CONFORMED COPY
WORLD ACCEPTANCE CORPORATION
NOTE AGREEMENT
Dated as of June 30, 1997
Re: $10,000,000 10% Senior Subordinated Secured NotesDue June 30, 2004
Table of Contents
(Not a part of the Agreement)
SECTION HEADING PAGE
SECTION 1. DESCRIPTION OF NOTES AND COMMITMENT............................................. 1
Section 1.1. Description of Notes.......................................................... 1
Section 1.2. Security for the Notes........................................................ 1
Section 1.3. Commitment, Closing Date, Purchase Price...................................... 2
SECTION 2. PREPAYMENT OF NOTES............................................................. 3
Section 2.1. Required Prepayments.......................................................... 3
Section 2.2. Optional Prepayment With Premium.............................................. 3
Section 2.3. Notice of Prepayments......................................................... 3
Section 2.4. Allocation of Prepayments..................................................... 3
Section 2.5. Direct Payment................................................................ 3
SECTION 3. REPRESENTATIONS................................................................. 4
Section 3.1. Representations of the Company................................................ 4
Section 3.2. Representations of the Purchaser.............................................. 4
SECTION 4. CLOSING CONDITIONS.............................................................. 5
Section 4.1. Conditions.................................................................... 5
Section 4.2. Waiver of Conditions.......................................................... 7
SECTION 5. COMPANY COVENANTS............................................................... 7
Section 5.1. Existence, Etc................................................................ 7
Section 5.2. Insurance..................................................................... 7
Section 5.3. Taxes, Claims for Labor and Materials......................................... 8
Section 5.4. Compliance with Laws.......................................................... 8
Section 5.5. Maintenance, Etc.............................................................. 8
Section 5.6. Nature of Business............................................................ 8
Section 5.7. Consolidated Net Worth........................................................ 8
Section 5.8. Fixed Charge Coverage Ratio................................................... 9
Section 5.9. Permitted Indebtedness........................................................ 9
Section 5.10. Limitations on Indebtedness................................................... 9
Section 5.11. Limitation on Liens.......................................................... 10
Section 5.12. Dividends, Stock Purchases................................................... 11
Section 5.13. Mergers, Consolidations and Sales or Transfers of Assets..................... 12
Section 5.14. Lease-Backs.................................................................. 15
Section 5.15. Guaranties................................................................... 15
Section 5.16. Repurchase of Notes.......................................................... 15
Section 5.17. Transactions with Affiliates................................................. 15
Section 5.18. Investments.................................................................. 16
Section 5.19. Termination of Pension Plans................................................. 16
Section 5.20. Reports and Rights of Inspection............................................. 16
SECTION 6. EVENTS OF DEFAULT AND REMEDIES THEREFOR........................................ 19
Section 6.1. Events of Default............................................................ 19
Section 6.2. Notice to Holders............................................................ 22
Section 6.3. Acceleration of Maturities................................................... 22
Section 6.4. Rescission of Acceleration................................................... 23
SECTION 7. AMENDMENTS, WAIVERS AND CONSENTS............................................... 23
Section 7.1. Consent Required............................................................. 23
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. SUBORDINATION.................................................................. 36
Section 9.1. Subordination to Senior Indebtedness......................................... 36
Section 9.2. Proofs of Claim.............................................................. 39
Section 9.3. No Waiver.................................................................... 40
Section 9.4. Rights of Holders of Senior Indebtedness..................................... 40
Section 9.5. Rights of Holders of Notes................................................... 40
Section 9.6. Holders of Notes Agreement as to the Subsidiary Senior Subordinated
Guaranty Agreement........................................................... 41
SECTION 10. MISCELLANEOUS.................................................................. 41
Section 10.1. Registered Notes............................................................. 41
Section 10.2. Exchange of Notes............................................................ 41
Section 10.3. Loss, Theft, Etc. of Notes................................................... 42
Section 10.4. Expenses, Stamp Tax Indemnity................................................ 42
Section 10.5. Powers and Rights Not Waived; Remedies Cumulative............................ 43
Section 10.6. Notices...................................................................... 43
Section 10.7. Successors and Assigns....................................................... 44
Section 10.8. Survival of Covenants and Representations.................................... 44
Section 10.9. Severability................................................................. 44
Section 10.10. Governing Law................................................................ 44
Section 10.11. Captions..................................................................... 44
Signatures......................................................................................... 45
ATTACHMENTS TO PURCHASE AGREEMENT:
Schedule I -- Name and Address of Purchaser
Schedule II -- Description of Liens
Exhibit A -- Form of 10% Senior Subordinated Secured Notes due June 30, 2004
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
000 Xxxxxxxxx XxxxxxXxxxxxxxxx, Xxxxx Xxxxxxxx 00000-0000
NOTE AGREEMENT
Re: $10,000,000 10% Senior Subordinated Secured Notes
Due June 30, 2004
Dated as of June 30, 1997
To the Purchaser Named in Schedule I
Hereto Which is a Signatory to this
Agreement
Ladies and Gentlemen:
The undersigned, WORLD ACCEPTANCE CORPORATION, a South Carolina
corporation (the "Company"), agrees with you as follows:
.'SECTION 1. DESCRIPTION OF NOTES AND COMMITMENT';.
