-----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, MafDZcoEBrYrk6bk7xL8rcjArjGH37C+UghTVi4/om8xrh5bh3I2JTbCMO8t3CN9 J2m791iJMhU6xPLNFiMLGg== 0000944209-96-000419.txt : 19961101 0000944209-96-000419.hdr.sgml : 19961101 ACCESSION NUMBER: 0000944209-96-000419 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 5 CONFORMED PERIOD OF REPORT: 19961030 ITEM INFORMATION: Other events ITEM INFORMATION: Financial statements and exhibits FILED AS OF DATE: 19961031 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: MONEY STORE INC /NJ CENTRAL INDEX KEY: 0000876297 STANDARD INDUSTRIAL CLASSIFICATION: MORTGAGE BANKERS & LOAN CORRESPONDENTS [6162] IRS NUMBER: 222293022 STATE OF INCORPORATION: NJ FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-10785 FILM NUMBER: 96650750 BUSINESS ADDRESS: STREET 1: 2840 MORRIS AVE CITY: UNION STATE: NJ ZIP: 07083 BUSINESS PHONE: 9086862200 8-K 1 FORM 8-K SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 _____ FORM 8-K CURRENT REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 Date of Report (date of earliest event reported) October 30, 1996 ------------------ THE MONEY STORE INC. ------------------------------------------------------------- (Exact name of registrant as specified in its charter) NEW JERSEY 001-10785 22-2293022 - ---------------------------------- ----------- ------------- (State or other jurisdiction of (Commission (IRS Employer incorporation) File Number) ID Number) 2840 Morris Avenue, Union, New Jersey 07083 - ------------------------------------------------------------------------- (Address of principal executive offices) (Zip Code) Registrant's Telephone Number, including area code: (908) 686-2200 -------------- Not Applicable ------------------------------------------------------------- (Former name or former address, if changed since last report) Item 5. Other Events. - ------ ------------ Attached as exhibits hereto are (i) the Amendment to the Restated Certificate of Incorporation of the registrant relating to 5,290,000 shares of Mandatory Convertible Preferred Stock, (ii) the opinion of Eric R. Elwin, Esq., Corporate Counsel to registrant, regarding legality of the Preferred Stock, (iii) the opinion of Stroock & Stroock & Lavan regarding tax matters and (iv) the $400,000,000 Credit Agreement dated as of August 16, 1996 among The Money Store Inc., as borrower, the various financial institutions named therein, as lenders, First Union National Bank of North Carolina, as documentation agent, and The First National Bank of Chicago, as administrative agent. Item 7. Financial Statements, Pro Forma Financial Information and Exhibits. - ------ ------------------------------------------------------------------ (c) Exhibits. -------- The following exhibits are filed herewith: Exhibit No. Description of Exhibit ----------- ---------------------- 4.1 Amendment to the Restated Certificate of Incorporation of the registrant. 5.1 Opinion of Eric R. Elwin, Esq., Corporate Counsel to the Company, regarding legality of the Preferred Stock. 8.1 Opinion of Stroock & Stroock & Lavan regarding tax matters. 10.1 $400,000,000 Credit Agreement dated as of August 16, 1996 among The Money Store Inc., as borrower, the various financial institutions named therein, as lenders, First Union National Bank of North Carolina, as documentation agent, and The First National Bank of Chicago, as administrative agent, and Amendment No. 1 thereto. SIGNATURE Pursuant to the requirements 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. THE MONEY STORE INC. By: /s/ MORTON DEAR ------------------------------- Name: Morton Dear Title: Executive Vice President and Chief Financial Officer Dated: October 30, 1996 EXHIBIT INDEX
Exhibit No. Description of Exhibit - ----------- ---------------------- 4.1 Amendment to the Restated Certificate of Incorporation of the registrant. 5.1 Opinion of Eric R. Elwin, Esq., Corporate Counsel to the Company, regarding legality of the Preferred Stock. 8.1 Opinion of Stroock & Stroock & Lavan regarding tax matters. 10.1 $400,000,000 Credit Agreement dated as of August 16, 1996 among The Money Store Inc., as borrower, the various financial institutions named therein, as lenders, First Union National Bank of North Carolina, as documentation agent, and The First National Bank of Chicago, as administrative agent, and Amendment No. 1 thereto.
EX-4.1 2 AMENDMENT TO THE RESTATED CERTIFICATE EXHIBIT 4.1 AMENDMENT TO THE RESTATED CERTIFICATE OF INCORPORATION OF THE MONEY STORE INC. On October 30, 1996, pursuant to the authority granted to and vested in the Board of Directors (hereinafter called the "Board of Directors" or the "Board") of The Money Store Inc., a corporation organized and existing under the laws of the State of New Jersey (hereinafter called the "Corporation"), and in accordance with the provisions of Section 14:7-2 of the New Jersey Business Corporation Law and Article Third of the Corporation's Restated Certificate of Incorporation (the "Certificate of Incorporation"), the Board of Directors voted in favor of amending Article Third of the Certificate of Incorporation to add a new Section F thereto in order to create a new series of preferred stock, no par value, of the Corporation and to state the designation and number of shares, and to fix the preferences, limitations and relative rights thereof, all as hereinafter set forth. "SECTION F -- $1.72 MANDATORY CONVERTIBLE PREFERRED STOCK, NO PAR VALUE PER SHARE. PARAGRAPH 1. DESIGNATION AND AMOUNT. The shares of such series shall be designated as "Mandatory Convertible Preferred Stock, no par value per share" (the "Preferred Shares"). The authorized number of shares constituting such series of Preferred Shares shall be 5,290,000. PARAGRAPH 2. DIVIDENDS. (a) The holders of outstanding Preferred Shares shall be entitled to receive, when, as and if declared by the Board of Directors out of funds legally available therefor, cumulative preferential cash dividends from November 5, 1996 (the "Issue Date"), at the rate per share of $1.72 per annum, and no more, payable quarterly in arrears on the 1st day of each March, June, September and December, respectively (each such date being hereinafter referred to as a "Dividend Payment Date"), or, if any Dividend Payment Date is not a business day, then the Dividend Payment Date shall be the next succeeding business day. Each dividend on the Preferred Shares shall be payable to holders of record as they appear on the stock register of the Corporation on the record date therefor, which shall be a date fixed by the Board of Directors not less than 10 nor more than 60 days preceding the related Dividend Payment Date. The first dividend payment shall be for the period from the Issue Date up to but excluding December 1, 1996 and the first dividend will be payable on December 2, 1996. Dividends (or amounts equal to accrued and unpaid dividends) payable on the Preferred Shares for any period less than a full quarterly dividend period will be computed on the basis of a 360-day year of twelve 30-day months and the actual number of days elapsed in any period less than one month. Dividends on the Preferred Shares will accrue whether or not there are funds legally available for the payment of such dividends and whether or not such dividends are declared on a daily basis from the previous Dividend Payment Date. Accrued but unpaid dividends on the Preferred Shares shall cumulate as of the Dividend Payment Date on which they first become payable, but no interest shall accrue on accumulated but unpaid dividends on the Preferred Shares. Dividends will cease to accrue in respect of the Preferred Shares on the Mandatory Conversion Date (as hereinafter defined) or on the date of their earlier conversion. The Preferred Shares will rank on a parity, both as to payment of dividends and distribution of assets upon liquidation, with any future preferred stock issued by the Corporation (the "Preferred Stock") that by its terms ranks pari passu with the Preferred Shares. (b) As long as any Preferred Shares are outstanding, no dividends for any dividend period or other distributions will be paid in cash or otherwise (other than dividends or other distributions payable in shares of, or warrants, rights or options exercisable for or convertible into shares of, Common Stock (as hereinafter defined) or any other capital stock of the Corporation ranking junior to the Preferred Shares as to the payment of dividends (for the purposes of this Paragraph 2, such shares of Common Stock and other capital stock ranking junior to the Preferred Shares as to payment of dividends are hereinafter referred to collectively as "Junior Stock") and cash in lieu of fractional shares of such Junior Stock in connection with any such dividend) on any Junior Stock unless: (i) full dividends on all outstanding shares of each series of Preferred Stock that does not constitute Junior Stock (for the purposes of this Paragraph 2, each such series, including the Preferred Shares, is hereinafter referred to as "Parity Preferred Stock") have been paid, or declared and set aside for payment, for all dividend periods terminating on or prior to the date of such Junior Stock dividend or distribution payment to the extent such dividends are cumulative; (ii) dividends in full, in the case of a dividend payment with respect to Junior Stock, for any Parity Preferred Stock dividend period commencing on or prior to the date of such Junior Stock dividend payment or, in the case of any other distribution with respect to Junior Stock, for the current quarterly dividend period, have been paid, or declared and set aside for payment, on all outstanding shares of Parity Preferred Stock to the extent such dividends are cumulative; (iii) the Corporation has paid or set aside all amounts, if any, then or theretofore required to be paid or set aside for all purchase, retirement and sinking funds, if any, for all outstanding shares of Parity Preferred Stock; and (iv) the Corporation is not in default on any of its obligations to redeem any outstanding shares of Parity Preferred Stock. In addition, as long as any Preferred Shares are outstanding, no shares of any Junior Stock may be purchased, redeemed or otherwise acquired by the Corporation or any of its subsidiaries (except in connection with a reclassification or exchange of any Junior Stock through the issuance of other Junior Stock (and cash in lieu of fractional shares of such Junior 2 Stock in connection therewith) or the purchase, redemption or other acquisition of any Junior Stock with any Junior Stock (and cash in lieu of fractional shares of such Junior Stock in connection therewith)) nor may any funds be set aside or made available for any sinking fund for the purchase or redemption of any Junior Stock unless: (i) full dividends on all outstanding shares of Parity Preferred Stock have been paid, or declared and set aside for payment, for all dividend periods terminating on or prior to the date of such Junior Stock purchase, redemption or other acquisition to the extent such dividends are cumulative; (ii) the Corporation has paid or set aside all amounts, if any, then or theretofore required to be paid or set aside for all purchase, retirement and sinking funds, if any, for any outstanding shares of Parity Preferred Stock; and (iii) the Corporation is not in default on any of its obligations to redeem any outstanding shares of Parity Preferred Stock. Subject to the provisions described above, such dividends or other distributions (payable in cash, property, or Junior Stock) as may be determined by the Board of Directors may be declared and paid on the shares of any Junior Stock from time to time and Junior Stock may be purchased, redeemed or otherwise acquired by the Corporation or any of its subsidiaries from time to time. In the event of the declaration and payment of any such dividends or other distributions, the holders of such Junior Stock will be entitled, to the exclusion of holders of any outstanding Parity Preferred Stock, to share therein according to their respective interests. As long as any Preferred Shares are outstanding, no dividends for any dividend period or other distributions will be paid in cash or otherwise (other than dividends or other distributions payable in shares of, or warrants, rights or options exercisable for or convertible into, Junior Stock and cash in lieu of fractional shares of such Junior Stock in connection therewith) on any shares of Parity Preferred Stock (other than the Preferred Shares), unless either: (a)(i) full dividends on all outstanding shares of Parity Preferred Stock have been paid, or declared and set aside for payment, for all dividend periods terminating on or prior to the date of such Parity Preferred Stock dividend or distribution payment to the extent such dividends are cumulative; (ii) dividends in full, in the case of a dividend payment, for any Parity Preferred Stock dividend period commencing on or prior to the date of such dividend payment or, in the case of any other distribution, for the current quarterly dividend period, have been paid, or declared and set aside for payment, on all outstanding shares of Parity Preferred Stock to the extent such dividends are cumulative; (iii) the Corporation has paid or set aside all amounts, if any, then or theretofore required to be paid or set aside for all purchase, retirement and sinking funds, if any, for all outstanding shares of Parity Preferred Stock; and (iv) the Corporation is not in default on any of its obligations to redeem any outstanding shares of Parity Preferred Stock; or (b) any such dividends are declared and paid pro rata so that the amounts of any dividends declared and paid per outstanding Preferred Share and each other share of such Parity Preferred Stock will in all cases bear to each other the same ratio that accrued and unpaid dividends (including any accumulation with respect to unpaid dividends for prior dividend periods, if such dividends are cumulative) per outstanding Preferred Share and such other outstanding shares of Parity Preferred Stock bear to each other. 3 In addition, as long as any Preferred Shares are outstanding, no shares of any Parity Preferred Stock may be purchased, redeemed or otherwise acquired by the Corporation or any of its subsidiaries (except with any Junior Stock and cash in lieu of fractional shares of such Junior Stock in connection therewith) nor may any funds be set aside or made available for any sinking fund for the purchase or redemption of any Parity Preferred Stock unless: (i) full dividends on all outstanding shares of Parity Preferred Stock have been paid, or declared and set aside for payment, for all dividend periods terminating on or prior to the date of such Parity Preferred Stock purchase, redemption or other acquisition to the extent such dividends are cumulative; (ii) the Corporation has paid or set aside all amounts, if any, then or theretofore required to be paid or set aside for all purchase, retirement, and sinking funds, if any, for any outstanding shares of Parity Preferred Stock; and (iii) the Corporation is not in default on any of its obligations to redeem any outstanding shares of Parity Preferred Stock. (c) Any dividend payment made on the Preferred Shares shall first be credited against the earliest accrued but unpaid dividend due with respect to the Preferred Shares. (d) All dividends paid with respect to the Preferred Shares shall be paid pro rata to the holders entitled thereto. (e) Holders of the Preferred Shares shall be entitled to receive dividends in preference to and in priority over any dividends upon any shares of the Corporation ranking junior to the Preferred Shares as to dividends, but subject to the rights of holders of shares of the Corporation having a preference and a priority over the payment of dividends on the Preferred Shares. PARAGRAPH 3. CONVERSION. (a) Mandatory Conversion. On December 1, 1999 (the "Mandatory Conversion Date"), unless previously converted at the option of the holder in accordance with the provisions of Paragraph 3(b) below, each outstanding Preferred Share shall convert automatically (the "Mandatory Conversion") into (i) a number of shares of Common Stock equal to the Conversion Rate (as defined below) in effect on the Mandatory Conversion Date and (ii) the right to receive an amount in cash equal to all accrued and unpaid dividends on such Preferred Share (other than previously declared dividends payable to a holder of record on a prior date) to the Mandatory Conversion Date, whether or not declared, out of funds legally available for the payment of dividends. The "Conversion Rate" is equal to (a) if the Current Market Price (as hereinafter defined) of the Common Stock is greater than or equal to $31.80 per share (the "Conversion Price"), 0.833 of a share of Common Stock per Preferred Share, (b) if the Current Market Price is less than the Conversion Price but greater than $26.50 (the "Initial Price"), a fractional share of Common Stock per Preferred Share having a value (determined at the Current Market Price) equal to the Initial Price, and (c) if the Current Market Price is less than or equal to the Initial Price, one share of Common Stock per Preferred Share, subject in each case to adjustment as provided in Paragraph 3(c) below. Dividends on the Preferred Shares shall cease to accrue, and the Preferred Shares shall cease 4 to be outstanding, on the Mandatory Conversion Date. The Corporation shall make such arrangements as it deems appropriate for the issuance of certificates representing shares of Common Stock and for the payment of cash in respect of such accrued and unpaid dividends, if any, or cash in lieu of fractional shares, if any, in exchange for and contingent upon surrender of certificates representing the Preferred Shares, and the Corporation may defer the payment of dividends on such shares of Common Stock and the voting thereof until, and make such payment and voting contingent upon, the surrender of such certificates representing the Preferred Shares, provided that the Corporation shall give the holders of the Preferred Shares such notice of any such actions as the Corporation deems appropriate and upon such surrender such holders shall be entitled to receive such dividends declared and paid on such shares of Common Stock subsequent to the Mandatory Conversion Date. Amounts payable in cash in respect of the Preferred Shares or in respect of such shares of Common Stock shall not bear interest. (b) Conversion at Option of Holder. The Preferred Shares are convertible, in whole or in part, at the option of the holders thereof, at any time prior to the Mandatory Conversion Date, into shares of Common Stock at a rate of 0.833 of a share of Common Stock for each Preferred Share (the "Optional Conversion Rate"), subject to adjustment as set forth in Paragraph 3(c) below. Conversion of Preferred Shares at the option of the holder may be effected by delivering certificates evidencing such Preferred Shares, together with written notice of conversion and a proper assignment of such certificates to the Corporation or in blank (and, if applicable, cash payment of an amount equal to the dividend attributable to the current quarterly dividend accrued on such shares), to the office of any transfer agent for the Preferred Shares or to any other office or agency maintained by the Corporation for that purpose and otherwise in accordance with conversion procedures established by the Corporation. Each optional conversion shall be deemed to have been effected immediately prior to the close of business on the date on which the foregoing requirements shall have been satisfied. The conversion shall be at the Optional Conversion Rate in effect at such time and on such date. Holders of Preferred Shares at the close of business on a record date for any payment of declared dividends shall be entitled to receive the dividend payable on such Preferred Shares on the corresponding Dividend Payment Date notwithstanding the optional conversion of such Preferred Shares following such record date and prior to the corresponding Dividend Payment Date. However, Preferred Shares surrendered for conversion after the close of business on a record date for any payment of declared dividends and before the opening of business on the next succeeding Dividend Payment Date must be accompanied by payment in cash of an amount equal to the dividend thereon which is to be paid on such Dividend Payment Date. Except as otherwise provided above, upon any optional conversion of Preferred Shares, the Corporation shall make no payment of or allowance for unpaid dividends, whether or not in arrears, on converted Preferred Shares or for previously declared dividends or distributions on the shares of Common Stock issued upon such conversion. 5 (c) Conversion Rate and Optional Conversion Rate Adjustments. The Conversion Rate and the Optional Conversion Rate shall each be subject to adjustment from time to time as provided below in this Paragraph 3(c). (i) If the Corporation shall, after the Issue Date: (A) pay a stock dividend or make a distribution with respect to its Common Stock in shares of such Common Stock, (B) subdivide or split its outstanding Common Stock into a greater number of shares, (C) combine its outstanding shares of Common Stock into a smaller number of shares, or (D) issue by reclassification of its shares of Common Stock any shares of common stock of the Corporation, then, in any such event, the Conversion Rate and the Optional Conversion Rate in effect immediately prior to such event shall each be adjusted so that the holder of any Preferred Shares shall thereafter be entitled to receive, upon Mandatory Conversion or upon conversion at the option of the holder, the number of shares of Common Stock of the Corporation which such holder would have owned or been entitled to receive immediately following any event described above had such Preferred Shares been converted immediately prior to such event or any record date with respect thereto. Such adjustment shall become effective at the opening of business on the business day next following the record date for determination of stockholders entitled to receive such dividend or distribution, in the case of a dividend or distribution, and shall become effective immediately after the effective date, in the case of a subdivision split, combination or reclassification. Such adjustment shall be made successively. (ii) If the Corporation shall, after the Issue Date, issue rights or warrants to all holders of its Common Stock entitling them (for a period not exceeding 45 days from the date of such issuance) to subscribe for or purchase shares of Common Stock at a price per share less than the Current Market Price of the Common Stock, then, in any such event unless such rights or warrants are issued to holders of Preferred Shares on a pro rata basis with the shares of Common Stock based on the Conversion Rate on the date immediately preceding such issuance, the Conversion Rate and Optional Conversion Rate shall each be adjusted by multiplying the Conversion Rate and the Optional Conversion Rate, in effect immediately prior to the date of issuance of such rights or warrants, by a fraction, of which the numerator shall be the number of 6 shares of Common Stock outstanding on the date of issuance of such rights or warrants, immediately prior to such issuance, plus the number of additional shares of Common Stock offered for subscription or purchase pursuant to such rights or warrants, and of which the denominator shall be the number of shares of Common Stock outstanding on the date of issuance of such rights or warrants, immediately prior to such issuance, plus the number of additional shares of Common Stock which the aggregate offering price of the total number of shares of Common Stock so offered for subscription or purchase pursuant to such rights or warrants would purchase at such Current Market Price (determined by multiplying such total number of shares by the exercise price of such rights or warrants and dividing the product so obtained by such Current Market Price). Such adjustment shall become effective at the opening of business on the business day next following the record date for the determination of stockholders entitled to receive such rights or warrants. To the extent that shares of Common Stock are not delivered after the expiration of such rights or warrants, the Conversion Rate and the Optional Conversion Rate shall each be readjusted to the Conversion Rate and the Optional Conversion Rate which would then be in effect had the adjustments been made upon the issuance of such rights or warrants upon the basis of delivery of only the number of shares of Common Stock actually delivered. Such adjustment shall be made successively. (iii) If the Corporation shall, after the Issue Date, pay a dividend or make a distribution to all holders of its Common Stock of evidences of its indebtedness, cash or other assets (including capital stock of the Corporation but excluding any cash dividends or distributions, other than Extraordinary Cash Distributions (as hereinafter defined) and dividends or distributions referred to in subparagraph (i) above), then unless such dividend is paid or distribution is made to each holder of Preferred Shares on a pro rata basis with the shares of Common Stock based on the Conversion Rate on the date immediately preceding such payment or distribution, in any such event, the Conversion Rate and the Optional Conversion Rate shall each be adjusted by multiplying the Conversion Rate and the Optional Conversion Rate in effect on the record date mentioned below, by a fraction of which the numerator shall be the Current Market Price per share of the Common Stock on the record date for the determination of stockholders entitled to receive such dividend or distribution, and of which the denominator shall be such Current Market Price per share of Common Stock less the fair market value (as determined in good faith by the Board of Directors, whose determination shall be conclusive, and described in a resolution adopted with respect thereto) as of such record date of the portion of the assets or evidences of indebtedness so distributed or of such subscription rights or warrants 7 applicable to one share of Common Stock. Such adjustment shall become effective on the opening of business on the business day next following the record date for the determination of stockholders entitled to receive such dividend or distribution. Such adjustment shall be made successively. (iv) Any shares of Common Stock issuable in payment of a dividend shall be deemed to have been issued immediately prior to the close of business on the record date for such dividend for purposes of calculating the number of outstanding shares of Common Stock under subparagraph (ii) above. (v) The Corporation shall also be entitled to make upward adjustments in the Conversion Rate and the Optional Conversion Rate, as it in its sole discretion shall determine to be advisable, in order that any stock dividends, subdivisions of shares, distribution of rights to purchase stock or securities, or distribution of securities convertible into or exchangeable for stock (or any transaction that could be treated as any of the foregoing transactions pursuant to Section 305 of the Internal Revenue Code of 1986, as amended) made by the Corporation to its stockholders after the Issue Date shall not be taxable. (vi) In any case in which Paragraph 3(c) shall require that an adjustment as a result of any event become effective at the opening of business on the business day next following a record date and the date fixed for conversion pursuant to Paragraph 3(a) occurs after such record date, but before the occurrence of such event, the Corporation may, in its sole discretion, elect to defer the following until after the occurrence of such event: (A) issuing to the holder of any converted Preferred Shares the additional shares of Common Stock issuable upon such conversion over the shares of Common Stock issuable before giving effect to such adjustments and (B) paying to such holder any amount in cash in lieu of a fractional share of Common Stock pursuant to Paragraph 3(h). (vii) All adjustments to the Conversion Rate and the Optional Conversion Rate shall be calculated to the nearest 1/100th of a share of Common Stock. No adjustment in the Conversion Rate or the Optional Conversion Rate shall be required unless such adjustment would require an increase or decrease of at least one percent therein; provided, however, that any adjustment that by reason of this subparagraph (vii) is not required to be made shall be carried forward and taken into account in any subsequent adjustment. If an adjustment is made to the Conversion Rate pursuant to this Paragraph 3(c), then an appropriate adjustment shall also be made to the Current Market Price solely to determine whether clause (a), (b) or (c) of the definition of "Conversion Rate" in Paragraph 3(a) shall apply on the Mandatory 8 Conversion Date. All adjustments in the Conversion Rate and the Optional Conversion Rate shall be made successively. (d) Adjustment for Consolidation or Merger. In case of any consolidation or merger to which the Corporation is a party (other than a merger or consolidation in which the Corporation is the surviving or continuing corporation and in which the Common Stock outstanding immediately prior to the merger or consolidation remains unchanged), or in case of any sale or transfer to another corporation of the property of the Corporation as an entirety or substantially as an entirety, or in case of any statutory exchange of securities with another corporation (other than in connection with a merger or acquisition), proper provision shall be made so that each Preferred Share shall, after consummation of such transaction, be subject to (i) conversion at the option of the holder into the kind and amount of securities, cash or other property receivable upon consummation of such transaction by a holder of the number of shares of Common Stock into which such Preferred Share might have been converted immediately prior to consummation of such transaction, and (ii) conversion on the Mandatory Conversion Date into the kind and amount of securities, cash or other property receivable upon consummation of such transaction by a holder of the number of shares of Common Stock into which such Preferred Share would have converted if the conversion on the Mandatory Conversion Date had occurred immediately prior to the date of consummation of such transaction, plus the right to receive cash in an amount equal to all accrued and unpaid dividends on such Preferred Share (other than previously declared dividends payable to a holder of record as of a prior date), and assuming in each case that such holder of shares of Common Stock failed to exercise rights of election, if any, as to the kind or amount of securities, cash or other property receivable upon consummation of such transaction (provided that if the kind or amount of securities, cash or other property receivable upon consummation of such transaction is not the same for each non- electing share, then the kind and amount of securities, cash or other property receivable upon consummation of such transaction for each non-electing share shall be deemed to be the kind and amount so receivable per share by a plurality of the non-electing shares). The kind and amount of securities into or for which the Preferred Shares shall be convertible after consummation of such transaction shall be subject to adjustment as described in Paragraph 3(c) above following the date of consummation of such transaction. The Corporation may not become a party to any such transaction unless the terms thereof are consistent with the foregoing or consistent with clause (iii) of Paragraph 7(b). For purposes of the immediately preceding paragraph and Paragraph 3(f)(iii), any sale or transfer to another corporation of property of the Corporation which did not account for at least 50% of the consolidated net income of the Corporation for its most recent fiscal year ending prior to the consummation of such transaction shall not in any event be deemed to be a sale or transfer of the property of the Corporation as an entirety or substantially as an entirety. (e) Announcement of Adjustments. Whenever the Conversion Rate and Optional Conversion Rate are adjusted as herein provided, the Corporation shall: 9 (i) forthwith compute the adjusted Conversion Rate and Optional Conversion Rate in accordance herewith and prepare a certificate signed by an officer of the Corporation setting forth the adjusted Conversion Rate and Optional Conversion Rate, the method of calculation thereof in reasonable detail and the facts requiring such adjustment and upon which such adjustment is based, which certificate shall be conclusive, final and binding evidence of the correctness of the adjustment, and file such certificate with the transfer agent for the Preferred Shares and the Common Stock; and (ii) make a prompt public announcement and mail a notice to the holders of record of the outstanding Preferred Shares stating that the Conversion Rate and the Optional Conversion Rate have been adjusted, the facts requiring such adjustment and upon which such adjustment is based and setting forth the adjusted Conversion Rate and Optional Conversion Rate, such notice to be mailed at or prior to the time the Corporation mails an interim statement to its stockholders covering the fiscal quarter during which the facts requiring such adjustment occurred, but in any event within 45 days of the end of such fiscal quarter. (f) Notices. In case, at any time while any of the Preferred Shares are outstanding, (i) the Corporation shall declare a dividend (or any other distribution) on its Common Stock, excluding any cash dividends; or (ii) the Corporation shall authorize the issuance to all holders of its Common Stock of rights or warrants to subscribe for or purchase shares of its Common Stock; or (iii) the Corporation shall authorize any reclassification of its Common Stock (other than a subdivision or combination thereof) or of any consolidation or merger to which the Corporation is a party and for which approval of any stockholders of the Corporation is required (except for a merger of the Corporation into one of its subsidiaries solely for the purpose of changing the corporate domicile of the Corporation to another state of the United States and in connection with which there is no substantive change in the rights or privileges of any securities of the Corporation other than changes resulting from differences in the corporate statutes of the then existing and the new state of domicile), or of the sale or transfer to another corporation of the property of the Corporation as an entirety or substantially as an entirety; or (iv) the Corporation shall authorize the voluntary or involuntary dissolution, liquidation or winding up of the Corporation; 10 then the Corporation shall cause to be filed at each office or agency maintained for the purpose of conversion of the Preferred Shares, and shall cause to be mailed to the holders of Preferred Shares at their last addresses as they shall appear on the stock register, at least 10 days before the date hereinafter specified (or the earlier of the dates hereinafter specified, in the event that more than one date is specified), a notice stating (A) the date on which a record is to be taken for the purpose of such dividend, distribution, rights or warrants, or, if a record is not to be taken, the date as of which the holders of Common Stock of record to be entitled to such dividend, distribution, rights or warrants are to be determined, or (B) the date on which any such reclassification, consolidation, merger, sale, transfer, dissolution, liquidation or winding up is expected to become effective, and the date as of which it is expected that holders of Common Stock of record shall be entitled to exchange their Common Stock for securities or other property (including cash), if any, deliverable upon such reclassification, consolidation, merger, sale, transfer, dissolution, liquidation or winding up. The failure to give or receive the notice required by this subparagraph (f) or any defect therein shall not affect the legality or validity of any such dividend, distribution, right or warrant or other action. (g) Effect of Conversions. The person or persons in whose name or names any certificate or certificates for shares of Common Stock shall be issuable upon any conversion shall be deemed to have become on the date of any such conversion the holder or holders of record of the shares represented thereby; provided, however, that any such surrender on any date when the stock transfer books of the Corporation shall be closed shall constitute the person or persons in whose name or names the certificate or certificates for such shares are to be issued as the record holder or holders thereof for all purposes at the opening of business on the next succeeding day on which such stock transfer books are open. (h) No Fractional Shares. No fractional shares of Common Stock shall be issued upon the conversion of any Preferred Shares. In lieu of any fractional share otherwise issuable in respect of the aggregate number of Preferred Shares of any holder which are converted upon Mandatory Conversion or any optional conversion, such holder shall be entitled to receive an amount in cash (computed to the nearest cent) equal to the same fraction of the Closing Price of the Common Stock determined (A) as of the fifth Trading Day immediately preceding the Mandatory Conversion Date, in the case of Mandatory Conversion, or (B) as of the second Trading Day immediately preceding the effective date of conversion, in the case of an optional conversion by a holder. If more than one Preferred Share shall be surrendered for conversion at one time by or for the same holder, the number of full shares of Common Stock issuable upon conversion thereof shall be computed on the basis of the aggregate number of Preferred Shares so surrendered or redeemed. (i) Reissuance. Preferred Shares that have been issued and reacquired in any manner, including shares purchased, exchanged or converted, shall not be reissued as part of the Preferred Shares and shall (upon compliance with any applicable provisions of the laws of the State of New Jersey) have the status of authorized and unissued shares of the Preferred Stock undesignated as to series and may be redesignated and reissued as part of any series of Preferred Stock. 