EXHIBIT 4(c)(4)
EXECUTION COPY
07/29/98
FOURTH AMENDMENT TO CREDIT AGREEMENT
This FOURTH AMENDMENT TO CREDIT AGREEMENT ("Fourth Amendment") is made as
of this 30th day of July, 1998 by and among Credit Acceptance Corporation, a
Michigan corporation ("Company"), the Permitted Borrowers signatory hereto
(each, a "Permitted Borrower" and collectively, the "Permitted Borrowers"),
Comerica Bank ("Comerica") and the other banks signatory hereto (individually, a
"Bank" and collectively, the "Banks") and Comerica Bank, as agent for the Banks
(in such capacity, "Agent").
RECITALS
A. Company, Permitted Borrowers, Agent and the Banks entered into that
certain Second Amended and Restated Credit Agreement dated as of December 4,
1996, as amended by First Amendment and Consent dated as of June 4, 1997, Second
Amendment dated as of December 12, 1997 and Third Amendment to Credit Agreement
dated as of May 11, 1998 (as amended, the "Credit Agreement") under which the
Banks renewed and extended (or committed to extend) credit to the Company and
the Permitted Borrowers, as set forth therein.
B. The Company and the Permitted Borrowers have requested that Agent and
the Banks agree to make certain amendments to the Credit Agreement and to extend
the Revolving Credit Maturity Date presently in effect, and Agent and the Banks
are willing to do so, but only on the terms and conditions set forth in this
Fourth Amendment.
NOW, THEREFORE, Company, Permitted Borrowers, Agent and the Banks agree:
l. Section 1 of the Credit Agreement is hereby amended, as follows:
(a) The definition of "Cleanup Call" is amended by adding the words
"or a Special Purpose Subsidiary" in the fourth and eighth lines
thereof, after the word "Company".
(b) The defined term "Co-Agents" is deleted.
(c) A new definition of "Collateral" is added, as follows:
"'Collateral' shall mean all right, title and interest
of the Company and each of its Significant Domestic
Subsidiaries in, to and under its accounts,
inventory, machinery, equipment, contract rights, chattel
paper, general intangibles, including without limitation
Advances to Dealers, Dealer Agreements (and any amounts
advanced to or liens granted by Dealers thereunder),
Installment Contracts and related financial property (such
Dealer Agreements , Advances to Dealers and the Installment
Contracts, accounts, contract rights, chattel paper and
general intangibles relating to such Dealer Agreements and
Advances to Dealers being subject to the rights of Dealers
under Dealer Agreements), and computer records and software
relating thereto, whether now owned or hereafter acquired by
such Person, one hundred percent (100%) of the share capital
of each Significant Domestic Subsidiary of the Company
(whether direct or indirect) and not less than sixty-five
percent (65%) of the share capital of CAC UK, and all proceeds
and products of the foregoing.
(d) A new definition of "Collateral Documents" is added, as follows:
"'Collateral Documents' shall mean such security
agreements, stock pledges, collateral assignments,
hypothecations, and other documents and instruments
required to be executed and delivered by the Company
and its Significant Subsidiaries in order to provide
the Banks with the security interests and other liens
and encumbrances required under Section 7.23 hereof,
and any other documents or instruments (including,
without limitation, financing statements, stock powers,
acknowledgments, registrations and the like) necessary
to protect or perfect the security interests, liens
and other encumbrances established thereby, all in form
and substance satisfactory to Agent and the Banks, as
each and any of such documents or instruments may be
amended from time to time."
(e) The definition of "Consolidated Tangible Net Worth" is amended by
replacing, in the last line thereof, the words "in the applicable
reporting period" with the words "prior to such date".
(f) The definition of "Debt Rating" is amended and restated in its
entirety as follows;
"'Debt Rating' shall mean the debt rating of Company's
long-term non-credit enhanced senior debt by Fitch."
(g) A new definition of "Equity Offering" is added, as follows:
"'Equity Offering' shall mean the issuance and sale for
cash, on or after the Fourth Amendment Effective Date
by Company or any of its Subsidiaries
of additional capital stock or other equity interests, other
than upon the exercise of employee and dealer stock options
pursuant to stock option plans maintained or offered by the
Company or its Subsidiaries in the ordinary course of business
and not in anticipation of any sale of capital stock or equity
interests to the general public."
(h) A new definition of "Equity Offering Adjustment" is added, as
follows:
"Equity Offering Adjustment' shall mean that amount to
be added to the minimum Consolidated Tangible Net Worth
required to be maintained under Section 7.7 hereof
consisting of an amount equal to one hundred percent
(100%) of each Equity Offering conducted by the Company
or any of its subsidiaries, net of related costs of
issuance payable to third parties, on and after July 1,
1998, on a cumulative basis."
(i) A new definition of "Excess Exposure" is added, as follows:
"'Excess Exposure'" shall mean, at any time, that
amount, if any, by which the Percentage of the
Revolving Credit Maximum Amount held by Comerica or
NationsBank (and their respective Affiliates), as the
case may be (expressed as an amount in Dollars),
exceeds, at any time, Thirty Million Dollars
($30,000,000.00); provided, however, that (i) for
purposes of the computations of Excess Exposure
hereunder, the Excess Exposure for each such Bank shall
not exceed Five Million Dollars ($5,000,000.00); (ii)
once the Excess Exposure has been eliminated for a
Bank, Excess Exposure shall not subsequently be deemed
to exist for such Bank unless payments received by such
Bank were required to have been disgorged or otherwise
readvanced by such Bank; (iii) in connection with the
elimination of the Excess Exposure, Agent shall prepare
and distribute to Company and the Banks a revised
Exhibit D to the Credit Agreement setting forth the
applicable new Percentages, if any; and (iv) neither
Comerica nor NationsBank shall have any obligation to
take any action to reduce its Excess Exposure."
