<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
/X/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1999
OR
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
Commission File Number 000-20202
CREDIT ACCEPTANCE CORPORATION
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C>
MICHIGAN 38-1999511
(State or other jurisdiction of incorporation or organization) (IRS Employer Identification)
25505 WEST TWELVE MILE ROAD, SUITE 3000
SOUTHFIELD, MICHIGAN 48034-8339
(Address of principal executive offices) (zip code)
</TABLE>
Registrant's telephone number, including area code: 248-353-2700
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes /X/. No / /.
Indicate the number of shares outstanding of each of the issuer's class
of common stock, as of the latest practicable date.
The number of shares outstanding of Common Stock, par value $.01, on
August 12, 1999 was 46,256,754.
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PART I. - FINANCIAL INFORMATION
<S> <C> <C>
ITEM 1. FINANCIAL STATEMENTS
Consolidated Balance Sheets -
As of December 31, 1998 and June 30, 1999................................................. 1
Consolidated Income Statements -
Three and six month periods ended June 30, 1998 and June 30, 1999......................... 2
Consolidated Statements of Cash Flows -
Six months ended June 30, 1998 and June 30, 1999.......................................... 3
Consolidated Statement of Shareholders' Equity -
Six months ended June 30, 1999............................................................ 4
Notes to Consolidated Financial Statements...................................................... 5
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS....................................................................... 7
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKS..................................... 16
PART II. - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS............................................................................... 17
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS............................................. 17
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K................................................................ 18
SIGNATURES ................................................................................................... 19
INDEX OF EXHIBITS............................................................................................. 20
EXHIBITS...................................................................................................... 21
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<PAGE> 3
PART I. - FINANCIAL INFORMATION
ITEM 1.- FINANCIAL STATEMENTS
CREDIT ACCEPTANCE CORPORATION
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
As of As of
(Dollars in thousands) 12/31/98 6/30/99
--------------- ---------------
(Unaudited)
<S> <C> <C>
ASSETS:
Cash and cash equivalents..................................... $ 13,775 $ 14,575
Investments................................................... 10,191 10,807
Installment contracts receivable.............................. 671,768 586,027
Allowance for credit losses................................... (7,075) (5,114)
--------------- ---------------
Installment contracts receivable, net.................... 664,693 580,913
Retained interest in securitization........................... 13,229 13,735
Floor plan receivables........................................ 14,071 18,666
Notes receivable.............................................. 2,278 2,637
Property and equipment, net................................... 20,627 20,107
Other assets.................................................. 13,065 13,823
--------------- ---------------
TOTAL ASSETS........................................................... $ 751,929 $ 675,263
=============== ===============
LIABILITIES:
Senior notes.................................................. $ 136,165 $ 116,165
Lines of credit............................................... 79,067 43,851
Mortgage loan payable to bank................................. 3,566 8,511
Income taxes payable.......................................... 776 6,899
Accounts payable and accrued liabilities...................... 22,423 24,916
Deferred dealer enrollment fees, net.......................... 296 249
Dealer holdbacks, net......................................... 222,275 171,765
Deferred income taxes, net.................................... 11,098 10,754
--------------- ---------------
TOTAL LIABILITIES...................................................... 475,666 383,110
--------------- ---------------
SHAREHOLDERS' EQUITY
Common stock.................................................. 463 463
Paid-in capital............................................... 129,914 130,332
Retained earnings............................................. 142,989 162,139
Cumulative translation adjustment............................. 2,897 (781)
--------------- ---------------
TOTAL SHAREHOLDERS' EQUITY............................................. 276,263 292,153
--------------- ---------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY............................. $ 751,929 $ 675,263
=============== ===============
</TABLE>
1
<PAGE> 4
CREDIT ACCEPTANCE CORPORATION
CONSOLIDATED INCOME STATEMENTS
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
----------------------------- ----------------------------
(Dollars in thousands, except per share data) 6/30/98 6/30/99 6/30/98 6/30/99
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
REVENUE:
Finance charges..................... $ 27,894 $ 19,797 $ 55,949 $ 39,202
Premiums earned..................... 2,630 2,331 5,553 4,776
Other income........................ 7,312 6,863 15,644 15,374
------------ ------------ ------------ ------------
Total revenue.............. $ 37,836 $ 28,991 $ 77,146 $ 59,352
COSTS AND EXPENSES:
Operating expenses.................. 14,019 14,461 28,640 29,010
Provision for credit losses......... 4,666 2,084 10,462 4,220
Provision for claims................ 937 894 1,972 1,725
Interest............................ 6,829 4,272 14,175 8,799
------------ ------------ ------------ ------------
Total costs and expenses... $ 26,451 $ 21,711 $ 55,249 $ 43,754
------------ ------------ ------------ ------------
Operating income............................. 11,385 7,280 21,897 15,598
------------ ------------ ------------ ------------
Gain on sale of subsidiary.......... - 14,720 - 14,720
Foreign exchange gain(loss)......... (7) (9) 5 (54)
------------ ------------ ------------ ------------
Income before provision for income taxes..... 11,378 21,991 21,902 30,264
Provision for income taxes.......... 3,935 8,220 7,572 11,114
------------ ------------ ------------ ------------
Net income................................... $ 7,443 $ 13,771 $ 14,330 $ 19,150
============ ============ ============ ============
Net income per common share:
Basic............................... $ 0.16 $ 0.30 $ 0.31 $ 0.41
============ ============ ============ ============
Diluted............................. $ 0.16 $ 0.30 $ 0.30 $ 0.41
============ ============ ============ ============
Weighted average shares outstanding:
Basic............................... 46,113,115 46,303,516 46,113,115 46,301,210
============ ============ ============ ============
Diluted............................. 47,410,190 46,545,290 47,179,931 46,625,575
============ ============ ============ ============
</TABLE>
2
<PAGE> 5
CREDIT ACCEPTANCE CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
(Dollars in thousands) Six Months Ended
----------------------------
6/30/98 6/30/99
------------ ------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income.......................................................... $ 14,330 $ 19,150
Adjustments to reconcile net income to net cash
provided by operating activities-
Gain on sale of subsidiary........................ - (14,720)
Credit for deferred income taxes.................. (1,706) (344)
Depreciation and amortization..................... 1,911 2,190
Valuation adjustment on retained interest
in securitization............................... - 517
Amortization on retained interest in
securitization.................................. - (1,023)
Provision for credit losses....................... 10,462 4,213
Dealer stock option plan expense.................. 41 66
Change in operating assets and liabilities-
Accounts payable and accrued liabilities.......... 5,527 2,856
Income taxes payable.............................. 3,546 6,123
Deferred dealer enrollment fees, net.............. (609) (47)
Unearned insurance premiums, insurance
reserves and fees............................... 142 369
Other assets...................................... 15,626 (1,597)
------------ ------------
Net cash provided by operating
activities............................. 49,270 17,753
============ ============
CASH FLOWS FROM INVESTING ACTIVITIES:
Principal collected on installment contracts receivable............. 203,494 170,353
Advances to dealers and payments of dealer holdback................. (173,413) (141,665)
Proceeds from sale of subsidiary.................................... - 16,147
Net purchases of marketable securities.............................. (1,329) (616)
Decrease (increase) in floor plan receivables....................... 1,343 (4,595)
Increase in notes receivable........................................ (343) (359)
Purchase of property and equipment.................................. (1,697) (2,621)
------------ ------------
Net cash provided by investing
activities............................. 28,055 36,644
============ ============
CASH FLOWS FROM FINANCING ACTIVITIES:
Net borrowings (repayments) under mortgage loan payable to
bank.............................................................. (116) 4,945
Net repayments under line of credit agreement....................... (77,064) (35,216)
Repayments of senior notes.......................................... - (20,000)
Proceeds from stock options exercised............................... - 352
------------ ------------
Net cash used in financing activities.... (77,180) (49,919)
------------ ------------
Effect of exchange rate changes on cash.. 934 (3,678)
------------ ------------
NET INCREASE IN CASH......................................................... 1,079 800
Cash and cash equivalents - beginning of period..................... 349 13,775
------------ ------------
Cash and cash equivalents - end of period........................... $ 1,428 $ 14,575
============ ============
</TABLE>
3
<PAGE> 6
CREDIT ACCEPTANCE CORPORATION
CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
FOR THE SIX MONTHS ENDED JUNE 30, 1999
(UNAUDITED)
<TABLE>
<CAPTION>
(Dollars in thousands) Accumulated
Total Other
Shareholders' Comprehensive Common Paid In Retained Comprehensive
Equity Income Stock Capital Earnings Income
------------ ------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Balance - December 31, 1998........... $ 276,263 $ $ 463 $ 129,914 $ 142,989 $ 2,897
Comprehensive income:
Net income....................... 19,150 19,150 19,150
------------
Other comprehensive income:
Foreign currency translation
adjustment................... (3,678) (3,678) (3,678)
Tax on other comprehensive
income..................... 1,287
------------
Other comprehensive income..... (2,391)
------------
Total comprehensive income.......... $ 16,759
============
Stock options exercised............. 352 352
Dealer stock option plan expense.... 66 66
------------ ------------ ------------ ------------ ------------
Balance - June 30, 1999............... $ 292,153 $ 463 $ 130,332 $ 162,139 $ (781)
============ ============ ============ ============ ============
</TABLE>
4
<PAGE> 7
CREDIT ACCEPTANCE CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
1. BASIS OF PRESENTATION
The accompanying unaudited consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-Q and Article 10 of
Regulation S-X. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements. In the opinion of management, all adjustments (consisting
of normal recurring accruals) considered necessary for a fair presentation have
been included. The results of operations for interim periods are not necessarily
indicative of actual results achieved for full fiscal years. The consolidated
balance sheet at December 31, 1998 has been derived from the audited financial
statements at that date but does not include all the information and footnotes
required by generally accepted accounting principles for complete financial
statements. Certain amounts in the 1998 financial statements have been
reclassified to conform to the 1999 presentation. For further information, refer
to the consolidated financial statements and footnotes thereto included in the
Company's Annual Report on Form 10-K for the year ended December 31, 1998.
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the amounts reported in the financial statements and
accompanying notes. Actual results could differ from those estimates.
2. NET INCOME PER SHARE
Basic net income per share amounts are based on the weighted average
number of common shares outstanding. Diluted net income per share amounts are
based on the weighted average number of common shares and common stock
equivalents outstanding. Common stock equivalents included in the computation
represent shares issuable upon assumed exercise of stock options which would
have a dilutive effect. All per share amounts have been adjusted to reflect all
stock splits declared by the Company.
3. NEW ACCOUNTING STANDARDS
In the first quarter of 1998, the American Institute of Certified
Public Accountants' Accounting Standards Executive Committee issued Statement of
Position (SOP) 98-1, "Accounting for the Costs of Computer Software Developed or
Obtained for Internal Use". SOP 98-1 provides guidance on the capitalization of
software for internal use. The Company adopted SOP 98-1 effective January 1,
1999, as required. The adoption of SOP 98-1 did not have a material effect on
the Company's consolidated financial position or results of operations.
5
<PAGE> 8
4. BUSINESS SEGMENT INFORMATION
The Company operates in two reportable business segments: North
American Automotive Finance and U.K./Ireland Automotive Finance. Selected
segment information is set forth below:
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
---------------------------- -----------------------------
6/30/98 6/30/99 6/30/98 6/30/99
----------- ----------- ------------ -----------
<S> <C> <C> <C> <C>
Total revenue:
North American Automotive Finance............. $ 30,572 $ 22,949 $ 62,694 $ 46,315
U.K./Ireland Automotive Finance............... 5,657 4,258 11,771 8,281
All Other..................................... 1,607 1,784 2,681 4,756
----------- ----------- ------------ -----------
$ 37,836 $ 28,991 $ 77,146 $ 59,352
=========== =========== ============ ===========
Earnings before interest and taxes:
North American Automotive Finance............. 14,792 24,266 29,120 34,818
U.K./Ireland Automotive Finance............... 3,114 2,134 6,611 4,056
All Other..................................... 301 (137) 346 189
----------- ----------- ------------ -----------
18,207 26,263 36,077 39,063
=========== =========== ============ ===========
Reconciliation of total earnings before interest and
taxes to consolidated income before provision for
income taxes:
Total earnings before interest and taxes...... 18,207 26,263 36,077 39,063
Interest expense.............................. (6,829) (4,272) (14,175) (8,799)
----------- ----------- ------------ -----------
Consolidated income before provision for
income taxes...................................... $ 11,378 $ 21,991 $ 21,902 $ 30,264
=========== =========== ============ ===========
</TABLE>
6
<PAGE> 9
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
THREE AND SIX MONTHS ENDED JUNE 30, 1998 COMPARED TO THREE AND SIX MONTHS
ENDED JUNE 30, 1999
TOTAL REVENUE. Total revenue decreased from $37.8 million and $77.1 million for
the three and six months ended June 30, 1998 to $29.0 million and $59.4 million
for the same periods in 1999, representing decreases of 23.4% and 23.1%. These
decreases are primarily due to decreases in finance charge revenue resulting
from lower average installment contract receivable balances. The decline in the
average installment contract receivable balance is primarily the result of
collections on and charge offs of installment contracts exceeding contract
originations for the period. The volume of contract originations for the
Company's North American Automotive Finance Operations decreased from $138.5
million and $328.1 million for the three and six months ended June 30, 1998 to
$105.8 million and $220.1 million for the same periods in 1999. The volume of
contract originations for the Company's U.K./Ireland Automotive Finance
Operations increased from $14.4 million and $27.7 million for the three and six
months ended June 30, 1998 to $29.3 million and $42.9 million for the same
periods in 1999. Based upon reviews of dealer profitability and improvements in
credit quality, the Company has introduced new advance programs, both in the
United States and United Kingdom, which have increased the Company's overall
advance rates. The Company's advances to dealers and payment of dealer holdback,
as a percent of gross installment contracts accepted, increased from 50.9% and
48.6% for the three and six months ended June 30, 1998 to 55.6% and 53.7% for
the same periods in 1999. There can be no assurance that higher advance rates
will lead to increased origination volumes in future periods, or that advance
rates will not need to be lowered in future periods based on continued review of
dealer profitability and credit quality or that higher advance rates will not
lead to higher losses on dealer advances in future periods.
The average annualized yield on the Company's installment contract portfolio,
calculated using finance charge revenue divided by average installment contracts
receivable, was approximately 11.6% and 12.6% for the six months ended June 30,
1998 and 1999, respectively. The increase in the average yield is due to a
decrease in the percentage of installment contracts which were in non-accrual
status as well as improvements in collection levels on non-accrual installment
contracts. The percentage of installment contracts which were in non-accrual
status was 32.3% and 25.9% as of June 30, 1998 and 1999, respectively.
Premiums earned increased, as a percent of total revenue, from 7.0% and 7.2% for
the three and six months ended June 30, 1998 to 8.0% for the same periods in
1999. Premiums on the Company's service contract program are earned on a
straight-line basis over the life of the service contracts. Premiums reinsured
under the Company's credit life and collateral protection insurance programs are
earned over the life of the contracts using the pro rata and sum-of-digits
methods. As a result of these revenue recognition methods, premiums earned
decreased at a slower rate than the decrease in finance charges. In addition,
the increase is due to an increase in the penetration rate of the Company's
service contract and credit life insurance programs.
Other income increased, as a percent of total revenue, from 19.3% and 20.3% for
the three and six months ended June
7
<PAGE> 10
30, 1998 to 23.7% and 25.9% for the same periods in 1999. The increases are
primarily due to i) revenues from the Company's auction services business which
the Company began operating in June 1998 and ii) servicing fees and interest
earned on the retained interest in securitization resulting from the Company's
securitization of advance receivables in July 1998. The increases are partially
offset by i) decreases in earned dealer enrollment fees due to a decline in the
number of dealers enrolling in the Company's financing program and ii) a
decrease in fees earned on third party service contract products offered by
dealers on installment contracts, as the volume of this business has declined
proportionately with the decrease in installment contract originations. For the
three month period ended June 30, 1999, the decrease is also due to a decrease
in revenues from the Company's credit reporting subsidiary which was sold on May
7, 1999.
The increases in other income, as a percent of total revenue, are also partially
offset by a valuation adjustment recorded by the Company during the three months
ended June 30, 1999, on its retained interest in securitization. The $517,000
adjustment resulted from the write-down of the retained interest in
securitization generated from the Company's securitization completed in July
1998. The retained interest in securitization represents an accounting estimate
based on several variables including the amount and timing of collections on the
underlying installment contracts receivable, the amount and timing of projected
dealer holdback payments and interest costs. The Company regularly reviews the
actual performance of these variables against the assumptions used to record the
retained interest. This evaluation has resulted in a reassessment of the timing
and amount of collections on the installment contracts underlying the
securitized advances. The Company will continue to assess the performance of its
securitization and make adjustments when necessary.
OPERATING EXPENSES. Operating expenses, as a percent of total revenue, increased
from 37.1% for the three and six months ended June 30, 1998 to 49.9% and 48.9%
for the same periods in 1999. Operating expenses consist of salaries and wages,
general and administrative, and sales and marketing expenses.
The increase, as a percent of revenue, is primarily due to an increase in
salaries and wages. Salaries and wages increased principally due to increases in
the Company's average wage rates necessary to attract and retain quality
personnel. In addition, salaries and wages increased, as a percent of revenue,
as the Company's employee head count was not reduced proportionately with the
decrease in revenues, as the Company has retained collection personnel in order
to continue to improve collection levels.
The increase is also due to an increase, as a percent of revenue, in general and
administrative expenses which, due to the fixed nature of certain of these
expenses, did not decline proportionately with the decline in revenue.
To a lesser extent, the increase in operating expenses results from the
Company's purchase of the auction services business in June 1998, which requires
proportionately higher operating expenses than the Company's other businesses.
The increases in salaries and wages and general and administrative expenses
are partially offset by a decrease in sales and marketing expenses. These
expenses decreased primarily due to reductions in sales commissions as a result
of lower contract origination volumes and reductions in the Company's total
sales force. The decrease in sales and marketing expenses is also the result of
decreases in advertising due to the termination of the Company's customer lead
generating program.
PROVISION FOR CREDIT LOSSES. The amount provided for credit losses, as a percent
of total revenue, decreased from 12.3% and 13.6% for the three and six months
ended June 30, 1998 to 7.2% and 7.1% for the same periods in 1999. The provision
for credit losses consists of two components: (i) a provision for earned but
unpaid revenue on installment contracts which were transferred to non-accrual
status during the period and (ii) a provision for losses on advances to dealers
that are not expected to be recovered through collections on the related
installment contract receivable portfolio. The decrease is primarily due to
lower provisions needed for advance losses, based on improvements in the
Company's loan performance as measured by the static pool analysis. Advance
balances are regularly reviewed by management utilizing the Company's loan
servicing system which allows management to estimate future collections for each
dealer pool using historical loss experience and a dealer by dealer static pool
analysis. In addition, the decrease is also due to lower provisions needed for
earned but unpaid revenue primarily resulting from the decrease in the percent
of non-accrual installment contracts receivable which were 32.3% and 25.9% of
gross receivables as of June 30, 1998 and 1999, respectively.
PROVISION FOR CLAIMS. The amount provided for insurance and service contract
claims, as a percent of total revenue, increased from 2.5% and 2.6% during the
three and six months ended June 30, 1998 to 3.1% and 2.9% during the same
periods in 1999. These increases correspond with increases, as a percent of
total revenue, in premiums earned from 7.0% and 7.2% for the three and six
months ended June 30, 1998 to 8.0% for the same periods in 1999. The Company has
established claims reserves based on accumulated estimates of claims reported
but unpaid plus estimates of incurred but unreported claims.
8
<PAGE> 11
INTEREST EXPENSE. Interest expense, as a percent of total revenue, decreased
from 18.0% and 18.4% for the three and six months ended June 30, 1998 to 14.7%
and 14.8% for the same periods in 1999. The decrease in interest expense is
primarily the result of a decrease in the amount of average outstanding
borrowings, which results from i) the positive cash flow generated primarily
from collections on installment contracts receivable exceeding cash advances to
dealers and payments of dealer holdbacks and ii) $49.3 million raised in July
1998 from the securitization of advance receivables. The decrease was partially
offset by higher average interest rates during the 1999 periods. The weighted
average interest rates increased from 8.25% and 8.19% for the three and six
months ended June 30, 1998 to 9.80% and 9.41% for the same periods in 1999. The
increase in the average interest rates is the result of i) the impact of fixed
borrowing costs, such as facility fees, up front legal fees and other costs on
average interest rates when average outstanding borrowings are decreasing ii) a
25 basis point increase in the interest rate on outstanding borrowings under the
Company's senior notes resulting from amendments to the note purchase agreements
due to the Company's securitization of advance receivables in July 1998; and
iii) a decrease in line of credit balances, which carry lower interest rates, as
a percentage of total average balance sheet debt.
OPERATING INCOME. As a result of the aforementioned factors, operating income
decreased from $11.4 million and $21.9 million for the three and six months
ended June 30, 1998 to $7.3 million and $15.6 million for the same periods in
1999, representing decreases of 36.1% and 28.8%, respectively.
GAIN ON SALE OF SUBSIDIARY. The Company recorded a pre-tax gain of $14.7 million
during the three months ended June 30, 1999 from the sale of the Company's
credit reporting services subsidiary. The net proceeds from the sale were used
to reduce outstanding indebtedness under the Company's $125 million credit
facility.
FOREIGN EXCHANGE GAIN (LOSS). The Company incurred foreign exchange gains
(losses) of ($7,000) and $5,000 for the three and six months ended June 30, 1998
and foreign exchange losses of ($9,000) and ($54,000) for the same periods in
1999. The gains and losses result from the effect of exchange rate fluctuations
between the U.S. dollar and foreign currencies on unhedged intercompany balances
between the Company and its subsidiaries which operate outside the United
States.
PROVISION FOR INCOME TAXES. The provision for income taxes increased from $3.9
million and $7.6 million during the three and six months ended June 30, 1998 to
$8.2 million and $11.1 million during the same periods in 1999. The increases
are due to a higher level of pretax income in 1999, primarily resulting from the
gain on the sale of the Company's credit reporting subsidiary. For the six
months ended June 30, the effective tax rate was 34.6% in 1998 and 36.7% in
1999. The increase in the effective tax rate is primarily due to approximately
$900,000 of state income taxes incurred on the sale of the Company's credit
reporting subsidiary. The increase in the effective tax rate is also due to a
lower percentage of the Company's consolidated pretax income being earned by the
Company's United Kingdom subsidiary in 1999, where the statutory rate is lower
than the U.S. statutory federal tax rate.
INSTALLMENT CONTRACTS RECEIVABLE
The following table summarizes the composition of installment contracts
receivable at the dates indicated:
<TABLE>
<CAPTION>
As of As of
(Dollars in thousands) 12/31/98 6/30/99
- ---------------------- ---------------- ---------------
<S> <C> <C>
(Unaudited)
Gross installment contracts receivable.................................... $ 794,831 $ 695,074
Unearned finance charges.................................................. (114,617) (100,232)
Unearned insurance premiums, insurance reserves, and fees................. (8,446) (8,825)
---------------- ---------------
Installment contracts receivable.......................................... $ 671,768 $ 586,027
================ ===============
</TABLE>
9
<PAGE> 12
A summary of changes in gross installment contracts receivable is as
follows:
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
----------------------------- -----------------------------
(Dollars in thousands) 6/30/98 6/30/99 6/30/98 6/30/99
- ---------------------- ------------- ------------ ------------- ------------
(Unaudited) (Unaudited)
<S> <C> <C> <C> <C>
Balance - beginning of period.................... $ 1,143,469 $ 724,946 $ 1,254,858 $ 794,831
Gross amount of installment contracts
accepted...................................... 153,515 135,996 356,480 263,976
Cash collections on installment contracts
receivable.................................... (137,139) (104,481) (276,243) (215,984)
Charge offs...................................... (121,789) (56,738) (296,678) (139,281)
Currency translation............................. 2,614 (4,649) 2,253 (8,468)
------------- ------------ ------------ ------------
Balance - end of period.......................... $ 1,040,670 $ 695,074 $ 1,040,670 $ 695,074
============= ============ ============ ============
</TABLE>
DEALER HOLDBACKS
The following table summarizes the composition of dealer holdbacks at
the dates indicated:
<TABLE>
<CAPTION>
As of As of
(Dollars in thousands) 12/31/98 6/30/99
- ---------------------- ------------ --------------
(Unaudited)
<S> <C> <C>
Dealer holdbacks........................................................... $ 634,102 $ 554,183
Less: Advances (net of reserves of $19,954 and $16,090 at
December 31, 1998 and June 30, 1999, respectively).................. (411,827) (382,418)
------------ --------------
Dealer holdbacks, net...................................................... $ 222,275 $ 171,765
============ ==============
</TABLE>
CREDIT POLICY AND EXPERIENCE
When an installment contract is assigned to the Company by a
participating dealer, the Company generally pays a cash advance to the dealer.
The Company maintains a reserve against advances to dealers that are not
expected to be recovered through collections on the related installment contract
portfolio. For purposes of establishing the reserve, future collections are
reduced to present-value in order to achieve a level yield over the remaining
term of the advance equal to the expected yield at the origination of the
impaired advance. The Company's loan servicing system allows the Company to
estimate future collections for each dealer pool using historical loss
experience and a dealer by dealer static pool analysis. Future reserve
requirements will depend in part on the magnitude of the variance between
management's prediction of future collections and the actual collections that
are realized. The Company charges off dealer advances against the reserve at
such time and to the extent that the Company's static pool analysis determines
that the advance is completely or partially impaired.
The Company also maintains an allowance for credit losses which, in the
opinion of management, adequately reserves against losses in the portfolio of
receivables. The risk of loss to the Company related to the installment
contracts receivable balances relates primarily to the earned but unpaid revenue
on installment contracts which were transferred to non-accrual status
during the period. Servicing fees, which are booked as finance charges, are
recognized under the interest method of accounting until the underlying
obligation is 90 days past due on a recency basis. At such time, the Company
suspends the accrual of revenue and makes a provision for credit losses equal to
the earned but unpaid revenue. In all cases, contracts on which no material
payment has been received for nine months are charged off against dealer
holdbacks, unearned finance charges and the allowance for credit losses.
10
<PAGE> 13
Ultimate losses may vary from current estimates and the amount of
provision, which is a current expense, may be either greater or less than actual
charge offs.
The following tables set forth information relating to charge offs, the
allowance for credit losses, and the reserve on advances.
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
----------------------------- -----------------------------
(Dollars in thousands) 6/30/98 6/30/99 6/30/98 6/30/99
- ---------------------- ------------- ------------ ------------- ------------
(Unaudited) (Unaudited)
<S> <C> <C> <C> <C>
CHARGES OFFS
Charged against dealer holdbacks.................. $ 97,459 $ 45,480 $ 237,328 $ 111,533
Charged against unearned finance charges.......... 22,133 10,365 53,481 25,472
Charged against allowance for credit losses....... 2,197 893 5,869 2,276
------------- ------------ ------------- ------------
Total contracts charged off....................... $ 121,789 $ 56,738 $ 296,678 $ 139,281
============= ============ ============ ============
Net charge offs against the reserve on advances... $ - $ 2,626 $ - $ 7,508
============= ============ ============ ============
</TABLE>
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
----------------------------- -----------------------------
(Dollars in thousands) 6/30/98 6/30/99 6/30/98 6/30/99
- ---------------------- ------------- ------------ ------------- ------------
(Unaudited) (Unaudited)
<S> <C> <C> <C> <C>
ALLOWANCE FOR CREDIT LOSSES
Balance - beginning of period.................... $ 10,473 $ 5,849 $ 13,119 $ 7,075
Provision for loan losses........................ 875 183 1,905 375
Charge offs...................................... (2,197) (893) (5,869) (2,276)
Currency translation............................. 23 (25) 19 (60)
------------- ------------ ------------- ------------
Balance - end of period.......................... $ 9,174 $ 5,144 $ 9,174 $ 5,114
============= ============ ============= ============
</TABLE>
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
----------------------------- -----------------------------
(Dollars in thousands) 6/30/98 6/30/99 6/30/98 6/30/99
- ---------------------- ------------- ------------ ------------- ------------
(Unaudited) (Unaudited)
<S> <C> <C> <C> <C>
RESERVE ON ADVANCES
Balance - beginning of period.................... $ 21,262 $ 16,884 $ 16,369 $ 19,954
Provision for advance losses..................... 3,791 1,894 8,557 3,838
Advance reserve fees............................. 15 4 167 8
Charge offs...................................... - (2,626) - (7,508)
Currency translation............................. 206 (66) 181 (202)
------------- ------------ ------------- ------------
Balance - end of period.......................... $ 25,274 $ 16,090 $ 25,274 $ 16,090
============= ============ ============= ============
</TABLE>
11
<PAGE> 14
<TABLE>
<CAPTION>
As of
-----------------------
(Dollars in thousands) 6/30/98 6/30/99
- ---------------------- ------- -------
<S> <C> <C>
CREDIT RATIOS (Unaudited)
Allowance for credit losses as a percent of gross
installment contracts receivable......................... 0.9% 0.7%
Reserve on advances as a percent of advances................ 4.6% 4.0%
Gross dealer holdbacks as a percent of gross
installment contracts receivable......................... 79.8% 79.7%
</TABLE>
LIQUIDITY AND CAPITAL RESOURCES
The Company's principal need for capital is to fund cash advances made
to dealers in connection with the acceptance of installment contracts and for
the payment of dealer holdbacks to dealers who have repaid their advance
balances. These cash outflows to dealers decreased from $173.4 million during
the six months ended June 30, 1998 to $141.7 million during the same period in
1999. These amounts have historically been funded from cash collections on
installment contracts, cash provided by operating activities and draws under the
Company's credit agreements. The Company maintains a significant dealer holdback
on installment contracts accepted which assists the Company in funding its long-
term cash flow requirements. During the first six months of 1999, the Company
reduced the amount of indebtedness outstanding under its $125 million credit
agreement by approximately $35.2 million and prepaid $20.0 million of senior
notes. The positive cash flow during the period is primarily a result of
collections on installment contracts receivable exceeding cash advances to
dealers and payments of dealer holdbacks.
The Company has a $125 million credit agreement with a commercial bank
syndicate. The facility has a commitment period through June 13, 2000 and is
subject to annual extensions for additional one year periods at the request of
the Company with the consent of each of the banks in the facility. The agreement
provides that interest is payable at the Eurocurrency rate plus 140 basis
points, or at the prime rate. The Eurocurrency borrowings may be fixed for
periods up to six months. The credit agreement has certain restrictive
covenants, including limits on the ratio of the Company's debt to equity, debt
to advances, debt to installment contracts receivable, advances to installment
contracts receivable, fixed charges to net income, limits on the Company's
investment in its foreign subsidiaries and requirements that the Company
maintain a specified minimum level of net worth. Borrowings under the credit
agreement are secured through a lien on most of the Company's assets on an equal
and ratable basis with the Company's senior notes. As of June 30, 1999, there
was approximately $43.9 million outstanding under this facility.
When borrowing to fund the operations of its foreign subsidiaries, the
Company's policy is to borrow funds denominated in the currency of the country
in which the subsidiary operates, thus mitigating the Company's exposure to
foreign exchange fluctuations.
On April 26, 1999, the Company refinanced a mortgage loan on its
headquarters which resulted in net proceeds to the Company of approximately $5.0
million. These proceeds were used to reduce amounts outstanding under the
Company's $125 million credit facility.
On May 7, 1999, the Company sold its credit reporting services
subsidiary for $20.5 million in cash. The Company received $16.1 million of net
proceeds from the sale, after the buyout of an employment agreement and other
costs of sale, which were used to reduce the outstanding indebtedness under the
Company's $125 million credit facility. In connection with this transaction, the
Company recorded a pre-tax gain of approximately $14.7 million during the
quarter ended June 30, 1999.
On July 21, 1999, the Company completed a securitization of advance
receivables. Pursuant to this transaction, the Company contributed dealer
advances having a carrying amount of approximately $62.4 million and received
approximately $49.5 million in financing from an institutional investor. The
financing, which is nonrecourse to the Company, bears interest at a floating
rate equal to the thirty day commercial paper rate plus 70 basis points with a
12
<PAGE> 15
maximum rate of 7.5% and is anticipated to fully amortize within thirty months.
The financing is secured by the contributed dealer advances, the rights to
collections on the related installment contracts receivable and certain related
assets up to the sum of the contributed dealer advance and the Company's
servicing fee. The Company will receive a monthly servicing fee equal to 4% of
the collections of the contributed installment contracts receivable. Except for
the servicing fee and payments due to dealers, the Company will not receive any
portion of collections on the installment contracts receivable until the
underlying indebtedness has been repaid in full. The proceeds of the
securitization were used to reduce indebtedness under the Company's credit
facility.
On August 5, 1999, the Company's Board of Directors authorized a common
stock repurchase program of up to 1,000,000 shares of the Company's common
stock. The shares, which can be repurchased through the open market or in
privately negotiated transactions, represent approximately 2.2% of the
outstanding common shares. The Company expects to fund the repurchases from cash
generated from operations and amounts available under its $125 million credit
agreement.
The Company has $23.9 million of principal maturing on its senior notes
in the fourth quarter of 1999 which the Company expects to repay from cash
generated from operations and amounts available under its $125 million credit
agreement.
As previously disclosed in the Company's 1998 Annual Report on Form
10-K and the Company's Quarterly Report on Form 10-Q for the quarterly period
ended March 31, 1999, the Company is currently a defendant in a class action
proceeding seeking money damages resulting for alleged violations of a number of
Missouri state and federal consumer protection laws. Pending the appeal of this
litigation, the Company may be required to post a bond or letter of credit,
which would reduce availability under the Company's credit agreement. Based upon
anticipated cash flows, management believes that amounts available under its
credit agreement, cash flow from operations and various financing alternatives
available will provide sufficient financing for current debt maturities and for
future operations. If the various financing alternatives were to become limited
or unavailable to the Company, the Company's operations would be materially
adversely affected.
YEAR 2000 UPDATE
The year 2000 issue is the result of computer programs and
microprocessors using two digits rather than four to define the applicable year
(the "Year 2000 Issue"). Such programs or microprocessors may recognize a date
using "00" as the year 1900 rather than the year 2000. This could result in
system failures or miscalculations leading to disruptions in the Company's
activities and operations. If the Company or third parties with which it has a
significant relationship fail to make necessary modifications, conversions and
contingency plans on a timely basis, the Year 2000 Issue could have a material
adverse effect on the Company's business, financial condition and results of
operations. However, the effect cannot be quantified at this time because the
Company cannot accurately estimate the magnitude, duration or ultimate impact of
noncompliance by its systems or those of vendors and other third parties. The
Company believes that its competitors face a similar risk. Although the risk is
not presently quantifiable, the following disclosure is intended to summarize
the Company's actions to minimize its risk from the Year 2000 Issue. Programs
that will operate in the year 2000 unaffected by the change in year from 1999 to
2000 are referred to herein as "year 2000 compliant."
State of Readiness. The Company employs three major computer systems in
its U.S. Operations: (i) the Application and Contract System (ACS) which is used
from the time a dealer faxes an application to the Company until the contract is
received and funded, (ii) the Loan Servicing System (LSS) which contains all
loan and payment information and is the primary source for management
information reporting, and (iii) the Collection System (CS) which is used by the
Company's collections personnel to track and service all active customer
accounts. The ACS and LSS went into production in 1997 and were developed in
Oracle 7.3 and Oracle Forms 4.5 which are year 2000 compliant. The CS is a third
party software package which has been upgraded to be year 2000 compliant.
The Company employs one major computer system in its United Kingdom
operations which is a third party
13
<PAGE> 16
software package. The vendor has certified to the Company that the system is
year 2000 compliant.
The Company or its third party suppliers have substantially completed
testing all of the Company's mission critical and non-mission critical computer
systems and other non-information technology systems material to the Company's
operations and the Company believes that such systems are year 2000 compliant.
The Company has completed a comprehensive inventory of all other
computer hardware, software, third party vendors and other non-information
technology systems. All items identified were prioritized and assigned to a
responsible party to investigate and ensure that the item becomes year 2000
compliant by the end of 1999. The Company initiated communication with its
significant suppliers to determine the extent to which its operations are
vulnerable to those third parties' failure to remediate their own year 2000
issues. Suppliers of hardware, software or products that might contain embedded
processors were asked to provide information regarding the year 2000 compliance
status of their products. The Company will continue to seek information from
non-responsive suppliers in the third quarter of 1999. The Company cannot give
any assurance that the systems of other companies on which its systems rely will
be year 2000 compliant and that any failure of such a company to be year 2000
compliant will not have an adverse effect on the Company's operations.
The Company expects verification activities will continue through the
end of the year. The Company also expects some aspects of the year 2000 plan to
continue beyond January 1, 2000 with respect to resolution of non-critical
issues.
Costs. The Company expects that all software installations or other
modifications will be expensed as incurred, while the cost for new software will
be capitalized and amortized over the software's useful life. At this time, the
Company anticipates spending no more than $50,000 in its efforts to become year
2000 compliant, of which approximately $42,000 has been spent to date from
available working capital. Estimates of time, cost and risks are based on
currently available information. Developments that could affect estimates
include, without limitation, the availability of trained personnel, the ability
to locate and correct all non-compliant systems, cooperation and remediation
success of third parties material to the Company, and the ability to correctly
anticipate risks and implement suitable contingency plans in the event of system
failures at the Company or third parties.
Risks. Because the Company believes that the mission critical systems
within its control are year 2000 compliant, the Company believes that the most
reasonably likely worst case scenario is a compliance failure by a third party
upon which the Company relies. Such a failure would likely have an effect on the
Company's business, financial condition and results of operations. The magnitude
of that effect however, cannot be quantified at this time because of variables
such as the type and importance of the third party, the possible effect on the
Company's operations and the Company's ability to respond. Thus, there can be no
assurance that there will not be a material adverse effect on the Company if
such third parties do not remediate their systems in a timely manner. In
addition, it is possible that the Company could experience a failure of a
non-mission critical system for a period of time, which could result in a minor
disruption in some internal operations.
Contingency Plans. Contingency planning is an integral part of the
Company's year 2000 readiness project. While substantial contingency planning
has occurred, the Company has not yet completed a comprehensive contingency plan
to address situations that may result should a significant third party system or
mission critical internal system fail. Development of contingency plans is in
progress and will develop and expand during the remainder of 1999. The Company
cannot give any assurance that it will be able to develop a contingency plan
that will adequately address all issues that may arise in the year 2000. The
Company's failure to develop and implement, if necessary, an appropriate
contingency plan could have a material adverse impact on its operations.
Finally, the Company is also vulnerable to external forces that might generally
affect industry and commerce, such as utility or transportation company year
2000 compliance failures and related service interruptions.
The disclosure in this section contains information regarding Year 2000
readiness which constitutes "Year 2000 Readiness Disclosure" as defined in the
Year 2000 Readiness Disclosure Act. Readers are cautioned that forward-looking
statements contained in the Year 2000 Update should be read in conjunction with
the Company's disclosures
14
<PAGE> 17
under the heading "Forward-Looking Statements".
FORWARD-LOOKING STATEMENTS
The foregoing discussion and analysis contains a number of forward
looking statements within the meaning of the Securities Act of 1933 and the
Securities Exchange Act of 1934, both as amended, with respect to expectations
for future periods which are subject to various risks and uncertainties. The
risks and uncertainties are detailed from time to time in reports filed by the
Company with the Securities and Exchange Commission, including forms 8-K, 10-Q,
and 10-K, and include, among others, competition from traditional financing
sources and from non-traditional lenders, availability of funding at competitive
rates of interest, adverse changes in applicable laws and regulations, adverse
changes in economic conditions, year 2000 compliance by the Company or third
parties to the Company, adverse changes in the automobile or finance industries
or in the non-prime consumer finance market, the Company's ability to maintain
or increase the volume of installment contracts accepted and historical
collection rates and the Company's ability to complete various financing
alternatives.
15
<PAGE> 18
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
Refer to the Company's Annual Report on Form 10-K for the year ended
December 31, 1998 for a complete discussion of the Company's market risk. There
have been no material changes to the market risk information included in the
Company's 1998 Annual Report on Form 10-K.
16
<PAGE> 19
PART II.--OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
As previously disclosed in the Company's 1998 Annual Report on Form 10-K and the
Company's Quarterly Report on Form 10-Q for the quarterly period ended March 31,
1999, during the first quarter of 1998, several putative class action complaints
were filed by shareholders against the Company and certain officers and
directors of the Company in the United States District Court for the Eastern
District of Michigan seeking money damages for alleged violations of the federal
securities laws. On August 14, 1998, a Consolidated Class Action Complaint,
consolidating the claims asserted in those cases, was filed. The Complaint
generally alleged that the Company's financial statements issued during the
period August 14, 1995 through October 22, 1997 did not accurately reflect the
Company's true financial condition and results of operations because such
reported results failed to be in accordance with generally accepted accounting
principles and such results contained material accounting irregularities in that
they failed to reflect adequate reserves for credit losses. The Complaint
further alleged that the Company issued public statements during the alleged
class period which fraudulently created the impression that the Company's
accounting practices were proper. On April 23, 1999, the Court granted the
Company's motion to dismiss the Complaint and entered a final judgment
dismissing the action with prejudice. On May 6, 1999, plaintiffs filed a motion
for reconsideration of the order dismissing the Complaint or, in the
alternative, for leave to file an amended complaint. On July 13, 1999, the Court
granted the plaintiffs' motion for reconsideration and granted the plaintiffs
leave to file an amended complaint. Plaintiffs filed their First Amended
Consolidated Class Action Complaint on August 2, 1999. The Company intends to
move to dismiss the amended complaint and intends to continue to vigorously
defend this action. While management believes it has meritorious legal and
factual defenses, an adverse ultimate disposition of this litigation could have
a material adverse impact on the Company's financial position, liquidity and
results of operations.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The Company held its Annual Meeting of Shareholders on May 24, 1999 at which the
shareholders considered the following.
1. The election of five directors. Each of the nominees for director at the
meeting was an incumbent and all nominees were elected. The following table
sets forth the number of votes for and withheld with respect to each
nominee.
Nominee Votes For Votes Withheld
------- --------- --------------
Donald A. Foss 41,463,335 1,101,492
Harry E. Craig 41,461,635 1,103,192
Thomas A. FitzSimmons 41,464,735 1,100,092
David T. Harrison 41,463,835 1,100,992
Sam M. LaFata 41,461,740 1,103,087
2. The approval of a proposal to amend the 1992 Stock Option Plan to increase
the number of shares subject to the plan from 5,000,000 to 8,000,000 and to
increase the number of options that may be granted to any individual
salaried employee in any three-year period from 500,000 to 1,000,000.
Votes For Votes Against Abstain Broker Non-Votes
--------- ------------- ------- ----------------
32,535,004 5,151,075 42,743 4,836,005
17
<PAGE> 20
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
See Index of Exhibits following the signature page.
(b) Reports on Form 8-K
The Company was not required to file a current report on
Form 8-K during the quarter ended June 30, 1999 and none
were filed during that period.
18
<PAGE> 21
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
CREDIT ACCEPTANCE CORPORATION
(Registrant)
/S/ BRETT A. ROBERTS
-------------------------------------------------------
BRETT A. ROBERTS
Executive Vice President and Chief Financial Officer
August 13, 1999
(Principal Financial Officer and Duly Authorized Officer)
/S/ JOHN P. CAVANAUGH
--------------------------------------------------------
JOHN P. CAVANAUGH
Corporate Controller and Assistant Secretary
August 13, 1999
(Principal Accounting Officer)
19
<PAGE> 22
INDEX OF EXHIBITS
EXHIBIT DESCRIPTION
4(a)(6) 1 Fifth Amendment dated April 13, 1999 to Note
Purchase Agreement dated October 1, 1994 between various
insurance companies and the Company
4(b)(4) 1 Third Amendment dated April 13, 1999 to Note
Purchase Agreement dated August 1, 1996 between various
insurance companies and the Company
4(c)(5) Third Amended and Restated Credit Agreement dated
as of June 15, 1999 between the Company, Comerica Bank as
Administrative Agent and Collateral Agent, NationsBank,
N.A., as Syndications Agent and Banc of America
Securities, LLC as Sole Lead Arranger and Sole Book
Manager.
4(e)(4) 1 Third Amendment dated April 13, 1999 to Note
Purchase Agreement dated March 25, 1997 between various
insurance companies and the Company
4(f)(4) Amendment No. 1 dated June 30, 1999 to Note
Purchase Agreement dated July 7, 1998 among Kitty Hawk
Funding Corporation, CAC Funding Corp. and NationsBank,
N.A.
4(f)(5) Amendment No. 1 dated June 30, 1999 to Security
Agreement dated July 7, 1998 among Kitty Hawk Funding
Corporation, CAC Funding Corp., the Company and
NationsBank, N.A.
4(f)(6) Amendment No. 1 dated June 30, 1999 to
Contribution Agreement dated July 7, 1998 between the
Company and CAC Funding Corp.
10(f)(4) Credit Acceptance Corporation 1992 Stock Option
Plan, as amended and restated May 1999.
27 Financial Data Schedule
- ----------------
1 Previously filed as an exhibit to the Company's Form 10-Q for the quarterly
period ended March 31, 1999, and incorporated herein by reference.
20
<PAGE> 1
Exhibit 4(c)(5)
================================================================================
THIRD AMENDED AND RESTATED
CREDIT ACCEPTANCE CORPORATION
CREDIT AGREEMENT
DATED AS OF JUNE 15, 1999
COMERICA BANK, AS ADMINISTRATIVE AGENT
AND COLLATERAL AGENT
NATIONSBANK, N.A., AS SYNDICATIONS AGENT
BANC OF AMERICA SECURITIES, LLC AS SOLE LEAD ARRANGER
AND SOLE BOOK MANAGER
================================================================================
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
1. DEFINITIONS.....................................................................................1
1.2 Euro...............................................................................36
1.3 Interest Act (Canada)..............................................................39
2. REVOLVING CREDIT...............................................................................39
2.1 Commitment.........................................................................39
2.2 Accrual of Interest and Maturity...................................................40
2.3 Requests for and Refundings and Conversions of Advances............................40
2.4 Disbursement of Advances...........................................................43
2.5 (a) Swing Line Advances..........................................................44
(c) Requests for Swing Line Advances.............................................45
(d) Disbursement of Swing Line Advances..........................................47
(e) Refunding of or Participation Interest in Swing Line Advances................48
2.6 Prime-based Interest Payments......................................................50
2.7 Eurocurrency-based Interest Payments and Quoted Rate Interest
Payments...........................................................................50
2.8 Interest Payments on Conversions...................................................51
2.9 Interest on Default................................................................51
2.10 Prepayment.........................................................................52
2.11 Determination, Denomination and Redenomination of Alternative
Currency Advances..................................................................53
2.12 Prime-based Advance in Absence of Election or Upon Default.........................53
2.13 Revolving Credit Facility Fee......................................................54
2.14 Currency Appreciation; Sublimits; Mandatory Reduction of
Indebtedness.......................................................................54
2.15 Optional Reduction or Termination of Revolving Credit Maximum
Amount.............................................................................56
2.16 Extension of Revolving Credit Maturity Date........................................57
2.17 Revolving Credit as Renewal; Application of Advances...............................57
2.18 Optional Increase in Revolving Credit Maximum Amount...............................58
3. LETTERS OF CREDIT..............................................................................59
3.1 Letters of Credit..................................................................59
3.2 Conditions to Issuance.............................................................60
3.3 Notice.............................................................................62
3.4 Letter of Credit Fees..............................................................62
3.5 Issuance Fees......................................................................63
3.6 Draws and Demands for Payment Under Letters of Credit..............................63
3.7 Obligations Irrevocable............................................................65
3.8 Risk Under Letters of Credit.......................................................66
</TABLE>
- i -
<PAGE> 3
<TABLE>
<S> <C> <C>
3.9 Indemnification....................................................................67
3.10 Right of Reimbursement.............................................................68
3.11 Existing Letters of Credit.........................................................68
4. TERM LOAN......................................................................................69
4.1 Term Loan..........................................................................69
4.2 Repayment of Principal.............................................................69
4.3 Accrual of Interest and Maturity...................................................69
4.4 Term Loan Rate Requests; Refundings and Conversions of
Advances of Term Loans.............................................................69
4.5 Failure to Refund or Convert.......................................................71
4.6 Prime-based Interest Payments......................................................71
4.7 Eurocurrency-based Interest Payments...............................................71
4.8 Interest Payments on Conversions...................................................71
4.9 Interest on Default................................................................72
5. CONDITIONS.....................................................................................72
5.1 Execution of Notes, this Agreement and the other Loan Documents....................72
5.2 Corporate Authority................................................................72
5.3 Representations and Warranties -- All Parties......................................72
5.4 Compliance with Certain Documents and Agreements...................................73
5.5 Opinion of Counsel.................................................................73
5.6 Company's Certificate..............................................................73
5.7 Payment of Agent's and Other Fees..................................................73
5.8 Other Documents and Instruments....................................................73
5.9 Continuing Conditions..............................................................73
6. REPRESENTATIONS AND WARRANTIES.................................................................74
6.1 Corporate Authority................................................................74
6.2 Due Authorization -- Company.......................................................74
6.3 Due Authorization -- Permitted Borrowers...........................................75
6.4 Title to Property..................................................................75
6.5 Liens..............................................................................75
6.6 Subsidiaries.......................................................................75
6.7 Taxes..............................................................................75
6.8 No Defaults........................................................................75
6.9 Enforceability of Agreement and Loan Documents -- Company..........................75
</TABLE>
- ii -
<PAGE> 4
<TABLE>
<S> <C> <C>
6.10 Enforceability of Domestic Guaranty -- Significant Domestic
Subsidiaries.......................................................................76
6.11 Enforceability of Loan Documents -- Permitted Borrowers............................76
6.12 Non-contravention -- Company.......................................................76
6.13 Non-contravention -- Significant Domestic Subsidiaries.............................76
6.14 Non-contravention -- Permitted Borrowers...........................................77
6.15 No Litigation -- Company...........................................................77
6.16 No Litigation -- Other Parties.....................................................77
6.17 Consents, Approvals and Filings, Etc...............................................78
6.18 Agreements Affecting Financial Condition...........................................78
6.19 No Investment Company; No Margin Stock.............................................78
6.20 ERISA..............................................................................78
6.21 Environmental Matters and Safety Matters...........................................79
6.22 Accuracy of Information............................................................80
7. AFFIRMATIVE COVENANTS..........................................................................81
7.1 Preservation of Existence, Etc.....................................................81
7.2 Keeping of Books...................................................................81
7.3 Reporting Requirements.............................................................81
7.4 Maintain Total Debt Level..........................................................83
7.5 Maintain Senior Funded Debt Level..................................................83
7.6 Maintain Subordinated Funded Debt Level............................................84
7.7 Minimum Tangible Net Worth.........................................................84
7.8 Maintain Gross Dealer Advances to Net Installment Contract
Receivables Level..................................................................84
7.9 Maintain Fixed Charge Coverage Ratio...............................................84
7.10 Inspections........................................................................84
7.11 Taxes..............................................................................84
7.12 Further Assurances.................................................................85
7.13 Insurance..........................................................................85
7.14 Indemnification....................................................................85
7.15 Governmental and Other Approvals...................................................85
7.16 Compliance with Contractual Obligations and Laws...................................86
7.17 ERISA..............................................................................86
7.18 Environmental Matters..............................................................87
7.19 Maintain Debt Rating...............................................................87
7.20 Installment Contract Standards.....................................................88
7.21 Financial Covenant Amendments......................................................89
7.22 Subsidiaries; Guaranties...........................................................89
7.23 Special Covenants for Leasing Program and Other Covenants..........................89
7.24 Year 2000 Requirement..............................................................90
8. NEGATIVE COVENANTS.............................................................................90
8.1 Capital Structure and Redemptions..................................................90
</TABLE>
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<PAGE> 5
<TABLE>
<S> <C> <C>
8.2 Business Purposes..................................................................90
8.3 Mergers or Dispositions............................................................91
8.4 Guaranties.........................................................................91
8.5 Debt...............................................................................91
8.6 Liens..............................................................................92
8.7 Acquisitions.......................................................................93
8.8 Investments........................................................................93
8.9 Accounts Receivable................................................................94
8.10 Transactions with Affiliates.......................................................95
8.11 No Further Negative Pledges........................................................95
8.12 Prepayment of Debts................................................................95
8.13 Amendment of Senior Debt or Future Debt Documents..................................95
8.14 Amendment of Subordinated Debt Documents...........................................96
8.15 Limitation on Dividends............................................................96
8.16 Securitization Transaction; Amendments to Securitization
Documents..........................................................................96
9. DEFAULTS.......................................................................................97
9.1 Events of Default..................................................................97
9.2 Exercise of Remedies...............................................................99
9.3 Rights Cumulative..................................................................99
9.4 Waiver by Company and Permitted Borrowers of Certain Laws..........................99
9.5 Waiver of Defaults................................................................100
9.6 Cross-Default.....................................................................100
10. PAYMENTS, RECOVERIES AND COLLECTIONS..........................................................100
10.1 Payment Procedure.................................................................100
10.2 Application of Proceeds...........................................................102
10.3 Pro-rata Recovery.................................................................102
10.4 Deposits and Accounts.............................................................102
11. CHANGES IN LAW OR CIRCUMSTANCES; INCREASED COSTS..............................................103
11.1 Reimbursement of Prepayment Costs.................................................103
11.2 Eurocurrency Lending Office.......................................................103
11.3 Availability of Alternative Currency..............................................104
11.4 Refunding Advances in Same Currency...............................................104
11.5 Circumstances Affecting Eurocurrency-based Rate Availability......................104
11.6 Laws Affecting Eurocurrency-based Advance Availability............................105
11.7 Increased Cost of Eurocurrency-based Advances.....................................105
11.8 Indemnity.........................................................................106
11.9 Judgment Currency.................................................................107
11.10 Other Increased Costs.............................................................107
11.11 Margin Adjustments................................................................108
11.12 Right of Banks to Fund through Branches and Affiliates............................108
</TABLE>
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<TABLE>
<S> <C> <C>
12. AGENT.........................................................................................108
12.1 Appointment of Agent..............................................................108
12.2 Deposit Account with Agent........................................................109
12.3 Exculpatory Provisions............................................................109
12.4 Successor Agents..................................................................109
12.5 Loans by Agent....................................................................110
12.6 Credit Decisions..................................................................110
12.7 Notices by Agent..................................................................110
12.8 Agent's Fees......................................................................110
12.9 Nature of Agency..................................................................110
12.10 Authority of Agent to Enforce Notes and This Agreement............................110
12.11 Indemnification...................................................................111
12.12 Knowledge of Default..............................................................111
12.13 Agent's Authorization; Action by Banks............................................111
12.14 Enforcement Actions by the Agent..................................................111
12.15 Syndication Agent.................................................................112
13. MISCELLANEOUS.................................................................................112
13.1 Accounting Principles.............................................................112
13.2 Consent to Jurisdiction...........................................................112
13.3 Law of Michigan...................................................................113
13.4 Interest..........................................................................113
13.5 Closing Costs; Other Costs........................................................114
13.6 Notices...........................................................................114
13.7 Further Action....................................................................115
13.8 Successors and Assigns; Assignments and Participations............................115
13.9 Indulgence........................................................................118
13.10 Counterparts......................................................................118
13.11 Amendment and Waiver..............................................................118
13.12 Taxes and Fees....................................................................119
13.13 Confidentiality...................................................................119
13.14 Withholding Taxes.................................................................119
13.15 Effective Upon Execution..........................................................120
13.16 Severability......................................................................120
13.17 Table of Contents and Headings....................................................121
13.18 Construction of Certain Provisions................................................121
13.19 Independence of Covenants.........................................................121
13.20 Reliance on and Survival of Various Provisions....................................121
13.21 Complete Agreement; Amendment and Restatement.....................................121
</TABLE>
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TABLE OF CONTENTS
(Continued)
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TABLE OF CONTENTS
(Continued)
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TABLE OF CONTENTS
(Continued)
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TABLE OF CONTENTS
(Continued)
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TABLE OF CONTENTS
(Continued)
<TABLE>
<CAPTION>
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EXHIBITS
<S> <C>
FORM OF REQUEST FOR ADVANCE..............................................................................A
FORM OF TERM NOTE -- COMPANY.............................................................................B
FORM OF REVOLVING CREDIT NOTE -- COMPANY...............................................................C-1
FORM OF REVOLVING CREDIT NOTE -- PERMITTED BORROWERS...................................................C-2
PERCENTAGES..............................................................................................D
FORM OF SWING LINE NOTE -- COMPANY.....................................................................E-1
FORM OF SWING LINE NOTE -- PERMITTED BORROWERS.........................................................E-2
FORM OF REQUEST FOR SWING LINE ADVANCE...................................................................F
FORM OF ASSIGNMENT AGREEMENT.............................................................................G
FORM OF COVENANT COMPLIANCE CERTIFICATE..................................................................H
FORM OF NOTICE OF LETTER OF CREDIT.......................................................................I
FORM OF DOMESTIC GUARANTY..............................................................................J-2
FORM OF TERM LOAN RATE REQUEST...........................................................................K
FORM OF STATIC POOL ANALYSIS.............................................................................L
FORM OF NEW BANK ADDENDUM................................................................................M
Schedules
- ---------
1.1 - Pricing Matrix
6.6 - Subsidiaries
6.15 - Litigation - Company
6.16 - Litigation - Other Parties
</TABLE>
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TABLE OF CONTENTS
(Continued)
<TABLE>
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<S> <C>
8.5 - Permitted Debt
8.6 - Liens
8.8 - Permitted Investments
13.6 - Notices
</TABLE>
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<PAGE> 13
THIRD AMENDED AND RESTATED
CREDIT AGREEMENT
THIS THIRD AMENDED AND RESTATED CREDIT AGREEMENT ("Agreement") is made
as of the 15th day of June, 1999, by and among the Banks signatory hereto
(individually, "Bank", and collectively "Banks"), Comerica Bank, as
administrative agent and collateral agent for the Banks (in such capacity,
"Agent"), Credit Acceptance Corporation, a Michigan corporation ("Company") and
Credit Acceptance Corporation UK Limited, a corporation organized under the laws
of England ("CAC UK"), CAC of Canada Limited, a corporation organized under the
laws of Canada ("CAC Canada") and Credit Acceptance Corporation Ireland Limited,
a corporation organized under the laws of the Republic of Ireland ("CAC
Ireland").
