WORLD ACCEPTANCE CORPORATION
AMENDED AND RESTATED NOTE AGREEMENT
Dated as of June 30, 1997
Re: $20,000,000 8.5% Senior Secured Notes Due December 1, 1999
Table of Contents
(Not a part of the Agreement)
SECTION HEADING PAGE
SECTION 1. DESCRIPTION OF NOTES AND COMMITMENT..........................................3
Section 1.1. Description of Notes.......................................................3
Section 1.2. Security for the Notes.....................................................3
Section 1.3. Commitment, Closing Date...................................................4
Section 1.4. Other Agreements...........................................................4
SECTION 2. PREPAYMENT OF NOTES..........................................................4
Section 2.1. Required Prepayments.......................................................4
Section 2.2. Optional Prepayment With Premium...........................................4
Section 2.3. Notice of Prepayments......................................................5
Section 2.4. Allocation of Prepayments..................................................5
Section 2.5. Direct Payment.............................................................5
SECTION 3. REPRESENTATIONS..............................................................6
Section 3.1. Representations of the Company.............................................6
Section 3.2. Representations of the Purchaser...........................................6
SECTION 4. CLOSING CONDITIONS.........................................................6
Section 4.1. Conditions.................................................................6
Section 4.2. Waiver of Conditions.......................................................7
SECTION 5. COMPANY COVENANTS............................................................8
Section 5.1. Existence, Etc.............................................................8
Section 5.2. Insurance..................................................................8
Section 5.3. Taxes, Claims for Labor and Materials......................................8
Section 5.4. Compliance with Laws.......................................................9
Section 5.5. Maintenance, Etc...........................................................9
Section 5.6. Nature of Business.........................................................9
Section 5.7. Consolidated Net Worth.....................................................9
Section 5.8. Fixed Charge Coverage Ratio................................................9
Section 5.9. Permitted Indebtedness.....................................................9
Section 5.10. Limitations on Indebtedness...............................................10
Section 5.11. Limitation on Liens.......................................................11
Section 5.12. Dividends, Stock Purchases................................................12
Section 5.13. Mergers, Consolidations and Sales or Transfers of Assets..................13
Section 5.14. Lease-Backs...............................................................15
Section 5.15. Guaranties................................................................15
Section 5.16. Repurchase of Notes.......................................................16
Section 5.17. Transactions with Affiliates..............................................16
Section 5.18. Investments...............................................................16
Section 5.19. Termination of Pension Plans..............................................17
Section 5.20. Reports and Rights of Inspection..........................................17
SECTION 6. EVENTS OF DEFAULT AND REMEDIES THEREFOR.....................................20
Section 6.1. Events of Default.........................................................20
Section 6.2. Notice to Holders.........................................................23
Section 6.3. Acceleration of Maturities................................................23
Section 6.4. Rescission of Acceleration................................................23
SECTION 7. AMENDMENTS, WAIVERS AND CONSENTS............................................24
Section 7.1. Consent Required..........................................................24
Section 7.2. Effect of Amendment or Waiver.............................................24
SECTION 8. INTERPRETATION OF AGREEMENT; DEFINITIONS....................................24
Section 8.1. Definitions...............................................................24
Section 8.2. Accounting Principles.....................................................36
Section 8.3. Directly or Indirectly....................................................36
SECTION 9. MISCELLANEOUS...............................................................37
Section 9.1. Registered Notes..........................................................37
Section 9.2. Exchange of Notes.........................................................37
Section 9.3. Loss, Theft, Etc. of Notes................................................37
Section 9.4. Expenses, Stamp Tax Indemnity.............................................38
Section 9.5. Powers and Rights Not Waived; Remedies Cumulative.........................39
Section 9.6. Notices...................................................................39
Section 9.7. Successors and Assigns....................................................39
Section 9.8. Survival of Covenants and Representations.................................39
Section 9.9. Severability..............................................................40
Section 9.10. Governing Law.............................................................40
Section 9.11. Captions..................................................................40
Signatures......................................................................................41
ATTACHMENTS TO PURCHASE AGREEMENT:
Schedule I -- Name and Address of Purchasers
Schedule II -- Description of Liens
Exhibit A -- Form of 8.5% Amended and Restated Senior Secured Notes due December
1, 1999
Exhibit B -- Form of Security Agreement, Pledge and the Indenture of Trust
Exhibit C -- Representations and Warranties of the Company
Exhibit D -- Description of Special Counsel's Closing Opinion
Exhibit E -- Description of Closing Opinion of Counsel to the Company, World
Finance Corporation of South Carolina, WFC of South Carolina, Inc., World
Acceptance Corporation of Alabama, World Acceptance Corporation of
Missouri, World Finance Corporation of Illinois and World Finance
Corporation of New Mexico
Exhibit F -- Description of Closing Opinion of Counsel to the
Restricted Subsidiaries (other than World Finance Corporation
of South Carolina, WFC of South Carolina, Inc., World
Acceptance Corporation of Alabama, World Acceptance
Corporation of Missouri, World Finance Corporation of Illinois
and World Finance Corporation of New Mexico)
Exhibit G -- Form of Subordination Provisions
Exhibit H -- Form of Borrowing Base Certificate
WORLD ACCEPTANCE CORPORATION
108 FREDERICK STREET GREENVILLE, SOUTH CAROLINA 29607-2532
AMENDED AND RESTATED NOTE AGREEMENT
Re: $20,000,000 8.5% Senior Secured Notes
Due December 1, 1999
---------------------------------
Dated as of June 30, 1997
To the Purchaser Named in Schedule I
Hereto Which is a Signatory to this
Agreement
Ladies and Gentlemen:
RECITALS
A. World Acceptance Corporation, a South Carolina corporation (the
"COMPANY") has previously entered into those certain separate Note Agreements
each dated as of December 1, 1992, as amended (the "ORIGINAL NOTE AGREEMENTS")
with the purchasers named in Schedule I thereto providing for the issuance and
sale by the Company of its $20,000,000 principal amount 8.5% Senior Secured
Notes due December 1, 1999 (the "ORIGINAL NOTES").
B. The Company also entered into that certain Revolving Credit
Agreement dated as of December 1, 1992, as amended (the "ORIGINAL REVOLVING
CREDIT AGREEMENT") with Harris Trust and Savings Bank, as agent and the other
banks which are signatories thereto providing for borrowings in an original
aggregate principal amount of $20,000,000 (the borrowings, whether or not
evidenced by promissory notes, being hereinafter referred to as the "ORIGINAL
REVOLVING CREDIT NOTES"). The Original Notes and the Original Revolving Credit
Notes are hereinafter collectively referred to as the "ORIGINAL SENIOR NOTES."
C. The Company also entered into that certain Security Agreement,
Pledge and Indenture of Trust dated as of December 1, 1992, as amended (the
"ORIGINAL COMPANY SECURITY AGREEMENT") with Harris Trust and Savings Bank, an
Illinois banking corporation, as security trustee (the "SECURITY TRUSTEE")
whereby the Company granted to the Security Trustee, INTER ALIA, for the benefit
of the holders of the Original Senior Notes, all of its right, title and
interest in the Collateral (as defined therein) as security for the Original
Senior Notes.
D. As a condition to the issuance of the Original Senior Notes,
World Finance Corporation of South Carolina, World Finance Corporation of
Georgia, World Finance Corporation of Texas, World Finance Corporation of
Oklahoma, Inc. and World Finance Corporation of Louisiana entered into (i) those
separate Guaranty Agreements each dated as of December 1, 1992, as amended or
amended and restated, as the case may be (the "ORIGINAL GUARANTIES") and (ii)
those separate Security Agreements and Indentures of Trust each dated as of
December 1, 1992, as amended or amended and restated, as the case may be (the
"ORIGINAL SUBSIDIARY SECURITY AGREEMENTS").
E. Pursuant to Section 3.29 of Original Company Security Agreement,
(i) World Acceptance Corporation of Alabama entered into that certain Guaranty
Agreement and that certain Security Agreement and Indenture of Trust, each dated
as of July 11, 1994, (ii) World Acceptance Corporation of Missouri entered into
that certain Guaranty Agreement and that certain Security Agreement and
Indenture of Trust, each dated as of April 2, 1993, (iii) World Finance
Corporation of Tennessee entered into that certain Guaranty Agreement and that
certain Security Agreement and Indenture of Trust, each dated as of April 2,
1993, (iv) WFC Limited Partnership entered into that certain Guaranty Agreement
and that certain Security Agreement and Indenture of Trust, each dated as of
July 1, 1995, (v) WFC of South Carolina, Inc. entered into that certain Guaranty
Agreement and that certain Security Agreement and Indenture of Trust, each dated
as of September 1, 1995, (vi) World Finance Corporation of Illinois entered into
that certain Guaranty Agreement and that certain Security Agreement and
Indenture of Trust, each dated as of March 14, 1996 and (vii) World Finance
Corporation of New Mexico entered into that certain Guaranty Agreement dated as
of January 31, 1997 and that certain Security Agreement and Indenture of Trust,
dated as of May 31,
1997. The above-mentioned Guaranty Agreements, as amended or amended and
restated, as the case may be, are hereinafter collectively referred to as the
"ADDITIONAL GUARANTIES" and the above-mentioned Security Agreements and
Indentures of Trust, as amended or amended and restated, as the case may be, are
hereinafter collectively referred to as the "ADDITIONAL SUBSIDIARY SECURITY
AGREEMENTS".
F. The Company desires to amend and restate the Original Note
Agreements and the Original Notes in order to modify the terms, conditions and
covenants of the Original Note Agreements and the Original Notes, as more
particularly set forth herein and therein.
NOW THEREFORE, in consideration of the foregoing and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Company and the Purchasers named on Schedule I hereto agree as
follows:
1. The foregoing recitals are true and correct and are incorporated
herein by this reference as if fully set forth at length.
2. That in lieu of the terms, conditions, covenants and agreements set
forth in the Original Note Agreements, the following terms, conditions,
covenants and agreements shall apply and each Original Note Agreement is amended
and restated to read in its entirety as follows:
.'SECTION 1. DESCRIPTION OF NOTES AND COMMITMENT';.
.SECTION 1.1. DESCRIPTION OF NOTES;. The Company has authorized the
issue and sale of $20,000,000 aggregate original principal amount of its 8.5%
Senior Secured Notes (as the same may from time to time be amended pursuant to
the terms hereof and thereof and any notes executed in replacement thereof, the
"NOTES") dated the date of issue, bearing interest from such date at the rate of
8.5% per annum (computed on the basis of a 360-day year of twelve 30-day
months), payable semiannually on the first day of each June and December in each
year (commencing June 1, 1993) and at maturity and bearing interest on overdue
principal (including any overdue required or optional prepayment of principal)
and premium, if any, and (to the extent legally enforceable) on any overdue
installment of interest at the rate of 10.5% per annum after maturity, whether
by acceleration or otherwise, until paid, expressed to mature on December 1,
1999, and in substantially the form attached hereto as Exhibit A. The Notes are
not subject to prepayment or redemption at the option of the Company prior to
their expressed maturity dates except on the terms and conditions and in the
amounts and with the premium, if any, set forth in SS.2 of this Agreement. The
term "NOTES" as used herein shall include each Note delivered pursuant to this
Agreement and the separate agreement with the other purchaser named in Schedule
1. You and the other purchaser named in Schedule 1 are hereinafter sometimes
referred to as the "PURCHASERS".
.SECTION 1.2. SECURITY FOR THE NOTES;. (a) The Notes will be
secured, PARI PASSU with the indebtedness under the Revolving Credit Agreement,
by (i) the Amended and Restated Security Agreement, Pledge and Indenture of
Trust dated as of June 30, 1997 between the Company and the Security Trustee,
substantially in the form attached hereto as Exhibit B and as the same may from
time to time be amended, restated, modified, supplemented or waived pursuant to
the terms thereof (the "COMPANY SECURITY AGREEMENT"), which amends and restates
the Original Company Security Agreement and (ii) the Amended and Restated
Security Agreement, Pledge and Indenture of Trust dated as of June 30, 1997
between each Restricted Subsidiary (other than the Insurance Subsidiary) and the
Security Trustee, substantially in the form attached as Exhibit A to the Company
Security Agreement, as the same may from time to time be amended, restated,
modified, supplemented or waived pursuant to the terms thereof (the "SUBSIDIARY
SECURITY AGREEMENT"), which amends and restates the Original Subsidiary Security
Agreements and the Additional Subsidiary Agreements.
(b) The Notes will also be secured by an absolute and unconditional
guarantee of all principal, interest and premium, if any, on the Notes and of
all of the covenants of the Company contained in this Agreement and the Company
Security Agreement under and pursuant to that certain Amended and Restated
Guaranty Agreement dated as of June 30, 1997 of each Restricted Subsidiary,
substantially in the form attached as Exhibit B to the Company Security
Agreement, as the same may from time to time be amended, restated, modified,
supplemented or waived pursuant to the terms thereof (the "SUBSIDIARY SENIOR
GUARANTY AGREEMENT"), which amends and restates the Original Guaranties and
Additional Guaranties.
.SECTION 1.3. COMMITMENT, CLOSING DATE;. Subject to the terms and
conditions hereof and on
the basis of the representations and warranties set forth herein, in the Company
Security Agreement and in the Subsidiary Security Agreement, the Company and you
agree that the Company will execute and deliver to you Notes in the principal
amount set forth opposite your name on Schedule I hereto (which principal amount
is the then currently outstanding principal amount of the Notes held by you) in
exchange for the Original Notes on the Closing Date hereinafter mentioned.
Delivery of the Notes will be made at the offices of Chapman and
Cutler, 111 West Monroe Street, Chicago, Illinois 60603, against delivery and
surrender of the Original Notes at 10:00 A.M., Chicago time, on July 3, 1997 or
such earlier date as the Company shall specify by not less than five business
days' prior written notice to you (the "CLOSING DATE"). The Notes delivered to
you on the Closing Date will be delivered to you in the form of a single
registered Note in the currently outstanding principal amount of your Original
Note (unless different denominations are specified by you), registered in your
name or in the name of such nominee as you may specify and in substantially the
form attached hereto as Exhibit A, all as you may specify at any time prior to
the date fixed for delivery.
.SECTION 1.4. OTHER AGREEMENTS;. Simultaneously with the execution
and delivery of this Agreement, the Company is entering into the other agreement
identical hereto (except as to the name of the purchaser which is a signatory
thereto) with the other Purchaser under which such other Purchaser agrees to
exchange its Original Notes for Notes in the principal amount set opposite such
Purchaser's name in Schedule I (which principal amount is the then currently
outstanding principal amount of the Original Notes), and your obligation and the
obligations of the Company hereunder are subject to the execution and delivery
of the similar agreement by the other Purchaser. This Agreement and said similar
agreement with the other Purchaser are herein collectively referred to as the
"AGREEMENTS". The obligations of each Purchaser shall be several and not joint
and no Purchaser shall be liable or responsible for the acts of any other
Purchaser.
.SECTION 2. PREPAYMENT OF NOTES;.
.SECTION 2.1. REQUIRED PREPAYMENTS;. The Company agrees that on the
first day of December in each year commencing December 1, 1995 and ending
December 1, 1998 it will prepay and apply and there shall become due and payable
on the principal indebtedness evidenced by the Notes an amount equal to the
lesser of (i) $4,000,000 or (ii) the principal amount of the Notes then
outstanding. The entire remaining, then outstanding principal amount of the
Notes shall become due on December 1, 1999. No premium shall be payable in
connection with any required prepayment made pursuant to this SS.2.1. For
purposes of this SS.2.1, any prepayment of less than all of the outstanding
Notes pursuant to SS.2.2 hereof shall be deemed to be applied first to the
amount of principal scheduled to remain unpaid on December 1, 1999 and then to
the remaining scheduled principal payments in inverse chronological order.
.SECTION 2.2. OPTIONAL PREPAYMENT WITH PREMIUM;. Upon compliance
with SS.2.3, the Company shall have the privilege, at any time and from time to
time, of prepaying the outstanding Notes, either in whole or in part (but if in
part then in a minimum principal amount of $1,000,000) by payment of the
principal amount of the Notes, or portion thereof to be prepaid, and accrued
interest thereon to the date of such prepayment, together with an additional
amount equal to the Make-Whole Amount with respect to such principal amount then
to be prepaid, determined as of five business days prior to the date of such
prepayment pursuant to this SS.2.2.
.SECTION 2.3. NOTICE OF PREPAYMENTS;. The Company will give notice
of any prepayment of the Notes pursuant to SS.2.2 to each holder thereof
(whether or not such holder's Notes are being prepaid) not less than 30 days nor
more than 60 days before the date fixed for such optional prepayment specifying
(i) such date, (ii) the section of this Agreement under which the prepayment is
to be made, (iii) the principal amount of the holder's Notes to be prepaid on
such date, (iv) whether a premium is payable, (v) the date when such premium
will be calculated, and (vi) the accrued interest applicable to the prepayment.
Notice of prepayment having been so given, the aggregate principal amount of the
Notes specified in such notice, together with the premium, if any, and accrued
interest thereon shall become due and payable on the prepayment date. Not later
than two (2) business days prior to the prepayment date the Company shall
provide each holder of a Note written notice of the amount of the premium
payable in connection with such prepayment and, whether or not any premium is
payable, together with a reasonably detailed computation thereof.
.SECTION 2.4. ALLOCATION OF PREPAYMENTS;. All partial prepayments of
the Notes pursuant to SS.2.1, SS.2.2, the Company Security Agreement or the
Subsidiary Security Agreement shall be applied on all outstanding Notes ratably
in accordance with the unpaid principal amounts thereof.
.SECTION 2.5. DIRECT PAYMENT;. Notwithstanding anything to the
contrary in this Agreement or the Notes, in the case of any Note owned by you or
your nominee or owned by any subsequent Institutional Holder who has given
written notice to the Company requesting that the provisions of this SS.2.5
shall apply, the Company will promptly and punctually pay when due the principal
thereof and premium, if any, and interest thereon, without any presentment
thereof directly to you or such subsequent Institutional Holder at the address
specified for you in Schedule I or at such other address as you or such
subsequent Institutional Holder may from time to time designate in writing to
the Company or, if a bank account is designated for you on Schedule I hereto or
in any written notice to the Company from you or any such subsequent
Institutional Holder, the Company will make such payments in immediately
available funds to such bank account, marked for attention as indicated, or in
such other manner or to such other account in any bank in the United States as
you or any such subsequent Institutional Holder may from time to time direct in
writing. The Company shall cause all payments made by bank wire transfer to be
transmitted by the initiating bank not later than 10:00 a.m., Chicago time, on
the date such payment is due.
.SECTION 3. REPRESENTATIONS;.
.SECTION 3.1. REPRESENTATIONS OF THE COMPANY;. The Company
represents and warrants that all representations set forth in Exhibit C are true
and correct as of the date hereof and are incorporated herein by reference with
the same force and effect as though herein set forth in full.
.SECTION 3.2. REPRESENTATIONS OF THE PURCHASER;. You represent, and
in entering into this Agreement the Company understands, that you are acquiring
the Notes for the purpose of investment and not with a view to the resale or
distribution thereof, and that you have no present intention of selling,
negotiating or otherwise disposing of the Notes; it being understood, however,
that the disposition of your property shall (i) at all times be and remain
within your control and (ii) be in compliance with SS.9.2
.C.SECTION 4. CLOSING CONDITIONS;.
.SECTION 4.1. CONDITIONS;. Your obligation to exchange the Original
Notes for the Notes on the Closing Date shall be subject to the performance by
the Company of its agreements hereunder which by the terms hereof are to be
performed at or prior to the time of delivery of the Notes and to the following
further conditions precedent:
(a) EXECUTION AND DELIVERY OF SECURITY DOCUMENTS. The Company
Security Agreement and the Subsidiary Security Agreement shall have been
executed and delivered by the Company, each Restricted Subsidiary existing on
the Closing Date and the Security Trustee, as the case may be, and financing
statements or other notices with respect to the Company Security Agreement and
the Subsidiary Security Agreement, shall have been recorded or filed in all
public offices, and all other steps deemed necessary by you shall have been
taken, in order to perfect the security interests granted by the Company
Security Agreement and the Subsidiary Security Agreement.
(b) GUARANTY AGREEMENT. You shall have received the Guaranty
Agreement of each Restricted Subsidiary dated as of the date hereof and
substantially in the form attached as Exhibit B to the Company Security
Agreement.
(c) STOCK CERTIFICATES. You shall have received evidence reasonably
satisfactory to you that the Security Trustee has in its possession certificates
representing all of the capital stock of the Restricted Subsidiaries and stock
powers executed by the Company in blank attached to such certificates and such
other documents or instruments as may be necessary or appropriate to pledge and
assign to the Security Trustee under the Company Security Agreement all of the
capital stock of the Restricted Subsidiaries.
(d) LIEN SEARCHES. You shall have received the results of a search
of all filings made against the Company and its Subsidiaries under the Uniform
Commercial Code as in effect in any relevant state, indicating that the
Collateral is free and clear of any Lien except the Liens of the Company
Security Agreement and the Subsidiary Security Agreement, the Weingarten Lien
and
Liens of the type described in clauses (b), (e) and (f) of SS.5.11.
(e) CLOSING CERTIFICATE. You shall have received a certificate
dated the Closing Date, signed by the President or a Vice President of the
Company, the truth and accuracy of which shall be a condition to your obligation
to exchange your Original Notes for the Notes and to the effect that (1) the
representations and warranties of the Company and each Restricted Subsidiary set
forth in Exhibit C hereto and in the Company Security Agreement, the Subsidiary
Security Agreement and the Subsidiary Senior Guaranty Agreement are true and
correct in all respects on and with respect to the Closing Date, (ii) the
Company and each Restricted Subsidiary have each performed all of its
obligations hereunder and under the Company Security Agreement, the Subsidiary
Security Agreement and the Subsidiary Senior Guaranty Agreement which are to be
performed on or prior to the Closing Date and (iii) no Default or Event of
Default has occurred and is continuing.
(f) LEGAL OPINIONS. You shall have received from Chapman and
Cutler, who are acting as your special counsel in this transaction, from
Robinson, Bradshaw & Hinson, P.A., counsel for the Company, World Finance
Corporation of South Carolina, WFC of South Carolina, Inc., World Acceptance
Corporation of Alabama, World Acceptance Corporation of Missouri, World Finance
Corporation of Illinois and World Finance Corporation of New Mexico, from Abbot,
Murphy & Harvey, P.C., counsel for World Finance Corporation of Georgia, from
Comegys, Lawrence, Jones, Odom & Spruiell, counsel for World Finance Corporation
of Louisiana, from Crowe & Dunlevy, Luttrell, Pendarvis & Rawlinson, counsel for
World Acceptance Corporation of Oklahoma, Inc., from Sam Kelley, Esq., counsel
for World Finance Corporation of Texas and WFC Limited Partnership, and from
Dance, Dance & Lane, counsel for World Finance Corporation of Tennessee, their
respective opinions dated the Closing Date, in form and substance satisfactory
to you, and covering the matters set forth in Exhibits D, E and F, respectively,
hereto.
(g) RELATED TRANSACTIONS. The Company and each Restricted
Subsidiary, as the case may be, shall have consummated the execution and
delivery of the other Agreement, the Revolving Credit Agreement, the Senior
Subordinated Note Agreement and the Subsidiary Senior Subordinated Guaranty
Agreement.
(h) SATISFACTORY PROCEEDINGS. All proceedings taken in connection
with the transactions contemplated by this Agreement, and all documents
necessary to the consummation thereof, shall be satisfactory in form and
substance to you and your special counsel, and you shall have received a copy
(executed or certified as may be appropriate) of all legal documents or
proceedings taken in connection with the consummation of said transactions.
.SECTION 4.2. WAIVER OF CONDITIONS;. If on the Closing Date the
Company fails to tender to you the Notes to be issued to you on such date or if
the conditions specified in SS.4.1 have not been fulfilled, you may thereupon
elect to be relieved of all further obligations under this Agreement. Without
limiting the foregoing, if the conditions specified in SS.4.1 havE not been
fulfilled, you may waive compliance by the Company with any such condition to
such extent as you may in your sole discretion determine. Nothing in this SS.4.2
shall operate tO relieve the Company of any of its obligations hereunder or to
waive any of your rights against the Company. .SECTION 5. COMPANY COVENANTS;.