.Section 1.1. Description of Notes;. The Company will authorize the
issue and sale of $10,000,000 aggregate principal amount of its 10% Senior
Subordinated 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") to be dated the date of issue, to bear interest from such
date at the rate of 10% per annum (computed on the basis of a 360-day year of
twelve 30-day months), payable quarterly on the thirtieth day of each June,
September, December and March in each year (commencing September 30, 1997) and
at maturity and to bear 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 12% per annum after maturity, whether by acceleration or otherwise, until
paid, to be expressed to mature on June 30, 2004, and to be substantially in 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.
You are hereinafter sometimes referred to as the "Purchaser".
.Section 1.2. Security for the Notes;. (a) The Notes will be
secured, on a senior subordinated basis, 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") 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").
(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 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 Subordinated Guaranty Agreement").
.Section 1.3. Commitment, Closing Date, Purchase Price;. 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 agrees to issue and sell to you, and
you agree to purchase from the Company, Notes in the principal amount set forth
opposite your name on Schedule I hereto at a price equal to 99.6936% of the
principal amount thereof on the Closing Date
hereinafter mentioned.
Delivery of the Notes will be made at the offices of Xxxxxxx and
Xxxxxx, 000 Xxxx Xxxxxx Xxxxxx, Xxxxxxx, Xxxxxxxx 00000, against payment
therefor in Federal Reserve or other funds current and immediately available for
the account of World Acceptance Corporation at the principal office of Xxxxxx
Trust and Savings Bank, Chicago, Illinois, ABA: 000-000-000, Loan Accounting,
Account Number 0000000, reference World Acceptance Corporation, Obligor Number
9414991000 in the amount of the purchase price 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 for the full amount of your purchase (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.
The Company and you acknowledge and agree that the purchase by you of
the Notes at a price equal to 99.6936% of the principal amount thereof results
in the creation of "original issue discount" under both generally accepted
accounting principles and the regulations of the Internal Revenue Service. The
Company and you acknowledge and agree, however, that due to the de minimis
nature of such "original issue discount" you and the Company are permitted to
and will treat the Notes as having no "original issue discount" for purposes of
the regulations of the Internal Revenue Service. .SECTION 2. PREPAYMENT OF
NOTES;.
.Section 2.1. Required Prepayments;. The Company agrees that on the
thirtieth day of June in each year commencing June 30, 2000 and ending June 30,
2003 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) $2,000,000 or (ii) the principal amount of the Notes then outstanding. The
entire remaining, then outstanding principal amount of the Notes shall become
due on June 30, 2004. 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 June 30, 2004 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;. (a) 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.10.2.
(b) You further represent that at least one of the following
statements is an accurate representation as to each source of funds (a "Source")
to be used by you to pay the purchase price of the Notes to be purchased by you
hereunder:
(i) the Source is an "insurance company general account" within
the meaning of Department of Labor Prohibited Transaction Exemption
("PTE") 95-60 (issued July 12, 1995), and there is no employee
benefit plan (treating as a single plan all plans maintained by the
same employer or employee organization) with respect to which the
amount of the general account reserves and liabilities for all
contracts held by or on behalf of such plan exceed 10% of the total
reserves and liabilities of such general account (exclusive of
separate account liabilities) plus surplus, as set forth in your most
recent annual statement in the form required by the National
Association of Insurance Commissioners as filed with your state of
domicile; or
(ii) the Source is either (A) an insurance company pooled
separate account, within the meaning of XXX 00-0 (xxxxxx Xxxxxxx 00,
0000), xx (X) a bank collective investment fund, within the meaning
of the PTE 91-38 (issued July 12, 1991) and, except as you have
disclosed to the Company in writing pursuant to this paragraph (ii),
no employee benefit plan or group of plans maintained by the same
employer or employee organization beneficially owns more than 10% of
all assets allocated to such pooled separate account or collective
investment fund; or
(iii) the Source constitutes assets of an "investment fund"
(within the meaning of Part V of the QPAM Exemption) managed by a
"qualified professional asset manager" or "QPAM" (within the meaning
of Part V of the QPAM Exemption), no employee benefit plan's assets
that are included in such investment fund, when combined with the
assets of all other employee benefit plans established or maintained
by the same employer or by an affiliate (within the meaning of
Section V(c)(1) of the QPAM Exemption) of such employer or by the
same employee organization and managed by such QPAM, exceed 20% of
the total client assets managed by such QPAM, the conditions of Part
l(c) and (g) of the QPAM Exemption are satisfied, neither the QPAM
nor a person controlling or controlled by the QPAM (applying the
definition of "control" in Section V(e) of the QPAM Exemption) owns a
5% or more interest in the Company and (A) the identity of such QPAM
and (B) the names of all employee benefit plans whose assets are
included in such investment fund have been disclosed to the Company
in writing pursuant to this paragraph (iii); or
(iv) the Source is a governmental plan; or
(v) the Source is one or more employee benefit plans, or a
separate account or trust fund comprised of one or more employee
benefit plans, each of which has been identified to the Company in
writing pursuant to this paragraph (v); or
(vi) the Source does not include assets of any employee benefit
plan, other than a plan exempt from the coverage of ERISA.
