-----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, MWkGzKpuEEdmUUf/6fXjI1rQlT1vgVjK3B5IZnsaVEhjZu+NpXJG1Au9mtRdT+Hs cjsOO+qd3mY4i7dZTehxNg== 0001047469-98-005995.txt : 19980218 0001047469-98-005995.hdr.sgml : 19980218 ACCESSION NUMBER: 0001047469-98-005995 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 6 CONFORMED PERIOD OF REPORT: 19971231 FILED AS OF DATE: 19980213 SROS: NYSE 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: 98538343 BUSINESS ADDRESS: STREET 1: 200 BAILEY AVENUE CITY: FORT WORTH STATE: TX ZIP: 76107 BUSINESS PHONE: 817-332-70 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 FORM 10-Q UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 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, 1997 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 (IRS Employer incorporation or organization) Identification No.) 200 Bailey Avenue, Fort Worth, Texas 76107 - ------------------------------------------------------------------------------- (Address of principal executive offices) (Zip Code) (817) 332-7000 - ------------------------------------------------------------------------------- (Registrant's telephone number, including area code) - ------------------------------------------------------------------------------- (Former name, former address and former fiscal year, if changed since last report) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No --- --- There were 29,993,188 shares of common stock, $.01 par value outstanding as of January 31, 1998. AMERICREDIT CORP. INDEX TO FORM 10-Q Part I. FINANCIAL INFORMATION Item 1. Financial Statements Page ---- Consolidated Balance Sheets - December 31, 1997 and June 30, 1997. . . . . . . . . . . 3 Consolidated Statements of Income - Three Months and Six Months Ended December 31, 1997 and 1996 . . . . . . . . . . . . . . . 4 Consolidated Statements of Cash Flows - Six Months Ended December 31, 1997 and 1996. . . . . . . 5 Notes to Consolidated Financial Statements . . . . . . . . . . . . . . . . . . . . . . . 6 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations . . . . . . . . . . . . . . 17 Item 3. Quantitative and Qualitative Disclosures About Market Risk . . . . . . . . . . . . . . . . . . 29 Part II. OTHER INFORMATION Item 4. Submission of Matters to a Vote of Security Holders. . . . . . . . . . . . . . . . . . . 30 Item 6. Exhibits and Reports on Form 8-K. . . . . . . . . . . 30 SIGNATURE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32 2 PART I - FINANCIAL INFORMATION Item 1. FINANCIAL STATEMENTS AMERICREDIT CORP. Consolidated Balance Sheets (Unaudited, Dollars in Thousands) December 31, June 30, ASSETS 1997 1997 ------------ -------- Cash and cash equivalents $ 2,267 $ 6,027 Investment securities 6,500 6,500 Finance receivables, net 257,791 266,657 Excess servicing receivable 179,788 114,376 Restricted cash 76,170 67,895 Property and equipment, net 17,232 13,884 Goodwill 7,112 7,260 Other assets 15,435 10,854 -------- -------- Total assets $562,295 $493,453 -------- -------- -------- -------- LIABILITIES AND SHAREHOLDERS' EQUITY Liabilities: Bank line of credit $ 2,100 $ 71,700 Commercial paper warehouse facility 95,989 Mortgage warehouse facility 7,281 345 Automobile receivables-backed notes 14,138 23,689 9 1/4% Senior Notes 125,000 125,000 Notes payable 4,458 3,517 Accrued taxes and expenses 38,619 39,362 Deferred income taxes 19,764 13,304 -------- -------- Total liabilities 307,349 276,917 -------- -------- Shareholders' equity: Common stock, $.01 par value per share; 120,000,000 shares authorized; 33,841,815 and 33,255,173 shares issued 338 333 Additional paid-in capital 213,890 203,544 Unrealized gain on excess servicing receivable, net of income taxes 3,410 2,954 Retained earnings 60,841 33,466 -------- -------- 278,479 240,297 Treasury stock, at cost (3,921,028 and 3,959,071 shares) (23,533) (23,761) -------- -------- Total shareholders' equity 254,946 216,536 -------- -------- Total liabilities and shareholders' equity $562,295 $493,453 -------- -------- -------- --------
The accompanying notes are an integral part of these consolidated financial statements 3 AMERICREDIT CORP. Consolidated Statements of Income (Unaudited, Dollars in Thousands, Except Per Share Data) Three Months Ended Six Months Ended December 31, December 31, ---------------------- ---------------------- 1997 1996 1997 1996 ---------- ---------- ---------- ---------- Revenue: Finance charge income $13,129 $10,739 $ 26,190 $21,503 Gain on sale of receivables 27,733 15,561 53,775 28,151 Servicing fee income 10,478 4,599 19,191 8,242 Investment income 1,290 684 2,570 1,152 Other income 308 292 502 622 ---------- ---------- ---------- ---------- 52,938 31,875 102,228 59,670 ---------- ---------- ---------- ---------- Costs and expenses: Operating expenses 21,825 11,920 41,916 21,747 Provision for losses 1,849 1,614 3,755 3,231 Interest expense 6,206 3,386 12,045 6,612 ---------- ---------- ---------- ---------- 29,880 16,920 57,716 31,590 ---------- ---------- ---------- ---------- Income before income taxes 23,058 14,955 44,512 28,080 Income tax provision 8,877 5,757 17,137 10,810 ---------- ---------- ---------- ---------- Net income $14,181 $ 9,198 $ 27,375 $17,270 ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- Earnings per share: Basic $ .47 $ .32 $ .92 $ .61 ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- Diluted $ .44 $ .30 $ .85 $ .57 ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- Weighted average shares outstanding 29,890,355 28,653,775 29,684,960 28,513,145 ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- Weighted average shares and assumed incremental shares 32,406,559 30,678,189 32,199,267 30,398,569 ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
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, ------------------------- 1997 1996 --------- --------- Cash flows from operating activities: Net income $ 27,375 $ 17,270 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 1,914 904 Provision for losses 3,755 3,231 Deferred income taxes 9,643 10,682 Gain on sale of auto receivables (51,531) (27,851) Amortization of excess servicing receivable 23,118 12,117 Changes in assets and liabilities: Other assets (4,581) (2,134) Accrued taxes and expenses (743) 9,195 --------- --------- Net cash provided by operating activities 8,950 23,414 --------- --------- Cash flows from investing activities: Purchases of auto receivables (686,543) (354,448) Originations of mortgage receivables (51,572) (7,748) Principal collections and recoveries on receivables 14,862 36,147 Net proceeds from sale of auto receivables 644,022 332,982 Net proceeds from sale of mortgage receivables 48,129 4,839 Purchases of property and equipment (3,571) (1,624) Proceeds from maturities of investment securities 55 Increase in restricted cash (8,275) (31,023) --------- --------- Net cash used by investing activities (42,948) (20,820) --------- --------- Cash flows from financing activities: Borrowings on bank line of credit 514,500 304,400 Payments on bank line of credit (584,100) (275,500) Net increase in commercial paper warehouse facility 95,989 Net increase in mortgage warehouse facility 6,936 264 Payments on automobile receivables-backed notes (9,551) (27,304) Payments on notes payable (602) (221) Proceeds from issuance of common stock 7,066 3,100 Purchase of treasury stock (4,387) --------- --------- Net cash provided by financing activities 30,238 352 --------- --------- Net increase (decrease) in cash and cash equivalents (3,760) 2,946 Cash and cash equivalents at beginning of period 6,027 2,145 --------- --------- Cash and cash equivalents at end of period $ 2,267 $ 5,091 --------- --------- --------- ---------
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 accounts and transactions have been eliminated in consolidation. The consolidated financial statements as of December 31, 1997 and for the periods ended December 31, 1997 and 1996 are unaudited, but in management's opinion, include all adjustments, consisting only of normal recurring adjustments, necessary for a fair presentation of the results for such interim periods. The results for interim periods are not necessarily indicative of results for a full year. The interim period financial statements, including the notes thereto, are condensed and do not include all disclosures required by generally accepted accounting principles. Such interim period financial statements should be read in conjunction with the Company's consolidated financial statements which were included in the Company's 1997 Annual Report to Shareholders. The Company adopted the requirements of Statement of Financial Accounting Standards No. 128, "Earnings per Share" ("SFAS 128") effective for the periods ended December 31, 1997. SFAS 128 establishes new standards for computing and presenting earnings per share, replacing existing accounting standards. All prior period earnings per share and related weighted average share amounts have been restated to conform to the requirements of SFAS 128. NOTE 2 - FINANCE RECEIVABLES Finance receivables consist of the following (in thousands): December 31, June 30, 1997 1997 ---- ---- Auto receivables $261,333 $275,249 Less allowance for losses (11,350) (12,946) -------- -------- Auto receivables, net 249,983 262,303 Mortgage receivables 7,808 4,354 -------- -------- Finance receivables, net $257,791 $266,657 -------- -------- -------- --------
6 A summary of the allowance for losses is as follows (in thousands): Three Months Ended Six Months Ended December 31, December 31, ------------------ ------------------- 1997 1996 1997 1996 -------- ------- -------- ------- Balance at beginning of period $ 13,549 $12,598 $ 12,946 $13,602 Provision for losses 1,849 1,614 3,755 3,231 Acquisition fees 10,681 6,237 22,046 12,809 Allowance related to auto receivables sold to Trusts (12,007) (3,962) (21,773) (8,404) Net charge-offs (2,722) (4,314) (5,624) (9,065) -------- ------- -------- ------- Balance at end of period $ 11,350 $12,173 $ 11,350 $12,173 -------- ------- -------- ------- -------- ------- -------- -------
NOTE 3 - EXCESS SERVICING RECEIVABLE As of December 31, 1997 and June 30, 1997, the Company was servicing $1,337.9 million and $863.0 million, respectively, of auto receivables which have been sold to certain special purpose financing trusts (the "Trusts"). The components of excess servicing receivable are as follows(in thousands): December 31, June 30, 1997 1997 ------------ -------- Interest-only strips $101,357 $ 59,933 Subordinated interests: Retained asset-backed securities 10,424 12,589 Excess of auto receivables in Trusts over asset-backed securities outstanding 68,007 41,854 -------- -------- $179,788 $114,376 -------- -------- -------- --------
7 Excess servicing receivable consists of the following (in thousands): December 31, June 30, 1997 1997 ------------ -------- Estimated future excess cash flows before allowance for credit losses $ 311,354 $200,869 Allowance for credit losses (112,294) (74,925) --------- -------- Estimated future excess cash flows 199,060 125,944 Discount to present value (19,272) (11,568) --------- -------- $ 179,788 $114,376 --------- -------- --------- --------
A summary of excess servicing receivable is as follows (in thousands): Three Months Ended Six Months Ended December 31, December 31, -------------------- -------------------- 1997 1996 1997 1996 -------- ------- -------- -------- Balance at beginning of period $148,009 $42,656 $114,376 $ 33,093 Additions 45,730 23,748 87,789 38,804 Net change in unrealized gain (488) 741 Amortization (13,463) (6,624) (23,118) (12,117) -------- ------- -------- -------- Balance at end of period $179,788 $59,780 $179,788 $ 59,780 -------- ------- -------- -------- -------- ------- -------- --------
NOTE 4 - DEBT In October 1997, the Company entered into a restated revolving credit agreement with a group of banks under which the Company may borrow up to $310 million, subject to a defined borrowing base. Aggregate borrowings of $2.1 million and $71.7 million were outstanding as of December 31, 1997 and June 30, 1997, respectively. Borrowings under the credit agreement are collateralized by certain auto receivables and bear interest at various market London Interbank Offered Rates ("LIBOR") plus 1.25%. The Company is also required to pay an annual commitment fee equal to 1/4% of the unused portion of the credit agreement. The credit agreement, which expires in October 1998, contains various restrictive covenants requiring certain minimum financial ratios and results and placing certain limitations on payment of cash dividends and repurchase of common stock. In October 1997, the Company entered into a funding agreement with a funding agent on behalf of an institutionally managed commercial paper conduit and a group of banks under which up to $245 million of structured warehouse financing is available to the Company. Aggregate borrowings of $96.0 million were outstanding as of December 31, 1997. Under the funding agreement, the Company transfers auto receivables to CP Funding Corp. ("CPFC"), a special purpose 8 finance subsidiary of the Company, and CPFC in turn issues a note, collateralized by such auto receivables, to the funding agent. The funding agent provides funding under the note to CPFC pursuant to an advance formula and CPFC forwards the funds to the Company in consideration for the transfer of auto receivables. While CPFC is a consolidated subsidiary of the Company, CPFC is a separate legal entity and the auto receivables transferred to CPFC and the other assets of CPFC are legally owned by CPFC and not available to creditors of AmeriCredit Corp. or its other subsidiaries. Advances under the note bear interest at commercial paper, LIBOR or prime rates plus specified fees depending upon the source of funds provided by the funding agent to CPFC. The funding agreement, which expires in October 1998, contains various covenants requiring certain minimum financial ratios and results. The Company also has a mortgage warehouse facility with a bank under which the Company may borrow up to $75 million, subject to a defined borrowing base. Aggregate borrowings of $7.3 million and $.3 million were outstanding as of December 31, 1997 and June 30, 1997, respectively. Borrowings under the facility are collateralized by certain mortgage receivables and bear interest at LIBOR plus 1%. The Company is also required to pay an annual commitment fee equal to 1/8% of the unused portion of the facility. In February 1998, the Company extended the maturity of the facility to February 1999. NOTE 5 - SUPPLEMENTAL CASH FLOW INFORMATION Cash payments for interest costs and income taxes consist of the following (in thousands): Six Months Ended December 31, ---------------------- 1997 1996 ------- ------- Interest costs (none capitalized) $12,661 $ 6,456 Income taxes 7,412 228
During the six months ended December 31, 1997 and 1996, the Company entered into capital lease obligations of $1,543,000 and $1,258,000 respectively, for the purchase of certain equipment. NOTE 6 - GUARANTOR CONSOLIDATING FINANCIAL STATEMENTS The payment of principal, premium, if any, and interest on the Company's 9 1/4% Senior Notes is guaranteed by certain of the Company's subsidiaries (the "Subsidiary Guarantors"). The separate financial statements of the Subsidiary Guarantors are not included herein because the Subsidiary Guarantors are wholly-owned consolidated subsidiaries of the Company and are jointly, severally and unconditionally liable for the obligations represented by the 9 1/4% Senior Notes. The Company believes that the condensed consolidating financial information for the Company, the combined Subsidiary Guarantors and the combined Non-Guarantor Subsidiaries provide information that is more 9 meaningful in understanding the financial position of the Subsidiary Guarantors than separate financial statements of the Subsidiary Guarantors. Therefore, the separate financial statements of the Subsidiary Guarantors are not deemed material. The following supplemental schedules present consolidating financial information for (i) AmeriCredit Corp. (on a parent only basis), (ii) the combined Subsidiary Guarantors, (iii) the combined Non-Guarantor Subsidiaries, (iv) an elimination column for adjustments to arrive at the information for the Company and its subsidiaries on a consolidated basis and (v) the Company and its subsidiaries on a consolidated basis. Investments in subsidiaries are accounted for by the parent company on the equity method for purposes of the presentation set forth below. Earnings of subsidiaries are therefore reflected in the parent company's investment accounts and earnings. The principal elimination entries set forth below eliminate investments in subsidiaries and intercompany balances and transactions. 10 AmeriCredit Corp. Consolidating Balance Sheet December 31, 1997 (Unaudited, Dollars in Thousands) AmeriCredit Corp. Guarantors Non-Guarantors Eliminations Consolidated ----------- ---------- -------------- ------------ ------------ ASSETS Cash and cash equivalents $ $ (1,025) $ 3,292 $ $ 2,267 Investment securities 6,500 6,500 Finance receivables, net 125,421 132,370 257,791 Excess servicing receivable (1,560) 10,670 170,678 179,788 Restricted cash 76,170 76,170 Property and equipment, net 137 17,095 17,232 Goodwill 7,112 7,112 Other assets 5,409 6,915 3,111 15,435 Due (to) from affiliates 267,917 (161,635) (106,282) Investment in affiliates 95,361 13,921 2 (109,284) -------- --------- -------- --------- -------- Total assets $373,764 $ 18,474 $ 279,341 $(109,284) $562,295 -------- --------- -------- --------- -------- -------- --------- -------- --------- -------- LIABILITIES AND SHAREHOLDERS' EQUITY Liabilities: Bank line of credit $ $ 2,100 $ $ $ 2,100 Mortgage warehouse facility 7,281 7,281 Commercial paper warehouse facility 95,989 95,989 Automobile receivables-backed notes 14,138 14,138 9 1/4% Senior Notes 125,000 125,000 Notes payable 4,429 29 4,458 Accrued taxes and expenses 9,341 27,398 1,880 38,619 Deferred income taxes (19,952) (11,034) 50,750 19,764 -------- --------- -------- --------- -------- Total liabilities 118,818 25,774 162,757 307,349 -------- --------- -------- --------- -------- Shareholders' equity: Common stock 338 203 3 (206) 338 Additional paid-in capital 213,890 108,336 13,921 (122,257) 213,890 Unrealized gain on excess servicing receivable 3,410 3,410 (3,410) 3,410 Retained earnings 60,841 (115,839) 99,250 16,589 60,841 -------- --------- -------- --------- -------- 278,479 (7,300) 116,584 (109,284) 278,479 Treasury stock (23,533) (23,533) -------- --------- -------- --------- -------- Total shareholders' equity 254,946 (7,300) 116,584 (109,284) 254,946 -------- --------- -------- --------- -------- Total liabilities and shareholders' equity $373,764 $ 18,474 $279,341 $(109,284) $562,295 -------- --------- -------- --------- -------- -------- --------- -------- --------- --------
11 AmeriCredit Corp. Consolidating Balance Sheet June 30, 1997 (Unaudited, Dollars in Thousands) AmeriCredit Corp. Guarantors Non-Guarantors Eliminations Consolidated ----------- ---------- -------------- ------------ ------------ ASSETS Cash and cash equivalents $ $ 3,988 $ 2,039 $ $ 6,027 Investment securities 6,500 6,500 Finance receivables, net 240,912 25,745 266,657 Excess servicing receivable (777) 12,096 103,057 114,376 Restricted cash 67,895 67,895 Property and equipment, net 136 13,748 13,884 Goodwill 7,260 7,260 Other assets 4,447 5,304 1,103 10,854 Due (to) from affiliates 277,369 (197,656) (79,713) Investment in affiliates 56,764 (56,764) -------- --------- -------- --------- -------- Total assets $344,439 $ 85,652 $120,126 $ (56,764) $493,453 -------- --------- -------- --------- -------- -------- --------- -------- --------- -------- LIABILITIES AND SHAREHOLDERS' EQUITY Liabilities: Bank line of credit $ $ 71,700 $ $ $ 71,700 Mortgage warehouse facility 345 345 Automobile receivables-backed notes 23,689 23,689 9 1/4% Senior Notes 125,000 125,000 Notes payable 3,484 33 3,517 Deferred income taxes (8,669) (5,547) 27,520 13,304 Accrued taxes and expenses 8,088 27,987 3,287 39,362 -------- --------- -------- --------- -------- Total liabilities 127,903 94,518 54,496 276,917 -------- --------- -------- --------- -------- Shareholders' equity: Common stock 333 203 3 (206) 333 Additional paid-in capital 203,544 98,336 (98,336) 203,544 Unrealized gain on excess servicing receivable 2,954 2,954 (2,954) 2,954 Retained earnings 33,466 (107,405) 62,673 44,732 33,466 -------- --------- -------- --------- -------- 240,297 (8,866) 65,630 (56,764) 240,297 Treasury stock (23,761) (23,761) -------- --------- -------- --------- -------- Total shareholders' equity 216,536 (8,866) 65,630 (56,764) 216,536 -------- --------- -------- --------- -------- Total liabilities and shareholders' equity $344,439 $ 85,652 $120,126 $ (56,764) $493,453 -------- --------- -------- --------- -------- -------- --------- -------- --------- --------
12 AmeriCredit Corp. Consolidating Income Statement Six Months Ended December 31, 1997 (Unaudited, Dollars in Thousands) AmeriCredit Corp. Guarantors Non-Guarantors Eliminations Consolidated ----------- ---------- -------------- ------------ ------------ Revenue: Finance charge income $ $ 20,213 $ 5,977 $ $ 26,190 Gain on sale of receivables (4,903) 3,321 55,357 53,775 Servicing fee income 42,256 3,721 (26,786) 19,191 Investment income 14,920 127 2,211 (14,688) 2,570 Other income 344 158 502 Equity in income of affiliates 28,143 (28,143) ------- -------- ------- -------- -------- 38,160 66,261 67,424 (69,617) 102,228 ------- -------- ------- -------- -------- Costs and expenses: Operating expenses 4,948 63,758 (4) (26,786) 41,916 Provision for losses 3,755 3,755 Interest expense 6,318 12,462 7,953 (14,688) 12,045 ------- -------- ------- -------- -------- 11,266 79,975 7,949 (41,474) 57,716 ------- -------- ------- -------- -------- Income before income taxes 26,894 (13,714) 59,475 (28,143) 44,512 Provision for income taxes (481) (5,280) 22,898 17,137 ------- -------- ------- -------- -------- Net income $27,375 $ (8,434) $36,577 $(28,143) $ 27,375 ------- -------- ------- -------- -------- ------- -------- ------- -------- --------
13 AmeriCredit Corp. Consolidating Income Statement Six Months Ended December 31, 1996 (Unaudited, Dollars in Thousands) AmeriCredit Corp. Guarantors Non-Guarantors Eliminations Consolidated ----------- ---------- -------------- ------------ ------------ Revenue: Finance charge income $ $16,339 $ 5,164 $ $21,503 Gain on sale of receivables 300 27,851 28,151 Servicing fee income 24,032 1,625 (17,415) 8,242 Investment income 6,775 89 904 (6,616) 1,152 Other income 28 260 334 622 Equity in income of affiliates 13,593 (13,593) ------- ------- ------- -------- ------- 20,396 41,020 35,878 (37,624) 59,670 ------- ------- ------- -------- ------- Costs and expenses: Operating expenses 2,144 35,885 1,133 (17,415) 21,747 Provision for losses 3,231 3,231 Interest expense 26 7,839 5,363 (6,616) 6,612 ------- ------- ------- -------- ------- 2,170 46,955 6,496 (24,031) 31,590 ------- ------- ------- -------- ------- Income before income taxes 18,226 (5,935) 29,382 (13,593) 28,080 Income tax provision 956 139 9,715 10,810 ------- ------- ------- -------- ------- Net income $17,270 $(6,074) $19,667 $(13,593) $17,270 ------- ------- ------- -------- ------- ------- ------- ------- -------- -------
14 AmeriCredit Corp. Consolidating Statement of Cash Flow Six Months Ended December 31, 1997 (Unaudited, Dollars in Thousands) AmeriCredit Corp. Guarantors Non-Guarantors Eliminations Consolidated ---------- ---------- -------------- ------------ ------------ Cash flows from operating activities: Net income $ 27,375 $ (8,434) $ 36,577 $ (28,143) $ 27,375 Adjustments to reconcile net income to net cash provided (used) by operating activities: Depreciation and amortization 22 1,892 1,914 Provision for losses 3,755 3,755 Deferred income taxes (7,771) (5,487) 22,901 9,643 Gain on sale of auto receivables 4,903 (1,077) (55,357) (51,531) Amortization of excess servicing receivable (4,120) 2,503 24,735 23,118 Equity in income of affiliates (28,143) 28,143 Changes in assets and liabilities: Other assets (962) (1,611) (2,008) (4,581) Accrued taxes and expenses 1,253 (589) (1,407) (743) -------- --------- --------- --------- --------- Net cash provided (used) by operating activities (7,443) (9,048) 25,441 8,950 -------- --------- --------- --------- --------- Cash flows from investing activities: Purchases of auto receivables (686,543) (795,637) 795,637 (686,543) Originations of mortgage receivables (51,572) (51,572) Principal collections and recoveries on receivables 6,085 8,777 14,862 Net proceeds from sale of auto receivables 795,637 644,022 (795,637) 644,022 Net proceeds from sale of mortgage receivables 48,129 48,129 Purchases of property and equipment (23) (3,548) (3,571) Increase in restricted cash (8,275) (8,275) Net change in investment in affiliates (9,998) (3,921) (2) 13,921 -------- --------- --------- --------- --------- Net cash provided (used) by investing activities (10,021) 104,267 (151,115) 13,921 (42,948) -------- --------- --------- --------- --------- Cash flows from financing activities: Borrowings on bank line of credit 514,500 514,500 Payments on bank line of credit (584,100) (584,100) Net increase in commercial paper warehouse facility 95,989 95,989 Net increase in mortgage warehouse facility 6,936 6,936 Payments on automobile receivables- backed notes (9,551) (9,551) Payments on notes payable (598) (4) (602) Net change in due (to) from affiliates 10,996 (37,564) 26,568 Proceeds from issuance of common stock 7,066 13,921 (13,921) 7,066 -------- --------- --------- --------- --------- Net cash provided (used) by financing activities 17,464 (100,232) 126,927 (13,921) 30,238 -------- --------- --------- --------- --------- Net increase (decrease) in cash and cash equivalents (5,013) 1,253 (3,760) Cash and cash equivalents at beginning of period 3,988 2,039 6,027 -------- --------- --------- --------- --------- Cash and cash equivalents at end of period $ $ (1,025) $ 3,292 $ $ 2,267 -------- --------- --------- --------- --------- -------- --------- --------- --------- ---------
15 AmeriCredit Corp. Consolidating Statement of Cash Flow Six Months Ended December 31, 1996 (Unaudited, Dollars in Thousands) AmeriCredit Corp. Guarantors Non-Guarantors Eliminations Consolidated ---------- ---------- -------------- ------------ ------------ Cash flows from operating activities: Net income $ 17,270 $ (6,074) $ 19,667 $ (13,593) $ 17,270 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 16 888 904 Provision for losses 3,231 3,231 Deferred income taxes 3,718 (3,174) 10,138 10,682 Gain on sale of auto receivables (27,851) (27,851) Amortization of excess servicing receivable 2,943 9,174 12,117 Equity in income of affiliates (13,593) 13,593 Changes in assets and liabilities: Other assets (487) (119) (1,528) (2,134) Accrued taxes and expenses (1,974) 11,037 132 9,195 -------- --------- --------- --------- --------- Net cash provided by operating activities 4,950 8,732 9,732 23,414 -------- --------- --------- --------- --------- Cash flows from investing activities: Purchases of auto receivables (354,448) (343,935) 343,935 (354,448) Originations of mortgage receivables (7,748) (7,748) Principal collections and recoveries on receivables 13,484 22,663 36,147 Net proceeds from sale of auto receivables 343,935 332,982 (343,935) 332,982 Net proceeds from sale of mortgage receivables 4,839 4,839 Purchases of property and equipment 1,273 (2,897) (1,624) Proceeds from maturities of investment securities 55 55 Increase in restricted cash (31,023) (31,023) Net change in investment in affiliates 942 (942) -------- --------- --------- --------- --------- Net cash provided (used) by investing activities 2,270 (3,777) (19,313) (20,820) -------- --------- --------- --------- --------- Cash flows from financing activities: Borrowings on bank line of credit 304,400 304,400 Payments on bank line of credit (275,500) (275,500) Net increase in mortgage warehouse facility 264 264 Payments on automobile receivables- backed notes (27,304) (27,304) Payments on notes payable (221) (221) Net change in due (to) from affiliates (9,178) (25,570) 34,748 Proceeds from issuance of common stock 3,100 3,100 Purchase of treasury stock (4,387) (4,387) -------- --------- --------- --------- --------- Net cash provided (used) by financing activities (10,686) 3,594 7,444 352 -------- --------- --------- --------- --------- Net increase (decrease) in cash and cash equivalents (3,466) 8,549 (2,137) 2,946 Cash and cash equivalents at beginning of period (4,913) (87) 7,145 2,145 -------- --------- --------- --------- --------- Cash and cash equivalents at end of period $ (8,379) $ 8,462 $ 5,008 $ $ 5,091 -------- --------- --------- --------- --------- -------- --------- --------- --------- ---------
16 Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS GENERAL The Company generates earnings and cash flow primarily through 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 ("owned receivables") and pays interest expense on borrowings under its warehouse credit facilities. The Company sells receivables to securitization trusts ("Trusts") or special purpose finance subsidiaries 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. The Company typically begins to receive excess cash flow distributions approximately seven to nine months after the receivables are securitized, although these time periods may be shorter or longer depending upon the structure of the securitization. Prior to such time as the Company begins to receive excess cash flow, excess cash flow is utilized to fund credit enhancement requirements to secure financial guaranty insurance policies issued by an insurance company to protect investors in the asset-backed securities from losses. Once predetermined credit enhancement requirements are reached and maintained, excess cash flow is distributed to the Company. In addition to excess cash flow, the Company earns monthly servicing fee income of between 2.25% and 2.50% per annum of the outstanding principal balance of receivables securitized ("serviced receivables"). In November 1996, the Company acquired AmeriCredit Mortgage Services ("AMS"), which originates and sells home equity mortgage loans. The acquisition was accounted for as a purchase, and the results of operations for AMS have been included in the consolidated financial statements since the acquisition date. Receivables originated in this business are referred to as mortgage receivables. Such receivables are generally packaged and sold for cash on a servicing released, whole-loan basis. The Company recognizes a gain at the time of sale. 17 RESULTS OF OPERATIONS THREE MONTHS ENDED DECEMBER 31, 1997 AS COMPARED TO THREE MONTHS ENDED DECEMBER 31, 1996 REVENUE: The Company's average managed receivables outstanding consisted of the following (in thousands): Three Months Ended December 31, ------------------------- 1997 1996 ---- ---- Auto: Owned $ 244,597 $215,644 Serviced 1,248,876 486,087 ---------- -------- 1,493,473 701,731 Mortgage 14,565 4,753 ---------- -------- $1,508,038 $706,484 ---------- -------- ---------- --------
Average managed receivables outstanding increased by 113% as a result of higher loan purchase volume. The Company purchased $341.2 million of auto loans during the three months ended December 31, 1997, compared to purchases of $183.5 million during the three months ended December 31, 1996. This growth resulted from loan production at branches open during both periods as well as expansion of the Company's loan production capacity. The Company operated 108 auto lending branch offices as of December 31, 1997, compared to 66 as of December 31, 1996. The Company purchased $24.2 million of mortgage loans during the three months ended December 31, 1997 as compared to $7.7 million from the date of acquisition of AMS through December 31, 1996. Finance charge income consisted of the following (in thousands): Three Months Ended December 31, ----------------------- 1997 1996 ---- ---- Auto $ 12,786 $ 10,708 Mortgage 343 31 -------- -------- $ 13,129 $ 10,739 -------- -------- -------- --------
The increase in finance charge income is due primarily to a 13% increase in average owned auto receivables outstanding for the three months ended December 31, 1997 versus the three months ended December 31, 1996. 18 The Company's effective yield on its owned auto receivables increased to 20.7% for the three months ended December 31, 1997 from 19.7% for the three months ended December 31, 1996. The gain on sale of receivables consists of the following (in thousands): Three Months Ended December 31, --------------------- 1997 1996 ---- ---- Auto $26,679 $15,261 Mortgage 1,054 300 ------- ------- $27,733 $15,561 ------- ------- ------- -------
The increase in gain on sale of auto receivables resulted from the sale of $350.0 million of receivables in the three months ended December 31, 1997 as compared to $190.4 million of receivables sold in the three months ended December 31, 1996. The gains amounted to 7.6% and 8.0% of the sales proceeds for the three months ended December 31, 1997 and 1996, respectively. The gain on sale of mortgage receivables resulted from the sale of $23.2 million of mortgage receivables in the three months ended December 31, 1997 as compared to $4.8 million of mortgage receivables sold from the date of acquisition of AMS through December 31, 1996. Servicing fee income increased to $10.5 million, or 3.3% of average serviced auto receivables, for the three months ended December 31, 1997, as compared to $4.6 million, or 3.8% of average serviced auto receivables, for the three months ended December 31, 1996. 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 primarily due to the increase in average serviced auto receivables outstanding for the three months ended December 31, 1997 compared to the three months ended December 31, 1996. Investment income increased to $1.3 million for the three months ended December 31, 1997 from $.7 million for the three months ended December 31, 1996 primarily as a result of higher restricted cash balances. Restricted cash is used as credit enhancement for the Trusts and generally increases as greater amounts of receivables are sold to the Trusts. COSTS AND EXPENSES: Operating expenses as an annualized percentage of average managed auto receivables outstanding decreased to 5.8% (5.5% excluding operating expenses of $1.3 million related to the mortgage business) for the three months ended December 31, 1997 as compared to 6.7% (6.5% excluding operating expenses of $.4 19 million related to the mortgage business) for the three months ended December 31, 1996. 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 $9.9 million, or 83%, primarily due to the addition of auto lending branch offices and management, auto loan processing and servicing staff and the recently acquired mortgage business. The provision for losses increased to $1.8 million for the three months ended December 31, 1997 as compared to $1.6 million for the three months ended December 31, 1996 due to higher average owned auto receivables outstanding. Interest expense increased to $6.2 million for the three months ended December 31, 1997 from $3.4 million for the three months ended December 31, 1996 due to higher debt levels and effective interest rates. Average debt outstanding was $271.7 million and $169.3 million for the three months ended December 31, 1997 and 1996, respectively. The Company's effective rate of interest paid on its debt increased to 9.1% from 7.9% as a result of the issuance of the 9 1/4% Senior Notes in February 1997. The Company's effective income tax rate was 38.5% for the three months ended December 31, 1997 and 1996, respectively. SIX MONTHS ENDED DECEMBER 31, 1997 AS COMPARED TO SIX MONTHS ENDED DECEMBER 31, 1996 REVENUE: The Company's average managed receivables outstanding consisted of the following (in thousands): Six Months Ended December 31, ------------------------- 1997 1996 ---- ---- Auto: Owned $ 245,296 $217,156 Serviced 1,130,318 424,366 ---------- --------- 1,375,614 641,522 Mortgage 11,534 4,753 ---------- --------- $1,387,148 $646,275 ---------- --------- ---------- ---------
Average managed receivables outstanding increased by 115% as a result of higher loan purchase volume. The Company purchased $696.3 million of auto loans during the six months ended December 31, 1997, compared to purchases of $359.4 million during the six months ended December 31, 1996. This growth resulted from loan production at branches open during both periods as well as expansion of the Company's loan production capacity. The Company operated 108 auto lending branch offices as of December 31, 1997, compared to 66 as of December 31, 1996. 20 The Company purchased $51.6 million of mortgage loans during the six months ended December 31, 1997 as compared to $7.7 million from the date of acquisition of AMS through December 31, 1996. Finance charge income consisted of the following (in thousands): Six Months Ended December 31, ------------------------- 1997 1996 ---- ---- Auto $ 25,645 $ 21,472 Mortgage 545 31 -------- -------- $ 26,190 $ 21,503 -------- -------- -------- --------
The increase in finance charge income is due primarily to an increase of 13% in average owned auto receivables outstanding for the six months ended December 31, 1997 versus the six months ended December 31, 1996. The Company's effective yield on its owned auto receivables increased to 20.7% for the six months ended December 31, 1997 from 19.6% for the six months ended December 31, 1996. The gain on sale of receivables consists of the following (in thousands): Six Months Ended December 31, -------------------- 1997 1996 ----- ---- Auto $51,531 $27,851 Mortgage 2,244 300 ------- ------- $53,775 $28,151 ------- ------- ------- -------
The increase in gain on sale of auto receivables resulted from the sale of $682.5 million of receivables in the six months ended December 31, 1997 as compared to $345.6 million of receivables sold in the six months ended December 31, 1996. The gains amounted to 7.6% and 8.1% of the sales proceeds for the six months ended December 31, 1997 and 1996, respectively. The gain on sale of mortgage receivables resulted from the sale of $48.1 million of mortgage receivables in the six months ended December 31, 1997 as compared to $4.8 million of mortgage receivables sold from the date of acquisition of AMS through December 31, 1996. Servicing fee income increased to $19.2 million, or 3.4% of average serviced auto receivables, for the six months ended December 31, 1997, as compared to $8.2 million, or 3.9% of average serviced auto receivables, for the six months 21 ended December 31, 1996. 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 primarily due to the increase in average serviced auto receivables outstanding for the six months ended December 31, 1997 compared to the six months ended December 31, 1996. Investment income increased to $2.6 million for the six months ended December 31, 1997 from $1.2 million for the six months ended December 31, 1996 primarily as a result of higher restricted cash balances. Restricted cash is used as credit enhancement for the Trusts and generally increases as greater amounts of receivables are sold to the Trusts. COSTS AND EXPENSES: Operating expenses as an annualized percentage of average managed receivables outstanding decreased to 6.0% (5.7% excluding operating expenses of $2.6 million related to the mortgage business) for the six months ended December 31, 1997 as compared to 6.7% (6.6% excluding operating expenses of $.4 million related to the mortgage business) for the six months ended December 31, 1996. 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 $20.2 million, or 93%, primarily due to the addition of auto lending branch offices and management, auto loan processing and servicing staff and the recently acquired mortgage business. The provision for losses increased to $3.8 million for the six months ended December 31, 1997 as compared to $3.2 million for the six months ended December 31, 1996 due to higher average owned auto receivables outstanding. Interest expense increased to $12.0 million for the six months ended December 31, 1997 from $6.6 million for the six months ended December 31, 1996 due to higher debt levels and effective interest rates. Average debt outstanding was $257.6 million and $165.7 million for the six months ended December 31, 1997 and 1996, respectively. The Company's effective rate of interest paid on its debt increased to 9.3% from 7.9% as a result of the issuance of the 9 1/4% Senior Notes in February 1997. The Company's effective income tax rate was 38.5% for the six months ended December 31, 1997 and 1996, respectively. FINANCE RECEIVABLES The Company provides financing in relatively high-risk markets, and therefore, charge-offs are anticipated. The Company records a periodic provision for losses as a charge to operations and a related allowance for losses in the consolidated balance sheets as a reserve against estimated future losses in the owned auto receivables portfolio. The Company typically purchases individual 22 finance contracts for 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 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 future credit losses expected over the life of the auto receivables sold. The Company sells mortgage receivables for cash on a servicing released, whole-loan basis. Such receivables are generally held by the Company for less than 90 days. Accordingly, no allowance for losses is provided by the Company for the mortgage receivables. The Company reviews static pool origination and charge-off relationships, charge-off experience factors, collection data, delinquency reports, estimates of the value of the underlying collateral, economic conditions and trends and other information in order to make the necessary judgments as to the appropriateness of the provisions for losses and the allowance for losses. Although the Company uses many resources to assess the adequacy of the allowance for losses, there is no precise method for accurately estimating the ultimate losses in the receivables portfolio. 23 The following table presents certain data related to the receivables portfolio (dollars in thousands): December 31, 1997 ------------------------------------------------------------- Balance Auto Sheet Auto Managed Owned Mortgage Total Serviced Portfolio ----- -------- ----- -------- --------- Principal amount of receivables $261,333 $ 7,808 $269,141 $1,337,940 $1,599,273 (2) ---------- ---------- ---------- ---------- Allowance for losses (11,350) (11,350) $ (112,294) (1) $ (123,644)(2) -------- ------- -------- ---------- ---------- ---------- ---------- Finance receivables, net $249,983 $ 7,808 $257,791 -------- ------- -------- -------- ------- -------- Number of outstanding contracts 23,538 72 129,420 152,958 (2) -------- -------- ---------- ---------- -------- -------- ---------- ---------- Average amount of outstanding contract (principal amount) (in dollars) $ 11,103 $108,444 $ 10,338 $ 10,456 (2) -------- -------- ---------- ---------- -------- -------- ---------- ---------- Allowance for losses as a percentage of receivables 4.3% 8.4% 7.7%(2) --- --- --- --- --- ---
(1) The allowance for losses related to serviced auto receivables is netted against excess servicing receivable in the Company's consolidated balance sheets. (2) Includes auto receivables only. The following is a summary of managed auto receivables which are (i) more than 60 days delinquent, but not in repossession, and (ii) in repossession (dollars in thousands): December 31, -------------------- 1997 1996 ---- ---- Delinquent contracts $57,186 $28,251 Delinquent contracts as a percentage of managed auto receivables 3.6% 3.7% Contracts in repossession $22,012 $12,149 Contracts in repossession as a percentage of managed auto receivables 1.4% 1.6%
In accordance with its policies and guidelines, the Company at times offers payment deferrals to customers, whereby the customer 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 a percentage of average managed auto receivables were 4.7% and 4.9% for the three months ended December 31, 1997 and 1996, respectively, and 9.1% and 8.9% for the six months ended December 31, 1997 and 1996, respectively. 24 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, --------------------- ------------------- 1997 1996 1997 1996 ---- ---- ---- ---- Net charge-offs: Owned $ 2,722 $4,314 $ 5,624 $ 9,065 Serviced 17,907 5,397 32,449 8,684 ------- ------ ------- ------- $20,629 $9,711 $38,073 $17,749 ------- ------ ------- ------- ------- ------ ------- ------- Net charge-offs as an annualized percentage of average managed auto receivables outstanding 5.5% 5.5% 5.5% 5.5% ------- ------ ------- ------- ------- ------ ------- -------
The Company began its indirect automobile finance business in September 1992 and has grown its managed auto receivables portfolio to $1.6 billion as of December 31, 1997. The Company expects that its delinquency and charge-offs will increase over time as the portfolio matures and its portfolio growth rate moderates. Accordingly, the delinquency and charge-off data above is not necessarily indicative of delinquency and charge-off experience that could be expected for a more seasoned portfolio. 25 LIQUIDITY AND CAPITAL RESOURCES The Company's cash flows are summarized as follows (in thousands): Six Months Ended December 31, -------------------------- 1997 1996 ---- ---- Operating activities $ 8,950 $ 23,414 Investing activities (42,948) (20,820) Financing activities 30,238 352 -------- -------- Net(decrease)increase in cash and cash equivalents $ (3,760) $ 2,946 -------- -------- -------- --------
The Company's primary sources of cash have been collections and recoveries on its receivables portfolio, borrowings under its warehouse credit facilities, sales of auto receivables to Trusts in securitization transactions, excess cash flow distributions from the Trusts and the issuance of its 9 1/4% Senior Notes. The Company's line of credit arrangement with a group of banks provides for borrowings up to $310 million, subject to a defined borrowing base. The Company utilizes the line of credit to fund its auto lending activities and daily operations. The facility matures in October 1998. A total of $2.1 million was outstanding under the line of credit as of December 31, 1997. In October 1997, the Company entered into a funding agreement with a funding agent on behalf of an institutionally managed commercial paper conduit and a group of banks under which up to $245 million of structured warehouse financing is available to the Company. The Company utilizes this facility to fund auto receivables pending securitization. The facility matures in October 1998. A total of $96.0 million was outstanding under this facility as of December 31, 1997. The Company also has a mortgage warehouse facility with a bank under which the Company may borrow up to $75 million, subject to a defined borrowing base, to fund mortgage loan originations. In February 1998, the Company extended the maturity of this facility to February 1999. A total of $7.3 million was outstanding under the mortgage warehouse facility as of December 31, 1997. In November 1997, the Company completed its eleventh securitization transaction with the issuance of $400 million of asset-backed securities through the AmeriCredit Automobile Receivables Trust 1997-D. The proceeds from the transaction were used to repay the borrowings then outstanding under the Company's warehouse facilities. In January 1998, the Company issued an additional $50 million of its 9 1/4% Senior Notes which are due in February 2004. These additional notes have substantially the same terms as the Company's original $125 million of 9 1/4% Senior Notes issued in February 1997. 26 The Company's primary use of cash has been purchases and originations of receivables. The Company purchased $696.3 million of auto finance contracts during the three months ended December 31, 1997 requiring cash of $686.5 million, net of acquisition fees and other items. The Company operated 108 auto lending branch offices as of December 31, 1997 and plans to open 17 additional branches in the remainder of fiscal 1998. The Company may also expand loan production capacity at existing 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. The Company's Board of Directors has authorized the repurchase of up to 6,000,000 shares of the Company's common stock. A total of 4,594,700 shares at an aggregate purchase price of $27.3 million had been purchased pursuant to this program through December 31, 1997, although no common stock has been repurchased since September 1996. Certain restrictions contained in the Indenture pursuant to which the 9 1/4% Senior Notes were issued limit the amount of common stock which may be repurchased by the Company. As of December 31, 1997, the Company had $8.8 million in cash and cash equivalents and investment securities. The Company also had available borrowing capacity of $77.5 million under its bank line of credit pursuant to the borrowing base requirement of such credit agreement and issued an additional $50 million of its 9 1/4% Senior Notes in January 1998. The Company estimates that it will require additional external capital for the remainder of fiscal 1998 in addition to these existing capital resources and collections and recoveries on its receivables portfolio and excess cash flow distributions from the Trusts in order to fund expansion of its lending activities, capital expenditures, and other costs and expenses. The Company anticipates that such funding will be in the form of additional securitization transactions. 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. Since the Company's funding strategy is dependent upon the issuance of interest-bearing securities and the incurrence of debt, fluctuations in interest rates impact the Company's profitability. The Company utilizes several strategies to minimize the risk of interest rate fluctuations, including the use of hedging instruments, the regular sale of auto receivables to the Trusts and pre-funding securitizations, whereby the amount of asset-backed securities issued in a securitization exceeds the amount of receivables initially sold to the Trust. The proceeds from the pre-funded portion are held in an escrow account until the Company sells additional receivables to the Trust in amounts up to the balance of the pre-funded escrow account. In pre-funded securitizations, the Company locks in the borrowing costs with respect to the loans it subsequently delivers to the Trust. However, the Company incurs an expense in pre-funded securitizations equal to the difference between the money market yields earned on the proceeds held in escrow prior to 27 subsequent delivery of receivables and the interest rate paid on the asset-backed securities outstanding. There can be no assurance that these strategies will be effective in minimizing interest rate risk or that increases in interest rates will not have an adverse effect on the Company's profitability. YEAR 2000 ISSUE The Company is in the preliminary stages of investigating the impact of the year 2000 issue and developing a remediation plan. The year 2000 issue is whether the Company's or its vendors' computer systems will properly recognize date sensitive information when the year changes to 2000. Systems that do not properly recognize such information could generate erroneous data or cause a system to fail. The Company is in the process of conducting an initial assessment of applicable computer systems to identify the systems that could be affected by the year 2000 issue and has determined that modification or replacement of portions of existing software will be required. The Company is utilizing both internal and external resources to identify, modify or replace and test systems for year 2000 compliance. The Company plans to complete application modifications and upgrades by December 31, 1998, with testing to take place in the first quarter of calendar year 1999. While the Company has not yet fully evaluated the cost of year 2000 compliance, such costs are not expected to be material to the Company's results of operations and liquidity. The Company presently believes that with modifications to existing software and conversion to new software, the year 2000 issue will not pose significant operational problems for the Company's computer systems. However, if such modifications and conversions are not made, or are not completed timely, the year 2000 issue could have a material impact on the operations of the Company. In addition, there can be no assurance that unforeseen problems in the Company's computer systems, or the systems of third parties on which the Company's computers rely, would not have an adverse effect on the Company's systems or operations. FORWARD LOOKING STATEMENTS Except for the historical information contained herein, the matters discussed above are forward looking statements that involve risks and uncertainties including competitive factors, the management of growth, and other risks 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, 1997. Such statements are only predictions and actual events or results may differ materially. 28 Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK The disclosures required pursuant to Item 305 of Regulation S-K are not yet effective for the Company. Such disclosures will be included in the Company's filings commencing with its Annual Report on Form 10-K for the year ending June 30, 1998. 29 PART II. OTHER INFORMATION Item 1. LEGAL PROCEEDINGS Not Applicable Item 2. CHANGES IN SECURITIES Not Applicable Item 3. DEFAULTS UPON SENIOR SECURITIES Not Applicable Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS On November 5, 1997, the Company held its Annual Meeting of Shareholders. The shareholders voted upon the election of eight directors, an amendment to increase the number of shares reserved under the 1995 Omnibus Stock and Incentive Plan for AmeriCredit Corp. (the "1995 Plan") and the ratification of the appointment of the Company's independent auditors. Each of the eight nominees identified in the Company's proxy statement, filed pursuant to Rule 14a-6 of the Securities Exchange Act of 1934, were elected at the meeting to hold office until the next annual meeting or until their successors are duly elected and qualified. The shareholders approved the amendment to the 1995 Plan, with 12,362,669 shares voting in favor, 8,620,234 shares voting against and 91,479 shares withheld. The Company's selection of independent auditors was also ratified. Item 5. OTHER INFORMATION Not Applicable Item 6. EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibits: 10.1 Restated Revolving Credit Agreement, dated as of October 3,1997, between AmeriCredit Corp. and subsidiaries, Wells Fargo Bank (Texas), National Association, Bank One Texas, N.A. and other banks named therein. 10.2 Sale and Servicing Agreement, dated as of October 8, 1997, between CP Funding Corp., AmeriCredit 30 Financial Services, Inc., and The Chase Manhattan Bank. 10.3 Funding Agreement, dated as of October 8, 1997, between CP Funding Corp., Park Avenue Receivables Corporation, The Chase Manhattan Bank, and other financial institutions named therein. 11.1 Statement Re Computation of Per Share Earnings 27.1 Financial Data Schedule (b) Reports on Form 8-K The Company did not file any reports on Form 8-K during the quarterly period ended December 31, 1997. Certain subsidiaries and affiliates of the Company filed reports on Form 8-K during the quarterly period ended December 31, 1997 reporting monthly information related to securitization trusts. 31 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 13, 1998 By: /s/ Daniel E. Berce ----------------------------------------- (Signature) Daniel E. Berce Chief Financial Officer 32 EX-10.1 2 RESTATED REVOLVING CREDIT AGREEMENT RESTATED REVOLVING CREDIT AGREEMENT This Restated Revolving Credit Agreement (this "Loan Agreement") is entered into by and among AMERICREDIT CORP., a Texas corporation ("Company"), AMERICREDIT FINANCIAL SERVICES, INC., a Delaware corporation, AMERICREDIT OPERATING CO., INC., a Delaware corporation, AMERICREDIT PREMIUM FINANCE, INC., a Delaware corporation, and ACF INVESTMENT CORP., a Delaware corporation, and WELLS FARGO BANK (TEXAS), NATIONAL ASSOCIATION, BANK ONE, TEXAS, N.A., LASALLE NATIONAL BANK, THE SUMITOMO BANK, LIMITED, HARRIS TRUST AND SAVINGS BANK, COMERICA BANK-TEXAS, TEXAS COMMERCE BANK NATIONAL ASSOCIATION, BANKAMERICA BUSINESS CREDIT, INC., THE BANK OF NOVA SCOTIA, CIBC INC., CREDIT LYONNAIS NEW YORK BRANCH, BANKBOSTON, N.A., and THE LONG-TERM CREDIT BANK OF JAPAN, LIMITED, WELLS FARGO BANK (TEXAS), NATIONAL ASSOCIATION, as agent for the Banks ("Agent") and BANK ONE, TEXAS, N.A. ("Co-Agent"). W I T N E S S E T H: WHEREAS, AmeriCredit Corp., AmeriCredit Financial Services, Inc., Agent and certain of Banks entered into that one certain Revolving Credit Agreement dated September 21, 1994; and WHEREAS, AmeriCredit Corp., AmeriCredit Financial Services, Inc., AmeriCredit Operating Co., Inc., Guarantors, Agent and certain of the Banks entered into that one certain Restated Revolving Credit Agreement dated June 2, 1995; and WHEREAS, AmeriCredit Corp., AmeriCredit Financial Services, Inc., AmeriCredit Operating Co., Inc., Guarantors, Agent and certain of the Banks entered into that one certain Second Restated Revolving Credit Agreement dated October 7, 1996 (the "Prior Loan Agreement"); and WHEREAS, AmeriCredit Corp., AmeriCredit Financial Services, Inc., AmeriCredit Operating Co., Inc. (individually, a "Borrower" and collectively, the "Borrowers"), Guarantors, Agent and Banks have agreed to amend and restate the Prior Loan Agreement in its entirety. NOW, THEREFORE, in consideration of the mutual promises herein contained and for other valuable consideration, the parties hereto do hereby agree to amend and restate the Prior Loan Agreement in its entirety as follows: ARTICLE I DEFINITION OF TERMS For the purposes of this Loan Agreement, unless the context requires otherwise, the following terms shall have the respective meanings assigned to them in this Article I below: "ADDITIONAL WAREHOUSE FACILITY" shall mean any additional nonrecourse credit facility or arrangement, other than a Securitization, pursuant to which Borrowers or their Affiliates sell or refinance Finance Contracts securing Obligations under the Loan Documents. "ADJUSTED INDEBTEDNESS" shall mean the Indebtedness of the Company and its Subsidiaries as reported on the balance sheet of Company, less obligations related to Securitizations and obligations related to Additional Warehouse Facilities, that are in each case nonrecourse to the Borrowers and that are reported on the balance sheet of Company. "ADJUSTED INTERBANK RATE" shall, with respect to each Interest Period, mean on any day thereof the quotient of (a) the Interbank Offered Rate with respect to such Interest Period, DIVIDED BY (b) the remainder of 1.00 MINUS the Eurodollar Reserve Requirement in effect on such day. "ADVANCE" shall have the meaning assigned to it in Section 2.01 hereof. "AFFILIATE" of any designated Person means any Person that has a relationship with the designated Person whereby either of such Persons directly or indirectly controls or is controlled by or is under common control with the other, or holds or beneficially owns five percent (5%) or more of any class of voting securities of the other. For this purpose, "control" means the power, direct or indirect, of one Person to direct or cause direction of the management and policies of another, whether by contract, through voting securities or otherwise. Notwithstanding the foregoing, no Person shall be deemed to be an Affiliate of another solely by reason of such Person's being a participant in a joint operating group or joint undivided ownership group. For purposes of this Loan Agreement, the term "Affiliate" shall include special purpose subsidiary corporations and trusts formed or sponsored by the Company or its subsidiaries for the purpose of facilitating one or more Securitizations and/or an Additional Warehouse Facility. "APPLICABLE MARGIN" shall mean the percentage set forth below opposite the rating by Standard & Poors, Moody's Investor Service or Fitch Investor Service in effect with respect to the Indebtedness of Borrowers to Banks on the date of the particular Eurodollar Borrowing or at any time during an Interest Period:
Debt Rating Percentage ----------- ---------- Unrated or less than BBB-/Baa3 1.55% BBB-/Baa3 1.40% BBB/Baa2 or higher 1.25%
In the event that the Ratings are not the same at a particular time, the Applicable Margin shall be based upon the highest rating assigned to such Indebtedness by Standard & Poors, Moody's Investor Service or Fitch Investor Service. "ARBITRATION PROGRAM" shall have the meaning assigned to it in Article XI hereof. "BANKS" shall mean Wells Fargo Bank (Texas), National Association and all other banks which are parties to this Loan Agreement or any amendment thereto. BANK shall mean any one of Banks. -2- "BORROWERS" shall mean AmeriCredit Corp., a Texas corporation, AmeriCredit Financial Services, Inc., a Delaware corporation, and AmeriCredit Operating Co., Inc., a Delaware corporation. "BUSINESS DAY" shall mean a day upon which business is transacted by national banks in Fort Worth, Texas, New York, New York and San Francisco, California. "CAPITAL LEASE" shall mean, as of any date, any lease of property, real or personal, which would be capitalized on a balance sheet of the lessee prepared as of such date, in accordance with GAAP. "CAPITAL LEASE OBLIGATION" shall mean any rental obligation which, under GAAP, is or will be required to be capitalized on the books of the Company or any Subsidiary, taken at the amount thereof accounted for as indebtedness (net of interest expense) in accordance with GAAP. "COMMITMENT" shall have the meaning assigned to it in Section 2.01 hereof. "CONSEQUENTIAL LOSS" shall mean, with respect to the payment by any of Borrowers or any of Guarantors of all or any portion of the then outstanding principal amount of any Bank's Eurodollar Advance on a day other than the last day of the Interest Period related thereto, any loss, cost or expense incurred by such Bank as a result of the timing of such payment or in redepositing such principal amount, including the greater of (a) the sum of (i) the interest which, but for such payment, such Bank would have earned in respect of such principal amount so paid, for the remainder of the Interest Period applicable to such sum, reduced, if such Bank is able to redeposit such principal amount so paid for the balance of such Interest Period, by the interest earned by such Bank as a result of so redepositing such principal amount PLUS (ii) any expense or penalty incurred by such Bank on redepositing such principal amount or (b) one hundred dollars ($100) for each prepayment of a Eurodollar Advance other than on the last day of the Interest Period applicable thereto. "CONSOLIDATED" shall mean the consolidation of any Person, in accordance with GAAP, with its properly consolidated subsidiaries. References herein to a Person's Consolidated financial statements, financial position, financial condition, liabilities, etc., refer to the consolidated financial statements, financial position, financial condition, liabilities, etc. of such Person and its properly consolidated subsidiaries. "CONTROLLED GROUP" shall mean (i) the controlled group of corporations as defined in section 1563 of the United States Internal Revenue Code of 1986, as amended, or (ii) the group of trades or business under common control as defined in section 414(c) of the United States Internal Revenue Code of 1986, as amended, of which Company is part or may become a part. "CREDIT ENHANCEMENT ASSETS" shall mean any asset, reflected as such on the Consolidated balance sheet of the Company and its Subsidiaries, created or arising as a result of any arrangement wherein the Company (or one or more of its Subsidiaries) or a third party provides credit support in connection with a Securitization or Additional Warehouse Facility, including but not limited to the following: (i) subordinated interests retained by the Company or any Subsidiary in a special purpose financing entity or trust created for a Securitization or Additional Warehouse Facility, (ii) restricted cash accounts maintained by the Company, any -3- Subsidiary or any special purpose financing entity in connection with a Securitization or Additional Warehouse Facility, and (iii) the excess servicing receivable, as such asset is determined from time to time in accordance with GAAP and reflected on the Consolidated balance sheet of Company and its Subsidiaries. "DEALER" shall mean a retail vendor of motor vehicles from which AmeriCredit Financial Services, Inc. acquires Finance Contracts which is not an Affiliate of any of Borrowers. "DEALER DISCOUNT" shall mean, with respect to a Finance Contract, the amount equal to the difference between (i) the face amount of the Finance Contract, less unearned interest or finance charges and fees, and (ii) the amount of cash advanced to the Dealer for the purchase of such Finance Contract. "DELINQUENT LOANS" shall mean Net Indirect Loans having five percent (5.0%) or more of an installment payment or final payment which is more than 60 days past due (without regard to any grace period) on a contractual basis except Net Indirect Loans which were secured by a motor vehicle that has been repossessed. "DIVIDENDS", in respect of any corporation, shall mean: (1) Cash distributions or any other distributions on, or in respect of, any class of capital stock of such corporation, except for distributions made solely in shares of stock of the same class; and (2) Any and all funds, cash or other payments made in respect of the redemption, repurchase or acquisition of such stock, unless such stock shall be redeemed or acquired through the exchange of such stock with stock of the same class. "DOLLARS" and the sign "$" shall mean lawful currency of the United States of America. "DOMESTIC FINANCE CONTRACT" shall mean a Finance Contract that is denominated and payable only in Dollars. "EBIT" shall mean, for any period, income of the Company for such period from operations after deducting all expenses except interest and taxes and eliminating all extraordinary items. "ELIGIBLE FINANCE CONTRACT" shall mean a Finance Contract, (i) that is secured by an Eligible Vehicle, (ii) that represents a Domestic Finance Contract with an Obligor (other than an Affiliate of Borrower), (iii) that was originated by a Dealer unless otherwise consented to in writing by the Agent (which consent shall not be unreasonably withheld), -4- (iv) that is not delinquent in the payment of any monthly installment (without regard to any stated grace period) more than thirty (30) days on a contractual basis prior to any repossession of the related Eligible Vehicle, (v) that has not been modified in any respect, unless the Finance Contract constitutes an Eligible Modified Finance Contract, (vi) in respect of which the related Eligible Vehicle has not been repossessed, (vii) that is not a Stayed Loan, (viii) that, as set forth in a written opinion, in form and substance, and from legal counsel, reasonably satisfactory to the Agent, constitutes chattel paper in which a security interest may be perfected under the UCC of the applicable jurisdiction by filing financing statements and making a notation of a security interest on the chattel paper and without taking possession of either the agreements evidencing such Finance Contract or related certificates of title, (ix) that is not subject to a Lien in favor of a Person other than the Agent on behalf of the Banks and that is not subject to a Lien created in conjunction with a Securitization or an Additional Warehouse Facility; (x) in respect of which the Dealer has received good funds from Borrowers in payment of the Finance Contract; and (xi) in respect of which the representations and warranties set forth in the Security Agreement are true. "ELIGIBLE MODIFIED FINANCE CONTRACT" shall mean a Finance Contract that has been modified in any way which affects the contractual timing or amount of any installment payment due under such Finance Contract and which satisfies each of the following conditions: (1) no installment payment was more than sixty (60) days past due at the time of any modification, (2) no modification extended the original maturity date by more than ninety (90) days, (3) no modification caused a permanent reduction in any monthly installment payment by more than five percent (5%), (4) the modification did not permit the deferral of more than two (2) installment payments, (5) not more than one (1) modification involving the deferral of two (2) installment payments or not more than two (2) modifications involving the deferral of one (1) installment payment has occurred during any twelve (12) month period, and (6) is otherwise an Eligible Finance Contract. "ELIGIBLE VEHICLE" shall mean a new or used motor vehicle that (i) to the best of any Borrower's knowledge is not acquired for use in a commercial enterprise or as part of a fleet, and (ii) in respect of which any of Borrowers (a) has, within forty five (45) days following the date of a Finance Contract, properly filed an application seeking to obtain legal title or a first priority lien under the applicable provisions of the motor vehicle or other similar law of the applicable jurisdiction and (b) has obtained or obtains, within one hundred fifty (150) days following the date of a Finance Contract, legal title or a first priority lien under applicable provisions of the motor vehicle or other similar law of the applicable jurisdiction. -5- "ERISA" shall mean the Employee Retirement Income Security Act of 1974, as amended, together with all regulations issued pursuant thereto. "ENVIRONMENTAL CLAIM" shall mean any written notice by any Person alleging potential liability or responsibility for (a) any removal or remedial action, including, without limitation, any clean-up, removal or treatment of any Hazardous Material or any action to prevent or minimize the release or movement of any Hazardous Materials through or in the air, soil, surface water, ground water or other property, (b) damage to the environment, or costs with respect thereto, or (c) personal injury (including sickness, disease or death), resulting from or based upon (i) the presence, release or movement (including sudden or nonsudden, accidental or nonaccidental, leaks or spills) of any Hazardous Material at, in or from the environment or any property, whether or not owned by the Company, or (ii) circumstances forming the basis of any violation, or alleged violation, of any Environmental Law or any permit issued to Company or any of its Subsidiaries pursuant to any Environmental Law. "ENVIRONMENTAL LAWS" shall mean the Comprehensive Environmental Response, Compensation, and Liability Act (42 U.S.C. Section 9601 ET SEQ.), the Hazardous Material Transportation Act (49 U.S.C. Section 1801 ET SEQ.), the Resource Conservation and Recovery Act (42 U.S.C. Section 6901 ET SEQ.), the Federal Water Pollution Control Act (33 U.S.C. Section 1251 ET SEQ.), the Clean Air Act (42 U.S.C. Section 7401 ET SEQ.), the Toxic Substances Control Act (15 U.S.C. Section 2601 ET SEQ.), and the Occupational Safety and Health Act (29 U.S.C. Section 651 ET SEQ.), as such laws have been or hereafter may be amended or supplemented, and any and all analogous future federal, or present and future state or local laws, and similar laws of jurisdictions other than the United States, to which Company or any of its Subsidiaries or any of its or their properties are subject. "EURODOLLAR ADVANCE" shall mean any principal amount under a Note with respect to which the interest rate is calculated by reference to the Adjusted Interbank Rate for a particular Interest Period. "EURODOLLAR BORROWING" shall mean any Borrowing composed of Eurodollar Advances. "EURODOLLAR BUSINESS DAY" shall mean a Business Day on which dealings in Dollars are carried out in the London Interbank market. "EURODOLLAR RESERVE REQUIREMENT" shall, on any day, mean that percentage (expressed as a decimal fraction rounded up to the nearest 1/100th) which is in effect on such day, as provided by the Board of Governors of the Federal Reserve System (or any successor governmental body) applied for determining the maximum reserve requirements (including without limitation, basic, supplemental, marginal and emergency reserves) under Regulation D with respect to "Eurocurrency liabilities" as currently defined in Regulation D, or under any similar or successor regulation with respect to Eurocurrency liabilities or Eurocurrency funding. Each determination by Agent of the Eurodollar Reserve Requirement shall, in the absence of manifest error, be conclusive and binding. "EVENT OF DEFAULT" shall have the meaning assigned to it in Article X hereof. "FDIC" shall mean the Federal Deposit Insurance Corporation (or any successor thereof). -6- "FEDERAL FUNDS RATE" shall mean, for any period, a fluctuating interest rate per annum equal for each day during such period to the weighted average of the rates on overnight Federal funds transactions with members of the Federal Reserve System arranged by Federal funds brokers, as published for such day (or, if such day is not a Business Day, for the next preceding Business Day) by the Federal Reserve Bank of New York, or, if such rate is not so published for any day which is a Business Day, the average of the quotations for such day on such transactions received by the Agent from three Federal funds brokers of recognized standing selected by Agent. "FINANCE CONTRACT" shall mean a motor vehicle installment sales contract assigned to AmeriCredit Financial Services, Inc. or an Affiliate of AmeriCredit Financial Services, Inc. that is secured by title to, security interests in, or liens on a motor vehicle under applicable provisions of the motor vehicle or other similar law of the jurisdiction in which the motor vehicle is titled and registered by the purchaser at the time the contract is originated. "FLOATING BASE ADVANCE" shall mean any principal amount under a Note with respect to which the interest rate is calculated by reference to the Floating Base Rate. "FLOATING BASE BORROWING" shall mean any Borrowing composed of Floating Base Advances. "FLOATING BASE RATE" shall mean the greater of (a) the Floating Prime Rate in effect from day to day or (b) the Federal Funds Rate plus one half of one percent (.5%). "FLOATING PRIME RATE" shall mean, on any date, the rate of interest most recently announced within Wells Fargo Bank, N.A. at its principal office in San Francisco, California as its Prime Rate, with the understanding that such Prime Rate is one of its base rates and serves as the basis upon which effective rates of interest are calculated for those loans making reference thereto, and is evidenced by the recording thereof after its announcement in such internal publication or publications as Wells Fargo Bank, N.A. may designate. "GENERALLY ACCEPTED ACCOUNTING PRINCIPLES" or "GAAP" shall mean those generally accepted accounting principles and practices which are recognized as such by the American Institute of Certified Public Accountants pursuant to its Statement on Auditing Standards No. 69 and which are consistently applied for all periods after the date hereof so as to properly reflect the financial condition, and the results of operations and cash flows of Company on a consolidated basis, except that any accounting principle or practice required to be changed by the American Institute of Certified Public Accountants in order to continue as a generally accepted accounting principle or practice may so be changed. "GOVERNMENTAL AUTHORITY" shall mean any government (or any political subdivision or jurisdiction thereof), court, bureau, agency or other governmental authority having jurisdiction over any of Borrowers or any of their Subsidiaries or any of its or their business, operations or properties. "GUARANTOR" shall mean any of the Guarantors. -7- "GUARANTORS" shall mean AmeriCredit Premium Finance, Inc., a Delaware corporation, and ACF Investment Corp., a Delaware corporation, and any other corporation which executes a Guaranty Agreement after the date of this Loan Agreement. "GUARANTY" of any Person shall mean any contract, agreement or understanding of such Person pursuant to which such Person guarantees, or in effect guarantees, any Indebtedness of any other Person (the "Primary Obligor") in any manner, whether directly or indirectly, including without limitation agreements: (1) to purchase such Indebtedness or any property constituting security therefor; (2) to advance or supply funds (a) for the purchase or payment of such Indebtedness, or (b) to maintain working capital or other balance sheet conditions, or otherwise to advance or make available funds for the purchase or payment of such Indebtedness; (3) to purchase property, securities or services primarily for the purpose of assuring the holder of such Indebtedness of the ability of the Primary Obligor to make payment of the Indebtedness; or (4) otherwise to assure the holder of the Indebtedness of the Primary Obligor against loss in respect thereof; EXCEPT THAT "Guaranty" shall not include the endorsement by Company or a Subsidiary in the ordinary course of business of negotiable instruments or documents for deposit or collection. "GUARANTY AGREEMENT" shall mean the guaranty agreement executed by the Guarantors, in the form of EXHIBIT B hereto, as the same may be amended or supplemented from time to time. "HAZARDOUS MATERIALS" shall mean those substances which are regulated by or form the basis of liability under any Environmental Laws. "INDEBTEDNESS" shall mean, with respect to any Person, all indebtedness, obligations and liabilities of such Person, including without limitation: (1) all "liabilities" which would be reflected on a balance sheet of such Person, prepared in accordance with Generally Accepted Accounting Principles; (2) all obligations of such Person in respect of any Capital Lease; (3) all obligations of such Person in respect of any Guaranty; and (4) the undrawn face amount of all outstanding Letters of Credit and all indebtedness and obligations resulting from draws under Letters of Credit. "INDIRECT LOAN" shall mean any Finance Contract or promissory note received for or in connection with the financing of the sale of a motor vehicle by a Dealer. -8- "INTERBANK OFFERED RATE" shall mean, with respect to each Interest Period, the average of the rate of interest (rounded upwards, if necessary to the next 1/16th of 1%) at which deposits in an amount approximately equal to the requested Borrowing and for the same term as the particular Interest Period are offered to Agent in the London Interbank Eurodollar market for delivery on the first day of the Interest Period as determined at 11:00 A.M. (London, England time) two (2) Eurodollar Business Days prior thereto (except in the case of a Swing Line Borrowing, the rate of interest shall not be determined two (2) Eurodollar Business Days prior thereto). "INTERCREDITOR AGREEMENT" shall mean that one certain Intercreditor Agreement dated as of October 8, 1997 by and among The Chase Manhattan Bank, Wells Fargo Bank (Texas), National Association, CP Funding Corp. and AmeriCredit Financial Services, Inc. "INTEREST COVERAGE RATIO" shall mean (a) the sum of EBIT and the amortization of excess servicing receivable LESS the gain on sale of Finance Contracts DIVIDED BY (b) total interest expense determined in accordance with GAAP. "INTEREST PERIOD" shall mean, with respect to a Eurodollar Advance, a period commencing: (i) on the borrowing date of such Eurodollar Advance made pursuant to Section 2.02 of this Loan Agreement; or (ii) on the Conversion Date pertaining to such Eurodollar Advance, if such Eurodollar Advance is made pursuant to a conversion as described in Section 2.02(c) hereof; or (iii) on the date of borrowing specified in the Request for Borrowing in the case of a rollover to a successive Interest Period, and ending one (1), two (2) or three (3) months thereafter (in the case of a Eurodollar Advance), as Borrowers shall elect in accordance with Section 2.02(c) of this Loan Agreement; provided, that: (A) any Interest Period which would otherwise end on a day which is not a Eurodollar Business Day shall be extended to the next succeeding Eurodollar Business Day UNLESS such Eurodollar Business Day falls in another calendar month in which case such Interest Period shall end on the next preceding Eurodollar Business Day; (B) any Interest Period which begins on the last Eurodollar Business Day of a calendar month (or on a day for which there is no numerically corresponding day in the calendar month or at the end of such Interest Period) shall, subject to clause (A) above, end on the last Eurodollar Business Day of a calendar month; and (C) if the Interest Period for any Eurodollar Advance would otherwise end after the Termination Date such Interest Period shall end on the Termination Date. -9- "INVESTMENT" shall mean any direct or indirect purchase or other acquisition of, or a beneficial interest in, capital stock or other securities or ownership interests of any other Person, or any direct or indirect loan, advance (other than advances to employees for moving and travel expenses, drawing accounts and similar expenditures in the ordinary course of business) or capital contribution to or investment in any other Person, including without limitation the incurrence or sufferance of Indebtedness or accounts receivable of any other Person which are not current assets or do not arise from sales to that other Person in the ordinary course of business. "LAW" shall mean all statutes, laws, ordinances, rules, regulations, orders, writs, injunctions or decrees of any Tribunal. "LETTER OF CREDIT" shall mean any outstanding standby letter of credit or commercial letter of credit for the account of any of Borrowers. "LIEN" shall mean any mortgage, pledge, security interest, encumbrance, lien or charge of any kind, including without limitation, any agreement to give any of the foregoing, any conditional sale or other title retention agreement, any lease in the nature thereof, and the filing of or agreement to give any financing statement or other similar form of public notice under the Laws of any jurisdiction. "LOAN DOCUMENTS" shall mean this Loan Agreement, the Notes, (including