11 (j) Payment of Taxes. The Corporation shall pay any and all documentary, stamp or similar issue or transfer taxes payable in respect of the issue or delivery of shares of Common Stock on the conversion of Preferred Shares pursuant to this Paragraph 3; provided, however, that the Corporation shall not be required to pay any tax which may be payable in respect of any registration of transfer involved in the issue or delivery of shares of Common Stock in a name other than that of the registered holder of Preferred Shares converted or to be converted, and no such issue or delivery shall be made unless and until the person requesting such issue has paid to the Corporation the amount of any such tax or has established, to the satisfaction of the Corporation, that such tax has been paid. (k) Reservation of Common Stock. The Corporation shall at all times reserve and keep available, free from preemptive rights, out of the aggregate of its authorized but unissued Common Stock and/or its issued Common Stock held in its treasury, for the purpose of effecting any Mandatory Conversion of the Preferred Shares or any conversion of the Preferred Shares at the option of the holder, the full number of shares of Common Stock then deliverable upon any such conversion of all outstanding Preferred Shares. PARAGRAPH 4. LIQUIDATION RIGHTS. (a) In the event of the liquidation, dissolution, or winding up of the business of the Corporation, whether voluntary or involuntary, the holders of Preferred Shares then outstanding, after payment or provision for payment of the debts and other liabilities of the Corporation and the payment or provision for payment of any distribution on any shares of the Corporation having a preference and a priority over the Preferred Shares on liquidation, and before any distribution to the holders of shares of Common Stock or other shares of capital stock ranking junior to the Preferred Shares as to the distribution of assets upon liquidation, dissolution or winding up, shall be entitled to be paid out of the assets of the Corporation available for distribution to its stockholders an amount per Preferred Share in cash equal to the sum of (i) $26.50 plus (ii) all accrued and unpaid dividends thereon. In the event the assets of the Corporation available for distribution to the holders of the Preferred Shares upon any dissolution, liquidation or winding up of the Corporation shall be insufficient to pay in full the liquidation payments payable to the holders of outstanding Preferred Shares and of all other series of Preferred Stock ranking on a parity with the Preferred Shares as to payments upon liquidation, dissolution or winding up, the holders of Preferred Shares and of all other series of Preferred Stock ranking on a parity with the Preferred Shares as to payments upon liquidation, dissolution or winding up shall share ratably in such distribution of assets in proportion to the amount which would be payable on such distribution if the amounts to which the holders of outstanding Preferred Shares and the holders of outstanding shares of such Preferred Stock ranking on a parity with the Preferred Shares as to payments upon liquidation, dissolution or winding up were paid in full. Except as provided in this Paragraph 4, holders of Preferred Shares shall not be entitled to any distribution in the event of liquidation, dissolution or winding up of the affairs of the Corporation. (b) For the purposes of this Paragraph 4, none of the following shall be deemed to be a voluntary or involuntary liquidation, dissolution or winding up of the Corporation: 12 (i) the sale, lease, transfer or exchange of all or substantially all of the assets of the Corporation; (ii) the consolidation or merger of the Corporation with one or more other corporations (whether or not the Corporation is the corporation surviving such consolidation or merger); or (iii) a statutory exchange of securities with another corporation. PARAGRAPH 5. DEFINITIONS. As used in this Section F: (i) The term "business day" shall mean any day other than a Saturday, Sunday, or a day on which banking institutions in the State of New Jersey are authorized or obligated by law or executive order to close or are closed because of a banking moratorium or otherwise. (ii) The term "Closing Price" with respect to a share of Common Stock shall mean, on any date of determination, the reported last sale price of a share of Common Stock on the Nasdaq Stock Market's National Market (the "Nasdaq National Market") on such date or, if the Common Stock is not listed for trading on the Nasdaq National Market for trading on any such date, the last sale price of a share of Common Stock as reported in the composite transactions for the principal United States securities exchange on which the Common Stock is then listed for trading, or if the Common Stock is not so listed on any national securities exchange, the last quoted bid price for the Common Stock in the over-the-counter market as reported by the National Quotation Bureau Incorporated or similar organization, or if such bid price is not available, the market value of a share of Common Stock on such date as determined by a nationally recognized independent investment banking firm retained for this purpose by the Corporation. (iii) The term "Common Stock" shall mean any stock of any class of the Corporation which has no preference in respect of dividends or of amounts payable in the event of any voluntary or involuntary liquidation, dissolution or winding up of the Corporation and which is not subject to redemption by the Corporation. However, shares of Common Stock issuable upon conversion of Preferred Shares shall include only shares of the class designated as Common Stock at the Issue Date, or shares of the Corporation of any class or classes resulting from any reclassification or reclassifications thereof and which have no preference in respect of dividends or of amounts payable in the event of any voluntary or involuntary liquidation, dissolution or winding up of the Corporation and which are not subject to redemption by the Corporation; provided, 13 however, that, if at any time there shall be more than one such resulting class, the shares of each such class then so issuable shall be substantially in the proportion which the total number of shares of such class resulting from such reclassification bears to the total number of shares of all classes resulting from all such reclassifications. (iv) Except as otherwise stated below, the term "Current Market Price" shall mean the average Closing Price per share of Common Stock on the 20 Trading Days immediately prior to, but not including, the Mandatory Conversion Date. Solely for purposes of determining the "Conversion Rate" referred to in clause (ii) of Paragraph 3(c), the term "Current Market Price" shall mean the average Closing Price per share of the Common Stock on the 20 Trading Days immediately prior to, but not including, the date on which the rights or warrants referred to in such clause (ii) are issued. Solely for purposes of determining the "Conversion Rate" referred to in clause (iii) of Paragraph 3(c), the term "Current Market Price" shall mean the average Closing Price per share of the Common Stock on the 20 Trading Days immediately prior to, but not including, the date on which the dividends or distributions referred to in such clause (iii) are paid or made. Solely for purposes of determining the "Conversion Rate" referred to in subclause (B) of Paragraph 7(b)(iii), the term "Current Market Price" shall mean the average Closing Price per share of the Common Stock on the 20 Trading Days immediately prior to, but not including, the date on which the announcement of the merger or consolidation referred to in such subclause (B) is made. (v) The term "Extraordinary Cash Distributions" shall mean, with respect to any cash dividend or distribution paid on any date, the amount, if any, by which all cash dividends and cash distributions on the Common Stock paid during the consecutive 12- month period ending on and including such date (other than cash dividends and cash distributions for which an adjustment to the Conversion Rate and the Optional Conversion Rate was previously made) exceeds, on a per share of Common Stock basis, 10% of the average of the daily Closing Prices of the Common Stock over such consecutive 12-month period. (vi) The term "Trading Day" shall mean a day on which the Common Stock (a) is not suspended from trading on any national securities exchange or association or over-the-counter market at the close of business of such day and (b) has traded at least once on the national securities exchange or association or over-the-counter market that is the primary market for the trading of such security. 14 PARAGRAPH 6. NO PREEMPTIVE RIGHTS. The holders of Preferred Shares shall have no preemptive rights, including preemptive rights with respect to any shares of capital stock or other securities of the Corporation convertible into or carrying rights or options to purchase any such shares. PARAGRAPH 7. VOTING RIGHTS. (a) Except as indicated below and as provided by New Jersey law, the holders of Preferred Shares have no voting rights. On matters subject to vote by holders of Preferred Shares, the holders are entitled to one vote per share. If at any time dividends payable on the Preferred Shares are in arrears and unpaid in an aggregate amount equal to or exceeding the aggregate amount of dividends payable thereon for six quarterly dividend periods, the holders of the Preferred Shares, voting separately as a class with the holders of all other series of Preferred Stock upon which like voting rights have been conferred and are exercisable, shall have the right to vote for the election of two Directors of the Corporation ("Preferred Stock Directors"), such Preferred Stock Directors to be in addition to the number of Directors constituting the Board of Directors immediately prior to the accrual of such right. Such right of the holders of Preferred Shares to elect two Preferred Stock Directors, when vested, shall continue until all dividends in arrears on the Preferred Shares shall have been paid in full or declared and set apart for payment, and, when so paid or declared and set apart for payment, such right of the holders of Preferred Shares to elect two Preferred Stock Directors separately as a class shall cease, subject always to the same provisions for the vesting of such right of the holders of the Preferred Shares to elect two Preferred Stock Directors in the case of future dividend defaults. The term of office of each Director elected pursuant to the preceding paragraph shall terminate on the earlier of (i) the next annual meeting of stockholders at which a successor shall have been elected and qualified or (ii) the termination of the right of holders of Preferred Shares and such other series of Preferred Stock to vote for Preferred Stock Directors pursuant to the preceding paragraph. Vacancies on the Board of Directors resulting from the death, resignation or other cause of any such Preferred Stock Director shall be filled exclusively by no less than two-thirds of the remaining Directors and the new Director so elected shall hold office until a successor is elected and qualified. (b) For as long as any Preferred Shares remain outstanding, the Corporation will not, without the affirmative vote or consent of the holders of at least 66 2/3% thereof actually voting (voting separately as a class): (i) amend, alter or repeal any of the provisions of the Certificate of Incorporation that would affect adversely the powers, preferences or rights of the holders of the Preferred Shares then outstanding or reduce the minimum time required for any notice to which only the holders of Preferred Shares then outstanding may be entitled; provided, however, that any such amendment, alteration or repeal that would authorize or create, or increase the authorized amount of, any additional shares of Common Stock or any other shares of capital stock ranking junior to or on a parity with the Preferred Shares as to payment of dividends or the distribution of assets upon 15 liquidation, dissolution or winding up of the Corporation (whether or not already authorized) shall not be deemed to affect adversely such powers, preferences or rights and shall not be subject to approval by the holders of the Preferred Shares; (ii) authorize or create, or increase the authorized amount of, any capital stock, or any security convertible into capital stock, of any class ranking senior to the Preferred Shares as to payment of dividends or the distribution of assets upon liquidation, dissolution or winding up of the Corporation; or (iii) merge or consolidate with or into any other corporation, unless each holder of the Preferred Shares immediately preceding such merger or consolidation shall have the right either to (A) receive or continue to hold in the resulting corporation the same number of shares, with substantially the same rights and preferences, as correspond to the Preferred Shares so held or (B) convert into shares of Common Stock at the Conversion Rate in effect on the date immediately preceding the announcement of any such merger or consolidation (such date, solely for purposes of determining the appropriate Conversion Rate then in effect with respect to this clause (B), being deemed the "Mandatory Conversion Date"). There is no limitation on the issuance by the Corporation of any class of stock ranking junior to or on a parity with the Preferred Shares as to the payment of dividends or the distribution of assets upon liquidation, dissolution or winding up of the Corporation. Notwithstanding the provisions summarized in the preceding two paragraphs, however, no such approval described therein of the holders of the Preferred Shares shall be required to authorize an increase in the number of authorized shares of Preferred Stock or Common Stock. 16 IN WITNESS WHEREOF, The Money Store Inc. has caused this Amendment to its Restated Certificate of Incorporation to be duly executed by the undersigned officer this __ day of October, 1996. THE MONEY STORE INC. By:__________________________ Name:________________________ Title:_______________________ 17 EX-5.1 3 OPINION OF ERIC R. ELWIN EXHIBIT 5.1 [LETTERHEAD OF THE MONEY STORE INC.] October 30, 1996 The Board of Directors The Money Store Inc. 2840 Morris Avenue P.O. Box 3155 Union, New Jersey 07083-1955 Re: The Money Store Inc. Prospectus Supplement dated October 30, 1996 (to the Prospectus dated February 13, 1996) in connection with the Registration Statement on Form S-3 File No. 33-98972 ------------------------------------------------------ Gentlemen: I am Vice President and Corporate Counsel for The Money Store Inc. (the "Company"), a New Jersey corporation. This opinion is rendered in connection ------- with the proposed public offering of 4,600,000 shares of the Company's $1.72 Mandatory Convertible Preferred Stock, no par value per share (the "Preferred --------- Stock"). I have examined the Restated Certificate of Incorporation (as amended - ----- on May 23, 1996 and October 17, 1995), By-laws and other corporate records of the Company, and such other instruments, certificates, and other documents, as we have deemed relevant to this opinion. In making such examination, I have assumed the genuineness of all signatures, the authenticity of all documents submitted to me as originals and the conformity to original documents of documents submitted to me as certified or photostated copies. Capitalized terms not otherwise defined herein are used as defined in, or by reference to, that certain Underwriting Agreement between the Company and the parties thereto dated October 30, 1996. Based upon the foregoing, I am of the opinion that: 1. The shares of Preferred Stock have been duly authorized and, when issued and delivered to and paid for by the Underwriters pursuant to the Underwriting Agreement, will be validly issued, fully paid and nonassessable. 2. The shares of Common Stock into which the Preferred Stock will be convertible have been duly authorized and, when issued and delivered upon conversion of the Preferred Stock, will be validly issued, fully paid and nonassessable. The Board of Directors The Money Store Inc. October 30, 1996 Page 2 I hereby consent to the filing of this opinion as an exhibit to the Registration Statement and I further consent to the reference made to me under the caption "Legal Opinions" in the Registration Statement and the Prospectus which constitutes a part thereof. Very truly yours, /s/ ERIC R. ELWIN ------------------- Eric R. Elwin Vice President and Corporate Counsel EX-8.1 4 OPINION OF STROOCK & STROOCK & LAVAN EXHIBIT 8.1 [LETTERHEAD OF STROOCK & STROOCK & LAVAN] October 29, 1996 The Money Store Inc. 2840 Morris Avenue Union, New Jersey 07083 Ladies and Gentlemen: We have acted as special tax counsel to The Money Store Inc., a New Jersey corporation (the "Company"), in connection with a Registration Statement on Form S-3 (Registration No. 33-98972) containing the Prospectus (the "Registration Statement") filed by the Company with the Securities Exchange Commission (the "Commission") on November 2, 1995, under the Securities Act of 1933, as amended (the "Act"), as amended by Amendments No. 1 and No. 2 thereto filed with the Commission on February 8, 1996 and February 13, 1996, respectively, and in connection with the offering (the "Offering") of an aggregate of 5,290,000 shares (the "Shares") of the Company's $1.72 Mandatory Convertible Preferred Stock, no par value per share (the "Preferred Shares"). Terms defined in the Registration Statement and not otherwise defined herein shall have the same meaning when used herein. In rendering the opinions set forth herein, we have examined a copy of the Registration Statement. In addition to the Registration Statement, we have relied with your permission upon the representations of the Company and its representatives as to certain factual matters. In rendering the opinions set forth herein, we have assumed (i) the genuineness of all signatures on documents we have examined, (ii) the authenticity of all documents submitted to us as originals, (iii) the conformity to the original documents of all documents submitted to us as copies, (iv) the authority and capacity of the individual or individuals who executed any such documents on behalf of any person, (v) the accuracy and completeness of all documents made available to us and (vi) the accuracy as to facts of all representations, warranties and The Money Store October 29, 1996 Page 2 written statements. We have also assumed, without investigation, that all of the representations, warranties and covenants contained in the Registration Statement and all documents on which we have relied in rendering the opinions set forth herein and that were given or dated earlier than the date of this letter continue to remain accurate, insofar as relevant to the opinions set forth herein, from such earlier date through and including the date of this letter. This opinion deals only with holders who are initial holders of shares of Preferred Stock and who hold Preferred Shares as capital assets within the meaning of Section 1221 of the Internal Revenue Code (the "Code"). It does not address aspects of taxation other than Federal income taxation, and it does not address tax consequences that may be relevant to the particular circumstances of each holder (some of which, such as dealers in securities, banks, insurance companies, tax-exempt organizations, and persons that hold the Preferred Shares as part of an integrated investment (including a straddle) comprised of the Preferred Shares and one or more other investments, may be subject to special rules). Stock having terms closely resembling those of the Preferred Shares has not been the subject of any regulation, Revenue Ruling or judicial decision currently in effect, and there can be no assurance that the Service will adopt the positions set forth below. There can be no assurance that future changes in applicable law or administrative and judicial interpretations thereof, any of which could have a retroactive effect, will not adversely affect the tax consequences discussed herein or that there will not be differences of opinion as to the interpretation of applicable law. For purposes of this section, "U.S. Holder" means a citizen or resident of the United States, a domestic corporation or any other entity which is subject to United States Federal income taxation on a net income basis in respect of the Preferred Shares, and "non-U.S. Holder" means a holder other than a U.S. Holder. With regard to the Offering, we are of the opinion that: 1) Dividends paid on Preferred Shares out of the Company's current or accumulated earnings and profits will be taxable as ordinary income. Corporate U.S. Holders will generally qualify for the 70% intercorporate dividends-received deduction subject to satisfaction of the minimum holding period (generally at least 46 days) and other applicable requirements. Under certain circumstances, a corporate The Money Store October 29, 1996 Page 3 holder may be subject to the alternative minimum tax with respect to the amount of its dividends-received deduction. Under certain circumstances, a corporation that receives an "extraordinary dividend," as defined in Section 1059(c) of the Code, is required to reduce its stock basis by the non-taxed portion of such dividend. Generally, quarterly dividends not in arrears paid to an original holder of Preferred Shares will not constitute extraordinary dividends under Section 1059(c). Under Section 1059(f), any dividend with respect to "disqualified preferred stock" is treated as an "extraordinary dividend." While there is no authority directly on point, and the issue is not free from doubt, based on certain factual representations made by the Company, we believe that Preferred Shares should not be determined to constitute "disqualified preferred stock." To the extent any dividends exceed the Company's current or accumulated earnings and profits, such dividends will be applied to reduce the tax basis of the Preferred Shares and, to the extent they exceed such tax basis, will be recognized as capital gain. 2) Under certain circumstances, Section 305(c) of the Code requires that any excess of the redemption price of preferred stock over its issue price be includible in income, prior to receipt, as a constructive dividend. However, while there is no authority directly on point, and the issue is not free from doubt, based on certain factual representations made by the Company, we believe that a holder of the Preferred Shares should not be required to include any redemption premium in income under Section 305(c). 3) As a general rule, gain or loss will not be recognized by a holder upon the conversion of Preferred Shares into shares of Common Stock if no cash is received. In addition, a holder who receives cash in lieu of a fractional share will be treated as having received such fractional share and as having exchanged it for cash in a transaction subject to Section 302 of the Code and related provisions. Such exchange should generally result in capital gain or loss measured by the difference between the cash received for the The Money Store October 29, 1996 Page 4 fractional share interest and the holder's basis in the fractional share interest. Generally, a holder's basis in the Common Stock received upon the conversion of Preferred Shares, other than shares of Common Stock taxed upon receipt as discussed above, will equal the adjusted tax basis of the converted Preferred Shares (exclusive of any basis allocable to a fractional share interest) plus the amount of gain (if any) recognized, minus the amount of cash (if any) received, and the holding period of such Common Stock will include the holding period of the converted Preferred Shares. As a general rule, a holder's basis in shares of Common Stock taxed upon receipt will equal the fair market value thereof, and the holding period for such Common Stock will begin on the day following the redemption or conversion. 4) Holders of stock in the Company (including Preferred Shares) might be treated as receiving a constructive distribution from the Company under Section 305(c) if (i) a conversion rate is adjusted and as a result of such adjustment the proportionate interest of holders of such stock in the assets or earnings and profits of the Company is increased and (ii) the adjustment is not made pursuant to a bona fide, reasonable anti-dilution formula. An adjustment in a conversion rate would not be considered made pursuant to such a formula if the adjustment were made to compensate for certain taxable distributions with respect to Common Stock. Thus, certain adjustments to the Conversion Rate and the Optional Conversion Rate to reflect the Company's distribution of certain rights, warrants, evidences of indebtedness, securities or other assets to holders of Common Stock may result in constructive distributions taxable as dividends to the holders of Preferred Shares and may constitute (and cause other dividends to constitute) "extraordinary dividends" to corporate holders as described above. While there is no authority directly on point, and the issue is not free from doubt, it appears that a holder of Preferred Shares should not be treated as receiving a constructive distribution from the Company as a result of the fixing of the Conversion Rate. The Money Store October 29, 1996 Page 5 5) If a holder surrenders Preferred Shares for conversion into shares of Common Stock after a dividend record date but before payment of the dividend, such holder will be required to pay the Company an amount equal to such dividend upon conversion. The holder would likely recognize the dividend payment that is received as income, and would increase the basis of the Common Stock received by the amount paid to the Company in connection with the receipt of such dividend. 6) Certain U.S. Holders may be subject to backup withholding at a rate of 31% on dividends and certain consideration received upon the conversion of Preferred Shares unless such holders provide proof of an applicable exemption or a correct taxpayer identification number, and otherwise comply with applicable requirements of the backup withholding rules. 7) Non-U.S. Holders (a) In general, dividends (including constructive distributions taxable as dividends) paid to a non-U.S. Holder will be subject to United States withholding tax at a 30% rate (or a lower rate prescribed by an applicable tax treaty) unless the dividends are (i) effectively connected with a trade or business carried on by the non- U.S. Holder within the United States or (ii) if a tax treaty applies, attributable to a United States permanent establishment maintained by the non-U.S. Holder. Dividends effectively connected with such trade or business and attributable to such permanent establishment will generally be subject to United States Federal income tax at regular rates and, in the case of a non-U.S. Holder which is a corporation, may be subject to the branch profits tax. To determine the applicability of a tax treaty providing for a lower rate of withholding, dividends paid to an address in a foreign country are presumed under current Treasury regulations to be paid to a resident of that country. On April 15, 1996, the Service released proposed regulations that The Money Store October 29, 1996 Page 6 would, if adopted in the form proposed, require that certain Non-U.S. Holders that seek to rely on a tax treaty to obtain a reduction in the rate of the dividend withholding tax provide certifications regarding their eligibility for receiving such treaty benefits. (b) A non-U.S. Holder generally will not be subject to United States Federal income tax on any gain recognized on a disposition or conversion (a "disposition") of a Preferred Share unless (i) such gain is treated as dividend income (as described above under "Dividends"); (ii) the Company is or has been a "U.S. real property holding corporation" for United States Federal income tax purposes (which the Company has represented it is not and does not intend to become) and the non-U.S. Holder disposing of the share owned, directly or constructively, at any time during the five-year period preceding the disposition, more than five percent of the Preferred Shares or the Preferred Shares are not regularly traded (within the meaning of applicable Treasury Regulations) on an established securities market; (iii) the gain is effectively connected with a trade or business carried on by the non-U.S. Holder within the United States and, if a tax treaty applies, attributable to a United States permanent establishment maintained by the non-U.S. Holder; (iv) in the case of a non-U.S. Holder who is an individual, who holds the share as a capital asset and who is present in the United States for 183 days or more in the taxable year of the disposition, either (a) such non-U.S. Holder has a "tax home" (as defined for U.S. Federal income tax purposes) in the United States and the gain from the disposition is not attributable to an office or other fixed place of business maintained by such non-U.S. Holder outside of the United States or (b) the gain from the disposition is attributable to an office or The Money Store October 29, 1996 Page 7 other fixed place of business maintained by such non-U.S. Holder in the United States; or (v) the non-U.S. Holder is subject to tax pursuant to provisions of the Code applicable to certain United States expatriates. (c) Preferred Shares owned or treated as owned by an individual who is not a citizen or resident (as defined for United States Federal estate tax purposes) of the United States at the time of death will be includible in the individual's gross estate for United States Federal estate tax purposes unless an applicable estate tax treaty provides otherwise. (d) The Company must report annually to the IRS and to each non- U.S. Holder the amount of dividends paid to, and the tax withheld with respect to, such holder. These information reporting requirements apply regardless of whether withholding was reduced or eliminated by an applicable tax treaty. Copies of these information returns may also be made available under the provisions of a specific treaty or agreement to the tax authorities in the country in which the non-U.S. Holder resides. United States backup withholding tax (which generally is a withholding tax imposed at the rate of 31% on certain payments to persons that fail to furnish the information required under the United States information reporting requirements) will generally not apply to dividends paid on Preferred Shares to a non-U.S. Holder at an address outside the United States. The payment of the proceeds from the disposition of Preferred Shares to or through the United States office of a broker will be subject to information reporting and backup withholding at a rate of 31% unless the owner certifies, among other things, its status as a non-U.S. Holder under penalties of perjury or otherwise establishes an exemption. The payment of the proceeds from the disposition of Preferred Shares The Money Store October 29, 1996 Page 8 to or through a non-U.S. office of a broker will generally, except as noted below, not be subject to backup withholding and information reporting. In the case of proceeds from a disposition of Preferred Shares paid to or through a non-U.S. office of a U.S. broker or paid to or through a non-U.S. office of a non-U.S. broker that is (i) a "controlled foreign corporation" for United States Federal income tax purposes or (ii) a person 50% or more of whose gross income from all sources for a certain three-year period was effectively connected with a United States trade or business, (a) backup withholding may apply if the broker has actual knowledge that the owner is not a non-U.S. Holder and (b) information reporting will apply unless the broker has documentary evidence in its files that the owner is a non-U.S. Holder (unless the broker has actual knowledge to the contrary). Any amounts withheld under the backup withholding rules from a payment to a non-U.S. Holder will be refunded (or credited against the non- U.S. Holder's United States Federal income tax liability, if any), provided that the required information is furnished to the IRS. On April 15, 1996, the Service issued proposed regulations that would change in certain respects the certification requirements in respect of claims for exceptions from information reporting and backup withholding in respect of payments made after December 31, 1997 on the Preferred Shares. It is not currently possible to predict whether, or in what form, any such regulations ultimately will be adopted. We note that our opinions expressed herein are based on our review of the documents described above, the statements and representations referred to above, the provisions of the Code, the regulations, published rulings and announcements thereunder, and the judicial interpretations thereof currently in effect. Any change in applicable law or any of the facts and circumstances described in the Registration Statement, or inaccuracy of any statements or representations on which we have relied, may effect the continuing validity of our opinions. This opinion does not address any tax consequences relating to the The Money Store October 29, 1996 Page 9 potential or actual effect of any proposed tax legislation. For example, legislation has been proposed that would (a) reduce the dividends-received deduction to 50%, (b) require that the 46-day holding period for the dividends- received deduction be satisfied for the period of time contemporaneous with each dividend payment and (c) amend portions of Sections 302 and 1059 of the Code and characterize non-pro rata redemptions otherwise eligible for the dividends received deduction as a sale of the stock redeemed. The Congressional statement proposing amendments to Sections 302 and 1059 indicated that the bill retained the existing regulatory authority of the Treasury Department to issue regulations which, among other things, would subject certain reorganizations, including recapitalizations, and similar transactions to the provisions of the bill. It is not possible to predict whether and, if so, in what form any such legislation will be enacted into law and, if enacted, whether it would affect the tax treatment of the Preferred Shares, as discussed above. This opinion will not be binding on the Service, and there can be no assurance that the Service will not challenge the conclusions stated herein or that, if the issue were decided in court, such a challenge would not ultimately succeed. The Company does not intend to seek a ruling from the Service with respect to any of these tax consequences. We consent to the filing of this opinion as an exhibit to the Registration Statement and to the reference to us in the Registration Statement with respect thereto. This opinion is solely for the benefit of the addressee hereof and may not be relied upon in any manner by any other person or entity. Very truly yours, /s/ Stroock & Stroock & Lavan STROOCK & STROOCK & LAVAN EX-10.1 5 CREDIT AGREEMENT INCLUDING AMENDMENT #1 THERETO EXECUTION COPY EXHIBIT 10.1 U.S. $400,000,000 ================================================================================ CREDIT AGREEMENT ================================================================================ dated as of August 16, 1996 among THE MONEY STORE INC., as Borrower, VARIOUS FINANCIAL INSTITUTIONS, as Lenders, and FIRST UNION NATIONAL BANK OF NORTH CAROLINA, as Documentation Agent and THE FIRST NATIONAL BANK OF CHICAGO, as Administrative Agent ================================================================================ TABLE OF CONTENTS
PAGE ARTICLE I DEFINITIONS........................................................................... vii ARTICLE II THE CREDITS.......................................................................... 15 2.1. Commitments............................................................................ 15 2.2. Required Payments; Termination......................................................... 15 2.3. Ratable Loans.......................................................................... 16 2.4. Types of Advances...................................................................... 16 2.5. Facility Fee; Reductions in Aggregate Commitment; Syndication Fee...................... 16 2.6. Minimum Amount of Each Advance......................................................... 16 2.7. Principal Payments..................................................................... 17 2.8. Method of Selecting Types and Eurodollar Interest Periods for New Advances............. 17 2.9. Conversion and Continuation of Outstanding Advances.................................... 18 2.10. Changes in Interest Rate, etc.......................................................... 18 2.11. Rates Applicable After Default......................................................... 18 2.12. Method of Payment...................................................................... 19 2.13. Notes; Telephonic Notices.............................................................. 19 2.14. Interest Payment Dates; Interest and Fee Basis......................................... 20 2.15. Notification of Advances, Interest Rates, Prepayments and Commitment Reductions........ 20 2.16. Lending Installations.................................................................. 20 2.17. Non-Receipt of Funds by the Agent...................................................... 20 2.18. Risk Participation in Facility B....................................................... 21 ARTICLE III CHANGE IN CIRCUMSTANCES............................................................. 21 3.1. Yield Protection....................................................................... 21 3.2. Changes in Capital Adequacy Regulations................................................ 22 3.3. Availability of Types of Advances...................................................... 22 3.4. Funding Indemnification................................................................ 23 3.5. Lender Statements; Survival of Indemnity............................................... 23 ARTICLE IV CONDITIONS PRECEDENT; WITHHOLDING TAX EXEMPTION...................................... 23 4.1. Initial Advance........................................................................ 23 4.2. Each Advance........................................................................... 24 4.3. Withholding Tax Exemption.............................................................. 25 ARTICLE V REPRESENTATIONS AND WARRANTIES........................................................ 25 5.1. Corporate Existence and Standing....................................................... 25 5.2. Authorization and Validity............................................................. 25 5.3. No Conflict; Government Consent........................................................ 25 5.4. Financial Statements................................................................... 26 5.5. Material Adverse Change................................................................ 26 5.6. Taxes.................................................................................. 26 5.7. Litigation and Contingent Obligations.................................................. 26 5.8. Subsidiaries........................................................................... 26 5.9. ERISA.................................................................................. 27 5.10. Accuracy of Information................................................................ 27 5.11. Regulation U........................................................................... 27 5.12. Material Agreements.................................................................... 27 5.13. Compliance With Laws................................................................... 27
i 5.14. Ownership of Properties................................................................ 27 5.15. Assets; Prohibited Transactions........................................................ 27 5.16. Environmental Matters.................................................................. 27 5.17. Investment Company Act................................................................. 28 5.18. Public Utility Holding Company Act..................................................... 28 5.19. Subordinated Indebtedness.............................................................. 28 5.20. Insurance.............................................................................. 28 ARTICLE VI COVENANTS............................................................................ 28 6.1. Financial Reporting.................................................................... 28 6.2. Use of Proceeds........................................................................ 30 6.3. Notice of Default...................................................................... 30 6.4. Conduct of Business.................................................................... 30 6.5. Taxes.................................................................................. 30 6.6. Insurance.............................................................................. 30 6.7. Compliance with Laws................................................................... 30 6.8. Maintenance of Properties.............................................................. 30 6.9. Maintenance of Books; Inspection....................................................... 31 6.10. Merger................................................................................. 31 6.11. Sale of Assets......................................................................... 31 6.12. Investments and Acquisitions........................................................... 31 6.13. Liens.................................................................................. 32 6.14. Subsidiary Indebtedness................................................................ 33 6.15. Affiliates............................................................................. 33 6.16. Subordinated Indebtedness.............................................................. 34 6.17. Contingent Obligations................................................................. 34 6.18. Distributions.......................................................................... 34 6.19. Subsidiary Preferred Stock............................................................. 35 6.20. Financial Covenants.................................................................... 35 6.21. Underwriting Standards................................................................. 36 ARTICLE VII DEFAULTS............................................................................ 36 ARTICLE VIII ACCELERATION, WAIVERS, AMENDMENTS AND REMEDIES..................................... 38 8.1. Acceleration........................................................................... 38 8.2. Amendments............................................................................. 39 8.3. Preservation of Rights................................................................. 39 ARTICLE IX GENERAL PROVISIONS................................................................... 40 9.1. Survival of Representations............................................................ 40 9.2. Governmental Regulation................................................................ 40 9.3. Taxes.................................................................................. 40 9.4. Headings............................................................................... 40 9.5. Entire Agreement....................................................................... 40 9.6. Several Obligations; Benefits of this Agreement........................................ 40 9.7. Expenses; Indemnification.............................................................. 40 9.8. Numbers of Documents................................................................... 41 9.9. Accounting............................................................................. 41 9.10. Severability of Provisions............................................................. 41 9.11. Nonliability of Lenders................................................................ 41 9.12. Nonreliance............................................................................ 42
