FOURTH AMENDMENT TO REVOLVING CREDIT AGREEMENT
Exhibit
4.2
FOURTH
AMENDMENT TO REVOLVING CREDIT AGREEMENT THIS
FOURTH AMENDMENT TO REVOLVING CREDIT AGREEMENT
("Amendment") is dated effective as of December 31 2006, by and among
AMERICA’S
CAR MART, INC.,
an
Arkansas corporation and TEXAS
CAR-MART, INC.,
a Texas
corporation (separately and collectively, “Borrower”) and BANK
OF OKLAHOMA, N.A.
(“Bank”).
RECITALS
A. Reference
is made to the Revolving Credit Agreement dated as of June 23, 2005, and
amended
by the First Amendment to Revolving Credit Agreement, dated effective as
of June
23, 2005, and executed August 19, 2005, the Second Amendment to Revolving
Credit
Agreement, dated effective as of September 30, 2005 and the Third Amendment
to
Revolving Credit Agreement, dated effective April 28, 2006 (as amended, the
"ACM
Credit Agreement"), by and among Borrowers and Bank, pursuant to which currently
exists a $10,000,000 Revolving Line of Credit and a $10,000,000 Term Loan
in
favor or Borrowers.
B. Borrower
and Bank hereby intend to make certain changes to the ACM Credit Agreement
for
compliance purposes. Terms used herein shall have the meanings given in the
ACM
Credit Agreement unless otherwise defined herein.
AGREEMENT
For
valuable consideration received, the parties agree to the
following.
1. Amendments
to ACM Credit Agreement.
The ACM
Credit Agreement is amended as follows.
| 1.1. |
The
term "Prime Rate" is amended to read as
follows:
|
"Prime
Rate" means a rate which is subject to change from time to time based on
changes
in an index which is the BOKF National Prime Rate, described as the rate
of
interest set by BOK Financial Corporation, in its sole discretion, on a daily
basis as published by BOK Financial Corporation (“BOKF”) from time to time (the
“Index”). The Index is not necessarily the lowest rate charged by Lender on its
loans and is set by Lender in its sole discretion. If the Index becomes
unavailable during the term of this loan, Lender may designate a substitute
index after notifying Borrower. Lender will tell Borrower the current index
rate
upon Borrower’s request. The interest rate change will not occur more often than
each day. Borrower understands that Lender may make loans based on other
rates
as well. NOTICE: Under no circumstances will the interest rate on this Note
be
more than the maximum rate allowed by applicable law. Whenever increases
occur
in the interest rate, Lender, at its option, may do one or more of the
following: (A) increase Borrower’s payments to ensure Borrower’s loan will pay
off by its original final maturity date, (B) increase Borrower’s payments to
cover accruing interest, (C) increase the number of Borrower’s payments, and (D)
continue Borrower’s payments at the same amount and increase Borrower’s final
payment.
1.2. Section
2.05 is hereby amended to replace the existing pricing grid with the
following:
|
Tier
|
Funded
Debt to EBITDA*
|
Adjusted
Prime Rate
|
Adjusted
LIBOR Rate
|
|
I
|
<1.75
|
Prime
Rate minus
25
bps
|
LIBOR
Rate plus 275 bps
|
|
II
|
>1.75
and <2.00
|
Prime
Rate plus 0.0
|
LIBOR
rate plus
300
bps
|
|
III
|
>2.00
and <2.25
|
Prime
Rate plus
25
bps
|
LIBOR
rate plus
325
bps
|
|
IV
|
>2.25
and <2.50
|
Prime
Rate plus
50
bps
|
LIBOR
rate plus
350
bps
|
|
V
|
>2.50
and <3.50
|
Prime
Rate plus
75
bps
|
LIBOR
rate plus
375
bps
|
|
VI
|
>3.5
|
Prime
Rate plus
100
bps
|
LIBOR
rate plus
400
bps
|
*Combined
Ratio for American Car Mart, Inc,., Texas Car-Mart, Inc. and Colonial Auto
Finance,
Inc.
The
Adjusted Rate shall be determined in accordance with the foregoing table
based
on the combined Funded Debt to EBITDA ratio as reflected in the then most
recent
financials. Adjustments, if any, shall be effective five Business Days after
Bank of Arkansas, N.A. has received the applicable financials. If the Borrower
fails to deliver the financials at the time required, then the rate shall
be the
highest rate set forth in the foregoing table until five (5) Business Days
after
such financials are so delivered.
1.3 Section
2.14 (Termination Fee) is hereby amended to the extent that it shall continue
in
effect through December 31, 2007.
1.4. Article
7
is hereby replaced with the following:
Article
7
FINANCIAL
COVENANTS
The
following financial covenants shall be calculated based upon a combined
financial basis of America's Car Mart, Inc., Texas Car-Mart, Inc. and Colonial
Auto Finance, Inc. So long as any Note shall remain unpaid or any Bank shall
have any Commitment under this Agreement:
Section
7.01. Leverage Ratio.
At all
times, calculated as of the last day of each month, maintain a ratio of Funded
Debt to EBITDA for the trailing twelve (12) month period of no greater than
4.00
to 1.00, reducing to 3.50 to 1.00 on November 1, 2007, 3.00 to 1.00 on February
1, 2008, 2.75 to 1.00 on may 1, 2008 and 2.50 to 1.00 on November 1, 2008.
