Exhibit 10.2
Rediscount Finance
FIRST AMENDED AND RESTATED
SCHEDULE TO
THIRD AMENDED AND RESTATED
LOAN AND SECURITY AGREEMENT
Borrower: THE THAXTON GROUP, INC.
THAXTON OPERATING COMPANY
THAXTON INSURANCE GROUP, INC.
TICO CREDIT COMPANY, INC.
EAGLE PREMIUM FINANCE CO., INC.
THAXTON COMMERCIAL LENDING, INC.
PARAGON, INC.
TICO PREMIUM FINANCE COMPANY, INC.
TICO REINSURANCE, LTD.
TICO CREDIT COMPANY OF TENNESSEE, INC.
TICO CREDIT COMPANY OF NORTH CAROLINA, INC.
TICO CREDIT COMPANY OF ALABAMA, INC.
TICO CREDIT COMPANY OF MISSISSIPPI, INC.
TICO CREDIT COMPANY OF GEORGIA, INC.
TICO CREDIT COMPANY (DE)
TICO CREDIT COMPANY (MS)
TICO CREDIT COMPANY (TN)
THAXTON INVESTMENT CORPORATION
THE MODERN FINANCE COMPANY
SOUTHERN MANAGEMENT CORPORATION
MODERN FINANCIAL SERVICES, INC.
SOUTHERN FINANCE OF SOUTH CAROLINA, INC.
COVINGTON CREDIT OF TEXAS, INC.
COVINGTON CREDIT OF GEORGIA, INC.
SOUTHERN FINANCE OF TENNESSEE, INC.
FITCH NATIONAL REINSURANCE COMPANY, LTD.
SOCO REINSURANCE, LTD.
QUICK CREDIT CORPORATION
COVINGTON CREDIT, INC. (OKLAHOMA)
COVINGTON CREDIT OF LOUISIANA, INC.
SOUTHERN FINANCIAL MANAGEMENT, INC.
Address: 1524 PAGELAND HIGHWAY
LANCASTER, SOUTH CAROLINA 29721
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Date: December 31, 2001
This First Amended and Restated Schedule to Third Amended and Restated
Loan and Security Agreement ("Schedule") is executed in conjunction with a
certain Third Amended and Restated Loan and Security Agreement ("Agreement"),
dated April 4, 2001, by and between FINOVA Capital Corporation, as Lender, and
the above Borrowers. All references to Section numbers herein refer to Sections
in the Agreement. The terms and provisions of this First Amended Schedule shall
supersede all terms and provisions contained in all prior schedules.
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1.A BORROWERS
The "Borrower(s)" herein shall be defined as follows:
The Thaxton Group, Inc. "TTG" or "Lead Borrower"
Thaxton Operating Company "TOC"
Thaxton Insurance Group, Inc. "TIG"
TICO Credit Company, Inc. "TICO"
Eagle Premium Finance Co., Inc. "EPF"
Thaxton Commercial Lending, Inc. "TCL"
Paragon, Inc. "PI"
TICO Premium Finance Company, Inc. "TICO Premium"
TICO Reinsurance, Ltd. "TICOR"
TICO Credit Company of Tennessee, Inc. "TICO - Tennessee"
TICO Credit Company of North Carolina, Inc. "TICO - North Carolina"
TICO Credit Company of Alabama, Inc. "TICO - Alabama"
TICO Credit Company of Mississippi, Inc. "TICO - Mississippi"
TICO Credit Company of Georgia, Inc. "TICO - Georgia"
TICO Credit Company (DE) "TICO - DE"
TICO Credit Company (MS) "TICO (MS)"
TICO Credit Company (TN) "TICO (TN)"
THAXTON INVESTMENT CORPORATION "Thaxton Investment"
Modern Finance Company d/b/a
TICO Credit Company (Ohio) "TICO-Ohio"
Modern Financial Services, Inc. d/b/a
TICO Financial Services (Ohio) "TICO Financial-Ohio"
Southern Finance of South Carolina, Inc. "Southern Finance-SC"
Southern Management Corporation "Southern Management"
Covington Credit of Texas, Inc. "Covington-Texas"
Covington Credit of Georgia, Inc. "Covington-Georgia"
Southern Finance of Tennessee, Inc. "Southern Finance-
Tennessee"
Fitch National Reinsurance Company, Ltd. "Fitch"
SoCo Reinsurance, Ltd. "SoCo"
Quick Credit Corporation "Quick Credit"
Covington Credit, Inc. (Oklahoma) "Covington Oklahoma"
Covington Credit of Louisiana, Inc. "Covington - Louisiana"
Southern Financial Management, Inc. "Southern Financial"
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Borrowers warrant and represent that each Borrower is organized under the laws
of the jurisdiction noted beside its signature to this Schedule; that attached
hereto as Exhibit 1.A is a complete and correct organizational chart showing for
each Borrower the ownership of all outstanding and committed equity interests
therein; and that no Borrower directly or indirectly owns an equity interest in
any other business entity that is not itself a Borrower and included in Exhibit
1.A hereto.
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1.16.A. MAXIMUM AMOUNT OF AN ELIGIBLE RECEIVABLE (SECTION 1.16).
