AMENDED AND RESTATED SECURITY AGREEMENT

Exhibit 4.5

 

C ONFORMED C OPY

 

 

A MENDED AND R ESTATED S ECURITY A GREEMENT , P LEDGE

 

A ND

 

I NDENTURE OF T RUST

 

D ATED AS OF J UNE  30, 1997

 

A MONG

 

W ORLD A CCEPTANCE C ORPORATION OF A LABAMA

W ORLD A CCEPTANCE C ORPORATION OF M ISSOURI

W ORLD F INANCE C ORPORATION OF G EORGIA

W ORLD F INANCE C ORPORATION OF L OUISIANA

W ORLD A CCEPTANCE C ORPORATION OF O KLAHOMA , I NC .

W ORLD F INANCE C ORPORATION OF S OUTH C AROLINA

W ORLD F INANCE C ORPORATION OF T ENNESSEE

W ORLD F INANCE C ORPORATION OF T EXAS

WFC L IMITED P ARTNERSHIP

WFC OF S OUTH C AROLINA , I NC .

W ORLD F INANCE C ORPORATION OF I LLINOIS

A ND

W ORLD F INANCE C ORPORATION OF N EW M EXICO

 

A ND

 

H ARRIS T RUST AND S AVINGS B ANK ,

AS S ECURITY T RUSTEE

 

 

T ABLE OF C ONTENTS

 

 

-i-

 

-ii-

 

A TTACHMENTS T O S ECURITY A GREEMENT A ND I NDENTURE OF T RUST :

 

 

-iii-

 

A MENDED AND R ESTATED S ECURITY A GREEMENT , P LEDGE

AND I NDENTURE OF T RUST

 

Amended and Restated Security Agreement, Pledge and Indenture of Trust (this “Agreement” ) dated as of June 30, 1997, among W ORLD A CCEPTANCE C ORPORATION OF A LABAMA , an Alabama corporation, W ORLD A CCEPTANCE C ORPORATION OF M ISSOURI , a Missouri corporation, W ORLD F INANCE C ORPORATION OF G EORGIA , a Georgia corporation, W ORLD F INANCE C ORPORATION OF L OUISIANA , a Louisiana corporation, W ORLD A CCEPTANCE C ORPORATION OF O KLAHOMA , I NC ., an Oklahoma corporation, W ORLD F INANCE C ORPORATION OF S OUTH C AROLINA , a South Carolina corporation, W ORLD F INANCE C ORPORATION OF T ENNESSEE , a Tennessee corporation, W ORLD F INANCE C ORPORATION OF T EXAS , a Texas corporation, WFC L IMITED P ARTNERSHIP , a Texas limited partnership, WFC OF S OUTH C AROLINA , I NC ., a South Carolina corporation, W ORLD F INANCE C ORPORATION OF I LLINOIS , an Illinois corporation, and W ORLD F INANCE C ORPORATION OF N EW M EXICO , a New Mexico corporation (collectively, the “Companies” and individually a “Company” ), and H ARRIS T RUST AND S AVINGS B ANK , an Illinois banking corporation (the “Security Trustee” ), as amended, modified, supplemented or waived from time to time and as supplemented from time to time by a security agreement supplement substantially in the form of Exhibit A hereto between a Restricted Subsidiary and the Security Trustee delivered pursuant to Section 3.9 of the World Security Agreement. This Agreement amends and restates the Original Subsidiary Security Agreements (as hereinafter defined) and the Additional Subsidiary Security Agreements (as hereinafter defined). The post office addresses of the Companies and the Security Trustee are set forth in §10.3 .

 

R ECITALS :

 

A. The capitalized terms used in this Agreement shall have the respective meanings specified in §1.1 unless otherwise herein defined or the context hereof shall otherwise require.

 

B. World Acceptance Corporation, a South Carolina corporation ( “World” ) and parent, directly or indirectly, of the Companies, has previously entered into separate Note Agreements each dated as of December 1, 1992, as amended (the “Original Senior Note Agreements” ), with the institutional investors named in Schedule I to the Original Senior Note Agreements providing for the issuance and sale by World of its $20,000,000 principal amount 8.5% Senior Secured Notes due December 1, 1999 (the “Original Senior Secured Notes” ).

 

C. World also entered into that certain Revolving Credit Agreement dated as of December 1, 1992, as amended (the “Original Revolving Credit Agreement” ), with Harris Trust and Savings Bank, as agent and the other banks which are signatories thereto providing for borrowings in an original aggregate principal amount of $20,000,000 (the borrowings, whether or not evidenced by promissory notes, being hereinafter referred to as the “Original Revolving Credit Notes” ) . The Original Senior Secured Notes and the Original Revolving Credit Notes are hereinafter collectively referred to as the “Original Senior Notes.”

Amended and Restated Security Agreement,

Pledge and Indenture of Trust (Subsidiaries)

 

D. World also entered into that certain Security Agreement, Pledge and Indenture of Trust dated as of December 1, 1992, as amended (the “Original World Security Agreement” ), with Harris Trust and Savings Bank, an Illinois banking corporation, as security trustee (the “Security Trustee” ) whereby World granted to the Security Trustee, inter alia, for the benefit of the holders of the Original Senior Notes, all of its right, title and interest in the Collateral (as defined therein) as security for the Original Senior Notes.

 

E. As a condition to the issuance of the Original Senior Notes, World Finance Corporation of South Carolina, World Finance Corporation of Georgia, World-TX, World-OK and World Finance Corporation of Louisiana entered into those separate Guaranty Agreements each dated as of December 1, 1992, as amended or amended and restated, as the case may be (the “Original Senior Guaranty Agreements” ).

 

F. Pursuant to Section 3.29 of the Original World Security Agreement, (i) World Acceptance Corporation of Alabama entered into that certain Guaranty Agreement dated as of July 11, 1994, (ii) World-MO entered into that certain Guaranty Agreement dated as of April 2, 1993, (iii) World Finance Corporation of Tennessee entered into that certain Guaranty Agreement dated as of April 2, 1993, (iv) WFC-LP entered into that certain Guaranty Agreement dated as of July 1, 1995, (v) WFC-SC entered into that certain Guaranty Agreement dated as of September 1, 1995, (vi) World Finance Corporation of Illinois entered into that certain Guaranty Agreement dated as of March 14, 1996 and (vii) World Finance Corporation of New Mexico entered into that certain Guaranty Agreement dated as of January 31, 1997 (collectively, as amended or amended and restated, as the case may be, the “Additional Senior Guaranty Agreements” ).

 

G. As a condition to the issuance of the Original Senior Notes, World Finance Corporation of South Carolina, World Finance Corporation of Georgia, World-TX, World-OK and World Finance Corporation of Louisiana entered into those separate Security Agreements and Indentures of Trust each dated as of December 1, 1992, as amended or amended and restated, as the case may be (the “Original Subsidiary Security Agreements” ).

 

H. Pursuant to Section 3.29 of Original World Security Agreement, (i) World Acceptance Corporation of Alabama entered into that certain Security Agreement and Indenture of Trust dated as of July 11, 1994, (ii) World-MO entered into that certain Security Agreement and Indenture of Trust dated as of April 2, 1993, (iii) World Finance Corporation of Tennessee entered into that certain Security Agreement and Indenture of Trust dated as of April 2, 1993, (iv) WFC-LP entered into that certain Security Agreement, Pledge and Indenture of Trust dated as of July 1, 1995, (v) WFC-SC entered into that certain Security Agreement and Indenture of Trust dated as of September 1, 1995, (vi) World Finance Corporation of Illinois entered into that certain Security Agreement and Indenture of Trust dated as of March 14, 1996 and (vii) World Finance Corporation of New Mexico entered into that certain Security Agreement and Indenture of Trust dated as of May 31, 1997 (collectively, as amended or amended and restated, as the case may be, the “Additional Subsidiary Security Agreements” ).