As used in this ss.3.2, the terms "employee benefit plan",
"governmental plan", "party in interest" and "separate account" shall have the
respective meanings assigned to such terms in Section 3 of ERISA.
.SECTION 4. CLOSING CONDITIONS;.
.Section 4.1. Conditions;. Your obligation to purchase 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 Xxxxxxxxxx Xxxx 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 purchase the Notes proposed to be sold to you 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 Subordinated 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 Subordinated
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 Xxxxxxx and
Xxxxxx, who are acting as your special counsel in this transaction,
from Xxxxxxxx, Xxxxxxxx & Xxxxxx, 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, Xxxxxx & Xxxxxx, P.C., counsel
for World Finance Corporation of Georgia, from Xxxxxxx,
Xxxxxxxx, Xxxxx, Xxxx & Xxxxxxxx, counsel for World Finance Corporation
of Louisiana, from Xxxxx & Dunlevy, Luttrell, Xxxxxxxxx & Xxxxxxxxx,
counsel for World Acceptance Corporation of Oklahoma, Inc., from Xxx
Xxxxxx, 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 Revolving Credit Agreement, the Senior Note
Agreements and the Subsidiary Senior 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 Junior Subordinated Debt unless such 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 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
Junior Subordinated Debt other than any regularly scheduled payment of
principal or interest on the 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 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 Xxxxx'x 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 Xxxxx'x 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-fifthday 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 Subordinated
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 Note Agreements; 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 Notes or the
Senior 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 this Agreement, the Senior
Note Agreements, 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 Subordinated
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 Subordinated Guaranty Agreement, is untrue in any material
respect as of the date of the issuance or making thereof; or
(k) The Subsidiary Senior Subordinated 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 Subordinated 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 Subordinated 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 Subordinated 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 Subordinated 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 Xxxxxx 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 Xxxxxx 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 o
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 (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 and Senior Notes
(exclusive of any Notes or Senior 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 Xxxxx'x 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 XxXxxx-Xxxx 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 Xxxxxx 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 Note Agreements" shall mean, collectively, the separate Amended
and Restated Note Agreements, each dated as of June 30, 1997, between the
Company and the respective note purchasers named therein, as the same may from
time to time be amended, restated, modified, supplemented or waived pursuant to
the terms thereof.
"Senior Notes" shall mean the Senior Secured Notes and the Revolving
Credit Notes.
"Senior Secured Notes" shall mean the Senior Secured Notes due December
1, 1999 issued pursuant to the Senior Note Agreements, as such Notes may from
time to time be amended or restated pursuant to the terms thereof and of the
Senior Note Agreements and any notes executed in replacement thereof.
"Senior Subordinated Debt" shall mean (i) the 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 and
Senior Notes (exclusive of any Notes and Senior Notes held by a Subsidiary or
other Affiliate).
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 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 Notes, as the same may from time to time be amended, restated,
modified, supplemented or waived pursuant to the terms thereof.
"Subsidiary Senior Subordinated Guaranty Agreement" shall have the
meaning as defined in ss.1.2.
"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 or other equity interests 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.
"Xxxxxxxxxx Xxxx" shall mean the Lien of Xxxxxxxxxx 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.
.C.SECTION 9. SUBORDINATION;.
.Section 9.1. Subordination to Senior Indebtedness;. The
Indebtedness evidenced by the Notes (whether for principal, interest or premium)
and any renewals or extensions thereof, and any and all other obligations and
liabilities owing under this Agreement and all other instruments and agreements
relating thereto, shall at all times be wholly subordinate and junior in right
of payment to any and all indebtedness of the Company or any of the Restricted
Subsidiaries to the Security Trustee and/or the holders of the Senior Notes from
time to time outstanding under the Senior Note Agreements, the Revolving Credit
Agreement, the Company Security Agreement, the Subsidiary Security Agreement,
the Subsidiary Senior Guaranty Agreement and the Senior Notes (collectively, the
"Financing Documents") for (i) principal, interest and premium due thereunder
(including, without limitation any interest which, but for the filing of a
petition in bankruptcy or similar event, would accrue after the commencement of
any bankruptcy, insolvency, reorganization or similar proceeding of the Company)
other than (A) any principal amount of borrowings outstanding under the
Revolving Credit Notes in excess of the Maximum Principal Amount and (B) the
related interest thereon, (ii) the amounts payable by the Company under the
Revolving Credit Agreement in the form of fees pursuant to Sections 3.1 and 3.3
thereof as such Sections were in effect on the Closing Date or as amended or
revised after the Closing Date but not in excess of the aggregate amount of the
fees payable pursuant to Sections 3.1 and 3.3 as in effect on the Closing Date,
(iii) the amounts payable under the Revolving Credit Agreement for increased
costs, taxes and indemnification as described in Section 10.3, Section 12.3 and
paragraph (b) of Section 12.12, respectively, of the Revolving Credit Agreement,
(iv) the amounts payable by the Company under the Senior Note Agreements
pursuant to the final paragraph of Section 8.4 of the Senior Note Agreements and
Section 8.13 of the Company Security Agreement, and (v) the first $2,500,000 of
all other costs, claims, expenses and fees (including trustee's fees and
attorneys' fees) which become payable by the Company pursuant to or arising out
of the Financing Documents with respect to the Senior Notes (such indebtedness
being herein referred to as "Senior Indebtedness"), in the manner and with the
force and effect hereafter set forth:
(a) In the event of any liquidation, dissolution or winding up
of the Company, or of any execution, sale, receivership, insolvency,
bankruptcy, liquidation, readjustment, reorganization, or other similar
proceeding relative to the Company or its property, all Senior
Indebtedness shall first be paid in full before any payment is made
upon the indebtedness evidenced by the Notes or related thereto and in
any such event any payment or distribution of any kind or character,
whether in cash, property or securities (other than in securities or
other evidences of indebtedness the payment of which is subordinated to
the payment of all Senior Indebtedness which may at the time be
outstanding to at least the same extent as the payment of the Notes is
subordinated thereto in this ss.9) which shall be made upon or in
respect of the Notes shall be paid over to the Security Trustee
for application in payment of the Senior Indebtedness unless and until
such Senior Indebtedness shall have been paid or satisfied in full.