From and after the Closing Date and continuing so long as any amount
remains unpaid on any Note:
.SECTION 5.1. EXISTENCE, ETC.; The Company will preserve and keep in
force and effect, and will cause each Subsidiary to preserve and keep in force
and effect, its legal existence and all licenses and permits necessary to the
proper conduct of its business, provided that the foregoing shall not prevent
any transaction permitted by SS.5.13.
.SECTION 5.2. INSURANCE;. The Company will maintain, and will cause
each Subsidiary to maintain, insurance coverage by financially sound and
reputable insurers accorded a rating of "A" or better by A.M. Best Company, Inc.
(the "BEST RATING") at the time of the issuance of any such policy and in such
forms and amounts and against such risks as are customary for corporations of
established reputation engaged in the same or a similar business and owning and
operating similar properties with each such policy requiring renewal of such
policy at intervals of no greater than one year from the date of issuance or
renewal
thereof; PROVIDED, HOWEVER, that if, during the term of any such insurance
policy, the rating accorded the insurer shall be less than a Best Rating of "A",
the Company will, on the date of renewal of any such policy (or, if such change
in rating shall occur within 90 days prior to such renewal date, within 90 days
of the date of such change in rating), obtain such insurance policy from an
insurer accorded a Best Rating of "A" or better.
.SECTION 5.3. TAXES, CLAIMS FOR LABOR AND MATERIALS;. The Company
will promptly pay and discharge, and will cause each Subsidiary promptly to pay
and discharge, all taxes, assessments and governmental charges or levies imposed
upon the Company or such Subsidiary, respectively, or upon or in respect of all
or any part of the property or business of the Company or such Subsidiary
(including, but not limited to the Collateral), all trade accounts payable in
accordance with usual and customary business terms, and all claims for work,
labor or materials, which if unpaid might become a lien or charge upon any
property of the Company or such Subsidiary (including, but not limited to the
Collateral); PROVIDED the Company or such Subsidiary shall not be required to
pay any such tax, assessment, charge, levy, account payable or claim if (i) the
validity, applicability or amount thereof is being contested in good faith by
appropriate actions or proceedings which will prevent the forfeiture or sale of
any property of the Company or such Subsidiary or any material interference with
the use thereof by the Company or such Subsidiary, and (ii) the Company or such
Subsidiary shall set aside on its books, reserves adequate in accordance with
GAAP with respect thereto.
.SECTION 5.4. COMPLIANCE WITH LAWS;. The Company will promptly
comply and will cause each Subsidiary to comply with all laws, ordinances or
governmental rules and regulations to which it is subject, including without
limitation, the Employee Retirement Income Security Act of 1974 and all
Environmental Legal Requirements the violation of which could, individually or
in the aggregate, materially and adversely affect the properties (including the
Collateral), business, prospects, profits or condition of the Company and its
Subsidiaries or could, individually or in the aggregate, result in any lien or
charge upon any property of the Company or any Subsidiary.
.SECTION 5.5. MAINTENANCE, ETC;. The Company will maintain, preserve
and keep, and will cause each Subsidiary to maintain, preserve and keep, its
properties which are used or useful in the conduct of its business (whether
owned in fee or a leasehold interest) in good repair and working order (ordinary
wear and tear excepted) and from time to time will make all necessary repairs,
replacements, renewals and additions so that at all times the efficiency thereof
shall be maintained.
.SECTION 5.6. NATURE OF BUSINESS;. Neither the Company nor any
Restricted Subsidiary will engage in any business if, as a result, the general
nature of the business, taken on a consolidated basis, which would then be
engaged in by the Company and its Restricted Subsidiaries (including, but not
limited to, the Insurance Subsidiary) would be substantially changed from the
general nature of the business engaged in by the Company and its Restricted
Subsidiaries on the date of this Agreement.
.SECTION 5.7. CONSOLIDATED NET WORTH;. The Company will at all times
keep and maintain Consolidated Net Worth at an amount not less than the Minimum
Net Worth.
For purposes of this SS.5.7, "MINIMUM NET WORTH" (i) for the fiscal
quarter of thE Company ending March 31, 1997, shall be $38,000,000 and (ii) for
each fiscal quarter thereafter shall be the sum of the Minimum Net Worth for the
immediately preceding fiscal quarter plus 50% of Consolidated Net Income for
such fiscal quarter (but without deduction in the case of any deficit in
Consolidated Net Income for such fiscal quarter).
.SECTION 5.8. FIXED CHARGE COVERAGE RATIO;. The Company will at the
end of each fiscal quarter have a ratio of Net Income Available for Fixed
Charges to Fixed Charges for each period of four consecutive fiscal quarters
then ending at not less than 1.5 to 1. As of the end of each fiscal quarter, the
Company's provision for loan losses for the four fiscal quarters then ending
shall equal or exceed the net loan charge off for the corresponding period.
.SECTION 5.9. PERMITTED INDEBTEDNESS;. The Company will not and will
not permit any Restricted Subsidiary to incur, create, issue, assume or permit
to exist any Indebtedness for Borrowed Money other than:
(a) Senior Debt;
(b) Senior Subordinated Debt; and
(c) Junior Subordinated Debt.
.SECTION 5.10. LIMITATIONS ON INDEBTEDNESS;. (a) The Company
will not at any time permit
(i) The aggregate unpaid principal amount of Senior Debt, on a
consolidated basis, to exceed 400% of the sum of (A) Consolidated Adjusted Net
Worth, (B) the aggregate unpaid principal amount of Junior Subordinated Debt,
and (C) the aggregate unpaid principal amount of Senior Subordinated Debt; or
(ii) The sum of (A) the aggregate unpaid principal amount of Senior
Subordinated Debt and (B) the aggregate unpaid principal amount of Junior
Subordinated Debt to exceed 125% of Consolidated Adjusted Net Worth; or
(iii) The aggregate unpaid principal amount of Junior Subordinated
Debt to exceed 50% of Consolidated Adjusted Net Worth; or
(iv) The aggregate amount of unused credit then available from banks
and trust companies under firmly committed lines of credit from a lending group
of not fewer than two banks to be less than the sum of the (A) aggregate
outstanding amount of its commercial paper and (B) payments of principal then
scheduled to become due during the eight-month period then commencing on all
Indebtedness for Borrowed Money of the Company and its Restricted Subsidiaries
(excluding obligations under the Revolving Credit Notes and the Revolving Credit
Agreement).
(b) The Company will not permit, (i) at any time on or before the
Trigger Date, the ratio of Indebtedness for Borrowed Money of the Company and
its Restricted Subsidiaries to Consolidated Adjusted Net Worth to exceed 4.5 to
1 for any month; PROVIDED that the ratio of Indebtedness for Borrowed Money of
the Company and its Restricted Subsidiaries to Consolidated Adjusted Net Worth
may exceed 4.5 to 1 for no more than 4 months of any consecutive 12-month period
so long as such ratio does not exceed 5.5 to 1, and (ii) at any time after the
Trigger Date, the ratio of Indebtedness for Borrowed Money of the Company and
its Restricted Subsidiaries to Consolidated Adjusted Net Worth to exceed 5.5 to
1 for any month; PROVIDED that the ratio of Indebtedness for Borrowed Money of
the Company and its Restricted Subsidiaries to Consolidated Adjusted Net Worth
may exceed 5.5 to 1 for no more than 4 months of any consecutive 12-month period
so long as such ratio does not exceed 6.5 to 1.
(c) The Company will not create, assume, or incur or otherwise become
liable in respect of any Senior Subordinated Debt (other than the Senior
Subordinated Notes) or Junior Subordinated Debt unless such Senior Subordinated
Debt or Junior Subordinated Debt shall have a Weighted Average Life to Maturity
equal to or greater than the remaining Weighted Average Life to Maturity of the
Senior Subordinated Notes. For purposes of this SS.5.10(C), "WEIGHTED AVERAGE
LIFE TO MATURITY" of the principal amount of the Notes or any other Indebtedness
of the Company shall mean, as of the time of any determination thereof, the
number of years obtained by dividing the then Remaining Dollar-years of such
Indebtedness by the then outstanding principal amount of such Indebtedness; and
the "REMAINING DOLLAR-YEARS" of any Indebtedness means at any time the amount
obtained by (a) multiplying the amount of each then remaining installment,
sinking fund, serial maturity or other required principal payment, including
payment at final maturity, by the number of years (calculated to the nearest
one-twelfth) which will elapse between the time in question and the making of
that payment and (b) totaling all of the products obtained in (a).
(d) The Company will not permit any Restricted Subsidiary to create,
assume or incur, or otherwise be or become liable in respect of any Indebtedness
for Borrowed Money (other than the Subsidiary Senior Guaranty Agreement and the
Subsidiary Senior Subordinated Guaranty Agreement) to any Person (other than to
the Company or another Restricted Subsidiary) in an aggregate amount for all
Restricted Subsidiaries in excess of $1,000,000 at any time outstanding.
.SECTION 5.11. LIMITATION ON LIENS;. The Company will not, and will
not permit any Restricted Subsidiary to create, assume or suffer to exist any
Lien upon any of its property or assets (including, but not limited to, the
Collateral), whether now owned or hereafter acquired; PROVIDED, HOWEVER, that
the foregoing restriction and limitation shall not apply to the following Liens:
(a) Liens created under the Company Security Agreement and under
the Subsidiary Security Agreement;
(b) Liens existing as of the date hereof and reflected on Schedule
II hereto;
(c) Liens existing on property at the time acquired by the Company
or any Restricted Subsidiary thereof or existing on the property of a
corporation at the time it becomes a Restricted Subsidiary, or placed upon
property within 120 days after the date of acquisition thereof by the Company or
any Restricted Subsidiary to secure a portion of the purchase price thereof, but
only if (i) such Lien shall attach solely to the property acquired, purchased or
constructed and (ii) such Lien does not exceed the lesser of the fair market
value or cost of such property;
(d) Liens constituting renewals, extensions or refundings of Liens
permitted by clause (b) or (c) above, PROVIDED that the principal amount of the
Indebtedness secured by any such new Lien does not exceed the principal amount
of the Indebtedness being renewed, extended or refunded at the time of renewal,
extension or refunding thereof and that such new Lien attaches only to the same
property theretofore subject to such earlier Lien;
(e) Liens securing taxes, assessments or governmental charges or
levies, or the claims or demands of materialmen, mechanics, carriers, workmen,
repairmen, warehousemen, landlords and other like persons, PROVIDED that payment
thereof is not at the time required by SS.5.3;
(f) other Liens incidental to the conduct of its business or the
ownership of its property and assets when not incurred in connection with the
borrowing of money or the obtaining of advances of credit, and which do not in
the aggregate materially detract from the value of its property or assets, or
materially impair the use thereof in the operation of its business;
(g) attachment, judgment and other similar Liens arising in
connection with court proceedings, PROVIDED that (i) execution or other
enforcement of such Liens is effectively stayed, (ii) the claims secured thereby
are being actively contested in good faith by appropriate proceedings, (iii)
adequate reserves in conformity with GAAP have been provided on the books of the
Company or such Restricted Subsidiary and (iv) the aggregate amount of the
liabilities of the Company and all Restricted Subsidiaries so secured, including
interest and penalties thereon, shall not be in excess of $100,000 at any one
time outstanding; and
(h) Liens on property of a Restricted Subsidiary of the Company to
secure obligations of such Restricted Subsidiary to the Company or another
Restricted Subsidiary.
.SECTION 5.12. DIVIDENDS, STOCK PURCHASES;. The Company will not
except as hereinafter provided:
(a) Declare or pay any dividends, either in cash or property, on
any shares of its capital stock of any class (except dividends or other
distributions payable solely in shares of capital stock of the Company); or
(b) Directly or indirectly, or through any Subsidiary, purchase,
redeem or retire any shares of its capital stock of any class or any warrants,
rights or options to purchase or acquire any shares of its capital stock (other
than in exchange for or out of the net cash proceeds to the Company from the
substantially concurrent issue or sale of other shares of capital stock of the
Company or warrants, rights or options to purchase or acquire any shares of its
capital stock); or
(c) Make any other payment or distribution, either directly or
indirectly or through any Subsidiary, in respect of its capital stock; or
(d) Make any payment of principal, interest or premium on any
Senior Subordinated Debt or Junior Subordinated Debt other than any regularly
scheduled payment of principal or interest on such Senior Subordinated Debt or
Junior Subordinated Debt; (such declarations or payments of dividends,
purchases, redemptions or retirements of capital stock and warrants, rights or
options, and all such other distributions and such payments on Senior
Subordinated Debt and Junior Subordinated Debt being herein collectively called
"RESTRICTED PAYMENTS"), if, after giving effect thereto (i) a Default or Event
of Default has occurred and is continuing or (ii) the aggregate amount of
Restricted Payments made during the period from and after March 31, 1997, to and
including the date of the making of the Restricted Payment in question, would
exceed the sum of (x) the net cash proceeds received by the Company from the
issuance or sale subsequent to March 31, 1997 of shares of common stock of the
Company or warrants, rights or options to purchase or acquire any shares of its
common stock,
plus (y) at all times after the Determination Date, 50% of Consolidated Net
Income for the period commencing on the day immediately succeeding the
Determination Date and ending on the date of the making of the Restricted
Payment in question, computed on a cumulative basis for said entire period (or
if such Consolidated Net Income is a deficit figure, then minus 100% of such
deficit); PROVIDED that at all times after the Determination Date and after
giving effect to such Restricted Payment, Consolidated Tangible Net Worth
exceeds $42,000,000.
For the purposes of this SS.5.12 the amount of any Restricted Payment
declared, paid oR distributed in property of the Company shall be deemed to be
the greater of the book value or fair market value (as determined in good faith
by the Board of Directors of the Company) of such property at the time of the
making of the Restricted Payment in question.
The Company will not declare any dividend which constitutes a
Restricted Payment payable more than 60 days after the date of declaration
thereof.
.SECTION 5.13. MERGERS, CONSOLIDATIONS AND SALES OR TRANSFERS OF
ASSETS;. (a) The Company will not, and will not permit any Restricted Subsidiary
to enter into any transaction of merger or consolidation or transfer, sell,
assign, lease, or otherwise dispose of all or a substantial part of its
properties or assets to any Person, except that:
(1) any Restricted Subsidiary may merge or consolidate with or into
the Company or any other Restricted Subsidiary (other than the Insurance
Subsidiary) so long as in any merger or consolidation involving the Company, the
Company shall be the surviving or continuing corporation;
(2) the Company may merge or consolidate with any other corporation
PROVIDED that (i) the Company shall be the surviving and continuing corporation;
and (ii) at the time of such consolidation or merger and after giving effect
thereto, no Default or Event of Default shall have occurred and be continuing;
(3) any Restricted Subsidiary may sell or convey all or
substantially all of its assets to the Company or to another Restricted
Subsidiary (other than the Insurance Subsidiary); and
(4) the Company or any Restricted Subsidiary may sell all or a
substantial part of the assets of the Company and its Restricted Subsidiaries
pursuant to and in compliance with Section 10.4 of the Company Security
Agreement or Section 10.4 of the Subsidiary Security Agreement.
(b) The Company will not permit any Restricted Subsidiary to issue or
sell any shares of stock of any class or any partnership interest, membership
interest or other equity interest of any type (including for the purposes of
this SS.5.13, any warrants, rights or optionS to purchase or otherwise acquire
any such equity interest or other Securities exchangeable for or convertible
into any such equity interest) of such Restricted Subsidiary to any Person other
than the Company or a Restricted Subsidiary (other than the Insurance
Subsidiary), except for the purpose of qualifying directors.
(c) The Company will not sell, transfer or otherwise dispose of any
shares of stock, partnership interest, membership interest or other equity
interest in any Restricted Subsidiary (except (i) to qualify directors and (ii)
the pledge of the Pledged Collateral under the Company Security Agreement and
any transfer or sale thereof pursuant to and in compliance with Section 10.4 of
the Company Security Agreement) or any Indebtedness of any Restricted
Subsidiary, and will not permit any Restricted Subsidiary to sell, transfer or
otherwise dispose of (except (i) to the Company or a Restricted Subsidiary or
(ii) the pledge of the Pledged Collateral under the Subsidiary Security
Agreement and any transfer or sale thereof pursuant to and in compliance with
Section 10.4 of the Subsidiary Security Agreement) any such shares of stock,
partnership interest, membership interest or other equity interest or any
Indebtedness of any other Restricted Subsidiary, unless:
(1) simultaneously with such sale, transfer, or disposition, all such
interests and all Indebtedness of such Restricted Subsidiary at the time owned
by the Company and by every other Restricted Subsidiary shall be sold,
transferred or disposed of as an entirety;
(2) the Board of Directors of the Company shall have determined, as
evidenced by a resolution thereof, that the retention of such interest and
Indebtedness is no longer in the best interests of the Company or the holders of
the Notes;
(3) such interest and Indebtedness is sold, transferred or otherwise
disposed of to a Person, for a cash consideration and on terms reasonably deemed
by the Board of Directors to be adequate and satisfactory;
(4) the Restricted Subsidiary being disposed of shall not have any
continuing investment in the Company or any other Restricted Subsidiary not
being simultaneously disposed of; and
(5) such sale or other disposition does not involve a substantial
part (as hereinafter defined) of the assets of the Company and its Restricted
Subsidiaries.
(d) As used in this SS.5.13, in the case of the sale, lease or other
disposition oF any assets, such assets shall be deemed to be a "substantial
part" of the assets of the Company and its Restricted Subsidiaries if (x) such
assets, together with all other assets (i) sold, leased or otherwise disposed of
by the Company and its Restricted Subsidiaries or (ii) subject to any waiver of
or supplemental agreement to the Company Security Agreement or the Subsidiary
Security Agreement without the consent of the holders of at least a majority of
the then outstanding principal amount of the Notes or, if such waiver or
supplemental agreement is described in clauses (B), (C), (E) or (F) of Section
9.2(a) of the Company Security Agreement or the Subsidiary Security Agreement,
without the consent of all of the holders of the Notes, in each case, during the
period of 12 months ending with the date of such sale, lease or disposition,
contributed more than 15% of EBIT of the Company and its Restricted Subsidiaries
determined as of the end of the fiscal year immediately preceding such sale or
disposition, (y) the book value of such assets, when added to the book value of
all other assets of the Company and its Restricted Subsidiaries (i) sold or
otherwise disposed of by the Company and its Restricted Subsidiaries or (ii)
subject to any waiver of or supplemental agreement to the Company Security
Agreement or the Subsidiary Security Agreement without the consent of the
holders of at least a majority of the then outstanding principal amount of the
Notes or, if such waiver or supplemental agreement is described in clauses (B),
(C), (E) or (F) of Section 9.2(a) of the Company Security Agreement or the
Subsidiary Security Agreement, without the consent of all of the holders of the
Notes, in each case, during the period of 12 months ending with the date of such
sale or disposition, exceeds 10% of the book value of all Receivables of the
Company and its Restricted Subsidiaries determined on a consolidated basis as of
the end of the fiscal year immediately preceding such sale or disposition, or
(z) the book value of such assets, when added to the book value of all other
assets of the Copany and its Restricted Subsidiaries (i) sold or otherwise
disposed of by the Company and its Restricted Subsidiaries or (ii) subject to
any waiver of or supplemental agreement to the Company Security Agreement or the
Subsidiary Security Agreement without the consent of the holders of at least a
majority of the then outstanding principal amount of the Notes or, if such
waiver or supplemental agreement is described in clauses (B), (C), (E) or (F) of
Section 9.2(a) of the Company Security Agreement or the Subsidiary Security
Agreement, without the consent of all of the holders of the Notes, in each case,
during the entire period commencing on April 1, 1997 and ending with the date of
such sale or disposition, exceeds 25% of the book value of all Receivables of
the Company and its Restricted Subsidiaries determined on a consolidated basis
as of the end of the fiscal year immediately preceding such sale or disposition.
(e) Nothing in this SS.5.13 shall prohibit the Company from
transferring, selling, assigning, leasing, subleasing or otherwise disposing of
an insubstantial part of its properties or assets, excluding Receivables of the
Company and its Restricted Subsidiaries, to any Person from time to time, in the
ordinary course.
.SECTION 5.14. LEASE-BACKS;. The Company will not, and will not
permit any Restricted Subsidiary to, enter into any arrangements, directly or
indirectly, with any Person, whereby the Company or any Restricted Subsidiary
shall sell or transfer any property, whether now owned or hereafter acquired,
used or useful in their respective businesses in connection with the rental or
lease of the property so sold or transferred or of other property which the
Company or any Restricted Subsidiary intends to use for substantially the same
purpose or purposes as the property so sold or transferred.
.SECTION 5.15. GUARANTIES;. The Company will not and will not permit
any Restricted Subsidiary to become or be liable in respect of any Guaranty
except: (i) Guaranties of the Company which are limited in amount to a stated
maximum dollar exposure and are permitted under SS.5.10; (ii) the Subsidiary
Senior Subordinated Guaranty Agreement; and (iii) the Subsidiary Senior Guaranty
Agreement.
.SECTION 5.16. REPURCHASE OF NOTES;. Neither the Company nor any
Restricted Subsidiary or other Affiliate, directly or indirectly, may repurchase
or make any offer to repurchase any Notes unless the offer has been made to
repurchase Notes, PRO RATA, from all holders of the Notes at the same time and
upon the same terms. In case the Company repurchases any Notes, such Notes shall
thereafter be cancelled and no Notes shall be issued in substitution therefor.
Without limiting the foregoing, upon the repurchase or other acquisition of any
Notes by the Company, any Restricted Subsidiary or any other Affiliate, such
Notes shall no longer be outstanding for purposes of any section of this
Agreement relating to the taking by the holders of the Notes of any actions with
respect hereto. If, notwithstanding the provisions of this SS.5.16, the Company
purchases or acquires less than all of the Notes, thE amount of the payment
required at maturity of the Notes and each prepayment of the Notes required to
be made pursuant to SS.2.1 shall be reduced in the proportion that the principaL
amount of such purchase or other acquisition bears to the unpaid principal
amount of the Notes immediately prior to such purchase or other acquisition
(after giving effect to any prepayment made pursuant to SS.2.1 on the date of
such prepayment, purchase or other acquisition).
.SECTION 5.17. TRANSACTIONS WITH AFFILIATES;. The Company will not,
and will not permit any Restricted Subsidiary to, enter into or be a party to,
any transaction or arrangement with any Affiliate (including without limitation,
the purchase from, sale to or exchange of property with, or the rendering of any
service by or for, any Affiliate), except in the ordinary course of and pursuant
to the reasonable requirements of the Company's or such Restricted Subsidiary's
business and upon fair and reasonable terms no less favorable to the Company or
such Restricted Subsidiary than would be obtained in a comparable arm's-length
transaction with a Person other than an Affiliate.
.SECTION 5.18. INVESTMENTS;. The Company will not, and will not
permit any Restricted Subsidiary to make any Investment except:
(a) Investments in obligations of the United States of America (or
any agency thereof for which the full faith and credit of the United States of
America is pledged for the repayment of principal and interest thereof) maturing
in twelve months or less from the date of acquisition thereof;
(b) certificates of deposit of any banking institution with
combined capital and surplus of at least $500,000,000, maturing in twelve months
or less from the date of acquisition thereof which, at the time of acquisition
by the Company or any Restricted Subsidiary, is accorded the rating of A or
better by S&P and A2 or better by Moody's, or if S&P and/or Moody's is no longer
rating any such certificates of deposit, then an equivalent rating by any other
nationally recognized credit rating agency of similar standing;
(c) loans, advances and extensions of credit to or for the benefit
of consumer/borrowers in the ordinary course of business in accordance with
SS.5.6;
(d) Investments by the Company or any Restricted Subsidiary in and
to any other Restricted Subsidiary PROVIDED, HOWEVER, Investments by the Company
in and to the Insurance Subsidiary shall not exceed $500,000 in the aggregate;
(e) Investments in commercial paper maturing in 270 days or less
from the date of issuance thereof which, at the time of acquisition by the
Company or any Restricted Subsidiary, is accorded the rating of P1 or better by
S&P and A1 or better by Moody's, or if S&P and/or Moody's is no longer rating
any such commercial paper, then an equivalent rating by any other nationally
recognized credit rating agency of similar standing; or
(f) other Investments (in addition to those permitted in clauses
(a) through (e) above) PROVIDED that the aggregate amount of all such
Investments shall not at any time exceed 10% of Consolidated Adjusted Net Worth.
