lending
office if the making of such a designation would avoid the need for,
or reduce the amount of, any such additional amounts and would not, in
the reasonable judgment of such Affected Person, be otherwise
disadvantageous to such Affected Person.
SECTION 6.3 Funding Losses. The Borrower hereby agrees that upon demand by
--------------
any Affected Person (which demand shall be accompanied by a statement setting
forth the basis for the calculations of the amount being claimed) the Borrower
will indemnify such Affected Person against any net loss or expense which such
Affected Person may sustain or incur (including, without limitation, any net
loss or expense incurred by reason of or resulting from interest to accrue on
the related commercial paper after the date of any failed borrowing, payment or
prepayment of an Advance or from the liquidation or reemployment of deposits or
other funds acquired by such Affected Person to fund or maintain any Advance to
the Borrower), as reasonably determined by such Affected Person, as a result of
any failure to borrow an Advance on the date specified therefor in an Advance
Request (other than due to a default by a Lender) or as a result of any payment
or prepayment (including any mandatory prepayment) of any Advance on a date
other than the last day of the Fixed Period for such Advance. Such written
statement shall, in the absence of manifest error, be rebuttably presumptive
evidence of the subject matter thereof.
SECTION 6.4 Replacement of Affected Person. Upon the receipt by the
Borrower of a claim for reimbursement or compensation under Section 6.1 or 6.2
------------------
hereof by an Affected Person, if payment thereof shall not be waived by such
Affected Person, the Borrower may (a) request such Affected Person or the Lender
that has assigned an interest in its Advances to such Affected Person to use
reasonable efforts to assist the Borrower in its attempt to obtain a replacement
bank, financial institution or Structured Lender, as applicable, satisfactory to
the Borrower (in the case of a replacement
<PAGE>
Page 45
Lender) and the Agent (which consent shall not be unreasonably withheld), to
acquire and assume all or a ratable part of such Affected Person's commitment to
make Advances, Advances, or interests therein (a "Replacement Person"), or (b)
------------------
request one or more of the other Lenders or Investors to acquire and assume all
or a part of such Affected Person's commitment to make Advances, Advances or
interests therein. Upon notice from the Borrower, such Affected Person shall, or
the Lender that has assigned an interest in its Advances to such Affected Person
shall cause such Affected Person to, assign, without recourse, its commitment to
make Advances, Advances or interests therein and its other rights and
obligations (if any) hereunder, or a ratable share thereof, to the Replacement
Person or Replacement Persons designated by the Borrower and consented to by the
Agent for a purchase price equal to the sum of the principal amount of the
Advances or interests therein so assigned, all accrued and unpaid Yield thereon
and any other amounts (including Fees and any amounts owing under this Article
-------
VI) to which such Affected Person is entitled hereunder; provided, that the
- -- --------
Borrower shall provide such Affected Person with an Officer's Certificate
stating that such Replacement Person has advised the Borrower that it is not
subject to, or has agreed not to seek, such increased amount.
ARTICLE VII
EFFECTIVENESS; CONDITIONS TO ADVANCES
SECTION 7.1 Effectiveness. This Agreement shall become effective on the
-------------
first day (the "Effective Date") on which the Agent, on behalf of the Lenders,
--------------
shall have received the following, each in form and substance satisfactory to
the Agent, provided that the Effective Date may not occur later than April 1,
--------
1999 without the prior written consent of the Agent and the Lenders:
(a) Agreement. This Agreement and Joinder Supplements (resulting in a
---------
Facility Limit of not less than $150,000,000), executed by each party thereto;
(b) Fee Letter. The Fee Letter, duly executed and delivered by the parties
----------
thereto, and evidence that all amounts required to be paid on the Effective Date
thereunder shall have been paid;
(c) Accounts. Evidence that the Reserve Account, the Collateral Account
--------
and the Collection Account have been established and the Borrower shall have
caused to be deposited in the Reserve Account an amount equal to the Minimum
Reserve Account Amount;
(d) Transaction Documents. Executed counterparts of each of the other
---------------------
Transaction Documents (other than the Note or any Interest Rate Hedge), and the
Backup Servicer/Collateral Agent Fee Letter, duly executed by each of the
parties thereto; and
<PAGE>
Page 46
(e) Other. Such other approvals, documents, opinions, certificates and
-----
reports as the Agent may reasonably request.
SECTION 7.2 Initial Advance. The making of the initial Advance is subject
---------------
to the condition that the Effective Date shall have occurred, the conditions set
forth in Section 7.3 have been satisfied, and the Agent on behalf of the Lenders
-----------
shall have received the following, each in form and substance satisfactory to
the Agent:
(a) Note. The Note duly completed and executed by the Borrower;
----
(b) Resolutions. A copy of the resolutions of the Board of Directors (or
-----------
similar items) of each of AFC, ACC and AFS (on behalf of itself and the
Borrower) approving the Transaction Documents to be delivered by it or the
Borrower hereunder and the transactions contemplated hereby, certified by its
Secretary or Assistant Secretary;
(c) Charters. The Certificate or Articles of Incorporation of each of the
--------
Trust Trustee, AFC, ACC and AFS certified by the Secretary of State of its
jurisdiction of organization; and a certified copy of the Trust Trustee's,
AFC's, ACC's and AFS's by-laws;
(d) Good Standing Certificates. Good Standing Certificates for the Trust
--------------------------
Trustee, and for each of AFC, ACC and AFS issued by the applicable Official Body
of its jurisdiction of organization;
(e) Incumbency. A certificate of the Secretary or Assistant Secretary of
----------
each of the Trust Trustee (on behalf of the Borrower), AFC, ACC and AFS
certifying the names and true signatures of the officers authorized on its
behalf to sign this Agreement and the other Transaction Documents to be
delivered by it (on which certificate the Agent and the Lenders may conclusively
rely until such time as the Agent shall receive a revised certificate meeting
the requirements of this subsection (e));
---------------
(f) Filings. Acknowledgment copies of proper UCC-1 Financing Statements
-------
(executed by each Seller and/or Borrower, as applicable), as may be necessary
or, in the opinion of the Agent, desirable under the UCC of all appropriate
jurisdictions or any comparable law to perfect the security interest of the
Collateral Agent on behalf of the Secured Parties in all Borrower Collateral in
which an interest may be pledged hereunder;
(g) Searches. Certified copies of Requests for Information or Copies (Form
--------
UCC-11) (or a similar search report certified by a party acceptable to the
Agent), dated a date reasonably near to the date of the initial Advance, listing
all effective financing statements which name the Borrower, AFS or a Seller
(under their respective present names and any previous names) as debtor and
which are filed in the jurisdictions in
<PAGE>
Page 47
which filings were made pursuant to Section 7.2(f), together with copies of such
--------------
financing statements;
(h) Opinions. Legal opinion(s) of the General Counsel of AFC, ACC and AFS,
--------
of Dewey Ballantine, Jenkins & Gilchrist, and Hinchy, Witte, Wood, Anderson &
Hodges, each special counsel for the Borrower and AFS, Richards, Layton &
Fingers, special Delaware counsel for the Borrower and the Trust Trustee and of
Purcell & Scott, Co., L.P.A., counsel for the Backup Servicer and Collateral
Agent, each in form and substance satisfactory to the Agent covering such
matters as the Agent may reasonably request;
(i) Procedures Letter. An "agreed upon procedures" letter (requiring,
-----------------
inter alia, the review of not less than 100 Receivables included in the Total
- ----- ----
Receivables Pool) approved and accepted by the Independent Accountants, AFS and
the Agent relating to the reviews described in Section 8.12(b); and
---------------
(j) Other. Such other approvals, documents, opinions, certificates and
-----
reports as the Agent may reasonably request.
SECTION 7.3 All Advances. The making of each Advance (including the
------------
initial Advance) is subject to the condition that the Effective Date shall have
occurred, the conditions set forth in Section 7.2 shall have been satisfied, and
-----------
to the following further conditions precedent that:
(a) No Facility Termination Event, etc. Each of the Transaction Documents
shall be in full force and effect and (i) no Facility Termination Event or
Unmatured Facility Termination Event has occurred and is continuing or will
result from the making of such Advance, (ii) the representations and warranties
of the Borrower contained in Article X and the Servicer and the Sellers
---------
contained in Section 8.6(b) are true and correct as of the date of such
--------------
requested Advance, with the same effect as though made on the date of (and after
giving effect to) such Advance, and (iii) after giving effect to such Advance,
the aggregate outstanding principal balance of the Advances hereunder will not
exceed the lesser of the Facility Limit and the Borrowing Base;
(b) Advance Request, etc. The Agent shall have received the Advance
---------------
Request for such Advance in accordance with Section 2.2, together with all items
-----------
required to be delivered in connection therewith;
(c) Facility Termination Date. The Facility Termination Date shall not
-------------------------
have occurred;
(d) Minimum Advance Amount. The amount of such Advance is not less than
----------------------
$5,000,000;
<PAGE>
Page 48
(e) Collateral Receipt. The Agent shall have received a duly completed and
------------------
executed Collateral Receipt in respect of each Receivable identified in related
Schedule of Receivables submitted with the Advance Request for such Advance;
(f) Portfolio Review. The Agent shall have received the results
----------------
of the most recent review required to be made by the Independent Accountants
pursuant to Section 8.12(b), which review shall contain no exceptions
---------------
unacceptable to the Agent in its reasonable discretion;
(g) Borrowing Base Confirmation. The Agent shall have received a duly
---------------------------
completed and executed certificate regarding the Borrowing Base in the form
attached hereto as Exhibit D (a "Borrowing Base Confirmation"), computed as of
--------- ---------------------------
the date of such Advance and after giving effect thereto and to the purchase by
the Borrower of any Receivables to be purchased by it under the Purchase
Agreement on such date;
(h) Interest Rate Hedges. The Agent shall have received evidence, in form
--------------------
and substance satisfactory to the Agent, that the Borrower has entered into
Interest Rate Hedges to the extent required by, and satisfying the requirements
of, Section 11.6 (together with an Interest Rate Hedge Assignment Acknowledgment
------------
duly executed by the counterparty thereto and concurrently delivered to the
Agent);
(i) Reserve Account. After giving effect to such Advance and the
---------------
application of the proceeds thereof in accordance with Section 2.3, the amount
-----------
on deposit in the Reserve Account is not less than the Minimum Reserve Account
Amount;
(j) Releases. Each of the Agent and the Borrower shall have received, duly
--------
executed and delivered by Wells Fargo, a lien release substantially in the form
specified in Section 1(b) of the Intercreditor Agreement with respect to the
Receivables to be acquired by the Borrower with the proceeds of such Advance;
and
(k) Other. The Agent shall have received such other approvals, documents,
-----
opinions, certificates and reports as it may reasonably request.
ARTICLE VIII
ADMINISTRATION AND SERVICING OF RECEIVABLES
SECTION 81. Duties of the Servicer. (a) The Servicer is hereby authorized
----------------------
to act for the Borrower and in such capacity shall manage, service, administer
and make collections on the Transferred Receivables, and perform the other
actions required by the Servicer under this Agreement for the benefit of the
Investors and other Secured Parties. The Servicer agrees that its servicing of
the Transferred Receivables shall be carried out in accordance with customary
and usual procedures of institutions which service motor vehicle retail
installment sales contracts and, to the extent more exacting,
<PAGE>
Page 49
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 accordance with AFS's Servicing Procedures and Credit Manual
as in effect from time to time for servicing all its other comparable motor
vehicle receivables. The Servicer's duties shall include, without limitation,
collection and posting of all payments, responding to inquiries of Obligors on
the Transferred Receivables, investigating delinquencies, sending payment
statements or payment books to Obligors, reporting any required tax information
to Obligors, policing the collateral, complying with the terms of the Lockbox
Agreement, accounting for collections and furnishing monthly and annual
statements to the Agent and the Collateral Agent 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
Transferred 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
Transferred Receivables, the related Financed Vehicles or the related Obligors.
(b) To the extent consistent with the standards, policies and procedures
otherwise required hereby, the Servicer shall follow its customary standards,
policies, and procedures with respect to the Transferred Receivables 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 Borrower to
execute and deliver, on behalf of the Borrower, 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 Transferred Receivables
and with respect to the related Financed Vehicles. The Servicer is authorized to
release Liens on Financed Vehicles in order to collect insurance proceeds with
respect thereto and to liquidate such Financed Vehicles in accordance with its
customary standards, policies and procedures; 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 Transferred Receivable or waive the right to collect
the unpaid balance of any Transferred Receivable from the Obligor, except that
the Servicer may forego collection efforts if the amount subject to collection
is de minimis and if it would forego collection in accordance with its customary
procedures. The Servicer is hereby authorized to commence, in its own name or
in the name of the Borrower, the Collateral Agent or the Lenders (provided that
--------
if the Servicer is acting in the name of the Collateral Agent or the Lenders,
the Servicer shall have obtained the Collateral Agent's and the Agent's consent,
as the case may be, which consent shall not be unreasonably withheld), a legal
proceeding to enforce a Transferred Receivable pursuant to Section 8.3 or to
-----------
commence or participate in any other legal proceeding (including, without
limitation, a
<PAGE>
Page 50
bankruptcy proceeding) relating to or involving a Transferred Receivable, an
Obligor or a Financed Vehicle. If the Servicer commences or participates in such
a legal proceeding in its own name, the Borrower or the Collateral Agent (on
behalf of the Secured Parties), as the case may be, shall thereupon be deemed to
have automatically assigned such Transferred 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 Borrower or the
Collateral Agent (on behalf of the Secured Parties), as the case may be, 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 Borrower and the Collateral Agent (on
behalf of the Secured Parties), as the case may be, shall furnish the Servicer
with any powers of attorney and other documents which the Servicer may
reasonably request in writing 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.
(c) The Servicer agrees to perform all duties and obligations of the
Borrower under the Transaction Documents, including, without limitation, the
obligations of the Borrower under this Agreement.
SECTION 8.2. Collection of Receivable Payments; Modification and Amendment
-------------------------------------------------------------
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 Transferred
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 Transferred Receivables, the Dealer Agreements, the Dealer Assignments
and the Insurance Policies in such manner as will, in the reasonable judgment of
the Servicer, maximize the amount to be received by the Borrower and the Secured
Parties 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 Transferred Receivable.
(b) The Servicer may at any time agree to a modification or amendment of a
Transferred Receivable in order to (i) change the Obligor's regular due date to
another date within the Collection Period in which such due date occurs, (ii)
re-amortize the amount of the scheduled payments on the Transferred Receivable
following a partial prepayment of principal or (iii) convert a Pre-Computed
Receivable to a Simple Interest Receivable.
<PAGE>
Page 51
(c) The Servicer may grant payment extensions on, or other modifications
or amendments to, a Transferred Receivable (including those modifications
permitted by Section 8.2(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 Transferred Receivable, will maximize
the amount to be received by the Borrower and the Secured Parties with respect
to such Transferred Receivable, and is otherwise in the best interests of the
Borrower and the Secured Parties; provided, however, that:
-------- -------
(i) in no event may a Transferred Receivable be extended more
than twice during any twelve month period or more than six times
during the full term of such Transferred Receivable;
(ii) the aggregate period of all extensions on a Receivable
shall not exceed six months and any such extension shall not extend
beyond 78 months after the Facility Termination Date; and
(iii) the Servicer shall not amend or modify a Transferred
Receivable (except as provided in Section 8.2(b) and clause (i) and
--------------
(ii) of this Section 8.2(c)) without the written consent of the Agent.
--------------
provided, that any such amendment, modification or extension shall be delivered
- -------- ----
by the Servicer to the Custodian promptly after execution thereof.
(a) The Servicer shall use its best efforts to cause Obligors to make all
payments on the Transferred 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 Collateral Agent (on behalf of the Secured Parties)
pursuant to a Lockbox Agreement. Amounts received by a Lockbox Bank in respect
of the Transferred Receivables may initially be deposited into an account (the
"Lockbox Account") maintained by the Lockbox Bank as agent for the Collateral
---------------
Agent (on behalf of the Secured Parties) and for other owners of automobile
receivables serviced by the Servicer. The Servicer shall use its best efforts to
cause the Lockbox Bank, pursuant to the Lockbox Agreement, to deposit all
payments on the Transferred Receivables in the Lockbox Account no later than the
Business Day after receipt and shall transfer all amounts credited to the
Lockbox Account on account of such payments to the Collection Account, no later
than the second Business Day after receipt of such payments. The Lockbox Account
shall be a demand deposit account held by the Lockbox Bank, or at the request of
the Agent, an Eligible Account satisfying clause (i) of the definition thereof.
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 Agent, the Collateral Agent and the Investors for servicing
and
<PAGE>
Page 52
administering the Transferred Receivables in accordance with the provisions
of this Agreement without diminution of such obligation or liability by virtue
thereof.
In the event the Servicer shall for any reason no longer be acting as
such, the Backup Servicer or successor Servicer shall thereupon assume all of
the rights and, from the date of assumption, all of the obligations of the
outgoing Servicer under the Lockbox Agreement, if applicable. The Backup
Servicer or any other successor Servicer shall not be liable for any acts,
omissions or obligations of the Servicer prior to such succession. In such
event, the successor Servicer shall be deemed to have assumed all of the
outgoing Servicer's interest therein and to have replaced the outgoing Servicer
as a party to each such Lockbox Agreement to the same extent as if such Lockbox
Agreement had been assigned to the successor Servicer, except that the outgoing
Servicer shall not thereby be relieved of any liability or obligations on the
part of the outgoing Servicer to the Lockbox Bank under such Lockbox Agreement.
The outgoing Servicer shall, upon request of the Agent, but at the expense of
the outgoing Servicer, deliver to the successor Servicer all documents and
records relating to each such 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 Agent elects to change the identity of the
Lockbox Bank, the Servicer, at its expense, shall cause the Lockbox Bank to
deliver, at the direction of the Agent, to the Collateral Agent or a successor
Lockbox Bank all documents and records relating to the Transferred 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 Account
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 Lockbox Account as soon as practicable,
but in no event later than the Business Day after receipt thereof.
SECTION 8.3 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 Transferred 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 Transferred Receivable but in no event later
than the date on which all or any portion of a Scheduled Payment has become 91
or more days delinquent; provided, however, that the Servicer may elect not to
repossess a Financed Vehicle within such time period if in its good faith
judgment it determines that the proceeds ultimately recoverable with respect to
such Receivable would be increased by
<PAGE>
Page 53
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 8.1, which practices and procedures may include
-----------
reasonable efforts to realize upon any recourse to Dealers, selling 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
Transferred 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 Transferred Receivable by an amount greater than the amount of such
expenses. All Recoveries shall be remitted directly by the Servicer to the
Lockbox 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, 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 may be retained by the Servicer (and shall not be
required to be deposited in the Lockbox Account) to the extent of such expenses.
The Servicer shall pay on behalf of the Borrower any personal property taxes
assessed on repossessed Financed Vehicles; and the Servicer shall be entitled to
reimbursement of any such tax from Recoveries with respect to the related
Transferred 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 Borrower and the Collateral Agent (on
behalf of the Secured Parties) 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 Borrower, at the Servicer'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. All amounts recovered shall be
remitted directly by the Servicer to the Lockbox Account as soon as practicable,
but in no event later than the Business Day after receipt thereof.
SECTION 8.4 Insurance.
---------
(a) The Servicer shall monitor the status of the Insurance Policies in
accordance with its customary servicing procedures. 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 (n) of the definition of "Eligible
----------
Receivable" (including during the repossession of such Financed Vehicle) the
Servicer shall enforce the rights of the holder of the
<PAGE>
Receivable thereunder to require that the Obligor obtains such physical loss and
damage insurance.
(b) The initial Servicer may, in its reasonable discretion, if an Obligor
fails to obtain or maintain a physical loss and damage Insurance Policy, obtain
insurance with respect to the related Financed Vehicle and advance on behalf of
such Obligor, as required under the terms of the Insurance Policy, the premiums
for such insurance (such insurance being referred to herein as "Force-Placed
------------
Insurance"). All policies of Force-Placed Insurance shall be endorsed with
- ---------
clauses providing for loss payable to the Collateral Agent. Any cost incurred by
the Servicer in maintaining such Force-Placed Insurance shall only be
recoverable out of premiums paid by the Obligors or Recoveries with respect to
the Transferred Receivable, as provided in paragraph (c) of this Section 8.4.
-----------
(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 in respect of the Obligations. The Servicer shall retain and
separately administer the right to receive payments from Obligors with respect
to Insurance Add-On Amounts or rebates of Force-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. Recoveries 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 Borrower for the
Purchase Amount on any subsequent Distribution 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 by the Borrower 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 Borrower and the
Collateral Agent (on behalf of the Secured Parties). If the Servicer elects to
commence a legal proceeding to enforce an Insurance Policy, the act of
commencement shall be deemed to be an
<PAGE>
Page 55
automatic assignment of the rights of the Borrower and the Collateral Agent (on
behalf of the Secured Parties) under such Insurance Policy to the Servicer for
purposes of collection only. If, however, in any enforcement suit or legal
proceeding it is held that the Servicer may not enforce an Insurance Policy on
the grounds that it is not a real party in interest or a holder entitled to
enforce the Insurance Policy, the Borrower shall take such steps as the
Servicer deems necessary to enforce such Insurance Policy, including bringing
suit in its name.
(e) The Servicer may, in its reasonable discretion, maintain Collateral
Insurance. If the Servicer elects not to maintain Collateral Insurance it will
be obligated to indemnify the Borrower, and the Secured Parties against any
losses arising from an Obligor's failure to maintain physical loss and damage
insurance with respect to the related Financed Vehicle.
SECTION 8.5 Maintenance of Security Interests in Financed Vehicles.
------------------------------------------------------
(a) Consistent with its obligations under this Agreement, the Security
Agreement and the Custodian Agreement, the Servicer shall take such steps as are
necessary to maintain perfection of the security interest created by each
Transferred Receivable in the related Financed Vehicle on behalf of the Borrower
and the Collateral Agent for the benefit of the Secured Parties, 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 Transferred
Receivables. The Borrower and the Collateral Agent (on behalf of the Secured
Parties) each 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 Borrower and the Collateral Agent (on behalf of the Secured Parties) as
necessary because of the relocation of a Financed Vehicle or for any other
reason. In the event that the assignment of a Transferred Receivable to the
Borrower and the pledge thereof to the Collateral Agent (on behalf of the
Secured Parties), and the filing of UCC financing statements all as provided
herein, 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 Borrower and the pledge thereof to the Collateral Agent (on behalf of the
Secured Parties), the parties hereto agree that AFS's or ACC's (as applicable)
designation as the secured party on the certificate of title is, with respect to
each secured party, as applicable, in its capacity as agent of the Borrower and
the Secured Parties.
(b) Upon the occurrence and during the continuance of a Facility
Termination Event, the Agent may instruct the Borrower and the Servicer to take
or cause to be taken such reasonable action as may, in the opinion of counsel to
the Agent, be necessary or desirable to perfect or re-perfect the security
interests in the Financed
<PAGE>
Page 56
Vehicles securing the Transferred Receivables in the name of the Borrower and
the Collateral Agent (on behalf of the Secured Parties) (as lienholder) by
amending the title documents of such Financed Vehicles or by such other
reasonable means as may, in the opinion of counsel to the Agent, be necessary or
prudent. AFS hereby agrees to pay all expenses related to such perfection or re-
perfection and to take all action necessary therefor. In addition, prior to the
occurrence of a Facility Termination Event, the Agent may instruct the Borrower
and the Servicer to take or cause to be taken such reasonable action (at the
expense of the Lenders) as may, in the opinion of counsel to the Agent, be
necessary to perfect or re-perfect the security interest in the Financed
Vehicles underlying the Transferred Receivables in the name of the Borrower and
the Collateral Agent (on behalf of the Secured Parties), 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 Agent, be necessary or prudent.
SECTION 8.6 Covenants, Representations and Warranties of Servicer and
---------------------------------------------------------
Sellers.
- -------
(a) The Servicer covenants to the Borrower, the Agent and the
Investors as follows:
(i) Liens in Force. The Financed Vehicle securing each
--------------
Transferred Receivable shall not be released in whole or in part
from the security interest granted by such Receivable, except
upon payment in full of such Receivable or as otherwise
contemplated herein;
(ii) No Impairment. The Servicer shall do nothing to
-------------
impair the rights of the Borrower or the Secured Parties in the
Transferred Receivables, the Dealer Agreements, the Dealer
Assignments or the Insurance Policies;
(iii) No Amendments. The Servicer shall not extend or
-------------
otherwise amend the terms of any Transferred Receivable, except
in accordance with Section 8.2;
-----------
(iv) Restriction on Liens. The Servicer shall not: (i)
--------------------
create or incur or agree to create or incur, or consent to cause
(upon the happening of a contingency or otherwise) the creation,
incurrence or existence of any Lien or restriction on
transferability of the Receivables or of any Other Conveyed
Property except for the Lien in favor of the Collateral Agent for
the benefit of Secured Parties, and the restrictions on
transferability imposed by this Agreement or (ii) sign or file
under the UCC of any jurisdiction any financing statement or sign
any security agreement authorizing any secured party thereunder
to file such financing statement, with respect to the Receivables
or to any Other Conveyed Property,
<PAGE>
Page 57
except in each case any such instrument solely securing the
rights and preserving the Lien of the Collateral Agent, for the
benefit of Secured Parties. The Servicer will take no action to
cause any Receivable to be evidenced by an instrument (as such
term is defined in the relevant UCC);
(v) Servicing of Receivables. The Servicer shall service
------------------------
the ransferred Receivables as required by the terms of this
Agreement and in material compliance with the current Servicing
Procedures and Credit Manual for servicing all its other
comparable motor vehicle receivables and the Servicer shall not
change the Servicing Procedures and Credit Manual or the manner
in which it services the Receivables in any way that can have a
material adverse effect on the Transferred Receivables or the
Investors;
(vi) Compliance with Laws. The Servicer shall comply in
--------------------
all material respects with the laws of each state in which a
Transferred Receivable is located, including, without limitation,
all federal and state laws regarding the collection and
enforcement of consumer debt;
(vii) Notice of Relocation. The Servicer shall give the
--------------------
Agent 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 the Collateral and its principal executive office
within the United States of America;
(viii) Maintenance of Computer Systems, etc. The Servicer
------------------------------------
shall maintain its computer systems so that, from and after the
time of the first Advance under this Agreement, the Servicer's
master computer records (including archives) that shall refer to
the Collateral indicate clearly that such Collateral is subject
to first priority security interest in favor of the Collateral
Agent for the benefit of the Secured Parties. Indication of the
Collateral Agent's security interest shall be deleted from or
modified on the Servicer's computer systems when, and only when,
the Collateral in question shall have been paid in full or sold
by the Borrower in accordance herewith; and
(ix) Other Sales, Grants or Transfers. If at any time the
--------------------------------
Servicer shall propose to sell, grant a security interest in, or
otherwise transfer any interest in motor vehicle 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 print-outs
<PAGE>
Page 58
(including any restored from archives) that, if they shall refer
in any manner whatsoever to any Collateral, shall indicate
clearly that such Collateral is subject to a first priority
security interest in favor of the Collateral Agent for the
benefit of the Secured Parties.
(b) Each of the Sellers, the Servicer and any successor Servicer
represents and warrants to the Borrower, the Agent and the Investors, as to
itself that:
(i) Organization and Good Standing. It has been duly
------------------------------
organized and is validly existing and in good standing under the
laws of the jurisdiction of its 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 and the other
Transaction Documents to which it is party (in any capacity);
(ii) Due Qualification. It 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 have a material
adverse effect on its ability to perform its obligations
hereunder or under any other Transaction Document to which it is
party (in any capacity);
(iii) Power and Authority. It has the power and authority
-------------------
to execute and deliver this Agreement and the Transaction
Documents to which it is a party (in any capacity) and to carry
out its terms and their terms, respectively, and, in the case of
the Sellers, to sell Receivables to the Borrower; and the
execution, delivery and performance of this Agreement and the
Transaction Documents to which it is a party (in any capacity)
have been duly authorized by all necessary corporate action;
(iv) Binding Obligation. This Agreement and the
------------------
Transaction Documents to which it is a party (in any capacity)
shall constitute its legal, valid and binding obligations
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;
(v) No Violation. The consummation of the transactions
------------
contemplated by this Agreement and the Transaction Documents to
which it is a party (in any capacity), and the fulfillment of the
terms of this
<PAGE>
Page 59
Agreement and the Transaction Documents to which it is a party
(in any capacity), including, in the case of the Sellers, the
sale of Receivables pursuant to the Purchase Agreement, 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, its c ertificate or articles of
incorporation or bylaws, or any indenture, agreement, mortgage,
deed of trust or other instrument to which it is a party or by
which it is bound or any of its properties are subject, 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 it of any court other Official Body,
having jurisdiction over it or any of its properties, or in any
way materially adversely affect the interest of the Borrower, the
Collateral Agent or the Secured Parties in any Transferred
Receivable, or affect its ability to perform its obligations
under this Agreement or under any of the other Transaction
Documents to which it is party;
(vi) No Proceedings. There are no proceedings or
--------------
investigations pending or,its knowledge, threatened against it,
before any court or other Official Body having jurisdiction over
it or its properties (A) asserting the invalidity of this
Agreement or any of the Transaction Documents, (B) seeking to
prevent the consummation of any of the transactions contemplated
by this Agreement or any of the Transaction Documents, (C)
seeking any determination or ruling that might materially and
adversely affect its performance of its obligations under, or the
validity or enforceability of, this Agreement or any of the
Transaction Documents, or (D) that could have a material adverse
effect on the Transferred Receivables;
(vii) Year 2000 Compliance. The Servicer and its
--------------------
Subsidiaries have (i) undertaken a detailed review and assessment
of all areas within its business and operations (including its
servicing operations) that could be adversely affected by the
failure of the Servicer or its Subsidiaries to be Year 2000
Compliant on a timely basis, (ii) developed a detailed plan and
timetable for becoming Year 2000 Compliant on a timely basis, and
(iii) implemented and will implement that plan in accordance with
that timetable in all material respects;
(viii) ERISA. It is in compliance in all material respects
-----
with ERISA and there is no Lien of the Pension Benefit Guaranty
Corporation on any of the Transferred Receivables or Other
Conveyed Property;
(ix) Investment Company Status. It is not an "investment
-------------------------
<PAGE>
Page 60
company" meaning of the Investment Company Act of 1940, as
amended, or is exempt from all provisions of such Act;
(x) No Consents. It is not required to obtain the
-----------
consent of any other Person or any consent, license, approval or
authorization of, or registration or declaration with, any
Official Body in connection with the execution, delivery,
performance, validity or enforceability of this Agreement and the
Transaction Documents to which it is party (in any
capacity);
(xi) Chief Executive Office. As to AFS, its chief
----------------------
executive office is located at 200 Bailey Avenue, Fort Worth,
Texas 76107 and as to AFC and ACC, as set forth in the Purchase
Agreement;
(xii) Eligibility. As to AFS only, each Receivable
-----------
(whether or not AFS is the Seller of such Receivable) set forth
in a Schedule of Receivables is, on its Purchase Date, an
Eligible Receivable, and the representations and warranties with
respect thereto set forth on the Schedule of Representations (as
defined in the Purchase Agreement) are true and correct on such
date;and
(xiii) Other Documents. The representations and warranties
---------------
made by it (in any capacity) in each of the other Transaction
Documents to which it is a party are true and correct in all
material respects as of the date(s) made.
(c) Each Seller covenants to the Borrower, the Agent and the
Investors as follows:
(i) Preservation of Existence. Such Seller shall observe
-------------------------
all procedures required by its organizational documents and by-
laws and preserve and maintain its existence, rights, franchises
and privileges in the jurisdiction of its incorporation, and
qualify and remain qualified in good standing in each
jurisdiction where the failure to preserve and maintain such
existence, rights, franchises, privileges and qualifications
would materially adversely affect (1) the interests hereunder of
the Agent or any Affected Person, (2) the collectibility of any
Receivable or (3) its ability to perform its obligations
hereunder or under any of the other Transaction Documents.
(ii) keeping of Records and Books of Account. Such Seller
---------------------------------------
shall maintain and implement (or cause the Servicer to maintain
and implement) administrative and operating procedures
(including, without limitation, an ability to recreate records
evidencing the Receivables in the
<PAGE>
Page 61
event of the destruction of the originals thereof) and keep and
maintain, all documents, books, records and other information
reasonably necessary or advisable for the collection of all
Transferred Receivables (including, without limitation, records
adequate to permit the daily identification of all collections of
and adjustments to each Transferred Receivable).
(iii) Separate Corporate Existence. Such Seller shall take
----------------------------
all reasonable steps to maintain its identity as a separate legal
entity from the Borrower or any of its Affiliates and to make it
manifest to third parties that it is an entity with assets and
liabilities distinct from those of the Borrower and each other
Affiliate thereof.
(iv) Tangible Net Worth. Such Seller shall maintain at all
------------------
times a positive Tangible Net Worth.
(v) Documents. Such Seller shall comply with each of the
---------
terms of the Transaction Documents to which it is party (in any
capacity) and shall not cancel or terminate any of the
Transaction Documents to which it is party (in any capacity), or
consent to or accept any cancellation or termination of any of
such agreements, or amend or otherwise modify any term or
condition of any of the Transaction Documents to which it is
party (in any capacity) or give any consent, waiver or approval
under any such agreement, or waive any default under or breach of
any of the Transaction Documents to which it is party (in any
capacity) or take any other action under any such agreement not
required by the terms thereof, unless (in each case) the Agent
shall have consented thereto.
(vi) Charter and By-Laws. As to AFC only, it shall not
-------------------
amend, modify or otherwise change any of the terms or provisions
in its certificate of incorporation or its by-laws, without the
prior written consent of the Agent.
(vii) Accounting Treatment. Such Seller shall not prepare
--------------------
any financial statements or other statements (including any tax
filings which are not consolidated with those of AmeriCredit
Corp.) which shall account for the transactions contemplated by
the Purchase Agreement in any manner other than as the sale of,
or a capital contribution of, the applicable Transferred
Receivables and the related assets by such Seller to the
Borrower.
(vii) Certificates. It will not sell, pledge, assign or
------------
transfer any Certificate to any other Person which is not a
Seller, or grant, create, incur, assume or suffer to exist any
Lien on any Certificate or any interest
<PAGE>
Page 62
therein.
SECTION 8.7 Purchase of Receivables Upon Breach of Covenant or
--------------------------------------------------
Representation and Warranty. The Borrower or the Servicer, as the case may be,
- ---------------------------
shall inform the other parties to this Agreement promptly, in writing, upon the
discovery of any breach of the Servicer's or any Seller's representations and
warranties and covenants pursuant to Section 8.5(a) or 8.6 or under the Purchase
------------- ---
Agreement; provided, however, that the failure to give any such notice shall not
derogate from any obligation of the Servicer hereunder or AFS or any Seller
under the Purchase Agreement to repurchase any Transferred Receivable; provided,
further that, the Backup Servicer shall have no duty to inquire into or to
investigate the breach of any such representations and warranties and covenants.
With respect to the breach of any of the Servicer's representations and
warranties and covenants pursuant to Section 8.5(a) and 8.6(a)(i), (ii), (iii)
------------- -------- -- ---
or (iv) and with respect to the breach of AFS's representation and warranties
--
pursuant to Section 8.6(b)(xii), unless the breach shall have been cured by the
------------------
last day of the first full calendar month following the discovery by or notice
to the Servicer or AFS, as the case may be, of the breach, the Servicer or AFS,
as the case may be, shall have an obligation, and the Borrower and the Agent
shall (provided that it either has made such discovery or has received such
--------
notice thereof) enforce such obligation, to purchase or repurchase any
Transferred Receivable materially and adversely affected by the breach. The
Borrower shall notify the Agent promptly, in writing, of any failure by the
Servicer or AFS to so repurchase any Transferred Receivable. In consideration of
the purchase of the Transferred Receivable hereunder or under the Purchase
Agreement, the Servicer or AFS, as the case may be, shall remit the Purchase
Amount to the Collection Account on the date of such repurchase.
In addition to the foregoing and notwithstanding whether the related
Transferred Receivable shall have been purchased by the Servicer, the Servicer
shall indemnify the Backup Servicer, the Borrower, the Collateral Agent, the
Agent and the other Secured Parties 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 a breach of
the covenants or representations and warranties set forth in Section 8.5(a) or
--------------
8.6.
- ---
SECTION 8.8. Total Servicing Fee; Payment of Certain Expenses by Servicer.
------------------------------------------------------------
(a) Subject to, and in accordance with, the provisions of the Security
Agreement, on each Distribution Date, the Servicer shall be entitled to receive
out of the Collection Account the Servicing Fee for the related Collection
Period.
(b) 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
<PAGE>
Page 63
Servicer). The Servicer shall be liable for the fees and expenses of the Backup
Servicer, the Lockbox Bank (and any fees under the Lockbox Agreement), the
Custodian, the Collateral Agent, the Agent and the Independent Accountants, to
the extent such amounts have not been paid in accordance with the Security
Agreement.
SECTION 8.9 Servicer's Certificate.
----------------------
(a) No later than 5:00 p.m., New York City time, on each Determination
Date, the Servicer shall deliver to the Backup Servicer, the Collateral Agent,
each Rating Agency, the Borrower and the Agent a Servicer's Certificate executed
by a Responsible Officer of the Servicer in the form attached hereto as Exhibit
-------
E. Transferred Receivables purchased by the Servicer or a Seller and each
- -
Transferred Receivable which became a Warranty Receivable or a Defaulted
Receivable or a Delinquent Receivable or which was paid in full during the
related Collection Period shall be identified by account number (as set forth in
the Schedule of Receivables).
(b) In addition to the information required by Section 8.9(a), the
-------------
Servicer shall include in the copy of the Servicer's Certificate delivered to
the Borrower and the Agent (i) whether any Facility Termination Event or
Unmatured Facility Termination Event has occurred as of such Determination Date,
(ii) whether any Facility Termination Event or Unmatured Facility Termination
Event that may have occurred as of a prior Determination Date is deemed cured as
of such Determination Date, (iii) the Delinquency Ratio, Monthly Extension Rate
(and three month average thereof), and Portfolio Net Loss Ratio for such
Determination Date and the Servicer Delinquency Ratio as of the last day of the
preceding Collection Period, and the weighted average AmeriCredit Score of the
Receivables in the Total Receivables Pool, (iv) whether a Level I-VI Trigger
Event has occurred (specifying same) and the Stated Percentage and Required
Reserve Account Amount for such Determination Date and (v) the Borrowing Base,
Required Holdback and Deficiency Percentage for such Determination Date.
SECTION 8.10 Annual Statement as to Compliance; Notice of Servicer
-----------------------------------------------------
Termination Event.
- -----------------
(a) The Servicer shall deliver to the Backup Servicer, the Collateral
Agent, each Rating Agency, the Borrower and the Agent, on or before October 31
of each year, beginning on October 31, 1999, an Officer's Certificate, dated as
of the immediately preceding June 30, 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.
<PAGE>
Page 64
(b) The Borrower or the Servicer shall deliver to the Backup Servicer,
the Collateral Agent, each Rating Agency, the Borrower and the Agent, promptly
after having obtained knowledge thereof, but in no event later than two Business
Days thereafter, written notice in an Officer's Certificate of any event which
is, or with the giving of notice or lapse of time, or both, would become a
Servicer Termination Event under Section 13.1.
------------
SECTION 8.11 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 AmeriCredit Corp., the Servicer or to AFS, to
deliver to the Servicer, the Backup Servicer, the Collateral Agent, the Borrower
and the Agent, on or before October 31 of each year, beginning on October 31,
1999, with respect to the twelve months ended the immediately preceding June 30
(or such other period as shall have elapsed from the Closing Date to the date of
such certificate), a statement (the "Accountants' Report") addressed to
-------------------
AmeriCredit Corp. and the Agent, to the effect that such firm has audited the
consolidated financial statements of AmeriCredit Corp. and issued its report
thereon and that (i) 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, (ii) certain agreed upon procedures were applied to three
randomly selected Servicer's Certificates (which procedures shall be submitted
for approval to the Agent, which approval shall not be unreasonably withheld)
and (iii) the firm is independent of AmeriCredit Corp., AFS and the Servicer
within the meaning of the Code of Professional Ethics of the American Institute
of Certified Public Accountants.
(b) In the event such Independent Accountants require Trust Trustee
on behalf of the Borrower and the Backup Servicer to agree to the procedures to
be performed by such firm in any of the reports required to be prepared pursuant
to this Section 8.11, the Servicer shall direct Trust Trustee on behalf of the
------------
Borrower and the Backup Servicer, in writing to so agree; it being understood
and agreed that Trust Trustee on behalf of the Borrower and the Backup Servicer
will deliver such letter of agreement in conclusive reliance upon the direction
of the Servicer, and Trust Trustee on behalf of the Borrower and the Backup
Servicer has not made any independent inquiry or investigation as to, and shall
have no obligation or liability in respect of, the sufficiency, validity or
correctness of such procedures.
SECTION 8.12 Access to Certain Documentation; Portfolio Review.
-------------------------------------------------
(a) The Servicer shall provide to representatives of the Backup
Servicer, the Collateral Agent, the Borrower and the Agent reasonable access to
the documentation regarding the Transferred Receivables including, without
limitation, copies of the
<PAGE>
Page 65
Servicing Procedures and Credit Manual. Nothing in this Section 8.12 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 8.12 as a result of
------------
such obligation shall not constitute a breach of this Section 8.12.
------------
(b) The Agent shall direct Independent approved by the Agent to review
information regarding the Transferred Receivables in accordance with the agreed
upon procedures described in Section 7.3(i) or otherwise approved by the Agent.
-------------
The reviews will be performed on the first to occur of (i) 60 days after the
Closing Date and (ii) 30 days following the date on which a cumulative aggregate
of $50,000,000 Aggregate Outstanding Principal Balance of Receivables have been
purchased by the Borrower and thereafter on a quarterly basis; provided that if
--------
the rating of the long-term debt securities of AmeriCredit Corp. is rated below
B by S&P or Ba2 by Moody's then the Agent may direct the Independent Accountants
to make a review under this Section 8.12(b) on a weekly basis. The fees and
--------------
expenses of the Independent Accountants shall be paid by the Servicer.
SECTION 8.13 Monthly Tape. On or before each Determination Date, the
------------
Servicer will deliver to the Backup Servicer the Monthly Tape in a format
acceptable to the Backup Servicer containing the information with respect to the
Transferred Receivables as of the last day of the immediately preceding calendar
month necessary for preparation of the Servicer's Certificate relating to the
immediately succeeding Determination Date. Based solely on the information
contained in the Monthly Tape and the Servicer's Certificate, the Backup
Servicer shall verify the Aggregate Outstanding Principal Balance of the Total
Receivables Pool. The Backup Servicer shall recalculate the information
contained in the Servicer's Certificate delivered by the Servicer, and shall
certify to the Agent that it is correct on its face or shall notify the Servicer
and the Agent 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, the Servicer shall, if so requested by the Agent, deliver to
the Backup Servicer its Collection Records and its Monthly Records as soon as
practicable and in
<PAGE>
Page 66
any event within one Business Day after demand therefor (which demand may be
made at any time after the occurrence of a Facility Termination Event or a
Servicer Termination Event or the occurrence of any event which, if uncured,
with lapse of time or notice or lapse of time and notice, would constitute a
Facility Termination Event or a Servicer Termination Event) 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
Transferred 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. The duties and obligations of the Backup Servicer shall be determined
solely by the express provisions of this Agreement and no implied covenants or
obligations shall be read into this Agreement against the Backup Servicer.
SECTION 8.14 Retention of Servicer. AFS hereby covenants and agrees to act
---------------------
as such under this Agreement for an initial term, commencing on the Closing Date
and ending on June 30, 1999, which term shall be extendible by the Agent for
successive quarterly terms ending on each successive September 30, December 31,
March 31 and June 30 (or, pursuant to revocable written standing instructions
from time to time to the Servicer, for any specified number of terms greater
than one). 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 Agent to the Servicer. AFS hereby agrees
- ------
that, as of the date hereof and upon its receipt of any such Servicer Extension
Notice, AFS shall become bound, for the initial term beginning on the Closing
Date and for the duration of the term covered by such notice, to continue as the
Servicer subject to and in accordance with the other provisions of this
Agreement.
SECTION 8.15 Fidelity Bond. The Servicer shall maintain a fidelity bond in
-------------
such form and amount as is customary for entities acting as custodian of funds
and documents in respect of consumer contracts on behalf of institutional
investors.
SECTION 8.16 Insurance. The Servicer shall maintain customary amounts of
---------
insurance coverage, including, without limitation, commercial crime coverage,
employee dishonesty coverage, commercial auto coverage, valuable papers and
records coverage, coverage for fire, theft, workers compensation, public
liability, property damage and errors and omissions coverage. The Servicer shall
be entitled to self-insure with respect to such insurance so long as the long-
term unsecured debt obligations of the Servicer are rated in the second highest
long-term debt category by each of the Rating Agencies.
SECTIONS 8.17 Accounts.
--------
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(a) The Servicer shall establish the Collection Account in the name of the
Collateral Agent for the benefit of the Secured Parties. The Collection Account
shall be an Eligible Account and initially shall be a segregated trust account
established and maintained with the Collateral Agent. Amounts on deposit in the
Collection Account shall be invested in Permitted Investments pursuant to
written instructions from the Servicer. If written direction from the Servicer
is not timely delivered any such amounts on deposit shall be invested in the
investment described in subclause (f) of the definition of Permitted
Investments.
(b) The Servicer shall establish the Reserve Account in the name of the
Collateral Agent for the benefit of the Secured Parties. The Reserve Account
shall be an Eligible Account and initially shall be a segregated trust account
established and maintained with the Collateral Agent. Amounts on deposit in the
Reserve Account shall be invested in Permitted Investments pursuant to written
instructions from the Servicer. If written direction from the Servicer is not
timely delivered any such amounts on deposit shall be invested in the investment
described in subclause (f) of the definition of Permitted Investments.
(c) The Servicer shall establish the Collateral Account in the name of the
Collateral Agent for the benefit of the Secured Parties. The Collateral Account
shall be an Eligible Account and initially shall be a segregated trust account
established and maintained with Collateral Agent. There shall be deposited to
the Collateral Account any amount delivered to the holder of the Collateral
Account by the Borrower and designated in writing (with a copy to the Agent) to
be deposited in the Collateral Account.
SECTION 8.1 Collections.
-----------
(a) Pursuant to the Lockbox Agreement, the Lockbox Bank shall remit to
the Collection Account within two Business Days of receipt thereof (i) all
payments by or on behalf of the Obligors and (ii) all Recoveries, each as
collected during the Collection Period. In addition, the Servicer shall remit,
or cause to be remitted, all payments by or on behalf of the Obligors received
by the Servicer or the Borrower with respect to the Transferred Receivables, all
Recoveries, the purchase price paid by AFS or the Servicer with respect to any
Transferred Receivables and all payments made to the Borrower under the Interest
Rate Hedges, no later than the Business Day following receipt directly into the
Collection Account.
(b) The Servicer will be entitled to be reimbursed from amounts on
deposit in the Collection Account with respect to a Collection Period for
amounts previously deposited in the Collection Account but later determined by
the Servicer 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
<PAGE>
Page 68
Distribution Date upon certification by the Servicer of such amounts and the
provision of such information to the Agent as may be necessary in the opinion of
the Agent to verify the accuracy of such certification. In the event that the
Agent has not received evidence satisfactory to it of the Servicer's entitlement
to reimbursement pursuant to this Section 8.18, the Agent shall give the
Servicer and the Collateral Agent written notice to such effect and no
distribution shall be made to the Servicer in respect of such amount, or if the
Servicer prior thereto has been reimbursed, such amounts shall be withheld from
amounts otherwise distributable to the Servicer on the next succeeding
Distribution Date.
SECTION 8.19 Application of Collections. For the purposes of this
--------------------------
Agreement, all collections for a Collection Period shall be applied by the
Servicer with respect to each Transferred Receivable as follows: (i) unless
otherwise required by law, in the case of a Pre-Computed Receivable, in
accordance with the terms contained in such Pre-Computed Receivable, and (ii) in
the case of a Simple Interest Receivable, to interest and principal in
accordance with the Simple Interest Method. With respect to Simple Interest
Receivables, any prepayment of principal during each Collection Period shall be
immediately applied to reduce the Principal Balance of such Receivable during
such Collection Period.
ARTICLE IX
GRANT OF SECURITY INTERESTS
SECTION 9.1 Borrower's Grant of Security Interest. As security for the
-------------------------------------
prompt payment or performance in full when due, whether at stated maturity, by
acceleration or otherwise, of all Obligations (including all Advances, Yield and
other amounts at any time owing hereunder), the Borrower hereby assigns and
pledges to the Collateral Agent, for the benefit of the Secured Parties, and
grants to the Collateral Agent, for the benefit of the Secured Parties, a
security interest in and lien upon, all of the Borrower's right, title and
interest in and to the following, in each case whether now or hereafter existing
or in which Borrower now has or hereafter acquires an interest and wherever the
same may be located (collectively, the "Borrower Collateral"):
-------------------
(a) all Collateral;
(b) the Purchase Agreement, each Lockbox Agreement and all other
documents now or hereafter in effect relating to the purchase, servicing or
processing of Transferred Receivables (collectively, the "Borrower Assigned
-----------------
Agreements"), including (i) all rights of the Borrower to receive moneys
----------
due and to become due under or pursuant to the Borrower Assigned
Agreements, (ii) all rights of the Borrower to receive proceeds of any
insurance, indemnity, warranty or guaranty with respect to the Borrower
Assigned Agreements, (iii) the Borrower's right of foreclosure as
lienholder of the vehicles underlying the
<PAGE>
Page 69
Receivables, (iv) claims of the Borrower for damages arising out of or
for breach of or default under the Borrower Assigned Agreements, and
(v) the right of the Borrower to amend, waive or terminate the
Borrower Assigned Agreements, to perform under the Borrower Assigned
Agreements and to compel performance and otherwise exercise all
remedies and rights under the Borrower Assigned Agreements; provided,
--------
that to the extent the foregoing applies to the Transferred
Receivables as well as other receivables originated and/or serviced by
AFS, the foregoing shall apply only to the Transferred Receivables;
(c) all of the following (the "Borrower Account Collateral"):
---------------------------
(i) the Lockbox Account and all funds held in the
Lockbox Account and all certificates and instruments, if any,
from time to time representing or evidencing the Lockbox Account
or such funds,
(ii) the Collection Account, all funds held in the
Collection Account, and all certificates and instruments, if any,
from time to time representing or evidencing the Collection
Account or such funds,
(iii) the Reserve Account, all funds held in the
Reserve Account, and all certificates and instruments, if any,
from time to time representing or evidencing the Reserve Account
or such funds,
(iv) the Collateral Account, all funds held in the
Collateral Account, and all certificates and instruments, if any,
from time to time evidencing the Collateral Account or such
funds,
(v) all investments from time to time of amounts in
the Collection Account, Reserve Account and Collateral Account,
and all certificates and instruments, if any, from time to time
representing or evidencing such investments,
(vi) all notes, certificates of deposit and other
instruments from time to time delivered to or otherwise possessed
by the Collateral Agent or any Secured Party or any assignee or
agent on behalf of the Collateral Agent or any Secured Party in
substitution for or in addition to any of the then existing
Borrower Account Collateral, and
(vii) all interest, dividends, cash, instruments and
other property from time to time received, receivable or
otherwise distributed in respect of or in exchange for any and
all of the then existing Borrower Account Collateral;
(d) each Interest Rate Hedge including all rights of the
Borrower to
<PAGE>
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receive moneys due and to become due thereunder;
(e) all additional property that may from time to time
hereafter be granted and pledged by the Borrower or by anyone on its
behalf under this Agreement, including the deposit with the Collateral
Agent of additional moneys by the Borrower; and
(f) all proceeds, accessions, substitutions, rents, Recoveries
and profits of, or with respect to, any and all of the foregoing
Borrower Collateral (including proceeds that constitute property of
the types described in Sections 9.1(a) through (e) above) and, to the
-------------- -
extent not otherwise included, all payments under insurance (whether
or not the Collateral Agent or a Secured Party or any assignee or
agent on behalf of the Collateral Agent or a Secured Party is an
additional insured thereunder or a loss payee thereof) or any
indemnity, warranty or guaranty payable by reason of loss or damage to
or otherwise with respect to any of the foregoing Borrower Collateral.
SECTION 9.2 Delivery of Collateral. All documents in the Receivables File
----------------------
shall be delivered and held by or on behalf of the Custodian pursuant to the
Custodian Agreement, and shall be in suitable form for transfer by delivery.
SECTION 9.3 Borrower Remains Liable. Notwithstanding anything in this
-----------------------
Agreement, (a) except to the extent of the Servicer's duties hereunder, the
Borrower shall remain liable under the Transferred Receivables, Borrower
Assigned Agreements and other agreements (including each Interest Rate Hedge)
included in the Borrower Collateral to perform all of its duties and obligations
thereunder to the same extent as if this Agreement had not been executed, (b)
the exercise by a Secured Party or the Collateral Agent of any of its rights
under this Agreement, the Custodian Agreement or the Security Agreement shall
not release the Borrower, AFS, any Seller or the Servicer from any of their
respective duties or obligations under the Transferred Receivables, Borrower
Assigned Agreements or other agreements included in the Borrower Collateral, (c)
the Agent, the Secured Parties, the Collateral Agent and the Custodian shall not
have any obligation or liability under the Transferred Receivables, Borrower
Assigned Agreements or other agreements included in the Borrower Collateral by
reason of this Agreement, the Custodian Agreement or the Security Agreement, and
(d) neither the Agent, the Collateral Agent, the Custodian nor any of the
Secured Parties shall be obligated to perform any of the obligations or duties
of the Borrower, AFS, any Seller or the Servicer under the Transferred
Receivables, Borrower Assigned Agreements or other agreements included in the
Borrower Collateral or to take any action to collect or enforce any claim for
payment assigned under this Agreement.
SECTION 9.4 Covenants of the Borrower and Servicer Regarding the
----------------------------------------------------
Collateral.
