EXECUTION COPY
AMENDMENT NO. 5 TO LOAN AND SECURITY AGREEMENT
AMENDMENT NO. 5 TO LOAN AND SECURITY AGREEMENT (this "Amendment"),
dated as of February 10, 2006, among CAC WAREHOUSE FUNDING CORPORATION II, as
borrower (the "Borrower"), CREDIT ACCEPTANCE CORPORATION, as Originator (the
"Originator"), WACHOVIA CAPITAL MARKETS, LLC, as deal agent (the "Deal Agent")
and collateral agent (the "Collateral Agent"), WACHOVIA BANK, NATIONAL
ASSOCIATION, as liquidity agent for the VFCC Purchaser Group (the "Liquidity
Agent") and as the sole Investor (the "Investor") and VARIABLE FUNDING CAPITAL
COMPANY, LLC (f/k/a Variable Funding Capital Corporation), as a lender (and
together with the Liquidity Agent, the "Lenders").
Capitalized terms used and not defined in this Amendment shall have
the meanings given such terms in the Loan and Security Agreement, dated as of
September 30, 2003 (the "Loan Agreement"), among the Borrower, the Originator,
the Investors, the Lenders, the Deal Agent, the Backup Servicer and the
Collateral Agent.
PRELIMINARY STATEMENTS
WHEREAS, each of the signatories hereto is party to the Loan
Agreement; and WHEREAS, each of the signatories hereto wishes to amend the Loan
Agreement as hereinafter provided;
NOW, THEREFORE, in consideration of the mutual covenants contained
herein and in the Loan Agreement, and other good and valuable consideration, the
receipt and adequacy of which is hereby expressly acknowledged, and intending to
be legally bound hereby, the signatories hereto agree as follows:
Section 1. Amendment.
(a) Section 1.1 of the Loan Agreement is hereby amended by deleting
the definition of "Available Funds" in its entirety and replacing it with the
following:
"With respect to any Payment Date: (i) all amounts deposited in the
Collection Account during the Collection Period (other than Dealer
Collections and Repossession Expenses) that ended on the last day of
the calendar month immediately preceding the calendar month in which
such Payment Date occurs and investment earnings thereon; (ii) all
amounts deposited in the Collection Account from the Reserve Account
in accordance with Section 2.7 hereof; (iii) all amounts paid by the
Borrower pursuant to Section 4.5 hereof during or with respect to
the prior Collection Period in respect of Ineligible Loans or
Ineligible Contracts (other than payments in respect of
Nonconforming Contracts); (iv)
amounts paid by the Borrower pursuant to Section 2.16 hereof; and
(v) all amounts paid under any Dealer Agreement."
(b) Section 1.1 of the Loan Agreement is hereby amended by adding
the following definition of "Commitment Termination Date" immediately after the
definition of "Breakage Costs":
"With respect to each Purchaser Group, February 9, 2007, or with
respect to each Purchaser Group, such later date to which the
Commitment Termination Date may be extended in the sole discretion
of such Purchaser Group in accordance with the terms of Section
2.1(b)."
(c) Section 1.1 of the Loan Agreement is hereby amended by deleting
the definition of "Credit Agreement" in its entirety and replacing it with the
following:
"The Fourth Amended and Restated Credit Agreement, dated as of
February 7, 2006 among Credit Acceptance, Comerica Bank, as
Administrative Agent and Collateral Agent and the banks signatory
thereto; provided, however, to the extent the Credit Agreement is
amended or terminated after February 10, 2006, references to the
Credit Agreement shall refer to the Credit Agreement on February 10,
2006 unless otherwise consented to by the Deal Agent."
(d) Section 1.1 of the Loan Agreement is hereby amended by deleting
the definition of "Dealer Concentration Limit" in its entirety and replacing it
with the following:
"With respect to any Dealer, an amount equal to, in the case of
Loans related to any Dealer, 4.0% of the aggregate Net Loan Balance,
on the Funding Date."
