THIRD AMENDMENT TO AMENDED AND RESTATED
REVOLVING CREDIT AGREEMENT
This Third Amendment to Amended and Restated Revolving Credit Agreement
("Third Amendment") dated as of September 27, 1996 by and among EAGLE FINANCE
CORP., a Delaware corporation ("Borrower"), CORESTATES BANK, N.A., a national
banking association, XXXXXX TRUST AND SAVINGS BANK, an Illinois banking
corporation, BANK ONE, CHICAGO, N.A., a national banking association, XXXX
XXXXXX BANK, an Illinois banking corporation, FLEET BANK, N.A. (successor in
interest to Natwest Bank N.A.), NBD BANK, a Michigan banking association,
LASALLE NATIONAL BANK, a national banking association, THE SUMITOMO BANK,
LIMITED, Chicago branch, a bank organized under the laws of Japan (successor
in interest to The Daiwa Bank, Limited), THE NORTHERN TRUST COMPANY
(successor in interest to Northern Trust Bank\O'Hare, N.A.) (each
individually a "Bank" and collectively the "Banks" and CORESTATES BANK, N.A.,
as agent for the Banks hereunder (in such capacity as "Agent").
BACKGROUND
A. Borrower, Banks and Agent are parties to a certain Amended and Restated
Revolving Credit Agreement dated as of June 30, 1995, as amended (the "Credit
Agreement"), which they are willing to further amend on the terms and
conditions set forth herein.
B. Capitalized terms used but not otherwise defined in this Third
Amendment shall have the meanings respectively ascribed to them in the Credit
Agreement.
NOW, THEREFORE, the parties hereto, intending to be legally bound, hereby
promise and agree as follows:
1. AMENDMENTS.
A. The Credit Agreement is amended by deleting the definitions of
"Termination Date" and "Borrowing Base" contained in Section 1.01 of the
Credit Agreement in their entirety and replacing such definitions with the
following respective definitions:
"Termination Date" means the earlier of (1) June 30, 1997, or
(2) the date of termination of the Commitments pursuant to
Section 2.02 or Section 9.01.
"Borrowing Base" means eighty-five percent (85%) of Eligible
Receivables, PROVIDED, HOWEVER, that the rate of advance shall
be seventy percent (70%) for Eligible Receivables for which
there has been a Modification (other than a Pre-Approved
Modification) during the six (6) month period immediately
preceding September 15, 1996 and, PROVIDED, FURTHER, HOWEVER,
that the rate of advance shall be fifty percent (50%) for
Eligible Receivables rated as D Paper. Aggregate outstanding
advances on Eligible Receivables rated as D Paper shall not
exceed $3,000,000 at any one time.
B. The Credit Agreement is amended by adding the following new
definitions to Section 1.01 of the Credit Agreement:
"EAFC" shall mean Eagle Auto Funding Corp., a wholly owned
special purpose Delaware Subsidiary of Borrower, formed for the
purpose of acquiring and securitizing a pool of Automobile Finance
Receivables from Borrower.
"NET MANAGED RECEIVABLES" means receivables previously owned
by Borrower which have been sold but are being managed by Borrower
in the ordinary course of its business.
"NET OWNED RECEIVABLES" means receivables owned solely by
Borrower which are not being managed for any other Person.
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C. The Credit Agreement is amended by modifying the definition of
"Eligible Receivable" by deleting Subsections "(xii)" and "(xiii)" thereof,
and inserting the following new Subsections "(xii)" and "(xiii)":
(xii) there has been no more than one (1) Extension (or two
(2) Extensions if two (2) Extensions were already granted during that
portion of the 6 month period which precedes September 1, 1996) with
respect to the receivable during the six (6) month period immediately
preceding the applicable Borrowing Base calculations;
(xiii) there has been (A) no more than one (1) Modification
with respect to the receivable during the six (6) month period
ending September 15, 1996 and (B) no Modification with respect to the
receivable after September 15, 1996.
D. The Credit Agreement is amended by deleting the number
"100,000,000" presently contained in the 29th line of Section 2.01 of the
Credit Agreement and replacing it with the number "$90,000,000" which such
number shall automatically be further reduced to "$70,000,000" as of October
31, 1996, to "$60,000,000" as of December 31, 1996 and "$50,000,000" as of
March 31, 1997. In connection with each such above-stated reduction in the
aggregate Commitments of all of the Banks, each Bank's Commitment is (or, as
the case may be, will be) reduced pro rata to the amount opposite each Bank's
name on the Schedule "A" attached hereto and made part hereof.
E. The Credit Agreement is amended by deleting Subsection 2.05(2)
thereof in its entirety and replacing such Subsection with the following:
(2) For any LIBOR Loan at a rate equal to the LIBOR Interest
Rate plus two and one-half percent (2 1/2%).