 

I. World has entered into the Amended and Restated Note Agreements dated as of June 30, 1997 (the “Senior Note Agreements” ), which Senior Note Agreements amend and

 

-2-

Amended and Restated Security Agreement,

Pledge and Indenture of Trust (Subsidiaries)

 

restate the Original Senior Note Agreements and which Senior Secured Notes amend and restate the Original Senior Secured Notes; the Original Senior Secured Notes as amended and restated and as the same may from time to time be amended or restated pursuant to the terms thereof and of the Senior Note Agreements and any notes executed in replacement thereof (the “Senior Secured Notes” ). World has also entered into the Amended and Restated Revolving Credit Agreement dated as of June 30, 1997 (the “Revolving Credit Agreement” ), which Revolving Credit Agreement amends and restates the Original Revolving Credit Agreement and the Original Revolving Credit Notes and provides for borrowings, whether or not such borrowings are evidenced by promissory notes and as the same may from time to time be amended or restated pursuant to the terms thereof and any notes executed in replacement thereof, in a maximum principal amount of borrowings at any one time outstanding not to exceed the Maximum Principal Amount (the “Revolving Credit Notes” ). The Senior Secured Notes and the Revolving Credit Notes are hereinafter collectively referred to as the “Senior Notes.” World has also authorized, on the terms provided in the Senior Subordinated Note Agreement dated as of June 30, 1997 ( the “Senior Subordinated Note Agreement” ), the issuance of $10,000,000 aggregate principal amount of Senior Subordinated Secured Notes due June 30, 2004, as the same may from time to time be amended or restated pursuant to the terms thereof and of the Senior Subordinated Note Agreement and any notes executed in replacement thereof (the “Senior Subordinated Notes” ). The Senior Notes and the Senior Subordinated Notes are hereinafter collectively referred to as the “Notes.”

 

J. In connection with the above-described transactions, World has entered into the Amended and Restated Security Agreement, Pledge and Indenture of Trust dated as of June 30, 1997 (the “World Security Agreement” ), which amends and restates the Original World Security Agreement.

 

K. In connection with the above-described transactions, each Company agreed (i) to amend and restate the Original Senior Guaranty Agreement or Additional Senior Guaranty Agreement, as the case may be, to which it is a party by entering into the Amended and Restated Guaranty Agreement dated as of June 30, 1997 (the “Senior Guaranty Agreement” ) and (ii) to enter into the Guaranty Agreement dated as of June 30, 1997 (the “Senior Subordinated Guaranty Agreement,” and collectively with the Senior Guaranty Agreement, the “Subsidiary Guaranty Agreements” ).

 

L. As a condition to the above-described transactions, the Noteholders require that each Company enter into this Agreement for purposes of, inter alia , securing the obligations of World under the Senior Note Agreements, the Revolving Credit Agreement, the Senior Subordinated Note Agreement and the Notes. The World Security Agreement requires that, upon formation or acquisition of any new Restricted Subsidiary, World cause such subsidiary to enter into a Security Agreement Supplement on the terms set forth herein.

 

M. The Companies desire that World comply with the provisions of the World Security Agreement, the Senior Note Agreements, the Revolving Credit Agreement, the Senior Subordinated Note Agreement and the Notes. By entering into the Senior Note Agreements, the Revolving Credit Agreement and the Senior Subordinated Note Agreement, the respective holders of the Notes have conferred financial and other benefits on the Companies.

 

-3-

Amended and Restated Security Agreement,

Pledge and Indenture of Trust (Subsidiaries)

 

N. Each Company agrees to amend and restate the Original Subsidiary Security Agreement or Additional Subsidiary Security Agreement, as the case may be, to which it is a party on the terms set forth herein for purposes of securing the obligations (i) of World under the Senior Note Agreements, the Revolving Credit Agreement, the Senior Subordinated Note Agreement and the Notes and (ii) of each other Company under the Subsidiary Guaranty Agreements.

 

O. Each Company is authorized by law, and deems it necessary to secure the Senior Note Agreements, the Revolving Credit Agreement, the Senior Subordinated Note Agreement and the Notes as hereinafter provided, and to that end, in the exercise of said authority, has duly authorized the execution and delivery of this Agreement providing for the securing of certain obligations of World and each other Company, all as hereinafter provided.

 

P. All acts and proceedings required by law and by the respective Governing Documents of each Company necessary to constitute this Agreement a valid and binding agreement for the uses and purposes herein set forth, in accordance with its terms, have been done and taken, and the execution and delivery of this Agreement has been in all respects duly authorized.

 

S ECTION  1. I NTERPRETATION OF A GREEMENT ; D EFINITIONS .

 

Section 1.1. Definitions. Unless the context otherwise requires, the terms hereinafter set forth when used herein shall have the following meanings and the following definitions shall be equally applicable to both the singular and plural forms of any of the terms herein defined:

 

“Account Debtor” shall mean any Person who is or may become obligated to any Company under or on account of a Receivable.

 

“Affiliate” shall mean, with respect to any Company, any Person (other than a Restricted Subsidiary) (i) which directly or indirectly through one or more intermediaries controls, or is controlled by, or is under common control with, such Company, (ii) which beneficially owns or holds 5% or more of any class of the Voting Stock (determined by number of shares or by number of votes) of such Company or (iii) 5% or more of the Voting Stock (determined by number of shares or by number of votes) (or in the case of a Person which is not a corporation, 5% or more of the equity interest) of which is beneficially owned or held by such Company or a Subsidiary. The term “control” means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of Voting Stock, by contract or otherwise.

 

“Agent” shall mean Harris Trust and Savings Bank and its permitted successors and assigns, in each case in its capacity as agent for the Banks under the Revolving Credit Agreement.

 

“Aggregate Principal Amount of the Outstanding Notes” shall mean (i) for purposes of §8.1 (A) if any Senior Note or any obligation or liability owing under the Revolving Credit Agreement or the Senior Note Agreement remains outstanding or any obligation to extend credit

 

-4-

Amended and Restated Security Agreement,

Pledge and Indenture of Trust (Subsidiaries)

 

under the Revolving Credit Agreement exists, the sum of the actual principal amount of the Senior Notes then outstanding, and (B) if no Senior Note and no other obligation or liability owing under the Revolving Credit Agreement or the Senior Note Agreement is then outstanding and all obligations to extend credit under the Revolving Credit Agreement have expired or otherwise terminated, the sum of the actual principal amount of the Senior Subordinated Notes then outstanding, (ii) for purposes of §8.7 and §8.8 , the sum of the actual principal amount of the Notes then outstanding, plus the amount of the unused commitment with respect to the Revolving Credit Notes and (iii) for purposes of §9.2 and §10.4 (A) so long as no Event of Default shall have occurred and be continuing, the sum of the actual principal amount of Notes then outstanding, plus the amount of the unused commitment with respect to the Revolving Credit Notes and (B) if an Event of Default shall have occurred and be continuing, the actual principal amount of the Notes then outstanding.

 

“Banks” shall mean Harris Trust and Savings Bank, The First National Bank of Chicago, LaSalle National Bank and the other banks or financial institutions that are or become a party to the Revolving Credit Agreement.

 

“Closing Date” shall mean July 3, 1997.

 

“Collateral” as used herein shall mean any and all property from time to time subject to the security interest granted hereby.