RECITALS:
A. Company has requested that the Banks amend, renew and/or extend to
it and to the Permitted Borrowers (as defined below), credit in the aggregate
amount (taking into account the Revolving Credit Optional Increase, as defined
below) of up to One Hundred Fifty Million Dollars ($150,000,000) consisting of
(i) the Revolving Credit (as defined below) previously extended to Company and
the Permitted Borrowers pursuant to that certain Second Amended and Restated
Credit Acceptance Corporation $120,000,000 Credit Agreement dated as of December
4, 1996 (as amended, the "Prior Credit Agreement") by and among Company, the
Permitted Borrowers, the Banks signatory thereto and Comerica Bank, individually
and in its capacity as Agent, (ii) letters of credit and (iii) the Term Loan (as
defined below) all on the terms and conditions set forth herein.
B. The Banks are prepared to extend such credit as aforesaid by
amendment and renewal (but not in novation) of the Prior Credit Agreement, but
only on the terms and conditions set forth in this Agreement.
NOW THEREFORE, COMPANY, PERMITTED BORROWERS, AGENT AND THE BANKS AGREE:
1. DEFINITIONS
For the purposes of this Agreement the following terms will have the
following meanings:
"Account Party(ies)" shall mean, with respect to any Letter of Credit,
the account party or parties (which shall be Company and/or any Permitted
Borrower) as named in an application to the Agent for the issuance of such
Letter of Credit.
"Advance(s)" shall mean, as the context may indicate, a borrowing
requested by Company or by a Permitted Borrower, and made by Banks under Section
2.1 or 4.1 of this Agreement, as the case may be, or requested by the Company or
by a Permitted Borrower and made by the Swing Line Bank under Section 2.5 hereof
(including without limitation any readvance, refunding or conversion
<PAGE> 14
of such borrowing pursuant to Section 2.3, 2.5(c) or 4.4 hereof) and any advance
in respect of a Letter of Credit under Section 3.6 hereof (including without
limitation the unreimbursed amount of any draws under Letters of Credit), and
shall include, as applicable, a Eurocurrency-based Advance, a Quoted Rate
Advance, a Prime-based Advance and a Swing Line Advance.
"Advances to Dealers" shall mean, as of any applicable date of
determination, the Dollar Amount of advances in respect of Installment
Contracts, 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 (a) any such advances (and the related Installment Contracts)
transferred or encumbered pursuant to a Permitted Securitization or (b)
Charged-Off Advances, to the extent that such Charged-Off Advances exceed the
portion of the Company's allowance for credit losses related to reserves against
such advances not expected to be recovered, as such allowance would appear in
the footnotes to the financial statements of the Company and its Subsidiaries
prepared in accordance with GAAP at such time. For purposes of this definition,
"Charged-Off Advances" shall mean those Advances to Dealers which the Company or
any of its Subsidiaries has determined, based on the application of a static
pool analysis or otherwise, are completely or partially impaired, to the extent
of such impairment.
"Affiliate" shall mean, at any time, a Person (other than a Subsidiary)
(a) that directly or indirectly through one or more intermediaries Controls, or
is Controlled by, or is under common Control with, the Company; (b) that
beneficially owns or holds five percent (5%) or more of any class of the voting
stock of the Company; (c) five percent (5%) or more of the voting stock (or in
the case of a Person that is not a corporation, five percent (5%) or more of the
equity interest) of which is beneficially owned or held by the Company or a
Subsidiary; or (d) that is an officer or director (or a member of the immediate
family of an officer or director) of the Company or any Subsidiary; in each
case, at such time. As used in this definition, "Control" shall mean the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of a Person, whether through the
ownership of voting securities, by contract or otherwise.
"Agent" shall mean Comerica Bank, a Michigan banking corporation, or
any successor appointed in accordance with Section 12.4 hereof.
"Agent's Correspondent" shall mean:
(a) for Advances in Sterling, Midland Bank plc., London, Great
Britain;
(b) for Advances in C$, Comerica Bank - Canada, Agent's
Canadian Affiliate, or such other bank or banks as Agent may from time
to time designate by written notice to Company, the Permitted
Borrowers and the Lenders;
(c) for Advances in Irish Punts, Ulster Bank Limited, Ireland;
and
2
<PAGE> 15
(d) for Advances in Eurodollars, Agent's Grand Cayman Branch
(or for the account of said branch office, at Agent's main office
in Detroit, Michigan, United States);
or at such other bank or banks as Agent may from time to time designate by
written notice to Company, the Permitted Borrowers and the Banks.
"Agent's Fees" shall mean those fees and expenses required to be paid
by Company to Agent under Section 12.8 hereof.
"Aggregate Commitment" shall mean the Revolving Credit Maximum Amount,
as in effect from time to time.
"Aggregate Sublimit" shall mean, as of any applicable date of
determination, that amount equal to twenty percent (20%), of Company's
Consolidated Tangible Net Worth, determined as of the end of each fiscal quarter
based upon the financial statements required to be delivered under Section
7.3(b) or 7.3(c) hereof, as the case may be, or (subject to the terms hereof)
determined on a monthly basis at the request of the Company based on monthly
financial statements to be delivered pursuant to Sections 2.13(b) and 2.14(b)
hereof, (and giving effect to any changes in net worth shown in the applicable
financial statements on the required date of delivery thereof).
"Allowances for Credit Losses" shall mean those allowances or reserves
established by Company or its Subsidiaries in arriving at installment contracts
receivable, net or Leased Vehicles, as the case may be, on its Consolidated
balance sheets, as specifically identified in such financial statements or as
disclosed in the footnotes thereto.
"Alternate Base Rate" shall mean, for any day, an interest rate per
annum equal to the Federal Funds Effective Rate in effect on such day, plus one
percent (1%).
"Alternative Currency" shall mean British Pounds Sterling ("Sterling"),
Canadian Dollars ("C$"), Irish Punts ("Irish Punts"), and, subject to the prior
written approval of Agent and each of the Banks and to the terms and conditions
of this Agreement, such other freely convertible foreign currencies including
(subject to the terms hereof) the "Euro", as requested by the Company or a
Permitted Borrower and acceptable to Agent and the Banks, in their reasonable
discretion. Any reference to a National Currency Unit of a Participating Member
State in this definition of "Alternative Currency" shall be deemed to also
include a reference to the Euro Unit.
"Applicable Fee Percentage" shall mean, as of any date of determination
thereof, the applicable percentage used to calculate certain of the fees due and
payable hereunder, determined by reference to the appropriate columns in the
Pricing Matrix attached to this Agreement as Schedule 1.1.
"Applicable Interest Rate" shall mean the Eurocurrency-based Rate, the
Prime-based Rate or, with respect to Swing Line Advances, the Quoted Rate, as
selected by Company or a Permitted Borrower from time to time subject to the
terms and conditions of this Agreement.
3
<PAGE> 16
"Applicable Margin" shall mean, as of any date of determination
thereof, the applicable interest rate margin, determined by reference to the
appropriate columns in the Pricing Matrix attached to this Agreement as Schedule
1.1.
"Applicable Sublimit" shall mean the Canadian Sublimit, the Irish
Sublimit or the Aggregate Sublimit, as the context may require.
"Assignment Agreement" shall have the meaning ascribed to such term in
Section 13.8(c) hereof.
"Back-End Dealer Agreement(s)" shall mean Dealer Agreements referred to
in clause (i) of the definition of Dealer Agreements.
"Banks" shall mean the Banks signatory hereto (including the New Banks)
and any assignee which becomes a Bank pursuant to Section 13.8(c) hereof.
"Business Day" shall mean any day on which commercial banks are open
for domestic and international business (including dealings in foreign exchange)
in Detroit, London (except with respect to any Prime-based Advances), and New
York and if funds are to be paid or made available in any Alternative Currency,
on such day in the place where such funds are to be paid or made available and,
if the applicable Business Day relates to the borrowing or payment of a
Eurocurrency-based Advance denominated in Euros, on which banks and foreign
exchange markets are open for business in the city where disbursements of or
payments on such Advance are to be made which is a Trans-European Business Day.
"CAC Canada" is defined in the Preamble.
"CAC Ireland" is defined in the Preamble.
"CAC Leasing" shall mean CAC Leasing, Inc., a Michigan corporation and
a wholly-owned Subsidiary of Company.
"CAC Life" shall mean Credit Acceptance Corporation Life Insurance
Company, an Arizona corporation and a wholly-owned Subsidiary of Company.
"CAC UK" is defined in the Preamble.
"Canadian BA Rate" shall mean, with respect to the relevant Advance of
C$ to CAC Canada, the rate per annum quoted by Agent's Correspondent as the
Agent's bid rate for C$ bankers" acceptances having a comparable face value as
the amount of such Advance and a tenor identical to the applicable
Eurocurrency-Interest Period as of 10:00 a.m. (Toronto time) on the first day of
such Interest Period.
4
<PAGE> 17
"Canadian BA Period" shall mean, for Advances of C$ to CAC Canada, an
interest Period of 30 days, 60 days, 90 days or with the consent of the Agent
180 days.
"Canadian Prime Rate" shall mean, for any day, the per annum rate of
interest in effect for such day as announced from time to time by the Agent's
Canadian Affiliate in Toronto, Ontario as its "prime rate." (The "prime rate" is
a rate set by such Canadian Affiliate based upon various factors including such
Canadian Affiliate's costs and desired return, general economic conditions and
other factors, and is used as a reference point for pricing some loans, which
may be priced at, above or below such announced rate.) Any change in the prime
rate by such Canadian Affiliate shall take effect at the opening of business on
such day.
"Canadian Prime-based Rate" shall mean, for any day, that rate of
interest which is equal to the sum of the Applicable Margin plus the greater of
(i) the Canadian Prime Rate and (ii) an interest rate per annum equal to the
Canadian BA Rate in effect on such day, plus one percent (1%).
"Canadian Sublimit" shall mean, as of any applicable date of
determination, that amount equal to the lesser of
(a) five percent (5%) of Company's Consolidated Tangible Net
Worth, determined as of the end of each fiscal quarter based upon the
financial statements required to be delivered under Section 7.3(b) or
7.3(c) hereof, as the case may be, or (subject to the terms hereof)
determined on a monthly basis at the request of the Company based on
monthly financial statements to be delivered pursuant to Section
2.14(b) hereof, (and giving effect to any changes in net worth shown in
such financial statements on the required date of delivery thereof);
and
(b) the Aggregate Sublimit minus the sum of the aggregate
principal amount of Advances outstanding to the Permitted Borrowers,
including CAC Canada, (after giving effect to any such Advances being
requested by any Permitted Borrower, including CAC Canada, on such
date, using the Current Dollar Equivalent of any such Advances
outstanding or requested in any Alternative Currency, determined
pursuant to the terms hereof as of the date of such requested Advance),
plus the aggregate undrawn portion of any Letters of Credit issued for
the account of the Permitted Borrowers (including CAC Canada) which
shall be outstanding as of the date of such requested Advance (based on
the Dollar Amount of the undrawn portion of any Letters of Credit
denominated in Dollars and the Current Dollar Equivalent of the undrawn
portion of any Letters of Credit denominated in any Alternative
Currency), the aggregate face amount of Letters of Credit requested but
not yet issued for the account of such Permitted Borrowers (determined
as aforesaid) and the aggregate amount of all drawings made under any
Letter of Credit for which the Agent has not received full
reimbursement from such Permitted Borrowers (using the Current Dollar
Equivalent thereof for any Letters of Credit denominated in any
Alternative Currency).
"Capital Assets" shall mean all assets of a Person other than
intangible assets (so classified in accordance with GAAP), inventories, accounts
receivable and Investments in and securities of any
5
<PAGE> 18
other Person.
"Cleanup Call(s)" shall mean (a) in the case of an optional cleanup
call, a cleanup call to be exercised at the option of the Company or a Special
Purpose Subsidiary under the terms of the applicable Permitted Securitization
(provided that, both before and after giving effect thereto, no Default or Event
of Default has occurred and is continuing when such option is exercised), in an
amount not in excess of Five Percent (5%) of the initial proceeds received by
the Company or a Special Purpose Subsidiary from the applicable Permitted
Securitization, and (b) in the case of a mandatory cleanup call, a mandatory
cleanup call to be exercised at the option of the investors under the terms of
the applicable Permitted Securitization, in an amount not in excess of Two and
One-Half Percent (2 1/2%) of the initial proceeds received by the Company or a
Special Purpose Subsidiary from the applicable Permitted Securitization, in
either case, such Cleanup Call being accompanied by the repurchase of or release
of encumbrances on Advances to Dealers, Leased Vehicles, Installment Contracts
(whether assigned outright or related to Advances to Dealers) or Leases (whether
assigned outright or related to Leased Vehicles), as the case may be, previously
transferred or encumbered pursuant to such Permitted Securitization in the
amount of such cleanup call.
"Closing Fee" shall mean the closing fee payable by Company to Agent,
for distribution to the Banks, in the amounts previously agreed to between Agent
and each of the Banks.
"Collateral" shall mean (x) all right, title and interest of each of
the Company and each of its Significant Domestic Subsidiaries in, to and under
its accounts, inventory, machinery, equipment, contract rights, chattel paper,
general intangibles, including without limitation Advances to Dealers, Leased
Vehicles, Dealer Agreements (and any amounts advanced to or liens granted by
Dealers thereunder), Installment Contracts, Leases and related financial
property (such Dealer Agreements, Advances to Dealers and the Installment
Contracts, Leases, accounts, contract rights, chattel paper and general
intangibles relating to such Dealer Agreements, Advances to Dealers and Leased
Vehicles, being subject to the rights, if any, of Dealers under Dealer
Agreements), and computer records and software relating thereto, whether now
owned or hereafter acquired by such Person, (y) one hundred percent (100%) of
the share capital of each Significant Domestic Subsidiary of the Company
(whether direct or indirect) and (z) not less than sixty-five percent (65%) of
the share capital of CAC UK, and all proceeds and products of the foregoing.
"Collateral Documents" shall mean that certain Security Agreement and
that certain English Share Charge, each dated as of December 15, 1998 and
executed and delivered by Company in favor of the Agent, as Collateral Agent
pursuant to the Intercreditor Agreement, and encumbering the property described
therein, and all other security documents (including, without limitation,
financing statements, stock powers, acknowledgments, registrations, joinders and
the like) executed by the Company or any of its Subsidiaries and delivered to
the Agent, as Collateral Agent (as aforesaid), as of the date thereof or, from
time to time, subsequent thereto in connection with such security documents,
this Agreement or the other Loan Documents, as such security documents may be in
each case amended (subject to the Intercreditor Agreement) from time to time.
"Company" is defined in the Preamble.
6
<PAGE> 19
"Company Guaranty" shall mean that certain amended and restated
guaranty of all of the Indebtedness outstanding from the Permitted Borrowers
hereunder, executed and delivered by the Company to the Agent, on behalf of the
Banks, in connection with the Prior Credit Agreement, as amended from time to
time.
"Consolidated" or "Consolidating" shall, when used with reference to
any financial information pertaining to (or when used as a part of any defined
term or statement pertaining to the financial condition of) Company and its
Subsidiaries, mean the accounts of Company and its Subsidiaries determined on a
consolidated or consolidating basis, as the case may be, all determined as to
principles of consolidation and, except as otherwise specifically required by
the definition of such term or by such statements, as to such accounts, in
accordance with GAAP applied on a consistent basis and consistent with the
financial statements as at and for the fiscal year ended December 31, 1998.
"Consolidated Current Debt" shall mean, as of any applicable date of
determination, all Current Debt of the Company and its Subsidiaries, determined
on a Consolidated basis in accordance with GAAP as of such date.
"Consolidated Fixed Charges" shall mean, for any period, the sum of (a)
Consolidated Interest Expense for such period, plus (b) Operating Rentals
payable by the Company and its Subsidiaries in respect of such period under
Operating Leases, determined after eliminating intercompany transactions among
the Company and its Subsidiaries.
"Consolidated Income Available for Fixed Charges" shall mean, for any
period, the sum of (a) Consolidated Net Income, plus (b) the aggregate amount of
income taxes, depreciation, amortization (including the amortization of any
excess servicing asset) and Consolidated Fixed Charges (to the extent, and only
to the extent, that such aggregate amount was reflected in the computation of
Consolidated Net Income for such period), determined on a Consolidated basis for
such Persons in accordance with GAAP.
"Consolidated Interest Expense" shall mean, for any period, the amount
of interest charged or chargeable to the Consolidated Statement of Operations of
Company and its Subsidiaries in respect of such period, as determined in
accordance with GAAP.
"Consolidated Net Income" shall mean, for any period, net earnings (or
loss) after income taxes of Company and its Subsidiaries, determined on a
Consolidated basis for such Persons, as defined according to GAAP, but
excluding:
(a) net earnings (or loss) of any Subsidiary accrued prior to the
date it became a Subsidiary;
(b) any gain or loss (net of tax effects applicable thereto)
resulting from the sale, conversion or other disposition of
Capital Assets other than in the ordinary course
7
<PAGE> 20
of business;
(c) any extraordinary or non-recurring gains or losses (including,
without limitation, any gain on sale generated by a Permitted
Securitization, except to the extent the Company has received a
cash benefit therefrom in the applicable reporting period); and
any interest income generated by a Permitted Securitization,
except to the extent the Company has received a cash benefit
therefrom in the applicable reporting period;
(d) any gain arising from any reappraisal or write-up of assets;
(e) any portion of the net earnings of any Subsidiary that for any
reason is unavailable for payment of dividends to the Company or
any other Subsidiary, provided that the net earnings of CAC Life
that are unavailable (due to regulatory requirements applicable
to CAC Life) for the payment of dividends to the Company may be
included in the determination of Consolidated Net Income, to the
extent that such unavailable net earnings do not exceed five
percent (5%) of Consolidated Net Income (determined without
giving effect to this proviso), and provided, further that so
long as the net earnings of CAC --- Life shall be included in
Consolidated Net Income pursuant to the preceding proviso, CAC
Life shall not have outstanding any debt, regardless of whether
any other Subsidiary may be permitted to have debt outstanding at
such time by reason of a waiver of or an amendment to this
Agreement;
(f) any gain or loss (net of tax effects applicable thereto) during
such period resulting from the receipt of any proceeds of any
insurance policy;
(g) except as set forth herein, any earnings of any Person acquired
by Company or any Subsidiary through the purchase, merger or
consolidation or otherwise, or earnings of any Person
substantially all of the assets of which have been acquired by
Company or any Subsidiary, for any period prior to the date of
acquisition;
(h) net earnings of any Person (other than a Subsidiary) in which
Company or any Subsidiary shall have an ownership interest unless
such net earnings shall actually have been received by the
Company or such Subsidiary in the form of cash distributions; and
(i) any restoration during such period to income of any contingency
reserve, except to the extent that provision for such reserve
(i) was made during such period out of income accrued during
such period,
(ii) was made in connection with the Company's program of
financing Installment Contracts or Leases
8
<PAGE> 21
(A) to provide for warranty claims for which the
Company may be responsible, or
(B) to cover credit losses in connection with
Advances to Dealers, Installment Contracts, Leased Vehicles
or Leases, or
(iii) is required by applicable law with respect to reserve
for claims related to the operation of CAC Life,
provided that the aggregate restoration to income during any period from
reserves described in clause (ii) and clause (iii) above shall not exceed ten
percent (10%) of Consolidated Net Income for such period, prior to giving effect
to such restoration.
"Consolidated Senior Funded Debt" shall mean, as of any applicable date
of determination, the aggregate amount of Funded Debt of the Company and its
Subsidiaries, other than Subordinated Funded Debt, determined on a Consolidated
basis according to GAAP as of such date.
"Consolidated Subordinated Funded Debt" shall mean, as of any
applicable date of determination, the aggregate amount of Subordinated Funded
Debt of the Company and its Subsidiaries, determined on a Consolidated basis
according to GAAP as of such date.
"Consolidated Tangible Net Worth" shall mean the total preferred
shareholders' investment and common shareholders' investment (common stock, paid
in capital and retained earnings) as computed under GAAP, less assets properly
classified as intangible assets according to GAAP (but excluding from the
determination thereof, without duplication, any capitalized gain on sales of
Advances to Dealers, Leased Vehicles, Installment Contracts (whether assigned
outright or related to Advances to Dealers) or Leases (whether assigned outright
or related to Leased Vehicles) pursuant to a Permitted Securitization, the
equity interest in any Special Purpose Subsidiary, any interest income generated
by a Permitted Securitization and any excess servicing asset, except to the
extent the Company has received a cash benefit therefrom prior to such date).
"Consolidated Total Assets" shall mean the Consolidated total assets of
Company and its Subsidiaries as determined according to GAAP (but excluding from
the determination thereof, without duplication, any capitalized gain on sales of
Advances to Dealers, Leased Vehicles, Installment Contracts (whether assigned
outright or related to Advances to Dealers) or Leases (whether assigned outright
or related to Advances to Dealers) pursuant to a Permitted Securitization, the
equity interest in any Special Purpose Subsidiary, any interest income generated
by a Permitted Securitization and any excess servicing asset, except to the
extent the Company has received a cash benefit therefrom in the applicable
reporting period).
"Consolidated Total Debt" shall mean, as of any applicable date of
determination, the aggregate amount of Funded Debt and Current Debt of the
Company and its Subsidiaries, determined on a Consolidated basis according to
GAAP as of such date.
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"Covenant Compliance Report" shall mean the report to be furnished by
the Company to the Agent, in substantially the form attached to this Agreement
as Exhibit H and certified by the chief financial officer of the Company
pursuant to Section 7.3(c) hereof, as to whether the Company and its
Subsidiaries are in compliance with the financial covenants contained in
Sections 7.4 through 7.9, inclusive, of this Agreement, in which report the
Company shall set forth its calculations and the resultant ratios or financial
tests determined thereunder, and certifying that no Default or Event of Default
has occurred and is continuing.
"Current Debt" shall mean, with respect to any Person (as of any
applicable date of determination), all Debt of such Person, other than Funded
Debt, determined as of such date according to GAAP.
"Current Dollar Equivalent" shall mean, as of any applicable date of
determination, with respect to any Advance or Letter of Credit in an Alternative
Currency, the amount of Dollars which is equivalent to the then outstanding
principal amount of such Advance or Letter of Credit at the most favorable spot
exchange rate determined by the Agent to be available to it for the sale of
Dollars for such Alternative Currency for delivery at approximately 11:00 A.M.
(Detroit time) two (2) Business Days after such date. Alternative Currency
equivalents of Advances or Letters of Credit in Dollars (to the extent used
herein) shall be determined by Agent in a manner consistent herewith.
"Dealer(s)" shall mean a Person engaged in the business of the retail
sale or lease of used motor vehicles, including both businesses exclusively
selling or leasing used motor vehicles and businesses principally selling or
leasing new motor vehicles, but having a used vehicle department, including any
such Person which constitutes an Affiliate of Company.
"Dealer Agreement(s)" shall mean the sales and/or servicing agreements
between the Company or its Subsidiaries and a participating Dealer which sets
forth the terms and conditions under which the Company or its Subsidiaries (i)
accepts, as nominee for such Dealer, the assignment of Installment Contracts or
Leases for purposes of administration, servicing and collection and under which
the Company or its Subsidiary may make advances to such Dealers included in
Advances to Dealers or Leased Vehicles and (ii) accepts outright assignments of
Installments Contracts or Leases from Dealers or funds Installments Contracts or
Leases originated by such Dealer in the name of Company or its Subsidiaries, in
each case as such agreements may be in effect from time to time.
"Debt" shall mean, with respect to any Person, without duplication, (a)
its liabilities for borrowed money (whether or not evidenced by a security), (b)
any liabilities secured by any Lien existing on property owned by such Person
(whether or not such liabilities have been assumed), (c) its liabilities
consisting of Capital Lease Obligations, (d) the present value of all payments
due under any arrangement for retention of title or any conditional sale
agreement (other than a Capital Lease) discounted at the implicit rate, if
known, with respect thereto or, if unknown, at eight and eighty-seven
one-hundredths percent (8.87%) per annum, and (e) its guaranties of any
liabilities of another Person constituting liabilities of a type set forth
above; provided however that dealer holdbacks shall not be considered Debt of
the Company or its Subsidiaries; and provided further that, solely for
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<PAGE> 23
purposes of Section 8.5 hereof, "Debt" shall also include reimbursement
obligations (contingent or otherwise) in respect of letters of credit,
obligations in respect of bankers acceptances, and payment obligations, if any,
under interest rate protection agreements (including without limitation interest
rate swaps and similar agreements) and currency swaps and hedges and similar
agreements.
"Debt Rating" shall mean the debt rating of Company's long-term
non-credit enhanced senior debt by Fitch.
"Default" shall mean any event which, with the giving of notice or the
passage of time, or both, would constitute an Event of Default.
"Dollar Amount" shall mean (a) with respect to Dollars or an amount
denominated in Dollars, such amount and (b) with respect to an amount of any
other Alternative Currency or an amount denominated in such Alternative
Currency, the amount of Dollars that may be purchased with such amount of
Alternative Currency in the interbank foreign exchange market, at the most
favorable spot rate of exchange (including all related costs of conversion)
applicable to the relevant transaction determined by the Agent to be available
to it at or about 11:00 a.m. Detroit time (i) on the date on which such
calculation would be necessary for the delivery of Dollars on the applicable
date contemplated in this Agreement or (ii) for interest rate setting purposes
only, on the date which is two Business Days prior to the commencement of an
Interest Period (or such other number of days as shall be reasonably deemed
necessary by Agent, for purposes of this Agreement). Alternative Currency
amounts of Advances or Letters of Credit made, issued, carried or expressed in
Dollars (to the extent used herein) shall be determined by Agent in a manner
consistent herewith.
"Dollars" and the sign "$" shall mean lawful money of the United States
of America.
"Domestic Advance" shall mean any Advance other than a
Eurocurrency-based Advance or any other Advance denominated in an Alternative
Currency.
"Domestic Guaranty" shall mean that certain guaranty of all
Indebtedness outstanding from the Company and the Permitted Borrowers hereunder,
executed and delivered (or to be executed and delivered) by each of the
Significant Domestic Subsidiaries (whether by execution thereof, or by execution
of the Joinder Agreement attached as "Exhibit A" to the form of such Guaranty),
to the Agent, on behalf of the Banks, in the form annexed hereto as Exhibit J-2,
as amended from time to time.
"Domestic Subsidiaries" shall mean those Subsidiaries of the Company
incorporated under the laws of the United States of America, or any state
thereof.
"Effective Date" shall mean the date on which the conditions precedent
to the effectiveness of this Agreement set forth in Sections 5.1 through 5.9
shall have been satisfied, amended or waived.
"EMU" shall mean Economic and Monetary Union as contemplated in the
Treaty on European Union.
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"EMU Legislation" shall mean legislative measures of the European
Council (including European Council regulations) for the introduction of,
changeover to or operation of a single or unified European currency (whether
known as the euro or otherwise), being in part the implementation of the third
stage of EMU.
"Equity Offering" shall mean the issuance and sale for cash, on or
after the Fourth Amendment Effective Date by Company or any of its Subsidiaries
of additional capital stock or other equity interests, other than upon the
exercise of employee and dealer stock options pursuant to stock option plans
maintained or offered by the Company or its Subsidiaries in the ordinary course
of business and not in anticipation of any sale of capital stock or equity
interests to the general public.
"Equity Offering Adjustment" shall mean that amount to be added to the
minimum Consolidated Tangible Net Worth required to be maintained under Section
7.7 hereof consisting of an amount equal to one hundred percent (100%) of each
Equity Offering conducted by the Company or any of its subsidiaries, net of
related costs of issuance payable to third parties, on and after July 1, 1998,
on a cumulative basis.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974,
as amended, or any successor act or code, and the regulations in effect from
time to time thereunder.
"ERISA Affiliate" shall mean any trade or business (whether or not
incorporated) which is under common control with the Company within the meaning
of Section 4001 of ERISA or is part of a group which includes the Company and
would be treated as a single employer under Section 414 of the Internal Revenue
Code, and any Domestic Subsidiary.
"Euro" or "Euro Unit" shall mean the currency unit of the euro as
defined in the EMU Legislation.
"Eurocurrency-based Advance" shall mean any Advance (including a Swing
Line Advance) which bears interest at the Eurocurrency-based Rate.
"Eurocurrency-based Rate" shall mean a per annum interest rate which is
equal to the sum of (a) the Applicable Margin (subject, if applicable, to
adjustment under Section 11.11 hereof), plus
(b)(i) in the case of any Eurocurrency-based Advance other
than an Advance of C$ to CAC Canada described in clause (b)(ii) below,
the quotient of:
(A) the per annum interest rate at which deposits in the
relevant eurocurrency are offered to Agent's Eurocurrency
Lending Office by other prime banks in the relevant
eurocurrency market in an amount comparable to the relevant
Eurocurrency-based Advance and for a period equal to the
relevant Eurocurrency-Interest Period at approximately 11:00
a.m. Detroit time two
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(2) Business Days (or, in the case of a Eurocurrency-based
Advance in Euros, on such other date as is customary in the
relevant offshore interbank market) prior to the first day
of such Eurocurrency-Interest Period, divided by
(B) a percentage equal to 100% minus the maximum rate on such
date at which Agent is required to maintain reserves on
"eurocurrency liabilities" as defined in and pursuant to
Regulation D of the Board of Governors of the Federal
Reserve System or, if such regulation or definition is
modified, and as long as Agent is required to maintain
reserves against a category of liabilities which includes
eurocurrency deposits or includes a category of assets which
includes eurocurrency loans, the rate at which such reserves
are required to be maintained on such category,
such sum to be rounded upward, if necessary, to the nearest whole
multiple of 1/16th of 1%; or
(b)(ii) in the case of any Advances of C$ to CAC Canada, the greater of
the Eurocurrency-based Rate determined in the manner set forth in clause (A)
above and the Canadian BA Rate.
"Eurocurrency-Interest Period" shall mean, (a) for Swing Line Advances
carried at the Eurocurrency-based Rate, an interest period of seven days, one
month (or any lesser number of days agreed to in advance by Company or a
Permitted Borrower, Agent and the Swing Line Bank), (b) for Eurocurrency-based
Advances of C$ to CAC Canada, a Canadian BA Rate Period and (c) for all other
Eurocurrency-based Advances, an interest period of one, two, three or six months
(or any lesser or greater number of days agreed to in advance by Agent and the
Banks), in each case as selected by Company or such Permitted Borrower, as
applicable, for a Eurocurrency-based Advance pursuant to Section 2.3, 2.5, or
4.4 hereof, as the case may be.
"Eurocurrency Lending Office" shall mean, (a) with respect to the
Agent, Agent's office located at its Grand Caymans Branch or such other branch
of Agent, domestic or foreign, as it may hereafter designate as its Eurocurrency
Lending Office by notice to Company, the Permitted Borrowers and the Banks and
(b) as to each of the Banks, its office, branch or affiliate located at its
address set forth on the signature pages hereof (or identified thereon as its
Eurocurrency Lending Office), or at such other office, branch or affiliate of
such Bank as it may hereafter designate as its Eurocurrency Lending Office by
notice to Company and Agent.
"Event of Default" shall mean any of the events specified in Section
9.1 hereof.
"Existing Letter of Credit" shall mean a letter of credit issued under
the Prior Credit Agreement which is outstanding on the effective date hereof.
"Federal Funds Effective Rate" shall mean, for any day, a fluctuating
interest rate per annum equal to the weighted average of the rates on overnight
Federal funds transactions with members of
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<PAGE> 26
the Federal Reserve System arranged by Federal funds brokers, as published for
such day (or, if such day is not a Business Day, for the next preceding Business
Day) by the Federal Reserve Bank of New York, or, if such rate is not so
published for any day which is a Business Day, the average of the quotations for
such day on such transactions received by Agent from three Federal funds brokers
of recognized standing selected by it.
"Fees" shall mean the Agent's Fees, the Revolving Credit Facility Fee
and the Letter of Credit Fees.
"Fitch" shall mean Fitch Investor Services, Inc. or its successors.
"Fixed Charge Coverage Ratio" shall mean, as of any applicable date of
determination, the ratio of (a) Consolidated Income Available for Fixed Charges
for the period of four (4) consecutive fiscal quarters of the Company most
recently ended at such time to (b) Consolidated Fixed Charges for such period.
"Floor Plan Receivables" shall mean, as of any applicable date of
determination, the aggregate amount outstanding from Dealers pursuant to
financing extended to such Dealers by Company or any of its Subsidiaries for
used motor vehicle inventories, such financing to be secured by the related
motor vehicle inventories and any future cash collections owed by Company or its
Subsidiaries to the Dealer under the applicable Dealer Agreement in respect of
outstanding Advances to Dealers (and the related Installment Contracts) or
Leased Vehicles (and the related Leases)
"Foreign Guaranty" shall mean that certain guaranty under the Prior
Credit Agreement of all Indebtedness outstanding from the Permitted Borrowers
hereunder, executed and delivered (or to be executed and delivered by joinder)
by each of the Significant Foreign Subsidiaries, as amended from time to time.
"Foreign Subsidiaries" shall mean all of the Company's Subsidiaries
other than its Domestic Subsidiaries.
"Funded Debt" shall mean, with respect to any Person (as of any
applicable date of determination), all Debt of a Person which matures, or which
at the election of such Person may mature, more than one (1) year after the date
as of which such computation was made, determined as of such date according to
GAAP.
"Funding Conditions" shall mean those conditions required to be
satisfied prior to or concurrently with the funding of any Future Debt, as
follows:
(a) within a period of one hundred eighty (180) days prior to the
date any such Debt is incurred, Company shall have provided to
the Agent and the Banks a Consolidated plan and financial
projections meeting the requirements therefor as set forth in
Section 7.3(h) of this Agreement;
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(b) both immediately before and immediately after such additional
Debt is incurred, no Default or Event of Default (whether or not
related to such additional Debt, and taking into account the
incurring of such additional Debt) has occurred and is
continuing;
(c) if such additional Debt shall be issued pursuant to loan
documents containing covenants which are more restrictive than
the covenants contained in this Agreement, Company shall, upon
the written request of the Majority Banks, enter into amendments
to this Agreement to extend the benefit of such covenants to the
Banks; and
(d) concurrently with the incurring of such additional Debt, (i) the
proceeds of such Debt, net of third party expenses incurred by
the Company in connection with the issuance of such Debt, shall
be applied to reduce the principal balance outstanding under the
Senior Debt or the Future Debt or (ii) the principal balance
outstanding under the Revolving Credit (to the extent then
outstanding, and including the aggregate amount of drawings made
under any Letter of Credit and the aggregate amount of drawings
made under any Letter of Credit for which the Agent has not
received full payment) shall be reduced by the amount of Debt so
incurred, net of third party expenses incurred by Company in
connection with the issuance of such Debt, subject to the right
to reborrow in accordance with this Agreement; provided, however,
that to the extent that, on the date any reduction of the
principal balance outstanding under the Revolving Credit shall be
required under this clause (d), the Indebtedness under the
Revolving Credit is being carried, in whole or in part, at the
Eurocurrency-based Rate and no Default or Event of Default has
occurred and is continuing, the Company may, after prepaying that
portion of the Indebtedness then carried at the Prime-based Rate,
deposit the amount of such required principal reductions in a
cash collateral account to be held by the Agent, for and on
behalf of the Banks (which shall be an interest-bearing account),
on such terms and conditions as are reasonably acceptable to
Agent and the Majority Banks and, subject to the terms and
conditions of such cash collateral account, sums on deposit
therein shall be applied (until exhausted) to reduce the
principal balance of the Revolving Credit on the last day of each
Interest Period attributable to the applicable Eurocurrency-based
Advances of the Revolving Credit (subject to the right to
reborrow, as aforesaid).
"Future Debt" shall mean (i) Debt evidenced by Medium Term Notes and
(ii) Debt evidenced by Long Term Notes; provided that the aggregate principal
amount of all such Debt incurred from and after the date hereof shall not exceed
Three Hundred Million Dollars ($300,000,000); and provided further that, at the
time any such Debt is incurred, the Funding Conditions have been satisfied.
For the purposes of this definition of "Future Debt",
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"(x) 'Long Term Notes' shall mean unsecured or, subject to
the terms hereof, secured promissory notes to be issued by the Company
(other than Debt evidenced by Medium Term Notes) issued as part of a
private placement or carrying a public debt rating by a Rating Agency
and which Debt shall have a term extending at least beyond the
Revolving Credit Maturity Date then in effect, with an amortization
schedule not greater than level amortization to maturity (but with no
principal payments required for a period of at least 24 months) and
with no call option or other provision for mandatory early repayment
except for acceleration on default or following a change in control;
and
"(y) 'Medium Term Notes' shall mean unsecured or, subject
to the terms hereof, secured promissory notes to be issued by the
Company pursuant to the registration statement to be filed with the
Securities and Exchange Commission and carrying a public debt rating by
a Rating Agency, with maturities of not less than two (2) or more than
ten (10) years from the date of issuance, with amortization schedules
not greater than level amortization to maturity and with no call option
or other provision for mandatory early repayment except for
acceleration on default or following a change in control; provided,
however, that notes in an aggregate principal amount of up to Fifty
Million Dollars ($50,000,000) may be issued with maturities less than
two (2) years or greater than ten (10) years and/or with a call option
or other provision for mandatory early repayment, so long as such notes
otherwise comply with the other limitations contained herein.
"Future Debt Documents" shall mean the promissory note(s),
guaranty(ies), agreement(s) or other documents, instruments and certificates
executed and delivered, subject to the terms of this Agreement, to evidence or
secure (or otherwise relating to) Future Debt, as the same may be amended from
time to time and any and all other documents executed in exchange therefor or
replacement or renewal thereof.
"GAAP" shall mean generally accepted accounting principles in the
United States of America as in effect on the date hereof, consistently applied.
"Gross Advances to Dealers" shall mean, as of any applicable date of
determination, the Dollar Amount of Advances to Dealers (without giving effect
to clause (b) of the proviso to the definition of Advances to Dealers), 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 (as
defined in the definition of Advances to Dealers) to the extent such Charged-off
Advances exceed the amount of such reserves.
"Gross Current Leased Vehicles" shall mean, as of any applicable date
of determination, the aggregate amount of Gross Leased Vehicles, less the amount
of Leased Vehicles in respect of which the underlying Leases are classified as
being on "non-accrual" in the financial statements of the Company and its
Subsidiaries in accordance with GAAP.
"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
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<PAGE> 29
such receivables which are classified as being on "non-accrual" in the
financial statements of the Company and its Subsidiaries in accordance
with GAAP.
"Gross Dealer Holdbacks" shall mean the aggregate amount, as of any
applicable date of determination, of dealer holdbacks utilized in arriving at
Net Dealer Holdbacks on the Consolidated balance sheet of the Company and its
Subsidiaries, as disclosed in the footnotes thereto.
"Gross Leased Vehicles" shall mean, as of any applicable date of
determination, the Dollar Amount of Leased Vehicles (without giving effect to
clause (b) of the proviso to the definition of Leased Vehicles), plus any
reserves established by the Company as an allowance for credit losses related to
such Leased Vehicles not expected to be recovered, plus Charged-Off Advances (as
defined in the definition of Leased Vehicles) to the extent such Charged-Off
Advances exceed the amount of such reserves.
"Gross Installment Contract Receivables" shall mean, as of any
applicable date of determination, the aggregate amount of Installment Contract
receivables utilized in arriving at Net Installment Contract Receivables on the
Consolidated balance sheet of the Company and its Subsidiaries, as determined in
the footnotes thereto.
"Guaranties" shall mean the Company Guaranty, the Domestic Guaranty and
the Foreign Guaranty.
"Guarantor(s)" shall mean each Significant Subsidiary which is required
by the Banks to guarantee the obligations of the Company and/or the Permitted
Borrowers hereunder and under the other Loan Documents.
"Hazardous Material" shall mean and include any hazardous, toxic or
dangerous waste, substance or material defined as such in (or for purposes of)
the Hazardous Material Laws.
"Hazardous Material Law(s)" shall mean all laws, codes, ordinances,
rules, regulations, orders, decrees and directives issued by any federal, state,
local, foreign or other governmental or quasi-governmental authority or body (or
any agency, instrumentality or political subdivision thereof) pertaining to
Hazardous Material on or about the Material Property or any portion thereof
including, without limitation, those relating to soil, surface, subsurface
ground water conditions and the condition of the ambient air; any so-called
"superfund" or "superlien" law; and any other federal, state, foreign or local
statute, law, ordinance, code, rule, regulation, order or decree regulating,
relating to, or imposing liability or standards of conduct concerning, any
hazardous, toxic or dangerous waste, substance or material, as now or at any
time hereafter in effect. For the purposes of this definition "Material
Property" shall mean any property, whether personal or real, owned, leased or
otherwise used by the Company or any of the Subsidiaries which is material to
the operations of the Company and the Subsidiaries, taken as a whole.
"Hereof", "hereto", "hereunder" and similar terms shall refer to this
Agreement in its entirety and not to any particular paragraph or provision of
this Agreement.
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"Indebtedness" shall mean all indebtedness and liabilities, whether
direct or indirect, absolute or contingent, owing by Company or any of the
Permitted Borrowers to the Banks (or any of them) or to the Agent, in any manner
and at any time, under this Agreement or the other Loan Documents, whether
evidenced by the Notes, the Guaranties, Letter of Credit Agreements or
otherwise, due or hereafter to become due, now owing or that may hereafter be
incurred by the Company, or any of the Permitted Borrowers to, or acquired by,
the Banks or by Agent, and any judgments that may hereafter be rendered on such
indebtedness or any part thereof, with interest according to the rates and terms
specified, or as provided by law, and any and all consolidations, amendments,
renewals, replacements or extensions of any of the foregoing.
"Installment Contract(s)" shall mean retail installment contracts for
the sale of used motor vehicles assigned outright by Dealers to Company or a
Subsidiary of Company or written by Dealers in the name of the Company or a
Subsidiary of the Company (and funded by Company or such Subsidiary) or assigned
by Dealers to Company or a Subsidiary of Company, as nominee for the Dealer, for
administration, servicing, and collection, in each case pursuant to an
applicable Dealer Agreement; provided, however, that to the extent the Company
or any Subsidiary transfers or encumbers its interest in any Installment
Contracts (or any Advances to Dealers related thereto) pursuant to a Permitted
Securitization, such Installment Contracts shall, from and after the date of
such transfer or encumbrance, cease to be considered Installment Contracts under
this Agreement (reducing the amount of Advances to Dealers by the outstanding
amount of such advances, if any, attributable to such Installment Contracts)
unless and until such installment contracts are reassigned to the Company or a
Subsidiary of the Company or such encumbrances are discharged.
"Intercreditor Agreement" shall mean that certain Intercreditor
Agreement executed and delivered as of December 15, 1998 by and among the Banks,
the Noteholders and the Agent, as Collateral Agent thereunder, and acknowledged
and accepted by the Company and the Permitted Borrowers, as amended from time to
time.
"Interest Period" shall mean
(a) with respect to a Eurocurrency-based Advance, a
Eurocurrency-Interest Period commencing on the day a Eurocurrency-based
Advance is made, or on the effective date of an election of the
Eurocurrency-based Rate made under Section 2.3 or hereof, as the case
may be, and
(b) with respect to a Swing Line Advance, a period of one
(1) to thirty (30) days agreed to in advance by Company and the Swing
Line Bank as selected by Company pursuant to Section 2.5(c),
provided that (i) any Interest Period which would otherwise end on a day which
is not a Business Day shall end on the next succeeding Business Day, except that
as to a Eurocurrency-Interest Period, if the next succeeding Business Day falls
in another calendar month, such Eurocurrency-Interest Period shall end on the
next preceding Business Day, and (ii) when a Eurocurrency-Interest Period
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<PAGE> 31
begins on a day which has no numerically corresponding day in the calendar month
during which such Eurocurrency-Interest Period is to end, it shall end on the
last Business Day of such calendar month, and (iii) no Interest Period shall
extend beyond the maturity date set forth in the Note to which such Interest
Period is to apply.
"Internal Revenue Code" shall mean the Internal Revenue Code of 1986,
as amended from time to time, and the regulations promulgated thereunder.
"Investment" shall mean, in respect of any Person, any loan, advance,
extension of credit, guaranty or contribution of capital or any investment in,
or purchase or other acquisition of, stocks, notes, debentures or other
securities of such Person.
"Irish Sublimit" shall mean, as of any applicable date of
determination, that amount equal to the lesser of
(a) five percent (5%) of Company's Consolidated Tangible Net
Worth, determined as of the end of each fiscal quarter based upon the
financial statements required to be delivered under Section 7.3(b) or
7.3(c) hereof, as the case may be, or (subject to the terms hereof)
determined on a monthly basis at the request of the Company based on
monthly financial statements to be delivered pursuant to Section
2.14(b) hereof, (and giving effect to any changes in net worth shown in
such financial statements on the required date of delivery thereof);
and
(b) the Aggregate Sublimit minus the sum of the aggregate
principal amount of Advances outstanding to the Permitted Borrowers,
including CAC Ireland, (after giving effect to any such Advances being
requested by any Permitted Borrower, including CAC Ireland, on such
date, using the Current Dollar Equivalent of any such Advances
outstanding or requested in any Alternative Currency, determined
pursuant to the terms hereof as of the date of such requested Advance),
plus the aggregate undrawn portion of any Letters of Credit issued for
the account of the Permitted Borrowers (including CAC Ireland) which
shall be outstanding as of the date of such requested Advance (based on
the Dollar Amount of the undrawn portion of any such Letters of Credit
denominated in Dollars and the Current Dollar Equivalent of the undrawn
portion of any such Letters of Credit denominated in any Alternative
Currency), the aggregate face amount of Letters of Credit requested but
not yet issued (determined as aforesaid) and the aggregate amount of
all drawings for the account of such Permitted Borrowers made under any
Letter of Credit for which the Agent has not received full
reimbursement from such Permitted Borrowers (using the Current Dollar
Equivalent thereof for any such Letters of Credit denominated in any
Alternative Currency).
"Issuing Office" shall mean Agent's office located at One Detroit
Center, 500 Woodward Avenue, Detroit, Michigan 48275 or such other office as
Agent shall designate as its Issuing Office.
"ITA" shall mean the Income Tax Act (Canada) as the same may, from time
to time be in effect.
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"Joinder Agreement (Guaranty)" shall mean a joinder agreement in the
form attached as "Exhibit A" to the form of the Domestic Guaranty and to the
form of the Foreign Guaranty, to be executed and delivered by any Person
required to be a Guarantor pursuant to Section 7.22 of this Agreement.
"Leased Vehicles" shall mean, as of any applicable date of
determination, the Dollar Amount of advances in respect of Leases, as such
amount would appear in the footnotes to the financial statements of the Company
and its Subsidiaries prepared in accordance with GAAP or, if specifically
identified, elsewhere in such financial statements, net of depreciation on the
motor vehicles which are covered by Leases with respect to which such Leased
Vehicles are attributable (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
Leased Vehicles shall not include (a) the amount of any such advances
attributable to any Leases transferred or encumbered pursuant to a Permitted
Securitization or (b) Charged-Off Advances, to the extent that such Charged-Off
Advances (i) exceed the portion of the Company's Allowance for Credit Losses
related to reserves against such advances not expected to be recovered, as such
allowance would appear in the footnotes to the financial statements of the
Company and its Subsidiaries prepared in accordance with GAAP at such time or if
specifically identified, elsewhere in such financial statements and (ii) have
not already been eliminated in the determination of Leased Vehicles. For
purposes of this definition, "Charged-off Advances" shall mean those Leased
Vehicles which the Company or any of its Subsidiaries has determined, based on
the application of a static pool or comparable analysis or otherwise, are
completely or partially impaired, to the extent of such impairment.
"Lease(s)" shall mean the retail agreements for the lease of motor
vehicles assigned outright by Dealers to Company or a Subsidiary of Company or
written by a Dealer in the name of the Company or a Subsidiary of Company (and
funded by Company or such Subsidiary) or assigned by Dealers to Company or a
Subsidiary of Company, as nominee for the Dealer, for administration, servicing
and collection, in each case pursuant to an applicable Dealer Agreement;
provided, however, that to the extent the Company or any Subsidiary transfers or
encumbers its interest in any Leases pursuant to a Permitted Securitization,
such Leases shall, from and after the date of such transfer or encumbrance,
cease to be considered Leases under this Agreement (reducing the amount of
Leased Vehicles by the outstanding amount of Leased Vehicles attributable to
such Leases) unless and until such Leases are reassigned to Company or a
Subsidiary of the Company or such encumbrances have been discharged.
"Lenders" shall mean the Banks, the Noteholders and the Future Debt
Holders (as defined in the Intercreditor Agreement).
"Letter of Credit Agreement" shall mean, in respect of each Letter of
Credit, the application and related documentation satisfactory to the Agent of
an Account Party or Account Parties requesting Agent to issue such Letter of
Credit, as amended from time to time.
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"Letter of Credit Fees" shall mean the fees payable to Agent for the
accounts of the Banks in connection with Letters of Credit pursuant to Section
3.4 hereof.
"Letter of Credit Maximum Amount" shall mean as of any date of
determination the lesser of: (a) Ten Million Dollars ($10,000,000); or (b) the
Revolving Credit Maximum Amount as of such date, minus the aggregate principal
amount of Advances outstanding as of such date under the Revolving Credit Notes
and the Swing Line Notes.
"Letter of Credit Obligation(s)" shall mean the obligation of an
Account Party or Account Parties under this Agreement and each Letter of Credit
Agreement to reimburse the Agent for each payment made by the Agent under the
Letter of Credit issued pursuant to such Letter of Credit Agreement, together
with all other sums, fees, charges and amounts which may be owing to the Agent
under such Letter of Credit Agreement.
"Letter of Credit Payment" shall mean any amount paid or required to be
paid by the Agent in its capacity hereunder as issuer of a Letter of Credit as a
result of a draft or other demand for payment under any Letter of Credit.
"Letter(s) of Credit" shall mean any standby or documentary letters of
credit issued by Agent at the request of or for the account of an Account Party
or Account Parties pursuant to Article 3A hereof, including without limitation
any Existing Letters of Credit.
"Lien" shall mean any pledge, assignment, hypothecation, mortgage,
security interest, deposit arrangement, option, trust receipt, conditional sale
or title retaining contract, sale and leaseback transaction, or any other type
of lien, charge or encumbrance, whether based on common law, statute or
contract; provided that the term "Lien" shall not include any negative pledge
clauses in agreements relating to the borrowing of money or the obligation of
Company or any of its Subsidiaries (a) to remit monies held by it in connection
with dealer holdbacks, claims or refunds under insurance policies or claims or
refunds under service contracts or (b) to make deposits in trust or otherwise as
required under re-insurance agreements and pursuant to state regulatory
requirements, unless the Company or any of its Subsidiaries, as the case may be,
has encumbered its interest in such monies or deposits or in other property of
the Company to secure such obligations.