(b) In the event that the Notes are declared or become due and
payable because of the occurrence of any Event of Default hereunder or
otherwise (other than that portion of the Notes becoming due and
payable by reason of any required prepayment pursuant to ss.2.1 hereof
or any optional prepayment pursuant to ss.2.2 hereof with the prior
written consent of the Agent and the holders of at least 76% in
aggregate principal amount of outstanding Senior Secured Notes), under
circumstances when the foregoing clause (a) shall not be applicable,
the holders of the Notes shall be entitled to payments due thereon,
other than regularly scheduled payments of interest and the payments of
principal and interest due and payable under ss.2.1 hereof and at
maturity (other than by acceleration), only after there shall first
have been paid in full all Senior Indebtedness outstanding at the time
the Notes so become due and payable (plus interest, fees and expenses
incurred or accrued thereafter constituting Senior Indebtedness)
because of any such event, or payment shall have been provided for in a
manner satisfactory to the holders of such Senior Indebtedness.
(c) Without limiting any of the other provisions hereof,
during:
(i) the continuance of any default in the payment of
either principal, interest or premium, if any, on any Senior
Indebtedness (a "Payment Default") no payment of principal,
premium or interest or other amounts shall be made on or with
respect to the Notes if either (A) a Blockage Period
(hereinafter defined) exists with respect to such Payment
Default or (B) judicial proceedings shall be pending in
respect of such Payment Default; or
(ii) the continuance of any Event of Default under the
Senior Note Agreements or the Revolving Credit Agreement
resulting from the failure of the Company to comply with the
covenants contained in Sections 5.8, 5.10(a)(i) 5.12, 5.13 or
5.20(k) of the Senior Note Agreements or Sections 8.8,
8.10(a)(i), 8.12, 8.13 or 8.20(k) of the Revolving Credit
Agreement, in each case, as such Sections were in effect as of
the Closing Date or as amended or modified subsequent to the
Closing Date so long as such amended or modified covenants
either (i) relate to the same matters covered by such Sections
as of the Closing Date and are no more restrictive or (ii) are
consented to by the holders of the Notes (any such event being
a "Material Nonpayment Default"), no payment of principal,
premium or interest shall be made on the Notes if either (A) a
Blockage Period exists with respect to such Material
Nonpayment Default or (B) judicial proceedings shall be
pending in respect of such Material Nonpayment Default or any
other Material Nonpayment Default,
provided, that payment of principal, premium or interest to the holders
of the Notes may not be prohibited by Blockage Periods pursuant to the
preceding provisions (x) for more than an aggregate of 120 days in any
twelve month period in the case of prohibitions arising from Material
Nonpayment Defaults, (y) for more than an aggregate of 360 days for
prohibitions arising from Material Nonpayment Defaults during the
period beginning on the Closing Date and ending on the day next
following the date on which the Notes have been paid in full, or (z)
for more than an aggregate of 360 days in any thirteen month period. As
used herein the term "Blockage Period" shall mean the period of time
commencing upon (A) the occurrence of a Payment Default and ending
either 180 days later or on such earlier date, if any, on which such
Payment Default shall have ceased to continue, provided, that all of
the holders of the Senior Indebtedness may (I) waive retroactively any
Blockage Period resulting from a Payment Default within 10 business
days after the occurrence of such Payment Default by delivery during
such period of an instrument in writing to the Company to such effect
and (II) waive any such Blockage Period at any time after such 10
business days by delivery of an instrument in writing to the Company to
such effect, which waiver shall be effective not earlier than the date
of delivery thereof and (B) in the case of a Material Nonpayment
Default, the furnishing of a Blockage Notice as hereinafter provided
and ending either 120 days later or on such earlier date, if any, on
which such Material Nonpayment Default shall have ceased to continue,
and the term "Blockage Notice" shall mean the furnishing of notice by
the
Security Trustee or one or more holders of Senior Indebtedness to the
Company of a Material Nonpayment Default. For purposes of this
paragraph (c) a Payment Default shall be deemed to be continuing until
the principal, interest and/or premium which is overdue has been paid
in full by the Company and a Material Nonpayment Default shall be
deemed to be continuing until waived by the requisite holders of Senior
Indebtedness by delivery of an instrument in writing to the Company to
such effect, which waiver shall be effective not earlier than the date
of delivery thereof. The Company agrees that immediately upon receipt
of any Blockage Notice or an instrument from the holders of the Senior
Indebtedness waiving a Blockage Period it will deliver copies thereof
to each holder of the Notes. In addition, the Company agrees that (A)
if any legal proceedings described in clauses (i) or (ii) above shall
be instituted or (B) if any Payment Default or any Material Nonpayment
Default shall be cured, waived or shall otherwise cease to exist, it
shall promptly furnish notice thereof to each holder of the Notes.
