Exhibit 4(c)(19)
EXECUTION COPY
FIRST AMENDMENT
TO
FOURTH AMENDED AND RESTATED CREDIT AGREEMENT
This FIRST AMENDMENT TO FOURTH AMENDED AND RESTATED CREDIT AGREEMENT
("First Amendment") is made as of September 20, 2006 by and among Credit
Acceptance Corporation, a Michigan corporation ("Company"), Comerica Bank and
the other banks signatory hereto (individually, a "Bank" and collectively, the
"Banks") and Comerica Bank, as administrative agent for the Banks (in such
capacity, "Agent").
RECITALS
A. Company, Agent and the Banks entered into that certain Fourth Amended
and Restated Credit Acceptance Corporation Credit Agreement dated as of February
7, 2006 (the "Credit Agreement") under which the Banks renewed and extended (or
committed to extend) credit to the Company, as set forth therein.
B. The Company has requested that Agent and the Banks agree to certain
amendments to the Credit Agreement and Agent and the Banks are willing to do so,
but only on the terms and conditions set forth in this First Amendment.
NOW, THEREFORE, Company, Agent and the Banks agree:
1. Section 1 of the Credit Agreement is hereby amended by amending and
restating, the following definitions:
"Borrowing Base Limitation" shall mean, as of any date of determination, an
amount equal to (i) seventy-five percent (75%) of Dealer Loans Receivable,
plus (ii) seventy -five percent (75%) of the Purchased Contract Balance,
minus (iii) the Hedging Reserve and minus (iv) the aggregate principal
amount outstanding from time to time of any Debt (other than the
Indebtedness) secured by any of the Collateral; provided, however, that, at
any time, the portion of the Borrowing Base Limitation derived from the
Purchased Contract Balance under clause (ii) of this definition shall not
exceed a maximum of twenty-five percent (25%) of the aggregate Borrowing
Base Limitation; and provided, further, that if, at any time, the advance
rates under any Securitization Transaction (other than a Bridge
Securitization) set forth in the related Securitization Documents
("Securitization Advance Rates") are lower than the applicable advance
rates expressed in clauses (i) or (ii) of this definition ("Credit
Agreement Advance Rates"), the applicable Credit Agreement Advance Rates
shall be deemed to be automatically reduced to the lowest Securitization
Advance Rates then in effect, such reduction to remain in effect so long as
the Securitization Advance Rates are lower than the Credit Agreement
Advance Rates set forth in this definition. At no time, however, shall the
Credit Agreement Advance Rates exceed seventy-five percent (75%)."
"Dealer Loans Receivable" shall mean, as of any applicable date of
determination, the amount of loans receivable, as such amount would appear
in the Consolidated financial statements of the Company and its
Subsidiaries prepared in accordance with GAAP (net of any reserves
established by the Company as an allowance for credit losses related to
such dealer loans receivable, provided that, for purposes of determining
the Borrowing Base and compliance with the covenants under Section 7.4
through 7.7 hereof, Dealer Loans Receivable shall not include (a) the net
book value of Dealer Loan Pools transferred or encumbered pursuant to a
Permitted Securitization (whether or not attributable to the Company under
GAAP), unless and until such Dealer Loan Pools are reassigned to the
Company or a Domestic Subsidiary of the Company or such encumbrances are
discharged and a Uniform Commercial Code financing statement or amendment
is on file to perfect or re-perfect, as the case may be, the Lien over such
pools (and the Dealer Advances and other financial assets covered thereby)
in favor of Agent for and on behalf of the Banks,or (b) Dealer Loans which
are not secured by the Installment Contracts relating thereto."