The term "Maximum Amount of an Eligible Receivable" shall mean
for each Receivable type as set forth below:
Consumer Loan Receivable other than a Real Estate Secured
Receivable - the sum of Thirty Thousand Dollars ($30,000.00)
remaining due thereon at any date of determination, including
all unearned finance charges and Dealer Discounts pursuant to
such Receivable.
Real Estate Secured Receivable - the sum of One Hundred
Thousand Dollars ($100,000.00)remaining due thereon at any
date of determination, including all unearned finance charges
and Dealer Discounts pursuant to such Receivable.
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1.16.B. MAXIMUM TERM OF AN ELIGIBLE RECEIVABLE (SECTION 1.16).
The "Maximum Term of an Eligible Receivable" shall be for each
Receivable type as set forth below:
Consumer Loan Receivable other than a Real Estate Secured
Receivable - a period of sixty (60) months remaining until the
contractual final due date
Real Estate Secured Receivable - a period of One Hundred and
Eighty (180) months remaining
until the contractual final
due date
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1.16.C. AGING PROCEDURES AND ELIGIBILITY TEST (SECTION 1.16).
AGING PROCEDURES FOR A CONTRACTUAL AGING FOR THE FOLLOWING RECEIVABLE TYPES:
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CONSUMER LOAN RECEIVABLES (OTHER THAN VEHICLE RECEIVABLES AND INSURANCE PREMIUM
RECEIVABLES)
1. No payment missed or due = Current.
2. 1 to 30 days past due = "30 day Account".
3. 31 to 60 days past due = "60 day Account".
4. 61 to 90 days past due = "90 day Account".
5. 91 or more days past due = "90 + day Account"
INSURANCE PREMIUM RECEIVABLES
1. No payment missed or due = Current.
2. 1 to 30 days past due = "30 day NC Account".
(Financing contract not canceled)
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3. 31 or more days past due = "30+ day NC Account".
(Financing contract not canceled)
4. 1 to 30 days past due = "30 day Canceled Account".
(Financing contract canceled)
5. 31 to 60 days past due = "60 day Canceled Account".
(Finance contract canceled)
6. 61 or more days past due = "60 + day Canceled Account".
(Finance contract canceled)
For the purposes of the Loan Documents the cancellation of an insurance
receivable shall be immediately effective upon the effective cancellation date
of the associated insurance policy.
VEHICLE RECEIVABLES
- -------------------
1. No payment missed or due = Current.
2. 1 to 30 days past due = "30 day Account".
3. 31 to 60 days past due = "60 day Account".
4. 61 or more days past due = "60 + day Account".
ELIGIBILITY TEST:
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The term "Eligibility Test" shall mean the test to determine the eligibility of
a Receivable for the purposes of Section 1.16 (xii) and 1.16 (xiii) hereof, that
test, being as follows for each Receivable type:
Direct Loan Receivables
(1) No payment due on said Receivable remains unpaid more than
ninety (90) days from the specific date on which such
payment was due pursuant to the terms of said Receivable;
(2) If the initial advance of said Receivable was greater than
One Thousand Dollars ($1,000.00), the payment of said
Receivable shall be secured by collateral;
(3) If said Receivable is purchased from a third party wherein
the Borrower is or will become obligated to such third party
in conjunction with the purchase of such Receivable through
a "reserve" or other liability arrangement, all of such
third party's rights in and to the "reserve" or other
liability shall be subordinated to Lender in all respects,
except as set forth below, in a form and substance
satisfactory to Lender. This provision shall not restrict
Borrower from making a payment to a third party for a
reserve or other liability arrangement, or a part thereof,
provided such payment is then contractually due to such
third party, pursuant to a written agreement executed at or
prior to the time the respective Receivable was purchased by
Borrower, and an Event of Default does not then exist; and
(4) With respect to Consumer Loan Receivables secured by real
estate, on the date of origination of such Receivable, the
percentage determined by dividing the outstanding principal
balance of such Receivable by the fair market value of the
real estate collateral securing such Receivable shall not
exceed ninety percent (90%) ("Maximum LTV").
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Insurance Premium Receivables
(1) No payment due on said Receivable remains unpaid more than
(i) thirty (30) days for that Insurance Premium Receivable
that the contractual obligation evidencing such Receivable
has not been canceled according to the terms of such
Receivable and (ii) sixty (60) days for Insurance Premium
Receivable that the contractual obligation evidencing such
Receivable has been canceled according to the terms of such
Receivable, from the specific date on which such payment was
due pursuant to the terms of said Receivable.
(2) The insurance company issuing the insurance policy of which
said Receivable evidences the financing of the payment of
the premiums with respect to such insurance policy meets one
of the following criteria:
(i) rated "C+" or better pursuant to the current edition
of "Best's Key Rating Guide - Property and Casualty"
as published by the A.M. Best Company ("A.M. Best");
or
(ii) a member of a state reinsurance facility or shared
pool.
(3) No more than twenty percent (20%) of the aggregate
outstanding balance of all Category Two Receivables can
evidence the financing of the payment of premiums for
insurance policies for any one insurance company that is not
one of the following:
(i) rated "A-" or better by A.M. Best; or
(ii) a member of a state insurance facility or shared pool.
