Exhibit 4.3
REGISTRATION RIGHTS AGREEMENT
DATED AS OF APRIL 11, 1997
BY AND AMONG
GENERAL ACCEPTANCE CORPORATION
AND
CAPITOL AMERICAN LIFE INSURANCE COMPANY
G:\LEGAL\AGREEMNT\MISC\GAC-REG.3
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (this AAgreement@) is made as of
April 11, 1997 by and between GENERAL ACCEPTANCE CORPORATION, an Indiana
corporation (the ACompany@) and CAPITOL AMERICAN LIFE INSURANCE COMPANY, an
Arizona life insurance corporation (the AHolder@).
WHEREAS, the Company and the Holder, entered into a Securities Purchase
Agreement dated as of the date hereof pursuant to which the Holder purchased
12% Subordinated Convertible Debentures in the aggregate amount of
$10,000,000 (the ANote@); and
WHEREAS, the Note is convertible at the option of the Holder into shares of
common stock of the Company (the AConverted Stock@); and
WHEREAS, it is a condition precedent to the Holder purchasing the Note
(pursuant to the Securities Purchase Agreement) that this Agreement be entered
into; and
WHEREAS, certain capitalized terms used herein are used as defined in the
Securities Purchase Agreement.
NOW, THEREFORE, in consideration of the mutual covenants herein
contained, and intending to be legally bound hereby, the parties hereto agree
as follows:
1. DEMAND REGISTRATION
1.1. Requests for Registration. At any time, a holder of the Note
or Converted Stock may demand registration under the Securities Act of all or
any portion of the Registrable Securities owned by such holder. In order to
accomplish such demand, a holder shall send written notice of the demand to
the Company, and such notice shall specify the number of Registrable
Securities sought to be registered. The Company shall proceed with any demand
registration requested by a holder of the Note or Converted Stock if the
number of Registrable Securities which the Holder shall have elected to
include in such Demand Registration pursuant to this Section 1.1 shall be at
least 51% of the Converted Stock issued or issuable upon conversion of the
Note. The minimum share amounts specified in this Section 1.1 shall be
appropriately adjusted to account for any stock dividend, stock split,
recapitalization, merger, consolidation, reorganization or other action as a
result of which additional shares of common stock of the Company are issued on
account of, in conversion of or in exchange for shares of outstanding common
stock.
1.2. Maximum Number of Demand Registrations. In no event shall the
total number of Demand Registrations exceed two.
1.3. Procedure. Within 10 days after receipt of a demand pursuant to
Section 1.1 hereof, the Company shall give written notice of such requested
registration to all other Persons who have registration rights and will
include in such registration, subject to the allocation provisions below, all
other Registrable Securities with respect to which the Company has received
written requests for inclusion within 20 days after the Company=s mailing of
such notice, plus any securities of the Company that the Company chooses to
include on its own behalf.
1.4. Expenses. The Company will pay the Registration Expenses of
any demand registration, but the Underwriting Commissions, if such demand
registration is underwritten, will be paid by the Holder in proportion to any
Registrable Securities to be included on their behalf.
1.5. Priority on Demand Registrations. If a demand registration is
underwritten and the managing underwriters advise the Company in writing that
in their opinion the number of Registrable Securities requested to be included
exceeds the number that can be sold in such offering, at a price reasonably
related to the fair value, the Company will allocate the Registrable
Securities to be included in such demand registration, first, to the Holder of
Registrable Securities pro rata on the basis of the number of Registrable
Securities (collectively, the "Selling Stockholders") for which the Company
has received written requests for inclusion, and, second, to the Company.
1.6. Selection of Underwriters. Any demand registration may be
underwritten, at the election of the Selling Stockholders, and the selection
of investment banker(s) and manager(s) and the other decisions regarding the
underwriting arrangements for any such offering will be made by the Selling
Stockholders; provided, however, that the selection of investment banker(s)
and manager(s) shall be subject to the consent of the Company, such consent
not to be unreasonably withheld.
2. PIGGYBACK REGISTRATIONS
2.1. Right to Piggyback. Whenever the Company proposes to register
the offer, sale or offer and sale of any of its securities for its own behalf
under the Securities Act (other than a demand registration), and the
registration form to be used may be used for the registrations of Registrable
Securities to be sold in the manner proposed by the Holder ("Piggyback
Registration@"), the Company will give prompt written notice to the Holder
and will include in such Piggyback Registration, subject to the allocation
provisions below, all Registrable Securities with respect to which the Company
has received written requests for inclusion within 20 days after the Company=s
mailing of such notice. The Company shall not select a Restricted Form that
would preclude registration of the Registrable Securities that the Company has
been requested to include in such registration if the Company could use
another available form of registration statement which is not a Restricted
Form and the use of which would not give rise to added Registration Expenses.
2.2. Piggyback Expenses. In all Piggyback Registrations, the
Company will pay the Registration Expenses related to the Registrable
Securities of the Holder, but the Underwriting Commissions will be paid by the
Selling Stockholders in proportion to any Registrable Securities included on
their behalf.
2.3. Priority on Primary Registrations. If a Piggyback
Registration is an underwritten registration on behalf of the Company, and the
managing underwriters advise the Company in writing that in their opinion the
number of securities requested to be included in such registration exceeds the
number that can be sold in such offering, at a price reasonable related to
fair value, the Company will allocate the securities to be included as
follows: first, the securities the Company proposes to sell on its own
behalf; and, second, Registrable Securities requested to be included in such
registration, pro rata on the basis of the number of Registrable Securities
owned, among the Selling Stockholders.
2.4. Withdrawal or Abandonment. Nothing contained in this Section
2 shall be construed as limiting or otherwise interfering with the right of
the Company to withdraw or abandon in its sole discretion any registration
statement filed by it in connection with a Piggyback Registration
notwithstanding the inclusion therein of Registrable Securities.
3. HOLDBACK AGREEMENTS
Both the Holder and the Company agree not to effect any public sale or
public distribution of equity securities of the Company of any securities
convertible into or exchangeable or exercisable for such securities during the
7 days prior to and the 180 days after any underwritten registration of equity
securities of the Company becomes effective (except as part of such
underwritten registration or except in connection with obligations of the
Company existing on the effective date of the registration statement relating
to such underwritten offering).
4. REGISTRATION PROCEDURES
Whenever the Holder has requested that any Registrable Securities be
registered pursuant to Section 1 of this Agreement, the Company will, as
expeditiously as possible, or whenever the Holder has requested that any
Registrable Securities be registered pursuant to Section 2 of this Agreement,
the Company will, to the extent applicable:
(a) Preparation and Filing of Registration Statement. Prepare and
file with the Securities and Exchange Commission a registration statement with
respect to such Registrable Securities and use its best efforts to cause such
registration statement to become effective (provided that before filing a
registration statement or prospectus or any amendments or supplements thereto,
the Company will furnish the Holder with copies of all such documents proposed
to be filed).
(b) Preparation and Filing of Amendments and Supplements. Prepare
and file with the Securities and Exchange Commission such amendments and
supplements to such registration statement and the prospectus used in
connection therewith as may be necessary to keep such registration statement
effective for the greater of (x) a period of not less than 120 days or (y)
until the Registrable Securities included therein have been sold.
(c) Copies of Documents. Furnish to the Holder such number of
copies of such registration statement, each amendment and supplement thereto
and the prospectus included in such registration statement (including each
preliminary prospectus), and such other documents as the Holder may reasonably
request in order to facilitate the disposition of the Registrable Securities
included therein owned by the Holder.
(d) Blue Sky Qualifications. Use its best efforts to register or
quality such Registrable Securities under such other securities or blue sky
laws of such jurisdictions as the Holder or managing underwriters may
reasonably request; provided, however, that in connection with any such
registration or qualification the Company shall not be obligated to file a
general consent to service of process, or to qualify to do business as a
foreign corporation, or otherwise subject itself to taxation in connection
with such qualification or compliance.
(e) Notification of Effectiveness; Amendments. Notify the Holder
at any time when a prospectus relating to the Registrable Securities included
therein is required to be delivered under the Securities Act within the period
that the Company is required to keep the registration statement effective of
the happening of any event as a result of which the prospectus included in
such registration statement as theretofore amended or supplemented contains an
untrue statement of a material fact or omits any material fact necessary to
make the statements therein not misleading, and, at the request of the Holder,
the Company will prepare a supplement or amendment to such prospectus so that,
as thereafter delivered to the purchasers of such Registrable Securities, such
prospectus will not contain an untrue statement of a material fact or omit to
state any material fact necessary to make the statements therein not
misleading.
(f) Listing. Cause all such Registrable Securities to be listed or
included on securities exchanges on which similar securities issued by the
Company are then listed or included.
(g) Transfer Agent and Registrar. Provide a transfer agent and
registrar for all such Registrable Securities not later than the effective
date of such registration statement.
(h) Other Agreements. Enter into such customary agreement
(including an underwriting agreement containing customary terms and
conditions, including usual and customary indemnification provisions, in form
reasonably acceptable to the Company) and take such other customary actions as
may be reasonable necessary to expedite or facilitate the disposition of such
Registrable Securities.
(i) Letters from Independent Accountants. Obtain a Acold comfort@
letter addressed to the Company from its independent accountants in such form
and covering such matters of the type customarily covered by Acold comfort@
letters delivered by such public accountants.
(j) Inspection of Records. Make available for inspection by the
Holder, and, upon execution of a confidentiality agreement mutually acceptable
to all parties, by any underwriter participating in any disposition pursuant
to such registration statement and any attorney, accountant or other agent
retained by the Holder or any underwriter, all financial and other records,
pertinent corporate documents and properties of the Company, and cause the
Company=s officers, directors and employees to supply all information
reasonably requested by the Holder or any underwriter, attorney, accountant or
agent in connection with such registration statement.
5. REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to the Holder:
5.1. Due Organization and Good Standing. The Company is a
corporation duly organized and validly existing under the laws of its
jurisdiction of incorporation and is duly qualified as a foreign corporation
in each jurisdiction in which the failure to be so qualified could reasonably
be expected to have a material adverse effect on the Company.
5.2. Due Authorization; Binding Effect. The execution and delivery
of this Agreement by the Company has been duly authorized by all necessary
corporate action and this Agreement constitutes the legal, valid and binding
obligation of the Company, enforceable against the Company in accordance with
its terms.
5.3. No Violation or Default. The execution and delivery by the
Company of this Agreement does not, and the performance by the Company of its
obligations hereunder will not, violate any provisions of its charter or
by-laws or constitute a default under any other agreement to which the Company
is a party or by which it or its assets may be bound.
6. REPRESENTATIONS AND WARRANTIES OF THE HOLDER
The Holder represents and warrants to the Company:
6.1. Due Organization and Good Standing. The Holder is a
corporation duly organized and validly existing under the laws of the state of
its incorporation and is duly qualified as a foreign corporation in each
jurisdiction in which the failure to be so qualified could reasonably be
expected to have a material adverse effect on the Holder.
6.2. Due Authorization; Binding Effect. The execution and delivery
of this Agreement by the Holder has been duly authorized by all necessary
action and this Agreement constitutes the legal, valid and binding obligation
of the Holder enforceable against each of the Holder in accordance with its
terms.
6.3. No Violation. The execution and delivery of this Agreement by
the Holder does not, and the performance by the Holder of its obligations
hereunder will not, violate any provision of the organizational documents of
the Holder.
6.4. No Default. The execution and delivery of this Agreement by
the Holder does not, and the performance by the Holder of its obligations
hereunder will not, violate any other agreement to which the Holder is a party
or by which any of its assets may be bound.
7. INFORMATION REGARDING HOLDER
The Holder shall provide to the Company such information as may be
reasonably requested by the Company for use in the preparation and filing of
any registration statement covering Registrable Securities owned by the
Holder, and the obligation of the Company to include Registrable Securities in
any registration statement on behalf of the Holder shall be subject to the
Holder's providing such information as promptly as practicable.
8. INDEMNIFICATION
8.1. Indemnification by the Company. The Company hereby
indemnifies, to the extent permitted by law, the Holder, its officers and
directors, and each person who controls such Holder (within the meaning of the
Securities Act), against all losses, claims, damages, liabilities and expenses
arising out of or resulting from any untrue or alleged untrue statement of
material fact contained in any registration statement, prospectus or
preliminary prospectus or any omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the
statements therein not misleading except insofar as the same occurs in
reliance upon and in conformity with any information furnished in writing to
the Company by the Holder expressly for use therein or is caused by the
Holder=s failure to deliver a copy of the registration statement or prospectus
or any amendments or supplements thereto after the Company has furnished the
Holder with copies of the same.
8.2. Indemnification by the Holder. In connection with any
registration statement in which the Holder is participating, the participating
Holder will furnish to the Company in writing such information as is
reasonably requested by the Company for use in such registration statement or
prospectus and will indemnify, to the extent permitted by law, the Company,
its directors and officers and each person who controls the Company (within
the meaning of the Securities Act) against any losses, claims, damages,
liabilities and expenses arising out of or resulting from any untrue or
alleged untrue statement of material fact or any omission or alleged omission
of a material fact required to be stated in the registration statement or
prospectus or any amendment thereof or supplement thereto or necessary to make
the statements therein not misleading, but only to the extent that such untrue
statement or omission or such alleged untrue statement or alleged omission
occurs in reliance upon and in conformity with information so furnished in
writing by the Holder specifically for use in the registration statement.
8.3. Procedures as to Indemnification. Any person entitled to
indemnification hereunder shall (i) give prompt notice to the indemnifying
party of any claim with respect to which it may seek indemnification and (ii)
unless in such indemnified party=s reasonable judgment a conflict of interest
between such indemnified and indemnifying parties may exist with respect to
such claim, permit such indemnifying party to assume the defense of such claim
with counsel reasonable satisfactory to the indemnified party. If such
defense is assumed, the indemnifying party will not be subject to any
liability for any settlement made without its consent (but such consent will
not be unreasonably withheld). An indemnifying party who is not entitled to,
or elects not to, assume the defense of a claim will not be obligated to pay
the fees and expenses of more than one counsel for all parties indemnified by
such indemnifying party with respect to such claim, unless in the reasonable
judgment of any indemnified party a conflict of interest may exist between
such indemnified party and any other of such indemnified parties with respect
to such claim.
8.4. Contribution. If the indemnification provided for in this
Section 8 is held by a court of competent jurisdiction to be unavailable to an
indemnified party with respect to any loss, liability, claim, damage, or
expense referred to therein, then the indemnifying party, in lieu of
indemnifying such indemnified party hereunder, shall contribute to the amount
paid or payable by such indemnified party as a result of such loss, liability,
claim, damage, or expense in such proportion as is appropriate to reflect the
relative fault of the indemnifying party on the one hand and of the
indemnified party on the other in connection with the statements or omissions
that resulted in such loss, liability, claim, damage, or expense (including
legal fees or expenses) as well as any other relevant equitable
considerations. The relative fault of the indemnifying party and of the
indemnified party shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or the
omission to state a material fact relates to information supplied by the
indemnifying party or by the indemnified party and the parties' relative
intent, knowledge, access to information, and opportunity to correct or
prevent such statement or omission. The Company and each holder of
Registrable Securities agree that it would not be just and equitable if
contribution pursuant to this Section 8.4 were determined by pro rata
allocation or by any other method of allocation which does not take into
account the equitable considerations referred to in the immediately preceding
paragraph. Notwithstanding the provisions of this Section 8, an indemnified
holder shall not be required to contribute any amount in excess of the net
proceeds received by the indemnified holder from the sale of the Registrable
Securities. No person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the ▇▇▇▇ ▇▇▇) shall be entitled to contribution
from any person who was not guilty of such fraudulent misrepresentation.
9. CONDITION TO THE COMPANY=S OBLIGATIONS
In connection with an underwritten offering, it shall be a condition to
the Company=s obligations to include Registrable Securities on behalf of the
Holder that the underwriters agree to indemnify the Company, its directors and
officers and each person who controls the Company (within the meaning of the
Securities Act) against any losses, claims, damages, liabilities and expenses
arising out of or resulting from any untrue or alleged untrue statement of
material fact or any omission or alleged omission of a material fact required
to be stated in the registration statement or prospectus or any amendment
thereof or supplement thereto or necessary to make the statements therein not
misleading, but only to the extent that such untrue statement or omission or
such alleged untrue statement or alleged omission is contained in information
furnished in writing by such underwriters on their own behalf specifically for
use in preparing the registration statement.
10. Definitions
10.1 Converted Stock. The term AConverted Stock@ means any common
stock of the Company issued upon conversion of the Notes.
10.2. Registrable Securities. The term ARegistrable Securities@
means any common stock of the Company issued or issuable upon exercise of any
convertible notes, warrant, or similar instruments and any securities issued
or to be issued with respect to such securities by way of a stock dividend or
stock split or in connection with a combination of shares, recapitalization,
merger, consolidation or other reorganization. As to any particular
Registrable Securities, such securities will cease to be Registrable
Securities when they have been (i) effectively registered under the Securities
Act or disposed of in accordance with the registration statement covering them
or (ii) transferred pursuant to Rule 144 under the Securities Act (or any
similar rule then in force).
10.3. Registration Expenses. The term ARegistration Expenses@
means all expenses incident to the Company=s performance of or compliance with
this Agreement, including without limitation all registration and filing fees,
fees and expenses of compliance with securities or blue sky laws, printing
expenses, messenger and delivery expenses, expenses and fees for listing the
securities to be registered on exchanges or trading system on which similar
securities issued by the Company are then listed or included, and fees and
disbursements of counsel for the Company.
10.4. Restricted Form. The term "Restricted Form" shall mean a
form of registration statement under the Securities Act which imposes for its
use a limitation on the maximum value or number of securities to be included
therein.
10.5. Securities Act. The term "Securities Act" shall mean the
Securities Act of 1933, as amended.
10.6. Underwriting Commissions. The term AUnderwriting
Commissions@ means all underwriting discounts or commissions relating to the
sale of securities of the Company, but excludes any expenses reimbursed to
underwriters.
11. MISCELLANEOUS
11.1. Notices. Any notices required hereunder shall be sent by
certified or registered mail or telecopied and confirmed by telecopy answer
back and, until changed by notice to the Holder, to the Company at ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention Chief Financial Officer, Facsimile
(▇▇▇) ▇▇▇-▇▇▇▇, and until changed by notice to the Company, to the Holder at
▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention ▇▇▇▇▇▇▇▇ ▇.
▇▇▇▇▇, Facsimile (▇▇▇) ▇▇▇-▇▇▇▇.
11.2. Amendments and Waivers. The provisions of this Agreement may
be amended and the Company may take any action herein prohibited, or omit to
perform any act herein required to be performed by it, if the Company has
obtained the prior written consent of the Holder.
11.3. Successors and Assigns. All covenants and agreements in this
Agreement by or on behalf of any of the parties hereto will bind and inure to
the benefit of their respective transferees and successors. The rights to
cause the Company to register Registrable Securities pursuant to this
Agreement shall follow the Note or Converted Stock, and shall be exercisable
by Holder of any Note or Converted Stock including any transferees of the Note
or Converted Stock.
11.4. Governing Law. All questions concerning the construction,
validity and interpretation of this Agreement will be governed by the law of
the State of Indiana.
11.5. Jurisdiction. The parties hereto agree to submit to personal
jurisdiction and to waive any objection as to venue in the federal or state
courts in the County of ▇▇▇▇▇▇▇▇ or Marion, State of Indiana. Service of
process on any party hereto in any action arising out of or relating to this
Agreement shall be effective if mailed to such party at the address listed in
Section 11.1 hereof.
11.6. Arbitration. If a dispute arises as to interpretation of this
Agreement, it shall be decided finally by three arbitrators in an arbitration
proceeding conforming to the Rules of the American Arbitration Association
applicable to commercial arbitration. The arbitrators shall be appointed as
follows: one by the Company, one by the Holder, and one by the two other
arbitrators. The arbitration shall take place in Carmel, Indiana. The
decision of a majority of the arbitrators shall be conclusively binding upon
the parties and final, and such decision shall be enforceable as a judgment in
any court of competent jurisdiction. Each party shall pay the fees and
expenses of the arbitrator appointed by it, its counsel and its witnesses.
The parties shall share equally the fees and expenses of the impartial
arbitrator.
11.7. Counterparts. This Agreement may be executed in any number
of counterparts, each of which shall be considered to be an original
instrument and to be effective as of the date first written above.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.
GENERAL ACCEPTANCE
CORPORATION
By /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: President & COO
CAPITOL AMERICAN LIFE
INSURANCE COMPANY
By /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Title: President
Exhibit 9.1
STOCKHOLDERS= AGREEMENT
THIS STOCKHOLDERS= AGREEMENT entered into as of April 11, 1997, among
GENERAL ACCEPTANCE CORPORATION (the ACompany@), CONSECO, INC. (AConseco@) and
CAPITOL AMERICAN LIFE INSURANCE COMPANY (the APurchaser@), and each of the
AStockholders@ listed on the signature page hereof. Capitalized terms used
herein are defined in paragraph 7 hereof.
The parties hereto desire to enter into this Agreement for the purposes,
among others, of (i) establishing the composition of the Company=s Board of
Directors (the ABoard@), (ii) limiting the manner and terms by which the
Stockholders= stock may be transferred, (iii) establishing the terms of an
acceptable tender offer by Conseco, and (iv) certain related matters. The
execution and delivery of this Agreement is a condition to the Purchaser=s
acquisition of the Company=s securities pursuant to a Securities Purchase
Agreement entered into on even date herewith.
NOW, THEREFORE, in consideration of the mutual covenants contained herein
and other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties to this Agreement hereby agree as
follows:
1. Board of Directors
(a) Conseco Designee. Until such time as the Debentures are no
longer outstanding, each Stockholder shall vote all of his or her Securities
which are voting shares and any other voting securities of the Company over
which such Stockholder has voting control and shall take all other necessary
or desirable actions within his or her control (whether in his or her capacity
as a stockholder, director, member of a board committee or officer of the
Company or otherwise, and including attendance at meetings in person or by
proxy for purposes of obtaining a quorum and execution of written consents in
lieu of meetings), and the Company shall take all necessary or desirable
actions within its control (including calling special board and stockholder
meetings), so that:
(i) two (2) persons designated by Conseco (individually, the AConseco
Designee@ and collectively, the AConseco Designees@) shall be nominated and
elected or appointed to serve on the Board;
(ii) at least one (1) of the Conseco Designees shall be appointed to serve on
each of the audit committee and the compensation committee of the Company;
(iii) the Board shall at all times consist of six (6) directors; and
A:\STOCK.3
(iv) one (1) person designated by Conseco shall be appointed in an operations
capacity for the Company and such person shall be granted full rights to
observe the daily operations of the Company with access to all operations
information and data of the Company.
In the event that any of the Conseco Designees for any reason ceases to
serve as a member of the Board during his or her term of office, the resulting
vacancy on the Board shall be filled by an alternative representative
designated by Conseco as provided hereunder so long as the Debentures are
still outstanding. Each of the Conseco Designees (or replacements thereof)
shall offer to tender their resignations to the Board effective as of the date
that the Debentures are no longer outstanding.
(b) Stockholders= Representative
So long as the Stockholders collectively own more than 10% of the issued
and outstanding Common Stock, the Purchaser shall vote all of its Securities
which are voting shares and any other voting securities of the Company over
which the Purchaser has voting control and shall take all necessary or
desirable actions within its control so that:
(i) one (1) person designated by a majority in interest of the
Stockholders (the AStockholders= Designee@) shall be nominated and elected or
appointed to serve on the Board;
(ii) the Board shall at all times consist of six (6) directors.
In the event that the Stockholders= Designee for any reason ceases to
serve as a member of the Board during his or her term of office, the resulting
vacancy on the Board shall be filled by an alternative representative
designated by the Stockholders as provided hereunder so long as the
Stockholders continue to collectively own more than 10% of the issued and
outstanding Common Stock. The Stockholders= Designee shall offer to tender
his or her resignation to the Board effective as of the date that the
Stockholders do not collectively own more than 10% of the issued and
outstanding Common Stock.
2. Restrictions on Transfer of Stockholders= Securities:
(a) Transfer of Stockholders= Securities. Except for Permitted
Transfers (as defined in paragraph 2(b) below), no Stockholder shall sell,
transfer, assign, pledge or otherwise dispose of (whether with or without
consideration and whether voluntarily or involuntarily or by operation of
law)(a ATransfer@) (i) any Securities until April 11, 1998, and (ii) so long
as any of the Debentures are still outstanding, Securities which would result
in the Stockholders holding in aggregate less than 51% of the Common Stock
from April 12, 1998 to April 11, 2000.
(b) Permitted Transfers. The restrictions set forth in paragraph
2(a) shall not apply with respect to any Transfer of Securities by any
Stockholder (i) pursuant to applicable laws of descent and distribution or
among the Stockholder=s Family Group or (ii) approved in advance in writing by
Conseco (which approval shall be at Conseco=s sole discretion) (a APermitted
Transfer@); provided that the restrictions contained in paragraph 2(a) shall
continue to be applicable to the Securities after any such Transfer and
provided further that the transferees of such Securities shall have agreed in
writing to be bound by the provisions of this Agreement affecting the
Securities so transferred. For purposes of this Agreement, AFamily Group@
means a Stockholder=s spouse and descendants (whether natural or adopted) and
any trust solely for the benefit of the Stockholder and/or the Stockholder=s
spouse and/or descendants.
3. Tender Offer. If Conseco makes a tender offer to all holders of
Common Stock within one year from the date hereof at a price per share of
Common Stock equal to or above the Market Price (as defined below), but not
less than $4.00 per share of Common Stock, which is accepted by stockholders
holding not less than 25% of the issued and outstanding Common Stock held by
all stockholders other than the Stockholders, the Stockholders shall tender a
quantity of shares of Common Stock so that their ownership interest will be
less than 20% of the total shares of Common Stock issued and outstanding
(including the shares of Underlying Common Stock). AMarket Price@ shall mean
the average of the closing prices of a share of Common Stock, as reported by
the principal stock exchange or the NASDAQ System upon which shares of Common
Stock are traded, for the 20 trading days prior to the tender offer; provided,
however, if the Common Stock is not listed for trading on a nationally
recognized stock exchange or on the NASDAQ System on the day before the tender
offer, the AMarket Price@ shall be determined by a recognized appraisal or
investment banking firm selected by the Board.
4. Approval at Stockholders= Meeting. Each Stockholder shall
vote all of his or her Securities which are voting shares and any other voting
securities of the Company over which such Stockholder has voting control and
shall take all other necessary or desirable actions within his or her control
(whether in his or her capacity as a stockholder, director, member of a board
committee or officer of the Company or otherwise, and including attendance at
meetings in person or by proxy for purposes of obtaining a quorum and
execution of written consents in lieu of meetings), and the Company shall take
all necessary or desirable actions within its control (including calling
special board or stockholder meetings), so that the issuance and sale of the
Debentures to the Purchaser, including but not limited to and the conversion
feature of the Debentures, is approved and ratified at the next meeting of the
stockholders of the Company.
5. Legend.
Each certificate evidencing Securities subject to this Agreement and each
certificate issued in exchange for or upon the transfer of any such Securities
shall be stamped or otherwise imprinted by the Company with a legend in
substantially the following form:
AThe securities represented by this certificate are subject to a Stockholders=
Agreement dated as of April 11, 1997, among General Acceptance Corporation
(the ACompany@), certain of the Company=s stockholders, Conseco, Inc. and
Capitol American Life Insurance Company, as amended and modified from time to
time. A copy of such Stockholders= Agreement shall be furnished without
charge by the Company to the holder hereof upon written request.@
6. Transfers in Violation of Agreement. Any Transfer or attempted
Transfer of any Securities in violation of any provision of this Agreement
shall be void, and the Company shall not record such Transfer on its books or
treat any purported transferee of such Securities as the owner of such shares
for any purpose.
7. Representations and Warranties.
(a) Each Stockholder and Purchaser represents and warrants for
himself, herself or itself, severally and not jointly, that:
(i) such Stockholder or Purchaser is the record or beneficial owner of the
Securities set forth opposite his, her or its name on Exhibit A attached
hereto (subject to adjustment in the case of the Purchaser),
(ii) this Agreement has been duly authorized, executed and delivered by
such Stockholder or Purchaser and constitutes the valid and binding obligation
of such Stockholder or Purchaser enforceable in accordance with its terms, and
(iii) such Stockholder or Purchaser has not granted and is not a party to any
proxy, voting trust or other agreement which is inconsistent with, conflicts
with or violates any provisions of this Agreement.
(b) No party to this Agreement shall grant any proxy or become party
to any voting trust or other agreement which is inconsistent with, conflicts
with or violates any provision of this Agreement.
8. Definitions.
AAlgood Debentures@ shall collectively mean those 12% Subordinated
Convertible Notes of like tenor and effect as the Debentures in the aggregate
sum of up to $3,250,000 issued to ▇.▇. ▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇, and
R.E. ▇▇▇▇▇▇ in exchange for 12% demand promissory notes dated October 15,
1996, January 3, 1997, January 6, 1997 and March 6, 1997 in such aggregate
principal amount.
ABoard@ has the meaning set forth in the preamble.
ACommon Stock@ means the Company=s Common Stock, no par value.
ACompany@ has the meaning set forth in the preamble.
AConseco@ has the meaning set forth in the preamble.
AConseco Designee(s)@ has the meaning set forth in paragraph 1(a)(i).
ADebentures@ means the 12% Subordinated Convertible Notes of the
Company purchased by the Purchaser pursuant to the Securities Purchase
Agreement.
APermitted Transfer@ has the meaning set forth in paragraph 2(b).
APerson@ means an individual, a partnership, a corporation, a limited
liability company, an association, a joint stock company, a trust, a joint
venture, an unincorporated organization and a governmental entity or any
department, agency or political subdivision thereof.
APurchaser@ has the meaning set forth in the preamble.
ARegistration Rights Agreement@ means the registration rights
agreements by and between the Company and the Purchaser dated as of the date
hereof.
ASecurities Act@ means the Securities Act of 1933, as amended from time
to time.
ASecurities@ means (i) any Common Stock, preferred stock or other
equity securities of the Company, (ii) any options, warrants or other rights
to acquire equity securities of the Company, including any convertible
debentures and (iii) any direct or indirect interest in any of the above.
ASecurities Purchase Agreement@ means the Securities Purchase Agreement
dated as of an even date herewith by and between the Company and the
Purchaser.
AStockholders@ has the meaning set forth in the preamble.
AStockholders= Designee@ has the meaning set forth in paragraph
1(b)(i).
ATransfer@ has the meaning set forth in paragraph 2(a).
AUnderlying Common Stock@ means the shares of the Common Stock issued or
issuable upon conversion of the Debenture purchased pursuant to the Securities
Purchase Agreement or the ▇▇▇▇▇▇ Debentures.
9. Amendment and Waiver. Except as otherwise provided herein, no
modification, amendment or waiver of any provision of this Agreement will be
effective unless such modification, amendment or waiver is approved in writing
by the Company, Conseco, the Purchaser and Stockholders owning at least 60% of
the Securities owned by the Stockholders. The failure of any party to enforce
any of the provisions of this Agreement will in no way be construed as a
waiver of such provisions and will not affect the right of such party
thereafter to enforce each and every provision of this Agreement in accordance
with its terms.
10. Severability. Whenever possible, each provision of this
Agreement shall be interpreted in such manner as to be effective and valid
under applicable law, but if any provision of this Agreement is held to be
invalid, illegal or unenforceable in any respect under any applicable law or
rule in any jurisdiction, such invalidity, illegality or unenforceability
shall not affect the validity, legality or enforceability of any other
provision of this Agreement in such jurisdiction or affect the validity,
legality or enforceability of any provision in any other jurisdiction, but
this Agreement shall be reformed, construed and enforced in such jurisdiction
as if such invalid, illegal or unenforceable provision had never been
contained herein.
11. Entire Agreement. Except as otherwise expressly set forth
herein, this Agreement together with the Securities Purchase Agreement and the
exhibits thereto (including, but not limited to, the Registration Rights
Agreement) embodies the complete agreement and understanding among the parties
hereto with respect to the subject matter hereof and supersedes and preempts
any prior understandings, agreements or representations by or among the
parties, written or oral, which may have related to the subject matter hereof
in any way.
12. Successors and Assigns. Except as otherwise provided herein,
this Agreement shall bind and inure to the benefit of and be enforceable by
each of the parties hereto and their respective successors and assigns and any
permitted subsequent holders of the Securities, so long as they hold
Securities subject to this Agreement.
13. Counterparts. This Agreement may be executed in multiple
counterparts, each of which shall be an original and all of which taken
together shall constitute one and the same agreement.
14. Remedies. The parties hereto shall be entitled to enforce
their rights under this Agreement specifically, to recover damages by reason
of any breach of any provision of this Agreement and to exercise all other
rights existing in their favor. The parties hereto agree and acknowledge that
money damages would not be an adequate remedy for any breach of the provisions
of this Agreement and that the parties hereto may in their sole discretion
apply to any court of law or equity of competent jurisdiction for specific
performance and/or injunctive relief (without posting a bond or other
security) in order to enforce or prevent any violation of the provisions of
this Agreement.
15. Notices. Any notice provided for in this Agreement shall be in
writing and shall be either personally delivered, or mailed first class mail
(postage prepaid) or sent by reputable overnight courier service (charges
prepaid) or telecopied and confirmed by telecopy answer back to the respective
address set forth below and to any subsequent holder of Securities subject to
this Agreement at such address as indicated by the Company=s records, or at
such address or to the attention of such other person as the recipient party
has specified by prior written notice to the sending party. Notices shall be
deemed to have been given hereunder when delivered personally, three days
after deposit in the U.S. mail, and upon receipt if the same shall have been
telecopied and confirmed by telecopy answer back one day after deposit with a
reputable overnight courier service.
If to the Company, at:
General Acceptance Corporation
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Chief Financial Officer
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
With copies to:
Hackman, McClarnon, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
and
▇▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
If to Conseco or the Purchaser, at:
Conseco, Inc.
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
If to the Stockholders, at:
▇▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
16. Governing Law. The laws of the State of Indiana shall govern
this Agreement without giving effect to any choice of law or conflict of law
rules or provisions.
17. Jurisdiction. The parties hereto agree to submit to personal
jurisdiction and to waive any objection as to venue in the federal or state
courts in the County of ▇▇▇▇▇▇▇▇ or Marion, State of Indiana. Service of
process on any party hereto in any action arising out of or relating to this
Agreement shall be effective if mailed to such party at the address listed in
paragraph 14 hereof.
18. Arbitration. If a dispute arises as to interpretation of this
Agreement, it shall be decided finally by three arbitrators in an arbitration
proceeding conforming to the Rules of the American Arbitration Association
applicable to commercial arbitration. The arbitrators shall be appointed as
follows: one by the Stockholders, one by Conseco, and one by the two other
arbitrators. The arbitration shall take place in Carmel, Indiana. The
decision of a majority of the arbitrators shall be conclusively binding upon
the parties and final, and such decision shall be enforceable as a judgment in
any court of competent jurisdiction. Each party shall pay the fees and
expenses of the arbitrator appointed by it, its counsel and its witnesses.
The parties shall share equally the fees and expenses of the impartial
arbitrator.
19. Descriptive Headings. The descriptive headings and captions of
this Agreement and the Exhibits attached hereto are inserted for convenience
only and do not constitute a part of this Agreement.
A:\STOCK.3
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the day
and year first above written.
GENERAL ACCEPTANCE CORPORATION
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
CONSECO, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
CAPITOL AMERICAN LIFE INSURANCE
COMPANY
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
ASTOCKHOLDERS@
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇
/s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇ ▇▇▇▇ ▇. ▇▇▇▇▇▇
/s/ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
/s/ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇
Exhibit 10.69
GUARANTY
As an inducement to General Electric Capital Corporation ("Lender") to provide
financing to General Acceptance Corporation ("Borrower"), but without in any
way binding Lender to do so, the undersigned ("Guarantor") hereby guaranties
to Lender the due, regular and punctual payment and prompt performance of all
debts and other obligations of any kind or character which Borrower now owes
Lender or which Borrower shall at any time or from time to time hereafter owe
Lender, regardless of any change in Borrower's name, entity, or ownership.
Guarantor also agrees to pay to Lender all costs incurred by Lender in the
collection and enforcement of the debts and obligations of Borrower to Lender.
The liability of Guarantor hereunder is direct, unconditional, absolute and
may be enforced without requiring Lender first to resort to any right or
remedy Lender has as to Borrower or any third parties with regard to
Borrower's debts and obligations to Lender or to foreclose or exhaust any
security therefor. Guarantor shall not have any right of reimbursement,
indemnity, subrogation or security enforceable against Borrower, nor otherwise
be a creditor of Borrower, with respect to payments to Lender to the extent
such rights or creditor status would make payments to Lender a preference
recoverable from Lender. Nothing shall discharge or satisfy the liability of
Guarantor hereunder except the full payment and performance of all of
Borrower's debts and obligations to Lender. Any and all present and future
debts and obligations of Borrower to Guarantor are hereby postponed in favor
of and subordinated to the full payment and performance of all present and
future debts and obligations of Borrower to Lender.
Guarantor has made an independent investigation of the financial condition and
affairs of Borrower prior to entering into this Guaranty and has not relied
upon any representation made by Lender as to the financial condition,
operation or creditworthiness of Borrower. Guarantor further agrees that
Lender shall have no duty or responsibility now or hereafter to make any
investigation or appraisal of Borrower, or the security for Borrower's debts
and obligations to Lender, on behalf of Guarantor or to provide Guarantor with
any information which may come to Lender's attention now or hereafter, whether
or not such information could materially increase the risk of Guarantor
hereunder.
Notice of acceptance of this Guaranty, of any default by Borrower, and of any
adverse change in Borrower's financial condition or of any other fact which
might materially increase the risk of Guarantor hereunder is hereby waived.
Presentment, protest and demand, and notice of protest and demand are hereby
waived. Guarantor authorizes Lender without notice or demand and without
affecting the obligations of Guarantor hereunder, with respect to any debt or
obligation of Borrower to Lender, to extend the time of payment (without limit
as to the number or term of extensions) or waive strict compliance of any
other term thereof, to renew or otherwise modify the terms thereof, to waive
or release any security therefor, to release a guarantor or other party liable
therefor, and to enter or grant any settlement, release, compromise,
composition, account stated or agreed balance with or to Borrower or any third
party, and Guarantor agrees that the foregoing actions shall not diminish
Guarantor's obligations hereunder. GUARANTOR WAIVES ANY AND ALL RIGHT TO A
TRIAL BY JURY IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATED TO THIS
GUARANTY. To the extent allowed by law, Guarantor hereby confesses judgment,
and acknowledges to be indebted unto and in favor of Lender, for the full
amount of all obligations due to Lender by Borrower, and consents to Lender
filing this Guaranty as evidence of judgment.
This Guaranty remains fully enforceable irrespective of any defenses which
Borrower could assert on the underlying debt, including but not limited to
failure of consideration, breach of warranty, fraud, payment, accord and
satisfaction, strict foreclosure, statute of frauds, bankruptcy, infancy,
statute of limitations, lender liability, and usury. If Borrower or Guarantor
should at any time become insolvent or make a general assignment, or a
petition in bankruptcy or any insolvency or reorganization proceedings shall
be filed or commenced by or against Borrower or Guarantor, any and all
obligations of Guarantor pursuant to this Guaranty shall not be lessened by
such petitions, assignments or filings and shall, at Lender's option,
forthwith become due and payable without notice. In the event of default in
the performance of this Guaranty, Guarantor agrees to pay all reasonable court
costs, attorney's fees and other expenses paid or incurred by Lender in the
enforcement hereof.
This Guaranty is a continuing guaranty which shall remain effective until
terminated as provided herein. Guarantor may terminate this Guaranty upon at
least sixty (60) days prior written notice received by Lender and sent by
registered or certified mail, return receipt requested. Notwithstanding such
termination, however, this Guaranty shall remain effective as to all financing
provided, or committed to be provided, by Lender to or for the benefit of
Borrower prior to the effective date of termination and this Guaranty shall be
continuing and unconditional until the same are fully paid, performed and
discharged.
This Guaranty supersedes all prior writings, and all prior and contemporaneous
oral understandings, regarding this Guaranty. Without Lender's prior written
consent, no assignment or delegation of any rights or duties by Guarantor
shall be effective to relieve Guarantor of its obligations hereunder. Lender
can at any time assign or delegate any rights or duties arising under this
Guaranty. This Guaranty shall inure to the benefit of Lender's successors and
assigns. Guarantor agrees to provide financial statements for Guarantor when
requested by Lender.
This Guaranty shall be governed by and construed in accordance with the laws
of the State of Illinois. The undersigned hereby irrevocably and
unconditionally consents to submit to the exclusive jurisdiction of the courts
of the State of Illinois and of the United States of America located in the
State of Illinois for any action, suit or proceeding arising out of or
relating to this Guaranty and the transactions contemplated hereby this
Agreement, and further agrees that service of any process, summons, notice or
document by U.S. registered mail to its address set forth below shall be
effective service of process for any action, suit or proceeding brought in
connection with this Agreement in any such court.
Signatures to follow on next page
Guarantor acknowledges that Guarantor has read this Guaranty, has consulted
with counsel to the extent Guarantor deemed advisable, understands this
Guaranty and desires to be bound by it.
Dated: November 14, 1996
General Acceptance Corporation Witness: /s/ ▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇
Reinsurance, Ltd.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Print Witness Name
Title: President & COO
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ Print Witness Address and Phone
No.
Print Name of Person Signing
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇-▇▇▇-▇▇▇▇
Exhibit 10.70
PROMISSORY NOTE
Date: January 3, 1997
Due: Demand
Amount: up to $1,000,000
For Value Received, the undersigned, General Acceptance Corporation, an
Indiana Corporation (Borrower) promises to pay to the order of ▇▇▇▇▇ ▇▇▇▇▇▇ at
Bloomington, Indiana, or such other place as the holder hereof may designate
in writing, the principal sum of up to five hundred thousand dollars or so
much thereof as may be advanced and outstanding from time to time, together
with interest on the unpaid principal balance existing from time to time:
(1) From the date of delivery hereof until maturity, whether by
acceleration or otherwise at the rate of 12%.
Accrued interest shall be due and payable on the first day of each month
commencing February 1, 1997.
In any and all events the entire remaining unpaid principal balance of
this Note, together with any remaining accrued but unpaid interest thereon
shall be due and payable on demand.
Interest shall accrue on the basis of a three hundred sixty (360) day
year and be paid for the actual number of days outstanding.
Borrower may prepay the outstanding principal of this Note in whole or in
part without premium or penalty.
If default is made in the payment of any installment or installments of
interest or principal and interest, as herein provided, when due, or in the
performance of any of the terms, agreements, covenants or conditions contained
in the Note or under any other agreement Borrower has then in any of such
events, or at any time thereafter, the entire principal of this Note,
irrespectively of the maturity date specified herein, together with attorney=s
fees incurred in collection or enforcing payment or performance hereof and
interest from the date of such default on the unpaid principal balance hereof
at the default rate hereinabove specified, shall at the election of the holder
hereof, and without relief from valuation or appraisement laws, become
immediately due and payable.
The rights and remedies of the holder hereof as provided in this Note
shall be cumulative and concurrent, and may be pursued singly, successively or
together. The failure to exercise any such right or remedy on any one or more
occasions shall in no event be constructed as a waiver of the right to the
later exercise thereof, or as the release thereof.
Borrower waives demand, presentment for payment, notice of dishonor,
protest and notice of protest, and expressly agrees that this Note and any
payment coming due under it may be extended or otherwise modified, from time
to time without in any way affecting its liability hereunder.
This note shall be construed according to and governed by the laws of the
State of Indiana.
IN WITNESS WHEREOF, Borrower has executed this Note as of the date first
hereinabove written.
General Acceptance Corporation
BY: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ CFO
Printed Name Title
Exhibit 10.71
PROMISSORY NOTE
Date: January 6, 1997
Due: Demand
Amount: up to $500,000.00
For Value Received, the undersigned, General Acceptance Corporation, an
Indiana Corporation (Borrower) promises to pay to the order of ▇. ▇.. ▇▇▇▇▇▇
at Bloomington, Indiana, or such other place as the holder hereof may
designate in writing, the principal sum of up to five hundred thousand dollars
or so much thereof as may be advanced and outstanding from time to time,
together with interest on the unpaid principal balance existing from time to
time:
(1) From the date of delivery hereof until maturity, whether by
acceleration or otherwise at the rate of 12%.
Accrued interest shall be due and payable on the first day of each month
commencing February 1, 1997.
In any and all events the entire remaining unpaid principal balance of
this Note, together with any remaining accrued but unpaid interest thereon
shall be due and payable on demand.
Interest shall accrue on the basis of a three hundred sixty (360) day
year and be paid for the actual number of days outstanding.
Borrower may prepay the outstanding principal of this Note in whole or in
part without premium or penalty.
If default is made in the payment of any installment or installments of
interest or principal and interest, as herein provided, when due, or in the
performance of any of the terms, agreements, covenants or conditions contained
in the Note or under any other agreement Borrower has then in any of such
events, or at any time thereafter, the entire principal of this Note,
irrespectively of the maturity date specified herein, together with attorney=s
fees incurred in collection or enforcing payment or performance hereof and
interest from the date of such default on the unpaid principal balance hereof
at the default rate hereinabove specified, shall at the election of the holder
hereof, and without relief from valuation or appraisement laws, become
immediately due and payable.
The rights and remedies of the holder hereof as provided in this Note
shall be cumulative and concurrent, and may be pursued singly, successively or
together. The failure to exercise any such right or remedy on any one or more
occasions shall in no event be constructed as a waiver of the right to the
later exercise thereof, or as the release thereof.
Borrower waives demand, presentment for payment, notice of dishonor,
protest and notice of protest, and expressly agrees that this Note and any
payment coming due under it may be extended or otherwise modified, from time
to time without in any way affecting its liability hereunder.
This note shall be construed according to and governed by the laws of the
State of Indiana.
IN WITNESS WHEREOF, Borrower has executed this Note as of the date first
hereinabove written.
General Acceptance Corporation
BY: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ CFO
Printed Name Title
Exhibit 10.72
PROMISSORY NOTE
Date: March 6, 1997
Due: Demand
Amount: up to $750,000.00
For Value Received, the undersigned, General Acceptance Corporation, an
Indiana Corporation (Borrower) promises to pay to the order of R. E. ▇▇▇▇▇▇ at
Bloomington, Indiana, or such other place as the holder hereof may designate
in writing, the principal sum of up to five hundred thousand dollars or so
much thereof as may be advanced and outstanding from time to time, together
with interest on the unpaid principal balance existing from time to time:
(1) From the date of delivery hereof until maturity, whether by
acceleration or otherwise at the rate of 12%.
Accrued interest shall be due and payable on the first day of each month
commencing April 1, 1997.
In any and all events the entire remaining unpaid principal balance of
this Note, together with any remaining accrued but unpaid interest thereon
shall be due and payable on demand.
Interest shall accrue on the basis of a three hundred sixty (360) day
year and be paid for the actual number of days outstanding.
Borrower may prepay the outstanding principal of this Note in whole or in
part without premium or penalty.
If default is made in the payment of any installment or installments of
interest or principal and interest, as herein provided, when due, or in the
performance of any of the terms, agreements, covenants or conditions contained
in the Note or under any other agreement Borrower has then in any of such
events, or at any time thereafter, the entire principal of this Note,
irrespectively of the maturity date specified herein, together with attorney=s
fees incurred in collection or enforcing payment or performance hereof and
interest from the date of such default on the unpaid principal balance hereof
at the default rate hereinabove specified, shall at the election of the holder
hereof, and without relief from valuation or appraisement laws, become
immediately due and payable.
