EXHIBIT 4(a)(5)
LIMITED WAIVER
RE:
CREDIT ACCEPTANCE CORPORATION
FIRST AMENDED AND RESTATED 9.12% SENIOR NOTES DUE NOVEMBER 1, 2001 ISSUED
UNDER NOTE PURCHASE AGREEMENT DATED AS OF OCTOBER 1, 1994
Dated as of July 27, 1998
Credit Acceptance Corporation
00000 Xxxx Xxxxxx Xxxx Xxxx
Xxxxx 0000
Xxxxxxxxxx, Xxxxxxxx 00000-0000
Ladies and Gentlemen:
Reference is made to the First Amended and Restated 9.12% Senior Notes due
November 1, 2001 (the "Notes") issued by Credit Acceptance Corporation, a
Michigan corporation (together with its successors and assigns, the "Company"),
in the original aggregate principal amount of $60,000,000 pursuant to separate
Note Purchase Agreements, each dated as of October 1, 1994 (collectively, as
amended, the "Note Agreement"), between the Company and each of the purchasers
listed on Annex 1 thereto (collectively, together with their respective
successors and assigns, the "Noteholders"). All terms not otherwise defined
herein are used with the same meaning as set forth in the Note Agreement.
We have been informed by the Company that the Company and certain
Restricted Subsidiaries propose to enter into an amendment to the Credit
Agreement pursuant to which the Company will agree to grant to the Banks a Lien
on certain collateral on or before November 30, 1998, including, without
limitation, all right, title and interest of the Company and its "Significant
Domestic Subsidiaries" (as defined in the Credit Agreement) to Advances (and
Installment Contracts and other rights relating thereto), subject to the rights
of its Dealers under the Dealer Agreements (excluding assets disposed of
pursuant to a Permitted Securitization), 100% of the outstanding capital stock
of its "Significant Domestic Subsidiaries" and 65% of the share capital of its
Credit Acceptance Corporation UK Limited subsidiary (the "Lien Provision").
Section 6.6(a) of the Note Agreement prohibits the Company and the Restricted
Subsidiaries from including the Lien Provision in the proposed amendment to the
Credit Agreement. In addition, the definition of "Permitted Securitization" in
the Credit Agreement is proposed to be amended to delete the requirement to
reduce the "Aggregate Commitment", the "Line of Credit Maximum Amount" and the
"Revolving Credit Maximum Amount" (as defined in the Credit Agreement) by 80% of
the net proceeds of each disposition in connection with a securitization (the
"Credit Agreement Reduction Provision").
1. Waiver. Subject to the terms and conditions set forth in Section 3
hereof, the Company requests that the Noteholders waive, and the undersigned
Noteholders do hereby waive:
(a) any Event of Default resulting from the Company's failure to
comply with Section 6.6(a) of the Note Agreement due solely to the existence of
the Lien Provision in the Credit Agreement and the agreements set forth in
Section 2(a) hereof;
(b) provided that the Noteholders are granted equal and ratable Liens
in accordance with Section 6.6(b) of the Note Agreement (as if the Lien granted
to the Banks was granted in violation of Section 6.6 of the Note Agreement)
contemporaneously with the grant of Liens to the Banks pursuant to the Lien
Provision and on the same assets, any Event of Default resulting from the
granting of the Liens to the Banks pursuant to the Lien Provision and to the
holders of the Company's other two series of senior notes; and
(c) provided that, and only as long as and to the extent that, the
Credit Agreement Reduction Provision is removed from the Credit Agreement, the
requirement contained in paragraph (d) of the definition of Permitted
Securitization in the Note Agreement to reduce the "aggregate commitment", the
"revolving credit maximum amount" and the "line of credit maximum amount" under
the Credit Agreement (as such terms are defined in the Credit Agreement) in
connection with securitization transactions occurring after the date hereof.
2. Acknowledgments and Agreement.
(a) (i) At the time required under Section 6.6(b) of the Note
Agreement (but in no event later than when such Liens are granted to Banks and
holders of the Company's other two series of senior notes), the Company agrees
that it will execute and deliver documents (in form and substance satisfactory
to the Required Holders) granting to or for the benefit of the Noteholders, as
security for the Notes, an equal and ratable Lien in the Property which is
covered by the Liens to be granted to the Banks in accordance with the
requirements of the Lien Provision and to the holders of the Company's other two
series of senior notes in accordance with the requirements of their respective
Note Purchase Agreements (as modified by the related Limited Waivers of even
date herewith), all of which Liens shall be on an equal and ratable basis with
the Liens granted in accordance with the requirements of the Note Agreement (as
modified hereby).
(ii) Nothing herein shall be deemed to amend, modify or
supersede the rights of the Noteholders pursuant to Section 6.6(b) of the Note
Agreement; provided, however, that the last sentence of Section 6.6(b) of the
Note Agreement shall be subject to Section 1(b) hereof.
(iii) The Company's failure to comply with the requirements of
this Section 2(a) shall constitute a violation of Section 6.6 of the Note
Agreement (and, accordingly, an Event of Default under the Note Agreement).
