UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
Annual Report Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934 (fee required)
For the Year Ended December 31, 1994
Commission file number 0-3417
CENCOR, INC.
(Exact name of registrant as specified in its charter)
1100 Main Street, City Center Square, Suite 2350
P.O. Box 26098
Kansas City, MO 64196-6098
Telephone (816) 221-9744
Incorporated in the State of Delaware
43-0914033
(I.R.S. Employer
Identification No.)
Securities registered pursuant to Section 12(g) of the Act:
TITLE OF CLASS
Regular Common Stock, $1.00 par value
Indicate by check mark whether the registrant (1) has
filed all reports required to be filed by Section 13 or 15(d)
of the Securities Exchange Act of 1934 during the preceding 12
months (or for such shorter period that the Registrant was
required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
X Yes __ No
Indicate by check mark if disclosure of delinquent filers
pursuant to Item 405 of Regulation S-K is not contained herein,
and will not be contained, to the best of registrant's
knowledge, in definitive proxy or information statements
incorporated by references in Part III of this Form 10-K or any
amendment to this Form 10-K. {}
Indicate the number of shares outstanding of each of the
issuer's classes of Common Stock, as of February 27, 1995.
1,240,498 Shares of Regular Common Stock, $1.00 par value
Market value at February 27, 1995 was $697,780
Documents incorporated by reference--None
<PAGE>
<PAGE>
CENCOR, INC.
FORM 10-K
YEAR ENDED DECEMBER 31, 1994
INDEX
Item Page
PART I . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Item 1. Business. . . . . . . . . . . . . . . . . . 3
Item 2. Properties . . . . . . . . . . . . . . . . . 8
Item 3. Legal Proceedings. . . . . . . . . . . . . . 8
Item 4. Submission of Matters to a Vote of Security
Holders. . . . . . . . . . . . . . . . . . . 9
PART II. . . . . . . . . . . . . . . . . . . . . . . . . . 11
Item 5. Market for Registrant's Common Stock and
Related Stockholder Matters. . . . . . . . . 11
Item 6. Selected Financial Data. . . . . . . . . . . 12
Item 6. Selected Financial Data (continued). . . . . 13
Item 7 Management's Discussion and Analysis of
Financial Condition and Results of Opera-
tions . . . . . . . . . . . . . . . . . . . 14
Item 8. Financial Statements and Supplementary
Data . .. . . . . . . . . . . . . . . . . . 18
Item 9. Changes in and Disagreements with
Accountants on Accounting and Financial
Disclosure. . . . . . . . . . . . . . . . . 38
PART III . . . . . . . . . . . . . . . . . . . . . . . . . 39
Item 10. Directors and Executive Officers of the
Registrant . . . . . . . . . . . . . . . . . 39
Item 11. Executive Compensation. . . . . . . . . . . .42
Item 12. Security Ownership of Certain Beneficial
Owners and Management. . . . . . . . . . . . 45
Item 13. Certain Relationships and Related
Transactions . . . . . . . . . . . . . . . . 46
PART IV. . . . . . . . . . . . . . . . . . . . . . . . . . 50
Item 14. Exhibits, Financial Statements, Schedules,
and Reports on Form 8-K. . . . . . . . . . . 50
<PAGE>
<PAGE>
PART I
Item 1. Business
General
CenCor, Inc. was incorporated under the laws of Delaware
on May 27, 1968. As used herein, the term "CenCor" refers to
CenCor, Inc. and the term "Century" refers to CenCor's sole
operating subsidiary, Century Acceptance Corporation. The term
"the Company" as used herein refers to CenCor collectively with
Century and, as indicated by the context, its prior
subsidiaries.
CenCor, through its wholly-owned subsidiary, Century, is
primarily engaged in the consumer finance business. Century
makes consumer and real estate loans to individuals and
purchases sales finance contracts. Century also sells various
credit insurance products, including life, accident and health,
and property insurance in conjunction with its consumer loan
business.