- ----------
(a) Offices and Records. The Borrower shall keep its chief place of
-------------------
business
<PAGE>
Page 71
and chief executive offices and the office where it keeps its records at the
location specified in Section 10.9 or, upon 60 days prior written notice to the
------------
Agent and the Collateral Agent, at such other location in a jurisdiction where
all action required by Section 9.4(e) shall have been taken with respect to the
-------------
Borrower Collateral. The Borrower and the Servicer shall, for not less than
three years or for such longer period as may be required by law, from the date
on which any Transferred Receivable arose, maintain the records with respect to
each Transferred Receivable, including records of all payments received, credits
granted and merchandise returned. The Borrower and the Servicer will permit
representatives of the Agent, the Backup Servicer, the Collateral Agent and the
Custodian at any time and from time to time during normal business hours, and at
such times outside of normal business hours as the Agent, the Backup Servicer,
the Collateral Agent and the Custodian shall reasonably request, (i) to inspect
and make copies of and abstracts from such records, and (ii) to visit the
properties of the Borrower or the Servicer utilized in connection with the
collection, processing or servicing of the Transferred Receivables for the
purpose of examining such records, and to discuss matters relating to the
Receivables or the Borrower's or Servicer's performance under this Agreement
with any officer or employee of the Borrower or Servicer having knowledge of
such matters. In connection therewith, the Agent, the Backup Servicer, the
Collateral Agent or the Custodian may institute procedures to permit it to
confirm the Obligor balances in respect of any Transferred Receivables. Each of
the Borrower and the Servicer agrees to render to the Agent, the Backup
Servicer, the Collateral Agent and the Custodian such clerical and other
assistance as may be reasonably requested with regard to the foregoing. Without
duplication of any obligations of the Servicer set forth in clause (b) below, if
a Facility Termination Event shall have occurred and be continuing, promptly
upon request therefor, the Borrower or the Servicer shall deliver to the Agent
and the Collateral Agent records reflecting activity through the close of
business on the immediately preceding Business Day.
(b) Maintain Records of Transferred Receivables. The Servicer shall, at
-------------------------------------------
its own cost and expense, maintain satisfactory and complete records of the
Collateral, including a record of all payments received and all credits granted
with respect to the Collateral and all other dealings with the Collateral. Each
of the Borrower and the Servicer will mark conspicuously with a legend, in form
and substance satisfactory to the Agent, its records, computer tapes, computer
disks and credit files pertaining to the Collateral, and its storage facilities
where it maintains information pertaining to the Collateral, to evidence this
Agreement and the assignment and security interest granted by this Article IX.
----------
(c) Performance of Borrower. Assigned Agreements. The Borrower shall (i)
--------------------------------------------
perform and observe all the terms and provisions of the Borrower Assigned
Agreements and the Interest Rate Hedges to be performed or observed by it,
maintain the Borrower Assigned Agreements and the Interest Rate Hedges in full
force and effect, enforce the Borrower Assigned Agreements and the Interest Rate
Hedges in accordance with their terms and take all such action to such end as
may be from time to
<PAGE>
Page 72
time requested by the Agent, and (ii) upon request of the Agent, make to any
other party to the Borrower Assigned Agreements and the Interest Rate Hedges
such demands and requests for information and reports or for action as the
Borrower is entitled to make under the Borrower Assigned Agreements and the
Interest Rate Hedges.
(d) Notice of Adverse Claim. Each of the Borrower and the Servicer shall
-----------------------
advise the Agent and the Collateral Agent promptly, in reasonable detail, (i) of
any Adverse Claim known to it made or asserted against any of the Borrower
Collateral, and (ii) of the occurrence of any event which would have a material
adverse effect on the aggregate value of the Borrower Collateral or on the
assignments and security interests granted by the Borrower in this Agreement.
(e) Further Assurances; Financing Statements.
----------------------------------------
(i) Each of the Borrower, the Sellers and the Servicer severally
agrees that at any time and from time to time, at its expense, it
shall promptly execute and deliver all further instruments and
documents, and take all reasonable further action, that may be
necessary or desirable or that the Agent or the Collateral Agent may
reasonably request to perfect and protect the assignments and security
interests granted or purported to be granted by this Article IX or to
----------
enable the Agent or the Collateral Agent to exercise and enforce its
rights and remedies under this Agreement and the Security Agreement
with respect to any Borrower Collateral. Without limiting the
generality of the foregoing, the Borrower and the Sellers shall
execute and file such financing or continuation statements, or
amendments thereto, and such other instruments or notices as may be
necessary or desirable or that the Agent or the Collateral Agent may
reasonably request to protect and preserve the assignments and
security interests granted by this Agreement and the Security
Agreement.
(ii) The Borrower, the Sellers and each Secured Party hereby
severally authorize the Collateral Agent to execute and file one or
more financing or continuation statements, and amendments thereto,
relating to all or any part of the Borrower Collateral without the
signature of the Borrower, the Sellers, the Agent or the Secured
Parties where permitted by law. A carbon, photographic or other
reproduction of this Agreement or any financing statement covering the
Borrower Collateral or any part thereof shall be sufficient as a
financing statement where permitted by law. The Collateral Agent will
promptly send to AFS and the Agent any financing or continuation
statements thereto which it files without the signature of the
Borrower or a Seller and will promptly send to the Agent and AFS any
financing or continuation statements thereto which it files without
the signature of the Agent except, in the case of filings of copies
<PAGE>
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of this Agreement as financing statements, the Collateral Agent will
promptly send to AFS the filing or recordation information with
respect thereto.
(iii) Each of the Borrower, the Sellers and the Servicer shall
furnish to the Agent and the Collateral Agent from time to time such
statements and schedules further identifying and describing the
Borrower Collateral and such other reports in connection with the
Borrower Collateral as the Agent or the Collateral Agent may
reasonably request, all in reasonable detail.
(iv) In the event three consecutive Servicer's Certificates
furnished to the Agent reflect that the Aggregate Outstanding
Principal Balance of Receivables in the Total Receivables Pool having
Obligors residing in the same state (other than Texas and California)
exceeds 10% of the Aggregate Outstanding Principal Balance of all
Receivables in the Total Receivables Pool, the Borrower shall obtain
from counsel in such state an opinion (or a reliance letter on a
recently delivered opinion) addressed to the Agent and each Rating
Agency and in form and substance reasonably acceptable to the Agent
and each Rating Agency with respect to the requirements in such state
for the assignment of a security interest in a Financed Vehicle.
SECTION 9.5 Release of Borrower Collateral.
------------------------------
(a) Generally. For purposes of selling and transferring Receivables to
---------
AFS or third parties in connection with any Take-Out Securitization, to the
extent that (immediately after giving effect to any requested release) there
exists no Borrowing Base Deficiency and, unless all Advances, Yield thereon and
other amounts due hereunder have been paid in full, there is no Facility
Termination Event or Unmatured Facility Termination Event, or, in connection
with the purchase by the Servicer of a Receivable pursuant to Section 8.4 or 8.7
----------- ---
or by a Seller under the Purchase Agreement, the Borrower may obtain releases of
the Collateral Agent's (for the benefit of the Secured Parties) security
interest in all or any part of the Borrower Collateral and from time to time.
Each request (a "Transfer Request") for a partial release of Collateral, except
----------------
in connection with the repurchase by the Servicer of a Receivable pursuant to
Section 8.4 or 8.7 or by a Seller under the Purchase Agreement, shall be
- ----------- ---
addressed to the Agent and the Collateral Agent, demonstrating compliance with
the immediately preceding sentence and acknowledging that the receipt of
proceeds from such sale or transfer shall be deposited into the Collection
Account.
(b) Transfers. With respect to each Transfer Request that is received
---------
by the Agent by 12:00 noon, New York City time, on a Business Day, the Agent
shall use due diligence and reasonable efforts to review such Transfer Requests
and instruct the
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Custodian (if AFS is not the Custodian) to prepare the files, identified in each
Transfer Request, for shipment by 12:00 noon, New York City time on the second
succeeding Business Day.
(c) Continuation of Lien. Unless released in writing by the Collateral
--------------------
Agent, as herein provided, the security interest in favor of the Collateral
Agent, for the benefit of the Secured Parties, in all Borrower Collateral shall
continue in effect until such time as the Collateral Agent (on behalf of the
Secured Parties) shall have received payment in full of the proceeds from the
sale or transfer of such Borrower Collateral to third parties in accordance with
this Section 9.5.
-----------
(d) Application of Proceeds; No Duty. Neither of the Collateral Agent nor
--------------------------------
any Secured Party shall be under any duty at any time to credit Borrower for any
amount due from any third party in respect of any purchase of any Borrower
Collateral contemplated above, until the Collateral Agent has actually received
such amount in immediately available funds for deposit to the Collection
Account. Neither the Collateral Agent nor any Secured Party shall be under any
duty at any time to collect any amounts or otherwise enforce any obligations due
from any third party in respect of any such purchase of Receivables covered by
the release of such portion of Borrower Collateral or in respect of a
securitization thereof with a third party.
(e) Representation in Connection with Releases, Sales and Transfers. The
---------------------------------------------------------------
Borrower represents and warrants that each request for any release or transfer
in connection with other securitizations pursuant to Section 9.5(a) shall
--------------
automatically constitute a representation and warranty to the Secured Parties,
the Collateral Agent and the Agent to the effect that immediately before and
after giving effect to such release or Transfer Request, there is no Facility
Termination Event, or Unmatured Facility Termination Event (including, without
limitation a Borrowing Base Deficiency).
(f) Release of Security Interest. Upon receipt of a Transfer Request or,
----------------------------
in connection with the purchase by the Servicer of a Receivable pursuant to
Section 8.4 or 8.7 or by a Seller under the Purchase Agreement, upon the
- ------------------
Servicer's written request, and, in each case upon receipt in the Collection
Account of proceeds from the sale or transfer, the Collateral Agent shall
promptly release, at the Borrower's expense, such part of Borrower Collateral
covered in connection with the Transfer Request or such Servicer's request and
shall deliver, at the Borrower's expense, the documents and certificates on the
released portion of Borrower Collateral to the trustee or such similar entity in
connection with any Take-Out Securitization or, in connection with the purchase
by the Servicer of a Receivable pursuant to Section 8.4 or 8.7 or by a Seller
------------------
under the Purchase Agreement, the Servicer; provided that the trustee or such
--------
similar entity in connection with any Take-Out Securitization or the Servicer,
as the case may be, acknowledges and agrees (i) that all proceeds thereof that
it receives are held in trust for the Secured Parties and (ii) at such time that
the Agent or the Collateral Agent shall instruct such trustee to transfer such
proceeds, the trustee shall transfer such
<PAGE>
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funds pursuant to such instructions.
ARTICLE X
REPRESENTATIONS AND WARRANTIES OF THE BORROWER
In order to induce the other parties hereto to enter into this Agreement
and, in the case of the Lenders, to make Advances hereunder, the Borrower hereby
represents and warrants to the Agent and the Investors as to itself, as of the
Closing Date and as of each Advance Date, as follows:
SECTION 10.1 Organization and Good Standing. The Borrower has been duly
------------------------------
organized and is validly existing as a business trust under the laws of the
State of Delaware, with power and authority to own its properties and to conduct
its business as such properties are currently owned and such business is
currently conducted. The Borrower had at all relevant times and now has, power,
authority and legal right to acquire and own the Transferred Receivables and the
Other Conveyed Property, and to grant to the Collateral Agent a security
interest in the Transferred Receivables, the Other Conveyed Property and the
other Borrower Collateral and to enter into and perform its obligations under
this Agreement.
SECTION 10.2 Due Qualification. The Borrower is duly qualified to do
-----------------
business as a foreign entity in good standing, and has obtained all necessary
licenses and approvals, in all jurisdictions in which the ownership or lease of
its property or the conduct of its business requires such qualification.
SECTION 10.3 Power and Authority. The Borrower has the power and
-------------------
authority to execute and deliver this Agreement and the other Transaction
Documents to which it is a party and to carry out its terms and their terms,
respectively; the Borrower has full power and authority to grant to the
Collateral Agent, for the benefit of the Secured Parties, a perfected first
priority security interest in the Transferred Receivables and the other Borrower
Collateral and has duly authorized such grant by all necessary corporate action;
and the execution, delivery and performance of this Agreement and the other
Transaction Documents to which it is a party have been duly authorized by the
Borrower by all necessary corporate action. The Trust Trustee is duly authorized
to execute the Transaction Documents for and on behalf of the Borrower.
SECTION 10.4 Security Interest; Binding Obligations. This Agreement and
--------------------------------------
the Transaction Documents to which it is a party have been duly executed and
delivered and shall create a valid first priority security interest (except, as
to priority, for any tax liens or mechanics liens that may arise after the
Closing Date) in the Borrower Collateral in favor of the Collateral Agent, on
behalf of the Secured Parties, enforceable against the Borrower and creditors of
and purchasers from the Borrower; and this Agreement and the other Transaction
Documents to which it is a party constitute legal,
<PAGE>
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valid and binding obligations of the Borrower 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.
SECTION 10.5 No Violation. The consummation of the transactions
------------
contemplated by this Agreement and the other Transaction Documents to which it
is a party, and the fulfillment of the terms of this Agreement and the other
Transaction Documents to which it is a party, 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 Trust Agreement, or any indenture,
agreement, mortgage, deed of trust or other instrument to which the Borrower is
a party or by which it is bound or any of its properties are subject, 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 Borrower of any Official Body having jurisdiction
over the Borrower or any of its properties, or in any way adversely affect the
Borrower's ability to perform its obligations under this Agreement or the other
Transaction Documents to which it is a party.
SECTION 10.6 No Proceedings. There are no proceedings or investigations
--------------
pending or, to the Borrower's knowledge, threatened against the Borrower, before
any court or other Official Body having jurisdiction over the Borrower or its
properties (A) asserting the invalidity of this Agreement or any of the other
Transaction Documents, (B) seeking to prevent the consummation of any of the
transactions contemplated by this Agreement or any of the other Transaction
Documents, (C) seeking any determination or ruling that might materially and
adversely affect the performance by the Borrower of its obligations under, or
the validity or enforceability of, this Agreement or any of the other
Transaction Documents, (D) involving the Borrower or the Trust Estate (as
defined in the Trust Agreement) or (E) that could have a material adverse effect
on the Transferred Receivables.
SECTION 10.7 No Consents. The Borrower is not required to obtain the
-----------
consent of any other Person (including any holder of a Certificate) which has
not been obtained, or any consent, license, approval or authorization of, or
registration or declaration with, any Official Body in connection with the
execution, delivery, performance, validity or enforceability of this Agreement
or the other Transaction Documents to which it is a party.
SECTION 10.8 Use of Proceeds. No proceeds of any Advance will be used by
---------------
the Borrower to acquire any security in any transaction which is subject to
Section 13 or 14 of the Securities Exchange Act of 1934, as amended.
<PAGE>
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SECTION 10.9 Chief Executive Office. The chief executive office of the
----------------------
Borrower is located at the Corporate Trust Office (as defined in the Trust
Agreement).
SECTION 10.10 Solvency. The Borrower is solvent and will not become
--------
insolvent after giving effect to the transactions contemplated by this Agreement
and the Transaction Documents. The Borrower has no Indebtedness to any Person
other than pursuant to this Agreement and the other Transaction Documents. The
Borrower, after giving effect to the transactions contemplated by this Agreement
and the other Transaction Documents, will have adequate funds to conduct its
business in the foreseeable future.
SECTION 10.11 Tax Treatment. For federal income tax purposes, each
-------------
Transferred Receivable and the related Other Conveyed Property will be treated
as owned by the Borrower. For accounting purposes, the Borrower will treat the
purchase or absolute assignment of each Transferred Receivable and Other
Conveyed Property pursuant to the Purchase Agreement as a purchase or absolute
assignment of the Seller's full right, title and ownership interest in such
Transferred Receivable and Other Conveyed Property (and those Transferred
Receivables and Other Conveyed Property contributed to the Borrower by AFS
pursuant to the Purchase Agreement shall be accounted for as an increase in the
stated capital of the Borrower) and the Borrower has not in any other manner
accounted for or treated the transfer to it of Transferred Receivables and Other
Conveyed Property.
SECTION 10.12 Compliance With Laws. The Borrower has complied and will
--------------------
comply in all material respects with all applicable laws, rules, regulations,
judgments, agreements, decrees and orders with respect to its business and
properties and all Borrower Collateral.
SECTION 10.13 Taxes. The Borrower has filed on a timely basis all tax
-----
returns (including, without limitation, foreign, federal, state, local and
otherwise) required to be filed, is not liable for taxes payable by any other
Person and has paid or made adequate provisions for the payment of all taxes,
assessments and other governmental charges due from the Borrower. No tax lien or
similar adverse claim has been filed, and no claim is being asserted, with
respect to any such tax, assessment or other governmental charge. Any taxes,
fees and other governmental charges payable by the Borrower in connection with
the execution and delivery of this Agreement and the other Transaction Documents
and the transactions contemplated hereby or thereby including the transfer of
each Transferred Receivable and Other Conveyed Property to the Borrower have
been paid or shall have been paid if and when due at or prior to the Closing
Date and the relevant Purchase Date, as the case may be.
SECTION 10.14 Certificates. Each Servicer's Certificate and Borrowing Base
------------
Confirmation is accurate in all material respects as of the date thereof.
<PAGE>
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SECTION 10.15 No Liens, Etc. The Borrower Collateral and each part
-------------
thereof is owned by the Borrower free and clear of any Adverse Claim or
restrictions on transferability and the Borrower has the full right, corporate
power and lawful authority to assign, transfer and pledge the same and interests
therein, and upon the making of each Advance, the Collateral Agent, for the
benefit of the Secured Parties, will have acquired a perfected, first priority
and valid security interest (except, as to priority, for any tax lien or
mechanics liens that may arise after the Closing Date) in such Borrower
Collateral, free and clear of any Adverse Claim or restrictions on
transferability. No effective financing statement or other instrument similar in
effect covering all or any part of the Borrower Collateral is on file in any
recording office, except such as may have been filed in favor of the Collateral
Agent as "Secured Party" pursuant to Article IX of this Agreement or,with
----------
respect to the Transferred Receivables, in favor of the Borrower pursuant to the
Purchase Agreement.
SECTION 10.16 Purchase and Sale. Each Transferred Receivable and Other
-----------------
Conveyed Property was purchased by, or contributed to, the Borrower on the
relevant Purchase Date pursuant to the Purchase Agreement.
SECTION 10.17 Investment Company Act of 1940. Each purchase of Transferred
------------------------------
Receivables and Other Conveyed Property under the Purchase Agreement will
constitute a purchase or other acquisition of notes, drafts, acceptances, open
accounts receivable or other obligations representing part or all of the sales
price of merchandise, insurance or services within the meaning of Section
3(c)(5) of the Investment Company Act of 1940, as amended.
SECTION 10.18 Information True and Correct. All information heretofore or
----------------------------
hereafter furnished by or on behalf of the Borrower to any Lender, the
Collateral Agent or the Agent in connection with this Agreement or any
transaction contemplated hereby is and will be true and complete in all material
respects and does not and will not omit to state a material fact necessary to
make the statements contained therein not misleading.
SECTION 10.19 ERISA Compliance. The Borrower is in compliance with ERISA
----------------
and has not incurred and does not expect to incur any liabilities (except for
premium payments arising in the ordinary course of business) to the Pension
Benefit Guaranty Corporation (or any successor thereto) under ERISA.
SECTION 10.20 Financial or Other Condition. There has been no material
----------------------------
adverse change in the condition (financial or otherwise), business, operations,
results of operations, or properties of the Borrower.
SECTION 10.21 Investment Company Status. The Borrower is not an
-------------------------
"investment company" within the meaning of the Investment Company Act of 1940,
as amended, or is exempt from all provisions of such Act.
<PAGE>
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SECTION 10.22 No Trade Names. The Borrower has no trade names, fictitious
--------------
names, assumed names or "doing business as" names.
SECTION 10.23 Separate Existence. The Borrower is operated as an entity
------------------
with assets and liabilities distinct from those of AFS and any other Affiliates
of the Borrower, and the Borrower hereby acknowledges that the Agent and each of
the Lenders are entering into the transactions contemplated by this Agreement in
reliance upon the Borrower's identity as a separate legal entity from AFS and
each such Affiliate. Since its formation, the Borrower has been (and will be)
operated in such a manner as to comply with the covenants set forth in Section
-------
11.5.
- ----
There is not now, nor will there be at any time in the future, any
agreement or understanding between AFS or any Seller and the Borrower (other
than as expressly set forth herein) providing for the allocation or sharing of
obligations to make payments or otherwise in respect of any taxes, fees,
assessments or other governmental charges.
SECTION 10.24 Investments. The Borrower does not own or hold, directly or
-----------
indirectly, any capital stock or equity security of, or any equity interest in,
any Person.
SECTION 10.25 Representation and Warranties True and Correct. Each of the
----------------------------------------------
representations and warranties of the Borrower contained in this Agreement and
the other Transaction Documents is true and correct in all material respects and
the Borrower hereby makes each such representation and warranty to, and for the
benefit of, the Agent and the other Secured Parties as if the same were set
forth in full herein.
SECTION 10.26 Transaction Documents. The Purchase Agreement is the only
---------------------
agreement pursuant to which the Borrower purchases and receives contributions of
Receivables, and the Transaction Documents delivered to the Agent represent all
material agreements between AFS and the Sellers, on the one hand, and the
Borrower, on the other. The Borrower has furnished to the Agent true, correct
and complete copies of each Transaction Document to which the Borrower is a
party, each of which is in full force and effect. Neither the Borrower nor any
Affiliate party thereto is in default of any of its obligations thereunder in
any material respect. Upon the purchase and/or contribution of each Receivable
pursuant to the Purchase Agreement, the Borrower shall be the lawful owner of,
and have good title to, such Receivable and all assets relating thereto, free
and clear of any Liens. All such assets are transferred to the Borrower without
recourse to a Seller except as described in the Purchase Agreement. The
purchases of such assets by the Borrower constitute valid and true sales for
consideration (and not merely a pledge of such assets for security purposes) and
the contributions of such assets received by the Borrower constitute valid and
true transfers for consideration, each enforceable against creditors of the
Sellers, and no such assets shall constitute property of a Seller.
<PAGE>
Page 80
SECTION 10.27 Ownership of the Borrower. One hundred percent (100%) of the
-------------------------
outstanding Certificates are and will be directly owned (both beneficially and
of record) by at least two holders and such holders shall not include any Person
other than AFS, AFC or ACC. Not more than 25% of the Certificates shall at any
time be owned by ACC. All Certificates are and will be validly issued, and there
are no options, warrants or other rights to acquire Certificates or other equity
rights in the Borrower.
SECTION 10.28 Eligible Receivables. All Receivables included in the
--------------------
Borrowing Base as of the most recently delivered Servicer's Certificate or
Borrowing Base Confirmation are Eligible Receivables.
ARTICLE XI
COVENANTS OF THE BORROWER
From the date hereof until the first day, following the Commitment
Termination Date, on which all Obligations shall have been finally and fully
paid and performed, the Borrower hereby covenants and agrees with the Investors
and the Agent as follows:
SECTION 11.1 Protection of Security Interest of the Secured Parties.
------------------------------------------------------
(a) At or prior to the date of the initial Advance, the Borrower shall
have filed or caused to be filed UCC-1 financing statements, executed by the
Borrower as debtor, naming the Collateral Agent (for the benefit of the Secured
Parties) as secured party and describing the Collateral, with the office of the
Secretary of State of the State of Texas and the office of the Secretary of
State of each of Delaware and California and in such other locations as may be
necessary to perfect the security interests intended to be granted hereby or as
the Collateral Agent or the Agent shall have required. From time to time
thereafter, the Borrower shall execute and file such financing statements and
cause to be executed and filed such continuation 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 Collateral Agent and the Secured Parties under this
Agreement in the Borrower Collateral and in the proceeds thereof. The Borrower
shall deliver (or cause to be delivered) to the Agent and the Collateral Agent
file-stamped copies of, or filing receipts for, any document filed as provided
above, as soon as available following such filing. In the event that the
Borrower fails to perform its obligations under this subsection, the Agent or
the Collateral Agent may do so, in each case at the expense of the Borrower.
(b) The Borrower shall not change its name, identity, or structure in any
manner that would, could or might make any financing statement or continuation
statement filed by the Borrower (or by the Agent or the Collateral Agent on
behalf of the Borrower) in accordance with paragraph (a) above seriously
misleading within the meaning of (S) 9-402(7) of the UCC, unless the Borrower
shall have given the Agent and
<PAGE>
Page 81
the Collateral Agent at least 60 days prior written notice thereof, and shall
promptly file appropriate amendments to all previously filed financing
statements and continuation statements.
(c) The Borrower shall give the Agent 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 Borrower shall at all times maintain its
principal executive office within the United States of America.
(d) The Borrower shall maintain its computer systems, if any, and cause
the Servicer to maintain its computer system so that, from and after the time of
the first Advance under this Agreement, its master computer records (including
archives) that shall refer to the Collateral indicate clearly that such
Collateral is subject to first priority security interest in favor of the
Collateral Agent, for the benefit of the Secured Parties. Indication of the
Collateral Agent's (for the benefit of the Secured Parties) security interest
shall be deleted from or modified on its computer systems when, and only when,
the Collateral in question shall have been paid in full.
(e) If at any time the Borrower shall propose to sell, grant a security
interest in, or otherwise transfer any interest in motor vehicle receivables to
any prospective purchaser, lender or other transferee, the Borrower shall give
to such prospective purchaser, lender, or other transferee computer tapes,
records, or print-outs (including any restored from archives) that, if they
shall refer in any manner whatsoever to any Collateral shall indicate clearly
that such Collateral is subject to a first priority security interest in favor
of the Collateral Agent, for the benefit of the Secured Parties.
SECTION 11.2 Reporting Requirements. The Borrower shall furnish, or
----------------------
to be furnished, to the Agent:
(a) as soon as available and in any event within 90 days (or
next succeeding Business Day if the last day of such period is not a
Business Day) after the end of each fiscal year, a copy of the audited
consolidated financial statements for such year for AmeriCredit Corp.
and its consolidated Subsidiaries, certified, without qualification by
Independent Accountants acceptable to the Agent and each other report
or statement sent to shareholders or publicly filed by AmeriCredit
Corp. or the Borrower;
(b) as soon as available and in any event within 45 days (or
next succeeding Business Day if the last day of such period is not a
Business Day) after the end of each of the first three quarters of
each fiscal year of AmeriCredit Corp., a consolidated balance sheet of
AmeriCredit Corp. and its consolidated Subsidiaries as of the end of
such quarter and including the prior comparable
<PAGE>
Page 82
period, and a consolidated statement of income of AmeriCredit Corp.
and its consolidated Subsidiaries for such quarter and for the period
commencing at the end of the previous fiscal year and ending with the
end of such quarter, certified by the chief financial officer or chief
accounting officer of AmeriCredit Corp. identifying such documents as
being the documents described in this paragraph (b) and stating that
the information set forth therein fairly presents the financial
condition of AmeriCredit Corp. and its consolidated Subsidiaries as of
and for the periods then ended, subject to year-end adjustments
consisting only of normal, recurring accruals;
(c) as soon as possible and in any event within five days after
the occurrence of a Facility Termination Event or an Unmatured
Facility Termination Event, the statement of the chief financial
officer of the Borrower or AFS setting forth complete details of such
Facility Termination Event or Unmatured Facility Termination Event and
the action which the Borrower has taken, is taking and proposes to
take with respect thereto; and
(d) promptly, from time to time, such other information,
documents, records or reports respecting the Transferred Receivables,
the Other Conveyed Property or the Financed Vehicles related thereto,
the other Borrower Collateral or the condition or operations,
financial or otherwise, of the Borrower, AmeriCredit Corp., any
Seller, AFS or any of its Subsidiaries, as the Agent may, from time to
time, reasonably request.
SECTION 11.3 Preservation of Existence. The Borrower shall observe all
-------------------------
procedures required by its organizational documents and preserve and maintain
its existence, rights, franchises and privileges in the jurisdiction of its
formation and qualify and remain qualified in good standing in each jurisdiction
where the failure to preserve and maintain such existence, rights, franchises,
privileges and qualifications would materially adversely affect (1) the
interests hereunder of the Agent or any Affected Person, (2) the collectibility
of any Receivable or (3) its ability to perform its obligations hereunder or
under any of the other Transaction Documents.
SECTION 11.4 Keeping of Records and Books of Account. The Borrower shall
---------------------------------------
maintain and implement (or cause the Servicer to maintain and implement)
administrative and operating procedures (including, without limitation, an
ability to recreate records evidencing the Receivables in the event of the
destruction of the originals thereof) and keep and maintain, all documents,
books, records and other information reasonably necessary or advisable for the
collection of all Transferred Receivables (including, without limitation,
records adequate to permit the daily identification of all collections of and
adjustments to each Transferred Receivable).
SECTION 11.5 Separate Existence. The Borrower shall take all reasonable
------------------
steps (including, without limitation, all steps that the Agent may from time to
time reasonably
<PAGE>
Page 83
request) to maintain the Borrower's identity as a separate legal entity from AFS
or any of its Affiliates (including any Seller) and to make it manifest to third
parties that the Borrower is an entity with assets and liabilities distinct from
those of AFS and each other Affiliate thereof. Without limiting the generality
of the foregoing, the Borrower shall:
(a) conduct business correspondence in its own name, follow
required trust procedures and maintain appropriate books and records;
(b) except as set forth in the Trust Agreement, not permit any
limitation on its authority to conduct its business and affairs in
accordance with accepted trust practice, and shall not authorize or
suffer any Person other than the directors and officers of the Trust
Trustee to act on its behalf with respect to matters (other than
matters customarily delegated to others under powers of attorney) for
which its representatives would customarily be responsible;
(c) subject to the terms of the Custodian Agreement, maintain or
cause to be maintained by an agent of the Borrower under the
Borrower's control physical possession of all its books and records;
(d) maintain capitalization adequate for the conduct of its
business;
(e) account for and manage its liabilities separately from those
of any other Person, including, without limitation, payment of all
payroll and other administrative expenses and taxes from its own
assets;
(f) maintain its assets separately from those of any other
Person;
(g) maintain offices through which its business is conducted
separate from those of AFS and any Affiliates of AFS (provided that,
--------
to the extent that AFS and any of its Affiliates have offices in the
same location, there shall be a fair and appropriate allocation of
overhead costs and expenses among them, and each such entity shall
bear its fair share of such expenses);
(h) not commingle its funds with those of AFS or any Affiliate
of AFS or any Affiliates of the Borrower except to the extent
contemplated herein, or use its funds for other than the Borrower's
uses; and
(i) ensure that any financial reports required of the Borrower
shall comply with GAAP and shall be issued separately from, but may be
consolidated with, any reports prepared by any of its Affiliates.
SECTION 11.6 Interest Rate Hedges. The Borrower shall maintain, at all
--------------------
times on and after the date of the initial Advance hereunder, Interest Rate
Hedges (a) between
<PAGE>
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the Borrower and (i) CSFB or any of its Affiliates or (ii) any other bank or
other financial institution whose long-term rating is at least A+ from S&P and
A1 from Moody's and whose short-term unsecured debt obligation rating is at
least A-1/P-1 by S&P and Moody's, respectively, and is reasonably acceptable to
the Agent, (b) with a notional principal amount not less than the outstanding
principal amount of the Advances and with a final maturity date which is the
date of the last required Scheduled Payment of any Receivable in the Total
Receivables Pool or such earlier date approved by the Agent and the Rating
Agencies, (c) each of which has an Interest Rate Cap Strike Price no greater
than the Maximum Interest Rate Cap Strike Price and (d) which are otherwise in
form and substance reasonably acceptable to the Agent and the Rating Agencies.
SECTION 11.7 Tangible Net Worth. The Borrower shall maintain at all
------------------
times a positive Tangible Net Worth.
SECTION 11.8 Take-Out Securitization. The Borrower shall effect or cause
-----------------------
an Affiliate to effect a Take-Out Securitization no more than six months after
the Closing Date and thereafter at least once during each successive calendar
quarter.
SECTION 11.9 Sales, Liens, Etc., Against Receivables and Related Assets.
----------------------------------------------------------
The Borrower shall not, except as otherwise provided herein, sell, assign (by
operation of law or otherwise) or otherwise dispose of, or create or suffer to
exist, any Lien upon or with respect to, any Transferred Receivable or any other
Borrower Collateral.
SECTION 11.10 Stock, Merger, Consolidation, Etc. The Borrower shall not
---------------------------------
(a) Merge or consolidate with or into, or sell, convey, transfer,
exchange, lease or otherwise dispose of (whether in one transaction or in a
series of transactions) all or substantially all of its assets (whether now
owned or hereafter acquired) to, acquire all or substantially all of the assets
of, any Person or division of any Person; or, except as expressly permitted
under the terms of this Agreement and its certificate of incorporation, sell,
convey, transfer, exchange, lease or otherwise dispose of any of its assets;
(b) Issue or allow the issuance of any Certificates or other equity rights
or rights, warrants or options in respect thereof, other than the Certificates
which are and shall at all times during the term of this Agreement be legally
and beneficially owned by AFS and ACC and/or AFC, free and clear of all Liens;
or
(c) Permit ACC to own more than 25% of the Certificates outstanding at any
time.
SECTION 11.11 Change in Name. The Borrower shall not make any change to
--------------
its name or use any trade names, fictitious names, assumed names or "doing
business as"
<PAGE>
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names.
SECTION 11.12 Indebtedness. The Borrower shall not incur, create, assume,
------------
suffer to exist or otherwise become liable with respect to any Indebtedness
other than (i) hereunder and under the other Transaction Documents and the
Backup Servicer/Collateral Agent Fee Letter, and (ii) other Indebtedness for
operational expenses of the Borrower in an amount not to exceed $50,000 at any
one time outstanding.
SECTION 11.13 Guarantees. The Borrower shall not guarantee, endorse or
----------
otherwise be or become contingently liable (including by agreement to maintain
balance sheet tests) in connection with the obligations of any other Person,
except endorsements of negotiable instruments for collection in the ordinary
course of business and reimbursement or indemnification obligations in favor of
the Agent or any Affected Person as provided for under this Agreement.
SECTION 11.14 Limitation on Transactions with Affiliates. The Borrower
------------------------------------------
shall not enter into, or be a party to any transaction with any Affiliate of the
Borrower, except for (a) the transactions contemplated by the Transaction
Documents and (b) to the extent not otherwise prohibited under this Agreement,
other transactions in the nature of employment contracts and directors' fees,
upon fair and reasonable terms materially no less favorable to the Borrower than
would be obtained in a comparable arm's-length transaction with a Person not an
Affiliate.
SECTION 11.15 Documents. The Borrower shall not cancel or terminate any
---------
of the Transaction Documents to which it is party (in any capacity), or consent
to or accept any cancellation or termination of any of such agreements, or amend
or otherwise modify any term or condition of any of the Transaction Documents to
which it is party (in any capacity) or give any consent, waiver or approval
under any such agreement, or waive any default under or breach of any of the
Transaction Documents to which it is party (in any capacity) or take any other
action under any such agreement not required by the terms thereof, unless (in
each case) the Agent shall have consented thereto .
SECTION 11.16 Trust Agreement. The Borrower shall not amend, modify or
---------------
otherwise change any of the terms or provisions in its Trust Agreement, without
(x) notice thereof being furnished by the Borrower to each Rating Agency and (y)
the prior written consent of the Agent.
SECTION 11.17 Accounting Treatment. The Borrower shall not prepare any
--------------------
financial statements or other statements (including any tax filings which are
not consolidated with those of AmeriCredit Corp.) which shall account for the
transactions contemplated by the Purchase Agreement in any manner other than as
the sale of, or a capital contribution of, the Transferred Receivables and the
related assets by the Sellers to the Borrower.
<PAGE>
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SECTION 11.18 Limitation on Investments. The Borrower shall not form, or
-------------------------
cause to be formed, any Subsidiaries; or make or suffer to exist any loans or
advances to, or extend any credit to, or make any investments (by way of
transfer of property, contributions to capital, purchase of stock or securities
or evidences of indebtedness, acquisition of the business or assets, or
otherwise) in, any Affiliate or any other Person except as otherwise permitted
herein and pursuant to the Purchase Agreement.
SECTION 11.19 Distributions. The Borrower shall not declare or make (a)
-------------
payment of any distribution on or in respect of any Certificates, or (b) any
payment on account of the purchase, redemption, retirement or acquisition of any
option, warrant or other right to acquire Certificates unless (in each case) at
the time of such declaration or payment (and after giving effect thereto) no
Facility Termination Event or Unmatured Facility Termination Event shall occur
or be continuing and no amount payable by the Borrower under any Transaction
Document is then due and owing but unpaid.
SECTION 11.20 Other Liens or Interests. Except for the security interest
------------------------
granted hereunder, the Borrower will not sell, pledge, assign or transfer to any
other Person, or grant, create, incur, assume or suffer to exist any Lien on the
Borrower Collateral or any interest therein, and the Borrower shall defend the
right, title, and interest of the Collateral Agent (for the benefit of the
Secured Parties), in and to the Borrower Collateral against all claims of third
parties claiming through or under the Borrower.
ARTICLE XII
THE SERVICER
SECTION 12.1 Liability of Servicer; Indemnities.
----------------------------------
(a) The Servicer shall be liable hereunder only to the extent of the
obligations in this Agreement and the other Transaction Documents specifically
undertaken by the Servicer and the representations made by the Servicer.
(b) The Servicer shall defend, indemnify and hold harmless each
Indemnified Party from and against any and all costs, expenses, losses, damages,
claims, liabilities, penalties, fines, forfeitures and judgments, including
reasonable fees and expenses of counsel and expenses of litigation arising out
of or resulting from the use, ownership or operation of any Financed Vehicle
related to a Transferred Receivable.
(c) The Servicer shall indemnify, defend and hold harmless each
Indemnified Party from and against any taxes that may at any time be asserted
against such Indemnified Party with respect to the transactions contemplated in
this Agreement, including, without limitation, any sales, gross receipts,
general corporation, tangible personal property, transfer, privilege or license
taxes (but not including any income or franchise taxes or other taxes based upon
the net income of the applicable Indemnified
<PAGE>
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Party, or taxes asserted with respect to, and as of the date of, the sale of the
Receivables to the Borrower) and costs and expenses in defending against the
same.
(d) The Servicer shall indemnify, defend and hold harmless each
Indemnified Party from and against any and all costs, expenses, losses, claims,
penalties, fines, forfeitures, judgments, damages and liabilities to the extent
that such cost, expense, loss, claim, penalty, fine, forfeiture, judgment,
damage or liability arose out of, or was imposed upon such Indemnified Party by
reason of the breach of this Agreement or any other Transaction Document to
which it is party 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 negligent disregard of its obligations and duties under this Agreement.
(e) Indemnification under this Section 12.1 shall survive the termination
------------
of this Agreement and shall include reasonable fees and expenses of counsel and
expenses of litigation. If the Servicer has made any indemnity payments pursuant
to this Section 12.1 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) Notwithstanding the indemnity provisions contained in Sections 12.1(b)
----------------
through (e), the Servicer shall not be required to indemnify any Indemnified
---
Party against any costs, expenses, losses, damages, claims or liabilities to the
extent the same shall have been (i) caused by the wilful misconduct or gross
negligence of such party, or (ii) suffered by reason of uncollectible or
uncollected Receivables not caused by the Servicer's negligence, misfeasance or
bad faith.
(g) If for any reason (other than the exclusions (i) and (ii) set forth in
Section 12.1(f)) the indemnification provided above in Section 12.1 is
- --------------- ------------
unavailable to an Indemnified Party or is insufficient to hold an Indemnified
Party harmless, then the Servicer shall contribute to the amount paid or payable
by such Indemnified Party as a result of such loss, claim, damage or liability
in such proportion as is appropriate to reflect not only the relative benefits
received by such Indemnified Party, on the one hand, and the Servicer, on the
other hand, but also the relative fault of such Indemnified Party, on the one
hand, and the Servicer, on the other hand, as well as any other relevant
equitable considerations.
SECTION 12.2 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 an Eligible Servicer,
shall be acceptable to the
<PAGE>
Page 88
Agent and the Required Lenders and shall be capable of fulfilling the duties of
the Servicer contained in this Agreement. Any Person (i) 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 the other Transaction Documents and, whether or not
such assumption agreement is executed, shall be the successor to the Servicer
under this Agreement and the other Transaction Documents 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 hereunder. The Servicer shall provide notice of any
merger, consolidation or succession pursuant to this Section 12.2(a) to the
---------------
Agent, each Rating Agency, the Collateral Agent, and the Backup Servicer.
Notwithstanding the foregoing, as a condition to the consummation of the
transactions referred to in clauses (i), (ii), (iii) and (iv) above, (x)
------------------------ ----
immediately after giving effect to such transaction, no representation or
warranty made pursuant to Section 8.6 shall have been breached in any material
-----------
respect (for purposes hereof, such representations and warranties shall speak as
of the date of the consummation of such transaction) and no Facility Termination
Event or Unmatured Facility Termination Event shall have occurred and be
continuing, (y) the Servicer shall have delivered to the Agent 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
-------
12.2(a), and (z) the Servicer shall have delivered to the Agent 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 security interest of
the Collateral Agent (for the benefit of the Secured Parties) in the Transferred
Receivables and other Borrower Collateral and reciting the details of the
filings or (B) no such action shall be necessary to preserve and protect such
interest.
(b) Any Person (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.
<PAGE>
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SECTION 12.3 Limitation on Liability of Servicer, Backup Servicer and
--------------------------------------------------------
Others.
- ------
(a) Neither the The Servicer shall not 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 Borrower, the Investors or
the Agent, 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 in the performance of duties. 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 written advice of counsel or on any document of any
kind prima facie properly executed and submitted by any Person respecting any
matters arising under this Agreement. The Backup Servicer shall not be required
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 the repayment of such funds or adequate written indemnity
against such risk or liability is not reasonably assured to it in writing prior
to the expenditure or risk of such funds or incurrence of financial liability.
(b) Unless acting as Servicer hereunder, the Backup Servicer shall not be
liable for any obligation of the Servicer contained in this Agreement, and the
Agent, the Borrower and the Investors shall look only to the Servicer to perform
such obligations.
(c) The Backup Servicer shall have no responsibility and shall not be in
default hereunder nor incur any liability for any failure, error, malfunction or
any delay in carrying out any of its duties under this Agreement if any such
failure or delay results from the Backup Servicer acting in accordance with
information prepared or supplied by a Person other than the Backup Servicer or
the failure of any such Person to prepare or provide such information. The
Backup Servicer shall have no responsibility, shall not be in default and shall
incur no liability (i) for any act or failure to act by any third party,
including the Servicer or for any inaccuracy or omission in a notice or
communication received by the Backup Servicer from any third party or (ii) that
is due to or results from the invalidity, unenforceability of any Receivable
under applicable law or the breach or the inaccuracy of any representation or
warranty made with respect to any Receivable.
SECTION 12.4 Delegation of Duties. So long as AFS is the Servicer, the
--------------------
Servicer may delegate duties under this Agreement to an Affiliate of AFS with
the prior written consent of the Agent and written notice to the Backup
Servicer. The Servicer also may at any time perform the specific duties of (a)
repossession of Financed Vehicles, (b) tracking the insurance on Financed
Vehicles and (c) pursuing the collection of deficiency balances on Delinquent
Receivables through sub-contractors who are in the business of servicing
automotive receivables, without the consent of the Agent, the Lenders or the
Backup Servicer. The Servicer may also perform other non-material
<PAGE>
Page 90
specific duties through such sub-contractors in accordance with customary
servicing policies and procedures without the prior consent of the Agent;
provided, however, that no such delegation or subcontracting of duties by the
- -------- -------
Servicer shall relieve the Servicer of its responsibility with respect to such
duties. Neither AFS nor any other party acting as Servicer hereunder shall
appoint any subservicer hereunder without the prior written consent of the Agent
and written notice to the Backup Servicer. If the Backup Servicer assumes the
role of successor Servicer, such successor Servicer may delegate its duties
under this Agreement to any Person or appoint a subservicer with the prior
consent of the Agent.
SECTION 12.5 Servicer and Backup Servicer Not to Resign. Subject to the
------------------------------------------
provisions of Section 12.2, 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 result in a material adverse effect on the Servicer or the Backup
Servicer, as the case may be, and the Agent does not elect to waive the
obligations of the Servicer or the Backup Servicer, as the case may be, to
perform the duties which render it legally unable to act or to delegate those
duties to another Person. Any such determination permitting the resignation of
the Servicer or Backup Servicer shall be evidenced by an Opinion of Counsel to
such effect delivered and acceptable to the Agent. No resignation of the
Servicer shall become effective until the Backup Servicer or an entity
acceptable to the Agent and the Required Lenders shall have assumed the
responsibilities and obligations of the Servicer. No resignation of the Backup
Servicer shall become effective until an entity acceptable to the Agent and the
Required Lenders 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 as permitted by this Section 12.5, the Backup Servicer
------------
may petition a court for its removal. Notwithstanding the foregoing, the Backup
Servicer may resign for any reason, provided an entity acceptable to the Agent
and the Required Lenders shall have assumed the responsibilities and obligations
of the Backup Servicer prior to the effectiveness of any such resignation.
ARTICLE XIII
SERVICER TERMINATION EVENTS
SECTION 13.1 Servicer Termination Event. For purposes of this Agreement,
--------------------------
each of the following shall constitute a "Servicer Termination Event":
--------------------------
(a) Any failure by the Servicer or, so long as AFS or an Affiliate of the
Borrower is the Servicer, the Borrower to deliver to the Collateral Agent or the
Agent any proceeds or payment required to be so delivered under the terms of
this Agreement
<PAGE>
Page 91
(or, if AFS or an Affiliate of the Borrower is the Servicer, under the
Purchase Agreement) that continues unremedied for a period of two Business Days
(or, with respect to any Purchase Amounts, one Business Day) after written
notice is received by the Servicer from the Agent or after discovery of such
failure by a Responsible Officer of the Servicer;
(b) Failure by the Servicer to deliver the Servicer's Certificate required
by Section 8.9 by 12:00 Noon, New York City time, on the second Business Day
-----------
after each Determination Date;
(c) Failure on the part of the Servicer to observe in all material aspects
its covenants and agreements set forth in Section 12.2(a);
---------------
(d) Failure on the part of the Servicer or, so long as AFS or an Affiliate
of the Borrower is the Servicer, the Borrower, duly to observe or perform in any
material respect any other covenants or agreements of the Servicer or, so long
as AFS is the Servicer, the Borrower, as the case may be, set forth in this
Agreement, which failure continues unremedied for a period of 30 days after the
earlier of knowledge thereof by a Responsible Officer of the Servicer and the
date on which written notice of such failure, requiring the same to be remedied,
shall have been given to the Servicer by the Agent;
(e) The entry of a decree or order for relief by a court or regulatory
authority having jurisdiction in respect of the Servicer (or, if AFS or an
Affiliate of the Borrower is the Servicer, the Borrower) in an involuntary case
under the Bankruptcy Code, as now or hereafter in effect, or another present or
future, federal or state, bankruptcy, insolvency or similar law, or appointing a
receiver, liquidator, assignee, trustee, custodian, sequestrator or other
similar official of the Servicer (or, if AFS or an Affiliate of the Borrower is
the Servicer, the Borrower) or of any substantial part of their respective
properties or ordering the winding up or liquidation of the affairs of the
Servicer (or, if AFS or an Affiliate of the Borrower is the Servicer, the
Borrower) or the commencement of an involuntary case under the Bankruptcy Code,
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;
(f) The commencement by the Servicer (or, if AFS or an Affiliate of the
Borrower is the Servicer, the Borrower) of a voluntary case under the Bankruptcy
Code, 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
(or, if AFS or an Affiliate of the Borrower is the Servicer, the Borrower) to
the appointment of or taking possession by a receiver, liquidator, assignee,
trustee, custodian, sequestrator or other similar official of the Servicer (or,
if AFS or an Affiliate of the
<PAGE>
Page 92
Borrower is the Servicer, the Borrower) generally to pay its debts as such debts
become due or the taking of corporate action by the Servicer (or, if AFS or an
Affiliate of the Borrower is the Servicer, the Borrower) in furtherance of any
of the foregoing;
(g) Any representation, warranty or statement of the Servicer (or, if AFS
or an Affiliate of the Borrower is the Servicer, the Borrower) made in this
Agreement or any certificate, report or other writing delivered pursuant hereto
shall prove to be incorrect in any material respect as of the time when the same
shall have been made (excluding, however, any representation or warranty set
forth in the definition of "Eligible Receivable"), and, within 30 days after the
-------------------
earlier of knowledge thereof by a Responsible Officer of the Servicer and the
date written notice thereof shall have been given to the Servicer by the Agent,
the circumstances or condition in respect of which such representation, warranty
or statement was incorrect shall not have been eliminated or otherwise cured;
(h) The Agent shall not have delivered a Servicer Extension Notice
pursuant to Section 8.14;
------------
(i) The average of the Servicer Delinquency Ratios for the last day of
each of the preceding three Collection Periods exceeds 15.5%;
(j) The Portfolio Net Loss Ratio exceeds 8%; or
(k) The occurrence and continuance of a Facility Termination Event.
SECTION 13.2 Consequences of a Servicer Termination Event. If a Servicer
--------------------------------------------
Termination Event shall occur and be continuing, the Agent may, and, upon the
direction of the Required Lenders, the Agent shall, by written notice given to
the Servicer, 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 if the Agent shall not have delivered a Servicer Extension Notice pursuant to
Section 8.14, all authority, power, obligations and responsibilities of the
- ------------
Servicer under this Agreement automatically shall pass to, be vested in and
become obligations and responsibilities of the Backup Servicer; provided,
--------
however, that the Backup Servicer shall have no liability with respect to any
- -------
obligation which was required to be performed by the prior Servicer prior to the
date that the Backup Servicer becomes the Servicer or any claim of a third party
based on any alleged action or inaction of the prior Servicer. The Backup
Servicer is authorized and empowered by this Agreement to execute and deliver,
on behalf of the prior 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 termination, whether to
complete the transfer and endorsement of the Transferred Receivables and related
documents to show the Collateral Agent (for the benefit of the Secured Parties)
as lienholder or secured party, or otherwise. The prior Servicer agrees to
cooperate with the Backup Servicer in
<PAGE>
Page 93
effecting the termination of the responsibilities and rights of the prior
Servicer under this Agreement, including, without limitation and at the prior
Servicer's expense, the transfer to the Backup Servicer for administration by it
of all cash amounts that shall at the time be held by the prior Servicer for
deposit, or have been deposited by the prior Servicer, in the Collection Account
or thereafter received with respect to the Transferred Receivables and the
delivery to the Backup Servicer of all Receivable Files, Monthly Records and
Collection Records and a computer tape in readable form containing all
information necessary to enable the Backup Servicer or a successor Servicer to
service the Transferred Receivables. In addition, upon the occurrence of a
Servicer Termination Event, the Servicer shall, if so requested by the Agent,
deliver to the Backup Servicer its Monthly Records within one day after demand
therefor and a computer tape or diskette (or any other means of electronic
transmission acceptable to the Backup Servicer) 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 Transferred Receivables. If
requested by the Agent, the Backup Servicer or successor Servicer shall
terminate the Lockbox Agreement with respect to the Transferred Receivables and
direct the Obligors to make all payments under the Transferred Receivables
directly to the successor Servicer (in which event the successor Servicer shall
process such payments in accordance with Section 8.2(e)), or to a lockbox
--------------
established by the successor Servicer at the direction of the Agent, at the
prior Servicer's expense. The terminated Servicer shall grant the Agent, the
Collateral Agent and the Backup Servicer reasonable access to the terminated
Servicer's premises at the terminated Servicer's expense.
SECTION 13.3 Appointment of Successor Servicer.
---------------------------------
(a) On and after (i) the time the Servicer receives a notice of
termination pursuant to Section 13.2 or (ii) upon the resignation of the
------------
Servicer pursuant to Section 12.5 or (iii) the receipt by the Backup Servicer
------------
(or any alternate successor Servicer appointed pursuant to Section 13.3(b)) of
---------------
written notice from the Agent that the Agent is not extending the Servicer's
term pursuant to Section 8.14, the Backup 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 Servicer by the terms and
provisions of this Agreement; provided, however, that the Backup Servicer shall
-------- -------
not be liable for any acts, omissions or obligations of the Servicer prior to
such succession or for any breach by the Servicer of any of its representations
and warranties contained in this Agreement or in any related document. The
Servicer 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
termination under Section 13.2 upon the occurrence of any Servicer Termination
------------
Event applicable to it as Servicer.
<PAGE>
Page 94
(b) The Agent (with the consent of the Required Lenders) 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 shall
have no liability to the Investors, the Borrower, AFS, the Person then serving
as Backup Servicer 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 the Agent shall fail to appoint a successor Servicer within 60 days of its
receipt of notice from the Backup Servicer to such effect, the Backup Servicer
may petition a court of competent jurisdiction to appoint any Eligible Servicer
as the successor to the Servicer. Pending such appointment, 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 12.5, 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 13.2, the resignation of the Servicer pursuant to
------------
Section 12.5 or the non-extension of the servicing term of the Servicer pursuant
- ------------
to Section 8.14. If, upon the termination of the Servicer pursuant to Section
------------ -------
13.2 or 8.14 or the resignation of the Servicer pursuant to Section 12.5, the
- ---- ---- ------------
Agent (with the consent of the Required Lenders) 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 appointed pursuant to this Section 13 shall be
----------
entitled to compensation based upon a rate equal to the Servicing Fee Rate. In
addition, any successor Servicer shall be entitled to receive Transition Costs
in accordance with the Security Agreement.
