-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, HilcCWweCKuiywXm+C1lBC6QDhZ9NaTntSvmcew0zzQRd6EaFEKx1f1SQIhb+s+r AT0PCURb52P3Jr1gOtAzNg== 0001023856-98-000016.txt : 19980414 0001023856-98-000016.hdr.sgml : 19980414 ACCESSION NUMBER: 0001023856-98-000016 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 19970930 FILED AS OF DATE: 19980413 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: PEGASUS INDUSTRIES INC CENTRAL INDEX KEY: 0000757073 STANDARD INDUSTRIAL CLASSIFICATION: BOTTLED & CANNED SOFT DRINKS CARBONATED WATERS [2086] IRS NUMBER: 953599648 STATE OF INCORPORATION: NV FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 000-12977 FILM NUMBER: 98592032 BUSINESS ADDRESS: STREET 1: 400 N ST PAUL STREET 2: SUITE 950 CITY: DALLAS STATE: TX ZIP: 75201 BUSINESS PHONE: 2145208300 FORMER COMPANY: FORMER CONFORMED NAME: PATHFINDER CORP DATE OF NAME CHANGE: 19940324 10-Q 1 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended September 30, 1997 Commission File Number 0-12977 PEGASUS INDUSTRIES, INC. _________________________________________________ (Exact name of registrant as specified in charter) Nevada 95-3599648 _____________________________ _______________________________________ (State or other jurisdiction) (I.R.S. Employer Identification Number) 400 N. St. Paul, Suite 950, Dallas, TX 75201 ____________________________________________ (Address of principal executive offices) (214) 520-8300 ___________________________ (Registrant's telephone number) Indicate by check mark whether the registrant (1) has filed all reports re- quired to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the re- gistrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes No X As of September 30, 1997, there were 14,343,091 shares of Common Stock out- standing. 1 PEGASUS INDUSTRIES, INC. Index Page No. -------- PART I. FINANCIAL INFORMATION Item 1. Condensed Consolidated Financial Statements 3 Condensed Consolidated Balance Sheets September 30, 1997 and December 31, 1996 3 Condensed Consolidated Statement of Income - Three Months Ended September 30, 1997 and September 30, 1996 6 Condensed Consolidated Statement of Income - Nine Months Ended September 30, 1997 and September 30, 1996 6 Condensed Consolidated Statement of Cash Flows - Nine Months Ended September 30, 1997 and September 30, 1996 8 Item 2. Managements' Discussion and Analysis of Financial Condition and Results of Operations 9 PART II. OTHER INFORMATION 2 PART I ITEM I. PEGASUS INDUSTRIES, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED FINANCIAL STATEMENTS CONDENSED CONSOLIDATED BALANCE SHEETS In the opinion of management, the information set forth in the Condensed Consolidated Balance Sheets is fairly stated in all material aspects in rela- tion to the consolidated balance sheets from which it has been derived. The Condensed Consolidated Balance Sheets as of September 30, 1997 reflect the Company's liquidation of its wholly owned subsidiary Zearl T. Young, Incor- porated ("ZTY"). The liquidation is reflected as a loss from discontinued ope- rations. Management believes that while the unpaid liabilities and preferred stockholders' equity are presented on these financial statements, those lia- bilities remain solely the obligation of ZTY and are not the responsibility or obligation of the parent corporation.