 

“Company” shall mean each of World Acceptance Corporation of Alabama, an Alabama corporation, World Acceptance Corporation of Missouri, a Missouri corporation, World Finance Corporation of Georgia, a Georgia corporation, World Finance Corporation of Louisiana, a Louisiana corporation, World Acceptance Corporation of Oklahoma, Inc., an Oklahoma corporation, World Finance Corporation of South Carolina, a South Carolina corporation, World Finance Corporation of Tennessee, a Tennessee corporation, World Finance Corporation of Texas, a Texas corporation, WFC Limited Partnership, a Texas limited partnership, WFC of South Carolina, Inc., a South Carolina corporation, World Finance Corporation of Illinois, an Illinois corporation, and World Finance Corporation of New Mexico, a New Mexico corporation, any entity that executes and delivers a Security Agreement Supplement in the form attached hereto as Exhibit A, and any Person which succeeds to all, or substantially all of the assets and business of any such entity.

 

“Consolidated Adjusted Net Worth” shall have the meaning specified in the Senior Subordinated Note Agreement as in effect on the Closing Date.

 

“Corporate Base Rate” means for any day the rate of interest announced by Harris Trust and Savings Bank from time to time as its prime commercial rate, or equivalent, with any change in the Corporate Base Rate resulting from a change in said prime commercial rate to be effective as of the date of the relevant change in said prime commercial rate.

 

“Default” shall mean any event or condition, the occurrence of which would, with the lapse of time or the giving of notice, or both, constitute an Event of Default.

 

-5-

Amended and Restated Security Agreement,

Pledge and Indenture of Trust (Subsidiaries)

 

“Event of Default” shall have the meaning specified in §7.1 .

 

“Environmental Legal Requirement” shall mean any international, Federal, state or local statute, law, regulation, order, consent decree, judgment, permit, license, code, covenant, deed restriction, common law, treaty, convention, ordinance or other requirement relating to public health, safety or the environment, including without limitation, those relating to releases, discharges or emissions to air, water, land or ground water, to the withdrawal or use of groundwater, to the use and handling of polychlorinated biphenyls or asbestos, to the disposal, treatment, storage or management of hazardous or solid waste, or Hazardous Substances or crude oil, or any fraction thereof, or to exposure to toxic or hazardous materials, to the handling, transportation, discharge or release of gaseous or liquid Hazardous Substances and any regulation, order, notice or demand issued pursuant to such law, statute or ordinance, in each case applicable to the property of World or any of its Subsidiaries or the operation, construction or modification of any thereof, including without limitation the following: the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended by the Superfund Amendments and Reauthorization Act of 1986, the Solid Waste Disposal Act, as amended by the Resource Conservation and Recovery Act of 1976 and the Hazardous and Solid Waste Amendments of 1984, the Hazardous Materials Transportation Act, as amended, the Federal Water Pollution Control Act, as amended by the Clean Water Act of 1976, the Safe Drinking Water Control Act, the Clean Air Act of 1966, as amended, the Toxic Substances Control Act of 1976, the Occupational Safety and Health Act of 1977, as amended, the Emergency Planning and Community Right-to-Know Act of 1986, the National Environmental Policy Act of 1975 and the Oil Pollution Act of 1990 and any similar or implementing state law, and any state statute and any further amendments to these laws, providing for financial responsibility for cleanup or other actions with respect to the release or threatened release of Hazardous Substances or crude oil, or any fraction thereof and all rules, regulations, guidance documents and publication promulgated thereunder.

 

“GAAP” shall mean generally accepted accounting principles at the time in the United States.

 

“Governing Documents” shall mean collectively the charter instruments, by-laws, partnership agreements, operating agreements and other similar documents prescribing the internal governance of each Restricted Subsidiary.

 

“Hazardous Substances” shall mean any hazardous or toxic material, substance or waste pollutant or contaminant which is regulated as such under any statute, law, ordinance, rule or regulation of any Federal, regional, state or local authority having jurisdiction over the property of World or any Subsidiary or its use, including but not limited to any material, substance or waste which is: (a) defined as a hazardous substance under Section 311 of the Federal Water Pollution Control Act (33 U.S.C. §1317), as amended; (b) regulated as a hazardous waste under Section 1004 of the Federal Resource Conservation and Recovery Act (42 U.S.C. §6901 et seq. ), as amended; (c) defined as a hazardous substance under Section 101 of the Comprehensive Environmental Response, Compensation and Liability Act, as amended; (d) defined or regulated as a hazardous substance or hazardous waste under any rules or regulations promulgated under any of the foregoing statutes or (e) petroleum or products derived therefrom.

 

-6-

Amended and Restated Security Agreement,

Pledge and Indenture of Trust (Subsidiaries)

 

“Indebtedness for Borrowed Money” shall have the meaning specified in the Senior Subordinated Note Agreement as in effect on the Closing Date.

 

“Insurance Subsidiary” shall mean any one Subsidiary (i) which is organized under the laws of the British Virgin Islands or such other jurisdiction as shall be consented to in writing by all of the holders of the Notes; (ii) which conducts substantially all of its business and has substantially all of its assets within the British Virgin Islands or such other jurisdiction as shall be consented to in writing by all of the holders of the Notes; (iii) of which 100% (by number of votes) (other than directors’ qualifying shares) of the Voting Stock is owned by World; and (iv) which is engaged in the business of reinsuring the credit insurance written by the Subsidiaries.

 

“ Investment Property ” shall have the meaning specified in §2.5 .

 

“Lien” shall mean any interest in property securing an obligation owed to a Person, whether such interest is based on the common law, statute or contract, and including but not limited to the security interest arising from a mortgage, security agreement, encumbrance, pledge, conditional sale or trust receipt or a lease, consignment or bailment for security purposes. The term “Lien” includes reservations, exceptions, encroachments, easements, rights of way, covenants, conditions, restrictions, leases and other similar title exceptions and encumbrances, including but not limited to mechanics’, materialmen’s, warehousemen’s, carriers’ and other similar encumbrances, affecting property. For the purposes of this Agreement, a Person shall be deemed to be the owner of any property which it has acquired or holds subject to a conditional sale agreement or other arrangement pursuant to which title to the property has been retained by or vested in some other Person for security purposes.

 

“Make-Whole Amount” (i) with respect to the Senior Secured Notes, shall have the meaning as defined in the Senior Note Agreements and (ii) with respect to the Senior Subordinated Notes, shall have the meaning as defined in the Senior Subordinated Note Agreement.

 

“Material Event of Default” shall mean (i) an Event of Default shall have occurred under any of Sections 6.1(a), (b), (c), (n), (o), (p) or (q) of any Senior Note Agreement, (ii) an Event of Default shall have occurred under any of Sections 9.1(a), (b), (c), (n), (p), (q) or (r) of the Revolving Credit Agreement, (iii) an Event of Default shall have occurred with respect to Sections 5.7, 5.8, 5.9, 5.10, 5.11 (but only to the extent such Event of Default relates to a Lien on property of World or any Restricted Subsidiary with a fair market value in excess of $1,000,000), 5.12, 5.13 or 5.18 of any Senior Note Agreement or (iv) an Event of Default shall have occurred with respect to Sections 8.7, 8.8, 8.9, 8.10, 8.11 (but only to the extent such Event of Default relates to a Lien on property of World or any Restricted Subsidiary with a fair market value in excess of $1,000,000), 8.12, 8.13 or 8.18 of the Revolving Credit Agreement.