(j) The definition of "Eurocurrency-Interest Period" is amended to
delete the availability thereunder of an Interest Period of
twelve months.
(k) A new definition of "Fourth Amendment Effective Date" is added as
follows:
"Fourth Amendment Effective Date" shall mean the date
on which all conditions are satisfied to the
effectiveness of the Fourth Amendment to
Credit Agreement dated as of July 30, 1998 executed and
delivered by and among the Company, Permitted Borrowers,
the Banks and the Agent."
(l) Paragraph (d) of the definition of "Funding Conditions" is
amended and restated in its entirety as follows:
"(d) concurrently with the incurring of such additional
Debt, (i) so long as any Excess Exposure of Comerica or
NationsBank exists, the Aggregate Commitment shall be
automatically reduced to eliminate such Excess Exposure
(in its entirety) and the proceeds of such Debt, net of
third party expenses incurred by the Company in
connection with the issuance of such Debt, shall be
applied by the Company first to reduce the outstanding
principal balance under the Revolving Credit (taking
into account outstanding Letters of Credit and Swing
Line Advances) to an amount not greater than the
Aggregate Commitment, as so reduced, remitting such
proceeds to Comerica and NationsBank, as applicable and
(ii) thereafter, (x) the proceeds of such Debt, net of
third party expenses incurred by the Company in
connection with the issuance of such Debt, shall be
applied to reduce the principal balance outstanding
under the Senior Debt or the Future Debt or (y) 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 and the aggregate amount of drawings made
under any Letter of Credit for which the Agent has not
received full payment) shall be reduced by the amount
of Debt so incurred, net of third party expenses
incurred by Company in connection with the issuance of
such Debt, subject to the right to reborrow in
accordance with this Agreement."
(m) The definition of "Future Debt" is amended, in clause (x) thereof
(defining "Long Term Notes") to add, in the first line of the
definition of Long Term Notes (following the word "unsecured"),
the words "or, subject to the terms hereof, secured".
(n) "Keystone Acquisition" shall mean that certain acquisition by
Company of the public vehicle auction business of Keystone Auto
Auction, Inc., conducted in compliance with the terms and
conditions set forth in the written consent of Agent (for and on
behalf of the Banks) issued on May 29, 1998 under this Agreement.
(o) The definition of "Line of Credit Maximum Amount" is amended and
restated in its entirety to read as follows:
"'Line of Credit Maximum Amount' shall mean zero (0)."
(p) The definition of "Loan Documents" is amended to add, in the
second line thereof (following the words "Letter of Credit
Agreements") the words ", any Collateral Documents executed under
Section 7.23 hereof".
(q) A new definition of "New Bank Addendum" is added, as follows:
"'New Bank Addendum' shall mean an addendum,
substantially in the form of Exhibit M hereto, to be
executed and delivered by each Bank becoming a party to
this Agreement pursuant to Section 3.18 hereof."
(r) The definition of "Permitted Acquisition" is hereby amended by
adding, immediately following the words "Tele-Track Acquisition,"
(in the first line thereof), the words "Keystone Acquisition" and
by deleting from the first paragraph thereof the words "primarily
engaged in the provision of financing programs for the purchase
of used motor vehicles".
(s) The definition of "Permitted Guaranties" is amended and restated
in its entirety to read as follows:
"'Permitted Guaranties' shall mean (i) any guaranties
or other support provided by the Company, for the
benefit of the Permitted Borrowers, covering any
overdraft lines of credit or similar credit
arrangements maintained by the Permitted Borrowers or
Arlington Investment Company under Section 8.5(d)
hereof or (ii) any agreement or other undertaking by
the Company, as servicer of the Installment Contracts
covered by a Permitted Securitization, to advance funds
to cover the interest component of obligations issued
as part of such securitization and payable from
collections on such Installment Contracts (such
advances to be repayable to Company on a priority basis
from such collections), provided that the aggregate
amount of such advances under this clause (ii) at any
time outstanding shall not exceed $750,000."
(t) The definition of "Permitted Investment" is hereby amended by
changing the period at the end of clause(e) to a semicolon and
adding the word "and", and adding a new clause (f), as follows:
"(f) Investments by CAC UK in obligations similar in nature,
term and credit quality to those enumerated in paragraphs
(a) through (e) above except that the United Kingdom shall
be substituted
for the United States of America in each case."