The rights and remedies of the holder hereof as provided in this Note
shall be cumulative and concurrent, and may be pursued singly, successively or
together. The failure to exercise any such right or remedy on any one or more
occasions shall in no event be constructed as a waiver of the right to the
later exercise thereof, or as the release thereof.
Borrower waives demand, presentment for payment, notice of dishonor,
protest and notice of protest, and expressly agrees that this Note and any
payment coming due under it may be extended or otherwise modified, from time
to time without in any way affecting its liability hereunder.
This note shall be construed according to and governed by the laws of the
State of Indiana.
IN WITNESS WHEREOF, Borrower has executed this Note as of the date first
hereinabove written.
General Acceptance Corporation
BY: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ CFO
Printed Name Title
Exhibit 10.73
SECURITIES PURCHASE AGREEMENT
Dated as of April 11, 1997
between
GENERAL ACCEPTANCE CORPORATION
and
CAPITOL AMERICAN LIFE INSURANCE COMPANY
iii
G:\LEGAL\AGREEMNT\SECPUR\GENERAL.3
TABLE OF CONTENTS
Section Page
1. Definitions 1
2. The Purchase of Securities
2.1. Sale and Purchase of Securities 8
2.2. Use of Proceeds 9
3. Conditions Precedent
3.1. Conditions to the Purchase 9
4. Representations and Warranties of the Purchaser
4.1. Organization 11
4.2. Due Execution, Delivery and Performance
of the Agreement 11
4.3. Investment Representation 11
5. Representations and Warranties of the Company
5.1. Corporate Existence; Compliance with Law 12
5.2. Executive Offices 13
5.3. Subsidiaries 13
5.4. Corporate Power; Authorization;
Enforceable Obligations 13
5.5. SEC Documents 14
5.6. Absence of Certain Changes or Events 14
5.7. Interim Financial Statements; Absence
of Undisclosed Liabilities 15
5.8. Projections 16
5.9. Ownership of Property 16
5.10. No Default 16
5.11. Employment Matters 17
5.12. Other Ventures 17
5.13. Taxes 17
5.14. ERISA 18
5.15. No Litigation 20
5.16. Employment and Labor Agreements 20
5.17. Other Contracts 20
5.18. Patents, Trademarks, Copyrights and
Licenses 20
5.19. Licenses 21
5.20. Capital Structure of the Company 21
5.21. Investment Company Act 22
5.22. Underwriting Guidelines 22
5.23. Broker=s or Finder=s Fee 22
5.24. Disclosure 22
6. Financial Statements and Information
6.1. Reports and Notices 22
6.2. Certificates; Other Information 25
Section Page
7. Affirmative Covenants
7.1. Maintenance of Existence and Conduct
of Business 26
7.2. Payment of Obligations 26
7.3. Books and Records 26
7.4. Litigation 27
7.5. Insurance 27
7.6. Compliance with Law 27
7.7. Agreements 27
7.8. Employee Plans 27
7.9. Access 29
7.10. Board Representation; Board Observer 29
8. Negative Covenants
8.1. Mergers, Etc. 30
8.2. Amendment of Certificate of Incorporation 30
8.3. Investments; Loans and Advances 30
8.4. Indebtedness 30
8.5. Employee Loans 31
8.6. Transactions with Affiliates 31
8.7. Liens 31
8.8. Capital Expenditures 31
8.9. Sales of Assets 31
8.10. Cancellation of Indebtedness 32
8.11. ERISA 32
8.12. Tax Sharing 32
9. Events of Default; Rights and Remedies
9.1. Events of Default 32
9.2. Remedies 35
10. Triggering Events
10.1. Events 35
10.2. Payment Acceleration 35
10.3. Redemption 35
10.4. Funds Unavailable 36
10.5. Notice 36
11. Right of First Refusal 36
12. Securities Law Matters 37
13. Miscellaneous
13.1. Press Releases 37
13.2. Expenses 37
13.3. Indemnification 37
Section Page
13.4. Assignment 38
13.5. Remedies 38
13.6. Waiver of Jury Trial 38
13.7. Arbitration 39
13.8. Severability 39
13.9. Parties 39
13.10. Conflict of Terms 39
13.11. Governing Law 39
13.12. Notices 40
13.13. Survival 41
13.14. Section Titles 41
13.15. Counterparts 41
13.16. ▇▇▇▇▇▇ Debentures 41
EXHIBIT A - FORM OF DEBENTURE
EXHIBIT B - FORM OF REGISTRATION RIGHTS AGREEMENT
EXHIBIT C - FORM OF STOCKHOLDERS' AGREEMENT
EXHIBIT D - FORM OF OPINION OF COUNSEL
EXHIBIT E - FORM OF EMPLOYMENT AGREEMENT FOR ▇▇▇▇▇▇ ▇▇▇▇▇▇
EXHIBIT F - FORM OF EMPLOYMENT AGREEMENT FOR ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
SECURITIES PURCHASE AGREEMENT
SECURITIES PURCHASE AGREEMENT, dated as of April 11, 1997 by and among
GENERAL ACCEPTANCE CORPORATION, an Indiana corporation (the "Company") and
CAPITOL AMERICAN LIFE INSURANCE COMPANY, an Arizona life insurance corporation
(the APurchaser@).
W I T N E S S E T H:
WHEREAS, upon the terms and conditions hereinafter provided, the Company
has agreed to issue and sell to the Purchaser, and the Purchaser has agreed to
purchase from the Company, $10,000,000 of 12% Subordinated Convertible Notes
of the Company in substantially the form attached hereto as Exhibit A (the
"Debentures") convertible into shares of Common Stock, no par value, of the
Company (the "Common Stock") (the Debentures and the Common Stock are
together referred to herein as the "Securities").
NOW, THEREFORE, in consideration of the premises and the covenants
hereinafter contained, it is agreed as follows:
I. DEFINITIONS
In addition to the defined terms appearing above, capitalized terms used
in this Agreement shall have (unless otherwise provided elsewhere in this
Agreement) the following respective meanings when used herein:
"Affiliate" shall mean, with respect to any Person, (i) each Person that,
directly or indirectly, owns or controls, whether of record or beneficially,
or as a trustee, guardian or other fiduciary, 5 percent or more of the Stock
having ordinary voting power in the election of directors of such Person, (ii)
each Person that controls, is controlled by or is under common control with
such Person or any Affiliate of such Person, or (iii) each of such Person's
officers, directors and general partners. For the purpose of this definition,
"control" of a Person shall mean the possession, directly or indirectly, of
the power to direct or cause the direction of its management or policies,
whether through the ownership of voting securities, by contract or otherwise.
For purposes of this definition the Purchaser shall not be deemed to be an
Affiliate of the Company or any of the Affiliates of the Company by reason of
the purchase of the Debentures.
"Agreement" shall mean this Securities Purchase Agreement, including all
amendments, modifications and supplements hereto and any appendices, exhibits
or schedules to any of the foregoing, and shall refer to this Securities
Purchase Agreement as the same may be in effect at the time such reference
becomes operative.
AAlgood Debentures@ shall collectively mean those 12% Subordinated
Convertible Notes of like tenor and effect as the Debentures in the aggregate
sum of up to $3,250,000 issued to ▇.▇. ▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇, and
R.E. ▇▇▇▇▇▇ in exchange for 12% demand promissory notes dated October 15,
1996, January 3, 1997, January 6, 1997 and March 6, 1997 in such aggregate
principal amount.
"Ancillary Agreements" shall mean any supplemental agreement,
undertaking, instrument, document or other writing executed by the Company or
any of its Subsidiaries or by any of their Stockholders as a condition to
purchasing any of the Securities under this Agreement or otherwise in
connection herewith, including, without limitation, the Stockholders'
Agreement and the Registration Rights Agreement.
"Board" shall mean the Company's Board of Directors.
"Business Day" shall mean any day that is not a Saturday, a Sunday or a
day on which banks are required or permitted to be closed in the State of
Indiana.
"Capital Lease" shall mean any obligation that is required to be
classified and accounted for as a capital lease on the face of a balance sheet
of such person prepared in accordance with generally accepted accounting
principles; and the amount of such obligations shall be the capitalized amount
thereof, determined in accordance with generally accepted accounting
principles.
"Capital Expenditures" shall mean all payments for any fixed assets or
improvements (whether paid in cash or accrued as liabilities, and including in
all events all amounts expended or capitalized under capital leases and any
expenditures financed by anybody during that period), including, without
limitation, computer software and computer software licenses, or for
replacements, substitutions or additions thereto, that have a useful life of
more than one year and which are required to be capitalized under GAAP.
"Charges" shall mean all Federal, state, county, city, municipal, local,
foreign or other governmental taxes at the time due and payable, levies,
assessments, charges, liens, claims or encumbrances upon or relating to (i)
the Obligations, (ii) the Company or any of its Subsidiaries' employees,
payroll, income or gross receipts, (iii) the Company or any of its
Subsidiaries' ownership or use of any of its assets, or (iv) any other aspect
of the Company or any of its Affiliates' business, in each case including any
and all interest and penalties.
"Closing Date" shall mean that date upon which the Closing occurs and
shall be a date agreed upon between the Company and the Purchaser and
"Closing" shall mean the moment on the Closing Date on which the purchase and
sale of the Securities is made.
"Company=s Stock Option Plan" shall mean the General Acceptance
Corporation Employee Stock Option Plan and the General Acceptance Corporation
Outside Directors= Stock Option Plan, collectively.
AConseco Directors@ shall mean the individuals designated by Conseco,
Inc. pursuant to the Stockholders= Agreement to be elected to the Board.
"Default" shall mean any event which, with the passage of time or notice
or both, would, unless cured or waived, become an Event of Default.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974
(or any successor legislation thereto), as amended from time to time.
"ERISA Affiliate" shall mean, with respect to the Company, any trade or
business (whether or not incorporated) under common control with the Company
and which, together with the Company, are treated as a single employer under
Section 414(b), (c), (m) or (o) of the IRC.
"ERISA Event" shall mean, with respect to the Company or any ERISA
Affiliate, (i) a Reportable Event with respect to a Title IV Plan or a
Multiemployer Plan; (ii) the withdrawal of the Company, any of its
Subsidiaries or any ERISA Affiliate from a Title IV Plan subject to Section
4063 of ERISA during a plan year in which it was a substantial employer, as
defined in Section 4001(a)(2) of ERISA; (iii) the complete or partial
withdrawal of the Company, any of its Subsidiaries or any ERISA Affiliate from
any Multiemployer Plan; (iv) the filing of a notice of intent to terminate a
Title IV Plan or the treatment of a plan amendment as a termination under
Section 4041 of ERISA; (v) the institution of proceedings to terminate a Title
IV Plan or Multiemployer Plan by the PBGC; (vi) the failure to make required
contributions to a Qualified Plan; or (vii) any other event or condition which
might reasonably be expected to constitute grounds under Section 4042 of ERISA
for the termination of, or the appointment of a trustee to administer, any
Title IV Plan or Multiemployer Plan or the imposition of any liability under
Title IV of ERISA, other than PBGC premiums due but not delinquent under
Section 4007 of ERISA.
"Event of Default" shall have the meaning assigned to it in Section 9.1
hereof.
"Financials" shall mean the financial statements referred to in Section
6.1(a) and (b) hereof.
"Financing Agreements" shall mean the following agreements, together with
the related documents thereto, in each case as such agreements may be amended
(including any amendment and restatement thereof), supplemented or otherwise
modified from time to time, including any agreement extending the maturity of,
refinancing, refunding, replacing or otherwise restructuring all or any
portion of the indebtedness under such agreement or any successor or
replacement agreement: Amended and Restated Motor Vehicle Installment Contract
Loan and Security Agreement by and between the Company and General Electric
Capital Corporation (AGECC@) dated as of April 11, 1997; and Revolving Loan
and Security Agreement by and between the Company and Fifth Third Bank of
Central Indiana dated as of August 27, 1996.
"Fiscal Year" shall mean the calendar year.
"GAAP" shall mean generally accepted accounting principles in the United
States of America as in effect from time to time.
"Governmental Authority" shall mean any nation or government, any state
or other political subdivision thereof, and any agency, department or other
entity exercising executive, legislative, judicial, regulatory or
administrative functions of or pertaining to government.
"Indebtedness" of any Person shall mean (i) all indebtedness of such
Person for borrowed money (including, without limitation, reimbursement and
all other obligations with respect to surety bonds, letters of credit and
bankers' acceptances, whether or not matured), but not including accounts
payable and other obligations to trade creditors and normal operating expenses
characterized as liabilities incurred in the ordinary course of business, (ii)
all obligations evidenced by notes, bonds, debentures or similar instruments
(except where such instruments evidence repayment of amounts referred to in
subparagraph (i)), (iii) all Capital Lease Obligations, and (iv) in the case
of the Company, the Debentures.
"IRC" shall mean the Internal Revenue Code of 1986, as amended, and any
successor thereto.
"IRS" shall mean the Internal Revenue Service, or any successor thereto.
"Licenses" shall have the meaning assigned to such term in Section 5.19;
individually a "License."
"Lien" shall mean any mortgage or deed of trust, pledge, hypothecation,
assignment, deposit arrangement, lien, Charge, claim, security interest,
easement or encumbrance, preference, priority or other security agreement or
preferential arrangement of any kind or nature whatsoever (including, without
limitation, any Capital Lease or title retention agreement, any financing
lease having substantially the same economic effect as any of the foregoing,
and the filing of, or agreement to give, any financing statement perfecting a
security interest under the Uniform Commercial Code or comparable law of any
jurisdiction).
"Material Adverse Effect" shall mean any material adverse effect on the
business, assets, operations, or financial or other condition or prospects of
the Company or any of its Subsidiaries.
"Multiemployer Plan" shall mean a "multiemployer plan" as defined in
Section 4001(a)(3) of ERISA, and to which the Company, any of its Subsidiaries
or any ERISA Affiliate is obligated to make, or has made or been obligated to
make, contributions on behalf of participants who are employed by any of them.
"Obligations" shall mean any principal, interest, premium, penalties,
fees and other liabilities and obligations due under the documentation
governing any Indebtedness (including interest after the commencement of any
bankruptcy, insolvency, rehabilitation, liquidation, conservation, supervision
or similar proceedings).
"Other Taxes" shall mean any present or future stamp or documentary taxes
or any other sales, transfer, excise or property taxes, charges or similar
levies that arise from any payment made with respect to this Agreement or the
Ancillary Agreements and any other agreements and instruments contemplated
thereby.
"Parent" shall mean, as to any corporate entity, the Person who owns 100
percent of the capital stock of such entity.
"PBGC" shall mean the Pension Benefit Guaranty Corporation or any
successor thereto.
"Pension Plan" shall mean an employee pension benefit plan, as defined in
Section (3)(2) of ERISA (other than a Multiemployer Plan), which is not an
individual account plan, as defined in Section 3(34) of ERISA, and which the
Company, any of its Subsidiaries or, if a Title IV Plan, any ERISA Affiliate
maintains, contributes to or has an obligation to contribute to on behalf of
participants who are or were employed by any of them.
"Permitted Encumbrances" shall mean the following encumbrances: (i)
Liens for taxes or assessments or other governmental charges or levies, either
not yet due and payable or to the extent that nonpayment thereof is permitted
by the terms of this Agreement; (ii) pledges or deposits securing obligations
under worker's compensation, unemployment insurance, social security or public
liability laws or similar legislation; (iii) pledges or deposits securing
bids, tenders, contracts (other than contracts for the payment of money) or
leases to which the Company or any of its Subsidiaries is a party as lessee
made in the ordinary course of business; (iv) deposits securing public or
statutory obligations of the Company or any of its Subsidiaries; (v) workers',
mechanics, suppliers', carriers', warehousemen's or other similar liens
arising in the ordinary course of business and securing indebtedness
aggregating not in excess of $50,000 at any time outstanding, not yet due and
payable; (vi) deposits securing or in lieu of surety, appeal or customs bonds
in proceedings to which the Company or any of its Subsidiaries is a party,
provided that such deposits could not, individually or in the aggregate, be
reasonably expected to have a Material Adverse Effect; (vii) pledges or
deposits effected by the Company or any of its Subsidiaries as a condition to
obtaining or maintaining any License of such Person; (viii) any attachment or
judgment lien, unless the judgment it secures shall not, within 90 days after
the entry thereof, have been discharged or execution thereof stayed pending
appeal, or shall not have been discharged within 90 days after the expiration
of any such stay; (ix) all Liens securing Senior Indebtedness; and (x) zoning
restrictions, easements, licenses, or other restrictions on the use of real
property or other minor irregularities in title (including leasehold title)
thereto, so long as the same do not materially impair the use, value, or
marketability of such real property, leases or leasehold estates.
"Person" shall mean any individual, sole proprietorship, partnership,
joint venture, trust, unincorporated organization, association, corporation,
limited liability company, institution, public benefit corporation, entity or
government (whether Federal, state, county, city, municipal or otherwise,
including, without limitation, any instrumentality, division, agency, body or
department thereof).
"Plan" shall mean an employee benefit plan, as defined in Section 3(3) of
ERISA, which the Company or any of its Subsidiaries maintains or makes or is
obligated to make contributions to on behalf of participants who are or were
employed by any of them.
"Qualified Plan" shall mean an employee pension benefit plan, as defined
in Section 3(2) of ERISA, which is intended to be tax-qualified under Section
401(a) of the IRC, and which the Company, any of its Subsidiaries or any ERISA
Affiliate maintains or makes or is obligated to make contributions to on
behalf of participants who are or were employed by any of them.
"Registration Rights Agreement" shall mean the Registration Rights
Agreement by and among the Company and the Purchaser dated as of the date
hereof and in substantially the form attached hereto as Exhibit B.
"SEC" shall mean the Securities and Exchange Commission.
"SEC Documents" shall mean all reports, schedules, forms, statements and
other documents required to be filed with the SEC.
"Securities Act" shall mean the Securities Act of 1933, as amended.
"Senior Indebtedness" shall mean all Indebtedness under the Financing
Agreements whether or not existing or hereinafter incurred and whether fixed
or contingent.
"Stock" shall mean all shares, options, warrants, general or limited
partnership interests, participations or other equivalents (regardless of how
designated) of or in a corporation, partnership or equivalent entity whether
voting or nonvoting, including, without limitation, common stock, preferred
stock, or any other "equity security" (as such term is defined in Rule 3a11-1
of the General Rules and Regulations promulgated by the Securities and
Exchange Commission under the Securities Exchange Act of 1934, as amended).
"Stockholders" shall mean, with respect to any Person, all of the holders
of Stock of such Person immediately following the Closing Date.
AStockholders= Agreement@ shall mean that certain Stockholders= Agreement
dated as of the date hereof by and among the Company, certain Stockholders of
the Company, the Purchaser and Conseco, Inc., substantially in the form
attached hereto as Exhibit C.
"Subsidiary" shall mean, with respect to any Person, (a) any corporation
of which an aggregate of 50 percent or more of the outstanding Stock
(irrespective of whether, at the time, Stock of any other class or classes of
such corporation shall have or might have voting power by reason of the
happening of any contingency) is at the time, directly or indirectly, owned
legally or beneficially by such Person and/or one or more Subsidiaries of such
Person, and (b) any partnership in which such Person and/or one or more
Subsidiaries of such Person shall have an interest (whether in the form of
voting or participation in profits or capital contribution) of 50 percent or
more.
"Taxes" shall mean any and all present or future taxes, levies, imposts,
deductions, charges or withholdings, and all liabilities with respect thereto,
excluding taxes imposed on or measured by the net income of the Purchaser by
the jurisdictions under the laws of which the Purchaser are organized or is
engaged in business (other than by reason of the transactions contemplated by
this Agreement or the Ancillary Agreements) or any political subdivision
thereof.
"Title IV Plan" shall mean a Pension Plan, other than a Multiemployer
Plan, which is covered by Title IV of ERISA.
"Transactions" shall mean the purchase and sale of the Securities as
described in the recitals to this Agreement, and all transactions related or
incidental thereto.
"Unfunded Pension Liability" shall mean, at any time, the aggregate
amount, if any, of the sum of (i) the amount by which the present value of all
accrued benefits under each Title IV Plan exceeds the fair market value of all
assets of such Title IV Plan allocable to such benefits in accordance with
Title IV of ERISA, all determined as of the most recent valuation date for
each such Title IV Plan using the actuarial assumptions in effect under such
Title IV Plan, and (ii) for a period of five (5) years following a transaction
reasonably likely to be covered by Section 4069 of ERISA, the liabilities
(whether or not accrued) that could be avoided by the Company, any of its
Subsidiaries or any ERISA Affiliate as a result of such transaction.
"Withdrawal Liability" shall mean, at any time, the aggregate amount of
the liabilities, if any, pursuant to Section 4201 of ERISA, and any increase
in contributions pursuant to Section 4243 of ERISA with respect to all
Multiemployer Plans.
Any accounting term used in this Agreement shall have, unless otherwise
specifically provided herein, the meaning customarily given such term in
accordance with GAAP and all financial computations hereunder shall be
computed, unless otherwise specifically provided herein, in accordance with
GAAP consistently applied and consistent with the Financials. That certain
terms or computations are explicitly modified by the phrase "in accordance
with GAAP" shall in no way be construed to limit the foregoing.
The words "herein," "hereof" and "hereunder" and other words of similar
import refer to this Agreement as a whole, including the Exhibits and
Schedules hereto, as the same may from time to time be amended, modified or
supplemented and not to any particular section, subsection or clause contained
in this Agreement. As used herein, the word "or" is not exclusive.
AThe knowledge of the Company@ shall mean the knowledge of the chairman
of the Board, the president of the Company or the chief financial officer of
the Company.
Wherever from the context it appears appropriate, each term stated in
either the singular or plural shall include the singular and the plural, and
pronouns stated in the masculine, feminine or neuter gender shall include the
masculine, the feminine and the neuter.
II. THE PURCHASE OF SECURITIES
2.1. Sale and Purchase of Securities. (a) Subject to the terms and
conditions herein, on the Closing Date, the Purchaser agrees to purchase from
the Company, and the Company agrees to
issue and sell to the Purchaser, Debentures for an aggregate purchase price of
$10,000,000. The Debentures shall be in the form attached hereto as Exhibit
A. The Closing shall take place in Indianapolis, Indiana on the Closing Date.
On the Closing Date, the Company will deliver to the Purchaser the Debentures
sold by the Company, against delivery by the Purchaser of the purchase price
to the Company in immediately available funds.
2.2. Use of Proceeds. The Company shall use the proceeds of the sale
of the Securities to purchase and originate automobile loans and leases and to
purchase automobiles and fund working capital needs in connection with such
purchases and originations and for other purposes set forth in the Company's
projections which have been delivered to the Purchaser.
III. CONDITIONS PRECEDENT
3.1. Conditions to the Purchase. Notwithstanding any other provision
of this Agreement and without affecting in any manner the rights of the
Purchaser hereunder, the Company shall have no rights under this Agreement
(but shall have all applicable obligations hereunder), and the Purchaser shall
not be obligated to make the purchases of the Securities hereunder, unless and
until each of the following conditions precedent shall have been fulfilled or
waived by the Purchaser, and the Company shall have delivered, where
applicable, in form and substance satisfactory to the Purchaser, and (unless
otherwise indicated) each dated the Closing Date:
(a) All of the representations and warranties of the Company contained
in this Agreement or in any of the Ancillary Agreements shall be correct in
all material respects as though made on and as of the Closing Date, except to
the extent that any such representation or warranty expressly relates to an
earlier date.
(b) The Purchaser shall have received a written certification by the
chief financial officer of the Company as to the matters set forth in Section
3.1(a) hereof.
(c) A favorable opinion of counsel for the Company substantially in the
form attached hereto as Exhibit D, it being understood that to the extent
that such opinion of counsel shall rely upon any other opinion of counsel,
each such other opinion shall be in form and substance satisfactory to the
Purchaser and shall provide that the Purchaser may rely thereon.
(d) Resolutions of the Board certified by the Secretary or Assistant
Secretary of the Company, to be dated, duly adopted and in full force and
effect as of the Closing Date, authorizing (i) the consummation of the
Transactions, (ii) specific officers to execute and deliver the Ancillary
Agreements and (iii) appointing the Conseco Directors to the Board.
(e) Certificates of the secretary or an assistant secretary of the
Company, dated the Closing Date, as to the incumbency and signatures of the
officers or representatives of such entity executing this Agreement and the
Ancillary Agreements and any other certificates or other documents to be
delivered pursuant hereto or thereto, together with evidence of the incumbency
of such secretary or assistant secretary.
(f) Certificate of Existence from the Indiana Secretary of State, dated
the most recent practicable date prior to the Closing Date, showing that the
Company is organized and in good standing in the State of Indiana.
(g) Each consent, license and approval required in connection with the
execution, delivery, performance, validity and enforceability of this
Agreement, the Ancillary Agreements, and the consummation of the Transactions;
such consents, licenses and approvals shall be in full force and effect and be
satisfactory in form and substance to the Purchaser.
(h) A copy of the certificate of incorporation and all amendments
thereto of each of the Company, General Acceptance Corporation Reinsurance,
Limited and copies of their respective by-laws all of which shall be certified
by the secretary or assistant secretary of each respective corporation as true
and correct as of the Closing Date.
(i) The Purchaser shall have received the Financials, projections and
such other financial and other information regarding the Company and its
Subsidiaries as the Purchaser deems appropriate.
(j) A certificate of the Chief Executive Officer of the Company,
satisfactory in form and substance to the Purchaser, stating that, as of the
Closing Date, no change has occurred in the business, assets, operating
properties, operations, prospects, financial or other condition of the Company
or any of its Subsidiaries since December 31, 1996 which would result in a
Material Adverse Effect, except the sale of approximately $44,000,000 of
accounts receivable previously disclosed to the Purchaser and as set forth on
Schedule 3.1(j).
(k) The Stockholders' Agreement.
(l) The Registration Rights Agreement.
(m) The Debentures.
(n) Employment Agreements for ▇▇▇▇▇▇ ▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ ▇▇▇▇▇▇,
substantially in the form of Exhibits E and F, respectively.
(o) Agreement by General Electric Capital Corporation to extend at
least $70 million of Senior Indebtedness to the Company through January 1,
1998;
(p) Unqualified opinion of Ernst & Young, LLP with respect to the
Company=s annual audited consolidated financial statements for the Fiscal Year
ended December 31, 1996;
(q) Copies of the ▇▇▇▇▇▇ Debentures, together with evidence that the
holders of the promissory notes to be exchanged for the ▇▇▇▇▇▇ Debentures have
accepted the ▇▇▇▇▇▇ Debentures in exchange therefor;
(r) Such additional information and materials as the Purchaser may
request.
IV. REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
The Purchaser makes the following representations and warranties to the
Company, each and all of which shall survive the execution and delivery of
this Agreement and the Closing until the Securities are no longer held by the
Purchaser:
4.1 Organization. The Purchaser is a corporation duly organized,
validly existing, and in good standing under the laws of the state of its
respective incorporation and it has full corporate power and authority to
enter into this Agreement and to perform its obligations hereunder. The
Purchaser is a wholly owned subsidiary of Conseco, Inc.
4.2 Due Execution, Delivery and Performance of the Agreement. The
execution, delivery, and performance of this Agreement (i) have been duly
authorized by all requisite corporate action by the Purchaser, and (ii) will
not violate the Certificate or Articles of Incorporation or Bylaws of the
Purchaser or any provision of any material indenture, mortgage, agreement,
contract, or other instrument to which it is a party or by which it or any of
its material properties or assets are bound, or be in conflict with, result in
a breach of or constitute (upon notice or lapse of time or both) a default
under any such indenture, mortgage, agreement, contract, or other instrument.
This Agreement is a legal, valid, and binding obligation of the Purchaser
enforceable against the Purchaser in accordance with its terms.
4.3 Investment Representation. The Purchaser represents and
warrants that it is purchasing the Securities for its own account, for
investment purposes and not with a view to the distribution thereof. The
Purchaser agrees that it will not, directly or indirectly, offer, transfer,
sell, assign, pledge, hypothecate or otherwise dispose of any of the
Securities (or solicit any offers to buy, purchase, or otherwise acquire or
take a pledge of any of the Securities), except in compliance with the
Securities Act of 1933, as amended (the "Act"), the rules and regulations
thereunder and any applicable state securities laws.
The Purchaser recognizes that investing in the Securities involves a high
degree of risk, and the Purchaser is in a financial position to hold the
Securities indefinitely and is able to bear the economic risk and withstand a
complete loss of its investment in the Securities. The Purchaser is a
sophisticated investor and is capable of evaluating the merits and risks of
investing in the Company. The Purchaser has had an opportunity to discuss the
Company's business, management and financial affairs with the Company's
management, has been given full and complete access to information concerning
the Company, and has utilized such access to its satisfaction for the purpose
of obtaining information or verifying information and has had the opportunity
to inspect the Company's operation. The Purchaser has had the opportunity to
ask questions of, and receive answers from the management of the Company
concerning the Securities and the terms and conditions of this Agreement and
the agreements and transactions contemplated hereby, and to obtain any
additional information as the Purchaser may have requested in making its
investment decision. The Purchaser is an "accredited investor", as defined by
Regulation D promulgated under the Act. The Purchaser understands that the
Securities have not been, and will not be registered under the Securities Act
by reason of their issuance by the Company in a transaction exempt from the
registration requirements of the Act; and that the Securities must be held by
the Purchaser indefinitely unless a subsequent disposition thereof is
registered under the Act or is exempt from registration.
Notwithstanding anything to the contrary in this Agreement, no
investigation by the Purchaser shall affect the representations and warranties
of the Company under this Agreement or contained in any document, certificate
or other writing furnished or to be furnished to the Purchaser in connection
with the transactions contemplated hereby.
V. REPRESENTATIONS AND WARRANTIES OF THE COMPANY
To induce the Purchaser to purchase the Securities as herein provided,
the Company makes the following representations and warranties to the
Purchaser, each and all of which shall survive the execution and delivery of
this Agreement and the Closing:
5.1. Corporate Existence; Compliance with Law. Each of the Company
and its Subsidiaries (i) is a corporation duly organized, validly existing and
in good standing under the laws of its state or country of incorporation; (ii)
is duly qualified to do business and is in good standing under the laws of
each jurisdiction where its ownership or lease of property or the conduct of
its business requires such qualification (except for jurisdictions in which
such failure to so qualify or to be in good standing would not have a Material
Adverse Effect); (iii) has the requisite corporate power and authority and the
legal right to own, pledge, mortgage or otherwise encumber and operate its
properties, to lease the property it operates under lease, and to conduct its
business as now, heretofore and proposed to be conducted; (iv) has all
material licenses, permits, consents or approvals from or by, and has made all
material filings with, and given all material notices to, all Governmental
Authorities having jurisdiction, to the extent required for such ownership,
operation and conduct (including, without limitation, the consummation of the
Transactions) (v) is in compliance with its certificate or articles of
incorporation, as applicable, and by-laws; and (vi) is in compliance with all
applicable provisions of law where the failure to comply would have a Material
Adverse Effect.
5.2. Executive Offices. The current location of the Company's and
each of its Subsidiaries' executive offices and principal place of business is
set forth on Schedule 5.2 hereto.
5.3. Subsidiaries. There currently exist, and upon consummation of
the Transactions there shall exist, no Subsidiaries of the Company other than
as set forth on Schedule 5.3 hereto, which sets forth such Subsidiaries,
together with their respective jurisdictions of organization, and the
authorized and outstanding capital Stock of each such Subsidiary, by class and
number and percentage of each class legally owned by the Company or a
Subsidiary of the Company or any other Person, or to be owned on the Closing
Date. There are no options, warrants, rights to purchase or similar rights
covering capital Stock of any such Subsidiary.
5.4. Corporate Power; Authorization; Enforceable Obligations. The
execution, delivery and performance by the Company of this Agreement and the
Ancillary Agreements and all instruments and documents to be delivered by the
Company: (i) are within the Company's corporate power; (ii) have been duly
authorized by all necessary or proper corporate action; (iii) are not in
contravention of any provision of the Company's articles of incorporation or
by-laws; (iv) will not violate any law or regulation, including any and all
Federal and state securities laws, or any order or decree of any court or
governmental instrumentality; (v) except as set forth on Schedule 5.4, will
not, in any material respect, conflict with or result in the breach or
termination of, constitute a default under or accelerate any performance
required by, any indenture, mortgage, deed of trust, lease, agreement or other
instrument to which the Company or any of its Subsidiaries is a party or by
which the Company or any of its Subsidiaries or any of their property is bound
(including, but not limited to, the Financing Documents); and (vi) will not
result in the creation or imposition of any Lien upon any of the property of
the Company or any of its Subsidiaries. Except as set forth on Schedule 5.4,
no consent, waiver or authorization of, or filing with, any Person (including,
without limitation, any Governmental Authority), which has not been obtained
as of the Closing Date is required in connection with the execution, delivery,
performance by, or validity of this Agreement or the Ancillary Agreements.
All such consents, waivers, authorizations and filings, except as set forth on
Schedule 5.4, have been obtained or made. On or prior to the Closing Date,
each of this Agreement and the Ancillary Agreements shall have been duly
executed and delivered of the Company and each shall then constitute a legal,
valid and binding obligation of the Company enforceable against the Company in
accordance with its terms, except to the extent that (a) enforcement may be
limited by or subject to the principles of public policy and any bankruptcy
and insolvency, reorganization, moratorium or similar laws now or hereafter in
effect relating to or limited to creditors= rights generally and (b) the
remedy of specific performance and injunctive and other forms of equitable
relief are subject to certain equitable defenses and to the discretion of the
court or other similar entity before which any proceeding thereafter may be
brought.
5.5. SEC Documents. (i) The Company has filed all required reports,
schedules, forms, statements and other documents with the SEC (such reports,
schedules, forms, statements and other documents are hereinafter referred to
as the "SEC Documents") or has filed adequate extensions therefor; (ii) as of
their respective dates, the SEC Documents complied with the requirements of
the Securities Act of 1933, as amended (the "Securities Act"), or the Exchange
Act, as the case may be, and the rules and regulations of the SEC promulgated
thereunder applicable to such SEC Documents, and none of the SEC Documents as
of such dates contained any untrue statement of a material fact or omitted to
state a material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which they
were made, not misleading; and (iii) the consolidated financial statements of
the Company included in the SEC Documents comply with applicable accounting
requirements and the published rules and regulations of the SEC with respect
thereto, have been prepared in accordance with GAAP applied on a consistent
basis during the periods involved and fairly present the consolidated
financial position of the Company and its consolidated subsidiaries as of the
dates thereof and the consolidated results of their operations and cash flows
for the periods then ended (subject, in the case of unaudited quarterly
statements, to normal year-end audit adjustments).
5.6. Absence of Certain Changes or Events. Absence of Certain
Changes or Events. Absence of Certain Changes or Events Absence of
Certain Changes or Events. Except as disclosed in the SEC Documents filed
and publicly available prior to the date of this Agreement (the "Filed SEC
Documents") or in Schedule 5.6 attached hereto, since the date of the most
recent audited financial statements included in the Filed SEC Documents, the
Company and its subsidiaries have conducted their business only in the
ordinary course, and there has not been (i) any change which would have a
Material Adverse Effect, (ii) any declaration, setting aside or payment of any
dividend or other distribution (whether in cash, stock or property) with
respect to any of the Company's outstanding capital stock, (iii) any split,
combination or reclassification of any of its outstanding capital stock or any
issuance or the authorization of any issuance of any other securities in
respect of, in lieu of or in substitution for shares of its outstanding
capital stock, (iv) (x) any granting by the Company or any of its subsidiaries
to any executive officer or other employee of the Company or any of its
subsidiaries of any increase in compensation, except in the ordinary course of
business consistent with prior practice or as was required under employment
agreements in effect as of the date of the most recent audited financial
statements included in the Filed SEC Documents, (y) any granting by the
Company or any of its subsidiaries to any such executive officer or other
employee of any increase in severance or termination pay, except in the
ordinary course of business consistent with prior practice or as was required
under any employment, severance or termination agreements in effect as of the
date of the most recent audited financial statements included in the Filed SEC
Documents or (z) any entry by the Company or any of its subsidiaries into any
employment, severance or termination agreement with any such executive officer
or other employee or (v) any change in accounting methods, principles or
practices by the Company or any of its subsidiaries materially affecting its
assets, liability or business, except insofar as may have been required by a
change in generally accepted accounting principles.
5.7. Interim Financial Statements; Absence of Undisclosed Liabilities.
(a) The Company has delivered to Purchaser a true and complete copy of the
unaudited balance sheet of the Company on February 28, 1997 and related
statement of income for the period then ended (the "Interim Financial
Statement"). The Interim Financial Statement has been prepared in accordance
with GAAP consistently applied throughout the period involved, except for the
disclosure of footnotes. The balance sheet included in the Interim Financial
Statement fairly presents the financial position, assets and liabilities
(whether accrued, absolute, contingent or otherwise) of the Company at the
date indicated, and the statement of income fairly presents the results of
operations of the Company for the period indicated. The Interim Financial
Statement contains all adjustments, which are solely of a normal recurring
nature, necessary to present fairly the financial position and results of
operations for the period then ended. To the best knowledge of the Company,
the draft unaudited consolidated balance sheet and income statement of the
Company for the month ending February 28, 1997 delivered by the Company at
Closing pursuant to the Agreement present fairly in accordance with GAAP
(subject to normal quarterly adjustments), the consolidated financial
position, the consolidated quarterly results of operations of the Company as
at the end of such periods and for the period then ended based upon
management's review and analysis to date.
(b) Except for those Obligations disclosed on the Interim Financial
Statements or set forth in Schedule 5.7, the Company has no Obligations, fixed
or contingent, ▇▇▇▇▇▇ or inchoate, in the individual amount of $25,000 or
more.
5.8. Projections. The financial projections delivered to the
Purchaser are attached hereto as Schedule 5.8. No facts to the best knowledge
of the Company exist which would result in any change in any of such
projections. The projections are based upon good faith estimates derived from
reasonable expectations at the time such projections were made, all of which
were fair in light of current conditions at the time they were made, reflect
the assumptions stated therein, and reflect the reasonable estimate of the
Company of the results of operations and other information projected therein
on a GAAP basis.
5.9. Ownership of Property. (a) Except as disclosed in Schedule
5.9(a), the Company and its Subsidiaries do not own any real property.
(b) All real property leased by the Company or any of its Subsidiaries
is set forth on Schedule 5.9(b). Each of such leases is valid and enforceable
in accordance with its terms and is in full force and effect. Neither the
Company nor the applicable Subsidiary, to the knowledge of the Company, nor
any other party to any such lease is in material default of its obligations
thereunder or has delivered or received any notice of default under any such
lease, nor has any event occurred which, with the giving of notice, the
passage of time or both, would constitute a material default under any such
lease.
(c) The Company has good and marketable title to all of its assets
and properties (or interests therein), real or personal, tangible or
intangible, that it owns or leases, free and clear of all Liens, except
Permitted Encumbrances and those set forth in Schedule 5.9(c). Except as set
forth in Schedule 5.9(c), the assets and properties of the Company are in a
condition suitable and necessary for its operations and no condition exists
that interferes with the use of the Company=s assets or properties in the
ordinary course of business.
5.10. No Default. Neither the Company nor any of its Subsidiaries is
in default, nor to the best knowledge of any of the Company or any of its
Subsidiaries is any third party in default, under or with respect to any
contract, agreement, lease or other instrument, including, but not limited to,
the Financing Agreements, to which any of the Company or its Subsidiaries is a
party, except for any default which (either individually or collectively with
other defaults arising out of the same event or events) would not have a
Material Adverse Effect or which has been waived. No Default or Event of
Default exists on the date hereof.
5.11. Employment Matters. Hours worked by and payments made to
employees of the Company or any of its Subsidiaries are not in violation of
the Fair Labor Standards Act or any other applicable law dealing with such
matters which would have a Material Adverse Effect. All payments due from the
Company or any of its Subsidiaries on account of employee health and welfare
insurance which would have a Material Adverse Effect if not paid have been
paid or accrued as a liability on the books of the Company or such Subsidiary.
5.12. Other Ventures. Except as set forth in the Filed SEC Documents
or on Schedule 5.12 hereto, neither the Company nor any of its Subsidiaries is
engaged in any joint venture or partnership with any other Person.
5.13. Taxes. Except as set forth on Schedule 5.13 hereto, all
Federal, state, local and foreign tax returns, reports and statements required
to be filed (including, for all purposes of this Section 5.13, any filed or to
be filed on a consolidated, combined or unitary basis with any other company)
by each of the Company or any of its Subsidiaries have been timely filed with
the appropriate Governmental Authority and such returns, reports and
statements were true, correct and complete in all respects to the knowledge of
the Company. All Charges and other impositions shown to be due and payable
have been paid prior to the date on which any fine, penalty, interest or late
charge may be added thereto for nonpayment thereof, or any such fine, penalty,
interest or late charge has been paid. Proper and accurate amounts have been
withheld by each of the Company and its Subsidiaries from their respective
employees for all periods in full and complete compliance with the tax, social
security and unemployment withholding provisions of applicable Federal, state,
local and foreign law and such withholdings have been timely paid to the
respective Governmental Authorities. The Federal income tax returns of each
of the Company and its Subsidiaries have been examined by the IRS or the
period covered by such tax returns has been closed by applicable statute of
limitations, for all periods prior to 1995. The state income or franchise tax
returns of each of the Company and its subsidiaries have not been examined by
any relevant Governmental Authority and no examinations are noticed or in
process. Except as set forth on Schedule 5.13 hereto, all deficiencies
asserted as a result of such examinations or otherwise have been paid, fully
settled or adequately provided for in the Financials and no issue has been
raised by a Federal, state, local or foreign Governmental Authority in any
such examination which, by application of the same or similar principles,
could reasonably be expected to result in a proposed deficiency for any
subsequent taxable period. No other deficiency for any Charges has been
proposed, asserted or assessed against any of the Company or its Subsidiaries
by any Federal, state, local or foreign Governmental Authority. Except as set
forth on Schedule 5.13 hereto, no Federal, state, local or foreign tax audits
or other administrative proceedings or court proceedings are presently pending
with regard to any Charges or tax returns of any of the Company or its
Subsidiaries. Except as described in Schedule 5.13 hereto, none of the
Company or its Subsidiaries has executed or filed with the IRS or any other
Governmental Authority any agreement or other document extending, or having
the effect of extending, the period of time within which to file a tax return,
report or statement which has not since been filed or the period for
assessment or collection of any Charges. None of the Company or its
subsidiaries has agreed or has been requested to or has an application pending
to make any adjustment under IRC Section 481(a) by reason of a change in
accounting method or otherwise. Except as set forth on Schedule 5.13 hereto,
neither the Company nor any of its Subsidiaries is a party to, bound by or has
any obligation under any tax sharing or similar agreement or arrangement.
5.14. ERISA. (a) Schedule 5.14 lists all Plans maintained or
contributed to by the Company or any of its Subsidiaries and all Qualified
Plans maintained or contributed to by any ERISA Affiliate, and of those plans
listed separately identifies the Title IV Plans, Multiemployer Plans, unfunded
Pension Plans and welfare plans, as defined in Section 3(l) of ERISA.
(b) Each Qualified Plan has been determined by the IRS to qualify under
Section 401 of the IRC, and the trusts created thereunder have been determined
to be exempt from tax under the provisions of Section 501 of the IRC, and to
the best knowledge of the Company nothing has occurred which would cause the
loss of such qualification or tax-exempt status.
(c) Each Plan set forth on Schedule 5.14 is in compliance in all
material respects with the applicable provisions of ERISA and the IRC,
including the filing of reports required under the IRC or ERISA which are true
and correct in all material respects as of the date filed, and with respect to
each Plan, other than a Qualified Plan, all required contributions and
benefits, have been paid in accordance with the provisions of each such Plan.
(d) None of the Company, its Subsidiaries or any ERISA Affiliate, with
respect to any Qualified Plan, has failed to make any contribution or pay any
amount due as required by Section 412 of the IRC or Section 302 of ERISA or
the terms of any such plan.
(e) Except as set forth on Schedule 5.14, no Title IV Plan has any
Unfunded Pension Liability.
(f) Except as set forth on Schedule 5.14, with respect to all Plans
which are welfare plans, as defined in Section 3(1) of ERISA, providing
retiree benefits the present value of future anticipated expenses pursuant to
the latest actuarial projections of liabilities does not exceed $100,000.
(g) Except as set forth on Schedule 5.14, with respect to Pension Plans,
other than Qualified Plans, the present value of the liabilities for current
participants thereunder using reasonable interest assumptions does not exceed
$50,000.
(h) Except as set forth on Schedule 5.14, there has been no, nor is
there reasonably expected to occur any, ERISA Event or event described in
Section 4068 of ERISA with respect to any Title IV Plan.
(i) Except as set forth on Schedule 5.14, there are no pending, or to
the knowledge of the Company or any of its Subsidiaries, threatened claims,
actions or lawsuits (other than claims for benefits in the normal course),
asserted or instituted against (i) any Plan or its assets, (ii) any fiduciary
with respect to any Plan or (iii) the Company, any of its Subsidiaries or any
ERISA Affiliate with respect to any Plan.
(j) Except as set forth on Schedule 5.14, none of the Company, any of
its Subsidiaries or any ERISA Affiliate has incurred or reasonably expects to
incur any Withdrawal Liability (and no event has occurred which, with the
giving of notice under Section 4219 of ERISA, would result in such liability)
under Section 4201 of ERISA as a result of a complete or partial withdrawal
from a Multiemployer Plan.
(k) Except as set forth in Schedule 5.14, none of the Company, any of
its Subsidiaries or any ERISA Affiliate has engaged in a transaction which
resulted or could result in any liability under Section 4069 of ERISA.
(l) Except as set forth on Schedule 5.14, no plan which is a welfare
benefit plan, as defined in Section 3(1) of ERISA, provides for continuing
benefits or coverage for any participant or any beneficiary of a participant
after such participant's termination of employment (except as may be required
by Section 4980B of the IRC and at the sole expense of the participant or the
beneficiary of the participant) which would result in a liability in an amount
which would have a Material Adverse Effect. The Company, its Subsidiaries and
each ERISA Affiliate have complied with the notice and continuation coverage
requirements of Section 4980B of the IRC and the regulations thereunder,
except where the failure to comply would not result in any Material Adverse
Effect.
(m) Neither the Company nor any of its Subsidiaries has engaged in a
prohibited transaction, as defined in Section 4975 of the IRC or Section 406
of ERISA, in connection with any Plan, which would subject the Company or any
of its Subsidiaries (after giving effect to any exemption) to a material tax
on prohibited transactions imposed by Section 4975 of the IRC or any other
material liability.
5.15. No Litigation. Except as set forth on Schedule 5.15 hereto, no
material action, claim or proceeding is now pending or, to the knowledge of
the Company or any of its Subsidiaries, threatened against any of the Company
or any of its Subsidiaries, at law, in equity or otherwise, before any court,
board, commission, agency or instrumentality of any Federal, state, local or
foreign government or of any agency or subdivision thereof, or before any
arbitrator or panel of arbitrators nor to the knowledge of any of the Company
or any of its Subsidiaries does a state of facts exist which is reasonably
likely to give rise to such proceedings. None of the matters set forth
therein questions the validity of any of this Agreement or the Ancillary
Documents or any action taken or to be taken pursuant thereto, or would have
either individually or in the aggregate a Material Adverse Effect.
5.16. Employment and Labor Agreements. Except as set forth on
Schedule 5.16 hereto, there are no employment, consulting, servicing or
management agreements with respect to management of the Company or any of its
Subsidiaries and there are no collective bargaining agreements or other labor
agreements covering any employees of the Company or any of its Subsidiaries.
