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INDENTURE

Indenture Agreement

INDENTURE | Document Parties: CREDIT ACCEPTANCE CORPORA | JPMORGAN CHASE BANK You are currently viewing:
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CREDIT ACCEPTANCE CORPORA | JPMORGAN CHASE BANK

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Title: INDENTURE
Governing Law: New York     Date: 8/30/2004
Industry: Consumer Financial Services     Sector: Financial

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                                                                  EXHIBIT 4(f)57

 

                                                                  EXECUTION COPY

 

================================================================================

 

                  CREDIT ACCEPTANCE AUTO DEALER LOAN TRUST 2004-1

                     $100,000,000 Class A Asset Backed Notes

 

                        ---------------------------------

 

                                    INDENTURE

 

                            Dated as of August 25, 2004

 

                        ---------------------------------

 

                               JPMORGAN CHASE BANK

                 as the Trust Collateral Agent/Indenture Trustee

 

                 CREDIT ACCEPTANCE AUTO DEALER LOAN TRUST 2004-1

                                  as the Issuer

 

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                                TABLE OF CONTENTS

 

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ARTICLE I Definitions and Incorporation by Reference................................................     2

 

         SECTION 1.1.      Definitions...............................................................     2

 

         SECTION 1.2.      Rules of Construction.....................................................     8

 

ARTICLE II The Notes................................................................................     9

 

         SECTION 2.1.      Form......................................................................     9

 

         SECTION 2.2.      Execution, Authentication and Delivery....................................     9

 

         SECTION 2.3.      Registration of Transfer and Exchange of Class A Notes....................    10

 

         SECTION 2.4.      Mutilated, Destroyed, Lost, or Stolen Notes...............................    13

 

         SECTION 2.5.      Persons Deemed Owners.....................................................    14

 

         SECTION 2.6.      Access to List of Noteholders' Names and Addresses........................    14

 

         SECTION 2.7.      Maintenance of Office or Agency...........................................    14

 

         SECTION 2.8.      Payment of Principal and Interest; Defaulted Interest.....................    15

 

         SECTION 2.9.      Release of Collateral.....................................................    15

 

ARTICLE III Covenants, Representations and Warranties...............................................    15

 

         SECTION 3.1.      Payment of Principal and Interest.........................................    15

 

          SECTION 3.2.      Maintenance of Office or Agency...........................................    16

 

         SECTION 3.3.      Money for Payments to be Held in Trust....................................    16

 

         SECTION 3.4.      Existence.................................................................    17

 

         SECTION 3.5.      Protection of Trust Property..............................................    18

 

         SECTION 3.6.      Opinions as to Trust Property.............................................    18

 

         SECTION 3.7.      Performance of Obligations; Servicing of Contracts........................    19

 

         SECTION 3.8.      Negative Covenants........................................................    20

 

         SECTION 3.9.       Annual Statement as to Compliance.........................................    20

 

         SECTION 3.10.     Issuer May Consolidate, Etc. Only on Certain Terms........................    21

 

         SECTION 3.11.     Successor or Transferee...................................................    23

 

         SECTION 3.12.     No Other Business.........................................................    23

 

         SECTION 3.13.     No Borrowing..............................................................    23

 

          SECTION 3.14.     Guarantees, Loans, Advances and Other Liabilities.........................    23

 

         SECTION 3.15.     Capital Expenditures......................................................    23

 

         SECTION 3.16.     Compliance with Laws......................................................    24

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         SECTION 3.17.     Restricted Payments.......................................................    24

 

         SECTION 3.18.     Notice of Indenture Events of Default.....................................    24

 

         SECTION 3.19.     Further Instruments and Acts..............................................    24

 

         SECTION 3.20.     Amendments of Sale and Servicing Agreement and Trust Agreement............    24

 

         SECTION 3.21.     Income Tax Characterization...............................................    24

 

         SECTION 3.22.     Perfection Representations, Warranties and Covenants......................    25

 

ARTICLE IV Satisfaction and Discharge...............................................................    25

 

         SECTION 4.1.      Satisfaction and Discharge of Indenture...................................    25

 

         SECTION 4.2.      Application of Trust Money................................................    26

 

         SECTION 4.3.      Repayment of Moneys Held by Paying Agent..................................    26

 

ARTICLE V Remedies..................................................................................    27

 

         SECTION 5.1.      Indenture Events of Default...............................................    27

 

         SECTION 5.2.      Rights Upon Indenture Event of Default....................................    28

 

         SECTION 5.3.      Collection of Indebtedness and Suits for Enforcement by Indenture

                          Trustee...................................................................    30

 

          SECTION 5.4.      Remedies..................................................................    32

 

         SECTION 5.5.      Optional Preservation of the Trust Property...............................    34

 

         SECTION 5.6.      [Reserved]................................................................    34

 

         SECTION 5.7.      Limitation of Suits.......................................................    34

 

         SECTION 5.8.      Unconditional Rights of Noteholders To Receive Principal and Interest.....    35

 

         SECTION 5.9.      Restoration of Rights and Remedies........................................    35

 

         SECTION 5.10.     Rights and Remedies Cumulative............................................    35

 

         SECTION 5.11.      Delay or Omission Not a Waiver............................................    35

 

         SECTION 5.12.     Control by the Controlling Party..........................................    36

 

         SECTION 5.13.     Undertaking for Costs.....................................................    36

 

         SECTION 5.14.     Waiver of Stay or Extension Laws..........................................    36

 

         SECTION 5.15.     Action on Class A Notes...................................................    36

 

          SECTION 5.16.     Performance and Enforcement of Certain Obligations........................    37

 

         SECTION 5.17.     Subrogation...............................................................    37

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ARTICLE VI The Indenture Trustee....................................................................    38

 

         SECTION 6.1.      Duties of Indenture Trustee...............................................    38

 

         SECTION 6.2.      Rights of Indenture Trustee...............................................    40

 

         SECTION 6.3.      Individual Rights of Indenture Trustee....................................    41

 

         SECTION 6.4.      Indenture Trustee's Disclaimer............................................    41

 

         SECTION 6.5.      Notice of Indenture Events of Default.....................................    42

 

         SECTION 6.6.      Reports by Indenture Trustee to Holders...................................    42

 

         SECTION 6.7.      Compensation..............................................................    42

 

         SECTION 6.8.      Replacement of Indenture Trustee..........................................    43

 

         SECTION 6.9.      Successor Indenture Trustee by Merger.....................................    44

 

         SECTION 6.10.     Appointment of Trust Collateral Agent.....................................    45

 

         The Issuer and the Indenture Trustee do hereby appoint JPMorgan Chase Bank to act as the

                          initial trust collateral agent on behalf of the Indenture Trustee and

                          JPMorgan Chase Bank hereby accepts such appointment.......................    45

 

         SECTION 6.11.     Appointment of Co-Indenture Trustee or Separate Indenture Trustee.........    45

 

         SECTION 6.12.     Eligibility...............................................................    46

 

         SECTION 6.13.     Trust Collateral Agent to Follow Indenture Trustee's Directions...........    47

 

         SECTION 6.14.     Representations and Warranties of the Indenture Trustee...................    47

 

         SECTION 6.15.     Waiver of Setoffs.........................................................    47

 

         SECTION 6.16.     Controlling Party.........................................................    48

 

         SECTION 6.17.     Disqualification of the Indenture Trustee.................................    48

 

         SECTION 6.18.     Authorization and Direction...............................................    48

 

         SECTION 6.19.     Action under the Intercreditor Agreement..................................    48

 

ARTICLE VII Noteholders' Lists and Reports..........................................................    48

 

         SECTION 7.1.      Issuer To Furnish To Indenture Trustee Names and Addresses of

                          Noteholders...............................................................    48

 

         SECTION 7.2.      Preservation of Information; Communications to Noteholders................    49

 

ARTICLE VIII Accounts, Disbursements and Releases...................................................    49

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         SECTION 8.1.      Collection of Money.......................................................    49

 

         SECTION 8.2.      Release of Trust Property.................................................    49

 

         SECTION 8.3.      Opinion of Counsel........................................................    49

 

ARTICLE IX Supplemental Indentures..................................................................    50

 

         SECTION 9.1.      Supplemental Indentures Without Consent of Noteholders....................    50

 

         SECTION 9.2.      Supplemental Indentures with Consent of Noteholders.......................    51

 

         SECTION 9.3.      Execution of Supplemental Indentures......................................    53

 

         SECTION 9.4.      Effect of Supplemental Indenture..........................................    53

 

         SECTION 9.5.      Reference in Class A Notes to Supplemental Indentures.....................    53

 

ARTICLE X Redemption of Notes.......................................................................    53

 

         SECTION 10.1.     Redemption................................................................     53

 

         SECTION 10.2.     Form of Redemption Notice.................................................    54

 

         SECTION 10.3.     Class A Notes Payable on Redemption Date..................................    55

 

ARTICLE XI Miscellaneous............................................................................    55

 

         SECTION 11.1.     Compliance Certificates and Opinions, etc.................................    55

 

         SECTION 11.2.     Form of Documents Delivered to Indenture Trustee..........................    56

 

         SECTION 11.3.     Acts of Noteholders.......................................................    57

 

         SECTION 11.4.     Notices, etc. to Indenture Trustee, Class A Insurer, Backup Insurer,

                          Issuer and Rating Agencies................................................    58

 

         SECTION 11.5.     Notices to Noteholders; Waiver............................................    59

 

         SECTION 11.6.     Alternate Payment and Notice Provisions...................................    59

 

         SECTION 11.7.     Effect of Headings and Table of Contents..................................    59

 

         SECTION 11.8.     Successors and Assigns....................................................    59

 

          SECTION 11.9.     Separability..............................................................    60

 

         SECTION 11.10.    Benefits of Indenture.....................................................    60

 

         SECTION 11.11.    Legal Holidays............................................................    60

 

         SECTION 11.12.    GOVERNING LAW.............................................................    60

 

         SECTION 11.13.    Counterparts..............................................................    60

 

         SECTION 11.14.    Recording of Indenture....................................................    60

 

         SECTION 11.15.    Trust Obligation..........................................................    61

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         SECTION 11.16.    No Petition...............................................................    61

 

         SECTION 11.17.    Inspection................................................................    61

 

         SECTION 11.18.    Maximum Interest Payable..................................................    61

 

         SECTION 11.19.    No Legal Title in Holders.................................................    62

 

         SECTION 11.20.    Third Party Beneficiary...................................................    62

 

         SECTION 11.21.    Control Rights............................................................    63

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EXHIBIT

 

      Exhibit A Form of Class A Note

 

SCHEDULE

 

      Schedule A Perfection Representations, Warranties and Covenants

 

                                      -v-

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      INDENTURE dated as of August 25, 2004, between CREDIT ACCEPTANCE AUTO

DEALER LOAN TRUST 2004-1, a Delaware statutory trust (the "Issuer"), and

JPMORGAN CHASE BANK, a New York banking corporation, as trust collateral agent

(the "Trust Collateral Agent") and as indenture trustee (the "Indenture

Trustee").