 

“Maximum Principal Amount” shall mean an amount equal to (i) $65,000,000, plus (ii) any principal amount in excess thereof agreed to in writing by the holders of the Senior Subordinated Notes, plus (iii) any principal amount in excess thereof; provided, that, at the time of any increase in the amount of the commitment of the Banks under the Revolving Credit

 

-7-

Amended and Restated Security Agreement,

Pledge and Indenture of Trust (Subsidiaries)

 

Agreement, the Agent shall have received a certificate or certificates of the Chief Financial Officer of World and an authorized officer of each holder of the Senior Subordinated Notes, in each case, certifying that on the date of such increase and after giving effect thereto and, in the case of clause (B) below, after giving effect to the treatment of the maximum aggregate amount of the commitment as so increased as having been incurred as Indebtedness for Borrowed Money on the last day of the calendar month then most recently ended and, in the case of any certificate delivered by any holder of the Senior Subordinated Notes, to the knowledge of such holder, (A) there does not exist any Default or Event of Default under clauses (a), (b), (c), (n), (o), (p) or (q) of Section 6.1 of the Senior Subordinated Note Agreement as in effect on the Closing Date or under Sections 5.7, 5.8, 5.9, 5.10, 5.11 (but only to the extent such Default or Event of Default relates to a Lien on property of World or any Restricted Subsidiary with a fair market value in excess of $1,000,000), 5.12, 5.13 or 5.18 of the Senior Subordinated Note Agreement as in effect on the Closing Date and (B) the ratio of Indebtedness for Borrowed Money of World and its Restricted Subsidiaries to Consolidated Adjusted Net Worth for the calendar month then most recently ended does not exceed 6.5 to 1.

 

“Moody’s” shall mean Moody’s Investors Service, Inc.

 

“Note Register” (i) with respect to the Senior Secured Notes, shall have the meaning specified in Section 9.1 of the Senior Note Agreements and (ii) with respect to the Senior Subordinated Notes, shall have the meaning specified in Section 10.1 of the Senior Subordinated Note Agreement.

 

“Noteholders” shall mean, collectively, the holders from time to time and at any time of the Notes.

 

“Notes” shall have the meaning specified in the recitals hereof.

 

“Original Closing Date” shall mean December 29, 1992.

 

“Partnership Interests” shall have the meaning specified in §2.6 .

 

“Person” shall mean an individual, partnership, corporation, limited liability company, trust or unincorporated organization, and a government agency or political subdivision thereof.

 

“Pledged Collateral” shall mean and include:

 

(a) the Pledged Shares;

 

(b) all shares, Securities, moneys, or other property distributed as a dividend on any shares of capital stock or other Pledged Collateral (including the Pledged Shares) at any time pledged hereunder or a distribution or return of capital upon or in respect of any such capital stock or other Pledged Collateral or any part thereof, or resulting from a split-up, revision, reclassification or other like change of any such capital stock or other Pledged Collateral, and any subscription warrants, rights or options issued to the holders of, or otherwise in respect of, any such capital stock or other Pledged Collateral; and

 

-8-

Amended and Restated Security Agreement,

Pledge and Indenture of Trust (Subsidiaries)

 

(c) in the event of any consolidation or merger in which the issuer of any Pledged Collateral is not the surviving entity, or in the event of any sale, lease, transfer or other disposition of all or substantially all of the assets of such issuer;

 

(i) all shares of each class of the capital stock or other Security of the successor entity formed by or resulting from such consolidation or merger, or of the corporation to which such sale, lease, transfer or other disposition shall have been made, and

 

(ii) all other Securities, money or property, distributed or distributable in any such event in respect of any of the Pledged Collateral in connection with such consideration, merger, sale, lease, transfer or other disposition.

 

“Pledged Shares” shall mean all of the capital stock, partnership interests, membership interests and other equity interests owned by any Company or hereafter acquired, including, without limitation, (a) all rights, authority, powers and privileges of such Company as a shareholder or holder of any partnership interest, membership interest or other equity interest of any entity, whether now existing or hereafter arising under the Governing Documents, or at law or otherwise, and the rights of such Company under such Governing Documents to acquire additional shares of stock or to acquire the shares of stock of other shareholders or the partnership interest, membership interest or other equity interest from any such other holder, and (b) all other instruments owned or held by, or otherwise established in favor of, such Company in the nature of capital stock of, partnership interest, membership interest or any other equity interest in any entity, of any and every type, class and series.

 

“Receivables” shall mean all accounts receivable, receivables, contract rights, controls, instruments, notes, drafts, bills, acceptances, documents, chattel paper, general intangibles and all other forms of obligations owing to a Person.

 

“Restricted Subsidiary” shall mean the Insurance Subsidiary, if any, and any other Subsidiary (i) which is organized under the laws of the United States or any State thereof; (ii) which conducts substantially all of its business and has substantially all of its assets within the United States; and (iii) of which 100% (by number of votes) of the Voting Stock is owned by World and/or one or more Restricted Subsidiaries.

 

“Revolving Credit Agreement” shall mean that certain Amended and Restated Revolving Credit Agreement dated as of June 30, 1997 among World, the Agent and the Banks, as the same may from time to time be amended, restated, modified, supplemented or waived pursuant to the terms thereof.

 

“Revolving Credit Notes” shall have the meaning specified in the recitals hereof.

 

“S&P” shall mean Standard & Poor’s Ratings Services Group, a division of The McGraw-Hill Companies, Inc.

 

-9-

Amended and Restated Security Agreement,

Pledge and Indenture of Trust (Subsidiaries)

 

“Secured Indebtedness” shall mean (i) the outstanding Notes and all principal thereof (and premium, if any) and interest thereon pursuant to the terms of the outstanding Notes, the World Security Agreement, the Senior Note Agreements, the Revolving Credit Agreement and the Senior Subordinated Note Agreement; provided, that, in no event shall “Secured Indebtedness” include (A) the principal amount of the Revolving Credit Notes in excess of the Maximum Principal Amount and (B) the related interest thereon and (ii) all additional amounts and other sums at any time due and owing from or required to be paid by World or any Company under the terms of this Agreement, the Senior Note Agreements, the Revolving Credit Agreement, the Senior Subordinated Note Agreement, the Subsidiary Security Agreement and the Subsidiary Guaranty Agreements, as in effect on the Closing Date or as otherwise consented to in writing by all of the holders of the Notes.

 

“Security” shall have the same meaning as in Section 2(a)(1) of the Securities Act of 1933, as amended.

 

“Security Trustee” means the Person named above as the “Security Trustee” in the first paragraph of this Agreement until a successor Security Trustee shall have become such pursuant to the applicable provisions of this Agreement, and thereafter “Security Trustee” shall mean such successor Security Trustee.

 

“Senior Note Agreements” shall mean, collectively, the separate Amended and Restated Note Agreements, each dated as of June 30, 1997, between World and the respective note purchasers named therein, as the same may from time to time be amended, restated, modified, supplemented or waived pursuant to the terms thereof.

 

“ Senior Notes ” shall have the meaning specified in the recitals hereof.

 

“Senior Secured Notes” shall have the meaning specified in the recitals hereof.

 

“Senior Subordinated Note Agreement” shall mean that certain Note Agreement dated as of June 30, 1997 between World and the purchaser named therein, as the same may from time to time be amended, restated, modified, supplemented or waived pursuant to the terms thereof.

 

“Senior Subordinated Notes” shall have the meaning specified in the recitals hereof.

 

The term “subsidiary” shall mean, as to any particular parent corporation, any corporation, partnership, limited liability company, or other entity of which more than 50% (by number of votes or other decision-making authority) of the Voting Stock shall be owned by such parent corporation and/or one or more corporations, partnerships, limited liability companies or other entities which are themselves subsidiaries of such parent corporation. The term “Subsidiary” shall mean a subsidiary, directly or indirectly, of World.