ARTICLE XIV
FACILITY TERMINATION EVENTS;
THEIR EFFECT
SECTION 14.1 Facility Termination Events. Each of the following shall
---------------------------
constitute a Facility Termination Event under this Agreement:
(a) Default in the payment when due of any principal of any Advance, which
default shall continue unremedied for one Business Day, or default in the
payment of any other amount payable by the Borrower hereunder, including,
without limitation, any Yield on any Advance or any Fees which default shall
continue for one Business Day; or the Borrower shall fail to comply with the
Clean-Up Requirement during any Clean-Up Period;
(b) The Borrower or AFS (in any capacity) or any Seller shall fail to
perform or observe any other term, covenant or agreement contained in this
Agreement or in any
<PAGE>
Page 95
other Transaction Document on its part to be performed or observed and, except
in the case of the covenants and agreements contained in Sections 11.7 and 11.8,
------------- ----
as to each of which no grace period shall apply, any such failure shall remain
unremedied for 30 days (two Business Days with respect to Section 11.6) after
------------
knowledge thereof or after written notice thereof shall have been given by the
Agent to AFS;
(c) Any representation or warranty of the Borrower or AFS (in any
capacity) or any Seller made or deemed to have been made hereunder or in any
other Transaction Document or any other writing or certificate furnished by or
on behalf of the Borrower, AFS or any Seller to the Agent or the Lenders for
purposes of or in connection with this Agreement or any other Transaction
Document (including any Servicer's Certificate or any Borrowing Base
Confirmation delivered pursuant to Section 7.3) shall prove to have been false
-----------
or incorrect in any material respect when made or deemed to have been made and,
within 30 days after the earlier of knowledge thereof by a Responsible Officer
of the Borrower or AFS, as the case may be, and the date written notice thereof
shall have been given to the Borrower or AFS, as the case may be, by the Agent,
the circumstances or condition in respect of which such representation, warranty
or statement was incorrect shall not have been eliminated or otherwise cured;
provided that no breach shall be deemed to occur hereunder in respect of any
- --------
representation or warranty relating to eligibility of any Receivable on its
Purchase Date to the extent AFS has repurchased such Receivable in accordance
with the provisions hereof or of the Purchase Agreement;
(d) An Event of Bankruptcy shall have occurred and remain continuing with
respect to AmeriCredit Corp., the Borrower, AFS or any Seller;
(e) The aggregate principal amount of all Advances and Accrued Expenses
outstanding on any day shall exceed the Borrowing Base on such day, and such
condition continues unremedied for one Business Day (such excess referred to as
the "Borrowing Base Deficiency");
-------------------------
(f) The Internal Revenue Service shall file notice of a Lien pursuant to
Section 6323 of the Internal Revenue Code with regard to any assets of the
Borrower or any material portion of the assets of AmeriCredit Corp., AFS or any
Seller and such Lien shall not have been released within 30 days, or the Pension
Benefit Guaranty Corporation shall file notice of a Lien pursuant to Section
4068 of ERISA with regard to any of the assets of AmeriCredit Corp., the
Borrower, a Seller or AFS and such Lien shall not have been released within 30
days;
(g) (i) Any Transaction Document or any Lien granted thereunder by the
Borrower, shall (except in accordance with its terms), in whole or in part,
terminate, cease to be effective or cease to be the legally valid, binding and
enforceable obligation of the Borrower; or (ii) the Borrower or any other party
shall, directly or indirectly, contest in any manner such effectiveness,
validity, binding nature or enforceability; or
<PAGE>
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(iii) any Lien securing any Obligation shall, in whole or in part, not be or
cease to be a perfected first priority security interest against the Borrower;
(h) A Servicer Termination Event shall have occurred;
(i) On any Determination Date, the Delinquency Ratio averaged for such
Determination Date and the three immediately preceding Determination Dates
exceeds 2.5%;
(j) The Borrower, AmeriCredit Corp., any Seller, or AFS shall fail to pay
any principal of or premium or interest on any Indebtedness having a principal
amount of $5,000,000 (or, in the case of the Borrower, $50,000) or greater, when
the same becomes due and payable (whether by scheduled maturity, required
prepayment, acceleration, demand or otherwise) and such failure shall continue
after the applicable grace period, if any, specified in the agreement or
instrument relating to such Indebtedness; or any other default under any
agreement or instrument relating to any such Indebtedness of the Borrower,
AmeriCredit Corp., any Seller, or AFS, as applicable, or any other event, shall
occur and shall continue after the applicable grace period, if any, specified in
such agreement or instrument if the effect of such default or event is to
accelerate, or to permit the acceleration of, the maturity of such Indebtedness;
or any such Indebtedness shall be declared to be due and payable or required to
be prepaid (other than by a regularly scheduled required prepayment), redeemed,
purchased or defeased, or an offer to prepay, redeem, purchase or defease such
Indebtedness shall be required to be made, in each case, prior to the stated
maturity thereof;
(k) There shall occur a "termination event"or "event of default" or
similar event under any other Transaction Document;
(l) Either (i) the long-term senior unsecured debt of AmeriCredit Corp. is
rated by either S&P or Moody's below B- or B1, respectively, or (ii) if
AmeriCredit Corp. is not so rated, the Agent, acting at the direction of the
Required Lenders, deems the creditworthiness of AmeriCredit Corp. to be
equivalent to a rating below B-/B1;
(m) The weighted average AmeriCredit Score for all Receivables in the
Total Receivables Pool shall at any time be less than 215;
(n) The average of the Monthly Extension Rates for three consecutive
Determination Dates shall exceed 5.0%;
(o) As of any Distribution Date, the amount in the Reserve Account is less
than the Minimum Reserve Account Amount, and such deficiency is not cured on or
prior to the immediately succeeding Distribution Date;
<PAGE>
Page 97
(p) This Agreement and the Advances hereunder are not rated "A/A2" by S&P
and Moody's within 45 days after the Closing Date or, after such rating is
granted, the same is reduced or withdrawn by S&P or Moody's;
(q) A notice of termination with respect to the Lockbox Agreement with
respect to the Transferred Receivables shall have been delivered, or a
termination of the Lockbox Agreement shall have otherwise occurred, and a
replacement Lockbox Bank reasonably acceptable to the Agent shall not have
executed a Lockbox Agreement with respect to the Transferred Receivables in form
and substance satisfactory to the Agent within 30 days of such notice;
(r) (i) One or more final rulings or judgments shall be entered against,
or one or more settlements shall be entered into by, AmeriCredit Corp. or AFS
(and/or any Affiliate of AFS other than the Borrower) involving in the aggregate
liability (not paid or fully covered by insurance) of $500,000 or more and, in
the case of a judgment, shall remain undischarged or unstayed within 60 days
from entry thereof or (ii) one or more final rulings or judgments shall be
entered against, or one or more settlements shall be entered into by, the
Borrower involving in the aggregate liability (not paid or fully covered by
insurance) of $50,000 or more and, in the case of a judgment, shall remain
undischarged or unstayed within 60 days from entry thereof;
(s) AmeriCredit Corp. shall be a party to any transaction of merger or
consolidation in which it is not the surviving entity or shall sell all or
substantially all of its assets to another Person unless it has given prior
written notice thereof to the Agent and the following conditions are met: (i)
the Required Lenders consent in writing, and (ii) the Rating Agencies shall
confirm that such transaction will not result in a withdrawal of or reduction in
their ratings of this Agreement or the Advances hereunder;
(t) A Change of Control shall occur with respect to AmeriCredit Corp.;
(u) The Tangible Net Worth of AmeriCredit Corp. shall be less than
$200,000,000 for any period of 20 consecutive days; or
(v) Either AFS or ACC shall cease to be a direct or indirect wholly-owned
subsidiary of AmeriCredit Corp.; or AFC shall cease to be a direct or indirect
wholly-owned subsidiary of AFS; or AFS and AFC and/or ACC shall at any time own
less than 100% of the Certificates issued pursuant to the Trust Agreement.
SECTION 14.2 Effect of Facility Termination Event.
------------------------------------
(a) Optional Termination. Upon the occurrence of a Facility Termination
--------------------
Event (other than a Facility Termination Event described in Section 14.1(d)),
---------------
the Agent may, and, at the direction of the Required Lenders, the Agent shall
declare all or any portion of the outstanding principal amount of the Advances
and other Obligations to be
<PAGE>
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due and payable and/or the Facility (if not theretofore terminated) to be
terminated, whereupon the full unpaid amount of such Advances and other
Obligations which shall be so declared due and payable shall be and become
immediately due and payable, without further notice, demand or presentment,
and/or, as the case may be, the Facility (and the Commitments of the Committed
Lenders, if any, thereunder) shall terminate.
(b) Automatic Termination. Upon the occurrence of a Facility Termination
---------------------
Event described in Section 14.1(d) or a Servicer Termination Event described in
---------------
Section 13.1(e) or (f), the Facility Termination Date shall be deemed to have
- ----------------------
occurred automatically, and all outstanding Advances under this Agreement and
all other Obligations under this Agreement shall become immediately and
automatically due and payable, all without presentment, demand, protest, or
notice of any kind.
SECTION 14.3 Certain Rights Upon Facility Termination Event.
----------------------------------------------
(a) In addition to the rights and remedies specified in Section 14.2, if a
------------
Facility Termination Event shall have occurred and be continuing, the Agent may
direct the Collateral Agent to exercise any of the remedies specified in the
Security Agreement or available to the Collateral Agent as a secured party under
the UCC in respect of the Borrower Collateral (or any portion thereof).
(b) The rights and remedies provided to the Collateral Agent, the Agent
and the Secured Parties herein and in the other Transaction Documents are
cumulative and not exclusive of any other rights and remedies the Collateral
Agent, the Agent and the Secured Parties may have under applicable law.
(c) If a Facility Termination Event shall have occurred and be continuing,
then at any time after the acceleration of the maturity of the Advances and
other Obligations has been made and before a judgment or decree for payment of
the money due has been obtained by the Agent as hereinafter provided, the
Required Lenders, by written notice to the Borrower and the Agent, may rescind
and annul such declaration and its consequences if:
(i) the Borrower has paid or deposited with the Agent a sum
sufficient to pay
(A) all payments of principal of and Yield on the Advances
and all other amounts that would then be due hereunder or if the
Facility Termination Event giving rise to such acceleration had
not occurred; and
(B) all sums paid or advanced by the Agent hereunder and
the reasonable compensation, expenses, disbursements and advances
of the Agent and its agents and counsel; and
<PAGE>
Page 99
(ii) all Facility Termination Events, other than the nonpayment
of the principal of the Advances that has become due solely by such
acceleration, have been cured or waived.
No such rescission shall affect any subsequent default or impair any right
consequent thereto.
ARTICLE XV
THE AGENT
SECTION 15.1 Appointment. Each Lender hereunder hereby irrevocably
-----------
designates and appoints CSFB as Agent hereunder, and authorizes the Agent to
take such action on its behalf under the provisions of this Agreement, the
Security Agreement and the other Transaction Documents and to exercise such
powers and perform such duties as are expressly delegated to the Agent by the
terms of this Agreement, the Security Agreement and the other Transaction
Documents, together with such other powers as are reasonably incidental thereto.
Notwithstanding any provision to the contrary elsewhere in this Agreement, the
Agent shall not have any duties or responsibilities, except those expressly set
forth herein, or any fiduciary relationship with any Lender, and no implied
covenants, functions, responsibilities, duties, obligations or liabilities on
the part of the Agent to any Lender shall be read into this Agreement, the
Security Agreement or the other Transaction Documents or shall otherwise exist
against the Agent. In performing its functions and duties hereunder, the Agent
shall act solely as the agent of the Lenders, and the Agent does not assume, nor
shall be deemed to have assumed, any obligation or relationship of trust or
agency with or for any such Person.
SECTION 15.2 Delegation of Duties. The Agent may execute any of its duties
--------------------
under this Agreement, the Security Agreement and the other Transaction Documents
by or through its subsidiaries, affiliates, agents or attorneys-in-fact and
shall be entitled to advice of counsel concerning all matters pertaining to such
duties. The Agent shall not be responsible to any Lender for the negligence or
misconduct of any agents or attorneys-in-fact selected by it with reasonable
care.
SECTION 15.3 Exculpatory Provisions. Neither the Agent (acting in such
----------------------
capacity) nor any of its directors, officers, agents or employees shall be (a)
liable for any action lawfully taken or omitted to be taken by it or them or any
Person described in Section 15.2 under or in connection with this Agreement, the
------------
Security Agreement or the other Transaction Documents (except for its, their or
such Person's own gross negligence or willful misconduct), or (b) responsible in
any manner to any Person for any recitals, statements, representations or
warranties of any Person (other than itself) contained in the Transaction
Documents or in any certificate, report, statement or other
<PAGE>
Page 100
document referred to or provided for in, or received under or in connection
with, the Transaction Documents or for the value, validity, effectiveness,
genuineness, enforceability or sufficiency of the Transaction Documents or any
other document furnished in connection therewith or herewith, or for any failure
of any Person (other than itself or its directors, officers, agents or
employees) to perform its obligations under any Transaction Document or for the
satisfaction of any condition specified in a Transaction Document. Except as
otherwise expressly provided in this Agreement, the Agent shall not be under any
obligation to any Person to ascertain or to inquire as to the observance or
performance of any of the agreements or covenants contained in, or conditions
of, the Transaction Documents, or to inspect the properties, books or records of
the Borrower, the AFS or the Servicer.
SECTION 15.4 Reliance by Agent. The Agent shall in all cases be
-----------------
entitled to rely, and shall be fully protected in relying, upon any note,
writing, resolution, notice, consent, certificate, affidavit, letter, cablegram,
telegram, telecopy, telex or teletype message, statement, order or other
document or conversation believed by it to be genuine and correct and to have
been signed, sent or made by the proper Person or Persons and upon advice and
statements of legal counsel (including, without limitation, counsel to each of
the Lenders), independent accountants and other experts selected by the Agent.
The Agent shall in all cases be fully justified in failing or refusing to take
any action under this Agreement, the Security Agreement, any other Transaction
Document or any other document furnished in connection herewith or therewith
unless it shall first receive such advice or concurrence of the Lenders, as it
deems appropriate, or it shall first be indemnified to its satisfaction by the
Lenders against any and all liability, cost and expense which may be incurred by
it by reason of taking or continuing to take any such action. The Agent shall in
all cases be fully protected in acting, or in refraining from acting, under this
Agreement, the Security Agreement, the other Transaction Documents or any other
document furnished in connection herewith or therewith in accordance with a
request of the Required Lenders, and such request and any action taken or
failure to act pursuant thereto shall be binding upon all the Lenders.
SECTION 15.5 Action Upon Certain Events; Reports and Notices.
-----------------------------------------------
(a) To the extent the Agent is entitled to consent to or withhold its
consent of any waiver or amendment of this Agreement, the Security Agreement or
other Transaction Documents in accordance with the terms hereof or thereof, or
is notified in writing by a party hereto of a Facility Termination Event or
Servicer Termination Event, the Agent shall (i) give prompt notice to the
Lenders of any such waiver, amendment, Facility Termination Event or Servicer
Termination Event of which it is aware, and (ii) take such action with respect
to such waiver, amendment, Facility Termination Event or Servicer Termination
Event as shall be directed by the Required Lenders; provided, however, that
-------- -------
unless and until the Agent shall have received such directions, the Agent may
(but shall not be obligated to) take such action, or refrain from taking such
action, with respect to such waiver, amendment, Facility Termination Event or
Servicer
<PAGE>
Page 101
Termination Event, as applicable, as the Agent shall, in its sole discretion,
deem advisable and in the best interests of the Lenders.
(b) The Agent shall upon request promptly provide the Lenders with copies
of reports and notices received by it hereunder and under the Custodian
Agreement and the Security Agreement.
SECTION 15.6 Non-Reliance on Agent. The Lenders expressly acknowledge
---------------------
that neither the Agent, nor any of its officers, directors, employees, agents,
attorneys-in-fact or affiliates has made any representations or warranties to it
and that no act by the Agent hereafter taken, including, without limitation, any
review of the affairs of either the Borrower, any Seller, AFS, the Servicer or
the Backup Servicer, shall be deemed to constitute any representation or
warranty by the Agent to any Lender. Except as expressly provided herein, the
Agent shall not have any duty or responsibility to provide any Lender with any
credit or other information concerning the Borrower Collateral or the business,
operations, property, prospects, financial and other condition or
creditworthiness of the Borrower, AFS, any Seller, the Servicer, the Lenders or
the Backup Servicer which may come into the possession of the Agent or any of
its officers, directors, employees, agents, attorneys-in-fact or affiliates
SECTION 15.7 Indemnification. The Committed Lenders agree to indemnify
---------------
the Agent and its officers, directors, employees, representatives and agents (to
the extent not reimbursed by the Borrower, the Servicer or AFS under the
Transaction Documents, and without limiting the obligation of such Persons to do
so in accordance with the terms of the Transaction Documents), ratably according
to their Commitment Percentages, from and against any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements of any kind or nature whatsoever (including, without
limitation, the reasonable fees and disbursements of counsel for the Agent or
the affected Person in connection with any investigative, or judicial proceeding
commenced or threatened, whether or not the Agent or such affected Person shall
be designated a party thereto) that may at any time be imposed on, incurred by
or asserted against the Agent or such affected Person as a result of, or arising
out of, or in any way related to or by reason of, any of the transactions
contemplated hereunder or under the Transaction Documents or any other document
furnished in connection herewith or therewith (but excluding any such
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements resulting solely from the gross negligence or
willful misconduct of the Agent or such affected Person).
SECTION 15.8 Successor Agent. The Agent may, upon five (5) days'
---------------
notice to the Lenders (with a copy to the Borrower), resign as Agent; provided,
--------
in either case, that a Lender agrees to become the successor Agent hereunder in
accordance with the next sentence. If the Agent shall resign as Agent under this
Agreement, then the Required Lenders during such period shall appoint from among
the Committed Lenders a
<PAGE>
Page 102
successor agent, whereupon such successor agent shall succeed to the rights,
powers and duties of the Agent, and the term "Agent" shall mean such successor
agent, effective upon its acceptance of such appointment, and the former Agent's
rights, powers and duties as Agent shall be terminated, without any other or
further act or deed on the part of such former Agent or any of the parties to
this Agreement. After the retiring Agent's resignation hereunder as Agent, the
provisions of this Article XV shall inure to its benefit as to any actions taken
----------
or omitted to be taken by it while it was Agent under this Agreement.
SECTION 15.9 Liability of the Agent. Notwithstanding any provision of
----------------------
this Agreement, the Security Agreement or any other Transaction Document: (i)
the Agent shall not have any obligations under this Agreement, the Security
Agreement or any other Transaction Document other than those specifically set
forth herein and therein, and no implied obligations of the Agent shall be read
into this Agreement, the Security Agreement or any other Transaction Document;
and (ii) in no event shall the Agent be liable under or in connection with this
Agreement, the Security Agreement or any other Transaction Document for
indirect, special, or consequential losses or damages of any kind, including
lost profits, even if advised of the possibility thereof and regardless of the
form of action by which such losses or damages may be claimed. Neither the Agent
nor any of its respective directors, officers, agents or employees shall be
liable for any action taken or omitted to be taken in good faith by it or them
under or in connection with this Agreement, the Security Agreement or any other
Transaction Document, except for its or their own gross negligence or willful
misconduct. Without limiting the foregoing, the Agent (a) may consult with legal
counsel (including counsel for the Lenders, the Borrower or the Servicer),
independent public accountants and other experts selected by it and shall not be
liable for any action taken or omitted to be taken in good faith by it in
accordance with the advice of such counsel, accountants or experts, (b) shall
not be responsible to the Lenders, the Borrower, AFS, the Servicer, any Seller,
or the Backup Servicer for any statements, warranties or representations (other
than its own statements) made in or in connection with this Agreement, the
Security Agreement or the other Transaction Documents, (c) shall not be
responsible to the Lenders, the Borrower, the AFS, the Servicer, any Seller or
the Backup Servicer for the due execution, legality, validity, enforceability,
genuineness, sufficiency or value of this Agreement, the Security Agreement or
the other Transaction Documents (other than the legality, validity,
enforceability or genuineness of its own execution, authorization and
performance hereof and thereof), (d) shall incur no liability under or in
respect of any of the commercial paper or other obligations of the Lenders under
this Agreement, the Security Agreement or the other Transaction Documents and
(e) shall incur no liability under or in respect of this Agreement, the Security
Agreement or the other Transaction Documents by acting upon any notice
(including notice by telephone), consent, certificate or other instrument or
writing (which may be by facsimile) believed by it to be genuine and signed or
sent by the proper party or parties. Notwithstanding anything else herein or in
the other Transaction Documents, it is agreed that where the Agent may be
required under this Agreement, the Security
<PAGE>
Page 103
Agreement or the other Transaction Documents to give notice of any event or
condition or to take any action as a result of the occurrence of any event or
the existence of any condition, the Agent agrees to give such notice or take
such action only to the extent that it has actual knowledge of the occurrence of
such event or the existence of such condition, and shall incur no liability for
any failure to give such notice or take such action in the absence of such
knowledge.
SECTION 15.10 Agent and Affiliates. The Agent and any of its Affiliates
--------------------
may generally engage in any kind of business with the Borrower, the Servicer,
any Seller, AFS, the Backup Servicer, any Obligor, any of their respective
Affiliates and any Person who may do business with or own securities of the
Borrower, the Servicer, any Seller, AFS, the Backup Servicer, any Obligor or any
of their respective Affiliates, all as if the Agent were not the Agent hereunder
and without any duty to account therefor to any Lender.
ARTICLE XVI
ASSIGNMENTS
SECTION 16.1 Restrictions on Assignments. Except as specifically
---------------------------
provided herein (with respect to the Servicer and the Backup Servicer), neither
the Borrower, the Servicer, AFS, any Seller nor Backup Servicer may assign any
of their respective rights or obligations hereunder or any interest herein
without the prior written consent of the Agent and all the Lenders or, in the
case of Backup Servicer, the Agent and the Required Lenders. No Lender may
assign its rights or obligations hereunder, any Advance or the Note (or any
portion thereof) to any Person without the prior written consent of the Borrower
and the Agent (as to the Borrower only, such consent not to be unreasonably
withheld or delayed); provided, however, that any Lender may assign, or grant a
-------- -------
security interest in, all or any portion of the Advances and the Note to (i)
CSFB or any of its Affiliates or another Lender or (ii) any Person managed by
CSFB or any of its Affiliates, and (iii) any Liquidity Provider (each, an
"Eligible Assignee"), in each case under clauses (i), (ii) and (iii) above,
-----------------
without the prior written consent of the Borrower; provided, further, however,
-------- ------- -------
that after the occurrence of the Facility Termination Date, any Lender may,
subject to the provisions of Section 16.5, assign all or a portion of the
------------
Advance or Note held by it to a Person other than those identified in clauses
(i), (ii) and (iii) above without the prior written consent of the Borrower.
SECTION 16.2 Documentation. Each Lender shall deliver to each
-------------
assignee an assignment, in such form as such Lender and the related assignee may
agree, duly executed by such Lender assigning any such rights, obligations,
Advance or Note to the assignee; and such Lender shall promptly execute and
deliver all further instruments and documents, and take all further action, that
the assignee may reasonably request, in order to perfect, protect or more fully
evidence the assignee's right, title and interest in and to the items assigned,
and to enable the assignee to exercise or enforce any
<PAGE>
Page 104
rights hereunder or under the Note evidencing such Advance.
SECTION 16.3 Rights of Assignee. Upon the foreclosure of any
------------------
assignment of any Advances made for security purposes, or upon any other
assignment of any Advance from any Lender pursuant to this Article XVI, the
-----------
respective assignee receiving such assignment shall have all of the rights of
such Lender hereunder with respect to such Advances and all references to the
Lender or Investors in Section 6.1 shall be deemed to apply to such assignee.
-----------
SECTION 16.4 Notice of Assignment. Each Lender shall provide notice
--------------------
to the Borrower of any assignment hereunder by such Lender to any assignee. Each
Lender authorizes the Agent to, and the Agent agrees that it shall, endorse the
Note to reflect any assignments made pursuant to this Article XVI or otherwise.
-----------
SECTION 16.5 Registration; Registration of Transfer and Exchange.
---------------------------------------------------
(a) The Agent shall keep a register (the "Note Register") in which,
-------------
subject to such reasonable regulations as it may prescribe, the Agent shall
provide for the registration of the Note and of transfer of interests in the
Note. The Agent is hereby appointed "Note Registrar" for the purpose of
--------------
registering the Note and transfers of the Note as herein provided.
(b) Each person who has or who acquired a Note or interest therein
shall be deemed by such acquisition to have agreed to be bound by the provisions
of this Section 16.5. No Note may be transferred prior to the Commitment
------------
Termination Date except to a successor Agent hereunder. Thereafter the Note may
be exchanged (in accordance with Section 16.5(c)) and transferred to the holders
----------------
(or their agents or nominees) of the Advances and to any assignee (in accordance
with Section 16.1) (or its agent or nominee) of all or a portion of the
------------
Advances. The Agent shall not register (or cause to be registered) the transfer
of the Note, unless the proposed transferee shall have delivered to the Agent
(i) either (x) evidence satisfactory to it that the transfer of such Note is
exempt from registration or qualification under the Securities Act of 1933, as
amended, and all applicable state securities laws and that the transfer does not
constitute a "prohibited transaction" under ERISA or (y) an express agreement by
the proposed transferee to be bound by and to abide by the provisions of this
Section 16.5, the restrictions noted on the face of such Note and (ii) a
- ------------
properly executed Form W-9 and, in the case of a transferee who is a foreign
person (within the meaning of Section 7701(a)(5) of the Code), a properly
executed Form 4224 or Form 1001.
(c) After the Commitment Termination Date, at the option of the
holder thereof, the Note may be exchanged for one or more new Notes of any
authorized denominations and of a like class and aggregate principal amount at
an office or agency of the Borrower. Whenever any Notes are so surrendered for
exchange, the Borrower shall execute and deliver (through the Agent) the new
Notes which the holder
<PAGE>
Page 105
making the exchange is entitled to receive.
(d) Upon surrender for registration of transfer of any Note at an office
or agency of the Borrower, the Borrower shall execute and deliver (through the
Agent), in the name of the designated transferee or transferees, one or more new
Notes of any authorized denominations and of a like class and aggregate
principal amount.
(e) All Notes issued upon any registration of transfer or exchange of any
Note in accordance with the provisions of this Agreement shall be the valid
obligations of the Borrower, evidencing the same debt, and entitled to the same
benefits under this Agreement, as the Note(s) surrendered upon such registration
of transfer or exchange.
(f) Every Note presented or surrendered for registration of transfer or
for exchange shall (if so required by the Borrower or the Agent) be fully
endorsed, or be accompanied by a written instrument of transfer in form
satisfactory to the Note Registrar, duly executed by the holder thereof or his
attorney duly authorized in writing. Each such Note shall be accompanied by a
statement providing the name of the transferee and indicating whether the
transferee is subject to income tax backup withholding requirements and whether
the transferee is the sole beneficial owner of such Notes.
(g) No service charge shall be made for any registration of transfer or
exchange of Notes, but the Borrower may require payment from the transferee
holder of a sum sufficient to cover any tax or other governmental charge that
may be imposed in connection with any registration of transfer of exchange of
Notes, other than exchanges pursuant to this Section 16.5.
------------
(h) The holders of the Notes shall be bound by the terms and conditions of
this Agreement.
SECTION 16.6 Mutilated, Destroyed, Lost and Stolen Notes.
--------------------------------------------
(a) If any mutilated Note is surrendered to the Agent, the Borrower shall
execute and deliver (through the Agent) in exchange therefor a new Note of like
class and tenor and principal amount and bearing a number not contemporaneously
outstanding.
(b) If there shall be delivered to the Borrower and the Agent prior to the
payment of the Notes (i) evidence to their satisfaction of the destruction, loss
or theft of any Note and (ii) such security or indemnity as may be required by
them to save each of them and any agent of either of them harmless, then, in the
absence of notice to the Borrower or the Agent that such Note has been acquired
by a bona fide purchaser, the Borrower shall execute and deliver (through the
---------
Agent), in lieu of any such destroyed, lost or stolen Note, a new Note of like
class, tenor and principal amount and bearing a
<PAGE>
Page 106
number not contemporaneously outstanding.
(c) Upon the issuance of any new Note under this Section 16.6, the
------------
Borrower may require the payment from the transferor holder of a sum sufficient
to cover any tax or other governmental charge that may be imposed in relation
thereto and any other expenses connected therewith.
(d) Every new Note issued pursuant to this Section 16.6 and in accordance
------------
with the provisions of this Agreement, in lieu of any destroyed, lost or stolen
Note shall constitute an original additional contractual obligation of the
Borrower, whether or not the destroyed, lost or stolen Note shall be at any time
enforceable by anyone, and shall be entitled to all the benefits of this
Agreement equally and proportionately with any and all other Notes duly issued
hereunder.
(e) The provisions of this Section 16.6 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 16.7 Persons Deemed Owners. The Borrower, the Servicer, the
---------------------
Agent, the Collateral Agent and any agent for any of the foregoing may treat the
holder of any Note as the owner of such Note for all purposes whatsoever,
whether or not such Note may be overdue, and none of the Borrower, the Servicer,
the Agent, the Collateral Agent and any such agent shall be affected by notice
to the contrary.
SECTION 16.8 Cancellation. All Notes surrendered for payment or
------------
registration of transfer or exchange shall be promptly canceled. The Borrower
shall promptly cancel and deliver to the Agent any Notes previously
authenticated and delivered hereunder which the Borrower may have acquired in
any manner whatsoever, and all Notes so delivered shall be promptly canceled by
the Borrower. No Notes shall be authenticated in lieu of or in exchange for any
Notes canceled as provided in this Section 16.8, except as expressly permitted
------------
by this Agreement.
SECTION 16.9 Participations.
--------------
(a) At any time and from time to time, each Lender may, in accordance with
applicable law, at any time grant participations in all or a portion of its
Commitment and/or its interest in the Advances and other payments due to it
under this Agreement to any Person (each, a "Participant"); provided, however,
----------- -------- -------
that no participation shall be granted to any Person unless and until the Agent
and, if the proposed Participant is other than a Person which at such time is an
Eligible Assignee and no Facility Termination Event shall have occurred, the
Borrower shall have consented thereto (which consent shall not be unreasonably
withheld or delayed). Each Lender hereby acknowledges and agrees that (A) any
such participation will not alter or affect such Lender's direct obligations
hereunder, and (B) neither the Borrower, the Agent nor the
<PAGE>
Page 107
Servicer shall have any obligation to have any communication or relationship
with any Participant. Each Participant shall comply with the provisions of
Section 5.1(b). No Participant (i) which is other than an Eligible Assignee
- --------------
shall be entitled to receive additional amounts under Section 6.1 in excess of
-----------
the additional amounts its lead Lender would have been entitled to receive had
such participation not been granted unless such Participant was consented to by
the Borrower or (ii) shall be entitled to transfer all or any portion of its
participation without the prior written consent of the Agent and, if the
proposed transferee is other than an Eligible Assignee and no Facility
Termination Event shall have occurred, the Borrower (which consent will not be
unreasonably withheld or delayed).
(b) Each Lender may pledge its interest in the Advances and the Note to
any Federal Reserve Bank as collateral in accordance with applicable law.
ARTICLE XVII
INDEMNIFICATION
SECTION 17.1 General Indemnity. Without limiting any other rights which any
-----------------
such Person may have hereunder or under applicable law, AFS hereby agrees to
indemnify each of the Agent, the Investors, the Collateral Agent, the Custodian
(if other than AFS), the Backup Servicer, the Borrower, the Trust Trustee and
each other Affected Person and each of their Affiliates, and each of their
respective successors, transferees, participants and assigns and all officers,
directors, shareholders, controlling persons, employees and agents of any of the
foregoing (each of the foregoing Persons being individually called an
"Indemnified Party"), forthwith on demand, from and against any and all damages,
-----------------
losses, claims, liabilities and related costs and expenses, including reasonable
attorneys' fees and disbursements (all of the foregoing being collectively
called "Indemnified Amounts") awarded against or incurred by any of them arising
-------------------
out of or relating to any Transaction Document or the transactions contemplated
thereby or the use of proceeds therefrom by the Borrower, including (without
limitation) in respect of the funding of any Advance or in respect of any
Transferred Receivable, excluding, however, (a) Indemnified Amounts to the
--------- -------
extent determined by a court of competent jurisdiction to have resulted from
gross negligence or willful misconduct on the part of such Indemnified Party or
its agent or subcontractor, (b) except as otherwise provided herein, non-payment
by any Obligor of an amount due and payable with respect to a Transferred
Receivable, (c) any loss in value of any Financed Vehicle or Permitted
Investment due to changes in market conditions or for other reasons beyond the
control of AFS or the Borrower or (d) any tax upon or measured by net income on
any Indemnified Party. Without limiting the foregoing, but subject to the
exclusions (a) through (d) above, AFS agrees to indemnify each Indemnified Party
for Indemnified Amounts arising out of or relating to:
(i) the breach of any representation or warranty made by the
<PAGE>
Page 108
Borrower (or any of its officers) or AFS (in any capacity) or any
Affiliate of AFS under or in connection with this Agreement or the
other Transaction Documents, any Servicer's Certificate, Borrowing
Base Confirmation or any other information, report or certificate
delivered by the Borrower or Servicer or AFS (in any capacity) or an
Affiliate of AFS pursuant hereto or thereto, which shall have been
false or incorrect in any material respect when made or deemed
made;
(ii) the failure by the Borrower, a Seller or AFS (in any
capacity) to comply in any material way with any applicable law, rule
or regulation with respect to any Transferred Receivable or any
Financed Vehicle, or the nonconformity of any Transferred Receivable
with any such applicable law, rule or regulation;
(ii) the failure to vest and maintain vested in the Collateral
Agent, for the benefit of the Secured Parties, a first-priority
security interest in all the Borrower Collateral, free and clear of
any Lien, other than a Lien arising solely as a result of an act of
any Investor, or any assignee of any Investor;
(iv) any dispute, claim, offset or defense (other than
discharge in bankruptcy) of an Obligor to the payment of any
Transferred Receivable (including, without limitation, a defense based
on such Transferred Receivable not being a legal, valid and binding
obligation of such Obligor enforceable against it in accordance with
its terms);
(v) any failure of AFS or an Affiliate of AFS, as Servicer, to
perform its duties or obligations in accordance with the provisions of
Article VIII or any provision contained in any Transaction
------------
Document;
(vi) any claim involving products liability that arises out of
or relates to merchandise or services that are the subject of any
Transferred Receivable or strict liability claim in connection with
any Financed Vehicle related to a Transferred Receivable;
(vii) any tax or governmental fee or charge (but not including
taxes upon or measured by net income), all interest and penalties
thereon or with respect thereto, and all out-of-pocket costs and
expenses, including the reasonable fees and expenses of counsel in
defending against the same, which may arise by reason of the making,
maintenance or funding, directly or indirectly, of any Advance, or any
other interest in the Borrower Collateral;
(viii) the offering or effectuation of any Take-Out
Securitization; or
<PAGE>
Page 109
(ix) the commingling of the proceeds of the Borrower Collateral
at any time with other funds.
SECTION 17.2 Contribution. If for any reason (other than the exclusions (a)
------------
through (d) set forth in the first paragraph of Section 17.1) the
------------
indemnification provided above in Section 17.1 is unavailable to an Indemnified
------------
Party or is insufficient to hold an Indemnified Party harmless, then AFS shall
contribute to the amount paid or payable by such Indemnified Party as a result
of such loss, claim, damage or liability in such proportion as is appropriate to
reflect not only the relative benefits received by such Indemnified Party, on
the one hand, and AFS, its Affiliates and the Borrower, on the other hand, but
also the relative fault of such Indemnified Party, on the one hand, and AFS, its
Affiliates or the Borrower, on the other hand, as well as any other relevant
equitable considerations.
ARTICLE XVIII
MISCELLANEOUS
SECTION 18.1 No Waiver; Remedies. No failure on the part of any Investor,
-------------------
the Agent, any Indemnified Party or any Affected Person to exercise, and no
delay in exercising, any right, power or remedy hereunder shall operate as a
waiver thereof; nor shall any single or partial exercise by any of them of any
right, power or remedy hereunder preclude any other or further exercise thereof,
or the exercise of any other right, power or remedy. The remedies herein
provided are cumulative and not exclusive of any remedies provided by law.
Without limiting the foregoing, each Investor and Participant is hereby
authorized by the Borrower at any time and from time to time, to the fullest
extent permitted by law, to set off and apply any and all deposits (general or
special, time or demand, provisional or final) at any time held and other
indebtedness at any time owing by it to or for the credit or the account of the
Borrower, now or hereafter existing under this Agreement, to the Agent, any
Affected Person, any Indemnified Party or any Investor or their respective
successors and assigns.Amendments,
SECTION 18.2 Amendments, Waivers. This Agreement may not be amended,
-------------------
supplemented or modified nor may any provision hereof be waived except in
accordance with the provisions of this Section 18.2. With the written consent of
------------
the Required Lenders, the Agent, the Borrower, the Servicer, AFC, ACC and the
Backup Servicer may, from time to time, enter into written amendments,
supplements, waivers or modifications hereto for the purpose of adding any
provisions to this Agreement or changing in any manner the rights of any party
hereto or waiving, on such terms and conditions as may be specified in such
instrument, any of the requirements of this Agreement; provided, however, that
-------- -------
no such amendment, supplement, waiver or modification shall (i) reduce the
amount of or extend the maturity of any payment with
<PAGE>
Page 110
respect to an Advance or reduce the rate or extend the time of payment of Yield
thereon, or reduce or alter the timing of any other amount payable to any Lender
hereunder, in each case without the consent of each Lender affected thereby,
(ii) amend, modify or waive any provision of this Section 18.2 or 18.12, or
-------------
reduce the percentage specified in the definition of Required Lenders, in each
case without the written consent of all Lenders or (iii) amend, modify or waive
any provision of Article XV of this Agreement without the written consent of the
----------
Agent and the Required Lenders. Any waiver of any provision of this Agreement
shall be limited to the provisions specifically set forth therein for the period
of time set forth therein and shall not be construed to be a waiver of any other
provision of this Agreement.
SECTION 18.3 Notices, Etc. All notices and other communications provided
------------
for hereunder shall, unless otherwise stated herein, be in writing (including
facsimile communication) and shall be personally delivered or sent by certified
mail, postage prepaid, or by facsimile, to the intended party (i) in the case of
the Borrower, at the Corporate Trust Office with a copy to AFS and (ii) in the
case of the other parties hereto, at the address or facsimile number of such
party set forth under its name on the signature pages hereof or in its Joinder
Supplement or assignment documentation, or at such other address or facsimile
number as shall be designated by such party in a written notice to the other
parties hereto. All such notices and communications shall be effective, (a) if
personally delivered, when received, (b) if sent by certified mail, three
Business Days after having been deposited in the mail, postage prepaid, (c) if
sent by overnight courier, one Business Day after having been given to such
courier, and (d) if transmitted by facsimile, when sent, receipt confirmed by
telephone or electronic means, except that notices and communications pursuant
to Section 2.2 shall not be effective until received.Costs, Expenses and Taxes.
-----------
SECTION 18.4 Costs, Expense and Taxes.
------------------------
(a) In addition to the rights of indemnification granted under Section
-------
17.1, AFS agrees to pay on demand all reasonable costs and expenses of the Agent
- ----
in connection with the preparation (subject to the Fee Letter), execution,
delivery, syndication and administration of this Agreement, any Noncommitted
Lender Liquidity Arrangement or other liquidity support facility and the other
documents and agreements to be delivered hereunder or with respect hereto, and
AFS further agrees to pay all reasonable costs and expenses of the Agent in
connection with any amendments, waivers or consents executed in connection with
this Agreement and any Noncommitted Lender Liquidity Arrangement or other
liquidity support facility, including, without limitation, the reasonable fees
and out-of-pocket expenses of counsel for the Agent with respect thereto and
with respect to advising the Agent as to its rights and remedies under this
Agreement and any Noncommitted Lender Liquidity Arrangement or other liquidity
support facility, and to pay all costs and expenses, if any (including
reasonable counsel fees and expenses), of the Agent, the Lenders, the Investors,
the Collateral Agent and their respective Affiliates, in connection with the
enforcement of
<PAGE>
Page 111
this Agreement, any of the other Transaction Documents and/or any Noncommitted
Lender Liquidity Arrangement or other liquidity support facility and the other
documents and agreements to be delivered hereunder or with respect hereto.
(b) In addition, AFS shall pay any and all stamp, personal property,
transfer and other taxes and fees payable in connection with the execution,
delivery, filing and recording of this Agreement, the Note, applicable UCC
financing statements or the other documents or agreements to be delivered
hereunder, and the pledge of the Borrower Collateral, and agrees to save each
Indemnified Party harmless from and against any liabilities with respect to or
resulting from any delay in paying or omission to pay such taxes and
fees.
SECTION 18.5 Binding Effect; Survival. This Agreement shall be binding upon
------------------------
and inure to the benefit of the Borrower, the Servicer, the Backup Servicer,
AFC, ACC, AFS, the Collateral Agent, the Investors, the Agent and their
respective successors and assigns, and the provisions of Section 5.1(b), Article
-------------- -------
VI, Section 12.1, and Article XVII shall inure to the benefit of the Affected
- -- ------------ ------------
Persons and the Indemnified Parties, as the case may be, and their respective
successors and permitted assigns; provided, however, nothing in the foregoing
-------- -------
shall be deemed to authorize any assignment not permitted by Article XVI. This
-----------
Agreement shall create and constitute the continuing obligations of the parties
hereto in accordance with its terms, and shall remain in full force and effect
until such time, after the Commitment Termination Date, when all Obligations
have been finally and fully paid and performed. The rights and remedies with
respect to any breach of any representation and warranty made by the Borrower
pursuant to Article IX and the indemnification and payment provisions of Article
---------- -------
VI, Section 12.1, and Article XVII and the provisions of Section 18.10 , Section
- -- ------------ ------------ ------------- -------
18.12 and Section 18.13 shall be continuing and shall survive any termination of
- ----- -------------
this Agreement and any termination of AFS's rights to act as Servicer hereunder
or under any other Transaction Document.
SECTION 18.6 Captions and Cross References. The various captions
-----------------------------
(including, without limitation, the table of contents) in this Agreement are
provided solely for convenience of reference and shall not affect the meaning or
interpretation of any provision of this Agreement. Unless otherwise indicated,
references in this Agreement to any Section, Schedule or Exhibit are to such
Section of or Schedule or Exhibit to this Agreement, as the case may be, and
references in any Section, subsection, or clause to any subsection, clause or
subclause are to such subsection, clause or subclause of such Section,
subsection or clause.
SECTION 18.7 Severability. Any provision of this Agreement which is
------------
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions of this Agreement or affecting the
validity or enforceability of such provision in any other jurisdiction.
<PAGE>
Page 112
SECTION 18.8 GOVERNING LAW. THIS AGREEMENT AND THE NOTE SHALL BE A CONTRACT
-------------
MADE UNDER AND GOVERNED BY THE INTERNAL LAW OF THE STATE OF NEW YORK WITHOUT
REGARD TO ANY OTHERWISE APPLICABLE CONFLICT OF LAW PRINCIPLES (OTHER THAN
SECTION 5-1401 OF THE NEW YORK GENERAL OBLIGATIONS LAW)
SECTION 18.9 Counterparts. This Agreement may be executed by the parties
hereto in several counterparts, each of which shall be deemed to be an original
but all of which shall constitute together but one and the same agreement.
SECTION 18.10 WAIVER OF JURY TRIAL. EACH OF THE PARTIES HERETO AND EACH
--------------------
INVESTOR BY ITS ACCEPTANCE OF ANY INTEREST IN ANY NOTE OR ADVANCE OR IN A
LENDER'S OBLIGATION TO MAKE ADVANCES HEREUNDER HEREBY KNOWINGLY, VOLUNTARILY AND
INTENTIONALLY WAIVES ANY RIGHTS IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY
LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH, THIS
AGREEMENT OR ANY OTHER TRANSACTION DOCUMENT, OR ANY COURSE OF CONDUCT, COURSE OF
DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN) OR ACTIONS OF THE BORROWER, AFS,
AFC, ACC, THE SERVICER, THE AGENT, THE BACKUP SERVICER, THE COLLATERAL AGENT,
THE INVESTORS OR ANY OTHER AFFECTED PERSON. THE BORROWER ACKNOWLEDGES AND AGREES
THAT IT HAS RECEIVED FULL AND SUFFICIENT CONSIDERATION FOR THIS PROVISION (AND
EACH OTHER PROVISION OF EACH OTHER TRANSACTION DOCUMENT TO WHICH IT IS A PARTY)
AND THAT THIS PROVISION IS A MATERIAL INDUCEMENT FOR THE AGENT AND THE LENDERS
ENTERING INTO THIS AGREEMENT AND EACH SUCH OTHER TRANSACTION DOCUMENT.
SECTION 18.11 Conflict Waiver. CSFB acts as Agent hereunder, as
---------------
administrative agent for one or more Noncommitted Lenders, and as provider and
as agent for other providers of backup facilities for one or more Noncommitted
Lenders, and may provide other services or facilities from time to time (the
"CSFB Roles"). Each of the parties hereto hereby acknowledges and consents to
----------
any and all CSFB Roles, waives any objections it may have to any actual or
potential conflict of interest caused by CSFB's acting or maintaining any of the
CSFB Roles, and agrees that in connection with any CSFB Role, CSFB may take, or
refrain from taking, any action consistent with its obligations under the
Transaction Documents.
SECTION 18.12 No Proceedings.
--------------
(a) Each of the Borrower, AFS, AFC, ACC, the Servicer, the Backup Servicer,
the Collateral Agent, and each Investor hereby agrees that it will not institute
against any
<PAGE>
Page 113
Noncommitted Lender, or join any other Person in instituting against any
Noncommitted Lender, any insolvency proceeding (namely, any proceeding of the
type referred to in the definition of Event of Bankruptcy) so long as any
commercial paper or other senior indebtedness issued by such Noncommitted Lender
shall be outstanding or there shall not have elapsed one year plus one day since
the last day on which any such commercial paper or other senior indebtedness
shall be outstanding. The foregoing shall not limit such Person's right to file
any claim in or otherwise take any action with respect to any insolvency
proceeding that was instituted by any Person other than such Person.
(b) Each of CSFB, AFS, AFC, ACC, the Servicer, the Backup Servicer, the
Collateral Agent, each Investor and the Agent hereby agrees that it will not
institute against the Borrower, or join any other Person in instituting against
the Borrower, any insolvency proceeding (namely, any proceeding of the type
referred to in the definition of Event of Bankruptcy) so long as any Advances or
other amounts due from the Borrower hereunder shall be outstanding or there
shall not have elapsed one year plus one day since the last day on which any
such Advances or other amounts shall be outstanding. The foregoing shall not
limit such Person's right to file any claim in or otherwise take any action with
respect to any insolvency proceeding that was instituted by any Person other
than such Person.
SECTION 18.13 Limited Recourse to the Lenders. No recourse under any
-------------------------------
obligation, covenant or agreement of a Lender contained in this Agreement shall
be had against any incorporator, stockholder, officer, director, member,
manager, employee or agent of any Lender or any of its Affiliates (solely by
virtue of such capacity) by the enforcement of any assessment or by any legal or
equitable proceeding, by virtue of any statute or otherwise; it being expressly
agreed and understood that this Agreement is solely a corporate obligation of
each Lender, and that no personal liability whatever shall attach to or be
incurred by any incorporator, stockholder, officer, director, member, manager,
employee or agent of any Lender or any of their Affiliates (solely by virtue of
such capacity) or any of them under or by reason of any of the obligations,
covenants or agreements of a Lender contained in this Agreement, or implied
therefrom, and that any and all personal liability for breaches by a Lender of
any of such obligations, covenants or agreements, either at common law or at
equity, or by statute, rule or regulation, of every such incorporator,
stockholder, officer, director, member, manager, employee or agent is hereby
expressly waived as a condition of and in consideration for the execution of
this Agreement; provided that the foregoing shall not relieve any such Person
--------
from any liability it might otherwise have as a result of their willful
misconduct, gross negligence or of fraudulent actions taken or fraudulent
omissions made by them.
SECTION 18.14 Collateral Agent. Each Lender and each Investor by its
----------------
acceptance of any interest in any Note or Advance or in a Lender's obligation to
make Advances hereunder and the Agent designate and appoint Bank One, N.A. to
act as Collateral Agent hereunder and under the Security Agreement. Bank One,
N.A., by its execution hereof, accepts and agrees to such designation and
appointment and agrees
<PAGE>
Page 114
to perform its obligations hereunder and under the Security Agreement in
accordance with the terms thereof and for the benefit of the Agent, the Lenders
and other Secured Parties. In furtherance of the foregoing, each Lender
authorizes the Agent to enter into the Security Agreement and to appoint the
Collateral Agent to act on behalf of, and as agent for, such Lender and the
Agent hereunder and under the Security Agreement and agrees to be bound by
Section 9 of such agreement.
SECTION 18.15 Custodian. AFS accepts and agrees to its designation and
---------
appointment as Custodian under the Custodian Agreement and agrees to perform its
obligations under such agreement in accordance with the terms thereof and for
the benefit of the Borrower and the Secured Parties.
SECTION 18.16 ENTIRE AGREEMENT. THIS AGREEMENT AND THE OTHER TRANSACTION
----------------
DOCUMENTS EXECUTED AND DELIVERED HEREWITH REPRESENT THE FINAL AGREEMENT BETWEEN
THE PARTIES HERETO AND THERETO AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO
UNWRITTEN ORAL AGREEMENTS AMONG THE PARTIES.
SECTION 18.17 Limitation of Liability of Trust Trustee. It is expressly
----------------------------------------
understood and agreed by the parties hereto that (a) this Agreement is executed
and delivered by Bankers Trust (Delaware), not individually or personally but
solely as Trust Trustee of the Borrower, in the exercise of the powers and
authority conferred and vested in it, (b) each of the representations,
undertakings and agreements herein made on the part of the Borrower is made and
intended not as personal representations, undertakings and agreements by Bankers
Trust (Delaware) but is made and intended for the purpose for binding only the
Borrower, (c) nothing herein contained shall be construed as creating any
liability on Bankers Trust (Delaware), individually or personally, to perform
any covenant either expressed or implied contained herein, all such liability,
if any, being expressly waived by the parties hereto and by any Person claiming
by, through or under the parties hereto and (d) under no circumstances shall
Bankers Trust (Delaware) be personally liable for the payment of any
indebtedness or expenses of the Borrower or be liable for the breach or failure
of any obligation, representation, warranty or covenant made or undertaken by
the Borrower under this Agreement or any other related documents.
[signature pages begin on next page]
<PAGE>
Page 115
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
by their respective officers thereunto duly authorized as of the day and year
first above written.
AMERICREDIT WAREHOUSE TRUST
By: Bankers Trust (Delaware), not in its
individual capacity but solely as Trustee
By: /s/
-----------------------------------------
Name:
Title:
AMERICREDIT FINANCIAL SERVICES, INC.,
individually and as Servicer and Custodian
By: /s/
-----------------------------------------
Name:
Title:
200 Bailey Avenue
Fort Worth, Texas 76107
Attention: Treasurer
Facsimile No.: (817) 882-7101
AMERICREDIT FUNDING CORP.
By: /s/
-----------------------------------------
Name:
Title:
200 Bailey Avenue
Fort Worth, Texas 76107
Attention: President
Facsimile No.: (817) 882-7101
AMERICREDIT CORPORATION OF CALIFORNIA
<PAGE>
Page 116
By: /s/
---------------------------------------
Name:
Title:
200 Bailey Avenue
Fort Worth, Texas 76107
Attention: President
Facsimile No.: (817) 882-7101
CREDIT SUISSE FIRST BOSTON, NEW
YORK BRANCH, as Agent
By: /s/
---------------------------------------
Name:
Title:
By: /s/
---------------------------------------
Name:
Title:
Eleven Madison Avenue
New York, New York 10010
Attention: Asset Finance Department
Facsimile No.: (212) 325-6677
BANK ONE, N.A., as Backup Servicer and Collateral
Agent
By: /s/
---------------------------------------
Name: John Rothrock
Title: Account Executive
100 East Broad Street - OH0181
Columbus, Ohio 43215
Attention: John Rothrock
Facsimile No.: (614) 248-5195
<PAGE>
Exhibit 10.25
MASTER RECEIVABLES
PURCHASE AGREEMENT
among
AMERICREDIT WAREHOUSE TRUST,
as Purchaser,
AMERICREDIT FINANCIAL SERVICES, INC.,
individually and as Seller
AMERICREDIT FUNDING CORP.,
as Seller,
AMERICREDIT CORPORATION OF CALIFORNIA
as Seller,
and
BANK ONE, N.A.,
as Collateral Agent
dated as of
March 31, 1999
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
ARTICLE I. DEFINITIONS............................................................................ 1
SECTION 1.1 General............................................................................ 1
SECTION 1.2 Specific Terms..................................................................... 1
SECTION 1.3 Usage of Terms..................................................................... 2
SECTION 1.4 No Recourse........................................................................ 2
ARTICLE II. CONVEYANCE OF THE RECEIVABLES AND THE OTHER CONVEYED PROPERTY........................ 3
SECTION 2.1 Conveyance of the Receivables and the Other Conveyed Property...................... 3
ARTICLE III. REPRESENTATIONS AND WARRANTIES....................................................... 4
SECTION 3.1 Representations and Warranties of AFS.............................................. 4
SECTION 3.2 Representations and Warranties of ACC.............................................. 6
SECTION 3.3 Representations and Warranties of AFC.............................................. 7
ARTICLE IV. COVENANTS OF SELLERS.................................................................. 9
SECTION 4.1 Liens in Force..................................................................... 9
SECTION 4.2 No Impairment...................................................................... 9
SECTION 4.3 No Amendments...................................................................... 10
SECTION 4.4 Restrictions on Liens.............................................................. 10
SECTION 4.5 Preservation of Collateral......................................................... 10
ARTICLE V. REPURCHASES............................................................................ 11
SECTION 5.1 Repurchase of Receivables Upon Breach of Warranty.................................. 10
SECTION 5.2 Reassignment of Purchased Receivables.............................................. 11
SECTION 5.3 Waivers............................................................................ 11
ARTICLE VI. CONDITIONS PRECEDENT.................................................................. 11
SECTION 6.1 Conditions Precedent to each Receivables Sale...................................... 11
ARTICLE VII. MISCELLANEOUS........................................................................ 12
SECTION 7.1 Liability of Sellers............................................................... 12
SECTION 7.2 Merger or Consolidation of Sellers or Purchaser.................................... 12
SECTION 7.3 Limitation on Liability of Sellers and Others...................................... 13
SECTION 7.4 Amendment.......................................................................... 13
SECTION 7.5 Notices............................................................................ 13
SECTION 7.6 Merger and Integration............................................................. 13
SECTION 7.7 Severability of Provisions......................................................... 13
SECTION 7.8 Intention of the Parties........................................................... 13
SECTION 7.9 Governing Law...................................................................... 14
SECTION 7.10 Counterparts....................................................................... 14
SECTION 7.11 Conveyance of the Receivables and the Other Conveyed Property to the
</TABLE>
i
<PAGE>
<TABLE>
<S> <C>
Collateral Agent..................................................................... 14
SECTION 7.12 Nonpetition Covenant................................................................. 14
SECTION 7.13 Limitation of Liability of Trust Trustee............................................ 14
</TABLE>
SCHEDULES AND EXHIBITS
Schedule A -- Representations and Warranties from AFS as to the Receivables
Exhibit A -- Form of Supplement
Addendum A -- Form of Sale Agreement
ii
<PAGE>
MASTER RECEIVABLES PURCHASE AGREEMENT
-------------------------------------
THIS MASTER RECEIVABLES PURCHASE AGREEMENT, dated as of March 31,
1999, executed among AmeriCredit Warehouse Trust, a Delaware business trust, as
purchaser ("Purchaser"), Bank One, N.A., as collateral agent (the "Collateral
Agent") AmeriCredit Corporation of California, a California corporation, as
seller ("ACC"), AmeriCredit Funding Corp. a Delaware corporation, as seller
("AFC") and AmeriCredit Financial Services, Inc., a Delaware corporation, as
seller ("AFS" and together with ACC and AFC, the "Sellers").
W I T N E S S E T H :
--------------------
WHEREAS, Purchaser has agreed to purchase from time to time from the
Sellers, and the Sellers, pursuant to this Agreement, have agreed to transfer
from time to time to the Purchaser the Receivables and Other Conveyed Property.
NOW, THEREFORE, in consideration of the premises and the mutual
agreements hereinafter contained, and for other good and valuable consideration,
the receipt of which is acknowledged, Purchaser and the Sellers, intending to be
legally bound, hereby agree as follows:
ARTICLE I.