ii ARTICLE X THE AGENT............................................................................. 42 10.1. Appointment; Nature of Relationship.................................................... 42 10.2. Powers................................................................................. 42 10.3. General Immunity....................................................................... 42 10.4. No Responsibility for Loans, Recitals, etc............................................. 42 10.5. Action on Instructions of Lenders...................................................... 43 10.6. Employment of Agents and Counsel....................................................... 43 10.7. Reliance on Documents; Counsel......................................................... 43 10.8. Agent's Reimbursement and Indemnification.............................................. 43 10.9. Notice of Default...................................................................... 44 10.10. Rights as a Lender..................................................................... 44 10.11. Lender Credit Decision................................................................. 44 10.12. Successor Agent........................................................................ 44 10.13. Agent's Fee; Documentation Agent's Fee................................................. 45 10.14 Duties and Rights of Documentation Agent............................................... 45 ARTICLE XI SETOFF; RATABLE PAYMENTS............................................................. 45 11.1. Setoff................................................................................. 45 11.2. Ratable Payments....................................................................... 45 ARTICLE XII BENEFIT OF AGREEMENT; ASSIGNMENTS; PARTICIPATIONS................................... 46 12.1. Successors and Assigns................................................................. 46 12.2. Participations......................................................................... 46 12.2.1. Permitted Participants; Effect......................................................... 46 12.2.2. Voting Rights.......................................................................... 46 12.2.3. Benefit of Setoff...................................................................... 47 12.3. Assignments............................................................................ 47 12.3.1. Permitted Assignments.................................................................. 47 12.3.2. Effect; Effective Date................................................................. 47 12.4. Dissemination of Information........................................................... 48 12.5. Tax Treatment.......................................................................... 48 ARTICLE XIII NOTICES............................................................................ 48 13.1. Notices................................................................................ 48 13.2. Change of Address...................................................................... 48
iii ARTICLE XIV COUNTERPARTS........................................................................ 48 ARTICLE XV CHOICE OF LAW, CONSENT TO JURISDICTION, WAIVER OF JURY TRIAL......................... 49 15.1. CHOICE OF LAW......................................................................... 49 15.2. CONSENT TO JURISDICTION............................................................... 49 15.3. WAIVER OF JURY TRIAL.................................................................. 49
iv EXHIBIT A-1 FACILITY A NOTE EXHIBIT A-2 FACILITY B NOTE EXHIBIT B FORM OF OPINION EXHIBIT C COMPLIANCE CERTIFICATE SCHEDULE I TO COMPLIANCE CERTIFICATE EXHIBIT D ASSIGNMENT AGREEMENT EXHIBIT I NOTICE OF ASSIGNMENT EXHIBIT E LOAN/CREDIT RELATED MONEY TRANSFER INSTRUCTION EXHIBIT F SUBSIDIARY GUARANTY SCHEDULE 1 SUBSIDIARIES AND OTHER INVESTMENTS SCHEDULE 2 INDEBTEDNESS AND LIENS SCHEDULE 3 COMMITMENT FEES v CREDIT AGREEMENT This Agreement, dated as of August 16, 1996, is among The Money Store Inc., the Lenders, First Union National Bank of North Carolina, as Documentation Agent, and The First National Bank of Chicago, as Administrative Agent. The parties hereto agree as follows: ARTICLE I DEFINITIONS ----------- As used in this Agreement: "Acquisition" means any transaction, or any series of related transactions, ----------- consummated on or after the date of this Agreement, by which the Borrower or any of its Subsidiaries (i) acquires any going business or all or substantially all of the assets of any firm, corporation or limited liability company, or division thereof, whether through purchase of assets, merger or otherwise or (ii) directly or indirectly acquires (in one transaction or as the most recent transaction in a series of transactions) at least a majority (in number of votes) of the Securities of a corporation which have ordinary voting power for the election of directors (other than Securities having such power only by reason of the happening of a contingency) or a majority (by percentage or voting power) of the outstanding ownership interests of a partnership or limited liability company. "Advance" means a borrowing hereunder (or conversion or continuation thereof) ------- consisting of the aggregate amount of the several Loans made on the same Borrowing Date (or date of conversion or continuation) by the Lenders (or in the case of a borrowing of Facility B Loans, by the Facility B Lenders) to the Borrower of the same Type and, in the case of Eurodollar Advances, for the same Eurodollar Interest Period. "Affiliate" of any Person means any other Person directly or indirectly --------- controlling, controlled by or under common control with such Person. A Person shall be deemed to control another Person if the controlling Person owns 5% or more of any class of voting securities (or other ownership interests) of the controlled Person or possesses, directly or indirectly, the power to direct or cause the direction of the management or policies of the controlled Person, whether through ownership of stock, by contract or otherwise. "Agent" means The First National Bank of Chicago in its capacity as ----- administrative agent for the Lenders pursuant to Article X, and not in its --------- individual capacity as a Lender, and any successor Agent appointed pursuant to Article X. - --------- "Aggregate Commitment" means the aggregate of the Commitments of all the -------------------- Lenders, as reduced from time to time pursuant to the terms hereof. The Aggregate Commitment initially shall be $400,000,000. "Aggregate Facility B Commitment" means the aggregate of the Facility B ------------------------------- Commitments of all the Facility B Lenders, as reduced from time to time pursuant to the terms hereof. The Aggregate Facility B Commitment initially shall be $30,000,000. The Aggregate Facility B Commitment constitutes a subcommitment of, and is not in addition to, the Aggregate Commitment. "Agreement" means this credit agreement, as it may be amended or modified and --------- in effect from time to time. "Alternate Base Rate" means, for any day, a rate of interest per annum equal ------------------- to the higher of (i) the Corporate Base Rate for such day and (ii) the sum of Federal Funds Effective Rate for such day plus 1/2% per annum. "Applicable Facility Fee Percentage" means for each day on which (i) Level I ---------------------------------- Status exists, 0.175%, (ii) Level II Status exists, 0.200%, (iii) Level III Status exists, 0.250% and (iv) Level IV Status exists, 0.300%. The Applicable Facility Fee Percentage shall be adjusted (upward or downward, as applicable) effective on the first Business Day following public issuance of, or announcement of a change in, the rating by S&P or Moody's of the Borrower's senior, unsecured long-term debt which results in a change in the applicable status level. "Applicable Margin" means for each day on which (i) Level I Status exists, ----------------- 0.325%, (ii) Level II Status exists, 0.500%, (iii) Level III Status exists, 0.600% and (iv) Level IV Status exists, 0.750%. The Applicable Margin shall be adjusted (upward or downward, as applicable) effective on the first Business Day following public issuance of, or announcement of a change in, the rating by S&P or Moody's of the Borrower's senior, unsecured long-term debt. "Article" means an article of this Agreement unless another document is ------- specifically referenced. "Authorized Officer" means any of the President, Chief Financial Officer, ------------------ Treasurer or any Vice President of the Borrower, acting singly. "Borrower" means The Money Store Inc., a New Jersey corporation, and its -------- successors and assigns. "Borrowing Date" means a date on which an Advance is made hereunder. -------------- "Borrowing Notice" is defined in Section 2.8. ---------------- ----------- "Business Day" means (i) with respect to any borrowing, payment or rate ------------ selection of Eurodollar Advances, a day (other than a Saturday or Sunday) on which banks generally are open in Chicago and New York for the conduct of substantially all of their commercial lending activities and on which dealings in United States dollars are carried on in the London interbank market and (ii) for all other purposes, a day (other than a Saturday or Sunday) on which banks generally are open in Illinois, New York, New Jersey and North Carolina for the conduct of substantially all of their commercial lending activities. "Capitalized Lease" of a Person means any lease of Property by such Person as ----------------- lessee which would be capitalized on a balance sheet of such Person prepared in accordance with GAAP. "Capitalized Lease Obligations" of a Person means the amount of the ----------------------------- obligations of such Person under Capitalized Leases which would be shown as a liability on a balance sheet of such Person prepared in accordance with GAAP. "Change" is defined in Section 3.2. ------ ----------- "Change in Control" means any change in the "beneficial ownership" (within the ----------------- meaning of Rule 13d-3 of the Securities and Exchange Commission under the Securities Exchange Act of 1934) of the capital stock of the Borrower which results in any Person, or two or more Persons acting in concert (other than the Turtletaub Group), together with any such Person's "affiliates" and "associates" (as each of such terms is defined in Rule 12b-2 of the Securities and Exchange Commission under the Securities Exchange Act of 1934) becoming the "beneficial owner" (as defined in Rule 13d-3 of the Securities and Exchange Commission under the Securities Exchange Act of 1934) of 40% or more of the outstanding shares of Voting Stock of the Borrower. "Code" means the Internal Revenue Code of 1986, as amended, reformed or ---- otherwise modified from time to time. 2 "Commitment" means, for each Lender, the obligation of such Lender to make ---------- Loans not exceeding the amount set forth opposite its signature below or as set forth in any Notice of Assignment relating to any assignment that has become effective pursuant to Section 12.3.2, as such amount may be modified from time -------------- to time pursuant to the terms hereof. "Condemnation" is defined in Section 7.8. ------------ ----------- "Consolidated Adjusted Tangible Net Worth" at any time of determination means ---------------------------------------- (a) the aggregate shareholders' equity of the Borrower and its Subsidiaries (other than in respect of Disqualified Stock) determined in accordance with GAAP, minus (b) goodwill of the Borrower and its Subsidiaries, plus (c) the ----- ---- outstanding principal amount of Subordinated Indebtedness of the Borrower and its Subsidiaries at such time. "Consolidated Capital" at any time of determination means Consolidated -------------------- Adjusted Tangible Net Worth plus the amount deducted in determining Consolidated ---- Receivables in respect of allowance for credit losses determined in accordance with GAAP. "Consolidated Cash Flow" for any period means the sum of (a) all cash released ---------------------- to the Borrower and its Subsidiaries from Consolidated Restricted Cash during such period (other than any such cash released in consideration of loans or other receivables (or an interest therein) transferred by the Borrower or any of its Subsidiaries) and (b) all cash collections of Consolidated Receivables and Consolidated Eligible Loans received by the Borrower and its Subsidiaries during such period. "Consolidated Eligible Loans" at any time of determination means the aggregate --------------------------- outstanding principal amount of all consumer and commercial loans owned by the Borrower or any of its Subsidiaries at such time which are held for sale which satisfy all of the following criteria: (a) the Borrower or the applicable Subsidiary has full right to pledge or otherwise transfer such loan (including, without limitation, all related documents, underlying collateral and other Property) and the same is not then transferred or subject to any commitment to transfer to any Person; (b) the Borrower's or the applicable Subsidiary's right, title and interest in and to such loan and related Property is not subject to any Lien of any kind and, without limiting the foregoing, is not on deposit, held in reserve or otherwise serving as credit or other enhancement for the benefit of Persons other than the Borrower and its Subsidiaries; and (c) such loan and related Property meets both the Borrower's underwriting standards as in effect on the date of calculation and eligibility requirements for the transfer of such loan and related Property to a trust or other special purpose entity in a securitization of the type customarily entered into by the Borrower and its Subsidiaries as of the date of calculation; provided, however, that, for a -------- ------- period of up to 90 days from the origination or acquisition of a loan by the Borrower or the applicable Subsidiary, such loan shall not be deemed ineligible solely because such loan and related Property fails to satisfy the condition contained in this clause (c) if and so long as the Borrower or the applicable ---------- Subsidiary reasonably expects such loan and related Property to satisfy such condition by the expiration of such 90 day period. "Consolidated Excess Servicing Asset" at any time of determination means the ----------------------------------- aggregate, for all consumer and commercial loans sold by the Borrower and its Subsidiaries, of the present value of the excess, if any, of (x) the interest charged by the Borrower or such Subsidiary to the obligor on such loan over (y) the sum of the interest payable to the transferee of such loan in respect of such loan (or, in the case of a sale by the Borrower or the applicable Subsidiary to a trust or other special purpose entity, the yield payable to the investors of such trust or other special purpose entity in respect of such loan) and any normal loan servicing fees payable to the servicer of such loan, all as determined at such time in accordance with GAAP in conformity with the line item entitled "excess servicing asset" in the consolidated statements of financial condition referred to in Section 5.4 (including the prepayment assumptions ----------- therein). "Consolidated Fixed Charges" means, for any period, the sum, computed on a -------------------------- consolidated basis for the Borrower and its Subsidiaries, without duplication, of (a) all interest (including, without limitation, interest, 3 sometimes referred to as "warehouse interest expense," accruing on amounts outstanding under lines of credit used to finance loans prior to sale thereof to third parties), accruing during such period on indebtedness for borrowed money (including any Contingent Obligations in respect of such indebtedness), together with that portion of all rental payments accruing during such period in respect of Capitalized Leases of the Borrower and its Subsidiaries which is allocated to interest expense in accordance with GAAP, plus (b) the aggregate amount of ---- fixed rents payable during such period by the Borrower or any of its Subsidiaries as lessee or sublessee under a lease of Property, or payable by another Person as such lessee or sublessee, if payment of such rents is guaranteed by the Borrower or any of its Subsidiaries (in each case for purposes of this clause (b) other than in respect of Capitalized Leases), plus (c) the ---------- ---- aggregate amount of any dividends, distributions or other payments paid in respect of any preferred stock of the Borrower or any of its Subsidiaries. "Consolidated Funded Debt" at any time of determination means consolidated ------------------------ Indebtedness of the Borrower and its Subsidiaries as of such date of determination. "Consolidated Net Income" means, for any period, the net income (or loss) of ----------------------- the Borrower and its Subsidiaries on a consolidated basis for such period taken as a single accounting period determined in accordance with GAAP. "Consolidated Other Cash Producing Assets" at any time of determination means ---------------------------------------- the sum, without duplication, of (a) Consolidated Restricted Cash plus (b) ---- Consolidated Receivables plus (c) Consolidated Excess Servicing Asset at such ---- time. "Consolidated Pre-Tax Income" for any period, means net earnings before income --------------------------- taxes of the Borrower and its Subsidiaries determined on a consolidated basis, but excluding: (i) the amount by which capital gains and other extraordinary credits exceed capital losses and extraordinary charges; (ii) any gain arising from any write-up of assets or from the acquisition of any Securities of the Borrower or any of its Subsidiaries; (iii) earnings of any Person realized prior to the date it becomes a Subsidiary of the Borrower or its assets are acquired by merger or otherwise by the Borrower or a Subsidiary of the Borrower; (iv) earnings of any Person (other than a Subsidiary of the Borrower) in which the Borrower or any of its Subsidiaries has an ownership interest, not received by the Borrower or such Subsidiary in the form of cash distributions, provided that any earnings excluded pursuant to -------- this clause (iv) may be included in the year in which they are actually ----------- received as cash distributions; (v) earnings denominated in any currency which is not freely convertible into United States dollars, provided that any earnings excluded -------- pursuant to this clause (v) may be included in the year in which they ---------- are actually converted into United States dollars; (vi) any portion of the earnings of any Subsidiary of the Borrower which for any reason is unavailable for payment of dividends to the Borrower or any other Subsidiary of the Borrower; (vii) earnings of any Person (other than a Subsidiary of the Borrower) realized prior to the date it acquires the assets of the Borrower by merger or otherwise; and (viii) any gain arising from the termination of a Plan. 4 "Consolidated Receivables" at any time of determination means all receivables ------------------------ of the Borrower and its Subsidiaries at such time (net of allowances for credit losses), determined in accordance with GAAP and in conformity with the line item entitled "receivables net of an allowance for credit losses" in the consolidated statements of financial condition referred to in Section 5.4, but excluding the ----------- aggregate principal amount of consumer and commercial loans owned by the Borrower or any of its Subsidiaries at such time. "Consolidated Restricted Cash" has the meaning assigned to such term in the ---------------------------- definition "Consolidated Unrestricted Cash" herein. ------------------------------ "Consolidated Tangible Net Worth" at any time of determination means, ------------------------------- Consolidated Adjusted Tangible Net Worth minus the outstanding principal amount ----- of Subordinated Indebtedness of the Borrower and its Subsidiaries at such time. "Consolidated Unrestricted Cash" at any time of determination means (a) the ------------------------------ aggregate amount of cash and cash equivalents of the Borrower and its Subsidiaries at such time minus (b) any such amounts which are held in trust or ----- in any fiduciary capacity in whole or in part for the benefit of Persons other than the Borrower and its Subsidiaries or which are on deposit or otherwise acting as a reserve, cash collateral or other form of credit or other enhancement in respect of loans or other Property (or any interest therein) transferred by the Borrower or any of its Subsidiaries to Persons other than the Borrower and its Subsidiaries (such amount described in this clause (b) is ---------- referred to herein as "Consolidated Restricted Cash"), all as calculated in ---------------------------- accordance with GAAP in the same manner as the line item "cash and cash equivalents" in the consolidated statements of financial condition of the Borrower and its Subsidiaries referred to in Section 5.4, excluding the portion ----------- of such amount referred to as "restricted". "Consolidated Unsecured Debt" at any time of determination means Consolidated --------------------------- Funded Debt minus any Indebtedness secured by Liens permitted pursuant to ----- Section 6.13(a)(vi). - ------------------- "Contingent Obligation" of a Person means any agreement, undertaking or --------------------- arrangement by which such Person assumes, guarantees, endorses, contingently agrees to purchase or provide funds for the payment of, or otherwise becomes or is contingently liable upon, the obligation or liability of any other Person, or agrees to maintain the net worth or working capital or other financial condition of any other Person, or otherwise assures any creditor of such other Person against loss, including, without limitation, any comfort letter, operating agreement, take-or-pay contract or discount with recourse, but excluding (i) endorsements of negotiable instruments for deposit or collection in the ordinary course of business of the Borrower and its Subsidiaries and (ii) any recourse obligation of the Borrower or any of its Subsidiaries with respect to loans or other receivables sold to trusts or other special purpose entities in securitization transactions entered into in the ordinary course of business of the Borrower and its Subsidiaries to the extent such recourse obligation either (x) is in respect of a breach of representation made by the Borrower or any of its Subsidiaries relating to such sale of receivables or (y) constitutes the repurchase obligations reported in the Borrower's consolidated financial statements as of December 31, 1995. Contingent Obligations of a Person shall include, without limitation, the stated amount of each letter of credit, surety bond and other similar instrument issued by such Person. The amount of any Contingent Obligation of a Person shall be deemed to be the maximum amount for which such Person may be liable, whether upon the occurrence of any contingency or otherwise, under or by virtue of such Contingent Obligation. "Conversion/Continuation Notice" is defined in Section 2.9. ------------------------------ ----------- "Controlled Group" means all members of a controlled group of corporations and ---------------- all trades or businesses (whether or not incorporated) under common control which, together with the Borrower or any of its Subsidiaries, are treated as a single employer under Section 414 of the Code. 5 "Corporate Base Rate" means a rate per annum equal to the corporate base rate ------------------- of interest announced by First Chicago from time to time, changing when and as said corporate base rate changes. "Default" means an event described in Article VII. ------- ----------- "Designated Subordinated Indebtedness" means that certain Note Purchase ------------------------------------ Agreement dated September 2, 1991 between the Borrower and American Bankers Life Assurance Company of Florida regarding that certain Senior Subordinated Note in the initial amount of $2,000,000. "Distribution" means: ------------ (1) dividends or other payments or distributions (including any prepayment or sinking fund payment) made directly or indirectly on capital stock of the Borrower (except dividends or other distributions payable solely in such stock); and (2) the redemption, purchase, acquisition or other retirement of capital stock of the Borrower or of warrants, rights or other options to purchase or acquire such stock (except when solely in exchange for such stock, warrants, rights or other options) unless made, contemporaneously, solely from the net proceeds of a sale of such stock or warrants, rights or other options to purchase or acquire such stock. Any Distribution of Property other than cash shall be valued at the greater of book or fair market value (as determined in the good faith judgment of the Borrower's Board of Directors). "Disqualified Stock" means with respect to any Person, any equity security or ------------------ other similar interest of such Person which by its terms, by the terms of any Security into which it is convertible or exchangeable, or otherwise, is, or upon the happening of an event would be, (a) required to be redeemed (i) on or prior to the Facility Termination Date or (ii) at the option of the holder thereof, or (b) exchangeable or convertible, directly or indirectly, into any Security other than (i) non-redeemable common stock or (ii) preferred stock which is not so required to be redeemed on or prior to the Facility Termination Date or at the option of the holder of such preferred stock. "Environmental Laws" means any and all federal, state, local and foreign ------------------ statutes, laws, judicial decisions, regulations, ordinances, rules, judgments, orders, decrees, plans, injunctions, permits, concessions, grants, franchises, licenses, agreements and other governmental restrictions relating to (i) the protection of the environment, (ii) the effect of the environment on human health, (iii) emissions, discharges or releases of pollutants, contaminants, hazardous substances or wastes into surface water, ground water or land, or (iv) the manufacture, processing, distribution, use, treatment, storage, disposal, transport or handling of pollutants, contaminants, hazardous substances or wastes or the clean-up or other remediation thereof. "ERISA" means the Employee Retirement Income Security Act of 1974, as amended ----- from time to time, and any rule or regulation issued thereunder. "Eurodollar Advance" means an Advance which bears interest at a Eurodollar ------------------ Rate. Only Facility A Advances may be Eurodollar Advances. "Eurodollar Base Rate" means, with respect to a Eurodollar Advance for the -------------------- relevant Eurodollar Interest Period, the rate determined by the Agent to be the rate at which First Chicago offers to place deposits in U.S. dollars with first- class banks in the London interbank market at approximately 11 a.m. (London time) two Business Days prior to the first day of such Eurodollar Interest Period, in the approximate amount of First Chicago's relevant Eurodollar Loan and having a maturity approximately equal to such Eurodollar Interest Period. 6 "Eurodollar Interest Period" means, with respect to a Eurodollar Advance, a -------------------------- period of one, two, three or six months commencing on a Business Day selected by the Borrower pursuant to this Agreement. Such Eurodollar Interest Period shall end on the day which corresponds numerically to such date one, two, three or six months thereafter; provided, however, that if there is no such numerically -------- ------- corresponding day in such next, second, third or sixth succeeding month, such Eurodollar Interest Period shall end on the last Business Day of such next, second, third or sixth succeeding month. If a Eurodollar Interest Period would otherwise end on a day which is not a Business Day, such Eurodollar Interest Period shall end on the next succeeding Business Day; provided, however, that if -------- ------- said next succeeding Business Day falls in a new calendar month, such Eurodollar Interest Period shall end on the immediately preceding Business Day. "Eurodollar Loan" means a Loan which bears interest at a Eurodollar Rate. --------------- "Eurodollar Rate" means, with respect to a Eurodollar Advance for the relevant --------------- Eurodollar Interest Period, the sum of (i) the quotient of (a) the Eurodollar Base Rate applicable to such Eurodollar Interest Period, divided by (b) one minus the Reserve Requirement (expressed as a decimal) applicable to such Eurodollar Interest Period, plus (ii) the Applicable Margin in effect from time to time during such Eurodollar Interest Period. The Eurodollar Rate shall be rounded to the next higher multiple of 1/16 of 1% if the rate is not such a multiple. "Excluded Subsidiary" means a Subsidiary of the Borrower designated as such ------------------- with the prior written consent of the Required Lenders. By its execution of this Agreement, each Lender hereby consents to the designation as an Excluded Subsidiary of each Subsidiary designated with an asterisk on Schedule 1 attached ---------- hereto. "Facility A Advance" means an Advance consisting of Facility A Loans. ------------------ "Facility A Commitment" is defined in Section 2.1(a). --------------------- -------------- "Facility A Loan" is defined in Section 2.1(a). --------------- -------------- "Facility B Advance" means an Advance consisting of Facility B Loans. ------------------ "Facility B Commitment" means, for each Facility B Lender, the obligation of --------------------- such Facility B Lender to make Facility B Loans not exceeding the amount set forth opposite its signature below under the heading "Facility B" or as set forth and so designated in any Notice of Assignment relating to any assignment of such Facility B Lender's Facility B Commitment that has become effective pursuant to Section 12.3.2, as such amount may be modified from time to time -------------- pursuant to the terms hereof. "Facility B Lenders" means First Chicago and First Union and their respective ------------------ successors and assigns. "Facility B Loan" is defined in Section 2.1(b). --------------- -------------- "Facility Termination Date" means August 16, 1999 or any earlier date on which ------------------------- the Aggregate Commitment (including, without limitation, the Aggregate Facility B Commitment) is reduced to zero or otherwise terminated pursuant to the terms hereof. "Federal Funds Effective Rate" means, for any day, an interest rate per annum ---------------------------- equal to the weighted average of the rates on overnight Federal funds transactions with members of the Federal Reserve System arranged by Federal funds brokers on such day, as published for such day (or, if such day is not a Business Day, for the immediately preceding Business Day) by the Federal Reserve Bank of New York, or, if such rate is not so published for any day which is a Business Day, the average of the quotations at approximately 10 a.m. (Chicago 7 time) on such day on such transactions received by the Agent from three Federal funds brokers of recognized standing selected by the Agent in its sole discretion. "First Chicago" means The First National Bank of Chicago in its individual ------------- capacity, and its successors. "First Union" means First Union National Bank of North Carolina in its ----------- individual capacity, and its successors. "Floating Rate Advance" means an Advance which bears interest at the Alternate --------------------- Base Rate. "Floating Rate Loan" means a Loan which bears interest at the Alternate Base ------------------ Rate. "GAAP" means generally accepted accounting principles applied in a manner ---- consistent with that used in preparing the financial statements referred to in Section 5.4, as in effect from time to time for purposes of the financial - ----------- reporting requirements set forth in Section 6.1 and, subject to Section 9.9, any ----------- ----------- other provisions of this Agreement. "Guarantor" means each Subsidiary of the Borrower (other than an Excluded --------- Subsidiary), and its respective successors and assigns. "Guaranty" means that certain Subsidiary Guaranty dated as of August 16, 1996 -------- executed by each Guarantor in favor of the Agent, for the ratable benefit of the Lenders, as it may be amended or modified and in effect from time to time. "Indebtedness" of a Person means such Person's (i) obligations for borrowed ------------ money, (ii) obligations representing the deferred purchase price of Property or services (other than accounts payable arising in the ordinary course of such Person's business payable on terms customary in the trade) and obligations to repurchase loans or other receivables transferred by such Person as a result of a breach of representation, warranty or covenant by such Person, (iii) obligations, whether or not assumed, secured by Liens or payable out of the proceeds or production from Property now or hereafter owned or acquired by such Person, (iv) obligations which are evidenced by notes, acceptances, or other instruments, (v) reimbursement obligations in respect of drawings under any letter of credit, surety bond, bankers acceptance or other similar instrument issued for the account of such Person, (vi) Contingent Obligations, (vii) the aggregate redemption price of all Disqualified Stock, (viii) Capitalized Lease Obligations, and (ix) Synthetic Lease Obligations. "Investment" of a Person means any loan, advance (other than commission, ---------- travel and similar advances to officers and employees made in the ordinary course of business), extension of credit (other than accounts receivable arising in the ordinary course of business on terms customary in the trade) or contribution of capital by such Person; stocks, bonds, mutual funds, partnership interests, notes, debentures or other Securities owned by such Person; any deposit accounts and certificate of deposit owned by such Person; and structured notes, derivative financial instruments and other similar instruments or contracts owned by such Person. "Lenders" means the lending institutions listed on the signature pages of this ------- Agreement and their respective successors and assigns. "Lending Installation" means, with respect to a Lender or the Agent, any -------------------- office, branch, subsidiary or affiliate of such Lender or the Agent. "Level I Status" exists at any date if, at such date, the Borrower has a -------------- senior, unsecured long-term debt rating (without any third-party credit enhancement with respect to such debt) from either S&P or Moody's and such debt is rated (x) BBB+ or better by S&P or (y) Baa1 or better by Moody's. 8 "Level II Status" exists at any date if, at such date, Level I Status does not --------------- exist, the Borrower has a senior, unsecured long-term debt rating (without any third-party credit enhancement with respect to such debt) from either S&P or Moody's and such debt is rated (x) BBB by S&P or (y) Baa2 by Moody's. "Level III Status" exists at any date if, at such date, neither Level I nor ---------------- Level II Status exists, the Borrower has a senior, unsecured long-term debt rating (without any third-party credit enhancement with respect to such debt) from either S&P or Moody's, and such debt is rated (x) BBB- by S&P or (y) Baa3 by Moody's. "Level IV Status" exists at any date if, at such date, none of Level I, Level --------------- II or Level III Status exists. "Lien" means any interest in Property securing an obligation owed to, or a ---- claim by, a Person other than the owner of the Property, whether the interest is based on common, statute or contract and including any lien, mortgage, pledge, hypothecation, assignment, deposit arrangement, encumbrance or preference, priority or other security agreement or preferential arrangement of any kind or nature whatsoever (including, without limitation, the interest of a vendor or lessor under any conditional sale, Capitalized Lease or other title retention agreement or in respect of Synthetic Lease Obligations). The term "Lien" shall ---- include reservations, exceptions, encroachments, easements, rights-of-way, covenants, conditions, restrictions, leases and other title exceptions and encumbrances affecting Property, but shall not be deemed to include a negative pledge clause prior to such time, if any, as such clause purports to impose a security interest lien on any Property of the Borrower or any Subsidiary of the Borrower. For the purposes of this Agreement, the Borrower or a Subsidiary of the Borrower shall be deemed to be the owner of any Property which it has acquired or holds subject to a Capitalized Lease, Synthetic Lease or 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, and such retention or vesting shall be deemed to create a Lien on the Property. "Loan" means as the context may require or allow, a Facility A Loan or a ---- Facility B Loan (or any conversion or continuation thereof). "Loan Documents" means this Agreement, the Notes, the Guaranty and the other -------------- documents and agreements contemplated hereby and executed by the Borrower, any Guarantor or any of their respective officers, agents or Affiliates. "Material Adverse Effect" means a material adverse effect on (i) the business, ----------------------- Property, condition (financial or otherwise), results of operations, or prospects of the Borrower and its Subsidiaries taken as a whole, (ii) the ability of the Borrower or any Guarantor to perform its respective obligations under the Loan Documents, or (iii) the validity or enforceability of any of the Loan Documents or the rights or remedies of the Agent or the Lenders hereunder or thereunder. "Material Indebtedness" is defined in Section 7.5. --------------------- ----------- "Moody's" means Moody's Investors Service, Inc. ------- "Multiemployer Plan" means a Plan maintained pursuant to a collective ------------------ bargaining agreement or any other arrangement to which the Borrower or any member of the Controlled Group