any renewals, extensions and refundings thereof), the Security Agreement, the Guaranty Agreement, the Intercreditor Agreement, and any agreements or documents (and with respect to this Loan Agreement, and such other agreements and documents, any amendments or supplements thereto or modifications thereof) executed or delivered pursuant to the terms of this Loan Agreement. "MAJORITY BANKS" shall mean, at any time, Banks holding Notes representing at least sixty-six and 2/3 percent (66 2/3%) of the aggregate unpaid principal amount of the aggregate Revolving Credit Loans or if no Revolving Credit Loans are at the time outstanding, Banks having at least sixty-six and 2/3 percent (66 2/3%) of the Total Revolving Credit Commitment. "MATERIAL ADVERSE EFFECT" shall mean any act, circumstance, occurrence or event that (i) could have any adverse effect whatsoever upon the validity or enforceability of the Loan Documents, (ii) causes or, with notice or lapse of time, or both, could cause an Event of Default under this Loan Agreement, (iii) is or reasonably could be expected to be material and adverse to the properties, business, prospects or conditions (financial or otherwise) of any of Borrowers or the Guarantors or their respective Subsidiaries on a Consolidated basis, or (iv) could reasonably be expected to impair the ability of any of Borrowers to perform their respective obligations under the Loan Documents in any material respect. "MAXIMUM RATE" shall mean, on any day, the highest nonusurious rate of interest (if any) permitted by applicable law on such day. Banks hereby notify Borrowers that, and disclose to Borrowers that, for purposes of Tex. Rev. Civ. Stat. Ann. Art. 5069-1.04, as it may from time to time be amended, the "applicable rate ceiling" shall be the "indicated rate" ceiling from time to time in effect as limited by Art. 5069-1.04(b); provided, however, that to the extent permitted by applicable law, Banks reserve the right to change the "applicable rate ceiling" from time to time by further notice and disclosure to Borrowers; and, provided further, that the -10- "highest nonusurious rate of interest permitted by applicable law" for purposes of this Loan Agreement and the Notes shall not be limited to the applicable rate ceiling under Art. 5069-1.04 if federal laws or other state laws now or hereafter in effect and applicable to this Loan Agreement and the Notes (and the interest contracted for, charged and collected hereunder or thereunder) shall permit a higher rate of interest. "MORTGAGE SUBSIDIARY" shall mean any subsidiary of Borrowers (whether now existing or hereafter formed or acquired) engaged in the business of making, originating or taking assignments of residential mortgage loans to consumer borrowers. "NET AMOUNT" shall mean with respect to Eligible Finance Contracts, as of any date, the outstanding face amount thereof as of such date, MINUS (1) (without duplication) to the extent included in the face amount thereof, unearned interest or finance charges with respect to future periods (or reserves with respect to unearned interest or finance charges) and (2) the aggregate amount by which the aggregate unpaid principal balance of Eligible Finance Contracts which have been modified during the preceding three (3) month period exceeds three and one-half percent (3.5%) of the aggregate unpaid principal balance of all Eligible Finance Contracts. "NET CREDIT LOSSES" shall mean, for any period, the actual aggregate amount of principal of Indirect Loans charged off prior to the application of the Dealer Discount or reserves during such period LESS the aggregate amount of Recoveries on Indirect Loans during such period. "NET INCOME" or "NET LOSS" shall mean, with respect to any period, the consolidated net earnings or net loss, as the case may be, of Company and its Subsidiaries for such period as determined in accordance with GAAP. "NET INDIRECT LOANS" shall mean the aggregate amount of all Indirect Loans LESS the amount of unearned finance charges. "NOTES" shall mean the promissory notes executed by Borrowers and delivered pursuant to the terms of this Loan Agreement, together with any renewals, extensions or modifications thereof. "Note" shall mean any of the Notes. "OBLIGATIONS" shall mean all present and future indebtedness, obligations, and liabilities of Borrowers to Banks or any of Banks, and all renewals and extensions thereof, or any part thereof, arising pursuant to this Loan Agreement or represented by the Notes, and all interest accruing thereon (including, without limitation, interest accruing after bankruptcy whether or not a claim for post-petition interest is allowed in such proceeding), and attorneys' fees incurred in the enforcement or collection thereof, regardless of whether such indebtedness, obligations and liabilities are direct, indirect, fixed, contingent, joint, several or joint and several; together with all indebtedness, obligations and liabilities of Borrowers evidenced or arising pursuant to any of the other Loan Documents, and all renewals and extensions thereof, or part thereof. "OBLIGOR" shall mean any one or more individuals (other than a Dealer) who are liable in whole or in part on a Finance Contract (determined without regard to limitations, if any, on recourse). -11- "OFFICER'S CERTIFICATE" shall mean a certificate signed in the name of the Company by its chief executive officer, its president, its chief financial officer, its treasurer or one of its vice presidents. "PAST DUE RATE" shall mean the lesser of (a) the Floating Base Rate in effect from day-to-day, plus five percent (5.0%), or (b) the Maximum Rate. "PBGC" shall mean the Pension Benefit Guaranty Corporation, and any successor to all or any of the Pension Benefit Guaranty Corporation's functions under ERISA. "PERCENTAGE" shall mean, with respect to any Bank, such Bank's Pro Rata share of the Total Revolving Credit Commitment, as set forth in Section 2.01 opposite its name under the heading "Revolving Commitment Percentage." "PERMITTED LIENS" shall mean: (i) Liens on equipment and fixed assets, including purchase money Liens, relating to or securing obligations in an aggregate amount not to exceed the positive difference between (a) twenty million dollars ($20,000,000) and (b) the aggregate amount of Liens described in (viii) below at any time; (ii) pledges or deposits made to secure payment of Worker's Compensation (or to participate in any fund in connection with Worker's Compensation), unemployment insurance, pensions or social security programs; (iii) Liens imposed by mandatory provisions of law such as for materialmen's, mechanics, warehousemen's and other like Liens arising in the ordinary course of business, securing Indebtedness whose payment is not yet due unless the same are being contested in good faith and for which adequate reserves have been provided; (iv) Liens for taxes, assessments and governmental charges or levies imposed upon a Person or upon such Person's income or profits or property, if the same are not yet due and payable or if the same are being contested in good faith and as to which adequate reserves have been provided; (v) Liens with respect to good faith deposits in connection with tenders, leases, real estate bids or contracts (other than contracts involving the borrowing of money unless such Liens are otherwise Permitted Liens), pledges or deposits to secure public or statutory obligations, deposits to secure (or in lieu of) surety, stay, appeal or customs bonds and deposits to secure the payment of taxes, assessments, customs duties or other similar charges; (vi) encumbrances consisting of zoning restrictions, easements, or other restrictions on the use of real property, provided that such do not impair the use of such property for the uses intended, and none of which is violated by Company or any of its Subsidiaries in connection with existing or proposed structures or land use; (vii) Liens and encumbrances created and existing in connection with Securitizations and any Additional Warehouse Facility; (viii) Liens on short term investments pledged to Texas Commerce Bank in an aggregate amount not to exceed two million dollars ($2,000,000) with respect to the Mortgage Subsidiary; and (ix) Liens on Credit Enhancement Assets. "PERSON" shall mean and include an individual, partnership, joint venture, corporation, limited liability company, trust, Tribunal, unincorporated organization or government or any department, agency or political subdivision thereof. "PLAN" shall mean an employee benefit plan or other plan maintained by Company for employees of Company and any of its Subsidiaries and/or covered by Title IV of ERISA, or subject to the minimum funding standards under Section 412 of the Internal Revenue Code of 1986, as amended. -12- "PRO RATA" and "PRO RATA PART" shall mean, when determined for any Bank, the proportion, stated as a percentage, that such Bank's Commitment bears to the Total Commitment. "RATINGS" shall mean the rating assigned to the Indebtedness of Borrowers to Banks by Standard & Poors, Moody's Investor Service and Fitch Investor Service. "RECOVERIES" shall mean amounts realized on the sale of collateral securing a Finance Contract, rebates on ancillary products and collections on charged-off deficiencies and proceeds of insurance claims related to the collateral less direct costs of repossession. "REGULATION U" shall mean Regulation U promulgated by the Board of Governors of the Federal Reserve System, 12 C.F.R. Part 221, or any other regulation hereafter promulgated by said Board to replace the prior Regulation U and having substantially the same function. "REGULATION X" shall mean Regulation X promulgated by the Board of Governors of the Federal Reserve System, 12 C.F.R. Part 224, or any other regulation hereafter promulgated by said Board to replace the prior Regulation X and having substantially the same function. "REGULATORY DEFECT" shall mean (i) any failure of any of Borrowers or any of the Guarantors to comply with any Law or any rules, regulations and other requirements of any Governmental Authority which would have a Material Adverse Effect, and/or (ii) any unfavorable examination report shall be received by any of Borrowers or any of the Guarantors from any Governmental Authority regarding any of the businesses or activities in which the Borrowers and Guarantors are engaged, if such report would have a Material Adverse Effect. "REPORTABLE EVENT" shall have the meaning assigned to that term in Title IV of ERISA. "REPOSSESSED LOANS" shall mean the aggregate amount of all Indirect Loans with respect to which the motor vehicle securing the payment of the Indirect Loan has been repossessed by Borrowers and all applicable time periods for reinstatement of the Indirect Loan or redemption of the motor vehicle have expired. "REVOLVING CREDIT BORROWING BASE" shall mean, as of any date of calculation, an amount equal to eighty percent (80%) of the Net Amount of Eligible Finance Contracts pledged to the Agent for the ratable benefit of the Banks pursuant to the Security Agreement; provided, however, if the ratio of the aggregate Dealer Discount to Net Indirect Loans originated in a trailing three (3) month period exceeds five percent (5.0%), such Revolving Credit Borrowing Base advance rate percentage of the Net Amount of Eligible Finance Contracts shall be reduced by two percentage points for each full percentage point that the ratio of the aggregate Dealer Discount to Net Indirect Loans originated in a trailing three (3) month period, as of any date of calculation, exceeds five percent (5.0%). "REVOLVING CREDIT LOANS" shall have the meaning assigned to it in Section 2.01 hereof. "SECURITIZATION" shall mean a transaction wherein an identified pool of Finance Contracts and related documents subject to a security interest in favor of Banks or other Additional Warehouse Facility are sold, pledged or conveyed by AmeriCredit Financial Services, Inc., or an Affiliate thereof, to a grantor trust or other special purpose financing entity as -13- collateral security for the issuance by such grantor trust or other special purpose financing entity of notes, certificates or other evidence of indebtedness. "SECURITY AGREEMENT" shall mean the Restated Security Agreement, dated as of October 3, 1997, delivered by Borrowers to the Agent for the benefit of the Banks, granting the security interests in certain of the properties and assets of each of Borrowers described therein, as amended or supplemented from time to time. "SENIOR NOTES" shall mean those senior unsecured notes of the Company due 2004 and all Guarantees thereof by the other Borrowers, Guarantors and the Mortgage Subsidiary sold pursuant to a Preliminary Offering Memorandum dated January 20, 1997 and issued or to be issued pursuant to an Indenture between the Company and the trustee named therein, and any new issue of debt securities of the Company and all Guarantees thereof by the other Borrowers, Guarantors and the Mortgage Subsidiary with the same terms issued in exchange for such senior unsecured notes. "STAYED LOAN" shall mean a Finance Contract: (i) as to which an Obligor obligated on such Finance Contract (any such Obligor, together with its Subsidiaries, herein, collectively, the "Applicable Obligor"), shall file a petition or seek relief under or take advantage of any insolvency law; make an assignment for the benefit of its creditors; commence a proceeding for the appointment of a receiver, trustee, liquidator, custodian or conservator of itself or of the whole or substantially all of its property; file or consent to a petition under any chapter of the United States Bankruptcy Code, as amended (11 U.S.C. Section 101 ET SEQ.), or file a petition or seek relief under or take advantage of any other similar law or statute of the United States of America, any state thereof or any foreign country; or (ii) as to which a court of competent jurisdiction shall enter an order, judgment or decree appointing or authorizing a receiver, trustee, liquidator, custodian or conservator of the Applicable Obligor or of the whole or substantially all of its property, or enter an order for relief against the Applicable Obligor in any case commenced under any chapter of the United States Bankruptcy Code, as amended, or grant relief under any similar law or statute of the United States of America, any state thereof or any foreign country; or as to which, under the provisions of any law for the relief or aid of debtors, a court of competent jurisdiction or a receiver, trustee, liquidator, custodian or conservator shall assume custody or control or take possession of the Applicable Obligor or of the whole or substantially all of its property; or as to which there is commenced against the Applicable Obligor any proceeding for any of the foregoing relief or as to which a petition is filed against the Applicable Obligor under any chapter of the United States Bankruptcy Code, as amended, or under any other similar law or statute of the United States of America or any state thereof or any foreign country and such proceeding or petition remains undismissed for a period of 60 days; or as to which the applicable Obligor by any act indicates its consent to, approval of or acquiescence in any such proceeding or petition; PROVIDED, HOWEVER, that a Finance Contract shall cease to be a Stayed Loan at such time as so long as (A) all principal, interest and other amounts theretofore due and payable according to the terms of such Finance Contract (as such terms have been approved, -14- adjusted and/or confirmed pursuant to court order or otherwise in any proceeding referred to in clause (i) or (ii) of this definition) have been irrevocably paid to or collected or received by Borrower and all such amounts thereafter due and payable shall be paid to or collected or received by the Borrower when due (or within any stated grace period) and (B) such Finance Contract shall be secured to the same extent as before such Finance Contract first became a Stayed Loan and no dispute regarding the existence, validity or priority of such security shall be pending in any court or asserted in any pending appeal. "SUBSIDIARY" shall mean, as to any particular parent corporation, any corporation of which more than fifty percent (by number of votes) of the Voting Stock shall be owned by such parent corporation and/or one or more corporations which themselves have more than fifty percent (by number of votes) of their Voting Stock owned by such parent corporation. As used herein, the term "Subsidiary" shall also mean any "Subsidiary" of the Company. "SWING LINE BORROWING" shall mean a Borrowing made pursuant to Section 2.03. "SWING LINE LOAN" shall mean a loan pursuant to Section 2.03. "SWING LINE MATURITY DATE" shall mean October 2, 1998. "SWING LINE NOTE" shall mean that one certain promissory note executed by Borrowers and payable to the order of Wells Fargo Bank in the amount of twenty million dollars ($20,000,000) and is one of the Notes. "SWING LINE SUBFACILITY" shall mean the subfacility which shall never exceed the aggregate of $20,000,000 as described in, and subject to the limitation of, Section 2.03. "SWING LINE DEBT" shall mean, on the date of determination, that portion outstanding, under the Swing Line Subfacility. "TAXES" shall mean all taxes, levies, assessments, fees, withholdings or other charges at any time imposed by any Laws or Tribunal. "TANGIBLE NET WORTH" shall mean, as of any date, the total shareholders' equity which would appear on a consolidated balance sheet of Company prepared as of such date in accordance with Generally Accepted Accounting Principles LESS intangible assets which should appear on a consolidated balance sheet of Company prepared as of such date in accordance with General Accepted Accounting Principles. "TERMINATION DATE" shall mean October 2, 1998. "TRIGGER EVENT" shall mean any trigger event as defined in any of the agreements relating to a Securitization or the equivalent. "UCC" shall mean, with respect to any jurisdiction, the Uniform Commercial Code as then in effect in that jurisdiction. References to terms defined in the UCC shall mean such terms in the UCC as in effect in such jurisdiction. -15- "VOTING STOCK" shall mean, with respect to any Subsidiary, any shares of any class of stock of such Subsidiary having general voting power under ordinary circumstances to elect a majority of the Board of Directors of such Subsidiary irrespective of whether at the time stock of any other class or classes shall have or might have voting power by reason of the happening of any contingency. OTHER DEFINITIONAL PROVISIONS. (a) All terms defined in this Loan Agreement shall have the above-defined meanings when used in the Notes or any Loan Documents, certificate, report or other document made or delivered pursuant to this Loan Agreement, unless the context therein shall otherwise require. (b) Defined terms used herein in the singular shall import the plural and VICE VERSA. (c) The words "hereof," "herein," "hereunder" and similar terms when used in this Loan Agreement shall refer to this Loan Agreement as a whole and not to any particular provision of this Loan Agreement. (d) All financial and other accounting terms not otherwise defined herein shall be defined and calculated in accordance with Generally Accepted Accounting Principles consistently applied. ARTICLE II REVOLVING CREDIT LOANS 2.01. REVOLVING CREDIT COMMITMENT. (a) REVOLVING LOAN COMMITMENTS. Subject to the terms and conditions of this Loan Agreement and the Revolving Credit Borrowing Base limitation in Section 2.01(b), each Bank severally agrees to extend to Borrowers, from the date hereof through the Termination Date (the "Revolving Credit Period"), a revolving line of credit which shall not exceed at any one time outstanding the amount set forth opposite its name below (for each Bank, such amount is hereinafter referred to as its "Commitment"):
Commitment Percentage Banks Commitment (Rounded) ----- ---------- ----------- Wells Fargo Bank (Texas), $45,000,000 14.516129035% National Association Bank One, Texas, N.A. $40,000,000 12.903225806% LaSalle National Bank $30,000,000 9.677419355% Texas Commerce Bank National $25,000,000 8.064516129% Association -16- The Sumitomo Bank, Limited $25,000,000 8.064516129% Comerica Bank-Texas $25,000,000 8.064516129% BankAmerica Business Credit, Inc $25,000,000 8.064516129% Harris Trust and Savings Bank $20,000,000 6.451612903% The Bank of Nova Scotia $15,000,000 4.838709677% CIBC Inc. $15,000,000 4.838709677% Credit Lyonnais New York Branch $15,000,000 4.838709677% BankBoston, N.A. $15,000,000 4.838709677% The Long Term Credit Bank of Japan, $15,000,000 4.838709677% Limited ------------ -------------- $310,000,000 100.000000000% ------------ -------------- ------------ --------------
No Bank shall be obligated to make any Advance under this Section 2.01 and Section 2.02 if, immediately after giving effect thereto, the aggregate amount of all indebtedness and obligations of Borrowers to such Bank under Section 2.01, Section 2.02 and Section 2.03 exceeds the lesser of (a) such Bank's Commitment or (b) an amount equal to such Bank's Percentage TIMES the Revolving Credit Borrowing Base in effect at such time. Within the limits of this Section 2.01, during the Revolving Credit Period, Borrowers may borrow, prepay pursuant to Section 3.03 hereof and reborrow under this Section 2.01; provided, however, the total number of unpaid Eurodollar Borrowings shall not exceed five (5) at any time. Each Borrowing pursuant to this Section 2.01 and Section 2.02 shall be funded ratably by Banks in proportion to their respective Percentages. Each advance made by a Bank under Section 2.01 and Section 2.02 is herein called an "Advance"; all Advances made by a Bank hereunder are herein collectively called a "Revolving Credit Loan"; the aggregate unpaid principal balance of all Advances made by Banks hereunder are herein collectively called the "Revolving Credit Loans"; and the combined Advances made by Banks on any given day are herein collectively called a "Borrowing". The "Total Commitment" shall be three hundred ten million dollars ($310,000,000). (b) BORROWING BASE LIMITATION. The maximum aggregate amount outstanding at any time under the Revolving Credit Loans shall not exceed the Revolving Credit Borrowing Base then in effect. (c) BORROWING BASE DEFICIENCY. If the aggregate unpaid principal balance of the Revolving Credit Loans and all Swing Line Borrowings shall at any time exceed the Revolving Credit Borrowing Base then in effect (the "Borrowing Base Deficiency"), Borrowers shall pay to Agent within one (1) Business Day of the date of the earlier of the most recent Borrowing Base Certificate which discloses a Borrowing Base Deficiency or the date of notification to Borrowers by Agent of the existence of a Borrowing Base Deficiency an amount equal to such Borrowing Base Deficiency so that the aggregate unpaid principal balance of the Revolving -17- Credit Loans and Swing Line Borrowings (after giving effect to such payment) is not in excess of the Revolving Credit Borrowing Base then in effect. (d) LOAN ORIGINATION FEE. At the time of execution of this Agreement, Borrowers shall pay to each Bank, including Agent, a loan origination fee in an amount equal to the sum of (i) one twentieth percent (.05%) of each such Bank's Revolving Commitment under the Prior Loan Agreement and (ii) one tenth percent (.10%) of the positive difference between such Bank's Commitment under this Loan Agreement and such Bank's Revolving Commitment under the Prior Loan Agreement. (e) UNUSED LINE FEE. In addition to the payments provided for in Article III hereof, Borrowers shall pay to Agent, for the account of each Bank, on the first day of each fiscal quarter of Company beginning January 1, 1998 during the period ending on the Termination Date a loan commitment fee at the rate of one quarter of one percent (.25%) per annum (calculated on the basis of a year consisting of 360 days) of the average daily amount of each such Bank's Commitment which was unused during the immediately preceding fiscal quarter of Company. Outstanding Borrowings under the Swing Line Subfacility shall not be treated as outstanding in determining the amount of each such Bank's Commitment which is unused at any time for purposes of calculating the loan commitment fee. Borrowers and Banks acknowledge and agree that the commitment fees payable hereunder are bona fide commitment fees and are intended as reasonable compensation to Banks for committing to make funds available to Borrowers as described herein and for no other purpose. 2.02. MANNER OF BORROWING. (a) REQUEST FOR BORROWING. Each request by Borrowers to Agent for a Borrowing under Section 2.01 hereof (a "Request for Borrowing") shall be in writing and specify the aggregate amount of such requested Borrowing, the requested date of such Borrowing, and, when the Request for Borrowing specifies a Eurodollar Borrowing, the Interest Period which shall be applicable thereto; provided, however, that the aggregate number of unpaid Eurodollar Borrowings shall not exceed five (5) at any time. Borrowers shall furnish to Agent the Request for Borrowing by at least 11:00 a.m. (Fort Worth time) three (3) Eurodollar Business Days prior to the requested Eurodollar Borrowing date (which must be a Eurodollar Business Day) and by at least 11:00 a.m. (Fort Worth time) on the requested borrowing date (which must be a Business Day) for a Floating Base Advance. Any Request for Borrowing shall: (i) in the case of a Floating Base Borrowing, be in the form attached hereto as EXHIBIT "C," and (ii) in the case of a Eurodollar Borrowing, be in the form attached hereto as EXHIBIT "D." Each Floating Base Borrowing shall be in an aggregate principal amount of five hundred thousand dollars ($500,000.00) or any higher integral multiple of one hundred thousand dollars ($100,000.00). Each Eurodollar Borrowing shall be in an amount of at least one million dollars ($1,000,000.00) or any higher integral multiple of $1,000,000.00. Prior to making a Request for Borrowing, Borrowers may (without specifying whether the anticipated Borrowing shall be a Floating Base Borrowing or Eurodollar Borrowing) request that Agent provide Borrowers with the most recent Interbank Offered Rate available to Agent. Agent shall endeavor to provide such quoted rates to Borrowers on the date of such request. Each Request for Borrowing shall be irrevocable and binding on Borrowers and, in respect of the Borrowing specified in such Request for Borrowing, Borrowers shall indemnify -18- each Bank against any cost, loss or expense incurred by such Bank as a result of any failure to fulfill, on or before the date specified for such Borrowing, the conditions to such Advance set forth herein, including without limitation, any cost, loss or expense incurred by reason of the liquidation or reemployment of deposits or other funds acquired by any Bank to fund the Advance to be made by such Bank as part of such Borrowing when such Advance, as a result of such failure, is not made on such date. After receiving a Request for Borrowing in the manner provided herein, Agent shall promptly notify each Bank by telephone (confirmed immediately by telecopy, telex or cable), telecopy, telex or cable of the amount of the Borrowing and such Bank's pro rata share of such Borrowing, the date on which the Borrowing is to be made, the interest option selected and, if applicable, the Interest Period selected. (b) FUNDING. Each Bank shall, before 2:00 P.M. (Fort Worth time) on the date of such Borrowing specified in the notice received from Agent pursuant to Section 2.02(a), deposit such Bank's ratable portion of such Borrowing in immediately available funds to Agent's account. Upon fulfillment of all applicable conditions set forth herein and after receipt by Agent of such funds, Agent shall pay or deliver such proceeds to or upon the order of Borrowers at the principal office of Agent in immediately available funds. The failure of any Bank to make any Advance required to be made by it hereunder shall not relieve any other Bank of its obligation to make its Advance hereunder. If any Bank shall fail to provide its ratable portion of such funds and if all conditions to such Borrowing shall have been satisfied, the Agent will make available such funds as shall have been received by it from the other Banks, in accordance with this Section 2.02(b). Neither Agent nor any Bank shall be responsible for the performance by any other Bank of its obligations hereunder. In the event of any failure by a Bank to make an Advance required hereunder, the other Banks may (but shall not be required to) purchase (on a pro rata basis, according to their respective Percentages) such Bank's Revolving Credit Note. Upon the failure of a Bank to make an Advance required to be made by it hereunder, the Agent shall use good faith efforts to obtain one or more banks, acceptable to Borrowers and Agent, to replace such Bank, but neither the Agent nor any other Bank shall have any liability or obligation whatsoever as a result of the failure to obtain a replacement for such Bank. Unless the Agent shall have received notice from a Bank prior to the date of any Borrowing that such Bank will not make available to the Agent such Bank's ratable portion of such Borrowing, the Agent may assume that such Bank has made such portion available to the Agent on the date of such Borrowing in accordance with Section 2.02(b) and the Agent may, in reliance upon such assumption, make available to or on behalf of Borrowers on such date a corresponding amount. If and to the extent such Bank shall not have so made such ratable portion available to the Agent, such Bank severally agrees to repay to the Agent forthwith on demand such corresponding amount together with interest thereon, for each day from the date such amount is made available to or on behalf of Borrowers until the date such amount is repaid to the Agent at the rate per annum equal to the Federal Funds Rate. If such Bank shall repay to the Agent such corresponding amount, such amount so repaid shall constitute such Bank's Advance as part of such Borrowing for purposes of this Agreement. (c) SELECTION OF INTEREST OPTION. Upon making a Request for Borrowing under Section 2.02(a) hereof, Borrowers shall advise Agent as to whether the Borrowing shall be (i) a Eurodollar Borrowing, in which case Borrowers shall specify the applicable Interest Period therefor, or (ii) a Floating Base Borrowing. At least three (3) Eurodollar Business Days prior -19- to the termination of each Interest Period with respect to a Eurodollar Borrowing, Borrowers shall give Agent written notice (the "Rollover Notice") of the interest option which shall be applicable to such Borrowing upon the expiration of such Interest Period. If Borrowers shall specify that such Borrowing shall be a Eurodollar Borrowing, such Rollover Notice shall also specify the length of the succeeding Interest Period selected by Borrowers with respect to such Borrowing. Each Rollover Notice shall be irrevocable and effective upon notification thereof to Agent. If the required Rollover Notice shall not have been timely received by Agent prior to the expiration of the then relevant Interest Period, then Borrowers shall be deemed to have elected to have such Borrowing be a Floating Base Borrowing. With respect to any Floating Base Borrowing, Borrowers shall have the right, on any Eurodollar Business Day (a "Conversion Date") to convert such Floating Base Borrowing to a Eurodollar Borrowing by giving Agent a Rollover Notice of such selection at least three (3) Eurodollar Business Days prior to such Conversion Date. Notwithstanding anything to the contrary contained herein, Borrowers shall have no right to request a Eurodollar Borrowing if (1) an Event of Default has occurred and is continuing, (2) the interest rate applicable thereto under Section 2.04 hereof would exceed the Maximum Rate in effect on the first day of the Interest Period applicable to such Eurodollar Borrowing, or (3) either of the circumstances described in Section 4.01 exist. Each Rollover Notice shall be irrevocable and binding upon Borrowers, and in respect of the Borrowing, conversion or extension specified in such Rollover Notice, Borrowers shall indemnify and hold harmless each Bank against any cost, loss or expense incurred by such Bank as a result of any failure to convert or extend as specified in such Rollover Notice, including without limitation, any loss, cost or expense incurred by reason of the liquidation or redeployment of deposits or other funds required by any Bank to fund, convert or extend the Advance specified in such Rollover Notice. 2.03 SWING LINE SUBFACILITY. (a) For the convenience of the parties and as an integral part of the transactions contemplated by the Loan Documents, Wells Fargo Bank (Texas), National Association ("Wells Fargo"), solely for its own account, may make any requested Borrowing in the form of EXHIBIT "E" of $500,000 or a greater integral multiple of $100,000, subject to those terms and conditions applicable to Borrowings set forth in Section 6.02(c), (d), (e), and (f), directly to Borrowers as a Swing Line Borrowing without requiring any other Bank to fund its Pro Rata Part thereof unless and until Section 2.03(b) is applicable; PROVIDED THAT: (i) each such Borrowing must occur on a Business Day prior to, and not on or after, the Swing Line Maturity Date; (ii) the aggregate Swing Line Debt outstanding on any date of determination shall not exceed $20,000,000; (iii) on any date of determination, the total amount outstanding under this Loan Agreement, after taking into account such requested Swing Line Borrowing, shall never exceed the lesser of the Total Commitment or the Revolving Credit Borrowing Base then in effect; (iv) at the time of such Swing Line Borrowing, no Event of Default or event, which with the giving of notice or the passage of time, or both, could constitute an Event of Default, shall have occurred and be continuing; and (v) no additional Swing Line Borrowing shall be made at any time after any Bank has refused, notwithstanding the requirements of Section 2.03(b), to purchase a participation in any Swing Line Borrowing as provided in Section 2.03(b), and until such purchase shall occur or until the Swing Line Borrowing has been repaid. Each Borrowing under the Swing Line Subfacility shall be available and may be prepaid on same day by -20- telephonic notice (to be followed immediately by written notice) from Borrowers to Wells Fargo, SO LONG AS such notice is received by Wells Fargo prior to 12:00 noon (Fort Worth, Texas time). Each Swing Line Borrowing shall be due and payable by Borrowers on the earlier of (a) five (5) Business Days after the date of such Swing Line Borrowing, (b) the occurrence of an Event of Default or (c) the Swing Line Maturity Date. (b) If Borrowers fail to repay any Swing Line Borrowing within five (5) Business Days after the date of such Swing Line Borrowing (and in any event upon the earlier to occur of an Event of Default, the Termination Date, or the date on which the Commitment is canceled in full), Agent shall timely notify each Bank of such failure and of the date and amount not paid. No later than the close of business on the date such notice is given (if such notice was given prior to 12:00 noon (Fort Worth time) on any Business Day, or, if made at any other time, on the next Business Day following the date of such notice), each Bank shall be deemed to have irrevocably and unconditionally purchased and received from Wells Fargo an undivided interest and participation in such Swing Line Borrowing to the extent of such Bank's Pro Rata Part, and each Bank shall make available to Wells Fargo in immediately available funds such Bank's Pro Rata Part of such unpaid amount. All such amounts payable by any Bank shall include interest thereon from the date on which such payment is payable by such Bank to, but not including, the date such amount is paid by such Bank to Agent, at the Federal Funds Rate. If such Bank does not promptly pay such amount upon Agent's demand therefor, and until such time as such Bank makes the required payment, Wells Fargo shall be deemed to continue to have outstanding a Swing Line Borrowing in the amount of such unpaid obligation. Each payment by Borrowers of all or any part of any Swing Line Borrowing shall be paid to Agent for the ratable benefit of Wells Fargo and those Banks who have funded their participations in such Swing Line Debt under this Section 2.03(b); PROVIDED THAT, with respect to any such participation, all interest accruing on the Swing Line Debt to which such participation relates prior to the date of funding such participation shall be payable solely to Wells Fargo for its own account. 2.04. INTEREST RATE. The unpaid principal of each Floating Base Advance except Borrowings under the Swing Line Facility shall bear interest from the date of advance until paid at a rate per annum which shall from day to day, be equal to the lesser of: (a) the Floating Base Rate or (b) the Maximum Rate. The unpaid principal of each Eurodollar Advance except Borrowings under the Swing Line Facility shall bear interest from the date of Advance until paid at a rate per annum which shall be equal to the lesser of (a) the sum of the Adjusted Interbank Rate for the applicable Interest Period, plus the Applicable Margin in effect from time to time or (b) the Maximum Rate. Borrowers shall notify Agent of any change in the Ratings and the Applicable Margin within one (1) Business Day of any such change. The unpaid principal of each Swing Line Borrowing shall bear interest at then Adjusted Interbank Rate applicable to a one (1) month Interest Period as determined by Wells Fargo on the date of the Swing Line Borrowing, plus the Applicable Margin; PROVIDED THAT at any time after any Bank is deemed to have purchased pursuant to Section 2.03(b) a participation in any Swing Line Borrowing, such Swing Line Borrowing shall bear interest at the Past Due Rate. All past due principal of, and to the extent permitted by applicable law, interest on the Notes shall bear interest at the Past Due Rate. Notwithstanding the foregoing, the unpaid principal balance of the Notes shall bear interest as provided in Section 3.04(c) hereof, upon the occurrence of the circumstances described in such section. - 21 - ARTICLE III NOTES AND INTEREST RATE PAYMENTS 3.01. PROMISSORY NOTES. The Advances under Section 2.02(a) and Section 2.02(b) hereof by a Bank shall be evidenced by a promissory note (each a "Note" and collectively, the "Notes") of Borrowers, which Note shall (i) be dated the date hereof, (ii) be in the amount of such Bank's Commitment, (iii) be payable to the order of such Bank at the office of Agent, (iv) bear interest in accordance with Section 2.04 hereof, and (v) be in the form of EXHIBIT "A" attached hereto with blanks appropriately completed in conformity herewith. Notwithstanding the principal amount of any Bank's Note as stated on the face thereof, the amount of principal actually owing on such Note at any given time shall be in the aggregate of all Advances theretofore made to Borrowers hereunder, less all payments of principal theretofore actually received hereunder by Bank. Each Bank is authorized, but is not required, to endorse on the schedule attached to its Note appropriate notations evidencing the date and amount of each Advance as well as the amount of each payment made by Borrowers hereunder. 3.02. PRINCIPAL PAYMENTS ON NOTES. Subject to Article X, the unpaid principal amount of each Note (other than the Swing Line Note), and all accrued but unpaid interest thereon, shall be due and payable on the Termination Date and the unpaid principal balance of the Swing Line Note shall be due and payable on the Swing Line Maturity Date. 3.03. PREPAYMENTS. (a) OPTIONAL PREPAYMENTS. Borrowers may prepay the principal of any Floating Base Advance upon one (1) Business Day's prior notice without premium or penalty, and of any Eurodollar Advance upon three (3) Business Days prior notice; provided, however, that (i) each prepayment of less than the full outstanding principal balance of the Notes shall be in an amount equal to one hundred thousand dollars ($100,000.00) or an integral multiple thereof, and (ii) if Borrowers shall prepay the principal of any Eurodollar Advance on any date other than the last day of the Interest Period applicable thereto, Borrowers shall make the payments required by Section 4.05 hereof. (b) GENERAL PREPAYMENT PROVISIONS. Any prepayment of a Note hereunder shall be (i) made together with interest accrued (to the date of such prepayment) on the principal amount prepaid, and (ii) applied first to accrued interest and then to principal. 3.04. PAYMENT OF INTEREST ON THE NOTES. (a) REVOLVING CREDIT NOTES. The interest on the unpaid principal amount of each Floating Base Advance under each Note shall be payable monthly as it accrues on the first Business Day of each month commencing November 1, 1997, and on the Termination Date. Interest on the unpaid principal amount of each Eurodollar Advance under each Note shall be payable on the last day of applicable Interest Period. Should any installment of interest on a Floating Base Advance become due and payable on a day other than a Business Day, the maturity thereof shall be extended to the next succeeding Business Day. - 22 - (b) SWING LINE NOTE. The unpaid accrued interest on each advance under the Swing Line Note shall be payable five (5) days from the date of each such advance. (c) RECAPTURE RATE. If, on any interest payment date, Agent does not receive interest (for the account of any Bank) on such Bank's Note computed (as if no Maximum Rate limitations were applicable) at the applicable contract rate described herein, because the applicable contract rate exceeds or has exceeded the Maximum Rate, then Borrowers shall, upon the written demand of Agent or such Bank, pay to such Bank, in addition to interest otherwise required hereunder, on each interest payment date thereafter, the Excess Interest Amount (hereinafter defined) calculated as of such later interest payment date; provided, however, that in no event shall Borrowers be required to pay, for any appropriate computation period, interest at a rate exceeding the Maximum Rate effective during such period. The term "Excess Interest Amount" shall mean, on any date, with respect to the Note of any Bank, the amount by which (a) the amount of all interest which would have accrued prior to such date on the principal of such Note (had the applicable contract rate(s) described herein at all times been in effect, without limitation by the Maximum Rate) EXCEEDS (b) the aggregate amount of interest actually paid to such Bank on such Note on or prior to such date. 3.05. CALCULATION OF INTEREST RATES. Interest on the unpaid principal of each Eurodollar Advance shall be calculated on the basis of the actual days elapsed in a year consisting of 360 days. Interest on the unpaid principal of each Floating Base Advance shall be calculated on the basis of the actual days elapsed in a year consisting of 365/366 days. 3.06. MANNER AND APPLICATION OF PAYMENTS. All payments of principal of, and interest on, any Note shall be made by Borrowers to Agent before 11:00 a.m. (Fort Worth time), in immediately available Federal funds or such other immediately available funds at Agent's principal banking office in Fort Worth, Texas or to Agent's office in San Francisco, California wired as follows: ABA No. 12100248, Account No. 4518151378, Reference: AmeriCredit - Syndicated Credit Agreement. Should the principal of, or any installment of the principal or interest on, any Note, become due and payable on a day other than a Business Day or a Eurodollar Business Day, as the case may be, the maturity thereof shall be extended to the next succeeding Business Day or Eurodollar Business Day, as the case may be. Each payment received by the Agent hereunder for the account of a Bank shall be promptly distributed by Agent to such Bank. All payments made on any Note shall be credited, to the extent of the amount thereof, in the following manner: (i) first, against the amount of interest accrued and unpaid on the Note as of the date of such payment; (ii) second, against all principal (if any) due and owing on the Note; (iii) third, as a prepayment of outstanding Floating Base Advances under the Note; and (iv) fourth, as a prepayment of outstanding Eurodollar Advances under the Note. Subject to the foregoing, payments and prepayments of principal of the Notes shall be applied to such outstanding Floating Base Advances and Eurodollar Advances under the Notes as Borrowers shall select; provided, however, that Borrowers shall select Floating Base Advances and Eurodollar Advances to be repaid in a manner designated to minimize the Consequential Loss, if any, resulting from such payments; and provided further that, if Borrowers shall fail to select the Floating Base Advances and Eurodollar Advances to which such payments are to be applied, or if an Event of Default has occurred and is continuing at the time of such payment, then Agent shall apply the payment first to Floating Base Advances and then to Eurodollar Advances. - 23 - 3.07. PRO RATA TREATMENT. Each payment received by Agent hereunder for account of Banks or any of them on the Notes shall be distributed to each Bank entitled to share in such payment, PRO RATA in proportion to the then unpaid principal balance of the Note of each Bank. Unless Agent shall have received notice from Borrowers prior to the date on which any payment is due to Banks hereunder that Borrowers will not make such payment in full, Agent may assume that Borrowers have made such payment in full to Agent on such date and Agent may, in reliance upon such assumption, cause to be distributed to each Bank on such due date an amount equal to the amount then due such Bank. If and to the extent Borrowers shall not have so made such payment in full to Agent, each Bank shall repay to Agent forthwith on demand such amount distributed to such Bank together with interest thereon, for each day from the date such amount is distributed to such Bank until the date such Bank repays such amount to Agent, at the Federal Funds Rate. 3.08. LENDING OFFICE. Each Bank may (a) designate its principal office or a foreign branch, subsidiary or affiliate of such Bank as its lending office (and the office to whose accounts payments are to be credited) for any Eurodollar Advance, (b) designate its principal office or a domestic branch, subsidiary or affiliate as its lending office (and the office to whose accounts payments are to be credited) for any Floating Base Advance and (c) change its lending offices from time to time by notice to Agent and Borrowers; provided, however, no Bank shall designate a foreign branch without the consent of Borrowers if such designation would subject interest payments hereunder to withholding for Taxes. In such event, such Bank shall continue to hold the Note evidencing its loans for the benefit and account of such foreign branch, subsidiary or affiliate. Each Bank shall be entitled to fund all or any portion of its Revolving Credit Loan in any manner that it deems appropriate, but for the purposes of this Agreement such Bank shall, regardless of such Bank's actual means of funding, be deemed to have funded its Loan in accordance with the interest option from time to time selected by Borrowers for such Borrowing. 3.09. TAXES. (a) Any and all payments by Borrowers hereunder or under the Notes shall be made, in accordance with Section 3.06, free and clear of and without deduction for any and all present or future Taxes, excluding, in the case of each Bank and Agent, taxes imposed on its income, and franchise taxes imposed on it, by the jurisdiction under the laws of which such Bank or Agent (as the case may be) is organized or is or should be qualified to do business or any political subdivision thereof and, in the case of each Bank Taxes imposed on its income and franchise taxes imposed on it by the jurisdiction of such Bank's lending office or any political subdivision thereof. If Borrowers shall be required by law to deduct any Taxes (i.e., Taxes for which any Borrower is responsible under the preceding sentence) from or in respect of any sum payable hereunder or under any Note to any Bank or Agent, (i) the sum payable shall be increased as may be necessary so that after making all required deductions (including deductions applicable to additional sums payable under this Section 3.09) such Bank or Agent receives an amount equal to the sum it would have received had no such deductions been made, (ii) Borrowers shall make such deductions and (iii) Borrowers shall pay the full amount deducted to the relevant taxation authority or other authority in accordance with applicable law. (b) In addition, Borrowers agree to pay any present or future stamp or documentary taxes or any other excise or property taxes, charges or similar levies which arise from any - 24 - payment made hereunder or under the Loan Documents from the execution, delivery, or registration of, or otherwise with respect to, this Agreement or the other Loan Documents (hereinafter referred to as "Other Taxes"). (c) Borrowers will indemnify each Bank and Agent for the full amount of Taxes or Other Taxes (including, without limitation, any Taxes or Other Taxes imposed by any jurisdiction on amounts payable under this Section 3.09) paid by such Bank or Agent (as the case may be) or any liability (including penalties and interest) arising therefrom or with respect thereto, whether or not such Taxes or Other Taxes were correctly or legally asserted. This indemnification shall be made within thirty (30) days from the date such Bank or Agent makes written demand therefor. (d) Within thirty (30) days after the date of any payment of Taxes, Borrowers will furnish to Agent, at its address referred to in Section 13.02, the original or a certified copy of a receipt evidencing payment thereof. (e) Without prejudice to the survival of any other agreement of Company hereunder, the agreements and obligations of Borrowers contained in this Section 3.09 shall survive the payment in full of the Obligation and the termination of the Commitments. (f) Each Bank agrees to use good faith efforts to carry out its obligations under this Loan Agreement in such a way as to reduce the amount of Taxes attributable to the Revolving Credit Loans, including the use of a different lending office, as long as in the good faith opinion of such Bank such actions would not have a material adverse effect upon it. 3.10. SHARING OF PAYMENTS. If any Bank shall obtain any payment (whether voluntary, involuntary, through the exercise of any right of set-off, or otherwise) on account of the Advances made by it in excess of its ratable share of payments on account of the Advances made by all Banks, such Bank shall forthwith purchase from the other Banks such participations in the Advances made by them as shall be necessary to cause such purchasing Bank to share the excess payment ratably with each of them, PROVIDED, HOWEVER, that if all or any portion of such excess payment is thereafter recovered from such purchasing Bank, such purchase from each Bank shall be rescinded and such other Banks shall repay to the purchasing Bank the purchase price to the extent of such recovery together with an amount equal to such other Bank's ratable share (according to the proportion of (i) the amount of such Bank's required repayment, to (ii) the total amount so recovered from the purchasing Bank) of any interest or other amount paid or payable by the purchasing Bank in respect of the total amount recovered. Borrowers agree that any Bank so purchasing a participation from another Bank pursuant to this Section 3.10 may, to the fullest extent permitted by law exercise all of its rights of payment (including the right of set-off) with respect to such participation as fully as if such Bank were the direct creditor of Borrowers in the amount of such participation. 3.11. JOINT AND SEVERAL LIABILITY. The Borrowers shall be liable for all amounts due to the Agent and to the Banks under this Loan Agreement, regardless of which the Borrowers actually receives the Revolving Credit Loans or other extensions of credit hereunder or the amount of such Revolving Credit Loans received or the manner in which the Agent or the Banks account for such Revolving Credit Loans or other extensions of credit on their books and records. The Obligations with respect to Revolving Credit Loans and with respect to each Swing Line Borrowing made to a Borrower, and the Obligations of a Borrower arising as a result of - 25 - the joint and several liability of the Borrower hereunder, with respect to Revolving Credit Loans or a Swing Line Borrowing made to the other Borrowers, shall be separate and distinct obligations, but all such Obligations shall be primary obligations of each of the Borrowers. The Obligations arising as a result of the joint and several liability of the Borrowers hereunder with respect to Revolving Credit Loans or other extensions of credit made to the other Borrowers shall, to the fullest extent permitted by law, be unconditional irrespective of (i) the validity or enforceability, avoidance or subordination of the Obligations of the other Borrowers or of any promissory note or other document evidencing all or any part of the Obligations of the other Borrowers, (ii) the absence of any attempt to collect the Obligations from the other Borrowers, any other guarantor, or any other security therefor, or the absence of any other action to enforce the same, (iii) the waiver, consent, extension, forbearance or granting of any indulgence by the Agent and the Banks with respect to any provision of any instrument evidencing the Obligations of the other Borrowers, or any part thereof, or any other agreement now or hereafter executed by the other Borrowers and delivered to the Agent and the Banks, (iv) the failure by the Agent and the Banks to take any steps to perfect and maintain their security interest in, or to preserve their rights to, any security or collateral for the Obligations of the other Borrowers, (v) the Agent's or the Banks' election, in any proceeding instituted under the Bankruptcy Code, of the application of Section 1111(b)(2) of the Bankruptcy Code, (vi) any borrowing or grant of a security interest by the other Borrowers, as debtor-in-possession under Section 364 of the Bankruptcy Code, (vii) the disallowance of all or any portion of the Agent's or the Banks' claim(s) for the repayment of the Obligations of the other Borrowers under Section 502 of the Bankruptcy Code, or (viii) any other circumstances which might constitute a legal or equitable discharge or defense of a Guarantor or of the other Borrowers. With respect to the Borrowers' Obligations arising as a result of the joint and several liability of the Borrowers with respect to Revolving Credit Loans or other extensions of credit made to the other Borrowers, each Borrower waives, until the Obligations shall have been paid in full and the Loan Agreement shall have been terminated, any right to enforce any right of subrogation or any remedy which the Agent and the Banks now have or may have hereafter have against the other Borrowers, any endorser or any guarantor of all or any part of the Obligations, and any benefit of, and any right to participate in, any security or collateral given to the Agent or to the Banks to secure payment of the Obligations or any other liability of the other Borrowers to the Agent and the Banks. Upon any Event of Default, the Agent and the Banks may proceed directly and at once, without notice, against any of the Borrowers to collect and recover the full amount, or any portion of the Obligations, without first proceeding against the other Borrowers or any other Person, or against any security or collateral for the Obligations. The Borrowers consent and agree that the Agent and the Banks shall be under no obligation to marshall any assets in favor of the Borrowers or against or in payment of any or all of the Obligations. ARTICLE IV SPECIAL PROVISIONS FOR EURODOLLAR LOANS 4.01. INADEQUACY OF EURODOLLAR LOAN PRICING. If with respect to an Interest Period for any Eurodollar Borrowing including a Swing Line Borrowing: - 26 - (i) Agent determines that, by reason of circumstances affecting the Interbank Eurodollar market generally, deposits in Dollars (in the applicable amounts) are not being offered to Banks in the Interbank Eurodollar market for such Interest Period, or (ii) Majority Banks advise Agent that the Interbank Offered Rate as determined by Agent will not adequately and fairly reflect the cost to such Banks of maintaining or funding the Eurodollar Borrowing for such Interest Period, then Agent shall forthwith give notice thereof to Borrowers, whereupon, until Agent notifies Borrowers that the circumstances giving rise to such suspension no longer exist, (a) the obligation of Banks to make Eurodollar Advances shall be suspended and (b) Borrowers shall either (i) repay in full the then outstanding principal amount of the Eurodollar Advances, together with accrued interest thereon on the last day of the then current Interest Period applicable to such Eurodollar Advances, or (ii) convert such Eurodollar Advances to Floating Base Advances in accordance with Section 2.02(c) of this Loan Agreement on the last day of the then current Interest Period applicable to each such Eurodollar Advance. 4.02. ILLEGALITY. If, after the date of this Loan Agreement, the adoption of any applicable law, rule or regulation, or any change therein, or any change in the interpretation or administration thereof by any Governmental Authority, central bank or comparable agency charged with the interpretation or administration thereof, or compliance by any Bank with any request or directive (whether or not having the force of law) of any such authority, central bank or comparable agency shall make it unlawful or impossible for any Bank to make, maintain or fund its Eurodollar Advances, and such Bank shall so notify Agent, Agent shall forthwith give notice thereof to Banks and Borrowers. Before giving any notice pursuant to this Subsection, such Bank shall designate a different Eurodollar lending office if such designation will avoid the need for giving such notice and will not be materially disadvantageous to such Bank (as determined in good faith by such Bank). Upon receipt of such notice, the obligation of such Bank to make Eurodollar Advances shall be suspended until receipt of notice from such Bank that such circumstances giving rise to such suspension no longer exist and Borrowers shall either (i) repay in full the then outstanding principal amount of the Eurodollar Advance of such Bank, together with accrued interest thereon, or (ii) convert such Eurodollar Advance to a Floating Base Advance, in either case on (a) the last day of the then current Interest Period applicable to such Eurodollar Advance if such Bank may lawfully continue to maintain and fund such Eurodollar Advance to such day or (b) immediately if such Bank may not lawfully continue to fund and maintain such Eurodollar Advance to such day. 4.03. INCREASED COSTS FOR EURODOLLAR LOANS. If any Governmental Authority, central bank or other comparable authority, shall at any time after the date of this Agreement impose, modify or deem applicable any reserve (including, without limitation, any imposed by the Board of Governors of the Federal Reserve System but excluding any reserve requirement included in the Eurodollar Reserve Requirement of such Bank), special deposit or similar requirement against assets of, deposits with or for the account of, or credit extended by, any Bank, or shall impose on any Bank (or its Eurodollar lending office) or the Interbank Eurodollar market any other condition affecting its Eurodollar Advances, any Note, or its obligation to make Eurodollar Advances; and the result of any of the foregoing is to increase the cost to such Bank of making or maintaining its Eurodollar Advances, or to reduce the amount of any sum received or receivable by such Bank under this Agreement or the Note by an amount reasonably deemed - 27 - by such Bank to be material; then, within five (5) days after demand by such Bank (with a copy to Agent), Borrowers shall pay to Agent, for the account of such Bank, such additional amount or amounts as will compensate such Bank for such increased cost or reduction. Each Bank will promptly notify Borrowers and Agent of any event of which it has knowledge, occurring after the date hereof, which will entitle such Bank to compensation pursuant to this Section. A certificate of any Bank claiming compensation under this Section and setting forth the additional amount or amounts to be paid to it hereunder shall be conclusive in the absence of manifest error. If any Bank demands compensation under this Section, then Borrowers may at any time, upon at least five (5) Business Days' prior notice to such Bank through Agent, either (i) repay in full the then outstanding Eurodollar Advances of such Bank, together with accrued interest thereon to the date of prepayment or (ii) convert such Eurodollar Advances to Floating Base Advances in accordance with the provisions of this Loan Agreement; provided, however, that Borrowers shall be liable for any Consequential Loss arising pursuant to such actions. Each Bank agrees to use good faith efforts to carry out its obligations under this Loan Agreement in such a way as to reduce the amount of Taxes attributable to the Revolving Credit Loans, including the use of a different lending office, as long as in the good faith opinion of such Bank such actions would not have a material adverse effect upon it. 4.04. EFFECT ON INTEREST OPTIONS. If notice has been given pursuant to Section 4.02 or Section 4.03 requiring the Eurodollar Advances of any Bank to be repaid or converted, then unless and until such Bank notifies Borrowers that the circumstances giving rise to such repayment no longer apply, all Advances shall be Floating Base Advances. If such Bank notifies Borrowers that the circumstances giving rise to such repayment no longer apply, Borrowers may thereafter select Advances to be Eurodollar Advances in accordance with Section 2.02(c) of this Loan Agreement. 4.05. PAYMENTS NOT AT END OF INTEREST PERIOD. If Borrowers make any payment of principal with respect to any Eurodollar Borrowing on any day other than the last day of an Interest Period applicable to such Eurodollar Borrowing (including payments made pursuant to Sections 4.02 or 4.03), then Borrowers shall reimburse each Bank on demand the Consequential Loss incurred by it as a result of the timing of such payment. A certificate of each Bank setting forth the basis for the determination of the amount of Consequential Loss shall be delivered to Borrowers through Agent and shall, in the absence of manifest error, be conclusive and binding. Any conversion of a Eurodollar Borrowing to a Floating Base Borrowing on any day other than the last day of the Interest Period for such Eurodollar Borrowing shall be deemed a payment for purposes of this Section. ARTICLE V SECURITY 5.01 LIENS AND SECURITY INTERESTS. The Obligations and the Notes shall be secured by a first priority security interest in all Finance Contracts evidencing Indirect Loans (except Finance Contracts subject to a Securitization or Additional Warehouse Facility) and proceeds of sale of collateral securing Finance Contracts (except Finance Contracts subject to a Securitization or Additional Warehouse Facility) and all promissory notes payable to any of Borrowers. - 28 - 5.02 GUARANTY DOCUMENTS. To secure the Obligations and the Notes, each of the Guarantors shall execute and deliver to Agent the Guaranty Agreements. ARTICLE VI CONDITIONS PRECEDENT 6.01. INITIAL ADVANCES. The obligation of each Bank to make the Revolving Credit Loan herein provided for and the initial Advances thereunder is subject to the condition precedent that, on or before the date of such Advance, Agent shall have received for each Bank the following, each dated the date of such Advance, in form and substance satisfactory to Agent and such Bank: (a) REVOLVING CREDIT NOTES. A duly executed promissory note, drawn to the order of each Bank, in the form of EXHIBIT A attached hereto with appropriate insertions. (b) SWING LINE NOTE. The duly executed Swing Line Note drawn to the order of Wells Fargo Bank (Texas), National Association in form satisfactory to Wells Fargo. (c) SECURITY AGREEMENT. Security Agreement executed by Borrowers covering all now existing and hereafter arising Finance Contracts evidencing Indirect Loans except Finance Contracts subject to a Securitization or an Additional Warehouse Facility. (d) FINANCING STATEMENTS. Financing statements executed by each of Borrowers covering all now existing and hereafter arising Finance Contracts evidencing Indirect Loans except Finance Contracts subject to a Securitization or an Additional Warehouse Facility. (e) GUARANTY AGREEMENT. The Guaranty Agreement in the form of EXHIBIT B executed by AmeriCredit Premium Finance, Inc. and ACF Investment Corp. (f) AGENT'S FEE AGREEMENT. Agent's fee agreement between Borrowers and Agent and the agent's fee payable to Agent. (g) BORROWING BASE. A borrowing base certificate satisfying the requirements of Section 8.01. (h) ARTICLES OF INCORPORATION OF BORROWERS. A copy of the Articles of Incorporation of each of Borrowers and all amendments thereto. (i) BYLAWS OF BORROWERS. A certified copy of the bylaws of each of Borrowers. (j) RESOLUTIONS OF BORROWERS. Resolutions of each of Borrowers authorizing the execution of this Loan Agreement and each of the other Loan Documents duly adopted by the Board of Directors of each of Borrowers and accompanied by a certificate of the Secretary of Company stating that such resolutions are true and correct, have not been altered or repealed and are in full force and effect. (k) INCUMBENCY CERTIFICATE OF BORROWERS. An incumbency certificate with respect to each of Borrowers executed by the appropriate officers of such Borrower. - 29 - (l) CERTIFICATES OF EXISTENCE AND ACCOUNT STATUS FOR BORROWERS. A current certificate of existence and good standing from the state of incorporation of each of Borrowers and a current certificate of account status from the Comptroller of Public Accounts of the State of Texas. (m) AUTHORITY TO TRANSACT BUSINESS. Certificate evidencing the authority of each of Borrowers to conduct or transact business in the State of Texas and in all other states in which any of them conducts or transacts business. (n) ARTICLES OF INCORPORATION OF THE GUARANTORS. A copy of the Articles of Incorporation of each of the Guarantors and all amendments thereto. (o) BYLAWS OF EACH GUARANTOR. A certified copy of the bylaws of each of the Guarantors. (p) RESOLUTIONS OF EACH GUARANTOR. Resolutions of each one of the Guarantors approving the execution of the Guaranty Agreement duly adopted by the Board of Directors of each of such Guarantors and accompanied by a certificate of the Secretary of each of such Guarantors stating that such resolutions are true and correct, have not been altered or repealed and are in full force and effect. (q) INCUMBENCY CERTIFICATES OF GUARANTORS. An incumbency certificate with respect to each Guarantor executed by the appropriate officers of each such Guarantor. (r) CERTIFICATES OF EXISTENCE AND ACCOUNT STATUS FOR EACH GUARANTOR. A current certificate of existence from the state of incorporation of each Guarantor and a certificate of account status from the Comptroller of Public Accounts of the State of Texas for each Guarantor. (s) AUTHORITY TO TRANSACT BUSINESS. Certificate evidencing the authority of each Guarantor to conduct or transact business in each state in which each such Guarantor conducts or transacts business. (t) OPINION OF COUNSEL. An executed opinion of counsel to Borrowers and each of the Guarantors. (u) LOAN ORIGINATION FEES. The loan origination fees described in Section 2.01(d). (v) FINANCIAL STATEMENT. Audited financial statement of Company for its fiscal year ended June 30, 1997, together with an unqualified opinion from a recognized accounting firm of national standing. (w) FIELD EXAMINATION. Field examination of collateral conducted by Agent which is satisfactory to Agent and Banks. - 30 - 6.02. ALL ADVANCES. The obligations of each Bank to make any Advance under this Loan Agreement (including the initial Advance) shall be subject to the following conditions precedent: (a) NO DEFAULTS. As of the date of the making of such Advance, there exists no Event of Default or event which with notice or lapse of time or both could constitute an Event of Default. (b) COMPLIANCE WITH LOAN AGREEMENT. Borrowers shall have performed and complied in all material respects with all agreements and conditions contained herein and in the Loan Documents which are required to be performed or complied with by Borrowers before or at the date of such Advance or conversion. (c) REQUEST FOR BORROWING. In the case of any Borrowing, Agent shall have received from Borrowers a Request for Borrowing in the form of EXHIBIT "C", EXHIBIT "D" or EXHIBIT "E" attached hereto, dated as of the date of such Advance and signed by an authorized officer of the Borrowers, all of the statements of which shall be true and correct, certifying that, as of the date thereof, (i) all of the representations and warranties of Borrowers contained in this Loan Agreement and each of the Loan Documents executed by Borrowers are true and correct, (ii) no event has occurred and is continuing, or would result from the Advance, which constitutes an Event of Default or which, with the lapse of time or giving of notice or both, would constitute an Event of Default, and (iii) such other facts as Agent may reasonably request. (d) NO MATERIAL ADVERSE CHANGE. As of the date of making such Advance, no change has occurred in the business or financial condition of the Company and its Subsidiaries on a Consolidated basis as reflected on the financial statement of Company for its fiscal year ended June 30, 1997 which has caused or could cause a Material Adverse Effect. (e) REPRESENTATIONS AND WARRANTIES. The representations and warranties contained in Article VII (other than the representations and warranties contained in Section 7.07) hereof and in each of the Loan Documents shall be true and correct on the date of making of such Advance, with the same force and effect as though made on and as of that date. (f) BANKRUPTCY PROCEEDINGS. No proceeding or case under the United States Bankruptcy Code shall have been commenced by or against any of Borrowers or any Guarantor. (g) FINANCING STATEMENTS. If requested and prepared by Agent, Borrowers shall have executed and delivered to Agent financing statements covering all Finance Contracts evidencing Indirect Loans except Finance Contracts subject to (i) a Securitization or (ii) an Additional Warehouse Facility. - 31 - ARTICLE VII REPRESENTATIONS AND WARRANTIES To induce Banks to make the Revolving Credit Loans and the Swing Line Loan, Borrowers represent and warrant to Banks that: 7.01. ORGANIZATION AND GOOD STANDING OF BORROWERS. Each of Borrowers is a corporation duly organized and existing in good standing under the laws of the state of its incorporation, is duly qualified as a foreign corporation and in good standing in all states in which the failure to so qualify would have a Material Adverse Effect and has the corporate power and authority to own its properties and assets and to transact the business in which it is engaged and is or will be qualified in those states wherein it will transact business in the future and where the failure to so qualify would have a Material Adverse Effect. 7.02. ORGANIZATION AND GOOD STANDING OF THE GUARANTORS. Each of the Guarantors is a corporation duly organized and existing in good standing under the laws of the state of its incorporation, is duly qualified as a foreign corporation and in good standing in all states in which the failure to so qualify would have a Material Adverse Effect and has the corporate power and authority to own its properties and assets and to transact the business in which it is engaged and is or will be qualified in those states wherein it will transact business in the future and where the failure to so qualify would have a Material Adverse Effect. 7.03. AUTHORIZATION AND POWER. Each of Borrowers has the corporate power and requisite authority to execute, deliver and perform this Loan Agreement and the other Loan Documents to be executed by such Borrower; each of Borrowers is duly authorized to, and has taken all corporate action necessary to authorize such Borrower to, execute, deliver and perform this Loan Agreement, the Notes and such other Loan Documents and is and will continue to be duly authorized to perform this Agreement, the Notes and such other Loan Documents. Each of the Guarantors has the corporate power and requisite authority to execute, deliver and perform the Guaranty Agreement. 7.04. NO CONFLICTS OR CONSENTS. Neither the execution and delivery of this Loan Agreement, the Notes, the Guaranty Agreement or the other Loan Documents, nor the consummation of any of the transactions herein or therein contemplated, nor compliance with the terms and provisions hereof or with the terms and provisions thereof, will contravene or materially conflict with any provision of law, statute or regulation to which any of Borrowers or any of the Guarantors is subject or any judgment, license, order or permit applicable to any of Borrowers or any of the Guarantors, or any indenture, loan agreement, mortgage, deed of trust, or other agreement or instrument to which any of Borrowers or any of the Guarantors is a party or by which any of Borrowers or any of the Guarantors may be bound, or to which any of Borrowers or any of the Guarantors may be subject, or violate any provision of the Charter or Bylaws of any of Borrowers or any of the Guarantors. No consent, approval, authorization or order of any court or governmental authority or third party is required in connection with the execution and delivery by any of Borrowers or any of the Guarantors of the Loan Documents or to consummate the transactions contemplated hereby or thereby. - 32 - 7.05. ENFORCEABLE OBLIGATIONS. This Loan Agreement, the Notes, the Security Agreement, the Guaranty Agreement and the other Loan Documents are the legal and binding obligations of the Borrowers and/or Guarantors parties thereto, enforceable against such parties in accordance with their respective terms, except as limited by bankruptcy, insolvency or other laws of general application relating to the enforcement of creditors' rights. 7.06. NO LIENS. Except for Permitted Liens, all of the properties and assets of Borrowers and their Subsidiaries are free and clear of all mortgages, liens, encumbrances and other adverse claims of any nature, and such corporation has and will have good and marketable title to such properties and assets. 7.07. FINANCIAL CONDITION. Company has delivered to Agent copies of the Consolidated balance sheet of Company and its Subsidiaries as of June 30, 1997, and the related consolidated statements of income, shareholders' equity and cash flows for the period ended such date; such financial statements are true and correct in all material respects, fairly present the financial condition of Company and its Subsidiaries as of such date and have been prepared in accordance with Generally Accepted Accounting Principles applied on a basis consistent with that of prior periods; as of the date hereof, there are no obligations, liabilities or indebtedness (including contingent and indirect liabilities and obligations or unusual forward or long-term commitments) of Company and its Subsidiaries which are (separately or in the aggregate) material and are not reflected in such financial statements or disclosed in writing to Agent; no changes having a Material Adverse Effect have occurred in the financial condition or business of any Borrower since June 30, 1997. 7.08. FULL DISCLOSURE. There is no material fact that Borrowers have not disclosed to Agent and Banks which could have a Material Adverse Effect. Neither the financial statements referred to in Section 7.07 hereof, nor any certificate or statement delivered herewith or heretofore by any of Borrowers to Banks in connection with negotiation of this Loan Agreement, contains any untrue statement of a material fact or omits to state any material fact necessary to keep the statements contained herein or therein from being misleading in any material respect. 7.09. NO DEFAULT. No event has occurred and is continuing which constitutes an Event of Default or which, with the lapse of time or giving of notice or both, would constitute an Event of Default. 7.10. NO LITIGATION. Except as described in EXHIBIT F attached hereto, there are no actions, suits or legal, equitable, arbitration or administrative proceedings pending, or to the knowledge of Borrowers threatened, against any of Borrowers or any of the Guarantors that could reasonably be expected to, if adversely determined, have a Material Adverse Effect. 7.11. REGULATORY DEFECTS. As of the date hereof, Borrowers have advised Banks, in writing, of all Regulatory Defects of which any of Borrowers has been advised or has knowledge. 7.12. USE OF PROCEEDS; MARGIN STOCK. The proceeds of the Revolving Credit Loans will be used by the Borrowers and the Guarantors solely for acquiring Finance Contracts and general corporate purposes of AmeriCredit Corp., AmeriCredit Financial Services, Inc. and AmeriCredit Operating Co., Inc. None of such proceeds will be used for the purpose of purchasing or carrying any "margin stock" as defined in Regulation U or G of the Board of - 33 - Governors of the Federal Reserve System (12 C.F.R. Part 221 and 207), or for the purpose of reducing or retiring any indebtedness which was originally incurred to purchase or carry a margin stock or for any other purpose which might constitute this transaction a "purpose credit" within the meaning of such Regulation U or G. No Borrower is engaged in the business of extending credit for the purpose of purchasing or carrying margin stocks. No Borrower nor any Person acting on behalf of Borrowers has taken or will take any action which might cause the Notes or any of the other Loan Documents, including this Loan Agreement, to violate Regulations U or G or any other regulations of the Board of Governors of the Federal Reserve System or to violate Section 7 of the Securities Exchange Act of 1934 or any rule or regulation thereunder, in each case as now in effect or as the same may hereinafter be in effect. None of Borrowers own any "margin stock" except for that described in the financial statements referred to in Section 7.07 hereof and, as of the date hereof, the aggregate value of all "margin stock" owned by Borrowers and their Subsidiaries does not exceed 25% of the aggregate value of all of the assets of Company and its Subsidiaries. 7.13. NO FINANCING OF CORPORATE TAKEOVERS. Except as permitted by Section 9.09, no proceeds of the Revolving Credit Loans will be used to acquire any security in any transaction which is subject to Section 13 or 14 of the Securities Exchange Act of 1934, including particularly (but without limitation) Sections 13(d) and 14(d) thereof. 7.14. TAXES. Except as previously disclosed to Bank, all tax returns required to be filed by each of Borrowers and their Subsidiaries in any jurisdiction have been filed or will be filed prior to the date on which the tax payable with respect to such return will become delinquent and all taxes (including mortgage recording taxes), assessments, fees and other governmental charges upon any of Borrowers or any of their Subsidiaries or upon any of their respective properties, income or franchises have been paid prior to the time that such taxes could give rise to a lien thereon. To the best of each Borrower's knowledge, there is no proposed tax assessment against any of Borrowers except as disclosed to Banks. 7.15. PRINCIPAL OFFICE, ETC. The principal office, chief executive office and principal place of business of each of Borrowers is at 200 Bailey Avenue, Fort Worth, Tarrant County, Texas 76107, and Borrowers maintain their principal records and books at 4100 International Plaza, Overton Center II, Suite 600, Fort Worth, Texas 76109. 7.16. ERISA. (a) No Reportable Event has occurred and is continuing with respect to any Plan; (b) PBGC has not instituted proceedings to terminate any Plan; (c) neither the Borrowers, any member of the Controlled Group, nor any duly appointed administrator of a Plan (i) has incurred any liability to PBGC with respect to any Plan other than for premiums not yet due or payable or (ii) has instituted or intends to institute proceedings to terminate any Plan under Section 4041 or 4041A of ERISA or withdraw from any Multi-Employer Pension Plan (as that term is defined in Section 3(37) of ERISA); and (d) each Plan of Company or its Subsidiaries has been maintained and funded in all material respects in accordance with its terms and with all provisions of ERISA applicable thereto. 7.17. COMPLIANCE WITH LAW. Except as described on EXHIBIT G, Company and each of its Subsidiaries are in compliance in all material respects with all laws, rules, regulations, ordinances, orders and decrees which are applicable to Company, any of its Subsidiaries or any of their respective properties or business. Neither Company nor any Subsidiary has been notified by any Governmental Authority that Company or any Subsidiary has failed to comply - 34 - with any such laws, rules, regulations, orders or decrees nor has Company or any Subsidiary been notified of any Environmental Claim except as described in EXHIBIT H. 7.18. GOVERNMENT REGULATION. No Borrower nor any of the Guarantors are subject to regulation under the Public Utility Holding Company Act of 1935, the Federal Power Act, the Investment Company Act of 1940, the Interstate Commerce Act (as any of the preceding acts have been amended), or any other law (other than Regulation X) which regulates the incurring by Company or any of its Subsidiaries of indebtedness, including but not limited to laws relating to common contract carriers or the sale of electricity, gas, steam, water, or other public utility services. 