"Permitted Securitization(s)" shall mean each transfer or encumbrance (each
a "disposition") of (I) specific Dealer Loan Pools (and any interest in and
lien on the Installment Contracts, motor vehicles, and other rights and
financial assets relating thereto) or specific Purchased Contracts (and any
interest in and lien on motor vehicles and other rights and financial
assets relating thereto, or (II) the trust certificate issued to evidence
the residual interest in Dealer Loan Pools and other financial assets
transferred or encumbered pursuant to a prior Permitted Securitization, in
each case by the Company or one or more of its Subsidiaries to one or more
Special Purpose Subsidiaries or, in the case of a Securitization
Transaction described in Clause (II) of this definition (a "Bridge
Securitization"), from one Special Purpose Subsidiary to another Special
Purpose Subsidiary, conducted in accordance with the following
requirements:
(a) Each disposition in clause (I) shall identify with reasonable
certainty the specific Dealer Loan Pools or Purchased Contracts, as
applicable, covered by such disposition; and (x) such Dealer Loan
Pools or Purchased Contracts shall have performance and other
characteristics so that the quality of such Dealer Loan Pools or
Purchased Contracts, as the case may be, is comparable to, but not
materially better than, the overall quality of the Company's Dealer
Loan Pools or Purchased Contracts, as applicable, as determined in
good faith by the Company in its reasonable discretion or (y) with
respect to any such assets assigned to an uncapped Dealer Loan Pool
subsequent to such Dealer Loan Pool becoming a Securitized Pool in
conformity with the standards set forth in clause (x) of this
subparagraph (a), the assets covered by such dispositions were
assigned to such Dealer Loan Pool in the order such assets were
originated and without the exercise of any discretion by the Company;
(b) Both before and after giving effect to such disposition (and
taking into account any reduction in the Indebtedness with the
proceeds of such disposition as required hereunder), the Company shall
be in compliance with the Borrowing Base Limitation, and, in the case
of any disposition to an uncapped Securitized Pool, none of the assets
covered by such disposition were included, prior to such
2
disposition, in the most recent Borrowing Base Certificate delivered
to Agent under Section 7.3(d);
(c) Each such Securitization Transaction shall be structured on the
basis of the issuance of Debt or other similar securities by one or
more Special Purpose Subsidiaries which Debt or other securities shall
be without recourse to Company and its other Subsidiaries, except to
the extent of normal and customary representations and warranties
given as of the date of each such disposition, and not as continuing
representations and warranties, and otherwise on normal and customary
terms and conditions for comparable asset based securitization
transactions, which may include Cleanup Call provisions (it being
understood that, for purposes of this subparagraph (c), the terms and
conditions governing Securitization Transactions made by the Company
prior to the date of this Agreement shall be deemed to have been made
on normal and customary terms and conditions for comparable
securitization transactions);
(d) Concurrently with each such disposition (except for dispositions
to an uncapped Securitized Pool whether or not pursuant to a
revolving, expansion or relending feature included in a Prior
Securitization (for purposes of this definition, a "Revolving
Feature"), in each case to the extent that no disposition proceeds are
available as a result of such dispositions for application hereunder),
the net proceeds of such disposition (net of customary third party
transaction fees and expenses and, if applicable, after applying the
proceeds of such disposition to repay any Debt to which the related
financial assets are subject):
shall be applied to reduce the principal balance outstanding under the
Revolving Credit (to the extent then outstanding, and including the
aggregate amount of drawings made under any Letter of Credit for which
the Agent has not received full payment) by the amount of such net
proceeds, subject to the right to reborrow in accordance with this
Agreement;
provided, however, that to the extent that, on the date any reduction
of the principal balance outstanding under the Revolving Credit shall
be required under this clause (d), the Indebtedness under the
Revolving Credit is being carried, in whole or in part, at the
Eurodollar-based Rate and no Default or Event of Default has occurred
and is continuing, the Company may, after prepaying that portion of
the Indebtedness then carried at the Prime-based Rate, deposit the
amount of such required principal reductions in a cash collateral
account to be held by the Agent, for and on behalf of the Banks (which
shall be an interest-bearing account), on such terms and conditions as
are reasonably acceptable to Agent and the Majority Banks and, subject
to the terms and conditions of such cash collateral account, sums on
deposit therein shall be applied (until exhausted) to reduce the
principal balance of the Revolving Credit on the last day of each
Interest Period attributable to the applicable Eurodollar-based
Advances of the Revolving Credit; and provided further that Agent and
the Banks acknowledge that any proceeds of any such Debt incurred
pursuant to a Permitted Securitization remaining after the application
of such proceeds as required by this clause (d) may be held or
invested
3
in Permitted Investments or otherwise invested or applied in any
manner not prohibited by this Agreement; and
(e) Both immediately before and after such disposition, no Default or
Event of Default (whether or not related to such disposition) has
occurred and is continuing.