(u) Paragraph (b) of the definition of "Permitted Securitization" is
hereby amended and restated in its entirety as follows:
"(b) (i) The aggregate principal amount of all Debt
incurred, and (without duplication) of securities issued
(other than subordinated securities issued to and held by
the Company or a Subsidiary), by any Special Purpose
Subsidiary pursuant to any Permitted Securitization,
together with the aggregate principal amount of all other
Debt incurred, and (without duplication) securities issued
(other than subordinated securities issued to and held by
the Company or a Subsidiary), by such Special Purpose
Subsidiary and/or any one or more other Special Purpose
Subsidiaries, pursuant to such Permitted Securitization
and/or any one or more other Permitted Securitizations, from
and after the effective date of the Third Amendment,
cumulatively shall not exceed $100,000,000 (which amount
shall not be readvanced or reborrowed); (ii) the aggregate
value of all Advances to Dealers disposed of by the Company
and/or any one or more Subsidiaries to such Special Purpose
Subsidiary pursuant to such Permitted Securitization,
together with the aggregate value of all other Advances to
Dealers disposed of by the Company and/or any one or more
Subsidiaries to such Special Purpose Subsidiary and/or any
one or more other Special Purpose Subsidiaries, from and
after the effective date of the Third Amendment,
cumulatively (but without duplication) shall not exceed
$117,648,000; and (iii) the Company or the Subsidiary
disposing of such Advances to Dealers shall itself actually
receive (substantially contemporaneously with such
disposition) cash from each disposition of such Advances to
Dealers in connection with any such securitization
transaction in an amount not less than Eighty-Five Percent
(85%) of the value of such Advances to Dealers;".
(v) Paragraph (d) of the definition of "Permitted Securitization" is
hereby amended and restated in its entirety, as follows:
"(d) Concurrently with each such disposition, (i) to the
extent any Excess Exposure of Comerica or NationsBank
exists, the Aggregate Commitment shall be automatically
reduced to eliminate such Excess Exposure (in its entirety)
and the Company shall apply the proceeds of each such
disposition (net of customary third party expenses incurred
by the Company in connection therewith) to reduce the
outstanding principal balance under the Revolving Credit
(taking into account outstanding Letters of Credit and Swing
Line Advances) to an amount equal to (or less
than) the Aggregate Commitment, as so reduced, remitting such
proceeds to Comerica and NationsBank, as applicable, and (ii)
once the Excess Exposure of Comerica and NationsBank has been
eliminated (in its entirety), the aforesaid net proceeds 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 and 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."
(w) The definition of "Permitted Transfer" is amended to add, at the
end of such definition (before the period), the following:
", any transfer of property by a Subsidiary to the
Company and any transfer of the stock of a Special
Purpose Subsidiary to the Company or to any other
Subsidiary which is not a Special Purpose Subsidiary."
(x) The definition of "Revolving Credit Maturity Date" is amended by
deleting the date "May 15, 1999" in the first line thereof (after
giving effect to the Third Amendment) and substituting therefor
the words "June 15, 1999, subject to any extensions thereof
pursuant to Section 3.16 hereof".
(y) The definition of "Revolving Credit Maximum Amount" is amended
and restated in its entirety to read as follows:
"'Revolving Credit Maximum Amount' shall mean One
Hundred Fifteen Million Dollars ($115,000,000), subject
to any increases in the Revolving Credit Maximum
Amount, pursuant to Section 3.18 of this Agreement, by
an amount not to exceed the Revolving Credit Optional
Increase and subject to any reductions of the Revolving
Credit Maximum Amount in connection with the
elimination of Excess Exposure hereunder or any
reductions or termination under Sections 3.15 or 9.2 of
this Agreement."
(z) A new definition of "Revolving Credit Optional Increase" is
hereby added, as follows:
"'Revolving Credit Optional Increase' shall mean an
amount up to Thirty Five Million Dollars
($35,000,000)."
(aa) The definition of "Securitization Documents" is amended and
restated in
its entirety, as follows:
"'Securitization Documents' shall mean any note
purchase agreement (and any notes issued thereunder),
transfer or security document, master trust or other
trust agreement, servicing agreement, indenture,
pooling agreement, contribution or sale agreement or
other document, instruments and certificates executed
and delivered, subject to the terms of this Agreement,
to evidence or secure (or otherwise relating to) a
Permitted Securitization, as the same may be amended
from time to time (subject to the terms hereof) and any
and all other documents executed in connection
therewith or replacement or renewal thereof."
(bb) A new definition of "Securitization Transaction" is added, as
follows:
"Securitization Transaction" shall mean a transfer of,
or grant of a Lien on, Advances to Dealers, Installment
Contracts, accounts receivable and/or other financial
assets by the Company or any Subsidiary to a Special
Purpose Subsidiary or other special purpose or limited
purpose entity and the issuance (whether by such
Special Purpose Subsidiary or other special purpose or
limited purpose entity or any other Person) of Debt or
of any securities secured directly or indirectly by
interests in, or of trust certificates or other
securities directly or indirectly evidencing interests
in, such Advances to Dealers, Installment Contracts,
accounts receivable and/or other financial assets."
(cc) A new definition of "Syndications Agent" is added to the Credit
Agreement as follows:
"Syndications Agent" shall mean NationsBank, N.A.
("NationsBank"), or such successor syndication agent as
appointed by the Company under Section 12.15 hereof.
2. Notwithstanding anything to the contrary contained in Section 2 of the
Credit Agreement, neither the Company nor the Permitted Borrowers shall be
entitled to receive, request or maintain any Advances of the Line of Credit.