Vehicle Receivables
(1) No payment due on said Receivable remains unpaid more than
sixty (60) days from the specific date on which such payment
was due pursuant to the terms of said Receivable.
(2) If said Receivable is purchased from a third party wherein
the Borrower is or will become obligated to such third party
in conjunction with the purchase of such Receivable through
a "reserve" or other liability arrangement, all of such
third party's rights in and to the "reserve" or other
liability shall be subordinated to Lender in all respects,
except as set forth below, in a form and substance
satisfactory to Lender. This provision shall not restrict
Borrower from making a payment or payments to a third party
for a reserve or other liability arrangement, or a part
thereof, provided such payment is then contractually due to
such third party, pursuant to a written agreement executed
at or prior to the time the respective Receivable was
purchased by Borrower, and an Event of Default does not then
exist.
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1.19. GUARANTOR (whether one or more) (SECTION 1.19).
James D. Thaxton (Validity and Support Agreement) with
respect to the outstanding balance of the Indebtedness with
respect to the Revolving Loan
James D. Thaxton (Guaranty Agreement) with respect the Term
Loan and the repurchase agreement with respect to the
Preferred Stock.
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1.38. SUBORDINATED DEBT (SECTION 1.38).
The following sentences are hereby added to the Agreement at
the end of Section 1.38.
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"The Securities now or hereafter issued by The Thaxton Group,
Inc. pursuant to that Indenture dated as of February 17, 1998
with the Bank of New York, and any extension thereof, have
been approved by Lender as Subordinated Debt, but neither said
Indenture nor the form of the securities issued pursuant
thereto may be amended without Lender's prior written
approval, except for amendments that do not affect the
subordination provisions thereof and which are either (i)
incidental to extensions or renewals or (ii) required by
applicable law or by governmental regulators."
"The obligation evidenced by the Senior Floating Rate
Debenture made by The Thaxton Group, Inc. dated November 15,
1999 to Voyager Life Insurance Company shall be subjected to
subordination provisions acceptable to Lender on or before
January 15, 2002."
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2.1.A. AMOUNT OF REVOLVING CREDIT LINE, AMOUNT OF TERM LOAN AND AMOUNT OF THE
TRANCHE `B' CREDIT FACILITY (SECTION 2.1.A.)
The "Amount of the Revolving Credit Line" is One Hundred Sixty
Five Million Dollars ($165,000,000.00) as of the execution of
this Schedule, and shall in the future reduce as follows:
3/31/02 $152,000,000
6/30/02 $149,000,000
9/30/02 $146,000,000
12/31/02 $143,000,000
3/31/03 $140,000,000
6/30/03 $135,500,000
9/30/03 $131,000,000
12/31/03 $126,500,000
3/31/04 $122,000,000
6/30/04 $117,500,000
9/30/04 $113,000,000
12/31/04 $108,500,000
3/31/05 $104,000,000
6/30/05 $ 99,500,000
9/30/05 $ 95,000,000
12/31/05 $ 90,500,000
3/31/06 $ 86,000,000
6/30/06 $ 81,500,000
The "Maximum Amount of the Term Facility" is Twenty Three
Million Eight Hundred Fifty Thousand Dollars ($23,850,000.00).
The "Amount of the Tranche `B' Credit Facility" is Eight
Million Dollars ($8,000,000.00).
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2.1.B. AVAILABILITY ON ELIGIBLE RECEIVABLES (SECTION 2.1.A.):
The "Availability on Revolving Loan Eligible Receivables"
shall be the sum of the following:
(i) an amount equal to the result of:
(a) if the date of determination is on or prior
to March 31, 2004, eighty-five percent
(85%) of the aggregate unmatured and unpaid
amount due to Borrower from the Account
Debtor named thereon, excluding all
unearned finance charges, and Dealer
Discounts pursuant to the Consumer Loan
Receivables and the Insurance Premium
Receivables; or
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(b) if the date of determination is after March
31, 2004, the Availability on Revolving
Loan Eligible Receivables shall reduce from
eighty-five percent (85%) by one-half
percentage point (.50%) each fiscal quarter
beginning with the quarter beginning April
1, 2004 and continuing on the first day of
each calendar quarter thereafter;
Less
----
(b) The outstanding balance of the Tranche "B" Credit
Facility, on the date of determination.
Notwithstanding any provision contained in the Loan Documents to the
contrary,
If on any date of determination, upon the occurrence of any of
the following events, Lender, in its sole and absolute
discretion, may modify the Availability on Revolving Loan
Eligible Receivables advance percentage:
(A) the sum of all liabilities and obligations
of all Borrowers plus the outstanding
balance of the Tranche "B" Facility, on
any date of determination, is greater than
the aggregate outstanding balance of all
Eligible Receivables, including all
unearned finance charges and all other
unearned fees and charges, plus all other
tangible assets of the Borrowers, on the
same date of determination, then in that
event, Lender, in its sole and absolute
discretion, may modify the Availability on
any of the Eligible Receivables;
(B) Delinquency Percentage is less than ninety
percent (90%) on any date of determination;
or
(C) The Collateral Recovery Rate is less than
ninety percent (90%) for the twelve (12)
calendar months immediately preceding the
date of determination.
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2.2. STATED INTEREST RATE (SECTION 2.2) AND STATED DIVIDEND RATE (SECTION 2.