On July 19, 1993, CenCor filed a Voluntary Petition with
the United States Bankruptcy Court for the Western District of
Missouri, seeking protection under Chapter 11 of the United
States Bankruptcy Code. At the same time, CenCor filed an
Application with the Bankruptcy Court seeking expeditious
confirmation of its previously creditor approved prepackaged
plan of reorganization. The plan was confirmed by the
bankruptcy court on August 30, 1993. On November 1, 1993,
CenCor issued new notes and stock to its subordinated
noteholders pursuant to the provisions of the plan. The
bankruptcy filing did not involve Century.
Consumer Finance Operations
The percentages of gross revenue from consumer financing
and insurance commissions during each of the last five years
were as follows:
<TABLE>
<CAPTION>
Consumer Loans and
Year Ended December 31 Sales Finance Contracts Insurance Operations
<S> <C> <C>
1990. . . . . . . . . . . . . 92.2% 7.8%
1991. . . . . . . . . . . . . 93.1 6.9
1992. . . . . . . . . . . . . 93.1 6.9
1993. . . . . . . . . . . . . 95.0 5.0
1994. . . . . . . . . . . . . 87.9 12.1
</TABLE>
Since the consumer finance business involves the carrying
of receivables, a relatively high ratio of borrowings to
invested capital is customary. Net income of the Company is
materially dependent on the cost of borrowed funds, and because
the maximum rates charged for Century's lending operations are
limited by statute, any increase or decrease in interest costs
tend to have an adverse or favorable effect on Century's net
income.
<PAGE>
<PAGE>
The following tables set forth certain information
concerning Century's consumer finance business:
<TABLE>
<CAPTION> Average
Net Receivables Unearned Finance Charges
For the Year (Gross Receivables Less as a % of Net Receivables
Ended December 31 Unearned Finance Charges) Outstanding at Year End
<S> <C> <C>
1990 $ 98,069,000 22.5%
1991 104,687,000 24.4
1992 90,523,000 25.2
1993 88,039,000 25.6
1994 99,271,000 19.8
</TABLE>
<TABLE>
<CAPTION>
Number of Average
Offices Loans Balance
As of December 31 Operated Outstanding Per Loan
<S> <C> <C> <C>
1990. . . 59 81,100 $ 1,559
1991. . . 59 75,300 1,768
1992. . . 59 60,200 1,680
1993. . . 53 59,033 2,019
1994. . . 46 66,550 1,990
</TABLE>
Consumer Loans and Real Estate Loans
Consumer loan operations are generally confined to two
types of loans, as authorized by the laws of the respective
states in which business is conducted: (a) loans on which the
interest is reflected in the face amount of the note
(precomputed loans) and (b) loans on which the interest is
computed on monthly unpaid balances (interest bearing loans).
As of December 31, 1994, 77% of Century's consumer loans
receivable were precompute loans. Permitted relevant effective
rates for loans vary from 18% per annum to approximately 36%
per annum with maximum allowable loans ranging from $2,500 to
an unspecified amount. In general, Century charges the maximum
rate permitted.
If a borrower needs additional money before repaying
his/her loan in full, Century's policy is to extend additional
monies if the borrower's credit circumstances warrant. This is
done by making a new loan in an amount sufficient to pay off
the balance of the old loan and to supply the needed new money.
The following table sets forth certain information regarding
new and present borrowers:
<TABLE>
<CAPTION>
New Borrowers Present Borrowers
During Gross Gross
the Year Number % of Amount % of Number % o Amount % of
Ended of Total of Total of Total of Total
December 31 Loans Loans Loans Amount Loans Loans Loans Amount
<S> <C> <C> <C> <C> <C> <C> <C> <C>
(000) (000)
1990 7,839 28.4% $12,895 18.9% 19,805 71.6 $55,352 81.1%
1991 7,954 25.9 14,170 18.2 22,717 74.1 63,627 81.8
1992 10,326 35.7 20,317 26.6 18,583 64.3 56,188 74.3
1993 8,074 21.6 19,276 17.7 29,381 78.4 89,779 82.3
1994 18,661 41.7 37,089 34.3 26,084 58.3 70,901<F1> 65.7
<FN>
<F1>
(1) The gross amount of loans to present borrowers during 1994
includes amounts lent to former borrowers of approximately
8%.
