-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, WmSbHp8se39YNzLX2zzOgQnOMlwZ6Q2ck2CS4of7Ncf+DBlpwaDQqzxFHSx48vXa nXfmvaOLwJ2Cz6tutFVfhw== 0000912057-01-005408.txt : 20010223 0000912057-01-005408.hdr.sgml : 20010223 ACCESSION NUMBER: 0000912057-01-005408 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 5 CONFORMED PERIOD OF REPORT: 20001231 FILED AS OF DATE: 20010214 FILER: COMPANY DATA: COMPANY CONFORMED NAME: AMERICREDIT CORP CENTRAL INDEX KEY: 0000804269 STANDARD INDUSTRIAL CLASSIFICATION: FINANCE SERVICES [6199] IRS NUMBER: 752291093 STATE OF INCORPORATION: TX FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 001-10667 FILM NUMBER: 1539818 BUSINESS ADDRESS: STREET 1: 801 CHERRY STREET, SUITE 3900 CITY: FORT WORTH STATE: TX ZIP: 76102 BUSINESS PHONE: 8173027000 MAIL ADDRESS: STREET 1: 200 BAILEY AVENUE CITY: FORT WORTH STATE: TX ZIP: 76107 FORMER COMPANY: FORMER CONFORMED NAME: URCARCO INC DATE OF NAME CHANGE: 19920703 10-Q 1 a2036548z10-q.txt FORM 10Q UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q (Mark One) [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended DECEMBER 31, 2000 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from __________ to __________ Commission file number 1-10667 AMERICREDIT CORP. (Exact name of registrant as specified in its charter) Texas 75-2291093 - ------------------------------------ -------------------------------- (State or other jurisdiction of (I.R.S. Employer Incorporation or organization) Identification No.) 801 CHERRY STREET, SUITE 3900, FORT WORTH, TEXAS 76102 ------------------------------------------------------ (Address of principal executive offices, including Zip Code) (817) 302-7000 -------------- (Registrant's telephone number, including area code) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [ ] There were 80,040,100 shares of common stock, $0.01 par value outstanding as of January 31, 2001. AMERICREDIT CORP. INDEX TO FORM 10-Q Part I. FINANCIAL INFORMATION PAGE Item 1. Financial Statements (unaudited) Consolidated Balance Sheets - December 31, 2000 and June 30, 2000 3 Consolidated Statements of Income and Comprehensive Income - Three Months and Six Months Ended December 31, 2000 and 1999 4 Consolidated Statements of Cash Flows - Six Months Ended December 31, 2000 and 1999 5 Notes to Consolidated Financial Statements 6 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 19 Item 3. Quantitative and Qualitative Disclosures About Market Risk 35 Part II. OTHER INFORMATION Item 1. Legal Proceedings 36 Item 2. Changes in Securities 36 Item 3. Defaults upon Senior Securities 37 Item 4. Submission of Matters to a Vote of Security Holders 37 Item 5. Other Information 37 Item 6. Exhibits and Reports on Form 8-K 37 SIGNATURE 39
2 Part I. FINANCIAL INFORMATION Item 1. FINANCIAL STATEMENTS AMERICREDIT CORP. Consolidated Balance Sheets (Unaudited, Dollars in Thousands)
DECEMBER 31, 2000 JUNE 30, 2000 ----------------- ------------- ASSETS Cash and cash equivalents $ 40,587 $ 42,916 Receivables held for sale, net 1,144,552 871,511 Interest-only receivables from Trusts 237,401 229,059 Investments in Trust receivables 446,329 341,707 Restricted cash 289,364 253,852 Property and equipment, net 42,680 44,535 Other assets 114,097 78,689 ---------------------- ---------------------- Total assets $2,315,010 $1,862,269 ====================== ====================== LIABILITIES AND SHAREHOLDERS' EQUITY Liabilities: Warehouse credit facilities $ 756,650 $ 487,700 Credit enhancement facility 74,840 66,606 Senior notes 375,000 375,000 Other notes payable 15,404 19,691 Funding payable 44,131 61,664 Accrued taxes and expenses 112,029 70,627 Deferred income taxes 105,036 92,402 ---------------------- ---------------------- Total liabilities 1,483,090 1,173,690 ---------------------- ---------------------- Shareholders' equity: Preferred stock, $0.01 par value per share; 20,000,000 shares authorized, none issued Common stock, $0.01 par value per share; 120,000,000 shares authorized; 85,276,200 and 83,726,534 shares issued 853 837 Additional paid-in capital 431,033 401,979 Accumulated other comprehensive income 67,702 44,803 Retained earnings 352,826 262,111 ---------------------- ---------------------- 852,414 709,730 Treasury stock, at cost (6,636,637 and 7,008,859 shares) (20,494) (21,151) ---------------------- ---------------------- Total shareholders' equity 831,920 688,579 ---------------------- ---------------------- Total liabilities and shareholders' equity $2,315,010 $1,862,269 ====================== ======================
The accompanying notes are an integral part of these consolidated financial statements 3 AMERICREDIT CORP. Consolidated Statements of Income and Comprehensive Income (Unaudited, Dollars in Thousands, Except Per Share Data)
Three Months Ended Six Months Ended December 31, December 31, ------------ ------------ 2000 1999 2000 1999 ------------------------------------------------------------------------ Revenue Finance charge income $ 52,095 $ 27,458 $ 97,495 $ 54,994 Gain on sale of receivables 71,173 49,314 132,759 98,242 Servicing fee income 63,435 41,096 122,705 75,883 Other income 1,906 1,376 4,991 2,744 ------------------------------------------------------------------------ 188,609 119,244 357,950 231,863 ------------------------------------------------------------------------ Costs and expenses Operating expenses 73,201 52,865 140,495 106,543 Provision for loan losses 7,271 3,756 13,325 7,243 Interest expense 29,370 16,129 56,626 30,405 Charge for closing mortgage operations 10,500 10,500 ------------------------------------------------------------------------ 109,842 83,250 210,446 154,691 ------------------------------------------------------------------------ Income before income taxes 78,767 35,994 147,504 77,172 Income tax provision 30,325 16,385 56,789 32,239 ------------------------------------------------------------------------ Net income 48,442 19,609 90,715 44,933 ------------------------------------------------------------------------ Other comprehensive income Unrealized gain (loss) on credit enhancement assets 53,203 (2,113) 83,517 12,868 Unrealized (loss) gain on cash flow hedges (30,323) 8,393 (46,284) 9,207 Less related income tax provision (8,809) (2,417) (14,334) (8,472) ------------------------------------------------------------------------ Comprehensive income $ 62,513 $ 23,472 $ 113,614 $ 58,536 ======================================================================== Earnings per share Basic $0.62 $0.27 $1.17 $0.64 ======================================================================== Diluted $0.57 $0.25 $1.08 $0.60 ======================================================================== Weighted average shares outstanding 78,261,907 73,988,228 77,757,716 70,745,962 ======================================================================== Weighted average shares and assumed incremental shares 84,418,806 78,958,413 83,888,520 75,318,456 ========================================================================
The accompanying notes are an integral part of these consolidated financial statements 4 AMERICREDIT CORP. Consolidated Statements of Cash Flows (Unaudited, Dollars in Thousands)
Six Months Ended December 31, ------------------------------------------------- 2000 1999 ----------------------- ----------------------- Cash flows from operating activities Net income $ 90,715 $ 44,933 Adjustments to reconcile net income to net cash provided by operating activities: Non-cash charge for closing mortgage operations 6,566 Depreciation and amortization 9,997 9,357 Provision for loan losses 13,325 7,243 Deferred income taxes 9,617 7,414 Non-cash servicing fee income (39,532) (20,165) Non-cash gain on sale of auto receivables (103,546) (92,670) Distributions from Trusts 107,069 36,711 Changes in assets and liabilities: Other assets (14,634) (11,264) Accrued taxes and expenses 29,563 12,618 ----------------------- ----------------------- Net cash provided by operating activities 102,574 743 ----------------------- ----------------------- Cash flows from investing activities Purchases of auto receivables (2,807,219) (2,040,093) Originations of mortgage receivables (108,950) Principal collections and recoveries on receivables 36,797 17,547 Net proceeds from sale of auto receivables 2,466,076 1,881,645 Net proceeds from sale of mortgage receivables 447 113,660 Initial deposits to restricted cash (75,234) (92,000) Net change in credit enhancement facility 8,234 35,000 Purchases of property and equipment (7,056) (5,279) Change in other assets (8,935) (5,653) ----------------------- ----------------------- Net cash used by investing activities (386,890) (204,123) ----------------------- ----------------------- Cash flows from financing activities Net change in warehouse credit facilities 268,950 241,558 Payments on other notes payable (5,373) (5,740) Proceeds from issuance of common stock 18,410 123,045 ----------------------- ----------------------- Net cash provided by financing activities 281,987 358,863 ----------------------- ----------------------- Net (decrease) increase in cash and cash equivalents (2,329) 155,483 Cash and cash equivalents at beginning of period 42,916 21,189 ----------------------- ----------------------- Cash and cash equivalents at end of period $ 40,587 $ 176,672 ======================= =======================
The accompanying notes are an integral part of these consolidated financial statements 5 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 transactions and accounts have been eliminated in consolidation. The consolidated financial statements as of December 31, 2000, and for the periods ended December 31, 2000 and 1999, are unaudited, but in management's opinion include all 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 for the year ended June 30, 2000. In September 2000, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 140, "Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities, a replacement of Financial Accounting Standards Board Statement No. 125" ("SFAS 140"), which revises the standards for accounting for securitizations and other transfers of financial assets and collateral and requires certain disclosures, but, carries over most of Statement No. 125's provisions without reconsideration. SFAS 140 is effective for transfers and servicing of financial assets and extinguishments of liabilities occurring after March 31, 2001, and is effective for disclosures relating to securitization transactions and collateral and for recognition and reclassification of collateral for fiscal years ending after December 15, 2000. The Company does not believe that the adoption of this statement will have a material effect on the Company's financial position or results of operations. 6 NOTE 2 - RECEIVABLES HELD FOR SALE Receivables held for sale consist of the following (in thousands):
DECEMBER 31, 2000 JUNE 30, 2000 ------------------------- -------------------------- Auto receivables $1,175,094 $891,672 Less allowance for loan losses (33,350) (24,374) ------------------------- -------------------------- Auto receivables, net 1,141,744 867,298 Mortgage receivables 2,808 4,213 ------------------------- -------------------------- $1,144,552 $871,511 ========================= ==========================
A summary of the allowance for loan losses is as follows (in thousands):
Three Months Ended Six Months Ended December 31, December 31, ------------ ------------ 2000 1999 2000 1999 ------------------------------------------------------------------------ Balance at beginning of period $30,994 $16,712 $24,374 $11,841 Provision for loan losses 7,271 3,756 13,325 7,243 Acquisition fees 32,184 20,785 64,216 42,498 Allowance related to receivables sold to Trusts (33,711) (22,666) (62,342) (41,337) Net charge-offs (3,388) (1,726) (6,223) (3,384) ------------------------------------------------------------------------ Balance at end of period $33,350 $16,861 $33,350 $16,861 ========================================================================
NOTE 3 - CREDIT ENHANCEMENT ASSETS As of December 31, 2000 and June 30, 2000, the Company was servicing $7,050.4 million and $5,758.3 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):
DECEMBER 31, 2000 JUNE 30, 2000 ------------------------- -------------------------- Interest-only receivables from Trusts $237,401 $229,059 Investments in Trust receivables 446,329 341,707 Restricted cash 289,364 253,852 ------------------------- -------------------------- $973,094 $824,618 ========================= ==========================
7 A summary of activity in the credit enhancement assets is as follows (in thousands):
Three Months Ended Six Months Ended December 31, December 31, ------------ ------------ 2000 1999 2000 1999 ------------------------------------------------------------------------ Balance at beginning of period $906,512 $577,532 $824,618 $494,862 Non-cash gain on sale of auto receivables 54,110 47,342 103,546 92,670 Accretion of present value discount 19,742 11,388 39,532 20,165 Initial deposits to restricted cash 27,859 65,000 75,234 92,000 Change in unrealized gain 22,880 6,280 37,233 22,075 Distributions from Trusts (58,009) (22,481) (107,069) (36,711) ------------------------------------------------------------------------ Balance at end of period $973,094 $685,061 $973,094 $685,061 ========================================================================
A summary of the allowance for loan losses included as a component of the interest-only receivables is as follows (in thousands):
Three Months Ended Six Months Ended December 31, December 31, ------------ ------------ 2000 1999 2000 1999 ------------------------------------------------------------------------ Balance at beginning of period $623,743 $400,738 $ 563,102 $354,338 Assumptions for cumulative credit losses 139,949 102,454 263,302 195,406 Net charge-offs (67,838) (50,971) (130,550) (97,523) ------------------------------------------------------------------------ Balance at end of period $695,854 $452,221 $ 695,854 $452,221 ========================================================================
NOTE 4 - WAREHOUSE CREDIT FACILITIES Warehouse credit facilities consist of the following (in thousands):
December 31, 2000 June 30, 2000 ----------------- ------------- Commercial paper facilities $246,315 $483,039 Medium term note facility 500,000 Canadian credit agreement 10,335 4,661 ----------------------- ----------------------- $756,650 $487,700 ======================= =======================
The Company has five separate funding agreements with administrative agents on behalf of institutionally managed commercial paper conduits and bank groups with aggregate structured warehouse financing availability of approximately $2 billion. The first and second commercial paper facilities provide for available structured warehouse financing of $525 million and $275 million, respectively, through September 2001. The third facility provides for available structured warehouse financing of $375 million through March 2001. The fourth and fifth facilities provide for available structured warehouse financing of $500 million and $300 million, respectively, through June 2001. 8 Under these funding agreements, the Company transfers auto receivables to special purpose finance subsidiaries of the Company, and these subsidiaries in turn issue notes, collateralized by such auto receivables, to the agents. The agents provide funding under the notes to the subsidiaries pursuant to an advance formula and the subsidiaries forward the funds to the Company in consideration for the transfer of auto receivables. While these subsidiaries are included in the Company's consolidated financial statements, these subsidiaries are separate legal entities and the auto receivables and other assets held by the subsidiaries are legally owned by these subsidiaries and are not available to creditors of AmeriCredit Corp. or its other subsidiaries. Advances under the funding agreements 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 agents. The funding agreements contain various covenants requiring certain minimum financial ratios and results. The funding agreements also require certain funds to be held in restricted cash accounts to provide additional collateral for borrowings under the facilities. As of December 31, 2000, and June 30, 2000, these restricted cash accounts totaled $6,663,000 and $16,262,000, respectively, and are included in other assets in the consolidated balance sheets. In December 2000, the Company entered into a funding agreement with an administrative agent on behalf of an institutionally managed medium term note conduit. Under this arrangement, the conduit sold medium term notes totaling $500 million and delivered the proceeds to a special purpose finance subsidiary of the Company. This subsidiary in turn issued a $500 million note, collateralized by auto receivables and cash, to the agent. The funding agreement allows for the substitution of auto receivables (subject to an over-collateralization formula) for cash, or vice versa, during the term of the agreement, thus allowing the Company to use the medium term note proceeds to finance auto receivables on a revolving basis through December 2003. While the special purpose finance subsidiary is included in the Company's consolidated financial statements, the subsidiary is a separate legal entity and the auto receivables and other assets held by the subsidiary are legally owned by the subsidiary and are not available to creditors of AmeriCredit Corp. or its other subsidiaries. The note issued by the subsidiary under the funding agreement bears interest at LIBOR plus specified fees. The funding agreement contains various covenants requiring certain minimum financial ratios and results. The funding agreement also requires certain funds to be held in a restricted cash account to provide additional collateral under the note. As of December 31, 2000, this restricted cash account totaled $7,895,000 and is included in other assets in the consolidated balance sheets. The Company's Canadian subsidiary has a convertible revolving term credit agreement with a bank, under which the subsidiary may borrow up to $30 million Cdn., subject to a defined borrowing base. Borrowings under the credit agreement are collateralized by certain Canadian auto receivables and bear interest at the Canadian prime rate. The credit agreement, which expires in March 2001, contains various restrictive covenants requiring certain minimum financial ratios and results. 9 NOTE 5 - CREDIT ENHANCEMENT FACILITY The Company has a credit enhancement facility with a financial institution under which the Company may borrow up to $225 million to fund a portion of the initial restricted cash deposit required in its securitization transactions. Borrowings under the credit enhancement facility are available on a revolving basis through October 2001 and are collateralized by the Company's credit enhancement assets. The facility contains covenants requiring certain asset performance ratios. The Company has alternatively utilized reinsurance arrangements to reduce the initial restricted cash deposit. These reinsurance arrangements do not represent funded debt, and therefore are not recorded as such on the Company's consolidated balance sheets. NOTE 6 - CHARGE FOR CLOSING MORTGAGE OPERATIONS As a result of declining premiums received for the sale of mortgage loans in the secondary markets, during the second quarter ended December 31, 1999, the Company ceased wholesale originations of mortgage loans and closed its mortgage loan production and processing offices. The Company recognized a pre-tax charge of $10.5 million during the three months ended December 31, 1999, related to the closing of the mortgage operations. The charge consists of a $6.6 million write-off of goodwill, $2.0 million of reserves against mortgage receivables held for sale and $1.9 million of severance, facility closing and other costs. Since the goodwill write-off is not deductible for income tax reporting purposes, the charge amounted to approximately $9.0 million after related income tax benefits. Reserves and accrued costs remaining at December 31, 2000, were $1.1 million. NOTE 7 - SUPPLEMENTAL INFORMATION Cash payments for interest costs and income taxes consist of the following (in thousands):
Six Months Ended December 31, ------------ 2000 1999 ------------------------------------------- Interest costs (none capitalized) $55,257 $29,137 Income taxes 31,897 16,799
During the six months ended December 31, 2000 and 1999, the Company entered into capital lease agreements for property and equipment of $1,086,000 and $10,958,000 respectively. NOTE 8 - DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES The Company adopted Statement of Financial Accounting Standards No. 138, Accounting for Certain Derivative Instruments and Hedging Activities - an 10 amendment of FASB Statement No. 133" ("SFAS 138"), on July 1, 2000. Pursuant to SFAS 138, all derivative instruments are recognized as either assets or liabilities in the balance sheet and are measured at fair value. The Company formally documents all relationships between hedging instruments and hedged items, as well as its risk management objective and strategy for undertaking various hedge transactions. Derivative instruments are utilized to manage the gross interest rate spread on the Company's securitization transactions, thereby hedging the estimated future excess cash flows to be received by the Company over the life of the securitization. The Company sells fixed rate auto receivables to Trusts that, in turn, sell either fixed rate or floating rate securities to investors. The interest rates on the floating rate securities issued by the Trusts are indexed to the one-month London Interbank Offered Rates. The Company uses interest rate swap agreements to convert the floating rate exposures on these securities to a fixed rate. The Company monitors the cash flow hedge effectiveness at interim and annual reporting dates. At December 31, 2000, the amount of ineffectiveness related to the interest rate swaps is not considered to be material. The fair value of the interest rate swaps is included in the valuation of interest-only receivables from Trusts in the Company's consolidated balance sheets. Changes in the fair value of the interest rate swaps are generally offset by a change in the fair value of the Company's credit enhancement assets. The Company also utilizes interest rate caps as part of its interest-rate risk-management strategy for securitization transactions as well as for warehouse credit facilities. The purchaser of the interest rate cap pays a premium in return for the right to receive the difference in the interest cost at any time a specified index of market interest rates rises above the stipulated "cap" rate. The interest rate cap purchaser bears no obligation or liability if interest rates fall below the "cap" rate. The Company's special purpose finance subsidiaries are contractually required to purchase interest rate cap agreements as credit enhancement in connection with securitization transactions and warehouse credit facilities. The Company simultaneously sells a corresponding interest rate cap agreement in order to offset the purchased interest rate cap agreement. The fair value of the interest rate cap agreements is included in other assets and accrued taxes and expenses on the Company's consolidated balance sheets. NOTE 9 - 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. 11 The following consolidating financial statement schedules present consolidating financial data 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 using the equity method for purposes of this presentation. 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. 12 AmeriCredit Corp. Consolidating Balance Sheet December 31, 2000 (Unaudited, Dollars in Thousands)
AmeriCredit Non- Corp. Guarantors Guarantors Eliminations Consolidated ----------------- ------------------ ----------------- ------------------ ----------------- ASSETS Cash and cash equivalents $ 40,587 $ 40,587 Receivables held for sale, net 335,153 $ 809,399 1,144,552 Interest-only receivables from Trusts $ 422 236,979 237,401 Investments in Trust receivables 446,329 446,329 Restricted cash 289,364 289,364 Property and equipment, net 349 42,331 42,680 Other assets 11,314 80,564 22,219 114,097 Due (to) from affiliates 654,319 (1,409,498) 755,179 Investment in affiliates 435,764 1,349,879 8,905 $(1,794,548) ----------------- ------------------ ----------------- ------------------ ----------------- Total assets $1,102,168 $ 439,016 $2,568,374 $(1,794,548) $2,315,010 ================= ================== ================= ================== ================= LIABILITIES AND SHAREHOLDERS' EQUITY Liabilities: Warehouse credit facilities $ 10,335 $ 746,315 $ 756,650 Credit enhancement facility 74,840 74,840 Senior notes $ 375,000 375,000 Other notes payable 15,404 15,404 Funding payable 43,820 311 44,131 Accrued taxes and expenses 29,605 74,916 7,508 112,029 Deferred income taxes (149,761) (58,117) 312,914 105,036 ----------------- ------------------ ----------------- ------------------ ----------------- Total liabilities 270,248 70,954 1,141,888 1,483,090 ----------------- ------------------ ----------------- ------------------ ----------------- Shareholders' equity: Common stock 853 30 $ (30) 853 Additional paid-in capital 431,033 40,088 904,498 (944,586) 431,033 Accumulated other comprehensive income 67,702 67,702 (67,702) 67,702 Retained earnings 352,826 327,944 454,286 (782,230) 352,826 ----------------- ------------------ ----------------- ------------------ ----------------- 852,414 368,062 1,426,486 (1,794,548) 852,414 Treasury stock (20,494) (20,494) ----------------- ------------------ ----------------- ------------------ ----------------- Total shareholders' equity 831,920 368,062 1,426,486 (1,794,548) 831,920 ----------------- ------------------ ----------------- ------------------ ----------------- Total liabilities and shareholders' equity $1,102,168 $ 439,016 $2,568,374 $(1,794,548) $2,315,010 ================= ================== ================= ================== =================
13 AmeriCredit Corp. Consolidating Balance Sheet June 30, 2000 (Unaudited, Dollars in Thousands)
AmeriCredit Non- Corp. Guarantors Guarantors Eliminations Consolidated ----------------- ------------------ ----------------- ------------------ ----------------- ASSETS Cash and cash equivalents $ 30,705 $ 12,211 $ 42,916 Receivables held for sale, net 284,851 586,660 871,511 Interest-only receivables from Trusts $ 1,019 228,040 229,059 Investments in Trust receivables 341,707 341,707 Restricted cash 253,852 253,852 Property and equipment, net 349 44,186 44,535 Other assets 11,529 40,781 26,379 78,689 Due (to) from affiliates 675,339 (701,473) 26,134 Investment in affiliates 318,749 632,534 2,641 $(953,924) ----------------- ------------------ ----------------- ------------------ ----------------- Total assets $1,006,985 $ 331,584 $1,477,624 $(953,924) $1,862,269 ================= ================== ================= ================== ================= LIABILITIES AND SHAREHOLDERS' EQUITY Liabilities: Warehouse credit facilities $ 4,661 $ 483,039 $ 487,700 Credit enhancement facility 66,606 66,606 Senior notes $ 375,000 375,000 Other notes payable 19,691 19,691 Funding payable 61,519 145 61,664 Accrued taxes and expenses 14,058 49,837 6,732 70,627 Deferred income taxes (90,343) (60,323) 243,068 92,402 ----------------- ------------------ ----------------- ------------------ ----------------- Total liabilities 318,406 55,694 799,590 1,173,690 ----------------- ------------------ ----------------- ------------------ ----------------- Shareholders' equity: Common stock 837 30 $ (30) 837 Additional paid-in capital 401,979 40,096 267,618 (307,714) 401,979 Accumulated other comprehensive income 44,803 44,803 (44,803) 44,803 Retained earnings 262,111 235,764 365,613 (601,377) 262,111 ----------------- ------------------ ----------------- ------------------ ----------------- 709,730 275,890 678,034 (953,924) 709,730 Treasury stock (21,151) (21,151) ----------------- ------------------ ----------------- ------------------ ----------------- Total shareholders' equity 688,579 275,890 678,034 (953,924) 688,579 ----------------- ------------------ ----------------- ------------------ ----------------- Total liabilities and shareholders' equity $1,006,985 $ 331,584 $1,477,624 $(953,924) $1,862,269 ================= ================== ================= ================== =================
14 AmeriCredit Corp. Consolidating Income Statement Six Months Ended December 31, 2000 (Unaudited, Dollars in Thousands)
AmeriCredit Non- Corp. Guarantors Guarantors Eliminations Consolidated ----------------- ------------------ ----------------- ------------------ ----------------- Revenue Finance charge income $ 41,009 $ 56,486 $ 97,495 Gain on sale of receivables $ (263) 18,611 114,411 132,759 Servicing fee income 119,813 35,543 $ (32,651) 122,705 Other income 22,526 3,912 1,079 (22,526) 4,991 Equity in income of affiliates 92,180 88,673 (180,853) ----------------- ------------------ ----------------- ------------------ ----------------- 114,443 272,018 207,519 (236,030) 357,950 ----------------- ------------------ ----------------- ------------------ ----------------- Costs and expenses Operating expenses 142 172,927 77 (32,651) 140,495 Provision for loan losses 4,054 9,271 13,325 Interest expense 24,503 662 53,987 (22,526) 56,626 ----------------- ------------------ ----------------- ------------------ ----------------- 24,645 177,643 63,335 (55,177) 210,446 ----------------- ------------------ ----------------- ------------------ ----------------- Income before income taxes 89,798 94,375 144,184 (180,853) 147,504 Income tax provision (917) 2,195 55,511 56,789 ----------------- ------------------ ----------------- ------------------ ----------------- Net income $ 90,715 $ 92,180 $ 88,673 $(180,853) $ 90,715 ================= ================== ================= ================== =================
15 AmeriCredit Corp. Consolidating Income Statement Six Months Ended December 31, 1999 (Unaudited, Dollars in Thousands)
AmeriCredit Non- Corp. Guarantors Guarantors Eliminations Consolidated ----------------- ------------------ ----------------- ------------------ ----------------- Revenue Finance charge income $ 36,490 $ 18,504 $ 54,994 Gain on sale of receivables $ (126) 6,684 91,684 98,242 Servicing fee income 73,032 19,273 $ (16,422) 75,883 Other income 22,338 2,386 351 (22,331) 2,744 Equity in income of affiliates 44,781 60,544 (105,325) ----------------- ------------------ ----------------- ------------------ ----------------- 66,993 179,136 129,812 (144,078) 231,863 ----------------- ------------------ ----------------- ------------------ ----------------- Costs and expenses Operating expenses 1,568 121,389 8 (16,422) 106,543 Provision for loan losses 4,087 3,156 7,243 Interest expense 20,397 4,137 28,202 (22,331) 30,405 Charge for closing mortgage operations 10,500 10,500 ----------------- ------------------ ----------------- ------------------ ----------------- 21,965 140,113 31,366 (38,753) 154,691 ----------------- ------------------ ----------------- ------------------ ----------------- Income before income taxes 45,028 39,023 98,446 (105,325) 77,172 Income tax provision 95 (5,758) 37,902 32,239 ----------------- ------------------ ----------------- ------------------ ----------------- Net income $ 44,933 $ 44,781 $ 60,544 $(105,325) $ 44,933 ================= ================== ================= ================== =================
16 AmeriCredit Corp. Consolidating Statement of Cash Flows Six Months Ended December 31, 2000 (Unaudited, Dollars in Thousands)
AmeriCredit Non- Corp. Guarantors Guarantors Eliminations Consolidated ----------------- ------------------ ----------------- ------------------ ----------------- Cash flow from operating activities: Net income $ 90,715 $ 92,180 $ 88,673 $(180,853) $ 90,715 Adjustments to reconcile net income To net cash provided by operating activities: Depreciation and amortization 9,997 9,997 Provision for loan losses 4,054 9,271 13,325 Deferred income taxes (48,101) 2,206 55,512 9,617 Non-cash servicing fee income (39,532) (39,532) Non-cash gain on sale of auto receivables (103,546) (103,546) Distributions from Trusts 107,069 107,069 Equity in income of affiliates (92,180) (88,673) 180,853 Changes in assets and liabilities: Other assets 215 (16,774) 1,925 (14,634) Accrued taxes and expenses 15,547 13,240 776 29,563 ----------------- ------------------ ----------------- ------------------ ----------------- Net cash (used) provided by operating activities (33,804) 16,230 120,148 102,574 ----------------- ------------------ ----------------- ------------------ ----------------- Cash flows from investing activities: Purchase of auto receivables (2,807,219) (2,748,778) 2,748,778 (2,807,219) Principal collections and recoveries on receivables (14,061) 50,858 36,797 Net proceeds from sale of auto receivables 2,748,778 2,466,076 (2,748,778) 2,466,076 Net proceeds from sale of mortgage receivables 447 447 Initial deposits to restricted cash (75,234) (75,234) Net change in credit enhancement facility 8,234 8,234 Purchases of property and equipment (7,056) (7,056) Change in other assets (11,170) 2,235 (8,935) Net change in investment in affiliates (1,936) (628,673) (6,369) 636,978 ----------------- ------------------ ----------------- ------------------ ----------------- Net cash used by investing activities (1,936) (718,954) (302,978) 636,978 (386,890) ----------------- ------------------ ----------------- ------------------ ----------------- Cash flows from financing activities: Net change in warehouse credit facilities 5,674 263,276 268,950 Payments on other notes payable (5,373) (5,373) Proceeds from issuance of common stock 18,410 (7) 636,985 (636,978) 18,410 Net change in due (to) from affiliates 22,703 706,939 (729,642) ----------------- ------------------ ----------------- ------------------ ----------------- Net cash provided by financing activities 35,740 712,606 170,619 (636,978) 281,987 ----------------- ------------------ ----------------- ------------------ ----------------- Net increase (decrease) in cash and cash equivalents 9,882 (12,211) (2,329) Cash and cash equivalents at beginning of period 30,705 12,211 42,916 ----------------- ------------------ ----------------- ------------------ ----------------- Cash and cash equivalents at end of period $ $ 40,587 $ $ $ 40,587 ================= ================== ================= ================== =================
17 AmeriCredit Corp. Consolidating Statement of Cash Flows Six Months Ended December 31, 1999 (Unaudited, Dollars in Thousands)
AmeriCredit Non- Corp. Guarantors Guarantors Eliminations Consolidated ----------------- ------------------ ----------------- ------------------ ----------------- Cash flow from operating activities: Net income $ 44,933 $ 44,781 $ 60,544 $ (105,325) $ 44,933 Adjustments to reconcile net income To net cash provided by operating activities: Non-cash charge for closing mortgage operations 6,566 6,566 Depreciation and amortization 9,357 9,357 Provision for loan losses 4,087 3,156 7,243 Deferred income taxes (24,721) (5,767) 37,902 7,414 Non-cash servicing fee income (20,165) (20,165) Non-cash gain on sale of auto receivables (92,670) (92,670) Distributions from Trusts 36,711 36,711 Equity in income of affiliates (44,781) (60,544) 105,325 Changes in assets and liabilities: Other assets (394) (8,369) (2,501) (11,264) Accrued taxes and expenses 9,459 1,415 1,744 12,618 ----------------- ------------------ ----------------- ------------------ ----------------- Net cash (used) provided by operating activities (15,504) (8,474) 24,721 743 ----------------- ------------------ ----------------- ------------------ ----------------- Cash flows from investing activities: Purchase of auto receivables (2,040,093) (2,084,943) 2,084,943 (2,040,093) Originations of mortgage receivables (108,950) (108,950) Principal collections and recoveries on receivables (4,698) 22,245 17,547 Net proceeds from sale of auto receivables 2,084,943 1,881,645 (2,084,943) 1,881,645 Net proceeds from sale of mortgage receivables 113,660 113,660 Initial deposits to restricted cash (92,000) (92,000) Net change in credit enhancement facility 35,000 35,000 Purchases of property and equipment (5,279) (5,279) Change in other assets 1,214 (6,867) (5,653) Net change in investment in affiliates (1,004) (71,015) (709) 72,728 ----------------- ------------------ ----------------- ------------------ ----------------- Net cash used by investing activities (1,004) (30,218) (245,629) 72,728 (204,123) ----------------- ------------------ ----------------- ------------------ ----------------- Cash flows from financing activities: Net change in warehouse credit facilities (6,934) 248,492 241,558 Payments on other notes payable (5,740) (5,740) Proceeds from issuance of common stock 123,045 1,685 71,043 (72,728) 123,045 Net change in due (to) from affiliates (100,797) 201,903 (101,106) ----------------- ------------------ ----------------- ------------------ ----------------- Net cash provided by financing activities 16,508 196,654 218,429 (72,728) 358,863 ----------------- ------------------ ----------------- ------------------ ----------------- Net increase (decrease) in cash and cash equivalents 157,962 (2,479) 155,483 Cash and cash equivalents at beginning of period 20,246 943 21,189 ----------------- ------------------ ----------------- ------------------ ----------------- Cash and cash equivalents at end of period $ $ 178,208 $ (1,536) $ $ 176,672 ================= ================== ================= ================== =================
18 Item 2. 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 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 credit facilities. The Company 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 the Company's 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 and 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 on the outstanding principal balance of receivables securitized ("serviced receivables"). In November 1996, the Company acquired AmeriCredit Mortgage Services ("AMS"), which originated and sold mortgage loans. Receivables originated in this business are referred to as mortgage receivables. Such receivables were generally packaged and sold for cash on a servicing released whole-loan basis. Deterioration in the wholesale loan markets caused premiums received by AMS for the sale of mortgage loans to decrease. As a result, during October 1999, Company management assessed various options with respect to the operations of AMS and decided to cease the operations of AMS. The AMS wholesale mortgage loan production and processing offices were closed, and the assets of AMS are being liquidated. 19 RESULTS OF OPERATIONS THREE MONTHS ENDED DECEMBER 31, 2000 AS COMPARED TO THREE MONTHS ENDED DECEMBER 31, 1999 REVENUE: The Company's average managed receivables outstanding consisted of the following (in thousands):
Three Months Ended December 31, ------------------------------------------- 2000 1999 --------------------- -------------------- Auto: Held for sale $961,780 $496,578 Serviced 6,894,906 4,542,046 --------------------- -------------------- 7,856,686 5,038,624 Mortgage 3,498 29,949 --------------------- -------------------- $7,860,184 $5,068,573 ===================== ====================
Average managed receivables outstanding increased by 55% as a result of higher loan purchase volume. The Company purchased $1,381.0 million of auto loans during the three months ended December 31, 2000, compared to purchases of $980.9 million during the three months ended December 31, 1999. This growth resulted from loan production at branches open during both periods as well as expansion of the Company's branch network. Loan purchases at branch offices opened prior to December 31, 1998, were 21% higher for the twelve months ended December 31, 2000, versus the twelve months ended December 31, 1999. The Company operated 202 auto lending branch offices as of December 31, 2000, compared to 184 as of December 31, 1999. The average new loan size was $15,307 for the three months ended December 31, 2000, compared to $14,269 for the three months ended December 31, 1999. The average annual percentage rate for loans purchased during the three months ended December 31, 2000, was 19.2%, compared to 18.4% during the three months ended December 31, 1999. The increased annual percentage rate is the result of pricing increases implemented in the third quarter of fiscal 2000 in response to rising short-term interest rates. Finance charge income increased by 90% to $52.1 million for the three months ended December 31, 2000, from $27.5 million for the three months ended December 31, 1999. Finance charge income was higher due primarily to an increase of 94% in average auto receivables held for sale in the three months ended December 31, 2000, versus the three months ended December 31, 1999. The Company's effective yield on its auto receivables held for sale decreased to 21.5% for the three months ended December 31, 2000, from 21.9% for the three months ended December 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 20 earned between the date the auto finance contract is originated by the automobile dealership and the date the auto finance contract is funded by the Company. The gain on sale of receivables rose by 44% to $71.2 million for the three months ended December 31, 2000, from $49.3 million for the three months ended December 31, 1999. The increase in gain on sale of auto receivables resulted from the sale of $1,300.0 million of receivables in the three months ended December 31, 2000, as compared to $1,000.0 million of receivables sold in the three months ended December 31, 1999. The gain as a percentage of the sales proceeds increased to 5.5% for the three months ended December 31, 2000, from 4.9% for the three months ended December 31, 1999, as a result of higher average annual percentage rates received by the Company on new loan purchases. Significant assumptions used in determining the gain on sale of auto receivables and fair value of credit enhancement assets were as follows:
Three Months Ended December 31, ------------------------------------------- 2000 1999 --------------------- -------------------- Cumulative credit losses (including deferred gains) 11.0% 10.9% Discount rate used to estimate present value: Interest-only receivables from Trusts 14.0% 12.0% Investment in Trust receivables 9.8% 7.8% Restricted cash 9.8% 7.8%
The discount rates used to estimate 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. As a result of generally higher market interest rates and wider credit spreads, the Company increased the discount rate used in determining the gain on sale of auto receivables effective for auto receivables sold subsequent to June 1, 2000. The discount rate used to estimate the present value of interest-only receivables from Trusts increased to 14.0% from 12.0% and the discount rate used to estimate the present value of investments in Trust receivables and restricted cash increased to 9.8% from 7.8%. The increased discount rate results only in a difference in the timing of revenue recognition from securitizations and has no effect on the Company's estimate of expected excess cash flows from such transactions. While the total amount of revenue recognized over the term of a securitization transaction is the same, a higher discount rate results in (i) lower initial gains on the sale of receivables and 21 (ii) higher subsequent servicing fee income from accretion of the additional discount. Servicing fee income increased to $63.4 million, or 3.7% of average serviced auto receivables, for the three months ended December 31, 2000, compared to $41.1 million, or 3.6% of average serviced auto receivables, for the three months ended December 31, 1999. 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. The growth in servicing fee income is attributable to the increase in average serviced auto receivables outstanding for the three months ended December 31, 2000, compared to the three months ended December 31, 1999. COSTS AND EXPENSES: Operating expenses as an annualized percentage of average managed receivables outstanding decreased to 3.7% for the three months ended December 31, 2000, compared to 4.2% for the three months ended December 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 $20.3 million, or 38%, primarily due to the addition of auto branch offices and loan processing and servicing staff. The provision for loan losses increased to $7.3 million for the three months ended December 31, 2000, from $3.8 million for the three months ended December 31, 1999, due to higher average amounts of receivables held for sale. As a percentage of average receivables held for sale, the provision for loan losses was 3.0% for the three months ended December 31, 2000 and 1999. Interest expense increased to $29.4 million for the three months ended December 31, 2000, from $16.1 million for the three months ended December 31, 1999, due to higher debt levels. Average debt outstanding was $1,177.9 million and $643.9 million for the three months ended December 31, 2000 and 1999, respectively. The Company's effective rate of interest paid on its debt was 9.9% for the three months ended December 31, 2000 and 1999. The Company's effective income tax rate was 38.5% and 45.5% for the three months ended December 31, 2000 and 1999, respectively. The effective income tax rate was higher for the three months ended December 31, 1999, due to the non-deductible write-off of goodwill from the closing of the mortgage operations. 22 SIX MONTHS ENDED DECEMBER 31, 2000 AS COMPARED TO SIX MONTHS ENDED DECEMBER 31, 1999 REVENUE: The Company's average managed receivables outstanding consisted of the following (in thousands):
Six Months Ended December 31, ------------------------------------------- 2000 1999 --------------------- -------------------- Auto: Held for sale $ 881,232 $ 478,566 Serviced 6,566,758 4,245,948 --------------------- -------------------- 7,447,990 4,724,514 Mortgage 3,755 35,137 --------------------- -------------------- $7,451,745 $4,759,651 ===================== ====================
Average managed receivables outstanding increased by 57% as a result of higher loan purchase volume. The Company purchased $2,787.7 million of auto loans during the six months ended December 31, 2000, compared to purchases of $2,012.7 million during the six months ended December 31, 1999. This growth resulted from loan production at branches open during both periods as well as expansion of the Company's branch network. Loan purchases at branch offices opened prior to December 31, 1998, were 21% higher for the twelve months ended December 31, 2000, versus the twelve months ended December 31, 1999. The Company operated 202 auto lending branch offices as of December 31, 2000, compared to 184 as of December 31, 1999. The average new loan size was $15,195 for the six months ended December 31, 2000, compared to $14,117 for the six months ended December 31, 1999. The average annual percentage rate for loans purchased during the six months ended December 31, 2000, was 19.2%, compared to 18.4% during the six months ended December 31, 1999. The increased annual percentage rate is the result of pricing increases implemented in the third quarter of fiscal 2000 in response to rising short-term interest rates. Finance charge income consisted of the following (in thousands):
Six Months Ended December 31, ------------------------------------------- 2000 1999 --------------------- -------------------- Auto $97,495 $53,937 Mortgage 1,057 --------------------- -------------------- $97,495 $54,994 ===================== ====================
23 The increase in finance charge income is due primarily to an increase of 84% in average auto receivables held for sale in the six months ended December 31, 2000, versus the six months ended December 31, 1999. The Company's effective yield on its auto receivables held for sale decreased to 22.0% for the six months ended December 31, 2000, from 22.4% for the six months ended December 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 auto finance contract is originated by the automobile dealership and the date the auto finance contract is funded by the Company. The gain on sale of receivables consisted of the following (in thousands):
Six Months Ended December 31, ------------------------------------------- 2000 1999 --------------------- -------------------- Auto $132,759 $96,731 Mortgage 1,511 --------------------- -------------------- $132,759 $98,242 ===================== ====================
The increase in gain on sale of auto receivables resulted from the sale of $2,500.0 million of receivables in the six months ended December 31, 2000, as compared to $1,900.0 million of receivables sold in the six months ended December 31, 1999. The gain as a percentage of the sales proceeds increased to 5.3% for the six months ended December 31, 2000, from 5.1% for the six months ended December 31, 1999, as a result of higher average annual percentage rates received by the Company on new loan purchases. Significant assumptions used in determining the gain on sale of auto receivables were as follows:
Six Months Ended December 31, ------------------------------------------- 2000 1999 --------------------- -------------------- Cumulative credit losses (including deferred gains) 10.9% 10.9% Discount rate used to estimate present value: Interest-only receivables from Trusts 14.0% 12.0% Investment in Trust receivables 9.8% 7.8% Restricted cash 9.8% 7.8%
The discount rates used to estimate 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 24 represent assets currently held by the Trustee and are senior to the interest-only receivables for credit enhancement purposes. Servicing fee income increased to $122.7 million, or 3.7% of average serviced auto receivables, for the six months ended December 31, 2000, as compared to $75.9 million, or 3.5% of average serviced auto receivables, for the six months ended December 31, 1999. 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. The growth in servicing fee income is attributable to the increase in average serviced auto receivables outstanding for the six months ended December 31, 2000, compared to the six months ended December 31, 1999. COSTS AND EXPENSES: Operating expenses as an annualized percentage of average managed receivables outstanding decreased to 3.7% (due to the closing of the mortgage business there were no mortgage operating expenses incurred) for the six months ended December 31, 2000, compared to 4.5% (4.4% excluding operating expenses of $2.1 million related to the mortgage business) for the six months ended December 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 $34.0 million, or 32%, primarily due to the addition of auto lending branch offices and management and auto loan processing and servicing staff. The provision for losses increased to $13.3 million for the six months ended December 31, 2000, from $7.2 million for the six months ended December 31, 1999, 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 3.0% for the six months ended December 31, 2000 and 1999. Interest expense increased to $56.6 million for the six months ended December 31, 2000, from $30.4 million for the six months ended December 31, 1999, due to higher debt levels and effective interest rates. Average debt outstanding was $1,099.4 million and $619.6 million for the six months ended December 31, 2000 and 1999, respectively. The Company's effective rate of interest paid on its debt increased to 10.2% from 9.7% as a result of higher short-term market interest rates and fees paid on higher unutilized borrowing capacity under the Company's warehouse credit facilities. The Company's effective income tax rate was 38.5% and 41.8% for the six months ended December 31, 2000 and 1999, respectively. The effective income tax rate was higher for the six months ended December 31, 1999, due to the non-deductible write-off of goodwill from the closing of the mortgage operations. 25 PRO FORMA PORTFOLIO-BASED EARNINGS DATA In addition to reporting results of operations in accordance with generally accepted accounting principles ("GAAP"), the Company has elected to present pro forma results of operations which treat securitization transactions as financings rather than sales of receivables. The Company refers to this presentation as pro forma portfolio-based earnings data. In its consolidated financial statements prepared in accordance with GAAP, the Company records a gain on the sale of receivables in securitization transactions primarily representing the present value of estimated future excess cash flows related to the receivables sold. Future excess cash flows consist of finance charges and fees to be collected on the receivables less interest payable on the asset-backed securities, credit losses and expenses of the Trusts. The Company also earns servicing fees for managing the receivables sold. The pro forma portfolio-based earnings data presents the Company's operating results under the assumption that securitization transactions are financings and no gain on sale or servicing fee income is recognized. Instead, finance charges and fees are recognized over the life of the securitized receivables as accrued and interest and other costs related to the asset-backed securities are also recognized as accrued. Credit losses are recorded as incurred. While the pro forma portfolio-based earnings data does not purport to present the Company's operating results in accordance with GAAP, the Company believes such presentation provides another measure for assessing the Company's performance. The pro forma portfolio-based earnings data were as follows(in thousands, except per share data):
Three Months Ended Six Months Ended December 31, December 31, -------------------------------------------------------------------- 2000 1999 (1) 2000 1999 (1) -------------------------------------------------------------------- Finance charge, fee and other income $386,749 $246,745 $ 742,575 $ 465,070 Funding costs (153,701) (96,579) (296,098) (174,751) -------------------------------------------------------------------- Net margin 233,048 150,166 446,477 290,319 Credit losses (71,226) (52,697) (136,773) (100,907) Operating expenses (73,201) (52,865) (140,495) (106,543) -------------------------------------------------------------------- Pre-tax portfolio-based income 88,621 44,604 169,209 82,869 Income taxes (34,119) (17,173) (65,145) (31,905) -------------------------------------------------------------------- Net portfolio-based income $ 54,502 $ 27,431 $ 104,064 $ 50,964 ==================================================================== Diluted portfolio-based earnings per share $ 0.65 $ 0.35 $ 1.24 $ 0.68 ====================================================================
(1) The pro forma portfolio-based earnings data for the periods ended December 31, 1999, exclude the charge for the closing of the Company's mortgage business. 26 The pro forma return on managed assets for the Company's auto business was as follows:
Three Months Ended Six Months Ended December 31, December 31, ------------------------------------------------------------------------ 2000 1999 2000 1999 ------------------------------------------------------------------------ Finance charge, fee and other income 19.5% 19.4% 19.8% 19.4% Funding costs (7.7) (7.6) (7.9) (7.3) ------------------------------------------------------------------------ Net margin 11.8 11.8 11.9 12.1 Credit losses (3.6) (4.1) (3.6) (4.2) ------------------------------------------------------------------------ Risk adjusted margin 8.2 7.7 8.3 7.9 Operating expenses (3.7) (4.2) (3.7) (4.4) ------------------------------------------------------------------------ Pre-tax return on managed assets 4.5 3.5 4.6 3.5 Income taxes (1.7) (1.3) (1.8) (1.3) ------------------------------------------------------------------------ Return on managed assets 2.8% 2.2% 2.8% 2.2% ========================================================================
CREDIT QUALITY The Company provides financing in relatively high-risk markets, and, therefore, charge-offs are anticipated. The Company records a periodic provision for loan losses as a charge to operations and a related allowance for loan losses in the consolidated balance sheets as a reserve against estimated probable 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 and collects a non-refundable acquisition fee on a non-recourse basis. Such acquisition fees are also recorded in the consolidated balance sheets as an allowance for loan losses. When the Company sells auto receivables to the Trusts, the calculation of the gain on sale of receivables is reduced by an estimate of cumulative credit losses expected over the life of the auto receivables sold. 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, provisions for loan losses and allowance for loan 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. 27 The following table presents certain data related to the receivables portfolio (dollars in thousands):
December 31, 2000 ------------------------------------------------------------------------------------- Held for Sale ----------------------------------------------- Auto Managed Auto Auto Mortgage Total Serviced Portfolio ---------------- ------------- ---------------- ---------------- ----------------- Principal amount of receivables $1,175,094 $2,808 $1,177,902 $7,050,415 $8,225,509 ================ ================= Allowance for loan losses (33,350) (33,350) $(695,854) (a) $(729,204) ---------------- ------------- ---------------- ================ ================= Receivables, net $1,141,744 $2,808 $1,144,552 ================ ============= ================ Number of outstanding contracts 78,348 24 604,365 682,713 ================ ============= ================ ================= Average principal amount of outstanding contract (in dollars) $ 14,998 $117,000 $11,666 $12,048 ================ ============= ================ ================= Allowance for loan losses as a percentage of receivables 2.8% 9.9% 8.9% ================ ================ =================
(a) The allowance for loan losses related to serviced auto receivables is factored into the valuation of interest-only receivables from Trusts in the Company's consolidated balance sheets. The following is a summary of managed auto receivables which are (i) more than 30 days delinquent, but not yet in repossession, and (ii) in repossession (dollars in thousands):