"Loan Documents" shall mean, collectively, this Agreement, the Notes,
the Guaranties, the Letter of Credit Agreements, the Collateral Documents and
any other documents, instruments or agreements executed pursuant to or in
connection with any such document, or this Agreement, as such documents may be
amended, renewed, replaced or extended from time to time.
"Majority Banks" shall mean at any time Banks holding 66-2/3% of the
aggregate principal amount of the Indebtedness then outstanding under the Notes
(provided that, for purposes of determining Majority Banks hereunder,
Indebtedness outstanding under the Swing Line Notes shall be allocated among the
Banks based on their respective Percentages of the Revolving Credit), or, if no
Indebtedness is then outstanding, Banks holding 66-2/3% of the Percentages.
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"Moody's" shall mean Moody's Investors Service, Inc., and its
successors.
"Multiemployer Plan" shall mean any Pension Plan which is a
multiemployer plan as defined in Section 4001(a)(3) of ERISA.
"National Currency Unit" shall mean a fraction or multiple of one Euro
Unit expressed in units of the former national currency of a Participating
Member State.
"Net Dealer Holdbacks" shall mean, as of any applicable date of
determination, (a) Gross Dealer Holdbacks minus (b) Advances to Dealers, as such
amounts would appear in the footnotes to the financial statements of the Company
and its Subsidiaries prepared in accordance with GAAP at such time.
"Net Installment Contract Receivables" shall mean, as of any date of
determination thereof, Installment Contract receivables, net, as such amount
would appear on the Consolidated balance sheet of the Company and its
Subsidiaries prepared in accordance with GAAP at such time and computed as the
result of (a) Gross Installment Contract Receivables minus (b) Unearned Finance
Charges minus (c) Allowances for Credit Losses.
"New Bank" is defined in clause (b) of Section 2.18.
"New Bank Addendum" shall mean an addendum, substantially in the form
of Exhibit M hereto, to be executed and delivered by each Bank becoming a party
to this Agreement pursuant to Section 2.18 hereof.
"Notes" shall mean the Term Notes, the Revolving Credit Notes or the
Swing Line Notes, or any or all of the Term Notes, the Revolving Credit Notes,
and the Swing Line Notes as the context indicates, and in the absence of such
indication, all such notes.
"Notes Receivable" shall mean, as of any applicable date of
determination, the aggregate amount outstanding under promissory notes issued by
Dealers to Company or its Subsidiaries to evidence working capital loans by
Company or any of its Subsidiaries to Dealers.
"Operating Lease" shall mean any lease other than a Capital Lease.
"Operating Rental" shall mean all rental payments that the Company or
any of its Subsidiaries, as lessee, is required to make under the terms of any
Operating Lease.
"Outright Dealer Agreement(s)" shall mean Dealer Agreements referred to
in clause (ii) of the definition of Dealer Agreements.
"Participating Member State" shall mean such country so described in
any EMU Legislation.
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"PBGC" shall mean the Pension Benefit Guaranty Corporation under ERISA,
or any successor corporation.
"Pension Plan(s)" shall mean all employee pension benefit plans of
Company, any ERISA Affiliate or any Permitted Borrower, as defined in Section
3(2) of ERISA.
"Percentage" shall mean, with respect to any Bank, its percentage
share, as set forth on Exhibit D hereto, of the Letters of Credit, the Term
Loan, and/or the Revolving Credit, as the context indicates, as such Exhibit may
be revised from time to time by Agent in accordance with Section 13.8(d) hereof.
"Permitted Acquisition" shall mean any acquisition by the Company or
any of its Subsidiaries (other than any Special Purpose Subsidiary) of assets,
businesses or business interests or shares of stock or other ownership interests
of or in any Person conducted in accordance with the following requirements:
(a) not less than twenty (20) nor more than ninety (90) days prior to
the commencement of each such proposed acquisition, the Company
provides written notice thereof to Agent (with drafts of all
material documents pertaining to such proposed acquisition to be
furnished to Agent within not less than twenty (20) days prior to
such proposed acquisition);
(b) on the date of any such acquisition, all necessary or appropriate
governmental, quasi-governmental, agency, regulatory or similar
approvals of applicable jurisdictions (or the respective
agencies, instrumentalities or political subdivisions, as
applicable, of such jurisdictions) and all necessary or
appropriate non-governmental and other third-party approvals
which, in each case, are material to such acquisition have been
obtained and are in effect, and the Company and its Subsidiaries
are in full compliance therewith, and all necessary or
appropriate declarations, registrations or other filings with any
court, governmental or regulatory authority, securities exchange
or any other person have been made;
(c) the aggregate value of all of such acquisitions, including the
value of any proposed new acquisition, conducted while this
Agreement remains in effect as Permitted Acquisitions (but
excluding any acquisition conducted with the specific written
approval of the Majority Banks, and not as a Permitted
Acquisition hereunder) computed on the basis of total acquisition
consideration paid or incurred, or to be paid or incurred, by the
Company or its Subsidiaries with respect thereto, including all
indebtedness which is assumed or to which such assets, businesses
or business or ownership interests or shares, or any Person so
acquired, is subject, shall not exceed Ten Million Dollars
($10,000,000) (or the Alternative Currency equivalent thereof, if
applicable), determined as of the date of such acquisition;
(d) within thirty (30) days after any such acquisition has been
completed the Company
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<PAGE> 36
shall deliver to the Agent executed copies of all material
documents pertaining to such acquisition, and the Company, its
Subsidiaries and any of the corporate entities involved in such
acquisition shall execute or cause to be executed, and provide or
cause to be provided to Agent, for the Banks, such documents and
instruments (including without limitation, the Guaranties as
required by Section 7.22 hereof, and opinions of counsel,
amendments, acknowledgments, consents and evidence of approvals
or filings) as reasonably requested by Agent, if any; and
(e) both immediately before and after such acquisition, no Default or
Event of Default (whether or not related to such acquisition),
has occurred and is continuing.
"Permitted Borrower" shall mean CAC UK, CAC Canada and/or CAC Ireland.
"Permitted CAC UK Debt" shall mean additional Debt of CAC UK issued as
part of any short term, working capital or overdraft loan facility denominated
in an Alternative Currency in an aggregate amount at any time outstanding
(determined on the date any such Debt is incurred) not to exceed the greater of
(a) twelve and one-half percent (12.5%) of Consolidated Tangible Net Worth or
(b) the equivalent of Ten Million Dollars ($10,000,000) in such Alternative
Currency, less the aggregate amount at any time outstanding of overdraft lines
of credit or similar credit facilities in the name of CAC UK permitted under
Section 8.5(d) hereof; provided that such Debt (i) is unsecured, except to
extent of any Lien granted by CAC UK which is permitted under Section 8.6(d)
hereof, (ii) is not guaranteed or otherwise supported by Company or any of its
other Subsidiaries, and (iii) both immediately before and immediately after such
additional Debt is incurred, no Default or Event of Default (whether or not
related to such additional Debt, and taking into account the incurring of such
additional Debt) has occurred and is continuing.
"Permitted Currencies" shall mean Dollars or any Alternative Currency.
"Permitted Guaranties" shall mean (i) any guaranties or other support
provided by the Company, for the benefit of the Permitted Borrowers, covering
any overdraft lines of credit or similar credit arrangements maintained by the
Permitted Borrowers or Arlington Investment Company under Section 8.5(d) hereof,
(ii) any guaranties provided by a Significant Subsidiary of the Company of the
Debt outstanding to the Noteholders or the Future Debt Holders, provided that
concurrently with the giving of any such guaranty, such Subsidiary shall enter
into a Guaranty on substantially similar terms and providing an equal and
ratable benefit to the Banks or (iii) any agreement or other undertaking by the
Company, as servicer of the Installment Contracts or Leases covered by a
Permitted Securitization, to advance funds to cover the interest component of
obligations issued as part of such securitization and payable from collections
on such Installment Contracts or Leases (such advances to be repayable to
Company on a priority basis from such collections), provided that the aggregate
amount of such advances under this clause (iii) at any time outstanding shall
not exceed $1,500,000.
"Permitted Investments" shall mean:
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(a) Investments in direct obligations of, or obligations guarantied
by, the United States of America or any agency of the United
States of America the obligations of which agency carry the full
faith and credit of the United States of America, provided that
such obligations (other than Investments by CAC Life in such
obligations made to match liabilities incurred in the ordinary
course of business) mature within one (1) year from the date of
acquisition thereof;
(b) Investments in any obligation of any state or municipality
thereof that at the time of acquisition thereof have an assigned
rating of "A" or higher by S&P (or an equivalent or higher rating
by another credit rating agency of recognized national standing
in the United States of America), provided that such obligations
(other than Investments by CAC Life in such obligations made to
match liabilities incurred in the ordinary course of business)
mature within one (1) year from the date of acquisition thereof;
(c) Investments in negotiable certificates of deposit issued by
commercial banks organized under the laws of the United States of
America or any state thereof, having capital, surplus and
undivided profits aggregating at least Fifty Million Dollars
($50,000,000) and the long-term unsecured debt obligations of
which are rated "A" or higher by S&P (or an equivalent or higher
rating by another credit rating agency of recognized national
standing in the United States of America), provided that such
certificates of deposit (other than Investments by CAC Life in
such certificates of deposit made to match liabilities incurred
in the ordinary course of business) mature within one (1) year
from the date of acquisition thereof;
(d) Investments in corporate debt obligations of corporations
organized under the laws of the United States of America or any
state thereof that at the time of acquisition thereof have an
assigned rating of "A" or higher by S&P (or an equivalent or
higher rating by another credit rating agency of recognized
national standing in the United States of America); and
(e) Investments in preferred stock of corporations organized under
the laws of the United States of America or any state thereof
that have an assigned rating of "A" or higher by S&P (or an
equivalent or higher rating by another credit rating agency of
recognized national standing in the United States of America);
and
(f) Investments by CAC UK in obligations similar in nature, term and
credit quality to those enumerated in paragraphs (a) through (e)
above except that the United Kingdom shall be substituted for the
United States of America in each case.
"Permitted Liens" shall mean, with respect to any Person:
(a) any Liens granted under or established by this Agreement or the
other Loan Documents;
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<PAGE> 38
(b) Liens for taxes not yet due and payable or which are being
contested in good faith by appropriate proceedings diligently
pursued, provided that such provision for the payment of all such
taxes known to such Person has been made on the books of such
Person as may be required by GAAP;
(c) mechanics', materialmen's, banker's, carriers', warehousemen's
and similar Liens arising in the ordinary course of business and
securing obligations of such Person that are not overdue for a
period of more than 60 days or are being contested in good faith
by appropriate proceedings diligently pursued, provided that in
the case of any such contest (i) any proceedings commenced for
the enforcement of such liens and encumbrances shall have been
duly suspended; and (ii) such provision for the payment of such
liens and encumbrances has been made on the books of such Person
as may be required by GAAP;
(d) Liens arising in connection with worker's compensation,
unemployment insurance, old age pensions (subject to the
applicable provisions of this Agreement) and social security
benefits which are not overdue or are being contested in good
faith by appropriate proceedings diligently pursued, provided
that in the case of any such contest (i) any proceedings
commenced for the enforcement of such Liens shall have been duly
suspended; and (ii) such provision for the payment of such Liens
has been made on the books of such Person as may be required by
GAAP;
(e) (i) Liens incurred in the ordinary course of business to secure
the performance of statutory obligations arising in connection
with progress payments or advance payments due under contracts
with the United States or any foreign government or any agency
thereof entered into in the ordinary course of business and (ii)
liens incurred or deposits made in the ordinary course of
business to secure the performance of statutory obligations,
bids, leases, fee and expense arrangements with trustees and
fiscal agents and other similar obligations (exclusive of
obligations incurred in connection with the borrowing of money,
any lease-purchase arrangements or the payment of the deferred
purchase price of property), provided that full provision for the
payment of all such obligations set forth in clauses (i) and (ii)
has been made on the books of such Person as may be required by
GAAP;
(f) Liens in the nature of any minor imperfections of title,
including but not limited to easements, covenants, rights-of-way
or other similar restrictions, which, either individually or in
the aggregate, would not (i) materially adversely affect the
present or future use of the property to which they relate, or
(ii) have a material adverse effect on the sale or lease of such
property, or (iii) render title thereto unmarketable;
(g) Liens (i) arising from judicial attachments and judgments, (ii)
securing appeal bonds or supersedeas bonds, and (iii) arising in
connection with court proceedings (including, without limitation,
surety bonds and letters of credit or any other
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<PAGE> 39
instrument serving a similar purpose), provided that (1) the
execution or other enforcement of such Liens is effectively
stayed, (2) the claims secured thereby are being contested in
good faith and by appropriate proceedings, (3) adequate book
reserves in accordance with GAAP shall have been established and
maintained and shall exist with respect thereto, (4) such Liens
do not in the aggregate detract from the value of such property
and (5) the title of the Company or a Subsidiary, as the case may
be, to, and its right to use, such property, is not materially
adversely affected thereby; and
(h) those Liens of the Company or its Subsidiaries identified in
Schedule 8.6 hereto.
"Permitted Merger(s)" shall mean any merger of (i) any Subsidiary
(including, without limitation, a Permitted Borrower or Guarantor, excluding any
Special Purpose Subsidiary) or any Person which is being acquired pursuant to a
Permitted Acquisition into Company or any Permitted Borrower or (ii) the merger
of any Subsidiary or any Person which is being acquired pursuant to a Permitted
Acquisition (other than a Permitted Borrower or Guarantor) into any other
Subsidiary (excluding any Special Purpose Subsidiary) or any Person which is
being acquired pursuant to a Permitted Acquisition, which, in each case,
satisfies and/or is conducted in accordance with the following requirements:
(a) not less than twenty (20) nor more than ninety (90) days prior to
the commencement of such proposed merger, Company provides
written notice thereof to Agent (with drafts of all material
documents pertaining to such proposed merger to be furnished to
Agent not less than twenty (20) days prior to such proposed
merger);
(b) immediately following and as the direct result of any such
merger, the surviving or successor entity has succeeded by
operation of applicable law (as confirmed by an opinion(s) of
counsel in form and substance satisfactory to the Majority Banks)
to all of the obligations of the non-surviving entity under this
Agreement and the other Loan Documents, and to all of the
property rights of such non-surviving entity subject to the
applicable Loan Documents;
(c) concurrently with such proposed merger, the surviving entity
involved in such merger shall execute or cause to be executed,
and provide or cause to be provided to Agent, for the Banks, such
documents and instruments (including without limitation opinions
of counsel, amendments, acknowledgments and consents), if any, as
reasonably requested by the Majority Banks; and
(d) both immediately before and immediately after such merger, no
Default or Event of Default (whether or not related to such
merger), has occurred and is continuing.
"Permitted Prepayment" shall mean any prepayment of the Senior Debt or
Future Debt which is funded solely with the proceeds of (x) new cash equity in
the form of nonconvertible common
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shares, (y) Subordinated Debt, or (z) substitute long term Debt which satisfies
the following conditions:
(a) such Debt shall have a term extending at least beyond the
Revolving Credit Maturity Date then in effect, with an
amortization schedule not greater than level amortization to
maturity (but with no principal payments required for a period of
at least 24 months) and with no call option or other provision
for mandatory early repayment except for acceleration on default;
(b) such Debt shall be unsecured, or, subject to the Intercreditor
Agreement, secured;
(c) both immediately before and immediately after such additional
Debt is incurred, no Default or Event of Default (whether or not
related to such additional Debt, and taking into account the
incurring of such additional Debt) has occurred and is
continuing; and
(d) if such additional Debt shall be issued pursuant to loan
documents containing covenants which are more restrictive than
the covenants contained in this Agreement, Company shall, upon
the written request of the Majority Banks, enter into amendments
to this Agreement to extend the benefit of such covenants to the
Banks,
in each case, issued concurrently with such prepayment.
"Permitted Repurchase" shall mean any purchases by the Company of its
capital stock during the period commencing on the Effective Date and ending on
the Revolving Credit Maturity Date then in effect, in an aggregate amount for
all such purchases not to exceed $30,000,000; provided that at the time of any
such purchase no Default or Event of Default has occurred and is continuing or
would occur after giving effect thereto.
"Permitted Securitization(s)" shall mean each transfer or encumbrance
(each a "disposition") of specific Advances to Dealers or Leased Vehicles funded
under Back-End Dealer Agreements (and any interest in or lien on the Installment
Contracts, Leases, motor vehicles or other rights relating thereto) or of
specific Installment Contracts or Leases (and any interest in or lien on motor
vehicles or other rights relating thereto) arising under Outright Dealer
Agreements, in each case by the Company or its Subsidiaries to a Special Purpose
Subsidiary conducted in accordance with the following requirements:
(a) Each disposition shall identify with reasonable certainty the
specific Advances to Dealers, Leased Vehicles, Installment
Contracts or Leases covered by such disposition; and such
Advances to Dealers or Leased Vehicles (and the Installment
Contracts, Leases, motor vehicles or other rights relating
thereto) and the Installment Contracts and Leases shall have
performance and other characteristics so that the quality of such
Advances to Dealers, Leases Vehicles, Installment Contracts or
Leases, as the case may be, is comparable to, but not materially
better
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<PAGE> 41
than, the overall quality of the Company's Advances to Dealers,
Leased Vehicles, Installment Contracts or Leases, as applicable,
as determined in good faith by the Company in its reasonable
discretion;
(b) (i) The disposition of Advances to Dealers, Leased Vehicles,
Installment Contracts or Leases will not result in the aggregate
principal amount of Debt at any time outstanding, and (without
duplication) of similar securities at any time issued and
outstanding (other than subordinated securities issued to and
held by the Company or a Subsidiary), of any Special Purpose
Subsidiary pursuant to Permitted Securitizations before or after
the Effective Date exceeding $100,000,000, which amount may be
readvanced and reborrowed and (ii) the Company or the Subsidiary
disposing of Advances to Dealers, Leased Vehicles, Installment
Contracts or Leases to a Special Purpose Subsidiary pursuant to
such Permitted Securitization shall itself actually receive
(substantially contemporaneously with such disposition) cash from
each disposition of such financial assets in connection with any
such Securitization Transaction in an amount not less than
Seventy- Five Percent (75%) of the sum of (A) the amount of such
Advances to Dealers, (B) the amount of Net Installment Contract
Receivables in respect of Installment Contracts arising under
Outright Dealer Agreements, and (C) the amount of Leased
Vehicles, in each case determined on the date of such
Securitization Transaction;
(c) Each such disposition shall be without recourse (except to the
extent of normal and customary representations and warranties
given as of the date of each such disposition, and not as
continuing representations and warranties) and otherwise on
normal and customary terms and conditions for comparable
asset-based securitization transactions, including, any Cleanup
Call provision;
(d) Concurrently with each such disposition, the aforesaid net
proceeds shall be applied to reduce the principal balance
outstanding under the Revolving Credit (to the extent then
outstanding, and including the aggregate amount of drawings made
under any Letter of Credit for which the Agent has not received
full payment) by the amount of such net proceeds, subject to the
right to reborrow in accordance with this Agreement; provided,
however, that to the extent that, on the date any reduction of
the principal balance outstanding under the Revolving Credit
shall be required under this clause (d), the Indebtedness under
the Revolving Credit is being carried, in whole or in part, at
the Euro Currency-based Rate and no Default or Event of Default
has occurred and is continuing, the Company may, after prepaying
that portion of the Indebtedness then carried at the Prime-based
Rate, deposit the amount of such required principal reductions in
a cash collateral account to be held by the Agent, for and on
behalf of the Banks (which shall be an interest-bearing account),
on such terms and conditions as are reasonably acceptable to
Agent and the Majority Banks and, subject to the terms and
conditions of such cash collateral account, sums on deposit
therein shall be applied (until exhausted) to reduce the
principal balance of the revolving credit on the last
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<PAGE> 42
day of each Interest Period attributable to the applicable
Eurocurrency-based Advances of the Revolving Credit;
(e) Each such Securitization Transaction shall be structured on the
basis of the issuance of non-recourse Debt or other similar
securities by the Special Purpose Subsidiary;
(f) Before conducting a Permitted Securitization, Agent shall have
received, to the extent the applicable Senior Debt Documents
require amendment or consent in order to effect such Permitted
Securitization, copies of amendments to or consents under the
Senior Debt Documents executed and delivered by the Company and
the requisite holders of the Senior Debt reflecting such
amendments or consents; and
(g) Both immediately before and after such disposition, no Default or
Event of Default (whether or not related to such disposition) has
occurred and is continuing.
In connection with each Permitted Securitization conducted hereunder,
not less than ten (10) Business Days prior to the date of consummation
thereof, the Company shall provide to the Agent and each of the Banks
(i) a schedule in the form attached hereto as Exhibit K identifying the
specific Installment Contracts or Leases or the Advances to Dealers or
Leased Vehicles (and providing collection information regarding the
related Installment Contracts or Leases) proposed to be covered by such
transaction (with evidence supporting its determination under
subparagraph (a) of this definition, including without limitation a
"static pool analysis" comparable to the static pool analysis required
to be delivered under Section 7.3(c) hereof with respect to such
Installment Contracts or Leases) and (ii) proposed drafts of the
material Securitization Documents covering the applicable
securitization (and the term sheet or commitment relating thereto) and
within five (5) Business Days following the consummation thereof, the
Company shall have provided to Agent and each Bank copies of the
material Securitization Documents, as executed, including an updated
schedule, substantially in the form of the schedule delivered under
clause (i) above, identifying the financial assets actually covered by
such transaction (and, if such financial assets are materially
different, as reasonably determined by the Company, from those shown in
the schedule delivered under clause (i), above, collection information
and evidence supporting its determination under subparagraph (a) of
this definition, including a comparable "static pool analysis," as
aforesaid, with respect to such financial assets).
"Permitted Senior Note Prepayment" shall mean the prepayment by the
Company of Debt under the senior notes issued in connection with the Senior Debt
Documents in an aggregate amount not to exceed $20,000,000.
"Permitted Transfer(s)" shall mean (i) any sale, assignment, transfer
or other disposition of inventory or worn-out or obsolete machinery, equipment
or other such personal property in the ordinary course of business, (ii) any
transfer of property by a Subsidiary to the Company, (iii) the transfer of the
Teletrack name (owned by the Company) in connection with the sale of Teletrack,
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<PAGE> 43
Inc., approved by the Banks under the Prior Credit Agreement, and (iv) any
transfer of the stock of a Special Purpose Subsidiary to the Company or to any
other Subsidiary which is not a Special Purpose Subsidiary. [NOTE: Subsequent to
the closing of the sale of Teletrack (previously approved by the Banks), the
Company determined that the Teletrack name was still held by the Company. For
obvious reasons, the purchaser is requiring the name to be transferred. This
change makes clear that the transfer is permitted and the existing lien on the
name can be released.]
"Person" shall mean an individual, corporation, partnership, limited
liability company, trust, incorporated or unincorporated organization, joint
venture, joint stock company, or a government or any agency or political
subdivision thereof or other entity of any kind.
"Prime Rate" shall mean the per annum interest rate established by
Agent as its prime rate for its borrowers as such rate may vary from time to
time, which rate is not necessarily the lowest rate on loans made by Agent at
any such time.
"Prime-based Advance" shall mean an Advance (including a Swing Line
Advance) which bears interest at the Prime-based Rate.
"Prime-based Rate" shall mean (i) with respect to any Advances in
Dollars, the U.S. Prime-based Rate and (ii) with respect to Swing Line Advances
in Canadian Dollars to CAC Canada, the Canadian Prime-based Rate.
"Prior Credit Agreement" is defined in Recital A to this Agreement.
"Prohibited Transaction" shall mean any transaction involving a Pension
Plan which constitutes a "prohibited transaction" under Section 406 of ERISA or
Section 4975 of the Internal Revenue Code.
"Quoted Rate" shall mean the rate of interest per annum offered by the
Swing Line Bank in its sole discretion with respect to a Swing Line Advance.
"Quoted Rate Advance" means any Swing Line Advance which bears interest
at the Quoted Rate.
"Rating Agency" shall mean Fitch, or S&P, or Moody's, and "Rating
Agencies" shall be the collective reference to any or all of the foregoing.
"Refunded Swing Line Advance" is defined in Section 2.5(e) hereof.
"Reportable Event" shall mean a "reportable event" within the meaning
of Section 4043 of ERISA and the regulations promulgated thereunder, which is
material to the Company and its Subsidiaries, taken as a whole.
"Request for Advance" shall mean a Request for Advance of the Revolving
Credit issued by Company or by a Permitted Borrower and countersigned by the
Company under Section 2.3 of this
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Agreement in the form annexed hereto as Exhibit A.
"Revolving Credit" shall mean the revolving credit loan to be advanced
to the Company or a Permitted Borrower by the Banks pursuant to Section 2
hereof, in an amount not to exceed the Revolving Credit Maximum Amount.
"Revolving Credit Facility Fee" shall mean the facility fee payable to
Agent for distribution to the Banks pursuant to Section 2.13, hereof.
"Revolving Credit Maturity Date" shall mean the earlier to occur of (i)
June 13, 2000, as such date may be extended from time to time pursuant to
Section 2.16 hereof, and (ii) the date on which the Revolving Credit Maximum
Amount shall be terminated pursuant to Section 2.15 or 9.2 hereof.
"Revolving Credit Maximum Amount" shall mean One Hundred Ten Million
Dollars ($110,000,000), subject to any increases in the Revolving Credit Maximum
Amount, pursuant to Section 2.18 of this Agreement, by an amount not to exceed
the Revolving Credit Optional Increase and subject to any reductions or
termination of the Revolving Credit Maximum Amount under Sections 2.15 or 9.2 of
this Agreement.
"Revolving Credit Notes" shall mean the Notes described in Section 2.1,
hereof, made or to be made by Company or a Permitted Borrower to each of the
Banks in the form annexed to this Agreement as Exhibit C-1 or C-2, as the case
may be, as such Notes may be amended, renewed, replaced or extended from time to
time.
"Revolving Credit Optional Increase" shall mean an amount up to Forty
Million Dollars ($40,000,000), minus the portions thereof applied from time to
time under Section 2.18 hereof to increase the Revolving Credit Maximum Amount.
"Securitization Documents" shall mean any note purchase agreement (and
any notes issued thereunder), transfer or security document, master trust or
other trust agreement, servicing agreement, indenture, pooling agreement,
contribution or sale agreement or other document, instruments and certificates
executed and delivered, subject to the terms of this Agreement, to evidence or
secure (or otherwise relating to) a Permitted Securitization, as the same may be
amended from time to time (subject to the terms hereof) and any and all other
documents executed in connection therewith or replacement or renewal thereof.
"Securitization Transaction" shall mean a transfer of, or grant of a
Lien on, Advances to Dealers, Leased Vehicles, Installment Contracts, Leases,
accounts receivable and/or other financial assets by the Company or any
Subsidiary to a Special Purpose Subsidiary or other special purpose or limited
purpose entity and the issuance (whether by such Special Purpose Subsidiary or
other special purpose or limited purpose entity or any other Person) of Debt or
of any securities secured directly or indirectly by interests in, or of trust
certificates or other securities directly or indirectly evidencing interests in,
such Advances to Dealers, Leased Vehicles, Installment Contracts, Leases,
accounts receivable and/or other financial assets.
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"Senior Debt" shall mean the debt issued by the Company pursuant to the
Senior Debt Documents in an aggregate principal amount of Two Hundred One
Million Seven Hundred Fifty Thousand Dollars ($201,750,000).
"Senior Debt Documents" shall mean (i) the several Credit Acceptance
Corporation Note Purchase Agreements dated as of October 1, 1994 ($60,000,000
9.12% (formerly 8.87%) Senior Notes due November 1, 2001), as amended to the
date hereof and (ii) the several Credit Acceptance Corporation Note Purchase
Agreements dated as of August 1, 1996 ($70,000,000 8.24% (formerly 7.99%) Senior
Notes due July 1, 2001), as amended to the dated hereof, and (iii) the several
Credit Acceptance Corporation Note Purchase Agreements dated as of March 25,
1997 ($71,750,000 8.02% (formerly 7.77%) Senior Notes due October 1, 2001), as
amended to the date hereof; and, in each case, the senior notes issued
thereunder, together with any and all other documents, instruments and
certificates executed and delivered pursuant thereto, as the same may be amended
(subject to the terms hereof) from time to time and any and all other documents
executed in exchange therefor or replacement or renewal thereof.
"Senior Funded Debt" shall mean Funded Debt, other than Subordinated
Funded Debt.
"Shares", "share capital", "capital stock", "stock" and words of
similar import shall mean and refer to the equity capital interest under
applicable law of any Person in a corporation, howsoever such interest is
created or arises, whether such capital consists of common stock, preferred
stock or preference shares, or other stock, and whether such capital is
evidenced by a certificate, share register entry or otherwise.
"Significant Subsidiary(ies)" shall mean, as of any date of
determination, any Subsidiary other than any Special Purpose Subsidiary which is
a Permitted Borrower or which has total assets (but excluding in the calculation
of total assets, for any Domestic Subsidiary, any assets which constitute
intercompany loans, advances, or extensions of credit by such Subsidiary to
Company outstanding from time to time and any assets which are acquired or arise
pursuant to a Permitted Securitization, including any equity interest in a
Special Purpose Subsidiary) [this change retroactive to March 31, 1997] in
excess of five percent (5%) of Company's Consolidated Tangible Net Worth,
determined as of the end of each fiscal quarter based upon the financial
statements required to be delivered under Section 7.3(b) or 7.3(c) hereof, as
the case may be (and giving effect to any changes in net worth shown in such
financial statements on the required date of delivery thereof).
"Significant Domestic Subsidiaries" shall mean those Domestic
Subsidiaries identified as such on Schedule 6.6 hereto, and any Domestic
Subsidiaries which become Significant Subsidiaries subsequent to the date
hereof.
"Significant Foreign Subsidiaries" shall mean those Foreign
Subsidiaries identified as such on Schedule 6.6 hereto, and any Foreign
Subsidiaries which become Significant Subsidiaries subsequent to the date
hereof.
"Single Employer Plan" shall mean any Pension Plan which does not
constitute a
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Multiemployer Plan.
"Special Purpose Subsidiary" shall mean any wholly-owned direct or
indirect subsidiary of the Company established for the sole purpose of
conducting one or more Permitted Securitizations and otherwise established and
operated in accordance with customary industry practices.
"Subordinated Debt" shall mean any unsecured Debt subordinated to the
prior payment and discharge in full of the Indebtedness, on written terms and
conditions approved by and acceptable to each of the Banks, in their sole
discretion.
"Subordinated Funded Debt" shall mean any unsecured Funded Debt which
is subordinate in right of payment and priority to the Indebtedness and which
has an average life and final maturity extending beyond the average life and
final maturity of the Indebtedness.
"Subsidiary(ies)" shall mean any other corporation or other entity, of
which more than fifty percent (50%) of the outstanding voting stock or interests
is owned either directly or indirectly by Company or one or more of its
Subsidiaries or by Company and one or more of its Subsidiaries. "100%
Subsidiary(ies)" shall mean any Subsidiary whose stock (other than directors' or
qualifying shares to the extent required under applicable law) is owned directly
or indirectly entirely by the Company and/or any of the Permitted Borrowers.
"Swing Line" shall mean the revolving credit loan to be advanced to the
Company or a Permitted Borrower by the Swing Line Bank pursuant to Section 2.5
hereof, in an aggregate amount (subject to the terms hereof) not to exceed, at
any one time outstanding, the Swing Line Maximum Amount.
"Swing Line Advance" shall mean an Advance made by Swing Line Bank to
Company or a Permitted Borrower pursuant to Section 2.5 hereof.
"Swing Line Bank" shall mean Comerica Bank, in its capacity as lender
under Section 2.5 of this Agreement, and its successors and assigns.
"Swing Line Maximum Amount" shall mean Seven Million Five Hundred
Thousand Dollars ($7,500,000).
"Swing Line Notes" shall mean the swing line notes described in Section
2.5 hereof, made by Company or a Permitted Borrower to Swing Line Bank in the
form annexed hereto as Exhibit E, as such Notes may be amended or supplemented
from time to time, and any notes issued in substitution, replacement or renewal
thereof from time to time.
"Syndications Agent" shall mean NationsBank, N.A. ("NationsBank"), or
such successor syndication agent as appointed by the Company under Section 12.15
hereof.
"S&P" shall mean Standard & Poor's Ratings Group, and its successors.
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"Trans-European Business Day" shall mean a day when the Trans-European
Settlement System is open for business.
"Trans-European Settlement System" shall mean the Trans-European
Automated Real-time Gross Settlement Express Transfer System or any successor.
"Treaty on European Union" shall mean the Treaty of Rome of March 25,
1957, as amended by the Single European Act 1986 and the Maastricht Treaty
(which was signed at Maastricht on February 7, 1992 and came into force on
November 1, 1993), as amended from time to time.
"Term Loan" shall mean the term loan funded by the Banks at the
election of the Company, by conversion, pursuant to Section 4.1 hereof.
"Term Loan Conversion Date" is defined in Section 4.1.
"Term Loan Maturity Date" shall mean the one-year anniversary of the
Term Loan Conversion Date.
"Term Loan Rate Request" shall mean the Term Loan Rate Request issued
by the Company and the Permitted Borrowers under this Agreement in the form
attached to this Agreement as Exhibit K.
"Term Notes" shall mean the Term Notes described in Section 4.1 made or
to be made by the Company to each of the Banks in the form attached to this
Agreement as Exhibit B, as such Notes may be amended, renewed, replaced or
extended from time to time.
"Unearned Finance Charges" shall mean, as of any applicable date of
determination, the unearned finance charges utilized in deriving Installment
Contract receivables, net on the Consolidated balance sheet of the Company and
its Subsidiaries, as disclosed in the footnotes thereto.
"U.S. Prime-based Rate" shall mean, for any day, that rate of interest
which is equal to the sum of the Applicable Margin plus the greater of (i) the
U.S. Prime Rate, and (ii) the Alternate Base Rate.
"U.S. Prime Rate" shall mean the per annum rate of interest announced
by the Agent, at its main office from time to time as its "prime rate" (it being
acknowledged that such announced rate may not necessarily be the lowest rate
charged by the Agent to any of its customers), which U.S. Prime Rate shall
change simultaneously with any change in such announced rate.
1.2 Euro.
(a) Redenomination of Eurocurrency-based Advances and
other Advances into
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Euro Units.
(i) From and after January 1, 1999, each obligation
under this Agreement of a party hereto which (A) was
originally denominated in the former national currency of a
Participating Member State, or (B) would otherwise have
been denominated in such former national currency prior to
such date shall be denominated in, or redenominated into,
as applicable, the Euro Unit in accordance with EMU
Legislation and applicable state law, provided that, if and
to the extent that any EMU Legislation provides that
amounts denominated in the euro unit or the National
Currency Unit of a Participating Member State, that are
payable by crediting an account of the creditor within that
country, may be made in either Euro or National Currency
Units, each party to this Agreement shall be entitled to
pay or repay any such amounts in either the Euro Unit or
such National Currency Unit.
(ii) Any Eurocurrency-based Advances denominated in
a National Currency Unit of a Participating Member State
which were made prior to January 1, 1999 but which have
Interest Periods ending after January 1, 1999 shall, for
purposes of this Agreement, remain denominated in such
National Currency Unit provided that such Advances may be
repaid either in the Euro or in such National Currency Unit
after January 1, 1999; provided, further, that from and
after January 1, 2002 all such amounts shall be deemed to
be in Euro Units.
(iii) Subject to any EMU Legislation, references in
this Agreement to a minimum amount (or an integral multiple
thereof) in a National Currency Unit to be paid to or by a
party hereto shall be deemed to be a reference to such
reasonably comparable and convenient amount (or an integral
multiple thereof) in the Euro Unit as the Agent may from
time to time specify.
(b) Payments.
(i) All payments by any of the Company or a
Permitted Borrower or any Bank of amounts denominated in
the Euro or a National Currency Unit of a Participating
Member State, shall be made in immediately available,
freely transferable, cleared funds to the account of the
Agent in the principal financial center in such
Participating Member State, as from time to time designated
by the Agent for such purpose.
(ii) All amounts payable by the Agent to any party
under this Agreement in the National Currency Unit of a
Participating Member State shall instead be paid in the
Euro Unit.
(iii) The Agent shall not be liable to any party to
this Agreement in any way whatsoever for any delay, or the
consequences of any delay, in the crediting
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<PAGE> 49
to any account of any amount denominated in the Euro or a
National Currency Unit of a Participating Member State.
(iv) All references herein to the London interbank
or other national market with respect to any National
Currency Unit of a Participating Member State shall be
deemed a reference to the applicable markets and locations
referred to in the definition of "Business Day" in Section
1.1.
(c) If the basis of accrual of interest or fees
expressed in this Agreement with respect to the currency of any state that
becomes a Participating Member State shall be inconsistent with any convention
or practice in the London interbank market for the basis of accrual of interest
or fees in respect of Euros, such convention or practice shall replace such
expressed basis effective as of and from the date on which such state becomes a
Participating Member State; provided, that if any Advance in the currency of
such state is outstanding immediately prior to such date, such replacement shall
take effect, with respect to such Advance, at the end of the then current
Interest Period.
(d) Increased Costs. The Company and the Permitted
Borrowers shall, from time to time upon demand of any Bank (with a copy to the
Agent), pay to such Bank the amount of any cost or increased cost incurred by,
or of any reduction in any amount payable to or in the effective return on its
capital to, or of interest or other return foregone by, such Bank or any holding
company of such Bank as a result of the introduction of, changeover to or
operation of the Euro in a Participating Member State, other than any such cost
or reduction or amount foregone reflected in any interest rate hereunder.
(e) Unavailability of Euro. If the Agent at any time
determines that: (i) the Euro has ceased to be utilized as the basic accounting
unit of the European Community; (ii) for reasons affecting the market in Euros
generally, Euros are not freely traded between banks internationally; or (iii)
it is illegal, impossible or impracticable for payments to be made hereunder in
Euro, then the Agent may, in its discretion declare (such declaration to be
binding on all the parties hereto) that any payment made or to be made
thereafter which, but for this provision, would have been payable in the Euro
shall be made in a component currency of the Euro or Dollars (as selected by the
Agent (the "Selected Currency") and the amount to be so paid shall be calculated
on the basis of the equivalent of the Euro in the Selected Currency).
(f) Additional Changes at Agent's Discretion. This section
and other provisions of this Agreement relating to Euros and the National
Currency Units of Participating Member States shall be subject to such further
changes (including changes in interpretation or construction) as the Agent may
from time to time in its reasonable discretion notify to the Company and the
Permitted Borrowers and the Banks to be necessary or appropriate to reflect the
changeover to the Euro in Participating Member States.
1.3 Interest Act (Canada). For the purposes of disclosure
under the ITA, if and to the extent applicable, whenever interest is to be paid
hereunder and such interest is to be calculated on the basis of a period of less
than a calendar year, the yearly rate of interest to which the rate
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<PAGE> 50
determined pursuant to such calculation is equivalent is the rate so determined
multiplied by the actual number of days in the calendar year in which the same
is to be ascertained and divided by the number of days in such period.
2. REVOLVING CREDIT
2.1 Commitment. Subject to the terms and conditions of this
Agreement (including without limitation Section 2.3 hereof), each Bank severally
and for itself alone agrees to make Advances of the Revolving Credit in any one
or more of the Permitted Currencies to the Company or to any of the Permitted
Borrowers from time to time on any Business Day during the period from the
effective date hereof until (but excluding) the Revolving Credit Maturity Date
in an aggregate amount, based on the Dollar Amount of any Advances outstanding
in Dollars and the Current Dollar Equivalent of any Advances outstanding in
Alternative Currencies, not to exceed at any one time outstanding such Bank's
Percentage of the Revolving Credit Maximum Amount. Except as provided in Section
2.12 hereof, for purposes of this Agreement, Advances in Alternative Currencies
shall be determined, denominated and redenominated as set forth in Section 2.11
hereof. All of the Advances of the Revolving Credit hereunder shall be evidenced
by Revolving Credit Notes made by Company or the Permitted Borrowers to each of
the Banks in the form attached hereto as Exhibit C-1 or C-2, as the case may be,
subject to the terms and conditions of this Agreement. Advances of the Revolving
Credit shall be subject to the following additional conditions and limitations:
(a) A Permitted Borrower shall not be entitled to
request an Advance of the Revolving Credit or the Swing Line hereunder until it
has executed and delivered to the Banks, as aforesaid, Revolving Credit Notes
and to the Swing Line Bank, as set forth in Section 2.5(a) hereof, a Swing Line
Note, and has become a party to the Domestic Guaranty or the Foreign Guaranty,
as applicable, accompanied in each case by authority documents, legal opinions
and other supporting documents as required hereunder.
(b) No Permitted Borrower shall be entitled to request
or maintain (or, in the case of any Eurocurrency-based Advance, maintain beyond
any applicable Interest Period then in effect) an Advance of the Revolving
Credit hereunder if it ceases to be a 100% Subsidiary of the Company.
(c) The maximum aggregate amount of Advances and
Letters of Credit including the unreimbursed amount of any draws under any
Letters of Credit) available to each of the Permitted Borrowers at any time
hereunder, using the Current Dollar Equivalent of any such Advances or Letters
of Credit (or unreimbursed draws thereunder) outstanding in any Alternative
Currency (determined and tested pursuant to and in accordance with Section 2.14
hereof), shall not exceed the Applicable Sublimit of each such Permitted
Borrower.
2.2 Accrual of Interest and Maturity. The Revolving Credit
Notes, and all principal and interest outstanding thereunder, shall mature and
become due and payable in full on the Revolving Credit Maturity Date, and each
Advance of Indebtedness evidenced by the Revolving Credit Notes from time to
time outstanding hereunder shall, from and after the date of such Advance, bear
interest
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at its Applicable Interest Rate. The amount and date of each Advance, its
Applicable Interest Rate, its Interest Period, if any, and the amount and date
of any repayment shall be noted on Agent's records, which records will be
conclusive evidence thereof, absent manifest error; provided, however, that any
failure by the Agent to record any such information shall not relieve the
Company or the applicable Permitted Borrower of its obligation to repay the
outstanding principal amount of such Advance, all interest accrued thereon and
any amount payable with respect thereto in accordance with the terms of this
Agreement and the other Loan Documents.
2.3 Requests for and Refundings and Conversions of Advances.
Company or a Permitted Borrower (with the countersignature of Company hereunder)
may request an Advance of the Revolving Credit, refund any such Advance in the
same type of Advance or convert any such Advance to any other type of Advance of
the Revolving Credit only after delivery to Agent of a Request for Advance
executed by an authorized officer of Company or of such Permitted Borrower (with
the countersignature of an authorized officer of the Company), subject to the
following and to the remaining provisions hereof:
(a) each such Request for Advance shall set forth
the information required on the Request for Advance form annexed hereto as
Exhibit A, including without limitation:
(i) the proposed date of such Advance, which must
be a Business Day;
(ii) whether such Advance is a refunding or
conversion of an outstanding Advance;
(iii) whether such Advance is to be a Prime-based
Advance or a Eurocurrency-based Advance,
and, except in the case of a Prime-based
Advance, the first Interest Period
applicable thereto; and
(iv) in the case of a Eurocurrency-based Advance,
the Permitted Currency in which such Advance
is to be made.
(b) each such Request for Advance shall be delivered
to Agent by 12 noon (Detroit time) three (3) Business Days prior to the proposed
date of Advance, except in the case of a Prime-based Advance, for which the
Request for Advance must be delivered by 12:00 noon (Detroit time) on such
proposed date;
(c) the principal amount (or Dollar Amount of the
principal amount, if such Advance of the Revolving Credit is being initially
funded in an Alternative Currency) of such requested Advance, plus the
principal amount (or Dollar Amount of the principal amount, if such other
Advance is being initially funded in an Alternative Currency) of any other
Advances of the Revolving Credit and of the Swing Line being requested
on such date, plus the principal amount of all other Advances of the Revolving
Credit and of the Swing Line then outstanding hereunder, in each case whether
to Company or the Permitted Borrowers (using the Current Dollar Equivalent of
any such Advances outstanding in any Alternative Currency, determined pursuant
to the terms hereof
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as of the date of such requested Advance), plus the aggregate undrawn portion of
any Letters of Credit which shall be outstanding as of the date of the requested
Advance (based on the Dollar Amount of the undrawn portion of any Letters of
Credit denominated in Dollars and the Current Dollar Equivalent of the undrawn
portion of any Letters of Credit denominated in any Alternative Currency), the
aggregate face amount of Letters of Credit requested but not yet issued
(determined as aforesaid) and the aggregate amount of all drawings made under
any Letter of Credit for which the Agent has not received full reimbursement
from the applicable Account Party (using the Current Dollar Equivalent thereof
for any Letters of Credit denominated in any Alternative Currency), shall not
exceed the Revolving Credit Maximum Amount; provided however, that, in the case
of any Advance of the Revolving Credit being applied to refund an outstanding
Swing Line Advance, the aggregate principal amount of Swing Line Advances to be
refunded shall not be included for purposes of calculating the limitation under
this Section 2.3(c);
(d) in the case of CAC UK, the principal amount of the
Advance of the Revolving Credit being requested by CAC UK (determined and tested
as aforesaid), plus the principal amount of any other Advances of the Revolving
Credit and of the Swing Line being requested by the Permitted Borrowers
(including CAC UK) on such date, plus the principal amount of any other Advances
of the Revolving Credit and all Advances of the Swing Line then outstanding to
the Permitted Borrowers hereunder (including CAC UK) (determined as aforesaid),
plus the undrawn portion of any Letter of Credit which shall be outstanding as
of the date of the requested Advance for the account of the Permitted Borrowers
(including CAC UK), plus the aggregate face amount of Letters of Credit
requested but not yet issued for the account of the Permitted Borrowers
hereunder, including CAC UK (in each case determined as aforesaid), plus the
unreimbursed amount of any draws under any Letters of Credit (using the Current
Dollar Equivalent thereof for any Letters of Credit denominated in any
Alternative Currency) issued for the account of the Permitted Borrowers
(including CAC UK), shall not exceed the Aggregate Sublimit;
(e) in the case of either CAC Canada or CAC Ireland, the
principal amount of the Advance of the Revolving Credit being requested by such
Permitted Borrower (determined and tested as aforesaid), plus the principal
amount of any Swing Line Advance being requested by such Permitted Borrower on
such date, plus the principal amount of any other Advances of the Revolving
Credit and all Advances of the Swing Line then outstanding to such Permitted
Borrower hereunder (determined as aforesaid), plus the undrawn portion of any
Letter of Credit which shall be outstanding as of the date of the requested
Advance for the account of such Permitted Borrower, plus the aggregate face
amount of Letters of Credit requested but not yet issued for the account of such
Permitted Borrower hereunder (in each case determined as aforesaid), plus the
unreimbursed amount of any draws under any Letters of Credit (using the Current
Dollar Equivalent thereof for any Letters of Credit denominated in any
Alternative Currency) issued for the account of such Permitted Borrower, shall
not exceed the Canadian Sublimit or the Irish Sublimit, as the case may be;
(f) the principal amount of such Advance, plus the
amount of any other outstanding Advance of the Revolving Credit to be then
combined therewith having the same Applicable Interest Rate and Interest Period,
if any, shall be (i) in the case of a Prime-based Advance at least Two Million
Five Hundred Thousand Dollars ($2,500,000) and (ii) in the case of a
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Eurocurrency-based Advance at least Five Million Dollars ($5,000,000) or the
equivalent thereof in an Alternative Currency (or a larger integral multiple of
One Million Dollars ($1,000,000), or the equivalent thereof in the Applicable
Alternative Currency), and at any one time there shall not be in effect more
than (x) for Advances in Dollars, five (5) Applicable Interest Rates and
Interest Periods, and (y) for Advances in any Alternative Currency, three (3)
Applicable Interest Rates and Interest Periods for each such currency;
(g) a Request for Advance, once delivered to Agent,
shall not be revocable by Company or the Permitted Borrowers;
(h) each Request for Advance shall constitute and
include a certification by the Company and the applicable Permitted Borrower, if
any, as of the date thereof that:
(i) both before and after such Advance, the
obligations of the Company and the Permitted
Borrowers set forth in this Agreement and
the other Loan Documents to which such
Persons are parties are valid, binding and
enforceable obligations of the Company and
the Permitted Borrowers, as the case may be;
(ii) all conditions to Advances of the Revolving
Credit have been satisfied, and shall remain
satisfied to the date of such Advance (both
before and after giving effect to such
Advance);
(iii) there is no Default or Event of Default in
existence, and none will exist upon the
making of such Advance (both before and
after giving effect to such Advance);
(iv) the representations and warranties contained
in this Agreement and the other Loan
Documents are true and correct in all
material respects and shall be true and
correct in all material respects as of the
making of such Advance (both before and
after giving effect to such Advance); and
(v) the execution of such Request for Advance
will not violate the material terms and
conditions of any material contract,
agreement or other borrowing of Company or
the Permitted Borrowers.
2.4 Disbursement of Advances.
(a) Upon receiving any Request for Advance from Company
or a Permitted Borrower under Section 2.3 hereof, Agent shall promptly notify
each Bank by wire, telex or telephone (confirmed by wire, telecopy or telex) of
the amount and currency of such Advance to be made and the date such Advance is
to be made by said Bank pursuant to its Percentage of such Advance. Unless such
Bank's commitment to make Advances of the Revolving Credit hereunder shall have
been suspended or terminated in accordance with this Agreement, each Bank shall
make
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available the amount of its Percentage of each Advance in immediately available
funds in the currency of such Advance to Agent, as follows:
(i) for Domestic Advances, at the office of Agent
located at One Detroit Center, Detroit, Michigan 48226, not
later than 2:00 p.m. (Detroit time) on the date of such
Advance; and
(ii) for Eurocurrency-based Advances, at the
Agent's Correspondent for the account of the Eurocurrency
Lending Office of the Agent, not later than 12 noon (the
time of the Agent's Correspondent) on the date of such
Advance.
(b) Subject to submission of an executed Request for
Advance by Company or a Permitted Borrower (with the countersignature of the
Company as aforesaid) without exceptions noted in the compliance certification
therein, Agent shall make available to Company or to the applicable Permitted
Borrower, as the case may be, the aggregate of the amounts so received by it
from the Banks in like funds and currencies:
(i) for Domestic Advances, not later than
4:00 p.m. (Detroit time) on the date of such Advance by
credit to an account of Company or such Permitted Borrower
maintained with Agent or to such other account or third
party as Company or such Permitted Borrower may reasonably
direct; and
(ii) for Eurocurrency-based Advances, not later
than 4:00 p.m. (the time of the Agent's Correspondent) on
the date of such Advance, by credit to an account of
Company or such Permitted Borrower maintained with Agent's
Correspondent or to such other account or third party as
Company or such Permitted Borrower may reasonably direct.
(c) Agent shall deliver the documents and papers
received by it for the account of each Bank to such Bank or upon its order.
Unless Agent shall have been notified by any Bank prior to the date of any
proposed Advance that such Bank does not intend to make available to Agent such
Bank's Percentage of such Advance, Agent may assume that such Bank has made such
amount available to Agent on such date and in such currency, as aforesaid and
may, in reliance upon such assumption, make available to Company or to the
applicable Permitted Borrower, as the case may be, a corresponding amount. If
such amount is not in fact made available to Agent by such Bank, as aforesaid,
Agent shall be entitled to recover such amount on demand from such Bank. If such
Bank does not pay such amount forthwith upon Agent's demand therefor, the Agent
shall promptly notify Company and Company or the applicable Permitted Borrower
shall pay such amount to Agent. Agent shall also be entitled to recover from
such Bank or Company or the applicable Permitted Borrower, as the case may be,
but without duplication, interest on such amount in respect of each day from the
date such amount was made available by Agent to Company or such Permitted
Borrower, as the case may be, to the date such amount is recovered by Agent, at
a rate per annum equal to:
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(i) in the case of such Bank, with respect to
Domestic Advances, the Federal Funds Effective Rate, and
with respect to Eurocurrency-based Advances, Agent's
aggregate marginal cost (including the cost of maintaining
any required reserves or deposit insurance and of any fees,
penalties, overdraft charges or other costs or expenses
incurred by Agent as a result of such failure to deliver
funds hereunder) of carrying such amount; and
(ii) in the case of Company or such Permitted
Borrower, the rate of interest then applicable to such
Advance of the Revolving Credit.
The obligation of any Bank to make any Advance of the Revolving Credit
hereunder shall not be affected by the failure of any other Bank to
make any Advance hereunder, and no Bank shall have any liability to the
Company or any of its Subsidiaries, the Agent, any other Bank, or any
other party for another Bank's failure to make any loan or Advance
hereunder.
2.5 (a) Swing Line Advances. The Swing Line Bank shall, on
the terms and subject to the conditions hereinafter set forth (including without
limitation Section 2.5(c) hereof), make one or more advances in Dollars or in
any Alternative Currency (each such advance being a "Swing Line Advance") to
Company or any of the Permitted Borrowers (provided that any such Permitted
Borrower has executed a Swing Line Note and Revolving Credit Notes in compliance
with this Agreement) from time to time on any Business Day during the period
from the date hereof to (but excluding) the Revolving Credit Maturity Date in an
aggregate amount, based on the Dollar Amount of any such Advances outstanding in
Dollars and the Current Dollar Equivalent of any such Advances outstanding in
Alternative Currencies, not to exceed at any time outstanding the Swing Line
Maximum Amount. All Swing Line Advances shall be evidenced by the Swing Line
Notes, under which advances, repayments and readvances may be made, subject to
the terms and conditions of this Agreement. Each Swing Line Advance shall mature
and the principal amount thereof shall be due and payable by Company or the
applicable Permitted Borrower on the last day of the Interest Period applicable
thereto. In no event whatsoever shall any outstanding Swing Line Advance be
deemed to reduce, modify or affect any Bank's commitment to make Revolving
Credit Advances based upon its Percentage.
(b) Accrual of Interest. Each Swing Line Advance
shall, from time to time after the date of such Advance, bear interest at its
Applicable Interest Rate. The amount and date of each Swing Line Advance, its
Applicable Interest Rate, its Interest Period, if any, and the amount and date
of any repayment shall be noted on Agent's records, which records will be
conclusive evidence thereof, absent manifest error; provided, however, that any
failure by the Agent to record any such information shall not relieve Company or
the applicable Permitted Borrower of its obligation to repay the outstanding
principal amount of such Advance, all interest accrued thereon and any amount
payable with respect thereto in accordance with the terms of this Agreement and
the other Loan Documents.