is a party to which more than one employer is obligated to make contributions. "Note" means, as the context may require or allow, either or both of (i) a ---- promissory note, in substantially the form of Exhibit A-1 hereto, duly executed ----------- by the Borrower and payable to the order of a Lender in the amount of its Commitment, or (ii) a promissory note, in substantially the form of Exhibit A-2 ----------- hereto, duly executed by the Borrower and payable to the order of a Facility B Lender in the amount of its Facility B 9 Commitment, in each case including any amendment, modification, renewal or replacement of such promissory note. "Notice of Assignment" is defined in Section 12.3.2. -------------------- -------------- "Obligations" means all unpaid principal of and accrued and unpaid interest on ----------- the Notes, all accrued and unpaid fees and all expenses, reimbursements, indemnities and other obligations of the Borrower to the Lenders or to any Lender, the Agent or any indemnified party hereunder arising under the Loan Documents. "Operating Lease Obligations" means, as at any date of determination, the --------------------------- amount obtained by aggregating the present values, determined in the case of each particular Operating Lease by applying a discount rate (which discount rate shall equal the discount rate which would be applied under GAAP if such Operating Lease were a Capitalized Lease) from the date on which each fixed lease payment is due under such Operating Lease to such date of determination, of all fixed lease payments due under all Operating Leases of the Borrower and its Subsidiaries. "Operating Lease" of a Person means any lease of Property (other than a --------------- Capitalized Lease) by such Person as lessee or sublessee or guarantor of another Person acting as a lessee or sublessee which has an original term (including any required renewals and any renewals effective at the option of the lessor) of one year or more. "Participants" is defined in Section 12.2.1. ------------ -------------- "Payment Date" means the fifteenth day of each calendar month. ------------ "PBGC" means the Pension Benefit Guaranty Corporation, or any successor ---- thereto. "Percentage" of any Lender means, at any time of determination, the percentage ---------- which such Lender's Commitment represents of the Aggregate Commitment at such time. "Person" means any natural person, corporation, firm, joint venture, ------ partnership, limited liability company, association, enterprise, trust or other entity or organization, or any government or political subdivision or any agency, department or instrumentality thereof. "Plan" means an employee pension benefit plan which is covered by Title IV of ---- ERISA or subject to the minimum funding standards under Section 412 of the Code as to which the Borrower or any member of the Controlled Group may have any liability. "Property" of a Person means any and all property, whether real, personal, -------- tangible, intangible, or mixed, of such Person, or other assets owned, leased or operated by such Person. "Purchasers" is defined in Section 12.3.1. ---------- -------------- "Quarterly Payment Date" means each March 31, June 30, September 30 and ---------------------- December 31. "Regulation D" means Regulation D of the Board of Governors of the Federal ------------ Reserve System as from time to time in effect and any successor thereto or other regulation or official interpretation of said Board of Governors relating to reserve requirements applicable to member banks of the Federal Reserve System. "Regulation U" means Regulation U of the Board of Governors of the Federal ------------ Reserve System as from time to time in effect and any successor or other regulation or official interpretation of said Board of Governors 10 relating to the extension of credit by banks for the purpose of purchasing or carrying margin stocks applicable to member banks of the Federal Reserve System. "Reportable Event" means a reportable event as defined in Section 4043 of ---------------- ERISA and the regulations issued under such section, with respect to a Plan, excluding, however, such events as to which the PBGC by regulation waived the requirement of Section 4043(a) of ERISA that it be notified within 30 days of the occurrence of such event; provided, however, that a failure to meet the -------- ------- minimum funding standard of Section 412 of the Code and of Section 302 of ERISA shall be a Reportable Event regardless of the issuance of any such waiver of the notice requirement in accordance with either Section 4043(a) of ERISA or Section 412(d) of the Code. "Required Lenders" means Lenders in the aggregate having at least 66-2/3% of ---------------- the Aggregate Commitment or, if the Aggregate Commitment has been terminated, Lenders in the aggregate holding at least 66-2/3% of the aggregate unpaid principal amount of the outstanding Advances. "Reserve Requirement" means, with respect to a Eurodollar Interest Period, the ------------------- maximum aggregate reserve requirement (including all basic, supplemental, marginal and other reserves) which is imposed under Regulation D on Eurocurrency liabilities. "Restricted Investments" of any Person means all Investments of such Person ---------------------- (including without limitation, loans and advances to, and other Investments in, Subsidiaries of such Person), the creation of any Subsidiary of such Person, such Person's becoming or remaining a partner in any partnership or joint venture, or such Person's Acquisition of any Person, except: (i) investments by the Borrower or any of its Subsidiaries in a Subsidiary of the Borrower or any corporation which concurrently with such investment becomes a Subsidiary of the Borrower, or investments by any Subsidiary of the Borrower in the Borrower; (ii) investments in direct obligations of the United States of America or any agency thereof, or repurchase agreements for such obligations in an aggregate amount not exceeding $20,000,000 and with a duration not exceeding 30 days with any bank or trust company organized under the laws of the United States or any state thereof having both (i) capital, surplus and undivided profits aggregating at least $100,000,000 and (ii) outstanding short-term debt rated A-1 or better by S&P or P-1 or better by Moody's; (iii) investments in federal funds, certificates of deposit, time deposits and banker's acceptances, in each case having original maturities of not more than 365 days and issued by a bank or trust company organized under the laws of the United States or any state hereof having both (i) capital, surplus and undivided profits aggregating at least $100,000,000 and (ii) outstanding short-term debt rated A-1 or better by S&P or P-1 or better by Moody's; (iv) investments in debt instruments of any state or political subdivision thereof rated AA or better by S&P or Aa3 or better by Moody's and maturing not more than one year from the date of acquisition thereof; (v) investments in commercial paper (having original maturities of not more than 365 days) rated A-1 or better by S&P or P-1 or better by Moody's; (vi) investments in corporate debt obligations rated AA or better by S&P or Aa3 or better by Moody's and maturing not more than one year from the date of acquisition thereof; and 11 (vii) investments in money market funds the assets of which are invested solely in the instruments described in clauses (ii)-(vi) hereof. "Risk-Based Capital Guidelines" is defined in Section 3.2. ----------------------------- ----------- "Section" means a numbered section of this Agreement, unless another ------- document is specifically referenced. "Securitization SPV" means a Subsidiary of the Borrower which is a ------------------ bankruptcy-remote special purpose entity formed for the sole purpose of securitizing consumer loans and other receivables of the Borrower and its other Subsidiaries, so long as (i) such entity does not itself originate consumer loans, receivables or other financial assets, but rather acquires such assets from the Borrower and its other Subsidiaries and (ii) such entity does not make or suffer to exist any Contingent Obligation. "Security" has the meaning assigned to such term in Section 2(1) of the -------- Securities Act of 1933, as amended. "Single Employer Plan" means a Plan maintained by the Borrower or any -------------------- member of the Controlled Group for employees of the Borrower or any member of the Controlled Group. "S&P" means Standard & Poor's Ratings Services, a division of The McGraw --- Hill Companies, Inc. "Subordinated Indebtedness" of a Person means any Indebtedness of such ------------------------- Person the payment of which is subordinated to payment of the Obligations and either (i) is listed on Part A of Schedule 2 attached hereto or (ii) with ------ ---------- respect to which the Required Lenders have stated in writing that they are satisfied with the terms (including without limitation the subordination terms) of such Indebtedness. "Subsidiary" of a Person means (i) any corporation more than 50% of the ---------- outstanding Voting Stock of which shall at the time be owned or controlled, directly or indirectly, by such Person or by one or more of its Subsidiaries or by such Person and one or more of its Subsidiaries, or (ii) any partnership, limited liability company, association, joint venture, enterprise, trust, or other entity or organization more than 50% of the ownership interests having ordinary voting power of which shall at the time be so owned or controlled. Unless otherwise expressly provided, all references herein to a "Subsidiary" shall mean a Subsidiary of the Borrower. "Substantial Portion" means, with respect to the Property of the Borrower ------------------- and its Subsidiaries, Property which (i) represents more than 10% of the consolidated assets of the Borrower and its Subsidiaries as would be shown in the consolidated financial statements of the Borrower and its Subsidiaries as at the beginning of the twelve-month period ending with the month in which such determination is made, or (ii) is responsible for more than 10% of the consolidated net sales or of the consolidated net income of the Borrower and its Subsidiaries as reflected in the financial statements referred to in clause (i) ---------- above. "Subsidiary Stock" means any shares of the stock (or any options or ---------------- warrants to purchase stock or other Securities exchangeable for or convertible into stock) of a Subsidiary. "Synthetic Lease Obligations" means, as at any date of determination, the --------------------------- amount of Operating Lease Obligations under all Operating Leases of the Borrower and its Subsidiaries which are structured to be treated as loans for commercial, bankruptcy and federal income tax law purposes. "Transferee" is defined in Section 12.4. ---------- ------------ 12 "Turtletaub Group" means any or all of (i) Alan Turtletaub, (ii) Marc ---------------- Turtletaub, (iii) their respective "affiliates" and "associates" (as each of such terms is defined in Rule 12b-2 of the Securities and Exchange Commission under the Securities Exchange Act of 1934), (iv) their respective heirs or estates, and (v) any trust created for the exclusive benefit of the grandchildren of Alan Turtletaub or Marc Turtletaub of which either or both of Alan Turtletaub or Marc Turtletaub shall be a trustee and, as such, have sole power to vote the stock held in such trust. "Type" means, with respect to any Advance, its nature as a Floating Rate ---- Advance or Eurodollar Advance. "Unfunded Liabilities" means the amount (if any) by which the present value -------------------- of all vested and unvested accrued benefits under all Single Employer Plans exceeds the fair market value of all such Plan assets allocable to such benefits, all determined as of the then most recent valuation date for such Plans using PBGC actuarial assumptions for single employer plan terminations. "Unmatured Default" means an event which but for the lapse of time or the ----------------- giving of notice, or both, would constitute a Default. "Voting Stock" of any Person means Securities the holders of which are ------------ ordinarily, in the absence of contingencies, entitled to elect the corporate directors (or Persons performing similar functions) of such Person. "Wholly-Owned Subsidiary" means a Subsidiary, all of the equity Securities ----------------------- (except directors' qualifying shares) of which are owned by the Borrower and/or the Borrower's other Wholly-Owned Subsidiaries. The foregoing definitions shall be equally applicable to both the singular and plural forms of the defined terms. ARTICLE II THE CREDITS ----------- 2.1. Commitments. ----------- (a) From and including the date of this Agreement and prior to the Facility Termination Date, each Lender severally agrees, on the terms and conditions set forth in this Agreement, to make loans (each a "Facility A ---------- Loan") to the Borrower from time to time in amounts not to exceed in the ---- aggregate at any one time outstanding the amount of its Commitment. The commitment of each Lender to make Facility A Loans pursuant to this Section ------- 2.1 is referred to herein as its "Facility A Commitment". No Lender shall --- --------------------- be required to make any Facility A Loan if, after giving effect thereto, the then aggregate outstanding principal amount of all Facility A Loans and Facility B Loans would exceed the Aggregate Commitment. Subject to the terms of this Agreement, the Borrower may borrow, repay and reborrow at any time prior to the Facility Termination Date. The Facility A Commitments shall expire on the Facility Termination Date. (b) Each Facility B Lender severally agrees, on the terms and conditions set forth in this Agreement, to make loans (each a "Facility B ---------- Loan") to the Borrower from time to time in amounts not to exceed in the ---- aggregate at any one time outstanding such Facility B Lender's Facility B Commitment; provided that the Facility B Lenders shall not in any event be -------- obligated to make any Facility B Loan if, after giving effect thereto, (i) the sum of the outstanding principal amount of the Facility B Loans would exceed the Aggregate Facility B Commitment, or (ii) the sum of the outstanding principal amount 13 of the Facility A Loans plus the outstanding principal amount of the Facility B Loans would exceed the Aggregate Commitment; and provided, -------- further, that no Facility B Lender shall be obligated to make any Facility ------- B Loan if, after giving effect thereto, the sum of the outstanding principal amount of all Facility A Loans and Facility B Loans owing to such Facility B Lender would exceed its Commitment. Subject to the terms of this Agreement, the Borrower may borrow, repay and reborrow Facility B Loans at any time prior to the Facility Termination Date. The Facility B Commitments shall expire on the Facility Termination Date. 2.2. Required Payments; Termination. Any outstanding Advances and all ------------------------------ other unpaid Obligations shall be paid in full by the Borrower on the Facility Termination Date. 2.3. Ratable Loans. ------------- (a) Each Facility A Advance hereunder shall consist of Facility A Loans made from the several Lenders ratably in accordance with their respective Percentages. (b) Each Facility B Advance hereunder shall consist of Facility B Loans made from the several Facility B Lenders ratably in proportion to the ratio that their respective Facility B Commitments bear to the Aggregate Facility B Commitment. 2.4. Types of Advances. ----------------- (a) The Facility A Advances may be Floating Rate Advances or Eurodollar Advances, or a combination thereof, selected by the Borrower in accordance with Sections 2.8 and 2.9. ------------ --- (b) The Facility B Advances shall be Floating Rate Advances. 2.5. Facility Fee; Reductions in Aggregate Commitment; Syndication Fee. ----------------------------------------------------------------- (a) The Borrower agrees to pay to the Agent for the account of each Lender a facility fee in an amount equal to the Applicable Facility Fee Percentage of such Lender's Commitment, whether used or unused, from the date hereof to and including the Facility Termination Date, payable in arrears on each Quarterly Payment Date hereafter and on the Facility Termination Date. (b) The Borrower may permanently reduce the Aggregate Commitment (but not the Aggregate Facility B Commitment) in whole, or in part ratably among the Lenders in integral multiples of $25,000,000, upon at least five Business Days' written notice to the Agent, which notice shall specify the amount of any such reduction; provided, however, that the amount of the -------- ------- Aggregate Commitment may not be reduced below the aggregate principal amount of the outstanding Advances; and provided, further, that if, as a -------- ------- result of a reduction in the Aggregate Commitment, the Aggregate Facility B Commitment would exceed the Aggregate Commitment, then the Aggregate Facility B Commitment shall, without further action, be reduced by the amount of such excess. All accrued facility fees shall be payable on the effective date of any termination of the obligations of the Lenders to make Loans hereunder. The Aggregate Facility B Commitment shall not be reduced except as set forth in this Section 2.5(b). -------------- (c) On or before the date hereof, the Borrower shall pay to the Agent for the account of each Lender a syndication fee in an amount equal to the amount set forth opposite the name of such Lender on Schedule 3 ---------- hereto. 14 2.6. Minimum Amount of Each Advance. Each Facility A Advance shall be ------------------------------ in the minimum amount of $10,000,000 (and in multiples of $5,000,000 if in excess thereof), and each Facility B Advance shall be in the minimum amount of $1,000,000 (and in multiples of $500,000 if in excess thereof); provided, -------- however, that any Facility B Advance may be in the amount of the unused - ------- Aggregate Facility B Commitment. 2.7. Principal Payments. ------------------ (a) The Borrower may from time to time pay, without penalty or premium, all outstanding Floating Rate Advances, or, any portion of the outstanding Floating Rate Advances upon one Business Day's prior notice to the Agent. Subject to Section 3.4 and upon one Business Day's prior notice ----------- to the Agent, the Borrower may from time to time prepay Eurodollar Advances in a minimum aggregate payment amount of $5,000,000 (or any integral multiple of $1,000,000 in excess thereof). (b) The Borrower shall from time to time prepay the Facility B Loans so as not to permit the aggregate outstanding balance of Facility B Loans at any time to equal or exceed $10,000,000 for more then five consecutive Business Days. (c) The Borrower shall prepay the Facility B Loans contemporaneously with any reduction of the Aggregate Facility B Commitment pursuant to Section 2.5(b). -------------- 2.8. Method of Selecting Types and Eurodollar Interest Periods for New ----------------------------------------------------------------- Advances. The Borrower shall select the Type of Facility A Advance and, in the - -------- case of each Eurodollar Advance, the Eurodollar Interest Period applicable to each Facility A Advance from time to time. The Borrower shall give the Agent (and in the case of a Facility B Advance, each Facility B Lender) irrevocable notice (a "Borrowing Notice") not later than (a) 10:00 a.m. (Chicago time) on ---------------- the Borrowing Date of each Facility A Advance which is a Floating Rate Advance, (b) noon (Chicago time) on the Borrowing Date of each Facility B Advance, and (c) 10:00 a.m. (Chicago time) at least three Business Days before the Borrowing Date for each Eurodollar Advance, in each case specifying: (i) the Borrowing Date, which shall be a Business Day, of such Advance, (ii) the aggregate amount of such Advance, (iii) the Type of Advance selected (which shall be a Floating Rate Advance in the case of a Facility B Advance), and (iv) in the case of each Eurodollar Advance, the Eurodollar Interest Period applicable thereto; provided, however that Eurodollar -------- ------- Advances may be subject to no more than five different Eurodollar Interest Periods at any time. Not later than (x) noon (Chicago time), in the case of a Eurodollar Advance, (y) 12:30 p.m. (Chicago time), in the case of a Facility A Advance which is a Floating Rate Advance, or a Facility B Advance with respect to which the Facility B Lenders have received a Borrowing Notice by 10:00 a.m. (Chicago time) on the applicable Borrowing Date, or (z) 3:00 p.m. (Chicago time), in the case of any Facility B Advance not described in the immediately preceding clause (y), ---------- on each Borrowing Date, each Lender (or in the case of a Facility B Advance, each Facility B Lender) shall make available its Loan or Loans, in funds immediately available in Chicago to the Agent at its address specified pursuant to Article XIII. The Agent will make the funds so received from the Lenders ------------ available to the Borrower at the Agent's aforesaid address. 2.9 Conversion and Continuation of Outstanding Advances. Floating Rate --------------------------------------------------- Advances shall continue as Floating Rate Advances unless and until such Floating Rate Advances are converted into Eurodollar 15 Advances. Each Eurodollar Advance shall continue as a Eurodollar Advance until the end of the then applicable Eurodollar Interest Period therefor, at which time such Eurodollar Advance shall be automatically converted into a Floating Rate Advance unless the Borrower shall have given the Agent a Conversion/Continuation Notice requesting that, at the end of such Eurodollar Interest Period, such Eurodollar Advance continue as a Eurodollar Advance for the same or another Eurodollar Interest Period. Subject to the terms of Section ------- 2.6, the Borrower may elect from time to time to convert all or any part of an - --- Advance of any Type into any other Type or Types of Advances; provided that any -------- conversion of any Eurodollar Advance on a day other than the last day of the Eurodollar Interest Period applicable thereto shall be subject to Section 3.4. ----------- The Borrower shall give the Agent irrevocable notice (a "Conversion/Continuation ----------------------- Notice") of each conversion of an Advance or continuation of a Eurodollar - ------ Advance not later than 10:00 a.m. (Chicago time) on the Business Day of the requested conversion or continuation, in the case of a conversion into a Floating Rate Advance or three Business Days prior to the date of the requested conversion or continuation, in the case of a conversion into or continuation of a Eurodollar Advance, specifying: (i) the requested date, which shall be a Business Day, of such conversion or continuation, (ii) the aggregate amount and Type of the Advance which is to be converted or continued, and (iii) the amount and Type(s) of Advance(s) into which such Advance is to be converted or continued and, in the case of a conversion into or continuation of a Eurodollar Advance, the duration of the Eurodollar Interest Period applicable thereto; provided, however that -------- ------- Eurodollar Advances may be subject to no more than five different Eurodollar Interest Periods at any time. 2.10. Changes in Interest Rate, etc. Each Floating Rate Advance shall ----------------------------- bear interest on the outstanding principal amount thereof, for each day, from and including the date such Advance is made or is converted from a Eurodollar Advance into a Floating Rate Advance pursuant to Section 2.9, to but excluding ----------- the date it becomes due or is converted into a Eurodollar Advance pursuant to Section 2.9, at a rate per annum equal to the Floating Rate for such day. - ----------- Changes in the rate of interest on that portion of any Advance maintained as a Floating Rate Advance will take effect simultaneously with each change in the Alternate Base Rate. Each Eurodollar Advance shall bear interest on the outstanding principal amount thereof from and including the first day of the Eurodollar Interest Period applicable thereto to (but not including) the last day of such Eurodollar Interest Period at the interest rate determined as applicable to such Eurodollar Advance. No Eurodollar Interest Period may end after the Facility Termination Date . 2.11. Rates Applicable After Default. Notwithstanding anything to the ------------------------------ contrary contained in Section 2.8 or 2.9, during the continuance of a Default or ----------- --- Unmatured Default the Required Lenders may, at their option, by notice to the Borrower (which notice may be revoked at the option of the Required Lenders notwithstanding any provision of Section 8.2 requiring unanimous consent of the ----------- Lenders to changes in interest rates), declare that (i) no Advance may be made as, converted into or continued as a Eurodollar Advance, (ii) each Eurodollar Advance shall bear interest for the remainder of the applicable Interest Period at the rate otherwise applicable to such Interest Period plus 2% per annum and (iii) each Floating Rate Advance shall bear interest at a rate per annum equal to the Alternate Base Rate (but not less than the Alternate Base Rate in effect at the time such Default occurred) plus 2% per annum. 2.12. Method of Payment. ----------------- (a) All payments of the Obligations hereunder shall be made, without setoff, deduction, or counterclaim, in immediately available funds to the Agent at the Agent's address specified pursuant to Article XIII, or ------------ at any other Lending Installation of the Agent specified in writing by the Agent to the Borrower, by noon (local time) on the date when due. 16 (b) Any payment of principal shall be applied in the following order of priority: First: to the outstanding principal balance of the Facility B ----- Loans, to the extent of any payment required pursuant to Section 2.7(b) or Section 2.7(c); -------------- -------------- Second: to the outstanding principal balance of any Facility A ------ Loans to the extent of any payment required pursuant to Section 2.5(b) as a result of a reduction of the -------------- Aggregate Commitment; and Third: to such of the outstanding Facility A Loans and Facility ----- B Loans as the Borrower (or during the existence of a Default or an Unmatured Default, the Agent) shall select. (c) Any payment of principal of or interest on the Facility B Loans shall be applied ratably by the Agent among the Facility B Lenders. Any payment of principal of or interest on the Facility A Loans and any payment of the facility fee pursuant to Section 2.5 shall be applied ----------- ratably by the Agent among all the Lenders. (d) Each payment delivered to the Agent for the account of any Lender shall be delivered promptly by the Agent to such Lender in the same type of funds that the Agent received at its address specified pursuant to Article XIII or at any Lending Installation specified in a notice received ------------ by the Agent from such Lender. (e) The Agent is hereby authorized to charge the account of the Borrower maintained with First Chicago for each payment of principal, interest and fees as it becomes due hereunder. 2.13. Notes; Telephonic Notices. Each Lender is hereby authorized to ------------------------- record the principal amount of each of its Loans and each repayment on the schedule attached to its applicable Note; provided, however, that neither the -------- ------- failure to so record nor any error in such recordation shall affect the Borrower's obligations under such Note. The Borrower hereby authorizes the Lenders and the Agent to extend, convert or continue Advances, effect selections of Types of Advances and to transfer funds based on telephonic notices made by any person or persons the Agent or any Lender in good faith believes to be acting on behalf of the Borrower. The Borrower agrees to deliver promptly to the Agent a written confirmation, if such confirmation is requested by the Agent or any Lender, of each telephonic notice signed by an Authorized Officer. If the written confirmation differs in any material respect from the action taken by the Agent and the Lenders, the records of the Agent and the Lenders shall govern absent manifest error. 2.14. Interest Payment Dates; Interest and Fee Basis. Interest accrued ---------------------------------------------- on each Floating Rate Advance shall be payable on each Payment Date, commencing with the first such date to occur after the date hereof, on any date on which the Floating Rate Advance is prepaid, whether due to acceleration or otherwise, and at maturity. Interest accrued on that portion of the outstanding principal amount of any Floating Rate Advance converted into a Eurodollar Advance on a day other than a Payment Date shall be payable on the date of conversion. Interest accrued on each Eurodollar Advance shall be payable on the last day of its applicable Eurodollar Interest Period, on any date on which the Eurodollar Advance is prepaid, whether by acceleration or otherwise, or converted to a Floating Rate Advance, and at maturity. Interest accrued on each Eurodollar Advance having an Eurodollar Interest Period longer than three months shall also be payable on the last day of each three-month interval during such Eurodollar Interest Period. Interest on all Eurodollar Loans and facility fees shall be calculated for actual days elapsed on the basis of a 360-day year. Interest on all Floating Rate Loans shall be calculated for actual days elapsed on the basis of a 365 (or, when appropriate, 366) day year. Interest shall be payable for the day an Advance is made but not for the day of any payment on the amount paid if payment is received prior to noon (local time) at the place of payment. If any payment of 17 principal of or interest on an Advance shall become due on a day which is not a Business Day, such payment shall be made on the next succeeding Business Day and, in the case of a principal payment, such extension of time shall be included in computing interest in connection with such payment. 2.15. Notification of Advances, Interest Rates, Prepayments and --------------------------------------------------------- Commitment Reductions. Promptly after receipt thereof, the Agent will notify - --------------------- each Lender of the contents of each Aggregate Commitment reduction notice, Borrowing Notice which relates to the making of Facility A Loans, Conversion/Continuation Notice, and repayment notice which relates to the repayment of Facility A Loans received by it hereunder. In addition, the Agent will notify each Facility B Lender of the contents of each Aggregate Facility B Commitment reduction notice, Borrowing Notice which relates to the making of Facility B Loans and repayment notice which relates to the repayment of Facility B Loans promptly after receipt of the same. The Agent will notify each Lender of the interest rate applicable to each Eurodollar Advance promptly upon determination of such interest rate and will give each Lender prompt notice of each change in the Alternate Base Rate. 2.16. Lending Installations. Each Lender may book its Loans at any --------------------- Lending Installation selected by such Lender and may change its Lending Installation from time to time. All terms of this Agreement shall apply to any such Lending Installation and the Notes shall be deemed held by each Lender for the benefit of such Lending Installation. Each Lender may, by written or telex notice to the Agent and the Borrower, designate a Lending Installation through which Loans will be made by it and for whose account Loan payments are to be made. 2.17. Non-Receipt of Funds by the Agent. Unless the Borrower or a --------------------------------- Lender, as the case may be, notifies the Agent prior to the date on which it is scheduled to make payment to the Agent of (i) in the case of a Lender, the proceeds of a Loan or (ii) in the case of the Borrower, a payment of principal, interest or fees to the Agent for the account of the Lenders, that it does not intend to make such payment, the Agent may assume that such payment has been made. The Agent may, but shall not be obligated to, make the amount of such payment available to the intended recipient in reliance upon such assumption. If such Lender or the Borrower, as the case may be, has not in fact made such payment to the Agent, the recipient of such payment shall, on demand by the Agent, repay to the Agent the amount so made available together with interest thereon in respect of each day during the period commencing on the date such amount was so made available by the Agent until the date the Agent recovers such amount at a rate per annum equal to (i) in the case of payment by a Lender, the Federal Funds Effective Rate for such day or (ii) in the case of payment by the Borrower, the interest rate applicable to the relevant Loan. 2.18. Risk Participation in Facility B. -------------------------------- (a) Each Lender (other than any Facility B Lender) shall be deemed to have unconditionally and irrevocably purchased, as of the date of this Agreement, a pro rata risk participation from the Facility B Lenders, --- ---- without recourse to or warranty by any Facility B Lender (except that the outstanding Facility B Loans in fact were made at a time when the obligations of the Lenders had not been suspended or terminated by the Required Lenders or the Agent pursuant to Section 8.1, have not been ----------- repaid, and have not been sold or assigned by such Facility B Lender), in an amount equal to that Lender's Percentage of the Aggregate Commitment, of the principal of the Facility B Loans outstanding from time to time. (b) Upon the occurrence and during the continuance of a Default, the Agent may, but is not required to, without notice to or the consent of the Borrower, suspend the Facility B Commitments and direct the Lenders (other than the Facility B Lenders) to fund their participations purchased pursuant to Section 2.18(a) by paying to the Agent an aggregate amount --------------- equal to the aggregate principal amount of Facility B Loans outstanding at such time. Each Lender (other than the Facility B Lenders) shall comply with such Agent's direction by funding its Percentage of such aggregate amount in the 18 same manner as it is required to fund Facility A Loans hereunder; provided, -------- however, that, for this purpose, the conditions precedent set forth in ------- Article IV shall not apply. The proceeds of such fundings shall be paid to ---------- the Agent for the ratable account of the Facility B Lenders to retire the outstanding principal balance of Facility B Loans and all interest accrued on such Facility B Loans prior to such payment shall be payable to the Facility B Lenders. Once made, such fundings shall be deemed to constitute Facility A Loans for all purposes hereunder and under the other Loan Documents. ARTICLE III CHANGE IN CIRCUMSTANCES ----------------------- 3.1 Yield Protection. If any law or any governmental or quasi- ---------------- governmental rule, regulation, policy, guideline or directive (whether or not having the force of law), or any interpretation thereof, or the compliance of any Lender therewith, (i) subjects any Lender or any applicable Lending Installation to any tax, duty, charge or withholding on or from payments due from the Borrower (excluding federal taxation of the overall net income of any Lender or applicable Lending Installation), or changes the basis of taxation of payments to any Lender in respect of its Loans or other amounts due it hereunder, or (ii) imposes or increases or deems applicable any reserve, assessment, insurance charge, special deposit or similar requirement against assets of, deposits with or for the account of, or credit extended by, any Lender or any applicable Lending Installation (other than reserves and assessments taken into account in determining the interest rate applicable to Eurodollar Advances), or (iii) imposes any other condition the result of which is to increase the cost to any Lender or any applicable Lending Installation of making, funding or maintaining loans or reduces any amount receivable by any Lender or any applicable Lending Installation in connection with loans, or requires any Lender or any applicable Lending Installation to make any payment calculated by reference to the amount of loans held or interest received by it, by an amount deemed material by such Lender, then, within 15 days of demand by such Lender, the Borrower shall pay such Lender that portion of such increased expense incurred or reduction in an amount received which such Lender determines is attributable to making, funding and maintaining its Loans and its Commitment (which shall include any taxes payable on the taxes paid by the Borrower pursuant to this Section 3.1 to the extent any ----------- tax which is not excluded in clause (i) above is payable by such Lender ---------- thereon). 3.2 Changes in Capital Adequacy Regulations. If a Lender determines --------------------------------------- the amount of capital required or expected to be maintained by such Lender, any Lending Installation of such Lender or any corporation controlling such Lender is increased as a result of a Change, then, within 15 days of demand by such Lender, the Borrower shall pay such Lender the amount necessary to compensate for any shortfall in the rate of return on the portion of such increased capital which such Lender determines is attributable to this Agreement, its Loans or its obligation to make Loans hereunder (after taking into account such Lender's policies as to capital adequacy). "Change" means (i) any change after the date ------ of this Agreement in the Risk-Based Capital Guidelines or (ii) any adoption of or change in any other law, governmental or quasi-governmental rule, regulation, policy, guideline, interpretation, or directive (whether or not having the force of law) after the date 19 of this Agreement which affects the amount of capital required or expected to be maintained by any Lender or any Lending Installation or any corporation controlling any Lender. "Risk-Based Capital Guidelines" means (i) the risk-based ----------------------------- capital guidelines in effect in the United States on the date of this Agreement, including transition rules, and (ii) the corresponding capital regulations promulgated by regulatory authorities outside the United States implementing the July 1988 report of the Basle Committee on Banking Regulation and Supervisory Practices Entitled "International Convergence of Capital Measurements and Capital Standards," including transition rules, and any amendments to such regulations adopted prior to the date of this Agreement. 3.3. Availability of Types of Advances. If any Lender determines that --------------------------------- maintenance of its Eurodollar Loans at a suitable Lending Installation would violate any applicable law, rule, regulation, directive, or official interpretation thereof, whether or not having the force of law, then the Agent shall suspend the availability of Eurodollar Advances and require any Eurodollar Advances to be repaid. If the Required Lenders determine that (i) deposits of a type and maturity appropriate to match fund Eurodollar Advances are not available or (ii) the interest rate applicable to Eurodollar Advances does not accurately reflect the cost of making or maintaining such Advance, then the Agent shall suspend the availability of Eurodollar Advances and require any Eurodollar Advances to be repaid at the end of their then-current Eurodollar Interest Periods. 3.4. Funding Indemnification. If any payment of a Eurodollar Advance ----------------------- occurs on a date which is not the last day of the applicable Eurodollar Interest Period, whether because of acceleration, prepayment or otherwise, or a Eurodollar Advance (or any payment thereof) is not made, or an Advance is not converted to or continued as a Eurodollar Advance, on the date specified by the Borrower for any reason other than default by the Lenders, the Borrower will indemnify each Lender for any loss or cost incurred by it resulting therefrom, including, without limitation, any loss or cost in liquidating or employing deposits acquired to fund or maintain the Eurodollar Advance. 