.SECTION 5.19. TERMINATION OF PENSION PLANS;. The Company will not
and will not permit any Subsidiary to withdraw from any Multiemployer Plan or
permit any employee benefit plan maintained by it to be terminated if such
withdrawal or termination could result in withdrawal liability (as described in
Part 1 of Subtitle E of Title IV of ERISA) or the imposition of a Lien on any
property of the Company or any Subsidiary pursuant to Section 4068 of ERISA.
.SECTION 5.20. REPORTS AND RIGHTS OF INSPECTION;. The Company will
keep, and will cause each Subsidiary to keep, proper books of record and account
in which full and correct entries will be made of
all dealings or transactions of or in relation to the business and affairs of
the Company or such Subsidiary, in accordance with GAAP consistently maintained
(except for changes disclosed in the financial statements furnished to you
pursuant to this SS.5.20 and concurred in by the independent public accountants
referred to in SS.5.20(B) hereoF), and will furnish to each holder of a Note and
the Security Trustee (in duplicate if so specified below or otherwise
requested):
(a) QUARTERLY STATEMENTS. As soon as available and in any event
within 45 days after the end of each quarterly fiscal period (except the last)
of each fiscal year, a copy of:
(1) consolidated and consolidating balance sheets of the Company and
its Restricted Subsidiaries as of the close of such quarter and, in the case of
the consolidated balance sheets, setting forth in comparative form the amount
for the corresponding period of the preceding fiscal year,
(2) consolidated and consolidating statements of income and retained
earnings of the Company and its Restricted Subsidiaries for the portion of the
fiscal year ending with such quarter and, in the case of the consolidated
statements of income and retained earnings, setting forth in comparative form
the amount for the corresponding period of the preceding fiscal year,
(3) consolidated and consolidating statements of changes in financial
position of the Company and its Restricted Subsidiaries for the portion of the
fiscal year ending with such quarter and, in the case of the consolidated
statements of changes in financial position, setting forth in comparative form
the amount for the corresponding period of the preceding fiscal year, and
(4) consolidated and consolidating statements of cash flows of the
Company and its Restricted Subsidiaries for the portion of the fiscal year
ending with such quarter and, in the case of the consolidated statements of cash
flows, setting forth in comparative form the consolidated figures for the
corresponding period of the preceding fiscal year,
all in reasonable detail and certified as complete and correct, by an
authorized financial officer of the Company;
(b) ANNUAL STATEMENTS. As soon as available and in any event within
90 days after the close of each fiscal year of the Company, a copy of:
(1) consolidated and consolidating balance sheets of the Company and
its Restricted Subsidiaries as of the close of such fiscal year,
(2) consolidated and consolidating statements of income and retained
earnings and changes in financial position of the Company and its Restricted
Subsidiaries for such fiscal year, and
(3) consolidated and consolidating statements of changes in cash
flows of the Company and its Restricted Subsidiaries for such fiscal year,
in each case setting forth in comparative form the consolidated figures for the
preceding fiscal year, all in reasonable detail and accompanied by an opinion,
unqualified as to scope limitations imposed by the Company and otherwise without
qualification except as therein noted, thereon of a firm of independent public
accountants of recognized national standing selected by the Company to the
effect that the consolidated financial statements have been prepared in
accordance with GAAP consistently applied (except for noted changes in
application in which such accountants concur) and present fairly the financial
condition of the Company and its Restricted Subsidiaries and that the
examination of such accountants in connection with such financial statements has
been made in accordance with generally accepted auditing standards and
accordingly, includes such tests of the accounting records and such other
auditing procedures as were considered necessary in the circumstances;
(c) AUDIT REPORTS. Promptly upon receipt thereof, one copy of each
interim or special audit made by independent accountants of the books of the
Company or any Restricted Subsidiary and any management letter received from
such accountants and the Company's response, if any, to such management letter;
(d) SEC AND OTHER REPORTS. Promptly upon their becoming available,
one copy of each
financial statement, report, notice, proxy statement or statement of additional
information sent by the Company to stockholders generally and of each regular or
periodic report, and any registration statement or prospectus filed by the
Company or any Subsidiary with any securities exchange or the Securities and
Exchange Commission or any successor agency, and copies of any orders in any
proceedings to which the Company or any of its Subsidiaries is a party, issued
by any governmental agency, Federal or state, having jurisdiction over the
Company or any of its Subsidiaries;
(e) REQUESTED INFORMATION. With reasonable promptness, such other
data and information as any holder of any Note or the Security Trustee may
reasonably request;
(f) OFFICERS' CERTIFICATES. Within the periods provided in paragraphs
(a) and (b) above, a certificate of an authorized financial officer of the
Company stating that he has reviewed the provisions of this Agreement and
setting forth: (i) the information and computations (in sufficient detail)
required in order to determine whether the Company was in compliance with the
requirements of SS.5.7 through SS.5.18, inclusive, at the end of the perIod
covered by the financial statements then being furnished, and (ii) whether, to
the best of his knowledge, there existed as of the date of such financial
statements and whether, to the best of his knowledge, there exists on the date
of the certificate or existed at any time during the period covered by such
financial statements any Default or Event of Default and, if any such condition
or event exists on the date of the certificate, specifying the nature and period
of existence thereof and the action the Company is taking and proposes to take
with respect thereto;
(g) ACCOUNTANT'S CERTIFICATES. Within the period provided in
paragraph (b) above, a certificate of the accountants who render an opinion with
respect to such financial statements, stating that they have reviewed this
Agreement and stating further, whether in making their audit, such accountants
have become aware of any Default or Event of Default under any of the terms or
provisions of this Agreement insofar as any such terms or provisions pertain to
or involve accounting matters or determinations, and if any such condition or
event then exists, specifying the nature and period of existence thereof;
(h) UNRESTRICTED SUBSIDIARIES. Within the respective periods provided
in paragraph (b) above, financial statements of the character and for the dates
and periods as in said paragraph (b) provided covering each Unrestricted
Subsidiary (or groups of Unrestricted Subsidiaries on a consolidated basis);
(i) LOAN LOSS RESERVE REPORT. On or before the twenty-fifth day of
every month, a loan loss reserve report with respect to the Company and its
Restricted Subsidiaries for the immediately preceding month in form and
substance reasonably satisfactory to the holders of the Notes;
(j) LOAN CHARGE-OFF RECOVERY REPORT. On or before the twenty-fifth
day of every month, a loan charge-off recovery report with respect to the
Company and its Restricted Subsidiaries for the prior month in form and
substance reasonably satisfactory to the holders of the Notes; and
(k) BORROWING BASE CERTIFICATE. On or before the twenty-fifth day
of every month, a Borrowing Base Certificate substantially in the form attached
hereto as Exhibit H calculated as of the last day of the immediately preceding
month. Without limiting the foregoing, the Company will permit each holder of a
Note and the Security Trustee (or such Persons as any holder or the Security
Trustee may designate) to visit and inspect, any of the properties of the
Company or any Subsidiary, to inspect any other Collateral, to examine all their
books of account, records, reports and other papers, to make copies and extracts
therefrom, and to discuss their respective affairs, finances and accounts with
their respective officers, employees, and independent public accountants (and by
this provision the Company authorizes said accountants to discuss with such
Persons the finances and affairs of the Company and its Subsidiaries) all at
such reasonable times and as often as may be reasonably requested. Any
visitation, inspection or discussion shall be at the sole cost and expense of
the Company; PROVIDED, HOWEVER, that prior to the occurrence of a Default or
Event of Default, the Company shall bear such costs and expenses not more
frequently than once every semi-annual fiscal period.
.SECTION 6. EVENTS OF DEFAULT AND REMEDIES THEREFOR;.
.SECTION 6.1. EVENTS OF DEFAULT;. Any one or more of the
following shall constitute an "Event of Default" as the term is used herein:
(a) Default shall occur in the payment of interest on any Note when
the same shall have become due and such default shall continue for more than
five days; or
(b) Default shall occur in the making of any required prepayment on
any of the Notes as provided in SS.2.1; or
(c) Default shall occur in the making of any other payment of the
principal of any Note or premium, if any, thereon at the expressed or any
accelerated maturity date or at any date fixed for prepayment; or
(d) Default shall occur in the observance or performance of any
covenant or agreement contained in SS.5.7 through SS.5.19; or
(e) Default shall occur in the observance or performance of any
provision of this Agreement, the Company Security Agreement, the Subsidiary
Security Agreement or the Subsidiary Senior Guaranty Agreement which is not
remedied within 30 days after the earlier to occur of (i) the date on which such
failure shall first become known to any officer of the Company or (ii) the date
on which notice thereof is given to the Company; or
(f) An "Event of Default" shall occur under the Revolving Credit
Agreement (other than an Event of Default covered by clause (m) of this SS.6.1)
or the Senior SubordinateD Note Agreement; or
(g) Default shall occur under any interest rate or currency
protection agreement entered into by the Company or any Restricted Subsidiary
with any bank or other financial institution; or
(h) Default shall be made in the payment when due (whether by lapse
of time, by declaration, by call for redemption or otherwise) of the principal
of or interest or premium on any Indebtedness for Borrowed Money in excess of
$1,000,000 (other than the Senior Notes or the Senior Subordinated Notes) of the
Company or any Restricted Subsidiary, individually or in the aggregate, and such
default shall continue beyond the period of grace, if any, allowed with respect
thereto; or
(i) Default or the happening of any event shall occur under any
indenture, agreement, or other instrument under which any Indebtedness for
Borrowed Money in excess of $1,000,000 of the Company or any Restricted
Subsidiary (other than the Agreements, the Senior Subordinated Note Agreement,
the Revolving Credit Agreement, the Subsidiary Senior Guaranty Agreement or the
Subsidiary Senior Subordinated Guaranty Agreement), individually or in the
aggregate, may be issued and such default or event shall continue for a period
of time sufficient to permit the acceleration of the maturity of any
Indebtedness for Borrowed Money of the Company or any Restricted Subsidiary
outstanding thereunder; or
(j) Any representation or warranty made by the Company or any
Restricted Subsidiary herein, in the Company Security Agreement, the Subsidiary
Security Agreement, the Subsidiary Senior Guaranty Agreement or made by the
Company or any Restricted Subsidiary in any statement or certificate furnished
by the Company or any Restricted Subsidiary in connection with the consummation
of the issuance and delivery of the Notes or furnished by the Company or any
Restricted Subsidiary pursuant hereto or pursuant to the Company Security
Agreement, the Subsidiary Security Agreement or the Subsidiary Senior Guaranty
Agreement, is untrue in any material respect as of the date of the issuance or
making thereof; or
(k) The Subsidiary Senior Guaranty Agreement shall be held by a
court of competent jurisdiction to be invalid or unenforceable in whole or in
part in any respect or shall otherwise cease to be in full force and effect or
the Company or any Restricted Subsidiary takes any action for the purpose of
repudiating or rescinding the Subsidiary Senior Guaranty Agreement in whole or
in part or the obligations of any Restricted Subsidiary, respectively,
thereunder or the Company or any Restricted Subsidiary declares that the
obligations of any Restricted Subsidiary under the Subsidiary Senior Guaranty
Agreement are unenforceable in whole or in part; or
(l) The Company Security Agreement or the Subsidiary Security
Agreement shall cease to be in full force and effect, or shall cease to give the
Security Trustee the Liens purported to be created thereby or, in the reasonable
judgment of the holders of the Notes, the practical realization of the benefits
of the Liens and security interest purported to be created thereby; or
(m) The Company shall for any reason fail to make any required
prepayment of the Revolving Credit Notes pursuant to Section 2.6(b)(ii) of the
Revolving Credit Agreement within one day after such prepayment becomes due; or
(n) Final judgment or judgments for the payment of money
aggregating in excess of $100,000 is or are outstanding against the Company or
any Restricted Subsidiary or against any property or assets of either and any
one of such judgments has remained unpaid, unvacated, unbonded or unstayed by
appeal or otherwise for a period of 30 days from the date of its entry; or
(o) A custodian, trustee or receiver is appointed for the Company
or any Restricted Subsidiary or for the major part of the property of either and
is not discharged within 45 days after such appointment; or
(p) The Company or any Restricted Subsidiary becomes insolvent or
bankrupt, is generally not paying its debts as they become due or makes an
assignment for the benefit of creditors, or the Company or any Restricted
Subsidiary causes or suffers an order for relief to be entered with respect to
it under applicable Federal bankruptcy law or applies for or consents to the
appointment of a custodian, trustee or receiver for the Company or such
Restricted Subsidiary or for the major part of the property of either; or
(q) Bankruptcy, reorganization, arrangement or insolvency
proceedings, or other proceedings for relief under any bankruptcy or similar law
or laws for the relief of debtors, are instituted by or against the Company or
any Restricted Subsidiary and, if instituted against the Company or any
Restricted Subsidiary, are consented to or are not dismissed within 60 days
after such institution; or
(r) The Company or any ERISA Affiliate shall fail to pay when due
an amount or amounts aggregating in excess of $100,000 which it shall have
become liable to pay to the Pension Benefit Guaranty Corporation (the "PBGC") or
to a Plan under Title IV of ERISA; or notice of intent to terminate a Plan or
Plans having aggregate Unfunded Vested Liabilities in excess of $100,000
(collectively, a "MATERIAL PLAN") shall be filed under Title IV of ERISA by the
Company or any ERISA Affiliate, any plan administrator or any combination of the
foregoing; or the PBGC shall institute proceedings under Title IV of ERISA to
terminate or to cause a trustee to be appointed to administer any Material Plan
or a proceeding shall be instituted by a fiduciary of any Material Plan against
the Company or any ERISA Affiliate to enforce Section 515 or 4219(c)(5) of ERISA
and such proceeding shall not have been dismissed within 30 days thereafter; or
a condition shall exist by reason of which the PBGC would be entitled to obtain
a decree adjudicating that any Material Plan must be terminated.
.SECTION 6.2. NOTICE TO HOLDERS;. When any Default or Event of
Default described in the foregoing SS.6.1 has occurred, or if the holder of any
Note or of any other evidence oF Indebtedness of the Company gives any notice or
takes any other action with respect to a claimed default, the Company agrees to
give notice within three business days (except as otherwise specifically
provided herein) of such event to all holders of the Notes then outstanding,
such notice to be in writing and sent by registered or certified mail or by
telegram.
.SECTION 6.3. ACCELERATION OF MATURITIES;. When any Event of Default
described in paragraph (a), (b) or (c) of SS.6.1 has happened and is continuing,
any holder of any NotE may, and when any Event of Default described in
paragraphs (d) through (n), inclusive, or (r) of said SS.6.1 has happened and is
continuing, the holder or holders of at least a majority oF the principal amount
of Notes at the time outstanding may, by notice in writing sent by personal
delivery, prepaid overnight mail or courier service or registered or certified
mail to the Company, declare the entire principal and all interest accrued on
all Notes to be, and all Notes shall thereupon become, forthwith due and
payable, without any presentment, demand, protest or other notice of any kind,
all of which are hereby expressly waived. When any Event
of Default described in paragraphs (o), (p) or (q) of SS.6.1 has occurred, then
all outstandinG Notes shall immediately become due and payable without
presentment, demand or notice of any kind. Upon the Notes becoming due and
payable as a result of any Event of Default as aforesaid, the Company will
forthwith pay to the holders of the Notes the entire principal and interest
accrued on the Notes and, to the extent permitted by law, liquidated damages for
the loss of the bargain evidenced hereby in an amount equal to the Make-Whole
Amount. No course of dealing on the part of any holder of a Note and no delay or
failure on the part of any holder of a Note to exercise any right shall operate
as a waiver of such right or otherwise prejudice such holder's rights, powers
and remedies. The Company further agrees, to the extent permitted by law, to pay
to the holder or holders of the Notes all costs and expenses incurred by them in
the collection of any Notes upon any default hereunder or thereon, including
reasonable compensation to such holder's or holders' attorneys for all services
rendered in connection therewith.
.SECTION 6.4. RESCISSION OF ACCELERATION;. The provisions of SS.6.3
are subject tO the condition that if the principal of and accrued interest on
all or any outstanding Notes have been declared immediately due and payable by
reason of the occurrence of any Event of Default described in paragraphs (a)
through (n), inclusive, or (r) of SS.6.1, the holders of aT least a majority in
aggregate principal amount of the Notes then outstanding may, by written
instrument filed with the Company, rescind and annul such declaration and the
consequences thereof, PROVIDED that at the time such declaration is annulled and
rescinded:
(a) no judgment or decree has been entered for the payment of any
monies due pursuant to the Notes, this Agreement, the Company Security
Agreement, the Subsidiary Security Agreement or the Subsidiary Senior Guaranty
Agreement;
(b) all arrears of interest upon, premium and principal payable in
respect of all of the Notes and all other sums payable under the Notes and under
this Agreement, the Company Security Agreement, the Subsidiary Security
Agreement and the Subsidiary Senior Guaranty Agreement (except any principal,
interest or premium on the Notes which has become due and payable solely by
reason of such declaration under SS.6.3) shall have been duly paid; and
(c) each and every other Default and Event of Default shall have
been made good, cured or waived pursuant to SS.7.1;
and PROVIDED FURTHER, that no such rescission and annulment shall extend to or
affect any subsequent Default or Event of Default or impair any right consequent
thereto.
.SECTION 7. AMENDMENTS, WAIVERS AND CONSENTS;.
.SECTION 7.1. CONSENT REQUIRED;. Any term, covenant, agreement or
condition of this Agreement may, with the consent of the Company, be amended or
compliance therewith may be waived (either generally or in a particular instance
and either retroactively or prospectively), if the Company shall have obtained
the consent in writing of the holders of at least 76% in aggregate principal
amount of outstanding Notes; PROVIDED that without the written consent of the
holders of all of the Notes then outstanding, no such waiver, modification,
alteration or amendment shall be effective (i) which will change the time of
payment (including any prepayment required by SS.2.1) of the principal of or the
interest on any Note or change thE principal amount thereof or change the rate
of interest thereon, (ii) which will change any of the provisions with respect
to optional prepayments or (iii) which will change the percentage of holders of
the Notes required to (A) consent to any such amendment, alteration, waiver or
modification or any of the provisions of this SS.7 or (B) accelerate the Notes
or rescind thE acceleration of the Notes pursuant to SS.6.
.SECTION 7.2. EFFECT OF AMENDMENT OR WAIVER;. Any such amendment or
waiver shall apply equally to all of the holders of the Notes and shall be
binding upon them, upon each future holder of any Note and upon the Company,
whether or not such Note shall have been marked to indicate such amendment or
waiver. No such amendment or waiver shall extend to or affect any obligation not
expressly amended or waived or impair any right consequent thereon.
.'SECTION 8. INTERPRETATION OF AGREEMENT; DEFINITIONS';.
.SECTION 8.1. DEFINITIONS;. Unless the context otherwise requires,
the terms hereinafter set forth when used herein shall have the following
meanings and the following definitions shall be equally applicable to both the
singular and plural forms of any of the terms herein defined:
"AFFILIATE" shall mean any Person (i) which directly or indirectly
through one or more intermediaries controls, or is controlled by, or is under
common control with, the Company, (ii) which beneficially owns or holds 5% or
more of any class of the Voting Stock (determined by number of shares or number
of votes) of the Company or (iii) 5% or more of the Voting Stock (determined by
number of shares or number of votes) (or in the case of a Person which is not a
corporation, 5% or more of the equity interest) of which is beneficially owned
or held by the Company or a Subsidiary. The term "CONTROL" means 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
Stock, by contract or otherwise.
"AGENT" shall mean Harris Trust and Savings Bank and its permitted
successors and assigns, in each case in its capacity as agent for the Banks
under the Revolving Credit Agreement.
"BANKS" shall mean Harris Trust and Savings Bank, The First National
Bank of Chicago, LaSalle National Bank and the other banks or financial
institutions that are or become a party to the Revolving Credit Agreement.
"CAPITALIZED LEASE" shall mean any lease the obligation for Rentals
with respect to which is required to be capitalized on a consolidated balance
sheet of the lessee and its subsidiaries in accordance with GAAP.
"CAPITALIZED RENTALS" of any Person shall mean as of the date of any
determination thereof the amount at which the aggregate Rentals due and to
become due under all Capitalized Leases under which such Person is a lessee
would be required to be reflected under GAAP as a liability on a consolidated
balance sheet of such Person.
"CLOSING DATE" shall have the meaning as defined in SS.1.3.
"COLLATERAL" shall have the meaning as defined in the Company Security
Agreement and the Subsidiary Security Agreement.
"COMPANY SECURITY AGREEMENT" shall have the meaning as defined in
SS.1.2.
"CONSOLIDATED ADJUSTED NET WORTH" at any date means:
(a) as to any corporation, the amount of capital stock liability plus
(or minus in the case of a deficit) the capital surplus and earned surplus of
the Company and its Restricted Subsidiaries on a consolidated basis, and as to
any partnership or limited liability company, the capital account of the Company
and its Restricted Subsidiaries on a consolidated basis; less (without
duplication)
(b) the net book value, after deducting any reserves applicable
thereto, of all items of the following character which are included in the
assets of the Company and its Restricted Subsidiaries, to wit:
(i) all real property, fixed assets, unamortized leasehold
improvements and furniture, fixtures and equipment other than property held for
immediate sale, lease or other liquidation which has been held by the Company or
a Restricted Subsidiary for less than 90 days;
(ii) all deferred charges (other than deferred Federal income taxes
and deferred investment tax credits) and prepaid expenses other than prepaid
interest, prepaid taxes and prepaid insurance premiums;
(iii) treasury stock;
(iv) unamortized debt discount and capitalized expense and unamortized
stock discount and capitalized expense;
(v) good will, organizational or experimental expense, patents,
trademarks, copyrights, trade names and other intangibles;
(vi) Minority Interests;
(vii) "direct loan origination costs" as set forth in FASB 91; (viii)
all Restricted Investments;
(ix) the excess, if any, of (A) net charge-offs of the Company and its
Restricted Subsidiaries over the twelve-month period ending with such date over
(B) reserves for credit losses of the Company and its Restricted Subsidiaries as
at such date; and
(x) any surplus resulting from any write-up in the book value of
assets of the Company or any Restricted Subsidiary subsequent to March 31, 1997.
"CONSOLIDATED NET INCOME" for any period shall mean the gross revenues
of the Company and its Restricted Subsidiaries for such period less all expenses
and other proper charges (including taxes on income), determined on a
consolidated basis in accordance with GAAP consistently applied and after
eliminating earnings or losses attributable to outstanding Minority Interests,
but excluding in any event:
(a) any gains or losses on the sale or other disposition of
investments or fixed or capital assets, and any taxes on such excluded gains and
any tax deductions or credits on account of any such excluded losses;
(b) the proceeds of any life insurance policy;
(c) net earnings and losses of any Restricted Subsidiary accrued
prior to the date it became a Restricted Subsidiary;
(d) net earnings and losses of any Person (other than a Restricted
Subsidiary), substantially all the assets of which have been acquired in any
manner, realized by such other Person prior to the date of such acquisition;
(e) net earnings and losses of any Person (other than a Restricted
Subsidiary) with which the Company or a Restricted Subsidiary shall have
consolidated or which shall have merged into or with the Company or a Restricted
Subsidiary prior to the date of such consolidation or merger;
(f) net earnings of any business entity (other than a Restricted
Subsidiary) in which the Company or any Restricted Subsidiary has an ownership
interest unless such net earnings shall have actually been received by the
Company or such Restricted Subsidiary in the form of cash distributions;
(g) any portion of the net earnings of any Restricted Subsidiary
(other than the Insurance Subsidiary) which for any reason is unavailable for
payment of dividends to the Company or any other Restricted Subsidiary;
(h) earnings resulting from any reappraisal, revaluation or write-up
of assets; (i) any deferred or other credit representing any excess
of the equity in any
Subsidiary at the date of acquisition thereof over the amount invested in such
Subsidiary; (j) any gain arising from the acquisition of any
Securities of the Company or any
Restricted Subsidiary;
(k) any reversal of any contingency reserve, except to the extent
that provision for such contingency reserve shall have been made from income
arising during such period; and
(l) any portion of the net earnings of the Insurance Subsidiary in
excess of $500,000 (on a cumulative basis) which has not actually been
distributed to the Company in the form of cash.