(c) Requests for Swing Line Advances. Company or a
Permitted Borrower (with the countersignature of the Company) may request a
Swing Line Advance only after delivery
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to Swing Line Bank of a Request for Swing Line Advance executed by an authorized
officer of Company or such Permitted Borrower, subject to the following and to
the remaining provisions hereof:
(i) each such Request for Swing Line Advance shall set forth
the information required on the Request for Swing Line Advance form annexed
hereto as Exhibit F, including without limitation:
(A) the proposed date of such Swing Line Advance, which
must be a Business Day;
(B) whether such Swing Line Advance is to be a
Prime-based Advance, a Eurocurrency-based Advance or a Quoted
Rate Advance;
(C) the duration of the Interest Period applicable
thereto; and
(D) the Permitted Currency in which such Advance is to
be made.
(ii) the principal amount (or Dollar Amount of the principal
amount, if such Advance is being funded in an Alternative Currency) of such
requested Swing Line Advance, plus the aggregate principal amount of all other
Swing Line Advances and all Advances of the Revolving Credit then outstanding
hereunder (including any Revolving Credit Advances or other Swing Line Advances
requested to be made on such date) whether to Company or to any of the Permitted
Borrowers (using the Current Dollar Equivalent of any such Advances outstanding
in any Alternative Currency, determined pursuant to the terms hereof as of the
date of such requested Advance), and the aggregate undrawn portion of any
Letters of Credit which shall be outstanding as of the date of the requested
Swing Line Advance (based on the Dollar Amount of the undrawn portion of any
Letters of Credit denominated in Dollars and the Current Dollar Equivalent of
the undrawn portion of any Letters of Credit denominated in any Alternative
Currency), plus the aggregate face amount of Letters of Credit requested but not
yet issued (determined as aforesaid), plus the unreimbursed amount of any draws
under Letters of Credit (using the Current Dollar Equivalent thereof for any
Letters of Credit denominated in any Alternative Currency) shall not exceed the
Revolving Credit Maximum Amount;
(iii) in the case of CAC UK, the principal amount of the
requested Swing Line Advance to CAC UK (determined as aforesaid), plus the
aggregate principal amount of any other Swing Line Advances and all other
Advances then outstanding to all of the Permitted Borrowers (including CAC UK)
hereunder (including, without duplication any Revolving Credit Advances or Swing
Line Advances requested to be made on such date) determined as aforesaid, plus
the aggregate undrawn portion of any Letters of Credit which shall be
outstanding as of the date of the requested Swing Line Advance for the accounts
of the Permitted Borrowers hereunder (including CAC UK), plus the aggregate face
amount of any Letters of Credit requested but not yet issued for the accounts of
the Permitted Borrowers (including CAC UK) hereunder (in each case determined as
aforesaid), plus the unreimbursed amount of any draws under any Letters of
Credit (using the Current Dollar Equivalent thereof for any Letters of Credit
denominated in any Alternative
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Currency) issued for the account of the Permitted Borrowers (including CAC UK)
shall not exceed the Aggregate Sublimit;
(iv) in the case of either CAC Canada or CAC Ireland, the
principal amount of the requested Swing Line Advance to such Permitted Borrower
(determined as aforesaid), plus the aggregate principal amount of any other
Swing Line Advances and all other Advances then outstanding to such Permitted
Borrower hereunder (including, without duplication any Revolving Credit Advances
or Swing Line Advances requested to be made on such date) determined as
aforesaid, plus the aggregate undrawn portion of any Letters of Credit which
shall be outstanding as of the date of the requested Swing Line Advance for the
account of such Permitted Borrower hereunder, plus the aggregate face amount of
any Letters of Credit requested but not yet issued for the account of such
Permitted Borrower hereunder (in each case determined as aforesaid), plus the
unreimbursed amount of any draws under any Letters of Credit (using the Current
Dollar Equivalent thereof for any Letters of Credit denominated in any
Alternative Currency) issued for the account of such Permitted Borrower shall
not exceed the Canadian Sublimit or the Irish Sublimit, as the case may be;
(v) the principal amount of such Swing Line Advance, plus the
amount of any other outstanding Advance of the Swing Line to be then combined
therewith having the same Applicable Interest Rate and Interest Period, if any,
shall be (i) in the case of a Prime-based Advance at least Three Hundred
Thousand Dollars ($300,000) and (ii) in the case of a Quoted Rate Advance or a
Eurocurrency-based Advance at least Three Hundred Thousand Dollars ($300,000),
or the equivalent thereof in an Alternative Currency (or a larger integral
multiple of One Hundred Thousand Dollars ($100,000), or the equivalent thereof
in the applicable Alternative Currency), and at any one time there shall not be
in effect more than (x) for Advances in Dollars, Five (5) Applicable Interest
Rates and Interest Periods, and (y) for Advances in any Alternative Currency
(other than eurodollars), two (2) Applicable Interest Rates and Interest Periods
for each such currency; and
(vi) each such Request for Swing Line Advance shall be delivered
to the Swing Line Bank (x) for each Advance in Dollars, by 12:00 noon (Detroit
time) on the proposed date of the Advance and (y) for each Advance in any
Alternative Currency, by 12:00 noon (Detroit time) two Business Days prior to
the proposed date of Advance;
(vii) each Request for Swing Line Advance, once delivered to
Swing Line Bank, shall not be revocable by Company, and shall constitute and
include a certification by the Company as of the date thereof that:
(A) both before and after such Swing Line Advance, the
obligations of the Company set forth in this Agreement and the Loan
Documents, are valid, binding and enforceable obligations of the
Company;
(B) all conditions to the making of Swing Line Advances
have been satisfied (both before and after giving effect to such
Advance);
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(C) both before and after the making of such Swing Line
Advance, there is no Default or Event of Default in existence; and
(D) both before and after such Swing Line Advance, the
representations and warranties contained in this Agreement and the
other Loan Documents are true and correct in all material respects.
Swing Line Bank shall promptly deliver to Agent by telecopy a copy of any
Request for Swing Line Advance received hereunder.
(d) Disbursement of Swing Line Advances. Subject to
submission of an executed Request for Swing Line Advance by Company or a
Permitted Borrower without exceptions noted in the compliance certification
therein and to the other terms and conditions hereof, Swing Line Bank shall make
available to Company or the applicable Permitted Borrower the amount so
requested, in like funds and currencies, not later than:
(i) for Prime-based Advances or Quoted Rate
Advances, not later than 4:00 p.m. (Detroit time) on the
date of such Advance by credit to an account of Company or
the applicable Permitted Borrower maintained with Agent or
to such other account or third party as Company or the
Permitted Borrower may reasonably direct; and
(ii) for Eurocurrency-based Advances, not later
than 4:00 p.m. (the time of the Agent's Correspondent) on
the date of such Advance, by credit to an account of
Company or the Permitted Borrower maintained with Agent's
Correspondent or to such other account or third party as
Company or the applicable Permitted Borrower may reasonably
direct.
Swing Line Bank shall promptly notify Agent of any Swing Line Advance by
telephone, telex or telecopier.
(e) Refunding of or Participation Interest in Swing
Line Advances.
(i) The Agent, at any time in its sole and
absolute discretion, may (or, upon the request of the Swing
Line Bank, shall) on behalf of the Company or the
applicable Permitted Borrower (which hereby irrevocably
directs the Agent to act on its behalf) request each of the
Banks (including the Swing Line Bank in its capacity as a
Bank) to make an Advance of the Revolving Credit to each of
Company and the Permitted Borrowers, for each Permitted
Currency in which Swing Line Advances are outstanding to
such party, in an amount (in the applicable Permitted
Currency, determined in accordance with Section 2.11(b)
hereof) equal to such Bank's Percentage of the principal
amount of the aggregate Swing Line Advances outstanding in
each Permitted Currency to each such party on the date such
notice is
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given (the "Refunded Swing Line Advances"); provided that
at any time as there shall be a Swing Line Advance
outstanding for more than thirty days, the Agent shall, on
behalf of the Company or the applicable Permitted Borrower
(which hereby irrevocably directs the Agent to act on its
behalf), promptly request each Bank (including the Swing
Line Bank) to make an Advance of the Revolving Credit in an
amount equal to such Bank's Percentage of the principal
amount of such outstanding Swing Line Advance. In the case
of each Refunded Swing Line Advance outstanding in Dollars,
the applicable Advance of the Revolving Credit used to
refund such Swing Line Advance shall be a Prime-based
Advance. In the case of each Refunded Swing Line Advance
outstanding in any Alternative Currency, the applicable
Advance of the Revolving Credit used to refund such Swing
Line Advance shall be an Advance in the applicable
Alternative Currency, with an Interest Period of one month
(or any lesser number of days selected by Agent in
consultation with the Banks). In connection with the making
of any such Refunded Swing Line Advances or the purchase of
a participation interest in Swing Line Advances under
Section 2.5(e)(ii) hereof, the Swing Line Bank shall retain
its claim against the Company or the applicable Permitted
Borrower for any unpaid interest or fees in respect
thereof. Unless any of the events described in Section
9.1(j) hereof shall have occurred (in which event the
procedures of subparagraph (ii) of this Section 2.5(e)
shall apply) and regardless of whether the conditions
precedent set forth in this Agreement to the making of an
Advance of the Revolving Credit are then satisfied but
subject to Section 2.5(e)(iii), each Bank shall make the
proceeds of its Advance of the Revolving Credit available
to the Agent for the benefit of the Swing Line Bank at the
office of the Agent specified in Section 2.4(a) hereof
prior to 11:00 a.m. Detroit time (for Domestic Advances) on
the Business Day next succeeding the date such notice is
given, and, in the case of any Eurocurrency-based Advance,
prior to 2:00 p.m. Detroit time on the third Business Day
following the date such notice is given, in each case in
immediately available funds in the applicable Permitted
Currency. The proceeds of such Advances of the Revolving
Credit shall be immediately applied to repay the Refunded
Swing Line Advances in accordance with the provisions of
Section 10.1 hereof.
(ii) If, prior to the making of an Advance of the
Revolving Credit pursuant to subparagraph (i) of this
Section 2.5(e), one of the events described in Section
9.1(j) hereof shall have occurred, each Bank will, on the
date such Advance of the Revolving Credit was to have been
made, purchase from the Swing Line Bank an undivided
participating interest in each Refunded Swing Line Advance
in an amount equal to its Percentage of such Refunded Swing
Line Advance. Each Bank within the time periods specified
in Section 2.5(e)(i) hereof, as applicable, shall
immediately transfer to the Agent, in immediately available
funds in the applicable Permitted Currency of such Swing
Line Advance, the amount of its participation and upon
receipt thereof the Agent will deliver to such Bank a
participation certificate evidencing such participation.
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(iii) Each Bank's obligation to make Advances of the
Revolving Credit and to purchase participation interests in
accordance with clauses (i) and (ii) above shall, except in
respect of any Swing Line Advance made by the Swing Line
Bank after it has obtained actual knowledge that an Event
of Default has occurred and is continuing, be absolute and
unconditional and shall not be affected by any
circumstance, including, without limitation, (A) any
set-off, counterclaim, recoupment, defense or other right
which such Bank may have against Swing Line Bank, the
Company, the Permitted Borrowers or any other Person for
any reason whatsoever; (B) the occurrence or continuance of
any Default or Event of Default; (C) any adverse change in
the condition (financial or otherwise) of the Company, any
Permitted Borrower or any other Person; (D) any breach of
this Agreement by the Company, any Permitted Borrower or
any other Person; (E) any inability of the Company or the
Permitted Borrowers to satisfy the conditions precedent to
borrowing set forth in this Agreement on the date upon
which such participating interest is to be purchased or (F)
any other circumstance, happening or event whatsoever,
whether or not similar to any of the foregoing. If any Bank
does not make available to the Agent the amount required
pursuant to clause (i) or (ii) above, as the case may be,
the Agent shall be entitled to recover such amount on
demand from such Bank, together with interest thereon for
each day from the date of non-payment until such amount is
paid in full at the Federal Funds Effective Rate for
Advances in Dollars (other than eurodollars) and for
Eurocurrency-based Advances, the Agent's marginal cost
(including the cost of maintaining any required reserves or
deposit insurance and of any fees, penalties, overdraft
charges or other costs or expenses incurred by Agent as a
result of such failure to deliver funds hereunder) of
carrying such amount.
2.6 Prime-based Interest Payments. Interest on the unpaid
balance of all Prime-based Advances of the Revolving Credit and all Swing Line
Advances carried at the Prime-based Rate from time to time outstanding shall
accrue from the date of such Advance to the Revolving Credit Maturity Date (and
until paid), at a per annum interest rate equal to the Prime-based Rate, and
shall be payable in immediately available funds (a) with respect to Swing Line
Advances, monthly commencing on the first day of the calendar month next
succeeding the calendar month during which the initial Swing Line Advance is
made and on the first day of each month thereafter, and (b) with respect to
Advances of the Revolving Credit, quarterly commencing on the first day of the
calendar quarter next succeeding the calendar month during which the initial
Advance of the Revolving Credit is made and on the first day of each calendar
quarter thereafter. Interest accruing at the U.S. Prime-based Rate shall be
computed on the basis of a 360 day year and assessed for the actual number of
days elapsed, and in such computation effect shall be given to any change in the
interest rate resulting from a change in the U.S. Prime-based Rate on the date
of such change in the U.S. Prime-based Rate. Subject to Section 1.3 hereof,
interest accruing at the Canadian Prime-based Rate shall be computed on the
basis of a 365 day year and assessed for the actual number of days elapsed, and
in such computation effect shall be given to any change in the interest rate
resulting from a change in the Canadian Prime-based Rate on the date of such
change in the Canadian Prime-based Rate.
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2.7 Eurocurrency-based Interest Payments and Quoted Rate
Interest Payments.
(a) Interest on each Eurocurrency-based Advance of the
Revolving Credit and all Swing Line Advances carried at the Eurocurrency-based
Rate shall accrue at its Applicable Interest Rate and shall be payable in
immediately available funds on the last day of the Interest Period applicable
thereto (and, if any Interest Period shall exceed three months, then on the last
Business Day of the third month of such Interest Period, and at three month
intervals thereafter). Interest accruing at the Eurocurrency-based Rate shall be
computed on the basis of a 360 day year (except that any such Advances made in
Sterling or any other Alternative Currency with respect to which applicable law
or market custom so requires shall be calculated based on a 365 day year, or as
otherwise required under applicable law or market custom) and assessed for the
actual number of days elapsed from the first day of the Interest Period
applicable thereto to but not including the last day thereof. Interest due on a
Eurocurrency-based Advance made in an Alternative Currency shall be paid in such
Alternative Currency.
(b) Interest on each Quoted Rate Advance of the Swing
Line shall accrue at its Quoted Rate and shall be payable in immediately
available funds on the last day of the Interest Period applicable thereto.
Interest accruing at the Quoted Rate shall be computed on the basis of a 360 day
year (except that any such Advances made in Sterling, Irish Punts or any other
Alternative Currency, or in Canadian Dollars to CAC Canada with respect to which
applicable law or market custom so requires shall be calculated based on a 365
day year, or as otherwise required under applicable law or market custom) and
assessed for the actual number of days elapsed from the first day of the
Interest Period applicable thereto to, but not including the last day thereof.
(c) If the basis of accrual of interest or fees
expressed in this Agreement with respect to the National Currency Unit of a
Participating Member State shall be inconsistent with any convention or practice
in the London interbank market or other applicable interbank market, as the case
may be, for the basis of accrual of interest or fees with respect to the Euro,
such convention or practice shall replace such expressed basis, effective as of
and from the date on which such country becomes a Participating Member State;
provided that if any Eurocurrency-based Advance in the currency of such country
is outstanding immediately prior to such date, such replacement shall take
effect, with respect to such Advance, at the end of the then current Interest
Period.
2.8 Interest Payments on Conversions. Notwithstanding anything
to the contrary in the preceding sections, all accrued and unpaid interest on
any Advance converted pursuant to Section 2.3 hereof shall be due and payable in
full on the date such Advance is converted.
2.9 Interest on Default. (a) In the case of the Company or any
Permitted Borrower other than CAC Canada, in the event and so long as any Event
of Default shall exist, in the case of any Event of Default under Sections
9.1(a), 9.1(b) or 9.1(j), immediately upon the occurrence thereof, and in the
case of all other Events of Default, upon notice from the Majority Banks,
interest shall be payable daily on all Eurocurrency-based Advances of the
Revolving Credit, Swing Line Advances carried at the Eurocurrency-based Rate and
Quoted Rate Advances from time to time outstanding at a per annum rate equal to
the Applicable Interest Rate plus three percent (3%) for the remainder
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of the then existing Interest Period, if any, and at all other such times, with
respect to Prime-based Advances from time to time outstanding, at a per annum
rate equal to the Prime-based Rate plus three percent (3%); and, with respect to
Eurocurrency-based Advances thereof in any Alternative Currency from time to
time outstanding, (i) at a per annum rate calculated by the Agent, whose
determination shall be conclusive absent manifest error, on a daily basis, equal
to three percent (3%) above the interest rate per annum at which one (1) day
deposits (or, if such amount due remains unpaid for more than three (3) Business
Days, then for such other period of time as the Agent may elect which shall in
no event be longer than six (6) months) in the relevant eurocurrency in the
amount of such overdue payment due to the Agent are offered by the Agent's
Eurocurrency Lending Office for the applicable period determined as provided
above, or (ii) if at any such time such deposits are not offered by Eurocurrency
Lending Office, then at a rate per annum equal to three percent (3%) above the
rate determined by the Agent to be its aggregate marginal cost (including the
cost of maintaining any required reserves or deposit insurance) of carrying the
amount of such Eurocurrency-based Advance.
(b) Subject to applicable Canadian law, in the case of
CAC Canada, upon a default by CAC Canada in the payment of interest or any other
amount (other than principal) due under this Agreement or any of the other Loan
Documents to which CAC Canada is a party, upon written notice of Majority Banks
confirmed by written notice from Agent to CAC Canada, CAC Canada shall pay
interest on such overdue amount, both before and after judgment, at a rate per
annum equal to (i) the rate of interest payable under this Section 2.9(b) on the
principal amount to which such overdue interest relates, in the case of overdue
interest, (ii) the Canadian Prime Rate plus three percent (3%), in the case of
all such overdue amounts denominated in Canadian Dollars, and (iii) the U.S.
Prime Rate plus three percent (3%), in the case of all such other overdue
amounts denominated in Dollars (all of which other overdue amounts, for greater
certainty, shall not include overdue principal or interest in any case), in each
case, calculated on a daily basis from the date such amount becomes overdue for
so long as such amount remains overdue and on the basis of the actual number of
days elapsed in a 360 day year in the case of amounts denominated in Dollars and
a 365 day year in the case of amounts denominated in Canadian Dollars. Such
interest shall be payable upon demand by Agent. From and after the occurrence of
any Event of Default that is continuing under Section 9.1(a) or 9.1(b) or so
long as any other Event of Default shall have occurred and be continuing and
upon written notice of Majority Banks confirmed by written notice from Agent to
CAC Canada, the Letter of Credit Fees shall be increased by three percent (3%)
per annum.
2.10 Prepayment. (a) Company or the Permitted Borrowers may
prepay all or part of the outstanding balance of any Prime-based Advance(s)
under the Revolving Credit Notes at any time, provided that the amount of any
partial prepayment shall be at least One Million Dollars ($1,000,000) and, after
giving effect to any such partial prepayment, the aggregate balance of
Prime-based Advance(s) of the Revolving Credit remaining outstanding, if any,
shall be at least One Million Dollars ($1,000,000). Company or the Permitted
Borrowers may prepay all or part of any Eurocurrency-based Advance (subject to
not less than three (3) Business Days' notice to Agent) only on the last day of
the Interest Period therefor, provided that the amount of any such partial
prepayment shall be at least One Million Dollars ($1,000,000), or the equivalent
thereof in an Alternative Currency, and, after giving effect of any such partial
prepayment, the unpaid portion of
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such Advance which is refunded or converted under Section 2.3 hereof shall be at
least Five Million Dollars ($5,000,000) or the equivalent thereof in an
Alternative Currency.
(b) Company may prepay all or part of the outstanding
balance of any Swing Line Advance carried at the Prime-based Rate at any time,
provided that the amount of any partial prepayment shall be at least One Hundred
Thousand Dollars ($100,000) and, after giving effect of any such partial
prepayment, the aggregate balance of such Swing Line Advances remaining
outstanding, if any, shall be at least One Hundred Thousand Dollars ($100,000).
Company may prepay all or part of any Swing Line Advances carried at the
Eurocurrency-based Rate or Quoted Rate (subject to not less than three (3)
Business Days' notice to Swing Line Bank and Agent) only on the last day of the
Interest Period therefor, provided that the amount of any such partial payment
shall be at least One Hundred Thousand Dollars ($100,000), after giving effect
of any such partial prepayment, and the unpaid portion of such Advance which is
refunded or converted under Section 2.5(c) hereof shall be at least One Hundred
Thousand Dollars ($100,000).
(c) Any prepayment made in accordance with this Section
shall be without premium, penalty or prejudice to the right to reborrow under
the terms of this Agreement. Any other prepayment of all or any portion of any
Advance of the Revolving Credit or any Swing Line Advance shall be subject to
Section 11.1 hereof, but otherwise without premium, penalty or prejudice.
2.11 Determination, Denomination and Redenomination of
Alternative Currency Advances. Whenever, pursuant to any provision of this
Agreement:
(a) an Advance of the Revolving Credit or a Swing Line
Advance is initially funded, as opposed to any refunding or conversion thereof,
in an Alternative Currency, the amount to be advanced hereunder will be the
equivalent in such Alternative Currency of the Dollar Amount of such Advance;
(b) an existing Advance of the Revolving Credit or a
Swing Line Advance denominated in an Alternative Currency is to be refunded, in
whole or in part, with an Advance denominated in the same Alternative Currency,
the amount of the new Advance shall be continued in the amount of the
Alternative Currency so refunded;
(c) an existing Advance of the Revolving Credit
denominated in an Alternative Currency is to be converted, in whole or in part,
to an Advance denominated in another Alternative Currency, the amount of the new
Advance shall be that amount of the Alternative Currency of the new Advance
which may be purchased, using the most favorable spot exchange rate determined
by Agent to be available to it for the sale of Dollars for such other
Alternative Currency at approximately 11:00 a.m. (Detroit time) two (2) Business
Days prior to the last day of the Eurocurrency Interest Period applicable to the
existing Advance, with the Dollar Amount of the existing Advance, or portion
thereof being converted; and
(d) an existing Advance of the Revolving Credit
denominated in an Alternative
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Currency is to be converted, in whole or in part, to an Advance denominated in
Dollars, the amount of the new Advance shall be the Dollar Amount of the
existing Advance, or portion thereof being converted (determined as aforesaid).
2.12 Prime-based Advance in Absence of Election or Upon Default.
If, (a) as to any outstanding Eurocurrency-based Advance of the Revolving
Credit, or any Swing Line Advance carried at the Eurocurrency-based Rate, Agent
has not received payment on the last day of the Interest Period applicable
thereto, or does not receive a timely Request for Advance meeting the
requirements of Section 2.3 or 2.5(c) hereof with respect to the refunding or
conversion of such Advance, or (b) if any Advance denominated in an Alternative
Currency or any deemed Advance under Section 3.6 hereof in respect of a Letter
of Credit denominated in an Alternative Currency cannot be refunded or made, as
the case may be, in such Alternative Currency by virtue of Section 11.3 hereof,
or (c) subject to Section 2.9 hereof, if on such day a Default or an Event of
Default shall have occurred and be continuing, then the principal amount thereof
which is not then prepaid in the case of a Eurocurrency-based Advance shall,
absent a contrary election of the Majority Banks, be converted automatically to
a Prime-based Advance and the Agent shall thereafter promptly notify Company of
said action. If a Eurocurrency-based Advance converted hereunder is payable in
an Alternative Currency, the Prime-based Advance shall be in an amount equal to
the Dollar Amount of such Eurocurrency-based Advance at such time and the Agent
and the Banks shall use said Prime-based Advance to fund payment of the
Alternative Currency obligation, all subject to the provisions of Section 2.14
hereof. The Company and the Permitted Borrowers, if applicable, shall reimburse
the Agent and the Banks on demand for any costs incurred by the Agent or any of
the Banks, as applicable, resulting from the conversion pursuant to this Section
2.12 of Eurocurrency-based Advances payable in an Alternative Currency to
Prime-based Advances.
2.13 Revolving Credit Facility Fee. From the date hereof to the
Revolving Credit Maturity Date, the Company shall pay to the Agent, for
distribution to the Banks (as set forth below), a Revolving Credit Facility Fee
determined by multiplying the Applicable Fee Percentage per annum times the
Revolving Credit Maximum Amount then applicable under Section 2.15 hereof
(whether used or unused), computed on a daily basis. The Revolving Credit
Facility Fee shall be payable quarterly in arrears commencing July 1, 1999 (in
respect of the prior calendar quarter or portion thereof), and on the first day
of each calendar quarter thereafter and on the Revolving Credit Maturity Date,
and shall be computed on the basis of a year of three hundred sixty (360) days
and assessed for the actual number of days elapsed. Whenever any payment of the
Revolving Credit Facility Fee shall be due on a day which is not a Business Day,
the date for payment thereof shall be extended to the next Business Day. Upon
receipt of such payment Agent shall make prompt payment to each Bank of its
share of the Revolving Credit Facility Fee based upon its respective Percentage.
2.14 Currency Appreciation; Sublimits; Mandatory Reduction of
Indebtedness. (a) If at any time and for any reason, the aggregate principal
amount (tested in the manner set forth below) of all Advances of the Revolving
Credit hereunder to the Company and to the Permitted Borrowers made in Dollars
and the aggregate Current Dollar Equivalent of all Advances hereunder to the
Company and to the Permitted Borrowers in any Alternative Currency as of such
time, plus the
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aggregate principal amount of Swing Line Advances outstanding hereunder as of
such time (determined as aforesaid), plus the aggregate undrawn portion of any
Letters of Credit which shall be outstanding (based on the Dollar Amount of the
undrawn portion of any Letters of Credit denominated in Dollars and the Current
Dollar Equivalent of the undrawn portion of any Letters of Credit denominated in
any Alternative Currency), plus the face amount of all Letters of Credit
requested but not yet issued (determined as aforesaid), plus the unreimbursed
amount of any draws under any Letters of Credit (using the Current Dollar
Equivalent thereof for any Letters of Credit denominated in any Alternative
Currency), as of such time exceeds the Revolving Credit Maximum Amount (as used
in this clause (a), the "Excess"), the Company and the Permitted Borrowers
shall:
(i) immediately repay that portion of such Indebtedness
then carried as a Prime-based Advance, if any, by the Dollar
Amount of such Excess, and/or reduce any pending request for an
Advance in Dollars on such day by the Dollar Amount of the
Excess, to the extent thereof; and
(ii) on the last day of each Interest Period of any
Eurocurrency-based Advance outstanding as of such time, until the
necessary reductions of Indebtedness under this Section 2.14(a)
have been fully made, repay the Indebtedness carried in such
Advances and/or reduce any requests for refunding or conversion
of such Advances submitted (or to be submitted) by the Company or
the applicable Permitted Borrower in respect of such Advances, by
the amount in Dollars or the applicable Alternative Currency, as
the case may be, of the Excess, to the extent thereof.
Compliance with this Section 2.14(a) shall be tested on a daily or other basis
satisfactory to Agent in its sole discretion, provided that, so long as no
Default or Event of Default has occurred and is continuing, at any time while
the aggregate Advances of the Revolving Credit available to be borrowed
hereunder (based on the Revolving Credit Maximum Amount then in effect) equal or
exceed Five Million Dollars ($5,000,000), compliance with this Section 2.14(a)
shall be tested as of the last day of each calendar quarter. Notwithstanding the
foregoing, upon the occurrence and during the continuance of any Default or
Event of Default, or if any Excess remains after recalculating said Excess based
on ninety-five percent (95%) of the Current Dollar Equivalent of any Advances or
Letters of Credit denominated in Alternative Currencies (and one hundred percent
(100%) of any Advances or Letters of Credit denominated in Dollars), Company and
the Permitted Borrowers shall be obligated immediately to reduce the foregoing
Indebtedness hereunder by an amount sufficient to eliminate such Excess.
(b) If at any time and for any reason with respect to:
(X) CAC UK, the aggregate principal amount (tested in
the manner set forth below) of all Advances of the Revolving Credit
and of the Swing Line outstanding hereunder to the Permitted Borrowers
(including CAC UK), plus the aggregate undrawn portion of any Letters
of Credit, plus the face amount of any Letters of Credit requested but
not yet issued, plus the unreimbursed amount of any draws under any
Letters of Credit to or for the account of the Permitted Borrowers
(including CAC UK), which Advances and Letters of Credit are
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made or issued, or to be made or issued, in Dollars and ninety percent
(90%) of the aggregate Current Dollar Equivalent of all such Advances
and Letters of Credit (including unreimbursed draws) hereunder for the
account of the Permitted Borrowers (including CAC UK) in any
Alternative Currency as of such time, exceeds the Aggregate Sublimit,
or
(Y) either CAC Canada or CAC Ireland, as the case may
be, the aggregate principal amount (tested in the manner set forth
below) of all Advances of the Revolving Credit and of the Swing Line
outstanding hereunder to such Permitted Borrower, plus the aggregate
undrawn portion of any Letters of Credit, the face amount of any
Letters of Credit requested but not yet issued, plus the unreimbursed
amount of any draws under any Letters of Credit to or for the account
of such Permitted Borrower, which Advances and Letters of Credit are
made or issued in Dollars and ninety percent (90%) of the aggregate
Current Dollar Equivalent of all such Advances and Letters of Credit
(including unreimbursed draws) hereunder for the account of such
Permitted Borrower in any Alternative Currency as of such time,
exceeds the Canadian Sublimit or the Irish Sublimit, as the case may
be,
then in each case, such Permitted Borrower shall (i) immediately repay that
portion of the Indebtedness outstanding to such Permitted Borrower then carried
as a Prime-based Advance, if any, by the Dollar Amount of such excess, and/or
reduce on such day any pending request for an Advance in Dollars submitted by
such Permitted Borrower by the Dollar Amount of such excess, to the extent
thereof; and (ii) on the last day of each Interest Period of any
Eurocurrency-based Advance outstanding to such Permitted Borrower as of such
time, until the necessary reductions of Indebtedness under this Section 2.14(b)
have been fully made, repay such Indebtedness carried in such Advances and/or
reduce any requests for refunding or conversion of such Advances submitted (or
to be submitted) by such Permitted Borrower in respect of such Advances, by the
amount in Dollars or the applicable Alternative Currency, as the case may be, of
such excess, to the extent thereof.
Provided that no Default or Event of Default has occurred and is continuing,
each Permitted Borrower's compliance with this Section 2.14(b) shall be tested
as of the last day of each calendar quarter or, upon the written request of the
Company from time to time, as of the last day of each calendar month, provided
the Company furnishes Agent with current monthly financial statements complying
with the requirements set forth in subparagraphs (i) and (ii) of Section 7.3(c)
hereof. Upon the occurrence and during the continuance of any Default or Event
of Default, compliance with this Section 2.14(b) shall be tested on a daily or
other basis satisfactory to Agent in its sole discretion.
2.15 Optional Reduction or Termination of Revolving Credit
Maximum Amount. Provided that no Default or Event of Default has occurred and is
continuing, the Company may upon at least five Business Days' prior written
notice to the Agent, permanently reduce the Revolving Credit Maximum Amount in
whole at any time, or in part from time to time, without premium or penalty,
provided that: (i) each partial reduction of the Revolving Credit Maximum Amount
shall be in an aggregate amount equal to Ten Million Dollars ($10,000,000) or a
larger integral multiple of One Million Dollars ($1,000,000); (ii) each
reduction shall be accompanied by the payment of
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the Revolving Credit Facility Fee, if any, accrued to the date of such
reduction; (iii) the Company or any Permitted Borrower, as applicable, shall
prepay in accordance with the terms hereof the amount, if any, by which the
aggregate unpaid principal amount of Advances (using the Current Dollar
Equivalent of any such Advance outstanding in any Alternative Currency) of the
Revolving Credit, plus the aggregate principal amount of Swing Line Advances
outstanding hereunder (using the Current Dollar Equivalent of any such Advance
outstanding in an Alternative Currency), plus the aggregate undrawn amount of
outstanding Letters of Credit (using the Current Dollar Equivalent thereof for
any Letters of Credit denominated in any Alternative Currency), plus the
unreimbursed amount of any draws under any Letters of Credit (determined as
aforesaid), exceeds the amount of the Revolving Credit Maximum Amount as so
reduced, together with interest thereon to the date of prepayment; (iv) if the
termination or reduction of the Revolving Credit Maximum Amount requires the
prepayment of a Eurocurrency-based Advance or a Quoted Rate Advance, the
termination or reduction may be made only on the last Business Day of the then
current Interest Period applicable to such Eurocurrency-based Advance or such
Quoted Rate Advance; and (v) no reduction shall reduce the Revolving Credit
Maximum Amount to an amount which is less than the aggregate undrawn amount of
any Letters of Credit outstanding at such time. Reductions of the Revolving
Credit Maximum Amount and any accompanying prepayments of the Revolving Credit
Notes shall be distributed by Agent to each Bank in accordance with such Bank's
Percentage thereof, and will not be available for reinstatement by or readvance
to the Company or any Permitted Borrower, and any accompanying prepayments of
the Swing Line Note shall be distributed by Agent to the Swing Line Bank and
will not be available for reinstatement by or readvance to the Company. Any
reductions of the Revolving Credit Maximum Amount hereunder shall reduce each
Bank's portion thereof proportionately (based on the applicable Percentages),
and shall be permanent and irrevocable. Any payments made pursuant to this
Section shall be applied first to outstanding Prime-based Advances under the
Revolving Credit, next to Swing Line Advances carried at the Prime-based Rate,
next to Eurocurrency-based Advances of the Revolving Credit and then to Swing
Line Advances carried at the Eurocurrency-based Rate or the Quoted Rate.
2.16 Extension of Revolving Credit Maturity Date. Provided that
no Default or Event of Default has occurred and is continuing, Company may, by
written notice to Agent and each Bank (which notice shall be irrevocable and
which shall not be deemed effective unless actually received by Agent and each
Bank), prior to April 15, but not before March 15, of each year beginning in
2000 request that the Banks extend the then applicable Revolving Credit Maturity
Date to a date that is 364 days later than the Revolving Credit Maturity Date
then in effect (each such request, a "Request").
Each Bank shall, not later than thirty (30) calendar days following the
date of its receipt of a Request, give written notice to the Agent stating
whether such Bank is willing to extend the Revolving Credit Maturity Date as
requested. If Agent has received the aforesaid written approvals of such Request
from each of the Banks, then, effective on (but not before) such Revolving
Credit Maturity Date (so long as no Default or Event of Default has occurred and
is continuing and none of the Banks has withdrawn its approval, in writing,
prior thereto), the Revolving Credit Maturity Date shall be so extended for an
additional period of 364 days, the term Revolving Credit Maturity Date shall
mean such extended date and Agent shall promptly notify the Company and the
Banks
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that such extension has occurred. If (i) any Bank gives the Agent written
notice that it is unwilling to extend the Revolving Credit Maturity Date as
requested or (ii) any Bank fails to provide written approval to Agent of the
Request within thirty (30) calendar days of the date of Agent's receipt of such
Request, or (iii) withdraws its approval in writing prior to the Revolving
Credit Maturity Date then in effect then (x) the Banks shall be deemed to have
declined to extend the Revolving Credit Maturity Date, (y) the then-current
Revolving Credit Maturity Date shall remain in effect (with no further right on
the part of Company, to request extensions thereof under this Section 2.16) and
(z) the commitments of the Banks to make Advances of the Revolving Credit
hereunder shall terminate on the Revolving Credit Maturity Date then in effect,
and Agent shall promptly notify Company and the Banks thereof."
2.17 Revolving Credit as Renewal; Application of Advances. The
Revolving Credit Notes issued by the Company and the Permitted Borrowers
hereunder shall constitute renewal and replacement evidence of all present
Indebtedness of such parties outstanding under the Revolving Credit Notes issued
under the Prior Credit Agreement. Advances of the Revolving Credit (including
Swing Line Advances) shall be available, subject to the terms hereof, to fund
working capital needs or other general corporate purposes of the Company and the
Permitted Borrowers.
2.18 Optional Increase in Revolving Credit Maximum Amount.
Provided that no Default or Event of Default has occurred and is continuing, and
provided that the Company has not previously elected to terminate the Revolving
Credit Maximum Amount under Section 2.15 hereof, the Company may request that
the Revolving Credit Maximum Amount be increased in an aggregate amount (for all
such Requests under this Section 2.18) not to exceed the Revolving Credit
Optional Increase, subject, in each case, to Section 11.1 hereof and to the
satisfaction concurrently with or prior to the date of each such request of the
following conditions:
(a) the Company shall have delivered to the Agent not
less than thirty (30) days prior to the Revolving Credit Maturity Date then in
effect a written request for such increase, specifying the amount of Revolving
Credit Optional Increase thereby requested (each such request, a "Request for
Increase"); provided, however that in the event the Company has previously
delivered a Request for Increase pursuant to this Section 2.18, the Company may
not deliver a subsequent Request for Increase until all the conditions to
effectiveness of such first Request for Increase have been fully satisfied
hereunder (or such Request for Increase has been withdrawn); and provided
further that the Company may make no more than two Requests for Increase in any
calendar year;
(b) a lender or lenders meeting the requirements of
Section 13.8(c) hereof and acceptable to the Company, Syndication Agent and the
Agent (including, for the purposes of this Section 2.18, any existing Bank which
agrees to increase its commitment hereunder, the "New Bank(s)") shall have
become a party to this Agreement by executing and delivering a New Bank Addendum
for a minimum amount (including for the purposes of this Section 2.18, the
existing commitment of any existing Bank) for each such New Bank of Ten Million
Dollars ($10,000,000) and an aggregate amount for all such New Banks of that
portion of the Revolving Credit Optional Increase, taking into account the
amount of any prior increase in the Revolving Credit Maximum Amount (pursuant to
this Section 2.18), covered by the applicable Request, provided, however that
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each New Bank shall remit to the Agent funds in an amount equal to its
Percentage (after giving effect to this Section 2.18) of all Advances of the
Revolving Credit then outstanding, such sums to be reallocated among and paid to
the existing Banks based upon the new Percentages as determined below;
(c) the Company (i) shall have paid to the Agent for
distribution to the existing Banks, as applicable, all interest, fees (including
the Revolving Credit Facility Fee and the Letter of Credit Fees) and other
amounts, if any, accrued to the effective date of such increase and any breakage
fees attributable to the reduction (prior to the last day of the applicable
Interest Period) of any outstanding Eurocurrency-based Advances, calculated on
the basis set forth in Section 11.1 hereof as though Company has prepaid such
Advances and (ii) shall have paid to each New Bank a special letter of credit
fee on the Letters of Credit outstanding on the effective date of such increase,
calculated on the basis of the Letter of Credit Fees which would be applicable
to such Letters of Credit if issued on the date of such increase, for the period
from the effective date of such increase to the expiration date of such Letters
of Credit;
(d) the Company and each of the Permitted Borrowers
shall have executed and delivered to the Agent new Revolving Credit Notes
payable to each of the New Banks in the face amount of each such New Bank's
Percentage of the Revolving Credit Maximum Amount (after giving effect to this
Section 2.18) and, if applicable, renewal and replacement Revolving Credit Notes
payable to each of the existing Banks in the face amount of each such Bank's
Percentage of the Revolving Credit Maximum Amount (after giving effect to this
Section 2.18), each of such Revolving Credit Notes to be substantially in the
form of Exhibit C-1 or C-2 to the Credit Agreement, as applicable, and dated as
of the effective date of such increase (with appropriate insertions relevant to
such Notes and acceptable to the applicable Bank, including the New Banks);
(e) the representations and warranties made by Company,
the Permitted Borrower, each Guarantor or any other party to any of the Loan
Documents (excluding the Agent and Banks) in this Agreement or any of the other
Loan Documents, and the representations and warranties of any of the foregoing
which are contained in any certificate, document or financial or other statement
furnished at any time hereunder or thereunder or in connection herewith or
therewith shall have been true and correct in all material respects when made
and shall be true and correct in all material respects on and as of the
effective date of such increase; and (ii) no Default or Event of Default shall
have occurred and be continuing as of such date; and
(f) such other amendments, acknowledgments, consents,
documents, instruments, any registrations, if any, shall have been executed and
delivered and/or obtained by Company as required by Agent or the Majority Banks,
in their reasonable discretion.
Promptly on or after the date on which all of the
conditions to such Request for Increase set forth above have been satisfied,
Agent shall notify the Company and each of the Banks of the amount of the
Revolving Credit Maximum Amount as increased pursuant this Section 2.18 and the
date on which such increase has become effective and shall prepare and
distribute to Company and each of the Banks (including the New Banks) a revised
Exhibit D to the Credit
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Agreement setting forth the applicable new Percentages of the Banks (including
the New Bank(s), taking into account such increase and assignments (if any).
3. LETTERS OF CREDIT.
3.1 Letters of Credit. Subject to the terms and conditions of
this Agreement, Agent may through the Issuing Office, at any time and from time
to time from and after the date hereof until thirty (30) days prior to the
Revolving Credit Maturity Date, upon the written request of an Account Party
accompanied by a duly executed Letter of Credit Agreement and such other
documentation related to the requested Letter of Credit as the Agent may
require, issue standby or documentary Letters of Credit for the account of such
Account Party, in an aggregate amount for all Letters of Credit issued hereunder
at any one time outstanding not to exceed the Letter of Credit Maximum Amount.
Each Letter of Credit shall be in a minimum face amount of One Hundred Thousand
Dollars ($100,000) and shall have an expiration date not later than one (1) year
from its date of issuance; provided that each Letter of Credit (including any
renewal thereof) shall expire not later than ten (10) Business Days prior to the
Revolving Credit Maturity Date in effect on the date of issuance thereof. The
submission of all applications in respect of and the issuance of each Letter of
Credit hereunder shall be subject in all respects to the Uniform Customs and
Practices for Documentary Credits of the International Chamber of Commerce, 1993
Revisions, ICC Publication No. 500 or, if applicable, ISP 98, and any successor
documentation thereto, as selected by the Issuing Lender. In the event of any
conflict between this Agreement and any Letter of Credit Document other than any
Letter of Credit, this Agreement shall control.
3.2 Conditions to Issuance. No Letter of Credit shall be
issued at the request and for the account of any Account Party unless, as of the
date of issuance of such Letter of Credit:
(a) the face amount of the Letter of Credit requested
(based on the Dollar Amount of the undrawn portion of any Letter of Credit
denominated in Dollars and the Current Dollar Equivalent of the undrawn portion
of any Letter of Credit denominated in any Alternative Currency), plus the face
amount of all other Letters of Credit of all Account Parties requested on such
date, plus the aggregate undrawn portion of all other Letters of Credit of all
Account Parties as of such date, plus the face amount of all Letters of Credit
of all Account Parties requested but not yet issued as of such date, plus the
unreimbursed amount of any draws under Letters of Credit of all Account Parties
(in each case, determined as aforesaid), does not exceed the Letter of Credit
Maximum Amount;
(b) the face amount of the Letter of Credit requested,
plus the face amount of all other Letters of Credit of all Account Parties
requested on such date, plus the aggregate undrawn portion of all other Letters
of Credit of all Account Parties as of such date, plus the face amount of all
Letters of Credit of all Account Parties requested but not yet issued as of such
date, plus the unreimbursed amount of any draws under Letters of Credit of all
Account Parties as of such date, (in each case determined as aforesaid), plus
the aggregate principal amount of all Advances outstanding under the Revolving
Credit Notes and the Swing Line Notes, including any Advances requested to be
made on such date (determined on the basis of the Current Dollar Equivalent of
any
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Advances denominated in any Alternative Currency, and the Dollar Amount of
any Advances in Dollars), do not exceed the then applicable Revolving Credit
Maximum Amount;
(c) whenever the Account Party is a Permitted Borrower,
(X) in the case of CAC UK, the face amount of the
Letter of Credit requested by CAC UK, plus the face amount
of all other Letters of Credit requested by CAC UK or any
other Permitted Borrower on such date, plus the aggregate
undrawn portion of all other outstanding Letters of Credit
issued for the account of the Permitted Borrowers,
including CAC UK (in each case determined as aforesaid),
plus the unreimbursed amount of any draws under Letters of
Credit (using the Current Dollar Equivalent thereof for any
such Letters of Credit denominated in any Alternative
Currency) issued for the account of the Permitted Borrowers
(including CAC UK), plus the aggregate outstanding
principal amount of all Advances of the Revolving Credit
and of the Swing Line to the Permitted Borrowers (including
CAC UK), including any Advances requested to be made on
such date (in each case determined as aforesaid), do not
exceed the Aggregate Sublimit; and
(Y) in the case of either CAC Canada or CAC Ireland,
the face amount of the Letter of Credit requested by such
Permitted Borrower, plus the face amount of all other
Letters of Credit requested by such Permitted Borrower on
such date, plus the aggregate undrawn portion of all other
outstanding Letters of Credit issued for the account of
such Permitted Borrower, (in each case determined as
aforesaid), plus the face amount of all other Letters of
Credit requested by such Permitted Borrower but not yet
issued, plus the unreimbursed amount of any draws under
Letters of Credit (using the Current Dollar Equivalent
thereof for any such Letters of Credit denominated in any
Alternative Currency) issued for the account of such
Permitted Borrower, plus the aggregate principal amount of
all Advances of the Revolving Credit and of the Swing Line
to such Permitted Borrower, including any Advances
requested to be made on such date (in each case determined
as aforesaid), do not exceed the Canadian Sublimit or the
Irish Sublimit, as the case may be;
(d) the obligations of Company and the Permitted
Borrowers set forth in this Agreement and the other Loan Documents are valid,
binding and enforceable obligations of Company and Permitted Borrowers and the
valid, binding and enforceable nature of this Agreement and the other Loan
Documents has not been disputed by Company or the Permitted Borrowers;
(e) the representations and warranties contained in this
Agreement and the other Loan Documents are true in all material respects as if
made on such date, and both immediately before and immediately after issuance of
the Letter of Credit requested, no Default or Event of Default exists;
(f) the execution of the Letter of Credit Agreement with
respect to the Letter of Credit requested will not violate the terms and
conditions of any contract, agreement or other
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borrowing of Company or the Permitted Borrowers;
(g) the Account Party requesting the Letter of Credit
shall have delivered to Agent at its Issuing Office, not less than five (5)
Business Days prior to the requested date for issuance (or such shorter time as
the Agent, in its sole discretion, may permit), the Letter of Credit Agreement
related thereto, together with such other documents and materials as may be
required pursuant to the terms thereof, and the terms of the proposed Letter of
Credit shall be satisfactory to Agent and its Issuing Office;
(h) no order, judgment or decree of any court,
arbitrator or governmental authority shall purport by its terms to enjoin or
restrain Agent from issuing the Letter of Credit requested, or any Bank from
taking an assignment of its Percentage thereof pursuant to Section 3.6 hereof,
and no law, rule, regulation, request or directive (whether or not having the
force of law) shall prohibit or request that Agent refrain from issuing, or any
Bank refrain from taking an assignment of its Percentage of, the Letter of
Credit requested or letters of credit generally;
(i) there shall have been no introduction of or change
in the interpretation of any law or regulation that would make it unlawful or
unduly burdensome for the Agent to issue or any Bank to take an assignment of
its Percentage of the requested Letter of Credit, no suspension of or material
limitation on trading on the New York Stock Exchange or any other national
securities exchange, no declaration of a general banking moratorium by banking
authorities in the United States, Michigan or the respective jurisdictions in
which the Banks, the applicable Account Party and the beneficiary of the
requested Letter of Credit are located, and no establishment of any new
restrictions on transactions involving letters of credit or on banks materially
affecting the extension of credit by banks; and
(j) Agent shall have received the issuance fees
required in connection with the issuance of such Letter of Credit pursuant to
Section 3.5 hereof.
Each Letter of Credit Agreement submitted to Agent pursuant hereto shall
constitute the certification by the Company and the Account Party of the matters
set forth in Section 3.2 (a) through (f) hereof. The Agent shall be entitled to
rely on such certification without any duty of inquiry.
3.3 Notice. Agent shall give notice, substantially in the form
attached as Exhibit I, to each Bank of the issuance of each Letter of Credit,
not later than three (3) Business Days after issuance of each Letter of Credit,
specifying the amount thereof and the amount of such Bank's Percentage thereof.
3.4 Letter of Credit Fees. Company shall pay to the Agent for
distribution to the Banks in accordance with their Percentages, Letter of Credit
Fees as follows:
(a) A per annum Letter of Credit Fee with respect to the
undrawn amount of each Letter of Credit issued pursuant hereto (based on the
Dollar Amount of any Letters of Credit denominated in Dollars and the Current
Dollar Equivalent of any Letters of Credit denominated in
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any Alternative Currency) in the amount of the Applicable Fee Percentage
(determined with reference to Schedule 1.1 to this Agreement), inclusive of the
facing fee of one-eighth of one percentage point (1/8%) per annum on the face
amount thereof to be retained by Agent under Section 3.5 hereof.
(b) If any change in any law or regulation or in the
interpretation thereof by any court or administrative or governmental authority
charged with the administration thereof shall either (i) impose, modify or cause
to be deemed applicable any reserve, special deposit, limitation or similar
requirement against letters of credit issued or participated in by, or assets
held by, or deposits in or for the account of, Agent or any Bank or (ii) impose
on Agent or any Bank any other condition regarding this Agreement or the Letters
of Credit, and the result of any event referred to in clause (i) or (ii) above
shall be to increase the cost or expense to Agent or such Bank of issuing or
maintaining or participating in any of the Letters of Credit (which increase in
cost or expense shall be determined by the Agent's or such Bank's reasonable
allocation of the aggregate of such cost increases and expense resulting from
such events), then, upon demand by the Agent or such Bank, as the case may be,
the Company shall, within ten days following demand for payment, pay to Agent or
such Bank, as the case may be, from time to time as specified by the Agent or
such Bank, additional amounts which shall be sufficient to compensate the Agent
or such Bank for such increased cost and expense, together with interest on each
such amount from ten days after the date demanded until payment in full thereof
at the Prime-based Rate. A certificate as to such increased cost or expense
incurred by the Agent or such Bank, as the case may be, as a result of any event
mentioned in clause (i) or (ii) above, submitted to the Company, shall be
conclusive evidence, absent manifest error, as to the amount thereof.
(c) All payments by the Company or the Permitted Borrowers to the
Agent or the Banks under this Section 3.4 shall be made in Dollars and in
immediately available funds at the Issuing Office or such other office of the
Agent as may be designated from time to time by written notice to the Company
and the Permitted Borrowers by the Agent. The fees described in clause (a) above
shall be nonrefundable under all circumstances, shall be payable semi-annually
in advance (or such lesser period, if applicable, for Letters of Credit issued
with stated expiration dates of less than six months) upon the issuance of each
such Letter of Credit, and shall be calculated on the basis of a 360 day year
and assessed for the actual number of days from the date of the issuance thereof
to the stated expiration thereof.
3.5 Issuance Fees. In connection with the Letters of Credit, and in
addition to the Letter of Credit Fees (including a letter of credit facing fee
of one-eighth of one percentage point (1/8%) to be retained by Agent for its own
account), the Company and the applicable Account Party shall pay, for the sole
account of the Agent, standard documentation, administration, payment and
cancellation charges assessed by Agent or the Issuing Office, at the times, in
the amounts and on the terms set forth or to be set forth from time to time in
the standard fee schedule of the Issuing Office in effect from time to time.
3.6 Draws and Demands for Payment Under Letters of Credit.
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(a) The Company and each applicable Account Party agree to pay to
the Agent, on the day on which the Agent shall honor a draft or other demand for
payment presented or made under any Letter of Credit, an amount equal to the
amount paid by the Agent in respect of such draft or other demand under such
Letter of Credit and all expenses paid or incurred by the Agent relative
thereto. Unless the Company or the applicable Account Party shall have made such
payment to the Agent on such day, upon each such payment by the Agent, the Agent
shall be deemed to have disbursed to the Company or the applicable Account
Party, and the Company or the applicable Account Party shall be deemed to have
elected to substitute for its reimbursement obligation, with respect to Letters
of Credit denominated in Dollars, a Prime-based Advance of the Revolving Credit
and, with respect to Letters of Credit denominated in any Alternative Currency,
a Eurocurrency-based Advance of the Revolving Credit in the applicable
Alternative Currency with an Interest Period, commencing three (3) Business Days
following the date of Agent's payment pursuant to the applicable Letter of
Credit, of one month (or, if unavailable, such other Interest Period as selected
by Agent in its sole discretion), in each case for the account of the Banks in
an amount equal to the amount so paid by the Agent in respect of such draft or
other demand under such Letter of Credit. Such Prime-based Advance or
Eurocurrency-based Advance shall be deemed disbursed notwithstanding any failure
to satisfy any conditions for disbursement of any Advance set forth in Section 3
hereof and, to the extent of the Advances so disbursed, the reimbursement
obligation of the Company or the applicable Account Party under this Section 3.6
shall be deemed satisfied, provided that, with respect to any such
Eurocurrency-based Advance deemed to have been made hereunder, Company or the
applicable Permitted Borrower shall also be obligated to pay to the Agent, for
Agent's sole account, interest on the aggregate amount paid by the Agent under
the applicable draft or other demand for payment at Agent's aggregate marginal
cost (including the cost of maintaining any required reserves or deposit
insurance and of any fees, penalties, overdraft charges or other costs or
expenses incurred by Agent as a result of such failure to deliver funds
hereunder) of carrying such amount plus the Applicable Margin then in effect for
Eurocurrency-based Advances, from the date of Agent's payment pursuant to any
Letter of Credit to the date of the commencement of the Interest Period for the
applicable Eurocurrency-based Advance deemed to have been made, as aforesaid,
such interest (the "Gap Interest") to be due and payable on the last day of the
initial Interest Period established for such deemed Advance.
(b) If the Agent shall honor a draft or other demand for payment
presented or made under any Letter of Credit, the Agent shall provide notice
thereof to the Company and the applicable Account Party on the date such draft
or demand is honored, and to each Bank on such date unless the Company or
applicable Account Party shall have satisfied its reimbursement obligation under
Section 3.6(a) hereof by payment to the Agent on such date. The Agent shall
further use reasonable efforts to provide notice to the Company or applicable
Account Party prior to honoring any such draft or other demand for payment, but
such notice, or the failure to provide such notice, shall not affect the rights
or obligations of the Agent with respect to any Letter of Credit or the rights
and obligations of the parties hereto, including without limitation the
obligations of the Company or applicable Account Party under Section 3.6(a)
hereof.