7.19. INSIDER. Company is not, and no Person having "control" (as that term is defined in 12 U.S.C. Section 375(b)(5) or in regulations promulgated pursuant thereto) of Company is, an "executive officer", "director", or "person who directly or indirectly or in concert with one or more persons owns, controls, or has the power to vote more than 10% of any class of voting securities" (as those terms are defined in 12 U.S.C. Section 375(b) or in regulations promulgated pursuant thereto) of any Bank, of a bank holding company of which any Bank is a subsidiary, or of any subsidiary of a bank holding company of which Bank is a subsidiary, or of any bank at which Bank maintains a correspondent account, or of any bank which maintains a correspondent account with any Bank. 7.20. SUBSIDIARIES. Company directly owns all of the capital stock of AmeriCredit Financial Services, Inc., AmeriCredit Operating Co., Inc., AmeriCredit Premium Finance, Inc. and ACF Investment Corp., in each case free and clear from all liens, security interests, charges and encumbrances. 7.21. SOLVENCY. Excluding intercompany indebtedness, Company and each of its Subsidiaries now have capital sufficient to carry on their businesses and transactions and all business and transactions in which they are about to engage, and for which they have projected, and are now solvent and able to pay their debts as they mature and each of Company and its Subsidiaries now owns property having a value, both at fair valuation and at present fair saleable value greater than the amount required to pay its respective debts. Excluding intercompany indebtedness and without giving effect to the Guaranty Agreement, no Guarantor is "insolvent" on the date hereof (that is, the sum of such Guarantor's absolute and contingent liabilities does not exceed the fair market value of such Guarantor's assets). Each Guarantor has received or will receive good and fair consideration for its liability and obligations incurred in connection with the Guaranty Agreement, and the incurrence of its liability under the Guaranty Agreement in return for such consideration may reasonably be expected to benefit each Guarantor, directly or indirectly. 7.22. ENVIRONMENTAL MATTERS. Except as described in EXHIBIT "H" attached hereto, none of the properties of Company or its Subsidiaries which are presently owned has been used at any time during their ownership to generate, manufacture, refine, transport, treat, store, handle, dispose, transfer, produce, process, or in any manner deal with Hazardous Materials. Except as described in EXHIBIT "H" attached hereto, there are no past, pending or, to the best of Company's knowledge, threatened or potential Environmental Claims against Company or any of its Subsidiaries or with respect to any properties presently owned or controlled by Company or any of its Subsidiaries. Except as described in EXHIBIT "H" attached hereto, there are no underground storage tanks located on any of the properties presently owned or - 35 - controlled by Company or any of its Subsidiaries and, to Company's best knowledge, there never have been any underground storage tanks located on any of the properties presently owned or controlled by Company or any of its Subsidiaries, and the Company has received no actual (as contrasted with constructive) notification of any Environmental Claims relating to any property contiguous to any property owned or controlled by Company or any of its Subsidiaries. 7.23. ENDORSEMENT OF INDIRECT LOANS. Borrowers have endorsed all Finance Contracts evidencing Indirect Loans in the manner specified in the Security Agreement except Finance Contracts that are subject to a Securitization. 7.24. REPRESENTATIONS AND WARRANTIES. Each Request for Borrowing shall constitute, without the necessity of specifically containing a written statement, a representation and warranty by Borrowers that no Event of Default, or any event which with the giving of notice or lapse of time or both would constitute, mature into or become an Event of Default, shall have occurred and be continuing and that all representations and warranties contained in this ARTICLE VII (other than in Section 7.07) or in any other Loan Document are true and correct at and as of the date the Advance is to be made. 7.25. SURVIVAL OF REPRESENTATIONS, ETC. All representations and warranties made herein are true and correct when made by Borrowers and shall survive delivery of the Notes and the Guaranty Agreement and the making of the Revolving Credit Loan and any investigation at any time made by or on behalf of Agent or any Bank shall not diminish Agent or such Bank's right to rely thereon. ARTICLE VIII AFFIRMATIVE COVENANTS So long as Banks have any commitment to make Advances hereunder and until payment in full of the Notes and the Obligation, Borrowers agree and covenant that Borrowers will (unless Majority Banks shall otherwise consent in writing): 8.01. BORROWING BASE CERTIFICATE. Within two (2) weeks after the fifteenth and last days of each month and as provided on the Intercreditor Agreement, Borrowers shall furnish to Agent a certificate in the form of EXHIBIT "I" executed by the chief financial officer, treasurer or one of the vice presidents of each of Borrowers reflecting in detail a computation of the Revolving Credit Borrowing Base as of the fifteenth and last days of each month. 8.02. COMPLIANCE CERTIFICATES. Within thirty (30) days after the end of each month, Borrowers shall deliver to Agent a certificate in the form of EXHIBIT "J" executed by the chief financial officer, treasurer, or one of the vice presidents of each of Borrowers stating that a review of its activities during such month has been made under his supervision and that such Borrower has observed, performed and fulfilled each and every obligation and covenant contained herein and is not in default under any of the same or, if any such default shall have occurred, specifying the nature and status thereof. 8.03. MONTHLY STATEMENTS. Within thirty (30) days after the end of each calendar month, Company shall furnish to Agent copies of the consolidated balance sheet of Company -36- and its Subsidiaries as of the close of such calendar month, and consolidated statements of income and of cash flow of Company and its Subsidiaries for the portion of the year then ended prepared in accordance with GAAP, in each case setting forth in comparative form the figures for the preceding year. 8.04 QUARTERLY STATEMENTS. Within forty five (45) days after the end of each fiscal quarter of Company, Company shall furnish to Agent copies of the consolidated and consolidating balance sheet of Company and its Subsidiaries as of the close of such fiscal quarter and consolidated and consolidating statements of income and consolidated statements of cash flow of Company and its Subsidiaries for the portion of the year then ended prepared in accordance with GAAP. 8.05. AUDITED ANNUAL STATEMENTS. As soon as available and in any event within one hundred twenty (120) days after the close of each fiscal year of Company, Company shall furnish to each of Banks copies of the Consolidated balance sheet of Company and its Subsidiaries as of the close of such fiscal year and Consolidated statements of income, shareholders' equity and the statement of cash flow of Company and its Subsidiaries for such fiscal year, in each case setting forth in comparative form the figures for the preceding fiscal year and accompanied by a separate opinion (which shall not be qualified by reason of any limitation imposed by Company) of independent public accountants of recognized national standing selected by Company and satisfactory to Agent, to the effect that such financial statements have been prepared in accordance with Generally Accepted Accounting Principles, and that the examination of such accounts in connection with such financial statements has been made in accordance with generally accepted auditing standards. In addition, as soon as available and in any event within 120 days after the close of each fiscal year, Company shall furnish to each of Banks a report of independent public accountants of recognized standing selected by Company and satisfactory to Agent containing a computation of the covenants contained in Sections 9.01, 9.02, 9.03, 9.04, 9.05 or 9.06, all in reasonable detail. 8.06. SEC AND OTHER REPORTS. Promptly upon transmission thereof, Company shall furnish Agent with copies of all financial statements, proxy statements, notices and reports which Company sends to its public security holders and copies of all registration statements (without exhibits) and all reports which it files with the Securities and Exchange Commission (or any governmental body or agency succeeding to the functions of the Securities and Exchange Commission), including, but not limited to, Form 10-Q and Form 10-K. 8.07. DELINQUENCIES. Within thirty (30) days after the end of each month, Borrowers shall furnish to Agent (a) a summary report reflecting the amount of all delinquencies and charge-offs for Net Indirect Loans, the percentage of Net Indirect Loans which are delinquent, and the percentage of Net Indirect Loans which have been charged off and (b) a summary report reflecting the amount of all Net Indirect Loans that are past due by cycle. 8.08. LIST OF INDIRECT LOANS. Within thirty (30) days after the end of each calendar month, Borrowers shall furnish to Agent one (1) copy of a list of all Finance Contracts and promissory notes evidencing Net Indirect Loans (other than Finance Contracts subject to a Securitization or subject to an Additional Warehouse Facility) that reflects the name, address and account number of each Obligor and the unpaid principal balance of each Finance Contract and promissory note as of the end of such preceding calendar month. -37- 8.09. CHARGE OFF VINTAGE REPORTS. Within thirty (30) days after the end of each month, Borrowers shall furnish Agent with a delinquency and charge-off vintage report reflecting the percentage of Net Indirect Loans which are delinquent and which have been charged off by month of origination accompanied by the supporting data. 8.10. ROLLFORWARD REPORT. Within thirty (30) days after the end of each month, Borrowers shall furnish to Agent a notes receivable rollforward report reflecting all originations, collections, charge-offs, pay-offs and ending balances for Net Indirect Loans. 8.11. REPOSSESSIONS. Within thirty (30) days after the end of each month, Borrowers shall furnish to Agent a summary report reflecting the aggregate principal amount of Finance Contracts in respect of which the related motor vehicle has been repossessed during the reporting period, excluding Finance Contracts which have been charged off. 8.12. MODIFIED CONTRACTS. Within thirty (30) days after the end of each month, Borrowers shall furnish to Agent a summary report reflecting the principal amount of all Finance Contracts that have been modified in any way during the reporting period which affects the contractual timing or amount of any installment payment due under such Finance Contract. 8.13. MATERIAL EVENTS. Each of the Borrowers shall promptly notify Agent of (i) any Material Adverse Effect in its financial condition or business; (ii) any material default under any material agreement, contract or other instrument to which such Borrower is a party or by which any of its properties are bound, or any acceleration of any maturity of any Indebtedness owing by such Borrower, (iii) any material adverse claim against or affecting such Borrower or any of its properties which might or could reasonably be expected to have a Material Adverse Effect; (iv) any litigation, or any claim or controversy which might become the subject of litigation, against such Borrower or affecting any of such Borrower's property, if such litigation or potential litigation might or could reasonably be expected to have, if adversely determined, a Material Adverse Effect or might or could reasonably be expected to cause an Event of Default; (v) any material change in underwriting standards or criteria, (vi) a change in the executive officers of any of Borrowers, or (vii) the occurrence of any default or Event of Default. 8.14. INSURANCE. Each Borrower shall maintain on its properties insurance of responsible and reputable companies in such amounts and covering such risks as is prudent and is usually carried by companies engaged in businesses similar to that of such Borrower; each Borrower shall furnish Agent, on request, with certified copies of insurance policies or other appropriate evidence of compliance with the foregoing covenant. 8.15. LICENSES. Borrowers shall preserve and maintain all material licenses, privileges, franchises, certificates and the like necessary for the operation of their respective business. 8.16. COMPLIANCE WITH LOAN DOCUMENTS. Borrowers will comply in all material respects with any and all covenants and provisions of this Loan Agreement, the Notes and all other of the Loan Documents. 8.17. COMPLIANCE WITH MATERIAL AGREEMENTS. Borrowers will comply in all material respects with all material agreements, indentures, mortgages or documents binding on it or -38- affecting their properties or business where the failure to so comply would have a Material Adverse Effect. 8.18. OPERATIONS AND PROPERTIES. Borrowers will act prudently and in accordance with customary industry standards in managing or operating its assets, properties, business and investments; Borrowers will keep in good working order and condition, ordinary wear and tear excepted, all of their respective assets and properties which are necessary to the conduct of its business except for worn out or obsolete assets which have been replaced. 8.19. BOOKS AND RECORDS; ACCESS. Upon prior written notice, Borrowers will give any representative of any Bank access during all business hours to, and permit such representative to examine, copy or make excerpts from, any and all books, records and documents in the possession of Borrowers and relating to its affairs, and to inspect any of the properties of Borrowers and discuss their respective affairs with their respective officers, directors, employees and representatives. Borrowers will maintain complete and accurate books and records of its transactions in accordance with good accounting practices. 8.20. COMPLIANCE WITH LAW. Company will comply with and will cause each Subsidiary to comply with all applicable laws, rules, regulations, and all orders of any Governmental Authority applicable to it or any of its property, business operations or transactions, a breach of which could have a Material Adverse Effect on Company's or any Subsidiary's financial condition, business or credit. 8.21. ERISA COMPLIANCE. Each Borrower shall (a) at all times, make prompt payment of all contributions required under all Plans and required to meet the minimum funding standard set forth in ERISA with respect to its Plans; (b) notify each Bank immediately of any fact, including, but not limited to, any Reportable Event arising in connection with any of its Plans, which might constitute grounds for termination thereof by the PBGC or for the appointment by the appropriate United States District Court of a trustee to administer such Plan, together with a statement, if requested by a Bank, as to the reason therefor and the action, if any, proposed to be taken with respect thereto; and (c) furnish to each Bank, upon its request, such additional information concerning any of its Plans as may be reasonably requested. 8.22. ADDITIONAL INFORMATION. Borrowers shall promptly furnish to Agent, at Agent's request, such additional financial or other information concerning assets, liabilities, operations and transactions of Borrowers as Agent may from time to time reasonably request. 8.23. PRINCIPAL DEPOSITORY. Borrowers shall use Agent as their principal depository; Borrowers shall use the lockbox services of Agent and Co-Agent. 8.24. GUARANTY OF SUBSIDIARY CORPORATIONS. Borrowers shall cause each Subsidiary formed or acquired after the date of this Agreement to execute a Guaranty of the Notes within ten (10) days after the date of formation or acquisition of such Subsidiary except (i) any special purpose Subsidiary formed solely for the purpose of consummating a Securitization or an Additional Warehouse Facility and (ii) the Mortgage Subsidiary. -39- 8.25. FINANCING STATEMENTS. If requested by Agent, each of Borrowers shall execute and deliver to Agent new financing statements in form satisfactory to Agent at the time it commences conducting business in any state in which it has not previously conducted business. 8.26. FIELD TESTS AND ANNUAL AUDIT. Borrowers shall from time to time permit Banks to conduct field examinations at the expense of Banks. Borrowers shall permit Agent to engage an independent third party (to be approved by Majority Banks and Borrowers, which approval shall not be unreasonably withheld or delayed by Borrowers) to conduct a collateral audit annually at the expense of Borrowers (not to exceed $25,000 annually plus travel expenses unless an Event of Default or extraordinary circumstances exist). 8.27. DELIVERY OF INDIRECT LOANS. At the request of Agent or Majority Banks after the occurrence of an Event of Default, Borrowers shall promptly deliver to Agent all Finance Contracts and promissory notes evidencing Indirect Loans duly endorsed or assigned to Agent other than Indirect Loans subject to a Securitization or an Additional Warehouse Facility. 8.28. INSPECTION OF INDIRECT LOANS. Borrowers shall permit Agent and its officers and representatives to inspect all Finance Contracts (except Finance Contracts subject to a Securitization or an Additional Warehouse Facility) and promissory notes evidencing Indirect Loans once each month during normal business hours. 8.29 CAPITAL ADEQUACY. If any Bank shall have determined that the adoption of any applicable law, rule or regulation regarding capital adequacy, or any change therein, or any change in the interpretation or administration thereof by any governmental authority, central bank or comparable agency charged with the interpretation or administration thereof, or compliance by such Bank with any request or directive regarding capital adequacy (whether or not having the force of law) of any such authority, central bank or comparable agency, has or would have the affect of reducing the rate of return on such Bank's capital as a consequence of its obligations hereunder to a level below that which such Bank could have achieved but for such adoption, change or compliance by an amount deemed by such Bank to be material, then from time-to-time, within 15 days after demand by such Bank, the Borrowers shall pay, without duplication, to such Bank such additional amount or amounts as will compensate such Bank for such reduction. Said demand shall include in reasonable detail the amount of and the cause of such compensation demand. 8.30. SECURITIZATION. Borrowers shall consummate a Securitization at least every 180 days resulting in the receipt of proceeds by Borrowers of not less than $100,000,000 which shall be used to reduce any outstanding Swing Line Borrowings, Revolving Credit Loans and/or outstanding advances or borrowings under an Additional Warehouse Facility based upon the respective Finance Contracts sold into the Securitization. 8.31. TRIGGER EVENT. Borrowers shall notify Agent of the occurrence of a Trigger Event in connection with the delivery of the Compliance Certificate required by Section 8.02. 8.32. FURTHER ASSURANCES. Upon request of the Agent, Borrowers agree to promptly cure any defects in the creation, issuance, execution and delivery of this Loan Agreement or in the Loan Documents. Each of Borrowers, at their expense, will further promptly execute and deliver to Agent upon request all such other and further documents, agreements and -40- instruments in compliance with or accomplishment of the covenants and agreements of Borrowers hereunder, or to further evidence and more fully describe the obligations of Borrowers hereunder, or to correct any omissions herein, or to more fully state the obligations set out herein. 8.33. INTERCREDITOR AGREEMENT. Borrowers shall execute and deliver to Agent the Intercreditor Agreement in form satisfactory to Agent prior to entering into an Additional Warehouse Facility. ARTICLE IX NEGATIVE COVENANTS So long as Banks have any commitment to make Advances hereunder, and until full payment of the Notes and the performance of the Obligation, Borrowers covenant and agree that neither Borrowers nor any of their respective Subsidiaries will, unless Majority Banks otherwise consent in writing: 9.01. RATIO OF ADJUSTED INDEBTEDNESS TO TANGIBLE NET WORTH. Permit the ratio of the total amount of the Adjusted Indebtedness of Company and its Subsidiaries to the Tangible Net Worth of Company and its Subsidiaries on a Consolidated basis to be more than 2.5 to 1.0 at any time; or 9.02. MINIMUM INTEREST COVERAGE RATIO. Permit the Interest Coverage Ratio computed on a trailing twelve (12) month basis to be less than 2.2 to 1.0 at any time; or 9.03. LOSS. Incur any net loss on a consolidated basis determined in accordance with GAAP during any calendar quarter; or 9.04. RESTRICTIONS ON DIVIDENDS ON CAPITAL STOCK. Pay any dividends or make any distributions on or with respect to its outstanding capital stock except to Company or its wholly-owned Subsidiaries or purchase, redeem or purchase any of its capital stock in excess of the sum of fifteen million dollars ($15,000,000) and the aggregate amount of new equity received by Company as a result of the sale of capital stock of Company or the exercise of options relating to the capital stock of Company during any trailing twelve (12) months; or 9.05. LOSSES TO NET INDIRECT LOANS. Permit the ratio of Net Credit Losses during the prior 12 months to the sum of month end balances of Net Indirect Loans over the prior 13 months DIVIDED BY 13 to be greater than .10 to 1.0 at any time; or 9.06. DELINQUENT AND REPOSSESSED LOANS TO NET INDIRECT LOANS. Permit the ratio of the sum of Delinquent Loans and Repossessed Loans to Net Indirect Loans to be greater than .075 to 1.0 at any time; or 9.07. LIQUIDATION; MERGERS. Liquidate, dissolve or reorganize; or merge with any other corporation or entity unless Company or one of its Subsidiaries is the survivor of such merger; or make or permit any of its Subsidiaries to make any other substantial change in its capitalization or its business; or -41- 9.08. ENTER INTO TRANSACTION WITH AFFILIATES. Enter into, or be a party to, any transaction with any Affiliate, Subsidiary or shareholder of Company, except (i) as permitted by this Agreement, (ii) in the ordinary course of and pursuant to the reasonable requirements of Company's business and upon fair and reasonable terms which are fully disclosed to Agent or (iii) sales of equity securities to its current shareholders other than management in connection with future financing upon fair and reasonable terms which are fully disclosed to Agent which are no less favorable to Company than would be in an arm's length transaction with Person's not an Affiliate; or 9.09. BUSINESS ACQUISITIONS AND INVESTMENTS. Purchase or otherwise acquire by merger or otherwise all or substantially all of the assets of any other corporation, partnership or person or make Investments in Subsidiaries in excess of twenty five million dollars ($25,000,000) in the aggregate; or 9.10. NEGATIVE PLEDGE. Create or suffer to exist any mortgage, pledge, security interest, conditional sale or other title retention agreement, charge, encumbrance or other Lien (whether such interest is based on common law, statute, other law or contract) upon any of its property or assets, now owned or hereafter acquired, except for Permitted Liens and Liens in favor of Agent and Liens granted by the Mortgage Subsidiary; or 9.11. NO GRANT OF NEGATIVE PLEDGE. Agree with any Person not to create or suffer to exist any mortgage, pledge, security interest or encumbrance or Lien upon any of its property or assets now owned or hereafter acquired except with respect to the property or assets of the Mortgage Subsidiary or in connection with the Senior Notes; or 9.12. SALE OF ASSETS. Sell or permit any Subsidiary other than the Mortgage Subsidiary to sell any of its material assets except in the ordinary course of business; or 9.13. CHANGE IN BUSINESS. Borrowers shall not, and shall not permit any of its Subsidiaries to, directly or indirectly, engage in any business other than those in which each of them is presently engaged. 9.14. RESTRICTION ON DEBT REPAYMENT. Prepay any of the Senior Notes. If any action or failure to act by Company or any Subsidiary violates any covenant or obligations of Borrowers contained herein, then such violation shall not be excused by the fact that such action or failure to act would otherwise be required or permitted by any covenant (or exception to any covenant) other than the covenant violated. ARTICLE X EVENTS OF DEFAULT; REMEDIES UPON EVENT OF DEFAULT 10.01. EVENTS OF DEFAULT. An "Event of Default" shall exist if any one or more of the following events (herein collectively called "Events of Default") shall occur and be continuing: (a) Borrowers shall fail to pay when due any principal of, or interest on any Note or any other fee or payment due hereunder (including a payment under Section 2.01(c)) or under any of the Loan Documents; or -42- (b) Any representation or warranty made under this Loan Agreement, or any of the Loan Documents or in any certificate or statement furnished to or made to Banks pursuant hereto or in connection herewith shall prove to be untrue or inaccurate in any material respect as of the date on which such representation or warranty is made; or (c) Failure of any of Borrowers to observe, keep and perform any of the covenants or agreements in Sections 8.13, 8.20, 8.21, 8.24, 8.28 or 8.30 or in Article IX of this Loan Agreement; or. (d) Failure of any of Borrowers to observe, keep and perform any of the covenants or agreements in Sections 8.01, 8.02, 8.03, 8.04, 8.05, 8.06, 8.07, 8.08, 8.09, 8.10, 8.11, 8.12, or 8.31 and the continuance of such failure for a period of at least ten (10) days after receipt of written notice from Agent to Borrowers specifying such failure; or (e) Failure or refusal of any of Borrowers to observe, keep and perform any of the covenants, agreements and obligations in this Loan Agreement or any of the Loan Documents (except the covenants in Sections 8.01, 8.02, 8.03, 8.04, 8.05, 8.06, 8.07, 8.08, 8.09, 8.10, 8.11, 8.12, 8.13, 8.20, 8.21, 8.24, 8.28, 8.30 and 8.31 and in Article IX of this Loan Agreement) and the continuance of such failure or refusal for a period of twenty (20) days after receipt of written notice from Agent to Borrowers specifying such failure; or (f) Any of Borrowers or any of their respective Subsidiaries shall (i) apply for or consent to the appointment of a receiver, custodian, trustee, intervenor or liquidator of all or a substantial part of its assets, (ii) voluntarily become the subject of a bankruptcy, reorganization or insolvency proceeding or be insolvent or admit in writing that it is unable to pay its debts as they become due, (iii) make a general assignment for the benefit of creditors, (iv) file a petition or answer seeking reorganization or an arrangement with creditors or to take advantage of any bankruptcy or insolvency laws, (v) file an answer admitting the material allegations of, or consent to, or default in answering, a petition filed against it in any bankruptcy, reorganization or insolvency proceeding, or (vi) become the subject of an order for relief under any bankruptcy, reorganization or insolvency proceeding; or (g) An order, judgment or decree shall be entered by any court of competent jurisdiction or other competent authority approving a petition appointing a receiver, custodian, trustee, intervenor or liquidator of any of Borrowers or any of their Subsidiaries or of all or substantially all of their respective assets, and such order, judgment or decree shall continue unstayed and in effect for a period of sixty (60) days; or a complaint or petition shall be filed against any of Borrowers or any of their respective Subsidiaries seeking or instituting a bankruptcy, insolvency, reorganization, rehabilitation or receivership proceeding of any of Borrowers or any of their respective Subsidiaries, and such petition or complaint shall not have been dismissed within sixty (60) days; or (h) Any final judgment(s) for the payment of money in excess of the sum of seven hundred fifty thousand dollars ($750,000) in the aggregate shall be rendered against any of Borrowers or any of their respective Subsidiaries and such judgment or judgments shall not be satisfied or discharged at least ten (10) days prior to the date on which any of its assets could be lawfully sold to satisfy such judgment; or (i) There shall occur any change in the condition (financial or otherwise) of any of Borrowers or any of their respective Subsidiaries which, in the reasonable opinion of Majority Banks, has a Material Adverse Effect; or -43- (j) The occurrence of a default or an event of default under any Indebtedness, including, without limitation, the Senior Notes, any Securitization, any Additional Warehouse Facility or similar arrangement or any other agreement, indenture or other instrument to which any of Borrowers or any of their respective Subsidiaries is a party; or (k) Default shall occur under any Indebtedness for borrowed money issued, assumed or guaranteed by any of Borrowers or any of their respective Subsidiaries or under any indenture, agreement or other instrument under which the same may be issued and such default shall continue for a period of time sufficient to permit the acceleration of maturity of such Indebtedness or any such Indebtedness shall not be paid when due. 10.02. REMEDIES UPON EVENT OF DEFAULT. If an Event of Default shall have occurred and be continuing, then Agent shall, at the request of Majority Banks, exercise any one or more of the following rights and remedies, and any other remedies in any of the Loan Documents, as Majority Banks in their sole discretion, may deem necessary or appropriate: (i) declare the principal of, and all interest then accrued on, the Notes and any other liabilities hereunder to be forthwith due and payable, whereupon the same shall forthwith become due and payable without presentment, demand, protest, notice of default, notice of acceleration or notice of intention to accelerate or other notice of any kind, all of which Borrowers hereby expressly waive, anything contained herein or in the Notes to the contrary notwithstanding, (ii) refuse to make any additional Advances under the Notes, (iii) reduce any claim to judgment, (iv) apply to the payment of the Notes all collections received in the lockbox with Agent to which payments on the Eligible Finance Contracts pledged to Agent and Banks are sent and/or (v) without notice of default or demand, pursue and enforce any of Banks' rights and remedies under the Loan Documents or otherwise provided under or pursuant to any applicable law or agreement. Notwithstanding the foregoing, in the event of the occurrence of an Event of Default under Section 10.01(f) or Section 10.01(g), the entire amount of principal of, and interest then accrued on, the Notes shall automatically be immediately due and payable, without demand, notice of default, notice of acceleration or notice of any kind, all of which Borrowers hereby expressly waive and the Revolving Commitment of each of the Banks shall terminate. Borrowers hereby designate and appoint Agent as its attorney-in-fact to endorse to Agent for the benefit of Banks after the occurrence of an Event of Default all checks deposited in the lockbox with Agent to which payments on the Eligible Finance Contracts pledged to Agent and Banks are sent. This power of attorney is irrevocable and is coupled with an interest. 10.03. PERFORMANCE BY BANKS. Should any of Borrowers fail to perform in any material respect any covenant, duty or agreement contained herein or in any of the Loan Documents, Agent or Banks may, at their option, perform or attempt to perform such covenant, duty or agreement on behalf of the Borrowers following written notice to Borrowers of such intention to perform. In such event, Borrowers shall, at the request of Agent or Banks, promptly pay any amount reasonably expended by Agent or Banks in performance or attempted performance to Agent at its principal office in Fort Worth, Texas, together with interest thereon at the Past Due Rate from the date of such expenditure until paid. Notwithstanding the foregoing, it is expressly understood that neither Banks nor Agent assume any liability or responsibility (except liability attributable to their gross negligence or willful misconduct) for the performance of any duties of Borrowers hereunder or under any of the Loan Documents or other control over the management and affairs of the Borrowers. -44- 10.04. REMEDIES CUMULATIVE. All covenants, conditions, provisions, warranties, indemnities and other undertakings of Borrowers contained in this Agreement, or in any document referred to herein or in any agreement supplementary hereto or in any of the Loan Documents shall be deemed cumulative to and not in derogation or substitution of any of the terms, covenants, conditions or agreements of Borrowers contained herein. The failure or delay of Agent or Banks to exercise or enforce any rights, liens, powers or remedies hereunder or under any of the aforesaid agreements or other documents against any security shall not operate as a waiver of such liens, rights, powers and remedies, but all such rights, powers and remedies shall continue in full force and effect until the loans evidenced by the Notes and the entire Obligation of Borrowers to Banks shall have been fully satisfied, and all rights, liens, powers and remedies herein provided for are cumulative and none are exclusive. ARTICLE XI ARBITRATION PROGRAM 11.01. ARBITRATION. Upon the demand of any party, any Dispute shall be resolved by binding arbitration (except as set forth in (e) below) in accordance with the terms of this Article XI. A "Dispute" shall mean any action, dispute, claim or controversy of any kind, whether in contract or tort, statutory or common law, legal or equitable, now existing or hereafter arising under or in connection with, or in any way pertaining to (i) any of the Loan Documents, (ii) any past, present or future extensions of credit and other activities, transactions or obligations of any kind related directly to any of the Loan Documents, including without limitation, any of the foregoing arising in connection with the exercise of any self-help, ancillary or other remedies pursuant to any of the Loan Documents or (iii) any contractual arrangement or relationship between any of Borrowers and Agent. Any party may by summary proceedings bring an action in court to compel arbitration of a Dispute; provided, however, that the pendency of any Dispute or such proceedings shall not preclude the Agent or any Bank from exercising its remedies as contemplated by Section 11.03. Any party who fails or refuses to submit to arbitration following a lawful demand by any other party shall bear all costs and expenses incurred by such other party in compelling arbitration of any Dispute. 11.02 GOVERNING RULES. Arbitration proceedings shall be administered by the American Arbitration Association ("AAA") or such other administrator as the parties shall mutually agree upon in accordance with the AAA Commercial Arbitration Rules. All Disputes submitted to arbitration shall be resolved in accordance with the Federal Arbitration Act (Title 9 of the United States Code), notwithstanding any conflicting choice of law provision in any of the Loan Documents. The arbitration shall be conducted at a location in Texas selected by the AAA or other administrator. If there is any inconsistency between the terms hereof and any such rules, the terms and procedures set forth herein shall control. All statutes of limitation applicable to any Dispute shall apply to any arbitration proceeding. All discovery activities shall be expressly limited to matters directly relevant to the dispute being arbitrated. Judgment upon any award rendered in an arbitration may be entered in any court having jurisdiction; provided, however, that nothing contained herein shall be deemed to be a waiver by any party that is a bank of the protections afforded to it under 12 U.S.C. Section 91 or any similar applicable state law. 11.03 NO WAIVER, PROVISIONAL REMEDIES, SELF-HELP AND FORECLOSURE. No provision hereof shall limit the right of any party to exercise self-help remedies such as setoff, foreclosure against or sale of any real or personal property collateral or security, or to obtain provisional or ancillary remedies, including without limitation, injunctive relief, sequestration, attachment, -45- garnishment or the appointment of a receiver, from a court of competent jurisdiction before, after or during the pendency of any arbitration or other proceeding. The exercise of any such remedy shall not waive the right of any party to compel arbitration hereunder. 11.04 ARBITRATOR QUALIFICATIONS AND POWERS; AWARDS. Arbitrators must be active members of the Texas State Bar with expertise in the substantive laws applicable to the subject matter of the Dispute. Arbitrators are empowered to resolve Disputes by summary rulings in response to motions filed prior to the final arbitration hearing. Arbitrators (i) shall resolve all Disputes in accordance with the substantive law of the state of Texas, (ii) may grant any remedy or relief that a court of the state of Texas could order or grant within the scope hereof and such ancillary relief as is necessary to make effective any award, and (iii) shall have the power to award recovery of all costs and fees, to impose sanctions and to take such other actions as they deem necessary to the same extent a judge could pursuant to the Federal Rules of Civil Procedure, the Texas rules of civil Procedure or other applicable law. Any Dispute in which the amount in controversy is $5,000,000 or less shall be decided by a single arbitrator who shall not render an award of greater than $5,000,000 (including damages, costs, fees and expenses). By submission to a single arbitrator, each party expressly waives any right or claim to recover more than $5,000,000. Any Dispute in which the amount in controversy exceeds $5,000,000 shall be decided by majority vote of a panel of three arbitrators; provided however, that all three arbitrators must actively participate in all hearings and deliberations. 11.05 JUDICIAL REVIEW. Notwithstanding anything herein to the contrary, in any arbitration in which the amount in controversy exceeds $25,000,000, the arbitrators shall be required to make specific, written findings of fact and conclusions of law. In such arbitrations (i) the arbitrators shall not have the power to make any award which is not supported by substantial evidence or which is based on legal error, (ii) an award shall not be binding upon the parties unless the findings of fact are supported by substantial evidence and the conclusions of law are not erroneous under the substantive law of the state of Texas, and (iii) the parties shall have in addition to the grounds referred to in the Federal Arbitration Act for vacating, modifying or correcting an award the right to judicial review of (A) whether the findings of fact rendered by the arbitrators are supported by substantial evidence, and (B) whether the conclusions of law are erroneous under the substantive law of the state of Texas. Judgment confirming an award in such a proceeding may be entered only if a court determines the award is supported by substantial evidence and not based on legal error under the substantive law of the state of Texas. 11.06 MISCELLANEOUS. To the maximum extent practicable, the AAA, the arbitrators and the parties shall take all action required to conclude any arbitration proceeding within 180 days of the filing of the Dispute with the AAA. No arbitrator or other party to an arbitration proceeding may disclose the existence, content or results thereof, except for disclosures of information by a party required in the ordinary course of its business, by applicable law or regulation, or to the extent necessary to exercise any judicial review rights set forth herein. If more than one agreement for arbitration by or between the parties potentially applies to a Dispute, the arbitration provision most directly related to the Loan Documents or the subject matter of the Dispute shall control. This arbitration provision shall survive termination, amendment or expiration of any of the Loan Documents. -46- ARTICLE XII THE AGENT 12.01. APPOINTMENT AND AUTHORIZATION. Each Bank hereby irrevocably appoints and authorizes Agent to take such action on its behalf and to exercise such powers under the Loan Documents as are delegated to Agent by the terms thereof, together with such powers as are reasonably incidental thereto. With respect to its Commitment, the Advances made by it and the Notes issued to it, Agent shall have the same rights and powers under this Agreement as any other Bank and may exercise the same as though it were not Agent; and the term "Bank" or "Banks" shall, unless otherwise expressly indicated, include the Agent in its capacity as a Bank. The Agent and its affiliates may accept deposits from, lend money to, act as trustee under indentures of, and generally engage in any kind of business with, Borrowers, and any Person which may do business with Borrowers, all as if Agent were not Agent hereunder and without any duty to account therefor to Banks. 12.02. NOTE HOLDERS. Agent may treat the payee of any Note as the holder thereof until written notice of transfer shall have been filed with it signed by such payee and in form satisfactory to Agent. 12.03. CONSULTATION WITH COUNSEL. Banks agree that Agent may consult with legal counsel selected by it and shall not be liable for any action taken or suffered in good faith by them in accordance with the advice of such counsel. 12.04. DOCUMENTS. Agent shall not be under a duty to examine or pass upon the validity, effectiveness, enforceability, genuineness or value of any of the Loan Documents or any other instrument or document furnished pursuant thereto or in connection therewith, and Agent shall be entitled to assume that the same are valid, effective, enforceable and genuine and what they purport to be. 12.05. RESIGNATION OR REMOVAL OF AGENT. Subject to the appointment and acceptance of a successor Agent as provided below, the Agent may resign at any time by giving written notice thereof to Banks and Borrowers and the Agent may be removed at any time with or without cause by Majority Banks. Upon any such resignation or removal, Majority Banks shall have the right to appoint a successor Agent. If no successor Agent shall have been so appointed by Majority Banks and shall have accepted such appointment within 30 days after the retiring Agent's giving of notice of resignation or Majority Banks' removal of the retiring Agent, then the retiring Agent may, on behalf of the Banks, appoint a successor Agent. Upon the acceptance of any appointment as Agent hereunder by a successor Agent, such successor Agent shall thereupon succeed to and become vested with all the rights, powers, privileges and duties of the retiring Agent, and the retiring Agent shall be discharged from its duties and obligations hereunder. After any retiring Agent's resignation or removal hereunder as Agent, the provisions of this Article 12 shall continue in effect for its benefit in respect to any actions taken or omitted to be taken by it while it was acting as Agent. 12.06. RESPONSIBILITY OF AGENT. It is expressly understood and agreed that the obligations of Agent under the Loan Documents are only those expressly set forth in the Loan Documents and that Agent shall be entitled to assume that no Event of Default or event which, -47- with the giving of notice or lapse of time, or both, would constitute an Event of Default has occurred and is continuing, unless Agent has actual knowledge of such fact or has received notice from a Bank that such Bank considers that an Event of Default or such event has occurred and is continuing and specifying the nature thereof. Agent shall furnish to each of Banks within five (5) Business Days receipt copies of the documents, statements and reports furnished to Agent pursuant to Sections 8.01, 8.02, 8.03, 8.04, 8.05, 8.06, 8.07, 8.09, 8.10, 8.11 and 8.12. Banks recognize and agree, that for purposes of Section 2.02(b) hereof, Agent shall not be required to determine independently whether the conditions described in Sections 6.02(a), (b), (c), (d) and (e) have been satisfied except for the receipt of a Request For Borrowing and, in disbursing funds to Borrowers, may rely fully upon statements contained in the relevant Request for Borrowing. Neither Agent nor any of its directors, officers or employees shall be liable for any action taken or omitted to be taken by it under or in connection with the Loan Documents, except for its own gross negligence or willful misconduct. Agent shall incur no liability under or in respect of any of the Loan Documents by acting upon any notice, consent, certificate, warranty or other paper or instrument reasonably believed by it to be genuine or authentic or to be signed by the proper party or parties, or with respect to anything which it may do or refrain from doing in the reasonable exercise of its judgment, or which may seem to it to be necessary or desirable in the premises. The relationship between Agent and each of the Banks is only that of agent and principal and has no fiduciary aspects, and Agent's duties hereunder are acknowledged to be only ministerial and not involving the exercise of discretion on its part. Nothing in this Loan Agreement or elsewhere contained shall be construed to impose on Agent any duties or responsibilities other than those for which express provision is herein made. In performing its duties and functions hereunder, Agent does not assume and shall not be deemed to have assumed, and hereby expressly disclaims, any obligation or responsibility toward or any relationship of agency or trust with or for, Borrowers. As to any matters not expressly provided for by this Loan Agreement (including, without limitation, enforcement or collection of the Notes), Agent shall not be required to exercise any discretion or take any action, but shall be required to act or to refrain from acting (and shall be fully protected in so acting or refraining from acting) upon the instructions of Majority Banks or all the Banks where unanimity is required and such instructions shall be binding upon all Banks and all holders of Notes; PROVIDED, HOWEVER, that Agent shall not be required to take any action which exposes Agent to personal liability or which is contrary to this Loan Agreement or applicable law. 12.07. NOTICES OF EVENT OF DEFAULT. In the event that Agent shall have acquired actual knowledge of any Event of Default or of an event which, with the giving of notice or the lapse of time, or both, would constitute an Event of Default, Agent shall promptly give written notice thereof to the other Banks. 12.08. INDEPENDENT INVESTIGATION. Each of the Banks severally represents and warrants to Agent that it has made its own independent investigation and assessment of the financial condition and affairs of the Borrowers in connection with the making and continuation of its participation in the Loans hereunder and has not relied exclusively on any information provided to such Bank by Agent in connection herewith, and each Bank represents, warrants and undertakes to Agent that it shall continue to make its own independent appraisal of the creditworthiness of the Borrowers while the Loans are outstanding or its commitment hereunder is in force. -48- 12.09. INDEMNIFICATION. Banks agree to indemnify Agent (to the extent not reimbursed by Borrowers), ratably according to the proportion that the respective principal amounts of the Note held by each of them bears to the sum of the aggregate principal amount of the Notes, from and against any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses, or disbursements of any kind or nature whatsoever which may be imposed on, incurred by or asserted against Agent in any way relating to or arising out of the Loan Documents or any action taken or omitted by Agent under the Loan Documents, provided that no Bank shall be liable for any portion of such liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements resulting from Agent's gross negligence or willful misconduct. 12.10. BENEFIT OF ARTICLE XII. The agreements contained in this Article XII are solely for the benefit of Agent and the Banks, and are not for the benefit of, or to be relied upon by, the Borrowers, or any third party. 12.11. NOT A LOAN TO AGENT; NO DUTY TO REPURCHASE. No amount paid by any Bank hereunder shall be considered a loan to Agent. Agent shall have no obligation to repurchase any interest from any Bank. 12.12. BANK'S REPRESENTATIONS. Each Bank represents and warrants to Agent and the other Banks that: (a) it is engaged in the business of entering into commercial lending transactions (including transactions of the nature contemplated herein) and can bear the economic risk related to the same; and (b) it does not consider the obligations hereunder to constitute the "purchase" or "sale" of a "security" within the meaning of any federal or state securities statute or law, or any rule or regulation under any of the foregoing. 12.13 CO-AGENT. It is expressly understood and agreed that Bank One, Texas, N.A. shall have no responsibility or obligations as a co-agent hereunder other than its obligations as a Bank under this Loan Agreement. ARTICLE XIII MISCELLANEOUS 13.01. WAIVER. No failure to exercise, and no delay in exercising, on the part of any Bank, any right hereunder shall operate as a waiver thereof, nor shall any single or partial exercise thereof preclude any other further exercise thereof or the exercise of any other right. The rights of Banks hereunder and under the Loan Documents shall be in addition to all other rights provided by law. No notice or demand given in any case shall constitute a waiver of the right to take other action in the same, similar or other instances without such notice or demand. 13.02. NOTICES. Any notices or other communications required or permitted to be given by this Agreement or any other documents relating to the loans evidenced by the Notes (the "Loan Documents") must be given in writing and personally delivered, sent by telecopy or telex (answerback received) or mailed by prepaid certified or registered mail, return receipt requested, to the party to whom such notice or communication is directed at the address of such party as follows: -49- Borrowers: AmeriCredit Corp. 200 Bailey Avenue Fort Worth, Texas 76107 Attn: Chief Financial Officer FAX No. (817) 882-7101 AmeriCredit Financial Services, Inc. 200 Bailey Avenue Fort Worth, Texas 76107 Attn: Chief Financial Officer FAX No. (817) 882-7101 AmeriCredit Operating Co., Inc. 200 Bailey Avenue Fort Worth, Texas 76107 Attn: Chief Financial Officer FAX No. (817) 882-7101 Agent: Wells Fargo Bank (Texas), National Association 505 Main Street, Suite 300 Fort Worth, Texas 76102 Attn: Susan B. Sheffield FAX No. (817) 347-0010 Wells Fargo Bank, N.A. 201 Third Street Eighth Floor San Francisco, California 94103 Attn: Agency Department - Cecilia Go FAX No. (415) 512-9408 Any such notice or other communication shall be deemed to have been given on the date it is personally delivered or sent by telecopy or telex as aforesaid or, if mailed, on the second day after it is mailed as aforesaid (whether actually received or not). Any party may change its address for purposes of this Loan Agreement by giving notice of such change to all other parties pursuant to this Section 13.02. Any notice given hereunder by Borrowers to Agent shall constitute notice to all of the Banks. Agent shall promptly notify Banks of any notice given by Borrowers hereunder. 13.03. PAYMENT OF EXPENSES. Borrowers agree to pay all costs and expenses of Banks (including, without limitation, the reasonable attorneys' fees of Banks' outside legal counsel) incurred by Banks in connection with the preservation and enforcement (which include work-outs and bankruptcy related matters) of Banks' rights under this Loan Agreement, the Notes, and/or the other Loan Documents, and all reasonable costs and expenses of Banks (including without limitation the reasonable fees and expenses of Banks' outside legal counsel) in connection with the negotiation, preparation, execution and delivery of this Loan Agreement, -50- the Notes, and the other Loan Documents and any and all amendments, modifications and supplements thereof or thereto. 13.04. MAXIMUM INTEREST RATE. Regardless of any provisions contained in this Loan Agreement, the Notes or in any of the other Loan Documents, Banks shall never be deemed to have contracted for or be entitled to receive, collect or apply as interest on the Notes any amount in excess of the Maximum Rate, and, in the event any Bank ever receives, collects or applies as interest any such excess, such amount which would be excessive interest shall be deemed to be a partial prepayment of principal and treated hereunder as such, and, if the principal amount of the Obligations is paid in full, any remaining excess shall forthwith be paid to Borrowers. In determining whether or not the interest paid or payable under any specific contingency exceeds the Maximum Rate, Borrowers and Banks shall, to the maximum extent permitted by applicable law, (i) characterize any nonprincipal payments (other than payments which are expressly designated as interest payments hereunder) as an expense, fee, or premium, rather than as interest, (ii) exclude voluntary prepayments and the effect thereof, and (iii) amortize, prorate, allocate and spread, in equal parts, the total amount of interest throughout the entire contemplated term of the indebtedness so that interest paid by Borrowers does not exceed the Maximum Rate; provided that, if a Note is paid and performed in full prior to the end of the full contemplated term thereof, and if the interest received for the actual period of existence thereof exceeds the Maximum Rate, Banks shall refund to Borrowers the amount of such excess or credit the amount of such excess against the principal amount of the Notes and, in such event, Banks shall not be subject to the penalties provided by any laws for contracting for, charging, taking, reserving or receiving interest in excess of the Maximum Rate. 13.05. AMENDMENTS, WAIVERS, ETC. Agent may enter into any amendment or modification of, or may waive compliance with the terms of, any of the Loan Documents with the written direction of the Majority Banks; PROVIDED THAT the consent of all Banks shall be required before Agent may take or omit to take any action under any of the Loan Documents directly affecting (a) the extension of the maturity of or the postponement of the payment of any portion of the principal of or interest on Revolving Credit Loans or any fees relating thereto, (b) a reduction of or increase in the principal amount of or rate of interest payable on Revolving Credit Loans or any fees related thereto, (c) the release of any of Borrowers, (d) the release of any of the Guarantors, (e) the release of any collateral except in the case of a Securitization or an Additional Warehouse Facility or (f) any material change in the definition of Revolving Credit Borrowing Base, in the definition of Net Amount or in the definition of Eligible Finance Contract. Nor shall any of the following occur without the consent of all Banks: (a) any amendment to the definition of Majority Banks, or (b) any amendment to this Section 13.05. The Commitment of a Bank shall not be increased without the consent of such Bank. If any Bank is unwilling to consent to any amendment or modification of, or waiver of compliance with, the Loan Agreement (where the consent of such Bank is required), the consenting Majority Banks shall have the right, but not the obligation, to repurchase such Bank's Percentage of the Obligation at such time for a purchase price equal to Bank's Percentage of any and all unpaid Advances made by Agent to the Borrowers under the Loan Agreement, any and all unpaid interest thereon and unpaid accrued fees or other amounts owing to such Bank. 13.06. GOVERNING LAW. This Loan Agreement has been prepared, is being executed and delivered, and is intended to be performed in the State of Texas, and the substantive laws of such state and the applicable federal laws of the United States of America shall govern the validity, construction, enforcement and interpretation of this Loan Agreement and all of the other Loan Documents. -51- 13.07. INVALID PROVISIONS. If any provision of any Loan Document is held to be illegal, invalid or unenforceable under present or future laws during the term of this Loan Agreement, such provision shall be fully severable; such Loan Document shall be construed and enforced as if such illegal, invalid or unenforceable provision had never comprised a part of such Loan Document; and the remaining provisions of such Loan Document shall remain in full force and effect and shall not be affected by the illegal, invalid or unenforceable provision or by its severance from such Loan Document. Furthermore, in lieu of each such illegal, invalid or unenforceable provision, there shall be added as part of such Loan Document a provision mutually agreeable to Borrowers, Agent and Majority Banks as similar in terms to such illegal, invalid or unenforceable provision as may be possible and be legal, valid and enforceable. In the event Borrowers, Agent and Majority Banks are unable to agree upon a provision to be added to the Loan Document within a period of ten (10) Business Days after a provision of the Loan Document is held to be illegal, invalid or unenforceable, then a provision reasonably acceptable to Agent and Majority Banks as similar in terms to the illegal, invalid or unenforceable provision as is possible and be legal, valid and enforceable shall be added automatically to such Loan Document. In either case, the effective date of the added provision shall be the date upon which the prior provision was held to be illegal, invalid or unenforceable. 13.08. HEADINGS. Section headings are for convenience of reference only and shall in no way affect the interpretation of this Loan Agreement. 13.09. PARTICIPATION AGREEMENTS AND ASSIGNMENTS. (a)(i) Subject to Section 13.09(a)(ii), each Bank may assign to one or more Eligible Assignees all or a portion of its rights and obligations under this Loan Agreement (including, without limitation, all or a portion of its Commitment, the Loan owing to it and the Note held by it) and the other Loan Documents; PROVIDED, HOWEVER, that (A) no such assignment shall be made except to an Affiliate unless such assignment and assignee have been approved by the Agent and, so long as no Events of Default exists, the Borrowers, such approvals not to be unreasonably withheld, (B) each such assignment shall be of a constant, and not a varying, percentage of all rights and obligations of the assignor under this Loan Agreement and the other Loan Documents, and no assignment shall be made unless it covers a pro rata share of all rights and obligations of such assignor under this Loan Agreement and the other Loan Documents, (C) the amount of the Commitment of the assigning Bank being assigned pursuant to each such assignment (determined as of the date of the Assignment and Acceptance substantially in the form of EXHIBIT K (hereinafter referred to as the "Assignment and Acceptance") with respect to such assignment) shall, unless otherwise agreed to by the Agent, in no event be less than $10,000,000 or, if less, the entirety of its Commitment and shall be an integral multiple of $1,000,000, (D) each such assignment shall be to an Eligible Assignee (defined below), (E) the parties to each such assignment shall execute and deliver to the Agent, for its acceptance and recording in the Register (defined below), an Assignment and Acceptance, together with any Note subject to such assignment and (F) Agent receives a fee from the assignor in the amount of $2,500. Upon such execution, delivery, acceptance and recording, from and after the effective date specified in each Assignment and Acceptance, (1) the assignee thereunder shall be a party hereto and, to the extent that rights and obligations under the Loan Documents have been assigned to it pursuant to such Assignment and Acceptance, have the rights and obligations of a Bank under the Loan Documents, (2) the assigning Bank thereunder shall, to the extent that rights and obligations under the Loan Documents have been assigned by it pursuant to such Assignment and Acceptance, relinquish its rights and be released from its obligations under the Loan Documents (and, in the case of an Assignment and Acceptance covering all or the remaining portion of an assigning Bank's rights and obligations under this Loan Agreement, such Bank shall cease to be a party hereto), and (3) Section 2.01(a) shall be deemed to have been -52- automatically amended to reflect the revised Commitments. As used herein, "Eligible Assignee" shall mean (a) any Bank or any Affiliate of any Bank; (b) a commercial bank organized under the laws of the United States, or any state thereof, and having total assets in excess of $1,000,000,000 and having deposits rated in either of the two highest generic letter rating categories (without regard to subcategories) from either Standard & Poor's Corporation or Moody's Investors Service, Inc.; (c) a commercial bank organized under the laws of any other country which is a member of the Organization for Economic Cooperation and Development ("OECD"), or a political subdivision of any such country, and having total assets in excess of $1,000,000,000, provided that such bank is acting through a branch or agency located in the country in which it is organized or another country which is also a member of the OECD; (d) the central bank of any country which is a member of the OECD; (e) any other financial institution approved by the Agent; and (f) a Federal Reserve Bank. (ii) In the event any Bank desires to transfer all or any portion of its rights and obligations under the Loan Documents, it shall give the Borrowers and the Agent prior written notice of the identity of such transferee and the terms and conditions of such transfer (a "TRANSFER NOTICE"). Except in the case of a transfer to an Affiliate of all or a portion of a Bank's rights and obligations under the Loan Documents, so long as no Event of Default has occurred and is continuing, the Borrowers may, no later than ten (10) days following receipt of such Transfer Notice, designate an alternative transferee and such Bank shall thereupon be obligated to sell the interests specified in such Transfer Notice to such alternative transferee, subject to the following: (A) such transfer shall be made on the same terms and conditions outlined in such Transfer Notice, (B) such transfer shall otherwise comply with the terms and conditions of the Loan Documents (including Section 13.09(a)(i), and (C) such alternative transferee must be an Eligible Assignee approved by the Agent. If the Borrowers shall fail to designate an alternative transferee within such ten (10) day period, such Bank shall, subject to compliance with the other terms and provisions hereof, be free to consummate the transfer described in such Transfer Notice. (b) By executing and delivering an Assignment and Acceptance substantially in the form of EXHIBIT K, the assigning Bank thereunder and the assignee thereunder confirm to and agree with each other and the other parties hereto as follows: (i) other than as provided in such Assignment and Acceptance, such assigning Bank makes no representation or warranty and assumes no responsibility with respect to any statements, warranties or representations made in or in connection with the Loan Documents or the execution, legality, validity, enforceability, genuineness, sufficiency or value of this Loan Agreement or any other instrument or document furnished pursuant hereto, (ii) such assigning Bank makes no representation or warranty and assumes no responsibility with respect to the financial condition of the Borrowers or the performance or observance by the Borrowers of any of its obligations under this Loan Agreement or any other instrument or document furnished pursuant hereto; (iii) such assignee confirms that it has received a copy of this Loan Agreement and the other Loan Documents, together with copies of the financial statements referred to in Section 7.07 and such other documents and information as it has deemed appropriate to make its own credit analysis and decision to enter into such Assignment and Acceptance; (iv) such assignee will, independently and without reliance upon any of the Banks (including such assigning Bank) and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under this Loan Agreement; (v) such assignee confirms that it is an Eligible Assignee; (vi) such assignee appoints and authorizes the Agent to take such action on its behalf and to exercise such powers under this Loan Agreement and the other Loan Documents as are delegated to such Person by the terms thereof, together with such powers as are reasonably incidental thereto; and (vii) such assignee agrees that it will -53- perform in accordance with their terms all of the obligations which by the terms of this Loan Agreement and the other Loan Documents are required to be performed by it as a Bank. (c) The Agent shall maintain a copy of each Assignment and Acceptance delivered to and accepted by it and a register for the recordation of the names and addresses of the Banks and the Commitment of, and principal amount of the Notes owing to, each Bank from time to time (the "REGISTER"). The entries in the Register shall be conclusive and binding for all purposes, absent manifest error, and the Borrowers and each of the Banks may treat each Person whose name is recorded in the Register as a Bank hereunder for all purposes of this Loan Agreement. The Register shall be available for inspection by the Borrowers or any of the Banks at any reasonable time and from time to time upon reasonable prior notice. (d) Upon its receipt of an Assignment and Acceptance executed by an assigning Bank and an assignee representing that it is an Eligible Assignee, together with any Note subject to such assignment, the Agent shall, if such Assignment and Acceptance has been completed and is in substantially the form of EXHIBIT K hereto and satisfies all other requirements set forth in this Section 13.09, (i) accept such Assignment and Acceptance, (ii) record the information contained therein in the Register and (iii) give prompt notice thereof to the Borrowers and the other Banks. Within five (5) Business Days after its receipt of such notice, the Borrowers, at their own expense, shall execute and deliver to the Agent, in exchange for the surrendered Note, a new Note to the order of such Eligible Assignee in an amount corresponding to the Commitment assumed by such Eligible Assignee pursuant to such Assignment and Acceptance and, if the assigning Bank has retained a Commitment hereunder, a new Note to the order of the assigning Bank in an amount corresponding to the Commitment retained by it hereunder. Such new Notes shall be in an aggregate principal amount equal to the aggregate principal amount of such surrendered Notes, shall be dated the effective date of such Assignment and Acceptance and shall otherwise be in substantially the form prescribed by EXHIBIT K hereto. (e) Each Bank may sell participations to one or more banks or other entities in or to all or a portion of its rights and obligations under this Loan Agreement and the other Loan Documents (including, without limitation, all or a portion of its Commitment and the Notes owing to it); PROVIDED, HOWEVER, that (i) such Bank's obligations under this Loan Agreement (including, without limitation, its Commitment to the Borrowers hereunder) and the other Loan Documents shall remain unchanged, (ii) such Bank shall remain solely responsible to the other parties hereto for the performance of such obligations, and the participating banks or other entities shall not be considered a "Bank" for purposes of the Loan Documents, (iii) the participating banks or other entities shall be entitled to the cost protection provision contained in Section 4.03 and Section 4.05, in each case to the same extent that the Bank from which such participating bank or other entity acquired its participations would be entitled to the benefit of such cost protection provisions and (iv) the Borrowers and the other Banks shall continue to deal solely and directly with such Bank in connection with such Bank's rights and obligations under this Loan Agreement and the other Loan Documents, and such Bank shall retain the sole right to enforce the obligations of the Borrowers relating to the Loans and to approve any amendment, modification or waiver of any provision of this Loan Agreement (other than amendments, modifications or waivers with respect to the amounts of any fees payable hereunder or the amount of principal of or the rate at which interest is payable on the Notes, or the dates fixed for payments of principal or interest on the Notes). (f) Any Bank may, in connection with any assignment or participation or proposed assignment or participation pursuant to this Section 13.09, disclose to the assignee or -54- participant or proposed assignee or participant, any information relating to the Borrowers furnished to such Bank by or on behalf of the Borrowers; PROVIDED that prior to any such disclosure, each such assignee or participant or proposed assignee or participant shall agree (subject to customary exceptions) to preserve the confidentiality of any confidential information relating to the Borrowers received from such Bank. (g) The obligations of the Borrowers in this Loan Agreement, the Notes and any other Loan Documents shall not be assignable or transferable by Borrowers and any purported assignment or transfer shall, as to the Agent and Banks, be of no force and effect. 13.10. ARTICLE 15.10(b). Borrowers and Banks hereby agree that, except for Article 15.10(b) thereof, the provisions of Charter 15 of Title 79 of the Revised Civil Statutes of Texas, 1925, as amended (regulating certain revolving credit loans and revolving triparty accounts) shall not apply to the Loan Documents. 13.11. SURVIVAL. All representations and warranties made by Borrowers herein shall survive delivery of the Notes and the making of the Revolving Credit Loans. 13.12. NO THIRD PARTY BENEFICIARY. The parties do not intend the benefits of this Agreement to inure to any third party, nor shall this Loan Agreement be construed to make or render Banks liable to any materialman, supplier, contractor, subcontractor, purchaser or lessee of any property owned by Borrowers, or for debts or claims accruing to any such persons against Borrowers. Notwithstanding anything contained herein or in the Notes, or in any other Loan Document, or any conduct or course of conduct by any or all of the parties hereto, before or after signing this Loan Agreement or any of the other Loan Documents, neither this Loan Agreement nor any other Loan Document shall be construed as creating any right, claim or cause of action against Banks, or any of its officers, directors, agents or employees, in favor of any materialman, supplier, contractor, subcontractor, purchaser or lessee of any property owned by Borrowers, nor to any other person or entity other than Borrowers. 13.13. COUNTERPARTS. This Loan Agreement may be executed by one or more of the parties to this Loan Agreement on any number of separate counterparts (including by facsimile transmission), and all of said counterparts taken together shall be deemed to constitute one and the same instrument. A set of the copies of this Loan Agreement signed by all the parties shall be lodged with the Borrowers and the Agent. 13.14. FINAL AGREEMENT. THIS WRITTEN AGREEMENT REPRESENTS THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES. EXECUTED effective as of the 3rd day of October 1997. AMERICREDIT CORP., a Texas corporation -55- By:___________________________________________ Daniel E. Berce, Vice Chairman and Chief Financial Officer AMERICREDIT FINANCIAL SERVICES, INC., a Delaware corporation By:___________________________________________ Daniel E. Berce, Vice Chairman and Chief Financial Officer AMERICREDIT OPERATING CO., INC., a Delaware corporation By:___________________________________________ Daniel E. Berce, Vice Chairman and Chief Financial Officer BORROWERS AMERICREDIT PREMIUM FINANCE, INC., a Delaware corporation By:___________________________________________ Daniel E. Berce, President ACF INVESTMENT CORP., a Delaware corporation By:___________________________________________ Daniel E. Berce, Vice Chairman and Chief Financial Officer GUARANTORS -56- WELLS FARGO BANK (TEXAS), NATIONAL ASSOCIATION By:___________________________________________ Susan B. Sheffield, Vice President BANK ONE, TEXAS, N.A. By:___________________________________________ J. Michael Wilson, Vice President LASALLE NATIONAL BANK By:___________________________________________ Terry M. Keating, First Vice President THE SUMITOMO BANK LIMITED By:___________________________________________ Kirk Stites, Vice President and Manager By:___________________________________________ Julie A. Schell, Vice President HARRIS TRUST AND SAVINGS BANK By:___________________________________________ -57- Michael A. Houlihan, Vice President COMERICA BANK-TEXAS By:___________________________________________ Stephen Graham, Senior Vice President TEXAS COMMERCE BANK NATIONAL ASSOCIATION By:___________________________________________ Buddy Wurthrich, Vice President BANKAMERICA BUSINESS CREDIT, INC. By:___________________________________________ Name:______________________________________ Title:_____________________________________ -58- THE BANK OF NOVA SCOTIA By:___________________________________________ Name: ________________________________________ Title:________________________________________ CIBC INC. By:___________________________________________ Name: ________________________________________ Title:________________________________________ CREDIT LYONNAIS NEW YORK BRANCH By:___________________________________________ Name: ________________________________________ Title:________________________________________ BANKBOSTON, N.A. By:___________________________________________ Name: ________________________________________ Title:________________________________________ THE LONG-TERM CREDIT BANK OF JAPAN, LIMITED By:___________________________________________ Name: ________________________________________ Title:________________________________________ BANKS WELLS FARGO BANK (TEXAS), NATIONAL ASSOCIATION By:___________________________________________ Susan B. Sheffield, Vice President -59- AGENT BANK ONE, TEXAS, N.A. By:___________________________________________ J. Michael Wilson, Vice President CO-AGENT -60- f-87578.WPD -61- EXHIBIT "A" REVOLVING CREDIT NOTE --------------------- $__________________ October 3, 1997 FOR VALUE RECEIVED, the undersigned, AMERICREDIT CORP., a Texas corporation, AMERICREDIT FINANCIAL SERVICES, INC., a Delaware corporation, and AMERICREDIT OPERATING CO., INC., a Delaware corporation (collectively, the "Borrowers"), hereby jointly, severally and unconditionally promise to pay to the order of _______________________ (the "Bank"), the principal sum of __________________ MILLION DOLLARS ($___,000,000.00), or such lesser aggregate amount of Advances as may be made pursuant to Bank's Commitment, which principal shall be payable as provided in Sections 3.01, 3.02, 3.03, 3.06 and 3.07 of the Loan Agreement, together with the interest on the unpaid principal balance of each Advance from the date made until maturity, which interest shall be determined at the varying rates per annum, and shall be payable as provided in Sections 2.04, 3.04, 3.05, 3.06 and 3.07 of the Loan Agreement. Payments of both principal and interest herein shall be made to Agent's account in lawful money of the United States of America and in immediately available funds at 505 Main Street, Fort Worth, Texas or to Agent's account in San Francisco, California wired as follows: ABA No. 12100248 Account No. 4518151378 Reference: AmeriCredit Corp. -- Syndicated Credit Agreement The Advances made by Bank to Borrowers pursuant to the Loan Agreement and all payments of the principal thereof and interest thereon may be noted by Bank on the Loan and Payment Transaction Schedule attached hereto, or on a continuation of such Schedule attached hereto or similar computer generated payment schedule; provided, however, that the failure of Bank to make any such notation or any error in making such notation shall not limit or otherwise affect the obligations of Borrowers hereunder or under the Loan Agreement. This Note has been executed and delivered pursuant to the terms of that certain Restated Revolving Credit Agreement (the "Loan Agreement") by and among Borrowers, the Guarantors (as defined in the Loan Agreement) and Wells Fargo Bank (Texas), National Association, as Agent, and the Banks (as defined in the Loan Agreement) dated as of October 3, 1997, and is a "Revolving Credit Note" referred to therein. Reference is hereby made to the Loan Agreement for a statement of the repayment rights and obligations of Borrowers and for a statement of the events upon which the maturity of this Note may be accelerated. -1- Each capitalized term used herein shall have the same meaning assigned to it in the Loan Agreement, unless the context hereof otherwise requires or provides. Borrowers agree to pay all costs and expenses of Banks incurred in the collection of this Note, including but not limited to court costs and reasonable attorneys' fees and all other costs and expenses described in Section 13.03 of the Loan Agreement. Borrowers and each surety, endorser, guarantor and any other party now or hereafter liable for payment of any sums of money payable on this Note, jointly and severally waive presentment and demand for payment, protest, notice of protest and nonpayment, notice of intent to accelerate, notice of acceleration and all other notices, filing of suit and diligence in collecting this Note or enforcing any security with respect to same, and agree that their liability under this Note shall not be affected by any renewal or extension in the time of payment hereof, or in any indulgences, or by any release, substitution or change in any security for the payment of this Note, and hereby consent to any and all renewals, extensions, indulgences, releases or changes, regardless of the number of such renewals, extensions, indulgences, releases or changes. Regardless of any provision contained in this Note, the Loan Agreement or any other document executed or delivered in connection therewith, neither Bank nor any holder hereof shall be deemed to have contracted for or be entitled to receive, collect or apply as interest (including any fee, charge or amount which is not denominated as "interest" but is legally deemed to be interest under applicable law) on this Note, the Loan Agreement, the Loan Documents or otherwise, any amount in excess of the Maximum Rate, and, in the event that Bank or any holder hereof ever receives, collects or applies as interest any such excess, such amount which would be excessive interest shall be applied to the reduction of the unpaid principal balance of this Note, and, if the principal balance of this Note is paid in full, any remaining excess shall forthwith be paid to Borrowers. In determining whether or not the interest paid or payable under any specific contingency exceeds the Maximum Rate, Borrowers, Bank and any other holder hereof shall, to the maximum extent permitted under applicable law, (i) characterize any non-principal payment (other than payments which are expressly designated as interest payments hereunder) as an expense or fee rather than as interest, (ii) exclude voluntary prepayments and the effect thereof, and (iii) amortize, prorate, allocate and spread the total amount of interest throughout the entire contemplated term of this Note so that the interest rate is uniform throughout the entire term; provided that, if this Note is finally paid and performed in full prior to the end of the full contemplated term hereof, and if the interest received for the actual period of existence thereof exceeds the Maximum Rate, Bank or any holder hereof shall refund to Borrowers the amount of such excess, or credit the amount of such excess against the principal amount of this Note and, in such event, neither Bank nor any other holder shall be subject to any penalties provided by any laws for contracting for, charging, taking, reserving or receiving interest in excess of the Maximum Rate. -2- [This Note is executed in renewal and extension of that one certain promissory note dated __________________, 199__ executed by AmeriCredit Corp., AmeriCredit -3- Financial Services, Inc. and AmeriCredit Operating Co., Inc. in the amount of $________________ payable to the order of Bank (the "Original Note"). The indebtedness evidenced by the Original Note is continuing indebtedness and nothing herein shall be deemed to constitute a payment, settlement or novation of the Original Note or to release or otherwise adversely affect any lien, mortgage or security interest securing such indebtedness or the rights of Bank against any guarantor, surety or any other party primarily or secondarily liable for such indebtedness.] This Note is being executed and delivered, and is intended to be performed in the State of Texas. Except to the extent that the laws of the United States may apply to the terms hereof, the substantive laws of the State of Texas shall govern the validity, construction, enforcement and interpretation of this Note. AMERICREDIT CORP., a Texas corporation By: ----------------------------------------- Daniel E. Berce, Vice Chairman and Chief Financial Officer AMERICREDIT FINANCIAL SERVICES, INC., a Delaware corporation By: ----------------------------------------- Daniel E. Berce, Vice Chairman and Chief Financial Officer AMERICREDIT OPERATING CO., INC., a Delaware corporation By: ----------------------------------------- Daniel E. Berce, Vice Chairman and Chief Financial Officer -4- LOAN AND PAYMENT TRANSACTION SCHEDULE attached to and made a part of a Note dated October 3, 1997, executed by AmeriCredit Corp., AmeriCredit Financial Services, Inc. and AmeriCredit Operating Co., Inc.