December 31, 2000 December 31, 1999 -------------------------------------- -------------------------------------- Amount Percent Amount Percent --------------------- --------------- --------------------- --------------- Delinquent contracts: 31 to 60 days $642,655 7.8% $402,436 7.6% Greater than 60 days 224,634 2.7 131,486 2.5 --------------------- --------------- --------------------- --------------- 867,289 10.5 533,922 10.1 In repossession 85,422 1.0 48,003 0.9 --------------------- --------------- --------------------- --------------- $952,711 11.5% $581,925 11.0% ===================== =============== ===================== ===============
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 4.9% and 4.8% for the three and six months ended December 31, 2000, respectively, and 4.5% for both the three and six months ended December 31, 1999. 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. 28 The following table presents charge-off data with respect to the Company's managed auto receivables portfolio (dollars in thousands):
Three Months Ended Six Months Ended December 31, December 31, ------------------------------------------------------------------------ 2000 1999 2000 1999 ------------------------------------------------------------------------ Net charge-offs: Held for sale $ 3,388 $ 1,726 $6,223 $3,384 Serviced 67,838 50,971 130,550 97,523 ------------------------------------------------------------------------ $71,226 $52,697 $136,773 $100,907 ======================================================================== Net charge-offs as an annualized percentage of average managed auto receivables outstanding 3.6% 4.1% 3.6% 4.2% ======================================================================== Net recoveries as a percentage of gross repossession charge-offs 50.8% 51.7% 51.6% 53.1% ========================================================================
Delinquency and charge-off ratios 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):
Six Months Ended December 31, ------------------------------------------- 2000 1999 --------------------- -------------------- Operating activities $ 102,574 $ 743 Investing activities (386,890) (204,123) Financing activities 281,987 358,863 --------------------- -------------------- Net (decrease) increase in cash and cash equivalents $ (2,329) $ 155,483 ===================== ====================
The Company's primary sources of cash have been cash flows from operating activities, including cash distributions from the Trusts, borrowings under its warehouse credit facilities, sales of auto receivables to Trusts in securitization transactions, and proceeds from issuance of debt and equity. The Company's primary uses of cash have been purchases of receivables and funding credit enhancement requirements for securitization transactions. The Company required cash of $2,807.2 million and $2,040.1 million for the purchase of auto finance contracts during the six months ended December 31, 2000 and 1999, respectively. These purchases were funded initially utilizing warehouse credit facilities and subsequently through the sale of auto receivables in securitization transactions. 29 The Company has five separate warehouse credit facilities with combined funding capacity of approximately $2.0 billion, which are used to fund domestic auto receivables pending securitization. The first funding agreement is with an administrative agent on behalf of an institutionally managed commercial paper conduit and a bank and provides for up to $500 million of available structured warehouse financing. The facility matures in June 2001. A total of $60.7 million was outstanding under this facility as of December 31, 2000. The second funding agreement is with an administrative agent on behalf of an institutionally managed commercial paper conduit and a bank and provides for up to $300 million of available structured warehouse financing. The facility matures in June 2001. A total of $64.3 million was outstanding under this facility as of December 31, 2000. The third funding agreement is with an administrative agent on behalf of an institutionally managed commercial paper conduit and a group of banks and provides for up to $525 million of available structured warehouse financing. The facility matures in September 2001. A total of $4.9 million was outstanding under this facility as of December 31, 2000. The fourth funding agreement is with an administrative agent on behalf of an institutionally managed commercial paper conduit and a bank and provides for up to $275 million of available structured warehouse financing. The facility matures in September 2001. A total of $99.4 million was outstanding under this facility as of December 31, 2000. The fifth funding agreement is with an administrative agent on behalf of an institutionally managed commercial paper conduit and a bank and provides for up to $375 million of available structured warehouse financing. The facility matures in March 2001. A total of $17.0 million was outstanding under this facility as of December 31, 2000. The Company also has a funding agreement with an administrative agent on behalf of an institutionally managed medium term note conduit under which $500 million of proceeds are available to invest in auto receivables or cash through the term of the agreement. This facility matures in December 2003. The funding agreement allows for the substitution of auto receivables (subject to an over-collateralization formula) for cash, or vice versa, thus allowing the Company to use the proceeds to finance auto receivables on a revolving basis. The Company's Canadian subsidiary has a convertible revolving term credit agreement with a bank that provides for borrowings thereunder of up to $30.0 million Cdn., subject to a defined borrowing base. The Company utilizes this facility to fund Canadian auto lending activities. The facility matures in March 2001. A total of $10.3 million was outstanding under the Canadian facility as of December 31, 2000. 30 As is customary in the Company's industry, the majority of the Company's warehouse 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 was unable to renew these facilities on acceptable terms, there could be a material adverse effect on the Company's financial position, results of operations and liquidity. The Company has completed twenty-four auto receivable securitization transactions through December 31, 2000. The proceeds from the transactions were primarily used to repay borrowings outstanding under the Company's warehouse credit facilities. A summary of these transactions is as follows:
Original Balance at Amount December 31, 2000 Transaction Date (in millions) (in millions) - ------------------------ ----------------------------- -------------------------- --------------------------------- 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 Paid in full 1996-B May 1996 115.9 Paid in full 1996-C August 1996 175.0 Paid in full 1996-D November 1996 200.0 Paid in full 1997-A March 1997 225.0 Paid in full 1997-B May 1997 250.0 $ 25.2 1997-C August 1997 325.0 45.1 1997-D November 1997 400.0 71.5 1998-A February 1998 425.0 93.1 1998-B May 1998 525.0 136.5 1998-C August 1998 575.0 182.4 1998-D November 1998 625.0 228.9 1999-A February 1999 700.0 295.6 1999-B May 1999 1,000.0 499.9 1999-C August 1999 1,000.0 606.4 1999-D October 1999 900.0 595.3 2000-A February 2000 1,300.0 978.0 2000-B May 2000 1,200.0 1,017.6 2000-C August 2000 1,100.0 1,018.6 2000-1 November 2000 495.0 474.1 2000-D November 2000 600.0 592.2 -------------------------- --------------------------------- $12,440.5 $6,860.4 ========================== =================================
31 In connection with securitization transactions, the Company is required to fund certain credit enhancement levels in order to attain specific credit ratings for 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 overcollateralization 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. Although the aggregate amount of excess cash flow does not change, the timing of the Company's receipt of excess cash flow distributions is dependent on the type of structure used. Since November 1997, the Company has employed structures that utilize reinsurance and other alternative credit enhancements. Under these structures, the Company expects to begin to receive excess cash flow distributions approximately 14 to 16 months after receivables are securitized. The reinsurance used to reduce the Company's initial cash deposit in a type of structure described above has typically been arranged by the insurer of the asset-backed securities. As of December 31, 2000, the Company had commitments from the insurer for an additional $385.5 million of reinsurance to reduce initial cash deposits in future securitization transactions. These commitments expire in December 2002. In addition, the Company has a credit enhancement facility with a financial institution under which the Company may borrow up to $225 million to fund a portion of the initial cash deposit in future securitization transactions, similar to the amount covered by the reinsurance described above. Borrowings under the credit enhancement facility, which matures in October 2001, are collateralized by the Company's credit enhancement assets. A total of $74.8 million was outstanding under this facility at December 31, 2000. In November 2000, the Company completed a securitization transaction (2000-1) involving the sale of subordinate asset-backed securities in order to provide credit enhancement for the senior asset-backed securities and protect investors from losses. Each of the Company's previous securitization transactions included the sale of senior asset-backed securities only and the purchase of a financial guarantee insurance policy for the benefit of investors. The subordinate asset-backed securities replace a portion of the Company's initial credit enhancement deposit otherwise required in a securitization transaction in a manner similar to the utilization of reinsurance described in the preceding paragraph. Initial deposits for credit enhancement purposes were $75.2 million ($67.0 million net of borrowings under the credit enhancement facility) and $92.0 million ($57.0 million net of borrowings under the credit enhancement facility) for the six months ended December 31, 2000 and 1999, respectively. Excess cash flows distributed to the Company were $107.1 million and $36.7 million for the six months ended December 31, 2000 and 1999, respectively. 32 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 December 31, 2000, none of the Company's securitizations had default or net loss ratios in excess of the targeted levels. The Company operated 202 auto lending branch offices as of December 31, 2000, and plans to open an additional 15 to 20 branches through the remainder of fiscal 2001 and expand loan production capacity at existing auto lending branch offices where appropriate. While the Company has been able to establish and grow its auto finance business thus far, there can be no assurance that future expansion will be successful due to competitive, regulatory, market, economic or other factors. As of December 31, 2000, the Company had $40.6 million in cash and cash equivalents. The Company also had available borrowing capacity of $267.2 million under its warehouse credit facilities pursuant to the borrowing base requirements of such agreements. The Company believes that its existing capital resources along with expected cash flows from operating activities will be sufficient to fund the Company's liquidity needs, exclusive of the purchase of auto finance contracts, for fiscal 2001. However, the Company anticipates that it will require additional external capital in the form of securitization transactions, renewal and expansion of its existing warehouse credit facilities and implementation of new warehouse credit facilities in order to fund auto loan purchases in fiscal 2001. 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. INTEREST RATE RISK The Company's earnings are affected by changes in interest rates as a result of its dependence upon the issuance of interest-bearing securities and the incurrence of debt to fund its lending activities. Several factors can influence the Company's ability to manage interest rate risk. First, auto finance contracts are purchased at fixed interest rates, while the amounts borrowed under warehouse credit facilities bear interest at variable rates that are subject to frequent adjustment to reflect prevailing market interest rates. Second, the interest rate demanded by investors in securitizations is a function of prevailing market rates for comparable transactions and the general interest rate environment. Because the auto finance contracts purchased by the Company have fixed interest rates, the Company bears the risk of smaller gross interest rate spreads in the event interest rates increase during the period between the date receivables are purchased and the completion and pricing of securitization transactions. The Company utilizes several strategies to minimize the risk of interest rate fluctuations, including the use of derivative financial instruments, the 33 regular sale of auto receivables to the Trusts and pre-funding of securitization transactions. Pre-funding securitizations is the practice of issuing more asset-backed securities than the amount of receivables initially sold to the Trust. The proceeds from the pre-funded portion are held in an escrow account until additional receivables are sold to the Trust in amounts up to the balance of the pre-funded escrow account. In pre-funded securitizations, borrowing costs are locked in with respect to the loans subsequently delivered 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. Derivative financial instruments are utilized 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 either rates on U.S. Treasury Notes with similar average maturities, market interest rate swap spreads for transactions of similar duration, or various London Interbank Offered Rates ("LIBOR"). The interest rates on the floating rate securities issued by the Trusts are indexed to LIBOR. The Company uses Interest Rate Swap agreements to convert the floating rate exposures on these securities to a fixed rate. The Company utilizes these derivative financial instruments to modify its net interest sensitivity to levels deemed appropriate based on the Company's risk tolerance. The Company also utilizes interest rate caps as part of its interest-rate risk-management strategy for securitization transactions as well as for warehouse credit facilities. The purchaser of the interest rate cap pays a premium in return for the right to receive the difference in the interest cost at any time a specified index of market interest rates rises above the stipulated "cap" rate. The interest rate cap purchaser bears no obligation or liability if interest rates fall below the "cap" rate. The Company's special purpose finance subsidiaries are contractually required to purchase interest rate cap agreements as credit enhancement in connection with securitization transactions and warehouse credit facilities. The Company simultaneously sells a corresponding interest rate cap agreement in order to offset the purchased interest rate cap agreement. Management monitors the Company's hedging activities to ensure that the value of hedges, their correlation to the contracts being hedged and the amounts being hedged continue to provide effective protection against interest rate risk. All transactions are entered into for purposes other than trading. There can be no assurance that the Company's 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. 34 CURRENT ACCOUNTING PRONOUNCEMENTS In September 2000, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 140, "Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities, a replacement of Financial Accounting Standards Board Statement No. 125" ("SFAS 140"), which revises the standards for accounting for securitizations and other transfers of financial assets and collateral and requires certain disclosures, but, carries over most of Statement No. 125's provisions without reconsideration. SFAS 140 is effective for transfers and servicing of financial assets and extinguishments of liabilities occurring after March 31, 2001, and is effective for disclosures relating to securitization transactions and collateral and for the recognition and reclassification of collateral for fiscal years ending after December 15, 2000. The Company does not believe that the adoption of this statement will have a material effect on the Company's financial position or results of operations. FORWARD LOOKING STATEMENTS The preceding Management's Discussion and Analysis of Financial Condition and Results of Operations section contains several "forward-looking statements". Forward-looking statements are those which use words such as "believe", "expect", "anticipate", "intend", "plan", "may", "will", "should", "estimate", "continue" or other comparable expressions. These words indicate future events and trends. Forward-looking statements are the Company's current views with respect to future events and financial performance. These forward-looking statements are subject to many risks and uncertainties which could cause actual results to differ significantly from historical results or from those anticipated by the Company. The most significant risks are detailed from time to time in the Company's filings and reports with the Securities and Exchange Commission including the Company's Annual Report on Form 10-K for the year ended June 30, 2000. It is advisable not to place undue reliance on the Company's forward-looking statements. The Company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise. Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK Because 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. Therefore, the Company employs various hedging strategies to minimize the risk of interest rate fluctuations. See "Management's Discussion and Analysis - Interest Rate Risk" for additional information regarding such market risks. 35 Part II. OTHER INFORMATION Item 1. LEGAL PROCEEDINGS As a consumer finance company, the Company is subject to various consumer claims and litigation seeking damages and statutory penalties, based upon, among other things, usury, disclosure inaccuracies, wrongful repossession, fraud and discriminatory treatment of credit applicants, which could take the form of a plaintiffs' class action complaint. The Company, 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. The relief requested by the plaintiffs varies but includes requests for compensatory, statutory and punitive damages. One proceeding in which the Company is a defendant has been brought in the form of a class action complaint. This lawsuit, pending in Superior Court in the State of California, claims that certain loan pricing structures used by the Company and other banks and finance companies violate various California laws. In the opinion of management, this lawsuit is without merit and the Company intends to defend vigorously. Management believes that the Company has taken prudent steps to address the litigation risks associated with the Company's business activities. However, there can be no assurance that the Company will be able to successfully defend against all such claims or that the determination of any such claim in a manner adverse to the Company would not have a material adverse effect on the Company's automobile finance business. On April 8, 1999, a putative class action complaint was filed against the Company and certain of the Company's officers and directors alleging violations of Section 10(b) of the Securities Exchange Act of 1934 arising from the Company's use of the cash-in method of measuring and accounting for credit enhancement assets in the Company's financial statements through the first quarter of fiscal 1999. The United States District Court dismissed this lawsuit in April 2000 and, in November 2000, the United States Court of Appeals for the Fifth Circuit affirmed the dismissal. Consequently, the Company considers this matter to be concluded. In the opinion of management, the resolution of the proceedings described in this section will not have a material adverse effect on the Company's consolidated financial position, liquidity or results of operations. Item 2. CHANGES IN SECURITIES Not Applicable 36 Item 3. DEFAULTS UPON SENIOR SECURITIES Not Applicable Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS On November 7, 2000, the Company held its Annual Meeting of Shareholders. The Shareholders voted upon the election of three directors, the adoption of the 2000 Limited Omnibus Incentive Plan for AmeriCredit Corp. (the "2000 Plan") and the ratification of the appointment of the Company's independent auditors. Each of the three nominees identified in the Company's proxy statement filed pursuant to Rule 14a-b of the Securities Exchange Act of 1934, were elected at the meeting to hold office for a three-year term or until their successors are duly elected and qualified. The shareholders adopted the 2000 Plan, with 37,089,849 shares voting in favor, 28,138,893 shares voting against and 176,638 withheld. The Company's selection of independent auditors was also ratified. Item 5. OTHER INFORMATION Not Applicable Item 6. EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibits: 10.1 Servicing and Custodian Agreement, dated as of December 18, 2000, by and among AmeriCredit MTN Receivables Trust, AmeriCredit Financial Services, Inc., and The Chase Manhattan Bank. 10.2 Security Agreement, dated as of December 18, 2000, by and among AmeriCredit MTN Receivables Trust, AmeriCredit Financial Services, Inc., AmeriCredit MTN Corp., and The Chase Manhattan Bank. 10.3 Master Receivables Purchase Agreement, dated as of December 18, 2000, by and among AmeriCredit MTN Receivables Trust, AmeriCredit Financial Services, Inc., AmeriCredit MTN Corp., and The Chase Manhattan Bank. 11.1 Statement Re: Computation of Per Share Earnings
37 (b) Reports on Form 8-K A report on Form 8-K was filed October 12, 2000, with the Commission to report under Item 5 the Company's earnings for its quarterly period ended September 30, 2000. Certain subsidiaries and affiliates of the Company filed reports on Form 8-K during the quarterly period ended December 31, 2000, reporting monthly information related to securitization trusts. 38 SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. AmeriCredit Corp. ----------------------------- (Registrant) Date: February 14, 2001 By: /s/ Daniel E. Berce ----------------------------- (Signature) Daniel E. Berce Vice Chairman and Chief Financial Officer 39 EX-10.1 2 a2036548zex-10_1.txt EXHIBIT 10.1 SERVICING AND CUSTODIAN AGREEMENT among AMERICREDIT FINANCIAL SERVICES, INC., as Servicer and Custodian, AMERICREDIT MTN RECEIVABLES TRUST, as Debtor, and THE CHASE MANHATTAN BANK, as Collateral Agent dated as of December 18, 2000 TABLE OF CONTENTS ARTICLE I DEFINITIONS......................................................................................2 Section 1.1. Definitions............................................................................2 Section 1.2. Other Definitional Provisions..........................................................5 ARTICLE II ADMINISTRATION AND SERVICING OF RECEIVABLES.....................................................6 Section 2.1. Duties of the Servicer.................................................................6 Section 2.2. Collection of Receivable Payments; Modifications of Receivables; Lock-Box Agreements...7 Section 2.3. Realization upon Receivables...........................................................9 Section 2.4. Insurance.............................................................................10 Section 2.5. Maintenance of Security Interests in Vehicles.........................................11 Section 2.6. Covenants, Representations, and Warranties of Servicer................................12 Section 2.7. Purchase of Receivables Upon Breach of Covenant or Representation and Warranty........14 Section 2.8. Total Servicing Fee; Payment of Certain Expenses by Servicer..........................15 Section 2.9. Servicer's Certificate................................................................15 Section 2.10. Annual Statement as to Compliance, Notice of Servicer Termination Event...............15 Section 2.11. Access to Certain Documentation and Information Regarding Receivables.................16 Section 2.12. Monthly Tape..........................................................................16 Section 2.13. Fidelity Bond and Errors and Omissions Policy.........................................17 ARTICLE III THE SERVICER..................................................................................17 Section 3.1. Liability of Servicer; Indemnities....................................................17 Section 3.2. Merger or Consolidation of, or Assumption of the Obligations of the Servicer..........18 Section 3.3. Limitation on Liability of Servicer and Others........................................19 Section 3.4. Delegation of Duties..................................................................19 Section 3.5. Servicer Not to Resign................................................................20 Section 3.6. Administrative Duties of Servicer.....................................................20 ARTICLE IV SERVICER TERMINATION...........................................................................21 Section 4.1. Servicer Termination Event............................................................21 Section 4.2. Consequences of a Servicer Termination Event..........................................22 Section 4.3. Appointment of Successor..............................................................23 Section 4.4. Notification to Secured Parties.......................................................23 Section 4.5. Waiver of Past Defaults...............................................................23 ARTICLE V THE CUSTODIAN...................................................................................23 Section 5.1. Appointment of Custodian; Acknowledgment of Receipt...................................23 Section 5.2. Maintenance of Records at Office......................................................24 Section 5.3. Duties of Custodian...................................................................24 Section 5.4. Instructions; Authority to Act........................................................25 Section 5.5. Custodian Fee.........................................................................25 Section 5.6. Indemnification by the Custodian......................................................25 Section 5.7. Advice of Counsel.....................................................................26 Section 5.8. Effective Period, Termination, and Amendment; Interpretive and Additional Provisions..26 Section 5.9. Representations, Warranties and Covenants of Custodian................................26 ARTICLE VI MISCELLANEOUS..................................................................................28 Section 6.1. Governing Law.........................................................................28 Section 6.2. Notices...............................................................................28 Section 6.3. Binding Effect........................................................................29 Section 6.4. Severability..........................................................................29 Section 6.5. Separate Counterparts.................................................................30 Section 6.6. Limitation of Liability of Trustee....................................................30 EXHIBITS AND SCHEDULES Exhibit A - Form of Servicer's Certificate Exhibit B Form of Monthly Exception Report Schedule A - Form of Custodian's Acknowledgment
ii THIS SERVICING AND CUSTODIAN AGREEMENT, dated as of December 18, 2000, is between AmeriCredit Financial Services, Inc. ("AMERICREDIT"), as Servicer (in such capacity, the "SERVICER") and as Custodian (in such capacity, the "CUSTODIAN"), AmeriCredit MTN Receivables Trust (the "TRUST") and The Chase Manhattan Bank as Collateral Agent (in such capacity, the "COLLATERAL AGENT"). W I T N E S S E T H WHEREAS, AmeriCredit MTN Receivables Trust (the "TRUST"), AmeriCredit, MBIA Insurance Corporation, as Administrative Agent, and Meridian Funding Company, LLC ("MERIDIAN") have entered into a Note Purchase Agreement, dated as of the date hereof (the "NOTE PURCHASE AGREEMENT"); WHEREAS, the Trust, AmeriCredit, AmeriCredit MTN Corp. ("AMTN") and the Collateral Agent have entered into a Security Agreement dated as of the date hereof (the "SECURITY AGREEMENT"); WHEREAS, AmeriCredit, AmeriCredit MTN Corp., the Collateral Agent, and the Trust have entered into a Master Receivables Purchase Agreement, dated as of the date hereof (the "RECEIVABLES PURCHASE AGREEMENT"), pursuant to which the Sellers (as defined in the Receivables Purchase Agreement) agree to sell, transfer and assign to the Trust all of their right, title and interest in and to the Receivables described in the Schedules of Receivables attached to the Supplements (as defined below); WHEREAS, pursuant to the Receivables Purchase Agreement, the Sellers and the Trust will enter into Supplements to the Receivables Purchase Agreement from time to time (each a "SUPPLEMENT"), whereby the Sellers will sell, transfer and assign to the Trust on the applicable Receivables Transfer Date (as defined in the Receivables Purchase Agreement) all of their right, title and interest in and to Receivables listed on the Schedules of Receivables attached to such Supplements; WHEREAS, pursuant to the Security Agreement, the Trust will pledge to the Collateral Agent for the benefit of the Secured Parties all of its right, title and interest in the Collateral, including, but not limited to, the Receivables and the Other Conveyed Property (as defined in the Receivables Purchase Agreement); WHEREAS, the Servicer is willing to service the Receivables; and WHEREAS, the Collateral Agent wishes to appoint the Custodian to hold the Receivable Files as the custodian on behalf of the Collateral Agent. NOW, THEREFORE, in consideration of the mutual agreements herein contained and of other good and valuable consideration the receipt and adequacy of which are hereby acknowledged, the parties agree as follows: ARTICLE I DEFINITIONS Section 1.1. DEFINITIONS. Whenever used in this Agreement, the following words and phrases shall have the following meanings: "ACCOUNTING DATE" means, with respect to any Settlement Period the last day of such Settlement Period. "AGREEMENT" means this Agreement, as the same may be amended and supplemented from time to time. "AMERICREDIT" means AmeriCredit Financial Services, Inc. "AMOUNT FINANCED" means, with respect to a Receivable, the aggregate amount advanced under such Receivable toward the purchase price of the Financed Vehicle and any related costs, including amounts advanced in respect of accessories, insurance premiums, service and warranty contracts, other items customarily financed as part of retail automobile installment sale contracts or promissory notes, and related costs. "ANNUAL PERCENTAGE RATE" of a Receivable means the annual percentage rate of finance charges or service charges, as stated in the related Contract. "COLLATERAL AGENT" means The Chase Manhattan Bank, in its capacity as Collateral Agent under the Security Agreement. "COLLATERAL INSURANCE" shall have the meaning set forth in Section 2.4(a). "COLLECTION RECORDS" means all manually prepared or computer generated records relating to collection efforts or payment histories with respect to the Receivables. "CRAM DOWN LOSS" means, with respect to a Receivable, if a court of appropriate jurisdiction in a proceeding related to an Insolvency Event shall have issued an order reducing the amount owed on a Receivable or otherwise modifying or restructuring the Scheduled Receivables Payments to be made on a Receivable, an amount equal to (i) the excess of the Outstanding Balance of such Receivable immediately prior to such order over the Outstanding Balance of such Receivable as so reduced and/or (ii) if such court shall have issued an order reducing the effective rate of interest on such Receivable, the excess of the Outstanding Balance of such Receivable immediately prior to such order over the net present value (using as the discount rate the higher of the Annual Percentage Rate on such Receivable or the rate of interest, if any, specified by the court in such order) of the Scheduled Receivables Payments as so modified or restructured. A "Cram Down Loss" shall be deemed to have occurred on the date of issuance of such order. "CUSTODIAN" means AmeriCredit acting as agent for the Collateral Agent and any successor Custodian selected pursuant to Section 4.3(a) hereof. 2 "CUSTODIAN'S ACKNOWLEDGMENT" means an acknowledgment from the Custodian substantially in the form of Schedule A. "DEALER" means a dealer who sold a Financed Vehicle and who originated and assigned the respective Receivable to AmeriCredit under a Dealer Agreement or pursuant to a Dealer Assignment. "DEALER AGREEMENT" means any agreement between a Dealer and AmeriCredit relating to the acquisition of Receivables from a Dealer by AmeriCredit. "DEALER ASSIGNMENT" means, with respect to a Receivable, the executed assignment executed by a Dealer conveying such Receivable to AmeriCredit. "DEALER UNDERWRITING GUIDE" means the underwriting manual used by AmeriCredit in the purchase of Receivables as amended from time to time. "FORCE-PLACED INSURANCE" has the meaning ascribed thereto in Section 2.4 hereof. "INDEPENDENT ACCOUNTANTS" means a firm of nationally recognized independent certified public accountants. "INSOLVENCY EVENT" means, with respect to a specified Person, (a) the filing of a petition against such Person or the entry of a decree or order for relief by a court having jurisdiction in the premises in respect of such Person or any substantial part of its property in an involuntary case under any applicable federal or state bankruptcy, insolvency or other similar law now or hereafter in effect, or appointing a receiver, liquidator, assignee, custodian, trustee, sequestrator, or similar official for such Person or for any substantial part of its property, or ordering the winding-up or liquidation of such Person's affairs, and such petition, decree or order shall remain unstayed and in effect for a period of 60 consecutive days; or (b) the commencement by such Person of a voluntary case under any applicable federal or state bankruptcy, insolvency or other similar law now or hereafter in effect, or the consent by such Person to the entry of an order for relief in an involuntary case under any such law, or the consent by such Person to the appointment of or taking possession by, a receiver, liquidator, assignee, custodian, trustee, sequestrator, or similar official for such Person or for any substantial part of its property, or the making by such Person of any general assignment for the benefit of creditors, or the failure by such Person generally to pay its debts as such debts become due, or the taking of action by such Person in furtherance of any of the foregoing. "INSURANCE ADD-ON AMOUNT" means the premium charged to the Obligor in the event that the Servicer obtains Force-Placed Insurance pursuant to Section 2.4. "INSURANCE POLICY" means, with respect to a Receivable, any insurance policy (including the insurance policies described in Section 2.4 hereof) 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. "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 3 applicable state to a secured party which indicates that the lien of the secured party on the Financed Vehicle is recorded on the original certificate of title. In any jurisdiction in which the original certificate of title is required to be given to the Obligor, the term "Lien Certificate" shall mean only a certificate or notification issued to a secured party. "MONTHLY RECORDS" means all records and data maintained by the Servicer with respect to the Receivables, including the following with respect to each Receivable: the account number; the originating Dealer; Obligor name; Obligor address; Obligor home phone number; Obligor business phone number; original Outstanding Balance; original term; Annual Percentage Rate; current Outstanding Balance; current remaining term; origination date; first payment date; final scheduled payment date; next payment due date; date of most recent payment; new/used classification; collateral description; days currently delinquent; number of contract extensions (months) to date; amount of Scheduled Receivables Payment; current Insurance Policy expiration date; and past due late charges. "NET LIQUIDATION PROCEEDS" means, with respect to a Defaulted Receivable, all amounts realized with respect to such Receivable net of (i) reasonable expenses incurred by the Servicer in connection with the collection of such Receivable and the repossession and disposition of the Financed Vehicle and (ii) amounts that are required to be refunded to the Obligor on such Receivable; PROVIDED, HOWEVER, that the Net Liquidation Proceeds with respect to any Receivable shall in no event be less than zero. "NOTE INSURER" means MBIA Insurance Corporation "OPINION OF COUNSEL" means a written opinion of counsel addressed to and acceptable to the Note Insurer. "PURCHASE AMOUNT" means, with respect to a Receivable, the Outstanding Balance and all accrued and unpaid interest on the Receivable, after giving effect to the receipt of any moneys collected (from whatever source) on such Receivable, if any. "PURCHASED RECEIVABLE" means a Receivable purchased as of the close of business on the last day of a Settlement Period by AmeriCredit pursuant to Section 2.7. "RATING AGENCY" means Moody's and Standard & Poor's. "RECEIVABLE FILES" means the following documents: (i) the fully executed original of the retail installment contract, promissory note, security agreement, or similar document evidencing such Receivable (together with any agreements modifying the Receivable, including without limitation any extension agreements); (ii) the original credit application, or a copy thereof, of each Obligor, fully executed by each such Obligor on AmeriCredit's customary form, or on a form approved by AmeriCredit, for such application; and (iii) the original certificate of title (when received) and otherwise such documents, if any, that AmeriCredit keeps on file in accordance with its customary procedures 4 indicating that the Financed Vehicle is owned by the Obligor and subject to the interest of AmeriCredit as first lienholder or secured party (including any Lien Certificate received by AmeriCredit), or, if such original certificate of title has not yet been received, a copy of the application therefor, showing AmeriCredit as secured party. "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. "RESPONSIBLE OFFICER" means any officer in the corporate trust office of the Trustee or any agent of the Trustee under a power of attorney with direct responsibility for the administration of this Agreement or any of the other Transaction Documents on behalf of the Trustee. "SCHEDULED RECEIVABLES PAYMENT" means, with respect to any Settlement Period for any Receivable, the amount set forth in such Receivable as required to be paid by the Obligor in such Settlement Period. If after the Closing Date, the Obligor's obligation under a Receivable with respect to a Settlement Period has been modified so as to differ from the amount specified in such Receivable as a result of (i) the order of a court in an insolvency proceeding involving the Obligor, (ii) pursuant to the Soldiers' and Sailors' Civil Relief Act of 1940 or (iii) modifications or extensions of the Receivable permitted by Section 2.2(b), the Scheduled Receivables Payment with respect to such Settlement Period shall refer to the Obligor's payment obligation with respect to such Settlement Period as so modified. "SERVICER" means AmeriCredit Financial Services, Inc., as the servicer of the Receivables, and each successor Servicer pursuant to Section 4.3. "SERVICER TERMINATION EVENT" means an event specified in Section 4.1. "SERVICER'S CERTIFICATE" means an Officers' Certificate of the Servicer delivered pursuant to Section 2.9, substantially in the form of Exhibit A. Section 1.2. OTHER DEFINITIONAL PROVISIONS. (a) Capitalized terms used herein and not otherwise defined herein have meanings assigned to them in the Security Agreement or the Note Purchase Agreement. (b) All terms defined in this Agreement shall have the defined meanings when used in any instrument governed hereby and in any certificate or other document made or delivered pursuant hereto unless otherwise defined therein. (c) As used in this Agreement, in any instrument governed hereby and in any certificate or other document made or delivered pursuant hereto or thereto, accounting terms not defined in this Agreement or in any such instrument, certificate or other document, and accounting terms partly defined in this Agreement or in any such instrument, certificate or other document to the extent not defined, shall have the respective meanings given to them under generally accepted accounting principles as in effect on the date of this Agreement or any such instrument, certificate or other document, as applicable. To the extent that the definitions of 5 accounting terms in this Agreement or in any such instrument, certificate or other document are inconsistent with the meanings of such terms under generally accepted accounting principles, the definitions contained in this Agreement or in any such instrument, certificate or other document shall control. (d) The words "hereof," "herein," "hereunder" and words of similar import when used in this Agreement shall refer to this Agreement as a whole and not to any particular provision of this Agreement; Section, Schedule and Exhibit references contained in this Agreement are references to Sections, Schedules and Exhibits in or to this Agreement unless otherwise specified; and the term "including" shall mean "including without limitation." (e) The definitions contained in this Agreement are applicable to the singular as well as the plural forms of such terms and to the masculine as well as to the feminine and neuter genders of such terms. (f) Any agreement, instrument or statute defined or referred to herein or in any instrument or certificate delivered in connection herewith means such agreement, instrument or statute as from time to time amended, modified or supplemented and includes (in the case of agreements or instruments) references to all attachments thereto and instruments incorporated therein; references to a Person are also to its permitted successors and assigns. ARTICLE II ADMINISTRATION AND SERVICING OF RECEIVABLES Section 2.1. DUTIES OF THE SERVICER. (a) The Servicer is hereby authorized to act as agent for the Trust and in such capacity shall manage, service, administer and make collections on the Receivables, and perform the other actions required by the Servicer under this Agreement. The Servicer agrees that its servicing of the Receivables shall be carried out in accordance with customary and usual procedures of institutions which service motor vehicle retail installment sales contracts and, to the extent more exacting, the degree of skill and attention that the Servicer exercises from time to time with respect to all comparable motor vehicle receivables that it services for itself or others. The Servicer's duties shall include, without limitation, collection and posting of all payments, responding to inquiries of Obligors on the Receivables, investigating delinquencies, sending payment coupons to Obligors, reporting any required tax information to Obligors, monitoring the collateral, complying with the terms of the Lock-Box Agreement, accounting for collections and furnishing monthly and annual statements to 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. (b) The Servicer shall also administer and enforce all rights and responsibilities of the holder of the Receivables provided for in the Dealer Agreements and Third Party Loan Purchase Agreements (and shall maintain possession of the Dealer Agreements and Third Party Loan Purchase Agreements, to the extent it is necessary to do so), the Dealer Assignments, Third Party Lender Assignments and the Insurance Policies, to the extent that such Dealer Agreements, Third Party Loan Purchase Agreements, Dealer Assignments, Third Party Lender Assignments 6 and Insurance Policies relate to the Receivables, the Financed Vehicles or the Obligors. The Servicer shall follow its customary standards, policies, and procedures and shall have full power and authority, acting alone, to do any and all things in connection with such managing, servicing, administration and collection that it may deem necessary or desirable. Without limiting the generality of the foregoing, the Servicer is hereby authorized and empowered by the Trust to execute and deliver, on behalf of the Trust, any and all instruments of satisfaction or cancellation, or of partial or full release or discharge, and all other comparable instruments, with respect to the Receivables and with respect to the Financed Vehicles; provided, however, that notwithstanding the foregoing, the Servicer shall not, except pursuant to an order from a court of competent jurisdiction, release an Obligor from payment of any unpaid amount under any Receivable or waive the right to collect the unpaid balance of any Receivable from the Obligor. (c) The Servicer is hereby authorized to commence, in it's own name or in the name of the Trust, a legal proceeding to enforce a Receivable pursuant to Section 2.3 or to commence or participate in any other legal proceeding (including, without limitation, a bankruptcy proceeding) relating to or involving a Receivable, an Obligor or a Financed Vehicle. If the Servicer commences or participates in such a legal proceeding in its own name, the Trust shall thereupon be deemed to have automatically assigned such Receivable to the Servicer solely for purposes of commencing or participating in any such proceeding as a party or claimant, and the Servicer is authorized and empowered by the Trust 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 Collateral Agent shall, in its reasonable discretion, furnish the Servicer with any limited powers of attorney and other documents which the Servicer may reasonably request and which the Servicer deems necessary or appropriate and take any other steps which the Servicer may deem necessary or appropriate to enable the Servicer to carry out its servicing and administrative duties under this Agreement. Section 2.2. COLLECTION OF RECEIVABLE PAYMENTS; MODIFICATIONS OF RECEIVABLES; LOCK-BOX AGREEMENTS. (a) Consistent with the standards, policies and procedures required by this Agreement and the Credit and Collection Policy, the Servicer shall make reasonable efforts to collect all payments called for under the terms and provisions of the Receivables as and when the same shall become due, and shall follow such collection procedures as it follows with respect to all comparable automobile receivables that it services for itself or others and otherwise act with respect to the Receivables, the Dealer Agreements, the Dealer Assignments, the Third Party Loan Purchase Agreements, the Third Party Lender Assignments, the Insurance Policies and the Other Conveyed Property in such manner as will, in the reasonable judgment of the Servicer, maximize the amount to be received by the Trust with respect thereto. The Servicer is authorized in its discretion to waive any prepayment charge, late payment charge or any other similar fees that may be collected in the ordinary course of servicing any Receivable. (b) So long as no Servicer Termination Event shall have occurred and be continuing, and in accordance with the Credit and Collection Policy, the Servicer may at any time agree to a modification or amendment of a Receivable in order to (i) change the Obligor's regular due date to a date within the Settlement Period in which such due date occurs or (ii) re-amortize the Scheduled Receivables Payments on the Receivable following a partial prepayment 7 of principal, in accordance with its customary procedures if the Servicer believes in good faith that such extension, modification or amendment is necessary to avoid a default on such Receivable, will maximize Collections with respect to such Receivable, and is otherwise in the best interests of the Trust. (c) So long as no Servicer Termination Event shall have occurred and be continuing, and in accordance with the Credit and Collection Policy, the Servicer may grant payment extensions on, or other modifications or amendments to, a Receivable (in addition to those modifications permitted by Section 2.2(b)) in accordance with its customary procedures if the Servicer believes in good faith that such extension, modification or amendment is necessary to avoid a default on such Receivable, will maximize Collections with respect to such Receivable, and is otherwise in the best interests of the Trust; PROVIDED, THAT any such amendment, modification or extension shall be delivered by the Servicer to the Custodian promptly after execution thereof. The Servicer shall use its best efforts to notify or direct Obligors to make all payments on the Receivables, whether by check or by direct debit of the Obligor's bank account, to be made directly to one or more Lock-Box Banks, acting as agent for the Collateral Agent, on behalf of the Secured Parties pursuant to a Lock-Box Agreement. The Servicer shall use its best efforts to notify or direct any Lock-Box Bank to deposit all payments on the Receivables in the Lock-Box Account no later than the Business Day after receipt, and to cause all amounts credited to the Lock-Box Account on account of such payments to be transferred to the Collection Account no later than the second Business Day after receipt of such payments. The Lock-Box Account shall be a demand deposit account held by the Lock-Box Bank, or at the request of the Note Insurer, an Eligible Deposit Account. Notwithstanding any Lock-Box Agreement, or any of the provisions of this Agreement relating to the Lock-Box Agreement, the Servicer shall remain obligated and liable to the Trust, the Collateral Agent and Secured Parties for servicing and administering the Receivables and the Other Conveyed Property in accordance with the provisions of this Agreement without diminution of such obligation or liability by virtue thereof. In the event of a termination of the Servicer, the successor Servicer shall assume all of the rights and obligations of the outgoing Servicer under the Lock-Box Agreement subject to the terms hereof. 