</FN>
</TABLE>
<PAGE>
Insurance Operations
In conjunction with its consumer lending operations and
where applicable laws permit, Century also makes credit life,
accident and health, and property insurance products available
to its customers. The insurance is carried through American
Bankers Life Assurance Co. of Florida and American Bankers Life
Insurance Co. of Florida.
The following table sets forth the percentage of revenues
from insurance operations attributable to accident and health,
property, and credit life policies for the periods indicated:
<TABLE>
<CAPTION>
Year Ended Accident Credit Credit
December 31 & Health Property Life
<S> <C> <C> <C>
1990. . . . . . 46% 23% 31%
1991. . . . . . 43 28 29
1992. . . . . . 42 26 32
1993. . . . . . 40 32 28
1994. . . . . . 38 38 24
</TABLE>
Lending Policies
In conducting lending activities, it is the policy of
Century to require a satisfactory credit history. Loans are
made to individuals primarily on the basis of the borrower's
income and are limited to amounts which the customer appears
able to repay without hardship. Investigation of the credit
worthiness of obligors is made by Century's personnel.
Although the Company may require borrowers to pledge collateral
on consumer loans, such collateral is generally not pursued in
the event of default. Sales finance and automobile contracts
are generally collateralized, although the fair value of the
collateral in the event of repossession has historically been
significantly less than the book value of the contract. Real
estate loans are secured by real property and are generally
limited to a maximum of 75% of the property's unencumbered
appraised market value at the date of the loan.
Subject to governmental restrictions, Century makes loans
secured by consumer goods for varying periods, with original
contractual terms up to 3 years and not exceeding 4 years.
Real estate loans secured by real property generally do not
exceed 15 years. Century purchases sales finance contracts
with original contractual terms generally not exceeding 3
years.
Credit Loss Experience
Past due finance receivables are charged off in accordance
with the policies set forth below and when management deems
them to be uncollectible, although in most instances collection
efforts do not cease. Provisions for credit losses are charged
to income in amounts sufficient to maintain the allowance for
credit losses at a level considered adequate to cover losses in
the existing portfolio (see Note 1 "Credit Losses" to the
financial statements). The allowance is determined using
estimated loss percentages established by management for each
major category of receivables. Additions to the allowance are
charged to the provision for credit losses.
Finance receivables are charged to the allowance for
credit losses when they are deemed to be uncollectible but, in
any event, all accounts (except for real estate secured loans)
for which an amount aggregating a full contractual payment has
not been received after six consecutive months are written off.
Real estate secured loans are charged to the allowance for
credit losses when a full contractual payment has not been
received for twelve months unless the property has been
foreclosed. Uncollectible accounts are handled as follows:
Bankruptcy-Chapter 7 - The balance of the account will be
charged off in the month following the first meeting of
creditors if an acceptable reaffirmation has not been
obtained.
Bankruptcy-Chapter 13 - Any unsecured portion of the
balance will be charged off in the month following the
confirmation of any secured plan.
<PAGE>
Settlement - The balance of the account will be charged
down to the settlement amount in the month following the
agreed settlement.
Repossession Deficiency - The deficiency balance will be
charged off after the appropriate proceeds of the sale of
security have been posted. The appropriate supervisor
must warrant that there is limited potential for
additional collection.