DEFINITIONS
1. General. The specific terms defined in this Article include the
----------
plural as well as the singular. The words "herein", "hereof" and "hereunder" and
other words of similar import refer to this Agreement as a whole and not to any
particular Article, Section or other subdivision, and Article, Section, Schedule
and Exhibit references, unless otherwise specified, refer to Articles and
Sections of and Schedules and Exhibits to this Agreement. Capitalized terms used
herein without definition shall have the respective meanings assigned to such
terms in the Receivables Financing Agreement dated as of the date hereof by and
among AmeriCredit Warehouse Trust (as Borrower), AmeriCredit Financial Services,
Inc. (in its individual capacity and as Servicer and Custodian), ACC, AFC the
lenders party thereto, Credit Suisse First Boston, New York Branch (as Agent)
and Bank One, N.A., as Backup Servicer and Collateral Agent.
2. Specific Terms. Whenever used in this Agreement, the following
-----------------
words and phrases, unless the context otherwise requires, shall have the
following meanings:
"Agreement" shall mean this Master Receivables Purchase Agreement and
---------
all amendments hereof and supplements hereto.
"Collateral Agent" means Bank One, N.A., as collateral agent and any
----------------
successor collateral agent appointed and acting pursuant to the Receivables
Financing Agreement.
"Other Conveyed Property" means all property conveyed by the Sellers
-----------------------
to the Purchaser pursuant to this Agreement and the Supplement other than the
Receivables.
<PAGE>
"Receivables" means the Receivables listed on the Schedules of
-----------
Receivables attached to each Supplement.
"Receivables Financing Agreement" means the Receivables Financing
-------------------------------
Agreement referred to in Section 1.1 hereof.
"Receivables Transfer Date" means the date specified in the related
-------------------------
Supplement as the date of contribution and/or sale of Receivables by the Sellers
named therein to the Purchaser.
"Related Documents" means, with respect to the Receivables, the
-----------------
Supplements, the Note, the Certificates, the Custodian Agreement, the
Receivables Financing Agreement, the Security and Collateral Agent Agreement,
the Intercreditor Agreement, the Trust Agreement and the Lockbox Agreement. The
Related Documents to be executed by any party are referred to herein as "such
party's Related Documents," "its Related Documents" or by a similar expression.
"Relevant Cutoff Date" means the date specified in the related
--------------------
Supplement, provided, however that such date shall be on or before the related
Receivables Transfer Date.
"Repurchase Event" means the occurrence of a breach of any of Sellers'
----------------
representations and warranties hereunder, the breach of any Seller covenants set
forth in Article IV or any other event which requires the repurchase of a
Receivable by AFS hereunder or under the Receivables Financing Agreement.
"Schedules of Receivables" means the lists of Receivables sold and
------------------------
transferred pursuant to this Agreement and the Supplements which are attached to
the Supplements as Schedules.
"Schedule of Representations" means the Schedule of Representations
---------------------------
and Warranties attached hereto as Schedule A.
"Supplement" means an agreement by and among one or more Sellers named
----------
therein and the Purchaser pursuant to which the Purchaser will acquire
Receivables, substantially in the form of Exhibit A hereto.
3. 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 or the Receivables
Financing Agreement; references to Persons include their permitted successors
and assigns; and the terms "include" or "including" mean "include without
limitation" or "including without limitation."
4. No Recourse. Without limiting the obligations of Sellers hereunder,
--------------
no recourse may be taken, directly or indirectly, under this Agreement or any
certificate or other
2
<PAGE>
writing delivered in connection herewith or therewith, against any stockholder,
officer or director, as such, of Sellers, or of any predecessor or successor of
Sellers.
ARTICLE II.
CONVEYANCE OF THE RECEIVABLES
AND THE OTHER CONVEYED PROPERTY
1. Conveyance of the Receivables and the Other Conveyed Property. By
----------------------------------------------------------------
execution of this Agreement and subject to the terms and conditions of this
Agreement and simultaneously with the execution and delivery of the related
Supplement, the relevant Sellers shall sell and/or contribute, transfer or
assign to the Purchaser (collectively, the "Conveyance") without recourse (but
without limitation of its obligations in this Agreement and the Receivables
Financing Agreement), and the Purchaser shall purchase or acquire as a
contribution, all right, title and interest of such Sellers in and to:
(i) each and every Receivable listed on the Schedules to the related
Supplement and all monies paid or payable thereon or in respect thereof on
or after the Relevant Cutoff Date;
(ii) the security interests in the related Financed Vehicles granted by
Obligors pursuant to such Receivables and any other interest of the Sellers
in such Financed Vehicles;
(iii) all proceeds and the rights to receive proceeds with respect to the
Receivables from claims on any physical damage, credit life or disability
insurance policies or Collateral Insurance (if any), covering Financed
Vehicles or Obligors;
(iv) all rights under any Service Contracts on the related Financed
Vehicles;
(v) all rights of the Sellers against Dealers pursuant to Dealer
Agreement or Dealer Assignments;
(vi) the related Receivables Files; and
(vii) all proceeds of any or all of the foregoing.
3
<PAGE>
ARTICLE III.
REPRESENTATIONS AND WARRANTIES
1. Representations and Warranties of AFS. AFS makes the following
----------------------------------------
representations and warranties as of the date hereof and as of each Receivables
Transfer Date, as the case may be, on which Purchaser relies in purchasing the
Receivables and the Other Conveyed Property. Such representations are made as of
the execution and delivery of this Agreement and as of the execution and
delivery by AFS of any Supplement, but shall survive the sale and/or
contribution, transfer and assignment of the Receivables and the Other Conveyed
Property hereunder and under any Supplement, and the sale, transfer and
assignment thereof by Purchaser to the Collateral Agent under the Receivables
Financing Agreement and the Security and Collateral Agent Agreement. AFS and
Purchaser agree that Purchaser will assign to Collateral Agent all Purchaser's
rights under this Agreement and that the Collateral Agent will thereafter be
entitled to enforce this Agreement against AFS in the Collateral Agent's own
name on behalf of the Secured Parties.
(a) Schedule of Representations. The representations and warranties
---------------------------
set forth on the Schedule of Representations with respect to the
Receivables (including all Receivables sold hereunder by AFS, ACC or AFC)
as of the date hereof and the Receivables Transfer Date are true and
correct.
(b) Organization and Good Standing. AFS has been duly organized and
------------------------------
is validly existing as a corporation in good standing under the laws of the
State of Delaware, with power and authority to own its properties and to
conduct its business as such properties are currently owned and such
business is currently conducted, and had at all relevant times, and now
has, power, authority and legal right to acquire, own and sell the
Receivables and the Other Conveyed Property to be transferred to Purchaser.
(c) Due Qualification. AFS 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 its property or the conduct of its business requires such qualification.
(d) Power and Authority. AFS 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; AFS has full power and authority to
sell or contribute and assign the Receivables and the Other Conveyed
Property to be sold or contributed and assigned to and deposited with
Purchaser hereunder and has duly authorized such sale or contribution,
transfer and assignment to Purchaser by all necessary corporate action; and
the execution, delivery and performance of this Agreement and AFS's Related
Documents have been duly authorized by AFS by all necessary corporate
action.
4
<PAGE>
(e) Valid Sale; Binding Obligations. This Agreement and AFS's Related
-------------------------------
Documents have been duly executed and delivered, shall effect a valid sale
or contribution, transfer and assignment of the Receivables and the Other
Conveyed Property to the Purchaser, enforceable against AFS and creditors
of and purchasers from AFS; and this Agreement and AFS's Related Documents
constitute legal, valid and binding obligations of AFS enforceable in
accordance with their respective terms, except as enforceability may be
limited by bankruptcy, insolvency, reorganization or other similar laws
affecting the enforcement of creditors' rights generally and by equitable
limitations on the availability of specific remedies, regardless of whether
such enforceability is considered in a proceeding in equity or at law.
(f) No Violation. The consummation of the transactions contemplated
------------
by this Agreement and the Related Documents, and the fulfillment of the
terms of this Agreement and the Related Documents, shall not conflict with,
result in any breach of any of the terms and provisions of, or constitute
(with or without notice, lapse of time or both) a default under, the
articles of incorporation or bylaws of AFS, or any indenture, agreement,
mortgage, deed of trust or other instrument to which AFS 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, the Security and Collateral Agent Agreement and the Receivables
Financing Agreement, or violate any law, order, rule or regulation
applicable to AFS of any court or of any federal or state regulatory body,
administrative agency or other governmental instrumentality having
jurisdiction over AFS or any of its properties.
(g) No Proceedings. There are no proceedings or investigations
--------------
pending or, to AFS's knowledge, threatened against AFS, before any court,
regulatory body, administrative agency or other tribunal or governmental
instrumentality having jurisdiction over AFS or its properties (i)
asserting the invalidity of this Agreement or any of the Related Documents,
(ii) seeking to prevent the issuance of the Note or the consummation of any
of the transactions contemplated by this Agreement or any of the Related
Documents, (iii) seeking any determination or ruling that might materially
and adversely affect the performance by AFS of its obligations under, or
the validity or enforceability of, this Agreement or any of the Related
Documents or (iv) seeking to affect adversely the federal income tax or
other federal, state or local tax attributes of, or seeking to impose any
excise, franchise, transfer or similar tax upon, the transfer and
acquisition of the Receivables and the Other Conveyed Property hereunder or
under the Security and Collateral Agent Agreement.
(h) Chief Executive Office. The chief executive office of AFS is
----------------------
located at 200 Bailey Avenue, Fort Worth, Texas 76107-1220.
(i) No Adverse Selection. No selection procedures adverse to the
--------------------
parties hereto or to the Secured Parties have been utilized in selecting
the Receivables from all other similar Receivables owned by AFS and its
Affiliates.
5
<PAGE>
(j) Solvency. AFS shall not be insolvent on any Receivables Transfer
--------
Date and the Conveyance will not cause AFS to become insolvent.
.2 Representations and Warranties of ACC. ACC makes the following
-----------------------------------------
representations and warranties as of the date hereof and as of each Receivables
Transfer Date, as the case may be, on which Purchaser relies in purchasing or
acquiring as a contribution the Receivables and the Other Conveyed Property.
Such representations are made as of the execution and delivery of this Agreement
and as of the execution and delivery by ACC of any Supplement, but shall survive
the sale or contribution, transfer and assignment of the Receivables and the
Other Conveyed Property hereunder and under any Supplement, and the sale or
contribution, transfer and assignment thereof by Purchaser to the Collateral
Agent under the Receivables Financing Agreement and the Security and Collateral
Agent Agreement. ACC and Purchaser agree that Purchaser will assign to
Collateral Agent all Purchaser's rights under this Agreement and that the
Collateral Agent will thereafter be entitled to enforce this Agreement against
ACC in the Collateral Agent's own name on behalf of the Secured Parties.
(a) Organization and Good Standing. ACC has been duly organized and
------------------------------
is validly existing as a corporation in good standing under the laws of the
State of California, 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 to be transferred to Purchaser.
(b) Power and Authority. ACC 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; ACC has full power and authority to
sell and assign or contribute the Receivables and the Other Conveyed
Property to be sold and assigned or contributed to and deposited with
Purchaser hereunder and has duly authorized such sale and assignment or
contribution to Purchaser by all necessary corporate action; and the
execution, delivery and performance of this Agreement and ACC's Related
Documents have been duly authorized by ACC by all necessary corporate
action.
(c) Due Qualification. ACC 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 its property or the conduct of its business requires such qualification
(d) Valid Sale; Binding Obligations. This Agreement and ACC's Related
-------------------------------
Documents have been duly executed and delivered, shall effect a valid sale
or contribution, transfer and assignment of the Receivables and the Other
Conveyed Property to the Purchaser, enforceable against ACC and creditors
of and purchasers from ACC; and this Agreement and ACC's Related Documents
constitute legal, valid and binding obligations of ACC 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
6
<PAGE>
limitations on the availability of specific remedies, regardless of whether
such enforceability is considered in a proceeding in equity or at law.
(e) No Violation. The consummation of the transactions contemplated
------------
by this Agreement and the Related Documents and the fulfillment of the
terms of this Agreement and the Related Documents shall not conflict with,
result in any breach of any of the terms and provisions of, or constitute
(with or without notice, lapse of time or both) a default under, the
articles of incorporation or bylaws of ACC, or any indenture, agreement,
mortgage, deed of trust or other instrument to which ACC 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, the Security and Collateral Agent Agreement and the Receivables
Financing Agreement, or violate any law, order, rule or regulation
applicable to ACC of any court or of any federal or state regulatory body,
administrative agency or other governmental instrumentality having
jurisdiction over ACC or any of its properties.
(f) No Proceedings. There are no proceedings or investigations
--------------
pending or, to ACC's knowledge, threatened against ACC, before any court,
regulatory body, administrative agency or other tribunal or governmental
instrumentality having jurisdiction over ACC or its properties (i)
asserting the invalidity of this Agreement or any of the Related Documents,
(ii) seeking to prevent the issuance of the Note or the consummation of any
of the transactions contemplated by this Agreement or any of the Related
Documents, (iii) seeking any determination or ruling that might materially
and adversely affect the performance by ACC of its obligations under, or
the validity or enforceability of, this Agreement or any of the Related
Documents, or (iv) seeking to affect adversely the federal income tax or
other federal, state or local tax attributes of, or seeking to impose any
excise, franchise, transfer or similar tax upon, the transfer and
acquisition of the Receivables and the Other Conveyed Property hereunder or
under the Security and Collateral Agent Agreement.
(g) Chief Executive Office. The chief executive office of ACC is
----------------------
located at 200 Bailey Avenue, Fort Worth, Texas 76107-1220.
(h) No Adverse Selection. No selection procedures adverse to the
--------------------
parties hereto or to the Secured Parties have been utilized in selecting
the Receivables from all other similar Receivables owned by AFS and its
Affiliates.
(i) Solvency. ACC shall not be insolvent on any Receivables Transfer
--------
Date and the Conveyance will not cause ACC to become insolvent.
.3 Representations and Warranties of AFC. AFC makes the following
------------------------------------------
representations and warranties as of the date hereof and as of each Receivables
Transfer Date, as the case may be, on which Purchaser relies in purchasing the
Receivables and the Other Conveyed Property. Such representations are made as of
the execution and delivery of this Agreement and as of the execution and
delivery by AFC of any Supplement, but shall survive the
7
<PAGE>
sale and/or contribution, transfer and assignment of the Receivables and the
Other Conveyed Property hereunder and under any Supplement, and the sale and/or
contribution, transfer and assignment thereof by Purchaser to the Collateral
Agent under the Security and Collateral Agent Agreement. AFC and Purchaser agree
that Purchaser will assign to Collateral Agent all Purchaser's rights under this
Agreement and that the Collateral Agent will thereafter be entitled to enforce
this Agreement against AFC in the Collateral Agent's own name on behalf of the
Secured Parties.
(a) Organization and Good Standing. AFC has been duly organized and
------------------------------
is validly existing as a corporation in good standing under the laws of the
State of Delaware, with power and authority to own its properties and to
conduct its business as such properties are currently owned and such
business is currently conducted, and had at all relevant times, and now
has, power, authority and legal right to acquire, own and sell the
Receivables and the Other Conveyed Property to be transferred to Purchaser.
(b) Power and Authority. AFC 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; AFC has full power and authority to
sell and/or contribute, transfer and assign the Receivables and the Other
Conveyed Property to be sold and/or contributed, transferred and assigned
to and deposited with Purchaser hereunder and has duly authorized such sale
and/or contribution, transfer and assignment to Purchaser by all necessary
corporate action; and the execution, delivery and performance of this
Agreement and AFC's Related Documents have been duly authorized by AFC by
all necessary corporate action.
(c) Due Qualification. AFC 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 its property or the conduct of its business requires such qualification
(d) Valid Sale; Binding Obligations. This Agreement and AFC's Related
-------------------------------
Documents have been duly executed and delivered, shall effect a valid sale
and/or contribution, transfer and assignment of the Receivables and the
Other Conveyed Property to the Purchaser, enforceable against AFC and
creditors of and purchasers from AFC; and this Agreement and AFC's Related
Documents constitute legal, valid and binding obligations of AFC
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.
(e) No Violation. The consummation of the transactions contemplated
------------
by this Agreement and the Related Documents and the fulfillment of the
terms of this Agreement and the Related Documents shall not conflict with,
result in any breach of any of the terms and provisions of, or constitute
(with or without notice, lapse of time or both) a
8
<PAGE>
default under, the articles of incorporation or bylaws of AFC, or any
indenture, agreement, mortgage, deed of trust or other instrument to which
AFC 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, the Security and Collateral Agent Agreement and
the Receivables Financing Agreement, or violate any law, order, rule or
regulation applicable to AFC of any court or of any federal or state
regulatory body, administrative agency or other governmental
instrumentality having jurisdiction over AFC or any of its properties.
(f) No Proceedings. There are no proceedings or investigations
--------------
pending or, to AFC's knowledge, threatened against AFC, before any court,
regulatory body, administrative agency or other tribunal or governmental
instrumentality having jurisdiction over AFC or its properties (i)
asserting the invalidity of this Agreement or any of the Related Documents,
(ii) seeking to prevent the issuance of the Note or the consummation of any
of the transactions contemplated by this Agreement or any of the Related
Documents, (iii) seeking any determination or ruling that might materially
and adversely affect the performance by AFC of its obligations under, or
the validity or enforceability of, this Agreement or any of the Related
Documents, or (iv) seeking to affect adversely the federal income tax or
other federal, state or local tax attributes of, or seeking to impose any
excise, franchise, transfer or similar tax upon, the transfer and
acquisition of the Receivables and the Other Conveyed Property hereunder or
under the Security and Collateral Agent Agreement.
(g) Chief Executive Office. The chief executive office of AFC is
----------------------
located at 200 Bailey Avenue, Fort Worth, Texas 76107-1220.
(h) No Adverse Selection. No selection procedures adverse to the
--------------------
parties hereto or to the Secured Parties have been utilized in selecting
the Receivables from all other similar Receivables owned by AFS and its
Affiliates.
(i) Solvency. AFC shall not be insolvent on any Receivables Transfer
--------
Date and the Conveyance will not cause AFC to become insolvent.
ARTICLE IV.
COVENANTS OF SELLERS
.1 Liens in Force. The Financed Vehicle securing each Receivable
--------------
shall not be released by the related Seller in whole or in part from the
security interest granted under the Receivable, except upon payment in full of
the Receivable or as otherwise contemplated herein or the Related Documents and
the related Seller shall not take or permit any action inconsistent with the
foregoing.
9
<PAGE>
.2 No Impairment. The related Seller shall do nothing to impair the
-------------
rights of the Purchaser or the Secured Parties in the Receivables, the Dealer
Agreements, the Dealer Assignments, the Insurance Policies or any other property
or interest comprising the Other Conveyed Property.
.3 No Amendments. The Sellers shall not take or permit any action to
-------------
extend or otherwise amend the terms of any Receivable, except in accordance with
the Related Documents.
.4 Restrictions on Liens. The Sellers shall not: (i) create or incur
---------------------
or agree to create or incur, or consent to cause (upon the happening of a
contingency or otherwise) the creation, incurrence or existence of any Lien or
restriction on transferability of the Receivables or of any Other Conveyed
Property except for the Lien in favor of the Purchaser and the Collateral Agent
as assignee thereof, and the restrictions on transferability imposed by this
Agreement or (ii) sign or file under the Uniform Commercial Code of any
jurisdiction any financing statement or sign any security agreement authorizing
any secured party thereunder to file such financing statement, with respect to
the Receivables or to any Other Conveyed Property, except in each case any such
instrument solely securing the rights and preserving the Lien of the Purchaser
and the Collateral Agent as assignee thereof. The Sellers will take no action to
cause any Receivable to be evidenced by an instrument (as such term is defined
in the relevant UCC).
.5 Preservation of Collateral. The Sellers will do, execute,
-------------------------------
acknowledge and deliver, or cause to be done, executed, acknowledged and
delivered, such instruments of transfer or take such other steps or actions as
may be necessary, or required by the Purchaser or the Collateral Agent or the
Agent, to effect the Conveyance, to perfect the security interest granted in the
Receivables and the Other Conveyed Property to the Collateral Agent on behalf of
the Secured Parties, to ensure that such Conveyance and security interest ranks
prior to all other Liens and to preserve the priority of such Conveyance and
security interest and the validity and enforceability thereof.
ARTICLE V.
REPURCHASES
.1 Repurchase of Receivables Upon Breach of Warranty. Upon the
------------------------------------------------------
occurrence of a Repurchase Event, AFS shall, unless the breach which is the
subject of such Repurchase Event shall have been cured in all material respects,
repurchase the Receivable relating thereto (whether or not it was the Seller
thereof) from the Purchaser and, simultaneously with the repurchase of the
Receivable, AFS shall deposit the Purchase Amount in full, without deduction or
offset, to the Collection Account, pursuant to Section 8.18 of the Receivables
Financing Agreement. It is understood and agreed that 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,
ACC or AFC for such breach available to Purchaser, the Backup Servicer, the
Noteholder, the Certificateholders or the Collateral Agent on behalf of the
Secured Parties. The provisions of this Section 5.1 are intended to grant the
Collateral Agent and the Agent a direct right against AFS to demand performance
hereunder, and in connection
10
<PAGE>
therewith, AFS waives any requirement of prior demand against Purchaser with
respect to such repurchase obligation. Any such repurchase shall take place in
the manner specified in Section 8.7 of the Receivables Financing Agreement.
Notwithstanding any other provision of this Agreement or the Receivables
Financing Agreement to the contrary, the obligation of AFS under this Section
shall not terminate upon a termination of AFS as Servicer under the Receivables
Financing Agreement and shall be performed in accordance with the terms hereof
notwithstanding the failure of the Servicer or Purchaser to perform any of their
respective obligations with respect to such Receivable under the Receivables
Financing Agreement.
.2 Reassignment of Purchased Receivables. Upon deposit in the
------------------------------------------
Collection Account of the Purchase Amount of any Receivable repurchased by AFS
under Section 5.1 hereof, Purchaser (at AFS's expense) shall take such steps as
may be reasonably requested by AFS in order to assign to AFS all of Purchaser's
and the Collateral Agent's right, title and interest in and to such Receivable
and all security and documents and all Other Conveyed Property conveyed to
Purchaser and the Collateral Agent directly relating thereto, without recourse,
representation or warranty, except as to the absence of Liens created by or
arising as a result of actions of Purchaser or the Collateral Agent. Such
assignment shall be a sale and assignment outright, and not for security. If,
following the reassignment of a Purchased Receivable, in any enforcement suit or
legal proceeding, it is held that AFS may not enforce any such Receivable on the
ground that it shall not be a real party in interest or a holder entitled to
enforce the Receivable, Purchaser and the Collateral Agent shall, at the expense
of AFS, take such steps as AFS deems reasonably necessary to enforce the
Receivable, including bringing suit in Purchaser's or in the Collateral Agent's
name.
.3 Waivers. No failure or delay on the part of Purchaser, or the
------------
Collateral Agent as assignee of Purchaser, in exercising any power, right or
remedy under this Agreement shall operate as a waiver thereof, nor shall any
single or partial exercise of any such power, right or remedy preclude any other
or future exercise thereof or the exercise of any other power, right or remedy.
ARTICLE VI.
CONDITIONS PRECEDENT
.1 Conditions Precedent to each Receivables Sale. Each sale and/or
--------------------------------------------------
contribution of Receivables shall be subject to the conditions precedent that:
(a) each relevant Seller and the Purchaser shall have executed and
delivered to the Collateral Agent a duly executed Supplement which shall
include Schedules listing the Receivables to be sold and/or contributed on
such Receivables Transfer Date;
(b) the Effective Date under the Receivables Financing Agreement
shall have occurred and the conditions to the making of the related Advance
pursuant to Section 7.2 and/or 7.3 (as the case may be) of the Receivables
Financing Agreement shall have been satisfied or waived.
11
<PAGE>
(c) the Sellers shall, to the extent required by Section 8.2 of the
Receivables Financing Agreement, have deposited in the Collection Account
all collections received after the Relevant Cutoff Date with respect to the
Receivables to be sold on such Receivables Transfer Date;
(d) the Sellers shall take any action (including, but not limited to,
the filing of appropriate UCC financing statements) required to perfect the
ownership interest of the Purchaser in the Receivables and the Other
Conveyed Property (provided, however, that the Sellers shall make such
-------- -------
filings as promptly as possible and in no event later then the third
Business Day following the respective Receivables Transfer Date and shall
promptly provide to each of the Purchaser and the Collateral Agent and the
Agent a copy of a stamped acknowledgement copy thereof);
(e) such sale or contribution shall be reflected on the books and
records of the Trust pursuant to Section 5.1; and
(f) to the extent that, after giving effect to the sale and/or
contribution of Receivables made on such date there would be one or more
states of the United States in which Financed Vehicles securing more than
10% of the Pool Balance were titled and as to which states an Opinion of
Counsel had not been given on the Effective Date or on a prior Receivables
Transfer Date as to the perfection, priority and enforceability of the
Collateral Agent's security interest for each such state, AFS shall have
caused to be delivered to the Purchaser, the Collateral Agent and the Agent
such an Opinion of Counsel;
(g) prior to first sale/and or contribution of Receivables by ACC,
legal opinions of (i) the General Counsel of ACC, (ii) Texas counsel, (iii)
California counsel and (iv) such other counsel as may be required by the
Agent, the Collateral Agent and/or the Rating Agencies, each in form and
substance satisfactory to the Agent covering such matters as the agent may
reasonably request shall be delivered to the Purchaser, the Collateral
Agent and the Agent; and
(h) the Purchaser and the Collateral Agent shall have received lien
releases duly executed and delivered by Wells Fargo Bank (Texas), National
Association with respect to the Receivables to be sold or contributed.
ARTICLE VII.
MISCELLANEOUS
.1 Liability of Sellers. Sellers shall be liable in accordance
-------------------------
herewith only to the extent of the obligations in this Agreement specifically
undertaken by Sellers and the representations and warranties of Sellers.
12
<PAGE>
.2 Merger or Consolidation of Sellers or Purchaser. Any corporation
----------------------------------------------------
or other entity (i) into which a Seller may be merged or consolidated, (ii)
resulting from any merger or consolidation to which a Seller is a party or (iii)
succeeding to the business of Seller shall execute an agreement of assumption to
perform every obligation of such Seller under this Agreement and, whether or not
such assumption agreement is executed, shall be the successor to such Seller
hereunder (without relieving such Seller of their responsibilities hereunder, if
it survives such merger or consolidation) without the execution or filing of any
document or any further action by any of the parties to this Agreement.
.3 Limitation on Liability of Sellers and Others. Each Seller and
--------------------------------------------------
any director, officer, employee or agent thereof 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.
No Seller shall be under any obligation to appear in, prosecute or defend any
legal action that is not incidental to its obligations under this Agreement or
its Related Documents and that in its opinion may involve it in any expense or
liability.
.4 Amendment.
--------------
(a) This Agreement may be amended by Sellers and Purchaser (with the
consent of the Agent) without the consent of the Collateral Agent (i) to
cure any ambiguity or (ii) to correct any provisions in this Agreement;
provided, however, that such action shall not adversely affect the
interests of any Secured Party.
(b) This Agreement may also be amended from time to time by Sellers
and Purchaser with the consent of the Collateral Agent and the Agent, in
accordance with the Receivables Financing Agreement.
.5 Notices. All demands, notices and communications to Sellers or
------------
Purchaser hereunder shall be in writing, personally delivered, or sent by
telecopier (subsequently confirmed in writing), reputable overnight courier or
mailed by certified mail, return receipt requested, and shall be deemed to have
been given upon receipt (a) in the case of Sellers, to AmeriCredit Financial
Services, Inc., 200 Bailey Avenue, Fort Worth, Texas 76107-1220, Attention:
Chief Financial Officer, or (b) in the case of Purchaser, to AmeriCredit
Warehouse Trust, c/o AmeriCredit Financial Services, Inc., 200 Bailey Avenue,
Fort Worth, Texas 76107-1120, Attention: Treasurer, or such other address as
shall be designated by a party in a written notice delivered to the other party
or to the Collateral Agent, as applicable.
.6 Merger and Integration. Except as specifically stated otherwise
---------------------------
herein, this Agreement and Related Documents set forth the entire understanding
of the parties relating to the subject matter hereof, and all prior
understandings, written or oral, are superseded by this Agreement and the
Related Documents. This Agreement may not be modified, amended, waived or
supplemented except as provided herein.
.7 Severability of Provisions. If any one or more of the covenants,
-------------------------------
provisions or terms of this Agreement shall be for any reason whatsoever held
invalid, then such covenants, provisions or terms shall be deemed severable from
the remaining covenants, provisions or terms
13
<PAGE>
of this Agreement and shall in no way affect the validity or enforceability of
the other provisions of this Agreement.
.8 Intention of the Parties. The execution and delivery of this
-----------------------------
Agreement shall constitute an acknowledgment by Sellers and Purchaser that they
intend that the assignments and transfers herein contemplated constitute a sale
and/or contribution, transfer and assignment outright, and not for security, of
the Receivables and the Other Conveyed Property, conveying good title thereto
free and clear of any Liens, from Sellers to Purchaser, and that the Receivables
and the Other Conveyed Property shall not be a part of Sellers' estates in the
event of the bankruptcy, reorganization, arrangement, insolvency or liquidation
proceeding, or other proceeding under any federal or state bankruptcy or similar
law, or the occurrence of another similar event, of, or with respect to Sellers.
In the event that such conveyance is determined to be made as security for a
loan made by Purchaser or the Lenders to Sellers, the parties intend that
Sellers shall have granted to Purchaser a security interest in all of Sellers'
right, title and interest in and to the Receivables and the Other Conveyed
Property conveyed pursuant to Section 2.1 hereof, and that this Agreement shall
constitute a security agreement under applicable law.
.9 Governing Law. This Agreement shall be 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.
Counterparts. For the purpose of facilitating the execution of this Agreement
- ------------
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.
.11 Conveyance of the Receivables and the Other Conveyed Property to
---------------------------------------------------------------------
the Collateral Agent. Sellers acknowledge that Purchaser intends, pursuant to
- --------------------
the Receivables Financing Agreement and the Security and Collateral Agent
Agreement, to pledge the Receivables and the Other Conveyed Property, together
with its rights under this Agreement, to the Collateral Agent on the Receivables
Transfer Dates. Sellers acknowledge and consent to such conveyance and pledge
and waive any further notice thereof and covenant and agree that the
representations and warranties of Sellers contained in this Agreement and the
rights of Purchaser hereunder are intended to benefit the Agent and the Lenders.
In furtherance of the foregoing, Sellers covenant and agree to perform their
duties and obligations hereunder, in accordance with the terms hereof for the
benefit of the Agent and the Lenders and that, notwithstanding anything to the
contrary in this Agreement, Sellers shall be directly liable to the Agent and
the Lenders and that the Agent may enforce the duties and obligations of Sellers
under this Agreement against Sellers for the benefit of the Secured Parties and
the Collateral Agent.
.12 Nonpetition Covenant. Neither Purchaser nor Sellers shall
-------------------------
petition or otherwise invoke the process of any court or government authority
for the purpose of commencing or sustaining a case against the Purchaser or the
Collateral Agent 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 Purchaser or the Collateral Agent
or any substantial part of their respective property, or ordering the winding up
or liquidation of
14
<PAGE>
the affairs of the Purchaser or the Collateral Agent. This Section 7.12 shall be
continuing and shall survive any termination of this Agreement.
.13 Limitation of Liability of Trust Trustee. It is expressly understood
----------------------------------------------
and agreed by the parties hereto that (a) this Agreement is executed and
delivered by Bankers Trust (Delaware), not individually or personally but solely
as Trust Trustee of the Purchaser, in the exercise of the powers and authority
conferred and vested in it, (b) each of the representations, undertakings and
agreements herein made on the part of the Purchaser is made and intended not as
personal representations, undertakings and agreements by Bankers Trust
(Delaware) but is made and intended for the purpose for binding only the
Purchaser, (c) nothing herein contained shall be construed as creating any
liability on Bankers Trust (Delaware), individually or personally, to perform
any covenant either expressed or implied contained herein, all such liability,
if any, being expressly waived by the parties hereto and by any Person claiming
by, through or under the parties hereto and (d) under no circumstances shall
Bankers Trust (Delaware) be personally liable for the payment of any
indebtedness or expenses of the Purchaser or be liable for the breach or failure
of any obligation, representation, warranty or covenant made or undertaken by
the Purchaser under this Agreement or any other related documents.
15
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Purchase Agreement to
be duly executed by their respective officers as of the day and year first above
written.
AMERICREDIT WAREHOUSE TRUST, as
Purchaser
By: BANKERS TRUST (DELAWARE), not in its
individual capacity but solely as Trustee on
behalf of the Trust
By: /s/
-------------------------------
Name:
Title:
AMERICREDIT FINANCIAL SERVICES,
INC., as Seller
By: /s/
-------------------------------
` Name: Preston A. Miller
Title: Executive Vice President and Treasurer
AMERICREDIT FUNDING CORP., as Seller
By: /s/
-------------------------------
Name: Preston A. Miller
Title: Executive Vice President and Treasurer
[Purchase Agreement]
<PAGE>
AMERICREDIT CORPORATION OF
CALIFORNIA, as Seller
By /s/
-----------------------------------
Name: Preston A. Miller
Title: Executive Vice President and Treasurer
BANK ONE, N.A., as Collateral Agent
By /s/
-----------------------------------
Name:
Title:
[Purchase Agreement]
<PAGE>
SCHEDULE A
REPRESENTATIONS AND WARRANTIES FROM AFS AS TO THE RECEIVABLES
-------------------------------------------------------------
Each Receivable that (i) was originated by AFS or ACC directly or
by a Dealer for the retail sale or refinancing of a Financed Vehicle in the
ordinary course of its business and such Seller or Dealer (as the case may be)
had all necessary licenses and permits to originate Receivables in the
applicable state, and, if originated by a Dealer, was purchased by AFS or ACC
from such Dealer under a Dealer Agreement or pursuant to a Dealer Assignment and
was validly assigned by such Dealer to such Seller, or, with respect to any
Receivable sold to the Purchaser by AFC, was purchased by AFC from AFS or ACC,
(ii) has created or shall create a valid, subsisting and enforceable first
priority perfected security interest in favor of AFS or ACC in the related
Financed Vehicle (which security interest has been assigned to the Purchaser and
shall be validly assignable by the Purchaser to the Collateral Agent on behalf
of the Secured Parties), except as enforceability may be limited by bankruptcy,
insolvency, reorganization or similar laws affecting the enforcement of
creditors' rights generally, (iii) was fully and properly executed by the
parties thereto and contains customary and enforceable provisions such as to
render the rights and remedies of the holder thereof adequate for realization
against the collateral security, (iv) is a Simple Interest Receivable or Pre-
Computed Receivable which provides for level monthly payments (provided that the
--------
payment in the first monthly period and the final monthly period of the life of
the Receivable may be minimally different from the level payment) which, if made
when due, shall fully amortize the Amount Financed over the original term, (v)
provides for, in the event that such contract is prepaid, a prepayment that
fully pays the principal balance and includes accrued but unpaid interest
through the date of prepayment in an amount at least equal to the Annual
Percentage Rate, and (vi) except to the extent permitted by this Agreement or
the Receivables Financing Agreement, has not been amended, waived or rewritten
or collections with respect thereto deferred or waived; and
(1) with respect to which 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 Magnuson-Moss Warranty Act, the Federal Reserve Board's
Regulations "B" and "Z", the Soldiers' and Sailors' Civil Relief Act of
1940, 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 such Receivable, the sale
of the Financed Vehicle related thereto and the sale of credit life and
credit accident and health insurance and any extended service contracts, if
any, in connection with such Receivable, have been complied with in all
material respects;
(2) that is a Dollar obligation of an Obligor domiciled in the United
States of America and that was originated and, if originated by a Dealer,
was sold by the
S-A-1
<PAGE>
Dealer to AFS or ACC, without any fraud or material misrepresentation on
the part of such Dealer or on the part of the Obligor;
(3) which 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 of the Soldiers' and
Sailors' Civil Relief Act of 1940, as amended; and all parties to such
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;
(4) which is not due from the United States of America or any State or
from any agency, department, subdivision or instrumentality thereof;
(5) with respect to which the information set forth in the Schedule of
Receivables has been produced from AFS's and, to the extent it maintains
separate computer records, AFC's or ACC's (as the case may be) electronic
ledger and was true and correct in all material respects, and is a complete
and accurate description, on the relevant Receivables Transfer Date, of the
Receivables sold to the Purchaser on such date; and with respect to which,
on or prior to the relevant Receivables Transfer Date, AFS and, to the
extent it maintains separate computer records, AFC or ACC (as the case may
be) has appropriately marked its computer records to indicate the sale to
the Purchaser of the Receivables sold on such date and with respect to
which the Monthly Tape delivered by the Servicer to the Backup Servicer
from time to time was complete and accurate as of the date delivered and
consistent with the information set forth in the Schedule of Receivables
with respect to such Receivable;
(6) which (i) as of the related Advance Date, (A) had an original
maturity of at least 6 months but not more than 72 months, (B) had an
original Amount Financed of at least $1,000 and not more than $50,000, (C)
had an Annual Percentage Rate of at least 7.75% and not more than 27.0%,
and (D) was not more than 30 days past due; and (ii) with respect to which
no funds have been advanced with respect to such Receivable by the
Purchaser, a Seller, the Servicer, any Dealer, or anyone acting on behalf
of any of them in order to cause such Receivable to qualify under subclause
---------
(i)(D) of this clause (f);
------ ----------
(7) which has not been satisfied, subordinated or rescinded, and the
Financed Vehicle securing such Receivable has not been released from the
Lien of such Receivable in whole or in part;
S-A-2
<PAGE>
(8) with respect to which no provision has been waived (except to the
extent permitted by this Agreement or the Receivables Financing Agreement);
(9) except for any Lien granted by the Wells Fargo Documents (as
defined in the Intercreditor Agreement) which Lien shall be released on the
applicable Receivables Transfer Date, as to which neither any Seller nor
the Purchaser has done anything to convey any right to any Person that
would result in such Person having a right to payments due under such
Receivable or otherwise to impair the rights of the Collateral Agent on
behalf of the Secured Parties in such Receivable or the proceeds thereof;
(10) which has not been sold, transferred, assigned or pledged by the
Purchaser to any Person other than hereunder; and no Dealer has a
participation in, or other right to receive, proceeds of such Receivable
and with respect to which neither AFS nor the Purchaser has taken any
action to convey any right to any Person (other than hereunder) that would
result in such Person having a right to payments received under the related
Insurance Policy or the related Dealer Agreement or Dealer Assignment or to
payments due under such Receivable;
(11) which is not subject to any right of rescission, setoff,
counterclaim or defense and no such right has been asserted or, to the
knowledge of the Purchaser or of any Seller, threatened with respect
thereto;
(12) with respect to which no liens or claims have been filed for
work, labor or materials relating to a Financed Vehicle that are liens
prior to or equal or coordinate with, the security interest in the Financed
Vehicle granted by such Receivable;
(13) with respect to which no default, breach, violation or event
permitting acceleration thereof has occurred, and none of the Purchaser,
the Servicer or any Seller has waived any of the foregoing;
(14) at the time of the origination of which the related Financed
Vehicle was covered by a comprehensive and collision insurance policy (i)
in an amount at least equal to the lesser of (a) its maximum insurable
value and (b) the Amount Financed, (ii) naming AFS or ACC, as applicable,
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 and with respect to which the Obligor
is required to maintain physical loss and damage insurance, naming AFS or
ACC and its successors and assigns as an additional insured party, and such
Receivable permits the holder thereof to obtain Force-Placed Insurance at
the expense of the Obligor if the Obligor fails to do so unless otherwise
prohibited by the law of the state in which the related contract was
entered into;
S-A-3
<PAGE>
(15) with respect to which, (i) immediately prior to the sale thereof
to the Purchaser, the applicable Seller had, and has conveyed to the
Purchaser, good and marketable title free and clear of all liens,
encumbrances, security interests and rights of others, and (ii) the sale
and assignment thereof to the Purchaser has been perfected under the UCC;
(16) with respect to each of which a Receivable File is in the
possession of the Custodian and such Receivable File contains (i) the fully
executed original of such Receivable, (ii) a certificate of insurance, an
application form for insurance signed by the related Obligor, or a signed
representation letter from the Obligor named in such Receivable pursuant to
which such Obligor has agreed to obtain physical damage insurance for the
related Financed Vehicle, or copies thereof, or a documented verbal
confirmation by an insurance agent for such Obligor of a policy number for
an insurance policy for the Financed Vehicle, (iii) the original Lien
Certificate (indicating AFS or ACC as first lienholder) or application
therefor or a letter from the applicable Dealer agreeing unconditionally to
repurchase the related Receivable if the certificate of title is not
received by the Servicer within 180 days (provided that the Lien
--------
Certificate is delivered to the Custodian within 180 days), and (iv) a
credit application or file of credit information regarding the Obligor, or
a copy thereof; each of such documents (if any) which is required to be
signed by the Obligor has been signed by the Obligor in the appropriate
spaces; and all blanks on any form have been properly filled in and each
form has otherwise been correctly prepared;
(17) which was not originated in, or is subject to the laws of, any
jurisdiction the laws of which would make unlawful, void or voidable the
sale, pledge, transfer and assignment of such Receivable under this
Agreement and with respect to which a Seller has not entered into any
agreement with any account debtor that prohibits, restricts or conditions
the assignment of any portion of such Receivable;
(18) as to which all filings (including, without limitation, UCC
filings but subject to clause (p) above in the case of the applicable Lien
----------
Certificate) required to be made by any Person and actions required to be
taken or performed by any Person in any jurisdiction to give the Collateral
Agent, on behalf of the Secured Parties, a first priority perfected Lien on
such Receivable and the proceeds thereof and the other Collateral related
thereto have been made, taken or performed;
(19) of which there is only one original executed copy;
(20) which constitutes chattel paper within the meaning of the UCC;
(21) as to which no selection procedures adverse to the Investors have
been utilized in selecting such Receivable from all other similar
Receivables owned or originated by AFS and its Affiliates;
S-A-4
<PAGE>
(22) with respect to which, by the related Advance Date and on each
relevant date thereafter, AFS or ACC or, to the extent it maintains such
records, AFC (as the case may be) will have caused the portions of its
servicing and other records relating to such Receivable to be clearly and
unambiguously marked to show that such Receivable constitutes part of the
Collateral and is subject to the Lien of the Collateral Agent on behalf of
the Secured Parties;
(23) which is not assumable by another Person in a manner which would
release the Obligor thereof from such Obligor's obligations to the
Purchaser with respect to such Receivable;
(24) with respect to which the related Financed Vehicle had not been
repossessed;
(25) with respect to which the following is true:
The Lien Certificate for the related Financed Vehicle shows,
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 related Receivables Transfer Date and will show, AFS
or ACC, as the case may be, named as the original secured party under such
Receivable and, accordingly, AFS or ACC, as the case may be, will be 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 or ACC, as the case may be, has
received written evidence from the related Dealer or the Obligor that such
Lien Certificate showing such Seller as first lienholder has been applied
for. If the Receivable was originated in a state in which a filing or
recording is required of the secured party to perfect a security interest
in motor vehicles, such filings or recordings have been duly made to show
AFS or ACC, as the case may be, named as the original secured party under
the related Receivable;
(26) which is not a Defaulted Receivable;
(27) which is not a Delinquent Receivable;
(28) which is not secured by vehicles which are financed
repossessions; and
(29) which was originated in the United States of America and, at the
time of origination, materially conformed to all requirements of the
Servicing Procedures and Credit Manual applicable to such Receivable.
S-A-5
<PAGE>
For purposes of this Agreement (including the computation from time to
time of the Borrowing Base), the eligibility of Receivables will be determined
from time to time, such that a Receivable that was an Eligible Receivable at one
time but that subsequently fails to meet all applicable eligibility requirements
will no longer be an Eligible Receivable (unless and until it again meets all
applicable eligibility requirements).
S-A-6
<PAGE>
Exhibit A
---------
SUPPLEMENT
ASSIGNMENT No. [____] of Receivables made this __ day of
______________, 199_, among AMERICREDIT FUNDING CORP., a Delaware corporation
("AFC"), AMERICREDIT FINANCIAL SERVICES, INC., a Delaware corporation ("AFS"),
[AMERICREDIT CORPORATION OF CALIFORNIA, a California corporation] (["ACC" and
together with AFC and AFS,] the "Sellers")* and AMERICREDIT WAREHOUSE TRUST, a
Delaware business trust (the "Purchaser").
W I T N E S S E T H:
WHEREAS, pursuant to the Sale Agreement (the form of which is attached
hereto as Addendum A), AFS wishes to sell/and or contribute Receivables to the
AFC;
WHEREAS, the Sellers wish to sell/and or contribute Receivables to the
Purchaser; and
WHEREAS, the Purchaser is willing to purchase or acquire as a
contribution such Receivables subject to the terms and conditions hereof.
NOW, THEREFORE, the Purchaser and the Sellers hereby agree as follows:
1. Defined Terms. Capitalized terms used herein shall have the
-------------
meanings ascribed to them in the Master Receivables Purchase Agreement, dated as
of March 31, 1999 (the "Purchase Agreement"), unless otherwise defined herein.
"Relevant Cutoff Date" shall mean, with respect to the Receivables
sold and/or contributed hereby, _____________ __, 199_.
"Receivables Transfer Date" shall mean, with respect to the
Receivables assigned hereby, the date hereof.
2. Schedule of Receivables. Annexed hereto is a Schedule from each
-----------------------
Seller listing the Receivables sold and/or contributed by it pursuant to this
Supplement on the Receivables Transfer Date.
3. Sale and/or Contribution of Receivables. (a) Each Seller, does
---------------------------------------
hereby sell and/or contribute, transfer, assign, set over and otherwise convey
to the Purchaser (the
___________________
*Specify which Seller(s) are conveying Receivables pursuant hereto.
E-A-1
<PAGE>
"Assignment"), without recourse (except as expressly provided in the Purchase
Agreement), all right, title and interest of such Seller in and to:
(i) the Receivables listed in the Schedule of Receivables
provided by such Seller and attached hereto and all moneys received
thereon, on and after the Relevant Cutoff Date;
(ii) all security interests in the Financed Vehicles granted by
Obligors pursuant to the Receivables and any other interest of the
Seller in such Financed Vehicles;
(iii) all proceeds and all rights to receive proceeds with
respect to the Receivables from claims on any physical damage, credit
life or disability insurance policies covering Financed Vehicles or
Obligors;
(iv) all rights of the Seller against Dealers pursuant to
Dealer Agreements and/or Dealer Assignments;
(v) all rights under any Service Contracts on the related
Financed Vehicles;
(vi) the related Receivables Files; and
(vii) all proceeds of any and all of the foregoing.
(b) The Assignment is in consideration of the Purchaser's
delivery to or upon the order of Sellers as set forth below:
(i) $___________ to AFS;
(ii) $___________ to AFC; and
[(iii) $___________ to ACC].
4. Representations and Warranties of the Sellers.
---------------------------------------------
(a) Representations and Warranties of AFS. AFS hereby
-------------------------------------
represents and warrant to the Purchaser as of the Receivables Transfer
Date that:
(i) Purchase Agreement. The representations and
------------------
warranties set forth in Section 3.1(a) of the Purchase Agreement
are true and correct with respect to the property sold and/or
contributed pursuant to Section 3 hereof.
(ii) Principal Balance. As of the Relevant Cutoff
-----------------
Date, the aggregate Principal Balance of the Receivables listed
on the Schedule provided by AFS (annexed hereto as Schedule A)
and sold to the
E-A-2
<PAGE>
Purchaser pursuant to this Supplement is $__________________.
(b) Representations and Warranties of AFC. AFC hereby
-------------------------------------
represents and warrant to the Purchaser as of the Receivables Transfer
Date that:
(i) Principal Balance. As of the Relevant Cutoff Date, the
-----------------
aggregate Principal Balance of the Receivables listed on the Schedule
provided by AFC (annexed hereto as Schedule B) and sold to the
Purchaser pursuant to this Supplement is $__________________.
[(c) Representations and Warranties of ACC. ACC hereby
-------------------------------------
represents and warrant to the Purchaser as of the Receivables Transfer
Date that:
(i) Principal Balance. As of the Relevant Cutoff Date, the
-----------------
aggregate Principal Balance of the Receivables listed on the Schedule
provided by ACC (annexed hereto as Schedule C) and sold to the
Purchaser pursuant to this Supplement is $__________________.]
5. Conditions Precedent. The obligation of the Purchaser to acquire
--------------------
the Receivables hereunder is subject to the satisfaction, on or prior to the
Receivables Transfer Date, of the following conditions precedent:
(a) Representations and Warranties. Each of the representations
------------------------------
and warranties made by the Sellers in Section 4 of this Supplement and
by AFS in Section 3.1(a) of the Purchase Agreement shall be true and
correct with respect to the property sold and/or contributed pursuant
to Section 3 hereof as of the Receivables Transfer Date.
(b) Purchase Agreement Conditions. Each of the conditions set
-----------------------------
forth in Section 6.1 of the Purchase Agreement shall have been
satisfied with respect to the property sold pursuant to Section 3
hereof.
(c) Additional Information. The Sellers shall have delivered to
----------------------
the Purchaser such information as was reasonably requested by the
Purchaser to satisfy itself as to the satisfaction of the conditions
set forth in this Section 5.
6. Ratification of Agreement. As supplemented by this Supplement,
-------------------------
the Purchase Agreement is in all respects ratified and confirmed and the
Purchase Agreement as so supplemented by this Supplement shall be read, taken
and construed as one and the same instrument.
7. Counterparts. This Supplement may be executed in two or more
------------
counterparts (and by different parties in separate counterparts), each of which
shall be an original but all of which together shall constitute one and the same
instrument.
8. GOVERNING LAW. THIS SUPPLEMENT SHALL BE CONSTRUED
-------------
E-A-3
<PAGE>
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.
E-A-4
<PAGE>
IN WITNESS WHEREOF, the Purchaser and the Sellers have caused this
Supplement to be duly executed and delivered by their respective duly authorized
officers as of the day and the year first above written.
AMERICREDIT WAREHOUSE TRUST, as
Purchaser
AMERICREDIT FINANCIAL SERVICES, INC.,
attorney-in-fact
By____________________________________
Name: Preston A. Miller
Title: Executive Vice President and Treasurer
AMERICREDIT FINANCIAL SERVICES,
INC., as Seller
By____________________________________
Name: Preston A. Miller
Title: Executive Vice President and Treasurer
AMERICREDIT FUNDING CORP., as Seller
By___________________________________
Name: Preston A. Miller
Title: Executive Vice President and Treasurer
[AMERICREDIT CORPORATION OF
CALIFORNIA, as Seller]
By___________________________________
Name: Preston A. Miller
Title: Executive Vice President and Treasurer
E-A-5
<PAGE>
Acknowledged:
BANK ONE, N.A.,
as solely in its capacity as Collateral Agent
By________________________________
Name
Title:
E-A-6
<PAGE>
Addendum A
----------
SALE AGREEMENT
ASSIGNMENT No. [____] of Receivables made this __ day of
______________, 199_, between AMERICREDIT FUNDING CORP., a Delaware corporation
("AFC") and AMERICREDIT FINANCIAL SERVICES, INC., a Delaware corporation
("AFS").
W I T N E S S E T H:
WHEREAS, AFS wishes to sell/and or contribute Receivables to AFC; and
WHEREAS, AFC is willing to purchase or acquire as a contribution such
Receivables subject to the terms and conditions hereof.
NOW, THEREFORE, AFC and AFS hereby agree as follows:
1. Defined Terms. Capitalized terms used herein shall have the
-------------
meanings ascribed to them in the Master Receivables Purchase Agreement, dated as
of March 31, 1999 (the "Purchase Agreement"), unless otherwise defined herein.
"Relevant Cutoff Date" shall mean, with respect to the Receivables
sold and/or contributed hereby, _____________ __, 199_.
"Receivables Transfer Date" shall mean, with respect to the
Receivables assigned hereby, the date hereof.
2. Schedule of Receivables. Annexed hereto is a Schedule from AFS
-----------------------
listing the Receivables sold and/or contributed by it pursuant to this Agreement
on the Receivables Transfer Date.
3. Sale and/or Contribution of Receivables. (a) AFS, does hereby
---------------------------------------
sell and/or contribute, transfer, assign, set over and otherwise convey to AFC
(the "Assignment"), without recourse (except as expressly provided in the
Purchase Agreement), all right, title and interest of AFS in and to:
(i) the Receivables listed in the Schedule of Receivables
provided by AFS and attached hereto and all moneys received thereon,
on and after the Relevant Cutoff Date;
(ii) all security interests in the Financed Vehicles granted by
Obligors pursuant to the Receivables and any other interest of AFS in
such Financed Vehicles;
A-A-1
<PAGE>
(iii) all proceeds and all rights to receive proceeds with
respect to the Receivables from claims on any physical damage, credit
life or disability insurance policies covering Financed Vehicles or
Obligors;
(iv) all rights of AFS against Dealers pursuant to Dealer
Agreements and/or Dealer Assignments;
(v) all rights under any Service Contracts on the related
Financed Vehicles;
(vi) the related Receivables Files; and
(vii) all proceeds of any and all of the foregoing.
(b) The Assignment is in consideration of AFC's delivery to or
upon the order of AFS of $____________.
4. Representations and Warranties of AFS.
-------------------------------------
(a) Representations and Warranties of AFS. AFS hereby
-------------------------------------
represents and warrant to AFC as of the Receivables Transfer Date
that:
(i) Purchase Agreement. The representations and
------------------
warranties set forth in Section 3.1(a) of the Purchase Agreement
are true and correct with respect to the property sold and/or
contributed pursuant to Section 3 hereof.
(ii) Principal Balance. As of the Relevant Cutoff
-----------------
Date, the aggregate Principal Balance of the Receivables listed
on the Schedule provided by AFS (annexed hereto as Schedule A)
and sold to AFC pursuant to this Agreement is
$__________________.
5. Conditions Precedent. The obligation of AFC to acquire the
--------------------
Receivables hereunder is subject to the satisfaction, on or prior to the
Receivables Transfer Date, of the following conditions precedent:
(a) Representations and Warranties. Each of the representations
------------------------------
and warranties made by AFS in Section 4 of this Agreement and by AFS
in Section 3.1(a) of the Purchase Agreement shall be true and correct
with respect to the property sold and/or contributed pursuant to
Section 3 hereof as of the Receivables Transfer Date.
(b) Purchase Agreement Conditions. Each of the conditions set
-----------------------------
forth in Section 6.1 of the Purchase Agreement shall have been
satisfied with respect to the property sold pursuant to Section 3
hereof.
(c) Additional Information. AFS shall have delivered to AFC
----------------------
such
A-A-2
<PAGE>
information as was reasonably requested by AFC to satisfy itself as to
the satisfaction of the conditions set forth in this Section 5.
6. Counterparts. This Agreement may be executed in two or more
------------
counterparts (and by different parties in separate counterparts), each of which
shall be an original but all of which together shall constitute one and the same
instrument.
