WORLD ACCEPTANCE CORPORATION
TENTH AMENDMENT TO REVOLVING CREDIT AGREEMENT AND AMENDMENT
TO SECURITY AGREEMENTS AND SUBSIDIARY GUARANTY AGREEMENTS
Harris Trust and Savings Bank, Principal Mutual Life Insurance Company
in its individual capacity as a Bank, Des Moines, Iowa
as Agent, and as Security Trustee
Chicago, Illinois
The First National Bank of Chicago Jefferson-Pilot Life Insurance Company
Chicago, Illinois Greensboro, North Carolina
Ladies and Gentlemen:
Reference is hereby made to that certain Credit Agreement dated as of
December 1, 1992, as amended, between the undersigned, World Acceptance
Corporation, a South Carolina corporation, Harris Trust and Savings Bank,
individually and as agent, and The First National Bank of Chicago (the
"Revolving Credit Agreement"). Reference is also hereby made to that certain
Security Agreement, Pledge and Indenture of Trust dated as of December 1, 1992,
as amended, between World Acceptance Corporation, a South Carolina corporation,
and Harris Trust and Savings Bank, as Security Trustee for the holders of the
Notes referred to therein (the "Company Security Agreement"). All capitalized
terms used herein without definition shall have the same meanings herein as such
terms have in the Company Security Agreement.
The Company and the Banks have agreed to amend the definitions of Borrowing
Base and Eligible Finance Receivables set forth in the Revolving Credit
Agreement, and the Noteholders, the Company and its Restricted Subsidiaries have
agreed to amend certain provisions of the Company Security Agreement, the
Subsidiary Security Agreements and the Subsidiary Guaranty Agreements, all under
the terms and conditions set forth in this Tenth Amendment (the "Amendment").
1. AMENDMENTS TO REVOLVING CREDIT AGREEMENT.
Upon the satisfaction of the conditions set forth in Section 3 below, the
definitions of "Borrowing Base" and "Eligible Finance Receivables" appearing in
Section 5.1 of the Revolving Credit Agreement shall be and hereby are amended
and restated in their entirety to read as follows:
"Borrowing Base" means, as of any time it is to be determined, the sum of:
(a) the product of 85% multiplied by the remainder of (x) the then
outstanding unpaid amount of Eligible
Finance Receivables, other than Eligible Finance Receivables consisting of
instruments not in the possession of the Security Trustee minus (y) all
unearned finance charges applicable to such Eligible Finance Receivables;
plus
(b) the lesser of (i) $15,000,000, (ii) 11.11% of the product
determined in accordance with clause (a) above or (iii) the product of 50%
multiplied by the remainder of (x) the then outstanding unpaid amount of
Eligible Finance Receivables consisting of instruments not in the
possession of the Security Trustee minus (y) all unearned finance charges
applicable to such Eligible Finance Receivables.
"Eligible Finance Receivables" means and includes each Finance Receivable
of the Borrower or any Restricted Subsidiary that:
(a) is the valid, binding and legally enforceable obligation of the
debtor obligated thereon and such debtor is not (i) an Affiliate of the
Borrower or of any Restricted Subsidiary, (ii) a shareholder, director,
officer or employee of the Borrower or of any Restricted Subsidiary or of
any Affiliate of the Borrower or any Restricted Subsidiary, (iii) the
United States of America or any department, agency or instrumentality
thereof unless the Borrower or such Restricted Subsidiary has complied with
the Assignment of Claims Act to the satisfaction of the Agent, (iv) a
debtor under any proceeding under the United States Bankruptcy Code or any
other comparable bankruptcy or insolvency law applicable under the law of
any other country or political subdivision thereof, or (v) an assignor for
the benefit of creditors;
(b) is assignable and not evidenced by an instrument or chattel paper
unless the same has been endorsed and delivered to the Security Trustee
(except that, until a Default or Event of Default has occurred and is
continuing and thereafter until otherwise notified by the Security Trustee
pursuant to Section 4.3(b) of the Company Security Agreement or the
Subsidiary Security Agreements, as appropriate, the same shall not be
required to be delivered to the Security Trustee if a legend shall have
been placed thereon in accordance with Section 4.3(c) of the Company
Security Agreement or the Subsidiary Security Agreements, as appropriate);
(c) is subject to a perfected, first priority Lien pursuant to the
Company Security Agreement or the Subsidiary Security Agreements, as
appropriate, in favor of the Security Trustee for the benefit of the Banks
(except that, in the case of instruments referred to in clause (b) above,
the same need not be perfected until the Security Trustee requests delivery
of the same in accordance with Section 4.3(b) of the Company Security
Agreement or the Subsidiary Security Agreements, as appropriate), and is
free and clear of any other Lien other than the lien in favor of the Note
Purchasers and liens permitted under Sections 3.19(e) and 3.19(g) of the
Company Security Agreement;
(d) is net of any credit or allowance given by the Borrower or such
Restricted Subsidiary to such account debtor;
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(e) is not subject to any offset, counterclaim or other defense with
respect thereto;
(f) is not owed by an account debtor who is obligated on accounts owed
to the Borrower or such Restricted Subsidiary any portion of which is
unpaid more than 60 days after the contractual due date (which must be
issued in accordance with the Borrower's or such Restricted Subsidiary's
business practices in effect as of the date hereof) unless the Agent has
approved the continued eligibility thereof; and
(g) is subject to loan and security documentation which complies in
all respects with all applicable federal, state and local laws, rules and
regulations.
