WAIVER AND FIFTH AMENDMENT TO REVOLVING CREDIT AND TERM LOAN AGREEMENT
Exhibit 99.1
WAIVER AND FIFTH AMENDMENT TO
REVOLVING CREDIT AND TERM LOAN AGREEMENT
REVOLVING CREDIT AND TERM LOAN AGREEMENT
THIS WAIVER AND FIFTH AMENDMENT TO REVOLVING CREDIT AND TERM LOAN AGREEMENT (this “Waiver and
Amendment”) is dated the 6th day of February, 2008 by and among FIRST ACCEPTANCE CORPORATION (the
“Borrower”), SUNTRUST BANK as Administrative Agent and as a Lender and FIRST BANK as a Lender.
RECITALS:
A. The Borrower, Administrative Agent and Lenders are parties to a Revolving Credit and Term
Loan Agreement dated as of January 12, 2006 (as previously amended by the Waiver and First
Amendment to Revolving Credit and Term Loan Agreement, as previously amended by the Waiver and
Second Amendment to Revolving Credit and Term Loan Agreement, as previously amended by the Waiver
and Third Amendment to Revolving Credit and Term Loan Agreement, and as previously amended by the
Waiver and Fourth Amendment to Revolving Credit Loan Agreement, and as amended from time to time,
collectively, the “Credit Agreement”).
B. Borrower has requested a waiver of compliance by the Borrower with certain provisions of
the Credit Agreement and has requested that certain provisions of the Credit Agreement be amended.
C. Subject to the terms of this Fifth Amendment to Revolving Credit and Term Credit Agreement,
the Lenders have agreed to such waivers and amendments as set forth herein.
D. Terms not defined herein shall have the meanings ascribed to such terms in the Credit
Agreement.
NOW, THEREFORE, in consideration of the foregoing, the covenants and agreements contained
herein, and other good and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto agree as follows:
Section 1. Waiver of Compliance with Section 6.1 for Certain Period. Compliance by
the Borrower with the terms of Section 6.1 of the Credit Agreement for the quarter ending December
31, 2007 is hereby waived.
Section 2. Waiver of Compliance with Section 6.6 for Certain Period. Compliance by
the Borrower with the terms of Section 6.6 of the Credit Agreement for the quarter ending December
31, 2007 is hereby waived.
Section 3. Fixed Charge Coverage Ratio. Section 6.1 of the Credit Agreement is deleted
in its entirety and the following is substituted in lieu thereof:
Section 6.1 Fixed Charge Coverage Ratio. The Borrower will have, on a
consolidated basis, as of the end of the quarter ending March 31, 2008 (measured
for such fiscal quarter), a Fixed Charge Coverage
Ratio of not less than 1.2 to 1.0. Thereafter, the Borrower will have on a
consolidated basis, as of the end of each fiscal quarter of the Borrower (measured
for such fiscal quarter), commencing with the fiscal quarter ending June 30, 2008,
a Fixed Charge Coverage Ratio of not less than 1.3 to 1.0.
Section 4. Elimination of Combined Ratio Covenant. Section 6.4 of the Credit Agreement
is deleted in its entirety.
Section 5. Minimum Net Income. Section 6.6 of the Credit Agreement is deleted in its
entirety and the following is substituted in lieu thereof:
Section 6.6 Minimum Net Income. The Borrower shall maintain Minimum
Net Income for the following fiscal quarters ending as set forth below:
March 31, 2008
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Greater than $0.00 | |
June 30, 2008
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Greater than $0.00 | |
September 30, 2008
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Greater than $0.00 | |
December 31, 2008
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Greater than $0.00 | |
March 31, 2009
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Greater than $0.00 | |
June 30, 2009
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Greater than $0.00 | |
September 30, 2009
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Greater than $0.00 | |
December 31, 2009
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Greater than $0.00 | |
March 31, 2010
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Greater than $0.00 |
Net Income shall be defined as follows: for any period, the net income (or loss)
of the Borrower and its Subsidiaries for such period determined on a consolidated
basis in accordance with GAAP. In computing net income (or loss), the Borrower
shall be entitled to add back any non-cash expense related to (i) increases in the
deferred tax valuation allowance (and shall be required to subtract any decrease),
(ii) non-cash stock-based compensation, and (iii) the impairment of goodwill or
identifiable intangible assets.
Section 6. Representations and Warranties. To induce the Administrative Agent, the
Issuing Bank, the Swingline Lender and the Lenders to enter into this Waiver and Amendment, the
Borrower hereby represents and warrants to the Lenders that:
(a) Reaffirmation. As of the date of this Waiver and Amendment and after
giving effect to this Waiver and Amendment, the representations and warranties set forth in
Article IV of the Credit Agreement are true and correct in all material respects
(except to the extent that any such representation or warranty expressly relates to a
specified earlier date, in which case such representation or warranty shall be true and
correct as of such earlier date, and except for changes in facts and circumstances which
are not prohibited by the terms of the Credit Agreement); and
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(b) No Default. As of the date hereof and after giving effect to this Waiver
and Amendment, no Default or Event of Default shall have occurred and be continuing.
Section 7. Payment of Expenses. The Borrower agrees to pay or reimburse the
Administrative Agent for its reasonable out-of-pocket costs and expenses incurred in connection
with the preparation and execution of this Waiver and Amendment.
Section 8. Conditions. The effectiveness of this Waiver and Amendment is subject to
the satisfaction of the following conditions precedent:
(a) The Lenders shall have received this Waiver and Amendment (and any other documents
necessary to evidence the transactions relating thereto) duly executed by the Borrower and
the Guarantors, as applicable;
(b) No Default or Event of Default shall exist; and
(c) The Administrative Agent shall have received an incumbency certificate with
respect to the officer(s) of Borrower executing this Waiver and Amendment, and a
certificate of existence for the Borrower.