 

“Subsidiary Guaranty Agreements” shall mean (i) the Amended and Restated Guaranty Agreement dated as of June 30, 1997 of each Restricted Subsidiary existing on the Closing Date and each other Restricted Subsidiary which has executed a Guaranty Supplement in the form of Exhibit A thereto, pursuant to the terms thereof and Section 3.9 of the World Security

 

-10-

Amended and Restated Security Agreement,

Pledge and Indenture of Trust (Subsidiaries)

 

Agreement, in each case, for the benefit of the Security Trustee and the holders of the Senior Notes, as the same may from time to time be amended, restated, modified, supplemented or waived pursuant to the terms thereof, and (ii) the Guaranty Agreement dated as of June 30, 1997 of each Restricted Subsidiary existing on the Closing Date and each other Restricted Subsidiary which has executed a Guaranty Supplement in the form of Exhibit A thereto, pursuant to the terms thereof and Section 3.9 of the World Security Agreement, in each case, for the benefit of the Security Trustee and the holders of the Senior Subordinated Notes, as the same may from time to time be amended, restated, modified, supplemented or waived pursuant to the terms thereof.

 

“Underlying Collateral” shall mean, with respect to any Receivable of any Company, all of its rights with respect to any collateral granted by the Account Debtor in connection with any loan.

 

“Uniform Commercial Code” as used herein with reference to any collateral shall mean the Uniform Commercial Code as enacted in the jurisdiction applicable to such Collateral, as amended from time to time, and any successor statute(s) thereto.

 

“Unsecured Receivables” shall mean Receivables which are not secured by Underlying Collateral or otherwise.

 

“Voting Stock” shall mean Securities or other equity interests of any class or classes, the holders of which are ordinarily, in the absence of contingencies, entitled to elect a majority of the corporate directors (or Persons performing similar functions).

 

“WFC-LP” shall mean WFC Limited Partnership, a Texas limited partnership.

 

“WFC-SC” shall mean WFC of South Carolina, Inc., a South Carolina corporation.

 

“World-MO”  shall mean World Acceptance Corporation of Missouri, a Missouri corporation.

 

“World-NM”  shall mean World Finance Corporation of New Mexico, a New Mexico corporation.

 

“World-OK” shall mean World Acceptance Corporation of Oklahoma, Inc., an Oklahoma corporation.

 

“World Security Agreement” shall mean that certain Amended and Restated Security Agreement, Pledge and Indenture of Trust dated as of June 30, 1997 between World and the Security Trustee, as the same may be amended, restated, supplemented or waived from time to time by any amendments and supplements thereto entered into in accordance with the terms thereof.

 

“World-TX” shall mean World Finance Corporation of Texas, a Texas corporation.

 

-11-

Amended and Restated Security Agreement,

Pledge and Indenture of Trust (Subsidiaries)

 

Section 1.2. Accounting Principles . Where the character or amount of any asset or liability or item of income or expense is required to be determined or any consolidation or other accounting computation is required to be made for the purposes of this Agreement, the same shall be done in accordance with GAAP, to the extent applicable, except where such principles are inconsistent with the requirements of this Agreement.

 

Section 1.3. Directly or Indirectly . Where any provision in this Agreement refers to action to be taken by any Person, or which such Person is prohibited from taking, such provision shall be applicable whether the action in question is taken directly or indirectly by such Person.

 

S ECTION  2. G RANTING C LAUSES .

 

Each Company in consideration of the premises and other good and valuable consideration, receipt whereof is hereby acknowledged, and intending to be legally bound, and in order to secure (i) the equal and pro rata payment of both the principal of and interest and premium, if any, on all Senior Notes at any time outstanding according to their tenor and effect, (ii) on a senior subordinated basis as set forth herein and in the Senior Subordinated Note Agreement, the equal and pro rata payment of both the principal of and interest and premium, if any, on all Senior Subordinated Notes at any time outstanding, according to their tenor and effect, and (iii) the payment of all other Secured Indebtedness and the performance and observance of all the covenants and conditions contained in the Notes, this Agreement, the World Security Agreement, the Senior Note Agreements, the Revolving Credit Agreement, the Senior Subordinated Note Agreement, and the Subsidiary Guaranty Agreements, in each case, subject to the terms thereof and of §7.5 , does hereby mortgage, grant, convey, warrant, assign, pledge and hypothecate unto the Security Trustee, its successors in trust and assigns, forever, and grants to the Security Trustee, its successors in trust and assigns, forever, a continuing security interest in, all and singular the following described properties, rights, interests and privileges, together with the proceeds thereof, now or hereafter owned by such Company (hereinafter sometimes referred to as the “Collateral” ):

 

Section 2.1. Equipment . All building materials, building equipment, machinery, apparatus, furniture and equipment and other personal property (other than motor vehicles and accessions to motor vehicles) of every kind and nature whatsoever located, including without limitation: all air conditioning, ventilating, plumbing, heating, lighting and electrical systems and apparatus; all communications equipment and intercom systems and apparatus; all typewriters, computers and other office machines and equipment, furniture, furnishings; all sprinkler equipment and apparatus, all elevators and escalators; and all machinery, equipment, engines, boilers, tools, furniture, carpeting, tables and chairs, together with all accessories, parts and appurtenances appertaining or attached thereto, whether now owned or hereafter acquired, and all substitutions, renewals, or replacements of and additions, improvements, accessions and accumulations to any and all thereof, together with all the rents, income, revenues, issues, proceeds, profits and avails arising therefrom or in connection therewith and excluding, in all cases, any of the foregoing items of property which are deemed fixtures;

 

Section 2.2. Receivables . Receivables, whether now existing or hereafter arising, and however evidenced or acquired, or in which such Company now has or hereafter acquires any

 

-12-

Amended and Restated Security Agreement,

Pledge and Indenture of Trust (Subsidiaries)

 

rights and all rights of such Company to any Underlying Collateral granted by an Account Debtor in connection with any Receivable owing by it to such Company;

 

Section 2.3. Pledged Collateral . The Pledged Collateral;

 

Section 2.4. General Intangibles . General intangibles of such Company, including, without limitation, tax refunds, rights with respect to trademarks, service marks, trade names, patents, copyrights, trade-secrets information and rights to prevent others from doing acts that constitute unfair competition with or misappropriation of property of such Company including, without limitation, any sums (net of expenses) that such Company may receive arising out of any claim for infringement of its rights in any patent, copyright, trademark, trade name, trade secret or other proprietary right and all rights of such Company under contracts to enjoy performance by others or to be entitled to enjoy rights granted by others, including, without limitation, any licenses (to the extent permitted by law);

 

Section 2.5. Investment Property . All Investment Property, whether now owned or existing or hereafter created, acquired or arising, or in which such Company now has or hereafter acquires any rights (the term “Investment Property” means and includes all investment property and any other securities (whether certificated or uncertificated), security entitlements, securities accounts, commodity contracts and commodity accounts, including all substitutions and additions thereto, all dividends, distributions and sums distributable or payable from, upon, or in respect of such property, and all rights and privileges incident to such property, but excludes the Pledged Collateral);

 

Section 2.6. Records and Cabinets . Supporting evidence and documents relating to any of the above-described property, including without limitation, written applications, credit information, account cards, payment records, correspondence, delivery and installation certificates, invoice copies, delivery receipts, notes and other evidences of indebtedness, insurance certificates and the like, together with all books of account, data processing records, computer software and licenses to use the same, ledgers and cabinets in which the same are reflected or maintained, all whether now existing or hereafter arising;

 

Section 2.7. Partnership Interests . (i) All right, title and interest of such Company, whether now owned or hereafter acquired, in all partnerships or limited liability companies, including, but not limited to, those set forth on Schedule II hereto (collectively, the “Partnerships” ), (ii) any and all payments or distributions of whatever kind or character and whether in cash or other property, at any time made, owing or payable to such Company in respect of or on account of its present or hereafter acquired interest in the Partnerships, whether due or to become due and whether representing profits, distributions pursuant to complete or partial liquidation or dissolution, repayment of capital contributions or otherwise, and the right to receive, receipt for, use and enjoy all such payments and distributions, and all proceeds thereof, in every case whether now arising or hereafter acquired or arising, and (iii) all proceeds of any of the foregoing (all of the foregoing rights, interests, properties and privileges assigned in and in which a security interest is granted pursuant to this §2.7 being hereafter collectively called the “Partnership Interest” );

 

-13-

Amended and Restated Security Agreement,

Pledge and Indenture of Trust (Subsidiaries)

 

Section 2.8. Additional Property . All property and rights, if any, which are by the express provisions of this Agreement required to be subjected to the lien hereof and any additional property and rights that may from time to time hereafter, by writing of any kind, be subjected to the lien hereof by such Company or by anyone acting at the direction or as an agent of such Company; and

 

Section 2.9. Other Proceeds and Products . All proceeds and products of the foregoing and all insurance of the foregoing and proceeds thereof, whether now existing or hereafter arising.

