1
EXHIBIT 4(C)(2)
REVISED
EXECUTION COPY
SECOND AMENDMENT TO CREDIT AGREEMENT
This SECOND AMENDMENT TO CREDIT AGREEMENT ("Second Amendment") is made
as of this 12th day of December, 1997 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 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 (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
Agent and the Banks are willing to do so, but only on the terms and conditions
set forth in this Second Amendment.
NOW, THEREFORE, Company, Permitted Borrowers, Agent and the Banks
agree:
1. Section 1 of the Credit Agreement is hereby amended, as
follows:
(a) (i) The first sentence of the definition of "Advances to
Dealers" is amended (in the second, third and fourth lines thereof) to
replace the phrase "as such amount would appear in the footnotes to the
financial statements of the Company and its Subsidiaries prepared in
accordance with GAAP at such time, provided that" with the phrase "as
such amount would appear in the footnotes to the financial statements
of the Company and its Subsidiaries prepared in accordance with GAAP
(and if such amount is not shown net of such reserves, then net of any
reserves established by the Company as an allowance for credit losses
related to such advances not expected to be recovered), provided that
Advances to Dealers shall not include Excess New Dealer Advances and
provided further that", and
2
(ii) the second sentence of the definition of "Advances to Dealers" is
amended to add at the end of such sentence the following:
"and (iv) "Excess New Dealer Advances' means, at any time, the
aggregate amount of advances to New Dealers to the extent such amount
exceeds 10% of Gross Advances to Dealers; and (v) "New Dealer' means,
at any time, a Dealer who participates in the Company"s program of
financing and collecting installment contract receivables, whose oldest
pool of Installment Contracts held by the Company is dated as of a date
which is not more than six months prior to such time and who has an
advance balance in excess of Ten Thousand Dollars ($10,000) at such
time".
(b) The definition of "Consolidated Income Available for Fixed
Charges" is amended to add at the end of such definition (following the word
"GAAP") the words:
", plus (c) for the next succeeding four fiscal quarters of the Company
(commencing with the fiscal quarter ending September 30, 1997), the
non-cash charge in the amount of $30,000,000 taken by the Company in
its financial statements for its fiscal quarter ending September 30,
1997 relating to the application of Statement of Financial Accounting
Standards No. 114 "Accounting by Creditors for Impairment of a Loan'."
(c) A new definition of "Gross Current Installment Contracts
Receivable" is added to the Credit Agreement (to be inserted in alphabetical
order), as follows:
"'Gross Current Installment Contract Receivables' shall mean,
as of any applicable date of determination, the aggregate
amount of Gross Installment Contract Receivables, less the
amount of such receivables which can be classified as being on
"non-accrual" under the "90 days measured on a recency basis"
method."
(d) A new definition of "Gross Advances to Dealers" is added to the
Credit Agreement (to be inserted in alphabetical order), as follows:
"'Gross Advances to Dealers' shall mean, as of any applicable
date of determination, the dollar amount of Advances to Dealers
(without giving effect to the first proviso to the definition of such
term), plus any reserves established by the Company as an allowance for
credit losses related to such advances not expected to be recovered,
plus Charged-off Advances to the extent Charged-off Advances exceed the
amount of such reserves."
(e) The definition of "Rating Level 5" is amended and restated in its
entirety, as follows:
"'Rating Level 5" shall mean (a) so long as no Debt Rating
from S&P or Xxxxx'x is obtained by the Company, then a Debt Rating of
BB+ from Fitch, and (b) in the event that a Debt Rating is obtained
from S&P and/or Moody's, then (i) if both ratings are obtained, the
lower of, and (ii) if only one rating is obtained, then either a Debt
Rating of BB (or higher) from S&P or Ba2 (or higher) from Moody's."
2
3
(f) The definition of "Rating Level 6" is added to the Credit
Agreement (immediately following the definition of "Rating Level 5"), as
follows:
'Rating Level 6' shall mean the Rating Level (if any) which
exists whenever the Company does not qualify for Rating Xxxxx 0, 0, 0,
0 xx 0."
2. Section 7 of the Credit Agreement is amended, as follows:
(a) Section 7.4 is amended and restated in its entirety as
follows:
"7.4 Maintain Total Debt Level.On a Consolidated basis,
maintain as of the end of each fiscal quarter, Consolidated Total
Debt at a level equal to or less than:
(a) Two Hundred Seventy-Five Percent (275%) of Company"s
Consolidated Tangible Net Worth;
(b) Ninety Percent (90%) of Advances to Dealers; and
(c) Sixty Percent (60%) of Gross Current Installment
Contract Receivables.