3. Section 3 of the Credit Agreement is amended, as follows:
(a) Section 3.5 is amended to add at the end of said section the
following:
"(vii) each Request for Swing Line Advance, once
delivered to Swing Line Bank, shall not be
revocable by Company, and shall constitute and include a
certification by the Company as of the date thereof that:
(A) both before and after such Swing Line
Advance, the obligations of the Company set forth
in this Agreement and the Loan Documents, are
valid, binding and enforceable obligations of the
Company;
(B) all conditions to the making of Swing
Line Advances have been satisfied (both before and
after giving effect to such Advance);
(C) both before and after the making of such
Swing Line Advance, there is no Default or Event
of Default in existence; and
(D) both before and after such Swing Line
Advance, the representations and warranties
contained in this Agreement and the other Loan
Documents are true and correct in all material
respects.
Swing Line Bank shall promptly deliver to Agent by telecopy a
copy of any Request for Swing Line Advance received hereunder."
(b) Section 3.16 is amended to replace the word "[Reserved]" with the
following:
"EXTENSION OF REVOLVING CREDIT MATURITY DATE. Provided
that no Default or Event of Default has occurred and is
continuing, Company may, by written notice to Agent and
each Bank (which notice shall be irrevocable and which
shall not be deemed effective unless actually received
by Agent and each Bank), prior to April 15, but not
before March 15, of each year beginning in 1999 request
that the Banks extend the then applicable Revolving
Credit Maturity Date to a date that is 364 days later
than the Revolving Credit Maturity Date then in effect
(each such request, a "Request").
Each Bank shall, not later than thirty (30) calendar
days following the date of its receipt of a Request,
give written notice to the Agent stating whether such
Bank is willing to extend the Revolving Credit Maturity
Date as requested. If Agent has received the aforesaid
written approvals of such Request from each of the
Banks, then, effective on (but not before) such
Revolving Credit Maturity Date (so long as no Default
or Event of Default has occurred and is continuing and
none of the Banks has withdrawn its approval, in
writing, prior thereto), the Revolving Credit Maturity
Date shall be so extended for an additional period of
364 days, the term Revolving Credit Maturity Date shall
mean such extended date and Agent shall promptly notify
the Company and the Banks that such extension has
occurred. If (i) any Bank gives the Agent written
notice that it is unwilling to extend the Revolving
Credit Maturity Date as requested or (ii) any Bank
fails to provide written approval to Agent of the
Request within thirty (30) calendar days of the date of
Agent's receipt of such Request, or (iii) withdraws its
approval in writing prior to the Revolving Credit
Maturity Date then in effect then (x) the Banks shall
be deemed to have declined to extend the Revolving
Credit Maturity Date, (y) the then-current Revolving
Credit Maturity Date shall remain in effect (with no
further right on the part of Company, to request
extensions thereof under this Section 3.16) and (z) the
commitments of the Banks to make Advances of the
Revolving Credit hereunder shall terminate on the
Revolving Credit Maturity Date then in effect, and
Agent shall promptly notify Company and the Banks
thereof."
(c) New Section 3.18 is added to the Credit Agreement as follows:
"3.18 OPTIONAL INCREASE IN REVOLVING CREDIT MAXIMUM
AMOUNT. Provided that no Default or Event of Default
has occurred and is continuing, and provided that the
Company has not previously elected to reduce or
terminate the Revolving Credit Maximum Amount under
Section 3.15 hereof, and provided further that the
Excess Exposure of Comerica and NationsBank no longer
exists, the Company may request that the Revolving
Credit Maximum Amount be increased in an aggregate
amount (for all such Requests under this Section 3.18)
not to exceed the Revolving Credit Optional Increase,
subject, in each case, to Section 11.1 hereof and to
the satisfaction concurrently with or prior to the date
of each such request of the following conditions:
(a) the Company shall have delivered to the Agent
not less than thirty (30) days prior to the Revolving
Credit Maturity Date then in effect a written request
for such increase, specifying the amount of Revolving
Credit Optional Increase thereby requested (each such
request, a "Request for Increase"); provided, however
that in the event the Company has previously delivered
a Request for Increase pursuant to this Section 3.18,
the Company may not deliver a subsequent Request for
Increase until all the conditions to effectiveness of
such first Request for
Increase have been fully satisfied hereunder (or such Request
for Increase has been withdrawn); and provided further that
the Company may make no more than two Requests for Increase in
any calendar year;
(b) a lender or lenders meeting the requirements
of Section 13.8(c) hereof and acceptable to the
Company, Syndication Agent and the Agent (including,
for the purposes of this Section 3.18, any existing
Bank which agrees to increase its commitment hereunder,
the "New Bank(s)") shall have become a party to this
Agreement by executing and delivering a New Bank
Addendum for a minimum amount (including for the
purposes of this Section 3.18, the existing commitment
of any existing Bank) for each such New Bank of Ten
Million Dollars ($10,000,000) and an aggregate amount
for all such New Banks of that portion of the Revolving
Credit Optional Increase, taking into account the
amount of any prior increase in the Revolving Credit
Maximum Amount (pursuant to this Section 3.18), covered
by the applicable Request, provided, however that each
New Bank shall remit to the Agent funds in an amount
equal to its Percentage (after giving effect to this
Section 3.18) of all Advances of the Revolving Credit
then outstanding, such sums to be reallocated among and
paid to the existing Banks based upon the new