 

      Each party agrees as follows for the benefit of the other party and for

the equal and ratable benefit of the Holders of the Issuer's $100,000,000 Class

A 2.53% Asset Backed Notes (the "Class A Notes"), the Class A Insurer and the

Backup Insurer:

 

                                  GRANTING CLAUSE

 

      The Issuer hereby grants to the Indenture Trustee for the benefit of

itself, the Class A Insurer, the Backup Insurer and the Class A Noteholders, as

their respective interests may appear, a first-priority perfected security

interest in all property of the Issuer, including all of the Issuer's right,

title and interest in and to the following collateral (the "Collateral") now

owned or hereafter acquired, which Collateral shall be held by the Trust

Collateral Agent on behalf of the Indenture Trustee, subject to the lien of this

Indenture:

 

      (i) all right, title, and interest of the Issuer in and to the Dealer

Loans listed on Schedule A to the Sale and Servicing Agreement, and listed on

any addendum to Schedule A delivered by the Seller during the Revolving Period;

and proceeds thereof;

 

      (ii) certain rights under the Dealer Agreements listed on Schedule A to

the Sale and Servicing Agreement, and listed on any addendum to Schedule A

delivered by the Seller during the Revolving Period, including Credit

Acceptance's right to service the Dealer Loans and Contracts and receive the

related servicing fee and receive reimbursement of certain recovery and

repossession expenses, in accordance with the terms of the Dealer Agreements

(other than the Excluded Dealer Agreement Rights);

 

      (iii) Collections (other than Dealer Collections) after the applicable

Cut-off Date;

 

      (iv) a security interest in each Contract listed on Schedule A to the Sale

and Servicing Agreement, and listed on any addendum to Schedule A delivered by

the Seller during the Revolving Period;

 

      (v) all records and documents relating to the Dealer Loans and the

Contracts;

 

      (vi) all security interests purporting to secure payment of the Dealer

Loans;

 

       (vii) all security interests purporting to secure payment of the Contracts

(including a security interest in each Financed Vehicle);

 

      (viii) all guarantees, insurance (including insurance insuring the

priority or perfection of any Contract) or other agreements or arrangements

securing the Contracts;

 

      (ix) all rights under the Contribution Agreement;

 

<PAGE>

 

      (x) the Collection Account, the Reserve Account, the Principal Collection

Account and the Note Distribution Account, amounts on deposit in those accounts

and Eligible Investments of amounts in deposit in those accounts;

 

      (xi) the Issuer's rights under the Sale and Servicing Agreement; and

 

      (xii) all proceeds of the foregoing.

 

      Such grant shall include all rights, powers and options (but none of the

obligations) of the Issuer, including the immediate and continuing right to

claim for, collect, receive and give receipt for principal and interest payments

in respect of the Collateral and all other moneys payable thereunder, to give

and receive notices and other communications, to make waivers or other

agreements, to exercise all rights and options, to bring proceedings in the name

of the Issuer or otherwise and generally to do and receive anything that the

Issuer is or may be entitled to do or receive thereunder or with respect

thereto.

 

      The Indenture Trustee hereby acknowledges such grant, accepts the trusts

under this Indenture in accordance with the provisions of this Indenture and

agrees to perform its duties required in this Indenture to the best of its

ability to the end that the interests of the parties and the Class A

Noteholders, the Class A Insurer and the Backup Insurer, recognizing the

priorities of their respective interests, may be adequately and effectively

protected.

 

      The Indenture Trustee, solely in its capacity as the named secured party

or assignee of secured party on financing statements naming Credit Acceptance,

the Seller or the Issuer as debtor or seller, acknowledges that in that capacity

it is acting as a representative, within the meaning of Section 9-502(a)(2) of

the UCC, for itself, the Trust Collateral Agent, the Class A Noteholders, the

Class A Insurer, the Backup Insurer, the Issuer and the Seller, to the extent

and as their interests as secured parties with security interests in the

collateral indicated on such financing statements may be.

 

      It is the intention of the Issuer and the Indenture Trustee that this

grant constitutes a grant or assignment of a valid, first priority security

interest in the Issuer's rights in the Collateral, free and clear of all Liens

(other than the security interest granted herein) to the Indenture Trustee. This

Agreement shall be deemed to create a security interest and deemed to be a

security agreement with respect to the Collateral within the meaning of Article

1, Article 8 and Article 9 of the Uniform Commercial Code as in effect in the

States of New York and Michigan and under the law of all jurisdictions governing

the creation and perfection of security interests in the Collateral.

 

                                   ARTICLE I

                   Definitions and Incorporation by Reference

 

      SECTION 1.1 Definitions.

 

      (a)Except as otherwise specified herein, the following terms have the

respective meanings set forth below for all purposes of this Indenture.

 

                                     - 2 -

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      (b) Capitalized terms used herein and not otherwise defined herein shall

have the meanings assigned to them in the Sale and Servicing Agreement or the

Trust Agreement.

 

      "Act" has the meaning specified in Section 11.3(a).

 

      "Authorized Officer" means, with respect to the Issuer, any officer or

agent acting pursuant to a power of attorney of the Owner Trustee or, with

respect to the Servicer, any officer or agent of the Servicer, and who is

identified on the list of Authorized Officers delivered by each of the Owner

Trustee and the Servicer to the Indenture Trustee, the Backup Servicer, the

Class A Insurer and the Backup Insurer on the Closing Date (as such list may be

modified or supplemented from time to time thereafter).

 

      "Class A Termination Date" means the date on which: (i) all amounts owing

to the Class A Noteholders and, as certified in writing by the relevant party to

the Owner Trustee, the Class A Insurer, the Indenture Trustee, the Trust

Collateral Agent, the Owner Trustee, the Backup Servicer and the Backup Insurer

under the Basic Documents are paid in full; and (ii) the Class A Note Insurance

Policy and the Backup Insurance Policy have expired in accordance with their

respective terms and have been returned to the Class A Insurer and the Backup

Insurer, as applicable, for cancellation.

 

      "Class A Notes" means the 2.53% Class A Asset Backed Notes of the Issuer,

substantially in the form of Exhibit A hereto.

 

      "Class A Note Rate" means 2.53% per annum (computed on the basis of a

360-day year of twelve 30-day months and assuming the Distribution Date is on

the 15th of each month).

 

      "Clearing Agency" means the Depository Trust Company or its successor,

which shall be an organization registered as a "clearing agency" pursuant to

Section 17A of the Securities Exchange Act of 1934, as amended.

 

      "Clearing Agency Participant" means the Depository Trust Company, and its

successors, each of which shall be a broker, dealer, bank or other financial

institution or other Person for whom from time to time a Clearing Agency effects

book-entry transfers and pledges of securities deposited with the Clearing

Agency.

 

      "Code" means the Internal Revenue Code of 1986, as amended from time to

time, and treasury regulations promulgated thereunder.

 

      "Collateral" has the meaning set forth in Granting Clause.

 

      "Controlling Party" means, prior to the Class A Termination Date: (i) so

long as no Class A Insurer Default has occurred and is continuing, the Class A

Insurer; and (ii) after the occurrence and during the continuance of a Class A

Insurer Default, so long as no Backup Insurer Default has occurred and is

continuing, the Backup Insurer.

 

      "Exchange Act" means the Securities Exchange Act of 1934, as amended.

 

                                     - 3 -

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      "Excluded Dealer Agreement Rights" means, with respect to any Dealer

Agreement listed on Schedule A to the Sale and Servicing Agreement, or listed on

any addendum thereto, the rights of Credit Acceptance thereunder related to

loans made to the related Dealer which are not Dealer Loans owned by the Issuer,

including rights of set-off and rights of indemnification, related to such

loans.

 

      "Executive Officer" means, with respect to any corporation, the Chairman

of the Board, the Vice Chairman, Chief Executive Officer, Chief Financial

Officer, President, Executive Vice President, any Vice President, the Secretary,

Assistant Secretary, the Treasurer, Assistant Treasurer, or Controller of such

corporation; and with respect to any partnership, any general partner thereof.

 

      "Indebtedness" means, with respect to any Person at any time, (a)

indebtedness or liability of such Person for borrowed money whether or not

evidenced by bonds, debentures, notes or other instruments, or for the deferred

purchase price of property or services (including trade obligations); (b)

obligations of such Person as lessee under leases which should have been or

should be, in accordance with generally accepted accounting principles, recorded

as capital leases; (c) current liabilities of such Person in respect of unfunded

vested benefits under plans covered by Title IV of ERISA; (d) obligations issued

for or liabilities incurred on the account of such Person; (e) obligations or

liabilities of such Person arising under acceptance facilities; (f) obligations

of such Person under any guarantees, endorsements (other than for collection or

deposit in the ordinary course of business) and other contingent obligations to

purchase, to provide funds for payment, to supply funds to invest in any Person

or otherwise to assure a creditor against loss; (g) obligations of such Person

secured by any lien on property or assets of such Person, whether or not the

obligations have been assumed by such Person; provided that the amount of such

indebtedness if not so assumed shall in no event be deemed to be greater than

the fair market value from time to time (as reasonably determined in good faith

by the Issuer) of the property subject to such lien; or (h) obligations of such

Person under any interest rate or currency exchange agreement.

 

      "Indenture" means this Indenture as amended and supplemented from time to

time.

 

      "Indenture Default" means any occurrence that is, or with notice or the

lapse of time or both would become, an Indenture Event of Default.

 

      "Indenture Event of Default" has the meaning given such term in Section

5.1 herein.

 

      "Indenture Trustee" means JPMorgan Chase Bank, a New York banking

corporation, not in its individual capacity but as trustee under this Indenture,

or any successor trustee under this Indenture.