"CONSOLIDATED NET WORTH" shall mean as of the date of any determination
thereof the total assets of the Company and its Restricted Subsidiaries less the
total liabilities of the Company and its Restricted Subsidiaries determined in
accordance with GAAP.
"CONSOLIDATED TANGIBLE NET WORTH" shall mean as of the date of any
determination thereof Consolidated Net Worth less intangible assets of the
Company and its Restricted Subsidiaries determined in accordance with GAAP.
"DEFAULT" shall mean any event or condition, the occurrence of which
would, with the lapse of time or the giving of notice, or both, constitute an
Event of Default.
"DETERMINATION DATE" shall mean the last day of the fiscal quarter of
the Company occurring after the Closing Date in which the Company has maintained
a Consolidated Tangible Net Worth in excess of $42,000,000 at the end of such
fiscal quarter.
"EBIT" for any period shall mean the sum of (i) Consolidated Net Income
during such period plus (to the extent deducted in determining Consolidated Net
Income), (ii) all provisions for any Federal, state or other income taxes made
by the Company and its Restricted Subsidiaries during such period and (iii) all
Interest Charges on all Indebtedness (including the interest component of
Capitalized Rentals) of the Company and its Restricted Subsidiaries.
"ENVIRONMENTAL LEGAL REQUIREMENT" shall mean any international,
Federal, state or local statute, law, regulation, order, consent decree,
judgment, permit, license, code, covenant, deed restriction, common law,
treaty, convention, ordinance or other requirement relating to public health,
safety or the environment, including without limitation, those relating to
releases, discharges or emissions to air, water, land or ground water, to the
withdrawal or use of groundwater, to the use and handling of polychlorinated
biphenyls or asbestos, to the disposal, treatment, storage or management of
hazardous or solid waste, or Hazardous Substances or crude oil, or any fraction
thereof, or to exposure to toxic or hazardous materials, to the handling,
transportation, discharge or release of gaseous or liquid Hazardous Substances
and any regulation, order, notice or demand issued pursuant to such law, statute
or ordinance, in each case applicable to the property of the Company or any of
its Subsidiaries or the operation, construction or modification of any thereof,
including without limitation the following: the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, as amended by the Superfund
Amendments and Reauthorization Act of 1986, the Solid Waste Disposal Act, as
amended by the Resource Conservation and Recovery Act of 1976 and the Hazardous
and Solid Waste Amendments of 1984, the Hazardous Materials Transportation Act,
as amended, the Federal Water Pollution Control Act, as amended by the Clean
Water Act of 1976, the Safe Drinking Water Control Act, the Clean Air Act of
1966, as amended, the Toxic Substances Control Act of 1976, the Occupational
Safety and Health Act of 1977, as amended, the Emergency Planning and Community
Right-to-Know Act of 1986, the National Environmental Policy Act of 1975 and the
Oil Pollution Act of 1990 and any similar or implementing state law, and any
state statute and any further amendments to these laws, providing for financial
responsibility for cleanup or other actions with respect to the release or
threatened release of Hazardous Substances or crude oil, or any fraction thereof
and all rules, regulations, guidance documents and publication promulgated
thereunder.
"ERISA" shall mean the Employment Retirement Income Security Act of
1974, as amended, and any successor statute of similar import, together with the
regulations thereunder, in each case as in effect from time to time. References
to sections to ERISA shall be construed to also refer to any successor sections.
"ERISA AFFILIATE" shall mean any corporation, trade or business that
is, along with the Company, a member of a controlled group of corporations or a
controlled group of trades or businesses, as described in section 414(b) and
414(c), respectively, of the Code or Section 4001 of ERISA.
"EVENT OF DEFAULT" shall have the meaning as defined in SS.6.1.
"FIXED CHARGES" for any period shall mean on a consolidated basis the
sum of (i) all Rentals (other than Capitalized Rentals) payable during such
period by the Company and its Restricted Subsidiaries, and (ii) all Interest
Charges on all Indebtedness (including the interest component of Capitalized
Rentals) of the Company and its Restricted Subsidiaries.
"GAAP" shall mean generally accepted accounting principles at the time
in the United States.
"GUARANTIES" by any Person shall mean all obligations (other than
endorsements in the ordinary course of business of negotiable instruments for
deposit or collection) of such Person guaranteeing or in effect guaranteeing any
Indebtedness, dividend or other obligation, of any other Person (the "PRIMARY
OBLIGOR") in any manner, whether directly or indirectly, including, without
limitation, all obligations incurred through an agreement, contingent or
otherwise, by such Person: (i) to purchase such Indebtedness or obligation or
any property or assets constituting security therefor, (ii) to advance or supply
funds (x) for the purchase or payment of such Indebtedness or obligation, (y) to
maintain working capital or other balance sheet condition or otherwise to
advance or make available funds for the purchase or payment of such Indebtedness
or obligation, (iii) to lease property or to purchase Securities or other
property or services primarily for the purpose of assuring the owner of such
Indebtedness or obligation of the ability of the primary obligor to make payment
of the Indebtedness or obligation, or (iv) otherwise to assure the owner of the
Indebtedness or obligation of the primary obligor against loss in respect
thereof. For the purposes of all computations made under this Agreement, a
Guaranty in respect of any Indebtedness for Borrowed Money shall be deemed to be
Indebtedness equal to the principal amount of such Indebtedness for Borrowed
Money which has been guaranteed, and a Guaranty in respect of any other
obligation or liability or any dividend shall be deemed to be Indebtedness equal
to the maximum aggregate amount of such obligation, liability or dividend.
"HAZARDOUS SUBSTANCES" shall mean any hazardous or toxic material,
substance or waste pollutant
or contaminant which is regulated as such under any statute, law, ordinance,
rule or regulation of any Federal, regional, state or local authority having
jurisdiction over the property of the Company or any Subsidiary or its use,
including but not limited to any material, substance or waste which is: (a)
defined as a hazardous substance under Section 311 of the Federal Water
Pollution Control Act (33 U.S.C. ss.1317), as amended; (b) regulated as A
hazardous waste under Section 1004 of the Federal Resource Conservation and
Recovery Act (42 U.S.C. ss.6901 ET SEQ.), as amended; (c) defined as a hazardous
substance under Section 101 oF the Comprehensive Environmental Response,
Compensation and Liability Act, as amended (d) defined or regulated as a
hazardous substance or hazardous waste under any rules or regulations
promulgated under any of the foregoing statutes or (e) petroleum or products
derived therefrom.
"INDEBTEDNESS" of any Person shall mean and include all obligations of
such Person which in accordance with GAAP shall be classified upon a balance
sheet of such Person as liabilities of such Person, and in any event shall
include all (i) obligations of such Person for borrowed money or which have been
incurred in connection with the acquisition of property or assets, (ii)
obligations secured by any Lien upon property or assets owned by such Person,
even though such Person has not assumed or become liable for the payment of such
obligations, (iii) obligations created or arising under any conditional sale or
other title retention agreement with respect to property acquired by such
Person, notwithstanding the fact that the rights and remedies of the seller,
lender or lessor under such agreement in the event of default are limited to
repossession or sale of property, (iv) Capitalized Rentals, (v) all obligations
of such Person on or with respect to letters of credit, bankers' acceptances and
other extensions of credit whether or not representing obligations for borrowed
money and (vi) Guaranties of obligations of others of the character referred to
in this definition.
"INDEBTEDNESS FOR BORROWED MONEY" of any Person shall mean (a) all
Indebtedness of such Person for borrowed money or which has been incurred in
connection with the acquisition of assets, (b) all Capitalized Rentals of such
Person, and (c) all Guaranties by such Person of Indebtedness for Borrowed Money
of others, it being understood that Indebtedness for Borrowed Money shall not
include trade payables in the ordinary course of business.
"INSTITUTIONAL HOLDER" shall mean any insurance company, bank, savings
and loan association, trust company, investment company, charitable foundation,
employee benefit plan (as defined in ERISA) or other institutional investor or
financial institution.
"INSURANCE SUBSIDIARY" shall mean any one Subsidiary (i) which is
organized under the laws of the British Virgin Islands or such other
jurisdiction as shall be consented to in writing by the holders of the Notes;
(ii) which conducts substantially all of its business and has substantially all
of its assets within the British Virgin Islands or such other jurisdiction as
shall be consented to in writing by the holders of the Notes; (iii) of which
100% (by number of votes) (other than directors' qualifying shares) of the
Voting Stock is owned by the Company; and (iv) which is engaged in the business
of reinsuring the credit insurance written by the Subsidiaries.
"INTEREST CHARGES" for any period shall mean all interest and all
amortization of debt discount and expense on any particular Indebtedness for
which such calculations are being made.
"INVESTMENTS" shall mean all investments, in cash or by delivery of
property made, directly or indirectly in any Person, whether by acquisition of
shares of capital stock, indebtedness or other obligations or Securities or by
loan, advance, capital contribution or otherwise; PROVIDED, HOWEVER, that
"INVESTMENTS" shall not mean or include routine investments in property to be
used or consumed in the ordinary course of business.
"JUNIOR SUBORDINATED DEBT" shall mean all unsecured Indebtedness for
Borrowed Money of the Company which (i) pursuant to its terms matures on a date
later than the stated maturity date of the Notes and the Senior Subordinated
Notes and (ii) contains or has applicable thereto subordination provisions
substantially in the form set forth in Exhibit G hereto but with appropriate
adjustments therein so as to provide that such Junior Subordinated Debt be
subordinate and junior to all Senior Debt and Senior Subordinated Debt (but not
to any other Indebtedness of the Company) rather than only to Senior Debt or
such other provisions as may be approved in writing by the holders of all of the
outstanding Notes, Revolving Credit Notes and Senior Subordinated Notes
(exclusive of any Notes, Revolving Credit Notes or
Senior Subordinated Notes held by a Subsidiary or other Affiliate).
"LIEN" shall mean any interest in property securing an obligation owed
to a Person, whether such interest is based on the common law, statute or
contract, and including but not limited to the security interest arising from a
mortgage, security agreement, encumbrance, pledge, conditional sale or trust
receipt or a lease, consignment or bailment for security purposes. The term
"LIEN" includes reservations, exceptions, encroachments, easements, rights of
way, covenants, conditions, restrictions, leases and other similar title
exceptions and encumbrances, including but not limited to mechanics',
materialmen's, warehousemen's, carriers' and other similar encumbrances,
affecting property. For the purposes of this Agreement, a Person shall be deemed
to be the owner of any property which it has acquired or holds subject to a
conditional sale agreement or other arrangement pursuant to which title to the
property has been retained by or vested in some other Person for security
purposes.
"MAKE-WHOLE AMOUNT" as at any date a payment thereof is due (the
"PAYMENT DATE") in connection with a payment or prepayment of any Notes shall
mean the excess of (a) the present value as at the payment date of the Prepaid
Cash Flows, discounted quarterly at an annual rate which is equal to the
Reinvestment Rate plus .50%, over (b) the aggregate principal amount of such
Notes then to be paid or prepaid. The Make-Whole Amount shall in no event be
less than zero. For purposes of any determination of the Make-Whole Amount:
"PREPAID CASH FLOWS" shall mean, for each date on which a payment of
principal or interest, or both, is scheduled to become due on the Notes, an
amount determined by subtracting (i) the amount of such payment scheduled to
become due on such date after giving effect to any prepayment pursuant to SS.2.1
on the date as to which the determination is being made and thE application of
such prepayment from (ii) the amount of such payment which would have become due
on such date but for such prepayment.
"REINVESTMENT RATE" shall mean the asked yield to maturity of the
United States Treasury obligations with a maturity (as compiled by and published
on Telerate Page 5 or its successor not more than five business days immediately
preceding the payment date) most nearly equal to the remaining Weighted Average
Life to Maturity of the Prepaid Cash Flows as at the payment date. If such rate
shall not have been so published, the Reinvestment Rate in respect of such
payment date shall mean the mean of the yields to maturity of United States
Treasury obligations (as compiled by and published in the United States Federal
Reserve Bulletin or its successor publication for each of the two weeks
immediately preceding the payment date) with a constant maturity most nearly
equal to the Weighted Average Life to Maturity of the Prepaid Cash Flows as at
the payment date. If no maturity exactly corresponding to such remaining
Weighted Average Life shall appear therein, yields for the next longer and the
next shorter published maturities shall be calculated pursuant to the foregoing
sentence and the Reinvestment Rate shall be interpolated from such yields on a
straight-line basis (rounding to the nearest month). If such rates shall not
have been so published, the Reinvestment Rate in respect of such determination
date shall be calculated pursuant to the next preceding sentence on the basis of
the arithmetic mean of the arithmetic means of the secondary market ask rates,
as of approximately 3:30 P.M., New York City time, on the last business days of
each of the two weeks preceding the payment date, for the actively traded U.S.
Treasury security or securities with a maturity or maturities most closely
corresponding to the remaining Weighted Average Life to Maturity, as reported by
three primary United States Government securities dealers in New York City of
national standing selected in good faith by the Company.
"WEIGHTED AVERAGE LIFE TO MATURITY" with respect to the Prepaid Cash
Flows means, as at the payment date for the determination of the Reinvestment
Rate, the number of years obtained by dividing the then Remaining Dollar-years
of such Prepaid Cash Flows by the principal amount of the prepayment. The term
"REMAINING DOLLAR-YEARS" of the Prepaid Cash Flows means the product obtained by
(i) multiplying (A) the principal portion of each Prepaid Cash Flow (including
payment at final maturity), by (B) the number of years (calculated to the
nearest one-twelfth) between the time of determination and the date of such
Prepaid Cash Flow, and (ii) totaling all the products obtained in the
computations described in clause (i).
"MATERIAL PLAN" shall have the meaning as defined in SS.6.1.
"MAXIMUM PRINCIPAL AMOUNT" shall mean the sum of (i) $65,000,000, plus
(ii) any principal amount in excess thereof agreed to in writing by the holders
of the Notes, plus (iii) any principal amount in excess thereof; PROVIDED, that,
at the time of any increase in the amount of the commitment of the Banks under
the Revolving Credit Agreement, the Agent shall have received a certificate or
certificates of the Chief Financial Officer of the Company and an authorized
officer of each holder of the Notes, in each case, certifying that on the date
of such increase and after giving effect thereto and, in the case of clause (B)
below, after giving effect to the treatment of the maximum aggregate amount of
the commitment as so increased as having been incurred as Indebtedness for
Borrowed Money on the last day of the calendar month then most recently ended
and, in the case of any certificate delivered by any holder of the Notes, to the
knowledge of such holder, (A) there does not exist any Default or Event of
Default under clauses (a), (b), (c), (n), (o), (p) or (q) of SS.6.1 as in effect
on thE Closing Date or under SS.5.7, SS.5.8, SS.5.9, SS.5.10, SS.5.11 (but only
to the extent such DEfault or Event of Default under SS.5.11 relates to a Lien
on property of the Company or any RestricteD Subsidiary with a fair market value
in excess of $1,000,000), SS.5.12, SS.5.13 or SS.5.18 As in effect on the
Closing Date and (B) the ratio of Indebtedness for Borrowed Money (as defined on
the Closing Date) of the Company and its Restricted Subsidiaries to Consolidated
Adjusted Net Worth (as defined on the Closing Date) for the calendar month then
most recently ended does not exceed 6.5 to 1.
"MINORITY INTERESTS" shall mean any shares of stock, partnership
interests, membership interests or other equity interests of any class of a
Restricted Subsidiary (other than directors' qualifying shares as required by
law) that are not owned by the Company and/or one or more of its Restricted
Subsidiaries. Minority Interests shall be valued by valuing Minority Interests
constituting preferred stock at the voluntary or involuntary liquidating value
of such preferred stock, whichever is greater, by valuing Minority Interests
constituting common stock at the book value of the capital and surplus
applicable thereto adjusted, if necessary, to reflect any changes from the book
value of such common stock required by the foregoing method of valuing Minority
Interests in preferred stock, and by valuing Minority Interests constituting
partnership or limited liability company membership interests at the book value
of such interest.
"MOODY'S" shall mean Moody's Investors Service, Inc.
"MULTIEMPLOYER PLAN" shall have the same meaning as in ERISA.
"NET INCOME AVAILABLE FOR FIXED CHARGES" for any period shall mean the
sum of (i) Consolidated Net Income during such period plus (to the extent
deducted in determining Consolidated Net Income), (ii) all provisions for any
Federal, state or other income taxes made by the Company and its Restricted
Subsidiaries during such period and (iii) Fixed Charges of the Company and its
Restricted Subsidiaries during such period.
"NOTES" shall have the meaning as defined in SS.1.1.
"OPERATING MARGIN" shall mean as of the date of any determination
thereof the sum of the pretax net operating income of the Company and its
Restricted Subsidiaries plus amortization of intangible assets of the Company
and its Restricted Subsidiaries divided by the total revenues of the Company and
its Restricted Subsidiaries, in each case, determined on a consolidated basis in
accordance with GAAP.
"PBGC" shall have the meaning as defined in SS.6.1.
"PERSON" shall mean an individual, partnership, corporation, limited
liability company, trust or unincorporated organization, and a government agency
or political subdivision thereof.
"PLAN" means a "pension plan" as such term is defined in ERISA,
established or maintained by the Company or any ERISA Affiliate or as to which
the Company or any ERISA Affiliate contributed or is a member or otherwise may
have any liability.
"PLEDGED COLLATERAL" shall have the meaning as defined in the Company
Security Agreement or in the Subsidiary Security Agreement, as the context may
require.
"PURCHASER" shall have the meaning as defined in SS.1.1.
"RECEIVABLES" shall mean all accounts receivable, receivables, contract
rights, controls, instruments, notes, drafts, bills, acceptances, documents,
chattel paper, general intangibles and other forms of obligations owing to a
Person.
"RENTALS" shall mean and include as of the date of any determination
thereof all fixed payments
(including as such all payments which the lessee is obligated to make to the
lessor on termination of the lease or surrender of the property) payable by the
Company or a Restricted Subsidiary, as lessee or sublessee under a lease of real
or personal property, but shall be exclusive of any amounts required to be paid
by the Company or a Restricted Subsidiary (whether or not designated as rents or
additional rents) on account of maintenance, repairs, insurance, taxes and
similar charges. Fixed rents under any so-called "percentage leases" shall be
computed solely on the basis of the minimum rents, if any, required to be paid
by the lessee regardless of sales volume or gross revenues.
"REPORTABLE EVENT" shall have the same meaning as in ERISA.
"RESTRICTED INVESTMENTS" shall mean all Investments other than the
Investments permitted by paragraphs (a) through (f), both inclusive, of SS.5.18.
"RESTRICTED SUBSIDIARY" shall mean the Insurance Subsidiary, if any,
and any other Subsidiary (i) which is organized under the laws of the United
States or any State thereof; (ii) which conducts substantially all of its
business and has substantially all of its assets within the United States; and
(iii) of which 100% (by number of votes) of the Voting Stock is owned by the
Company and/or one or more Restricted Subsidiaries.
"REVOLVING CREDIT AGREEMENT" shall mean that certain Amended and
Restated Revolving Credit Agreement dated as of June 30, 1997 among the Company,
the Agent and the Banks, as the same may from time to time be amended, restated,
modified, supplemented or waived pursuant to the terms thereof.
"REVOLVING CREDIT NOTES" shall mean the borrowings pursuant to the
Revolving Credit Agreement, whether or not such borrowings are evidenced by
promissory notes and as the same may from time to time be amended or restated
pursuant to the terms thereof and any notes executed in replacement thereof, in
a maximum aggregate principal amount of borrowings at any one time outstanding
not to exceed the Maximum Principal Amount.
"S&P" shall mean Standard & Poor's Ratings Services Group, a division
of The McGraw-Hill Companies, Inc.
"SECURITY" shall have the same meaning as in Section 2(a) (1) of the
Securities Act of 1933, as amended.
"SECURITY TRUSTEE" shall mean Harris Trust and Savings Bank, an
Illinois banking corporation, and its successors and assigns under the Company
Security Agreement and the Subsidiary Security Agreement.
"SENIOR DEBT" shall mean (i) the Senior Notes, (ii) the Voyager Note,
(iii) all other Indebtedness for Borrowed Money of the Company which is not
expressed to be subordinate or junior to any other Indebtedness of the Company
and (iv) all Indebtedness for Borrowed Money of Restricted Subsidiaries (other
than the Subsidiary Senior Subordinated Guaranty Agreement and the Subsidiary
Senior Guaranty Agreement).
"SENIOR INDEBTEDNESS" shall have the meaning as defined in SS.9.
"SENIOR NOTES" shall mean the Notes and the Revolving Credit Notes
"SENIOR SUBORDINATED NOTE AGREEMENT" shall mean the Note Agreement
dated as of June 30, 1997 between the Company and the note purchaser named
therein, as the same may be amended, restated, modified, supplemented or waived
pursuant to the terms thereof.
"SENIOR SUBORDINATED DEBT" shall mean (i) the Senior Subordinated Notes
and (ii) all other unsecured Indebtedness for Borrowed Money of the Company
which (A) pursuant to its terms matures on a date later than the stated maturity
date of the Senior Notes and (B) contains or has applicable thereto
subordination provisions substantially in the form set forth in Exhibit G hereto
or such other provisions as may be approved in writing by the holders of all of
the outstanding Notes, Revolving Credit Notes and Senior Subordinated Notes
(exclusive of any Notes, Revolving Credit Notes and Senior Subordinated Notes
held by a Subsidiary or other Affiliate).
"SENIOR SUBORDINATED NOTES" shall mean the Senior Subordinated Secured
Notes due June 30, 2004 issued pursuant to the Senior Subordinated Note
Agreement, as such Notes may from time to time be amended or restated pursuant
to the terms thereof and of the Senior Subordinated Note Agreement and any notes
executed in replacement thereof.
The term "SUBSIDIARY" shall mean, as to any particular parent
corporation, any corporation, partnership, limited liability company or other
entity of which more than 50% (by number of votes or other
similar decision-making authority) of the Voting Stock shall be owned by such
parent corporation and/or one or more corporations, partnerships, limited
liability companies or other entities which are themselves subsidiaries of such
parent corporation. The term "SUBSIDIARY" shall mean a subsidiary, directly or
indirectly, of the Company.
"SUBSIDIARY SENIOR GUARANTY AGREEMENT" shall have the meaning set
forth in SS.1.2.
"SUBSIDIARY SENIOR SUBORDINATED GUARANTY AGREEMENT" shall mean that
certain Amended and Restated Guaranty Agreement dated as of June 30, 1997 of
each Restricted Subsidiary (other than the Insurance Subsidiary) for the benefit
of the holders of the Senior Subordinated Notes, as the same may from time to
time be amended, restated, modified, supplemented or waived pursuant to the
terms thereof.
"SUBSIDIARY SECURITY AGREEMENT" shall have the meaning as defined in
SS.1.2.
"TRIGGER DATE" shall mean the last day of the fiscal quarter of the
Company occurring after the Closing Date in which the Company has maintained (i)
a Consolidated Tangible Net Worth in excess of $42,000,000 throughout such
fiscal quarter and (ii) an Operating Margin in excess of 25% for the four
consecutive fiscal quarter period ending on such date.