8. GOVERNING LAW. THIS AGREEMENT 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.
A-A-3
<PAGE>
IN WITNESS WHEREOF, AFC and AFS have caused this Agreement to be duly
executed and delivered by their respective duly authorized officers as of the
day and the year first above written.
AMERICREDIT FINANCIAL SERVICES,
INC., as Seller
By_______________________________
Name: Preston A. Miller
Title: Executive Vice President and
Treasurer
AMERICREDIT FUNDING CORP., as Purchaser
By_______________________________
Name: Preston A. Miller
Title: Executive Vice President and
Treasurer
A-A-4
<PAGE>
Page 1
EXHIBIT 10.26
SECURITY AND COLLATERAL AGENT AGREEMENT
among
CREDIT SUISSE FIRST BOSTON,
NEW YORK BRANCH,
as Agent,
BANK ONE, N.A.,
as Collateral Agent
AMERICREDIT FINANCIAL SERVICES, INC.,
individually and as Servicer
and
AMERICREDIT WAREHOUSE TRUST,
as Borrower
_____________________________________
Dated as of March 31, 1999
_____________________________________
<PAGE>
Page 2
TABLE OF CONTENTS
-----------------
<TABLE>
<CAPTION>
<S> <C>
Section 1. Definitions 1
Section 3. Distributions 2
Section 4. The Reserve Account and the Collateral Account; Investments 4
Section 5. Expenses 6
Section 6. Representations And Warranties Of The Collateral Agent 7
Section 7. Resignation By And Removal Of The Collateral Agent;
Successor Collateral Agent 7
Section 8. Indemnity 8
Section 9. Limitations Of Liability 8
Section 10. Term Of Agreement 9
Section 11. Notices 9
Section 12. GOVERNING LAW; VENUE; CONSENT TO JURISDICTION 9
Section 13. Assignment 10
Section 14. Counterparts 10
Section 15. Headings 10
Section 16. Third Party Beneficiaries 10
Section 17. Certain Remedies 10
Section 18. Remedies 12
</TABLE>
<PAGE>
Page 3
SECURITY AND COLLATERAL AGENT AGREEMENT
SECURITY AND COLLATERAL AGENT AGREEMENT dated as of March 31, 1999 among
CREDIT SUISSE FIRST BOSTON, NEW YORK BRANCH, as agent for the Lenders (in such
capacity, the "Agent"), BANK ONE, N.A., a national banking association
-----
(including any successor thereto, the "Collateral Agent"), AMERICREDIT WAREHOUSE
----------------
TRUST, a Delaware business trust (the "Borrower"), and AMERICREDIT FINANCIAL
--------
SERVICES, INC., a Delaware corporation ("AFS"), individually and as Servicer.
---
W I T N E S S E T H :
-------------------
WHEREAS, AFS and the other Sellers are the owners of certain Receivables;
WHEREAS, the Borrower desires to purchase certain of such Receivables;
WHEREAS, the Noncommitted Lenders may, or if any Noncommitted Lender elects
not to, certain Committed Lenders shall, from time to time hereafter finance the
purchase of such Receivables by making advances to the Borrower under the
Receivables Financing Agreement (as hereinafter defined) secured, inter alia, by
----- ----
such Receivables; and
WHEREAS, AFS will service such Receivables.
NOW, THEREFORE, AFS, the Borrower, the Collateral Agent and the Agent,
intending to be legally bound, hereby agree as follows:
Section 1. Definitions. For all purposes of this Agreement, the
-----------
following terms shall have the meanings set forth below, unless the context
clearly indicates otherwise. Capitalized terms used herein but not otherwise
defined shall have the meanings set forth in the Receivables Financing
Agreement.
"Accrual Period" shall mean, with respect to any Distribution Date,
--------------
the period from and including the previous Distribution Date (or, in the case of
the first Distribution Date, from and including the Closing Date) through and
including the day preceding such Distribution Date.
"AFS" has the meaning specified in the Preamble.
--- --------
"Agent" has the meaning specified in the Preamble.
----- --------
"Agreement" means this Security and Collateral Agent Agreement, as it
---------
may be amended, supplemented or otherwise modified from time to time.
<PAGE>
Page 4
"Amount Available" means, with respect to any Distribution Date, the
----------------
sum of (a) the amount on deposit in the Collection Account as of the end of the
preceding Collection Period and any amounts paid into the Collection Account
under any Interest Rate Hedge with respect to the Accrual Period ending on the
day preceding such Distribution Date plus (b) any investment income earned on
amounts on deposit in the Collection Account, the Collateral Account and the
Reserve Account since the prior Distribution Date (or the Closing Date in the
case of the first Distribution Date).
"Borrower" has the meaning specified in the Preamble.
-------- --------
"Capped Expenses" means, at any time, costs and expenses due at such
---------------
time (if any) to the Backup Servicer and the Collateral Agent under the
Transaction Documents not in excess of $7500 with respect to any Collection
Period.
"Collateral Agent" has the meaning specified in the Preamble.
---------------- --------
"Increased Costs" means collectively, any increased cost, loss or
---------------
liability owing to the Agent and/or any other Affected Person under Article VI
of the Receivables Financing Agreement.
"Indemnity Amounts" means, collectively, all indemnity obligations and
-----------------
other amounts owing to the Agent, any Lender and/or any other Indemnified Party
under Article XVII or Section 18.4 of the Receivables Financing Agreement (to
the extent not paid by AFS) and the unreimbursed amount (if any) expended by the
Lenders under Section 8.5(b) of the Receivables Financing Agreement.
"Receivables Financing Agreement" means the Receivables Financing
-------------------------------
Agreement, dated as of March 31, 1999, among the Borrower, AFS, individually and
as Servicer and Custodian, each Noncommitted Lender and Committed Lender party
thereto, AmeriCredit Funding Corp., AmeriCredit Corporation of California, the
Agent, and Bank One, N.A., as Backup Servicer and Collateral Agent, as amended,
extended or otherwise modified from time to time.
Section 2. Appointment of Collateral Agent. Subject to the terms and
-------------------------------
conditions hereof, the Agent, on behalf of the Lenders and other Investors,
hereby appoints Bank One, N.A., as Collateral Agent hereunder and under the
Receivables Financing Agreement, and Bank One, N.A. hereby accepts such
appointment.
Section 3. Distributions.
-------------
(a) On each Distribution Date prior to the Facility Termination Date,
the Collateral Agent shall distribute, in
<PAGE>
Page 5
accordance with the applicable Servicer's Certificate, the Amount Available for
such Distribution Date in the following order of priority:
(i) FIRST, to the extent not previously paid by AFS or otherwise by
or on behalf of the Borrower (A) to the Servicer, the Servicing Fee
(computed at a Servicing Fee Rate not in excess of 2.00% per annum) for the
related Collection Period; (B) to the Backup Servicer and the Collateral
Agent, the Backup Servicer Fee for the related Collection Period; (C) to
the Backup Servicer and the Collateral Agent, the Capped Expenses; (D) to
the Backup Servicer, Transition Costs (if any) due to the Backup Servicer
under the Transaction Documents; and (E) to the Agent, on behalf of itself
and the Lenders and Liquidity Providers, the Fees payable on such
Distribution Date pursuant to the Fee Letter (and any Fees due and not paid
on a prior Distribution Date);
(ii) SECOND, to the Agent, on behalf of the Lenders, an amount equal
to Yield on the Advances accrued during the Accrual Period with respect to
such Distribution Date (and any Yield with respect to any prior Accrual
Period to the extent not paid pursuant to this Section 2(a)(ii) on a prior
Distribution Date);
(iii) THIRD, to the Agent, on behalf of the Lenders, the principal
amount of Advances which are to be paid or prepaid to the extent then due
and owing including, without limitation, any amount of such principal
required to prevent the existence of a Borrowing Base Deficiency;
(iv) FOURTH, to the Reserve Account, until the amount on deposit
therein is equal to the Required Reserve Account Amount;
(v) FIFTH, to the Agent, for the benefit of the Affected Persons,
any Increased Costs then due and owing, and, to the extent not previously
paid by or on behalf of the Borrower, to each Indemnified Party, any
Indemnity Amounts then due and owing to each such Indemnified Party;
(vi) SIXTH, to the extent not previously paid pursuant to clause
FIRST above, (A) to the Agent, any costs and expenses due to the Agent
under the Transaction Documents; and (B) to the Backup Servicer and
Collateral Agent, any costs and expenses due to the Backup Servicer and
Collateral Agent under the Transaction Documents; and
(vii) SEVENTH, to the Borrower, the remaining portion of the Amount
Available.
(b) On each Distribution Date on or after the Facility
<PAGE>
Page 6
Termination Date, the Collateral Agent shall distribute, in accordance with the
applicable Servicer's Certificate, or, if not delivered, upon the Agent's
direction, the Amount Available for such Distribution Date and all amounts, if
any, on deposit in the Reserve Account and the Collateral Account in the
following order of priority:
(i) FIRST, to the extent not previously paid by AFS or otherwise by
or on behalf of the Borrower (A) to the Servicer, the Servicing Fee
(computed at a Servicing Fee Rate not in excess of 2.00% per annum) for the
related Collection Period; (B) to the Backup Servicer and the Collateral
Agent, the Backup Servicer Fee for the related Collection Period; (C) to
the Backup Servicer and the Collateral Agent, the Capped Expenses; (D) to
the Backup Servicer, Transition Costs (if any) due to the Backup Servicer
under the Transaction Documents; and (E) to the Agent, on behalf of itself,
the Lenders and the Liquidity Providers, any Fees payable on such
Distribution Date pursuant to the Fee Letter (and any Fees due and not paid
on a prior Distribution Date);
(ii) SECOND, to the Agent on behalf of the Lenders, an amount equal
to Yield on the Advances accrued during the Accrual Period with respect to
such Distribution Date (and any Yield with respect to any prior Accrual
Period to the extent not paid on a prior Distribution Date);
(iii) THIRD, to the Agent, on behalf of the Lenders, the principal
amount of all outstanding Advances;
(iv) FOURTH, to the Agent, for the benefit of the Affected Persons,
any Increased Costs then due and owing, and, to the extent not previously
paid by or on behalf of the Borrower, to each Indemnified Party, any
Indemnity Amounts then due and owing to each such Indemnified Party;
(v) FIFTH, to the extent not previously paid pursuant to clause
FIRST above, (A) to the Agent, any costs and expenses due to the Agent
under the Transaction Documents; and (B) to the Backup Servicer and
Collateral Agent, any costs and expenses due to the Backup Servicer and
Collateral Agent under the Transaction Documents; and
(vi) SIXTH, to the Borrower, the remaining portion of the amount to
be distributed.
(c) On each Interim Distribution Date, the Collateral Agent shall,
at the direction of the Servicer or the Agent, withdraw from the Collection
Account and distribute the following amounts in the following order of priority:
(i) FIRST, to the Agent, on behalf of the Lenders,
<PAGE>
Page 7
Yield in respect of any Advances being paid or prepaid on such date and, on
the last day of any Fixed Period for any Advance, Yield due and unpaid with
respect to such Advance; and
(ii) SECOND, to the Agent, on behalf of the Lenders, an amount equal
to the Advances being paid or prepaid on such date.
Section 4. The Reserve Account and the Collateral Account;
-----------------------------------------------
Investments.
- -----------
(a) If, on any Distribution Date, the Amount Available is less than
the aggregate amount required to be distributed pursuant to clauses (i), (ii),
(iii), and (v) of Section 3(a), the Collateral Agent shall withdraw (or, if the
Reserve Account shall not at such time be maintained by the Collateral Agent,
the Collateral Agent shall direct the holder of the Reserve Account to withdraw)
the amount of such deficiency, up to the amount available in the Reserve
Account, from the Reserve Account and apply such amount in the order of priority
and in the manner set forth in such clauses of Section 3(a).
(b) If, on any Distribution Date, the Amount Available plus the
----
amount to be withdrawn from the Reserve Account pursuant to Section 4(a) on such
Distribution Date is less than the aggregate amount required to be distributed
pursuant to clauses (i), (ii), (iii), (iv), and (v) of Section 3(a), the
Collateral Agent shall withdraw (or, if the Collateral Account shall not at such
time be maintained by the Collateral Agent, the Collateral Agent shall direct
the holder of the Collateral Account to withdraw) the amount of such deficiency,
up to the amount available in the Collateral Account, from the Collateral
Account and apply such amount in the order of priority and in the manner set
forth in such clauses of Section 3(a).
(c) If, on any Interim Distribution Date, the amount withdrawn from
the Collection Account is less than the aggregate amount required to be
distributed pursuant to clauses (i) and (ii) of Section 3(c), the Collateral
Agent shall withdraw (or, if the Reserve Account shall not at such time be
maintained by the Collateral Agent, the Collateral Agent shall direct the holder
of the Reserve Account to withdraw) the amount of such deficiency, up to the
amount available in the Reserve Account, from the Reserve Account and apply such
amount in the order of priority and in the manner set forth in such clauses of
Section 3(c).
(d) If, on any Interim Distribution Date, the amount withdrawn from
the Collection Account plus the amount to be withdrawn from the Reserve Account
----
pursuant to Section 4(c) on such Interim Distribution Date is less than the
aggregate amount required to be distributed pursuant to clauses (i) and (ii) of
Section 3(c), the Collateral Agent shall withdraw (or, if the
<PAGE>
Page 8
Collateral Account shall not at such time be maintained by the Collateral Agent,
the Collateral Agent shall direct the holder of the Collateral Account to
withdraw) the amount of such deficiency, up to the amount available in the
Collateral Account, from the Collateral Account and apply such amount in the
order of priority and in the manner set forth in such clauses of Section 3(c).
(e) On the Facility Termination Date (if a Distribution Date) or
otherwise on the first Distribution Date following the Facility Termination
Date, the Collateral Agent shall withdraw (or direct the holder of the
applicable account to withdraw) all amounts on deposit in the Reserve Account
and the Collateral Account and apply such amount as provided in Section 3(b) and
at such time the Reserve Account and the Collateral Account shall be closed.
(f) On each Distribution Date prior to the Facility Termination Date
and based solely on the Servicer's Certificate for such Distribution Date, the
Collateral Agent shall withdraw from the Reserve Account the amount on deposit
in the Reserve Account in excess of the Required Reserve Account Amount (after
giving effect to all distributions to be made on such Distribution Date pursuant
to Section 3(a), and any withdrawals to be made from the Reserve Account
------------
pursuant to paragraph (a) of this Section 4) and distribute such amount to the
Borrower or as it may direct.
(g) On each Distribution Date prior to the Facility Termination Date
(after giving effect to the distributions to be made on such Distribution Date
pursuant to Section 3(a) and any withdrawals to be made from the Collateral
Account pursuant to paragraph (b) of this Section 4), the Borrower shall be
entitled to direct the Collateral Agent (with a copy of such directions to be
delivered to the Agent) to withdraw and pay to the Borrower (or as it may
direct), any and all amounts on deposit in the Collateral Account so long as
after giving effect to such withdrawal no Borrowing Base Deficiency, Facility
Termination Event or Unmatured Facility Termination Event shall occur or be
continuing.
(h) All or a portion of the amounts on deposit in the Collection
Account, the Collateral Account and the Reserve Account shall be invested and
reinvested by the Collateral Agent at the direction of the Servicer in one or
more Permitted Investments. No such investment shall mature later than the day
prior to the next occurring Distribution Date. The amounts held in the
Collection Account, the Collateral Account and the Reserve Account on the
Business Day prior to each Distribution Date shall be invested by the Collateral
Agent in overnight or next-day funds in such Permitted Investments reasonably
available to the Collateral Agent as may be acceptable to the Servicer (which
shall initially be the Collateral Agent's U.S. Treasury
<PAGE>
Page 9
Securities Money Market Fund and, from time to time, shall include such other
proprietary Permitted Investments of the Collateral Agent) for the period of
time from the Business Day prior to the Distribution Date until such
Distribution Date. All income or other gains from investment of moneys on
deposit in any such account shall be deposited by the Collateral Agent in the
applicable account immediately upon receipt. If any amounts are needed for
disbursement from the Collection Account, the Collateral Account or the Reserve
Account and sufficient uninvested funds are not available therein to make such
disbursement, the Collateral Agent shall cause to be sold or otherwise converted
to cash a sufficient amount of the investments in such account to make such
disbursement upon the direction of the Servicer or, if the Servicer shall fail
to give such direction, the Agent.
(i) If at any time the Collection Account, the Collateral Account or
the Reserve Account ceases to be an Eligible Account, the Agent may direct the
Collateral Agent to transfer such account to another institution such that such
account shall meet the requirements of an Eligible Account.
Section 5. Expenses. It is understood that the Collateral Agent
--------
shall be entitled to receive reimbursement for costs and expenses and such
reimbursement obligation shall be payable by the Borrower to the extent funds
are available therefor under Section 3 hereof and otherwise by AFS.
Section 6. Representations And Warranties Of The Collateral Agent.
------------------------------------------------------
The Collateral Agent represents and warrants as of the date hereof that:
(a) It is a national banking association, validly existing and in
good standing under the laws of United States of America;
(b) It has full power, authority and legal right to execute, deliver
and perform this Agreement, the Custodian Agreement, the Lockbox Agreement and
the Receivables Financing Agreement and has taken all necessary action to
authorize the execution, delivery and performance by it of this Agreement, the
Custodian Agreement, the Lockbox Agreement and the Receivables Financing
Agreement;
(c) The execution, delivery and performance by it of this Agreement,
the Custodian Agreement, the Lockbox Agreement and the Receivables Financing
Agreement do not violate (i) any provision of any law or regulation governing
its banking and trust powers or any order, writ, judgment, or decree of any
court, arbitrator, or governmental authority applicable to it or any of its
assets or (ii) any provision of its corporate charter or by-laws;
<PAGE>
Page 10
(d) The execution, delivery and performance by it of this Agreement,
the Custodian Agreement, the Lockbox Agreement and the Receivables Financing
Agreement do not require the authorization, consent or approval of, the giving
of notice to, the filing or registration with, or the taking of any other action
in respect of, any governmental authority or agency regulating its banking and
corporate trust activities; and
(e) This Agreement, the Custodian Agreement, the Lockbox Agreement
and the Receivables Financing Agreement have been duly executed and delivered by
it and each constitutes its legal, valid and binding agreement, enforceable in
accordance with its terms, except as enforceability may be limited by
bankruptcy, insolvency reorganization or other similar laws affecting the
enforcement of creditors' rights generally and by general principles of equity.
Section 7. Resignation By And Removal Of The Collateral Agent;
---------------------------------------------------
Successor Collateral Agent.
- --------------------------
(a) The Collateral Agent may at any time resign and terminate its
obligations under this Agreement upon at least 60 days prior written notice to
the Agent and AFS. No resignation shall be effective until a successor
collateral agent shall have been appointed and accepted its appointment.
Promptly after receipt of notice of the Collateral Agent's proposed resignation,
the Agent shall appoint, by written instrument, a successor collateral agent and
notify AFS thereof. If a successor collateral agent is not appointed in
accordance with the foregoing procedures, the Collateral Agent may petition a
court of competent jurisdiction to appoint a successor collateral agent. One (1)
original counterpart of such instrument of appointment shall be delivered to
each of the Agent, the Collateral Agent, AFS and the successor collateral agent.
(b) The Agent, upon at least 60 days written notice to the Collateral
Agent (or, if such removal is for cause, such 60 day period may be decreased to
no less than three Business Days by the Agent in its sole discretion), may
remove and discharge the Collateral Agent (or any successor collateral agent
thereafter appointed) from the performance of its obligations under this
Agreement. A copy of such notice shall be delivered to each other party hereto.
Promptly after the giving of notice of removal of the Collateral Agent, the
Agent shall appoint, by written instrument, a successor collateral agent and
notify AFS thereof. One (1) original counterpart of such instrument of
appointment shall be delivered to each of the Agent, the Collateral Agent, AFS
and the successor collateral agent.
(c) In the event of any such resignation or removal, the Collateral
Agent shall promptly transfer to the successor collateral agent, as directed in
writing by the Agent, all accounts, funds and investments being administered
under this
<PAGE>
Page 11
Agreement and shall cooperate with the Agent, AFS and the successor collateral
agent to facilitate the continued perfection and priority of the Lien granted
for the benefit of the Secured Parties in the Borrower Collateral.
Section 8. Indemnity. The Borrower (to the extent of funds available
---------
therefor under Section 3 of this Agreement) and AFS agree, jointly and
severally, to indemnify and hold harmless the Collateral Agent and its
directors, officers, agents and employees against any and all claims, damages,
losses, liabilities or expenses (including, but not limited to, reasonable
attorneys' fees, court costs and costs of investigation) of any kind or nature
whatsoever arising out of or in connection with this Agreement and the
Transaction Documents that may be imposed upon, incurred by or asserted against
the Collateral Agent; provided, however, that this Section 8 shall not relieve
-------- ---------
Collateral Agent from liability for its willful misconduct or gross negligence.
The provisions of this Section 8 shall survive the resignation or removal of the
Collateral Agent or any successor Collateral Agent and the termination of this
Agreement.
Section 9. Limitations Of Liability.
------------------------
(a) The Collateral Agent shall not be liable to the Borrower, the
Servicer, the Agent, any Lender, the Investors or any other Person with respect
to any action taken or not taken by it in good faith in the performance of its
obligations under this Agreement. The obligations of the Collateral Agent shall
be determined solely by the express provisions of this Agreement. No
representation, warranty, covenant, agreement, obligation or duty of the
Collateral Agent shall be implied with respect to this Agreement or the
Collateral Agent's services hereunder.
(b) The Collateral Agent may rely, and shall be protected in acting
or refraining to act, upon and need not verify the accuracy of (i) any oral
instructions from any persons the Collateral Agent believes to be authorized to
give such instructions, who shall only be, with respect to the Servicer, the
Borrower and the Agent, persons the Collateral Agent believes in good faith to
be duly authorized officers thereof, and (ii) any written instruction, notice,
order, request, direction, certificate, opinion or other instrument or document
believed by the Collateral Agent to be genuine and to have been signed and
presented by the proper party or parties.
(c) The Collateral Agent may consult with counsel nationally
recognized in the area of commercial transactions with regard to legal questions
arising out of or in connection with this Agreement, and the advice or opinion
of such counsel shall be full and complete authorization and protection in
respect of any action taken, omitted or suffered by the Collateral Agent in
reasonable reliance, in good faith, and in accordance therewith
<PAGE>
Page 12
provided, however, that if the Agent gives instructions to the Collateral Agent
- -------- -------
provides an opinion of counsel selected by them, which in either case
conflicts with any such advice or opinion of counsel, then the Collateral Agent
shall follow such instructions of the Agent (unless such instructions violate
the express terms of this Agreement or violate applicable law) or such opinion
of counsel selected by the Agent, and shall be fully protected in acting or
refraining to act thereon.
(d) No provision of this Agreement shall require the Collateral
Agent to expend or risk its own funds or otherwise incur financial liability in
the performance of its duties under this Agreement if it shall have reasonable
grounds for believing that repayment of such funds or adequate indemnity is not
reasonably assured to it.
Section 10. Term Of Agreement. This Agreement shall be terminated
-----------------
upon the final payment of all Obligations of the Borrower under the Transaction
Documents and the termination of any commitment of the Lenders under the
Transaction Documents.
Section 11. Notices. All demands, notices and communications
-------
relating to this Agreement shall be in writing and shall be deemed to have been
duly given when received by the other party or parties at the address shown in
the Receivables Financing Agreement, whether by personal delivery, express
delivery or facsimile, or such other address as may hereafter be furnished to
the other party or parties by like notice. Any such demand, notice or
communication hereunder shall be deemed to have been received on the date
delivered to or received at the premises of the addressee.
Section 12. GOVERNING LAW; VENUE; CONSENT TO JURISDICTION. (A) THIS
---------------------------------------------
AGREEMENT SHALL BE A CONTRACT MADE UNDER AND GOVERNED BY THE INTERNAL LAW OF
THE STATE OF NEW YORK, WITHOUT REGARD TO ANY OTHERWISE APPLICABLE CONFLICT OF
LAW PRINCIPLES THEREOF (OTHER THAN SECTION 5-1401 OF THE NEW YORK GENERAL
OBLIGATIONS LAW).
(B) VENUE FOR ANY ACTION BROUGHT UNDER THIS AGREEMENT MAY BE IN
ANY NEW YORK STATE COURT OR FEDERAL DISTRICT COURT SITTING IN NEW YORK, NEW
YORK. EACH PARTY TO THIS AGREEMENT HEREBY CONSENTS TO THE JURISDICTION OF SUCH
COURT.
Section 13. Assignment. Except as expressly permitted herein, no
----------
party to this Agreement may assign its rights or delegate its obligations under
this Agreement without the express written consent of the other parties.
Section 14. Counterparts. For the purpose of facilitating the
------------
execution of this Agreement and for other purposes, this Agreement may be
executed simultaneously in any number of counterparts, each of which shall be
deemed to be an
<PAGE>
Page 13
original, and together shall constitute and be one and the same instrument.
Section 15. Headings. The section headings are not part of this
--------
Agreement and shall not be used in its interpretation.
Section 16. Third Party Beneficiaries. It is hereby agreed by the
-------------------------
parties hereto that, the Lenders and the other Secured Parties are, and are
intended to be, third party beneficiaries under this Agreement.
Section 17. Certain Remedies.
----------------
(a) The Collateral Agent may, in its discretion (with the consent of
the Agent), and shall, at the direction of the Agent, proceed to protect and
enforce its rights and the rights of the Secured Parties by such appropriate
proceedings as the Collateral Agent or the Agent shall deem most effective to
protect and enforce any such rights, whether for the specific enforcement of any
covenant or agreement in any Transaction Document or in and of the exercise of
any power granted herein, or to enforce any other proper remedy or legal or
equitable right vested in the Collateral Agent by any Transaction Document or by
law.
(b) In case there shall be pending, relative to the Borrower or any
other obligor upon the Notes or any Person having or claiming an ownership
interest in the Borrower Collateral, proceedings under the Bankruptcy 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 Borrower or its property or such other obligor or
Person, or in case of any other comparable judicial proceedings relative to the
Borrower or other obligor upon the Notes, or to the creditors of property of the
Borrower or such other obligor, the Collateral Agent, irrespective of whether
the principal of any Notes shall their be due and payable as therein expressed
or by declaration or otherwise and irrespective of whether the Collateral Agent
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 and Yield 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 Collateral Agent (including any claim for
reimbursement of all expenses and liabilities incurred, and all advances,
if any, made, by the Collateral Agent and each predecessor Collateral
Agent, except as a result of negligence, bad
<PAGE>
Page 14
faith or wilful misconduct) and of each of the other Secured Parties
allowed in such proceedings;
(ii) unless prohibited by applicable law and regulations, to vote
(with the consent of the Agent) on behalf of the holders of the Notes in
any election of a trustee, a standby trustee or person performing similar
functions in any such proceedings;
(ii) 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 Secured Parties 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 Collateral
Agent or the Secured Parties allowed in any judicial proceedings relative
to the Borrower, 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 Secured Parties to make
payments to the Collateral Agent, and, in the event that the Collateral Agent
and the Agent shall consent, to the making of payments directly to such Secured
Parties, to pay to the Collateral Agent such amounts as shall be sufficient to
cover all reasonable expenses and liabilities incurred, and all advances made,
by the Collateral Agent and each predecessor Collateral Agent except as a result
of negligence, bad faith or wilful misconduct.
(c) Nothing herein contained shall be deemed to authorize the
Collateral Agent to authorize or consent to or vote for or accept or adopt on
behalf of any Lender or other Secured Party any plan of reorganization,
arrangement, adjustment or composition affecting the Notes or the rights of any
holder thereof or to authorize the Collateral Agent to vote in respect of the
claim of any Secured Party in any such proceeding except, as aforesaid, to vote
for the election of a trustee in bankruptcy or similar person.
(d) All rights of action and of asserting claims under the
Transaction Documents, may be enforced by the Collateral Agent 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 Collateral Agent shall be brought in its own name as Collateral Agent, and
any recovery of judgment, subject to the payment of the reasonable expenses,
disbursements and compensation of the Collateral Agent, each predecessor
Collateral Agent and their respective agents and attorneys, shall be for the
ratable benefit of the holders of the Notes and other Secured Parties.
<PAGE>
Page 15
(e) In any proceedings brought by the Collateral Agent to enforce
the Liens under the Transaction Documents (and also any proceedings involving
the interpretation of any provision of any Transaction Document), the Collateral
Agent shall be held to represent all the Secured Parties, and it shall not be
necessary to make any Secured Party a party to any such proceedings.
Section 18. Remedies. The Collateral Agent may (with the consent of
--------
the Agent), or the Collateral Agent shall, at the direction of the Agent, also
do one or more of the following (subject to Section 9):
---------
(a) institute proceedings in its own name and on behalf of the
Secured Parties as Collateral Agent for the collection of all amounts then
payable on the Notes or under the Receivables Financing Agreement and Fee Letter
with respect thereto, whether by declaration or otherwise, enforce any judgment
obtained, and collect from the Borrower and any other obligor upon such Notes
moneys adjudged due;
(b) institute proceedings from time to time for the complete or
partial foreclosure upon the Borrower Collateral;
(c) exercise any remedies of a secured party under the UCC and take
any other appropriate action to protect and enforce the right and remedies of
the Collateral Agent and the Secured Parties; and
(d) sell the Borrower Collateral 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.
Section 19. Limitation on Liability. It is expressly understood and
-----------------------
agreed by the parties hereto that (a) this Agreement is executed and delivered
by Bankers Trust (Delaware), not individually or personally but solely as Trust
Trustee of the Borrower, in the exercise of the powers and authority conferred
and vested in it, (b) each of the representations, undertakings and agreements
herein made on the part of the Borrower is made and intended not as personal
representations, undertakings and agreements by Bankers Trust (Delaware) but is
made and intended for the purpose for binding only the Borrower, (c) nothing
herein contained shall be construed as creating any liability on Bankers Trust
(Delaware), individually or personally, to perform any covenant either expressed
or implied contained herein, all such liability, if any, being expressly waived
by the parties hereto and by any Person claiming by, through or under the
parties hereto and (d) under no circumstances shall Bankers Trust (Delaware) be
personally liable for the payment of any indebtedness or expenses of the
Borrower or be liable for the breach or failure of any obligation,
representation, warranty or covenant made or undertaken by the Borrower under
this Agreement
<PAGE>
Page 16
or any other related documents.
[Signature Page Follows]
<PAGE>
Page 17
IN WITNESS WHEREOF, the parties hereto have caused their duly
authorized representatives to hereunto set their hand as of the day and year
first above written.
CREDIT SUISSE FIRST BOSTON,
NEW YORK BRANCH, as Agent
By: /s/
-------------------------------
Name:
Title:
By: /s/
-------------------------------
Name:
Title:
AMERICREDIT WAREHOUSE TRUST
By: Bankers Trust (Delaware),
not in its individual capacity
but solely as Trustee
By: /s/
-------------------------------
Name:
Title:
AMERICREDIT FINANCIAL SERVICES, INC.
By: /s/
-------------------------------
Name:
Title:
BANK ONE, N.A., as Collateral Agent
By: /s/
-------------------------------
Name:
Title:
[Signature Page to Security Agreement]
<PAGE>
EXHIBIT 10.27
$200,000,000
AmeriCredit Corp.
97/8% Senior Notes due 2006
PURCHASE AGREEMENT
------------------
April 15, 1999
Salomon Smith Barney Inc.
Bear, Stearns & Co. Inc.
ING Baring Furman Selz LLC
c/o Salomon Smith Barney Inc.
388 Greenwich Street
New York, New York 10013
Dear Sirs:
AmeriCredit Corp., a Texas corporation (the "Company"), proposes, upon
the terms and conditions set forth herein, to issue and sell to you, as the
initial purchasers (the "Initial Purchasers"), $200,000,000 in aggregate
principal amount of its 97/8% Series A Senior Notes due 2006 (the "Series A
Notes"). The Company's obligations under the Series A Notes, including the due
and punctual payment of principal and interest on the Series A Notes, will be
unconditionally guaranteed (the "Series A Subsidiary Guarantees") by each of
AmeriCredit Financial Services, Inc., a Delaware corporation, ACF Investment
Corp., a Delaware corporation, Americredit Corporation of California, a
California corporation, AmeriCredit Management Company, a Delaware corporation
(collectively, the "United States Guarantors"), AmeriCredit Financial Services
of Canada Ltd., a Canadian corporation chartered in the Province of Ontario (the
"Canadian Guarantor" and, together with the United States Guarantors, the
"Guarantors"). As used herein, the term "Series A Notes" shall include the
Series A Subsidiary Guarantees thereof by the Guarantors, unless the context
otherwise requires. The Guarantors and AmeriCredit Funding Corp., a Delaware
corporation, AmeriCredit Warehouse Trust, a Delaware business trust, AFS Funding
Corp., a Nevada corporation, and CP Funding Corp., a Nevada corporation, are
collectively referred to herein as the "Subsidiaries." The Series A Notes will
(i) have the terms and provisions which are summarized in the Offering
Memorandum (as defined herein), (ii) be in the forms specified by the Initial
Purchasers pursuant to Section 3 hereof, and (iii) be issued pursuant to the
provisions of an Indenture, to be dated as of April 20, 1999 (the "Indenture"),
between the Company, the Guarantors and Bank One, N.A., as Trustee (the
"Trustee").
The Company and the Guarantors wish to confirm as follows their
agreement with you the Initial Purchasers in connection with the purchase and
resale of the Series A Notes.
1. Preliminary Offering Memorandum and Offering Memorandum. The
Series A Notes will be offered and sold to the Initial Purchasers without
registration under the Securities Act of 1933, as amended (the "Act"), in
reliance on an exemption pursuant to Section 4(2) under the Act. The Company
and the Guarantors have prepared a preliminary offering memorandum, dated April
9, 1999
<PAGE>
(the "Preliminary Offering Memorandum"), and an offering memorandum, dated April
15, 1999 (the "Offering Memorandum"), setting forth information regarding the
Company, the Guarantors, the Series A Notes and the Series B Notes (as defined
herein). Any references herein to the Preliminary Offering Memorandum and the
Offering Memorandum shall be deemed to include all amendments and supplements
thereto. The Company and the Guarantors hereby confirm that they have authorized
the use of the Preliminary Offering Memorandum and the Offering Memorandum in
connection with the offering and resale of the Series A Notes by the Initial
Purchasers.
The Company and the Guarantors understand that the Initial Purchasers
propose to make offers (the "Exempt Resales") of the Series A Notes purchased by
the Initial Purchasers hereunder only on the terms set forth in the Offering
Memorandum, and Section 2 hereof, as soon as the Initial Purchasers deem
advisable after this Agreement has been executed and delivered, solely to
persons whom the Initial Purchasers reasonably believe to be "qualified
institutional buyers" as defined in Rule 144A under the Act (referred to herein
as "QIBs" or "Eligible Purchasers").
It is understood and acknowledged that upon original issuance thereof,
and until such time as the same is no longer required under the applicable
requirements of the Act, the Series A Notes (and all securities issued in
exchange therefor, in substitution thereof) shall bear the following legend:
"THE SECURITY (OR ITS PREDECESSOR) EVIDENCED HEREBY WAS
ORIGINALLY ISSUED IN A TRANSACTION EXEMPT FROM REGISTRATION
UNDER SECTION 5 OF THE UNITED STATES SECURITIES ACT OF 1933
(THE "SECURITIES ACT"), AND THE SECURITY EVIDENCED HEREBY MAY
NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE
OF SUCH REGISTRATION OR AN APPLICABLE EXEMPTION THEREFROM.
EACH PURCHASER OF THE SECURITY EVIDENCED HEREBY IS HEREBY
NOTIFIED THAT THE SELLER MAY BE RELYING ON THE EXEMPTION FROM
THE PROVISIONS OF SECTION 5 OF THE SECURITIES ACT PROVIDED BY
RULE 144A THEREUNDER. THE HOLDER OF THE SECURITY EVIDENCED
HEREBY AGREES FOR THE BENEFIT OF THE COMPANY THAT (A) SUCH
SECURITY MAY BE RESOLD, PLEDGED OR OTHERWISE TRANSFERRED,
ONLY (1) (a) TO A PERSON WHO THE SELLER REASONABLY BELIEVES
IS A QUALIFIED INSTITUTIONAL BUYER (AS DEFINED IN RULE 144A
UNDER THE SECURITIES ACT) IN A TRANSACTION MEETING THE
REQUIREMENTS OF RULE 144A, (b) IN A TRANSACTION MEETING THE
REQUIREMENTS OF RULE 144 UNDER THE SECURITIES ACT, (c) OUTSIDE
THE UNITED STATES TO A NON-U.S. PERSON IN A TRANSACTION MEETING
THE REQUIREMENTS OF RULE 904 UNDER THE SECURITIES ACT, OR (d)
IN ACCORDANCE WITH ANOTHER EXEMPTION FROM THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT (AND BASED UPON AN OPINION
OF COUNSEL IF THE COMPANY SO REQUESTS), (2) TO THE COMPANY,
OR (3) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT AND,
IN EACH CASE, IN ACCORDANCE WITH ANY APPLICABLE SECURITIES
LAWS OF ANY STATE OF THE UNITED STATES OR ANY OTHER APPLICABLE
JURISDICTION AND (B) THE HOLDER WILL, AND EACH SUBSEQUENT
HOLDER IS REQUIRED TO, NOTIFY ANY PURCHASER FROM IT OF THE
SECURITY EVIDENCED HEREBY OF THE RESALE RESTRICTIONS SET FORTH
IN (A) ABOVE."
2
<PAGE>
It is also understood and acknowledged that holders (including
subsequent transferees) of the Series A Notes will have the registration rights
set forth in the registration rights agreement (the "Registration Rights
Agreement"), to be dated the Closing Date, in substantially the form of Exhibit
A hereto, for so long as such Series A Notes constitute "Transfer Restricted
Securities" (as defined in the Registration Rights Agreement). Pursuant to the
Registration Rights Agreement, the Company will agree to file with the
Securities and Exchange Commission under the circumstances set forth therein,
(i) a registration statement under the Act relating to the Company's 97/8%
Series B Notes due 2006 (the "Series B Notes") and the guarantees thereof (the
"Series B Subsidiary Guarantees") by the Guarantors to be offered in exchange
for the Series A Notes (the "Registered Exchange Offer") and (ii) under certain
circumstances, a shelf registration statement pursuant to Rule 415 under the Act
relating to the resale by certain holders of the Series A Notes, and to use its
best efforts to cause such registration statements to be declared effective. As
used herein, the term "Series B Notes" shall include the Series B Subsidiary
Guarantees thereof by the Guarantors, unless the context otherwise requires and
the Series A Notes and the Series B Notes, are hereinafter referred to
collectively as the "Notes." This Agreement, the Indenture, the Notes, the
Series A Subsidiary Guarantees, the Series B Subsidiary Guarantees and the
Registration Rights Agreement are hereinafter referred to collectively as the
"Operative Documents."
2. Agreements to Sell, Purchase and Resell. (a) The Company and the
Guarantors hereby agree, on the basis of the representations, warranties and
agreements of the Initial Purchasers contained herein and subject to all the
terms and conditions set forth herein, to issue and sell to the Initial
Purchasers and, upon the basis of the representations, warranties and agreements
of the Company and the Guarantors herein contained and subject to all the terms
and conditions set forth herein, each Initial Purchaser agrees, severally and
not jointly, to purchase from the Company, at a purchase price of 97.25% of the
principal amount thereof, the principal amount of Series A Notes set forth
opposite the name of such Initial Purchaser in Schedule I hereto. The Company
and the Guarantors shall not be obligated to deliver any of the securities to be
delivered hereunder except upon payment for all of the securities to be
purchased as provided herein.
(b) Each of the Initial Purchasers hereby represents and warrants to
the Company and the Guarantors that it will offer the Series A Notes for sale
upon the terms and conditions set forth in this Agreement and in the Offering
Memorandum. Each of the Initial Purchasers hereby represents and warrants to,
and agrees with, the Company and the Guarantors that such Initial Purchaser (i)
is either a QIB or an institutional "accredited investor," as defined in Rule
501(a)(1), (2), (3) and (7) under the Act, in either case with such knowledge
and experience in financial and business matters as are necessary in order to
evaluate the merits and risks of an investment in the Series A Notes; (ii) is
purchasing the Series A Notes pursuant to a private sale exempt from
registration under the Act; (iii) in connection with the Exempt Resales, will
solicit offers to buy the Notes only from, and will offer to sell the Notes only
to, the Eligible Purchasers in accordance with this Agreement and on the terms
contemplated by the Offering Memorandum; and (iv) will not offer or sell the
Notes, nor has it offered or sold the Notes by, or otherwise engaged in, any
form of general solicitation or general advertising (within the meaning of
Regulation D; including, but not limited to, advertisements, articles, notices
or other communications published in any newspaper, magazine, or similar medium
or broadcast over television or radio, or any seminar or meeting whose attendees
have been invited by any general solicitation or general advertising) in
connection with the offering of the Series A Notes. The Initial Purchasers have
advised the Company that they will offer the Series A Notes to Eligible
Purchasers at a price initially equal to 100.00% of the principal amount
thereof, plus accrued interest, if any, from the date of issuance of the Series
A Notes. Such price may be changed by the Initial Purchasers at any time
thereafter without notice.
Each of the Initial Purchasers understands that the Company and the
Guarantors and, for purposes of the opinions to be delivered to the Initial
Purchasers pursuant to Sections 7(d) and 7(h) hereof, counsel to the Company and
counsel to the Initial Purchasers, will rely upon the accuracy and
3
<PAGE>
truth of the foregoing representations, warranties and agreements and the
Initial Purchasers hereby consents to such reliance.
3. Delivery of the Series A Notes and Payment Therefor. Delivery to
the Initial Purchasers of and payment for the Series A Notes shall be made at
the office of Jenkens & Gilchrist, P.C., 1445 Ross Avenue, Dallas, TX, at 9:00
A.M., New York City time, on April 20, 1999 (the "Closing Date"). The place of
closing for the Series A Notes and the Closing Date may be varied by agreement
between the Initial Purchasers and the Company.
The Series A Notes will be delivered to the Initial Purchasers against
payment of the purchase price therefor in immediately available funds. The
Series A Notes will be evidenced by a single global security in definitive form
(the "Global Note") and/or by additional definitive securities, and will be
registered, in the case of the Global Note, in the name of Cede & Co. as nominee
of The Depository Trust Company ("DTC"), and in the other cases, in such names
and in such denominations as the Initial Purchasers shall request prior to 9:30
A.M., New York City time, on the second business day preceding the Closing Date.
The Series A Notes to be delivered to the Initial Purchasers shall be made
available to the Initial Purchasers in New York City for inspection and
packaging not later than 9:30 A.M., New York City time, on the business day next
preceding the Closing Date.
4. Agreements of the Company and the Guarantors. The Company and the
Guarantors jointly and severally agree with each Initial Purchaser as follows:
(a) The Company and the Guarantors will furnish to the Initial
Purchasers, without charge, as of the date of the Offering Memorandum, such
number of copies of the Offering Memorandum as may then be amended or
supplemented as they may reasonably request.
(b) The Company and the Guarantors will not make any amendment or
supplement to the Preliminary Offering Memorandum or to the Offering Memorandum
of which the Initial Purchasers shall not previously have been advised or to
which they shall reasonably object after being so advised.
(c) Prior to the execution and delivery of this Agreement, the
Company and the Guarantors shall have delivered or will deliver to the Initial
Purchasers, without charge, in such quantities as the Initial Purchasers shall
have requested or may hereafter reasonably request, copies of the Preliminary
Offering Memorandum. The Company and each of the Guarantors consent to the use,
in accordance with the securities or Blue Sky laws of the jurisdictions in which
the Series A Notes are offered by the Initial Purchasers and by dealers, prior
to the date of the Offering Memorandum, of each Preliminary Offering Memorandum
so furnished by the Company and the Guarantors. The Company and each of the
Guarantors consent to the use of the Offering Memorandum in accordance with the
securities or Blue Sky laws of the jurisdictions in which the Series A Notes are
offered by the Initial Purchasers and by all dealers to whom Series A Notes may
be sold, in connection with the offering and sale of the Series A Notes.
(d) If, at any time prior to completion of the distribution of the
Series A Notes by the Initial Purchasers to Eligible Purchasers, any event shall
occur that in the judgment of the Company, any of the Guarantors or in the
opinion of counsel for the Initial Purchasers should be set forth in the
Offering Memorandum in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading, or if it is necessary
to supplement or amend the Offering Memorandum in order to comply with any law,
the Company and the Guarantors will forthwith prepare an appropriate supplement
or amendment thereto or such document, and will expeditiously furnish to the
Initial Purchasers and dealers a reasonable number of copies thereof.
4
<PAGE>
(e) The Company and each of the Guarantors will cooperate with the
Initial Purchasers and with their counsel in connection with the qualification
of the Series A Notes for offering and sale by the Initial Purchasers and by
dealers under the securities or Blue Sky laws of such jurisdictions as the
Initial Purchasers may designate and will file such consents to service of
process or other documents necessary or appropriate in order to effect such
qualification; provided, that in no event shall the Company or any of the
Guarantors be obligated to qualify to do business in any jurisdiction where it
is not now so qualified or to take any action which would subject it to service
of process in suits, other than those arising out of the offering or sale of the
Series A Notes, in any jurisdiction where it is not now so subject.
(f) So long as any of the Notes are outstanding, the Company and the
Guarantors will furnish to the Initial Purchasers (i) as soon as available, a
copy of each report of the Company mailed to stockholders generally or filed
with any stock exchange or regulatory body and (ii) from time to time such other
information concerning the Company and/or the Guarantors as the Initial
Purchasers may reasonably request.
(g) If this Agreement shall terminate or shall be terminated after
execution and delivery pursuant to any provisions hereof (otherwise than by
notice given by the Initial Purchasers terminating this Agreement pursuant to
Section 10 hereof) or if this Agreement shall be terminated by the Initial
Purchasers because of any failure or refusal on the part of the Company or any
of the Guarantors to comply with the terms or fulfill any of the conditions of
this Agreement, the Company and the Guarantors agree to reimburse the Initial
Purchasers for all out-of-pocket expenses (including reasonable fees and
expenses of its counsel) reasonably incurred by it in connection herewith, but
without any further obligation on the part of the Company or any of the
Guarantors for loss of profits or otherwise.
(h) The Company and the Guarantors will apply the net proceeds from
the sale of the Series A Notes to be sold by it hereunder substantially in
accordance with the description set forth in the Offering Memorandum under the
caption "Use of Proceeds."
(i) Except as stated in this Agreement and in the Preliminary
Offering Memorandum and Offering Memorandum, the Company and the Guarantors have
not taken, nor will any of them take, directly or indirectly, any action
designed to or that might reasonably be expected to cause or result in
stabilization or manipulation of the price of the Notes to facilitate the sale
or resale of the Notes. Except as permitted by the Act, the Company and the
Guarantors will not distribute any offering material in connection with the
Exempt Resales.
(j) The Company and the Guarantors will use their best efforts to
permit the Notes to be designated Private Offerings, Resales and Trading through
Automated Linkages ("PORTAL") Market securities in accordance with the rules and
regulations adopted by the National Association of Securities Dealers, Inc.
relating to trading in the PORTAL Market and to permit the Notes to be eligible
for clearance and settlement through DTC.
(k) From and after the Closing Date, so long as any of the Notes are
outstanding and are "restricted securities" within the meaning of the Rule
144(a)(3) under the Act or, if earlier, until three years after the Closing
Date, and during any period in which the Company is not subject to Section 13 or
15(d) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"),
the Company and the Guarantors will furnish to holders of the Notes and
prospective purchasers of Notes designated by such holders, upon request of such
holders or such prospective purchasers, the information required to be delivered
pursuant to Rule 144A(d)(4) under the Act to permit compliance with Rule 144A in
connection with resale of the Notes.
5
<PAGE>
(l) The Company and the Guarantors have complied and will comply with
all provisions of Florida Statutes Section 517.075 relating to issuers doing
business with Cuba.
(m) The Company and the Guarantors agree not to sell, offer for sale
or solicit offers to buy or otherwise negotiate in respect of any security (as
defined in the Act) that would be integrated with the sale of the Series A Notes
in a manner that would require the registration under the Act of the sale to the
Initial Purchasers or the Eligible Purchasers of the Series A Notes.
(n) The Company and the Guarantors agree to comply with all the terms
and conditions of the Registration Rights Agreement and all agreements set forth
in the representation letters of the Company and the Guarantors to DTC relating
to the approval of the Notes by DTC for "book entry" transfer.
(o) The Company and the Guarantors agree to cause the Exchange Offer,
if available, to be made in the appropriate form, as contemplated by the
Registration Rights Agreement, to permit registration of the Series B Notes to
be offered in exchange for the Series A Notes, and to comply with all applicable
federal and state securities laws in connection with the Registered Exchange
Offer.
(p) The Company and the Guarantors agree that prior to any
registration of the Notes pursuant to the Registration Rights Agreement, or at
such earlier time as may be required, the Indenture shall be qualified under the
Trust Indenture Act of 1939 (the "1939 Act") and any necessary supplemental
indentures will be entered into in connection therewith.
(q) The Company and the Guarantors will not voluntarily claim, and
will resist actively all attempts to claim, the benefit of any usury laws
against holders of the Notes.
(r) The Company and the Guarantors will do and perform all things
required or necessary to be done and performed under this Agreement by them
prior to the Closing Date, and to satisfy all conditions precedent to the
Initial Purchasers' obligations hereunder to purchase the Series A Notes.
5. Representations and Warranties of the Company and each of the
Guarantors. The Company and each of the Guarantors, represent and warrant to
each of the Initial Purchasers that:
(a) The Preliminary Offering Memorandum and Offering Memorandum with
respect to the Series A Notes have been prepared by the Company and the
Guarantors for use by the Initial Purchasers in connection with the Exempt
Resales. No order or decree preventing the use of the Preliminary Offering
Memorandum or the Offering Memorandum, or any order asserting that the
transactions contemplated by this Agreement are subject to the registration
requirements of the Act has been issued and no proceeding for that purpose has
commenced or is pending or, to the knowledge of the Company or any of the
Guarantors, is contemplated.
(b) The Preliminary Offering Memorandum and the Offering Memorandum
as of their respective dates and the Offering Memorandum as of the Closing Date,
did not or will not at any time contain an untrue statement of a material fact
or omit to state a material fact required to be stated therein or necessary to
make the statements therein not misleading, except that this representation and
warranty does not apply to statements in or omissions from the Preliminary
Offering Memorandum and Offering Memorandum made in reliance upon and in
conformity with information relating to the Initial Purchasers furnished to the
Company in writing by or on behalf of the Initial Purchasers expressly for use
therein.
6
<PAGE>
(c) The market-related and customer-related data and estimates
included under the captions "Offering Memorandum Summary-The Company" and
"Business-Market and Competition" in the Preliminary Offering Memorandum and the
Offering Memorandum are based on or derived from sources which the Company
believes to be reliable and accurate.
(d) The Indenture has been duly and validly authorized by the Company
and the Guarantors, and upon its execution and delivery and, assuming due
authorization, execution and delivery by the Trustee, will constitute the valid
and binding agreement of the Company and the Guarantors, enforceable against the
Company and the Guarantors in accordance with its terms, subject to the
qualification that the enforceability of the Company's and the Guarantors'
obligations thereunder may be limited by bankruptcy, fraudulent conveyance,
insolvency, reorganization, moratorium, and other laws relating to or affecting
creditors' rights generally and by general equitable principles; no
qualification of the Indenture under the 1939 Act is required in connection with
the offer and sale of the Series A Notes contemplated hereby or in connection
with the Exempt Resales.
(e) The Series A Notes have been duly and validly authorized by the
Company and when duly executed by the Company in accordance with the terms of
the Indenture and, assuming due authentication of the Series A Notes by the
Trustee, upon delivery to the Initial Purchasers against payment therefor in
accordance with the terms hereof, will have been validly issued and delivered,
and will constitute valid and binding obligations of the Company entitled to the
benefits of the Indenture, enforceable against the Company in accordance with
their terms, subject to the qualification that the enforceability of the
Company's obligations thereunder may be limited by bankruptcy, fraudulent
conveyance, insolvency, reorganization, moratorium, and other laws relating to
or affecting creditors' rights generally and by general equitable principles.
(f) The Series B Notes have been duly and validly authorized by the
Company and if and when duly issued and authenticated in accordance with the
terms of the Indenture and delivered in accordance with the Exchange Offer
provided for in the Registration Rights Agreement, will constitute valid and
binding obligations of the Company entitled to the benefits of the Indenture,
enforceable against the Company in accordance with their terms, subject to the
qualification that the enforceability of the Company's obligations thereunder
may be limited by bankruptcy, fraudulent conveyance, insolvency, reorganization,
moratorium, and other laws relating to or affecting creditors' rights generally
and by general equitable principles.
(g) The Series A Subsidiary Guarantees have been duly and validly
authorized by the Guarantors and when duly executed and delivered by the
Guarantors in accordance with the terms of the Indenture and upon the due
execution, authentication and delivery of the Series A Notes in accordance with
the Indenture and the issuance of the Series A Notes in the sale to the Initial
Purchasers contemplated by this Agreement, will constitute valid and binding
obligations of the Guarantors, enforceable against the Guarantors in accordance
with their terms, subject to the qualification that the enforceability of the
Guarantors' obligations thereunder may be limited by bankruptcy, fraudulent
conveyance, insolvency, reorganization, moratorium, and other laws relating to
or affecting creditors' rights generally and by general equitable principles.
(h) The Series B Subsidiary Guarantees have been duly and validly
authorized by the Guarantors and if and when duly executed and delivered by the
Guarantors in accordance with the terms of the Indenture and upon the due
execution and authentication of the Series B Notes in accordance with the
Indenture and the issuance and delivery of the Series B Notes in the Exchange
Offer contemplated by the Registration Rights Agreement, will constitute valid
and binding obligations of the Guarantors, enforceable against the Guarantors in
accordance with their terms, subject to the qualification that the
enforceability of the Guarantors' obligations thereunder may be limited by
7
<PAGE>
bankruptcy, fraudulent conveyance, insolvency, reorganization, moratorium, and
other laws relating to or affecting creditors' rights generally and by general
equitable principles.