Amount Unpaid Initials Amount Amount of of Principal of Person of Amount of Principal Interest Balance Making Date Advance Principal Repaid Paid of Note Notation - ---- ------- --------- --------- -------- --------- ---------- - ------------------------------------------------------------------------ - ------------------------------------------------------------------------ - ------------------------------------------------------------------------ - ------------------------------------------------------------------------ - ------------------------------------------------------------------------ - ------------------------------------------------------------------------ - ------------------------------------------------------------------------ - ------------------------------------------------------------------------ - ------------------------------------------------------------------------ - ------------------------------------------------------------------------ - ------------------------------------------------------------------------ - ------------------------------------------------------------------------ - ------------------------------------------------------------------------ - ------------------------------------------------------------------------ - ------------------------------------------------------------------------ - ------------------------------------------------------------------------
-5- EXHIBIT "B" GUARANTY AGREEMENT THIS GUARANTY AGREEMENT is dated as of the 3rd day of October 1997, by AMERICREDIT PREMIUM FINANCE, INC., a Delaware corporation, and ACF INVESTMENT CORP., a Delaware corporation (collectively, the "Guarantors"), in favor of WELLS FARGO BANK (TEXAS), NATIONAL ASSOCIATION, as agent for the benefit of the Banks (the "Agent"). WITNESSETH: WHEREAS, pursuant to a Restated Revolving Credit Agreement (the "Loan Agreement") of even date herewith among AmeriCredit Corp., a Texas corporation, AmeriCredit Financial Services, Inc., a Delaware corporation and AmeriCredit Operating Co., Inc., a Delaware corporation (individually, a "Borrower," and collectively, the "Borrowers"), the Guarantors, Agent and Banks, the Banks have agreed to make Revolving Credit Loans to the Borrowers; and WHEREAS, it is a condition precedent to the obligation of the Banks to make any such Revolving Credit Loans that the Guarantors guaranty repayment thereof upon the terms and conditions set forth herein; and WHEREAS, Guarantors desire to induce the Banks to make such Revolving Credit Loans, which may reasonably be expected to benefit, directly or indirectly, each Guarantor. NOW, THEREFORE, in consideration of the foregoing and for other valuable consideration hereby acknowledged, Guarantors agree for the benefit of Agent and the Banks as follows: A. DEFINITIONS. 1. DEFINITIONS. Unless otherwise defined in this Guaranty, terms used herein shall have the meanings set forth in the Loan Agreement. 2. ADDITIONAL DEFINITIONS. In addition to the definitions set forth in the Loan Agreement, the following terms shall have the following meanings: "ADJUSTED NET WORTH" shall mean, with respect to any Guarantor as of the date of determination, (a) the value of the assets of such Guarantor as of such date, minus (b) all liabilities of such Guarantor, contingent or otherwise, as of such date (excluding such Guarantor's liability hereunder), as such concepts are determined in accordance with applicable laws governing determinations of the insolvency of debtors. "GUARANTEED AMOUNT" shall mean, (a) the Obligations, and all renewals, extensions, increases, modifications or rearrangements thereof, plus (b) all costs incurred by the Agent and Banks to obtain, preserve, defend and enforce this Guaranty and other Loan Documents, collect the Obligations, and maintain, preserve, collect and enforce any security relating to this Guaranty or any Guaranteed Amount, including without limitation taxes, insurance premiums, attorneys' fees and legal expenses, and expenses of sale. "MAXIMUM GUARANTEED AMOUNT" shall mean, with respect to any Guarantor as of the date of determination, the greater of (a) the amount of any Guaranteed Amount used to make a Valuable Transfer to such Guarantor, and (b) the greater of 95% of the Guarantor's Adjusted Net Worth (i) at the date hereof (if appropriate under applicable Law), (ii) at the time the Guaranteed Amount was incurred, and (iii) on the date of enforcement hereof (which shall be deemed to be the date of commencement of a proceeding described in Section 10.01(f) or Section 10.01(g) of the Loan Agreement, if applicable). "VALUABLE TRANSFER" shall mean, with respect to any Guarantor, (a) all loans, advances or capital contributions made to such Guarantor with proceeds of any Guaranteed Amount, (b) the acquisition from such Guarantor or retirement by such Guarantor with proceeds of any Guaranteed Amount of debt securities or other obligations of such Guarantor, (c) the acquisition by such Guarantor of all property acquired with proceeds of any Guaranteed Amount, and transferred, absolutely and not as collateral, to such Guarantor, to the extent of the fair market value thereof, and (d) the acquisition from such Guarantor with proceeds of any Guaranteed Amount of equity securities of such Guarantor. B. GUARANTY 1. GUARANTY. Each Guarantor hereby jointly and severally guarantees absolutely and unconditionally to Agent and the Banks the due performance of all terms and conditions of the Loan Agreement and other Loan Documents, and the prompt and full payment when due of the Guaranteed Amount. Notwithstanding anything herein or in any other Loan Documents to the contrary, the maximum liability of each Guarantor hereunder shall in no event exceed such Guarantor's Maximum Guaranteed Amount. Each Guarantor agrees that the Guaranteed Amount may at any time exceed the aggregate Maximum Guaranteed Amount of all Guarantors combined, without affecting or impairing the obligation of any Guarantor hereunder. 2. PAYMENT OBLIGATIONS. If an Event of Default shall occur, and following any notices required under Section 10.01(a), Section 10.01(d) or Section 10.01(e) of the Loan Agreement, each Guarantor shall, on demand, pay the Guaranteed Amount to -2- Agent at its address set forth in the Loan Agreement in immediately available funds. It shall not be necessary for Agent or the Banks, in order to enforce such payment by any Guarantor, to institute suit or exhaust its rights and remedies against the Borrowers, any other Guarantor or any other Person, including others liable to pay any Guaranteed Amount, or to enforce its rights and remedies against any security ever given to secure payment thereof. 3. COMPLETE WAIVER OF SUBROGATION. (a) Notwithstanding any payment or payments made by any Guarantor hereunder, or any set-off or application by the Agent or Banks of any security or of any credits or claims, no Guarantor will assert or exercise any rights of the Banks or of such Guarantor against the Borrowers to recover the amount of any payment made by such Guarantor to the Banks hereunder by way of subrogation, reimbursement, contribution, indemnity, or otherwise arising by contract or operation of law, and no Guarantor shall have any right of recourse to or any claim against assets or property of any Borrower, whether or not the Obligations of the Borrowers have been satisfied, all of such rights being herein expressly waived by all Guarantors. Each Guarantor agrees not to seek contribution from any other Guarantor until all of the Guaranteed Amount shall have been paid in full. If any amount shall nevertheless be paid to a Guarantor by the Borrowers or another Guarantor, such amount shall be held in trust for the benefit of the Banks and shall forthwith be paid to the Banks to be credited and applied to the Guaranteed Amount, whether matured or unmatured. The provisions of this paragraph shall survive the termination of this Guaranty, and any satisfaction and discharge of the Borrowers by virtue of any payment, court order or any federal or state law. (b) Notwithstanding the provisions of the preceding clause (a), each Guarantor shall have and be entitled to (i) all rights of subrogation otherwise provided by Law in respect of any payment it may make or be obligated to make under this Guaranty and (ii) all claims it would have against the Borrowers or any other Guarantor in the absence of the preceding clause (a), and to assert and enforce same, in each case on and after, but at no time prior to, the date (the "Subrogation Trigger Date") which is 400 days after the date on which the Obligations have been paid in full and the Commitment terminated, if and only if (x) no Event of Default of the type described in Section 10.01(f) or Section 10.01(g) of the Loan Agreement with respect to the Borrowers or any other Guarantor has existed at any time on and after the date of this Guaranty to and including the Subrogation Trigger Date and (y) the existence of the Guarantor's rights under this clause (b) would not make the Guarantor a creditor (as defined in the Bankruptcy Code) of any of Borrowers or any other Guarantor in any insolvency, bankruptcy, reorganization or similar proceeding commenced on or prior to the Subrogation Trigger Date. C. TERMS OF GUARANTY 1. CONTINUING GUARANTY. Each Guarantor agrees that the Guaranteed Amount and Loan Documents may be extended or renewed, and the Revolving Credit Loans repaid and reborrowed in whole or in part, without notice to or assent by such -3- Guarantor, and that it will remain bound upon this Guaranty notwithstanding any extension, renewal or other alteration of any Guaranteed Amount or Loan -4- Documents, or any repayment and reborrowing of the Revolving Credit Loans. Each Guarantor waives notice of acceptance of this Guaranty, presentation, demand, protest, notice of protest for nonpayment, diligence in bringing suits against any Person liable on any Guaranteed Amount, and any other notices or defenses of any kind. The obligations of each Guarantor under this Guaranty shall be absolute, unconditional and irrevocable, and shall be performed strictly in accordance with the terms hereof under any circumstances whatsoever, including without limitation: (a) any extension, renewal, modification, settlement, compromise, waiver or release in respect of any Guaranteed Amount, including any increase, reduction or termination of the Commitment; (b) any extension, renewal, amendment, modification, rescission, waiver or release in respect of any Loan Documents; (c) any release, exchange, substitution, non-perfection or invalidity of, or failure to exercise rights with respect to, any direct or indirect security for any Guaranteed Amount, including the release of any Guarantor or other Person liable on any Guaranteed Amount; (d) any change in the corporate existence, structure or ownership of any of Borrowers or any Guarantor, or any insolvency, bankruptcy, reorganization or other similar proceeding affecting any of Borrowers or any Guarantor or any of their assets; (e) the existence of any claim, defense, set-off or other rights or remedies which any of Borrowers or any Guarantor may have at any time against any of Borrowers, any Bank, the Agent, any other Guarantor or any other Person, whether in connection with this Guaranty, the Loan Documents, the transactions contemplated thereby or any other transactions; (f) any invalidity or unenforceability for any reason of the Loan Agreement or other Loan Documents, or any provision of Law purporting to prohibit the payment or performance by any of Borrowers or any Guarantor of the Guaranteed Amount or Loan Documents, or of any other obligation to the Banks; or (g) any other circumstances or happening whatsoever, whether or not similar to any of the foregoing. 2. PAYMENTS WITH RESPECT TO GUARANTEED AMOUNT. Each payment on the Guaranteed Amount shall be deemed to have been made by the Company unless express written notice is given to the Agent at the time of such payment that such payment is made by a specific Guarantor. -5- 3. EFFECT OF DEBTOR RELIEF LAWS. If after receipt of any payment of, or proceeds of any security applied (or intended to be applied) to the payment of all or any part of the Guaranteed Amount, the Agent or any Bank is for any reason compelled to surrender or voluntarily surrenders, such payment or proceeds to any Person, (a) because such payment or application of proceeds is or may be avoided, invalidated, declared fraudulent, set aside, determined to be void or voidable as a preference, fraudulent conveyance, impermissible set-off or a diversion of trust funds; or (b) for any other reason, including without limitation (i) any judgment, decree or order of any court or administrative body having jurisdiction over the Agent or any Bank or its properties, or (ii) any settlement or compromise of any such claim effected by any Bank with any such claimant (including either of Borrowers), then the Guaranteed Amount or part thereof intended to be satisfied shall be reinstated and continue and this Guaranty shall continue in full force as if such payment or proceeds had not been received, notwithstanding any revocation thereof or the cancellation of any Note or any other instrument evidencing any Guaranteed Amount or otherwise; and each Guarantor shall be liable to pay such Bank, and hereby does indemnify, jointly and severally, such Bank and hold it harmless for, the amount of such payment or proceeds so surrendered and all expenses (including reasonable attorneys' fees, court costs and expenses attributable thereto) incurred by the Bank in the defense of any claim made against it that any payment or proceeds received by the Bank in respect of all or part of the Guaranteed Amount must be surrendered. The provisions of this paragraph shall survive the termination of this Guaranty, and any satisfaction and discharge of the Company by virtue of any payment, court order or any federal or state law. D. REPRESENTATIONS AND COVENANTS 1. REPRESENTATIONS AND WARRANTIES. Each Guarantor hereby represents and warrants that all representations and warranties set forth in Article VII of the Loan Agreement with respect to it are true and correct as of the date hereof, and are incorporated herein by reference. 2. COVENANTS. Each Guarantor hereby jointly and severally expressly assumes, confirms and agrees to perform, observe and be bound by all conditions and covenants set forth in the Loan Agreement, to the extent applicable to it. E. GENERAL 1. PARTIES BOUND. This Guaranty is for the benefit of the Agent and Banks, their respective successors and assigns, and in the event of an assignment by any Bank of a Guaranteed Amount, the rights and benefits hereunder, to the extent applicable to the Guaranteed Amount so assigned, shall be automatically transferred therewith. This Guaranty is binding not only on each Guarantor, but on each of their successors and assigns. -6- 2. MODIFICATION AND AMENDMENT. No modification, consent, amendment or waiver of any provision of this Guaranty, nor consent to any departure by any Guarantor therefrom, shall be effective unless the same shall be in writing and signed by the Agent and Majority Banks, and then shall be effective only in the specific instance and for the purpose for which given. 3. WAIVER. No delay or omission by the Agent or Banks in exercising any right or remedy hereunder shall impair any such right or remedy or be construed as a waiver thereof or any acquiescence therein, nor shall any single or partial exercise of any such right or remedy preclude other or further exercise thereof, or the exercise of any other right or remedy hereunder. 4. CUMULATIVE RIGHTS. If any Guarantor is or becomes liable for any indebtedness owing by any of Borrowers to any Bank by endorsement or otherwise than under this Guaranty, such liability shall not be in any manner impaired or affected hereby, and the rights or remedies of the Banks hereunder shall be cumulative of all other rights or remedies that the Banks may ever have against the Guarantors. The exercise by the Agent or the Banks of any rights or remedies hereunder or under any other instrument, or at law or in equity, shall not preclude the concurrent or subsequent exercise of any other rights or remedies. Without limitation of the foregoing, it is specifically understood and agreed that this Guaranty is given by each Guarantor as an additional guaranty to any and all other guaranties heretofore or hereafter executed and delivered to any of the Banks by any Guarantor, and nothing herein shall ever be deemed to replace or be in lieu of any other of such previous or subsequent guaranties. 5. INTEREST; LIMITATIONS OF LAW. All agreements between each Guarantor and the Agent and Banks, whether now existing or hereafter arising and whether written or oral, are expressly limited so that in no contingency or event whatsoever, whether by reason of acceleration of payment of any of the Guaranteed Amount or otherwise, shall the amount paid or agreed to be paid to any Bank for the use, forbearance or detention of funds advanced pursuant to any Loan Documents or for the performance or payment of any covenant or obligation contained in any Loan Documents exceed the maximum amount permitted by applicable law. If from any circumstance whatsoever, fulfillment of any provision of any Loan Documents, at the time performance of such provision shall be due, shall involve transcending the limit of validity prescribed by applicable law, then, IPSO FACTO, the obligation to be fulfilled shall be reduced to the limit of such validity, and if from any circumstance Bank shall ever receive anything of value deemed excess interest by applicable law, an amount equal to any such excess interest shall be applied to the reduction of the principal amount owing under the Loan Documents, and not to the payment of interest, or if such excess interest exceeds the unpaid principal balance, such excess interest shall be promptly refunded to the Borrowers or Guarantor, as applicable. All sums paid or agreed to be paid for the use, forbearance or detention of any funds advanced pursuant to the Loan Documents shall, to the extent permitted by applicable law, be amortized, -7- prorated, allocated and spread throughout the full term of this Agreement until payment in full, so that the rate of interest on account of the Guaranteed Amount is uniform throughout the term hereof. 6. SUBORDINATION. Each Guarantor hereby expressly agrees that any obligation of any Borrower to any Guarantor is expressly subordinate to the right of the Banks to payment and performance by the Borrowers of the Guaranteed Amount and Loan Documents, and that the Banks shall be entitled to such full payment and performance prior to the exercise by any Guarantor of any rights, including realization upon any security, to enforce the payment or performance of any obligation that the Borrowers may owe to any Guarantor; provided that, Guarantors shall be entitled to receive scheduled payments from the Borrowers with respect to such obligations if at the time of such payment no Event of Default exists or would exist immediately after giving effect to any such payment. 7. COSTS AND EXPENSES. Each Guarantor agrees, jointly and severally, to pay to the Agent all costs and expenses (including court costs and attorneys' fees) incurred by the Banks in the enforcement of this Guaranty and all other Loan Documents. 8. NOTICES. Unless otherwise provided herein, all notices, requests, consents and demands shall be in writing and shall be personally delivered, sent by telecopy of telex (answerback received), or mailed, by certified mail, postage prepaid, to the following addresses: (a) If to the Agent and Banks: Wells Fargo Bank (Texas), National Association 505 Main Street, Suite 300 Fort Worth, Texas 76102 Attention: Susan B. Sheffield Wells Fargo Bank, N.A. 201 Third Street Eighth Floor San Francisco, California 94103 Attn: Agency Department - Cecilia Go FAX No. (415) 512-9408 (b) If to any Guarantor: [Name of Guarantor] c/o AmeriCredit Corp. 200 Bailey Avenue Fort Worth, Texas 76107 -8- Attention: Chief Financial Officer or to such other address as any party may designate in written notice to the other parties. All notices, requests, consents and demands hereunder will be effective when so personally delivered or sent by telecopy of telex, or two days after being so mailed. 9. COUNTERPARTS. This Guaranty may be executed in any number of counterparts, all of which taken together shall constitute one and the same instrument. In making proof of this Guaranty, it shall not be necessary to produce or account for any counterpart other than one signed by the party against which enforcement is sought. 10. GOVERNING LAW. This Guaranty shall be deemed a contract made in Fort Worth, Texas, and shall be construed and governed by the laws of Texas and the United States of America. Without excluding any other jurisdiction, each Guarantor hereby agrees that the courts of Texas and federal courts sitting in Texas will have jurisdiction over proceedings in connection herewith. 11. ENTIRE AGREEMENT. THIS GUARANTY REPRESENTS THE FINAL AGREEMENT AMONG THE PARTIES RELATING TO THE SUBJECT MATTER HEREOF AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS AMONG THE PARTIES. IN WITNESS WHEREOF, each Guarantor has executed this Guaranty as of the date first set forth above. AMERICREDIT PREMIUM FINANCE, INC., a Delaware corporation By: -------------------------------- Name: -------------------------- Title: ------------------------- ACF INVESTMENT CORP., a Delaware corporation By: -------------------------------- -9- Name: -------------------------- Title: ------------------------- EXHIBIT "C" REQUEST FOR BORROWING -- FLOATING BASE BORROWING ------------------------------------------------ Date: --------------- Wells Fargo Bank, N.A. 201 Third Street Eighth Floor San Francisco, California 94103 Re: Request For Floating Base Borrowing This Request for Borrowing has been prepared and is being delivered to Agent pursuant to Section 2.02(a) of that certain Restated Revolving Credit Agreement ("Agreement") dated as of October 3, 1997 by and among AmeriCredit Corp., a Texas corporation ("Company"), AmeriCredit Financial Services, Inc., a Delaware corporation, AmeriCredit Operating Co., Inc., a Delaware corporation, the Guarantors, Wells Fargo Bank (Texas), National Association, as Agent, and "Banks." Capitalized terms shall have the meanings assigned to them in the Agreement unless otherwise provided herein or the context hereof otherwise requires. / / [For New Advances] On this date the undersigned does hereby request that Banks make an Advance for a Floating Base Borrowing (i) in the aggregate principal amount of $_____________ (such amount shall be in an integral multiple of $100,000.00 unless such a Borrowing would exhaust the Total Commitment in which case, such amount may be in an amount of the unused portion of the Total Commitment) (ii) on ____________________, 199___. / / [For Rollover Notices] On this date the undersigned does hereby request that Banks make an Advance for a Floating Base Borrowing (i) in the aggregate principal amount of $_____________ (such amount shall be in an integral multiple of $100,000.00 unless such a Borrowing would exhaust the Total Commitment in which case, such amount may be in an amount of the unused portion of the Total Commitment) (ii) on ____________________, 199___. This Request for Borrowing shall serve as a Rollover Notice under Section 2.02(c) of the Agreement, with respect to the Eurodollar Borrowing made on ____________, 199___ ("Prior Borrowing"). This Rollover Notice is being submitted at least three (3) Eurodollar Business Days prior to the Conversion Date. The undersigned (in his representative capacity and not in his individual capacity) hereby represents and warrants to Agent and Banks that all of the representations and warranties contained in Article VII of the Agreement (except Section 7.07) are true and correct in all material respects as of the date hereof, with the same force and effect as if made on the date hereof, and that no Event of Default or condition, event or act which with the giving of notice or lapse of time, or both, would constitute an Event of Default exists and is continuing on this date, unless noted below (if such a condition, event or act is so noted, there shall also be noted below the nature, period of existence thereof and the action which the Company is taking or proposes to take with respect thereto): AMERICREDIT CORP. By: -------------------------------- Name: -------------------------- Title: ------------------------- -2- EXHIBIT "D" REQUEST FOR BORROWING -- EURODOLLAR BORROWING Date: --------------------------------- Wells Fargo Bank, N.A. 201 Third Street Eighth Floor San Francisco, California 94103 Re: Request For Eurodollar Borrowing This Request for Borrowing has been prepared and is being delivered to Agent pursuant to Section 2.02(a) of that certain Restated Revolving Credit Agreement ("Agreement") dated as of October 3, 1997, by and among AmeriCredit Corp., a Texas corporation ("Company"), AmeriCredit Financial Services, Inc., a Delaware corporation, AmeriCredit Operating Co., Inc., a Delaware corporation, the Guarantors, Wells Fargo Bank (Texas), National Association, as Agent, and the "Banks." Capitalized terms shall have the meanings assigned to them in the Agreement unless otherwise provided herein or the context hereof otherwise requires. (Check applicable box below.) /_/ [For New Advances] On this date the undersigned does hereby request that Banks make Advances for a Eurodollar Borrowing (i) in the aggregate principal amount of $___________ (such amount shall be in an integral multiple of $1,000,000.00), (ii) for the following Interest Period ___________ (one (1), two (2) or three (3) months), (iii) on ___________ , 199__ (which date shall be at least three (3) Eurodollar Business Days after the date on which this Request for Borrowing shall be submitted to Agent). After taking into account the Borrowing requested hereby, the total number of unpaid Eurodollar Borrowings under section 2.02(a) of the Agreement does not exceed five (5). /_/ [For Rollover Notices] On this date the undersigned does hereby request a Eurodollar Borrowing (i) in the aggregate principal amount of $____________ (such amount shall be in an integral multiple of $1,000,000.00), (ii) for the following Interest Period ___________ (one (1), two (2) or three (3) months), (iii) on ___________ , 199__ (which date shall be at least three (3) Eurodollar Business Days after the date on which this Request for Borrowing shall be submitted to Agent). After taking into account the Borrowing requested hereby, the total number of unpaid Eurodollar Borrowings under section 2.02(a) of the Agreement does not exceed five (5). This Request for Borrowing shall serve as a Rollover Notice under Section 2.02(c) of the Agreement, with respect to the Eurodollar Borrowing [Floating Base Borrowing] made on _________________, 199__ ("Prior Borrowing"). This Rollover Notice is being submitted at least three (3) Eurodollar Business Days (if the Prior Borrowing was a Eurodollar Borrowing) prior to the termination of the Interest Period for the Prior Advance. The undersigned (in his representative capacity and not in his individual capacity) hereby represents and warrants to Agent and Banks that all of the representations and warranties contained in Article VII of the Agreement (except Section 7.07) are true and correct in all material respects as of the date hereof, with the same force and effect as if made on the date hereof, and that no Event of Default or condition, event or act which with the giving of notice or lapse of time, or both, would constitute an Event of Default, exists and is continuing on this date, unless noted below (if such a condition, event or act is so noted, there shall also be noted below the nature, period of existence thereof and the action which the Company is taking, or proposes to take with respect thereto): AMERICREDIT CORP. By: -------------------------------- Name: -------------------------- Title: ------------------------- -2- EXHIBIT "E" REQUEST FOR BORROWING -- SWING LINE BORROWING Date: ----------------------------------- Wells Fargo Bank, N.A. 201 Third Street Eighth Floor San Francisco, California 94103 Re: Request For Swing Line Borrowing This Request For Swing Line Borrowing has been prepared and is being delivered to Agent pursuant to Section 2.03(a) of that certain Restated Revolving Credit Agreement ("Agreement") dated as of October 3, 1997, by and among AmeriCredit Corp., a Texas corporation ("Company"), AmeriCredit Financial Services, Inc., a Delaware corporation, AmeriCredit Operating Co., Inc., a Delaware corporation, the Guarantors, Wells Fargo Bank (Texas), National Association, as Agent, and the "Banks." Capitalized terms shall have the meanings assigned to them in the Agreement unless otherwise provided herein or the context hereof otherwise requires. On this date the undersigned does hereby request that Wells Fargo Bank make an Advance for a Swing Line Borrowing (i) in the aggregate principal amount of $__________ (such amount shall be at least $500,000 or an integral multiple of $100,000.00), (ii) for an Interest Period of one (1) month, (iii) on ___________ , 199__ (which shall be before 12:00 noon (Fort Worth, Texas time) on the date on which this Request For Swing Line Borrowing shall be submitted to Agent). The undersigned (in his representative capacity and not in his individual capacity) hereby represents and warrants to Agent and Banks that all of the representations and warranties contained in Article VII of the Agreement (except Section 7.07) are true and correct in all material respects as of the date hereof, with the same force and effect as if made on the date hereof, and that no Event of Default or condition, event or act which with the giving of notice or lapse of time, or both, would constitute an Event of Default, exists and is continuing on this date, unless noted below (if such a condition, event or act is so noted, there shall also be noted below the nature, period of existence thereof and the action which the Company is taking, or proposes to take with respect thereto): AMERICREDIT CORP. By: -------------------------------- Name: -------------------------- Title: ------------------------- EXHIBIT "F" TO RESTATED REVOLVING CREDIT AGREEMENT AMONG AMERICREDIT CORP., ET AL, AND WELLS FARGO BANK (TEXAS), NATIONAL ASSOCIATION, ET AL. LITIGATION None EXHIBIT "G" TO RESTATED REVOLVING CREDIT AGREEMENT AMONG AMERICREDIT CORP., ET AL, AND WELLS FARGO BANK (TEXAS), NATIONAL ASSOCIATION, ET AL. COMPLIANCE WITH LAW None EXHIBIT "H" TO RESTATED REVOLVING CREDIT AGREEMENT AMONG AMERICREDIT CORP., ET AL, AND WELLS FARGO BANK (TEXAS), NATIONAL ASSOCIATION, ET AL. ENVIRONMENTAL MATTERS None EXHIBIT "I" AMERICREDIT CORP., AMERICREDIT FINANCIAL SERVICES, INC. AND AMERICREDIT OPERATING CO., INC. BORROWING BASE CERTIFICATE AS OF ____________________ This Borrowing Base Certificate has been prepared pursuant to Section 8.01 of that certain Restated Revolving Credit Agreement dated as of October 3, 1997 by and between AmeriCredit Corp., AmeriCredit Financial Services, Inc. and AmeriCredit Operating Co., Inc. ("Borrowers"), AmeriCredit Premium Finance, Inc. and ACF Investment Corp. ("Guarantors") and Wells Fargo Bank (Texas), National Association, Bank One, Texas, N.A., LaSalle National Bank, Comerica Bank-Texas, The Sumitomo Bank, Limited, Harris Trust and Savings Bank, Texas Commerce Bank N.A., BankAmerica Business Credit, Inc., The Bank of Nova Scotia, CIBC Inc., Credit Lyonnais New York Branch, BankBoston, N.A., and The Long Term Credit Bank of Japan, Limited ("Banks"). Defined terms shall have the meanings assigned to them in the Restated Revolving Credit Agreement unless otherwise provided herein. The undersigned does hereby certify that the following information is true and correct, and has been prepared in accordance with the terms of the Restated Revolving Credit Agreement. 1. Net Amount of all Finance Contracts _______________ 2. Net Amount of Finance Contracts not representing Eligible Modified Finance Contracts (Finance Contracts applicable to more than one category are included only in the category listed first): (i) Not secured by an Eligible Vehicle _______________ (ii) Not representing Domestic Finance Contracts _______________ (iii) Originated by a Dealer that is an Affiliate of Borrowers _______________ (iv) Contractually delinquent by more than 30 days _______________ (v) Rewritten, excluding Eligible Modified Finance contracts _______________ (vi) The related motor vehicle has been repossessed _______________ (vii) Stayed Loans _______________
-1- (viii) Not constituting chattel paper _______________ (ix) Subject to a security interest in favor of a Person other than Agent on behalf of Banks _______________ (x) Dealer has not received good funds from Borrowers in respect of Finance Contract _______________ 3. The sum of items i - x: _______________ 4. Item 1 less item 3 = Principal outstanding on Eligible Finance Contracts _______________ 5. a) Eligible Finance Contracts modified in current month/Average principal outstanding on Eligible Finance contracts in current month. _____________ b) Eligible Finance Contracts modified in prior month/Average principal outstanding on Eligible Finance contracts in prior month. _____________ c) Eligible Finance Contracts modified in second prior month/Average principal outstanding on Eligible Finance contracts in second prior month. _____________ d) Sum of a, b and c _____________ e) (d) less 0.035 _____________ f) If (e) is positive, (e) times ending balance of Eligible Finance Contracts in current month; if (e) is negative, then zero (0). _____________ 6. Item 4 less item 5(f) = Net Amount of Eligible Finance Contracts _____________ 7. a) Dealer Discount on Finance Contracts originated in current month/Principal amount of Finance Contracts originated in current month. _____________ b) Dealer Discount on Finance Contracts
-2- originated in prior month/Principal amount of Finance Contracts originated in prior month. _____________ c) Dealer Discount on Finance Contracts originated in second prior month/Principal amount of Finance Contracts originated in second prior month. _____________ d) Sum of a, b and c divided by three (3) _____________ 8. Item 6 Times 80% (unless item 7(d) exceeds 0.05 (5%)) _____________ If item 7(d) exceeds 5%, then reduce the advance rate percentage by 2% for every percentage point over 5%. 9. Total Aggregate Outstanding Balance on Revolving Line of Credit and Swing Line Loan _____________ 10. Item 8 less item 9 = Availability/(Deficiency) _____________ AmeriCredit Corp., AmeriCredit Financial Services, Inc. and AmeriCredit Operating Co., Inc.