(e) Section 1.1 of the Loan Agreement is hereby amended by deleting
the definition of "Defaulted Contract" in its entirety and replacing it with the
following:
"A Contract shall be deemed a Defaulted Contract no later than the
earlier of (x) the day it becomes 90 days delinquent, based on the
date the last payment thereon was received by the Servicer and (y)
the day on which an auction check is posted to the relevant
account."
(f) Section 1.1 of the Loan Agreement is hereby amended by deleting
the definition of "Forecasted Collections" in its entirety and replacing it with
the following:
"The expected amount of Collections to be received with respect to
the Aggregate Outstanding Eligible Loan Balance each month as
determined by Credit Acceptance in accordance with its forecasting
model, which shall be submitted to the Deal Agent with each Funding
Notice related to a proposed Advance when new Pools are pledged to
the Collateral Agent."
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(g) Section 1.1 of the Loan Agreement is hereby amended by deleting
the definition of "Loan" in its entirety and replacing it with the following:
"All amounts advanced by Credit Acceptance under a Dealer Agreement
and payable from Collections, including servicing charges, insurance
charges and service policies and all related finance charges, late
charges, and all other fees and charges; provided, however, that the
term "Loan" shall, for the purposes of this Agreement, include only
those Loans identified from time to time on Schedule V hereto, as
amended from time to time in accordance herewith."
(h) Section 1.1 of the Loan Agreement is hereby amended by deleting
the definition of "Loan Loss Reserve" in its entirety and replacing it with the
following:
"The loan loss reserve, calculated in accordance with Credit
Acceptance's periodic analysis of the performance of each Dealer,
maintained against the Loans of such Dealer."
(i) Section 1.1 of the Loan Agreement is hereby amended by adding
the following definition of "Nonconforming Contract Payment Amount" immediately
after the definition of "Nonconforming Contract":
"An amount equal to the sum of (i): (x) the product of the
Outstanding Balance of such Contract as of the last day of the
related Collection Period and a fraction, the numerator of which is
Capital as of the Funding Date and the denominator of which is the
Outstanding Balance of Eligible Contracts as of the Funding Date;
(ii) accrued and unpaid Carrying Costs, Increased Costs, Indemnified
Amounts and Additional Amounts related to such Contract through the
date of such deposit; (iii) any related Servicer Advances; and (iv)
and all Hedge Costs due to the relevant Hedge Counterparties for any
termination in whole or in part of one or more transactions related
to the relevant Hedging Agreement, as required by the terms of any
Hedging Agreement."
(j) Section 1.1 of the Loan Agreement is hereby amended by deleting
paragraph (ii) of the definition of "Outstanding Balance" in its entirety and
replacing it with the following:
"with respect to any Loan on any date of determination, the
aggregate amount advanced under such Loan plus revenue accrued with
respect to such Loan in accordance with Credit Acceptance's
accounting policies set forth in its periodic reports filed with the
Securities and Exchange Commission and the payment of monies to a
Dealer under the related Dealer Agreement, less collections on the
related Contracts applied through such date of determination in
accordance with the related Dealer Agreement to the reduction of the
balance of such Loan and write offs of such Loan."
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(k) Section 1.1 of the Loan Agreement is hereby amended by deleting
the definitions of "Overconcentration Contract" and "Recency Basis" in their
entirety.
(l) Section 1.1 of the Loan Agreement is hereby amended by deleting
paragraph (i) of the definition of "Related Security" in its entirety and
replacing it with the following:
"the Dealer Agreements (other than Excluded Dealer Agreement Rights,
but including Credit Acceptance's rights to service the Loans and
the related Contracts and receive the related collection fee and
receive reimbursement of certain repossession and recovery expenses,
in accordance with the terms of the Dealer Agreements) and Contracts
securing payment of such Loan;"
(m) Section 1.1 of the Loan Agreement is hereby amended by deleting
the definition of "Required Reserve Account Amount" in its entirety and
replacing it with the following:
"With respect to any date of determination, an amount equal to the
product of (i) 1.0% and (ii) the Capital on such date (after the
application of funds pursuant to Section 2.7 on the related Payment
Date plus all amounts required to be maintained by the Borrower
pursuant to Section 6.2(c)(ii) hereof); provided, however, the
Required Reserve Account Amount shall at no time be less than the
product of 0.5% and the Facility Limit and provided, further, that
if the Capital is zero, the Required Reserve Account Amount shall be
$100,000."