3.5. Lender Statements; Survival of Indemnity. To the extent reasonably ---------------------------------------- possible, each Lender shall designate an alternate Lending Installation with respect to its Eurodollar Loans to reduce any liability of the Borrower to such Lender under Sections 3.1 and 3.2 or to avoid the unavailability of Eurodollar ------------ --- Advances under Section 3.3, so long as such designation is not disadvantageous ----------- to such Lender in its sole determination. Each Lender shall deliver a written statement of such Lender to the Borrower (with a copy to the Agent) as to the amount due, if any, under Section 3.1, 3.2 or 3.4. Such written statement shall ----------- --- --- set forth in reasonable detail the calculations upon which such Lender determined such amount and shall be final, conclusive and binding on the Borrower in the absence of manifest error. Determination of amounts payable under such Sections in connection with a Eurodollar Loan shall be calculated as though each Lender funded its Eurodollar Loan through the purchase of a deposit of the type and maturity corresponding to the deposit used as a reference in determining the Eurodollar Rate applicable to such Loan, whether in fact that is the case or not. The amount specified in the written statement of any Lender shall be payable on demand after receipt by the Borrower of such written statement. The obligations of the Borrower under Sections 3.1, 3.2 and 3.4 ------------ --- --- shall survive payment of the Obligations and termination of this Agreement. ARTICLE IV CONDITIONS PRECEDENT; WITHHOLDING TAX EXEMPTION ----------------------------------------------- 4.1. Initial Advance. The Lenders shall not be required to make the --------------- initial Advance hereunder unless the Borrower has furnished to the Agent with sufficient copies for the Lenders: (i) Copies of the articles of incorporation of the Borrower, together with all amendments, and a certificate of good standing, both certified by the Secretary of State of the State of New Jersey. 20 (ii) For each Guarantor, copies of the articles of incorporation of such Guarantor, together with all amendments, and a certificate of good standing, both certified by the appropriate governmental officer in its jurisdiction of incorporation. (iii) For the Borrower and each Guarantor, copies, certified by the Secretary or Assistant Secretary of such Person, of its by-laws and of its Board of Directors' resolutions (and resolutions of other bodies, if any are deemed necessary by counsel for any Lender) authorizing the execution of the Loan Documents to which it is a party. (iv) For the Borrower and each Guarantor, an incumbency certificate, executed by the Secretary or Assistant Secretary of such Person, which shall identify by name and title and bear the signature of the officers of such Person, authorized to sign the Loan Documents to which it is a party and, in the case of the Borrower, to make borrowings hereunder, upon which certificate the Agent and the Lenders shall be entitled to rely until informed of any change in writing by the Borrower or such Guarantor, as the case may be. (v) A certificate, signed by the chief financial officer of the Borrower, stating that on the initial Borrowing Date no Default or Unmatured Default has occurred and is continuing. (vi) A written opinion of Eric R. Elwin, corporate counsel to the Borrower and each Guarantor, addressed to the Agent and the Lenders in substantially the form of Exhibit B hereto. --------- (vii) Notes with respect to Loans under the Facility A Commitments payable to the order of each of the Lenders and Notes with respect to Loans under the Facility B Commitments payable to the order of each of the Facility B Lenders. (viii) Written money transfer instructions, in substantially the form of Exhibit E hereto, addressed to the Agent and signed by an --------- Authorized Officer, together with such other related money transfer authorizations as the Agent may have reasonably requested. (ix) The Guaranty duly executed by each Guarantor in substantially the form of Exhibit F hereto. --------- (x) Such other documents as any Lender or its counsel may have reasonably requested. 4.2. Each Advance. The Lenders shall not be required to make any ------------ Advance (other than a Facility A Advance that, after giving effect thereto and to the application of the proceeds thereof, does not increase the aggregate amount of outstanding Advances), unless the Agent shall have received a Borrowing Notice and on the applicable Borrowing Date: (i) There exists no Default or Unmatured Default. (ii) The representations and warranties contained in Article V are true --------- and correct as of such Borrowing Date except to the extent any such representation or warranty is stated to relate solely to an earlier date, in which case such representation or warranty shall be true and correct on and as of such earlier date. (iii) All legal matters incident to the making of such Advance shall be satisfactory to the Lenders and their counsel. 21 Each Borrowing Notice with respect to each such Advance shall constitute a representation and warranty by the Borrower that the conditions contained in Sections 4.2(i) and (ii) have been satisfied and shall be satisfied on the - --------------- ---- applicable Borrowing Date. 4.3. Withholding Tax Exemption. At least five Business Days prior to ------------------------- the first date on which interest or fees are payable hereunder for the account of any Lender, each Lender that is not incorporated under the laws of the United States of America, or a state thereof, agrees that it will deliver to each of the Borrower and the Agent two duly completed copies of United States Internal Revenue Service Form 1001 or 4224, certifying in either case that such Lender is entitled to receive payments under this Agreement and the Notes without deduction or withholding of any United States federal income taxes. Each Lender which so delivers a Form 1001 or 4224 further undertakes to deliver to each of the Borrower and the Agent two additional copies of such form (or a successor form) on or before the date that such form expires (currently, three successive calendar years for Form 1001 and one calendar year for Form 4224) or becomes obsolete or after the occurrence of any event requiring a change in the most recent forms so delivered by it, and such amendments thereto or extensions or renewals thereof as may be reasonably requested by the Borrower or the Agent, in each case certifying that such Lender is entitled to receive payments under this Agreement and the Notes without deduction or withholding of any United States federal income taxes, unless an event (including without limitation any change in treaty, law or regulation) has occurred prior to the date on which any such delivery would otherwise be required which renders all such forms inapplicable or which would prevent such Lender from duly completing and delivering any such form with respect to it and such Lender advises the Borrower and the Agent that it is not capable of receiving payments without any deduction or withholding of United States federal income tax. ARTICLE V REPRESENTATIONS AND WARRANTIES ------------------------------ The Borrower represents and warrants to the Lenders that: 5.1. Corporate Existence and Standing. Each of the Borrower and its -------------------------------- Subsidiaries is a corporation duly incorporated, validly existing and in good standing under the laws of its jurisdiction of incorporation and has all requisite authority to conduct its business in each jurisdiction in which its business is conducted. 5.2. Authorization and Validity. Each of the Borrower and each -------------------------- Guarantor has the corporate power and authority and legal right to execute and deliver the Loan Documents to which it is a party and to perform its respective obligations thereunder. The execution and delivery by each of the Borrower and each Guarantor of the Loan Documents to which it is a party and the performance of its respective obligations thereunder have been duly authorized by proper corporate proceedings. The Loan Documents have been duly executed and delivered by each of the Borrower and the Guarantors parties thereto and constitute legal, valid and binding obligations of such of the Borrower and each Guarantor which is a party thereto, enforceable against each such Person in accordance with their respective terms, except as enforceability may be limited by bankruptcy, insolvency or similar laws affecting the enforcement of creditors' rights generally. 5.3. No Conflict; Government Consent. Neither the execution and ------------------------------- delivery by any of the Borrower or any Guarantor of the Loan Documents to which such Person is a party, nor the consummation of the transactions therein contemplated, nor compliance with the provisions thereof will violate any law, rule, regulation, order, writ, judgment, injunction, decree or award binding on the Borrower, any Guarantor or any of their respective Subsidiaries or the Borrower's, any Guarantor's or any of their respective Subsidiary's articles of incorporation or by-laws or the provisions of any indenture, instrument or agreement to which the Borrower, any Guarantor or any of their respective Subsidiaries is a party or is subject, or by which it, or its Property, is 22 bound, or conflict with or constitute a default thereunder, or result in the creation or imposition of any Lien in, of or on the Property of the Borrower, any Guarantor or any of their respective Subsidiaries pursuant to the terms of any such indenture, instrument or agreement. No order, consent, approval, license, authorization, or validation of, or filing, recording or registration with, or exemption by, or other action in respect of any governmental or public body or authority, or any subdivision thereof, is required to authorize, or is required in connection with the execution, delivery and performance of, or the legality, validity, binding effect or enforceability of, any of the Loan Documents. 5.4. Financial Statements. The December 31, 1995 audited, and the March -------------------- 31, 1996 unaudited, consolidated financial statements of the Borrower and its Subsidiaries, each heretofore delivered to the Lenders, were prepared in accordance with generally accepted accounting principles in effect on the date such statements were prepared and fairly present the consolidated financial condition and operations of the Borrower and its Subsidiaries at such date and the consolidated results of their operations for the period then ended. 5.5. Material Adverse Change. Since March 31, 1996, there has been no ----------------------- event, circumstance or other condition which could have a Material Adverse Effect. 5.6. Taxes. The Borrower and its Subsidiaries have filed all United ----- States federal tax returns and all other tax returns which are required to be filed and have paid all taxes due pursuant to said returns or pursuant to any assessment received by the Borrower or any of its Subsidiaries, except such taxes, if any, as are being contested in good faith and as to which adequate reserves have been provided in accordance with GAAP and as to which no Lien exists. The United States income tax returns of the Borrower and its Subsidiaries have been audited by the Internal Revenue Service through the fiscal year ended December 31, 1993. No tax Liens have been filed and no claims are being asserted with respect to any such taxes. The charges, accruals and reserves on the books of the Borrower and its Subsidiaries in respect of any taxes or other governmental charges are adequate. 5.7. Litigation and Contingent Obligations. There is no litigation, ------------------------------------- arbitration, governmental investigation, proceeding or inquiry pending or, to the knowledge of any of their officers, threatened against or affecting the Borrower or any of its Subsidiaries which could have a Material Adverse Effect or which seeks to prevent, enjoin or delay the making of the Loans or Advances. The Borrower and its Subsidiaries have no material contingent obligations not provided for or disclosed in the financial statements referred to in Section ------- 5.4. - --- 5.8. Subsidiaries. Schedule 1 hereto contains an accurate list of all ------------ ---------- Subsidiaries of the Borrower as of the date of this Agreement, setting forth their respective jurisdictions of incorporation and the percentage of their respective capital stock owned by the Borrower or other Subsidiaries. All of the issued and outstanding shares of capital stock of such Subsidiaries have been duly authorized and issued and are fully paid and non-assessable. 5.9. ERISA. The Unfunded Liabilities of all Single Employer Plans do ----- not in the aggregate exceed $10,000,000. Neither the Borrower nor any other member of the Controlled Group has incurred, or is reasonably expected to incur, any withdrawal liability to Multiemployer Plans in excess of $10,000,000 in the aggregate. Each Plan complies in all material respects with all applicable requirements of law and regulations, no Reportable Event has occurred with respect to any Plan, neither the Borrower nor any other members of the Controlled Group has withdrawn from any Plan or initiated steps to do so, and no steps have been taken to reorganize or terminate any Plan. 5.10. Accuracy of Information. No information, exhibit or report ----------------------- furnished by the Borrower or any of its Subsidiaries to the Agent or to any Lender in connection with the negotiation of, or compliance with, the Loan Documents contained any material misstatement of fact or omitted to state a material fact or any fact 23 necessary to make the statements contained therein not misleading. There is no fact known to the Borrower that has not been disclosed to the Lenders in writing that materially and adversely affects the ability of the Borrower to perform its obligations under the Loan Documents. 5.11. Regulation U. Margin stock (as defined in Regulation U) ------------ constitutes less than 25% of those assets of the Borrower and its Subsidiaries which are subject to any limitation on sale, pledge, or other restriction hereunder. 5.12. Material Agreements. Neither the Borrower nor any Subsidiary is a ------------------- party to any agreement or instrument or subject to any charter or other corporate restriction which could have a Material Adverse Effect. Neither the Borrower nor any Subsidiary is in default in the performance, observance or fulfillment of any of the obligations, covenants or conditions contained in (i) any agreement to which it is a party, which default could have a Material Adverse Effect or (ii) any agreement or instrument evidencing or governing Indebtedness. 5.13. Compliance With Laws. The Borrower and its Subsidiaries have -------------------- complied with all applicable statutes, rules, regulations, orders and restrictions of any domestic or foreign government or any instrumentality or agency thereof, having jurisdiction over the conduct of their respective businesses or the ownership of their respective Property if failure to comply could reasonably be expected to have a Material Adverse Effect. 5.14. Ownership of Properties. Except as set forth on Part C of Schedule ----------------------- ------ -------- 2 hereto, on the date of this Agreement, the Borrower and its Subsidiaries will - - have good title, free of all Liens other than those permitted by Section 6.15, ------------ to all of the Property and assets reflected in the financial statements referenced in Section 5.4 as owned by it. ----------- 5.15. Assets; Prohibited Transactions. The Borrower is not an entity ------------------------------- deemed to hold "plan assets" within the meaning of 29 C.F.R. (S) 2510.3-101 of an employee benefit plan (as defined in Section 3(3) of ERISA) which is subject to Title I of ERISA or any plan (within the meaning of Section 4975 of the Code); and neither the execution of this Agreement nor the making of Loans hereunder give rise to a prohibited transaction within the meaning of Section 406 of ERISA or Section 4975 of the Code. 5.16. Environmental Matters. In the ordinary course of its business, the --------------------- officers of the Borrower consider the effect of Environmental Laws on the business of the Borrower and its Subsidiaries, in the course of which they identify and evaluate potential risks and liabilities accruing to the Borrower due to Environmental Laws. On the basis of this consideration, the Borrower has reasonably concluded that Environmental Laws cannot reasonably be expected to have a Material Adverse Effect. Neither the Borrower nor any Subsidiary has received any notice to the effect that its operations are not in material compliance with any of the requirements of applicable Environmental Laws or are the subject of any federal or state investigation evaluating whether any remedial action is needed to respond to a release of any toxic or hazardous waste or substance into the environment, which non-compliance or remedial action could reasonably be expected to have a Material Adverse Effect. 5.17. Investment Company Act. Neither the Borrower nor any Subsidiary ---------------------- thereof is an "investment company" or a company "controlled" by an "investment company", within the meaning of the Investment Company Act of 1940, as amended. 5.18. Public Utility Holding Company Act. Neither the Borrower nor any ---------------------------------- Subsidiary thereof is a "holding company" or a "subsidiary company" of a "holding company", or an "affiliate" of a "holding company" or of a "subsidiary company" of a "holding company", within the meaning of the Public Utility Holding Company Act of 1935, as amended. 24 5.19. Subordinated Indebtedness. The Obligations constitute senior ------------------------- indebtedness which is entitled to the benefits of the subordination provisions of all outstanding Subordinated Indebtedness. 5.20. Insurance. The certificate signed by the President or Chief --------- Financial Officer of the Borrower, that attests to the existence and adequacy of, and summarizes, the property and casualty insurance program carried by the Borrower and that has been furnished by the Borrower to the Agent and the Lenders, is complete and accurate. This summary includes the insurer's or insurers' name(s), policy number(s), expiration date(s), amount(s) of coverage, type(s) of coverage, exclusion(s), and deductibles. This summary also includes similar information, and describes any reserves, relating to any self-insurance program that is in effect. ARTICLE VI COVENANTS --------- During the term of this Agreement, unless the Required Lenders shall otherwise consent in writing: 6.1. Financial Reporting. The Borrower will maintain, for itself and ------------------- each Subsidiary, a system of accounting established and administered in accordance with generally accepted accounting principles, and furnish to the Lenders: (i) Within 120 days after the close of each of its fiscal years, an unqualified audit report certified by nationally recognized independent certified public accountants, reasonably acceptable to the Lenders, prepared in accordance with GAAP for itself and its consolidated Subsidiaries, including (a) a consolidated balance sheet as of the end of such period, (b) a related consolidated profit and loss and reconciliation of surplus statements, and statement of cash flows, (c) balance sheets and statements of revenue and operating income of the Borrower and its Subsidiaries for the following areas of business: (I) mortgage loans, (II) student loans, (III) SBA guaranteed loans, (IV) auto loans, and (V) any other significant area of business in which the Borrower or its Subsidiaries are engaged, accompanied by (x) any management letter prepared by said accountants and (y) a certificate of said accountants that, in the course of their examination necessary for their certification of the foregoing, they have obtained no knowledge of any Default or Unmatured Default, or if, in the opinion of such accountants, any Default or Unmatured Default shall exist, stating the nature and status thereof. (ii) Within 60 days after the end of each of the first three quarterly fiscal periods in each fiscal year of the Borrower, (a) a consolidated balance sheet of the Borrower and its Subsidiaries as at the end of that quarter, (b) consolidated statements of income, retained earnings and cash flows of the Borrower and its Subsidiaries, for that quarter and (in the case of the second and third quarters) for the portion of the fiscal year ending with that quarter, and (c) statements of revenue and operating income of the Borrower and its Subsidiaries for the following areas of business: (I) mortgage loans, (II) student loans, (III) SBA guaranteed loans, (IV) auto loans, and (V) any other significant area of business in which the Borrower or its Subsidiaries are engaged. (iii) Together with the financial statements required under Sections -------- 6.1(i) and (ii), a compliance certificate in substantially the form ------ ---- of Exhibit C hereto signed by its Chief Financial Officer showing --------- the calculations necessary to determine compliance with this Agreement and stating that no Default or Unmatured Default exists, or if any Default or Unmatured Default exists, stating the nature and status thereof. 25 (iv) Together with the financial statements required under Sections -------- 6.1(i) and (ii), a summary of delinquency information with respect ------ ---- to loans serviced by the Borrower in such form as is customarily prepared by the Borrower from time to time. (v) Within 270 days after the close of each fiscal year, a statement of the Unfunded Liabilities of each Single Employer Plan, certified as correct by an actuary enrolled under ERISA. (vi) As soon as possible and in any event within 10 days after the Borrower knows that any Reportable Event has occurred with respect to any Plan, a statement, signed by the chief financial officer of the Borrower, describing said Reportable Event and the action which the Borrower proposes to take with respect thereto. (vii) As soon as possible and in any event within 10 days after receipt by the Borrower, a copy of (a) any notice or claim to the effect that the Borrower or any of its Subsidiaries is or may be liable to any Person as a result of the release or the presence of any toxic or hazardous waste or substance into the environment, and (b) any notice alleging any violation of any federal, state or local environmental, health or safety law or regulation by the Borrower or any of its Subsidiaries, which, in either case, could reasonably be expected to have a Material Adverse Effect. (viii) Promptly upon the furnishing thereof to the shareholders of the Borrower, copies of all financial statements, reports and proxy statements so furnished. (ix) Promptly upon the filing thereof, copies of all registration statements and annual, quarterly, monthly or other regular reports which the Borrower or any of its Subsidiaries files with the Securities and Exchange Commission. (x) Such other information (including non-financial information) as the Agent or any Lender may from time to time reasonably request. 6.2. Use of Proceeds. The Borrower will, and will cause each of its --------------- Subsidiaries to, use the proceeds of the Advances for general corporate purposes (including, without limitation, the repayment of outstanding Advances). The Borrower will not, and will not permit any of its Subsidiaries to, use any of the proceeds of the Advances to purchase or carry any "margin stock" (as defined in any of Regulations G, T, U or X of the Board of Governors of the Federal Reserve System) or to make any Acquisition not permitted by Section 6.12. ------------ 6.3. Notice of Default. The Borrower will, and will cause each of its ----------------- Subsidiaries to, give prompt notice in writing to the Lenders of the occurrence of any Default or Unmatured Default and of any other development, financial or otherwise, which could reasonably be expected to have a Material Adverse Effect. 6.4. Conduct of Business. The Borrower will, and will cause each of its ------------------- Subsidiaries to, do all things necessary to remain duly incorporated, validly existing and in good standing as a domestic corporation in its jurisdiction of incorporation and maintain all requisite authority (including, without limitation, all required franchises, licenses, permits and approvals) to conduct its business in each jurisdiction in which its business is conducted. The Borrower and its Subsidiaries at all times shall derive not less than 80% of their consolidated gross revenues from consumer and commercial financial services in the United States. 6.5. Taxes. The Borrower will, and will cause each of its Subsidiaries ----- to, timely file complete and correct United States federal and applicable foreign, state and local tax returns required by law and pay when due all taxes, assessments and governmental charges and levies upon it or its income, profits or Property, except 26 those which are being contested in good faith by appropriate proceedings and with respect to which adequate reserves have been set aside in accordance with GAAP. 6.6. Insurance. The Borrower will, and will cause each of its --------- Subsidiaries to, maintain with financially sound and reputable insurance companies insurance on all their Property in such amounts and covering such risks as is consistent with sound business practice, and the Borrower will furnish to any Lender upon request full information as to the insurance carried. 6.7. Compliance with Laws. The Borrower will, and will cause each of -------------------- its Subsidiaries to, comply with all laws, rules, regulations, orders, writs, judgments, injunctions, decrees or awards to which it may be subject. 6.8. Maintenance of Properties. The Borrower will, and will cause each ------------------------- of its Subsidiaries to, do all things necessary to maintain, preserve, protect and keep its Property in good repair, working order and condition, and make all necessary and proper repairs, renewals and replacements so that its business carried on in connection therewith may be properly conducted at all times. 6.9. Maintenance of Books; Inspection. The Borrower will, and will -------------------------------- cause each of its Subsidiaries to (i) maintain a standard and modern system of accounting and keep true books of records and accounts in which full and correct entries will be made of all its respective business transactions, and reflect in its respective financial statements adequate accruals and appropriations to reserves, all in accordance with GAAP, and (ii) permit the Agent and the Lenders, by their respective representatives and agents, to inspect any of the Property, corporate books and financial records of the Borrower and each such Subsidiary, to examine and make copies of the books of accounts and other financial records of the Borrower and each such Subsidiary, and to discuss the affairs, finances and accounts of the Borrower and each such Subsidiary with, and to be advised as to the same by, their respective officers at such reasonable times and intervals as the Lenders may designate upon reasonable notice given to the Borrower. 6.10. Merger. The Borrower will not, and will not permit any of its ------ Subsidiaries to, merge or consolidate with or into any other Person; provided, -------- however, that a Subsidiary of the Borrower may merge into the Borrower or a - ------- Guarantor if the Borrower or such Guarantor, as the case may be, is the surviving corporation. 6.11. Sale of Assets. The Borrower will not, and will not permit any of -------------- its Subsidiaries to, lease, sell or otherwise dispose of its Property (whether voluntarily or involuntarily), to any other Person, except: (i) Sales in the ordinary course of business of loans originated or purchased by the Borrower or any of its Subsidiaries; provided, -------- however that (x) immediately before and after giving effect to such ------- transaction, no Default or Unmatured Default would exist and (y) such sale is for fair value and is in the best interests of the Borrower or such Subsidiary, in the opinion of such Person's Board of Directors; and (ii) Leases, sales or other dispositions of its Property that, together with all other Property of the Borrower and its Subsidiaries previously leased, sold or disposed of (other than pursuant to clause (i) above) as permitted by this Section during the twelve- ---------- month period ending with the month in which any such lease, sale or other disposition occurs, do not constitute a Substantial Portion of the Property of the Borrower and its Subsidiaries and so long as (x) immediately before and after giving effect to such transaction no Default or Unmatured Default would exist and (y) in the opinion of the Borrower's Board of Directors such sale or other disposition is for fair value and is in the best interests of the Borrower. 27 6.12. Investments and Acquisitions. The Borrower will not, and will not ---------------------------- permit any of its Subsidiaries to, make or suffer to exist any Restricted Investments or commitments therefor, unless, after giving effect thereto, the aggregate amount (at original cost) of all outstanding Restricted Investments of the Borrower and all of its Subsidiaries shall be less than 25% of Consolidated Tangible Net Worth. Any Person which becomes a Subsidiary of the Borrower after the date hereof shall be deemed to have made, at the time it becomes a Subsidiary, all Restricted Investments of such Person existing immediately after it becomes a Subsidiary. Unless otherwise directed by the Agent or the Required Lenders, any Person which becomes a Subsidiary of the Borrower (other than a Securitization SPV, so long as such Person remains a Securitization SPV) after the date hereof, shall, contemporaneously with such Person becoming a Subsidiary, become a party to the Guaranty and provide to the Agent such opinions and certificates in respect thereof as the Agent or the Required Lenders may reasonably request. 6.13. Liens. ----- (a) The Borrower will not, and will not permit any of its Subsidiaries to, create, incur, or suffer to exist any Lien in, of or on the Property of the Borrower or any of its Subsidiaries, except: (i) Liens for taxes, assessments or governmental charges or levies on its Property if the same shall not at the time be delinquent or thereafter can be paid without penalty, or are being contested in good faith and by appropriate proceedings and for which adequate reserves in accordance with generally accepted principles of accounting shall have been set aside on its books; provided, however, that the Borrower's or the ----------------- applicable Subsidiary's title to such Property is not materially adversely affected and its use of such Property in the ordinary course of its business is not materially interfered with. (ii) Liens imposed by law, such as carriers', warehousemen's and mechanics' liens and other similar liens arising in the ordinary course of business which secure payment of obligations which are not past due and are being contested in good faith and by appropriate proceedings and for which adequate reserves in accordance with generally accepted principles of accounting shall have been set aside on its books; provided, however, that the Borrower's or the ----------------- applicable Subsidiary's title to such Property is not materially adversely affected and its use of such Property in the ordinary course of its business is not materially interfered with. (iii) Liens arising out of pledges or deposits under worker's compensation laws, unemployment insurance, old age pensions, or other social security or retirement benefits, or similar legislation (and not in connection with borrowed money, advances or the deferred purchase price of Property). (iv) Utility easements, building restrictions and such other encumbrances or charges against real property as are of a nature generally existing with respect to properties of a similar character and which do not in any material way affect the marketability of the same or interfere with the use thereof in the business of the Borrower or its Subsidiaries. (v) Liens existing on the date hereof and described in Part C of ------ Schedule 2 hereto. ---------- (vi) Liens securing obligations of the Borrower for borrowed money arising under inventory warehouse financing facilities entered into by the Borrower from time to time which are secured by consumer or commercial loans or other receivables owned 28 by the Borrower or any Subsidiary of the Borrower or by the cash proceeds of such loans or receivables, provided that such Lien and obligations are incurred in the ordinary course of business of such Subsidiary and the Borrower. (vii) Liens placed on tangible real or personal Property being acquired by the Borrower or any Subsidiary of the Borrower securing Indebtedness incurred to finance all or part of the purchase price thereof, provided that (i) such Lien is incurred within six months of the acquisition of such Property by the Borrower or such Subsidiary and (ii) the principal amount of such Indebtedness does not exceed the lesser of (x) the fair market value of such Property at the time of such incurrence or (y) the purchase price of such Property. (b) Notwithstanding anything contained in Section 6.13(a): --------------- (x) the Borrower will not, and will not permit or suffer and Subsidiary to, at any time, create or permit or suffer to exist any Lien on any Subsidiary Stock or other Security issued by a Subsidiary and held by the Borrower or by another Subsidiary; and (y) no Lien permitted by Section 6.13(a) shall result in any --------------- obligation of the Borrower or any Subsidiary being secured by assets which have a fair market value in excess of the amount of such obligation except as generally required by conventional commercial practice, and then only if, after giving effect to such over-collateralization, the Borrower or such Subsidiary owns similar assets, free of any Lien, which have an aggregate value at least equal to the difference between (A) the aggregate fair market value (as determined in the reasonable good faith judgment of the Borrower's Board of Directors) of all assets of the Borrower or such Subsidiary, as the case may be, securing such obligations, and (B) the aggregate amount of all such secured obligations of the Borrower or such Subsidiary. (c) In case any Property is subjected to a Lien securing Indebtedness of the Borrower or any Subsidiary in violation of Section ------- 6.13(a) or (b), the Borrower will make or cause to be made provision -------------- whereby the Obligations will be secured equally and ratably with all other obligations secured thereby, and in any case the Obligations shall have the benefit, to the full extent that, and with such priority as, the Lenders may be entitled thereto under applicable law, of an equitable Lien on such Property securing the Obligations. Such violation of Section 6.13(a) or (b) ------- --- shall result in a Default hereunder, whether or not any such provision is made pursuant to this Section 6.13(c). --------------- 6.14. Subsidiary Indebtedness. No Subsidiary will (i) become liable for ----------------------- or have outstanding, any Indebtedness (except to the extent a Contingent Obligation permitted by Section 6.17 constitutes Indebtedness) other than to the ------------ Borrower or to a Wholly-Owned Subsidiary of the Borrower or (ii) permit its Property to be subject to a Lien securing any Indebtedness except for Liens on loans or other receivables of a Subsidiary or on the cash proceeds of such loans or other receivables securing Indebtedness of the Borrower, which are permitted pursuant to Section 6.13(a)(vi). ------------------- 6.15. Affiliates. The Borrower will not, and will not permit any of its ---------- Subsidiaries to, enter into any transaction (including, without limitation, the purchase or sale of any Property or service) with, or make any payment or transfer to, any Affiliate except in the ordinary course of business and pursuant to the reasonable requirements of the Borrower's or such Subsidiary's business and upon fair and reasonable terms no less favorable to the Borrower or such Subsidiary than the Borrower or such Subsidiary would obtain in a comparable arms-length transaction. 29 6.16. Subordinated Indebtedness. The Borrower will not issue any ------------------------- Subordinated Indebtedness or Disqualified Stock unless the same is not otherwise prohibited hereunder and the first sinking fund, redemption or other required payment is scheduled to occur after the Facility Termination Date. The Borrower will not, and will not permit any of its Subsidiaries to, make any amendment or modification to the indenture, note or other agreement evidencing or governing any Subordinated Indebtedness, or directly or indirectly voluntarily prepay, defease or in substance defease, purchase, redeem, retire or otherwise acquire, any Subordinated Indebtedness; provided, however, that the Borrower may from -------- ------- time to time extend (but not increase) the Designated Subordinated Indebtedness. 6.17. Contingent Obligations. (a) The Borrower will not make or suffer ---------------------- to exist any Contingent Obligation unless (i) after giving effect to the existence of such Contingent Obligation, no Default or Unmatured Default would exist, and (ii) the maximum amount of Indebtedness, dividend or other obligation or liability with respect to which such Contingent Obligation provides assurance (as well as the maximum amount of such Contingent Obligation) can be mathematically determined at the time such Contingent Obligation is incurred. (b) No Subsidiary of the Borrower will make or suffer to exist any Contingent Obligation except (i) the Guaranty, (i) the existing Contingent Obligations listed in Part B of Schedule 2 attached hereto, and (iii) any other ------ ---------- Contingent Obligation incurred by the Borrower or any Subsidiary which satisfies all of the following conditions: (A) it is a guaranty of indebtedness for borrowed money, (B) the Borrower is the primary obligor of the indebtedness guaranteed; (C) the proceeds of such indebtedness are applied by the Borrower to provide funds (including working capital) to be used in the ordinary course of business of the Borrower and its Subsidiaries; (D) after giving effect to the existence of such Contingent Obligation, no Default or Unmatured Default would exist; (E) the maximum amount of indebtedness being guaranteed (as well as the maximum amount of such Contingent Obligation) can be mathematically determined at the time the Contingent Obligation is incurred; and (F) such Contingent Obligation and the indebtedness of the Borrower guaranteed thereby is incurred in the ordinary course of business of such Subsidiary and the Borrower and in accordance with the current practice of the Borrower and its Subsidiaries, at the date hereof. 6.18. Distributions. Neither the Borrower nor any Subsidiary will ------------- declare, make or become obligated to make any Distribution unless, immediately after giving effect thereto the aggregate amount of all Distributions declared, made or obligated, for the period subsequent to December 31, 1994 would not exceed the sum of (x) 50% (or 100% in case of a negative number) of Consolidated Pre-Tax Income (net of income taxes) accumulated after December 31, 1994, plus ---- (y) 100% of the aggregate net proceeds received by the Borrower after December 31, 1994 from the issue and sale of its capital stock (less any portion of the net proceeds of such sale of capital stock which was used by the Borrower to contemporaneously redeem or acquire any of the Borrower's capital stock or warrants, rights or other options to purchase or acquire such stock), plus (z) ---- the aggregate amount of capital contributions to the Borrower made after December 31, 1994 in any fashion other than through the purchase of the Borrower's capital stock. The Borrower will not become obligated to make a Distribution which is payable more than sixty days after authorization. 