A true and complete copy of each such agreement has been furnished to the
Purchaser.
5.17. Other Contracts. Schedule 5.17 attached hereto lists each
agreement, contract, lease, sublease, promissory note or evidence of
indebtedness (whether written or oral) that involves the payment or potential
payment by or to the Company or any of its Subsidiaries of more than One
Hundred Thousand Dollars ($100,000) or that is otherwise individually material
to the business of the Company or such Subsidiary.
Each of the agreements, contracts, commitments, leases, plans and other
instruments, documents and undertakings listed in Schedule 5.17 is valid and
enforceable in accordance with its terms, except to the extent that (a)
enforcement may be limited by or subject to the principles of public policy
and any bankruptcy and insolvency, reorganization, moratorium or similar laws
now or hereafter in effect relating to or limited to creditors' rights
generally and (b) the remedy of specific performance and injunctive and other
forms of equitable relief are subject to certain equitable defenses and to the
discretion of the court or other similar entity before which any proceeding
therefor may be brought. To the knowledge of the Company, there does not
exist any default by any third party to any such agreement, contract,
commitment, lease, plan or other instrument, document or undertaking which
default would have a Material Adverse Effect.
5.18. Patents, Trademarks, Copyrights and Licenses. Each of the
Company and its Subsidiaries own all material licenses, patents, patent
applications, copyrights, service marks, service ▇▇▇▇ applications,
trademarks, trademark applications, and trade names necessary to continue to
conduct its business as heretofore conducted, now conducted and proposed to be
conducted, each of which is listed on Schedule 5.18 hereto. To the knowledge
of the Company, the Company and its Subsidiaries conduct their respective
businesses without infringement or claim of infringement of any license,
patent, copyright, service ▇▇▇▇, trademark, trade name, trade secret or other
intellectual property right of others, except where such infringement or claim
of infringement would not have a Material Adverse Effect. There is no
infringement or claim of infringement by others of any material license,
patent, copyright, service ▇▇▇▇, trademark, trade name, trade secret or other
intellectual property right of the Company or any of its Subsidiaries.
5.19. Licenses. Schedule 5.19 attached hereto lists all of the
jurisdictions in which the Company or any of its Subsidiaries hold active
licenses, permits or authorizations to transact business (collectively, the
"Licenses"). Except as set forth on Schedule 5.19, no such License is the
subject of a proceeding for suspension or revocation or any similar
proceedings and to the Company's knowledge no such suspension or revocation
has been threatened by any licensing authority.
5.20. Capital Structure of the Company. The entire authorized capital
stock of the Company consists solely of 25,000,000 shares of common stock, no
par value, of which 6,022,000 shares are issued and outstanding, and 5,000,000
shares of preferred stock, no par value, none of which are outstanding. All
of the issued and outstanding shares of capital stock of the Company have been
duly authorized, are not subject to preemptive rights and were issued in full
compliance with all federal, state and local laws, rules and regulations.
Except for options to purchase Common Stock and warrants to purchase Common
Stock as set forth on Schedule 5.20 hereto and the options issuable under the
Company's Stock Option Plan to purchase 600,000 shares of Common Stock, there
are no outstanding or authorized subscriptions, options, warrants, calls,
commitments, agreements or arrangements of any kind relating to the issuance,
transfer, delivery or sale of any additional shares of capital stock or other
securities of the Company, including, but not limited to, any right of
conversion or exchange under any outstanding security, agreement or other
instrument. None of the options and warrants to purchase Common Stock will
have their vesting period accelerated as a result of this Agreement, the
Ancillary Agreements and the transactions contemplated hereby and thereby
(other than any subsequent tender offer by Conseco, Inc.). Except as set
forth on Section 5.20, there are no authorized or outstanding voting
agreements, voting trusts, proxies, stockholder agreements, rights to
purchase, transfer restrictions, or other similar arrangements with respect to
any of the capital stock of the Company of which the Company has knowledge.
There are no outstanding or authorized stock appreciation, phantom stock or
similar rights with respect to the capital stock of the Company. The Company
has no indebtedness for dividends, interest or other distributions declared or
accumulated but unpaid with respect to any securities of the Company. No
Person has a claim arising out of a violation of any preemptive rights of a
stockholder of the Company, nor any claim based upon ownership, repurchase or
redemption of any shares of the Company's capital stock.
5.21. Investment Company Act. The Company is not, and is not directly
or indirectly controlled by or acting on behalf of any Person which is,
required to register as an "investment company" under the Investment Company
Act of 1940, as amended.
5.22. Underwriting Guidelines. Each automobile loan originated or
purchased by the Company, which is reflected on the balance sheet, was
originated or purchased in accordance with the Company's underwriting
guidelines in effect at that time with such exceptions which, in the
aggregate, do not have a Material Adverse Effect. The Company's current
underwriting guidelines effective March 5, 1997 are contained in Schedule
5.22.
5.23. Broker=s or Finder=s Fee. No agent, broker, investment
banker, person or firm acting on behalf of or under the authority of the
Company is or will be entitled to any broker=s or finder=s fee or any other
commission or similar fee directly or indirectly from the Company in
connection with any of the transactions contemplated by this Agreement.
5.24. Disclosure. The Company has not withheld from the Purchaser any
material facts relating to the assets, properties, operations, financial
condition, or prospects of the Company. No representation or warranty of the
Company in this Agreement or the Ancillary Agreements, and no statement
contained in any certificate or other instrument delivered by the Company in
connection with the transactions contemplated by this Agreement or the
Ancillary Agreements contains or will contain any untrue statement of a
material fact, or omits or will omit to state a material fact necessary in
order to make the statements contained herein or therein not misleading.
VI. FINANCIAL STATEMENTS AND INFORMATION
6.1. Reports and Notices. The Company covenants and agrees that from
and after the Closing Date until such time as no amounts are owing under the
Debentures, it shall deliver to the Purchaser:
(a) GAAP Financial Statements:
(i) As soon as possible and in any event within 45 days after the end of
the first three quarterly fiscal periods of each Fiscal Year commencing the
quarter ending June 30, 1997 and within 30 days after the end of each month
commencing with May 1997 a copy of the unaudited consolidated balance sheet
of the Company as of the close of each period and the related consolidated
statements of income and cash flows (with respect to cash flows, on a
quarterly basis only) for the period from the beginning of such fiscal year to
the end of such period, all prepared in accordance with GAAP (subject to
normal quarterly adjustments) and accompanied by a certification of the chief
financial officer of the Company that all such financial statements are
complete and correct and present fairly in accordance with GAAP (subject to
normal quarterly adjustments) the consolidated financial position, the
consolidated results of operations and cash flows of the Company as at the end
of such period and for the period then ended, and a certification of the chief
financial officer of the Company that there was no Event of Default or to the
best of his knowledge, an event that with the passage of the grace or cure
periods specified in Section 9.1 hereof would result in an Event of Default in
existence as of such time. Each such statement shall set forth in comparative
form the figures for the corresponding periods of the preceding fiscal year
and for the corresponding current period reflected in the annual budget of the
Company, if any, and its Subsidiaries and shall include a brief management
report discussing all material variances from budget and recent developments
which management believes may in the future result in material variances from
its budget.
(ii) Within 45 days after the close of each Fiscal Year commencing with
the Fiscal Year ending December 31, 1997, a copy of the respective unaudited
consolidated financial statements of the Company, consisting of consolidated
balance sheets and consolidated statements of income and retained earnings and
cash flows, as the case may be, and where applicable setting forth in
comparative form in each case the consolidated figures for the previous fiscal
year, which statements shall be prepared in accordance with GAAP (subject to
year end adjustments), accompanied by a certification of the chief financial
officer of the Company that all such financial statements are complete and
correct and present fairly in accordance with GAAP the consolidated financial
position, the consolidated results of operations and cash flows of the Company
as at the end of such year and for the period then ended and a certification
of the chief financial officer of the Company that there was no Event of
Default or, to the best of his knowledge, an event that with the passage of
the grace or cure periods specified in Section 9.1 hereof would result in an
Event of Default in existence as of such time. Each such statement shall set
forth in comparative form the figures for the corresponding periods of the
preceding fiscal year and for the corresponding periods reflected in the
annual budget of the Company, if any, and its Subsidiaries and shall include a
brief management report discussing all material variances from budget and
recent developments which management believes may in the future result in
material variances from its budget.
(iii) Within 90 days after the close of each Fiscal Year commencing with
the Fiscal Year ending December 31, 1997, a copy of the respective annual
audited consolidated financial statements of the Company, consisting of
consolidated balance sheet and consolidated statements of income and retained
earnings and cash flows, as the case may be, and where applicable setting
forth in comparative form in each case the consolidated figures for the
previous fiscal year, which financial statements shall be prepared in
accordance with GAAP (only with respect to the consolidated financial
statements) without qualification by a firm of independent certified public
accountants of recognized national standing selected by the Company with
respect to the financial statements of the Company, and accompanied by a
certification of the chief financial officer of the Company that all such
financial statements are complete and correct and present fairly in accordance
with GAAP the consolidated financial position, the consolidated results of
operations and cash flows of the Company as at the end of such year and for
the period then ended that there was no Event of Default, or to the best of
his knowledge, an event that with the passage of the grace or cure periods
specified in 9.1 hereof would result in an Event of Default in existence as of
such time. Each such statement shall set forth in comparative form the
figures for the corresponding periods of the preceding fiscal year and shall
include a brief management report discussing all materials variances from its
annual budget, if any, and recent developments which management believes may
in the future result in material variances from its annual budget, if any.
(b) SEC Documents; Reports; Notices:
(i) Immediately after the Company's issuance or receipt thereof, copies
of (v) the preliminary prospectus and the effective prospectus contained in
any registration statement filed with the SEC or any state securities law
authority; (x) any annual or periodic report filed with the SEC; (y) any
listing application filed with any stock exchange or amendment thereof; and
(z) each annual report and all other reports or information, including proxy
solicitations, which the Company shall from time to time send to any of its
shareholders. In addition, except for the 10-K report due April 15, 1997,
draft copies of any such reports to be filed by the Company shall be submitted
to the Purchaser for review and approval at least five (5) days before filing.
(ii) Within thirty (30) days after month end commencing May 1997, a copy
of the Management Report summarizing the operations of the Company in all
material respects.
(iii) Upon request, a copy of weekly origination and delinquency reports
and such otherother reports otherwise prepared for the Company's internal use.
(iv) Within two Business Days, a copy of all other information or
notices delivered to the Company's Senior Indebtedness.
(c) As soon as practicable, but in any event within two Business Days
after the Company becomes aware of the existence of any Event of Default,
telephonic or telegraphic notice specifying the nature of such Event of
Default or development or information, including the expected effect thereof,
which notice shall be promptly confirmed in writing within five Business Days.
(d) Budgets. On or before June 1, 1997, the Company shall prepare
and present to the Purchaser budgets for the quarters ending September 30,
1997 and December 31, 1997. On or before November 15 of each year, the
Company shall prepare and present to the Purchaser quarterly budgets for the
following fiscal year.
6.2. Certificates; Other Information. The Company covenants and
agrees that it shall deliver:
(a) to the Purchaser, (x) not later than thirty (30) days prior to the
end of each Fiscal Year of the Company commencing with December 31, 1997, a
copy of the preliminary projections of the Company and its Subsidiaries of (i)
the monthly operating budget including, but not limited to, balance sheets,
statements of cash flow, statements of income, a detailed listing of material
assumptions made in preparing such budget, cost budgets by department and a
detail of receivable composition, and (ii) new business plans, such
projections and business plan to be acceptable to the Purchaser and to be
accompanied by a certificate of the chief financial officer of the Company to
the effect that such projections have been prepared on the basis of sound
financial planning and that such projections are based upon reasonable
estimates and assumptions (which estimates and assumptions shall be acceptable
to the Purchaser), all of which are fair in light of current conditions, have
been prepared on the basis of the assumptions stated therein, and reflect the
reasonable estimate of the Company of the results of operations and other
information projected therein and (y) not later than January 31 of each Fiscal
Year a final form of the projections delivered pursuant to Section 6.2(a)(x)
hereof or a letter from the chief financial officer of the Company certifying
that the projections delivered pursuant to Section 6.2(a)(x) hereof shall be
treated as the final projections for such Fiscal Year and have been presented
to the Board;
(b) to the Purchaser, immediately, notice of actual or threatened
suspension, termination or revocation of any material License of the Company
or any of its Subsidiaries by any Governmental Authority; and
(c) such other information respecting the Company's or any of its
Subsidiaries' business, prospects or financial condition or prospects as the
Purchaser may, from time to time, reasonably request.
VII. AFFIRMATIVE COVENANTS
The Company covenants and agrees that, unless the Purchaser shall
otherwise consent in writing, from and after the date hereof and until no
amounts are owing under the Debentures:
7.1. Maintenance of Existence and Conduct of Business. The Company
shall and shall cause each of its Subsidiaries to (a) do or cause to be done
all things necessary to preserve and keep in full force and effect its
corporate existence, including, without limitation, all Licenses or similar
qualifications required by them to engage in their business in all
jurisdictions in which they are at the time so engaged; (b) continue to
conduct its business substantially as now conducted or as otherwise permitted
hereunder; and (c) at all times maintain, preserve and protect all of its
trademarks and tradenames (if any), and preserve all the remainder of its
material property, in use or useful in the conduct of its business and keep
the same in good repair, working order and condition (taking into
consideration ordinary wear and tear) and from time to time make, or cause to
be made, all needful and proper repairs, renewals and replacements,
betterments and improvements thereto consistent with industry practices, so
that the business carried on in connection therewith may be properly and
advantageously conducted at all times. The Company shall give written notice
to the Purchaser prior to the Company's or any of its Subsidiaries' ceasing to
conduct business in any country or state.
7.2. Payment of Obligations. (a) Subject to subsection (b) below, the
Company shall and shall cause each of its Subsidiaries to pay and discharge or
cause to be paid and discharged all its Indebtedness, as and when due and
payable (including any applicable grace period).
(b) Notwithstanding subsection (a) above, the Company and its
Subsidiaries shall not be required to pay Indebtedness so long as (i) it is in
good faith and by appropriate proceedings diligently contesting such
Indebtedness, (ii) any reserve required by GAAP shall have been made therefor,
and (iii) the contest will not result in the forfeiture or loss of any asset
or property of the Company or its Subsidiaries other than cash or its
equivalent.
7.3. Books and Records. The Company shall and shall cause each of its
Subsidiaries to keep adequate records and books of account with respect to its
business activities, in which proper entries, reflecting all of their
financial transactions, are made in accordance with GAAP and on a basis
consistent with the Financials.
7.4. Litigation. The Company shall notify the Purchaser in writing,
promptly upon learning thereof, of any material litigation or administrative
proceeding commenced or threatened against the Company or any of its
Subsidiaries.
7.5. Insurance. Schedule 7.5 lists in summary form all insurance
maintained by the Company and its Subsidiaries. The Company shall and shall
cause each of its Subsidiaries to continue to maintain such insurance. The
Company shall and shall cause each of its Subsidiaries to pay all insurance
premiums payable by them.
7.6. Compliance with Law. The Company shall and shall cause each of
its Subsidiaries to comply with all Federal, state and local laws and
regulations applicable to it, including, without limitation, ERISA, those
regarding the collection, payment and deposit of employees' income,
unemployment and social security taxes and those relating to insurance or
environmental matters, where the failure to comply would have a Material
Adverse Effect.
7.7. Agreements. The Company shall and shall cause each of its
Subsidiaries to perform, within all required time periods (after giving effect
to any applicable grace periods), all of its obligations and enforce all of
its rights under each material agreement to which it is a party. The Company
shall not and shall cause each of its Subsidiaries not to terminate or modify
in any manner adverse to any such party any provision of any such material
agreement to which it is a party except in the ordinary course of business,
consistent with past practice.
7.8. Employee Plans. (a) With respect to other than a Multiemployer
Plan, for each Qualified Plan hereafter adopted or maintained by the Company,
any of its Subsidiaries or any ERISA Affiliate, the Company shall (i) be in
possession of, or cause its Subsidiaries or ERISA Affiliates to be in
possession of, determination letters from the IRS to the effect that such
Qualified Plan is qualified within the meaning of Section 401(a) of the IRC;
and (ii) from and after the adoption of any such Qualified Plan, cause such
plan to be qualified within the meaning of Section 401(a) of the IRC and to be
administered in all material respects in accordance with the requirements of
ERISA and Section 401(a) of the IRC.
(b) With respect to each welfare benefit plan, as defined in Section
3(1) of ERISA, hereafter adopted or maintained by the Company, any of its
Subsidiaries or any ERISA Affiliate, the Company shall comply, in all material
respects, or cause its Subsidiaries or ERISA Affiliates to comply, in all
material respects with the notice and continuation coverage requirements of
Section 4980B of the IRC and the regulations thereunder.
(c) (i) Promptly and in any event within thirty (30) days after the
Company, any of its Subsidiaries or any ERISA Affiliate knows or has reason to
know that any ERISA Event has occurred, and (ii) promptly and in any event
within ten (10) days after the Company, any of its Subsidiaries or any ERISA
Affiliate knows or has reason to know that a request for a minimum funding
waiver under Section 412 of the IRC has been filed with respect to any
Qualified Plan, the Company shall furnish to the Purchaser a written statement
of the chief financial officer or other appropriate officer of the Company
describing such ERISA Event or waiver request and the action, if any, which
the Company, any of its Subsidiaries or any ERISA Affiliate proposes to take
with respect thereto and a copy of any notice filed with the PBGC or the IRS
pertaining thereto.
(d) Promptly and in any event within thirty (30) days after the filing
thereof by the Company, any of its Subsidiaries or any ERISA Affiliate, the
Company shall furnish to the Purchaser a copy of each annual report (Form 5500
Series, including Schedule B thereto) with respect to each Pension Plan, and
upon request by the Purchaser, with respect to any other Plan.
(e) Promptly and in any event within thirty (30) days after receipt
thereof, the Company shall furnish to the Purchaser a copy of any adverse
notice, determination letter, ruling or opinion the Company, any of its
Subsidiaries or any ERISA Affiliate received from the PBGC, DOL or IRS with
respect to any Qualified Plan.
(f) Promptly and in any event within ten (10) Business Days after
receipt thereof, the Company shall furnish to the Purchaser a copy of any
correspondence the Company, any of its Subsidiaries or any ERISA Affiliate
receives from the plan sponsor (as defined by Section 4001(a)(10) of ERISA) of
any Multiemployer Plan concerning potential withdrawal liability of the
Company, any of its Subsidiaries or any ERISA Affiliate, or notice of any
reorganization, with respect to any Multiemployer Plan, together with a
written statement of the chief financial officer or other appropriate officer
of the Company of the action which the Company, any of its Subsidiaries or any
ERISA Affiliate proposes to take with respect thereto.
(g) Promptly and in any event within thirty (30) Business Days after the
adoption thereof, the Company shall furnish to the Purchaser notice of (i) any
amendment to a Title IV Plan which results in an increase in benefits or the
adoption of any new Title IV Plan, (ii) any amendment to a, or adoption of a
new, welfare benefit plan, as defined in Section 3(1) of ERISA, which the
Company or any of its Subsidiaries maintains, contributes or has an obligation
to contribute to, and which results in an increase in benefits for retirees or
new benefits for retirees, and (iii) any amendment to terminate a Title IV
Plan or treatment of a plan amendment as a termination under Section 4041 of
ERISA.
(h) Promptly and in any event after receipt of written notice of
commencement thereof, the Company shall furnish to the Purchaser notice of any
action, suit or proceeding before any court or other governmental authority
affecting the Company, any of its Subsidiaries or any ERISA Affiliate with
respect to any Plan, except those which, in the aggregate, if adversely
determined could not have a Material Adverse Effect.
(i) Promptly and in any event within thirty (30) days after notice or
knowledge thereof, the Company shall furnish to the Purchaser notice that the
Company or any of its Subsidiaries, has become or may become subject to a
material tax on prohibited transactions imposed by Section 4975 of the IRC,
together with a copy of Form 5330.
7.9. Access. (a) The Company shall and shall cause each of its
Subsidiaries to allow the Purchaser and any of its officers, employees and/or
agents, upon reasonable notice (unless a Default or Event of Default has
occurred and is continuing, in which case no notice shall be required),
exercisable as frequently as the Purchaser (or representative thereof)
reasonably determines to be appropriate, during normal business hours (or at
such other times as may reasonably be requested by the Purchaser or
representative), to inspect the properties and facilities of the Company or
any of its Subsidiaries and, at its own expense, to inspect, audit and make
extracts from all of the Company's or any of its Subsidiaries' records, files
and books of account. The Company shall obtain and deliver any document or
instrument reasonably necessary for the Purchaser (or representative), as any
of them may reasonably request, to obtain records from any service bureau
maintaining records for the Company or any of its Subsidiaries as the
Purchaser may reasonably request. The Company shall also maintain duplicate
computer tapes and discs owned by the Company or any of its Subsidiaries.
(b) The Purchaser (or representative) shall use reasonable efforts to
keep confidential any non-public information obtained pursuant to this
Agreement except (i) as may be required in connection with the administration
of matters relating to this Agreement, (ii) as may be required in connection
with the enforcement of any rights of the Purchaser pursuant to this Agreement
or any of the Ancillary Agreements, or (iii) as may otherwise be required by
law. The Purchaser shall endeavor to give the Company not less than ten (10)
days prior written notice of any disclosure of non-public information pursuant
to this subparagraph.
7.10. Board Representation; Board Observer. The Company shall use its
best efforts to cause and maintain the election to the Board the Conseco
Directors. In the event that any Conseco Director is unable to attend any
meeting of the Board of Directors of the Company, the Company will permit any
authorized representative of the Purchaser to attend any such meeting as an
observer.
VIII. NEGATIVE COVENANTS
The Company covenants and agrees that, without the Purchaser=s prior
written consent, from and after the date hereof and until no amounts are owing
under the Debentures:
8.1. Mergers, Etc. Neither the Company nor any Subsidiary thereof,
shall directly or indirectly, by operation of law or otherwise, merge with,
consolidate with, acquire all or substantially all of the assets or capital
stock of, or otherwise combine with, any Person or form or acquire any
Subsidiary.
8.2 Amendment of Certificate of Incorporation. The Company and each
of its Subsidiaries shall not amend their respective articles or certificate
of incorporation or organization without the consent of the Board and the
Conseco Directors and shall not amend their certificate or articles of
incorporation or by-laws in any manner which would adversely affect the rights
of the Purchaser.
8.3. Investments; Loans and Advances. (a) Except in connection with
its purchases and originations of sub-prime automobile loans and leases, the
Company shall not and shall not permit any of its Subsidiaries to make any
investment in, or make or accrue loans or advances of money to, any Person,
through the direct or indirect holding of securities or otherwise; provided,
however, that the Company and its Subsidiaries may make and own investments
in (i) marketable direct obligations issued or unconditionally guaranteed by
the United States of America or any agency thereof maturing within thirty days
from the date of acquisition thereof; (ii) commercial paper maturing no more
than thirty days from the date of creation thereof and at the time of their
acquisition having the highest rating obtainable from either Standard & Poor's
Corporation or ▇▇▇▇▇'▇ Investors Service, Inc.; and (iii) certificates of
deposit, maturing no more than thirty days from the date of creation thereof,
issued by commercial banks incorporated under the laws of the United States of
America, each having at the time of the acquisition of any such certificate of
deposit combined capital, surplus and undivided profits of not less than
$200,000,000 and a rating of "A" or better by a nationally recognized rating
agency.
8.4. Indebtedness. Except as otherwise expressly permitted by this
Section 8.4 or upon approval of the Company's Board of Directors including all
of the Conseco Directors, the Company shall not, nor shall it permit any of
its Subsidiaries to, create, incur, assume or permit to exist any
Indebtedness, whether recourse or nonrecourse, and whether superior, pari
passu or junior, except (i) Senior Indebtedness; (ii) the ▇▇▇▇▇▇ Debentures;
(iii) deferred Charges; (iv) unfunded pension fund and other employee benefit
plan obligations and liabilities but only to the extent they are permitted to
remain unfunded under applicable law; and (v) Capital Leases having aggregate
obligations not in excess of $100,000.
8.5. Employee Loans. Except automobile loans or leases and travel
advances entered into in the ordinary course of business consistent with past
practice, the Company shall not and shall not permit any of its Subsidiaries
to make or accrue any loans or other advances of money to any employee of the
Company or any such Subsidiary.
8.6. Transactions with Affiliates. (a) The Company shall not, except
as provided in Schedule 8.6 or as disclosed in the SEC Filed Documents and
except for compensation arrangements entered into with the consent of the
Conseco Directors, and shall not permit any of its Subsidiaries to, enter into
or be a party to any transaction with any Affiliates of the Company except in
the ordinary course of and pursuant to the reasonable requirements of the
Company's or such Subsidiary's business and upon fair and reasonable terms
that are no less favorable to the Company or such Subsidiary than would be
obtained at the time of such transaction in a comparable arm's-length
transaction with a Person not an Affiliate of the Company or such Subsidiary
and in any event only if such transaction is effected in accordance with all
applicable laws and regulations and except for previously approved
transactions with ▇▇▇▇▇▇ Chevrolet Olds and Pontiac, Inc. and ▇▇▇▇▇▇ Body
Shop, Inc., is not in an amount in excess of $100,000 or is approved by the
Board and the Conseco Directors. The agreements referred to in Schedule 8.6,
if any, shall not be amended, assigned (by either party thereto), extended or
terminated by the Company or any of its Subsidiaries, nor shall they grant any
waivers thereunder, without the consent of the Purchaser.
8.7. Liens. The Company shall not and shall not permit any of its
Subsidiaries to create or permit any Lien on any of its properties or assets
which would have a Material Adverse Effect except Permitted Encumbrances.
8.8. Capital Expenditures. The Company shall not and shall not permit
any of its Subsidiaries to make Capital Expenditures that, in the aggregate,
exceed the amounts of such expenditures provided for in the business plan or
projections of the Company for any Fiscal Year, or individually, exceed
$50,000, which are not approved by the Board or otherwise approved in advance
in writing by the Purchaser.
8.9. Sales of Assets. The Company shall not and shall not permit any
of its Subsidiaries to sell, transfer, or otherwise dispose of any assets or
properties; provided, however, that the foregoing shall not prohibit (i)
the sale of assets in the ordinary course of business, consistent with past
practice; (ii) the sale of surplus or obsolete equipment and fixtures; and
(iii) transfers resulting from any casualty or condemnation of assets or
properties.
8.10. Cancellation of Indebtedness. The Company shall not and shall
not permit any of its Subsidiaries to cancel any claim or debt owing to it,
except for reasonable consideration and in the ordinary course of business,
consistent with past practice.
8.11. ERISA. The Company shall not, directly or indirectly, and shall
not permit its Subsidiaries or any ERISA Affiliate to directly or indirectly
by reason of an amendment or amendments to, or the adoption of, one or more
Title IV Plans, permit the present value of all benefit liabilities, as
defined in Title IV of ERISA (using the actuarial assumptions utilized by the
PBGC upon termination of a plan), to exceed the fair market value of assets
allocable to such benefits, all determined as of the most recent valuation
date for each such Title IV Plan, by more than $100,000, or to increase such
benefit liabilities to the extent security must be provided to any Title IV
Plan under Section 401(a)(29) of the IRC. Neither the Company nor any of its
Subsidiaries shall establish or become obligated to any new welfare benefit
plan, as defined in Section 3(1) of ERISA, or modify any existing welfare
benefit plan, for retirees, which would result in the present value of future
liabilities under any such plans to increase by more than $100,000. Except as
set forth on Schedule 5.14, neither the Company nor any of its Subsidiaries
shall establish or become obligated to any new unfunded Pension Plan, which
would result in the present value of future liabilities under any such plans
to increase by more than $100,000.
8.12. Tax Sharing. The Company shall not make any tax sharing or
similar payment to any Affiliate in excess of: (a) its separate state, local
and/or foreign income tax liability; plus (b) its pro rata share of the
consolidated Federal income tax liability as determined under Treas. Reg. '
1.1552-1(a)(1); plus (c) its pro rata share of any consolidated, combined or
unitary state, local and/or foreign income tax computed similarly as under
subparagraph (b).
IX. EVENTS OF DEFAULT; RIGHTS AND REMEDIES
9.1. Events of Default. The occurrence of any one or more of the
following events (regardless of the reason therefor) shall constitute an
"Event of Default" hereunder until no amounts are owing under the Debentures:
(a) The Company shall fail or neglect to perform, keep or observe any of
the provisions of Sections 7 or 8 of this Agreement and the same shall remain
unremedied for a period ending on the first to occur of ten (10) days after
the Company shall receive written notice of any such failure from the
Purchaser or fifteen (15) days after the Company shall have knowledge thereof.
(b) The Company shall fail or neglect to perform, keep or observe any
other provision of this Agreement or of any of the other Ancillary Agreements
and the same shall remain unremedied for a period ending on the first to occur
of thirty (30) days after the Company shall receive written notice of any such
failure from the Purchaser or thirty (30) days after the Company shall have
knowledge thereof.
(c) A default shall occur under any other agreement, document or
instrument to which the Company or any Subsidiary thereof is a party or by
which the Company or such Subsidiary or any of the Company's or such
Subsidiary's property is bound, and such default (i) involves the failure to
make any payment (whether of principal, interest or otherwise) due (whether by
scheduled maturity, required prepayment, acceleration, demand or otherwise) in
respect of any Indebtedness of the Company or such Subsidiary in an aggregate
amount exceeding $100,000, or (ii) causes (or permits any holder of such
Indebtedness of a trustee to cause) such Indebtedness or a portion thereof in
an aggregate amount exceeding $100,000, to become due prior to its stated
maturity or prior to its regularly scheduled dates of payment.
(d) Any representation or warranty herein or in this Agreement or any
Ancillary Agreement or in any written statement pursuant thereto or hereto,
report, financial statement or certificate made or delivered to the Purchaser
by the Company or any of its Subsidiaries shall be untrue or incorrect in any
material respects, as of the date when made or deemed made, and the same shall
remain unremedied for a period ending on the first to occur of ten (10) days
after the Company shall receive written notice of any such failure from the
Purchaser or fifteen (15) days after the Company shall have knowledge thereof.
(e) The Company shall fail to make any principal or interest payment
with respect to any Senior Indebtedness when the same shall be due and payable
(including any applicable grace period), or any maturity date under the Senior
Indebtedness is accelerated.
(f) Any of the material assets of the Company or any of its Subsidiaries
thereof shall be attached, seized, levied upon or subject to a writ or
distress warrant, or come within the possession of any receiver, trustee,
custodian or assignee for the benefit of creditors of the Company or any of
its Subsidiaries and shall remain unstayed or undismissed for thirty (30)
consecutive days; or any Person other than the Company or such Subsidiary
shall apply for the appointment of a receiver, trustee or custodian for any of
the assets of the Company or such Subsidiary and such application shall remain
unstayed or undismissed for thirty (30) consecutive days; or the Company or
such Subsidiary shall have concealed, removed or permitted to be concealed or
removed, any part of its property, with intent to hinder, delay or defraud its
creditors or any of them or made or suffered a transfer of any of its property
or the incurring of an obligation which may be fraudulent under any
bankruptcy, fraudulent conveyance or other similar law.
(g) A case or proceeding shall have been commenced against the Company
or any of its Subsidiaries in a court having competent jurisdiction seeking a
decree or order in respect of the Company or such Subsidiary (i) under title
11 of the United States Code, as now constituted or hereafter amended, or any
other applicable federal, state or foreign bankruptcy or other similar law;
(ii) appointing a custodian, receiver, liquidator, assignee, trustee or
sequestrator (or similar official) of the Company or such Subsidiary or of any
substantial part of its or their properties; or (iii) ordering the winding-up
or liquidation of the affairs of the Company or such Subsidiary and such case
or proceeding shall remain undismissed or unstayed for sixty (60) consecutive
days or such court shall enter a decree or order granting the relief sought in
such case or proceeding.
(h) The Company or any of its Subsidiaries shall (i) file a petition
seeking relief under title 11 of the United States Code, as now constituted or
hereafter amended, or any other applicable federal, state or foreign
bankruptcy or other similar law; (ii) consent to the institution of
proceedings thereunder or to the filing of any such petition or to the
appointment of or taking possession by a custodian, receiver, liquidator,
assignee, trustee or sequestrator (or similar official) of the Company or such
Subsidiary or of any substantial part of its properties; (iii) fail generally
to pay its debts as such debts become due; or (iv) take any corporate action
in furtherance of any such action.
(i) Final judgment or judgments (after the expiration of all times to
appeal therefrom) for the payment of money in excess of $100,000 in the
aggregate shall be rendered against the Company or any of its Subsidiaries and
the same shall not be (i) fully covered by insurance in accordance with
Section 7.5 hereof, or (ii) vacated, stayed, bonded, paid or discharged for a
period of thirty (30) days.
(j) Any other event shall have occurred and be continuing, including the
revocation of any License or other material suspension of the authority of the
Company to conduct its business, which would have a Material Adverse Effect
and the Purchaser shall have given the Company at least thirty (30) days'
notice thereof.
(k) With respect to any Plan, (i) a prohibited transaction within the
meaning of Section 4975 of the IRC or Section 406 of ERISA occurs which in the
reasonable determination of the Purchaser could result in direct or indirect
liability to the Company or any of its Subsidiaries, (ii) with respect to any
Title IV Plan, the filing of a notice to voluntarily terminate any such plan
in a distress termination, (iii) with respect to any Multiemployer Plan, the
Company, any of its Subsidiaries or any ERISA Affiliate shall incur any
Withdrawal Liability, (iv) with respect to any Qualified Plan, the Company,
any of its Subsidiaries or any ERISA Affiliate shall incur an accumulated
funding deficiency or request a funding waiver from the IRS, or (v) with
respect to any Title IV Plan or Multiemployer Plan which has an ERISA Event
not described in clauses (ii) - (iv) hereof, in the reasonable determination
of the Purchaser there is a reasonable likelihood for termination of any such
plan by the PBGC; provided, however, that the events listed in clauses (i)
- (v) hereof shall constitute Events of Default only if the liability,
deficiency or waiver request of the Company, any of its Subsidiaries or any
ERISA Affiliate, whether or not assessed, exceeds $50,000, in any case set
forth in (i) through (v) above, or exceeds $100,000, in the aggregate for all
such cases.
9.2. Remedies. If any Event of Default specified in Section 9.1 shall
have occurred and be continuing, the Purchaser shall have the right to require
full payment of the principal amount of the Debentures together with all
accrued and unpaid interest.
X. TRIGGERING EVENT
10.1. Events. The following event shall be considered a triggering event
under this Agreement ("Triggering Event"):
Upon the earlier of the optional conversion or maturity date of the
Debentures, the Company fails or refuses to register shares of Common Stock
issued or issuable to the Purchaser pursuant to the terms and provisions of
the Registration Rights Agreement.
10.2. Payment Acceleration. From and after the occurrence of a
Triggering Event, the Purchaser shall be entitled to accelerate the maturity
date of the Debentures and to receive immediate payment in full of all amounts
owing thereunder.
10.3. Redemption. From and after the occurrence of a Triggering
Event, the Purchaser shall be entitled to cause the Company to redeem the
Debentures in such amount as may be specified by the Purchaser in a request
delivered to the Company by the Purchaser, and the Company shall redeem such
Debentures, by paying to the holder thereof an amount equal to the market
value of the greatest number of shares of Common Stock into which the
Debentures are convertible. The market value and the maximum number of shares
of Common Stock into which the Debentures are convertible shall be determined
using the higher of the average of the closing prices of a share of Common
Stock, as reported by the principal stock exchange upon which shares of Common
Stock are traded, for the 20 trading days prior to (i) the day of the public
announcement of a Triggering Event or (ii) the day of the event giving rise to
the to the Triggering Event. If the Common Stock is not listed for trading on
a nationally recognized stock exchange or on the NASDAQ System on the day
before the Triggering Event, for purposes of determining the number of shares
of Common Stock issuable upon conversion of the Debentures and the redemption
price provided for in this Section 10.3, the market value of a share of Common
Stock shall be determined by a recognized appraisal or investment banking firm
selected by the Board.
10.4. Funds Unavailable. If sufficient funds are not legally
available for repayment of all of the Debentures under Section 10.2 hereof or
payment of the redemption amount under Section 10.3 hereof following the
occurrence of a Triggering Event, the Company and its Subsidiaries will take
all lawful action necessary to enable the Company to make such payment to the
fullest extent possible, including without limitation, (i) the sale of
additional equity securities, (ii) any necessary action under applicable law
to reduce the Company's surplus or other funds legally available, (iii)
additional borrowing by, or a refinancing of, the Company, (iv) asset sales
and (v) a sale of the Company or Subsidiaries to a third party. The Company
will retain, at the Company's expense and with the consent of the Purchaser,
an investment banking firm to assist the Company in taking the action referred
to in the preceding sentence; such investment banking firm shall provide its
service to the Company under the direction of a committee which will have two
members, one of whom will be a representative of the Company and the other
will be a representative of the Purchaser. Except as provided in the following
paragraph, the foregoing shall not preclude the holders of Debentures from
availing themselves of any other remedy available at law or equity at any time
to collect amounts due and payable to them by the Company.
10.5. Notice. When a Triggering Event has occurred, the Company shall
immediately give written notice thereof to the Purchaser. The Company shall
also promptly notify the Purchaser of any event which could reasonably become
a Triggering Event with the lapse of time or otherwise promptly after
obtaining knowledge thereof.
XI. RIGHT OF FIRST REFUSAL
Until such time as no amounts are owing under the Debentures, upon any
offer, sale or issuance, for cash or other property, of subordinated
indebtedness of the Company, then the Purchaser shall have the right to
subscribe to and purchase such notes and evidences of subordinated
indebtedness (the "New Indebtedness") at a price and on such other terms and
conditions as are no less favorable to the Purchaser than those on which the
New Indebtedness will be offered, sold or issued to other persons. The
Purchaser shall have the option to purchase up to such portion of the New
Indebtedness as shall be equal to the Purchaser's pro rata investment in the
Company of the entire amount of investments made in the Company by the
Purchaser at such date. The Company shall give written notice to the
Purchaser of any and each opportunity for exercise of its rights under this
Article XI, setting forth the price of such New Indebtedness and the amount of
such New Indebtedness that the Purchaser is entitled to purchase. Such notice
shall be delivered to the Purchaser at the address then shown in the records
of the Company, and the Purchaser may exercise its rights to purchase such New
Indebtedness by written notice thereof delivered to the Company at its
principal office not later than 10 business days following the date on which
notice of such rights was received by the Purchaser. In the event the
Purchaser does not elect to purchase the offered New Indebtedness, any other
Affiliate of the Purchaser that is a wholly owned subsidiary of Conseco, Inc.
shall be given notice thereof and shall have five business days thereafter to
elect to purchase such unpurchased allotment.
XII. SECURITIES LAW MATTERS
Each certificate or instrument representing the Securities shall bear a
legend substantially in the following form:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED BY THE
HOLDER PURSUANT TO A SECURITIES PURCHASE AGREEMENT DATED APRIL 11, 1997 BY AND
BETWEEN GENERAL ACCEPTANCE CORPORATION AND CAPITOL AMERICAN LIFE INSURANCE
COMPANY, AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED ("THE ACT"), OR ANY APPLICABLE STATE SECURITIES LAWS. THESE
SECURITIES MAY NOT BE SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF IN THE
ABSENCE OF REGISTRATION, UNDER THE ACT, BASED ON AN OPINION LETTER OF COUNSEL
REASONABLE SATISFACTORY TO THE COMPANY OR A NO-ACTION LETTER FROM THE
SECURITIES AND EXCHANGE COMMISSION."
XIII. MISCELLANEOUS
13.1. Press Releases. Except as required by applicable law, the
Purchaser and the Company will not give notice to third parties or otherwise
make any public statement or releases concerning this Agreement or the
transactions contemplated hereby except for such written information as shall
have been approved in writing as to form and content by the other party, which
approval shall not be unreasonably withheld.
13.2. Expenses. The Company will pay its own costs and expenses and
the costs and expenses of the Purchaser incident to preparing for, entering
into and carrying out this Agreement and the consummation of the transactions
contemplated hereby.
13.3. Indemnification. (a) The Company shall indemnify and hold
harmless the Purchaser against and from any losses, claims, damages,
liabilities or expenses (ALosses@) insofar as the Losses (or actions in
respect thereof) arise out of or are based upon (i) the falsity or
incorrectness as of the Closing Date of any representation or warranty of the
Company contained in or made pursuant to this Agreement or any of the
Ancillary Agreements, or (ii) the existence of any condition, event or fact
constituting, or which with notice or passage of time, or both, would
constitute a default in the observance of any of the Company=s undertakings
or covenants under or pursuant to the Articles of Incorporation. The Company
shall also pay all reasonable attorneys= and accountants= fees and costs and
court costs incurred by the Purchaser in enforcing the indemnification
provided for in this Section 13.3(a). Notwithstanding the foregoing, the
Company expressly agrees and acknowledges that the right of indemnification
granted herein to the Purchaser shall not be deemed to be the exclusive remedy
available to the Purchaser for any of the matters described in this Section
13.3(a).
(b) The Purchaser shall indemnify and hold harmless the Company
against and from any Losses insofar as the Losses (or actions in respect
thereof) arise out of or are based upon the falsity or incorrectness as of the
Closing Date of any representation or warranty of the Purchaser contained in
or made pursuant to this Agreement or any of the Ancillary Agreements. The
Purchaser shall also pay all reasonable attorneys= and accountants= fees and
costs and court costs incurred by the Company in enforcing the indemnification
provided for in this Section 13.3(b).13.4. Notwithstanding the foregoing,
the Purchaser expressly agrees and acknowledges that the right of
indemnification granted herein to the Company shall not be deemed to be the
exclusive remedy available to the Company for any of the matters described in
this Section 13.3(b).
13.4. Assignment. Neither party may assign any of its rights, title,
interest, remedies, powers and duties hereunder without prior written consent
of the other parties hereto. However, the Company hereby consents to the
Purchaser's assignments, at any time or times, of any of the Purchaser's
rights, title, interests, remedies, powers and duties hereunder, whether
evidenced by a writing or not, to any of the Affiliates of the Purchaser that
are Subsidiaries of Conseco, Inc. The Company agrees that it will use its
best efforts to assist and cooperate with the Purchaser in any manner
reasonably requested by the Purchaser to effect such assignments.
13.5. Remedies. TrialThe Purchaser' rights and remedies under this
Agreement shall be cumulative and nonexclusive of any other rights and
remedies which the Purchaser may have under any other agreement, including
without limitation, the Ancillary Agreements, by operation of law or
otherwise.
13.6. Waiver of Jury Trial. The parties hereto waive all right to
trial by jury in any action or proceeding to enforce or defend any rights
under this Agreement or the Ancillary Agreements.
13.7. Arbitration. If a dispute arises as to interpretation of this
Agreement, it shall be decided finally by three arbitrators in an arbitration
proceeding conforming to the Rules of the American Arbitration Association
applicable to commercial arbitration. The arbitrators shall be appointed as
follows: one by the Company, one by the Purchaser and the third by the said
two arbitrators, or, if they cannot agree, then the third arbitrator shall be
appointed by the American Arbitration Association. The third arbitrator shall
be chairman of the panel and shall be impartial. The arbitration shall take
place in Carmel, Indiana. The decision of a majority of the Arbitrators shall
be conclusively binding upon the parties and final, and such decision shall be
enforceable as a judgment in any court of competent jurisdiction. Each party
shall pay the fees and expenses of the arbitrator appointed by it, its counsel
and its witnesses. The parties shall share equally the fees and expenses of
the impartial arbitrator.
13.8. Severability. Wherever possible, each provision of this
Agreement shall be interpreted in such manner as to be effective and valid
under applicable law, but if any provision of this Agreement shall be
prohibited by or invalid under applicable law, such provision shall be
ineffective to the extent of such prohibition or invalidity, without
invalidating the remainder of such provision or the remaining provisions of
this Agreement.
13.9. Parties. This Agreement and the other Ancillary Agreements
shall be binding upon, and inure to the benefit of, the successors of the
Company, and the successors and assigns of the Purchaser.
13.10. Conflict of Terms. Except as otherwise provided in this
Agreement or any of the Ancillary Agreements by specific reference to the
applicable provisions of this Agreement, if any provision contained in this
Agreement is in conflict with, or inconsistent with, any provision in any of
the Ancillary Agreements, the provision contained in this Agreement shall
govern and control.
13.11. GOVERNING LAW. EXCEPT AS OTHERWISE EXPRESSLY PROVIDED IN THIS
AGREEMENT OR IN ANY OF THE ANCILLARY AGREEMENTS, IN ALL RESPECTS, INCLUDING
ALL MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE, THIS AGREEMENT AND THE
OBLIGATIONS ARISING HEREUNDER SHALL BE GOVERNED BY, AND CONSTRUED AND ENFORCED
IN ACCORDANCE WITH, THE LAWS OF THE STATE OF INDIANA APPLICABLE TO CONTRACTS
MADE AND PERFORMED IN SUCH STATE, WITHOUT REGARD TO THE PRINCIPLES THEREOF
REGARDING CONFLICT OF LAWS, AND ANY APPLICABLE LAWS OF THE UNITED STATES OF
AMERICA. THE PURCHASER AND THE COMPANY AGREE TO SUBMIT TO PERSONAL
JURISDICTION AND TO WAIVE ANY OBJECTION AS TO VENUE IN THE FEDERAL OR STATE
COURTS IN THE COUNTY OF ▇▇▇▇▇▇, STATE OF INDIANA. SERVICE OF PROCESS ON THE
COMPANY OR THE PURCHASER IN ANY ACTION ARISING OUT OF OR RELATING TO THIS
AGREEMENT OR ANY OF THE ANCILLARY AGREEMENTS SHALL BE EFFECTIVE IF MAILED TO
SUCH PARTY AT THE ADDRESS LISTED IN SECTION 13.9 HEREOF. NOTHING HEREIN SHALL
PRECLUDE THE PURCHASER OR THE COMPANY FROM BRINGING SUIT OR TAKING OTHER LEGAL
ACTION IN ANY OTHER JURISDICTION.
13.12. Notices. Except as otherwise provided herein, whenever it is
provided herein that any notice, demand, request, consent, approval,
declaration or other communication shall or may be given to or served upon any
of the parties by another, or whenever any of the parties desires to give or
serve upon another any communication with respect to this Agreement, each such
notice, demand, request, consent, approval, declaration or other communication
shall be in writing and either shall be delivered in person with receipt
acknowledged or by registered or certified mail, return receipt requested,
postage prepaid, or telecopied and confirmed by telecopy answer back,
addressed as follows:
(a) If to the Purchaser at:
▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
(b) If to the Company at:
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Chief Financial Officer
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
With copies to:
▇▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
and
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇
Suite ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
or at such other address as may be substituted by notice given as herein
provided. The giving of any notice required hereunder may be waived in
writing by the party entitled to receive such notice. Every notice, demand,
request, consent, approval, declaration or other communication hereunder shall
be deemed to have been duly given or served on the date on which personally
delivered, with receipt acknowledged, or upon receipt if the same shall have
been telecopied and confirmed by telecopy answer back or three (3) Business
Days after the same shall have been deposited in the United States mail.
Failure or delay in delivering copies of any notice, demand, request, consent,
approval, declaration or other communication to the persons designated above
to receive copies shall in no way adversely affect the effectiveness of such
notice, demand, request, consent, approval, declaration or other
communication.
13.13. Survival. The representations and warranties of the Company in
this Agreement shall survive the execution, delivery and acceptance hereof by
the parties hereto and the Closing for a period ending on the date no amounts
are owing under the Debenture.