(i) The Company, AmeriCredit Financial Services, Inc., AmeriCredit
Management Company and ACF Investment Corp. (collectively the "Borrowers"), have
entered into an agreement (the "Credit Agreement Amendment"), dated as of April
1, 1999 with Wells Fargo Bank (Texas), National Association and certain other
banks named therein. The Credit Agreement Amendment became effective on April
1, 1999 and amended the credit agreement (the "Credit Agreement"), dated as of
October 3, 1997, as amended on January 21, 1998, April 30, 1998 and August 31,
1998 by and among the Borrowers and Wells Fargo Bank (Texas), National
Association and certain other banks named therein, to clarify that the Credit
Agreement does not prohibit or conflict with the Company's obligations under the
Series A and Series B Notes. Americredit Corporation of California entered into
an amendment (the "Mortgage Facility Credit Agreement Amendment"), dated as of
April 15, 1999, from Chase Bank of Texas, National Association. The Mortgage
Facility Credit Agreement Amendment became effective on April 15, 1999 and
waived compliance with Section 8.11(i) of the credit agreement (the "Mortgage
Facility Credit Agreement"), dated as of February 5, 1997, as amended on June
22, 1998, February 7, 1999 and February 10, 1999 by and among the Americredit
Corporation of California and Chase Bank of Texas, National Association to
clarify that the Mortgage Facility Credit Agreement does not prohibit or
conflict with Americredit Corporation of California's guarantee of the Series A
Notes or the Series B Notes. The Company has received a waiver of that certain
Specific Guaranty (the "Canadian Subsidiary Credit Agreement Waiver"), dated as
of April 14, 1999, from The Bank of Nova Scotia. The Canadian Subsidiary Credit
Agreement Waiver became effective on April 14, 1999 and clarifies that the
Company's obligations under the Series A Notes and Series B Notes do not
conflict with the credit agreement (the "Canadian Subsidiary Credit Agreement
Waiver"), dated as of November 13, 1998 by and among the AmeriCredit Financial
Services of Canada Ltd. and The Bank of Nova Scotia.
(j) (A) The Credit Agreement and the agreements (the "Warehouse
Facility Agreements") governing each Warehouse Facility (as defined in the
Indenture) constitute the valid and binding obligation of each of the borrowers
thereto, enforceable against the borrowers in accordance with their respective
terms, subject to the qualification that the enforceability of the borrowers'
obligations thereunder may be limited by bankruptcy, fraudulent conveyance,
insolvency, reorganization, moratorium, and other laws relating to or affecting
creditors' rights generally and by general equitable principles; (B) the
Borrowers will have at least $115 million of borrowings available to them under
the Credit Agreement (giving effect to the borrowing base requirements of the
Credit Agreement) after the Closing of the sale of the Series A Notes hereunder,
the receipt by the Company of the proceeds therefore and the application of such
proceeds as described under the caption "Use of Proceeds" in the Offering
Memorandum; (C) all representations and warranties made by the borrowers in (i)
Article VII of the Credit Agreement and (ii) the Warehouse Facility Agreements
are true and correct in all material respects as of the date hereof; (D) the
Mortgage Facility Credit Agreement constitutes the valid and binding obligation
of Americredit Corporation of California, enforceable against Americredit
Corporation of California in accordance with its terms, subject to the
qualification that the enforceability of Americredit Corporation of California's
obligations thereunder may be limited by bankruptcy, fraudulent conveyance,
insolvency, reorganization, moratorium, and other laws relating to or affecting
creditors' rights generally and by general equitable principles; (E) all
representations and warranties made by Americredit Corporation of California in
Section 6 of the Mortgage Facility Credit Agreement are true and correct in all
material respects as of the date hereof; (F) the Canadian Subsidiary Credit
Agreement constitutes the valid and binding obligation of the AmeriCredit
Financial Services of Canada Ltd., enforceable against the AmeriCredit Financial
Services of Canada Ltd. in accordance with its terms, subject to the
qualification that the enforceability of AmeriCredit Financial Services of
Canada Ltd.'s obligations thereunder may be limited by bankruptcy, fraudulent
conveyance, insolvency, reorganization, moratorium, and other laws relating to
or affecting creditors' rights generally and by general equitable
8
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principles; and (G) all representations and warranties made by AmeriCredit
Financial Services of Canada Ltd. in the Canadian Subsidiary Credit Agreement
are true and correct in all material respects as of the date hereof.
(k) The Company and the Guarantors have obtained, in writing, all
consents, waivers and amendments required under the terms of the Warehouse
Facility Agreements, the Credit Agreement, the Mortgage Facility Credit
Agreement, the Canadian Subsidiary Credit Agreement and existing Credit
Enhancement Agreements (as defined in the Indenture) necessary to ensure that
the execution and delivery of, and the performance of all of the transactions
contemplated by, the Operative Documents will not conflict with or constitute a
breach of, or a default under, the Warehouse Facility Agreements, the Credit
Agreement, the Mortgage Facility Credit Agreement, the Canadian Subsidiary
Credit Agreement or any Credit Enhancement Agreement.
(l) All the shares of capital stock of the Company outstanding prior
to the issuance of the Series A Notes have been duly authorized and validly
issued and are fully paid and nonassessable; the authorized capital stock of the
Company conforms to the description thereof under the caption "Capitalization"
in the Offering Memorandum.
(m) The Company is a corporation duly incorporated and validly
existing and in good standing under the laws of Texas with full corporate power
and authority to own, lease and operate its properties and to conduct its
business as described in the Offering Memorandum, and is duly registered and
qualified to conduct its business and is in good standing in each jurisdiction
or place where the nature of its properties or the conduct of its business
requires such registration or qualification, except where the failure so to
register or qualify or to be in good standing does not have a material adverse
effect on the condition (financial or other), business, prospects, properties,
net worth or results of operations of the Company and the Subsidiaries taken as
a whole (a "Material Adverse Effect").
(n) Neither the Company nor any of the Subsidiaries owns capital
stock of any corporation or entity (excluding interests in Company-sponsored
securitizations) other than the Subsidiaries. Each of the Subsidiaries is a
corporation duly incorporated and validly existing and in good standing under
the laws of the jurisdiction of its incorporation, with all requisite corporate
power and authority to own, lease and operate its properties and to conduct its
business as described in the Offering Memorandum, and is duly registered and
qualified to conduct its business and is in good standing in each jurisdiction
or place where the nature of its properties or the conduct of its business
requires such registration or qualification, except where the failure so to
register or qualify or be in good standing does not have a Material Adverse
Effect. All the outstanding shares of capital stock or beneficial interests of
each of the Subsidiaries have been duly authorized and validly issued, are fully
paid and nonassessable, and are wholly owned by the Company directly, or
indirectly through one of the other Subsidiaries, free and clear of any lien,
adverse claim, security interest, equity or other encumbrance, except as
specifically described in the Offering Memorandum under the Caption "Description
Of Other Debt."
(o) There are no legal or governmental proceedings pending or, to the
knowledge of the Company or any of the Guarantors, threatened, against the
Company or any of the Subsidiaries or to which the Company or any of the
Subsidiaries or to which any of their respective properties, is subject, that
are not disclosed in the Offering Memorandum and which, if adversely decided,
are reasonably likely to cause a Material Adverse Effect or to materially affect
the issuance of the Notes or the consummation of the other transactions
contemplated by the Operative Documents. The Offering Memorandum contains
accurate summaries of all material agreements, contracts, indentures, leases or
other instruments required to be described or summarized therein. Neither the
Company nor any of the
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Subsidiaries is involved in any strike, job action or labor dispute with any
group of employees, and, to the Company's knowledge, no such action or dispute
is threatened.
(p) Neither the Company nor any of the Subsidiaries is (i) in
violation of its certificate or articles of incorporation or by-laws or other
organizational documents, or of any law, ordinance, administrative or
governmental rule or regulation applicable to the Company or any of the
Subsidiaries or of any decree of any court or governmental agency or body having
jurisdiction over the Company or any of the Subsidiaries except where any such
violation or violations in the aggregate would not have a Material Adverse
Effect or (ii) in default in the performance of any obligation, agreement or
condition contained in any bond, debenture, note or any other evidence of
indebtedness or in any material agreement, indenture, lease or other instrument
to which the Company or any of the Subsidiaries is a party or by which any of
them or any of their respective properties may be bound, except as may be
disclosed in the Offering Memorandum.
(q) None of the issuance, offer or sale of the Series A Notes, the
execution, delivery or performance by the Company and the Guarantors of this
Agreement or the other Operative Documents, compliance by the Company and the
Guarantors with the provisions hereof or thereof nor consummation by the Company
and the Guarantors of the transactions contemplated hereby or thereby (i)
requires any consent, approval, authorization or other order of, or registration
or filing with, any court, regulatory body, administrative agency or other
governmental body, agency or official (except such as may be required in
connection with the registration under the Act of the Series B Notes in
accordance with the Registration Rights Agreement, qualification of the
Indenture under the 1939 Act and compliance with the securities or Blue Sky laws
of various jurisdictions), or conflicts or will conflict with or constitutes or
will constitute a breach of, or a default under, the certificate or articles of
incorporation or bylaws, or other organizational documents, of the Company or
any of the Subsidiaries or (ii) conflicts or will conflict with or constitutes
or will constitute a breach of, or a default under any material agreement,
indenture, lease or other instrument to which the Company or any of the
Subsidiaries is a party or by which any of them or any of their respective
properties may be bound, or violates or will violate any statute, law,
regulation or filing or judgment, injunction, order or decree applicable to the
Company or any of the Subsidiaries or any of their respective properties, or
will result in the creation or imposition of any lien, charge or encumbrance
upon any property or assets of the Company or any of the Subsidiaries pursuant
to the terms of any agreement or instrument to which any of them is a party or
by which any of them may be bound or to which any of the property or assets of
any of them is subject.
(r) The accountants, PricewaterhouseCoopers LLP, who have certified
the financial statements included as part of the Offering Memorandum, are
independent public accountants under Rule 101 of the AICPA's Code of
Professional Conduct, and its interpretations and rulings.
(s) The financial statements, together with related notes forming
part of the Offering Memorandum, present fairly in all material respects the
consolidated financial position, results of operations, shareholders' equity and
cash flows of the Company and the Subsidiaries on the basis stated in the
Offering Memorandum at the respective dates or for the respective periods to
which they apply; such statements and related notes have been prepared in
accordance with generally accepted accounting principles consistently applied
throughout the periods involved, except as disclosed therein, and meet the
requirements of Regulation S-X under the Act for registration statements on Form
S-1; and the other financial and statistical information and data set forth in
the Offering Memorandum is accurately presented and, to the extent such
information and data is derived from the financial books and records of the
Company, is prepared on a basis consistent with such financial statements and
the books and records of the Company.
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(t) The Company and the Guarantors have all requisite power and
authority to execute, deliver and perform their obligations under this Agreement
and the Registration Rights Agreement; the execution and delivery of, and the
performance by the Company and the Guarantors of their obligations under this
Agreement and the Registration Rights Agreement have been duly and validly
authorized by the Company and the Guarantors; this Agreement has been duly
executed and delivered by the Company and the Guarantors and constitutes the
valid and binding agreements of the Company and the Guarantors, enforceable
against the Company and the Guarantors in accordance with their terms, except as
the enforcement hereof and thereof may be limited by bankruptcy, insolvency or
other similar laws affecting the enforcement of creditors' rights generally and
subject to the applicability of general principles of equity, and except as
rights to indemnity and contribution hereunder and thereunder may be limited by
Federal, Canadian or state securities laws or principles of public policy; and
the Registration Rights Agreement, when duly executed and delivered by the
Company and the Guarantors, will constitute the valid and binding agreements of
the Company and the Guarantors, enforceable against the Company and the
Guarantors in accordance with their terms, except as the enforcement hereof and
thereof may be limited by bankruptcy, insolvency or other similar laws affecting
the enforcement of creditors' rights generally and subject to the applicability
of general principles of equity, and except as rights to indemnity and
contribution hereunder and thereunder may be limited by Federal, Canadian or
state securities laws or principles of public policy.
(u) Except as disclosed in, or specifically contemplated by, the
Offering Memorandum, subsequent to the date as of which such information is
given in the Offering Memorandum, neither the Company nor any of the
Subsidiaries has incurred any liability or obligation (including, without
limitation, any liability or obligation in connection with the securitization of
Receivables or Credit Enhancement Agreements (as such terms are defined in the
Indenture)), direct or contingent, or entered into any transaction, in each case
not in the ordinary course of business, that is material to the Company and the
Subsidiaries taken as a whole, and there has not been any material change in the
capital stock, or material increase in the short-term or long-term debt, of the
Company or any of the Subsidiaries or any material adverse change, or any
development involving or which would reasonably be expected to involve a
prospective material adverse change, in the condition (financial or other),
business, properties, net worth or results of operations of the Company and the
Subsidiaries taken as a whole.
(v) Each of the Company and the Subsidiaries has good and
indefeasible title to all property (real and personal) described in the Offering
Memorandum as being owned by it, free and clear of all liens, claims, security
interests or other encumbrances except such as are described in the Offering
Memorandum and all the material property described in the Offering Memorandum as
being held under lease by each of the Company and the Subsidiaries is held by it
under valid, subsisting and enforceable leases, with only such exceptions as in
the aggregate are not materially burdensome and do not interfere with the
conduct of the business of the Company and the Subsidiaries taken as a whole.
(w) Except as permitted by the Act, the Company and the Guarantors
have not distributed and, prior to the later to occur of the Closing Date and
completion of the distribution of the Series A Notes, will not distribute any
offering material in connection with the offering and sale of the Series A Notes
other than the Preliminary Offering Memorandum and Offering Memorandum.
(x) Each of the Company and the Subsidiaries has such permits,
licenses, franchises, certificates of need and other approvals or authorizations
of governmental or regulatory authorities ("Permits") as are necessary under
applicable law to own their respective properties and to conduct their
respective businesses in the manner described in the Offering Memorandum, except
to the extent that the failure to have such Permits would not have a Material
Adverse Effect; the Company and each of the Subsidiaries have fulfilled and
performed in all material respects, all their respective material obligations
11
<PAGE>
with respect to the Permits, and no event has occurred which allows, or after
notice or lapse of time would allow, revocation or termination thereof or
results in any other material impairment of the rights of the holder of any such
Permit, subject in each case to such qualification as may be set forth in the
Offering Memorandum and except to the extent that any such revocation or
termination would not have a Material Adverse Effect; and, except as described
in the Offering Memorandum, none of the Permits contains any restriction that is
materially burdensome to the Company or any of the Subsidiaries.
(y) The Company maintains a system of internal accounting controls
sufficient to provide reasonable assurances that (i) transactions are executed
in accordance with management's general or specific authorization; (ii)
transactions are recorded as necessary to permit preparation of financial
statements in conformity with generally accepted accounting principles and to
maintain accountability for assets; (iii) access to assets is permitted only in
accordance with management's general or specific authorization; and (iv) the
recorded accountability for assets is compared with existing assets at
reasonable intervals and appropriate action is taken with respect to any
differences.
(z) Neither the Company nor any of the Subsidiaries nor, to the
Company's knowledge, any employee or agent of the Company or any of the
Subsidiaries has made any payment of funds of the Company or any of the
Subsidiaries or received or retained any funds in violation of any law, rule or
regulation, which violation would have a Material Adverse Effect.
(aa) Except as disclosed in the Offering Memorandum, the Company and
each of the Subsidiaries have filed all tax returns required to be filed, which
returns are true and correct in all material respects, and neither the Company
nor any of the Subsidiaries is in default in the payment of any taxes which were
payable pursuant to said returns or any assessments with respect thereto, except
where the failure to file such returns and make such payments would not have a
Material Adverse Effect.
(bb) No holder of any security of the Company or any of the
Subsidiaries has any right to request or demand registration of shares of common
stock or any other security of the Company because of the consummation of the
transactions contemplated by this Agreement or the Registration Rights
Agreement. Except as described in or contemplated by the Offering Memorandum,
there are no outstanding options, warrants or other rights calling for the
issuance of, and there are no commitments, plans or arrangements to issue, any
shares of capital stock of any of the Subsidiaries or any security convertible
into or exchangeable or exercisable for capital stock of any of the
Subsidiaries.
(cc) The Company and each of the Subsidiaries own or possess all
patents, trademarks, trademark registration, service marks, service mark
registrations, trade names, copyrights, licenses, inventions, trade secrets and
rights described in the Offering Memorandum as being owned by any of them or
necessary for the conduct of their respective businesses, and the Company is not
aware of any claim to the contrary or any challenge by any other person to the
rights of the Company and the Subsidiaries with respect to the foregoing.
(dd) The Company and the Guarantors are not and, upon sale of the
Series A Notes to be issued and sold thereby in accordance herewith and the
application of the net proceeds to the Company of such sale as described in the
Offering Memorandum under the caption "Use of Proceeds," will not be an
"investment company" within the meaning of the Investment Company Act of 1940,
as amended.
(ee) When the Series A Notes are issued and delivered pursuant to this
Agreement, such Series A Notes will not be of the same class (within the meaning
of Rule 144A(d)(3) under the Act) as any security of the Company that is listed
on a national securities exchange registered under Section 6 of the Exchange Act
or that is quoted in a United States automated interdealer quotation system.
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<PAGE>
(ff) Neither the Company nor any affiliate (as defined in Rule 501(b)
of Regulation D ("Regulation D") under the Act) of the Company has directly, or
through any agent (provided that no representation is made as to the Initial
Purchasers or any person acting on its behalf), (i) sold, offered for sale,
solicited offers to buy or otherwise negotiated in respect of, any security (as
defined in the Act) which is or will be integrated with the offering and sale of
the Notes in a manner that would require the registration of the Series A Notes
under the Act or (ii) engaged in any form of general solicitation or general
advertising (within the meaning of Regulation D; including, but not limited to,
advertisements, articles, notices or other communications published in any
newspaper, magazine, or similar medium or broadcast over television or radio, or
any seminar or meeting whose attendees have been invited by any general
solicitation or general advertising) in connection with the offering of the
Series A Notes.
(gg) The Company and the Guarantors are not required to deliver the
information specified in Rule 144A(d)(4) in connection with the offering and
resale of the Series A Notes by the Initial Purchasers.
(hh) Assuming (i) that the representations and warranties in Section 2
hereof are true, (ii) the Initial Purchasers comply with the covenants set forth
in Section 2 hereof and (iii) that each person to whom the Initial Purchasers
offer, sell or deliver the Series A Notes is a QIB, the purchase and sale of the
Series A Notes pursuant hereto (including the Initial Purchasers' proposed
offering of the Series A Notes on the terms and in the manner set forth in the
Offering Memorandum and Section 2 hereof) is exempt from the registration
requirements of the Act.
(ii) The execution and delivery of this Agreement and the other
Operative Documents and the sale of the Series A Notes to the Initial Purchasers
or by the Initial Purchasers to Eligible Purchasers will not involve any
prohibited transaction within the meaning of Section 406 of ERISA or Section
4975 of the Code. The representation made by the Company and the Guarantors in
the preceding sentence is made in reliance upon and subject to the accuracy of,
and compliance with, the representations and covenants made or deemed made by
the Eligible Purchasers as set forth in the Offering Memorandum under the
section entitled "Notice to Investors."
(jj) The Company and the Subsidiaries have regular and ongoing
regulatory compliance programs and procedures that are adequate to ensure that
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 and the
Federal Trade Commission Act) with respect to Receivables owned and/or serviced
by the Company or its Subsidiaries have been complied with in all material
respects and to the Company's knowledge, all such Receivables now comply with
all such applicable legal requirements.
6. Indemnification and Contribution. (a) The Company and each
Guarantor jointly and severally agree to indemnify and hold harmless each
Initial Purchaser and each person, if any, who controls any Initial Purchaser
within the meaning of Section 15 of the Act or Section 20 of the Exchange Act,
from and against any and all losses, claims, damages, liabilities and expenses
(including reasonable costs of investigation) arising out of or based upon any
untrue statement or alleged untrue statement of a material fact contained in the
Preliminary Offering Memorandum or Offering Memorandum, or arising out of or
based upon any omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading, except insofar as such losses, claims, damages, liabilities or
expenses arise out of or are based upon any untrue statement or omission or
alleged untrue statement or omission which has been made therein or omitted
therefrom in reliance upon and in conformity with the information relating to
the Initial Purchasers furnished in writing to the Company by or on behalf of
the Initial Purchasers expressly for use in connection therewith; provided,
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<PAGE>
however, that the indemnification contained in this paragraph (a) with respect
to the Preliminary Offering Memorandum shall not inure to the benefit of any
Initial Purchaser (or to the benefit of any person controlling such Initial
Purchaser) on account of any such loss, claim, damage, liability or expense
arising from the sale of the Series A Notes by such Initial Purchaser to any
person if the untrue statement or alleged untrue statement or omission or
alleged omission of a material fact contained in the Preliminary Offering
Memorandum was corrected in the Offering Memorandum and the Initial Purchaser
sold Series A Notes to that person without sending or giving at or prior to the
written confirmation of such sale, a copy of the Offering Memorandum (as then
amended or supplemented) if the Company has previously furnished sufficient
copies thereof to the Initial Purchaser on a timely basis to permit such sending
or giving. The foregoing indemnity agreement shall be in addition to any
liability which the Company and the Guarantors may otherwise have.
(b) If any action, suit or proceeding shall be brought against the
Initial Purchasers or any person controlling the Initial Purchasers in respect
of which indemnity may be sought against the Company and the Guarantors, the
Initial Purchasers or such controlling person shall promptly notify the parties
against whom indemnification is being sought (the "indemnifying parties"), and
such indemnifying parties shall assume the defense thereof, including the
employment of counsel and payment of all fees and expenses. The Initial
Purchasers or any such controlling person shall have the right to employ
separate counsel in any such action, suit or proceeding and to participate in
the defense thereof, but the fees and expenses of such counsel shall be at the
expense of the Initial Purchasers or such controlling person unless (i) the
indemnifying parties have agreed in writing to pay such fees and expenses, (ii)
the indemnifying parties have failed to assume the defense and employ counsel,
or (iii) the named parties to any such action, suit or proceeding (including any
impleaded parties) include both the Initial Purchasers or such controlling
person and the indemnifying parties and the Initial Purchasers or such
controlling person shall have been advised in writing by its counsel that
representation of such indemnified party and any indemnifying party by the same
counsel would be inappropriate under applicable standards of professional
conduct (whether or not such representation by the same counsel has been
proposed) due to actual or potential differing interests between them (in which
case the indemnifying party shall not have the right to assume the defense of
such action, suit or proceeding on behalf of the Initial Purchasers or such
controlling person). It is understood, however, that the indemnifying parties
shall, in connection with any one such action, suit or proceeding or separate
but substantially similar or related actions, suits or proceedings in the same
jurisdiction arising out of the same general allegations or circumstances, be
liable for the reasonable fees and expenses of only one separate firm of
attorneys (in addition to any local counsel) at any time for the Initial
Purchasers and controlling persons not having actual or potential differing
interests with the Initial Purchasers or among themselves, which firm shall be
designated in writing by Salomon Smith Barney Inc., and that all such fees and
expenses shall be reimbursed as they are incurred. The indemnifying parties
shall not be liable for any settlement of any such action, suit or proceeding
effected without their written consent, but if settled with such written
consent, or if there be a final judgment for the plaintiff in any such action,
suit or proceeding, the indemnifying parties agree to indemnify and hold
harmless the Initial Purchasers, to the extent provided in paragraph (a), and
any such controlling person from and against any loss, claim, damage, liability
or expense by reason of such settlement or judgment.
(c) Each Initial Purchaser, severally and not jointly, agrees to
indemnify and hold harmless the Company and the Guarantors, and their directors
and officers, and any person who controls the Company or any Guarantor within
the meaning of Section 15 of the Act or Section 20 of the Exchange Act to the
same extent as the indemnity from the Company and the Guarantors to the Initial
Purchasers set forth in paragraph (a) hereof, but only with respect to
information relating to the Initial Purchasers furnished in writing by or on
behalf of the Initial Purchasers expressly for use in the Preliminary Offering
Memorandum or Offering Memorandum. If any action, suit or proceeding shall be
brought against the Company or the Guarantors, any of their directors or
officers, or any such controlling
14
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person based on the Preliminary Offering Memorandum or Offering Memorandum, and
in respect of which indemnity may be sought against the Initial Purchasers
pursuant to this paragraph (c), the Initial Purchasers shall have the rights and
duties given to the Company and the Guarantors by paragraph (b) above (except
that if the Company and the Guarantors shall have assumed the defense thereof
the Initial Purchasers shall not be required to do so, but may employ separate
counsel therein and participate in the defense thereof, but the fees and
expenses of such counsel shall be at the Initial Purchasers' expense), and the
Company and the Guarantors, their directors and officers, and any such
controlling person shall have the rights and duties given to the Initial
Purchasers by paragraph (b) above. The foregoing indemnity agreement shall be in
addition to any liability which the Initial Purchasers may otherwise have.
(d) If the indemnification provided for in this Section 6 is
unavailable (except if inapplicable according to its terms) to an indemnified
party under paragraphs (a) or (c) hereof in respect of any losses, claims,
damages, liabilities or expenses referred to therein, then an indemnifying
party, in lieu of indemnifying such indemnified party, shall contribute to the
amount paid or payable by such indemnified party as a result of such losses,
claims, damages, liabilities or expenses (i) in such proportion as is
appropriate to reflect the relative benefits received by the Company and the
Guarantors on the one hand and the Initial Purchasers on the other hand from the
offering of the Series A Notes, or (ii) if the allocation provided by clause (i)
above is not permitted by applicable law, in such proportion as is appropriate
to reflect not only the relative benefits referred to in clause (i) above but
also the relative fault of the Company and the Guarantors on the one hand and
the Initial Purchasers on the other in connection with the statements or
omissions that resulted in such losses, claims, damages, liabilities or
expenses, as well as any other relevant equitable considerations. The relative
benefits received by the Company and the Guarantors on the one hand and the
Initial Purchasers on the other shall be deemed to be in the same proportion as
the total net proceeds from the offering (before deducting expenses) received by
the Company bear to the total underwriting discounts received by the Initial
Purchasers, in each case as set forth in the table on the cover page of the
Offering Memorandum. The relative fault of the Company and the Guarantors on
the one hand and the Initial Purchasers on the other hand shall be determined by
reference to, among other things, whether the untrue or alleged untrue statement
of a material fact or the omission or alleged omission to state a material fact
relates to information supplied by the Company and the Guarantors on the one
hand or by the Initial Purchasers on the other hand and the parties' relative
intent, knowledge, access to information and opportunity to correct or prevent
such statement or omission.
(e) The Company, the Guarantors and the Initial Purchasers agree that
it would not be just and equitable if contribution pursuant to this Section 6
were determined by a pro rata allocation or by any other method of allocation
that does not take account of the equitable considerations referred to in
paragraph (d) above. The amount paid or payable by an indemnified party as a
result of the losses, claims, damages, liabilities and expenses referred to in
paragraph (d) above shall be deemed to include, subject to the limitations set
forth above, any legal or other expenses reasonably incurred by such indemnified
party in connection with investigating any claim or defending any such action,
suit or proceeding. Notwithstanding the provisions of this Section 6, the
Initial Purchasers shall not be required to contribute any amount in excess of
the amount by which the total price of the Series A Notes underwritten by it and
distributed to the public exceeds the amount of any damages which the Initial
Purchasers have otherwise been required to pay by reason of such untrue or
alleged untrue statement or omission or alleged omission. No person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation.
(f) Any losses, claims, damages, liabilities or expenses for which an
indemnified party is entitled to indemnification or contribution under this
Section 6 shall be paid by the indemnifying
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party to the indemnified party as such losses, claims, damages, liabilities or
expenses are incurred but only to the extent that such losses, claims, damages,
liabilities or expenses are required to be paid by an indemnified party. The
indemnity and contribution agreements contained in this Section 6 and the
representations and warranties of the Company and the Guarantors set forth in
this Agreement shall remain operative and in full force and effect, regardless
of (i) any investigation made by or on behalf of the Initial Purchasers or any
person controlling the Initial Purchasers, the Company and the Guarantors, their
directors or officers or any person controlling the Company or the Guarantors,
(ii) acceptance of any Series A Notes and payment therefor hereunder, and (iii)
any termination of this Agreement. A successor to the Initial Purchasers or any
person controlling the Initial Purchasers, or to the Company and the Guarantors,
their directors or officers or any person controlling the Company or the
Guarantors, shall be entitled to the benefits of the indemnity, contribution and
reimbursement agreements contained in this Section 6.
(g) No indemnifying party shall, without the prior written consent of
the indemnified party, effect any settlement of any pending or threatened
action, suit or proceeding in respect of which any indemnified party is or could
have been a party and indemnity could have been sought hereunder by such
indemnified party, unless such settlement includes an unconditional release of
such indemnified party from all liability on claims that are the subject matter
of such action, suit or proceeding.
7. Conditions of the Initial Purchasers' Obligations. The several
obligations of the Initial Purchasers to purchase the Series A Notes hereunder
are subject to the following conditions:
(a) At the time of execution of this Agreement and on the Closing
Date, no order or decree preventing the use of the Offering Memorandum, or any
order asserting that the transactions contemplated by this Agreement are subject
to the registration requirements of the Act shall have been issued and no
proceedings for that purpose shall have been commenced or shall be pending or,
to the knowledge of the Company or any of the Guarantors, be contemplated. No
stop order suspending the sale of the Series A Notes in any jurisdiction
designated by the Initial Purchasers shall have been issued and no proceedings
for that purpose shall have been commenced or shall be pending or, to the
knowledge of the Company or any of the Guarantors, shall be contemplated.
(b) Subsequent to the date as of which information is given in the
Offering Memorandum, except as otherwise stated in the Offering Memorandum,
there shall not have occurred (i) any change, or any development involving a
prospective change, in or affecting the condition (financial or other),
business, properties, net worth, or results of operations of the Company or the
Subsidiaries not contemplated by the Offering Memorandum, which in the opinion
of the Initial Purchasers, would materially adversely affect the market for the
Series A Notes, or (ii) any event or development relating to or involving the
Company, any of its Subsidiaries or any officer or director of the Company or
any of its Subsidiaries which makes any statement made in the Offering
Memorandum untrue or which, in the opinion of the Company, the Guarantors and
their counsel or the Initial Purchasers and their counsel, requires the making
of any addition to or change in the Offering Memorandum in order to state a
material fact required by any law to be stated therein or necessary in order to
make the statements therein not misleading, if amending or supplementing the
Offering Memorandum to reflect such event or development would, in the opinion
of the Initial Purchasers, materially adversely affect the market for the Series
A Notes.
(c) The Final Offering Memorandum shall have been printed and copies
thereof distributed to the Initial Purchasers in such quantities as shall have
been previously specified by them not later than 9:00 a.m., New York City time,
on April 19, 1999, or at such later date and time as the Initial Purchasers may
approve in writing.
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(d) The Initial Purchasers shall have received on the Closing Date an
opinion of Jenkens & Gilchrist, P.C., counsel for the Company, dated the Closing
Date and addressed to the Initial Purchasers, to the effect that:
(i) The Company is a corporation duly incorporated and validly
existing in good standing under the laws of Texas with full corporate power and
authority to own, lease and operate its properties and to conduct its business
as described in the Offering Memorandum;
(ii) Each of the Subsidiaries is a corporation duly
incorporated and validly existing and in good standing under the laws of its
jurisdiction of incorporation, with all requisite power and authority to own,
lease, and operate its properties and to conduct its business as described in
the Offering Memorandum; and all the outstanding shares of capital stock or
beneficial interests of each of the Subsidiaries have been duly authorized and
validly issued, are fully paid and nonassessable, and to the knowledge of such
counsel, are wholly owned by the Company directly, or indirectly through one of
the other Subsidiaries, free and clear of any security interest, lien, adverse
claim, equity or other encumbrance, except as specifically described in the
Offering Memorandum under the caption "Description Of Other Debt;"
(iii) The authorized capital stock of the Company is as set
forth under the caption "Capitalization" in the Offering Memorandum;
(iv) The Company and each of the Guarantors have the corporate
power and authority to enter into this Agreement and the Registration Rights
Agreement and to issue, sell and deliver the Series A Notes to be sold to the
Initial Purchasers as provided herein, and this Agreement and the Registration
Rights Agreement have been duly and validly authorized, executed and delivered
by the Company and the Guarantors and constitute the valid and binding
agreements of the Company and the Guarantors, enforceable against the Company
and the Guarantors in accordance with their terms, except (A) as enforcement of
rights to indemnity and contribution hereunder and thereunder may be limited by
Federal or state securities laws or principles of public policy and (B) subject
to the qualification that the enforceability of the Company's and the
Guarantors' obligations hereunder and thereunder may be limited by bankruptcy,
fraudulent conveyance, insolvency, reorganization, moratorium, and other laws
relating to or affecting creditors' rights generally and by general equitable
principles;
(v) The Indenture has been duly and validly authorized,
executed and delivered by the Company and the Guarantors and, assuming due
authorization, execution and delivery by the Trustee, constitutes the valid and
binding agreement of the Company and the Guarantors, enforceable against the
Company and the Guarantors in accordance with its terms, subject to the
qualification that the enforceability of the Company's and the Guarantors'
obligations thereunder may be limited by bankruptcy, fraudulent conveyance,
insolvency, reorganization, moratorium, and other laws relating to or affecting
creditors' rights generally and by general equitable principles; no
qualification of the Indenture under the 1939 Act is required in connection with
the offer and sale of the Series A Notes contemplated hereby or in connection
with the Exempt Resales;
(vi) The Series A Notes have been duly and validly authorized
by the Company and when duly executed by the Company in accordance with the
terms of the Indenture and, assuming due authentication of the Series A Notes by
the Trustee, upon delivery to the Initial Purchasers against payment therefor in
accordance with the terms hereof, will have been validly issued and delivered,
and will constitute valid and binding obligations of the Company entitled to the
benefits of the Indenture, enforceable against the Company in accordance with
their terms, subject to the qualification that the enforceability of the
Company's obligations thereunder may be limited by bankruptcy,
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fraudulent conveyance, insolvency, reorganization, moratorium, and other laws
relating to or affecting creditors' rights generally and by general equitable
principles;
(vii) The Series B Notes have been duly and validly authorized
by the Company and if and when duly issued and authenticated in accordance with
the terms of the Indenture and delivered in accordance with the Exchange Offer
provided for in the Registration Rights Agreement, will constitute valid and
binding obligations of the Company entitled to the benefits of the Indenture,
enforceable against the Company in accordance with their terms, subject to the
qualification that the enforceability of the Company's obligations thereunder
may be limited by bankruptcy, fraudulent conveyance, insolvency, reorganization,
moratorium, and other laws relating to or affecting creditors' rights generally
and by general equitable principles;
(viii) The Series A Subsidiary Guarantees have been duly and
validly authorized by the Guarantors and when duly executed and delivered by the
Guarantors in accordance with the terms of the Indenture and upon the due
execution, authentication and delivery of the Series A Notes in accordance with
the Indenture and the issuance of the Series A Notes in the sale to the Initial
Purchasers contemplated by this Agreement, will constitute valid and binding
obligations of the Guarantors, enforceable against the Guarantors in accordance
with their terms, subject to the qualification that the enforceability of the
Guarantors' obligations thereunder may be limited by bankruptcy, fraudulent
conveyance, insolvency, reorganization, moratorium, and other laws relating to
or affecting creditors' rights generally and by general equitable principles;
(ix) The Series B Subsidiary Guarantees have been duly and
validly authorized by the Guarantors and if and when duly executed and delivered
by the Guarantors in accordance with the terms of the Indenture and upon the due
execution, authentication and delivery of the Series B Notes in accordance with
the Indenture and the issuance and delivery of the Series B Notes in the
Exchange Offer contemplated by the Registration Rights Agreement, will
constitute valid and binding obligations of the Guarantors, enforceable against
the Guarantors in accordance with their terms, subject to the qualification that
the enforceability of the Guarantors' obligations thereunder may be limited by
bankruptcy, fraudulent conveyance, insolvency, reorganization, moratorium, and
other laws relating to or affecting creditors' rights generally and by general
equitable principles ;
(x) None of the issuance, offer or sale of the Series A Notes
and Series A Subsidiary Guarantees, the execution, delivery or performance by
the Company and the Guarantors of this Agreement or the other Operative
Documents, compliance by the Company and the Guarantors with the provisions
hereof or thereof nor consummation by the Company and the Guarantors of the
transactions contemplated hereby or thereby conflicts or will conflict with or
constitutes or will constitute a breach of, or a default under the certificate
or articles of incorporation or bylaws or other organizational documents of the
Company or any of the Subsidiaries or the Credit Agreement, or will result in
the creation or imposition of any lien, charge or encumbrance upon any property
or assets of the Company or the Subsidiaries pursuant to the terms of the Credit
Agreement nor will any such action result in any violation of any existing law,
or any regulation, ruling (assuming compliance with all applicable state
securities and Blue Sky laws and, in the case of the Registration Rights
Agreement, the Act, the Exchange Act and the 1939 Act), judgment, injunction,
order or decree known to such counsel, applicable to the Company or the
Subsidiaries or any of their respective properties;
(xi) No consent, approval, authorization or other order of, or
registration or filing with, any court, regulatory body, administrative agency
or other governmental body, agency, or official is required on the part of the
Company or the Guarantors for the valid issuance and sale of the Series A Notes
to the Initial Purchasers and the issuance of the Series A Subsidiary Guarantees
in
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connection therewith as contemplated by this Agreement (other than as may be
required by applicable state securities and Blue Sky laws, as to which counsel
need express no opinions);
(xii) To the knowledge of such counsel, (A) other than as
described or contemplated in the Offering Memorandum, there are no legal or
governmental proceedings pending or threatened against the Company, the
Guarantors or any of the other Subsidiaries or to which the Company or any of
the Subsidiaries or any of their properties, are subject, which are not
disclosed in the Offering Memorandum and which, if adversely decided, are
reasonably likely to cause a Material Adverse Effect or materially affect the
issuance of the Notes or the consummation of the other transactions contemplated
by the Operative Documents and (B) there are no material agreements, contracts,
indentures, leases or other instruments, that are not described in the Offering
Memorandum;
(xiii) The statements under the captions "Risk Factors,"
"Management's Discussion and Analysis of Financial Condition and Results of
Operations," "Business," "Description of Other Debt," and "Certain Federal
Income Tax Consequences" in the Offering Memorandum, insofar as they are
descriptions of contracts, agreements or other legal documents, (excluding
contracts, agreements or other legal documents pertaining to Company-sponsored
securitizations) or refer to statements of law or legal conclusions, are
accurate in all material respects and present fairly the information required to
be shown;
(xiv) Such counsel does not know of any person who has the
right, contractual or otherwise, to cause the Company to sell or otherwise issue
to them, or to permit them to underwrite the sale of, any of the Notes or the
right, as a result of the consummation of the transactions contemplated by the
Operative Documents, to require registration under the Act of any shares of
Common Stock or other securities of the Company;
(xv) When the Series A Notes are issued and delivered pursuant
to this Agreement, such Series A Notes will not be of the same class (within the
meaning of Rule 144A(d)(3) under the Act) as any security of the Company that is
listed on a national securities exchange registered under Section 6 of the
Exchange Act or that is quoted in a United States automated interdealer
quotation system;
(xvi) No registration of the Series A Notes under the Act is
required for the sale of the Series A Notes to the Initial Purchasers as
contemplated in this Agreement or for the Exempt Resales (assuming (A) that any
Eligible Purchaser who buys the Series A Notes in the Exempt Resales is a QIB
and (B) the accuracy of the Initial Purchasers' representations and those of the
Company and the Guarantors in this Agreement (it being understood that no
opinion is being expressed as to any resale subsequent to the Exempt Resales or
any resale of securities by any person other than the Initial Purchasers);
(xvii) The Company and the Guarantors are not required to
deliver the information specified in Rule 144A(d)(4) in connection with the
offering and resale of the Series A Notes by the Initial Purchasers;
(xviii) The Company is not required to obtain stockholder
consent for the issuance or offering of the Notes; and
In addition, such counsel shall also state that such counsel has
participated in conferences with officers and representatives of the Company and
the Guarantors, representatives of the independent public accountants for the
Company and the Guarantors and the Initial Purchasers at which the contents of
the Offering Memorandum and related matters were discussed and, although such
counsel
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is not passing upon and does not assume any responsibility for and has not
verified the accuracy, completeness or fairness of the statements contained in
the Offering Memorandum, and has not made any independent check or verification
thereof, on the basis of the foregoing (relying as to materiality to the extent
such counsel deemed appropriate upon facts provided by officers and other
representatives of the Company and the Guarantors), no facts have come to the
attention of such counsel that lead such counsel to believe that the Offering
Memorandum, as of its date or as of the Closing Date, contained or contains any
untrue statement of material fact or omitted or omits to state any material fact
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading (it being understood that such counsel need
express no belief or opinion with respect to the financial statements and other
financial and statistical data included therein).
The opinion of such counsel may be limited to the laws of the state of
Texas, the laws of the states of New York and California, the General
Corporation Law of the State of Delaware and the federal laws of the United
States. Such counsel may rely as to matters of New York and California law, as
it relates to the authorization and enforceability of the Operative Documents
only, on the opinion of Latham & Watkins described below in Section 7(h). Such
counsel need not express any opinion with respect to the Canadian Guarantor,
except that such counsel shall express its opinion as to the due execution and
delivery of the Operative Documents by the Canadian Guarantor. In rendering
such opinion, such counsel may rely as to matters of Canadian and Ontario choice
of law rules, on the opinion of Fogler, Rubinoff described below in Section
7(g).
(e) The Initial Purchasers shall have received on the Closing Date an
opinion of Chris A. Choate, Esq., General Counsel of the Company, dated the
Closing Date and addressed to the Initial Purchasers to the effect that:
(i) The Company is duly registered and qualified to conduct
its business and is in good standing as a foreign corporation in each
jurisdiction or place where the nature of its properties or the conduct of its
business requires such registration or qualification, except where the failure
so to register or qualify or to be in good standing does not have a Material
Adverse Effect;
(ii) Each of the Guarantors is duly registered and qualified to
conduct its business and is in good standing as a foreign corporation in each
jurisdiction or place where the nature of its properties or the conduct of its
business requires such registration or qualification, except where the failure
so to register or qualify or to be in good standing does not have a Material
Adverse Effect;
(iii) Neither the Company nor any of the Subsidiaries is in
violation of its respective certificate or articles of incorporation or bylaws,
or other organizational documents, or to the best knowledge of such counsel
after reasonable inquiry, is in default in the performance of any material
obligation, agreement or condition contained in any bond, debenture, note or
other evidence of indebtedness or in any material agreement, indenture, lease or
other instrument to which the Company or any of the Subsidiaries is a party or
by which any of them or any of their respective properties may be bound, except
as disclosed in the Offering Memorandum and except to the extent that any such
violation or default would not have a Material Adverse Effect;
(iv) None of the issuance, offer or sale of the Series A Notes
and Series A Subsidiary Guarantees, the execution, delivery or performance by
the Company and the Guarantors of this Agreement or the other Operative
Documents, compliance by the Company and the Guarantors with the provisions
hereof or thereof nor consummation by the Company and the Guarantors of the
transactions contemplated hereby or thereby conflicts or will conflict with or
constitutes or will constitute a breach of, or a default under the certificate
or articles of incorporation or bylaws or other organizational documents of the
Company or any of the Subsidiaries or any material agreement,
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indenture, lease or other instrument to which the Company or any of the
Subsidiaries is a party or by which any of them or any of their respective
properties is bound, or will result in the creation or imposition of any lien,
charge or encumbrance upon any property or assets of the Company or the
Subsidiaries pursuant to the terms of any material agreement or instrument to
which any of them is a party or by which any of them may be bound or to which
any of the property or assets of them is subject, nor will any such action
result in any violation of any existing law, or any regulation, ruling (assuming
compliance with all applicable state securities and Blue Sky laws and, in the
case of the Registration Rights Agreement, the Act, the Exchange Act and the
1939 Act), judgment, injunction, order or decree known to such counsel,
applicable to the Company or the Subsidiaries or any of their respective
properties;
(v) The statements under the caption "Management" in the
Offering Memorandum, insofar as they are descriptions of contracts, agreements
or other legal documents or refer to statements of law or legal conclusions, are
accurate in all material respects and present fairly the information required to
be shown;
(vi) To the best knowledge of such counsel after reasonable
inquiry, neither the Company nor any of the Subsidiaries is in violation of any
law, ordinance, administrative or governmental rule or regulation applicable to
the Company or any of the Subsidiaries or of any decree of any court or
governmental agency or body having jurisdiction over the Company or any of the
Subsidiaries, except to the extent that any such violation would not have a
Material Adverse Effect;
(vii) The Company and the Subsidiaries have all Permits that are
required under applicable law to own their respective properties and to conduct
their respective businesses as now being conducted as described in the Offering
Memorandum except where the failure to have any such Permits would not,
individually or in the aggregate, have a Material Adverse Effect;
(viii) The statements in the Offering Memorandum, insofar as they
are descriptions of contracts, agreements or other legal documents pertaining to
the Company's $505 Million Warehouse Facility and $150 Million Warehouse
Facility, are accurate in all material respects and present fairly the Company's
and the Guarantors' rights, obligations and liabilities in connection with such
Warehouse Facilities; and
(ix) None of the issuance, offer or sale of the Series A Notes,
the execution, delivery or performance by the Company and the Guarantors of this
Agreement or the other Operative Documents, compliance by the Company and the
Guarantors with the provisions hereof or thereof nor consummation by the Company
and the Guarantors of the transactions contemplated hereby or thereby conflicts
or will conflict with or constitutes or will constitute a breach of, or a
default under any material agreement, indenture, or other instrument pertaining
to the Company's $505 Million Warehouse Facility and $150 Million Warehouse
Facility, or will result in the creation or imposition of any lien, charge or
encumbrance upon any property or assets of the Company or any of the
Subsidiaries pursuant to the terms of any material agreement or instrument
pertaining to the Company's Warehouse Facilities.
(f) The Initial Purchasers shall have received on the Closing Date an
opinion of Dewey Ballantine LLP, special securitization counsel for the Company
and its Subsidiaries, dated the Closing Date, and addressed to the Initial
Purchasers to the effect that:
(i) The statements in the Offering Memorandum, insofar as they
are descriptions of contracts, agreements or other legal documents pertaining to
Company-sponsored securitizations, are accurate in all material respects and
present fairly the Company's and the Guarantors' rights, obligations and
liabilities in connection with such securitizations; and
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(ii) None of the issuance, offer or sale of the Series A Notes,
the execution, delivery or performance by the Company and the Guarantors of this
Agreement or the other Operative Documents, compliance by the Company and the
Guarantors with the provisions hereof or thereof nor consummation by the Company
and the Guarantors of the transactions contemplated hereby or thereby conflicts
or will conflict with or constitutes or will constitute a breach of, or a
default under any material agreement, indenture, or other instrument pertaining
to a Company-sponsored securitization, or will result in the creation or
imposition of any lien, charge or encumbrance upon any property or assets of the
Company or any of the Subsidiaries pursuant to the terms of any material
agreement or instrument pertaining to a Company-sponsored securitization.
(g) The Initial Purchasers shall have received on the Closing Date an
opinion of Fogler, Rubinoff, Canadian counsel for the Company, dated the Closing
Date and addressed to the Initial Purchasers, in form and substance satisfactory
to counsel for the Initial Purchasers, to the effect that:
(i) The Canadian Guarantor is a corporation duly incorporated
and validly existing and in good standing under the laws of its jurisdiction of
incorporation, with all requisite power and authority to own, lease, and operate
its properties and to conduct its business as described in the Offering
Memorandum; and all the outstanding shares of capital stock or beneficial
interests of the Canadian Guarantor have been duly authorized and validly
issued, are fully paid and nonassessable, and to the knowledge of such counsel,
are wholly owned by the Company directly, or indirectly through one of the other
Subsidiaries, free and clear of any security interest, lien, adverse claim,
equity or other encumbrance, except as specifically described in the Offering
Memorandum under the caption "Description Of Other Debt;"
(ii) The Canadian Guarantor has the corporate power and
authority to enter into this Agreement and the Registration Rights Agreement and
this Agreement and the Registration Rights Agreement have been duly and validly
authorized by the Canadian Guarantor;
(iii) The Indenture has been duly and validly authorized by the
Canadian Guarantor;
(iv) The Series A Subsidiary Guarantees have been duly and
validly authorized by the Canadian Guarantor;
(v) The Series B Subsidiary Guarantees have been duly and
validly authorized by the Canadian Guarantor;
(vi) None of the issuance of the Series A Subsidiary
Guarantees, the execution, delivery or performance by the Canadian Guarantor of
this Agreement or the other Operative Documents, compliance by the Canadian
Guarantor with the provisions hereof or thereof nor consummation by the Canadian
Guarantor of the transactions contemplated hereby or thereby conflicts or will
conflict with or constitutes or will constitute a breach of, or a default under
the articles of incorporation or bylaws or other organizational documents of the
Canadian Guarantor or the Canadian Subsidiary Credit Agreement, or will result
in the creation or imposition of any lien, charge or encumbrance upon any
property or assets of the Canadian Guarantor pursuant to the terms of the
Canadian Subsidiary Credit Agreement nor will any such action result in any
violation of any existing law, or any regulation, ruling judgment, injunction,
order or decree known to such counsel, applicable to the Canadian Guarantor or
any of its properties;
(vii) No consent, approval, authorization or other order of, or
registration or filing with, any court, regulatory body, administrative agency
or other governmental body, agency, or
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official is required on the part of the Canadian Guarantor for the issuance of
the Series A Subsidiary Guarantees in connection therewith as contemplated by
this Agreement;
(viii) In the event that the Operative Documents to which the
Canadian Guarantor is a party (the "Canadian Guarantor Documents") are sought to
be enforced in any action or proceeding in the Province of Ontario in accordance
with the laws applicable to the Canadian Guarantor Documents as chosen by the
parties, namely the laws of the State of New York, the courts of the Province of
Ontario would recognize such choice of laws provided that it was not made with a
view to avoiding the consequences of the laws of any other jurisdiction and
provided that such choice is not contrary to public policy, as that term is
understood under the laws of the Province of Ontario;
(ix) In the event that the Canadian Guarantor Documents are
sought to be enforced in any action or proceeding in the Province of Ontario in
accordance with the laws applicable thereto as chosen by the parties, namely the
laws of the State of New York, the courts of the Province of Ontario would,
subject to paragraph (viii), apply the laws of the State of New York, upon
appropriate evidence as to such laws being adduced, provided that none of the
provisions of the Canadian Guarantor Documents or of the laws of the State of
New York are contrary to public policy, as such term is understood under the
laws of the Province of Ontario. A court in the Province of Ontario has,
however, an inherent power to decline to hear such an action or proceeding if it
is contrary to public policy, as such term is understood under the laws of the
Province of Ontario, for it to do so, or if it is not the proper forum to hear
such action, or if concurrent proceedings are being brought elsewhere;
(x) The laws of the Province of Ontario permit an action to be
brought in a court of competent jurisdiction in the Province of Ontario on any
final and conclusive judgment in personam against the Canadian Guarantor in
respect of the Canadian Guarantor Documents by a court in the State of New York,
which is not impeachable as void or voidable under the internal laws of the
State of New York, for a sum certain if (i) the court rendering judgment had
jurisdiction over the Canadian Guarantor, as recognized by the courts of the
Province of Ontario; (ii) such judgment was not obtained by fraud or in a manner
contrary to natural justice and the enforcement thereof would not be
inconsistent with public policy, as such term is understood under the laws of
the Province of Ontario; (iii) the enforcement of such judgment does not
constitute, directly or indirectly, the enforcement of foreign revenue or penal
laws; and (iv) there has been compliance with the laws of the Province of
Ontario pertaining to the law of limitations and the time period under which an
action to enforce such judgment must be commenced;
(xi) Under the laws of the Province of Ontario and Canadian
conflict of laws principles, the execution and delivery of the Canadian
Guarantor Documents is governed by the lex loci contractus (the place of
execution) which we understood will be the State of Texas. That being said, the
laws of the Province of Ontario regarding execution and delivery are based in
common law principles and we know of no reason why the laws of the State of
Texas pertaining to execution and delivery would be materially different from
the laws of the Province of Ontario regarding same. In particular, the Canadian
Guarantor Documents need not be executed before a notary or any other
governmental authority in order to be duly executed and delivered; and
The opinion of such counsel may be limited to the laws of the Province
of Ontario and the federal laws of Canada.
(h) The Initial Purchasers shall have received on the Closing Date an
opinion, of Latham & Watkins, counsel for the Initial Purchasers, dated the
Closing Date, and addressed to the Initial Purchasers, with respect to the
Offering Memorandum and such other related matters as the Initial
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Purchasers may reasonably request, and such counsel shall have received such
certificates, documents and information as they may reasonably request to enable
them to pass upon such matters.
(i) The Initial Purchasers shall have received letters addressed to
the Initial Purchasers, and dated the date hereof and the Closing Date from
PricewaterhouseCoopers LLP, independent certified public accountants,
substantially in the forms heretofore approved by the Initial Purchasers.
(j) (i) There shall not have been any decrease in stockholders'
equity of the Company nor any material increase in the short-term or long-term
debt of the Company (other than in the ordinary course of business) from that
set forth or specifically contemplated in the Offering Memorandum; (ii) the
Company and the Subsidiaries shall not have any liabilities or obligations,
direct or contingent (whether or not in the ordinary course of business), that
are material to the Company and the Subsidiaries, taken as a whole, other than
those reflected in the Offering Memorandum; and (iii) all the representations
and warranties of the Company and the Guarantors contained in this Agreement
shall be true and correct in all material respects on and as of the date hereof
and on and as of the Closing Date as if made on and as of the Closing Date, and
the Initial Purchasers shall have received a certificate, dated the Closing Date
and signed by the Chief Executive Officer and the Chief Financial Officer of the
Company (or such other officers as are acceptable to the Initial Purchasers), to
the effect set forth in this Section 7(j) and in Section 7(k) hereof.
(k) The Company and the Guarantors shall not have failed at or prior
to the Closing Date to have performed or complied in all material respects with
any of its agreements herein contained and required to be performed or complied
with by it hereunder at or prior to the Closing Date.
(l) There shall not have been any announcement by any "nationally
recognized statistical rating organization," as defined for purposes of Rule
436(g) under the Act, that (i) it is downgrading its rating assigned to any
class of securities of the Company or any asset-backed securities of any
Company-sponsored Securitization Trust (as such term is defined in the
Indenture), or (ii) it is reviewing its ratings assigned to any class of
securities of the Company or any asset-backed security of any Company-sponsored
Securitization Trust with a view to possible downgrading, or with negative
implications, or direction not determined.
(m) The Series A Notes shall have been approved for trading in the
PORTAL Market.
(n) The Company and the Guarantors shall have obtained, in writing,
all consents and waivers required under the terms of the Warehouse Facility
Agreements, the Credit Agreement, the Mortgage Facility Credit Agreement, the
Canadian Subsidiary Credit Agreement and existing Credit Enhancement Agreements
necessary to ensure that the execution and delivery of, and the performance of
all of the transactions contemplated by this Agreement and the other Operative
Documents will not conflict with or constitute a breach of, or a default under,
the Warehouse Facility Agreements, the Credit Agreement, the Mortgage Facility
Credit Agreement, the Canadian Subsidiary Credit Agreement or any Credit
Enhancement Agreement. The Company and the Guarantors shall have furnished
photocopies of such waivers and consents to the Initial Purchasers.