2)
REVOLVING LOAN CREDIT FACILITY STATED INTEREST RATE
---------------------------------------------------
A. If the date of determination is on or prior to July
31, 2004, the Revolving Loan Credit Facility
Stated Interest Rate shall be lesser of:
(i) the Governing Rate, plus:
(a.) One percent (1.0%) per annum; or
(ii) the Maximum Rate.
B. If the date of determination is on or after August 1,
2004, the Stated Interest Rate shall be lesser of:
(i) the Governing Rate, plus
(a) three percent (3.00%) per
annum, on the average
outstanding balance of the
Indebtedness, for the month
of determination, that is
equal to or less than One
Hundred Million Dollars
($100,000,000.00); and
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(b) six percent (6.00%) per
annum, on the average
outstanding balance of the
Indebtedness, for the month
of determination, that is
greater than One Hundred
Million Dollars
($100,000,000.00).
or
(ii) the Maximum Rate.
TERM LOAN CREDIT FACILITY STATED INTEREST RATE
The "Term Loan Credit Facility Stated Interest Rate" shall be
lesser of (i) the Governing Rate plus Two percent (2.00%) per annum; or
(ii) the Maximum Rate.
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2.3. MATURITY DATE (SECTION 2.3.D).
The primary term of this Agreement shall expire on July 31,
2006 (the "Maturity Date"), and all Indebtedness not
previously due shall then become finally due and payable.
Notwithstanding the foregoing, the Borrower's obligation
pursuant to this Agreement shall remain in full force and
effect until the Indebtedness due and owing to Lender has been
paid in full.
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2.11. Tranche B Facility.
Concurrently with the execution of this Schedule, Borrower
shall deliver to Lender a First Amendment to Stock Purchase
Agreement confirming that the obligation of James Thaxton to
purchase the Preferred Stock includes the obligation to cover
any amounts of dividends or other amounts with respect thereto
that may be demanded of Lender by any creditor, trustee,
debtor in possession or other party claiming under any
creditor's rights law.
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2.13. ADVANCES TO LEAD BORROWER.
The following is hereby added as a second paragraph to Section
2.13 of the Agreement:
"Borrowers further warrant, represent and agree as
follows:
A. Joint and Several Liability.
---------------------------
Borrowers are interdependent for their
operational and financial needs, and they
and Lender intend that each Borrower be
jointly and severally liable for each
monetary obligation, warranty and covenant
obligation arising under this Agreement. The
delivery of funds to any Borrower under this
Agreement shall constitute valuable
consideration and reasonably equivalent
value to all Borrowers for the purpose of
binding them and their assets on a joint and
several basis for the Indebtedness
hereunder. Lender may enforce this Agreement
against any Borrower without first making
demand upon or instituting collection
proceedings against any other Borrower.
B. Unconditional Obligation.
-------------------------
The unconditional liability of each
Borrower for the entire Indebtedness shall
not be impaired by any event whatsoever,
including, but not limited to, the merger,
consolidation, dissolution, cessation of
business or liquidation of any Borrower; the
financial decline or bankruptcy of any
Borrower; the failure of any other party to
guarantee the Indebtedness or to provide
collateral therefor; Lender's compromise
or settlement with or without release of
any Borrower; Lender's release of any
collateral for the Indebtedness, with or
without notice to Borrowers; Lender's
failure to file suit against any Borrower;
Lender's failure to give any Borrower
notice of default; the unenforceability
of the Indebtedness against any Borrower
due to bankruptcy discharge, counterclaim
or for any other reason; Lender's
acceleration of the Indebtedness at any
time; the extension,
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modification or renewal of the Indebtedness;
Lender's failure to undertake or exercise
diligence in collection efforts against any
party or property; the termination of any
relationship of any Borrower with any other
Borrower, including, but not limited to, any
relationship of commerce or ownership; any
Borrower's change of name or use of any name
other than the name used to identify such
Borrower in this Agreement; or any
Borrower's use of the credit extended for
any purpose whatsoever.
C. Deferral of Contribution and
----------------------------
Subrogation.
-----------
Borrowers' respective rights of contribution
and any other such rights among themselves
are not impaired by this Agreement, except
that each Borrower agrees not to seek
payment directly or indirectly from another
Borrower through a claim of indemnity,
contribution, subrogation or otherwise with
respect to the Indebtedness, until the
Indebtedness has been indefeasibly paid in
full.
D. Solvency. Borrowers are not
---------
insolvent and are not rendered insolvent
under any applicable definition under
corporate law or laws applicable to
creditors' rights by their duties
respecting the Indebtedness. Borrowers
agree that it is appropriate to include in
the determination of their solvency under
these laws the value of their rights of
contribution, exoneration, indemnity,
subrogation and other related rights of
recourse respecting their joint and several
liability for the Indebtedness and the
inter-company loans arising under this
Section 2.13, adequate provisions for which
rights of contribution and other rights
exist at law or by independent document(s)
to the satisfaction of the respective
Borrowers. Submitted to Lender concurrently
with the delivery of this Schedule is a
Solvency Certificate further establishing
the solvency of all Borrowers as of the
date of this Schedule.