 

      "Independent" means, when used with respect to any specified Person, that

the Person (a) is in fact independent of the Issuer, the Originator, any other

obligor upon the Class A Notes, the Seller and any Affiliate of any of the

foregoing Persons, (b) does not have any direct financial interest or any

material indirect financial interest in the Issuer, the Originator, any such

 

                                     - 4 -

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other obligor, the Seller or any Affiliate of any of the foregoing Persons and

(c) is not connected with the Issuer, the Originator, any such other obligor,

the Seller or any Affiliate of any of the foregoing Persons as an officer,

employee, promoter, underwriter, trustee, partner, director or Person performing

similar functions.

 

      "Independent Certificate" means a certificate or opinion to be delivered

to the Indenture Trustee, the Class A Insurer and the Backup Insurer under the

circumstances described in, and otherwise complying with, the applicable

requirements of Section 11.1, prepared by an Independent appraiser or other

expert appointed by an Issuer Order and approved by the Indenture Trustee, and

prior to the Class A Termination Date, the Controlling Party, in the exercise of

reasonable care, which opinion or certificate shall state that the signer has

read the definition of "Independent" in this Indenture and that the signer is

Independent within the meaning thereof.

 

      "Issuer" means the party named as such in this Indenture until a successor

replaces it and, thereafter, means the successor and, for purposes of any

provision contained herein, each other obligor on the Class A Notes.

 

      "Issuer Order" and "Issuer Request" means a written order or request

signed in the name of the Issuer by any one of its Authorized Officers and

delivered to the Indenture Trustee a copy of which shall be delivered to the

Class A Insurer and the Backup Insurer.

 

      "Issuer Secured Obligations" means all amounts and obligations which the

Issuer may at any time owe to or on behalf of the Class A Insurer, the Backup

Insurer and the Indenture Trustee for the benefit of the Indenture Trustee and

the Class A Noteholders under this Indenture, the Class A Notes or the other

Basic Documents.

 

      "Majority Noteholders" means the Holders of a majority by principal amount

of the outstanding Class A Notes.

 

      "Note" means a Class A Note.

 

      "Note Owner" means, with respect to any Note registered in the name of the

Clearing Agency or its nominee, the Person who is the beneficial owner of such

Class A Note, as reflected on the books of the Clearing Agency (directly as a

Clearing Agency Participant or as an indirect participant, in each case in

accordance with the rules of such Clearing Agency).

 

      "Note Register" and "Note Registrar" mean the register maintained and the

registrar appointed pursuant to Section 2.3 hereof.

 

      "Noteholder", "Holder" or "Class A Noteholder" means the Person in whose

name a Class A Note shall be registered in the Note Register, except that,

solely for the purposes of giving any consent, waiver, request, or demand

pursuant to the Basic Documents, the interest evidenced by any Class A Note

registered in the name of the Seller, the Servicer, or any person controlling,

controlled by, or under common control with the Seller or the Servicer, shall

not be taken into account in determining whether the requisite percentage

necessary to effect any such consent, waiver, request, or demand shall have been

obtained.

 

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      "Officer's Certificate" means a certificate signed by any Authorized

Officer of the Owner Trustee, under the circumstances described in, and

otherwise complying with, the applicable requirements of Section 11.1 hereof.

 

      "Opinion of Counsel" means one or more written opinions of counsel who

may, except as otherwise expressly provided in this Indenture, or as otherwise

required by the Indenture Trustee or the Controlling Party, be employees of or

counsel to the Issuer and who shall be reasonably satisfactory to the Indenture

Trustee and the Controlling Party, and which shall comply with any applicable

requirements of Section 11.1 hereof, and shall be in form and substance

reasonably satisfactory to the Indenture Trustee and the Controlling Party.

 

      "Outstanding" means, as of the date of determination, all Class A Notes

theretofore authenticated and delivered under this Indenture except:

 

            (i) Class A Notes theretofore canceled by the Note Registrar or

      delivered to the Note Registrar for cancellation;

 

             (ii) Class A Notes or portions thereof the payment for which money

      in the necessary amount has been theretofore deposited with the Indenture

      Trustee or any Paying Agent in trust for the Holders of such Notes

      (provided, however, that if such Class A Notes are to be redeemed, notice

      of such redemption has been duly given pursuant to this Indenture); and

 

            (iii) Class A Notes in exchange for or in lieu of other Class A

      Notes which have been authenticated and delivered pursuant to this

      Indenture unless proof satisfactory to the Indenture Trustee is presented

      that any such Class A Notes are held by a bona fide purchaser;

 

provided, however, that (x) in determining whether the Holders of the requisite

Outstanding Amount of the Class A Notes have given any request, demand,

authorization, direction, notice, consent or waiver hereunder or under any Basic

Document, Class A Notes owned by the Issuer, the Servicer, any other obligor

upon the Class A Notes, the Seller or any Affiliate of any of the foregoing

Persons shall be disregarded and deemed not to be Outstanding, except that, in

determining whether the Indenture Trustee shall be fully protected in relying

upon any such request, demand, authorization, direction, notice, consent or

waiver, only Class A Notes that a Responsible Officer of the Indenture Trustee

either actually knows to be so owned or has received written notice thereof

shall be so disregarded; provided, further, however, that Class A Notes which

have been paid with proceeds of the Class A Note Insurance Policy or the Backup

Insurance Policy shall continue to remain outstanding until the Class A Insurer

or the Backup Insurer, as applicable, has been paid as subrogee hereunder or

reimbursed pursuant to the Insurance Agreement, and the Class A Insurer or the

Backup Insurer, as applicable, shall be deemed to be the Holder thereof to the

extent of any payments thereon made by the Class A Insurer or the Backup

Insurer, as applicable. Class A Notes so owned that have been pledged in good

faith may be regarded as Outstanding if the pledgee establishes to the

satisfaction of the Indenture Trustee the pledgees right so to act with respect

to such Notes and that the pledgee is not the Issuer, any other obligor upon the

Class A Notes, the Seller or any Affiliate of any of the foregoing Persons and

(y) to the extent that the Indenture Trustee is a Class A Noteholder, Class

 

                                     - 6 -

<PAGE>

 

A Notes owned by the Indenture Trustee shall be disregarded for purposes of

Section 6.8(b) hereof.

 

      "Outstanding Amount" means the aggregate principal amount of all Class A

Notes Outstanding at the date of determination.

 

      "Paying Agent" means the Indenture Trustee or any other Person that meets

the eligibility standards for the Indenture Trustee specified in Section 6.12

and is authorized by the Issuer to make the payments to and distributions from

the Collection Account, the Note Distribution Account, the Reserve Account, the

Principal Distribution Account and the Certificate Distribution Account

including payment of principal of or interest on the Class A Notes on behalf of

the Issuer.

 

      "Predecessor Note" means, with respect to any particular Class A Note,

every previous Class A Note evidencing all or a portion of the same debt as that

evidenced by such particular Class A Note; and, for the purpose of this

definition, any Class A Note authenticated and delivered under Section 2.4 in

lieu of a mutilated, lost, destroyed or stolen Class A Note shall be deemed to

evidence the same debt as the mutilated, lost, destroyed or stolen Class A Note.

 

      "Proceeding" means any suit in equity, action at law or other judicial or

administrative proceeding.

 

      "Rating Agency Condition" means, with respect to any action, that each

Rating Agency shall have been given 10 days (or such shorter period as shall be

acceptable to such Rating Agency) prior notice thereof and that such Rating

Agency shall have notified the Seller, the Servicer, the Indenture Trustee, the

Owner Trustee, the Class A Insurer, the Backup Insurer and the Issuer that such

action will not result in a reduction or withdrawal of its then current rating

of the Class A Notes, without regard to the Class A Note Insurance Policy or the

Backup Insurance Policy.

 

      "Record Date" means, with respect to a Distribution Date, (i) if the Class

A Notes are held in book-entry form, the day immediately preceding such

Distribution Date; or (ii) if the Class A Notes are held in definitive form, the

last day of the calendar month preceding such Distribution Date; provided that

the Record Date with respect to the First Distribution Date shall be the Closing

Date.

 

      "Redemption Date" means, in the case of a redemption of the Class A Notes

pursuant to Section 10.1(a) hereof, the Distribution Date specified by the

Servicer or the Issuer pursuant to Section 10.1(a) hereof.

 

      "Redemption Price" means in the case of a redemption of the Class A Notes

pursuant to Section 10.1(a) hereof an amount equal to the unpaid principal

amount of the outstanding Class A Notes being redeemed plus accrued and unpaid

interest thereon to but excluding the Redemption Date plus all amounts due to

the Class A Insurer, the Backup Insurer, the Indenture Trustee, the Backup

Servicer and the Owner Trustee under the Basic Documents.

 

                                     - 7 -

<PAGE>

 

      "Related Security" means the property described in clauses (ii) through

(xii) of the Granting Clause.

 

      "Required Long-Term Debt Rating" shall be a rating on long-term unsecured

debt obligations of "Aa3" by Moody's and "AA-" by S&P (or other equivalent

rating by a nationally recognized rating agency), and any requirement that

long-term unsecured debt obligations have the "Required Long-Term Debt Rating"

shall mean that such long-term unsecured debt obligations have the foregoing

required rating.

 

      "Responsible Officer" means, with respect to the Indenture Trustee, the

Trust Collateral Agent, the Paying Agent or the Owner Trustee, any officer

within the Corporate Trust Office of the Indenture Trustee, the Trust Collateral

Agent, the Paying Agent, or the Owner Trustee, as the case may be, including any

Vice President, Assistant Vice President, Assistant Treasurer, Assistant

Secretary, Associate, Corporate Trust Officer or any other officer of the

Indenture Trustee, the Trust Collateral Agent, the Paying Agent, or the Owner

Trustee customarily performing functions similar to those performed by any of

the above designated officers and also, with respect to a particular matter, any

other officer to whom such matter is referred because of such officer's

knowledge of and familiarity with the particular subject.

 

      "Rule 144A" means Rule 144A of the Securities Act.

 

      "Sale and Servicing Agreement" means the Sale and Servicing Agreement

dated as of August 25, 2004, among the Issuer, the Seller, Credit Acceptance

Corporation, in its individual capacity and as the Servicer, the Trust

Collateral Agent/Indenture Trustee and the Backup Servicer, as the same may be

amended or supplemented from time to time in accordance with its terms.