September 30, December 31, 1997 1996 (Unaudited) (Unaudited) _____________ ____________ Current Assets: Cash $ 48,513 $ 132,162 Financing Contract Receivables Current Portion - 2,988,990 Inventories - 624,141 Prepaid Expenses and Other - 35,740 _____________ ____________ Total Current Assets 48,513 3,781,033 Property and Equipment, net of accumulated depreciation of $1,590 and $1,290 354 274,363 Financing Contracts Receivable - non current portion - 1,102,395 Other Assets - 60,010 _____________ ____________ $ 48,867 $ 5,217,801 _____________ ____________
The accompanying notes are an integral part of the Condensed Consolidated Balance Sheets 3 LIABILITIES AND STOCKHOLDERS' EQUITY
September 30, December 31, 1997 1996 (Unaudited) (Unaudited) ______________ ____________ Current Liabilities: Accounts Payable $ 687,103 $ 557,418 Accrued Expenses 136,931 516,243 Current maturities of long term debt 4,063,759 6,584,128 ______________ ____________ Total Current Liabilities 4,887,793 7,657,789 Long-term debt, less current maturities - - ______________ ____________ 4,887,793 7,657,789 Preferred Stockholders' Equity in Subsidiary 1,128,370 1,128,370 Stockholders' Equity Common stock, $.01 par value, 50,000,000 shares authorized; 14,343,091 shares issued and outstanding at September 30, 1997 and 14,343,091 shares issued and outstanding at December 31, 1996 143,091 143,091 Additional Paid in Capital 58,536 58,536 Accumulated Loss (6,169,263) (3,770,325) ______________ ____________ (5,967,636) (3,568,358) ______________ ____________ 48,867 5,217,801 ______________ ____________
The accompanying notes are an integral part of the Condensed Consolidated Financial Statements 4 CONSOLIDATED CONDENSED STATEMENT OF INCOME The interim consolidated condensed statement of income contained herein reflect all adjustments which, in the opinion of management, are necessary for a fair statement of the results of operations for the periods presented. Ope- rating results for the three month period ended September 30, 1997 are not necessarily indicative of the results that may be expected for the year ended December 31, 1997. Operating results of the Company for the period have been adjusted to re- flect the operation of Zearl T. Young, Incorporated ("ZTY"), its wholly owned subsidiary as losses from discontinued operations. The Company liquidated the assets of ZTY under an agreement with its secured lender in the third quarter of 1997.
For the Three Months Ended September 30, September 30, 1997 1996 (Unaudited) (Unaudited) _____________ _____________ Collection Income $ 18,705 $ 25,469 Other Income 5,881 5,829 _____________ _____________ 24,856 31,298 Operating Expenses 12,837 19,402 _____________ _____________ Operating Income 11,749 11,896 Interest Expense 4,334 4,634 _____________ _____________ Net Income/(Loss) 7,415 7,262 Loss from Discontinued Operations (1,904,583) (307,887) _____________ _____________ (1,897,168) (300,625) _____________ _____________ Income per Common Share Before Discontinued Operations 0.00 0.00 _____________ _____________ Loss per Common Share from Discontinued Operations (0.13) (0.07) _____________ _____________ (0.13) (0.07) _____________ _____________ Weighted Average Common Shares 14,343,091 14,343,091 _____________ _____________
The accompanying notes are an integral part of the Condensed Consolidated Financial Statements. 5 CONSOLIDATED CONDENSED STATEMENT OF INCOME The interim consolidated condensed statement of income contained herein reflect all adjustments which, in the opinion of management, are necessary for a fair statement of the results of operations for the periods presented. Operating results for the nine month period ended September 30, 1997 are not necessarily indicative of the results that may be expected for the year ended December 31, 1997. Operating results of the Company for the period have been adjusted to re- flect the operation of Zearl T. Young, Incorporated ("ZTY"), its wholly owned subsidiary as losses from discontinued operations. The Company liquidated the assets of ZTY under an agreement with its secured lender in the third quarter of 1997.