2. AMENDMENTS TO SECURITY AGREEMENTS AND SUBSIDIARY GUARANTY AGREEMENTS.
Upon the satisfaction of the conditions set forth in Section 3 below, the
Company Security Agreement, each Subsidiary Security Agreement, and each
Subsidiary Guaranty Agreement shall be amended as follows:
(a) Section 8.2(i) of the Company Security Agreement and Section
7.2(i) or 8.2(i), as the case may be, of the relevant Subsidiary Security
Agreement (containing terms substantially similar to Section 8.2(i) of the
Company Security Agreement) shall each be amended and restated in its
entirety to read as follows:
"(i) Intentionally deleted."
(b) The section entitled "Waivers and Consents by Noteholders;
Supplemental Security Agreements with Noteholders' Consent" set forth in
Section 9.2 of the Company Security Agreement and Section 8.2 or 9.2, as
the case may be, of the relevant Subsidiary Security Agreement shall be
amended and restated in its entirety to read as follows:
"Waivers and Consents by Noteholders; Supplemental Security
Agreements with Noteholders' Consent. Upon the waiver or
consent of (x) the holders of more than 50% of the Aggregate
Principal Amount of Outstanding Notes, computed solely by
reference to the Senior Secured Notes, and of (y) the
holders of more than 50%, of the Aggregate Principal Amount
of Outstanding Notes, computed solely by reference to the
Revolving Credit Notes, (a) the Company may take any action
prohibited, or omit the taking of any action required, by
any of the provisions of this Agreement or any indenture
supplemental hereto, or (b) the Company and the Security
Trustee may enter into an agreement or agreements
supplemental hereto for the purpose of adding, changing or
eliminating any provisions of this Agreement or of any
agreement supplemental hereto or modifying in any manner the
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rights and obligations of the holders of the Notes and the
Company; provided, however, that no such waiver or
supplemental agreement shall (i) impair or affect the right
of any holder to receive payments or prepayments of the
principal of and payments of the interest and premium, if
any, on its Note, as therein and herein provided, without
the consent of such holder, (ii) permit the creation of any
lien and security interest with respect to any of the
Collateral, without the consent of the holders of all the
Notes at the time outstanding, (iii) effect the deprivation
of the holder of any Note of the benefit of the lien and
security interest of this Agreement upon all or any part of
the Collateral without the consent of such holder, (iv)
reduce the aforesaid percentages of the aggregate principal
amount of Notes, the holders of which are required to
consent to any such waiver or supplemental indenture
pursuant to this Section, without the consent of the holders
of all of the Notes at the time outstanding (including,
without limitation, any change to the definition of
"Aggregate Principal Amount of the Outstanding Notes"), (v)
modify the rights, duties or immunities of the Security
Trustee without the consent of the holders of all of the
Notes at the time outstanding, (vi) consent to the release
or termination of any Subsidiary Guaranty Agreement without
the consent of the holders of all of the Notes at the time
outstanding or (vii) amend or modify the form of
subordination provisions attached hereto without the consent
of the holders of all of the Notes at the time outstanding."
(b) The Noteholders, the Company and each Restricted Subsidiary hereby
acknowledge and agree that the Revolving Credit Notes issued and outstanding
under the Revolving Credit Agreement, as amended, currently in the aggregate
principal amount of $75,000,000 constitute "Revolving Credit Notes" for all
purposes of the Company Security Agreement, each Subsidiary Security Agreement,
and each Subsidiary Guaranty Agreement, entitled to all the benefits and
security provided for thereby or referred to therein, and the definition of
"Revolving Credit Notes" set forth in the Company Security Agreement, each
Subsidiary Security Agreement, and each Subsidiary Guaranty Agreement shall be
deemed amended hereby to refer to such amount.
3. CONDITIONS PRECEDENT.
The effectiveness of this Amendment is subject to the satisfaction of all
of the following conditions precedent:
(a) The Noteholders, the Company and each existing Restricted
Subsidiary shall have executed and delivered this Amendment.
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(b) The Noteholders shall have received copies (executed or certified,
as may be appropriate) of all legal documents or proceedings taken in
connection with the execution and delivery of this Amendment to the extent
the Noteholders, or their counsel, may reasonably request.