The allowance for credit losses, in the opinion of
management, is adequate to cover losses and expenses known
through the end of the year. The credit loss experience of
Century for each of the five years ended December 31, is set
forth below:
<TABLE>
<CAPTION>
1994 1993 1992 1991 1990
Gross Charge-offs:
<S> <C> <C> <C> <C> <C>
Amount $5,800,000 $5,032,000 $16,278,000 $13,412,000 $6,457,000
Percent of average
gross
receivables
outstanding 4.80% 4.57% 15.30% 10.26% 5.33%
Recoveries from loans
charged off $449,000 $1,964,000 $880,000 $1,567,00 $455,000
Net charge-offs (gross
charge-offs less
recoveries):
Amount $5,351,000 $3,068,000 $15,398,000 $11,845,00 $6,002,000
Percent of average
gross
receivables outstanding 4.43% 2.78 14.47 9.06% 4.95%
Provisions for credit
losses
charged to income $5,519,000 $2,104,000 $12,988,000 $11,704,000 $4,323,000
</TABLE>
The following is a table of net receivables outstanding
(gross receivables less unearned finance charges), percent of
allowance for credit losses to net receivables at year-end and
net charge-offs at the dates indicated:
<TABLE>
<CAPTION>
% of
Allowances for
Net Credit Losses Net Charge-Off's
December 31 Receivables to Net Receivables During the Year
<S> <C> <C> <C>
1990 $104,073,000 4.33% $6,002,000
1991 108,523,000 7.02 11,845,000
1992 80,767,000 7.42 15,398,000
1993 95,113,000 5.35 3,068,000
1994 110,554,000 4.70 5,351,000
</TABLE>
A summary of delinquent consumer loan receivables
(excluding sales finance contracts) as of December 31, 1990
through 1994 is set forth on the following page. The table
includes accounts which have had no collections of principal,
interest or charges for 60 days or more, classified as to the
period during which the last collection was received.
<PAGE>
<TABLE>
<CAPTION>
Age of
Delinquent Installments 1994 1993 1992 1991 1990
<S> <C> <C> <C> <C> <C>
60-89 days $2,115,000 $1,646,000 $1,046,000 $843,000 $1,332,000
90-270 days 2,931,000 1,694,000 386,000 - 1,694,000
Total. . . $5,046,000 $3,340,000 $1,432,000 $843,000 $3,026,000
</TABLE>
Regulation
Century operates under various state laws which regulate
the direct consumer loan business, although the degree and
nature of such regulation varies from state to state and
depends on the laws involved. In general, the laws under which
a substantial amount of Century's business is conducted provide
for state licensing of lenders (which licenses may be revoked
for cause), impose limitations on the maximum duration and
amount of individual loans and the maximum rate of interest and
charges and prohibit the taking of assignments of wages. In
addition, certain of these laws prohibit the taking of liens on
real estate except liens resulting from judgments.
In accordance with the Federal Consumer Credit Protection
Act, Century discloses to its customers various charges and
expenses, including the total finance charge and the annual
percentage rate of charges applicable to each transaction.
Century also discloses either monthly interest rates or total
dollar credit charges as required by the states in which it
operates.
Century also is subject to the provisions of the Fair
Credit Reporting Act ("FCRA") and makes the disclosures to
consumers required by the FCRA. Consumers are advised when
adverse action, such as the denial of credit or insurance or an
increase in charges for credit or insurance, is taken based in
whole or in part on information contained in consumer reports
received from consumer reporting agencies, such as credit
bureaus, or other sources.
A rule of the Federal Trade Commission permits a debtor to
assert against a purchaser of a consumer credit contract, such
as the sales finance contracts purchased by Century, all claims
and defenses which the debtor could assert against the seller
of the goods or services obtained by the debtor pursuant to the
contract. Although Century has no direct recourse against the
seller of such installment contracts, if problems with
purchased contracts arise, it is common business practice and
Century's history has demonstrated that the seller will
exchange a more satisfactory sales finance contract for the
problem one. Therefore, there has been no material impact on
operations as a result of the rule. At December 31, 1994,
approximately 19% of Century's receivables are from the
purchase of sales finance contracts.
Century is subject to the Equal Credit Opportunity Act,
Title VII, prohibiting discrimination on the basis of sex or
marital status, race, color, religion, national origin, age,
receipt of income under public aid or good faith exercise of
rights under the Consumer Credit Protection Act.
The federal bankruptcy law affects the business of Century
in the following principal respects:
(A) Rights of the creditor and debtor to reaffirm
obligations are limited by necessity of court
approval, and then the debtor has 30 days to change
his mind;
(B) Contract between creditor and debtor must be limited
once a bankruptcy case is filed;
(C) Debtor next has choice of federal exemptions or
state exemptions and in many instances federal
exemptions are more liberal so that creditor's
rights are limited;
(D) Payments made by a debtor to a creditor 90 days
before bankruptcy may have to be returned because of
presumption of insolvency;
<PAGE>
<PAGE>
(E) The value of secured property can be determined by
the court rather than by the balance of the loan,
thus making it possible for the debtor to retain
property free and clear through payoff of the debt,
at an amount which is less than the outstanding
balance of the loan.