(c) Upon issuance by the Agent of each Letter of Credit hereunder
(except in respect of any Letter of Credit issued after Agent has obtained
actual knowledge that an Event of
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Default has occurred and is continuing), each Bank shall automatically acquire a
pro rata participation interest in such Letter of Credit and each related Letter
of Credit Payment based on its respective Percentage. Each Bank, on the date a
draft or demand under any Letter of Credit is honored (or the next succeeding
Business Day if the notice required to be given by Agent to the Banks under
Section 3.6(b) hereof is not given to the Banks prior to 2:00 p.m. (Detroit
time) on such date of draft or demand) or three (3) Business Days thereafter in
respect of draws or demands under Letters of Credit issued in any Alternative
Currency, shall make its Percentage of the amount paid by the Agent, and not
reimbursed by the Company or applicable Account Party on such day, available in
the applicable Permitted Currency and in immediately available funds at the
principal office of the Agent for the account of the Agent. If and to the extent
such Bank shall not have made such pro rata portion available to the Agent, such
Bank, the Company and the applicable Account Party severally agree to pay to the
Agent forthwith on demand such amount together with interest thereon, for each
day from the date such amount was paid by the Agent until such amount is so made
available to the Agent at a per annum rate equal to the interest rate applicable
during such period to the related Advance deemed to have been disbursed under
Section 3.6(a) in respect of the reimbursement obligation of the Company and the
applicable Account Party, as set forth in Section 2.4(c)(i) or 2.4(c)(ii)
hereof, as the case may be. If such Bank shall pay such amount to the Agent
together with such interest, such amount so paid shall be deemed to constitute
an Advance by such Bank disbursed in respect of the reimbursement obligation of
the Company or applicable Account Party under Section 3.6(a) hereof for purposes
of this Agreement, effective as of the dates applicable under said Section
3.6(a). The failure of any Bank to make its pro rata portion of any such amount
paid by the Agent available to the Agent shall not relieve any other Bank of its
obligation to make available its pro rata portion of such amount, but no Bank
shall be responsible for failure of any other Bank to make such pro rata portion
available to the Agent. Furthermore, in the event of the failure by Company or
the Permitted Borrowers to pay the Gap Interest required under the proviso to
Section 3.6(a) hereof, each of the Banks shall pay to Agent, within one Business
Day following receipt from Agent of written request therefor, its pro rata
portion of said Gap Interest, excluding any portion thereof attributable to the
Applicable Margin.
(d) Nothing in this Agreement shall be construed to require or
authorize any Bank to issue any Letter of Credit, it being recognized that the
Agent shall be the sole issuer of Letters of Credit under this Agreement.
3.7 Obligations Irrevocable. The obligations of Company and any
Account Party to make payments to Agent or the Banks with respect to Letter of
Credit Obligations under Section 3.6 hereof, shall be unconditional and
irrevocable and not subject to any qualification or exception whatsoever,
including, without limitation:
(a) Any lack of validity or enforceability of any Letter of Credit
or any documentation relating to any Letter of Credit or to any transaction
related in any way to any Letter of Credit (the "Letter of Credit Documents");
(b) Any amendment, modification, waiver, consent, or any
substitution, exchange or release of or failure to perfect any interest in
collateral or security, with respect to or under any
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of the Letter of Credit Documents;
(c) The existence of any claim, setoff, defense or other right
which the Company or any Account Party may have at any time against any
beneficiary or any transferee of any Letter of Credit (or any persons or
entities for whom any such beneficiary or any such transferee may be acting),
the Agent or any Bank or any other person or entity, whether in connection with
any of the Letter of Credit Documents, the transactions contemplated herein or
therein or any unrelated transactions;
(d) Any draft or other statement or document presented under any
Letter of Credit proving to be forged, fraudulent, invalid or insufficient in
any respect or any statement therein being untrue or inaccurate in any respect;
(e) Payment by the Agent to the beneficiary under any Letter of
Credit against presentation of documents which do not comply with the terms of
such Letter of Credit, including failure of any documents to bear any reference
or adequate reference to such Letter of Credit;
(f) Any failure, omission, delay or lack on the part of the Agent
or any Bank or any party to any of the Letter of Credit Documents to enforce,
assert or exercise any right, power or remedy conferred upon the Agent, any Bank
or any such party under this Agreement, any of the other Loan Documents or any
of the Letter of Credit Documents, or any other acts or omissions on the part of
the Agent, any Bank or any such party; or
(g) Any other event or circumstance that would, in the absence of
this Section 3.7, result in the release or discharge by operation of law or
otherwise of Company or any Account Party from the performance or observance of
any obligation, covenant or agreement contained in Section 3.6 hereof.
No setoff, counterclaim, reduction or diminution of any obligation or any
defense of any kind or nature which Company or any Account Party has or may have
against the beneficiary of any Letter of Credit shall be available hereunder to
Company or any Account Party against the Agent or any Bank. Nothing contained in
this Section 3.7 shall be deemed to prevent Company or the Account Parties,
after satisfaction in full of the absolute and unconditional obligations of
Company and the Account Parties hereunder, from asserting in a separate action
any claim, defense, set off or other right which they (or any of them) may have
against Agent or any Bank.
3.8 Risk Under Letters of Credit. (a) In the administration and
handling of Letters of Credit and any security therefor, or any documents or
instruments given in connection therewith, Agent shall have the sole right to
take or refrain from taking any and all actions under or upon the Letters of
Credit.
(b) Subject to other terms and conditions of this Agreement, Agent
shall issue the Letters of Credit and shall hold the documents related thereto
in its own name and shall make all collections thereunder and otherwise
administer the Letters of Credit in accordance with Agent's
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regularly established practices and procedures and, except pursuant to Section
12.3 hereof, Agent will have no further obligation with respect thereto. In the
administration of Letters of Credit, Agent shall not be liable for any action
taken or omitted on the advice of counsel, accountants, appraisers or other
experts selected by Agent with due care and Agent may rely upon any notice,
communication, certificate or other statement from Company, any Account Party,
beneficiaries of Letters of Credit, or any other Person which Agent believes to
be authentic. Agent will, upon request, furnish the Banks with copies of Letter
of Credit Agreements, Letters of Credit and documents related thereto.
(c) In connection with the issuance and administration of Letters
of Credit and the assignments hereunder, Agent makes no representation and shall
have no responsibility with respect to (i) the obligations of Company or any
Account Party or the validity, sufficiency or enforceability of any document or
instrument given in connection therewith, or the taking of any action with
respect to same, (ii) the financial condition of, any representations made by,
or any act or omission of, Company, the applicable Account Party or any other
Person, or (iii) any failure or delay in exercising any rights or powers
possessed by Agent in its capacity as issuer of Letters of Credit in the absence
of its gross negligence or willful misconduct. Each of the Banks expressly
acknowledges that they have made and will continue to make their own evaluations
of Company's and the Account Parties' creditworthiness without reliance on any
representation of Agent or Agent's officers, agents and employees.
(d) If at any time Agent shall recover any part of any
unreimbursed amount for any draw or other demand for payment under a Letter of
Credit, or any interest thereon, Agent shall receive same for the pro rata
benefit of the Banks in accordance with their respective Percentages and shall
promptly deliver to each Bank its share thereof, less such Bank's pro rata share
of the costs of such recovery, including court costs and attorney's fees. If at
any time any Bank shall receive from any source whatsoever any payment on any
such unreimbursed amount or interest thereon in excess of such Bank's Percentage
of such payment, such Bank will promptly pay over such excess to Agent, for
redistribution in accordance with this Agreement.
3.9 Indemnification. (a) The Company and each Account Party hereby
indemnifies and agrees to hold harmless the Banks and the Agent, and their
respective officers, directors, employees and agents, from and against any and
all claims, damages, losses, liabilities, costs or expenses of any kind or
nature whatsoever which the Banks or the Agent or any such person may incur or
which may be claimed against any of them by reason of or in connection with any
Letter of Credit, and neither any Bank nor the Agent or any of their respective
officers, directors, employees or agents shall be liable or responsible for: (i)
the use which may be made of any Letter of Credit or for any acts or omissions
of any beneficiary in connection therewith; (ii) the validity, sufficiency or
genuineness of documents or of any endorsement thereon, even if such documents
should in fact prove to be in any or all respects invalid, insufficient,
fraudulent or forged; (iii) payment by the Agent to the beneficiary under any
Letter of Credit against presentation of documents which do not comply with the
terms of any Letter of Credit (unless such payment resulted from the gross
negligence or willful misconduct of the Agent), including failure of any
documents to bear any reference or adequate reference to such Letter of Credit;
(iv) any error, omission, interruption or delay in transmission,
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dispatch or delivery of any message or advice, however transmitted, in
connection with any Letter of Credit; or (v) any other event or circumstance
whatsoever arising in connection with any Letter of Credit; provided, however,
that Company and Account Parties shall not be required to indemnify the Banks
and the Agent and such other persons, and the Agent shall be liable to the
Company and the Account Parties to the extent, but only to the extent, of any
direct, as opposed to consequential or incidental, damages suffered by Company
and the Account Parties which were caused by the Agent's gross negligence,
willful misconduct or wrongful dishonor of any Letter of Credit after the
presentation to it by the beneficiary thereunder of a draft or other demand for
payment and other documentation strictly complying with the terms and conditions
of such Letter of Credit.
(b) It is understood that in making any payment under a Letter of
Credit the Agent will rely on documents presented to it under such Letter of
Credit as to any and all matters set forth therein without further investigation
and regardless of any notice or information to the contrary. It is further
acknowledged and agreed that Company or an Account Party may have rights against
the beneficiary or others in connection with any Letter of Credit with respect
to which Agent or the Banks are alleged to be liable and it shall be a condition
of the assertion of any liability of Agent or the Banks under this Section that
Company or the applicable Account Party shall contemporaneously pursue all
remedies in respect of the alleged loss against such beneficiary and any other
parties obligated or liable in connection with such Letter of Credit and any
related transactions.
3.10 Right of Reimbursement. Each Bank agrees to reimburse the Agent on
demand, pro rata in accordance with its respective Percentage, for (i) the
reasonable out-of-pocket costs and expenses of the Agent to be reimbursed by
Company or any Account Party pursuant to any Letter of Credit Agreement or any
Letter of Credit, to the extent not reimbursed by Company or any Account Party
and (ii) any and all liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, fees, reasonable out-of-pocket expenses or
disbursements of any kind and nature whatsoever which may be imposed on,
incurred by or asserted against Agent (in its capacity as issuer of any Letter
of Credit) in any way relating to or arising out of this Agreement, any Letter
of Credit, any documentation or any transaction relating thereto, or any Letter
of Credit Agreement, to the extent not reimbursed by Company or any Account
Party, except to the extent that such liabilities, losses, costs or expenses
were incurred by Agent solely as a result of Agent's gross negligence or willful
misconduct or by the Agent's wrongful dishonor of any Letter of Credit after the
presentation to it by the beneficiary thereunder of a draft or other demand for
payment and other documentation strictly complying with the terms and conditions
of such Letter of Credit.
3.11 Existing Letters of Credit. Each Existing Letter of Credit shall
be deemed for all purposes of this Agreement to be a Letter of Credit, and each
application submitted in connection with each Existing Letter of Credit shall be
deemed for all purposes of this Agreement to be a Letter of Credit Agreement. On
the date of execution of this Agreement, the Agent shall be deemed automatically
to have sold and transferred, and each other Bank shall be deemed automatically,
irrevocably, and unconditionally to have purchased and received from the Agent,
without recourse or warranty, an undivided interest and participation (on the
terms set forth herein), to the extent of such other Bank's Percentage, in each
Existing Letter of Credit and the applicable reimbursement
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obligations with respect thereto and any security therefor or guaranty
pertaining thereto. Letter of Credit Fees paid under the Prior Credit Agreement
shall not be recalculated, redistributed or reallocated by Agent to the Banks;
provided that the Company shall pay to any new Banks becoming parties hereto on
the Effective Date (or any existing Bank increasing its Percentage on such date)
a special letter of credit fee on the Existing Letters of Credit, calculated on
the basis of the Letter of Credit Fees which would be applicable to such
Existing Letters of Credit if issued on the date hereof (but in the case of any
existing Bank, computed only to the extent of the applicable increase in its
Percentage) for the period from the Effective Date to the expiration date of
such Existing Letters of Credit.
4. TERM LOAN
4.1 Term Loan. Company shall be entitled, effective on the Revolving
Credit Maturity Date (subject to the terms hereof), to elect to convert the
principal balance outstanding in Dollars from the Company under the Revolving
Credit on such date (the "Term Loan Conversion Date") to the Term Loan;
provided, however, that (x) Company provides written notice of its term out
election hereunder to Agent and each of the Banks at least ten (10) days prior
to the Term Loan Conversion Date and no request for extension of the Revolving
Credit Maturity Date is then in effect, (y) no Default or Event of Default has
occurred and is continuing on the date of election and on the Term Loan
Conversion Date and (z) Company pays to Agent, for distribution to the Agent and
to the Banks based on their respective Percentages, (i) all accrued interest and
Fees through the Term Loan Conversion Date and (ii) a conversion fee of fifty
(50) basis points on the amount so converted. All of the Advances of the Term
Loan hereunder shall be evidenced by Term Notes made by Company to each of the
Banks in the form attached hereto as Exhibit B, subject to the terms and
conditions of this Agreement.
4.2 Repayment of Principal. The Term Loan shall be repaid in equal
monthly installments, due on the first day of each month following the Term Loan
Conversion Date, in the amount of one-twelfth (1/12) of the principal amount of
the Term Loan on the Term Loan Conversion Date, provided that the entire balance
of the Term Loan, plus all accrued interest and Fees, shall be due and payable
in full on the Term Loan Maturity Date. There shall be no readvances or
reborrowings of any repayments of the Term Loan.
4.3 Accrual of Interest and Maturity. The Term Notes, and all
principal and interest outstanding thereunder, shall mature and become due and
payable in full on the Term Loan Maturity Date, and each Advance of Indebtedness
evidenced by the Term Notes from time to time outstanding hereunder shall, from
and after the date of such Advance, bear interest at its Applicable Interest
Rate. The amount and date of each Advance, its Applicable Interest Rate, its
Interest Period, if any, and the amount and date of any repayment shall be noted
on Agent's records, which records will be conclusive evidence thereof, absent
manifest error; provided, however, that any failure by the Agent to record any
such information shall not relieve the Company of its obligation to repay the
outstanding principal amount of such Advance, all interest accrued thereon and
any amount payable with respect thereto in accordance with the terms of this
Agreement and the other Loan Documents.
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4.4 Term Loan Rate Requests; Refundings and Conversions of Advances of
Term Loans. The Applicable Interest Rate for the initial Advance of the Term
Loan to the extent funded on the Effective Date shall be the Prime-based Rate.
The Company may refund all or any portion of any Advance of the Term Loan as an
Advance with a like Interest Period or convert each such Advance of Term Loan to
an Advance with a different Interest Period, but only after delivery to Agent of
a Term Loan Rate Request executed in connection with such Term Loan by an
authorized officer of the Company and subject to the terms hereof and to the
following:
(a) each such Term Loan Rate Request shall set forth the
information required on the Term Loan Rate Request form attached hereto as
Exhibit K with respect to such Term Loan, including without limitation:
(i) whether the Advance is a refunding or conversion of an
outstanding Advance; and the proposed date of such refunding or
conversion, which must be a Business Day; and
(ii) whether such Advance (or any portion thereof) is to be a
Prime-based Advance or a Eurocurrency-based Advance, and, except
in the case of a Prime-based Advance, the Interest Period(s)
applicable thereto.
(b) each such Term Loan Rate Request shall be delivered to Agent
by 12:00 p.m. (Detroit time) three (3) Business Days prior to the proposed date
of Advance, except in the case of a Prime-based Advance, for which the Term Loan
Rate Request must be delivered by 12:00 p.m. on the proposed date of Advance;
(c) the principal amount of such Advance of the applicable Term
Loan plus the amount of any other Advance of such Term Loan to be then combined
therewith having the same Applicable Interest Rate and Interest Period, if any,
shall be (i) in the case of a Prime-based Advance at least Two Million Five
Hundred Thousand Dollars ($2,500,000), or the remaining principal balance
outstanding under such Term Loan, whichever is less, and (ii) in the case of a
Eurocurrency-based Advance at least Five Million Dollars ($5,000,000) or the
remaining principal balance outstanding under such Term Loan, whichever is less,
or in each case, a larger integral multiple of One Million Dollars ($1,000,000);
(d) no Advance shall have an Interest Period ending after the
applicable Term Loan Maturity Date, and, notwithstanding any provision hereof to
the contrary, the Company shall select Interest Periods (or the Prime-based
Rate) for sufficient portions of such Term Loan such that the Company may make
its required principal payments hereunder on a timely basis and otherwise in
accordance with Section 4.5 below;
(e) upon completion of the Advance there shall be no more than
three (3) Interest Periods in effect for Advances of the Term Loan; and
(f) a Term Loan Rate Request, once delivered to Agent, shall not
be revocable
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by the Company.
Each selection of an Interest Period under this Section 4.4, and the amount and
date of any repayment, shall be noted on Agent's records, which records will be
conclusive evidence thereof, absent manifest error.
4.5 Failure to Refund or Convert. Subject to Section 11.5 and unless
the Majority Banks shall have otherwise agreed, upon the expiration of any
Interest Period applicable to any Eurocurrency-based Advance:
(a) if the Company has failed to timely select a new Interest
Period to be applicable to such Eurocurrency Advance, it shall be deemed to have
elected to convert such Eurocurrency-based Advance into a Prime-based Advance
effective as of the expiration date of such Interest Period;
(b) on such day a Default or Event of Default shall exist, then
subject to Sections 4.9 and 11.1 hereof, and notwithstanding the foregoing
clause (a), at the election of the Majority Banks the outstanding principal
amount of such Eurocurrency-based Advance shall be converted to a Prime-based
Advance and the Agent shall promptly notify the Company of such action.
4.6 Prime-based Interest Payments. Interest on the unpaid balance of
all Prime-based Advances of any Term Loan from time to time outstanding shall
accrue until paid at a per annum interest rate equal to the Prime-based Rate,
and shall be payable in immediately available funds monthly commencing on the
first day of the month next succeeding the month during which the initial
Advance of such Term Loan is made and on the first day of each month thereafter.
Interest accruing at the Prime-based Rate shall be computed on the basis of a
360 day year and assessed for the actual number of days elapsed, and in such
computation effect shall be given to any change in the interest rate resulting
from a change in the Prime-based Rate on the date of such change in the
Prime-based Rate.
4.7 Eurocurrency-based Interest Payments. Interest on each
Eurocurrency-based Advance of a Term Loan having a related Eurocurrency-Interest
Period of 3 months or less shall accrue at its Eurocurrency-based Rate and shall
be payable in immediately available funds on the last day of the Interest Period
applicable thereto. Interest shall be payable in immediately available funds on
each Eurocurrency-based Advance of such Term Loan outstanding from time to time
having a Eurocurrency-Interest Period of 6 months or longer, at intervals of 3
months after the first day of the applicable Interest Period, and shall also be
payable on the last day of the Interest Period applicable thereto. Interest
accruing at the Eurocurrency-based Rate shall be computed on the basis of a 360
day year and assessed for the actual number of days elapsed from the first day
of the Interest Period applicable thereto to, but not including, the last day
thereof.
4.8 Interest Payments on Conversions. Notwithstanding anything to the
contrary in Sections 4.6 and 4.7 all accrued and unpaid interest on any Advance
refunded or converted pursuant to Section 4.4 hereof shall be due and payable in
full on the date such Advance is refunded or converted.
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4.9 Interest on Default. In the event and so long as any Event of
Default shall exist, in the case of any Event of Default under Sections 9.1(a),
9.1(b) or 9.1(j), immediately upon the occurrence thereof, and in the case of
all other Events of Default, upon notice from the Majority Banks, interest shall
be payable daily on all Eurocurrency-based Advances of the Term Loans from time
to time outstanding (and, subject to Section 2.9 hereof, all other monetary
obligations of the Borrowers hereunder and under the other Loan Documents) at a
per annum rate equal to the Applicable Interest Rate plus three percent (3%) for
the remainder of the then existing Interest Period, if any, and at all other
such times, with respect to Prime-based Advances from time to time outstanding,
at a per annum rate equal to the Prime-based Rate plus three percent (3%).
5. CONDITIONS
The obligations of Banks to make Advances or loans pursuant to this
Agreement are subject to the following conditions, provided however that
Sections 5.1 through 5.7 below shall only apply to the initial Advances or loans
hereunder:
5.1 Execution of Notes, this Agreement and the other Loan Documents.
The Company (on or before the date hereof) and the Permitted Borrowers (prior to
requesting any Advance hereunder), as applicable, shall have executed and
delivered to the Agent for the account of each Bank, the Revolving Credit Notes,
the Swing Line Notes (solely for the account of the Swing Line Bank) and this
Agreement (including all schedules, exhibits, certificates, opinions, financial
statements and other documents to be delivered pursuant hereto) and, as
applicable, such Revolving Credit Notes, the Swing Line Notes and this Agreement
shall be in full force and effect.
5.2 Corporate Authority. Agent shall have received, with a counterpart
thereof for each Bank: (i) certified copies of resolutions of the Board of
Directors of the Company and each of the Permitted Borrowers evidencing approval
of the form of this Agreement, the Notes and the other Loan Documents to which
such Person is a party and authorizing the execution, delivery and performance
thereof and the borrowing of Advances hereunder; (ii) (A) certified copies of
the Company's, and each of the Permitted Borrowers', articles of incorporation
and bylaws or other constitutional documents certified as true and complete as
of a recent date by the appropriate official of the jurisdiction of
incorporation of each such entity (or, if unavailable in such jurisdiction, by a
responsible officer of such entity); and (B) a certificate of good standing from
the state of the Company's incorporation and from the applicable state of
incorporation or other jurisdiction of incorporation of each of the Permitted
Borrowers.
5.3 Representations and Warranties -- All Parties. The representations
and warranties made by the Company, each of the Permitted Borrowers or any other
party to any of the Loan Documents under this Agreement or any of the other Loan
Documents (excluding the Agent and the Banks), and the representations and
warranties of any of the foregoing which are contained in any certificate,
document or financial or other statement furnished at any time hereunder or
thereunder or in connection herewith or therewith shall have been true and
correct in all material respects when made and shall be true and correct in all
material respects on and as of the date of the making of the initial Advance
hereunder.
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5.4 Compliance with Certain Documents and Agreements. The Company and
the Permitted Borrowers (and any of their respective Subsidiaries or Affiliates)
shall have each performed and complied with all agreements and conditions
contained in this Agreement, the other Loan Documents, or any agreement or other
document executed hereunder or thereunder and required to be performed or
complied with by each of them (as of the applicable date) and none of such
parties shall be in default in the performance or compliance with any of the
terms or provisions hereof or thereof.
5.5 Company's Certificate. The Agent shall have received, with a
signed counterpart for each Bank, a certificate of a responsible senior officer
of Company, dated the date of the making of the initial Advances hereunder,
stating that the conditions set forth in this Section 5 have been fully
satisfied.
5.6 Payment of Agent's and Other Fees. Company shall have paid to the
Syndications Agent any syndication fee under any syndication fee letter in
effect as of the date hereof, to the Agent the Closing Fee (for distribution to
the Banks hereunder), and to the Agent, the Agent's Fees and all costs and
expenses required hereunder.
5.7 Other Documents and Instruments. The Agent shall have received,
with a photocopy for each Bank, such other instruments and documents as the
Majority Banks may reasonably request in connection with the making of Advances
hereunder, and all such instruments and documents shall be satisfactory in form
and substance to the Majority Banks.
5.8 Continuing Conditions. The obligations of the Banks to make any of
the Advances or loans under this Agreement, including but not limited to the
initial Advances of the Revolving Credit, the Swing Line or the Term Loan
hereunder, shall be subject to the following continuing conditions:
(a) No Default or Event of Default shall have occurred and be
continuing as of the making of the proposed Advance (both before and after
giving effect thereto);
(b) There shall have been no material adverse change in the
condition (financial or otherwise), properties, business, results of operations
of the Company or its Subsidiaries, taken as a whole, from December 31, 1998,
except changes in the ordinary course of business, or any subsequent December
31st, if the Agent determines, with the concurrence of the Majority Banks, based
on the Company's financial statements for such subsequent fiscal year that no
material adverse change has occurred during such year, such determination being
made solely for purposes of determining the applicable date under this paragraph
to the date of the proposed Advance hereunder;
(c) The representations and warranties contained in this Agreement
and the other Loan Documents are true and correct in all material respects as of
the making of the applicable Advance; and
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(d) All documents executed or submitted pursuant hereto shall be
satisfactory in form and substance (consistent with the terms hereof) to Agent
and its counsel and to each of the Banks; Agent and its counsel and each of the
Banks and their respective counsel shall have received all information, and such
counterpart originals or such certified or other copies of such materials, as
Agent or its counsel and each of the Banks and their respective counsel may
reasonably request; and all other legal matters relating to the transactions
contemplated by this Agreement (including, without limitation, matters arising
from time to time as a result of changes occurring with respect to any
statutory, regulatory or decisional law applicable hereto) shall be satisfactory
to counsel to Agent and counsel to each of the Banks.
6. REPRESENTATIONS AND WARRANTIES
Company and the Permitted Borrowers represent and warrant and such
representations and warranties shall be deemed to be continuing representations
and warranties during the entire life of this Agreement:
6.1 Corporate Authority. Each of the Company, the Subsidiaries and
each of the Permitted Borrowers is a corporation duly organized and validly
existing in good standing under the laws of the applicable jurisdiction of
organization, charter or incorporation; each of the Company, the Subsidiaries
and each of the Permitted Borrowers is duly qualified and authorized to do
business as a corporation or foreign corporation in each jurisdiction where the
character of its assets or the nature of its activities makes such qualification
necessary, except where such failure to qualify and be authorized to do business
will not have a material adverse impact on the Company and its Subsidiaries,
taken as a whole.
6.2 Due Authorization - Company. Execution, delivery and performance
of this Agreement, the other Loan Documents, and any other documents and
instruments required under or in connection with this Agreement, and the
issuance of the Notes by and extensions of credit to the Company are within its
corporate powers, have been duly authorized, are not in contravention of law or
the terms of the Company's articles of incorporation or bylaws, and, except as
have been previously obtained or as referred to in Section 6.17, below, do not
require the consent or approval, material to the transactions contemplated by
this Agreement, or the Loan Documents, of any governmental body, agency or
authority.
6.3 Due Authorization -- Permitted Borrowers. Execution, delivery and
performance of this Agreement, the Notes, the other Loan Documents, and any
other documents and instruments required under or in connection with this
Agreement by each of the Permitted Borrowers, and extensions of credit to the
Permitted Borrowers, are (or will be, on the applicable date of delivery of such
Loan Documents) within their respective corporate powers, have been (or will be,
as aforesaid) duly authorized, are not (or will not be, as aforesaid) in
contravention of law or the terms of articles of incorporation or bylaws or
other organic documents of the parties thereto, as applicable, and, except as
have been previously obtained (or as referred to in Section 6.17, below), do not
(or will not, as aforesaid) require the consent or approval, material to the
transactions contemplated by this Agreement, or the other Loan Documents, of any
governmental body, agency or authority.
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6.4 Title to Property. Each of the Company, each of the Permitted
Borrowers and each of the Subsidiaries has good and valid title to the property
owned by it, which property (individually or in the aggregate) is material to
the business or operations of the Company and its Subsidiaries, taken as a
whole, excluding imperfections in title not material to the ownership, use
and/or enjoyment of any such property.
6.5 Liens. There are no security interests in, Liens, mortgages or
other encumbrances on and no financing statements on file with respect to any
property of Company, any of the Permitted Borrowers or any of the Subsidiaries,
except for those Liens permitted under Section 8.6 hereof.
6.6 Subsidiaries. As of the date of this Agreement, there are no
directly or indirectly owned Subsidiaries of the Company, except for those
Subsidiaries identified in Schedule 6.6, attached hereto.
6.7 Taxes. The Company and its Subsidiaries each has filed on or
before their respective due dates, all federal, state and foreign tax returns
which are required to be filed or has obtained extensions for filing such tax
returns and is not delinquent in filing such returns in accordance with such
extensions and has paid all taxes which have become due pursuant to those
returns or pursuant to any assessments received by any such party, as the case
may be, to the extent such taxes have become due, except to the extent such tax
payments are being actively contested in good faith by appropriate proceedings
and with respect to which adequate provision has been made on the books of the
Company or its Subsidiaries, as applicable, as may be required by GAAP.
6.8 No Defaults. There exists no default under the provisions of any
instrument evidencing any permitted Debt of the Company or its Subsidiaries or
connected with any of the permitted Liens, or of any agreement relating thereto,
except where such default would not have a material adverse effect on the
Company and its Subsidiaries taken as a whole and would not violate this
Agreement or any of the other Loan Documents according to the terms thereof.
6.9 Enforceability of Agreement and Loan Documents -- Company. This
Agreement, the Notes, each of the other Loan Documents to which the Company is a
party, and all other certificates, agreements and documents executed and
delivered by Company under or in connection herewith or therewith have each been
duly executed and delivered by duly authorized officers of the Company and
constitute the valid and binding obligations of the Company, enforceable in
accordance with their respective terms, except as enforcement thereof may be
limited by applicable bankruptcy, reorganization, insolvency, moratorium or
similar laws affecting the enforcement of creditor's rights generally and by
general principles of equity (whether enforcement is sought in a proceeding in
equity or at law).
6.10 Enforceability of Domestic Guaranty -- Significant Domestic
Subsidiaries. The Domestic Guaranty, and all other certificates, agreements and
documents executed and delivered by each Significant Domestic Subsidiary under
or in connection with this Agreement will, upon execution and delivery thereof,
have each been duly executed and delivered by duly authorized
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officers of each such Significant Domestic Subsidiary and constitute the valid
and binding obligations of each such Significant Domestic Subsidiary,
enforceable in accordance with their respective terms, except as enforcement
thereof may be limited by applicable bankruptcy, reorganization, insolvency,
moratorium or similar laws affecting the enforcement of creditor's rights
generally and by general principles of equity (whether enforcement is sought in
a proceeding in equity or at law).
6.11 Enforceability of Loan Documents -- Permitted Borrowers. This
Agreement, the Notes, each of the other Loan Documents to which any of the
Permitted Borrowers is a party, and all certificates, documents and agreements
executed in connection herewith or therewith by the Permitted Borrowers have
each been duly executed and delivered by duly authorized officers of the
applicable Permitted Borrower and constitute the valid and binding obligations
of the Permitted Borrowers, enforceable in accordance with their respective
terms, except as enforcement thereof may be limited by applicable bankruptcy,
reorganization, insolvency, moratorium or similar laws affecting the enforcement
of creditors' rights generally and by general principles of equity (whether
enforcement is sought in a proceeding in equity or at law).
6.12 Non-contravention -- Company. The execution, delivery and
performance of this Agreement and the other Loan Documents and any other
documents and instruments required under or in connection with this Agreement by
the Company are not in contravention of the terms of any indenture, material
agreement or material undertaking to which the Company is a party or by which it
or its properties are bound or affected, except to the extent such terms have
been waived or are not material to the transactions contemplated by this
Agreement and the other Loan Documents or to the financial performance of the
Company and its Subsidiaries, taken as a whole.
6.13 Non-contravention -- Significant Domestic Subsidiaries. The
execution, delivery and performance of the Domestic Guaranty and any other
documents and instruments required under or in connection with this Agreement by
each Significant Domestic Subsidiary (upon execution and delivery thereof) will
not be in contravention of the terms of any indenture, material agreement or
material undertaking to which each such Significant Domestic Subsidiary is a
party or by which it or its properties are bound or affected, except to the
extent such terms have been waived or are not material to the transactions
contemplated by this Agreement and the other Loan Documents or to the financial
performance of the Company and its Subsidiaries, taken as a whole.
6.14 Non-contravention -- Permitted Borrowers. The execution, delivery
and performance of this Agreement, those other Loan Documents signed by the
Permitted Borrowers, and any other documents and instruments required under or
in connection with this Agreement by the Permitted Borrowers are not in
contravention of the terms of any indenture, material agreement or material
undertaking to which any of the Permitted Borrowers is a party or by which it or
its properties are bound or affected, except to the extent such terms have been
waived or are not material to the transaction contemplated by this Agreement and
the other Loan Documents or to the financial performance of the Company and its
Subsidiaries, taken as a whole.
6.15 No Litigation -- Company. There is no suit, action, proceeding,
including, without
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limitation, any bankruptcy proceeding, or governmental investigation pending
against or, to the best knowledge of the Company, threatened or otherwise
affecting the Company (other than any suit, action or proceeding in which the
Company is the plaintiff and in which no counterclaim or cross-claim against
Company has been filed), nor has the Company or any of its officers or directors
been subject to any suit, action, proceeding or governmental investigation as a
result of which any such officer or director is or may be entitled to
indemnification by Company, except as otherwise disclosed in Schedule 6.15
attached hereto and except for miscellaneous suits, actions and proceedings
which have a reasonable likelihood of being adversely determined, and which
suits, if resolved adversely to the Company would not in the aggregate have a
material adverse effect on the Company and its Subsidiaries, taken as a whole.
Except as so disclosed, there is not outstanding against the Company any
judgment, decree, injunction, rule, or order of any court, government,
department, commission, agency, instrumentality or arbitrator, nor, to the best
knowledge of the Company, is the Company in violation of any applicable law,
regulation, ordinance, order, injunction, decree or requirement of any
governmental body or court where such violation would have a material adverse
effect on the Company and its Subsidiaries, taken as a whole.
6.16 No Litigation -- Other Parties. There is no suit, action,
proceeding (other than any suit, action or proceeding in which any such party is
the plaintiff and in which no counterclaim or cross-claim against any such party
has been filed), including, without limitation, any bankruptcy proceeding, or
governmental investigation pending against or, to the best knowledge of the
Company, threatened or otherwise affecting any of the Subsidiaries or the
Permitted Borrowers, nor has any such party or any of its officers or directors
been subject to any suit, action, proceeding or governmental investigation as a
result of which any such officer or director is or may be entitled to
indemnification by such party, except as otherwise disclosed in Schedule 6.16
attached hereto and except for miscellaneous suits, actions and proceedings
which have a reasonable likelihood of being adversely determined, which suits,
if resolved adversely to such party, would not in the aggregate have a material
adverse effect on the Company and its Subsidiaries, taken as a whole. Except as
so disclosed, there is not outstanding against any such party any judgment,
decree, injunction, rule, or order of any court, government, department,
commission, agency, instrumentality or arbitrator nor, to the best knowledge of
the Company, is any such party in violation of any applicable law, regulation,
ordinance, order, injunction, decree or requirement of any governmental body or
court where such violation would have a material adverse effect on the Company
and its Subsidiaries, taken as a whole.
6.17 Consents, Approvals and Filings, Etc. Except as have been
previously obtained no authorization, consent, approval, license, qualification
or formal exemption from, nor any filing, declaration or registration with, any
court, governmental agency or regulatory authority or any securities exchange or
any other person or party (whether or not governmental) is required in
connection with the execution, delivery and performance: (i) by the Company, of
this Agreement, any of the other Loan Documents to which it is a party or any
other documents or instruments to be executed and/or delivered by the Company in
connection therewith or herewith; or (ii) by the Permitted Borrowers, of this
Agreement, the other Loan Documents to which it is a party or any other
documents or instruments to be executed and/or delivered by Permitted Borrowers
in connection therewith or herewith. All such authorizations, consents,
approvals, licenses,
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qualifications, exemptions, filings, declarations and registrations which have
previously been obtained or made, as the case may be, are in full force and
effect and are not the subject of any attack, or to the knowledge of the
Company, threatened attack (in any material respect) by appeal or direct
proceeding or otherwise.
6.18 Agreements Affecting Financial Condition. Neither the Company, the
Permitted Borrowers nor any of the Subsidiaries is party to any agreement or
instrument or subject to any charter or other corporate restriction which
materially adversely affects the financial condition or operations of the
Company and its Subsidiaries, taken as a whole.
6.19 No Investment Company; No Margin Stock. None of the Company, any
of the Permitted Borrowers, nor any of the Subsidiaries is engaged principally,
or as one of its important activities, directly or indirectly, in the business
of extending credit for the purpose of purchasing or carrying margin stock. None
of the Letters of Credit and none of the proceeds of any of the Advances will be
used by the Company, any of the Permitted Borrowers or any of the Subsidiaries
to purchase or carry margin stock or will be made available by the Company, the
Permitted Borrower or any of the Subsidiaries in any manner to any other Person
to enable or assist such Person in purchasing or carrying margin stock. Terms
for which meanings are provided in Regulation U of the Board of Governors of the
Federal Reserve System or any regulations substituted therefor, as from time to
time in effect, are used in this paragraph with such meanings. None of the
Company, any of the Permitted Borrowers nor any of the Subsidiaries is an
"investment company" within the meaning of the Investment Company Act of 1940,
as amended.
6.20 ERISA. Neither a Reportable Event which is material to the Company
and its Subsidiaries taken as a whole nor an accumulated funding deficiency (as
defined in Section 412 of the Internal Revenue Code or Section 302 of ERISA) has
occurred during the five-year period prior to the date on which this
representation is made or deemed made with respect to any Pension Plan. Each
Pension Plan has complied and continues to comply in all material respects with
the applicable provisions of ERISA and the Internal Revenue Code and any
applicable regulations thereof (and, if applicable, any comparable foreign law
provisions), except to the extent that any noncompliance, individually or in the
aggregate, would not have a material adverse effect upon the Company and its
Subsidiaries, taken as a whole. No termination of a Single Employer Plan has
occurred, and no lien in favor of the PBGC or a Pension Plan has arisen, during
such five-year period. The present value of all accrued benefits under each
Single Employer Plan maintained by the Company or any ERISA Affiliate did not,
as of the last annual valuation date prior to the date on which this
representation is made or deemed made, exceed the value of the assets of such
Pension Plan allocable to such accrued benefits. Neither the Company nor any
ERISA Affiliate has had a complete or partial withdrawal from any Multiemployer
Plan within the five year period prior to the date of this Agreement, nor does
the Company or any ERISA Affiliate presently intend to completely or partially
withdraw from any Multiemployer Plan, and neither the Company nor any ERISA
Affiliate would become subject to fines, penalties or any other liability under
ERISA if the Company or any ERISA Affiliate were to withdraw completely from all
Multiemployer Plans as of the valuation date most closely preceding the date of
this Agreement. To the best of Company's knowledge, no such Multiemployer Plan
is in bankruptcy or reorganization or insolvent. There is
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no pending or, to the best of Company's knowledge, threatened litigation or
investigation questioning the form or operation of any Pension Plan, nor is
there any basis for any such litigation or investigation which if adversely
determined could have a material adverse effect upon the Company and its
Subsidiaries, taken as a whole, as of the valuation date most closely preceding
the date of this Agreement.
6.21 Environmental Matters and Safety Matters. (a) The Company and each
Subsidiary is in compliance with all applicable federal, state, provincial and
local laws, ordinances and regulations relating to safety and industrial hygiene
or to the environmental condition, including without limitation all applicable
Hazardous Materials Laws in jurisdictions in which the Company or any such
Subsidiary owns or operates a facility or site, or arranges for disposal or
treatment of hazardous substances, solid waste, or other wastes, accepts for
transport any hazardous substances, solid wastes or other wastes or holds any
interest in real property or otherwise, except for matters which, individually
or in the aggregate, would not have a material adverse effect upon the financial
condition or business of the Company and its Subsidiaries, taken as a whole.
(b) All federal, state, provincial, local and foreign permits,
licenses and authorizations required for present or (to the best of the
Company's knowledge) past use of the facilities and other properties or
activities of the Company and each Subsidiary have been obtained and are
presently in effect, and there is and has been full compliance with all such
permits, licenses or authorizations, except, in all cases, where the failure to
comply with the foregoing would not have a material adverse effect on the
Company and its Subsidiaries taken as a whole.
(c) No demand, claim, notice, suit (in law or equity), action,
administrative action, investigation or inquiry (including, without limitation,
the listing of any property by any domestic or foreign governmental entity which
identifies sites for remedial, clean-up or investigatory action) whether brought
by any governmental authority, private person or entity or otherwise, arising
under, relating to or in connection with any applicable Hazardous Materials Laws
is pending or, to the best of the Company's knowledge, threatened against the
Company or any of its Subsidiaries, any real property in which the Company or
any such Subsidiary holds or, to the best of the Company's knowledge, has held
an interest or any present or, to the best of the Company's knowledge, past
operation of the Company or any such Subsidiary, except for such matters which,
individually or in the aggregate, would not have a material adverse effect on
the financial condition or business of the Company and its Subsidiaries, taken
as a whole.
(d) Neither the Company nor any of its Subsidiaries, whether with
respect to present or, to the best of the Company's knowledge, past operations
or properties, (i) is, to the best of the Company's knowledge, the subject of
any federal or state investigation evaluating whether any remedial action is
needed to respond to a release of any toxic substances, radioactive materials,
hazardous wastes or related materials into the environment, (ii) has received
any notice of any toxic substances, radioactive materials, hazardous waste or
related materials in or upon any of its properties in violation of any
applicable Hazardous Materials Laws, or (iii) knows of any basis for any such
investigation or notice, or for the existence of such a violation, except for
such matters which, individually or in the aggregate, would not have a material
adverse effect on the financial
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condition or business of the Company and its Subsidiaries, taken as a whole.
(e) No release, threatened release or disposal of hazardous waste,
solid waste or other wastes is occurring or has occurred on, under or to any
real property in which the Company or any of its Subsidiaries holds any interest
or performs any of its operations, in violation of any applicable Hazardous
Materials Laws, except for any such matters which, individually or in the
aggregate, would not have a material adverse effect on the financial condition
or business of the Company and its Subsidiaries, taken as a whole.
6.22 Accuracy of Information. Each of the Company's audited or
unaudited financial statements previously furnished to Agent and the Banks by
the Company prior to the date of this Agreement, is complete and correct in all
material respects and fairly presents the financial condition of the Company and
its Subsidiaries, taken as a whole, and the results of their operations for the
periods covered thereby; any projections of operations for future years
previously furnished by Company to Agent and the Banks have been prepared as the
Company's good faith estimate of such future operations, taking into account all
relevant facts and matters known to Company; since December 31, 1998 there has
been no material adverse change in the financial condition of the Company or its
Subsidiaries, taken as a whole, except changes in the ordinary course of
business; neither the Company, nor any of its Subsidiaries has any contingent
obligations (including any liability for taxes) not disclosed by or reserved
against in the December 31, 1998 balance sheet which is likely to have a
material adverse effect on the Company and its Subsidiaries, taken as a whole.
7. AFFIRMATIVE COVENANTS
Company and each of the Permitted Borrowers covenants and agrees that
it will, and, as applicable, it will cause its Subsidiaries (but excluding, for
purposes of Sections 7.3 through 7.10, 7.19, 7.20 and 7.22 hereof, any Special
Purpose Subsidiary) to, so long as any of the Banks are committed to make any
Advances under this Agreement and thereafter so long as any Indebtedness remains
outstanding under this Agreement:
7.1 Preservation of Existence, Etc. Subject to the terms of this
Agreement: (i) preserve and maintain its existence and such of its rights,
licenses, and privileges as are material to the business and operations
conducted by it; (ii) qualify and remain qualified to do business in each
jurisdiction in which such qualification is material to its business and
operations or ownership of its properties; (iii) continue to conduct and operate
its businesses substantially as conducted and operated during the present and
preceding fiscal years; (iv) at all times maintain, preserve and protect all of
its franchises and trade names and preserve all the remainder of its property
and keep the same in good repair, working order and condition; and (v) from time
to time make, or cause to be made, all necessary or appropriate repairs,
replacements, betterments and improvements thereto such that the businesses
carried on in connection therewith may be properly and advantageously conducted
at all times.
7.2 Keeping of Books. Keep proper books of record and account in which
full and correct
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entries shall be made of all of its financial transactions and its assets and
businesses so as to permit the presentation of financial statements prepared in
accordance with GAAP.
7.3 Reporting Requirements. Furnish Agent with:
(a) as soon as possible, and in any event within three calendar
days after becoming aware of the occurrence of each Default or Event of Default,
a written statement of the chief financial officer of the Company (or in his
absence, a responsible senior officer) setting forth details of such Default or
Event of Default and the action which the Company or such Permitted Borrower has
taken or has caused to be taken or proposes to take or cause to be taken with
respect thereto;
(b) as soon as available, and in any event within one hundred
twenty (120) days after and as of the end of each of Company's fiscal years, (i)
a detailed Consolidated audit report of Company certified to by independent
certified public accountants satisfactory to Banks together with an unaudited
Consolidating report of Company and its Subsidiaries certified by an authorized
officer of Company as to consistency (with prior financial reports and
accounting periods), accuracy and fairness of presentation; and (ii) a Covenant
Compliance Report;
(c) as soon as available, and in any event within sixty (60) days
after and as of the end of each quarter, excluding the last quarter, of each
fiscal year, (i) a Consolidated and Consolidating balance sheet, income
statement, statement of cash flows and statement of shareholder's equity of
Company and its Subsidiaries certified by an authorized officer of Company as to
consistency (with prior financial reports and accounting periods), accuracy and
fairness of presentation; (ii) a Covenant Compliance Report; and (iii) a "static
pool analysis" substantially in the form of Exhibit L attached hereto and in any
event satisfactory in form and substance to the Majority Banks, which analyzes
the performance of Company's and each Permitted Borrower's Installment Contracts
(segregated between the Company's North American operations and its UK
operations) on a quarterly basis, and, for quarters beginning with the quarter
ended September 30, 1999, a "static pool analysis" substantially in the form of
Exhibit L attached hereto and in any event and satisfactory in form and
substance to the Majority Banks, which analyzes the performance of the Company's
and each Permitted Borrower's Leases on a quarterly basis (segregated between
the Company's North American operations and its UK operations), in each case
certified by an authorized officer of the Company as to consistency with prior
such analyses, accuracy and fairness of presentation;
(d) as soon as possible, and in any event within three calendar
days after becoming aware (i) of any material adverse change in the financial
condition of the Company, any of its Subsidiaries or any of the Permitted
Borrowers, a certificate of the chief financial officer of Company (or in his
absence, a responsible senior officer) setting forth the details of such change,
(ii) of the taking by the Internal Revenue Service or any foreign taxing
jurisdiction of a tax position (verbal or written) which could have a materially
adverse effect upon the Company, any of its Subsidiaries or any of the Permitted
Borrowers (or any such tax position taken by the Company or any of its
Subsidiaries or any of the Permitted Borrowers) setting forth the details of
such position
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and the financial impact thereof or (iii) of any change in the Rating Level of
which Company has actual knowledge;
(e) as soon as available (and with copies for each of the Banks),
the Company's 8-K, 10-Q and 10-K Reports filed with the federal Securities and
Exchange Commission, and in any event, with respect to the 10-Q Report, within
sixty (60) days of the end of each of the first three fiscal quarters of each of
Company's fiscal years, and with respect to the 10-K Report, within one hundred
twenty (120) days after and as of the end of each of Company's fiscal years; and
as soon as available, copies of all filings, reports or other documents filed by
the Company or any of its Subsidiaries with the federal Securities and Exchange
Commission or other federal regulatory or taxing agencies or authorities in the
United States, or comparable agencies or authorities in foreign jurisdictions,
or any stock exchanges in such jurisdictions;
(f) promptly as issued (and with copies for each of the Banks),
all press releases, notices to shareholders and all other material
communications transmitted by the Company or any of its Subsidiaries; and,
concurrently with each incurrence thereof written notice that new Future Debt
has been incurred, accompanied by copies of the material documents governing
such Debt and a certification that, both before and after giving effect thereto,
no Default or Event of Default shall have occurred and be continuing and the
Company is otherwise in compliance with this Agreement;
(g) on not less than an annual basis, a copy of the standard form
of Company's Dealer Agreement then in effect;
(h) on or before ninety (90) days after the commencement of each
fiscal year, a Consolidated plan and financial projections and which shall
reflect any Future Debt or Permitted Securitizations contemplated to be incurred
or made for the succeeding two years of the Company and its Significant
Subsidiaries including, without limitation, a Consolidated and Consolidating
balance sheet and a Consolidated and Consolidating statement of projected income
and cash flow of the Company for each of the succeeding two fiscal years and
including a statement in reasonable detail specifying all material assumptions
underlying the projections;
(i) promptly upon the request of Agent or the Majority Banks
(acting through Agent) from time to time, a "static pool analysis" which
analyzes the performance of any Installment Contracts or Leases transferred or
encumbered pursuant to a Permitted Securitization comparable to the static pool
analysis required to be delivered pursuant to subparagraph (c) of this Section
7.3; and
(j) promptly, and in form to be satisfactory to Agent and the
requesting Bank or Banks, such other information as Agent or any of the Banks
(acting through Agent) may reasonably request from time to time.
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 each of the following tests:
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(a) Two Hundred Seventy-Five Percent (275%) of Company's
Consolidated Tangible Net Worth; provided however that for the purposes of this
test, Consolidated Total Debt shall be calculated by including all Debt incurred
by a Special Purpose Subsidiary, whether or not included therein under GAAP;
(b) Seventy Five Percent (75%) of the sum of (i) Advances to
Dealers and (ii) Leased Vehicles; and
(c) Sixty Percent (60%) of the sum of (i) Gross Current
Installment Contract Receivables and (ii) Gross Current Leased Vehicles.
7.5 Maintain Senior Funded Debt Level. On a Consolidated basis,
maintain as of the end of each fiscal quarter Consolidated Senior Funded Debt at
a level equal to or less than Two Hundred Percent (200%) of the Company's
Consolidated Tangible Net Worth and in an amount not in excess of the sum of (i)
Net Installment Contract Receivables less Net Dealer Holdbacks and (ii) Leased
Vehicles, divided by 1.10.
7.6 Maintain Subordinated Funded Debt Level. On a Consolidated basis,
maintain as of the end of each fiscal quarter the Consolidated Subordinated
Funded Debt at a level equal to or less than One Hundred Fifty Percent (150%) of
the Company's Consolidated Tangible Net Worth.
7.7 Minimum Tangible Net Worth. On a Consolidated basis, maintain
Consolidated Tangible Net Worth of not less than Two Hundred Eighteen Million
Seven Hundred Twenty Five Thousand Dollars ($218,725,000.00) [NUMBER UPDATED FOR
FY END 1998], plus the sum of (i) seventy-five percent (75%) of Consolidated Net
Income for each fiscal quarter of the Company (A) beginning on or after January
1, 1999, (B) ending on or before the applicable date of determination thereof,
and (C) for which Consolidated Net Income as determined above is a positive
amount and (ii) the Equity Offering Adjustment.
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 Seventy
Percent (70%) of Net Installment Contract Receivables.
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 2.25 to 1.0.
7.10 Inspections. Permit Agent and each Bank, through their authorized
attorneys, accountants and representatives to examine (and make copies of)
Company's and each of the Subsidiaries" books, accounts, records, ledgers and
assets and properties (including without limitation, any Collateral) of every
kind and description including, without limitation, all promissory notes,
security agreements, customer applications, vehicle title certificates, chattel
paper, Uniform Commercial Code filings, wherever located at all reasonable times
during normal business hours, upon oral or written request of Agent or such
Bank; and permit Agent and each Bank or their authorized representatives, at
reasonable times and intervals, to visit all of its offices, discuss its
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financial matters with its officers and independent certified public
accountants, and by this provision Company authorizes such accountants to
discuss the finances and affairs of Company and its Subsidiaries (provided that
Company is given an opportunity to participate in such discussions) and examine
any of its or their books and other corporate records. An examination of the
records or properties of Company or any of its Subsidiaries may require
revealment of proprietary and/or confidential data and information, and the
Agent and each of the Banks agrees upon request of the inspected party to
execute a confidentiality agreement (satisfactory to Agent or the inspecting
Bank, as the case may be, and such party) on behalf of the Agent or such
inspecting Bank and all parties making such inspections or examinations under
its authorization; provided however that such confidentiality agreement shall
not prohibit Agent from revealing such information to Banks or prohibit the
inspecting Bank from revealing such information to Agent or another Bank.
Notwithstanding the foregoing, all information furnished to the Banks hereunder
shall be subject to the undertaking of the Banks set forth in Section 13.13
hereof.
7.11 Taxes. Pay and discharge all taxes and other governmental charges,
and all material contractual obligations calling for the payment of money,
before the same shall become overdue, unless and to the extent only that such
payment is being contested in good faith by appropriate proceedings and is
reserved for, as required by GAAP on its balance sheet, or where the failure to
pay any such matter could not have a material adverse effect on the Company and
its Subsidiaries, taken as a whole.
7.12 Further Assurances. Execute and deliver or cause to be executed
and delivered to Agent within a reasonable time following Agent's request, and
at the Company's and the Permitted Borrowers' expense, such other documents or
instruments as Agent may reasonably require to effectuate more fully the
purposes of this Agreement or the other Loan Documents, including without
limitation any Collateral Documents required under Section 7.23 hereof.
7.13 Insurance. Maintain, with financially sound and reputable
insurers, insurance with respect to its material property and business against
such casualties and contingencies, of such types (including, without limitation,
insurance with respect to losses arising out of such property loss or damage,
public liability, business interruption, larceny, workers' compensation,
embezzlement or other criminal misappropriation) and in such amounts as is
customary in the case of corporations of established reputations engaged in the
same or similar business and similarly situated (and including such lender loss
payee clauses and/or endorsements as Agent or the Majority Banks may request
following the delivery of the Collateral Documents under Section 7.23 hereof),
provided that such insurance is commercially available, it being understood that
the Company and its Subsidiaries may self-insure against hazards and risks with
respect to which, and in such amounts as, the Company in good faith determines
to be prudent and consistent with sound financial and business practice.
7.14 Indemnification. With respect to the Company, indemnify and save
Agent and each of the Banks harmless from all reasonable loss, cost, damage,
liability or expenses, including reasonable attorneys' fees and disbursements,
incurred by Agent and each of the Banks by reason of an Event of Default or
enforcing the obligations of the Company or the Permitted Borrowers under this
Agreement or the other Loan Documents, or in the prosecution or defense of any
action
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or proceeding concerning any matter growing out of or connected with this
Agreement or any of the other Loan Documents other than resulting from the gross
negligence or willful misconduct of Agent or such Bank or Banks, as the case may
be; and, with respect to each of the Permitted Borrowers, indemnify and save
Agent and each of the Banks harmless from all reasonable loss, cost, damage,
liability or expenses, including reasonable attorneys' fees and disbursements,
incurred by Agent and each of the Banks with respect to such Permitted Borrower
by reason of an Event of Default or enforcing the obligations of such Permitted
Borrower under this Agreement or the other Loan Documents or in the prosecution
or defense of any action or proceeding concerning any matter growing out of or
connected with this Agreement or any of the other Loan Documents, other than
resulting from the gross negligence or willful misconduct of Agent or such Bank
or Banks, as the case may be.