Percentages as determined below;
(c) the Company shall have paid to the Agent for
distribution to the existing Banks, as applicable, all
interest, fees (including the Revolving Credit Facility
Fee) and other amounts, if any, accrued to the
effective date of such increase and any breakage fees
attributable to the reduction (prior to the last day of
the applicable Interest Period) of any outstanding
Eurocurrency-based Advances, calculated on the basis
set forth in Section 11.1 hereof as though Company has
prepaid such Advances;
(d) the Company and each of the Permitted
Borrowers shall have executed and delivered to the
Agent new Revolving Credit Notes payable to each of the
New Banks in the face amount of each such New Bank's
Percentage of the Revolving Credit Maximum Amount
(after giving effect to this Section 3.18) and, if
applicable, renewal and replacement Revolving Credit
Notes payable to each of the existing Banks in the face
amount of each such Bank's Percentage of the Revolving
Credit Maximum Amount (after giving effect to this
Section 3.18), each of such Revolving Credit Notes to
be substantially in the form of Exhibit C-1 or C-2 to
the Credit Agreement, as applicable, and dated as of
the effective date of such increase (with appropriate
insertions relevant to such Notes
and acceptable to the applicable Bank, including the New Banks);
(e) the representations and warranties made by
Company, the Permitted Borrower, each Guarantor or any
other party to any of the Loan Documents (excluding the
Agent and Banks) in this Agreement or any of the other
Loan Documents, and the representations and warranties
of any of the foregoing which are contained in any
certificate, document or financial or other statement
furnished at any time hereunder or thereunder or in
connection herewith or therewith shall have been true
and correct in all material respects when made and
shall be true and correct in all material respects on
and as of the Fourth Amendment Effective Date; and (ii)
no Default or Event of Default shall have occurred and
be continuing; and
(f) such other amendments, acknowledgments,
consents, documents, instruments, any registrations, if
any, shall have been executed and delivered and/or
obtained by Company as required by Agent or the
Majority Banks, in their reasonable discretion.
Promptly on or after the date on which all of the
conditions to such Request for Increase set forth above
have been satisfied, Agent shall notify the Company and
each of the Banks of the amount of the Revolving Credit
Maximum Amount as increased pursuant this Section 3.18
and the date on which such increase has become
effective and shall prepare and distribute to Company
and each of the Banks (including the New Banks) a
revised Exhibit D to the Credit Agreement setting forth
the applicable new Percentages of the Banks (including
the New Bank(s), taking into account such increase and
assignments (if any).".
(d) New Section 3.19 is added to the Credit Agreement, as follows:
"3.19 MANDATORY REDUCTION OF REVOLVING CREDIT MAXIMUM
AMOUNT. If, at any time during which any Excess Exposure of
Comerica or NationsBank exists and the Collateral Documents
required under Section 7.23 hereof have not yet been
delivered, the average principal Indebtedness outstanding
under the Revolving Credit for any period of thirty (30)
consecutive days exceeds Ninety-One percent (91%) of the
Revolving Credit Maximum Amount then in effect hereunder,
the Company shall be obligated, within thirty (30) days of
such occurrence, to reduce the amount of the Aggregate
Commitment by the amount of the Excess Exposure (in its entirety),
such reduction in the Aggregate Commitment to be accompanied by
prepayments of principal sufficient to reduce the
outstanding principal balance under the Revolving Credit (taking
into account outstanding Letters of Credit and Swing Line Advances)
to an amount not greater than the Aggregate Commitment, as so
reduced, such prepayments to be remitted by the Agent to Comerica
and NationsBank, as applicable."
4. Section 7 of the Credit Agreement is amended, as follows:
(a) Paragraph (a) of Section 7.4 is amended by replacing "2.00" in
the fifth line thereof with "2.25".
(b) Section 7.5 is amended by adding, after the word "Debt" in the
second line thereof, the words "at a level equal to or less than
Two Hundred Percent (200%) of the Company's Consolidated Tangible
Net Worth and".
(c) Section 7.7 is amended and restated in its entirety, as follows:
"7.7 MINIMUM TANGIBLE NET WORTH. On a Consolidated
basis, maintain consolidated tangible net worth of not
less than Two Hundred Three Million Dollars
($203,000,000.00), plus the sum of (i) seventy-five
percent (75%) of Consolidated Net Income for each
fiscal quarter of the Company (A) beginning on or after
July 1, 1998, (B) ending on or before the applicable
date of determination thereof, and (C) for which
Consolidated Net Income as determined above is a
positive amount and (ii) the Equity Offering
Adjustment."
(d) Section 7.8 is amended to change the reference to "sixty-five
percent (65%)" therein (after giving effect to the Third
Amendment) to "seventy percent (70%)".
(e) Section 7.9 is amended (i) to delete the word "and" from the end
of clause (d), (ii) to replace existing clause (e) with new
clause (e), "(e) from September 30, 1998 to December 30, 1998,
2.0 to 1.0" and (iii) to add new clause (f), "(f) from and after
December 31, 1998, 2.25 to 1.0."
(f) Section 7.10 is amended to add, in the third line thereof
(following the word "properties") the parenthetical clause
"(including without limitation, any Collateral)".
(g) Section 7.12 is amended to add, in the last line thereof
(following the words "Loan Documents"), the words ", including
without limitation any
Collateral Documents required under Section 7.23 hereof.".
(h) Section 7.13 is amended to add, in the seventh line thereof
(following the words "similarly situated"), the words "(and
including such lender loss payee clauses and/or endorsements as
Agent or the Majority Banks may request following the delivery of
the Collateral Documents under Section 7.23 hereof)".