By: __________________________ Name: __________________________ Title: __________________________ Date: __________________________ -3- EXHIBIT "J" AMERICREDIT CORP., AMERICREDIT FINANCIAL SERVICES, INC. AND AMERICREDIT OPERATING CO., INC. COMPLIANCE CERTIFICATE AS OF ____________________ This Certificate of Compliance has been prepared pursuant to Section 8.02 of that certain Restated Revolving Credit Agreement dated as of October 3, 1997 by and between AmeriCredit Corp., AmeriCredit Financial Services, Inc. and AmeriCredit Operating Co., Inc. ("Borrowers"), AmeriCredit Premium Finance, Inc. and ACF Investment Corp. ("Guarantors") and Wells Fargo Bank (Texas), National Association, Bank One, Texas, N.A., LaSalle National Bank, Comerica Bank-Texas, The Sumitomo Bank, Limited, Harris Trust and Savings Bank, Texas Commerce Bank National Association, BankAmerica Business Credit, Inc., The Bank of Nova Scotia, CIBC Inc., Credit Lyonnais New York Branch, BankBoston, N.A., and The Long Term Credit Bank of Japan, Limited (collectively, the "Banks"). Defined terms shall have the meanings assigned to them in the Restated Revolving Credit Agreement unless otherwise provided herein. The undersigned does hereby certify that on this date all representations and warranties of Borrowers contained in the Restated Revolving Credit Agreement are true and correct and that all other agreements, covenants and conditions required by the second Restated Revolving Credit Agreement have been performed or complied with. In particular, and without limiting the generality of the foregoing, Borrowers hereby certify the following as set forth in Article VIII and Article IX of the Restated Revolving Credit Agreement. 8.31 A Trigger Event has [not] occurred 9.01 Maximum Indebtedness to Net Worth Ratio _______________ N1. Indebtedness _______________ N2. Automobile Receivable Backed Notes _______________ N3. Additional Warehouse Facility _______________ N4. Net Worth _______________ Formula: (N1-N2-N3)/N4 _______________ Required: < =2.50 9.02 Minimum Interest Coverage Ratio (trailing 12 months) N1. Net Income N2. Interest expense _______________ N3. Income tax expense _______________ N4. Amortization of Excess Servicing Receivable _______________
-1- N5. Gain on Sale of Receivables _______________ Formula: ((+N1..N4)-N5)/(N2) _______________ Required: > =2.2 9.03 No Net Loss N1. Net Income (calendar quarter) _______________ Required: > =$0 9.04 Restrictions on Dividends on Capital Stock N1. Payments of dividends and/or purchase of capital stock _______________ Required: < = $__________ at __/__/9 9.05 Maximum Losses to Net Indirect Loans N1. Net Credit Losses (12 months) _______________ N2. Sum of month end balances of Net Indirect Loans for prior 13 months/13 _______________ Formula: N1/N2 _______________ Required: < =10.0% 9.06 Maximum Delinquent and Repossessed Loans to Net Indirect Loans N1. Net Amount of Delinquent Loans _______________ N2. Net Amount of Repossessed Loans _______________ N3. Net Indirect Loans _______________ Formula: N1+N2/N3 Required: < =7.5%
AmeriCredit Corp., AmeriCredit Financial Services, Inc. and AmeriCredit Operating Co., Inc. By: __________________________ Name: __________________________ Title: __________________________ Date: __________________________ -2- EXHIBIT "K" ASSIGNMENT AND ACCEPTANCE Dated: ______________, 19_____ Reference is made to the Restated Revolving Credit Agreement dated as of October 3, 1997 (as amended from time to time, the "LOAN AGREEMENT") among AMERICREDIT CORP., a Texas corporation, and AMERICREDIT FINANCIAL SERVICES, INC., a Delaware corporation, and AMERICREDIT OPERATING CO., INC., a Delaware corporation (collectively the "Borrowers"), the Guarantors named therein, the Banks named therein, and WELLS FARGO BANK (TEXAS), NATIONAL ASSOCIATION, as Agent. Capitalized terms not otherwise defined herein shall have the meanings specified in the Loan Agreement. ________________________, acting as one of the Banks referred to in the Loan Agreement (the "ASSIGNOR"), and _______________ (the "ASSIGNEE") agree as follows: 1. The Assignor, without recourse, representation or warranty of any kind except as expressly set out herein, hereby sells and assigns to the Assignee, and the Assignee hereby purchases and assumes from the Assignor, that interest in and to a portion of the Assignor's rights and obligations as of the date hereof under the Loan Agreement and the other Loan Documents sufficient to give the Assignee the percentage interest specified in SECTION 1 of SCHEDULE 1 hereto of all outstanding rights and obligations under the Loan Agreement and the other Loan Documents. Such sale and assignment shall [include] [exclude] a proportionate share of the loan origination fee previously paid to Assignor pursuant to Section 2.01(d) of the Loan Agreement, [THE AMOUNTS OF SUCH PROPORTIONATE SHARES BEING SPECIFIED IN SECTION 2 OF SCHEDULE 1 HERETO]. After giving effect to such sale and assignment, the respective Commitments of and amounts of the Loans owing to the Assignor and the Assignee will be as set forth in SECTION 3 of SCHEDULE 1 hereto. 2. The Assignor (i) represents and warrants that it (a) is the legal and beneficial owner of the interest being assigned by it hereunder and that such interest is free and clear of any adverse claim and (b) to its knowledge (1) there exists no Event of Default, or event which with the giving of notice or the passage of time or both, would constitute and Event of Default and (2) it has not waived any material provision of any Loan Document; (ii) makes no representation or warranty and assumes no responsibility with respect to any statements, warranties or representations made by another Person in or in connection with the Loan Documents or the execution, legality, validity, enforceability, genuineness, sufficiency or value of the Loan Documents or any other instrument or document furnished pursuant thereto or the value of any collateral provided with respect thereto or the perfection of any security interest provided in such collateral; (iii) makes no representation or warranty and assumes no responsibility with respect to the financial condition of the Borrowers, the Guarantors, or any other Person or the performance or observance by the Borrowers, the Guarantors, or any other Person of any of its obligations under the Loan Documents or any other instrument or document furnished pursuant thereto; and (iv) will deliver the Note issued to it pursuant to the Credit Agreement to the Agent concurrently with the presentation hereof to the Agent for acceptance and requests that, upon receipt of such Note, the Agent shall exchange such Note for a new Note [NEW NOTES] payable to the order of the Assignee in an amount equal to the Commitment assumed by the Assignee pursuant hereto [AND THE ASSIGNOR IN AN AMOUNT EQUAL TO THE COMMITMENT RETAINED BY THE ASSIGNOR UNDER THE LOAN AGREEMENT, RESPECTIVELY] as specified in SECTION 4 of SCHEDULE 1 hereto. 3. The Assignee (i) confirms that it has received a copy of the Loan Agreement and the other Loan Documents, together with copies of the financial statements referred to in Section 7.07 thereof and such other documents and information as it has deemed appropriate to make its own credit analysis and decision to enter into this Assignment and Acceptance; (ii) agrees that it will, independently and without reliance upon the Assignor or any other of the Banks and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under the Loan Agreement; (iii) confirms that it is an Eligible Assignee; (iv) appoints and authorizes the Agent to take such action on its behalf and to exercise such powers under the Loan Agreement and the other Loan Documents as are delegated to such Person by the terms thereof, together with such powers as are reasonably incidental thereto; (v) agrees that it will perform in accordance with their terms all of the obligations which by the terms of the Loan Agreement and the other Loan Documents are required to be performed by it as a Bank; and (vi) specifies as its domestic lending office (and address for notices) and Eurodollar lending office the offices set forth in SECTION 5 of SCHEDULE 1 hereto; and (vii) represents that it is either (y) a corporation organized under the laws of the United States, a state thereof or the District of Columbia or (z) presently entitled to complete exemption from United States withholding tax imposed on or with respect to any payments, including fees, to be made to it pursuant to the Loan Agreement (A) under an applicable provision of a tax convention or treaty to which the United States is a party or (B) because it is acting through a branch, agency or office in the United States and any payment to be received by it under the Loan Agreement is effectively connected with a trade or business in the United States. 4. Following the execution of this Assignment and Acceptance by the Assignor and the Assignee, it will be delivered to the Agent for the approval of [THE BORROWERS the Agent and acceptance by the Agent, and the effective date of this Assignment and Acceptance (the "EFFECTIVE DATE") shall be the date on which such approval and acceptance has occurred. 5. Upon the Effective Date, (i) the Assignee shall be a party to the Loan Agreement and, to the extent provided in this Assignment and Acceptance, have the rights and obligations of a Bank thereunder and (ii) the Assignor shall, to the extent -2- provided in this Assignment and Acceptance, relinquish its rights and be released from its obligations under the Loan Agreement. 6. From and after the Effective Date, the Agent shall make all payments under the Loan Agreement and the other Loan Documents in respect of the interest assigned hereby (including, without limitation, all payments of principal, interest and commitment fees with respect thereto) to the Assignee. The Assignor and Assignee shall make all appropriate adjustments in payments and fundings under the Loan Agreement and the other Loan Documents for periods prior to the Effective Date directly between themselves. 7. This Assignment and Acceptance shall be governed by, and construed in accordance with, the laws of the State of Texas (without giving effect to the conflict of law principles thereof) and applicable federal law. This Assignment and Acceptance may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which when so executed and delivered shall be deemed to be an original and all of which taken together shall constitute but one and the same instrument. This Assignment and Acceptance shall be binding upon and inure to the benefit of the Assignor and the Assignee and their respective successors and assigns. IN WITNESS WHEREOF, the parties hereto have caused this Assignment and Acceptance to be executed by their respective officers thereunto duly authorized effective as of the date first above written. ATTACHMENTS: ASSIGNOR: Schedule 1 -------------------------------------------- By: ---------------------------------------- Name: -------------------------------------- Title: -------------------------------------- ASSIGNEE: -------------------------------------------- By: ----------------------------------------- Name: --------------------------------------- Title: -------------------------------------- -3- Approved this ____ day of _____________________, 199__. AMERICREDIT CORP. By: ----------------------------------------- Name: ----------------------------------- Title: --------------------------------- AMERICREDIT FINANCIAL SERVICES, INC. By: ---------------------------------------- Name: ----------------------------------- Title: ----------------------------------- AMERICREDIT OPERATING CO., INC. By: ---------------------------------------- Name: ----------------------------------- Title: ------------------------------------ WELLS FARGO BANK (TEXAS), NATIONAL ASSOCIATION as Agent By: ---------------------------------------- Name: ----------------------------------- Title: ------------------------------------ -4- SCHEDULE TO ASSIGNMENT AND ACCEPTANCE DATED _____________, 199____. SECTION 1. Percentage Interest acquired by Assignee relative to all Banks --------------------- SECTION 2. 1. Assignee's proportionate share of loan origination fee previously paid to Assignor pursuant to Section 2.01(d) of the Loan Agreement: $ ------------- SECTION 3. 1. Assignee's Acquired Interest. Assignee's Commitment: $ ---------------------- Aggregate outstanding principal amount of Loans owing to the Assignee: $ ---------------------- 2. Assignor's Retained Interest. Assignor's Commitment: $ ---------------------- Aggregate outstanding principal amount of Loans owing to the Assignor: $ ---------------------- SECTION 4. 1. A Note payable to the order of the Assignee in the principal amount of $________. 2. A Note payable to the order of the Assignor in the principal amount of $______. -5- SECTION 5. DOMESTIC LENDING OFFICE EURODOLLAR LENDING OFFICE ----------------------------- -------------------------------------- ----------------------------- -------------------------------------- ----------------------------- -------------------------------------- ----------------------------- -------------------------------------- ----------------------------- -------------------------------------- -6- EX-10.2 3 SALE & SERVICING AGREEMENT EXECUTION COPY ___________________________________________________________ SALE AND SERVICING AGREEMENT among CP FUNDING CORP., Borrower, AMERICREDIT FINANCIAL SERVICES, INC., Seller and Servicer THE CHASE MANHATTAN BANK, Backup Servicer, and THE CHASE MANHATTAN BANK, Funding Agent Dated as of October 8, 1997 ___________________________________________________________ TABLE OF CONTENTS
PAGE ---- ARTICLE I Definitions SECTION 1.1 Definitions. . . . . . . . . . . . . . . . . . . . . . . . . 1 SECTION 1.2 Other Definitional Provisions. . . . . . . . . . . . . . . . 2 ARTICLE II Sale of Receivables SECTION 2.1 Sale of Receivables. . . . . . . . . . . . . . . . . . . . . 2 SECTION 2.2 The Conveyed Property; Nature of Transaction . . . . . . . . 3 SECTION 2.3 Further Encumbrance of Conveyed Property; Additional Covenants of the Seller . . . . . . . . . . . . . . . . . . 3 SECTION 2.4 Prepayment of Purchase Price of Receivables. . . . . . . . . 5 ARTICLE III Conditions Precedent SECTION 3.1 Conditions Precedent to the Effectiveness of this Agreement. . . . . . . . . . . . . . . . . . . . . . . . . . 5 SECTION 3.2 Conditions Precedent to each Receivables Sale. . . . . . . . 6 ARTICLE IV The Receivables SECTION 4.1 Representations and Warranties of Seller . . . . . . . . . . 9 SECTION 4.2 Repurchase Upon Breach . . . . . . . . . . . . . . . . . . . 9 SECTION 4.3 Custody of Receivables Files . . . . . . . . . . . . . . . . 10 ARTICLE V Administration and Servicing of Receivables SECTION 5.1 Appointment; Standard of Care; Duties of the Servicer. . . . . 11
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PAGE ---- SECTION 5.2 Collection of Receivable Payments; Modifications of Receivables; Lockbox Agreements. . . . . . . . . . . . . . . 12 SECTION 5.3 Realization Upon Receivables . . . . . . . . . . . . . . . . 14 SECTION 5.4 Insurance. . . . . . . . . . . . . . . . . . . . . . . . . . 16 SECTION 5.5 Maintenance of Security Interests in Vehicles. . . . . . . . 16 SECTION 5.6 Covenants, Representations, and Warranties of Servicer . . . 17 SECTION 5.7 Purchase of Receivables Upon Breach of Covenant. . . . . . . 18 SECTION 5.8 Total Servicing Fee; Payment of Certain Expenses by Servicer . . . . . . . . . . . . . . . . . . . . . . . . . . 18 SECTION 5.9 Certain Servicer's Certificates. . . . . . . . . . . . . . . 19 SECTION 5.10 Annual Statement as to Compliance, Notice of Servicer Termination Event. . . . . . . . . . . . . . . . . . . . . . 19 SECTION 5.11 Annual Independent Accountants' Report; Quarterly Reviews. . . . . . . . . . . . . . . . . . . . . . . . . . . 20 SECTION 5.12 Access to Certain Documentation and Information Regarding the Receivables. . . . . . . . . . . . . . . . . . 20 SECTION 5.13 Monthly Tape . . . . . . . . . . . . . . . . . . . . . . . . 21 SECTION 5.14 Retention and Termination of Servicer. . . . . . . . . . . . 21 SECTION 5.15 Fidelity Bond and Errors and Omissions Policy. . . . . . . . 21 ARTICLE VI Collection and Reserve Accounts; Distributions; Statements to Secured Parties SECTION 6.1 Establishment of Collection and Reserve Accounts . . . . . . 22 SECTION 6.2 Reserve Account. . . . . . . . . . . . . . . . . . . . . . . 25 SECTION 6.3 Certain Reimbursements to the Servicer . . . . . . . . . . . 25 SECTION 6.4 Application of Collections . . . . . . . . . . . . . . . . . 26 SECTION 6.5 Servicer Advances. . . . . . . . . . . . . . . . . . . . . . 26 SECTION 6.6 Withdrawals from the Reserve Accounts; Special Withdrawals from the Pledged Accounts. . . . . . . . . . . . 26 SECTION 6.7 Additional Deposits. . . . . . . . . . . . . . . . . . . . . 27 SECTION 6.8 Distributions. . . . . . . . . . . . . . . . . . . . . . . . 27
ARTICLE VII The Seller ii SECTION 7.1 Representations and Warranties of Seller . . . . . . . . . . . 30 SECTION 7.2 Corporate Existence. . . . . . . . . . . . . . . . . . . . . . 32 SECTION 7.3 Liability of Seller; Indemnities . . . . . . . . . . . . . . . 33 SECTION 7.4 Merger or Consolidation of, or Assumption of the Obligations of, Seller . . . . . . . . . . . . . . . . . . . . 33 SECTION 7.5 Limitation on Liability of Seller and Others . . . . . . . . . 34
iii ARTICLE VIII The Servicer SECTION 8.1 Representations and Warranties of AFS, in its capacity as Servicer. . . . . . . . . . . . . . . . . . . . . . . . . . 34 SECTION 8.2 Liability of Servicer; Indemnities . . . . . . . . . . . . . . 36 SECTION 8.3 Merger or Consolidation of, or Assumption of the obligations of the Servicer or Backup Servicer . . . . . . . . 37 SECTION 8.4 Limitation on Liability of the Servicer and the Backup Servicer . . . . . . . . . . . . . . . . . . . . . . . . . . . 38 SECTION 8.5 Delegation of Duties . . . . . . . . . . . . . . . . . . . . . 38 SECTION 8.6 Servicer and Backup Servicer Not to Resign . . . . . . . . . . 39 ARTICLE IX Default SECTION 9.1 Servicer Termination Event . . . . . . . . . . . . . . . . . . 39 SECTION 9.2 Consequences of a Servicer Termination Event . . . . . . . . . 40 SECTION 9.3 Appointment of Successor . . . . . . . . . . . . . . . . . . . 41 SECTION 9.4 Notification to Secured Parties. . . . . . . . . . . . . . . . 42 SECTION 9.5 Waiver of Past Defaults. . . . . . . . . . . . . . . . . . . . 42 ARTICLE X Administrative Duties of the Servicer SECTION 10.1 Administrative Duties. . . . . . . . . . . . . . . . . . . . . 42 SECTION 10.2 Records. . . . . . . . . . . . . . . . . . . . . . . . . . . . 43 SECTION 10.3 Additional Information to be Furnished to the Borrower . . . . 43 ARTICLE XI Miscellaneous Provisions SECTION 11.1 Amendment. . . . . . . . . . . . . . . . . . . . . . . . . . . 43 SECTION 11.2 Protection of Title. . . . . . . . . . . . . . . . . . . . . . 44 SECTION 11.3 Notices. . . . . . . . . . . . . . . . . . . . . . . . . . . . 45 SECTION 11.4 Assignment . . . . . . . . . . . . . . . . . . . . . . . . . . 45
iv SECTION 11.5 Limitations on Rights of Others. . . . . . . . . . . . . . . . 46 SECTION 11.6 Severability . . . . . . . . . . . . . . . . . . . . . . . . . 46 SECTION 11.7 Separate Counterparts. . . . . . . . . . . . . . . . . . . . . 46 SECTION 11.8 Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . 46 SECTION 11.9 Assignment to Funding Agent. . . . . . . . . . . . . . . . . . 46 SECTION 11.10 Chase Roles; Limitation of Liability . . . . . . . . . . . . . 46 SECTION 11.11 Non-petition Covenants . . . . . . . . . . . . . . . . . . . . 47 SECTION 11.12 Independence of the Servicer . . . . . . . . . . . . . . . . . 47 SECTION 11.13 No Joint Venture . . . . . . . . . . . . . . . . . . . . . . . 48 SECTION 11.14 Consents to Jurisdiction . . . . . . . . . . . . . . . . . . . 48 SECTION 11.15 Trial by Jury Waived . . . . . . . . . . . . . . . . . . . . . 48 SECTION 11.16 Governing Law. . . . . . . . . . . . . . . . . . . . . . . . . 48
ANNEXES Annex A - Defined Terms SCHEDULES Schedule A - Intentionally Omitted Schedule B - Schedule of Representations Schedule 2.4 - Form of Prepaid Receivables Notice Schedule 3.1 - Conditions to Effectiveness of Agreement Schedule 5.11 - Procedures for Data Integrity Reviews EXHIBITS Exhibit A - Form of Receivables Sale Agreement Exhibit B - Form of Servicer's Determination Date Certificate Exhibit B-1 - Form of Servicer's VFN Prepayment Date Certificate Exhibit C - Form of Receivables Sale Notice Exhibit D - Form of Servicer's Receivables Sale Date Certificate Exhibit E - Form of Receivables Purchase Note
v SALE AND SERVICING AGREEMENT dated as of October 8, 1997, among CP Funding Corp., a Nevada corporation (the "Borrower"), AMERICREDIT FINANCIAL SERVICES, INC., a Delaware corporation ("AFS") as seller and as servicer (in such capacities, the "Seller" and the "Servicer", respectively), and The Chase Manhattan Bank, a New York banking corporation ("Chase") as backup servicer and as funding agent (in such capacities, the "Backup Servicer" and the "Funding Agent", respectively). WHEREAS, AFS is engaged in the business of acquiring motor vehicle retail installment sale contracts from motor vehicle dealers and of servicing such contracts and the related receivables; and WHEREAS, the Borrower desires to enter into an agreement with AFS, pursuant to which the Borrower may, at its option, from time to time purchase from AFS such contracts and the related receivables; and WHEREAS, the Borrower desires to retain AFS as servicer of such purchased contracts and receivables; and WHEREAS, AFS is willing to sell and to service all such contracts and receivables; and WHEREAS, the Borrower desires to obtain financing for its purchase of the contracts and receivables from Park Avenue Receivables Corporation and from a syndicate of bank lenders; NOW, THEREFORE, in consideration of the premises and the mutual covenants herein contained, the parties hereto agree as follows: ARTICLE I DEFINITIONS SECTION 1.1 DEFINITIONS. As used herein, "Agreement" shall mean this Sale and Servicing Agreement, as it may from time to time be amended, supplemented or otherwise modified in accordance with the terms hereof. Unless the context otherwise requires, other capitalized terms used herein and not otherwise defined shall have the meanings assigned to such terms in Annex A hereto, which Annex A is incorporated by reference herein. SECTION 1.2 OTHER DEFINITIONAL PROVISIONS. (a) All terms defined in Annex A shall have such 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. (b) The principles of construction set forth in Annex A shall apply to this Agreement. ARTICLE II SALE OF RECEIVABLES SECTION 2.1 SALE OF RECEIVABLES. Subject to the satisfaction of the conditions precedent set forth in Article III hereof, in consideration of the Borrower's delivery to or upon the order of the Seller of the Receivables Purchase Price therefor, the Seller, as to the Receivables sold on the Initial Receivables Sale Date and on each subsequent Receivables Sale Date, in each case pursuant to a Receivables Sale Agreement, shall sell, transfer, assign, pledge, set over and otherwise convey to the Borrower, without recourse (subject to the obligations set forth herein), all right, title and interest of the Seller in, to and under: (a) the Receivables sold on each such date, as listed in Schedule A to the relevant Receivables Sale Agreement, and all moneys received thereon after the Relevant Cutoff Date; (b) all security interests in the Financed Vehicles granted by Obligors pursuant to the Receivables sold and any other interest of the Seller in such Financed Vehicles; (c) all proceeds and all rights to receive proceeds with respect to the Receivables sold from claims on any physical damage, credit life or disability insurance policies covering Financed Vehicles or Obligors and any proceeds from the liquidation of such Receivables; (d) all rights of the Seller against Dealers pursuant to Dealer Agreements and/or Dealer Assignments; (e) all rights under any Service Contracts on the related Financed Vehicles; (f) the related Receivables Files; and (g) all proceeds of any and all of the foregoing. 2 SECTION 2.2 THE CONVEYED PROPERTY; NATURE OF TRANSACTION. (a) Any and all of the property described in the foregoing Section 2.1 is referred to as the "Conveyed Property". (b) It is the intention of the Seller that each sale and assignment contemplated by this Agreement shall constitute a sale of the Receivables and other property from the Seller to the Borrower and the beneficial interest in and title to the Receivables and the Other Conveyed Property shall not be part of the Seller's estate in the event of the filing of a bankruptcy petition by or against the Seller under any bankruptcy law. In the event that, notwithstanding the intent of the Seller, the sale and assignment contemplated hereby is held not to be a sale, this Agreement and each Receivables Sale Agreement shall constitute a security agreement, and the Seller hereby grants to the Borrower a security interest in all of the Conveyed Property, whether now owned or hereafter acquired and wherever located. At the request of the Borrower or the Funding Agent, the Seller, at its expense, will take all action necessary or advisable to perfect and protect such security interest, free and clear of all Liens (other than the Lien of the Funding Agent). SECTION 2.3 FURTHER ENCUMBRANCE OF CONVEYED PROPERTY; ADDITIONAL COVENANTS OF THE SELLER. (a) Immediately upon the conveyance to the Borrower by the Seller of any item of the Conveyed Property, all right, title and interest of the Seller in and to such item of Conveyed Property shall terminate, and all such right, title and interest shall vest in the Borrower. (b) Immediately upon the vesting of the Conveyed Property in the Borrower, the Borrower shall have the sole right to transfer, sell, pledge or otherwise encumber, such Conveyed Property. As required by the Funding Agreement, the Borrower shall grant a security interest in the Conveyed Property to secure the repayment of the Secured Obligations, pursuant to the Security Agreement. (c) Without limiting the foregoing, the Seller covenants as follows: (i) LIENS IN FORCE. The Financed Vehicle securing each Receivable shall not be released by the Seller in whole or in part from the security interest granted under the Receivable, except upon payment in full of the Receivable or as otherwise contemplated herein and the Seller shall not take or permit any action inconsistent with the foregoing; (ii) NO IMPAIRMENT. The Seller shall do nothing to impair the rights of the Borrower or the Secured Parties in the Receivables, the Dealer Agreements, the Dealer Assignments, the Insurance Policies or any other property or interest comprising the Other Conveyed Property; 3 (iii) NO AMENDMENTS. The Seller shall not take or permit any action to extend or otherwise amend the terms of any Receivable, except in accordance with Section 5.2 hereof; and (iv) RESTRICTIONS ON LIENS. The Seller 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 Funding 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 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 Funding Agent, for the benefit of the Secured Parties. The Seller will take no action to cause any Receivable to be evidenced by an instrument (as such term is defined in the Relevant UCC). (d) The Seller will furnish or cause to be furnished to the Funding Agent (and the Funding Agent promptly after receipt thereof shall forward to each of the Secured Parties): (i) within 90 days after the end of each fiscal year of AmeriCredit Corp., the audited consolidated balance sheet and related statements of operations, shareholders' equity and cash flows of AmeriCredit Corp. as of the end of and for such year, setting forth in each case in comparative form the figures for the previous fiscal year, all reported on by Coopers & Lybrand, LLC or other independent public accountants of recognized national standing (without a "going concern" or like qualification or exception and without any qualification or exception as to the scope of such audit) to the effect that such consolidated financial statements present fairly in all material respects the financial condition and results of operations of AmeriCredit Corp. and its consolidated subsidiaries on a consolidated basis in accordance with GAAP; (ii) within 45 days after the end of each of the first three fiscal quarters of each fiscal year of AmeriCredit Corp., the consolidated balance sheet and related statements of operations of AmeriCredit Corp. as of the end of and for such fiscal quarter and the then elapsed portion of the fiscal year, and statements of cash flows for AmeriCredit Corp. for the then elapsed portion of the fiscal year, setting forth in each case in comparative form the figures for the corresponding period or periods of (or, in the case of the balance sheet, as of the end of) the previous fiscal year, all certified by one of the financial officers of AmeriCredit Corp. as presenting fairly in all material respects the financial condition and results of its operations and its consolidated subsidiaries on a consolidated basis in accordance with GAAP consis- 4 tently applied, subject to normal year-end audit adjustments and the absence of footnotes; (iii) promptly after the same become publicly available, copies of all periodic and other reports (excluding the monthly 8-K filed for the securitization trusts for the securitizations of AmeriCredit Corp. and/or its subsidiaries), proxy statements and other materials filed by AmeriCredit Corp. or any subsidiary with the Securities and Exchange Commission, or any governmental authority succeeding to any or all of the functions of said Commission, or with any national securities exchange, or distributed by AmeriCredit Corp. to its shareholders generally, as the case may be; and (iv) promptly following any request therefor, such other information regarding the operations, business affairs and financial condition of AmeriCredit Corp. or any subsidiary, or compliance with the terms of this Agreement, as the Funding Agent may reasonably request. SECTION 2.4 PREPAYMENT OF PURCHASE PRICE OF RECEIVABLES. From time to time, the Borrower may make a cash payment to the Seller out of funds available therefor, by way of prepayment for future sales of Receivables hereunder, which payment shall be accompanied by a notice substantially in the form of Schedule 2.4 hereto. The Seller's acceptance of any such prepayment shall constitute its agreement to sell Receivables satisfying the criteria set forth in Schedule B hereto and otherwise in accordance with the terms and conditions of this Agreement. ARTICLE III CONDITIONS PRECEDENT SECTION 3.1 CONDITIONS PRECEDENT TO THE EFFECTIVENESS OF THIS AGREEMENT. The effectiveness of this Agreement is subject to the following conditions precedent (provided, however, that payment by the Borrower of the amounts referred to in clauses (ii) and (iv) below may be made out of the proceeds of the Initial Funding): (i) the Borrower and the Funding Agent shall have received, and found satisfactory in form and substance, each of the Basic Agreements, and each of the other documents, certificates and opinions set forth in Schedule 3.1; (ii) without limiting the foregoing, the Funding Agent shall have received and found satisfactory in form and substance the Hedge Contract(s) to be effective as of the Effective Date which shall, among other things, (A) be in an aggregate notional amount equal to the Facility Limit; (B) be a 6% LIBOR cap with the entire 5 consideration payable by the Borrower thereunder to be paid in full on the Effective Date; (C) provide for a term equal to the initial term of the Facility, with an amortization schedule in the event of a Termination Event or non-renewal of the Facility satisfactory to the Funding Agent and the Rating Agencies; and (D) provide for any payments by the Hedge Counterparty thereunder to be payable on the last Business Day of each calendar month; (iii) the Funding Agent shall have entered into an intercreditor agreement, satisfactory to it in form and substance (the "Intercreditor Agreement"), with Wells Fargo in its capacity as agent bank under the Restated Revolving Credit Agreement, dated as of October 3, 1997, to which the Seller is a party; and (iv) the amount of $2,450,000 in immediately available funds shall have been received by the Funding Agent from the Borrower for deposit to the Reserve Account. SECTION 3.2 CONDITIONS PRECEDENT TO EACH RECEIVABLES SALE. (a) The initial sale and each subsequent sale of Receivables shall be subject to the further conditions precedent that: (i) the Seller shall have provided the Borrower and the Funding Agent with a Receivables Sale Notice not later than three Business Days prior to such Receivables Sale Date and shall have provided any information reasonably requested by the Borrower and/or the Funding Agent with respect to the Receivables to be sold to the Borrower on such Receivables Sale Date, said Receivables Sale notice to including as an exhibit thereto the form of UCC financing statement to be filed with respect to such Receivables which shall include a schedule listing the Receivables to be sold on such Receivables Sale Date substantially in the form of the Schedule A to the related Receivables Sale Agreement; (ii) the Seller shall have caused the Servicer to provide the Borrower and the Funding Agent with a Servicer's Receivables Sale Date Certificate not later than three Business Days prior to such Receivables Sale Date, which Certificate shall set forth the Pool Balance as of the Reference Date, the Principal Balance of the Receivables to be sold, and such additional information as the Borrower and/or the Funding Agent shall specify; (iii) the Seller and the Borrower shall have executed and delivered to the Funding Agent a duly executed Receivables Sale Agreement which shall include a Schedule A listing the Receivables to be sold on such Receivables Sale Date; 6 (iv) the Seller shall, to the extent required by Section 5.2, 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 Sale Date; (v) as of each Receivables Sale Date, (A) the Seller shall not be insolvent and shall not become insolvent as a result of the sale of Receivables on such Receivables Sale Date, (B) the Seller shall not intend to incur or believe that it shall incur debts that would be beyond its ability to pay as such debts mature, (C) such sale shall not have been made with actual intent to hinder, delay or defraud any Person and (D) the assets of the Seller shall not constitute unreasonably small capital to carry out its business as conducted; (vi) the Termination Date shall not have occurred; (vii) after giving effect to the sale of Receivables proposed to be made on any Receivables Sale Date, no Pool Limitation shall have been exceeded; (viii) each of the representations and warranties made by the Seller pursuant to Section 4.1 with respect to the Receivables to be sold on such Receivables Sale Date shall be true and correct as of such Receivables Sale Date, and the Seller shall have performed all obligations to be performed by it hereunder on or prior to such Receivables Sale Date; (ix) the Seller shall, at its own expense, on or prior to the Receivables Sale Date indicate in its computer files that the Receivables identified in the Receivables Sale Agreement have been sold to the Borrower pursuant to this Agreement; (x) the Seller shall have taken any action (including, but not limited to, the filing of appropriate UCC financing statements) required to maintain the ownership interest of the Borrower in the Receivables (PROVIDED, HOWEVER, that after the Initial Receivables Sale Date the Seller shall make such filings as promptly as possible and in no event later than the third Business Day following the respective Receivables Sale Date and shall promptly provide to each of the Borrower and the Funding Agent a copy of a stamped acknowledgment copy thereof); (xi) each of the Funding Agent and the Borrower shall have received, duly executed and delivered by Wells Fargo, a lien release substantially in the form specified in Section 1(b) of the Intercreditor Agreement; (xii) no selection procedures adverse to the interests of the Borrower and/or the Secured Parties shall have been utilized in selecting the Receivables to be sold on such Receivables Sale Date; 7 (xiii) without limiting any of the foregoing, no event shall have occurred and remain continuing, nor would result from such sale of Receivables, that constitutes a Termination Event or a Potential Termination Event; (xiv) on each Receivables Sale Date after the Initial Receivables Sale Date, the Borrower shall transfer to the Funding Agent for deposit in the Reserve Account, the amount of the Subsequent Reserve Account Deposit, if any, required to be made in connection with such sale; (xv) the Seller shall have received a cash payment in the amount of the entire Receivables Purchase Price of the Receivables sold on such Receivables Sale Date, except to the extent that the Seller, at its option, elects to extend credit to the Borrower under the Receivables Purchase Note or to make a capital contribution to the Borrower; (xvi) to the extent that, after giving effect to the sale of Receivables made on such date there would be one or more states of the United States in which Financed Vehicles securing more than 10% of the Pool Balance were titled and as to which states an Opinion of Counsel had not been given on the Effective Date or on a prior Receivables Sale Date as to the perfection, priority and enforceability of the Funding Agent's security interest for each such state, the Seller shall have caused to be delivered to the Borrower and the Funding Agent such an Opinion of Counsel together with the related opinion of counsel, satisfactory in form and substance to the Borrower and the Funding Agent to be given by in-house counsel to the Seller with respect to such jurisdiction; and (xvii) the Borrower shall have delivered to the Funding Agent an Officer's Certificate confirming the satisfaction of each condition precedent specified in this Section 3.2. (b) Notwithstanding anything to the contrary contained in the foregoing Section 3.2(a), in connection with any contemplated CP Funding, upon the request of the Borrower, the Funding Agent, in its discretion, may accept a revised Receivables Sale Notice and a revised Servicer's Receivables Sale Date Certificate, up to 1 p.m. on the Business Day immediately preceding such contemplated CP Funding, subject to the satisfaction of all other conditions set forth above. 8 ARTICLE IV THE RECEIVABLES SECTION 4.1 REPRESENTATIONS AND WARRANTIES OF SELLER. The Seller makes the following representations and warranties as to the Receivables on which the Borrower is deemed to have relied in acquiring the Receivables and upon which the Secured Parties shall be deemed to have relied in making any Advance pursuant to the Funding Agreement, as the case may be. Such representations and warranties speak as of the execution and delivery of this Agreement and as of each Receivables Sale Date with respect to the Receivables sold on such date, but shall survive the sale, transfer and assignment of the Receivables to the Borrower and the pledge thereof to the Funding Agent pursuant to the Security Agreement: (a) SCHEDULE OF REPRESENTATIONS. The representations and warranties set forth on the Schedule of Representations attached hereto as Schedule B are true and correct. SECTION 4.2 REPURCHASE UPON BREACH. The Seller, the Servicer or the Borrower, as the case may be, shall inform the other parties to this Agreement promptly, in writing, (i) upon the discovery of any breach of the Seller's representations and warranties made pursuant to Section 4.1, and (ii) of any Receivable for which the related Lien Certificate has not been received within 150 days following the Receivables Sale Date with respect thereto (for purposes of this Section 4.2, each of the foregoing referred to as a "breach"). As of the last day of the month in which the Seller, the Servicer or the Borrower, as the case may be, discovers the breach, or in which the Seller receives notice of such breach, unless such breach is cured by such date, the Seller shall have an obligation to repurchase any Receivable that is adversely affected and/or in which the interests of the Borrower or the Secured Parties are adversely affected by any such breach. In consideration of and simultaneously with the repurchase of the Receivable, the Seller shall remit, or cause the Servicer to remit, to the Collection Account the Repurchase Obligation Amount in the manner specified in Section 6.7 and the Borrower shall execute such assignments and other documents reasonably requested by such Person in order to effect such repurchase. The sole remedy of the Borrower, the Funding Agent, or the Secured Parties with respect to a breach of representations and warranties pursuant to Section 4.1 and the agreement contained in this Section shall be the repurchase of Receivables and Seller indemnity pursuant to this Section, subject to the conditions contained herein. Neither the Funding Agent nor the Borrower shall have a duty to conduct any affirmative investigation as to the occurrence of any conditions requiring the repurchase of any Receivable pursuant to this Section. In addition to the foregoing and notwithstanding whether the related Receivable shall have been purchased by the Seller, the Seller shall indemnify the Borrower, the Backup Servicer, the Funding Agent, and the Secured Parties against all costs, expenses, losses, damages, claims and 9 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 4.3 CUSTODY OF RECEIVABLES FILES. (a) In connection with the sale, transfer and assignment of the Receivables and the Other Conveyed Property to the Borrower pursuant to this Agreement and simultaneously with the execution and delivery of this Agreement, the Funding Agent shall enter into the Custodian Agreement with the Custodian, dated as of the date hereof, pursuant to which the Funding Agent shall revocably appoint the Custodian, and the Custodian shall accept such appointment, to act as the agent of the Funding Agent as custodian of the following documents or instruments in its possession which shall be delivered to the Custodian as agent of the Funding Agent on or before the Initial Receivables Sale Date and each subsequent Receivables Sale Date (with respect to each Receivable): (i) The fully executed original of the Receivable (together with any agreements modifying the Receivable, including without limitation any extension agreements); (ii) The original credit application, or a copy thereof, of each Obligor, fully executed by each such Obligor on the Servicer's customary form, or on a form approved by the Servicer, for such application; and (iii) The original certificate of title (when received) and otherwise such documents, if any, that the Servicer keeps on file in accordance with its customary procedures indicating that the Financed Vehicle is owned by the Obligor and subject to the interest of the Seller as first lienholder or secured party, or, if such original certificate of title has not yet been received, a copy of the application therefor, showing the Seller as secured party. The Funding Agent may act as the Custodian, in which case the Funding Agent shall be deemed to have assumed the obligations of the Custodian specified in the Custodian Agreement. (b) Upon payment in full of any Receivable, the Servicer will notify the Custodian pursuant to a certificate of an officer of the Servicer (which certificate shall include a statement to the effect that all amounts received in connection with such payments which are required to be deposited in the Collection Account pursuant to Section 5.1 have been so deposited) and shall request delivery of the Receivable and Receivable File to the Servicer; PROVIDED, HOWEVER, that so long as AFS acts in the capacities of Servicer and of Custodian, such notice by the Servicer may be made in such other form and manner as are consistent with the Servicer's customary operating procedures. From time to time as appropriate for servicing and enforcing any Receivable, the Custodian shall, upon written request of an officer of the Servicer and delivery to the Custodian of a receipt signed by such officer, cause the original Receivable and the related Receivable File to be released to the Servicer. The 10 Servicer's receipt of a Receivable and/or Receivable File shall obligate the Servicer to return the original Receivable and the related Receivable File to the Custodian when its need by the Servicer has ceased unless the Receivable is repurchased as described in Section 4.2 or 5.7. ARTICLE V ADMINISTRATION AND SERVICING OF RECEIVABLES SECTION 5.1 APPOINTMENT; STANDARD OF CARE; DUTIES OF THE SERVICER. (a) The Servicer is hereby authorized to act as agent for the Borrower 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. So long as AFS is the Servicer, the Servicer agrees that its servicing of the Receivables shall be carried out in accordance with the Credit and Servicing Procedures and, with respect to any matters not expressly covered by such Credit and Servicing Procedures, or, in the event the Servicer is not AFS, in accordance with customary and usual procedures of institutions that are primarily engaged in the business of servicing motor vehicle retail installment sales contracts; PROVIDED, that in any event the Servicer shall exercise at least 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 foregoing standard of care being referred to as the "Servicing Standard"). (b) The Servicer's duties shall include, without limitation: collection and posting of all payments; responding to inquiries of Obligors on the Receivables; investigating delinquencies; sending payment coupons to Obligors; reporting any required tax information to Obligors; monitoring the Collateral; complying with the terms of the Lockbox Agreement; accounting for collections and furnishing monthly and annual statements to the Borrower and the Funding Agent with respect to collections and distributions, as well as the Servicer statements required in connection with the each sale of Receivables; monitoring the status of Insurance Policies with respect to the Financed Vehicles and performing the other duties specified herein. The Servicer shall also administer and enforce all rights and responsibilities of the holder of the Receivables provided for in the Dealer Agreements (and shall maintain possession of the Dealer Agreements, to the extent it is necessary to do so), the Dealer Assignments and the Insurance Policies, to the extent that such Dealer Agreements, Dealer Assignments and Insurance Policies relate to the Receivables, the Financed Vehicles or the Obligors. To the extent consistent with the standards, policies and procedures otherwise required hereby, the Servicer shall follow its customary standards, policies, and procedures and shall have full power and authority, acting alone, to do any and all things in connection with such managing, servicing, administration and collection that it may deem necessary or desirable. Without limiting the generality of the foregoing, the Servicer is hereby authorized and empowered by the Borrower to execute and deliver, on behalf of the Borrower, any and all instruments of satisfaction or cancellation, or of partial or full release or discharge, and all other comparable instruments, with respect to the Receivables and with respect to the Financed Vehicles; PROVIDED, HOWEVER, that notwithstanding the foregoing, the 11 Servicer shall not, except pursuant to an order from a court of competent jurisdiction, release an Obligor from payment of any unpaid amount under any Receivable or waive the right to collect the unpaid balance of any Receivable from the Obligor. The Servicer is hereby authorized to commence, in its own name or in the name of the Borrower, a legal proceeding to enforce a Receivable pursuant to Section 5.3 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 Borrower 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 Borrower 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 Funding Agent shall furnish the Servicer with any powers of attorney and other documents which the Servicer may reasonably request and which the Servicer deems necessary or appropriate and take any other steps which the Servicer may deem necessary or appropriate to enable the Servicer to carry out its servicing and administrative duties under this Agreement. (c) The provisions of this subsection (c) are applicable only so long as AFS is the Servicer. On each Determination Date, together with the Servicer's Determination Date Certificate to be delivered on such date, which Servicer's Determination Date Certificate shall include a statement that no modification has been made to the Credit and Servicing Procedures that could be reasonably expected to have a material adverse effect on the Borrower and/or the Secured Parties, the Servicer shall deliver to the Funding Agent a description of any modification made to the Credit and Servicing Procedures since the last Determination Date. The Servicer further agrees that it shall not make any changes to the Credit and Servicing Procedures that could reasonably be expected to have a material adverse effect on the Borrower and/or the Secured Parties unless it has given the Funding Agent (for transmittal to the Required Banks and the Rating Agencies) at least 20 days' prior written notice of such proposed modification and the Required Banks have not objected in writing prior to the expiration of such 20 day period. SECTION 5.2 COLLECTION OF RECEIVABLE PAYMENTS; MODIFICATIONS OF RECEIVABLES; LOCKBOX AGREEMENTS. (a) Consistent with the Servicing Standard, the Servicer shall make reasonable efforts to collect all payments called for under the terms and provisions of the Receivables as and when the same shall become due, and shall follow such collection procedures as it follows with respect to all comparable automobile receivables that it services for itself or others and otherwise act with respect to the Receivables, the Dealer Agreements, the Dealer Assignments, the Insurance Policies and the Other Conveyed Property in such manner as will, in the reasonable judgment of the Servicer, maximize the amount to be received by the Borrower 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. 12 (b) The Servicer may at any time agree to a modification or amendment of a Receivable in order to (i) change the Obligor's regular due date to a date within the Collection Period in which such due date occurs or (ii) reamortize the Scheduled Payments on the Receivable following a partial prepayment of principal. (c) The Servicer may grant payment extensions on, or other modifications or amendments to, a Receivable (in addition to those modifications permitted by Section 5.2(b)) in accordance with the Credit and Servicing Procedures and the Servicing Standard if the Servicer believes in good faith that such extension, modification or amendment is necessary to avoid a default on such Receivable, will maximize the amount to be received by the Borrower with respect to such Receivable, and is otherwise in the best interests of the Borrower; PROVIDED, HOWEVER, that: (i) The aggregate period of all extensions on a Receivable shall not exceed six months; (ii) In no event may a Receivable be extended such that the final payment scheduled to be made thereunder would be more than 66 months beyond the Commitment Expiry Date; and (iii) the Servicer shall not amend or modify a Receivable (except as provided in Section 5.2(b) and this Section 5.2(c)) without the consent of the Funding Agent (acting at the direction of the Required Banks). (d) 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 Lockbox Banks, acting as agent for the Borrower pursuant to a Lockbox Agreement. The Servicer shall use its best efforts to notify or direct any Lockbox Bank to deposit all payments on the Receivables in the Lockbox Account no later than the Business Day after receipt, and to cause all amounts credited to the Lockbox Account on account of such payments to be transferred to the Collection Account no later than the second Business Day after receipt of such payments. The Lockbox Account shall be a demand deposit account held by the Lockbox Bank, or at the request of the Funding Agent, acting at the direction of the Required Banks, an Eligible Deposit Account. On each Receivables Sale Date, the Servicer shall have notified each Obligor that makes its payments on the Receivables by check to make such payments thereafter directly to the Lockbox Bank (except in the case of Obligors that have already been making such payments to the Lockbox Bank), and shall have provided each such Obligor with remittance invoices in order to enable such Obligors to make such payments directly to the Lockbox Bank for deposit into the Lockbox Account, and the Servicer will continue, not less often than every three months, to so notify those Obligors who have failed to make payments to the Lockbox Bank. If and to the extent requested by the Funding Agent, acting at the direction of the Required Banks, the Servicer shall request each Obligor that makes payment on the Receivables by direct debit of such Obligor's bank account, to 13 execute a new authorization for automatic payment which in the judgment of the Funding Agent, acting at the direction of the Required Banks, is sufficient to authorize direct debit by the Lockbox Bank on behalf of the Borrower. If at any time, the Lockbox Bank is unable to directly debit an Obligor's bank account that makes payment on the Receivables by direct debit and if such inability is not cured within 15 days or cannot be cured by execution by the Obligor of a new authorization for automatic payment, the Servicer shall notify such Obligor that it cannot make payment by direct debit and must thereafter make payment by check. Notwithstanding any Lockbox Agreement, or any of the provisions of this Agreement relating to the Lockbox Agreement, the Servicer shall remain obligated and liable to the Borrower, the Funding 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, PROVIDED, however, that the foregoing shall not apply to any Backup Servicer for so long as a Lockbox Bank is performing its obligations pursuant to the terms of a Lockbox Agreement. In the event of a termination of the Servicer, the successor Servicer shall assume all of the rights and obligations of the outgoing Servicer under the Lockbox Agreement 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 Lockbox Agreement to the same extent as if such Lockbox Agreement had been assigned to the successor Servicer, except that the outgoing Servicer shall not thereby be relieved of any liability or obligations on the part of the outgoing Servicer to the Lockbox Bank under such Lockbox Agreement. The outgoing Servicer shall, upon request of the Funding Agent, but at the expense of the outgoing Servicer, deliver to the successor Servicer all documents and records relating to each such Lockbox Agreement and an accounting of amounts collected and held by the Lockbox Bank and otherwise use its best efforts to effect the orderly and efficient transfer of any Lockbox Agreement to the successor Servicer. In the event that the Funding Agent elects to change the identity of the Lockbox Bank, the outgoing Servicer, at its expense, shall cause the Lockbox Bank to deliver, at the direction of the Funding Agent to the Funding Agent or a successor Lockbox Bank, all documents and records relating to the Receivables and all amounts held (or thereafter received) by the Lockbox Bank (together with an accounting of such amounts) and shall otherwise use its best efforts to effect the orderly and efficient transfer of the lockbox arrangements and the Servicer shall notify the Obligors to make payments to the Lockbox established by the successor. (e) The Servicer shall remit all payments by or on behalf of the Obligors received directly by the Servicer (including any such payments forwarded to the Servicer for special handling pursuant to the Lockbox Agreement) into the Collection Account as soon as practicable, but in no event later than the Business Day after receipt thereof. SECTION 5.3 REALIZATION UPON RECEIVABLES. 14 (a) Consistent with the Servicing Standard, the Servicer shall use its best efforts to repossess (or otherwise comparably convert the ownership of) and liquidate any Financed Vehicle securing a Receivable with respect to which the Servicer has determined that payments thereunder are not likely to be resumed, as soon as is practicable after default on such Receivable but in no event later than the date on which all or any portion of a Scheduled Payment has become 91 days delinquent; provided, however, that the Servicer may elect not to repossess a Financed Vehicle within such time period if in its good faith judgment it determines that the proceeds ultimately recoverable with respect to such Receivable would be increased by forbearance. The Servicer is authorized to follow such customary practices and procedures as it shall deem necessary or advisable, consistent with the Servicing Standard, which practices and procedures may include reasonable efforts to realize upon any recourse to Dealers, the sale of the related Financed Vehicle at public or private sale, the submission of claims under an Insurance Policy and other actions by the Servicer in order to realize upon such a Receivable. The foregoing is subject to the provision that, in any case in which the Financed Vehicle shall have suffered damage, the Servicer shall not expend funds in connection with any repair or towards the repossession of such Financed Vehicle unless it shall determine in its discretion that such repair and/or repossession shall increase the proceeds of liquidation of the related Receivable by an amount greater than the amount of such expenses. All amounts received upon liquidation of a Financed Vehicle shall be remitted directly by the Servicer to the 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 (including, without limitation, any personal property taxes assessed on such Financed Vehicles). Such expenses, at the option of the Servicer: (i) shall be reimbursable as Servicer Advances on the Distribution Date next following the liquidation of the Financed Vehicle (or, if consistent with the Servicing Standard the Servicer shall have made a determination that the Financed Vehicle cannot be repossessed and/or liquidated, on the Distribution Date next following the delivery to the Borrower and the Funding Agent of an Officer's Certificate of the Servicer to such effect); or (ii) shall be retained by the Servicer as deductions from the cash proceeds of such Financed Vehicle, any deficiency obtained from the Obligor or any amounts received from the related Dealer, which proceeds and other such cash receipts shall not be required to be deposited as required by Section 5.2(e) and the foregoing provisions of this Section 5.3(a) to the extent of such Servicer disbursements. Notwithstanding anything to the contrary in the foregoing, the Servicer shall not pay any such reimbursable expense with respect to a Financed Vehicle to the extent that it does not reasonably expect, after reasonable inquiry, to be reimbursed for such expenses from the collections on the Receivable relating to such Financed Vehicle. (b) If the Servicer elects to commence a legal proceeding to enforce a Dealer Agreement or Dealer Assignment, the act of commencement shall be deemed to be an automatic assignment from the Borrower to the Servicer of the rights under such Dealer Agreement and Dealer Assignment for purposes of collection only. If, however, in any enforcement suit or legal proceeding it is held that the Servicer may not enforce a Dealer Agreement or Dealer Assignment on the grounds that it is not a real party in interest or a Person entitled to enforce the Dealer Agreement or Dealer Assignment, the Funding Agent, at the Borrower's expense, or the Seller, at the Borrower's expense, shall take such steps as the Servicer deems necessary to enforce the Dealer Agreement or Dealer 15 Assignment, including bringing suit in its name or the name of the Seller or of the Borrower and/or the Funding Agent for the benefit of the Secured Parties. All amounts recovered shall be remitted directly by the Servicer as provided in Section 5.2(e). SECTION 5.4 INSURANCE. (a) The Servicer shall require, in accordance with the Servicing Standard, that each Financed Vehicle be insured by the related Obligor under the Insurance Policies referred to in Paragraph "n" of the Schedule of Representations and Warranties and shall monitor the status of such physical loss and damage insurance coverage thereafter, in accordance with the Servicing Standard. Each Receivable requires the Obligor to maintain such physical loss and damage insurance, naming the Seller and its successors and assigns as additional insureds, and permits the holder of such Receivable to obtain physical loss and damage insurance at the expense of the Obligor if the Obligor fails to maintain such insurance. If the Servicer shall determine that an Obligor has failed to obtain or maintain a physical loss and damage Insurance Policy covering the related Financed Vehicle which satisfies the conditions set forth in such Paragraph "n" (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. At its sole option, 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. Any such policy of Collateral Insurance shall be endorsed with clauses providing for loss payable to the Borrower. Costs incurred by the Servicer in maintaining such Collateral Insurance shall be paid by the Borrower. (b) The Servicer may sue to enforce or collect upon the Insurance Policies, in its own name, if possible, or as agent of the Borrower and/or the Secured Parties. If the Servicer elects to commence a legal proceeding to enforce an Insurance Policy, the act of commencement shall be deemed to be an automatic assignment of the rights of the Borrower under such Insurance Policy to the Servicer for purposes of collection only. If, however, in any enforcement suit or legal proceeding it is held that the Servicer may not enforce an Insurance Policy on the grounds that it is not a real party in interest or a holder entitled to enforce the Insurance Policy, the Borrower and/or the Funding Agent, at the Borrower's expense, or the Seller, at the Borrower's expense, shall take such steps as the Servicer deems necessary to enforce such Insurance Policy, including bringing suit in its name or the name of the Borrower and/or the Funding Agent for the benefit of the Secured Parties. SECTION 5.5 MAINTENANCE OF SECURITY INTERESTS IN VEHICLES. (a) Consistent with the Servicing Standard, the Servicer shall take such steps on behalf of the Borrower as are necessary to maintain perfection of the security interest created by each Receivable in the related Financed Vehicle, including but not limited to obtaining the execution by the Obligors and the recording, registering, filing, re-recording, re-filing, and re-registering of all security agreements, financing statements and continuation statements as are necessary to maintain 16 the security interest granted by the Obligors under the respective Receivables. The Funding 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 Borrower 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 Borrower is insufficient, without a notation on the related Financed Vehicle's certificate of title, or without fulfilling any additional administrative requirements under the laws of the state in which the Financed Vehicle is located, to perfect a security interest in the related Financed Vehicle in favor of the Borrower, the Servicer hereby agrees that the Seller's designation as the secured party on the certificate of title shall be deemed in its capacity as Servicer as agent of the Secured Parties and further agrees to hold such certificate of title as the agent and custodian of the Secured Parties. (b) Upon the occurrence of a Servicer Termination Event, the Funding Agent may instruct the Servicer to take or cause to be taken such action as may be necessary to perfect or re-perfect the security interests in the Financed Vehicles securing the Receivables in the name of the Borrower by amending the title documents of such Financed Vehicles or by such other reasonable means as may, in the opinion of counsel to the Required Banks, be necessary or prudent. The Servicer hereby agrees to pay all expenses related to such perfection or re-perfection and to take all action necessary therefor. In addition, the Required Banks may instruct the Funding Agent and the Servicer to take or cause to be taken such action as may be necessary to perfect or re-perfect the security interest in the Financed Vehicles underlying the Receivables in the name of the Borrower, including by amending the title documents of such Financed Vehicles or by such other reasonable means as may, in the opinion of counsel to the Required Banks, be necessary or prudent. The Servicer hereby appoints the Funding Agent as its attorney-in-fact to take any and all steps required to be performed by AFS pursuant to this Section 5.5(b) including, but not limited to, execution of certificates of title or any other documents in the name and stead of the Servicer, and the Funding Agent hereby accepts such appointment. SECTION 5.6 COVENANTS, REPRESENTATIONS, AND WARRANTIES OF SERVICER. By its execution and delivery of this Agreement, the Servicer makes the following representations, warranties and covenants on which on which the Borrower is deemed to have relied in acquiring the Receivables and upon which the Secured Parties shall be deemed to have relied in making any Advance pursuant to the Funding Agreement, as the case may be. The Servicer covenants as follows: (i) LIENS IN FORCE. The Financed Vehicle securing each Receivable shall not be released by the Servicer in whole or in part from the security interest granted under the Receivable, except upon payment in full of the Receivable or as otherwise contemplated herein; (ii) NO IMPAIRMENT. The Servicer shall do nothing to impair the rights of the Borrower or the Secured Parties in the Receivables, the Dealer Agreements, the Dealer Assignments, the Insurance Policies or the Other Conveyed Property; 17 (iii) NO AMENDMENTS. The Servicer shall not extend or otherwise amend the terms of any Receivable, except in accordance with Section 5.2; and (iv) RESTRICTIONS ON LIENS. The Servicer shall not: (i) create or incur or agree to create or incur, or consent to cause (upon the happening of a contingency or otherwise) the creation, incurrence or existence of any Lien or restriction on transferability of the Receivables or of any Other Conveyed Property except for the Lien in favor of the Funding 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 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 Funding Agent, for the benefit of the Secured Parties. The Servicer will take no action to cause any Receivable to be evidenced by an instrument (as such term is defined in the Relevant UCC). SECTION 5.7 PURCHASE OF RECEIVABLES UPON BREACH OF COVENANT. Upon discovery by any of the Seller, the Custodian, the Servicer, the Borrower, the Funding Agent or the Secured Parties of a breach of any of the covenants set forth in Sections 5.5(a) or 5.6, the party discovering such breach shall give prompt written notice to the others; PROVIDED, HOWEVER, that the failure to give any such notice shall not affect any obligation of the Servicer under this Section 5.7. As of the last day of the month following its discovery or receipt of notice of any breach of any covenant set forth in Sections 5.5(a) or 5.6 which adversely affects any Receivable(s) (or the related Financed Vehicle) and/or the interests of the Borrower and/or the Secured Parties therein (including any Defaulted or Delinquent Receivable), the Servicer shall, unless such breach shall have been cured in all material respects, purchase from the Borrower the Receivable affected by such breach and, on the related Determination Date, the Servicer shall pay the related Repurchase Obligation Amount. It is understood and agreed that the obligation of the Servicer to purchase any Receivable (including any Delinquent or 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 the Servicer for such breach available to the Borrower, the Secured Parties or the Funding Agent; PROVIDED, HOWEVER, that the Servicer shall indemnify the Borrower, the Backup Servicer, the Funding Agent and the Secured Parties against all costs, expenses, losses, damages, claims and liabilities, including reasonable fees and expenses of counsel, which may be asserted against or incurred by any of them as a result of third party claims arising out of the events or facts giving rise to such breach. SECTION 5.8 TOTAL SERVICING FEE; PAYMENT OF CERTAIN EXPENSES BY SERVICER. On each Distribution Date, the Servicer shall be entitled to receive out of the Collection Account the Base Servicing Fee and any Supplemental Servicing Fee for the related Collection Period pursuant to Section 6.8 (the "Servicing Fee"). 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 and expenses incurred in connection with distributions and reports made by the Servicer to the Secured 18 Parties). The Servicer shall be liable for the fees and expenses of the Custodian, the Backup Servicer, the Lockbox Bank and the Independent Accountants; PROVIDED, HOWEVER that any successor to AFS as Servicer (including the Backup Servicer) shall not be liable for such fees and expenses which shall, in such event, be the responsibility of the Borrower. SECTION 5.9 CERTAIN SERVICER'S CERTIFICATES. (a) No later than 10:00 a.m. New York City time on each Determination Date, the Servicer shall deliver to the Funding Agent, the Backup Servicer and each Rating Agency a Servicer's Determination Date Certificate executed by a Responsible Officer of the Servicer in substantially the form of Exhibit B hereto and including such credit and other information as the Funding Agent may reasonably request with respect to the Managed Assets, including newly originated Managed Assets. (b) In addition, in connection with any Optional Prepayment pursuant to Section 2.1(f)(ii) of the Funding Agreement, unless such Optional Prepayment is to be effected on a Distribution Date (in which case the relevant calculations with respect to such Optional Prepayment shall be reflected in the applicable Servicer's Determination Date Certificate), the Servicer shall deliver to the Funding Agent, the Backup Servicer and each Rating Agency a Servicer's VFN Prepayment Date Certificate in substantially the form of Exhibit B-1 hereto. Such Servicer's VFN Prepayment Date Certificate shall be delivered to the Funding Agent by 1:00 p.m., five (5) Business Days prior to the contemplated VFN Prepayment Date. SECTION 5.10 ANNUAL STATEMENT AS TO COMPLIANCE, NOTICE OF SERVICER TERMINATION EVENT. (a) The Servicer shall deliver to the Funding Agent, the Backup Servicer and each Rating Agency, on or before April 30 of each year, beginning on April 30, 1998, an Officer's Certificate, dated as of December 31 of the preceding 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 Funding Agent, the Backup Servicer and each Rating Agency, promptly after having obtained knowledge thereof, but in no event later than two (2) Business Days thereafter, written notice in an Officer's Certificate of any event which with the giving of notice or lapse of time, or both, would become a Servicer Termination Event under Section 9.1. 19 SECTION 5.11 ANNUAL INDEPENDENT ACCOUNTANTS' REPORT; QUARTERLY REVIEWS. (a) The Servicer shall cause a firm of nationally recognized independent certified public accountants who shall be selected by the Servicer and acceptable to the Funding Agent (the "Independent Accountants"), who may also render other services to the Servicer or to the Seller, to deliver to the Funding Agent, the Backup Servicer 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, 1998, with respect to the twelve months ended the immediately preceding June 30 (or other applicable date) (or such other period as shall have elapsed from the Closing Date to the date of such certificate), a statement (the "Accountants' Report") addressed to the Board of Directors of the Servicer, to the Funding Agent and the Backup Servicer, 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; and (2) the firm is independent of the Seller and the Servicer within the meaning of the Code of Professional Ethics of the American Institute of Certified Public Accountants. With respect to the fiscal year ended June 30, 1997, the Servicer shall deliver to the Funding Agent, the Backup Servicer and each Rating Agency, on or before October 31, 1997, a copy of each of the foregoing described reports, as well as a copy of the report on the application of agreed upon procedures to three randomly selected servicer certificates of AFS as servicer delivered in connection with the outstanding AmeriCredit securitization transactions for which it acts as servicer, including the delinquency, default and loss statistics required to be specified therein and noting whether any exceptions or errors in the such servicer certificates were found. (b) On the first to occur of (i) 60 days after the Closing Date and (ii) 30 days following the date on which a cumulative aggregate of $50,000,000 Principal Balance of Receivables have been purchased by the Borrower, and thereafter on a quarterly basis, the Independent Accountants shall undertake a data integrity review in accordance with Schedule 5.11 hereof, as such Schedule 5.11 may from time to time be amended by agreement of the Borrower and the Funding Agent, with the consent of the Required Banks. The report of the Independent Accountants on the results of each such data integrity review shall be completed and delivered to the Funding Agent, the Borrower and the Servicer within 20 days following the first, fourth, seventh and tenth months of each calendar year. SECTION 5.12 ACCESS TO CERTAIN DOCUMENTATION AND INFORMATION REGARDING THE RECEIVABLES. The Servicer shall provide to representatives of the Borrower, the Funding Agent and the Backup Servicer reasonable access to the Receivable Files and all other documentation regarding the Receivables. In each case, such access shall be afforded without charge but only upon reasonable request and during normal business hours. Nothing in this Section shall derogate from the obligation of the Servicer to observe any applicable law prohibiting disclosure of information regarding the 20 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 5.13 MONTHLY TAPE. On or before the Determination Date, but in no event later than the seventh calendar day, of each month, the Servicer will deliver to the Backup Servicer a computer tape and a diskette (or any other electronic transmission acceptable to the Funding Agent and the Backup Servicer) in a format acceptable to the Backup Servicer containing the information with respect to the Receivables as of the preceding Accounting Date necessary for preparation of the Servicer's Determination Date Certificate relating to the immediately succeeding Determination Date and necessary to determine the application of collections as provided in Section 6.4. The Backup Servicer shall use such tape or diskette (or other electronic transmission acceptable to the Backup Servicer) to verify the Servicer's Determination Date Certificate delivered by the Servicer, and the Backup Servicer shall certify to the Funding Agent that it has verified the Servicer's Determination Date Certificate in accordance with this Section 5.13 and shall notify the Servicer and the Funding Agent of any discrepancies, in each case, on or before the second Business Day following the Determination Date. In the event that the Backup Servicer reports any discrepancies, the Servicer and the Backup Servicer shall attempt to reconcile such discrepancies prior to the related Distribution Date, but in the absence of a reconciliation, the Servicer's Determination Date Certificate shall control for the purpose of calculations and distributions with respect to the related Distribution Date. In the event that the Backup Servicer and the Servicer are unable to reconcile discrepancies with respect to a Servicer's Determination Date Certificate by the related Distribution Date, the Servicer shall cause the Independent Accountants, at the Servicer's expense, to audit the Servicer's Determination Date Certificate and, prior to the next succeeding Determination Date, reconcile the discrepancies. The effect, if any, of such reconciliation shall be reflected in the Servicer's Determination Date 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 Funding Agent deliver to the Backup Servicer its Collection Records and its Monthly Records within 5 Business Days after demand therefor and a computer tape, or other electronic transmission acceptable to the Backup Servicer, containing as of the close of business on the date of demand all of the data maintained by the Servicer in computer format in connection with servicing the Receivables. Other than the duties specifically set forth in this Agreement, the Backup Servicer shall have no obligations hereunder, including, without limitation, to supervise, verify, monitor or administer the performance of the Servicer. The Backup Servicer shall have no liability for any actions taken or omitted by the Servicer. SECTION 5.14 RETENTION AND TERMINATION OF SERVICER. The Servicer hereby covenants and agrees to act as such under this Agreement during the term of the Facility, as such term may be extended pursuant to the Funding Agreement, unless the Servicer is terminated pursuant to Article IX hereof, or is permitted to resign pursuant to Section 8.6 hereof. SECTION 5.15 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. 