 

T O H AVE AND TO H OLD the Collateral, W ITH P OWER OF S ALE and right of entry and possession, unto the Security Trustee, its successors and assigns, forever; IN T RUST N EVERTHELESS , upon the terms and trust herein set forth, for the equal and proportionate benefit, security and protection of all present and future holders of the Senior Notes outstanding hereunder from and after the issuance of the Senior Notes, without preference, priority or distinction of any Senior Note over any other Senior Note by reason of series, priority of time of issue, sale, negotiation, time of any extensions of credit evidenced thereby, date of maturity thereof or otherwise for any cause whatsoever and, on a senior subordinated basis as set forth herein and in the Senior Subordinated Note Agreement, for the equal and proportionate benefit, security and protection of all present and future holders of the Senior Subordinated Notes outstanding hereunder from and after the issuance of the Senior Subordinated Notes, without preference, priority or distinction of any Senior Subordinated Note over any other Senior Subordinated Note by reason of series, priority of time of issue, sale, negotiation, date of maturity thereof or otherwise for any cause whatsoever; provided always, however, that these presents are upon the express condition that if the Companies shall irrevocably pay or cause to be irrevocably paid all the Secured Indebtedness and all obligations to extend Senior Indebtedness have expired or otherwise terminated, then these presents and the estate hereby granted and conveyed shall cease and this Agreement shall become null and void; otherwise this Agreement shall remain in full force and effect.

 

S ECTION  3. C OVENANTS , R EPRESENTATIONS AND  W ARRANTIES OF THE C OMPANIES .

 

Each Company hereby covenants with, and represents and warrants to, the Security Trustee and for the benefit of the holders of the Notes from time to time that:

 

Section 3.1. Location of Collateral . The Collateral (other than the Underlying Collateral and the Pledged Collateral) relating to such Company and the books and records relating thereto are in such Company’s possession at the offices and facilities owned or leased by such Company or World set forth in Schedule III hereto. Not less than ten days before the opening of any additional business location which would require the filing of an additional financing statement in accordance with the Uniform Commercial Code in order to perfect the security interest of the Security Trustee in the Collateral relating to such Company and the books and records relating thereto or any change in the business location where the Collateral relating to such Company and the books and records relating thereto are located and/or maintained which would require the filing of an additional financing statement in accordance with the Uniform Commercial Code in order to perfect the security interest of the Security Trustee in the Collateral relating to such

 

-14-

Amended and Restated Security Agreement,

Pledge and Indenture of Trust (Subsidiaries)

 

Company, such Company will deliver to the Security Trustee a supplement hereto amending Schedule III to include such business location, together with evidence of the filing of financing statements or other notices of the security interest hereof and an opinion of such Company’s counsel responsive to the requirements of §3.8 hereof. On or before the fifth day of every December of every year, such Company will deliver to the Security Trustee a supplement hereto amending Schedule III to include any additional business locations not previously reflected in a supplement hereto.

 

Section 3.2. Warranty of Title . Such Company is the lawful owner of the Collateral relating to such Company and has the sole right and lawful authority to deliver this Agreement. The Collateral relating to such Company and every part thereof is, on the Closing Date, free and clear of all Liens, except the Lien of this Agreement and will be free and clear of all Liens, except the Lien of this Agreement and the other Liens of the character described in clauses (e), (f), (g) and (h) of Section 5.11 of the Senior Note Agreements and the Senior Subordinated Note Agreement and in clauses (e), (f), (g) and (h) of Section 8.11 of the Revolving Credit Agreement, and such Company will warrant and defend the Collateral relating to such Company, against any claims and demands of all Persons at any time claiming the same or any interest therein adverse to the Security Trustee.

 

Section 3.3. No Alienation of Collateral . Except as permitted by the provisions of Section 5.13 of the Senior Note Agreements and the Senior Subordinated Note Agreement and Section 8.13 of the Revolving Credit Agreement, such Company will not, without the Security Trustee’s prior written consent, sell, assign, mortgage, lease or otherwise dispose of the Collateral relating to such Company or any interest therein.

 

Section 3.4. Removal of Collateral . Such Company will not remove the Collateral relating to such Company and/or the books and records relating thereto from the locations relating to such Company set forth in Schedule III hereto (i) without complying with §3.1 hereof or (ii) without the Security Trustee’s prior written consent (provided that such Company may move items of Collateral relating to such Company among such locations). Such Company will at all times allow the Security Trustee, the holders of the Notes and their representatives free access to, and right of inspection of, the Collateral relating to such Company.

 

Section 3.5. Compliance with Leases . Such Company will comply with the terms and conditions of any leases covering the premises wherein the Collateral relating to such Company is located and any orders, ordinances, laws or statutes of any city, state or other governmental entity, department or agency having jurisdiction with respect to such premises or the conduct of business thereon unless the failure to so comply will not, individually or in the aggregate, have a material adverse effect on such Collateral or impair the rights or interests of World, such Company, any other Restricted Subsidiary or the Security Trustee therein.

 

Section 3.6. Protection of Collateral . At any time and from time to time, the holder of any Notes may, at its option, or the Security Trustee may, at the direction of the holders of the Notes, discharge any taxes, or other Liens at any time levied or placed on the Collateral relating to such Company which are due and unpaid and (A) which are not being contested in good faith by appropriate actions or proceedings which will prevent the forfeiture or sale of the Collateral

 

-15-

Amended and Restated Security Agreement,

Pledge and Indenture of Trust (Subsidiaries)

 

relating to such Company or any material interference with the use thereof or (B) for which such Company has not set aside on its books, reserves adequate in accordance with GAAP with respect thereto, and such parties may pay for the maintenance and preservation of the Collateral relating to such Company, including the purchasing of insurance therefor to the extent required to be maintained by World or such Company pursuant to Section 5.2 of the Senior Note Agreements and the Senior Subordinated Note Agreement and Section 8.2 of the Revolving Credit Agreement and not so maintained, and such Company will immediately reimburse the Security Trustee or such holder on demand for any payment made or any expense incurred by the Security Trustee or such holder pursuant to the foregoing authority with interest at a rate per annum equal to the higher of (i) 10.5% and (ii) the Corporate Base Rate plus 2%. All such expenses and payments shall have the benefit of and be secured by the security interest herein granted, and the Security Trustee is authorized to charge any depository account of such Company maintained with the Security Trustee or any holder of the Notes for the amount of such expenses and payments.

