AMENDED AND RESTATED SECURITY AGREEMENT, PLEDGE AND INDENTURE OF TRUST
Dated as of June 30, 1997
Between
WORLD ACCEPTANCE CORPORATION
And
▇▇▇▇▇▇ TRUST AND SAVINGS BANK,as Security Trustee
TABLE OF CONTENTS
SECTION HEADING PAGE
Parties 1
Recitals 1
SECTION 1. INTERPRETATION OF AGREEMENT; DEFINITIONS. 2
Section 1.1. Definitions 2
Section 1.2. Accounting Principles 8
Section 1.3. Directly or Indirectly 8
SECTION 2. GRANTING CLAUSES 8
Section 2.1. Equipment 9
Section 2.2. Receivables 9
Section 2.3. Pledged Collateral 9
Section 2.4. General Intangibles 9
Section 2.5. Investment Property 10
Section 2.6. Records and Cabinets 10
Section 2.7. Partnership Interests 10
Section 2.8. Additional Property 10
Section 2.9. Other Proceeds and Products 10
SECTION 3. COVENANTS, REPRESENTATIONS AND WARRANTIES OF THE COMPANY 11
Section 3.1. Location of Collateral 11
Section 3.2. Warranty of Title 11
Section 3.3. No Alienation of Collateral 12
Section 3.4. Removal of Collateral 12
Section 3.5. Compliance with Leases 12
Section 3.6. Protection of Collateral 12
Section 3.7. Further Assurances 13
Section 3.8. Maintenance of Lien; Recording; Opinions of Counsel 13
Section 3.9. Guaranty and Security Agreement Supplements 14
Section 3.10. Note Register 14
SECTION 4. SPECIAL PROVISIONS RELATING TO RECEIVABLES 15
Section 4.1. Representations and Warranties 15
Section 4.2. Receivable Schedules 16
Section 4.3. Collection of Receivables 16
Section 4.4. Power of Attorney 18
SECTION 5. SPECIAL PROVISIONS RELATING TO PLEDGED COLLATERAL 18
Section 5.1. Delivery of Pledged Collateral; Transfer to Security Trustee 18
Section 5.2. Voting Power; Payments 19
Section 5.3. Covenants of the Company 20
SECTION 6. APPLICATION OF CERTAIN MONEYS. 21
Section 6.1. Application if no Default or Event of Default Exists. 21
Section 6.2. Application if a Default or an Event of Default Exists. 21
SECTION 7. DEFAULTS AND REMEDIES 21
Section 7.1. Events of Default 21
Section 7.2. Security Trustee's Rights 21
Section 7.3. Waiver by Company 22
Section 7.4. Effect of Sale 23
Section 7.5. Application of Sale and Other Proceeds 23
Section 7.6. Discontinuance of Remedies 25
Section 7.7. Cumulative Remedies 25
SECTION 8. THE SECURITY TRUSTEE 25
Section 8.1. Duties of Security Trustee 25
Section 8.2. Security Trustee's Liability 26
Section 8.3. No Responsibility of Security Trustee for Recitals 27
Section 8.4. Certain Limitations on Security Trustee's Rights to Compensation and Indemnification 28
Section 8.5. Status of Moneys Received 28
Section 8.6. Resignation of Security Trustee 28
Section 8.7. Removal of Security Trustee 29
Section 8.8. Appointment of Successor Security Trustee 29
Section 8.9. Succession of Successor Security Trustee 29
Section 8.10. Eligibility of Security Trustee 30
Section 8.11. Successor Security Trustee by Merger 30
Section 8.12. Co-Trustees 30
Section 8.13. Compensation and Reimbursement 31
SECTION 9. SUPPLEMENTS; WAIVERS. 31
Section 9.1. Supplemental Security Agreements Without Noteholder Consent 31
Section 9.2. Waivers and Consents by Noteholders; Supplemental Security Agreements with Noteholders' Consent 32
Section 9.3. Notice of Supplements 34
Section 9.4. Opinion of Counsel Conclusive as to Supplements 34
SECTION 10. MISCELLANEOUS 34
Section 10.1. Successors and Assigns 34
Section 10.2. Severability 34
Section 10.3. Communications 34
Section 10.4. Release 35
Section 10.5. Counterparts 36
Section 10.6. Governing Law 36
Section 10.7. Headings 37
Section 10.8. Prior Liens 37
Section 10.9. Rights of Holders of Senior Subordinated Notes 37
Signature Page 38
ATTACHMENTS TO SECURITY AGREEMENT, PLEDGE AND INDENTURE OF TRUST:
Schedule I -- Description of Pledged Shares
Schedule II -- Description of Partnership Interest
Schedule III -- Locations of the Company's Offices and Facilities
Exhibit A -- Form of Subsidiary Security Agreement
Exhibit B -- Form of Subsidiary Guaranty Agreement
AMENDED AND RESTATED SECURITY AGREEMENT, PLEDGE AND INDENTURE OF TRUST
Parties; AMENDED AND RESTATED SECURITY AGREEMENT, PLEDGE AND
INDENTURE OF TRUST (this "AGREEMENT") dated as of June 30, 1997, between WORLD
ACCEPTANCE CORPORATION, a South Carolina corporation (the "COMPANY"), and ▇▇▇▇▇▇
TRUST AND SAVINGS BANK, an Illinois banking corporation (the "SECURITY TRUSTEE")
which amends and restates that certain Security Agreement, Pledge and Indenture
of Trust dated as of December 1, 1992 (as the same has been amended, restated,
modified, supplemented or waived pursuant to the terms thereof) between the
Company and the Security Trustee (the "ORIGINAL SECURITY AGREEMENT"). The post
office addresses of the Company and the Security Trustee are set forth in
SS.10.3.
.C4.RECITALS;:
A. The capitalized terms used in this Agreement shall have the
respective meanings specified in SS.1.1 unless otherwise herein defined or the
context hereof shall otherwise require.
B. The Company is authorized by law, and deems it necessary from time
to time, to borrow money for its proper purposes and to secure the same as
hereinafter provided, and to that end, in the exercise of said authority, has
duly authorized the execution and delivery of this Agreement providing for the
securing of certain obligations of the Company hereunder, all as hereinafter
provided.
C. The Company has duly authorized, on the terms provided in the Senior
Note Agreements, the issuance of $20,000,000 aggregate principal amount of
Senior Secured Notes due December 1, 1999, as the same 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 (the "SENIOR SECURED
NOTES"). The Company has also authorized 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
principal amount of borrowings at any one time outstanding not to exceed the
Maximum Principal Amount (the "REVOLVING CREDIT NOTES"). The Senior Secured
Notes and the Revolving Credit Notes are hereinafter collectively referred to as
the "SENIOR NOTES." The Company has also authorized, on the terms provided in
the Senior Subordinated Note Agreement, the issuance of $10,000,000 aggregate
principal amount of Senior Subordinated Secured Notes due June 30, 2004, as the
same may from time to time be amended or restated pursuant to the terms thereof
and of the Senior Subordinated Note Agreement and any notes executed in
replacement thereof (the "SENIOR SUBORDINATED NOTES"). The Senior Notes and the
Senior Subordinated Notes are hereinafter collectively referred to as the
"NOTES".
D. All acts and proceedings required by law and by the Articles of
Incorporation and By-Laws of the Company, to make the above-described Notes,
when executed by the Company the valid, binding and legal obligations of the
Company, and to constitute this Agreement a valid and binding agreement for the
uses and purposes herein set forth, in accordance with its terms, have been done
and taken, and the execution and delivery of this Agreement has been in all
respects duly authorized.
.C.'SECTION 1. INTERPRETATION OF AGREEMENT; SECTION DEFINITIONS'.
1.1. 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:
"ACCOUNT DEBTOR" shall mean any Person who is or may become obligated
to the Company under or on account of a Receivable.
"AFFILIATE" shall mean any Person (other than a Restricted Subsidiary)
(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 by number of votes) of the Company or (iii)
5% or more of the Voting Stock (determined by number of shares or by 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 ▇▇▇▇▇▇ 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.
"AGGREGATE PRINCIPAL AMOUNT OF THE OUTSTANDING NOTES" shall mean (i)
for purposes of SS.8.1 (A) if any Senior Note or any obligation or liability
owing under the Revolving Credit Agreement or the Senior Note Agreement remains
outstanding or any obligation to extend credit under the Revolving Credit
Agreement exists, the sum of the actual principal amount of the Senior Notes
then outstanding, and (B) if no Senior Note and no other obligation or liability
owing under the Revolving Credit Agreement or the Senior Note Agreement is then
outstanding and all obligations to extend credit under the Revolving Credit
Agreement have expired or otherwise terminated, the sum of the actual principal
amount of the Senior Subordinated Notes then outstanding, (ii) for purposes of
SS.8.7 and SS.8.8, the sum of the actual principal amount of the Notes then
outstanding, plus the amount of the unused commitment with respect to the
Revolving Credit Notes and (iii) for purposes of SS.9.2 and SS.10.4 (A) so long
as no Event of Default shall have occurred and be continuing, the sum of the
actual principal amount of Notes then outstanding, plus the amount of the unused
commitment with respect to the Revolving Credit Notes and (B) if an Event of
Default shall have occurred and be continuing, the actual principal amount of
the Notes then outstanding.
"BANKS" shall mean ▇▇▇▇▇▇ 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.
"CLOSING DATE" shall mean July 3, 1997.
"COLLATERAL" as used herein shall mean any and all property from time
to time subject to the security interest granted hereby.
"COMPANY" shall mean World Acceptance Corporation, a South Carolina
corporation and any Person which succeeds to all, or substantially all of the
assets and business of World Acceptance Corporation.
"CONSOLIDATED ADJUSTED NET WORTH" shall have the meaning specified in
the Senior Subordinated Note Agreement as in effect on the Closing Date.
"CORPORATE BASE RATE" means for any day the rate of interest announced
by ▇▇▇▇▇▇ Trust and Savings Bank from time to time as its prime commercial rate,
or equivalent, with any change in the Corporate Base Rate resulting from a
change in said prime commercial rate to be effective as of the date of the
relevant change in said prime commercial rate.
"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.
"EVENT OF DEFAULT" shall have the meaning specified in SS.7.1.
"GAAP" shall mean generally accepted accounting principles at the time
in the United States
"GOVERNING DOCUMENTS" shall mean collectively the charter instruments,
by-laws, partnership agreements, operating agreements and other similar
documents prescribing the internal governance of each Restricted Subsidiary.
"INDEBTEDNESS FOR BORROWED MONEY" shall have the meaning specified in
the Senior Subordinated Note Agreement as in effect on the Closing Date.
"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 all of 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 all of 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.
"INVESTMENT PROPERTY" shall have the meaning specified in SS.2.5.
"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" (i) with respect to the Senior Secured Notes, shall
have the meaning as defined in the Senior Note Agreements and (ii) with respect
to the Senior Subordinated Notes, shall have the meaning as defined in the
Senior Subordinated Note Agreement.
"MATERIAL EVENT OF DEFAULT" shall mean (i) an Event of Default shall
have occurred under any of Sections 6.1(a), (b), (c), (n), (o), (p) or (q) of
any Senior Note Agreement, (ii) an Event of Default shall have occurred under
any of Sections 9.1(a), (b), (c), (n), (p), (q) or (r) of the Revolving Credit
Agreement, (iii) an Event of Default shall have occurred with respect to
Sections 5.7, 5.8, 5.9, 5.10, 5.11 (but only to the extent such Event of Default
relates to a Lien on property of the Company or any Restricted Subsidiary with a
fair market value in excess of $1,000,000), 5.12, 5.13 or 5.18 of any Senior
Note Agreement or (iv) an Event of Default shall have occurred with respect to
Sections 8.7, 8.8, 8.9, 8.10, 8.11 (but only to the extent such Event of Default
relates to a Lien on property of the Company or any Restricted Subsidiary with a
fair market value in excess of $1,000,000), 8.12, 8.13 or 8.18 of the Revolving
Credit Agreement.
"MAXIMUM PRINCIPAL AMOUNT" shall mean an amount equal to (i)
$65,000,000, plus (ii) any principal amount in excess thereof agreed to in
writing by the holders of the Senior Subordinated 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 Senior Subordinated 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 Senior
Subordinated 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 Section 6.1 of the Senior Subordinated Note Agreement as in effect on the
Closing Date or under Sections 5.7, 5.8, 5.9, 5.10, 5.11 (but only to the extent
such Default or Event of Default relates to a Lien on property of the Company or
any Restricted Subsidiary with a fair market value in excess of $1,000,000),
5.12, 5.13 or 5.18 of the Senior Subordinated Note Agreement as in effect on the
Closing Date and (B) the ratio of Indebtedness for Borrowed Money of the Company
and its Restricted Subsidiaries to Consolidated Adjusted Net Worth for the
calendar month then most recently ended does not exceed 6.5 to 1.