7.15 Governmental and Other Approvals. Apply for, obtain and/or
maintain in effect, as applicable, all material authorizations, consents,
approvals, licenses, qualifications, exemptions, filings, declarations and
registrations (whether with any court, governmental agency, regulatory
authority, securities exchange or otherwise) which are necessary in connection
with the execution, delivery and performance of this Agreement, the other Loan
Documents, or any other documents or instruments to be executed and/or delivered
by the Company or any of the Permitted Borrowers or Guarantors, as the case may
be, in connection therewith or herewith.
7.16 Compliance with Contractual Obligations and Laws.
(a) Comply in all material respects with all Contractual
Obligations, and with all applicable laws, rules, regulations and orders of any
governmental authority, whether federal, state, local or foreign (including
without limitation Hazardous Materials Laws and any consumer protection, truth
in lending, disclosure and other similar laws and regulations governing the
provision of financing to consumers), in effect from time to time, except to the
extent that failure to comply therewith could not reasonably be expected to
have, individually or in the aggregate, a material adverse effect on the
business, operations, property or financial or other condition of the Company or
any of the Permitted Borrowers and their respective Subsidiaries, taken as a
whole, and could not reasonably be expected to materially adversely affect the
ability of the Company or any of the Permitted Borrowers or Guarantors to
perform their respective obligations under any of the Loan Documents to which
they are a party.
(b) Comply in all material respects with all applicable federal,
state and/or foreign laws and regulations in effect from time to time governing
the due and proper creation of installment sales contracts, motor vehicle leases
or similar indebtedness or obligations and of the creation, perfection and/or
protection, as applicable, of first priority security interests or lessor's
interests in motor vehicles being financed and/or sold and/or leased pursuant
thereto, as applicable.
7.17 ERISA. Comply in all material respects with all requirements
imposed by ERISA as presently in effect or hereafter promulgated or the Internal
Revenue Code (or comparable laws in applicable jurisdictions outside the United
States of America relating to foreign Pension Plans) and promptly notify Banks
upon the occurrence of any of the following events:
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(a) the termination of any Pension Plan pursuant to Subtitle C of
Title IV of ERISA or otherwise (other than any defined contribution plan not
subject to Section 412 of the Internal Revenue Code and any Multiemployer Plan);
(b) the appointment of a trustee by a United States District Court
to administer any Pension Plan pursuant to ERISA;
(c) the commencement by the PBGC, or any successor thereto, of any
proceeding to terminate any Pension Plan;
(d) the failure of the Company or any ERISA Affiliate to make any
payment in respect of any Pension Plan required under Section 412 of the
Internal Revenue Code;
(e) the withdrawal of the Company or any ERISA Affiliate from any
Multiemployer Plan;
(f) the occurrence of an accumulated funding deficiency (as
defined in Section 6.18 hereof) or a Reportable Event; or
(g) the occurrence of a Prohibited Transaction which could have a
material adverse effect upon the Company and its Subsidiaries, taken as a whole.
7.18 Environmental Matters.
(a) Conduct and complete all investigations, studies, sampling and
testing, and all remedial, removal and other actions necessary to clean up and
remove all Hazardous Materials on or affecting any premises owned or occupied by
Company or any of its Subsidiaries, whether resulting from conduct of Company or
any of its Subsidiaries or any other Person, if required by Hazardous Material
Laws, all such actions to be taken in accordance with such laws, and the orders
and directives of all applicable federal, state and local governmental
authorities; and
(b) Defend, indemnify and hold harmless Agent and each of the
Banks, and their respective employees, agents, officers and directors from and
against any and all claims, demands, penalties, fines, liabilities, settlements,
damages, costs or expenses of whatever kind or nature arising out of or related
to (i) the presence, disposal, release or threatened release of any Hazardous
Materials on, from or affecting any premises owned or occupied by Company or any
of its Subsidiaries, (ii) any personal injury (including wrongful death) or
property damage (real or personal) arising out of or related to such Hazardous
Materials, (iii) any lawsuit or other proceeding brought or threatened,
settlement reached or governmental order or decree relating to such Hazardous
Materials, (iv) the cost of removal of all Hazardous Materials from all or any
portion of any premises owned by Company or its Subsidiaries, (v) the taking of
necessary precautions to protect against the release of Hazardous Materials on
or affecting any premises owned by Company or any of its Subsidiaries, (vi)
complying with all Hazardous Material Laws and/or (vii) any violation by Company
or any of its Subsidiaries of Hazardous Material Laws, including without
limitation,
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reasonable attorneys and consultants fees, investigation and laboratory fees,
environmental studies required by Agent or any Bank (whether before or after the
occurrence of any Default or Event of Default), court costs and litigation
expenses; and, if so requested by Agent or any Bank, Company shall execute, and
shall cause the Permitted Borrowers to execute, separate indemnities covering
the foregoing matters. The obligations of Company and Permitted Borrowers under
this Section 7.18 shall be in addition to any and all other obligations and
liabilities the Company or any of the Permitted Borrowers may have to Agent or
any of the Banks at common law or pursuant to any other agreement.
7.19 Maintain Debt Rating. Cause Fitch on an ongoing basis, but not
less than once during each calendar year, to maintain a Debt Rating for
Company's long term, non-credit enhanced senior debt.
7.20 Installment Contract Standards. (a) Cause each Installment
Contract included in Gross Installment Contract Receivables and each Lease
purchased and/or entered into by or on behalf of Company or any Subsidiary to
satisfy the following requirements:
(i) Such Installment Contract or Lease (and the interest of
Company or its Subsidiaries thereunder) has not been sold,
transferred or otherwise assigned or encumbered by the Company or
its Subsidiaries to any Person, other than to the Lenders pursuant
to the Collateral Documents;
(ii) The Installment Contract obligor or lessee under such
Lease thereunder is not an Affiliate of the Company; and
(iii) It is owned by Company or a Subsidiary, or Company or a
Subsidiary has a valid first priority perfected security interest
therein; and
(b) Exercise its best efforts to enforce the provisions of its
Dealer Agreements relating to the eligibility criteria for Installment Contracts
included in Gross Installment Contract Receivables and for Leases, including
without limitation:
(i) it has not been rescinded and it is a valid, binding and
enforceable obligation of the applicable Installment Contract
obligor or lessee under such Lease;
(ii) it is enforceable against the applicable Installment
Contract obligor or lessee under such Lease for the amount shown
as owing in the contract and in any related records;
(iii) it complied at the time it was originated or made, and
is currently in compliance in all respects, with all requirements
of applicable federal, state and local laws, and regulations
thereunder, including, usury laws, the Federal Truth-in-Lending
Act, the Equal Credit Opportunity Act, the Fair Credit Billing
Act, the Fair Credit Reporting Act, the Fair Debt Collection
Practices Act, the Federal Trade Commission
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Act, the Magnuson-Moss Warranty Act, Federal Reserve Board
Regulations B, M and Z, state adaptations of the National Consumer
Act and of the Uniform Consumer Credit Code and any other consumer
credit or equal opportunity disclosure;
(iv) it is not subject to any material offset, credit,
allowance or adjustment;
(v) the Company or a Subsidiary has a first and prior
perfected security interest or ownership interest (subject only to
the applicable Lease) (received directly or by assignment) in the
financed or leased vehicle securing the performance of the
applicable Installment Contract obligor or lessee under such
Lease;
(vi) the financed vehicle has been delivered to the
applicable Installment Contract obligor or lessee under such Lease
and, on the date of delivery, satisfied all warranties, expressed
or implied, made to such Installment Contract obligor or lessee
under such Lease; and
(vii) the applicable Installment Contract obligor or lessee
under such Lease owns or leases the motor vehicle free of all
liens or encumbrances, except the security interest granted to
Company or a Subsidiary or the lessor's interest held by Company
or a Subsidiary (received in each case directly or by assignment)
in the applicable Installment Contract or Lease.
7.21 Financial Covenant Amendments. In the event that, at any time
while this Agreement is in effect, the Company shall issue any indebtedness for
borrowed money which is not by its terms subordinate and junior to other
indebtedness of Company for borrowed money and such indebtedness shall include,
or be issued pursuant to a trust indenture or other agreement which includes,
financial covenants which are not substantially identical to the financial
covenants set forth in this Agreement, the Company shall so advise the Agent in
writing. Such notice shall be accompanied by a copy of the applicable agreement
containing such financial covenants. The Agent shall promptly furnish a copy of
such notice and the applicable agreement to each of the Banks. If the Majority
Banks determine in their sole discretion that some or all of the financial
covenants set forth in such agreement are more favorable to the lender
thereunder than the financial covenants set forth in this Agreement ("More
Favorable Terms") and that the Majority Banks desire that this Agreement be
amended to incorporate the More Favorable Terms, then the Agent shall give
written notice of such determination to the Company. Thereupon, and in any event
within thirty (30) days following the date of notice by Agent to the Company,
Company and the Banks shall enter into an amendment to this Agreement
incorporating, on terms and conditions acceptable to the Majority Banks, the
More Favorable Terms.
7.22 Subsidiaries; Guaranties. With respect to each Person which
becomes a Significant Subsidiary of the Company subsequent to the effective date
hereof, within thirty days of the date of Company's delivery of the financial
statements required under Section 7.3(b) or 7.3(c) which establish that such
Person is or has become a Significant Subsidiary (but in any event, in the case
of a Permitted Borrower, prior to the time such Permitted Borrower shall be
entitled to request any
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Advances hereunder), cause such Subsidiary to execute and deliver to Agent, for
and on behalf of each of the Banks, a Joinder Agreement whereby such Significant
Subsidiary becomes obligated as a Guarantor under the Domestic Guaranty or the
Foreign Guaranty, as applicable, together with such supporting documentation,
including without limitation corporate authority items, certificates and
opinions of counsel, as reasonably required by Agent and the Majority Banks.
7.23 Special Covenants for Leasing Program and Other Covenants. (a)
Prior to funding and/or securitizing more than $5,000,000 in book value of
Leased Vehicles after the Effective Date, enter into (i) amendments to the Note
Purchase Agreements, if then outstanding, on substantially the terms set forth
herein with respect to the funding and/or securitization of Leased Vehicles, and
(ii) amendments to the Collateral Documents necessary (in the reasonable
determination of the Agent, acting in its capacity as collateral agent under the
Intercreditor Agreement) to confirm the encumbrance thereunder of Leases and, to
the extent applicable, Leased Vehicles; and
(b) Other than (i) Leases with respect to motor vehicles located
outside the United States of America and its territories and possessions or (ii)
Leases originated by CAC Leasing prior to the date hereof or (iii) Leases
originated by AutoNet.net Finance Company to the extent applicable state law
prohibits the Company from originating Leases in such state using an assumed
name, the Company will originate and hold all Leases in its own name or by using
the assumed name, CAC Leasing; and
(c) Promptly upon the Company's creation or acquisition of any
Significant Domestic Subsidiary, (i) grant a security interest and lien to the
Agent, for the benefit of the Banks, in the Collateral owned by such Significant
Domestic Subsidiary substantially on the terms set forth in the Security
Agreement, and (ii) pledge to the Agent, for the benefit of the Banks, all of
the outstanding capital stock of such Significant Domestic Subsidiary which is
owned by the Company or its Subsidiaries in a form satisfactory to the Agent,
acting in its capacity as collateral agent under the Intercreditor Agreement, in
its reasonable discretion, all to secure the Indebtedness.
7.24 Year 2000 Requirement. The Company and its Subsidiaries shall
review the areas in their business and operations which could be materially
adversely affected by, and develop a program to address on a timely basis the
risk that, computer applications used by the Company and its Subsidiaries may be
unable to recognize and perform properly date-sensitive functions involving
certain dates prior to and any date after December 31, 1999. Any reprogramming
required to permit the proper functioning, in and following the year 2000,
computer systems and equipment containing embedded microchips owned or leased by
the Company or any of its Subsidiaries and the testing of all such systems and
equipment, as so reprogrammed, will be completed by June 30, 1999. The cost to
the Company and its Subsidiaries of such reprogramming and testing and of the
reasonably foreseeable consequences of year 2000 to the Company and its
Subsidiaries (including, without limitation, reprogramming errors and the
failure of others' systems or equipment) will not result in a Default or have a
material adverse effect on the Company and its Subsidiaries, taken as a whole.
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8. NEGATIVE COVENANTS
Company and each of the Permitted Borrowers covenant and agree that, so
long as any of the Banks are committed to make any Advances under this Agreement
and thereafter so long as any Indebtedness remains outstanding, it will not, and
it will not allow its Subsidiaries (but excluding, for purposes of Sections
8.10, 8.13, 8.14 hereof, any Special Purpose Subsidiary), without the prior
written consent of the Majority Banks, to:
8.1 Capital Structure and Redemptions. Purchase, acquire or redeem any
of its capital stock, except for a Permitted Repurchase; or make any material
change in its capital structure, provided however that the issuance of (i)
additional common stock or (ii) (if issued as part of or in connection with an
underwritten public offering) shares of other classes of capital stock of
Company or its Subsidiaries, or (iii) securities issued by a Special Purpose
Subsidiary pursuant to a Permitted Securitization, shall not constitute material
changes in capital structure.
8.2 Business Purposes. Engage in, or make any investment in any
business engaged in, the provision of property and casualty insurance unless the
Company or such Subsidiary shall maintain reinsurance of its underwriting risk
with a third party(ies) rated "A-" or better by S&P or "A3" or better by Moody's
for all of the Company's or such Subsidiary's exposure in excess of one hundred
percent (100%) of the premiums written by the Company or such Subsidiary; or
engage in any business if, after giving effect thereto, the general nature of
the businesses of the Company and its Subsidiaries, taken as a whole, would no
longer be the provision of financing programs for the purchase or lease of used
motor vehicles, motor vehicle service protection programs, credit life, accident
and health insurance programs and other programs related to the foregoing (it
being understood that, in the course of the provision of such programs, the
Company may be obligated to remit monies held by it in connection with dealer
holdbacks, claims or refunds under insurance policies, or claims or refunds
under service contracts, and to make deposits in trust or otherwise as required
under reinsurance agreements or pursuant to state regulatory requirements);
provided however that the Company and its Subsidiaries shall manage and operate
such businesses in substantially the same manner that they are managed and
operated as of the date hereof.
8.3 Mergers or Dispositions. Enter into any merger or consolidation,
except for any Permitted Merger, or sell, lease, transfer, relocate or dispose
of all, substantially all, or any material part of its assets, except for
Permitted Transfers and Permitted Securitization(s).
8.4 Guaranties. Guarantee, endorse, or otherwise become liable for or
upon the obligations of others, except by endorsement of cash items for deposit
in the ordinary course of business and except for the Guaranties and the
Permitted Guaranties.
8.5 Debt. Become or remain obligated for any indebtedness for borrowed
money, or for any indebtedness incurred in connection with the acquisition of
any property, real or personal, tangible or intangible, or for any other Debt,
except for:
(a) Indebtedness to Banks hereunder;
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(b) current unsecured trade, utility or non-extraordinary accounts
payable arising in the ordinary course of Company's or any Subsidiary's
businesses;
(c) purchase money debt for fixed assets (including capitalized
leases or other non-cancelable leases having a term of twelve months or longer)
not to exceed an aggregate amount, for the Company and its Subsidiaries incurred
while in compliance with this Agreement and the other Loan Documents, of Three
Million Dollars ($3,000,000) (or the Alternative Currency equivalent thereof) at
any one time outstanding and mortgage debt incurred (by assumption or otherwise)
by Arlington Investment Company, a Subsidiary of the Company, in an aggregate
principal amount not to exceed $1,000,000.00 at any time outstanding;
(d) the Senior Debt, Future Debt, Permitted CAC UK Debt, the
Subordinated Debt, unsecured overdraft lines of credit or similar credit
arrangements maintained by the Permitted Borrowers in the ordinary course of
business in the countries of their formation, in an amount not to exceed, in the
case of CAC UK, Pound 2,000,000 and in the case of each of the other Permitted
Borrowers, $1,500,000, or the equivalent thereof in an Alternative Currency,
lines of credit maintained by Arlington Investment Company, in the ordinary
course of business, in an aggregate amount not to exceed $5,000,000.00 at any
time outstanding, and such other debt set forth in Schedule 8.5 attached hereto,
if any (in addition to any other matters set forth in this Section 8.5), and any
renewals or refinancing of such indebtedness in amounts not exceeding the
scheduled amounts (less any required amortization according to the terms
thereof) on substantially the same terms and otherwise in compliance with this
Agreement;
(e) non-recourse Debt incurred by a Special Purpose Subsidiary
pursuant to a Permitted Securitization; and
(f) debt consisting of interest rate protection agreements
(including interest rate caps, collars or swaps) or foreign currency exchange
agreements (including foreign currency hedges and swaps) entered into by the
Company and/or a Permitted Borrower, to manage existing or anticipated interest
rate or foreign exchange rate risk and not for speculative purposes (copies of
which shall be provided to the Agent promptly upon the execution thereof), and
other Debt for borrowed money in an amount not to exceed in the aggregate for
the Company and its Subsidiaries at any time outstanding, the sum of Five
Million Dollars ($5,000,000) (or the Alternative Currency equivalent thereof),
which Debt shall be unsecured except to the extent of any Lien permitted under
Section 8.6(d) hereof.
8.6 Liens. Permit or suffer any Lien to exist on any of its
properties, real, personal or mixed, tangible or intangible, whether now owned
or hereafter acquired, except:
(a) in favor of Agent, as security for the Indebtedness and any
Liens granted to the holders of Senior Debt (and, to the extent applicable,
Future Debt under clause (x) of the definition thereof) pursuant to Collateral
Documents, on an equal and ratable basis with comparable Liens granted to Agent,
for and on behalf of the Banks;
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(b) purchase money security interests in fixed assets to secure
the purchase money indebtedness permitted in Section 8.5(c) hereof, provided
that each such security interest is created substantially contemporaneously with
the acquisition of such fixed assets and does not extend to any property other
than the fixed asset so financed and provided further that the sum of all such
purchase money indebtedness outstanding at any time shall not exceed the
aggregate amount set forth in Section 8.5(c) hereof and mortgage debt identified
in Section 8.5(c) encumbering that certain land and building currently leased to
Arlington Investment Company by MP Developers; and
(c) Permitted Liens and any Lien encumbering property interests,
rights or proceeds which are the subject of a transfer or encumbrance pursuant
to a Permitted Securitization; and
(d) Liens on the property of Company or any of its Subsidiaries
other than Advances to Dealers, Leased Vehicles, Installment Contracts, Leases
or property related thereto, not otherwise permitted under subparagraphs (a)
through (c) of this Section 8.6 if the obligations secured by such Liens do not
exceed, in an aggregate amount from time to time outstanding, the difference
between (i) Twenty Percent (20%) of Consolidated Tangible Net Worth of Company
and (ii) the sum of (w) the aggregate obligations secured by Liens permitted
under subparagraph (b) of this Section 8.6, (x) the aggregate obligations
secured by Permitted Liens disclosed on Schedule 8.6 attached hereto, (y) the
aggregate amount of Debt of the Subsidiaries of Company (other than Special
Purpose Subsidiaries) and, all as of the applicable date of determination.
8.7 Acquisitions. Other than any Permitted Acquisition or any
acquisition of any rights or property pursuant to a Permitted Securitization,
purchase or otherwise acquire or become obligated for the purchase of all or
substantially all of the assets or business interests of any Person, firm or
corporation, or any shares of stock (or other ownership interests) of any
corporation, trusteeship or association, or any business or going concern, or in
any other manner effectuate or attempt to effectuate an expansion of present
business by acquisition.
8.8 Investments. Make or allow to remain outstanding any Investment
in, or any loans or advances to, any Person, firm, corporation or other entity
or association, other than:
(a) any loan or other advance by Company or a Subsidiary, as the
case may be, to any and all of its officers or employees, as the case may be, in
the normal course of business, so long as the aggregate of all such loans or
advances by the Company and its Subsidiaries does not exceed One Million Five
Hundred Thousand Dollars ($1,500,000) (or the equivalent thereof in an
Alternative Currency) at any time outstanding, plus reasonable, reimbursable
business and travel expenses;
(b) Permitted Investments at any time outstanding or in effect;
(c) Investments in Company's Subsidiaries existing as of the date
of this Agreement;
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(d) Investments from and after the date hereof in any Subsidiary
or any Person that concurrently with such Investment becomes a Subsidiary, in an
aggregate amount for all such Investments at any time outstanding, not to exceed
in the aggregate twenty five percent (25%) of Company's Consolidated Tangible
Net Worth (it being understood that loans and advances to any Subsidiary by any
Person other than the Company or any other Subsidiary, regardless of whether
such loans and advances are guaranteed by the Company or any other Subsidiary,
shall not be taken into account in determining the aggregate amount of
investments made pursuant to this clause (d));
(e) Floor Plan Receivables and Notes Receivable in an aggregate
amount at any time outstanding not to exceed ten percent (10%) of Consolidated
Total Assets;
(f) Advances to Dealers, Leased Vehicles and, subject to the
limitation contained in subparagraph (e) of this Section 8.8, receivables
arising from the sale or lease of goods and services by the Company or its
Subsidiaries, in each case in the ordinary course of business of Company and its
Subsidiaries;
(g) Permitted Acquisition(s), to the extent any such acquisition
shall be deemed to constitute an Investment;
(h) Those Investments set forth on the attached Schedule 8.8;
(i) Investments in any Subsidiary (including, without limitation,
any Special Purpose Subsidiary) from and after the date hereof, consisting of
(w) dispositions of specific Advances to Dealers, Leased Vehicles, Installment
Contracts (whether assigned outright or related to Advances to Dealers) or
Leases (whether assigned outright or related to Leased Vehicles) made pursuant
to a Permitted Securitization and the resultant Debt issued by a Special Purpose
Subsidiary to another Subsidiary as part of a Permitted Securitization, in each
case to the extent constituting Investments hereunder; (x) advances by Company
(as servicer) which are permitted under the definition of Permitted Guaranties;
(y) the repurchase or replacement from and after the date hereof of an aggregate
amount not to exceed $5,000,000 in Advances to Dealers, Leased Vehicles,
Installment Contracts (whether assigned outright or related to Advances to
Dealers) or Leases (whether assigned outright or related to Leased Vehicles)
subsequently determined not to satisfy the eligibility standards contained in
the applicable Securitization Documents relating to a Permitted Securitization,
so long as (i) such replacement is accompanied by the repurchase of or release
of encumbrances on such financial assets previously transferred or encumbered
pursuant to such securitization and in the amount thereof, (ii) any replacement
Advances to Dealers, Leased Vehicles, Installment Contracts (whether assigned
outright or related to Advances to Dealers) or Leases (whether assigned outright
or related to Leased Vehicles) are selected by Company according to the
requirements set forth in clause (a) of the definition of Permitted
Securitization and (iii) such replacements are made at a time when (both before
and after giving effect thereto) no Default or Event of Default has occurred and
is continuing; (z) amounts required to fund any Cleanup Call under the terms of
such Permitted Securitization, and (zz) the disposition to the Company of any
Subsidiary (other than a Special Purpose Subsidiary) of the capital stock of any
Special Purpose
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Subsidiary; and
(j) Investments, other than those set forth in subparagraphs (a)
through (h) above, in an aggregate amount at any time outstanding not to exceed
Two Million Five Hundred Thousand Dollars ($2,500,000), or the equivalent
thereof in an Alternative Currency.
In valuing any Investments for the purpose of applying the limitations set forth
in this Section 8.8 (except as otherwise expressly provided herein), such
Investment shall be taken at the original cost thereof, without allowance for
any subsequent write-offs or appreciation or depreciation, but less any amount
repaid or recovered on account of capital or principal.
8.9 Accounts Receivable. Except to Agent on behalf of the Banks or
pursuant to a Permitted Securitization, sell or assign any account, note or
trade acceptance receivable, if the sum of (i) the face value of the account,
note or trade acceptance receivables proposed to be transferred, plus (ii) the
face value of account, note or trade acceptance receivables transferred by the
Company and its Subsidiaries during the then current fiscal year of the Company
would exceed five percent (5%) of the face value of the account, note and trade
acceptance receivables of the Company and its Subsidiaries determined on a
Consolidated basis as of the end of the most recently concluded fiscal year of
the Company prior to giving effect to any such transfer.
8.10 Transactions with Affiliates. Enter into any transaction with any
of its stockholders or officers or its Affiliates (including without limitation
affiliated Dealers), except in the ordinary course of business and on terms not
materially less favorable than would be usual and customary in similar
transactions between Persons dealing at arm's length.
8.11 No Further Negative Pledges. Enter into or become subject to any
agreement (other than loan documents evidencing or otherwise related to the
Senior Debt, the Future Debt, the Permitted CAC UK Debt, or unsecured overdraft
lines of credit or similar credit arrangements maintained by the Permitted
Borrowers in the ordinary course of business in the countries of their formation
or any purchase money Debt permitted under this Agreement or the other Loan
Documents, but only to the extent of the property acquired with the proceeds of
such purchase money Debt, and other than pursuant to any of the Securitization
Documents, but only to the extent of the Advances to Dealers, Leased Vehicles,
Installment Contracts or Leases, and the other rights and property transferred
or encumbered in connection with the Permitted Securitization covered by such
Securitization Documents) (i) prohibiting the guaranteeing by the Company or any
Subsidiary of any obligations, (ii) prohibiting the creation or assumption of
any lien or encumbrance upon the properties or assets of the Company or any
Subsidiary, whether now owned or hereafter acquired, or (iii) requiring an
obligation to become secured (or further secured) if another obligation is
secured or further secured.
8.12 Prepayment of Debts. Except for Permitted Prepayments and the
Permitted Senior Note Prepayment, prepay, purchase, redeem or defease any Debt
for money borrowed, excluding, subject to the terms hereof, the Indebtedness,
and excluding paydowns from time to time of permitted working capital facilities
or other revolving debt and mandatory payments, prepayments
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or redemptions for which Company or any Subsidiary is obligated as of the date
hereof or, with respect only to the Senior Debt or for any Future Debt, for
which Company or any Subsidiary becomes obligated after the date hereof or, with
respect only to Permitted Securitizations, any payment pursuant to a Cleanup
Call.
8.13 Amendment of Senior Debt or Future Debt Documents. Except with the
prior written approval of Agent and the Majority Banks, amend, modify or
otherwise alter (or suffer to be amended, modified or altered) or waive (or
permit to be waived) in any material respect, any documents or instruments
evidencing or otherwise related to Senior Debt or Future Debt so as to shorten
the original maturity date or amortization schedule thereof, or amend, modify or
otherwise alter (or suffer to be amended, modified or altered) any documents or
instruments evidencing or otherwise related to Senior Debt or Future Debt to
include (or enter into any Future Debt Documents which include) any covenants or
other provisions, other than a provision not more onerous to the Company than
Section 6.18 of the note purchase agreements governing the Senior Debt as in
effect on the date hereof, that require, for the amendment of any term or
provision of this Agreement, or the waiver of any term or provision hereof, the
approval or consent of any other creditor of the Company.
8.14 Amendment of Subordinated Debt Documents. Amend, modify or
otherwise alter (or suffer to be amended, modified or altered) any of the
material terms and conditions of those documents or instruments evidencing or
otherwise related to Subordinated Debt or waive (or permit to be waived) any
such provision thereof in any material respect, without the prior written
approval of Agent and the Majority Banks. For purposes of those documents and
instruments evidencing or otherwise related to the Subordinated Debt, any
increase in the original interest rate or principal amount, any shortening of
the original amortization, any change in any default, remedial or other
repayment terms, any change in or waiver of conditions contained therein which
are required under or necessary for compliance with this Agreement or the other
Loan Documents or any change in the subordination provisions contained therein,
shall (without reducing the scope of this Section 8.14) be deemed to be
material.
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 (other than any Special Purpose
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.
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8.16 Securitization Transaction; Amendments to Securitization
Documents. Engage in a Securitization Transaction, other than a Permitted
Securitization and once executed and delivered pursuant to a Permitted
Securitization, amend, modify or otherwise alter any of the material terms and
conditions of any Securitization Documents or waive (or permit to be waived) any
such provision thereof in any material respect, adverse to the Company or any
Subsidiary, without the prior written approval of Agent and the Majority Banks.
For purposes of such documents and instruments, "material" and "materially"
shall be deemed to relate solely to recourse, Cleanup Calls or any change in or
waiver of conditions contained therein which are required under or necessary for
compliance with this Agreement. For purposes of the Securitization Documents,
the "material terms and conditions" thereof shall be deemed solely those terms
or conditions with respect to servicer fees, servicer expenses, defaults, events
of default, recourse to the Company or any Subsidiary (other than a Special
Purpose Subsidiary), Cleanup Calls or conditions contained therein which are
required under or necessary for compliance with this Agreement.
9. DEFAULTS
9.1 Events of Default. Any of the following events is an "Event of
Default":
(a) non-payment of the principal or interest, when due, under any
of the Notes issued hereunder, or of any Letter of Credit Obligation in
accordance with the terms thereof;
(b) Default in the payment of any money by Company or the
Permitted Borrowers under this Agreement (other than as set forth in subsection
(a), above), within three (3) days of the date the same is due and payable;
(c) default in the observance or performance of any of the other
conditions, covenants or agreements set forth in this Agreement or any of the
other Loan Documents by any party thereto (provided that, with respect to the
covenants set forth in Sections 7.11, 7.13, 7.16, 7.17 and 7.18(a) hereof, such
event has continued for thirty (30) consecutive days) or the occurrence of any
other default or event of default, as the case may be, hereunder or thereunder;
(d) any representation or warranty made or deemed made by Company
or a Permitted Borrower herein or in any instrument submitted pursuant hereto or
by any other party to the Loan Documents proves untrue in any material adverse
respect when made or deemed made;
(e) any provision of the Company Guaranty, the Domestic Guaranty
or the Foreign Guaranty or any of the Collateral Documents shall at any time for
any reason (other than in accordance with its terms or the terms of this
Agreement) cease to be valid and binding and enforceable against the Company, or
any Significant Subsidiary, as applicable, or the validity, binding effect or
enforceability thereof shall be contested by any Person, or the Company, or any
Significant Subsidiary shall deny that it has any or further liability or
obligation under the Company Guaranty, the Domestic Guaranty or the Foreign
Guaranty or any of the Collateral Documents, as applicable, or the Company
Guaranty, the Domestic Guaranty or the Foreign Guaranty or any of the
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Collateral Documents shall be terminated, invalidated, revoked or set aside or
in any way cease to give or provide to the Banks and the Agent the benefits
purported to be created thereby;
(f) default in the payment of any other obligation of Company, its
Subsidiaries or any of the Permitted Borrowers for borrowed money in an
aggregate amount in excess of Two Million Dollars ($2,000,000), or the
equivalent thereof in an Alternative Currency; or default in the observance or
performance of any conditions, covenants or agreements related or given with
respect to any other obligations for borrowed money in an aggregate amount in
excess of Two Million Dollars ($2,000,000), or the equivalent thereof in an
Alternative Currency, sufficient to permit the holder thereof to accelerate the
maturity of such obligation or, with respect to the Securitization Documents,
(i) the occurrence (beyond any applicable period of grace or cure) of any
"servicer event of default" thereunder or (ii) the occurrence of any other
default (beyond any applicable period of grace or cure) by Company or any of its
Subsidiaries, including any Special Purpose Subsidiary, under the Securitization
Documents, which can be reasonably expected to result in recourse liability
against the Company or any of its Subsidiaries (other than a Special Purpose
Subsidiary) in an aggregate amount exceeding $2,000,000;
(g) a final judgment or final judgments for the payment of money
aggregating in excess of Two Million Dollars ($2,000,000), or the equivalent
thereof in an Alternative Currency, shall be outstanding against any one or more
of the Company and its Subsidiaries and any one of such judgments shall have
been outstanding for more than thirty (30) days from the date of its entry,
except to the extent that any such judgment is being contested in good faith by
appropriate proceedings which provide for a stay of any enforcement action
against the Company or such Subsidiary during the pendency of such proceedings
and for which adequate reserves have been established and where nonpayment of
such judgment could not reasonably be expected to have a material adverse effect
on the Company and its Subsidiaries taken as a whole;
(h) any Person shall engage in any Prohibited Transaction
involving any Pension Plan, (ii) any accumulated funding deficiency (as defined
in Section 6.18 hereof), whether or not waived, shall exist with respect to any
Pension Plan or any Lien in favor of the PBGC or a Pension Plan shall arise on
the assets of the Company or any ERISA Affiliate, (iii) a Reportable Event shall
occur with respect to, or proceedings shall commence to have a trustee appointed
or a trustee shall be appointed to administer, or to terminate, any Single
Employer Plan, (iv) any Single Employer Plan shall terminate for purposes of
Title IV of ERISA or (v) the Company or any ERISA Affiliate shall, or in the
reasonable opinion of the Majority Banks is likely to, incur any liability in
connection with a withdrawal from, or the insolvency, bankruptcy or
reorganization of, a Multiemployer Plan and in each case in clauses (i) through
(v) above, (x) a period of sixty (60) days, or more, has elapsed from the
occurrence of such event or condition and (y) such event or condition, together
with all other such events or conditions, if any, could reasonably be expected
to subject the Company or any of its Subsidiaries to any tax, penalty or other
liabilities in the aggregate material in relation to the business, operations,
property or financial or other condition of the Company and its Subsidiaries
taken as a whole;
(i) Donald Foss, his wife and children or trust(s) established for
his or their
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benefit cease to own legal or beneficial title to thirty-five percent (35%) or
more of the voting stock of Company, or Donald Foss, his wife and children or
trust(s) established for his or their benefit otherwise lose the practical,
beneficial or effective control of the Company, whether by reason of debt,
merger, consolidation, sale or purchase of stock or assets or otherwise, or the
occurrence of a "Change in Control" under the documents relating to the Senior
Debt or any Future Debt; or
(j) a receiver, liquidator, custodian or trustee of the Company or
any Subsidiary, or of all or any part of the property of the Company or any
Subsidiary, shall be appointed by court order and such order shall remain in
effect for more than sixty (60) days, or an order for relief shall be entered
with respect to the Company or any Subsidiary, or the Company or any Subsidiary
shall be adjudicated a bankrupt or insolvent; or any of the property of the
Company or any Subsidiary shall be sequestered by court order and such order
shall remain in effect for more than sixty (60) days; or a petition shall be
filed against the Company or any Subsidiary under any bankruptcy,
reorganization, arrangement, insolvency, readjustment of debt, dissolution or
liquidation law of any jurisdiction, whether now or hereafter in effect, and
shall not be dismissed within sixty (60) days after such filing; or the Company
or any Subsidiary shall file a petition in voluntary bankruptcy or seeking
relief under any provision of any bankruptcy, reorganization, arrangement,
insolvency, readjustment of debt, dissolution or liquidation law of any
jurisdiction, whether now or hereafter in effect, or shall consent to the filing
of any petition against it under any such law; or the Company or any Subsidiary
shall make an assignment for the benefit of its creditors, or shall admit in
writing its inability, or shall fail, to pay its debts generally as they become
due, or shall consent to the appointment of a receiver, liquidator or trustee of
the Company or any Subsidiary or of all or any part of the property of the
Company or any Subsidiary.
9.2 Exercise of Remedies. If an Event of Default has occurred and is
continuing hereunder: (a) the Agent shall, if directed to do so by the Majority
Banks, declare any commitment of the Banks to extend credit hereunder
immediately terminated; (b) the Agent shall, if directed to do so by the
Majority Banks, declare the entire unpaid Indebtedness, including the Notes,
immediately due and payable, without presentment, notice or demand, all of which
are hereby expressly waived by Company and the Permitted Borrower; (c) upon the
occurrence of any Event of Default specified in Section 9.1(j) above, and
notwithstanding the lack of any declaration by Agent under the preceding clause
(a) or (b), the Banks' commitments to extend credit hereunder shall immediately
and automatically terminate and the entire unpaid Indebtedness, including the
Notes, shall become automatically due and payable without presentment, notice or
demand; (d) the Agent shall, upon being directed to do so by the Majority Banks,
demand immediate delivery of cash collateral, and the Company and each Account
Party agree to deliver such cash collateral upon demand, in an amount equal to
the maximum amount that may be available to be drawn at any time prior to the
stated expiry of all outstanding Letters of Credit, and (e) the Agent shall, if
directed to do so by the Majority Banks or the Banks, as applicable (subject to
the terms hereof), exercise any remedy permitted by this Agreement, the other
Loan Documents, including without limitation any of the Collateral Documents.
9.3 Rights Cumulative. No delay or failure of Agent and/or Banks in
exercising any right, power or privilege hereunder shall affect such right,
power or privilege, nor shall any single or partial
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exercise thereof preclude any other or further exercise thereof, or the exercise
of any other power, right or privilege. The rights of Banks under this Agreement
are cumulative and not exclusive of any right or remedies which Banks would
otherwise have.
9.4 Waiver by Company and Permitted Borrowers of Certain Laws. To the
extent permitted by applicable law, Company and each of the Permitted Borrowers
hereby agree to waive, and do hereby absolutely and irrevocably waive and
relinquish the benefit and advantage of any valuation, stay, appraisement,
extension or redemption laws now existing or which may hereafter exist, which,
but for this provision, might be applicable to any sale made under the judgment,
order or decree of any court, on any claim for interest on the Notes, AND
FURTHER HEREBY IRREVOCABLY AGREE TO WAIVE THE RIGHT TO TRIAL BY JURY WITH
RESPECT TO ANY AND ALL ACTIONS OR PROCEEDINGS IN WHICH AGENT OR THE BANKS (OR
ANY OF THEM), ON THE ONE HAND, AND THE COMPANY OR ANY OF THE PERMITTED
BORROWERS, ON THE OTHER HAND, ARE PARTIES, WHETHER OR NOT SUCH ACTIONS OR
PROCEEDINGS ARISE OUT OF THIS AGREEMENT OR THE OTHER LOAN DOCUMENTS, OR
OTHERWISE. These waivers have been voluntarily given, with full knowledge of the
consequences thereof.
9.5 Waiver of Defaults. No Event of Default shall be waived by the
Banks except in a writing signed by an officer of the Agent in accordance with
Section 13.11 hereof. No single or partial exercise of any right, power or
privilege hereunder, nor any delay in the exercise thereof, shall preclude any
other or further exercise of the Banks' rights by Agent. No waiver of any Event
of Default shall extend to any other or further Event of Default. No forbearance
on the part of the Agent in enforcing any of the Banks' rights shall constitute
a waiver of any of their rights. Company and the Permitted Borrowers expressly
agree that this Section may not be waived or modified by the Banks or Agent by
course of performance, estoppel or otherwise.
9.6 Cross-Default. In addition to the other Events of Default
specified herein, any failure to perform and discharge when due, after allowance
for any applicable cure period, any of the obligations, covenants and agreements
required to be performed under the provisions of any instruments securing any
other present and future borrowings of Company or the Permitted Borrowers from
the Banks (or from Agent) in renewal or extension of, or related to, this
Agreement or any of the other Loan Documents, or any security agreements in
relation thereto, shall be an Event of Default under the provisions of this
Agreement entitling Agent, with the consent of the Majority Banks (without
notice or any cure period except as expressly provided herein or therein), to
exercise any and all rights and remedies provided hereby. Any Event of Default
shall also constitute a default under all other instruments securing this or any
other present or future borrowings, or any agreements in relation thereto,
entitling Agent and the Banks to exercise any and all rights and remedies
provided therein.
10. PAYMENTS, RECOVERIES AND COLLECTIONS.
10.1 Payment Procedure.
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(a) All payments by Company and/or by any of the Permitted
Borrowers of principal of, or interest on, the Term Notes, the Revolving Credit
Notes or the Swing Line Notes or of Letter of Credit Obligations or Fees shall
be made without setoff or counterclaim on the date specified for payment under
this Agreement not later than 11:00 a.m. (Detroit time) in Dollars in
immediately available funds to Agent, for the ratable account of the Banks, at
Agent's office located at One Detroit Center, Detroit, Michigan 48226, in
respect of Domestic Advances or Fees payable in Dollars. Payments made in
respect of any Advance in any Alternative Currency or any Fees payable in any
Alternative Currency shall be made in such Alternative Currency in immediately
available funds for the account of Agent's Eurocurrency Lending Office, at the
Agent's Correspondent, for the ratable account of the Banks, not later than
11:00 a.m. (the time of Agent's Correspondent). Upon receipt of each such
payment, the Agent shall make prompt payment to each Bank, or, in respect of
Eurocurrency-based Advances, such Bank's Eurocurrency Lending Office, in like
funds and currencies, of all amounts received by it for the account of such
Bank.
(b) Unless the Agent shall have been notified by the Company prior
to the date on which any payment to be made by the Company or any of the
Permitted Borrowers is due that the Company or such Permitted Borrower does not
intend to remit such payment, the Agent may, in its discretion, assume that the
Company or such Permitted Borrower has remitted such payment when so due and the
Agent may, in reliance upon such assumption, make available to each Bank on such
payment date an amount equal to such Bank's share of such assumed payment. If
the Company or any of the Permitted Borrowers has not in fact remitted such
payment to the Agent, each Bank shall forthwith on demand repay to the Agent in
the applicable currency the amount of such assumed payment made available to
such Bank, together with the interest thereon, in respect of each day from and
including the date such amount was made available by the Agent to such Bank to
the date such amount is repaid to the Agent at a rate per annum equal to (i) for
Prime-based Advances, the federal funds rate (daily average), as the same may
vary from time to time, and (ii) with respect to Eurocurrency-based Advances,
Agent's aggregate marginal cost (including the cost of maintaining any required
reserves or deposit insurance and of any fees, penalties, overdraft charges or
other costs or expenses incurred by Agent) of carrying such amount.
(c) Whenever any payment to be made hereunder (other than payments
in respect of any Eurocurrency-based Advance or a Quoted Rate Advance) shall
otherwise be due on a day which is not a Business Day, such payment shall be
made on the next succeeding Business Day and such extension of time shall be
included in computing interest, if any, in connection with such payment.
Whenever any payment of principal of, or interest on, a Eurocurrency-based
Advance or a Quoted Rate Advance shall be due on a day which is not a Business
Day the date of payment thereof shall be extended to the next succeeding
Business Day unless as a result thereof it would fall in the next calendar
month, in which case it shall be shortened to the next preceding Business Day
and, in the case of a payment of principal, interest thereon shall be payable
for such extended or shortened time, if any.
(d) All payments to be made by the Company or the Permitted
Borrowers under this Agreement or any of the Notes (including without limitation
payments under the Swing Line Notes) shall be made without set-off or
counterclaim, as aforesaid, and without deduction for or on
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account of any present or future withholding or other taxes of any nature
imposed by any governmental authority or of any political subdivision thereof or
any federation or organization of which such governmental authority may at the
time of payment be a member, unless Company or any of the Permitted Borrowers,
as the case may be, is compelled by law to make payment subject to such tax. In
such event, Company and such Permitted Borrower shall:
(i) pay to the Agent for Agent's own account and/or, as the
case may be, for the account of the Banks (and, in the case of any
Swing Line Advances, pay to the Swing Line Bank which funded such
Advances) such additional amounts as may be necessary to ensure
that the Agent and/or such Bank or Banks receive a net amount in
the applicable Permitted Currency equal to the full amount which
would have been receivable had payment not been made subject to
such tax; and
(ii) remit such tax to the relevant taxing authorities
according to applicable law, and send to the Agent or the
applicable Bank (including the Swing Line Bank) or Banks, as the
case may be, such certificates or certified copy receipts as the
Agent or such Bank or Banks shall reasonably require as proof of
the payment by the Company or such Permitted Borrower of any such
taxes payable by the Company or such Permitted Borrower.
As used herein, the terms "tax", "taxes" and "taxation" include all
taxes, levies, imposts, duties, charges, fees, deductions and withholdings and
any restrictions or conditions resulting in a charge together with interest
thereon and fines and penalties with respect thereto which may be imposed by
reason of any violation or default with respect to the law regarding such tax,
assessed as a result of or in connection with the transactions in any
Alternative Currency hereunder, or the payment and/or receipt of funds in any
Alternative Currency hereunder, or the payment or delivery of funds into or out
of any jurisdiction other than the United States (whether assessed against
Company, the Permitted Borrower, Agent or any of the Banks).
10.2 Application of Proceeds. Notwithstanding anything to the contrary
in this Agreement, after an Event of Default, the proceeds of any offsets,
voluntary payments by the Company or the Permitted Borrowers or others, the
proceeds of any Collateral and any other sums received or collected in respect
of the Indebtedness, shall be applied, first, to the Notes in such order and
manner as determined by the Majority Banks (subject, however, to the applicable
Percentages of the Revolving Credit and of the Term Loan held by each of the
Banks), next, to any other Indebtedness on a pro rata basis, and then, if there
is any excess, to the Company or the Permitted Borrowers, as the case may be.
The application of such proceeds and other sums to the Notes shall be based on
each Bank's Percentage of the aggregate Indebtedness.
10.3 Pro-rata Recovery. If any Bank shall obtain any payment or other
recovery (whether voluntary, involuntary, by application of offset or otherwise)
on account of principal of, or interest on, any of the Notes (or on account of
its participation in any Letter of Credit) in excess of its pro rata share of
payments then or thereafter obtained by all Banks upon principal of and interest
on all Notes (or such participation), such Bank shall purchase from the other
Banks such participations in
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the Notes (or subparticipations in the Letters of Credit) held by them as shall
be necessary to cause such purchasing Bank to share the excess payment or other
recovery ratably in accordance with the Percentages of the Revolving Credit or
of the Term Loan, as the case may be, with each of them; provided, however, that
if all or any portion of the excess payment or other recovery is thereafter
recovered from such purchasing holder, the purchase shall be rescinded and the
purchase price restored to the extent of such recovery, but without interest.
10.4 Deposits and Accounts. In addition to and not in limitation of any
rights of any Bank or other holder of any of the Notes under applicable law,
each Bank and each other such holder shall, upon acceleration of the
indebtedness under the Notes and without notice or demand of any kind, have the
right to appropriate and apply to the payment of the Notes owing to it (whether
or not then due) any and all balances, credits, deposits, accounts or moneys of
Company or the Permitted Borrowers then or thereafter with such Bank or other
holder; provided, however, that any such amount so applied by any Bank or other
holder on any of the Notes owing to it shall be subject to the provisions of
Section 10.3 hereof.
11. CHANGES IN LAW OR CIRCUMSTANCES; INCREASED COSTS.
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11.1 Reimbursement of Prepayment Costs. If Company or any Permitted
Borrower makes any payment of principal with respect to any Eurocurrency-based
Advance or Quoted Rate Advance on any day other than the last day of the
Interest Period applicable thereto (whether voluntarily, by acceleration, or
otherwise), or converts or refunds (or attempts to convert or refund) any such
Advance; or if Company or any Permitted Borrower fails to borrow, refund or
convert into any Eurocurrency-based Advance or Quoted Rate Advance after notice
has been given by Company or such Permitted Borrower to Agent in accordance with
the terms hereof requesting such Advance, or if Company or any Permitted
Borrower fails to make any payment of principal or interest in respect of a
Eurocurrency-based Advance or Quoted Rate Advance when due, Company shall
reimburse Agent and Banks, as the case may be, on demand for any resulting loss,
cost or expense incurred by Agent and Banks, as the case may be as a result
thereof, including, without limitation, any such loss, cost or expense incurred
in obtaining, liquidating, employing or redeploying deposits from third parties,
whether or not Agent and Banks, as the case may be, shall have funded or
committed to fund such Advance. Such amount payable by Company to Agent and
Banks, as the case may be may include, without limitation, an amount equal to
the excess, if any, of (a) the amount of interest which would have accrued on
the amount so prepaid, or not so borrowed, refunded or converted, for the period
from the date of such prepayment or of such failure to borrow, refund or
convert, through the last day of the relevant Interest Period, at the applicable
rate of interest for said Advance(s) provided under this Agreement, over (b) the
amount of interest (as reasonably determined by Agent and Banks, as the case may
be) which would have accrued to Agent and Banks, as the case may be, on such
amount by placing such amount on deposit for a comparable period with leading
banks in the interbank eurocurrency market. Calculation of any amounts payable
to any Bank under this paragraph shall be made as though such Bank shall have
actually funded or committed to fund the relevant Advance through the purchase
of an underlying deposit in an amount equal to the amount of such Advance and
having a maturity comparable to the relevant Interest Period; provided, however,
that any Bank may fund any Eurocurrency-based Advance or Quoted Rate Advance, as
the case may be, in any manner it deems fit and the foregoing assumptions shall
be utilized only for the purpose of the calculation of amounts payable under
this paragraph. Upon the written request of Company, Agent and Banks shall
deliver to Company a certificate setting forth the basis for determining such
losses, costs and expenses, which certificate shall be conclusively presumed
correct, absent manifest error.
11.2 Eurocurrency Lending Office. For any Advance to which the
Eurocurrency-based Rate is applicable, if Agent or a Bank, as applicable, shall
designate a Eurocurrency Lending Office which maintains books separate from
those of the rest of Agent or such Bank, Agent or such Bank, as the case may be,
shall have the option of maintaining and carrying the relevant Advance on the
books of such Eurocurrency Lending Office.
11.3 Availability of Alternative Currency. The Agent and the Banks
shall not be required to make any Advance in an Alternative Currency if, at any
time prior to making such Advance, the Agent or the Majority Banks (after
consultation with Agent) shall determine, in its or their sole discretion, that
(i) deposits in the applicable Alternative Currency in the amounts and
maturities required to fund such Advance will not be available to the Agent and
the Banks; (ii) a fundamental change has occurred in the foreign exchange or
interbank markets with respect to the applicable
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Alternative Currency (including, without limitation, changes in national or
international financial, political or economic conditions or currency exchange
rates or exchange controls); or (iii) it has become otherwise materially
impractical for the Agent or the Banks, as applicable, to make such Advance in
the applicable Alternative Currency. The Agent or the applicable Bank, as the
case may be, shall promptly notify the Company and Banks of any such
determination.
11.4 Refunding Advances in Same Currency. If pursuant to any provisions
of this Agreement, the Company or any of the Permitted Borrowers repays one or
more Advances and on the same day borrows an amount in the same currency, the
Agent (or the Swing Line Bank, in the case of a Swing Line Advance) shall apply
the proceeds of such new borrowing to repay the principal of the Advance or
Advances being repaid and only an amount equal to the difference (if any)
between the amount being borrowed and the amount being repaid shall be remitted
by the Agent to the Company or such Permitted Borrower, or by the Company or
such Permitted Borrower to the Agent, as the case may be.
11.5 Circumstances Affecting Eurocurrency-based Rate Availability. If
with respect to any Interest Period, Agent or the Majority Banks (after
consultation with Agent) shall determine that, by reason of circumstances
affecting the foreign exchange and interbank markets generally, deposits in
eurodollars or in any applicable Alternative Currency, as the case may be, in
the applicable amounts are not being offered to the Agent or such Banks for such
Interest Period, then Agent shall forthwith give notice thereof to the Company
and the Permitted Borrowers. Thereafter, until Agent notifies Company and the
Permitted Borrowers that such circumstances no longer exist, (i) the obligation
of Banks to make Eurocurrency-based Advances (other than in any applicable
Alternative Currency with respect to which deposits are available, as required
hereunder), and the right of Company and the Permitted Borrowers to convert an
Advance to or refund an Advance as a Eurocurrency-based Advance, as the case may
be (other than in any applicable Alternative Currency with respect to which
deposits are available, as required hereunder), shall be suspended, and (ii) the
Company and the Permitted Borrowers shall repay in full (or cause to be repaid
in full) the then outstanding principal amount of each such Eurocurrency-based
Advance covered hereby in the applicable Permitted Currency, together with
accrued interest thereon, any amounts payable under Sections 11.1 and 11.8
hereof, and all other amounts payable hereunder on the last day of the then
current Interest Period applicable to such Advance. Upon the date for repayment
as aforesaid and unless Company notifies Agent to the contrary within two (2)
Business Days after receiving a notice from Agent pursuant to this Section, such
outstanding principal amount shall be converted to a Prime-based Advance as of
the last day of such Interest Period.
11.6 Laws Affecting Eurocurrency-based Advance Availability. If, after
the date of this Agreement, the introduction of, or any change in, any
applicable law, rule or regulation or in the interpretation or administration
thereof by any governmental authority charged with the interpretation or
administration thereof, or compliance by any of the Banks (or any of their
respective Eurocurrency Lending Offices) with any request or directive (whether
or not having the force of law) of any such authority, shall make it unlawful or
impossible for any of the Banks (or any of their respective Eurocurrency Lending
Offices) to honor its obligations hereunder to make or maintain any Advance with
interest at the Eurocurrency-based Rate, or in an Alternative Currency,
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such Bank shall forthwith give notice thereof to Company and to Agent.
Thereafter, (a) the obligations of Banks to make Eurocurrency-based Advances or
Advances in any such Alternative Currency and the right of Company or any
Permitted Borrower to convert an Advance into or refund an Advance as a
Eurocurrency-based Advance or as an Advance in any such Alternative Currency
shall be suspended and thereafter Company and the Permitted Borrowers may select
as Applicable Interest Rates or as Alternative Currencies only those which
remain available and which are permitted to be selected hereunder, and (b) if
any of the Banks may not lawfully continue to maintain an Advance to the end of
the then current Interest Period applicable thereto as a Eurocurrency-based
Advance or in such Alternative Currency, the applicable Advance shall
immediately be converted to a Prime-based Advance (in the Dollar Amount thereof)
and the Prime-based Rate shall be applicable thereto for the remainder of such
Interest Period. For purposes of this Section, a change in law, rule,
regulation, interpretation or administration shall include, without limitation,
any change made or which becomes effective on the basis of a law, rule,
regulation, interpretation or administration presently in force, the effective
date of which change is delayed by the terms of such law, rule, regulation,
interpretation or administration.