13.14. Section Titles. The Section titles and Table of Contents
contained in this Agreement are and shall be without substantive meaning or
content of any kind whatsoever and are not a part of the agreement between the
parties hereto.
13.15. Counterparts. This Agreement may be executed in any number of
separate counterparts, each of which shall, collectively and separately,
constitute one agreement.
13.16. ▇▇▇▇▇▇ Debentures. Purchaser acknowledge and agree that the
▇▇▇▇▇▇ Debentures shall be on a parity with the rights of the Purchaser under
the Debentures without priority or distinction, and that no payments of
principal or interest on the Debentures shall be made by the Company unless a
pro rata payment of principal and interest is paid to the holders of the
▇▇▇▇▇▇ Debentures outstanding from time to time.
IN WITNESS WHEREOF, this Agreement has been duly executed as of the date
first written above.
CAPITOL AMERICAN LIFE
INSURANCE COMPANY
As the Purchaser
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
GENERAL ACCEPTANCE CORPORATION
As the Company
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Exhibit 10.74
THIS SUBORDINATED CONVERTIBLE NOTE HAS NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE OR OTHER SECURITIES LAWS AND
MAY NOT BE OFFERED, SOLD, TRANSFERRED OR ASSIGNED EXCEPT (I) PURSUANT TO
REGISTRATIONS THEREOF UNDER SUCH LAWS, OR (II) IF, IN THE OPINION OF COUNSEL
REASONABLY SATISFACTORY TO GENERAL ACCEPTANCE CORPORATION THE PROPOSED
TRANSFER MAY BE EFFECTED IN COMPLIANCE WITH APPLICABLE SECURITIES LAWS WITHOUT
SUCH REGISTRATIONS.
THIS SUBORDINATED CONVERTIBLE NOTE IS SUBJECT TO A SUBORDINATION AGREEMENT
DATED APRIL 11, 1997, IN FAVOR OF GENERAL ELECTRIC CAPITAL CORPORATION.
12% SUBORDINATED CONVERTIBLE NOTE
$10,000,000 Dated: April 11, 1997
For value received, General Acceptance Corporation, an Indiana
corporation with its principal offices at ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇ ▇▇▇▇▇ (▇▇▇▇▇▇@), hereby promises to pay to the order of CAPITOL
AMERICAN LIFE INSURANCE COMPANY, an Arizona life insurance company with its
principal offices at ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇,
or its assigns (collectively, the AHolder@), at its principal office or at
such other place as the Holder may direct in writing to the Maker, in lawful
money of the United States of America, the principal amount of Ten Million
Dollars ($10,000,000) and interest, as provided herein, all without relief
from valuation or appraisement laws. This Note is being delivered in
connection with the Securities Purchase Agreement by and among the Maker and
the Holder, dated as of April 11, 1997 (ASecurities Purchase Agreement@).
The terms and provisions of the Securities Purchase Agreement shall govern the
terms and provisions of this Note and any conflict between this Note and the
Securities Purchase Agreement shall be resolved by the Securities Purchase
Agreement.
1. Payment of Principal. Subject to acceleration as provided for
elsewhere in this 12% Subordinated Convertible Note (ANote@), the Maker shall
pay to the Holder the principal balance of this Note on April 11, 2000, plus
all accrued and unpaid interest on the full principal balance of this Note as
of that date.
2. Interest. Interest on the unpaid principal balance hereof
existing from time to time shall accrue at the rate of 12% per annum;
provided, however, interest shall accrue at the rate of 15% per annum so long
as an AEvent of Default,@ as specified in Section 4(a), exists hereunder.
Interest shall be calculated on the basis of actual daily balances of
outstanding principal for the exact number of days the principal remains
outstanding and shall be computed on the basis of a 360-day year. Interest
shall be due and payable on a quarterly basis, on March 31, June 30, September
30 and December 31.
3. Prepayment. The Maker may not prepay all or any portion of the
unpaid principal balance hereof or accrued interest without the consent of
Holder.
G:\LEGAL\KSK\MISC\GACC-REV.3
4. Default and Remedy.
(a) An AEvent of Default@ under this Note shall mean the occurrence of any
of the following events: (i) the Maker defaults in the payment of principal of
or interest on this Note when due and the Maker does not cure that default
within 5 days after the due date; (ii) the Maker defaults in the performance
of any obligation under this Note (other than the payment described in the
immediately preceding clause) and the does not cure that default within 30
days after receipt by the Maker of written notice from the Holder; (iii) an
AEvent of Default@ or a ATriggering Event@, both as defined in the Securities
Purchase Agreement, shall occur; or (iv) the Maker commences proceedings in
any court under the United States Bankruptcy Code, or any other debtors'
relief or insolvency act, whether state or federal (the ABankruptcy Laws@), or
any other person commences proceedings under the Bankruptcy Laws against the
Maker and those proceedings are not stayed or dismissed within 60 days.
(b) If any Event of Default occurs and is continuing, then the Holder
shall have the right and option to declare, by notice in writing sent by
registered or certified mail to the Maker, the full unpaid principal balance
hereof, together with all accrued and unpaid interest thereon, immediately due
and payable without further demand, notice, or presentment for payment.
Alternatively, if a Triggering Event occurs, the Holder shall have the right
and option to cause the Company to redeem this Note pursuant to the procedure
set forth in Section 10.3 of the Securities Purchase Agreement.
(c) If this Note is collected or attempted to be collected by the
initiation or prosecution of any suit or through any bankruptcy court, or by
any judicial proceeding, or is placed in the hands of attorneys for
collection, then the Maker shall pay, in addition to all other amounts owing
hereunder, all court costs and reasonable attorney's fees incurred by the
Holder.
5. Subordination.
(a) Subordination to Senior Debt. Notwithstanding anything to the
contrary contained in this Note, the Maker covenants and agrees, and the
Holder by acceptance of this Note likewise covenants and agrees, that the
Maker's indebtedness under this Note shall be junior and subordinate to the
Senior Indebtedness (as hereafter defined) to the extent and in the manner set
forth in this Section 5, except to the extent otherwise agreed to in writing
by the Holder and any Senior Lender (as hereinafter defined) with respect to
the Senior Indebtedness held by or payable to that Senior Lender. Each
subsection of this Section 5 shall be given independent effect so that if a
particular payment or action is prohibited by any one of these subsections, it
shall be prohibited although it otherwise would not be prohibited by another
subsection.
(b) Payment Default on Senior Indebtedness. If at any time a default
occurs in the payment when due (whether at maturity or upon acceleration or
mandatory prepayment, or on any principal installment payment date or interest
payment date, or otherwise) (APayment Default@) of any Senior Indebtedness,
then at all times thereafter until (i) the Payment Default has been cured,
(ii) the Payment Default or the benefits of this sentence have been waived in
writing by or on behalf of the Senior Lenders holding that Senior
Indebtedness, or (iii) payment in full of all affected Senior Indebtedness,
the Maker shall not, directly or indirectly, make any Distribution of Assets
(as hereinafter defined) or Payment (as hereinafter defined) with respect to
this Note.
(c) Dissolution, Liquidation or Reorganization of Maker. In the event
of any insolvency, bankruptcy or receivership case or proceeding or any
dissolution, winding up, liquidation, reorganization or other similar
proceeding relating to the Maker, its property or its operations (whether
voluntary or involuntary and whether in bankruptcy, insolvency or receivership
proceedings or otherwise), upon an assignment for the benefit of creditors, or
any other marshaling of the assets of the Maker, then payment in full of all
Senior Indebtedness then or thereafter to become due shall occur before the
Holder shall be entitled to receive or retain any Distribution of Assets or
Payment with respect to this Note. In any such proceedings, any Distribution
of Assets or Payment to which the Holder would be entitled if this Note were
not subordinated to the Senior Indebtedness shall be paid by the Maker or the
agent or other person making such payment or distribution, or by the Holder if
received by the Holder, directly to each Senior Lender, pro forma, to the
extent necessary to make payment in full of all Senior Indebtedness, after
giving effect to any concurrent payment or distribution to or for the benefit
of the Senior Lenders.
(d) Subrogation. No Distribution of Assets or Payment to which the
Holder would have been entitled except for the provisions of this Section 5
and which are received by or paid over to the Senior Lenders or their
Representative (as hereinafter defined) shall, as between the Maker and its
creditors other than the Senior Lenders and the Holder, be deemed to be a
payment by the Maker to the Senior Lenders or on account of the Senior
Indebtedness, and the Holder shall be subrogated (without any duty on the part
of the Senior Lenders to warrant, create, effectuate, preserve or protect such
subrogation) to the then or thereafter existing rights of the Senior Lenders
to receive Distributions of Assets or payments made on the Senior Indebtedness
until this Note shall be paid in full.
(e) Payments Held in Trust. If the Holder receives any Distribution of
Assets or Payment which the Holder is not entitled to retain under the
provisions of this Section 5, any such Distribution of Assets or Payment so
received shall be held in trust for the Senior Lenders, shall not be
commingled with any other assets of the Holder, and shall be paid to the
Senior Lenders, pro rata, to the extent necessary to make payment in full,
after giving effect to any concurrent payment or distribution to or for the
benefit of the Senior Lenders.
(f) Changes in Senior Indebtedness. Any Senior Lender may at any time
and from time to time with notice to the Holder: (i) extend, renew, modify,
waive or amend the terms of the Senior Indebtedness; (ii) sell, exchange,
release or otherwise deal with any property pledged, mortgaged or otherwise
securing the Senior Indebtedness; (iii) release any guarantor or any other
person liable in any manner for the Senior Indebtedness or amend or waive the
terms of the Senior Indebtedness; (iv) exercise or refrain from exercising any
rights against the Maker or any other persons; (v) apply in any order any sums
by whomever paid or however to the Senior Indebtedness; and (vi) take any
other action which otherwise might be deemed to impair the Holder's rights.
Any and all of such actions may be taken by the Senior Lenders without
incurring responsibility to the Holder and without impairing or releasing the
Holder's obligations to the Senior Lenders.
(g) Third-Party Beneficiary, Etc.. The foregoing provisions regarding
subordination are solely for the purpose of defining the relative rights of
the Senior Lenders on the one hand and the Holder on the other hand. Such
provisions are for the benefit of the Senior Lenders (and their successors and
assigns) and shall be enforceable by them directly against the Holder except
to the extent otherwise agreed to in writing by the Holder and any other
Senior Lender.
(h) Definitions. As used in this Section 5 (or as elsewhere used in
this Note) the following terms shall have the meanings indicated:
ADistribution of Assets@ means any distribution of assets of the Maker or any
of its subsidiaries of any kind or character, whether a payment, purchase or
other acquisition or retirement for cash, property, or securities, with
respect to the Maker's obligations under this Note.
APayment@ means payment of any obligation now or hereafter existing under this
Note (as it may hereafter be amended, supplemented, or otherwise modified from
time to time), whether created directly or acquired by assignment or
otherwise, and interest and premiums, if any, thereon and all other amounts
payable in respect thereof or in connection therewith.
ARepresentative@ means, with respect to any Senior Indebtedness, the trustee,
agent, or other representative for one or more of the Senior Lenders, if any,
designated in the indenture, agreement or document creating, evidencing or
governing such Senior Indebtedness or pursuant to which it was issued, or
otherwise designated by the holders of such Senior Indebtedness.
ASenior Indebtedness@ shall have the meaning specified in the Securities
Purchase Agreement.
ASenior Lender@ or ASenior Lenders@ means one or more of the holders of Senior
Indebtedness.
6. Conversion.
(a) The Holder may, at the Holder=s option, at any time, and from time to
time, prior to payment in full of this Note, convert the outstanding Principal
Amount of this Note and any accrued but unpaid interest due pursuant to
Section 2 above (the AConversion Amount@), in whole or in part (but only
into full shares), into fully paid and non-assessable shares of the common
stock, no par value of the Maker (the ACommon Shares@), at a rate equal to the
amount of $3.00 per Common Share (subject to adjustment as set forth in
Section 7) (the AConversion Rate@). In order to exercise this conversion
right, the Holder must send written notice of the conversion to the Maker at
least 10 days prior to the specified conversion date. On the conversion date
(or as soon thereafter as is reasonably practicable), the Maker shall issue to
the Holder a share certificate for the Common Shares acquired upon conversion.
(c) Notwithstanding any other provisions of this Section 6 to the
contrary, the conversion rights of the Holder shall be subject to compliance
with all applicable federal and state securities laws, and the Holder agrees
to execute all required agreements and documents required by the Maker to
establish compliance with such laws.
(d) The Maker shall at all times reserve and keep available and free of
preemptive rights out of its authorized but unissued Common Shares, solely for
the purpose of issuance upon conversion of the Note, the number of Common
Shares as shall from time to time be sufficient to effect the conversion of
the Note, and if at any time the number of authorized but unissued Common
Shares shall not be sufficient to effect the conversion of the Note, the Maker
shall take the corporate action necessary to increase the number of its
authorized Common Shares to a number sufficient for this purpose. Maker
further covenants that all shares that may be issued upon the conversion of
this Note and payment of the Conversion Price, all as set forth herein, will
be free from all taxes, liens and charges in respect of the issue thereof.
Maker agrees that its issuance of this Note shall constitute full authority to
its officers who are charged with the duty of executing stock certificates to
execute and issue the necessary certificates for the shares upon the
conversion of this Note.
7. Adjustments.
(a) Reorganization, Merger or Sale of Assets
If at any time while this Note, or any portion thereof, is outstanding
there shall be (i) a reorganization (other than a combination,
reclassification, exchange or subdivision of shares otherwise provided for
herein), (ii) a merger or consolidation with or into another corporation in
which the Maker is not the surviving entity, or a reverse triangular merger in
which the Maker is the surviving entity but the shares of the Maker=s capital
stock outstanding immediately prior to the merger are converted by virtue of
the merger into other property, whether in the form of securities, cash or
otherwise, or (iii) a sale or transfer of the Maker=s properties and assets
as, or substantially as, an entirety to any other person, then, as a part of
such reorganization, merger, consolidation, sale or transfer, lawful provision
shall be made so that the holder of this Note shall thereafter be entitled to
receive upon conversion of the Notes the number of shares of stock or other
securities or property of the successor corporation resulting from such
reorganization, merger, consolidation, sale or transfer that a holder of the
shares deliverable upon conversion of this Note would have been entitled to
receive in such reorganization, consolidation, merger, sale or transfer if
this Note had been converted immediately before such reorganization, merger,
consolidation, sale or transfer, all subject to further adjustment as provided
in this Section 7. The foregoing provisions of this Section 7(a) shall
similarly apply to successive reorganizations, consolidations, mergers, sales
and transfers and to the stock or securities of any other corporation that are
at the time receivable upon the conversion of this Note. If the per-share
consideration payable to Holder for shares in connection with any such
transaction is in a form other than cash or marketable securities, then the
value of such consideration shall be determined in good faith by the Maker=s
Board of Directors. In all events, appropriate adjustment (as determined in
good faith by the Maker=s Board of Directors) shall be made in the application
of the provisions of this Note with respect to the rights and interests of
Holder after the transaction, to the end that the provisions of this Note
shall be applicable after that event, as near as reasonably may be, in
relation to any shares or other property deliverable after that event upon
conversion of this Note.
(b) Reclassification.
If the Maker, at any time while this Note, or any portion thereof,
remains outstanding, by reclassification of securities or otherwise, shall
change any of the securities as to which conversion rights under this Note
exist into the same or a different number of securities of any other class or
classes, this Note shall thereafter represent the right to acquire such number
and kind of securities as would have been issuable as the result of such
change with respect to the securities that were subject to the conversion
rights under this Note immediately prior to such reclassification or other
change and the Conversion Price or number of shares received upon such
conversion shall be appropriately adjusted, all subject to further adjustment
as provided in this Section 7.
(c) Split, Subdivision or Combination of Shares.
If the Maker at any time while this Note, or any portion thereof, remains
outstanding shall split, subdivide or combine the securities as to which
conversion rights under this Note exist, into a different number of securities
of the same class, the number of shares issuable upon conversion shall be
proportionately decreased in the case of a split or subdivision or
proportionately increased in the case of a combination.
(d) Adjustments for Dividends in Stock or Other Securities or Property.
If while this Note, or any portion hereof, remains outstanding and
unexpired the holders of the securities as to which conversion rights under
this Note exist at the time shall have received, or, on or after the record
date fixed for the determination of eligible stockholders, shall have become
entitled to receive, without payment therefor, other or additional stock or
other securities or property (other than cash) of the Maker by way of
dividend, then and in each case, this Note shall represent the right to
acquire upon conversion, in addition to the number of shares of the security
receivable upon conversion of this Note, and without payment of any additional
consideration therefor, the amount of such other or additional stock or other
securities or property (other than cash) of the Maker that such holder would
hold on the date of such conversion had it been the holder of record of the
security receivable upon conversion of this Note on the date hereof and had
thereafter, during the period from the date hereof to and including the date
of such conversion, retained such shares and/all other additional stock, other
securities or property available by this Note as aforesaid during such period,
giving effect to all adjustments called for during such period by the
provisions of this Section 7.
(e) Issuance of Shares Below Conversion Price.
(1) If while this Note, or any portion hereof, remains outstanding,
the Maker shall offer and sell Additional Shares of Common Stock (as
hereinafter defined) for consideration per share less than the Conversion
Price in effect immediately prior to the issuance of such Additional Shares of
Common Stock (except upon the exercise of stock options granted pursuant to
the Company=s Stock Option Plan approved by the Board), the Conversion Price
in effect immediately prior to each such issuance shall forthwith be adjusted
upon such issuance to a price equal to the price paid per share for such
Additional Shares of Common Stock.
(2) For the purpose of the calculations provided in this Section
7(e), if at any time or from time to time after the date hereof the Maker
shall issue any rights or options for the purchase of, or stock or other
securities convertible into, Additional Shares of Common Stock (such Common
Stock or securities being hereinafter referred to as AConvertible
Securities@), then, and in each case, if the Effective Price (as hereinafter
defined) of such rights, options or Convertible Securities shall be less than
the Conversion Price, the Maker shall be deemed to have issued at the time of
the issuance of such rights or options or Convertible Securities the maximum
number of Additional Shares of Common Stock issuable upon exercise or
conversion thereof and to have received as consideration for the issuance of
such shares an amount equal to the total amount of the consideration, if any,
payable to the Maker upon exercise or conversion of such options or rights.
AEffective Price@ shall mean the quotient determined by dividing the total of
all of such consideration by such maximum number of Additional Shares of
Common Stock. No further adjustment shall be made as a result of the actual
issuance of Additional Shares of Common Stock on the exercise of any such
rights or options or the conversion of any such Convertible Securities. In
the case of Convertible Securities which have a conversion price which is
based, in whole or in part, upon a discount to the market price or value of
the Common Stock, then for the purposes of calculating the Effective Price,
the consideration shall be deemed to include the minimum conversion price
payable to the Maker.
If any such rights or options or the conversion privilege represented by
any such Convertible Securities shall expire prior to the Maturity hereof
without having been exercised, the adjustment to the number of shares
available hereunder upon the issuance of such rights, options or Convertible
Securities shall be readjusted to the number of shares that would have been in
effect had an adjustment been made on the basis that the only Additional
Shares of Common Stock so issued were the Additional Shares of Common Stock,
if any, actually issued or sold on the exercise of such rights or options or
rights of conversion of such Convertible Securities, and such Additional
Shares of Common Stock, if any, were issued or sold for the consideration
actually received by the Maker for the granting of all such rights or options,
whether or not exercised, plus the consideration received for issuing or
selling the Convertible Securities actually converted plus the consideration,
if any, actually received by the Maker on the conversion of such Convertible
Securities.
(3) For the purpose of the calculations provided for in this Section
7(e), if at any time or from time to time after the date hereof the Maker
shall issue any rights or options for the purchase of Convertible Securities,
then, in each such case, if the Effective Price thereof is less than the then
Conversion Price, the Maker shall be deemed to have issued at the time of the
issuance of such rights or options the maximum number of Additional Shares of
Common Stock issuable upon conversion of the total amount of Convertible
Securities covered by such rights or options and to have received as
consideration for the issuance of such Additional Shares of Common Stock an
amount equal to the amount of consideration, if any, received by the Maker for
the issuance of such rights or options, plus the consideration, if any,
payable to the Maker upon the conversion of such Convertible Securities.
AEffective Price@ shall mean the quotient determined by dividing the total
amount of such consideration by such maximum number of Additional Shares of
Common Stock. No further adjustment of such Conversion Price adjusted upon
the issuance of such rights or options shall be made as a result of the actual
issuance of the Convertible Securities upon the exercise of such rights or
options or upon the actual issuance of Additional Shares of Common Stock upon
the conversion of such Convertible Securities.
(4) The term AAdditional Shares of Common Stock@ as used herein shall
mean all shares of Common Stock issued or deemed issued by the Maker after the
date hereof, other than (i) securities issued pursuant to or in connection
with the terms of the Securities Purchase Agreement; (ii) shares of Common
Stock issued upon conversion of convertible securities or the exercise of
common stock purchase warrants outstanding as of the date hereof; (iii) shares
of Common Stock issuable to employees, officers or directors pursuant to the
Maker=s stock option plan; (iv) shares of Common Stock issued or issuable to
directors in connection with their service as directors; (v) shares of Common
Stock issued or issuable to directors, officers or employees for services
rendered or to be rendered pursuant to arrangements approved by the Board of
Directors; and (vii) shares of Common Stock issued in connection with a
business combination, merger, consolidation, asset acquisition or the
acquisition of the business of another corporation (through the purchase of
stock or assets) approved by the Board of Directors and all of the Conseco
Directors (as defined in the Securities Purchase Agreement).
(f) No Impairment.
Maker will not, by any voluntary action, avoid or seek to avoid the
observance or performance or any of the terms to be observed or performed
hereunder by Maker, but will at all times in good faith assist in the carrying
out of all the provisions of this Section 7 and in the taking of all such
action as may be necessary or appropriate in order to protect the rights of
Holder against impairment.
8. Notices. (a) Whenever the number of shares issuable or the
Conversion Price hereunder shall be adjusted pursuant to Section 7 hereof,
the Maker shall issue a certificate signed by its Chief Financial Officer
setting forth, in reasonable detail, the event requiring the adjustment, the
amount of the adjustment, the method by which such adjustment was calculated,
and the Conversion Price and number of shares purchasable hereunder after
giving effect to such adjustment, and shall cause a copy of such certificate
to be mailed (by first-class mail, postage prepaid) to Holder.
(b) All notices, requests, demands, or other communications that are
required or may be given pursuant to the terms of this Note shall be in
writing and delivery shall be deemed sufficient and to have been duly given on
the date of service if delivered personally or by facsimile transmission if
receipt is confirmed to the party to whom notice is to be given or on the
third day after mailing if mailed by first-class mail, return receipt
requested, and properly addressed as follows:
If to the Maker, to:
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Chief Financial Officer
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Copies to:
▇▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
and
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇
Suite ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
If to the Holder, to:
▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
or to such other address as may be specified in writing by any of the above.
9. Remedies. The remedies provided by this Note shall be
cumulative, and shall be in addition to and not exclusive of other remedies
available under or pursuant to the Share Purchase Agreement, at law, or in
equity. The exercise or waiver by the Holder of any right or remedy available
under this Note shall not be deemed to be a waiver of any other right or
remedy available under this Note, the Share Purchase Agreement, at law, or in
equity.
10. Miscellaneous.
(a) Whenever used herein, the singular includes the plural and the plural
includes the singular. The term ▇▇▇▇▇▇@ means the corporation named in the
opening paragraph hereof and its successors and assigns.
(b) Indiana law shall govern this interpretation, construction, and
enforcement of this Note and all transactions contemplated hereby,
notwithstanding any state's choice of law rules to the contrary. Any
litigation related to this Note may be maintained only in the federal district
court for the Southern District of Indiana, Indianapolis Division (or any
successor jurisdiction) or in an Indiana state court in ▇▇▇▇▇▇▇▇ County or one
of the counties immediately contiguous to ▇▇▇▇▇▇▇▇ County, and each party
hereby irrevocably consents and submits to the jurisdiction of that federal or
state court and irrevocably waives any objection the party may have based upon
improper venue, forum non conveniens, or other similar doctrines or rules.
(c) Maker and any other party now or hereafter liable for the payment of
this Note in whole or in part, hereby severally (i) waive demand, presentment
for payment, notice of nonpayment, protest, notice of protest, notice of
intent to accelerate, notice of acceleration and all other notice, filing of
suit and diligence in collecting this Note, (ii) agree to the release of any
party primarily or secondarily liable hereon, (iii) agree that the Holder
shall not be required first to institute suit or exhaust its remedies hereon
against Maker or others liable or to become liable hereon or to enforce its
rights against them, and (iv) consent to any extension or postponement of time
of payment of this Note and to any other indulgence with respect hereto
without notice thereof to any of them.
(d) Holder, by acceptance hereof, acknowledges that this Note and the
shares to be issued upon conversion hereof are being acquired solely for
Holder=s own account and not as a nominee for any other party, and for
investment, and that Holder will not offer, sell or otherwise dispose of this
Note or any shares to be issued upon conversion hereof except under
circumstances that will not result in a violation of applicable federal and
state securities laws. Upon exercise of this Note, Holder shall, if requested
by Maker, confirm in writing, in a form satisfactory to Maker, that the shares
so purchased are being acquired solely for Holder=s own account and not as a
nominee for any other party, for investment, and not with a view toward
distribution or resale.
All shares issued upon exercise hereof shall be stamped or imprinted with
a legend in substantially the following form (in addition to any legend
required by state securities laws):
THE SECURITIES REPRESENTED HEREBY HAVE BEEN ACQUIRED FOR INVESTMENT AND HAVE
NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933. SUCH SECURITIES AND ANY
SECURITIES OR SHARES ISSUED UPON CONVERSION THEREOF MAY NOT BE SOLD OR
TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN EXEMPTION THEREFROM
UNDER SAID ACT.
Holder shall be entitled to the registration rights set forth in a
certain Registration Rights Agreement of even date herewith by and between
Maker and Holder.
(e) The captions of the sections of this Note are solely for convenient
reference and shall not be deemed to affect the meaning or interpretation of
any provision of this Note.
IN WITNESS WHEREOF, the Maker has executed, acknowledged, and delivered
this Note as of the day and year first above written.
GENERAL ACCEPTANCE CORPORATION
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Accepted and agreed to this 11th day of April, 1997:
CAPITOL AMERICAN LIFE INSURANCE COMPANY
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Exhibit 10.75
EMPLOYMENT AGREEMENT AND AGREEMENT NOT TO COMPETE
THIS AGREEMENT, is entered into this 11th day of April, 1997, by and
between General Acceptance Corporation, an Indiana corporation, with principal
offices at ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇ (hereinafter referred
to as the "Corporation") and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, residing at ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇ (hereinafter referred to as the "Employee").
RECITALS
A. The Corporation is principally engaged in (i) the business of
financing non-prime automobile loans in the United States originated by
non-affiliated dealers and company operated retail sales lots, and (ii) the
business of selling automobiles and operating retail automobile sales lots
(collectively the "Business").
B. Employee has been the Chairman of the Board of Directors and Chief
Executive Officer of the Corporation for several years.
C. Concurrently herewith, the Corporation is issuing $10,000,000 12%
Subordinated Convertible Notes to Capitol American Life Insurance Company as
purchaser pursuant to a Securities Purchase Agreement, Registration Rights
Agreement, and Stockholders Agreement each of even date herewith (hereinafter
the "Financing Documents").
D. The Financing Documents require that the Corporation enter into
this Employment Agreement and Agreement Not to Compete with the Employee.
AGREEMENT
NOW, THEREFORE, in consideration of the recitals, and the mutual
covenants and undertakings herein contained, the parties hereto mutually agree
as follows:
1. Employment and Term. The Corporation agrees to continue the
employment of the Employee as the Chairman of the Board of Directors and Chief
Executive Officer of the Corporation until the earlier to occur of April 11,
1999, the voluntary retirement of Employee, the permanent disability of
Employee, or the death of Employee. Unless the Corporation gives the Employee
not less than ninety (90) days prior written notice of its intention not to
renew this Agreement, this Agreement shall be automatically renewed for an
additional twelve (12) months commencing at the expiration of the original
term upon the same terms and conditions herein set forth.
2. Employee's Duties. During the term of this Agreement, the
Employee, while employed by the Corporation, shall continue to occupy his
present offices and shall have such responsibilities and perform such duties
as are commensurate with the duties of a Chairman of the Board of Directors
and Chief Executive Officer in accordance with past practice.
3. Compensation. As compensation for Employee's services, the
Corporation shall pay to Employee the following:
(a) A base salary of One Hundred Twenty Five Thousand Dollars
($125,000) per year payable in twenty-six (26) by-weekly installments, less
applicable withholding for income and employment taxes as required by law.
(b) An annual bonus payable within seventy-five (75) days following
the end of each fiscal year of the Corporation in an amount equal to 3-1/2% of
the consolidated net income of the Corporation for the preceding fiscal year
before taxes and bonuses in excess of Five Million Dollars ($5,000,000), which
shall be computed each year on a non-cumulative basis. The bonus payable for
the partial year during which this Agreement expires shall be a pro rata
amount based upon the consolidated net income of the Corporation for the
entire year.
(c) A qualified stock option pursuant to the Corporation's Employee
Stock Option Plan to purchase 30,000 shares of the Corporation's capital stock
to be granted to the Employee each year commencing January 1, 1998, at a price
equal to the fair market value of such shares determined in accordance with
the Plan if the shares of the Corporation are publicly traded, and if not, at
the book value of such shares as of the date of the grant of option. Such
options shall vest in the Employee one (1) year following the date the options
are granted provided the Employee remains employed by the Corporation or is a
member of the Corporation's Board of Directors. Vested options may be
exercised by the Employee for a period of ten (10) years from the date of
grant.
4. Fringe Benefits. In addition to the compensation provided for
in paragraph 3 above, Employee shall be entitled to retain his present company
car (or comparable replacement) without expense to the Employee during the
term of this Agreement, and shall receive all other fringe benefits which the
Corporation provides to its executive officers from time to time, including
health, disability, group life insurance, sick pay and paid vacations and
shall be eligible to participate in any pension or profit sharing plan
hereafter established by the Corporation for the benefit of its executive
officers. In addition, the Company shall continue to pay the premiums on the
life insurance policy in effect on Employee's life with beneficiaries' rights
as now in existence.
5. Restrictive Covenant During the Term of this Agreement. From
the date hereof until April 11, 1999 (or April 11, 2000 if this Agreement is
renewed pursuant to paragraph 1 hereof):
(a) Employee shall not, directly or indirectly, whether as an
employee, owner, consultant, agent or in any other capacity, engage in the
Business or compete in any manner with the Corporation or any of its
subsidiaries or affiliates in the Business or aid or render services to any
person or entity engaging in any such activity anywhere;
(b) Employee shall not solicit, directly or indirectly, on his own
behalf or on behalf of any person or entity that competes with the Corporation
or any of its subsidiaries or affiliates in the Business, customers of the
Business to whom any sales were or are made;
(c) Employee shall not, directly or indirectly, on his own behalf or
on behalf of any person or entity that competes with the Corporation or any
subsidiaries or affiliates of the Corporation, solicit for employment or
employ, or otherwise seek to establish any contractual relationship with, any
employees, agents or representatives of, or other persons having a contractual
relationship with, the Corporation or any of its subsidiaries or affiliates.
Notwithstanding the foregoing, the Employee shall be permitted to
continue to engage in the Business as an owner, agent or employee of ▇▇▇▇▇▇
Chevrolet-Oldsmobile-Pontiac, Inc. and ▇▇▇▇▇▇ Body Shop, Inc., and shall be
permitted to operate retail sales lots except in cities in which the
Corporation at any time has a retail sales operation or within a sixty (60)
mile radius of such cities.
6. Disclosure of Information. For purposes of this Section 6, the
term "Confidential Information" shall mean any knowledge or information,
written or oral, with respect to the Business of the Corporation and any of
its subsidiaries or affiliates, with the following exceptions: (i) knowledge
or information ascertainable or obtainable from public sources; and (ii)
knowledge or information which is or becomes known to the public other than
through a breach of this Agreement by the Employee. The Employee acknowledges
that as a result of his association with and employment by the Corporation, he
has had and will continue to have access to the Confidential Information,
which has a special and unique nature and value to the Corporation. As a
material inducement to the Corporation to enter into this Agreement and to pay
the Employee the compensation and other benefits provided herein, the Employee
covenants and agrees that he shall not, directly or indirectly, divulge or
disclose to any third party for any purpose whatsoever, any Confidential
Information without the consent of the Corporation and that he will surrender
to the Corporation all such Confidential Information in his possession or
control upon the termination of his employment with the Corporation.
7. Termination of Employment. Nothing contained in this Agreement
shall require the Corporation to continue the employment of the Employee;
provided, however, that if such employment is terminated by the Corporation,
except for Employee's fraud, other willful misconduct in connection with his
employment, or willful breach of this Agreement, the Corporation shall
continue to pay the compensation to the Employee provided for in paragraph 3
hereof in consideration of Employee's covenant not to compete contained in
paragraph 5 hereof until April 11, 1999 (or April 11, 2000 if this Agreement
is renewed pursuant to paragraph 1 hereof). In the event of Employee's death
or permanent disability during the term of this Agreement, the Employee's
compensation shall continue to be paid by the Corporation for a period of
three (3) months, or until the earlier expiration of the term of this
Agreement pursuant to paragraph 1 hereof, to his surviving spouse, and if
none, to the Employee's estate.
8. Remedies. Employee recognizes that a violation of the
restrictive covenant contained in this Agreement will irreparably damage
Corporation, that money damages are not likely to be an adequate remedy and
that for a breach of said covenant, the Corporation shall be entitled to an
injunction to prevent the continuation of such breach.
9. Attorneys' Fees and Other Litigation Costs. If the Corporation
or the Employee violates any term of this Agreement, the defaulting party
shall reimburse the non-defaulting party for all reasonable attorneys' fees
and litigation costs incurred to enforce, or recover damages for the breach
of, this Agreement.
10. Survival of Obligations. The obligations of this Agreement
shall survive the termination of Employee's employment with Corporation.
11. No Prior Contrary Representations or Agreements. This
Agreement supersedes any and all prior proposals, representations, or
agreements, oral or written, insofar as any such proposal, representation or
agreement might be determined to be inconsistent with or to limit the terms or
applications of this Agreement.
12. Waiver, Modification and Amendment. A failure to insist upon
or enforce compliance with any term of this Agreement shall not constitute a
waiver or relinquishment of any such term, and the term shall remain in full
force and effect. This Agreement may not be waived, changed, modified,
abandoned, or terminated, in whole or in part, except by a written instrument
signed by a duly authorized representative of the Corporation and accepted by
Employee.
13. Successors. This Agreement shall be binding upon the
Corporation and the Employee's successors, assigns, executors, administrators,
and personal representatives, but may not be assigned by Employee.
14. Headings. The headings in this Agreement are for convenience
only and shall not be deemed to limit the content of or to interpret the
meaning of this Agreement.
15. Governing Law. This Agreement and its performance shall be
subject to and governed by the laws of the State of Indiana.
16. Severability. If any word or other term of this Agreement, or
if any construction or application of any term of this Agreement, is held to
be unenforceable or invalid for any reason, then the validity of any remaining
construction or application of that term shall not be affected, and the rights
or obligations of each of the parties shall be construed and enforced as if
the contract did not contain such invalid term, or as the case may be, invalid
construction or application of such term; provided, however, that such
resulting construction and enforcement shall be generally consistent with the
basic purposes of this Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first above written.
GENERAL ACCEPTANCE CORPORATION
By:_/s/ ▇▇▇▇▇▇ ▇. Algood______
Title:_Chief Executive Officer____
______________________________
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
AGREEMENT OF PURCHASER
The terms and provisions of this Agreement are approved this 11th day of
April, 1997.
CAPITOL AMERICAN LIFE INSURANCE
COMPANY
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇
Exhibit 10.76
EMPLOYMENT AGREEMENT AND AGREEMENT NOT TO COMPETE
THIS AGREEMENT, is entered into this 11th day of April, 1997, by and
between General Acceptance Corporation, an Indiana corporation, with principal
offices at ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇ (hereinafter referred
to as the "Corporation") and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, residing at ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇ (hereinafter referred to as the
"Employee").
RECITALS
A. The Corporation is principally engaged in (i) the business of
financing non-prime automobile loans in the United States originated by
non-affiliated dealers and company operated retail sales lots, and (ii) the
business of selling automobiles and operating retail automobile sales lots
(collectively the "Business").
B. Employee is the President and Chief Operating Officer of the
Corporation.
C. Concurrently herewith, the Corporation is issuing $10,000,000 12%
Subordinated Convertible Notes to Capitol American Life Insurance Company as
purchaser pursuant to a Securities Purchase Agreement, Registration Rights
Agreement, and Stockholders Agreement each of even date herewith (hereinafter
the "Financing Documents").
D. The Financing Documents require that the Corporation enter into
this Employment Agreement and Agreement Not to Compete with the Employee.
AGREEMENT
NOW, THEREFORE, in consideration of the recitals, and the mutual
covenants and undertakings herein contained, the parties hereto mutually agree
as follows:
1. Employment and Term. The Corporation agrees to continue the
employment of the Employee as the President and Chief Operating Officer of the
Corporation until the earlier to occur of April 11, 1999, the permanent
disability of Employee, or the death of Employee. Unless the Corporation
gives the Employee not less than ninety (90) days prior written notice of its
intention not to renew this Agreement, this Agreement shall be automatically
renewed for an additional twelve (12) months commencing at the expiration of
the original term upon the same terms and conditions herein set forth.
2. Employee's Duties. During the term of this Agreement, the
Employee, while employed by the Corporation, shall continue to occupy his
present offices and shall have such responsibilities and perform such duties
as are commensurate with the duties of a President and Chief Operating Officer
in accordance with past practice.
3. Compensation. As compensation for Employee's services, the
Corporation shall pay to Employee the following:
(a) A base salary of Two Hundred Thousand Dollars ($200,000) per year
payable in twenty-six (26) bi-weekly installments, less applicable withholding
for income and employment taxes as required by law.
(b) An annual bonus payable within seventy-five (75) days following
the end of each fiscal year of the Corporation in an amount equal to 3-1/2% of
the consolidated net income of the Corporation for the preceding fiscal year
before taxes and bonuses in excess of Five Million Dollars ($5,000,000), which
shall be computed each year on a non-cumulative basis. The bonus payable for
the partial year during which this Agreement expires shall be a pro rata
amount based upon the consolidated net income of the Corporation for the
entire year.
(c) A qualified stock option pursuant to the Corporation's Employee
Stock Option Plan to purchase 30,000 shares of the Corporation's capital stock
to be granted to the Employee each year commencing January 1, 1998, at a price
equal to the fair market value of such shares determined in accordance with
the Plan if the shares of the Corporation are publicly traded, and if not, at
the book value of such shares as of the date of the grant of option. Such
options shall vest in the Employee at the rate of 20% per year of employment
commencing in the years the options are granted for so long as the Employee
remains employed by the Corporation or is a member of the Corporation's Board
of Directors. Vested options may be exercised by the Employee for a period of
ten (10) years from the date of grant.
4. Fringe Benefits. In addition to the compensation provided for
in paragraph 3 above, Employee shall be entitled to retain his present company
car (or comparable replacement) without expense to the Employee during the
term of this Agreement, and shall receive all other fringe benefits which the
Corporation provides to its executive officers from time to time, including
health, disability, group life insurance, sick pay and paid vacations and
shall be eligible to participate in any pension or profit sharing plan
hereafter established by the Corporation for the benefit of its executive
officers.
5. Restrictive Covenant During the Term of this Agreement. From
the date hereof until April 11, 1999 (or April 11, 2000 if this Agreement is
renewed pursuant to paragraph 1 hereof):
(a) Employee shall not, directly or indirectly, whether as an
employee, owner, consultant, agent or in any other capacity, engage in the
Business or compete in any manner with the Corporation or any of its
subsidiaries or affiliates in the Business or aid or render services to any
person or entity engaging in any such activity anywhere;
(b) Employee shall not solicit, directly or indirectly, on his own
behalf or on behalf of any person or entity that competes with the Corporation
or any of its subsidiaries or affiliates in the Business, customers of the
Business to whom any sales were or are made;
(c) Employee shall not, directly or indirectly, on his own behalf or
on behalf of any person or entity that competes with the Corporation or any
subsidiaries or affiliates of the Corporation, solicit for employment or
employ, or otherwise seek to establish any contractual relationship with, any
employees, agents or representatives of, or other persons having a contractual
relationship with, the Corporation or any of its subsidiaries or affiliates.
Notwithstanding the foregoing, the Employee shall be permitted to
continue to engage in the Business as an owner, agent or employee of ▇▇▇▇▇▇
Chevrolet-Oldsmobile-Pontiac, Inc. and ▇▇▇▇▇▇ Body Shop, Inc., and shall be
permitted to operate retail sales lots except in cities in which the
Corporation at any time has a retail sales operation or within a sixty (60)
mile radius of such cities.
6. Disclosure of Information. For purposes of this Section 6, the
term "Confidential Information" shall mean any knowledge or information,
written or oral, with respect to the Business of the Corporation and any of
its subsidiaries or affiliates, with the following exceptions: (i) knowledge
or information ascertainable or obtainable from public sources; and (ii)
knowledge or information which is or becomes known to the public other than
through a breach of this Agreement by the Employee. The Employee acknowledges
that as a result of his association with and employment by the Corporation, he
has had and will continue to have access to the Confidential Information,
which has a special and unique nature and value to the Corporation. As a
material inducement to the Corporation to enter into this Agreement and to pay
the Employee the compensation and other benefits provided herein, the Employee
covenants and agrees that he shall not, directly or indirectly, divulge or
disclose to any third party for any purpose whatsoever, any Confidential
Information without the consent of the Corporation and that he will surrender
to the Corporation all such Confidential Information in his possession or
control upon the termination of his employment with the Corporation.
7. Termination of Employment. Nothing contained in this Agreement
shall require the Corporation to continue the employment of the Employee;
provided, however, that if such employment is terminated by the Corporation,
except for Employee's fraud, other willful misconduct in connection with his
employment, or willful breach of this Agreement the Corporation shall continue
to pay the compensation to the Employee provided for in paragraph 3 hereof in
consideration of Employee's covenant not to compete contained in paragraph 5
hereof until April 11, 1999 (or April 11, 2000 if this Agreement is renewed
pursuant to paragraph 1 hereof. In the event of Employee's death or permanent
disability during the term of this Agreement, the Employee's compensation
shall continue to be paid by the Corporation for a period of three (3) months,
or until the earlier expiration of the term of this Agreement pursuant to
paragraph 1 hereof, to his surviving spouse, and if none, to the Employee's
estate.
8. Remedies. Employee recognizes that a violation of the
restrictive covenant contained in this Agreement will irreparably damage
Corporation, that money damages are not likely to be an adequate remedy and
that for a breach of said covenant, the Corporation shall be entitled to an
injunction to prevent the continuation of such breach.
9. Attorneys' Fees and Other Litigation Costs. If the Corporation
or the Employee violates any term of this Agreement, the defaulting party
shall reimburse the non-defaulting party for all reasonable attorneys' fees
and litigation costs incurred to enforce, or recover damages for the breach
of, this Agreement.
10. Survival of Obligations. The obligations of this Agreement
shall survive the termination of Employee's employment with Corporation.
11. No Prior Contrary Representations or Agreements. This
Agreement supersedes any and all prior proposals, representations, or
agreements, oral or written, insofar as any such proposal, representation or
agreement might be determined to be inconsistent with or to limit the terms or
applications of this Agreement.
12. Waiver, Modification and Amendment. A failure to insist upon
or enforce compliance with any term of this Agreement shall not constitute a
waiver or relinquishment of any such term, and the term shall remain in full
force and effect. This Agreement may not be waived, changed, modified,
abandoned, or terminated, in whole or in part, except by a written instrument
signed by a duly authorized representative of the Corporation and accepted by
Employee.
13. Successors. This Agreement shall be binding upon the
Corporation and the Employee's successors, assigns, executors, administrators,
and personal representatives, but may not be assigned by Employee.
14. Headings. The headings in this Agreement are for convenience
only and shall not be deemed to limit the content of or to interpret the
meaning of this Agreement.
15. Governing Law. This Agreement and its performance shall be
subject to and governed by the laws of the State of Indiana.
16. Severability. If any word or other term of this Agreement, or
if any construction or application of any term of this Agreement, is held to
be unenforceable or invalid for any reason, then the validity of any remaining
construction or application of that term shall not be affected, and the rights
or obligations of each of the parties shall be construed and enforced as if
the contract did not contain such invalid term, or as the case may be, invalid
construction or application of such term; provided, however, that such
resulting construction and enforcement shall be generally consistent with the
basic purposes of this Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first above written.
GENERAL ACCEPTANCE CORPORATION
By:_/s/ ▇▇▇▇▇▇▇ ▇. Algood_______
Title:_President and COO_______
______________________________
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
AGREEMENT OF PURCHASER
The terms and provisions of this Agreement are approved this 11th day of
April, 1997.
CAPITOL AMERICAN LIFE INSURANCE
COMPANY
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇
Exhibit 10.77
THIS SUBORDINATED CONVERTIBLE NOTE HAS NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE OR OTHER SECURITIES LAWS AND
MAY NOT BE OFFERED, SOLD, TRANSFERRED OR ASSIGNED EXCEPT (I) PURSUANT TO
REGISTRATIONS THEREOF UNDER SUCH LAWS, OR (II) IF, IN THE OPINION OF COUNSEL
REASONABLY SATISFACTORY TO GENERAL ACCEPTANCE CORPORATION THE PROPOSED
TRANSFER MAY BE EFFECTED IN COMPLIANCE WITH APPLICABLE SECURITIES LAWS WITHOUT
SUCH REGISTRATIONS.
THIS SUBORDINATED CONVERTIBLE NOTE IS SUBJECT TO
A SUBORDINATION AGREEMENT DATED APRIL 11, 1997, IN
FAVOR OF GENERAL ELECTRIC CAPITAL CORPORATION.
12% SUBORDINATED CONVERTIBLE NOTE
$1,000,000 Dated: April 11, 1997
For value received, General Acceptance Corporation, an Indiana
corporation with its principal offices at ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇ ▇▇▇▇▇ ("Maker"), hereby promises to pay to the order of ▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇, residing at ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇, or assigns
(collectively, the "Holder"), at its principal office or at such other place
as the Holder may direct in writing to the Maker, in lawful money of the
United States of America, the principal amount of One Million Dollars
($1,000,000) and interest, as provided herein, all without relief from
valuation or appraisement laws.
This Note is one of a series of 12% Subordinated Convertible Notes in the
aggregate principal amount of $13,250,000, of which $10,000,000 is being
issued to Capitol American Life Insurance Company pursuant to a Securities
Purchase Agreement dated as of April 11, 1997 ("Securities Purchase
Agreement") and the balance are being issued to the Holder and other
stockholders of the Maker in exchange for the surrender of certain promissory
notes payable to them by the Maker. Purchaser acknowledges and agrees that
the Note purchased by Capitol American Life Insurance Company shall be on a
parity with the rights of the Holder under this Note and the other Notes
without priority or distinction, and that no payments of principal or interest
on this Note shall be made by the Company unless a pro rata payment of
principal and interest is paid to the holders of all Notes outstanding from
time to time. The terms and provisions of the Securities Purchase Agreement
shall govern the terms and provisions of this Note and any conflict between
this Note and the Securities Purchase Agreement shall be resolved by the
Securities Purchase Agreement.
1. Payment of Principal. Subject to acceleration as provided for
elsewhere in this 12% Subordinated Convertible Note ("Note"), the Maker shall
pay to the Holder the principal balance of this Note on April 11, 2000, plus
all accrued and unpaid interest on the full principal balance of this Note as
of that date.