For the Nine Months Ended September 30, September 30, 1997 1996 (Unaudited) (Unaudited) _____________ _____________ Financing Income $ 72,654 $ 106,788 Other Income 19,604 18,953 _____________ _____________ 92,258 125,740 Operating Expenses 46,717 54,104 Operating Income 45,541 71,636 Interest Expense 12,101 24,526 _____________ _____________ Net Income/(Loss) 33,440 47,110 _____________ _____________ Loss from Discontinued Operations (2,432,378) (1,096,216) _____________ _____________ (2,398,938) (1,049,106) Income per Common Share before Discontinued Operations 0.00 0.00 Loss per Common Share from Discontinued Operations (0.17) (0.07) _____________ _____________ (0.17) (0.07) _____________ _____________ Weighted Average Common Shares 14,343,091 14,343,091 _____________ _____________
The accompanying notes are an integral part of the Condensed Consolidated Statement of Cash Flow 6 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (1) The financial statements are adjusted to reflect the liquidation of the Company's wholly owned subsidiary Zearl T. Young, Incorporated ("ZTY"). ZTY was liquidated in the third quarter of 1997. The income statements have been adjusted to restate the results of ZTY's operations in 1997 and 1996 as loss from discontinued operations to more fully present the Company's operating results. (2) Reflects consolidated restated stockholders equity after the effects of the acquisition of ZTY as if the acquisition had occurred January 1, 1994. (3) Reflects the preferred stockholders' equity interest in ZTY as a result of a reorganization in 1994. The preferred stock issued as part of the re- organization has a $5.00 par value and 5% cumulative dividend. The preferred stock relates only to the assets of ZTY. The shareholders have no common or preferred shares in the parent corporation. 7
For the Nine Months Ended September 30, September 30, 1997 1996 (Unaudited) (Unaudited) Cash flow provided by (used in) operating activities: Net income /(loss) 33,440 47,110 Net loss from discontinued operations (2,432,378) (1,096,216) Adjustments to reconcile net cash provided (used in) operating activities: Depreciation and amortization 300 57,822 (Increase)decrease in finance contract receivables 4,091,385 1,085,924 (Increase)decrease in inventories 624,141 (32,656) (Increase)decrease in prepaid expenses 35,740 110,245) Increase(decrease) in accounts payable 129,685 ( 40,895) Increase(decrease) in accrued expenses (379,312) 52,853 __________ _________ Net cash provided by (used) in operating activities 4,501,939 184,187 Cash flows (used in) investing activities: (Increase)decrease in property and equipment 273,709 63 (Increase)decrease in other assets 60,010 (8,039) __________ __________ Net cash (used in) investing activities 333,719 (7,976) Cash flows (used in) financing activities: Increase(decrease) in long-term debt (2,520,369) (212,729) __________ __________ Net cash (used in) financing activities (2,520,369) (212,729) __________ __________ Net Increase in Cash (83,644) (36,518) Cash - beginning of period 132,162 73,782 __________ __________ Cash - end of period 48,513 37,264 ========== ==========
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS GENERAL All financial statements presented herein reflect the operations of the Company and ZTY, a wholly owned subsidiary of the Company. ZTY was liquidated in the third quarter of 1997 under a liquidation agreement with ZTY's primary lender. Under the agreement, ZTY was to sell the finance contracts receivable to a third party at a price to be agreed to by ZTY, its lender and a third party purchaser. On August 5, 1997, ZTY's management completed a sale of the finance contracts for total consideration of $1,760,698.20 or 48.5% of the face amount of the contracts. The value received represented 60.49% of the book value of the accounts resulting in a $1,154,112 loss to the Company as a result of the sale. The Company initiated a liquidation of the remaining two stores in July 1997 when the finance contract purchaser had been located. Two public auctions were conducted on August 23, 1997 and September 7, 1997 netting total proceeds of $77,225 for ZTY's remaining inventory and equipment. The combined loss for the quarter recognizing the loss for discontinued operations was $1,904,583. The operating results have been restated for comparative purposes to reflect only those operations of the Company reflecting ZTY's liquidation as a loss from discontinued operations for 1997 and 1996. The balance sheets for September 30, 1997 reflect approximately $4.7 million in liabilities of ZTY including $3.9 million of secured debt, $686,379 of accounts payable and $132,008 of accrued liabilities. The parent corporation assumed no responsibility or liability for ZTY's obligations and consequently management believes these