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 Lock-Box Agreement to the same extent as if such Lock-Box 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 Lock-Box Bank under such Lock-Box Agreement. The outgoing Servicer shall, upon request of the Collateral Agent, but at the expense of the outgoing Servicer, deliver to the successor Servicer all documents and records relating to each such Lock-Box Agreement and an accounting of amounts collected and held by the Lock-Box Bank and otherwise use its best efforts to effect the orderly and efficient transfer of any Lock-Box Agreement to the successor Servicer. In the event that the Note Insurer elects to change the identity of the Lock-Box Bank, the outgoing Servicer, at its expense, shall cause the Lock-Box Bank to deliver, at the direction of the Note Insurer to the Collateral Agent 8 or a successor Lock-Box Bank, all documents and records relating to the Receivables and all amounts held (or thereafter received) by the Lock-Box Bank (together with an accounting of such amounts) and shall otherwise use its best efforts to effect the orderly and efficient transfer of the Lock-Box arrangements and the Servicer shall notify the Obligors to make payments to the Lock-Box established by the successor. (d) The Servicer shall remit all payments by or on behalf of the Obligors received directly by the Servicer to the Lock-Box Bank for deposit into the Lock-Box Account and for transfer to the Collection Account in accordance with Section 2.2(c) here of, in either case, without deposit into any intervening account and as soon as practicable, but in no event later than the Business Day after receipt thereof. Section 2.3. REALIZATION UPON RECEIVABLES. (a) Consistent with the standards, policies and procedures required by this Agreement and the Credit and Collection Policy, the Servicer shall use its best efforts to repossess (or otherwise comparably convert the ownership of) and liquidate any Financed Vehicle securing a Receivable with respect to which the Servicer has determined that payments thereunder are not likely to be resumed, as soon as is practicable after default on such Receivable but in no event later than the date on which all or any portion of a Scheduled Receivables Payment has become 91 days delinquent; PROVIDED, HOWEVER, that the Servicer may elect not to repossess a Financed Vehicle within such time period if in its good faith judgment it determines that the proceeds ultimately recoverable with respect to such Receivable would be increased by forbearance. The Servicer is authorized to follow such customary practices and procedures as it shall deem necessary or advisable, consistent with the standard of care required by Section 2.1, which practices and procedures may include reasonable efforts to realize upon any recourse to Dealers and Third Party Lenders, the sale of the related Financed Vehicle at public or private sale, the submission of claims under an Insurance Policy and other actions by the Servicer in order to realize upon such a Receivable. The foregoing is subject to the provision that, in any case in which the Financed Vehicle shall have suffered damage, the Servicer shall not expend funds in connection with any repair or towards the repossession of such Financed Vehicle unless it shall determine in its reasonable discretion that such repair and/or repossession shall increase the proceeds of liquidation of the related Receivable by an amount greater than the amount of such expenses. All amounts received upon liquidation of a Financed Vehicle shall be remitted by the Servicer to the Collection Account as soon as practicable, but in no event later than the Business Day after receipt thereof. The Servicer shall be entitled to recover all reasonable expenses incurred by it in the course of repossessing and liquidating a Financed Vehicle into cash proceeds, but only out of the cash proceeds of such Financed Vehicle, any deficiency obtained from the Obligor with respect to such Financed Vehicle or any amounts received from the related Dealer and Third Party Lender with respect to such Financed Vehicle, which amounts in reimbursement may be retained by the Servicer to the extent of such expenses. The Servicer shall pay on behalf of the Trust any personal property taxes assessed on repossessed Financed Vehicles. (b) If the Servicer elects to commence a legal proceeding to enforce a Dealer Agreement, Third Party Loan Purchase Agreement, Dealer Assignment or Third Party Lender Assignment, the act of commencement shall be deemed to be an automatic assignment from the 9 Trust to the Servicer of the rights under such Dealer Agreement, Third Party Loan Purchase Agreement, Dealer Assignment and Third Party Lender 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, Third Party Loan Purchase Agreement, Dealer Assignment or Third Party Lender Assignment on the grounds that it is not a real party in interest or a Person entitled to enforce the Dealer Agreement, Third Party Loan Purchase Agreement, Dealer Assignment or Third Party Lender Assignment, the Sellers, at the Sellers' expense, shall take such steps as the Servicer deems reasonably necessary to enforce the Dealer Agreement, Third Party Loan Purchase Agreement, Dealer Assignment or Third Party Lender Assignment, including bringing suit in its name or the name of the Sellers or of the Trust. All amounts recovered in any legal proceeding shall be remitted directly by the Servicer to the Lock-Box Bank as provided in Section 2.2(d). Notwithstanding anything to the contrary contained herein, (i) the Note Insurer may, in its reasonable discretion, direct the Servicer (whether the Servicer is AmeriCredit or any other Person) to commence or settle any legal action to enforce collection of any Receivable or to foreclose upon or repossess any Related Security and (ii) the Servicer shall not make the Collateral Agent or the Secured Parties a party to any litigation without the prior written consent of such Person; provided, however, that in the case of subsection (i) of this sentence, the Servicer may decline or refuse to act on instructions provided by the Note Insurer if, in the reasonable determination of the Servicer, such action is not consistent with any Requirements of Law (as defined in the Note Purchase Agreement) or the Credit and Collection Policy (as defined in the Security Agreement), or could result in legal or regulatory action against the Servicer. Section 2.4. INSURANCE. (a) The Servicer shall require, in accordance with its customary servicing policies and procedures, that each Financed Vehicle be insured by the related Obligor under the Insurance Policies and shall monitor the status of such physical loss and damage insurance coverage thereafter, in accordance with its customary servicing procedures. Each Receivable requires the Obligor to maintain such physical loss and damage insurance, naming AmeriCredit and its successors and assigns as additional insureds, and permits the holder of such Receivable to obtain physical loss and damage insurance at the expense of the Obligor if the Obligor fails to maintain such insurance. If the Servicer shall determine that an Obligor has failed to obtain or maintain a physical loss and damage Insurance Policy covering the related Financed Vehicle (including, without limitation, during the repossession of such Financed Vehicle) the Servicer may enforce the rights of the holder of the Receivable under the Receivable to require the Obligor to obtain such physical loss and damage insurance in accordance with its customary servicing policies and procedures. The Servicer may maintain a vendor's single interest or other collateral protection insurance policy with respect to all Financed Vehicles ("COLLATERAL INSURANCE") which policy shall by its terms insure against physical loss and damage in the event any Obligor fails to maintain physical loss and damage insurance with respect to the related Financed Vehicle. All policies of Collateral Insurance shall be endorsed with clauses providing for loss payable to the Servicer. Costs incurred by the Servicer in maintaining such Collateral Insurance shall be paid by the Servicer. The Servicer will administer the filing of claims under the Insurance Policies. (b) The Servicer may, if an Obligor fails to obtain or maintain a physical loss 10 and damage Insurance Policy, obtain insurance with respect to the related Financed Vehicle and advance on behalf of such Obligor, as required under the terms of the insurance policy, the premiums for such insurance (such insurance being referred to herein as "FORCE-PLACED INSURANCE"). All policies of Force-Placed Insurance shall be endorsed with clauses providing for loss payable to the Servicer. Any cost incurred by the Servicer in maintaining such Force-Placed Insurance shall only be recoverable out of premiums paid by the Obligors or Net Liquidation Proceeds with respect to the Receivable, as provided in Section 2.4(c). (c) In connection with any Force-Placed Insurance obtained hereunder, the Servicer may, in the manner and to the extent permitted by applicable law, require the Obligors to repay the entire premium to the Servicer. In no event shall the Servicer include the amount of the premium in the Amount Financed under the Receivable. For all purposes of this Agreement, the Insurance Add-On Amount with respect to any Receivable having Force-Placed Insurance will be treated as a separate obligation of the Obligor and will not be added to the Outstanding Balance of such Receivable, and amounts allocable thereto will not be available for distribution on the Note. The Servicer shall retain and separately administer the right to receive payments from Obligors with respect to Insurance Add-On Amounts or rebates of Forced-Placed Insurance premiums. If an Obligor makes a payment with respect to a Receivable having Force-Placed Insurance, but the Servicer is unable to determine whether the payment is allocable to the Receivable or to the Insurance Add-On Amount, the payment shall be applied first to any unpaid Scheduled Receivables Payments and then to the Insurance Add-On Amount. Net Liquidation Proceeds on any Receivable will be used first to pay the Outstanding Balance and accrued interest on such Receivable (until reduced to zero) 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 Trust for the Purchase Amount on any subsequent Determination Date. Any such Receivable, and any Receivable with respect to which the Servicer has placed Force-Placed Insurance which has been paid in full (excluding any Insurance Add-On Amounts) will be assigned to the Servicer. (d) The Servicer may sue to enforce or collect upon the Insurance Policies, in its own name, if possible, or as agent of the Trust. If the Servicer elects to commence a legal proceeding to enforce an Insurance Policy, the act of commencement shall be deemed to be an automatic assignment of the rights of the Trust 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 Sellers, at the Sellers' expense, shall take such steps as the Servicer deems necessary to enforce such Insurance Policy, including bringing suit in its name or the name of the Trust. (e) The Servicer will cause itself and may cause the Collateral Agent on behalf of the Secured Parties to be named as named insured under all policies of Collateral Insurance. Section 2.5. MAINTENANCE OF SECURITY INTERESTS IN VEHICLES. (a) Consistent with the policies and procedures required by this Agreement, the 11 Servicer shall take such steps on behalf of the Trust as are necessary to maintain perfection of the security interest created by each Contract in the related Financed Vehicle with respect to each Receivable, including, but not limited to, obtaining the execution by the Obligors and the recording, registering, filing, re-recording, re-filing, and re-registering of all security agreements, financing statements and continuation statements as are necessary to maintain the security interest granted by the Obligors under the respective Contracts. The Servicer shall take all action required under Section 2.1 and 2.6 of the Security Agreement with respect to the notation of Contracts and the marking of records of the Trust. The Collateral Agent hereby authorizes the Servicer, and the Servicer agrees, to take any and all steps necessary to re-perfect such security interest on behalf of the Trust as necessary because of the relocation of a Financed Vehicle or for any other reason. In the event that the assignment of a Receivable to the Trust 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 Trust, the Servicer hereby agrees that AmeriCredit's designation as the secured party on the certificate of title is in its capacity as Servicer as agent of the Trust. (b) Upon the occurrence of a Termination and Amortization Event, the Note Insurer may instruct the Collateral Agent and the Servicer to take or cause to be taken such action as may, in the discretion of the Note Insurer, be necessary to perfect or re-perfect the security interests in the Financed Vehicles securing the Receivables in the name of the Trust by amending the title documents of such Financed Vehicles to name the Collateral Agent on behalf of the Secured Parties as lienholder or by such other reasonable means as may, in the opinion of counsel to the Note Insurer, be necessary or prudent. Any costs associated with such retitling shall be paid by the Servicer and to the extent not so paid, the Note Insurer shall have the option to pay such costs and shall be entitled to reimbursement therefor pursuant to Section 2.3(a)(ix) of the Security Agreement and the Collateral Agent shall not be responsible for any such costs. Section 2.6. COVENANTS, REPRESENTATIONS, AND WARRANTIES OF SERVICER. (a) The Servicer covenants as follows: (i) LIENS IN FORCE. The Financed Vehicle securing each Receivable shall not be released in whole or in part from the security interest granted by the related Contract, except upon payment in full of the Receivable or as otherwise contemplated herein; (ii) NO IMPAIRMENT. The Servicer shall do nothing to impair the rights of the Trust or the Secured Parties in the Receivables, the Dealer Agreements, the Third Party Loan Purchase Agreements, the Dealer Assignments, the Third Party Lender Assignments, the Insurance Policies or the Other Conveyed Property except as otherwise expressly provided herein; (iii) NO AMENDMENTS. The Servicer shall not extend or otherwise amend the terms of any Receivable, except in accordance with Section 2.2; and (iv) RESTRICTIONS ON LIENS. The Servicer shall not (i) create, incur or suffer to exist, or agree to create, incur or suffer to exist, or consent to cause or permit in the future 12 (upon the happening of a contingency or otherwise) the creation, incurrence or existence of any Lien or restriction on transferability of the Receivables except for the Lien in favor of the Collateral Agent for the benefit of the Secured Parties and the restrictions on transferability imposed by this Agreement or (ii) sign or file under the Uniform Commercial Code of any jurisdiction any financing statement which names AmeriCredit or the Servicer as a debtor, or sign any security agreement authorizing any secured party thereunder to file such financing statement, with respect to the Receivables, except in each case any such instrument solely securing the rights and preserving the Lien of the Collateral Agent, for the benefit of the Secured Parties. (b) The Servicer represents and warrants as follows: (i) REPRESENTATIONS AND WARRANTIES. Each Receivable is an Eligible Receivable; (ii) ORGANIZATION AND GOOD STANDING. The Servicer has been duly organized and is validly existing and in good standing under the laws of its jurisdiction of organization, with power, authority and legal right to own its properties and to conduct its business as such properties are currently owned and such business is currently conducted, and had at all relevant times, and now has, all power, authority and legal right required to enter into and perform its obligations under this Agreement and each of the other Transaction Documents to which it is a party; (iii) DUE QUALIFICATION. The Servicer is duly qualified to do business as a foreign corporation, is in good standing and has obtained all necessary licenses and approvals, in all jurisdictions in which the ownership or lease of property or the conduct of its business (including the servicing of the Receivables as required by this Agreement) requires or shall require such qualification; (iv) POWER AND AUTHORITY. The Servicer has the full 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, 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 Servicer by all necessary corporate action; (v) BINDING OBLIGATION. This Agreement and the other Transaction Documents to which the Servicer is a party shall constitute legal, valid and binding obligations of the Servicer enforceable in accordance with their respective terms, except as enforceability may be limited by bankruptcy, insolvency, reorganization, or other similar laws affecting the enforcement of creditors' rights generally and by equitable limitations on the availability of specific remedies, regardless of whether such enforceability is considered in a proceeding in equity or at law; (vi) NO VIOLATION. The consummation of the transactions contemplated by this Agreement and the other Transaction Documents to which the Servicer is a party, and the fulfillment of the terms of this Agreement and the Transaction Documents to which the Servicer is a party, shall not conflict with, result in any breach of any of the terms and 13 provisions of, or constitute (with or without notice or lapse of time) a default under, the articles of incorporation or bylaws of the Servicer, or any indenture, agreement, mortgage, deed of trust or other instrument to which the Servicer is a party or by which it is bound, or result in the creation or imposition of any Lien upon any of its properties pursuant to the terms of any such indenture, agreement, mortgage, deed of trust or other instrument, other than this Agreement, or violate any law, order, rule or regulation applicable to the Servicer of any court or of any federal or state regulatory body, administrative agency or other governmental instrumentality having jurisdiction over the Servicer or any of its properties and do not require any action by or require the consent of or the filing of any notice with any Official Body or other Person; (vii) NO PROCEEDINGS. There are no proceedings or investigations pending or, to the Servicer's knowledge, threatened against the Servicer, before any court, regulatory body, administrative agency or other tribunal or governmental instrumentality having jurisdiction over the Servicer or its properties (A) asserting the invalidity of this Agreement or any of the Transaction Documents, (B) seeking to prevent the consummation of any of the transactions contemplated by this Agreement or any of the Transaction Documents, or (C) seeking any determination or ruling that might materially and adversely affect the performance by the Servicer of its obligations under, or the validity or enforceability of, this Agreement or any of the Transaction Documents or (D) that could have a Material Adverse Effect on the Receivables; and (viii) NO CONSENTS. The Servicer is not required to obtain the consent of any other party or any consent, license, approval or authorization, or registration or declaration with, any governmental authority, bureau or agency in connection with the execution, delivery, performance, validity or enforceability of this Agreement which has not already been obtained. Section 2.7. PURCHASE OF RECEIVABLES UPON BREACH OF COVENANT OR REPRESENTATION AND WARRANTY. Upon discovery by either of the Servicer or a Responsible Officer of the Note Insurer of a breach of any of the covenants set forth in Sections 2.5(a), 2.6(a), 5.1, 5.2, 5.3 or 5.9, the party discovering such breach shall give prompt written notice to all of the parties hereto; PROVIDED, HOWEVER, that the failure to give any such notice shall not affect any obligation of AmeriCredit as Servicer under this Section. As of the second Accounting Date following its discovery or receipt of notice of any breach of any covenant set forth in Sections 2.5(a), 2.6(a), 5.1, 5.2, 5.3 or 5.9 which materially and adversely affects the interests of the Secured Parties in any Receivable (including any Defaulted Receivable) (or, at AmeriCredit's election, the first Accounting Date so following) or the related Financed Vehicle, AmeriCredit shall, unless such breach shall have been cured in all material respects by the last day of the second Settlement Period after such breach, purchase from the Trust the Receivable affected by such breach and, on the related Determination Date, AmeriCredit shall pay the related Purchase Amount to the Trust. It is understood and agreed that the obligation of AmeriCredit to purchase any Receivable (including any Defaulted Receivable) with respect to which such a breach has occurred and is continuing shall, if such obligation is fulfilled, constitute the sole remedy against AmeriCredit for such breach available to the Secured Parties or the Collateral Agent except as otherwise provided in the Insurance Agreement; PROVIDED, HOWEVER, that AmeriCredit shall indemnify the Trust, the Collateral Agent and the Secured Parties from and against all costs, 14 expenses, losses, damages, claims and liabilities, including reasonable fees and expenses of counsel, which may be asserted against or incurred by any of them as a result of third party claims arising out of the events or facts giving rise to such breach. Section 2.8. TOTAL SERVICING FEE; PAYMENT OF CERTAIN EXPENSES BY SERVICER. On each Remittance Date, the Servicer shall to the extent provided in Section 2.3(a) of the Security Agreement be entitled to receive out of the Collection Account the Servicing Fee for the related Settlement Period. The Servicer shall be required to pay all expenses incurred by it in connection with its activities under this Agreement (including taxes imposed on the Servicer, expenses incurred in connection with distributions and reports made by the Servicer to Secured Parties and all other fees and expenses of the Collateral Agent (to the extent such fees and expenses are not paid pursuant to Section 2.3(a) of the Security Agreement), except taxes levied or assessed against the Trust, and claims against the Trust in respect of indemnification, which taxes and claims in respect of indemnification against the Trust are expressly stated to be for the account of AmeriCredit). The Servicer shall be liable for the fees and expenses of the Custodian, the Collateral Agent, the Lock-Box Bank (and any fees under the Lock-Box Agreement) and the Independent Accountants. Section 2.9. SERVICER'S CERTIFICATE. No later than 5 p.m. Eastern time on each Determination Date, the Servicer shall deliver (facsimile delivery being acceptable) to the Trust, the Note Insurer and the Collateral Agent a Servicer's Certificate executed by a Responsible Officer of the Servicer in the form attached hereto as Exhibit A. Receivables purchased by the Servicer or by the Sellers on the related Accounting Date and each Receivable which became a Defaulted Receivable or which was paid in full during the related Settlement Period shall be identified by account number (as set forth in the Schedule of Receivables). In addition to the information set forth in the preceding sentence, the Servicer's Certificate shall also state whether to the knowledge of the Servicer a Termination and Amortization Event or Potential Termination and Amortization Event has occurred. Section 2.10. ANNUAL STATEMENT AS TO COMPLIANCE, NOTICE OF SERVICER TERMINATION EVENT. (a) The Servicer shall deliver to the Note Insurer, the Trust, and the Collateral Agent, on or before September 30 (or 90 days after the end of the Servicer's fiscal year, if other than June 30) of each year, beginning on September 30, 2001, an officer's certificate signed by any Responsible Officer of the Servicer, dated as of June 30 (or other applicable date) of such year, stating that (i) a review of the activities of the Servicer during the preceding 12-month period (or such other period as shall have elapsed from the Closing Date to the date of the first such certificate) and of its performance under this Agreement has been made under such officer's supervision, and (ii) to such officer's knowledge, based on such review, the Servicer has fulfilled all its obligations under this Agreement throughout such period, or, if there has been a default in the fulfillment of any such obligation, specifying each such default known to such officer and the nature and status thereof. (b) The Servicer shall deliver to the Trust, the Note Insurer and the Collateral Agent, promptly after having obtained knowledge thereof, but in no event later than two (2) Business Days thereafter, written notice in an officer's certificate of any event which with the 15 giving of notice or lapse of time, or both, would become a Servicer Termination Event under Section 4.1(a). The Servicer shall, and shall cause the Sellers to, deliver to the Note Insurer, the Collateral Agent and the Servicer promptly after having obtained knowledge thereof, but in no event later than two (2) Business Days thereafter, written notice in an Officer's Certificate of any event which with the giving of notice or lapse of time, or both, would become a Servicer Termination Event under any other clause of Section 4.1. The Servicer shall cause a firm of nationally recognized independent certified public accountants (the "INDEPENDENT ACCOUNTANTS"), who may also render other services to the Servicer, to deliver to the Trustee, the Collateral Agent, the Note Insurer and each Rating Agency, on or before October 31 (or 120 days after the end of the Servicer's fiscal year, if other than June 30) of each year, beginning on October 31, 2001, with respect to the twelve months ended the immediately preceding June 30 (or other applicable date) (or such other period as shall have elapsed from the Closing Date to the date of such certificate (which period shall not be less than six months)), a statement (the "ACCOUNTANTS' REPORT") addressed to the Board of Directors of the Servicer, to the Trustee, the Collateral Agent, and to the Note Insurer, to the effect that such firm has audited the books and records of AmeriCredit Corp., in which the Servicer is included as a consolidated subsidiary, and issued its report thereon in connection with the audit report on the consolidated financial statements of AmeriCredit Corp. and that (1) such audit was made in accordance with generally accepted auditing standards, and accordingly included such tests of the accounting records and such other auditing procedures as such firm considered necessary in the circumstances; (2) the firm is independent of the Servicer within the meaning of the Code of Professional Ethics of the American Institute of Certified Public Accountants, and (3) includes a report on the application of agreed upon procedures to three randomly selected Servicer's Certificates including the delinquency, default and loss statistics required to be specified therein noting whether any exceptions or errors in the Servicer's Certificates were found. Without otherwise limiting the scope of the examination, the Note Insurer may, using generally accepted audit procedures, verify the status of each Receivable and review the Receivable Files and records relating thereto for conformity to the Servicer's Certificates prepared pursuant to Section 2.09 hereof, conformity with the Dealer Underwriting Guide and with the Credit and Collection Policy and compliance with the servicing standards and the Credit and Collection Policy pursuant to this Agreement. Section 2.12. ACCESS TO CERTAIN DOCUMENTATION AND INFORMATION REGARDING RECEIVABLES. The Servicer shall provide to representatives of the Collateral Agent and the Note Insurer reasonable access to the documentation regarding the Receivables. In each case, such access shall be afforded without charge and, provided no Servicer Termination Event or Potential Termination and Amortization Event shall have occurred, only upon reasonable request and during normal business hours. Nothing in this Section shall affect the obligation of the Servicer to observe any applicable law prohibiting disclosure of information regarding the Obligors, and the failure of the Servicer to provide access as provided in this Section as a result of such obligation shall not constitute a breach of this Section. Section 2.13. MONTHLY TAPE. On or before the Remittance Date, the Servicer will deliver to the Collateral Agent and the Note Insurer a computer tape or a diskette (or any other electronic transmission acceptable to the Collateral Agent) in a format acceptable to the Collateral Agent containing the information with respect to the Receivables as of the preceding 16 Accounting Date necessary for preparation of the Servicer's Certificate relating to the immediately preceding Determination Date and necessary to review the application of collections. The Collateral Agent shall use such tape or diskette (or other electronic transmission acceptable to the Collateral Agent) to (i) confirm that the Servicer's Certificate is complete, (ii) confirm that such tape, diskette or other electronic transmission is in readable form, (iii) verify the mathematical accuracy of all calculations contained within the Servicer's Certificate and (iv) calculate and confirm any amounts distributed. The Collateral Agent shall certify to the Note Insurer that it has verified the Servicer's Certificate in accordance with this Section and shall notify the Servicer and the Note Insurer of any discrepancies, in each case, on or before the second Business Day following the Remittance Date. In the event that the Collateral Agent reports any discrepancies, the Servicer and the Collateral Agent shall attempt to reconcile such discrepancies prior to the next succeeding Remittance 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 next succeeding Remittance Date. In the event that the Collateral Agent and the Servicer are unable to reconcile discrepancies with respect to a Servicer's Certificate by the next succeeding Remittance Date, the Servicer shall cause the Independent Accountants, at the Servicer's expense, to audit the Servicer's Certificate and, prior to the last day of the month after the month in which such Servicer's Certificate was delivered, reconcile the discrepancies. The effect, if any, of such reconciliation shall be reflected in the Servicer's Certificate for the next succeeding Remittance Date, and/or the Servicer's Certificate for such next succeeding Determination Date. In addition, upon the occurrence of a Servicer Termination Event the Servicer shall, if so requested by the Note Insurer, deliver to the Collateral Agent its Collection Records and its Monthly Records within 15 days after demand therefor and a computer tape containing as of the close of business on the date of demand all of the data maintained by the Servicer in computer format in connection with servicing the Receivables. Other than the duties specifically set forth in this Agreement, the Collateral Agent shall have no obligations hereunder, including, without limitation, to supervise, verify, monitor or administer the performance of the Servicer. The Collateral Agent shall have no liability for any actions taken or omitted by the Servicer. Section 2.14. FIDELITY BOND AND ERRORS AND OMISSIONS POLICY. The Servicer has obtained, and shall continue to maintain in full force and effect, a fidelity bond and errors and omissions policy of a type and in such amount as is customary for servicers engaged in the business of servicing automobile receivables. ARTICLE III THE SERVICER Section 3.1. LIABILITY OF SERVICER; INDEMNITIES. (a) The Servicer (in its capacity as such) shall be liable hereunder only to the extent of the obligations in this Agreement and the Security Agreement specifically undertaken by the Servicer and the representations made by the Servicer herein and therein. (b) The Servicer shall defend, indemnify and hold harmless the Trust, the Trustee, the Collateral Agent, the Note Insurer, the Secured Parties and their respective officers, 17 directors, agents and employees, from and against any and all costs, expenses, losses, damages, claims and liabilities, including reasonable fees and expenses of counsel and expenses of litigation arising out of or resulting from the use, ownership or operation by the Servicer or any Affiliate thereof of any Financed Vehicle; AmeriCredit shall indemnify, defend and hold harmless the Trust, the Trustee, the Collateral Agent, the Note Insurer, the Secured Parties and their respective officers, directors, agents and employees from and against any taxes that may at any time be asserted against any of such parties with respect to the transactions contemplated in this Agreement, including, without limitation, any sales, gross receipts, tangible or intangible personal property, privilege or license taxes (but not including any federal or other income taxes, including franchise taxes asserted with respect to, and as of the date of, the sale of the Receivables and the Other Conveyed Property to the Trust) and costs and expenses in defending against the same; (c) The Servicer shall indemnify, defend and hold harmless the Trust, the Trustee, and the Collateral Agent, the Secured Parties and their respective officers, directors, agents and employees from and against any and all costs, expenses, losses, claims, damages, and liabilities to the extent that such cost, expense, loss, claim, damage, or liability arose out of, or was imposed upon the Trust, the Trustee, the Collateral Agent or the Secured Parties by reason of the breach of this Agreement by the Servicer, the negligence, misfeasance, or bad faith of the Servicer in the performance of its duties under this Agreement or by reason of reckless disregard of its obligations and duties under this Agreement; (d) AmeriCredit shall indemnify the Collateral Agent, the Trustee and their officers, directors, agents and employees thereof against any and all loss, liability or expense, (other than overhead and expenses incurred in the normal course of business) incurred by each of them in connection with the acceptance or administration of the Trust and the performance of their duties under the Transaction Documents other than if such loss, liability or expense is conclusively determined by a judicial proceeding to have been incurred by the Collateral Agent as a result of any such entity's willful misconduct, bad faith or negligence; and (e) Indemnification under this Article shall survive the termination of the Transaction Documents or the resignation and removal of the Trustee and the Collateral Agent and shall include, without limitation, reasonable fees and expenses of counsel and expenses of litigation. If the Servicer has made any indemnity payments pursuant to this Article and the recipient thereafter collects any of such amounts from others, the recipient shall promptly repay such amounts collected to the Servicer, without interest. Section 3.2. MERGER OR CONSOLIDATION OF, OR ASSUMPTION OF THE OBLIGATIONS OF THE SERVICER. AmeriCredit 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 AmeriCredit's business unless, after the merger, consolidation, conveyance, transfer, lease or succession, the successor or surviving entity shall be capable of fulfilling the duties of AmeriCredit contained in this Agreement and shall be acceptable to the Note Insurer in the Note Insurer's sole discretion. Any corporation (i) into which AmeriCredit may be merged or consolidated, (ii) resulting from any merger or consolidation to which AmeriCredit shall be a party, (iii) which acquires by conveyance, transfer, or lease substantially 18 all of the assets of AmeriCredit, or (iv) succeeding to the business of AmeriCredit, in any of the foregoing cases shall execute an agreement of assumption to perform every obligation of AmeriCredit under this Agreement and, whether or not such assumption agreement is executed, shall be the successor to AmeriCredit 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 AmeriCredit from any obligation. AmeriCredit shall provide notice of any merger, consolidation or succession pursuant to this Section to the Collateral Agent and the Secured Parties. Notwithstanding the foregoing, AmeriCredit shall not merge or consolidate with any other Person or permit any other Person to become a successor to AmeriCredit's business, unless (x) immediately after giving effect to such transaction, no representation or warranty made pursuant to Section 2.6 shall have been breached (for purposes hereof, such representations and warranties shall speak as of the date of the consummation of such transaction) and no Termination and Amortization Event or Potential Termination and Amortization Event shall have occurred and be continuing, (y) AmeriCredit shall have delivered to the Collateral Agent and the Note Insurer an Officer's Certificate and an Opinion of Counsel each stating that such consolidation, merger or succession and such agreement of assumption comply with this Section and that all conditions precedent, if any, provided for in this Agreement relating to such transaction have been complied with, and (z) AmeriCredit shall have delivered to the Collateral Agent and the Note Insurer an Opinion of Counsel, stating in the opinion of such counsel, either (A) all financing statements and continuation statements and amendments thereto have been executed and filed that are necessary to preserve and protect the interest of the Trust in the Receivables and the Other Conveyed Property and reciting the details of the filings or (B) no such action shall be necessary to preserve and protect such interest. Section 3.3. LIMITATION ON LIABILITY OF SERVICER AND OTHERS. None of AmeriCredit nor any of the directors or officers or employees or agents of AmeriCredit shall be under any liability to the Trust or the Secured Parties, 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 AmeriCredit 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; provided further that this provision shall not affect any liability to indemnify the Collateral Agent for costs, taxes, expenses, claims, liabilities, losses or damages paid by the Collateral Agent, in its individual capacity. AmeriCredit and any director, officer, employee or agent of AmeriCredit may rely in good faith on the written advice of counsel selected by it with due care or on any document of any kind prima facie properly executed and submitted by any Person respecting any matters arising under this Agreement. Section 3.4. DELEGATION OF DUTIES. The Servicer may delegate duties under this Agreement to an Affiliate of AmeriCredit with the prior written consent of the Note Insurer. The Servicer also may at any time perform through sub-contractors the specific duties of (i) repossession of Financed Vehicles, (ii) tracking Financed Vehicles' insurance and (iii) pursuing the collection of deficiency balances on certain Defaulted Receivables, in each case, without the consent of the Note Insurer and may perform other specific duties through such sub-contractors in accordance with Servicer's customary servicing policies and procedures, with the prior consent of the Note Insurer; PROVIDED, HOWEVER, that no such delegation or sub-contracting duties by the 19 Servicer shall relieve the Servicer of its responsibility with respect to such duties. Neither AmeriCredit or any party acting as Servicer hereunder shall appoint any subservicer hereunder without the prior written consent of the Note Insurer. Section 3.5. SERVICER NOT TO RESIGN. Subject to the provisions of Section 3.2, the Servicer shall not resign from the obligations and duties imposed on it by this Agreement as Servicer except upon a determination that by reason of a change in legal requirements the performance of its duties under this Agreement would cause it to be in violation of such legal requirements in a manner which would have a material adverse effect on the Servicer and the Note Insurer does not elect to waive the obligations of the Servicer 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 shall be evidenced by an Opinion of Counsel to such effect delivered and acceptable to the Note Insurer. No resignation of the Servicer shall become effective until a successor Servicer that is an eligible servicer as approved by the Note Insurer, shall have assumed the responsibilities and obligations of the Servicer. Section 3.6. ADMINISTRATIVE DUTIES OF SERVICER. (a) DUTIES WITH RESPECT TO THE TRANSACTION DOCUMENTS. The Servicer shall perform the duties of the Debtor under the Transaction Documents. In furtherance of the foregoing, the Servicer shall consult with the Trustee as the Servicer deems appropriate regarding the duties of the Debtor under the Transaction Documents. The Servicer shall monitor the performance of the Debtor and shall advise the Trustee when action is necessary to comply with the Debtor's duties under the Transaction Documents. The Servicer shall prepare for execution by the Trustee or shall cause the preparation by other appropriate Persons of all such documents, reports, filings, instruments, certificates and opinions as it shall be the duty of the Debtor or the Trustee to prepare, file or deliver pursuant to the Transaction Documents. (b) DUTIES WITH RESPECT TO THE DEBTOR. (i) In addition to the duties of the Servicer set forth in this Agreement or any of the Transaction Documents, the Servicer shall perform such calculations and shall prepare, or shall cause the preparation, for execution by the Trustee or other appropriate Persons of all such documents, reports, filings, instruments, certificates and opinions as it shall be the duty of the Debtor to prepare, file or deliver pursuant to state and federal tax and securities laws. The Servicer shall administer, perform or supervise the performance of such other activities in connection with the Debtor as are not covered by any of the foregoing provisions and as are expressly requested by the Trustee and are reasonably within the capability of the Servicer. (ii) Notwithstanding anything in this Agreement or any of the Transaction Documents to the contrary, the Servicer shall be responsible for promptly notifying the Trustee in the event that any withholding tax is imposed on the Debtor's payments (or allocations of income) to a Certificateholder. Any such notice shall be in writing and specify the amount of any withholding tax required to be withheld by the Trustee pursuant to such provision. (c) RECORDS. The Servicer shall maintain appropriate books of account and records relating to services performed under this Agreement and as required by the Transaction 20 Documents, which books of account and records shall be accessible for inspection by the Trustee and the Note Insurer at any time during normal business hours. (d) ADDITIONAL INFORMATION TO BE FURNISHED TO THE TRUSTEE AND THE NOTE INSURER. The Servicer shall furnish to the Trustee from time to time such additional information regarding the Debtor or the Transaction Documents as the Trustee and the Note Insurer shall reasonably request. ARTICLE IV SERVICER TERMINATION Section 4.1. SERVICER TERMINATION EVENT. For purposes of this Agreement, each of the following shall constitute a "Servicer Termination Event": (a) Any failure by the Servicer to deliver to the Collateral Agent for distribution to Secured Parties payment required to be so delivered under the terms of the Transaction Documents; (b) Failure on the part of the Servicer duly to observe or perform in any material respect any covenant or agreement set forth in this Agreement or any other Transaction Document to which it is a party, which failure continues unremedied for a period of 10 days; (c) Any representation, warranty, certification or statement made by the Servicer (including AmeriCredit, if it is the Servicer) or the Trust, any Seller or any Affiliate of the Trust or any Seller (in the event that the Trust, any Seller or such Affiliate is then acting as the Servicer) in this Agreement, the Receivables Purchase Agreement or in any of the other Transaction Documents or in any certificate or report delivered by it pursuant to any of the foregoing shall prove to have been incorrect in any material respect when made or deemed made; (d) The Servicer shall materially modify the Credit and Collection Policy, unless it has given the Note Insurer prompt notification of such modification and the Note Insurer has determined in its reasonable discretion that such modification is not a material adverse change; (e) The occurrence of a Termination and Amortization Event listed in Section 6.1 of the Security Agreement; (f) Any Event of Bankruptcy shall occur with respect to the Servicer or any of its Subsidiaries or Affiliates; (g) There shall have occurred a Material Adverse Effect with respect to the Servicer since the end of the last fiscal year ending prior to the date of its appointment as Servicer hereunder or any other event shall have occurred which, in the commercially reasonable judgment of the Note Insurer, materially and adversely affects the Servicer's ability to either collect the Receivables or to perform under this Agreement; and (h) Failure of the Servicer or any Subsidiary of the Servicer to pay when due 21 any amounts due under any agreement to which any such Person is a party and under which any Indebtedness greater than $5,000,000, in the case of AmeriCredit or any Subsidiary of AmeriCredit (other than the Debtor), is governed; or the default by the Servicer or any Subsidiary of the Servicer in the performance of any term, provision or condition contained in any agreement to which any such Person is a party and under which any Indebtedness owing by the Servicer or any Subsidiary of the Servicer greater than such respective amounts was created or is governed, regardless of whether such event is an "event of default" or "default" under any such agreement; or any Indebtedness owing by the Servicer or any Subsidiary of the Servicer greater than such respective amounts shall be declared to be due and payable or required to be prepaid (other than by a regularly scheduled payment) prior to the date of maturity thereof. Section 4.2. CONSEQUENCES OF A SERVICER TERMINATION EVENT. If a Servicer Termination Event shall occur and be continuing, the Collateral Agent, with the consent of the Note Insurer, by notice given in writing to the Servicer may, or at the direction of the Note Insurer shall, terminate all of the rights and obligations of the Servicer under this Agreement. On or after the receipt by the Servicer of such written notice or upon termination of the term of the Servicer, all authority, power, obligations and responsibilities of the Servicer under this Agreement, whether with respect to the Receivables or the Other Conveyed Property (as defined in the Master Receivables Purchase Agreement) or otherwise, automatically shall pass to, be vested in and become obligations and responsibilities of a successor Servicer acceptable to the Note Insurer); PROVIDED, HOWEVER, that the successor Servicer shall have no liability with respect to any obligation which was required to be performed by the terminated Servicer prior to the date that the successor Servicer becomes the Servicer or any claim of a third party based on any alleged action or inaction of the terminated Servicer. The successor Servicer is authorized and empowered by this Agreement to execute and deliver, on behalf of the terminated Servicer, as attorney-in-fact or otherwise, any and all documents and other instruments and to do or accomplish all other acts or things necessary or appropriate to effect the purposes of such notice of termination, whether to complete the transfer and endorsement of the Receivables and the Other Conveyed Property and related documents to show the Trust as lienholder or secured party on the related Lien Certificates, or otherwise. The terminated Servicer agrees to cooperate with the successor Servicer in effecting the termination of the responsibilities and rights of the terminated Servicer under this Agreement, including, without limitation, the transfer to the successor Servicer for administration by it of all cash amounts that shall at the time be held by the terminated Servicer for deposit, or have been deposited by the terminated Servicer, in the Collection Account or thereafter received with respect to the Receivables and the delivery to the successor Servicer of all Receivable Files, Monthly Records and Collection Records and a computer tape in readable form as of the most recent Business Day containing all information necessary to enable the successor Servicer or a successor Servicer to service the Receivables and the Other Conveyed Property. If requested by the Note Insurer, the successor Servicer shall terminate the Lock-Box Agreement and direct the Obligors to make all payments under the Receivables directly to the successor Servicer (in which event the successor Servicer shall process such payments in accordance with Section 2.2(d)), or to a Lock-Box Account established by the successor Servicer at the direction of the Note Insurer, at the successor Servicer's expense. The terminated Servicer shall grant the Collateral Agent, the successor Servicer and the Note Insurer reasonable access to the terminated Servicer's premises at the terminated Servicer's expense. 22 Section 4.3. APPOINTMENT OF SUCCESSOR. (a) On and after the time the Servicer receives a notice of termination pursuant to Section 4.2, or upon the resignation of the Servicer, the Collateral Agent shall appoint an alternate successor Servicer upon written direction from the Note Insurer, provided that any successor Servicer may not be an Affiliate (as defined in the Security Agreement) of the Note Insurer, who shall be subject to all the rights, responsibilities, restrictions, duties, liabilities and termination provisions relating thereto placed on the Servicer by the terms and provisions of this Agreement except as otherwise stated herein. The Collateral Agent 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 4.2 upon the occurrence of any Servicer Termination Event applicable to it as Servicer. (b) Any successor Servicer shall be entitled to such compensation (whether payable out of the Collection Account or otherwise) as the Servicer would have been entitled to under this Agreement if the Servicer had not resigned or been terminated hereunder. The Collateral Agent and such successor Servicer may agree on additional reasonable compensation to be paid to such successor Servicer. In addition, any successor Servicer shall be entitled to reasonable transition expenses incurred in acting as successor Servicer. Section 4.4. NOTIFICATION TO SECURED PARTIES. Upon any termination of, or appointment of a successor to, the Servicer, the Collateral Agent shall give prompt written notice thereof to each Secured Party. Section 4.5. WAIVER OF PAST DEFAULTS. The Agent may, on behalf of all Secured Parties, waive any default by the Servicer in the performance of its obligations hereunder and its consequences. Upon any such waiver of a past default, such default shall cease to exist, and any Servicer Termination Event arising therefrom shall be deemed to have been remedied for every purpose of this Agreement. No such waiver shall extend to any subsequent or other default or impair any right consequent thereto. ARTICLE V THE CUSTODIAN Section 5.1. APPOINTMENT OF CUSTODIAN; ACKNOWLEDGMENT OF RECEIPT; MONTHLY EXCEPTION REPORTS. Subject to the terms and conditions hereof, the Collateral Agent hereby revocably appoints the Custodian and the Custodian hereby accepts such appointment, as custodian and bailee on behalf of the Collateral Agent (for the benefit of the Secured Parties) to maintain exclusive custody of the Receivable Files relating to the Receivables from time to time held as part of the Collateral; PROVIDED, HOWEVER, that neither the Collateral Agent nor any Secured Party shall be responsible for the acts or omissions of the Custodian. In performing its duties hereunder, the Custodian agrees to act with that degree of care, skill and attention that a commercial bank acting in the capacity of a custodian would exercise with respect to files relating to comparable automotive or other receivables that it services or holds for itself or others, and, in any event, to exercise at least that degree of care, skill and attention that it 23 exercises with respect to its own assets. The Custodian, as of each Receivables Transfer Date with respect to the Receivables sold on such date, hereby acknowledges receipt of the Receivable File for each Receivable listed in the Schedules of Receivables attached to the related Supplement, subject to any exceptions noted on the applicable Custodian's Acknowledgment. As evidence of its acknowledgement of such receipt of such Records, the Custodian shall execute and deliver to the Collateral Agent and the Note Insurer on each Receivables Transfer Date with respect to the Receivables sold on such date, the Custodian's Acknowledgement in the form attached hereto as Schedule A. In addition, the Custodian shall deliver to the Collateral Agent and the Note Insurer a monthly exception report in the form attached as Exhibit B hereto. AmeriCredit shall be required to repurchase the Receivables listed on the monthly exception report pursuant to Section 2.7 hereof, in the event that the related Lien Certificates are indicated as not having been received by the 181st day following the date of origination of the related Receivables. Section 5.2. MAINTENANCE OF RECORDS AT OFFICE. The Custodian agrees to maintain the Receivable Files at 4001 Embarcadero Drive, Arlington, Texas 76014 or at such other office as shall from time to time be identified to the Collateral Agent and the Note Insurer, and the Custodian will hold the Receivable Files in such office on behalf of the Collateral Agent (for the benefit of the Secured Parties), clearly identified on its records as being separate from any other instruments and files, including other instruments and files held by the Custodian, and in compliance with Section 5.3(b) hereof. Section 5.3. DUTIES OF CUSTODIAN. (a) SAFEKEEPING. (i) The Custodian shall hold the Receivable Files on behalf of the Collateral Agent (for the benefit of the Secured Parties) clearly identified as being separate from all other files or records maintained by the Custodian, whether at the same or any other location, and shall maintain such accurate and complete accounts, records or computer systems pertaining to each Receivable File as are required to comply with the terms and conditions of the Note Purchase Agreement. Each Contract shall be stamped on both of the first page and the signature page (if different) in accordance with the requirements of any Opinion of Counsel or as otherwise is deemed necessary or desirable by the Collateral Agent and the Note Insurer. Each Receivable shall be identified on the books and records of the Custodian in an manner that (x) is consistent with the practices of a commercial bank acting in the capacity of custodian with respect to similar receivables, (y) indicates that the Receivables are held by the Custodian on behalf of the Collateral Agent and (z) is otherwise necessary, as reasonably determined by the Custodian, to comply with the terms of this Agreement. The Custodian shall conduct, or cause to be conducted, periodic physical inspections of the Receivable Files held by it under this Agreement, and of the related accounts, records and computer systems, in such a manner as shall enable the Collateral Agent, the Note Insurer and the Custodian to verify the accuracy of the Custodian's inventory and recordkeeping. Such inspections shall be conducted at such times, in such manner and by such persons, including, without limitation, independent accountants, as the Collateral Agent and the Note Insurer may request and the cost of such inspections shall be borne by the Custodian. The Custodian shall promptly report to the Collateral Agent and the Note Insurer any failure on the Custodian's part to hold the Receivable Files and maintain its accounts, records and computer systems as herein provided and the Custodian shall promptly take appropriate action to remedy any such failure. 24 (ii) Notwithstanding the above paragraph (i), upon a Servicer Termination Event, at the direction of the Note Insurer, the Custodian shall deliver the Receivable Files within 30 days of such notice to the Collateral Agent and the Collateral Agent shall hold such Receivable Files on behalf of the Secured Parties. Subject to Section 5.3(c) hereof and the preceding sentence, the Custodian shall at all times maintain the original of the fully executed original retail installment sales contract or promissory note and of the Lien Certificate or application therefore, if no such Lien Certificate has yet been issued, relating to each Receivable in a fire resistant vault. (b) ACCESS TO RECORDS. The Custodian shall, subject only to the Custodian's security requirements applicable to its own employees having access to similar records held by the Custodian, which requirements shall be consistent with the practices of a commercial bank acting in the capacity of custodian with respect to similar files or records, and at such times as may be reasonably imposed by the Custodian, permit only the Secured Parties and the Collateral Agent or their duly authorized representatives, attorneys or auditors to inspect the Receivable Files and the related accounts, records, and computer systems maintained by the Custodian pursuant hereto at such times as any of the Secured Parties or the Collateral Agent may reasonably request. (c) RELEASE OF DOCUMENTS. The Custodian shall release such Receivable Files to the Servicer only (1) upon payment in full of such Receivable or (2) as required from time to time as appropriate for servicing and enforcing any Receivable but, in the case of clause (1) or (2), only as is consistent with the terms of the Note Purchase Agreement and the Security Agreement. (d) ADMINISTRATION; REPORTS. The Custodian shall, in general, attend to all ministerial matters in connection with maintaining custody of the Receivable Files on behalf of the Collateral Agent. In addition, the Custodian shall assist the Collateral Agent or the Servicer, as the case may be, in the preparation of any routine reports to Secured Parties or to regulatory bodies, to the extent necessitated by the Custodian's custody of the Receivable Files. Section 5.4. INSTRUCTIONS; AUTHORITY TO ACT. The Custodian shall be deemed to have received proper instructions with respect to the Receivable Files upon its receipt of written instructions signed by a Responsible Officer of the Collateral Agent. Such instructions may be general or specific in terms. Section 5.5. CUSTODIAN FEE. For its services under this Agreement, the Custodian shall be entitled to reasonable compensation to be paid by the Servicer. Section 5.6. INDEMNIFICATION BY THE CUSTODIAN. The Custodian agrees to indemnify the Secured Parties, the Trust, the Note Insurer, the Trustee and the Collateral Agent for any and all liabilities, obligations, losses, damage, payments, costs or expenses of any kind whatsoever (including the fees and expenses of counsel) that may be imposed on, incurred or asserted against any of the Secured Parties, the Trust, the Note Insurer and/or the Collateral Agent as the result of any act or omission in any way relating to the maintenance and custody by the Custodian of the Receivable Files or any default by the Custodian of its obligations hereunder; PROVIDED, HOWEVER, that the Custodian shall not be liable to any party indemnified 25 hereunder for any portion of any such liabilities, obligations, losses, damages, payments or costs or expenses as are due to the willful misfeasance, bad faith or gross negligence of such indemnified party. Section 5.7. ADVICE OF COUNSEL. The Custodian shall be entitled to rely and act upon advice of counsel selected by it with due care with respect to its performance hereunder as custodian and shall be without liability for any action reasonably taken in good faith pursuant to such advice, provided that such action is not in violation of applicable federal or state law. Section 5.8. EFFECTIVE PERIOD, TERMINATION, AND AMENDMENT; INTERPRETIVE AND ADDITIONAL PROVISIONS. This Agreement shall become effective as of the date hereof and shall continue in full force and effect until terminated as hereinafter provided. This Agreement may be amended at any time by agreement of the Collateral Agent, the Note Insurer and the Custodian and the rights and obligations of the Servicer and the Custodian may be terminated by the Note Insurer following a Termination and Amortization Event; PROVIDED so long as AmeriCredit is Custodian, the Custodian shall not resign from the obligations and duties imposed on it by this Agreement, except upon a determination that by reason of a change in legal requirements, the performance of its duties under this Agreement would cause it to be in violation of such legal requirements in a manner which would have a material adverse effect on it and the Note Insurer does not elect to waive the obligations of the Custodian to perform the duties which render it legally unable to act or to delegate those duties to another Person; PROVIDED, FURTHER, that any such determination permitting the resignation of the Custodian shall be evidenced by an Opinion of Counsel to such effect delivered to the Note Insurer and the Collateral Agent that is acceptable to the Note Insurer. So long as AmeriCredit is serving as Custodian, any termination of AmeriCredit as Servicer under the Note Purchase Agreement or the Security Agreement shall terminate AmeriCredit as Custodian under this Agreement. Immediately after receipt of notice of termination of this Agreement, the Custodian shall deliver the Receivable Files to the Collateral Agent on behalf of the Secured Parties, at such place or places as the Collateral Agent may designate, and the Collateral Agent, or its agent, as the case may be, shall act as custodian for such Records on behalf of the Secured Parties until such times as a successor custodian acceptable to the Note Insurer has been appointed by the Collateral Agent. (For the avoidance of doubt, during any such period, the Collateral Agent shall be acting in its capacity as Collateral Agent, including the standard of care and liability in such capacity, and not as a successor "CUSTODIAN" hereunder.) If, within 30 days after the termination of this Agreement, the Custodian has not delivered the Receivable Files in accordance with the preceding sentence, the Collateral Agent may enter the premises of the Custodian and remove the Receivable Files from such premises. In connection with the administration of this Agreement, the parties may agree from time to time upon the interpretation of the provisions of this Agreement as may in their joint opinion be consistent with the general tenor and purposes of this Agreement, any such interpretation to be signed by all parties and annexed hereto. Section 5.9. REPRESENTATIONS, WARRANTIES AND COVENANTS OF CUSTODIAN. (a) The Custodian hereby represents and warrants to, and covenants with, the Collateral Agent and the Secured Parties that as of the date hereof and as of each Receivables Transfer Date: 26 (i) The Custodian is duly organized, validly existing and in good standing under the laws of the state of its incorporation; (ii) The Custodian has the full power and authority to hold each Receivable File on behalf of the Collateral Agent, and to execute, deliver and perform, and to enter into and consummate all transactions contemplated by this Agreement, has duly authorized the execution, delivery and performance of this Agreement, has duly executed and delivered this Agreement, and this Agreement constitutes a legal, valid and binding obligation of the Custodian, enforceable against it in accordance with its terms, except as enforcement of such terms may be limited by bankruptcy, insolvency or similar laws affecting the enforcement of creditors' rights generally and by the availability of equitable remedies; (iii) The consummation of the transactions contemplated by this Agreement and the Transaction Documents to which the Custodian is a Party, and the fulfillment of the terms of this Agreement and the Transaction Documents to which the Custodian 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 articles of incorporation or bylaws of the Custodian, or any indenture, agreement, mortgage, deed of trust or other instrument to which the Custodian is a party or by which it is bound, or result in the creation or imposition of any Lien upon any of its properties pursuant to the terms of any such indenture, agreement, mortgage, deed of trust or other instrument, other than this Agreement, or violate any law, order, rule or regulation applicable to the Custodian of any court or of any federal or state regulatory body, administrative agency or other governmental instrumentality having jurisdiction over the Custodian or any of its properties and do not require any action by or require the consent of or the filing of any notice with any Official Body or other Person; (iv) There is no litigation pending or, to the Custodian's knowledge, threatened, which if determined adversely to the Custodian, would adversely affect the execution, delivery or enforceability of this Agreement, or any of the duties or obligations of the Custodian thereunder, or which would have a material adverse effect on the financial condition of the Custodian; (v) No consent, approval, authorization or order of any court or governmental agency or body is required for the execution, delivery and performance by the Custodian of or compliance by the Custodian with this Agreement or the consummation of the transactions contemplated hereby or thereby; (vi) Upon written request of the Collateral Agent or the Note Insurer, the Custodian shall take such steps as requested by the Collateral Agent or the Note Insurer to protect or maintain any interest in any Receivable; and (vii) The Custodian has not been notified by any party that any third party claims an interest in the Receivables or is requesting the Custodian to act as a bailee with respect to the Records, except such interests that are created under the Master Receivables Purchase Agreement, the Security Agreement, the Note Purchase Agreement 27 and any Supplement. (b) The Custodian covenants and warrants to the Collateral Agent and each of the Secured Parties that as of the date of each Custodian's Acknowledgment: (i) it holds no adverse interest, by way of security or otherwise, in any Receivable or Receivable File; and (ii) the execution of this Agreement and the creation of the custodial relationship hereunder does not create any interest, by way of security or otherwise, of the Custodian in or to any Receivable or Receivable File, other than the Custodian's rights as custodian hereunder. (c) The Custodian shall, at its own expense, maintain at all times during the existence of this Agreement and keep in full force and effect, a fidelity bond and errors and omissions policy of a type and in such amount as is customary for custodians engaged in the business of acting as custodian of automobile receivables and shall maintain any other similar insurance policies that are customarily maintained by custodians engaged in the business of acting as custodian of automobile receivables. A certificate of the respective insurer as to each such policy or a blanket policy for such coverage shall be furnished to the Collateral Agent and the Note Insurer containing the insurer's statement or endorsement that such insurance shall not terminate prior to receipt by such party, by certified mail, of 10 days advance notice thereof. ARTICLE VI MISCELLANEOUS Section 6.1. GOVERNING LAW. This Agreement shall be governed by and construed in accordance with the laws of the State of New York without giving effect to the conflict of law provisions thereof. Section 6.2. NOTICES. All demands, notices and communications hereunder shall be in writing (including bank wire, telex, telecopy or electronic facsimile transmission or similar writing) and shall be given to the other party at its address or telecopy number set forth below or at such other address or telecopy number as such party may hereafter specify for the purposes of notice to such party. Each such notice or other communication shall be effective (i) if given by telecopy, when such telecopy is transmitted to the telecopy number specified in this Section and confirmation is received, (ii) if given by mail three (3) Business Days following such posting, if postage prepaid, or if sent via U.S. certified or registered mail, (iii) if given by overnight courier, one (1) Business Day after deposit thereof with a national overnight courier service, or (iv) if given by any other means, when received at the address specified in this Section. If to the Trust: AmeriCredit MTN Receivables Trust c/o Bankers Trust (Delaware) E.A. Delle Donne Corporate Center Montgomery Building 1011 Centre Road, Suite 200 Wilmington, Delaware 19805 28 Attention: Corporate Trust Administration Telephone: (302) 636-3305 Telecopy: (302) 636-3222 with a copy to: Bankers Trust Company 4 Albany Street New York, New York 10006 Attention: Asset Backed Finance Unit If to the Servicer or the Custodian: AmeriCredit Financial Services, Inc. 801 Cherry Street Suite 3900 Fort Worth, Texas 76102 Telephone: (817) 302-7022 Telecopy: (817) 302-7942 If to the Note Insurer: MBIA Insurance Corporation 113 King Street Armonk, NY 10504 Telephone: (914) 273-4545 Telecopy: (914) 765-3810 If to the Collateral Agent: The Chase Manhattan Bank 450 W. 33rd Street New York, NY 10001 Attention: AmeriCredit MTN Receivables Trust Telephone: (212) 946-3651 Telecopy: (212) 946 8302 Section 6.3. BINDING EFFECT. This Agreement shall be binding upon and shall inure to the benefit of the parties hereto and their respective successors and assigns. In addition, each of the Secured Parties shall be an express third party beneficiary hereof entitled to enforce the terms hereof as if it were a party hereto. Concurrently with the appointment of a successor Collateral Agent under the Security Agreement, the parties hereto shall amend this Agreement to make said Collateral Agent, the successor to the Collateral Agent hereunder. Section 6.4. SEVERABILITY. Any provision of this Agreement that 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, and any 29 such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction. Section 6.5. SEPARATE COUNTERPARTS. This Agreement may be executed by the parties hereto in separate counterparts, each of which when so executed and delivered shall be an original, but all such counterparts shall together constitute but one and the same instrument. Section 6.6. LIMITATION OF LIABILITY OF 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 Trustee of the Trust, 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 Trust 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 Trust, (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 Trust or be liable for the breach or failure of any obligation, representation, warranty or covenant made or undertaken by the Trust under this Agreement or any other Transaction Documents; provided, however, that no provision of this Agreement shall be construed to relieve the Trustee from liability for its own negligent action, its own negligent failure to act, its action in bad faith or its own willful misconduct. Section 6.7. WAIVERS; AMENDMENT (a) No failure or delay on the part of the Collateral Agent, the Note Insurer, the Note Insurer or any of the Secured Parties 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 further exercise thereof or the exercise of any other power, right or remedy. The rights and remedies herein provided shall be cumulative and nonexclusive of any rights or remedies provided by law. (b) Any provision of this Agreement or any of the Transaction Documents may be amended or waived if, but only if, such amendment is in writing and is signed by the Debtor, the Collateral Agent, the Custodian, the Servicer and the Purchaser and the Note Insurer. Section 6.8. NONPETITION COVENANTS. None of the parties shall petition or otherwise invoke the process of any court or government authority for the purpose of commencing or sustaining a case against the Debtor, AMTN or Purchaser 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 Debtor, AMTN or the Purchaser (as defined in the Note Purchase Agreement) or any substantial part of their respective property, or ordering the winding up or liquidation of the affairs of the Debtor, AMTN and the Purchaser. This Section 6.8 shall be continuing and shall survive any termination of this Agreement. Notwithstanding anything else herein to the contrary, in no event shall the 30 Collateral Agent be liable for any servicing fee or for any differential in the amount of the servicing fee paid hereunder and the amount necessary to induce any successor Servicer to act as successor Servicer under this Agreement and the transactions set forth or provided for herein. 31 IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to be executed in its name and on its behalf by a duly authorized officer on the day and year first above written. THE CHASE MANHATTAN BANK solely in its capacity as Collateral Agent By: ---------------------------------------- Name: Title: AMERICREDIT FINANCIAL SERVICES, INC., as Servicer and Custodian By: ---------------------------------------- Name: Title: AMERICREDIT MTN RECEIVABLES TRUST By: BANKERS TRUST (DELAWARE), not in its individual capacity but solely as Trustee By: ---------------------------------------- Name: Title: [Servicing and Custodian Agreement] 32 SCHEDULE A FORM OF CUSTODIAN'S ACKNOWLEDGMENT AmeriCredit Financial Services, Inc. (the "CUSTODIAN"), acting as Custodian under a Servicing and Custodian Agreement, dated as of December 18, 2000 (the "Servicing and Custodian Agreement"), between the Custodian, AmeriCredit MTN Receivables Trust, as Debtor, and The Chase Manhattan Bank, as Collateral Agent, pursuant to which the Custodian holds on behalf of the Secured Parties certain Receivable Files (as defined in the Servicing and Custodian Agreement), hereby acknowledges receipt of the Receivable File for each Receivable listed in the Schedules of Receivables attached as Exhibits to the Supplements to the Receivables Purchase Agreement, dated [INSERT DATE OF THE RELEVANT SUPPLEMENT], except as noted in the Exception List attached as Schedule I hereto. IN WITNESS WHEREOF, AmeriCredit Financial Services, Inc., has caused this acknowledgment to be executed by its duly authorized officer as of this [____] day of [___________], [_____]. AMERICREDIT FINANCIAL SERVICES, INC. as Custodian By: ---------------------------------------- Name: Title: i EX-10.2 3 a2036548zex-10_2.txt EXHIBIT 10.2 ================================================================================ SECURITY AGREEMENT among AMERICREDIT MTN RECEIVABLES TRUST, as the Debtor AMERICREDIT FINANCIAL SERVICES, INC., Individually and as the Servicer AMERICREDIT MTN CORP., Individually and THE CHASE MANHATTAN BANK as the Collateral Agent and as the Securities Intermediary Dated as of December 18, 2000 ================================================================================ TABLE OF CONTENTS