6.19. Subsidiary Preferred Stock. No Subsidiary shall (i) issue -------------------------- preferred stock except shares of nonconvertible preferred stock issued to the Borrower or a Wholly-Owned Subsidiary of the Borrower or (ii) permit any shares of its preferred stock to remain outstanding except (x) shares of its nonconvertible preferred stock which are held by the Borrower or a Wholly-Owned Subsidiary of the Borrower and (y) shares of nonconvertible preferred stock of a Guarantor held by others at the time such Guarantor becomes a Guarantor so long as such shares of preferred stock were not issued or transferred to such others in contemplation of, or in connection with, such Guarantor becoming a Subsidiary of the Borrower. 30 6.20. Financial Covenants. ------------------- (a) Fixed Charge Coverage. The Borrower will not permit the ratio of --------------------- (i) the sum of Consolidated Pre-Tax Income plus Consolidated Fixed Charges ---- to (ii) Consolidated Fixed Charges, in each case determined as at the end of any fiscal quarter of the Borrower for the period of four consecutive fiscal quarters ending on such determination date, to be less than 1.50:1.00. (b) Consolidated Adjusted Tangible Net Worth. The Borrower will at ---------------------------------------- all times maintain Consolidated Adjusted Tangible Net Worth of not less than $325,000,000 plus: ---- (i) 50% of Consolidated Net Income for the period commencing January 1, 1996 and ending on the last day of the most recent fiscal quarter ended at least 60 days prior to the date of determination (excluding any net losses during any fiscal quarter period within such measurement period); and (ii) 100% of the cash proceeds (net of underwriting commissions, legal, accounting and other usual professional fees and taxes) of any sale or issuance of equity Securities of the Borrower or any of its Subsidiaries (or of any options, warrants or rights in respect of any such equity Securities) or the sale or issuance of any Subordinated Indebtedness, in each case which issuance or sale takes place after the date of this Agreement. (c) Consolidated Funded Debt to Consolidated Adjusted Tangible Net -------------------------------------------------------------- Worth. The Borrower will maintain the ratio of Consolidated Funded Debt to ----- Consolidated Adjusted Tangible Net Worth at less than 7.00:1.00 at all times and will not permit the ratio of Consolidated Funded Debt to Consolidated Adjusted Tangible Net Worth to exceed 5.00:1.00 as of the last day of any fiscal quarter of the Borrower. (d) Liquid Asset Coverage. The Borrower will not permit the ratio of --------------------- Consolidated Unrestricted Cash plus Consolidated Eligible Loans to (y) ---- Consolidated Unsecured Debt at any time to be less than .75:1.00 at such time. (e) Minimum Cash Flow. The Borrower will not permit the sum, ----------------- determined as of the last day of any fiscal quarter of the Borrower, of (i) the Consolidated Cash Flows during each of the four consecutive fiscal quarters of the Borrower ending on such day plus (ii) the Consolidated Cash ---- Flows projected by the Borrower pursuant to the procedure (and subject to any adjustments) described below for each of the next succeeding four consecutive fiscal quarters of the Borrower to be less than $200,000,000. The amount in clause (ii) above shall be as provided in pro forma financial ----------- statements prepared by the Borrower in good faith in reasonable detail with reasonable assumptions for such period, which financial statements shall have been provided as part of the compliance certificate delivered pursuant to Section 6.1(iii) for such fiscal quarter. At the request of the Agent ---------------- (made in its reasonable discretion or at the direction of the Required Lenders within 10 Business Days after the applicable compliance certificate is delivered as required by Section 6.1(iii)) the Borrower shall, at its ---------------- expense, arrange for its accountants referred to in Section 6.1 to review ----------- and render a report (addressed to the Borrower and the Lenders) regarding the accuracy of the applicable projections, and the Borrower will make any adjustments to such projections recommended by such accountants, all within 20 Business Days after request of the Agent pursuant to this Section 6.20 ------------ (e). --- (f) Consolidated Other Cash Producing Assets to Consolidated Capital ---------------------------------------------------------------- Ratio. The Borrower will not permit the ratio of Consolidated Other Cash ----- Producing Assets to Consolidated Capital to be greater than 1.80:1.00 as of the last day of any fiscal quarter of the Borrower. 31 6.21. Underwriting Standards. The Borrower will not, and will not permit ---------------------- any of its Subsidiaries to, modify its respective underwriting standards or eligibility requirements for the origination, and transfer to a trust or other special purpose entity, of loans and related Property if such modification could result in a Material Adverse Effect. ARTICLE VII DEFAULTS -------- The occurrence of any one or more of the following events shall constitute a Default: 7.1. Any representation or warranty made or deemed made by or on behalf of the Borrower or any of its Subsidiaries to the Lenders or the Agent under or in connection with this Agreement,any other Loan Document, any Loan, or any certificate or information delivered in connection with this Agreement or any other Loan Document shall be materially false on the date as of which made. 7.2. (a) Nonpayment of principal of any Note when due, or (b) nonpayment of interest upon any Note or of any facility fee or other Obligations under any of the Loan Documents within five days after the same becomes due. 7.3 The breach by the Borrower of any of the terms or provisions of Section 6.2 or any of Sections 6.10 through 6.21. - ----------- ------------- ---- 7.4 The breach by the Borrower (other than a breach which constitutes a Default under Section 7.1, 7.2 or 7.3) of any of the terms or provisions of this ----------- --- --- Agreement which is not remedied within five days after written notice from the Agent or any Lender. 7.5. Failure of the Borrower or any of its Subsidiaries to pay when due any Indebtedness aggregating in excess of $10,000,000 ("Material Indebtedness"); or --------------------- the default by the Borrower or any of its Subsidiaries in the performance of any term, provision or condition contained in any agreement under which any Indebtedness was created or is governed (including any default arising from a failure to pay), or any other event shall occur or condition exist, the effect of which is to cause, or to permit the holder or holders of any Material Indebtedness to cause, any Material Indebtedness to become due prior to its stated maturity; or any Material Indebtedness of the Borrower or any of its Subsidiaries shall be declared to be due and payable or required to be prepaid or repurchased (other than by a regularly scheduled payment) prior to the stated maturity thereof; or the Borrower or any of its Subsidiaries shall not pay, or admit in writing its inability to pay, its debts generally as they become due. 7.6. The Borrower or any of its Subsidiaries shall (i) have an order for relief entered with respect to it under the Federal bankruptcy laws as now or hereafter in effect, (ii) make an assignment for the benefit of creditors, (iii) apply for, seek, consent to, or acquiesce in, the appointment of a receiver, custodian, trustee, examiner, liquidator or similar official for it or any Substantial Portion of its Property, (iv) institute any proceeding seeking an order for relief under the Federal bankruptcy laws as now or hereafter in effect or seeking to adjudicate it a bankrupt or insolvent, or seeking dissolution, winding up, liquidation, reorganization, arrangement, adjustment or composition of it or its debts under any law relating to bankruptcy, insolvency or reorganization or relief of debtors or fail to file an answer or other pleading denying the material allegations of any such proceeding filed against it, (v) take any corporate action to authorize or effect or in furtherance of any of the foregoing actions set forth in this Section 7.6 or (vi) fail to contest in good ----------- faith any appointment or proceeding described in Section 7.7. ----------- 32 7.7. Without the application, approval or consent of the Borrower or any of its Subsidiaries, a receiver, trustee, examiner, liquidator or similar official shall be appointed for the Borrower or any of its Subsidiaries or any Substantial Portion of its respective Property, or a proceeding described in Section 7.6(iv) shall be instituted against the Borrower or any of its - --------------- Subsidiaries and such appointment continues undischarged or such proceeding continues undismissed or unstayed for a period of 30 consecutive days. 7.8. Any court, government or governmental agency shall condemn, seize or otherwise appropriate, or take custody or control of (each a "Condemnation"), ------------ all or any portion of the Property of the Borrower or any of its Subsidiaries which, when taken together with all other Property of the Borrower and its Subsidiaries so condemned, seized, appropriated, or taken custody or control of, during the twelve-month period ending with the month in which any such Condemnation occurs, constitutes a Substantial Portion. 7.9. The Borrower or any of its Subsidiaries shall fail within 30 days to pay, bond or otherwise discharge one or more judgments or orders for the payment of money in excess of $10,000,000 in the aggregate, which are not stayed on appeal or otherwise being appropriately contested in good faith. 7.10. The Unfunded Liabilities of all Single Employer Plans shall exceed in the aggregate $10,000,000 or any Reportable Event shall occur in connection with any Plan. 7.11. The Borrower or any other member of the Controlled Group shall have been notified by the sponsor of a Multiemployer Plan that it has incurred withdrawal liability to such Multiemployer Plan in an amount which, when aggregated with all other amounts required to be paid to Multiemployer Plans by the Borrower or any other member of the Controlled Group as withdrawal liability (determined as of the date of such notification), exceeds $10,000,000 or requires payments exceeding $2,500,000 per annum. 7.12. The Borrower or any other member of the Controlled Group shall have been notified by the sponsor of a Multiemployer Plan that such Multiemployer Plan is in reorganization or is being terminated, within the meaning of Title IV of ERISA, if as a result of such reorganization or termination the aggregate annual contributions of the Borrower and the other members of the Controlled Group (taken as a whole) to all Multiemployer Plans which are then in reorganization or being terminated have been or will be increased over the amounts contributed to such Multiemployer Plans for the respective plan years of each such Multiemployer Plan immediately preceding the plan year in which the reorganization or termination occurs by an amount exceeding $10,000,000. 7.13. The Borrower or any of its Subsidiaries shall be the subject of any proceeding or investigation pertaining to the release by the Borrower or any of its Subsidiaries, or any other Person of any toxic or hazardous waste or substance into the environment, or any violation of any federal, state or local environmental, health or safety law or regulation, which, in either case, could reasonably be expected to have a Material Adverse Effect. 7.14. Any Change in Control shall occur. 7.15. The occurrence of any "default", as defined in any Loan Document (other than this Agreement or the Notes) or the breach of any of the terms or provisions of any Loan Document (other than this Agreement or the Notes), which default or breach continues beyond any period of grace therein provided. 7.16. The Guaranty shall fail to remain in full force or effect or any action shall be taken to discontinue or to assert the invalidity or unenforceability of the Guaranty or any Guarantor shall fail to comply with any of the terms or provisions of the Guaranty, or any Guarantor denies that it has any further liability under the Guaranty, or gives notice to such effect. 33 7.17. The representations and warranties set forth in Section 5.15 shall at ------------ any time not be true and correct. 7.18. The Borrower or any Subsidiary shall fail to pay when due any rate hedging obligation, operating lease obligation, letter of credit, obligation under sale and leaseback transaction or Contingent Obligation. ARTICLE VIII ACCELERATION, WAIVERS, AMENDMENTS AND REMEDIES ---------------------------------------------- 8.1. Acceleration. If any Default described in Section 7.6 or 7.7 occurs ------------ ----------- --- with respect to the Borrower, the obligations of the Lenders to make Loans hereunder shall automatically terminate and the Obligations shall immediately become due and payable without any election or action on the part of the Agent or any Lender. If any other Default occurs, the Required Lenders (or the Agent with the consent of the Required Lenders) may terminate or suspend the obligations of the Lenders to make Loans hereunder, or declare the Obligations to be due and payable, or both, whereupon the Obligations shall become immediately due and payable, without presentment, demand, protest or notice of any kind, all of which the Borrower hereby expressly waives. If, within five days after acceleration of the maturity of the Obligations or termination of the obligations of the Lenders to make Loans hereunder as a result of any Default (other than any Default as described in Section 7.6 or 7.7 ----------- --- with respect to the Borrower) and before any judgment or decree for the payment of the Obligations due shall have been obtained or entered, the Required Lenders (or, in respect of a Default of the type described in Section 7.1, all the ----------- Lenders), in either case in their sole discretion, shall so direct, then the Agent shall, by notice to the Borrower, rescind and annul such acceleration and/or termination. 8.2. Amendments. Subject to the provisions of this Article VIII, the ---------- ------------ Required Lenders (or the Agent with the consent in writing of the Required Lenders) and the Borrower may enter into agreements supplemental hereto for the purpose of adding or modifying any provisions to the Loan Documents or changing in any manner the rights of the Lenders or the Borrower hereunder or waiving any Default hereunder or any requirement under any Loan Document; provided, however, -------- ------- that no such supplemental agreement shall, without the consent of each Lender affected thereby: (i) Extend the final maturity of any Loan or Note or forgive all or any portion of the principal amount thereof, or reduce the rate or amount or extend the time of payment of interest or fees thereon. (ii) Reduce the percentage specified in the definition of Required Lenders. (iii) Extend the Facility Termination Date, or reduce the amount or extend the payment date for, the mandatory payments required under Section 2.2, or increase or decrease the amount of the Commitment ----------- (including without limitation any Facility B Commitment) of any Lender hereunder (except for a ratable decrease in the Commitments of all Lenders), or permit the Borrower to assign its rights under this Agreement. (iv) Amend this Section 8.2. ----------- (v) Release any Guarantor from the Guaranty. 34 No amendment of any provision of this Agreement relating to the Agent shall be effective without the written consent of the Agent. The Agent may waive payment of the fee required under Section 12.3.2 without obtaining the consent of any -------------- other party to this Agreement. 8.3. Preservation of Rights. No delay or omission of the Lenders or the ---------------------- Agent to exercise any right under the Loan Documents shall impair such right or be construed to be a waiver of any Default or an acquiescence therein, and the making of a Loan notwithstanding the existence of a Default or the inability of the Borrower to satisfy the conditions precedent to such Loan shall not constitute any waiver or acquiescence. Any single or partial exercise of any such right shall not preclude other or further exercise thereof or the exercise of any other right, and no waiver, amendment or other variation of the terms, conditions or provisions of the Loan Documents whatsoever shall be valid unless in writing signed by the Lenders required pursuant to Section 8.2, and then only ----------- to the extent in such writing specifically set forth. All remedies contained in the Loan Documents or by law afforded shall be cumulative and all shall be available to the Agent and the Lenders until the Obligations have been paid in full. ARTICLE IX GENERAL PROVISIONS ------------------ 9.1. Survival of Representations. All representations and warranties of --------------------------- the Borrower contained in this Agreement shall survive delivery of the Notes and the making of the Loans herein contemplated. 9.2. Governmental Regulation. Anything contained in this Agreement to the ----------------------- contrary notwithstanding, no Lender shall be obligated to extend credit to the Borrower in violation of any limitation or prohibition provided by any applicable statute or regulation. 9.3. Taxes. Any taxes (excluding federal income taxes on the overall net ----- income of any Lender) or other similar assessments or charges made by any governmental or revenue authority in respect of the Loan Documents shall be paid by the Borrower, together with interest and penalties, if any. 9.4. Headings. Section headings and tables of contents in the Loan -------- Documents are for convenience of reference only, and shall not govern the interpretation of any of the provisions of the Loan Documents. 9.5. Entire Agreement. The Loan Documents embody the entire agreement and ---------------- understanding among the Borrower, the Agent and the Lenders and supersede all prior agreements and understandings among the Borrower, the Agent and the Lenders relating to the subject matter thereof (other than the fee letter described in Section 10.13). ------------- 9.6. Several Obligations; Benefits of this Agreement. The respective ----------------------------------------------- obligations of the Lenders hereunder are several and not joint and no Lender shall be the partner or agent of any other (except to the extent to which the Agent is authorized to act as such). The failure of any Lender to perform any of its obligations hereunder shall not relieve any other Lender from any of its obligations hereunder. This Agreement shall not be construed so as to confer any right or benefit upon any Person other than the parties to this Agreement and their respective permitted successors and assigns and any indemnitees pursuant to Section 9.7 to the extent provided in such Section. ----------- 9.7. Expenses; Indemnification . The Borrower shall reimburse each of the -------------------------- Agent and the Documentation Agent for any costs, internal charges and out-of- pocket expenses (including attorneys' fees and time charges of attorneys for the Agent and the Documentation Agent, which attorneys may be employees of 35 the Agent or the Documentation Agent) paid or incurred by the Agent or the Documentation Agent in connection with the preparation, negotiation, execution, delivery, review, amendment, modification, and administration of the Loan Documents. The Borrower also agrees to reimburse the Agent and the Lenders for any costs, internal charges and out-of-pocket expenses (including attorneys' fees and time charges of attorneys for the Agent and the Lenders, which attorneys may be employees of the Agent or the Lenders) paid or incurred by the Agent or any Lender in connection with the collection and enforcement of (including without limitation endeavoring to enforce) the Loan Documents. The Borrower further agrees to indemnify the Agent and each Lender, its directors, officers and employees against all losses, claims, damages, penalties, judgments, liabilities and expenses (including, without limitation, all expenses of litigation or preparation therefor whether or not the Agent or any Lender is a party thereto) which any of them may pay or incur arising out of or relating to this Agreement, the other Loan Documents, the transactions contemplated hereby or the direct or indirect application or proposed application of the proceeds of any Loan hereunder except to the extent that they are determined by a court of competent jurisdiction in a final and non-appealable order to have resulted from the gross negligence or willful misconduct of the party seeking indemnification. The obligations of the Borrower under this Section shall survive the termination of this Agreement. 9.8. Numbers of Documents. All statements, notices, closing documents, -------------------- and requests hereunder shall be furnished to the Agent with sufficient copies so that the Agent may furnish one to each of the Lenders. 9.9. Accounting. All accounting terms not specifically defined herein ---------- shall be construed in accordance with GAAP. Except as otherwise provided herein, if any changes in accounting principles from those used in the preparation of the most recent financial statements referred to in Section 5.4 ----------- are hereafter required or permitted by the rules, regulations, pronouncements and opinions of the Financial Accounting Standards Board of the American Institute of Certified Public Accountants (or successors thereto or agencies with similar functions) and are adopted by the Borrower with the agreement of its independent certified public accountants and such changes result in a change in the method of calculation of any of the financial covenants, standards or terms found in Section 6.20 or in the related definitions of terms used therein, ------------ the parties hereto agree to enter into good faith negotiations in order to amend such provisions so as to reflect equitably such changes with the desired result that the criteria for evaluating the Borrower's financial condition shall be the same after such changes as if such changes had not been made, provided that no -------- change in GAAP that would affect the method of calculation of any of the financial covenants, standards or terms shall be given effect in such calculations until such provisions are amended, in a manner satisfactory to the Borrower, the Agent and the Required Lenders, so as to reflect such change in accounting principles. 9.10. Severability of Provisions. Any provision in any Loan Document that -------------------------- is held to be inoperative, unenforceable, or invalid in any jurisdiction shall, as to that jurisdiction, be inoperative, unenforceable, or invalid without affecting the remaining provisions in that jurisdiction or the operation, enforceability, or validity of that provision in any other jurisdiction, and to this end the provisions of all Loan Documents are declared to be severable. 9.11. Nonliability of Lenders. The relationship between the Borrower and ----------------------- the Lenders and the Agent shall be solely that of borrower and lender. Neither the Agent nor any Lender shall have any fiduciary responsibilities to the Borrower. Neither the Agent nor any Lender undertakes any responsibility to the Borrower to review or inform the Borrower of any matter in connection with any phase of the Borrower's business or operations. The Borrower agrees that neither the Agent nor any Lender shall have liability to the Borrower (whether sounding in tort, contract or otherwise) for losses suffered by the Borrower in connection with, arising out of, or in any way related to, the transactions contemplated and the relationship established by the Loan Documents, or any act, omission or event occurring in connection therewith, unless it is determined by a court of competent jurisdiction in a final and non-appealable order that such losses resulted from the gross negligence or willful misconduct of the party from which recovery is sought. Neither the Agent nor any Lender shall have any liability with respect to, and the Borrower hereby waives, releases and agrees not to sue for, any 36 special, indirect or consequential damages suffered by the Borrower in connection with, arising out of, or in any way related to the Loan Documents or the transactions contemplated thereby. 9.12. Nonreliance. Each Lender hereby represents that it is not relying on ----------- or looking to any margin stock (as defined in Regulation U of the Board of Governors of the Federal Reserve System) for the repayment of the Loans provided for herein. ARTICLE X THE AGENT --------- 10.1. Appointment; Nature of Relationship. The First National Bank of ----------------------------------- Chicago is hereby appointed by the Lenders as the Agent hereunder and under each other Loan Document, and each of the Lenders irrevocably authorizes the Agent to act as the contractual representative of such Lender with the rights and duties expressly set forth herein and in the other Loan Documents. The Agent agrees to act as such contractual representative upon the express conditions contained in this Article X. In its capacity as the Lenders' contractual representative, the --------- Agent (i) does not hereby assume any fiduciary duties to any of the Lenders, (ii) is a "representative" of the Lenders within the meaning of Section 9-105 of the Uniform Commercial Code and (iii) is acting as an independent contractor, the rights and duties of which are limited to those expressly set forth in this Agreement and the other Loan Documents. Notwithstanding the use of the defined term "Agent" or any provision to the contrary contained elsewhere in this Agreement or in any other Loan Document, it is expressly understood and agreed that the Agent is merely acting as the representative of the Lenders and the Agent shall not have any duties or responsibilities, except those expressly set forth herein, nor shall the Agent have or be deemed to have any fiduciary relationship with any Lender, and no implied covenants, functions, responsibilities, duties, obligations or liabilities shall be read into this Agreement or any other Loan Document or otherwise exist against the Agent. 10.2. Powers. The Agent shall have and may exercise such powers under the ------ Loan Documents as are specifically delegated to the Agent by the terms of each thereof, together with such powers as are reasonably incidental thereto. The Agent shall have no implied duties to the Lenders, or any obligation to the Lenders to take any action thereunder except any action specifically provided by the Loan Documents to be taken by the Agent. 10.3. General Immunity. Neither the Agent nor any of its directors, ---------------- officers, agents or employees shall be liable to the Borrower, the Lenders or any Lender for any action taken or omitted to be taken by it or them hereunder or under any other Loan Document or in connection herewith or therewith except for its or their own gross negligence or willful misconduct. 10.4. No Responsibility for Loans, Recitals, etc. Neither the Agent nor ------------------------------------------- any of its directors, officers, agents or employees shall be responsible for or have any duty to ascertain, inquire into, or verify (i) any statement, warranty or representation made in connection with any Loan Document or any borrowing hereunder; (ii) the performance or observance of any of the covenants or agreements of any obligor under any Loan Document, including, without limitation, any agreement by an obligor to furnish information directly to each Lender; (iii) the satisfaction of any condition specified in Article IV, except ---------- receipt of items required to be delivered to the Agent; (iv) the validity, enforceability, effectiveness, sufficiency or genuineness of any Loan Document or any other instrument or writing furnished in connection therewith; or (v) the value, sufficiency, creation, perfection or priority of any interest in any collateral security. The Agent shall have no duty to disclose to the Lenders information that is not required to be furnished by the Borrower to the Agent at such time, but 37 is voluntarily furnished by the Borrower to the Agent (either in its capacity as Agent or in its individual capacity). 10.5. Action on Instructions of Lenders. The Agent shall in all cases be --------------------------------- fully protected in acting, or in refraining from acting, hereunder and under any other Loan Document in accordance with written instructions signed by the Required Lenders (or all the Lenders, to the extent unanimity is expressly required herein or in such Loan Document), and such instructions and any action taken or failure to act pursuant thereto shall be binding on all of the Lenders and on all holders of Notes. The Lenders hereby acknowledge that the Agent shall be under no duty to take any discretionary action permitted to be taken by it pursuant to the provisions of this Agreement or any other Loan Document unless it shall be requested in writing to do so by the Required Lenders (or all the Lenders, to the extent unanimity is expressly required herein or in such Loan Document). The Agent shall be fully justified in failing or refusing to take any action hereunder and under any other Loan Document unless it shall first be indemnified to its satisfaction by the Lenders pro rata against any and all liability, cost and expense that it may incur by reason of taking or continuing to take any such action. 10.6. Employment of Agents and Counsel. The Agent may execute any of its -------------------------------- duties as Agent hereunder and under any other Loan Document by or through employees, agents, and attorneys-in-fact and shall not be answerable to the Lenders, except as to money or securities received by it or its authorized agents, for the default or misconduct of any such agents or attorneys-in-fact selected by it with reasonable care. The Agent shall be entitled to advice of counsel concerning all matters pertaining to the agency hereby created and its duties hereunder and under any other Loan Document. 10.7. Reliance on Documents; Counsel. The Agent shall be entitled to rely ------------------------------ upon any Note, notice, consent, certificate, affidavit, letter, telegram, statement, paper or document believed by it (which belief is held in the absence of gross negligence or willful misconduct) to be genuine and correct and to have been signed or sent by the proper person or persons, and, in respect to legal matters, upon the opinion of counsel selected by the Agent, which counsel may be employees of the Agent. 10.8. Agent's Reimbursement and Indemnification. The Lenders agree to ----------------------------------------- reimburse and indemnify the Agent ratably in proportion to their respective Commitments (or, if the Commitments have been terminated, in proportion to their Commitments immediately prior to such termination) (i) for any amounts not reimbursed by the Borrower for which the Agent is entitled to reimbursement by the Borrower under the Loan Documents, (ii) for any other expenses incurred by the Agent on behalf of the Lenders, in connection with the preparation, execution, delivery, administration and enforcement of the Loan Documents and (iii) for any liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind and nature whatsoever which may be imposed on, incurred by or asserted against the Agent in any way relating to or arising out of the Loan Documents or any other document delivered in connection therewith or the transactions contemplated thereby, or the enforcement of any of the terms thereof or of any such other documents, provided that no Lender shall be liable for any of the foregoing to the extent they arise from the gross negligence or willful misconduct of the Agent. The obligations of the Lenders under this Section 10.8 shall survive payment of the ------------ Obligations and termination of this Agreement. 10.9. Notice of Default. The Agent shall not be deemed to have knowledge ----------------- or notice of the occurrence of any Default or Unmatured Default hereunder unless the Agent has received written notice from a Lender or the Borrower referring to this Agreement describing such Default or Unmatured Default and stating that such notice is a "notice of default". In the event that the Agent receives such a notice, the Agent shall give prompt notice thereof to the Lenders. 10.10. Rights as a Lender. In the event the Agent is a Lender, the Agent ------------------ shall have the same rights and powers hereunder and under any other Loan Document as any Lender and may exercise the same as though it were not the Agent, and the term "Lender" or "Lenders" shall, at any time when the Agent is a Lender, unless 38 the context otherwise indicates, include the Agent in its individual capacity. The Agent may accept deposits from, lend money to, and generally engage in any kind of trust, debt, equity or other transaction, in addition to those contemplated by this Agreement or any other Loan Document, with the Borrower or any of its Subsidiaries in which the Borrower or such Subsidiary is not restricted hereby from engaging with any other Person. The Agent, in its individual capacity, is not obligated to remain a Lender. 10.11. Lender Credit Decision. Each Lender acknowledges that it has, ---------------------- independently and without reliance upon the Agent or any other Lender and based on the financial statements prepared by the Borrower and such other documents and information as it has deemed appropriate, made its own credit analysis and decision to enter into this Agreement and the other Loan Documents. Each Lender also acknowledges that it will, independently and without reliance upon the Agent or any other Lender and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under this Agreement and the other Loan Documents. 10.12. Successor Agent. The Agent may resign at any time by giving --------------- written notice thereofto the Lenders and the Borrower, such resignation to be effective upon the appointment of a successor Agent or, if no successor Agent has been appointed, forty-five days after the retiring Agent gives notice of its intention to resign. The Agent may be removed at any time by written notice received by the Agent from the Required Lenders, such removal to be effective on the date specified by the Required Lenders. Upon any such resignation or removal, the Required Lenders shall have the right to appoint, on behalf of the Borrower and the Lenders, a successor Agent. If no successor Agent shall have been so appointed by the Required Lenders within thirty days after the resigning or removed Agent's giving notice of its intention to resign, then the resigning or removed Agent may appoint, on behalf of the Borrower and the Lenders, a successor Agent. If the Agent has resigned or been removed and no successor Agent has been appointed, the Lenders may perform all the duties of the Agent hereunder and the Borrower shall make all payments in respect of the Obligations to the applicable Lender and for all other purposes shall deal directly with the Lenders. No successor Agent shall be deemed to be appointed hereunder until such successor Agent has accepted the appointment. Any such successor Agent shall be a commercial bank having capital and retained earnings of at least $50,000,000. Upon the acceptance of any appointment as Agent hereunder by a successor Agent, such successor Agent shall thereupon succeed to and become vested with all the rights, powers, privileges and duties of the resigning or removed Agent. Upon the effectiveness of the resignation or removal of the Agent, the resigning or removed Agent shall be discharged from its duties and obligations hereunder and under the Loan Documents. After the effectiveness of the resignation or removal of an Agent, the provisions of this Article X shall continue in effect for the --------- benefit of such Agent in respect of any actions taken or omitted to be taken by it while it was acting as the Agent hereunder and under the other Loan Documents. 10.13. Agent's Fee; Documentation Agent's Fee. The Borrower agrees to pay -------------------------------------- to the Agent, for its own account, the fees agreed to by the Borrower pursuant to that certain letter agreement dated June 13, 1996, between the Borrower and First Chicago Capital Markets, Inc. or as otherwise agreed from time to time. The Borrower agrees to pay to the Documentation Agent, for its own account, such fees as have been agreed to by the Borrower and the Documentation Agent. 10.14. Duties and Rights of Documentation Agent. The Documentation ---------------------------------------- Agent shall have no duties under this Agreement or the other Loan Documents, and shall have no rights, in its capacity as Documentation Agent hereunder except as expressly set forth herein or therein. 39 ARTICLE XI SETOFF; RATABLE PAYMENTS ------------------------ 11.1. Setoff. In addition to, and without limitation of, any rights of the ------ Lenders under applicable law, if the Borrower becomes insolvent, however evidenced, or any Default or Unmatured Default occurs, any and all deposits (including all account balances, whether provisional or final and whether or not collected or available) and any other Indebtedness at any time held or owing by any Lender to or for the credit or account of the Borrower may be offset and applied toward the payment of the Obligations owing to such Lender, whether or not the Obligations, or any part hereof, shall then be due. 11.2. Ratable Payments. If any Lender, whether by setoff or otherwise, has ---------------- payment made to it upon its Facility A Loans (other than payments received pursuant to Section 3.1, 3.2 or 3.4) in a greater proportion than that received ----------- --- --- by any other Lender, such Lender agrees, promptly upon demand, to purchase a portion of the Facility A Loans held by the other Lenders so that after such purchase each Lender will hold its ratable proportion of Facility A Loans. If any Facility B Lender, whether by setoff or otherwise, has payment made to it upon its Facility B Loans (other than payments received pursuant to Section 3.1 ----------- or 3.2) in a greater proportion than that received by any other Facility B --- Lender, such Facility B Lender agrees, promptly upon demand, to purchase a portion of the Facility B Loans held by the other Facility B Lenders so that after such purchase each Facility B Lender will hold its ratable proportion of Facility B Loans. If any Lender, whether in connection with setoff or amounts which might be subject to setoff or otherwise, receives collateral or other protection for its Obligations or such amounts which may be subject to setoff, such Lender agrees, promptly upon demand, to take such action necessary such that all Lenders share in the benefits of such collateral ratably in proportion to their Loans. In case any such payment is disturbed by legal process, or otherwise, appropriate further adjustments shall be made. If an amount to be setoff is to be applied to Indebtedness of the Borrower to a Lender, other than Indebtedness evidenced by any of the Notes held by such Lender, such amount shall be applied ratably to such other Indebtedness and to the Indebtedness evidenced by such Notes. ARTICLE XII BENEFIT OF AGREEMENT; ASSIGNMENTS; PARTICIPATIONS ------------------------------------------------- 12.1. Successors and Assigns. The terms and provisions of the Loan ---------------------- Documents shall be binding upon and inure to the benefit of the Borrower, the Agent and the Lenders and their respective successors and assigns, except that (i) the Borrower shall not have the right to assign its rights or obligations under the Loan Documents and (ii) any assignment by any Lender must be made in compliance with Section 12.3. Notwithstanding clause (ii) of this Section, any ------------ ----------- Lender may at any time, without the consent of the Borrower or the Agent, assign all or any portion of its rights under this Agreement and its Notes to a Federal Reserve Bank; provided, however, that no such assignment to a Federal Reserve -------- ------- Bank shall release the transferor Lender from its obligations hereunder. The Agent may treat the payee of any Note as the owner thereof for all purposes hereof unless and until such payee complies with Section 12.3 in the case of an ------------ assignment thereof or, in the case of any other transfer, a written notice of the transfer is filed with the Agent. Any assignee or transferee of a Note agrees by acceptance thereof to be bound by all the terms and provisions of the Loan Documents. Any request, authority or consent of any Person, who at the time of making such request or giving such authority or consent is the holder of any Note, shall be conclusive and binding on any subsequent holder, transferee or assignee of such Note or of any Note or Notes issued in exchange therefor. 