 

      "Subsidiary" means, with respect to any Person, any corporation or other

Person (a) of which securities or other ownership interests having ordinary

voting power to elect a majority of the board of directors or other Persons

performing similar functions are at the time directly or indirectly owned by

such Person or (b) that is directly or indirectly controlled by such Person

within the meaning of control under Section 15 of the Securities Act.

 

      "Trust Collateral Agent" means, initially, JPMorgan Chase Bank, in its

capacity as collateral agent on behalf of the Indenture Trustee for the benefit

of the Class A Noteholders, the Class A Insurer and the Backup Insurer,

including its successors-in-interest, until and unless a successor Person shall

have become the Trust Collateral Agent pursuant to the Sale and Servicing

Agreement, and thereafter "Trust Collateral Agent" shall mean such successor

Person.

 

      "Trust Property" has the meaning set forth in the Trust Agreement.

 

      SECTION 1.2 Rules of Construction.

 

      Unless the context otherwise requires:

 

            (i) a term has the meaning assigned to it;

 

                                      - 8 -

<PAGE>

 

            (ii) an accounting term not otherwise defined has the meaning

      assigned to it in accordance with generally accepted accounting principles

      as in effect from time to time;

 

            (iii) "or" is not exclusive;

 

            (iv) "including" means including without limitation; and

 

            (v) words in the singular include the plural and words in the plural

      include the singular.

 

                                   ARTICLE II

 

                                     The Notes

 

        SECTION 2.1 Form.

 

The Class A Notes together with the Indenture Trustee's certificate of

authentication, shall be in definitive registered form in substantially the form

set forth in Exhibit A hereto, with such appropriate insertions, omissions,

substitutions and other variations as are required or permitted by this

Indenture and may have such letters, numbers or other marks of identification

and such legends or endorsements placed thereon as may, consistently herewith,

be determined by the officers executing such Class A Notes, as evidenced by

their execution of the Class A Notes. Any portion of the text of any Class A

Note may be set forth on the reverse thereof, with an appropriate reference

thereto on the face of the Class A Note.

 

        The Class A Notes shall be typewritten, printed, lithographed or

engraved or produced by any combination of these methods (with or without steel

engraved borders), all as determined by the officers executing such Class A

Notes, as evidenced by their execution of such Class A Notes.

 

        Each Class A Note shall be dated the date of its authentication. The

terms of the Class A Notes set forth in Exhibit A hereto are part of the terms

of this Indenture.

 

        SECTION 2.2 Execution, Authentication and Delivery.

 

The Class A Notes shall be executed on behalf of the Issuer by any of the

Authorized Officers of the Owner Trustee. The signature of any such Authorized

Officer on the Class A Notes may be manual or facsimile.

 

        Class A Notes bearing the manual or facsimile signature of individuals

who were at any time Authorized Officers of the Issuer shall bind the Issuer,

notwithstanding that such individuals or any of them have ceased to hold such

offices prior to the authentication and delivery of such Class A Notes or did

not hold such offices at the date of such Class A Notes.

 

        The Indenture Trustee shall upon receipt of the Issuer Order

authenticate and deliver the Class A Notes for original issue in an aggregate

principal amount of $100,000,000.

 

                                     - 9 -

<PAGE>

 

The aggregate outstanding principal balance of the Class A Notes at any time may

not exceed such amount.

 

      Each Class A Note shall be dated the date of its authentication. The Class

A Notes shall be issuable as registered Class A Notes in the minimum

denomination of $100,000 and integral multiples of $1,000 thereafter.

 

      It is intended that the Class A Notes be registered so as to participate

in a book-entry system with the Clearing Agency as set forth herein. The Class A

Notes shall be initially issued in the form of a single fully-registered note

with a denomination equal to the original principal balance of the Class A

Notes. Upon initial issuance, the ownership of such Notes shall be registered in

the Note Register in the name of Cede & Co., or any successor thereto, as

nominee for the Clearing Agency.

 

      No Class A Note shall be entitled to any benefit under this Indenture or

be valid or obligatory for any purpose, unless there appears on such Class A

Note a certificate of authentication substantially in the form provided for

herein executed by the Indenture Trustee by the manual signature of one of its

Responsible Officers, and such certificate upon any Class A Note shall be

conclusive evidence, and the only evidence, that such Class A Note has been duly

authenticated and delivered hereunder.

 

      SECTION 2.3 Registration of Transfer and Exchange of Class A Notes.

 

      (a) The Note Registrar shall keep or cause to be kept, at the office or

agency maintained pursuant to Section 2.7, a Note Register in which, subject to

such reasonable regulations as it may prescribe, the Indenture Trustee shall

provide for the registration of Notes and of transfers and exchanges of Class A

Notes as herein provided. The Indenture Trustee shall be the initial Note

Registrar. In the event that, subsequent to the Closing Date, the Indenture

Trustee notifies the Seller, the Class A Insurer and the Backup Insurer that it

is unable to act as Note Registrar, the Seller shall appoint another bank or

trust company, having an office or agency located in the Borough of Manhattan,

The City of New York, agreeing to act in accordance with the provisions of this

Indenture applicable to it, and otherwise acceptable to the Indenture Trustee

and, prior to the Class A Termination Date, the Controlling Party, to act as

successor Note Registrar under this Indenture. If at any time the Indenture

Trustee is not the Note Registrar, the Note Registrar shall make available to

the Indenture Trustee ten (10) days prior to each Distribution Date and at such

other times as the Indenture Trustee may reasonably request the names and

addresses of the Holders as they appear in the Note Register.

 

      No sale, pledge or other transfer of a Class A Note shall be made unless

such sale, pledge or other transfer is (A) pursuant to an effective registration

statement under the Securities Act, (B) for so long as the Class A Notes are

eligible for resale pursuant to Rule 144A to a Person the transferor reasonably

believes after due inquiry is a "qualified institutional buyer" as defined in

Rule 144A that purchases for its own account or for the account of a qualified

institutional buyer to whom notice is given that the transfer is being made in

reliance on Rule 144A, or (C) pursuant to another available exemption from the

registration requirements of the Securities Act, the Investment Company Act of

1940, as amended and any applicable state securities and blue sky laws or is

made in accordance with said Act and state laws. The Indenture

 

                                     - 10 -

<PAGE>

 

Trustee may require an opinion of counsel to be delivered to it in connection

with any transfer of the Class A Notes pursuant to clauses (A) or (C) above.

 

      Under no circumstances may an institutional "accredited investor" within

Regulation D of the Securities Act take delivery in the form of a beneficial

interest in a book-entry Class A Note if such purchaser is not a "qualified

institutional buyer" as defined under Rule 144A under the Securities Act.

 

      If definitive Class A Notes are issued, the Class A Notes may not be

transferred, directly or indirectly, to any Person unless (A) the transferee of

the Class A Note certifies in a certificate to the Issuer and the Indenture

Trustee that such Person is a "qualified institutional buyer" as defined in Rule

144A or (B) the transferee of the Class A Note delivers to the Indenture Trustee

and the Issuer an opinion of counsel that such transfer is permitted pursuant to

clause (A) or (C) above.

 

      All opinions of counsel required in connection with any transfer shall be

by counsel reasonably acceptable to the Indenture Trustee.

 

      The transferee of each Class A Note shall be deemed to represent and

warrant that, with respect to the source of funds to be used by such transferee

to acquire this Class A Note (the "Source") either (a) such Source is not an

"employee benefit plan" (within the meaning of Section 3(3) of ERISA), a "plan"

(within the meaning of Section 4975(e)(1) of the Code) or a plan that is subject

to any substantively similar provision of any federal, state or local law, or a

person using assets of any such plan, or (b) the acquisition and holding of the

Class A Notes by such Source will not constitute or result in a nonexempt

prohibited transaction under Section 406 of ERISA, Section 4975 of the Code or

any substantively similar provision of any federal, state or local law.

 

      Neither the Issuer nor the Indenture Trustee is obligated to register the

Class A Notes under the Securities Act or any other securities law. Any transfer

in violation of the provisions of this Section 2.3 shall be void ab initio.

 

      (b) If an election is made to hold Class A Notes in book-entry form, the

Class A Notes shall be registered in the name of a nominee designated by the

Clearing Agency (and may be aggregated as to denominations with other Class A

Notes held by the Clearing Agency). With respect to Class A Notes held in

book-entry form:

 

            (i) the Note Registrar, the Class A Insurer, the Backup Insurer, the

  Trust Collateral Agent and the Indenture Trustee will be entitled to deal with

  the Clearing Agency for all purposes of this Indenture (including the payment

  of principal of and interest on the Class A Notes and the giving of

  instructions or directions hereunder) as the sole holder of the Class A Notes,

  and shall have no obligation to the Note Owners;

 

            (ii) the rights of Note Owners will be exercised only through the

  Clearing Agency and will be limited to those established by law and agreements

  between such Note Owners and the Clearing Agency and/or the Clearing Agency

  Participants pursuant to the Depository Agreement;

 

                                      - 11 -

<PAGE>

 

            (iii) whenever this Indenture or any of the Basic Documents requires

  or permits actions to be taken based upon instructions or directions of

  Holders of Class A Notes evidencing a specified percentage of the Class A Note

  Balance, the Clearing Agency will be deemed to represent such percentage only

  to the extent that it has received instructions to such effect from Note

  Owners and/or Clearing Agency Participants owning or representing,

  respectively, such required percentage of the beneficial interest in the Class

  A Notes and has delivered such instructions to the Indenture Trustee; and

 

            (iv) without the consent of the Seller and the Indenture Trustee, no

  such Class A Note may be transferred by the Clearing Agency except to a

  successor Clearing Agency that agrees to hold such Note for the account of the

  Note Owners or except upon the election of the Note Owner thereof or a

  subsequent transferee to hold such Class A Note in physical form.

 

       None of the Indenture Trustee, the Note Registrar, the Class A Insurer or

the Backup Insurer shall have any responsibility to monitor or restrict the

transfer of beneficial ownership in any Note an interest in which is

transferable through the facilities of the Clearing Agency.