"MOODY'S" shall mean ▇▇▇▇▇'▇ Investors Service, Inc.
"NOTE REGISTER" (i) with respect to the Senior Secured Notes, shall
have the meaning specified in Section 9.1 of the Senior Note Agreements and (ii)
with respect to the Senior Subordinated Notes, shall have the meaning specified
in Section 10.1 of the Senior Subordinated Note Agreement.
"NOTEHOLDERS" shall mean, collectively, the holders from time to time
and at any time of the Notes.
"NOTES" shall have the meaning specified in the recitals hereof.
"ORIGINAL CLOSING DATE" shall mean December 29, 1992.
"PARTNERSHIP INTERESTS" shall have the meaning specified in SS.2.6.
"PERSON" shall mean an individual, partnership, corporation, limited
liability company, trust or unincorporated organization, and a government agency
or political subdivision thereof.
"PLEDGED COLLATERAL" shall mean and include:
(a) the Pledged Shares;
(b) all shares, Securities, moneys, or other property
distributed as a dividend on any shares of capital stock or other
Pledged Collateral (including the Pledged Shares) at any time pledged
hereunder or a distribution or return of capital upon or in respect of
any such capital stock or other Pledged Collateral or any part thereof,
or resulting from a split-up, revision, reclassification or other like
change of any such capital stock or other Pledged Collateral, and any
subscription
warrants, rights or options issued to the holders of, or otherwise in
respect of, any such capital stock or other Pledged Collateral; and
(c) in the event of any consolidation or merger in which the
issuer of any Pledged Collateral is not the surviving entity, or in the
event of any sale, lease, transfer or other disposition of all or
substantially all of the assets of such issuer;
(i) all shares of each class of the capital stock or
other Security of the successor entity formed by or resulting
from such consolidation or merger, or of the corporation to
which such sale, lease, transfer or other disposition shall
have been made, and
(ii) all other Securities, money or property,
distributed or distributable in any such event in respect of any of the
Pledged Collateral in connection with such consideration, merger, sale,
lease, transfer or other disposition.
"PLEDGED SHARES" shall mean all of the capital stock, partnership
interests, membership interests and other equity interests of each Restricted
Subsidiary owned by the Company (as more specifically set forth on Schedule I
hereto) or hereafter acquired, including, without limitation, (a) all rights,
authority, powers and privileges of the Company as a shareholder or holder of
any partnership interest, membership interest or other equity interest of the
Restricted Subsidiaries, whether now existing or hereafter arising under the
Governing Documents or at law or otherwise, and the rights of the Company under
such Governing Documents to acquire additional shares of stock or partnership
interests, membership interests or other equity interests or to acquire the
shares of stock, partnership interest, membership interest or other equity
interest of other shareholders, partners, members or other holders of equity
interests, and (b) all other instruments owned or held by, or otherwise
established in favor of, the Company in the nature of capital stock of,
partnership interest, membership interest or any other equity interest in the
Restricted Subsidiaries, of any and every type, class and series.
"RECEIVABLES" shall mean all accounts receivable, receivables, contract
rights, controls, instruments, notes, drafts, bills, acceptances, documents,
chattel paper, general intangibles and all other forms of obligations owing to a
Person.
"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 have the meaning specified in the
recitals hereof.
"S&P" shall mean Standard & Poor's Ratings Services Group, a division
of The ▇▇▇▇▇▇-▇▇▇▇ Companies, Inc.
"SECURED INDEBTEDNESS" shall mean (i) the outstanding Notes and all
principal thereof (and premium, if any) and interest thereon pursuant to the
terms of the outstanding Notes, this Agreement, the Senior Note Agreements, the
Revolving Credit Agreement and the Senior Subordinated Note Agreement; PROVIDED,
that, in no event shall "Secured Indebtedness" include (A) the principal amount
of the Revolving Credit Notes in excess of the Maximum Principal Amount and (B)
the related interest thereon and (ii) all additional amounts and other sums at
any time due and owing from or required to be paid by the Company or any
Restricted Subsidiary under the terms of this Agreement, the Senior Note
Agreements, the Revolving Credit Agreement, the Senior Subordinated Note
Agreement, the Subsidiary Security Agreement and the Subsidiary Guaranty
Agreements, as in effect on the Closing Date or as otherwise consented to in
writing by all of the holders of the Notes.
"SECURITY" shall have the same meaning as in Section 2(a)(1) of the
Securities Act of 1933, as amended.
"SECURITY TRUSTEE" means the Person named above as the "Security
Trustee" in the first paragraph of this Agreement until a successor Security
Trustee shall have become such pursuant to the applicable
provisions of this Agreement, and thereafter "SECURITY TRUSTEE" shall mean such
successor Security Trustee.
"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 have the meaning specified in the recitals hereof.
"SENIOR SECURED NOTES" shall have the meaning specified in the recitals
hereof.
"SENIOR SUBORDINATED NOTE AGREEMENT" shall mean that certain Note
Agreement dated as of June 30, 1997 between the Company and the purchaser named
therein, as the same may from time to time be amended, restated, modified,
supplemented or waived pursuant to the terms thereof.
"SENIOR SUBORDINATED NOTES" shall have the meaning specified in the
recitals hereof.
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 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 GUARANTY AGREEMENTS" shall mean (i) the Amended and
Restated Guaranty Agreement dated as of June 30, 1997 of each Restricted
Subsidiary existing on the Closing Date and each other Restricted Subsidiary
which has executed a Guaranty Supplement in the form of Exhibit A thereto
pursuant to the terms thereof and SS.3.9, in each case, for the benefit of the
Security Trustee and 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, and (ii) the Guaranty Agreement dated as of June 30, 1997 of each
Restricted Subsidiary existing on the Closing Date and each other Restricted
Subsidiary which has executed a Guaranty Supplement in the form of Exhibit A
thereto pursuant to the terms thereof and SS.3.9, in each case, for the benefit
of the Security Trustee and the holders of the Senior Subordinated Notes, as the
same may from time to time be amended, restated, modified, supplemented or
waived pursuant to the terms thereof.
"SUBSIDIARY SECURITY AGREEMENT" shall mean the Amended and Restated
Security Agreement, Pledge and Indenture of Trust dated as of June 30, 1997
between each Restricted Subsidiary existing on the Closing Date and the Security
Trustee, as supplemented from time to time by a security agreement supplement
between a Restricted Subsidiary and the Security Trustee delivered pursuant to
the terms thereof and SS.3.9, in each such case, substantially in the form of
Exhibit A to the Subsidiary Security Agreement, as the same may from time to
time be amended, restated, modified, supplemented or waived pursuant to the
terms thereof.
"UNDERLYING COLLATERAL" shall mean, with respect to any Receivable of
the Company, all of its rights with respect to any collateral granted by the
Account Debtor in connection with any Receivable owing by it to the Company.
"UNIFORM COMMERCIAL CODE" as used herein with reference to any
collateral shall mean the Uniform Commercial Code as enacted in the jurisdiction
applicable to such Collateral, as amended from time to time, and any successor
statute(s) thereto.
"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).
.SECTION 1.2. 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 1.3. DIRECTLY OR INDIRECTLY;. Where any provision in this
Agreement refers to action to be taken by any Person, or which such Person is
prohibited from taking, such provision shall be applicable whether the action in
question is taken directly or indirectly by such Person.
.SECTION 2. GRANTING CLAUSES;.
The Company in consideration of the premises and other good and
valuable consideration, receipt whereof is hereby acknowledged, and intending to
be legally bound, and in order to secure (i) the equal and pro rata payment of
both the principal of and interest and premium, if any, on all Senior Notes at
any time outstanding according to their tenor and effect, (ii) on a senior
subordinated basis as set forth herein and in the Senior Subordinated Note
Agreement, the equal and pro rata payment of both the principal of and interest
and premium, if any, on all Senior Subordinated Notes at any time outstanding,
according to their tenor and effect, and (iii) the payment of all other Secured
Indebtedness and the performance and observance of all the covenants and
conditions contained in the Notes, this Agreement, the Senior Note Agreements,
the Revolving Credit Agreement, the Senior Subordinated Note Agreement, the
Subsidiary Guaranty Agreements and the Subsidiary Security Agreement, in each
case, subject to the terms thereof and SS7.5, does hereby mortgage, grant,
convey, warrant, assign, pledge and hypothecate unto the Security Trustee, its
successors in trust and assigns, forever, and grants to the Security Trustee,
its successors in trust and assigns, forever, a continuing security interest in,
all and singular the following described properties, rights, interests and
privileges, together with the proceeds thereof, now or hereafter owned by the
Company (hereinafter sometimes referred to as the "COLLATERAL"):
.SECTION 2.1. EQUIPMENT;. All building materials, building
equipment, machinery, fixtures, apparatus, furniture and equipment and other
personal property (other than motor vehicles and accessions to motor vehicles)
of every kind and nature whatsoever located, including without limitation: all
air conditioning, ventilating, plumbing, heating, lighting and electrical
systems and apparatus; all communications equipment and intercom systems and
apparatus; all typewriters, computers and other office machines and equipment,
furniture, furnishings; all sprinkler equipment and apparatus, all elevators and
escalators; and all machinery, equipment, engines, boilers, tools, fixtures,
furniture, carpeting, tables and chairs, together with all accessories, parts
and appurtenances appertaining or attached thereto, whether now owned or
hereafter acquired, and all substitutions, renewals, or replacements of and
additions, improvements, accessions and accumulations to any and all thereof,
together with all the rents, income, revenues, issues, proceeds, profits and
avails arising therefrom or in connection therewith;
.SECTION 2.2. RECEIVABLES;. Receivables, whether now existing or
hereafter arising, and however evidenced or acquired, or in which the Company
now has or hereafter acquires any rights and all rights of the Company to any
Underlying Collateral granted by an Account Debtor in connection with any
Receivable owing by it to the Company;
.SECTION 2.3. PLEDGED COLLATERAL;. The Pledged Collateral;
.SECTION 2.4. GENERAL INTANGIBLES;. General intangibles of the
Company, including, without limitation, tax refunds, rights with respect to
trademarks, service marks, trade names, patents, copyrights, trade-secrets
information and rights to prevent others from doing acts that constitute unfair
competition with or misappropriation of property of the Company including,
without limitation, any sums (net of expenses) that the Company may receive
arising out of any claim for infringement of its rights in any patent,
copyright, trademark, trade name, trade secret or other proprietary right and
all rights of the Company under contracts to enjoy performance by others or to
be entitled to enjoy rights granted by others, including, without limitation,
any licenses (to the extent permitted by law);
.SECTION 2.5. INVESTMENT PROPERTY;. All Investment Property, whether
now owned or existing or hereafter created, acquired or arising, or in which the
Company now has or hereafter acquires any rights (the term "INVESTMENT PROPERTY"
means and includes all investment property and any other securities (whether
certificated or uncertificated), security entitlements, securities accounts,
commodity contracts and commodity accounts, including all substitutions and
additions thereto, all dividends, distributions and sums distributable or
payable from, upon, or in respect of such property, and all rights and
privileges incident to such property, but excludes the Pledged Collateral);
.SECTION 2.6. RECORDS AND CABINETS;. Supporting evidence and
documents relating to any of the above-described property, including without
limitation, written applications, credit information, account cards, payment
records, correspondence, delivery and installation certificates, invoice copies,
delivery receipts, notes and other evidences of indebtedness, insurance
certificates and the like, together with all
books of account, data processing records, computer software and licenses to use
the same, ledgers and cabinets in which the same are reflected or maintained,
all whether now existing or hereafter arising;
.SECTION 2.7. PARTNERSHIP INTERESTS;. (i) All right, title and
interest of the Company, whether now owned or hereafter acquired, in all
partnerships or limited liability companies, including, but not limited to,
those set forth on Schedule II hereto (collectively, the "PARTNERSHIPS"), (ii)
any and all payments or distributions of whatever kind or character and whether
in cash or other property, at any time made, owing or payable to the Company in
respect of or on account of its present or hereafter acquired interest in the
Partnerships, whether due or to become due and whether representing profits,
distributions pursuant to complete or partial liquidation or dissolution,
repayment of capital contributions or otherwise, and the right to receive,
receipt for, use and enjoy all such payments and distributions, and all proceeds
thereof, in every case whether now arising or hereafter acquired or arising, and
(iii) all proceeds of any of the foregoing (all of the foregoing rights,
interests, properties and privileges assigned in and in which a security
interest is granted pursuant to this SS.2.7 being hereafter collectively called
the "PARTNERSHIP INTERESTS");
.SECTION 2.8. ADDITIONAL PROPERTY;. All property and rights, if any,
which are by the express provisions of this Agreement required to be subjected
to the lien hereof and any additional property and rights that may from time to
time hereafter, by writing of any kind, be subjected to the lien hereof by the
Company or by anyone acting at the direction or as an agent of the Company; and
.SECTION 2.9. OTHER PROCEEDS AND PRODUCTS;. All proceeds and
products of the foregoing and all insurance of the foregoing and proceeds
thereof, whether now existing or hereafter arising.