(b) Section 7.8 is amended and restated in its entirety, as
follows:
"7.8 Maintain Gross Dealer Advances to Net Installment
Contract Receivables Level. On a Consolidated Basis, maintain as
of the end of each fiscal quarter Gross Advances to Dealers at a
level not to exceed Sixty-Five Percent (65%) of Net Installment
Contract Receivables."
(c) Section 7.9 is amended and restated in its entirety, as
follows:
"7.9 Maintain Fixed Charge Coverage Ratio. On a Consolidated
basis, maintain as of the end of each fiscal quarter a Fixed
Charge Coverage Ratio of not less than:
(a) from the date hereof to December 30, 1997, 2.5 to 1.0;
(b) from December 31, 1997 to March 30, 1998, 1.9 to 1.0;
(c) from March 31, 1998 to June 29, 1998, 1.7 to 1.0;
(d) from June 30, 1998 to September 29, 1998, 1.6 to 1.0;
and
(e) from and after September 30, 1998, 2.0 to 1.0."
3
4
3. Section 8 of the Credit Agreement is hereby amended to add new
Section 8.15, as follows:
"8.15 'Limitation on Dividends'.Declare, make or otherwise set
apart, directly or indirectly, any funds or other property for,
or incur any liability to make any dividend or other
distribution, direct or indirect and whether payable in cash or
property, on account of any capital stock or other equity
interest of the Company or any of its Subsidiaries, except to the
extent that any such dividend or distribution (i) is payable to
the Company or any of its Subsidiaries or (ii) is payable solely
in capital stock or other equity interests of the Company or any
such Subsidiary, unless, at the time of such action (and giving
effect thereto) such dividend or distribution is permitted under
Section 2.5 of each of the amendments to the note agreements
which constitute Senior Debt Documents executed concurrently with
the execution of the Second Amendment to this Agreement (the
"December 1997 Note Agreement Amendments"), as such note
agreements are presently in effect (after giving effect to the
December 1997 Note Agreement Amendments) without giving effect to
any subsequent amendments, modifications or waivers thereof,
except to the extent expressly provided in Section 2.6 of the
December 1997 Note Agreement Amendments."
4. The consent of the Majority Banks (the "Consent") under paragraph
3 of the First Amendment to Credit Agreement and Consent dated as of June 4,
1997 to Stock Repurchases (as such term is defined therein) is hereby modified
such that, notwithstanding the terms of such Consent, Stock Repurchases shall
not be permitted unless, at the time of any such Stock Repurchase, Company is
permitted to make such repurchases under Section 2.5 of each of the amendments
to the note agreements which constitute Senior Debt Documents executed
concurrently with the execution of this Second Amendment (the "December 1997
Note Agreement Amendments"), as such note agreements are presently in effect
(after giving effect to the December 1997 Note Agreement Amendments) without
giving effect to any amendments, modifications or waivers thereof, except to the
extent expressly provided in Section 2.6 of the December 1997 Note Agreement
Amendments.
5. This Second Amendment shall become effective (according to the
terms hereof) upon satisfaction by the Company and the Permitted Borrowers, on
or before December 15, 1997, of the following conditions:
(a) Agent shall have received counterpart originals of this
Second Amendment, in each case duly executed and delivered by Company,
the Permitted Borrowers and the requisite Banks, in form satisfactory
to Agent and the Banks;
(b) Agent shall have received, with a copy for each of the
Banks, amendments to the Senior Debt Documents executed and delivered
by the Company and the requisite holders of the Senior Debt reflecting
amendments to the applicable Senior Debt Documents identical in
substance (or more favorable to the Company) to the amendments set
forth in paragraphs 1 and 2 of this Second Amendment;
(c) Agent shall have received from the Company and each of the
Permitted Borrowers a certification (i) that all necessary actions have
been taken by such parties to
4
5
authorize execution and delivery of this Second Amendment, supported by
such resolutions or other evidence of corporate authority or action as
reasonably required by Agent and the Majority Banks; and (ii) that,
after giving effect to this Second Amendment, no Default or Event of
Default has occurred and is continuing on the proposed effective date
of the Second Amendment; and
(d) Company shall have paid (through Agent) to those Banks
which have approved (in writing) the execution and delivery of this
Second Amendment on or before the close of business on December 3, 1997
an amendment fee in the amount of five basis points on the aggregate
commitment of each such Bank under the Line of Credit and the Revolving
Credit as of the date of the Second Amendment.
provided, however, that subject to the foregoing, the Amendment set forth in
paragraph 1(a) of this Second Amendment shall be given retroactive effect to
September 30, 1997.
If the foregoing conditions have not been satisfied or waived on or before
December 15, 1997, this Second Amendment shall lapse and be of no further force
and effect.