 

      If (i)(A) the Issuer advises the Indenture Trustee in writing that the

Clearing Agency is no longer willing or able to properly discharge its

responsibilities with respect to the Class A Notes as described in the

Depository Agreement and (B) the Issuer is unable to locate a qualified

successor, (ii) the Issuer at its option advises the Indenture Trustee in

writing that it elects to terminate the book-entry system through the Clearing

Agency, or (iii) Note Owners representing beneficial interests in Class A Notes

aggregating not less than a majority of the Class A Note Balance advise the

Indenture Trustee and the Clearing Agency through the Clearing Agency

Participants in writing that the continuation of a book-entry system through the

Clearing Agency with respect to such class is no longer in the best interests of

the related Note Owners, then the Indenture Trustee shall notify all such Note

Owners, through the Clearing Agency, and the Class A Insurer and the Backup

Insurer of the occurrence of any such event and of the availability of

definitive Class A Notes to such Note Owners requesting the same. Upon surrender

to the Indenture Trustee of the related Class A Notes by the Clearing Agency

accompanied by registration instructions from the Clearing Agency, the Indenture

Trustee shall issue definitive Class A Notes and deliver such definitive Notes

in accordance with the instructions of the Clearing Agency. None of the Issuer,

the Note Registrar, the Class A Insurer, the Backup Insurer nor the Indenture

Trustee shall be liable for any delay in delivery of such instructions and may

conclusively rely on, and shall be protected in relying on, such instructions.

Upon the issuance of definitive Class A Notes, the Indenture Trustee shall

recognize the Holders of the definitive Class A Notes as Noteholders hereunder.

The Indenture Trustee shall not be liable if the Seller is unable to locate a

qualified successor Clearing Agency.

 

      (c)In order to preserve the exemption for resales and transfers provided

by Rule 144A, the Issuer shall provide to any Holder of a Class A Note and any

prospective purchaser designated by such Holder, upon request of such Holder or

such prospective purchaser, such information required by Rule 144A as will

enable the resale of such Class A Note to be made pursuant to Rule 144A. The

Servicer and the Indenture Trustee shall cooperate

 

                                     - 12 -

<PAGE>

 

with the Issuer in providing the Issuer such information regarding the Class A

Notes, the Collateral and other matters regarding the Trust as the Issuer shall

reasonably request to meet its obligations under the preceding sentence.

 

      (d) Upon surrender for registration of transfer of any Class A Note at the

Corporate Trust Office, the Indenture Trustee shall, subject to Section 2.3(a),

authenticate, and deliver, in the name of the designated transferee or

transferees, one or more new Class A Notes in authorized denominations of a like

aggregate amount dated the date of authentication by the Indenture Trustee. At

the option of a Holder, Class A Notes may be exchanged for other Class A Notes

of authorized denominations of a like aggregate amount upon surrender of the

Class A Notes to be exchanged at the Corporate Trust Office.

 

       (e) Every Class A Note presented or surrendered for registration of

transfer or exchange shall be accompanied by a written instrument of transfer in

form satisfactory to the Indenture Trustee and the Note Registrar duly executed

by the Holder or his attorney duly authorized in writing. Each Class A Note

surrendered for registration of transfer or exchange shall be cancelled and

subsequently disposed of by the Indenture Trustee in accordance with its

customary practice.

 

      (f)No service charge shall be made for any registration of transfer or

exchange of Class A Notes, but the Indenture Trustee may require payment of a

sum sufficient to cover any tax or governmental charge that may be imposed in

connection with any transfer or exchange of Class A Notes.

 

      (g)Subject to Article IX hereof, the Class A Notes and this Indenture may

be amended or supplemented from time to time, prior to the Class A Termination

Date, with the consent of the Controlling Party, and in certain circumstances

the Backup Insurer, but without the consent of any of the Class A Noteholders,

to modify restrictions on and procedures for resale and other transfers of the

Class A Notes to reflect any change in applicable law or regulations (or the

interpretation thereof) or practices relating to the resale or transfer of

restricted securities generally.

 

      SECTION 2.4 Mutilated, Destroyed, Lost, or Stolen Notes.

 

If (a) any mutilated Class A Note shall be surrendered to the Note Registrar, or

if the Note Registrar shall receive evidence to its satisfaction of the

destruction, loss, or theft of any Class A Note and (b) there shall be delivered

to the Note Registrar, the Class A Insurer, the Backup Insurer, the Issuer and

the Indenture Trustee such security or indemnity (an unsecured indemnity

agreement of a Class A Noteholder with a net worth at least equal to

$200,000,000 containing terms reasonably satisfactory to the Indenture Trustee

and the Controlling Party being sufficient for such security or indemnity

requirement), as may be required by them to save each of them and the Issuer

harmless, then in the absence of notice that such Note shall have been acquired

by a bona fide purchaser, the Owner Trustee on behalf of the Issuer shall

execute and the Indenture Trustee shall authenticate and deliver, in exchange

for or in lieu of any such mutilated, destroyed, lost, or stolen Class A Note, a

new Class A Note of like tenor and denomination. In connection with the issuance

of any new Class A Note under this Section, the Indenture Trustee and the Note

Registrar may require the payment of a sum sufficient to cover any tax or other

 

                                     - 13 -

<PAGE>

 

governmental charge that may be imposed in connection therewith. The Indenture

Trustee may charge such Holder for its expenses (including without limitation

the fees and expenses of its counsel) in replacing a Class A Note. Any duplicate

Class A Note issued pursuant to this Section shall constitute conclusive

evidence of ownership of such Class A Note, as if originally issued, whether or

not the lost, stolen, or destroyed Class A Note shall be found at any time.

 

      SECTION 2.5 Persons Deemed Owners.

 

The Issuer, the Indenture Trustee, the Trust Collateral Agent, the Note

Registrar and any agent of the Issuer, the Indenture Trustee or the Note

Registrar may treat the Person in whose name any Class A Note shall be

registered as the owner of such Class A Note for the purpose of receiving

distributions pursuant to Section 5.08 of the Sale and Servicing Agreement and

Section 5.2 hereof and for all other purposes whatsoever, and neither the

Issuer, the Indenture Trustee, the Trust Collateral Agent, the Class A Insurer,

the Backup Insurer nor the Note Registrar nor any such agent shall be bound by

any notice to the contrary.

 

      SECTION 2.6 Access to List of Noteholders' Names and Addresses.

 

The Indenture Trustee shall furnish or cause to be furnished to the Servicer,

the Class A Insurer or the Backup Insurer, within 15 days after receipt by the

Indenture Trustee of a request therefor from the Servicer, the Class A Insurer

or the Backup Insurer in writing, a list, in such form as the Servicer, Class A

Insurer or the Backup Insurer may reasonably require, of the names and addresses

of the Class A Noteholders as of the most recent Record Date. If three or more

Class A Noteholders, or one or more Holders of Notes aggregating not less than

10% of the Class A Note Balance, apply in writing to the Indenture Trustee, and

such application states that the applicants desire to communicate with other

Noteholders with respect to their rights under this Indenture or under the Class

A Notes and such application shall be accompanied by a copy of the communication

that such applicants propose to transmit, then the Indenture Trustee shall,

within five Business Days after the receipt of such application, make available

to such Class A Noteholders access during normal business hours to the current

list of Class A Noteholders. Each Holder, by receiving and holding a Class A

Note, shall be deemed to have agreed to hold none of the Servicer, the Class A

Insurer, the Backup Insurer nor the Indenture Trustee accountable by reason of

the disclosure of its name and address, regardless of the source from which such

information was derived.

 

      SECTION 2.7 Maintenance of Office or Agency.

 

The Indenture Trustee shall maintain in New York, New York, an office or offices

or agency or agencies where Class A Notes may be surrendered for registration of

transfer or exchange and an office in New York, New York, where notices and

demands to or upon the Indenture Trustee in respect of the Class A Notes and

this Indenture may be served. The Indenture Trustee initially designates the

Corporate Trust Office as specified in this Indenture as its office for such

purposes. The Indenture Trustee shall give prompt written notice to the

Servicer, the Class A Insurer, the Backup Insurer and to Class A Noteholders of

any change in the location of the Note Register or any such office or agency.

 

                                      - 14 -

<PAGE>

 

      SECTION 2.8 Payment of Principal and Interest; Defaulted Interest.

 

      (a) The Class A Notes shall accrue interest as provided in the form of the

Class A Note set forth in Exhibit A hereto and such interest shall be due and

payable on each Distribution Date as specified therein. Any installment of

interest or principal, if any, payable on any Class A Note which is punctually

paid or duly provided for by the Issuer on the applicable Distribution Date or

on the Stated Final Maturity shall be paid as set forth in Section 5.09(a) of

the Sale and Servicing Agreement.

 

      (b) The principal of each Class A Note shall be payable in installments on

each Distribution Date as provided in the form of the Class A Note set forth in

Exhibit A hereto. Notwithstanding the foregoing, the entire unpaid principal

amount of the Class A Notes, and all accrued interest thereon, shall become due

and payable, if not previously paid, upon the acceleration thereof after the

occurrence of an Indenture Event of Default in the manner provided in Section

5.2. All principal payments on the Class A Notes shall be made as provided in

Section 5.2 and in Section 5.09(a) of the Sale and Servicing Agreement, as

applicable. Upon written notice from the Issuer, the Indenture Trustee shall

notify the Person in whose name a Class A Note is registered at the close of

business on the Record Date preceding the Distribution Date on which the Issuer

expects that the final installment of principal of and interest on such Class A

Note will be paid. Such notice shall be mailed or transmitted by facsimile prior

to such final Distribution Date and shall specify that such final installment

will be payable only upon presentation and surrender of such Class A Note and

shall specify the place where such Class A Note may be presented and surrendered

for payment of such installment. Notices in connection with redemptions of Class

A Notes shall be mailed to Noteholders as provided in Section 10.2.

 

      (c) If the Issuer defaults in a payment of interest on the Class A Notes,

such defaulted interest shall itself bear interest (to the extent lawful) at the

Class A Note Rate. Such defaulted interest (and such interest thereon) shall be

paid on subsequent Distribution Dates pursuant to Section 5.09 of the Sale and

Servicing Agreement, or as otherwise set forth below.

 

      SECTION 2.9 Release of Collateral.