11.7 Increased Cost of Eurocurrency-based Advances. If the adoption
after the date of this Agreement of, or any change after the date of this
Agreement in, any applicable law, rule or regulation of or in the interpretation
or administration thereof by any governmental authority, central bank or
comparable agency charged with the interpretation or administration thereof, or
compliance by Agent or any of the Banks (or any of their respective Eurocurrency
Lending Offices) with any request or directive (whether or not having the force
of law) made by any such authority, central bank or comparable agency after the
date hereof:
(a) shall subject any of the Banks (or any of their respective
Eurocurrency Lending Offices) to any tax, duty or other charge with respect to
any Advance or any Note or shall change the basis of taxation of payments to any
of the Banks (or any of their respective Eurocurrency Lending Offices) of the
principal of or interest on any Advance or any Note or any other amounts due
under this Agreement in respect thereof (except for changes in the rate of tax
on the overall net income of any of the Banks or any of their respective
Eurocurrency Lending Offices imposed by the jurisdiction in which such Bank's
principal executive office or Eurocurrency Lending Office is located); or
(b) shall impose, modify or deem applicable any reserve
(including, without limitation, any imposed by the Board of Governors of the
Federal Reserve System), special deposit or similar requirement against assets
of, deposits with or for the account of, or credit extended by, any of the Banks
(or any of their respective Eurocurrency Lending Offices) or shall impose on any
of the Banks (or any of their respective Eurocurrency Lending Offices) or the
foreign exchange and interbank markets any other condition affecting any Advance
or any of the Notes;
and the result of any of the foregoing is to increase the costs to any of the
Banks of maintaining any part of the Indebtedness hereunder as a
Eurocurrency-based Advance or as an Advance in any Alternative Currency or to
reduce the amount of any sum received or receivable by any of the Banks under
this Agreement or under the Notes in respect of a Eurocurrency-based Advance or
any
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Advance in an Alternative Currency, whether with respect to Advances to
Company or to any of the Permitted Borrowers, then such Bank shall promptly
notify Agent (or, in the case of a Swing Line Advance, shall notify Company and
the applicable Permitted Borrower directly, with a copy of such notice to
Agent), and Agent (or such Bank, as aforesaid) shall promptly notify Company and
Permitted Borrowers of such fact and demand compensation therefor and, within
fifteen (15) days after such notice, Company agrees to pay to such Bank such
additional amount or amounts as will compensate such Bank or Banks for such
increased cost or reduction. Agent will promptly notify Company and the
Permitted Borrowers of any event of which it has knowledge which will entitle
Banks to compensation pursuant to this Section, or which will cause Company or
Permitted Borrowers to incur additional liability under Sections 11.1 and 11.8
hereof, provided that Agent shall incur no liability whatsoever to the Banks,
Company or Permitted Borrowers in the event it fails to do so. A certificate of
Agent (or such Bank, if applicable) setting forth the basis for determining such
additional amount or amounts necessary to compensate such Bank or Banks shall be
conclusively presumed to be correct save for manifest error. For purposes of
this Section, a change in law, rule, regulation, interpretation, administration,
request or directive shall include, without limitation, any change made or which
becomes effective on the basis of a law, rule, regulation, interpretation,
administration, request or directive presently in force, the effective date of
which change is delayed by the terms of such law, rule, regulation,
interpretation, administration, request or directive.
11.8 Indemnity. The Company will indemnify Agent and each of the Banks
against any loss or expense which may arise or be attributable to the Agent's
and each Bank's obtaining, liquidating or employing deposits or other funds
acquired to effect, fund or maintain the Advances (a) as a consequence of any
failure by the Company or any of the Permitted Borrowers to make any payment
when due of any amount due hereunder in connection with a Eurocurrency-based
Advance, (b) due to any failure of the Company or any Permitted Borrower to
borrow, refund or convert on a date specified therefor in a Request for Advance
or request for Swing Line Advance or (c) due to any payment, prepayment or
conversion of any Eurocurrency-based Advance on a date other than the last day
of the Interest Period for such Advance. Such loss or expense shall be
calculated based upon the present value, as applicable, of payments due from the
Company or such Permitted Borrower with respect to a deposit obtained by the
Agent or any of the Banks in order to fund such Advance to the Company or to
such Permitted Borrower. The Agent's and each Bank's, as applicable,
calculations of any such loss or expense shall be furnished to the Company and
shall be conclusive, absent manifest error.
11.9 Judgment Currency. The obligation of the Company and Permitted
Borrowers to make payments of the principal of and interest on the Notes and any
other amounts payable hereunder in the currency specified for such payment
herein or in the Notes shall not be discharged or satisfied by any tender, or
any recovery pursuant to any judgment, which is expressed in or converted into
any other currency, except to the extent that such tender or recovery shall
result in the actual receipt by each of the Banks of the full amount of the
particular Permitted Currency expressed to be payable herein or in the Notes.
The Agent (or the Swing Line Bank, as applicable) shall, using all amounts
obtained or received from the Company and from Permitted Borrowers pursuant to
any such tender or recovery in payment of principal of and interest on the
Notes, promptly purchase the applicable Permitted Currency at the most favorable
spot exchange rate
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determined by the Agent to be available to it. The obligation of the Company and
the Permitted Borrowers to make payments in the applicable Permitted Currency
shall be enforceable as an alternative or additional cause of action solely for
the purpose of recovering in the applicable Permitted Currency the amount, if
any, by which such actual receipt shall fall short of the full amount of the
Permitted Currency expressed to be payable herein or in the Notes.
11.10 Other Increased Costs. In the event that at any time after the
date of this Agreement any change in law such as described in Section 11.7
hereof, shall, in the opinion of the Agent or any of the Banks (as certified to
Agent in writing by such Bank) require that the Revolving Credit, the Swing
Line, or any other Indebtedness or commitment under this Agreement or any of the
other Loan Documents be treated as an asset or otherwise be included for
purposes of calculating the appropriate amount of capital to be maintained by
each of the Banks or any corporation controlling such Banks, as the case may be
(or shall increase the amount of capital required under such law, as of the date
hereof, to be so maintained), the Agent, in consultation with the Banks, shall
notify the Company. The Company and the Agent shall thereafter negotiate in good
faith an agreement to increase the Revolving Credit Facility Fee, or other fees
payable to the Agent, for the benefit of the Banks under this Agreement, which
in the opinion of the Agent (in consultation with the Banks), will adequately
compensate the Banks for the costs associated with such change in law. If such
increase is approved in writing by the Company within thirty (30) days from the
date of the notice to the Company from the Agent, the Revolving Credit Facility
Fee or other fees (if applicable) payable by the Company under this Agreement
shall, effective from the date of such agreement, include the amount of such
agreed increase. If the Company and the Agent (in consultation with the Banks)
are unable to agree on such an increase within thirty (30) days from the date of
the notice to the Company, the Company shall have the option, exercised by
written notice to the Agent within forty-five (45) days from the date of the
aforesaid notice to the Company from the Agent, to terminate the Revolving
Credit and the Swing Line, as the case may be, or other commitments if
applicable, in which event, all sums then outstanding to Banks and to Agent
hereunder shall be due and payable in full. If (a) the Company and the Agent (in
consultation with the Banks) fail to agree on an increase in the Revolving
Credit Facility Fee or other fees (if applicable), and (b) the Company fails to
give timely notice that it has elected to exercise its option to terminate the
Revolving Credit or other commitments, if applicable, as set forth above, then
the Revolving Credit and the Swing Line, and such other commitments shall
automatically terminate as of the last day of the aforesaid forty-five (45) day
period, in which event all sums then outstanding to Banks and to Agent hereunder
shall be due and payable in full.
11.11. Margin Adjustments. Adjustments to the Applicable Margin based
on Schedule 1.1 hereto (to the extent required in said Schedule), shall be
implemented as follows:
(a) Such adjustments to the Applicable Margin shall be given
prospective effect only, effective (i) as to all Prime-based Advances
outstanding hereunder, immediately upon any change in the Rating Level then in
effect, and (ii) as to each Eurocurrency-based Advance outstanding hereunder,
effective upon the expiration of the applicable Interest Period(s), if any, in
effect on the date of the obtaining and/or any change in the Rating Level in
effect hereunder, in each case with no retroactivity or claw-back.
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(b) With respect to Eurocurrency-based Advances outstanding
hereunder, an adjustment hereunder, after becoming effective, shall remain in
effect only through the end of the applicable Interest Period(s) for such
Eurocurrency-based Advances if any; provided, however, that upon any change in
the Rating Level then in effect, as aforesaid, or the occurrence of any other
event which under the terms hereof causes such adjustment no longer to be
applicable, then any such subsequent adjustment or no adjustment, as the case
may be, shall be effective (and said pricing shall thereby be adjusted up or
down, as applicable) with the commencement of each Interest Period following
such change or event, all in accordance with the preceding subparagraph.
11.12 Right of Banks to Fund through Branches and Affiliates. Each Bank
(including without limitation the Swing Line Bank) may, if it so elects, fulfill
its commitment as to any Advance hereunder by designating a branch or Affiliate
of such Bank to make such Advance; provided that (a) such Bank shall remain
solely responsible for the performances of its obligations hereunder and (b) no
such designation shall result in any material increased costs to the applicable
Borrower. Comerica Bank, in its capacity as a Bank and as Swing Line Bank,
hereby designates its Canadian Affiliate to make Advances hereunder in C$.
12. AGENT
12.1 Appointment of Agent. Each Bank and the holder of each Note
appoints and authorizes Agent to act on behalf of such Bank or holder under the
Loan Documents and to exercise such powers hereunder and thereunder as are
specifically delegated to or required of Agent by the terms hereof and thereof,
together with such powers as may be reasonably incidental thereto. Each Bank
agrees (which agreement shall survive any termination of this Agreement) to
reimburse Agent for all reasonable out-of-pocket expenses (including house and
outside attorneys' fees) incurred by Agent hereunder or in connection herewith
or with an Event of Default or in enforcing the obligations of Company or any of
the Permitted Borrowers under this Agreement or the other Loan Documents or any
other instrument executed pursuant hereto, and for which Agent is not reimbursed
by Company or such Permitted Borrower, pro rata according to such Bank's
Percentage, but excluding any such expenses resulting from Agent's gross
negligence or willful misconduct. Agent shall not be required to take any action
under the Loan Documents, or to prosecute or defend any suit in respect of the
Loan Documents, unless indemnified to its satisfaction by the Banks against
loss, costs, liability and expense (excluding liability resulting from its gross
negligence or willful misconduct). If any indemnity furnished to Agent shall
become impaired, it may call for additional indemnity and cease to do the acts
indemnified against until such additional indemnity is given.
12.2 Deposit Account with Agent. Each of Company and the Permitted
Borrowers hereby authorizes Agent to charge its general deposit account, if any,
maintained with Agent for the amount of any principal, interest, or other
amounts or costs due under this Agreement when the same becomes due and payable
under the terms of this Agreement or the Notes.
12.3 Exculpatory Provisions. Agent agrees to exercise its rights and
powers, and to perform its duties, as Agent hereunder and under the other Loan
Documents in accordance with its
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usual customs and practices in bank-agency transactions, but only upon and
subject to the express terms and conditions of this Section 12 (and no implied
covenants or other obligations shall be read into this Agreement against the
Agent); neither Agent nor any of its directors, officers, employees or agents
shall be liable to any Bank for any action taken or omitted to be taken by it or
them under this Agreement or any document executed pursuant hereto, or in
connection herewith or therewith, except for its or their own willful misconduct
or gross negligence, nor be responsible for any recitals or warranties herein or
therein, or for the effectiveness, enforceability, validity or due execution of
this Agreement or any document executed pursuant hereto, or any security
thereunder, or to make any inquiry respecting the performance by Company, any of
its Subsidiaries or any of the Permitted Borrowers of its obligations hereunder
or thereunder. Agent shall not have, or be deemed to have, a fiduciary
relationship with any Bank by reason of this Agreement. Agent shall be entitled
to rely upon advice of counsel concerning legal matters and upon any notice,
consent, certificate, statement or writing which it believes to be genuine and
to have been presented by a proper person.
12.4 Successor Agents. Agent may resign as such at any time upon at
least 30 days prior notice to Company and all Banks. If Agent at any time shall
resign or if the office of Agent shall become vacant for any other reason,
Majority Banks shall, by written instrument, appoint a successor Agent
(consisting of the Syndication Agent, or of any other Bank or financial
institution satisfactory to such Majority Banks) which shall thereupon become
Agent hereunder and shall be entitled to receive from the prior Agent such
documents of transfer and assignment as such successor Agent may reasonably
request. Such successor Agent shall succeed to all of the rights and obligations
of the retiring Agent as if originally named. The retiring Agent shall duly
assign, transfer and deliver to such successor Agent all moneys at the time held
by the retiring Agent hereunder after deducting therefrom its expenses for which
it is entitled to be reimbursed. Upon such succession of any such successor
Agent, the retiring agent shall be discharged from its duties and obligations
hereunder, except for its gross negligence or willful misconduct arising prior
to its retirement hereunder, and the provisions of this Section 12 shall
continue in effect for its benefit in respect of any actions taken or omitted to
be taken by it while it was acting as Agent.
12.5 Loans by Agent. Agent shall have the same rights and powers with
respect to the credit extended by it and the Notes held by it as any Bank and
may exercise the same as if it were not Agent, and the term "Bank" and, when
appropriate, "holder" shall include Agent in its individual capacity.
12.6 Credit Decisions. Each Bank acknowledges that it has,
independently of Agent and each other Bank and based on the financial statements
of Company, the Permitted Borrowers and the Subsidiaries and such other
documents, information and investigations as it has deemed appropriate, made its
own credit decision to extend credit hereunder from time to time. Each Bank also
acknowledges that it will, independently of Agent and each other Bank and based
on such other documents, information and investigations as it shall deem
appropriate at any time, continue to make its own credit decisions as to
exercising or not exercising from time to time any rights and privileges
available to it under this Agreement or any document executed pursuant hereto.
12.7 Notices by Agent. Agent shall give prompt notice to each Bank of
its receipt of each
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notice or request required or permitted to be given to Agent by Company or a
Permitted Borrower pursuant to the terms of this Agreement and shall promptly
distribute to the Banks any reports received from the Company or any of its
Subsidiaries or any of the Permitted Borrowers under the terms hereof, or other
material information or documents received by Agent, in its capacity as Agent,
from the Company, its Subsidiaries or the Permitted Borrowers.
12.8 Agent's Fees. Commencing on July 1, 1999 and on the first day of
each calendar quarter thereafter until the Indebtedness has been repaid and no
commitment to fund any loan hereunder is outstanding, the Company and the
Permitted Borrower, jointly and severally, shall pay to Agent an agency fee set
forth (or to be set forth from time to time) in a letter agreement between or
among Company, Permitted Borrowers and Agent. The Agent's Fees described in this
Section 12.8 shall not be refundable under any circumstances.
12.9 Nature of Agency. The appointment of Agent as agent is for the
convenience of Banks, Company and the Permitted Borrowers in making Advances of
the Revolving Credit or any other Indebtedness of Company or the Permitted
Borrowers hereunder, and collecting fees and principal and interest on the
Indebtedness. No Bank is purchasing any Indebtedness from Agent and this
Agreement is not intended to be a purchase or participation agreement.
12.10 Authority of Agent to Enforce Notes and This Agreement. Each
Bank, subject to the terms and conditions of this Agreement (including, without
limitation, any required approval or direction of the Majority Banks or the
Banks, as applicable, to be obtained by or given to the Agent hereunder),
authorizes the Agent with full power and authority as attorney-in-fact to
institute and maintain actions, suits or proceedings for the collection and
enforcement of the Notes and to file such proofs of debt or other documents as
may be necessary to have the claims of the Banks allowed in any proceeding
relative to the Company, any of its Subsidiaries, any of the Permitted Borrowers
or its creditors or affecting its properties, and to take such other actions
which Agent considers to be necessary or desirable for the protection,
collection and enforcement of the Notes, this Agreement or the other Loan
Documents, but in each case only to the extent of any required approval or
direction of the Majority Banks or the Banks, as applicable, obtained by or
given to the Agent hereunder.
12.11 Indemnification. The Banks agree to indemnify the Agent in its
capacity as such, to the extent not reimbursed by the Company or the Permitted
Borrowers, pro rata according to their respective Percentages, from and against
any and all claims, liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, and reasonable out-of-pocket expenses or
disbursements of any kind or nature whatsoever which may be imposed on, incurred
by, or asserted against the Agent in any way relating to or arising out of this
Agreement or any of the other Loan Documents or any action taken or omitted to
be taken or suffered in good faith by the Agent hereunder, provided that no Bank
shall be liable for any portion of any of the foregoing items resulting from the
gross negligence or willful misconduct of the Agent or any of its officers,
employees, directors or agents.
12.12 Knowledge of Default. It is expressly understood and agreed that
the Agent (whether in its capacity as issuing bank, Swing Line Bank or
otherwise) shall be entitled to assume that no
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Default or Event of Default has occurred and is continuing, unless the officers
of the Agent immediately responsible for matters concerning this Agreement shall
have actual (rather than constructive) knowledge of such occurrence or shall
have been notified in writing by a Bank that such Bank considers that a Default
or an Event of Default has occurred and is continuing, and specifying the nature
thereof. Upon obtaining actual knowledge of any Default or Event of Default as
described above, the Agent shall promptly, but in any event within three (3)
Business Days after obtaining knowledge thereof, notify each Bank of such
Default or Event of Default and the action, if any, the Agent proposes be taken
with respect thereto.
12.13 Agent's Authorization; Action by Banks. Except as otherwise
expressly provided herein, whenever the Agent is authorized and empowered
hereunder on behalf of the Banks to give any approval or consent, or to make any
request, or to take any other action, on behalf of the Banks (including without
limitation the exercise of any right or remedy hereunder or under the other Loan
Documents), the Agent shall be required to give such approval or consent, or to
make such request or to take such other action only when so requested in writing
by the Majority Banks or the Banks, as applicable hereunder. Action that may be
taken by Majority Banks or all of the Banks, as the case may be (as provided for
hereunder), may be taken (i) pursuant to a vote at a meeting (which may be held
by telephone conference call) as to which all of the Banks have been given
reasonable advance notice (subject to the requirement that amendments, waivers
or consents under Section 13.11 hereof be made in writing by the Majority Banks
or all the Banks, as applicable), or (ii) pursuant to the written consent of the
requisite Percentages of the Banks as required hereunder, provided that all of
the Banks are given reasonable advance notice of the requests for such consent.
12.14 Enforcement Actions by the Agent. Except as otherwise expressly
provided under this Agreement or in any of the other Loan Documents and subject
to the terms hereof, Agent will take such action, assert such rights and pursue
such remedies under this Agreement and the other Loan Documents as the Majority
Banks or all of the Banks, as the case may be (as provided for hereunder), shall
direct. Except as otherwise expressly provided in any of the Loan Documents,
Agent will not (and will not be obligated to) take any action, assert any rights
or pursue any remedies under this Agreement or any of the other Loan Documents
in violation or contravention of any express direction or instruction of the
Majority Banks or all of the Banks, as the case may be (as provided for
hereunder). Agent may refuse (and will not be obligated) to take any action,
assert any rights or pursue any remedies under this Agreement or any of the
other Loan Documents in the absence of the express written direction and
instruction of the Majority Banks or all of the Banks, as the case may be (as
provided for hereunder). In the event Agent fails, within a commercially
reasonable time, to take such action, assert such rights, or pursue such
remedies as the Majority Banks or all of the Banks, as the case may be (as
provided for hereunder), shall direct in conformity with this Agreement, the
Majority Banks or all of the Banks, as the case may be (as provided for
hereunder), shall have the right to take such action, to assert such rights, or
pursue such remedies on behalf of all of the Banks unless the terms hereof
otherwise require the consent of all the Banks to the taking of such actions (in
which event all of the Banks must join in such action). Except as expressly
provided above or elsewhere in this Agreement or the other Loan Documents, no
Bank (other than the Agent, acting in its capacity as Agent) shall be entitled
to take any enforcement action of any kind under any of the Loan Documents.
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12.15 Syndication Agent. NationsBank N.A. has been designated by the
Company as "Syndication Agent" under this Agreement. Other than its rights and
remedies as a Bank hereunder, the Syndication Agent shall have no
administrative, collateral or other rights or responsibilities, provided,
however, that the Syndication Agent shall be entitled to the benefits afforded
to Agent under Sections 12.5, 12.6 and 12.11 hereof.
13. MISCELLANEOUS
13.1 Accounting Principles. Where the character or amount of any asset
or liability or item of income or expense is required to be determined or any
consolidation or other accounting computation is required to be made for the
purposes of this Agreement, it shall be done in accordance with GAAP.
13.2 Consent to Jurisdiction. Each of the Company and the Permitted
Borrowers hereby irrevocably submits to the non-exclusive jurisdiction of any
United States Federal or Michigan state court sitting in Detroit in any action
or proceeding arising out of or relating to this Agreement or any of the other
Loan Documents and each of the Company and the Permitted Borrowers hereby
irrevocably agrees that all claims in respect of such action or proceeding may
be heard and determined in any such United States Federal or Michigan state
court. Each of the Permitted Borrowers irrevocably appoints the Company as its
agent for service of process. Each of the Company and the Permitted Borrowers
irrevocably consents to the service of any and all process in any such action or
proceeding brought in any court in or of the State of Michigan by the delivery
of copies of such process to the Company at its address specified on the
signature page hereto or by certified mail directed to such address. Nothing in
this Section shall affect the right of the Banks and the Agent to serve process
in any other manner permitted by law or limit the right of the Banks or the
Agent (or any of them) to bring any such action or proceeding against the
Company or the Permitted Borrowers or any of its or their property in the courts
of any other jurisdiction. Each of the Company and the Permitted Borrowers
hereby irrevocably waives any objection to the laying of venue of any such suit
or proceeding in the above described courts.
13.3 Law of Michigan. This Agreement and the Notes have been delivered
at Detroit, Michigan, and shall be governed by and construed and enforced in
accordance with the laws of the State of Michigan, except as and to the extent
expressed to the contrary in any of the Loan Documents. Whenever possible each
provision of this Agreement shall be interpreted in such manner as to be
effective and valid under applicable law, but if any provision of this Agreement
shall be prohibited by or invalid under applicable law, such provision shall be
ineffective to the extent of such prohibition or invalidity, without
invalidating the remainder of such provision or the remaining provisions of this
Agreement.
13.4 Interest. (a) In the case of any of the Company and the Permitted
Borrowers other than CAC Canada: in the event the obligation of the Company or
any of the Permitted Borrowers to pay interest on the principal balance of the
Notes is or becomes in excess of the maximum interest rate which the Company or
each Permitted Borrower is permitted by law to contract or agree to pay,
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giving due consideration to the execution date of this Agreement, then, in that
event, the rate of interest applicable with respect to such Bank's Percentage of
the Revolving Credit or of the Term Loan, as applicable, shall be deemed to be
immediately reduced to such maximum rate and all previous payments in excess of
the maximum rate shall be deemed to have been payments in reduction of principal
and not of interest.
(b) In the case of CAC Canada: If any provision of this Agreement
or any of the other Loan Documents would obligate CAC Canada to make any payment
of interest or other amount payable to any Bank in an amount or calculated at a
rate which would be prohibited by law or would result in a receipt by that Bank
of interest at a criminal rate (as such terms are construed under the Criminal
Code (Canada)) then, notwithstanding such provision, such amount or rate shall
be deemed to have been adjusted with retroactive effect to the maximum amount or
rate of interest, as the case may be, as would not be so prohibited by law or so
result in a receipt by that Bank of interest at a criminal rate, such adjustment
to be effected, to the extent necessary, as follows: (a) firstly, by reducing
the amount or rate of interest required to be paid to the affected Bank under
this Agreement; and (b) thereafter, by reducing any fees, commissions, premiums
and other amounts required to be paid to the affected Bank which would
constitute interest for purposes of Section 347 of the Criminal Code (Canada).
Notwithstanding the foregoing, and after giving effect to all adjustments
contemplated thereby, if any Bank shall have received an amount in excess of the
maximum permitted by Section 347 of the Criminal Code (Canada), then CAC Canada
making such payment, shall be entitled, by notice in writing to the affected
Bank, to obtain reimbursement from that Bank in an amount equal to such excess,
and pending such reimbursement, such amount shall be deemed to be an amount
payable by that Bank to CAC Canada. Any amount or rate of interest referred to
in this Agreement shall be determined in accordance with generally accepted
actuarial practices and principles as an effective annual rate of interest over
the term that any Advance remains outstanding on the assumption that any
charges, fees or expenses that fall within the meaning of "interest" (as defined
in the Criminal Code (Canada)) shall, if they relate to a specific period of
time, be pro-rated over that period of time and otherwise be pro-rated over the
period from the Effective Date to the Revolving Credit Maturity Date and, in the
event of a dispute, a certificate of a Fellow of the Canadian Institute of
Actuaries appointed by Agent shall be conclusive for the purposes of such
determination.
13.5 Closing Costs; Other Costs. To the extent not restricted by any
financial assistance provisions of any applicable law, Company and each of the
Permitted Borrowers, jointly and severally, shall pay or reimburse (a) Agent for
payment of, on demand, all reasonable closing costs and expenses, including, by
way of description and not limitation, reasonable in-house and outside attorney
fees and advances, appraisal and accounting fees, lien search fees, and required
travel costs, incurred by Agent in connection with the commitment, consummation
and closing of the loans contemplated hereby, or in connection with any
refinancing or restructuring of the loans or Advances provided under this
Agreement or the other Loan Documents, or any amendment thereof requested by
Company or the Permitted Borrowers, and (b) Agent and each of the Banks, as the
case may be, for all stamp and other taxes and duties payable or determined to
be payable in connection with the execution, delivery, filing or recording of
this Agreement and the other Loan Documents and the consummation of the
transactions contemplated hereby, and any and all liabilities with respect to or
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resulting from any delay in paying or omitting to pay such taxes or duties.
Furthermore, all reasonable costs and expenses, including without limitation
attorney fees, incurred by Agent and, after the occurrence and during the
continuance of an Event of Default, by the Banks in revising, preserving,
protecting, exercising or enforcing any of its or any of the Banks' rights
against Company or the Permitted Borrowers, or otherwise incurred by Agent and
the Banks in connection with any Event of Default or the enforcement of the
loans (whether incurred through negotiations, legal proceedings or otherwise),
including by way of description and not limitation, such charges in any court or
bankruptcy proceedings or arising out of any claim or action by any person
against Agent or any Bank which would not have been asserted were it not for
Agent's or such Bank's relationship with Company and the Permitted Borrowers
hereunder or otherwise, shall also be paid by Company and the Permitted
Borrower. All of said amounts required to be paid by Company and Permitted
Borrowers hereunder and not paid forthwith upon demand, as aforesaid, shall bear
interest, from the date incurred to the date payment is received by Agent, at
the Prime-based Rate, plus three percent (3%).
13.6 Notices. Except as otherwise provided herein, all notices or
demand hereunder to the parties hereto shall be sufficient if made in writing
and delivered by messenger or deposited in the mail (certified or registered
mail (or the equivalent thereof), postage prepaid), and addressed to the parties
as set forth on Schedule 13.6 of this Agreement and to Permitted Borrowers at
the Company's address as set forth on Schedule 13.6 or at such other address as
such party may, by written notice received by the other parties hereto, have
designated as its address for such purpose. Any notice or demand given to the
Company hereunder shall be deemed given to each of the Permitted Borrowers,
whether or not said notice or demand is addressed to or received by such
Permitted Borrower.
13.7 Further Action. Company and the Permitted Borrowers, from time to
time, upon written request of Agent will make, execute, acknowledge and deliver
or cause to be made, executed, acknowledged and delivered, all such further and
additional instruments, and take all such further action, as may be required to
carry out the intent and purpose of this Agreement, and to provide for Advances
under and payment of the Notes, according to the intent and purpose herein and
therein expressed.
13.8 Successors and Assigns; Assignments and Participations.
(a) This Agreement shall be binding upon and shall inure to the
benefit of Company and the Permitted Borrowers and the Banks and their
respective successors and assigns.
(b) The foregoing shall not authorize any assignment by Company
or any of the Permitted Borrowers, of its rights or duties hereunder, and no
such assignment shall be made (or effective) without the prior written approval
of the Banks.
(c) The Company, Permitted Borrowers and Agent acknowledge that
each of the Banks may at any time and from time to time, subject to the terms
and conditions hereof, assign or grant participations in such Bank's rights and
obligations hereunder and under the other Loan Documents to any commercial bank,
savings and loan association, insurance company, pension fund,
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mutual fund, commercial finance company or other similar financial institution,
the identity of which institution is approved by Company and Agent, such
approval not to be unreasonably withheld or delayed; provided, however, that (i)
the approval of Company shall not be required upon the occurrence and during the
continuance of a Default or Event of Default and (ii) the approval of Company
and Agent shall not be required for any such sale, transfer, assignment or
participation to the Affiliate of an assigning Bank, any other Bank or any
Federal Reserve Bank. The Company and each of Permitted Borrowers authorize each
Bank to disclose to any prospective assignee or participant, once approved by
Company and Agent, any and all financial information in such Bank's possession
concerning the Company and such Permitted Borrower which has been delivered to
such Bank pursuant to this Agreement; provided that each such prospective
participant shall execute a confidentiality agreement consistent with the terms
of Section 13.13 hereof.
(d) Each assignment by a Bank of any portion of its rights and
obligations hereunder and under the other Loan Documents, other than assignments
to such Bank's Affiliates under Section 13.8(f) hereof, shall be made pursuant
to an Assignment Agreement ("Assignment Agreement") substantially (as determined
by Agent), in the form attached hereto as Exhibit G (with appropriate insertions
acceptable to Agent) and shall be subject to the terms and conditions hereof,
and to the following restrictions:
(i) each assignment shall cover all of the Notes issued by
Company and the Permitted Borrowers hereunder to the assigning
Bank (and not any particular Note or Notes), and shall be for a
fixed and not varying percentage thereof, with the same percentage
applicable to each such Note;
(ii) each assignment shall be in a minimum amount of Five
Million Dollars ($5,000,000);
(iii) no assignment shall violate any "blue sky" or other
securities law of any jurisdiction or shall require the Company,
any Permitted Borrower or any other Person to file a registration
statement or similar application with the United States Securities
and Exchange Commission (or similar state regulatory body) or to
qualify under the "blue sky" or other securities laws of any
jurisdiction; and
(iv) no assignment shall be effective unless Agent has
received from the assignee (or from the assigning Bank) an
assignment fee of $3,500 for each such assignment.
In connection with any assignment subject to this Section 13.8(d), Company, each
of the Permitted Borrowers and Agent shall be entitled to continue to deal
solely and directly with the assigning Bank in connection with the interest so
assigned until (x) the Agent shall have received a notice of assignment duly
executed by the assigning Bank and an Assignment Agreement (with respect
thereto) duly executed by the assigning Bank and each assignee; and (y) the
assigning Bank shall have delivered to the Agent the original of each Note held
by the assigning Bank under this Agreement. From and after the date on which the
Agent shall notify Company and the Bank which
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has accepted an assignment subject to this Section 13.8(d) that the foregoing
conditions shall have been satisfied and all consents (if any) required shall
have been given, the assignee thereunder shall be deemed to be a party to this
Agreement. To the extent that rights and obligations hereunder shall have been
assigned to such assignee as provided in such notice of assignment (and
Assignment Agreement), such assignee shall have the rights and obligations of a
Bank under this Agreement and the other Loan Documents (including without
limitation the right to receive fees payable hereunder in respect of the period
following such assignment). In addition, the assigning Bank, to the extent that
rights and obligations hereunder shall have been assigned by it as provided in
such notice of assignment (and Assignment Agreement), but not otherwise, shall
relinquish its rights and be released from its obligations under this Agreement
and the other Loan Documents.
Within five (5) Business Days following Company's receipt of notice from the
Agent that Agent has accepted and executed a notice of assignment and the duly
executed Assignment Agreement, Company and the Permitted Borrowers shall, to the
extent applicable, execute and deliver to the Agent in exchange for any
surrendered Note, new Note(s) payable to the order of the assignee in an amount
equal to the amount assigned to it pursuant to such notice of assignment (and
Assignment Agreement), and with respect to the portion of the Indebtedness
retained by the assigning Bank, to the extent applicable, new Note(s) payable to
the order of the assigning Bank in an amount equal to the amount retained by
such Bank hereunder shall be executed and delivered by the Company and the
Permitted Borrowers. Agent, the Banks and the Company and the Permitted
Borrowers acknowledge and agree that any such new Note(s) shall be given in
renewal and replacement of the surrendered Notes and shall not effect or
constitute a novation or discharge of the Indebtedness evidenced by any
surrendered Note, and each such new Note may contain a provision confirming such
agreement. In addition, promptly following receipt of such Notes, Agent shall
prepare and distribute to Company, the Permitted Borrowers and each of the Banks
a revised Exhibit D to this Agreement setting forth the applicable new
Percentages of the Banks (including the assignee Bank), taking into account such
assignment.
(e) Each Bank agrees that any participation agreement permitted
hereunder shall comply with all applicable laws and shall be subject to the
following restrictions (which shall be set forth in the applicable participation
agreement):
(i) such Bank shall remain the holder of its Notes
hereunder, notwithstanding any such participation;
(ii) except as expressly set forth in this Section 13.8(e)
with respect to rights of setoff and the benefits of Section 11
hereof, a participant shall have no direct rights or remedies
hereunder;
(iii) a participant shall not reassign or transfer, or grant
any sub-participations in its participation interest hereunder or
any part thereof; and
(iv) such Bank shall retain the sole right and responsibility
to enforce the obligations of the Company and Permitted Borrowers
relating to the Notes and the
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other Loan Documents, including, without limitation, the right to
proceed against any Guaranties, or cause Agent to do so (subject
to the terms and conditions hereof), and the right to approve any
amendment, modification or waiver of any provision of this
Agreement without the consent of the participant (other than a
participant which is an Affiliate of such Bank), except for those
matters covered by Section 13.11(a) through (e) and (h) hereof
(provided that a participant may exercise approval rights over
such matters only on an indirect basis, acting through such Bank,
and Company, Permitted Borrowers, Agent and the other Banks may
continue to deal directly with such Bank in connection with such
Bank's rights and duties hereunder).
Company and each of the Permitted Borrowers each agrees that each participant
shall be deemed to have the right of setoff under Section 10.4 hereof in respect
of its participation interest in amounts owing under this Agreement and the
other Loan Documents to the same extent as if the Indebtedness were owing
directly to it as a Bank under this Agreement, shall be subject to the pro rata
recovery provisions of Section 10.3 hereof and shall be entitled to the benefits
of Section 11 hereof. The amount, terms and conditions of any participation
shall be as set forth in the participation agreement between the issuing Bank
and the Person purchasing such participation, and none of the Company, none of
the Permitted Borrowers, the Agent and the other Banks shall have any
responsibility or obligation with respect thereto, or to any Person to whom any
such participation may be issued. No such participation shall relieve any
issuing Bank of any of its obligations under this Agreement or any of the other
Loan Documents (including without limitation the Collateral Documents), and all
actions hereunder shall be conducted as if no such participation had been
granted.
(f) Each assignment by a Bank to its Affiliates of all or any
portion of the Notes, or any Advances thereunder, may be made on such terms and
conditions as determined by such Bank (rather than pursuant to Section 13.8(d)
hereof), provided however that (i) following each such assignment, the assigning
Bank shall remain responsible for the performance of its obligations under this
Agreement and the other Loan Documents (including without limitation its
obligations in respect of any Notes and Advances thereunder so assigned), and
each such Affiliate assignee shall not be deemed a "Bank" hereunder, (ii)
Company, the Permitted Borrowers and the Agent shall be entitled to continue to
deal solely and directly with such assigning Bank in connection with such Bank's
rights and obligations under this Agreement and the other Loan Documents, (iii)
such assigning Bank shall retain the sole right and responsibility to enforce
the obligations of Company and the Permitted Borrowers (including Company or the
applicable Permitted Borrower whose Notes or Advances thereunder have been so
assigned) under this Agreement and the other Loan Documents. In connection with
assignments to its Affiliates under this Section 13.8(f), an assigning Bank
shall act as agent for its Affiliates having received assignments hereunder, and
may appoint such Affiliates as such Bank's applicable Eurocurrency Lending
Office. Furthermore with respect to such assignments under this Section 13.8(f),
it is expressly acknowledged that the assignment fee provided for in Section
13.8(d)(iv) shall not apply.
(g) Nothing in this Agreement, the Notes or the other Loan
Documents, expressed or implied, is intended to or shall confer on any Person
other than the respective parties hereto and thereto and their successors and
assignees and participants permitted hereunder and
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thereunder any benefit or any legal or equitable right, remedy or other claim
under this Agreement, the Notes or the other Loan Documents.
13.9 Indulgence. No delay or failure of Agent and the Banks in
exercising any right, power or privilege hereunder shall affect such right,
power or privilege nor shall any single or partial exercise thereof preclude any
other or further exercise thereof, or the exercise of any other right, power or
privilege. The rights of Agent and the Banks hereunder are cumulative and are
not exclusive of any rights or remedies which Agent and the Banks would
otherwise have.
13.10 Counterparts. This Agreement may be executed in several
counterparts, and each executed copy shall constitute an original instrument,
but such counterparts shall together constitute but one and the same instrument.
13.11 Amendment and Waiver. No amendment or waiver of any provision of
this Agreement or any other Loan Document, or consent to any departure by the
Company or the Permitted Borrowers therefrom, shall in any event be effective
unless the same shall be in writing and signed by the Majority Banks (or signed
by the Agent at the direction of the Majority Banks), and then such waiver or
consent shall be effective only in the specific instance and for the specific
purpose for which given; provided, however, that no amendment, waiver or consent
shall, unless in writing and signed by all the Banks, do any of the following:
(a) subject the Banks to any additional obligations, (b) reduce the principal
of, or interest on, the Notes or any Fees or other amounts payable hereunder,
(c) postpone any date fixed for any payment of principal of, or interest on, the
Notes or any Fees or other amounts payable hereunder, (d) waive any Event of
Default specified in Section 9.1(a) or (b) hereof, (e) release or defer the
granting or perfecting of a lien or security interest in any collateral or
release any guaranty or similar undertaking provided by any Person, except as
shall be otherwise expressly provided in this Agreement or any other Loan
Document, (f) take any action which requires the signing of all Banks pursuant
to the terms of this Agreement or any other Loan Document, (g) change the
aggregate unpaid principal amount of the Notes which shall be required for the
Banks or any of them to take any action under this Agreement or any other Loan
Document, (h) change this Section 13.11, or (i) change the definition of
"Majority Banks" or "Percentage", and provided further, however, that (x) no
amendment, waiver, or consent shall, unless in writing and signed by the Agent
in addition to all the Banks, affect the rights or duties of the Agent under
this Agreement or any other Loan Document, whether in its capacity as Agent,
issuing bank or Swing Line Bank and (y) no amendment, waiver, or consent shall,
unless in writing and signed by the Syndications Agent in addition to all the
Banks, affect the rights or duties of the Syndications Agent under this
Agreement or any other Loan Document. All references in this Agreement to
"Banks" or "the Banks" shall refer to all Banks, unless expressly stated to
refer to Majority Banks.
13.12 Taxes and Fees. Should any tax (other than a tax based upon the
net income of any Bank or Agent by any jurisdiction where a Bank or Agent is
located), recording or filing fee become payable in respect of this Agreement or
any of the other Loan Documents or any amendment, modification or supplement
hereof or thereof, the Company and each of the Permitted Borrowers, jointly and
severally, agrees to pay the same together with any interest or penalties
thereon and
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agrees to hold the Agent and the Banks harmless with respect thereto.
13.13 Confidentiality. Each Bank agrees that without the prior consent
of Company, it will not disclose (other than to its employees, to another Bank
or to its auditors or counsel) any information with respect to the Company or
any of its Subsidiaries or any of the Permitted Borrowers which is furnished
pursuant to the terms and conditions of this Agreement or any of the other Loan
Documents or which is designated (in writing) by Company or any of the Permitted
Borrowers to be confidential; provided that any Bank may disclose any such
information (a) as has become generally available to the public or has been
lawfully obtained by such Bank from any third party under no duty of
confidentiality to the Company or such Permitted Borrower known to such Bank
after reasonable inquiry, (b) as may be required or appropriate in any report,
statement or testimony submitted to, or in respect of any inquiry by, any
municipal, state or federal regulatory body having or claiming to have
jurisdiction over such Bank, including the Board of Governors of the Federal
Reserve System of the United States or the Federal Deposit Insurance Corporation
or similar organizations (whether in the United States or elsewhere) or their
successors, (c) as may be required or appropriate in respect of any summons or
subpoena or in connection with any litigation, (d) in order to comply with any
law, order, regulation or ruling applicable to such Bank, and (e) to any
permitted transferee or assignee or to any approved participant of, or with
respect to, the Notes, as aforesaid.
13.14 Withholding Taxes. If any Bank is not incorporated under the laws
of the United States or a state thereof, such Bank shall promptly (but in any
event prior to the initial payment of interest hereunder) deliver to the Agent
two executed copies of (i) Internal Revenue Service Form 1001 specifying the
applicable tax treaty between the United States and the jurisdiction of such
Bank's domicile which provides for the exemption from withholding on interest
payments to such Bank, (ii) Internal Revenue Service Form 4224 evidencing that
the income to be received by such Bank hereunder is effectively connected with
the conduct of a trade or business in the United States or (iii) other evidence
satisfactory to the Agent that such Bank is exempt from United States income tax
withholding with respect to such income; provided, however, that such Bank shall
not be required to deliver to Agent the aforesaid forms or other evidence with
respect to (i) Advances to any Foreign Subsidiary which is or becomes a
Permitted Borrower hereunder or (ii) with respect to Advances to the Company or
any Domestic Subsidiary which subsequently becomes a Permitted Borrower
hereunder, if such Bank has assigned (pursuant to Section 13.8(f) hereof) those
Notes (and the Advances thereunder) issued to it by the Company, or any Domestic
Subsidiary which subsequently becomes a Permitted Borrower hereunder, to an
Affiliate which is incorporated under the laws of the United States or a state
thereof, and so notifies the Agent. Such Bank shall amend or supplement any such
form or evidence as required to insure that it is accurate, complete and
non-misleading at all times. Promptly upon notice from the Agent of any
determination by the Internal Revenue Service that any payments previously made
to such Bank hereunder were subject to United States income tax withholding when
made, such Bank shall pay to the Agent the excess of the aggregate amount
required to be withheld from such payments over the aggregate amount actually
withheld by the Agent. In addition, from time to time upon the reasonable
request and at the sole expense of the Company or the Permitted Borrowers, each
Bank and the Agent shall (to the extent it is able to do so based upon
applicable facts and circumstances), complete and provide the
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Company or the Permitted Borrowers with such forms, certificates or other
documents as may be reasonably necessary to allow the Company or the Permitted
Borrowers, as applicable, to make any payment under this Agreement or the other
Loan Documents without any withholding for or on the account of any tax under
Section 10.1(d) hereof (or with such withholding at a reduced rate), provided
that the execution and delivery of such forms, certificates or other documents
does not adversely affect or otherwise restrict the right and benefits
(including without limitation economic benefits) available to such Bank or the
Agent, as the case may be, under this Agreement or any of the other Loan
Documents, or under or in connection with any transactions not related to the
transactions contemplated hereby.
13.15 Effective Upon Execution. This Agreement shall become effective
upon the execution hereof by Banks, Agent, the Company and the Permitted
Borrowers signatory hereto, and the issuance by the Company and such Permitted
Borrowers, as applicable, of the Revolving Credit Notes and the Swing Line Notes
hereunder, and shall remain effective until the Indebtedness has been repaid and
discharged in full and no commitment to extend any credit hereunder remains
outstanding. Those Permitted Borrowers not signatories to this Agreement on the
effective date thereof shall become obligated hereunder (and shall be deemed
parties to this Agreement) upon their execution and delivery, according to the
terms hereof, of the aforesaid Notes.
13.16 Severability. In case any one or more of the obligations of the
Company or any of the Permitted Borrowers under this Agreement, the Notes or any
of the other Loan Documents shall be invalid, illegal or unenforceable in any
jurisdiction, the validity, legality and enforceability of the remaining
obligations of the Company or such Permitted Borrower shall not in any way be
affected or impaired thereby, and such invalidity, illegality or
unenforceability in one jurisdiction shall not affect the validity, legality or
enforceability of the obligations of the Company or such Permitted Borrower
under this Agreement, the Notes or any of the other Loan Documents in any other
jurisdiction.
13.17 Table of Contents and Headings. The table of contents and the
headings of the various subdivisions hereof are for convenience of reference
only and shall in no way modify or affect any of the terms or provisions hereof.
13.18 Construction of Certain Provisions. If any provision of this
Agreement or any of the other Loan Documents refers to any action to be taken by
any Person, or which such Person is prohibited from taking, such provision shall
be applicable whether such action is taken directly or indirectly by such
Person, whether or not expressly specified in such provision.
13.19 Independence of Covenants. Each covenant hereunder shall be given
independent effect (subject to any exceptions stated in such covenant) so that
if a particular action or condition is not permitted by any such covenant
(taking into account any such stated exception), the fact that it would be
permitted by an exception to, or would be otherwise within the limitations of,
another covenant shall not avoid the occurrence of a Default or an Event of
Default if such action is taken or such condition exists.
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13.20 Reliance on and Survival of Various Provisions. All terms,
covenants, agreements, representations and warranties of the Company or any
party to any of the Loan Documents made herein or in any of the other Loan
Documents or in any certificate, report, financial statement or other document
furnished by or on behalf of the Company, any such party in connection with this
Agreement or any of the other Loan Documents shall be deemed to have been relied
upon by the Banks, notwithstanding any investigation heretofore or hereafter
made by any Bank or on such Bank's behalf, and those covenants and agreements of
the Company and the Permitted Borrowers set forth in Section 11.8 hereof
(together with any other indemnities of the Company or the Permitted Borrowers
contained elsewhere in this Agreement or in any of the other Loan Documents,
including but not limited to Sections 7.14, 11.1, 11.7, 11.10, 13.5 and 13.12)
and of Banks set forth in Sections 12.1, 12.12 and 13.13 hereof shall,
notwithstanding anything to the contrary contained in this Agreement, survive
the repayment in full of the Indebtedness and the termination of any commitments
to make Advances hereunder.
13.21 Complete Agreement; Amendment and Restatement. This Agreement,
the Notes, any Requests for Advance or Letters of Credit hereunder, the other
Loan Documents and any agreements, certificates, or other documents given to
secure the Indebtedness, contain the entire agreement of the parties hereto, and
none of the parties hereto shall be bound by anything not expressed in writing.
This Agreement constitutes an amendment and restatement of the Prior Credit
Agreement, which Prior Credit Agreement is fully superseded and amended and
restated in its entirety hereby; provided, however, that the Indebtedness
governed by the Prior Credit Agreement shall remain outstanding and in full
force and effect and provided further that this Agreement does not constitute a
novation of such Indebtedness.
[SIGNATURES FOLLOW ON SUCCEEDING PAGES]
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WITNESS the due execution hereof as of the day and year first above
written.
COMPANY: AGENT:
CREDIT ACCEPTANCE COMERICA BANK, As Agent
CORPORATION
By: /S/Douglas W. Busk By: /S/Mike Stapleton
------------------------------ ------------------------------
Its: Treasurer Its: Vice President
----------------------------- -----------------------------
PERMITTED BORROWERS:
CREDIT ACCEPTANCE CORPORATION
UK LIMITED
By: /S/Douglas W. Busk
------------------------------
Its: Treasurer
-----------------------------
CAC OF CANADA LIMITED
By: /S/Douglas W. Busk
------------------------------
Its: Treasurer
-----------------------------
CREDIT ACCEPTANCE CORPORATION
IRELAND LIMITED
By: /S/Douglas W. Busk
------------------------------
Its: Treasurer
-----------------------------
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BANKS:
COMERICA BANK
By: /S/Mike Stapleton
------------------------------
Its: Vice President
-----------------------------
LASALLE BANK NATIONAL
ASSOCIATION
By: /S/Lisa Mun
------------------------------
Its: Assistant Vice President
-----------------------------
HARRIS TRUST AND SAVINGS BANK
By: /S/Michael Cameli
------------------------------
Its: Vice President
-----------------------------
NATIONAL CITY BANK OF
MINNEAPOLIS
By: /S/Steve Barglund
------------------------------
Its: Assistant Vice President
-----------------------------
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NATIONSBANK, N.A.
By: /S/Elizabeth Kurilecz
------------------------------
Its: Senior Vice President
THE BANK OF NOVA SCOTIA
By: /S/F. C. H. Ashby
------------------------------
Its: Senior Manager, Loan
Operations
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Exhibit 4 (f) (4)
AMENDMENT NO. 1 TO
NOTE PURCHASE AGREEMENT
AMENDMENT NO. 1 TO NOTE PURCHASE AGREEMENT (this "Amendment"), dated as
of June 30, 1999, among KITTY HAWK FUNDING CORPORATION, a Delaware corporation,
as a secured party (together with its successors and assigns, the "Company"),
CAC FUNDING CORP., a Nevada corporation, as issuer (together with its successors
and assigns, the "Issuer") and NATIONSBANK, N.A., a national banking association
("NationsBank"), individually and as agent for the Company and the Bank
Investors (together with its successors and assigns in such capacity, the
"Agent"), amending that certain Note Purchase Agreement (the "Note Purchase
Agreement"), dated as of July 7, 1998, among the Company, the Issuer and
NationsBank, individually and as the Agent.
WHEREAS, on the terms and conditions set forth herein, the parties
thereto wish to amend the Note Purchase Agreement as provided herein.
NOW, THEREFORE, the parties hereby agree as follows:
SECTION 1. Defined Terms. As used in this Amendment capitalized terms
have the same meanings assigned thereto in the Note Purchase Agreement.
SECTION 2. Amendment of Certain Terms.
(a) Section 1.1 of the Note Purchase Agreement is hereby amended by
deleting the definition of "Assignment Amount" and replacing it with the
following:
""Assignment Amount" with respect to a Bank Investor shall mean at any
time an amount equal to the lesser of (i) such Bank Investor's Pro Rata
Share of the Net Investment at such time, (ii) such Bank Investor's Pro Rata
Share of the aggregate Outstanding Balance of the Contracts (other than
Defaulted Contracts) plus all Collections received by the Servicer but not
yet remitted by the Servicer plus any amounts in respect of Ineligible Loans
and Ineligible Contracts required to be paid by the Issuer at such time and
(iii) such Bank Investor's unused Commitment."
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<PAGE> 2
(b) Section 1.1 of the Note Purchase Agreement is hereby amended by
deleting the reference to "July 6, 1999" in the definition of "Commitment
Termination Date" and replacing such reference with "June 28, 2000".
(c) Section 1.1 of the Note Purchase Agreement is hereby amended by
deleting the definition of "Facility Limit" and replacing it with the following:
""Facility Limit" shall mean, as of July 20, 1999, $72,700,000, and at
any time thereafter, 102% of the Net Investment; provided, that at no time
shall the Facility Limit exceed $72,700,000."
(d) Section 1.1 of the Note Purchase Agreement is hereby amended by
deleting the definition of "Net Asset Test".
(e) Section 1.1 of the Note Purchase Agreement is hereby amended by
deleting the reference to "July 6, 1999" in clause (viii) of the definition of
"Termination Date" and replacing such reference with "June 28, 2000".
(f) Section 2.1(e)(i)(4) of the Note Purchase Agreement is hereby amended
by deleting the reference to "2006" therein and replacing such reference with
"2007".
(g) Section 2.1(b) of the Note Purchase Agreement is hereby amended by
inserting the following between "Funding" and "(i)" in the fourth line thereof:
", after giving effect to such Funding,".
(h) Section 4.1(j) of the Note Purchase Agreement is hereby amended by
adding the following to the end thereof: "or the consummation on any Subsequent
Funding Date of any Subsequent Funding".
(i) Section 4.2(a)(i) of the Note Purchase Agreement is hereby amended
by deleting the reference to "(90)" therein and replacing such reference with
"(120)".
(j) Section 4.2(a)(ii) of the Note Purchase Agreement is hereby amended by
deleting the reference to "(45)" therein and replacing such reference with
"(60)".
(k) Section 4.2(f) of the Note Purchase Agreement is hereby amended by
adding the following after the words "minute books" in the twenty-ninth line
thereof:
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"and the holding of regular board of director meetings".
(l) Article VI of the Note Purchase Agreement is hereby amended by
deleting Section 6.7 and replacing it with the following:
"SECTION 6.7 Bank Commitment; Assignment to Bank Investors. (a) Bank
Commitment. At any time on or prior to the Commitment Termination Date, in
the event that the Bank Investors elect to make a Subsequent Funding as
requested under Section 2.1(a), then at any time, the Issuer shall be
considered to have directed the Company to assign its interest in the Note
in whole to the Bank Investors pursuant to this Section 6.7(a). In addition,
at any time on or prior to the Commitment Termination Date (i) upon the
occurrence of a Termination Event that results in the Termination Date or
(ii) the Company elects to give notice to the Issuer of a Notice Termination
Date, the Issuer hereby requests and directs that the Company assign its
interest in the Note in whole to the Bank Investors pursuant to this Section
6.7(a) and the Issuer hereby agrees to pay the amounts described in Section
6.7(c) below. No further documentation or action on the part of the Company
shall be required to exercise the rights set forth in the immediately
preceding sentence, other than, in the case of clause (i) of such sentence,
receipt of notice by the Bank Investors from the Agent that a Termination
Date has occurred or, in the case of clause (ii) of such sentence, the
giving of the notice set forth in such clause and the delivery by the Agent
of a copy of such notice to each Bank Investor (the date of the receipt of a
notice referred to in such clauses, together with the occurrence of the
event referred to in the first sentence of this paragraph, being the
"Effective Date"). Each Bank Investor hereby agrees, unconditionally and
irrevocably and under all circumstances, without setoff, counterclaim or
defense of any kind, to pay the full amount of its Assignment Amount on such
Effective Date to the Company in immediately available funds to an account
designated by the Agent. Upon payment of its Assignment Amount, each Bank
Investor shall acquire its Pro Rata Share of the Note and shall assume its
respective portion of the Company's obligations hereunder, and the Company
shall be released from such portion of such obligations. If, by 2:00 P.M.