TO HAVE AND TO HOLD the Collateral, WITH POWER OF SALE and right of
entry and possession, unto the Security Trustee, its successors and assigns,
forever; IN TRUST NEVERTHELESS, upon the terms and trust herein set forth, for
the equal and proportionate benefit, security and protection of all present and
future holders of the Senior Notes outstanding hereunder from and after the
issuance of the Senior Notes, without preference, priority or distinction of any
Senior Note over any other Senior Note by reason of series, priority of time of
issue, sale, negotiation, time of any extensions of credit evidenced thereby,
date of maturity thereof or otherwise for any cause whatsoever and, on a senior
subordinated basis as set forth herein and in the Senior Subordinated Note
Agreement, for the equal and proportionate benefit, security and protection of
all present and future holders of the Senior Subordinated Notes outstanding
hereunder from and after the issuance of the Senior Subordinated Notes, without
preference, priority or distinction of any Senior Subordinated Note over any
other Senior Subordinated Note by reason of series, priority of time of issue,
sale, negotiation, date of maturity thereof or otherwise for any cause
whatsoever; PROVIDED ALWAYS, HOWEVER, that these presents are upon the express
condition that if the Company shall irrevocably pay or cause to be irrevocably
paid all the Secured Indebtedness and all obligations to extend Senior
Indebtedness have expired or otherwise terminated, then these presents and the
estate hereby granted and conveyed shall cease and this Agreement shall become
null and void; otherwise this Agreement shall remain in full force and effect.
.C.SECTION 3. COVENANTS, REPRESENTATIONS AND WARRANTIES OF THE COMPANY;.
The Company hereby covenants with, and represents and warrants to, the
Security Trustee and for the benefit of the holders of the Notes from time to
time that:
.SECTION 3.1. LOCATION OF COLLATERAL;. The Collateral (other than
the Underlying Collateral and the Pledged Collateral) and the books and records
relating thereto are in the Company's possession at the offices and facilities
owned or leased by the Company set forth in Schedule III hereto. Not less than
ten days before the opening of any additional business location which would
require the filing of an additional financing statement in accordance with the
Uniform Commercial Code in order to perfect the security interest of the
Security Trustee in the Collateral, any change in the business location where
the Collateral and the books and records relating thereto are located and/or
maintained which would require the filing of an additional financing statement
in accordance with the Uniform Commercial Code in order to perfect the security
interest of the Security Trustee in the Receivables or any other Collateral, the
Company will deliver to the Security Trustee a supplement hereto amending
Schedule III to include such business location, together with evidence of the
filing of financing statements or other notices of the security interest hereof
and an opinion of the Company's counsel responsive to the requirements of SS.3.8
hereof. On or before the fifth day of every December of every year, the Company
will deliver to the Security Trustee a supplement hereto
amending Schedule III to include any additional business locations not
previously reflected in a supplement hereto.
.SECTION 3.2. WARRANTY OF TITLE;. The Company is the lawful owner of
the Collateral (other than the Underlying Collateral) and has the sole right and
lawful authority to deliver this Agreement. The Collateral (other than the
Underlying Collateral) and every part thereof is, on the Closing Date, free and
clear of all Liens, except the Lien of this Agreement and will be free and clear
of all Liens, except the Lien of this Agreement and the other Liens of the
character described in clauses (e), (f), (g) and (h) of Section 5.11 of the
Senior Note Agreements and the Senior Subordinated Note Agreement and in clauses
(e), (f), (g) and (h) of Section 8.11 of the Revolving Credit Agreement, and the
Company will warrant and defend the Collateral (other than the Underlying
Collateral) against any claims and demands of all Persons at any time claiming
the same or any interest therein adverse to the Security Trustee.
.SECTION 3.3. NO ALIENATION OF COLLATERAL;. Except as permitted by
the provisions of Section 5.13 of the Senior Note Agreements and the Senior
Subordinated Note Agreement and Section 8.13 of the Revolving Credit Agreement,
the Company will not, without the Security Trustee's prior written consent,
sell, assign, mortgage, lease or otherwise dispose of the Collateral or any
interest therein.
.SECTION 3.4. REMOVAL OF COLLATERAL;. The Company will not remove
the Collateral and/or the books and records relating thereto from the locations
set forth in Schedule III hereto (i) without complying withSS.3.1 hereof or (ii)
without the Security Trustee's prior written consent (provided that the Company
may move items of Collateral among such locations). The Company will at all
times allow the Security Trustee, the holders of the Notes and their
representatives free access to, and right of inspection of, the Collateral.
.SECTION 3.5. COMPLIANCE WITH LEASES;. The Company will comply with
the terms and conditions of any leases covering the premises wherein the
Collateral is located and any orders, ordinances, laws or statutes of any city,
state or other governmental entity, department or agency having jurisdiction
with respect to such premises or the conduct of business thereon unless the
failure to so comply will not, individually or in the aggregate, have a material
adverse effect on such Collateral or impair the rights or interests of the
Company or the Security Trustee therein.
.SECTION 3.6. PROTECTION OF COLLATERAL;. At any time and from time
to time, the holder of any Notes may, at its option, or the Security Trustee
may, at the direction of the holders of the Notes, discharge any taxes, or other
Liens at any time levied or placed on the Collateral which are due and unpaid
and (A) which are not being contested in good faith by appropriate actions or
proceedings which will prevent the forfeiture or sale of the Collateral or any
material interference with the use thereof or (B) for which the Company has not
set aside on its books, reserves adequate in accordance with GAAP with respect
thereto, and such parties may pay for the maintenance and preservation of the
Collateral, including the purchasing of insurance therefor to the extent
required to be maintained by the Company pursuant to Section 5.2 of the Senior
Note Agreements and the Senior Subordinated Note Agreement and Section 8.2 of
the Revolving Credit Agreement and not so maintained, and the Company will
immediately reimburse the Security Trustee or such holder on demand for any
payment made or any expense incurred by the Security Trustee or such holder
pursuant to the foregoing authority with interest at a rate per annum equal to
the higher of (i) 10.5% and (ii) the Corporate Base Rate plus 2%. All such
expenses and payments shall have the benefit of and be secured by the security
interest herein granted, and the Security Trustee is authorized to charge any
depository account of the Company maintained with the Security Trustee or any
holder of the Notes for the amount of such expenses and payments.
.SECTION 3.7. FURTHER ASSURANCES;. The Company agrees to execute and
deliver to the Security Trustee such further agreements and assignments or other
instruments and to do all such other things as the Security Trustee may deem
necessary or appropriate to assure the Security Trustee its first priority
security interest hereunder, including such financing statement or statements or
amendments thereof or supplements thereto or other instruments as the Security
Trustee may from time to time reasonably require to perfect, and continue the
perfection of, the security interest in the Collateral contemplated by this
Agreement. The Company hereby agrees that, to the extent permitted by applicable
law, a carbon, photographic or other reproduction of this Agreement or any such
financing statement is sufficient for filing as a financing statement by the
Security Trustee without notice thereof to the Company wherever the Security
Trustee in
its sole discretion desires to file the same. The Security Trustee shall, when
an Event of Default shall have occurred and be continuing, or at such other time
pursuant to SS.4 or SS.5, have the right to take physical possession of any and
all of the Collateral and to maintain such possession on the Company's premises
or, if possible, to remove the Collateral or any part thereof to such other
places as the Security Trustee may desire. If the Security Trustee exercises its
right to take possession of the Collateral, the Company shall, upon the Security
Trustee's demand, if possible, assemble the Collateral and make it available to
the Security Trustee at a place designated by the Security Trustee. The Company
shall at its expense perform any and all other steps reasonably requested by the
Security Trustee to preserve and protect the first priority security interest
hereby granted in the Collateral. If any Collateral is in the possession or
control of any of the Company's agents or processors while a Default or an Event
of Default shall have occurred and be continuing, the Company agrees (i) to
notify such agents or processors in writing of the Security Trustee's security
interest therein, and (ii) upon the Security Trustee's request instruct them to
hold all such Collateral for the Security Trustee's account and subject to the
Security Trustee's instructions. The Company agrees to ▇▇▇▇ its books and
records to reflect the security interest of the Security Trustee in the
Collateral.
.'SECTION 3.8. MAINTENANCE OF LIEN; RECORDING; OPINIONS OF
COUNSEL';. (a) The Company will, at its expense, take all necessary action to
maintain and preserve the first and prior perfected lien of this Agreement
(including, without limitation, the filing of all financing statements or
similar notices thereof if and to the extent permitted or required by applicable
law) so long as any Notes are outstanding.
(b) The Company will, forthwith after the execution and delivery of
this Agreement and thereafter from time to time, cause this Agreement (and all
financing statements, continuation statements or similar notices thereof if and
to the extent permitted or required by applicable law) to be filed, registered
and recorded in such manner and in such places as may be required by law in
order to publish notice of and fully to protect the first lien of the Security
Trustee in and to the Collateral; and from time to time will perform or cause to
be performed any other act as provided by law and will execute or cause to be
executed any and all further instruments that may be required for such
publication and protection or requested by any Noteholder. With respect to any
Investment Property held by a securities intermediary, commodity intermediary,
or other financial intermediary of any kind, at the Security Trustee's request,
acting at the direction of the holders of the Notes, the Company shall execute
and deliver, and shall cause any such intermediary to execute and deliver, an
agreement among the Company, the Security Trustee and such intermediary in form
and substance reasonably satisfactory to the Noteholders which provides, among
other things, for the intermediary's agreement that, upon notice by the Security
Trustee that an Event of Default has occurred and is continuing, it shall comply
with entitlement orders, and apply any value distributed on account of any
Investment Property maintained in an account with such intermediary, as directed
by the Security Trustee without further consent of the Company.
(c) The Company agrees at its own expense to furnish to the Security
Trustee promptly after the execution and delivery of any supplement or amendment
hereto or any continuation statement, an opinion of counsel satisfactory to the
Security Trustee (who may be independent counsel to the Company) stating that in
the opinion of such counsel, such supplement or amendment to this Agreement (or
a financing statement, continuation statement or similar notice thereof if and
to the extent required by applicable law) or such continuation statement, as the
case may be, has been properly recorded or filed for record in all public
offices in which such recording or filing is necessary to perfect the Lien
provided by this Agreement as a valid Lien and security interest in the
Collateral.
.SECTION 3.9. GUARANTY AND SECURITY AGREEMENT SUPPLEMENTS;. The
Company hereby covenants and agrees that, within 30 days after any Person
becomes a Restricted Subsidiary, it will (i) deliver all of the certificates or
other instruments evidencing the capital stock, partnership interests,
membership interests or other equity interests of such Restricted Subsidiary
(except the Company will transfer and deliver only 65% of the capital stock of
the Insurance Subsidiary) and all other items constituting Pledged Collateral,
with all such certificates or other instruments duly endorsed in blank or
accompanied by an assignment or assignments sufficient to transfer title
thereto, to the Security Trustee to be held in pledge pursuant to the terms
hereof as part of the Pledged Collateral, together with an amended Schedule I
and, if applicable, Schedule II, hereto or to the Subsidiary Security Agreement,
as the case may be, describing such additional
Pledged Shares and, if applicable, Partnership Interests, and (ii) cause such
Restricted Subsidiary (other than the Insurance Subsidiary) to enter into a
Guaranty Supplement to each Subsidiary Guaranty Agreement substantially in the
form of Exhibit A thereto and a supplement to the Subsidiary Security Agreement
substantially in the form of Exhibit A thereto, together with such items
described in SS.3.8 hereof as the Security Trustee or any Noteholder may
reasonably request.