 

The Indenture Trustee shall, on or after the Class A Termination Date, release

and shall cause the Trust Collateral Agent to release any remaining portion of

the Trust Property from the lien created by this Indenture and shall cause the

Trust Collateral Agent to deposit in the Collection Account any funds then on

deposit in any other Trust Account. The Indenture Trustee shall release property

from the lien created by this Indenture pursuant to this Section only upon

receipt by the Indenture Trustee, the Class A Insurer and the Backup Insurer of

an Issuer Request accompanied by an Officer's Certificate and an Opinion of

Counsel meeting the applicable requirements of Section 11.1.

 

                                  ARTICLE III

 

                    Covenants, Representations and Warranties

 

      SECTION 3.1 Payment of Principal and Interest.

 

                                     - 15 -

<PAGE>

 

The Issuer will duly and punctually pay the principal of and interest on the

Class A Notes in accordance with the terms of the Class A Notes and this

Indenture. Without limiting the foregoing and in accordance with the terms set

forth in Section 5.09(a) of the Sale and Servicing Agreement, the Issuer will

cause to be distributed to the Class A Noteholders all amounts on deposit in the

Note Distribution Account on each Distribution Date deposited therein pursuant

to the Sale and Servicing Agreement for the benefit of the Class A Notes, to the

Class A Noteholders. Amounts properly withheld under the Code by any Person from

a payment to any Class A Noteholder of interest and/or principal shall be

considered as having been paid by the Issuer to such Class A Noteholder for all

purposes of this Indenture.

 

      SECTION 3.2 Maintenance of Office or Agency.

 

For so long as the Indenture Trustee is the transfer agent, the Issuer will

maintain in New York, New York, an office or agency where Class A Notes may be

surrendered for registration of transfer or exchange, and an office in New York,

New York where notices and demands to or upon the Issuer in respect of the Class

A Notes and this Indenture may be served. The Issuer hereby initially appoints

the Indenture Trustee to serve as its agent for the foregoing purposes. The

Issuer will give prompt written notice to the Indenture Trustee, the Class A

Insurer and the Backup Insurer of the location, and of any change in the

location, of any such office or agency. If at any time the Issuer shall fail to

maintain any such office or agency or shall fail to furnish the Indenture

Trustee or the Class A Insurer and the Backup Insurer with the address thereof,

such surrenders, notices and demands may be made or served at the Corporate

Trust Office, and the Issuer hereby appoints the Indenture Trustee as its agent

to receive all such surrenders, notices and demands.

 

      SECTION 3.3 Money for Payments to be Held in Trust.

 

On or before each Distribution Date and Redemption Date, the Issuer shall

deposit or cause to be deposited in the Note Distribution Account from the

Collection Account, a sum sufficient to pay the amounts then becoming due under

the Class A Notes, such sum to be held in trust for the benefit of the Persons

entitled thereto and (unless the Paying Agent is the Indenture Trustee) shall

promptly notify the Indenture Trustee of its action or failure so to act.

 

      The Issuer will cause each Paying Agent other than the Indenture Trustee

to execute and deliver to the Indenture Trustee, the Class A Insurer and the

Backup Insurer an instrument in which such Paying Agent shall agree with the

Indenture Trustee (and if the Indenture Trustee acts as Paying Agent, it hereby

so agrees), subject to the provisions of this Section, that such Paying Agent

will:

 

            (i) hold all sums held by it for the payment of amounts due with

  respect to the Class A Notes in trust for the benefit of the Persons entitled

  thereto until such sums shall be paid to such Persons or otherwise disposed of

  as herein provided and pay such sums to such Persons as herein provided;

 

            (ii) give the Indenture Trustee, the Class A Insurer and the Backup

  Insurer written notice of any default by the Issuer of which a Responsible

  Officer has

 

                                     - 16 -

<PAGE>

 

      actual knowledge (or any other obligor upon the Class A Notes) in the

      making of any payment required to be made with respect to the Class A

      Notes;

 

            (iii) at any time during the continuance of any such default, upon

      the written request of the Indenture Trustee, or, prior to the Class A

      Termination Date, the Controlling Party, forthwith pay to the Indenture

      Trustee all sums so held in trust by such Paying Agent;

 

            (iv) immediately resign as a Paying Agent and forthwith pay to the

      Indenture Trustee all sums held by it in trust for the payment of Class A

      Notes if at any time it ceases to meet the standards required to be met by

      a Paying Agent at the time of its appointment; and

 

            (v) comply with all requirements of the Code with respect to the

      withholding from any payments made by it on any Class A Notes of any

      applicable withholding taxes imposed thereon and with respect to any

      applicable reporting requirements in connection therewith in each case, as

      instructed by the Issuer.

 

        The Issuer may at any time, for the purpose of obtaining the

satisfaction and discharge of this Indenture or for any other purpose, by Issuer

Order direct any Paying Agent to pay to the Indenture Trustee all sums held in

trust by such Paying Agent, such sums to be held by the Indenture Trustee upon

the same trusts as those upon which the sums were held by such Paying Agent; and

upon such a payment by any Paying Agent to the Indenture Trustee, such Paying

Agent shall be released from all further liability with respect to such money.

 

        Subject to applicable laws with respect to the escheat of funds, any

money held by the Indenture Trustee or any Paying Agent in trust for the payment

of any amount due with respect to any Class A Note and remaining unclaimed for

two years after such amount has become due and payable shall be discharged from

such trust and be paid to the Issuer on Issuer Request, with the written consent

of the Controlling Party if the Class A Termination Date has not occurred; and

the Holder of such Class A Note shall thereafter, as an unsecured general

creditor, look only to the Issuer for payment thereof (but only to the extent of

the amounts so paid to the Issuer), and all liability of the Indenture Trustee

or such Paying Agent with respect to such trust money shall thereupon cease;

provided, however, that the Indenture Trustee or such Paying Agent, before being

required to make any such repayment, shall at the expense of the Issuer cause to

be published once, in a newspaper published in the English language, customarily

published on each Business Day and of general circulation in The City of New

York, notice that such money remains unclaimed and that, after a date specified

therein, which shall not be less than 30 days from the date of such publication,

any unclaimed balance of such money then remaining will be repaid to the Issuer.

The Indenture Trustee shall also adopt and employ, at the expense of the Issuer,

any other reasonable means of notification of such repayment (including, but not

limited to, mailing notice of such repayment to Holders whose Class A Notes have

been called but have not been surrendered for redemption or whose right to or

interest in moneys due and payable but not claimed is determinable from the

records of the Indenture Trustee or of any Paying Agent, at the last address of

record for each such Holder).

 

         SECTION 3.4 Existence.

 

                                     - 17 -

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Except as otherwise permitted by the provisions of Section 3.10, the Issuer will

keep in full effect its existence, rights and franchises as a statutory trust

under the laws of the State of Delaware and will obtain and preserve its

qualification to do business in each jurisdiction in which such qualification is

or shall be necessary to protect the validity and enforceability of this

Indenture, the Class A Notes, the Collateral and each other instrument or

agreement included in the Trust Property.

 

        SECTION 3.5 Protection of Trust Property.

 

The Issuer intends the security interest granted pursuant to this Indenture in

favor of the Indenture Trustee, the Class A Noteholders, the Class A Insurer and

the Backup Insurer to be prior to all other liens in respect of the Trust

Property, and the Issuer shall take all actions necessary to obtain and

maintain, in favor of the Indenture Trustee, for the benefit of the Class A

Noteholders, the Class A Insurer and the Backup Insurer, a first lien on and a

first priority, perfected security interest in the Trust Property. The Issuer

will from time to time prepare (or shall cause to be prepared), execute, file

and deliver all such supplements and amendments hereto and all such financing

statements, continuation statements, instruments of further assurance and other

instruments, and will take such other action necessary or advisable to:

 

            (i) grant more effectively all or any portion of the Trust Property;

 

            (ii) maintain or preserve the lien and security interest (and the

      priority thereof) in favor of the Indenture Trustee for the benefit of the

      Class A Noteholders, the Class A Insurer and the Backup Insurer created by

      this Indenture or carry out more effectively the purposes hereof;

 

            (iii) perfect, publish notice of or protect the validity of any

      grant made or to be made by this Indenture;

 

            (iv) enforce any of the Trust Property;

 

            (v) preserve and defend title to the Trust Property and the rights

      of the Indenture Trustee in such Trust Property against the claims of all

      persons and parties; and

 

            (vi) pay all taxes or assessments levied or assessed upon the Trust

      Property when due.

 

        The Issuer hereby designates and authorizes the Indenture Trustee its

agent and attorney-in-fact to execute, upon Issuer request, any financing

statement, continuation statement or other instrument required to be executed by

the Issuer pursuant to this Section.

 

        SECTION 3.6 Opinions as to Trust Property.

 

        (a)On the Closing Date, the Issuer shall furnish to the Indenture

Trustee, the Class A Insurer and the Backup Insurer an Opinion of Counsel either

stating that, in the opinion of such counsel, such action has been taken with

respect to this Indenture with respect to the filing of any financing statements

and continuation statements, as are necessary to perfect and

 

                                      - 18 -

<PAGE>

 

make effective the first priority lien and security interest in favor of the

Indenture Trustee, created by this Indenture and reciting the details of such

action, or stating that, in the opinion of such counsel, no such action is

necessary to make such lien and security interest effective.

 

      (b)Within 90 days after the beginning of each calendar year, beginning

with the first calendar year beginning more than three months after the Closing

Date, the Issuer shall furnish to the Indenture Trustee, the Class A Insurer and

the Backup Insurer an Opinion of Counsel either stating that, in the opinion of

such counsel, such action has been taken with respect to the recording, filing,

re-recording and refiling of this Indenture, any indentures supplemental hereto

and with respect to the filing of any financing statements and continuation

statements as are necessary to maintain the lien and security interest created

by this Indenture and reciting the details of such action or stating that in the

opinion of such counsel no such action is necessary to maintain such lien and

security interest. Such Opinion of Counsel shall also describe the recording,

filing, re-recording and refiling of this Indenture, any indentures supplemental

hereto and the filing of any financing statements and continuation statements

that will, in the opinion of such counsel, be required to maintain the lien and

security interest of this Indenture until the 90th day to occur in the following

calendar year.

 

       SECTION 3.7 Performance of Obligations; Servicing of Contracts.

 

      (a)The Issuer will not take any action and will use its best efforts not

to permit any action to be taken by others that would release any Person from

any of such Person's material covenants or obligations under any instrument or

agreement included in the Trust Property or that would result in the amendment,

hypothecation, subordination, termination or discharge of, or impair the

validity or effectiveness of, any such instrument or agreement, except as

ordered by any bankruptcy or other court or as expressly provided in this

Indenture, the Basic Documents or such other instrument or agreement.