E. Savings Provision. Should
------------------
the liability of any Borrower hereunder
for the entire amount of the Indebtedness
be subject to avoidance or limitation,
notwithstanding the contrary agreement and
the express intention of the parties hereto,
under any state or federal fraudulent
conveyance law or other similar law that may
be determined to be applicable, then the
liability of such Borrower for the
Indebtedness shall be limited to the maximum
amount for which the Borrower may be liable
without legal impairment."
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2.15. FACILITY FEE (SECTION 2.15).
The amount of "Facility Fee" shall be One Million Dollars
($1,000,000.00) at the earlier of maturity or termination of
the credit facility. No Facility Fee shall be due if the
outstanding balance of Tranche "B" is paid in full on or
before December 31, 2003.
Borrower hereby agrees to pay to Lender a closing fee in the
amount of Fifteen Thousand Dollars ($15,000.00) which shall be
due and payable upon the execution of this First Amended
Schedule.
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3.1. COLLATERAL DESCRIPTION (SECTION 3.1).
Section 3.1.E in the Agreement is hereby deleted and the
following is substituted in lieu thereof:
"E. All monies and all "deposit
accounts" and "investment property" (as
such terms are defined in Revised Article 9
of the Uniform Commercial Code as adopted
in Arizona effective July 1, 2001) now or
hereafter owned by Borrower;"
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3.2. BUSINESS LOCATIONS OF BORROWER (SECTIONS 3.2, 3.6 and 5.1.N.).
All locations as set forth on a list of locations attached
hereto.
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3.2.A. FINANCING STATEMENTS AND FURTHER ASSURANCES (SECTION 3.2).
The following sentence is hereby added to the Agreement as a
third paragraph to Section 3.2.
"Borrower agrees that Lender is authorized to file
financing statements as permitted by Revised Article
9 of the Uniform Commercial Code as adopted in
Arizona effective July 1, 2001."
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3.6. LOCATION OF COLLATERAL (SECTION 3.6).
The following sentence is hereby added to the Agreement as a
final paragraph to Section 3.6.
"Without limiting any other provision of this
Agreement, Borrower agrees to deliver to Lender, as
received by Borrower, all original promissory notes
that are secured by real estate (i) if the real
estate is located in the State of Mississippi, or
(ii) if the promissory note is held by any Borrower
that is domiciled in Mississippi, in each case as
long as Lender deems this delivery appropriate for
the purpose of perfecting its security interest
therein."
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3.7. RECORDS AND INSPECTIONS (SECTION 3.7).
The following language is hereby added as a final sentence of
Section 3.7:
"Borrower shall reimburse to Lender the reasonable costs of
collateral audits (including auditor time and travel expenses)
that Lender may conduct from time to time, but only to the
extent that (i) audits exceed the scope and effort of the
collateral audits customarily performed by Lender respecting
the Loan prior to January 1, 2002 (but in no event absent an
Event of Default will such reimbursable audit expenses exceed
$50,000 per year) or (ii) audits are performed after the
occurrence of (and during the continuation of) an Event of
Default."
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5.1. BORROWER'S TRADENAMES (whether one or more)(SECTION 5.1.B.)
TICO Credit Company
Eagle Premium Finance Company
TICO Premium Finance Company
Paragon Lending
Thaxton Insurance
And as additionally set forth on Exhibit "A".
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6.1.E. LINES OF BUSINESS.
Section 6.1.E is hereby amended by adding the following
language as a final sentence thereof:
"Absent Lender's prior written consent, Borrowers
will engage in no additional lines of business and
will not increase beyond two percent (2%) of their
consolidated gross income as of their future
quarterly financial statements, their participation
in any present line of business which contributed
less than one percent (1%) of their consolidated
gross income as of their financial statements dated
as of July 31, 2001. For the purpose of this
provision, the mere sale of an additional product
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that is reasonably related to an existing line of
business shall not be regarded as a separate line of
business as long as the sale of the product does not
introduce novel liability or operational
requirements. For example, the mere sale of casualty
insurance for an agent's fee would be regarded as a
different line of business from the underwriting of
casualty insurance, but the addition of new
credit-related insurance products to Borrower's
product line to be sold as agent would be regarded as
an expansion of product lines within a line of
business and not as a separate line of business.
Without limiting the foregoing, Borrowers will not
expand the scope of their insurance underwriting
activities beyond its present product offerings
without Lender's prior written consent."
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6.1.H. ADDITIONAL AFFIRMATIVE COVENANT (SECTION 6.1.H).
Section 6.1.H is hereby added to the Agreement in its entirety
as follows:
"H. If the controlling shareholder and
senior management succession plan delivered to and
approved by Lender dated June 14, 2001 is modified by
Borrower, such modification shall be approved in
writing as acceptable to Lender, in its reasonable
discretion, and its final form shall be delivered to
Lender within fifteen (15) days of such modification.
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6.2.D. ADDITIONAL NEGATIVE COVENANT (SECTION 6.2.D).