.SECTION 3.10. NOTE REGISTER;. The Company will, forthwith after the
execution and delivery of this Agreement, provide a copy of the Note Register to
the Security Trustee. The Company agrees to promptly notify the Security Trustee
of any changes to such Note Register.
.C.SECTION 4. SPECIAL PROVISIONS RELATING TO RECEIVABLES;.
.SECTION 4.1. REPRESENTATIONS AND WARRANTIES;. As of the time any
Receivable of the Company becomes subject to the security interest provided for
hereby, the Company shall be deemed to have warranted as to such Receivables
that:
(a) Such Receivable and all papers and documents relating
thereto are genuine and in all respects what they purport to be;
(b) Such Receivable is legal, valid and subsisting;
(c) The amount of such Receivable represented as owing is the
correct amount actually and unconditionally owing, is not disputed and
is not subject to any set-offs, credits, deductions or countercharges;
(d) Such Receivable has been created, and is, in all respects
in compliance with applicable state and federal lending laws and will
continue to be in compliance with such laws;
(e) The Company has no knowledge or reason to know of any fact
which would impair the collectibility of such Receivable;
(f) All of the Company's procedures, requirements and
conditions and all federal and state laws applicable to the making of
the loans related to such Receivable and the creation of such
Receivable have been complied with;
(g) To the best knowledge of the Company, the Account Debtor
on such Receivable and other obligors had legal capacity to enter into
the transactions related to such Receivable;
(h) The form and content of each document related to such
Receivable, the security related thereto, and the transactions from
which it arose comply fully with any and all applicable laws,
ordinances, rules and regulations, federal, state and/or local, with
respect to the extension of credit and charging of interest, including
without limitation, as applicable, the Federal Consumer Credit
Protection Act, the Federal Fair Credit Reporting Act, the Federal
Trade Commission Act, the Federal Equal Credit Opportunity Act and all
federal, state and local laws related to licensing, usury, truth in
lending, real estate settlement procedures, consumer protection, equal
credit opportunity, fair debt collection, unfair and deceptive trade
practices, rescission rights and disclosures, and with all rules and
regulations thereunder, all as amended, and any disclosures required
with respect to such Receivable were and will continue to be made
properly and in a timely manner;
(i) To the best knowledge of the Company, such Receivable and
all facts, statements or obligations contained or implicit in any
application for credit or financial statement of the Account Debtor or
other obligor submitted to the Company, including without limitation,
the description of any Underlying Collateral securing such Receivable
and the amount owing from the Account Debtor or other obligor, and the
signatures of the parties are genuine, correct, true and complete;
(j) The Company has extended no credit of any kind or in any
manner to the Account Debtor or other obligors in connection with the
transactions from which such Receivable arose other than as indicated
on and evidenced by the Company's files related to such Receivable;
(k) To the best knowledge of the Company, each security
agreement, UCC filing, title retention instruments and other document
and instrument, if any, which is security for such Receivable contains
a correct and sufficient description of any Underlying Collateral
covered thereby and each lien or security interest which secures such
Receivable is and will continue to be valid;
(l) Before extending credit to the Account Debtor or other
obligor on such Receivable, the Company has made an adequate credit
investigation of the Account Debtor or other obligor and has determined
that the risk of extending such credit is satisfactory and in
accordance with the standards historically observed by the Company in
the conduct of its business;
(m) Any and all policies of insurance related to the property
securing any obligation of the Account Debtor in connection with such
Receivable and any credit life insurance, credit disability insurance,
or credit unemployment insurance are in full force and effect in
accordance with the terms of all agreements between the Company and the
Account Debtor; and
(n) As to such Receivable, the Company was duly authorized to
do business and in good standing in the jurisdiction in which such
Receivable was originated and was duly licensed to originate such
Receivable in such jurisdiction.
.SECTION 4.2. RECEIVABLE SCHEDULES;. On or before the fifth day of
every month, the Company shall provide the Security Trustee with a monthly
consolidated report of gross Receivables created or acquired by the Company and
the Restricted Subsidiaries. The Company shall provide the Security Trustee with
such other relevant information as the Security Trustee may request from time to
time.
.SECTION 4.3. COLLECTION OF RECEIVABLES;. (a) Unless and until a
Default or an Event of Default shall have occurred and be continuing and the
Company shall have received written notice from the Security Trustee not to
collect the Receivables, the Company shall make collection of all Receivables of
the Company and may use the same to carry on its business in accordance with
sound business practice and otherwise subject to the terms hereof.
(b) At any time while a Default or an Event of Default shall have
occurred and be continuing, in the event the Security Trustee requests the
Company to do so:
(i) All instruments and chattel paper at any time constituting
part of the Receivables of the Company (including any postdated checks)
shall, upon receipt by the Company and to the extent permitted by law,
be immediately endorsed to and deposited with the Security Trustee in
the same form as received by the Company; and/or
(ii) The Company shall, to the extent permitted by law, instruct
all account debtors to remit all payments in respect of Receivables of
the Company to a lockbox to be maintained at the main post office,
Chicago, Illinois, or such other single location as the Security
Trustee may reasonably designate, under the sole custody and control of
the Security Trustee.
(c) Except as otherwise directed by the Security Trustee, the Company
shall immediately place the following legend conspicuously, on the face of each
document, instrument, chattel paper and other writing evidencing the Receivables
created on or after the Original Closing Date but before the Closing Date: "A
SECURITY INTEREST IN THIS DOCUMENT HAS BEEN GRANTED TO ▇▇▇▇▇▇ TRUST AND SAVINGS
BANK, AS SECURITY TRUSTEE AND SECURED PARTY, PURSUANT TO THAT CERTAIN SECURITY
AGREEMENT, PLEDGE AND INDENTURE OF TRUST DATED AS OF DECEMBER 1, 1992." Except
as otherwise directed by the Security Trustee, the Company shall, within ten
days after the Closing Date, place the following legend conspicuously, on the
face of each document, instrument, chattel paper and other writing evidencing
the Receivables created on or after the Closing Date: "A SECURITY INTEREST IN
THIS DOCUMENT HAS BEEN GRANTED TO ▇▇▇▇▇▇ TRUST AND SAVINGS BANK, AS SECURITY
TRUSTEE AND SECURED PARTY, PURSUANT TO A SECURITY AGREEMENT, PLEDGE AND
INDENTURE OF TRUST." At any time while a Default or an Event of Default shall
have occurred and be continuing, the Security Trustee or its designee may notify
the Company's customers or account debtors at any time that Receivables of the
Company have been assigned to the Security Trustee or of the Security Trustee's
security interest therein and either in its own name, that of the Company or
both, demand, collect (including without limitation through a lockbox analogous
to that described in SS. 4.3(B)(II) hereof), receive, receipt for, ▇▇▇ for,
compound and give acquittance for any or all amounts due or to become due on
such Receivables, and in the Security Trustee's discretion file any claim or
take any other action or proceeding which the Security Trustee may deem
necessary or appropriate to protect and realize upon the security interest of
the Security Trustee in such Receivables.
(d) In the event the Security Trustee has exercised any or all of its
rights under SS.SS.4.3(B) or (C) hereof, the Security Trustee may, at any time
while a Default or an Event of Default shall have occurred
and be continuing, cause all instruments, chattel paper, moneys or other
proceeds received by the Security Trustee to be deposited, handled and
administered in and through a remittance account. If a Default or an Event of
Default has occurred and is continuing to the knowledge of the Security Trustee,
all amounts received by the Security Trustee pursuant to the Granting Clauses
hereof and all amounts held in any remittance account referred to above in this
paragraph shall be held by the Security Trustee for application in the manner
provided for in SS.7 in respect of proceeds and avails of the Collateral.
.SECTION 4.4. POWER OF ATTORNEY;. Upon the occurrence and during the
continuance of a Default or an Event of Default, in addition to any other powers
of attorney granted herein, the Company appoints the Security Trustee, its
nominee, or any other Person whom the Security Trustee may designate as the
Company's attorney-in-fact, with full power at any time and from time to time to
endorse the Company's name on any checks, notes, acceptances, money orders,
drafts or other forms of payment or security that may come into the Security
Trustee's possession, upon the occurrence and during the continuance of a
Default or an Event of Default, to sign the Company's name on any invoice or
▇▇▇▇ of lading relating to any Collateral of the Company, on drafts against
customers, on schedules and assignments of Collateral of the Company, on notices
of assignment, and other public records, on verification of accounts and on
notices to customers, to notify the post office authorities to change the
address for delivery of the Company's mail to an address designated by the
Security Trustee, to receive, open and dispose of all mail addressed to the
Company, to send requests for verification of Receivables of the Company to
customers or account debtors, and to do all things necessary to carry out this
Agreement. The Company ratifies and approves all acts of any such attorney and
agrees that neither the Security Trustee nor any such attorney will be liable
for any acts or omissions nor for any error of judgment or mistake of fact or
law other than their willful misconduct or gross negligence. The foregoing power
of attorney, being coupled with an interest, is irrevocable until the Secured
Indebtedness is fully and irrevocably paid and satisfied and all obligations to
extend credit under the Revolving Credit Notes have expired or otherwise
terminated. The Security Trustee may file one or more financing statements
disclosing its security interest in any or all of the Collateral without the
Company's signature appearing thereon. The Company also hereby grants the
Security Trustee a power of attorney to execute any such financing statement, or
amendments and supplements to financing statements on behalf of the Company with
notice thereof to the Company, which power of attorney is coupled with an
interest and irrevocable until the Secured Indebtedness is fully paid and
satisfied.
.C.SECTION 5. SPECIAL PROVISIONS RELATING TO PLEDGED COLLATERAL;.
.'SECTION 5.1. DELIVERY OF PLEDGED COLLATERAL; TRANSFER TO SECURITY
TRUSTEE';. All instruments and certificates representing or evidencing the
Pledged Collateral shall be delivered to and held by or on behalf of the
Security Trustee for the ratable benefit of the holders of the Notes pursuant
hereto and shall be in suitable form for transfer by delivery, or shall be
accompanied by duly executed instruments of transfer or assignment in blank and
undated, all in form and substance satisfactory to the Security Trustee. The
Security Trustee shall have the right, subject to applicable law, at any time in
its discretion after the occurrence of an Event of Default, to transfer to or to
register in the name of the Security Trustee or any of its nominees any or all
of such Pledged Collateral. Promptly after any such transfer or registration,
the Security Trustee shall give notice thereof to the Company, but the failure
to give such notice shall not affect any of the rights or remedies of the
Security Trustee hereunder. The Security Trustee shall have the right at any
time to exchange instruments or certificates representing or evidencing such
Pledged Collateral for instruments or certificates of smaller or larger
denominations, subject to the terms thereof.
.'SECTION 5.2. VOTING POWER; PAYMENTS';.
(a) VOTING POWER. So long as an Event of Default shall not have
occurred and be continuing, the Company shall have the right to exercise any and
all voting or other consensual rights pertaining to the Pledged Collateral or
any part thereof for all purposes not inconsistent with the terms of this
Agreement, the Senior Note Agreements, the Revolving Credit Agreement and the
Senior Subordinated Note Agreement, and the Company agrees that it will not
exercise any such rights in any manner which is inconsistent with the terms of
this Agreement, the Senior Note Agreements, the Revolving Credit Agreement and
the Senior Subordinated Note Agreement; PROVIDED, HOWEVER, that the Company
shall not exercise or shall refrain from exercising any such right if such
action would have a material adverse affect on the value of the Pledged
Collateral or any part thereof; the Security Trustee (1) shall have no right to
exercise such voting rights as are reserved in this SS.5.2(A) to the Company and
(2) shall execute and deliver to the Company or cause to be executed and
delivered to the Company all such proxies, powers of attorney, and other orders,
and all such instruments, without recourse, as the Company may reasonably
request in writing for the purpose of enabling the Company to exercise the
voting rights which it is entitled to exercise under this SS.5.2(A).