In connection with each Permitted Securitization to be conducted hereunder,
the Company shall provide the following:
(i) other than in the case of a Bridge Securitization, to the
Agent, (x) not less than three (3) Business Days prior to the
date of consummation thereof (or such lesser period as approved
by Agent) or (y) solely in the case of dispositions to uncapped
Securitized Pools pursuant to a Revolving Feature, not less than
three (3) Business Days prior to the date of the release of the
financial assets covered by such disposition (or such lesser
period as approved by Agent), (I) a certification that, after
giving effect to such disposition, it will be in compliance with
the Borrowing Base Limitation and that none of the assets covered
by such disposition were included in the most recent quarterly
Borrowing Base Certificate delivered to Agent under Section
7.3(d) hereof prior to such disposition or (II) a new Borrowing
Base Certificate (and any supporting information reasonably
required by the Agent) dated as of the proposed date of the
applicable disposition or release and, based on projected
information, giving effect to such disposition and confirming
compliance with the Borrowing Base Limitation;
(ii) to the Agent and the Banks (x) not less than five (5)
Business Days prior to the date of consummation thereof (or such
lesser period as approved by Agent), proposed drafts of the
material Securitization Documents covering the applicable
Securitization Transaction (and the term sheet or commitment
relating thereto) and (y) within ten (10) Business Days following
the consummation thereof, executed copies of such Securitization
Documents, including, if applicable, a summary of any material
changes from the draft documents delivered to Agent and the Banks
prior thereto, except that if such Securitization Transaction
consists solely of dispositions pursuant to a Revolving Feature,
the Company shall only be required (I) under clause (x) of this
subparagraph (ii), to deliver to Agent, not less than three (3)
Business Days prior to the consummation thereof (or such lesser
period as approved by Agent), a certification that the applicable
Securitization Documents remain in effect substantially in the
form previously furnished to Agent and the Banks (or identifying
any material changes, and attaching any proposed amendment,
supplement or other document delivered under such prior
Securitization Documents to effect such dispositions) and (II)
under clause (y) of this subparagraph (ii), to deliver to Agent
executed copies of any such amendment, supplement or other
document;
4
(iii) except in the case of dispositions to uncapped Securitized
Pools or any Bridge Securitization, to the Agent, not less than
three (3) Business Days prior to the date of consummation thereof
(or such lesser period as approved by Agent), (I) a schedule
substantially in the form delivered for Permitted Securitizations
under the Prior Credit Agreement identifying the specific Dealer
Loan Pools or Purchased Contracts, as applicable, proposed to be
covered by such transaction, accompanied by (II) a request that
the Agent release such assets from the Lien of the Security
Agreement and a certification that the proposed Securitization
Transaction (and related dispositions) constitutes a Permitted
Securitization hereunder, whereupon the financial assets covered
by such dispositions which have been originated prior to the date
of such release shall be promptly released by Agent; and in the
case of a disposition to an uncapped Securitized Pool in a Prior
Securitization, all remaining financial assets assigned
thereafter to the applicable uncapped Securitized Pool in the
ordinary course, whether originated before or after the date of
release, shall be so released and the Lien of the Security
Agreement shall be deemed not to attach to any such assets when
the Company or any of its Subsidiaries subsequently acquires
rights in, to or under such assets and such assets are assigned
to an uncapped Securitized Pool; and
(iv) only if the applicable Securitization Transaction is not
related to a Prior Securitization, is a Bridge Securitization or
involves the disposition or release of any assets which were
covered by the most recent quarterly Borrowing Base Certificate
delivered to Agent under Section 7.3(d) hereof and the aggregate
net book value of the Dealer Loan Pools (as included in Dealer
Loans Receivable) or Purchased Contracts, as applicable, covered
by such dispositions (or related series of dispositions) in any
calendar month exceeds or would exceed (after giving effect to
any proposed disposition) Seven Million Five Hundred Thousand
Dollars ($7,500,000), collection information regarding the
Installment Contracts securing the Dealer Loan Pools or Purchased
Contracts of the Company and its Subsidiaries proposed to be
covered by such transaction (with evidence supporting its
determination under clause (x) of subparagraph (a) of this
definition, if applicable, including without limitation a "static
pool analysis" comparable to the static pool analysis required to
be delivered under Section 7.3(c) hereof with respect to such
Dealer Loan Pools or Purchased Contracts)."