Page ---- ARTICLE I DEFINITIONS; THE NOTE................................................................................1 SECTION 1.1. Certain Defined Terms.......................................................................1 SECTION 1.2. Other Terms................................................................................30 SECTION 1.3. Computation of Time Periods................................................................30 SECTION 1.4. Form of Notes..............................................................................30 SECTION 1.5. Execution, Authentication and Delivery.....................................................30 SECTION 1.6. Registration; Registration of Transfer and Exchange........................................31 SECTION 1.7. Mutilated, Destroyed, Lost or Stolen Notes.................................................32 SECTION 1.8. Persons Deemed Owner.......................................................................33 SECTION 1.9. Cancellation...............................................................................33 SECTION 1.10. Maintenance of Office or Agency............................................................33 ARTICLE II GRANT OF SECURITY INTEREST AND SETTLEMENTS.........................................................34 SECTION 2.1. Grant of Security Interest.................................................................34 SECTION 2.2. Note Interest, Premium Amounts, Fees and Other Costs and Expenses..........................34 SECTION 2.3. Monthly Flow of Funds......................................................................35 SECTION 2.4. Prepayments. On each Payment Date the Collateral Agent shall apply an amount on deposit in the Collection Account, to the extent of the Prepayment Amount, as directed by the Servicer as follows:.......................................................37 SECTION 2.5. Liquidation Settlement Procedures..........................................................37 SECTION 2.6. Protection of Interest of the Collateral Agent.............................................37 SECTION 2.7. Deemed Collections; Application of Payments................................................39 SECTION 2.8. Payments and Computations, Etc.............................................................39 SECTION 2.9. Reports....................................................................................40 SECTION 2.10. Collection Account.........................................................................40 SECTION 2.11. Funding Account............................................................................41 SECTION 2.12. Yield Supplement Account; Withdrawals; Releases............................................43 SECTION 2.13. [Intentionally Omitted]....................................................................45 SECTION 2.14. [Intentionally Omitted]....................................................................45 SECTION 2.15. Reserve Account; Withdrawals; Releases.....................................................45 SECTION 2.16. Optional Release...........................................................................46 SECTION 2.17. Delivery of Collateral. With respect to the Collateral, the Debtor and the Collateral Agent hereby agree that:........................................................47 ARTICLE III REPRESENTATIONS AND WARRANTIES....................................................................48 SECTION 3.1. Representations and Warranties of the Debtor, AmeriCredit and AMTN.........................48 SECTION 3.2. Representations and Warranties of the Servicer.............................................51 ARTICLE IV CONDITIONS PRECEDENT...............................................................................53 SECTION 4.1. Conditions to Closing......................................................................53 ARTICLE V COVENANTS ..........................................................................................56 SECTION 5.1. Affirmative Covenants of the Debtor and AmeriCredit........................................56 SECTION 5.2. Negative Covenants of Debtor, AMTN and AmeriCredit.........................................60 SECTION 5.3. Hedging Arrangements.......................................................................63 SECTION 5.4. Affirmative Covenants of the Servicer......................................................64 SECTION 5.5. Negative Covenants of the Servicer.........................................................65 ARTICLE VI TERMINATION AND AMORTIZATION EVENTS; OPTIONAL TERMINATION..........................................66 SECTION 6.1. Termination and Amortization Events........................................................66 i SECTION 6.2. Termination................................................................................70 SECTION 6.3. Optional Redemption of Note................................................................70 SECTION 6.4. Optional Purchase of All Receivables.......................................................70 SECTION 6.5. Proceeds...................................................................................71 ARTICLE VII THE COLLATERAL AGENT..............................................................................71 SECTION 7.1. Duties of the Collateral Agent.............................................................71 SECTION 7.2. Compensation and Indemnification of Collateral Agent.......................................72 SECTION 7.3. [Intentionally Omitted]....................................................................72 SECTION 7.4. Liability of the Collateral Agent..........................................................72 SECTION 7.5. [Intentionally Omitted]....................................................................75 SECTION 7.6. Limitation on Liability of the Collateral Agent and Others.................................75 ARTICLE VIII THE SECURITIES INTERMEDIARY......................................................................75 SECTION 8.1. Duties of the Securities Intermediary......................................................75 SECTION 8.2. Representations, Warranties and Covenants of the Securities Intermediary...................75 SECTION 8.3. Governing Law for Certain Securities Intermediary Matters..................................76 ARTICLE IX MISCELLANEOUS......................................................................................77 SECTION 9.1. Term of Agreement..........................................................................77 SECTION 9.2. Waivers; Amendments........................................................................77 SECTION 9.3. Notices....................................................................................77 SECTION 9.4. Governing Law; Submission to Jurisdiction; Waiver of Jury Trial; Integration; Appointment of Agent for Service of Process................................................80 SECTION 9.5. Counterparts; Severability.................................................................80 SECTION 9.6. Successors and Assigns.....................................................................81 SECTION 9.7. Waiver of Confidentiality..................................................................81 SECTION 9.8. Confidentiality Agreement..................................................................81 SECTION 9.9. No Bankruptcy Petition Against the Purchaser, AMTN, or the Debtor..........................81 SECTION 9.10. Further Assurances.........................................................................81 SECTION 9.11. Characterization of the Transactions Contemplated by the Agreement; Tax Treatment..........82 SECTION 9.12. Responsibilities of the Debtor.............................................................82 SECTION 9.13. Headings...................................................................................82 SECTION 9.14. Limitation on Liability....................................................................82 SECTION 9.15. Binding Effect.............................................................................83 SECTION 9.16. Effect of Note Insurer Default.............................................................83
ii EXHIBITS EXHIBIT A List of Lock-Box Banks and Lock-Box Accounts EXHIBIT B Form of Lock-Box Agreement EXHIBIT C Form of Note EXHIBIT D Form of Investor Representation Letter EXHIBIT E List of Actions and Suits EXHIBIT F Schedule of Locations of Records EXHIBIT G List of Subsidiaries, Divisions and Tradenames EXHIBIT H Intentionally Omitted EXHIBIT I Form of Secretary's Certificate EXHIBIT J [Intentionally Omitted] EXHIBIT K Form of Take-Out Notice EXHIBIT L Form of Delivery Notice EXHIBIT M Cumulative Net Loss Ratio Table EXHIBIT N Delinquency Ratio Table EXHIBIT O Default Ratio Table EXHIBIT P Collateral Agent's Fee Schedule EXHIBIT Q Trustee's Fee Schedule iii SECURITY AGREEMENT SECURITY AGREEMENT (as amended, supplemented or otherwise modified from time to time, this "AGREEMENT"), dated as of December 18, 2000, by and among AMERICREDIT MTN RECEIVABLES TRUST, a Delaware business trust, as debtor (in such capacity, the "DEBTOR"), AMERICREDIT FINANCIAL SERVICES, INC., a Delaware corporation ("AMERICREDIT"), individually and in its capacity as Servicer (in such capacity, the "SERVICER"), AMERICREDIT MTN CORP., a Delaware limited liability company ("AMTN"), individually, and THE CHASE MANHATTAN BANK, a New York banking corporation ("The Chase Manhattan Bank"), individually and as collateral agent for the Secured Parties (in such capacity, the "COLLATERAL AGENT") and as securities intermediary (in such capacity, the "SECURITIES INTERMEDIARY"). PRELIMINARY STATEMENTS WHEREAS, subject to the terms and conditions of this Agreement, the Debtor desires to grant a security interest in and to the Receivables and related property including the Debtor's interest in certain retail automotive installment sales contracts and loans or promissory notes secured by automobiles; WHEREAS, pursuant to the Note Purchase Agreement, the Debtor has issued the Note to the Purchaser and will be obligated to the holder of the Note to pay the principal of and interest on the Note in accordance with the terms thereof; MBIA Insurance Corporation (the "NOTE INSURER"), a New York stock insurance company, has issued and delivered a note guaranty insurance policy, dated the Closing Date (with endorsements and exhibits, the "NOTE POLICY"), pursuant to which the Note Insurer guarantees Insured Payments, as defined in the Note Policy. As an inducement to the Note Insurer to issue and deliver the Note Policy, the Debtor and the Note Insurer have executed and delivered the Insurance Agreement, dated as of December 18, 2000 (as amended from time to time, the "INSURANCE AGREEMENT"), among the Note Insurer, the Debtor, AmeriCredit, the Servicer, the Collateral Agent and AMTN. As an additional inducement to the Note Insurer to issue the Note Policy, and as security for the performance by the Debtor of its obligations hereunder the Debtor has agreed to assign the Collateral (as defined below) as collateral to the Collateral Agent for the benefit of the Secured Parties, as their respective interests may appear. NOW, THEREFORE, the parties hereto hereby agree as follows: ARTICLE I DEFINITIONS; THE NOTE SECTION 1.1. CERTAIN DEFINED TERMS. As used in this Agreement, the following terms shall have the following meanings: "ABS" means the assumed rate of prepayments on the Receivables for each Settlement Period based upon the "Absolute Prepayment Model", applied in accordance with current market standards. "ACCOUNT(S)" means, singularly, each of the Lock-Box Account, the Collection Account, the Funding Account, the Reserve Account and the Yield Supplement Account, and, collectively, all such Accounts. "ACCRUAL PERIOD" means, with respect to each MTN Payment Date other than the first MTN Payment Date, the period commencing on the prior MTN Payment Date and ending on the day immediately preceding such MTN Payment Date and, with respect to the first MTN Payment Date, the period commencing on the Closing Date and ending on the day immediately preceding such first MTN Payment Date. "ADJUSTED EBITDA" means, with respect to AmeriCredit Corp., earnings before interest, taxes, depreciation, and amortization, plus cash distributions from the trusts created in connection with securitizations sponsored by AmeriCredit (i.e., residual interest income) minus any non-cash gain on the sale of receivables. "ADMINISTRATIVE AGENT" means MBIA, as agent for the Purchaser, and any successor thereto appointed pursuant to the Note Purchase Agreement. "ADVERSE CLAIM" means a lien, security interest, charge or encumbrance, or other right or claim in, of or on any Person's assets or properties in favor of any other Person (including any UCC financing statement or any similar instrument filed against such Person's assets or properties). "AFFECTED ASSETS" means, collectively, the Receivables and the Related Security, Collections and Proceeds relating thereto. "AFFILIATE" means, with respect to any Person, any other Person directly or indirectly controlling, controlled by, or under direct or indirect common control with, such Person. A Person shall be deemed to control another Person if the controlling Person possesses, directly or indirectly, the power to direct or cause the direction of the management or policies of the controlled Person, whether through ownership of voting stock, by contract or otherwise. "AGGREGATE OUTSTANDING BALANCE" means, with respect to any group of Receivables as of any date, the sum of the Outstanding Balances of all such Receivables as of the close of business on the immediately preceding date. "AMTN" means AmeriCredit MTN Corp., a Delaware corporation, and its successors and assigns. "AMERICREDIT" means AmeriCredit Financial Services, Inc., a Delaware corporation, and its successors and assigns. "AMERICREDIT CORP." means AmeriCredit Corp., a Texas corporation, and its successors and assigns. 2 "AMERICREDIT SCORE" means, with respect to a Receivable, the credit score for the related Obligor, determined in accordance with the Credit and Collection Policy. "AMORTIZATION PERIOD" means the period commencing on the earlier to occur of (i) the date on which the Regular Amortization Period commences or (ii) the date on which the Rapid Amortization Period commences and ending on the later of (x) the date on which the Net Investment is reduced to zero and there are no amounts outstanding to the Note Insurer and (y) the Final Maturity Date. "AMORTIZATION PERIOD RESERVE PERCENTAGE" means, (x) with respect to any date of determination which occurs after the commencement of the Amortization Period and prior to the seventh (7th) Remittance Date during the Amortization Period: (i) 7.0% if the Portfolio Net Loss Ratio calculated as of the most recent Determination Date is less than 5.00%. (ii) 8.0%, if the Portfolio Net Loss Ratio calculated as of the most recent Determination Date is greater than or equal to 5.00% but less than 6.00%. (iii) 9.0%, if the Portfolio Net Loss Ratio calculated as of the most recent Determination Date is greater than or equal to 6.00% but less than 7.00%. (iv) 10.0%, if the Portfolio Net Loss Ratio calculated as of the most recent Determination Date is greater than or equal to 7.00% but less than 7.50%. (v) 11.0%, if the Portfolio Net Loss Ratio calculated as of the most recent Determination Date is greater than or equal to 7.50%; and (y) with respect to any date of determination occurring on and after the seventh (7th) Remittance Date during the Amortization Period, the applicable percentage set forth in the numbered clauses (i) through (v) in paragraph (x) above calculated with respect to the (6th) Remittance Date. "AMOUNT FINANCED" means, with respect to a Receivable, the aggregate amount of credit extended under the Contract related to such Receivable to pay, or to refinance, the purchase price of or outstanding balance with respect to the Financed Vehicle and related costs, including amounts advanced in respect of accessories, insurance premiums, service and warranty contracts, other items customarily financed as part of retail automobile installment sales contracts or promissory notes, and related costs. "ANNUALIZED NET LOSS RATIO" means, as of any date of determination, the ratio (expressed as a percentage), computed by dividing "A" by "B", and then multiplying the result by "C" where: 3 "A" is equal to the Monthly Net Losses for all Receivables held as Collateral which have occurred during six Settlement Periods immediately preceding such date divided by the average Aggregate Outstanding Balance of all Receivables held as Collateral during such six-month period; "B" is equal to the actual number of days in such six-month period; and "C" is equal to the actual number of days in the Servicer's fiscal year in which the most recently-ended Settlement Period occurred. "ANNUAL PERCENTAGE RATE" or "APR" means, with respect to a Receivable, the rate per annum of finance charges stated in the Contract related to such Receivable as the "annual percentage rate" (within the meaning of the Federal Truth-in-Lending Act). If, after the applicable Delivery Date, the rate per annum with respect to a Receivable as of such Delivery Date is reduced as a result of (a) an insolvency proceeding involving the related Obligor or (b) pursuant to the Soldiers' and Sailors' Civil Relief Act of 1940, "Annual Percentage Rate" or "APR" shall refer to such reduced rate. "AUTHORIZED OFFICER" means, with respect to the Debtor, any officer, or agent acting pursuant to a power of attorney of the Debtor, who is authorized to act for the Debtor, in matters relating to the Debtor and who is identified on the list of Authorized Officers delivered by the Debtor to the Collateral Agent on the Closing Date (as such list may be modified or supplemented from time to time thereafter). "AVAILABLE FUNDS" means, with respect to any Remittance Date, the aggregate amount then on deposit in the Collection Account which represents the amounts described in clause (i), (ii), (iii) and (iv) of Section 2.10(a) hereof on such Remittance Date. "BANKRUPTCY CODE" means the Bankruptcy Reform Act of 1978 (11 U.S.C.) Section 101 et seq., as amended. "BENEFIT PLAN" means any employee benefit plan as defined in Section 3(3) of ERISA in respect of which the Debtor, AmeriCredit, AMTN or any ERISA Affiliate of the Debtor, AmeriCredit or AMTN is, or at any time during the immediately preceding six years was, an "employer" as defined in Section 3(5) of ERISA. "BORROWING BASE" means, as of any Borrowing Base Determination Date, the sum of (x) the product of (i) 95% and (ii) the Net Receivables Balance as of the close of business on such Borrowing Base Determination Date after taking into account all Facility Activity on such Borrowing Base Determination Date plus (y) the amount on deposit in the Funding Account at the close of business on such Borrowing Base Determination Date after taking into account all Facility Activity on such Borrowing Base Determination Date plus (z) the amount on deposit in the Collection Account with respect to principal at the close of business on such Borrowing Base Determination Date after taking into account all Facility Activity on such Borrowing Base Determination Date. 4 "BORROWING BASE DETERMINATION DATE" means each of the following dates: (i) the last day of each Settlement Period, (ii) each Take-Out Date and (iii) each Receivables Delivery Date. "BUSINESS DAY" means any day excluding Saturday, Sunday and any day on which banks in New York, New York, Fort Worth, Texas or London England are authorized or required by law to close. "CAPITALIZED LEASE" of a Person means any lease of property by such Person as lessee which would be capitalized on a balance sheet of such Person prepared in accordance with GAAP. "CERTIFICATEHOLDERS" means the holders of the Class A Certificates and the Class B Certificates issued under the Trust Agreement. The Debtor shall inform the Collateral Agent and the Note Insurer in writing of the identity of the Certificateholders. "CLASS A CERTIFICATES" means the Class A Certificates issued under the Trust Agreement. "CLASS B CERTIFICATES" means the Class B Certificates issued under the Trust Agreement. "CLOSING DATE" means December 18, 2000. "CODE" means the Internal Revenue Code of 1986, as amended. "COLLATERAL" has the meaning specified in Section 2.1 hereof. "COLLATERAL AGENT" means The Chase Manhattan Bank, as collateral agent for the Secured Parties, and its successors and assigns. "COLLATERAL AGENT ACCOUNTS" has the meaning described in Section 8.2(i) hereof. "COLLECTION ACCOUNT" means the account established by the Collateral Agent, for the benefit of the Secured Parties, pursuant to Section 2.10. "COLLECTIONS" means, with respect to any Receivable, all cash collections and other cash proceeds (including liquidation proceeds) of such Receivable, including, without limitation, all Finance Charges, if any, and any refunded portion of extended warranty protection plan costs or of insurance costs (for example, physical damage, credit life or disability) included in the original amount financed under such Receivable, and cash proceeds of Related Security with respect to such Receivable. "CONTRACT" means any and all retail installment sales contracts or installment notes and security agreements relating to the sale or refinancing of a new or used automobile, light duty truck, van or minivan and other writings related thereto now existing and hereafter created or acquired by AmeriCredit or AMTN and assigned from time to time to the Debtor pursuant to the Master Receivables Purchase Agreement. 5 "CRAM DOWN LOSS" has the meaning given such term in the Servicing and Custodian Agreement. "CREDIT AND COLLECTION POLICY" means the Servicer's credit and collection policy or policies and practices relating to automobile installment sales contracts, existing on the date hereof and in effect from time to time in compliance with Section 5.2(d). "CREDIT SCORE BASED RESERVE PERCENTAGE" means, with respect to the Amortization Period, the applicable percentage set forth in the numbered clauses (i) through (v) below: (i) 7% if the Weighted Average AmeriCredit Score of all Eligible Receivables as of the commencement of the Amortization Period, after taking into account all Facility Activity on such date is greater than or equal to 227.00; or (ii) 8%, if the Weighted Average AmeriCredit Score of all Eligible Receivables as of the commencement of the Amortization Period, after taking into account all Facility Activity on such date is greater than or equal to 226.00 but less than 227.00; or (iii) 9%, if the Weighted Average AmeriCredit Score of all Eligible Receivables as of the commencement of the Amortization Period, after taking into account all Facility Activity on such date is greater than or equal to 224.00 but less than 226.00; or (iv) 10%, if the Weighted Average AmeriCredit Score of all Eligible Receivables as of the commencement of the Amortization Period, after taking into account all Facility Activity on such date is greater than or equal to 222.00 but less than 224.00; or (v) 11%, if the Weighted Average AmeriCredit Score of all Eligible Receivables as of the commencement of the Amortization Period, after taking into account all Facility Activity on such date is less than 222.00. "CUMULATIVE NET LOSS" means, for any Receivables Pool or the Regular Amortization Receivables Pool, as appropriate, the positive difference between (i) the sum of (A) the Aggregate Outstanding Balance of all Liquidated Receivables plus (B) aggregate Cram Down Losses minus (ii) Liquidation Proceeds received with respect to the Receivables described in clause (i). "CUMULATIVE NET LOSS RATIO" means, for any Receivables Pool, the ratio, expressed as a percentage, computed by dividing: (a) the sum (without duplication) of (i) Cumulative Net Losses and (ii) the product of (x) 0.50 and (y) the Aggregate Outstanding Balance of all Receivables which are more than ninety (90) days past due as of the end of the related Settlement Period; BY (b) the aggregate initial principal balance for the related Receivables Pool. 6 "DEBTOR" means AmeriCredit MTN Receivables Trust, a Delaware business trust, and its successors and permitted assigns. "DEBTOR ORDER" means a written order or request signed in the name of the Debtor by any one of its Authorized Officers and delivered to the Collateral Agent. "DEFAULTED RECEIVABLE" means 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), or (iii) such Receivable is in default and the Servicer has charged-off such Receivable in accordance with the Credit and Collection Policy or otherwise has determined in good faith that payments thereunder are not likely to be resumed. "DEFAULT RATIO" means a fraction, expressed as a percentage, the numerator of which is the Aggregate Outstanding Balance of all Defaulted Receivables since the commencement of the Regular Amortization Period and the denominator of which is the Initial Regular Amortization Receivables Pool Balance. "DEFICIENCY AMOUNT" has the meaning specified in the Note Policy. "DELINQUENCY RATIO" means, the ratio (expressed as a percentage) computed by dividing: (a) the Aggregate Outstanding Balance of all Receivables which were Delinquent Receivables as of the close of business on the last day of the related Settlement Period. BY (b) the sum of the Aggregate Outstanding Balance of all Receivables as of the close of business on the first day of the related Settlement Period. "DELINQUENT RECEIVABLE" means a Receivable with respect to which 5% or more of a scheduled payment is more than sixty (60) days past due (excluding (i) Receivables which the Servicer has repossessed the related Financed Vehicle and (ii) Receivables which have become Liquidated Receivables). "DELIVERY" when used with respect to Collateral means: (a) with respect to bankers' acceptances, commercial paper, negotiable certificates of deposit and other obligations that constitute instruments and are susceptible of physical delivery ("Physical Property"): (i) transfer of possession thereof to the Collateral Agent, endorsed to, or registered in the name of, the Collateral Agent or its nominee or endorsed in blank; (b) with respect to a certificated security: 7 (i) delivery thereof in bearer form to the Collateral Agent; or (ii) delivery thereof in registered form to the Collateral Agent; and (A) the certificate is endorsed to the Collateral Agent or in blank by effective endorsement; or (B) the certificate is registered in the name of the Collateral Agent, upon original issue or registration of transfer by the issuer; (c) with respect to an uncertificated security: (i) the delivery of the uncertificated security to the Collateral Agent; or (ii) the issuer has agreed that it will comply with instructions originated by the Collateral Agent without further consent by the registered owner; (d) with respect to any security issued by the U.S. Treasury that is a book-entry security held through the Federal Reserve System pursuant to Federal book-entry regulations: (i) a Federal Reserve Bank by book entry credits the book-entry security to the securities account (as defined in 31 CFR Part 357) of a participant (as defined in 31 CFR Part 357) which is also a Securities Intermediary; and (ii) the participant indicates by book entry that the book-entry security has been credited to the Collateral Agent's securities account; (e) with respect to a security entitlement: (i) the Collateral Agent becomes the entitlement holder; or (ii) the Securities Intermediary has agreed that it will comply with entitlement orders originated by the Collateral Agent without further consent by the entitlement holder; (f) for the purpose of clauses (b) and (c) hereof "delivery" means: (i) with respect to a certificated security: (A) the Collateral Agent acquires possession thereof; (B) another person (other than a Securities Intermediary) either acquires possession thereof on behalf of the Collateral Agent or, having previously acquired possession thereof, acknowledges that it holds for the Collateral Agent; or 8 (C) a Securities Intermediary acting on behalf of the Collateral Agent acquires possession of thereof, only if the certificate is in registered form and has been specially endorsed to the Collateral Agent by an effective endorsement; (ii) with respect to an uncertificated security: (A) the issuer registers the Collateral Agent as the registered owner, upon original issue or registration of transfer; or (B) another person (other than a Securities Intermediary) either becomes the registered owner thereof on behalf of the Collateral Agent or, having previously become the registered owner, acknowledges that it holds for the Collateral Agent; (g) for purposes of this definition, except as otherwise indicated, the following terms shall have the meaning assigned to each such term in the UCC: (i) "certificated security"; (ii) "effective endorsement"; (iii) "entitlement holder"; (iv) "instrument"; (v) "securities account"; (vi) "securities entitlement"; (vii) "Securities Intermediary"; and (viii) "uncertificated security"; (h) in each case of Delivery contemplated herein, the Collateral Agent shall make appropriate notations on its records, and shall cause the same to be made on the records of its nominees, indicating that securities are held in trust pursuant to and as provided in this Agreement. "DELIVERY DATE" means the date on which a Receivables Delivery occurs. "DELIVERY NOTICE" means the notice, substantially in the form attached hereto as Exhibit L, furnished by the Debtor in accordance with Section 2.11(b)(1). "DEPOSITARY" has the meaning set forth in 31 C.F.R. 306.118 or similar federal regulations governing the transfer of securities issued by the United States Treasury which are maintained in book-entry form. 9 "DETERMINATION DATE" means, with respect to each Remittance Date, the second Business Day preceding such Remittance Date, notwithstanding anything else to the contrary herein, the Determination Date for any month in which any repayment of principal is to be made by the Debtor (currently expected to begin in December 2003) shall be the 11th Business Day prior to the MTN Payment Date in such month. "ELIGIBLE COLLATERAL" means, collectively, Eligible Receivables, Eligible Investments credited to the Funding Account, and Eligible Investments credited to the Collection Account. "ELIGIBLE DEPOSIT ACCOUNT" means a segregated trust account with the corporate trust department of a depository institution acceptable to the Note Insurer organized under the laws of the United States of America or any one of the states thereof or the District of Columbia (or any domestic branch of a foreign bank), having corporate trust powers and acting as trustee for funds deposited in such account, so long as any of the securities of such depository institution have a long term unsecured debt rating of "AA" or higher from S&P and "Aa2" or higher by Moody's and in the highest short-term rating category by S&P and Moody's or is otherwise acceptable to the Note Insurer. Each Eligible Deposit Account created hereunder shall be established as follows: "[name of account], The Chase Manhattan Bank, as Collateral Agent". "ELIGIBLE INVESTMENTS" means any of the following (a) negotiable instruments or securities represented by instruments in bearer or registered or in book-entry form which evidence (i) obligations fully guaranteed by the United States; (ii) time deposits in, or bankers acceptances issued by, any depository institution or trust company incorporated under the laws of the United States or any state thereof and subject to supervision and examination by Federal or state banking or depository institution authorities; PROVIDED, HOWEVER, that at the time of investment or contractual commitment to invest therein, the certificates of deposit or short-term deposits, if any, or long-term unsecured debt obligations (other than such obligation whose rating is based on collateral or on the credit of a Person other than such institution or trust company) of such depository institution or trust company has a credit rating from Moody's and S&P of at least "P-1" and "A-1", respectively, in the case of the certificates of deposit or short-term deposits, or a rating not lower than one of the two highest investment categories granted by Moody's and by S&P; (iii) certificates of deposit having, at the time of investment or contractual commitment to invest therein, a rating from Moody's and S&P of at least "P-1" and "A-1", respectively; or (iv) investments in money market funds rated in the highest investment category or otherwise approved in writing by the applicable rating agencies; (b) demand deposits in any depository institution or trust company referred to in (a)(ii) above; (c) commercial paper (having original or remaining maturities of no more than 31 days) having, at the time of investment or contractual commitment to invest therein, a credit rating from Moody's and S&P of at least "P-1" and "A-1", respectively; (d) Eurodollar time deposits having a credit rating from Moody's and S&P of at least "P-1" and "A-1", respectively; and (e) repurchase agreements involving any of the Eligible Investments described in clauses (a)(i), (a)(iii) and (d) hereof, so long as the other party to the repurchase agreement has at the time of investment therein, a rating from Moody's and S&P of at least "P-1" and "A-1", respectively. 10 "ELIGIBLE RECEIVABLE" means, at any time, any Receivable: (i) (A) which shall have been originated by AmeriCredit directly with an Obligor or through an automobile dealer or Third Party Lender approved in accordance with AmeriCredit's standard operating procedures and which has been acquired from a Dealer by means of a Dealer Agreement or a Dealer Assignment (as defined in the Servicing Agreement), which dealer shall be located in the United States and which, together with the Contract related thereto, if originated by a dealer, shall have been validly assigned by such dealer to AmeriCredit and which assignment, if part of a bulk sale by such dealer to AmeriCredit, shall have been approved in writing by the Note Insurer, or pursuant to the terms of such Contract, for the retail sale or refinancing of the related Financed Vehicle in the ordinary course of its business, shall have been fully and properly executed by the parties thereto, and shall have been advanced directly to or for the benefit of the Obligor for the purchase or refinancing of the related Financed Vehicle, (B) which shall have been sold by AmeriCredit or AMTN to the Debtor pursuant to the Master Receivables Purchase Agreement, and to which the Debtor has good and marketable title thereto, free and clear of all Adverse Claims, and (C) the Contract related to which contains customary and enforceable provisions such that the rights and remedies of the holder thereof shall be adequate for the realization against the collateral of the benefits of the security provided thereby; (ii) which (together with the Collections and Related Security related thereto) has been the subject of the grant of a first priority perfected security interest therein (and in the Collections and Related Security related thereto) to the Collateral Agent for the benefit of the Secured Parties, effective until the termination of this Agreement; (iii) the Obligor of which (A) is a United States resident and is recorded in the Servicer's records as having a United States billing address or is a member of the U.S. military and is recorded in the Servicer's records as having an overseas U.S. military base address, (B) is a natural person, (C) is not an Affiliate of any of the parties hereto, and (D) is not a government or a governmental subdivision or agency or any other governmental entity; (iv) which is not a Defaulted Receivable at the time of the related Receivables Delivery hereunder; (v) (A) during the Revolving Period with respect to which 5% or more of a scheduled payment is not more than thirty (30) days past due and (B) during the Amortization Period, with respect to which 5% or more of a scheduled payment is not more than 30 days past due as of the date the Amortization Period commences; (vi) the Contract related to which provides for level monthly payments (PROVIDED that the payment in the first or last month in the life of the Receivable may be minimally different from such level payment) that fully amortizes the Amount Financed over the original term and yields interest at the related APR; (vii) the Contract related to which provides for the calculation of interest payable thereunder under either the "simple interest" or "Rule of 78's" or the "sum of the periodic time balances" method; 11 (viii) the Contract related to which provides for no more than 72 monthly payments; (ix) which is an "eligible asset" as defined in Rule 3a-7 under the Investment Company Act of 1940, as amended; (x) which is "chattel paper" within the meaning of Article 9 of the UCC of all applicable jurisdictions and, which is secured by a first priority perfected lien on the related Financed Vehicle, free and clear of any Adverse Claim or for which all necessary steps to result in such a first priority perfected lien shall have been taken as of the Delivery Date; (xi) which is denominated and payable only in United States dollars in the United States; (xii) which arises under a Contract that, together with the Receivable related thereto, is in full force and effect and constitutes the legal, valid and binding obligation of the related Obligor enforceable against such Obligor in accordance with its terms, is the complete, accurate and entire financing agreement with the Obligor relating to the Financed Vehicle, is not subject to any litigation, dispute, offset, counterclaim or other defense and the provisions of which have not been extended, waived or modified except in accordance with the Credit and Collection Policy or upon the written instructions of the Note Insurer; (xiii) which, together with the Contract related thereto, does not contravene in any material respect any laws, rules or regulations applicable thereto (including, without limitation, laws, rules and regulations relating to usury, truth in lending, fair credit billing, fair credit reporting, equal credit opportunity, fair debt collection practices and privacy) and with respect to which no part of the Contract related thereto is in violation of any such law, rule or regulation in any material respect; (xiv) which (A) satisfies all applicable requirements of the Credit and Collection Policy and is identified on the Servicer's master servicing records as a automobile installment sales contract or installment note, (B) arises under a Contract which is assignable without the consent of, or notice to, the Obligor thereunder, and which does not contain a confidentiality provision that purports to restrict the ability of the Servicer to exercise its rights under this Agreement, including, without limitation, its right to review the Contract, and (C) arises under a Contract with respect to which AmeriCredit, AMTN and the Debtor have each performed all obligations required to be performed by them thereunder, and, in the event such Contract is an installment sales contract, delivery of the Financed Vehicle to the related Obligor has occurred; (xv) which was generated in the ordinary course of AmeriCredit's business; (xvi) the assignment of which under the Master Receivables Purchase Agreement by AmeriCredit or AMTN to the Debtor and the grant of a security interest with respect thereto hereunder by the Debtor to the Collateral Agent does not violate, conflict or contravene any applicable laws, rules, regulations, orders or writs or any contractual or other restriction, limitation or encumbrance; 12 (xvii) with respect to which AmeriCredit or any Affiliate thereof has not advanced any funds to or for the benefit of the related Obligor in order to make such Receivable an "Eligible Receivable"; (xviii) the Obligor of which has been or will be directed to make all payments to a specified account of the Servicer with respect to which there shall be a Lock-Box Agreement in effect; (xix) with respect to which there is only one original Contract which original Contract has been delivered to the Custodian; (xx) with respect to which the Amount Financed does not exceed $60,000; (xxi) the APR of which is no less than 8.0%; (xxii) the Contract related to which provides that any prepayment in full of such Receivable fully pays all remaining principal and all interest due at the applicable APR as of such date of prepayment, in each case with respect to such Receivable; (xxiii) which is not, at the time of an initial creation of an interest therein hereunder, subject to any right of rescission, cancellation, set-off, claim, counterclaim or defense (including the defense of usury) of the Obligor; (xxiv) which is secured by a valid, existing and enforceable first priority perfected security interest in favor of the Receivable's originator in the related Financed Vehicle, which security interest has been validly assigned by the originator to AmeriCredit (if such Receivable is not originated by, or the security interest is not initially perfected in favor of, AmeriCredit) and either (A) by AmeriCredit to the Debtor or (B) by AmeriCredit to AMTN and by AMTN to the Debtor, and by the Debtor to the Collateral Agent; (xxv) the Contract related to which requires it to be insured by an individual physical damage insurance policy; and (xxvi) provides for enforcement of the lien or the clear legal right of repossession as applicable on the Financed Vehicle securing such Receivable, and the certificate of title names the Servicer as the secured party, or an application for a certificate of title naming the Servicer as secured party has been filed with the relevant jurisdiction. "ENTITLEMENT ORDER" shall have the meaning given such term in Section 8-102(a)(8) of the UCC. "ERISA" means the Employee Retirement Income Security Act of 1974, as amended from time to time, and the regulations promulgated thereunder. "ERISA AFFILIATE" means, with respect to any Person, (i) any corporation which is a member of the same controlled group of corporations (within the meaning of Section 414(b) of the Code) as such Person; (ii) a trade or business (whether or not incorporated) under common 13 control (within the meaning of Section 414(c) of the Code) with such Person; or (iii) a member of the same affiliated service group (within the meaning of Section 414(n) of the Code) as such Person, any corporation described in clause (i) above or any trade or business described in clause (ii) above. "EVENT OF BANKRUPTCY" means, with respect to any Person, (i) that such Person (a) shall generally not pay its debts as such debts become due or (b) shall admit in writing its inability to pay its debts generally or (c) shall make a general assignment for the benefit of creditors; (ii) any proceeding shall be instituted by or against such Person seeking to adjudicate it as bankrupt or insolvent, or seeking liquidation, winding up, reorganization, arrangement, adjustment, protection, relief or composition of it or its debts under any law relating to bankruptcy, insolvency or reorganization or relief of debtors, or seeking the entry of an order for relief or the appointment of a receiver, trustee or other similar official for it or any substantial part of its property or (iii) if such Person is a corporation, such Person or any Subsidiary shall take any corporate action to authorize any of the actions set forth in the preceding clauses (i) or (ii). "EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended. "EXECUTIVE OFFICER" means, with respect to any corporation, the Chief Executive Officer, Chief Operating Officer, Chief Financial Officer, President, any Executive Vice President, any Vice President, the Secretary or the Treasurer of such corporation; and with respect to any partnership, any general partner thereof. "FACILITY ACTIVITY" means, with respect to any calculation as of a specified date or time after taking into account all Facility Activity, adjusting (x) all Accounts for any withdrawals, transfers and deposits on such date and prior to such time, (y) for any Receivables Delivery or any Take-Out which occurs on such date and prior to such time and (z) any amortization of Receivables and the Net Investment on such date and prior to such time. "FINAL MATURITY DATE" means the Remittance Date in December 2010. "FINANCE CHARGES" means, with respect to a Contract, any finance, interest or similar charges owing by an Obligor or another Person pursuant to such Contract. "FINANCED VEHICLE" means, with respect to a Receivable, any new or used automobile, light-duty truck, van or minivan, together with all accessories thereto, securing the related Obligor's indebtedness thereunder. "FUNDING ACCOUNT" has the meaning specified in Section 2.11 hereof. "GUARANTY" means, with respect to any Person any agreement by which such Person assumes, guarantees, endorses, contingently agrees to purchase or provide funds for the payment of, or otherwise becomes liable upon, the obligation of any other Person, or agrees to maintain the net worth or working capital or other financial condition of any other Person or otherwise assures any other creditor of such other Person against loss, including, without limitation, any comfort letter, operating agreement or take-or-pay contract and shall include, 14 without limitation, the contingent liability of such Person in connection with any application for a letter of credit. "HEDGING ARRANGEMENT" means any financial arrangement obtained by the Debtor from a counterparty rated "A" or better by S&P and "A2" or better by Moody's satisfying the requirements of Section 5.3 hereof and otherwise in form and substance reasonably satisfactory to the Purchaser and the Note Insurer, the benefits of which are in favor of the Debtor and pledged to the Collateral Agent for the benefit of the Secured Parties. "INDEBTEDNESS" means, with respect to any Person such Person's (i) obligations for borrowed money, (ii) obligations representing the deferred purchase price of property other than accounts payable arising in the ordinary course of such Person's business on terms customary in the trade, (iii) obligations, whether or not assumed, secured by liens or payable out of the proceeds or products of property now or hereafter owned or acquired by such Person, (iv) obligations which are evidenced by notes, acceptances, or other instruments, (v) Capitalized Lease obligations and (vi) obligations for which such Person is obligated pursuant to a Guaranty. "INITIAL REGULAR AMORTIZATION RECEIVABLES POOL BALANCE" means the Aggregate Outstanding Balance of all Receivables held as Collateral at the commencement of the Regular Amortization Period. "INITIAL RESERVE PERCENTAGE" means, with respect to any Delivery Date: (i) 1.5% if BOTH (a) the Weighted Average AmeriCredit Score of all Eligible Receivables (including the Receivables to be delivered on such Receivables Delivery Date) is greater than or equal to 227.00; and (b) the most-recently calculated Portfolio Net Loss Ratio is less than 5.00%. (ii) 2.5%, if EITHER (a) the Weighted Average AmeriCredit Score of all Eligible Receivables (including the Receivables to be delivered on such Receivables Delivery Date) is greater than or equal to 226.00 but less than 227.00; or (b) the most-recently calculated Portfolio Net Loss Ratio is greater than or equal to 5.00% but less than 6.00%. (iii) 3.5%, if EITHER (a) the Weighted Average AmeriCredit Score of all Eligible Receivables (including the Receivables to be delivered on such Receivables 15 Delivery Date) is greater than or equal to 224.00 but less than 226.00; or (b) the most-recently calculated Portfolio Net Loss Ratio is greater than or equal to 6.00% but less than 7.00%. (iv) 4.5%, if EITHER (a) the Weighted Average AmeriCredit Score of all Eligible Receivables (including the Receivables to be delivered on such Receivables Delivery Date) is greater than or equal to 222.00 but less than 224.00; or (b) the most-recently calculated Portfolio Net Loss Ratio is greater than or equal to 7.00% but less than 7.50%. (v) 5.5%, if EITHER (a) the Weighted Average AmeriCredit Score of all Eligible Receivables (including the Receivables to be delivered on such Receivables Delivery Date) is less than 222.00; or (b) the most-recently calculated Portfolio Net Loss Ratio is greater than or equal to 7.50%. "INSURANCE AGREEMENT" has the meaning specified in the Recitals hereto. "INSURANCE TERMINATION DATE" means the date on which the Net Investment has been reduced to zero, and there are no amounts outstanding to the Note Insurer. "INTEREST EXPENSE" means with respect to AmeriCredit Corp. and for any period, AmeriCredit Corp.'s interest expense during such period for money borrowed (exclusive of any such interest expense on any "off-balance sheet" securitizations or warehouse facilities), calculated in accordance with GAAP. "LATE PAYMENT RATE" has the meaning specified in the Insurance Agreement. "LAW" means any law (including common law), constitution, statute, treaty, regulation, rule, ordinance, order, injunction, writ, decree or award of any Official Body. "LIBOR" means, with respect to any LIBOR Determination Date, the rate for deposits in U.S. dollars for one month which appears on Telerate Page 3750 as of 11:00 a.m., London time, on the LIBOR Determination Date. If such rate does not appear on the Telerate Page 3750, the rate will be determined on the basis of the rates at which deposits for U.S. dollars are offered by four major banks in the London interbank market at approximately 11:00 a.m., London time, on the LIBOR Determination Date to prime banks in the London interbank market 16 for one month commencing on the first day of the Accrual Period. The Collateral Agent will request the principal London office of each such banks to provide a quotation of its rate. If at least two such quotations are provided, the LIBOR rate for that Accrual Period will be the arithmetic mean of the quotations. If fewer than two quotations are provided, the rate will be the arithmetic mean of the rates quoted by major banks in New York City, selected by the Collateral Agent, at approximately 11:00 a.m., New York City time, on the LIBOR Determination Date for loans in the U.S. dollars to leading European banks for one month commencing on the first day of the related Accrual Period. "LIBOR DETERMINATION DATE" means, with respect to any Accrual Period, the second London Business