Century continuously modifies its finance forms in order
to conform with new interpretations of the various laws and
regulations to which it is subject. However, it is virtually
impossible, because of numerous new court decisions with
retroactive application, to avoid technical violations,
especially with respect to the truth-in-lending laws, which may
subject Century to substantial liabilities including penalties
and attorney's fees payable to its customers. To date, there
has not been a significant number of such claims asserted
against Century.
The sale of insurance is subject to various insurance
regulations in each state where Century sells such insurance.
Employees
As of February 27, 1995, the Company had 293 employees.
The Company has no contract with any labor union representing
its employees and there have been no organizing efforts of
employees.
Item 2. Properties
Location of Offices
Century's business requires a relatively small investment
in fixed assets. All offices occupied by Century are leased
with terms of five years or less.
The geographic distribution of Century's business on
December 31, 1994 was as follows:
<TABLE>
<CAPTION>
Percent Percent
of Gross of Gross
State Offices Receivables State Offices Receivables
<S> <C> <C> <C> <C> <C>
Alabama 3 5.87% Missouri 2 6.16%
Colorado 2 3.86 Nebraska 1 1.34
Florida 5 8.87 Oklahoma 2 5.74
Georgia 12 20.15 South Carolina 1 2.26
Kansas 6 15.23 Tennessee 5 8.88
Kentucky 1 2.07 Texas 4 13.04
Louisiana 1 1.44 Utah 1 5.09
46 100.00%
</TABLE>
Item 3. Legal Proceedings
Because the business of Century involves the collection of
numerous accounts, the validity of liens, accident and other
damage or loss claims under many types of insurance, and
compliance with state and federal consumer laws, Century and
its subsidiaries are from time to time plaintiffs and
defendants in numerous legal proceedings. Other than the cases
listed below, CenCor, nor any of its subsidiaries is a party
to, nor is the property thereof the subject of, any pending
legal proceedings which depart from the ordinary routine
litigation incident to the kinds of business conducted by
Century and its subsidiaries or, if such proceedings constitute
other than routine litigation, in which there is a reasonable
possibility of an adverse decision which could have any
material adverse effect upon the financial condition of the
Company. There are no proceedings pending or, to the Company's
knowledge, threatened by or<PAGE>
<PAGE>
on behalf of any administrative board or regulatory body which
would materially affect or impair the right of Century to carry
on any of its respective business.
As previously reported, during 1991 a Century subsidiary
was the victim of a fraudulent scheme involving the purchase of
automobile financing contracts which Century determined were
fictitious. Century recorded a multi-million dollar loss in
1991 as a result of the fraudulent automobile contracts. At
the time of the fraudulent scheme the Century subsidiary was
insured by Lloyds of London for a maximum of $1,000,000 under
a fidelity policy. Lloyds of London has offered to settle the
claim for less than the full amount of the policy coverage. On
April 22, 1994, the Century subsidiary filed suit in the
Circuit Court of the Thirteenth Judicial Circuit of the State
of Florida, Hillsborough County, against Lloyds of London
seeking recovery of $1,000,000 for breach of contract. The
suit is presently in the discovery stage and a trial hearing
date has not yet been set by the Circuit Court.
On June 28, 1994, a Century subsidiary was named as a
defendant, along with a number of other consumer finance
companies, in a lawsuit filed in the Circuit Court of Jefferson
County, Alabama. The Century subsidiary was dismissed without
prejudice from the case on September 9, 1994.