(i) Section 7.19 is amended and restated in its entirety as follows:
"7.19 MAINTAIN DEBT RATING. Cause Fitch on an ongoing
basis, but not less than once during each calendar
year, to maintain a Debt Rating for Company's long
term, non-credit enhanced senior debt."
(j) New Section 7.23 is added, as follows:
"7.23. REQUIRED COLLATERAL. As soon as reasonably
practicable, but in any event on or before Agent's
close of business on November 30, 1998, execute and/or
deliver to the Agent, for and on behalf of the Banks,
(i) Collateral Documents granting to Agent, for and on
behalf of the Banks, as security for the Indebtedness,
a first priority perfected security interest, mortgage
and lien encumbering the Collateral, subject only to
Liens permitted under Sections 8.6(a) through (c)
hereof and to the grant of security interests and liens
in favor of the holders of the Senior Debt (and, to the
extent applicable, Future Debt under clause (x) of the
definition thereof) on an equal and ratable basis with
the liens granted hereunder and (ii) to the extent
necessary (as determined by the Agent or the Majority
Banks) an intercreditor agreement(s); provided however
that in accepting such Collateral, Agent and the Banks
agree, upon the request of the Company, in connection
with a Permitted Securitization, to release such
Collateral, but only to the extent of the Advances to
Dealers (and the Dealer Agreements, Installment
Contracts and related property) covered by such
Permitted Securitization;."
(k) New Section 7.24 is added, as follows:
"7.24 YEAR 2000 REQUIREMENT. The Company and its
Subsidiaries shall review the areas in their business
and operations which could be materially adversely
affected by, and develop a program to address on a
timely basis the risk that, computer applications used
by the Company and its Subsidiaries may be unable to
recognize and perform properly date-sensitive functions
involving certain dates prior to and any date after
December 31, 1999. Any reprogramming required to
permit the proper functioning, in and following the
year 2000, computer systems and equipment containing
embedded microchips owned or leased by the Company or
any of its Subsidiaries and the testing of all such
systems and equipment, as so reprogrammed, will be
completed by June 1, 1999. The cost to the Company and
its Subsidiaries of such reprogramming and testing and
of the reasonably foreseeable consequences of year 2000
to the Company and its Subsidiaries (including, without
limitation, reprogramming errors and the failure of
others' systems or equipment) will not result in a
Default or have a material adverse effect on the
Company and its Subsidiaries, taken as a whole."
5. Section 8 of the Credit Agreement is hereby amended, as follows:
"(a) Section 8.5(c) is amended to add in the last line thereof
(following the word "outstanding"), the words:
"and mortgage debt incurred (by assumption or otherwise) by
Arlington Investment Company, a Subsidiary of the Company,
in an aggregate principal amount not to exceed $1,000,000.00
at any time outstanding".
(b) Section 8.5(d) is amended and restated in its entirety as
follows:
"(d) the Senior Debt, Future Debt, Permitted CAC UK
Debt, the Subordinated Debt, unsecured overdraft lines
of credit or similar credit arrangements maintained by
the Permitted Borrowers in the ordinary course of
business in the countries of their formation, in an
amount not to exceed, in the case of CAC UK, L2,000,000
and in the case of each of the other Permitted
Borrowers, $1,500,000, or the equivalent thereof in an
Alternative Currency, lines of credit maintained by
Arlington Investment Company, in the ordinary course of
business, in an aggregate amount not to exceed
$5,000,000.00 at any time outstanding, and such other
debt set forth in Schedule 8.5 attached hereto, if any
(in addition to any other matters set forth in this
Section 8.5), and any renewals or refinancing of such
indebtedness in amounts not exceeding the scheduled
amounts (less any required amortization according to
the terms thereof) on substantially the same terms and
otherwise in compliance with this Agreement;"
(c) Section 8.6(a) is amended by adding, at the end of said
section (immediately following the word "Indebtedness"), the
words "and any Liens granted to the holders of Senior Debt (and,
to the extent applicable, Future Debt under clause (x) of the
definition thereof) as contemplated by Section 7.23 hereof,
on an equal and ratable basis with comparable Liens granted to
Agent, for and on behalf of the Banks."
(d) Section 8.6(b) is amended to add in the last line thereof
(following the word "hereof," but preceding the semicolon) the
words "and mortgage debt identified in Section 8.5(c) encumbering
that certain land and building currently leased to Arlington
Investment Company by MP Developers".
(e) Section 8.6(d) is amended by adding, in the first line
thereof (following the words "Company or any of its
Subsidiaries"), the words ", other than Advances to Dealers,
Installment Contracts or property related thereto, by adding in
clause (y) thereof, after the word "Company" the words "(other
than Special Purpose Subsidiaries) and", and by deleting clause
(z) thereof, but retaining the words at end of said Section
8.6(d), "all as of the applicable date of determination".
(f) Section 8.7 is amended by deleting the words "or any
material portion" from the third line thereof.
(g) Paragraph (i) of Section 8.8 is amended by deleting the word
"and" before "(z)" and adding the following in the last line
thereof after the word "continuing" (before the semicolon): "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".