The following sentence is hereby added as the last sentence to
Section 6.2.D of the Agreement:
Borrower further agrees not to exercise its right to
redeem or prepay any Subordinated Debt prior to its
stated maturity without Lender's prior written
approval. This restriction applies to voluntary
redemptions or prepayments only, and does not
restrict redemptions that may occur (i) at the
election of the holder of Subordinated Debt under the
terms thereof, rather than at the election of
Borrower, or (ii) as may be required by applicable
law or by a regulator; provided, however, Lender does
not consent to any redemption that would violate the
terms of subordination set forth in the Indenture and
Notes establishing the Subordinated Debt.
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6.2.L. ADDITIONAL NEGATIVE COVENANTS (SECTIONS 6.2.L, 6.2.M).
Sections 6.2.L and 6.2.M are hereby added to the Agreement in
their entirety as follows:
"L. Allow the change of senior
management with respect to James D. Thaxton as
President, Bob Wilson as Executive Vice President
or Alan Ross, Chief Financial Officer and not
replace such management within sixty (60) days of
the date of such change with another qualified
person. With respect to James D. Thaxton, the
replacement officer shall be of like experience
and expertise, and as to the other officers, the
replacement need only be duly qualified for the
requirements of the position by ordinary industry
standards.
"M. Issue any equity securities or
rights for the issuance of, or convertible into,
equity securities, unless documentation acceptable to
Lender establishes that the net proceeds of such
offering after the reasonable and necessary expenses
of issuance are paid to Lender and a corresponding
reduction is made in the maximum Amount of the
Revolving Credit Line; provided, however, that Lender
shall not unreasonably withhold its consent to the
issuance of a reasonable amount of such securities as
incentive compensation even though no cash proceeds
will result from the issuance."
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6.3.A. LEVERAGE RATIO LIMIT (SECTION 6.3.A).
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The term "Leverage Ratio Limit" shall mean 8.50 to 1.00.
================================================================================
6.3.B. MINIMUM NET INCOME (SECTION 6.3.B).
The Minimum Net Income shall be One Million Dollars
($1,000,000.00) for each fiscal year of Borrower.
================================================================================
6.3.C. DISTRIBUTIONS LIMITATION (SECTION 6.3.C).
None, provided that regularly scheduled dividends on Preferred
Stock shall not be a distribution for the purposes of this
negative covenant.
================================================================================
6.3.D. MINIMUM NET WORTH (BOOK) (SECTION 6.3.D.).
The Minimum Net Worth (Book) shall be as follows:
(i) if the date of determination is on
or before December 31, 2001, Four
Million Dollars ($4,000,000.00);
(ii) if the date of determination is on or
before December 31, 2002, but after
December 31, 2001, Five Million Dollars
($5,000,000.00);
(iii) if the date of determination is on or before
December 31, 2003, but after December 31,
2002, Six Million Dollars ($6,000,000.00);
(iv) if the date of determination is on or
before December 31, 2004, but after
December 31, 2003, Seven Million Dollars
($7,000,000.00);
(v) if the date of determination is on or
before December 31, 2005, but after
December 31, 2004, Eight Million Dollars
($8,000,000.00); or
(vi) if the date of determination is after
December 31, 2005, Nine Million Dollars
($9,000,000.00).
Notwithstanding the foregoing, effective upon Borrower's redemption of the
Preferred Stock from Lender in full on or before December 31, 2003, the Minimum
Net Worth (Book) shall be as follows:
(i) Three Million Dollars ($3,000,000.00) as to
each date of determination prior to
December 31, 2004;
(v) if the date of determination is before
December 31, 2005, but on or after
December 31, 2004, Four Million Dollars
($4,000,000.00); or
(v) if the date of determination is on or after
December 31, 2005, Five Million Dollars
($5,000,000.00).
================================================================================
6.3.E. MINIMUM NET CASH FLOW (SECTION 6.3.E.).
The Minimum Net Cash Flow shall be Four Million Two Hundred
Thousand Dollars ($4,200,000.00) for each twelve (12) month
period immediately preceding the date of determination,
beginning after December 31, 2001.
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================================================================================
6.6. ANNUAL FINANCIAL STATEMENTS (SECTION 6.6).
Annual audited financial statements to be prepared by an
independent certified public accountant, satisfactory to
Lender.
If Lender so requests in writing, Borrowers agree to deliver
to Lender a list of and/or copies of any specified financial
statements delivered to state or federal regulators.
Borrowers agree to deliver to Lender at least annually,
without specific request, and as frequently as monthly, should
Lender so request, consolidating financial statements of the
various Borrowers.
================================================================================
8.1. REIMBURSEMENT OF EXPENSES (SECTION 8.1).
Borrowers shall reimburse Lender for Lender expenses incurred
in Lender's attorneys fees and expenses incurred in the
negotiation, preparation and execution of these Loan Documents
executed in conjunction therewith.
================================================================================
9.1. NOTICES (SECTION 9.1).
Lender: FINOVA Capital Corporation
(copy each office below with all notices)
Corporate Office:
FINOVA Capital Corporation
4800 N. Scottsdale Road
Scottsdale, AZ 85251
Attn: Joseph R. D'Amore, Deputy General
Counsel
Telephone: (480) 636-4932
Telecopy No.: (480) 636-4937
Rediscount Finance Office:
FINOVA Capital Corporation
16633 Dallas Parkway
Addison, Texas 75001
Attn: Steve Thomas
Telephone: (972) 764-1100
Telecopy No.: (972) 764-1149
Borrower: (All Borrowers)
1524 Pageland Highway
Lancaster, South Carolina 29721
Telephone: (803) 285-4336
Telecopy No.: (803) 286-5770
Guarantor: James D. Thaxton
P.O. Box 338
822 Griggs Street
Pageland, SC 29728
================================================================================
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9.15. AGENT FOR SERVICE OF PROCESS (SECTION 9.15).