(b) PAYMENTS ON DEFAULT. So long as no Default or Event of Default
shall have occurred and be continuing, the Company shall have the right to
receive and retain all cash distributions and payments made in respect of the
Pledged Collateral to the extent such payments (1) may be legally declared and
paid under applicable law and (2) are not prohibited by the applicable
provisions hereof and of the Senior Note Agreements, the Revolving Credit
Agreement or the Senior Subordinated Note Agreement; PROVIDED, HOWEVER, that any
and all
(i) dividends and distributions paid or payable other than in
cash in respect of, and instruments and other property received,
receivable or otherwise distributed in respect of, or in exchange
for, any Pledged Collateral,
(ii) dividends and other distributions paid or payable in cash
in respect of any Pledged Collateral in connection with a partial or
total liquidation or dissolution or in connection with a reduction of
capital, capital surplus or paid-in-surplus, and
(iii) cash paid, payable or otherwise distributed in redemption
of, or in exchange for, any Pledged Collateral; shall be forthwith
delivered to the Security Trustee to hold as, and such amounts so
delivered shall be, Pledged Collateral and shall, if received by the
Security Trustee, be received in trust for the benefit of the
Security Trustee, be segregated from the other property or funds of
the Company and be forthwith delivered to the Security Trustee as
Pledged Collateral in the same form as so received (with all
appropriate powers, authorizations, orders and documents).
(c) VOTING RIGHTS AFTER AN EVENT OF DEFAULT AND RECEIPT OF
DISTRIBUTIONS AFTER A DEFAULT OR AN EVENT OF DEFAULT. Upon the occurrence and
during the continuance of an Event of Default, all rights of the Company to
exercise or refrain from exercising the voting and other consensual rights that
it would otherwise be entitled to exercise pursuant to clause (a) above and,
upon the occurrence and during the continuance of a Default or an Event of
Default, all rights of the Company to receive the dividends and other
distributions which it would otherwise be entitled to receive and retain
pursuant to clause (b) above, in each such case, shall cease during the period
and continuance of such Default or Event of Default, as the case may be, and all
such rights shall thereupon become vested in the Security Trustee, which shall
thereupon have the sole right to exercise or refrain from exercising such voting
and other consensual rights, as directed in writing by the the Noteholders
pursuant to SS.8.1 hereof, and to receive and hold as Pledged Collateral such
distributions and dividends.
.SECTION 5.3. COVENANTS OF THE COMPANY;. The Company hereby
covenants and agrees as follows:
(a) ISSUANCE OF ADDITIONAL SHARES OF STOCK. The Company will
not vote to enable or otherwise cause any Restricted Subsidiary to
issue any shares of stock or other Securities in addition to, or to
issue other securities of any nature in exchange or substitution for,
the Pledged Collateral (except to qualify directors) unless such stock
or other securities may be issued under the relevant provisions hereof,
are pledged to the Security Trustee for the ratable benefit of the
holders of the Notes as part of the Pledged Collateral and the Company
represents to the Security Trustee and the holders of the Notes that
(i) the Company has good and marketable title to such stock or other
Security, free and clear of any Lien other than the Lien hereof and
(ii) such stock or other Security has been duly authorized, validly
issued and is fully paid and non-assessable.
(b) REGULATORY CONSENT. The Company will use its best efforts
to obtain consent of any regulatory authority, Federal, state or local,
if any, having jurisdiction over any license, franchise or other
authorization granted by any governmental unit or authority, which
consent may be required in connection with the transfer of the Pledged
Collateral, and will cooperate fully with the Security Trustee in
effecting any such transfer, including, without limitation, the
execution and
delivery of all applications, certificates and other documents that may
be required to obtain the consent and approval or authorization of or
registration or qualification with, any governmental authority, and
specifically, without limitation, any application for consent to
assignment of license or transfer of control necessary or appropriate
under the rules and regulations of any governmental authority for
approval of (1) any sale or sales of property constituting Pledged
Collateral by or on behalf of the Security Trustee or (2) any
assumption by the Security Trustee of voting rights or management
rights in the Pledged Collateral, effected in accordance with the terms
of this Agreement.
(c) ADDITIONAL PLEDGED COLLATERAL. If any of the Pledged
Collateral, including, without limitation, any shares, notes,
obligations, Securities, instruments, property or (except to the extent
otherwise provided in clauses (b) and (c) in the definition of Pledged
Collateral) moneys, distributions or other payments of every kind and
variety referred to in clauses (a) through (c) in the definition of
Pledged Collateral are received by the Company, the Company agrees
forthwith to transfer and deliver the same (with the certificates or
other instruments or documents evidencing or documenting any such
shares, notes, obligations, interests, instruments, or other Securities
duly endorsed in blank or accompanied by an assignment or assignments
sufficient to transfer title thereto), to the Security Trustee to be
held in pledge pursuant to the terms of this Agreement, as part of the
Pledged Collateral.
(d) SCHEDULE OF PLEDGED COLLATERAL. The Company will furnish
to the Security Trustee from time to time statements and schedules
further identifying and describing the Pledged Collateral and such
other reports in connection with the Pledged Collateral as the Security
Trustee may reasonably request, all in reasonable detail.
SECTION 6. APPLICATION OF CERTAIN MONEYS.
.SECTION 6.1. APPLICATION IF NO DEFAULT OR EVENT OF DEFAULT EXISTS.;
So long as no Default or Event of Default shall have occurred and be continuing,
subject to the Company's contractual obligations to other parties (including,
without limitation, the Revolving Credit Agreement), the Company shall be
allowed to receive and apply the Collateral and to carry on its business in
accordance with sound business practices.
.SECTION 6.2. APPLICATION IF A DEFAULT OR AN EVENT OF DEFAULT
EXISTS.; If a Default or an Event of Default has occurred and is continuing, all
amounts which constitute Collateral shall be paid over to the Security Trustee
for application in the manner provided inSS.7 in respect of proceeds and avails
of the Collateral.
SECTION 7. DEFAULTS AND REMEDIES;.
.SECTION 7.1. EVENTS OF DEFAULT;. An "Event of Default" under the
Senior Note Agreements, the Revolving Credit Agreement or the Senior
Subordinated Note Agreement shall constitute an Event of Default hereunder.
.SECTION 7.2. SECURITY TRUSTEE'S RIGHTS;. The Company agrees that
when any Event of Default has occurred and is continuing, the Security Trustee
may, subject to the provisions of SS.8.1, without limitation of all other rights
and remedies available herein, in the Subsidiary Security Agreement, at law or
in equity in such event, exercise any one or more or all, and in any order, of
the remedies hereinafter set forth, it being expressly understood that no remedy
herein conferred is intended to be exclusive of any other remedy or remedies;
but each and every remedy shall be cumulative and shall be in addition to every
other remedy given herein or now or hereafter existing at law or in equity or by
statute:
(a) The Security Trustee personally, or by agents or
attorneys, shall have the right (subject to compliance with any
applicable mandatory legal requirements) to enter into and upon the
premises of the Company and take possession of all or any part of the
Collateral and to exclude the Company wholly therefrom, and having and
holding the same may use, operate, manage and control the Collateral
and collect and receive all earnings, revenues, issues, proceeds and
income of the Collateral and every part thereof and may maintain,
repair and renew the Collateral and make replacements, alterations,
additions and improvements thereto or remove and dispose of any portion
of the Collateral and may otherwise exercise any and all of the rights
and powers of the Company
in respect thereof.
(b) The Security Trustee may, if at the time such action may
be lawful and always subject to compliance with any mandatory legal
requirements, either with or without taking possession, and either
before or after taking possession, and without instituting any legal
proceedings whatsoever, and having first given notice of such sale by
registered mail to the Company and each holder of the Notes once at
least ten days prior to the date of such sale, and any other notice
which may be required by law, sell and dispose of the Collateral, or
any part thereof, or interest therein, at public auction to the highest
bidder, in one lot as an entirety or in separate lots, and either for
cash or on credit and on such terms as the Security Trustee may
determine, and at any place (whether or not it be the location of the
Collateral or any part thereof) designated in the notice above referred
to. Any such sale or sales may be adjourned from time to time by
announcement at the time and place appointed for such sale or sales, or
for any such adjourned sale or sales, without further notice, and the
Security Trustee or the holder or holders of any Notes, or of any
interest therein, may bid and become the purchaser at any such sale.
(c) The Security Trustee may proceed to protect and enforce
this Agreement and the Notes by suit or suits or proceedings in equity,
at law or in bankruptcy, and whether for the specific performance of
any covenant or agreement herein contained or in execution or aid of
any power herein granted; or for foreclosure hereunder, or for the
appointment of a receiver or receivers for the Collateral or any part
thereof, or for the recovery of judgment for the Secured Indebtedness
or for the enforcement of any other proper, legal or equitable remedy
available under applicable law.
.SECTION 7.3. WAIVER BY COMPANY;. To the extent now or at any time
hereafter enforceable under applicable law, the Company covenants that it will
not at any time insist upon or plead, or in any manner whatsoever claim or take
any benefit or advantage of, any stay or extension law now or at any time
hereafter in force, nor claim, take nor insist upon any benefit or advantage of
or from any law now or hereafter in force providing for the valuation or
appraisement of the Collateral or any part thereof, prior to any sale or sales
thereof to be made pursuant to any provision herein contained, or to the decree,
judgment or order of any court of competent jurisdiction; nor, after such sale
or sales, claim or exercise any right under any statute now or hereafter made or
enacted by any state or otherwise to redeem the property so sold or any part
thereof, and hereby expressly waives for itself and on behalf of each and every
Person, except decree or judgment creditors of the Company acquiring any
interest in or title to the Collateral or any part thereof subsequent to the
date of this Agreement, all benefit and advantage of any such law or laws, and
covenants that it will not invoke or utilize any such law or laws or otherwise
hinder, delay or impede the execution of any power herein granted and delegated
to the Security Trustee, but will suffer and permit the execution of every such
power as though no such law or laws had been made or enacted.
.SECTION 7.4. EFFECT OF SALE;. Any sale, whether under any power of
sale hereby given or by virtue of judicial proceedings, shall operate to divest
all right, title, interest, claim and demand whatsoever, either at law or in
equity, of the Company in and to the property sold and shall be a perpetual bar,
both at law and in equity, against the Company, its successors and assigns, and
against any and all persons claiming the property sold or any part thereof
under, by or through the Company, its successors or assigns.
.SECTION 7.5. APPLICATION OF SALE AND OTHER PROCEEDS;. The Security
Trustee shall give at least one day prior written notice to each holder of a
Note then outstanding of each date (the "APPLICATION DATE") on which the
proceeds and/or avails of any sale of the Collateral, or any part thereof, shall
be applied, and on such Application Date, or as soon thereafter as may be
practical, the proceeds and the avails of any remedy hereunder then available to
the Security Trustee shall be irrevocably paid to and applied as follows:
FIRST, to the payment of costs and expenses of foreclosure or
suit, if any, and of such sale, and of all proper expenses, liability
and advances, including reasonable legal and administrative expenses
and attorneys' fees, incurred or made hereunder by the Security Trustee
and of all taxes, assessments or Liens superior to the lien of these
presents, except any taxes, assessments or other superior lien subject
to which said sale may have been made;
SECOND, to the irrevocable payment of the whole amount then
due upon the Senior Notes, whether by acceleration or otherwise, for
principal, interest and premium, if any; and in case such
proceeds shall be insufficient to pay in full the whole amount so due,
owing or unpaid upon the Senior Notes, then ratably according to the
aggregate of such principal and the accrued and unpaid interest and
premium, if any, with application on each Senior Note to be made,
first, to unpaid interest thereon, second, to the unpaid principal
thereof, and third, to unpaid premium (including, but not limited to,
any Make-Whole Amount and any other amounts due and owing pursuant to
Section 2.10 of the Revolving Credit Agreement), if any, thereon; such
application to be made upon presentation of the several Senior Notes,
and the notation thereon of the payment, if partially paid, or the
surrender and cancellation thereof, if fully paid;
THIRD, on a pro rata basis without any order of priority, to
the irrevocable payment of (i) 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, (ii) 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, (iii) 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 SS.8.13 (in each case, except to the extent
covered by clause FIRST above), and (iv) 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 Senior Note Agreements, the Revolving Credit
Agreement or this Agreement, in each case, with respect to the Senior
Notes;
FOURTH, to the irrevocable payment of the whole amount then
due upon the Senior Subordinated Notes, whether by acceleration or
otherwise, for principal, interest and premium, if any; and in case
such proceeds shall be insufficient to pay in full the whole amount so
due, owing or unpaid upon the Senior Subordinated Notes, then ratably
according to the aggregate of such principal and the accrued and unpaid
interest and premium, if any, with application on each Senior
Subordinated Note to be made, first, to unpaid interest thereon,
second, to the unpaid principal thereof, and third, to unpaid premium,
if any, thereon; such application to be made upon presentation of the
several Senior Subordinated Notes, and the notation thereon of the
payment, if partially paid, or the surrender and cancellation thereof,
if fully paid;
FIFTH, to the irrevocable payment of any other Secured
Indebtedness, including, without limitation, (i) all other expenses,
fees and amounts owing to the holder of any Senior Note and not covered
by the immediately preceding clauses FIRST through FOURTH and (ii) all
expenses, fees and other amounts owing to the holder of any Senior
Subordinated Note; and
SIXTH, to the irrevocable payment of the surplus, if any, to
the Company, its successors and assigns, or to whomsoever may be
lawfully entitled to receive the same.