40 12.2. Participations. -------------- 12.2.1. Permitted Participants; Effect. Any Lender may, in the ordinary ------------------------------ course of its business and in accordance with applicable law, at any time sell to one or more banks or other entities ("Participants") participating interests ------------ in any Loan owing to such Lender, any Note held by such Lender, any Commitment of such Lender or any other interest of such Lender under the Loan Documents. In the event of any such sale by a Lender of participating interests to a Participant, such Lender's obligations under the Loan Documents shall remain unchanged, such Lender shall remain solely responsible to the other parties hereto for the performance of such obligations, such Lender shall remain the holder of any such Note for all purposes under the Loan Documents, all amounts payable by the Borrower under this Agreement shall be determined as if such Lender had not sold such participating interests, and the Borrower and the Agent shall continue to deal solely and directly with such Lender in connection with such Lender's rights and obligations under the Loan Documents. 12.2.2. Voting Rights. Each Lender shall retain the sole right to approve, ------------- without the consent of any Participant (and no Lender shall permit a Participant to have the right to approve), any amendment, modification or waiver of any provision of the Loan Documents other than any amendment, modification or waiver with respect to any Loan or Commitment in which such Participant has an interest which forgives principal, interest or fees or reduces the interest rate or fees payable with respect to any such Loan or Commitment, postpones the final maturity date of any such Loan or any date fixed for any regularly scheduled payment of interest or fees on any such Loan or Commitment, or releases any Guarantor. 12.2.3. Benefit of Setoff. The Borrower agrees that each Participant shall ----------------- be deemed to have the right of setoff provided in Section 11.1 in respect of its ------------ participating interest in amounts owing under the Loan Documents to the same extent as if the amount of its participating interest were owing directly to it as a Lender under the Loan Documents, provided that each Lender shall retain the right of setoff provided in Section 11.1 with respect to the amount of ------------ participating interests sold to each Participant. The Lenders agree to share with each Participant, and each Participant, by exercising the right of setoff provided in Section 11.1, agrees to share with each Lender, any amount received ------------ pursuant to the exercise of its right of setoff, such amounts to be shared in accordance with Section 11.2 as if each Participant were a Lender. ------------ 12.3. Assignments. ----------- 12.3.1. Permitted Assignments. Any Lender may, in the ordinary course of --------------------- its business and in accordance with applicable law, at any time assign to one or more banks or other entities ("Purchasers") all or any part of its rights and ---------- obligations under the Loan Documents. Such assignment shall be substantially in the form of Exhibit D hereto or in such other form as may be agreed to by the --------- parties thereto. The consent of the Agent and the Borrower (which consent shall not be unreasonably withheld or delayed) shall be required prior to an assignment becoming effective with respect to a Purchaser which is not a Lender or an Affiliate thereof; provided, however, that if a Default has occurred and -------- ------- is continuing, the consent of the Borrower shall not be required. Each such assignment shall be in an amount not less than the lesser of (i) $10,000,000 or (ii) the remaining amount of the assigning Lender's Commitment (calculated as at the date of such assignment). Any assignment by a Facility B Lender of its Commitment may or may not include its Facility B Commitment, so long as after giving effect to any such assignment, each of the assigning Facility B Lender and the assignee Lender have a Commitment at least equal to its Facility B Commitment, if any. 12.3.2. Effect; Effective Date. Upon (i) delivery to the Agent of a notice ---------------------- of assignment, substantially in the form attached as Exhibit I to Exhibit D --------- --------- hereto (a "Notice of Assignment"), together -------------------- 41 with any consents required by Section 12.3.1, and (ii) payment of a $3,000 fee -------------- to the Agent for processing such assignment, such assignment shall become effective on the effective date specified in such Notice of Assignment. The Notice of Assignment shall contain a representation by the Purchaser to the effect that none of the consideration used to make the purchase of the Commitment and Loans under the applicable assignment agreement are "plan assets" as defined under ERISA and that the rights and interests of the Purchaser in and under the Loan Documents will not be "plan assets" under ERISA. On and after the effective date of such assignment, such Purchaser shall for all purposes be a Lender (and, if applicable, a Facility B Lender) party to this Agreement and any other Loan Document executed by the Lenders and shall have all the rights and obligations of a Lender (and if applicable, a Facility B Lender) under the Loan Documents, to the same extent as if it were an original party hereto, and no further consent or action by the Borrower, the Lenders or the Agent shall be required to release the transferor Lender with respect to the percentage of the Aggregate Commitment and/or the Aggregate Facility B Commitment and Facility A Loans and/or Facility B Loans assigned to such Purchaser. Upon the consummation of any assignment to a Purchaser pursuant to this Section 12.3.2, the transferor -------------- Lender, the Agent and the Borrower shall make appropriate arrangements so that replacement Notes are issued to such transferor Lender and new Notes or, as appropriate, replacement Notes, are issued to such Purchaser, in each case in principal amounts reflecting their Commitments (and, if applicable, their respective Facility B Commitments), as adjusted pursuant to such assignment. 12.4.Dissemination of Information. The Borrower authorizes each Lender to ---------------------------- disclose to any Participant or Purchaser or any other Person acquiring an interest in the Loan Documents by operation of law (each a "Transferee") and any ---------- prospective Transferee any and all information in such Lender's possession concerning the creditworthiness of the Borrower and its Subsidiaries. 12.5. Tax Treatment. If any interest in any Loan Document is transferred ------------- to any Transferee which is organized under the laws of any jurisdiction other than the United States or any State thereof, the transferor Lender shall cause such Transferee, concurrently with the effectiveness of such transfer, to comply with the provisions of Section 4.3. ----------- ARTICLE XIII NOTICES ------- 13.1. Notices. Except as otherwise permitted by Section 2.13 with respect ------- ------------ to borrowing notices, all notices, requests and other communications to any party hereunder shall be in writing (including bank wire, facsimile transmission or similar writing) and shall be given to such party: (x) in the case of the Borrower or the Agent, at its address or facsimile number set forth on the signature pages hereof, (y) in the case of any Lender, at its address or facsimile number set forth below its signature hereto or (z) in the case of any party, such other address or facsimile number as such party may hereafter specify for the purpose by notice to the Agent and the Borrower. Each such notice, request or other communication shall be effective (i) if given by facsimile transmission, when transmitted to the facsimile number specified in this Section and confirmation of receipt is received, (ii) if given by mail, 72 hours after such communication is deposited in the mails with first class postage prepaid, addressed as aforesaid or (iii) if given by any other means, when delivered at the address specified in this Section; provided that notices -------- to the Agent under Article II shall not be effective until received. ---------- 13.2. Change of Address. The Borrower, the Agent and any Lender may each ----------------- change the address for service of notice upon it by a notice in writing to the other parties hereto. 42 ARTICLE XIV COUNTERPARTS ------------ This Agreement may be executed in any number of counterparts, all of which taken together shall constitute one agreement, and any of the parties hereto may execute this Agreement by signing any such counterpart. This Agreement shall be effective when it has been executed by the Borrower, the Agent and the Lenders and each party has notified the Agent by facsimile transmission or telephone, that it has taken such action. ARTICLE XV CHOICE OF LAW, CONSENT TO JURISDICTION, WAIVER OF JURY TRIAL ------------------------------------------------------------ 15.1. CHOICE OF LAW. THE LOAN DOCUMENTS SHALL BE CONSTRUED IN ACCORDANCE ------------- WITH THE INTERNAL LAWS (AND NOT THE LAW OF CONFLICTS) OF THE STATE OF ILLINOIS, BUT GIVING EFFECT TO FEDERAL LAWS APPLICABLE TO NATIONAL BANKS. 15.2 CONSENT TO JURISDICTION. THE BORROWER HEREBY IRREVOCABLY SUBMITS TO ----------------------- THE NON-EXCLUSIVE JURISDICTION OF ANY UNITED STATES FEDERAL OR ILLINOIS STATE COURT SITTING IN CHICAGO IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO ANY LOAN DOCUMENTS AND THE BORROWER HEREBY IRREVOCABLY AGREES THAT ALL CLAIMS IN RESPECT OF SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN ANY SUCH COURT AND IRREVOCABLY WAIVES ANY OBJECTION IT MAY NOW OR HEREAFTER HAVE AS TO THE VENUE OF ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN SUCH A COURT OR THAT SUCH COURT IS AN INCONVENIENT FORUM. NOTHING HEREIN SHALL LIMIT THE RIGHT OF THE AGENT OR ANY LENDER TO BRING PROCEEDINGS AGAINST THE BORROWER IN THE COURTS OF ANY OTHER JURISDICTION. ANY JUDICIAL PROCEEDING BY THE BORROWER AGAINST THE AGENT OR ANY LENDER OR ANY AFFILIATE OF THE AGENT OR ANY LENDER INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER IN ANY WAY ARISING OUT OF, RELATED TO, OR CONNECTED WITH ANY LOAN DOCUMENT SHALL BE BROUGHT ONLY IN A COURT IN CHICAGO, ILLINOIS. 15.3. WAIVER OF JURY TRIAL. THE BORROWER, THE AGENT AND EACH LENDER HEREBY -------------------- WAIVE TRIAL BY JURY IN ANY JUDICIAL PROCEEDING INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER (WHETHER SOUNDING IN TORT, CONTRACT OR OTHERWISE) IN ANY WAY ARISING OUT OF, RELATED TO, OR CONNECTED WITH ANY LOAN DOCUMENT OR THE RELATIONSHIP ESTABLISHED THEREUNDER. 43 IN WITNESS WHEREOF, the Borrower, the Lenders and the Agent have executed this Agreement as of the date first above written. THE MONEY STORE INC. By: ______________________________ Print Name: ______________________ Title: ___________________________ 2840 Morris Avenue Post Office Box 3155 Union, New Jersey 07083 Attention: ______________________ Commitment (Facility B, if any) - ----------- ------------------ FIRST UNION NATIONAL BANK $37,500,000 $15,000,000 OF NORTH CAROLINA, Individually and as Documentation Agent By: ______________________________ Print Name: ______________________ Title: ___________________________ One First Union Center, DC-6 Charlotte, North Carolina 28288-0166 Attention: ______________________ Commitment (Facility B, if any) - ----------- ------------------- BANCO POPULAR de PUERTO RICO $30,000,000 N/A By: _______________________________ Print Name: _______________________ Title: ____________________________ Seven West 51st Street, Fifth Floor New York, New York 10019 Attention: _______________________ Commitment (Facility B, if any) - ---------- ------------------- BANK HAPOALIM B.M. $20,000,000 N/A By: _______________________________ Print Name: _______________________ Title: ____________________________ 250 Montgomery Street, Suite 700 San Francisco, California 94104 Attention: _______________________ Commitment (Facility B, if any) - ---------- ------------------- THE BANK OF NEW YORK $15,000,000 N/A By: ______________________________ Print Name: ______________________ Title: ___________________________ One Wall Street 17th Floor, Mortgage Banking Division New York, New York 10286 Attention: ______________________ Commitment (Facility B, if any) - ---------- ------------------- THE BANK OF NOVA SCOTIA $27,000,000 N/A By: __________________________ Print Name: __________________ Title: _______________________ One Liberty Plaza New York, New York 10006 Attention: __________________ Commitment (Facility B, if any) - ---------- ------------------- THE CHASE MANHATTAN BANK $27,000,000 N/A By: _______________________________ Print Name: _______________________ Title: ____________________________ 270 Park Avenue, 43rd Floor New York, New York 10017-2070 Attention: Chris T. Kako Commitment (Facility B, if any) - ---------- -------------------- CIBC INC. $27,000,000 N/A By: ________________________________ Print Name: ________________________ Title: _____________________________ 425 Lexington Avenue New York, New York 10017 Attention: ________________________ Commitment (Facility B, if any) - ---------- ------------------- COMERICA BANK $30,000,000 N/A By: _________________________ Print Name: _________________ Title: ______________________ One Detroit Center 500 Woodward Avenue, MC-3280 Detroit, Michigan 48226 Attention: _________________ Commitment (Facility B, if any) - ---------- ------------------ CREDIT LYONNAIS NEW YORK BRANCH $27,000,000 N/A By: ___________________________ Print Name: ___________________ Title: ________________________ Credit Lyonnais Building 1301 Avenue of the Americas, 17th Floor New York, New York 10019 Attention: Renaud d'Herbes, Senior Vice President --------------------- Commitment (Facility B, if any) - ---------- -------------------- FIRST BANK NATIONAL ASSOCIATION $25,000,000 N/A By: ________________________________ Print Name: ________________________ Title: _____________________________ First Bank Place 601 Second Avenue, South, MPFP 0801 Minneapolis, Minnesota 55402-4302 Attention: _________________________ Commitment (Facility B, if any) - ---------- ------------------- THE SUMITOMO BANK OF CALIFORNIA $15,000,000 N/A By: _________________________________ Print Name: _________________________ Title: ______________________________ 320 California Street Sixth Floor, Commercial Banking Office San Francisco, California 94104 Attention: __________________________ By: _________________________________ Print Name: _________________________ Title: ______________________________ Commitment (Facility B, if any) - ---------- ------------------- THE SUMITOMO BANK, LIMITED $10,000,000 N/A By: _________________________________ Print Name: _________________________ Title: ______________________________ By: _________________________________ Print Name: _________________________ Title: ______________________________ 100 Pine Street, Suite 3300 San Francisco, California 94611 Attention: _________________________ Commitment (Facility B, if any) - ---------- ------------------- UNION BANK OF CALIFORNIA, N.A. $20,000,000 N/A By: _______________________________ Print Name: _______________________ Title: ____________________________ 350 California Street, 11th Floor San Francisco, California 94104 Attention: _______________________ Commitment (Facility B, if any) - ---------- ------------------- UNITED STATES NATIONAL BANK OF OREGON $25,000,000 N/A By: ______________________________ Print Name: ______________________ Title: ___________________________ 555 S.W. Oak Street, PL-4 Portland, Oregon 97204 Attention: ______________________ Commitment (Facility B, if any) - ---------- -------------------- WELLS FARGO BANK, N.A. $27,000,000 N/A By: ____________________________ Print Name: ____________________ Title: _________________________ 707 Wilshire Boulevard, 16th Floor Los Angeles, California 90017 Attention: _____________________ Commitment (Facility B, if any) - ------------ ------------------- $ 37,500,000 $ 15,000,000 THE FIRST NATIONAL BANK OF CHICAGO, Individually and as Administrative Agent By: ____________________________ Print Name: Todd E. Ritz -------------------- Title: As Authorized Agent ------------------------- One First National Plaza Chicago, Illinois 60670 Attention: Todd E. Ritz --------------------- - ------------ ------------- $400,000,000 $(30,000,000) ============ ============ EXHIBIT A-1 ----------- FACILITY A NOTE $ ___________ ___________, 19__ The Money Store Inc., a New Jersey corporation (the "Borrower"), promises to -------- pay to the order of __________________________________ (the "Lender") the lesser ------ of the principal sum of __________________ Dollars or the aggregate unpaid principal amount of all Facility A Loans made (or deemed made) by the Lender to the Borrower pursuant to Article II of the Agreement (as hereinafter defined), ---------- in immediately available funds at the main office of The First National Bank of Chicago in Chicago, Illinois, as Agent, together with interest on the unpaid principal amount hereof at the rates and on the dates set forth in the Agreement. The Borrower shall pay the principal of and accrued and unpaid interest on the Facility A Loans in full on the Facility Termination Date. The Lender shall, and is hereby authorized to, record on the schedule attached hereto, or to otherwise record in accordance with its usual practice, the date and amount of each Facility A Loan and the date and amount of each principal payment hereunder, provided that its failure to do so shall not absolve the Borrower of its obligations hereunder or under any other Loan Document. This Note is one of the Notes issued pursuant to, and is entitled to the benefits of, the Credit Agreement dated as of August 16, 1996 (which, as it may be amended or modified and in effect from time to time, is herein called the "Agreement"), among the Borrower, the lenders party thereto, including the ---------- Lender, First Union National Bank of North Carolina, as Documentation Agent, and The First National Bank of Chicago, as Administrative Agent, to which Agreement reference is hereby made for a statement of the terms and conditions governing this Note, including the terms and conditions under which this Note may be prepaid or its maturity date accelerated. This Note is guaranteed pursuant to the Guaranty, as more specifically described in the Agreement, and reference is made thereto for a statement of the terms and provisions thereof. Capitalized terms used herein and not otherwise defined herein are used with the meanings attributed to them in the Agreement. THIS NOTE SHALL BE CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS (AND NOT THE LAW OF CONFLICTS) OF THE STATE OF ILLINOIS, BUT GIVING EFFECT TO FEDERAL LAWS APPLICABLE TO NATIONAL BANKS. THE MONEY STORE INC. By:--------------------------- Print Name:------------------- Title:------------------------ SCHEDULE OF LOANS AND PAYMENTS OF PRINCIPAL TO FACILITY A NOTE OF THE MONEY STORE INC., DATED _______________, 19__
Principal Maturity Principal Maturity Amount of of Interest Amount Unpaid Date Facility A Loan Period Paid Balance - ------- --------------- ----------- -------- ---------
EXHIBIT A-2 ----------- FACILITY B NOTE $_______________ ____________, 19__ The Money Store Inc., a New Jersey corporation (the "Borrower"), promises to -------- pay to the order of __________________________________ (the "Lender") the lesser ------ of the principal sum of __________________ Dollars or the aggregate unpaid principal amount of all Facility B Loans made by the Lender to the Borrower pursuant to Article II of the Agreement (as hereinafter defined), in immediately ---------- available funds at the main office of The First National Bank of Chicago in Chicago, Illinois, as Agent, together with interest on the unpaid principal amount hereof at the rates and on the dates set forth in the Agreement. The Borrower shall pay the principal of and accrued and unpaid interest on the Facility B Loans in full on the Facility Termination Date. The Lender shall, and is hereby authorized to, record on the schedule attached hereto, or to otherwise record in accordance with its usual practice, the date and amount of each Facility B Loan and the date and amount of each principal payment hereunder, provided that its failure to do so shall not absolve the Borrower of its obligations hereunder or under any other Loan Document. This Note is one of the Notes issued pursuant to, and is entitled to the benefits of, the Credit Agreement dated as of August 16, 1996 (which, as it may be amended or modified and in effect from time to time, is herein called the "Agreement"), among the Borrower, the lenders party thereto, including the ---------- Lender, First Union National Bank of North Carolina, as Documentation Agent, and The First National Bank of Chicago, as Administrative Agent, to which Agreement reference is hereby made for a statement of the terms and conditions governing this Note, including the terms and conditions under which this Note may be prepaid or its maturity date accelerated. This Note is guaranteed pursuant to the Guaranty, as more specifically described in the Agreement, and reference is made thereto for a statement of the terms and provisions thereof. Capitalized terms used herein and not otherwise defined herein are used with the meanings attributed to them in the Agreement. THIS NOTE SHALL BE CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS (AND NOT THE LAW OF CONFLICTS) OF THE STATE OF ILLINOIS, BUT GIVING EFFECT TO FEDERAL LAWS APPLICABLE TO NATIONAL BANKS. THE MONEY STORE INC. By:________________________ Print Name:________________ Title:_____________________ SCHEDULE OF LOANS AND PAYMENTS OF PRINCIPAL TO FACILITY B NOTE OF THE MONEY STORE INC., DATED AUGUST 16, 1996 Principal Principal Amount of Amount Unpaid Date Facility B Loan Paid Balance - ---- --------------- ---------- -------
EXHIBIT B --------- FORM OF OPINION August __, 1996 The Agent and the Lenders who are parties to the Credit Agreement described below. Gentlemen/Ladies: I am Corporate Counsel for The Money Store Inc. (the "Borrower") and each -------- Subsidiary of the Borrower listed on Annex I hereto (collectively, the ------- "Guarantors"), and have represented the Borrower and the Guarantors in - ----------- connection with the execution and delivery by the Borrower of a Credit Agreement dated as of August 16, 1996 (the "Agreement") among the Borrower, the Lenders --------- named therein, First Union National Bank of North Carolina, as Documentation Agent, and The First National Bank of Chicago, as Administrative Agent, providing for Advances in an aggregate principal amount not exceeding $400,000,000 at any one time outstanding, and the execution and delivery by each of the Guarantors of a Subsidiary Guaranty dated as of August 16, 1996 (the "Guaranty") guaranteeing the obligations of the Borrower under the Agreement. - --------- All capitalized terms used in this opinion and not otherwise defined herein shall have the meanings attributed to them in the Agreement. I have examined the Borrower's and each Guarantor's original or certified copies of its articles of incorporation, by-laws, resolutions, the Loan Documents and such other matters of fact and law which I deem necessary in order to render this opinion. In all such examinations made by me in connection with the opinions set forth below, I have assumed the genuineness of all signatures (other than those signatures of officers of the Borrower and the Guarantors appearing on the Credit Agreement, the Guaranty and the Notes, as the case may be), the completeness and authenticity of all records and all documents submitted to me as originals, and the conformity with the originals of all documents submitted to me as copies thereof. As to various matters of fact relevant to the opinions hereinafter expressed, I have relied upon the representations and warranties contained in the Credit Agreement and the Guaranty and statements and certificates of officers and representatives of the Borrower, the Guarantors and others. As to matters in paragraph 1 below, relating to the good standing, valid existence of the Borrower, and the Guarantors, I have relied solely upon good standing certificates of public officials in the appropriate jurisdictions, copies of which are attached hereto, and my opinion is expressed as of the date set forth on the related good standing certificate and not as of the date hereof. As to matters in paragraph 1 below relating to the requisite authority of the Borrower and the Guarantors to conduct their business in each jurisdiction in which their business is conducted, with your consent, I have not obtained any good standing or similar certificates of public officials in the appropriate jurisdictions, and my opinion is therefor given without independent verification. With respect to the opinion in Paragraphs 2(a) and 3 below, I have assumed the due authorization, execution and delivery of, and the validity and binding effect of, the Credit Agreement on the part of the parties thereto other than the Borrower. I express no opinion except as to the laws of the United States and of the State of New Jersey. In that regard, I call your attention to the fact that the Agreement, the Guaranty and the Note state they are governed by the law of the State of Illinois and I am not rendering an opinion under the laws of that State. My opinion is based on the assumption that the internal laws of the State of New Jersey and United States law would govern the provisions of such documents and the transactions contemplated thereby. The opinions in paragraphs 2(a) and 3 below are subject to the effect of bankruptcy, insolvency, reorganization, fraudulent conveyance, moratorium and similar laws relating to or affecting creditors' rights generally and court decisions with respect thereto, and to the understanding that I express no opinion as the application of equitable principles or remedies in any proceeding, whether at law or in equity. Based upon the foregoing, it is my opinion that: 1. The Borrower and each Guarantor are corporations duly incorporated, validly existing and in good standing under the laws of their states of incorporation and have all requisite authority to conduct their business in each jurisdiction in which their business is conducted. 2. The execution and delivery of the Loan Documents by each of the Borrower and the Guarantors parties thereto and the performance by the Borrower and the Guarantors of the Obligations have been duly authorized by all necessary corporate action and proceedings on the part of the Borrower and the Guarantors and will not: (a) require any consent of the Borrower's or any Guarantor's shareholders; (b) violate, conflict with or result in a default under any law, rule, regulation, order, writ, judgment, injunction, decree or award binding on the Borrower or any of its Subsidiaries or the Borrower's or any Subsidiary's articles of incorporation or by-laws or any indenture, instrument or agreement binding upon the Borrower or any of its Subsidiaries; or (c) result in, or require, the creation or imposition of any Lien pursuant to the provisions of any indenture, instrument or agreement binding upon the Borrower or any of its Subsidiaries. 3. The Loan Documents have been duly executed and delivered by such of the Borrower and the Guarantors parties thereto and constitute legal, valid and binding obligations of such of the Borrower and the Guarantors parties thereto enforceable in accordance with their terms except to the extent the enforcement thereof may be limited by bankruptcy, insolvency or similar laws affecting the enforcement of creditors' rights generally and subject also to the availability of equitable remedies if equitable remedies are sought. 4. There is no litigation or proceeding against the Borrower or any of its Subsidiaries which, if adversely determined, could have a Material Adverse Effect. 5. No approval, authorization, consent, adjudication or order of any governmental authority, which has not been obtained by the Borrower or any of its Subsidiaries, is required to be obtained by the Borrower or any of its Subsidiaries in connection with the execution and delivery of the Loan Documents, the borrowings under the Agreement or in connection with the payment by the Borrower and the Guarantors of the Obligations. 6. The Obligations constitute senior indebtedness which is entitled to the benefits of the subordination provisions of all outstanding Subordinated Indebtedness. This opinion may be relied upon by the Agent, the Lenders and their participants, assignees and other transferees. Very truly yours, EXHIBIT C --------- COMPLIANCE CERTIFICATE To: The Lenders which are parties to the Credit Agreement Described Below This Compliance Certificate is furnished pursuant to that certain Credit Agreement dated as of August 16, 1996 (as amended, modified, renewed or extended from time to time, the "Agreement") among The Money Store Inc. (the "Borrower"), --------- -------- the lenders party thereto, First Union National Bank of North Carolina, as Documentation Agent, and The First National Bank of Chicago, as Administrative Agent for the Lenders. Unless otherwise defined herein, capitalized terms used in this Compliance Certificate have the meanings ascribed thereto in the Agreement. THE UNDERSIGNED HEREBY CERTIFIES THAT: 1. I am the duly elected _____________________ of the Borrower; 2. I have reviewed the terms of the Agreement and I have made, or have caused to be made under my supervision, a detailed review of the transactions and conditions of the Borrower and its Subsidiaries during the accounting period covered by the attached financial statements; 3. The examinations described in paragraph 2 did not disclose, and I have ----------- no knowledge of, the existence of any condition or event which constitutes a Default or Unmatured Default during or at the end of the accounting period covered by the attached financial statements or as of the date of this Certificate, except as set forth below; and 4. Schedule I attached hereto sets forth financial data and computations ---------- evidencing the Borrower's compliance with certain covenants of the Agreement, all of which data and computations are true, complete and correct. Described below are the exceptions, if any, to paragraph 3 by listing, in ----------- detail, the nature of the condition or event, the period during which it has existed and the action which the Borrower has taken, is taking, or proposes to take with respect to each such condition or event: __________________________________________________________________________ __________________________________________________________________________ __________________________________________________________________________ __________________________________________________________________________ The foregoing certifications, together with the computations set forth in Schedule I hereto and the financial statements delivered with this Certificate - ---------- in support hereof, are made and delivered this ____ day of ______________, 19___. SCHEDULE I TO COMPLIANCE CERTIFICATE Compliance as of _________, 199_ with Provisions of Section 6.20 of the Agreement 6.20(A) FIXED CHARGE COVERAGE: --------------------- i. Consolidated Pre-Tax Income plus Consolidated Fixed Charges -- ----------------------------------------------------------- ii. Consolidated Fixed Charges ---- -------------------------- RATIO (CANNOT BE LESS THAN 1.50 TO 1 ON A ROLLING FOUR QUARTER BASIS) ====================================================== ====================== 6.20(B) CONSOLIDATED ADJUSTED TANGIBLE NET WORTH: ---------------------------------------- NOT LESS THAN: $325,000 Plus: ---- i. 50% of: -- ------ Consolidated Net Income since 1/1/96 ii. 100% of cash proceeds of: --- ------------------------ Equity Securities sold or issued after 8/16/96 Subordinated Indebtedness issued after 8/16/96 ================================================================================ 6.20(C) CONSOLIDATED FUNDED DEBT TO CONSOLIDATED ADJUSTED TANGIBLE NET WORTH: -------------------------------------------------------------------- i. Consolidated Funded Debt -- ------------------------ ii. Consolidated Adjusted Tangible Net Worth --- ---------------------------------------- RATIO (CANNOT BE GREATER THAN 5 TO 1 AS OF THE LAST DAY OF ANY FISCAL QUARTER AND 7 TO 1 AT ALL OTHER TIMES). ================================================================================ 6.20(D) LIQUID ASSET COVERAGE: i. Consolidated Unrestricted Cash plus Consolidated Eligible Loans -- --------------------------------------------------------------- ii. Consolidated Unsecured Debt --- --------------------------- RATIO (CANNOT BE LESS THAN .75 TO 1) Consolidated Unrestricted Cash Consolidated Eligible Loans Consolidated Unrestricted Cash plus Consolidated Eligible Loans ================================================================================ 6.20(E) MINIMUM CASH FLOW: MINIMUM CASH FLOW i. Borrower's Consolidated Cash Flows for the four consecutive fiscal quarters ended _______, 199__ ii. Borrowers projected Consolidated Cash Flows for the next succeeding four consecutive fiscal quarters BORROWER'S CASH FLOW (sum of (i) and (ii) cannot be less than $200,000,000) ================================================================================ 6.20(F) CONSOLIDATED OTHER CASH PRODUCING ASSETS TO CONSOLIDATED CAPITAL RATIO: -------------------------------------------- i. Consolidated Other Cash Producing Assets ii. Consolidated Capital RATIO (CANNOT EXCEED 1.80 TO 1) EXHIBIT D --------- ASSIGNMENT AGREEMENT This Assignment Agreement (this "Assignment Agreement") between -------------------- __________________________ (the "Assignor") and __________________ (the -------- "Assignee") is dated as of _________________, 19__. The parties hereto agree as - --------- follows: 1. PRELIMINARY STATEMENT. The Assignor is a party to a Credit Agreement --------------------- (which, as it may be amended, modified, renewed or extended from time to time is herein called the "Credit Agreement") described in Item 1 of Schedule 1 attached ---------------- ------ ---------- hereto ("Schedule 1"). Capitalized terms used herein and not otherwise defined ---------- herein shall have the meanings attributed to them in the Credit Agreement. 2. ASSIGNMENT AND ASSUMPTION. The Assignor hereby sells and assigns to the ------------------------- Assignee, and the Assignee hereby purchases and assumes from the Assignor, an interest in and to the Assignor's rights and obligations under the Credit Agreement such that after giving effect to such assignment the Assignee shall have purchased pursuant to this Assignment Agreement the percentage interest specified in Item 3 of Schedule 1 of all outstanding rights and obligations ------ ---------- under the Credit Agreement relating to the facilities listed in Item 3 of ------ Schedule 1 and the other Loan Documents. The aggregate Commitment (or Loans, if - ---------- the applicable Commitment has been terminated) purchased by the Assignee hereunder is set forth in Item 4 of Schedule 1. ------ ---------- 3. EFFECTIVE DATE. The effective date of this Assignment Agreement (the -------------- "Effective Date") shall be the later of the date specified in Item 5 of Schedule -------------- ------ -------- 1 or two Business Days (or such shorter period agreed to by the Agent) after a - - Notice of Assignment substantially in the form of Exhibit I attached hereto has --------- been delivered to the Agent. Such Notice of Assignment must include any consents required to be delivered to the Agent by Section 12.3.1 of the Credit -------------- Agreement. In no event will the Effective Date occur if the payments required to be made by the Assignee to the Assignor on the Effective Date under Sections -------- 4 and 5 hereof are not made on the proposed Effective Date. The Assignor will - - - notify the Assignee of the proposed Effective Date no later than the Business Day prior to the proposed Effective Date. As of the Effective Date, (i) the Assignee shall have the rights and obligations of a Lender (including, if applicable, of a Facility B Lender) under the Loan Documents with respect to the rights and obligations assigned to the Assignee hereunder and (ii) the Assignor shall relinquish its rights and be released from its corresponding obligations under the Loan Documents with respect to the rights and obligations assigned to the Assignee hereunder. 4. PAYMENTS OBLIGATIONS. On and after the Effective Date, the Assignee shall be entitled to receive from the Agent all payments of principal, interest and fees with respect to the interest assigned hereby. The Assignee shall advance funds directly to the Agent with respect to all Loans and reimbursement payments made on or after the Effective Date with respect to the interest assigned hereby. [In consideration for the sale and assignment of Loans hereunder, (i) the Assignee shall pay the Assignor, on the Effective Date, an amount equal to the principal amount of the portion of all Floating Rate Loans assigned to the Assignee hereunder and (ii) with respect to each Eurodollar Loan made by the Assignor and assigned to the Assignee hereunder which is outstanding on the Effective Date, (a) on the last day of the Eurodollar Interest Period therefor or (b) on such earlier date agreed to by the Assignor and the Assignee or (c) on the date on which any such Eurodollar Loan either becomes due (by acceleration or otherwise) or is prepaid (the date as described in the foregoing clauses (a), (b) or (c) being hereinafter referred to as the "Payment Date"), - ----------- --- --- ------------ the Assignee shall pay the Assignor an amount equal to the principal amount of the portion of such Eurodollar Loan assigned to the Assignee which is outstanding on the Payment Date. If the Assignor and the Assignee agree that the Payment Date for such D-1 Eurodollar Loan shall be the Effective Date, they shall agree to the interest rate applicable to the portion of such Loan assigned hereunder for the period from the Effective Date to the end of the existing Eurodollar Interest Period applicable to such Eurodollar Loan (the "Agreed Interest Rate") and any interest -------------------- received by the Assignee in excess of the Agreed Interest Rate shall be remitted to the Assignor. In the event interest for the period from the Effective Date to but not including the Payment Date is not paid by the Borrower with respect to any Eurodollar Loan sold by the Assignor to the Assignee hereunder, the Assignee shall pay to the Assignor interest for such period on the portion of such Eurodollar Loan sold by the Assignor to the Assignee hereunder at the applicable rate provided by the Credit Agreement. In the event a prepayment of any Eurodollar Loan which is existing on the Payment Date and assigned by the Assignor to the Assignee hereunder occurs after the Payment Date but before the end of the Eurodollar Interest Period applicable to such Eurodollar Loan, the Assignee shall remit to the Assignor the excess of the prepayment penalty paid with respect to the portion of such Eurodollar Loan assigned to the Assignee hereunder over the amount which would have been paid if such prepayment penalty was calculated based on the Agreed Interest Rate. The Assignee will also promptly remit to the Assignor (i) any principal payments received from the Agent with respect to Eurodollar Loans prior to the Payment Date and (ii) any amounts of interest on Loans and fees received from the Agent which relate to the portion of the Loans assigned to the Assignee hereunder for periods prior to the Effective Date, in the case of Floating Rate Loans or fees, or the Payment Date, in the case of Eurodollar Loans, and not previously paid by the Assignee to the Assignor.]