obligations should have no impact on the Company's ongoing operations. The $1,128,370 of Preferred Stockholder's Equity also relates directly to ZTY's preferred stock owned in ZTY, not the parent corporation and, consequently, should have no impact on the Company's common shareholders. LIQUIDITY AND CAPITAL RESOURCES - SEPTEMBER 30, 1997 COMPARED TO DECEMBER 31, 1996 During the nine months ended September 30, 1997 total assets decreased from $5,217,801 at December 31, 1996 to $48,867 representing the liquidation of ZTY's assets. The remaining operations of the Company reflect continuing collections of charge off finance 9 contracts purchased from ZTY in October 1995. The Company paid ZTY $300,000 for the receivables which it financed with a third party lender. As of September 30, 1997 the loan balance had been reduced to $183,302. Cash at September 30, 1997 was $48,513. The Company assigned no value to the receivables purchased from its subsidiary for financial reporting purposes. RESULTS OF OPERATIONS - THREE MONTHS ENDED SEPTEMBER 30, 1997 COMPARED TO THREE MONTHS ENDED SEPTEMBER 30, 1996 Operating results exclude operations of ZTY, the Company's wholly owned subsidiary, except as reflected as a loss from discontinued operations. The Company reported revenues of $24,586 for the quarter ended September 30, 1997 compared to $31,298 for the same period the prior year. Operating expenses for the three month period were $12,837 or $7,565 less than the prior year. The losses from discontinued operations for ZTY were $1,904,583 for the three month period ended September 30, 1997 compared to $307,887 for the same period a year earlier. The losses are due to the liquidation of all assets of ZTY. ZTY recorded a $1,154,112 loss on the sale of finance contracts in August 1997. RESULTS OF OPERATIONS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1997 COMPARED TO NINE MONTHS ENDED SEPTEMBER 30, 1996 Revenues for the nine months ended September 30, 1997 were $92,258 as compared to $125,740 for the year earlier period. The 27% decrease is primarily due to the closing of ZTY's stores which resulted in a relocation of the Company's collection office. Operating expenses decreased $7,387 for the same period. The Company reported $33,440 net income for the nine months ended September 30, 1997 before the loss from discontinued operations as compared to $47,110 for the same period the prior year. The $2,432,378 loss from discontinued operations reflects the liquidation of ZTY's assets in the third quarter of 1997. ITEM 3. DEFAULTS UPON SENIOR SECURITIES The Company's wholly owned subsidiary, ZTY, liquidated its assets as part of a liquidation agreement with its secured lender, Norwest Bank Minnesota, N.A. After liquidation, ZTY still owed Norwest approximately $3.9 million as a deficiency. The parent corporation assumed none of the responsibilities or obligations of ZTY in conjunction with the acquisition or its liquidation. ZTY continues to be in default under the loan for nonpayment of the outstanding deficiency. 10 PART II - OTHER INFORMATION ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS None ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibits Zearl T. Young, Incorported Liquidation Agreement.............................................13 Norwest Letter - Sales of Accounts Receivable.....................18 (b) There are no reports on Form 8-K SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized on April 13, 1998. PEGASUS INDUSTRIES, INC. By: /s/ Robert W. Schleizer ------------------------------ Robert W. Schleizer, President 11 Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in capacities and on the dates indicated. /s/ Robert W. Schleizer - ------------------------------- Robert W. Schleizer, President (1) April 13, 1998 (1) Principal executive officer 12
EX-2 2 LIQUIDATION AGREEMENT LIQUIDATION AGREEMENT This Agreement is entered into as of this 5th day of May, 1997 between Norwest Bank Minnesota, National Association (the "Lender") and Zearl T. Young, Incorporated (the "Company"). Recitals - -------- A. The Company is indebted to the Lender pursuant to a Loan and Security Agreement dated October 28, 1994, as amended, (the "Credit Agreement"). All advances under the Credit Agreement, together with daily interest, fees, costs and expenses and any other indebtedness of the Company to Lender, are hereinafter collectively referred to as the "Indebtedness." The Credit Agreement and all related documents in favor of the Lender are referred to herein as the "Security Documents." B. As of the close of business on May 4, 1997, the outstanding principal amount of the Indebtedness was $6,055,473.65. In addition, interest, fees, costs and expenses have accrued and are accruing. C. The Indebtedness is secured by, among other things, a perfected security interest in, without