(n) Section 1.1 of the Loan Agreement is hereby amended by deleting
the definition of "Take-Out" in its entirety and replacing it with the
following:
"The release of certain Loans and the related contracts from the
Lien of this Agreement and the reduction of the Capital by the
lesser of (a) 85% of currently outstanding Capital or (b)
$100,000,000."
(o) Section 2.2(iii) and (iv) of the Loan Agreement are hereby
amended by deleting Section 2.2(iii) and (iv) in their entirety and replacing
them with the following:
"(iii) In connection with such pledge, the Borrower agrees to
deliver to the Collateral Agent on the Closing Date or any Funding
Date on which new Pools are pledged to the Collateral Agent, as the
case may be, one or more computer files containing true and complete
lists of all Dealer Agreements, Pools and Loans securing the payment
of the Notes and amounts due under the Transaction Documents and all
of the Borrower's obligations under the Notes and the Transaction
Documents as of the Closing Date or Funding Date, and all Contracts
securing all such Loans, identified by account number, dealer
number, and pool number and Outstanding Balance as of the Funding
Date. Such file shall be marked as Schedule V hereto or as an
addendum thereto, shall be delivered to the
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Collateral Agent as confidential and proprietary, and such Schedule
V and each addendum thereto are hereby incorporated into and made a
part of this Agreement.
(iv) In connection with such pledge, each of the Borrower, Credit
Acceptance and the Servicer also agrees, within 180 days of the
Closing Date or relevant Funding Date, as the case may be, to
clearly xxxx 98% of the Contracts or Contract folders securing a
Loan with the following legend: "THIS AGREEMENT HAS BEEN PLEDGED TO
WACHOVIA CAPITAL MARKETS, LLC AS COLLATERAL AGENT FOR THE BENEFIT OF
CERTAIN SECURED PARTIES". Such legend shall be in bold, in type face
at least as large as 12 point and shall be entirely in capital
letters."
(p) Section 2.7(b) of the Loan Agreement is hereby amended by
deleting Section 2.7(b) in its entirety and replacing it with the following:
"One Business Day per calendar month, the date of which is to be
chosen by the Borrower, the Collateral Agent shall, upon two
Business Days' prior written request of the Borrower, withdraw from
the Collection Account an amount not to exceed the amount on deposit
therein on the date of such request . The Collateral Agent shall
distribute such amount to the Deal Agent for the account of the
Lenders, to be distributed by the Deal Agent to the Lenders, pro
rata, as a payment in reduction of Capital. Notwithstanding anything
in this Section 2.7(b) to the contrary, the Collateral Agent shall
not be required to effect any such withdrawal or the Deal Agent make
any such distribution until the Servicer has certified to the
Collateral Agent and the Deal Agent in writing that it reasonably
believes that at the end of the related Collection Period the sum of
Available Funds and Excess Reserve Amount, after giving effect to
such payment, will be greater than the amount needed to make the
payments required pursuant to Section 2.7(a)(i) through (xii)."