21 ARTICLE VI COLLECTION AND RESERVE ACCOUNTS; DISTRIBUTIONS; STATEMENTS TO SECURED PARTIES SECTION 6.1 ESTABLISHMENT OF COLLECTION AND RESERVE ACCOUNTS. (a) The Funding Agent, on behalf of the Secured Parties, shall establish and maintain in its own name accounts that are Eligible Deposit Accounts, the "COLLECTION ACCOUNT" and the "RESERVE ACCOUNT", bearing a designation clearly indicating that the funds deposited therein are held for the benefit of the Funding Agent on behalf of the Secured Parties. The Collection Account and the Reserve Account shall initially be established with the Funding Agent, and may be on a sub-ledger of the Funding Agent. (b) Funds on deposit in the Collection Account and the Reserve Account (collectively, the "PLEDGED ACCOUNTS") in excess of $25,000 shall be invested by the Funding Agent in Eligible Investments selected by the Funding Agent in its discretion among Eligible Investments specified in standing written instructions of the Borrower, or, in the absence of such instructions, solely in the discretion of the Funding Agent. All such Eligible Investments shall be held by the Funding Agent for the benefit of the Secured Parties, and funds on deposit in any Pledged Account shall be invested in Eligible Investments having maturities that are determined by the Funding Agent to be consistent with PARCO's cashflow requirements, including availability of funds for the payment of maturing Commercial Paper, and that in any event will mature no later than the close of business on the Business Day immediately preceding the following Distribution Date. Funds deposited in a Pledged Account on the day immediately preceding a Distribution Date are not required to be invested overnight. All Eligible Investments made in accordance with this subsection will be held to maturity, except to the extent otherwise required in connection with an acceleration of indebtedness pursuant to the terms of the Funding Agreement. (c) All investment earnings of moneys deposited in the Pledged Accounts shall be deposited (or caused to be deposited) by the Funding Agent in the Collection Account, and any loss resulting from such investments shall be charged to such account. The Borrower will not direct the Funding Agent to make any investment of any funds held in any of the Pledged Accounts unless the security interest granted and perfected in such account will continue to be perfected in such investment, in either case without any further action by any Person, and, in connection with any direction to the Funding Agent to make any such investment, if requested by the Funding Agent, the Borrower shall deliver to the Funding Agent an Opinion of Counsel, acceptable to the Funding Agent, to such effect. (d) The Funding Agent shall not in any way be held liable by reason of any insufficiency in any of the Pledged Accounts resulting from any loss on any Eligible Investment included therein except for losses attributable to the Funding Agent's gross negligence or willful misconduct (provided that the foregoing shall not be deemed to relieve the Funding Agent of any 22 liability in its individual capacity as an issuer of any Eligible Investment for failure to make payments thereon in accordance with the terms thereof). (e) It is expressly acknowledged and agreed that the Funding Agent is authorized hereby to direct the purchase of investments constituting Eligible Investments (i) from any Affiliate of the Funding Agent, including securities that are underwritten, placed or dealt in by any such Affiliate and/or from management investment companies of which the Funding Agent (in its individual capacity) or any Affiliate is an investment advisor, administrator, shareholder, servicing agent and/or custodian, or (ii) that involve the Funding Agent (in its individual capacity) or an Affiliate of the Administrative Agent as a participant or counterparty. It is further acknowledged and agreed that the Funding Agent (in its individual capacity) and/or such Affiliates may receive advisory fees, referral fees and other compensation in connection with such services that are distinct from the fees, charges and expenses of the Funding Agent under or in connection with any of the Basic Agreements. (f)(i) The Funding Agent, on behalf of the Secured Parties, shall possess all right, title and interest in and to all funds on deposit from time to time in the Pledged Accounts and in and to all proceeds thereof and all such funds, investments, proceeds and income shall be part of the Conveyed Property. Except as otherwise provided herein, the Pledged Accounts shall be under the sole dominion and control of the Funding Agent for the benefit of the Secured Parties. If, at any time, any of the Pledged Accounts ceases to be an Eligible Deposit Account, the Funding Agent (or the Servicer on its behalf) shall within five Business Days (or such longer period as to which each Rating Agency and the Funding Agent may consent) establish a new Pledged Account as an Eligible Deposit Account and shall transfer any cash and/or any investments to such new Pledged Account. In connection with the foregoing, the Servicer agrees that, in the event that any of the Pledged Accounts are not accounts with the Funding Agent, the Servicer shall notify the Funding Agent in writing immediately upon any of such Pledged Accounts ceasing to be an Eligible Deposit Account. (ii) With respect to the Conveyed Property, the Funding Agent agrees and Borrower agrees to cause that: (A) any Conveyed Property that is held in deposit accounts (within the meaning of the New York UCC) shall be held solely in Eligible Deposit Accounts; and, except as otherwise provided herein, each such Eligible Deposit Account shall be subject to the exclusive custody and control of the Funding Agent, and the Funding Agent shall have sole signature authority with respect thereto; (B) prior to "Uniform Commercial Code-Investment Securities," 1997 N.Y. Laws ch. 566 ("New York Revised Article 8") becoming effective, any Conveyed Property or Collateral invested in Eligible Investments that constitutes "instruments" within the meaning of Section 9-105(1)(i) of the New York UCC (other than Certificated Securities), Certificated Securities, or "uncertificated securities" within the meaning of Article 8 of the New York 23 UCC shall be delivered to the Funding Agent in accordance with the appropriate paragraph of the definition of "Delivery"; (C) with respect to all other Conveyed Property or Collateral not listed in subparagraph (B) above, and with respect to all Conveyed Property or Collateral after New York Revised Article 8 becomes effective, any Conveyed Property or Collateral invested in Eligible Investments shall be delivered to the Funding Agent by causing a financial institution then maintaining a Pledged Account (such institution being referred to as a "Pledged Accounts Securities Intermediary") to create a Security Entitlement (or a United States Securities Entitlement, when applicable) in such Pledged Account in favor of the Funding Agent on behalf of the Secured Parties with respect to such Eligible Investment by indicating by book-entry that such Eligible Investment has been credited to such Pledged Account; (D) the Funding Agent shall only invest in Eligible Investments which the applicable Pledged Account Securities Intermediary agrees to credit to the applicable Pledged Account; (E) any Conveyed Property or Collateral may be delivered: (i) upon the instruction of the Funding Agent, by any additional or alternative procedures as may hereafter become appropriate, in the sole judgment of the Funding Agent, under applicable law or regulations or the interpretation thereof to obtain and maintain a first priority perfected security interest in any such Conveyed Property or Collateral in favor of the Funding Agent on behalf of the Secured Parties, or (ii) upon the request of the Borrower or the Servicer and the consent of the Funding Agent, by any additional or alternative procedures that will, in the written opinion of counsel, create and maintain a first priority perfected security interest in any such Conveyed Property or Collateral in favor of the Funding Agent on behalf of the Secured Parties. (g) The Servicer shall have the power, revocable by the Funding Agent, to instruct the Funding Agent to make withdrawals and payments from the Pledged Accounts for the purpose of permitting each of the Servicer and the Funding Agent to carry out its respective duties hereunder. (h) Notwithstanding anything else contained herein, the Funding Agent agrees that, with respect to each Pledged Account, it will cause each Securities Intermediary establishing such Pledged Account to enter into an agreement pursuant to which the Funding Agent, for the benefit of the Secured Parties, shall have "control" (within the meaning of Section 8-106 of the New York UCC) of such Pledged Account and all securities, investment property, financial assets, investments and other property credited thereto from time to time; PROVIDED that each such agreement entered into between the Funding Agent and any Securities Intermediary shall, in the opinion of special counsel to the Secured Parties, be effective to perfect by "control" (within the meaning of Section 8-106 of 24 the New York UCC) the security interest of the Funding Agent for the benefit of the Secured Parties in such Pledged Account and property credited thereto. SECTION 6.2 RESERVE ACCOUNT. (a) The Servicer shall cause the Funding Agent to establish and maintain an Eligible Deposit Account (the "RESERVE ACCOUNT") with the Funding Agent, bearing a designation clearly indicating that the funds deposited therein are held in trust for the benefit of the Secured Parties. On or prior to the Effective Date, the Borrower shall transfer to the Funding Agent for deposit into the Reserve Account an amount equal to the Reserve Account Initial Deposit. (b) At all times during the term of the Facility, the Borrower shall maintain the Minimum Reserve Account Balance. In the event that the amount on deposit in the Reserve Account shall fall below the Minimum Reserve Account Balance then as promptly as possible and in no event later than five Business Days following such event (or, if sooner, the next contemplated Funding Date pursuant to the Funding Agreement), the Borrower shall pay to the Funding Agent, for deposit in the Reserve Account, the amount of any such shortfall in immediately available funds (it being understood that the payment of any such amount, being referred to as a "Subsequent Reserve Account Deposit", shall be a condition precedent to the occurrence of any Funding on such contemplated Funding Date). (c) Prior to the occurrence of a Termination Event or the Commitment Expiry Date (or the occurrence and continuation of a Pool Seasoning Event), on any Distribution Date after application of Available Funds as set forth in clauses (i) through (xii) of Section 6.8(a) hereof, funds on deposit in the Reserve Account in excess of the higher of (i) the Minimum Reserve Account Balance and (ii) 6% of the VFN Balance, shall be available for distribution to the Borrower in accordance with Section 6.8 hereof. Further, in connection with an Optional Prepayment of the VFN as described in Section 2.1(f) of the Funding Agreement, and after payment of (i) all obligations to PARCO required in connection with such prepayment and (ii) all other costs and expenses related to such prepayment (and provided that no Termination Event is then in existence, that no Pool Seasoning Event is or would be in existence after giving effect to such Optional Prepayment and that the Commitment Expiry Date has not occurred), then, funds in the Reserve Account in excess of the Minimum Reserve Account Balance may be released to the Borrower in an amount determined as follows: the product of (i) funds on deposit in the Reserve Account and (ii) a fraction, the numerator of which is the Principal Balance of Receivables released in connection with the prepayment that had been included in the Pool Balance, and the denominator of which is the Pool Balance before giving effect to the prepayment; PROVIDED that an amount at least equal to the Minimum Reserve Account Balance shall be retained after such distribution. Notwithstanding anything to the contrary herein, following the occurrence of a Termination Event, any amounts on deposit in the Reserve Account shall be transferred to the Collection Account and applied in accordance with Section 6.8(a). 25 SECTION 6.3 CERTAIN REIMBURSEMENTS TO THE SERVICER. The Servicer will be entitled to be reimbursed from amounts on deposit in the Collection Account with respect to a Collection Period for amounts previously deposited in the Collection Account but later determined by the Servicer to have resulted from mistaken deposits or postings or checks returned for insufficient funds. The amount to be reimbursed hereunder shall be paid to the Servicer on the related Distribution Date pursuant to Section 6.8 upon certification by the Servicer of such amounts and the provision of such information to the Funding Agent as may be necessary in the opinion of the Funding Agent to verify the accuracy of such certification. In the event that the Funding Agent has not received evidence satisfactory to it of the Servicer's entitlement to reimbursement pursuant to this Section, the Funding Agent shall give notice to such effect. SECTION 6.4 APPLICATION OF COLLECTIONS. All collections for the Collection Period shall be applied by the Servicer as follows: With respect to each Receivable (other than a Repurchased Receivable), payments by or on behalf of the Obligor, (other than Supplemental Servicing Fees with respect to such Receivable, to the extent collected) shall be applied to interest and principal in accordance with the Simple Interest Method. All amounts collected that are payable to the Servicer as Supplemental Servicing Fees hereunder shall be deposited in the Collection Account and paid to the Servicer in accordance with Section 5.8. SECTION 6.5 SERVICER ADVANCES. In the event that, on any date, there are not sufficient Available Funds to pay the sum of the amounts described in Section 6.8(a), clauses (ii)(B), (iv) and (v), due and payable on such date, the Servicer shall advance an amount equal to such amounts due and payable on such date (each, a "Servicer Advance"), PROVIDED that the Servicer shall not make such an advance to the extent that it does not reasonably expect, after reasonable inquiry, to be reimbursed for such advance from the collections on the Receivables. SECTION 6.6 WITHDRAWALS FROM THE RESERVE ACCOUNTS; SPECIAL WITHDRAWALS FROM THE PLEDGED ACCOUNTS. (a) In the event that the Servicer's Determination Date Certificate with respect to any Determination Date shall state that the amount of the Available Funds with respect to such Determination Date is less than the sum of the amounts payable on the related Distribution Date pursuant to clauses (i) through (xii) of Section 6.8(a), then, on the Business Day preceding the related Distribution Date, the Funding Agent shall withdraw the amount of such deficiency (to the extent of the funds available in the Reserve Account) from the Reserve Account and deposit the same in the Collection Account. 26 (b) Notwithstanding anything in this Agreement or any other Basic Agreement to the contrary, to the extent that PARCO (or the Administrative Agent on its behalf) notifies the Funding Agent with respect to any date other than a Distribution Date that PARCO has insufficient funds on hand to pay any portion of the Carrying Costs representing Accrued Discount payable on such date, then the Funding Agent may immediately withdraw the necessary amount from the Collection Account, and, to the extent there are not sufficient Available Funds in the Collection Account may immediately withdraw the necessary amount from the Reserve Account (to the extent of the funds available in the Reserve Account) and deposit the same in the Collection Account for distribution to PARCO on such date. The Funding Agent shall give notice to the Borrower and the Servicer by telephone as promptly as practicable and in any event no later than the Business Day following such withdrawal, such notice to be promptly confirmed in writing. SECTION 6.7 ADDITIONAL DEPOSITS. The Servicer or the Seller, as applicable, shall deposit or cause to be deposited in the Collection Account, on the Determination Date following the date on which such obligations are due, the aggregate Repurchase Obligation Amount with respect to Repurchased Receivables. SECTION 6.8 DISTRIBUTIONS. (a) No later than 11:00 a.m. New York time on each Distribution Date, the Funding Agent shall cause to be made the following transfers and distributions from the Collection Account in accordance with the following priorities (such transfers and distributions to be based solely on the information contained in the Servicer's Determination Date Certificate delivered on the related Determination Date, SUBJECT HOWEVER (A) in the case of clause (x) below to the effect of any intervening Funding, in which case the relevant information shall be as updated in the relevant Servicer's Receivables Sale Date Certificate, and (B) to the occurrence of an intervening Termination Event): (i) to the Servicer, to repay any outstanding Servicer Advances; (ii) on a PARI PASSU basis (A) to each of the Lockbox Bank, the Custodian and the Independent Accountants, its respective accrued and unpaid fees and expenses (in each case, only to the extent such fees and expenses have not been previously paid when due by the Servicer and provided that, so long as the Servicer is also the Custodian, such fees shall not exceed $200,000 in the aggregate in any calendar year) and (B) any amounts owing to the Lockbox Bank as reimbursement for checks that have been credited to the Lockbox Account and are not collectible in accordance with the procedures specified in the Lockbox Agreement; (iii) to the Servicer, the Base Servicing Fee and any Supplemental Servicing Fees for the related Collection Period (as well as any amounts specified in Section 6.3, to the extent the Servicer has not reimbursed itself in 27 respect of such amounts pursuant to Section 6.3 and to the extent not retained by the Servicer), but LESS the total of any fees and expenses to be paid to the Lockbox Bank(s), the Custodian, the Independent Accountants or the Backup Servicer pursuant to clauses (ii)(A) or (iv); (iv) to the Backup Servicer (or any successor Servicer) to pay servicing fees (in the case of the Backup Servicer, only to the extent such fees have not been previously paid when due by the Servicer); (v) to the Funding Agent for the benefit of the Secured Parties, the following amounts in the following priority: (A) On a PARI PASSU basis, Accrued Discount and Accrued Interest with respect to such Collection Period (after giving effect, in the case of Accrued Discount, to any portion thereof paid since the previous Distribution Date as contemplated by Section 6.6(b) hereof); (B) without duplication, all dealer fees due and owing with respect to Commercial Paper issued to fund the Net Investment during such Collection Period; (C) any past due Discount and any past due interest due and owing to the APA Banks specified in Section 2.4 of the Funding Agreement (in each case, together with interest at the default rate specified therein) with respect to prior Collection Periods, on a PARI PASSU basis; and (D) the Utilization Fee and the Facility Fee accrued from the first day through the last day of such Collection Period, whether or not such amounts are payable during such Collection Period; (vi) to the Funding Agent for the benefit of the Secured Parties, the Targeted Monthly Principal Payment; (vii) following any replacement of the Servicer, to the Backup Servicer to pay the reasonable costs of transition, including any required re-liening of the Financed Vehicles, to the extent such costs have not been paid by the terminated Servicer; (viii) the costs of PARCO and the costs of the APA Banks with respect to the operation of the Yield Protection Provision, on a PARI PASSU basis; 28 (ix) after the occurrence of the first to occur of the Commitment Expiry Date or a Termination Event, or the occurrence and continuation of a Pool Seasoning Event, the remainder to reduce the VFN Balance; (x) prior to the occurrence of the Commitment Expiry Date, a Termination Event, or the occurrence and continuation of a Pool Seasoning Event, the balance, if any, will first be deposited into the Reserve Account until the Reserve Account is equal to the greater of 6% of the VFN Balance and $2,450,000; (xi) to the Funding Agent for the benefit of the Secured Parties, any indemnity amounts owing by the Borrower pursuant hereto (other than those described in clause (vii) above), payable on a PARI PASSU basis to the Secured Parties; (xii) without duplication, on a PARI PASSU basis, any other costs and expenses due and owing to PARCO, the Funding Agent and the APA Banks pursuant to this Agreement and the other Basic Agreements that are accrued and unpaid during such Collection Period, together with any unpaid costs and expenses due and owing to PARCO, the Funding Agent and the APA Banks from prior Collection Periods; and (xiii) any remaining funds will then be paid to the Borrower; PROVIDED, HOWEVER, that following the occurrence of a Termination Event no such distribution shall be made to the Borrower until after payment of any and all other amounts owed by the Borrower to the Secured Parties under or in connection with any Basic Agreement, including, without limitation, any costs and expenses incurred in connection with such Termination Event. (b) In the event that the Collection Account is maintained with an institution other than the Funding Agent, the Servicer shall instruct and cause such institution to make all deposits and distributions pursuant to Section 6.8(a) on the related Distribution Date. (c) on each Distribution Date, the Funding Agent shall send to each Secured Party the statement provided to the Funding Agent by the Servicer pursuant to Section 5.9 hereof with respect to such Distribution Date. (d) In the event that any withholding tax is imposed on the Borrower's payment (or allocations of income) to a Secured Party, the Borrower shall be obligated to indemnify such Secured Party (or Parties) for such taxes pursuant to Article IV of the Funding Agreement. Without limiting the obligations of the Borrower under the Funding Agreement, or the rights of the Secured Parties in the event of the Borrower's failure to make full and timely payment of any amounts owing pursuant 29 to Article IV thereof, the Funding Agent is hereby authorized and directed to retain from amounts otherwise distributable to the Secured Parties sufficient funds for the payment of any tax that is legally owed by the Borrower. The amount of any withholding tax imposed with respect to a Secured Party shall be treated as cash distributed to such Secured Party at the time it is withheld by the Borrower or the Funding Agent and remitted to the appropriate taxing authority. If there is a possibility that withholding tax is payable with respect to a distribution (such as a distribution to a non-US Secured Party), the Funding Agent may in its sole discretion withhold such amounts in accordance with this clause (d). In the event that a Secured Party wishes to apply for a refund of any such withholding tax, the Funding Agent shall reasonably cooperate with such Secured Party in making such claim so long as such Secured Party agrees to reimburse the Funding Agent for any out-of-pocket expenses incurred. (e) Distributions required to be made to Secured Parties on any Distribution Date shall be made in immediately available funds, to the account of the Funding Agent for distribution to such Secured Party at a bank or other entity having appropriate facilities therefor. (f) Subject to Section 6.1 and this section, monies received by the Funding Agent hereunder need not be segregated in any manner except to the extent required by law and may be deposited under such general conditions as may be prescribed by law, and the Funding Agent shall not be liable for any interest thereon. ARTICLE VII THE SELLER SECTION 7.1 REPRESENTATIONS AND WARRANTIES OF SELLER. The Seller makes the following representations on which the Borrower is deemed to have relied in acquiring the Receivables and on which the Secured Parties have relied in advancing funds to the Borrower under the Funding Agreement. The representations speak as of the execution and delivery of this Agreement and as of each Receivables Sale Date with respect to the Receivables sold on such date, and shall survive the sale of the Receivables to the Borrower and the pledge thereof to the Funding Agent on behalf of the Secured Parties. (a) ORGANIZATION AND GOOD STANDING. The Seller has been duly organized and is validly existing as a corporation in good standing under the laws of the State of Delaware, with power and authority to own its properties and to conduct its business as such properties are currently owned and such business is currently conducted, and had at all relevant times, and now has, power, authority and legal right to acquire, own and sell the Receivables and the Other Conveyed Property sold to the Borrower. (b) DUE QUALIFICATION. The Seller is duly qualified to do business as a foreign corporation in good standing and has obtained all necessary licenses and approvals in all jurisdictions 30 where the failure to do so would materially and adversely affect Seller's ability to sell the Receivables and the Other Conveyed Property to the Borrower pursuant to this Agreement, or the validity or enforceability of the Receivables and the Other Conveyed Property or to perform Seller's obligations hereunder and under the other Basic Agreements. (c) POWER AND AUTHORITY. The Seller has the power and authority to execute and deliver this Agreement and the other Basic Agreements to which it is a party and to carry out its terms and their terms, respectively; the Seller has full power and authority to sell and assign the Receivables and the Other Conveyed Property to be sold and assigned to and deposited with the Borrower by it and has duly authorized such sale and assignment to the Borrower by all necessary corporate action; and the execution, delivery and performance of this Agreement and the other Basic Agreements to which the Seller is a party have been duly authorized by the Seller by all necessary corporate action. (d) VALID SALE, BINDING OBLIGATIONS. This Agreement effects a valid sale, transfer and assignment of the Receivables and the Other Conveyed Property, enforceable against the Seller and creditors of and purchasers from the Seller; and this Agreement and the other Basic Agreements to which the Seller is a party, when duly executed and delivered, shall constitute legal, valid and binding obligations of the Seller enforceable in accordance with their respective terms, except as enforceability may be limited by bankruptcy, insolvency, reorganization or other similar laws affecting the enforcement of creditors' rights generally and by equitable limitations on the availability of specific remedies, regardless of whether such enforceability is considered in a proceeding in equity or at law. (e) ERISA. The Seller is in compliance in all material respects with ERISA and there is no lien of the Pension Benefit Guaranty Corporation on any of the Receivables or Other Conveyed Property. (f) NOT AN INVESTMENT COMPANY. The Seller is not an "investment company" within the meaning of the Investment Company Act of 1940, as amended, or is exempt from all provisions of such Act. (g) NO VIOLATION. The consummation of the transactions contemplated by this Agreement and the other Basic Agreements to which the Seller is a party and the fulfillment of the terms of this Agreement and the other Basic Agreements to which the Seller 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, lapse of time or both) a default under the certificate of incorporation or by-laws of the Seller, or any indenture, agreement, mortgage, deed of trust or other instrument to which the Seller is a party or by which it is bound, or result in the creation or imposition of any Lien upon any of its properties pursuant to the terms of any such indenture, agreement, mortgage, deed of trust or other instrument, other than this Agreement, or violate any law, order, rule or regulation applicable to the Seller of any court or of any federal or state regulatory body, administrative agency or other governmental instrumentality having jurisdiction over the Seller or any of its properties. 31 (h) NO PROCEEDINGS. There are no proceedings or investigations pending or, to the Seller's knowledge, threatened, against the Seller, before any court, regulatory body, administrative agency or other tribunal or governmental instrumentality having jurisdiction over the Seller or its properties (A) asserting the invalidity of this Agreement or any of the other Basic Agreements, (B) seeking to prevent the consummation of any of the transactions contemplated by this Agreement or any of the other Basic Agreements, (C) seeking any determination or ruling that might materially and adversely affect the Receivables or the performance by the Seller of its obligations under, or the validity or enforceability of, this Agreement or any of the other Basic Agreements, (D) seeking to adversely affect the federal income tax or other federal, state or local tax attributes of the transactions contemplated by the Basic Agreements, or (E) involving any Receivable. (i) CHIEF EXECUTIVE OFFICE. The chief executive office of the Seller is at 200 Bailey Avenue, Fort Worth, Texas. (j) NO CONSENTS. The Seller 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 7.2 CORPORATE EXISTENCE. (a) During the term of this Agreement, the Seller will keep in full force and effect its existence, rights and franchises as a corporation under the laws of the jurisdiction of its incorporation and will obtain and preserve its qualification to do business in each jurisdiction in which such qualification is or shall be necessary to protect the validity and enforceability of this Agreement, any Receivables Sale Agreement, the other Basic Agreements and each other instrument or agreement necessary or appropriate to the proper administration of this Agreement and the transactions contemplated hereby. (b) During the term of this Agreement, the Seller shall observe the applicable legal requirements for the recognition of the Seller as a legal entity separate and apart from its Affiliates, including as follows: (i) the Seller shall maintain corporate records and books of account separate from those of its Affiliates; (ii) except as otherwise provided in this Agreement, the Seller shall not commingle its assets and funds with those of its Affiliates; (iii) the Seller shall hold such appropriate meetings of its Board of Directors as are necessary to authorize all the Seller's corporate actions required by law to be authorized by the Board of Directors, shall keep minutes of such meetings and of meetings of its stockholders) and observe all other customary corporate formalities (and any successor Seller not a corporation shall observe similar procedures in accordance with its governing documents and applicable law); 32 (iv) the Seller shall at all times hold itself out to the public under the Seller's own name as a legal entity separate and distinct from its Affiliates; and (v) all transactions and dealings between the Seller and its Affiliates will be conducted on an arm's length basis. (c) During the term of this Agreement, the Seller shall take no action that would cause the Borrower to violate any of its covenants under the Basic Agreements or that otherwise would be likely to have a material adverse effect on the Borrower and/or the Secured Parties. SECTION 7.3 LIABILITY OF SELLER; INDEMNITIES. The Seller shall be liable in accordance herewith only to the extent of the obligations specifically undertaken by the Seller under this Agreement. (a) The Seller shall indemnify, defend and hold harmless the Borrower, the Funding Agent, the Secured Parties, the Backup Servicer and the Servicer (if other than the Seller) from and against any taxes that may at any time be asserted against any such Person with respect to, and as of the date of, each sale of Receivables to the Borrower including any sales, gross receipts, general corporation, tangible or intangible personal property, privilege or license taxes (but not including any taxes asserted with respect to ownership of the Receivables or federal or other income taxes, including franchise taxes measured by net income) and all costs and expenses in defending against the same. (b) The Seller shall indemnify, defend and hold harmless the Borrower, the Funding Agent, the Secured Parties, the Backup Servicer and the Servicer (if other than the Seller) from and against any loss, liability or expense incurred by reason of the Seller's willful malfeasance, bad faith or negligence in the performance of its duties under this Agreement, or by reason of reckless disregard of its obligations and duties under this Agreement. Indemnification under this Section shall survive the resignation or removal of the Funding Agent and the termination of this Agreement and shall include all reasonable fees and expenses of counsel and other expenses of litigation. If the Seller shall have made any indemnity payments pursuant to this Section and the Person to or on behalf of whom such payments are made thereafter shall collect any of such amounts from others, such Person shall promptly repay such amounts to the Seller, without interest. SECTION 7.4 MERGER OR CONSOLIDATION OF, OR ASSUMPTION OF THE OBLIGATIONS OF, SELLER. Any Person (a) into which the Seller may be merged or consolidated, (b) which may result from any merger or consolidation to which the Seller shall be a party or (c) which may succeed to the properties and assets of the Seller substantially as a whole, which Person in any of the foregoing cases executes an agreement of assumption to perform every obligation of the Seller under this Agreement, shall be the successor to the Seller hereunder without the execution or filing of any document or any further act by any of the parties to this Agreement; PROVIDED, HOWEVER, that (i) the Seller shall have received the written consent of the Borrower and the Required Banks prior to entering into any such 33 transaction, (ii) immediately after giving effect to such transaction, no representation or warranty made pursuant to Section 4.1 shall have been breached and (if AFS is the Servicer) no Servicer Termination Event, and no event which, after notice or lapse of time, or both, would become a Servicer Termination Event shall have happened and be continuing, (iii) the Seller shall have delivered to the Funding Agent and the Rating Agencies an Officers' 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, (iv) the Rating Agency Condition shall have been satisfied with respect to such transaction and (v) the Seller shall have delivered to the Funding Agent an Opinion of Counsel stating that, in the opinion of such counsel, either (A) all financing statements and continuation statements and amendments thereto relating to the sale of the Receivables from the Seller to the Borrower have been executed and filed that are necessary fully to preserve and protect the interest of the Borrower in the Receivables and reciting the details of such filings or (B) no such action shall be necessary to preserve and protect such interest. For the avoidance of doubt, it is understood that the execution of the foregoing agreement of assumption and compliance with clauses (i) through (v) above shall be conditions to the consummation of the transactions referred to in clauses (a), (b) or (c) above. SECTION 7.5 LIMITATION ON LIABILITY OF SELLER AND OTHERS. The Seller and any director or officer or employee or agent of the Seller may rely in good faith on the advice of counsel or on any document of any kind, prima facie properly executed and submitted by any Person respecting any matters arising under any Basic Agreement. The Seller shall not be under any obligation to appear in, prosecute or defend any legal action that shall not be incidental to its obligations under this Agreement, and that in its opinion may involve it in any expense or liability. ARTICLE VIII THE SERVICER SECTION 8.1 REPRESENTATIONS AND WARRANTIES OF AFS, IN ITS CAPACITY AS SERVICER. AFS makes the following representations and warranties on which the Borrower is deemed to have relied in acquiring the Receivables and on which the Secured Parties have relied in advancing funds to the Borrower under the Funding Agreement. The representations speak as of the execution and delivery of this Agreement and as of each Receivables Sale Date with respect to the Receivables sold on such date, and shall survive the sale of the Receivables to the Borrower and the pledge thereof to the Funding Agent on behalf of the Secured Parties. (i) ORGANIZATION AND GOOD STANDING. AFS 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 34 had at all relevant times, and now has, power, authority and legal right to enter into and perform its obligations under this Agreement; (ii) 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 property or the conduct of its business (including the servicing of the Receivables as required by this Agreement) requires or shall require such qualification; (iii) POWER AND AUTHORITY. AFS has the power and authority to execute and deliver this Agreement and the other Basic Agreements 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 Basic Agreements to which it is a party have been duly authorized by the Servicer by all necessary corporate action; (iv) BINDING OBLIGATION. This Agreement and the other Basic Agreements to which AFS is a party shall constitute legal, valid and binding obligations of AFS enforceable in accordance with their respective terms, except as enforceability may be limited by bankruptcy, insolvency, reorganization, or other similar laws affecting the enforcement of creditors' rights generally and by equitable limitations on the availability of specific remedies, regardless of whether such enforceability is considered in a proceeding in equity or at law; (v) ERISA. AFS is in compliance in all material respects with ERISA and there is no lien of the Pension Benefit Guaranty Corporation on any of the Receivables or Other Conveyed Property; (vi) NOT AN INVESTMENT COMPANY. AFS is not an "investment company" within the meaning of the Investment Company Act of 1940, as amended, or is exempt from all provisions of such Act; (vii) NO VIOLATION. The consummation of the transactions contemplated by this Agreement and the other Basic Agreements to which AFS is a party, and the fulfillment of the terms of this Agreement and the other Basic Agreements to which AFS 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 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, or violate any law, order, rule or regulation applicable to AFS of any court or of any federal or state regulatory body, 35 administrative agency or other governmental instrumentality having jurisdiction over AFS or any of its properties; (viii) NO PROCEEDINGS. There are no proceedings or investigations pending or, to the knowledge of AFS threatened, against AFS, before any court, regulatory body, administrative agency or other tribunal or governmental instrumentality having jurisdiction over AFS or its properties (A) asserting the invalidity of this Agreement or any of the other Basic Agreements, (B) seeking to prevent the consummation of any of the transactions contemplated by this Agreement or any of the other Basic Agreements, (C) 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 Basic Agreements or (D) seeking to adversely affect the federal income tax or other federal, state or local tax attributes of the transactions contemplated by the Basic Agreements; (ix) NO CONSENTS. AFS 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 8.2 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 specifically undertaken by the Servicer and the representations made by the Servicer. (b) The Servicer shall defend, indemnify and hold harmless the Borrower, the Funding Agent, the Secured Parties, the Backup Servicer, their respective officers, 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. (c) The Servicer shall indemnify, defend and hold harmless the Borrower, the Funding Agent, the Secured Parties, the Backup Servicer, 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 Borrower, the Funding Agent, the Backup Servicer 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. 36 (d) Indemnification under this Article shall include, without limitation, reasonable fees and expenses of counsel and expenses of litigation. If the Servicer has made any indemnity payments pursuant to this Article and the recipient thereafter collects any of such amounts from others, the recipient shall promptly repay such amounts collected to the Servicer, without interest. The indemnification obligations of the Servicer set forth in this Section 8.2 shall survive the termination of this Agreement and, with respect to any Servicer, shall survive the termination of such Servicer with respect to any act or omission that occurs prior to such Servicer's termination. SECTION 8.3 MERGER OR CONSOLIDATION OF, OR ASSUMPTION OF THE OBLIGATIONS OF THE SERVICER OR BACKUP SERVICER. (a) For so long as AFS is the Seller and the Servicer, in the event of any conflict between this Section 8.3 and Section 7.4, this Section 8.3 shall control. Any Person (A) into which the Servicer may be merged or consolidated, (B) which may result from any merger or consolidation to which the Servicer shall be a party or (C) which may succeed to the properties and assets of the Servicer substantially as a whole, which Person in any of the foregoing cases executes an agreement of assumption to perform every obligation of the Servicer under this Agreement, shall be the successor to the Servicer hereunder without the execution or filing of any document or any further act by any of the parties to this Agreement; PROVIDED, HOWEVER, that the Servicer shall not merge or consolidate with any other person, convey, transfer or lease substantially all its assets as an entirety to another Person, or permit any other Person to become the successor to the Servicer's business except as expressly provided in this Section 8.3. (b) The Servicer shall be permitted to merge or consolidate with any other person, convey, transfer or lease substantially all its assets as an entirety to another Person, or permit another Person to become the successor to the Servicer's business; provided (i) that such Person is a direct or indirect wholly-owned subsidiary of AmeriCredit Corp.; and (ii) that, after giving effect to such merger, consolidation, conveyance, transfer, lease or succession, the successor or surviving entity shall be capable of fulfilling the duties of the Servicer contained in this Agreement in the reasonable judgment of the Funding Agent. (c) Except as described in clause (b) above, the Servicer shall not merge or consolidate with any other person, convey, transfer or lease substantially all its assets as an entirety to another Person, or permit any other Person to become the successor to the Servicer's business unless: (i) the Servicer shall have received the written consent of the Funding Agent and the Borrower prior to entering into any such transaction, (ii) immediately after giving effect to such transaction, no representation or warranty made pursuant to Section 5.6 shall have been breached and no Servicer Termination Event, and no event which, after notice or lapse of time, or both, would become a Servicer Termination Event shall have happened and be continuing, (iii) the Servicer shall have delivered to the Funding Agent and the Rating Agencies 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, (iv) the Rating Agency Condition shall have 37 been satisfied with respect to such transaction and (v) the Servicer shall have delivered to the Funding Agent an Opinion of Counsel stating that, in the opinion of such counsel, either (A) all financing statements and continuation statements and amendments thereto that are otherwise required hereunder to be filed by the Servicer have been executed and filed that are necessary fully to preserve and protect the interest of the Borrower and the Funding Agent, respectively, in the Receivables and reciting the details of such filings or (B) no such action shall be necessary to preserve and protect such interest. Notwithstanding anything herein to the contrary, the execution of the foregoing agreement of assumption and compliance with clauses (i), (ii), (iii), (iv) and (v) above shall be conditions to the consummation of the transactions referred to in clauses (a) or (c) above. (d) Any corporation (i) into which the Backup Servicer may be merged or consolidated, (ii) resulting from any merger or consolidation to which the Backup Servicer shall be a party, (iii) which acquires by conveyance, transfer or lease substantially all of the assets of the Backup Servicer, or (iv) succeeding to the business of the Backup Servicer, in any of the foregoing cases shall execute an agreement of assumption to perform every obligation of the Backup Servicer under this Agreement and, whether or not such assumption agreement is executed, shall be the successor to the Backup Servicer under this Agreement without the execution or filing of any paper or any further act on the part of any of the parties to this Agreement, anything in this Agreement to the contrary notwithstanding; PROVIDED, HOWEVER, that nothing contained herein shall be deemed to release the Backup Servicer from any obligation. SECTION 8.4 LIMITATION ON LIABILITY OF THE SERVICER AND THE BACKUP SERVICER. (a) Neither the Servicer, the Backup Servicer nor any of the directors or officers or employees or agents of the Servicer or Backup Servicer shall be under any liability to the Borrower 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 the Servicer, the Backup Servicer or any such person against any liability that would otherwise be imposed by reason of a breach of this Agreement or willful misfeasance, bad faith or negligence in the performance of duties; PROVIDED FURTHER that this provision shall not affect any liability to indemnify the Funding Agent, the Secured Parties and the Borrower for costs, taxes, expenses, claims, liabilities, losses or damages paid by the Funding Agent, the Secured Parties and the Borrower. The Servicer, the Backup Servicer and any director, officer, employee or agent of the Servicer or Backup Servicer may rely in good faith on the written advice of counsel or on any document of any kind prima facie properly executed and submitted by any Person respecting any matters arising under this Agreement. (b) Notwithstanding anything herein to the contrary, the Backup Servicer shall not be liable for any obligation of the Servicer contained in this Agreement, and the Funding Agent, the Borrower, the Seller, and the Secured Parties shall look only to the Servicer to perform such obligations. SECTION 8.5 DELEGATION OF DUTIES. The Servicer may delegate duties under this Agreement to an Affiliate of the Servicer with the prior written consent of the Borrower, the Funding 38 Agent (acting at the direction of the Required Banks) and the Backup Servicer. 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 Delinquent and Defaulted Receivables, in each case, without the consent of the Funding Agent or the Borrower 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 Funding Agent and the Borrower; PROVIDED, HOWEVER, that no such delegation or sub-contracting duties by the Servicer shall relieve the Servicer of its responsibility with respect to such duties. Neither AFS or any party acting as Servicer hereunder shall appoint any subservicer hereunder without the prior written consent of the Funding Agent (acting at the direction of the Required Banks), the Borrower, and the Backup Servicer. SECTION 8.6 SERVICER AND BACKUP SERVICER NOT TO RESIGN. Subject to the provisions of Section 8.3, neither the Servicer nor the Backup Servicer shall resign from the obligations and duties imposed on it by this Agreement as Servicer or Backup Servicer except upon a determination that by reason of a change in legal requirements the performance of its duties under this Agreement would cause it to be in violation of such legal requirements in a manner which would have a material adverse effect on the Servicer or the Backup Servicer, as the case may be, and the Required Banks and the Borrower do not elect to waive the obligations of the Servicer or the Backup Servicer, as the case may be, to perform the duties which render it legally unable to act or to delegate those duties to another Person. Any such determination permitting the resignation of the Servicer or Backup Servicer shall be evidenced by an Opinion of Counsel to such effect delivered and acceptable to the Funding Agent and the Borrower. No resignation of the Servicer shall become effective until the Backup Servicer or an entity acceptable to the Funding Agent (at the direction of the Required Banks) and the Borrower shall have assumed the responsibilities and obligations of the Servicer. No resignation of the Backup Servicer shall become effective until an entity acceptable to the Funding Agent (at the direction of the Required Banks) and the Borrower shall have assumed the responsibilities and obligations of the Backup Servicer; PROVIDED, HOWEVER, that in the event a successor Backup Servicer is not appointed within 60 days after the Backup Servicer has given notice of its resignation and has provided the Opinion of Counsel required by this Section 8.6, the Backup Servicer may petition a court for its removal. ARTICLE IX DEFAULT SECTION 9.1 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 Funding Agent for distribution to the Secured Parties any proceeds or payment required to be so delivered under the terms of this Agreement that continues unremedied for a period of two Business Days (one Business Day with 39 respect to payment of Repurchase Obligation Amounts) after written notice is received by the Servicer from the Funding Agent or after discovery of such failure by a Responsible Officer of the Servicer; (b) Failure by the Servicer (i) to deliver to the Funding Agent the Servicer's Determination Date Certificate by the fourth Business Day prior to the Distribution Date, which failure continues unremedied as of the close of business on the first to occur of the next Business Day after written notice is received by the Servicer from the Funding Agent or the second Business Day prior to the Distribution Date, or (ii) to observe its covenants and agreements set forth in Section 8.3(a), (b) or (c); (c) Failure on the part of the Servicer duly to observe or perform any other covenants or agreements of the Servicer set forth in this Agreement or any other Basic Agreement, which failure continues unremedied for a period of 30 days after knowledge thereof by the Servicer or after the date on which written notice of such failure shall have been given to the Servicer by the Funding Agent (acting at the direction of the Required Banks) or the Borrower; (d) Any representation, warranty or statement of the Servicer made in this Agreement or any other Basic Agreement or in any certificate, report or other writing delivered pursuant hereto or thereto shall prove to be incorrect in any material respect as of the time when the same shall have been made, and, within 30 days after knowledge thereof by the Servicer or after written notice thereof shall have been given to the Servicer by the Funding Agent or the Borrower, the circumstances or condition in respect of which such representation, warranty or statement was incorrect shall not have been eliminated or otherwise cured; (e) The occurrence of an Insolvency Event with respect to the Servicer; or (f) Without duplication of any of the foregoing, a Termination Event shall have occurred and be continuing. SECTION 9.2 CONSEQUENCES OF A SERVICER TERMINATION EVENT. If a Servicer Termination Event shall occur and be continuing, the Funding Agent or the Required Banks or the Borrower (so long as no other Termination Event shall have then occurred and remain continuing), by notice given in writing to the Servicer (and to the Funding Agent if given by the Required Banks), may terminate all of the rights and obligations of the Servicer under this Agreement. On or after the receipt by the Servicer of such written notice, all authority, power, obligations and responsibilities of the Servicer under this Agreement automatically shall pass to, be vested in and become obligations and responsibilities of the Backup Servicer (or such other successor Servicer appointed by the Funding Agent at the direction of the Required Banks, or by the Borrower with the consent of the Required Banks); 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 40 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 sale and endorsement of the Receivables and the Other Conveyed Property and related documents to show the Borrower 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 Funding Agent or by the Borrower with the consent of the Funding Agent, the successor Servicer shall terminate the Lockbox Agreement and direct the Obligors to make all payments under the Receivables directly to the successor Servicer (in which event the successor Servicer shall process such payments in accordance with Section 4.2(e)), or to a lockbox established by the successor Servicer at the direction of the Funding Agent or by the Borrower with the consent of the Funding Agent, at the successor Servicer's expense. The terminated Servicer shall grant the Funding Agent, the Borrower, the successor Servicer and the Required Banks reasonable access to the terminated Servicer's premises and to its equipment, systems and personnel, at the terminated Servicer's expense. SECTION 9.3 APPOINTMENT OF SUCCESSOR. (a) On and after the time the Servicer receives a notice of termination pursuant to Section 9.2, or upon the resignation of the Servicer pursuant to Section 8.6, the Backup Servicer (unless the Funding Agent, at the direction of the Required Banks or the Borrower with the consent of the Required Banks, shall have exercised its option pursuant to Section 9.3 (b) to appoint an alternate successor Servicer) shall be the successor in all respects to the Servicer in its capacity as servicer under this Agreement and the transactions set forth or provided for in this Agreement, and shall be subject to all the rights, responsibilities, restrictions, duties, liabilities and termination provisions relating thereto placed on the Servicer by the terms and provisions of this Agreement except as otherwise stated herein. The Funding Agent and such successor shall take such action, consistent with this Agreement, as shall be necessary to effect any such succession. If a successor Servicer is acting as Servicer hereunder, it shall be subject to termination under Section 9.2 upon the occurrence of any Servicer Termination Event applicable to it as Servicer. (b) The Funding Agent, at the direction of the Required Banks, may exercise at any time its right to appoint as successor to the Servicer a Person other than the Person serving as Backup Servicer at the time, and shall have no liability to AFS, the Seller, the Person then serving as Backup Servicer, any Secured Party or any other Person if it does so. Notwithstanding the above, if the Backup Servicer shall be legally unable or unwilling to act as Servicer, the Backup Servicer, the Funding Agent, acting at the direction of the Required Banks, or the Borrower with the consent of the Required Banks may petition a court of competent jurisdiction to appoint any Eligible Servicer 41 as the successor to the Servicer. Pending appointment pursuant to the preceding sentence, the Backup Servicer shall act as successor Servicer unless it is legally unable to do so, in which event the outgoing Servicer shall continue to act as Servicer until a successor has been appointed and accepted such appointment. Subject to Section 8.6, no provision of this Agreement shall be construed as relieving the Backup Servicer of its obligation to succeed as successor Servicer upon the termination of the Servicer pursuant to Section 9.2 or the resignation of the Servicer pursuant to Section 8.6. If upon the termination of the Servicer pursuant to Section 9.2 or the resignation of the Servicer pursuant to Section 8.6, the Funding Agent, acting at the direction of the Required Banks, or the Borrower with the consent of the Required Banks appoints a successor Servicer other than the Backup Servicer, the Backup Servicer shall not be relieved of its duties as Backup Servicer hereunder. (c) Any successor Servicer shall be entitled to such compensation (whether payable out of the Collection Account or otherwise, including, without limitation, any Supplemental Servicing Fee) as the Servicer would have been entitled to under this Agreement if the Servicer had not resigned or been terminated hereunder. If any successor Servicer is appointed as a result of the Backup Servicer's refusal (in breach of the terms of this Agreement) to act as Servicer although it is legally able to do so, the Funding Agent, the Borrower, and such successor Servicer may agree on reasonable additional compensation to be paid to such successor Servicer by the Backup Servicer, which additional compensation shall be paid by such breaching Backup Servicer in its individual capacity and solely out of its own funds. If any successor Servicer is appointed for any reason other than the Backup Servicer's refusal to act as Servicer although legally able to do so, the Funding Agent, the Borrower (so long as no Termination Event other than a Servicer Termination Event shall have then occurred and remain continuing), and such successor Servicer may agree on additional compensation to be paid to such successor Servicer, subject to satisfaction of the Rating Agency Condition, which additional compensation shall be payable as provided in the Section 6.8 hereof. In addition, any successor Servicer shall be entitled to reasonable transition expenses incurred in acting as successor Servicer. SECTION 9.4 NOTIFICATION TO SECURED PARTIES. Upon any termination of, or appointment of a successor to, the Servicer, the Funding Agent shall give prompt written notice thereof to each Secured Party, to the Borrower, and to the Rating Agencies. SECTION 9.5 WAIVER OF PAST DEFAULTS. The Required Banks, or the Borrower with the consent of the Required Banks may 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; PROVIDED, HOWEVER, that no such waiver shall extend to any subsequent or other default or impair any right consequent thereto. ARTICLE X ADMINISTRATIVE DUTIES OF THE SERVICER 42 SECTION 10.1 ADMINISTRATIVE DUTIES. (a) DUTIES WITH RESPECT TO THE BORROWER. (i) Notwithstanding anything in this Agreement or any of the Basic Agreements to the contrary, the Servicer shall be responsible for promptly notifying, in writing, the Borrower and the Funding Agent in the event that any withholding tax is imposed on the Borrower's payments (or allocations of income) to any Secured Party. Any such notice shall be in writing and specify the amount of any withholding tax required to be withheld by the Funding Agent pursuant to such provision. (ii) The Servicer shall perform the duties of the Servicer specified herein and any other duties expressly required to be performed by the Servicer under any other Basic Agreement. (iii) Notwithstanding anything to the contrary in this Agreement, except as expressly provided herein or in the other Basic Agreements, the Servicer, in its capacity hereunder, shall not be obligated to, and shall not, (1) take any action that the Borrower directs the Servicer not to take on its behalf or (2) in connection with its duties hereunder assume any indemnification obligation of any other Person. SECTION 10.2 RECORDS. The Servicer shall maintain appropriate books of account and records relating to services performed under this Agreement, which books of account and records shall be accessible for inspection by the Borrower at any time during normal business hours. SECTION 10.3 ADDITIONAL INFORMATION TO BE FURNISHED TO THE BORROWER The Servicer shall furnish to the Borrower from time to time such additional information regarding the Collateral as the Borrower shall reasonably request. ARTICLE XI MISCELLANEOUS PROVISIONS SECTION 11.1 AMENDMENT. This Agreement may be amended from time to time by the parties hereto, with the consent of the Funding Agent (such consent not to be unreasonably withheld), but without the consent of any of the Secured Parties, to cure any ambiguity, to correct or supplement any provisions in this Agreement, to comply with any changes in the Uniform Commercial Code, or to make any other provisions with respect to matters or questions arising under this Agreement which shall not be inconsistent with the provisions of this Agreement or the other Basic Agreements or the transactions contemplated hereby or thereby; PROVIDED, HOWEVER, that such action shall not, as evidenced by an Opinion of Counsel delivered to the Funding Agent, adversely affect in any material respect the interests of any Secured Party. 43 This Agreement may also be amended from time to time by the parties hereto, with the consent of the Funding Agent (as directed by the Required Banks) for the purpose of adding any provisions to or changing in any manner or eliminating any of the provisions of this Agreement or of modifying in any manner the rights of the Secured Parties; PROVIDED, however, that no such amendment shall (a) increase or reduce in any manner the amount of, or accelerate or delay the timing of, collections of payments on Receivables or distributions that shall be required to be made for the benefit of the Secured Parties, (b) reduce the aforesaid percentage of the outstanding principal amount of the VFN, the Holders of which are required to consent to any such amendment, (c) amend this Section, or (d) increase the funding amount of the VFN, without the consent of all the Secured Parties. Promptly after the execution of any such amendment or consent, the Funding Agent shall furnish written notification of the substance of such amendment or consent to each Secured Party and the Rating Agencies. It shall not be necessary for the consent of Secured Parties pursuant to this Section to approve the particular form of any proposed amendment or consent, but it shall be sufficient if such consent shall approve the substance thereof. The manner of obtaining such consents (and any other consents of Secured Parties provided for in this Agreement) and of evidencing the authorization of any action by Secured Parties shall be subject to such reasonable requirements as the Funding Agent may prescribe. Prior to the execution of any amendment to this Agreement, the Funding Agent shall be entitled to receive and rely upon an Opinion of Counsel stating that the execution of such amendment is authorized or permitted by this Agreement and the Opinion of Counsel referred to in the first paragraph of this Section 11.1 has been delivered. The Funding Agent, the Borrower, and the Backup Servicer may, but shall not be obligated to, enter into any such amendment which affects the Borrower's, the Funding Agent's or the Backup Servicer's, as applicable, own rights, duties or immunities under this Agreement or otherwise. SECTION 11.2 PROTECTION OF TITLE. (a) The Seller shall execute and file such financing statements and cause to be executed and filed such continuation statements, all in such manner and in such places as may be required by law fully to preserve, maintain and protect the interest of the Borrower in the Conveyed Property and in the proceeds thereof. The Seller shall deliver (or cause to be delivered) to the Borrower and the Funding Agent file-stamped copies of, or filing receipts for, any document filed as provided above, as soon as available following such filing. (b) Without limiting any other provision of this Agreement, neither the Seller nor the Servicer shall change its name, identity or corporate structure in any manner that would, could or might make any financing statement or continuation statement filed in accordance with paragraph (a) above seriously misleading within the meaning of Section 9-402 (7) of the Relevant UCC, unless it shall have given the Funding Agent and the Borrower at least 15 days' prior written notice thereof and shall have promptly filed appropriate amendments to all previously filed financing statements or 44 continuation statements. Promptly upon such filing, the Seller or the Servicer, as the case may be, shall deliver an Opinion of Counsel in form and substance reasonably satisfactory to the Funding Agent, stating either (A) all financing statements and continuation statements have been executed and filed that are otherwise required hereunder to be filed by the Seller or the Servicer, as applicable, that are necessary fully to preserve and protect the interest of the Borrower in the Receivables, and reciting the details of such filings or referring to prior opinions of Counsel in which such details are given, or (B) no such action shall be necessary to preserve and protect such interest. (c) Each of the Seller and the Servicer shall have an obligation to give the Funding Agent and the Borrower at least 60 days' prior written notice of any relocation of its principal executive office if, as a result of such relocation, the applicable provisions of the Relevant UCC would require the filing of any amendment of any previously filed financing or continuation statement or of any new financing statement and shall promptly file any such amendment. The Servicer shall at all times maintain each office from which it shall service Receivables, and its principal executive office, within the United States of America. (d) The Servicer shall maintain accounts and records as to each Receivable accurately and in sufficient detail to permit (i) the reader thereof to know at any time the status of such Receivable, including payments and recoveries made and payments owing (and the nature of each) and (ii) reconciliation between payments or recoveries on (or with respect to) each Receivable and the amounts from time to time deposited in the Collection Account in respect of such Receivable. (e) The Servicer shall maintain its computer systems so that, from and after the time of sale under this Agreement of the Receivables to the Borrower, the Servicer's master computer records (including any backup archives) that refer to a Receivable shall indicate clearly that the Borrower owns such Receivable and that such Receivable has been pledged by the Borrower to the Funding Agent for the benefit of the Secured Parties. Indication of the Borrower's ownership of a Receivable shall be deleted from or modified on the Servicer's computer systems when, and only when, the related Receivable shall have been paid in full or repurchased. (f) If at any time the Seller or the Servicer shall propose to sell, grant a security interest in or otherwise transfer any interest in automotive receivables to any prospective purchaser, lender or other transferee, the Seller or the Servicer, as applicable, shall give to such prospective purchaser, lender or other transferee computer tapes, records or printouts (including any restored from backup archives) that, if they shall refer in any manner whatsoever to any Receivable, shall indicate clearly that such Receivable has been sold and is owned by the Borrower and has been pledged by the Borrower to the Funding Agent for the benefit of the Secured Parties. (g) Upon request, the Servicer shall furnish to the Funding Agent, within five Business Days, a list of all Receivables (by contract number and name of Obligor) then held as part of the Conveyed Property, together with a reconciliation of such list to the Schedule of Receivables and to each of the Servicer's Determination Date Certificates furnished before such request. 45 SECTION 11.3 NOTICES. All demands, notices and communications upon or to the Seller, the Servicer, the Borrower, the Funding Agent, the Secured Parties or the Rating Agencies under this Agreement shall be in writing, personally delivered, or mailed by overnight courier, express mail or certified mail, return receipt requested, and shall be deemed to have been duly given upon receipt by such Person at its address specified in Annex A hereto. SECTION 11.4 ASSIGNMENT. This Agreement shall inure to the benefit of and be binding upon the parties hereto and their respective successors and permitted assigns. Notwithstanding anything to the contrary contained herein, except as provided in Sections 7.4 and 8.3 and as provided in the provisions of this Agreement concerning the resignation of the Servicer, this Agreement may not be assigned by the Seller or the Servicer without the prior written consent of the Funding Agent, the Borrower, and the Backup Servicer. SECTION 11.5 LIMITATIONS ON RIGHTS OF OTHERS. The provisions of this Agreement are solely for the benefit of the parties hereto and their respective successors and permitted assigns. Except as expressly stated otherwise herein, any right of the Funding Agent to direct, appoint, consent to, approve of, or take any action under this Agreement, shall be a right exercised by the Funding Agent in its sole and absolute discretion. The Funding Agent may disclaim any of its rights and powers under this Agreement. Nothing in this Agreement, whether express or implied, shall be construed to give to any other Person any legal or equitable right, remedy or claim in the Property or under or in respect of this Agreement or any covenants, conditions or provisions contained herein. SECTION 11.6 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 such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction. SECTION 11.7 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 11.8 HEADINGS. The headings of the various Articles and Sections herein are for convenience of reference only and shall not define or limit any of the terms or provisions hereof. SECTION 11.9 ASSIGNMENT TO FUNDING AGENT. The Seller hereby acknowledges and consents to any mortgage, pledge, assignment and grant of a security interest by the Borrower to the Funding Agent for the benefit of the Secured Parties of all right, title and interest of the Borrower in, to and under the Receivables and Other Conveyed Property, and/or the assignment of any or all of the Borrower's rights and obligations hereunder to the Funding Agent. All rights of the Borrower hereunder may be exercised by the Funding Agent for the benefit of the Secured Parties or their assignees to the extent of their respective rights pursuant to such assignments. Any assignee 46 (including, but not limited to, any Secured Party) is hereby intended by the parties hereto to be a third-party beneficiary of this Agreement. SECTION 11.10 CHASE ROLES; LIMITATION OF LIABILITY. The parties expressly acknowledge and consent to The Chase Manhattan Bank acting in the capacities of Funding Agent, Backup Servicer, Administrative Agent and APA Bank. The Chase Manhattan Bank may, in any such or other capacities, discharge its separate functions fully, without hinderance or regard to conflict of interest principles, duty of loyalty principles or other breach of fiduciary duties to the extent that any such conflict or breach arises from the performance by The Chase Manhattan Bank of express duties set forth in this Agreement or in any other Basic Agreement in any of such capacities, all of which defenses, claims or assertions are hereby expressly waived by the other parties hereto and the Secured Parties except in the case of gross negligence and willful misconduct by The Chase Manhattan Bank. Without limiting any other provision hereof, the parties further expressly acknowledge and agree that in no event shall The Chase Manhattan Bank be liable under or in connection with this Agreement or any other Basic Agreement for indirect, special or consequential losses or damages of any kind, including lost profits, even if advised of the possibility thereof and regardless of the form of action by which such losses or damages may be claimed. SECTION 11.11 NON-PETITION COVENANTS. (a) Notwithstanding any prior termination of this Agreement, the Servicer, the Seller, the Funding Agent, and each Secured Party shall not, prior to the date which is one year and one day after the later of (i) termination of this Agreement with respect to the Borrower and (ii) the payment in full of all obligation due and owing by the Borrower to the Funding Agent and the Secured Parties under the Basic Agreements, acquiesce, petition or otherwise invoke or cause the Borrower to invoke the process of any court or government authority for the purpose of commencing or sustaining a case against the Borrower 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 Borrower or any substantial part of its property, or ordering the winding up or liquidation of the affairs of the Borrower. (b) Notwithstanding any prior termination of this Agreement, the Servicer, the Funding Agent, and each Secured Party shall not, prior to the date that is one year and one day after the termination of this Agreement with respect to the Seller, acquiesce to, petition or otherwise invoke or cause the Seller to invoke the process of any court or government authority for the purpose of commencing or sustaining a case against the Seller under any federal or state bankruptcy, insolvency or similar law, appointing a receiver, liquidator, assignee, trustee, custodian, sequestrator, or other similar official of the Seller or any substantial part of its property, or ordering the winding up or liquidation of the affairs of the Seller. (c) Notwithstanding anything contained herein to the contrary, this Agreement has been executed and delivered by The Chase Manhattan Bank, not in its individual capacity but solely in its capacities as Funding Agent and as Backup Servicer and in no event shall The Chase Manhattan Bank have any liability for the representations, warranties, covenants, agreements or other obligations 47 of the Borrower hereunder or in any of the certificates, notices or agreements delivered pursuant hereto, as to all of which recourse shall be had solely to the assets of the Borrower. SECTION 11.12 INDEPENDENCE OF THE SERVICER. For all purposes of this Agreement, the Servicer shall be an independent contractor and shall not be subject to the supervision of the Borrower, the Funding Agent or the Backup Servicer with respect to the manner in which it accomplishes the performance of its obligations hereunder. Unless expressly authorized by this Agreement, the Servicer shall have no authority to act for or represent the Borrower in any way and shall not otherwise be deemed an agent of the Borrower. SECTION 11.13 NO JOINT VENTURE. Nothing contained in this Agreement (i) shall constitute the Servicer or the Borrower as members of any partnership, joint venture, association, syndicate, unincorporated business or other separate entity, (ii) shall be construed to impose any liability as such on any of them or (iii) shall be deemed to confer on any of them and express, implied or apparent authority to incur any obligation or liability on behalf of the others. SECTION 11.14 CONSENTS TO JURISDICTION. Each of the parties hereto irrevocably submits to the jurisdiction of the United States District Court for the Southern District of New York, any court in the State of New York located in the city and county of New York, and any appellate court from any thereof, in any action, suit or proceeding brought against it and related to or in connection with this Security Agreement, the other Basic Agreements or the transactions contemplated hereunder or thereunder or for recognition or enforcement of any judgment and each of the parties hereto irrevocably and unconditionally agrees that all claims in respect of any such suit or action or proceeding may be heard or determined in such New York State court or, to the extent permitted by law, in such federal court. Each of the parties hereto agrees that a final judgment in any such action, suit or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law. To the extent permitted by applicable law, each of the parties hereby waives and agrees not to assert by way of motion, as a defense or otherwise in any such suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of such courts, that the suit, action or proceeding is brought in an inconvenient forum, that the venue of the suit, action or proceeding is improper or that this Security Agreement or any of the other Basic Agreements or the subject matter hereof or thereof may not be litigated in or by such courts. The Borrower hereby irrevocably appoints and designates The Prentice-Hall Corporation System, 500 Central Avenue, Albany, New York 12206-2290 as its true and lawful attorney and duly authorized agent for acceptance of service of legal process. The Borrower agrees that service of such process upon such Person shall constitute personal service of such process upon it. Nothing contained in this Security Agreement shall limit or affect the rights of any party hereto to serve process in any other manner permitted by law or to start legal proceedings relating to any of the Basic Agreements against the Seller, the Servicer, the Borrower or their respective property in the courts of any jurisdiction. SECTION 11.15 TRIAL BY JURY WAIVED. EACH OF THE PARTIES HERETO WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION ARISING DIRECTLY OR INDIRECTLY OUT OF, UNDER OR IN CONNECTION WITH THIS SECURITY 48 AGREEMENT, ANY OF THE OTHER BASIC AGREEMENTS OR ANY OF THE TRANSACTIONS CONTEMPLATED HEREUNDER OR THEREUNDER. EACH OF THE PARTIES HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT HAS BEEN INDUCED TO ENTER INTO THIS SECURITY AGREEMENT AND THE OTHER BASIC AGREEMENTS TO WHICH IT IS A PARTY, BY AMONG OTHER THINGS, THIS WAIVER. SECTION 11.16 GOVERNING LAW. THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS. 49 IN WITNESS WHEREOF, the parties hereto 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. CP FUNDING CORP., Borrower by______________________________ Name: Preston A. Miller Title: Senior Vice President and Treasurer AMERICREDIT FINANCIAL SERVICES, INC., Seller by______________________________ Name: Preston A. Miller Title: Senior Vice President and Treasurer AMERICREDIT FINANCIAL SERVICES, INC., Servicer by______________________________ Name: Preston A. Miller Title: Senior Vice President and Treasurer THE CHASE MANHATTAN BANK, not in its individual capacity but solely as Backup Servicer by______________________________ Name: Title: THE CHASE MANHATTAN BANK, as Funding Agent on behalf of the Secured Parties, by______________________________ Name: Title SCHEDULE A SCHEDULE OF RECEIVABLES THIS SCHEDULE INTENTIONALLY OMITTED SCHEDULE B REPRESENTATIONS AND WARRANTIES OF THE SELLER (a) GENERAL CHARACTERISTICS. Each Receivable: (i) has been originated in the United States by a dealer for the retail sale of a Financed Vehicle in the ordinary course of such dealer's business, which dealer has all necessary licenses and permits to originate Receivables in the state where such dealer is located, has been fully and properly executed by the parties thereto, and has been purchased from the dealer by the Seller under an existing Dealer Agreement or validly assigned by a dealer to the Seller; (ii) has created or shall create a valid, subsisting and enforceable first priority perfected security interest in favor of the Seller in the related Financed Vehicle (which security interest has been assigned to the Borrower and shall be validly assignable by the Borrower to the Funding Agent on behalf of the Secured Parties), except as enforceability may be limited by bankruptcy, insolvency, reorganization or similar laws affecting the enforcement of creditors' rights generally; (iii) contains customary and enforceable provisions (except as enforceability may be limited by bankruptcy, insolvency, reorganization or similar laws affecting the enforcement of creditors' rights generally) such that the rights and remedies of the holder thereof shall be adequate for realization against the collateral of the benefits of the security; (iv) 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 the level payment) that fully amortize the amount financed over the original contractual term and yield interest at the annual percentage rate; (v) provides for, in the event that such contract is prepaid, a prepayment that fully pays the principal balance and includes accrued but unpaid interest through the date of prepayment in an amount at least equal to the annual percentage rate; and (vi) has not been amended, or rewritten or collections with respect thereto deferred or waived. (b) COMPLIANCE WITH LAW. Each Receivable and the sale of the related Financed Vehicle complied at the time it was originated or made, and at the date such Receivable is sold by the Seller to the Borrower, complies, in all material respects, with all requirements of applicable Federal, state and local laws and regulations thereunder, including, without limitation, usury laws, the Federal Truth-in-Lending Act, the Equal Credit Opportunity Act, the Federal Trade Commission Act, the Fair Credit Billing Act, the Fair Credit Reporting Act, the Fair Debt Collection Practices Act, the Magnuson-Moss Warranty Act, the Federal Reserve Board's Regulations B and Z, the Federal Trade Commission Credit Practices Rule, state unfair and deceptive trade practice laws, and state adaptations of the National Consumer Act and of the Uniform Consumer Credit Code, and any other applicable consumer credit, equal credit opportunity and disclosure laws. (c) NO FRAUD. Each Receivable was originated by a dealer and was sold by the dealer to the Seller without any fraud or misrepresentation by the dealer. (d) BINDING OBLIGATION. Each Receivable represents the genuine, legal, valid and binding payment obligation in writing of the Obligor, enforceable by the holder thereof in accordance with its terms (except as enforceability may be limited by bankruptcy, insolvency, reorganization or similar laws affecting the enforcement of creditors' rights generally) and all parties to each Receivable had full legal capacity to execute and deliver such Receivable and all other documents related thereto and to grant the security interest purported to be granted thereby. (e) NO GOVERNMENT OBLIGOR. No Receivable is due from the United States of America or any state or local government or from any agency, department or instrumentality of the United States of America, any state or local government. (f) NO OBLIGOR BANKRUPTCY. At the Relevant Cutoff Date no Obligor had been identified on the records of the Seller as being the subject of a current bankruptcy proceeding. (g) SCHEDULE OF RECEIVABLES. The information set forth in the Schedule of Receivables has been produced from the Seller's electronic ledger and was true and correct in all material respects on the Relevant Cutoff Date, and is a complete and accurate description, on the relevant Receivables Sale Date, of the Receivables sold to the Borrower on such date; and on or prior to the relevant Receivables Sale Date, the Seller has appropriately marked its computer records to indicate the sale to the Borrower of the Receivables sold on such date. (h) CERTAIN CHARACTERISTICS OF RECEIVABLES. Each Receivable: (i) has a remaining maturity, as of the Relevant Cutoff Date, of not more than 60 months; (ii) each Receivable has an original maturity of not more than 60 months; B-2 (iii) each Receivable has a remaining Principal Balance as of the Relevant Cutoff Date of not more than $30,000; (iv) no Receivable is more than 30 days past due as of the Relevant Cutoff Date; and (v) no funds have been advanced by the Seller, any dealer, or anyone acting on behalf of any of them in order to cause any Receivable to qualify under clause (iv) above. (i) RECEIVABLES IN FORCE. No Receivable has been satisfied, subordinated or rescinded, nor shall any Financed Vehicle have been released from the security interests granted by the related Contract in whole or in part. (j) NO WAIVER. No provision of any Receivable has been waived. (k) NO DEFENSES. Except for the security interests in favor of the Seller and the Borrower, the Receivables are free and clear of all security interests, liens, charges, and encumbrances and to the best knowledge of the Seller no right of rescission, setoff, counterclaim or defense has been asserted or threatened with respect to any Receivable. (l) NO LIENS. No liens or claims have been filed for work, labor or materials relating to a Financed Vehicle that are liens prior to or equal or coordinate with, the security interest in the Financed Vehicle granted by the Receivable. (m) NO DEFAULT. No default, breach, violation or event permitting acceleration under the terms of any Receivable has occurred, and the Seller has not waived any of the foregoing. (n) INSURANCE. The Obligor under each Receivable has obtained physical damage and theft insurance covering the Financed Vehicle, and is required under the terms of the Receivable to maintain such insurance. (o) TITLE. (i) Immediately prior to the sale of the subject Receivables, the Seller had, and has conveyed to the Borrower, good and marketable title to each Receivable free and clear of all liens, encumbrances, security interests and rights of others, and (ii) the sale and assignment of the Receivables to the Borrower has been perfected under the Relevant UCC. (p) RECEIVABLE FILES COMPLETE. There exists a Receivable File pertaining to each Receivable and such Receivable File contains (1) a fully executed original of the Receivable, (2) the original executed credit application, or a copy thereof and (3) the original Lien Certificate or application therefor. Each of such documents which is required to be signed by the Obligor has been signed by the Obligor in the appropriate spaces. All blanks on any form have been properly filled in and each form has otherwise been correctly prepared. The complete Receivable File for each Receivable currently is in the possession of the Custodian. B-3 (q) LAWFUL ASSIGNMENT. No Receivable has been originated in, or is subject to the laws of, any jurisdiction under which the sale, transfer and assignment of such Receivable shall be unlawful, void or voidable. (r) ALL FILINGS MADE. All filings (including, without limitation, UCC filings) necessary in any jurisdiction to give the Borrower a first priority perfected security interest in the Receivables have been made. (s) ONE ORIGINAL. There is in existence one, and only one, original executed copy of each Receivable. (t) LOCKBOX. The Obligor of each Receivable is required to make payments to a lockbox that is subject to a Lockbox Agreement. (u) UCC CHARACTERIZATION. The contract evidencing such Receivable constitutes "chattel paper" under the Relevant UCC. (v) No selection procedures adverse to the Secured Parties or the Borrower were used in selecting the Receivables from the receivables owned by the Seller and/or otherwise constituting Managed Assets, that met the selection criteria contained in the Sale and Servicing Agreement and set forth above in this Schedule B. B-4 SCHEDULE 2.4 TO SALE AND SERVICING AGREEMENT FORM OF PREPAID RECEIVABLES NOTICE Reference is made to the Sale and Servicing Agreement, dated as of October 8, 1997 (the "Sale and Servicing Agreement"), among CP FUNDING CORP., a Nevada corporation ("CP Funding"), AMERICREDIT FINANCIAL SERVICES, INC., a Delaware corporation, as Seller and as Servicer (the "Seller"), and The Chase Manhattan Bank, a New York banking corporation, as Backup Servicer and as Funding Agent. Capitalized terms used herein and not otherwise defined shall have the meanings assigned in the Sale and Servicing Agreement. CP Funding has, on the date hereof, made a payment to the Seller in the amount of $[___________________] (the "Prepaid Amount") representing prepayment for Receivables that, in the aggregate, will have a fair market value (determined to be the price that would be obtained in an arm's-length transaction between a seller under no compulsion to sell and a buyer under no compulsion to buy, and taking into account such relevant factors as the prepayment of such purchase price and the anticipated sale date(s) of such Receivables) equal to the Prepaid Amount and meeting all of the necessary conditions for a sale and purchase pursuant to the Sale and Servicing Agreement. CP Funding understands that the Seller's acceptance of such amount constitutes its agreement: (i) to sell Receivables meeting such requirements on one or more Receivables Sale Dates occurring within [____] days following the date hereof; (ii) that the aggregate Principal Balance of the Receivables to be sold pursuant to this Prepaid Receivables Notice shall be not less than $[____________________]; and (iii) that the application of amounts paid hereunder toward the Receivables Purchase Price on such Receivables Sale Date(s) shall be reflected in the Seller's Receivables Sale Notice for each such date. CP FUNDING CORP. By: ------------------------------ Name: --------------------------- Title: --------------------------- SCHEDULE 3.1 TO SALE AND SERVICING AGREEMENT CONDITIONS PRECEDENT In addition to the receipt of documents and satisfaction of other conditions set forth in Section 3.1 of the Sale and Servicing Agreement, the following shall have been delivered, and shall be satisfactory in form and substance, to the Funding Agent and the Borrower: 1. Certified copy of the Credit and Servicing Procedures. 