The proceeds and/or avails of the Collateral shall be applied as set
forth above notwithstanding the time or order of advance of any funds secured by
any such Collateral or any other priority provided by law or otherwise. By
accepting the benefits of this Agreement, each of the holders of the Notes
agrees that it will not initiate or prosecute, or encourage any other person to
initiate or prosecute, any claim, action or other proceeding challenging the
enforceability of the claims of the holders of the Notes or challenging the
enforceability of any liens or security interests in assets securing the Notes
and the other obligations and liabilities relating thereto, in each case,
created or incurred in accordance with the terms of this Agreement and the
Subsidiary Security Agreement.
.'SECTION 7.6. DISCONTINUANCE OF REMEDIES';. In case the Security
Trustee shall have proceeded to enforce any right under this Agreement by
foreclosure, sale, entry or otherwise, and such proceedings shall have been
discontinued or abandoned for any reason or shall have been determined
adversely, then and in every such case the Company, the Security Trustee and the
holders of the Notes shall be restored to their former positions and rights
hereunder with respect to the property subject to the lien and security interest
created under this Agreement.
.SECTION 7.7. CUMULATIVE REMEDIES;. No delay or omission of the
Security Trustee or of the
holder of any Note to exercise any right or power arising from any default,
shall exhaust or impair any such right or power or prevent its exercise during
the continuance of such default. No waiver by the Security Trustee or the holder
of any Note of any such default, whether such waiver be full or partial, shall
extend to or be taken to affect any subsequent default, or to impair the rights
resulting therefrom except as may be otherwise provided therein. No remedy
hereunder is intended to be exclusive of any other remedy but each and every
remedy shall be cumulative and in addition to any and every other remedy given
hereunder or otherwise existing; nor shall the giving, taking or enforcement of
any other or additional security, collateral or guaranty for the payment of the
Secured Indebtedness operate to prejudice, waive or affect the security of this
Agreement or any rights, powers or remedies hereunder, nor shall the Security
Trustee or the holder of any Note be required to first look to, enforce or
exhaust such other or additional security, collateral or guaranties.
.C.SECTION 8. THE SECURITY TRUSTEE;.
The Security Trustee accepts the trusts hereunder and agrees to perform
the same, but only upon the terms and conditions hereof, including the
following, to all of which the Company and the respective holders of the Notes
at any time outstanding by their acceptance thereof agree:
.SECTION 8.1. DUTIES OF SECURITY TRUSTEE;. (a) The Security Trustee
undertakes (i) except while an Event of Default actually known to the Security
Trustee shall have occurred and be continuing, to perform such duties and only
such duties as are specifically set forth in this Agreement, or in any direction
given pursuant to this Agreement, and (ii) while an Event of Default actually
known to the Security Trustee shall have occurred and be continuing, (A) to
exercise such of the rights and powers as are vested in it by this Agreement and
subject to SS.8.1(B), to use the same degree of care and skill in their exercise
as an ordinary prudent man would exercise or use under the circumstances in the
conduct of his own affairs and (B) to conduct any sale or disposition of the
Collateral pursuant to SS.7.2 in a commercially reasonable manner.
The Security Trustee upon receipt of instruments or notices furnished
to the Security Trustee pursuant to the provisions of this Agreement shall
furnish copies of the same to the holders of the Notes.
(b) In the event that the Security Trustee shall have actual
knowledge of an Event of Default, the Security Trustee shall give prompt written
notice of such Event of Default to each holder of a Note. Subject to the terms
of SS.8.2(H), in accordance with written instructions received from the holders
of at least a majority of the Aggregate Principal Amount of the Outstanding
Notes, the Security Trustee shall take such action or refrain from taking such
action as the Security Trustee shall be directed in writing by such holders. If
the Security Trustee shall not have received written instructions as above
provided within twenty (20) days after mailing notice of such Event of Default
to the holders, the Security Trustee may, subject to instructions received
pursuant to the preceding sentence, take such action, or refrain from taking
such action, but shall be under no duty to take or refrain from taking any
action, with respect to such Event of Default, as it shall determine advisable
in the best interests of the holders of the Notes.
(c) The Security Trustee shall not have any duty or obligation to
manage, control, use, sell, dispose of or otherwise deal with the Collateral,
or, to otherwise take or refrain from taking any action under, or in connection
with, this Agreement, except as expressly provided by the terms of this
Agreement or expressly provided in written instructions received pursuant to
this Agreement.
(d) Except if it is herein otherwise expressly provided that no such
request is required, the Security Trustee shall not be under any obligation to
take any action which is discretionary with the Security Trustee or otherwise
requires judgment to be made by the Security Trustee under the provisions
hereof, except on written request by the holders of the Notes or by the
requisite portion thereof as expressly provided herein.
.SECTION 8.2. SECURITY TRUSTEE'S LIABILITY;. No provision of this
Agreement (except to the extent provided in SS.8.13 hereof) shall be construed
to relieve the Security Trustee from liability for its own negligent action,
negligent failure to act, or its own willful misconduct, except that:
(a) unless an Event of Default actually known to the Security
Trustee shall have occurred and be continuing, the Security Trustee
shall not be liable except for the performance of such duties as are
specifically set forth in this Agreement and no implied covenants or
obligations
shall be read into this Agreement against the Security Trustee but the
duties and obligations of the Security Trustee shall be determined
solely by the express provisions of this Agreement; and
(b) in the absence of bad faith on the part of the Security
Trustee, the Security Trustee may rely upon the authenticity of, and
the truth of the statements and the correctness of the opinions
expressed in, and shall be protected in acting upon, any resolution,
officer's certificate, opinion of counsel (which counsel shall be
independent of the Company, any Affiliate thereof and the holders of
the Notes), Note, request, notice, consent, waiver, order, signature
guaranty, notarial seal, stamp, acknowledgment, verification,
appraisal, report, stock certificate, or other paper or document
believed by the Security Trustee to be genuine and to have been signed,
affixed or presented by the proper party or parties; and
(c) in the absence of bad faith on the part of the Security
Trustee, whenever the Security Trustee, or any of its agents,
representatives, experts or counsel (which counsel shall be independent
of the Company, any Affiliate thereof and the holders of the Notes),
shall consider it necessary or desirable that any matter be proved or
established, such matter (unless other evidence in respect thereof be
herein specifically prescribed) may be deemed to be conclusively proved
and established by an officer's certificate; provided, however, that
the Security Trustee, or such agent, representative, expert or counsel,
may require such further and additional evidence and make such further
investigation as it or they may consider reasonable; and
(d) the Security Trustee may consult with counsel (which
counsel shall be independent of the Company, any Affiliate thereof and
the holders of the Notes) and the advice or opinion of such counsel
shall be full and complete authorization and protection in respect of
any action taken or suffered hereunder in good faith and in accordance
with such advice or opinion of counsel; and
(e) the Security Trustee shall not be liable with respect to
any action taken or omitted to be taken by it in good faith in
accordance with any direction or request of the holders of Notes or the
requisite portion thereof as expressly provided herein; and
(f) the Security Trustee shall not be liable for any error of
judgment made in good faith by an officer of the Security Trustee
unless it shall be proved that the Security Trustee was negligent in
ascertaining the pertinent facts; and
(g) the Security Trustee shall not be deemed to have knowledge
of any Default or Event of Default unless and until an officer of the
Corporate Trust Department of the Security Trustee who customarily
handles corporate trusts or such other Person employed by the Security
Trustee who has primary responsibility for the transactions
contemplated hereby shall have actual knowledge thereof or the Security
Trustee shall have received written advice thereof from the holder of
any Note; and
(h) whether or not an Event of Default shall have occurred,
the Security Trustee shall not be under any obligation to take or
refrain from taking any action under this Agreement which may tend to
involve it in any expense or liability, the payment of which within a
reasonable time is not, in its reasonable opinion, assured to it by the
security afforded to it by the terms of this Agreement, unless and
until it is requested in writing so to do by one or more holders of
Notes outstanding hereunder and furnished, from time to time as it may
require, with reasonable security and indemnity.
.SECTION 8.3. NO RESPONSIBILITY OF SECURITY TRUSTEE FOR RECITALS;.
The recitals and statements contained herein and in the Notes shall be taken as
the recitals and statements of the Company, and the Security Trustee assumes no
responsibility for the correctness of the same, nor shall the Security Trustee
have any responsibility for or any liability with respect to any disclosure,
warranty, representation or concealment or failure to disclose in connection
with the offering, solicitation, sale or distribution Notes by the Company or by
any other Person.
The Security Trustee makes no representation as to the validity or
sufficiency of this Agreement, or of the Notes secured hereby, the security
hereby or thereby afforded, the title of the Company to or the existence of the
Collateral or the descriptions thereof, or the filing or recording or
registering of this Agreement or any other document.
The Security Trustee shall not be concerned with or accountable to any
Person for the use or application of any deposited moneys which shall be
released or withdrawn in accordance with the provisions of this Agreement or of
any property or Securities or the proceeds thereof which shall be released from
the lien and security interest hereof in accordance with the provisions of this
Agreement.
.SECTION 8.4. CERTAIN LIMITATIONS ON SECURITY TRUSTEE'S RIGHTS TO
COMPENSATION AND INDEMNIFICATION;. Except to the extent otherwise expressly
provided herein the Security Trustee shall have no right against the holder of
any Note for the payment of compensation for its services hereunder or any
expenses or disbursements incurred in connection with the exercise and
performance of its powers and duties hereunder or any indemnification against
liabilities which it may incur in the exercise and performance of such powers
and duties but on the contrary, shall look solely to the Company for such
payment and indemnification which the Company hereby agrees to make, and the
Security Trustee shall have no lien on or security interest in the Collateral as
security for such compensation, expenses, disbursements and indemnification
except to the extent provided for in SS.7.5.
.SECTION 8.5. STATUS OF MONEYS RECEIVED;. (a) All moneys received by
the Security Trustee shall, together with any interest thereon, until used or
applied as herein provided, be held in trust for the purposes for which they
were received, but (except as herein otherwise provided with respect to the
funds referred to in paragraph (b) of this Section) need not be segregated in
any manner from any other moneys, except to the extent required by law, and may
be deposited by the Security Trustee under such general conditions as may be
prescribed by law in the Security Trustee's general banking department, and the
Security Trustee shall be under no liability for interest (other than any
interest accrued pursuant to clause (b) of this SS.8.5) on any moneys received
by it hereunder.
(b) The Security Trustee shall invest and reinvest any funds from
time to time held by the Security Trustee in direct obligations of the United
States of America or obligations for which the full faith and credit of the
United States is pledged to provide for the payment of principal and interest,
maturing not more than 90 days from the date of such investment.
. SECTION 8.6. RESIGNATION OF SECURITY TRUSTEE;. The Security
Trustee may resign without cause and be discharged from the trusts created
hereby by delivering notice thereof, by registered or certified mail postage
prepaid to the Company and all holders of the Notes at the time outstanding.
Such resignation shall take effect immediately upon the appointment of a
successor Security Trustee as provided inSS.SS.8.8 and 8.9.
. SECTION 8.7. REMOVAL OF SECURITY TRUSTEE;. The Security Trustee
may be removed at any time, for or without cause, by an instrument or
instruments in writing executed by the holders of a majority of the Aggregate
Principal Amount of the Outstanding Notes and delivered to the Security Trustee
with a copy to the Company, specifying the removal and the date when it shall
take effect provided, however, that no such removal shall be effective hereunder
unless and until a successor security trustee shall have been appointed and
shall have accepted such appointment as provided in SS.SS.8.8 and 8.9.
.SECTION 8.8. APPOINTMENT OF SUCCESSOR SECURITY TRUSTEE;. In case at
any time the Security Trustee shall resign or be removed or become incapable of
acting, a successor Security Trustee may be appointed by the holders of a
majority of the Aggregate Principal Amount of the Outstanding Notes, by an
instrument or instruments in writing executed by such Noteholders and filed with
such successor Security Trustee and the Company.