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F. The Credit Agreement is amended by deleting Section 2.11
thereof in its entirety and replacing such Section with the following:
SECTION 2.11 TERM. The term of the Commitments and the
and the Credit Facility under which Revolving Credit Loans shall
be made available to Borrower under the terms of this Agreement shall
expire on June 30, 1997, as of which date no further Loans shall be
made available by Banks to Borrower and on which date all of
Borrower's obligations of every kind and nature shall, unless
sooner becoming due under the terms of this Agreement, become due and
payable in full.
G. The Credit Agreement is amended by the following modifications
to Section 6.11:
(1) Subsection 6.11(1) is modified by deleting the number
"sixty (60)" in the first and second lines thereof and replacing
it with the number "forty-five (45)."
(2) Subsection 6.11(3) is modified to add the following in
the fourth line of such subsection after the words "month end,":
and contemporaneously with the submission of each Advance
Request Form, certified as to accuracy by Borrower's chief
financial officer, to the best of his knowledge, a
borrowing base or availability certificate showing the
interim calculations for the Borrowing Base
(3) Subsections (12) and (13) of such Section are each
modified by deleting therefrom the words "forty-five (45) days after
each fiscal quarter" and replacing them with the following words:
thirty (30) days after each month end
H. The Credit Agreement is amended, solely with respect to EAFC,
to waive the requirements contained in Section 6.13 thereof that (1) Borrower
provide Agent with at least 30 days written notice of the formation of such
Subsidiary and (2) Borrower cause EAFC to join in each of the Loan Documents
as a co-borrower.
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I. The Credit Agreement is amended by adding the following
sentences to the end of Section 6.14:
In addition to the foregoing examinations, Borrower shall
cause BDO Xxxxxxx to perform additional examinations requested by
Agent and to cause a written report thereof to be promptly
submitted to Banks (the cost and expenses of which shall be
the sole responsibility of Borrower), which examinations shall
in any event include a monthly review of Borrower's reports
related to underwriting exceptions for newly purchased accounts
(which review shall include a sampling of such accounts to test
the validity of the reports) and a monthly review and
verification of the calculations of the Borrowing Base.
J. (1) The Credit Agreement is amended by (a) deleting clause (x)
in the first paragraph of Section 7.04 thereof and replacing it with the
following new clause (x): "that not less than 85% of the consideration for
any such sale or other disposition shall be paid in cash or cash
equivalents," and (b) deleting the last three (3) sentences of the first
paragraph of Section 7.04 (which three (3) sentences had been added in the
Second Amendment to Amended and Restated Loan and Security Agreement dated as
of June 28, 1996 among the parties hereto).
(2) The Credit Agreement is amended by deleting the percentage
"thirty-five percent (35%)" in the fifth line of the second paragraph of
Section 7.04 therein and replacing such percentage with "fifty percent (50%)."
K. The Credit Agreement is amended to add the following 2 new
clauses at the end of Section 7.05 thereof as additional exceptions to the
prohibition on the making of investments by Borrower:
(4) an investment of not more than $250,000 by Borrower in
EAFC reasonably contemporaneously with
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EAFC'S acquisition and securitization of a pool of Automobile Finance
Receivables from Borrower; and
(5) an investment by Borrower in EAFC (to the extent such
transaction would be treated as an investment) in the form of
Borrower's receipt of a Class C Certificate for an amount not to exceed
$5,000,000 issued by EAFC or any other entity or trust formed by EAFC to
facilitate a securitization transaction.
L. The Credit Agreement is amended by deleting Section 8.01 in its
entirety and replacing such Section with the following:
SECTION 8.01 MINIMUM TANGIBLE NET WORTH. Borrower will maintain
at all times during the fiscal quarter ending June 30, 1996, a Tangible
Net Worth of not less than $14,500,000. For each succeeding fiscal
quarter, Borrower shall maintain at all times during such fiscal
quarter a Tangible Net Worth of not less than the minimum Tangible Net
Worth requirement for the immediately preceding fiscal quarter (as
determined in accordance with this Section) plus an amount equal to one
hundred percent (100%) of the actual positive Net Income (i.e. without
any reduction for losses) of Borrower for the immediately preceding
fiscal quarter.
M. The Credit Agreement is amended to add the following sentence at
the end of Section 8.02 thereof:
If Borrower does an on-balance sheet securitization, there shall be
deducted from Tangible Net Worth, solely for the purpose of calculating
this covenant, any capital investment by Borrower in its securitization
Subsidiary, any certificate, instrument or other obligation owing to
Borrower by its securitization Subsidiary, and any reserves required to
be maintained by such Subsidiary as part of a securitization
transaction.
N. The Credit Agreement is amended to add the following sentence at
the end of Section 8.03 thereof:
If Borrower does an off-balance sheet securitization, there shall be
deducted from Capital Base, solely for the purpose of calculating this
covenant, any capital investment by Borrower in its securitization
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Subsidiary, any certificate, instrument or other obligation owing to
Borrower by its securitization Subsidiary, and any reserves required to
be maintained by such Subsidiary as part of a securitization
transaction.