 

      (b)The Issuer may contract with other Persons acceptable to the

Controlling Party or, if both a Class A Insurer Default and a Backup Insurer

Default have occurred and are continuing, the Indenture Trustee, to assist it in

performing its duties under this Indenture, and any performance of such duties

by a Person identified to the Indenture Trustee and the Controlling Party in an

Officer's Certificate of the Issuer shall be deemed to be action taken by the

Issuer. Initially, the Servicer has agreed to assist the Issuer in performing

its duties under this Indenture.

 

      (c)The Issuer will punctually perform and observe all of its obligations

and agreements contained in this Indenture, the Basic Documents and in the

instruments and agreements included in the Trust Property, including, but not

limited to, preparing (or causing to be prepared) and filing (or causing to be

filed) all UCC financing statements and continuation statements required to be

filed by the terms of this Indenture and the Sale and Servicing Agreement in

accordance with and within the time periods provided for herein and therein.

 

      (d)Upon a Responsible Officer of the Owner Trustee having actual knowledge

or written notice thereof, the Issuer shall promptly notify the Indenture

Trustee, the Class A Insurer, the Backup Insurer and the Rating Agencies of the

occurrence of a Servicer Default in accordance with Section 11.4 hereof, and

shall specify in such notice the action, if

 

                                     - 19 -

<PAGE>

 

any, the Issuer is taking in respect of such default. If a Servicer Default

shall arise from the failure of the Servicer to perform any of its duties or

obligations under the Sale and Servicing Agreement with respect to the Dealer

Loans or Contracts, the Issuer shall take all reasonable steps available to it

to remedy such failure.

 

        (e)The Issuer agrees that it will not waive timely performance or

observance by the Servicer or the Seller of their respective duties under the

Basic Documents, (x) prior to the Class A Termination Date without the prior

written consent of the Controlling Party, or (y) if the effect thereof would

adversely affect the Holders of the Class A Notes.

 

        SECTION 3.8 Negative Covenants.

 

So long as any Class A Notes are Outstanding, the Issuer shall not:

 

            (i) except as expressly permitted by this Indenture or the Basic

      Documents, sell, transfer, exchange or otherwise dispose of any of the

      properties or assets of the Issuer, including those included in the Trust

      Property, unless directed to do so by the Controlling Party;

 

            (ii) claim any credit on, or make any deduction from the principal

      or interest payable in respect of, the Class A Notes (other than amounts

      properly withheld from such payments under the Code) or assert any claim

      against any present or former Noteholder by reason of the payment of the

      taxes levied or assessed upon any part of the Trust Property; or

 

            (iii) (A) permit the validity or effectiveness of this Indenture to

      be impaired, or permit the lien in favor of the Indenture Trustee created

      by this Indenture to be amended, hypothecated, subordinated, terminated or

      discharged, or permit any Person to be released from any covenants or

      obligations with respect to the Class A Notes under this Indenture except

      as may be expressly permitted hereby, (B) permit any lien, charge, excise,

      claim, security interest, mortgage or other encumbrance (other than the

      lien of this Indenture) to be created on or extend to or otherwise arise

      upon or burden the Trust Property or any part thereof or any interest

      therein or the proceeds thereof (other than tax liens, mechanics' liens

      and other liens that arise by operation of law, in each case on a Financed

      Vehicle and arising solely as a result of an action or omission of the

      related Obligor), (C) permit the lien of this Indenture not to constitute

      a valid perfected first priority security interest in the Trust Property,

      (D) change its name, identity, state of organization or structure as a

      statutory trust in any manner that would, could or might make any

      financing statement or continuation statement filed with respect to it

      seriously misleading within the meaning of Section 9-507 of the UCC or (E)

      waive, amend, modify, supplement or terminate any Basic Document or any

      provision thereof, or fail to comply with the provisions of the Basic

      Documents, in each case, prior to the Class A Termination Date, without

      the prior written consent of the Controlling Party.

 

        SECTION 3.9 Annual Statement as to Compliance.

 

                                     - 20 -

<PAGE>

 

The Issuer will deliver to the Indenture Trustee, the Rating Agencies, the Class

A Insurer, the Backup Insurer and the Noteholders on or before April 30th of

each year beginning in the year 2005, an Officer's Certificate dated as of the

previous December 31st stating, as to the Authorized Officer signing such

Officer's Certificate, that

 

            (i) a review of the activities of the Issuer during the preceding

      12-month period (or, for the initial certificate, for such shorter period

      as may have elapsed from the initial issuance of the Class A Notes to such

      December 31st) and of performance under this Indenture has been made under

      such Authorized Officer's supervision; and

 

            (ii) to the best of such Authorized Officer's knowledge, based on

      such review, the Issuer has complied with all conditions and covenants

      under this Indenture throughout such year, or, if there has been a default

      in the compliance of any such condition or covenant, specifying each such

      default known to such Authorized Officer and the nature and status

      thereof.

 

        SECTION 3.10 Issuer May Consolidate, Etc. Only on Certain Terms.

 

        (a)The Issuer shall not consolidate or merge with or into any other

Person, unless

 

            (i) the Person (if other than the Issuer) formed by or surviving

      such consolidation or merger shall be a Person organized and existing

      under the laws of the United States of America or any State and shall

      expressly assume, by an indenture supplemental hereto, executed and

      delivered to the Indenture Trustee, in form satisfactory to the Indenture

      Trustee, and prior to the Class A Termination Date, the Controlling Party,

      the due and punctual payment of the principal of and interest on all Notes

      and the performance or observance of every agreement and covenant of this

       Indenture on the part of the Issuer to be performed or observed, all as

      provided herein;

 

            (ii) immediately after giving effect to such transaction, no Early

      Amortization Event, Indenture Default or Indenture Event of Default shall

      have occurred and be continuing;

 

            (iii) the Rating Agency Condition shall have been satisfied with

      respect to such transaction;

 

            (iv) the Issuer shall have received an Opinion of Counsel (and shall

      have delivered copies thereof to the Indenture Trustee, the Class A

      Insurer and the Backup Insurer) to the effect that such transaction will

      not have any material adverse tax consequence to the Trust, any Class A

      Noteholder, the Class A Insurer, the Backup Insurer or any

      Certificateholder;

 

            (v) any action as is necessary to maintain the Lien and security

      interest created by this Indenture shall have been taken;

 

                                     - 21 -

<PAGE>

 

            (vi) prior to the Class A Termination Date, the Issuer shall have

      given the Class A Insurer and the Backup Insurer written notice of such

      proposed consolidation or merger at least 30 Business Days prior to its

      proposed consummation, and the Controlling Party has given its prior

      written consent of such consolidation or merger; and

 

            (vii) the Issuer shall have delivered to the Indenture Trustee, the

      Class A Insurer and the Backup Insurer an Officer's Certificate and an

       Opinion of Counsel each stating that such consolidation or merger and such

      supplemental indenture comply with this Section 3.10(a) and that all

      conditions precedent herein provided for relating to such transaction have

      been complied with.

 

        (b) The Issuer shall not convey or transfer all or substantially all of

its properties or assets, including those included in the Trust Property, to any

Person, unless

 

            (i) the Person that acquires by conveyance or transfer the

       properties and assets of the Issuer the conveyance or transfer of which is

      hereby restricted shall (A) be a United States citizen or a Person

      organized and existing under the laws of the United States of America or

      any State, (B) expressly assume, by an indenture supplemental hereto,

      executed and delivered to the Indenture Trustee, in form satisfactory to

      the Indenture Trustee, and prior to the Class A Termination Date the

      Controlling Party, the due and punctual payment of the principal of and

      interest on all Class A Notes and the performance or observance of every

      agreement and covenant of this Indenture and each of the Basic Documents

      on the part of the Issuer to be performed or observed, all as provided

      herein, (C) expressly agree by means of such supplemental indenture that

      all right, title and interest so conveyed or transferred shall be subject

      and subordinate to the rights of Holders of the securities and (D) unless

      otherwise provided in such supplemental indenture, expressly agree to

      indemnify, defend and hold harmless the Issuer against and from any loss,

      liability or expense arising under or related to this Indenture and the

      Class A Notes;

 

            (ii) immediately after giving effect to such transaction, no Early

      Amortization Event, Indenture Default or Indenture Event of Default shall

      have occurred and be continuing;

 

            (iii) the Rating Agency Condition shall have been satisfied with

      respect to such transaction;

 

            (iv) the Issuer shall have received an Opinion of Counsel (and shall

      have delivered copies thereof to the Indenture Trustee, the Class A

      Insurer and the Backup Insurer) to the effect that such transaction will

      not have any material adverse tax consequence to the Trust, any Class A

      Noteholder, the Class A Insurer, the Backup Insurer or any Certificate

      holder;

 

            (v) any action as is necessary to maintain the Lien and security

      interest created by this Indenture shall have been taken;

 

                                     - 22 -

<PAGE>

 

            (vi) prior to the Class A Termination Date, the Issuer shall have

  given the Class A Insurer and the Backup Insurer written notice of such

  proposed action at least 30 Business Days prior to its proposed consummation,

  and the Controlling Party shall have given its prior written consent to such

  action; and

 

            (vii) the Issuer shall have delivered to the Indenture Trustee, the

  Class A Insurer and the Backup Insurer an Officer's Certificate and an Opinion

  of Counsel each stating that such conveyance or transfer and such supplemental

  indenture comply with this Section 3.10(b) and that all conditions precedent

  herein provided for relating to such transaction have been complied with.

 

      SECTION 3.11 Successor or Transferee.

 

      (a) Upon any consolidation or merger of the Issuer in accordance with

Section 3.10(a), the Person formed by or surviving such consolidation or merger

(if other than the Issuer) shall succeed to, and be substituted for, and may

exercise every right and power of, the Issuer under this Indenture with the same

effect as if such Person had been named as the Issuer herein.

 

       (b) Upon a conveyance or transfer of all the assets and properties of the

Issuer pursuant to Section 3.10 (b), Credit Acceptance Auto Dealer Loan Trust

2004-1 will be released from every covenant and agreement of this Indenture to

be observed or performed on the part of the Issuer with respect to the Class A

Notes immediately upon the delivery of written notice from the Issuer to the

Indenture Trustee, the Class A Insurer and the Backup Insurer stating that

Credit Acceptance Auto Dealer Loan Trust 2004-1 is to be so released.