Until a successor Security Trustee shall be so appointed by the
Noteholders, the Company shall appoint a successor Security Trustee to fill such
vacancy, by an instrument in writing executed by the Company and delivered to
the successor Security Trustee. If all or substantially all of the Collateral
shall be in the possession of one or more receivers, trustees, liquidators or
assignees for the benefit of creditors, then such receivers, trustees,
custodians, liquidators or assignees may, by an instrument in writing delivered
to the successor Security Trustee, appoint a successor Security Trustee.
Promptly after any such appointment, the Company, or any such receivers,
trustees, custodians, liquidators or assignees, as the case may be, shall give
notice thereof by first class mail postage prepaid to each holder of the Notes
at the time outstanding.
Any successor Security Trustee so appointed by the Company, or such
receivers, trustees, custodians, liquidators or assignees, shall immediately and
without further act be superseded by a successor
Security Trustee appointed by the holders of a majority in Aggregate Principal
Amount of the Outstanding Notes.
If a successor Security Trustee shall not be appointed pursuant to this
Section within thirty days after notice of the resignation or removal of the
retiring Security Trustee, the holder of any Note or such retiring Security
Trustee (unless the retiring Security Trustee is being removed) may apply to any
court of competent jurisdiction to appoint a successor Security Trustee, and
such court may thereupon, after such notice, if any, as it may consider proper,
appoint a successor Security Trustee.
.SECTION 8.9. SUCCESSION OF SUCCESSOR SECURITY TRUSTEE;. Any
successor Security Trustee appointed hereunder shall execute, acknowledge and
deliver to the Company and the predecessor Security Trustee an instrument
accepting such appointment, and thereupon such successor Security Trustee,
without any further act, deed, conveyance or transfer, shall become vested with
the title to the Collateral, and with all the rights, powers, trusts, duties and
obligations of the predecessor Security Trustee in the trust hereunder, with
like effect as if originally named as Security Trustee herein.
Upon the request of any such successor Security Trustee, however, the
Company and the predecessor Security Trustee shall execute and deliver such
instruments of conveyance and further assurance and do such other things as may
reasonably be required for more fully and certainly vesting and confirming in
such successor Security Trustee its interest in the Collateral and all such
rights, powers, trusts, duties and obligations of the predecessor Security
Trustee hereunder, and the predecessor Security Trustee shall also assign and
deliver to the successor Security Trustee any property subject to the lien and
security interest of this Agreement which may then be in its possession.
.SECTION 8.10. ELIGIBILITY OF SECURITY TRUSTEE;. The Security
Trustee shall be a state or national bank or trust company in good standing,
organized under the laws of the United States of America or of any state
thereof, having a capital, surplus and undivided profits aggregating at least
$500,000,000 and whose certificates of deposit are accorded a rating of A or
better by S&P and ▇▇▇▇▇'▇ or, if S&P and ▇▇▇▇▇'▇ are no longer rating such
banks, then by any other nationally recognized credit rating agency of similar
standing or a guaranty of its obligations hereunder from such a bank or trust
company or holding company in good standing, organized under the laws of the
United States of America or of any State thereof, having a capital, surplus and
undivided profits aggregating at least $500,000,000 and whose certificates of
deposit are accorded a rating of A or better by S&P and ▇▇▇▇▇'▇ or, if S&P and
▇▇▇▇▇'▇ are no longer rating such banks, then by any other nationally recognized
credit rating agency of similar standing, if there be such a bank or trust
company willing and able to accept such trust upon reasonable and customary
terms. In case the Security Trustee shall cease to be eligible in accordance
with the provisions of this Section, the Security Trustee shall resign
immediately in the manner and with the effect specified in SS.8.6.
.SECTION 8.11. SUCCESSOR SECURITY TRUSTEE BY MERGER;. Any
corporation into which the Security Trustee may be merged or with which it may
be consolidated, or any corporation resulting from any merger or consolidation
to which the Security Trustee shall be a party, or any state or national bank or
trust company in any manner succeeding to the corporate trust business of the
Security Trustee as a whole or substantially as a whole, if eligible as provided
in SS.8.10, shall be the successor of the Security Trustee hereunder without the
execution or filing of any paper or any further act on the part of any of the
parties hereto, anything to the contrary contained herein notwithstanding.
.SECTION 8.12. CO-TRUSTEES;. At any time, for the purpose of meeting
any legal requirements of any jurisdiction in which any part of the Collateral
may at the time be located, the Company and the Security Trustee jointly shall
have power and shall execute and deliver all instruments, to appoint one or more
persons approved by the Security Trustee, to act as co-trustee, or co-trustees,
jointly with the Security Trustee, or separate trustee or separate trustees, of
all or any part of the Collateral, and to vest in such person or persons in such
capacity, such interest in the Collateral or any part thereof, and such rights,
powers, duties, trusts or obligations as the Company and the Security Trustee
may consider necessary or desirable. If the Company shall not have joined in
such appointment within 15 days after the receipt by it of a request so to do,
or in case an Event of Default shall have occurred and be continuing, the
Security Trustee alone shall have power to make such appointment if the Security
Trustee reasonably believes such appointment is necessary or desirable to carry
out the transactions contemplated hereby.
.SECTION 8.13. COMPENSATION AND REIMBURSEMENT;. The Company agrees:
(a) to pay to the Security Trustee all of its out-of-pocket expenses
in connection with the preparation, execution and delivery of this Agreement and
the transactions contemplated hereby, including but not limited to the
reasonable charges and disbursements of its special counsel;
(b) to pay to the Security Trustee from time to time reasonable
compensation for all services rendered by it hereunder;
(c) except as otherwise expressly provided herein, to reimburse the
Security Trustee upon its request for all reasonable expenses, disbursements and
advances incurred or made by the Security Trustee in accordance with any
provision of this Agreement (including the reasonable compensation and the
expenses and disbursements of its agents and counsel), except any such expense,
disbursement or advance as may be attributable to its gross negligence or
willful misconduct; and
(d) to indemnify the Security Trustee for, and to hold it harmless
against, any loss, liability or expense incurred without gross negligence or
willful misconduct on its part, arising out of or in connection with the
acceptance or administration of the Agreement, including, but not limited to,
the costs and expenses of defending itself against any claim or liability in
connection with the exercise or performance of any of its powers or duties
hereunder, and any loss, liability, expense or claim arising out of its
possession, management, control, use or operation of the Collateral.
.c.'SECTION 9. SUPPLEMENTS; WAIVERS'.
.SECTION 9.1. SUPPLEMENTAL SECURITY AGREEMENTS WITHOUT NOTEHOLDER
CONSENT;. The Company and the Security Trustee from time to time and at any
time, subject to the restrictions in this Agreement contained, may enter into an
agreement or agreements supplemental hereto, which thereafter shall form a part
hereof, for any one or more or all of the following purposes:
(a) to add to the covenants and agreements to be observed by,
and to surrender any right or power reserved to or conferred upon the
Company;
(b) to subject to the lien and security interest of this
Agreement additional property hereafter acquired by the Company and
intended to be subjected to the lien and security interest of this
Agreement and to correct and amplify the description of any property
subject to the lien and security interest of this Agreement; and
(c) to permit the qualification of this Agreement under the
Trust Indenture Act of 1939, as amended, or any similar Federal statute
hereafter in effect, except that nothing herein contained shall permit
or authorize the inclusion of the provisions referred to in Section
316(a)(2) of said Trust Indenture Act of 1939 or any corresponding
provision in any similar Federal statute hereafter in effect;
and the Company covenants to perform all requirements of any such supplemental
agreement. No restriction or obligation imposed upon the Company may, except as
otherwise provided in this Agreement, be waived or modified by any such
supplemental agreement.
.'SECTION 9.2. WAIVERS AND CONSENTS BY NOTEHOLDERS; SUPPLEMENTAL
SECURITY AGREEMENTS WITH NOTEHOLDERS' CONSENT';. (a) Upon the waiver or consent
of (x) the holders of more than 50% of the Aggregate Principal Amount of
Outstanding Notes, computed solely by reference to the Senior Secured Notes, (y)
the holders of more than 50% of the Aggregate Principal Amount of Outstanding
Notes, computed solely by reference to the Revolving Credit Notes, and, if any
of the waivers or supplemental agreements described below relate to Collateral
involving assets of the Company and its Restricted Subsidiaries which constitute
a "substantial part" (as defined below), (z) the holders of more than 50% of the
Aggregate Principal Amount of Outstanding Notes, computed solely by reference to
the Senior Subordinated Notes, the Company and the Security Trustee may enter
into an agreement or agreements supplemental hereto for the purpose of waiving,
adding, changing or eliminating any provisions of this Agreement or of any
agreement supplemental hereto or modifying in any manner the rights and
obligations of the holders of the Notes and the Company; PROVIDED, HOWEVER, that
no such waiver or supplemental agreement shall (A) impair or affect the right of
any holder to receive payments or prepayments of the principal of and payments
of the interest and premium, if any, on its Note, as therein and herein
provided, without the consent of such holder,
(B) permit the creation of any lien and security interest with respect to any of
the Collateral, without the consent of the holders of all the Senior Notes at
the time outstanding and, if such waiver or supplemental agreement relates to
Collateral which constitutes a "substantial part" of the assets of the Company
and its Restricted Subsidiaries, without the consent of all of the holders of
the Senior Subordinated Notes at the time outstanding, (C) except as otherwise
provided in SS.10.4, effect the deprivation of the holder of any Note of the
benefit of the lien and security interest of this Agreement upon all or any part
of the Collateral without the consent of the holders of all of the Senior Notes
at the time outstanding and, if such waiver or supplemental agreement relates to
Collateral which constitutes a "substantial part" of the assets of the Company
and its Restricted Subsidiaries, without the consent of all of the holders of
the Senior Subordinated Notes at the time outstanding, (D) reduce the aforesaid
percentages of the aggregate principal amount of Notes, the holders of which are
required to consent to any such waiver or supplemental indenture pursuant to
this Section, without the consent of the holders of all of the Notes at the time
outstanding (including, without limitation, any change to the definition of
"Aggregate Principal Amount of the Outstanding Notes"), (E) modify the rights,
duties or immunities of the Security Trustee without the consent of the Security
Trustee and the holders of all of the Senior Notes at the time outstanding and,
if such waiver or supplemental agreement relates to Collateral which constitutes
a "substantial part" of the assets of the Company and its Restricted
Subsidiaries, without the consent of all of the holders of the Senior
Subordinated Notes at the time outstanding, or (F) except as otherwise provided
in SS.10.4 hereof, consent to the release or termination of any Subsidiary
Guaranty Agreement without the consent of the holders of all of the Senior Notes
at the time outstanding and, if such waiver or supplemental agreement relates to
Collateral which constitutes a "substantial part" of the assets of the Company
and its Restricted Subsidiaries, without the consent of all of the holders of
the Senior Subordinated Notes at the time outstanding.
(b) For purposes of this SS.9.2, assets subject to any waiver or
supplemental agreement shall be deemed to be a "substantial part" of the assets
of the Company and its Restricted Subsidiaries if (i) such assets, together with
all other assets (A) sold, leased or otherwise disposed of by the Company and
its Restricted Subsidiaries or (B) subject to any waiver or supplemental
agreement pursuant to this SS.9.2 or Section 9.2 of the Subsidiary Security
Agreement without the consent of the holders of more than 50% of the Aggregate
Principal Amount of Outstanding Notes, computed solely by reference to the
Senior Subordinated Notes or, if such waiver or supplemental agreement is
described in clauses (B), (C), (E) or (F) of SS.9.2(A) or Section 9.2(a) of the
Subsidiary Security Agreement, without the consent of all of the holders of the
Senior Subordinated Notes, in each case, during the period of 12 months ending
with the date of such waiver or supplemental agreement, 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 waiver or supplemental
agreement, (ii) the book value of such assets, when added to the book value of
all other assets of the Company and its Restricted Subsidiaries (A) sold or
otherwise disposed of by the Company and its Restricted Subsidiaries or (B)
subject to any waiver or supplemental agreement pursuant to this SS.9.2 or
Section 9.2 of the Subsidiary Security Agreement without the consent of the
holders of more than 50% of the Aggregate Principal Amount of Outstanding Notes,
computed solely by reference to the Senior Subordinated Notes or, if such waiver
or supplemental agreement is described in clauses (B), (C), (E) or (F) of
SS.9.2(A) or Section 9.2(a) of the Subsidiary Security Agreement, without the
consent of all of the holders of the Senior Subordinated Notes, in each case,
during the period of 12 months ending with the date of such waiver or
supplemental agreement, 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 waiver or supplemental
agreement, or (iii) the book value of such assets, when added to the book value
of all other assets of the Company and its Restricted Subsidiaries (A) sold or
otherwise disposed of by the Company and its Restricted Subsidiaries or (B)
subject to any waiver or supplemental agreement pursuant to this SS.9.2 or
Section 9.2 of the Subsidiary Security Agreement without the consent of the
holders of more than 50% of the Aggregate Principal Amount of Outstanding Notes,
computed solely by reference to the Senior Subordinated Notes or, if such waiver
or supplemental agreement is described in clauses (B), (C), (E) or (F) of
SS.9.2(A) or Section 9.2(a) of the Subsidiary Security Agreement, without the
consent of all of the holders of the Senior Subordinated Notes, in each case,
during
the entire period commencing on April 1, 1997 and ending with the date of such
waiver or supplemental agreement, 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
waiver or supplemental agreement.