(q) Section 2.16(a) of the Loan Agreement is hereby amended by
deleting the first paragraph of Section 2.16(a) in its entirety and replacing it
with the following:
"On any Business Day (the "Take-Out Date"), the Borrower shall have
the right to effect a Take-Out and require the Collateral Agent to
release its security interest and Lien on the related Contracts and
Loans, subject to the following terms and conditions:"
(r) Section 2.16(a)(iv) of the Loan Agreement is hereby amended by
deleting Section 2.16(a)(iv) in its entirety and replacing it with the
following:
"On the Take-Out Date, the Collateral Agent shall have received, for
the benefit of the Secured Parties and the Hedge Counterparties, as
applicable, in immediately available funds, an amount equal to the
sum of: (A) the aggregate
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outstanding Capital being paid plus (B) an amount equal to the
related unpaid Yield (including Yield not yet accrued) to the end of
the Accrual Period plus (C) an aggregate amount equal to the sum of
all other amounts due and owing to the Deal Agent, the Lenders, the
Backup Servicer, the Successor Servicer, the Hedge Counterparties
and the other Secured Parties, as applicable, under this Agreement
and the other Transaction Documents, to the extent accrued to such
date and to accrue thereafter (including, without limitation,
Breakage Costs and Hedge Costs) plus (D) any outstanding Servicer
Advances plus (E) all other Aggregate Unpaids. No such reduction
shall be given effect unless the Borrower has complied with the
terms of any Hedging Agreement requiring that any derivative
transaction related thereto be terminated in whole or in part as a
result of any such reduction in the Capital and Borrower has paid
all Hedge Costs due to the relevant Hedge Counterparty for any such
termination;"
(s) Section 2.16(a) of the Loan Agreement is hereby amended by
adding the following paragraph (vi) immediately after Section 2.16(a)(v):
"The Borrower shall certify in writing to the Collateral Agent and
the Deal Agent that no adverse selection was employed in the
selection of the Loans and Contracts to be released."
(t) Section 4.1(bb) of the Loan Agreement is hereby amended by
deleting Section 4.1(bb) in its entirety and replacing it with the following:
"Amount of Loans and Contracts; Computer File. When new Pools are
pledged to the Collateral Agent, the related Funding Notice shall
provide (A) the aggregate Outstanding Balance of the Contracts to be
pledged to the Collateral Agent on the related Funding Date; (B) the
Aggregate Outstanding Eligible Loan Balance; and (C) the Aggregate
Outstanding Eligible Loan Net Balance; each as of the applicable
Cut-off Date and as reported in the Loan Servicing System or as a
product of the Loan Loss Reserve analysis. The computer file or
microfiche list delivered pursuant to Section 2.2(a)(iii) hereof is
complete and accurately reflects the information regarding the
Loans, Dealer Agreements and Contracts in all material respects."
(u) Section 4.5(c) through (f) of the Loan Agreement are hereby
amended by deleting Section 4.5(c) through (f) in their entirety and replacing
them with the following:
"(c) [Reserved.]
(d) Remedy for Breach. The parties hereto agree that the sole remedy
for the breach by the Borrower of the representations and warranties
set forth in Section 4.2 hereof with respect to the eligibility of a
Loan or Contract shall be set forth in this Section 4.5 and Section
6.2(c)(ii).
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(e) Application. Amounts paid in accordance with Section 4.5(a) and
(b) shall be distributed on the next succeeding Payment Date in
accordance with Section 2.7.
(f) Notwithstanding anything herein to the contrary, during the
Revolving Period, payments required under Section 4.5(a) and (b)
shall not be required if the Capital is equal to or less than the
Borrowing Base."
(v) Section 6.2(c)(ii) of the Loan Agreement is hereby amended by
deleting Section 6.2(c)(ii) in its entirety and replacing it with the following:
"The Custodian shall within 180 days after the Closing Date or
Funding Date, as applicable, review 100% of the Contract Files to
verify the presence of the original retail installment contract and
security agreement and/or installment loans with respect to each
Contract, provided, however, that the Certificate of Title or other
evidence of lien with respect to a Contract need not be verified. If
the number of Contracts for which any of the foregoing documents
have not been delivered to the Custodian within 180 days of the
Closing Date or relevant Funding Date, as the case may be, or
corrected (each such Contract, a "Nonconforming Contract"), exceeds
2% of the aggregate Contract Files required to be reviewed pursuant
to this Section 6.2(c)(ii), the Borrower shall make a deposit to the
Reserve Account only with respect to the excess number of
Nonconforming Contracts, in an amount equal to the related
Nonconforming Contract Payment Amount. Once per month, the amount on
deposit in the Reserve Account in respect of Nonconforming Contracts
shall be adjusted to account for increases or decreases in the
excess number of Nonconforming Contracts. The Borrower shall, in the
case of an increase, promptly deposit to the Reserve Account the
amount of any such increase. In the case of a decrease, the amount
of any such decrease shall be deemed to be part of the Excess
Reserve Amount. During the Revolving Period, payments required under
this Section 6.2(c)(ii) shall not be required if the Capital is
equal to or less than the Borrowing Base by the amount of the
payment that would otherwise be required to be made by this clause."