"UNFUNDED VESTED LIABILITIES" means, with respect to any Plan at any
time, the amount (if any) by which the present value of all vested
nonforfeitable accrued benefits under such Plan exceeds the fair market value of
all Plan assets allocable to such benefits, all determined as of the then most
recent valuation date for such Plan, but only to the extent that such excess
represents a potential liability of the Company or any ERISA Affiliate to the
PBGC or the Plan under Title IV of ERISA.
"UNRESTRICTED SUBSIDIARY" shall mean any Subsidiary which is
not a Restricted Subsidiary.
"UNSECURED RECEIVABLES" shall have the meaning as defined in the
Subsidiary Security Agreement.
"VOTING STOCK" shall mean Securities of any class or classes, the
holders of which are ordinarily, in the absence of contingencies, entitled to
elect a majority of the corporate directors (or Persons performing similar
functions).
"VOYAGER NOTE" shall mean the 10% Senior Debenture of the Company,
dated October 23, 1989, payable to Voyager Life Insurance Company, without
taking into account any amendment thereof other than any amendment which extends
the maturity date thereof.
"WEINGARTEN LIEN" shall mean the Lien of Weingarten Realty Investors as
in effect on the Closing Date and as reflected on the UCC-1 financing statement
filed with the Secretary of State of the State of Texas on August 21, 1989
against World Finance Corporation of Texas under document number 189822 and
continued by the UCC-3 financing statement filed with the Secretary of State of
the State of Texas on July 15, 1994 under document number 685105.
.SECTION 8.2. 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, the same shall be done in accordance
with GAAP, to the extent applicable, except where such principles are
inconsistent with the requirements of this Agreement.
.SECTION 8.3. DIRECTLY OR INDIRECTLY;. Where any provision in this
Agreement refers to action to be taken by any Person, or which such Person is
prohibited from taking, such provision shall be applicable whether the action in
question is taken directly or indirectly by such Person.
.SECTION 9. MISCELLANEOUS;.
.SECTION 9.1. REGISTERED NOTES;. The Company shall cause to be kept
at its principal office a register for the registration and transfer of the
Notes (hereinafter called the "NOTE REGISTER"), and the Company will register or
transfer or cause to be registered or transferred, as hereinafter provided and
under such reasonable regulations as it may prescribe, any Note issued pursuant
to this Agreement.
At any time and from time to time the registered holder of any Note
which has been duly registered as hereinabove provided may transfer such Note
upon surrender thereof at the principal office of the Company duly endorsed or
accompanied by a written instrument of transfer duly executed by the registered
holder of such Note or its attorney duly authorized in writing.
The Person in whose name any registered Note shall be registered shall
be deemed and treated as the owner and holder thereof for all purposes of this
Agreement. Payment of or on account of the principal,
premium, if any, and interest on any registered Note shall be made to or upon
the written order of such registered holder
.SECTION 9.2. EXCHANGE OF NOTES;. At any time, and from time to
time, upon not less than ten days' notice to that effect given by the holder of
any Note initially delivered or of any Note substituted therefor pursuant to
SS.9.1, this SS.9.2 or SS.9.3, and, upon surrendEr of such Note at its office,
the Company will deliver in exchange therefor, without expense to the holder,
except as set forth below, Notes for the same aggregate principal amount as the
then unpaid principal amount of the Note so surrendered, in the denomination of
the lesser of the then outstanding principal amount of the Note so surrendered
or $1,000,000 or any amount in excess thereof as such holder shall specify, in
each such case, dated as of the date to which interest has been paid on the Note
so surrendered or, if such surrender is prior to the payment of any interest
thereon, then dated as of the date of issue, payable to such Person or Persons,
or order, as may be designated by such holder, and otherwise of the same form
and tenor as the Notes so surrendered for exchange. The Company may require the
payment of a sum sufficient to cover any stamp tax or governmental charge
imposed upon such exchange or transfer.
.SECTION 9.3. LOSS, THEFT, ETC. OF NOTES;. Upon receipt of evidence
reasonably satisfactory to the Company of the loss, theft, mutilation or
destruction of any Note, and in the case of any such loss, theft or destruction
upon delivery of a bond of indemnity in such form and amount as shall be
reasonably satisfactory to the Company, or in the event of such mutilation upon
surrender and cancellation of the Note, the Company will make and deliver
without expense to the holder thereof, a new Note, of like tenor, in lieu of
such lost, stolen, destroyed or mutilated Note. If you or any subsequent
Institutional Holder is the owner of any such lost, stolen or destroyed Note,
then the affidavit of an authorized officer of such owner, setting forth the
fact of loss, theft or destruction and of its ownership of the Note at the time
of such loss, theft or destruction shall be accepted as satisfactory evidence
thereof and no further indemnity shall be required as a condition to the
execution and delivery of a new Note other than the unsecured written agreement
of such owner to indemnify the Company.
.SECTION 9.4. EXPENSES, STAMP TAX INDEMNITY;. Whether or not the
transactions herein contemplated shall be consummated, the Company agrees to pay
directly all of your out-of-pocket expenses in connection with the preparation,
execution and delivery of this Agreement, the Company Security Agreement, the
Subsidiary Security Agreement and the Subsidiary Senior Guaranty Agreement and
the transactions contemplated hereby and thereby, including but not limited to:
(a) the cost of reproducing this Agreement, the Company Security
Agreement, the Subsidiary Security Agreement, the Subsidiary Senior Guaranty
Agreement and the Notes;
(b) the reasonable fees and disbursements of Chapman and Cutler,
your special counsel;
(c) the reasonable fees and disbursements of the local counsels
listed in SS.4.1(F);
(d) all reasonable fees, costs and other expenses of the Security
Trustee, as trustee under the Company Security Agreement and the Subsidiary
Security Agreement;
(e) all recording and filing fees and stamp taxes in connection
with the recordation or filing and re-recordation or re-filing of the Company
Security Agreement and the Subsidiary Security Agreement and financing and
continuation statements and other notices of either thereof necessary to
maintain the first perfected lien on the Collateral under the Company Security
Agreement and the Subsidiary Security Agreement;
(f) the cost of conducting all reasonable Uniform Commercial Code
and tax lien searches; and
(g) all fees, expenses and disbursements of the Security Trustee
and the holders of the Notes (including without limitation, reasonable
attorneys' fees and court costs) relating to any supplemental indentures,
amendments, waivers or consents pursuant to the provisions of this Agreement,
the Company Security Agreement, the Subsidiary Security Agreement, the
Subsidiary Senior Guaranty Agreement or the Notes (whether or not the same is
actually executed or delivered), including without limitation, the fees,
expenses and disbursements of the holders of the Notes following the occurrence
and during the continuance of a Default or an Event of Default or
in connection with any supplemental indenture, amendment, waiver or consent
resulting from any work-out, restructuring or similar proceeding relating to the
performance or non-performance by the Company or any Restricted Subsidiary of
its obligations under the provisions of this Agreement, the Company Security
Agreement, the Subsidiary Security Agreement, the Subsidiary Senior Guaranty
Agreement or the Notes as the result of any potential Default or Event of
Default or incurred in connection with the enforcement of rights hereunder or
under the Company Security Agreement, the Subsidiary Security Agreement, the
Subsidiary Senior Guaranty Agreement or the Notes as a result of any potential
Default or Event of Default, whether or not a lawsuit is filed in connection
therewith.
Except as set forth in SS.9.2, the Company also agrees that it will pay
and save yoU harmless against any and all liability with respect to stamp and
other taxes, if any, which may be payable or which may be determined to be
payable in connection with the execution and delivery of this Agreement, the
Company Security Agreement, the Subsidiary Security Agreement, the Subsidiary
Senior Guaranty Agreement or the Notes, whether or not any Notes are then
outstanding. Except as set forth in SS.9.2, the Company agrees to protect and
indemnify yoU against any liability for any and all brokerage fees and
commissions payable or claimed to be payable to any Person in connection with
the transactions contemplated by this Agreement.
.'SECTION 9.5. POWERS AND RIGHTS NOT WAIVED; REMEDIES CUMULATIVE';.
No delay or failure on the part of the holder of any Note in the exercise of any
power or right shall operate as a waiver thereof; nor shall any single or
partial exercise of the same preclude any other or further exercise thereof, or
the exercise of any other power or right, and the rights and remedies of the
holder of any Note are cumulative to and are not exclusive of any rights or
remedies any such holder would otherwise have.
.SECTION 9.6. NOTICES;. All communications provided for hereunder
shall be in writing and, if to you, delivered or mailed by personal delivery,
prepaid overnight mail or courier service or registered or certified mail, in
each case, addressed to you at your address appearing on Schedule I to this
Agreement or such other address as you or the subsequent holder of any Note
initially issued to you, may designate to the Company in writing, and if to the
Company, delivered or mailed by personal delivery, prepaid overnight mail or
courier service or registered or certified mail to the Company at 108 Frederick
Street, Greenville, South Carolina 29607-2532, Attention: Chief Financial
Officer or to such other address as the Company may in writing designate to you
or to a subsequent holder of the Note initially issued to you.
.SECTION 9.7. SUCCESSORS AND ASSIGNS;. This Agreement shall be
binding upon the Company and its successors and assigns and shall inure to your
benefit and to the benefit of your successors and assigns, including each
successive holder or holders of any Notes.
.SECTION 9.8. SURVIVAL OF COVENANTS AND REPRESENTATIONS;. All
covenants, representations and warranties made by the Company and the Restricted
Subsidiaries herein, in the Company Security Agreement, the Subsidiary Security
Agreement, and the Subsidiary Senior Guaranty Agreement and in any certificates
delivered pursuant hereto, whether or not in connection with the Closing Date,
shall survive the closing and the delivery of this Agreement and the Notes.
.SECTION 9.9. SEVERABILITY;. Should any part of this Agreement for
any reason be declared invalid, such decision shall not affect the validity of
any remaining portion, which remaining portion shall remain in force and effect
as if this Agreement had been executed with the invalid portion thereof
eliminated and it is hereby declared the intention of the parties hereto that
they would have executed the remaining portion of this Agreement without
including therein any such part, parts, or portion which may, for any reason, be
hereafter declared invalid.
.SECTION 9.10. GOVERNING LAW;. THIS AGREEMENT AND THE NOTES ISSUED
AND SOLD HEREUNDER SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH SOUTH
CAROLINA LAW.
.SECTION 9.11. CAPTIONS;. The descriptive headings of the various
Sections or parts of this Agreement are for convenience only and shall not
affect the meaning or construction of any of the provisions hereof.
The execution hereof by you shall constitute a contract between us for
the uses and purposes hereinabove set forth, and this Agreement may be executed
in any number of counterparts, each executed counterpart constituting an
original but all together only one agreement.
WORLD ACCEPTANCE CORPORATION
By /s/ A. Alexander McLean, III
Its Executive Vice President
Accepted as of June 30, 1997.
JEFFERSON-PILOT LIFE INSURANCE COMPANY
By /S/ [SIGNATURE ILLEGIBLE]
Its Second Vice President
SCHEDULE I (TO NOTE AGREEMENT)
NAME AND ADDRESSES OF PURCHASERS CURRENTLY OUTSTANDING
PRINCIPAL MUTUAL LIFE INSURANCE COMPANY PRINCIPAL AMOUNT OF ORIGINAL NOTES
$9,000,000
711 High Street
Des Moines, Iowa 50392-0800
Attention: Investment Securities,
Telefacsimile: (515) 248-2490
Confirmation: (515) 248-3495
Payments
All payments on or in respect of the Notes to be by bank wire transfer of
Federal or other immediately available funds (identifying each payment as "World
Acceptance Corporation, 8.5% Senior Secured Note due December 1, 1999, Bond No.
1-B-24450, principal, premium or interest") to:
ABA #073000228
Norwest Bank Iowa, N.A.
7th and Walnut Streets
Des Moines, Iowa 50309
for credit to Principal Mutual Life Insurance Company
Account No. 014752
OBI PFGSE (S) B24450() World Acceptance Corp. Senior
Secured Notes due 1999
Notices
All notices with respect to payments to:
Principal Mutual Life Insurance Company
711 High Street
Des Moines, Iowa 50392-0960
Attention: Investment Accounting & Treasury
Securities
Telefacsimile: (515) 248-2643
Confirmation: (515) 248-8213
All other notices and communications to be addressed
as first provided above.
Name of Nominee in which Notes are to be issued: None
Tax Identification No.: 42 0127290
NAME AND ADDRESSES OF PURCHASERS CURRENTLY OUTSTANDING
JEFFERSON-PILOT LIFE INSURANCE COMPANY PRINCIPAL AMOUNT OF ORIGINAL NOTES
$3,000,000
P. O. Box 21008
Greensboro, North Carolina 27420
Attention: Securities Administration - 3630
Telefacsimile: (910) 691-3025
Payments
All payments on or in respect of the Notes to be by bank wire transfer of
Federal or other immediately available funds (identifying each payment as "World
Acceptance Corporation, 8.5% Senior Secured Note due December 1, 1999, PPN
981420 A@ 1, principal, interest or premium") to:
Jefferson-Pilot Life Insurance Company
c/o The Bank of New York
ABA #021 000 018 BNF: IOC566
Attention: P&I Department
Notices
All notices of payment on or in respect of the Notes and written confirmation of
each such payment, to be addressed to:
Jefferson-Pilot Life Insurance Company
c/o The Bank of New York
P. O. Box 19266
Newark, NJ 07195
Attention: P&I Department
with duplicate notice to Jefferson-Pilot Life
Insurance Company at the address first provided above.
All notices and communications other than those in
respect to payments to be addressed as first provided
above.
Name of Nominee in which Notes are to be issued: None
Taxpayer I.D. Number: 56-0359860
Schedule II to Senior Subordinated
Note Agreement dated June 30, 1997
Description of Liens
Lien of Weingarten Realty Investors on certain property of World Finance
Corporation of Texas, evidenced by UCC-1 financing statement No. 189822, filed
August 21, 1989 in the Office of the Texas Secretary of State and continued by
UCC-3 continuation statement No. 685105, filed July 15, 1994 in the Office of
the Texas Secretary of State.
Liens consisting of immaterial utility easements and similar immaterial
encumbrances on the real property of World Acceptance Corporation located at 108
Frederick Street, Greenville, South Carolina 29607. See Schedule B to owner's
title policy attached.
EXHIBIT A (TO NOTE AGREEMENT)
WORLD ACCEPTANCE CORPORATION
8.5% Senior Secured Note
Due December 1, 1999
No. R - 19__
________________,
$
WORLD ACCEPTANCE CORPORATION, a South Carolina corporation (the
"COMPANY"), for value received, hereby promises to pay to
or registered assigns
on the first day of December, 1999
the principal amount of
DOLLARS ($ )
and to pay interest (computed on the basis of a 360-day year of twelve 30-day
months) on the principal amount from time to time remaining unpaid hereon at the
rate of 8.5% per annum from the date hereof until maturity, payable semiannually
on the first of each June and December in each year commencing June 1, 1993, and
at maturity. The Company agrees to pay interest on overdue principal (including
any overdue required or optional prepayment of principal) and premium, if any,
and (to the extent legally enforceable) on any overdue installment of interest,
at the rate of 10.5% per annum after maturity, whether by acceleration or
otherwise, until paid. Both the principal hereof, premium and interest hereon
are payable at the principal office of the Company in Greenville, South Carolina
in coin or currency of the United States of America which at the time of payment
shall be legal tender for the payment of public and private debts.
This Note is one of the 8.5% Senior Secured Notes due December 1, 1999
(the "NOTES") of the Company in the original aggregate principal amount of
$20,000,000 issued or to be issued under and pursuant to the terms and
provisions of the separate Amended and Restated Note Agreements dated as of June
30, 1997, as the same may from time to time be amended pursuant to the terms
thereof (the "NOTE Agreements"), entered into by the Company with the original
purchasers therein referred to and this Note and the holder hereof are entitled
equally and ratably with the holders of all other Notes outstanding under the
Note Agreements to all the benefits and security provided for thereby or
referred to therein. Reference is hereby made to the Note Agreements for a
statement of such rights and benefits.
This Note and the other Notes outstanding under the Note Agreements may
be declared due prior to their expressed maturity dates and certain prepayments
are required to be made thereon, all in the events, on the terms and in the
manner and amounts as provided in the Note Agreements and the Company Security
Agreement (as hereinafter defined).
The Notes are not subject to prepayment or redemption at the option of
the Company prior to their expressed maturity dates except on the terms and
conditions and in the amounts and with the premium, if any, set forth in the
Note Agreements.
The Notes and the Revolving Credit Notes (as such term is defined in
the Company Security Agreement) are equally and ratably secured by the Amended
and Restated Security Agreement, Pledge and Indenture of Trust dated as of June
30, 1997 between the Company and Harris Trust and Savings Bank, as security
trustee (the "SECURITY TRUSTEE"), as the same may from time to time be
amended, restated, modified, supplemented or waived pursuant to the terms
thereof (the "COMPANY SECURITY AGREEMENT") and by the Amended and Restated
Security Agreement, Pledge and Indenture of Trust dated as of June 30, 1997
between each Restricted Subsidiary and the Security Trustee, as the same may
from time to time be amended, restated, modified, supplemented or waived
pursuant to the terms thereof (the "SUBSIDIARY SECURITY AGREEMENT"), to which
Company Security Agreement, Subsidiary Security Agreement and all security
agreements supplementary thereto, reference is hereby made for the statement
thereof, including a description of the collateral, the nature and extent of the
security and the rights of the holder or holders of the Notes and of the
Security Trustee in respect thereof. The obligations of the Company under the
Notes, the Revolving Credit Notes, the Note Agreements, Revolving Credit
Agreements and the Company Security Agreement are guaranteed pursuant to that
certain Amended and Restated Guaranty Agreement dated as of June 30, 1997 of
each Restricted Subsidiary, as the same may from time to time be amended,
modified, supplemented, or waived pursuant to the terms thereof.
This Note is registered on the books of the Company and is transferable
only by surrender thereof at the principal office of the Company duly endorsed
or accompanied by a written instrument of transfer duly executed by the
registered holder of this Note or its attorney duly authorized in writing.
Payment of or on account of principal, premium, if any, and interest on this
Note shall be made only to or upon the order in writing of the registered
holder.
WORLD ACCEPTANCE CORPORATION
By
Its
[EXHIBIT B - FORM OF AMENDED AND RESTATED SECURITY AGREEMENT, PLEDGE AND
INDENTURE OF TRUST OMITTED]
EXHIBIT C (TO NOTE AGREEMENT)
REPRESENTATIONS AND WARRANTIES
The Company represents and warrants to you as follows:
1. SUBSIDIARIES. Annex A attached hereto states the name of each of the
Company's Subsidiaries existing on the Closing Date, its jurisdiction of
incorporation and the percentage of its Voting Stock owned by the Company and/or
its Subsidiaries. Those Subsidiaries listed in Section 1 of said Annex A
constitute Restricted Subsidiaries on the Closing Date. The Company has good and
marketable title to all of the shares of the stock, partnership interest,
membership interest or other applicable equity interest of each Subsidiary, free
and clear in each case of any Lien other than the Lien of the Company Security
Agreement and the Subsidiary Security Agreement. All such shares, partnership
interests, membership interests and other equity interests have been duly
authorized and validly issued and are fully paid and non-assessable.
2. ORGANIZATION AND AUTHORITY. The Company, and each Subsidiary,
(a) is a corporation, partnership, limited liability company or other
entity duly organized, validly existing and in good standing under the laws of
its jurisdiction of incorporation or organization;
(b) has all requisite corporate or other applicable power and
authority and all necessary licenses and permits to own and operate its
properties and to carry on its business as now conducted; and
(c) is duly licensed or qualified and is in good standing as a
foreign corporation, partnership, limited liability company or other entity in
each jurisdiction where the nature of the business conducted or the nature of
the property owned or leased by it makes such licensing or qualification
necessary.
3. FINANCIAL STATEMENTS. (a) The consolidated and consolidating
balance sheets of the Company and its Subsidiaries as of March 31 in each of the
years 1993 to 1997, both inclusive, and the statements of income and retained
earnings and of cash flows for the fiscal year ended on said date accompanied by
a report thereon containing an opinion unqualified as to scope limitations
imposed by the Company and otherwise without qualification except as therein
noted, by KPMG Peat Marwick, were prepared in accordance with GAAP consistently
applied except as therein noted, are correct and complete in all material
respects and present fairly the financial position of the Company and its
Subsidiaries as of such date and the results of their operations for such
period.
(b) Since March 31, 1997, there has been no change in the condition,
financial or otherwise, of the Company and its Subsidiaries as shown on the
consolidated balance sheet as of such date except changes in the ordinary course
of business, none of which individually or in the aggregate have been materially
adverse.
4. INDEBTEDNESS. Annex B attached hereto correctly describes all
Indebtedness for Borrowed Money of the Company and its Restricted Subsidiaries
outstanding on the Closing Date.
5. FULL DISCLOSURE. Neither the financial statements referred to in
paragraph 3 hereof, nor the Agreements, the Company Security Agreement, the
Subsidiary Security Agreement, the Subsidiary Senior Guaranty Agreement nor any
other written statement furnished by the Company or any Restricted Subsidiary to
you in connection with the negotiation of the sale of the Original Notes or the
exchange of the Original Notes for the Notes, contain any untrue statement of a
material fact or omit a material fact necessary to make the statements contained
therein or herein not misleading. There is no fact peculiar to the Company or
its Subsidiaries which the Company has not disclosed to you in writing which,
individually or in the aggregate, materially affects adversely or, so far as the
Company can now foresee, will materially affect adversely the properties,
business, prospects, profits or condition (financial or otherwise) of the
Company and its Subsidiaries.
6. PENDING LITIGATION. Except for the litigation described on Annex
C attached hereto, there are no proceedings pending or, to the knowledge of the
Company threatened, against the Company or any Subsidiary in any court or before
any governmental authority or arbitration board or tribunal which involve the
possibility of, individually or in the aggregate, materially and adversely
affecting the properties, business, prospects, profits or condition (financial
or otherwise) of the Company and its Subsidiaries.
7. TITLE TO PROPERTIES. The Company and each Subsidiary has good and
marketable title in fee simple (or its equivalent under applicable law) to all
the real property and has good title to all the other property (including, but
not limited to, the Collateral) it purports to own, including that reflected in
the most recent balance sheet referred to in paragraph 3 except as sold or
otherwise disposed of in the ordinary course of business and except for liens
disclosed in notes to the financial statements referred to in paragraph 3 hereof
or otherwise permitted by the Agreements, the Company Security Agreement or the
Subsidiary Security Agreement.
8. PATENTS AND TRADEMARKS. The Company and each Subsidiary owns or
possesses all the patents, trademarks, trade names, service marks, copyright,
licenses and rights with respect to the foregoing necessary for the present and
planned future conduct of its business, without any known conflict with the
rights of others which failure to own or possess or which conflict would,
individually or in the aggregate, materially and adversely affect the
properties, business, prospects, profits or condition (financial or otherwise)
of the Company and its Subsidiaries.
9. SALE IS LEGAL AND AUTHORIZED. The sale of the Original Notes, the
exchange of the Original Notes for the Notes and compliance by the Company with
all of the provisions of the Agreement, the Notes and the Company Security
Agreement--
(a) are within the corporate powers of the Company and, on and as of
the Closing Date, have been duly authorized by proper corporate action on the
part of the Company;
(b) assuming the accuracy of the Purchasers representations contained
in SS.3.2, will not violate any provisions of any law;
(c) will not violate any order of any court or governmental authority
or agency and will not conflict with or result in any breach of any of the
terms, conditions or provisions of, or constitute a default under the Articles
of Incorporation or By-laws of the Company or any indenture or other agreement
or instrument to which the Company is a party or by which it may be bound or
result in the imposition of any liens or encumbrances on any property of the
Company; and
(d) have been duly authorized on and as of the Closing Date by all
necessary corporate action on the part of the Company, have been duly executed
on the Closing Date by authorized officers of the Company and delivered on the
Closing Date and constitute the legal, valid and binding contracts and
agreements of the Company enforceable in accordance with their respective terms,
except as enforceability may be limited by bankruptcy, insolvency, fraudulent
conveyance or similar laws affecting creditors' rights generally and general
principles of equity (regardless of whether the application of such principles
is considered in a proceeding in equity or at law) and to the discretion of the
court before which any proceedings may be brought.