For
purposes of this calculation, the $5,371,000 one-time, non-cash charge will
be
excluded from EBITDA through October 31, 2007.
2
Section
7.02. Fixed Charge Coverage Ratio.
At all
times, calculated as of the last day of each month, maintain a ratio of (a)
EBITDA to (b) Fixed Charges as of the end of each month for the trailing
six (6)
month period of not less than 1.15 to 1.00, increasing to 1.20 to 1.00 on
May 1,
2007, 1.30 to 1.00 on August 1, 2007, 1.40 to 1.00 on November 1, 2007 and
1.50
to 1.00 on February 1, 2008. For purposes of this calculation, the $5,371,000
one-time, non-cash charge will be excluded from EBITDA through October 31,
2007.
Section
7.03. Minimum Tangible Net Worth.
At all
times, calculated as of the last day of each month, maintain a minimum combined
Adjusted Tangible Net Worth for American Car Mart, Inc, Texas Car-Mart, Inc.
and
Borrower, as of the last day of each fiscal quarter equal to or greater than
the
sum of (i) the greater of (A) eighty-five percent (85%) of the Minimum Adjusted
Tangible Net Worth as of January 31, 2007 or (B) $108,000,000, plus
(ii)
seventy-five percent (75%) of positive quarterly Net Income and (iii) on
hundred
percent (100%) of any subsequent equity issuances, less Distributions permitted
under Section 6.06 hereof.
2. Amendment
to $10,000,000 Term Note.
The
Term Note is amended to evidence that the fixed rate as of December 31, 2006
shall equal 8.08% and shall continue through June 30, 2007; whereupon, it
may be
reduced to (i) 7.83% when the combined Funded Debt to EBITDA ratio is below
3.25
to 1.00, and (ii) 7.33% when the combined Funded Debt to EBITDA ratio is
below
2.25 to 1.00. The rate shall be determined based on the combined Funded Debt
to
EBITDA ratio as reflected in the then most recent financials. Adjustments,
if
any, shall be effective five Business Days after Bank of Arkansas, N.A. has
received the applicable financials. If the Borrower fails to deliver the
financials at the time required, then the rate shall be 8.08% until five
(5)
Business Days after such financials are so delivered.
3. Representations
and Warranties.
Each of
the Borrower and the Guarantors, respectively, hereby ratify and confirm
all
representations and warranties set forth in Article IV of the ACM Credit
Agreement, Section 8 of the Security Agreement, and Sections 24 through 29
of
the Guaranty Agreement other than any representation or warranty that relates
to
a specific prior date and except to the extent that the Bank has been notified
in writing by the Borrower that any representation or warranty is not correct
and the Bank has explicitly waived in writing compliance with such
representation or warranty.
4. Conditions
Precedent.
The
obligations of the Bank to perform under the ACM Credit Agreement, as amended
hereby, are subject to satisfaction of the following.
| 4.1 |
Borrower
and all other parties hereto shall execute and deliver this
Amendment.
|
|
4.2
|
No
Default or Event of Default shall exist or result from the execution
and
delivery of this Amendment.
|
5. Ratification.
Borrower hereby ratifies and confirms the ACM Credit Agreement, and all
instruments, documents, and agreements executed by and in connection
therewith.
6. Ratification
of Security Agreements. Each
of
Borrower and Colonial hereby ratifies and confirms its respective Security
Agreement.
3
7. Ratification
of Guaranties.
ACM-Texas and Colonial each hereby ratifies and confirms its respective
Guaranty.
8. Ratification
of Subordination Agreements. ACM-Texas
and Colonial each hereby ratifies and confirms its respective Subordination
Agreement.
9. Governing
Law.
This
Agreement and the Notes shall be governed by, and construed in accordance
with,
the laws of the State of Arkansas.
10. Multiple
Counterparts.
This
Amendment may be executed in any number of counterparts, and by different
parties to this Amendment in separate counterparts, each of which when so
executed shall be deemed to be an original and all of which taken together
shall
constitute one and the same agreement.
11. Costs,
Expenses and Fees.
Borrower agrees to pay all costs; expenses and fees incurred by Banks in
connection herewith, including without limitation the reasonable attorney
fees
of Riggs, Abney, Neal, Turpen, Orbison and Xxxxx.
[Signature
page follows.]
4
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“BORROWER”
AMERICA’S
CAR MART, INC.,
an Arkansas corporation
By
/s/Xxxx Xxxxxxxx
Xxxx Xxxxxxxx, Vice President
TEXAS
CAR-MART, INC.,
a
Texas corporation
By
/s/ Xxxx Xxxxxxxx
Xxxx Xxxxxxxx, Vice President
"GUARANTOR"
and “SUBORDINATING PARTY”
AMERICA’S
CAR-MART, INC.,
a
Texas
corporation,
formerly known as Crown Group, Inc.
By
/s/ Xxxx Xxxxxxxx
Xxxx Xxxxxxxx, Vice President
COLONIAL
AUTO FINANCE, INC.,
an
Arkansas corporation
By
/s/ Xxxxxx X. Xxxxxxx
Xxxxxx X. Xxxxxxx, III, President
|
|
“BANK”
|
|
|
BANK
OF OKLAHOMA, N.A.
|
|
|
By
/s/ Xxxxxxx X. Xxxx
|
|
|
Xxxxxxx X. Xxxx, Vice President
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