(d) During any period of time when pursuant to paragraph (c)
above payment of principal, premium and interest may not be made on the
Notes the holders of the Notes shall not be deemed to be prohibited
from (i) filing or initiating a petition in bankruptcy against the
Company or instituting any other proceedings relating to insolvency,
liquidation, readjustment, reorganization or other similar proceedings
relative to the Company or its property or (ii) joining in any
proceedings involving the Company initiated by the Security Trustee,
any holder of Senior Indebtedness or other Person to collect or enforce
such Senior Indebtedness or under laws relating to bankruptcy,
insolvency, liquidation, readjustment, reorganization or other similar
proceedings.
(e) In the event that notwithstanding this ss.9.1, the Company
shall make any payment in respect of the Notes in violation of this
ss.9.1, then until such violation shall have been cured (within the
applicable time period) or waived or shall have ceased to exist, such
payment shall be held by the recipient for the benefit of, and
forthwith shall be paid over and delivered to, the Security Trustee for
application to the payment of all Senior Indebtedness remaining unpaid
unless and until all Senior Indebtedness shall have been paid or
satisfied in full.
.Section 9.2. Proofs of Claim;. If, while any Senior Indebtedness is
outstanding, any bankruptcy, reorganization, insolvency, receivership,
arrangement, composition or marshalling of assets or similar proceedings
relating to the Company or its property is commenced by or against the Company
or its property:
(a) The Security Trustee and/or the holders of the Senior
Indebtedness each is hereby irrevocably authorized and empowered (in
its own name or in the name of the holder of each Note or otherwise),
but shall have no obligation, to demand, xxx for, collect and receive
every payment or distribution referred to in respect of the Notes and
give acquittance therefor and to file claims and proofs of claim and
take such other action (including without limitation enforcing any lien
securing payment of the Notes) as it may deem necessary or advisable
for the exercise or enforcement of any of the rights or interests of
the holders of such Notes; provided, however, (i) in no event shall the
Security Trustee or any holder of such Senior Indebtedness be entitled
to vote the Notes on behalf of the holders of the Notes and (ii) within
5 business days following the taking of any material action by the
Security Trustee or the holders of the Senior Indebtedness pursuant to
this paragraph (a), the Company will furnish each holder of the Notes
written notice describing the action so taken; and
(b) The holder of each Note shall duly and promptly take such
action as the Security Trustee and/or the holders of the Senior
Indebtedness may reasonably request (i) to collect any payment with
respect to the Notes for the account of the holders of such Senior
Indebtedness and to file appropriate claims or proofs of claim in
respect of the Notes, (ii) to execute and deliver to the Security
Trustee and/or the holders of the Senior Indebtedness such powers of
attorney, assignments, or other instruments as it may request in order
to enable it to enforce any and all claims with respect to, and any
liens securing payment of, the Notes, and (iii) to collect and receive
any and all payments or distributions which may be payable or
deliverable upon or with respect to the Notes;
provided, however, that the foregoing shall not waive or diminish the rights of
each holder of the Notes to take any action (including, without limitation, the
foregoing actions) itself in respect of enforcement of the Notes, and no waiver,
consent or failure to pursue any right or remedy in respect of the Notes shall
limit any rights which the Security Trustee or the holder of any Senior
Indebtedness otherwise may have.
.Section 9.3. No Waiver;. Except as otherwise specified in the
preceding provisions of this ss.9, no right of the Security Trustee or any
present or future 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
act or failure to act on the part of the Company, the Security Trustee or the
holders of Senior Indebtedness, or by any noncompliance by the Company with any
of the terms, provisions and covenants of the Notes or the agreement under which
they are issued, regardless of any knowledge thereof that the Security Trustee
or any such holder of Senior Indebtedness may have or be otherwise charged with.