2. Interest. Interest on the unpaid principal balance hereof
existing from time to time shall accrue at the rate of 12% per annum;
provided, however, interest shall accrue at the rate of 15% per annum so long
as an "Event of Default," as specified in Section 4(a), exists hereunder.
Interest shall be calculated on the basis of actual daily balances of
outstanding principal for the exact number of days the principal remains
outstanding and shall be computed on the basis of a 360-day year. Interest
shall be due and payable on a quarterly basis, on March 31, June 30, September
30 and December 31.
3. Prepayment. The Maker may not prepay all or any portion of the
unpaid principal balance hereof or accrued interest without the consent of
Holder.
4. Default and Remedy.
(a) An "Event of Default" under this Note shall mean the occurrence
of any of the following events: (i) the Maker defaults in the payment of
principal of or interest on this Note when due and the Maker does not cure
that default within 5 days after the due date; (ii) the Maker defaults in the
performance of any obligation under this Note (other than the payment
described in the immediately preceding clause) and the does not cure that
default within 30 days after receipt by the Maker of written notice from the
Holder; (iii) an "Event of Default" or a "Triggering Event", both as defined
in the Securities Purchase Agreement, shall occur; or (iv) the Maker commences
proceedings in any court under the United States Bankruptcy Code, or any other
debtors' relief or insolvency act, whether state or federal (the "Bankruptcy
Laws"), or any other person commences proceedings under the Bankruptcy Laws
against the Maker and those proceedings are not stayed or dismissed within 60
days.
(b) If any Event of Default occurs and is continuing, then the Holder
shall have the right and option to declare, by notice in writing sent by
registered or certified mail to the Maker, the full unpaid principal balance
hereof, together with all accrued and unpaid interest thereon, immediately due
and payable without further demand, notice, or presentment for payment.
Alternatively, if a Triggering Event occurs, the Holder shall have the right
and option to cause the Maker to redeem this Note pursuant to the procedure
set forth in Section 10.3 of the Securities Purchase Agreement.
(c) If this Note is collected or attempted to be collected by the
initiation or prosecution of any suit or through any bankruptcy court, or by
any judicial proceeding, or is placed in the hands of attorneys for
collection, then the Maker shall pay, in addition to all other amounts owing
hereunder, all court costs and reasonable attorney's fees incurred by the
Holder.
5. Subordination.
(a) Subordination to Senior Debt. Notwithstanding anything to the
contrary contained in this Note, the Maker covenants and agrees, and the
Holder by acceptance of this Note likewise covenants and agrees, that the
Maker's indebtedness under this Note shall be junior and subordinate to the
Senior Indebtedness (as hereafter defined) to the extent and in the manner set
forth in this Section 5, except to the extent otherwise agreed to in writing
by the Holder and any Senior Lender (as hereinafter defined) with respect to
the Senior Indebtedness held by or payable to that Senior Lender. Each
subsection of this Section 5 shall be given independent effect so that if a
particular payment or action is prohibited by any one of these subsections, it
shall be prohibited although it otherwise would not be prohibited by another
subsection.
(b) Payment Default on Senior Indebtedness. If at any time a
default occurs in the payment when due (whether at maturity or upon
acceleration or mandatory prepayment, or on any principal installment payment
date or interest payment date, or otherwise) ("Payment Default") of any Senior
Indebtedness, then at all times thereafter until (i) the Payment Default has
been cured, (ii) the Payment Default or the benefits of this sentence have
been waived in writing by or on behalf of the Senior Lenders holding that
Senior Indebtedness, or (iii) payment in full of all affected Senior
Indebtedness, the Maker shall not, directly or indirectly, make any
Distribution of Assets (as hereinafter defined) or Payment (as hereinafter
defined) with respect to this Note.
(c) Dissolution, Liquidation or Reorganization of Maker. In the
event of any insolvency, bankruptcy or receivership case or proceeding or any
dissolution, winding up, liquidation, reorganization or other similar
proceeding relating to the Maker, its property or its operations (whether
voluntary or involuntary and whether in bankruptcy, insolvency or receivership
proceedings or otherwise), upon an assignment for the benefit of creditors, or
any other marshaling of the assets of the Maker, then payment in full of all
Senior Indebtedness then or thereafter to become due shall occur before the
Holder shall be entitled to receive or retain any Distribution of Assets or
Payment with respect to this Note. In any such proceedings, any Distribution
of Assets or Payment to which the Holder would be entitled if this Note were
not subordinated to the Senior Indebtedness shall be paid by the Maker or the
agent or other person making such payment or distribution, or by the Holder if
received by the Holder, directly to each Senior Lender, pro forma, to the
extent necessary to make payment in full of all Senior Indebtedness, after
giving effect to any concurrent payment or distribution to or for the benefit
of the Senior Lenders.
(d) Subrogation. No Distribution of Assets or Payment to which the
Holder would have been entitled except for the provisions of this Section 5
and which are received by or paid over to the Senior Lenders or their
Representative (as hereinafter defined) shall, as between the Maker and its
creditors other than the Senior Lenders and the Holder, be deemed to be a
payment by the Maker to the Senior Lenders or on account of the Senior
Indebtedness, and the Holder shall be subrogated (without any duty on the part
of the Senior Lenders to warrant, create, effectuate, preserve or protect such
subrogation) to the then or thereafter existing rights of the Senior Lenders
to receive Distributions of Assets or payments made on the Senior Indebtedness
until this Note shall be paid in full.
(e) Payments Held in Trust. If the Holder receives any
Distribution of Assets or Payment which the Holder is not entitled to retain
under the provisions of this Section 5, any such Distribution of Assets or
Payment so received shall be held in trust for the Senior Lenders, shall not
be commingled with any other assets of the Holder, and shall be paid to the
Senior Lenders, pro rata, to the extent necessary to make payment in full,
after giving effect to any concurrent payment or distribution to or for the
benefit of the Senior Lenders.
(f) Changes in Senior Indebtedness. Any Senior Lender may at any
time and from time to time with notice to the Holder: (i) extend, renew,
modify, waive or amend the terms of the Senior Indebtedness; (ii) sell,
exchange, release or otherwise deal with any property pledged, mortgaged or
otherwise securing the Senior Indebtedness; (iii) release any guarantor or any
other person liable in any manner for the Senior Indebtedness or amend or
waive the terms of the Senior Indebtedness; (iv) exercise or refrain from
exercising any rights against the Maker or any other persons; (v) apply in any
order any sums by whomever paid or however to the Senior Indebtedness; and
(vi) take any other action which otherwise might be deemed to impair the
Holder's rights. Any and all of such actions may be taken by the Senior
Lenders without incurring responsibility to the Holder and without impairing
or releasing the Holder's obligations to the Senior Lenders.
(g) Third-Party Beneficiary, Etc.. The foregoing provisions
regarding subordination are solely for the purpose of defining the relative
rights of the Senior Lenders on the one hand and the Holder on the other hand.
Such provisions are for the benefit of the Senior Lenders (and their
successors and assigns) and shall be enforceable by them directly against the
Holder except to the extent otherwise agreed to in writing by the Holder and
any other Senior Lender.
(h) Definitions. As used in this Section 5 (or as elsewhere used
in this Note) the following terms shall have the meanings indicated:
"Distribution of Assets" means any distribution of assets of the Maker or any
of its subsidiaries of any kind or character, whether a payment, purchase or
other acquisition or retirement for cash, property, or securities, with
respect to the Maker's obligations under this Note.
"Payment" means payment of any obligation now or hereafter existing under this
Note (as it may hereafter be amended, supplemented, or otherwise modified from
time to time), whether created directly or acquired by assignment or
otherwise, and interest and premiums, if any, thereon and all other amounts
payable in respect thereof or in connection therewith.
"Representative" means, with respect to any Senior Indebtedness, the trustee,
agent, or other representative for one or more of the Senior Lenders, if any,
designated in the indenture, agreement or document creating, evidencing or
governing such Senior Indebtedness or pursuant to which it was issued, or
otherwise designated by the holders of such Senior Indebtedness.
"Senior Indebtedness" shall have the meaning specified in the Securities
Purchase Agreement.
"Senior Lender" or "Senior Lenders" means one or more of the holders of Senior
Indebtedness.
6. Conversion.
(a) The Holder may, at the Holder's option, at any time, and from
time to time, prior to payment in full of this Note, convert the outstanding
Principal Amount of this Note and any accrued but unpaid interest due pursuant
to Section 2 above (the "Conversion Amount"), in whole or in part (but only
into full shares), into fully paid and non-assessable shares of the common
stock, no par value of the Maker (the "Common Shares"), at a rate equal to the
amount of $3.00 per Common Share (subject to adjustment as set forth in
Section 7) (the "Conversion Rate"). In order to exercise this conversion
right, the Holder must send written notice of the conversion to the Maker at
least 10 days prior to the specified conversion date. On the conversion date
(or as soon thereafter as is reasonably practicable), the Maker shall issue to
the Holder a share certificate for the Common Shares acquired upon conversion.
(c) Notwithstanding any other provisions of this Section 6 to the
contrary, the conversion rights of the Holder shall be subject to compliance
with all applicable federal and state securities laws, and the Holder agrees
to execute all required agreements and documents required by the Maker to
establish compliance with such laws.
(d) The Maker shall at all times reserve and keep available and free
of preemptive rights out of its authorized but unissued Common Shares, solely
for the purpose of issuance upon conversion of the Note, the number of Common
Shares as shall from time to time be sufficient to effect the conversion of
the Note, and if at any time the number of authorized but unissued Common
Shares shall not be sufficient to effect the conversion of the Note, the Maker
shall take the corporate action necessary to increase the number of its
authorized Common Shares to a number sufficient for this purpose. Maker
further covenants that all shares that may be issued upon the conversion of
this Note and payment of the Conversion Price, all as set forth herein, will
be free from all taxes, liens and charges in respect of the issue thereof.
Maker agrees that its issuance of this Note shall constitute full authority to
its officers who are charged with the duty of executing stock certificates to
execute and issue the necessary certificates for the shares upon the
conversion of this Note.
7. Adjustments.
(a) Reorganization, Merger or Sale of Assets
If at any time while this Note, or any portion thereof, is outstanding
there shall be (i) a reorganization (other than a combination,
reclassification, exchange or subdivision of shares otherwise provided for
herein), (ii) a merger or consolidation with or into another corporation in
which the Maker is not the surviving entity, or a reverse triangular merger in
which the Maker is the surviving entity but the shares of the Maker's capital
stock outstanding immediately prior to the merger are converted by virtue of
the merger into other property, whether in the form of securities, cash or
otherwise, or (iii) a sale or transfer of the Maker's properties and assets
as, or substantially as, an entirety to any other person, then, as a part of
such reorganization, merger, consolidation, sale or transfer, lawful provision
shall be made so that the holder of this Note shall thereafter be entitled to
receive upon conversion of the Notes the number of shares of stock or other
securities or property of the successor corporation resulting from such
reorganization, merger, consolidation, sale or transfer that a holder of the
shares deliverable upon conversion of this Note would have been entitled to
receive in such reorganization, consolidation, merger, sale or transfer if
this Note had been converted immediately before such reorganization, merger,
consolidation, sale or transfer, all subject to further adjustment as provided
in this Section 7. The foregoing provisions of this Section 7(a) shall
similarly apply to successive reorganizations, consolidations, mergers, sales
and transfers and to the stock or securities of any other corporation that are
at the time receivable upon the conversion of this Note. If the per-share
consideration payable to Holder for shares in connection with any such
transaction is in a form other than cash or marketable securities, then the
value of such consideration shall be determined in good faith by the Maker's
Board of Directors. In all events, appropriate adjustment (as determined in
good faith by the Maker's Board of Directors) shall be made in the application
of the provisions of this Note with respect to the rights and interests of
Holder after the transaction, to the end that the provisions of this Note
shall be applicable after that event, as near as reasonably may be, in
relation to any shares or other property deliverable after that event upon
conversion of this Note.
(b) Reclassification.
If the Maker, at any time while this Note, or any portion thereof,
remains outstanding, by reclassification of securities or otherwise, shall
change any of the securities as to which conversion rights under this Note
exist into the same or a different number of securities of any other class or
classes, this Note shall thereafter represent the right to acquire such number
and kind of securities as would have been issuable as the result of such
change with respect to the securities that were subject to the conversion
rights under this Note immediately prior to such reclassification or other
change and the Conversion Price or number of shares received upon such
conversion shall be appropriately adjusted, all subject to further adjustment
as provided in this Section 7.
(c) Split, Subdivision or Combination of Shares.
If the Maker at any time while this Note, or any portion thereof, remains
outstanding shall split, subdivide or combine the securities as to which
conversion rights under this Note exist, into a different number of securities
of the same class, the number of shares issuable upon conversion shall be
proportionately decreased in the case of a split or subdivision or
proportionately increased in the case of a combination.
(d) Adjustments for Dividends in Stock or Other Securities or Property.
If while this Note, or any portion hereof, remains outstanding and
unexpired the holders of the securities as to which conversion rights under
this Note exist at the time shall have received, or, on or after the record
date fixed for the determination of eligible stockholders, shall have become
entitled to receive, without payment therefor, other or additional stock or
other securities or property (other than cash) of the Maker by way of
dividend, then and in each case, this Note shall represent the right to
acquire upon conversion, in addition to the number of shares of the security
receivable upon conversion of this Note, and without payment of any additional
consideration therefor, the amount of such other or additional stock or other
securities or property (other than cash) of the Maker that such holder would
hold on the date of such conversion had it been the holder of record of the
security receivable upon conversion of this Note on the date hereof and had
thereafter, during the period from the date hereof to and including the date
of such conversion, retained such shares and/all other additional stock, other
securities or property available by this Note as aforesaid during such period,
giving effect to all adjustments called for during such period by the
provisions of this Section 7.
(e) Issuance of Shares Below Conversion Price.
(1) If while this Note, or any portion hereof, remains outstanding,
the Maker shall offer and sell Additional Shares of Common Stock (as
hereinafter defined) for consideration per share less than the Conversion
Price in effect immediately prior to the issuance of such Additional Shares of
Common Stock, except pursuant to the Maker's Stock Option Plan approved by the
Board of Directors, the Conversion Price in effect immediately prior to each
such issuance shall forthwith be adjusted upon such issuance to a price equal
to the price paid per share for such Additional Shares of Common Stock.
(2) For the purpose of the calculations provided in this Section
7(e), if at any time or from time to time after the date hereof the Maker
shall issue any rights or options for the purchase of, or stock or other
securities convertible into, Additional Shares of Common Stock (such Common
Stock or securities being hereinafter referred to as "Convertible
Securities"), then, and in each case, if the Effective Price (as hereinafter
defined) of such rights, options or Convertible Securities shall be less than
the Conversion Price, the Maker shall be deemed to have issued at the time of
the issuance of such rights or options or Convertible Securities the maximum
number of Additional Shares of Common Stock issuable upon exercise or
conversion thereof and to have received as consideration for the issuance of
such shares an amount equal to the total amount of the consideration, if any,
payable to the Maker upon exercise or conversion of such options or rights.
"Effective Price" shall mean the quotient determined by dividing the total of
all of such consideration by such maximum number of Additional Shares of
Common Stock. No further adjustment shall be made as a result of the actual
issuance of Additional Shares of Common Stock on the exercise of any such
rights or options or the conversion of any such Convertible Securities. In
the case of Convertible Securities which have a conversion price which is
based, in whole or in part, upon a discount to the market price or value of
the Common Stock, then for the purposes of calculating the Effective Price,
the consideration shall be deemed to include the minimum conversion price
payable to the Maker.
If any such rights or options or the conversion privilege represented by
any such Convertible Securities shall expire prior to the Maturity hereof
without having been exercised, the adjustment to the number of shares
available hereunder upon the issuance of such rights, options or Convertible
Securities shall be readjusted to the number of shares that would have been in
effect had an adjustment been made on the basis that the only Additional
Shares of Common Stock so issued were the Additional Shares of Common Stock,
if any, actually issued or sold on the exercise of such rights or options or
rights of conversion of such Convertible Securities, and such Additional
Shares of Common Stock, if any, were issued or sold for the consideration
actually received by the Maker for the granting of all such rights or options,
whether or not exercised, plus the consideration received for issuing or
selling the Convertible Securities actually converted plus the consideration,
if any, actually received by the Maker on the conversion of such Convertible
Securities.
(3) For the purpose of the calculations provided for in
this Section 7(e), if at any time or from time to time after the
date hereof the Maker shall issue any rights or options for the purchase of
Convertible Securities, then, in each such case, if the Effective Price
thereof is less than the then Conversion Price, the Maker shall be deemed to
have issued at the time of the issuance of such rights or options the maximum
number of Additional Shares of Common Stock issuable upon conversion of the
total amount of Convertible Securities covered by such rights or options and
to have received as consideration for the issuance of such Additional Shares
of Common Stock an amount equal to the amount of consideration, if any,
received by the Maker for the issuance of such rights or options, plus the
consideration, if any, payable to the Maker upon the conversion of such
Convertible Securities. "Effective Price" shall mean the quotient determined
by dividing the total amount of such consideration by such maximum number of
Additional Shares of Common Stock. No further adjustment of such Conversion
Price adjusted upon the issuance of such rights or options shall be made as a
result of the actual issuance of the Convertible Securities upon the exercise
of such rights or options or upon the actual issuance of Additional Shares of
Common Stock upon the conversion of such Convertible Securities.
(4) The term "Additional Shares of Common Stock" as used herein shall
mean all shares of Common Stock issued or deemed issued by the Maker after the
date hereof, other than (i) securities issued pursuant to or in connection
with the terms of the Securities Purchase Agreement; (ii) shares of Common
Stock issued upon conversion of convertible securities or the exercise of
common stock purchase warrants outstanding as of the date hereof; (iii) shares
of Common Stock issuable to employees, officers or directors pursuant to the
Maker's stock option plan; (iv) shares of Common Stock issued or issuable to
directors in connection with their service as directors; (v) shares of Common
Stock issued or issuable to directors, officers or employees for services
rendered or to be rendered pursuant to arrangements approved by the Board of
Directors; and (vii) shares of Common Stock issued in connection with a
business combination, merger, consolidation, asset acquisition or the
acquisition of the business of another corporation (through the purchase of
stock or assets) approved by the Board of Directors and all of the Conseco
Directors (as defined in the Securities Purchase Agreement).
(f) No Impairment.
Maker will not, by any voluntary action, avoid or seek to avoid the
observance or performance or any of the terms to be observed or performed
hereunder by Maker, but will at all times in good faith assist in the carrying
out of all the provisions of this Section 7 and in the taking of all such
action as may be necessary or appropriate in order to protect the rights of
Holder against impairment.
8. Notices. (a) Whenever the number of shares issuable or the
Conversion Price hereunder shall be adjusted pursuant to Section 7 hereof,
the Maker shall issue a certificate signed by its Chief Financial Officer
setting forth, in reasonable detail, the event requiring the adjustment, the
amount of the adjustment, the method by which such adjustment was calculated,
and the Conversion Price and number of shares purchasable hereunder after
giving effect to such adjustment, and shall cause a copy of such certificate
to be mailed (by first-class mail, postage prepaid) to Holder.
(b) All notices, requests, demands, or other communications that are
required or may be given pursuant to the terms of this Note shall be in
writing and delivery shall be deemed sufficient and to have been duly given on
the date of service if delivered personally or by facsimile transmission if
receipt is confirmed to the party to whom notice is to be given or on the
third day after mailing if mailed by first-class mail, return receipt
requested, and properly addressed as follows:
If to the Maker, to: ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Chief Financial Officer
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
If to the Holder, to: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
or to such other address as may be specified in writing by any of the above.
9. Remedies. The remedies provided by this Note shall be
cumulative, and shall be in addition to and not exclusive of other remedies
available at law, or in equity. The exercise or waiver by the Holder of any
right or remedy available under this Note shall not be deemed to be a waiver
of any other right or remedy available under this Note, at law, or in equity.
10. Miscellaneous.
(a) Whenever used herein, the singular includes the plural and the
plural includes the singular. The term "Maker" means the Corporation named in
the opening paragraph hereof and its successors and assigns.
(b) Indiana law shall govern this interpretation, construction, and
enforcement of this Note and all transactions contemplated hereby,
notwithstanding any state's choice of law rules to the contrary. Any
litigation related to this Note may be maintained only in the federal district
court for the Southern District of Indiana, Indianapolis Division (or any
successor jurisdiction) or in an Indiana state court in ▇▇▇▇▇▇▇▇ County or one
of the counties immediately contiguous to ▇▇▇▇▇▇▇▇ County, and each party
hereby irrevocably consents and submits to the jurisdiction of that federal or
state court and irrevocably waives any objection the party may have based upon
improper venue, forum non conveniens, or other similar doctrines or rules.
(c) Maker and any other party now or hereafter liable for the payment
of this Note in whole or in part, hereby severally (i) waive demand,
presentment for payment, notice of nonpayment, protest, notice of protest,
notice of intent to accelerate, notice of acceleration and all other notice,
filing of suit and diligence in collecting this Note, (ii) agree to the
release of any party primarily or secondarily liable hereon, (iii) agree that
the Holder shall not be required first to institute suit or exhaust its
remedies hereon against Maker or others liable or to become liable hereon or
to enforce its rights against them, and (iv) consent to any extension or
postponement of time of payment of this Note and to any other indulgence with
respect hereto without notice thereof to any of them.
(d) Holder, by acceptance hereof, acknowledges that this Note and the
shares to be issued upon conversion hereof are being acquired solely for
Holder's own account and not as a nominee for any other party, and for
investment, and that Holder will not offer, sell or otherwise dispose of this
Note or any shares to be issued upon conversion hereof except under
circumstances that will not result in a violation of applicable federal and
state securities laws. Upon exercise of this Note, Holder shall, if requested
by Maker, confirm in writing, in a form satisfactory to Maker, that the shares
so purchased are being acquired solely for Holder's own account and not as a
nominee for any other party, for investment, and not with a view toward
distribution or resale.
All shares issued upon exercise hereof shall be stamped or
imprinted with a legend in substantially the following form (in addition to
any legend required by state securities laws):
THE SECURITIES REPRESENTED HEREBY HAVE BEEN ACQUIRED FOR INVESTMENT
AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933. SUCH
SECURITIES AND ANY SECURITIES OR SHARES ISSUED UPON CONVERSION THEREOF MAY NOT
BE SOLD OR TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN EXEMPTION
THEREFROM UNDER SAID ACT.
(e) The captions of the sections of this Note are solely for
convenient reference and shall not be deemed to affect the meaning or
interpretation of any provision of this Note.
IN WITNESS WHEREOF, THE MAKER HAS EXECUTED, ACKNOWLEDGED, AND DELIVERED
THIS NOTE AS OF THE DAY AND YEAR FIRST ABOVE WRITTEN.
GENERAL ACCEPTANCE CORPORATION
BY: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
PRINTED: _Martin ▇. ▇▇▇▇▇▇▇
TITLE: __Chief Financial Officer
Exhibit 10.78
THIS SUBORDINATED CONVERTIBLE NOTE HAS NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE OR OTHER SECURITIES LAWS AND
MAY NOT BE OFFERED, SOLD, TRANSFERRED OR ASSIGNED EXCEPT (I) PURSUANT TO
REGISTRATIONS THEREOF UNDER SUCH LAWS, OR (II) IF, IN THE OPINION OF COUNSEL
REASONABLY SATISFACTORY TO GENERAL ACCEPTANCE CORPORATION THE PROPOSED
TRANSFER MAY BE EFFECTED IN COMPLIANCE WITH APPLICABLE SECURITIES LAWS WITHOUT
SUCH REGISTRATIONS.
THIS SUBORDINATED CONVERTIBLE NOTE IS SUBJECT TO
A SUBORDINATION AGREEMENT DATED APRIL 11, 1997, IN
FAVOR OF GENERAL ELECTRIC CAPITAL CORPORATION.
12% SUBORDINATED CONVERTIBLE NOTE
$750,000 Dated: April 11, 1997
For value received, General Acceptance Corporation, an Indiana
corporation with its principal offices at ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇ ▇▇▇▇▇ ("Maker"), hereby promises to pay to the order of ▇▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇, residing at ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇,
or assigns (collectively, the "Holder"), at its principal office or at such
other place as the Holder may direct in writing to the Maker, in lawful money
of the United States of America, the principal amount of Seven Hundred Fifty
Thousand Dollars ($750,000) and interest, as provided herein, all without
relief from valuation or appraisement laws.
This Note is one of a series of 12% Subordinated Convertible Notes in the
aggregate principal amount of $13,250,000, of which $10,000,000 is being
issued to Capitol American Life Insurance Company pursuant to a Securities
Purchase Agreement dated as of April 11, 1997 ("Securities Purchase
Agreement") and the balance are being issued to the Holder and other
stockholders of the Maker in exchange for the surrender of certain promissory
notes payable to them by the Maker. Purchaser acknowledges and agrees that
the Note purchased by Capitol American Life Insurance Company shall be on a
parity with the rights of the Holder under this Note and the other Notes
without priority or distinction, and that no payments of principal or interest
on this Note shall be made by the Company unless a pro rata payment of
principal and interest is paid to the holders of all Notes outstanding from
time to time. The terms and provisions of the Securities Purchase Agreement
shall govern the terms and provisions of this Note and any conflict between
this Note and the Securities Purchase Agreement shall be resolved by the
Securities Purchase Agreement.
1. Payment of Principal. Subject to acceleration as provided for
elsewhere in this 12% Subordinated Convertible Note ("Note"), the Maker shall
pay to the Holder the principal balance of this Note on April 11, 2000, plus
all accrued and unpaid interest on the full principal balance of this Note as
of that date.
2. Interest. Interest on the unpaid principal balance hereof
existing from time to time shall accrue at the rate of 12% per annum;
provided, however, interest shall accrue at the rate of 15% per annum so long
as an "Event of Default," as specified in Section 4(a), exists hereunder.
Interest shall be calculated on the basis of actual daily balances of
outstanding principal for the exact number of days the principal remains
outstanding and shall be computed on the basis of a 360-day year. Interest
shall be due and payable on a quarterly basis, on March 31, June 30, September
30 and December 31.
3. Prepayment. The Maker may not prepay all or any portion of the
unpaid principal balance hereof or accrued interest without the consent of
Holder.
4. Default and Remedy.
(a) An "Event of Default" under this Note shall mean the occurrence
of any of the following events: (i) the Maker defaults in the payment of
principal of or interest on this Note when due and the Maker does not cure
that default within 5 days after the due date; (ii) the Maker defaults in the
performance of any obligation under this Note (other than the payment
described in the immediately preceding clause) and the does not cure that
default within 30 days after receipt by the Maker of written notice from the
Holder; (iii) an "Event of Default" or a "Triggering Event", both as defined
in the Securities Purchase Agreement, shall occur; or (iv) the Maker commences
proceedings in any court under the United States Bankruptcy Code, or any other
debtors' relief or insolvency act, whether state or federal (the "Bankruptcy
Laws"), or any other person commences proceedings under the Bankruptcy Laws
against the Maker and those proceedings are not stayed or dismissed within 60
days.
(b) If any Event of Default occurs and is continuing, then the Holder
shall have the right and option to declare, by notice in writing sent by
registered or certified mail to the Maker, the full unpaid principal balance
hereof, together with all accrued and unpaid interest thereon, immediately due
and payable without further demand, notice, or presentment for payment.
Alternatively, if a Triggering Event occurs, the Holder shall have the right
and option to cause the Maker to redeem this Note pursuant to the procedure
set forth in Section 10.3 of the Securities Purchase Agreement.
(c) If this Note is collected or attempted to be collected by the
initiation or prosecution of any suit or through any bankruptcy court, or by
any judicial proceeding, or is placed in the hands of attorneys for
collection, then the Maker shall pay, in addition to all other amounts owing
hereunder, all court costs and reasonable attorney's fees incurred by the
Holder.
5. Subordination.
(a) Subordination to Senior Debt. Notwithstanding anything to the
contrary contained in this Note, the Maker covenants and agrees, and the
Holder by acceptance of this Note likewise covenants and agrees, that the
Maker's indebtedness under this Note shall be junior and subordinate to the
Senior Indebtedness (as hereafter defined) to the extent and in the manner set
forth in this Section 5, except to the extent otherwise agreed to in writing
by the Holder and any Senior Lender (as hereinafter defined) with respect to
the Senior Indebtedness held by or payable to that Senior Lender. Each
subsection of this Section 5 shall be given independent effect so that if a
particular payment or action is prohibited by any one of these subsections, it
shall be prohibited although it otherwise would not be prohibited by another
subsection.
(b) Payment Default on Senior Indebtedness. If at any time a
default occurs in the payment when due (whether at maturity or upon
acceleration or mandatory prepayment, or on any principal installment payment
date or interest payment date, or otherwise) ("Payment Default") of any Senior
Indebtedness, then at all times thereafter until (i) the Payment Default has
been cured, (ii) the Payment Default or the benefits of this sentence have
been waived in writing by or on behalf of the Senior Lenders holding that
Senior Indebtedness, or (iii) payment in full of all affected Senior
Indebtedness, the Maker shall not, directly or indirectly, make any
Distribution of Assets (as hereinafter defined) or Payment (as hereinafter
defined) with respect to this Note.
(c) Dissolution, Liquidation or Reorganization of Maker. In the
event of any insolvency, bankruptcy or receivership case or proceeding or any
dissolution, winding up, liquidation, reorganization or other similar
proceeding relating to the Maker, its property or its operations (whether
voluntary or involuntary and whether in bankruptcy, insolvency or receivership
proceedings or otherwise), upon an assignment for the benefit of creditors, or
any other marshaling of the assets of the Maker, then payment in full of all
Senior Indebtedness then or thereafter to become due shall occur before the
Holder shall be entitled to receive or retain any Distribution of Assets or
Payment with respect to this Note. In any such proceedings, any Distribution
of Assets or Payment to which the Holder would be entitled if this Note were
not subordinated to the Senior Indebtedness shall be paid by the Maker or the
agent or other person making such payment or distribution, or by the Holder if
received by the Holder, directly to each Senior Lender, pro forma, to the
extent necessary to make payment in full of all Senior Indebtedness, after
giving effect to any concurrent payment or distribution to or for the benefit
of the Senior Lenders.
(d) Subrogation. No Distribution of Assets or Payment to which the
Holder would have been entitled except for the provisions of this Section 5
and which are received by or paid over to the Senior Lenders or their
Representative (as hereinafter defined) shall, as between the Maker and its
creditors other than the Senior Lenders and the Holder, be deemed to be a
payment by the Maker to the Senior Lenders or on account of the Senior
Indebtedness, and the Holder shall be subrogated (without any duty on the part
of the Senior Lenders to warrant, create, effectuate, preserve or protect such
subrogation) to the then or thereafter existing rights of the Senior Lenders
to receive Distributions of Assets or payments made on the Senior Indebtedness
until this Note shall be paid in full.
(e) Payments Held in Trust. If the Holder receives any
Distribution of Assets or Payment which the Holder is not entitled to retain
under the provisions of this Section 5, any such Distribution of Assets or
Payment so received shall be held in trust for the Senior Lenders, shall not
be commingled with any other assets of the Holder, and shall be paid to the
Senior Lenders, pro rata, to the extent necessary to make payment in full,
after giving effect to any concurrent payment or distribution to or for the
benefit of the Senior Lenders.
(f) Changes in Senior Indebtedness. Any Senior Lender may at any
time and from time to time with notice to the Holder: (i) extend, renew,
modify, waive or amend the terms of the Senior Indebtedness; (ii) sell,
exchange, release or otherwise deal with any property pledged, mortgaged or
otherwise securing the Senior Indebtedness; (iii) release any guarantor or any
other person liable in any manner for the Senior Indebtedness or amend or
waive the terms of the Senior Indebtedness; (iv) exercise or refrain from
exercising any rights against the Maker or any other persons; (v) apply in any
order any sums by whomever paid or however to the Senior Indebtedness; and
(vi) take any other action which otherwise might be deemed to impair the
Holder's rights. Any and all of such actions may be taken by the Senior
Lenders without incurring responsibility to the Holder and without impairing
or releasing the Holder's obligations to the Senior Lenders.
(g) Third-Party Beneficiary, Etc.. The foregoing provisions
regarding subordination are solely for the purpose of defining the relative
rights of the Senior Lenders on the one hand and the Holder on the other hand.
Such provisions are for the benefit of the Senior Lenders (and their
successors and assigns) and shall be enforceable by them directly against the
Holder except to the extent otherwise agreed to in writing by the Holder and
any other Senior Lender.
(h) Definitions. As used in this Section 5 (or as elsewhere used
in this Note) the following terms shall have the meanings indicated:
"Distribution of Assets" means any distribution of assets of the Maker or any
of its subsidiaries of any kind or character, whether a payment, purchase or
other acquisition or retirement for cash, property, or securities, with
respect to the Maker's obligations under this Note.
"Payment" means payment of any obligation now or hereafter existing under this
Note (as it may hereafter be amended, supplemented, or otherwise modified from
time to time), whether created directly or acquired by assignment or
otherwise, and interest and premiums, if any, thereon and all other amounts
payable in respect thereof or in connection therewith.
"Representative" means, with respect to any Senior Indebtedness, the trustee,
agent, or other representative for one or more of the Senior Lenders, if any,
designated in the indenture, agreement or document creating, evidencing or
governing such Senior Indebtedness or pursuant to which it was issued, or
otherwise designated by the holders of such Senior Indebtedness.
"Senior Indebtedness" shall have the meaning specified in the Securities
Purchase Agreement.
"Senior Lender" or "Senior Lenders" means one or more of the holders of Senior
Indebtedness.
6. Conversion.
(a) The Holder may, at the Holder's option, at any time, and from
time to time, prior to payment in full of this Note, convert the outstanding
Principal Amount of this Note and any accrued but unpaid interest due pursuant
to Section 2 above (the "Conversion Amount"), in whole or in part (but only
into full shares), into fully paid and non-assessable shares of the common
stock, no par value of the Maker (the "Common Shares"), at a rate equal to the
amount of $3.00 per Common Share (subject to adjustment as set forth in
Section 7) (the "Conversion Rate"). In order to exercise this conversion
right, the Holder must send written notice of the conversion to the Maker at
least 10 days prior to the specified conversion date. On the conversion date
(or as soon thereafter as is reasonably practicable), the Maker shall issue to
the Holder a share certificate for the Common Shares acquired upon conversion.
(c) Notwithstanding any other provisions of this Section 6 to the
contrary, the conversion rights of the Holder shall be subject to compliance
with all applicable federal and state securities laws, and the Holder agrees
to execute all required agreements and documents required by the Maker to
establish compliance with such laws.
(d) The Maker shall at all times reserve and keep available and free
of preemptive rights out of its authorized but unissued Common Shares, solely
for the purpose of issuance upon conversion of the Note, the number of Common
Shares as shall from time to time be sufficient to effect the conversion of
the Note, and if at any time the number of authorized but unissued Common
Shares shall not be sufficient to effect the conversion of the Note, the Maker
shall take the corporate action necessary to increase the number of its
authorized Common Shares to a number sufficient for this purpose. Maker
further covenants that all shares that may be issued upon the conversion of
this Note and payment of the Conversion Price, all as set forth herein, will
be free from all taxes, liens and charges in respect of the issue thereof.
Maker agrees that its issuance of this Note shall constitute full authority to
its officers who are charged with the duty of executing stock certificates to
execute and issue the necessary certificates for the shares upon the
conversion of this Note.
7. Adjustments.
(a) Reorganization, Merger or Sale of Assets
If at any time while this Note, or any portion thereof, is outstanding
there shall be (i) a reorganization (other than a combination,
reclassification, exchange or subdivision of shares otherwise provided for
herein), (ii) a merger or consolidation with or into another corporation in
which the Maker is not the surviving entity, or a reverse triangular merger in
which the Maker is the surviving entity but the shares of the Maker's capital
stock outstanding immediately prior to the merger are converted by virtue of
the merger into other property, whether in the form of securities, cash or
otherwise, or (iii) a sale or transfer of the Maker's properties and assets
as, or substantially as, an entirety to any other person, then, as a part of
such reorganization, merger, consolidation, sale or transfer, lawful provision
shall be made so that the holder of this Note shall thereafter be entitled to
receive upon conversion of the Notes the number of shares of stock or other
securities or property of the successor corporation resulting from such
reorganization, merger, consolidation, sale or transfer that a holder of the
shares deliverable upon conversion of this Note would have been entitled to
receive in such reorganization, consolidation, merger, sale or transfer if
this Note had been converted immediately before such reorganization, merger,
consolidation, sale or transfer, all subject to further adjustment as provided
in this Section 7. The foregoing provisions of this Section 7(a) shall
similarly apply to successive reorganizations, consolidations, mergers, sales
and transfers and to the stock or securities of any other corporation that are
at the time receivable upon the conversion of this Note. If the per-share
consideration payable to Holder for shares in connection with any such
transaction is in a form other than cash or marketable securities, then the
value of such consideration shall be determined in good faith by the Maker's
Board of Directors. In all events, appropriate adjustment (as determined in
good faith by the Maker's Board of Directors) shall be made in the application
of the provisions of this Note with respect to the rights and interests of
Holder after the transaction, to the end that the provisions of this Note
shall be applicable after that event, as near as reasonably may be, in
relation to any shares or other property deliverable after that event upon
conversion of this Note.
(b) Reclassification.
If the Maker, at any time while this Note, or any portion thereof,
remains outstanding, by reclassification of securities or otherwise, shall
change any of the securities as to which conversion rights under this Note
exist into the same or a different number of securities of any other class or
classes, this Note shall thereafter represent the right to acquire such number
and kind of securities as would have been issuable as the result of such
change with respect to the securities that were subject to the conversion
rights under this Note immediately prior to such reclassification or other
change and the Conversion Price or number of shares received upon such
conversion shall be appropriately adjusted, all subject to further adjustment
as provided in this Section 7.
(c) Split, Subdivision or Combination of Shares.
If the Maker at any time while this Note, or any portion thereof, remains
outstanding shall split, subdivide or combine the securities as to which
conversion rights under this Note exist, into a different number of securities
of the same class, the number of shares issuable upon conversion shall be
proportionately decreased in the case of a split or subdivision or
proportionately increased in the case of a combination.
(d) Adjustments for Dividends in Stock or Other Securities or Property.
If while this Note, or any portion hereof, remains outstanding and
unexpired the holders of the securities as to which conversion rights under
this Note exist at the time shall have received, or, on or after the record
date fixed for the determination of eligible stockholders, shall have become
entitled to receive, without payment therefor, other or additional stock or
other securities or property (other than cash) of the Maker by way of
dividend, then and in each case, this Note shall represent the right to
acquire upon conversion, in addition to the number of shares of the security
receivable upon conversion of this Note, and without payment of any additional
consideration therefor, the amount of such other or additional stock or other
securities or property (other than cash) of the Maker that such holder would
hold on the date of such conversion had it been the holder of record of the
security receivable upon conversion of this Note on the date hereof and had
thereafter, during the period from the date hereof to and including the date
of such conversion, retained such shares and/all other additional stock, other
securities or property available by this Note as aforesaid during such period,
giving effect to all adjustments called for during such period by the
provisions of this Section 7.
(e) Issuance of Shares Below Conversion Price.
(1) If while this Note, or any portion hereof, remains outstanding,
the Maker shall offer and sell Additional Shares of Common Stock (as
hereinafter defined) for consideration per share less than the Conversion
Price in effect immediately prior to the issuance of such Additional Shares of
Common Stock, except pursuant to the Maker's Stock Option Plan approved by the
Board of Directors, the Conversion Price in effect immediately prior to each
such issuance shall forthwith be adjusted upon such issuance to a price equal
to the price paid per share for such Additional Shares of Common Stock.
(2) For the purpose of the calculations provided in this Section
7(e), if at any time or from time to time after the date hereof the Maker
shall issue any rights or options for the purchase of, or stock or other
securities convertible into, Additional Shares of Common Stock (such Common
Stock or securities being hereinafter referred to as "Convertible
Securities"), then, and in each case, if the Effective Price (as hereinafter
defined) of such rights, options or Convertible Securities shall be less than
the Conversion Price, the Maker shall be deemed to have issued at the time of
the issuance of such rights or options or Convertible Securities the maximum
number of Additional Shares of Common Stock issuable upon exercise or
conversion thereof and to have received as consideration for the issuance of
such shares an amount equal to the total amount of the consideration, if any,
payable to the Maker upon exercise or conversion of such options or rights.
"Effective Price" shall mean the quotient determined by dividing the total of
all of such consideration by such maximum number of Additional Shares of
Common Stock. No further adjustment shall be made as a result of the actual
issuance of Additional Shares of Common Stock on the exercise of any such
rights or options or the conversion of any such Convertible Securities. In
the case of Convertible Securities which have a conversion price which is
based, in whole or in part, upon a discount to the market price or value of
the Common Stock, then for the purposes of calculating the Effective Price,
the consideration shall be deemed to include the minimum conversion price
payable to the Maker.
If any such rights or options or the conversion privilege represented by
any such Convertible Securities shall expire prior to the Maturity hereof
without having been exercised, the adjustment to the number of shares
available hereunder upon the issuance of such rights, options or Convertible
Securities shall be readjusted to the number of shares that would have been in
effect had an adjustment been made on the basis that the only Additional
Shares of Common Stock so issued were the Additional Shares of Common Stock,
if any, actually issued or sold on the exercise of such rights or options or
rights of conversion of such Convertible Securities, and such Additional
Shares of Common Stock, if any, were issued or sold for the consideration
actually received by the Maker for the granting of all such rights or options,
whether or not exercised, plus the consideration received for issuing or
selling the Convertible Securities actually converted plus the consideration,
if any, actually received by the Maker on the conversion of such Convertible
Securities.
(3) For the purpose of the calculations provided for in
this Section 7(e), if at any time or from time to time after the
date hereof the Maker shall issue any rights or options for the purchase of
Convertible Securities, then, in each such case, if the Effective Price
thereof is less than the then Conversion Price, the Maker shall be deemed to
have issued at the time of the issuance of such rights or options the maximum
number of Additional Shares of Common Stock issuable upon conversion of the
total amount of Convertible Securities covered by such rights or options and
to have received as consideration for the issuance of such Additional Shares
of Common Stock an amount equal to the amount of consideration, if any,
received by the Maker for the issuance of such rights or options, plus the
consideration, if any, payable to the Maker upon the conversion of such
Convertible Securities. "Effective Price" shall mean the quotient determined
by dividing the total amount of such consideration by such maximum number of
Additional Shares of Common Stock. No further adjustment of such Conversion
Price adjusted upon the issuance of such rights or options shall be made as a
result of the actual issuance of the Convertible Securities upon the exercise
of such rights or options or upon the actual issuance of Additional Shares of
Common Stock upon the conversion of such Convertible Securities.
(4) The term "Additional Shares of Common Stock" as used herein shall
mean all shares of Common Stock issued or deemed issued by the Maker after the
date hereof, other than (i) securities issued pursuant to or in connection
with the terms of the Securities Purchase Agreement; (ii) shares of Common
Stock issued upon conversion of convertible securities or the exercise of
common stock purchase warrants outstanding as of the date hereof; (iii) shares
of Common Stock issuable to employees, officers or directors pursuant to the
Maker's stock option plan; (iv) shares of Common Stock issued or issuable to
directors in connection with their service as directors; (v) shares of Common
Stock issued or issuable to directors, officers or employees for services
rendered or to be rendered pursuant to arrangements approved by the Board of
Directors; and (vii) shares of Common Stock issued in connection with a
business combination, merger, consolidation, asset acquisition or the
acquisition of the business of another corporation (through the purchase of
stock or assets) approved by the Board of Directors and all of the Conseco
Directors (as defined in the Securities Purchase Agreement).
(f) No Impairment.
Maker will not, by any voluntary action, avoid or seek to avoid the
observance or performance or any of the terms to be observed or performed
hereunder by Maker, but will at all times in good faith assist in the carrying
out of all the provisions of this Section 7 and in the taking of all such
action as may be necessary or appropriate in order to protect the rights of
Holder against impairment.
8. Notices. (a) Whenever the number of shares issuable or the
Conversion Price hereunder shall be adjusted pursuant to Section 7 hereof,
the Maker shall issue a certificate signed by its Chief Financial Officer
setting forth, in reasonable detail, the event requiring the adjustment, the
amount of the adjustment, the method by which such adjustment was calculated,
and the Conversion Price and number of shares purchasable hereunder after
giving effect to such adjustment, and shall cause a copy of such certificate
to be mailed (by first-class mail, postage prepaid) to Holder.
(b) All notices, requests, demands, or other communications that are
required or may be given pursuant to the terms of this Note shall be in
writing and delivery shall be deemed sufficient and to have been duly given on
the date of service if delivered personally or by facsimile transmission if
receipt is confirmed to the party to whom notice is to be given or on the
third day after mailing if mailed by first-class mail, return receipt
requested, and properly addressed as follows:
If to the Maker, to: ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Chief Financial Officer
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
If to the Holder, to: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
or to such other address as may be specified in writing by any of the above.
9. Remedies. The remedies provided by this Note shall be
cumulative, and shall be in addition to and not exclusive of other remedies
available at law, or in equity. The exercise or waiver by the Holder of any
right or remedy available under this Note shall not be deemed to be a waiver
of any other right or remedy available under this Note, at law, or in equity.
10. Miscellaneous.
(a) Whenever used herein, the singular includes the plural and the
plural includes the singular. The term "Maker" means the Corporation named in
the opening paragraph hereof and its successors and assigns.
(b) Indiana law shall govern this interpretation, construction, and
enforcement of this Note and all transactions contemplated hereby,
notwithstanding any state's choice of law rules to the contrary. Any
litigation related to this Note may be maintained only in the federal district
court for the Southern District of Indiana, Indianapolis Division (or any
successor jurisdiction) or in an Indiana state court in ▇▇▇▇▇▇▇▇ County or one
of the counties immediately contiguous to ▇▇▇▇▇▇▇▇ County, and each party
hereby irrevocably consents and submits to the jurisdiction of that federal or
state court and irrevocably waives any objection the party may have based upon
improper venue, forum non conveniens, or other similar doctrines or rules.
(c) Maker and any other party now or hereafter liable for the payment
of this Note in whole or in part, hereby severally (i) waive demand,
presentment for payment, notice of nonpayment, protest, notice of protest,
notice of intent to accelerate, notice of acceleration and all other notice,
filing of suit and diligence in collecting this Note, (ii) agree to the
release of any party primarily or secondarily liable hereon, (iii) agree that
the Holder shall not be required first to institute suit or exhaust its
remedies hereon against Maker or others liable or to become liable hereon or
to enforce its rights against them, and (iv) consent to any extension or
postponement of time of payment of this Note and to any other indulgence with
respect hereto without notice thereof to any of them.
(d) Holder, by acceptance hereof, acknowledges that this Note and the
shares to be issued upon conversion hereof are being acquired solely for
Holder's own account and not as a nominee for any other party, and for
investment, and that Holder will not offer, sell or otherwise dispose of this
Note or any shares to be issued upon conversion hereof except under
circumstances that will not result in a violation of applicable federal and
state securities laws. Upon exercise of this Note, Holder shall, if requested
by Maker, confirm in writing, in a form satisfactory to Maker, that the shares
so purchased are being acquired solely for Holder's own account and not as a
nominee for any other party, for investment, and not with a view toward
distribution or resale.
All shares issued upon exercise hereof shall be stamped or
imprinted with a legend in substantially the following form (in addition to
any legend required by state securities laws):
THE SECURITIES REPRESENTED HEREBY HAVE BEEN ACQUIRED FOR INVESTMENT
AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933. SUCH
SECURITIES AND ANY SECURITIES OR SHARES ISSUED UPON CONVERSION THEREOF MAY NOT
BE SOLD OR TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN EXEMPTION
THEREFROM UNDER SAID ACT.