(h) Section 8.16 is amended (i) by adding, in the first line
thereof, (immediately following the caption), the words "Engage
in a Securitization Transaction, other than a Permitted
Securitization and", (ii) by changing the caption to read, in its
entirety, "SECURITIZATION TRANSACTION; AMENDMENTS TO
SECURITIZATION DOCUMENTS" and (iii) by adding, after the word
"respect" in the fourth line thereof, the words "adverse to the
Company or any Subsidiary" and amending and restating the last
sentence thereof to read as follows:
"For purposes of the Securitization Documents, the
'material terms and conditions' thereof shall be
deemed solely those terms or conditions with respect to
servicer fees, servicer expenses, defaults, events of
default, recourse to the Company or any Subsidiary
(other than a Special Purpose Subsidiary), Cleanup
Calls or conditions contained therein which are
required under or necessary for compliance with this
Agreement."
6. Section 9 of the Credit Agreement is amended as follows:
(a) Section 9.1(e) is amended to add, after each reference
therein to the "Foreign Guaranty" the words "or any of the
Collateral Documents executed and delivered under Section 7.23
hereof,".
(b) Section 9.2(e) is amended to add, in the last line thereof
(following the words "Loan Documents") the words ", including
without limitation any Collateral Documents executed and
delivered by the Company pursuant to Section 7.23 hereof,".
7. Section 10.2 of the Credit Agreement is amended to add, in the third
line thereof (following the words "or others"), the words ", the proceeds of any
Collateral (if provided to the Banks under Section 7.23 hereof)".
8. Section 12.15 of the Credit Agreement is amended and restated in its
entirety as follows:
"12.15 SYNDICATION AGENT. NationsBank N.A. has been
designated by the Company as "Syndication Agent" under this
Agreement. Other than its rights and remedies as a Bank
hereunder, the Syndication Agent shall have no
administrative, collateral or other rights or
responsibilities, provided, however, that the Syndication
Agent shall be entitled to the benefits afforded to Agent
under Sections 12.5, 12.6 and 12.11 hereof."
9. Section 13.11 of the Credit Agreement is amended to add at the end of
the second to last sentence thereof (following the words "Swing Line Bank") the
following:
"and no amendment, waiver or consent shall, unless in
writing and signed by Comerica and NationsBank
(together with such other Banks as necessary to
constitute Majority Banks), change the definition of
Excess Exposure, or any term or provision related
thereto."
10. This Fourth 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:
(i) counterpart originals of this Fourth Amendment, in
each case duly executed and delivered by Company, the Permitted
Borrowers and the Banks signatory to this Fourth Amendment, in
form satisfactory to Agent and the Banks;
(ii) renewal and replacement Notes (the "New Notes")
substantially in the form of Exhibits C-1 and C-2 to the Credit
Agreement, payable to the order of each of the Banks in the face
amount of each such Bank's Percentage of the Revolving Credit
Maximum Amount as set forth in Attachment I (Exhibit D --
Percentages) hereto;
(iii) certified copies of resolutions of the Boards of
Directors of each of the Company and the Permitted Borrowers
authorizing, as applicable, the execution and delivery of this
Fourth Amendment, the New Notes and the other Loan Documents
required under this clause (a) and the performance by the Company
and the Permitted Borrowers of each of their respective
obligations under the Credit Agreement as amended by this Fourth
Amendment and the New Notes;
(iv) a certificate of the Secretary or other authorized
officer of each of the Company and the Permitted Borrowers
certifying the names of the officer or officers of the Company or
the Permitted Borrowers, as the case may be, authorized to sign
this Fourth Amendment and the New Notes and such other Loan
Documents required under this clause (a) together with a sample
of the true signature of each such officer;
(v) a certificate of the Secretary or other authorized
officer of the Company certifying that, except as have been
previously obtained, no consents or other authorizations of any
third parties are required in connection with this Fourth
Amendment; and that, after giving effect to this Fourth
Amendment, no Default or Event of Default has occurred and is
continuing on the proposed Fourth Amendment Effective Date;
(vi) an opinion of counsel to the Company in form and
substance satisfactory to Agent and the Majority Banks;
(vii) a receipt and acknowledgment of those banks which
were parties to the Third Amendment, but which are not parties to
this Fourth Amendment confirming repayment and discharge in full
of the Indebtedness outstanding to them immediately prior to the
Fourth Amendment Effective Date and that such banks are no longer
parties to the Credit Agreement; and
(viii) duly executed copies of such waivers or consents as
required under the Senior Debt Documents in connection with the
Company's execution and delivery of this Fourth Amendment.
(b) Company shall have paid to the Agent, for distribution to the
Banks (including, where applicable, those Banks parties to the
Credit Agreement immediately prior to the Fourth Amendment
Effective Date, but not parties to this Fourth Amendment): (i)
all sums outstanding under the Line of Credit on the Fourth
Amendment Effective Date and (ii) the upfront fee referred to in
the 7/6/98 term sheet issued by Syndications Agent and all
interest, fees (including the Revolving Credit Fee) and other
amounts, if any, accrued to the Fourth Amendment Effective Date;
and Company shall have paid to Agent and Syndication Agent, as
the case may be, all fees referenced in the respective agency fee
letters entered into by agents with the Company.
If the foregoing conditions have not been satisfied or waived on or before July
31, 1998, this Fourth Amendment shall lapse and be of no further force and
effect.
11. New Exhibit D (setting forth the applicable Percentages as revised
hereunder) and New Schedule 4.1 (Pricing Grid), attached hereto as Attachments I
and II respectively, shall replace existing Exhibit D and Schedule 4.1 in their
entirety. New Exhibit M (New Bank Addendum), attached hereto as Attachment III,
is hereby added to the Agreement; and new Schedule 6.15 (Litigation) attached
hereto as Attachment IV shall replace existing Schedule 6.15 in its entirety..