James D. Thaxton, whose address is 1524 Pageland Highway,
Lancaster, South Carolina 29721.(Agent)
================================================================================
ADDITIONAL AGREEMENTS REGARDING AMENDMENT AND RESTATEMENT OF SCHEDULE.
A. Concurrently with the execution hereof (except as noted), Borrowers
shall deliver to Lender (i) certificates of existence for each Borrower (except
that no such certificate shall be required of Southern Financial Management,
Inc., which Borrowers warrant and represent has no assets or operations and
which Borrowers agree shall not hereafter have either assets or operations) (ii)
certified copies of resolutions approved by the Board of Directors of each
Borrower (and by the shareholder(s) of each Borrower other than The Thaxton
Group, Inc.) authorizing the execution, delivery and performance of this
Schedule in the precise form as delivered to Lender, and (iii) within ten (10)
days, opinion letters issued by Borrowers' inside and outside counsel addressed
to Lender in the forms previously approved by Lender.
B. Borrowers and Guarantor warrant and represent to Lender that (i) the
Loan Documents are valid, binding and enforceable against Borrowers according to
their terms, and there exist no agreements or inducements whatsoever between the
parties except as evidenced by the executed Loan Documents, (ii) no Event of
Default presently exists under the Loan Documents and no condition presently
exists which, with the giving of notice, the passing of time, or both, would
cause an Event of Default, (iii) Lender has exercised no inappropriate influence
whatsoever over the policies or practices of the Borrowers (and specifically has
not participated in any degree in the preparation or review of any registration
statement or other securities or disclosure filing or document with respect to
Subordinated Debt issued by any Borrower), and (iv) all Subordinated Debt issued
by any Borrower has been and will continue to be issued in full accordance with
all applicable laws, including, but not limited to, laws relating to the
required substance and accuracy of disclosures about the business and prospects
of the Borrowers.
C. As used in this Section C:
"Affiliate" means, with respect to any Person, another Person who (i)
owns an equity interest in the first Person, of any degree, (ii) is
owned, as to equity interest, by the first Person, in any degree, (iii)
Controls the first Person, (iv) is Controlled by the first Person, or
(v) is Controlled by a Person who also Controls the first Person.
"Borrower Parties" means Borrowers, Guarantor and their respective
predecessors, successors and assigns and their present and previous
agents, attorneys, representatives, Affiliates, officers, directors,
and each of them.
"Claims" means any and all accounts, covenants, agreements,
obligations, claims, debts, liabilities, offsets, demands, costs,
expenses, actions or causes of action of every nature, character and
description, whether arising at law or equity or under statute,
regulation or otherwise, and whether liquidated or unliquidated,
contingent or noncontingent, known or unknown, suspected or
unsuspected.
"Control" means the ability to substantially direct the policies of a
Person, whether directly or indirectly, and whether such influence
exists by right or by economic compulsion.
"Obligors" means Borrowers and Guarantor.
"Person" means any natural person and any legal entity with the ability
to enter into contracts.
"Lender Parties" means Lender, its participants, predecessors,
successors and assigns and their present and previous agents,
attorneys, representatives, Affiliates, officers, directors, and each
of them.
In consideration of Lender's execution of this Schedule, the sufficiency of
which is acknowledged, and excepting only the contractual obligations respecting
future performance by Lender arising under this Schedule, the Agreement or the
other
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Loan Documents, Obligors hereby release and forever discharge the Lender
Parties of and from any and all Claims that any Obligor may have against any
Lender Party as of the execution of this Schedule. Obligors further warrant and
represent that to the best of their knowledge no Borrower Party presently has,
or has alleged to have, any Claim against Lender. Obligors further agree that
they shall forever refrain and forbear from commencing, instituting or
prosecuting any lawsuit, action, or other proceeding, whether judicial,
administrative or otherwise, or otherwise attempting to collect or enforce, any
such released Claim and agree to indemnify, defend (with counsel satisfactory to
Lender) and hold harmless the Lender Parties against any and all loss,
liability, claim or expense, including attorneys' fees, that any of them might
incur as a result of any breach of this Section by any Obligor or the assertion
of any Claim or defense that exists as of the date of this Schedule by any
Obligor. Obligors further waive any presently existing defenses against the
payment and performance of all obligations (of every nature, character and
description) to the Lender Parties under the Loan Documents. Obligors further
warrant and represent to Lender that no Obligor has granted or purported to
grant to any other person or entity any interest whatsoever in any Claim, as
security or otherwise, and that their execution hereof does not require the
consent of or notice to any third party in order to be fully effective as to any
Claim that may have existed in favor of any Obligor at any time.
[The remainder of this page is intentionally left blank]
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================================================================================
IN WITNESS WHEREOF, the parties have executed this Schedule on the day
and year first set forth above.