(e) The captions of the sections of this Note are solely for
convenient reference and shall not be deemed to affect the meaning or
interpretation of any provision of this Note.
IN WITNESS WHEREOF, THE MAKER HAS EXECUTED, ACKNOWLEDGED, AND DELIVERED
THIS NOTE AS OF THE DAY AND YEAR FIRST ABOVE WRITTEN.
GENERAL ACCEPTANCE CORPORATION
BY: __/s/ ▇▇▇▇▇▇ ▇. Bozarth____
PRINTED :_Martin C. Bozarth____
TITLE: __Chief Financial Officer_
Exhibit 10.79
THIS SUBORDINATED CONVERTIBLE NOTE HAS NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE OR OTHER SECURITIES LAWS AND
MAY NOT BE OFFERED, SOLD, TRANSFERRED OR ASSIGNED EXCEPT (I) PURSUANT TO
REGISTRATIONS THEREOF UNDER SUCH LAWS, OR (II) IF, IN THE OPINION OF COUNSEL
REASONABLY SATISFACTORY TO GENERAL ACCEPTANCE CORPORATION THE PROPOSED
TRANSFER MAY BE EFFECTED IN COMPLIANCE WITH APPLICABLE SECURITIES LAWS WITHOUT
SUCH REGISTRATIONS.
THIS SUBORDINATED CONVERTIBLE NOTE IS SUBJECT TO
A SUBORDINATION AGREEMENT DATED APRIL 11, 1997, IN
FAVOR OF GENERAL ELECTRIC CAPITAL CORPORATION.
12% SUBORDINATED CONVERTIBLE NOTE
$500,000 Dated: April 11, 1997
For value received, General Acceptance Corporation, an Indiana
corporation with its principal offices at ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇ ▇▇▇▇▇ ("Maker"), hereby promises to pay to the order of ▇▇▇▇ ▇.
▇▇▇▇▇▇, residing at ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇, or assigns
(collectively, the "Holder"), at its principal office or at such other place
as the Holder may direct in writing to the Maker, in lawful money of the
United States of America, the principal amount of Five Hundred Thousand
Dollars ($500,000) and interest, as provided herein, all without relief from
valuation or appraisement laws.
This Note is one of a series of 12% Subordinated Convertible Notes in the
aggregate principal amount of $13,250,000, of which $10,000,000 is being
issued to Capitol American Life Insurance Company pursuant to a Securities
Purchase Agreement dated as of April 11, 1997 ("Securities Purchase
Agreement") and the balance are being issued to the Holder and other
stockholders of the Maker in exchange for the surrender of certain promissory
notes payable to them by the Maker. Purchaser acknowledges and agrees that
the Note purchased by Capitol American Life Insurance Company shall be on a
parity with the rights of the Holder under this Note and the other Notes
without priority or distinction, and that no payments of principal or interest
on this Note shall be made by the Company unless a pro rata payment of
principal and interest is paid to the holders of all Notes outstanding from
time to time. The terms and provisions of the Securities Purchase Agreement
shall govern the terms and provisions of this Note and any conflict between
this Note and the Securities Purchase Agreement shall be resolved by the
Securities Purchase Agreement.
1. Payment of Principal. Subject to acceleration as provided for
elsewhere in this 12% Subordinated Convertible Note ("Note"), the Maker shall
pay to the Holder the principal balance of this Note on April 11, 2000, plus
all accrued and unpaid interest on the full principal balance of this Note as
of that date.
2. Interest. Interest on the unpaid principal balance hereof
existing from time to time shall accrue at the rate of 12% per annum;
provided, however, interest shall accrue at the rate of 15% per annum so long
as an "Event of Default," as specified in Section 4(a), exists hereunder.
Interest shall be calculated on the basis of actual daily balances of
outstanding principal for the exact number of days the principal remains
outstanding and shall be computed on the basis of a 360-day year. Interest
shall be due and payable on a quarterly basis, on March 31, June 30, September
30 and December 31.
3. Prepayment. The Maker may not prepay all or any portion of the
unpaid principal balance hereof or accrued interest without the consent of
Holder.
4. Default and Remedy.
(a) An "Event of Default" under this Note shall mean the occurrence
of any of the following events: (i) the Maker defaults in the payment of
principal of or interest on this Note when due and the Maker does not cure
that default within 5 days after the due date; (ii) the Maker defaults in the
performance of any obligation under this Note (other than the payment
described in the immediately preceding clause) and the does not cure that
default within 30 days after receipt by the Maker of written notice from the
Holder; (iii) an "Event of Default" or a "Triggering Event", both as defined
in the Securities Purchase Agreement, shall occur; or (iv) the Maker commences
proceedings in any court under the United States Bankruptcy Code, or any other
debtors' relief or insolvency act, whether state or federal (the "Bankruptcy
Laws"), or any other person commences proceedings under the Bankruptcy Laws
against the Maker and those proceedings are not stayed or dismissed within 60
days.
(b) If any Event of Default occurs and is continuing, then the Holder
shall have the right and option to declare, by notice in writing sent by
registered or certified mail to the Maker, the full unpaid principal balance
hereof, together with all accrued and unpaid interest thereon, immediately due
and payable without further demand, notice, or presentment for payment.
Alternatively, if a Triggering Event occurs, the Holder shall have the right
and option to cause the Maker to redeem this Note pursuant to the procedure
set forth in Section 10.3 of the Securities Purchase Agreement.
(c) If this Note is collected or attempted to be collected by the
initiation or prosecution of any suit or through any bankruptcy court, or by
any judicial proceeding, or is placed in the hands of attorneys for
collection, then the Maker shall pay, in addition to all other amounts owing
hereunder, all court costs and reasonable attorney's fees incurred by the
Holder.
5. Subordination.
(a) Subordination to Senior Debt. Notwithstanding anything to the
contrary contained in this Note, the Maker covenants and agrees, and the
Holder by acceptance of this Note likewise covenants and agrees, that the
Maker's indebtedness under this Note shall be junior and subordinate to the
Senior Indebtedness (as hereafter defined) to the extent and in the manner set
forth in this Section 5, except to the extent otherwise agreed to in writing
by the Holder and any Senior Lender (as hereinafter defined) with respect to
the Senior Indebtedness held by or payable to that Senior Lender. Each
subsection of this Section 5 shall be given independent effect so that if a
particular payment or action is prohibited by any one of these subsections, it
shall be prohibited although it otherwise would not be prohibited by another
subsection.
(b) Payment Default on Senior Indebtedness. If at any time a
default occurs in the payment when due (whether at maturity or upon
acceleration or mandatory prepayment, or on any principal installment payment
date or interest payment date, or otherwise) ("Payment Default") of any Senior
Indebtedness, then at all times thereafter until (i) the Payment Default has
been cured, (ii) the Payment Default or the benefits of this sentence have
been waived in writing by or on behalf of the Senior Lenders holding that
Senior Indebtedness, or (iii) payment in full of all affected Senior
Indebtedness, the Maker shall not, directly or indirectly, make any
Distribution of Assets (as hereinafter defined) or Payment (as hereinafter
defined) with respect to this Note.
(c) Dissolution, Liquidation or Reorganization of Maker. In the
event of any insolvency, bankruptcy or receivership case or proceeding or any
dissolution, winding up, liquidation, reorganization or other similar
proceeding relating to the Maker, its property or its operations (whether
voluntary or involuntary and whether in bankruptcy, insolvency or receivership
proceedings or otherwise), upon an assignment for the benefit of creditors, or
any other marshaling of the assets of the Maker, then payment in full of all
Senior Indebtedness then or thereafter to become due shall occur before the
Holder shall be entitled to receive or retain any Distribution of Assets or
Payment with respect to this Note. In any such proceedings, any Distribution
of Assets or Payment to which the Holder would be entitled if this Note were
not subordinated to the Senior Indebtedness shall be paid by the Maker or the
agent or other person making such payment or distribution, or by the Holder if
received by the Holder, directly to each Senior Lender, pro forma, to the
extent necessary to make payment in full of all Senior Indebtedness, after
giving effect to any concurrent payment or distribution to or for the benefit
of the Senior Lenders.
(d) Subrogation. No Distribution of Assets or Payment to which the
Holder would have been entitled except for the provisions of this Section 5
and which are received by or paid over to the Senior Lenders or their
Representative (as hereinafter defined) shall, as between the Maker and its
creditors other than the Senior Lenders and the Holder, be deemed to be a
payment by the Maker to the Senior Lenders or on account of the Senior
Indebtedness, and the Holder shall be subrogated (without any duty on the part
of the Senior Lenders to warrant, create, effectuate, preserve or protect such
subrogation) to the then or thereafter existing rights of the Senior Lenders
to receive Distributions of Assets or payments made on the Senior Indebtedness
until this Note shall be paid in full.
(e) Payments Held in Trust. If the Holder receives any
Distribution of Assets or Payment which the Holder is not entitled to retain
under the provisions of this Section 5, any such Distribution of Assets or
Payment so received shall be held in trust for the Senior Lenders, shall not
be commingled with any other assets of the Holder, and shall be paid to the
Senior Lenders, pro rata, to the extent necessary to make payment in full,
after giving effect to any concurrent payment or distribution to or for the
benefit of the Senior Lenders.
(f) Changes in Senior Indebtedness. Any Senior Lender may at any
time and from time to time with notice to the Holder: (i) extend, renew,
modify, waive or amend the terms of the Senior Indebtedness; (ii) sell,
exchange, release or otherwise deal with any property pledged, mortgaged or
otherwise securing the Senior Indebtedness; (iii) release any guarantor or any
other person liable in any manner for the Senior Indebtedness or amend or
waive the terms of the Senior Indebtedness; (iv) exercise or refrain from
exercising any rights against the Maker or any other persons; (v) apply in any
order any sums by whomever paid or however to the Senior Indebtedness; and
(vi) take any other action which otherwise might be deemed to impair the
Holder's rights. Any and all of such actions may be taken by the Senior
Lenders without incurring responsibility to the Holder and without impairing
or releasing the Holder's obligations to the Senior Lenders.
(g) Third-Party Beneficiary, Etc.. The foregoing provisions
regarding subordination are solely for the purpose of defining the relative
rights of the Senior Lenders on the one hand and the Holder on the other hand.
Such provisions are for the benefit of the Senior Lenders (and their
successors and assigns) and shall be enforceable by them directly against the
Holder except to the extent otherwise agreed to in writing by the Holder and
any other Senior Lender.
(h) Definitions. As used in this Section 5 (or as elsewhere used
in this Note) the following terms shall have the meanings indicated:
"Distribution of Assets" means any distribution of assets of the Maker or any
of its subsidiaries of any kind or character, whether a payment, purchase or
other acquisition or retirement for cash, property, or securities, with
respect to the Maker's obligations under this Note.
"Payment" means payment of any obligation now or hereafter existing under this
Note (as it may hereafter be amended, supplemented, or otherwise modified from
time to time), whether created directly or acquired by assignment or
otherwise, and interest and premiums, if any, thereon and all other amounts
payable in respect thereof or in connection therewith.
"Representative" means, with respect to any Senior Indebtedness, the trustee,
agent, or other representative for one or more of the Senior Lenders, if any,
designated in the indenture, agreement or document creating, evidencing or
governing such Senior Indebtedness or pursuant to which it was issued, or
otherwise designated by the holders of such Senior Indebtedness.
"Senior Indebtedness" shall have the meaning specified in the Securities
Purchase Agreement.
"Senior Lender" or "Senior Lenders" means one or more of the holders of Senior
Indebtedness.
6. Conversion.
(a) The Holder may, at the Holder's option, at any time, and from
time to time, prior to payment in full of this Note, convert the outstanding
Principal Amount of this Note and any accrued but unpaid interest due pursuant
to Section 2 above (the "Conversion Amount"), in whole or in part (but only
into full shares), into fully paid and non-assessable shares of the common
stock, no par value of the Maker (the "Common Shares"), at a rate equal to the
amount of $3.00 per Common Share (subject to adjustment as set forth in
Section 7) (the "Conversion Rate"). In order to exercise this conversion
right, the Holder must send written notice of the conversion to the Maker at
least 10 days prior to the specified conversion date. On the conversion date
(or as soon thereafter as is reasonably practicable), the Maker shall issue to
the Holder a share certificate for the Common Shares acquired upon conversion.
(c) Notwithstanding any other provisions of this Section 6 to the
contrary, the conversion rights of the Holder shall be subject to compliance
with all applicable federal and state securities laws, and the Holder agrees
to execute all required agreements and documents required by the Maker to
establish compliance with such laws.
(d) The Maker shall at all times reserve and keep available and free
of preemptive rights out of its authorized but unissued Common Shares, solely
for the purpose of issuance upon conversion of the Note, the number of Common
Shares as shall from time to time be sufficient to effect the conversion of
the Note, and if at any time the number of authorized but unissued Common
Shares shall not be sufficient to effect the conversion of the Note, the Maker
shall take the corporate action necessary to increase the number of its
authorized Common Shares to a number sufficient for this purpose. Maker
further covenants that all shares that may be issued upon the conversion of
this Note and payment of the Conversion Price, all as set forth herein, will
be free from all taxes, liens and charges in respect of the issue thereof.
Maker agrees that its issuance of this Note shall constitute full authority to
its officers who are charged with the duty of executing stock certificates to
execute and issue the necessary certificates for the shares upon the
conversion of this Note.
7. Adjustments.
(a) Reorganization, Merger or Sale of Assets
If at any time while this Note, or any portion thereof, is outstanding
there shall be (i) a reorganization (other than a combination,
reclassification, exchange or subdivision of shares otherwise provided for
herein), (ii) a merger or consolidation with or into another corporation in
which the Maker is not the surviving entity, or a reverse triangular merger in
which the Maker is the surviving entity but the shares of the Maker's capital
stock outstanding immediately prior to the merger are converted by virtue of
the merger into other property, whether in the form of securities, cash or
otherwise, or (iii) a sale or transfer of the Maker's properties and assets
as, or substantially as, an entirety to any other person, then, as a part of
such reorganization, merger, consolidation, sale or transfer, lawful provision
shall be made so that the holder of this Note shall thereafter be entitled to
receive upon conversion of the Notes the number of shares of stock or other
securities or property of the successor corporation resulting from such
reorganization, merger, consolidation, sale or transfer that a holder of the
shares deliverable upon conversion of this Note would have been entitled to
receive in such reorganization, consolidation, merger, sale or transfer if
this Note had been converted immediately before such reorganization, merger,
consolidation, sale or transfer, all subject to further adjustment as provided
in this Section 7. The foregoing provisions of this Section 7(a) shall
similarly apply to successive reorganizations, consolidations, mergers, sales
and transfers and to the stock or securities of any other corporation that are
at the time receivable upon the conversion of this Note. If the per-share
consideration payable to Holder for shares in connection with any such
transaction is in a form other than cash or marketable securities, then the
value of such consideration shall be determined in good faith by the Maker's
Board of Directors. In all events, appropriate adjustment (as determined in
good faith by the Maker's Board of Directors) shall be made in the application
of the provisions of this Note with respect to the rights and interests of
Holder after the transaction, to the end that the provisions of this Note
shall be applicable after that event, as near as reasonably may be, in
relation to any shares or other property deliverable after that event upon
conversion of this Note.
(b) Reclassification.
If the Maker, at any time while this Note, or any portion thereof,
remains outstanding, by reclassification of securities or otherwise, shall
change any of the securities as to which conversion rights under this Note
exist into the same or a different number of securities of any other class or
classes, this Note shall thereafter represent the right to acquire such number
and kind of securities as would have been issuable as the result of such
change with respect to the securities that were subject to the conversion
rights under this Note immediately prior to such reclassification or other
change and the Conversion Price or number of shares received upon such
conversion shall be appropriately adjusted, all subject to further adjustment
as provided in this Section 7.
(c) Split, Subdivision or Combination of Shares.
If the Maker at any time while this Note, or any portion thereof, remains
outstanding shall split, subdivide or combine the securities as to which
conversion rights under this Note exist, into a different number of securities
of the same class, the number of shares issuable upon conversion shall be
proportionately decreased in the case of a split or subdivision or
proportionately increased in the case of a combination.
(d) Adjustments for Dividends in Stock or Other Securities or Property.
If while this Note, or any portion hereof, remains outstanding and
unexpired the holders of the securities as to which conversion rights under
this Note exist at the time shall have received, or, on or after the record
date fixed for the determination of eligible stockholders, shall have become
entitled to receive, without payment therefor, other or additional stock or
other securities or property (other than cash) of the Maker by way of
dividend, then and in each case, this Note shall represent the right to
acquire upon conversion, in addition to the number of shares of the security
receivable upon conversion of this Note, and without payment of any additional
consideration therefor, the amount of such other or additional stock or other
securities or property (other than cash) of the Maker that such holder would
hold on the date of such conversion had it been the holder of record of the
security receivable upon conversion of this Note on the date hereof and had
thereafter, during the period from the date hereof to and including the date
of such conversion, retained such shares and/all other additional stock, other
securities or property available by this Note as aforesaid during such period,
giving effect to all adjustments called for during such period by the
provisions of this Section 7.
(e) Issuance of Shares Below Conversion Price.
(1) If while this Note, or any portion hereof, remains outstanding,
the Maker shall offer and sell Additional Shares of Common Stock (as
hereinafter defined) for consideration per share less than the Conversion
Price in effect immediately prior to the issuance of such Additional Shares of
Common Stock, except pursuant to the Maker's Stock Option Plan approved by the
Board of Directors, the Conversion Price in effect immediately prior to each
such issuance shall forthwith be adjusted upon such issuance to a price equal
to the price paid per share for such Additional Shares of Common Stock.
(2) For the purpose of the calculations provided in this Section
7(e), if at any time or from time to time after the date hereof the Maker
shall issue any rights or options for the purchase of, or stock or other
securities convertible into, Additional Shares of Common Stock (such Common
Stock or securities being hereinafter referred to as "Convertible
Securities"), then, and in each case, if the Effective Price (as hereinafter
defined) of such rights, options or Convertible Securities shall be less than
the Conversion Price, the Maker shall be deemed to have issued at the time of
the issuance of such rights or options or Convertible Securities the maximum
number of Additional Shares of Common Stock issuable upon exercise or
conversion thereof and to have received as consideration for the issuance of
such shares an amount equal to the total amount of the consideration, if any,
payable to the Maker upon exercise or conversion of such options or rights.
"Effective Price" shall mean the quotient determined by dividing the total of
all of such consideration by such maximum number of Additional Shares of
Common Stock. No further adjustment shall be made as a result of the actual
issuance of Additional Shares of Common Stock on the exercise of any such
rights or options or the conversion of any such Convertible Securities. In
the case of Convertible Securities which have a conversion price which is
based, in whole or in part, upon a discount to the market price or value of
the Common Stock, then for the purposes of calculating the Effective Price,
the consideration shall be deemed to include the minimum conversion price
payable to the Maker.
If any such rights or options or the conversion privilege represented by
any such Convertible Securities shall expire prior to the Maturity hereof
without having been exercised, the adjustment to the number of shares
available hereunder upon the issuance of such rights, options or Convertible
Securities shall be readjusted to the number of shares that would have been in
effect had an adjustment been made on the basis that the only Additional
Shares of Common Stock so issued were the Additional Shares of Common Stock,
if any, actually issued or sold on the exercise of such rights or options or
rights of conversion of such Convertible Securities, and such Additional
Shares of Common Stock, if any, were issued or sold for the consideration
actually received by the Maker for the granting of all such rights or options,
whether or not exercised, plus the consideration received for issuing or
selling the Convertible Securities actually converted plus the consideration,
if any, actually received by the Maker on the conversion of such Convertible
Securities.
(3) For the purpose of the calculations provided for in
this Section 7(e), if at any time or from time to time after the
date hereof the Maker shall issue any rights or options for the purchase of
Convertible Securities, then, in each such case, if the Effective Price
thereof is less than the then Conversion Price, the Maker shall be deemed to
have issued at the time of the issuance of such rights or options the maximum
number of Additional Shares of Common Stock issuable upon conversion of the
total amount of Convertible Securities covered by such rights or options and
to have received as consideration for the issuance of such Additional Shares
of Common Stock an amount equal to the amount of consideration, if any,
received by the Maker for the issuance of such rights or options, plus the
consideration, if any, payable to the Maker upon the conversion of such
Convertible Securities. "Effective Price" shall mean the quotient determined
by dividing the total amount of such consideration by such maximum number of
Additional Shares of Common Stock. No further adjustment of such Conversion
Price adjusted upon the issuance of such rights or options shall be made as a
result of the actual issuance of the Convertible Securities upon the exercise
of such rights or options or upon the actual issuance of Additional Shares of
Common Stock upon the conversion of such Convertible Securities.
(4) The term "Additional Shares of Common Stock" as used herein shall
mean all shares of Common Stock issued or deemed issued by the Maker after the
date hereof, other than (i) securities issued pursuant to or in connection
with the terms of the Securities Purchase Agreement; (ii) shares of Common
Stock issued upon conversion of convertible securities or the exercise of
common stock purchase warrants outstanding as of the date hereof; (iii) shares
of Common Stock issuable to employees, officers or directors pursuant to the
Maker's stock option plan; (iv) shares of Common Stock issued or issuable to
directors in connection with their service as directors; (v) shares of Common
Stock issued or issuable to directors, officers or employees for services
rendered or to be rendered pursuant to arrangements approved by the Board of
Directors; and (vii) shares of Common Stock issued in connection with a
business combination, merger, consolidation, asset acquisition or the
acquisition of the business of another corporation (through the purchase of
stock or assets) approved by the Board of Directors and all of the Conseco
Directors (as defined in the Securities Purchase Agreement).
(f) No Impairment.
Maker will not, by any voluntary action, avoid or seek to avoid the
observance or performance or any of the terms to be observed or performed
hereunder by Maker, but will at all times in good faith assist in the carrying
out of all the provisions of this Section 7 and in the taking of all such
action as may be necessary or appropriate in order to protect the rights of
Holder against impairment.
8. Notices. (a) Whenever the number of shares issuable or the
Conversion Price hereunder shall be adjusted pursuant to Section 7 hereof,
the Maker shall issue a certificate signed by its Chief Financial Officer
setting forth, in reasonable detail, the event requiring the adjustment, the
amount of the adjustment, the method by which such adjustment was calculated,
and the Conversion Price and number of shares purchasable hereunder after
giving effect to such adjustment, and shall cause a copy of such certificate
to be mailed (by first-class mail, postage prepaid) to Holder.
(b) All notices, requests, demands, or other communications that are
required or may be given pursuant to the terms of this Note shall be in
writing and delivery shall be deemed sufficient and to have been duly given on
the date of service if delivered personally or by facsimile transmission if
receipt is confirmed to the party to whom notice is to be given or on the
third day after mailing if mailed by first-class mail, return receipt
requested, and properly addressed as follows:
If to the Maker, to: ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Chief Financial Officer
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
If to the Holder, to: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
or to such other address as may be specified in writing by any of the above.
9. Remedies. The remedies provided by this Note shall be
cumulative, and shall be in addition to and not exclusive of other remedies
available at law, or in equity. The exercise or waiver by the Holder of any
right or remedy available under this Note shall not be deemed to be a waiver
of any other right or remedy available under this Note, at law, or in equity.
10. Miscellaneous.
(a) Whenever used herein, the singular includes the plural and the
plural includes the singular. The term "Maker" means the Corporation named in
the opening paragraph hereof and its successors and assigns.
(b) Indiana law shall govern this interpretation, construction, and
enforcement of this Note and all transactions contemplated hereby,
notwithstanding any state's choice of law rules to the contrary. Any
litigation related to this Note may be maintained only in the federal district
court for the Southern District of Indiana, Indianapolis Division (or any
successor jurisdiction) or in an Indiana state court in ▇▇▇▇▇▇▇▇ County or one
of the counties immediately contiguous to ▇▇▇▇▇▇▇▇ County, and each party
hereby irrevocably consents and submits to the jurisdiction of that federal or
state court and irrevocably waives any objection the party may have based upon
improper venue, forum non conveniens, or other similar doctrines or rules.
(c) Maker and any other party now or hereafter liable for the payment
of this Note in whole or in part, hereby severally (i) waive demand,
presentment for payment, notice of nonpayment, protest, notice of protest,
notice of intent to accelerate, notice of acceleration and all other notice,
filing of suit and diligence in collecting this Note, (ii) agree to the
release of any party primarily or secondarily liable hereon, (iii) agree that
the Holder shall not be required first to institute suit or exhaust its
remedies hereon against Maker or others liable or to become liable hereon or
to enforce its rights against them, and (iv) consent to any extension or
postponement of time of payment of this Note and to any other indulgence with
respect hereto without notice thereof to any of them.
(d) Holder, by acceptance hereof, acknowledges that this Note and the
shares to be issued upon conversion hereof are being acquired solely for
Holder's own account and not as a nominee for any other party, and for
investment, and that Holder will not offer, sell or otherwise dispose of this
Note or any shares to be issued upon conversion hereof except under
circumstances that will not result in a violation of applicable federal and
state securities laws. Upon exercise of this Note, Holder shall, if requested
by Maker, confirm in writing, in a form satisfactory to Maker, that the shares
so purchased are being acquired solely for Holder's own account and not as a
nominee for any other party, for investment, and not with a view toward
distribution or resale.
All shares issued upon exercise hereof shall be stamped or
imprinted with a legend in substantially the following form (in addition to
any legend required by state securities laws):
THE SECURITIES REPRESENTED HEREBY HAVE BEEN ACQUIRED FOR INVESTMENT
AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933. SUCH
SECURITIES AND ANY SECURITIES OR SHARES ISSUED UPON CONVERSION THEREOF MAY NOT
BE SOLD OR TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN EXEMPTION
THEREFROM UNDER SAID ACT.
(e) The captions of the sections of this Note are solely for
convenient reference and shall not be deemed to affect the meaning or
interpretation of any provision of this Note.
IN WITNESS WHEREOF, THE MAKER HAS EXECUTED, ACKNOWLEDGED, AND DELIVERED
THIS NOTE AS OF THE DAY AND YEAR FIRST ABOVE WRITTEN.
GENERAL ACCEPTANCE CORPORATION
BY: /s/▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
PRINTED: _Martin C. Bozarth____
TITLE: Chief Financial Officer
Exhibit 10.80
THIS SUBORDINATED CONVERTIBLE NOTE HAS NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE OR OTHER SECURITIES LAWS AND
MAY NOT BE OFFERED, SOLD, TRANSFERRED OR ASSIGNED EXCEPT (I) PURSUANT TO
REGISTRATIONS THEREOF UNDER SUCH LAWS, OR (II) IF, IN THE OPINION OF COUNSEL
REASONABLY SATISFACTORY TO GENERAL ACCEPTANCE CORPORATION THE PROPOSED
TRANSFER MAY BE EFFECTED IN COMPLIANCE WITH APPLICABLE SECURITIES LAWS WITHOUT
SUCH REGISTRATIONS.
THIS SUBORDINATED CONVERTIBLE NOTE IS SUBJECT TO
A SUBORDINATION AGREEMENT DATED APRIL 11, 1997, IN
FAVOR OF GENERAL ELECTRIC CAPITAL CORPORATION.
12% SUBORDINATED CONVERTIBLE NOTE
$1,000,000 Dated: April 11, 1997
For value received, General Acceptance Corporation, an Indiana
corporation with its principal offices at ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇ ▇▇▇▇▇ ("Maker"), hereby promises to pay to the order of ▇▇▇▇▇ ▇▇▇▇▇▇,
residing at ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇, or assigns
(collectively, the "Holder"), at its principal office or at such other place
as the Holder may direct in writing to the Maker, in lawful money of the
United States of America, the principal amount of One Million Dollars
($1,000,000) and interest, as provided herein, all without relief from
valuation or appraisement laws.
This Note is one of a series of 12% Subordinated Convertible Notes in the
aggregate principal amount of $13,250,000, of which $10,000,000 is being
issued to Capitol American Life Insurance Company pursuant to a Securities
Purchase Agreement dated as of April 11, 1997 ("Securities Purchase
Agreement") and the balance are being issued to the Holder and other
stockholders of the Maker in exchange for the surrender of certain promissory
notes payable to them by the Maker. Purchaser acknowledges and agrees that
the Note purchased by Capitol American Life Insurance Company shall be on a
parity with the rights of the Holder under this Note and the other Notes
without priority or distinction, and that no payments of principal or interest
on this Note shall be made by the Company unless a pro rata payment of
principal and interest is paid to the holders of all Notes outstanding from
time to time. The terms and provisions of the Securities Purchase Agreement
shall govern the terms and provisions of this Note and any conflict between
this Note and the Securities Purchase Agreement shall be resolved by the
Securities Purchase Agreement.
1. Payment of Principal. Subject to acceleration as provided for
elsewhere in this 12% Subordinated Convertible Note ("Note"), the Maker shall
pay to the Holder the principal balance of this Note on April, 2000, plus all
accrued and unpaid interest on the full principal balance of this Note as of
that date.
2. Interest. Interest on the unpaid principal balance hereof
existing from time to time shall accrue at the rate of 12% per annum;
provided, however, interest shall accrue at the rate of 15% per annum so long
as an "Event of Default," as specified in Section 4(a), exists hereunder.
Interest shall be calculated on the basis of actual daily balances of
outstanding principal for the exact number of days the principal remains
outstanding and shall be computed on the basis of a 360-day year. Interest
shall be due and payable on a quarterly basis, on March 31, June 30, September
30 and December 31.
3. Prepayment. The Maker may not prepay all or any portion of the
unpaid principal balance hereof or accrued interest without the consent of
Holder.
4. Default and Remedy.
(a) An "Event of Default" under this Note shall mean the occurrence
of any of the following events: (i) the Maker defaults in the payment of
principal of or interest on this Note when due and the Maker does not cure
that default within 5 days after the due date; (ii) the Maker defaults in the
performance of any obligation under this Note (other than the payment
described in the immediately preceding clause) and the does not cure that
default within 30 days after receipt by the Maker of written notice from the
Holder; (iii) an "Event of Default" or a "Triggering Event", both as defined
in the Securities Purchase Agreement, shall occur; or (iv) the Maker commences
proceedings in any court under the United States Bankruptcy Code, or any other
debtors' relief or insolvency act, whether state or federal (the "Bankruptcy
Laws"), or any other person commences proceedings under the Bankruptcy Laws
against the Maker and those proceedings are not stayed or dismissed within 60
days.
(b) If any Event of Default occurs and is continuing, then the Holder
shall have the right and option to declare, by notice in writing sent by
registered or certified mail to the Maker, the full unpaid principal balance
hereof, together with all accrued and unpaid interest thereon, immediately due
and payable without further demand, notice, or presentment for payment.
Alternatively, if a Triggering Event occurs, the Holder shall have the right
and option to cause the Maker to redeem this Note pursuant to the procedure
set forth in Section 10.3 of the Securities Purchase Agreement.
(c) If this Note is collected or attempted to be collected by the
initiation or prosecution of any suit or through any bankruptcy court, or by
any judicial proceeding, or is placed in the hands of attorneys for
collection, then the Maker shall pay, in addition to all other amounts owing
hereunder, all court costs and reasonable attorney's fees incurred by the
Holder.
5. Subordination.
(a) Subordination to Senior Debt. Notwithstanding anything to the
contrary contained in this Note, the Maker covenants and agrees, and the
Holder by acceptance of this Note likewise covenants and agrees, that the
Maker's indebtedness under this Note shall be junior and subordinate to the
Senior Indebtedness (as hereafter defined) to the extent and in the manner set
forth in this Section 5, except to the extent otherwise agreed to in writing
by the Holder and any Senior Lender (as hereinafter defined) with respect to
the Senior Indebtedness held by or payable to that Senior Lender. Each
subsection of this Section 5 shall be given independent effect so that if a
particular payment or action is prohibited by any one of these subsections, it
shall be prohibited although it otherwise would not be prohibited by another
subsection.
(b) Payment Default on Senior Indebtedness. If at any time a
default occurs in the payment when due (whether at maturity or upon
acceleration or mandatory prepayment, or on any principal installment payment
date or interest payment date, or otherwise) ("Payment Default") of any Senior
Indebtedness, then at all times thereafter until (i) the Payment Default has
been cured, (ii) the Payment Default or the benefits of this sentence have
been waived in writing by or on behalf of the Senior Lenders holding that
Senior Indebtedness, or (iii) payment in full of all affected Senior
Indebtedness, the Maker shall not, directly or indirectly, make any
Distribution of Assets (as hereinafter defined) or Payment (as hereinafter
defined) with respect to this Note.
(c) Dissolution, Liquidation or Reorganization of Maker. In the
event of any insolvency, bankruptcy or receivership case or proceeding or any
dissolution, winding up, liquidation, reorganization or other similar
proceeding relating to the Maker, its property or its operations (whether
voluntary or involuntary and whether in bankruptcy, insolvency or receivership
proceedings or otherwise), upon an assignment for the benefit of creditors, or
any other marshaling of the assets of the Maker, then payment in full of all
Senior Indebtedness then or thereafter to become due shall occur before the
Holder shall be entitled to receive or retain any Distribution of Assets or
Payment with respect to this Note. In any such proceedings, any Distribution
of Assets or Payment to which the Holder would be entitled if this Note were
not subordinated to the Senior Indebtedness shall be paid by the Maker or the
agent or other person making such payment or distribution, or by the Holder if
received by the Holder, directly to each Senior Lender, pro forma, to the
extent necessary to make payment in full of all Senior Indebtedness, after
giving effect to any concurrent payment or distribution to or for the benefit
of the Senior Lenders.
(d) Subrogation. No Distribution of Assets or Payment to which the
Holder would have been entitled except for the provisions of this Section 5
and which are received by or paid over to the Senior Lenders or their
Representative (as hereinafter defined) shall, as between the Maker and its
creditors other than the Senior Lenders and the Holder, be deemed to be a
payment by the Maker to the Senior Lenders or on account of the Senior
Indebtedness, and the Holder shall be subrogated (without any duty on the part
of the Senior Lenders to warrant, create, effectuate, preserve or protect such
subrogation) to the then or thereafter existing rights of the Senior Lenders
to receive Distributions of Assets or payments made on the Senior Indebtedness
until this Note shall be paid in full.
(e) Payments Held in Trust. If the Holder receives any
Distribution of Assets or Payment which the Holder is not entitled to retain
under the provisions of this Section 5, any such Distribution of Assets or
Payment so received shall be held in trust for the Senior Lenders, shall not
be commingled with any other assets of the Holder, and shall be paid to the
Senior Lenders, pro rata, to the extent necessary to make payment in full,
after giving effect to any concurrent payment or distribution to or for the
benefit of the Senior Lenders.
(f) Changes in Senior Indebtedness. Any Senior Lender may at any
time and from time to time with notice to the Holder: (i) extend, renew,
modify, waive or amend the terms of the Senior Indebtedness; (ii) sell,
exchange, release or otherwise deal with any property pledged, mortgaged or
otherwise securing the Senior Indebtedness; (iii) release any guarantor or any
other person liable in any manner for the Senior Indebtedness or amend or
waive the terms of the Senior Indebtedness; (iv) exercise or refrain from
exercising any rights against the Maker or any other persons; (v) apply in any
order any sums by whomever paid or however to the Senior Indebtedness; and
(vi) take any other action which otherwise might be deemed to impair the
Holder's rights. Any and all of such actions may be taken by the Senior
Lenders without incurring responsibility to the Holder and without impairing
or releasing the Holder's obligations to the Senior Lenders.
(g) Third-Party Beneficiary, Etc.. The foregoing provisions
regarding subordination are solely for the purpose of defining the relative
rights of the Senior Lenders on the one hand and the Holder on the other hand.
Such provisions are for the benefit of the Senior Lenders (and their
successors and assigns) and shall be enforceable by them directly against the
Holder except to the extent otherwise agreed to in writing by the Holder and
any other Senior Lender.
(h) Definitions. As used in this Section 5 (or as elsewhere used
in this Note) the following terms shall have the meanings indicated:
"Distribution of Assets" means any distribution of assets of the Maker or any
of its subsidiaries of any kind or character, whether a payment, purchase or
other acquisition or retirement for cash, property, or securities, with
respect to the Maker's obligations under this Note.
"Payment" means payment of any obligation now or hereafter existing under this
Note (as it may hereafter be amended, supplemented, or otherwise modified from
time to time), whether created directly or acquired by assignment or
otherwise, and interest and premiums, if any, thereon and all other amounts
payable in respect thereof or in connection therewith.
"Representative" means, with respect to any Senior Indebtedness, the trustee,
agent, or other representative for one or more of the Senior Lenders, if any,
designated in the indenture, agreement or document creating, evidencing or
governing such Senior Indebtedness or pursuant to which it was issued, or
otherwise designated by the holders of such Senior Indebtedness.
"Senior Indebtedness" shall have the meaning specified in the Securities
Purchase Agreement.
"Senior Lender" or "Senior Lenders" means one or more of the holders of Senior
Indebtedness.
6. Conversion.
(a) The Holder may, at the Holder's option, at any time, and from
time to time, prior to payment in full of this Note, convert the outstanding
Principal Amount of this Note and any accrued but unpaid interest due pursuant
to Section 2 above (the "Conversion Amount"), in whole or in part (but only
into full shares), into fully paid and non-assessable shares of the common
stock, no par value of the Maker (the "Common Shares"), at a rate equal to the
amount of $3.00 per Common Share (subject to adjustment as set forth in
Section 7) (the "Conversion Rate"). In order to exercise this conversion
right, the Holder must send written notice of the conversion to the Maker at
least 10 days prior to the specified conversion date. On the conversion date
(or as soon thereafter as is reasonably practicable), the Maker shall issue to
the Holder a share certificate for the Common Shares acquired upon conversion.
(c) Notwithstanding any other provisions of this Section 6 to the
contrary, the conversion rights of the Holder shall be subject to compliance
with all applicable federal and state securities laws, and the Holder agrees
to execute all required agreements and documents required by the Maker to
establish compliance with such laws.
(d) The Maker shall at all times reserve and keep available and free
of preemptive rights out of its authorized but unissued Common Shares, solely
for the purpose of issuance upon conversion of the Note, the number of Common
Shares as shall from time to time be sufficient to effect the conversion of
the Note, and if at any time the number of authorized but unissued Common
Shares shall not be sufficient to effect the conversion of the Note, the Maker
shall take the corporate action necessary to increase the number of its
authorized Common Shares to a number sufficient for this purpose. Maker
further covenants that all shares that may be issued upon the conversion of
this Note and payment of the Conversion Price, all as set forth herein, will
be free from all taxes, liens and charges in respect of the issue thereof.
Maker agrees that its issuance of this Note shall constitute full authority to
its officers who are charged with the duty of executing stock certificates to
execute and issue the necessary certificates for the shares upon the
conversion of this Note.
7. Adjustments.
(a) Reorganization, Merger or Sale of Assets
If at any time while this Note, or any portion thereof, is outstanding
there shall be (i) a reorganization (other than a combination,
reclassification, exchange or subdivision of shares otherwise provided for
herein), (ii) a merger or consolidation with or into another corporation in
which the Maker is not the surviving entity, or a reverse triangular merger in
which the Maker is the surviving entity but the shares of the Maker's capital
stock outstanding immediately prior to the merger are converted by virtue of
the merger into other property, whether in the form of securities, cash or
otherwise, or (iii) a sale or transfer of the Maker's properties and assets
as, or substantially as, an entirety to any other person, then, as a part of
such reorganization, merger, consolidation, sale or transfer, lawful provision
shall be made so that the holder of this Note shall thereafter be entitled to
receive upon conversion of the Notes the number of shares of stock or other
securities or property of the successor corporation resulting from such
reorganization, merger, consolidation, sale or transfer that a holder of the
shares deliverable upon conversion of this Note would have been entitled to
receive in such reorganization, consolidation, merger, sale or transfer if
this Note had been converted immediately before such reorganization, merger,
consolidation, sale or transfer, all subject to further adjustment as provided
in this Section 7. The foregoing provisions of this Section 7(a) shall
similarly apply to successive reorganizations, consolidations, mergers, sales
and transfers and to the stock or securities of any other corporation that are
at the time receivable upon the conversion of this Note. If the per-share
consideration payable to Holder for shares in connection with any such
transaction is in a form other than cash or marketable securities, then the
value of such consideration shall be determined in good faith by the Maker's
Board of Directors. In all events, appropriate adjustment (as determined in
good faith by the Maker's Board of Directors) shall be made in the application
of the provisions of this Note with respect to the rights and interests of
Holder after the transaction, to the end that the provisions of this Note
shall be applicable after that event, as near as reasonably may be, in
relation to any shares or other property deliverable after that event upon
conversion of this Note.
(b) Reclassification.
If the Maker, at any time while this Note, or any portion thereof,
remains outstanding, by reclassification of securities or otherwise, shall
change any of the securities as to which conversion rights under this Note
exist into the same or a different number of securities of any other class or
classes, this Note shall thereafter represent the right to acquire such number
and kind of securities as would have been issuable as the result of such
change with respect to the securities that were subject to the conversion
rights under this Note immediately prior to such reclassification or other
change and the Conversion Price or number of shares received upon such
conversion shall be appropriately adjusted, all subject to further adjustment
as provided in this Section 7.
(c) Split, Subdivision or Combination of Shares.
If the Maker at any time while this Note, or any portion thereof, remains
outstanding shall split, subdivide or combine the securities as to which
conversion rights under this Note exist, into a different number of securities
of the same class, the number of shares issuable upon conversion shall be
proportionately decreased in the case of a split or subdivision or
proportionately increased in the case of a combination.
(d) Adjustments for Dividends in Stock or Other Securities or Property.
If while this Note, or any portion hereof, remains outstanding and
unexpired the holders of the securities as to which conversion rights under
this Note exist at the time shall have received, or, on or after the record
date fixed for the determination of eligible stockholders, shall have become
entitled to receive, without payment therefor, other or additional stock or
other securities or property (other than cash) of the Maker by way of
dividend, then and in each case, this Note shall represent the right to
acquire upon conversion, in addition to the number of shares of the security
receivable upon conversion of this Note, and without payment of any additional
consideration therefor, the amount of such other or additional stock or other
securities or property (other than cash) of the Maker that such holder would
hold on the date of such conversion had it been the holder of record of the
security receivable upon conversion of this Note on the date hereof and had
thereafter, during the period from the date hereof to and including the date
of such conversion, retained such shares and/all other additional stock, other
securities or property available by this Note as aforesaid during such period,
giving effect to all adjustments called for during such period by the
provisions of this Section 7.
(e) Issuance of Shares Below Conversion Price.
(1) If while this Note, or any portion hereof, remains outstanding,
the Maker shall offer and sell Additional Shares of Common Stock (as
hereinafter defined) for consideration per share less than the Conversion
Price in effect immediately prior to the issuance of such Additional Shares of
Common Stock, except pursuant to the Maker's Stock Option Plan approved by the
Board of Directors, the Conversion Price in effect immediately prior to each
such issuance shall forthwith be adjusted upon such issuance to a price equal
to the price paid per share for such Additional Shares of Common Stock.
(2) For the purpose of the calculations provided in this Section
7(e), if at any time or from time to time after the date hereof the Maker
shall issue any rights or options for the purchase of, or stock or other
securities convertible into, Additional Shares of Common Stock (such Common
Stock or securities being hereinafter referred to as "Convertible
Securities"), then, and in each case, if the Effective Price (as hereinafter
defined) of such rights, options or Convertible Securities shall be less than
the Conversion Price, the Maker shall be deemed to have issued at the time of
the issuance of such rights or options or Convertible Securities the maximum
number of Additional Shares of Common Stock issuable upon exercise or
conversion thereof and to have received as consideration for the issuance of
such shares an amount equal to the total amount of the consideration, if any,
payable to the Maker upon exercise or conversion of such options or rights.
"Effective Price" shall mean the quotient determined by dividing the total of
all of such consideration by such maximum number of Additional Shares of
Common Stock. No further adjustment shall be made as a result of the actual
issuance of Additional Shares of Common Stock on the exercise of any such
rights or options or the conversion of any such Convertible Securities. In
the case of Convertible Securities which have a conversion price which is
based, in whole or in part, upon a discount to the market price or value of
the Common Stock, then for the purposes of calculating the Effective Price,
the consideration shall be deemed to include the minimum conversion price
payable to the Maker.
If any such rights or options or the conversion privilege represented by
any such Convertible Securities shall expire prior to the Maturity hereof
without having been exercised, the adjustment to the number of shares
available hereunder upon the issuance of such rights, options or Convertible
Securities shall be readjusted to the number of shares that would have been in
effect had an adjustment been made on the basis that the only Additional
Shares of Common Stock so issued were the Additional Shares of Common Stock,
if any, actually issued or sold on the exercise of such rights or options or
rights of conversion of such Convertible Securities, and such Additional
Shares of Common Stock, if any, were issued or sold for the consideration
actually received by the Maker for the granting of all such rights or options,
whether or not exercised, plus the consideration received for issuing or
selling the Convertible Securities actually converted plus the consideration,
if any, actually received by the Maker on the conversion of such Convertible
Securities.
(3) For the purpose of the calculations provided for in
this Section 7(e), if at any time or from time to time after the
date hereof the Maker shall issue any rights or options for the purchase of
Convertible Securities, then, in each such case, if the Effective Price
thereof is less than the then Conversion Price, the Maker shall be deemed to
have issued at the time of the issuance of such rights or options the maximum
number of Additional Shares of Common Stock issuable upon conversion of the
total amount of Convertible Securities covered by such rights or options and
to have received as consideration for the issuance of such Additional Shares
of Common Stock an amount equal to the amount of consideration, if any,
received by the Maker for the issuance of such rights or options, plus the
consideration, if any, payable to the Maker upon the conversion of such
Convertible Securities. "Effective Price" shall mean the quotient determined
by dividing the total amount of such consideration by such maximum number of
Additional Shares of Common Stock. No further adjustment of such Conversion
Price adjusted upon the issuance of such rights or options shall be made as a
result of the actual issuance of the Convertible Securities upon the exercise
of such rights or options or upon the actual issuance of Additional Shares of
Common Stock upon the conversion of such Convertible Securities.
(4) The term "Additional Shares of Common Stock" as used herein shall
mean all shares of Common Stock issued or deemed issued by the Maker after the
date hereof, other than (i) securities issued pursuant to or in connection
with the terms of the Securities Purchase Agreement; (ii) shares of Common
Stock issued upon conversion of convertible securities or the exercise of
common stock purchase warrants outstanding as of the date hereof; (iii) shares
of Common Stock issuable to employees, officers or directors pursuant to the
Maker's stock option plan; (iv) shares of Common Stock issued or issuable to
directors in connection with their service as directors; (v) shares of Common
Stock issued or issuable to directors, officers or employees for services
rendered or to be rendered pursuant to arrangements approved by the Board of
Directors; and (vii) shares of Common Stock issued in connection with a
business combination, merger, consolidation, asset acquisition or the
acquisition of the business of another corporation (through the purchase of
stock or assets) approved by the Board of Directors and all of the Conseco
Directors (as defined in the Securities Purchase Agreement).
(f) No Impairment.
Maker will not, by any voluntary action, avoid or seek to avoid the
observance or performance or any of the terms to be observed or performed
hereunder by Maker, but will at all times in good faith assist in the carrying
out of all the provisions of this Section 7 and in the taking of all such
action as may be necessary or appropriate in order to protect the rights of
Holder against impairment.