12. Concurrently with the Fourth Amendment Effective Date pursuant to
Section 10 hereof, each Bank shall have (i) a Percentage equal to the percentage
set forth in Attachment I hereto and (ii) Revolving Loans (and participations in
Letters of Credit) in its Percentage of all Revolving Loans (and Letters of
Credit) outstanding on the Fourth Amendment Effective Date. To facilitate the
foregoing, each Bank which as a result of the adjustments of Percentages
evidenced by Attachment I is to have a greater principal amount of Revolving
Loans outstanding than such Bank had outstanding under the Credit Agreement
immediately prior to the Fourth Amendment Effective Date shall deliver to the
Agent immediately available funds to cover such Revolving Loans (and the Agent
shall, to the extent of the funds so received, and after remitting funds to
those Banks no longer parties to the Credit Agreement after giving effect to the
Fourth Amendment disburse funds to each Bank which, as a result of the
adjustment of the Percentages, is to have a lesser principal amount of Revolving
Loans outstanding than such Bank had under the Credit Agreement immediately
prior to the Fourth Amendment Effective Date). Each Bank which was a party to
the Credit Agreement prior the Fourth Amendment Effective Date, upon receipt of
its New Note(s) (which Notes are to be in exchange for and not in payment of the
predecessor Revolving Credit Notes) issued by the Company to such Bank, shall
return its predecessor Revolving Credit Notes and, if applicable, its Swing Line
Note, to the Agent which shall stamp such Notes "Exchanged" and deliver said
Notes to the Company.
13. Each of the Company and the Permitted Borrowers 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 6.22,
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.
14. Except as specifically set forth above, this Fourth 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.
15. Unless otherwise defined to the contrary herein, all capitalized terms
used in this Fourth Amendment shall have the meaning set forth in the Credit
Agreement.
16. This Fourth Amendment may be executed in counterpart in accordance
with Section 13.10 of the Credit Agreement.
17. This Fourth Amendment shall be construed in accordance with and
governed by the laws of the State of Michigan.
[SIGNATURES FOLLOW ON SUCCEEDING PAGES]
WITNESS the due execution hereof as of the day and year first above
written.
COMERICA BANK, CREDIT ACCEPTANCE CORPORATION
as Agent
By: /S/ XXXX XXXXXXXXX By: /S/ XXXXXXX X. XXXX
------------------------ ---------------------------
Its: VICE PRESIDENT Its: TREASURER
------------------------ ---------------------------
One Detroit Center
000 Xxxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxxxxx
CREDIT ACCEPTANCE CORPORATION
UK LIMITED
By: /S/ XXXXXXX X. XXXX
------------------------------
Its: TREASURER
------------------------------
CAC OF CANADA LIMITED
By: /S/ XXXXXXX X. XXXX
------------------------------
Its: TREASURER
------------------------------
CREDIT ACCEPTANCE CORPORATION IRELAND LIMITED
By: /S/ XXXXXXX X. XXXX
------------------------------
Its: TREASURER
------------------------------
Signature Page to
Fourth Amendment
NATIONSBANK, N.A.
By: /S/ XXXXXXXXX XXXXXXXX
------------------------------
Its: SENIOR VICE PRESIDENT
------------------------------
THE BANK OF NOVA SCOTIA
By: /S/ F. C. H. XXXXX
------------------------------
Its: SENIOR MANAGER LOAN OPERATIONS
--------------------------------
COMERICA BANK
By: /S/ XXXXXXX XXXXXXXXX
------------------------------
Its: VICE PRESIDENT
------------------------------
XXXXXX TRUST AND SAVINGS BANK
By: /S/ XXXXXXX XXXXXX
------------------------------
Its: VICE PRESIDENT
------------------------------
LASALLE NATIONAL BANK
By: /S/ XXXXX XXXXXXX
------------------------------
Its: SENIOR VICE PRESIDENT
------------------------------
Signature Page to
Fourth Amendment
EXHIBIT D
--------------------------------------------------------------------------------
Percentages Commitment Allocation
------------------------------------------------------ (Expressed in Dollars)
Bank Percentage
--------------------------------------------------------------------------------
Comerica 30.435 35,000,000
NationsBank 30.435 35,000,000
LaSalle 17.391 20,000,000
Xxxxxx 13.043 15,000,000
ScotiaBank 8.696 10,000,000
-------- -------------
100.000% $115,000,000
--------------------------------------------------------------------------------
SCHEDULE 4.1 (*)
PRICING MATRIX
---------------------------------------------------------------------------------------------------------
THE APPLICABLE MARGIN FOR THE APPLICABLE FEE PERCENTAGE FOR THE
---------------------------------------------------------------------------------------------------------
ADVANCES AT THE ADVANCES AT THE REVOLVING CREDIT
PRIME-BASED RATE EUROCURRENCY-BASED FACILITY FEE LETTER OF CREDIT
SHALL BE RATE SHALL BE SHALL BE FEE (**) SHALL BE
---------------------------------------------------------------------------------------------------------
NOTWITHSTANDING
THE RATING LEVEL 0% 1.40% .6000% 1.525%
MAINTAINED BY
THE COMPANY:
---------------------------------------------------------------------------------------------------------
---------------------------------------
(*)All terms as defined in the Agreement.
(**)Includes Facing Fee.