(New York time) on the Effective Date, one or more Bank Investors (each, a
"Defaulting Bank Investor", and each Bank Investor other than
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<PAGE> 4
any Defaulting Bank Investor being referred to as a "Non-Defaulting Bank
Investor") fails to pay its Assignment Amount (the aggregate amount not so
made available to the Company being herein called the "Assignment Amount
Deficit"), then the Agent shall, by no later than 2:30 P.M. (New York time)
on the Effective Date, instruct each Non-Defaulting Bank Investor to pay,
by no later than 3:00 P.M. (New York time) on the Effective Date, in
immediately available funds, to the account designated by the Company, an
amount equal to the lesser of (x) such Non-Defaulting Bank Investor's
proportionate share (based upon the relative Commitments of the
Non-Defaulting Bank Investors) of the Assignment Amount Deficit and (y) its
unused Commitment. A Defaulting Bank Investor shall forthwith, upon demand,
pay to the Agent for the ratable benefit of the Non-Defaulting Bank
Investors all amounts paid by each Non-Defaulting Bank Investor on behalf of
such Defaulting Bank Investor, together with interest thereon for each day
from the date a payment was made by a Non-Defaulting Bank Investor until the
date such Non-Defaulting Bank Investor has been paid such amounts in full at
a rate per annum equal to the rate determined in accordance with clause (i)
of the definition of "Base Rate" plus two percent (2%). In addition, if,
after giving effect to the provisions of the immediately preceding sentence,
any Assignment Amount Deficit continues to exist, each such Defaulting Bank
Investor shall pay interest to the Agent on such Defaulting Bank Investor's
portion of such remaining Assignment Amount Deficit, at a rate per annum
equal to the rate determined in accordance with clause (i) of the definition
of "Base Rate" plus two percent (2%), for each day from the Effective Date
until the date such Defaulting Bank Investor shall pay its portion of such
remaining Assignment Amount Deficit in full to the Company. Upon any
assignment by the Company to the Bank Investors contemplated hereunder, the
Company shall cease to make any further advances to the Issuer hereunder.
(b) Assignment by a Bank Investor.
(i) No Bank Investor may assign all or any portion of its Commitment or
interest in the Note and its rights and obligations hereunder to any Person
unless approved in writing by the Issuer (which approval shall not be
unreasonably withheld), the Administrative Agent,
4
<PAGE> 5
on behalf of the Company, and the Agent. In connection with any such
assignment by a Bank Investor to another Person, the assignor shall deliver
to the assignee an Assignment and Assumption Agreement, duly executed,
assigning to such assignee all or any portion of (A) such assignor's
Commitment and other obligations hereunder and (B) such assignor's pro rata
interest in the Note and other rights hereunder, and such assignor shall
promptly execute and deliver all further instruments and documents, and
take all further action, that the assignee may reasonably request, in order
to protect, or more fully evidence the assignee's right, title and interest
in and to such interest and to enable the Agent, on behalf of such
assignee, to exercise or enforce any rights hereunder and under the other
Transaction Documents to which such assignor is or, immediately prior to
such assignment, was a party. Upon any such assignment, (i) the assignee
shall have all of the rights and obligations of the assignor hereunder and
under the other Transaction Documents to which such assignor is or,
immediately prior to such assignment, was a party with respect to such
assignor's Commitment and interest in the Note for all purposes of this
Agreement and under the other Transaction Documents to which such assignor
is or, immediately prior to such assignment, was a party and (ii) the
assignor shall have no further obligations with respect to the portion of
its Commitment hereunder which has been assigned and shall relinquish its
rights with respect to the portion of its interest in the Note which has
been assigned for all purposes of this Agreement and under the other
Transaction Documents to which such assignor is or, immediately prior to
such assignment, was a party. No such assignment shall be effective unless
a fully executed copy of the related Assignment and Assumption Agreement
shall be delivered to the Agent and the Issuer. All costs and expenses of
the Agent incurred in connection with any assignment hereunder shall be
borne by the Issuer. No Bank Investor shall enter into any Assignment and
Assumption Agreement hereunder without also simultaneously assigning an
equal portion of its interest in the Liquidity Agreement.
(ii) By executing and delivering an Assignment and Assumption
Agreement, the assignor and assignee thereunder confirm to and agree with
each other and the other parties hereto as follows: (i) other than as
provided in such Assignment and Assumption Agreement,
5
<PAGE> 6
the assignor makes no representation or warranty and assumes no
responsibility with respect to any statements, warranties or representations
made in or in connection with this Agreement, the other Transaction
Documents or any other instrument or document furnished pursuant hereto or
thereto or the execution, legality, validity, enforceability, genuineness,
sufficiency or value or this Agreement, the other Transaction Documents or
any such other instrument or document; (ii) the assignor makes no
representation or warranty and assumes no responsibility with respect to the
financial condition of the Issuer, CAC or the Servicer or the performance or
observance by the Issuer, CAC or the Servicer of any of their respective
obligations under this Agreement, the other Transaction Documents or any
other instrument or document furnished pursuant hereto; (iii) such assignee
confirms that it has received a copy of this Agreement, the Security
Agreement and such other instruments, documents and information as it has
deemed appropriate to make its own credit analysis and decision to enter
into such Assignment and Assumption Agreement and to purchase such interest;
(iv) such assignee will, independently and without reliance upon the Agent,
or any of its Affiliates, or the assignor and based on such agreements,
documents and information as it shall deem appropriate at the time, continue
to make its own credit decisions in taking or not taking action under this
Agreement and the other Transaction Documents; (v) such assignee appoints
and authorizes the Agent to take such action as agent on its behalf and to
exercise such powers under this Agreement, the other Transaction Documents
and any other instrument or document furnished pursuant hereto or thereto as
are delegated to the Agent by the terms hereof or thereof, together with
such powers as are reasonably incidental thereto and to enforce its
respective rights and interests in and under this Agreement, the other
Transaction Documents, the Loans, the Contracts and the Related Security;
(vi) such assignee agrees that it will perform in accordance with their
terms all of the obligations which by the terms of this Agreement and the
other Transaction Documents are required to be performed by it as the
assignee of the assignor; and (vii) such assignee agrees that it will not
institute against the Company any proceeding of the type referred to in
Section 7.6 prior to the date which is one year and one day after the
payment in full of all Commercial Paper issued by the Company.
6
<PAGE> 7
(c) Issuer's Obligation to Pay Certain Amounts; Additional Assignment
Amount. The Issuer shall pay to the Agent, for the account of the Company,
in connection with any assignment by the Company to the Bank Investors
pursuant to Section 6.7(a), an aggregate amount equal to all Carrying Costs
to accrue through the end of each outstanding funding period plus all other
amounts owed to the Agent, the Company or the Bank Investors pursuant to any
Transaction Document (other than the Net Investment). If the Issuer fails to
make payment of such amounts at or prior to the time of assignment by the
Company to the Bank Investors, such amount shall be paid by the Bank
Investors (in accordance with their respective Pro Rata Shares) to the
Company as additional consideration for the interests assigned to the Bank
Investors and the amount of the "Net Investment" hereunder held by the Bank
Investors shall be increased by an amount equal to the additional amount so
paid by the Bank Investors.
(d) Administration of Agreement After Assignment by Company to Bank
Investors. After any assignment by the Company to the Bank Investors
pursuant to Section 6.7(a) (and the payment of all amounts owing to the
Company in connection therewith), all rights of the Administrative Agent and
the Collateral Agent set forth herein shall be deemed to be afforded to the
Agent on behalf of the Bank Investors instead of either such party.
(e) Payments after Assignment by Company to Bank Investors. After any
assignment by the Company to the Bank Investors pursuant to Section 6.7(a),
all payments to be made hereunder by the Issuer or the Servicer to the
Company shall be made to the Agent's account as such account shall have been
notified to the Issuer and the Servicer. In the event that the aggregate of
the Assignment Amounts paid by the Bank Investors pursuant to Section 6.7(a)
is less than the Net Investment of the Company on the date of such
assignment, then to the extent payments made hereunder in respect of the Net
Investment exceed the aggregate of the Assignment Amounts, such excess shall
be remitted by the Agent to the Collateral Agent.
(f) Downgrade of Bank Investor. If at any time prior to any assignment
by the Company to the Bank Investors as contemplated
7
<PAGE> 8
pursuant to Section 6.7(a), the short term debt rating of any Bank Investor
shall be "A-2" or "P-2" from Standard & Poor's or Moody's, respectively,
with negative credit implications, such Bank Investor, upon request of the
Agent, shall, within 30 days of such request, assign its rights and
obligations hereunder to another financial institution (which institution's
short term debt shall be rated at least "A-2" and "P-2" from Standard &
Poor's and Moody's, respectively, and which shall not be so rated with
negative credit implications and which is acceptable to the Company and the
Agent). If the short term debt rating of a Bank Investor shall be "A-3" or
"P-3", or lower, from Standard & Poor's or Moody's, respectively (or such
rating shall have been withdrawn by Standard & Poor's or Moody's), such Bank
Investor, upon request of the Agent, shall, within five (5) Business Days of
such request, assign its rights and obligations hereunder to another
financial institution (which institution's short term debt shall be rated at
least "A-2" and "P-2" from Standard & Poor's and Moody's, respectively, and
which shall not be so rated with negative credit implications and which is
acceptable to the Company and the Agent). In either such case, if any such
Bank Investor shall not have assigned its rights and obligations under this
Agreement within the applicable time period described above, the Company
shall have the right to require such Bank Investor to pay to the Agent an
amount equal to such Bank Investor's Commitment for deposit by the Agent
into an account, in the name of the Agent, which shall be in satisfaction of
such Bank Investor's obligations to make Subsequent Fundings and to pay its
Assignment Amount upon an assignment from the Company in accordance with
Section 6.7(a) hereof. The amount on deposit in such account shall be
invested by the Agent in Eligible Investments and such Eligible Investments
shall be selected by the Agent in its sole discretion. The Agent shall remit
to such Bank Investor, monthly, the income thereon. Nothing in the three
preceding sentences shall affect or diminish in any way any such downgraded
Bank Investor's Commitment to the Issuer or the Company or such downgraded
Bank Investor's other obligations and liabilities hereunder and under the
other Transaction Documents."
SECTION 3. Representations and Warranties. The Issuer hereby makes to
the Agent, the Company and the Bank Investors, on and as of the date hereof,
all of the representations and warranties set forth in Section 4.1 of the
Note Purchase
8
<PAGE> 9
Agreement, except that to the extent that any of such representations and
warranties expressly relate to an earlier date, such representations and
warranties shall be true and correct as of such earlier date.
SECTION 4. Effectiveness. This Amendment shall become effective on June
30, 1999.
SECTION 5. Condition Precedent to Subsequent Funding. Prior to the
Subsequent Funding next succeeding the Closing Date, the Debtor shall obtain
and, unless otherwise consented to by the Agent, have at all times in
effect, an interest rate cap agreement (the "Interest Rate Cap") with a
financial institution (the "Cap Counterparty"), which shall at all times
during the term of the Interest Rate Cap be acceptable to the Agent and
shall have at all times a rating of at least "A3" from Moody's and "A-" from
Standard & Poor's and which has irrevocably and unconditionally agreed that,
prior to the date which is one year and one day after the payment in full of
all Commercial Paper issued by the Company, it will not acquiesce, petition
or otherwise invoke or cause the Debtor to invoke the process of any
Governmental Authority for the purpose of commencing or sustaining a case
against the Debtor under any Federal or state bankruptcy, insolvency or
similar law or appointing a receiver, liquidator, assignee, trustee,
custodian, sequestrator or other similar official of the Debtor or any
substantial part of its property or ordering the winding-up or liquidation
of the affairs of the Debtor. The Interest Rate Cap shall be in form and
substance acceptable to the Agent and shall provide (i) that all amounts
payable thereunder shall be paid by the Cap Counterparty directly to the
Collection Account, (ii) that the Debtor's rights thereunder have been
irrevocably assigned to, and a security interest therein has been granted
to, the Collateral Agent for the benefit of the Secured Parties, (iii) for a
strike rate of not more than 7.50% per annum, and (iv) that it covers a
notional amount corresponding to an amortization schedule provided by the
Collateral Agent and attached hereto as Exhibit A. Nothing in this Section
shall be interpreted as limiting in any way the other conditions to Funding
in the Note Purchase Agreement or the Security Agreement.
SECTION 6. Costs and Expenses. The Issuer shall pay all of the
Company's, the Bank Investors' and the Agent's cost and expenses (including
out of pocket expenses and reasonable attorneys fees and disbursements)
incurred by them in connection with the preparation, execution and delivery
of this Amendment.
SECTION 7. Governing Law. THIS AMENDMENT SHALL BE
9
<PAGE> 10
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW
YORK.
SECTION 8. Severability; Counterparts. This Amendment may be executed
in any number of counterparts and by different parties hereto in separate
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 instrument. Any provisions of this Amendment which are 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.
SECTION 9. Captions. The captions in this Amendment are for convenience
of reference only and shall not define or limit any of the terms or
provisions hereof.
SECTION 10. Ratification. Except as expressly affected by the
provisions hereof, the Note Purchase Agreement as amended shall remain in
full force and effect in accordance with its terms and ratified and
confirmed by the parties hereto. On and after the date hereof, each
reference in the Note Purchase Agreement to "this Agreement", "hereunder",
"herein" or words of like import shall mean and be a reference to the
Agreement as amended by this Amendment.
10
<PAGE> 11
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Amendment No. 1 to the Note Purchase Agreement as of the date first written
above.
CAC FUNDING CORP., as Issuer
By: /S/ Douglas W. Busk
---------------------------------
Name: Douglas W. Busk
KITTY HAWK FUNDING CORPORATION,
as Company
By: /S/ Richard L. Taiano
---------------------------------
Name: Richard L. Taiano
Title: Vice President
NATIONSBANK, N.A., Individually and
as Collateral Agent
By: /S/ Brian D. Krum
---------------------------------
Name: Brian D. Krum
Title: Vice President
11
<PAGE> 1
Exhibit 4 (f) (5)
AMENDMENT NO. 1 TO
SECURITY AGREEMENT
AMENDMENT NO. 1 TO SECURITY AGREEMENT (this "Amendment"),
dated as of June 30, 1999, among KITTY HAWK FUNDING CORPORATION, a Delaware
corporation, as a secured party (together with its successors and assigns, the
"Company"), CAC FUNDING CORP., a Nevada corporation, as debtor (together with
its successors and assigns, the "Debtor"), CREDIT ACCEPTANCE CORPORATION, a
Michigan corporation, individually and as servicer (together with its successors
and assigns, the "Servicer"), and NATIONSBANK, N.A., a national banking
association ("NationsBank"), individually and as collateral agent (together with
its successors and assigns in such capacity, the "Collateral Agent"), amending
that certain Security Agreement (the "Security Agreement"), dated as of July 7,
1998, among the Company, the Debtor, the Servicer and NationsBank, individually
and as Collateral Agent.
WHEREAS, on the terms and conditions set forth herein, the
parties to the Security Agreement wish to amend the Security Agreement as
provided herein.
NOW, THEREFORE, the parties hereby agree as follows:
SECTION 1. Defined Terms. As used in this Amendment
capitalized terms have the same meanings assigned thereto in the Security
Agreement.
SECTION 2. Amendment of Certain Terms.
(a) Section 1.1 of the Security Agreement is hereby amended by
deleting the definition of "Dealer Concentration Limit" and replacing it with
the following: "Dealer Concentration Limit" shall mean 3%."
(b) The definition of "Loan" in Section 1.1 of the Security Agreement
is hereby amended by inserting the following after the word "advanced" in the
first line of such definition: ", whether before or after the listing of such
Loan on Exhibit D hereto,".
(c) Section 1.1 of the Security Agreement is hereby amended by
inserting the following definition after the definition of "Loan":
""Loan Systems" means those computer applications which are
related to or involved in the origination, collection, management or
1
<PAGE> 2
servicing of the Loans."
(d) Section 1.1 of the Security Agreement is hereby amended by deleting
the definition of "Required Reserve Account Balance" and replacing it with the
following:
""Required Reserve Account Balance" shall mean an amount equal
to the sum of (A) the product of (i) 1.45% and (ii) the Net Investment
related to the Initial Funding (after application of funds pursuant to
Section 5.1 on the related Remittance Date) and (B) the product of (i)
1.00% and (ii) the Net Investment related to the Subsequent Funding
(after application of funds pursuant to Section 5.1 on the related
Remittance Date)."
(e) Section 1.1 of the Security Agreement is hereby amended by
inserting the following definition after the definition of "Weighted Average
Advance Rate":
""Year 2000 Compliant" means, with respect to any Person, the
ability of such Person's computer applications to perform properly
date-sensitive functions for all dates before and after January 1,
2000."
(f) Section 1.1 of the Security Agreement is hereby amended by
inserting the following definition after the definition of "Year 2000
Compliant":
""Year 2000 Problem" means, with respect to any Person, the
risk that computer applications used by the such Person may be unable
to recognize and perform properly date-sensitive functions involving
certain dates prior to and any date after December 31, 1999."
(g) Section 3.1 of the Security Agreement is hereby amended by
inserting the following as paragraph (k):
"(k) Year 2000 Compliance. The Debtor (i) has initiated a
review and assessment of all areas within its business and operations
(including those affected by suppliers, vendors and customers), (ii) is
in the process of developing a plan and timeline for addressing the
Year 2000 Problem on a timely basis, and (iii) will implement that plan
in accordance with that timetable. Based on the foregoing, the Debtor
believes that all computer applications (including those of its
suppliers, vendors and customers) that are material to its business and
operations are reasonably expected on a timely basis to be Year 2000
Compliant,
2
<PAGE> 3
except to the extent that a failure to do so could not be reasonably
expected to have a material adverse effect on the Debtor or on the
transactions contemplated by this Agreement, or to result in a
Termination Event or a Potential Termination Event.
Subject to the following paragraph, the Debtor (i) has
completed a review and assessment of all Loan Systems (including, but
not limited to, those of its suppliers, vendors and third-party
servicers), and (ii) has determined that the Loan Systems are Year 2000
Compliant or will be Year 2000 Compliant on or before August 1, 1999,
and thereafter.
The costs of all assessment, remediation, testing and
integration related to the Debtor's plan for becoming Year 2000
Compliant will not have a material adverse effect on the financial
condition or operations of the Debtor.".
(h) Section 3.3 of the Security Agreement is hereby amended by
inserting the following as paragraph (r):
"(r) Year 2000 Compliance. The Debtor will promptly notify the
Collateral Agent in the event it discovers or determines (i) that any
Loan Systems will not be Year 2000 Compliant on or before August 1,
1999, and thereafter, or (ii) that any computer application is
otherwise material to its business and operations will not be Year 2000
Compliant on a timely basis, except to the extent that, in the case of
(ii) above, such failure could not reasonably be expected (a) to have a
material adverse effect, or (b) to result in a Termination Event or a
Potential Termination Event.
Further, the Debtor will deliver simultaneously with any
quarterly or annual financial statements or reports to be delivered
under this Agreement or any other Transaction Document, a letter,
report, certificate or statement signed by the chief financial officer
or chief accounting officer of the Debtor, as appropriate, that no
material event, problems or conditions have occurred which in the
opinion of management would (i) prevent or materially delay the
Debtor's plan to become Year 2000 Compliant or (ii) cause or be likely
to cause the Debtor's representations and warranties set forth herein
with respect to being or becoming Year 2000 Compliant to no longer be
true; provided, however, that such letter, report, certificate or
statement need not be
3
<PAGE> 4
delivered after August 1, 1999, for so long as the Debtor remains Year
2000 Compliant.".
(i) Section 4.1(c) of the Security Agreement is hereby amended by
deleting the reference to "ninety (90)" therein and replacing such reference
with "one hundred twenty (120)".
(j) Section 4.6 of the Security Agreement is hereby amended by adding
the following after the word "are" in the sixth line thereof: "(i) owned by it,
or (ii)".
(k) Article IV of the Security Agreement is hereby amended by adding
the following as Section 4.8:
"SECTION 4.8 Year 2000 Compliance. (a) The Servicer (i) has
initiated a review and assessment of all areas within its business and
operations (including those affected by suppliers, vendors and
customers), (ii) is in the process of developing a plan and timeline
for addressing the Year 2000 Problem on a timely basis, and (iii) will
implement that plan in accordance with that timetable. Based on the
foregoing, the Servicer believes that all computer applications
(including those of its suppliers, vendors and customers) that are
material to its business and operations are reasonably expected on a
timely basis to be Year 2000 Compliant, except to the extent that a
failure to do so could not be reasonably expected to have a material
adverse effect on the Servicer or on the transactions contemplated by
this Agreement, or to result in a Termination Event or a Potential
Termination Event.
Subject to the following paragraph, the Servicer (i) has
completed a review and assessment of all Loan Systems (including, but
not limited to, those of its suppliers, vendors and third-party
servicers), and (ii) has determined that the Loan Systems are Year 2000
Compliant or will be Year 2000 Compliant on or before August 1, 1999,
and thereafter.
The costs of all assessment, remediation, testing and
integration related to the Servicer's plan for becoming Year 2000
Compliant will not have a material adverse effect on the financial
condition or operations of the Servicer.
4
<PAGE> 5
(b) The Servicer will promptly notify the Collateral Agent in
the event it discovers or determines (i) that any Loan Systems will not
be Year 2000 Compliant on or before August 1, 1999, and thereafter, or
(ii) that any computer application is otherwise material to its
business and operations will not be Year 2000 Compliant on a timely
basis, except to the extent that, in the case of (ii) above, such
failure could not reasonably be expected (a) to have a material adverse
effect, or (b) to result in a Termination Event or a Potential
Termination Event.
Further, the Servicer will deliver simultaneously with any
quarterly or annual financial statements or reports to be delivered
under this Agreement, a letter, report, certificate or statement signed
by the chief financial officer or chief accounting officer of the
Servicer, as appropriate, that no material event, problems or
conditions have occurred which in the opinion of management would (i)
prevent or materially delay the Servicer's plan to become Year 2000
Compliant or (ii) cause or be likely to cause the Servicer's
representations and warranties set forth herein with respect to being
or becoming Year 2000 Compliant to no longer be true; provided,
however, that such letter, report, certificate or statement need not be
delivered after August 1, 1999, for so long as the Servicer remains
Year 2000 Compliant.".
(l) Section 6.1(vii) of the Security Agreement is hereby amended by
deleting clause (vii) and adding the following in its place: "(vii) the Net
Investment shall exceed the Outstanding Balance of all Eligible Contracts minus
the Outstanding Balance of all Eligible Contracts which have become Defaulted
Contracts."
(m) Section 5.4 of the Security Agreement is hereby amended by (i)
deleting all references to "Debtor" and replacing each such reference with
"Servicer", and (ii) adding to the end thereof the following sentence: "The
rights and obligations of the Servicer pursuant to this Section 5.4 shall be
applicable to CAC as the initial Servicer and to any Successor Servicer.".
SECTION 3. Representations and Warranties.
(a) The Debtor hereby makes to the Collateral Agent, the Company and
the Bank Investors, on and as of the date hereof, all of the representations and
warranties set forth in Sections 3.1 and 3.2 of the Security Agreement, except
that to the extent that any of such representations and warranties expressly
relate to an earlier date, such representations and warranties shall be true and
correct as of such earlier date.
5
<PAGE> 6
SECTION 4. Effectiveness. This Amendment shall become
effective on June 30, 1999.
SECTION 5. Costs and Expenses. The Debtor shall pay all of the
Company's, the Bank Investors' and the Collateral Agent's cost and expenses
(including out of pocket expenses and reasonable attorneys fees and
disbursements) incurred by them in connection with the preparation, execution
and delivery of this Amendment.
SECTION 6. Governing Law. THIS AMENDMENT SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF
THE STATE OF NEW YORK.
SECTION 7. Severability; Counterparts. This Amendment may be
executed in any number of counterparts and by different parties hereto in
separate 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
instrument. Any provisions of this Amendment which are 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.
SECTION 8. Captions. The captions in this Amendment are
for convenience of reference only and shall not define or limit any of the terms
or provisions hereof.
SECTION 9. Ratification. Except as expressly affected by the
provisions hereof, the Security Agreement as amended shall remain in full force
and effect in accordance with its terms and ratified and confirmed by the
parties hereto. On and after the date hereof, each reference in the Security
Agreement to "this Agreement", "hereunder", "herein" or words of like import
shall mean and be a reference to the Security Agreement as amended by this
Amendment.
6
<PAGE> 7
IN WITNESS WHEREOF, the parties hereto have executed and
delivered this Amendment No. 1 to the Security Agreement as of the date first
written above.
CAC FUNDING CORP., as Debtor
By: /S/ Douglas W. Busk
----------------------------------
Name: Douglas W. Busk
Title: Treasurer
CREDIT ACCEPTANCE CORPORATION,
Individually and as Servicer
By: /S/ Douglas W. Busk
----------------------------------
Name: Douglas W. Busk
Title: Treasurer
KITTY HAWK FUNDING CORPORATION,
as Company
By: /S/ Richard L. Taiano
----------------------------------
Name: Richard L. Taiano
Title: Vice President
NATIONSBANK, N.A., Individually and
as Collateral Agent
By: /S/ Brian D. Krum
----------------------------------
Name: Brian D. Krum
Title: Vice President
7
<PAGE> 1
Exhibit 4 (f) (6)
AMENDMENT NO. 1 TO CONTRIBUTION AGREEMENT
This AMENDMENT NO. 1 TO CONTRIBUTION AGREEMENT ("Amendment No. 1"),
dated as of June 30, 1999, is made between CREDIT ACCEPTANCE CORPORATION, a
Michigan corporation ("CAC") and CAC FUNDING CORP., a Nevada corporation
("Funding").
On July 7, 1998, CAC and Funding entered into a Contribution Agreement
pursuant to which CAC did assign, transfer and convey to Funding a pool of Loans
constituting the Contributed Property, and Funding did use such loans as
collateral to obtain financing from unrelated parties. Funding now desires to
acquire additional Loans and related property from CAC identified herein,
including CAC's rights in the Dealer Agreements and Contracts securing payment
of such Loans and the Collections derived therefrom during the full term of this
Agreement, and CAC desires to transfer, convey and assign such additional Loans
and related property to Funding upon the terms and conditions hereinafter set
forth. CAC has agreed to service the Loans and related property to be
transferred, conveyed and assigned to Funding.
In consideration of the premises and the mutual agreements set forth
herein, it is hereby agreed by and between CAC and Funding as follows:
SECTION 1. Definitions. All capitalized terms used herein shall have
the meanings specified in the Contribution Agreement or, if not so specified,
the meaning specified in, or incorporated by reference into, the Security
Agreement or the Note Purchase Agreement, as the same may be amended through the
date hereof, and shall include in the singular number the plural and in the
plural number the singular. All accounting terms not specifically defined herein
or therein shall be construed in accordance with GAAP. All terms used in Article
9 of the Relevant UCC, and not specifically defined herein, are used herein as
defined in such Article 9. In addition, the following capitalized terms shall
have the meanings shown in this Section:
"Additional Contributed Property" means (i) all Loans, including,
without limitation, all monies due or to become due, and all monies received,
with respect thereto on or after the Cut-Off Date and all Related Security
therefor (including all of CAC's right, title and interest in and to the vehicle
retail installment sales contracts identified on Exhibit A attached hereto),
(ii) all Records with respect to the Loans, (iii) all of CAC's right, title and
interest in and to a business interruption insurance policy number 496-30-11-13
issued by Atlantic Mutual Insurance Company, (iv) all Collections and (v) and
all proceeds (including "proceeds" as defined in the UCC) of any of the
foregoing.
"Closing Date" means June 30, 1999.
"Contribution Agreement" means the Contribution Agreement between CAC
and Funding dated July 7, 1998.
"Cut-Off Date" means June 30, 1999.
<PAGE> 2
"Loans" shall mean all amounts owing to CAC on account of advances made
by CAC pursuant to Dealer Agreements entered into between CAC and a new or used
automobile and/or light-duty truck dealer, including servicing charges,
insurance charges and service policies and all related finance charges, late
charges, and all other fees and charges charged to any such dealer, which Loans
are related to those vehicle retail installment sales contracts identified on
Exhibit A attached hereto and are payable from Collections.
SECTION 2. Contribution and Sale of Additional Contributed Property.
(a) Upon the terms and subject to the conditions set forth herein (i) CAC hereby
assigns, transfers and conveys to Funding, and Funding hereby accepts from CAC,
on the terms and subject to the conditions specifically set forth herein, all of
CAC's right, title and interest, in, to and under the Additional Contributed
Property conveyed on the Closing Date. Such sale, assignment, transfer and
conveyance does not constitute an assumption by Funding of any obligations of
CAC or any other Person to Obligors or to any other Person in connection with
the Loans or under any Related Security, Dealer Agreement or other agreement and
instrument relating to the Loans.
(b) In connection with any such foregoing conveyance, CAC agrees to record
and file on or prior to the Closing Date, at its own expense, a financing
statement or statements with respect to the Additional Contributed Property
conveyed by CAC hereunder meeting the requirements of applicable state law in
such manner and in such jurisdictions as are necessary to perfect and protect
the interests of Funding created hereby under the Relevant UCC (subject, in the
case of Related Security constituting returned inventory, to the applicable
provisions of Section 9-306 of the Relevant UCC) against all creditors of and
purchasers from CAC, and to deliver either the originals of such financing
statements or a file-stamped copy of such financing statements or other evidence
of such filings to Funding on the Closing Date.
(c) CAC agrees that from time to time, at its expense, it will promptly
execute and deliver all instruments and documents and take all actions as may be
necessary or as Funding may reasonably request in order to perfect or protect
the interest of Funding in the Loans and other Additional Contributed Property
purchased hereunder or to enable Funding to exercise or enforce any of its
rights hereunder. CAC shall, upon request of Funding, obtain such additional
search reports as Funding shall request. To the fullest extent permitted by
applicable law, Funding shall be permitted to sign and file continuation
statements and amendments thereto and assignments thereof without CAC's
signature. Carbon, photographic or other reproduction of this Agreement or any
financing statement shall be sufficient as a financing statement.
(d) It is the express intent of CAC and Funding that the conveyance of the
Loans and other Additional Contributed Property by CAC to Funding pursuant to
this Amendment No. 1 be construed as a complete transfer of such Loans and other
Additional Contributed Property by CAC to Funding. Further, it is not the
intention of CAC and Funding that such conveyance be deemed a grant of a
security interest in the Loans and other Additional Contributed Property by CAC
to Funding to secure a debt or other obligation of CAC. However, in the event
that, notwithstanding the express intent of the parties, the Loans and other
Additional Contributed Property are construed
<PAGE> 3
to constitute property of CAC, then (i) this Amendment No. 1 also shall be
deemed to be, and hereby is, a security agreement within the meaning of the
Relevant UCC; and (ii) the conveyance by CAC provided for in this Amendment No.
1 shall be deemed to be, and CAC hereby grants to Funding, a security interest
in, to and under all of CAC's right, title and interest in, to and under the
Additional Contributed Property, to secure the rights of Funding set forth in
this Amendment No. 1 or as may be determined in connection therewith by
applicable law. CAC and Funding shall, to the extent consistent with this
Amendment No. 1, take such actions as may be necessary to ensure that, if this
Amendment No. 1 were deemed to create a security interest in the Loans and other
Additional Contributed Property, such security interest would be deemed to be a
perfected security interest in favor of Funding under applicable law and will be
maintained as such throughout the term of this Agreement.
(e) In connection with such conveyance, CAC agrees to deliver to
Funding on the Closing Date, one or more computer files or microfiche lists
containing true and complete lists of all Dealer Agreements and Loans conveyed
to Funding on the Closing Date, and all Contracts securing all such Loans,
identified by account number, dealer number, and pool number and Outstanding
Balance as of the Cut-Off Date. Such file or list shall be marked as Exhibit A
to this Amendment No. 1, shall be delivered to Funding as confidential and
proprietary, and is hereby incorporated into and made a part of this Amendment
No. 1.
SECTION 3. Consideration. The consideration for the Loans and other
Additional Contributed Property conveyed on the Closing Date to Funding by CAC
under this Amendment No. 1 shall be reflected as by a credit on the books and
records of Funding of an amount of additional contributed capital in the form of
shareholders' equity with respect to the Shares previously issued to CAC, which
amount shall be equal to the aggregate principal amount of the Loans as of the
Cut-Off Date that are contributed by CAC to Funding on the Closing Date.
SECTION 4. Representations and Warranties. CAC represents and
warrants to Funding as of the Closing Date that:
(a) Corporate Existence and Power. CAC is a corporation duly
organized, validly existing and in good standing under the laws of its
jurisdiction of incorporation and has all corporate power and all
material governmental licenses, authorizations, consents and approvals
required to carry on its business in each jurisdiction in which its
business is now conducted. CAC is duly qualified to do business in, and
is in good standing in, every other jurisdiction in which the nature of
its business requires it to be so qualified, except where the failure
to be so qualified or in good standing would not have a material
adverse effect.
(b) Corporate and Governmental Authorization; Contravention.
The execution, delivery and performance by CAC of this Amendment No. 1
are within its corporate powers, have been duly authorized by all
necessary corporate action, require no action by or in respect of, or
filing with, any Official Body or official thereof (except for the
filing by Seller
3
<PAGE> 4
of UCC financing statements as required by this Amendment No. 1), and do not
contravene, or constitute a default under, any provision of applicable law, rule
or regulation or of the Articles of Incorporation or Bylaws or of any agreement,
judgment, injunction, order, writ, decree or other instrument binding upon CAC,
or result in the creation or imposition of any Adverse Claim on the assets of
CAC or any of its subsidiaries (except those created by this Agreement).
(c) Binding Effect. This Amendment No. 1 constitutes the legal, valid
and binding obligation of CAC, enforceable against it in accordance with its
terms, subject to applicable bankruptcy, insolvency, moratorium or other similar
laws affecting the rights of creditors generally.
(d) Perfection. CAC is the owner of all of the Loans and the other
Additional Contributed Property, free and clear of all Adverse Claims. On or
prior to the Closing Date, all financing statements and other documents required
to be recorded or filed in order to perfect and protect the ownership interest
of Funding in and to the Loans and the other Additional Contributed Property
against all creditors of and purchasers from CAC will have been duly filed in
each filing office necessary for such purpose and all filing fees and taxes, if
any, payable in connection with such filings shall have been paid in full.
(e) Accuracy of Information. All information heretofore furnished by CAC
to Funding, the Agent, Kitty Hawk and any Bank Investor for purposes of or in
connection with this Amendment No. 1 and the Contribution Agreement or any
transaction contemplated hereby or thereby is, and all such information
hereafter furnished by CAC to Funding, the Agent, Kitty Hawk and any Bank
Investor will be, true and accurate in every material respect, on the date such
information is stated or certified.
(f) Tax Status. CAC has filed all material tax returns (federal, state
and local) required to be filed and has paid or made adequate provision for the
payment of all taxes, assessments and other governmental charges.
(g) Action, Suits. There are no actions, suits or proceedings pending,
or to the knowledge of CAC, threatened against or affecting CAC or any Affiliate
of CAC or its properties, in or before any court, arbitrator or other body,
which may, individually or in the aggregate, have a material adverse effect on
CAC or the Additional Contributed Property.
(h) Place of Business. The principal place of business and chief
executive office of CAC is in Southfield, Michigan, and the office where CAC
keeps all of its Records is at the address listed in Section 9.3 of the
Contribution Agreement, or such other locations notified to Funding in
accordance with the Contribution Agreement in jurisdictions where all actions
required by the terms of this Amendment No. 1 and the Contribution Agreement
have been taken and completed.
4
<PAGE> 5
(i) Good Title. Upon the contribution of the Loans and related property
to Funding pursuant to this Amendment No. 1, Funding shall acquire all of CAC's
ownership and other interest in each Loan (and in the Related Security,
Collections and proceeds with respect thereto) and in the Related Security,
Collections and proceeds with respect thereto, in each case free and clear of
any Adverse Claim.
(j) Tradenames, Etc. As of the date hereof CAC has not, within the last
five (5) years, operated under any tradenames other than its corporate name, nor
has it changed its name, merged with or into or consolidated with any other
corporation or been the subject of any proceeding under Title 11, United States
Code (Bankruptcy).
(k) Nature of Loans, Contracts. Each Loan represented by CAC to be an
Eligible Loan, or included in the calculation of the Aggregate Outstanding
Eligible Loan Balance, at the time of such representation, or at the time of
such calculation, as applicable, in fact satisfies the definition of "Eligible
Loan" set forth in the Security Agreement. Each Contract classified as an
"Eligible Contract" (or included in any aggregation of balances of "Eligible
Contracts") by CAC satisfies at the time of such classification the definition
of "Eligible Contract" set forth in the Security Agreement.
(l) Amount of Loans. As of the Cut-Off Date, as reported in the loan
servicing system of CAC, the Aggregate Outstanding Eligible Loan Balance was not
less than $ . .
(m) Collection Guidelines. Since July 7, 1998, there have been no
material changes in the Collection Guidelines other than as permitted hereunder
and under the Security Agreement. Since such date, no material adverse change
has occurred in the overall rate of collection of the Loans.
(n) Collections and Servicing. Since July 7, 1998, there has been no
material adverse change in the ability of the Servicer to service and collect
the Loans.
(o) Not an Investment Company. CAC is not, and is not controlled by, an
"investment company" within the meaning of the Investment Company Act of 1940,
as amended, or each is exempt from all provisions of such Act.
(p) ERISA. Each of CAC and its ERISA Affiliates is in compliance in all
material respects with ERISA and no lien exists in favor of the Pension Benefit
Guaranty Corporation on any of the Loans.
(q) Bulk Sales. No transaction contemplated by this Amendment No. 1
requires compliance with any bulk sales act or similar law.
5
<PAGE> 6
(r) Preference; Voidability. The transfer of the Loans,
Collections, Related Security and other Additional Contributed Property
by the Servicer to Funding, has not been made for or on account of an
antecedent debt owed by Funding to CAC, or by CAC to Funding, and
neither of such transfers is or may be voidable under any Section of
the Bankruptcy Reform Act of 1978 (11 U.S.C. SECTION 101 et seq.), as
amended. After giving effect to the transfer of the Additional
Contributed Property hereunder, CAC will not be insolvent.
(s) Consents, Licenses, Approvals. With respect to each Dealer
Agreement and each Loan and Contract and all other Additional
Contributed Property, all consents, licenses, approvals or
authorizations of or registrations or declarations with any
Governmental Authority required to be obtained, effected or given by
CAC, in connection with the conveyance of such Loan, Contract or other
Additional Contributed Property to Funding have been duly obtained,
effected or given and are in full force and effect.
(t) Exhibit A. Exhibit A to this Amendment No. 1 is and will
be an accurate and complete listing of all Dealer Agreements and Loans
in all material respects and all Contracts securing such Loans on the
date each such Dealer Agreement, Contract and Loan was added to Exhibit
A, and the information contained therein with respect to the identity
of such Dealer Agreements and Loans and all Contracts securing such
Loans and the Outstanding Balances thereunder and under the related
Contracts is and will be true and correct in all material respects as
of each such date.
(u) Adverse Selection. No selection procedure believed by CAC
to be adverse to the interests of Funding has been or will be used in
selecting the Dealer Agreements or the Loans (it being expressly
understood that the Loans consist of closed pools of Loans under the
related Dealer Agreements).
(v) Use of Proceeds. No proceeds of any contribution hereunder
will be used for a purpose that violates, or would be inconsistent
with, Regulations T, U or X promulgated by the Board of Governors of
the Federal Reserve System.
The representations and warranties set forth in this Section 4 shall survive the
conveyance of the Additional Contributed Property to Funding, and termination of
the rights and obligations of Funding and CAC under this Amendment No. 1. Upon
discovery by Funding or CAC of a breach of any of the foregoing representations
and warranties, the party discovering such breach shall give prompt written
notice to the other within three Business Days of such discovery.
SECTION 5. Reaffirmation of Covenants, etc. CAC and Funding each
reaffirm to the other the covenants, undertakings, agreements and obligations
set forth in Articles V and VI of the Contribution Agreement as is the same were
set forth herein in full and made applicable to the Additional Contributed
Property.
6
<PAGE> 7
SECTION 6. Effectiveness. This Amendment No. 1 shall become effective
on June 30, 1999.
SECTION 7. Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF MICHIGAN.
SECTION 8. Counterparts. This Amendment No. 1 may be executed
in two or more counterparts including telecopy transmission thereof (and by
different parties on separate counterparts), each of which shall be an original,
but all of which together shall constitute one and the same instrument.
SECTION 9. Headings. The headings herein are for purposes of
reference only and shall not otherwise affect the meaning or interpretation of
any provision hereof.
SECTION 10. Ratification. Except as expressly affected by the
provisions hereof, the Contribution Agreement, as amended hereby, shall remain
in full force and effect in accordance with its terms and is hereby ratified and
confirmed by the parties hereto. On and after the date hereof, each reference in
the Contribution Agreement to "this Agreement", "hereunder", "herein" or words
of like import shall mean and be a reference to the Contribution Agreement as
amended by this Amendment No. 1.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
7
<PAGE> 8
IN WITNESS WHEREOF, Funding and CAC each have caused this Amendment No.
1 to the Contribution Agreement to be duly executed by their respective officers
as of the day and year first above written.
CAC FUNDING CORP.
By: /S/ Douglas W. Busk
---------------------------------
Name: Douglas W. Busk
-------------------------------
Title: Treasurer
------------------------------
CREDIT ACCEPTANCE CORPORATION,
individually and as Servicer
By: /S/ Douglas W. Busk
---------------------------------
Name: Douglas W. Busk
-------------------------------
Title: Treasurer
------------------------------
Acknowledged and agreed as
of the date first above written:
KITTY HAWK FUNDING CORPORATION
By: /S/ Richard L. Taiano
---------------------------
Name: Richard L. Taiano
-------------------------
Title: Vice President
-------------------------
NATIONSBANK, N.A., as Agent
By: /S/ Brian D. Krum
---------------------------
Name: Brian D. Krum
-------------------------
Title: Vice President
------------------------
8
<PAGE> 1
Exhibit 10 (f)(4)
CREDIT ACCEPTANCE CORPORATION
1992 STOCK OPTION PLAN
(as amended and restated May 1999)
1. PURPOSE. The purpose of the Plan is to promote the best interests
of the Company and its shareholders by giving participants a greater personal
interest in the success of the Company in order to create additional incentive
for participants to make greater efforts on behalf of the Company.
2. ADMINISTRATION. (a) The selection of participants in the Plan and
decisions concerning the timing, pricing and amount of any grant of options
under the Plan shall be made by the Committee. Except as provided in Section 12
of the Plan, the Committee shall interpret the Plan, prescribe, amend, and
rescind rules and regulations relating to the Plan, and make all other
determinations necessary or advisable for its administration. The decision of
the Committee on any question concerning the interpretation of the Plan or any
option granted under the Plan shall be final and binding upon all participants.
(b) The Committee may delegate to one or more officers or managers
of the Company or a committee of such officers or managers, the authority,
subject to such terms and limitations as the Committee shall determine, to grant
options to, or to cancel, modify, waive rights with respect to, alter,
discontinue or terminate options held by participants who are not officers or
directors of the Company for purposes of Section 16 of the Securities Exchange
Act of 1934, as amended.
3. PARTICIPANTS. Participants in the Plan shall be such key Employees
as the Committee may select from time to time. The Committee may grant options
to an individual upon the condition that the individual become an Employee,
provided that the option shall be deemed to be granted only on the date the
individual becomes an Employee.
4. STOCK. The stock subject to options under the Plan shall be the
Common Stock, and may be either authorized and unissued shares or treasury
shares held by the Company. The total amount of Common Stock on which options
may be granted under the Plan shall not exceed 8,000,000 shares (as adjusted for
all stock splits through January 1, 1995), subject to adjustment in accordance
with Section 10. Shares subject to any unexercised portion of a terminated,
cancelled or expired option granted under the Plan may again be subjected to
options under the Plan.
5. AWARD OF OPTIONS. Subject to the limitations set forth in the
Plan, the Committee from time to time may grant options to such participants and
for such number of shares of Common Stock and upon such other terms (including,
without limitation, the exercise price and the times at which the option may be
exercised) as it shall designate; provided that during any three-year period, no
salaried Employee shall receive options to purchase more than 1,000,000 shares
of Common Stock (as adjusted from time to time upon the occurrence of a
corporate transaction or
<PAGE> 2
event described in the first sentence of Section 10). Each option shall be
evidenced by a stock option agreement in such form and containing such
provisions as the Committee shall deem appropriate, provided that such terms
shall not be inconsistent with the Plan. The Committee may designate any option
granted as either an Incentive Stock Option or a Nonqualified Stock Option, or
the Committee may designate a portion of an option as an Incentive Stock Option
or a Nonqualified Stock Option. Any participant may hold more than one option
under the Plan and any other stock option plan of the Company. The date on which
an option is granted shall be the date of the Committee's authorization of the
option or such later date as shall be determined by the Committee at the time
the option is authorized.
Any option intended to constitute an Incentive Stock Option shall
comply with the following requirements in addition to the other requirements of
the Plan: (a) the exercise price per share for each Incentive Stock Option
granted under the Plan shall be equal to the Fair Market Value per share of
Common Stock on the date the option is granted; provided that no Incentive Stock
Option shall be granted to any participant who owns (within the meaning of
Section 424(d) of the Code) stock of the Company, or any Parent or Subsidiary,
possessing more than 10% of the total combined voting power of all classes of
stock of such Company, Parent or Subsidiary unless, at the date of grant of an
option to such participant, the exercise price for the option is at least 110%
of the Fair Market Value of the shares subject to option and the option, by its
terms, is not exercisable more than five years after the date of grant; (b) the
aggregate Fair Market Value of the underlying Common Stock at the time of grant
as to which Incentive Stock Options under the Plan (or a plan of a Subsidiary)
may first be exercised by a participant in any calendar year shall not exceed
$100,000 (to the extent that an option intended to constitute an Incentive Stock
Option shall exceed the $100,000 limitation, the portion of the option that
exceeds such limitation shall be deemed to constitute a Nonqualified Stock
Option); and (c) an Incentive Stock Option shall not be exercisable after the
tenth anniversary of the date of grant or such lesser period as the Committee
may specify from time to time.
A Nonqualified Stock Option shall be exercisable for a term not to
exceed 10 years, or such lesser period as the Committee shall determine. The
exercise price per share of a Nonqualified Stock Option shall not be less than
85% of the Fair Market Value of the Common Stock on the date the option is
granted.
6. PAYMENT FOR SHARES. The purchase price for shares of Common Stock
to be acquired upon exercise of an option granted hereunder shall be paid in
full, at the time of exercise, in any of the following ways: (a) in cash, (b) by
certified check, bank draft or money order, (c) by tendering to the Company
shares of Common Stock then owned by the participant, duly endorsed for transfer
or with duly executed stock power attached, which shares shall be valued at
their Fair Market Value as of the date of such exercise and payment or (d) by
delivery to the Company of a properly executed exercise notice, acceptable to
the Company, together with irrevocable instructions to the participant's broker
to deliver to the Company a sufficient amount of cash to pay the exercise price
and any applicable income and employment withholding taxes, in accordance with a
written
2
<PAGE> 3
agreement between the Company and the brokerage firm ("Cashless Exercise") if,
at the time of exercise, the Company has entered into such an agreement.
7. WITHHOLDING TAXES.
The Company shall have the right to withhold from a participant's
compensation or require a participant to remit sufficient funds to satisfy
applicable withholding for income and employment taxes upon the exercise of an
option. A participant may make an election, notice of which shall be in writing,
to tender previously-acquired shares of Common Stock or have shares of Common
Stock withheld from the exercise, provided that the shares have an aggregate
Fair Market Value on the date of exercise of the option sufficient to satisfy in
whole or in part the applicable withholding taxes, or the Cashless Exercise
procedure described in Section 6 may be utilized to satisfy the withholding
requirements related to the exercise of an option.
8. NON-ASSIGNABILITY. No option shall be transferable by a
participant except by will or the laws of descent and distribution or, in the
case of a Nonqualified Stock Option, pursuant to a qualified domestic relations
order as defined by the Code or Title I of the Employee Retirement Income
Security Act, or the rules thereunder. During the lifetime of a participant, an
option shall be exercised only by the optionee. No transfer of an option shall
be effective to bind the Company unless the Company shall have been furnished
with written notice thereof and such evidence as the Company may deem necessary
to establish the validity of the transfer and the acceptance by the transferee
of the terms and conditions of the option.
9. TERMINATION OF EMPLOYMENT. Unless otherwise provided in the stock
option agreement relating to a particular option: (a) if, prior to the date that
such option shall first become exercisable, the participant's Employment shall
be terminated, with or without cause, or by the act, death, Disability, or
retirement of the participant, the participant's right to exercise the option
shall terminate and all rights thereunder shall cease; and (b) if, on or after
the date that such option shall first become exercisable, a participant's
Employment shall be terminated for any reason other than death or Disability,
the participant shall have the right, prior to the earlier of (i) the expiration
of the option or (ii) three months after such termination of Employment, to
exercise the option to the extent that it was exercisable and is unexercised on
the date of such termination of Employment, subject to any other limitation on
the exercise of the option in effect at the date of exercise; and (c) if, on or
after the date that such option shall have become exercisable, the participant
shall die or become Disabled while an Employee or while such option remains
exercisable, the participant or the executor or administrator of the estate of
the participant (as the case may be), or the person or persons to whom the
option shall have been transferred by will or by the laws of descent and
distribution, shall have the right, prior to the earlier of (i) the expiration
of the option or (ii) one year from the date of the participant's death or
termination due to such Disability to exercise the option to the extent that it
was exercisable and unexercised on the date of death, subject to any other
limitation on exercise in effect at the date of exercise.
3
<PAGE> 4
The transfer of an Employee from one corporation to another among the
Company, any Parent and any Subsidiary, or a leave of absence with the written
consent of the Company, shall not constitute a termination of Employment for
purposes of the Plan.
10. ADJUSTMENTS. In the event that the Committee shall determine that
any dividend or other distribution (whether in the form of cash, Common Stock,
other securities, or other property), recapitalization, stock split, reverse
stock split, reorganization, merger, consolidation, split-up, spin-off,
combination, repurchase, or exchange of Common Stock or other securities of the
Company, issuance of warrants or other rights to purchase Common Stock or other
securities of the Company, or other similar corporate transaction or event
affects the Common Stock such that an adjustment is determined by the Committee
to be appropriate in order to prevent dilution or enlargement of the benefits or
potential benefits intended to be made available under the Plan, then the
Committee shall, in such manner as it may deem equitable, adjust any or all of
(a) the number and type of shares of Common Stock which thereafter may be made
the subject of options, (b) the number and type of shares of Common Stock
subject to outstanding options, and (c) the exercise price with respect to any
option, or, if deemed appropriate, make provision for a cash payment to the
holder of an outstanding option; provided, however, in each case, that with
respect to Incentive Stock Options no such adjustment shall be authorized to the
extent that such authority would cause the Plan to violate Section 422 of the
Code or any successor provision thereto; and provided further, however, that the
number of shares of Common Stock subject to any option shall always be a whole
number. In the event of a Change of Control, options under the Plan shall be
treated as the Committee may determine (including acceleration of vesting and
settlements of options) at the time of grant or at a subsequent date as provided
in the stock option agreement reflecting the grant of such options.
11. RIGHTS PRIOR TO ISSUANCE OF SHARES. No participant shall have any
rights as a shareholder with respect to any shares covered by an option until
the issuance of a stock certificate to the participant for such shares. No
adjustment shall be made for dividends or other rights with respect to such
shares for which the record date is prior to the date such certificate is
issued.
12. TERMINATION AND AMENDMENT. The Board of Directors (the "Board")
may terminate the Plan, or the granting of options under the Plan, at any time.
No Incentive Stock Option shall be granted under the Plan after March 1, 2002.
Termination of the Plan shall not affect the rights of the holders of any
options previously granted.
The Board may amend or modify the Plan at any time and from time to
time. No amendment, modification, or termination of the Plan shall in any manner
affect any option granted under the Plan without the consent of the participant
holding the option.
13. APPROVAL OF PLAN. The Plan shall be subject to the approval of the
holders of at least a majority of the shares of Common Stock of the Company
present and entitled to vote at a meeting of shareholders of the Company held
within 12 months after adoption of the Plan by the
4
<PAGE> 5
Board. No option granted under the Plan may be exercised in whole or in part
until the Plan has been approved by the shareholders as provided herein. If not
approved by shareholders within such 12-month period, the Plan and any options
granted hereunder shall become void and of no effect.
14. EFFECT ON EMPLOYMENT. Neither the adoption of the Plan nor the
granting of any option pursuant to it shall be deemed to create any right in any
individual to be retained as an Employee.
15. CERTAIN DEFINITIONS.
A "Change in Control" shall mean (i) consummation of any merger or
consolidation with respect to which the Company or any Parent is a constituent
corporation (other than a transaction for the purpose of changing the Company's
corporate domicile), any liquidation or dissolution of the Company or any sale
of all or substantially all of the Company's assets or (ii) a change in the
identity of a majority of the members of the Company's Board of Directors within
any twelve-month period, which change or changes are not recommended by the
incumbent directors immediately prior to any such change or changes.
The "Code" is the Internal Revenue Code of 1986, as amended.
The "Committee" is a committee of two or more directors of the Company,
each of whom is a "non-employee director" as defined in Rule 16b-3 under the
Exchange Act.
The "Common Stock" is the common stock of the Company.
The "Company" is Credit Acceptance Corporation, a Michigan corporation.
"Disabled" or "Disability" means permanently disabled as defined in
Section 22(e)(3) of the Code.
"Employee" means an individual with an "employment relationship" with
the Company, or any Parent or Subsidiary, as defined in Regulation 1.421-7(h)
promulgated under the Code, and shall include, without limitation, employees who
are directors of the Company, or any Parent or Subsidiary.
"Employment" means the state of being an Employee.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Fair Market Value" shall mean the average of the high and low sale
prices per share of the Common Stock reported in the Wall Street Journal for the
last preceding day on which the Common Stock was traded prior to the date with
respect to which the fair market value is to be determined, as determined by the
Committee in its sole discretion; provided, however, that Fair
5
<PAGE> 6
Exhibit 10 (f)(4)
Market Value with respect to the initial option grants approved by the Committee
on July 15, 1992 shall be deemed to be the initial public offering price per
share of the Company's Common Stock of $13.00 ($6.50 after adjustment for the
two-for-one stock split paid March 17, 1993).
An "Incentive Stock Option" is an option intended to meet the
requirements of Section 422 of the Code.
A "Nonqualified Stock Option" is an option granted under the Plan other
than an Incentive Stock Option.
"Parent" means any "parent corporation" of the Company as defined in
Section 424(e) of the Code.
The "Plan" is the 1992 Stock Option Plan.
"Subsidiary" means any "subsidiary corporation" of the Company as
defined in Section 424(f) of the Code.
6
<TABLE> <S> <C>
<ARTICLE> 5
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<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> JUN-30-1999
<CASH> 14,575
<SECURITIES> 10,807
<RECEIVABLES> 586,027
<ALLOWANCES> 5,114
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 30,267
<DEPRECIATION> 10,160
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<BONDS> 124,676
0
0
<COMMON> 463
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<TOTAL-LIABILITY-AND-EQUITY> 675,262
<SALES> 0
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<INCOME-CONTINUING> 19,150
<DISCONTINUED> 0
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<CHANGES> 0
<NET-INCOME> 19,150
<EPS-BASIC> .41
<EPS-DILUTED> .41
</TABLE>