8. Notices. (a) Whenever the number of shares issuable or the
Conversion Price hereunder shall be adjusted pursuant to Section 7 hereof,
the Maker shall issue a certificate signed by its Chief Financial Officer
setting forth, in reasonable detail, the event requiring the adjustment, the
amount of the adjustment, the method by which such adjustment was calculated,
and the Conversion Price and number of shares purchasable hereunder after
giving effect to such adjustment, and shall cause a copy of such certificate
to be mailed (by first-class mail, postage prepaid) to Holder.
(b) All notices, requests, demands, or other communications that are
required or may be given pursuant to the terms of this Note shall be in
writing and delivery shall be deemed sufficient and to have been duly given on
the date of service if delivered personally or by facsimile transmission if
receipt is confirmed to the party to whom notice is to be given or on the
third day after mailing if mailed by first-class mail, return receipt
requested, and properly addressed as follows:
If to the Maker, to: ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Chief Financial Officer
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
If to the Holder, to: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
or to such other address as may be specified in writing by any of the above.
9. Remedies. The remedies provided by this Note shall be
cumulative, and shall be in addition to and not exclusive of other remedies
available at law, or in equity. The exercise or waiver by the Holder of any
right or remedy available under this Note shall not be deemed to be a waiver
of any other right or remedy available under this Note, at law, or in equity.
10. Miscellaneous.
(a) Whenever used herein, the singular includes the plural and the
plural includes the singular. The term "Maker" means the Corporation named in
the opening paragraph hereof and its successors and assigns.
(b) Indiana law shall govern this interpretation, construction, and
enforcement of this Note and all transactions contemplated hereby,
notwithstanding any state's choice of law rules to the contrary. Any
litigation related to this Note may be maintained only in the federal district
court for the Southern District of Indiana, Indianapolis Division (or any
successor jurisdiction) or in an Indiana state court in ▇▇▇▇▇▇▇▇ County or one
of the counties immediately contiguous to ▇▇▇▇▇▇▇▇ County, and each party
hereby irrevocably consents and submits to the jurisdiction of that federal or
state court and irrevocably waives any objection the party may have based upon
improper venue, forum non conveniens, or other similar doctrines or rules.
(c) Maker and any other party now or hereafter liable for the payment
of this Note in whole or in part, hereby severally (i) waive demand,
presentment for payment, notice of nonpayment, protest, notice of protest,
notice of intent to accelerate, notice of acceleration and all other notice,
filing of suit and diligence in collecting this Note, (ii) agree to the
release of any party primarily or secondarily liable hereon, (iii) agree that
the Holder shall not be required first to institute suit or exhaust its
remedies hereon against Maker or others liable or to become liable hereon or
to enforce its rights against them, and (iv) consent to any extension or
postponement of time of payment of this Note and to any other indulgence with
respect hereto without notice thereof to any of them.
(d) Holder, by acceptance hereof, acknowledges that this Note and the
shares to be issued upon conversion hereof are being acquired solely for
Holder's own account and not as a nominee for any other party, and for
investment, and that Holder will not offer, sell or otherwise dispose of this
Note or any shares to be issued upon conversion hereof except under
circumstances that will not result in a violation of applicable federal and
state securities laws. Upon exercise of this Note, Holder shall, if requested
by Maker, confirm in writing, in a form satisfactory to Maker, that the shares
so purchased are being acquired solely for Holder's own account and not as a
nominee for any other party, for investment, and not with a view toward
distribution or resale.
All shares issued upon exercise hereof shall be stamped or
imprinted with a legend in substantially the following form (in addition to
any legend required by state securities laws):
THE SECURITIES REPRESENTED HEREBY HAVE BEEN ACQUIRED FOR INVESTMENT
AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933. SUCH
SECURITIES AND ANY SECURITIES OR SHARES ISSUED UPON CONVERSION THEREOF MAY NOT
BE SOLD OR TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN EXEMPTION
THEREFROM UNDER SAID ACT.
(e) The captions of the sections of this Note are solely for
convenient reference and shall not be deemed to affect the meaning or
interpretation of any provision of this Note.
IN WITNESS WHEREOF, THE MAKER HAS EXECUTED, ACKNOWLEDGED, AND DELIVERED
THIS NOTE AS OF THE DAY AND YEAR FIRST ABOVE WRITTEN.
GENERAL ACCEPTANCE CORPORATION
BY:_ /s/ ▇▇▇▇▇ Algood__________
PRINTED:__Janet Algood_________
TITLE:________________________
Exhibit 10.81
AMENDED AND RESTATED MOTOR VEHICLE INSTALLMENT
CONTRACT LOAN AND SECURITY AGREEMENT
This Amended and Restated Loan and Security Agreement ("Agreement") is
entered into by and between GENERAL ACCEPTANCE CORPORATION, an Indiana
corporation (hereinafter referred to as "Borrower"), and General Electric
Capital Corporation, a New York corporation (hereinafter referred to as
"Lender"). In consideration of the mutual covenants and agreements contained
herein, Borrower and Lender agree as follows:
RECITALS
A. Borrower and Lender are parties to that certain Motor Vehicle
Installment Contract Loan and Security Agreement dated as of May 1, 1992 as
amended (the Original Agreement ) pursuant to which Lender made certain loans
to Borrower which loans were secured by, among other things, Borrower s motor
vehicle installment contracts;
B. Borrower and Lender have agreed to enter into this Agreement in order
to (i) amend and restate the Original Agreement in its entirety; (ii)
incorporate such terms of the Forbearance Agreement executed between Borrower
and Lender dated March 18, 1996, as amended on May 10, 1996 and as further
amended effective January 31, 1997 and March 31, 1997 as the parties agree
should be contained in this Agreement; (iii) waive all existing defaults under
the Original Agreement; and (iv) document such other changes in the lending
relationship between the parties as have occurred since the Original
Agreement.
C. It is the intent of Borrower and Lender that the execution and delivery
of this amendment and restatement of the Original Agreement shall not
effectuate a novation of the indebtedness outstanding under the Original
Agreement, but rather as it pertains to the indebtedness outstanding under the
Original Agreement, shall constitute a substitution of certain of the terms
governing the payment and performance of such indebtedness and a waiver of
past defaults.
ARTICLE I. DEFINITIONS.
Section 1.0 DEFINITIONS. Capitalized terms used in this Agreement
shall have the meanings given to such terms in Section 16 of this Agreement.
When such defined terms are used in this Agreement in the plural, the terms
shall have the plural of such meanings. All other terms contained in this
Agreement shall, unless the context indicates otherwise, have the meanings
provided for by the UCC to the extent the same are defined therein.
ARTICLE II. LOAN: GENERAL TERMS
Section 2.0. REVOLVING CREDIT; LOAN AMOUNT. Subject to all of the
terms and conditions of this Agreement, Lender agrees to loan funds to
Borrower against Eligible Contracts from time to time in a series of Advances
during the term of this Agreement. Funds may be borrowed, repaid and
reborrowed on a revolving basis subject to the terms and conditions set forth
in this Agreement, provided that the Loan shall not at any time exceed the
Borrowing Base. Borrower's obligation to pay the Loan is evidenced by this
Agreement. Borrower shall pay Lender when due all Obligations in accordance
with the terms of this Agreement whether or not Borrower has executed a
promissory note. The actual amount Borrower is obligated to pay Lender
hereunder shall be determined by this Agreement and the records of Lender,
regardless of the terms of any promissory note. Any promissory note executed
in connection with the Indebtedness need not be amended to reflect changes
made to this Agreement.
Section 2.1. SINGLE LOAN. All Advances by Lender to Borrower shall
constitute one loan and all indebtedness and obligations of Borrower to Lender
under the Loan Documents shall constitute an obligation secured by Lender's
security interest in all of the Collateral.
Section 2.2. GENERAL INTEREST RATE. Except as modified by Sections 2.4
and 15.1, the average daily balance of the Loan shall bear interest,
calculated daily on the basis of a 365-day year, at a per annum rate equal to
450 basis points (4.5%) plus the LIBOR Rate.
Section 2.3. LOAN TERM; RIGHT TO TERMINATE. Unless sooner terminated
as hereinafter provided, this Agreement shall terminate on January 1, 1998.
If an Event of Default has occurred, Lender may without prior notice to
Borrower, immediately terminate this Agreement. A prepayment in full of the
Loan shall be a termination of this Agreement. Notwithstanding termination of
this Agreement in any manner, the Indebtedness shall be payable in accordance
with this Agreement, and all rights and remedies granted to Lender hereunder
or pursuant to applicable law shall continue until all obligations of Borrower
to Lender have been fully paid and performed.
Section 2.4. MAXIMUM LAWFUL RATE. (A) INTEREST RATE.
Notwithstanding any provision in this Agreement, or in any other document, if
at any time before the payment in full of the Indebtedness, any of the rates
of interest specified in this Agreement (the "Stated Rates") exceeds the
highest rate of interest permissible under any law which a court of competent
jurisdiction shall, in a final determination, deem applicable hereto (the
"Maximum Lawful Rate"), then in such event and so long as the Maximum Lawful
Rate would be so exceeded, the rate of interest payable shall be equal to the
Maximum Lawful Rate; provided, however, that if at any time thereafter the
Stated Rates shall be less than the Maximum Lawful Rate, then, subject to (B)
below, Borrower shall continue to pay interest at the Maximum Lawful Rate
until such time as the total interest received by Lender is equal to the total
interest which Lender would have received had the Stated Rates been (but for
the operation of this Section 2.4(A)) the interest rates payable; thereafter,
the interest rates payable shall be the Stated Rates unless and until any of
the Stated Rates shall again exceed the Maximum Lawful Rate, in which event
this Section 2.4(A) shall again apply. In the event interest payable
hereunder is calculated at the Maximum Lawful Rate, such interest shall be
calculated at a daily rate equal to the Maximum Lawful Rate divided by the
number of days in the year in which such calculation is made.
(B) AMOUNT OF INTEREST. In no event shall the total interest
contracted for, charged, received or owed pursuant to the terms of this
Agreement exceed the amount which Lender may lawfully receive. In the event
that a court of competent jurisdiction, notwithstanding the provisions of this
Section 2.4, shall make a final determination that Lender has received,
charged, collected, or contracted for interest hereunder in excess of the
amount which Lender could lawfully have, Lender shall, to the extent permitted
by law, promptly apply such excess first to any interest due (calculated at
the Maximum Lawful Rate if applicable) and not yet paid, then to the
prepayment of principal, and any excess remaining thereafter and after
application to any other amounts Borrower owes Lender shall be refunded to
Borrower. In determining whether the interest exceeds the Maximum Lawful Rate
or the maximum amount which Lender could lawfully have received, the total
amount of interest shall, to the extent allowed by law, be spread over the
term of the Loan. Any provisions of this Agreement regarding the time during
which interest accrues on Advances are only elements of the formula for
calculating interest on the total Loan and are not intended to cause interest
to be applied to specific Advances for usury determination purposes.
Section 2.5. LINE AND UNDERUTILIZATION FEE. Borrower shall pay to the
Lender the Line Fee upon closing. The Line Fee shall be deemed fully earned
and nonrefundable at the time of closing. Borrower shall pay to Lender the
Underutilization Fee immediately upon the end of an Accounting Period.
ARTICLE III. LOAN DISBURSEMENTS
Section 3.0. LOAN - BORROWING BASE. Provided that there does not then
exist an Event of Default, and provided that Lender has not taken over all or
some of the administration of the Contracts, Lender shall, upon written
request of Borrower and subject to all of the terms and conditions of this
Agreement, make Advances to Borrower pursuant to Section 3.2.
Section 3.1. ELIGIBLE CONTRACTS. Borrower shall from time to time
deliver to Lender Eligible Contracts which Borrower desires to be included in
the Borrowing Base. Along with the Contracts Borrower shall also deliver a
List of Contracts. An Eligible Contract shall be included in the Borrowing
Base only when and for so long as, in Lender's sole determination, each of the
requirements in the definition of Eligible Contracts continues to be
satisfied. If a Contract is determined by Lender to be, or is treated by
Lender as, an Eligible Contract, Lender reserves the right to change its
determination or treatment and to remove the Contract from the Borrowing Base
if it later determines that the Contract is not or was not an Eligible
Contract. A determination by Lender that a Contract is an Eligible Contract
is not a waiver by Lender of, or an admission by Lender of the truth of, any
of Borrower's representations and warranties in this Agreement.
Section 3.2. PROCEDURE FOR BORROWING. (A) The first Advance shall not
exceed the Borrowing Base. Subsequent Advances can be requested on any
Business Day. Each subsequent Advance shall not exceed the Loan Availability
determined at Lender's election either as of the end of the most recent
Accounting Period for which Lender has received the monthly reports required
by Section 5.1 (C), or, as of such other date thereafter designated by Lender.
Lender is not obligated to make an Advance if the amount available or
requested is less than One Hundred Thousand Dollars ($100,000.00). Lender is
not obligated to make an Advance unless Borrower provides Lender with
sufficient information to calculate the Loan Availability. Lender's use of
the information provided by Borrower to determine the amount available for
Advances is not an admission by Lender as to the accuracy of the information,
and Lender reserves the right to verify the information and redetermine the
amount available for Advances.
(B) Lender shall disburse each Advance requested in writing by
Borrower on the same day if PROVIDED BY 1:30 P.M EASTERN STANDARD TIME (WHEN
POSSIBLE, OTHERWISE, ADVANCE SHALL BE MADE BY THE NEXT BUSINESS DAY), after
receipt of Borrower's written request for the Advance. Lender shall disburse
each Advance requested by Borrower by means of a draft, or, upon the request
of Borrower, Lender shall wire transfer the funds to Borrower.
ARTICLE IV. LOANS: PAYMENTS
Section 4.0. PAYMENTS BY BORROWER. (A) All payments by Borrower to
Lender shall be deposited in the Depository Account; or shall be sent to such
other location as shall be specified by Lender to Borrower, from time to time.
(B) Upon the effective date of termination of this Agreement,
Borrower shall pay to Lender the entire Indebtedness. If there is an Event of
Default, Borrower shall pay the entire Indebtedness on demand if the
Indebtedness is accelerated pursuant to Section 15.2.
(C) Interest shall accrue on the Loan daily and be paid from the
Remittances as provided in Section 4.2. If at the end of an Accounting Period
there is more than one Business Day of accrued unpaid interest, Borrower shall
pay the more-than- one-day accrued interest to Lender within five (5) calendar
days after the end of the Accounting Period. Accrued interest shall not be
added to the Loan balance and bear interest, unless the interest is past due
and paid with an Advance requested by Borrower and approved by Lender;
provided that, such an approval by Lender shall not constitute a waiver of the
Event of Default consisting of the failure to pay the interest except to the
extent provided in Section 17.9.
(D) Whenever Lender shall notify Borrower, with a Statement of
Borrowing Base or otherwise, that the Loan exceeds the Borrowing Base,
Borrower shall within one (1) Business Day after receipt of such notice,
either pay down the Loan by the amount of such excess, or, if Lender consents,
deliver additional Eligible Contracts to Lender which are sufficient to
increase the Borrowing Base above the Loan.
(E) The payment of all elements of the Indebtedness not covered
by Subsections (B), (C), or (D) of Section 4.0 shall be payable by Borrower to
Lender as and when provided in the Loan Documents, and, if not specified, then
on demand.
Section 4.1. CONTRACT PAYMENTS. Borrower shall direct all Contract
Debtors for Pledged Contracts, and all other Persons (including Contract
Rights Payors) who make payments to Borrower relating to Pledged Contracts, to
make, when paying by mail, all payments directly to the Lock Box. In the
event Borrower receives any Remittances, Borrower shall, as soon as possible
but no later than the one (1) Business Day following receipt, deposit the
Remittances in kind in the Depository Account. Borrower shall hold
Remittances in trust for Lender until delivery to Lender or deposit in the
Depository Account. Borrower shall pay all expenses associated with the Lock
Box.
Section 4.2. APPLICATION OF PAYMENTS. All Remittances received by
Lender shall be applied by Lender to the Indebtedness within one (1) Business
Day after the Remittance has been deposited in Lender's account. No
Remittance other than cash shall be treated as a final payment to Lender
unless and until such item has actually been collected by Lender's bank and
such collection has been finally credited to Lender's account; provided,
further that if a Remittance applied to the Indebtedness is charged back to
Lender's bank, Lender can retroactively remove the application of the
Remittance to the Indebtedness and accrue any interest not accrued because of
the application of the Remittance to the Indebtedness. Each Remittance shall
be applied by Lender to the Indebtedness (i) first to accrued interest, and,
if sufficient to pay accrued interest, (ii) then to the Indebtedness, other
than the Advances, and (iii) then to the Loan. Lender reserves the right to
use a different order of application if there is an Event of Default or Lender
has given prior written notice to Borrower of a different order. All
Remittances received by Lender may be applied to the Indebtedness even though
no portion of the Indebtedness is otherwise then due and even though Lender
has not sent Borrower a demand, notice or request for payment of the
Indebtedness. Payments shall be deemed to be due by Borrower when received by
Lender unless they are due sooner by the terms of the Loan Documents.
ARTICLE V. CONTRACT ADMINISTRATION
Section 5.0. LENDER ADMINISTRATION. Lender shall have no liability to
Borrower with respect to Remittances received by Lender, the Lock Box, or the
Depository Account, other than to: (i) apply the Remittances pursuant to
Section 4.2 of this Agreement and (ii) upon termination of this Agreement and
Borrower's satisfaction of all of its obligations under this Agreement, to
assign the Lock Box and its contents to Borrower. Lender shall have no
liability to Borrower with respect to any interest or other earnings which are
earned, or could have been earned, on the Remittances while they are in the
Lock Box, the Depository Account, or otherwise.
Section 5.1. BORROWER ADMINISTRATION. (A) Borrower shall perform all
aspects of servicing, administering, collecting, liquidating, accounting for
and managing (collectively, "administering", "administer", or
"administration") the Pledged Contracts it customarily performs in accordance
with Borrower's current practices for contract administration, which practices
are in accordance with applicable law and have been disclosed to Lender prior
to the date hereof. Borrower shall provide such administration in a
reasonable and prudent way that does not, in Lender's determination, adversely
affect the value of the Collateral to Lender. If in Lender's opinion,
Borrower fails to administer the Pledged Contracts in accordance with
Borrower's practices as existing under the Original Agreement through the date
hereof, Lender shall notify Borrower of the deficiencies in Borrower's
administration and Borrower shall have ten (10) Business Days to cure any such
deficiencies. If Borrower fails to cure such deficiency within such ten (10)
Business Day period, Lender may thereafter, in its sole discretion, take over
all or part of the administration of the Pledged Contracts. The
administration provided by Borrower shall include but not be limited to all
servicing currently provided by Borrower, and Financed Vehicle titling and
lien perfection, customer service, insurance claim tracking and collection,
insurance maintenance, Contract enforcement, Contract billing, payment
processing, portfolio and Contract accounting, portfolio management,
delinquency collection, repossession, foreclosure, resale, and maintaining
current Contract Debtor and Financed Vehicle location information (name,
address and phone number), as set forth in Exhibit 5.1(A). Borrower shall
maintain current, accurate, and complete records of activity and comments
regarding collection, insurance, payments, and other material events. The
records regarding collection history, payments, Contract accounting, customer
service notes, Contract Debtor names and addresses and Outstanding Principal
Balance shall be computerized. Borrower shall require Contract Debtors to
maintain Required Contract Debtor Insurance. Borrower shall administer and
otherwise deal with the Contracts in compliance with all applicable laws.
Borrower shall conduct foreclosure sales in a commercially reasonable manner
and take the steps necessary to preserve the deficiency liability of the
Contract Debtors.
(B) Borrower shall administer the Pledged Contracts at its
existing service centers as set forth more fully in Exhibit 5.1(B), or at such
other locations that Borrower provides prior notice of to Lender and Lender
approves for Contract administration, which approval shall not be unreasonably
withheld.
(C) Borrower shall furnish to Lender such reports in such form
that Lender determines are necessary for it to track and monitor the Pledged
Contracts, Remittances, Financed Vehicles, and insurance. Such reports shall
be in a format and on a medium readable by Lender's computer software, or such
other format or medium acceptable to Lender. Lender acknowledges that the
present format and medium used by Borrower is acceptable and Borrower agrees
to advise Lender prior to any system or software changes so that such reports
continue to be provided in an acceptable format and medium. The reports shall
include but not be limited to those reports set forth on Exhibit 5.1(C)
attached hereto and made a part hereof, and shall be delivered to Lender in
accordance with such Exhibit.
(D) Notwithstanding anything herein to the contrary, (i)
Borrower shall remain liable under all Contracts, and any other contracts and
agreements with Contract Rights Payors or otherwise included in or related to
the Collateral, to the extent set forth therein to perform all of its duties
and obligations thereunder to the same extent as if this Agreement had not
been executed, and (ii) the exercise by Lender of any rights under any of the
Loan Documents shall not release Borrower from any of its duties or
obligations under the Contracts, or the other contracts and agreements, and
(iii) Lender shall not have any obligation or liability under the Contracts,
or the other contracts and agree-ments, nor shall Lender be obligated to
perform any of the obligations or duties of Borrower thereunder or to take any
action to collect or enforce any rights thereunder.
(E) Borrower shall administer the Contracts at its own expense.
In the event that Borrower fails to administer the Contracts in accordance
with Section 5.1(A) or there is an Event of Default, Lender may in Lender's or
Borrower's name take over all or part of the Contract administration Borrower
is required by this Agreement to perform. If Lender takes over all or part of
such administration, Borrower shall pay to Lender on demand all out-of-pocket
costs incurred by Lender in the performance of Borrower's administration
obligations, and Borrower shall pay Lender for the administration performed by
Lender an administration fee in the amount of $25 per Contract per month
(exclusive of out-of-pocket costs) established by Lender, and until so paid
such costs and fee shall be part of the Loan.
ARTICLE VI. COLLATERAL: GENERAL TERMS
Section 6.0. SECURITY INTEREST. To secure the performance and payment
of the Indebtedness and all of Borrower's existing and future obligations to
Lender whether arising under or related to this Agreement or otherwise,
Borrower hereby grants to Lender a continuing security interest in and to all
of the following property of Borrower, whether now owned or existing or
hereafter arising or acquired and regardless of where located:
(i) Contracts; Contract Debtor Documents; Contract Rights; payments from
Contract Debtor bank accounts; chattel paper; leases; installment sale
contracts; installment loan contracts; payments from chattel paper obligors;
security deposits; Motor Vehicles (including but not limited to cars, trucks
and motorcycles); certificates of title; contract purchase discounts;
accounts; general intangibles; security interests; collateral securing chattel
paper; dealer agreements; dealer reserves and rate participation; rights of
Debtor related to chattel paper, installment contracts, motor vehicles, and
collateral securing chattel paper; documents; instruments; deposit accounts;
electronic funds transfers; equipment; inventory; parts and accessories for
motor vehicles; payments from account debtor bank accounts; reserve accounts;
tax refunds; insurance policies, and benefits and rights under insurance
policies, which Borrower is solely or jointly the owner of, insured under, the
lienholder or loss payee under, or the beneficiary of; and all payments and
property of any kind, now or at any time or times hereafter, in the possession
or under the control of Secured Party, or a bailee of Secured Party;
(ii) accessions to, substitutions for and all replacements, products and
proceeds of, any of the foregoing property; and
(iii) books and records (including, without limitation, financial
statements, accounting records, customer lists, credit files, computer
programs, electronic data, print-outs and other computer materials and
records) of Borrower pertaining to any of the foregoing property.
Section 6.1. DISCLOSURE OF SECURITY INTEREST. Borrower shall make
appropriate entries upon its financial statements and its books and records
disclosing Lender's security interest in the Collateral. Upon the request of
Lender, Borrower shall stamp all original, duplicates and reproductions of
Pledged Contracts with an assignment to Lender.
Section 6.2. ADDITIONAL ACTS. Borrower shall perform all other acts
requested by Lender for the purpose of perfecting, protecting, maintaining and
enforcing Lender's security interest in the Collateral and the priority of
such security interest. Borrower agrees that a carbon, photographic,
photostatic, or other reproduction of this Agreement or of a financing
statement is sufficient as a financing statement. Borrower, upon request of
Lender, shall either pay or reimburse Lender for all costs, filing fees, and
taxes associated with the perfection of Lender's security interest.
Section 6.3. INSPECTION AND ACCESS. Lender and its agents shall have
the right, at any time, to (i) during Borrower's usual business hours, inspect
the Collateral and the premises upon which any of the Collateral is located;
(ii) during Borrower's usual business hours, inspect, audit and make copies or
extracts from any of Borrower's records, computer systems, files, and books of
account; (iii) during Borrower's usual business hours, monitor Borrower's
performance of its obligations with respect to this Agreement; and (iv) obtain
information about Borrower's affairs and finances from any Person; and (v)
verify, in Lender's name or in the name of Borrower, the validity, amount,
quality, quantity, value and condition of, or any other matter relating to,
the Collateral including but not limited to verifying Contract information
with Contract Debtors. Borrower shall, upon Lender's request from time to
time, instruct its vendors, banking and other financial institutions and its
accountants to make available to Lender and discuss with Lender such
information and records as Lender may request. Borrower authorizes Lender, if
requested by a Person other than a credit reporting agency and without request
if the Person is a credit reporting agency, to provide that Person with
information about the Indebtedness, Collateral and Borrower's performance of
this Agreement. If Borrower maintains or stores any data with respect to
Collateral on a computer data system, Borrower shall upon request of Lender
provide Lender with (a) on-line access to such computer data system and (b)
deliver to Lender duplicate copies of the requested data in machine readable
form acceptable to Lender along with a printout or other hard copy of such
data. Borrower shall, on request of Lender, provide to Lender (at the
location designated by Lender) the Contract Debtor Documents.
Section 6.4. RIGHT TO NOTIFY AND ENDORSE. Borrower hereby irrevocably
authorizes Lender to notify any or all Contract Debtors and Contract Rights
Payors that Lender has a security interest in Contracts, Contract Rights, and
other items of Collateral at any time (i) prior to the occurrence of an Event
of Default, in the name of Borrower, and (ii) after the occurrence of an Event
of Default, in Lender's or Borrower's name. Any such notice shall, at
Lender's election, be signed by Borrower and may be sent on Borrower's
stationery.
Section 6.5. LENDER APPOINTED ATTORNEY-IN-FACT. Borrower hereby
irrevocably appoints Lender (and all Persons designated by Lender for that
purpose) as Borrower's true and lawful attorney-in-fact to act in Borrower's
place in Borrower's or Lender's name (i) to endorse Borrower's name on any
Remittance; (ii) to sign Borrower's name on any assignment or termination of a
security interest in a Financed Vehicle, on any application for a Certificate
of Title for a Financed Vehicle, or on any UCC financing statement related the
Collateral, and on any other public records regarding the Collateral; (iii) to
send requests for verification to Contract Debtors and (iv) to execute an
assignment to Lender of any Pledged Contract for which Lender has made an
Advance which was delivered to Lender without such assignment. Borrower
ratifies and approves all acts of Lender as Borrower's attorney-in-fact.
Lender shall not, when acting as attorney-in-fact, be liable for any acts or
omissions or for any error of judgment or mistake of fact or law, except for
actions taken in bad faith or resulting from Lender's gross negligence or
willful misconduct. This power, being coupled with an interest, is
irrevocable until all payment and performance obligations of Borrower to
Lender have been fully satisfied. Borrower shall upon request of Lender
execute powers of attorney to separately evidence the foregoing powers granted
to Lender. After an Event of Default has occurred, all costs, fees and
expenses thereafter incurred by Lender, or for which Lender becomes obligated,
in connection with exercising any of the foregoing powers shall be payable to
Lender by Borrower on demand by Lender and until paid shall be part of the
Loan.
Section 6.6. CHANGE OF COLLATERAL, LOCATION, OFFICE OR STRUCTURE.
Borrower shall keep the Collateral, other than Collateral delivered to Lender
and Financed Vehicles, at Borrower's address set forth in Section 17.1 or its
locations listed in Section 5.1(B). Borrower shall not change its name,
tradename, principal place of business and chief executive office, unless
Borrower gives Lender at least sixty (60) days prior written notice of such
change and prior thereto has taken all action Lender requires to maintain the
priority and perfection of its security interest in, and access to, the
Collateral. Borrower shall not change any service center or sales outlet,
unless Borrower gives Lender at least fifteen (15) days prior written notice
of such change and prior thereto has taken all action Lender requires to
maintain the priority and perfection of its security interest in, and access
to, the Collateral.
Section 6.7. LENDER'S PAYMENT OF CLAIMS ASSERTED AGAINST BORROWER.
Lender may, at any time, in its sole discretion and without obligation to do
so and without waiving or releasing any obliga-tion, liability or duty of
Borrower under the Loan Documents or any Event of Default, pay, acquire or
accept an assignment of any security interest, lien, claim or encumbrance
asserted by any Person against the Collateral; provided that Lender shall
first give Borrower writ-ten notice of its intent to do the same, and Borrower
does not, within five (5) days of such notice, pay such claim and/or obtain to
Lender's reasonable satisfaction the release of the security interests, liens,
claims or encumbrances to which such notice relates. All sums paid by Lender
in respect thereof and all costs, fees and expenses, including reasonable
attorneys' fees, court costs, expenses and other charges relating thereto,
which are incurred by Lender on account thereof, shall be payable by Borrower
to Lender on demand by Lender and until paid shall be part of the Loan.
Section 6.8. TERMINATION OF SECURITY INTEREST. Lender's security
interest in the Collateral shall continue until performance and payment in
full of all of Borrower's obligations to Lender in accordance with the terms
of agreements creating such obligations; and if, at any time, all or part of a
payment or transfer made by Borrower or any other Person and applied by Lender
to Borrower's obligations to Lender is rescinded or otherwise must be returned
by Lender for any reason whatsoever (including, without limitation, the
insolvency, bankruptcy or reorgani-zation of Borrower or such other Person),
the security interest granted hereunder or under any other present or future
agreement between Borrower and Lender, and all rights of Lender, shall be
reinstated as to the obligations which were satisfied by the payment or
transfer rescinded or returned, all as though such payment or transfer had not
been made, and Borrower shall take the action requested by Lender to reperfect
all terminated security interests and to reinstate all satisfied obligations.
Lender shall release its security interest in Contracts which are sold or
pledged to other Persons in accordance with Section 14.8.
Section 6.9. RETURN OF CONTRACT DELIVERY DOCUMENTS. Lender shall
return to Borrower within two (2) Business Days of Borrower's request any
Contract Delivery Document originals for Contracts paid in full. In addition,
provided that there is no Event of Default and the removal of the Contract
will not result in the Loan exceeding the Borrowing Base, Lender shall return
Contract Delivery Document originals for other Contracts requested by Borrower
for the time and to the extent necessary for Borrower to make corrections or
to enforce the Contracts or the obligations of the Contracts Rights Payors.
Whenever Borrower is in possession or control of Contract Delivery Documents
for Contracts not paid in full, Borrower shall hold them in trust for Lender.
ARTICLE VII. COLLATERAL: CONTRACTS
Section 7.0. NOTICE REGARDING CONTRACTS. (A) In the event any
amounts due and owing in excess of One Thousand Dollars ($1,000) on a Pledged
Contract become disputed between the Contract Debtor and Borrower, or in the
event a Contract Debtor for a Pledged Contract asserts a claim, offset, or
defense, or in the event a Person other than Borrower or a Contract Debtor
makes a claim of ownership or other interest in a Financed Vehicle or
Contract, then Borrower shall provide Lender with written notice thereof
within Ten (10) Business Days of learning of the same, explaining in detail
the nature of the matter and the amount in controversy. Borrower shall
promptly, but in no event later than ten (10) Business Days after learning
thereof, inform Lender of all material adverse information relating to the
financial condition of any Contract Debtor, or the value of any Pledged
Contract or Financed Vehicle.
(B) After an Eligible Contract is included in the Borrowing Base, in the
event that Borrower becomes aware that one of the requirements in the
definition of Eligible Contracts or one of the conditions in Section 9.1 are
no longer being satisfied with respect to the Contract, Borrower shall state
such ineligibility on the next monthly applicable reports submitted after
Borrower becomes aware thereof.
(C) Upon request of Lender, Borrower shall to the extent authorized by
law obtain current credit bureau reports on Contract Debtors.
ARTICLE VIII. COLLATERAL: REMITTANCES AND INSURANCE
Section 8.0. ASSIGNMENT OF LIEN IN FINANCED VEHICLES. In addition to
the security interest granted in Section 6.0, Borrower hereby assigns
absolutely to Lender Borrower's rights of foreclosure as lienholder of the
Financed Vehicles for Pledged Contracts delivered to Lender. This assignment
is solely for the purpose of Lender foreclosing on the liens following an
Event of Default. Until an Event of Default, Borrower has the right to
foreclose on a Financed Vehicle. In the event Lender exercises the right to
foreclose, Lender shall be the owner of the foreclosure sale proceeds and
shall apply them to the Indebtedness.
Section 8.1. ABSOLUTE ASSIGNMENT OF REMITTANCES. In addition to the
security interest granted in Section 6.0, Borrower hereby absolutely assigns
to Lender Borrower's interest in and right to all Remittances arising on or
after the date of this Agreement, and such Remittances shall be the property
solely of Lender.
Section 8.2. INSURANCE. In addition to the security interest granted
in Section 6.0, Borrower hereby assigns absolutely to Lender Borrower's right
to refunds and benefits under Required Contract Debtor Insurance, and Optional
Contract Debtor Insurance for Pledged Contracts. This assignment is evidenced
by Exhibit 8.2. In the event Lender uses this assignment to collect insurance
benefits or refunds, Lender shall be the owner of the benefits and refunds and
shall apply them to the Indebtedness.
ARTICLE IX. CONDITIONS TO ADVANCES
Section 9.0. CONDITIONS TO INITIAL ADVANCE. Notwithstanding any other
provision of this Agreement and without affecting in any manner the rights of
Lender hereunder, Lender shall not be obligated to make the initial Advance
hereunder unless and until Borrower shall have delivered to Lender, in form
and substance satisfactory to Lender each of the Supplemental Documents listed
on Exhibit 9.0 attached hereto and made a part hereof, and such additional
information and materials as Lender may reasonably request. Such Supplemental
Documents shall include, but are not limited to, Guaranty Agreements or
Reaffirmations of existing Guaranties, and Debt Subordination Agreements or
Amendments thereto.
Section 9.1. CONDITIONS TO EACH ADVANCE. Notwithstanding any other
provision of this Agreement and without affecting in any manner the rights of
Lender hereunder, Lender shall not be obligated to make any Advances
(including the initial Advance) unless at the time of the Advance, all of the
following conditions shall, in Lender's sole determination, be satisfied:
(A) For each Eligible Contract, Borrower shall have included the
Eligible Contract on a List of Contracts delivered to Lender and shall have
delivered to Lender the Contract Delivery Documents; except that, if a
Certificate of Title has not been issued, then the Certificate of Title must
be delivered to Lender within one hundred twenty (120) days of the Contract
date.
(B) All of the representations and warranties of Borrower in all
of the Loan Documents shall be true and correct on and as of the date of such
Advance as though they were made on and as of such date and Borrower shall
have performed all of its obligations contained in the Loan Documents required
to be performed as of such date;
(C) The making of the Advance will not constitute an Event of
Default;
(D) There shall have been no material adverse change in the
financial condition of Borrower or Guarantor, after the Closing Date;
(E) No claim has been asserted or proceeding commenced
challenging this Agreement or Lender's rights under this Agreement, and no
claim has been asserted which if true would be a breach of a representation
and warranty in the Loan Documents;
(F) No Event of Default shall have occurred and still be in
existence;
(G) Lender has a first priority perfected security interest in
the Collateral except to the extent otherwise allowed by this Agreement or
Lender in writing;
(H) An event has not occurred which entitles Lender pursuant to
Section 5.1 (E) to take over administration of the Pledged Contracts;
(I) Lender's most recent inspection of the Collateral or
Borrower's records or operations has been satisfactory to Lender in all
material respects;
(J) Borrower shall have provided such additional information and
documents as Lender may reasonably request;
(K) In the event a Certificate of Title with respect to any
Financed Vehicle has been sent from Lender to Borrower, Borrower has returned
said Certificate of Title to Lender within 120 days of Lender s initial
sending of Certificate to Borrower;
(L) The amount financed for each Eligible Contract does not
exceed: (i) 160% of N.A.D.A. (National Automobile Dealer s Association) trade
value for used Motor Vehicles or, (ii) 160% of Dealer Invoice on new Motor
Vehicles, on average for all the Contracts delivered to Lender, and
(M) None of the actions taken or documents executed to satisfy
the conditions in Section 9.0 have been revoked, rescinded, terminated, or
canceled without Lender's prior consent.
ARTICLE X. REPRESENTATIONS AND WARRANTIES OF BORROWER
Section 10.0. REPRESENTATIONS OF BORROWER. Borrower hereby makes the
following representations and warranties. The representations and warranties
are made as of the execution and delivery of the Agreement, and each time
Borrower delivers Pledged Contracts to Lender or requests an Advance the
representations and warranties are deemed to be made again at that time.
Lender's knowledge of any breach of the representations and warranties
contained herein shall not void any of the representations or warranties or
affect Lender's rights with respect to the breach.
(a) ORGANIZATION, GOOD STANDING, NAME, AND LOCATION. Borrower is
a corporation duly organized, validly existing and in good standing under the
laws of the State of Indiana, with power and authority to own its properties
and to conduct its business, and, at all relevant times, has the power,
authority and legal right to acquire, own, and pledge the Pledged Contracts.
Borrower has, is in good standing under, and is in compliance with, all
governmental approvals, licenses, permits, certificates, inspections, consents
and franchises necessary to conduct its business, to enter into and perform
this Agreement, and to own and operate its business. Borrower's principal
place of business and chief executive office is the Borrower address set forth
in Section 17.1. During the preceding five (5) years, Borrower has not been
known by or used any other corporate, trade or fictitious name, except as
disclosed in Exhibit 10(a). Borrower has no subsidiaries, except as disclosed
on Exhibit 10(a).
(b) DUE QUALIFICATION. Borrower has, and is in good standing
under, all licenses, permits, and approvals in all jurisdictions which are
required for Borrower's initial acquisition of the Pledged Contracts and for
Borrower's performance of this Agreement.
(c) POWER AND AUTHORITY. Borrower has the power and authority to
execute this Agreement and carry out its terms, and the execution and
performance of the Agreement have been duly authorized by all necessary
corporate action. The execution and performance of this Agreement by Borrower
does not require the consent or approval of any Person.
(d) VALID AND BINDING OBLIGATIONS. The Agreement constitutes a
valid loan obligation of Borrower and a valid granting of a security interest
in the Collateral to Lender, enforceable against creditors of and purchasers
from Borrower; and is a legal, valid and binding obligation of Borrower
enforceable in accordance with its terms. The Guaranties are valid and
binding obligations of the Guarantors enforceable according to their terms.
Borrower's use of the Advances is a legal and proper corporate use. Borrower
has not used Advances to give any preference to any creditor or to make a
fraudulent transfer.
(e) NO VIOLATION. Borrower's execution and performance of this
Agreement does not conflict with, result in any breach of, nor constitute
(with or without notice or lapse of time) a default under, (i) the articles of
incorporation or bylaws of Borrower, (ii) any indenture, instrument,
agreement, or court order by which it is bound; or (iii) nor does it result in
the creation or imposition of any lien upon any of Borrower's properties other
than that granted to Lender.
(f) NO PROCEEDINGS. There are no proceedings or investigations
pending, or to the best of Borrower's knowledge, threatened, before any court,
regulatory body, administrative agency, or other governmental instrumentality
having jurisdiction over Borrower or its properties, which (i) assert the
invalidity of the Agreement, (ii) seek to prevent the consummation of any of
the transactions contemplated by the Agreement, (iii) seek any determination
or ruling that, if determined adversely to Borrower, would materially and
adversely affect the Collateral, Borrower's ability to perform its obligations
under the Agreement, the validity or enforceability of the Agreement, Lender's
rights under the Agreement, or Borrower's financial condition or business, or
(iv) allege that Borrower is in violation of any statute, regulation, rule or
ordinance of any governmental entity, including, without limitation, the
United States of America, any state, city, town, municipality, county or of
any other jurisdiction, or of any agency thereof.
(g) COLLATERAL. Borrower has good and marketable ownership of
the Collateral, and the Collateral is free and clear of all liens, claims,
charges, defenses, counterclaims, offsets, encumbrances and security interests
of any kind or nature, except the Permitted Liens. The security interests
granted to Lender pursuant hereto are perfected first priority security
interests, assuming delivery to Lender of any Collateral as to which
possession is the only method of perfecting a security interest, notation on
motor vehicle titles when necessary and assuming the filing of a UCC financing
statement with the collateral description in Exhibit 10.0(g) with the office
of Secretary of State of Indiana; and no claim of ownership or other interest
has been asserted which would be a breach of this Section 10.0(g).
(h) TAXES. All required federal, state and local tax returns of
Borrower have been accurately prepared and duly and timely filed (within the
initial or extended time period allowed therefor) and all federal, state and
local taxes required to be paid with respect to the periods covered by such
returns have been paid. Borrower has not been delinquent in the payment of
any tax, assessment or other governmental charge which could adversely affect
in any way the Collateral.
(i) BROKERS. Except as otherwise disclosed on Exhibit 10(i)
attached hereto, no person has, or as a result of the transactions
contemplated hereby will have by reason of any Borrower conduct or any
agreement to which Borrower is a party, any right, interest or claim against
Borrower, Lender or the Collateral for any commission, fee or other
compensation as a finder or broker or in any similar capacity.
(j) STATUS AND CONDITION. Borrower is solvent, in stable
financial condition and is able to and does pay its liabilities as they
mature. Except as otherwise disclosed on Exhibit 10(j) attached hereto,
Borrower is not a party to any labor dispute or any collective bargaining
contract.
(k) DISCLOSURE. There is no fact known to Borrower which
Borrower has not disclosed to Lender in writing with respect to the Collateral
or the assets, liabilities, financial condition or activities of Borrower or
its Subsidiaries which would or may be likely to have a material adverse
effect upon the Collateral or Borrower's ability to perform its obligations
under the Agreement. All information and documents prepared by Borrower and
provided to Lender at any time are true and accurate at the time of delivery.
Borrower does not have knowledge that any information or documents, not
prepared by Borrower but delivered by Borrower to Lender were not true and
accurate at the time of delivery.
(l) ARTICLES OF INCORPORATION AND CERTIFICATES OF EXISTENCE. The
Borrower's Articles of Incorporation received by Lender pursuant to Section
9.0 have not been modified. Borrower has not taken or allowed any action
which would result in it not being in legal existence. Borrower has not
received notice of any actual or threatened action to revoke its articles of
incorporation or legal existence.
(m) FINANCIAL STATEMENTS. All financial statements of Borrower,
and Subsidiaries or any Guarantor delivered to Lender fairly present the
assets, liabilities and financial condition and income as of the dates
thereof. There are no material omissions from the financial statements and
there has been no adverse change in the assets, liabilities or financial
condition since the date of the most recently delivered financial statements.
There exists no equity or long-term investments in, or outstanding advances
to, or guaranties of, any Person except such equity, investment, advances, or
guaranties disclosed in the financial statements. The financial statements
accurately disclose all transactions with Subsidiaries.
(n) CONDITIONS. Each time Borrower requests an Advance, the
Conditions in Section 9.1 have been met.
(o) CHARACTERISTICS OF CONTRACTS. Each Pledged Contract
delivered to Lender as an Eligible Contract meets all of the requirements
listed in the definition of Eligible Contract, except that Borrower makes no
representation or warranty as to whether (i) the Contract meets such
requirements to Lender's satisfaction, or (ii) the Contract presents a credit,
collateral, or documentation risk unacceptable to Lender. No selection
procedures adverse to Lender have been utilized in selecting the Eligible
Contracts delivered to Lender.
(p) NO DEFAULTS. No condition exists which would, upon the
execution and delivery of this Agreement or Borrower s performance hereunder,
constitute an Event of Default. Borrower is not in default, and no event has
occurred and no condition exists which constitutes, or with the passage of
time or the giving of notice or both, would constitute, a default under any
material agreement between Borrower and any Person, including the payment of
any debt or other obligation permitted under this Agreement to any Person for
borrowed funds.
ARTICLE XI. REPRESENTATIONS AND WARRANTIES OF THE LENDER
Section 11.0. REPRESENTATIONS OF LENDER. The Lender hereby makes the
following representations and warranties:
(a) DUE ORGANIZATION. The Lender is a corporation, duly
organized, validly existing and in good standing under the laws of the State
of New York, and has the power to own its assets and to transact the business
in which it is presently engaged with regard to this Agreement;
(b) REQUISITE POWER. The Lender has the power to execute,
deliver and perform this Agreement, and has taken all necessary action to
authorize the execution, delivery and performance of this Agreement; and
(c) BINDING AGREEMENT. This Agreement has been duly executed and
delivered by the Lender and constitutes the legal, valid and binding
obligation of the Lender, enforceable in accordance with its terms.
ARTICLE XII. INDEMNITIES
Section 12.0. INDEMNITY. Borrower shall indemnify and hold Lender
harmless from any and all losses, claims, damages, costs, good faith
settlements, expenses, taxes, reasonable attorneys' fees or other liabilities,
including but not limited to costs of investigation, litigation fees and
expenses, and costs in successfully asserting the right to indemnification
hereunder, (collectively, "Losses") incurred by Lender at any time and
pertaining to (i) facts which are, or allegations which if true would be, a
breach of any representation, warranty, obligation, agreement or covenant of
Borrower contained in the Loan Documents, or (ii) Lender entering into the
Loan Documents or making Advances or handling Remittances or administering
Pledged Contracts in accordance with this Agreement, (iii) an Event of Default
or, (iv) activities, operations or conduct of Borrower, Guarantor, or
Subsidiaries.
ARTICLE XIII. AFFIRMATIVE COVENANTS
The following covenants shall remain in effect until the full payment and
performance of all of Borrower's obligations to Lender:
Section 13.0. FINANCING STATEMENTS. At the request of Lender, Borrower
shall execute such financing statements as Lender determines may be required
by law to perfect, maintain and protect the interest of Lender in the
Collateral and in the proceeds thereof.
Section 13.1. BOOKS AND RECORDS. Borrower shall maintain accurate and
complete books and records with respect to the Collateral, Borrower's
business, and Borrower's administration of the Pledged Contracts. All
accounting books and records shall be maintained in accordance with generally
accepted accounting principles consistently applied.
Section 13.2. CONTINUITY OF BUSINESS AND COMPLIANCE WITH AGREEMENT.
Borrower shall continue in business in a prudent, reasonable and lawful manner
with all necessary licenses, permits, and qualifications necessary to perform
this Agreement. Borrower shall regularly and properly train its employees to
comply with all applicable laws governing the administration and purchase of
Contracts. Borrower shall take the steps necessary for the representations
and warranties in Article X to be true at all times. In the event that
Borrower learns that a representation and warranty in Article X is no longer
true, it shall notify Lender within three (3) Business Days after learning
thereof.
Section 13.3. FINANCIAL STATEMENTS AND ACCESS TO RECORDS. Borrower
shall provide Lender with monthly audited or unaudited financial statements
within thirty (30) days of the end of each of Borrower s Accounting Period,
with quarterly statements (10Q) within forty-five (45) days of the end of each
quarter, and with audited annual financial statements within ninety (90) days
of Borrower's fiscal year-end audited by Ernst & Young LLP or an independent
certified public accounting firm acceptable to Lender. Borrower shall deliver
to Lender with each financial statement a certificate by Borrower's chief
financial officer in the form of Exhibit 13.3. Borrower shall provide Lender
with audited or unaudited annual financial statements of any Guarantor within
ninety (90) days after the end of each calendar year. The Borrower shall
permit the Lender or its agents to have access to and the ability to inspect
and make copies of the records of the Borrower wherever located, including but
not limited to the locations set forth on Exhibit 10.0(a), provided such
access is requested during the Borrower s regular business hours.