6. New Exhibit F (Request for Swing Line Advance) attached hereto as
Attachment 1 shall replace existing Exhibit F in its entirety and new Schedule
4.1 (Pricing Matrix) attached hereto as Attachment 2 shall replace existing
Schedule 4.1 in its entirety. New Schedule 6.15 (Litigation) attached hereto as
Attachment 3 shall replace existing Schedule 6.15 in its entirety.
7. 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.
8. Except as specifically set forth above, this Second 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.
9. Unless otherwise defined to the contrary herein, all capitalized
terms used in this Second Amendment shall have the meaning set forth in the
Credit Agreement.
10. This Second Amendment may be executed in counterpart in
accordance with Section 13.10 of the Credit Agreement.
[SIGNATURES FOLLOW ON SUCCEEDING PAGES]
5
6
WITNESS the due execution hereof as of the day and year first above
written.
COMERICA BANK, CREDIT ACCEPTANCE CORPORATION
as Agent
By: /S/ Xxxxxxxx X. Xxxxx By: /S/ Xxxxxxx X.Xxxxxxx
-------------------------------- ---------------------------------
Its: Corporate Finance Officer Its: President
------------------------------- --------------------------------
One Detroit Center
000 Xxxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxxxxx
CREDIT ACCEPTANCE CORPORATION
UK LIMITED
By: /S/ Xxxxxxx X. Xxxxxxx
--------------------------------
Its: Secretary
-------------------------------
CAC OF CANCAND LIMITED
By: /S/ Xxxxxxx X. Xxxxxxx
--------------------------------
Its: Secretary
-------------------------------
CREDIT ACCEPTANCE CORPORATION
IRELAND LIMITED
By: /S/ Xxxxxxx X. Xxxxxxx
--------------------------------
Its: Secretary
-------------------------------
6
7
BANKS: COMERICA BANK
By: /S/ Xxxxxxx X. Xxxxxxxxx
--------------------------------
Its: Vice President
--------------------------------
LASALLE NATIONAL BANK THE BANK OF NEW YORK
By: /S/ Xxxxx Xxxxxxx By: /S/ Xxxxxxx Xxxxxx
--------------------------------- ---------------------------------
Its: 1st Vice President Its: Vice President
-------------------------------- --------------------------------
THE FIRST NATIONAL BANK OF THE FIFTH THIRD BANK OF NORTHWESTERN
CHICAGO OHIO, N.A.
By: /S/ Xxxxx Xxxxxxxxx By: /S/ Xxxxx X. Xxxxxxxxxx
--------------------------------- ---------------------------------
Its: Assistant Vice President
-------------------------------- Its: Vice President
--------------------------------
THE SUMITOMO BANK, LIMITED,
CHICAGO BRANCH U.S. BANK NATIONAL ASSOCIATION, AS
SUCCESSOR BY MERGER to United States
National Bank of Oregon
By: /S/ X.X. Xxxxxxx
---------------------------------
Its: Vice President and Manager
-------------------------------- By: /S/ Xxxxx Xxxxxx
---------------------------------
and Its: Vice President
--------------------------------
By: /S/ Xxxxxx X. Xxxxx
-------------------------------- THE BANK OF TOKYO-MITSUBISHI, LTD.
Its: Vice President (CHICAGO BRANCH)
--------------------------------
XXXXXX TRUST AND SAVINGS BANK
By:
----------------------------------
Its:
---------------------------------
By: /S/ Xxxxxx X. Xxxxxx
---------------------------------
7
8
Its: Vice President
-------------------------------- THE LONG-TERM CREDIT BANK OF JAPAN,
LTD. (CHICAGO BRANCH)
By: /S/ Xxxx Xxxxxxxx
----------------------------------
Its: Senior Vice President
---------------------------------
CREDIT LYONNAIS FIRSTAR BANK MILWAUKEE, N.A.
NEW YORK BRANCH
By: /S/ Xxxxxxxxx Xxxxx By: /S/ Xxxxxx Xxxxxxxx
--------------------------------- ----------------------------------
Its: First Vice President Its: Vice President
-------------------------------- ---------------------------------
NATIONSBANK, N.A.
FIRST UNION NATIONAL BANK OF
NORTH CAROLINA
By: /S/ Xxxxxxxxx Xxxxxxxx
----------------------------------
Its: Senior Vice President
---------------------------------
By:
--------------------------------
Its:
--------------------------------
THE BANK OF NOVA SCOTIA CIBC INC.
By: /S/ F.C.H. Xxxxx By: /S/ Xxxxxx Xxxxxxx
--------------------------------- ----------------------------------
Its: Senior Manager Loan Operations Its: Executive Director
-------------------------------- ---------------------------------
8