limitation, all inventory, receivables, accounts, equipment and general intangibles of the Company (the "Collateral"). D. Robert W. Schleizer and John R. Boudreau (the "Guarantors") have each, in their personal capacities, executed a Guaranty dated as of October 28, 1994, as amended, and a Management Agreement dated as of October 28, 1994. E. The Company is in default of its obligations under the Security Documents. The Lender is entitled to exercise its rights and remedies. F. The Company has acknowledged its financial difficulties and has represented to the Lender its desire to liquidate its assets. The Company desires to seek a buyer for its assets on a going concern basis for a limited period of time, and, if the Company cannot sell its assets as a going concern, to wind up its affairs through an orderly liquidation. The Company has represented that the level of the Collateral will not materially deteriorate in relationship to the level of Indebtedness while the Company seeks buyers for its assets. The Lender has consented to a winding down of the Company's business and orderly liquidation on the terms and conditions set forth below. 12 AGREEMENT NOW, THEREFORE, in consideration of the foregoing and for good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged by each party, the parties agree as follows: 1. The Recitals are true and correct. The Indebtedness is due and owing, without defense, offset or counterclaim. 2. The Company may continue its business operations to the extent reasonably necessary to sell inventory and other assets, service existing customers, collect receivables and wind down its affairs in a timely manner until July 31, 1997, provided that it complies with the Budget attached hereto as Exhibit A in all material respects. No item of Collateral with a value greater than $5,000.00 may be sold, other than in the ordinary course of business, by the Company without the prior approval of the Lender. The Company shall pay the Indebtedness in full on or before July 31, 1997. Promptly after July 15, 1997, unless the Company has located a buyer who will buy the Company's assets on a going-concern basis, the Company will conduct a going out of business sale or will otherwise sell its remaining inventory, equipment and other assets, and shall either sell or collect its remaining receivables. 3. All proceeds from the sale of assets and from the collection of accounts or otherwise collected or received by the Company shall be turned over to the Lender in the form received for application to the Indebtedness in a manner to be determined by the Lender in its sole discretion. 4. Except as set forth in paragraph 5 below, the Company shall not incur or pay expenses or other obligations except expenses which are both (i) set forth in the Budget and (ii) reasonably necessary to wind down its business. The Lender, in its sole discretion, may fund advances required by the Company as set forth in the Budget, and any amounts so advanced shall become part of the Indebtedness. The Company shall achieve the collections and payments to the Indebtedness as set forth in the Budget, and shall comply with the Budget in every respect at the times and in the amounts set forth in the Budget. The Company shall not accept consigned inventory unless the consignor has executed an intercreditor agreement with the Lender, in form and substance acceptable to the Lender, including, without limitation, provisions regarding the segregation of consigned inventory and that no consigned inventory shall be sold on a deferred payment basis unless such deferred payments are sold to a third party. 5. The Company has represented to the Lender that certain parties ("Consignors") may provide inventory to the Company on consignment (the "Consignment Goods") for sale by the Company. The Lender has no objection to the Company accepting Consigned Goods for sale, provided: 13 (i) All Consigned Goods must be readily identifiable by marking or labeling as constituting Consigned Goods. (ii) All Consigned Goods that are not clearly marked or labeled as such shall be deemed to be part of the Collateral. (iii) The Company shall not sell any Consigned Goods for less than the amount owing to the Consignor for such Consigned Goods. (iv) The Company shall not sell any Consigned Goods other than for cash unless the company has an agreement from an unrelated third party to purchase any accounts receivable or chattel paper created by such sales at face value. (v) The Company will deliver to the Lender all payments made to the Company on account of the sale of the Consigned Goods, including the proceeds from the disposition of chattel paper or accounts receivable resulting from the sale of Consigned Goods. Provided that the Company meets its obligations herein and complies with the foregoing, the Lender has no objection to the Company's payment to Consignors of an amount equal to the cost of Consigned Goods sold by the Company, notwithstanding that the Budget does not list any payments to Consignors for the Sale of Consigned Goods. 