Day preceding such Accrual Period. "LIEN" means any mortgage, deed of trust, pledge, hypothecation, assignment, deposit arrangement, encumbrance, lien (statutory or other), preference, priority or other security agreement or preferential arrangement of any kind or nature whatsoever, including, without limitation, any conditional sale or other title retention agreement, any financing lease having substantially the same economic effect as any of the foregoing and the filing of any financing statement under the UCC (other than any such financing statement filed for informational purposes only) or comparable law of any jurisdiction to evidence any of the foregoing. "LIQUIDATED RECEIVABLE" means with respect to any Settlement Period, a Receivable (i) as to which 90 days have elapsed since the related Financed Vehicle was repossessed by the Servicer, (ii) as to which (A) 210 days or more have elapsed since 5% or more of any Scheduled Payment became due, which amount remains unpaid, and (B) the related Financed Vehicle has been repossessed by the Servicer, (iii) other than a Receivable falling under clause (i) or (ii) as to which 120 days or more have elapsed since 5% or more of any Scheduled Payment became due, which amount remains unpaid or (iv) as to which the Servicer has in good faith determined that it has allocated all amounts that it expects to collect with respect to such Receivable. "LIQUIDATION PROCEEDS" means, with respect to a Liquidated Receivable, all amounts realized with respect to such Receivable. "LOCK-BOX ACCOUNT" means an account or accounts maintained by the Servicer at a Lock-Box Bank for the purpose of receiving Collections from Receivables. "LOCK-BOX AGREEMENT" means an agreement between the Servicer, the Collateral Agent and a Lock-Box Bank in substantially the form of Exhibit B hereto. "LOCK-BOX BANK" means each of the banks set forth in Exhibit A hereto and such banks as may be added thereto or deleted therefrom pursuant to Section 2.6 hereof. "LONDON BUSINESS DAY" means any day which is a Business Day and also is a day on which commercial banks are open for international business (including dealings in U.S. Dollar deposits) in London. "MASTER RECEIVABLES PURCHASE AGREEMENT" means the Master Receivables Purchase Agreement, dated as of the date hereof, among the Debtor, AmeriCredit, AMTN and 17 the Collateral Agent, as such agreement may be amended, supplemented, or otherwise modified from time to time. "MATERIAL ADVERSE EFFECT" means any event or condition which would have a material adverse effect on (i) the collectibility of the Receivables, (ii) the condition (financial or otherwise), businesses or properties of the Debtor, the Servicer, AmeriCredit or AMTN, (iii) the ability of the Debtor, the Servicer, AmeriCredit or AMTN to perform its respective obligations under the Transaction Documents to which it is a party, or (iv) the interests of the Note Insurer, the Collateral Agent or the Secured Parties under the Transaction Documents. "MBIA" means MBIA Insurance Corporation. "MONTHLY ADMINISTRATIVE FEE" means, with respect to any Remittance Date, the product of (x) one twelfth, (y) 0.10% per annum and (z) the Net Investment outstanding immediately prior to such Remittance Date. The Monthly Administrative Fee is included in the calculation of the Note Rate. "MONTHLY EXTENSION RATIO" means, with respect to any Determination Date, the fraction expressed as a percentage, the numerator of which is the Aggregate Outstanding Balance of all Receivables in the Servicing Portfolio whose payments are extended during the related Settlement Period and the denominator of which is the Aggregate Outstanding Balance of all Receivables in the Servicing Portfolio as of the close of business on the last day of the Settlement Period immediately preceding such related Settlement Period. "MONTHLY NET LOSSES" means the positive difference, if any, of (i) the sum of (A) the Aggregate Outstanding Balance of all Receivables that became Liquidated Receivables during the related Settlement Period plus (B) all Cram Down Losses incurred during the related Settlement Period minus (ii) all Liquidation Proceeds received during the related Settlement Period. "MONTHLY PRINCIPAL AMOUNT" means, as of any Remittance Date: (A) during the Revolving Period, the amount equal to the excess, if any, of (x) the sum of (i) the principal portion of all Collections received during the related Settlement Period (other than Collections with respect to Liquidated Receivables and Purchased Receivables) and (ii) the principal portion of the Purchase Amounts received with respect to all Receivables that became Purchased Receivables during the related Settlement Period over (y) the Step-Down Amount, if any, for such Remittance Date; and (B) during the Amortization Period, the amount equal to the excess, if any, of (x) the sum of (i) the principal portion of all Collections received during the related Settlement Period (other than Collections with respect to Liquidated Receivables and Purchased Receivables), (ii) the principal portion of the Purchase Amounts received with respect to all Receivables that became Purchased Receivables during the related Settlement Period, (iii) the Aggregate Outstanding Balance of all Receivables that became Liquidated Receivables during the related Settlement Period (other than Purchased Receivables), (iv) in the sole discretion of the Note Insurer, the Principal Balance of all the Receivables that were required to be become Purchased Receivables during such Settlement Period but were not purchased, (v) the aggregate 18 amount of Cram Down Losses that occurred during the related Settlement Period and (vi) if such Remittance Date is the first Remittance Date to occur during the Amortization Period, the amount transferred from the Funding Account to the Collection Account in accordance with Section 2.11(e) hereof over (y) the Step-Down Amount, if any, for such Remittance Date. "MOODY'S" means Moody's Investors Service, Inc. "MTN PAYMENT DATE" means the 22nd day of each month or next succeeding Business Day unless such day falls in the next calendar month, in which case it shall be the Business Day immediately preceding the 22nd, commencing February 22, 2001. "MULTIEMPLOYER PLAN" means a "multiemployer plan" as defined in Section 4001(a)(3) of ERISA which is or was at any time during the current year or the immediately preceding five years contributed to by the Debtor, AmeriCredit, AMTN or any ERISA Affiliate of the Debtor, AmeriCredit or AMTN on behalf of its employees. "NET INVESTMENT" means (i) $500,000,000 minus (ii) the aggregate amount applied to reduce such Net Investment pursuant to Section 2.3 hereof. "NET RECEIVABLES BALANCE" means at any time the Aggregate Outstanding Balance of all Eligible Receivables at such time. "NET SPREAD DEFICIENCY" means, as of any Borrowing Base Determination Date, the positive difference, if any, of (i) the sum of (A) 8.25% plus (B) the Servicing Fee, expressed as a percentage of the Net Receivables Balance plus (C) the lesser of (x) one-month LIBOR plus (I) from the Closing Date up to and including the thirty-fifth (35th) Remittance Date, 0.7205% and (II) after the thirty-fifth (35th) Remittance Date, 1.8505% and (y) the weighted average strike price under the Hedging Arrangements then in effect, minus (ii) the weighted average APR of all Eligible Receivables then held as Collateral. "NOTE" means the Debtor's note issued and delivered pursuant to Section 1.5 hereof, in substantially the form set forth as Exhibit C hereto. "NOTEHOLDER" or "HOLDER" means the Person in whose name a Note is registered on the Note Register. "NOTE INSURER" means MBIA, as Note Insurer, and its successors and assigns. "NOTE INSURER DEFAULT" means any one of the following events shall have occurred and be continuing: (a) the Note Insurer shall have failed to make a payment required under the Note Policy; (b) the Note Insurer shall have (i) filed a petition or commenced any case or proceeding under any provision or chapter of the United States Bankruptcy Code or any other similar Federal or state law relating to insolvency, bankruptcy, rehabilitation, liquidation or reorganization, (ii) made a general assignment for the benefit of its creditors, or (iii) had an order 19 for relief entered against it under the United States Bankruptcy Code or any other similar Federal or state law relating to insolvency, bankruptcy, rehabilitation, liquidation or reorganization which is final and nonappealable; or (c) a court of competent jurisdiction, the New York Department of Insurance, or other competent regulatory authority shall have entered a final and nonappealable order, judgment or decree (i) appointing a custodian, trustee, agent or receiver for the Note Insurer or for all or any material portion of its property or (ii) authorizing the taking of possession by a custodian, trustee, agent or receiver of the Note Insurer (or the taking of possession of all or any material portion of the property of the Note Insurer). "NOTE INTEREST" means, with respect to each Remittance Date, the product of (x) the Note Rate in effect with respect to such Remittance Date, (y) the Net Investment outstanding immediately prior to such Remittance Date and (z) a fraction, the numerator of which is the actual number of days in the related Accrual Period and the denominator of which is 360. The Note Interest shall be reduced by the interest portion of any Prepayment Amount applied since the preceding Remittance Date. "NOTE POLICY" means the note guaranty insurance policy No. 33871(1), issued by the Note Insurer. "NOTE PURCHASE AGREEMENT" means that certain Note Purchase Agreement, dated as of December 12, 2000, among the Debtor, AmeriCredit, the Purchaser and the Administrative Agent. "NOTE RATE" means, (i) with respect to each Accrual Period relating to a Remittance Date prior to the Remittance Date in December 2003, LIBOR as of the related LIBOR Determination Date plus 0.4455% per annum and (ii) with respect to each Accrual Period thereafter, LIBOR as of the related LIBOR Determination Date plus 1.5755% per annum; PROVIDED, that with respect to the first Accrual Period, the Note Rate shall be 7.05675% per annum. "OBLIGOR" means a Person obligated to make payments pursuant to a Contract. "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, any Senior Vice President, or any Vice President of such Person. "OFFICIAL BODY" means any government or political subdivision or any agency, authority, 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. "OUTSTANDING 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 the Contract related to such Receivable MINUS any Cram Down Loss in respect of such Receivable PLUS the accrued and unpaid interest on such Receivable. 20 "OWNER" has the meaning specified in the Note Purchase Agreement. "PERSON" means any corporation, limited liability company, natural person, firm, joint venture, partnership, trust, unincorporated organization, enterprise, government or any department or agency of any government. "PORTFOLIO DELINQUENCY RATIO" means as of any date of determination a fraction, expressed as a percentage, equal to (i) the Aggregate Outstanding Balance of all Receivables included in the Servicing Portfolio which are Delinquent Receivables on the last day of the related Settlement Period divided by (ii) the average Aggregate Outstanding Balance of the Servicing Portfolio during the related Settlement Period. "PORTFOLIO NET LOSS RATIO" means, as of any date of determination, the ratio (expressed as a percentage), computed by dividing "A" by "B", and then multiplying the result by "C" where: "A" is equal to the Monthly Net Losses for the Servicing Portfolio which have occurred during the six Settlement Periods immediately preceding such date divided by (ii) the average Aggregate Outstanding Balance of the Servicing Portfolio during such six-month period; "B" is equal to the actual number of days in such six-month period; and "C" is equal to the actual number of days in the Servicer's fiscal year in which the most recently-ended Settlement Period occurred. "PORTFOLIO REPOSSESSION RATIO" means as of any date of determination a fraction, expressed as a percentage, equal to (i) the Aggregate Outstanding Balance of all repossessed Receivables included in the Servicing Portfolio as of the last Business Day of the related Settlement Period divided by (ii) the Servicing Portfolio as of the end of the related Settlement Period. "POTENTIAL TERMINATION AND AMORTIZATION EVENT" means an event which but for the lapse of time or the giving of notice, or both, would constitute a Termination and Amortization Event. "PREMIUM AMOUNT" shall have the meaning set forth in the Premium Side Letter. "PREMIUM SIDE LETTER" means the letter agreement dated the date hereof between AmeriCredit and the Note Insurer, as amended, modified or otherwise supplemented from time to time. "PREPAYMENT AMOUNT" means, with respect to any Prepayment Date, the sum of (i) the amount deposited in the Collection Account in accordance with Section 6.5 hereof on account of principal and not previously applied as a principal reduction of the Net Investment and (ii) accrued interest at the Note Rate on the amount described in clause (i). 21 "PREPAYMENT DATE" means each date on which a Prepayment Amount is applied, which date shall be a Remittance Date. "PROCEEDS" means "proceeds" as defined in Section 9-306(1) of the UCC of the states set forth in Section 2.6 hereof. "PURCHASE AMOUNT" has the meaning given such term in the Master Receivables Purchase Agreement. "PURCHASED RECEIVABLES" means a Receivable purchased from the Debtor pursuant to Article V of the Master Receivables Purchase Agreement or Section 2.7 of the Servicing Agreement. "PURCHASER" means Meridian Funding Company, LLC, a Delaware limited liability company. "RAPID AMORTIZATION PERIOD" means the period commencing on the close of business on the Business Day immediately preceding the day on which a Termination and Amortization Event occurs or is deemed to have occurred and ending on the later of (i) the date on which the Net Investment is reduced to zero and there are no amounts outstanding to the Note Insurer and (ii) the Final Maturity Date. "RECEIVABLE" means indebtedness owed to the Debtor by an Obligor (without giving effect to any transfer hereunder) under a Contract, whether constituting an account, chattel paper, instrument or general intangible, arising out of or in connection with the sale, refinancing or loan made or purchased by AmeriCredit with respect to new or used automobiles, light-duty trucks, vans or minivans or the rendering of services by the originating dealer in connection therewith, and includes the right of payment of any Finance Charges and other obligations of the Obligor with respect thereto. Notwithstanding the foregoing, once the Collateral Agent has released its security interest in a Receivable and the related Contract pursuant to Section 2.4, 2.7 or Section 2.15 hereof, it shall no longer constitute a Receivable hereunder. "RECEIVABLES DELIVERY" means the delivery by the Debtor of Eligible Receivables hereunder (x) in exchange for a release of cash from the Funding Account or (y) for any other reason pursuant to this Agreement or the other Transaction Documents. "RECEIVABLES DELIVERY PAYMENT AMOUNT" has the meaning specified in Section 2.11(c)(ii) hereof. "RECEIVABLES POOL" means each receivables pool supporting an asset-backed securitization sponsored by AmeriCredit on and after September 30, 2000 (excluding any Receivables held as part of any warehouse arrangement), or, if the initial Aggregate Outstanding Balance of any such asset-backed securitization is less than $500,000,000, the Aggregate Outstanding Balance of all Receivables originated or purchased by AmeriCredit in each calendar quarter, on or after September 30, 2000. 22 "RECEIVABLES SYSTEMS" means, with respect to any Person, all computer applications of such Person (including, but not limited to, those of any suppliers, vendors, customers and any third party Servicers of such Person), which are related to or involved in the origination, collection, management or servicing of the Receivables. "RECORDS" means all Contracts and other documents, books, records and other information (including, without limitation, computer programs, tapes, discs, punch cards, data processing software and related property and rights) maintained with respect to Receivables and the related Obligors. "REGULAR AMORTIZATION PERIOD" means the period commencing on the thirty-fifth (35th) Remittance Date and ending on the earlier of (i) a Termination and Amortization Event occurs and (ii) the later of (A) the date on which the Net Investment is reduced to zero and there are no amounts outstanding to the Note Insurer and (B) the Final Maturity Date. "REGULAR AMORTIZATION PERIOD CUMULATIVE NET LOSS RATIO" means the ratio, expressed as a percentage, computed by dividing: (a) the sum (without duplication) of (i) Cumulative Net Losses for the Regular Amortization Receivables Pool and (ii) the product of (x) 0.50 multiplied by (y) the Aggregate Outstanding Balance of all Receivables which are more than ninety (90) days past due as of the end of the related Settlement Period BY (b) the Initial Regular Amortization Receivables Pool Balance. "REGULAR AMORTIZATION RECEIVABLES POOL" means all Eligible Receivables held as Collateral during the Regular Amortization Period. "REGULATION D" means Regulation D of the Board of Governors of the Federal Reserve System, as the same may be amended, supplemented or otherwise modified and in effect from time to time. "REIMBURSEMENT AMOUNT" means, with respect to any Remittance Date, the sum of (i) any draws under the Note Policy paid by the Note Insurer to the Collateral Agent which was not previously repaid to the Note Insurer pursuant to Section 2.3(a)(ix) hereof plus (ii) any other amounts then due and owing to the Note Insurer pursuant to the Insurance Agreement and (iii) interest accrued on each such amount described in (i) or (ii) above which was not previously repaid, calculated from the date the Trust Collateral Agent received the related amount, at the Late Payment Rate applicable to such Remittance Date. On each Determination Date, the Note Insurer shall notify the Collateral Agent and the Servicer of the amount of any Reimbursement Amount due on the related Remittance Date if such amount is greater than zero. "RELATED SECURITY" means with respect to any Receivable: (i) all of the Debtor's interest in the Financed Vehicles (including repossessed vehicles) or in any document or writing evidencing any security interest in any 23 Financed Vehicle and all of the Debtor's interest in all rights to payment under all insurance contracts with respect to a Financed Vehicle, including, without limitation, any monies collected from whatever source in connection with any default of an Obligor with respect to a Financed Vehicle and any proceeds from claims or refunds of premiums on any physical damage, lender's single interest, credit life, disability and hospitalization insurance policies covering Financed Vehicles or Obligors; (ii) all of the Debtor's interest in all other security interests or liens and property subject thereto from time to time, if any, purporting to secure payment of such Receivable, whether pursuant to the Contract related thereto or otherwise, together with all financing statements signed by an Obligor and security agreements describing any collateral securing such Contract; (iii) all of the Debtor's interest in all guaranties, indemnities, warranties, insurance (and proceeds and premium refunds thereof) and other agreements or arrangements of whatever character from time to time supporting or securing payment of such Receivable, whether pursuant to the Contract related to such Receivable or otherwise; (iv) all of the Debtor's interest in all rights to payment under all service contracts and other contracts and agreements associated with such Receivables and all of the Debtor's interest in all recourse rights against the dealers (excluding any rights in any dealer reserve); (v) all of the Debtor's interest in all Records, documents and writings evidencing or related to such Receivables or the Contracts; (vi) all of the Debtor's interest in all rights and remedies of the Debtor under the Master Receivables Purchase Agreement, together with all financing statements filed by the Debtor against each of AmeriCredit and AMTN in connection therewith; (vii) all of the Debtor's interest in all Lock-Box Accounts and Lock-Box Agreements; (viii) all of the Debtor's interest in the Hedging Agreements; and (ix) all Proceeds of the foregoing. "REMITTANCE DATE" means, for each Settlement Period, the third Business Day prior to the MTN Payment Date, commencing in February, 2001. "REPOSSESSIONS" means Financed Vehicles the Servicer has voluntarily or involuntarily taken possession of and has not yet disposed of at auction or otherwise. "RESERVE ACCOUNT" has the meaning specified in Section 2.15 hereof. "RESERVE ACCOUNT DEPOSIT AMOUNT" has the meaning specified in Section 2.11(c)(i) hereof. 24 "RESERVE ACCOUNT REQUIRED AMOUNT" means, (x) as of any Borrowing Base Determination Date during the Revolving Period, the product of (i) the applicable Revolving Period Reserve Percentage and (ii) the Net Receivables Balance as of such Borrowing Base Determination Date; and (y) as of any date of determination during the Amortization Period, the lesser of: (i) the greatest of: (A) 1.5% of the Aggregate Outstanding Balance of all Receivables as of the commencement of the Amortization Period; (B) the product of (I) the applicable Amortization Period Reserve Percentage and (II) the Aggregate Outstanding Balance of all Receivables as of such date of determination; and (C) the product of (I) the Credit Score Based Reserve Percentage applicable to the Amortization Period and (II) the Aggregate Outstanding Balance of all Receivables as of such date of determination; and (ii) the Net Investment as of such date of determination. "RESERVE ACCOUNT SHORTFALL" means, as of any Delivery Date, that the amount on deposit in the Reserve Account on such Determination Date is less than the Reserve Account Deposit Amount for such Delivery Date. "REVOLVING PERIOD" means the period commencing on the Closing Date and ending on the commencement of the earlier of (i) the date on which the Regular Amortization Period commences and (ii) the date on which the Rapid Amortization Period commences. "REVOLVING PERIOD RESERVE PERCENTAGE" means, with respect to any Borrowing Base Determination Date during the Revolving Period, the sum of (x) if, and only if, the Weighted Average Age of the Eligible Receivables then exceeds 180.00 days, 3%, plus (y) the applicable percentage set forth in the numbered clauses (i) through (v) below: (i) 3.5% if BOTH (a) the Weighted Average AmeriCredit Score of all Eligible Receivables as of such date of determination, after taking into account all Facility Activity on such date is greater than or equal to 227.00; and (b) the most-recently calculated Portfolio Net Loss Ratio is less than 5.00%. (ii) 4.5%, if EITHER 25 (a) the Weighted Average AmeriCredit Score of all Eligible Receivables as of such date of determination, after taking into account all Facility Activity on such date is greater than or equal to 226.00 but less than 227.00; or (b) the most-recently calculated Portfolio Net Loss Ratio is greater than or equal to 5.00% but less than 6.00%. (iii) 5.5%, if EITHER (a) the Weighted Average AmeriCredit Score of all Eligible Receivables as of such date of determination, after taking into account all Facility Activity on such date is greater than or equal to 224.00 but less than 226.00; or (b) the most-recently calculated Portfolio Net Loss Ratio is greater than or equal to 6.00% but less than 7.00%. (iv) 6.5%, if EITHER (a) the Weighted Average AmeriCredit Score of all Eligible Receivables as of such date of determination, after taking into account all Facility Activity on such date is greater than or equal to 222.00 but less than 224.00; or (b) the most-recently calculated Portfolio Net Loss Ratio is greater than or equal to 7.00% but less than 7.50%. (v) 7.5%, if EITHER (a) the Weighted Average AmeriCredit Score of all Eligible Receivables as of such date of determination, after taking into account all Facility Activity on such date is less than 222.00; or (b) the most-recently calculated Portfolio Net Loss Ratio is greater than or equal to 7.50%. "S&P" or "STANDARD & POOR'S" means Standard & Poor's Ratings Services, a Division of the McGraw-Hill Companies. "SCHEDULE OF RECEIVABLES" means the schedule of all retail installment sales contracts and promissory notes originally held as part of the Trust. "SECURED OBLIGATIONS" means, at any time, collectively but without duplication, all of the following: the Net Investment then outstanding, any accrued and unpaid Note Interest, 26 any accrued and unpaid Premiums and Reimbursement Amounts, the Monthly Administration Fee, all amounts due to the Trustee and to the Collateral Agent, all amounts due to the Note Insurer, and all other amounts due from the Debtor hereunder or under any other Transaction Document. "SECURED PARTIES" means, collectively, the Purchaser and the Note Insurer. "SECURITIES ACCOUNT" shall have the meaning given such term in Section 8-501(a) of the UCC. "SECURITY ENTITLEMENT" shall have the meaning given such term in Section 8-102(a)(17) of the UCC. "SECURITIES INTERMEDIARY" has the meaning specified in Article VIII hereto. "SECURITIZATION ASSETS" means the sum of (i) restricted cash deposits under securitizations sponsored by AmeriCredit, (ii) investments in trust receivables from securitzations sponsored by AmeriCredit and (iii) the interest-only receivables from the trusts created in connection with securitizations sponsored by AmeriCredit. "SERVICER" means at any time the Person then authorized pursuant to Section 2.1 of the Servicing Agreement to service, administer and collect Receivables. "SERVICER'S CERTIFICATE" has the meaning specified in the Servicing Agreement. "SERVICING AGREEMENT" means the Servicing and Custodian Agreement, dated as of the date hereof, among the Servicer, the Custodian, the Debtor and the Collateral Agent, as such agreement may be amended, supplemented or otherwise modified from time to time. "SERVICING FEE" means, for any Settlement Period, the fee payable to the Servicer from Collections pursuant to Section 2.3(b) hereof on the related Remittance Date, in an amount equal to 2.25% per annum on the amount of the Aggregate Outstanding Balance of the Receivables as of the first day of such Settlement Period. "SERVICING PORTFOLIO" means, as of any date, the Aggregate Outstanding Balance of all Receivables (whether or not thereafter sold or disposed of) relating to retail installment sales contracts or installment notes and security agreements relating to the sale or refinancing of new or used automobiles, light-duty trucks, vans, or minivans that are serviced by the Servicer or any of its Affiliates as of such date, calculated in a manner consistent with the components of "managed receivables" in the most recent reports on Form 10-K or Form 10-Q filed by AmeriCredit Corp. "SETTLEMENT PERIOD" means any calendar month, provided that the initial Settlement Period shall commence on the Closing Date and end on January 31, 2000. "STEP-DOWN AMOUNT" means zero for any Remittance Date occurring during the Revolving Period or during the Rapid Amortization Period; for any Remittance Date occurring during the Regular Amortization Period, the excess, if any, of (x) the excess of (i) the Aggregate 27 Outstanding Balance of all Receivables held as Collateral as of the end of the related Settlement Period over (ii) the Net Investment outstanding on such Remittance Date, assuming that 100% of the Monthly Principal Amount (without deduction for any Step-Down Amount) were applied in reduction of the Net Investment on such Remittance Date over (y) 5% of the Aggregate Outstanding Balance of all Receivables held as Collateral as of the end of the related Settlement Period. "SUBSIDIARY" of a Person means any corporation more than 50% of the outstanding voting securities of which, and any partnership more than 50% of the partnership interests of which, shall at any time be owned or controlled, directly or indirectly, by such Person or by one or more Subsidiaries of such Person or any similar business organization which is so owned or controlled. "TAKE-OUT" means the release, pursuant to Section 2.16 hereof, by the Collateral Agent of Receivables and the Contracts related thereto. "TAKE-OUT DATE" means the date on which a Take-Out occurs. "TAKE-OUT NOTICE" means the notice, substantially in the form attached hereto as Exhibit K, furnished by the Debtor to the Collateral Agent and the Note Insurer in accordance with Section 2.15. "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, copyrights and service marks. "TARGET YIELD SUPPLEMENT ACCOUNT AMOUNT" means as of any Borrowing Base Determination Date the product of (i) the amount credited to the Funding Account at the close of business on such Determination Date multiplied by (ii)(A) from the first until the fifth Determination Dates after the Closing Date, 1.75%, (B) from the sixth until the eleventh Determination Dates after the Closing Date, 1.20%, and (C) thereafter, 0.70%. "TERMINATION AND AMORTIZATION EVENT" means an event described in Section 6.1 hereof. "THIRD PARTY LENDER" means a lender other than the Sellers that has originated a Receivable in connection with the sale of a Financed Vehicle and has sold such Receivable to AmeriCredit under a Third Party Loan Purchase Agreement or pursuant to a Third Party Lender Assignment and (i) which has been approved by AmeriCredit in accordance with comparable procedures as Dealers are approved, (ii) which will be monitored by AmeriCredit in accordance with comparable procedures as Dealers are monitored, (iii) whose motor vehicle installment sale contracts or installment loan contracts are underwritten in accordance with AmeriCredit's underwriting standards, and (iv) whose motor vehicle installment sales contracts or installment loan contracts are serviced in accordance with the Servicer's servicing standards. 28 "THIRD PARTY LENDER ASSIGNMENT" means, with respect to a Receivable, the executed assignment executed by a Third Party Lender conveying such Receivable to AmeriCredit, as the same may be amended, supplemented or otherwise modified and in effect. "THIRD PARTY LOAN PURCHASE AGREEMENT" means any agreement between a Third Party Lender and AmeriCredit relating to the acquisition of Receivables from a Third Party Lender by AmeriCredit, as the same may be amended, supplemented or otherwise modified and in effect. "TOTAL AVAILABLE FUNDS" means, with respect to any Remittance Date, the sum of (x) the Available Funds for such Remittance Date and (y) the amounts, if any, withdrawn from the Yield Supplement Account and from the Reserve Account on such Remittance Date and deposited to the Collection Account pursuant to Section 2.3(b) hereof. "TRANSACTION DOCUMENTS" means this Agreement, the Note Purchase Agreement, the Note, the Master Receivables Purchase Agreement, the Servicing Agreement, the Insurance Agreement, the Trust Agreement, the Premium Side Letter, each Hedging Arrangement and all other agreements, documents and instruments delivered pursuant thereto or in connection therewith. "TRUST AGREEMENT" means the Amended and Restated Trust Agreement, dated as of the date hereof, among AmeriCredit, AMTN and the Trustee, together with all permitted amendments, modifications and supplements thereto. "TRUSTEE" means the Trustee under the Trust Agreement. "UCC" means, with respect to any state, the Uniform Commercial Code as from time to time in effect in such state. "U.S." or "UNITED STATES" means the United States of America. "WEIGHTED AVERAGE AGE" means, with respect to any group of Eligible Receivables, the quotient equal to (x) the product of (i) the number of days each Receivable in such group has been included as Collateral multiplied by (ii) the Outstanding Balance of the related Receivable divided by (y) the Aggregate Outstanding Balance of all such Receivables. "WEIGHTED AVERAGE AMERICREDIT SCORE" means, with respect to any group of Eligible Receivables, the quotient equal to (x) the product of (i) the AmeriCredit Score for each Receivable in such group multiplied by (ii) the Outstanding Balance of the related Receivable divided by (y) the Aggregate Outstanding Balance of all such Receivables. "YIELD SUPPLEMENT ACCOUNT" has the meaning specified in Section 2.12 hereof. "YIELD SUPPLEMENT ACCOUNT SHORTFALL" means, as of any Determination Date, that the amount on deposit in the Yield Supplement Account on such Determination Date is less than the required Yield Supplement Account Amount for such Determination Date. 29 SECTION 1.2. OTHER TERMS. Unless the context otherwise requires, all capitalized terms used herein and not otherwise defined herein shall have the meanings specified in the Note Purchase Agreement, and shall include in the singular number the plural and in the plural number the singular. All accounting terms not specifically defined herein shall be construed in accordance with GAAP. All terms used in Article 9 of the UCC in the State of New York, and not specifically defined herein, are used herein as defined in such Article 9. SECTION 1.3. COMPUTATION OF TIME PERIODS. Unless otherwise stated in this Agreement, in the computation of a period of time from a specified date to a later specified date, the word "from" means "from and including," the words "to" and "until" each means "to but excluding," and the word "within" means "from and excluding a specified date and to and including a later specified date." SECTION 1.4. FORM OF NOTES. The Notes, in each case together with the Collateral Agent's certificate of authentication, shall be in substantially the form set forth in Exhibit C, with such appropriate insertions, omissions, substitutions and other variations as are required or permitted by this Security Agreement and may have such letters, numbers or other marks of identification and such legends or endorsements placed thereon as may, consistently herewith, be determined by the officers executing such Note, as evidenced by their execution of the Notes. Any portion of the text of such Note may be set forth on the reverse thereof, with an appropriate reference thereto on the face of the Note. The Notes shall be typewritten, printed, lithographed or engraved or produced by any combination of these methods (with or without steel engraved borders), all as determined by the officers executing such Notes, as evidenced by their execution of such Notes. Each Note shall be dated the date of its authentication. SECTION 1.5. EXECUTION, AUTHENTICATION AND DELIVERY. The Notes shall be executed on behalf of the Debtor by any of its Authorized Officers. The signature of any such Authorized Officer on the Notes may be manual or facsimile. Notes bearing the manual or facsimile signature of individuals who were at any time Authorized Officers of the Debtor shall bind the Debtor, notwithstanding that such individuals or any of them have ceased to hold such offices prior to the authentication and delivery of such Notes or did not hold such offices at the date of such Notes. The Collateral Agent shall, upon receipt of the Debtor Order, authenticate and deliver Notes for original issue in an aggregate principal amount of $500,000,000. The Notes shall be issuable as registered Notes in the minimum denomination of $1,000,000 and in integral multiples thereof (except for one Note which may be issued in a denomination other than an integral multiple of $1,000,000). No Note shall be entitled to any benefit under this Security Agreement or be valid or obligatory for any purpose, unless there appears on such Note a certificate of authentication substantially in the form provided for herein executed by the Collateral Agent by the manual signature of one of its authorized signatories, and such certificate upon any Note shall be 30 conclusive evidence, and the only evidence, that such Note has been duly authenticated and delivered hereunder. SECTION 1.6. REGISTRATION; REGISTRATION OF TRANSFER AND EXCHANGE. The Debtor shall cause to be kept a register (the "NOTE REGISTER") in which, subject to such reasonable regulations as it may prescribe, the Debtor shall provide for the registration of Notes and the registration of transfers of Notes. The Collateral Agent shall be "NOTE REGISTRAR" for the purpose of registering Notes and transfers of Notes as herein provided. Upon any resignation of any Note Registrar, the Debtor shall promptly appoint a successor or, if it elects not to make such an appointment, assume the duties of Note Registrar. If a Person other than the Collateral Agent is appointed by the Debtor as Note Registrar, the Debtor will give the Collateral Agent prompt written notice of the appointment of such Note Registrar and of the location, and any change in the location, of the Note Register, and the Collateral Agent shall have the right to inspect the Note Register at all reasonable times and to obtain copies thereof, and the Collateral Agent shall have the right to conclusively rely upon a certificate executed on behalf of the Note Registrar by an Executive Officer thereof as to the names and addresses of the Noteholders of the Notes and the principal amounts and number of such Notes. Upon surrender for registration of transfer of any Note at the office or agency of the Debtor to be maintained as provided in Section 1.10 hereof, if the requirements of Section 8-401(1) of the UCC are met the Issuer shall execute and upon its request the Collateral Agent shall authenticate and the Noteholder shall obtain from the Collateral Agent, in the name of the designated transferee or transferees, one or more new Notes, in any authorized denominations, of the same class and a like aggregate principal amount. At the option of the Noteholder, Notes may be exchanged for other Notes in any authorized denominations, of the same class and a like aggregate principal amount, upon surrender of the Notes to be exchanged at such office or agency. Whenever any Notes are so surrendered for exchange, if the requirements of Section 8-401(1) of the UCC are met the Debtor shall execute and upon its request the Collateral Agent shall authenticate and the Noteholder shall obtain from the Collateral Agent, the Notes which the Noteholder making the exchange is entitled to receive. All Notes issued upon any registration of transfer or exchange of Notes shall be the valid obligations of the Debtor, evidencing the same debt, and entitled to the same benefits under this Security Agreement, as the Notes surrendered upon such registration of transfer or exchange. Every Note presented or surrendered for registration of transfer or exchange shall be (i) duly endorsed by, or be accompanied by a written instrument of transfer in the form attached to Exhibit C duly executed by the Holder thereof or such Holder's attorney duly authorized in writing, with such signature guaranteed by an "eligible guarantor institution" meeting the requirements of the Note Registrar which requirements include membership or participation in Securities Transfer Agents Medallion Program ("STAMP") or such other "signature guarantee program" as may be determined by the Note Registrar in addition to, or in substitution for, Stamp, all in accordance with the Exchange Act, and (ii) accompanied by an investor representation letter in substantially the form of Exhibit D hereto or, in lieu thereof, a legal 31 opinion to the effect that such transfer or exchange constitutes an exempt transaction under Section 4(2) of the Securities Act of 1933, as amended. Notwithstanding the foregoing, in the case of any sale or other transfer of a Note, the transferor of such Note shall be required to represent and warrant in writing that the prospective transferee either (a) is not (i) an employee benefit plan (as defined in section 3(3) of the Employee Retirement Income Security Act of 1974, as amended ("ERISA")), which is subject to the provisions of Title I of ERISA, (ii) a plan (as defined in section 4975(e)(1) of the Code), which is subject to Section 4975 of the Code, or (iii) an entity whose underlying assets are deemed to be assets of a plan described in (i) or (ii) above by reason of such plan's investment in the entity (any such entity described in clauses (i) through (iii), a "BENEFIT PLAN ENTITY") or (b) is a Benefit Plan Entity and the acquisition and holding of the Definitive Note by such prospective transferee is covered by a Department of Labor Prohibited Transaction Class Exemption. Each transferee of a Book Entry Note that is a Benefit Plan Entity shall be deemed to represent that its acquisition and holding of the Book Entry Note is covered by a Department of Labor Prohibited Transaction Class Exemption. Notwithstanding the foregoing, the transferor of such Note shall be further required to represent and warrant in writing that it reasonably believes, after due inquiry, that the prospective transferee is not a Benefit Plan Entity. Each transferee of such Note shall be deemed to represent that it is not a Benefit Plan Entity. No service charge shall be made to a Noteholder for any registration of transfer or exchange of Notes, but the Note Registrar may require payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in connection with any registration of transfer or exchange of Notes. The preceding provisions of this section notwithstanding, the Debtor shall not be required to make and the Note Registrar shall not register transfers or exchanges of Notes selected for redemption or of any Note for a period of 15 days preceding the due date for any payment with respect to the Note. SECTION 1.7. MUTILATED, DESTROYED, LOST OR STOLEN NOTES. If (i) any mutilated Note is surrendered to the Collateral Agent, or the Collateral Agent receives evidence to its satisfaction of the destruction, loss or theft of any Note, and (ii) there is delivered to the Collateral Agent such security or indemnity as may be required by it to hold the Debtor and the Collateral Agent harmless, then, in the absence of notice to the Debtor, the Note Registrar or the Collateral Agent that such Note has been acquired by a bona fide purchaser, and provided that the requirements of Section 8-405 of the UCC are met, the Debtor shall execute and upon its request the Collateral Agent shall authenticate and deliver, in exchange for or in lieu of any such mutilated, destroyed, lost or stolen Note, a replacement Note; PROVIDED, HOWEVER, that if any such destroyed, lost or stolen Note, but not a mutilated Note, shall have become or within seven days shall be due and payable, instead of issuing a replacement Note, the Debtor may direct the Collateral Agent, in writing, to pay such destroyed, lost or stolen Note when so due or payable without surrender thereof. If, after the delivery of such replacement Note or payment of a destroyed, lost or stolen Note pursuant to the proviso to the preceding sentence, a bona fide purchaser of the original Note in lieu of which such replacement Note was issued presents for 32 payment such original Note, the Debtor and the Collateral Agent shall be entitled to recover such replacement Note (or such payment) from the Person to whom it was delivered or any Person taking such replacement Note from such Person to whom such replacement Note was delivered or any assignee of such Person, except a bona fide purchaser, and shall be entitled to recover upon the security or indemnity provided therefor to the extent of any loss, damage, cost or expense incurred by the Debtor or the Collateral Agent in connection therewith. Upon the issuance of any replacement Note under this Section 1.7, the Debtor may require the payment by the Holder of such Note of a sum sufficient to cover any tax or other governmental charge that may be imposed in relation thereto and any other reasonable expenses (including the fees and expenses of the Collateral Agent) connected therewith. Every replacement Note issued pursuant to this Section 1.7 in replacement of any mutilated, destroyed, lost or stolen Note shall constitute an original additional contractual obligation of the Debtor, whether or not the mutilated, destroyed, lost or stolen Note shall be at any time enforceable by anyone, and shall be entitled to all the benefits of this Security Agreement equally and proportionately with any and all other Notes duly issued hereunder. The provisions of this Section 1.7 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 1.8. PERSONS DEEMED OWNER. Prior to due presentment for registration of transfer of any Note, the Debtor, the Collateral Agent and any agent of the Debtor or the Collateral Agent may treat the Person in whose name any Note is registered as the owner of such Note for the purpose of receiving payments of principal of and interest, if any on such Note and for all other purposes whatsoever, whether or not such Note be overdue, and none of the Debtor, the Collateral Agent nor any agent of the Debtor or the Collateral Agent shall be affected by notice to the contrary. SECTION 1.9. CANCELLATION. All Notes surrendered for payment, registration of transfer, exchange or redemption shall, if surrendered to any Person other than the Collateral Agent, be delivered to the Collateral Agent and shall be promptly canceled by the Collateral Agent. The Debtor may at any time deliver to the Collateral Agent for cancellation any Notes previously authenticated and delivered hereunder which the Debtor may have acquired in any manner whatsoever, and all Notes so delivered shall be promptly canceled by the Collateral Agent. No Notes shall be authenticated in lieu of or in exchange for any Notes canceled as provided in this Section 1.9, except as expressly permitted by this Security Agreement. All canceled Notes may be held or disposed of by the Collateral Agent in accordance with its standard retention or disposal policy as in effect at the time unless the Debtor shall timely direct by a Debtor Order that they be destroyed or returned to it; provided that such Debtor Order is timely and the Notes have not been previously disposed of by the Collateral Agent. SECTION 1.10. MAINTENANCE OF OFFICE OR AGENCY. The Debtor will maintain in New York, New York, an office or agency where Notes may be surrendered for registration of transfer or exchange, and where notices and demands to or upon the Debtor in respect of the Notes and this Security Agreement may be served. The Debtor hereby initially appoints the Collateral 33 Agent to serve as its agent for the foregoing purposes. The Debtor will give prompt written notice to the Collateral Agent of the location, and of any change in the location, of any such office or agency. If at any time the Debtor shall fail to maintain any such office or agency or shall fail to furnish the Collateral Agent with the address thereof, such surrenders, notices and demands may be made or served at the Collateral Agent's office, and the Debtor hereby appoints the Collateral Agent as its agent to receive all such surrenders, notices and demands. ARTICLE II GRANT OF SECURITY INTEREST AND SETTLEMENTS SECTION 2.1. GRANT OF SECURITY INTEREST. As security for the prompt and complete payment of the Note and the performance of all of the Debtor's obligations under the Transaction Documents, the Debtor hereby grants to the Collateral Agent, for the benefit of the Secured Parties, without recourse except as provided herein, a security interest in and continuing Lien on all of the Debtor's property, in existence on the Closing Date or thereafter acquired and wherever located, including, without limitation, all of its right, title and interest in, to and under all accounts, contract rights, general intangibles, chattel paper, instruments, documents, money, cash, deposit accounts, certificates of deposit, goods, letters of credit, securities, investment property, financial assets or security entitlements (all of the foregoing, collectively, the "COLLATERAL"); PROVIDED, that once the Secured Parties have released their interest in a Receivable and the related Contract pursuant to Section 2.7 or 2.15 hereof, such Receivable and related Contract shall no longer be part of the Collateral. In connection with such grant, the Debtor agrees to record and file, at its own expense, financing statements with respect to the Collateral now existing and hereafter created meeting the requirements of applicable state law in such manner and in such jurisdictions as are necessary to perfect the first priority security interest of the Collateral Agent in the Collateral, and to deliver a file-stamped copy of such financing statements or other evidence of such filing (which may, for purposes of this Section 2.1, consist of telephone confirmation of such filing) to the Collateral Agent on or prior to the Closing Date. In addition, in order to show that the Collateral, including that portion of the Collateral consisting of the Receivables and the related Contracts, have been pledged to the Collateral Agent hereunder, the Debtor and the Servicer agree (i) to clearly and unambiguously mark their respective general ledgers and all accounting records and documents and all computer tapes and records and (ii) to stamp all Contracts and related files with the following legend: All right, title and interest in the foregoing finance contract has been assigned to a financial institution in its capacity as agent or collateral agent for the secured parties in connection with a credit facility. SECTION 2.2. NOTE INTEREST, PREMIUM AMOUNTS, FEES AND OTHER COSTS AND EXPENSES. Notwithstanding the limitation on recourse under Section 2.1 hereof, the Debtor shall pay, as and when due in accordance with this Agreement, all Note Interest, all Reimbursement Amounts, the Monthly Administration Fee, all amounts payable pursuant to Article VII hereof, if any, all 34 Premium Amounts, and the Servicing Fee. Nothing in this Agreement shall limit in any way the obligations of the Debtor to pay the amounts set forth in this Section 2.2. SECTION 2.3. MONTHLY FLOW OF FUNDS. (a) On each Remittance Date, the Available Funds or the Total Available Funds, as applicable, plus, in the case of priorities (v) and (vi), the amount of any draws made under the Note Policy by the Collateral Agent shall be applied, without duplication, by the Collateral Agent as follows: (i) FIRST, from the Total Available Funds, (x) to pay any regularly scheduled amounts due under any Hedging Arrangement and (y) to pay, with the prior consent of the Note Insurer, any other amounts then due to the counterparty under any such Hedging Agreements; (ii) SECOND, from the Total Available Funds, to pay the Servicer, the Servicing Fee for such Settlement Period; (iii) THIRD, from the Total Available Funds, to the extent available, to pay to AmeriCredit Financial Services, Inc., any amounts on deposit in the Collection Account with respect to a Settlement Period for amounts previously deposited in the Collection Account but later determined to have resulted from mistaken deposits or postings or checks returned for insufficient funds, together with amounts paid by Obligors that were collected during the related Settlement Period and which do not relate to principal and interest payments due on the Receivables; (iv) FOURTH, from the Total Available Funds, to pay to the Collateral Agent all fees and expenses due pursuant to Section 7.2 hereof, but not, for any single Remittance Date, in excess of 1/12 of the annual amount set forth on the fee schedule attached as Exhibit P hereto, and to the Trustee, its fees and expenses (to the extent not paid by the Servicer), but not, for any single Remittance Date, in excess of the monthly amount set forth in part III of the fee schedule attached as Exhibit Q hereto; (v) FIFTH, from the Total Available Funds, to pay the Purchaser an amount equal to all accrued and unpaid Note Interest in respect of such Settlement Period and with respect to any previous Settlement Period to the extent not previously paid; (vi) SIXTH, from the Total Available Funds, the Monthly Principal Amount shall be paid (x) if such Remittance Date occurs during the Revolving Period, to the Funding Account, or (y) if such Remittance Date occurs during the Amortization Period, to the Purchaser, in reduction of the Net Investment; (vii) SEVENTH, from the Total Available Funds, to the extent of any remaining Total Available Funds, to pay the Note Insurer, the Premium Amount then due and any accrued and unpaid Premium Amount with interest at the Late Payment Rate; (viii) EIGHTH, from the Total Available Funds, to the Note Insurer, the Reimbursement Amount, if any, then due to it; 35 (ix) NINTH, from the Total Available Funds, to the successor Servicer, if any, expenses incurred in connection with transition of servicing, and any fees owed to the successor Servicer not paid in (ii) above; (x) TENTH, from the Available Funds, to the Reserve Account, the amount, if any, by which the Reserve Account Required Amount, after taking into account any Receivables Delivery which occurs on such Remittance Date, then exceeds the amount then on deposit in the Reserve Account, after taking into account all other deposits to, and all withdrawals and transfers from, the Reserve Account on such Remittance Date; (xi) ELEVENTH, from the Available Funds, to the Yield Supplement Account, the amount, if any, by which the Target Yield Supplement Account Amount then exceeds the amount on deposit in the Yield Supplement Account, after taking into account all other deposits to, and all withdrawals and transfers from, the Yield Supplement Account on such Remittance Date; (xii) TWELFTH, from the Available Funds, any amounts owed to the Collateral Agent and the Trustee not paid in (iv) above; (xiii) THIRTEENTH, from the Available Funds, an amount equal to the positive excess, if any, of (x) the Net Investment on such Remittance Date, after taking into account all other Facility Activity on such Remittance Date over (y) the Borrowing Base as of such Remittance Date, after taking into account all other Facility Activity on such Remittance Date, which amount shall be paid (a) if such Remittance Date occurs during the Revolving Period, to the Funding Account, or (b) if such Remittance Date occurs during the Amortization Period, to the Purchaser, in reduction of the Net Investment; and (xiv) FOURTEENTH, from the Available Funds, all remaining Available Funds shall be paid (x) if the Rapid Amortization Period is then in effect unless the Note Insurer otherwise directs, to the Purchaser, as a reduction in the Net Investment until the Net Investment has been reduced to zero or (y) if the Rapid Amortization Period is not then in effect, to the holders of the Class A Certificates. (b) (i) In the event that, on any Remittance Date, the Available Funds are insufficient, after following the priority of payments as enumerated in paragraph (a) above, to fund in full the amounts described in clauses (i), (ii), (iii), (iv) and (v) of paragraph (a) above on such Remittance Date, the Collateral Agent shall transfer the amount of the insufficiency to the Collection Account (x) first, from the Yield Supplement Account, until the amount on deposit therein has been reduced to zero and (y) second, and to the extent of any remaining insufficiency once the amount on deposit in the Yield Supplement Account has been reduced to zero, from the Reserve Account. (ii) In the event that, on any Remittance Date, the Available Funds are insufficient after following the payment priorities enumerated in paragraph (a) above, to fund in full the amounts described in clauses (vi), (vii), (viii) and (ix) of paragraph (a) above on such Remittance Date, the Collateral Agent shall transfer the amount of such insufficiency to the 36 Collection Account from the Reserve Account, to the extent of amounts then on deposit therein and after taking into account any withdrawal therefrom pursuant to clause (b)(i)(y) above. (c) In the event that, on any Determination Date, the Collateral Agent determines that, after application of the Total Available Funds on such Remittance Date, a Deficiency Amount then exists, the Collateral Agent shall, submit a claim under the Note Policy pursuant to the terms thereof demanding that the Note Insurer pay to the Collateral Agent for deposit in the Collection Account the amount of such Deficiency Amount, in immediately available funds pursuant to the terms of the Note Policy. SECTION 2.4. PREPAYMENTS. On each Payment Date the Collateral Agent shall apply an amount on deposit in the Collection Account, to the extent of the Prepayment Amount, as directed by the Servicer as follows: (a) an amount equal to the amount described in clause (i) of the definition of Prepayment Amount shall be paid to the Purchaser, in reduction of the Net Investment; and (b) an amount equal to the amount described in clause (ii) of the definition of Prepayment Amount shall be paid to the Purchaser on account of accrued interest on the Note, through the Prepayment Date. SECTION 2.5. LIQUIDATION SETTLEMENT PROCEDURES. Following any date after the date on which all Secured Obligations have been paid in full in cash, (i) the Collateral Agent shall be considered to have released its security interest in and continuing Lien on the Collateral, including all of the Receivables and Related Security, (ii) the Servicer shall pay to the Debtor any remaining Collections set aside and held by the Servicer, and (iii) the Collateral Agent shall, at the written request of the Debtor, execute and deliver to the Debtor, at the Debtor's expense, such documents or instruments as are necessary to terminate the Collateral Agent's security interest in the Collateral, including all of the Receivables and Related Security and Collections with respect thereto. Any such documents shall be prepared by or on behalf of the Debtor at the expense of the Debtor. After giving effect to any such liquidation, any amounts remaining in the Reserve Account, the Yield Supplement Account and in the Funding Account shall be paid to the holders of the Class A Certificates. SECTION 2.6. PROTECTION OF INTEREST OF THE COLLATERAL AGENT. (a) AmeriCredit and AMTN agree that they shall, and shall cause the Debtor to, from time to time, at its expense, promptly execute and deliver all instruments and documents and take all actions as may be necessary or as the Collateral Agent may reasonably request in order to perfect or protect the Collateral or to enable the Collateral Agent or any Secured Party to exercise or enforce any of its rights hereunder. Nothing contained herein shall imply a duty of the Collateral Agent to initiate the preparation of documents or the taking of action to perfect or protect the Collateral beyond the duties