LENDER:
FINOVA CAPITAL CORPORATION,
a Delaware corporation
By:
-------------------------------------------------
John B. Burtchaell, Jr., Senior Vice President
BORROWER:
THE THAXTON GROUP, INC.
a South Carolina corporation
By:
-------------------------------------------------
James D. Thaxton, President
THAXTON OPERATING COMPANY
a South Carolina corporation
By:
-------------------------------------------------
James D. Thaxton, President
THAXTON INSURANCE GROUP, INC.
a South Carolina corporation
By:
-------------------------------------------------
James D. Thaxton, President
TICO CREDIT COMPANY, INC.,
a South Carolina Corporation
By:
-------------------------------------------------
James D. Thaxton, President
[Signature page to First Amended And Restated Schedule To
Third Amended And Restated Loan And Security Agreement]
-16-
EAGLE PREMIUM FINANCE CO., INC.
a South Carolina Corporation
By:
-------------------------------------------------
James D. Thaxton, President
THAXTON COMMERCIAL LENDING, INC.
a South Carolina corporation
By:
-------------------------------------------------
James D. Thaxton, President
PARAGON, INC.
a South Carolina Corporation
By:
-------------------------------------------------
James D. Thaxton, President
TICO PREMIUM FINANCE COMPANY, INC.,
a South Carolina Corporation
By:
-------------------------------------------------
James D. Thaxton, President
TICO REINSURANCE, LTD.,
a British West Indies Association
By:
-------------------------------------------------
James D. Thaxton, President
TICO CREDIT COMPANY OF TENNESSEE, INC.,
a Tennessee Corporation
By:
-------------------------------------------------
James D. Thaxton, President
[Signature page to First Amended And Restated Schedule To
Third Amended And Restated Loan And Security Agreement]
-17-
TICO CREDIT COMPANY OF NORTH CAROLINA, INC.,
a North Carolina Corporation
By:
-------------------------------------------------
James D. Thaxton, President
TICO CREDIT COMPANY OF ALABAMA, INC.,
an Alabama Corporation
By:
-------------------------------------------------
James D. Thaxton, President
TICO CREDIT COMPANY OF MISSISSIPPI, INC.,
a Mississippi Corporation
By:
-------------------------------------------------
James D. Thaxton, President
TICO CREDIT COMPANY OF GEORGIA, INC.,
a Georgia Corporation
By:
-------------------------------------------------
James D. Thaxton, President
TICO CREDIT COMPANY(DE),
a Delaware Corporation
By:
-------------------------------------------------
James D. Thaxton, President
TICO CREDIT COMPANY(MS),
a Mississippi Corporation
By:
-------------------------------------------------
James D. Thaxton, President
[Signature page to First Amended And Restated Schedule To
Third Amended And Restated Loan And Security Agreement]
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TICO CREDIT COMPANY (TN),
a Tennessee Corporation
By:
-------------------------------------------------
James D. Thaxton, President
THAXTON INVESTMENT CORPORATION,
a South Carolina corporation
By:
-------------------------------------------------
James D. Thaxton, President
The MODERN FINANCE COMPANY,
an Ohio corporation
By:
-------------------------------------------------
James D. Thaxton, President
SOUTHERN MANAGEMENT CORPORATION,
a South Carolina corporation
By:
-------------------------------------------------
James D. Thaxton, President
MODERN FINANCIAL SERVICES, INC.
an Ohio corporation
By:
-------------------------------------------------
James D. Thaxton, President
SOUTHERN FINANCE OF SOUTH CAROLINA, INC.,
a South Carolina corporation
By:
-------------------------------------------------
James D. Thaxton, President
[Signature page to First Amended And Restated Schedule To
Third Amended And Restated Loan And Security Agreement]
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COVINGTON CREDIT OF TEXAS, INC.,
a Texas corporation
By:
-------------------------------------------------
James D. Thaxton, President
COVINGTON CREDIT OF GEORGIA, INC.,
a Georgia corporation
By:
-------------------------------------------------
James D. Thaxton, President
SOUTHERN FINANCE OF TENNESSEE, INC.,
a Tennessee corporation
By:
-------------------------------------------------
James D. Thaxton, President
FITCH NATIONAL REINSURANCE COMPANY, LTD.,
a British West Indies Association
By:
-------------------------------------------------
James D. Thaxton, President
SOCO REINSURANCE, LTD.,
a British West Indies Association
By:
-------------------------------------------------
James D. Thaxton, President
QUICK CREDIT CORPORATION,
a South Carolina corporation
By:
-------------------------------------------------
James D. Thaxton, President
[Signature page to First Amended And Restated Schedule To
Third Amended And Restated Loan And Security Agreement]
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COVINGTON CREDIT, INC.,
an Oklahoma corporation
By:
-------------------------------------------------
James D. Thaxton, President
COVINGTON CREDIT OF LOUISIANA, INC.,
a Louisiana corporation
By:
-------------------------------------------------
James D. Thaxton, President
SOUTHERN FINANCIAL MANAGEMENT, INC.,
a South Carolina corporation
By:
-------------------------------------------------
James D. Thaxton, President
GUARANTOR (Validity):
--------------------------------
James D. Thaxton
[Signature page to First Amended And Restated Schedule To
Third Amended And Restated Loan And Security Agreement]
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