6. The Company agrees to permit the Lender, and its respective officers, employees and agents, to have full access to the Company's books, records and properties for the purpose of verifying the Company's compliance with the terms of the Security Documents and this Agreement. 7. Except as expressly modified by this Agreement, all provisions of the Security Documents remain in full force and effect. The Lender reserves its rights at any time to exercise all of its rights and remedies under the Security Documents, whether or not the Company has complied with its covenants and obligations under this Agreement, or the Security Documents. The Company shall, upon request of the Lender, deliver all of the Collateral to the Lender and shall permit the Lender to use the Company's premises for the purpose of enforcement and foreclosure of the Lender's security interest in the Collateral. Without limiting the generality of the foregoing, the Lender specifically reserves its rights with respect to the Guarantors. 8. The Company shall also deliver the following to the Lender: (a) a daily report setting forth the sales of inventory, equipment and other assets and collection of receivables by 12:00 noon on the next business day and (b) a revised weekly cash flow 14 forecast comparing actual results to forecasted performance for the prior week, along with a collateral\loan schedule, and a sales projection schedule, all to be received by 12:00 noon on the Tuesday of the following week and reflecting information through the close of business for the prior week. The Company shall also deliver to the Lender by 12:00 noon on each Tuesday, a report with respect to the Company's efforts with respect to the sale of its receivables portfolio, including information regarding offers received, contacts made, and other information relevant to the disposition of the Company's assets. The reports shall also provide detailed information regarding the Company's efforts to sell its store operations, and information regarding store performance including sales, cash collections and expenses. The Company agrees to execute and deliver such other and further documents or reports as the Lender may request from the Company to execute, perfect, evidence or otherwise implement the agreements set forth in this Agreement. In consideration of the Lender's willingness to provide further advances to the Company and to provide the Company an opportunity to liquidate its assets in an orderly fashion, the Company shall execute such further financing statements, assignments, mortgages or other documents which the Lender may require to create perfected security interests or liens on assets of the Company. 9. If the Company permanently reduces the outstanding Indebtedness from the proceeds of liquidation to $4,000,000 or less by no later than July 31, 1997, the Lender will not object if Company elects to pay the Guarantors a bonus of $25,000 each. If the Company further permanently reduces the outstanding Indebtedness from the proceeds of the liquidation below $4,000,000 by no later than July 31, 1997, the Lender will not object to the Company's payment of an additional bonus to each Guarantor, not to exceed $50,000 each (in addition to the foregoing $25,000 bonus), equal to five percent (5%) of the amount such permanent reduction is less than $4,000,000. If the Company further permanently reduces the outstanding Indebtedness from the proceeds of liquidation below $3,000,000 by no later than July 31, 1997, the Lender will not object to the Company's payment of a bonus to each of Guarantors of ten percent (10%) of the amount of such permanent reduction below $3,000,000, such bonus being in addition to the foregoing described bonuses. For the purposes of the calculations set forth in this paragraph 9 only, (i) the proceeds of liquidation shall not include any proceeds received from life insurance policies, and (ii) collateral monitoring fees, unused line fees and interest accruing after April 5, 1997 shall not be added to the Indebtedness. 10. In consideration of the execution of this Agreement, the Company, on behalf of itself, its officers, agents, insurers, successors and assigns, releases, acquits and forever discharges the Lender, and its respective officers, directors, agents, attorneys, insurers, parents, affiliates, successors and assigns, of and from any and all manner of action or actions, suits, claims, damages, judgments, levies and executions, whether known or unknown, liquidated or unliquidated, fixed, contingent, direct or indirect, which the Company ever had, has, or may have or claim to have against the Lender or its respective officers, agents, insurers, successors and assigns, for, upon or by reason of any matter, act or thing prior to the date of execution of this Agreement. 