10. NO DEFAULTS. No Default or Event of Default has occurred and is
continuing. The Company is not in default in the payment of principal or
interest on any Indebtedness for Borrowed Money and is not in default under any
instrument or instruments or agreements under and subject to which any
Indebtedness for Borrowed Money has been issued and no event has occurred and is
continuing under the provisions of any such instrument or agreement which with
the lapse of time or the giving of notice, or both, would constitute an event of
default thereunder.
11. GOVERNMENTAL CONSENT. No approval, consent or withholding of
objection on the part of any regulatory body, state, Federal or local, is
necessary in connection with the execution and delivery by the Company and each
Restricted Subsidiary of the Agreements, the Company Security Agreement, the
Subsidiary Security Agreement, the Subsidiary Senior Guaranty Agreement or the
Notes, as the case may be, or compliance by the Company and each Restricted
Subsidiary with any of the provisions of the Agreements, the Company Security
Agreement, the Subsidiary Security Agreement, the Subsidiary Senior Guaranty
Agreement or the Notes, as the case may be.
12. TAXES. As of the Closing Date, except as disclosed on Annex D
attached hereto, all tax returns required to be filed by the Company or any
Subsidiary in any jurisdiction have, in fact, been filed, and all taxes,
assessments, fees and other governmental charges upon the Company or any
Subsidiary or upon any of their respective properties, income or franchises,
which are shown to be due and payable in such returns have been paid. The
Company does not know of any proposed additional tax assessment against it
for which adequate provision in accordance with GAAP has not been made on its
accounts. The Federal income tax liability of the Company and its Subsidiaries
has been fully paid and satisfied for all taxable years up to and including the
taxable year ended December 31, 1993 and no material controversy in respect of
additional income taxes due since said date is pending or to the knowledge of
the Company threatened, except as disclosed on Annex D attached hereto. The
provisions for taxes on the books of the Company and each Subsidiary are
adequate in accordance with GAAP for all open years, and for its current fiscal
period.
13. USE OF PROCEEDS. The net proceeds from the sale of the Notes were
used to provide additional working capital and for other corporate purposes.
None of the transactions contemplated in the Agreements, the Company Security
Agreement, the Subsidiary Security Agreement or the Subsidiary Senior Guaranty
Agreement (including, without limitation thereof, the use of proceeds from the
issuance of the Notes) will violate or result in a violation of Section 7 of the
Securities Exchange Act of 1934, as amended, or any regulation issued pursuant
thereto, including, without limitation, Regulations G, T and X of the Board of
Governors of the Federal Reserve System, 12 C.F.R., Chapter II. Neither the
Company nor any Subsidiary owns or intends to carry or purchase any "MARGIN
STOCK" within the meaning of said Regulation G. None of the proceeds from the
sale of the Notes were or will be used to purchase, or refinance any borrowing,
the proceeds of which were used to purchase any "security" within the meaning of
the Securities Exchange Act of 1934, as amended.
14. PRIVATE OFFERING. Neither the Company, directly or indirectly,
nor any agent on its behalf has offered or will offer any of the Notes or any
similar Security or has solicited or will solicit an offer to acquire any of the
Notes or any similar Security from or has otherwise approached or negotiated or
will approach or negotiate in respect of the Notes or any similar Security with
any Person other than you and the other purchaser, each of whom was offered a
portion of the Notes at private sale for investment. Neither the Company,
directly or indirectly, nor any agent on its behalf has offered or will offer
the Notes or any similar Security or has solicited or will solicit an offer to
acquire the Notes or any similar Security from any Person so as to bring the
issuance and sale of the Notes within the provisions of Section 5 of the
Securities Act of 1933, as amended.
15. ERISA. The consummation of the transactions provided for in the
Agreements and compliance by the Company with the provisions thereof and the
Notes issued thereunder will not involve any prohibited transaction within the
meaning of ERISA or Section 4975 of the Internal Revenue Code of 1986, as
amended. Each Plan complies in all material respects with all applicable
statutes and governmental rules and regulations, and (a) no Reportable Event has
occurred and is continuing with respect to any Plan, (b) neither the Company nor
any ERISA Affiliate has withdrawn from any Plan or Multiemployer Plan or
instituted steps to do so, in each case, for which there is any withdrawal
liability (as described in Part 1 of Subtitle E of Title IV of ERISA), and (c)
no steps have been instituted to terminate any Plan. No condition exists or
event or transaction has occurred in connection with any Plan which,
individually or in the aggregate, could result in the incurrence by the Company
or any ERISA Affiliate of any material liability, fine or penalty. No Plan
maintained by the Company or any ERISA Affiliate, nor any trust created
thereunder, has incurred any "ACCUMULATED FUNDING DEFICIENCY" as defined in
Section 302 of ERISA nor does the present value of all benefits vested under all
Plans exceed, as of the last annual valuation date, the value of the assets of
the Plans allocable to such vested benefits. Neither the Company nor any ERISA
Affiliate has any contingent liability with respect to any post-retirement
"WELFARE BENEFIT PLAN" (as such term is defined in ERISA) except as has been
disclosed to the Purchaser.
16. COMPLIANCE WITH LAW. Neither the Company nor any Subsidiary (a)
is in violation of any law, ordinance, franchise, governmental rule or
regulation to which it is subject; or (b) has failed to obtain any license,
permit, franchise or other governmental authorization necessary to the ownership
of its property (including, but not limited to, the Collateral) or to the
conduct of its business, which violation or failure to obtain would,
individually or in the aggregate, materially adversely affect the business,
prospects, profits, properties or condition (financial or otherwise) of the
Company and its Subsidiaries, taken as a whole, or impair the ability of the
Company or any Restricted Subsidiary to perform its obligations contained in the
Agreements, the Company Security Agreement, the Subsidiary Security Agreement,
the Subsidiary Senior Guaranty Agreement or the Notes, as the case may be.
Neither the Company nor any Subsidiary is in
default with respect to any order of any court or governmental authority or
arbitration board or tribunal.
17. COMPLIANCE WITH ENVIRONMENTAL LAWS. The Company is not in
violation of any applicable Environmental Legal Requirement which violation
could, individually or in the aggregate, have a material adverse effect on the
business, prospects, profits, properties or condition (financial or otherwise)
of the Company and its Subsidiaries, taken as a whole. The Company does not know
of any liability or class of liability of the Company or any Subsidiary under
the Comprehensive Environmental Response, Compensation and Liability Act of
1980, as amended (42 U.S.C. Section 9601 ET SEQ.), or the Resource Conservation
and Recovery Act of 1976, as amended (42 U.S.C. Section 6901 ET SEQ.).
18. PERFECTION OF SECURITY INTEREST. On and as of the Closing Date,
financing statements or other notices with respect to the Company Security
Agreement and the Subsidiary Security Agreement have been filed for record or
recorded in all the public offices wherein such filing or recordation is
necessary to perfect the lien and security interest of the Security Trustee in
the Collateral under the Company Security Agreement and the Subsidiary Security
Agreement as against creditors of and purchasers from the Company and each
Restricted Subsidiary, and the Company Security Agreement and the Subsidiary
Security Agreement have created valid and perfected first priority liens on, and
security interests in, the right, title and interest of the Company and each
Restricted Subsidiary in and to the Collateral (other than the Unsecured
Receivables); PROVIDED, that during the existence of a Default or Event of
Default, the Company has agreed to deliver, or cause to be delivered, to the
Security Trustee possession of promissory notes evidencing the Unsecured
Receivables in order to create valid and perfected first priority liens on the
Unsecured Receivables), effective as against creditors of and purchasers from
the Company and each Restricted Subsidiary other than the Weingarten Lien.
19. COMPLIANCE BY RESTRICTED Subsidiaries. Compliance by each
Restricted Subsidiary with all of the provisions of the Subsidiary Security
Agreement and the Subsidiary Senior Guaranty Agreement--
(a) is within the corporate or other applicable powers of
such Restricted Subsidiary;
(b) will not violate any provisions of any law or any order of any
court or governmental authority or agency and will not conflict with or result
in any breach of any of the terms, conditions or provisions of, or constitute a
default under the charter, by-laws, certificate of limited partnership,
partnership agreement, articles of organization, operating agreement or other
applicable governing documents of such Restricted Subsidiary or any indenture or
other agreement or instrument to which such Restricted Subsidiary is a party or
by which it may be bound or result in the imposition of any Liens or
encumbrances on any property of such Restricted Subsidiary (other than as
contemplated by such Subsidiary Security Agreement); and
(c) has been duly authorized by proper corporate or other proper
action on the part of such Restricted Subsidiary (other than such action as has
already been taken, no action by the stockholders or other equity holders of
such Restricted Subsidiary being required by law, by the charter, by-laws,
certificate of limited partnership, partnership agreement, articles of
organization, operating agreement or other applicable governing documents of
such Restricted Subsidiary or otherwise), executed and delivered by such
Restricted Subsidiary and the Subsidiary Security Agreement and the Subsidiary
Senior Guaranty Agreement constitute the legal, valid and binding obligations,
contracts and agreements of such Restricted Subsidiary enforceable in accordance
with their respective terms, except as enforceability may be limited by
bankruptcy, insolvency, fraudulent conveyance or similar laws affecting
creditors' rights generally and general principles of equity (regardless of
whether the application of such principles is considered in a proceeding in
equity or at law) and to the discretion of the court before which any
proceedings may be brought.
ANNEX A TO EXHIBIT C
NAME OF SUBSIDIARY JURISDICTION OF PERCENTAGE OF VOTING STOCK OWNED BY THE COMPANY AND
INCORPORATION EACH OTHER SUBSIDIARY
World Acceptance Corporation of Alabama Alabama 100% (World Acceptance Corporation)
World Finance Corporation of Georgia Georgia 100% (World Acceptance Corporation)
World Finance Corporation of Illinois Illinois 100% (World Acceptance Corporation)
WFC Limited Partnership Texas 99% L.P. Interest (World Acceptance Corporation of
Oklahoma, Inc.)
1% G.P. Interest (WFC of South Carolina, Inc.)
World Finance Corporation of Louisiana Louisiana 100% (World Acceptance Corporation)
World Acceptance Corporation of Missouri Missouri 100% (World Acceptance Corporation)
World Finance Corporation of New Mexico New Mexico 100% (World Acceptance Corporation)
World Acceptance Corporation of Oklahoma, Inc. Oklahoma 100% (World Finance Corporation of Texas)
World Finance Corporation of South Carolina South Carolina 100% (World Acceptance Corporation)
WFC of South Carolina, Inc. South Carolina 100% (World Acceptance Corporation)
World Finance Corporation of Tennessee Tennessee 100% (World Acceptance Corporation)
World Finance Corporation of Texas Texas 100% (World Acceptance Corporation)
WAC Insurance Company, Ltd. British Virgin Islands 65% (World Acceptance Corporation)
2. SUBSIDIARIES (OTHER THAN RESTRICTED SUBSIDIARIES):
None
DESCRIPTION OF INDEBTEDNESS FOR BORROWED MONEY
Annex B to Exhibit C to Senior
Subordinated Note Agreement
dated June 30, 1997
Description of Indebtedness for Borrowed Money
CAPITALIZED TERMS USED HEREIN HAVE THE MEANINGS SET FORTH IN THE NOTE AGREEMENT
UNLESS OTHERWISE INDICATED.
Indebtedness of World Acceptance Corporation ("World") evidenced by this Senior
Note Agreement, the separate Senior Note Agreement with the other purchaser
named in Schedule I hereto, the Revolving Credit Agreement, the Subordinated
Note Agreement and all Notes issued pursuant to the above-listed agreements.
Indebtedness of each of World Finance Corporation of Alabama, World Finance
Corporation of Georgia, World Finance Corporation of Illinois, World Finance
Corporation of Louisiana, World Acceptance Corporation of Missouri, World
Finance Corporation of New Mexico, World Acceptance Corporation of Oklahoma,
Inc., World Finance Corporation of South Carolina, WFC of South Carolina, Inc.,
World Finance Corporation of Tennessee, World Finance Corporation of Texas and
WFC Limited Partnership, under the Subsidiary Senior Guaranty Agreement, the
Subsidiary Senior Subordinated Guaranty Agreement and the Subsidiary Security
Agreement.
Indebtedness evidenced by World's 10 Percent Senior Debenture in the principal
amount of $482,000, payable to Voyager Life Insurance Company.
Indebtedness evidenced by World Finance Corporation of Georgia's 8% Subordinated
Promissory Note(s) in the principal amount of $9,924,000, payable to World
Finance Corporation of Texas.
Indebtedness evidenced by World Finance Corporation of Louisiana's 8%
Subordinated Promissory Note(s) in the principal amount of $3,158,000, payable
to World Finance Corporation of Texas.
Indebtedness evidenced by World Acceptance Corporation of Oklahoma's 8%
Subordinated Promissory Note(s) in the principal amount of $5,220,000, payable
to World Finance Corporation of Texas.
Indebtedness evidenced by World Finance Corporation of South Carolina's 8%
Subordinated Promissory Note(s) in the principal amount of $23,894,000, payable
to World Finance Corporation of Texas.
Indebtedness evidenced by WFC of South Carolina, Inc.'s 8% Subordinated
Promissory Note(s) in the principal amount of $295,000, payable to World Finance
Corporation of Texas.
Indebtedness evidenced by World Finance Corporation of Tennessee's 8%
Subordinated Promissory Note(s) in the principal amount of $4,268,000, payable
to World Finance Corporation of Texas.
ANNEX B
(to Exhibit C)
ANNEX C TO EXHIBIT C
LITIGATION
Annex C to Exhibit C to Senior
Subordinated Note Agreement
dated June 30, 1997
Litigation
(1) World Acceptance Corporation and World Finance Corporation of Georgia are
named as co-defendants with 46 other finance companies, merchants and insurance
companies in a class action lawsuit, 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 UCC-1 financing statements
to perfect the lenders' security interest in 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 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. On June 23, 1997, Judge Clemon
issued a Class Certification Order that certified a nationwide class of
plaintiffs who, on or after April 18, 1991, were charged a non-filing insurance
fee. The order applies only to the liability aspects of the case.
(2) The Company has been named as a defendant in an action, Turner v. World
Acceptance Corp., pending in District Court for the Fourteenth Judicial
District, Tulsa County, Oklahoma (No. CJ-97-1921). The action was commenced
against the Company on May 20, 1997, names numerous other consumer finance
companies as defendants, and seeks certification as a statewide class action.
The action alleges that World and other consumer finance defendants collected
excess finance charges in connection with refinancing certain consumer finance
loans in Oklahoma and seeks money damages and an injunction against further
collection of such charges. The Company has filed an answer in the action
denying liability, and discovery has not commenced. The plaintiff's claim is
based on a recent opinion of the Oklahoma Attorney General interpreting a
provision of the Oklahoma Consumer Credit Code with respect to the permitted
amount of certain loan refinance charges in a manner contrary to prior
regulatory practice in Oklahoma. Enforcement of the Oklahoma Attorney General's
opinion has been enjoined, and such action is currently pending before the
Oklahoma Supreme Court. In addition, the State of Oklahoma has recently enacted
legislation to clarify the interpretation of the disputed provision of the
Oklahoma Consumer Credit Code consistent with prior regulatory practice. World
intends to vigorously defend this action.
ANNEX C
(to Exhibit C)
Annex D to Exhibit C to Senior
Subordinated Note Agreement
dated June 30, 1997
Taxes
The Internal Revenue Service has issued a preliminary determination
that WAC Insurance Company, Ltd. is not engaged in a bona fide reinsurance
business and thus, that its earnings are not excludable from the taxable
earnings of World Acceptance Corporation and its subsidiaries. World Acceptance
Corporation is appealing this matter.
ANNEX D
(to Exhibit C)
DESCRIPTION OF SPECIAL COUNSEL'S CLOSING OPINION
The closing opinion of Chapman and Cutler, special counsel to
the Purchasers, called for by SS.4.1 of the Agreements, shall be dated the
Closing Date and addressed to the Purchasers, shall be satisfactory
in form and substance to the Purchaser and shall be to the effect that:
1. The Company is a corporation, validly existing and in good
standing under the laws of the State of South Carolina and has the corporate
power and the corporate authority to execute and deliver the Agreements and the
Company Security Agreement and to issue the Notes.
2. Each Restricted Subsidiary is a corporation or partnership, as
the case may be, validly existing and in good standing under the laws of its
jurisdiction of incorporation or organization, as the case may be, has the power
and the authority to execute and deliver the Subsidiary Security Agreement and
Subsidiary Senior Guaranty Agreement.
3. The Agreements and the Company Security Agreement have been duly
authorized by all necessary corporate action on the part of the Company, have
been duly executed and delivered by the Company and constitute the legal, valid
and binding contracts and agreements of the Company enforceable in accordance
with their terms, subject to bankruptcy, insolvency, fraudulent conveyance and
similar laws affecting creditors' rights generally and general principles of
equity (regardless of whether the application of such principles is considered
in a proceeding in equity or at law).
4. The Notes have been duly authorized by all necessary corporate
action on the part of the Company, have been duly executed and delivered by the
Company and constitute the legal, valid and binding obligations of the Company
enforceable in accordance with their terms, subject to bankruptcy, insolvency,
fraudulent conveyance and similar laws affecting creditors' rights generally and
general principles of equity (regardless of whether the application of such
principles is considered in a proceeding in equity or at law).
5. The Subsidiary Senior Guaranty Agreement and the Subsidiary
Security Agreement have been duly authorized by all necessary corporate or
partnership, as the case may be, action on the part of each Restricted
Subsidiary and have been duly executed and delivered by each Restricted
Subsidiary.
6. The Security Trustee is an Illinois banking corporation duly
organized, validly existing and in good standing under the laws of the State of
Illinois and has the corporate power and authority to enter into and perform its
obligations under the Company Security Agreement and the Subsidiary Security
Agreement.
7. The Company Security Agreement and the Subsidiary Security
Agreement have been duly authorized, executed and delivered by the Security
Trustee and constitute the legal, valid and binding contracts and agreements of
the Security Trustee enforceable against the Security Trustee in accordance with
their terms, subject to applicable bankruptcy, insolvency and similar laws
affecting creditors' rights generally and general principles of equity
(regardless of whether the application of such principles is considered in a
proceeding in equity or at law).
8. The execution and delivery of the Company Security Agreement and
the Subsidiary Security Agreement and compliance by the Security Trustee with
all of the provisions thereof does not and will not contravene any law of the
State of Illinois governing the banking or trust powers of the Security Trustee,
or any order of any court or governmental authority or agency applicable to or
binding on the Security Trustee or its charter or its by-laws.
9. No authorization or approval or other action by, and no notice to
or filing with, any governmental authority or regulatory body is required for
the due execution and delivery by the Security Trustee of the Company Security
Agreement and the Subsidiary Security Agreement.
10. Stock certificates representing the Pledged Shares have been
delivered to the Security Trustee by the Company. No filing or recording in any
public office is necessary in order to perfect the security interest in the
Pledged Shares granted by the Company to the Security Trustee under the Company
Security Agreement.
11. Arrangements satisfactory to us have been made for the filing of
each of the
financing statements described in Schedule I hereto in the public offices in the
states referred to in Schedule I with respect to such financing statement. No
other filing or recording in any public office in such state is necessary to
perfect the security interest of the Security Trustee under the Company Security
Agreement and the Subsidiary Security Agreement in the interest of the Company
and each Restricted Subsidiary in the Collateral specifically described in the
Company Security Agreement and the Subsidiary Security Agreement as to which a
security interest may be perfected by the filing of financing statements, other
than a security interest in fixtures.
No opinion is expressed as to the enforceability of the Subsidiary
Senior Guaranty Agreement or the Subsidiary Security Agreement. We have
previously advised you that there is no clear legal precedent as to whether the
obligations of any particular Restricted Subsidiary under the Subsidiary Senior
Guaranty Agreement or the Subsidiary Security Agreement may be avoidable as a
fraudulent transfer under Section 548 of the Bankruptcy Code or may be subject
to attack in an action brought pursuant to state fraudulent conveyance statutes
by a trustee in bankruptcy of such Restricted Subsidiary or by third-party
creditors.
No opinion is expressed as to the title of the Company or any
Restricted Subsidiary to the Collateral described in the Company Security
Agreement and the Subsidiary Security Agreement or as to the priority of the
security interest of the Security Trustee under the Company Security Agreement
and the Subsidiary Security Agreement in the Collateral described therein.
Section 36-9-308 of the Uniform Commercial Code of the State of South Carolina,
Section 9.308 of the Uniform Commercial Code of the State of Texas, Section
10:9-308 of the Uniform Commercial Code of the State of Louisiana, Section
11-9-308 of the Uniform Commercial Code of the State of Georgia, Section 9-308
of the Uniform Commercial Code of the State of Oklahoma, Section 9-308 of the
Uniform Commercial Code of the State of Illinois, Section 400.9-308 of the
Uniform Commercial Code of the State of Missouri, Section 47-9-308 of the
Uniform Commercial Code of the State of Tennessee, Section 7-9-308 of the
Uniform Commercial Code of the State of Alabama and Section 55-9-308 of the
Uniform Commercial Code of the State of New Mexico provide that a purchaser of
chattel paper who gives new value and takes possession of it in the ordinary
course of its business has priority over a security interest in chattel paper
which is perfected by the filing of a financing statement if such purchaser acts
without knowledge that the chattel paper is subject to a security interest.
Section 4.3 of the Company Security Agreement and the Subsidiary Security
Agreement requires that the Company and each Restricted Subsidiary place on each
document, instrument, chattel paper and other writing evidencing its Receivables
created on or after the Closing Date the legend described in said Section. No
opinion is expressed as to the perfection of the security interest of the
Company Security Agreement and the Subsidiary Security Agreement against any
fixtures or any other Collateral (other than the Pledged Shares) of a character
against which a security interest cannot be perfected b filing under the
applicable Uniform Commercial Code.
Your attention is directed to the Uniform Commercial Code, as adopted
in each of the jurisdictions listed in Schedule I hereto. In general, the
Uniform Commercial Code as in effect in most jurisdictions provides that a filed
financing statement which does not state a maturity date or which states a
maturity date of more than five years is effective only for a period of five
years from the date of filing unless within six months prior to the expiration
of said period a continuation statement is filed in the same office or offices
in which the original statement was filed. The continuation statement must be
signed by the secured party, identify the original statement by file number and
state that the original statement is still effective. Upon the timely filing of
a continuation statement, the effectiveness of the original financing statement
is continued for five years after the last date to which the original statement
was effective. Succeeding continuation statements may be filed in the same
manner to continue the effectiveness of the original statement.
We have also examined the opinions of Robinson, Bradshaw & Hinson,
P.A., counsel for the Company, World Finance Corporation of South Carolina, WFC
of South Carolina, Inc., World Acceptance Corporation of Alabama, World
Acceptance Corporation of Missouri, World Finance Corporation of Illinois and
World Finance Corporation of New Mexico, from Abbot, Murphy & Harvey, P.C.,
counsel for World Finance Corporation of Georgia, from Comegys, Lawrence, Jones,
Odom & Spruiell, counsel for World Finance Corporation of Louisiana, from Crowe
& Dunlevy, Luttrell, Pendarvis & Rawlinson, counsel for World Acceptance
Corporation of Oklahoma, Inc., from Dance, Dance & Lane, counsel for World
Finance
Corporation of Tennessee, and from Sam Kelley, Esq., counsel for World
Finance Corporation of Texas and WFC Limited Partnership, each delivered on the
date hereof responsive to the requirements of Section 4.1(f) of the Agreements,
signed copies of which, dated the date hereof, are delivered to you herewith.
Said opinions are satisfactory in scope and form and we believe that you are
justified in relying thereon.