(o) The Company and the Guarantors shall have entered into the Credit
Agreement Amendment and shall have furnished photocopies of such Credit
Agreement Amendment to the Initial Purchasers. The Company shall have received
the Mortgage Facility Credit Agreement Amendment and shall have furnished
photocopies of such Mortgage Facility Credit Agreement Amendment to the Initial
Purchasers. The Company shall have received the Canadian Subsidiary Credit
Agreement Waiver and
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shall have furnished photocopies of such Canadian Subsidiary Credit Agreement
Waiver to the Initial Purchasers.
(p) The Company and Guarantors shall have furnished or caused to be
furnished to the Initial Purchasers such further certificates and documents as
the Initial Purchasers or their counsel shall have requested.
All such opinions, certificates, letters, consents, waivers amendments
and other documents will be in compliance with the provisions hereof only if
they are reasonably satisfactory in form and substance to the Initial Purchasers
and counsel for the Initial Purchasers. Any certificate or document signed by
any officer of the Company or a Guarantor and delivered to the Initial
Purchasers, or to counsel for the Initial Purchasers, shall be deemed a
representation and warranty by the Company or Guarantor, as the case may be, to
the Initial Purchasers as to the statements made therein.
8. Expenses. The Company and the Guarantors jointly and severally
agree to pay the following costs, expenses and fees and all other costs and
expenses incident to the performance by any of them of any of their obligations
hereunder: (i) the preparation and reproduction of the Preliminary Offering
Memorandum and the Final Offering Memorandum (including, without limitation,
financial statements thereto), and each amendment or supplement to any of them,
this Agreement and the Indenture; (ii) the printing (or reproduction) and
delivery (including postage, air freight charges and charges for counting and
packaging) of such copies of the Final Offering Memorandum, the Preliminary
Offering Memorandum, and all amendments or supplements to any of them as may be
reasonably requested for use in connection with the offering and sale of the
Series A Notes; (iii) the preparation, printing, authentication, issuance and
delivery of certificates for the Notes, including any stamp taxes in connection
with the original issuance and sale of the Notes; (iv) the printing (or
reproduction) and delivery of this Agreement, the preliminary and supplemental
Blue Sky Memoranda and all other agreements or documents printed (or reproduced)
and delivered in connection with the offering of the Notes; (v) the application
for quotation of the Notes on the PORTAL Market; (vi) the qualification of the
Notes for offer and sale under the securities or Blue Sky laws of the several
states as provided in Section 4(f) hereof (including the reasonable fees,
expenses and disbursements of counsel for the Initial Purchasers relating to the
preparation, printing or reproduction, and delivery of the preliminary and
supplemental Blue Sky Memoranda and such qualification); (vii) the performance
by the Company of its obligations under the Registration Rights Agreement;
(viii) fees and expenses of the Trustee and its counsel; (ix) the transportation
and other expenses incurred by or on behalf of the Company representatives in
connection with presentations to prospective purchasers of the Series A Notes;
and (x) the fees and expenses of the Company's and the Guarantors' accountants
and the fees and expenses of counsel (including local and special counsel, if
any) for the Company and the Guarantors. The Company and each of the Guarantors
hereby agree that they will pay in full on the Closing Date the fees and
expenses referred to in clause (vi) of this Section 8 by delivering to counsel
for the Initial Purchasers on such date a check payable to such counsel in the
requisite amount.
9. Effective Date of Agreement. This Agreement shall become
effective upon the execution and delivery hereof by all the parties hereto.
10. Termination of Agreement. This Agreement shall be subject to
termination in the absolute discretion of the Initial Purchasers, without
liability on the part of any of the Initial Purchasers to the Company or any of
the Guarantors, by notice to the Company, if prior to the Closing Date, (i)
trading in securities generally on the New York Stock Exchange, the American
Stock Exchange or the Nasdaq National market shall have been suspended or
materially limited, (ii) a general moratorium on commercial banking activities
in New York or Texas shall have been declared, or (iii) there shall have
occurred any outbreak or escalation of hostilities involving the United States
or other domestic, foreign
25
<PAGE>
or international calamity, crisis or change in political, financial or economic
conditions, the effect of which on the financial markets of the United States is
such as to make it, in the judgment of the Initial Purchasers, impracticable or
inadvisable to commence or continue the offering of the Series A Notes on the
terms set forth on the cover page of the Offering Memorandum or to enforce
contracts for the resale of the Series A Notes by the Initial Purchasers. Notice
of such termination may be given to the Company by telegram, telecopy or
telephone and shall be subsequently confirmed by letter.
11. Information Furnished by the Initial Purchasers. The statements
set forth in the stabilization legend on the inside front cover and the last
paragraph on the cover page of the Preliminary Offering Memorandum and Offering
Memorandum, constitute the only information furnished by or on behalf of the
Initial Purchasers as such information is referred to in Sections 5(b) and 6
hereof.
12. Miscellaneous. Except as otherwise provided in Sections 4, 9 and
10 hereof, notice given pursuant to any provision of this Agreement shall be in
writing and shall be delivered (i) if to the Company or the Guarantors, at the
office of the Company at 200 Bailey Avenue, Fort Worth, TX 76107, Attention:
Chief Financial Officer with a copy to Jenkens & Gilchrist, P.C., 1445 Ross
Avenue, Suite 3200, Dallas, TX 75202, Attention: L. Steven Leshin, or (ii) if to
the Initial Purchasers, care of Salomon Smith Barney Inc., 388 Greenwich Street,
New York, NY 10013, Attention: Manager, Investment Banking Division with a copy
to Latham & Watkins, 885 Third Avenue, New York, New York 10022, Attention:
Robert A. Zuccaro.
This Agreement has been and is made solely for the benefit of the
Initial Purchasers, the Company, the Guarantors and their respective directors,
officers and the controlling persons referred to in Section 6 hereof and their
respective successors and assigns, to the extent provided herein, and no other
person shall acquire or have any right under or by virtue of this Agreement.
Neither the term "successor" nor the term "successors and assigns" as used in
this Agreement shall include a purchaser from the Initial Purchasers of any of
the Series A Notes in his status as such purchaser.
13. Applicable Law; Counterparts. This Agreement shall be governed
by and construed in accordance with the laws of the State of New York applicable
to contracts made and to be performed within the State of New York and without
regard to the conflicts of law principles thereof.
This Agreement may be signed in various counterparts which together
constitute one and the same instrument. If signed in counterparts, this
Agreement shall not become effective unless at least one counterpart hereof
shall have been executed and delivered on behalf of each party hereto.
[signature page follows]
26
<PAGE>
Please confirm that the foregoing correctly sets forth the agreement
between the Company, the Guarantors and the Initial Purchasers.
Very truly yours,
AmeriCredit Corp.
By /s/
----------------------------
Daniel E. Berce
Vice Chairman and Chief Financial
Officer
AmeriCredit Financial Services, Inc. Americredit Corporation of California
By /s/ By /s/
---------------------------- ----------------------------
Daniel E. Berce Daniel E. Berce
Vice Chairman and Chief Financial Vice Chairman and Chief Financial
Officer Officer
AmeriCredit Management Company ACF Investment Corp.
By /s/ By /s/
---------------------------- ----------------------------
Daniel E. Berce Daniel E. Berce
Vice Chairman and Chief Financial Vice Chairman and Chief Financial
Officer Officer
AmeriCredit Financial Services of
Canada Ltd.
By /s/
----------------------------
Daniel E. Berce
Chief Financial Officer
<PAGE>
Confirmed as of the date first
above mentioned.
Salomon Smith Barney Inc.
Bear, Stearns & Co. Inc.
ING Baring Furman Selz LLC
By: Salomon Smith Barney Inc.
By /s/
--------------------------------
Name:
Title
<PAGE>
SCHEDULE I
AmeriCredit Corp.
<TABLE>
<CAPTION>
Principal Amount
Initial Purchaser of Notes
- ----------------- --------
<S> <C>
Salomon Smith Barney Inc.................................................... $120,000,000
Bear, Stearns & Co. Inc..................................................... $ 60,000,000
ING Baring Furman Selz LLC.................................................. $ 20,000,000
Total.................................................................... $200,000,000
============
</TABLE>
<PAGE>
EXHIBIT 10.28
===============================================================================
A/B EXCHANGE
REGISTRATION RIGHTS AGREEMENT
Dated as of April 20, 1999
relating to
$200,000,000 in Aggregate Principal Amount
of 9 7/8% Senior Notes due 2006
by and among
AmeriCredit Corp. and the Guarantors named herein
and
Salomon Smith Barney Inc.,
Bear, Stearns & Co. Inc.
and
ING Baring Furman Selz LLC
===============================================================================
<PAGE>
This Registration Rights Agreement (this "Agreement") is made and
entered into as of April 20, 1999 by and among AmeriCredit Corp., a Texas
corporation (the "Company"); AmeriCredit Financial Services, Inc., a Delaware
corporation, AmeriCredit Management Company, a Delaware corporation, ACF
Investment Corp., a Delaware corporation, Americredit Corporation of California,
a California corporation, and AmeriCredit Financial Services of Canada Ltd., a
Canadian corporation chartered in the Province of Ontario (collectively the
"Guarantors"); and Salomon Smith Barney Inc., Bear, Stearns & Co. Inc. and ING
Baring Furman Selz LLC (collectively the "Initial Purchasers"), each of whom
have agreed to purchase the Company's 97/8% Series A Senior Notes due 2006 (the
"Series A Notes") pursuant to the Purchase Agreement (as defined below).
This Agreement is made pursuant to the Purchase Agreement, dated April
15, 1999 (the "Purchase Agreement"), by and among the Company, the Guarantors
and the Initial Purchasers. In order to induce the Initial Purchasers to
purchase the Series A Notes, the Company has agreed to provide the registration
rights set forth in this Agreement. The execution and delivery of this
Agreement is a condition to the obligations of the Initial Purchasers set forth
in Section 2 of the Purchase Agreement.
The parties hereby agree as follows:
SECTION 1. DEFINITIONS
As used in this Agreement, the following capitalized terms shall have
the following meanings:
Act: The Securities Act of 1933, as amended.
---
Broker-Dealer: Any broker or dealer registered under the Exchange
-------------
Act.
Closing Date: The date of this Agreement.
------------
Commission: The Securities and Exchange Commission.
----------
Consummate: A registered Exchange Offer shall be deemed "Consummated"
----------
for purposes of this Agreement upon the occurrence of (i) the filing and
effectiveness under the Act of the Exchange Offer Registration Statement
relating to the Series B Notes to be issued in the Exchange Offer, (ii) the
maintenance of such Registration Statement continuously effective and the
keeping of the Exchange Offer open for a period not less than the minimum period
required pursuant to Section 3(b) hereof, and (iii) the delivery by the Company
to the Registrar under the Indenture of Series B Notes in the same aggregate
principal amount as the aggregate principal amount of Series A Notes that were
tendered by Holders thereof pursuant to the Exchange Offer.
Damages Payment Date: With respect to the Series A Notes, each
--------------------
Interest Payment Date.
Effectiveness Target Date: As defined in Section 5.
-------------------------
Exchange Act: The Securities Exchange Act of 1934, as amended.
------------
<PAGE>
Exchange Offer: The registration by the Company under the Act of the
--------------
Series B Notes pursuant to a Registration Statement pursuant to which the
Company offers the Holders of all outstanding Transfer Restricted Securities the
opportunity to exchange all such outstanding Transfer Restricted Securities held
by such Holders for Series B Notes in an aggregate principal amount equal to the
aggregate principal amount of the Transfer Restricted Securities tendered in
such exchange offer by such Holders.
Exchange Offer Registration Statement: The Registration Statement
-------------------------------------
relating to the Exchange Offer, including the related Prospectus.
Holder: As defined in Section 2(b) hereof.
------
Indenture: The Indenture, dated as of April 20, 1999, among the
---------
Company, Bank One, N.A., as trustee (the "Trustee"), and the Guarantors,
pursuant to which the Senior Notes are to be issued, as such Indenture is
amended or supplemented from time to time in accordance with the terms thereof.
Initial Purchasers: As defined in the preamble hereto.
------------------
Interest Payment Date: As defined in the Indenture and the Senior
---------------------
Notes.
NASD: National Association of Securities Dealers, Inc.
----
Person: An individual, partnership, corporation, trust or
------
unincorporated organization, or a government or agency or political subdivision
thereof.
Prospectus: The prospectus included in a Registration Statement, as
----------
amended or supplemented by any prospectus supplement and by all other amendments
thereto, including post-effective amendments, and all material incorporated by
reference into such Prospectus.
Record Holder: With respect to any Damages Payment Date relating to
-------------
Senior Notes, each Person who is a Holder of Senior Notes on the record date
with respect to the Interest Payment Date on which such Damages Payment Date
shall occur.
Registration Default: As defined in Section 5 hereof.
--------------------
Registration Statement: Any registration statement of the Company
----------------------
relating to (a) an offering of Series B Notes pursuant to an Exchange Offer or
(b) the registration for resale of Transfer Restricted Securities pursuant to
the Shelf Registration Statement, which is filed pursuant to the provisions of
this Agreement, in each case, including the Prospectus included therein, all
amendments and supplements thereto (including post-effective amendments) and all
exhibits and material incorporated by reference therein.
Senior Notes: The Series A Notes and the Series B Notes, including
------------
the guarantees thereof by the Guarantors.
2
<PAGE>
Series B Notes: The Company's 9 7/8% Series B Senior Notes due 2006,
--------------
including the guarantees thereof by the Guarantors, to be issued pursuant to the
Indenture in the Exchange Offer.
Shelf Filing Deadline: As defined in Section 4 hereof.
---------------------
Shelf Registration Statement: As defined in Section 4 hereof.
----------------------------
TIA: The Trust Indenture Act of 1939 (15 U.S.C. Section 77aaa-77bbbb)
---
as in effect on the date of the Indenture.
Transfer Restricted Securities: Each Senior Note, until the earliest
------------------------------
to occur of (a) the date on which such Senior Note is exchanged in the Exchange
Offer and entitled to be resold to the public by the Holder thereof without
complying with the prospectus delivery requirements of the Act, (b) the date on
which such Senior Note has been effectively registered under the Act and
disposed of in accordance with a Shelf Registration Statement and (c) the date
on which such Senior Note is distributed to the public pursuant to Rule 144
under the Act or by a Broker-Dealer pursuant to the "Plan of Distribution"
contemplated by the Exchange Offer Registration Statement (including delivery of
the Prospectus contained therein).
Underwritten Registration or Underwritten Offering: A registration in
------------------------- ---------------------
which securities of the Company are sold to an underwriter for reoffering to the
public.
SECTION 2. SECURITIES SUBJECT TO THIS AGREEMENT
(a) Transfer Restricted Securities. The securities entitled to the
------------------------------
benefits of this Agreement are the Transfer Restricted Securities.
(b) Holders of Transfer Restricted Securities. A Person is deemed to
-----------------------------------------
be a holder of Transfer Restricted Securities (each, a "Holder") whenever such
Person owns Transfer Restricted Securities.
SECTION 3. REGISTERED EXCHANGE OFFER
(a) Unless the Exchange Offer shall not be permissible under
applicable law or Commission policy (after the procedures set forth in Section
6(a) below have been complied with), the Company and the Guarantors shall (i)
cause to be filed with the Commission as soon as practicable after the Closing
Date, but in no event later than 60 days after the Closing Date, a Registration
Statement under the Act relating to the Series B Notes and the Exchange Offer,
(ii) use their best efforts to cause such Registration Statement to become
effective at the earliest possible time, but in no event later than 150 days
after the Closing Date, (iii) in connection with the foregoing, file (A) all
pre-effective amendments to such Registration Statement as may be necessary in
order to cause such Registration Statement to become effective, (B) if
applicable, a post-effective amendment to such Registration Statement pursuant
to Rule 430A under the Act and (C) cause all necessary filings in connection
with the registration and qualification of the Series B Notes to be made under
the Blue Sky laws of such jurisdictions as are necessary to permit Consummation
of the Exchange Offer, and (iv) upon the effectiveness of such Registration
Statement, commence the Exchange Offer. The Exchange Offer shall be on the
3
<PAGE>
appropriate form permitting registration of the Series B Notes to be offered in
exchange for the Transfer Restricted Securities and to permit resales of Senior
Notes held by Broker-Dealers as contemplated by Section 3(c) below.
(b) The Company shall cause the Exchange Offer Registration Statement
to be effective continuously and shall keep the Exchange Offer open for a period
of not less than the minimum period required under applicable federal and state
securities laws to Consummate the Exchange Offer; provided, however, that in no
event shall such period be less than 20 business days. The Company shall cause
the Exchange Offer to comply with all applicable federal and state securities
laws. No securities other than the Senior Notes shall be included in the
Exchange Offer Registration Statement. The Company shall use its best efforts
to cause the Exchange Offer to be Consummated on the earliest practicable date
after the Exchange Offer Registration Statement has become effective, but in no
event later than 30 business days thereafter.
(c) The Company shall indicate in a "Plan of Distribution" section
contained in the Prospectus contained in the Exchange Offer Registration
Statement that any Broker-Dealer who holds Series A Notes that are Transfer
Restricted Securities and that were acquired for its own account as a result of
market-making activities or other trading activities (other than Transfer
Restricted Securities acquired directly from the Company), may exchange such
Series A Notes pursuant to the Exchange Offer; however, such Broker-Dealer may
be deemed to be an "underwriter" within the meaning of the Act and must,
therefore, deliver a prospectus meeting the requirements of the Act in
connection with any resales of the Series B Notes received by such Broker-Dealer
in the Exchange Offer, which prospectus delivery requirement may be satisfied by
the delivery by such Broker-Dealer of the Prospectus contained in the Exchange
Offer Registration Statement. Such "Plan of Distribution" section shall also
contain all other information with respect to such resales by Broker-Dealers
that the Commission may require in order to permit such resales pursuant
thereto, but such "Plan of Distribution" shall not name any such Broker-Dealer
or disclose the amount of Senior Notes held by any such Broker-Dealer except to
the extent required by the Commission as a result of a change in policy after
the date of this Agreement.
The Company and the Guarantors shall use their best efforts to keep
the Exchange Offer Registration Statement continuously effective, supplemented
and amended as required by the provisions of Section 6(c) below to the extent
necessary to ensure that it is available for resales of Senior Notes acquired by
Broker-Dealers for their own accounts as a result of market-making activities or
other trading activities, and to ensure that it conforms with the requirements
of this Agreement, the Act and the policies, rules and regulations of the
Commission as announced from time to time, for a period of one year from the
date on which the Exchange Offer Registration Statement is declared effective.
The Company shall provide sufficient copies of the latest version of
such Prospectus to Broker-Dealers promptly upon request at any time during such
one-year period in order to facilitate such resales.
4
<PAGE>
SECTION 4. SHELF REGISTRATION
(a) Shelf Registration. If (i) the Company is not required to file an
------------------
Exchange Offer Registration Statement or to Consummate the Exchange Offer
because the Exchange Offer is not permitted by applicable law or Commission
policy (after the procedures set forth in Section 6(a) below have been complied
with) or (ii) if any Holder of Transfer Restricted Securities shall notify the
Company within 20 business days following the Consummation of the Exchange Offer
(A) that such Holder is prohibited by applicable law or Commission policy from
participating in the Exchange Offer, or (B) that such Holder may not resell the
Series B Notes acquired by it in the Exchange Offer to the public without
delivering a prospectus and that the Prospectus contained in the Exchange Offer
Registration Statement is not appropriate or available for such resales by such
Holder, or (C) that such Holder is a Broker-Dealer and holds Series A Notes
acquired directly from the Company or one of its affiliates, then the Company
and the Guarantors shall
(x) cause to be filed a shelf registration statement pursuant to
Rule 415 under the Act, which may be an amendment to the Exchange Offer
Registration Statement (in either event, the "Shelf Registration
Statement") on or prior to the earliest to occur of (1) the 60th day after
the date on which the Company determines that it is not required to file
the Exchange Offer Registration Statement, (2) the 60th day after the date
on which the Company receives notice from a Holder of Transfer Restricted
Securities as contemplated by clause (ii) above, and (3) the 60th day after
the Closing Date (such earliest date being the "Shelf Filing Deadline"),
which Shelf Registration Statement shall provide for resales of all
Transfer Restricted Securities the Holders of which shall have provided the
information required pursuant to Section 4(b) hereof; and
(y) use their best efforts to cause such Shelf Registration
Statement to be declared effective by the Commission on or before the 90th
day after the Shelf Filing Deadline.
The Company and the Guarantors shall use their best efforts to keep such Shelf
Registration Statement continuously effective, supplemented and amended as
required by the provisions of Sections 6(b) and (c) hereof to the extent
necessary to ensure that it is available for resales of Senior Notes by the
Holders of Transfer Restricted Securities entitled to the benefit of this
Section 4(a), and to ensure that it conforms with the requirements of this
Agreement, the Act and the policies, rules and regulations of the Commission as
announced from time to time, for a period of at least three years following the
Closing Date.
(b) Provision by Holders of Certain Information in Connection with the
------------------------------------------------------------------
Shelf Registration Statement. No Holder of Transfer Restricted Securities may
- ----------------------------
include any of its Transfer Restricted Securities in any Shelf Registration
Statement pursuant to this Agreement unless and until such Holder furnishes to
the Company in writing, within 20 business days after receipt of a request
therefor, such information as the Company may reasonably request for use in
connection with any Shelf Registration Statement or Prospectus or preliminary
Prospectus included therein. No Holder of Transfer Restricted Securities shall
be entitled to Liquidated Damages pursuant to Section 5 hereof unless and until
such Holder shall have used its best efforts to provide all such reasonably
requested information. Each Holder as to which any Shelf
5
<PAGE>
Registration Statement is being effected agrees to furnish promptly to the
Company all information required to be disclosed in order to make the
information previously furnished to the Company by such Holder not materially
misleading.
SECTION 5. LIQUIDATED DAMAGES
If (i) any of the Registration Statements required by this Agreement
is not filed with the Commission on or prior to the date specified for such
filing in this Agreement, (ii) any of such Registration Statements has not been
declared effective by the Commission on or prior to the date specified for such
effectiveness in this Agreement (the "Effectiveness Target Date"), (iii) the
Exchange Offer has not been Consummated within 30 business days after the
Effectiveness Target Date with respect to the Exchange Offer Registration
Statement or (iv) any Registration Statement required by this Agreement is filed
and declared effective but shall thereafter cease to be effective or fail to be
usable for its intended purpose without being succeeded within two business days
by a post-effective amendment to such Registration Statement that cures such
failure and that is itself declared effective within two business days (each
such event referred to in clauses (i) through (iv), a "Registration Default"),
the Company and the Guarantors hereby jointly and severally agree to pay
liquidated damages to each Holder of Transfer Restricted Securities with respect
to the first 90-day period immediately following the occurrence of such
Registration Default, in an amount equal to $.05 per week per $1,000 principal
amount of Transfer Restricted Securities held by such Holder for each week or
portion thereof that the Registration Default continues. The amount of the
liquidated damages shall increase by an additional $.05 per week per $1,000 in
principal amount of Transfer Restricted Securities with respect to each
subsequent 90-day period until all Registration Defaults have been cured, up to
a maximum amount of liquidated damages of $.50 per week per $1,000 principal
amount of Transfer Restricted Securities. All accrued liquidated damages shall
be paid to Record Holders by the Company by wire transfer of immediately
available funds or by federal funds check on each Damages Payment Date, as
provided in the Indenture. Following the cure of all Registration Defaults
relating to any particular Transfer Restricted Securities, the accrual of
liquidated damages with respect to such Transfer Restricted Securities will
cease.
All obligations of the Company and the Guarantors set forth in the
preceding paragraph that are outstanding with respect to any Transfer Restricted
Security at the time such security ceases to be a Transfer Restricted Security
shall survive until such time as all such obligations with respect to such
Security shall have been satisfied in full.
SECTION 6. REGISTRATION PROCEDURES
(a) Exchange Offer Registration Statement. In connection with the
-------------------------------------
Exchange Offer, the Company and the Guarantors shall comply with all of the
provisions of Section 6(c) below, shall use their best efforts to effect such
exchange to permit the sale of Transfer Restricted Securities being sold in
accordance with the intended method or methods of distribution thereof, and
shall comply with all of the following provisions:
(i) If in the reasonable opinion of counsel to the Company there
is a question as to whether the Exchange Offer is permitted by applicable
law, the Company and the Guarantors hereby agree to seek a no-action letter
or other favorable decision
6
<PAGE>
from the Commission allowing the Company and the Guarantors to Consummate
an Exchange Offer for such Series A Notes. The Company and the Guarantors
each hereby agrees to pursue the issuance of such a decision to the
Commission staff level but shall not be required to take commercially
unreasonable action to effect a change of Commission policy. The Company
and the Guarantors each hereby agrees, however, to (A) participate in
telephonic conferences with the Commission, (B) deliver to the Commission
staff an analysis prepared by counsel to the Company setting forth the
legal bases, if any, upon which such counsel has concluded that such an
Exchange Offer should be permitted and (C) diligently pursue a resolution
(which need not be favorable) by the Commission staff of such submission.
(ii) As a condition to its participation in the Exchange Offer
pursuant to the terms of this Agreement, each Holder of Transfer Restricted
Securities shall furnish, upon the request of the Company, prior to the
Consummation thereof, a written representation to the Company (which may be
contained in the letter of transmittal contemplated by the Exchange Offer
Registration Statement) to the effect that (A) it is not an affiliate of
the Company, (B) it is not engaged in, and does not intend to engage in,
and has no arrangement or understanding with any Person to participate in,
a distribution of the Series B Notes to be issued in the Exchange Offer and
(C) it is acquiring the Series B Notes in its ordinary course of business.
In addition, all such Holders of Transfer Restricted Securities shall
otherwise cooperate in the Company's preparations for the Exchange Offer.
Each Holder hereby acknowledges and agrees that any Broker-Dealer and any
such Holder using the Exchange Offer to participate in a distribution of
the securities to be acquired in the Exchange Offer (1) could not under
Commission policy as in effect on the date of this Agreement rely on the
position of the Commission enunciated in Morgan Stanley and Co., Inc.
---------------------------
(available June 5, 1991) and Exxon Capital Holdings Corporation (available
----------------------------------
May 13, 1988), as interpreted in the Commission's letter to Shearman &
Sterling dated July 2, 1993, and similar no-action letters (including any
no-action letter obtained pursuant to clause (i) above), and (2) must
comply with the registration and prospectus delivery requirements of the
Act in connection with a secondary resale transaction and that such a
secondary resale transaction should be covered by an effective registration
statement containing the selling security holder information required by
Item 507 or 508, as applicable, of Regulation S-K if the resales are of
Series B Notes obtained by such Holder in exchange for Series A Notes
acquired by such Holder directly from the Company.
(iii) Prior to effectiveness of the Exchange Offer Registration
Statement, the Company and the Guarantors shall provide a supplemental
letter to the Commission (A) stating that the Company and the Guarantors
are registering the Exchange Offer in reliance on the position of the
Commission enunciated in Exxon Capital Holdings Corporation (available May
----------------------------------
13, 1988), Morgan Stanley and Co., Inc. (available June 5, 1991) and, if
---------------------------
applicable, any no-action letter obtained pursuant to clause (i) above and
(B) including a representation that neither the Company nor the Guarantors
has entered into any arrangement or understanding with any Person to
distribute the Series B Notes to be received in the Exchange Offer and
that, to the best of the Company's information and belief, each Holder
participating in the Exchange Offer is acquiring the Series B Notes in its
ordinary course of business and has no arrangement or
7
<PAGE>
understanding with any Person to participate in the distribution of the
Series B Notes received in the Exchange Offer.
(b) Shelf Registration Statement. In connection with the Shelf
----------------------------
Registration Statement, the Company and the Guarantors shall comply with all the
provisions of Section 6(c) below and shall use their best efforts to effect such
registration to permit the sale of the Transfer Restricted Securities being sold
in accordance with the intended method or methods of distribution thereof, and
pursuant thereto the Company will as expeditiously as possible prepare and file
with the Commission a Registration Statement relating to the registration on any
appropriate form under the Act, which form shall be available for the sale of
the Transfer Restricted Securities in accordance with the intended method or
methods of distribution thereof.
(c) General Provisions. In connection with any Registration
------------------
Statement and any Prospectus required by this Agreement to permit the sale or
resale of Transfer Restricted Securities (including, without limitation, any
Registration Statement and the related Prospectus required to permit resales of
Senior Notes by Broker-Dealers), the Company shall:
(i) use its best efforts to keep such Registration Statement
continuously effective and provide all requisite financial statements
(including, if required by the Act or any regulation thereunder, financial
statements of the Guarantors) for the period specified in Section 3 or 4 of
this Agreement, as applicable; upon the occurrence of any event that would
cause any such Registration Statement or the Prospectus contained therein
(A) to contain a material misstatement or omission or (B) not to be
effective and usable for resale of Transfer Restricted Securities during
the period required by this Agreement, the Company shall file promptly an
appropriate amendment to such Registration Statement, in the case of clause
(A), correcting any such misstatement or omission, and, in the case of
either clause (A) or (B), use its best efforts to cause such amendment to
be declared effective and such Registration Statement and the related
Prospectus to become usable for their intended purpose(s) as soon as
practicable thereafter;
(ii) prepare and file with the Commission such amendments and
post-effective amendments to the Registration Statement as may be necessary
to keep the Registration Statement effective for the applicable period set
forth in Section 3 or 4 hereof, as applicable, or such shorter period as
will terminate when all Transfer Restricted Securities covered by such
Registration Statement have been sold; cause the Prospectus to be
supplemented by any required Prospectus supplement, and as so supplemented
to be filed pursuant to Rule 424 under the Act, and to comply fully with
the applicable provisions of Rules 424 and 430A under the Act in a timely
manner; and comply with the provisions of the Act with respect to the
disposition of all securities covered by such Registration Statement during
the applicable period in accordance with the intended method or methods of
distribution by the sellers thereof set forth in such Registration
Statement or supplement to the Prospectus;
(iii) advise the underwriter(s), if any, and selling Holders
promptly and, if requested by such Persons, to confirm such advice in
writing, (A) when the Prospectus or any Prospectus supplement or post-
effective amendment has been filed, and, with
8
<PAGE>
respect to any Registration Statement or any post-effective amendment
thereto, when the same has become effective, (B) of any request by the
Commission for amendments to the Registration Statement or amendments or
supplements to the Prospectus or for additional information relating
thereto, (C) of the issuance by the Commission of any stop order suspending
the effectiveness of the Registration Statement under the Act or of the
suspension by any state securities commission of the qualification of the
Transfer Restricted Securities for offering or sale in any jurisdiction, or
the initiation of any proceeding for any of the preceding purposes, (D) of
the existence of any fact or the happening of any event that makes any
statement of a material fact made in the Registration Statement, the
Prospectus, any amendment or supplement thereto, or any document
incorporated by reference therein untrue, or that requires the making of
any additions to or changes in the Registration Statement or the Prospectus
in order to make the statements therein not misleading. If at any time the
Commission shall issue any stop order suspending the effectiveness of the
Registration Statement, or any state securities commission or other
regulatory authority shall issue an order suspending the qualification or
exemption from qualification of the Transfer Restricted Securities under
state securities or Blue Sky laws, the Company and the Guarantors shall use
their best efforts to obtain the withdrawal or lifting of such order at the
earliest possible time;
(iv) furnish to each of the selling Holders and each of the
underwriter(s), if any, before filing with the Commission, copies of any
Registration Statement or any Prospectus included therein or any amendments
or supplements to any such Registration Statement or Prospectus (including
all documents incorporated by reference after the initial filing of such
Registration Statement), which documents will be subject to the review of
such Holders and underwriter(s), if any, for a period of at least three
business days, and the Company will not file any such Registration
Statement or Prospectus or any amendment or supplement to any such
Registration Statement or Prospectus (including all such documents
incorporated by reference) to which a selling Holder of Transfer Restricted
Securities covered by such Registration Statement or the underwriter(s), if
any, shall reasonably object within three business days after the receipt
thereof;
(v) promptly after the filing of any document that is to be
incorporated by reference into a Registration Statement or Prospectus,
provide copies of such document to the selling Holders and to the
underwriter(s), if any, make the Company's representatives available (and
representatives of the Guarantors) for discussion of such document and
other customary due diligence matters, and include such information in such
document promptly after the filing thereof as such selling Holders or
underwriter(s), if any, reasonably may request;
(vi) make available at reasonable times for inspection by the
selling Holders, any underwriter participating in any disposition pursuant
to such Registration Statement, and any attorney or accountant retained by
such selling Holders or any of the underwriter(s), all financial and other
records, pertinent corporate documents and properties of the Company and
the Guarantors and cause the Company's and the Guarantors' officers,
directors and employees to supply all information reasonably
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<PAGE>
requested by any such Holder, underwriter, attorney or accountant in
connection with such Registration Statement subsequent to the filing
thereof and prior to its effectiveness;
(vii) if requested by any selling Holders or the underwriter(s),
if any, promptly incorporate in any Registration Statement or Prospectus,
pursuant to a supplement or post-effective amendment if necessary, such
information as such selling Holders and underwriter(s), if any, may
reasonably request to have included therein, including, without limitation,
information relating to the "Plan of Distribution" of the Transfer
Restricted Securities, information with respect to the principal amount of
Transfer Restricted Securities being sold to such underwriter(s), the
purchase price being paid therefor and any other terms of the offering of
the Transfer Restricted Securities to be sold in such offering; and make
all required filings of such Prospectus supplement or post-effective
amendment as soon as practicable after the Company is notified of the
matters to be incorporated in such Prospectus supplement or post-effective
amendment;
(viii) cause the Transfer Restricted Securities covered by the
Registration Statement to be rated with the appropriate rating agencies, if
so requested by the Holders of a majority in aggregate principal amount of
Senior Notes covered thereby or the underwriter(s), if any;
(ix) furnish to each selling Holder and each of the
underwriter(s), if any, without charge, at least one copy of the
Registration Statement, as first filed with the Commission, and of each
amendment thereto, including all documents incorporated by reference
therein and all exhibits (including exhibits incorporated therein by
reference);
(x) deliver to each selling Holder and each of the
underwriter(s), if any, without charge, as many copies of the Prospectus
(including each preliminary prospectus) and any amendment or supplement
thereto as such Persons reasonably may request; the Company and the
Guarantors hereby consent to the use of the Prospectus and any amendment or
supplement thereto by each of the selling Holders and each of the
underwriter(s), if any, in connection with the offering and the sale of the
Transfer Restricted Securities covered by the Prospectus or any amendment
or supplement thereto;
(xi) enter into, and cause the Guarantors to enter into, such
agreements (including an underwriting agreement), and make, and cause the
Guarantors to make, such representations and warranties, and take all such
other actions in connection therewith in order to expedite or facilitate
the disposition of the Transfer Restricted Securities pursuant to any
Registration Statement contemplated by this Agreement, all to such extent
as may be reasonably requested by any Initial Purchaser or by any Holder of
Transfer Restricted Securities or underwriter in connection with any sale
or resale pursuant to any Registration Statement contemplated by this
Agreement; and whether or not an underwriting agreement is entered into and
whether or not the registration is an Underwritten Registration, the
Company and the Guarantors shall:
(A) furnish to each Initial Purchaser, each selling Holder and
each underwriter, if any, in such substance and scope as they may
reasonably request and as are customarily made by issuers to
underwriters
10
<PAGE>
offerings, upon the date of the Consummation of the Exchange Offer and, if
applicable, the effectiveness of the Shelf Registration Statement:
(1) a certificate, dated the date of Consummation of the Exchange
Offer or the date of effectiveness of the Shelf Registration
Statement, as the case may be, signed by (y) the President or any Vice
President and (z) a principal financial or accounting officer of each
of the Company and the Guarantors, confirming, as of the date thereof,
the matters set forth in paragraphs (i) and (j) of Section 7 of the
Purchase Agreement and such other matters as such parties may
reasonably request;
(2) an opinion, dated the date of Consummation of the Exchange
Offer or the date of effectiveness of the Shelf Registration
Statement, as the case may be, of counsel for the Company and the
Guarantors, covering the matters set forth in paragraphs (d), (e) and
(f) of Section 7 of the Purchase Agreement and such other matters as
such parties may reasonably request, and in any event including a
statement to the effect that such counsel has participated in
conferences with officers and other representatives of the Company,
representatives of the independent public accountants for the Company,
the Initial Purchasers' representatives and the Initial Purchasers'
counsel in connection with the preparation of such Registration
Statement and the related Prospectus and have considered the matters
required to be stated therein and the statements contained therein,
and although such counsel has not independently verified the accuracy,
completeness or fairness of such statements, on the basis of the
foregoing (relying as to materiality to a large extent upon facts
provided to such counsel by officers and other representatives of the
Company and without independent check or verification), no facts came
to such counsel's attention that caused such counsel to believe that
the applicable Registration Statement, at the time such Registration
Statement or any post-effective amendment thereto became effective,
contained an untrue statement of a material fact or omitted to state a
material fact required to be stated therein or necessary to make the
statements therein not misleading, or that the Prospectus contained in
such Registration Statement as of its date and, in the case of the
opinion dated the date of Consummation of the Exchange Offer, as of
the date of Consummation, contained an untrue statement of a material
fact or omitted to state a material fact necessary in order to make
the statements therein, in light of the circumstances under which they
were made, not misleading. Without limiting the foregoing, such
counsel may state further that such counsel assumes no responsibility
for, and has not independently verified, the accuracy, completeness or
fairness of the exhibits, financial statements, notes and schedules
and other financial or statistical data included in any Registration
Statement contemplated by this Agreement or the related Prospectus;
and
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<PAGE>
(3) a customary comfort letter, dated as of the date of
Consummation of the Exchange Offer or the date of effectiveness
of the Shelf Registration Statement, as the case may be, from the
Company's independent accountants, in the customary form and
covering matters of the type customarily covered in comfort
letters by underwriters in connection with primary underwritten
offerings, and affirming the matters set forth in the comfort
letters delivered pursuant to Section 7(h) of the Purchase
Agreement, without exception;
(B) set forth in full or incorporate by reference in the
underwriting agreement, if any, the indemnification provisions and
procedures of Section 8 hereof with respect to all parties to be
indemnified pursuant to said Section; and
(C) deliver such other documents and certificates as may be
reasonably requested by such parties to evidence compliance with
clause (A) above and with any customary conditions contained in the
underwriting agreement or other agreement entered into by the Company
pursuant to this clause (xi), if any.
If at any time the Company or the Guarantors become aware that the
representations and warranties of the Company and the Guarantors contemplated in
clause (A)(1) above cease to be true and correct, the Company or the Guarantors
shall so advise the Initial Purchasers and the underwriter(s), if any, and each
selling Holder promptly and, if requested by such Persons, shall confirm such
advice in writing;
(xii) prior to any public offering of Transfer Restricted
Securities, cooperate with, and cause the Guarantors to cooperate with, the
selling Holders, the underwriter(s), if any, and their respective counsel
in connection with the registration and qualification of the Transfer
Restricted Securities under the securities or Blue Sky laws of such
jurisdictions as the selling Holders or underwriter(s) may reasonably
request and do any and all other acts or things reasonably necessary or
advisable to enable the disposition in such jurisdictions of the Transfer
Restricted Securities covered by the Shelf Registration Statement;
provided, however, that neither the Company nor the Guarantors shall be
required to register or qualify as a foreign corporation where it is not
now so qualified or to take any action that would subject it to the service
of process in suits or to taxation, other than as to matters and
transactions relating to the Registration Statement, in any jurisdiction
where it is not now so subject;
(xiii) shall issue, upon the request of any Holder of Series A
Notes covered by the Shelf Registration Statement, Series B Notes, having
an aggregate principal amount equal to the aggregate principal amount of
Series A Notes surrendered to the Company by such Holder in exchange
therefor or being sold by such Holder; such Series B Notes to be registered
in the name of such Holder or in the name of the purchaser(s) of such
Senior Notes, as the case may be; in return, the Series A Notes held by
such Holder shall be surrendered to the Company for cancellation;
(xiv) cooperate with, and cause the Guarantors to cooperate
with, the selling Holders and the underwriter(s), if any, to facilitate the
timely preparation and
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<PAGE>
delivery of certificates representing Transfer Restricted Securities to be
sold and not bearing any restrictive legends; and enable such Transfer
Restricted Securities to be in such denominations and registered in such
names as the Holders or the underwriter(s), if any, may request at least
two business days prior to any sale of Transfer Restricted Securities made
by such underwriter(s);
(xv) use its best efforts to cause the Transfer Restricted
Securities covered by the Registration Statement to be registered with or
approved by such other governmental agencies or authorities as may be
necessary to enable the seller or sellers thereof or the underwriter(s), if
any, to consummate the disposition of such Transfer Restricted Securities,
subject to the proviso contained in clause (viii) above;
(xvi) if any fact or event contemplated by clause (c)(iii)(D)
above shall exist or have occurred, prepare a supplement or post-effective
amendment to the Registration Statement or related Prospectus or any
document incorporated therein by reference or file any other required
document so that, as thereafter delivered to the purchasers of Transfer
Restricted Securities, the Prospectus will not contain an untrue statement
of a material fact or omit to state any material fact necessary to make the
statements therein not misleading;
(xvii) provide a CUSIP number for all Transfer Restricted
Securities not later than the effective date of the Registration Statement
and provide the Trustee under the Indenture with printed certificates for
the Transfer Restricted Securities which are in a form eligible for deposit
with the Depository Trust Company;
(xviii) cooperate and assist in any filings required to be made
with the NASD and in the performance of any due diligence investigation by
any underwriter (including any "qualified independent underwriter") that is
required to be retained in accordance with the rules and regulations of the
NASD, and use its reasonable best efforts to cause such Registration
Statement to become effective and approved by such governmental agencies or
authorities as may be necessary to enable the Holders selling Transfer
Restricted Securities to consummate the disposition of such Transfer
Restricted Securities;
(xix) otherwise use its best efforts to comply with all
applicable rules and regulations of the Commission, and make generally
available to its security holders, as soon as practicable, a consolidated
earnings statement meeting the requirements of Rule 158 (which need not be
audited) for the twelve-month period (A) commencing at the end of any
fiscal quarter in which Transfer Restricted Securities are sold to
underwriters in a firm or best efforts Underwritten Offering or (B) if not
sold to underwriters in such an offering, beginning with the first month of
the Company's first fiscal quarter commencing after the effective date of
the Registration Statement;
(xx) cause the Indenture to be qualified under the TIA not
later than the effective date of the first Registration Statement required
by this Agreement, and, in connection therewith, cooperate, and cause the
Guarantors to cooperate, with the Trustee and the Holders of Senior Notes
to effect such changes to the Indenture as may be
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<PAGE>
required for such Indenture to be so qualified in accordance with the terms
of the TIA; and execute, and cause the Guarantors to execute, and use its
best efforts to cause the Trustee to execute, all documents that may be
required to effect such changes and all other forms and documents required
to be filed with the Commission to enable such Indenture to be so qualified
in a timely manner; and
(xxi) provide promptly to each Holder upon request each document
filed with the Commission pursuant to the requirements of Section 13 and
Section 15 of the Exchange Act.
Each Holder agrees by acquisition of a Transfer Restricted Security
that, upon receipt of any notice from the Company of the existence of any fact
of the kind described in Section 6(c)(iii)(D) hereof, such Holder will forthwith
discontinue disposition of Transfer Restricted Securities pursuant to the
applicable Registration Statement until such Holder's receipt of the copies of
the supplemented or amended Prospectus contemplated by Section 6(c)(xvi) hereof,
or until it is advised in writing (the "Advice") by the Company that the use of
the Prospectus may be resumed, and has received copies of any additional or
supplemental filings that are incorporated by reference in the Prospectus. If
so directed by the Company, each Holder will deliver to the Company (at the
Company's expense) all copies, other than permanent file copies then in such
Holder's possession, of the Prospectus covering such Transfer Restricted
Securities that was current at the time of receipt of such notice. In the event
the Company shall give any such notice, the time period regarding the
effectiveness of such Registration Statement set forth in Section 3 or 4 hereof,
as applicable, shall be extended by the number of days during the period from
and including the date of the giving of such notice pursuant to Section
6(c)(iii)(D) hereof to and including the date when each selling Holder covered
by such Registration Statement shall have received the copies of the
supplemented or amended Prospectus contemplated by Section 6(c)(xvi) hereof or
shall have received the Advice.
SECTION 7. REGISTRATION EXPENSES
(a) All expenses incident to the Company's or the Guarantors'
performance of or compliance with this Agreement will be borne by the Company or
the Guarantors, regardless of whether a Registration Statement becomes
effective, including without limitation: (i) all registration and filing fees
and expenses (including filings made by any Initial Purchaser or Holder with the
NASD (and, if applicable, the fees and expenses of any "qualified independent
underwriter" and its counsel that may be required by the rules and regulations
of the NASD)); (ii) all fees and expenses of compliance with federal securities
and state Blue Sky or securities laws; (iii) all expenses of printing (including
printing certificates for the Series B Notes to be issued in the Exchange Offer
and printing of Prospectuses), messenger and delivery services and telephone;
(iv) all fees and disbursements of counsel for the Company, the Guarantors and,
subject to Section 7(b) below, the Holders of Transfer Restricted Securities;
(v) all application and filing fees in connection with listing Senior Notes on a
national securities exchange or automated quotation system pursuant to the
requirements hereof; and (vi) all fees and disbursements of independent
certified public accountants of the Company and the Guarantors (including the
expenses of any special audit and comfort letters required by or incident to
such performance).
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<PAGE>
The Company will, in any event, bear its and the Guarantors' internal
expenses (including, without limitation, all salaries and expenses of its
officers and employees performing legal or accounting duties), the expenses of
any annual audit and the fees and expenses of any Person, including special
experts, retained by the Company.
(b) In connection with any Registration Statement required by this
Agreement (including, without limitation, the Exchange Offer Registration
Statement and the Shelf Registration Statement), the Company will reimburse the
Initial Purchasers and the Holders of Transfer Restricted Securities being
tendered in the Exchange Offer and/or resold pursuant to the "Plan of
Distribution" contained in the Exchange Offer Registration Statement or
registered pursuant to the Shelf Registration Statement, as applicable, for the
reasonable fees and disbursements of not more than one counsel, who shall be
Latham & Watkins or such other counsel as may be chosen by the Holders of a
majority in principal amount of the Transfer Restricted Securities for whose
benefit such Registration Statement is being prepared.
SECTION 8. INDEMNIFICATION
(a) The Company and each Guarantor jointly and severally agree to
indemnify and hold harmless each Holder and each Person, if any, who controls
any Holder within the meaning of Section 15 of the Act or Section 20 of the
Exchange Act, from and against any and all losses, claims, damages, liabilities
and expenses (including reasonable costs of investigation) arising out of or
based upon any untrue statement or alleged untrue statement of a material fact
contained in any Registration Statement or Prospectus, or arising out of or
based upon any omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading, except insofar as such losses, claims, damages, liabilities or
expenses arise out of or are based upon any untrue statement or omission or
alleged untrue statement or omission which has been made therein or omitted
therefrom in reliance upon and in conformity with the information relating to
the Holders furnished in writing to the Company by the Holders expressly for use
in connection therewith. The foregoing indemnity agreement shall be in addition
to any liability which the Company and the Guarantors may otherwise have.
(b) If any action, suit or proceeding shall be brought against the
Holders or any Person controlling the Holders in respect of which indemnity may
be sought against the Company and the Guarantors, the Holders or such
controlling Person shall promptly notify the parties against whom
indemnification is being sought (the "indemnifying parties"), and such
indemnifying parties shall assume the defense thereof, including the employment
of counsel and payment of all fees and expenses. The Holders or any such
controlling Person shall have the right to employ separate counsel in any such
action, suit or proceeding and to participate in the defense thereof, but the
fees and expenses of such counsel shall be at the expense of the Holders or such
controlling Person unless (i) the indemnifying parties have agreed in writing to
pay such fees and expenses, (ii) the indemnifying parties have failed to assume
the defense and employ counsel, or (iii) the named parties to any such action,
suit or proceeding (including any impleaded parties) include both the Holders or
such controlling Person and the indemnifying parties and the Holders or such
controlling Person shall have been advised in writing by its counsel that
representation of such indemnified party and any indemnifying party by the same
counsel would be inappropriate under applicable standards of professional
conduct (whether or
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<PAGE>
not such representation by the same counsel has been proposed) due to actual or
potential differing interests between them (in which case the indemnifying party
shall not have the right to assume the defense of such action, suit or
proceeding on behalf of the Holders or such controlling Person). It is
understood, however, that the indemnifying parties shall, in connection with any
one such action, suit or proceeding or separate but substantially similar or
related actions, suits or proceedings in the same jurisdiction arising out of
the same general allegations or circumstances, be liable for the reasonable fees
and expenses of only one separate firm of attorneys (in addition to any local
counsel) at any time for the Holders and controlling Persons not having actual
or potential differing interests with the Holders or among themselves, which
firm shall be designated in writing by the Holders, and that all such fees and
expenses shall be reimbursed as they are incurred but only to the extent that
such losses, claims, damages, liabilities or expenses are required to be paid by
and indemnified party. The indemnifying parties shall not be liable for any
settlement of any such action, suit or proceeding effected without their written
consent, but if settled with such written consent, or if there be a final
judgment for the plaintiff in any such action, suit or proceeding, the
indemnifying parties agree to indemnify and hold harmless the Holders, to the
extent provided in paragraph (a), and any such controlling Person from and
against any loss, claim, damage, liability or expense by reason of such
settlement or judgment.
(c) Each Holder, severally and not jointly, agrees to indemnify and
hold harmless the Company and the Guarantors, and their directors and officers,
and any Person who controls the Company or any Guarantor within the meaning of
Section 15 of the Act or Section 20 of the Exchange Act to the same extent as
the indemnity from the Company and the Guarantors to the Holders set forth in
paragraph (a) hereof, but only with respect to information relating to the
Holders furnished in writing by or on behalf of the Holders expressly for use in
the Registration Statement or Prospectus. If any action, suit or proceeding
shall be brought against the Company or the Guarantors, any of their directors
or officers, or any such controlling Person based on any Registration Statement
or Prospectus, and in respect of which indemnity may be sought against the
Holders pursuant to this paragraph (c), the Holders shall have the rights and
duties given to the Company and the Guarantors by paragraph (b) above (except
that if the Company and the Guarantors shall have assumed the defense thereof
the Holders shall not be required to do so, but may employ separate counsel
therein and participate in the defense thereof, but the fees and expenses of
such counsel shall be at the Holders' expense), and the Company and the
Guarantors, their directors and officers, and any such controlling Person shall
have the rights and duties given to the Holders by paragraph (b) above. The
foregoing indemnity agreement shall be in addition to any liability which the
Holders may otherwise have.
(d) If the indemnification provided for in this Section 8 is
unavailable (except if inapplicable according to its terms) to an indemnified
party under paragraphs (a) or (c) hereof in respect of any losses, claims,
damages, liabilities or expenses referred to therein, then an indemnifying
party, in lieu of indemnifying such indemnified party, shall contribute to the
amount paid or payable by such indemnified party as a result of such losses,
claims, damages, liabilities or expenses (i) in such proportion as is
appropriate to reflect the relative benefits received by the Company and the
Guarantors on the one hand and the Holders on the other hand from their sale of
Senior Notes (it being expressly understood and agreed that the relative
benefits received by the Company and the Guarantors from the sale of the Senior
Notes shall be equal to the amount of net proceeds received by the Company and
the Guarantors from the sale
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<PAGE>
of the Series A Notes to the Initial Purchasers), or (ii) if the allocation
provided by clause (i) above is not permitted by applicable law, in such
proportion as is appropriate to reflect not only the relative benefits referred
to in clause (i) above but also the relative fault of the Company and the
Guarantors on the one hand and the Holders on the other in connection with the
statements or omissions that resulted in such losses, claims, damages,
liabilities or expenses, as well as any other relevant equitable considerations.
The relative fault of the Company and the Guarantors on the one hand and the
Holders on the other hand shall be determined by reference to, among other
things, whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to information
supplied by the Company and the Guarantors on the one hand or by the Holders on
the other hand and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission.
(e) The Company, the Guarantors and the Holders agree that it would
not be just and equitable if contribution pursuant to this Section 8 were
determined by a pro rata allocation or by any other method of allocation that
does not take account of the equitable considerations referred to in paragraph
(d) above. The amount paid or payable by an indemnified party as a result of
the losses, claims, damages, liabilities and expenses referred to in paragraph
(d) above shall be deemed to include, subject to the limitations set forth
above, any legal or other expenses reasonably incurred by such indemnified party
in connection with investigating any claim or defending any such action, suit or
proceeding. Notwithstanding the provisions of this Section 8, the Holders shall
not be required to contribute any amount in excess of the amount by which the
net proceeds received by them in connection with the sale of the Senior Notes
exceeds the amount of any damages which the Holders have otherwise been required
to pay by reason of such untrue or alleged untrue statement or omission or
alleged omission. No Person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Act) shall be entitled to contribution from any
Person who was not guilty of such fraudulent misrepresentation.
(f) Any losses, claims, damages, liabilities or expenses for which an
indemnified party is entitled to indemnification or contribution under this
Section 8 shall be paid by the indemnifying party to the indemnified party as
such losses, claims, damages, liabilities or expenses are incurred. The
indemnity and contribution agreements contained in this Section 8 and the
representations and warranties of the Company and the Guarantors set forth in
this Agreement shall remain operative and in full force and effect, regardless
of (i) any investigation made by or on behalf of the Holders or any Person
controlling the Holders, the Company and the Guarantors, their directors or
officers or any Person controlling the Company or the Guarantors, (ii)
acceptance of any Series A Notes and payment therefor hereunder, and (iii) any
termination of this Agreement. A successor to the Holders or any Person
controlling the Holders, or to the Company and the Guarantors, their directors
or officers or any Person controlling the Company or the Guarantors, shall be
entitled to the benefits of the indemnity, contribution and reimbursement
agreements contained in this Section 8.
(g) No indemnifying party shall, without the prior written consent of
the indemnified party, effect any settlement of any pending or threatened
action, suit or proceeding in respect of which any indemnified party is or could
have been a party and indemnity could have been sought hereunder by such
indemnified party, unless such settlement includes an
17
<PAGE>
unconditional release of such indemnified party from all liability on claims
that are the subject matter of such action, suit or proceeding.
SECTION 9. RULE 144A
The Company hereby agrees with each Holder, for so long as any
Transfer Restricted Securities remain outstanding, to make available to any
Holder or beneficial owner of Transfer Restricted Securities in connection with
any sale thereof and any prospective purchaser of such Transfer Restricted
Securities from such Holder or beneficial owner, the information required by
Rule 144A(d)(4) under the Act in order to permit resales of such Transfer
Restricted Securities pursuant to Rule 144A.