The holders of Senior Indebtedness may, without in any way affecting
the obligations of the holders of the Notes with respect thereto, at any time or
from time to time and in their absolute discretion, change the manner, place or
terms of payment of, change or extend the time of payment of, or renew or alter,
any Senior Indebtedness, or amend, modify or supplement any agreement or
instrument governing or evidencing such Senior Indebtedness or any other
documents referred to therein, or exercise or refrain from exercising any other
of their rights under the Senior Indebtedness including, without limitation, the
waiver of default thereunder and the exchange, release or nonperfection of any
collateral, or any release or amendment or waiver of or consent to departure
from any guaranty securing such Senior Indebtedness, all without notice to or
assent from the holders of the Notes and, so long as any Senior Indebtedness
remains outstanding, all rights and interests of the holders of such Senior
Indebtedness and all agreements and obligations of each holder of a Note and the
Company under this Agreement shall remain in full force and effect irrespective
of the foregoing. As soon as available the Company shall furnish to each holder
of the Notes a copy of any amendment, modification or supplement to the
Financing Documents and any waiver of any of the provisions thereof.
.Section 9.4. Rights of Holders of Senior Indebtedness;. The Company
agrees, for the benefit of the holders of Senior Indebtedness, that in the event
that any Note is declared due and payable before its expressed maturity because
of the occurrence of an Event of Default, (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.
.Section 9.5. Rights of Holders of Notes;. The foregoing provisions
are solely for the purpose of defining the relative rights of the holders of
Senior Indebtedness on the one hand, and the holders of the Notes on the other
hand, and nothing herein shall impair, as between the Company and the holders of
the Notes, the obligation of the Company which is unconditional and absolute, to
pay the principal, premium, if any, and interest on the Notes in accordance with
their terms, nor shall anything herein prevent the holders of the Notes from
exercising all remedies otherwise permitted by applicable law or hereunder upon
default hereunder, subject to the rights of the holders of Senior Indebtedness
as herein provided for.
.Section 9.6. Holders of Notes Agreement as to the Subsidiary Senior
Subordinated Guaranty Agreement;. The holders of the Notes acknowledge that the
Subsidiary Senior Subordinated Guaranty Agreement has been executed for their
benefit by the Restricted Subsidiaries and agree to comply with the requirements
and obligations set forth in Section 15 thereof of the holders of the
Subordinated Guarantee Obligations thereunder and to be bound by the other
provisions contained in Section 15 thereof.
.SECTION 10. MISCELLANEOUS;.
.Section 10.1. 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 10.2. 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.10.1, this ss.10.2 or ss.10.3, 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 10.3. 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 10.4. 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 Subordinated 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 Subordinated Guaranty Agreement and the Notes;
(b) the reasonable fees and disbursements of Xxxxxxx and
Xxxxxx, 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 Subordinated 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 Subordinated 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 Subordinated 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.10.2, 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 Subordinated Guaranty Agreement or the Notes, whether or not any Notes
are then outstanding. Except as set forth in ss.10.2, 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 10.5. 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 10.6. 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 000 Xxxxxxxxx
Xxxxxx, Xxxxxxxxxx, Xxxxx Xxxxxxxx 00000-0000, 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 10.7. 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 10.8. 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 Subordinated 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 10.9. 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 10.10. GOVERNING LAW;. THIS AGREEMENT AND THE NOTES ISSUED
AND SOLD HEREUNDER SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH SOUTH
CAROLINA LAW.
.Section 10.11. 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. Xxxxxxxxx XxXxxx III
Its Executive Vice President
Accepted as of June 30, 1997.
PRINCIPAL MUTUAL LIFE INSURANCE
COMPANY
By /s/ Xxxxx X. Xxxxxxx
Its Counsel
By /s/ Xxxx X. Xxxxxx
Its Counsel
SCHEDULE I
NAME AND ADDRESSES OF PURCHASER PRINCIPAL AMOUNT OF NOTES TO BE PURCHASED
PRINCIPAL MUTUAL LIFE INSURANCE COMPANY $8,000,000
$2,000,000
000 Xxxx Xxxxxx
x0,000,000
Xxx Xxxxxx, Xxxx 00000-0000
Attention: Investment-Securities
Telefacsimile: (000) 000-0000
Confirmation: (000) 000-0000
Payments
All payments on or in respect of the Notes to be by bank wire transfer of
Federal or other immediately available funds to:
With respect to the $8,000,000 Note:
ABA #000000000
Norwest Bank Iowa, N.A.
7th and Xxxxxx Xxxxxxx
Xxx Xxxxxx, Xxxx 00000
For credit to Principal Mutual Life Insurance Company
Account Xx. 000000
XXX XXXXX (X) B61045()World Acceptance Corp. Sr.
Subordinated Notes due 2004
With respect to the $2,000,000 Note:
ABA #000000000
Norwest Bank Iowa, N.A.
7th and Xxxxxx Xxxxxxx
Xxx Xxxxxx, Xxxx 00000
For credit to Principal Mutual Life Insurance Company
Account Xx. 0000000
XXX XXXXX (X) B61045()World Acceptance Corp. Sr.
Subordinated Notes due 2004
In each case with sufficient information (including interest rate,
maturity date, interest amount, principal amount and premium amount, if
applicable) to identify the source and application of such funds.