Respectfully submitted,
EXHIBIT E-1 (TO NOTE AGREEMENT)
DESCRIPTION OF CLOSING OPINION OF COUNSEL TO THE COMPANY, WORLD FINANCE
CORPORATION OF SOUTH CAROLINA, WFC OF SOUTH CAROLINA, INC., WORLD ACCEPTANCE
CORPORATION OF ALABAMA, WORLD ACCEPTANCE CORPORATION OF MISSOURI, WORLD FINANCE
CORPORATION OF ILLINOIS AND WORLD FINANCE CORPORATION OF NEW MEXICO
The closing opinion of Robinson, Bradshaw & Hinson, P.C., counsel for
the Company, World Finance Corporation of South Carolina ("WORLD-SC"), WFC of
South Carolina, Inc. ("WFC-SC"), World Acceptance Corporation of Alabama
("WORLD-AL"), World Acceptance Corporation of Missouri ("WORLD-MO"), World
Finance Corporation of Illinois ("WORLD-IL") and World Finance Corporation of
New Mexico ("WORLD-NM"), which is called for by SS.4.1 of the Agreements, shall
be dated the Closing Date and addressed to the Purchasers, shall be satisfactory
in scope and form to the Purchasers and shall be to the effect that:
1. The Company is a corporation duly incorporated, validly existing
and in good standing under the laws of the State of South Carolina, has the
corporate power and authority to execute and perform the Agreements and the
Company Security Agreement and to issue the Notes and is duly qualified and is
in good standing as a foreign corporation in each jurisdiction in which, to our
knowledge, the character of the properties owned or leased by it or the nature
of the business transacted by it makes such qualification necessary.
2. World-SC is a corporation duly incorporated, validly existing and
in good standing under the laws of the State of South Carolina, has the
corporate power and authority to execute and perform the Subsidiary Security
Agreement and the Subsidiary Senior Guaranty Agreement and is duly qualified and
is in good standing in each jurisdiction in which, to our knowledge, the
character of the properties owned or leased by it or the nature of the business
transacted by it makes such qualification necessary.
3. WFC-SC is a corporation duly organized, validly existing and in
good standing under the laws of the State of South Carolina, has the corporate
power and authority to execute and perform the Subsidiary Security Agreement and
the Subsidiary Senior Guaranty Agreement and is duly licensed or qualified and
is in good standing in each jurisdiction in which, to our knowledge, the
character of the properties owned or leased by it or the nature of the business
transacted by it makes such licensing or qualification necessary.
4. World-AL is a corporation duly incorporated, validly existing and
in good standing under the laws of the State of Alabama, has the corporate power
and authority to execute and perform the Subsidiary Security Agreement and the
Subsidiary Senior Guaranty Agreement and is duly qualified and is in good
standing in each jurisdiction in which, to our knowledge, the character of the
properties owned or leased by it or the nature of the business transacted by it
makes such qualification necessary.
5. World-MO is a corporation duly incorporated, validly existing and
in good standing under the laws of the State of Missouri, has the corporate
power and authority to execute and perform the Subsidiary Security Agreement and
the Subsidiary Senior Guaranty Agreement and is duly qualified and is in good
standing in each jurisdiction in which, to our knowledge, the character of the
properties owned or leased by it or the nature of the business transacted by it
makes such qualification necessary.
6. World-IL is a corporation duly incorporated, validly existing and
in good standing under the laws of the State of Illinois, has the corporate
power and authority to execute and perform the Subsidiary Security Agreement and
the Subsidiary Senior Guaranty Agreement and is duly qualified and is in good
standing in each jurisdiction in which, to our knowledge, the character of the
properties owned or leased by it or the nature of the business transacted by it
makes such qualification necessary.
7. World-NM is a corporation duly incorporated, validly existing and
in good standing under the laws of the State of New Mexico, has the corporate
power and authority to execute and perform the Subsidiary Security Agreement and
the Subsidiary Senior Guaranty Agreement and is
duly qualified and is in good standing in each jurisdiction in which, to our
knowledge, the character of the properties owned or leased by it or the nature
of the business transacted by it makes such qualification necessary.
8. The Company is the sole record owner of all of the outstanding
capital stock of each Restricted Subsidiary existing as of the Closing Date
(other than (x) WFC Limited Partnership, of which WFC-SC (a wholly-owned
subsidiary of the Company) is a 1% general partner and World Acceptance
Corporation of Oklahoma, Inc. (a wholly-owned subsidiary of the Company) is a
99% limited partner, (y) World Acceptance Corporation of Oklahoma, Inc., which
is wholly owned by World Finance Corporation of Texas (a wholly-owned subsidiary
of the Company) and (z) WAC Insurance Company, Ltd., of which 65% is owned by
the Company). All of the outstanding shares of capital stock of each of
World-SC, WFC-SC, World-AL, World-MO, World-IL and World-NM have been duly
authorized and validly issued, and are fully paid and non-assessable.
9. The Agreements, the Company Security Agreement and the Notes have
been duly authorized by all necessary corporate action on the part of the
Company, have been duly executed and delivered by the Company and constitute the
legal, valid and binding contracts and agreements of the Company, enforceable in
accordance with their terms, except as such enforceability may be affected by
bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance or
similar laws affecting creditors' rights generally, or general principles of
equity (regardless of whether the application of such principles is considered
in a proceeding in equity or at law) and to the discretion of the court before
which any proceeding may be brought.
10. The Subsidiary Senior Guaranty Agreement and the Subsidiary
Security Agreement have been duly authorized by all necessary corporate action
on the part of World-SC, WFC-SC, World-AL, World-MO, World-IL and World-NM, have
been duly executed and delivered by World-SC, WFC-SC, World-AL, World-MO,
World-IL and World-NM and constitute the legal, valid and binding contracts and
agreements of World-SC, WFC-SC, World-AL, World-MO, World-IL and World-NM,
enforceable in accordance with their terms, except as such enforceability may be
affected by bankruptcy, insolvency, reorganization, moratorium, fraudulent
conveyance or similar laws affecting creditors' rights generally, or general
principles of equity (regardless of whether the application of such principles
is considered in a proceeding in equity or at law) and to the discretion of the
court before which any proceeding may be brought.
11. Assuming the due authorization, execution and delivery of the
Subsidiary Security Agreement and the Subsidiary Senior Guaranty Agreement by
World Finance Corporation of Georgia, World Finance Corporation of Louisiana,
World Acceptance Corporation of Oklahoma, Inc., World Finance Corporation of
Tennessee, World Finance Corporation of Texas and WFC Limited Partnership, each
of the Subsidiary Senior Guaranty Agreement and the Subsidiary Security
Agreement constitute the legal, valid and binding contracts and agreements of
each Restricted Subsidiary, respectively, enforceable in accordance with its
terms, except as such enforceability may be affected by bankruptcy, insolvency,
reorganization, moratorium, fraudulent conveyance or similar laws affecting
creditors' rights generally, or general principles of equity (regardless of
whether the application of such principles is considered in a proceeding in
equity or at law) and to the discretion of the court before which any proceeding
may be brought.
12. The issuance of the Notes and the execution, delivery and
performance by the Company of the Agreements and the Company Security Agreement
do not violate any law, regulation, order or decree of any court or governmental
instrumentality, or conflict with, or result in any breach of any of, the
provisions of, or constitute a default under, or result in the creation or
imposition of any lien or encumbrance upon any of the property of the Company
pursuant to, the provisions of the Articles of Incorporation or Bylaws of the
Company or, the Material Agreements. For purposes of this opinion letter,
"MATERIAL AGREEMENTS" mean all agreements and instruments attached as exhibits
to the Company's Registration Statement No. 33-42879 and the Company's Quarterly
Report on Form 10-Q for the quarter ended December 31, 1996.
13. The execution, delivery and performance by World-SC, WFC-SC,
World-AL,
World-MO, World-IL and World-NM of the Subsidiary Senior Guaranty Agreement and
the Subsidiary Security Agreement do not violate any law, regulation, order or
decree of any court or governmental instrumentality and the execution, delivery
and performance by each Restricted Subsidiary of the Subsidiary Senior Guaranty
Agreement and the Subsidiary Security Agreement do not conflict with or result
in any breach of any of the provisions of or constitute a default under or
result in the creation or imposition of any lien or encumbrance upon any of the
property of such Restricted Subsidiary pursuant to the provisions of the
articles of incorporation, bylaws or other organizational documents of such
Restricted Subsidiary or the Material Agreements.
14. Except for the filings referred to in paragraphs 22 and 23 below,
no approval, consent or withholding of objection on the part of, or filing,
registration or qualification with, any governmental body, federal, state or
local, is necessary in connection with the execution, delivery and performance
by the Company, World-SC, WFC-SC, World-AL, World-MO, World-IL or World-NM of
the Agreements, the Company Security Agreement, the Subsidiary Security
Agreement or the Subsidiary Senior Guaranty Agreement.
15. Except as disclosed on Annex C to Exhibit C to the Agreement,
there are no proceedings pending or, to our knowledge, threatened against the
Company or any Restricted Subsidiary in any court or before any governmental
authority or arbitration board or tribunal, an adverse determination in which
could, individually or in the aggregate, materially and adversely affect the
properties, business or condition (financial or otherwise) of the Company or
such Restricted Subsidiary, as the case may be, and to our knowledge, neither
the Company nor any such Restricted Subsidiary is in default with respect to any
order of any court or governmental authority or arbitration board or tribunal.
16. With respect to each Receivable of World-SC and WFC-SC, assuming
that World-SC and WFC-SC each uses a written document to evidence such
Receivable, and assuming each such written document evidences a monetary
obligation of the account debtor and a grant by such account debtor to World-SC
or WFC-SC, as the case may be, of a security interest in specific goods, the
documents evidencing such Receivable constitute chattel paper within the meaning
of the Uniform Commercial Code of the State of South Carolina.
17. Upon delivery to the Security Trustee by the Company of stock
certificates representing the Pledged Shares, the Security Trustee shall have a
perfected security interest in the
Pledged Shares.
18. Assuming that (i) the financing statements in the form attached
hereto as Schedule 1 have been accepted for filing and properly indexed in the
Office of the Secretary of State of South Carolina and the Register of Mesne
Conveyances of the County of Greenville, South Carolina, (ii) value has been
given by the Banks and purchaser to the Company and each Restricted Subsidiary,
and (iii) the Company and each Restricted Subsidiary have rights in the
collateral described on such financing statements, the security interests
created by the Company Security Agreement and the Subsidiary Security Agreement
in the collateral described therein constitute valid perfected security
interests in such types of collateral as to which a security interest may be
perfected by filing financing statements under the Uniform Commercial Code of
the State of South Carolina.
19. Section 36-9-308 of the Uniform Commercial Code of the State of
South Carolina provides that a purchaser of chattel paper who gives new value
and takes possession of it in the ordinary course of its business has priority
over a security interest in chattel paper which is perfected by the filing of a
financing statement if such purchaser acts without knowledge that the chattel
paper is subject to a security interest. Assuming World-SC and WFC-SC place on
each document, instrument, chattel paper and other writing evidencing its
Receivables the legend described in Section 4.3(c) of the Subsidiary Security
Agreement and assuming that the assumptions set forth in paragraphs 16 and 18 of
this opinion are true, nothing has come to our attention to lead us to believe
that, under Section 36-9-308 of the Uniform Commercial Code of the State of
South Carolina, the security interests of the Security Trustee in World-SC's and
WFC-SC's Receivables would not be prior to the rights of a purchaser of such
Receivables who thereafter gives new value
and takes possession thereof in the ordinary course of such purchaser's
business.
The opinions expressed above are subject to the effect of legal and
equitable doctrines and procedures (including the requirement that the Agent,
the Banks, the purchasers and the Security Trustee act in good faith) that may
limit the enforceability of any particular remedy, covenant or other provision
in the Loan Documents. In our opinion, however, the effect of such legal and
equitable doctrines and procedures will not prevent the practical realization of
the rights provided for in the Loan Documents. Specifically, but without
limiting the generality of the foregoing, no opinion is expressed as to
provisions, if any, contained in the Loan Documents that (a) purport to excuse a
party for liability for its own acts in contradiction of public policy, (b)
purport to make void any act done in contravention thereof, (c) relate to the
effect of laws or regulations that may be enacted in the future, (d) require
waivers or amendments to be made only in writing, (e) purport to effect waivers
of constitutional or statutory rights or the effect of applicable laws, or (f)
purport to preserve or maintain the obligation or liability of the Company or
the Restricted Subsidiaries despite the unenforceability of the Notes due to
illegality.
This opinion is subject to the following further assumptions and
qualifications:
a. We express no opinion as to the effectiveness of any of the
provisions of the Loan Documents whereby any legal or equitable rights are
purportedly waived.
b. We express no opinion as to the enforceability of provisions
relating to self help or evidentiary standards by which the Loan Documents are
to be construed.
c. We express no opinion as to the enforceability of any provision
of the Loan Documents whereby the Company or any Restricted Subsidiary appoints
the Agent, the Banks, the purchasers or the Security Trustee or other parties as
attorney-in-fact.
d. We express no opinion with regard to any provisions of the Loan
Documents whereby the Company or any Restricted Subsidiary purports to indemnify
the Agent, any of the Banks, the purchasers or the Security Trustee against its
own negligence or misconduct.
e. We express no opinion with regard to any choice of law provisions
in the Subsidiary Security Agreement and Subsidiary Senior Guaranty Agreement.
Nothing has come to our attention, however, to lead us to believe that a South
Carolina court, if properly presented with the question, would not enforce the
choice of law provisions contained in such agreements.
f. No opinion is expressed with respect to the validity or existence
of any security interest in fixtures.
g. In rendering the opinions in paragraph 8 relating to the ownership
by the Company of the capital stock of the Restricted Subsidiaries, we have
relied solely upon the stock transfer ledgers of the Restricted Subsidiaries as
certified by their respective officers and certain statements of objective fact
certified to us by officers of the Restricted Subsidiaries.
h. In rendering the opinions set forth in paragraph 15, we have
relied solely on a review of the litigation log and telephone complaint log of
the Company, World-SC, WFC-SC, World-AL, World-MO, World-IL and World-NM as
certified by an officer of the Company as of the date hereof and discussions
with officers of the Company about the matters contained therein.
i. In rendering the opinions set forth in paragraph 20, we have
relied, as to factual matters, solely on the representations of the Purchaser
under the Agreements.
j. We express no opinion as to whether any consents or
authorizations of third parties may be required under the Code of Laws of South
Carolina pursuant to Chapter 29 of Title 34 of the Consumer Finance Law, the
Consumer Protection Code or The Insurance Law as a condition precedent to, or in
connection with, (i) the ability of the Security Trustee to foreclose on and
transfer title to or vote the Pledged Stock; or (ii) the ability of the Security
Trustee to foreclose on and take possession of or sell a substantial portion of
the assets of the Company, World-SC or WFC-SC where such foreclosure, possession
or sale may be deemed to involve an acquisition or transfer of control or
management of the Company, World-SC or WFC-SC, or where such foreclosure,
possession or sale may involve a transfer of licenses granted to the Company,
World-SC or WFC-SC under the foregoing laws.
k. As to factual matters related to the subject matter of this
opinion letter, we have
relied on the representations of the Company, World-SC, WFC-SC, World-AL,
World-MO, World-IL and World-NM in the Agreements, the Company Security
Agreement, Subsidiary Senior Guaranty Agreement and Subsidiary Security
Agreement and on certificates of officers of the Company, World-SC, WFC-SC,
World-AL, World-MO, World-IL and World-NM.
This opinion is rendered only to you and is intended solely for your
benefit in connection with the transactions contemplated in the Loan Documents.
This opinion may not be relied upon for any other purposes, nor may it be relied
upon by any other person (other than your special counsel, Chapman and Cutler,
and any subsequent holder of a Note) for any purpose, without our prior written
consent.
Sincerely yours,
ROBINSON, BRADSHAW & HINSON, P.A.
Karen A. Gledhill
EXHIBIT F-1 (TO NOTE AGREEMENT)
FORM OF CLOSING OPINION OF SUBSIDIARY COUNSEL
The closing opinion of Abbot, Murphy & Harvey, P.C., counsel
for World Finance Corporation of Georgia (the "COMPANY"), which is called for by
SS.4.1 of the Agreements, shall be dated the Closing Date and addressed to the
Purchasers, shall be satisfactory in scope and form to the Purchasers and shall
be to the effect that:
1. The Company is a corporation duly incorporated, validly existing
and in good standing under the laws of the State of Georgia, has the corporate
power and authority to execute and perform the Subsidiary Security Agreement and
the Subsidiary Senior Guaranty Agreement, and is duly licensed or qualified and
is in good standing in each jurisdiction in which the character of the
properties owned or leased by it or the nature of the business transacted by it
makes such licensing or qualification necessary.
2. All of the outstanding shares of capital stock of the Company
have been duly authorized and validly issued and are fully paid and
non-assessable.
3. The Subsidiary Senior Guaranty Agreement and the Subsidiary
Security Agreement have been duly authorized by all necessary corporate action
on the part of the Company, have been duly executed and delivered by the Company
and constitute the legal, valid and binding contracts and agreements of the
Company, enforceable in accordance with their terms, except as such
enforceability may be affected by bankruptcy, insolvency, reorganization,
moratorium, fraudulent conveyance or similar laws affecting creditors' rights
generally, or general principles of equity (regardless of whether the
application of such principles is considered in a proceeding equity or at law)
and to the discretion of the court at which any proceeding may be brought.
4. The execution, delivery and performance by the Company of the
Subsidiary Senior Guaranty Agreement and the Subsidiary Security Agreement do
not violate any law, regulation, order or decree of any court or governmental
instrumentality or conflict with the Articles of Incorporation or Bylaws of the
Company.
5. No approval, consent or withholding of objection on the part of,
or filing, registration or qualification with, any governmental body, federal,
state or local, is necessary in connection with the execution, delivery and
performance by the Company of the Subsidiary Security Agreement and the
Subsidiary Senior Guaranty
Agreement.
6. With respect to each Receivable of the Company, assuming that the
Company uses a written document to evidence such Receivable, and assuming each
such written document evidences a monetary obligation of the account debtor and
a grant by such account debtor to the Company of a security interest in specific
goods, the documents evidencing such Receivable constitute chattel paper within
the meaning of the Uniform Commercial Code of the State of Georgia.
7. All Financing Statements and other notices with respect to the
Subsidiary Security Agreement have been filed for record or recorded in all
public offices where such filing or recordation is necessary to perfect the lien
and security interests of the Security Trustee in the Collateral under the
Subsidiary Security Agreement as against creditors of and purchasers from the
Company and the liens and security interests created by the Subsidiary Security
Agreement in the Collateral described therein constitute valid perfected liens
on and security interests in the right, title and interest of the Company in and
to the Collateral, effective as against creditors of and purchasers from the
Company.
8. Assuming the Company complies with Section 4.3(c) of the
Subsidiary Security Agreement and assuming that the assumptions set forth in
paragraph 6 of this opinion are true, the security interests of the Security
Trustee in the Company's Receivables created on or after the Closing Date will
be prior to the right of any purchaser of such Receivables who thereafter gives
new value and takes possession thereof in the ordinary course of such
purchaser's business.
Very truly yours,
ABBOT, MURPHY AND HARVEY, P.C.
By
Fred K. Harvey, Jr.
FKH:fs
FORM OF CLOSING OPINION OF SUBSIDIARY COUNSEL
The closing opinion of Comegys, Lawrence, Jones, Odom & Spruiell,
counsel for World Finance Corporation of Louisiana (the "COMPANY"), which is
called for by SS.4.1 of the Agreements, shall be dated the Closing Date and
addressed to the Purchasers, shall be satisfactory in scope and form to the
Purchasers and shall be to the effect that:
1. The Company is a corporation duly incorporated, validly existing
and in good standing under the laws of State of Louisiana, has the corporate
power and authority to execute and perform the Subsidiary Security Agreement and
the Subsidiary Senior Guaranty Agreement, and is duly qualified or licensed and
is in good standing in each jurisdiction in which the character of the
properties owned or leased by it or the nature of the business transacted by it
makes such qualification or licensing necessary.
2. All of the outstanding shares of capital stock of the Company
have been duly authorized and validly issued and are fully paid and
non-assessable.
3. The Subsidiary Senior Guaranty Agreement and the Subsidiary
Security Agreement have been duly authorized by all necessary corporate action
on the part of the Company, have been duly executed and delivered by the Company
and constitute the legal, valid and binding contracts and agreements of the
Company, enforceable in accordance with their terms, except as such
enforceability may be affected by bankruptcy, insolvency, reorganization,
moratorium, fraudulent conveyance or similar laws affecting creditors' rights
generally, or general principles of equity (regardless of whether the
application of such principles is considered in a proceeding in equity or at
law) and to the discretion of the court before which any proceeding may be
brought.
4. The execution, delivery and performance by the Company of the
Subsidiary Senior Guaranty Agreement and the Subsidiary Security Agreement do
not violate any law, regulation, order or decree of any court or governmental
instrumentality or conflict with the Articles of Incorporation or Bylaws of the
Company.
5. No approval, consent or withholding of objection on the part of,
or filing, registration or qualification with, any governmental body, federal,
state or local, is necessary in connection with the execution, delivery and
performance by the Company of the Subsidiary Security Agreement and the
Subsidiary Senior Guaranty Agreement.
6. With respect to each Receivable of the Company, assuming that the
Company uses a written document to evidence each of such Receivable, and
assuming each such written document evidences a monetary obligation of the
account debtor and a grant by such account debtor to the Company of a security
interest in specific goods, the documents evidencing such Receivable constitute
chattel paper within the meaning of the Uniform Commercial Code of the State of
Louisiana.
7. All financing statements and other notices with respect to the
Subsidiary Security Agreement have been filed for record or recorded in all
public offices where such filing or recordation is necessary to perfect the lien
and security interest of the Security Trustee in the Collateral under the
Subsidiary Security Agreement as against creditors of and purchasers from the
Company and the liens and security interests created by the Subsidiary Security
Agreement in the Collateral constitute valid perfected liens on and security
interests in the right, title and interest of the Company in and to the
Collateral effective as against creditors or and purchasers from the Company.
8. Assuming the Company complies with Section 4.3(c) of the
Subsidiary Security Agreement and assuming that the assumptions set forth in
paragraph 6 of this opinion are true, the security interests of the Security
Trustee in the Company's Receivables will be prior to the rights of any
purchaser of such Receivables who thereafter gives new value and takes
possession thereof in the ordinary course of such purchaser's business.
We are licensed to practice law only in the State of Louisiana and we
express no opinion with respect to the effect of any laws other than the laws of
the State of Louisiana and those of the United States as are relative to the
operations of the Company in the State of Louisiana. This opinion is issued to
you and your assignees for value, and is not to be relied upon by anyone else
other than your special counsel and subsequent holders of the Notes.
COMEGYS, LAWRENCE, JONES, ODOM &
SPRUIELL
By
William M. Comegys, III
WMCIII/sdw
FORM OF CLOSING OPINION OF SUBSIDIARY COUNSEL
The closing opinion of Crowe & Dunlevy, Luttrell, Pendarvis &
Rawlinson, counsel for World Acceptance Corporation of Oklahoma, Inc. (the
"COMPANY"), which is called for by SS.4.1 of the Agreements, shall be dated the
Closing Date and addressed to the Purchasers, shall be satisfactory in scope and
form to the Purchasers and shall be to the effect that:
1. The Company is a corporation duly incorporated, validly existing
and in good standing under the laws of the State of Oklahoma and has the
corporate power and authority to execute and perform the Subsidiary Security
Agreement and the Subsidiary Senior Guaranty Agreement.
2. The outstanding shares of common stock of the Company, $1.00 par
value, have been duly authorized and validly issued and are fully paid and
nonassessable.
3. The Subsidiary Senior Guaranty Agreement and the Subsidiary
Security Agreement have been duly authorized by all necessary corporate action
on the part of the Company, have been duly executed and delivered by the Company
and constitute the legal, valid and binding contracts and agreements of the
Company, enforceable in accordance with their terms, except as such
enforceability may be affected by bankruptcy, insolvency, reorganization,
moratorium, fraudulent conveyance or similar laws affecting creditors' rights
generally, or general principles of equity (regardless of whether the
application of such principles is considered in a proceeding equity or at law)
and to the discretion of the court before which any proceeding may be brought.