(w) Section 6.11(a) of the Loan Agreement is hereby amended by
deleting Section 6.11(a) in its entirety and replacing it with the following:
"any failure by the Servicer to make any payment, transfer or
deposit as required by this Agreement or any other Transaction
Document, other than any such failure resulting from an
administrative or technical error of the Servicer in the amount so
paid, transferred or deposited; provided that within one (1)
Business Day after the Servicer becomes aware that, as a result of
an administrative or technical error of the Servicer, any amount
previously paid, transferred
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or deposited by the Servicer was less than the amount required to be
paid, transferred or deposited by the Servicer, the Servicer pays,
transfers or deposits the amount of such shortfall;"
(x) Section 10.1(u) of the Loan Agreement is hereby amended by
deleting Section 10.1(u) in its entirety and replacing it with the following:
"a Take-Out has not occurred within 90 days of February 10, 2006, or
within 360 days of the most recent Take-Out occurring after February
10, 2006."
Section 2. Conditions to Effectiveness. This Amendment shall become
effective on and as of the date hereof, upon the receipt by the Deal Agent of an
executed counterpart of this Amendment from each party hereto.
Section 3. Severability of Provisions. Any provision of this Amendment
which is prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof or
affecting the validity or enforceability of such provision in any other
jurisdiction.
Section 4. Captions. The captions in this Amendment are for convenience of
reference only and shall not define or limit any of the terms or provisions
hereof.
Section 5. Agreement to Remain in Full Force and Effect. Except as amended
hereby, the Loan Agreement shall remain in full force and effect and is hereby
ratified, adopted and confirmed in all respects. All references in the Loan
Agreement to "herein," or words of like import, and all references to the Loan
Agreement in any agreement or document shall hereafter be deemed to refer to the
Loan Agreement as amended hereby.
Section 6. GOVERNING LAW. THIS AMENDMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
Section 7. Execution in Counterparts. This Amendment may be executed in
any number of counterparts and by different parties hereto on separate
counterparts, each of which counterparts, when so executed and delivered, shall
be deemed to be an original and all of which counterparts, taken together, shall
constitute but one and the same Amendment.
Section 8. Representations and Warranties. The Borrower hereby certifies
that (i) the representations and warranties made by it in Section 4.1 of the
Loan Agreement are true and correct as of the date hereof, as though made on and
as of the date hereof and (ii) as of the date hereof, there is no Termination
Event or Servicer Termination Event or event which, with the passage of time of
the giving of notice, could result in a Termination Event or a Servicer
Termination Event.
Section 9. Waiver of Notice. Each of the parties hereto hereby waives any
notice in connection with the execution and delivery of this Amendment.
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[Signature page follows]
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IN WITNESS WHEREOF, the parties hereto have caused this Amendment to
be executed as of the date and year first above written.
CAC WAREHOUSE FUNDING CORPORATION II,
as Borrower
By: /s/ Xxxxxxx X. Xxxx
-------------------
Name: Xxxxxxx X. Xxxx
Title: Treasurer
CREDIT ACCEPTANCE CORPORATION, as
Originator
By: /s/ Xxxxxxx X. Xxxx
---------------------
Name: Xxxxxxx X. Xxxx
Title: Treasurer
WACHOVIA CAPITAL MARKETS, LLC, as Deal
Agent and Collateral Agent
By: /s/ Xxxx Xxxxx
----------------
Name: Xxxx Xxxxx
Title: Director
WACHOVIA BANK, NATIONAL ASSOCIATION, as
Liquidity Agent and the Sole Investor
By: /s/ Xxxxxx Zacocs
-------------------
Name: Xxxxxx Zacocs
Title: Vice President
VARIABLE FUNDING CAPITAL COMPANY, LLC,
as a Lender
By: Wachovia Capital Markets, LLC, as
attorney-in-fact
By: /s/ Xxxxxxx X. Xxxxxx, Xx.
---------------------------
Name: Xxxxxxx X. Xxxxxx, Xx.
Title: Vice President