2. Section 7 of the Credit Agreement is amended by amending and restating the
preamble thereof, as follows:
"Company covenants and agrees that it will, and, as applicable, it will
cause its Subsidiaries (but excluding, for purposes of Sections 7.1, 7.3
through 7.8, 7.17 and 7.18 through 7.20 hereof, any Special Purpose
Subsidiary) to, so long as any of the Banks are committed to make any
Advances under this Agreement and thereafter so long as any Indebtedness
remains outstanding under this Agreement:"
5
3. Section 8 of the Credit Agreement is amended by amending and restating
clause (j) of Section 8.8, as follows:
"(j) Investments in any Subsidiary (including, without limitation, any
Special Purpose Subsidiary) from and after the date hereof, consisting of
(v) dispositions made pursuant to a Permitted Securitization and the
resultant Debt issued by a Special Purpose Subsidiary to another Subsidiary
as part of a Permitted Securitization, in each case to the extent
constituting Investments hereunder; (w) advances by Company (as servicer or
administrative agent) which are permitted under the definition of Permitted
Guaranties; (x) the repurchase or replacement from and after the Effective
Date hereof of an aggregate amount (based on the net book value thereof)
not to exceed $5,000,000 in Dealer Loan Pools or Purchased Contracts or
related pools thereof subsequently determined not to satisfy the
eligibility standards contained in the applicable Securitization Documents
relating to a Permitted Securitization or otherwise required to be
repurchased by the applicable Securitization Documents entered into in
compliance with the terms of this Agreement, so long as (i) such
replacement is accompanied by the repurchase of or release of encumbrances
on such financial assets previously transferred or encumbered pursuant to
such securitization and in the amount thereof, (ii) any replacement Dealer
Loan Pools or Purchased Contracts which are selected by Company according
to the requirements set forth in clause (a) of the definition of Permitted
Securitization and (iii) such replacements are made at a time when (both
before and after giving effect thereto) no Default or Event of Default has
occurred and is continuing; (y) capital contributions made from time to
time to a Special Purpose Subsidiary in connection with a Bridge
Securitization concurrent with the purchase of the applicable trust
certificate, each such capital contribution in an amount not to exceed the
value of the trust certificate being purchased by such Special Purpose
Subsidiary pursuant to such Bridge Securitization so long as each such
Investment (i) is accompanied by the concurrent receipt by the Company of
proceeds from the sale of the applicable trust certificate equal to 100% of
the value of such trust certificate and (ii) is effected by ledger entries,
cross receipts and similar documentation and not by the transfer of cash or
other financial assets (other than the trust certificate), plus cash
Investments from time to time, to the extent necessary to cover the
establishment of reserves (A) for facility fees due in respect of such
Bridge Securitization and (B) in connection with each advance under a
Bridge Securitization, for up to one year's interest due in respect of such
advance; (z) amounts required to fund any Cleanup Call under the terms of a
Permitted Securitization, provided, however, that in connection with any
Cleanup Call under a Permitted Securitization where the trust certificate
representing the residual interest therein has been assigned or encumbered
pursuant to a subsequent Bridge Securitization, the take-out in respect of
such trust certificate under such Bridge Securitization shall have been
executed concurrently with such Cleanup Call and the aggregate amount
invested or otherwise expended to fund both such Cleanup Call and the
related take-out does not exceed the maximum amount permitted to be
invested to fund such Cleanup Call under the definition thereof, plus any
amounts advanced toward the repurchase by the Company or its Subsidiaries
of any related financial assets in connection with such takeout, to the
extent such repurchases have been made on terms not materially less
favorable to the Company or such repurchasing Subsidiary, taking into
account the applicable Securitization Advance Rates, than would be usual
and customary in similar transactions
6
between Persons dealing at arms length; and (zz) the disposition to the
Company or any Subsidiary (other than a Special Purpose Subsidiary) of the
capital stock of any Special Purpose Subsidiary;
4. This First Amendment shall become effective, according to the terms and as
of the date hereof, upon satisfaction by the Company of the following
conditions:
(a) Agent shall have received counterpart originals of (i) this First
Amendment, duly executed and delivered by the Company and the
requisite Banks, and (ii) that certain Reaffirmation of Certain Loan
Documents, dated as of the date hereof, duly executed and delivered by
the applicable Subsidiaries in form satisfactory to Agent; and
(b) Agent shall have received from a responsible senior officer of the
Company a certification (i) that all necessary actions have been taken
by the Company to authorize execution and delivery of this First
Amendment, supported by such resolutions or other evidence of
corporate authority or action as reasonably required by Agent and the
Majority Banks and that no consents or other authorizations of any
third parties are required in connection therewith; and (ii) that,
after giving effect to this First Amendment, no Default or Event of
Default has occurred and is continuing on the proposed effective date
of the First Amendment.