The same Century subsidiary, along with virtually the same
consumer finance companies named in the previous suit, was also
named as a defendant on July 21, 1994, in a lawsuit styled
Princess Nobels v. Associates Corporation of North America, et
al. filed in the United States District Court for the Northern
District of Alabama Southern Division. This is a class action
lawsuit asserting claims relating to non-filing insurance filed
against a number of consumer credit lenders, certain sellers of
consumer products, and certain insurance companies. In this
case, the Plaintiffs make claims for antitrust violations,
fraud, violations of RICO, breach of contract, conversion, and
Truth-in-Lending Act violations. Plaintiffs have asserted a
conspiracy among the various defendants to restrain trade and
fix prices and have asserted a purported nationwide class
action of borrowers or purchasers who were charged for non-
filing insurance. The plaintiffs' complaint seeks statutory
and actual damages sustained by the plaintiffs, attorney fees
and litigation costs, and such other relief deemed appropriate
by the Court. The suit is currently in the discovery planning
stage with a trial hearing date scheduled for mid-June. The
Century subsidiary has denied the allegations presented in the
suit and is actively defending the charges.
On September 9, 1994, CenCor was also named as a defendant
in the Federal suit discussed above. The plaintiffs' amended
complaint alleges that CenCor and the parent corporations of
certain previously named defendant finance companies directed
the conduct and exerted control over their subsidiary finance
companies and thus are also being named in the class action
suit. CenCor has filed a motion seeking dismissal from the
case based upon being inaccurately named as the parent
corporation of the Century subsidiary.
On October 25, 1994, a number of the same defendants in
the above-captioned action, including Century and its same
subsidiary, were named as defendants in a lawsuit filed in the
Circuit Court of Jefferson County, Alabama by certain alleged
borrowers from the defendant creditor/lenders. In the action,
styled Alfonzo Calloway, et al. v. Baker Furniture Company, et
al., the plaintiffs allege that the defendants, including
Century and its subsidiary, engaged in violations of the
Alabama Mini Code and Alabama Small Loan Act, fraud, and civil
conspiracy and request the certification of a state-wide class
action. On March 8, 1995, the suit was removed from the
Circuit Court and consolidated with the Princess Nobels case
previously mentioned.
Item 4. Submission of Matters to a Vote of Security Holders
At the Annual Meeting of the Stockholders on November 3,
1994, the entire incumbent Board of Directors was re-elected
for another one-year term. The result of the vote for the
Board of Directors was as follows:
<TABLE>
<CAPTION>
FOR AGAINST ABSTAINED
<S> <C> <C> <C>
Jack L. Brozman, Chairman 1,075,221 0 5,499
Edward G. Bauer, Jr. 1,076,298 0 4,422
George L. Bernstein 1,076,351 0 4,369
<PAGE>
<PAGE>
Marvin S. Riesenbach 1,076,407 0 4,313
</TABLE>
Additionally, the retention of Ernst & Young LLP as
independent auditors for 1994 was approved. The result of the
vote for retention of Ernst & Young LLP was as follows:
<TABLE>
<CAPTION>
FOR AGAINST ABSTAINED
<S> <C> <C>
1,076,169 1,494 3,057
</TABLE>
(The remainder of this page is intentionally blank.)
<PAGE>
<PAGE>
PART II
Item 5. Market for Registrant's Common Stock and Related
Stockholder Matters
Until December 7, 1992, the Company's Common Stock was
quoted on the NASDAQ National Market System (Symbol-CNCRE).
Effective that date, the Common Stock was delisted from the
NASDAQ National Market System because of CenCor's failure to
meet the NASDAQ capital and surplus requirements. On December
4, 1992, the last date the Common Stock was quoted, the closing
price was $.50 per share. Since that time, CenCor's stock has
been quoted on an inter-dealer basis in the over-the-counter
market on the OTC Bulletin Board. The range of high and low
sales price as quoted on OTC Bulletin Board for each quarter of
1994 and 1993 is as follows:
<TABLE>
<CAPTION>
1993 1994
Quarter Ended High Low High Low
<S> <C> <C> <C> <C>
March 31 1/2 1/8 3/4 1/2
June 30 5/16 1/8 13/16 1/2
September 30 3/8 3/16 3/4 1/2
December 31 3/4 1/2 3/4 9/16
</TABLE>
The quotations from the OTC Bulletin Board reflect inter-
dealer prices without retail mark-up, mark-down, or commission
and may not represent actual transactions.