 

Section 3.7. Further Assurances . Such Company agrees to execute and deliver to the Security Trustee such further agreements and assignments or other instruments and to do all such other things as the Security Trustee may deem necessary or appropriate to assure the Security Trustee its first priority security interest hereunder (provided, that WFC-LP, World-MO or World-NM shall be required to deliver to the Security Trustee possession of promissory notes evidencing the Unsecured Receivables only upon the request of the Security Trustee during the existence of a Default or Event of Default hereunder), including such financing statement or statements or amendments thereof or supplements thereto or other instruments as the Security Trustee may from time to time reasonably require to perfect, and continue the perfection of, the security interest in the Collateral contemplated by this Agreement. Such Company hereby agrees that, to the extent permitted by applicable law, a carbon, photographic or other reproduction of this Agreement or any such financing statement is sufficient for filing as a financing statement by the Security Trustee without notice thereof to such Company wherever the Security Trustee in its sole discretion desires to file the same. The Security Trustee shall, when an Event of Default shall have occurred and be continuing, or at such other time pursuant to §4 or §5 , have the right to take physical possession of any and all of the Collateral relating to such Company and to maintain such possession on such Company’s premises or, if possible, to remove the Collateral relating to such Company or any part thereof to such other places as the Security Trustee may desire. If the Security Trustee exercises its right to take possession of the Collateral relating to such Company, such Company shall, upon the Security Trustee’s demand, if possible, assemble the Collateral relating to such Company and make it available to the Security Trustee at a place designated by the Security Trustee. Such Company shall at its expense perform any and all other steps reasonably requested by the Security Trustee to preserve and protect the first priority security interest hereby granted in the Collateral. If any Collateral relating to such Company is in the possession or control of any of such Company’s agents or processors while a Default or an Event of Default shall have occurred and be continuing, such Company agrees (i) to notify such agents or processors in writing of the Security Trustee’s security interest therein, and (ii) upon the Security Trustee’s request instruct them to hold all such Collateral relating to such Company for the Security Trustee’s account and subject to the Security Trustee’s instructions. Such Company agrees to mark its books and records to reflect the security interest of the Security Trustee in the Collateral relating to such Company.

 

-16-

Amended and Restated Security Agreement,

Pledge and Indenture of Trust (Subsidiaries)

 

Section 3.8. Maintenance of Lien; Recording; Opinions of Counsel . (a) Such Company will, at its expense, take all necessary action to maintain and preserve the first and prior perfected lien of this Agreement (including, without limitation, the filing of all financing statements or similar notices thereof if and to the extent permitted or required by applicable law) so long as any Notes are outstanding (provided, that WFC-LP, World-MO or World-NM shall be required to deliver to the Security Trustee possession of promissory notes evidencing the Unsecured Receivables only upon the request of the Security Trustee during the existence of a Default or Event of Default hereunder).

 

(b) Such Company will, forthwith after the execution and delivery of this Agreement and thereafter from time to time, cause this Agreement (and all financing statements, continuation statements or similar notices thereof if and to the extent permitted or required by applicable law) to be filed, registered and recorded in such manner and in such places as may be required by law in order to publish notice of and fully to protect the first lien of the Security Trustee in and to the Collateral relating to such Company (provided, that WFC-LP, World-MO or World-NM shall be required to deliver to the Security Trustee possession of promissory notes evidencing the Unsecured Receivables only upon the request of the Security Trustee during the existence of a Default or Event of Default hereunder); and from time to time will perform or cause to be performed any other acts as provided by law and will execute or cause to be executed any and all further instruments that may be required for such publication and protection or required by any Noteholder. With respect to any Investment Property held by a securities intermediary, commodity intermediary, or other financial intermediary of any kind, at the Security Trustee’s request, acting at the direction of the holders of the Notes, such Company shall execute and deliver, and shall cause any such intermediary to execute and deliver, an agreement among such Company, the Security Trustee and such intermediary in form and substance reasonably satisfactory to the Noteholders which provides, among other things, for the intermediary’s agreement that, upon notice by the Security Trustee that an Event of Default has occurred and is continuing, it shall comply with entitlement orders, and apply any value distributed on account of any Investment Property maintained in an account with such intermediary, as directed by the Security Trustee without further consent of such Company.

 

(c) Such Company agrees at its own expense to furnish to the Security Trustee promptly after the execution and delivery of any supplement or amendment hereto or any continuation statement, an opinion of counsel satisfactory to the Security Trustee (who may be independent counsel to such Company) stating that in the opinion of such counsel, such supplement or amendment to this Agreement (or a financing statement, continuation statement or similar notice thereof if and to the extent required by applicable law) or such continuation statement, as the case may be, has been properly recorded or filed for record in all public offices in which such recording or filing is necessary to perfect the Lien provided by this Agreement as a valid Lien and security interest in the Collateral relating to such Company; provided, such opinion shall be required with respect to any Unsecured Receivables of WFC-LP, World-MO and World-NM only after the occurrence and during the continuance of a Default or Event of Default hereunder.

 

Section 3.9. Consent to World Security Agreement, Etc. Such Company hereby consents to, and agrees to comply with, the terms and provisions of the World Security Agreement, the

 

-17-

Amended and Restated Security Agreement,

Pledge and Indenture of Trust (Subsidiaries)

 

Senior Note Agreements, the Revolving Credit Agreement and the Senior Subordinated Note Agreement.

 

Section 3.10. Names under which Each Company Conducts its Business . No Company conducts its business under any other name(s) other than as set forth opposite its name on Schedule IV hereto and such Company will not conduct business under any other name(s) (other than the names set forth opposite its name on Schedule IV hereto) without (i) providing the Security Trustee and the holders of the Notes with thirty (30) days’ prior written notice of such name and the location of where such business will be conducted under such name and (ii) complying with any and all requests made by the Security Trustee pursuant to §3.7 hereof.

 

S ECTION  4. S PECIAL P ROVISIONS R ELATING TO R ECEIVABLES .

 

Section 4.1. Representations and Warranties . As of the time any Receivable of any Company becomes subject to the security interest provided for hereby, such Company shall be deemed to have warranted as to such Receivables that:

 

(a) Such Receivable and all papers and documents relating thereto are genuine and in all respects what they purport to be;

 

(b) Such Receivable is legal, valid and subsisting;

 

(c) The amount of such Receivable represented as owing is the correct amount actually and unconditionally owing, is not disputed and is not subject to any set-offs, credits, deductions or countercharges;

 

(d) Such Receivable has been created, and is, in all respects in compliance with applicable state and federal lending laws and will continue to be in compliance with such laws, any Secured Receivable is secured by Underlying Collateral and, to the best knowledge of such Company, there is no violation of any Environmental Legal Requirement with respect to such Underlying Collateral;

 

(e) Such Company has no knowledge or reason to know of any fact which would impair the collectibility of such Receivable;

 

(f) All of such Company’s procedures, requirements and conditions and all federal and state laws applicable to the making of the loans related to such Receivable and the creation of such Receivable have been complied with;

 

(g) To the best knowledge of such Company, the Account Debtor on such Receivable and other obligors had legal capacity to enter into the transactions related to such Receivable;

 

(h) The form and content of each document related to such Receivable, the security related thereto, and the transactions from which it arose comply fully with any and all applicable laws, ordinances, rules and regulations, federal, state and/or local, with

 

-18-

Amended and Restated Security Agreement,

Pledge and Indenture of Trust (Subsidiaries)

 

respect to the extension of credit and charging of interest, including without limitation, as applicable, the Federal Consumer Credit Protection Act, the Federal Fair Credit Reporting Act, the Federal Trade Commission Act, the Federal Equal Credit Opportunity Act and all federal, state and local laws related to licensing, usury, truth in lending, real estate settlement procedures, consumer protection, equal credit opportunity, fair debt collection, unfair and deceptive trade practices, rescission rights and disclosures, and with all rules and regulations thereunder, all as amended, and any disclosures required with respect to such Receivable were and will continue to be made properly and in a timely manner;

 

(i) To the best knowledge of such Company, such Receivable and all facts, statements or obligations contained or implicit in any application for credit or financial statement of the Account Debtor or other obligor submitted to such Company, including without limitation, the description of any Underlying Collateral securing such Receivable and the amount owing from the Account Debtor or other obligor, and the signatures of the parties are genuine, correct, true and complete;