(b) Without limitation of Section 10.5(d) of the Note Agreement, the
Company shall pay or, if paid by the Noteholders, reimburse the Noteholders for,
all out of pocket fees, costs and expenses paid or incurred by any Noteholder in
connection with the negotiation, preparation, drafting, implementation,
modification, administration and enforcement of this letter, the Note Agreement,
the Notes and the documents to be delivered pursuant to Section 2(a) hereof.
(c) The Company represents that no Default or Event of Default exists
on the date hereof.
3. Effectiveness; Effect Upon Other Provisions of the Note Agreement and
the Notes.
(a) The effectiveness of the waiver and other terms set forth herein
is subject to the full execution and the delivery of this letter by the Company
and the Required Holders, and full execution and delivery of letters containing
substantially identical terms to those set forth in this letter by the Company
and the "Required Holders" of each of the other two series of the Company's
senior notes.
(b) The execution, delivery and effectiveness of this letter shall
not be deemed, except as expressly provided herein, (i) to operate as a waiver
of any right, power or remedy of the Noteholders under the Note Agreement or the
Notes, nor constitute a waiver of any provision thereunder, or (ii) to prejudice
any rights which any Noteholder now has or may have in the future under or in
connection with the Note Agreement, the Notes or any other documents referred to
therein. All terms and conditions of the Note Agreement shall remain unchanged
and in full force and effect, except as, and to the extent, set forth in this
letter agreement.
4. Counterparts.
This letter and all acceptances hereof may be executed simultaneously
in any number of counterparts, each of which shall be deemed an original, with
the same effect as if the signatures thereto and hereto were upon the same
instrument.
If you are in agreement with the foregoing, please sign the form of
acceptance on the enclosed counterpart of this letter and return the same to us
in care of our special counsel, Xxxx & Xxxxxx, a Professional Corporation, Xxx
Xxxxx Xxxxxx, Xxxxxxxx, Xxxxxxxxxxx 00000, Attention: Xxxxx Xxxxxx (facsimile:
(000)000-0000).
[Remainder of page intentionally blank. Next page is signature page.]
Very truly yours,
ALLSTATE LIFE INSURANCE CO.
By: /S/XXXXXXXX X. XXXXXX
Name: XXXXXXXX X. XXXXXX
Title: AUTHORIZED SIGNATORY
By: /S/XXXXX X. ZINKUL
Name: XXXXX X. ZINKUL
Title: AUTHORIZED SIGNATORY
THE OHIO CASUALTY INSURANCE
COMPANY
By: /S/XXXX XXXXXXX
Name: XXXX XXXXXXX
Title: ASSOCIATE PORTFOLIO
MANAGER
THE OHIO LIFE INSURANCE COMPANY
By: /S/XXXX XXXXXXX
Name: XXXX XXXXXXX
Title: ASSOCIATE PORTFOLIO
MANAGER
XXXXXXX XXXXX & COMPANY, LLC
By Xxxxxxx Xxxxx & Company, LLC,
Attorney-in-Fact
By: /S/XXXXX X. XXXXXXXX
Name: XXXXX X. XXXXXXXX
Title: PRINCIPAL
CONNECTICUT GENERAL LIFE INSURANCE
COMPANY
By Cigna Investments, Inc.
By: /S/XXXXX X. XXXXXXXXX
Name: XXXXX X. XXXXXXXXX
Title: MANAGING DIRECTOR
CONNECTICUT GENERAL LIFE INSURANCE COMPANY,
ON BEHALF OF ONE OR MORE SEPARATE ACCOUNTS
BY CIGNA INVESTMENTS, INC.
By: /S/XXXXX X. XXXXXXXXX
Name: XXXXX X. XXXXXXXXX
Title: MANAGING DIRECTOR
WESTERN FARM BUREAU LIFE INSURANCE COMPANY
By: /S/XXXXXX X. XXXXXXXXXX
Name: XXXXXX X. XXXXXXXXXX
Title: FIXED INCOME-VICE PRESIDENT
FARM BUREAU LIFE INSURANCE COMPANY
By: /S/XXXXXX X. XXXXXXXXXX
Name: XXXXXX X. XXXXXXXXXX
Title: FIXED INCOME-VICE PRESIDENT
WASHINGTON NATIONAL INSURANCE
COMPANY
By: /S/XXXXXX X. XXXX
Name: XXXXXX X. XXXX
Title: SECOND VICE PRESIDENT
Accepted and Agreed:
CREDIT ACCEPTANCE CORPORATION
By: /S/XXXXX X. XXXXXXX
Name: XXXXX X. XXXXXXX
Title: EXECUTIVE VICE PRESIDENT
AND CFO
ANNEX I
FIRST AMENDED AND RESTATED 9.12% SENIOR NOTES DUE NOVEMBER 1, 2001
Allstate Life Insurance Co.
The Ohio Casualty Insurance
The Ohio Life Insurance Company
Connecticut General Life Insurance Company
Western Farm Bureau Life Insurance Company
Farm Bureau Life Insurance Company
Washington National Insurance Company
Xxxxxxx Xxxxx & Company, LLC