On February 27, 1995, the quoted bid price of the Common
Stock on OTC Bulletin Board was $0.5625.
At February 27, 1995, CenCor had approximately 1,181
shareholders of record. No dividends have been paid on the
common stock. Due to the current financial status of the
Company it is unlikely that dividends will be declared or paid.
In addition, the terms of Century's restructuring
agreements eliminate Century's ability to pay dividends on its
common stock other than in shares of Century. Accordingly,
CenCor will not be entitled to receive cash dividends from
Century until Century's restructured debt obligations have been
paid-in-full.
<PAGE>
<PAGE>
Item 6. Selected Financial Data
<TABLE>
<CAPTION>
Year Ended December 31
1994 1993 1992 1991 1990
<S> <C> <C> <C> <C> <C>
Income Statement Data:
(In thousands except per
share amounts)
Revenue:
Earned discount, interest,
and nce charges $25,505 $21,892 $24,023 $30,089 $27,131
Insurance commissions 3,529 1,145 1,782 2,088 2,043
29,034 23,037 25,805 32,177 29,174
Provision for credit losses 5,519 2,104 13,156 12,133 4,323
Operating expenses 14,155 19,339 14,652 18,169 10,325
Interest expense, warrants 639 513 -- -- --
Interest expense, net 10,745 9,263 10,685 11,562 10,474
Operating income (loss) (2,024) (8,182) (12,688) (9,687) 4,052
Other income (loss):
Gain on sale of finance
receivable 517 944 -- -- --
Loss on sale of property and
equipment (5) (18) -- -- --
Proceeds from officers life
insurance -- -- -- 652 --
512 926 -- 652 --
Income tax benefit (expense) -- -- 336 687 (1,628)
Income (loss) from continuing
operations (1,512) (7,256) (12,352) (8,348) 2,424
Discontinued operations:<F1>
Income (loss) from
operations<F5> -- -- (502) 111 815
Loss on disposal<F5> -- -- (3,699) (340) --
Provision for credit losses on
subordinated notes assumed by
spun-off career training
subsidiary<F5> -- -- (5,422) -- --
Income (loss) before extra-
ordinary item (1,512) (7,256) (21,975) (8,577) 3,239
Extraordinary Item:
Gain on restructuring of
long-term debt -- 18,033 -- -- --
Net income (loss) $(1,512) $10,777 $(21,975) $(8,577) 3,239
Per Share Amounts:<F2>
Income (loss) from continuing
operations $(.83) $(5.45) $(11.34) $(7.66) 2.14
Discontinued operations -- -- (8.84) (.21) .72
Extraordinary item -- 13.55 -- - --
Net income (loss) applicable
to common stock
and common stock equivalents $(.83) $8.10 $(20.18) $(7.87) 2.86
Weighted average common and
common equivalent shares
outstanding 1,815,080 1,331,058 1,089,048 1,089,718 1,134,581
Item 6. Selected Financial Data (continued)
</TABLE>
<TABLE>
<CAPTION>
Year Ended December 31
1994 1993 1992 1991 1990
<S> <C> <C> <C> <C <C>
Balance Sheet Data
(End of Period):
Net finance receivable $104,125 $88,972 $74,777 $100,905 $99,571
Total asset 111,944 97,456 102,130 146,709 165,530
Indebtedness:<F4>
Unsecured notes payable
and commercial paper -- -- -- 491 17,508
Direct financing lease
obligations -- -- -- 14,115 16,374
Long-term debt 99,407 96,925 108,321 116,657 106,913
Borrowings under line
of credit 13,693 -- -- -- --
Stockholders' equity
(deficit)<F3> (7,227) (5,715) (16,625) 5,350 14,057
<FN>
<F1>
(1) During 1991 and 1992, the Company sold its temporary
services division and the net assets of its equipment
leasing company (see Note 3 to the financial statements).
<F2>
(2) Adjusted to reflect the one for five reverse stock split
effected August 31, 1990.
<F3>
(3) The purchase of treasury stock reduced the consolidated
stockholders' equity of the Company in 1991.