(c) Legal matters incident to the execution and delivery of this
Amendment shall be satisfactory to the Noteholders and their counsel.
4. REPRESENTATIONS.
In order to induce the Noteholders to execute and deliver this Amendment,
the Company hereby represents to the Noteholders that, except as set forth on
Schedule 1 hereto, as of the date hereof, each of the representations and
warranties set forth in the Revolving Credit Agreement and each Note Agreement
is and shall be and remain true and correct, in each such case after giving
effect to this Amendment, and the Company is in compliance with all of the terms
and conditions of the Revolving Credit Agreement and each Note Agreement and no
Default or Event of Default has occurred and is continuing thereunder or shall
result after giving effect to this Amendment.
5. MISCELLANEOUS.
(a) The Company and its Restricted Subsidiaries set forth on the signature
pages set forth below have heretofore executed and delivered to the Security
Trustee for the benefit of the Noteholders the Company Security Agreement and
the Subsidiary Security Agreements (collectively, the "Collateral Documents");
and the Company and each Restricted Subsidiary hereby agrees that,
notwithstanding the execution and delivery of this Amendment, the Collateral
Documents shall be and remain in full force and effect and that any rights and
remedies of the Security Trustee thereunder, obligations of the Company or any
Restricted Subsidiary thereunder, and any liens and security interests created
or provided for thereunder shall be and remain in full force and effect and
shall not be affected, impaired or discharged hereby. Nothing herein contained
shall in any manner affect or impair the priority of the liens and security
interests created and provided for by the Collateral Documents as to the
indebtedness which would be secured thereby prior to giving effect to this
Amendment.
(b) The Revolving Credit Agreement, Company Security Agreement, Subsidiary
Security Agreements and Subsidiary Guaranty Agreements shall continue in full
force and effect in accordance with their original terms except to the extent
amended hereby. Reference to this specific Amendment need not be made in any
note, document, letter, certificate, the Revolving Credit Agreement, the Company
Security Agreement, any Subsidiary Guaranty Agreement, or any Subsidiary
Security Agreement, or any communication issued or made pursuant to or with
respect thereto, any reference in any of such items to the Revolving Credit
Agreement, the Company Security Agreement, any Subsidiary Security Agreement, or
any Subsidiary Guaranty Agreement being sufficient to refer to such agreements
as amended hereby.
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(c) The Company agrees to pay on demand all costs and expenses of or
incurred by the Noteholders in connection with the negotiation, preparation,
execution and delivery of this Amendment, including the fees and expenses of
counsel for the Noteholders.
(d) This Amendment may be executed in any number of counterparts, and by
the different parties on different counterparts, all of which taken together
shall constitute one and the same agreement. Any of the parties hereto may
execute this Amendment by signing any such counterpart and each of such
counterparts shall for all purposes be deemed to be an original. This Amendment
shall be governed by the internal laws of the State of Illinois.
(e) By signing below, the Noteholders hereby request that the Security
Trustee execute and deliver this Amendment pursuant to the terms of the Company
Security Agreement and the relevant Subsidiary Security Agreements.
Dated as of March 31, 1997.
WORLD ACCEPTANCE CORPORATION
By /s/ A A McLean III
-----------------------------
Its Executive Vice President,
Chief Financial Officer, and
Assistant Secretary
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Accepted and agreed to as of the date and year last above written.
HARRIS TRUST AND SAVINGS BANK, in its PRINCIPAL MUTUAL LIFE INSURANCE
individual capacity as a Bank and as COMPANY
Agent
By /s/ Jerome Crokin By /s/ James C. Fifield
----------------------- ----------------------------
Its Vice President Its [illegible]
By /s/ Stephen G. Skrivanek
----------------------------
Its Counsel
THE FIRST NATIONAL BANK OF CHICAGO JEFFERSON-PILOT LIFE INSURANCE
COMPANY
By /s/ Craig Goldsmith By /s/ [illegible]
------------------------------- ---------------------------
Its AVP Its [illegible]
Acknowledged and agreed to as of the date and year last above written.
HARRIS TRUST AND SAVINGS BANK,
as Security Trustee
By /s/ Robert D. Foltz
------------------------------
Its Vice President
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ACKNOWLEDGEMENT AND CONSENT
The undersigned have each heretofore executed and delivered to the Security
Trustee a Guaranty Agreement and a Security Agreement and Indenture of Trust or
a Security Agreement, Pledge and Indenture of Trust, in each case in favor of
the Security Trustee for the benefit of the Noteholders referred to therein.
Each of the undersigned hereby acknowledges and agrees to the Amendment as set
forth above (including, without limitation, Section 2 above) and confirms that
its Subsidiary Guaranty Agreement and Subsidiary Security Agreement, and all of
the obligations of the undersigned thereunder, remain in full force and effect.