4. The execution, delivery and performance by the Company of the
Subsidiary Senior Guaranty Agreement and the Subsidiary Security Agreement do
not violate any law, regulation, order or decree of any court or governmental
instrumentality or conflict with the Articles of Incorporation or Bylaws of the
Company.
5. Under current applicable Oklahoma law, no approval, consent or
withholding of objection on the part of, or filing, registration or
qualification with, any Oklahoma state or local governmental body, is necessary
in connection with the execution, delivery and performance by the Company of the
Subsidiary Security Agreement and the Subsidiary Senior Guaranty Agreement.
6. With respect to each Receivable of the Company, assuming that the
Company uses a written document to evidence such Receivable, and assuming each
such written document evidences a monetary obligation of the account debtor and
a grant by such account debtor to the Company of a security interest in specific
goods, the documents evidencing such Receivable constitute chattel paper within
the meaning of the Uniform Commercial Code of the State of Oklahoma.
7. All financing statements and other notices with respect to the
Subsidiary Security Agreement have been filed for record or recorded in all
public offices where such filing or recordation is necessary to perfect the lien
and security interest of the Security Trustee in the Collateral as against
creditors of and purchasers from the Company. The liens and security interests
created by the Subsidiary Security Agreement in the Collateral constitute valid
perfected liens on and security interests in the right, title and interest of
the Company in and to the Collateral effective as against creditors and
purchasers from the Company, assuming the Company complies with Section 4.3(c)
of the Subsidiary Security Agreement.
8. Assuming the Company places on each document, instrument, chattel
paper and other writing evidencing its Receivable the legend described in
Section 4.3(c) of the Subsidiary Security Agreement to which it is a party and
assuming that the assumptions set forth in paragraphs 6 and 7 of this opinion
are true, then according to the official comments to Section 9-308 of the
Oklahoma Uniform Commercial Code, the security interests of the Security Trustee
in the Company's Receivables will be prior to the rights of a purchaser of such
Receivables who thereafter gives new value and takes possession thereof in the
ordinary course of such purchaser's business.
The opinions expressed above are subject to the effect of legal and
equitable doctrines and procedures (including the requirement that the Agent,
the Banks, the Noteholders and the Security Trustee act in good faith) that may
limit the enforceability of any particular remedy, covenant or other provision
of the Subsidiary Security Agreement or the Subsidiary Senior Guaranty
Agreement. Specifically without limiting the generality of the foregoing, no
opinion is expressed as to provisions, if any, contained in the Subsidiary
Security Agreement or the Subsidiary Senior Guaranty Agreement that (a) purport
to excuse a
party for liability for its own acts that may be contrary to public
policy, (b) purport to make void any act done in contravention thereof, (c)
purport to authorize a party to act in its own discretion, (d) relate to the
effect of laws or regulations that may be enacted in the future, (e) require
waivers or amendments to be made all in writing, (f) purport to effect waivers
of constitutional or statutory rights or the effect of applicable laws or (g)
purport to preserve or maintain the obligation or liability of the borrower or
the liability of the Company despite the unenforceability of the Notes due to
illegality or impossibility of performance.
9. This opinion is further subject to the following qualifications
and exceptions:
A. We are licensed to practice law only in the State of Oklahoma and
we express no opinion with respect to the effect of any laws other than the laws
of Oklahoma and those of the United States.
B. We do not opine on any state or federal securities laws which may
be applicable to the Transaction or the compliance of such Transaction with any
state or federal securities laws.
C. We do not opine on any federal banking laws which may be
applicable to the Transaction.
D. We do not opine on any state or federal taxation laws which may
be applicable to the Transaction.
E. We do not opine on the qualification, authority to do business or
good standing of the Company in any jurisdiction other than the State of
Oklahoma.
F. We express no opinion as to whether any consents or
authorizations of third parties may be required under the Uniform Consumer
Credit Code and the State Insurance Code, as a condition precedent to or in
connection with (i) the ability of the Security Trustee to foreclose on and
transfer title to the pledged stock or the Collateral described in the
Subsidiary Security Agreement; or (ii) the ability of the Security Trustee to
foreclose and take possession of or sell a substantial portion of the assets of
the Company or to collect the Receivables of the Company.
G. We do not opine on the compliance of the Company with any state
or federal laws relating to labor or employment.
This opinion is rendered only to you and is intended solely for your
benefit in connection with the transactions contemplated in the Loan Documents.
This opinion may not be relied upon for any other purposes, nor may it be relied
upon by any other person (other than your special counsel and subsequent holders
of the Notes) for any purpose without our prior written consent.
Very truly yours,
CROWE & DUNLEVY, LUTTRELL, PENDARVIS
& RAWLINSON
MSR:sdb
FORM OF CLOSING OPINION OF SUBSIDIARY COUNSEL
The closing opinion of Samuel L. Kelley, Esq., counsel for World
Finance Corporation of Texas (the "WFC-TEXAS"), and WFC Limited Partnership
("WFC-LP") which is called for by SS.4.1 of the Agreements, shall be dated the
Closing Date and addressed to the Purchasers, shall be satisfactory in scope and
form to the Purchasers and shall be to the effect that:
1. WFC-Texas is a corporation duly incorporated, validly existing
and in good standing under the laws of its jurisdiction of incorporation, has
the corporate power and authority to execute and perform the Subsidiary Security
Agreement and the Subsidiary Senior Guaranty Agreement, and is duly qualified or
licensed and is in good standing in each jurisdiction in which the character of
the properties owned or leased by it or the nature of the business transacted by
it makes such qualification or licensing necessary.
2. WFC-LP is a limited partnership, duly organized, validly existing
and in good standing under the laws of its jurisdiction of organization, has the
power and authority to execute and perform the Subsidiary Security Agreement and
the Subsidiary Senior Guaranty Agreement, and is duly qualified or licensed and
is in good standing in each jurisdiction in which the character of the
properties owned or leased by it or the nature of the business transacted by it
makes such qualifications or licensing necessary.
3. All of the outstanding shares of capital stock of WFC-Texas have
been duly authorized and validly issued and are fully paid and non-assessable.
4. All of the outstanding partnership interests of WFC-LP have been
duly authorized and validly issued and are fully paid and non-assessable.
5. The Subsidiary Senior Guaranty Agreement and the Subsidiary
Security Agreement have been duly authorized, executed and delivered by
WFC-Texas and WFC-LP and constitute the legal, valid, and binding contracts and
agreements of WFC-Texas and WFC-LP, enforceable in accordance with their terms,
except as such enforceability may be affected by bankruptcy, insolvency,
reorganization, moratorium, fraudulent conveyance or similar laws affecting
creditor's rights generally, or general principles of equity (regardless of
whether the application of such principles is considered in a proceeding in
equity or at law) and to the discretion of the court before which any proceeding
may be brought.
6. The execution, delivery and performance by WFC-Texas and WFC-LP
of the Subsidiary Senior Guaranty Agreement and the Subsidiary Security
Agreement do not violate any law, regulation, order or decree of any court or
governmental instrumentality.
7. Except for the filing of UCC-3 financing statements with the
Texas Secretary of State as to WFC-LP and except for the filing of UCC-3
financing statements with the Texas Secretary of State with respect to
WFC-Texas, no approval, consent or withholding of objection on the part of, or
filing, registration or qualification with, any governmental body, federal,
state or local, is necessary in connection with the execution, delivery and
performance by WFC-Texas or WFC-LP of the Subsidiary Security Agreement or the
Subsidiary Senior Guaranty Agreement.
8. With respect to each Secured Receivable (as defined in the
Subsidiary Security Agreement) of WFC-Texas and WFC-LP, assuming that WFC-Texas
and WFC-LP use a written document to evidence such Receivable, and assuming each
such written document evidences a monetary obligation of the account debtor and
a grant by such account debtor to WFC-Texas or WFC-LP, as the case may be, of a
security interest in specific goods, the documents evidencing such Receivable
constitute chattel paper within the meaning of the Uniform Commercial Code of
the State of Texas.
9. Assuming that (i) financing statements in the forms attached
hereto as Schedule 1 have been accepted for filing and properly indexed in the
Office of the Secretary of State of Texas and the appropriate recording fees and
taxes paid thereon, (ii) value has been given by the Banks and Purchaser (as
defined in the Subsidiary Security Agreement) to WFC-LP and by the Banks and the
Purchaser (as defined in the Subsidiary Security Agreement) to WFC-Texas, and
(iii) WFC-LP and WFC-Texas each has rights in the collateral described on such
respective financing statements applicable to it, the security interest created
by the Subsidiary Security Agreement in the collateral described therein (other
than the Unsecured Receivables (as defined in the Subsidiary Security
Agreement), of WFC-LP or WFC-Texas, as the case may be; PROVIDED that during the
existence of a Default or Event of Default, the Company has agreed to deliver to
the Security
Trustee possession of promissory notes evidencing the Unsecured Receivables and
such delivery shall create a valid and perfected lien on, and security interest
in, the Unsecured Receivables) constitutes a valid perfected security interest
in such types of collateral as to which a security interest may be perfected by
filing in such offices under the Uniform Commercial Code of the State of Texas.
10. Section 9-308 of the Uniform Commercial Code of the State of Texas
provides that a purchaser of chattel paper who gives new value and takes
possession of it in the ordinary course of its business has priority over a
security interest in chattel paper which is perfected by the filing of a
financing statement if such purchaser acts without knowledge that the chattel
paper is subject to a security interest. Assuming WFC-Texas and WFC-LP place on
each document, instrument, chattel paper, and other writing evidencing its
Secured Receivables the legend described in Section 4.3(c) of the Subsidiary
Security Agreement and assuming that the assumptions set forth in paragraphs 6
and 7 of this opinion are true, nothing has come to my attention to lead me to
believe that, under Section 9-308 of the Uniform Commercial Code of the State of
Texas, the security interests of the Security Trustee in Secured Receivables of
WFC-Texas and WFC-LP would not be prior to the right of a purchaser of such
Receivables who thereafter gives new value and takes possession thereof in the
ordinary course of such purchaser's business.
12. Assuming possession by the Security Trustee of the certificates
evidencing the capital stock of World Acceptance Corporation of Oklahoma, Inc.,
an Oklahoma corporation, together with duly executed blank stock powers for the
transfer of such stock, and the promissory notes evidencing the intercompany
receivables referred to in clause (a) of the definition of "Pledged Collateral"
set forth in the Subsidiary Security Agreement, together with duly executed
blank assignments for the transfer of such notes in the form contained in such
notes, the Security Trustee will have a perfected security interest in the
Pledged Shares and such promissory notes pursuant to the Subsidiary Security
Agreement.
I am licensed to practice law only in the state of Texas, and the
opinions expressed in this letter relate only to the laws of Texas and federal
laws as they are applicable within Texas.
Sincerely,
Sam Kelley
FORM OF CLOSING OPINION OF SUBSIDIARY COUNSEL
The closing opinion of Dance, Dance & Lane, counsel for World Finance
Corporation of Tennessee (the "COMPANY"), which is called for by SS.4.1 of the
Agreements, shall be dated the Closing Date and addressed to the Purchasers,
shall be satisfactory in scope and form to the Purchasers and shall be to the
effect that:
1. The Company is a corporation duly incorporated, validly existing
and in good standing under the laws of the State of Tennessee, has the corporate
power and authority to execute and perform the Subsidiary Security Agreement and
the Subsidiary Senior Guaranty Agreement (collectively, the "LOAN DOCUMENTS").
2. All of the outstanding shares of capital stock of the Company
have been duly authorized and validly issued and are fully paid and
non-assessable.
3. The Loan Documents have been duly authorized by all necessary
corporate action on the part of the Company, have been duly executed and
delivered by the Company and constitute the legal, valid and binding contracts
and agreements of the Company enforceable in accordance with their terms, except
as such enforceability may be affected by bankruptcy, insolvency,
reorganization, moratorium, fraudulent conveyance, inadequate or failure of
consideration, applicable regulatory law affecting the Receivables, or other
similar laws and proceedings affecting creditors' rights generally, or general
principles of equity (regardless of whether the application of such principles
is considered in a proceeding in equity or at law) and to the discretion of the
court before which any proceeding may be brought, and to the laws of the State
of South Carolina.
4. Subject to all of the provisions of paragraph 3, the execution,
delivery and performance by the Company of the Loan Documents do not violate any
law or regulation or conflict with the provisions of its Charter or Bylaws.
5. No approval, consent or withholding of objection on the part of,
or filing, registration or qualification with any state or local governmental
body is necessary in connection with the execution, delivery and performance by
the Company of the Loan Documents.
6. Assuming that the Company uses written documents to evidence its
Receivables, and assuming each such written document evidences a monetary
obligation of the account debtor and a grant by such account debtor to the
Company of a security interest in specific goods, the documents evidencing all
of the Company's Receivables constitute chattel paper within the meaning of the
Uniform Commercial Code of the State of Tennessee.
7. Assuming that (i) the financing statements and amendments thereto
in the form attached hereto as Schedule 1 are accepted by, filed and properly
indexed in, the Office of the Secretary of State of Tennessee and the
appropriate recording fees and taxes paid thereon, (ii) new value/consideration
has been and will be given by the Banks and Purchaser to the Company and (iii)
the Company has rights in the collateral described in such financing statements,
the security interests created by the Subsidiary Security Agreement in the
collateral described therein constitute valid perfected security interests in
such types of collateral as to which a security interest may be perfected by
filing in such offices under the Uniform Commercial Code of the State of
Tennessee.
8. All recording, filing and other taxes, fees and charges to
enforce the liens created by the Subsidiary Security Agreement to the extent of
[$1,400,000.00] in maximum principal indebtedness have been paid, and no
penalties, fines or additional taxes, fees or charges may be assessed with
respect to the liens created by the Subsidiary Security Agreement or by the
enforcement of the Subsidiary Senior Guaranty Agreement unless and until the
Security Trustee attempts to enforce such lien of the Subsidiary Security
Agreement for amounts greater than the maximum principal indebtedness so stated.
The maximum principal indebtedness as herein stated may be increased without
penalty at any time, before or within sixty (60) days after an increase occurs
(and at any time after such 60-day period, upon the payment of applicable
penalties and applicable taxes) upon the filing of amendments to the financing
statements on file with the Tennessee Secretary of State declaring the increase
in maximum principal indebtedness and payment of the tax on the amount of the
increase plus filing fees.
9. Section 47-9-308 of the Uniform Commercial Code of the State of
Tennessee provides that a purchaser of chattel paper who gives new value and
takes possession of it in the ordinary course of its business has priority over
a security interest in chattel paper which is perfected by the filing of a
financing statement if such purchaser acts without knowledge that the chattel
paper is subject to a security interest. Assuming the Company places on each
document, instrument, chattel paper and other writing evidencing its Receivables
the legend (legend) described in Section 4.3(c) of the Subsidiary Security
Agreement and assuming that the assumptions set forth in paragraphs 6 and 7 of
this opinion are true, nothing has come to our attention to lead us to believe
that, under Section 47-9-308 of the Uniform Commercial Code of the State of
Tennessee, the security interests of the Security Trustee in the Company's
Receivables would not be prior to the rights of a purchaser of such Receivables
who after the legend is placed therein and with knowledge of the interest of the
Security Trustee, gives new value and takes possession thereof in the ordinary
course of such purchaser's business.
10. A Tennessee Court, if properly presented with the question, would
enforce the choice of law provisions in, and not apply the Tennessee Usury Laws
to, the Subsidiary Security Agreement, the Subsidiary Senior Guaranty Agreement,
the Agreements or the Notes.
11. Notwithstanding paragraph 4.1(c) Subsidiary Security Agreement,
the Tennessee Industrial Loan and Thrift Companies Act requires, in certain
instances, that unearned finance charges and insurance premiums, which are
included in the Receivables, be refunded.
This opinion is rendered only to you and is intended solely for your
benefit in connection with the transactions contemplated in the Loan Documents.
This opinion may not be relied upon for other purposes, nor may it be relied
upon by any other person (other than your special counsel Chapman and Cutler and
any subsequent holder of a Note) for any purpose, without our prior written
consent.
DANCE, DANCE & LANE
By
Richard Dance
EXHIBIT G (TO NOTE AGREEMENT)
SUBORDINATION PROVISIONS APPLICABLE TO
SENIOR SUBORDINATED DEBT AND
JUNIOR SUBORDINATED DEBT
The indebtedness evidenced by the subordinated notes or related thereto and any
renewals or extensions thereof (the "SUBORDINATED INDEBTEDNESS") shall at all
times be wholly subordinate and junior in right of payment to any and all
indebtedness of the Company and the Restricted Subsidiaries [here insert
description of indebtedness to which Subordinated Indebtedness is subordinate
which in all events must include all indebtedness, obligations and liabilities
of the Company and the Restricted Subsidiaries under the Revolving Credit
Agreement, the Note Agreements, the Subsidiary Senior Guaranty Agreement, the
Senior Notes and the Company Security Agreement and the Subsidiary Security
Agreement as each relates to the Senior Notes and, with respect to Senior
Subordinated Debt under the Agreement, the Subsidiary Senior Subordinated
Guaranty Agreement, the Senior Subordinated Notes and the Company Security
Agreement and the Subsidiary Security Agreement as each relates to the Notes
(the "SENIOR INDEBTEDNESS") in the manner and with the force and effect
hereinafter set forth:
1. So long as any Senior Indebtedness shall remain outstanding and
unpaid, no payment either of principal, interest or premium (notwithstanding the
expressed maturity or any time for the payment of principal of, interest or
premium on any Subordinated Indebtedness) shall be made on Subordinated
Indebtedness except with the prior written consent of all of the holders of the
Notes and the holders of the Subordinated Indebtedness will take no steps,
whether by suit or otherwise to compel or enforce the collection of Subordinated
Indebtedness, nor will the holders of the Subordinated Indebtedness use
Subordinated Indebtedness by way of counterclaim, setoff, recoupment or
otherwise so as to diminish, discharge or otherwise satisfy in whole or in part
any indebtedness or liability of the holders of the Subordinated Indebtedness to
the Company, whether now existing or hereafter arising and howsoever evidenced,
PROVIDED, HOWEVER, that the Company may pay interest on Subordinated
Indebtedness accrued to and payable on the date of any such payment so long as
(i) the Company shall not be in default in the payment of principal of, interest
or premium on Senior Indebtedness, (ii) the Company has not received written
notice from any holder of the Senior Indebtedness that some other default has
occurred and is continuing under any promissory note or agreement pertaining to
Senior Indebtedness or any collateral security therefor, and (iii) none of the
events hereinafter set forth in paragraph numbered 2 hereof has occurred.
2. In the event of any distribution, dividend, or application,
partial or complete, voluntary or involuntary, by operation of law or otherwise,
of all or any part of the assets of the Company or of the proceeds thereof to
the creditors of the Company or upon any indebtedness of the Company, occurring
by reason of the liquidation, dissolution, or other winding up of the Company,
or by reason of any execution sale, or bankruptcy, receivership, reorganization,
arrangement, insolvency, liquidation or foreclosure proceeding of or for the
Company or involving its property, no dividend, payment, distribution or
application shall be made, and the holders of the Subordinated Indebtedness
shall not be entitled to receive or retain any payment, dividend, distribution,
or application on or in respect of the Subordinated Indebtedness, unless and
until all of the Senior Indebtedness then outstanding shall have been paid and
satisfied in full, and in any such event any dividend, payment, distribution or
application otherwise payable in respect of Subordinated Indebtedness shall be
paid and applied on Senior Indebtedness until such Senior Indebtedness has been
fully paid and satisfied.
3. The holders of Senior Indebtedness need not at any time give the
holders of the Subordinated Indebtedness notice of any kind of the creation or
existence of any Senior Indebtedness, nor of the amount or terms thereof, all
such notice being hereby expressly waived. Also, the holders of Senior
Indebtedness may at any time from time to time, without the consent of or notice
to the holders of Subordinated Indebtedness, without incurring responsibility to
the holders of the Subordinated Indebtedness, and without impairing or releasing
the obligation of the undersigned under this agreement (i) renew, refund or
extend the maturity of any Senior Indebtedness, or any part thereof, or
otherwise revise, amend or alter the terms and conditions thereof, (ii) sell,
exchange, release or otherwise deal with any property by whomsoever at any time
pledged, mortgaged or otherwise hypothecated or subjected to a lien to secure
any Senior
Indebtedness, and (iii) exercise or refrain from exercising any rights against
the Company and others, including the holders of the Subordinated Indebtedness.
4. The holders of the Subordinated Indebtedness will not sell,
assign or otherwise transfer any Subordinated Indebtedness, or any part thereof,
except subject to and in accordance with the terms hereof and upon the agreement
of the transferee or assignee to abide by and be bound by the terms hereof.
5. The holders of the Subordinated Indebtedness undertake and agree
for the benefit of each holder of Senior Indebtedness to execute, verify,
deliver and file any proofs of claim which any holder of Senior Indebtedness may
at any time require in order to prove and realize upon any rights or claims
pertaining to the Subordinated Indebtedness to effectuate the full benefit of
the subordination contained herein; and upon failure of the holder of any
Subordinated Indebtedness so to do, any such holder of Senior Indebtedness shall
be deemed to be irrevocably appointed the agent and attorney-in-fact of the
holder of such Subordinated Indebtedness to execute, verify, deliver and file
any such proofs of claim.
6. No right of any holder of any Senior Indebtedness to enforce
subordination as herein provided shall at any time or in any way be affected or
impaired by any failure to act on the part of the Company or the holders of
Senior Indebtedness, or by any noncompliance by the Company with any of the
terms, provisions and covenants applicable to the Subordinated Indebtedness,
regardless of any knowledge thereof that any such holder of Senior Indebtedness
may have or be otherwise charged with.
7. The Company agrees, for the benefit of the holders of Senior
Indebtedness, that in the event that any Subordinated Indebtedness is declared
due and payable before its expressed maturity because of the occurrence of a
default hereunder, (i) the Company will give prompt notice in writing of such
happening to the holders of Senior Indebtedness and (ii) all Senior Indebtedness
shall forthwith become immediately due and payable upon demand, regardless of
the expressed maturity thereof.
8. These subordination provisions shall be continuing and binding
until written notice of its discontinuance shall be actually received by the
holders of the Subordinated Indebtedness, and also shall continue to remain in
full force and effect until all Senior Indebtedness created or existing prior to
the receipt of such notice shall have been fully paid and satisfied.
EXHIBIT H (TO NOTE AGREEMENT)
BORROWING BASE CERTIFICATE
WORLD ACCEPTANCE CORPORATION AND RESTRICTED SUBSIDIARIES AS OF --------------, --------------
TOTAL UNSECURED SECURED
COMPANY
1. Gross Finance Receivables
$---------- $---------- $----------
2. Less Credits/Allowances
$---------- $---------- $----------
3. Net Finance Receivables
$---------- $---------- $----------
Ineligibles:
Affiliate Receivables
$---------- $---------- $----------
Shareholder/Employee Receivables
$---------- $---------- $----------
Government Receivables
$---------- $---------- $----------
Bankruptcy
$---------- $---------- $----------
Subject to claims, offsets or defenses
$---------- $---------- $----------
60 days past due
$---------- $---------- $----------
4. Total Ineligibles
$---------- $---------- $----------
5. Eligible Finance Receivables
$---------- $---------- $----------
6. Unearned Finance Charges
$---------- $---------- $----------
7. Eligible Finance Receivables, Net
$---------- $---------- $----------
8.
Borrowing Base
(a) 85% of Secured Eligible Receivables $__________
(b) Lesser of:
(i) $15,000,000 $----------
(ii) 11.11% of (a) above $----------
(iii) 50% of Eligible Unsecured,
Net $----------
Lesser $----------
9. Total Borrowing Base (a+b) $----------
10. Current Maximum $----------
11. Current Outstanding Balance of
Term Notes $----------
12. Available Borrowing Base $----------
13. Current Outstanding Balance
of Revolver $----------
14. Current Availability $----------