Notices
All notices with respect to payments to:
Principal Mutual Life Insurance Company
000 Xxxx Xxxxxx
Xxx Xxxxxx, Xxxx 00000-0000
Attention: Investment-Accounting & Treasury-Securities
Telefacsimile: (000) 000-0000
Confirmation: (000) 000-0000
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.: 00-0000000
DESCRIPTION OF LIENS
Schedule II to Senior Subordinated
Note Agreement dated June 30, 1997
Description of Liens
Lien of Xxxxxxxxxx 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 000
Xxxxxxxxx Xxxxxx, Xxxxxxxxxx, Xxxxx Xxxxxxxx 00000. See Schedule B to owner's
title policy attached.
SCHEDULE II
(to Senior Subordinated Note Agreement)
EXHIBIT A (TO NOTE AGREEMENT)
WORLD ACCEPTANCE CORPORATION
10% Senior Subordinated Secured Note
Due June 30, 2004
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 thirtieth day of June, 2004
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 10% per annum from the date hereof until maturity, payable quarterly on
the thirtieth of each September, December, March and June in each year
commencing September 30, 1997, 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 12% 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 10% Senior Subordinated Secured Notes due June
30, 2004 (the "Notes") of the Company in the aggregate principal amount of
$10,000,000 issued or to be issued under and pursuant to the terms and
provisions of that certain Note Agreement dated as of June 30, 1997, as the same
may from time to time be amended pursuant to the terms thereof (the "Note
Agreement"), entered into by the Company with the original purchaser 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 Agreement to all
the benefits and security provided for thereby or referred to therein. Reference
is hereby made to the Note Agreement for a statement of such rights and benefits
and the terms of the subordination relating thereto.
This Note and the other Notes outstanding under the Note Agreement 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 Agreement 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 Agreement.
The Notes are secured, on a senior subordinated basis, by the Amended
and Restated Security Agreement, Pledge and Indenture of Trust dated as of June
30, 1997 between the Company and Xxxxxx 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 Note
Agreement and the Company Security Agreement are guaranteed pursuant to that
certain 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 Agreement, the Company Security Agreement, the
Subsidiary Security Agreement, the Subsidiary Senior Subordinated 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 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 Agreement, 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 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 Purchaser 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 Agreement, the Company Security Agreement, the
Subsidiary Security Agreement, the Subsidiary Senior Subordinated 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 Agreement, the
Company Security Agreement, the Subsidiary Security Agreement, the Subsidiary
Senior Subordinated 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 will
be used to provide additional working capital and for other corporate purposes.
None of the transactions contemplated in the Agreement, the Company Security
Agreement, the Subsidiary Security Agreement or the Subsidiary Senior
Subordinated 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 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, who was offered 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
Agreement 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 Agreement, the
Company Security Agreement, the Subsidiary Security Agreement, the Subsidiary
Senior Subordinated 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 Xxxxxxxxxx Xxxx.
19. Compliance by Restricted Subsidiaries. Compliance by each
Restricted Subsidiary with all of the provisions of the Subsidiary Security
Agreement and the Subsidiary Senior Subordinated 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
Subordinated 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
SUBSIDIARIES OF THE COMPANY
1. RESTRICTED SUBSIDIARIES:
NAME OF SUBSIDIARY JURISDICTION OF PERCENTAGE OF VOTING STOCK OWNED BY THE
INCORPORATION COMPANY AND 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
ANNEX B
(to Exhibit C)
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 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, XXX Xx. 0000, X.X. Xxxxxxxx Xxxxx, Xxxxxx
Xxxxxxxx xx Xxxxxxx), 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. Xxxxxx 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 Xxxxxx
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, Xxxxxx 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)
EXHIBIT D (TO NOTE AGREEMENT)
DESCRIPTION OF SPECIAL COUNSEL'S CLOSING OPINION
The closing opinion of Xxxxxxx and Xxxxxx, special counsel to the
Purchaser, called for by ss.4.1 of the Agreement, shall be dated the Closing
Date and addressed to the Purchaser, 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
Agreement 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 Subordinated
Guaranty Agreement.
3. The Agreement 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 Subordinated 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 issuance, sale and delivery of the Notes under the
circumstances contemplated by the Agreement constitute an exempt
transaction under the registration provisions of the Securities Act of
1933, as amended, and do not under existing law require the
registration of the Notes under the Securities Act of 1933, as amended,
or the qualification of an indenture in respect thereof under the Trust
Indenture Act of 1939.
7. 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.
8. 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).
9. 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.
10. 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.
11. 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.