specifically enumerated herein and contained in the Transaction Documents. Without limiting the foregoing, AmeriCredit and 37 AMTN shall, and shall cause the Debtor to, in order to accurately reflect the security interest of the Collateral Agent for the benefit of the Secured Parties in the Collateral, (i) stamp (or cause to be stamped) all Contracts and related files with the legend set forth in Section 2.1 hereof and (ii) upon the request of any Secured Party, execute and file such financing or continuation statements or amendments thereto or assignments thereof as may be requested by such Secured Party and mark its master data processing records and other documents (or to cause such records or other documents to be marked) so as to indicate the Collateral Agent's security interest in the portion of the Collateral consisting of Receivables, the related Contracts, the Collections and the Related Security with respect thereto. AmeriCredit and AMTN agree that they shall take all actions necessary to cause the Debtor to similarly mark its records to reflect the sale of the Receivables and the Contracts to the Debtor and the Collateral Agent's security interest in the Receivables, the related Contracts, the Collections and the Related Security with respect thereto. AmeriCredit and AMTN shall, and shall cause the Debtor to, at their own expense, upon request of any Secured Party, obtain such additional search reports as any such Secured Party shall request. To the fullest extent permitted by applicable law, the Collateral Agent shall be permitted to sign and file continuation statements and amendments thereto and assignments thereof in respect of security interests created under this Agreement without the Debtor's, AmeriCredit's or AMTN's signature. Carbon, photographic or other reproduction of this Agreement or any financing statement shall be sufficient as a financing statement. The Debtor shall not, and shall not permit AmeriCredit or AMTN to, change its name, identity or corporate structure (within the meaning of Section 9-402(7) of the UCC as in effect in the State of New York, Delaware and Texas) or relocate its chief executive office or any office where Records are kept unless it shall have: (i) given the Collateral Agent and the Note Insurer at least thirty (30) days' prior notice thereof and (ii) prepared at the Debtor's expense and delivered to the Collateral Agent all financing statements, instruments and other documents necessary to preserve and protect the Collateral or requested by the Collateral Agent or any Secured Party in connection with such change or relocation. Any filings under the UCC or otherwise that are occasioned by such change in name or location shall be made at the expense of the Debtor. On the Closing Date, the Debtor shall deliver to the Collateral Agent and the Note Insurer a listing by account number of the Contracts as of the Closing Date, which listing shall constitute Schedule A hereto and is hereby incorporated herein by reference. On each Remittance Date, the Debtor shall deliver to the Collateral Agent and the Note Insurer an updated listing by account number of the Contracts as of the last day of such Settlement Period (giving effect to any releases by the Purchaser pursuant to Section 2.15 hereof) and such updated list shall thereupon constitute Schedule A hereto and is hereby incorporated by reference herein. (b) The Servicer shall instruct all Obligors to cause all Collections to be deposited directly with a Lock-Box Bank, acting as agent for the Collateral Agent, on behalf of the Secured Parties, pursuant to a Lock-Box Agreement. Amounts received by a Lock-Box Bank in respect of Receivables may initially be deposited into a Lock-Box Account maintained by the Lock-Box 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 be permitted to give instructions to the Lock-Box Banks for so long as neither a Potential Termination and Amortization Event nor any Termination and Amortization Event has occurred hereunder. The Servicer shall not add any bank as a Lock-Box Bank to those listed on Exhibit A attached hereto unless such bank has entered into a Lock-Box Agreement. The Servicer shall not terminate any bank as a Lock-Box Bank unless the Collateral Agent and the Note Insurer shall 38 have received fifteen (15) days' prior notice of such termination. The Servicer shall use its best efforts to cause the Lock-Box Bank, pursuant to the Lock-Box Agreement, to deposit all payments on the Receivables in the Lock-Box Account not later than the Business Day after receipt thereof and, within two (2) Business Days of receipt of Collections into the Lock-Box Account, the Servicer shall cause such Collections to be remitted into the Collection Account. If the Debtor, AmeriCredit, AMTN or the Servicer receives any Collections, the Debtor, AmeriCredit, AMTN or the Servicer, as applicable, shall immediately, but in any event within two (2) Business Days of receipt, remit (and shall cause AmeriCredit and AMTN to remit) such Collections to the Collection Account. SECTION 2.7. DEEMED COLLECTIONS; APPLICATION OF PAYMENTS. (a) If on any day the Outstanding Balance of a Receivable is either (x) reduced as a result of any defective, rejected or returned merchandise or services, any discount, credit, rebate, dispute, warranty claim, repossessed or returned goods, charge-back, allowance, any billing adjustment, dilutive factor or other adjustment or (y) reduced or canceled as a result of a setoff or offset in respect of any claim by any Person (whether such claim arises out of the same or a related transaction or an unrelated transaction), the Debtor shall be deemed to have received on such day a Collection of such Receivable in the amount of such reduction or cancellation and the Debtor shall pay to the Servicer an amount equal to such reduction or cancellation and such amount shall be deposited into the Collection Account and applied by the Servicer as a Collection in accordance with Section 2.3 or 2.4 hereof, as applicable. (b) If on any day any of the representations or warranties in Article III was or becomes untrue with respect to a Receivable (whether on or after the date of any transfer of an interest therein to the Collateral Agent, for the benefit of the Secured Parties, as contemplated hereunder), the Debtor shall be deemed to have received on such day a Collection of such Receivable in full and the Debtor shall on such day pay to the Servicer an amount equal to the Outstanding Balance of such Receivable and such amount shall be deposited into the Collection Account and allocated and applied by the Servicer as a Collection on account of such Receivable. (c) Any payment by an Obligor in respect of any indebtedness owed by it to the Debtor, AmeriCredit or AMTN shall, except as otherwise specified by such Obligor or otherwise required by contract or law and unless otherwise instructed by the Note Insurer, be applied as a Collection of any Receivable of such Obligor included in the Net Investment (starting with the oldest such Receivable) to the extent of any amounts then due and payable thereunder before being applied to any other receivable or other indebtedness of such Obligor. SECTION 2.8. PAYMENTS AND COMPUTATIONS, ETC. All amounts to be paid or deposited by the Debtor or the Servicer hereunder shall be paid or deposited in accordance with the terms hereof no later than 1:00 p.m. (New York City time) on the day when due in immediately available funds; if such amounts are payable to the Note Insurer (whether on behalf of the Purchaser or any other Owners or otherwise), they shall be paid or deposited in the Note Insurer's account indicated in Section 9.3 hereof, until otherwise notified by the Note Insurer, the Purchaser or any other Owners. The Debtor shall, to the extent permitted by law, pay to the applicable Secured Parties upon demand, interest on all amounts not paid or deposited when due 39 to the Secured Parties hereunder at a rate equal to 2% per annum plus LIBOR as of the most recent LIBOR Determination Date. All computations of Note Interest, Premium Amount, the Monthly Administration Fee, the Late Payment Rate and the Servicing Fee hereunder shall be made on the basis of a year of 360 days for the actual number of days (including the first but excluding the last day) elapsed. Any computations by the Note Insurer of amounts payable by the Debtor hereunder shall be binding upon the Debtor absent manifest error. SECTION 2.9. REPORTS. On or before each Determination Date, the Servicer shall prepare and forward to the Collateral Agent and the Note Insurer, (i) a Servicer's Certificate as of the end of the preceding Settlement Period, (ii) if requested by the Collateral Agent or the Note Insurer, a computer tape listing by Obligor all Receivables, together with an aging of such Receivables, and (iii) such other information as the Collateral Agent, the Note Insurer or any Secured Party may reasonably request. The Note Insurer shall provide to the Debtor, the Servicer and to the Collateral Agent, within three (3) Business Days of each LIBOR Determination Date indicating LIBOR as it applies to the Purchaser's medium term notes with respect to the upcoming MTN Payment Date. The Collateral Agent will determine LIBOR as it applies to the Note, on each LIBOR Determination Date, and will forward such determination to the Debtor and to the Servicer within three (3) Business Days. The Servicer will compare the two LIBOR rates, and will promptly contact the Purchaser, the Collateral Agent and the Note Insurer if such rates do not reconcile. SECTION 2.10. COLLECTION ACCOUNT. (a) There shall be established on or prior to the Closing Date and maintained, for the benefit of the Secured Parties, with the Collateral Agent, an Eligible Deposit Account (the "COLLECTION ACCOUNT"), bearing a designation clearly indicating that the funds deposited therein are held in the name of the Collateral Agent, for the benefit of the Secured Parties. The Collection Account shall be under the exclusive ownership and control of the Collateral Agent, for the benefit of the Secured Parties. Subject to the terms hereof, the Collateral Agent shall possess all right, title and interest in and to all funds deposited from time to time in the Collection Account. There shall be deposited in the Collection Account: (i) by the Servicer, on a daily basis and from the Lock-Box Account, all Collections on account of the Receivables, within two (2) Business Days upon receipt or such Collections in the Lock-Box Account; (ii) amounts representing net investment earnings (a) on the Funding Account, as provided in Section 2.11(h), (b) on the Yield Supplement Account as provided in Section 2.12(a)(iii) and (c) on the Reserve Account, as provided in Section 2.15(a)(iii), in each case, upon the Collateral Agent's receipt of any such net investment earnings; (iii) amounts received under any Hedging Arrangement; (iv) amounts transferred from the Funding Account to the Collection Account pursuant to Section 2.11(e), and from the Yield Supplement Account to the Collection 40 Account pursuant to Section 2.12(a)(vi), in each case in connection with the commencement of the Amortization Period; (v) amounts transferred from the Reserve Account and from the Yield Supplement Account pursuant to Section 2.3(b) hereof; (vi) the proceeds of each draw under the Note Policy; and (vii) the amount deposited in the Collection Account as provided in Section 6.5 hereof. On the date on which Secured Obligations have been paid in full, any funds remaining on deposit in the Collection Account shall be paid to the Debtor. (b) Subject to subsection (d) below, funds on deposit in the Collection Account shall be invested in Eligible Investments by the Collateral Agent at the written direction of the Servicer, provided that if such Eligible Investments are not available or a Termination and Amortization Event shall have occurred, such investments shall be made in the investment described in subclause (iv) of the definition of Eligible Investments. Any such written directions shall specify the particular investment to be made and shall certify that such investment is an Eligible Investment and is permitted to be made under this Agreement. (c) The Servicer shall provide the Collateral Agent on or prior to the Closing Date and from time to time an incumbency certificate or the substantial equivalent with respect to each officer of the Servicer that is authorized to provide instructions relating to investments in Eligible Investments in the Collection Account. (d) Funds on deposit in the Collection Account shall be invested by the Collateral Agent, in the name of the Collateral Agent, in Eligible Investments that will mature so that such funds will be available so as to permit amounts in the Collection Account to be paid and applied on the Remittance Date and otherwise in accordance with the provisions of Sections 2.3 and 2.4 hereof. Realized losses, if any, on amounts invested in such Eligible Investments shall be charged against investment earnings on amounts on deposit in the Collection Account. SECTION 2.11. FUNDING ACCOUNT. (a) There shall be established on or prior to the Closing Date and maintained, for the benefit of the Secured Parties, with the Collateral Agent, an Eligible Deposit Account (the "FUNDING Account"), bearing a designation clearly indicating that the funds deposited therein are held in the name of the Collateral Agent, for the benefit of the Secured Parties. The Funding Account shall be under the exclusive ownership and control of the Collateral Agent, for the benefit of the Secured Parties. Subject to the terms hereof, the Collateral Agent shall possess all right, title and interest in and to all funds deposited from time to time in the Funding Account. There shall be deposited in the Funding Account: 41 (i) on the Closing Date, $500,000,000; (ii) on each Remittance Date, the amounts, if any, described in Sections 2.3(a)(vi) and 2.3(a)(xiii) hereof with respect to such Remittance Date; (iii) on each Take-Out Date, the amount, if any, specified in the related Take-Out Notice which is to be deposited in the Funding Account in connection with the related Take-Out; and (iv) any amounts delivered to the Collateral Agent by the Debtor and designated by the Debtor for deposit in the Funding Account. All interest and earnings (net of losses and investment expenses) on funds on deposit in the Funding Account shall be deposited upon receipt in the Collection Account. On the date on which the Net Investment is zero and all Secured Obligations have been paid in full, any funds remaining on deposit in the Funding Account shall be paid to the holders of the Class A Certificates. (b) On any Business Day during the Revolving Period, amounts on deposit in the Funding Account may be released therefrom and paid to the Debtor in exchange for a Receivables Delivery on such Business Day, PROVIDED THAT: (i) the Collateral Agent, the Purchaser and the Note Insurer shall have received an executed copy of the related Delivery Notice not later than 10:30 a.m. Eastern Standard Time on the related Delivery Date; and (ii) the Debtor shall have timely delivered an Officer's Certificate regarding Hedging Arrangements, as required pursuant to Section 5.3 hereof. (c) The amount to be released from the Funding Account in connection with a Receivables Delivery shall be comprised of two components: (i) the "RESERVE ACCOUNT DEPOSIT AMOUNT", which shall equal the product of (x) the applicable Initial Reserve Percentage and (y) the aggregate Net Receivable Balance of all Receivables comprising the Receivables Delivery, but in no event an amount which would increase the amount on deposit in the Reserve Account to a level above the then Reserve Account Required Amount; and (ii) the "RECEIVABLES DELIVERY PAYMENT AMOUNT", which shall be equal to the excess of (A) the product of (x) 95% and (y) the Aggregate Outstanding Balance of the Receivables comprising the Receivables Delivery over (B) the Reserve Account Deposit Amount related to such Receivables Delivery. On the related Delivery Date, the Collateral Agent shall transfer the related Reserve Account Deposit Amount from the Funding Account to the Reserve Account, and shall 42 pay the Receivables Delivery Payment Amount to the accounts designated by the Debtor on behalf of the holders of the Class A Certificates in the related Delivery Notice. (d) On any Business Day on which the Borrowing Base exceeds the Net Investment, the amount of such excess, to the extent then on deposit in the Funding Account may be paid by the Collateral Agent to the accounts designated by the Debtor on behalf of the holders of the Class A Certificates, if the Debtor so requests. If, after taking into account the payment to the Debtor of any such amount from the Funding Account, the Borrowing Base still exceeds the Net Investment, the Debtor may deliver a Take-Out Notice and request the release to it of Receivables designated by the Debtor such that, when so released, the Net Investment would equal the Borrowing Base, provided that no Termination and Amortization Event would result from such release. The provisions of this paragraph (d) shall be inoperative following the occurrence of a Termination and Amortization Event. (e) On the first Remittance Date occurring during the Amortization Period, the Collateral Agent shall transfer all amounts then on deposit in the Funding Account to the Collection Account for application in accordance with Section 2.3(a) hereof. (f) Subject to subsection (h) below, funds on deposit in the Funding Account shall be invested in Eligible Investments by the Collateral Agent at the written direction of the Servicer, provided that if such Eligible Investments are not available or a Termination and Amortization Event shall have occurred, such investments shall be made in the investment described in subclause (iv) of the definition of Eligible Investments. Any such written directions shall specify the particular investment to be made and shall certify that such investment is an Eligible Investment and is permitted to be made under this Agreement. (g) The Servicer shall provide the Collateral Agent on or prior to the Closing Date and from time to time an incumbency certificate or the substantial equivalent with respect to each officer of the Servicer that is authorized to provide instructions relating to investments in Eligible Investments in the Funding Account. (h) Funds on deposit in the Funding Account shall be invested by the Collateral Agent, in the name of the Collateral Agent, in Eligible Investments that will mature so that such funds will be available so as to permit amounts in the Collection Account to be paid and applied on each Remittance Date and otherwise in accordance with the provisions of this Section 2.11. Investment earnings on amounts on deposit in the Funding Account shall be deposited into the Collection Account immediately following receipt thereof. Realized losses, if any, on amounts invested in such Eligible Investments shall be charged against investment earnings on amounts on deposit in the Collection Account. SECTION 2.12. YIELD SUPPLEMENT ACCOUNT; WITHDRAWALS; RELEASES. (a) (i) There shall be established on the Closing Date and maintained, for the benefit of the Secured Parties, with the Collateral Agent, an Eligible Deposit Account (the "YIELD SUPPLEMENT ACCOUNT"), bearing a designation clearly indicating that the funds deposited therein are held in the name of the Collateral Agent, for the benefit of the Secured Parties. Subject to the terms hereof, the Collateral Agent shall possess all right, title and interest in and to 43 all funds deposited from time to time in the Yield Supplement Account, including all Eligible Investments in which such funds are invested. (ii) There shall be deposited in the Yield Supplement Account: (x) by the Debtor, on any Take-Out Date, the amount, if any, by which the Target Yield Supplement Account Amount then exceeds the amount on deposit in the Yield Supplement Account; (y) any amounts delivered to the Collateral Agent by the Debtor and designated by the Debtor for deposit to the Yield Supplement Account; and (z) on each Remittance Date, the amount, if any, described in Section 2.3(a)(xii) hereof with respect to such Remittance Date. (iii) Funds on deposit in the Yield Supplement Account (other than investment earnings) shall be invested by the Collateral Agent (in the name of the Collateral Agent on behalf of the Secured Parties) in Eligible Investments that will mature so that such funds will be available on the Remittance Date following such investment. Investment earnings on amounts on deposit in the Yield Supplement Account shall be deposited into the Collection Account immediately following receipt thereof. (iv) Subject to clause (iii) above, funds on deposit in the Yield Supplement Account shall be invested in Eligible Investments by or at the written direction of the Servicer, provided that if such Eligible Investments are not available or a Termination and Amortization Event shall have occurred, such investments shall be made in the investment described in subclause (iv) of the definition of Eligible Investments. Any such written directions shall specify the particular investment to be made and shall certify that such investment is an Eligible Investment and is permitted to be made under this Agreement. (v) The Servicer shall provide the Collateral Agent on the date hereof and from time to time an incumbency certificate or the substantial equivalent with respect to each officer of the Servicer that is authorized to provide instructions relating to investments in Eligible Investments in the Yield Supplement Account. (vi) On the first Remittance Date occurring during the Amortization Period, the Collateral Agent shall withdraw all amounts on deposit in the Yield Supplement Account and deposit such amounts into the Collection Account. Realized losses, if any, on amounts invested in such Eligible Investments shall be charged against investment earnings on amounts on deposit in the Yield Supplement Account, as applicable. (b) In the event that on any Borrowing Base Determination Date, after giving effect to the amounts required to be distributed pursuant to Section 2.3(a) hereof and any amounts to be withdrawn pursuant to clause Section 2.3(b), the amount on deposit in the Yield Supplement Account exceeds the Target Yield Supplement Account Amount, the Collateral Agent shall, if no Termination and Amortization Event or Potential Termination and Amortization Event shall have occurred, release to the Debtor an amount equal to the excess of the amount on deposit in the Yield Supplement Account over the Target Yield Supplement Account Amount. 44 (c) On the day on which the Secured Obligations shall have been paid in full, in cash, the Collateral Agent shall release to the Debtor all amounts on deposit in the Yield Supplement Account. SECTION 2.13. [INTENTIONALLY OMITTED]. SECTION 2.14. [INTENTIONALLY OMITTED]. SECTION 2.15. RESERVE ACCOUNT; WITHDRAWALS; RELEASES. (a) (i) There shall be established on the Closing Date and maintained, for the benefit of the Secured Parties, with the Collateral Agent, an Eligible Deposit Account (the "RESERVE ACCOUNT"), bearing a designation clearly indicating that the funds deposited therein are held in the name of the Collateral Agent, for the benefit of the Secured Parties. Subject to the terms hereof, the Collateral Agent shall possess all right, title and interest in and to all funds deposited from time to time in the Reserve Account. (ii) There shall be deposited in the Reserve Account (x) on each Receivables Delivery Date, the related Reserve Account Deposit Amount transferred from the Funding Account, or if not so available from the Funding Account, then from the Servicer as described in Section 2.11(c)(i) hereof and (y) on each Remittance Date, the amount, if any, described in Section 2.3(a)(xi) hereof on such Remittance Date. (iii) Funds on deposit in the Reserve Account (other than investment earnings) shall be invested by the Collateral Agent (in the name of the Collateral Agent on behalf of the Secured Parties) in Eligible Investments that will mature so that such funds will be available on the Remittance Date following such investment. Investment earnings on amounts on deposit in the Reserve Account shall be deposited into the Collection Account immediately following receipt thereof. (iv) Subject to clause (iii) above, funds on deposit in the Reserve Account shall be invested in Eligible Investments by or at the written direction of the Servicer, provided that if such Eligible Investments are not available or a Termination and Amortization Event shall have occurred, such investments shall be made in the investment described in subclause (iv) of the definition of Eligible Investments. Any such written directions shall specify the particular investment to be made and shall certify that such investment is an Eligible Investment and is permitted to be made under this Agreement. (v) The Servicer shall provide the Collateral Agent on the date hereof and from time to time an incumbency certificate or the substantial equivalent with respect to each officer of the Servicer that is authorized to provide instructions relating to investments in Eligible Investments in the Reserve Account. (vi) Realized losses, if any, on amounts invested in such Eligible Investments shall be charged against investment earnings on amounts on deposit in the Reserve Account, as applicable. 45 (b) In the event that on any Borrowing Base Determination Date or on any Remittance Date, after taking into account all other Facility Activity on such date, the amount on deposit in the Reserve Account exceeds the Reserve Account Required Amount, the Collateral Agent shall, if no Termination and Amortization Event or Potential Termination and Amortization Event shall have occurred, release to the holders of the Class A Certificates an amount equal to the excess of the amount on deposit in the Reserve Account over the Reserve Account Required Amount. (c) On the day on which the Secured Obligations shall have been paid in full, in cash, the Collateral Agent shall release to the holders of the Class A Certificates all amounts on deposit in the Reserve Account. SECTION 2.16. OPTIONAL RELEASE. On any Business Day, the Debtor shall have the right, upon delivery to the Collateral Agent of a Take-Out Notice substantially in the form of Exhibit K hereto, to require the Collateral Agent to release its security interest in and its Lien on all or part of the Contracts and the related Receivables on the terms and conditions set forth herein. It shall be a condition precedent to any such release that (i) the Debtor shall pay to the Collateral Agent for deposit in the Funding Account an amount equal to the amount necessary to maintain the Borrowing Base at a level at least equal to the Net Investment (calculated after giving effect to such proposed release of Receivables and by including in the Net Receivables Balance only those Receivables that as of such date satisfy (as if determined on such date) the definition of Eligible Receivable provided that no Delinquent Receivable shall be classified as an Eligible Receivable on such day) (ii) the Debtor shall have given the Note Insurer and the Collateral Agent irrevocable prior written notice by not later than 10:30 a.m. Eastern Standard Time on the day of such release of (x) its intention to request a release with respect to such Contracts and Receivables and (y) the proposed date of such release, (iii) the Debtor shall provide to the Note Insurer and the Collateral Agent an Officer's Certificate certifying that as of the date of such release all non-released Receivables satisfy the definition of Eligible Receivable (and are not Delinquent Receivables or Defaulted Receivables) set forth herein, (iv) after giving effect to such release the amount on deposit in the Reserve Account shall be at least equal to the Reserve Account Required Amount, (v) the Debtor shall not have applied any adverse selection criteria to the Contracts and the Receivables being released on such date and (vi) AmeriCredit shall pay any breakage costs incurred in connection with such release under any Hedging Arrangement. Nothing above shall imply a duty of the Collateral Agent to determine whether such above-referenced conditions precedent have been satisfied. The Debtor shall pay to the Note Insurer, for the benefit of the Purchaser, such amounts as are required under this Section on the date of such release. The Debtor shall be obligated to pay all reasonable legal fees, expenses or other costs of the Note Insurer, the Collateral Agent, and the Secured Parties arising in connection with any such assignment. Upon the deposit of all required amounts and the payment by the Debtor of the amounts described in this Section, the Collateral Agent shall execute and deliver to the Debtor, at the Debtor's expense, such documents or instruments as are necessary to terminate the Collateral Agent's security interest in the released Receivables and the Contracts related thereto. Any such 46 documents shall be prepared by or on behalf of the Debtor in form and substance satisfactory to the Collateral Agent. SECTION 2.17. DELIVERY OF COLLATERAL. With respect to the Collateral, the Debtor and the Collateral Agent hereby agree that: (i) Any Collateral that is held in deposit accounts shall be held in the Collection Account and shall be subject to the exclusive dominion and control of the Collateral Agent, and the Collateral Agent shall have sole signature authority with respect thereto; (ii) Any Collateral that is Physical Property (as defined under the definition of "Delivery") shall be delivered to the Collateral Agent in accordance with paragraph (a) of the definition of "Delivery" and shall be held, pending maturity or disposition, solely by the Collateral Agent or a Securities Intermediary (as such term is defined in Section 8-102(a)(14) of the UCC; (iii) Any Collateral that is a "certificated security" under Article 8 of the UCC shall be delivered to the Collateral Agent in accordance with paragraph (b) of the definition of "Delivery" and shall be held, pending maturity or disposition, solely by the Collateral Agent or a Securities Intermediary (as such term is defined in Section 8-102(a)(14) of the UCC); (iv) Any Collateral that is an "uncertificated security" under Article 8 of the UCC shall be delivered to the Collateral Agent in accordance with paragraph (c) of the definition of "Delivery" and shall be maintained by the Collateral Agent, pending maturity or disposition, through continued registration on the books and records of the issuer thereof of the ownership of such security by the Collateral Agent (or its nominee) or a Securities Intermediary (as such term is defined in Section 8-102(a)(14) of the UCC); (v) Any Collateral that is a book-entry security held through the Federal Reserve System pursuant to Federal book-entry regulations shall be delivered to the Collateral Agent in accordance with paragraph (d) of the definition of "Delivery" and shall be maintained by the Collateral Agent, pending maturity or disposition, through continued book-entry registration of such Collateral in the name of the Collateral Agent or a Securities Intermediary (as such term is defined in Section 8-102(a)(14) of the UCC; and (vi) Any Collateral held through a Securities Intermediary (as such term is defined in Section 8-102(a)(14) of the UCC) shall be held in a securities account (as such term is defined in Section 8-501(a) of the UCC) that is established by such Securities Intermediary in the name of the Collateral Agent for which the Collateral Agent is the sole entitlement holder (as defined in Section 8-102(a)(7) of the UCC). Effective upon Delivery of any Collateral in the form of Physical Property, book-entry securities or uncertificated securities, the Collateral Agent shall be deemed to have 47 purchased such Collateral for value, in good faith and without notice of any adverse claim thereto. ARTICLE III REPRESENTATIONS AND WARRANTIES SECTION 3.1. REPRESENTATIONS AND WARRANTIES OF THE DEBTOR, AMERICREDIT AND AMTN. On the Closing Date and on each Determination Date, Remittance Date and Delivery Date, the Debtor, AmeriCredit and AMTN represent and warrant to the Note Insurer, the Collateral Agent and the Secured Parties that: (a) EXISTENCE AND POWER. The Debtor is a business trust duly organized, validly existing and in good standing under the laws of the State of Delaware and has all power and all material governmental licenses, authorizations, consents and approvals required to carry on its business in each jurisdiction in which its business is now conducted. The Debtor is duly qualified to do business in, and is in good standing in, every other jurisdiction in which the nature of its business requires it to be so qualified. (b) AUTHORIZATION; CONTRAVENTION. The execution, delivery and performance by the Debtor of this Agreement and the other Transaction Documents are within the Debtor's trust powers, have been duly authorized by all necessary trust action, require no action by or in respect of, or require the consent or approval of, or the filing of any notice or other documentation with, any Official Body or other Person (except as contemplated by Section 2.6 hereof), and do not contravene, or constitute a default under, any provision of applicable law or regulation or of the Trust Agreement of the Debtor or of any agreement, judgment, injunction, order, decree or other instrument binding upon the Debtor or result in the creation or imposition of any Adverse Claim on the assets of the Debtor or any of its Subsidiaries (except as contemplated by Section 2.6 hereof). (c) BINDING EFFECT. Each of this Agreement and the other Transaction Documents has been duly executed and delivered and constitutes the legal, valid and binding obligation of the Debtor, enforceable in accordance with its terms, subject to applicable bankruptcy, insolvency, moratorium or other similar laws affecting the rights of creditors generally. (d) PERFECTION. Immediately preceding each Receivables Delivery, the Debtor shall be the legal and beneficial owner of all of the Receivables, Related Security and Collections, free and clear of all Adverse Claims. On or prior to each Funding and each day on which a Receivable is sold to the Debtor by AmeriCredit or AMTN, as the case may be, pursuant to the Master Receivables Purchase Agreement, all financing statements and other documents required to be recorded or filed in order to perfect and protect (i) the Debtor's interest in the Receivables, the Contracts related thereto, the Related Security with respect thereto and all Proceeds thereof against all creditors of and purchasers from AmeriCredit or AMTN, as applicable and (ii) the interest of the Collateral Agent on behalf of the Purchaser and the other 48 Owners in the Collateral against all creditors of and purchasers from AmeriCredit, AMTN and the Debtor will have been duly filed in each filing office necessary for such purpose, and all filing fees and taxes, if any, payable in connection with such filings shall have been paid in full. (e) ACCURACY OF INFORMATION. All information heretofore furnished by the Debtor (including without limitation, the Servicer's Certificate, any reports delivered pursuant to Section 2.9 hereof and AmeriCredit Corp.'s financial statements) to the Collateral Agent, the Secured Parties, the Note Insurer or any of the other Persons party hereto for purposes of or in connection with this Agreement or any transaction contemplated hereby is, and all such information hereafter furnished by the Debtor to any such Person will be, true and accurate in every material respect, and the Debtor has not omitted to disclose any information which is material to the transaction on the date such information is furnished. (f) TAX STATUS. All tax returns (federal, state and local) required to be filed with respect to the Debtor have been filed (which filings may be made by an Affiliate of the Debtor on a consolidated basis covering the Debtor and other Persons) and there has been paid or adequate provision made for the payment of all taxes, assessments and other governmental charges in respect of the Debtor (or in the event consolidated returns have been filed, with respect to the Persons subject to such returns). (g) ACTION, SUITS. There are no actions, suits or proceedings pending, or to the knowledge of the Debtor threatened, against or affecting (x) the Debtor or its properties and (y) except as set forth in Exhibit E hereto, against any Affiliate of the Debtor or their respective properties, in or before any court, arbitrator or other body which in the case of clause (y), individually or in the aggregate, could reasonably be expected to have a Material Adverse Effect if determined adversely to such Affiliate. The Debtor is not in violation of any order of any Official Body. (h) USE OF PROCEEDS. The proceeds of any Receivables Delivery Payment Amount will be used by the Debtor to (a) acquire the Receivables, the Contracts related thereto and the Related Security with respect thereto from AmeriCredit or AMTN, as the case may be, pursuant to the Master Receivables Purchase Agreement, (b) to pay down debt in connection with the purchase of the Receivables and Contracts pursuant to the Master Receivables Purchase Agreement, or (c) to make distributions constituting a return of capital. No proceeds of any Receivables Delivery Payment Amount will be used by the Debtor to acquire any security in any transaction which is subject to Section 12 of the Securities Exchange Act of 1934, as amended or for any purpose that violates any applicable law, rule or regulation, including Regulation U of the Federal Reserve Board. (i) PLACE OF BUSINESS. The principal place of business and chief executive office (as such terms are defined in the UCC) of the Debtor are located at the address of the Debtor indicated in Section 9.3 hereof and the offices where the Debtor keeps all its Records, are located at the address(es) described on Exhibit F or such other locations notified to the Purchaser in accordance with Section 2.6 hereof in jurisdictions where all action required by Section 2.6 hereof has been taken and completed. 49 (j) GOOD TITLE. Upon each Receivables Delivery and on each day on which a Receivable and related Contract is sold to the Debtor by AmeriCredit or AMTN, as the case may be, pursuant to the Master Receivables Purchase Agreement, the Collateral Agent shall acquire a valid and perfected first priority security interest in each Receivable and related Contract that exists on the date of such Funding and sale and in the Related Security and Collections with respect thereto free and clear of any Adverse Claim. (k) TRADENAMES, ETC. As of the date hereof: (i) the Debtor has only the subsidiaries and divisions listed on Exhibit G hereto; and (ii) the Debtor has not operated under any tradenames and has not changed its name, merged with or into or consolidated with any other corporation or been the subject of any proceeding under Title 11, United States Code (Bankruptcy). (l) NATURE OF RECEIVABLES. Each Receivable (x) represented by the Debtor or the Servicer to be an Eligible Receivable (including in any report, document or instrument delivered hereunder or in connection with the other Transaction Documents) or (y) included in the calculation of the Net Receivables Balance, satisfies at the time of such representation or inclusion the definition of "Eligible Receivable" set forth herein and, in the case of clause (y) above is not a Defaulted Receivable. (m) CREDIT AND COLLECTION POLICY. Since September 30, 2000, there have been no material changes in the Credit and Collection Policy other than as permitted hereunder. Since such date, no material adverse change has occurred in the overall rate of collection of the Receivables. (n) COLLECTION AND SERVICING; MATERIAL ADVERSE EFFECT. Since September 30, 2000, there has not been any material adverse change in the ability of the Servicer (to the extent it is AmeriCredit, the Debtor or any Subsidiary or Affiliate of any of the foregoing) to service and collect the Receivables or other Material Adverse Effect. (o) NO TERMINATION AND AMORTIZATION EVENT. No event has occurred and is continuing and no condition exists which constitutes a Termination and Amortization Event or a Potential Termination and Amortization Event. (p) NOT AN INVESTMENT COMPANY OR A HOLDING COMPANY. The Debtor is not, and is not controlled by, an "investment company" within the meaning of the Investment Company Act of 1940, as amended, or is exempt from all provisions of such Act. The Debtor is not a "holding company," or a subsidiary or affiliate of a "holding company," within the meaning of the Public Utility Holding Company Act of 1935, as amended. (q) ERISA. Each of the Debtor and its ERISA Affiliates is in compliance in all material respects with ERISA and no lien exists in favor of the Pension Benefit Guaranty Corporation on any of the Receivables. (r) LOCK-BOX ACCOUNT. The name and address of the Lock-Box Bank, together with the account number of the Lock-Box Account at such Lock-Box Bank, are specified in Exhibit A hereto (or at such other Lock-Box Banks and/or with such other Lock-Box Accounts as have been notified to the Collateral Agent and for which Lock-Box Agreements 50 have been executed in accordance with Section 2.6(b) hereof and delivered to the Collateral Agent). All Obligors have been instructed (or will be instructed on their next billing statement) to make payment to a Lock-Box Account. (s) BULK SALES. No transaction contemplated hereby or by the Note Purchase Agreement or the Master Receivables Purchase Agreement requires compliance with any bulk sales act or similar law. (t) TRANSFERS UNDER MASTER RECEIVABLES PURCHASE AGREEMENT. Each Receivable which has been transferred to the Debtor by AmeriCredit or AMTN has been purchased by the Debtor from AmeriCredit or AMTN, as the case may be, pursuant to, and in accordance with, the terms of the Master Receivables Purchase Agreement. (u) PREFERENCE; VOIDABILITY. With respect to each transfer of Receivables and Related Security from AmeriCredit or AMTN, as the case may be, to the Debtor, the Debtor has given reasonably equivalent value to AmeriCredit or AMTN, as applicable, in consideration for such transfer of Receivables and Related Security, and each such transfer has not been made for or on account of an antecedent debt owed by AmeriCredit or AMTN to the Debtor and no such transfer is or may be voidable under any Section of the Bankruptcy Code. (v) INSURANCE POLICIES. At the time of the sale of each Receivable and related Contract by AmeriCredit or AMTN to the Debtor pursuant to the Master Receivables Purchase Agreement, each Financed Vehicle is required to be covered by physical damage and liability insurance obtained by the related Obligor at least in the amount required by the related Contract, and each such required insurance policy is required to name AmeriCredit or AMTN, as loss payee and is required to be in full force and effect. (w) REPRESENTATIONS AND WARRANTIES OF AMERICREDIT AND AMTN. Each of the representations and warranties of AmeriCredit and AMTN set forth in Sections 3.1 and 3.3, respectively, of the Master Receivables Purchase Agreement are true and correct in all material respects and each of AmeriCredit and AMTN hereby remakes all such representations and warranties for the benefit of the Note Insurer, the Collateral Agent, the Purchaser and the Note Insurer. Any document, instrument, certificate or notice delivered hereunder by the Debtor to the Note Insurer, the Collateral Agent or the Secured Parties shall be deemed a representation and warranty by the Debtor. SECTION 3.2. REPRESENTATIONS AND WARRANTIES OF THE SERVICER. On the Closing Date and on each Determination Date, Remittance Date and Delivery Date, the Servicer represents and warrants to the Note Insurer, the Collateral Agent and the Secured Parties that: (a) CORPORATE EXISTENCE AND POWER. The Servicer is a corporation duly organized, validly existing and in good standing under the laws of its jurisdiction of incorporation and has all corporate power and all material governmental licenses, authorizations, consents and approvals required to carry on its business in each jurisdiction in which its business 51 is now conducted. The Servicer is duly qualified to do business in and is in good standing in every other jurisdiction in which the nature of its business requires it to be so qualified. (b) CORPORATE AND GOVERNMENTAL AUTHORIZATION; CONTRAVENTION. The execution, delivery and performance by the Servicer of this Agreement and the other Transaction Documents are within the Servicer's corporate powers, have been duly authorized by all necessary corporate action, require no action by or in respect of, or require the consent or approval of, or the filing of any notice or other documentation with, any Official Body (except as contemplated by Section 2.6 hereof), and do not contravene, or constitute a default under, any provision of applicable law or regulation or of the certificate of incorporation or bylaws of the Servicer or of any agreement, judgment, injunction, order, decree or other instrument binding upon the Servicer or result in the creation or imposition of any Adverse Claim on assets of the Servicer or any of its Subsidiaries (except as contemplated by Section 2.6 hereof). (c) BINDING EFFECT. This Agreement has been duly executed and delivered and constitutes the legal, valid and binding obligation of the Servicer, enforceable in accordance with its terms, subject to applicable bankruptcy, insolvency, moratorium or other similar laws affecting the rights of creditors generally. (d) ACCURACY OF INFORMATION. All information heretofore furnished by the Servicer to the Collateral Agent, the Secured Parties, the Note Insurer or any of the other Persons party hereto for purposes of or in connection with this Agreement or any transaction contemplated hereby is, and all such information hereafter furnished by the Servicer to the Collateral Agent, the Secured Parties or the Note Insurer will be, true and accurate in every material respect, and the Servicer has not omitted , and will not omit, to disclose any information which is material to the transactions contemplated by this Agreement on the date such information was or is furnished. (e) ACTION, SUITS. There are no actions, suits or proceedings pending, or to the knowledge of the Servicer threatened, against or affecting the Servicer or any Affiliate of the Servicer or their respective properties, in or before any court, arbitrator or other body, which, individually or in the aggregate, could reasonably be expected to cause a Material Adverse Effect. The Servicer is not in violation of any order of any Official Body. (f) NATURE OF RECEIVABLES. Each Receivable included in the calculation of the Net Receivables Balance satisfies at such time the definition of "Eligible Receivable" and is not a Defaulted Receivable. (g) CREDIT AND COLLECTION POLICY. Since September 30, 2000, there have been no material changes in the Credit and Collection Policy other than as permitted hereunder. Since such date, no material adverse change has occurred in the overall rate of collection of the Receivables. (h) COLLECTIONS AND SERVICING; MATERIAL ADVERSE EFFECT. Since September 30, 2000, there has not been any material adverse change in the ability of the Servicer to service and collect the Receivables or other Material Adverse Effect relating to the Servicer. 52 (i) NOT AN INVESTMENT COMPANY OR A HOLDING COMPANY. The Servicer is not, and is not controlled by, an "investment company" within the meaning of the Investment Company Act of 1940, as amended, or is exempt from all provisions of such Act. The Servicer is not a "holding company," or a subsidiary or affiliate of a "holding company," within the meaning of the Public Utility Holding Company Act of 1935, as amended. (j) LOCK-BOX ACCOUNT. The name and address of the Lock-Box Bank, together with the account number of the Lock-Box Account at such Lock-Box Bank, are specified in Exhibit A (or at such other Lock-Box Banks and/or with such other Lock-Box Accounts as have been notified to the Debtor and the Collateral Agent and for which Lock-Box Agreements have been executed in accordance with Section 2.6(b) hereof and delivered to the Collateral Agent). All Obligors have been instructed (or will be instructed on their next billing statement) to make payment to a Lock-Box Account. ARTICLE IV CONDITIONS PRECEDENT SECTION 4.1. CONDITIONS TO CLOSING. The obligation of the Purchaser to pay for the Note upon initial issuance is subject to (i) satisfaction of the conditions precedent set forth in Section 4.01 of the Note Purchase Agreement and (ii) receipt by the Note Insurer of the following documents, instruments and fees, all of which shall be in a form and substance acceptable to the Note Insurer: (a) An executed copy of this Agreement, the Master Receivables Purchase Agreement, the Premium Side Letter and each of the other Transaction Documents (other than Hedging Arrangements not then executed, which shall be subject to the review and approval procedures of Section 5.3 hereof). (b) Any other fees or amounts due and payable on the Closing Date in accordance with the Premium Side Letter. (c) Such other documents, approvals, consents, instruments, certificates or opinions as the Collateral Agent or the Secured Parties shall reasonably request. (d) A copy of the resolutions of the Board of Directors of AmeriCredit, certified by its Secretary approving the execution, delivery and performance by it (and the Debtor) of this Agreement, the Master Receivables Purchase Agreement, the Trust Agreement and the other Transactions Documents to be delivered by it (and the Debtor) hereunder or thereunder and all other documents evidencing necessary corporate action (including shareholders consents) and government approvals, if any. (e) A copy of the resolutions of the Board of Directors of AMTN, certified by its Secretary approving the execution, delivery and performance by it of this Agreement, the Master Receivables Purchase Agreement, the Trust Agreement and the other Transactions Documents to be delivered by it hereunder or thereunder and all other documents 53 evidencing necessary corporate action (including shareholders consents, if any) and government approvals, if any. (f) The certificate of trust of the Debtor certified by the Secretary of State of the State of Delaware dated a date reasonably prior to the Closing Date. (g) The certificate of incorporation of AmeriCredit certified by the Secretary of State of the State of Delaware dated a date reasonably prior to the Closing Date. (h) The certificate of incorporation of AMTN certified by the Secretary of State of the State of Delaware dated a date reasonably prior to the Closing Date. (i) (i) The articles of incorporation of the Trustee certified by an officer of the Trustee dated a date reasonably prior to the Closing Date and (ii) a power of attorney granted by the Trust in favor of Bankers Trust (Delaware). (j) A Good Standing Certificate for the Debtor issued by the Secretary of State of the State of Delaware and certificates of qualification as a foreign trust issued by the Secretary of State or other similar official of each jurisdiction where such qualification is material to the transactions contemplated by this Agreement, the Master Receivables Purchase Agreement and the other Transaction Documents, in each case, dated a date reasonably prior to the Closing Date. (k) A Good Standing Certificate for AmeriCredit issued by the Secretary of State of the State of Delaware and certificates of qualification as a foreign corporation issued by the Secretary of State or other similar official of Texas and California, in each case, dated a date reasonably prior to the Closing Date. (l) A Good Standing Certificate for AMTN issued by the Secretary of State of the State of Delaware and certificates of qualification as a foreign corporation issued by the Secretary of State or other similar official of each jurisdiction where such qualification is material to the transactions contemplated by this Agreement, the Master Receivables Purchase Agreement and the other Transaction Documents, in each case, dated a date reasonably prior to the Closing Date. (m) A Good Standing Certificate for the Trustee issued by the Secretary of State of the State of Delaware, dated a date reasonably prior to the Closing Date. (n) [Intentionally Omitted]. (o) A Certificate of the Secretary of AmeriCredit substantially in the form of Exhibit I hereto. (p) A Certificate of the Secretary of AMTN substantially in the form of Exhibit I hereto. (q) A Certificate of the Secretary of the Trustee substantially in the form of Exhibit I hereto. 54 (r) Acknowledgement copies of proper financing statements (Form UCC-1), naming AmeriCredit as the debtor/seller in favor of the Debtor as secured party/purchaser and the Collateral Agent, for the benefit of the Secured Parties, as assignee of the secured party/purchaser or other similar instruments or documents as may be necessary or in the reasonable opinion of the Collateral Agent desirable under the UCC of all appropriate jurisdictions or any comparable law to perfect the Debtor's interest in the Receivables, Related Security and Collections, free and clear of any Adverse Claim. (s) Acknowledgement copies of proper financing statements (Form UCC-1), naming AMTN as the debtor/seller in favor of the Debtor as secured party/purchaser and the Collateral Agent, for the benefit of the Secured Parties, as assignee of the secured party/purchaser or other similar instruments or documents as may be necessary or in the reasonable opinion of the Collateral Agent desirable under the UCC of all appropriate jurisdictions or any comparable law to perfect the Debtor's interest in the Receivables, Related Security and Collections, free and clear of any Adverse Claim. (t) Acknowledgement copies of proper financing statements (Form UCC-1), naming the Debtor as the debtor in favor of the Collateral Agent, for the benefit of the Secured Parties, or other similar instruments or documents as may be necessary or in the reasonable opinion of the Collateral Agent desirable under the UCC of all appropriate jurisdictions or any comparable law to perfect the Collateral Agent's security interest in the Collateral, including all Receivables, Related Security and Collections, free and clear of any Adverse Claim. (u) Copies of proper financing statements (Form UCC-3), if any, necessary to terminate all security interests and other rights of any person in the Receivables, Related Security and Collections, previously granted by AmeriCredit. (v) Copies of proper financing statements (Form UCC-3), if any, necessary to terminate all security interests and other rights of any person in the Receivables, Related Security and Collections, previously granted by AMTN. (w) Copies of proper financing statements (Form UCC-3), if any, necessary to terminate all security interests and other rights of any person in the Collateral, including the Receivables, Related Security and Collections, previously granted by the Debtor. (x) Certified copies of request for information or copies (Form UCC-11) (or a similar search report certified by parties acceptable to the Collateral Agent) dated a date reasonably near the date of the Initial Funding listing all effective financing statements which name the Debtor, AmeriCredit or AMTN (under its present name and any previous name) as debtor and which are filed in jurisdictions in which the filings were made pursuant to items (p), (q) and (r) above together with copies of such financing statements with respect to AMTN and the Debtor, and, with respect to AmeriCredit, as may be requested by the Note Insurer or its counsel (none of which shall cover any Receivables or Contracts). (y) Executed copies of the Lock-Box Agreement relating to the Lock-Box Account. 55 (z) An opinion of Dewey Ballantine LLP, special counsel to the Debtor, AmeriCredit and AMTN, in form and substance satisfactory to the Note Insurer and the Note Insurer's counsel. (aa) An opinion of Dewey Ballantine LLP, special counsel to the Debtor, AmeriCredit and AMTN, covering certain bankruptcy and insolvency matters (i.e. "true sale" and non-consolidation) in form and substance satisfactory to the Note Insurer and the Note Insurer's counsel. (bb) The Note, duly executed by the Debtor and appropriately completed. (cc) Executed copies of the documentation relating to any Hedging Arrangement. (dd) Such other documents, approvals, consents, instruments, certificates or opinions as the Collateral Agent or the Secured Parties shall reasonably request. ARTICLE V COVENANTS SECTION 5.1. AFFIRMATIVE COVENANTS OF THE DEBTOR AND AMERICREDIT. At all times from the date hereof to the date on which all Secured Obligations have been paid in full in cash, unless the Collateral Agent and the Secured Parties shall otherwise consent in writing: (a) FINANCIAL REPORTING AND OTHER INFORMATION. AmeriCredit and AMTN shall, and shall cause the Debtor and each of the Debtor's, AmeriCredit's and AMTN's Subsidiaries to, maintain, for itself and each of its respective Subsidiaries, a system of accounting established and administered in accordance with GAAP, and furnish to the Note Insurer and the Collateral Agent: (i) ANNUAL REPORTING. As soon as available and in any event within 90 days (or the 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 prepared in accordance with GAAP and any management letter (which letter shall be furnished as soon as available) prepared by independent certified public accountants acceptable to the Note Insurer, certified, without qualification by such accountants and each other report or statement sent to shareholders or publicly filed by AmeriCredit Corp. or the Debtor. (ii) QUARTERLY REPORTING. As soon as available and in any event within 45 days (or the 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 period, and a consolidated statement of income of AmeriCredit Corp. and its consolidated Subsidiaries for such quarter and for the 56 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 Section 5.1(a)(ii) 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. (iii) COMPLIANCE CERTIFICATE. Together with the financial statements required pursuant to clauses (i) and (ii) above, a compliance certificate signed by AmeriCredit Corp.'s chief financial officer, treasurer or authorized officer who shall hold the office of a Vice President or above, stating that (x) the attached financial statements have been prepared in accordance with GAAP and accurately reflect the financial condition of the Debtor or AmeriCredit Corp. as applicable and (y) to the best of such Person's knowledge, no Termination and Amortization Event or Potential Termination and Amortization Event exists, or if any Termination and Amortization Event or Potential Termination and Amortization Event exists, stating the nature and status thereof and showing the computation of, and showing compliance with, each of the financial ratios and restrictions set forth in Section 6.1(x), (y) and (z) hereof. (iv) SHAREHOLDERS STATEMENTS AND REPORTS. Promptly upon the furnishing thereof to the shareholders of AmeriCredit Corp., copies of all financial statements, reports and proxy statements so furnished. (v) S.E.C. FILINGS. Promptly upon the filing thereof, copies of all registration statements and annual, quarterly, monthly or other regular reports which AmeriCredit Corp. or any Subsidiary files with the Securities and Exchange Commission, other than any reports on Form 8-K filed with respect to securitizations unrelated to this Agreement or the transactions contemplated hereby. (vi) NOTICE OF TERMINATION AND AMORTIZATION EVENTS OR POTENTIAL TERMINATION AND AMORTIZATION EVENTS, ETC. (A) As soon as possible and in any event within two (2) days after the occurrence of each Termination and Amortization Event or each Potential Termination and Amortization Event, a statement of the chief financial officer, chief accounting officer or treasurer of the Servicer setting forth details of such Termination and Amortization Event or Potential Termination and Amortization Event and the action which the Debtor proposes to take with respect thereto, which information shall be updated promptly from time to time; (B) promptly after the Debtor obtains knowledge thereof, notice of any Termination and Amortization Event, litigation, investigation or proceeding that may exist at any time between the Servicer and any Person that may result in a Material Adverse Effect or any litigation or proceeding relating to any Transaction Document; and (C) promptly after the occurrence thereof, notice of any Material Adverse Effect. (vii) CHANGE IN CREDIT AND COLLECTION POLICY AND DEBT RATINGS. Within ten (10) days after the date any material change in or amendment to the Credit and Collection Policy is made, a copy of the Credit and Collection Policy then in effect indicating such change or amendment. Within five (5) days after the date of any change in AmeriCredit's or AmeriCredit Corp.'s public or private debt ratings, if any, a written certification of AmeriCredit's or AmeriCredit Corp.'s public and private debt ratings after giving effect to any such change. 