SECTION 10. PARTICIPATION IN UNDERWRITTEN REGISTRATIONS
No Holder may participate in any Underwritten Registration hereunder
unless such Holder (a) agrees to sell such Holder's Transfer Restricted
Securities on the basis provided in any underwriting arrangements approved by
the Persons entitled hereunder to approve such arrangements and (b) completes
and executes all reasonable questionnaires, powers of attorney, indemnities,
underwriting agreements, lock-up letters and other documents required under the
terms of such underwriting arrangements.
SECTION 11. SELECTION OF UNDERWRITERS
The Holders of Transfer Restricted Securities covered by the Shelf
Registration Statement who desire to do so may sell such Transfer Restricted
Securities in an Underwritten Offering. In any such Underwritten Offering, the
investment banker or investment bankers and manager or managers that will
administer the offering will be selected by the Holders of a majority in
aggregate principal amount of the Transfer Restricted Securities included in
such offering; provided, that such investment bankers and managers must be
reasonably satisfactory to the Company.
SECTION 12. MISCELLANEOUS
(a) Remedies. The Company and the Guarantors agree that monetary
--------
damages (including the liquidated damages contemplated hereby) would not be
adequate compensation for any loss incurred by reason of a breach by it of the
provisions of this Agreement and hereby agree to waive the defense in any action
for specific performance that a remedy at law would be adequate.
(b) No Inconsistent Agreements. The Company will not, and will cause
--------------------------
the Guarantors not to, on or after the date of this Agreement enter into any
agreement with respect to its securities that is inconsistent with the rights
granted to the Holders in this Agreement or otherwise conflicts with the
provisions hereof. Neither the Company nor the Guarantors has previously
entered into any agreement granting any registration rights with respect to its
securities to any Person which remains in effect as of the date hereof. The
rights granted to the Holders hereunder do not in any way conflict with and are
not inconsistent with the rights granted to the holders of the Company's
securities under any agreement in effect on the date hereof.
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(c) Adjustments Affecting the Senior Notes. The Company will not
--------------------------------------
take any action, or permit any change to occur, with respect to the Senior Notes
that would materially and adversely affect the ability of the Holders to
Consummate any Exchange Offer.
(d) Amendments and Waivers. The provisions of this Agreement may not
----------------------
be amended, modified or supplemented, and waivers or consents to or departures
from the provisions hereof may not be given unless the Company has obtained the
written consent of Holders of a majority of the outstanding principal amount of
Transfer Restricted Securities. Notwithstanding the foregoing, a waiver or
consent to departure from the provisions hereof that relates exclusively to the
rights of Holders whose securities are being tendered pursuant to the Exchange
Offer and that does not affect directly or indirectly the rights of other
Holders whose securities are not being tendered pursuant to such Exchange Offer
may be given by the Holders of a majority of the outstanding principal amount of
Transfer Restricted Securities being tendered or registered.
(e) Notices. All notices and other communications provided for or
-------
permitted hereunder shall be made in writing by hand-delivery, first-class mail
(registered or certified, return receipt requested), telex, telecopier, or air
courier guaranteeing overnight delivery:
(i) if to a Holder, at the address set forth on the records of
the Registrar under the Indenture, with a copy to the Registrar under the
Indenture; and
(ii) if to the Company or a Guarantor:
AmeriCredit Corp.
200 Bailey Avenue
Fort Worth, TX 76107
Telecopier No.: (817) 882-7101
Attention: Chief Financial Officer
With a copy to:
Jenkens & Gilchrist, P.C.
1445 Ross Avenue, Suite 3200
Dallas, TX 75202
Telecopier No.: (214) 855-4300
Attention: L. Steven Leshin, Esq.
All such notices and communications shall be deemed to have been duly
given: at the time delivered by hand, if personally delivered; five business
days after being deposited in the mail, postage prepaid, if mailed; when
answered back, if telexed; when receipt acknowledged, if telecopied; and on the
next business day, if timely delivered to an air courier guaranteeing overnight
delivery.
Copies of all such notices, demands or other communications shall be
concurrently delivered by the Person giving the same to the Trustee at the
address specified in the Indenture.
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(f) Successors and Assigns. This Agreement shall inure to the
----------------------
benefit of and be binding upon the successors and assigns of each of the
parties, including without limitation and without the need for an express
assignment, subsequent Holders of Transfer Restricted Securities; provided,
however, that this Agreement shall not inure to the benefit of or be binding
upon a successor or assign of a Holder unless and to the extent such successor
or assign acquired Transfer Restricted Securities from such Holder.
(g) Counterparts. This Agreement may be executed in any number of
------------
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
(h) Headings. The headings in this Agreement are for convenience of
--------
reference only and shall not limit or otherwise affect the meaning hereof.
(i) 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
CONFLICT OF LAW RULES THEREOF.
(j) Severability. In the event that any one or more of the
------------
provisions contained herein, or the application thereof in any circumstance, is
held invalid, illegal or unenforceable, the validity, legality and
enforceability of any such provision in every other respect and of the remaining
provisions contained herein shall not be affected or impaired thereby.
(k) Entire Agreement. This Agreement together with the other
----------------
Operative Documents (as defined in the Purchase Agreement) is intended by the
parties as a final expression of their agreement and intended to be a complete
and exclusive statement of the agreement and understanding of the parties hereto
in respect of the subject matter contained herein. There are no restrictions,
promises, warranties or undertakings, other than those set forth or referred to
herein with respect to the registration rights granted by the Company with
respect to the Transfer Restricted Securities. This Agreement supersedes all
prior agreements and understandings between the parties with respect to such
subject matter.
[signature page follows]
20
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.
<TABLE>
<S> <C>
AmeriCredit Corp.
By /s/
---------------------------------
Daniel E. Berce
Vice Chairman and Chief Financial
Officer
AmeriCredit Financial Services, Inc. Americredit Corporation of California
By /s/ By /s/
--------------------------------- ---------------------------------
Daniel E. Berce Daniel E. Berce
Vice Chairman and Chief Financial Vice Chairman and Chief Financial
Officer Officer
AmeriCredit Management Company. ACF Investment Corp.
By /s/ By /s/
--------------------------------- ---------------------------------
Daniel E. Berce Daniel E. Berce
Vice Chairman and Chief Financial Vice Chairman and Chief Financial
Officer Officer
AmeriCredit Financial Services of
Canada Ltd.
By /s/
---------------------------------
Daniel E. Berce
Vice Chairman and Chief Financial
Officer
</TABLE>
21
<PAGE>
Salomon Smith Barney Inc.
Bear, Stearns & Co. Inc.
ING Baring Furman Selz LLC
By: Salomon Smith Barney Inc.
By /s/
----------------------------
Director
22
<PAGE>
EXHIBIT 12.1
AMERICREDIT CORP.
STATEMENT RE COMPUTATION OF RATIOS
(dollars in thousands)
NINE MONTHS ENDED
YEARS ENDED JUNE 30, MARCH 31,
-------------------- -----------------
1996 1997 1998 1998 1999
---- ---- ---- ---- ----
COMPUTATION OF EARNINGS:
Income before
income taxes $34,256 $62,925 $ 80,162 $57,559 $ 85,143
Interest expense (none
capitalized) 13,129 16,312 27,135 18,973 25,660
------- ------- -------- ------- --------
$47,385 $79,237 $107,297 $76,532 $110,803
======= ======= ======== ======= ========
COMPUTATION OF FIXED CHARGES:
Interest expenses $13,129 $16,312 $ 27,135 $18,973 $25,660
------- ------- -------- ------- --------
Total fixed charges $13,129 $16,312 $ 27,135 $18,973 $25,660
======= ======= ======== ======= ========
RATIO OF EARNINGS TO
FIXED CHARGES 3.6x 4.9x 4.0x 4.0x 4.3x
---- ---- ---- ---- ----
<PAGE>
EXHIBIT 21.1
AMERICREDIT CORP.
SUBSIDIARIES OF THE COMPANY
<TABLE>
<CAPTION>
Subsidiary Ownership State of Incorporation
---------- --------- ----------------------
<S> <C> <C>
AmeriCredit Financial Services, Inc. 100% Delaware
AmeriCredit Management Company 100% Delaware
ACF Investment Corp 100% Delaware
Americredit Corporation of California 100% California
AmeriCredit Financial Services of Canada Ltd. 100% Ontario, Canada
CP Funding Corp. 100% Nevada
AmeriCredit Warehouse Trust 100% Delaware
AmeriCredit Funding Corp. 100% Delaware
AFS Funding Corp. 100% Nevada
</TABLE>
<PAGE>
EXHIBIT 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
----------------------------------
We hereby consent to the use in this Registration Statement on Form S-4 of
AmeriCredit Corp. of our reports dated August 4, 1998, except as to the
information presented in Note 14 for which the date is September 30, 1998 and
except as to the information presented in Note 2 for which the date is
January 14, 1999 relating to the financial statements and supplementary
information of AmeriCredit Corp., which appear in such Registration
Statement. We also consent to the reference to us under the heading "Experts"
in such Registration Statement.
/s/ PricewaterhouseCoopers LLP
Fort Worth, Texas
June 14, 1999
<PAGE>
EXHIBIT 25.1
Registration No._________
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM T-1
STATEMENT OF ELIGIBILITY AND QUALIFICATION UNDER THE TRUST INDENTURE ACT OF 1939
OF A CORPORATION DESIGNATED TO ACT AS TRUSTEE
BANK ONE, N.A.
Not Applicable 31-4148768
(State of Incorporation (I.R.S. Employer
if not a national bank) Identification No.)
100 East Broad Street, Columbus, Ohio 43271-0181
(Address of trustee's principal (Zip Code) executive offices)
c/o Bank One Trust Company, NA
100 East Broad Street
Columbus, Ohio 43271-0181
(614) 248-5811
(Name, address and telephone number of agent for service)
AmeriCredit Corp.
(Exact name of obligor as specified in its charter)
Texas 75-2291093
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
200 Bailey Ave 76107
Fort Worth, TX (Zip Code)
(Address of principal executive
office)
9 7/8% Series A Senior Notes 2006
(Title of the Indenture securities)
<PAGE>
GENERAL
1. General Information.
Furnish the following information as to the trustee:
(a) Name and address of each examining or supervising authority to
which it is subject.
Comptroller of the Currency, Washington, D.C.
Federal Reserve Bank of Cleveland, Cleveland, Ohio
Federal Deposit Insurance Corporation, Washington, D.C.
The Board of Governors of the Federal Reserve System, Washington,
D.C.
(b) Whether it is authorized to exercise corporate trust powers.
The trustee is authorized to exercise corporate trust powers.
2. Affiliations with Obligor and Underwriters.
If the obligor is an affiliate of the trustee, describe each such
affiliation.
The obligor is not an affiliate of the trustee.
16. List of Exhibits
List below all exhibits filed as a part of this statement of eligibility
and qualification. (Exhibits identified in parentheses, on file with the
Commission, are incorporated herein by reference as exhibits hereto.)
Exhibit 1 - A copy of the Articles of Association of the trustee as now in
effect.
Exhibit 2 - A copy of the Certificate of Authority of the trustee to commence
business.
Exhibit 3 - A copy of the Authorization of the trustee to exercise corporate
trust powers.
Exhibit 4 - A copy of the Bylaws of the trustee as now in effect.
<PAGE>
Exhibit 5 - Not applicable.
Exhibit 6 - The consent of the trustee required by Section 321(b) of the Trust
Indenture Act of 1939, as amended.
Exhibit 7 - Report of Condition of the trustee as of the close of business on
March 31, 1999, published pursuant to the requirements of the Comptroller of the
Company, see attached.
Exhibit 8 - Not applicable.
Exhibit 9 - Not applicable.
Items 3 through 15 are not answered pursuant to General Instruction B which
requires responses to Item 1, 2 and 16 only, if the obligor is not in default.
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of 1939, as
amended, the Trustee, Bank One, NA, a national banking association organized
under the National Banking Act, has duly caused this statement of eligibility
and qualification to be signed on its behalf by the undersigned, thereunto duly
authorized, all in Columbus, Ohio, on June __, 1999.
Bank One, NA
By: /s/
-----
Authorized Signer
<PAGE>
Exhibit 1
BANK ONE, NATIONAL ASSOCIATION
ARTICLES OF ASSOCIATION
-----------------------
FIRST. The title of this Association shall be Bank One, National
-----
Association.
SECOND. The main office of the Association shall be in Columbus, County of
------
Franklin, State of Ohio. The general business of the Association shall be
conducted at its main office and its branches.
THIRD. The Board of Directors of this Association shall consist of not less
-----
than five nor more than twenty-five Directors, the exact number of Directors
within such minimum and maximum limits to be fixed and determined from time-to-
time by resolution of the shareholders at any annual or special meeting thereof,
provided, however, that the Board of Directors, by resolution of a majority
thereof, shall be authorized to increase the number of its members by not more
than two between regular meetings of the shareholders. Each Director, during the
full term of his directorship, shall own, as qualifying shares, the minimum
number of shares of either this Association or of its parent bank holding
company in accordance with the provisions of applicable law. Unless otherwise
provided by the laws of the United States, any vacancy in the Board of Directors
for any reason, including an increase in the number thereof, may be filled by
action of the Board of Directors.
<PAGE>
FOURTH. The annual meeting of the shareholders for the election of
------
Directors and the transaction of whatever other business may be brought before
said meeting shall be held at the main office of this Association or such other
place as the Board of Directors may designate, on the day of each year specified
therefor in the Bylaws, but if no election is held on that day, it may be held
on any subsequent business day according to the provisions of law; and all
elections shall be held according to such lawful regulations as may be
prescribed by the Board of Directors.
FIFTH. The authorized amount of capital stock of this Association shall be
-----
12,704,315 shares of common stock of the par value of Ten Dollars ($10) each;
but said capital stock may be increased or decreased from time-to-time, in
accordance with the provisions of the laws of the United States.
No holder of shares of the capital stock of any class of the
Association shall have the preemptive or preferential right of subscription to
any share of any class of stock of this Association, whether now or hereafter
authorized or to any obligations convertible into stock of this Association,
issued or sold, nor any right of subscription to any thereof other than such, if
any, as the Board of Directors, in its discretion, may from time-to-time
determine and at such price as the Board of Directors may from time-to-time fix.
This Association, at any time and from time-to-time, may authorize
and issue debt obligations, whether or not subordinated, without the approval of
the shareholders.
SIXTH. The Board of Directors shall appoint one of its members President
-----
of the Association, who shall be Chairman of the Board, unless the Board
appoints another director to be the Chairman. The Board of Directors shall have
the power to appoint one or more Vice Presidents and to appoint a Secretary and
such other officers and employees as may be required to transact the business of
this Association.
<PAGE>
The Board of Directors shall have the power to define the duties of
the officers and employees of this Association; to fix the salaries to be paid
to them; to dismiss them; to require bonds from them and to fix the penalty
thereof; to regulate the manner in which any increase of the capital of this
Association shall be made; to manage and administer the business and affairs of
this Association; to make all Bylaws that it may be lawful for them to make; and
generally to do and perform all acts that it may be legal for a Board of
Directors to do and perform.
SEVENTH. The Board of Directors shall have the power to change the
-------
location of the main office to any other place within the limits of the City of
Columbus, Ohio, without the approval of the shareholders but subject to the
approval of the Comptroller of the Currency; and shall have the power to
establish or change the location of any branch or branches of this Association
to any other location, without the approval of the shareholders but subject to
the approval of the Comptroller of the Currency.
EIGHTH. The corporate existence of this Association shall continue until
------
terminated in accordance with the laws of the United States.
NINTH. The Board of Directors of this Association, or any three or more
-----
shareholders owning, in the aggregate, not less than 10 percent of the stock of
this Association, may call a special meeting of shareholders at any time.
Unless otherwise provided by the laws of the United States, a notice of the
time, place and purpose of every annual and special meeting of the shareholders
shall be given by first-class mail, postage prepaid, mailed at least ten days
prior to the date of such meeting to each shareholder of record at his address
as shown upon the books of this Association.
<PAGE>
TENTH. Every person who is or was a Director, officer or employee of the
-----
Association or of any other corporation which he served as a Director, officer
or employee at the request of the Association as part of his regularly assigned
duties may be indemnified by the Association in accordance with the provisions
of this paragraph against all liability (including, without limitation,
judgments, fines, penalties and settlements) and all reasonable expenses
(including, without limitation, attorneys' fees and investigative expenses) that
may be incurred or paid by him in connection with any claim, action, suit or
proceeding, whether civil, criminal or administrative (all referred to hereafter
in this paragraphs as "Claims") or in connection with any appeal relating
thereto in which he may become involved as a party or otherwise or with which he
may be threatened by reason of his being or having been a Director, officer or
employee of the Association or such other corporation, or by reason of any
action taken or omitted by him in his capacity as such Director, officer or
employee, whether or not he continues to be such at the time such liability or
expenses are incurred, provided that nothing contained in this paragraph shall
be construed to permit indemnification of any such person who is adjudged guilty
of, or liable for, willful misconduct, gross neglect of duty or criminal acts,
unless, at the time such indemnification is sought, such indemnification in such
instance is permissible under applicable law and regulations, including
published rulings of the Comptroller of the Currency or other appropriate
supervisory or regulatory authority, and provided further that there shall be no
indemnification of directors, officers, or employees against expenses,
penalties, or other payments incurred in an administrative proceeding or action
instituted by an appropriate regulatory agency which proceeding or action
results in a final order assessing civil money penalties or requiring
affirmative action by an individual or individuals in the form of payments to
the Association. Every person who may be indemnified under the provisions of
this paragraph and who has been wholly successful on the merits with respect to
any Claim shall be entitled to indemnification as of right. Except as provided
in the preceding sentence, any indemnification under this paragraph shall be at
the sole discretion of the Board of Directors and shall be made only if the
Board of Directors or the Executive Committee acting by a quorum consisting of
<PAGE>
Directors who are not parties to such Claim shall find or if independent legal
counsel (who may be the regular counsel of the Association) selected by the
Board of Directors or Executive Committee whether or not a disinterested quorum
exists shall render their opinion that in view of all of the circumstances then
surrounding the Claim, such indemnification is equitable and in the best
interests of the Association. Among the circumstances to be taken into
consideration in arriving at such a finding or opinion is the existence or non-
existence of a contract of insurance or indemnity under which the Association
would be wholly or partially reimbursed for such indemnification, but the
existence or non-existence of such insurance is not the sole circumstance to be
considered nor shall it be wholly determinative of whether such indemnification
shall be made. In addition to such finding or opinion, no indemnification under
this paragraph shall be made unless the Board of Directors or the Executive
Committee acting by a quorum consisting of Directors who are not parties to such
Claim shall find or if independent legal counsel (who may be the regular counsel
of the Association) selected by the Board of Directors or Executive Committee
whether or not a disinterested quorum exists shall render their opinion that the
Director, officer or employee acted in good faith in what he reasonably believed
to be the best interests of the Association or such other corporation and
further in the case of any criminal action or proceeding, that the Director,
officer or employee reasonably believed his conduct to be lawful. Determination
of any Claim by judgment adverse to a Director, officer or employee by
settlement with or without Court approval or conviction upon a plea of guilty or
of nolo contendere or its equivalent shall not create a presumption that a
---------------
Director, officer or employee failed to meet the standards of conduct set forth
in this paragraph. Expenses incurred with respect to any Claim may be advanced
by the Association prior to the final disposition thereof upon receipt of an
undertaking satisfactory to the Association by or on behalf of the recipient to
repay such amount unless it is ultimately determined that he is entitled to
indemnification under this paragraph. The rights of indemnification provided in
this paragraph shall be in addition to any rights to which any Director, officer
or employee may otherwise be entitled by contract or as a matter of law.
<PAGE>
Every person who shall act as a Director, officer or employee of this
Association shall be conclusively presumed to be doing so in reliance upon the
right of indemnification provided for in this paragraph.
ELEVENTH. These Articles of Association may be amended at any regular or
--------
special meeting of the shareholders by the affirmative vote of the holders of a
majority of the stock of this Association, unless the vote of the holders of a
greater amount of stock is required by law, and in that case by the vote of the
holders of such greater amount.
Articles of Association of Bank One, National Association effective with the
consolidation of banks in Ohio.
<PAGE>
Exhibit 4
BY-LAWS
-------
OF
--
BANK ONE, NATIONAL ASSOCIATION
------------------------------
ARTICLE I
---------
MEETING OF SHAREHOLDERS
-----------------------
SECTION 1.01. ANNUAL MEETING. The regular annual meeting of the Shareholders
- -----------------------------
of the Bank for the election of Directors and for the transaction of such
business as may properly come before the meeting shall be held at its main
banking house, or other convenient place duly authorized by the Board of
Directors, on the third Monday of January of each year, or on the next
succeeding banking day, if the day fixed falls on a legal holiday. If from any
cause, an election of directors is not made on the day fixed for the regular
meeting of shareholders or, in the event of a legal holiday, on the next
succeeding banking day, the Board of Directors shall order the election to be
held on some subsequent day, as soon thereafter as practicable, according to the
provisions of law; and notice thereof shall be given in the manner herein
provided for the annual meeting. Notice of such annual meeting shall be given
by or under the direction of the Secretary or such other officer as may be
designated by the Chief Executive Officer by first-class mail, postage prepaid,
to all shareholders of record of the Bank at their respective addresses as shown
upon the books of the Bank mailed not less than ten days prior to the date fixed
for such meeting.
SECTION 1.02. SPECIAL MEETINGS. A special meeting of the shareholders of this
- -------------------------------
Bank may be called at any time by the Board of Directors or by any three or more
shareholders owning, in the aggregate, not less than ten percent of the stock of
this Bank. The notice of any special meeting of the shareholders called by the
Board of Directors, stating the time, place and purpose of the meeting, shall be
given by or under the direction of the Secretary, or such other officer as is
designated by the Chief Executive Officer, by first-class mail, postage prepaid,
to all shareholders of
<PAGE>
record of the Bank at their respective addresses as shown upon the books of the
Bank, mailed not less than ten days prior to the date fixed for such meeting.
Any special meeting of shareholders shall be conducted and its proceedings
recorded in the manner prescribed in these Bylaws for annual meetings of
shareholders.
SECTION 1.03. SECRETARY OF SHAREHOLDERS' MEETING. The Board of Directors may
- -------------------------------------------------
designate a person to be the Secretary of the meetings of shareholders. In the
absence of a presiding officer, as designated in these Bylaws, the Board of
Directors may designate a person to act as the presiding officer. In the event
the Board of Directors fails to designate a person to preside at a meeting of
shareholders and a Secretary of such meeting, the shareholders present or
represented shall elect a person to preside and a person to serve as Secretary
of the meeting.
The Secretary of the meetings of shareholders shall cause the returns made by
the judges and election and other proceedings to be recorded in the minute book
of the Bank. The presiding officer shall notify the directors-elect of their
election and to meet forthwith for the organization of the new board.
The minutes of the meeting shall be signed by the presiding officer and the
Secretary designated for the meeting.
SECTION 1.04. JUDGES OF ELECTION. The Board of Directors may appoint as many
- ---------------------------------
as three shareholders to be judges of the election, who shall hold and conduct
the same, and who shall, after the election has been held, notify, in writing
over their signatures, the secretary of the shareholders' meeting of the result
thereof and the names of the Directors elected; provided, however, that upon
failure for any reason of any judge or judges of election, so appointed by the
directors, to serve,
<PAGE>
the presiding officer of the meeting shall appoint other shareholders or their
proxies to fill the vacancies. The judges of election at the request of the
chairman of the meeting, shall act as tellers of any other vote by ballot taken
at such meeting, and shall notify, in writing over their signatures, the
secretary of the Board of Directors of the result thereof.
SECTION 1.05. PROXIES. In all elections of Directors, each shareholder of
- ----------------------
record, who is qualified to vote under the provisions of Federal Law, shall have
the right to vote the number of shares of record in his name for as many persons
as there are Directors to be elected, or to cumulate such shares as provided by
Federal Law. In deciding all other questions at meetings of shareholders, each
shareholder shall be entitled to one vote on each share of stock of record in
his name. Shareholders may vote by proxy duly authorized in writing. All
proxies used at the annual meeting shall be secured for that meeting only, or
any adjournment thereof, and shall be dated, and if not dated by the
shareholder, shall be dated as of the date of receipt thereof. No officer or
employee of this Bank may act as proxy.
SECTION 1.06. QUORUM. Holders of record of a majority of the shares of the
- ---------------------
capital stock of the Bank, eligible to be voted, present either in person or by
proxy, shall constitute a quorum for the transaction of business at any meeting
of shareholders, but shareholders present at any meeting and constituting less
than a quorum may, without further notice, adjourn the meeting from time to time
until a quorum is obtained. A majority of the votes cast shall decide every
question or matter submitted to the shareholders at any meeting, unless
otherwise provided by law or by the Articles of Association.
<PAGE>
ARTICLE II
----------
DIRECTORS
---------
SECTION 2.01. MANAGEMENT OF THE BANK. The business of the Bank shall be
- -------------------------------------
managed by the Board of Directors. Each director of the Bank shall be the
beneficial owner of a substantial number of shares of BANC ONE CORPORATION and
shall be employed either in the position of Chief Executive Officer or active
leadership within his or her business, professional or community interest which
shall be located within the geographic area in which the Bank operates, or as an
executive officer of the Bank. A director shall not be eligible for nomination
and re-election as a director of the Bank if such person's executive or
leadership position within his or her business, professional or community
interests which qualifies such person as a director of Bank terminates. The age
of 70 is the mandatory retirement age as a director of the Bank. When a
person's eligibility as director of the Bank terminates, whether because of
change in share ownership, position, residency or age, within 30 days after such
termination, such person shall submit his resignation as a director to be
effective at the pleasure of the Board provided, however, that in no event shall
such person be nominated or elected as a director. Provided, however, following
a person's retirement or resignation as a director because of the age
limitations herein set forth with respect to election or re-election as a
director, such person may, in special or unusual circumstances, and at the
discretion of the Board, be elected by the directors as a Director Emeritus of
the Bank for a limited period of time. A Director Emeritus shall have the right
to participate in board meetings but shall be without the power to vote and
shall be subject to re-election by the Board at its organizational meeting
following the Bank's annual meeting of shareholders.
SECTION 2.02. QUALIFICATIONS. Each director shall have the qualification
- -----------------------------
prescribed by law. No person elected a director may exercise any of the powers
of his office until he has taken the oath of such office.
<PAGE>
SECTION 2.03. TERM OF OFFICE/VACANCIES. A director shall hold office until the
- ----------------------------------------
annual meeting for the year in which his term expires and until his successor
shall be elected and shall qualify, subject, however, to his prior death,
resignation, or removal from office. Whenever any vacancy shall occur among the
directors, the remaining directors shall constitute the directors of the Bank
until such vacancy is filled by the remaining directors, and any director so
appointed shall hold office for the unexpired term of his or her successor.
Notwithstanding the foregoing, each director shall hold office and serve at the
pleasure of the Board.
SECTION 2.04. ORGANIZATION MEETING. The directors elected by the share-
- -----------------------------------
holders shall meet for organization of the new board at the time fixed by the
presiding officer of the annual meeting. If at the time fixed for such meeting
there is no quorum present, the Directors in attendance may adjourn from time to
time until a quorum is obtained. A majority of the number of Directors elected
by the shareholders shall constitute a quorum for the transaction of business.
SECTION 2.05. REGULAR MEETINGS. The regular meetings of the Board of Directors
- -------------------------------
shall be held on the third Monday of January, April, July and October, which
meetings will be held at 3:30 p.m. When any regular meeting of the Board falls
on a holiday, the meeting shall be held on such other day as the Board may
previously designate or should the Board fail to so designate, on such day as
the Chairman of the Board or President may fix. Whenever a quorum is not
present, the directors in attendance shall adjourn the meeting to a time not
later than the date fixed by the Bylaws for the next succeeding regular meeting
of the Board.
SECTION 2.06. SPECIAL MEETINGS. Special meetings of the Board of Directors
- -------------------------------
shall be held at the call of the Chairman of the Board or President, or at the
request of two or more Directors. Any special meeting may be held at such place
in Franklin County, Ohio, and at such time as may be fixed in the call. Written
or oral notice shall be given to each Director not later than the day next
preceding the day on which special meeting is to be held, which notice may be
waived in writing.
<PAGE>
The presence of a Director at any meeting of the Board shall be deemed a waiver
of notice thereof by him. Whenever a quorum is not present the Directors in
attendance shall adjourn the special meeting from day to day until a quorum is
obtained.
SECTION 2.07. QUORUM. A majority of the Directors shall constitute a quorum at
- ---------------------
any meeting, except when otherwise provided by law; but a lesser number may
adjourn any meeting, from time-to-time, and the meeting may be held, as
adjourned, without further notice. When, however, less than a quorum as herein
defined, but at least one-third and not less than two of the authorized number
of Directors are present at a meeting of the Directors, business of the Bank may
be transacted and matters before the Board approved or disapproved by the
unanimous vote of the Directors present.
SECTION 2.08. COMPENSATION. Each member of the Board of Directors shall
- ---------------------------
receive such fees for, and transportation expenses incident to, attendance at
Board and Board Committee Meetings and such fees for service as a Director
irrespective of meeting attendance as from time to time are fixed by resolution
of the Board; provided, however, that payment hereunder shall not be made to a
Director for meetings attended and/or Board service which are not for the Bank's
sole benefit and which are concurrent and duplicative with meetings attended or
board service for an affiliate of the Bank for which the Director receives
payment; and provided further, that payment hereunder shall not be made in the
case of any Director in the regular employment of the Bank or of one of its
affiliates.
SECTION 2.09. EXECUTIVE COMMITTEE. There shall be a standing committee of the
- ----------------------------------
Board of Directors known as the Executive Committee which shall possess and
exercise, when the Board is not in session, all powers of the Board that may
lawfully be delegated. The Executive Committee shall also exercise the powers
of the Board of Directors in accordance with the Provisions of the "Employees
Retirement Plan" and the "Agreement and Declaration of Trust" as the same now
<PAGE>
exist or may be amended hereafter. The Executive Committee shall consist of not
fewer than four board members, including the Chairman of the Board and President
of the Bank, one of whom, as hereinafter required by these Bylaws, shall be the
Chief Executive Officer. The other members of the Committee shall be appointed
by the Chairman of the Board or by the President, with the approval of the Board
and shall continue as members of the Executive Committee until their successors
are appointed, provided, however, that any member of the Executive Committee may
be removed by the Board upon a majority vote thereof at any regular or special
meeting of the Board. The Chairman or President shall fill any vacancy in the
Committee by the appointment of another Director, subject to the approval of the
Board of Directors. The regular meetings of the Executive Committee shall be
held on a regular basis as scheduled by the Board of Directors. Special
meetings of the Executive Committee shall be held at the call of the Chairman or
President or any two members thereof at such time or times as may be designated.
In the event of the absence of any member or members of the Committee, the
presiding member may appoint a member or members of the Board to fill the place
or places of such absent member or members to serve during such absence. Not
fewer than three members of the Committee must be present at any meeting of the
Executive Committee to constitute a quorum, provided, however that with regard
to any matters on which the Executive Committee shall vote, a majority of the
Committee members present at the meeting at which a vote is to be taken shall
not be officers of the Bank and, provided further, that if, at any meeting at
which the Chairman of the Board and President are both present, Committee
members who are not officers are not in the majority, then the Chairman of the
Board or President, which ever of such officers is not also the Chief Executive
Officer, shall not be eligible to vote at such meeting and shall not be
recognized for purposes of determining if a quorum is present at such meeting.
When neither the Chairman of the Board nor President are present, the Committee
shall appoint a presiding officer. The Executive Committee shall keep a record
of its proceedings and report its proceedings and the action taken by it to the
Board of Directors.
<PAGE>
SECTION 2.10 COMMUNITY REINVESTMENT ACT AND COMPLIANCE POLICY COMMITTEE. There
- ------------------------------------------------------------------------
shall be a standing committee of the Board of Directors known as the Community
Reinvestment Act and Compliance Policy Committee the duties of which shall be,
at least once in each calendar year, to review, develop and recommend policies
and programs related to the Bank's Community Reinvestment Act Compliance and
regulatory compliance with all existing statutes, rules and regulations
affecting the Bank under state and federal law. Such Committee shall provide
and promptly make a full report of such review of current Bank policies with
regard to Community Reinvestment Act and regulatory compliance in writing to the
Board, with recommendations, if any, which may be necessary to correct any
unsatisfactory conditions. Such Committee may, in its discretion, in fulfilling
its duties, utilize the Community Reinvestment Act officers of the Bank, Banc
One Ohio Corporation and Banc One Corporation and may engage outside Community
Reinvestment Act experts, as approved by the Board, to review, develop and
recommend policies and programs as herein required. The Community Reinvestment
Act and regulatory compliance policies and procedures established and the
recommendations made shall be consistent with, and shall supplement, the
Community Reinvestment Act and regulatory compliance programs, policies and
procedures of Banc One Corporation and Banc One Ohio Corporation. The Community
Reinvestment Act and Compliance Policy Committee shall consist of not fewer than
four board members, one of whom shall be the Chief Executive Officer and a
majority of whom are not officers of the Bank. Not fewer than three members of
the Committee, a majority of whom are not officers of the Bank, must be present
to constitute a quorum. The Chairman of the Board or President of the Bank,
whichever is not the Chief Executive Officer, shall be an ex officio member of
the Community Reinvestment Act and Compliance Policy Committee. The Community
Reinvestment Act and Compliance Policy Committee, whose chairman shall be
appointed by the Board, shall keep a record of its proceedings and report its
proceedings and the action taken by it to the Board of Directors.
<PAGE>
SECTION 2.11. TRUST COMMITTEES. There shall be two standing Committees known
- -------------------------------
as the Trust Management Committee and the Trust Examination Committee appointed
as hereinafter provided.
SECTION 2.12. OTHER COMMITTEES. The Board of Directors may appoint such
- -------------------------------
special committees from time to time as are in its judgment necessary in the
interest of the Bank.
<PAGE>
ARTICLE III
-----------
OFFICERS, MANAGEMENT STAFF AND EMPLOYEES
----------------------------------------
SECTION 3.01. OFFICERS AND MANAGEMENT STAFF.
- --------------------------------------------
(a) The officers of the Bank shall include a President, Secretary and
Security Officer and may include a Chairman of the Board, one or more
Vice Chairmen, one or more Vice Presidents (which may include one or
more Executive Vice Presidents and/or Senior Vice Presidents) and one
or more Assistant Secretaries, all of whom shall be elected by the
Board. All other officers may be elected by the Board or appointed in
writing by the Chief Executive Officer. The salaries of all officers
elected by the Board shall be fixed by the Board. The Board from time-
to-time shall designate the President or Chairman of the Board to
serve as the Bank's Chief Executive Officer.
(b) The Chairman of the Board, if any, and the President shall be elected
by the Board from their own number. The President and Chairman of the
Board shall be re-elected by the Board annually at the organizational
meeting of the Board of Directors following the Annual Meeting of
Shareholders. Such officers as the Board shall elect from their own
number shall hold office from the date of their election as officers
until the organization meeting of the Board of Directors following the
next Annual Meeting of Shareholders, provided, however, that such
officers may be relieved of their duties at any time by action of the
Board in which event all the powers incident to their office shall
immediately terminate.
(c) Except as provided in the case of the elected officers who are members
of the Board, all officers, whether elected or appointed, shall hold
office at the pleasure of the Board. Except as otherwise limited by
law or these Bylaws, the Board assigns to Chief Executive Officer
and/or his
<PAGE>
designees the authority to appoint and dismiss any elected
or appointed officer or other member of the Bank's management staff
and other employees of the Bank, as the person in charge of and
responsible for any branch office, department, section, operation,
function, assignment or duty in the Bank.
(d) The management staff of the Bank shall include officers elected by the
Board, officers appointed by the Chief Executive Officer, and such
other persons in the employment of the Bank who, pursuant to written
appointment and authorization by a duly authorized officer of the
Bank, perform management functions and have management
responsibilities. Any two or more offices may be held by the same
person except that no person shall hold the office of Chairman of the
Board and/or President and at the same time also hold the office of
Secretary.
(e) The Chief Executive Officer of the Bank and any other officer of the
Bank, to the extent that such officer is authorized in writing by the
Chief Executive Officer, may appoint persons other than officers who
are in the employment of the Bank to serve in management positions and
in connection therewith, the appointing officer may assign such title,
salary, responsibilities and functions as are deemed appropriate by
him, provided, however, that nothing contained herein shall be
construed as placing any limitation on the authority of the Chief
Executive Officer as provided in this and other sections of these
Bylaws.
SECTION 3.02. CHIEF EXECUTIVE OFFICER. The Chief Executive Officer of the Bank
- --------------------------------------
shall have general and active management of the business of the Bank and shall
see that all orders and resolutions of the Board of Directors are carried into
effect. Except as otherwise prescribed or limited by these Bylaws, the Chief
Executive Officer shall have full right, authority and power to control all
personnel, including elected and appointed officers, of the Bank, to employ or
direct the
<PAGE>
employment of such personnel and officers as he may deem necessary, including
the fixing of salaries and the dismissal of them at pleasure, and to define and
prescribe the duties and responsibility of all Officers of the Bank, subject to
such further limitations and directions as he may from time-to-time deem proper.
The Chief Executive Officer shall perform all duties incident to his office and
such other and further duties, as may, from time-to-time, be required of him by
the Board of Directors or the shareholders. The specification of authority in
these Bylaws wherever and to whomever granted shall not be construed to limit in
any manner the general powers of delegation granted to the Chief Executive
Officer in conducting the business of the Bank. The Chief Executive Officer or,
in his absence, the Chairman of the Board or President of the Bank, as
designated by the Chief Executive Officer, shall preside at all meetings of
shareholders and meetings of the Board. In the absence of the Chief Executive
Officer, such officer as is designated by the Chief Executive Officer shall be
vested with all the powers and perform all the duties of the Chief Executive
Officer as defined by these Bylaws. When designating an officer to serve in his
absence, the Chief Executive Officer shall select an officer who is a member of
the Board of Directors whenever such officer is available.
SECTION 3.03. POWERS OF OFFICERS AND MANAGEMENT STAFF. The Chief Executive
- ------------------------------------------------------
Officer, the Chairman of the Board, the President, and those officers so
designated and authorized by the Chief Executive Officer are authorized for an
on behalf of the Bank, and to the extent permitted by law, to make loans and
discounts; to purchase or acquire drafts, notes, stock, bonds, and other
securities for investment of funds held by the Bank; to execute and purchase
acceptances; to appoint, empower and direct all necessary agents and attorneys;
to sign and give any notice required to be given; to demand payment and/or to
declare due for any default any debt or obligation due or payable to the Bank
upon demand or authorized to be declared due; to foreclose any mortgages, to
exercise any option, privilege or election to forfeit, terminate, extend or
renew any lease; to authorize and direct any proceedings for the collection of
any money or for the enforcement
<PAGE>
of any right or obligation; to adjust, settle and compromise all claims of every
kind and description in favor of or against the Bank, and to give receipts,
releases and discharges therefor; to borrow money and in connection therewith to
make, execute and deliver notes, bonds or other evidences of indebtedness; to
pledge or hypothe- cate any securities or any stocks, bonds, notes or any
property real or personal held or owned by the Bank, or to rediscount any notes
or other obligations held or owned by the Bank, to employ or direct the
employment of all personnel, including elected and appointed officers, and the
dismissal of them at pleasure, and in furtherance of and in addition to the
powers herein above set forth to do all such acts and to take all such
proceedings as in his judgment are necessary and incidental to the operation of
the Bank.
Other persons in the employment of the Bank, including but not limited to
officers and other members of the management staff, may be authorized by the
Chief Executive Officer, or by an officer so designated and authorized by the
Chief Executive Officer, to perform the powers set forth above, subject,
however, to such limitations and conditions as are set forth in the
authorization given to such persons.
SECTION 3.04. SECRETARY. The Secretary or such other officers as may be
- ------------------------
designated by the Chief Executive Officer shall have supervision and control of
the records of the Bank and, subject to the direction of the Chief Executive
Officer, shall undertake other duties and functions usually performed by a
corporate secretary. Other officers may be designated by the Chief Executive
Officer or the Board of Directors as Assistant Secretary to perform the duties
of the Secretary.
SECTION 3.05. EXECUTION OF DOCUMENTS. The Chief Executive Officer, Chairman of
- -------------------------------------
the Board, President, any officer being a member of the Bank's management staff
who is also a person in charge of and responsible for any department within the
Bank and any other officer to the extent such officer is so designated and
authorized by the Chief Executive Officer, the Chairman of the
<PAGE>
Board, the President, or any other officer who is a member of the Bank's
management staff who is in charge of and responsible for any department within
the Bank, are hereby authorized on behalf of the Bank to sell, assign, lease,
mortgage, transfer, deliver and convey any real or personal property now or
hereafter owned by or standing in the name of the Bank or its nominee, or held
by this Bank as collateral security, and to execute and deliver such deeds,
contracts, leases, assignments, bills of sale, transfers or other papers or
documents as may be appropriate in the circumstances; to execute any loan
agreement, security agreement, commitment letters and financing statements and
other documents on behalf of the Bank as a lender; to execute purchase orders,
documents and agreements entered into by the Bank in the ordinary course of
business, relating to purchase, sale, exchange or lease of services, tangible
personal property, materials and equipment for the use of the Bank; to execute
powers of attorney to perform specific or general functions in the name of or on
behalf of the Bank; to execute promissory notes or other instruments evidencing
debt of the Bank; to execute instruments pledging or releasing securities for
public funds, documents submitting public fund bids on behalf of the Bank and
public fund contracts; to purchase and acquire any real or personal property
including loan portfolios and to execute and deliver such agreements, contracts
or other papers or documents as may be appropriate in the circumstances; to
execute any indemnity and fidelity bonds, proxies or other papers or documents
of like or different character necessary, desirable or incidental to the conduct
of its banking business; to execute and deliver settlement agreements or other
papers or documents as may be appropriate in connection with a dismissal
authorized by Section 3.01(c) of these Bylaws; to execute agreements,
instruments, documents, contracts or other papers of like or difference
character necessary, desirable or incidental to the conduct of its banking
business; and to execute and deliver partial releases from and discharges or
assignments of mortgages, financing statements and assignments or surrender of
insurance policies, now or hereafter held by this Bank.
The Chief Executive Officer, Chairman of the Board, President, any officer
being a member of the Bank's management staff who is also a person in charge of
and responsible for any department within the Bank, and any other officer of the
Bank
<PAGE>
so designated and authorized by the Chief Executive Officer, Chairman of
the Board, President or any officer who is a member of the Bank's management
staff who is in charge of and responsible for any department within the Bank are
authorized for and on behalf of the Bank to sign and issue checks, drafts, and
certificates of deposit; to sign and endorse bills of exchange, to sign and
countersign foreign and domestic letters of credit, to receive and receipt for
payments of principal, interest, dividends, rents, fees and payments of every
kind and description paid to the Bank, to sign receipts for property acquired by
or entrusted to the Bank, to guarantee the genuineness of signatures on
assignments of stocks, bonds or other securities, to sign certifications of
checks, to endorse and deliver checks, drafts, warrants, bills, notes,
certificates of deposit and acceptances in all business transactions of the
Bank.
Other persons in the employment of the Bank and of its subsidiaries,
including but not limited to officers and other members of the management staff,
may be authorized by the Chief Executive Officer, Chairman of the Board,
President or by an officer so designated by the Chief Executive Officer,
Chairman of the Board, or President to perform the acts and to execute the
documents set forth above, subject, however, to such limitations and conditions
as are contained in the authorization given to such person.
SECTION 3.06. PERFORMANCE BOND. All officers and employees of the Bank shall
- -------------------------------
be bonded for the honest and faithful performance of their duties for such
amount as may be prescribed by the Board of Directors.
<PAGE>
ARTICLE IV
----------
TRUST DEPARTMENT
----------------
SECTION 4.01. TRUST DEPARTMENT. Pursuant to the fiduciary powers granted to
- -------------------------------
this Bank under the provisions of Federal Law and Regulations of the Comptroller
of the Currency, there shall be maintained a separate Trust Department of the
Bank, which shall be operated in the manner specified herein.
SECTION 4.02. TRUST MANAGEMENT COMMITTEE. There shall be a standing Committee
- -----------------------------------------
known as the Trust Management Committee, consisting of at least five members, a
majority of whom shall not be officers of the Bank. The Committee shall consist
of the Chairman of the Board who shall be Chairman of the Com- mittee, the
President, and at least three other Directors appointed by the Board of
Directors and who shall continue as members of the Committee until their
successors are appointed. Any vacancy in the Trust Management Committee may be
filled by the Board at any regular or special meeting. In the event of the
absence of any member or members, such Committee may, in its discretion, appoint
members of the Board to fill the place of such absent members to serve during
such absence. Three members of the Committee shall constitute a quorum. Any
member of the Committee may be removed by the Board by a majority vote at any
regular or special meeting of the Board. The Committee shall meet at such times
as it may determine or at the call of the Chairman, or President or any two
members thereof.
The Trust Management Committee, under the general direction of the Board of
Directors, shall supervise the policy of the Trust Department which shall be
formulated and executed in accordance with Law, Regulations of the Comptroller
of the Currency, and sound fiduciary principles.
<PAGE>
SECTION 4.03. TRUST EXAMINATION COMMITTEE. There shall be a standing Commit-
- ------------------------------------------
tee known as the Trust Examination Committee, consisting of three directors
appointed by the Board of Directors and who shall continue as members of the
committee until their successors are appointed. Such members shall not be
active officers of the Bank. Two members of the Committee shall constitute a
quorum. Any member of the Committee may be removed by the Board by a majority
vote at any regular or special meeting of the Board. The Committee shall meet
at such times as it may determine or at the call of two members thereof.
This Committee shall, at least once during each calendar year and within
fifteen months of the last such audit, or at such other time(s) as may be
required by Regulations of the Comptroller of the Currency, make suitable audits
of the Trust Department or cause suitable audits to be made by auditors
responsible only to the Board of Directors, and at such time shall ascertain
whether the Department has been administered in accordance with Law, Regulations
of the Comptroller of the Currency and sound fiduciary principles.
The Committee shall promptly make a full report of such audits in writing to
the Board of Directors of the Bank, together with a recommendation as to what
action, if any, may be necessary to correct any unsatisfactory condition. A
report of the audits together with the action taken thereon shall be noted in
the Minutes of the Board of Directors and such report shall be a part of the
records of this Bank.
SECTION 4.04. MANAGEMENT. The Trust Department shall be under the management
- -------------------------
and supervision of an officer of the Bank or of the trust affiliate of the Bank
designated by and subject to the advice and direction of the Chief Executive
Officer. Such officer having supervisory responsibility over the Trust
Department shall do or cause to be done all things necessary or proper in
carrying on the business of the Trust Department in accordance with provisions
of law and applicable regulations.
<PAGE>
SECTION 4.05. HOLDING OF PROPERTY. Property held by the Trust Department may
- ----------------------------------
be carried in the name of the Bank in its fiduciary capacity, in the name of
Bank, or in the name of a nominee or nominees.
SECTION 4.06. TRUST INVESTMENTS. Funds held by the Bank in a fiduciary
- --------------------------------
capacity awaiting investment or distribution shall not be held uninvested or
undistributed any longer than is reasonable for the proper management of the
account and shall be invested in accordance with the instrument establishing a
fiduciary relationship and local law. Where such instrument does not specify
the character or class of investments to be made and does not vest in the Bank
any discretion in the matter, funds held pursuant to such instrument shall be
invested in any investment which corporate fiduciaries may invest under local
law.
The investments of each account in the Trust Department shall be kept
separate from the assets of the Bank, and shall be placed in the joint custody
or control of not less than two of the officers or employees of the Bank or of
the trust affiliate of the Bank designated for the purpose by the Trust
Management Committee.
SECTION 4.07. EXECUTION OF DOCUMENTS. The Chief Executive Officer, Chairman of
- -------------------------------------
the Board, President, any officer of the Trust Department, and such other
officers of the trust affiliate of the Bank as are specifically designated and
authorized by the Chief Executive Officer, the President, or the officer in
charge of the Trust Department, are hereby authorized, on behalf of this Bank,
to sell, assign, lease, mortgage, transfer, deliver and convey any real property
or personal property and to purchase and acquire any real or personal property
and to execute and deliver such agreements, contracts, or other papers and
documents as may be appropriate in the circumstances for property now or
hereafter owned by or standing in the name of this Bank, or its nominee, in any
fiduciary capacity, or in the name of any principal for whom this Bank may now
or hereafter be acting under a power of attorney, or as agent and to execute and
deliver partial releases from
<PAGE>
any discharges or assignments or mortgages and assignments or surrender of
insurance policies, to execute and deliver deeds, contracts, leases,
assignments, bills of sale, transfers or such other papers or documents as may
be appropriate in the circumstances for property now or hereafter held by this
Bank in any fiduciary capacity or owned by any principal for whom this Bank may
now or hereafter be acting under a power of attorney or as agent; to execute and
deliver settlement agreements or other papers or documents as may be appropriate
in connection with a dismissal authorized by Section 3.01(c) of these Bylaws;
provided that the signature of any such person shall be attested in each case by
any officer of the Trust Department or by any other person who is specifically
authorized by the Chief Executive Officer, the President or the officer in
charge of the Trust Department.
The Chief Executive Officer, Chairman of the Board, President, any officer of
the Trust Department and such other officers of the trust affiliate of the Bank
as are specifically designated and authorized by the Chief Executive Officer,
the President, or the officer in charge of the Trust Department, or any other
person or corporation as is specifically authorized by the Chief Executive
Officer, the President or the officer in charge of the Trust Department, are
hereby authorized on behalf of this Bank, to sign any and all pleadings and
papers in probate and other court proceedings, to execute any indemnity and
fidelity bonds, trust agreements, proxies or other papers or documents of like
or different character necessary, desirable or incidental to the appointment of
the Bank in any fiduciary capacity and the conduct of its business in any
fiduciary capacity; also to foreclose any mortgage, to execute and deliver
receipts for payments of principal, interest, dividends, rents, fees and
payments of every kind and description paid to the Bank; to sign receipts for
property acquired or entrusted to the Bank; also to sign stock or bond
certificates on behalf of this Bank in any fiduciary capacity and on behalf of
this Bank as transfer agent or registrar; to guarantee the genuineness of
signatures on assignments of stocks, bonds or other securities, and to
authenticate bonds, debentures, land or lease trust certificates or other forms
of security issued pursuant to any indenture under which this Bank now or
hereafter is acting as
<PAGE>
Trustee. Any such person, as well as such other persons as are specifically
authorized by the Chief Executive Officer or the officer in charge of the Trust
Department, may sign checks, drafts and orders for the payment of money executed
by the Trust Department in the course of its business.
SECTION 4.08. VOTING OF STOCK. The Chairman of the Board, President, any
- ------------------------------
officer of the Trust Department, any officer of the trust affiliate of the Bank
and such other persons as may be specifically authorized by Resolution of the
Trust Management Committee or the Board of Directors, may vote shares of stock
of a corporation of record on the books of the issuing company in the name of
the Bank or in the name of the Bank as fiduciary, or may grant proxies for the
voting of such stock of the granting if same is permitted by the instrument
under which the Bank is acting in a fiduciary capacity, or by the law applicable
to such fiduciary account. In the case of shares of stock which are held by a
nominee of the Bank, such shares may be voted by such person(s) authorized by
such nominee.
<PAGE>
ARTICLE V
---------
STOCKS AND STOCK CERTIFICATES
-----------------------------
SECTION 5.01. STOCK CERTIFICATES. The shares of stock of the Bank shall be
- ---------------------------------
evidenced by certificates which shall bear the signature of the Chairman of the
Board, the President, or a Vice President (which signature may be engraved,
printed or impressed), and shall be signed manually by the Secretary, or any
other officer appointed by the Chief Executive Officer for that purpose.
In case any such officer who has signed or whose facsimile signature has been
placed upon such certificate shall have ceased to be such before such
certificate is issued, it may be issued by the Bank with the same effect as if
such officer had not ceased to be such at the time of its issue. Each such
certificate shall bear the corporate seal of the Bank, shall recite on its fact
that the stock represented thereby is transferable only upon the books of the
Bank properly endorsed and shall recite such other information as is required by
law and deemed appropriate by the Board. The corporate seal may be facsimile
engraved or printed.
SECTION 5.02. STOCK ISSUE AND TRANSFER. The shares of stock of the Bank shall
- ---------------------------------------
be transferable only upon the stock transfer books of the Bank and except as
hereinafter provided, no transfer shall be made or new certificates issued
except upon the surrender for cancellation of the certificate or certificates
previously issued therefor. In the case of the loss, theft, or destruction of
any certificate, a new certificate may be issued in place of such certificate
upon the furnishing of any affidavit setting forth the circumstances of such
loss, theft, or destruction and indemnity satisfactory to the Chairman of the
Board, the President, or a Vice President. The Board of Directors, or the Chief
Executive Officer, may authorize the issuance of a new certificate therefor
without the furnishing of indemnity. Stock Transfer Books, in which all
transfers of stock shall be recorded, shall be provided.
<PAGE>
The stock transfer books may be closed for a reasonable period and under such
conditions as the Board of Directors may at any time determine for any meeting
of shareholders, the payment of dividends or any other lawful purpose. In lieu
of closing the transfer books, the Board may, in its discretion, fix a record
date and hour constituting a reasonable period prior to the day designated for
the holding of any meeting of the shareholders or the day appointed for the
payment of any dividend or for any other purpose at the time as of which
shareholders entitled to notice of and to vote at any such meeting or to receive
such dividend or to be treated as shareholders for such other purpose shall be
determined, and only shareholders of record at such time shall be entitled to
notice of or to vote at such meeting or to receive such dividends or to be
treated as shareholders for such other purpose.
<PAGE>
ARTICLE VI
----------
MISCELLANEOUS PROVISIONS
------------------------
SECTION 6.01. SEAL. The impression made below is an impression of the seal
- -------------------
adopted by the Board of Directors of Bank One, National Association. The Seal
may be affixed by any officer of the Bank to any document executed by an
authorized officer on behalf of the Bank, and any officer may certify any act,
proceedings, record, instrument or authority of the Bank.
SECTION 6.02. BANKING HOURS. Subject to ratification by the Executive
- ----------------------------
Committee, the Bank and each of its Branches shall be open for business on such
days and during such hours as the Chief Executive Officer of the Bank shall,
from time to time, prescribe.
SECTION 6.03. MINUTE BOOK. The organization papers of this Bank, the Articles
- --------------------------
of Association, the returns of the judges of elections, the Bylaws and any
amendments thereto, the proceedings of all regular and special meetings of the
shareholders and of the Board of Directors, and reports of the committees of the
Board of Directors shall be recorded in the minute book of the Bank. The
minutes of each such meeting shall be signed by the presiding officer and
attested by the secretary of the meetings.
SECTION 6.04. AMENDMENT OF BY-LAWS. These Bylaws may be amended by vote of a
- -----------------------------------
majority of the Directors.
Bylaws of Bank One, National Association effective with merger of Ohio Banks.