.SECTION 9.3. NOTICE OF SUPPLEMENTS;. Promptly after the execution
by the Company and the Security Trustee of any supplemental agreement pursuant
to the provisions ofSS.9.1 orSS.9.2 the Company shall deliver a conformed copy
thereof, mailed first-class postage prepaid, to each holder of the Notes at its
address set forth in the Note Register. Any failure of the Company to give such
notice, or any defect therein, shall not, however, in any way impair or affect
the validity of any such supplemental agreement.
.SECTION 9.4. OPINION OF COUNSEL CONCLUSIVE AS TO SUPPLEMENTS;. The
Security Trustee is hereby authorized to join with the Company in the execution
of any such supplemental indenture or agreement authorized or permitted by the
terms of this Agreement and to make the further agreements and stipulations
which may be therein contained, and the Security Trustee may receive an opinion
of independent counsel selected by the Security Trustee as conclusive evidence
that any supplemental agreement executed pursuant to the provisions of this SS.9
complies with the requirements of this SS.9.
.C.SECTION 10. MISCELLANEOUS;.
.SECTION 10.1. SUCCESSORS AND ASSIGNS;. Whenever any of the parties
hereto is referred to such reference shall be deemed to include the successors
and assigns of such party; and all the covenants, promises and agreements in
this Agreement contained by or on behalf of the Company or by or on behalf of
the Security Trustee shall bind and inure to the benefit of the respective
successors and assigns of such parties whether so expressed or not.
.SECTION 10.2. SEVERABILITY;. Any provision of this Agreement which
is prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof, and any
such prohibition or unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction.
.SECTION 10.3. COMMUNICATIONS;. All communications provided for
herein shall be in writing. Communications to the Company or the Security
Trustee shall be deemed to have been given (unless otherwise required by the
specific provisions hereof in respect of any matter) when addressed and
delivered in person, or five days after being deposited in the U.S. mail,
postage prepaid, by registered or certified mail or by overnight express mail,
as follows:
If to the Company: World Acceptance Corporation
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: Chief Financial Officer
If to the Security ▇▇▇▇▇▇ Trust and Savings Bank
Trustee: ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇
Indenture Trust Division
or to the Company or the Security Trustee at such other address as the Company
or the Security Trustee may designate by notice duly given in accordance with
this Section to the other. Communications to the holder of a Note shall be
deemed to have been given (unless otherwise provided for by the specific
provisions hereof in respect of any matter) when delivered personally or five
days after being deposited in the U.S. mail, postage prepaid by registered or
certified mail or by overnight express mail, addressed to such holder at its
address set forth in the Note Register in the case of any holder of the Senior
Secured Notes or the Senior Subordinated Notes and at its address set forth in
the Revolving Credit Agreement in the case of any holder of the Revolving Credit
Notes.
.SECTION 10.4. RELEASE;. The Security Trustee shall release fully or
partially, as the case may
be, the Lien granted by this Agreement under and only under the following
circumstances:
(a) Upon the presentation of satisfactory evidence that all
Secured Indebtedness has been irrevocably fully paid or discharged and
all obligations of the holders of Notes to extend Secured Indebtedness
to the Company have terminated or otherwise expired, the Security
Trustee shall release the Lien and security interest of this Agreement
by proper instrument or instruments;
(b) So long as no Default or Event of Default then exists,
upon the sale or other disposition of any assets of the Company and its
Restricted Subsidiaries which the Chief Financial Officer of the
Company certifies to the Security Trustee and the Noteholders in
writing does not constitute a "substantial part" of the assets of the
Company and its Restricted Subsidiaries (as defined in Section 5.13 of
the Senior Note Agreements, Section 5.13 of the Senior Subordinated
Note Agreement and Section 8.13 of the Revolving Credit Agreement), the
Security Trustee shall, upon the written direction of the Company and
without the consent of the Noteholders (unless the Security Trustee has
been notified in writing by a Noteholder prior to such release that
such Noteholder in good faith believes that the conditions set forth
above have not been satisfied, in which case no such release shall be
issued), release the Lien of this Agreement on such assets by proper
instrument or instruments. If any such sale or other disposition of
assets constituting less than a "substantial part" of the assets of the
Company and its Restricted Subsidiaries pursuant to this SS.10.4(B)
results in the sale or other disposition of the capital stock or other
equity interest in a Restricted Subsidiary, the Subsidiary Guaranty
Agreements with respect to, and only with respect to, such Restricted
Subsidiary shall automatically be released and the Security Trustee and
the Noteholders agree to execute and deliver such further instruments
and do such further acts as the Company may deem necessary or proper to
carry out more effectively the foregoing;
(c) Upon the sale or other disposition by the Company of a
"substantial part" of the assets of the Company and its Restricted
Subsidiaries (as defined in Section 5.13 of the Senior Note Agreements,
Section 5.13 of the Senior Subordinated Note Agreement and Section 8.13
of the Revolving Credit Agreement) after the occurrence and during the
continuance of a Material Event of Default, the Security Trustee shall,
upon the written direction of the Company and the written consent of
(x) the holders of more than 50% of the Aggregate Principal Amount of
Outstanding Notes, computed solely by reference to the Senior Secured
Notes, and (y) the holders of more than 50% of the Aggregate Principal
Amount of Outstanding Notes, computed solely by reference to the
Revolving Credit Notes, and without the further consent of the holders
of the Senior Subordinated Notes, release the Lien of this Agreement on
such assets by proper instrument or instruments, PROVIDED, that, (i)
such sale or other disposition is not to an Affiliate, (ii) the sale
price for such assets is determined by the Company in good faith to be
reasonable, as evidenced by a resolution of the board of directors of
the Company, (iii) the proceeds of any such sale or other disposition
are applied to the satisfaction of Secured Indebtedness and, if such
application results in the prepayment of any obligations under the
Revolving Credit Agreement, such application permanently reduces the
amount of the commitment under the Revolving Credit Agreement, (iv)
each Noteholder shall have received written notice of such sale or
other disposition at least ten days prior to the date of such sale or
other disposition and (v) the Security Trustee and the Noteholders
receive a certificate of the Chief Financial Officer of the Company
certifying to each of the foregoing. If any such sale or other
disposition of assets of the Company and its Restricted Subsidiaries
pursuant to this SS.10.4(C) results in the sale or other disposition of
the capital stock or other equity interest in a Restricted Subsidiary,
the Subsidiary Guaranty Agreements with respect to, and only with
respect to, such Restricted Subsidiary shall automatically be released
and the Security Trustee and the Noteholders agree to execute and
deliver such further instruments and do such further acts as the
Company may deem necessary or proper to carry out more effectively the
foregoing;
(d) Upon the sale or other disposition of the Collateral or
any part thereof pursuant to and in accordance with SS.7.2 and
conducted in a commercially reasonable manner, the Security Trustee
shall release the Lien of this Agreement on the Collateral or such
part, as the case may be, by proper instrument or instruments; and
(e) With the prior written consent of each Noteholder, the
Security Trustee shall release the Lien of this Agreement by proper
instrument or instruments.
.SECTION 10.5. COUNTERPARTS;. This Agreement may be executed,
acknowledged and delivered in any number of counterparts, each of such
counterparts constituting an original but all together only one Agreement.
.SECTION 10.6. GOVERNING LAW;. THIS AGREEMENT SHALL BE CONSTRUED IN
ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF SOUTH CAROLINA.
.SECTION 10.7. HEADINGS;. Any headings or captions preceding the
text of the several sections hereof are intended solely for convenience of
reference and shall not constitute a part of this Agreement nor shall they
affect its meaning, construction or effect.
.SECTION 10.8. PRIOR LIENS;. Upon the execution and delivery of this
Agreement by the Company and the Security Trustee, this Agreement shall
supersede all provisions of the Original Security Agreement as of the date of
such execution and delivery. The Company hereby agrees that, notwithstanding the
execution and delivery of this Agreement, the liens and security interests
created and provided for under the Original Security Agreement continue in
effect under and pursuant to the terms of this Agreement for the benefit of all
of the Secured Indebtedness. Nothing herein shall in any manner affect or impair
the priority of the liens and security interests created and provided for by the
Original Security Agreement as to the indebtedness and obligations which would
otherwise be secured thereby prior to giving effect to this Agreement.
.SECTION 10.9. RIGHTS OF HOLDERS OF SENIOR SUBORDINATED NOTES;. The
rights and remedies under this Agreement of the holders of the Senior
Subordinated Notes are junior and subordinate to the rights and remedies of the
holders of the Senior Notes pursuant to the terms of the Senior Subordinated
Note Agreement, reference to Section 9 of which is hereby made for a statement
of the terms and conditions thereof.
IN WITNESS WHEREOF, the Company has caused this Agreement to be
executed, and the Security Trustee in evidence of its acceptance of the trusts
hereby created, has caused this Agreement to be executed on its behalf.
WORLD ACCEPTANCE CORPORATION
By /s/ A. ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ III
Its Executive Vice President
▇▇▇▇▇▇ TRUST AND SAVINGS BANK, as
Security Trustee
By /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Its Vice President
NOTEHOLDERS CONSENT
The undersigned Noteholders hereby consent to the execution and
delivery of this Agreement by the Companies and the Security Trustee and hereby
agree to the terms and provisions of the Amended and Restated Guaranty Agreement
executed contemporaneously herewith.
▇▇▇▇▇▇ TRUST AND SAVINGS BANK, as a
Noteholder
By /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Its Vice President
THE FIRST NATIONAL BANK OF CHICAGO, as
a Noteholder
By /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Its Assistant Vice President
LASALLE NATIONAL BANK, as a Noteholder
By /s/ ▇▇▇ ▇▇▇▇▇▇▇▇▇
Its Loan Officer
PRINCIPAL MUTUAL LIFE INSURANCE COMPANY,
as a Noteholder
By /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Its Counsel
By /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Its Counsel
JEFFERSON-PILOT LIFE INSURANCE COMPANY,
as a Noteholder
By /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇.
Its Second Vice President
Schedule I to Company
Security Agreement dated June 30, 1997
Description of Pledged Shares
Number of Stock
Subsidiary Description Shares Certificate No.
---------- ----------- ------ ---------------
WAC Insurance Company, Ltd. Common, $1 par 325* 1
WFC of South Carolina, Inc. Common, $.01 par 10,000 1
World Acceptance Common, $.01 par 1,000 1
Corporation of Alabama
World Acceptance Common, $.01 par 1,000 1
Corporation of Missouri
World Finance Corporation Common, $1 par 25,000 1
of Georgia 25,000 2
World Finance Corporation Common, $.01 par 1,000 1
of Illinois
World Finance Corporation Common, no par 25 1
of Louisiana
World Finance Corporation Common, $.01 par 1,000 3
of New Mexico
World Finance Corporation Common, $1 par 3,750 1
of South Carolina
World Finance Corporation Common, $.01 par 1,000 1
of Tennessee
World Finance Corporation Class A Common, $1 par 125,000 A-1
of Texas
Class B Common, par 5,802 B-2
* Constituting 65% of the outstanding stock
Date: June 30, 1997
SCHEDULE I TO COMPANY SECURITY AGREEMENT DATED JUNE 30, 1997
SCHEDULE II
PARTNERSHIP INTERESTS
NONE.
Schedule III to Company
Security Agreement dated June 30, 1997
Location of Offices - World Acceptance Corporation
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▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇ (29606)
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Post Office Box 6429 (29606)
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[Exhibit A, Form of Subsidiary Amended and Restated Security Agreement,
Pledge and Indenture of Trust and Exhibit B, Form of Subsidiary Amended
and Restated Guaranty Agreement, omitted.]
SCHEDULE III TO COMPANY SECURITY AGREEMENT DATED JUNE 30, 1997