O. The Credit Agreement is amended by deleting Section 8.05 in its
entirety and replacing such Section with the following:
SECTION 8.05. INTEREST COVERAGE RATIO. Borrower will maintain a
ratio of (i) the sum of Net Earnings PLUS Interest Expense to
(ii) Interest Expense of at least 1.05 to 1 at all times through
December 31, 1996 and at least 1.1 to 1 at all times thereafter.
P. The Credit Agreement is amended by deleting Section 8.07 in its
entirety and replacing such Section with the following:
SECTION 8.07 ASSET QUALITY TEST.
(1) Borrower shall not permit the sum of aggregate Net Managed
Receivables with payments 31 days or more contractually past due
to exceed 11.0% of Borrower's Net Managed Receivables at all
times. Borrower shall not permit the sum of aggregate Net
Managed Receivables with payments 62 days or more contractually
past due to exceed 2.5% of Borrower's Net Managed Receivables at
all times.
(2) Borrower shall not permit the sum of aggregate Net Owned
Receivables with payments 31 days or more contractually past due
to exceed $12,000,000. Borrower shall not permit the sum of
aggregate Net Owned Receivables with payments 62 days or more
contractually past due to exceed $2,500,000.
2. EXTENSION FEE.
Borrower shall, contemporaneously with the execution hereof, pay to
Agent in good funds, for the benefit of, and to be distributed to Banks based
on their respective Pro Rata Percentages, an extension fee of $562,500.
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3. MISCELLANEOUS.
A. Borrower represents and warrants to the Banks and Agent that it
has taken all necessary corporate action to authorize the execution, delivery
and performance of this Third Amendment. This Third Amendment is, or when
executed by the Borrower and delivered to the Agent, will be, duly executed
and constitute valid and legally binding obligations of the Borrower,
enforceable against the Borrower in accordance with its terms. Borrower
hereby ratifies and restates each of the representations and warranties of
the Borrower set forth in Article V of the Credit Agreement as being true and
correct on the date hereof.
B. This Third Amendment may be executed in any number of
counterparts, each of which when so executed shall be deemed to be an
original and all of which when taken together shall constitute one and the
same agreement.
C. This Third Amendment shall amend and is incorporated into the
Credit Agreement. To the extent of any express inconsistency between the
terms hereof and the terms of the Credit Agreement, the terms hereof shall
control. Except as expressly amended by this Third Amendment, all of the
terms and conditions of the Credit Agreement remain in full force and effect.
D. Borrower acknowledges, confirms, represents and covenants that as
of September 26, 1996, (a) it is indebted to Banks, without defense, setoff,
counterclaim or recoupment of any nature, in the aggregate principal amount
of $91,600,000.00 for Revolving Credit Loans made pursuant to the Credit
Agreement and
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(b) all security interests and liens in the Collateral granted to Agent (for
the benefit of Agent and Banks) under the Credit Agreement continue to be
first priority perfected security interests and continue to secure all
obligations and indebtedness of every kind owing from Borrower to the Banks
and/or Agent.
IN WITNESS WHEREOF, the parties have caused this Third Amendment to be
executed by their respective duly authorized officers as of the date first
above written.
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SCHEDULE "A"
PRO RATA COMMITMENT SHARES OF BANKS
Prior
Commitment % Share @ 9/30/96 @ 10/31/96 @12/31/96 @ 3/31/97
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CoreStates $16,250,000.00 16.250000% $14,625,000.00 $11,375,000.00 $ 9,750,000.00 $ 8,125,000.00
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Bank One 12,500,000.00 12.500000% 11,250,000.00 8,750,000.00 7,500,000.00 6,250,000.00
-----------------------------------------------------------------------------------------------------------------------
Fleet 12,500,000.00 12.500000% 11,250,000.00 8,750,000.00 7,500,000.00 6,250,000.00
-----------------------------------------------------------------------------------------------------------------------
NBD 12,500,000.00 12.500000% 11,250,000.00 8,750,000.00 7,500,000.00 6,250,000.00
-----------------------------------------------------------------------------------------------------------------------
LaSalle 12,500,000.00 12.500000% 11,250,000.00 8,750,000.00 7,500,000.00 6,250,000.00
-----------------------------------------------------------------------------------------------------------------------
Xxxxxx 10,000,000.00 10.000000% 9,000,000.00 7,000,000.00 6,000,000.00 5,000,000.00
-----------------------------------------------------------------------------------------------------------------------
Sumitomo 8,333,333.33 8.333333% 7,500,000.00 5,833,333.33 5,000,000.00 4,166,666.67
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Northern 8,333,333.33 8.333333% 7,500,000.00 5,833,333.33 5,000,000.00 4,166,666.67
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Xxxx Xxxxxx 7,083,333.34 7.083334% 6,375,000.00 4,958,333.34 4,250,000.00 3,541,666.66
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$100,000,000.00 100.00000% $90,000,000.00 $70,000,000.00 $60,000,000.00 $50,000,000.00
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