2. A Borrower Officer's Certificate, including as attachments thereto: a. Resolutions of the Board of Directors of the Borrower duly authorizing the execution, delivery and performance by the Borrower of each of the Basic Agreements to which it is a party and any other documents executed by or on behalf of the Borrower in connection with the transactions contemplated thereby; b. Certified Certificate of Incorporation of the Borrower; and c. By-laws of the Borrower. 3. An Incumbency Certificate of the Borrower setting forth the names, titles and signatures of the officers of the Borrower who are authorized to execute documents, give instructions and otherwise to take actions in connection with the contemplated transactions. 4. A Borrower Good Standing Certificate. 5. A Borrower Officer's Certificate re: liens, location of records of Receivables and certain corporate matters. 6. A Borrower's Certificate regarding establishment of Reserve Account. 7. Servicer Certificate regarding establishment of Collection Account. 8. AFS Officer's Certificate, including as attachments thereto: a. Resolutions of the Board of Directors duly authorizing the execution, delivery and performance by the Seller and the Servicer of each of the Basic Agreements to which each is a party and any other documents executed by or on behalf of the Seller and the Servicer in connection with the transactions contemplated thereby; b. Certified Certificate of Incorporation; and c. By-laws. 9. An Incumbency Certificate of AFS setting forth the names, titles and signatures of the officers of AFS who are authorized to execute documents, give instructions and otherwise take actions on behalf of AFS in connection with the contemplated transactions, in its roles as Seller and as Servicer. 10. A Good Standing Certificate of AFS. 11. Seller Officer's Certificate re: liens, location of records of Receivables and certain corporate matters. 12. Certificate of the Lockbox Bank as to due execution of the Lockbox Agreement. 13. An Opinion of special counsel to Chase Securities Inc. as to true sale and nonconsolidation matters. 14. An Opinion of special counsel to Chase Securities Inc. with respect to the validity and enforceability of certain transaction documents. 15. Opinion of counsel to the APA Banks addressed to the Rating Agencies. 16. Opinions of local counsel to the Seller with respect to perfection and priority of the security interests in the Collateral.(1) 17. Opinion of local counsel to the Borrower, as to the formation of and other corporate matters relating to the Borrower, as to the enforceability of certain transaction documents and as to the enforceability, perfection and priority of the security interests in the Collateral. 18. The Opinion of Chris A. Choate, General Counsel of AmeriCredit Corp. as to pending and threatened litigation. 19. The Opinion of Chris A. Choate, General Counsel of AmeriCredit Corp. as to certain matters relating to the Receivables. - -------------------------- (1) Jurisdictions where such an opinion is required to include California, Texas and any other jurisdiction where financed vehicles securing more than 10% of the Receivables from time to time are titled. 3.1-2 20. The Opinion of Chris A. Choate, General Counsel to AmeriCredit Corp., AFSI, and Borrower, with respect to corporate matters for each of the Seller, the Servicer and the Borrower. 21. Acknowledgment copy of financing statement on Form UCC-1 naming AFSI, as debtor, the Borrower, as secured party, and the Funding Agent, as assignee, filed with the Office of the Secretary of State of the State of Texas. 22. Acknowledgment copy of financing statement on Form UCC-1 naming the Borrower, as debtor, and the Funding Agent, as secured party, filed with the Secretaries of State of the States of Nevada and Texas. 23. Letter(s) re: Wire Instructions. 24. Rating Letters: a. Letters from Standard & Poor's and Moody's confirming PARCO's A-1/P-1 commercial paper ratings; and b. VFN rating letter from Moody's. 3.1-3 SCHEDULE 5.11 TO SALE AND SERVICING AGREEMENT PROCEDURES FOR DATA INTEGRITY REVIEWS Capitalized terms are used as defined in Annex A to the Sale and Servicing Agreement. SERVICER'S DETERMINATION DATE CERTIFICATES; Servicer's Receivables Sale Date Certificates On the quarterly basis specified in Section 5.11 of the Sale and Servicing Agreement, the latest monthly Servicer's Determination Date Certificate should be selected as well as the most current Servicer's Receivables Sale Date Certificate. The line items should be reconciled including the raw data lines and the calculation of formulas within the statement. FILE INTEGRITY On a quarterly basis, a file integrity check will be conducted. This process will include pulling 100 files, chosen randomly, from the Receivables constituting Collateral during the specified three-month period. A completeness check should be performed to see that each of the following items is present in each selected Obligor file: - fully executed original of the Contract evidencing the Receivable - evidence of credit approval by an authorized AmeriCredit employee is present on contract - original executed credit application or copy of credit application - original lien certificate showing the security interest of AmeriCredit or the application therefor - credit bureau report - agreement to provide insurance or a completed credit application showing evidence of insurance - truth in lending disclosure statement - contract is stamped with legend indicating assignment DATA INTEGRITY Additionally, for the selected files, the following fields should be checked to see that they appear accurately on the electronic installment loan database with respect to the security agreement, installment sale contract, title or application for title present in each obligor loan file: - name of the obligor - original amount financed (rounded to the nearest dollar) - original term - monthly payment amount - the new or used status of the related Financed Vehicle - VIN number - annual percentage rate - APR should be recalculated using the APR recalculation program distributed by the Office of the Comptroller of the Currency and the accuracy rated to within 1/8 of one percent tolerance - coding indicates assignment to the Funding Agent (Chase) Within the installment loan database, the following items should be checked: - the Receivable is not more than 30 days delinquent - as of the date of sale to the Borrower, the remaining maturity of the Receivable did not exceed 60 months - the original maturity of the Receivable does not exceed 60 months - as of the date of sale to the Borrower, the receivable had remaining principal of no more than $30,000 5.11-2 EXHIBIT A TO SALE AND SERVICING AGREEMENT RECEIVABLES SALE AGREEMENT SALE No. [____] of Receivables made this ___ day of ____________, 199_, pursuant to the Sale and Servicing Agreement, dated as of October 8, 1997 (the "Sale and Servicing Agreement"), among CP FUNDING CORP., a Nevada corporation ("CP Funding"), AMERICREDIT FINANCIAL SERVICES, INC., a Delaware corporation as Seller and as Servicer (the "Seller"), and The Chase Manhattan Bank, a New York banking corporation, as Backup Servicer and as Funding Agent. W I T N E S S E T H: WHEREAS pursuant to the Sale and Servicing Agreement, the Seller wishes to sell Receivables to CP Funding; and WHEREAS, CP Funding is willing to purchase such Receivables subject to the terms and conditions hereof. NOW, THEREFORE, CP Funding and the Seller hereby agree as follows: 1. DEFINED TERMS. Capitalized terms used herein shall have the meanings ascribed to them in Annex A to the Sale and Servicing Agreement, unless otherwise defined herein. "Relevant Cutoff Date" shall mean, with respect to the Receivables sold hereby, ___________ ___, 199_. "Receivables Sale Date" shall mean, with respect to the Receivables sold hereby, the date hereof. 2. SCHEDULE OF RECEIVABLES. Annexed hereto is a Schedule A listing the Receivables sold pursuant to this Receivables Sale Agreement on the Receivables Sale Date. 3. SALE OF RECEIVABLES. In consideration of CP Funding's delivery to or upon the order of the Seller of $________, the Seller does hereby sell, transfer, assign, set over and otherwise convey to CP Funding, without recourse (except as expressly provided in the Sale and Servicing Agreement), all right, title and interest of the Seller in and to: (a) the Receivables listed in Schedule A and all moneys received thereon, on and after the Relevant Cutoff Date; (b) all security interests in the Financed Vehicles granted by Obligors pursuant to the Receivables and any other interest of the Seller in such Financed Vehicles; (c) all proceeds and all rights to receive proceeds with respect to the Receivables from claims on any physical damage, credit life or disability insurance policies covering Financed Vehicles or Obligors; (d) all rights of the Seller against Dealers pursuant to Dealer Agreements and/or Dealer Assignments; (e) all rights under any Service Contracts on the related Financed Vehicles; (f) the related Receivables Files; (g) all proceeds of any and all of the foregoing. 4. REPRESENTATIONS AND WARRANTIES OF THE SELLER. The Seller hereby represents and warrants to CP Funding as of the Receivables Sale Date that: (a) SALE AND SERVICING AGREEMENT. The representations and warranties set forth in Sections 4.1 and 7.1 of the Sale and Servicing Agreement are true and correct with respect to the property sold pursuant to Section 3 hereof. (b) PRINCIPAL BALANCE. As of the Relevant Cutoff Date, the aggregate Principal Balance of the Receivables listed on Schedule A annexed hereto and sold to CP Funding pursuant to this Receivables Sale Agreement is $_______________. 5. CONDITIONS PRECEDENT. The obligation of CP Funding to acquire the Receivables hereunder is subject to the satisfaction, on or prior to the Receivables Sale Date, of the following conditions precedent: (a) REPRESENTATIONS AND WARRANTIES. Each of the representations and warranties made by the Seller in Section 4 of this Receivables Sale Agreement and in Sections 4.1 and 7.1 of the Sale and Servicing Agreement shall be true and correct with respect to the property sold pursuant to Section 3 hereof as of the Receivables Sale Date. (b) SALE AND SERVICING AGREEMENT CONDITIONS. Each of the conditions set forth in Section 3.2 of the Sale and Servicing Agreement shall have been satisfied with respect to the property sold pursuant to Section 3 hereof. (c) ADDITIONAL INFORMATION. The Seller shall have delivered to CP Funding such information as was reasonably requested by CP Funding to satisfy itself as to the satisfaction of the conditions set forth in this Section 5. 6. RATIFICATION OF AGREEMENT. As supplemented by this Receivables Sale Agreement, the Sale and Servicing Agreement, including without limitation Section 2.2(b) thereof, is in all respects ratified and confirmed and the Sale and Servicing Agreement as so supplemented by this Receivables Sale Agreement shall be read, taken and construed as one and the same instrument. 7. COUNTERPARTS. This Receivables Sale Agreement may be executed in two or more counterparts (and by different parties in separate counterparts), each of which shall be an original but all of which together shall constitute one and the same instrument. 8. GOVERNING LAW. THIS RECEIVABLES SALE AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REFERENCE TO ITS CONFLICT OF LAW PROVISIONS, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS. A-3 IN WITNESS WHEREOF, CP Funding and the Seller have caused this Receivables Sale Agreement to be duly executed and delivered by their respective duly authorized officers as of the day and the year first above written. CP FUNDING CORP. by__________________________ Title: AMERICREDIT FINANCIAL SERVICES, INC., Seller by___________________________ Title: Acknowledged: THE CHASE MANHATTAN BANK, as Funding Agent by______________________________ Title: EXHIBIT B TO SALE AND SERVICING AGREEMENT FORM OF SERVICER'S DETERMINATION DATE CERTIFICATE [To Follow] EXHIBIT B-1 TO SALE AND SERVICING AGREEMENT FORM OF SERVICER'S VFN PREPAYMENT DATE CERTIFICATE [To Follow] EXHIBIT C TO SALE AND SERVICING AGREEMENT FORM OF RECEIVABLES SALE NOTICE [To Follow] EXHIBIT D TO SALE AND SERVICING AGREEMENT FORM OF SERVICER'S RECEIVABLES SALE DATE CERTIFICATE [To Follow] EXHIBIT E TO SALE AND SERVICING AGREEMENT THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 NOR UNDER THE SECURITIES LAWS OF ANY STATE AND MAY NOT BE TRANSFERRED EXCEPT IN A TRANSACTION EXEMPT FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933 AND APPLICABLE STATE SECURITIES LAWS. October ______, 1997 RECEIVABLES PURCHASE NOTE Capitalized terms used and not otherwise defined in this Receivables Purchase Note (this "Note") shall have the respective meanings assigned in the Sale and Servicing Agreement, dated as of October 8, 1997, among the AmeriCredit Financial Services Inc., as Seller, the Obligor (as defined below), as Purchaser, The Chase Manhattan Bank, as Funding Agent, and the other parties thereto (the "Sale and Servicing Agreement"). This Note is the Receivables Purchase Note referred to in the Sale and Servicing Agreement. CP FUNDING CORP., a Nevada corporation (the "Obligor"), for value received, hereby promises to pay to AMERICREDIT FINANCIAL SERVICES, INC., a Delaware corporation (together with any other permitted holder hereof the "Holder"), the principal amount hereof as set forth in Schedule I attached hereto together with any and all accrued and unpaid interest thereon in accordance with the terms set forth herein. Subject to the terms and conditions hereof, the principal amount then outstanding on this Note, together with any accrued and unpaid interest thereon, shall be due and payable on the Termination Date. Interest on the unpaid principal balance hereof from time to time outstanding shall accrue at a rate per annum equal to the Applicable Rate in effect during the relevant Collection Period, plus 2.5%, but not to exceed a rate per annum of 8.5%, computed on the basis of a 360-day year consisting of 30-day months and shall be payable on each Distribution Date. Principal and interest shall be payable in lawful money of the United States of America at the principal office of the Holder. The Obligor also shall pay interest at the rate referred to above on any overdue principal and (to the extent permitted by applicable law) on any overdue interest, from the date on which payment thereof is due until the obligation of the Obligor with respect to the payment thereof shall be discharged. The principal amount hereof shall be increased from time to time by the amount of advances made to the Obligor by AmeriCredit Financial Services Inc. in its discretion pursuant to the Sale and Servicing Agreement; PROVIDED, HOWEVER, that the principal amount hereof after giving effect to any particular sale of Receivables and any related advance hereunder, shall not exceed 7% of the Pool Balance. Subject to the restrictions set forth below, this Note may be prepaid in whole or in part, at any time or from time to time, without premium or penalty. The rights of the Holder to receive payment with respect to this Note shall not be subject to any offset by Obligor. No delay or omission on the part of the Holder in exercising any rights hereunder shall operate as a waiver of such right or any other right of such Holder, nor shall any delay, omission or waiver on any one occasion be deemed a bar to or waiver of the same or any other right on any future occasion. The Obligor hereby waives presentment, demand, protest and notice of every kind, and the Obligor assents to any extension or postponement of the time of payment or any other indulgence, to the addition of any collateral that at any time may be security for payment of this Note and to the substitution, release, or addition of any party that may, from time to time, be primarily or secondarily obligated for the payment of this Note. The Obligor shall pay on demand all costs, including court costs and reasonable attorneys' fees paid or incurred by the holder hereof in enforcing this Note upon default. If any payment or distribution of any kind is collected or received by the Holder under this Note when pursuant hereto such payment should not have been made to or received by the Holder, the Holder forthwith shall deliver the same to the Funding Agent for the benefit of the Secured Parties. Until so delivered, such payment or distribution shall be held in trust by the Holder as the property of the Secured Parties, segregated from other funds and property held by the Holder. PAYMENT OF PRINCIPAL AND INTEREST ON THIS NOTE IS SUBJECT TO THE FOLLOWING TERMS, CONDITIONS AND RESTRICTIONS, TO WHICH EACH HOLDER OF THIS NOTE SHALL BE DEEMED TO HAVE AGREED BY ITS ACCEPTANCE HEREOF: (1) PAYMENT OF ANY AMOUNTS DUE HEREUNDER SHALL BE SUBJECT AND SUBORDINATE TO THE PAYMENT OF THE VFN AND OTHER SECURED OBLIGATIONS PURSUANT TO THE SECURITY AGREEMENT, AND SHALL BE MADE ONLY OUT OF AVAILABLE FUNDS OF THE OBLIGOR THAT ARE NOT REQUIRED TO BE USED TO MAKE ANY PAYMENTS THEN DUE AND OWING TO THE SECURED PARTIES; (2) IN NO EVENT SHALL ANY PAYMENT BE MADE (OR BE CLAIMED) ON ANY DATE IF A TERMINATION EVENT OR POTENTIAL TERMINATION EVENT HAS OCCURRED AND IS CONTINUING ON SUCH DATE (OR WOULD OCCUR AS A RESULT OF SUCH PAYMENT); AND (3) PRIOR TO THE DATE THAT IS ONE YEAR AND ONE DAY AFTER THE DATE OF TERMINATION OF THE SECURITY AGREEMENT PURSUANT TO SECTION 4.5 THEREOF, IT WILL NOT INSTITUTE AGAINST, OR JOIN ANY OTHER PERSON IN INSTITUTING AGAINST THE OBLIGOR, ANY BANKRUPTCY, REORGANIZATION, ARRANGEMENT, INSOLVENCY, OR LIQUIDATION PROCEEDINGS, OR OTHER PROCEEDINGS UNDER ANY FEDERAL OR STATE BANKRUPTCY OR SIMILAR LAW. THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK. THE OBLIGOR AGREES THAT ANY ACTION ON THIS NOTE MAY BE BROUGHT IN THE FEDERAL OR STATE COURTS IN THE STATE OF NEW YORK. E-3 IN WITNESS WHEREOF, the Obligor has caused this Note to be signed as of the date above written. CP FUNDING CORP. By:____________________________ Name:_________________________ Title:__________________________ Schedule I to RECEIVABLES PURCHASE NOTE RECEIVABLES PURCHASE ADVANCES AND PAYMENTS OF PRINCIPAL
Amount of Unpaid Amount of Principal Principal Notation Date Advances Repaid Balance - ----- --------- -------- -------- Made By --------
EX-10.3 4 FUNDING AGREEMENT - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- FUNDING AGREEMENT BY AND AMONG CP FUNDING CORP., as Borrower, PARK AVENUE RECEIVABLES CORPORATION, THE CHASE MANHATTAN BANK, as Funding Agent, APA Bank and Syndication Agent AND THE SEVERAL FINANCIAL INSTITUTIONS PARTY HERETO FROM TIME TO TIME, as APA Banks Dated as of October 8, 1997 - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- TABLE OF CONTENTS
Page ARTICLE I DEFINITIONS SECTION 1.1 Definitions. . . . . . . . . . . . . . . . . . . . . . . . . . . 2 ARTICLE II FUNDINGS; THE VFN SECTION 2.1 Loans to Borrower; Funding Procedures; the VFN. . . . . . . . . . 2 SECTION 2.2 Sharing of Payments, Etc. . . . . . . . . . . . . . . . . . . . . 12 SECTION 2.3 Right of Setoff . . . . . . . . . . . . . . . . . . . . . . . . . 13 SECTION 2.4 Interest. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13 SECTION 2.5 Payments Generally. . . . . . . . . . . . . . . . . . . . . . . . 14 SECTION 2.6 Broken Funding. . . . . . . . . . . . . . . . . . . . . . . . . . 15 SECTION 2.7 Conversion and Continuation of Outstanding Advances Made by the APA Banks. . . . . . . . . . . . . . . . . . 15 SECTION 2.8 Illegality. . . . . . . . . . . . . . . . . . . . . . . . . . . . 16 SECTION 2.9 Inability to Determine Eurodollar Rate. . . . . . . . . . . . . . 17 SECTION 2.10 Fees. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17 ARTICLE III REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE BORROWER SECTION 3.1 Representations, Warranties and Covenants of the Borrower . . . . 19 ARTICLE IV INDEMNIFICATION SECTION 4.1 Indemnity . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23 SECTION 4.2 Indemnity for Reserves and Expenses . . . . . . . . . . . . . . . 24 SECTION 4.3 Indemnity for Taxes . . . . . . . . . . . . . . . . . . . . . . . 26 SECTION 4.4 Other Costs, Expenses and Related Matters . . . . . . . . . . . . 28
i ARTICLE V LIQUIDITY COMMITMENT SECTION 5.1 Liquidity Purchases . . . . . . . . . . . . . . . . . . . . . . . 29 SECTION 5.2 Several Purchase Commitments of the APA Banks . . . . . . . . . . 30 SECTION 5.3 Nonrecourse Nature of Transactions. . . . . . . . . . . . . . . . 31 SECTION 5.4 Payments; Indemnity . . . . . . . . . . . . . . . . . . . . . . . 31 SECTION 5.5 Reduction of Commitments. . . . . . . . . . . . . . . . . . . . . 32 ARTICLE VI REPRESENTATIONS AND WARRANTIESOF THE APA BANKS SECTION 6.1 Representations and Warranties of the APA Banks to PARCO and the Funding Agent. . . . . . . . . . . . . . . . . . 33 SECTION 6.2 PARCO Disclaimer of Representations and Warranties. . . . . . . . . . . . . . . . . . . . . . . . . . 34 ARTICLE VII THE FUNDING AGENT SECTION 7.1 Appointment.. . . . . . . . . . . . . . . . . . . . . . . . . . . 35 SECTION 7.2 Delegation of Duties. . . . . . . . . . . . . . . . . . . . . . . 35 SECTION 7.3 Exculpatory Provisions. . . . . . . . . . . . . . . . . . . . . . 35 SECTION 7.4 Reliance by Funding Agent . . . . . . . . . . . . . . . . . . . . 36 SECTION 7.5 Notice of Termination Event and Other Events; Voting. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37 SECTION 7.6 Non-Reliance by APA Banks on Funding Agent and Other APA Banks . . . . . . . . . . . . . . . . . . . . . . . 37 SECTION 7.7 Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . 38 SECTION 7.8 Funding Agent in its Individual Capacity. . . . . . . . . . . . . 38 SECTION 7.9 Successor Funding Agent . . . . . . . . . . . . . . . . . . . . . 38 SECTION 7.10 Chase Conflict Waiver . . . . . . . . . . . . . . . . . . . . . . 39 ARTICLE VIII MISCELLANEOUS SECTION 8.1 Waivers; Amendments, Etc. . . . . . . . . . . . . . . . . . . . . 40
ii SECTION 8.2 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41 SECTION 8.3 Governing Law; Submission to Jurisdiction; Waiver of Jury Trial. . . . . . . . . . . . . . . . . . . . . . . 41 SECTION 8.4 Severability; Counterparts; Waiver of Setoff. . . . . . . . . . . 42 SECTION 8.5 Successors and Assigns; Participations; Assignments . . . . . . . . . . . . . . . . . . . . . . . . . . . 42 SECTION 8.6 No Petition.. . . . . . . . . . . . . . . . . . . . . . . . . . . 45 SECTION 8.7 Limited Recourse. . . . . . . . . . . . . . . . . . . . . . . . . 46 SECTION 8.8 Further Assurances. . . . . . . . . . . . . . . . . . . . . . . . 46 SECTION 8.9 Headings. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47 EXHIBITS ANNEX I Commitments . . . . . . . . . . . . . . . . . . . . . . . . . . . 49 EXHIBIT A Form of Variable Funding Note . . . . . . . . . . . . . . . . . . A-1 EXHIBIT B Form of Transfer Supplement . . . . . . . . . . . . . . . . . . . B-1 EXHIBIT C Form of Opinion of Counsel. . . . . . . . . . . . . . . . . . . . C-1 EXHIBIT D Notice Addresses. . . . . . . . . . . . . . . . . . . . . . . . . D-1
iii FUNDING AGREEMENT FUNDING AGREEMENT (as amended, supplemented or otherwise modified and in effect from time to time, this "AGREEMENT"), dated as of October 8, 1997, by and among PARK AVENUE RECEIVABLES CORPORATION, a Delaware corporation, as lender (together with its successors and assigns, "PARCO"), CP FUNDING CORP., a Nevada corporation, as borrower (together with its successors and assigns, the "BORROWER"), THE CHASE MANHATTAN BANK, a New York banking corporation ("CHASE"), as funding agent for PARCO and the several APA Banks (in such capacity, the "FUNDING AGENT") and THE SEVERAL FINANCIAL INSTITUTIONS PARTY HERETO FROM TIME TO TIME. W I T N E S S E T H : WHEREAS, subject to the terms and conditions of this Agreement and the other Basic Agreements, the Borrower desires to obtain, and PARCO desires to lend, funds from time to time on an uncommitted basis; WHEREAS, subject to the terms and conditions of this Agreement and the other Basic Agreements, the Borrower desires to obtain, and the APA Banks have agreed to lend, funds from time to time on a committed basis; WHEREAS, in order to evidence its obligation to repay amounts borrowed by it from PARCO and/or the APA Banks, as applicable, together with interest thereon, the Borrower has agreed to execute and deliver the VFN to the Funding Agent for the benefit of PARCO and the APA Banks; WHEREAS, in order to obtain ratings for its Commercial Paper issued to fund its interest in the VFN from time to time, PARCO desires that the APA Banks to commit to purchase from PARCO, without recourse, representation or warranty, all or a portion, as applicable, of PARCO's right, title and interest in its loans made to the Borrower hereunder, subject to the terms and conditions of this Agreement and the other Basic Agreements; and WHEREAS, pursuant to the Security Agreement, the Borrower will pledge to the Funding Agent for the benefit of the Secured Parties its interest in the Collateral, including, but not limited to, the Borrower's security interest in the Receivables and the Other Conveyed Property; NOW THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows: ARTICLE I DEFINITIONS SECTION 1.1 DEFINITIONS. All capitalized terms not otherwise defined herein shall have the meanings specified in, or incorporated by reference into, Annex A to that certain Sale and Servicing Agreement, dated as of October 8, 1997 (as amended, supplemented or otherwise modified and in effect from time to time, the "SALE AND SERVICING AGREEMENT"), by and among AmeriCredit Financial Services, Inc., as Seller and Servicer thereunder, CP Funding Corp., as Borrower, The Chase Manhattan Bank, as Funding Agent and The Chase Manhattan Bank, as Back-Up Servicer, which Annex A is incorporated herein by reference. ARTICLE II FUNDINGS; THE VFN SECTION 2.1 LOANS TO BORROWER; FUNDING PROCEDURES; THE VFN. (a) FUNDING GENERALLY. Upon the terms and subject to the conditions set forth herein, prior to the Commitment Expiry Date, and PROVIDED that (i) in the case of PARCO, no Potential PARCO Wind-Down Event or PARCO Wind-Down Event shall have occurred and be continuing and (ii) in the case of the APA Banks, no Termination Event or Potential Termination Event shall have occurred and be continuing, PARCO may, in its sole discretion, and the APA Banks shall (subject to the terms and conditions specified herein), make an advance (any such advance, a "FUNDING," the first such advance, the "INITIAL FUNDING," and each such additional funding, a "SUBSEQUENT FUNDING") to the Borrower from time to time on or after the Effective Date. 2 To request a Funding hereunder, the Borrower shall notify the Funding Agent of such request by telephone (a) in the case of a Eurodollar Funding, not later than 11:00 A.M. (New York time) three (3) Business Days before the date of the proposed Funding, (b) in the case of an ABR Funding, not later than 12:30 P.M. (New York Time) on the proposed date of such Funding and (c) in the case of a CP Funding, not later than 11:00 A.M. (New York time), one (1) Business Day before the date of the proposed Funding. Each day on which a Funding is made hereunder shall be a Business Day. Each such telephonic request for a Funding shall be irrevocable and shall be confirmed promptly by hand delivery or telecopy to the Funding Agent of a written funding request (each, a "FUNDING REQUEST") in a form approved by the Funding Agent and signed by the Borrower. Each such telephonic and written Funding Request shall specify the following information in compliance with Section 2.1(b): (i) the requested Advance Amount (calculated in accordance with the definition thereof, and which shall be at least $1,000,000 or integral multiples of $1,000 in excess thereof); (ii) the date of such Funding, which shall be a Business Day; (iii) whether such Funding is to be an ABR Funding, a CP Funding or a Eurodollar Funding; (iv) in the case of a CP Funding or a Eurodollar Funding, the CP Funding Period or Eurodollar Funding Period to be applicable thereto, which shall be a period contemplated by the definition of the term "CP Funding Period" and "Eurodollar Funding Period", respectively; and (v) the location and number of the Borrower's account to which funds are to be disbursed, which shall comply with the requirements of Section 2.1(e). If no election as to the type of Funding is specified, then the requested Funding shall be at the discretion of the Funding Agent (with the consent of PARCO if the Funding Agent so selects a CP Funding). Promptly following receipt of a Funding Request in accordance with this Section 2.1(a), the Funding Agent shall promptly advise each Secured Party of the details thereof and of the amount of such Secured Party's loan to be made as part of the requested Funding (if any). No more than five (5) Subsequent Fundings shall be permitted each calendar month, unless the Funding 3 Agent, at the direction of the Required Banks, shall have agreed to more frequent Fundings. (b) CONDITIONS TO FUNDING. Neither PARCO nor the APA Banks shall have any obligation to advance any funds to the Borrower in connection with any Funding unless, on the date of such Funding, (i) after giving effect to such Funding, the Total Investment PLUS the Interest Component of all Commercial Paper issued by PARCO to fund the Total Investment would not exceed the Facility Limit; (ii) each APA Bank's Pro Rata Share of such Funding would not exceed the amount of its unused Commitment; (iii) the Borrower has provided a Funding Request to the Funding Agent, which Funding Request shall include the calculations necessary to satisfy the requirement set forth in clauses (i) and (ii) above and shall also include a certification by an authorized officer of the Borrower that, to the best of such officer's knowledge, no event has occurred since the most recent Funding (or the Effective Date, in the case of the Initial Funding) that would have a material and adverse effect on the Receivables, the Seller, the Servicer or the Borrower; (iv) the Borrower shall have deposited in the Reserve Account, or shall have given irrevocable instructions to the Funding Agent to withhold from the proceeds of such Funding and to deposit in the Reserve Account, an amount equal to (x) in the case of the Initial Funding, the Reserve Account Initial Deposit and (y) in the case of any Subsequent Funding, the Subsequent Reserve Account Deposit; (v) the VFN is rated at least A2 by Moody's; (vi) one or more binding and enforceable Hedge Contracts in an aggregate notional amount equal to the Facility Limit are in full force and effect in accordance with the terms of the Sale and Servicing Agreement; (vii) each representation and warranty of the Borrower herein or in the Security Agreement shall be true and correct with respect to the Borrower and each Receivable as of the date of such Funding; (viii) a Potential PARCO Wind-Down Event or a PARCO Wind-Down Event (each only in the case of a Funding to be made by PARCO), or a Potential Termination Event or a Termination Event (in the case of a Funding to be made by the APA Banks or PARCO), shall not have occurred and be continuing; (ix) PARCO is able to obtain funds for the making of such Funding (only in the case of a Funding to be made by PARCO); (x) the Funding Agent shall have received, duly executed and delivered by Wells Fargo Bank, a lien release in substantially the form specified in Section 1(b) of the Intercreditor Agreement; and (ix) in connection with the Initial Funding, the conditions precedent set forth in Section 2.1(g) hereof and Section 3.2 of the Sale and Servicing Agreement shall be satisfied. Notwithstanding anything to the contrary set forth in this Agreement, no APA Bank shall have any obligation to advance funds to the Borrower on the 4 Initial Funding Date or any Subsequent Funding Date if, on such day, any Termination Event or Potential Termination Event shall have occurred and be continuing. The Funding Agent shall promptly advise each APA Bank (by telecopy or by telephone call promptly confirmed in writing by telecopy) of the receipt and content of any Funding Request. The APA Banks' several obligations to provide the Borrower with funds pursuant to this Article II shall terminate on the Commitment Expiry Date. Notwithstanding anything contained in this Section 2.1 or elsewhere in this Agreement to the contrary, no APA Bank shall be obligated to provide the Borrower with aggregate funds in connection with a Funding Request in an amount that would exceed such APA Bank's unused Commitment then in effect, and the failure of any APA Bank to make its Pro Rata Share of the Funding available to the Borrower (subject to the terms and conditions set forth herein) shall not relieve any other APA Bank of its obligations hereunder. (c) ADVANCE PERCENTAGE; FUNDING REQUEST IRREVOCABLE. With respect to any Funding Date, the advance percentage (the "ADVANCE PERCENTAGE") to determine the Advance Amount shall be 88%, subject to downward adjustment on such Funding Date as described below: (1) if a "Trigger Event" (as defined in any public asset-backed transaction beginning with, and including, the AmeriCredit Automobile Receivables Trust 1996-D transaction) occurs which continues unremedied for two (2) monthly reporting periods and is waived by the party or parties entitled to exercise such waiver under the related transaction documentation, then the Advance Percentage in effect at the opening of business on such Funding Date shall be reduced by 2%; PROVIDED that if the Trigger Event relates to a delinquency test failure and occurs after the Pool Factor (as defined in the related transaction documentation) is below 25%, the Advance Percentage shall not be so reduced; PROVIDED FURTHER that if the Advance Percentage has been reduced as a result of the application of this clause (1), the Advance Percentage shall remain at such reduced percentage until such time as the related Trigger Event has been cured for a period of three (3) consecutive months; (2) if a Trigger Event occurs and is not waived by the Person or Persons entitled to exercise such waiver under the related 5 transaction documentation, then the Advance Percentage in effect at the opening of business on such Funding Date shall be reduced by 6% (without duplication of any reduction pursuant to clause (1) above); and (3) if there is an Excess Spread Deficiency (calculated as of the close of business three (3) Business Days prior to such Funding Date), then the Advance Percentage shall be reduced by the product of (i) the amount of such Excess Spread Deficiency (stated as a percentage) MULTIPLIED BY (ii) 1.7 (rounded to the nearest 1%); PROVIDED that if the Advance Percentage has been reduced as a result of the application of this clause (3), the Advance Percentage shall remain at such reduced percentage until such time as the Excess Spread Deficiency has been cured. (d) FUNDING REQUEST IRREVOCABLE. The notice of the proposed Initial Funding and any Subsequent Funding shall be irrevocable and binding on the Borrower, and the Borrower shall indemnify PARCO and the APA Banks against any loss or expense incurred by PARCO or the APA Banks as provided in Section 2.6 hereof. (e) DISBURSEMENT OF FUNDS. No later than 4:30 P.M. (New York City time) on the date on which a Funding is to be made, PARCO and/or the APA Banks, as applicable, will make available to the Borrower, in immediately available funds, the amount of the Funding to be made on such day by remitting the required amount thereof to an account of the Borrower as designated in the related Funding Request. (f) THE VFN. (i) The Borrower's obligation to pay the principal of, and interest on, all amounts advanced by PARCO or the APA Banks pursuant to any Funding shall be evidenced by a single note of the Borrower (as amended, supplemented or otherwise modified and in effect from time to time, the "VFN") which shall (1) be dated the Closing Date; (2) be in the stated principal amount equal to the Facility Limit (as reflected from time to time on the grid attached thereto); (3) bear interest as provided therein; (4) be payable to the order of the Funding Agent for the account of PARCO and the APA Banks and mature on the Distribution Date occurring in the calendar month 6 sixty-six (66) months following the Commitment Expiry Date (unless otherwise accelerated pursuant to the terms of the Basic Agreements); (5) be entitled to the benefits of this Agreement, the Security Agreement and the other Basic Agreements; and (6) be substantially in the form of Exhibit A to this Agreement, with blanks appropriately completed in conformity herewith. The Funding Agent shall, and is hereby authorized to, make a notation on the schedule attached to the VFN of the date and the amount of each Funding and the date and amount of the payment of principal thereon, and prior to any transfer of the VFN, the Funding Agent, on behalf of PARCO and the APA Banks, shall endorse the outstanding principal amount of the VFN on the schedule attached thereto. The entries made by the Funding Agent pursuant to the preceding sentence shall be PRIMA FACIE evidence of the existence and amounts of the obligations recorded therein; PROVIDED, HOWEVER, that failure to make such notation shall not adversely affect the rights of PARCO and the APA Banks with respect to the payment obligations of the Borrower hereunder and under the VFN. (ii) On any VFN Prepayment Date, the Borrower shall have the option to prepay all or a portion of the VFN Balance (each, an "OPTIONAL PREPAYMENT"), subject to the following terms and conditions: 1. The Borrower shall have given the Funding Agent at least five (5) Business Days' prior written notice of its intent to effect an Optional Prepayment; 2. Unless such Optional Prepayment is to be effected on a Distribution Date (in which case the relevant calculations with respect to such Optional Prepayment shall be reflected on the applicable Servicer's Determination Date Certificate), the Borrower shall cause the Servicer to deliver to the Funding Agent, the Backup Servicer and the Rating Agencies a Servicer's VFN Prepayment Date Certificate substantially in the form of Exhibit B-1 to the Sale and Servicing Agreement, together with evidence to the Funding Agent, the Backup Servicer and the Rating Agencies (which evidence may consist solely of the Servicer's VFN Prepayment Date Certificate) that the Borrower shall have sufficient funds on the contemplated VFN Prepayment Date to effect the Optional Prepayment in accordance with this Agree- 7 ment. Any such Servicer's VFN Prepayment Date Certificate and related evidence shall be delivered to the Funding Agent no later than 1 P.M. (New York time), five (5) Business Days prior to the contemplated VFN Prepayment Date. In effecting an Optional Prepayment, the Borrower may (i) use the proceeds of sales of the Receivables (which sales must be made in arm's-length transactions to Persons other than AFS), and (ii) give effect to Principal Collections on deposit in the Collection Account at such time to the extent consistent with the requirements of paragraph 4 below (as evidenced by the Servicer's VFN Prepayment Date Certificate). 3. In connection with any such Optional Prepayment that does not constitute a prepayment in full of the outstanding VFN Balance, then, following receipt by the Funding Agent of the amounts referred to in paragraph 5 below, there shall be released from the Lien of the Security Agreement (subject to the requirements of paragraph 4 below): (i) a portion of the Receivables comprising the Pool Balance selected by the Borrower in accordance with the FIFO method; and (ii) such other Receivables not then constituting part of the Pool Balance, excluding, however, any Receivable subject to a Repurchase Obligation ("Other Designated Receivables") as the Borrower has agreed to sell in an arm's length transaction permitted hereby and as are designated by the Borrower and specified in the Servicer's VFN Prepayment Date Certificate (such Receivables and such Other Designated Receivables, together, in each case, with the related Other Conveyed Property, being collectively referred to as the "Prepayment Related Collateral"). 4. After giving effect to the Optional Prepayment and the release of Prepayment Related Collateral from the Lien of the Security Agreement on any VFN Prepayment Date, (x) the remaining VFN Balance MINUS Adjusted Principal Collections shall be less than or equal to the amount resulting when the effective Advance Percentage is multiplied by the remaining Pool Balance, (y) none of the Pool Limitations shall be exceeded and (z) a Termination Event or Potential Termination Event shall not have resulted; For purposes of the foregoing, Adjusted Principal Collections means the product of (i) the effective Advance Percentage, and (ii) the 8 amount of Principal Collections on deposit in the Collection Account as of the close of business on the day preceding the date of the Servicer's VFN Prepayment Date Certificate. 5. On the related VFN Prepayment Date, the Funding Agent shall have received, for the benefit of the Secured Parties, in immediately available funds, an amount equal to the sum of (i) the portion of the VFN Balance to be prepaid PLUS (ii) an amount equal to all unpaid Carrying Costs (including Carrying Costs not yet accrued) to the extent reasonably determined by the Funding Agent to be attributable to that portion of the Total Investment to be prepaid PLUS (iii) an aggregate amount equal to the sum of all other amounts due and owing to the Funding Agent and the Secured Parties under this Agreement and the other Basic Agreements, to the extent accrued to such date and to accrue thereafter, as reasonably determined by the Funding Agent to be attributable to that portion of the Total Investment to be prepaid. The Borrower hereby agrees to pay the reasonable legal fees and expenses of the Funding Agent, PARCO and each APA Bank in connection with any Optional Prepayment (including, but not limited to, expenses incurred in connection with the release of the Lien of the Funding Agent over the Receivables and related Other Conveyed Property in connection with such Optional Prepayment). (iii) Although the VFN shall be dated the Closing Date, Carrying Costs in respect thereof shall be payable in the manner specified therein and in the other Basic Agreements only for the periods during which amounts are outstanding thereunder. In addition, although the stated principal amount of the VFN shall be equal to the Facility Limit, the VFN shall be enforceable with respect to the Borrower's obligation to pay the principal thereof only to the extent of the unpaid principal amount outstanding thereunder at the time such enforcement shall be sought. Principal on the VFN shall be payable by the Borrower in the manner and on the dates specified in the VFN and in the other Basic Agreements. 9 (g) CONDITIONS PRECEDENT. The obligations of PARCO and the APA Banks under this Agreement on any Funding Date are subject to the accuracy of the representations and warranties on the part of the Borrower made herein and in the other Basic Agreements as of such Funding Date. This Agreement shall become effective on the first day on which all of the following conditions precedent have been satisfied (the "Effective Date"): (i) The Funding Agent shall have received such opinions of counsel to the Seller, the Servicer and the Borrower, in form and substance acceptable to the Funding Agent, addressing such matters as the Funding Agent, on behalf of the Secured Parties, shall request. (ii) The Funding Agent shall have received a certificate of the Borrower, dated the Closing Date, stating that (1) its representations and warranties made herein and in the other Basic Agreements are true and correct as of the Closing Date, and (2) the Borrower has complied with all agreements and satisfied all conditions to be satisfied on its part pursuant to this Agreement and the other Basic Agreements on or prior to the Closing Date. (iii) All conditions precedent to the authentication and delivery of the VFN under this Agreement shall have been satisfied. (iv) Each party to a Basic Agreement shall have performed and complied with all agreements and conditions contained in such Basic Agreement and all other documents delivered in connection herewith or therewith which are required to be performed or complied with by such party. (v) This Agreement, the other Basic Agreements, the Fee Letters, the Intercreditor Agreement and all agreements, certificates, instruments and other documents required to be delivered in connection herewith and therewith shall have been duly authorized, executed and delivered by the respective parties thereto, shall be in full force and effect and shall be in form and substance satisfactory to the Funding Agent, PARCO and the APA Banks. 10 (vi) The Funding Agent shall have received the following, in each case in form and substance satisfactory to it: (1) copy of the resolutions of the Board of Directors of the Borrower, certified by the Secretary or an Assistant Secretary as of the Closing Date, duly authorizing the execution, delivery and performance by the Borrower of the documents executed by or on behalf of the Borrower in connection with the transactions contemplated by this Agreement and the other Basic Agreements to which it is a party; and attesting to the names and true signatures of the person or persons executing and delivering each such document; (2) a copy of the resolutions of the Board of Directors of the Seller and the Servicer, certified by the Secretary or an Assistant Secretary of the Seller and the Servicer as of the Closing Date, duly authorizing the execution, delivery and performance by the Seller and the Servicer of each of the Basic Agreements to which each of them is a party and any other documents executed by or on behalf of the Seller and the Servicer in connection with the transactions contemplated thereby; and an incumbency certificate of the Seller and the Servicer as to the person or persons executing and delivering each such document; and (3) such other documents and evidence with respect to the Borrower, the Seller, the Servicer, the Back-Up Servicer and the Custodian as the Funding Agent may reasonably request in order to establish the corporate existence and good standing of each thereof, the proper taking of all appropriate corporate proceedings in connection with the transactions contemplated by this Agreement and the other Basic Agreements and the compliance with the conditions set forth herein and therein. (vii) No fact or condition shall exist under applicable law or applicable regulations thereunder or interpretations thereof by any regulatory authority which, in the Funding Agent's reasonable opinion, would make it unlawful to issue the VFN or for the Borrower or any of the other parties thereto to perform their respective obligations under this Agreement and the other Basic Agreements. 11 (viii) The Seller and the Borrower shall have filed any financing statements or amendments thereto, wherever necessary or advisable in the judgment of the Funding Agent, in order to perfect the transfer and assignment of the Receivables to the Borrower and the grant of the security interest therein to the Funding Agent and shall have delivered file-stamped copies of such financing statements or other evidence of the filing thereof to the Funding Agent. (ix) All taxes and fees due in connection with the filing of the financing statements referred to in clause (viii) of this Section 2.1(g) shall have been paid in full or duly provided for. (x) No action or proceeding shall have been instituted nor shall any governmental action be threatened before any court or governmental agency nor shall any order, judgment or decree have been issued or proposed to be issued by any court or governmental agency to set aside, restrain, enjoin or prevent the performance of this Agreement or any of the other Basic Agreements or the transactions contemplated hereby or thereby. (xi) The Funding Agent shall have received written confirmation from each of the Rating Agencies that the then-current ratings assigned by each of them to PARCO's Commercial Paper will not be reduced or withdrawn as a result of the execution and delivery of this Agreement by PARCO. (xii) The Reserve Account shall have been established pursuant to the Sale and Servicing Agreement. (h) MATURITY OF COMMERCIAL PAPER. PARCO shall not issue any Commercial Paper related to the VFN with a maturity in excess of forty-five (45) days in connection with any financing or refinancing of an increase in the VFN. SECTION 2.2 SHARING OF PAYMENTS, ETC. If PARCO or any APA Bank (for purposes of this Section 2.2 only, being a "RECIPIENT") shall obtain any payment (whether voluntary, involuntary, through the exercise of any right of setoff, or otherwise) on account of any interest in the VFN owned by it in excess of its ratable share of payments on account of any interest in the VFN obtained by PARCO and/or the APA Banks entitled thereto, such Recipient shall forthwith purchase from 12 PARCO and/or the APA Banks entitled to a share of such amount participations in the percentage interests owned by such Persons as shall be necessary to cause such Recipient to share the excess payment ratably with each such other Person entitled thereto; PROVIDED, HOWEVER, that if all or any portion of such excess payment is thereafter recovered from such Recipient, such purchase from each such other Person shall be rescinded and each such other Person shall repay to the Recipient the purchase price paid by such Recipient for such participation to the extent of such recovery, together with an amount equal to such other Person's ratable share (according to the proportion of (a) the amount of such other Person's required payment to (b) the total amount so recovered from the Recipient) of any interest or other amount paid or payable by the Recipient in respect of the total amount so recovered. SECTION 2.3 RIGHT OF SETOFF. Without in any way limiting the provisions of Section 2.2, each of PARCO and the APA Banks is hereby authorized (in addition to any other rights it may have) at any time after the occurrence of a Termination Event or during the continuance of a Potential Termination Event to setoff, appropriate and apply (without presentment, demand, protest or other notice which are hereby expressly waived) any deposits and any other indebtedness held or owing by PARCO or such APA Bank to, or for the account of, the Borrower against the amount owing by the Borrower hereunder to such Person (even if contingent or unmatured). SECTION 2.4 INTEREST. (a) Any Funding (or portion thereof) funded by PARCO shall have Discount calculated at the CP Rate. (b) At the option of the Borrower, any Funding (or portion thereof) made by the APA Banks to the Borrower pursuant to Section 2.1 hereof shall bear interest at either (i) if available to the Borrower on the related Funding Date, the Eurodollar Rate plus 1.25% or (ii) the Alternate Base Rate. (c) If, on any Purchase Date specified in Article V below, no Termination Event or Potential Termination Event has occurred and is continuing, then the portion of the Banks' Aggregate Investment related to a Purchase by the APA Banks on such Purchase Date shall, at the option of the Borrower, bear interest at either (i) if available to the Borrower on the related Purchase Date, the Eurodollar Rate plus 1.25% or (ii) the Alternate Base Rate. (d) If, on any Purchase Date specified in Article V below, a Termination Event or Potential Termination Event has occurred and is continuing, 13 then the portion of the Banks' Aggregate Investment related to a Purchase by the APA Banks on such Purchase Date shall bear interest at the Alternate Base Rate plus 2%. (e) If any principal of, or interest on, any Funding or any fee or other amount payable by the Borrower hereunder is not paid when due, whether at stated maturity, upon acceleration or otherwise, such overdue amount shall bear interest, after as well as before judgment, at a rate per annum equal to the Alternate Base Rate PLUS 2%. (f) Accrued Interest on each Funding shall be payable in arrears on each Interest Payment Date for such Funding and upon the Commitment Expiry Date; PROVIDED that (i) interest accrued pursuant to paragraph (e) of this Section 2.4 shall be payable on demand, (ii) in the event of any repayment of any Funding or prepayment (other than with respect to a CP Funding) of any Funding, accrued interest on the principal amount repaid or prepaid shall be payable on the date of such repayment or prepayment and (iii) in the event of any conversion of any ABR Funding or Eurodollar Funding pursuant to Section 2.7, accrued interest on such ABR Funding or Eurodollar Funding shall be payable on the Distribution Date occurring immediately after of such conversion. (g) All interest on Fundings hereunder (other than CP Fundings) shall be computed on the basis of a year of 360 days, except that interest computed when the Alternate Base Rate is based on the Prime Rate shall be computed on the basis of a year of 365 days (or 366 days in a leap year), and in each case shall be payable for the actual number of days elapsed (including the first day but excluding the last day). The applicable Alternate Base Rate or Eurodollar Rate shall be determined by the Funding Agent, and such determination shall be conclusive absent manifest error. SECTION 2.5 PAYMENTS GENERALLY. All payments by the Borrower hereunder shall be at the times, and in the manner, specified in Section 6.8 of the Sale and Servicing Agreement. Notwithstanding any provision of this Agreement or the other Basic Agreements to the contrary, all amounts due and owing to the Funding Agent and the Secured Parties by the Borrower hereunder and under the other Basic Agreements (if not due on an earlier date in accordance with the terms hereof or the other Basic Agreements) will be due and payable on the Distribution Date occurring in the month sixty-six (66) months following the Commitment Expiry Date. 14 SECTION 2.6 BROKEN FUNDING. In the event of (a) the payment of any principal of any Eurodollar Funding other than on the last day of a Eurodollar Funding Period applicable thereto (including as a result of a Termination Event, Potential Termination Event or Optional Prepayment), (b) the conversion of any Eurodollar Funding other than on the applicable Interest Payment Date or (c) any failure to borrow, convert, continue or prepay any Eurodollar Funding on the date specified in any notice delivered pursuant hereto, then, in any such event, the Borrower shall compensate the APA Banks for the loss, cost and expense attributable to such event . Such loss, cost or expense to any APA Bank shall be deemed to include an amount determined by such APA Bank to be the excess, if any, of (i) the amount of interest which would have accrued on the principal amount of such Eurodollar Funding had such event not occurred, at the Eurodollar Rate that would have been applicable to such Eurodollar Funding, for the period from the date of such event to the Interest Payment Date therefor (or, in the case of a failure to borrow, convert or continue, for the period that would have been the related Eurodollar Funding Period), over (ii) the amount of interest which would accrue on such principal amount for such period at the interest rate which such APA Bank would bid were it to bid, at the commencement of such period, for dollar deposits of a comparable amount and period from other banks in the interbank eurodollar market. A certificate of any APA Bank setting forth any amount or amounts that such APA Bank is entitled to receive pursuant to this Section 2.6 shall be delivered to the Borrower and shall be conclusive absent manifest error. The Borrower shall pay each such APA Bank the amount shown as due on any such certificate on the next succeeding Distribution Date after receipt thereof. SECTION 2.7 CONVERSION AND CONTINUATION OF OUTSTANDING ADVANCES MADE BY THE APA BANKS. Prior to the occurrence of a Termination Event or a Potential Termination Event, (a) each ABR Funding hereunder may, at the option of the Borrower, be converted to a Eurodollar Funding and (b) each Eurodollar Funding may, at the option of the Borrower, be continued as a Eurodollar Funding or converted to an ABR Funding. If a Termination Event or Potential Termination Event has occurred and is continuing, then, for so long as any such Termination Event or Potential Termination Event is continuing, (i) no outstanding Funding may be converted to, or continued as, a Eurodollar Funding and (ii) unless repaid, each Eurodollar Funding shall be converted to an ABR Funding on the next succeeding Interest Payment Date related thereto. For any such conversion or continuation, the Borrower shall give the Funding Agent irrevocable notice (each, a "CONVERSION/CONTINUATION NOTICE") of such request not later than 12:30 P.M. (New York time) (i) in the case of a conversion of an ABR Funding into a Eurodollar 15 Funding, or a continuation of a Eurodollar Funding as a Eurodollar Funding, three (3) Business Days before the date of such conversion or continuation, as applicable, and (ii) following the occurrence and continuation of a Termination Event or a Potential Termination Event, in the case of a conversion of a Eurodollar Funding into an ABR Funding or a continuation of an ABR Funding as an ABR Funding, on the Business Day of such conversion. If a Conversion/Continuation Notice has not been timely delivered with respect to any ABR Funding or Eurodollar Funding, such Funding shall be automatically continued as, or converted to, an ABR Funding. Each Conversion/Continuation Notice shall specify (a) the requested date (which shall be a Business Day) of such conversion or continuation, (b) the aggregate amount and rate option applicable to the Funding which is to be converted or continued and (c) the amount and rate option(s) of Funding(s) into which such Funding is to be converted or continued. SECTION 2.8 ILLEGALITY. (a) Notwithstanding any other provision herein, if, after the Closing Date, the adoption of any Law or bank regulatory guideline or any amendment or change in the interpretation of any existing or future Law or bank regulatory guideline by any Official Body charged with the administration, interpretation or application thereof, or the compliance with any directive of any Official Body (in the case of any bank regulatory guideline, whether or not having the force of Law), shall make it unlawful for any APA Bank to acquire or maintain a Eurodollar Funding as contemplated by this Agreement, (i) such APA Bank shall promptly, after becoming aware thereof, notify the Funding Agent and the Borrower thereof, (ii) the commitment of such APA Bank hereunder to make a portion of a Eurodollar Funding, continue any portion of a Eurodollar Funding as such and convert an ABR Funding to a Eurodollar Funding shall forthwith be cancelled, and such cancellation shall remain in effect so long as the circumstance described above exists, and (iii) such APA Bank's portion of any Eurodollar Funding then outstanding shall be converted automatically to an ABR Funding on the last day of the related Eurodollar Funding Period, or within such earlier period as required by law. If any such conversion of a portion of a Eurodollar Funding occurs on a day which is not the last day of the related Eurodollar Funding Period, the Borrower shall pay to such APA Bank such amounts, if any, as may be required to compensate such APA Bank pursuant to Section 2.6 hereof. If circumstances subsequently change so that it is no longer unlawful for an affected APA Bank to acquire or to maintain a portion of a Eurodollar Funding as contemplated hereunder, such APA Bank will, as soon as reasonably practicable after such APA Bank knows of such change in circumstances, notify the Borrower, and the Funding Agent, and 16 upon receipt of such notice, the obligations of such APA Bank to acquire or maintain its acquisition of portions of Eurodollar Fundings or to convert its portion of an ABR Funding into portions of Eurodollar Fundings shall be reinstated. (b) Each APA Bank agrees that, upon the occurrence of any event giving rise to the operation of Section 2.8(a) with respect to such APA Bank, it will, if requested by the Borrower and to the extent permitted by law or by the relevant Official Body, endeavor in good faith to change the office at which it books its portions of Eurodollar Fundings hereunder if such change would make it lawful for such APA Bank to continue to acquire or to maintain its acquisition of portions of Eurodollar Fundings hereunder; PROVIDED, HOWEVER, that such change may be made in such manner that such APA Bank, in its sole determination, suffers no unreimbursed cost or expense or any other disadvantage whatsoever. SECTION 2.9 INABILITY TO DETERMINE EURODOLLAR RATE. If, prior to the first day of any Eurodollar Period: (1) the Funding Agent shall have determined (which determination in the absence of manifest error shall be conclusive and binding upon the Borrower) that, by reason of circumstances affecting the relevant market, adequate and reasonable means do not exist for ascertaining the Eurodollar Rate for such Eurodollar Funding Period; or (2) the Funding Agent shall have received notice from the Required Banks that the Eurodollar Rate determined or to be determined for such Eurodollar Funding Period will not adequately and fairly reflect the cost to such APA Banks (as conclusively certified by such APA Banks) of purchasing or maintaining their affected portions of Eurodollar Fundings during such Eurodollar Funding Period; then, in either such event, the Funding Agent shall give telecopy or telephonic notice thereof (confirmed in writing) to the Borrower and the APA Banks as soon as practicable thereafter. Until such notice has been withdrawn by the Funding Agent, no further Eurodollar Fundings shall be made. The Funding Agent agrees to withdraw any such notice as soon as reasonably practicable after the Funding Agent is notified of a change in circumstances which makes such notice inapplicable. SECTION 2.10 FEES. The Borrower hereby agrees to pay to the Funding Agent, for the account of the Secured Parties (and, if applicable, itself), the 17 Utilization Fee, the Facility Fee and any other fees specified in the Fee Letters. Such payments shall be made to the Funding Agent on the dates and in the manner specified in the Fee Letters. 18 ARTICLE III REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE BORROWER SECTION 3.1 REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE BORROWER. The Borrower represents and warrants to and covenants with PARCO and the APA Banks as of the Closing Date and the Initial Funding Date and, except as otherwise provided herein, as of each Subsequent Funding Date that: (a) CORPORATE EXISTENCE AND POWER. The Borrower 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 is now conducted. (b) CORPORATE AND GOVERNMENTAL AUTHORIZATION; CONTRAVENTION. The execution, delivery and performance by the Borrower of this Agreement and the other Basic Agreements to which it is a party are within the Borrower's corporate powers, have been duly authorized by all necessary corporate action, require no action by or in respect of, or filing with, any governmental body, agency or official, 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 Borrower or of any agreement, judgment, injunction, order, decree or other instrument binding upon the Borrower or result in the creation or imposition of any Lien on assets of the Borrower (other than the Lien of the Security Agreement), or require the consent or approval of, or the filing of any notice or other documentation with, any governmental authority or other Person. (c) BINDING EFFECT. Each of this Agreement and the other Basic Agreements to which it is a party constitutes the legal, valid and binding obligation of the Borrower, enforceable against the Borrower in accordance with its terms, subject to applicable bankruptcy, insolvency, moratorium or other similar laws affecting the rights of creditors. (d) ACCURACY OF INFORMATION. All information heretofore furnished by the Borrower to PARCO, the APA Banks or the Funding Agent for purposes of, or in connection with, this Agreement or any transaction contemplated hereby is, and all such information hereafter furnished by the Borrower to PARCO, the APA Banks or 19 the Funding Agent will be, true and accurate in every material respect, on the date such information is stated or certified. (e) TAX STATUS. All tax returns (Federal, state and local) required to be filed with respect to the Borrower have been filed (which filings may be made by an Affiliate of the Borrower on a consolidated basis covering the Borrower 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 Borrower (or in the event consolidated returns have been filed, with respect to the Persons subject to such returns). (f) ACTION, SUITS. There are no actions, suits or proceedings pending or threatened against or affecting the Borrower or any Affiliate of the Borrower or their respective properties, in or before any court, arbitrator or other body, which may have a material adverse effect on the Borrower's ability to perform its obligations hereunder or under the other Basic Agreements. (g) USE OF PROCEEDS. The proceeds of any Funding will be used by the Borrower to acquire the Receivables and related Other Conveyed Property with respect thereto from the Seller pursuant to the Sale and Servicing Agreement. (h) PLACE OF BUSINESS. The chief place of business and chief executive office of the Borrower are located at 1325 Airmotive Way, Suite 130, Reno, Nevada, and the offices where the Borrower keeps all of its books and records are located at 1325 Airmotive Way, Reno, Nevada. (i) MERGER AND CONSOLIDATION. The Borrower has not changed its name, merged with or into or been consolidated with any other corporation or been the subject of any proceeding under Title 11, United States Code (Bankruptcy). (j) SOLVENCY. The Borrower is not insolvent and will not be rendered insolvent immediately following the consummation on the Closing Date, the Initial Funding Date and any Subsequent Funding Date of the transactions contemplated by this Agreement and the other Basic Agreements, including (but not limited to) the pledge by the Borrower to the Funding Agent of the Collateral in accordance with the Security Agreement. (k) NO TERMINATION EVENT. After giving effect to the Funding, no Potential Termination Event or Termination Event exists. 20 (l) COMPLIANCE. The Borrower has complied in all material respects with all Requirements of Law in respect of the conduct of its business and ownership of its property. (m) NOT AN INVESTMENT COMPANY. The Borrower is not an "investment company" within the meaning of the Investment Company Act of 1940, as amended, or is exempt from all provisions of such Act. (n) ERISA. The Borrower is in compliance in all material respects with ERISA, and no lien in favor of the Pension Benefit Guaranty Corporation on any of the Receivables or Other Conveyed Property shall exist. (o) SUBSIDIARIES. The Borrower does not have any Subsidiaries. (p) CAPITAL STOCK. The Borrower has neither sold nor pledged any of its common stock to any entity other than the Seller. (q) NO MATERIAL ADVERSE CHANGE. Since June 30, 1997, there has been no material adverse change in the business, assets, operations, prospects or conditions (financial or otherwise) of the Seller or the Servicer, either individually or taken as a whole. Since September 25, 1997, there has been no material adverse change in the business, assets, operations, prospects or conditions (financial or otherwise) of the Borrower. (r) FINANCIAL REPORTING. The Borrower will maintain for itself a system of accounting established and administered in accordance with GAAP, and will furnish to the Funding Agent for the benefit of the Secured Parties: (i) QUARTERLY REPORTING. Within forty-five (45) days after the close of each quarterly period of each of the Borrower's fiscal years, for the Borrower, consolidated and consolidating unaudited balance sheets as at the close of each such period and consolidated and consolidating related statements of operations and cash flows for the period from the beginning of such fiscal year to the end of such quarter, all certified by an Authorized Officer of the Borrower. (ii) COMPLIANCE CERTIFICATE. Together with the financial statements required hereunder, a compliance certificate signed by an Authorized Officer of the Borrower stating that (x) the attached 21 financial statements have been prepared in accordance with generally accepted accounting principles and accurately reflect the financial condition of the Borrower and (y) to the best of such Person's knowledge, no Termination Event or Potential Termination Event exists, or if any Termination Event or Potential Termination Event exists, stating the nature and status thereof. (s) CHARACTERISTICS OF RECEIVABLES. Each of the statements listed on Schedule A to the Security Agreement is true and correct on the Initial Funding Date and any Subsequent Funding Date with respect to each Receivable to be purchased on such date. Any document, instrument, certificate or notice delivered to PARCO, the Funding Agent or the APA Banks by, or on behalf of, the Borrower or its Affiliates hereunder or under the other Basic Agreements shall be deemed a representation and warranty by the Borrower. The representations and warranties set forth in this Section 3.1 shall survive the pledge and assignment of the Collateral to the Funding Agent for the benefit of the Secured Parties. Upon discovery by the Borrower, PARCO, the Funding Agent or an APA Bank of a breach of any of the foregoing representations and warranties, the party discovering such breach shall give prompt written notice to the others. 