WORLD ACCEPTANCE CORPORATION OF
ALABAMA
By /s/ A A McLean III
------------------------------
Its Executive Vice President,
Chief Financial Officer, and Assistant
Secretary
WORLD ACCEPTANCE CORPORATION OF
MISSOURI
By /s/ A A McLean III
------------------------------
Its Executive Vice President,
Chief Financial Officer, and Assistant
Secretary
WORLD FINANCE CORPORATION OF GEORGIA
By /s/ A A McLean III
------------------------------------
Its Executive Vice President,
Chief Financial Officer, and Assistant
Secretary
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WORLD FINANCE CORPORATION OF
LOUISIANA
By /s/ A A McLean III
------------------------------------
Its Executive Vice President,
Chief Financial Officer, and Assistant
Secretary
WORLD ACCEPTANCE CORPORATION OF
OKLAHOMA, INC.
By /s/ A A McLean III
------------------------------------
Its Executive Vice President,
Chief Financial Officer, and Assistant
Secretary
WORLD FINANCE CORPORATION OF SOUTH
CAROLINA
By /s/ A A McLean III
------------------------------------
Its Executive Vice President,
Chief Financial Officer, and Assistant
Secretary
WORLD FINANCE CORPORATION OF
TENNESSEE
By /s/ A A McLean III
------------------------------------
Its Executive Vice President,
Chief Financial Officer, and Assistant
Secretary
WORLD FINANCE CORPORATION OF TEXAS
By /s/ Duane D. Moore
------------------------------------
Its President
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WFC LIMITED PARTNERSHIP
By WFC of South Carolina, Inc.,
as sole general partner
By /s/ A A McLean III
------------------------------------
Its Executive Vice President,
Chief Financial Officer, and Assistant
Secretary
WFC OF SOUTH CAROLINA, INC.
By /s/ A A McLean III
------------------------------------
Its Executive Vice President,
Chief Financial Officer, and Assistant
Secretary
WORLD FINANCE CORPORATION OF ILLINOIS
By /s/ A A McLean III
------------------------------------
Its Executive Vice President,
Chief Financial Officer, and Assistant
Secretary
PERSONAL CREDIT PLAN, INC.
By /s/ A A McLean III
------------------------------------
Its Executive Vice President,
Chief Financial Officer, and Assistant
Secretary
WORLD FINANCE CORPORATION OF NEW
MEXICO
By /s/ A A McLean III
------------------------------------
Its Executive Vice President,
Chief Financial Officer, and Assistant
Secretary
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SCHEDULE I
EXCEPTIONS TO REPRESENTATIONS AND WARRANTIES
The Company and its Georgia subsidiary are named as co-defendants with 46
other finance companies, merchants, and insurance companies in purported class
action, Jordan, et al. v. AVCO Financial Services, Inc., et al, (Case No. 96-CL-
1557N, MDL No. 1130, U.S. District Court, Middle District of Alabama), that
challenges the defendants' practices with respect to non-filing insurance. The
action was filed on April 18, 1995, in U.S. District Court for the Middle
District of Georgia, in Columbus, Georgia, and by order dated October 11, 1996
was consolidated for pre-trial proceedings before Judge U.W. Clemon of the U.S.
District Court for the Middle District of Alabama by the Judicial Panel on
Multidistrict Litigation. Non-filing insurance is a product that lenders can
purchase as an alternative to filing a UCC-1 financing statement to perfect the
lenders' security interest borrowers' collateral. Borrowers are charged a fee
representing the amount of the non-filing insurance premium. In the Jordan
action, the plaintiffs have alleged that non-filing insurance is not true,
legitimate insurance and that non-filing fees charged to borrowers are not being
disclosed properly under the federal Truth-in-Lending Act. The plaintiffs also
have alleged violations of RICO and the federal antitrust laws. The plaintiffs
originally asserted state law claims for breach of contract, conversion, and
fraud, but subsequently dismissed those claims without prejudice. The plaintiffs
seek damages, permanent injunctive relief, and attorneys' fees. If the Company's
non-filing insurance practices are found to be unlawful, the Company could be
required to refund non-filing insurance fees, pay other damages to the
plaintiffs, and change its non-filing insurance practices going forward.
World has denied that its non-filing insurance practices are unlawful and
is defending the case vigorously. Discovery in the case is ongoing, and,
pursuant to court order, will continue through March 1998. A hearing on the
issue of class certification was held on January 23, 25 and 28; although Judge
Clemon has not yet ruled on the plaintiffs' request to certify a national class
(including borrowers who dealt with the defendants beginning in 1991), he has
indicated that he expects to certify a nationwide class. Due to the complexity
of the litigation, it is difficult to predict either the outcome or the
potential damages that the Company would have to pay if an outcome were adverse.