15 11. No modifications or amendments to this Agreement may be made except in a writing signed by all parties hereto. 12. This Agreement may be executed in any number of counterparts, each of which shall be an original, but all of which together shall constitute one instrument. Facsimiles or photocopies of executed signature pages to this Agreement shall be considered originals. 13. This Agreement is made and entered into in the State of Minnesota, and the laws of Minnesota shall govern its enforcement and performance. IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed as of the day and year first above written. NORWEST BANK MINNESOTA NATIONAL ASSOCIATION By______________________________ Its___________________________ ZEARL T. YOUNG, INCORPORATED By /s/ ______________________________ Its President ____________________________ 16 EX-27 3 FINANCIAL DATA SCHEDULE
5 9-MOS DEC-31-1997 SEP-30-1997 48,513 0 0 0 0 48,513 354 0 48,867 4,887,793 0 0 1,128,370 143,091 0 48,867 0 0 0 0 46,717 0 12,101 33,440 0 0 (2,432,378) 0 0 (2,398,938) (0.17) (0.17)
EX-99 4 LETTER FROM NORWEST BANK RE ACCOUNTS NORWEST BANKS Norwest Bank Minnesota, N.A. Norwest Center Sixth and Marquette Minneapolis, Minnesota 55479-0001 August 5, 1997 R. Harold Owens President and Chief Operating Officer World Acceptance Corporation P.O. Box 6429 Greenville, SC 29806 Robert W. Schleizer President Zearl T. Young, Incorporated 400 North St. Paul, Suite 950 Dallas, Texas 75291 RE: Sale of Accounts Receivable Gentlemen: As you are aware, Norwest Bank Minnesota, National Association ("Norwest") has a valid, perfected, first priority lien on, among other things, all accounts receivable and other rights to payment of Zearl T. Young, Incorporated (the "Company") pursuant to a Loan and Security Agreement dated October 28, 1994, as amended from time to time. Norwest has been informed that the Company would like to sell, and World Acceptance Corporation (the "Purchaser") would like to buy, certain of the Company's accounts receivable (the "Accounts"), all as more fully set forth in a purchase agreement being executed between them. Norwest is willing to release its lien on the Accounts on the terms and conditions set forth below. The Purchaser shall pay an amount equal to $1,760,698.29 (the "Purchase Price") equal to 48.5% of the face value of the Accounts on the Company's books at the close of business Monday, August 4, 1997 (the "Closing Date"). All collections of Accounts received on and prior to the Closing Date shall be wired promptly in full directly to Norwest and shall remain subject to Norwest's lien. All collections of Accounts received after the Closing Date and payment of the Purchase Price shall be remitted promptly to the Purchaser and shall no longer be subjectto Norwest's lien. The Purchase Price shall be wired by the Purchaser directly to Norwest and applied in reduction of the Company's obligations to Norwest The wiring instructions to Norwest are as follows: Norwest Bank Minnesota, National Association ABA No. 091000019 Commercial Loan Clearing Account No. 840165 Attention: Alma McKenzie 612/673-8680 Reference: Zearl T. Young We understand and agree that $50,000 of the Purchase Price may be reserved by the Purchaser in a segregated account (the "Reserve Fund") for up to one year solely for the purpose of paying any valid credit insurance premium refund claims of account debtors whose accounts are sold to the Purchaser by the Company where such credit insurance is actually in force on the closing date and the premium has been fully paid; provided, however, that no refund claim shall be paid from the Reserve fund in the event the account debtor renews, extends or otherwise modifies an existing payment obligation and obtains additional or replacement credit insurance to which the refund amount should be credited against the new or additional premium. Purchaser may not withdraw any funds from the Reserve Account without first giving notice to Norwest of the intent to make such withdrawal, together with evidence of the account debtor's right to receive a credit insurance premium refund, and receiving written authorization for such withdrawal from Norwest. On or before the first anniversary of the closing date of the sale of the Company's accounts to the Purchaser, the Purchaser shall remit to Norwest the sum of $50,000 or such balance as remains in the Reserve Fund after withdrawals approved by Norwest. Very truly yours, NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION By /s/ ------------------------ Its Assistant Vice President ------------------------
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