Section 13.4. SUBSEQUENT ACTIONS. At the request of Lender, Borrower
shall execute and deliver to Lender after execution of this Agreement such
documents or take such action as Lender deems necessary to carry out the
Agreement.
Section 13.5. FINANCIAL CONDITION. The Borrower shall observe each of
the following financial covenants and shall notify Lender in writing promptly
upon its learning of any violation of the following or any material adverse
change in its financial condition or the financial condition of the Guarantor:
A. Debt Ratio -- Borrower shall not allow its Debt Ratio to exceed
3.5:1 at all times, measured as of the end of each Accounting Period.
B. Net Worth -- Borrower shall maintain a Net Worth of at least
Twenty-Eight Million Dollars ($28,000,000) at all times, measured as of the
end of each Accounting Period.
C. Interest Coverage -- From the date hereof through June 30, 1997,
the Borrower shall maintain Interest Coverage of at least .8:1; at July 1,
1997 through September 30, 1997 of at least 1:1; and at October 1, 1997
through December 31, 1997 of at least 1.2:1 and at all times thereafter,
measured at the end of each calendar quarter.
D. Rolling Average Delinquency -- From the date hereof through June
30, 1997, Borrower's Rolling Average Delinquency shall not exceed 9%, and at
July 1, 1997 and at all times thereafter shall not exceed 8%, measured as of
the end of each Accounting Period.
E. Rolling Average Charge Offs -- From the date hereof through June
30, 1997, Borrower's Rolling Average Charged-Off Losses shall not exceed
2.50%; at July 1, 1997 through September 30, 1997, such Losses shall not
exceed 1.50% and at October 1, 1997 and at all times thereafter, such Losses
shall not exceed 1.25%, measured as of the end of each Accounting Period.
F. Reserve Requirement -- The Borrower shall maintain its Reserve for
Losses at 10% at all times, measured as of the end of each Accounting Period.
G. Repossession Inventory -- From the date hereof through June 30,
1997, the Borrower's Repossession Inventory shall not exceed 10%, and at July
1, 1997 and at all times thereafter, such Inventory shall not exceed 5%,
measured as of the end of each Accounting Period.
Section 13.6. LITIGATION MATTERS. Borrower shall notify Lender in
writing, promptly upon its learning thereof, of any litigation, arbitration or
administrative proceeding which may materially and adversely affect the
operations, financial condition or business of Borrower or Borrower's ability
to perform this Agreement or which in any way involve Lender's security
interest in the Collateral or other rights under the Loan Documents.
Section 13.7. VALUE OF COLLATERAL. If in Lender's judgment the
Collateral has materially decreased in value, other than the ordinary
depreciation of Financed Vehicles, Borrower shall either provide enough
addi-tional Collateral to satisfy Lender or reduce the Loan by an amount
sufficient to satisfy Lender.
Section 13.8 PAYMENT OF OBLIGATIONS. Borrower shall pay and perform,
as and when due, all of its obligations, including, without limitation, all of
its obligations to Lender.
Section 13.9. BORROWER INSURANCE. Borrower shall maintain customary
amounts of insurance covering, without limitation, fire, theft, burglary,
public liability, property damage, product liability, workers' compensation,
and liability arising from Borrower's collection of Contracts and sale of
motor vehicles. Borrower shall pay all insurance premiums payable for such
coverage and shall upon request of Lender deliver a copy of the policies of
such insurance to Lender, together with evidence of payment of all premiums
therefor.
Section 13.10. CERTIFICATES OF TITLE. Borrower shall promptly obtain
Certificates of Title for all Financed Vehicles. Borrower shall promptly
deliver to Lender all Certificates of Title it receives for Financed Vehicles
for Pledged Contracts.
Section 13.11. INTEREST RATE CAP/COLLAR. Borrower shall maintain an
interest rate cap/collar issued by a financial institution acceptable to
Lender and keep such cap/collar in place. The cap/collar shall cover a
principal amount of at least fifty million dollars ($50,000,000.00), and
should be on substantially the same terms and conditions as the cap/collar
presently in effect between the Borrower and LaSalle National Bank dated
October 1, 1996.
Section 13.12. PAYMENT OF FEES AND EXPENSES. Borrower shall pay to
Lender, on demand, any and all fees, costs or expenses which Lender pays to a
bank or other similar institution arising out of or in connection with (i) the
forwarding to Borrower, or any other Person on behalf of Borrower, by Lender
of Advances pursuant to this Agreement and (ii) the return of payments
deposited for collection by Lender, including but not limited to payments by
Borrower and payments by Contract Debtors.
ARTICLE XIV. NEGATIVE COVENANTS
Borrower covenants and agrees that hereafter, without Lender's prior
written consent, which shall not be unreasonably withheld, in its sole
discretion, until all of Borrower's obligations to Lender with respect to this
Agreement are performed and paid in full:
Section 14.0. MERGERS, ETC. Borrower shall not merge with, consolidate
with, acquire or otherwise combine with any Person, transfer any division or
segment of its operations to any Person or form any subsidiary.
Section 14.1. INVESTMENTS. Borrower shall not make any investment in
any Person through the direct or indirect holding of securities or otherwise.
Section 14.2 DIVIDENDS. Borrower shall not declare or pay dividends.
Section 14.3. LOANS AND ADVANCES. Except for routine and customary
salary advances, Borrower shall not make any unsecured loans or other advances
of money to officers, directors, employees, stockholders or Subsidiaries in
excess of $25,000 in total. Borrower shall not incur any long term or working
capital debt (other than the Indebtedness) secured by Contracts, and shall not
create, incur, assume or suffer to exist any short term indebtedness which is
not Subordinated Debt.
Section 14.4. CAPITAL STRUCTURE. Borrower shall not (i) redeem,
retire, purchase or otherwise acquire, directly or indirectly, any of
Borrower's stock, or (ii) make any change in Borrower's capital structure, or
(iii) make any change in any of its business objectives, purposes and
operations which might in any way adversely affect the payment or performance
of, or Borrower's ability to pay and perform, its obligations to Lender with
respect to this Agreement. Borrower shall not allow a transfer of ownership
involving management shareholders that have greater than a ten percent (10%)
ownership interest in Borrower provided, however, that with prior written
notice to the Lender, Capitol American Life Insurance Company may convert its
Subordinated Debt into shares of common stock of the Borrower, provided that
Capitol American Life Insurance Company is in compliance with the terms of its
Debt Subordination Agreement with the Lender.
Section 14.5. TRANSACTIONS WITH SUBSIDIARY. Borrower shall not enter
into, or be a party to, any transaction with any Subsidiary, or stockholder of
Borrower, except, consistent with Borrower's practice before entering into
this Agreement, in the ordinary course of, and pursuant to the reasonable
requirements of, Borrower's business and upon fair and reasonable terms which
are fully disclosed to Lender and are no less favorable to Lender than would
obtain in a comparable arm's length transaction with a Person not a Subsidiary
or stockholder of Borrower.
Section 14.6 ADVERSE TRANSACTIONS. Borrower shall not enter into any
trans-action which adversely affects the Collateral or Borrower's ability to
perform this Agreement or Lender's rights under the Loan Documents; or permit
or agree to any extension, compromise or settlement or make any change or
modification of any kind or nature with respect to any Pledged Contract,
including any of the terms thereof or the amounts due thereunder except for
customary payment extensions of Pledged Contracts done, in accordance with
Borrower's policies and routines in existence on the Closing Date, as
contained in Exhibit 5.1(A).
Section 14.7. GUARANTIES. Borrower shall not guaranty or otherwise in
any way, become liable with respect to the obligations or liabilities of any
other Person except (i) any Subsidiary's or Guarantor's obligations to Lender,
and (ii) by customary endorsement of instruments or items of payment for
deposit to the general account of Borrower or for delivery to Lender.
Section 14.8. COLLATERAL. Except as otherwise expressly permitted in
the Loan Documents, Borrower shall not convey or allow any ownership,
security, or other, interest in the Collateral other than Borrower's ownership
interest and Lender's security interest. Borrower shall not interfere with or
countermand Lender's instructions to any Person to send Remittances to the
Lock Box, the Depository Account or Lender. Borrower can grant purchase money
security interests in its equipment to Persons other than Lender. Borrower
can lease, as lessee, equipment it uses.
ARTICLE XV. EVENTS OF DEFAULT
Section 15.0. EVENTS OF DEFAULT. An Event of Default means the
occurrence or existence of one or more of the following events or conditions
(whatever the reason for the Event of Default and whether voluntary,
involuntary or caused by operation of law) which is not waived in writing by
Lender or cured to the extent a cure is applicable:
(A) A breach by Borrower of any representation, warranty or
obligation contained herein or in the other Loan Documents or in any other
agreement with Lender.
(B) A breach by a Subsidiary, a Guarantor or a Person which holds
any Subordinated Debt of the Borrower, of any representation, warranty, or
obligation contained in any other agreement with Lender.
(C) Any default by Borrower (including but not limited to a default
due to non-payment) under any material agreement, document or instrument to
which Borrower is a party or by which Borrower or any of its property is
bound, creating or relating to any debt or other obligation (other than the
Loan or the Subordinated Debt), if the payment or maturity of such debt or
obligation is accelerated as a consequence of such default or demand for
payment thereof is made.
(D) The Collateral or any other of Borrower's, a Subsidiary's or
Guarantor's assets are attached, seized, levied upon or subjected to a writ or
distress warrant, or come within the possession of any receiver, trustee,
custodian or assignee for the benefit of creditors and the same is not
dissolved within thirty (30) days thereafter; an application is made by any
Person other than Borrower for the appointment of a receiver, trustee, or
custodian for the Collateral or any other of Borrower's, a Subsidiary's or a
Guarantor s assets and the same is not dismissed within thirty (30) days after
the application therefor; or Borrower, a Subsidiary or a Guarantor shall have
concealed, removed or permitted to be concealed or removed, any part of its
property, with intent to hinder, delay or defraud its creditors or made or
suffered a transfer of any of its property which may be fraudulent under any
bankruptcy, fraudulent conveyance or other similar law.
(E) An application is made by Borrower, a Subsidiary or a
Guarantor for the appointment of a receiver, trustee or custodian for the
Collateral or any other of Borrower's, a Subsidiary's or a Guarantor s assets;
a petition under any section or chapter of the Bankruptcy Code or any similar
federal or state law or regulation shall be filed by Borrower, a Subsidiary or
a Guarantor; Borrower, a Subsidiary or a Guarantor shall make an assignment
for the benefit of its creditors or any case or proceeding is filed by
Borrower, a Subsidiary or a Guarantor for its dissolution, liquidation, or
termination; Borrower ceases to conduct its Contract purchase and servicing
business.
(F) Borrower is enjoined, restrained or in any way prevented by
court order from conducting all or any material part of its business affairs,
or a petition under any section or chapter of the Bankruptcy Code or any
similar federal or state law or regulation is filed against Borrower, or an
Affiliate, or a Guarantor or any case or proceeding is filed against Borrower,
or an Affiliate or a Guarantor for its dissolution or liquidation, and such
injunction, restraint, petition, case or proceeding is not dismissed within
thirty (30) days after the entry or filing thereof.
(G) A notice of lien, levy or assessment is filed of record with
respect to all or any of Borrower's, a Subsidiary's or a Guarantor s assets by
the United States, or any department, agency or instrumentality thereof, or by
any state, county, municipal or other governmental agency and it is not
released within thirty (30) days after the filing; or if any taxes or debts
become a lien or encumbrance upon the Collateral or any other of Borrower's, a
Subsidiary's or a Guarantor s assets, and the same is not released within
thirty (30) days after the same becomes a lien or encumbrance.
(H) Borrower, a Subsidiary or a Guarantor becomes insolvent or
admits in writing to its inability to pay its debts as they mature.
(I) An event has occurred which entitles Lender pursuant to Section
5.1(E) to take over administration of the Pledged Contracts.
(J) There occurs or exists any situation which leads Lender to
believe, in good faith, that Borrower may not, or may be unable to, pay in the
normal course one or more payment obligations to Lender, and Lender has given
Borrower at least ten (10) days' notice thereof.
(K) A financial statement of Borrower, a Subsidiary or a
Guarantor reveals that its financial condition has materially adversely
deteriorated after the execution of this Agreement.
(L) An audited financial statement of Borrower is not
unqualified.
(M) Any other event occurs which will, in Lender's reasonable
opinion, have a material adverse effect on the Collateral, Lender's rights
under the Loan Documents, or on Borrower's financial or business condition,
operations or prospects, including, without limitation, any change in the due
diligence procedures used by Borrower to qualify Contract Debtors for
Contracts, and Lender has given Borrower at least ten (10) days' notice
thereof.
(N) Guarantor fails to immediately repay the Loan to Lender upon
notice from Lender pursuant to the terms of the Guaranty.
(O) Any Guarantor shall revoke or attempt to revoke its
Guaranty, or shall repudiate its liability thereunder or be in default of the
terms of such Guaranty.
Section 15.1. DEFAULT RATE OF INTEREST. Upon and after an Event of
Default and subject to Section 2.4, Borrower's obligations to Lender shall
continue to bear interest, calculated daily on the basis of a 365-day year at
the per annum rate set forth in Section 2.2, plus additional post-default
interest of two percent (2%) per annum until paid in full.
Section 15.2. LENDER'S REMEDIES. Whenever an Event of Default has
occurred and whenever Lender is entitled to take over Contract administration,
Lender may without prior notice immediately suspend making Advances. Upon and
after an Event of Default, Lender shall have the following rights and
remedies. The rights and remedies shall be cumulative, and none exclusive,
except to the extent required by law. Lender's exercise of any right, remedy,
or attorney-in-fact appointment shall not relieve Borrower of any of its
obligations to Lender.
(A) The right, at Lender's discretion and without notice, (i) to
immediately cease further Advances and/or terminate this Agreement, and (ii)
to declare Borrower's obligations to Lender immediately due and payable,
whereupon Borrower's obligations shall become and be due and payable, without
presentment, demand, protest or further notice or process of any kind, all of
which are expressly waived by Borrower. Borrower's obligations to Lender
shall be immediately due and payable without declaration by Lender if the
Event of Default consists of a petition filed under the Bankruptcy Code or any
similar federal or state law.
(B) All of the rights and remedies of a secured party under the
UCC and other applicable laws, including the right to appoint a receiver.
(C) The right at any time to (i) enter through self-help and
without judicial process, upon the premises of Borrower, without any
obligation to pay rent to Borrower, or to enter any other place or places
where the Collateral is located and kept, and remove the Collateral or remain
on and use the premises for the purpose of collecting or disposing of the
Collateral, and (ii) require Borrower to assemble the Collateral and make it
available to Lender at a place to be designated by Lender.
(D) The right to sell or otherwise dispose of all or any of the
Collateral at public or private sale, as Lender in its sole discretion may
deem advisable, with such notice as may be required by law; and such sales may
be adjourned from time to time with or without notice. Lender shall have the
right to conduct such sales on Borrower's premises without charge for such
time and Collateral as Lender may see fit. Lender is hereby granted a license
or other applicable right to use, without charge, Borrower's labels, patents,
copyrights, rights of use of any name, trade secrets, trade names, trademarks
and advertising matter, or any property of a similar nature, as it pertains to
the Collateral, in advertising for sale and selling any Collateral and
Borrower's rights under all licenses and all franchise agreements shall inure
to Lender's benefit for this purpose. Lender shall have the right to sell,
lease or otherwise dispose of the Collateral, or any part thereof, for cash,
credit or any combination thereof, and Lender may purchase all or any part of
the Collateral at public or, if permitted by law, private sale and, in lieu of
actual payment of such purchase price, may set off the amount of such price
against Borrower's obligations to Lender. Without excluding other methods of
disposition which may be commercially reasonable, it shall be a commercially
reasonable disposition of the Pledged Contracts and Contract Rights for Lender
to collect and enforce the Contracts and Contract Rights in the same manner
that it collects and enforces similar Contracts and Contract Rights for its
own account or for the account of other Persons. If any deficiency shall
arise from the disposition of Collateral, Borrower shall remain liable to
Lender therefor.
(E) The right at any time and from time to time thereafter, at
Lender's sole discretion and without notice to Borrower, (i) to enforce
payment of the Contract Debtor's and Contract Rights Payor's obligations, and
to collect and foreclose, by legal proceedings or otherwise, the Collateral in
the name of Lender or Borrower and (ii) to take control, in any manner, of any
item of payment for or proceeds of the Collateral. Lender is not obligated to
pursue the Collateral or the Guarantors or any other Person in order to
enforce Borrower's obligations to Lender.
(F) The right to take over in Lender's or Borrower's name all or
part of the administration of the Contracts.
(G) The right to carry out the actions within the scope of
Borrower's appointment of Lender as attorney-in-fact.
(H) The right to offset or apply the funds in the Depository
Account.
Section 15.3. INJUNCTIVE RELIEF. Borrower recognizes that if there is
an Event of Default then, depending on the nature of the Event of Default, it
may be that no remedy at law will provide complete or adequate relief to
Lender, and Lender shall be entitled to temporary and permanent injunctive
relief in any such case without the necessity of proving actual damages. The
injunctive relief shall not be a waiver of Lender's rights to other relief and
remedies.
Section 15.4. NOTICE. Any notice required to be given by Lender of a
sale, lease, or other disposition of the Collateral which is given pursuant to
Section 17.1 at least five (5) days prior to such proposed action, shall
constitute commercially reasonable and fair notice thereof to Borrower.
Notice of less duration shall not be presumed to be commercially unreasonable
or unfair.
Section 15.5. APPOINTMENT OF LENDER AS BORROWER'S LAWFUL ATTORNEY.
Borrower irrevocably appoints Lender (and all persons designated by Lender) as
Borrower's true and lawful attorney-in-fact to act in Borrower's place in
Borrower's or Lender's name, upon an Event of Default, to: (i) demand payment
of the Pledged Contracts, other Collateral consisting of payment obligations
and Contract Rights; (ii) enforce payment of the Pledged Contracts, other
Collateral consisting of payment obligations and Contract Rights, by legal
proceedings or otherwise; (iii) exercise all of Borrower's rights and remedies
with respect to the collection and enforcement of the Pledged Contracts, other
Collateral consisting of payment obligations, and Contract Rights; (iv)
settle, adjust, compromise, discharge, release, extend or renew the Pledged
Contracts, other Collateral consisting of payment obligations, and Contract
Rights; (v) if permitted by applicable law, sell or assign the Collateral upon
such terms, for such amounts and at such time or times as Lender deems
advisable; (vi) take control, in any manner, of any item of payment or
proceeds with respect to the Collateral; (vii) prepare, file and sign
Borrower's name on any proof of claim in Bankruptcy or similar document
against any Contract Debtor or Contract Rights Payor; (viii) prepare, file and
sign Borrower's name on any notice of lien, assignment or satisfaction of lien
or similar document in connection with the Collateral; (ix) do all acts and
things necessary, in Lender's sole discretion, to exercise Lender's rights
granted in or referred to in Section 15.2 of this Agreement; (x) endorse the
name of Borrower upon any item of payment or proceeds consisting of or
relating to the Collateral and deposit the same to the account of Lender for
application to the Indebtedness; (xi) use the information recorded on or
con-tained in any data processing equipment and computer hardware and software
relating to the Collateral to which Borrower has access; (xii) open Borrower's
mail to collect Collateral and direct the Post Office to deliver Borrower's
mail to an address designated by Lender; and (xiii) do all things necessary to
carry out and enforce this Agreement which Borrower has failed to do.
Borrower ratifies and approves all acts of Lender as Borrower's
attorney-in-fact. Lender shall not, when acting as attorney-in-fact, be
liable for any acts or omissions as or for any error of judgment or mistake of
fact or law, except for actions taken in bad faith. This power, being coupled
with an interest, is irrevocable until all payment and performance obligations
of Borrower to Lender have been fully satisfied. Borrower shall upon request
of Lender execute powers of attorney to separately evidence the foregoing
powers granted to Lender. All costs, fees and expenses incurred by Lender, or
for which Lender becomes obligated, in connection with exercising any of the
foregoing powers shall be payable to Lender by Borrower on demand by Lender
and until paid shall be part of the Loan.
Section 15.6. LENDER'S DEFAULT. In the event of any default of the
Loan Documents by Lender or any claim by Borrower related to the Loan
Documents, Borrower's sole and exclusive remedy against Lender shall be a
cause of action sounding in contract with damages limited to actual and direct
damages incurred. Lender shall in no event be liable for ordinary negligence,
delay in performance or any consequential, special, punitive, incidental or
indirect damages, including without limitation, loss of profit or goodwill.
Lender shall in no event be liable for any loss or damage directly or
indirectly resulting from the furnishing of services or reports under this
Agreement. With respect to any goods and services provided by Lender, LENDER
MAKES NO WARRANTIES, whether expressed or implied, including, without
limitation, IMPLIED WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR
PURPOSE. Borrower shall have no cause of action against Lender for a default
under the Loan Documents unless Borrower first gives notice to Lender of the
default and allows Lender a reasonable time of at least fifteen (15) Business
Days to cure the default and Lender fails to commence action within such
period to cure the default.
ARTICLE XVI. DEFINITIONS
Section 16.0 DEFINED TERMS. Whenever used in this Agreement with the
initial letter capitalized, the following terms shall have the respective
meanings set forth below. When the terms are used in the plural, the plural
forms of the meanings shall apply.
ACCOUNTING DATE: The last day of an Accounting Period.
ACCOUNTING PERIOD: a calendar month, beginning with the month during
which this Agreement is executed and ending with the calendar month during
which the Indebtedness has been paid in full following termination of this
Agreement.
ADVANCE: each of the Loan advances described in Article III of this
Agreement.
AVERAGE CHARGED-OFF LOSSES: the Accounting Period average of the
Charged-Off Losses for any six consecutive Accounting Periods.
BORROWING BASE: the amount equal to the lesser of (i) Seventy Million
Dollars ($70,000,000) or (ii) seventy-eight percent (78%) of the Outstanding
Principal Balance of all Eligible Contracts during the time they are included
in the Borrowing Base pursuant to Section 3.1.
BUSINESS DAY: any day other than (i) a Saturday or Sunday, or (ii) a day
on which banking institutions in the State of Indiana are required by law to
be closed.
CERTIFICATE OF TITLE: with respect to each Financed Vehicle, the
certificate of title (or other evidence of ownership) issued by the department
of motor vehicles, or other appropriate governmental body, of the state in
which the Financed Vehicle is to be registered showing the Contract Debtor as
owner, with either notation of the Borrower's first lien or such other status
indicated thereon which is necessary to perfect Borrower's security interest
in the Financed Vehicle as a first priority interest, and showing no other
actual or possible lien interest in the Financed Vehicle.
CHARGED-OFF CONTRACT: a Pledged Contract (i) for which any Scheduled
Payment is delinquent (not paid by the due date) more than one hundred twenty
(120) days as of the end of an Accounting Period, (ii) for which the Financed
Vehicle has been surrendered, repossessed, or unable to be located, or (iii)
which has been settled for less than the Outstanding Principal Balance.
CHARGED-OFF LOSSES: as of the end of an Accounting Period, the Net
Credit Losses recorded during the Accounting Period, divided by the
Outstanding Principal of all Contracts owned by Borrower, which are not
Charged-Off Contracts, expressed as a percentage.
CLOSING DATE: the date on which the first Advance is made.
COLLATERAL: any and all real and personal, tangible and intangible,
property, whether now owned or hereafter acquired, in which Lender is granted
a security interest now or hereafter, in this Agreement or otherwise, to
secure Borrower's obligations to Lender.
CONTRACT: an installment or conditional sale contract, with any
amendments, owned or acquired by Borrower pursuant to which a Contract Debtor
has: (i) purchased a new or used Motor Vehicle, (ii) granted a security
interest in the Motor Vehicle to secure the Contract Debtor's payment
obligations, and (iii) agreed to pay the unpaid purchase price and a finance
charge in periodic installments no less frequently than monthly.
CONTRACT DEBTOR: the Person that has executed a Contract as a purchaser,
and any Guarantor, co-signer or other Person obligated to make payments under
the Contract.
CONTRACT DEBTOR DOCUMENTS: those documents as are identified on the
attached Exhibit 6.3 attached hereto and made apart hereof.
CONTRACT DELIVERY DOCUMENTS: the original Certificate of Title, and the
original executed Contract with original Contract Debtor and Dealer signatures
and bearing on its front or back surface an assignment to Lender.
CONTRACT RIGHTS: with respect to Pledged Contracts, (i) Borrower's
interest in the Financed Vehicle; (ii) all rights of Borrower regarding the
Contract and Financed Vehicle, including but not limited to rights to
electronic funds transfers and rights under all dealer agreements and purchase
agreements pursuant to which the Contract was acquired by Borrower; (iii) all
rights of Borrower with respect to Optional Contract Debtor Insurance,
Required Contract Debtor Insurance, and any other policies of fire, theft or
comprehensive insurance, collision insurance, public liability insurance or
property damage insurance maintained with respect to the Financed Vehicle, the
Contract, or the Contract Debtor; (iv) all rights of Borrower, if any, to
prepaid dealer rate participation in connection with the Contract; (v)
Remittances, and (vi) all rights of Borrower to the originals of all books,
records (including electronic data), reports, files, and documents relating to
the Contracts, including, but not limited to, Contract Debtor Documents,
financial statements of Contract Debtors, and all payment reports or records
relating to the Contracts.
CONTRACT RIGHTS PAYORS: Persons, other than Contract Debtors, against
whom Contract Rights can be asserted.
CREDIT LINE: the dollar component in the definition of Borrowing Base
(which is $70,000,000).
DEALER: the seller of the Financed Vehicle to the Contract Debtor.
DEALER INVOICE: as to new Financed Vehicles, the invoice prepared by the
manufacturer showing the net cost; and, as to used Financed Vehicles, the
Black Book wholesale average used to establish wholesale value as of the date
of the contract.
DEBT RATIO: the debt-to-equity ratio of Borrower, calculated on a
consolidated basis and in accordance with generally accepted accounting
principles, by comparing total liabilities, other than Subordinated Debt, to
Net Worth.
DELINQUENCY MEASUREMENT: as of the end of an Accounting Period, the sum
of the Gross Outstanding Balances of all Delinquency Measurement Contracts
which have at least two (2) due and partially or completely unpaid Scheduled
Payments, divided by the sum of the Gross Outstanding Balances of all
Delinquency Measurement Contracts; expressed as a percentage.
DELINQUENCY MEASUREMENT CONTRACTS: all Pledged Contracts which do not
constitute Charged-Off Contracts.
DEPOSITORY ACCOUNT: a bank account owned by Lender at a bank designated
by Lender for the purpose of receiving Remittances made payable to it or
Borrower.
ELIGIBLE CONTRACT: each Contract delivered by Borrower to Lender which
is listed on a List of Contracts delivered to Lender at the same time, and
which in Lender's sole determination satisfies each of the requirements set
forth on Exhibit 3.1 at the time of delivery and thereafter except to the
extent expressly stated in Exhibit 3.1 to apply only at delivery or only
thereafter.
EVENT OF DEFAULT: this term has the meaning provided in Section 15.0 of
this Agreement.
FINANCED VEHICLE: the new or used Motor Vehicle purchased by a Contract
Debtor pursuant to a Contract, or any substituted vehicle which is properly
documented and approved by Lender.
GAAP: Generally Accepted Accounting Principles.
GROSS CREDIT LOSSES: For any Accounting Period, the sum of all
Charged-Off Contracts reflected on Borrower s general ledger, calculated in
accordance with GAAP.
GROSS OUTSTANDING BALANCE: the total of all remaining payments due under
a Contract plus any other amount due thereunder.
GUARANTORS: GENERAL ACCEPTANCE CORPORATION REINSURANCE, LTD., and any
other Person who guaranties Borrower's obligations to Lender.
INDEBTEDNESS: the Loan and all other amounts, including but not limited
to interest, that Borrower owes Lender in connection with this Agreement.
INTEREST COVERAGE: the sum of Borrower's pre-tax income plus Borrower's
interest expense, compared to Borrower's interest expense, expressed as a
ratio each fiscal quarter.
LIBOR RATE: the average of the "one month" London Interbank Offered
Rates ("LIBOR") published in the Money Rates column of the Wall Street Journal
during the calendar month immediately preceding the calendar month for which
interest is being calculated, or published in such other publication as Lender
may designate.
LINE FEE: the fee payable by Borrower to Lender at closing equal to one
half of one percent (.50%) times the Credit Line.
LIST OF CONTRACTS: the list delivered to Lender by Borrower with each
Contract or group of Contracts which: (i) identifies each Contract being
delivered by account number, the name of the Contract Debtor, the Outstanding
Principal Balance, and the year, make, model, and VIN of the Financed Vehicle,
and (ii) shows the total number of Contracts and the total of the Outstanding
Principal Balances.
LOAN: the outstanding principal amount of the Advances, plus all other
amounts advanced, expended or applied by Lender under this Agreement to or for
the benefit of Borrower or to perform or enforce Borrower's covenants in this
Agreement.
LOAN AVAILABILITY: the amount by which the Borrowing Base exceeds the
Loan.
LOAN DOCUMENTS: this Agreement, the Note, the guaranties signed by the
Guarantors, and the Supplemental Documentation.
LOCK BOX: the arrangement established by Lender at Fifth Third Bank of
Central Indiana for the receipt and identification of remittances.
MEASUREMENT PERIOD: each consecutive period, without overlap, of three
(3) consecutive Accounting Periods beginning with the first Accounting Period.
MOTOR VEHICLE: A passenger motor vehicle, van, or light duty truck which
is not manufactured for a particular commercial purpose and which can be
registered for use on public highways and is not a "grey market" vehicle.
NET CREDIT LOSSES: For any Accounting Period, the difference between
Gross Credit Losses and Recoveries, calculated in accordance with GAAP.
NET WORTH: the total of shareholders' equity (including capital stock,
additional paid-in capital, and retained earnings) plus Subordinated Debt,
less (i) the total amount of loans and debts due from Subsidiaries,
shareholders or officers, and (ii) the total amount of any intangible assets,
including without limitation, goodwill.
OPTIONAL CONTRACT DEBTOR INSURANCE: any insurance, other than Required
Contract Debtor Insurance which insures a Financed Vehicle or a Contract
Debtor's obligations under a Contract, including but not limited to credit
life, credit health, credit disability, unemployment insurance; and any
service contract, mechanical breakdown coverage, warranty, or extended
warranty for a Financed Vehicle.
OUTSTANDING PRINCIPAL BALANCE: the outstanding principal balance of a
Contract calculated by subtracting the unearned finance charge from the Gross
Outstanding Balance, where applicable.
PERMITTED LIEN: (i) any security interest or lien at any time granted in
favor of Lender; (ii) liens securing claims of materialmen, mechanics,
carriers, warehousemen, landlords and other similar Persons for labor,
materials, supplies or rentals incurred in the ordinary course of Borrower's
business; (iii) liens resulting from deposits made in the ordinary course of
business in connection with workers compensation, unemployment insurance,
social security and other similar laws; (iv) liens in favor of Fifth Third
Bank of Central Indiana, provided, that such liens remain subject to the terms
and conditions of that certain Intercreditor Agreement dated August 26, 1996
between Fifth Third Bank of Central Indiana and the Lender, as the same may be
amended from time to time; and (v) liens in favor of any lender for the sole
purpose of securing the purchase price of vehicles to be used by Borrower
and/or its employees in the ordinary course of Borrower s business, provided
that the collective amount of the loans secured by such liens shall at no time
exceed Two Hundred Thousand Dollars ($200,000.00).
PERSON: any individual, sole proprietorship, partnership, joint venture,
trust, unincorporated organization, association, corporation, institution,
entity, party, or govern-ment (including, any instrumentality or division
thereof).
PLEDGED CONTRACT: a Contract owned on the Closing Date or in the future
by Borrower which is subject to the security interest granted in Section 6.0.
RECOVERIES: For any Accounting Period, the sum of all amounts received
on account of previously Charged-Off Contracts, calculated in accordance with
GAAP.
REMITTANCES: all payments made with respect to Pledged Contracts,
including, but not limited to, Scheduled Payments, full and partial
prepayments, liquidation proceeds, insurance proceeds and refunds, late
charges, fees (including but not limited to NSF fees and extension fees), and
payments from Contract Rights Payors.
REPOSSESSION INVENTORY: Motor Vehicles which have been repossessed by
Borrower or any of its agents calculated at the end of each Accounting Period
as the sum of all Repossession Contracts divided by the sum of all Contracts
which do not constitute Charged-Off Contracts, expressed as a percentage.
REQUIRED CONTRACT DEBTOR INSURANCE: insurance for physical damage to,
and theft or loss of, the Financed Vehicle, having a deductible no higher than
$500 and providing coverage at least equal to the actual cash value of the
Financed Vehicle.
RESERVE FOR LOSSES: calculated at the end of each Accounting Period as
the sum of the reserve available for credit losses divided by the Outstanding
Principal Balances as stated on the financial statements, expressed as a
percentage.
ROLLING AVERAGE CHARGED-OFF LOSSES: the weighted average of the
Charged-Off Losses for any six consecutive Accounting Periods.
ROLLING AVERAGE DELINQUENCY: the weighted average of the Delinquency
Measurements for any six consecutive Accounting Periods.
SCHEDULE OF PAYMENTS: the schedule of payments disclosed on a Contract.
SCHEDULED PAYMENT: the periodic installment payment amount disclosed in
the Schedule of Payments for the Contract.
SKIP LOSS INVESTIGATION: an investigation initiated by Borrower of the
whereabouts of a Financed Vehicle or a Contract Debtor.
STATEMENT OF BORROWING BASE: a statement issued by Lender which contains
the amount of the Borrowing Base, the amount of the Loan or Indebtedness, and
either the amount available for Advances or the amount by which the Loan or
Indebtedness exceeds the Borrowing Base.
SUBORDINATED DEBT: a debt obligation of Borrower which is subordinated to
Lender pursuant to a subordination agreement which is in the form of Exhibit
16 or pursuant to some other agreement approved in writing by Lender,
including, but not limited to, a Debt Subordination Agreement with ▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ and ▇▇▇▇ ▇. ▇▇▇▇▇▇ and with Capitol
American Life Insurance Company, as the same may be amended from time to time.
SUBSIDIARY: any Person, now or in the future, over which the Borrower
exercises control, provided that it shall be conclusively presumed that the
Borrower exercises control over any such Person 51% or more of the equity
interest in which is owned by the Borrower, directly or indirectly.
SUPPLEMENTAL DOCUMENTATION: all agreements, instruments, documents,
certificates of title, financing statements, notices of assignment, Lists of
Contracts, chattel mortgages, powers of attorney, subordination agreements,
and other written matter necessary or reasonably requested by Lender to
perfect and maintain perfected Lender's security interest in the Collateral or
to consummate the transactions contemplated by this Agreement.
UCC: Uniform Commercial Code.
UNDERUTILIZATION FEE: the fee payable on a monthly basis by Borrower to
Lender equal to .25% on an annualized basis, times the unused portion of the
Credit Line during an Accounting Period, with the unused portion being equal
to the amount by which the average daily balance of the outstanding Advances
in each Accounting Period is less than the Credit Line for the Accounting
Period.
Section 16.1 OTHER TERMS: All other terms contained in this Agreement
shall, unless the context indicates otherwise, have the meanings provided in
the UCC to the extent the same are defined therein.
Section 16.2 ACCOUNTING TERMS. Any accounting terms used in this
Agreement which are not specifically defined shall have the meanings
customarily given them in accordance with GAAP.
ARTICLE XVII. GENERAL TERMS AND CONDITIONS
Section 17.0. APPLICABLE LAW. This Agreement shall be governed and
construed in accordance with the laws of the State of Indiana.
Section 17.1. NOTICES. Any notice, request, demand, instruction or
other communication to be given any party hereto in writing shall be effective
upon delivery during regular business hours at the offices of Borrower and
Lender hereinafter set forth or at such other offices that either party
notifies the other of in writing. The failure to deliver a copy as set forth
below shall not affect the validity of the notice to the Borrower or Lender.
Such communications shall be given by telecopy, commercial delivery service,
or sent by certified mail, postage prepaid and return receipt requested, as
follows:
If to Borrower: General Acceptance Corporation
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Electronic FAX (▇▇▇) ▇▇▇-▇▇▇▇
ATTN: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ or ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
If to Lender: General Electric Capital Corporation
▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Electronic FAX (▇▇▇) ▇▇▇-▇▇▇▇
Attention: Manager, Asset Based Financing
with a copy to: General Electric Capital Corporation
▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Electronic FAX (▇▇▇) ▇▇▇-▇▇▇▇
Attention: Counsel, Auto Financial Services
Section 17.2. HEADINGS. Paragraph headings have been inserted in this
Agreement as a matter of convenience for reference only. The paragraph
headings shall not be used in the interpretation of this Agreement.
Section 17.3. SEVERABILITY. If any one or more of the provisions of
this Agreement are held to be invalid, illegal or unenforceable in any respect
for any reason, the validity, legality and enforceability of any such
provision or provision in every other respect and of the remaining provisions
of this Agreement shall not be in any way impaired.
Section 17.4. OFFSET. Lender has the right to offset, apply, or recoup
any obligation of Borrower to Lender, arising under the Loan Documents or
otherwise, against any obligations or payments Lender owes to Borrower,
arising under the Loan Documents or otherwise, or against any property of
Borrower held by Lender. Borrower waives any right to offset, apply, or
recoup against any obligation it owes to Lender. Lender is not obligated to
collect any of the Contracts or pursue any of the other Collateral or any of
Lender's rights at any time as a condition to payment and performance by
Borrower.
Section 17.5. INDEPENDENT CONTRACTOR. Borrower is an independent
contractor in all matters relating to this Agreement and the Collateral and is
not an agent or representative of Lender. Borrower has no authority to act on
behalf of or bind Lender.
Section 17.6. EXPENSES. Each party shall bear the expenses of its own
performance of this Agreement.
Section 17.7. MODIFICATION OF LOAN DOCUMENTS; SALE OF INTEREST. This
Agreement or any exhibit attached hereto may not be modified, altered or
amended, except by an agreement in writing signed by Borrower and Lender. The
rights of Lender granted in or referred to in this Agreement shall apply to
any modification of or supplement to the Loan Documents. Borrower may not
without Lender's prior written permission sell, assign or transfer any of the
Loan Documents, or any portion thereof, including, without limitation,
Borrower's rights, title, interests, remedies, powers and duties thereunder.
Any sale, assignment, or transfer by Borrower without Lender's permission
shall be void ab initio. Borrower hereby consents to Lender's participation,
sale, assignment, transfer or other disposition, at any time or times
hereafter, of any of the Loan Documents, or of any portion thereof, including,
without limitation, Lender's rights, title, interests, remedies, powers and
duties thereunder. The Loan Documents shall be binding upon and inure to the
benefit of the permitted successors and assigns of Borrower and Lender.
Section 17.8. ATTORNEYS' FEES AND LENDER'S EXPENSES. The Borrower,
and/or the Guarantors to the extent not paid by the Borrower, shall reimburse
the Lender on demand for all out-of-pocket costs and expenses of the Lender
(including but not limited to all attorneys fees, paralegal fees and legal
expenses) incurred by the Lender in connection with the drafting, negotiation,
execution or enforcement of this Agreement or any other Loan Documents.
Further, if, following an Event of Default, Lender shall employ counsel for
advice or other representation or shall incur other costs and expenses in
connection with (A) any litigation, contest, dispute, suit, proceeding or
action (whether instituted by Lender, Borrower or any other Person) in any way
relating to the Collateral, any of the Loan Documents or any other agreements
executed or delivered in connection herewith, (B) any attempt to enforce, or
enforcement of, any rights of Lender against Borrower or any other Person,
including, without limitation, Contract Debtors, that may be obligated to
Lender by virtue of any of the Loan Documents, or (C) any actual or attempted
inspection, audit, monitoring, verification, protection, collection, sale,
liquidation or other disposition of the Collateral; then, in any such event,
the attorneys' fees arising from such services and all expenses, costs,
charges and other fees (including expert's fees) incurred by Lender in any way
arising from or relating to any of the events or actions described in this
Section shall be payable to Lender by Borrower on demand by Lender and until
paid shall be part of the Loan. All obligations provided for in this Section
shall survive termination of this Agreement.
Section 17.9. WAIVER BY LENDER. Lender's failure, at any time or times
hereafter, to require strict performance by Borrower of any provision of this
Agreement or any of the other Loan Documents shall not waive, affect or
diminish any right of Lender thereafter to demand strict performance
therewith. Any suspension or waiver by Lender of an Event of Default by
Borrower under the Loan Documents shall not suspend, waive or affect any other
Event of Default by Borrower under the Loan Documents, whether the same is
prior or subsequent thereto and whether of the same or of a different type.
None of the undertakings, agreements, warranties, covenants and
representations of Borrower contained in the Loan Documents and no Event of
Default by the Borrower under the Loan Documents shall be deemed to have been
suspended or waived by Lender unless such suspension or waiver is by an
instrument in writing signed by a manager of Lender and identifies the matter
waived or suspended. Any consent or approval by Lender pursuant to this
Agreement is not a waiver by Lender of, or an admission by Lender of the truth
of, any of Borrower's representations and warranties in this Agreement.
Section 17.10. WAIVERS BY BORROWER. Except as otherwise provided for
in this Agreement, Borrower waives (i) notice and consummation of presentment,
demand, protest, dishonor, intent to accelerate, acceleration; (ii) all rights
to notice and a hearing prior to taking possession or control of, or Lender's
replevy, attachment or levy upon, the Collateral; (iii) any bond or security
in a judicial proceeding as a condition to Lender exercising any of Lender's
remedies; (iv) the benefit of all valuation, appraisement and exemption laws;
and (v) TRIAL BY JURY in any dispute with Lender arising out of or related to
any of the Loan Documents. The failure or delay of Borrower to strictly
enforce the terms of this Agreement shall not be a waiver of Borrower's right
to do so.
Section 17.11. COUNTERPARTS. This Agreement may be executed in two or
more counterparts, with the same effect as if all parties had signed the same
document. All such counterparts shall be deemed an original, shall be
construed together and shall constitute one and the same instrument.
Section 17.12. ENTIRE AGREEMENT. This Agreement contains the entire
agreement among the parties regarding the Loan by Lender to Borrower based on
Contracts and supersedes all prior agreements, whether written or oral, with
respect thereto.
Section 17.13. STATEMENTS OF ACCOUNT. Each report, billing statement,
Statement of Borrowing Base, and payment transcript which is prepared by
Lender shall, except for manifest errors, be deemed final, binding and
conclusive upon Borrower in all respects as to all matters reflected therein,
and shall constitute an account stated between Borrower and Lender, unless
thereafter waived in writing by Lender or unless, within thirty (30) days
after Borrower's receipt of such document, Borrower delivers to Lender notice
of a written objection thereto specifying the claimed error. In the event of
such an error, only those items expressly objected to in such notice shall be
deemed to be disputed by Borrower and Lender's only liability to Borrower
shall be to issue a corrected document.
Section 17.14. PUBLICITY. Borrower shall not (i) issue any press
release or make any public announcement or otherwise publicize the
consummation of this Agreement with Lender, or (ii) make a public disclosure
of any kind regarding the subject matter hereof, or (iii) make use of Lender's
name, tradename, logo or trademark without the express written consent of
Lender, except that Borrower may publicly disclose information relating to
this Agreement if Borrower gives Lender advance written notice prior to
releasing any disclosure.
Section 17.15. CONTRACT DOCUMENTS. After Lender reviews a Contract
form or any other form used in connection with a Contract (collectively, the
"Form") Lender may inform Borrower that the Form may not comply with certain
laws or that the Form is not acceptable to Lender as an Eligible Contract form
unless certain changes are made. Borrower is responsible for its use of the
Forms and for any changes Borrower makes to the Forms in response to Lender's
comments. Lender shall have no liability to Borrower arising from Borrower's
use of, or changes to, any Form regardless of whether Lender approved the Form
or the changes or whether Lender conditioned the use of the Form as an
Eligible Contract form upon the changes being made. Regardless of Lender's
approval of a Form or Lender's comments regarding a Form, Borrower remains
obligated to Lender to conduct its business in a lawful manner, including the
use of Forms which comply with applicable laws.
Section 17.16. FAXED DOCUMENTS. In order to expedite the acceptance
and execution of this Agreement and any of the Supplemental Documents, each of
the parties hereto agrees that a faxed copy of any original executed document
shall have the same binding effect on the party so executing the faxed
document as an original handwritten executed copy thereof.
Entered into as of: April 11, 1997
GENERAL ACCEPTANCE CORPORATION
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Print Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: President & COO
GENERAL ELECTRIC CAPITAL CORPORATION
By: /s/ W. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Print Name: W. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Title: Account Executive
STATE OF ______________________ )
) SS:
COUNTY OF ____________________ )
Before me, a Notary Public in and for said County and State, personally
appeared ________________________________, the duly authorized representative
of General Acceptance Corporation, who acknowledged execution of the foregoing
for and on behalf of said Corporation.
Witness my hand and Notarial Seal this _____ day of _________________,
19____.
_____________________________________
Signature
_____________________________________
Printed Name
My Commission Expires: _____________ Residing in ____________________
County
SS-111146-5
Exhibit 11.1
GENERAL ACCEPTANCE CORPORATION
Statement Re: Computation of Per Share Earnings
YEAR ENDED DECEMBER 31
----------------------
1996 1995 1994
------------ ---------- ----------
HISTORICAL PRO FORMA PRO FORMA
------------ ---------- ----------
Primary:
Weighted average shares outstanding 6,022,000 5,485,562 4,064,000
Net affect of dilutive stock options - based on
the treasury stock method using the average
market price --- 29,856 ---
Adjustment for shares required to pay
undistributed S Corporation earnings using
the initial public offering price --- 123,548 397,961
Total weighted average shares 6,022,000 5,638,966 4,461,961
============ ========== ==========
Net income (loss) $(9,080,538) $ 716,657 $2,544,067
============ ========== ==========
Per share amount $ (1.51) $ 0.13 $ 0.57
============ ========== ==========
Fully diluted:
Weighted average shares outstanding 6,022,000 5,485,562 4,064,000
Net effect of dilutive stock options - based on
the treasury stock method using the period-
end market price, if greater than average
market price --- 29,856 ---
Adjustment for shares required to pay
undistributed S Corporation earnings using
the initial public offering price --- 123,548 397,961
Total weighted average shares outstanding 6,022,000 5,638,966 4,461,961
============ ========== ==========
Net income (loss) $(9,080,538) $ 716,657 $2,544,067
============ ========== ==========
Per share amount $ (1.51) $ 0.13 $ 0.57
============ ========== ==========
Supplemental:
Weighted average shares outstanding 4,064,000
Net effect of dilutive stock options - based on
the treasury stock method using the average
market price 29,856
Adjustment for shares required to pay
undistributed S Corporation earnings using
the initial public offering price 556,577
Adjustment for shares required to pay initial
public offering costs and debt of $20,673,198 1,398,423
Unregistered shares issued as director
compensation at time of initial public
offering 3,000
Total weighted average shares 6,051,856
==========
Net Income $ 716,657
Reduction of interest expense, net of the related
income tax benefit, because of the assumed
payment, as of January 1, 1995, of a
portion of borrowings under the revolving
line of credit 315,028
Total $1,031,684
Per share amount $ 0.17
==========
Exhibit 21.1
SUBSIDIARIES OF REGISTRANT
SUBSIDIARY % OWNED DOMICILED IN
General Acceptance Corporation Reinsurance Limited
100% Turks and Caicos Islands