Section 9. Resolutions. Within 10 days of the date of this Waiver and Amendment,
Borrower shall deliver to the Administrative Agent a resolution of the Borrower ratifying and
affirming the execution and delivery of this Waiver and Amendment and all transactions related
hereto, in form and substance satisfactory to the Administrative Agent and its counsel. Failure to
deliver such resolution within such period shall constitute an Event of Default under the Credit
Agreement.
Section 10. Counterparts. This Amendment may be executed by one or more of the
parties hereto on any number of separate counterparts, and all of said counterparts taken together
shall be deemed to constitute one and the same instrument.
Section 11. Severability; Headings. Any provision of this Waiver and Amendment which
is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability, without invalidating the remaining
provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not
invalidate or render unenforceable such provision in any other jurisdiction. The section and
subsection headings used in this Amendment are for convenience of reference only and are not to
affect the construction hereof or to be taken into consideration in the interpretation hereof.
Section 12. Continuing Effect of Other Documents. This Waiver and Amendment shall not
constitute an amendment or waiver of any other provision of the Credit Agreement not expressly
referred to herein and, except to the extent that the Credit Agreement expressly has been amended
hereby, shall not be construed as a waiver or consent to any further or future action on the part
of the Borrower that would require a waiver or consent of the Required Lenders or the
Administrative Agent. Except as
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expressly amended, modified or supplemented hereby, the provisions of the Credit Agreement are
and shall remain in full force and effect.
Section 13. Affect of Waiver. No consent or waiver, express or implied, by the
Administrative Agent to or for any breach of or deviation from any covenant, condition or duty by
the Borrower or any Subsidiary Loan Party, including without limitation the waivers described in
paragraph 2 above, shall be deemed a consent or waiver to or of any other breach of the same or any
other covenant, condition or duty.
Section 14. GOVERNING LAW. THIS AMENDMENT AND THE RIGHTS AND OBLIGATIONS OF THE
PARTIES UNDER THIS AMENDMENT SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE
WITH, THE LAWS OF THE STATE OF NEW YORK.
IN WITNESS WHEREOF, the parties hereto have executed this Waiver and Fifth Amendment to
Revolving Credit and Term Loan Agreement as of the date first set forth above.
FIRST ACCEPTANCE CORPORATION |
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By: | /s/ Xxxxxxx X. Xxxxxxx | |||
Title: Treasurer | ||||
SUNTRUST BANK, as Administrative
Agent and as a Lender |
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By: | /s/ Xxxxxxx Xxxxxxxxxxx | |||
Title: Director | ||||
FIRST BANK, as a Lender |
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By: | /s/ Xxxxxxx X. Xxxxx | |||
Title: Vice President | ||||
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CONSENT OF GUARANTORS
The undersigned, each a Guarantor, as defined in the Subsidiary Guarantee Agreement, hereby execute
this Waiver and Fifth Amendment to Revolving Credit and Term Loan Agreement to evidence their
consent thereto, as well as the transactions contemplated thereby, and agree that the Subsidiary
Guarantee Agreement dated January 12, 2006, remains in full force and effect.
USAUTO HOLDINGS, INC., as a Guarantor |
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By: | /s/ Xxxxxxx X. Xxxxxxx | |||
Name: | Xxxxxxx X. Xxxxxxx | |||
Title: | Treasurer | |||
TRANSIT AUTOMOBILE CLUB, INC., as a Guarantor |
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By: | /s/ Xxxxxxx X. Xxxxxxx | |||
Name: | Xxxxxxx X. Xxxxxxx | |||
Title: | Treasurer | |||
ALABAMA ACCEPTANCE INSURANCE AGENCY, INC., as a Guarantor |
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By: | /s/ Xxxxxxx X. Xxxxxxx | |||
Name: | Xxxxxxx X. Xxxxxxx | |||
Title: | Treasurer | |||
ACCEPTANCE INSURANCE AGENCY OF TENNESSEE, INC., as a Guarantor |
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By: | /s/ Xxxxxxx X. Xxxxxxx | |||
Name: | Xxxxxxx X. Xxxxxxx | |||
Title: | Treasurer |
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ACCEPTANCE INSURANCE AGENCY, INC., as a Guarantor |
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By: | /s/ Xxxxxxx X. Xxxxxxx | |||
Name: | Xxxxxxx X. Xxxxxxx | |||
Title: | Treasurer | |||
FIRST ACCEPTANCE SERVICES, INC., as a Guarantor |
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By: | /s/ Xxxxxxx X. Xxxxxxx | |||
Name: | Xxxxxxx X. Xxxxxxx | |||
Title: | Treasurer | |||
ACCEPTANCE INSURANCE AGENCY OF ILLINOIS, INC., as a Guarantor |
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By: | /s/ Xxxxxxx X. Xxxxxxx | |||
Name: | Xxxxxxx X. Xxxxxxx | |||
Title: | Treasurer | |||
LNC HOLDINGS, INC., as a Guarantor |
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By: | /s/ Xxxxxxx X. Xxxxxxx | |||
Name: | Xxxxxxx X. Xxxxxxx | |||
Title: | Treasurer | |||
ACCEPTANCE INSURANCE AGENCY OF TEXAS, INC., as a Guarantor |
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By: | /s/ Xxxxxxx X. Xxxxxxx | |||
Name: | Xxxxxxx X. Xxxxxxx | |||
Title: | Treasurer | |||
6705615.1
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