 

      SECTION 3.12 No Other Business.

 

The Issuer shall not engage in any business other than financing, purchasing,

owning, selling and managing the Contracts in the manner contemplated by this

Indenture and the Basic Documents and activities incidental thereto and any

other activities permitted under the Trust Agreement.

 

      SECTION 3.13 No Borrowing.

 

The Issuer shall not issue, incur, assume, guarantee or otherwise become liable,

directly or indirectly, for any Indebtedness except for: (i) the Class A Notes;

(ii) obligations owing from time to time to the Class A Insurer and the Backup

Insurer; and (iii) any other Indebtedness permitted by or arising under the

Basic Documents. The proceeds of the Class A Notes shall be used exclusively to

fund the Issuer's purchase of the Dealer Loans and the other assets specified in

the Sale and Servicing Agreement, to fund the Reserve Account and to pay the

Issuer's organizational, transactional and start-up expenses.

 

      SECTION 3.14 Guarantees, Loans, Advances and Other Liabilities.

 

Except as contemplated by the Sale and Servicing Agreement or this Indenture,

the Issuer shall not make any loan or advance or credit to, or guarantee

(directly or indirectly or by an instrument having the effect of assuring

another's payment or performance on any obligation or capability of so doing or

otherwise), endorse or otherwise become contingently liable, directly or

indirectly, in connection with the obligations, stocks or dividends of, or own,

purchase, repurchase or

 

                                     - 23 -

<PAGE>

 

acquire (or agree contingently to do so) any stock, obligations, assets or

securities of, or any other interest in, or make any capital contribution to,

any other Person.

 

      SECTION 3.15 Capital Expenditures.

 

The Issuer shall not make any expenditure (by long-term or operating lease or

otherwise) for capital assets (either realty or personalty) except as

contemplated by the Basic Documents.

 

      SECTION 3.16 Compliance with Laws.

 

The Issuer shall comply with the requirements of all applicable laws, the

non-compliance with which would, individually or in the aggregate, materially

and adversely affect the ability of the Issuer to perform its obligations under

the Class A Notes, this Indenture or any Basic Document.

 

      SECTION 3.17 Restricted Payments.

 

The Issuer shall not, directly or indirectly, (i) pay any dividend or make any

distribution (by reduction of capital or otherwise), whether in cash, property,

securities or a combination thereof, to the Owner Trustee or any owner of a

beneficial interest in the Issuer or otherwise with respect to any ownership or

equity interest or security in or of the Issuer or to the Servicer, (ii) redeem,

purchase, retire or otherwise acquire for value any such ownership or equity

interest or security or (iii) set aside or otherwise segregate any amounts for

any such purpose; provided, however, that the Issuer may make, or cause to be

made, distributions to the Servicer, the Owner Trustee, the Indenture Trustee,

the Trust Collateral Agent, the Class A Insurer, the Backup Insurer and the

Certificateholders as permitted by, and to the extent funds are available for

such purpose under, the Sale and Servicing Agreement and the Trust Agreement.

The Issuer will not, directly or indirectly, make payments to or distributions

from the Collection Account except in accordance with this Indenture and the

Basic Documents.

 

      SECTION 3.18 Notice of Indenture Events of Default.

 

Upon a Responsible Officer of the Owner Trustee having actual knowledge or

receipt of written notice thereof, the Issuer agrees to give the Indenture

Trustee, the Trust Collateral Agent, the Class A Insurer, the Backup Insurer and

the Rating Agency prompt written notice of each Indenture Event of Default

hereunder and each default on the part of the Servicer or the Seller of its

obligations under the Sale and Servicing Agreement.

 

      SECTION 3.19 Further Instruments and Acts.

 

Upon request of the Indenture Trustee or the Controlling Party, the Issuer will

execute and deliver such further instruments and do such further acts as may be

reasonably necessary or proper to carry out more effectively the purpose of this

Indenture.

 

      SECTION 3.20 Amendments of Sale and Servicing Agreement and Trust

Agreement.

 

The Issuer shall not agree to any amendment to Section 11.01 of the Sale and

Servicing Agreement or Section 11.1 of the Trust Agreement to eliminate the

requirements thereunder that

 

                                     - 24 -

<PAGE>

 

the Indenture Trustee or the Holders of the Class A Notes consent to amendments

thereto as provided therein.

 

      SECTION 3.21 Income Tax Characterization.

 

For purposes of federal income, state and local income and franchise and any

other income taxes, the Issuer will, and each Class A Noteholder by such Class A

Noteholder's acceptance thereof agrees to, treat the Class A Notes as

indebtedness and hereby instructs the Issuer to treat the Class A Notes as

indebtedness for federal, state and other tax reporting purposes.

 

      SECTION 3.22 Perfection Representations, Warranties and Covenants.

 

The perfection representations, warranties and covenants made by the Issuer and

set forth on Schedule A hereto shall be a part of this Indenture for all

purposes.

 

                                   ARTICLE IV

 

                           Satisfaction and Discharge

 

      SECTION 4.1 Satisfaction and Discharge of Indenture.

 

This Indenture shall cease to be of further effect with respect to the Class A

Notes except as to: (i) rights of registration of transfer and exchange; (ii)

substitution of mutilated, destroyed, lost or stolen Class A Notes; (iii) rights

of Class A Noteholders to receive payments of principal thereof and interest

thereon; (iv) Sections 3.3, 3.4, 3.5, 3.7, 3.8, 3.10, 3.12, 3.13, 3.14, 3.15,

3.16, 3.17, 3.19, 3.20 and 3.21; (v) the rights, obligations and immunities of

the Indenture Trustee hereunder (including the rights of the Indenture Trustee

under Section 6.7 and the obligations of the Indenture Trustee under Section

4.2); and (vi) the rights of Class A Noteholders, the Class A Insurer and the

Backup Insurer as beneficiaries hereof with respect to the property so deposited

with the Indenture Trustee, or the Trust Collateral Agent, payable to all or any

of them, and the Indenture Trustee, on written demand of and at the expense of

the Issuer, shall execute proper instruments acknowledging satisfaction and

discharge of this Indenture with respect to the Class A Notes, when

 

            (A) either

 

                   (1) all Class A Notes theretofore authenticated and delivered

            (other than (i) Class A Notes that have been destroyed, lost or

            stolen and that have been replaced or paid as provided in Section

            2.4 and (ii) Class A Notes for whose payment money has theretofore

            been deposited in trust or segregated and held in trust by the

            Issuer and thereafter repaid to the Issuer or discharged from such

            trust, as provided in Section 3.3) have been delivered to the

            Indenture Trustee for cancellation; or

 

                  (2) all Class A Notes not theretofore delivered to the

            Indenture Trustee for cancellation

 

                        (i) have become due and payable,

 

                                     - 25 -

<PAGE>

 

                              (ii) will become due and payable at the Stated

                        Final Maturity within one year, or

 

                              (iii) are to be called for redemption within one

                        year under arrangements satisfactory to the Indenture

                        Trustee for the giving of notice of redemption by the

                        Indenture Trustee in the name, and at the expense, of

                         the Issuer,

 

and the Issuer, in the case of (i), (ii) or (iii) of this clause (2), has

irrevocably deposited or caused to be irrevocably deposited with the Trust

Collateral Agent cash or direct obligations of or obligations guaranteed by the

United States of America (which will mature prior to the date such amounts are

payable), in trust for such purpose, in an amount sufficient to pay and

discharge the entire indebtedness on such Class A Notes not theretofore

delivered to the Indenture Trustee for cancellation when due to the Stated Final

Maturity or Redemption Date (if Class A Notes shall have been called for

redemption pursuant to Section 10.1(a)), as the case may be;

 

                  (B) the Issuer has paid or caused to be paid all Issuer

            Secured Obligations;

 

                  (C) the Issuer has delivered to the Indenture Trustee, the

            Class A Insurer and the Backup Insurer an Officer's Certificate, an

            Opinion of Counsel and if required by the Indenture Trustee or the

            Controlling Party an Independent Certificate from a firm of

            certified public accountants, each meeting the applicable

            requirements of Section 11.1(a) and each stating that all conditions

            precedent herein provided for relating to the satisfaction and

            discharge of this Indenture have been complied with; and

 

                  (D) upon the satisfaction and discharge of the Indenture

            pursuant to this Section 4.1, the Indenture Trustee shall deliver to

            the Owner Trustee, the Class A Insurer and the Backup Insurer a

            certificate of a Responsible Officer stating that the Class A

            Noteholders, the Class A Insurer, the Backup Insurer and the

             Indenture Trustee have been paid all amounts owed to them.

 

            SECTION 4.2. Application of Trust Money.

 

All moneys deposited with the Indenture Trustee pursuant to Section 4.1 hereof

shall be held in trust and applied by it, in accordance with the provisions of

the Class A Notes and this Indenture, to the payment, either directly or through

any Paying Agent, as the Indenture Trustee may determine, to the Holders of the

particular Class A Notes for the payment or redemption of which such moneys have

been deposited with the Indenture Trustee, of all sums due and to become due

thereon for principal and interest; but such moneys need not be segregated from

other funds except to the extent required herein or in the Sale and Servicing

Agreement or required by law.

 

            SECTION 4.3. Repayment of Moneys Held by Paying Agent.

 

In connection with the satisfaction and discharge of this Indenture with respect

to the Notes, all moneys then held by any Paying Agent other than the Indenture

Trustee under the provisions   of

 

                                     - 26 -

<PAGE>

 

this Indenture with respect to such Class A Notes shall, upon demand of the

Issuer, be paid to the Indenture Trustee to be held and applied according to

Section 3.3 and thereupon such Paying Agent shall be released from all further

liability with respect to such moneys.

 

                                    ARTICLE V

 

                                    Remedies

 

            SECTION 5.1. Indenture Events of Default.

 

"Indenture Event of Default", wherever used herein or in the other Basic

Documents, means any one of the following events (whatever the reason for such

Indenture Event of Default and whether it shall be voluntary or involuntary or

be effected by operation of law or pursuant to any judgment, decree or order of

any court or any order, rule or regulation of any administrative or governmental

body):

 

                  (i) default by the Issuer in the payment of any interest on

      the Class A Notes when the same becomes du


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