22 ARTICLE IV INDEMNIFICATION SECTION 4.1 INDEMNITY. Without limiting any other rights which PARCO or the APA Banks may have hereunder or under applicable law, the Borrower agrees to indemnify PARCO, the APA Banks and the Funding Agent and any of their permitted assigns and their respective agents, officers, directors and employees (collectively, "INDEMNIFIED PARTIES") from and against any and all damages, losses, claims, liabilities, costs and expenses, including reasonable attorneys' fees (which such attorneys may be employees of PARCO, the APA Banks and the Funding Agent) and disbursements (all of the foregoing being collectively referred to as "INDEMNIFIED AMOUNTS") awarded against or incurred by any of them arising out of or as a result of this Agreement and the other Basic Agreements, excluding, however, (i) Indemnified Amounts to the extent resulting from gross negligence or willful misconduct on the part of an Indemnified Party or (ii) recourse (except as otherwise specifically provided in this Agreement and the other Basic Agreements) for uncollectible Receivables and Other Conveyed Property. Such Indemnified Amounts shall be paid in accordance with the terms of the other Basic Agreements. Without limiting the generality of the foregoing, the Borrower shall indemnify each Indemnified Party for Indemnified Amounts relating to or resulting from: (a) reliance on any representation or warranty made by the Borrower (or any officers of the Borrower) under or in connection with this Agreement and the other Basic Agreements, any Funding Request or any other information or report delivered by the Borrower pursuant hereto or thereto, which shall have been false or incorrect in any material respect when made or deemed made; (b) the failure by the Borrower to comply with any applicable law, rule or regulation with respect to the Collateral, or the nonconformity of the Collateral with any such applicable law, rule or regulation; (c) the failure to vest and maintain vested in the Funding Agent a first priority perfected security interest in the Collateral, free and clear of any Lien (other than the Lien of the Security Agreement); (d) the failure to file, or any delay in filing, financing statements, continuation statements, or other similar instruments or documents under the UCC of any applicable jurisdiction or other applicable laws with respect to all or any part of 23 the Collateral, which failure has an adverse effect on the validity, perfected status or priority of the security interest granted to the Funding Agent under the Security Agreement; (e) any valid dispute, claim, offset or defense (other than discharge in bankruptcy of the related Obligor) of the Obligor to the payment of any Receivable (including, without limitation, a defense based on such Receivable not being legal, valid and binding obligation of such Obligor enforceable against it in accordance with its terms), or any other claim resulting from the sale of a Financed Vehicle or services related to such Receivable or the furnishing or failure to furnish such Financed Vehicle or services; (f) any failure of the Borrower to perform its duties, covenants or obligations in accordance with the provisions of Articles II and IV of the Security Agreement; or (g) any product liability claim or personal injury or property damage suit or other similar or related claim or action of whatever sort arising out of or in connection with the related Financed Vehicle or related merchandise or services which are the subject of any Receivable; PROVIDED, HOWEVER, that if PARCO enters into agreements for the purchase of interests in receivables from one or more Other Transferors, PARCO shall allocate such Indemnified Amounts which are in connection with its activities to the Borrower and each Other Transferor; and PROVIDED, FURTHER, that if such Indemnified Amounts are attributable to the Borrower and not attributable to any Other Transferor, the Borrower shall be solely liable for such Indemnified Amounts or, if such Indemnified Amounts are attributable to Other Transferors and not attributable to the Borrower, such Other Transferors shall be solely liable for such Indemnified Amounts. SECTION 4.2 INDEMNITY FOR RESERVES AND EXPENSES. (a) If after the date hereof, the adoption of any Law or bank regulatory guideline or any amendment or change in the interpretation of any existing or future Law or bank regulatory guideline by any Official Body charged with the administration, interpretation or application thereof, or the compliance with any directive of any Official Body (in the case of any bank regulatory guideline, whether or not having the force of Law): 24 (1) shall impose, modify or deem applicable any reserve, special deposit or similar requirement (including, without limitation, any such requirement imposed by the Board of Governors of the Federal Reserve System) against assets of, deposits with or for the account of, or credit extended by, any Indemnified Party or shall impose on any Indemnified Party or on the United States market for certificates of deposit or the London interbank market any other condition affecting this Agreement, the other Basic Agreements, the Collateral or payments of amounts due hereunder or thereunder or its obligation to advance funds under any agreement or otherwise in respect of this Agreement, the other Basic Agreements or the Collateral; or (2) imposes upon any Indemnified Party any other expense (including, without limitation, reasonable attorneys' fees and expenses, and expenses of litigation or preparation therefor in contesting any of the foregoing) with respect to this Agreement, the other Basic Agreements, the Collateral or payments of amounts due hereunder or thereunder or its obligation to advance funds under any agreement or otherwise in respect of this Agreement, the other Basic Agreements or the Collateral; and the result of any of the foregoing is to increase the cost to such Indemnified Party with respect to this Agreement, the other Basic Agreements, the Collateral and the obligations hereunder and thereunder, by an amount reasonably deemed by such Indemnified Party to be material, then, on the next succeeding Distribution Date after demand by the Funding Agent, the Borrower shall pay to the Funding Agent, for the benefit of such Indemnified Party, such additional amount or amounts as will compensate such Indemnified Party for such increased cost; PROVIDED that no such amount shall be payable with respect to any period commencing more than two hundred seventy (270) days prior to the date the Funding Agent first notifies the Borrower of its intention to demand compensation therefor under this Section 4.2(a); PROVIDED FURTHER that if such change in Law, rule or regulation giving rise to such increased costs or reductions is retroactive, then such 270-day period shall be extended to include the period of retroactive effect thereof. (b) If any Indemnified Party shall have determined that after the date hereof, the adoption of any applicable Law or bank regulatory guideline regarding capital adequacy, or any change therein, or any change in the interpretation thereof 25 by any Official Body, or any directive regarding capital adequacy (in the case of any bank regulatory guideline, whether or not having the force of law) of any such Official Body, has or would have the effect of reducing the rate of return on capital of such Indemnified Party (or its parent) as a consequence of such Indemnified Party's obligations hereunder or with respect hereto to a level below that which such Indemnified Party (or its parent) could have achieved but for such adoption, change, request or directive (taking into consideration its policies with respect to capital adequacy) by an amount reasonably deemed by such Indemnified Party to be material, then from time to time, within ten (10) days after demand by the Funding Agent, the Borrower shall pay to the Funding Agent, for the benefit of such Indemnified Party, such additional amount or amounts as will compensate such Indemnified Party (or its parent) for such reduction; PROVIDED that no such amount shall be payable with respect to any period commencing two hundred seventy (270) days prior to the date the Funding Agent first notifies the Borrower of its intention to demand compensation under this Section 4.2(b); PROVIDED FURTHER that if such change in Law, rule or regulation giving rise to such increased costs or reductions is retroactive, then such 270-day period shall be extended to include the period of retroactive effect thereof. (c) The Funding Agent will promptly notify the Borrower of any event of which it has knowledge, occurring after the date hereof, which will entitle an Indemnified Party to compensation pursuant to this Article IV. A notice by the Funding Agent claiming compensation for the benefit of an Indemnified Party under this Article IV and setting forth the additional amount or amounts to be paid to it hereunder shall be conclusive in the absence of manifest error. In determining such amount, the Funding Agent may use any reasonable averaging and attributing methods. (d) Anything in this Section 4.2 to the contrary notwithstanding, if PARCO enters into agreements for the acquisition of interests in receivables from one or more Other Transferors, PARCO shall allocate the liability for any amounts under this Section 4.2 ("SECTION 4.2 COSTS") ratably to the Borrower and each Other Transferor; and PROVIDED, FURTHER, that if such Section 4.2 Costs are attributable to the Borrower and not attributable to any Other Transferor, the Borrower shall be solely liable for such Section 4.2 Costs or if such Section 4.2 Costs are attributable to Other Transferors and not attributable to the Borrower, such Other Transferors shall be solely liable for such Section 4.2 Costs. SECTION 4.3 INDEMNITY FOR TAXES. (a) All payments made by the Borrower under this Agreement and any other Transaction Document shall be made 26 free and clear of, and without deduction or withholding for or on account of, any present or future income, stamp or other taxes, levies, imposts, duties, charges, fees, deductions or withholdings, now or hereafter imposed, levied, collected, withheld or assessed by any Official Body, EXCLUDING (i) taxes imposed on the net income of the Funding Agent or any other Indemnified Party, however denominated, and (ii) franchise taxes imposed on any of them in lieu of income taxes, in each case imposed: (1) by the United States or any political subdivision or taxing authority thereof or therein; (2) by any jurisdiction under the laws of which the Funding Agent or such Indemnified Party or lending office is organized or in which its lending office is located, managed or controlled or in which its principal office is located or any political subdivision or taxing authority thereof or therein; or (3) by reason of any connection between the jurisdiction imposing such tax and the Funding Agent, such Indemnified Party or such lending office other than a connection arising solely from this Agreement or any other Basic Agreement or any transaction hereunder or thereunder (all such non-excluded taxes, levies, imposts, duties, charges, fees, deductions or withholdings, collectively or individually, "TAXES"). If any such Taxes are required to be withheld from any amounts payable to the Funding Agent or any Indemnified Party hereunder, the amounts so payable to the Funding Agent or such Indemnified Party shall be increased to the extent necessary to yield to the Funding Agent or such Indemnified Party (after payment of all Taxes) all amounts payable hereunder at the rates or in the amounts specified in this Agreement and the other Basic Agreements. The Borrower shall indemnify the Funding Agent or any such Indemnified Party for the full amount of any such Taxes on the Distribution Date immediately succeeding the date of written demand therefor by the Funding Agent or any Indemnified Party. (b) Each Indemnified Party that is not incorporated under the laws of the United States of America or a state thereof or the District of Columbia shall: (i) deliver to the Borrower and the Funding Agent (A) two duly completed copies of IRS Form 1001 or Form 4224, or successor applicable form, as the case may be, and (B) if applicable, an IRS Form W-8 or W-9, or successor applicable form, as the case may be; (ii) deliver to the Borrower and the Funding Agent two (2) further copies of any such form or certification on or before the date that any such form or certification expires or becomes obsolete and after the occurrence of any event requiring a change in the most recent form previously delivered by it to the Borrower; and 27 (iii) obtain such extensions of time for filing and complete such forms or certifications as may reasonably be requested by the Borrower or the Funding Agent; unless, in any such case, an event (including, without limitation, any change in treaty, law or regulation) has occurred prior to the date on which any such delivery would otherwise be required which renders all such forms inapplicable or which would prevent such Indemnified Party from duly completing and delivering any such form with respect to it, and such Indemnified Party so advises the Borrower and the Funding Agent. Each such Indemnified Party so organized shall certify (i) in the case of an IRS Form 1001 or IRS Form 4224, that it is entitled to receive payments under the this Agreement and the other Basic Agreements without deduction or withholding of any United States federal income taxes and (ii) in the case of an IRS Form W-8 or IRS Form W-9, that it is entitled to an exemption from United States backup withholding tax. Each Person that is a Purchaser or Participant hereunder, or which otherwise becomes a party to this Agreement as an APA Bank, shall, prior to the effectiveness of such assignment, participation or addition, as applicable, be required to provide all of the forms and statements required pursuant to this Section 4.3. SECTION 4.4 OTHER COSTS, EXPENSES AND RELATED MATTERS. (a) The Borrower agrees, upon receipt of a written invoice, to pay or cause to be paid, and to save PARCO and the Funding Agent harmless against liability for the payment of, all reasonable out-of-pocket expenses (including, without limitation, all reasonable attorneys', accountant's and other third parties' fees and expenses, any filing fees and expenses incurred by officers or employees of PARCO or the Funding Agent) incurred by or on behalf of PARCO, any APA Bank or the Funding Agent (i) in connection with the negotiation, execution, delivery and preparation of this Agreement and the other Basic Agreements and any documents or instruments delivered pursuant hereto or thereto and the transactions contemplated hereby and thereby (subject to the terms of that certain engagement letter, dated as of June 24, 1997, between the Seller and The Chase Manhattan Bank) and (ii) from time to time (a) relating to any amendments, waivers or consents under this Agreement and the other Basic Agreements, (b) arising in connection with PARCO's, the APA Banks' or their respective agents' enforcement or preservation of rights (including, without limitation, the perfection and protection of the Funding Agent's first priority security interest in the Collateral), or (c) arising in connection with any audit, dispute, disagreement, litigation or preparation for litigation involving this Agreement. 28 ARTICLE V LIQUIDITY COMMITMENT SECTION 5.1 LIQUIDITY PURCHASES. (a) SALES BY PARCO. From time to time prior to the Commitment Expiry Date, PARCO, in its sole discretion, may elect to deliver a Sale Notice to the Funding Agent or, following a PARCO Wind-Down Event, shall be obligated to deliver a Sale Notice to the Funding Agent. Each Sale Notice shall constitute an irrevocable offer by PARCO to sell all or a portion of the PARCO Interest at the Purchase Price; PROVIDED that, following a PARCO Wind-Down Event, the Assigned Percentage specified in any such Sale Notice shall be 100%. Each Sale Notice shall be deemed to be a representation and warranty by PARCO that no PARCO Insolvency Event shall have occurred and be continuing. Each APA Bank hereby agrees to purchase from PARCO such APA Bank's Pro Rata Share of the Assigned Percentage of PARCO Interest for a purchase price equal to such APA Bank's Pro Rata Share of the Purchase Price on the Purchase Date (which date, subject to Section 5.1(b) below, may be the same as the date of the Sale Notice); PROVIDED that no such purchase shall be made on a Purchase Date if a PARCO Insolvency Event shall have occurred and be continuing. The Funding Agent shall promptly advise each APA Bank (by telecopy or by telephone call promptly confirmed in writing by telecopy) of the receipt and content of the Sale Notice and shall promptly advise PARCO of each APA Bank's Pro Rata Share of the Purchase Price thereunder. The Purchase Price shall be deposited in immediately available funds into the account(s) specified by PARCO in the Sale Notice. (b) TIMING OF SALE NOTICE AND PURCHASE DATE. If, at or prior to 12:30 P.M. (New York time) on any Business Day, PARCO delivers the Sale Notice to the Funding Agent specifying that the Purchase Date shall be the same date as the date of the Sale Notice, the Funding Agent shall, by no later than 1:00 P.M. (New York time), notify each APA Bank of such Sale Notice. Each APA Bank shall make a purchase of the PARCO Interest by advancing immediately available funds on such date to PARCO's account at the principal office of the Funding Agent no later than 2:00 P.M. (New York time). Notwithstanding the fact that the Purchase Date may occur on a date which is later than the date on which the Sale Notice is delivered to the Funding Agent, the several obligations of each APA Bank to accept such transfer and to make payment of the amounts required to be paid by it pursuant to Section 5.2 shall arise immediately upon receipt by the Funding Agent of the Sale Notice. Regardless of when the Sale Notice is received, any APA Bank may designate any one or more of its domestic or foreign branches, offices or affiliates through which it 29 will fund its Pro Rata Share of the Purchase Price for a Purchase, and the term "APA Bank" shall include any such branch, office or affiliate for such purpose. SECTION 5.2 SEVERAL PURCHASE COMMITMENTS OF THE APA BANKS. (a) FUNDING UPON RECEIPT OF A SALE NOTICE FROM PARCO. Subject to Section 5.1, each APA Bank hereby absolutely and unconditionally severally commits to PARCO and to the Funding Agent to provide the Funding Agent, on the Purchase Date (if notice has been given in accordance with Section 5.1 (b)) at the principal office of the Funding Agent in The City of New York for delivery to PARCO, with immediately available funds in an amount equal to such APA Bank's Pro Rata Share of the Purchase Price, whereupon such APA Bank shall become an assignee of PARCO under this Agreement and the other Basic Agreements with an undivided interest in the Collateral equal to its Pro Rata Share of the Assigned Percentage of the PARCO Interest. The APA Banks' several obligations under this Section 5.2(a) to provide the Funding Agent with funds pursuant to this Article V shall terminate on the Commitment Expiry Date. Notwithstanding anything contained in this Section 5.2(a) or elsewhere in this Agreement to the contrary, no APA Bank shall be obligated to provide the Funding Agent with aggregate funds in connection with a Purchase in an amount that would exceed such APA Bank's unused Commitment then in effect, and the failure of any APA Bank to make its Pro Rata Share of the Purchase Price available to the Funding Agent shall not relieve any other APA Bank of its obligations hereunder. (b) DEFAULTING APA BANKS. If, by 2:00 P.M. (New York time), one or more APA Banks (each, a "DEFAULTING APA BANK", and each APA Bank other than the Defaulting APA Bank being referred to as a "NON-DEFAULTING APA BANK") fails to make its Pro Rata Share of the Purchase Price available to the Funding Agent pursuant to Section 2.1(a) (the aggregate amount not so made available to the Funding Agent being herein called the "PURCHASE PRICE DEFICIT"), then the Funding Agent shall, by no later than 2:30 P.M. (New York time), instruct each Non-Defaulting APA Bank to pay, by no later than 3:00 P.M. (New York time), in immediately available funds, to the account designated by the Funding Agent, an amount equal to the lesser of (x) such Non-Defaulting APA Bank's proportionate share (based upon the relative Commitments of the Non-Defaulting APA Banks) of the Purchase Price Deficit and (y) its unused Commitment. A Defaulting APA Bank shall forthwith, upon demand, pay to the Funding Agent, for the ratable benefit of the Non-Defaulting APA Banks, all amounts paid by each Non-Defaulting APA Bank on behalf of such Defaulting APA Bank, together with interest thereon, for each day 30 from the date a payment was made by a Non-Defaulting APA Bank until the date such Non-Defaulting APA Bank has been paid such amounts in full, at a rate per annum equal to the sum of the Federal Funds Effective Rate plus 2% (or such higher rate as is applicable through interbank compensation rules). In addition, without prejudice to any other rights that PARCO may have under applicable law, each Defaulting APA Bank shall pay to PARCO forthwith upon demand, the difference between the Defaulting APA Bank's unpaid Pro Rata Share of the Purchase Price and the amount paid with respect thereto by the Non-Defaulting APA Banks, together with interest thereon, for each day from the date of the Funding Agent's request for such Defaulting APA Bank's Pro Rata Share of the Purchase Price pursuant to Section 5.1(b) until the date the requisite amount is paid to PARCO in full, at a rate per annum equal to the sum of the Federal Funds Effective Rate plus 2% (or such higher rate as is applicable through interbank compensation rules). SECTION 5.3 NONRECOURSE NATURE OF TRANSACTIONS. Each of the Funding Agent and the APA Banks hereby agrees that all Purchases under this Article V shall be without recourse, representation or warranty of any kind to PARCO or the Funding Agent. SECTION 5.4 PAYMENTS; INDEMNITY. (a) PAYMENTS GENERALLY. On or prior to the Closing Date, the Funding Agent shall establish a demand deposit account with Chase for the benefit of PARCO and the APA Banks (the "FUNDING ACCOUNT"), into which all payments received in respect of this Agreement and the other Basic Agreements shall be deposited. The Funding Agent, on behalf of PARCO and the APA Banks, shall have the sole right of withdrawal from the Funding Account. For so long as any amounts remain due and owing to PARCO or the APA Banks hereunder or under the other Basic Agreements, the Funding Agent shall distribute all payments received by it in respect of the Basic Agreements immediately after receipt thereof by (i) transferring PARCO's Pro Rata Share of any such payments to PARCO and (ii) immediately after giving effect to the payment in clause (a)(i), if any, transferring the remainder of any such payments to the APA Banks ratably in accordance with their Pro Rata Shares (calculated without regard to that portion of the Commitment of a Defaulting APA Bank which such Defaulting APA Bank failed to fund pursuant to this Agreement). Such transfers shall be made by the Funding Agent by withdrawing funds on deposit in the Funding Account and by remitting such funds to the accounts of PARCO and the several APA Banks specified by each of them from time to time. 31 (b) REQUESTS FOR INDEMNITY UNDER THE BASIC AGREEMENTS. The Funding Agent shall, at the written request of any APA Bank, make demand of PARCO for payment of any amounts held by PARCO from time to time claimed by such APA Bank pursuant to this Agreement and the other Basic Agreements, and the Funding Agent shall, upon its receipt of such amounts, distribute them to each such APA Bank ratably in accordance with their respective Pro Rata Shares (calculated, in the case of each Defaulting APA Bank, without regard to that portion of its Commitment related to which such Defaulting APA Bank failed to fund pursuant to this Agreement). (c) PAYMENTS CONDITIONAL UPON RECEIPT FROM PARCO, THE BORROWER, THE SELLER OR THE SERVICER. Anything in this Agreement to the contrary notwithstanding, the Funding Agent (i) shall have no obligation to make any payments to the APA Banks unless and until it has received such amounts from PARCO, the Borrower, the Seller or the Servicer pursuant to this Agreement or the other Basic Agreements and (ii) shall be entitled to assume that such amounts have been paid by PARCO, the Borrower, the Seller or the Servicer absent notice to the contrary. SECTION 5.5 REDUCTION OF COMMITMENTS. The Aggregate Commitment shall be automatically reduced, ratably among the APA Banks, by the amount of any permanent reduction of the Facility Limit. The Funding Agent shall notify the APA Banks and each Rating Agency of the occurrence of any such reduction specified in the immediately preceding sentence promptly after the Funding Agent (individually or in its capacity as Funding Agent) becomes aware of the same. In addition to the foregoing, the Commitment of each APA Bank and the Aggregate Commitment shall be reduced to zero on the Commitment Expiry Date. 32 ARTICLE VI REPRESENTATIONS AND WARRANTIES OF THE APA BANKS SECTION 6.1 REPRESENTATIONS AND WARRANTIES OF THE APA BANKS TO PARCO AND THE FUNDING AGENT. Each of the APA Banks (a) confirms that it has received copies of the Basic Agreements; (b) represents and warrants to the Funding Agent and PARCO that it has, independently and without reliance upon the Funding Agent, PARCO or any other APA Bank, and based on such documents and information as it has deemed appropriate, made its own appraisal of and investigation into the business, operations, property, prospects, financial and other conditions and creditworthiness of the Seller, the Servicer, the Borrower, the Custodian, any Hedge Counterparty, the Back-Up Servicer and the Obligors, and made its own decision to enter into this Agreement; (c) represents that it will, independently and without reliance upon the Funding Agent, PARCO or any other APA Bank, and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit analysis, appraisals and decisions in taking or not taking action under this Agreement and the other Basic Agreements, and to make such investigation as it deems necessary to inform itself as to the business, operations, property, prospects, financial and other condition and creditworthiness of the Seller, the Servicer, the Borrower, the Custodian, any Hedge Counterparty, the Back-Up Servicer and the Obligors; (d) represents and warrants that it is a corporation or a banking association duly organized and validly existing under the laws of its jurisdiction of incorporation or organization and has all corporate power to perform its obligations hereunder; (e) represents and warrants that no authorization or approval or other action by, and no notice to or filing with, any governmental authority or regulatory body is required for the due execution, delivery and performance by it of this Agreement, which has not otherwise been obtained; (f) represents and warrants that the execution, delivery and performance of this Agreement are within its corporate powers, have been duly authorized by all necessary corporate action, do not contravene or violate (i) its certificate or articles of incorporation or association or by-laws, (ii) any law, rule or regulation applicable to it, (iii) any restrictions under any agreement, contract or instrument to which it is a party or any of its property is bound, or (iv) any order, writ, judgment, award, injunction or decree binding on or affecting it or its property, and do not result in the creation or imposition of any adverse claim on its assets, which contravention or violation in any of the foregoing cases could have a material adverse effect on its financial condition or its ability to perform its obligations hereunder; (g) represents 33 and warrants that this Agreement constitutes its legal, valid and binding obligations enforceable against it in accordance with their terms, except as such enforcement may be limited by applicable bankruptcy, insolvency, reorganization or other similar laws relating to limiting creditors' rights generally and by equitable principles (regardless of whether such enforceability is considered in a proceeding in equity or at law); and (h) represents and warrants that this Agreement has been duly authorized, executed and delivered by it. SECTION 6.2 PARCO DISCLAIMER OF REPRESENTATIONS AND WARRANTIES. By executing and delivering any Sale Notice pursuant to Section 5.2(a), (a) PARCO makes no representation or warranty and assumes no responsibility with respect to any statements, warranties or representations made in or in connection with this Agreement and the other Basic Agreements or the execution, legality, validity, enforceability, genuineness, sufficiency or value of this Agreement and the other Basic Agreements, or any other instrument or document furnished pursuant hereto or thereto or in connection herewith or therewith, and (b) PARCO makes no representation or warranty and assumes no responsibility with respect to the financial condition of the Seller, the Servicer, the Borrower, the Custodian, any Hedge Counterparty, the Back-Up Servicer or any Obligor or the performance or observance by such Persons of any of their respective obligations under this Agreement, the other Basic Agreements or any other instrument or document furnished pursuant hereto or thereto or in connection herewith or therewith. 34 ARTICLE VII THE FUNDING AGENT SECTION 7.1 APPOINTMENT. Each Secured Party hereby irrevocably designates and appoints Chase as Funding Agent hereunder, and authorizes the Funding Agent to take such action on its behalf under the provisions of this Agreement and the other Basic Agreements and to exercise such powers and perform such duties as are expressly delegated to the Funding Agent by the terms of this Agreement and the other Basic Agreements, together with such other powers as are reasonably incidental thereto. Notwithstanding any provision to the contrary elsewhere in this Agreement, the Funding Agent shall not have any duties or responsibilities, except those expressly set forth herein, or any fiduciary relationship with any Secured Party, and no implied covenants, functions, responsibilities, duties, obligations or liabilities on the part of the Funding Agent shall be read into this Agreement or the other Basic Agreements or otherwise exist against the Funding Agent. The provisions of this Article VII are solely for the benefit of the Funding Agent and the Secured Parties, and neither the Borrower, the Seller, the Servicer, the Custodian, any Hedge Counterparty nor the Back-Up Servicer shall have any rights as a third party beneficiary or otherwise under any of the provisions hereof. In performing its functions and duties hereunder, the Funding Agent shall act solely as the funding agent of the Secured Parties and does not assume, nor shall be deemed to have assumed, any obligation or relationship of trust or agency with or for the Borrower, the Seller, the Servicer, the Custodian, any Hedge Counterparty or the Back-Up Servicer. SECTION 7.2 DELEGATION OF DUTIES. The Funding Agent may execute any of its duties under this Agreement and the other Basic Agreements by or through its subsidiaries, affiliates, agents or attorneys-in-fact, and the Funding Agent shall be entitled to advice of counsel concerning all matters pertaining to such duties. The Funding Agent shall not be responsible for the negligence or misconduct of any agents or attorneys-in-fact selected by it with reasonable care. SECTION 7.3 EXCULPATORY PROVISIONS. Neither the Funding Agent nor any of its directors, officers, agents or employees shall be (a) liable for any action lawfully taken or omitted to be taken by it or them or any Person described in Section 7.2 under or in connection with this Agreement, the Receivables, the other Conveyed Property or the other Basic Agreements (except for its, their or such Person's own gross negligence or willful misconduct), or (b) responsible in any 35 manner to any of the Secured Parties, the Borrower, the Seller, the Servicer, the Custodian, any Hedge Counterparty or the Back-Up Servicer for any recitals, statements, representations or warranties contained in the Basic Agreements or in any certificate, report, statement or other document referred to or provided for in, or received under or in connection with, such agreements or for the value, validity, effectiveness, genuineness, enforceability or sufficiency of the Receivables, the Other Conveyed Property or the Basic Agreements, or any other document furnished in connection therewith or herewith, or for any failure of any Person (other than itself and the Persons specified in Section 7.2) to perform its obligations under any Basic Agreement or for the satisfaction of any condition specified in any Basic Agreement. Except as expressly set forth in the Basic Agreements, the Funding Agent shall not be under any obligation to any Secured Party to ascertain or to inquire as to the observance or performance of any of the agreements or covenants contained in, or conditions of, the Receivables, the Other Conveyed Property or the Basic Agreements, or to inspect the properties, books or records of the Borrower, the Seller, the Servicer, the Custodian, any Hedge Counterparty or the Back-Up Servicer. SECTION 7.4 RELIANCE BY FUNDING AGENT. The Funding Agent shall, in all cases, be entitled to rely, and shall be fully protected in relying, upon any note, writing, resolution, notice, consent, certificate, affidavit, letter, cablegram, telegram, telecopy, telex or teletype message, statement, order or other document or conversation believed by it to be genuine and correct and to have been signed, sent or made by the proper Person or Persons and upon advice and statements of legal counsel (including, without limitation, counsel to each of the Secured Parties and the Borrower, the Seller, the Servicer, the Custodian, any Hedge Counterparty and the Back-Up Servicer), independent accountants and other experts selected by the Funding Agent. The Funding Agent shall in all cases be fully justified in failing or refusing to take any action under this Agreement, the other Basic Agreements, the Receivables or the Other Conveyed Property or any other document furnished in connection herewith or therewith unless it shall first receive such advice or concurrence of the Required Banks or all of the APA Banks, as the case may be, as it deems appropriate, or it shall first be indemnified to its satisfaction by all of the APA Banks against any and all liability, cost and expense which may be incurred by it by reason of taking or continuing to take any such action. The Funding Agent shall, in all cases, be fully protected in acting, or in refraining from acting, under this Agreement, the other Basic Agreements, the Receivables or the Other Conveyed Property or any other document furnished in connection herewith or therewith in accordance with a request of the Required Banks or all of the APA Banks, as applica- 36 ble, and such request and any action taken or failure to act pursuant thereto shall be binding upon all the Secured Parties. SECTION 7.5 NOTICE OF TERMINATION EVENT AND OTHER EVENTS; VOTING. The Funding Agent shall not be deemed to have knowledge or notice of the occurrence of any Termination Event, Potential Termination Event, PARCO Wind-Down Event or Potential PARCO Wind-Down Event unless the Funding Agent has received notice from the Borrower, the Seller, the Servicer, the Custodian, any Hedge Counterparty, the Back-Up Servicer or any Secured Party referring to any Basic Agreement stating that such an event has occurred and describing such event. If the Funding Agent receives such a notice, the Funding Agent shall promptly give notice thereof to each Secured Party and each Rating Agency. Subject to the provisions of Section 8.l(b), to the extent the Funding Agent is entitled to consent to or withhold its consent of any waiver or amendment of any Basic Agreement in accordance with the terms thereof, the Funding Agent shall (a) give prompt notice to the Secured Parties and Rating Agencies of any such waiver or amendment of which it is aware, and (b) take such action with respect to such waiver, amendment, Termination Event, Potential Termination Event, PARCO Wind-Down Event or Potential PARCO Wind-Down Event as shall be directed by the Required Banks; PROVIDED, HOWEVER, that unless and until the Funding Agent shall have received such directions, the Funding Agent may (but shall not be obligated to) take such action, or refrain from taking such action, with respect to such Termination Event, Potential Termination Event, PARCO Wind-Down Event or Potential PARCO Wind-Down Event as the Funding Agent shall deem advisable and in the best interests of the APA Banks. SECTION 7.6 NON-RELIANCE BY APA BANKS ON FUNDING AGENT AND OTHER APA BANKS. Each APA Bank expressly acknowledges that neither the Funding Agent, nor any of its officers, directors, employees, agents, attorneys-in-fact or affiliates has made any representations or warranties to it and that no act by the Funding Agent hereafter taken, including, without limitation, any review of the affairs of PARCO, the Borrower, the Seller, the Servicer, the Custodian, any Hedge Counterparty or the Back-Up Servicer, shall be deemed to constitute any representation or warranty by the Funding Agent. The Funding Agent shall not have any duty or responsibility to provide any APA Bank with any credit or other information concerning the business, operations, property, prospects, financial and other condition or creditworthiness of PARCO, the Borrower, the Seller, the Servicer, the Custodian, any Hedge Counterparty or the Back-Up Servicer which may come into the possession of the Funding Agent or any of its officers, directors, employees, agents, attorneys-in-fact or affiliates. 37 SECTION 7.7 INDEMNIFICATION. The APA Banks agree to indemnify the Funding Agent and its officers, directors, employees, representatives and agents (to the extent not reimbursed by the Borrower or any other Person pursuant to a Basic Agreement, and without limiting the obligation of any such Person to do so in accordance with the terms of the Basic Agreements), ratably according to their Pro Rata Shares, from and against any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind or nature whatsoever (including, without limitation, the reasonable fees and disbursements of counsel for the Funding Agent or the affected Person in connection with any investigative, administrative or judicial proceeding commenced or threatened, whether or not the Funding Agent or such affected Person shall be designated a party thereto) that may at any time be imposed on, incurred by or asserted against the Funding Agent or such affected Person as a result of, or arising out of, or in any way related to or by reason of, any of the transactions contemplated hereunder or under the Agreement or the execution, delivery or performance of this Agreement, the Receivables, the Other Conveyed Property, any other Basic Agreement or any other document furnished in connection herewith or therewith (but excluding any such liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements resulting solely from the gross negligence or willful misconduct of the Funding Agent or such affected Person). SECTION 7.8 FUNDING AGENT IN ITS INDIVIDUAL CAPACITY. The Funding Agent and its Affiliates may make loans to, accept deposits from and generally engage in any kind of business with PARCO, the Borrower, the Seller, the Servicer, the Custodian, any Hedge Counterparty or the Back-Up Servicer or any Affiliate of such Persons as though the Funding Agent were not the Funding Agent hereunder. With respect to the acquisition of its Assigned Percentage of a Purchase Price pursuant to this Agreement, the Funding Agent shall have the same rights and powers under this Agreement and the other Basic Agreements as any APA Bank and may exercise the same as though it were not the Funding Agent, and the terms "APA Bank" and "APA Banks" shall include the Funding Agent in its individual capacity as an APA Bank. SECTION 7.9 SUCCESSOR FUNDING AGENT. Subject to the appointment and acceptance of a successor Funding Agent as provided in this Section 7.9, the Funding Agent may, upon five (5) days' notice to PARCO, the APA Banks and the Rating Agencies, and the Funding Agent will, upon the direction of the Required Banks (calculated without regard to the Pro Rata Share of Chase or any Affiliate of Chase), resign as Funding Agent; PROVIDED, in either case, that an APA Bank agrees 38 to become the successor Funding Agent hereunder in accordance with the next sentence. If the Funding Agent shall resign as Funding Agent under this Agreement, then the Required Banks during such period shall appoint, from among the APA Banks, a successor agent, whereupon such successor agent shall succeed to the rights, powers and duties of the Funding Agent, and the term "Funding Agent" shall mean such successor agent, effective upon its acceptance of such appointment, and the former Funding Agent's rights, powers and duties as Funding Agent shall be terminated, without any other or further act or deed on the part of such former Funding Agent or any of the parties to this Agreement. After the retiring Funding Agent's resignation hereunder as Funding Agent, the provisions of this Article VII shall inure to its benefit as to any actions taken or omitted to be taken by it while it was Funding Agent under this Agreement. SECTION 7.10 CHASE CONFLICT WAIVER. Chase acts as PARCO's administrative agent, as issuing and paying agent for PARCO's Commercial Paper, as provider of other backup facilities for PARCO, and may provide other services or facilities from time to time (the "CHASE ROLES"). Without limiting the generality of Section 7.8, each party hereto hereby acknowledges and consents to any and all Chase Roles, waives any objections it may have to any actual or potential conflict of interest caused by Chase's acting as the Funding Agent or as an APA Bank hereunder and acting as or maintaining any of the Chase Roles, and agrees that in connection with any Chase Role, Chase may take, or refrain from taking, any action which it in its discretion deems appropriate. The APA Banks are hereby notified that PARCO may delegate responsibility for signing and/or sending Sale Notices to Chase as PARCO's administrative agent. 39 ARTICLE VIII MISCELLANEOUS SECTION 8.1 WAIVERS; AMENDMENTS, ETC. (a) NO WAIVER; REMEDIES CUMULATIVE. No failure or delay by the Funding Agent or any Secured Party in exercising any right or power hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any such right or power, or any abandonment or discontinuance of steps to enforce such a right or power, preclude any other or further exercise thereof or the exercise of any other right or power. The rights and remedies of the Funding Agent and the Secured Parties hereunder are cumulative and are not exclusive of any rights or remedies that they would otherwise have. No waiver of any provision of this Agreement or consent to any departure by the Borrower therefrom shall in any event be effective unless the same shall be permitted by Section 8.1(b), and then such waiver or consent shall be effective only in the specific instance and for the purpose for which given. Without limiting the generality of the foregoing, the making of a Funding or a Purchase hereunder shall not be construed as a waiver of any Termination Event or Potential Termination Event, regardless of whether the Funding Agent or any Secured Party may have had notice or knowledge of such Termination Event or Potential Termination Event at the time. (b) AMENDMENTS, ETC. Neither this Agreement nor any provision hereof may be waived, amended or modified except pursuant to an agreement or agreements in writing entered into by the Borrower, PARCO and the Required Banks or by the Borrower, PARCO and the Funding Agent with the consent of the Required Banks; PROVIDED that no such waiver, amendment or modification shall become effective without prior written notice to the Rating Agencies; PROVIDED FURTHER that no such agreement shall (i) increase the Commitment of any APA Bank without the written consent of such APA Bank, (ii) reduce the amount of any payments due and owing to PARCO or any APA Bank hereunder and under the other Basic Agreements without the prior written consent of PARCO and each APA Bank affected thereby, as applicable, (iii) postpone the scheduled date of payment of the any amount payable hereunder or under the other Basic Agreements, or reduce the amount of, waive or excuse any such payment, or postpone the scheduled date of expiration of any Commitment, without the written consent of PARCO and each APA Bank affected thereby, (iv) change Section 2.1 or Article V in a manner that would alter the PRO RATA sharing of payments required thereby, without the written 40 consent of each APA Bank and, if there is a Net Investment, of PARCO, or (v) change any of the provisions of this Section 8.1(b) or the definition of "Required Banks" or any other provision hereof specifying the number or percentage of APA Banks required to waive, amend or modify any rights hereunder or make any determination or grant any consent hereunder, without the prior written consent of each APA Bank; PROVIDED FURTHER that no such agreement shall amend, modify or otherwise affect the rights or duties of the Funding Agent hereunder without the prior written consent of the Funding Agent. (c) INTEGRATION. This Agreement and the other Basic Agreements contain a 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 among the parties hereto with respect to the subject matter hereof, superseding all prior oral or written understandings. SECTION 8.2 NOTICES. Except as otherwise expressly provided herein, all communications and notices provided for hereunder shall be in writing and shall be (a) hand-delivered by messenger, (b) sent by reputable overnight or second business day courier, or (c) sent by telecopy or similar electronic transmission directed to the applicable address or telecopy number, as the case may be, set forth on Exhibit D hereto (as amended from time to time) or at such other address or telecopy number as any party may hereafter specify in writing to the Funding Agent for the purpose of receiving notices. Each such notice or other communication shall be effective only upon receipt thereof. SECTION 8.3 GOVERNING LAW; SUBMISSION TO JURISDICTION; WAIVER OF JURY TRIAL. (a) This Agreement shall be governed by, and construed in accordance with, the laws of the State of New York. (b) For any action related to the judicial enforcement or interpretation of this Agreement, each of the parties hereto expressly submits to the nonexclusive jurisdiction of the state or federal courts located in the County of New York in the State of New York. Each of the parties hereto further irrevocably consents to the service of process out of any of the aforementioned courts in any such action or proceeding by the mailing of copies thereof by registered or certified mail, postage prepaid, to such party at its address for notice under this Agreement, such service to become effective five (5) days after such mailing. Each of the parties hereto hereby stipulates that the venues referenced in this Section 8.3(b) are convenient, and each 41 waives any objection that it may now or hereafter have relating to the venue or convenience of such courts. (c) The parties hereto hereby agree that no party shall request a trial by jury in the event of litigation between them concerning this Agreement or any claims or transactions in connection herewith, and any right to trial by jury is expressly waived. Each of the parties hereto hereby acknowledges that such waiver is made with full understanding and knowledge of the nature of the rights and benefits waived hereby. SECTION 8.4 SEVERABILITY; COUNTERPARTS; WAIVER OF SETOFF. 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 any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction. Each of the parties hereto (other than PARCO) hereby waives any right of setoff it may have or to which it may be entitled under this Agreement or the other Basic Agreements from time to time against PARCO or its assets. SECTION 8.5 SUCCESSORS AND ASSIGNS; PARTICIPATIONS; ASSIGNMENTS. (a) SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon the parties hereto and their respective successors and permitted assigns; PROVIDED that the Borrower shall not assign any of its rights or obligations hereunder to any Person without the prior written consent of the Secured Parties. No APA Bank may participate, assign or sell any portion of its rights hereunder except as required by operation of law, in connection with the merger, consolidation or dissolution of any APA Bank or as otherwise provided in this Section 8.5. No assignment hereunder shall become effective without a Rating Confirmation. (b) PARTICIPATIONS BY APA BANKS. Any APA Bank may, without the consent of the Borrower, the Funding Agent or PARCO, sell participations to one or more banks or other entities (each, a "PARTICIPANT") in all or a portion of such APA Bank's rights and obligations hereunder and under the other Basic Agreements (including all or a portion of its Commitment, Funding Balance and amounts due and 42 owing to it); PROVIDED that (i) such APA Bank's obligations under this Agreement shall remain unchanged, (ii) such APA Bank shall remain solely responsible to the other parties hereto for the performance of such obligations and (iii) the Borrower, PARCO, the Funding Agent and the other APA Banks shall continue to deal solely and directly with such APA Bank in connection with such APA Bank's rights and obligations under this Agreement and the other Basic Agreements. Any agreement or instrument pursuant to which an APA Bank sells such a participation shall provide that such APA Bank shall retain the sole right to enforce this Agreement and the other Basic Agreements and to approve any amendment, modification or waiver of any provision of this Agreement and the other Basic Agreements (as provided by the terms hereof and thereof); PROVIDED that such agreement or instrument may provide that such APA Bank will not, without the consent of the Participant, agree to any amendment, modification or waiver described in the first proviso of Section 8.1(b) that affects such Participant. The Borrower agrees that each Participant shall be entitled to the benefits of Article IV to the same extent as if it were an APA Bank and had acquired its interest by assignment pursuant to Section 8.5(c); PROVIDED that no Participant shall be entitled to receive any greater payment under Article IV than the applicable APA Bank would have been entitled to receive with respect to the participation sold to such Participant, unless the sale of the participation to such Participant is made with the Borrower's prior written consent. (c) ASSIGNMENTS BY APA BANKS. (i) Any APA Bank may at any time and from time to time, upon the prior written consent of PARCO and the Funding Agent, (which consent shall not be unreasonably withheld) assign to one or more accredited investors or other Persons (each, a "PURCHASER") all or any part of its rights and obligations under this Agreement and any other Basic Agreement pursuant to a supplement to this Agreement, substantially in the form of Exhibit B hereto (each, a "TRANSFER SUPPLEMENT"), executed by the Purchaser, such selling APA Bank and, as applicable, the Funding Agent; and PROVIDED, HOWEVER, that (A) each Purchaser shall purchase an identical percentage in such selling APA Bank's Commitment, unused Commitment and Funding Balance, (B) any such assignment cannot be for an amount less than the lesser of (1) $10,000,000 and (2) such selling APA Bank's Commitment or Funding Balance (calculated at the time of such assignment), (C) each Purchaser must be a financial institution rated at least A-1/P-1 (or the equivalent short-term rating) 43 by the Rating Agencies and incorporated in an OECD Country and (D) each Purchaser shall deliver to the Funding Agent and PARCO an opinion of such Purchaser's counsel in substantially the form of Exhibit C hereto. Such assignment shall also be subject to the other limitations set forth in this Agreement and the other Basic Agreements, as the case may be. (ii) Each of the APA Banks agrees that in the event that it shall cease to have short-term debt ratings of at least A-1 by S&P and at least P-1 by Moody's, or, if such APA Bank does not have short-term debt which is rated by S&P's and Moody's, in the event that the parent corporation of such APA Bank has rated short-term debt, such parent corporation ceases to have short-term debt ratings of at least A-1 by S&P and at least P-1 by Moody's (each, an "AFFECTED APA BANK"), such Affected APA Bank shall be obligated, at the request of PARCO and the Funding Agent, to assign all of its rights and obligations hereunder to (x) one or more other APA Banks selected by PARCO and the Funding Agent which are willing to accept such assignment, or (y) another financial institution rated at least A-1/P-1 (or the equivalent short-term rating) by the Rating Agencies) nominated by the Funding Agent and agreed to by PARCO and the Funding Agent, and willing to participate in this facility through the Commitment Expiry Date in the place of such Affected APA Bank; PROVIDED that (i) the Affected APA Bank receives payment in full, pursuant to a Transfer Supplement and/or, as applicable, an assignment, of an amount equal to the Affected APA Bank's Funding Balance and any other amounts due and owing under this Agreement and the other Basic Agreements in respect of such Affected APA Bank's Funding Balance and (ii) such nominated financial institution, if not an existing APA Bank, satisfies all the requirements of this Agreement and provides the Funding Agent with an opinion of counsel in substantially the form of Exhibit C hereto. (iii) Upon (A) execution of a Transfer Supplement, (B) delivery of an executed copy thereof to PARCO and the Funding Agent and delivery to the Funding Agent and PARCO of an opinion of such Purchaser's counsel in substantially the form of Exhibit C hereto, (C) payment, if applicable, by the Purchaser to such selling APA Bank of an amount equal to the purchase price agreed between 44 such selling APA Bank and the Purchaser and (D) receipt by PARCO of a Rating Confirmation, such selling APA Bank shall be released from its obligations hereunder and under the other Basic Agreements to the extent of such assignment and the Purchaser shall, for all purposes, be an APA Bank party to this Agreement and, if and when applicable, and assignee of PARCO's interest under this Agreement and the other Basic Agreements and shall have all the rights and obligations of an APA Bank under this Agreement to the same extent as if it were an original party hereto or thereto, and no further consent or action by PARCO, the APA Banks or the Funding Agent shall be required. The amount of the assigned portion of the selling APA Bank's Funding Balance allocable to the Purchaser shall be equal to the Transferred Percentage (as defined in the Transfer Supplement) of such selling APA Bank's Funding Balance which is transferred thereunder regardless of the purchase price paid therefor. Such Transfer Supplement shall be deemed to amend this Agreement to the extent, and only to the extent, necessary to reflect the addition of the Purchaser as an APA Bank and the resulting adjustment of the selling APA Bank's Commitment arising from the purchase by the Purchaser of all or a portion of the selling APA Bank's rights, obligations, and interest hereunder and under the other Basic Agreements. (d) An APA Bank may, at any time, pledge or assign a security interest in all or any portion of its rights under this Agreement and the other Basic Agreements to a Federal Reserve Bank or similar central banking authority to secure obligations of such APA Bank, and this Section 8.5 shall not apply to any such pledge or assignment of a security interest; PROVIDED that no such pledge or assignment of a security interest shall release an APA Bank from any of its obligations hereunder or substitute any such pledgee or assignee for such APA Bank as a party hereto. SECTION 8.6 NO PETITION. Each of the parties hereto hereby covenant and agree that, prior to the date which is one year and one day after the payment in full of all outstanding Commercial Paper of PARCO or all outstanding indebtedness of the Borrower (other than the Subordinated Note), as the case may be, such party will not institute against, or join any other Person in instituting against, PARCO or the Borrower, as applicable, any bankruptcy, reorganization, arrangement, insolvency or liquidation proceedings or other similar proceeding under the 45 laws of any jurisdiction. The provisions of this Section 8.6 shall survive termination of this Agreement. SECTION 8.7 LIMITED RECOURSE. Notwithstanding anything to the contrary contained herein, the obligations of PARCO under this Agreement are solely the corporate obligations of PARCO and, in the case of obligations of PARCO other than Commercial Paper, shall be payable at such time as funds are received by or are available to PARCO in excess of funds necessary to pay in full all outstanding Commercial Paper and, to the extent funds are not available to pay such obligations, the claims relating thereto shall not constitute a claim against PARCO but shall continue to accrue. Each party hereto agrees that the payment of any claim (as defined in Section 101 of Title 11 of the Bankruptcy Code) of any such party shall be subordinated to the payment in full of all Commercial Paper. No recourse under any obligation, covenant or agreement of PARCO contained in this Agreement shall be had against any incorporator, stockholder, officer, director, employee or agent of PARCO, the Funding Agent or any of their Affiliates (solely by virtue of such capacity) by the enforcement of any assessment or by any legal or equitable proceeding, by virtue of any statute or otherwise; it being expressly agreed and understood that this Agreement is solely a corporate obligation of PARCO, and that no personal liability whatever shall attach to or be incurred by any incorporator, stockholder, officer, director, employee or agent of PARCO, the Funding Agent or any of their Affiliates (solely by virtue of such capacity) or any of them under or by reason of any of the obligations, covenants or agreements of PARCO contained in this Agreement, or implied therefrom, and that any and all personal liability for breaches by PARCO of any of such obligations, covenants or agreements, either at common law or at equity, or by statute, rule or regulation, of every such incorporator, stockholder, officer, director, employee or agent is hereby expressly waived as a condition of and in consideration for the execution of this Agreement; PROVIDED that the foregoing shall not relieve any such Person from any liability it might otherwise have as a result of its fraudulent actions or omissions. The provisions of this Section 8.7 shall survive termination of this Agreement. SECTION 8.8 FURTHER ASSURANCES. The Borrower agrees to do such further acts and things and to execute and deliver to the Funding Agent such additional assignments, agreements, powers and instruments as are required by the Funding Agent, on behalf of the Secured Parties, to carry into effect the purposes of this Agreement or the other Basic Agreements or to better assure and confer unto the Funding Agent its rights, powers and remedies hereunder or thereunder. 46 SECTION 8.9 HEADINGS. Section headings used in this Agreement are for convenience of reference only and shall not affect the construction or interpretation of this Agreement. 47 IN WITNESS WHEREOF, the parties hereto have caused this Funding Agreement to be executed and delivered by their duly authorized officers or signatories as of the date hereof. CP FUNDING CORP., as Borrower By: -------------------------------------- Name: Title: THE CHASE MANHATTAN BANK, Individually as an APA Bank and as Funding Agent By: -------------------------------------- Name: Title: PARK AVENUE RECEIVABLES CORPORATION By: -------------------------------------- Name: Title: 48 ANNEX 1 COMMITMENTS The Chase Manhattan Bank $ 50,000,000 The Bank of Tokyo-Mitsubishi, Houston Agency $ 20,000,000 The Industrial Bank of Japan, Limited, New York Branch $ 30,000,000 The Bank of Nova Scotia, Atlanta Agency $ 20,000,000 Credit Suisse First Boston, New York Branch $ 50,000,000 ING (U.S.) Capital Corporation $ 75,000,000 ------------ Aggregate Commitment $245,000,000
Date: October 8, 1997 54 EXHIBIT A FORM OF VARIABLE FUNDING NOTE THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"). ANY RESALE OF TRANSFER OF THIS NOTE WITHOUT REGISTRATION THEREOF UNDER THE ACT MAY ONLY BE MADE IN A TRANSACTION EXEMPT FROM THE REGISTRATION REQUIREMENTS OF THE ACT. Reference is hereby made to (i) that certain Funding Agreement, dated as of October 8, 1997 (as amended, supplemented or otherwise modified and in effect from time to time, the "FUNDING AGREEMENT") by and among CP Funding Corp., a Nevada corporation, as borrower (the "BORROWER"), Park Avenue Receivables Corporation, a Delaware corporation ("PARCO"), The Chase Manhattan Bank, a New York banking corporation, as funding agent (in such capacity, the "FUNDING AGENT") and the several financial institutions party thereto from time to time (the "APA BANKS" and, together with PARCO, the "SECURED PARTIES") and (ii) that certain Security Agreement, dated as of October 8, 1997 (as amended, supplemented or otherwise modified and in effect from time to time, the "SECURITY AGREEMENT"), between the Borrower and the Funding Agent. Capitalized terms used herein and not otherwise defined herein shall have the meanings assigned to such terms in, or incorporated by reference into, the Funding Agreement and the Security Agreement. FOR VALUE RECEIVED, the Borrower hereby promises to pay to the order of the Funding Agent, for the account of and for the benefit of PARCO and the APA Banks at the principal office of the Funding Agent at 450 West 33rd Street, 15th Floor, New York, New York 10001, Attention: Structured Finance Services, a principal sum equal to TWO HUNDRED FORTY-FIVE MILLION DOLLARS ($245,000,000.00), in lawful money of the United States of America and in immediately available funds. The date and amount of each Funding extended by PARCO and the APA Banks, as the case may be, to the Borrower under the Funding Agreement, and each payment of principal thereof, shall be recorded by the Funding Agent, for the account of PARCO and the APA Banks, as appropriate, on its books and, prior to A-1 any transfer of this Note (or, at the discretion of PARCO and the APA Banks, at any other time), endorsed by the Funding Agent, on behalf of PARCO and the APA Banks, on the schedule attached hereto or on any continuation thereof. Although the stated principal amount of this Note is as stated above, this Note shall be enforceable only with respect to the Borrower's obligation to pay the principal hereof to the extent of the unpaid principal amount of the Fundings outstanding under the Funding Agreement at the time such enforcement shall be sought. Carrying Costs in respect of the outstanding principal amount of this Note shall accrue at the rate or rates from time to time in effect pursuant to the Funding Agreement and payable to the Funding Agent for the benefit of the Secured Parties of such Carrying Costs on the dates and in the manner provided for in the Sale and Servicing Agreement and the Funding Agreement; PROVIDED that, in all events, Carrying Costs constituting Accrued Discount shall be payable by the Borrower on any day on which outstanding Commercial Paper issued by PARCO to fund the Net Investment matures. Carrying Costs due and payable hereunder shall be payable in accordance with the priorities set forth in Section 6.8 of the Sale and Servicing Agreement. Principal in an amount equal to the Targeted Monthly Principal Payment, if any, will be due and payable on each Distribution Date in accordance with the priorities set forth in Section 6.8 of the Sale and Servicing Agreement. Unless otherwise due and payable on an earlier date in accordance with the terms of the Basic Agreements, the entire outstanding principal amount of this Note and accrued interest thereon will be due and payable on the Distribution Date occurring in the calendar month sixty-six (66) months following the Commitment Expiry Date. Following the occurrence of a Termination Event, the Funding Agent may, with the consent of the Required Banks, or shall, at the direction of the Required Banks, declare all amounts due hereunder to be immediately due and payable and exercise all remedies available to it pursuant to the Basic Agreements and applicable law; PROVIDED that, upon the occurrence of an Insolvency Event with respect to the Borrower, all such amounts immediately shall become due and owing automatically without the need for presentment, demand, protest or other notice of any kind, all of which are hereby waived by the Borrower. The Borrower's obligation to make payments hereunder shall be a limited recourse obligation of the Borrower, payable solely from the Collateral, and no recourse shall be had hereunder to the Borrower for payment hereunder except to A-2 the extent of the Collateral. This Note does not purport to summarize the Funding Agreement, the Security Agreement or the other Basic Agreements, and reference is hereby made to such agreements for information with respect to the interests, rights, benefits, obligations, proceeds and duties evidenced hereby. The Borrower shall pay all costs of collection of any amount due hereunder when incurred including, without limitation, reasonable attorney's fees and expenses, and including all costs and expenses actually incurred in connection with the pursuit by the Funding Agent, on behalf of and at the direction of the Secured Parties, of any of their rights or remedies referred to herein or in the Security Agreement or the Funding Agreement, or the protection of, or realization upon, Collateral, and all such costs shall be payable in accordance with the terms of the Security Agreement and the Funding Agreement. The Borrower hereby waives presentment, notice of dishonor, protest and other notice or formality with respect to this Note. This Note shall be governed by, and construed in accordance with, the laws of the State of New York. A-3 IN WITNESS WHEREOF, the undersigned has executed and delivered this Variable Funding Note as of the date and year first above written. CP FUNDING CORP. By: -------------------------- Name: Title: A-4 FUNDING AND REPAYMENT SCHEDULE Amount of Amount of Principal Notation Date of Funding Repayment Outstanding By ---- ---------- --------- ----------- --------- A-5 EXHIBIT B [FORM OF TRANSFER SUPPLEMENT] THIS TRANSFER SUPPLEMENT is entered into as of the ____ day of _________, 19__, by and between ______________________ ("TRANSFEROR") and _______________ ("TRANSFEREE"). PRELIMINARY STATEMENTS A. This Transfer Supplement is being executed and delivered in accordance with Section 8.5(c) of that certain Funding Agreement, dated as of October 8, 1997 (as amended, supplemented or otherwise modified and in effect from time to time, the "AGREEMENT"), by and among CP Funding Corp., a Nevada corporation, Park Avenue Receivables Corporation, a Delaware corporation, the several APA Banks party thereto from time to time, and The Chase Manhattan Bank, a New York banking corporation, individually and as Funding Agent. Capitalized terms used herein and not otherwise defined herein are used with the meanings set forth in, or incorporated by reference into, the Agreement. B. The Transferor is an APA Bank party to the Agreement, and the Purchaser wishes to become an APA Bank thereunder. C. The Transferor is selling and assigning to the Purchaser an undivided _______% (the "TRANSFERRED PERCENTAGE") interest in all of Transferor's rights and obligations under the Agreement and the other Basic Agreements, including, without limitation, the Transferor's Commitment and (if applicable) the Transferor's Funding Balance as set forth herein. The parties hereto hereby agree as follows: 1. The transfer effected by this Transfer Supplement shall become effective (the "TRANSFER EFFECTIVE DATE") two (2) Business Days (or such other date selected by the Funding Agent in its sole discretion) following the date on which a transfer effective notice substantially in the form of Schedule II to this Transfer Supplement ("TRANSFER EFFECTIVE NOTICE") is delivered by the Funding Agent to PARCO, the Transferor and the Transferee. From and after the Transfer Effective Date, the Transferee shall be an APA Bank party to the Agreement for all purposes B-1 thereof as if the Transferee were an original party thereto and the Transferee agrees to be bound by all of the terms and provisions contained therein. 2. If there is no Net Investment or Banks' Aggregate Investment on the Transfer Effective Date, Transferor shall be deemed to have hereby transferred and assigned to the Transferee, without recourse, representation or warranty (except as provided in paragraph 6 below), and the Transferee shall be deemed to have hereby irrevocably taken, received and assumed from the Transferor, the Transferred Percentage of the Transferor's Commitment and all rights and obligations associated therewith under the terms of the Agreement, including, without limitation, the Transferred Percentage of the Transferor's future funding obligations under Section 5.2(a) of the Agreement. 3. If there is a Net Investment or Banks' Aggregate Investment, at or before 12:00 noon, local time of the Transferor, on the Transfer Effective Date, the Transferee shall pay to the Transferor, in immediately available funds, an amount equal to the sum of (i) the Transferred Percentage of an amount equal to the Transferor's Funding Balance (such amount, being hereinafter referred to as the "TRANSFEREE'S FUNDING BALANCE"); (ii) all accrued but unpaid (whether or not then due) interest attributable to the Transferee's Funding Balance; and (iii) accrued but unpaid fees and other costs and expenses payable in respect of the Transferee's Funding Balance for the period commencing upon each date such unpaid amounts commence accruing, to and including the Transfer Effective Date (the "TRANSFEREE'S ACQUISITION COST"), whereupon, the Transferor shall be deemed to have transferred and assigned to the Transferee, without recourse, representation or warranty (except as provided in paragraph 6 below), and the Transferee shall be deemed to have hereby irrevocably taken, received and assumed from the Transferor, the Transferred Percentage of the Transferor's Commitment and Funding Balance and all related rights and obligations under the Agreement and the other Basic Agreements, including, without limitation, the Transferred Percentage of the Transferor's future funding obligations under Section 5.2(a) of the Agreement. 4. Concurrently with the execution and delivery hereof, the Transferor will provide to the Transferee copies of all documents requested by the Transferee which were delivered to such Transferor pursuant to the Agreement. 5. Each of the parties to this Transfer Supplement agrees that at any time and from time to time upon the written request of any other party, it will execute and deliver such further documents and do such further acts and things as B-2 such other party may reasonably request in order to effect the purposes of this Transfer Supplement. 6. By executing and delivering this Transfer Supplement, the Transferor and the Transferee confirm to and agree with each other, the Funding Agent and the APA Banks as follows: (a) other than the representation and warranty that it has not created any Lien (other than the Lien of the Funding Agent for the benefit of the Secured Parties) upon any interest being transferred hereunder, the Transferor makes no representation or warranty and assumes no responsibility with respect to any statements, warranties or representations made by any other Person in or in connection with the Agreement or the other Basic Agreements or the execution, legality, validity, enforceability, genuineness, sufficiency or value thereof or any other instrument or document furnished pursuant thereto or the perfection, priority, condition, value or sufficiency of any Collateral; (b) the Transferor makes no representation or warranty and assumes no responsibility with respect to the financial condition of PARCO, the Seller, the Servicer, the Borrower, the Custodian, any Hedge Counterparty, the Back-Up Servicer, any Obligor, any surety or any guarantor or the performance or observance by any of such Persons of any of their respective obligations under the Agreement or the other Basic Agreements or any other instrument or document furnished pursuant thereto or in connection therewith; (c) the Purchaser confirms that it has received a copy of the Agreement and the other Basic Agreements, together with such other documents and information as it has deemed appropriate to make its own credit analysis and decision to enter into this Transfer Supplement; (d) the Transferee will, independently and without reliance upon the Funding Agent, PARCO or any other APA Bank, and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under the Agreement or the other Basic Agreements; (e) the Transferee appoints and authorizes the Funding Agent to take such action as agent on its behalf and to exercise such powers under the Agreement as are delegated to the Funding Agent by the terms thereof, together with such powers as are reasonably incidental thereto; (f) the Transferee was not formed for the purpose of acquiring the interest being acquired hereunder; and (h) the Transferee agrees that it will perform in accordance with their terms all of the obligations which, by the terms of the Agreement and the other Basic Agreements, are required to be performed by it as an APA Bank or as the holder of PARCO's interest thereunder. 7. Each party hereto represents and warrants to and agrees with the Funding Agent that it is aware of and will comply with the provisions of the Agreement, including, without limitation, Sections 5.2, 8.5(c), 8.6 and 8.7 thereof. B-3 8. Schedule I hereto sets forth the revised Commitment of the Transferor and the Commitment of the Transferee, as well as administrative information with respect to the Transferee. 9. This Transfer Supplement shall be governed by, and construed in accordance with, the laws of the State of New York. B-4 IN WITNESS WHEREOF, the parties hereto have caused this Transfer Supplement to be executed by their respective duly authorized officers as of the date hereof. [TRANSFEROR] By: ------------------------------ Name: Title: [TRANSFEREE] By: ------------------------------ Name: Title: B-5 SCHEDULE I TO TRANSFER SUPPLEMENT LIST OF PURCHASING OFFICES, ADDRESSES FOR NOTICES AND COMMITMENT AMOUNTS DATE: ___________________, 19__ TRANSFERRED PERCENTAGE: _____ %
Commitment Commitment Outstanding Pro Rata Transferor [existing] [revised] Funding Balance Share - ---------- ---------- ---------- --------------- --------
Commitment Outstanding Pro Rata Transferee [initial] Funding Balance Share - ---------- ---------- --------------- -----
ADDRESS FOR NOTICES: - -------------------- ____________________ ____________________ ____________________ Attention: Telephone: Telecopy: B-6 SCHEDULE II TO TRANSFER SUPPLEMENT TRANSFER EFFECTIVE NOTICE TO:_________________, Transferor _________________ _________________ TO:_________________, Transferee _________________ _________________ The undersigned, as Funding Agent under the Funding Agreement, dated as of October 8, 1997 (as amended, supplemented or otherwise modified and in effect from time to time), by and among CP Funding Corp., a Nevada corporation, Park Avenue Receivables Corporation, a Delaware corporation, the several APA Banks party thereto from time to time, and The Chase Manhattan Bank, a New York banking corporation, individually and as Funding Agent, hereby acknowledges receipt of executed counterparts of a completed Transfer Supplement dated as of ______________, 19__ between ______________, as Transferor, and ______________, as Transferee. Capitalized terms defined in such Transfer Supplement are used herein as therein defined or incorporated by reference therein. 1. Pursuant to such Transfer Supplement, you are advised that the Transfer Effective Date will be _____________, 19__. 2. PARCO and the Funding Agent each hereby consents to the Transfer Supplement as required by Section 8.5(c) of the Agreement. [3. Pursuant to such Transfer Supplement, the Transferee is required to pay $_________ to the Transferor at or before 12:00 noon (local time of the Transferor) on the Transfer Effective Date in immediately available funds.] Very truly yours, THE CHASE MANHATTAN BANK, as Funding Agent By:_____________________________________ Authorized Signatory B-7 PARK AVENUE RECEIVABLES CORPORATION By:_____________________________________ Authorized Signatory B-8 EXHIBIT C FORM OF OPINION OF COUNSEL Park Avenue Receivables Corporation Standard & Poor's Ratings Services c/o Global Securitization Services, LLC 25 Broadway 25 West 43rd Street, Suite 704 New York, New York 10004 New York, New York 10036 The Chase Manhattan Bank, as Moody's Investors Service, Inc. Administrative Agent, Depositary, 99 Church Street Liquidity Agent, Liquidity Bank, New York, New York 10007 L/C Agent and L/C Bank 270 Park Avenue New York, New York 10017 Re: Transfer Supplement dated as of _____________ with [Name of Bank] Ladies and Gentlemen: We have acted as counsel for [Name of Bank] (the "Bank") in connection with (i) the Funding Agreement, dated as of October 8, 1997 (as amended, supplemented or otherwise modified to the date hereof, the "AGREEMENT"; terms defined therein and not otherwise defined in this letter shall have the respective meanings ascribed therein), by and among CP Funding Corp., Park Avenue Receivables Corporation, a Delaware corporation, the several APA Banks party thereto from time to time, and The Chase Manhattan Bank, a New York banking corporation, individually and as Funding Agent, and (ii) the Transfer Supplement (the "Transfer Supplement") dated as of ______________, 199__ between [Name of Transferor] as "Transferor" (as defined therein) and the Bank as "Transferee" (as defined therein), consented to by PARCO and the Funding Agent. 1. The Bank is a _________________ organized, validly existing and in good standing under the laws of _______________. The Bank has the corporate power and authority to execute and deliver the Transfer Supplement and to perform its obligations under the Funding Agreement. C-1 2. No governmental approval, which has not been obtained or taken and is not in full force and effect, is required to authorize, or is required in connection with, the execution or delivery by the Bank of the Transfer Supplement or the performance by the Bank of its obligations thereunder and under the Funding Agreement. 3. Neither the execution and delivery of the Transfer Supplement by the Bank, nor the consummation of the transactions contemplated thereby and by the Funding Agreement, will contravene, or result in a violation of, any law applicable to the Bank. 4. The Transfer Supplement has been duly authorized, executed and delivered by the Bank, and the Funding Agreement, as amended by the Transfer Supplement, constitutes the legal, valid and binding obligation of the Bank, enforceable against the Bank in accordance with its terms, except such enforceability may be limited by bankruptcy, insolvency, receivership, conservatorship or other similar laws, regulations and administrative orders of general application relating to or affecting the enforcement of creditors' rights in general and the rights of creditors of banks as the same may be applied in the event of the bankruptcy, insolvency, receivership, conservatorship or other similar event in respect of the Bank or by general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law). 5. With the exception of obligations being given priority by statute or regulation, the obligations of the Bank under the Funding Agreement, as amended by the Transfer Supplement, will rank PARI PASSU with all obligations of the Bank which are not contractually subordinated to payment of such obligations. Very truly yours, [NOTE THAT ADDITIONAL OPINIONS MAY BE REQUIRED FROM FOREIGN APA BANKS] C-2 EXHIBIT D NOTICE ADDRESSES IF TO THE BORROWER: CP Funding Corp. 1325 Airmotive Way, Suite 130 Reno, Nevada 8950 Attention: President Telephone: (702) 322-2221 Telecopy: (702) 322-8808 IF TO PARCO: Park Avenue Receivables Corporation c/o Global Securitization Services, LLC 25 West 43rd Street, Suite 704 New York, New York 10036 Attention: President Telephone: (212) 302-5151 Telecopy: (212) 302-8767 IF TO THE FUNDING AGENT OR THE APA BANKS: The Chase Manhattan Bank 450 West 33rd Street, 15th Floor New York, New York 10001 Attention: Structured Finance Services Telephone: (212) 946-7861 Telecopy: (212) 946-7776 D-1 EX-11.1 5 STATEMENT RE COMPUTATION 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, ------------------- ------------------ 1997 1996 1997 1996 ---- ---- ---- ---- Weighted average shares outstanding 29,890,355 28,653,775 29,684,960 28,513,145 Incremental shares resulting from assumed exercise of stock options 2,516,204 2,024,414 2,514,307 1,885,424 ---------- ---------- ---------- ---------- Weighted average shares and assumed incremental shares 32,406,559 30,678,189 32,199,267 30,398,569 ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- NET INCOME $14,181 $9,198 $27,375 $17,270 ------- ------ ------- ------- ------- ------ ------- ------- EARNINGS PER SHARE: Basic $ .47 $ .32 $ .92 $ .61 ------- ------ ------- ------- ------- ------ ------- ------- Diluted $ .44 $ .30 $ .85 $ .57 ------- ------ ------- ------- ------- ------ ------- -------
Basic earnings per share has been computed by dividing net income by the weighted average shares outstanding. Diluted earnings per share has 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. EX-27.1 6 FINANCIAL DATA SCHEDULE
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE CONSOLIDATED FINANCIAL STATEMENTS OF AMERICREDIT CORP. INCLUDED IN ITS QUARTERLY REPORT ON FORM 10-Q AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1,000 6-MOS JUN-30-1998 JUL-01-1997 DEC-31-1997 78,437 6,500 269,141 (11,350) 0 0 22,824 5,592 562,295 0 248,966 0 0 338 254,608 562,295 0 102,228 0 41,916 0 3,755 12,045 44,512 17,137 27,375 0 0 0 27,375 .92 .85
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