 

(j) Such Company has extended no credit of any kind or in any manner to the Account Debtor or other obligors in connection with the transactions from which such Receivable arose other than as indicated on and evidenced by such Company’s files related to such Receivable;

 

(k) To the best knowledge of such Company, each security agreement, UCC filing, title retention instruments and other document and instrument, if any, which is security for such Receivable contains a correct and sufficient description of any Underlying Collateral covered thereby and each lien or security interest which secures such Receivable is and will continue to be valid;

 

(l) Before extending credit to the Account Debtor or other obligor on such Receivable, such Company has made an adequate credit investigation of the Account Debtor or other obligor and has determined that the risk of extending such credit is satisfactory and in accordance with the standards historically observed by such Company in the conduct of its business;

 

(m) Any and all policies of insurance related to the property securing any obligation of the Account Debtor in connection with such Receivable and any credit life insurance, credit disability insurance, or credit unemployment insurance are in full force and effect in accordance with the terms of all agreements between such Company and the Account Debtor; and

 

(n) As to such Receivable, such Company was duly authorized to do business and in good standing in the jurisdiction in which such Receivable was originated and was duly licensed to originate such Receivable in such jurisdiction.

 

Section 4.2. Receivable Schedules. Each Company shall provide the Security Trustee with such other relevant information as the Security Trustee may request from time to time.

 

-19-

Amended and Restated Security Agreement,

Pledge and Indenture of Trust (Subsidiaries)

 

Section 4.3. Collection of Receivables . (a) Unless and until a Default or an Event of Default shall have occurred and be continuing and such Company shall have received written notice from the Security Trustee not to collect the Receivables, such Company shall make collection of all Receivables of such Company and may use the same to carry on its business in accordance with sound business practice and otherwise subject to the terms hereof.

 

(b) At any time while a Default or an Event of Default shall have occurred and be continuing, in the event the Security Trustee requests such Company to do so:

 

(i) All instruments and chattel paper at any time constituting part of the Receivables of such Company (including any postdated checks) shall, upon receipt by such Company and to the extent permitted by law, be immediately endorsed to and deposited with the Security Trustee in the same form as received by such Company; and/or

 

(ii) Such Company shall, to the extent permitted by law, instruct all account debtors to remit all payments in respect of Receivables of such Company to a lockbox to be maintained at the main post office, Chicago, Illinois, or such other single location as the Security Trustee may reasonably designate, under the sole custody and control of the Security Trustee.

 

(c) Except as otherwise directed by the Security Trustee, each Company shall immediately place the following legend conspicuously, on the face of each document, instrument, chattel paper and other writing evidencing the Receivables created on or after the Original Closing Date but before the Closing Date: “A S ECURITY I NTEREST IN THIS DOCUMENT HAS BEEN GRANTED TO H ARRIS T RUST AND S AVINGS B ANK , AS S ECURITY T RUSTEE AND S ECURED P ARTY , PURSUANT TO THAT CERTAIN S ECURITY A GREEMENT , P LEDGE AND I NDENTURE OF T RUST DATED AS OF D ECEMBER  1, 1992.” Except as otherwise directed by the Security Trustee, such Company shall, within ten days after the Closing Date, place the following legend conspicuously, on the face of each document, instrument, chattel paper and other writing evidencing the Receivables created on or after the Closing Date: “A S ECURITY I NTEREST IN THIS DOCUMENT HAS BEEN GRANTED TO H ARRIS T RUST AND S AVINGS B ANK , AS S ECURITY T RUSTEE AND S ECURED P ARTY , PURSUANT TO A S ECURITY A GREEMENT , P LEDGE AND I NDENTURE OF T RUST .” At any time while a Default or an Event of Default shall have occurred and be continuing, the Security Trustee or its designee may notify such Company’s customers or account debtors at any time that Receivables of such Company have been assigned to the Security Trustee or of the Security Trustee’s security interest therein and either in its own name, that of such Company or both, demand, collect (including without limitation through a lockbox analogous to that described in §4.3(b)(ii) hereof), receive, receipt for, sue for, compound and give acquittance for any or all amounts due or to become due on such Receivables, and in the Security Trustee’s discretion file any claim or take any other action or proceeding which the Security Trustee may deem necessary or appropriate to protect and realize upon the security interest of the Security Trustee in such Receivables.

 

(d) In the event the Security Trustee has exercised any or all of its rights under §§4.3(b) or (c)  hereof, the Security Trustee may, at any time while a Default or an Event of Default shall

 

-20-

Amended and Restated Security Agreement,

Pledge and Indenture of Trust (Subsidiaries)

 

have occurred and be continuing, cause all instruments, chattel paper, moneys or other proceeds received by the Security Trustee to be deposited, handled and administered in and through a remittance account. If a Default or an Event of Default has occurred and is continuing to the knowledge of the Security Trustee, all amounts received by the Security Trustee pursuant to the Granting Clauses hereof and all amounts held in any remittance account referred to above in this paragraph shall be held by the Security Trustee for application in the manner provided for in §7 in respect of proceeds and avails of the Collateral.

 

Section 4.4. Power of Attorney. Upon the occurrence and during the continuance of a Default or an Event of Default, in addition to any other powers of attorney granted herein, each Company appoints the Security Trustee, its nominee, or any other Person whom the Security Trustee may designate as such Company’s attorney-in-fact, with full power at any time and from time to time to endorse such Company’s name on any checks, notes, acceptances, money orders, drafts or other forms of payment or security that may come into the Security Trustee’s possession, upon the occurrence and during the continuance of a Default or an Event of Default, to sign such Company’s name on any invoice or bill of lading relating to any Collateral of such Company, on drafts against customers, on schedules and assignments of Collateral of such Company, on notices of assignment, and other public records, on verification of accounts and on notices to customers, to notify the post office authorities to change the address for delivery of such Company’s mail to an address designated by the Security Trustee, to receive, open and dispose of all mail addressed to such Company, to send requests for verification of Receivables of such Company to customers or account debtors, and to do all things necessary to carry out this Agreement. Such Company ratifies and approves all acts of any such attorney and agrees that neither the Security Trustee nor any such attorney will be liable for any acts or omissions nor for any error of judgment or mistake of fact or law other than their willful misconduct or gross negligence. The foregoing power of attorney, being coupled with an interest, is irrevocable until the Secured Indebtedness is fully and irrevocably paid and satisfied and all obligations to extend credit under the Revolving Credit Notes have expired or otherwise terminated. The Security Trustee may file one or more financing statements disclosing its security interest in any or all of the Collateral without such Company’s signature appearing thereon. Such Company also hereby grants the Security Trustee a power of attorney to execute any such financing statement, or amendments and supplements to financing statements on behalf of such Company with notice thereof to such Company, which power of attorney is coupled with an interest and irrevocable until the Secured Indebtedness is fully paid and satisfied.

 

S ECTION  5. S PECIAL P ROVISIONS R ELATING TO P LEDGED C OLLATERAL .

 

Section 5.1. Delivery of Pledged Collateral; Transfer to Security Trustee . All instruments and certificates representing or evidencing the Pledged Collateral shall be delivered to and held by or on behalf of the Security Trustee for the ratable benefit of the holders of the Notes pursuant hereto and shall be in suitable form for transfer by delivery, or shall be accompanied by duly executed instruments of transfer or assignment in blank and undated, all in form and substance satisfactory to the Security Trustee. The Security Trustee shall have the right, subject to applicable law, at any time in its discretion after the occurrence of an Event of Default, to transfer to or to register in the name of the Security Trustee or any of its nominees any or all of such Ple