12. 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 Subordinated 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 Subordinated 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 Xxxxxxxx, Xxxxxxxx & Xxxxxx,
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, Xxxxxx & Xxxxxx, P.C., counsel for World Finance
Corporation of Georgia, from Xxxxxxx, Xxxxxxxx, Xxxxx, Xxxx & Xxxxxxxx, counsel
for World Finance Corporation of Louisiana, from Xxxxx & Dunlevy, Luttrell,
Xxxxxxxxx & Xxxxxxxxx, counsel for World Acceptance Corporation of Oklahoma,
Inc., from Dance, Dance & Lane, counsel for World Finance Corporation of
Tennessee, and from Xxx Xxxxxx, 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 Agreement, 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 ANDWORLD FINANCE CORPORATION OF NEW MEXICO
The closing opinion of Xxxxxxxx, Xxxxxxxx & Xxxxxx, 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 Agreement, shall
be dated the Closing Date and addressed to the Purchaser, shall be satisfactory
in scope and form to the Purchaser 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 Agreement 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
Subordinated 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 Subordinated 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 Subordinated
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 Subordinated
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 Subordinated
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
Subordinated 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 Agreement, 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 Subordinated 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
Subordinated 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 Subordinated 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 and sale of the Notes and the execution,
delivery and performance by the Company of the Agreement and the
Company Security Agreement do not violate any law, regulation, or, to
our knowledge, any 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 Subordinated Guaranty Agreement and the Subsidiary Security
Agreement do not violate any law, regulation, or, to our knowledge, any
order or decree of any court or governmental instrumentality and the
execution, delivery and performance by each Restricted Subsidiary of
the Subsidiary Senior Subordinated 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 Agreement, the Company Security
Agreement, the Subsidiary Security Agreement or the Subsidiary Senior
Subordinated 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.
20. The issuance, sale and delivery of the Notes under the
circumstances contemplated by the Agreement do not, under existing law,
require the registration of the Notes under the Securities Act of 1933,
as amended, or the qualification of an indenture under the Trust
Indenture Act of 1939, as amended.
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
Subordinated 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 Agreement.
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
Agreement, the Company Security Agreement, Subsidiary Senior
Subordinated 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, Xxxxxxx and Xxxxxx,
and any subsequent holder of a Note) for any purpose, without our prior written
consent.
Sincerely yours,
XXXXXXXX, XXXXXXXX & XXXXXX, P.A.
Xxxxx X. Xxxxxxxx
EXHIBIT F-1 (TO NOTE AGREEMENT)
Form of Closing Opinion of Subsidiary Counsel
The closing opinion of Abbot, Xxxxxx & Xxxxxx, P.C., counsel for World
Finance Corporation of Georgia (the "Company"), which is called for by ss.4.1 of
the Agreement, shall be dated the Closing Date and addressed to the Purchaser,
shall be satisfactory in scope and form to the Purchaser 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 Subordinated 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 Subordinated 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 Subordinated 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 Subordinated
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, XXXXXX AND XXXXXX, P.C.
By
Xxxx X. Xxxxxx, Xx.
FKH:fs
FORM OF CLOSING OPINION OF SUBSIDIARY COUNSEL
The closing opinion of Xxxxxxx, Xxxxxxxx, Xxxxx, Xxxx & Xxxxxxxx,
counsel for World Finance Corporation of Louisiana (the "Company"), which is
called for by ss.4.1 of the Agreement, shall be dated the Closing Date and
addressed to the Purchaser, shall be satisfactory in scope and form to the
Purchaser 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 Subordinated 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 Subordinated 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 Subordinated 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 Subordinated 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.
XXXXXXX, XXXXXXXX, XXXXX, XXXX & XXXXXXXX
By
Xxxxxxx X. Xxxxxxx, III
WMCIII/sdw
FORM OF CLOSING OPINION OF SUBSIDIARY COUNSEL
The closing opinion of Xxxxx & Dunlevy, Luttrell, Xxxxxxxxx &
Xxxxxxxxx, counsel for World Acceptance Corporation of Oklahoma, Inc. (the
"Company"), which is called for by ss.4.1 of the Agreement, shall be dated the
Closing Date and addressed to the Purchaser, shall be satisfactory in scope and
form to the Purchaser 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 Subordinated 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 Subordinated 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 Subordinated 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 Subordinated 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 Subordinated
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 Subordinated 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,
XXXXX & DUNLEVY, LUTTRELL, XXXXXXXXX
& XXXXXXXXX
MSR:sdb
FORM OF CLOSING OPINION OF SUBSIDIARY COUNSEL
The closing opinion of Xxxxxx X. Xxxxxx, 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 Agreement, shall be dated the
Closing Date and addressed to the Purchaser, shall be satisfactory in scope and
form to the Purchaser 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 Subordinated 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 Subordinated 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 Subordinated 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 Subordinated 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 Subordinated 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.
11. 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,
Xxx Xxxxxx
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
Agreement, shall be dated the Closing Date and addressed to the Purchaser, shall
be satisfactory in scope and form to the Purchaser 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 Subordinated 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
$10,000,000.00 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 Subordinated 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 Subordinated
Guaranty Agreement,
the Agreement 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 Xxxxxxx and Xxxxxx and
any subsequent holder of a Note) for any purpose, without our prior written
consent.
DANCE, DANCE & LANE
By
Xxxxxxx Dance
EXHIBIT G (TO NOTE AGREEMENT)
SUBORDINATION PROVISIONS APPLICABLE TO
Senior Subordinated Debt
(other than the Notes)
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 Senior 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 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 CORPORATIONAND 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 $----------