57 (viii) ERISA. Promptly after the filing or receiving thereof, copies of all reports and notices with respect to any Reportable Event (as defined in Article IV of ERISA) which the Debtor, AmeriCredit, AMTN or any ERISA Affiliate of the Debtor, AmeriCredit or AMTN files under ERISA with the Internal Revenue Service, the Pension Benefit Guaranty Corporation or the U.S. Department of Labor or which the Debtor, AmeriCredit, AMTN or any ERISA Affiliates of the Debtor, AmeriCredit or AMTN receives from the Internal Revenue Service, the Pension Benefit Guaranty Corporation or the U.S. Department of Labor. (ix) CHANGE IN ACCOUNTANTS OR ACCOUNTING POLICY. Promptly, notice of any change in the accountants or material change in accounting policy of either the Debtor, AmeriCredit Corp., AmeriCredit or AMTN. (x) OTHER INFORMATION. Such other information (including non-financial information) with respect to the Debtor, AmeriCredit Corp., AmeriCredit, AMTN or any of their respective Subsidiaries as the Note Insurer, the Collateral Agent or any Secured Party may from time to time reasonably request. (b) CONDUCT OF BUSINESS. (i) AmeriCredit and AMTN shall cause the Debtor and each of the Debtor's, AmeriCredit's and AMTN's Subsidiaries to, carry on and conduct its business in substantially the same manner and in substantially the same fields of enterprise as it is presently conducted and do all things necessary to remain duly organized, validly existing and in good standing as a domestic corporation in its jurisdiction of organization and maintain all requisite authority to conduct its business in each jurisdiction in which its business is conducted and (ii) the Debtor and AMTN shall at all times be a wholly-owned Subsidiary of AmeriCredit. (c) COMPLIANCE WITH LAWS. AmeriCredit or AMTN shall, and shall cause the Debtor and each of the Debtor's, AmeriCredit's and AMTN's Subsidiaries to, comply with all laws, rules, regulations, orders, writs, judgments, injunctions, decrees or awards to which it or its respective properties may be subject. (d) FURNISHING OF INFORMATION AND INSPECTION OF RECORDS. AmeriCredit or AMTN shall, and shall cause the Debtor to, furnish to the Note Insurer from time to time such information with respect to the Receivables as the Note Insurer may reasonably request, including, without limitation, listings identifying the Obligor and the outstanding balance for each Receivable. AmeriCredit or AMTN shall, and shall cause the Debtor to, at any time and from time to time, during regular business hours and, provided that a Termination and Amortization Event or Potential Termination and Amortization Event shall not have occurred and be continuing, upon reasonable prior notice, permit the Collateral Agent or any Secured Party, or their agents or representatives, (i) to examine and make copies of and take abstracts from all Records and (ii) to visit the offices and properties of the Debtor, AmeriCredit or AMTN, as applicable, for the purpose of examining such Records, and to discuss matters relating to Receivables or the Debtor's, AmeriCredit's or AMTN's performance hereunder and under the other Transaction Documents to which such Person is a party with any of the officers, directors, employees or independent public accountants of the Debtor, AmeriCredit or AMTN, as applicable, having knowledge of such matters. 58 (e) OFFICES, RECORDS AND BOOKS OF ACCOUNT. The Debtor (i) shall keep its principal place of business and chief executive office (as such terms or similar terms are used in the UCC) and the office where it keeps its records concerning the Receivables at the address of the Debtor set forth in Section 9.3 hereof or at any other locations in jurisdictions where all actions requested by the Secured Parties to protect and perfect the interest of the Collateral Agent, for the benefit of the Secured Parties, in the Collateral have been taken and completed and (ii) shall provide the Collateral Agent with at least 30 days' written notice before making any change in the Debtor's name or making any other change in the Debtor's identity or corporate structure that could render any UCC financing statement filed in connection with this Agreement seriously misleading as such term (or similar term) is used in the UCC. Each notice to the Collateral Agent pursuant to the foregoing sentence shall set forth the applicable change and the effective date thereof. AmeriCredit or AMTN shall, and shall cause the Debtor to, maintain and implement administrative and operating procedures (including, without limitation, an ability to recreate records evidencing 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 Receivables (including, without limitation, records adequate to permit the daily identification of each new Receivable and all Collections of and adjustments to each existing Receivable). AmeriCredit or AMTN shall, and shall cause the Debtor to, give the Note Insurer notice of any material change in the administrative and operating procedures of the Debtor, AmeriCredit or AMTN, as applicable, referred to in the previous sentence. (f) PERFORMANCE AND COMPLIANCE WITH CONTRACTS RELATED TO THE RECEIVABLES. AmeriCredit or AMTN, at their expense, shall, and shall cause the Debtor to, timely and fully perform and comply with all material provisions, covenants and other promises required to be observed by the Debtor, AmeriCredit or AMTN under the Contracts related to the Receivables. (g) CREDIT AND COLLECTION POLICIES. AmeriCredit or AMTN shall, and shall cause the Debtor to, comply in all material respects with the Credit and Collection Policy in regard to each Receivable and the related Contract. (h) COLLECTIONS. AmeriCredit or AMTN shall, and shall cause the Debtor to, instruct all Obligors to cause all Collections to be deposited directly to a Lock-Box Account. (i) COLLECTIONS RECEIVED. AmeriCredit or AMTN shall, and shall cause the Debtor to, hold in trust, and deposit, immediately, but in any event not later than forty-eight (48) hours of its receipt thereof, to the Collection Account all Collections received from time to time by the Debtor, AmeriCredit or AMTN, as the case may be. (j) CONTRIBUTION TREATMENT. AmeriCredit or AMTN shall not, and shall not permit the Debtor to, account for (including for accounting and tax purposes), or otherwise treat, the transactions contemplated by the Master Receivables Purchase Agreement in any manner other than as a contribution of Receivables by AmeriCredit or AMTN, as applicable, to the Debtor. In addition, AmeriCredit or AMTN shall, and shall cause the Debtor to, disclose (in a footnote or otherwise) in all of its respective financial statements (including any such 59 financial statements consolidated with any other Persons' financial statements) the existence and nature of the transactions contemplated by the Master Receivables Purchase Agreement and the interest of the Debtor (in the case of AmeriCredit's or AMTN's financial statements) in the Affected Assets. (k) SEPARATE BUSINESS. (a) The Debtor shall be a limited purpose entity whose primary activities are restricted in the Trust Agreement to (i) purchasing or otherwise acquiring from AmeriCredit or AMTN, owning, holding, granting security interests or selling interests in Affected Assets, (ii) entering into agreements for the selling, financing and servicing of the Affected Assets, and (iii) conducting such other activities as it deems necessary or appropriate to carry out its primary activities. The Debtor shall not create any Subsidiaries or divisions. The Debtor shall not engage in any business other than the transactions contemplated by the Transaction Documents. The Debtor shall at all times (a) to the extent the Debtor's office is located in the offices of AmeriCredit, AMTN or any Affiliate of AmeriCredit or AMTN, pay fair market rent for its executive office space located in such offices, (b) maintain the Debtor's books, financial statements, accounting records and other trust documents and records separate from those of AmeriCredit, AMTN or any other entity, (c) not commingle the Debtor's assets with those of AmeriCredit, AMTN or any other entity, (d) act solely in its own name and through its own authorized officers and agents, (e) make investments directly or by brokers engaged and paid by the Debtor or its agents (PROVIDED that if any such agent is an Affiliate of the Debtor it shall be compensated at a fair market rate for its services), (f) separately manage its liabilities from those of AmeriCredit, AMTN or any Affiliates of AmeriCredit or AMTN and pay its own liabilities, including all administrative expenses, from its own separate assets, except that AmeriCredit may pay the organizational expenses of the Debtor, and (g) pay from the Debtor's assets all obligations and indebtedness of any kind incurred by the Debtor. The Debtor shall abide by all trust formalities, and the Debtor shall cause its financial statements to be prepared in accordance with GAAP in a manner that indicates the separate existence of the Debtor and its assets and liabilities. The Debtor shall (i) pay all its liabilities, (ii) not assume the liabilities of AmeriCredit, AMTN or any Affiliate of AmeriCredit or AMTN, (iii) not lend funds or extend credit to AmeriCredit, AMTN or any Affiliate of AmeriCredit or AMTN and (iv) not guarantee the liabilities of AmeriCredit, AMTN or any Affiliates of AmeriCredit or AMTN. The officers of the Debtor (as appropriate) shall make decisions with respect to the business and daily operations of the Debtor independent of and not dictated by any controlling entity. The Debtor shall not engage in any business not permitted by the Trust Agreement as in effect on the Closing Date. (l) TRUST AGREEMENT. The Debtor shall only amend, alter, change or repeal the Trust Agreement with the prior written consent of the Collateral Agent and the Note Insurer. SECTION 5.2. NEGATIVE COVENANTS OF DEBTOR, AMTN AND AMERICREDIT. At all times from the date hereof to the date on which all Secured Obligations shall have been paid in full in cash, unless the Collateral Agent and the Secured Parties shall otherwise consent in writing: (a) NO SALES, LIENS, ETC. Except as otherwise provided herein and in the Master Receivables Purchase Agreement, AmeriCredit and AMTN shall not, and shall not permit the Debtor to, sell, assign (by operation of law or otherwise) or otherwise dispose of, or 60 create or suffer to exist any Adverse Claim (or the filing of any financing statement) upon or with respect to any of the Affected Assets, or any account which concentrates in a Lock-Box Bank to which any Collections of any Receivable are sent, or assign any right to receive income in respect thereof. (b) EXTENSIONS AND AMENDMENTS OF RECEIVABLES. AmeriCredit or AMTN shall not, and shall not permit the Debtor to, extend, amend or otherwise modify the terms of any Receivable, or amend, modify or waive any term or condition of any Contract related thereto, except in accordance with the Terms of Section 2.2(c) of the Servicing Agreement. (c) NO AMENDMENT OF MASTER RECEIVABLES PURCHASE AGREEMENT. AmeriCredit or AMTN shall not, and shall not permit the Debtor to, amend, supplement or otherwise modify the Master Receivables Purchase Agreement or waive any provision thereof, in each case except with the prior written consent of the Collateral Agent and the Secured Parties; nor shall AmeriCredit or AMTN take, or permit the Debtor to take, any other action under the Master Receivables Purchase Agreement that could have a material adverse effect on the Note Insurer, the Purchaser or any other Owner or which is inconsistent with the terms of this Agreement. (d) NO CHANGE IN BUSINESS OR CREDIT AND COLLECTION POLICY. AmeriCredit or AMTN shall not, and shall not permit the Debtor to, make any change in the character of its business or in the Credit and Collection Policy, which change would, in either case (i) impair the collectibility of any Receivable or (ii) otherwise have a Material Adverse Effect. (e) NO MERGERS, SALE OF ASSETS, ETC. AmeriCredit or AMTN shall not, and shall not permit the Debtor to, (i) consolidate or merge with or into any other Person, or (ii) sell, lease or transfer all or substantially all of its assets to any other Person; PROVIDED, HOWEVER, that no such sale shall be deemed to occur solely as a result of a Take-Out or solely as a result of the sale of Contracts and related Receivables which are released to the Debtor pursuant to Section 2.16 hereof. (f) CHANGE IN PAYMENT INSTRUCTIONS TO OBLIGORS. AmeriCredit or AMTN shall not, and shall not permit the Debtor or the Servicer to, add or terminate any bank as a Lock-Box Bank or any account as a Lock-Box Account to or from those listed in Exhibit A hereto or make any change in its instructions to Obligors regarding payments to be made to any Lock-Box Account, unless (i) such instructions are to deposit such payments to another existing Lock-Box Account or (ii) the Collateral Agent and the Note Insurer shall have received written notice of such addition, termination or change at least 30 days prior thereto and the Collateral Agent and the Note Insurer shall have received a Lock-Box Agreement executed by each new Lock-Box Bank or existing Lock-Box Bank, as applicable, with respect to each new Lock-Box Account. (g) CHANGE OF NAME, ETC. AmeriCredit or AMTN shall not, and shall not permit the Debtor to, change its name, identity or structure or the location of its chief executive office, unless at least 30 days prior to the effective date of any such change the Debtor, 61 AmeriCredit or AMTN, as applicable, delivers to the Collateral Agent (i) such documents, instruments or agreements, executed by the Debtor or the Collateral Agent, as applicable, as are necessary to reflect such change and to continue the perfection of the Collateral Agent's security interest in the Collateral and (ii) new or revised Lock-Box Agreements executed by the Lock-Box Banks which reflect such change and enable the Note Insurer to continue to exercise its rights contained in Section 2.6 hereof. (h) CONTRIBUTION TREATMENT. AmeriCredit or AMTN shall not, and shall not permit the Debtor to account for (including for accounting and tax purposes), or otherwise treat, the transactions contemplated by the Master Receivables Purchase Agreement in any manner other than as a contribution of Receivables by AmeriCredit or AMTN, as applicable, to the Debtor. (i) OTHER DEBT. Except as provided for herein, the Debtor shall not create, incur, assume or suffer to exist any indebtedness whether current or funded, or any other liability other than indebtedness of the Debtor representing fees, expenses and indemnities arising hereunder or under the Master Receivables Purchase Agreement for the purchase price of the Receivables under the Master Receivables Purchase Agreement. (j) ERISA MATTERS. The Servicer shall not, and shall not permit AmeriCredit, AMTN or the Debtor to, (i) engage or permit any of its respective ERISA Affiliates to engage in any prohibited transaction (as defined in Section 4975 of the Code and Section 406 of ERISA) for which an exemption is not available or has not previously been obtained from the U.S. Department of Labor; (ii) permit to exist any accumulated funding deficiency (as defined in Section 302(a) of ERISA and Section 412(a) of the Code) or funding deficiency with respect to any Benefit Plan other than a Multiemployer Plan; (iii) fail to make any payments to any Multiemployer Plan that the Debtor, AmeriCredit, AMTN or any ERISA Affiliate of the Debtor, AmeriCredit or AMTN is required to make under the agreement relating to such Multiemployer Plan or any law pertaining thereto; (iv) terminate any Benefit Plan so as to result in any liability; (v) permit to exist any occurrence of any reportable event described in Title IV of ERISA which represents a material risk of a liability to the Debtor, AmeriCredit, AMTN or any ERISA Affiliate of the Debtor, AmeriCredit or AMTN under ERISA or the Code; or (vi) take any action or fail to take any action which shall give rise to a lien under Section 302(f) of ERISA or cause the Internal Revenue Service to indicate its intention in writing or to file a notice of lien asserting a claim or claims pursuant to the Code with regard to any assets of the Debtor, AmeriCredit, AMTN or any ERISA Affiliate or cause the Pension Benefit Guaranty Corporation to indicate its intention in writing to file a notice of lien asserting a claim pursuant to ERISA with regard to any assets of the Debtor, AmeriCredit, AMTN or any ERISA Affiliate or to terminate any Benefit Plan, or to take any steps to terminate any Benefit Plan, if such prohibited transactions, accumulated funding deficiencies, payments, terminations, reportable events and actions or inactions occurring within any fiscal year of the Debtor, AmeriCredit and AMTN, in the aggregate, involve a payment of money or an incurrence of liability by the Debtor, AmeriCredit, AMTN or any ERISA Affiliate of the Debtor, AmeriCredit or AMTN, in an amount in excess of $10,000. (k) PAYMENT TO AMERICREDIT AND AMTN. With respect to any Receivable sold by AmeriCredit or AMTN to the Debtor, AmeriCredit or AMTN shall, and shall 62 cause the Debtor to, effect such sale under, and pursuant to the terms of, the Master Receivables Purchase Agreement, including, without limitation, the payment by the Debtor in cash to AmeriCredit or AMTN, as the case may be, an amount equal to the purchase price for such Receivable as required by the terms of the Master Receivables Purchase Agreement. (l) the Debtor shall not engage in any business or activity other than set forth in its organizational documents; (m) the Debtor shall not, without the affirmative vote of 100% of the its Certificateholders, institute proceedings to be adjudicated bankrupt or insolvent, or consent to the institution of bankruptcy or insolvency proceedings against it, or file a petition seeking or consent to reorganization or relief under any applicable federal or state law relating to bankruptcy, or consent to the appointment of a receiver, liquidator, assignee, trustee, sequestrator of the corporation or substantial part of its property, or make any assignment for the benefit of creditors, or admit in writing its inability to pay its debts generally as they become due, or take corporate action in furtherance of any such action. (n) the Debtor shall not amend, change or repeal its Certificate of Incorporation as in effect on the date hereof with the prior written consent of the Collateral Agent and the Note Insurer. SECTION 5.3. HEDGING ARRANGEMENTS. The Debtor shall (a) at or prior to the time of any Receivables Delivery, provide to the Note Insurer, and the Collateral Agent an Officer's Certificate stating that the Servicer has Hedging Arrangements in place satisfying the conditions of this Section 5.3 as set forth below, and (b) in connection with any Servicer's Certificate provided hereunder and to the extent not previously provided, provide an executed copy of all existing Hedging Arrangements, which Hedging Arrangements shall be satisfactory to the Collateral Agent, and with respect to which the Debtor shall be the beneficiary, in respect of an aggregate notional amount equal to the lesser of (i) the Net Investment and (ii) the Net Receivables Balance, and if such Hedging Arrangement is a swap, not greater than the Net Investment related to such swap. On each Delivery Date, the notional balance of the Hedging Arrangement shall be in an amount equal to the lesser of (i) the Net Investment and (ii) the Net Receivables Balance and, in the case of a swap, not exceeding the Net Receivables Balance (including any Receivables to be added in connection with such Funding). The form, structure and counterparty to each Hedging Arrangement shall be acceptable to the Note Insurer and the Collateral Agent (and which, unless such Hedging Agreement is a cap agreement, shall be submitted to the Note Insurer and the Collateral Agent for their prior review) and must be in full force and effect at all times during which the Net Receivables Balance is greater than zero (however such required amount may be reduced for the period of time between the pricing and the funding of a structured financing utilizing receivables released to the Debtor pursuant to Section 2.16 hereof by the Aggregate Outstanding Balance of such Receivables). Any counterparty to a Hedging Arrangement shall have a long-term unsecured debt rating from Moody's and S&P of at least "A2" and "A", respectively. 63 With respect to any Hedging Arrangement, (i) on and after the occurrence of a Termination and Amortization Event or Potential Termination and Amortization Event, the Note Insurer shall have the right, in its sole discretion, to direct the Debtor's actions with respect thereto and (ii) the related amortization schedule shall be approved by the Note Insurer. Any Hedging Arrangement relating to a Receivables Delivery which is an interest rate cap agreement shall consist of the following requirements (each interest rate cap agreement meeting the following requirements, an "Interest Rate Cap" and collectively, the "Interest Rate Caps"): (i) any such counterparty thereto not rated at least "A" by S&P or "A2" by Moody's shall be approved in writing by the Note Insurer, Moody's and S&P; (ii) each Interest Rate Cap shall be documented in form and substance reasonably acceptable to the Note Insurer; (iii) the strike rate of any Interest Rate Cap shall be set at a level that will not result in a Net Spread Deficiency; (iv) all amounts payable by the counterparty thereunder shall be required to be paid by such counterparty directly to the Collection Account; (v) the notional amount thereunder shall amortize according to the scheduled amortization of the Receivables funded on such Receivables Delivery Date assuming zero prepayments and zero defaults with respect to such Receivables; (vi) the Interest Rate Cap shall cover at least 100% of the lesser of (a) the Net Investment and (b) the Net Receivables Balance and must be in effect for at least as long as the latest maturing Receivables securing the Net Investment; and (vii) the Effective Date shall be no later than the Receivables Delivery Date. SECTION 5.4. AFFIRMATIVE COVENANTS OF THE SERVICER. At all times from the date hereof to the date on which all Secured Obligations have been paid in full in cash, unless the Collateral Agent and the Secured Parties shall otherwise consent in writing: (a) CONDUCT OF BUSINESS. The Servicer shall, and shall cause each of its Subsidiaries to, carry on and conduct its business in substantially the same manner and in substantially the same fields of enterprise as it is presently conducted and do all things necessary to remain duly incorporated, validly existing and in good standing as a domestic corporation in its jurisdiction of incorporation and maintain all requisite authority to conduct its business in each jurisdiction in which its business is conducted. (b) COMPLIANCE WITH LAWS. The Servicer shall, and shall cause each of its Subsidiaries to, comply with all laws, rules, regulations, orders, writs, judgments, injunctions, decrees or awards to which it or its respective properties may be subject. (c) FURNISHING OF INFORMATION AND INSPECTION OF RECORDS. The Servicer shall furnish to the Note Insurer and the Collateral Agent from time to time such information with respect to the Receivables as the Note Insurer or the Collateral Agent may reasonably request (at the Servicer's expense), including, without limitation, listings identifying the Obligor and the outstanding balance for each Receivable. The Servicer shall, at any time and from time to time during regular business hours and, provided that a Termination and Amortization Event or Potential Termination and Amortization Event shall not have occurred and be continuing, upon reasonable prior notice, permit the Collateral Agent or any Secured Party, or their agents or representatives, (i) to examine and make copies of and take abstracts from all Records and (ii) to visit the offices and properties of the Servicer for the purpose of examining such Records, and to discuss matters relating to Receivables or its performance 64 hereunder and under the other Transaction Documents to which it is a party with any of the officers, directors, employees or independent public accountants of the Servicer having knowledge of such matters. (d) KEEPING OF RECORDS AND BOOKS OF ACCOUNT. The Servicer shall maintain and implement administrative and operating procedures (including, without limitation, an ability to recreate records evidencing 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 Receivables (including, without limitation, records adequate to permit the daily identification of each new Receivable and all Collections of and adjustments to each existing Receivable). The Servicer shall give the Note Insurer notice of any material change in its administrative and operating procedures referred to in the previous sentence. (e) NOTICE OF COLLATERAL AGENT'S INTEREST. In the event that the Debtor, AmeriCredit or AMTN shall sell or otherwise transfer any interest in accounts receivable, the Servicer shall disclose on any computer tapes or other documents or instruments provided by the Servicer in connection with any such sale or transfer the Debtor's ownership of the Receivables and the Servicer's interest therein. (f) CREDIT AND COLLECTION POLICIES. The Servicer shall comply in all material respects with the Credit and Collection Policy with respect to each Receivable and the related Contract. (g) COLLECTIONS. The Servicer shall instruct all Obligors to cause all Collections to be deposited directly to a Lock-Box Account. (h) COLLECTIONS RECEIVED. The Servicer shall hold in trust, and deposit, immediately, but in any event not later than forty-eight (48) hours of its receipt thereof, to a Lock-Box Account all Collections received by it from time to time. (i) CHANGE IN ACCOUNTANTS OR ACCOUNTING POLICIES. The Servicer shall promptly notify the Note Insurer of any change in its accountants or material change in its accounting policy. SECTION 5.5. NEGATIVE COVENANTS OF THE SERVICER. At all times from the date hereof to the date on which all Secured Obligations shall have been paid in full in cash, unless the Collateral Agent and the Secured Parties shall otherwise consent in writing: (a) EXTENSIONS OR AMENDMENTS OF RECEIVABLES. The Servicer shall not extend, amend or otherwise modify the terms of any Receivable, or amend, modify or waive any term or condition of any Contract related thereto, except in accordance with the Terms of Section 2.2(c) of the Servicing Agreement. (b) NO CHANGE IN BUSINESS OR CREDIT AND COLLECTION POLICY. The Servicer shall not make any change in the character of its business or in the Credit and Collection Policy, which change would, in either case, impair the collectibility of any Receivable or otherwise have a Material Adverse Effect. 65 (c) NO MERGERS, ETC. The Servicer shall not (i) consolidate or merge with or into any other Person or (ii) sell, lease or transfer all or substantially all of its assets to any other Person. (d) CHANGE IN PAYMENT INSTRUCTIONS TO OBLIGORS. The Servicer shall not add or terminate any bank as a Lock-Box Bank or any account as a Lock-Box Account to or from those listed in Exhibit A hereto or make any change in its instructions to Obligors regarding payments to be made to any Lock-Box Account, unless (i) such instructions are to deposit such payments to another existing Lock-Box Account or (ii) the Note Insurer shall have received written notice of such addition, termination or change at least 30 days prior thereto and the Collateral Agent shall have received a Lock-Box Agreement executed by each new Lock-Box Bank or existing Lock-Box Bank, as applicable, with respect to each new Lock-Box Account. ARTICLE VI TERMINATION AND AMORTIZATION EVENTS; OPTIONAL TERMINATION SECTION 6.1. TERMINATION AND AMORTIZATION EVENTS. The occurrence of any one or more of the following events shall constitute a Termination and Amortization Event: (a) any representation or warranty made by AmeriCredit or AMTN in this Agreement, the Master Receivables Purchase Agreement (other than the representations and warranties relating to the Receivables) or in any other Transaction Document shall prove to have been incorrect in any material respect when made or deemed made, or AmeriCredit or AMTN shall fail to perform any covenant in this Agreement or any other Transaction Document; or (b) AmeriCredit or AMTN shall fail to make any payment or deposit to be made by it hereunder or under the Note Purchase Agreement, the Servicing and Custodian Agreement or the Insurance Agreement when due hereunder or thereunder; or (c) any Event of Bankruptcy shall occur with respect to the Debtor, AmeriCredit or AMTN; or (d) an "Event of Default" shall have occurred and be continuing under the Insurance Agreement; or (e) the Debtor shall at any time not be in compliance with the requirements of Section 5.3 hereof and such noncompliance shall continue for five (5) days; or (f) any event of default by the Debtor under the Hedge Agreement, as defined by the ISDA guidelines with respect to the related hedge type; or (g) the long-term debt rating of any hedge counterparty under a Hedge Agreement is either A-/A3 or below or withdrawn or suspended (unless a new hedge counterparty reasonably acceptable to the Note Insurer replaces such hedge counterparty within 10 business days or Collateral acceptable to the Note Insurer is transferred by the hedge 66 counterparty to the Debtor pursuant to a Collateral Agreement (as defined in the Hedge Agreement) within 10 business days); or (h) the Collateral Agent, on behalf of the Secured Parties, shall, for any reason, fail to have a valid and perfected security interest in the Collateral, including, without limitation, the Receivables and Related Security and Collections with respect thereto, free and clear of any Adverse Claim; or (i) there shall have occurred any material adverse change in the operations of AmeriCredit since the Closing Date which materially adversely affects AmeriCredit's ability to service the Receivables or to perform under the Servicing Agreement (or any other agreement pursuant to which it is then servicing the Receivables), the Insurance Agreement, the Master Receivables Purchase Agreement or any other Transaction Document; or (j) a final judgment for the payment of money in excess of $10,000,000 shall have been rendered against AmeriCredit or AMTN by a court of competent jurisdiction and AmeriCredit or AMTN shall not have either (1) discharged or provided for the discharge of such judgment in accordance with its terms, or (2) perfected a timely appeal of such judgment and caused the execution thereof to be stayed (by supercedes or otherwise) pending such appeal or (ii) AmeriCredit or AMTN shall have made payments of amounts in excess of $15,000,000 in settlement of any litigation unless covered by insurance; or (k) a claim shall have been made under the Note Policy; or (l) during the Revolving Period only, a Yield Supplement Account Shortfall exists, and continues for a period of five (5) Business Days; or (m) a Reserve Account Shortfall exists at the close of business on any Delivery Date, and remains uncured at the close of business on the fifth (5th) Business Day following such Delivery Date; or (n) an unwaived event of default by AmeriCredit or AMTN which continues for 10 or more days under any material agreement for borrowed money exceeding $5,000,000 to which any such Person is a party; or the default by the Debtor, AmeriCredit, AMTN or any Subsidiary of the Debtor or AmeriCredit in the performance of any term, provision or condition contained in any agreement to which any such Person is a party and under which any Indebtedness owing by the Debtor, AmeriCredit, AMTN or any Subsidiary of the Debtor, AmeriCredit or AMTN greater than such respective amounts was created or is governed, regardless of whether such event is an "event of default" or "default" under any such agreement; or any Indebtedness owing by the Debtor, AmeriCredit, AMTN or any Subsidiary of the Debtor, AmeriCredit or AMTN greater than such respective amounts shall be declared to be due and payable or required to be prepaid (other than by a regularly scheduled payment) prior to the date of maturity thereof; or (o) the Portfolio Delinquency Ratio averaged for the three most recent Determination Dates shall exceed 5.50%; or 67 (p) the Portfolio Net Loss Ratio for any Determination Date shall exceed 8.00%; or (q) the Portfolio Repossession Ratio, as measured on a 3-month rolling average basis, is greater than 1.5%; or (r) the Cumulative Net Loss Ratio exceeds the amount specified for the related Determination Date in Exhibit M hereto; or (s) the weighted average AmeriCredit Score for all Receivables shall at any time be less than 220 or more than 5.00% of the Receivables shall have an AmeriCredit Score below 200; or (t) the average Monthly Extension Ratios for the three most recent Determination Dates shall exceed 2.50%; or (u) the weighted average remaining maturity of the Receivables shall exceed 65 months; or (v) during the Revolving Period only, the Net Investment exceeds the Borrowing Base, for five (5) consecutive days following any Borrowing Base Determination Date; or (w) a Net Spread Deficiency exists, and such deficiency continues for a period of more than five (5) Business Days; or (x) the Tangible Net Worth of AmeriCredit Corp. shall be less than $600,000,000 for any period of twenty (20) consecutive days; or (y) the ratio of AmeriCredit Corp.'s Securitization Assets to its Tangible Net Worth exceeds 2.5x; or (z) the ratio (on a rolling two quarter average basis) of AmeriCredit Corp.'s Adjusted EBITDA for the two most recent financial quarters to its Interest Expense for the two most recent financial quarters shall be less than 1.2x; or (aa) the Servicer or the Note Insurer shall have been informed in writing by either Rating Agency that the risk covered by the Note Policy shall no longer carry a shadow rating of at least BBB from S&P or Baa2 from Moody's and the failure to maintain either such shadow rating shall continue for a period of five (5) days from the date that such notice is provided; or (bb) one or more courts of competent jurisdiction have issued final, non-appealable orders to the effect that the Collateral Agent is not the secured party with respect to Financed Vehicles financed under Receivables with an Aggregate Outstanding Balance (i.e., as of the date upon which such Receivables were originated), equal to 5.00% or more of the Aggregate Outstanding Balance of all Receivables owned by the Debtor; or 68 (cc) AmeriCredit shall enter into any transaction or merger whereby it is not the surviving entity (other than internal re-organization), or AMTN or the Debtor shall enter into any merger regardless of the surviving entity; or (dd) the periodic due diligence by the Note Insurer (or its designee) as permitted by the Transaction Documents, reveals that Receivables representing more than 10% of the sample reviewed (which sample must be of a reasonably statistically significant size) displays material non-compliance with the standards described in the Credit and Collection Policy; or (ee) except as permitted by the transaction documents, any assignment by AmeriCredit of its rights and obligations under the Transaction Documents without the prior written consent of the Note Insurer; or (ff) the Trust becomes an "investment company" within the meaning of the Investment Company Act of 1940; or (gg) AMTN fails to repurchase Receivables in connection with a breach of representation or warranty relating to the Receivables or due to an incomplete or defective Receivable File, or as a result of the related Lien Certificate not having been received by the Custodian by the 181st day following the origination date of the related Receivable; or (hh) AmeriCredit is removed as servicer or is provided with notice of servicer non-renewal on any outstanding term asset-backed transaction; or (ii) Eligible Receivables averaging less than 50% of the Eligible Collateral during any calendar quarter, commencing with the first quarter of 2001; or (jj) more than 30% of the Eligible Receivables held as Collateral have Contracts which provide for 72 monthly payments; or (kk) the Weighted Average AmeriCredit Score for all of the Eligible Receivables held as Collateral which have Contracts which provide for 72 monthly payments is less than 230; or (ll) a Servicer Termination Event occurs. In addition to the Termination and Amortization Events listed above, the following Termination and Amortization Events apply only during the Regular Amortization Period and only with respect to the Regular Amortization Receivables Pool: (a) on any Determination Date, the Regular Amortization Period Cumulative Net Loss Ratio exceeds the amount (based on weighted average pool seasoning in months) specified for the related Determination Date in Exhibit M hereto; or (b) on any Determination Date during the Regular Amortization Period, the Delinquency Ratio, averaged for the 3 most recent Determination Dates, exceeds the level specified for such Determination Date in Exhibit N hereto; or 69 (c) on any Determination Date during the Regular Amortization Period, the Default Ratio exceeds the level specified for such Determination Date in Exhibit O hereto; or (d) (i) on any of the sixth through eighth Determination Dates during the Regular Amortization Period, the Annualized Net Loss Ratio for Receivables held as Collateral, exceeds 9%; (ii) on any of the ninth through twelfth Determination Dates during the Regular Amortization Period, the Annualized Net Loss Ratio for Receivables held as Collateral, exceeds 10%; (i) on any Determination Dates during the Regular Amortization Period thereafter, the Annualized Net Loss Ratio for Receivables held as Collateral, exceeds 11%. SECTION 6.2. TERMINATION. Upon the occurrence of any Termination and Amortization Event hereunder, the Rapid Amortization Period shall commence, unless the Note Insurer otherwise waives in writing such Termination and Amortization Event. No waiver of any Termination and Amortization Event hereunder shall be effective without the prior written consent of the Note Insurer. The Debtor and the Servicer agree that they shall take all actions (including reliening of the certificates of title or other title documents in the name of the Collateral Agent on behalf of the Secured Parties) and execute all documents as may be necessary or requested by the Collateral Agent or the Note Insurer to perfect its interest in the Collateral, including, without limitation, to perfect the Collateral Agent's security interest in the Financed Vehicles. Each of the Debtor, AmeriCredit and AMTN hereby grant to the Collateral Agent, on behalf of the Secured Parties, a power of attorney to act in its place and stead to take all actions as may be necessary to perfect the Collateral Agent's security interest in the Financed Vehicles. Each of AmeriCredit, AMTN and the Debtor acknowledge that such power of attorney is irrevocable and is coupled with an interest. In connection with any sale of the Receivables by the Collateral Agent after the occurrence of a Termination and Amortization Event, the Debtor shall have, for a period of five (5) Business Days after notice of such proposed sale from or on behalf of the Secured Parties, the right to repurchase the Receivables and related Contracts for a price, payable in immediately available funds, in an amount equal to the then outstanding Secured Obligations. SECTION 6.3. OPTIONAL REDEMPTION OF NOTE. On any Remittance Date (i) following the occurrence of a Termination and Amortization Event (which Termination and Amortization Event itself occurs on or after the eleventh (11th) Remittance Date), the Note Insurer, on not fewer than fifteen (15) prior Business Days' written notice delivered to the Debtor, the Servicer, the Collateral Agent and the Purchaser may, or (ii) on or after the twenty-third (23rd Remittance Date, the Debtor not fewer than fifteen (15) prior Business Day's written notice delivered to the Note Insurer, the Purchaser and the Collateral Agent, may, redeem the Note, in whole or in part, on, in each case for a purchase price equal to the Net Investment then outstanding, plus all accrued and unpaid Note Interest, to the date of payment; and provided that all amounts, if any, then due and owing to the Note Insurer, the Collateral Agent and the Servicer are paid in full in cash. The purchase price shall be applied as set forth in Section 6.5 hereof. SECTION 6.4. OPTIONAL PURCHASE OF ALL RECEIVABLES. (a) On the last day of any Settlement Period during the Amortization Period as of which the Aggregate Outstanding Balance of all Receivables shall be less than or equal to 10% of the Aggregate Outstanding 70 Balance of all Receivables as of the beginning of the Amortization Period, the Servicer and AMTN each shall have the option to purchase the Trust Estate, other than the Accounts (with the consent of the Note Insurer if such purchase would result in a claim on the Note Policy or would result in any amount owing to the Note Insurer under the Insurance Agreement remaining unpaid); provided, however, that the amount to be paid for such purchase (as set forth in the following sentence) shall be sufficient to pay the full amount of principal, premium, if any, and interest then due and payable on the Notes and the Certificates and any amount then due and owed to the Note Insurer. To exercise such option, the Servicer or AMTN, as the case may be, shall deposit in the Collection Account an amount equal to the aggregate Purchase Amount for the Receivables (including Liquidated Receivables), plus the appraised value of any other property held by the Trust and any amount then due and owed to the Note Insurer, such value to be determined by an appraiser mutually agreed upon by the Servicer, the Note Insurer and the Collateral Agent, and shall succeed to all interests in and to the Trust. (b) Notice of any termination of the Trust shall be given to the Trustee, the Collateral Agent, the Note Insurer and the Rating Agencies as soon as practicable after the Servicer has received notice thereof. (c) All amounts deposited in the Collection Account pursuant to this Section 6.4 shall be applied as set forth in Section 6.5 hereof. SECTION 6.5. PROCEEDS. The proceeds from the sale, disposition or liquidation of the Receivables pursuant to Section 6.2 hereof, in connection with any optional redemption of the Note pursuant to Section 6.3 hereof, or in connection with the optional purchase of all Receivables pursuant to Section 6.4 hereof, shall be treated as Prepayment Amounts and applied pursuant to Section 2.4 hereof. ARTICLE VII THE COLLATERAL AGENT SECTION 7.1. DUTIES OF THE COLLATERAL AGENT. The Secured Parties hereby appoint The Chase Manhattan Bank to act solely on their behalf as Collateral Agent hereunder, and The Chase Manhattan Bank hereby accepts such appointment. The Collateral Agent, both prior to the occurrence of a Termination and Amortization Event hereunder and after a Termination and Amortization Event shall have been cured or waived, shall undertake to perform such duties and only such duties as are specifically set forth in this Agreement. The Collateral Agent shall at all times after the occurrence of a Termination and Amortization Event which has not been cured or waived exercise such of the rights and powers vested in it pursuant to this Agreement using the same degree of care and skill as a prudent person would exercise or use in the conduct of his or her own affairs. All Collections received by the Collateral Agent from the Servicer or otherwise will, pending remittance to the Secured Parties entitled thereto, be held in trust by the Collateral Agent for the benefit of the Secured Parties and together with all other payment obligations of 71 the Debtor hereunder owing to the Secured Parties shall be payable to the Secured Parties in accordance with the provisions of Article III hereof. SECTION 7.2. COMPENSATION AND INDEMNIFICATION OF COLLATERAL AGENT. The Collateral Agent shall be compensated for its activities hereunder and reimbursed for reasonable out-of-pocket expenses (including, but not limited to, (i) securities transaction charges not waived due to the Collateral Agent's receipt of a payment from a financial institution with respect to certain Eligible Investments and (ii) the compensation and expenses of its counsel and agents) pursuant to a separate letter agreement between the Collateral Agent and the Debtor. All such amounts shall be payable from funds available therefor in accordance with Section 2.3(a)(iv) and (xiii) hereof. Notwithstanding any other provisions in this Agreement, the Collateral Agent shall not be liable for any liabilities, costs or expenses of the Debtor arising under any tax law, including without limitation any Federal, state or local income or franchise taxes or any other tax imposed on or measured by income (or any interest or penalties with respect thereto or from a failure to comply therewith). (a) Each of the Debtor and AmeriCredit shall, jointly and severally, indemnify the Collateral Agent, its officers, directors, employees and agents for, and hold it harmless against any loss, liability or expense incurred without willful misconduct, gross negligence or bad faith on its part, arising out of or in connection with (i) the acceptance or administration of this Agreement, including the costs and expenses of defending itself against any claim or liability in connection with the exercise or performance of any of its powers or duties under this Agreement and (ii) the negligence, willful misconduct or bad faith of the Debtor in the performance of its duties hereunder. All such amounts shall be payable in accordance with Section 2.3(a)(iv) and (xiii) hereof. The provisions of this Section 7.2 shall survive the termination of this Agreement or the earlier resignation or removal of the Collateral Agent. SECTION 7.3. [INTENTIONALLY OMITTED]. SECTION 7.4. LIABILITY OF THE COLLATERAL AGENT. (a) The Collateral Agent shall be liable in accordance herewith only to the extent of the obligations specifically undertaken by the Collateral Agent in such capacity herein. No implied covenants or obligations shall be read into this Agreement against the Collateral Agent and, in the absence of bad faith on the part of the Collateral Agent, the Collateral Agent may conclusively rely on the truth of the statements and the correctness of the opinions expressed in any certificates or opinions furnished to the Collateral Agent and conforming to the requirements of this Agreement. (b) The Collateral Agent shall not be liable for an error of judgment made in good faith by an authorized officer, unless it shall be conclusively proved in a judicial proceeding that the Collateral Agent shall have been negligent in ascertaining the pertinent facts of which the Collateral Agent is required by the terms of this Agreement or any other Transaction Documents to make itself aware. (c) The Collateral Agent shall not be liable with respect to any action taken, suffered or omitted to be taken in good faith in accordance with this Agreement or at the 72 direction of a Secured Party relating to the exercise of any power conferred upon the Collateral Agent under this Agreement. (d) The Collateral Agent shall not be charged with knowledge of any Termination and Amortization Event unless an authorized officer obtains actual knowledge of such event or the Collateral Agent receives written notice of such event from the Debtor, the Purchaser, any other Owner, any other Secured Party or the Note Insurer, as the case may be. (e) Without limiting the generality of this Section 7.4, the Collateral Agent shall have no duty (i) to see to any recording, filing or depositing of this Agreement or any other Transaction Document or any financing statement or continuation statement evidencing a security interest in the Receivables or the Financed Vehicles, or to see to the maintenance of any such recording or filing or depositing or to any recording, refiling or redepositing of any thereof, (ii) to see to any insurance of the Financed Vehicles or Obligors or to effect or maintain any such insurance, (iii) to see to the payment or discharge of any tax, assessment or other governmental charge or any Lien or encumbrance of any kind owing with respect to, assessed or levied against, any part of the Receivables, (iv) to confirm or verify the contents of any reports or certificates of the Servicer or the Debtor delivered to the Collateral Agent pursuant to this Agreement believed by the Collateral Agent to be genuine and to have been signed or presented by the proper party or parties or (v) to inspect the Financed Vehicles at any time or ascertain or inquire as to the performance or observance of any of the Debtor's or the Servicer's representations, warranties or covenants or the Servicer's duties and obligations as Servicer and as custodian of books, records, files and computer records relating to the Receivables. (f) The Collateral Agent 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 there shall be reasonable ground for believing that the repayment of such funds or indemnity satisfactory to it against such risk or liability shall not be assured to it, and none of the provisions contained in this Agreement shall in any event require the Collateral Agent to perform, or be responsible for the manner of performance of, any of the obligations of the Servicer under this Agreement. (g) The Collateral Agent may conclusively rely and shall be fully protected in acting or refraining from acting upon any resolution, officer's certificate, any Servicer's Certificate, certificate of auditors, or any other certificate, statement, instrument, opinion, report, notice, request, consent, order, appraisal, bond or other paper or document reasonably believed by it to be genuine and to have been signed or presented by the proper party or parties. (h) The Collateral Agent may consult with counsel and any opinion of such counsel shall be full and complete authorization and protection in respect of any action taken or suffered or omitted by it under this Agreement in good faith and in accordance with such opinion of counsel. (i) The Collateral Agent shall be under no obligation to exercise any of the rights or powers vested in it by this Agreement or to institute, conduct or defend any litigation under this Agreement or in relation to this Agreement, at the request, order or direction 73 of the Note Insurer pursuant to the provisions of this Agreement, unless the Note Insurer shall have offered to the Collateral Agent reasonable security or indemnity against the costs, expenses and liabilities that may be incurred therein or thereby; nothing contained in this Agreement, however, shall relieve the Collateral Agent of its obligations, upon the occurrence of a Termination and Amortization Event (that shall not have been cured or waived), to exercise such of the rights and powers vested in it by this Agreement, and to use the same degree of care and skill in their exercise as a prudent person would exercise or use under the circumstances in the conduct of his or her own affairs. (j) The Collateral Agent shall not be liable for any action taken, suffered or omitted by it in good faith and believed by it to be authorized or within the discretion or rights or powers conferred upon it by this Agreement. (k) Prior to the occurrence of a Termination and Amortization Event and before the Collateral Agent has received notice of such Termination and Amortization Event and after the waiver of any Termination and Amortization Event that may have occurred, the Collateral Agent shall not be bound to make any investigation into the facts of matters stated in any resolution, certificate, statement, instrument, opinion, report, notice, request, consent, order, approval, bond or other paper or document, unless requested in writing so to do by a Secured Party; PROVIDED, HOWEVER, that if the payment within a reasonable time to the Collateral Agent of the costs, expenses or liabilities likely to be incurred by it in the making of such investigation shall be, in the opinion of the Collateral Agent, not reasonably assured by the Debtor, the Collateral Agent may require reasonable indemnity against such cost, expense or liability as a condition to so proceeding. The reasonable expense of every such examination shall be paid by the Debtor or, if paid by the Collateral Agent, shall be reimbursed by the Debtor upon demand. (l) The Collateral Agent may execute any of the trusts or powers hereunder or perform any duties under this Agreement either directly or by or through agents or attorneys or a custodian. The Collateral Agent shall not be responsible for any misconduct or negligence of any such Agent or custodian appointed with due care by it hereunder. (m) The Collateral Agent shall have no obligation to invest and reinvest any cash held in the applicable Eligible Deposit Account in the absence of timely and specific written investment direction of the Servicer. In no event shall the Collateral Agent be liable for the selection of investments or for investment losses incurred thereon by reason of investment performance, nor shall the Collateral Agent shall have any liability in respect of losses incurred as a result of the liquidation of any investment prior to its stated maturity or the failure to be provided with timely written investment direction from the Servicer. (n) The Collateral Agent may at any time resign by giving 30 days written notice of resignation to the Debtor, the Servicer, AMTN and the Note Insurer. Upon receiving such notice of resignation, the Servicer, with the consent of the Note Insurer, shall promptly appoint a successor and, upon the acceptance by the successor of such appointment, release the resigning Collateral Agent from its obligations hereunder by written instrument, a copy of which instrument shall be delivered to each of the Debtor, the Servicer, AMTN and the Note Insurer, the resigning Collateral Agent and the successor. If no successor shall have been so appointed and have accepted appointment within 45 days after the giving of such notice of 74 resignation, the resigning Collateral Agent may petition any court of competent jurisdiction for the appointment of a successor. SECTION 7.5. [INTENTIONALLY OMITTED]. SECTION 7.6. LIMITATION ON LIABILITY OF THE COLLATERAL AGENT AND OTHERS. The directors, officers, employees or agents of the Collateral Agent shall not be under any liability to the Note Insurer, any Secured Party or any other Person hereunder or pursuant to any document delivered hereunder, it being expressly understood that all such liability is expressly waived and released as a condition of, and as consideration for, the execution of this Agreement; PROVIDED, HOWEVER, that this provision shall not protect the directors, officers, employees and agents of the Collateral Agent against any liability which would otherwise be imposed by reason of willful misfeasance, bad faith or gross negligence in the performance of duties or by reason of reckless disregard of obligations and duties hereunder. Except as provided in Section 7.4 hereof, the Collateral Agent shall not be under any liability to any Secured Party or any other Person for any action taken or for refraining from the taking of any action in its capacity as Collateral Agent pursuant to this Agreement whether arising from express or implied duties under this Agreement; PROVIDED, HOWEVER, that this provision shall not protect the Collateral Agent against any liability which would otherwise be imposed by reason of willful misfeasance, bad faith or gross negligence in the performance of duties or by reason of reckless disregard of obligations and duties hereunder. The Collateral Agent may rely in good faith on any document of any kind PRIMA FACIE properly executed and submitted by any Person respecting any matters arising hereunder. The Collateral Agent shall not be under any obligation to appear in, prosecute or defend any legal action which is not incidental to its duties to administer the Collections and the Collection Account in accordance with this Agreement which in its reasonable opinion may involve it in any expense or liability. ARTICLE VIII THE SECURITIES INTERMEDIARY SECTION 8.1. DUTIES OF THE SECURITIES INTERMEDIARY. The Chase Manhattan Bank, in its capacity as Securities Intermediary hereunder, hereby undertakes and agrees to act as "security intermediary" (as such term is defined in Section 8-501 of the Uniform Commercial Code as in effect in the State of New York (the "NEW YORK UCC")) in connection with the securities accounts hereinafter referred to in this Article 8 and all securities, security entitlements, cash and other property held from time to time in such securities accounts). In such capacity, the Securities Intermediary will establish each of the Collection Account, the Reserve Account, the Funding Account and the Yield Supplement Account as an Eligible Account. SECTION 8.2. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE SECURITIES INTERMEDIARY. The Securities Intermediary represents, warrants and covenants that: (i) It shall not change the name or account number of the Collection Account, the Funding Account, the Yield Supplement Account or the Reserve Account 75 (collectively, the "COLLATERAL AGENT ACCOUNTS") without the prior written consent of the Collateral Agent and the Note Insurer; (ii) All securities or other property comprising any financial assets deposited in or credited to the Collateral Agent Accounts shall be registered in the name of the Securities Intermediary or the Collateral Agent or in blank or shall be credited to another securities account or accounts maintained in the name of the Securities Intermediary, and in no case shall any financial asset deposited in or credited to any such account be registered in the name of the Debtor, payable to the order of the Debtor or specially endorsed to the Debtor, except to the extent the foregoing have been specifically endorsed to the Securities Intermediary or in blank; (iii) All property delivered to the Securities Intermediary pursuant to this Agreement for deposit in or credit to the Collateral Agent Accounts shall be promptly credited to such account; (iv) Each of the Collateral Agent Accounts is and shall remain a "securities account" as such term is defined in Section 8-501(a) of the New York UCC, and the Securities Intermediary agrees that each item of property (whether investment property, financial asset, security, instrument or cash) deposited in or credited to each such account shall be treated as a "financial asset" within the meaning of Section 8-102(a)(9) of the New York UCC and that, subject to the terms of this Agreement, the Securities Intermediary will treat the Collateral Agent as the holder of a security entitlement in and as entitled to exercise the rights that comprise any financial asset deposited in or credited to such account; (v) The Chase Manhattan Bank, in the ordinary course of its business maintains securities accounts for others and is acting in that capacity in exercising its rights and discharging its duties hereunder; and (vi) If at any time the Securities Intermediary shall receive any notification from the Collateral Agent directing transfer or redemption of any financial asset relating to the Collateral Agent Accounts, the Securities Intermediary shall comply with such entitlement order without further consent by the Debtor or any other person. SECTION 8.3. GOVERNING LAW FOR CERTAIN SECURITIES INTERMEDIARY MATTERS. Without limiting the generality of Section 9.4 of this Agreement, the parties agree that both this Agreement, the Collateral Agent Accounts shall be governed by the laws of the State of New York. Regardless of any provision in any other agreement, for purposes of the New York UCC, New York shall be deemed to be the Securities Intermediary's jurisdiction and the Collateral Agent Accounts (as well as all of the securities entitlements related thereto) shall be governed by the laws of the State of New York. 76 ARTICLE IX MISCELLANEOUS SECTION 9.1. TERM OF AGREEMENT. This Agreement shall terminate on the date immediately following the date upon which all Secured Obligations have been paid in full in cash; PROVIDED, HOWEVER, that (i) the rights and remedies of the Collateral Agent, the Note Insurer, and the Secured Parties with respect to any representation and warranty made or deemed to be made by the Debtor, AmeriCredit, AMTN or the Servicer pursuant to this Agreement, (ii) the indemnification and payment provisions of Article VII, and (iii) the agreement set forth in Section 9.9 hereof, shall be continuing and shall survive any termination of this Agreement. SECTION 9.2. WAIVERS; AMENDMENTS. (a) No failure or delay on the part of the Collateral Agent, the Note Insurer or any of the Secured Parties 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 further exercise thereof or the exercise of any other power, right or remedy. The rights and remedies herein provided shall be cumulative and nonexclusive of any rights or remedies provided by law. (b) Any provision of this Agreement or any of the Transaction Documents may be amended or waived if, but only if, such amendment is in writing and is signed by the Debtor, the Servicer and the Purchaser and the Note Insurer (and, if the Servicing and Custodian Agreement or the rights or duties of the Collateral Agent are affected thereby, by the Collateral Agent). Prior to the execution of any amendment to this Agreement, the Collateral Agent shall be entitled to receive and conclusively rely upon an Opinion of Counsel stating that the execution of such amendment is authorized or permitted by this Agreement and that all conditions precedent to such execution and delivery have been satisfied. The Collateral Agent may, but shall not be obligated to enter into any such amendment which affects the Collateral Agent's own rights, duties or immunities under this Agreement. SECTION 9.3. NOTICES. Except as provided below, all communications and notices provided for hereunder shall be in writing (including bank wire, telex, telecopy or electronic facsimile transmission or similar writing) and shall be given to the other party at its address or telecopy number set forth below or at such other address or telecopy number as such party may hereafter specify for the purposes of notice to such party. Each such notice or other communication shall be effective (i) if given by telecopy, when such telecopy is transmitted to the telecopy number specified in this Section 9.3 and confirmation is received, (ii) if given by mail three (3) Business Days following such posting, if postage prepaid, or if sent via U.S. certified or registered mail, (iii) if given by overnight courier, one (1) Business Day after deposit thereof with a national overnight courier service, or (iv) if given by any other means, when received at the address specified in this Section 9.3. However, the absence of such confirmation shall not affect the validity of such notice. If the written confirmation differs in any material 77 respect from the action taken by the Purchaser, the records of the Purchaser shall govern absent manifest error. If to the Purchaser: Meridian Funding Company, LLC c/o MBIA Insurance Corporation 113 King Street Armonk, NY 10504 Attention: Group Managing Directors-Conduits Telephone: 914-273-4545 Telecopy: 914-765-3979 (with a copy to the Note Insurer) If to the Debtor: AmeriCredit MTN Receivables Trust c/o Bankers Trust (Delaware) E.A. Delle Donne Corporate Center Montgomery Building 1011Centre Road, Suite 200 Wilmington, Delaware 19805 Attention: Corporate Trust Administration with a copy to: Bankers Trust Company 4 Albany Street New York, New York 10006 Attention: Asset Backed Finance Unit and a copy to: AmeriCredit Financial Services, Inc. 801 Cherry Street Suite 3900 Fort Worth, Texas 76102 Attention: Treasury Department Telephone: (817) 302-7022 Telecopy: (817) 302-7942 78 If to the Trustee: Bankers Trust Company 4 Albany Street New York, New York 10006 Attention: Asset Backed Finance Unit If to AmeriCredit or the Servicer: AmeriCredit Financial Services, Inc. 801 Cherry Street Suite 3900 Fort Worth, Texas 76102 Attention: Treasury Department Telephone: (817) 302-7022 Telecopy: (817) 302-7942 If to AMTN: AmeriCredit MTN Corp. 801 Cherry Street Suite 4000 Fort Worth, Texas 76102 Attention: Treasury Department Telephone: (817) 302-7082 Telecopy: (817) 302-7915 If to the Note Insurer: MBIA Insurance Corporation 113 King Street Armonk, NY 10504 Attention: Insured Portfolio Management - SF Telephone: 914-273-4545 Telecopy: 914-765-3810 If to the Collateral Agent or the Securities Intermediary: The Chase Manhattan Bank 450 W. 33rd Street New York, NY 10001 Attention: AmeriCredit MTN Receivables Trust Telephone: 212-946-3651 Telecopy: 212-946-8302 79 SECTION 9.4. GOVERNING LAW; SUBMISSION TO JURISDICTION; WAIVER OF JURY TRIAL; INTEGRATION; APPOINTMENT OF AGENT FOR SERVICE OF PROCESS. (a) THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO THE CONFLICTS OF LAW PROVISIONS THEREOF. EACH OF THE DEBTOR, AMERICREDIT, AMTN AND THE SERVICER HEREBY SUBMITS TO THE NONEXCLUSIVE JURISDICTION OF THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK AND OF ANY NEW YORK STATE COURT SITTING IN THE CITY OF NEW YORK FOR PURPOSES OF ALL LEGAL PROCEEDINGS ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY. Each of the Debtor, AmeriCredit, AMTN and the Servicer hereby irrevocably waives, to the fullest extent it may effectively do so, any objection which it may now or hereafter have to the laying of the venue of any such proceeding brought in such a court and any claim that any such proceeding brought in such a court has been brought in an inconvenient forum. Nothing in this Section 9.4 shall affect the right of the Purchaser to bring any action or proceeding against the Debtor, AmeriCredit, AMTN or the Servicer or their respective properties in the courts of other jurisdictions. (b) EACH OF THE PARTIES HERETO HEREBY WAIVES ANY RIGHT TO HAVE A JURY PARTICIPATE IN RESOLVING ANY DISPUTE, WHETHER SOUNDING IN CONTRACT, TORT OR OTHERWISE AMONG ANY OF THEM ARISING OUT OF, CONNECTED WITH, RELATING TO OR INCIDENTAL TO THE RELATIONSHIP BETWEEN THEM IN CONNECTION WITH THIS AGREEMENT OR THE OTHER TRANSACTION DOCUMENTS. (c) This Agreement contains the final and complete integration of all prior expressions by the parties hereto with respect to the subject matter hereof and shall constitute the entire Agreement between the parties hereto with respect to the subject matter hereof superseding all prior oral or written understandings. (d) The Debtor, AmeriCredit, AMTN and the Servicer each hereby appoint Corporation Servicing Company, located at 80 State Street, Albany, New York 12207-2543, as the authorized agent upon whom process may be served in any action arising out of or based upon this Agreement, the other Transaction Documents to which such Person is a party or the transactions contemplated hereby or thereby that may be instituted in the United States District Court for the Southern District of New York and of any New York State court sitting in the City of New York by the Purchaser, the Note Insurer, any other Owner, the Collateral Agent or any assignee of any of them. SECTION 9.5. COUNTERPARTS; SEVERABILITY. This Agreement may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which when so executed shall be deemed to be an original and all of which when taken together shall constitute one and the same Agreement. Any provisions of this Agreement which are 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, and 80 and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction. SECTION 9.6. SUCCESSORS AND ASSIGNS. (a) This Agreement shall be binding on the parties hereto and their respective successors and assigns; PROVIDED, HOWEVER, that none of the Debtor, AmeriCredit, AMTN or the Servicer may assign any of its rights or delegate any of its duties hereunder or under the Master Receivables Purchase Agreement or under any of the other Transaction Documents without the prior written consent of the Collateral Agent. No provision of this Agreement shall in any manner restrict the ability of the Collateral Agent to assign, participate, grant security interests in, or otherwise transfer any portion of the Collateral. (b) Each of the Debtor, AmeriCredit, AMTN and the Servicer hereby consents to and acknowledges the assignment by the Purchaser of all of its rights under, interest in and title to this Agreement, the Note and the Collateral to the Note Insurer. SECTION 9.7. WAIVER OF CONFIDENTIALITY. Each of the Debtor, AmeriCredit, AMTN and the Servicer hereby consents to the disclosure of any non-public information with respect to it received by any Secured Party, the Collateral Agent or the Note Insurer to any of the Purchaser, any nationally recognized rating agency rating the Purchaser's medium term notes, the Note Insurer or any Secured Party, in relation to this Agreement. SECTION 9.8. CONFIDENTIALITY AGREEMENT. Each of the Debtor, AmeriCredit and AMTN hereby agrees that it shall not disclose the contents of this Agreement or any other proprietary or confidential information of any of the Secured Parties, the Collateral Agent or the Note Insurer to any other Person except (i) its auditors and attorneys, employees or financial advisors (other than any commercial bank) and any nationally recognized rating agency; PROVIDED such auditors, attorneys, employees, financial advisors or rating agencies are informed of the highly confidential nature of such information or (ii) as otherwise required (x) by applicable law, (y) under the Securities Exchange Act of 1934, as amended, in connection with an offering of securities issued by the Debtor or an Affiliate thereof, or (z) by order of a court of competent jurisdiction (PROVIDED, HOWEVER, that in the case of this clause (ii) no such disclosure shall occur without the prior review by the Note Insurer of the material to be disclosed). SECTION 9.9. NO BANKRUPTCY PETITION AGAINST THE PURCHASER, AMTN, OR THE DEBTOR. Each of the Debtor, AmeriCredit, AMTN and the Servicer hereby covenants and agrees that, prior to the date which is one year and one day after the payment in full of all outstanding indebtedness of the Purchaser, it shall not institute against, or join any other Person in instituting against, the Purchaser, AMTN or the Debtor or any bankruptcy, reorganization, arrangement, insolvency or liquidation proceedings or other similar proceeding under the laws of the United States or any state of the United States. SECTION 9.10. FURTHER ASSURANCES. The Debtor agrees to do such further acts and things and to execute and deliver to the Secured Parties, the Note Insurer or the Collateral Agent such additional assignments, agreements, powers and instruments as are required by each of 81 them to carry into effect the purposes of this Agreement or to better assure and confirm unto each of them their rights, powers and remedies hereunder. SECTION 9.11. CHARACTERIZATION OF THE TRANSACTIONS CONTEMPLATED BY THE AGREEMENT; TAX TREATMENT. The parties hereto agree that this Agreement shall constitute a security agreement under applicable law. The Debtor hereby assigns to the Collateral Agent, for the benefit of the Secured Parties, all of its rights and remedies under (i) the Master Receivables Purchase Agreement with respect to the Receivables and with respect to any obligations thereunder of each of AmeriCredit and AMTN with respect to the Receivables and (ii) under or in connection with any Hedging Arrangement. The Collateral Agent agrees that upon any release of a Receivable or Contract to the Debtor, the Collateral Agent shall be deemed to have released its security interest therein and reassigned to the Debtor all of the Collateral Agent's rights under the Master Receivables Purchase Agreement with respect to such Receivable or Contract. The Debtor agrees that neither it nor the Servicer shall give any consent or waiver required or permitted to be given under the Master Receivables Purchase Agreement with respect to the Receivables or the Contracts without the prior consent of the Collateral Agent and the Note Insurer. (b) Each of the parties hereto agrees to treat the transactions contemplated by this Agreement as a financing for federal income tax purposes and further agree to file on a timely basis all federal and other income tax returns consistent with such treatment. SECTION 9.12. RESPONSIBILITIES OF THE DEBTOR. Anything herein to the contrary notwithstanding, the Debtor shall (i) perform all of its obligations under the Contracts related to the Receivables to the same extent as if interests in such Receivables had not been pledged hereunder and the exercise by the Collateral Agent or any Secured Party of their rights hereunder shall not relieve the Debtor from such obligations and (ii) pay when due any taxes, including, without limitation, any sales taxes payable in connection with the Receivables and their creation and satisfaction. Neither the Collateral Agent nor any Secured Party shall have any obligation or liability with respect to any Receivable or related Contracts, nor shall any of them be obligated to perform any of the obligations of the Debtor thereunder. SECTION 9.13. HEADINGS. Section headings used in this Agreement are for convenience of reference only and shall not affect the construction or interpretation of this Agreement. SECTION 9.14. 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 Trustee of the Debtor, 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 Debtor is made and intended not as a personal representation, undertaking and agreement by Bankers Trust (Delaware) but is made and intended for the purpose for binding only the Debtor, (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 82 of any indebtedness or expenses of the Debtor or be liable for the breach or failure of any obligation, representation, warranty or covenant made or undertaken by the Debtor under this Agreement or any other related documents; PROVIDED, HOWEVER, that no provision of this Agreement shall be construed to relieve the Trustee from liability for its own negligent action, its own negligent failure to act, its action in bad faith or its own willful misconduct. SECTION 9.15. BINDING EFFECT. This Agreement shall be binding upon and shall inure to the benefit of the parties hereto and their respective successors and assigns. In addition, each of the Secured Parties shall be an express third party beneficiary hereof entitled to enforce the terms hereof as if it were a party hereto. Concurrently with the appointment of a successor Collateral Agent under the Security Agreement, the parties hereto shall amend this Agreement to make said Collateral Agent, the successor to the Collateral Agent hereunder. SECTION 9.16. EFFECT OF NOTE INSURER DEFAULT. Upon the occurrence of a Note Insurer Default, and for so long as such Note Insurer Default continues, all rights of the Note Insurer shall vest in the Purchaser; provided, however, that all rights of the Note Insurer shall be immediately reinstated upon cure of such Note Insurer Default. 83 IN WITNESS WHEREOF, the parties hereto have executed and delivered this Agreement as of the date first written above. AMERICREDIT MTN RECEIVABLES TRUST, as Debtor By: BANKERS TRUST (DELAWARE), not in its individual capacity but solely as Trustee By: ------------------------------------------ Name: Title: AMERICREDIT FINANCIAL SERVICES, INC., individually and as Servicer By: ------------------------------------- Name: Title: AMERICREDIT MTN CORP., individually By: ------------------------------------- Name: Title: 84 THE CHASE MANHATTAN BANK, as Collateral Agent and as Securities Intermediary By: ------------------------------------- Name: Title: 85 EXHIBIT A LIST OF LOCK-BOX BANKS AND LOCK-BOX ACCOUNTS EXHIBIT B FORM OF LOCK-BOX AGREEMENT EXHIBIT C [[[[FORM OF NOTE]]]] EXHIBIT D [[[[INTENTIONALLY OMITTED]]]] EXHIBIT E LIST OF ACTIONS AND SUITS EXHIBIT F SCHEDULE OF LOCATIONS OF RECORDS EXHIBIT G LIST OF SUBSIDIARIES, DIVISIONS AND TRADENAMES EXHIBIT H [[[[INTENTIONALLY OMITTED.]]]] EXHIBIT I FORM OF SECRETARY'S CERTIFICATE EXHIBIT J [[[[INTENTIONALLY OMITTED]]]] EXHIBIT K FORM OF TAKE-OUT NOTICE EXHIBIT L FORM OF DELIVERY NOTICE EXHIBIT M CUMULATIVE NET LOSS TABLE - ---------------- ----------------- Seasoning in Trigger Rate Months - ---------------- ----------------- 3 0.50% - ---------------- ----------------- 6 2.50% - ---------------- ----------------- 9 5.20% - ---------------- ----------------- 12 7.10% - ---------------- ----------------- 15 9.00% - ---------------- ----------------- 18 10.90% - ---------------- ----------------- 21 12.60% - ---------------- ----------------- 24 13.60% - ---------------- ----------------- 27 14.60% - ---------------- ----------------- 30 15.60% - ---------------- ----------------- 33 16.20% - ---------------- ----------------- 36 16.60% - ---------------- ----------------- 39 16.90% - ---------------- ----------------- 42 17.10% - ---------------- ----------------- EXHIBIT N DELINQUENCY RATIO TABLE - --------------------------- -------------------- Weighted Average Trigger Rate Seasoning of Pool - --------------------------- -------------------- 1 - 12 months 5.00% - --------------------------- -------------------- 13 - 24 months 5.50% - --------------------------- -------------------- 25 - 48 months 6.50% - --------------------------- -------------------- 49 - 72 months 7.00% - --------------------------- -------------------- EXHIBIT O DEFAULT RATIO TABLE - -------------------------- ------------------------- Weighted Average Seasoning of Pool Default Rate Trigger - -------------------------- ------------------------- 1-3 months 4.15% - -------------------------- ------------------------- 4-6 months 7.00% - -------------------------- ------------------------- 7-9 months 9.98% - -------------------------- ------------------------- 10-12 months 13.36% - -------------------------- ------------------------- 13-15 months 16.50% - -------------------------- ------------------------- 16-18 months 17.83% - -------------------------- ------------------------- 19-21 months 19.78% - -------------------------- ------------------------- 22-24 months 21.29% - -------------------------- ------------------------- 25-27 months 22.44% - -------------------------- ------------------------- 28-30 months 23.27% - -------------------------- ------------------------- 31-33 months 23.85% - -------------------------- ------------------------- 34-36 months 24.23% - -------------------------- ------------------------- 37-39 months 24.47% - -------------------------- ------------------------- 40-42 months 24.59% - -------------------------- ------------------------- 43-45 months 24.64% - -------------------------- ------------------------- 46-48 months 24.66% - -------------------------- ------------------------- 49-51 months 24.67% - -------------------------- ------------------------- 52-54 months 24.68% - -------------------------- ------------------------- 55-57 months 24.69% - -------------------------- ------------------------- 58-60 months 24.70% - -------------------------- ------------------------- 61-63 months 24.70% - -------------------------- ------------------------- 64-66 months 24.70% - -------------------------- ------------------------- 67-69 months 24.70% - -------------------------- ------------------------- 70-72 months 24.70% - -------------------------- ------------------------- EXHIBIT P COLLATERAL AGENT'S FEE SCHEDULE EXHIBIT Q TRUSTEE'S FEE SCHEDULE EX-10.3 4 a2036548zex-10_3.txt EXHIBIT 10.3 MASTER RECEIVABLES PURCHASE AGREEMENT AMONG AMERICREDIT MTN RECEIVABLES TRUST, AS PURCHASER, AMERICREDIT FINANCIAL SERVICES, INC., INDIVIDUALLY AND AS SELLER, AMERICREDIT MTN CORP., AS SELLER, AND THE CHASE MANHATTAN BANK, AS COLLATERAL AGENT DATED AS OF DECEMBER 18, 2000 1 TABLE OF CONTENTS
Page ---- 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....................................................................3 SECTION 3.1 Representations and Warranties of AFS....................................................3 SECTION 3.2 [Reserved]...............................................................................5 SECTION 3.3 Representations and Warranties of AMTN...................................................5 ARTICLE IV. COVENANTS OF SELLERS...............................................................................8 SECTION 4.1 Liens in Force...........................................................................8 SECTION 4.2 No Impairment............................................................................8 SECTION 4.3 No Amendments............................................................................8 SECTION 4.4 Restrictions on Liens....................................................................8 SECTION 4.5 Preservation of Collateral...............................................................8 ARTICLE V. REPURCHASES.........................................................................................9 SECTION 5.1 Repurchase of Receivables Upon Breach of Warranty........................................9 SECTION 5.2 Reassignment of Purchased Receivables....................................................9 SECTION 5.3 Waivers.................................................................................10 ARTICLE VI. CONDITIONS PRECEDENT..............................................................................10 SECTION 6.1 Conditions Precedent to each Receivables Sale...........................................10 ARTICLE VII. MISCELLANEOUS....................................................................................11 SECTION 7.1 Liability of Sellers....................................................................11 SECTION 7.2 Merger or Consolidation of Sellers......................................................11 SECTION 7.3 Limitation on Liability of Sellers and Others...........................................11 SECTION 7.4 Amendment...............................................................................11 SECTION 7.5 Notices.................................................................................11 SECTION 7.6 Merger and Integration..................................................................12 SECTION 7.7 Severability of Provisions..............................................................12 SECTION 7.8 Intention of the Parties................................................................12 SECTION 7.9 Governing Law...........................................................................12 SECTION 7.10 Counterparts............................................................................12 SECTION 7.11 Conveyance of the Receivables and the Other Conveyed Property to the i Collateral Agent.....................................................................12 SECTION 7.12 Nonpetition Covenant....................................................................13 SECTION 7.13 Limitation of Liability of Trustee......................................................13 SECTION 7.14 Additional Transfers....................................................................13 EXHIBITS Exhibit A -- Form of Supplement Addendum A -- Form of Sale Agreement
ii MASTER RECEIVABLES PURCHASE AGREEMENT THIS MASTER RECEIVABLES PURCHASE AGREEMENT, dated as of December 18, 2000, executed among AmeriCredit MTN Receivables Trust, a Delaware business trust, as purchaser ("PURCHASER"), The Chase Manhattan Bank, as collateral agent (the "COLLATERAL AGENT"), AmeriCredit MTN Corp., a Delaware corporation, as seller ("AMTN") and AmeriCredit Financial Services, Inc., a Delaware corporation, as seller ("AFS" and together with AMTN, 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 SECTION 1.1 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 Security Agreement (as defined herein) or the Servicing and Custodian Agreement (as defined herein). SECTION 1.2 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 The Chase Manhattan Bank, as collateral agent and any successor collateral agent appointed and acting pursuant to the Security 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. "PURCHASE AMOUNT" means, with respect to a Receivables the Outstanding Balance of such Receivable and all accrued and unpaid interest on such Receivables, after giving effect to the receipt of any funds collected (from whatever source on such Receivable). "RECEIVABLES" means the Receivables (as defined in the Security Agreement) listed on the Schedules of Receivables attached to each Supplement. "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. "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 Seller's representations and warranties hereunder or under the Servicing and Custodian Agreement, or the breach of any Seller's covenants set forth in Article IV. "SALE AGREEMENT" means each "Sale Agreement" in substantially the form attached as Addendum A hereto which is hereafter executed by AFS and AMTN. "SCHEDULES OF RECEIVABLES" means the lists of Receivables sold and transferred pursuant to this Agreement and the Schedules which are attached to the Supplements as Schedules A and B thereto. "SECURITY AGREEMENT" means the Security Agreement, dated as of the date hereof, by and among the Purchaser (as Debtor), AFS (in its individual capacity and as Servicer), AMTN and the Collateral Agent. "SERVICING AND CUSTODIAN AGREEMENT" means the Servicing and Custodian Agreement, dated as of the date hereof, by and among AFS (as Servicer and as Custodian), the Trust and the Collateral Agent. "SUPPLEMENT" means each agreement by and among the Sellers and the Purchaser pursuant to which the Purchaser will acquire Receivables, substantially in the form of Exhibit A hereto. SECTION 1.3 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, the Servicing and Custodian Agreement, the Security Agreement or the Note Purchase Agreement; references to Persons include their permitted successors and assigns; and the terms "include" or "including" mean "include without limitation" or "including without limitation." SECTION 1.4 NO RECOURSE. Without limiting the obligations of Sellers hereunder and except to the extent otherwise provided in the Transaction Documents, no recourse may be taken, directly or indirectly, under this Agreement or any certificate or other 2 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 SECTION 2.1 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 and assign to the Purchaser (collectively, the "Conveyance") without recourse (but without limitation of its obligations in this Agreement and the other Transaction Documents), 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 Schedule A and B to the related Supplement and all Collections thereon or in respect thereof on or after the Relevant Cutoff Date; (ii) the Related Security with respect to each Receivable; (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 Agreements or Dealer Assignments; (vi) all rights of Seller against Third Party Lenders pursuant to Third Party Loan Purchase Agreements and/or Third Party Assignments. (vii) the related Records; and (viii) all Proceeds of any or all of the foregoing. ARTICLE III. REPRESENTATIONS AND WARRANTIES SECTION 3.1 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 3 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 grant of the security interest therein and the continuing lien therein by Purchaser to the Collateral Agent for the benefit of the Secured Parties under the Security 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) ELIGIBLE RECEIVABLES. Upon each Receivables Transfer Date, the Purchaser (i) will acquire each Receivable and the Other Conveyed Property free and clear of any Adverse Claim and (ii) will purchase each Receivable at fair market value. Each Receivable (including all Receivables sold hereunder by AFS or AMTN) as of the date hereof and the Receivables Transfer Date is an Eligible Receivable. (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 Transaction Documents and to carry out its terms and their terms, respectively; AFS 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 or contribution, transfer and assignment to Purchaser by all necessary corporate action; and the execution, delivery and performance of this Agreement and AFS's Transaction Documents have been duly authorized by AFS by all necessary corporate action. (e) VALID SALE; BINDING OBLIGATIONS. This Agreement and AFS's Transaction 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 Transaction 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 4 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 Transaction Documents, and the fulfillment of the terms of this Agreement and the Transaction 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 Agreement and the Note Purchase 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 and do not require any action by or require the consent or approval of or the filing of any notice with any Official Body or any other Person. (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 Transaction 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 Transaction 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 Transaction 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 Agreement. (h) CHIEF EXECUTIVE OFFICE. The chief executive office of AFS is located at 801 Cherry Street, Fort Worth, Texas 76102. (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. (j) SOLVENCY. AFS shall not be insolvent on any Receivables Transfer Date and no Conveyance will cause AFS to become insolvent. SECTION 3.2 [RESERVED]. SECTION 3.3 REPRESENTATIONS AND WARRANTIES OF AMTN. AMTN 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 5 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 AMTN 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 and/or contribution, transfer and assignment thereof by Purchaser to the Collateral Agent under the Security Agreement. AMTN 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 AMTN in the Collateral Agent's own name on behalf of the Secured Parties. (a) ELIGIBLE RECEIVABLES. Upon each Receivables Transfer Date, the Purchaser (i) will acquire each Receivable and the Other Conveyed Property free and clear of any Adverse Claim and (ii) will purchase each Receivable at fair market value. Each Receivable (including all Receivables sold hereunder by AFS or AMTN) as of the date hereof and the Receivables Transfer Date is an Eligible Receivable. (b) ORGANIZATION AND GOOD STANDING. AMTN 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) POWER AND AUTHORITY. AMTN has the power and authority to execute and deliver this Agreement and its Transaction Documents and to carry out its terms and their terms, respectively; AMTN 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 AMTN's Transaction Documents have been duly authorized by AMTN by all necessary corporate action. (d) DUE QUALIFICATION. AMTN 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. (e) VALID SALE; BINDING OBLIGATIONS. This Agreement and AMTN's Transaction 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 AMTN and creditors of and purchasers from AMTN; and this Agreement and AMTN's Transaction Documents constitute legal, valid and binding obligations of AMTN 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 6 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 Transaction Documents and the fulfillment of the terms of this Agreement and the Transaction 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 AMTN, or any indenture, agreement, mortgage, deed of trust or other instrument to which AMTN 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 Agreement and the Note Purchase Agreement, or violate any law, order, rule or regulation applicable to AMTN of any court or of any federal or state regulatory body, administrative agency or other governmental instrumentality having jurisdiction over AMTN or any of its properties and do not require any action by or require the consent or approval of or the filing of any notice with any Official Body or any other Person. (g) NO PROCEEDINGS. There are no proceedings or investigations pending or, to AMTN's knowledge, threatened against AMTN, before any court, regulatory body, administrative agency or other tribunal or governmental instrumentality having jurisdiction over AMTN or its properties (i) asserting the invalidity of this Agreement or any of the Transaction 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 Transaction Documents, (iii) seeking any determination or ruling that might materially and adversely affect the performance by AMTN of its obligations under, or the validity or enforceability of, this Agreement or any of the Transaction 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 Agreement. (h) CHIEF EXECUTIVE OFFICE. The chief executive office of AMTN is located at 801 Cherry Street, Fort Worth, Texas 76102. (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 AMTN and its Affiliates. (j) SOLVENCY. AMTN shall not be insolvent on any Receivables Transfer Date and no Conveyance will cause AMTN to become insolvent. 7 ARTICLE IV. COVENANTS OF SELLERS SECTION 4.1 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 related Receivable, except upon payment in full of the Receivable or as otherwise contemplated herein or the Transaction Documents and the related Seller shall not take or permit any action inconsistent with the foregoing. SECTION 4.2 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. SECTION 4.3 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 Transaction Documents. SECTION 4.4 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 on behalf of the Secured Parties 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). SECTION 4.5 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 Note Insurer, 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. SECTION 4.6 TRANSFERS TREATED AS SALES. Each Seller agrees to treat each transfer for all purposes other than federal income tax purposes (but including, without limitation, financial accounting purposes) as a sale on all relevant books, records, financial statements and other applicable documents; for federal income tax purposes, the parties hereto intend the contribution of Receivables by the Sellers to the Purchaser to be characterized as a contribution of property to a partnership in exchange for an interest in the partnership in which 8 no gain or loss shall be recognized pursuant to Section 721(a) of the Internal Revenue Code of 1986, as amended. In the event that, notwithstanding the intent of each Seller, the transfer and assignment contemplated hereby is not held to be a sale, each Seller hereby grants to the Purchaser a security interest in the Receivables and Other Conveyed Property described in each Supplement. ARTICLE V. REPURCHASES SECTION 5.1 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 by the last day of the second Settlement Period after such breach), 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 2.7(b) of the Security 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 or AMTN for such breach available to Purchaser, the Note Insurer or the Collateral Agent on behalf of the Secured Parties except as otherwise specified in the Insurance Agreement. The provisions of this Section 5.1 are intended to grant the Collateral Agent and the Note Insurer a direct right against AFS to demand performance hereunder, and in connection 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 2.7 of the Servicing and Custodian Agreement. Notwithstanding any other provision of this Agreement or the Servicing and Custodian Agreement to the contrary, the obligation of AFS under this Section shall not terminate upon a termination of AFS as Servicer under the Servicing and Custodian 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 Servicing and Custodian Agreement. SECTION 5.2 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 or Section 2.7 of the Servicing and Custodian Agreement, 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 9 necessary to enforce the Receivable, including bringing suit in Purchaser's or in the Collateral Agent's name. SECTION 5.3 WAIVERS. No failure or delay on the part of Purchaser, or the Collateral Agent on behalf of the Secured Parties 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 SECTION 6.1 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 and the Note Insurer a duly executed Supplement substantially in the form attached hereto as Exhibit A which shall include Schedules listing the Receivables to be sold and/or contributed on such Receivables Transfer Date and the Seller shall have delivered the Receivable Files to the Custodian and any other documents as the Purchaser may request; (b) the all conditions to a Receivables Delivery under the Security Agreement shall have been fulfilled; (c) the Sellers shall, to the extent required by the Security 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-1 financing statements and/or UCC-3 releases, as applicable) required to (i) perfect the ownership interest of the Purchaser in the Receivables and the Other Conveyed Property and (ii) provide the Collateral Agent on behalf of the Secured Parties with a first priority perfected security interest in the Receivables and the Other Conveyed Property and shall promptly provide to each of the Purchaser and the Collateral Agent and the Note Insurer a copy of a stamped acknowledgement copy of such UCC-1 or UCC-3 if any are necessary or required); (e) such sale or contribution shall be reflected on the books and records of the Trust; 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 Net Receivables Balance were titled and as to which states an opinion of counsel, in form and substance acceptable to the Note Insurer, had not previously been given in connection with this facility as to the 10 perfection, priority and enforceability of the Collateral Agent's security interest for each such state, AFS shall cause, within 30 days, to be delivered to the Purchaser, the Rating Agencies, the Collateral Agent and the Note Insurer such an opinion of counsel. ARTICLE VII. MISCELLANEOUS SECTION 7.1 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. SECTION 7.2 MERGER OR CONSOLIDATION OF SELLERS. 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; PROVIDED, HOWEVER, that, with respect to AMTN, any such merger or consolidation is subject in all respects to the restrictions set forth in its articles of incorporation. SECTION 7.3 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 Transaction Documents. SECTION 7.4 AMENDMENT. (a) This Agreement may be amended by Sellers and Purchaser (with the consent of the Note Insurer) 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 of the Note Insurer, in accordance with the Security Agreement. SECTION 7.5 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., 801 Cherry Street, Fort Worth, Texas 76102, Attention: Chief Financial Officer, (b) in the case of Purchaser, to AmeriCredit MTN 11 Receivables Trust, c/o Bankers Trust (Delaware), E.A. Delle Donne Corporate Center, Montgomery Building, 1011 Centre Road, Suite 200, Wilmington, Delaware 19085, Attention: Corporate Trust Administration, or (c) in the case of the Collateral Agent, The Chase Manhattan Bank, 450 W. 22nd Street, New York, NY 10001, Attention: AmeriCredit MTN Receivables Trust, 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. SECTION 7.6 MERGER AND INTEGRATION. Except as specifically stated otherwise herein, this Agreement and Transaction 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 Transaction Documents. This Agreement may not be modified, amended, waived or supplemented except as provided herein. SECTION 7.7 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 of this Agreement and shall in no way affect the validity or enforceability of the other provisions of this Agreement. SECTION 7.8 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 Secured Parties 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. SECTION 7.9 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. SECTION 7.10 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. SECTION 7.11 CONVEYANCE OF THE RECEIVABLES AND THE OTHER CONVEYED PROPERTY TO THE COLLATERAL AGENT. Sellers acknowledge that Purchaser intends, pursuant to the Security Agreement, to pledge the Receivables and the Other Conveyed Property, together with 12 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 Note Insurer, the Collateral Agent and the Secured Parties. 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 Collateral Agent and the Secured Parties and that, notwithstanding anything to the contrary in this Agreement, Sellers shall be directly liable to the Collateral Agent and the Secured Parties and that the Note Insurer may enforce, and the Collateral Agent shall enforce, at the direction of the Note Insurer, the duties and obligations of Sellers under this Agreement against Sellers for the benefit of the Secured Parties and the Collateral Agent. SECTION 7.12 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, AMTN or the Debtor 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, AMTN or the Debtor (as defined in the Note Purchase Agreement) or any substantial part of their respective property, or ordering the winding up or liquidation of the affairs of the Purchaser, AMTN or the Debtor. This Section 7.12 shall be continuing and shall survive any termination of this Agreement. SECTION 7.13 LIMITATION OF LIABILITY OF 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 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 Transaction Documents. SECTION 7.14 ADDITIONAL TRANSFERS. It is contemplated that from time to time on and/or after the date hereof that AFS will transfer (by sale or contribution) to AMTN, pursuant to the provisions of a Sale Agreement (substantially in the form of Addendum A to Exhibit A attached hereto), as of the Relevant Cutoff Date set forth therein, certain Receivables, as described on the Schedule A attached to such Sale Agreement. Furthermore, it is anticipated that such Receivables so transferred to AMTN pursuant to a Sale Agreement will be retransferred by AMTN to the Purchaser pursuant to the terms of this Agreement. SECTION 7.15 BINDING EFFECT. This Agreement shall be binding upon and shall inure to the benefit of the parties hereto and their respective successors and assigns. In 13 addition, each of the Secured Parties shall be an express third party beneficiary hereof entitled to enforce the terms hereof as if it were a party hereto. Concurrently with the appointment of a successor Collateral Agent under the Security Agreement, the parties hereto shall amend this Agreement to make said Collateral Agent, the successor to the Collateral Agent hereunder. [Remainder of page intentionally left blank] 14 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 MTN RECEIVABLES TRUST, as Purchaser By: BANKERS TRUST (DELAWARE), not in its individual capacity but solely as Trustee on behalf of the Trust By -------------------------------------------------- Name: Title: AMERICREDIT FINANCIAL SERVICES, INC., as Seller By -------------------------------------------------- Name: Title: AMERICREDIT MTN CORP., as Seller By -------------------------------------------------- Name: Title: -------------------, as Collateral Agent By -------------------------------------------------- Name: Title: [Receivables Purchase Agreement] EXHIBIT A SUPPLEMENT ASSIGNMENT No. [____] of Receivables made this __ day of ______________, 200_, among AMERICREDIT MTN CORP., a Delaware corporation ("AMTN"), AMERICREDIT FINANCIAL SERVICES, INC., a Delaware corporation ("AFS" and together with AMTN, the "SELLERS") and AMERICREDIT MTN RECEIVABLES 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 AMTN; WHEREAS, the relevant 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 December 18, 2000, (the "PURCHASE AGREEMENT"), unless otherwise defined herein. "RELEVANT CUTOFF DATE" shall mean, with respect to the Receivables sold and/or contributed hereby, _____________ __, 200_. "RECEIVABLES TRANSFER DATE" shall mean, with respect to the Receivables assigned hereby, the date hereof. 2. SCHEDULE OF RECEIVABLES. Annexed hereto are Schedule A and Schedule B from AFS and AMTN, respectively, listing the Receivables sold and/or contributed by it pursuant to this Supplement on the Receivables Transfer Date. The term "Receivables" as used in this Supplement means and includes each and every chattel paper and other form of receivable relating to the sale or financing provided for new or used motor vehicles transferred by Sellers to Purchaser pursuant to this Supplement and identified on the Schedule A and Schedule B provided by AFS and AMTN, respectively, attached thereto, together with all payment obligations thereunder and all proceeds thereof, including all items listed in 2.1 to the Purchase Agreement. It is intended that Sellers will transfer to Purchaser hereafter from time to time additional Receivables, whether now existing or hereafter arising and wherever located. 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 "ASSIGNMENT"), without recourse (except as expressly provided in the Purchase Agreement), all right, title and interest of such Seller in and to: (i) each and every Receivable listed on the Schedule A and B to this Supplement and all Collections thereon or in respect thereof on or after the Relevant Cutoff Date; (ii) the Related Security with respect to each Receivable; (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 Agreements or Dealer Assignments; (vi) the related Records; and (vii) all Proceeds of any or 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; and (ii) $___________ to AMTN. 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 the Purchase Agreement are true and correct and with respect to any representation which relates to Receivables or Other Conveyed Property with respect to the related Receivables and Other Conveyed Property sold and/or contributed pursuant to Section 3 hereof are true and correct. (ii) PRINCIPAL BALANCE. As of the Relevant Cutoff Date, the aggregate Outstanding Balance of the Receivables listed on the Schedule of Receivables provided by AFS (annexed hereto as Schedule A) and sold to the Purchaser pursuant to this Supplement is $__________________. E-A-2 (b) REPRESENTATIONS AND WARRANTIES OF AMTN. AMTN hereby represents and warrant to the Purchaser as of the Receivables Transfer Date that: (i) PURCHASE AGREEMENT. The representations and warranties set forth in the Purchase Agreement are true and correct and with respect to any representation which relates to Receivables or Other Conveyed Property with respect to the related Receivables and Other Conveyed Property sold and/or contributed pursuant to Section 3 hereof are true and correct. (ii) PRINCIPAL BALANCE. As of the Relevant Cutoff Date, the aggregate Outstanding Balance of the Receivables listed on the Schedule of Receivables provided by AMTN (annexed hereto as Schedule B) 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 and AMTN in Section 3.3 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) DELIVERY OF RECEIVABLE FILES. The Seller shall have delivered the Receivable Files to the Custodian and any other documents as the Purchaser may request; (c) 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. (d) 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. INTENTION OF THE PARTIES. (a) The execution and delivery of this Agreement E-A-3 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 Secured Parties 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 3 of this Agreement and Section 2.1 of the Master Receivables Purchase Agreement, and that this Agreement shall constitute a security agreement under applicable law. (b) For federal income tax purposes, the parties hereto intend the contribution of Receivables by the Sellers to the Purchaser to be characterized as a contribution of property to a partnership in exchange for an interest in the partnership in which no gain or loss shall be recognized pursuant to Section 721(a) of the Internal Revenue Code of 1986, as amended. 9. GOVERNING LAW. THIS SUPPLEMENT 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. E-A-4 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 MTN RECEIVABLES TRUST, as Purchaser By: AMERICREDIT FINANCIAL SERVICES, INC., attorney-in-fact By ---------------------------------------- Name: Title: AMERICREDIT FINANCIAL SERVICES, INC., as Seller By ---------------------------------------- Name: Title: AMERICREDIT MTN CORP., as Seller By ---------------------------------------- Name: Title: Acknowledged: THE CHASE MANHATTAN BANK, solely in its capacity as Collateral Agent By ---------------------------------------- Name: Title: E-A-5 ADDENDUM A SALE AGREEMENT ASSIGNMENT No. [____] of Receivables made this __ day of ______________, 200_, between AMERICREDIT MTN CORP., a Delaware corporation ("AMTN") 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 AMTN; and WHEREAS, AMTN is willing to purchase or acquire as a contribution such Receivables subject to the terms and conditions hereof. NOW, THEREFORE, AMTN 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 December 18, 2000 (the "PURCHASE AGREEMENT"), unless otherwise defined herein. "RELEVANT CUTOFF DATE" shall mean, with respect to the Receivables sold and/or contributed hereby, _____________ __, 200_. "RECEIVABLES TRANSFER DATE" shall mean, with respect to the Receivables assigned hereby, the date hereof. 2. SCHEDULE OF RECEIVABLES. Annexed hereto as Schedule 1 is a schedule from AFS listing the Receivables sold and/or contributed by it pursuant to this Agreement on the Receivables Transfer Date. The term "Receivables" as used in this Sale Agreement means and includes each and every chattel paper and other form of receivable relating to the sale or financing provided for new or used motor vehicles transferred by AFS to AMTN pursuant to this Sale Agreement and identified on the Schedule provided by AFS attached thereto, together with all payment obligations thereunder and all proceeds thereof, including all items set forth in Section 2.1 of the Purchase Agreement. It is intended that AFS will transfer to AMTN hereafter from time to time additional Receivables, whether now existing or hereafter arising and wherever located. 3. SALE AND/OR CONTRIBUTION OF RECEIVABLES. (a) AFS, does hereby sell and/or contribute, transfer, assign, set over and otherwise convey to AMTN (the "ASSIGNMENT"), without recourse (except as expressly provided in the Purchase Agreement), all right, title and interest of AFS in and to: (i) each and every Receivable listed on the Schedule attached hereto and all Collections thereon or in respect thereof on or after the Relevant Cutoff Date; (ii) the Related Security with respect to each Receivable; (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 AFS against Dealers pursuant to Dealer Agreements or Dealer Assignments; (vi) the related Records; and (vii) all Proceeds of any or all of the foregoing. (b) The Assignment is in consideration of AMTN'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 AMTN as of the Receivables Transfer Date that: (i) PURCHASE AGREEMENT. The representations and warranties set forth in the Purchase Agreement are true and correct and with respect to any representation which relates to Receivables or Other Conveyed Property with respect to the related Receivables and Other Conveyed Property sold and/or contributed pursuant to Section 3 hereof are true and correct. (ii) PRINCIPAL BALANCE. As of the Relevant Cutoff Date, the aggregate Outstanding Balance of the Receivables listed on the Schedule provided by AFS (annexed hereto as Schedule A) and sold to AMTN pursuant to this Agreement is $____________________. 5. CONDITIONS PRECEDENT. The obligation of AMTN 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 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 A-A-2 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 AMTN such information as was reasonably requested by AMTN 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. 7. INTENTION OF THE PARTIES. (a) The execution and delivery of this Agreement shall constitute an acknowledgment by AFS and AMTN 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 AFS to AMTN, and that the Receivables and the Other Conveyed Property shall not be a part of AFS' 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 AFS. In the event that such conveyance is determined to be made as security for a loan made by AMTN or the Secured Parties to AFS, the parties intend that AFS shall have granted to AMTN a security interest in all of AFS' right, title and interest in and to the Receivables and the Other Conveyed Property conveyed pursuant to Section 3 of this Agreement and Section 2.1 of the Master Receivables Agreement, and that this Agreement shall constitute a security agreement under applicable law. (b) For federal income tax purposes, the parties hereto intend the contribution of Receivables by the Sellers to the Purchaser to be characterized as a contribution of property to a partnership in exchange for an interest in the partnership in which no gain or loss shall be recognized pursuant to Section 721(a) of the Internal Revenue Code of 1986, as amended. 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. [Remainder of page intentionally left blank.] A-A-3 IN WITNESS WHEREOF, AMTN 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: Title: AMERICREDIT MTN CORP., as Purchaser By ---------------------------------------- Name: Title: A-A-4 EX-11.1 5 a2036548zex-11_1.txt EXHIBIT 11.1 EXHIBIT 11.1 AMERICREDIT CORP. STATEMENT RE: COMPUTATION OF PER SHARE EARNINGS (dollars in thousands, except per share amounts)
Three Months Ended Six Months Ended December 31, December 31, ------------------------------------------------------------------------ 2000 1999 2000 1999 ------------------------------------------------------------------------ Weighted average shares outstanding 78,261,907 73,988,228 77,757,716 70,745,962 Incremental shares resulting from assumed exercise of stock options 6,156,899 4,970,185 6,130,804 4,572,494 ------------------------------------------------------------------------ Weighted average shares and assumed incremental shares 84,418,806 78,958,413 83,888,520 75,318,456 ======================================================================== NET INCOME $48,442 $19,609 $90,715 $44,933 ======================================================================== EARNINGS PER SHARE: Basic $0.62 $0.27 $1.17 $0.64 ======================================================================== Diluted $0.57 $0.25 $1.08 $0.60 ========================================================================
Basic earnings per share have been computed by dividing net income by weighted average shares outstanding. Diluted earnings per share have been computed by dividing net income by the weighted average shares and assumed incremental shares. Assumed incremental shares were computed using the treasury stock method. The average common stock market price for the period was used to determine the number of incremental shares. -----END PRIVACY-ENHANCED MESSAGE-----