* In the event that either party hereto receives any payment to which the other party hereto is entitled under this Assignment Agreement, then the party receiving such amount shall promptly remit it to the other party hereto. *Each Assignor may insert its standard payment provisions in lieu of the payment terms included in this Exhibit. 5. FEES PAYABLE BY THE ASSIGNEE. The Assignee shall pay to the Assignor a ---------------------------- fee on each day on which a payment of interest or facility fees is made under the Credit Agreement with respect to the amounts assigned to the Assignee hereunder (other than a payment of interest or facility fees for the period prior to the Effective Date or, in the case of Eurodollar Loans, the Payment Date, which the Assignee is obligated to deliver to the Assignor pursuant to Section 4 hereof). The amount of such fee shall be the difference between (i) - ---------------- the interest or fee, as applicable, paid with respect to the amounts assigned to the Assignee hereunder and (ii) the interest or fee, as applicable, which would have been paid with respect to the amounts assigned to the Assignee hereunder if each interest rate was ___ of 1% less than the interest rate paid by the Borrower or if the facility fee was ___ of 1% less than the facility fee paid by the Borrower, as applicable. In addition, the Assignee agrees to pay ___% of the recordation fee required to be paid to the Agent in connection with this Assignment Agreement. 6. REPRESENTATIONS OF THE ASSIGNOR; LIMITATIONS ON THE ASSIGNOR'S -------------------------------------------------------------- LIABILITY. The Assignor represents and warrants that it is the legal and - --------- beneficial owner of the interest being assigned by it hereunder and that such interest is free and clear of any adverse claim created by the Assignor. It is understood and agreed that the assignment and assumption hereunder are made without recourse to the Assignor and that the Assignor makes no other representation or warranty of any kind to the Assignee. Neither the Assignor nor any of its officers, directors, employees, agents or attorneys shall be responsible for (i) the due execution, legality, validity, enforceability, genuineness, sufficiency or collectability of any Loan Document, including without limitation, documents granting the Assignor and the other Lenders a security interest in assets of the Borrower or any Guarantor, (ii) any representation, warranty or statement made in or in connection with any of the Loan Documents, (iii) the financial condition or creditworthiness of the Borrower or any Guarantor, (iv) the performance of or compliance with any of the terms or provisions of any of the Loan Documents, (v) inspecting any of the Property, books or records of the Borrower, (vi) the validity, enforceability, perfection, priority, condition, value or sufficiency of any collateral securing or purporting to secure the Loans or (vii) any mistake, error of judgment, or action taken or omitted to be taken in connection with the Loans or the Loan Documents. D-2 7. REPRESENTATIONS OF THE ASSIGNEE. The Assignee (i) confirms that it ------------------------------- has received a copy of the Credit Agreement, together with copies of the financial statements requested by the Assignee and such other documents and information as it has deemed appropriate to make its own credit analysis and decision to enter into this Assignment Agreement, (ii) agrees that it will, independently and without reliance upon the Agent, the Assignor or any other Lender and based on such documents and information at it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under the Loan Documents, (iii) appoints and authorizes the Agent to take such action as agent on its behalf and to exercise such powers under the Loan Documents as are delegated to the Agent by the terms thereof, together with such powers as are reasonably incidental thereto, (iv) agrees that it will perform in accordance with their terms all of the obligations which by the terms of the Loan Documents are required to be performed by it as a Lender, (v) agrees that its payment instructions and notice instructions are as set forth in the attachment to Schedule 1, (vi) confirms that none of the funds, monies, assets ---------- or other consideration being used to make the purchase and assumption hereunder are "plan assets" as defined under ERISA and that its rights, benefits and interests in and under the Loan Documents will not be "plan assets" under ERISA, [and (vii) attaches the forms prescribed by the Internal Revenue Service of the United States certifying that the Assignee is entitled to receive payments under the Loan Documents without deduction or withholding of any United States federal income taxes].** **to be inserted if the Assignee is not incorporated under the laws of the United States, or a state thereof. 8. INDEMNITY. The Assignee agrees to indemnify and hold the Assignor --------- harmless against any and all losses, costs and expenses (including, without limitation, reasonable attorneys' fees) and liabilities incurred by the Assignor in connection with or arising in any manner from the Assignee's non-performance of the obligations assumed under this Assignment Agreement. 9. SUBSEQUENT ASSIGNMENTS. After the Effective Date, the Assignee shall ---------------------- have the right pursuant to Section 12.3.1 of the Credit Agreement to assign the ------ rights which are assigned to the Assignee hereunder to any Person, provided that (i) any such subsequent assignment does not violate any of the terms and conditions of the Loan Documents or any law, rule, regulation, order, writ, judgment, injunction or decree and that any consent required under the terms of the Loan Documents has been obtained and (ii) unless the prior written consent of the Assignor is obtained, the Assignee is not thereby released from its obligations to the Assignor hereunder, if any remain unsatisfied, including, without limitation, its obligations under Sections 4, 5 and 8 hereof. ---------- - - 10. REDUCTIONS OF AGGREGATE COMMITMENTS. If any reduction in the Aggregate ----------------------------------- Commitment or the Aggregate Facility B Commitment occurs between the date of this Assignment Agreement and the Effective Date, the percentage interest specified in Item 3 of Schedule 1 shall remain the same, but the dollar amount ------ ---------- purchased shall be recalculated based on the reduced Aggregate Commitment or Aggregate Facility B Commitment, as applicable. 11. ENTIRE AGREEMENT. This Assignment Agreement and the attached Notice of ---------------- Assignment embody the entire agreement and understanding between the parties hereto and supersede all prior agreements and understandings between the parties hereto relating to the subject matter hereof. 12. GOVERNING LAW. This Assignment Agreement shall be governed by the ------------- internal law, and not the law of conflicts, of the State of Illinois. D-3 13. NOTICES. Notices shall be given under this Assignment Agreement in the ------- manner set forth in the Credit Agreement. For the purpose hereof, the addresses of the parties hereto (until notice of a change is delivered) shall be the address set forth in the attachment to Schedule 1. ---------- IN WITNESS WHEREOF, the parties hereto have executed this Assignment Agreement by their duly authorized officers as of the date first above written. [NAME OF ASSIGNOR] By: ________________________________________ Title: ________________________________________ ________________________________________ ________________________________________ [NAME OF ASSIGNEE] By: ________________________________________ Title: ________________________________________ ________________________________________ ________________________________________ D-4 SCHEDULE 1 to Assignment Agreement 1. Description and Date of Credit Agreement dated as of August 16, Credit Agreement: 1996, among The Money Store Inc., the Lenders party thereto, First Union National Bank of North Carolina, as Documentation Agent, and The First National Bank of Chicago, as Administrative Agent. 2. Date of Assignment Agreement: _____________, 19__ 3. Amounts (As of Date of Item 2 above): ------ Facility A Facility B Commitment Commitment ---------- ----------- a. Total of Commitments (Loans)** under Credit Agreement $______ $______ b. Assignee's Percentage of each Facility purchased under the Assignment Agreement*** ______% ______% c. Amount of Assigned Share in each Facility purchased under the Assignment Agreement $______ $______ 4. Assignee's Aggregate (Loan Amount)** Commitment Amount Purchased Hereunder: $______ $______ 5. Proposed Effective Date: ______ Accepted and Agreed: [NAME OF ASSIGNOR] [NAME OF ASSIGNEE] By: _______________________ By: ______________________ Title: ____________________ Title: ___________________ * Insert specific facility names per Credit Agreement ** If a Commitment has been terminated, insert outstanding Loans in place of Commitment *** Percentage taken to 10 decimal places D-5 Attachment to SCHEDULE 1 to ASSIGNMENT AGREEMENT Attach Assignor's Administrative Information Sheet, which must include notice address for the Assignor and the Assignee D-6 EXHIBIT I --------- to Assignment Agreement NOTICE OF ASSIGNMENT ------------- ____________________, 19__ -------------------------- To: THE MONEY STORE INC. 2840 Morris Avenue Post Office Box 3155 Union, New Jersey 07083 THE FIRST NATIONAL BANK OF CHICAGO, as Agent One First National Plaza Chicago, Illinois From: [NAME OF ASSIGNOR] (the "Assignor") [NAME OF ASSIGNEE] (the "Assignee") 1. We refer to that Credit Agreement (the "Credit Agreement") described in Item 1 of Schedule 1 attached hereto ("Schedule 1"). Capitalized ------ ---------- ---------- terms used herein and not otherwise defined herein shall have the meanings attributed to them in the Credit Agreement. 2. This Notice of Assignment (this "Notice") is given and ------ delivered to the Borrower and the Agent pursuant to Section 12.3.2 of the Credit -------------- Agreement. 3. The Assignor and the Assignee have entered into an Assignment Agreement, dated as of __________, 19__ (the "Assignment"), pursuant to which, ---------- among other things, the Assignor has sold, assigned, delegated and transferred to the Assignee, and the Assignee has purchased, accepted and assumed from the Assignor the percentage interest specified in Item 3 of Schedule 1 of all ------ ---------- outstandings, rights and obligations under the Credit Agreement relating to the facilities listed in Item 3 of Schedule 1. The Effective Date of the Assignment ------ ---------- shall be the later of the date specified in Item 5 of Schedule 1 or two Business ------ ---------- Days (or such shorter period as agreed to by the Agent) after this Notice of Assignment and any consents and fees required by Sections 12.3.1 and 12.3.2 of --------------- ------ the Credit Agreement have been delivered to the Agent, provided that the Effective Date shall not occur if any condition precedent agreed to by the Assignor and the Assignee has not been satisfied. 4. The Assignor and the Assignee hereby give to the Borrower and the Agent notice of the assignment and delegation referred to herein. The Assignor will confer with the Agent before the date specified in Item 5 of ------ Schedule 1 to determine if the Assignment Agreement will become effective on - ---------- such date pursuant to Section 3 hereof, and will confer with the Agent to --------- determine the Effective Date pursuant to Section 3 hereof if it occurs --------- thereafter. The Assignor shall notify the Agent if the Assignment Agreement does not become effective on any proposed Effective Date as a result of the failure to satisfy the conditions precedent agreed to by the Assignor and the Assignee. At the request of the Agent, the Assignor will give the Agent written confirmation of the satisfaction of the conditions precedent. I-1 5. The Assignor or the Assignee shall pay to the Agent on or before the Effective Date the processing fee of $3,000 required by Section ------- 12.3.2 of the Credit Agreement. - ------ 6. If Notes are outstanding on the Effective Date, the Assignor and the Assignee request and direct that the Agent prepare and cause the Borrower to execute and deliver new Notes or, as appropriate, replacements notes, to the Assignor and the Assignee. The Assignor and, if applicable, the Assignee each agree to deliver to the Agent the original Note received by it from the Borrower upon its receipt of a new Note in the appropriate amount. 7. The Assignee advises the Agent that notice and payment instructions are set forth in the attachment to Schedule 1. ---------- 8. The Assignee hereby represents and warrants that none of the funds, monies, assets or other consideration being used to make the purchase pursuant to the Assignment are "plan assets" as defined under ERISA and that its rights, benefits, and interests in and under the Loan Documents will not be "plan assets" under ERISA. 9. The Assignee authorizes the Agent to act as its agent under the Loan Documents in accordance with the terms thereof. The Assignee acknowledges that the Agent has no duty to supply information with respect to the Borrower or the Loan Documents to the Assignee until the Assignee becomes a party to the Credit Agreement.* *May be eliminated if Assignee is a party to the Credit Agreement prior to the Effective Date. NAME OF ASSIGNOR NAME OF ASSIGNEE By: ______________________________ By: ______________________________ Title: ______________________________ Title: ______________________________ ACKNOWLEDGED AND CONSENTED TO BY ACKNOWLEDGED AND CONSENTED TO THE FIRST NATIONAL BANK OF CHICAGO, BY THE MONEY STORE INC. as Agent By: ______________________________ By: ______________________________ Title: ______________________________ Title: ______________________________ [Attach photocopy of Schedule 1 to Assignment] I-2 EXHIBIT E --------- LOAN/CREDIT RELATED MONEY TRANSFER INSTRUCTION To The First National Bank of Chicago, as Administrative Agent (the "Agent") ----- under the Credit Agreement Described Below. Re: Credit Agreement, dated August 16, 1996 (as the same may be amended or modified, the "Credit Agreement"), among The Money Store Inc. (the ---------------- "Borrower"), the Lenders named therein, First Union National Bank of North -------- Carolina, as Documentation Agent, and the Agent. Capitalized terms used herein and not otherwise defined herein shall have the meanings assigned thereto in the Credit Agreement. The Agent is specifically authorized and directed to act upon the following standing money transfer instructions with respect to the proceeds of Advances or other extensions of credit from time to time until receipt by the Agent of a specific written revocation of such instructions by the Borrower, provided, however, that the Agent may otherwise transfer funds as hereafter directed in writing by the Borrower in accordance with Section 13.1 of the Credit Agreement ------------ or based on any telephonic notice made in accordance with Section 2.13 of the ------------ Credit Agreement. Facility Identification Number(s)_______________________________________________ Customer/Account Name___________________________________________________________ Transfer Funds To_______________________________________________________________ _______________________________________________________________ _______________________________________________________________ For Account No._________________________________________________________________ Reference/Attention To__________________________________________________________ Authorized Officer (Customer Representative) Date______________________________ _________________________ _________________________________________________ (Please Print) Signature _________________________ _________________________________________________ Bank Officer Name Date _________________________ _________________________________________________ (Please Print) Signature (Deliver Completed Form to Credit Support Staff For Immediate Processing) E-1 EXHIBIT F --------- SUBSIDIARY GUARANTY THIS SUBSIDIARY GUARANTY dated as of August 16, 1996, is executed in favor of THE FIRST NATIONAL BANK OF CHICAGO, as Administrative Agent for the benefit of the Lenders, under the Credit Agreement referred to below. W I T N E S S E T H: - - - - - - - - - - WHEREAS, The Money Store Inc. (the "Borrower") has entered into a Credit -------- Agreement dated as of August 16, 1996 (as amended or otherwise modified from time to time, the "Credit Agreement"; the terms defined therein and not ---------------- otherwise defined herein shall be used herein as therein defined) with the Lenders from time to time party thereto (collectively, the "Lenders" and ------- individually, a "Lender"), First Union National Bank of North Carolina, as ------ Documentation Agent, and The First National Bank of Chicago, as Administrative Agent (in such capacity, together with its successors and assigns in such capacity, the "Agent") pursuant to which the Lenders may make Advances from time ----- to time to the Borrower; WHEREAS, each of the undersigned are Subsidiaries of the Borrower and the financial strength and flexibility of the Borrower has a direct impact on each of the undersigned; and WHEREAS, each of the undersigned does and will benefit from the making of the Advances pursuant to the Credit Agreement and is willing to guaranty the Guaranteed Obligations (as defined below). NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, each of the undersigned hereby jointly and severally unconditionally, as primary obligor and not merely as surety, guarantees the full and prompt payment when due, whether by acceleration or otherwise, and at all times thereafter, of all Obligations and all obligations (monetary or otherwise) of each of the undersigned to the Agent or any Lender, howsoever created, arising or evidenced, whether direct or indirect, absolute or contingent, now or hereafter existing, or due or to become due, which arise out of or in connection with the Credit Agreement, the Notes, or any document or instrument executed in connection therewith, in each case as the same may be amended, modified, extended or renewed from time to time, including any interest which would accrue but for the fact that bankruptcy proceedings have been commenced (all such obligations being herein collectively called the "Guaranteed Obligations"); provided, however, that the liability of each of the - ----------------------- -------- ------- undersigned hereunder shall be limited to the maximum amount of the Guaranteed Obligations which such undersigned may guaranty without violating any fraudulent conveyance or fraudulent transfer law (plus all costs and expenses (including attorneys' fees (which attorneys may be employees of the Agent or any Lender) and legal expenses) paid or incurred by the Agent or any Lender in enforcing this Guaranty against such undersigned). Each of the undersigned agrees that, in the event of the dissolution or insolvency of the Borrower or any undersigned, or the inability or failure of the Borrower or any undersigned to pay debts as they become due, or an assignment by the Borrower or any undersigned for the benefit of creditors, or the occurrence of any other event of the type described in Section 7.7 or 7.8 of ----------- --- the Credit Agreement with respect to the Borrower or any of the undersigned, and if such event shall occur at a time when any of the Guaranteed Obligations may not then be due and payable, such undersigned will pay to the Agent, for the benefit of itself and the Lenders forthwith the full amount which would be payable hereunder by such undersigned if all Guaranteed Obligations were then due and payable. To secure all obligations of each of the undersigned hereunder, the Agent and each Lender shall have a Lien on and security interest in (and may, without demand or notice of any kind, at any time and from time to time when any amount shall be due and payable by such undersigned hereunder, appropriate and apply toward the payment of such amount, in such order of application as the Agent or such Lender may elect, subject to Section 2.12 of the Credit Agreement) any and ------------ all balances, credits, deposits, accounts or moneys of or in the name of such undersigned now or hereafter with the Agent or any Lender (other than to the extent held in trust or as fiduciary for the benefit of investors) and any and all property of every kind or F-1 description of or in the name of such undersigned now or hereafter, for any reason or purpose whatsoever, in the possession or control of, or in transit to, the Agent or any Lender or any agent or bailee for the Agent or any Lender. This Guaranty shall in all respects be a continuing, absolute and unconditional guaranty, and shall remain in full force and effect (notwithstanding, without limitation, the dissolution of any of the undersigned or that at any time or from time to time no Guaranteed Obligations are outstanding) until all Guaranteed Obligations have been paid in full and all Commitments under the Credit Agreement have been terminated. The undersigned further agree that if at any time all or any part of any payment theretofore applied by the Agent or any Lender to any of the Guaranteed Obligations is or must be rescinded or returned by the Agent or such Lender for any reason whatsoever (including, without limitation, the insolvency, bankruptcy or reorganization of the Borrower or any of the undersigned), such Guaranteed Obligations shall, for the purposes of this Guaranty, to the extent that such payment is or must be rescinded or returned, be deemed to have continued in existence, notwithstanding such application by the Agent or such Lender, and this Guaranty shall continue to be effective or be reinstated, as the case may be, as to such Guaranteed Obligations, all as though such application by the Agent or such Lender had not been made. The Agent (on behalf of the Lenders) may, from time to time, at its sole discretion and without notice to the undersigned (or any of them), take any or all of the following actions: (a) retain or obtain a security interest in any property to secure any of the Guaranteed Obligations or any obligation hereunder (to the extent provided in any collateral document entered into in connection with the Credit Agreement), (b) retain or obtain the primary or secondary obligation of any obligor or obligors, in addition to the undersigned, with respect to any of the Guaranteed Obligations, (c) extend or renew any of the Guaranteed Obligations for one or more periods (whether or not longer than the original period), alter or exchange any of the Guaranteed Obligations, or release or compromise any obligation of any of the undersigned hereunder or any obligation of any nature of any other obligor with respect to any of the Guaranteed Obligations, (d) release its security interest in, or surrender, release or permit any substitution or exchange for, all or any part of any property securing any of the Guaranteed Obligations or any obligation hereunder, or extend or renew for one or more periods (whether or not longer than the original period) or release, compromise, alter or exchange any obligations of any nature of any obligor with respect to any such property, and (e) resort to the undersigned (or any of them) for payment of any of the Guaranteed Obligations when due, whether or not the Agent or any Lender shall have resorted to any property securing any of the Guaranteed Obligations or any obligation hereunder or shall have proceeded against any other of the undersigned or any other obligor primarily or secondarily obligated with respect to any of the Guaranteed Obligations. Any amounts received by the Agent or any Lender from whatever source on account of the Guaranteed Obligations may be applied by it toward the payment of the Guaranteed Obligations; and, notwithstanding any payments made by or for the account of any of the undersigned pursuant to this Guaranty, the undersigned shall not be subrogated to any rights of the Agent or any Lender until such time as this Guaranty shall have been discontinued as to all of the undersigned and the Agent and each Lender shall have received payment of the full amount of all Guaranteed Obligations. The undersigned hereby expressly waive: (a) notice of the acceptance by the Agent or any Lender of this Guaranty, (b) notice of the existence or creation or non-payment of all or any of the Guaranteed Obligations, (c) presentment, demand, notice of dishonor, protest, and all other notices whatsoever, and (d) all diligence in collection or protection of or realization upon any Guaranteed Obligations or any security for or guaranty of any Guaranteed Obligations. Each of the undersigned further agrees to pay all reasonable expenses (including reasonable attorneys' fees (which attorneys may be employees of the Agent or any Lender) and legal expenses) paid or incurred by the Agent or any Lender in endeavoring to collect the Guaranteed Obligations of such undersigned, or any part thereof, and in enforcing this Guaranty against such undersigned. The creation or existence from time to time of additional Guaranteed Obligations to the Agent or any Lender is hereby authorized, without notice to the undersigned (or any of them), and shall in no way affect or impair the rights of the Agent or any Lender or the obligations of the undersigned under this Guaranty. F-2 The Agent or any Lender may from time to time, without notice to the undersigned (or any of them), assign or transfer any or all of the Guaranteed Obligations or any interest therein to the extent permitted by the Credit Agreement; and, notwithstanding any such assignment or transfer or any subsequent assignment or transfer thereof, such Guaranteed Obligations shall be and remain Guaranteed Obligations for the purposes of this Guaranty, and each and every immediate and successive assignee or transferee of any of the Guaranteed Obligations or of any interest therein shall, to the extent of the interest of such assignee or transferee in the Guaranteed Obligations, be entitled to the benefits of this Guaranty to the same extent as if such assignee or transferee were the Agent or such Lender, as the case may be. No delay on the part of the Agent or any Lender in the exercise of any right or remedy shall operate as a waiver thereof, and no single or partial exercise by the Agent or any Lender of any right or remedy shall preclude other or further exercise thereof or the exercise of any other right or remedy; nor shall any modification or waiver of any provision of this Guaranty be binding upon the Agent or any Lender except as expressly set forth in a writing duly signed and delivered on behalf of the Agent or such Lender, as the case may be. No action of the Agent or any Lender permitted hereunder shall in any way affect or impair the rights of the Agent or any Lender or the obligations of the undersigned under this Guaranty. For purposes of this Guaranty, Guaranteed Obligations shall include all obligations of the Borrower and each of the undersigned to the Agent and each Lender arising under or in connection with the Credit Agreement, the Notes or any other Loan Document, notwithstanding any right or power of the Borrower or anyone else to assert any claim or defense as to the invalidity or unenforceability of any obligation, and no such claim or defense shall affect or impair the obligations of the undersigned hereunder. This Guaranty shall be binding upon the undersigned and the successors and assigns of the undersigned; and to the extent that the Borrower or any of the undersigned is either a partnership or a corporation, all references herein to the Borrower and to the undersigned, respectively, shall be deemed to include any successor or successors, whether immediate or remote, to such partnership or corporation. The term "undersigned" as used herein shall mean all parties executing this Guaranty and each of them, and all such parties shall be jointly and severally obligated hereunder. This Guaranty has been delivered at Chicago, Illinois, and shall be construed in accordance with and governed by the internal laws of the State of Illinois. Wherever possible each provision of this Guaranty shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Guaranty shall be prohibited by or invalid under such law, such provision shall be ineffective to the extent of such prohibition or invalidity, without invalidating the remainder of such provision or the remaining provisions of this Guaranty. This Guaranty may be executed in any number of counterparts and by the different parties hereto on separate counterparts, and each such counterpart shall be deemed to be an original but all such counterparts shall together constitute one and the same Guaranty. At any time after the date of this Guaranty, one or more additional persons or entities may become parties hereto by executing and delivering to the Agent a counterpart of this Guaranty. Immediately upon such execution and delivery (and without any further action), each such additional person or entity will become a party to, and will be bound by all of the terms of, this Guaranty. This Guaranty may be secured by one or more other agreements (including, without limitation, one or more pledge agreements, mortgages, deeds of trust or other similar documents). EACH OF THE UNDERSIGNED HEREBY IRREVOCABLY SUBMITS TO THE NON-EXCLUSIVE JURISDICTION OF ANY UNITED STATES FEDERAL OR ILLINOIS STATE COURT SITTING IN CHICAGO IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO ANY LOAN DOCUMENTS AND EACH OF THE UNDERSIGNED HEREBY IRREVOCABLY AGREES THAT ALL CLAIMS IN RESPECT OF SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN ANY SUCH COURT AND IRREVOCABLY WAIVES ANY OBJECTION IT MAY NOW OR HEREAFTER HAVE AS TO THE VENUE OF ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN SUCH A COURT OR THAT SUCH COURT IS AN INCONVENIENT FORUM. NOTHING HEREIN SHALL LIMIT THE RIGHT OF THE AGENT OR ANY LENDER TO BRING PROCEEDINGS AGAINST ANY OF THE UNDERSIGNED IN THE COURTS OF ANY OTHER JURISDICTION. ANY JUDICIAL PROCEEDING BY ANY OF THE UNDERSIGNED AGAINST THE AGENT OR ANY LENDER OR ANY AFFILIATE OF THE AGENT OR F-3 ANY LENDER INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER IN ANY WAY ARISING OUT OF, RELATED TO, OR CONNECTED WITH ANY LOAN DOCUMENT SHALL BE BROUGHT ONLY IN A COURT IN CHICAGO, ILLINOIS. EACH OF THE UNDERSIGNED, AND (BY ACCEPTING THE BENEFITS HEREOF) THE AGENT AND EACH LENDER HEREBY WAIVE TRIAL BY JURY IN ANY JUDICIAL PROCEEDING INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER (WHETHER SOUNDING IN TORT, CONTRACT OR OTHERWISE) IN ANY WAY ARISING OUT OF, RELATED TO, OR CONNECTED WITH ANY LOAN DOCUMENT OR THE RELATIONSHIP ESTABLISHED THEREUNDER. F-4 IN WITNESS WHEREOF, this Guaranty has been duly executed and delivered as of the day and year first above written. TMS Mortgage Inc., The Money Store/Kentucky Inc., The Money Store Home Equity Corp., The Money Store/D.C., Inc., The Money Store/Minnesota Inc., The Money Store Auto Finance Inc., The Money Store Commercial Mortgage Inc., Equity Insurance Agency, Inc., Major Brokerage Co., Inc., Princeton Escrow, Dyna-Mark, Inc., The Money Store Investment Corporation, The Money Store of New York, Inc., The Commerce Group, The Money Store/Service Corp., ClassNotes Inc., The Money Store Realty, Inc., TMS Venture Holdings Inc. By:______________________________________________ Name:____________________________________________ Printed:_________________________________________ Title:___________________________________________ F-5 FIRST AMENDMENT TO CREDIT AGREEMENT THIS FIRST AMENDMENT, dated as of September 20, 1996 (this "Amendment") is --------- among The Money Store Inc. (the "Borrower"), the Lenders, First Union National -------- Bank of North Carolina, as Documentation Agent, and The First National Bank of Chicago, as Administrative Agent. BACKGROUND 1. The Borrower, the Lenders, the Documentation Agent and the Administrative Agent entered into a Credit Agreement, dated as of August 16, 1996 (the "Credit Agreement"). ---------------- 2. The parties desire to amend the Credit Agreement in certain respects as set forth herein. NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto hereby agree as follows: SECTION 1. Definitions. Capitalized terms used in this Amendment and not ----------- otherwise defined herein shall have the meanings assigned thereto in the Credit Agreement. SECTION 2. Amendments to Credit Agreement. Each of the parties hereto ------------------------------ agrees that effective as of August 16, 1996, the Credit Agreement is hereby amended as follows: (a) The definition of "Contingent Obligation" is hereby amended by (i) deleting the clause designation "(y)" therein and substituting therefor the clause designation "(z)" and (ii) inserting the text ", (y) is or will be funded from Consolidated Restricted Cash" immediately before the word "or" and the new clause designation "(z)". (b) There is hereby added to Section 6.13(a) the following new clause --------------- (viii): "(viii) Liens incurred on Consolidated Restricted Cash to secure the performance of letters of credit, bids, tenders, sales contracts, leases, statutory obligations, surety, appeal and performance bonds and other similar obligations not incurred in connection with the borrowing of money, the obtaining of advances or the payment of the deferred purchase price of Property." (c) Section 6.14 is hereby amended by adding the following sentence ------------ thereto immediately following the period at the end of such Section: "Notwithstanding the foregoing, a Subsidiary may become liable for or have outstanding Indebtedness, or permit such of its Property constituting Consolidated Restricted Cash to be subject to a Lien securing Indebtedness, in each case to the extent such Indebtedness would be excluded from the definition of "Contingent Obligation" pursuant to clause (ii) of the definition thereof." SECTION 3. Conditions to Effectiveness. This Amendment shall become --------------------------- effective as of August 16, 1996, subject to the satisfaction of the following conditions precedent: (a) the Agent shall have received counterparts of this Amendment executed by the Borrower and the Required Lenders; and (b) the Agent shall have received an opinion of Stroock & Stroock & Lavan, special counsel to the Borrower, addressed to the Agent and the Lenders, in form and substance satisfactory to the Agent and to the effect that the performance by the Borrower and the Guarantors of the Obligations will not violate, conflict with or result in a default under the documents governing the Borrower's contemplated securitization transaction expected to close during the week of September 23, 1996. SECTION 4. Representations and Warranties. The Borrower hereby represents ------------------------------ and warrants that no Default or Unmatured Default has occurred which is continuing and the representations and warranties set forth in Article V of the --------- Credit Agreement are true and correct as of the date hereof, in each case after giving effect to the amendments made hereby. SECTION 5. Fees and Expenses. The Borrower hereby agrees, in accordance ----------------- with Section 9.7 of the Credit Agreement, to pay, or reimburse the Agent and the ----------- Documentation Agent, on demand, for any and all legal fees and expenses incurred by the Agent or the Documentation Agent, as applicable, in connection with this Amendment. SECTION 6. Post-Closing Opinion. The Borrower hereby agrees to deliver to -------------------- the Agent (with sufficient copies for the Lenders) on or prior to October 31, 1996, an opinion of Stroock & Stroock & Lavan, special counsel to the Borrower, addressed to the -2- Agent and the Lenders, in form and substance satisfactory to the Agent and to the effect that the performance by the Borrower and the Guarantors of the Obligations will not violate, conflict with or result in a default under any material indenture, instrument or agreement binding upon the Borrower or any of its subsidiaries. Failure to deliver such opinion by October 31, 1996 shall constitute a Default for all purposes under the Credit Agreement and the other Loan Documents. -3- SECTION 7. Miscellaneous. The Credit Agreement, as amended hereby, ------------- remains in full force and effect. Any reference to the Credit Agreement from and after the date of this Amendment shall be deemed to refer to the Credit Agreement as amended hereby. This Amendment may be executed in any number of counterparts, and by the parties on separate counterparts, all of which shall constitute but one and the same agreement. This Amendment shall be governed by the internal laws of the State of Illinois, but giving effect to Federal laws applicable to national banks. -4- IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed and delivered as of the date and year first above written. THE MONEY STORE INC. By:_______________________________ Name Printed:_____________________ Title:____________________________ THE FIRST NATIONAL BANK OF CHICAGO, individually and as Administrative Agent By:________________________________ Name Printed:______________________ Title:_____________________________ FIRST UNION NATIONAL BANK OF NORTH CAROLINA By:________________________________ Name Printed:______________________ Title:_____________________________ BANCO POPULAR de PUERTO RICO By:________________________________ Name Printed:______________________ Title:_____________________________ BANK HAPOALIM B.M. By:________________________________ Name Printed:______________________ Title:_____________________________ THE BANK OF NEW YORK By:________________________________ Name Printed:______________________ Title:_____________________________ THE BANK OF NOVA SCOTIA By:________________________________ Name Printed:______________________ Title:_____________________________ THE CHASE MANHATTAN BANK By:________________________________ Name Printed:______________________ Title:_____________________________ CIBC INC. By:________________________________ Name Printed:______________________ Title:_____________________________ COMERICA BANK By:________________________________ Name Printed:______________________ Title:_____________________________ CREDIT LYONNAIS NEW YORK BRANCH By:________________________________ Name Printed:______________________ Title:_____________________________ FIRST BANK NATIONAL ASSOCIATION By:________________________________ Name Printed:______________________ Title:_____________________________ THE SUMITOMO BANK OF CALIFORNIA By:________________________________ Name Printed:______________________ Title:_____________________________ By:________________________________ Name Printed:______________________ Title:_____________________________ THE SUMITOMO BANK, LIMITED By:________________________________ Name Printed:______________________ Title:_____________________________ By:________________________________ Name Printed:______________________ Title:_____________________________ UNION BANK OF CALIFORNIA, N.A. By:________________________________ Name Printed:______________________ Title:_____________________________ UNITED STATES NATIONAL BANK OF OREGON By:________________________________ Name Printed:______________________ Title:_____________________________ WELLS FARGO BANK, N.A. By:________________________________ Name Printed:______________________ Title:_____________________________ Each of the undersigned hereby consents to the foregoing Amendment as of the date and year first above written: TMS Mortgage Inc., The Money Store/Kentucky Inc., The Money Store Home Equity Corp., The Money Store/D.C., Inc., The Money Store/Minnesota Inc., The Money Store Auto Finance Inc., The Money Store Commercial Mortgage Inc., Equity Insurance Agency, Inc., Major Brokerage Co., Inc., Princeton Escrow, Dyna-Mark, Inc., The Money Store Investment Corporation, The Money Store of New York, Inc., The Commerce Group, The Money Store/Service Corp., ClassNotes Inc., The Money Store Realty, Inc., TMS Venture Holdings Inc. By:________________________________________ Name Printed:_______________________________ Title:______________________________________ -----END PRIVACY-ENHANCED MESSAGE-----