5. The Company ratifies and confirms, as of the date hereof and after giving
effect to the amendments contained herein, each of the representations and
warranties set forth in Sections 6.1 through 6.18, inclusive, of the Credit
Agreement and acknowledges that such representations and warranties are and
shall remain continuing representations and warranties during the entire
life of the Credit Agreement.
6. Except as specifically set forth above, this First Amendment shall not be
deemed to amend or alter in any respect the terms and conditions of the
Credit Agreement, any of the Notes issued thereunder or any of the other
Loan Documents, or to constitute a waiver by the Banks or Agent of any
right or remedy under or a consent to any transaction not meeting the terms
and conditions of the Credit Agreement, any of the Notes issued thereunder
or any of the other Loan Documents.
7. Unless otherwise defined to the contrary herein, all capitalized terms used
in this First Amendment shall have the meaning set forth in the Credit
Agreement.
8. This First Amendment may be executed in counterpart in accordance with
Section 13.10 of the Credit Agreement.
9. This First Amendment shall be construed in accordance with and governed by
the laws of the State of Michigan.
[SIGNATURES FOLLOW ON SUCCEEDING PAGES]
7
WITNESS the due execution hereof as of the day and year first above
written.
COMERICA BANK,
as Agent
By: /s/ Harve C. Light
------------------------------------
Harve C. Light
Its: Vice President
SIGNATURE PAGE FOR
CAC FIRST AMENDMENT
CREDIT ACCEPTANCE CORPORATION
By: /s/ Douglas W. Busk
------------------------------------
Douglas W. Busk
Its: Treasurer
SIGNATURE PAGE FOR
CAC FIRST AMENDMENT
BANKS:
COMERICA BANK
By: /s/ Harve C. Light
------------------------------------
Harve C. Light
Its: Vice President
SIGNATURE PAGE FOR
CAC FIRST AMENDMENT
BANK OF AMERICA, N.A.
By: /s/ Charles W. Hagel
------------------------------------
Charles W. Hagel
Its: Senior Vice President
SIGNATURE PAGE FOR
CAC FIRST AMENDMENT
LASALLE BANK NATIONAL ASSOCIATION
By: /s/ David H. Sherer
------------------------------------
David H. Sherer
Its: Senior Vice President
SIGNATURE PAGE FOR
CAC FIRST AMENDMENT
HARRIS N.A.
By: /s/ Paul Rubrich
------------------------------------
Paul Rubrich
Its: Vice President
SIGNATURE PAGE FOR
CAC FIRST AMENDMENT
FIFTH THIRD BANK
(EASTERN MICHIGAN)
By: /s/ John Antonczak
------------------------------------
John Antonczak
Its: Vice President
SIGNATURE PAGE FOR
CAC FIRST AMENDMENT
NATIONAL CITY BANK OF THE MIDWEST,
FORMERLY KNOWN AS NATIONAL CITY BANK OF
MICHIGAN/ILLINOIS
By: /s/ Michael Kell
------------------------------------
Michael Kell
Its: Vice President