<F4>
(4) See Notes 2, 6, and 7 of the financial statements.
<F5>
(5) Amounts shown net of income taxes.
</FN>
</TABLE>
(The remainder of this page is intentionally blank.)
<PAGE>
<PAGE>
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations
Results of Operations
The Company was significantly and adversely affected by
certain events in 1991 and 1992. As a result of these adverse
developments, the Company has, since mid-1991, experienced
severe liquidity problems. In July 1992, the Board of
Directors began reviewing various financial alternatives that
the Company might pursue, including restructuring its
outstanding debt by means of an exchange offer or by means of
a Chapter 11 bankruptcy filing, with the goal of maximizing its
investment in Century and implementing a long-term solution to
the Company's financial situation. The review process resulted
in the development of a proposed restructuring plan and a
prepackaged bankruptcy plan of reorganization, which was
circulated to noteholders and other creditors on May 13, 1993.
Following creditor approval, CenCor filed for Chapter 11
bankruptcy reorganization on July 19, 1993. The prepackaged
bankruptcy plan was confirmed by the bankruptcy court on August
30, 1993.
1994 Compared to 1993
For the year ended December 31, 1994, the Company incurred
a net loss of $1,512,000 as compared to a net loss before
extraordinary item of $7,256,000 for 1993. The decrease in the
net loss from December 31, 1993, to December 31, 1994, was
attributable to an increase in revenue of $5,997,000 (26%) and
a decrease in salaries and other operating expenses of
$5,184,000 (27%). Offsetting this was an increase in the
provision for credit losses of $3,145,000 (162%).
Interest on finance receivables increased by $3,613,000
(17%) in the year ended December 31, 1994 as compared to 1993.
The increase is primarily attributable to income derived from
increased net finance receivables outstanding as a result of
Century's emphasis on growth.
Insurance commissions, which are earned on the sale of
insurance upon origination of consumer and home equity loans,
increased by $2,384,000 (208%) in the year ended December 31,
1994 as compared to 1993. The increase is partially a result
of the increase in the outstanding finance receivables. In
addition, during 1994 Century increased its emphasis on the
sale of insurance products which further contributed to the
increase in insurance commissions during the period. Century
also renegotiated the terms with its' insurance carrier, which
resulted in increased commissions earned from the sale of
insurance.
Salaries and other operating expenses for the year ended
December 31, 1994 decreased from $19,339,000 to $14,155,000, a
decrease of $5,184,000 or 27%. A reduction in operating
expenses of $2,263,000 was realized as a result of the
elimination and consolidation of several of Century's offices.
In addition, the following expenses incurred in 1993 were
absent or significantly reduced in 1994 and, therefore, also
reduced operating expenses: temporary employment expense
($110,000), legal services ($290,000), audit and tax services
($173,000), computer conversion costs ($737,000), incentives
toward the growth of Century's portfolio ($496,000), settlement
with a former employee ($586,000), and relocation expenses
($124,000).
<PAGE>
<PAGE>
1994 Compared to 1993 (continued)
The provision for credit losses increased from $2,104,000
to $5,519,000 for the year ended December 31, 1994. The
increase in the provision for credit losses in 1994 is
partially a result of the increase in net finance receivables.
In addition, due to the establishment of a centralized location
for the purposes of collecting charged off receivables during
the fourth quarter of 1992, a large amount of delinquent
receivables were charged off in the fourth quarter of 1992 and
delivered to the centralized collection location to pursue
further collection efforts. Although the centralized
collection location was discontinued at the end of 1993,
management has continued to focus on the collection of
delinquent accounts directly by the branch offices. However,
as a result of the centralized collection efforts and the low
charge-off's during 1993, the amount of provision necessary to
set the allowance at an adequate level for 1993 was reduced.
The increase in the provision for credit losses in 1994 was
necessary to bring the balance to appropriate levels for the
existing portfolio mix and the provision is consistent with
historical trends prior to 1993.
As discussed earlier, a financial reorganization plan was
confirmed by the U.S. Bankruptcy Court and approved by the
majority of CenCor's noteholders and other creditors. The
Company accounted for the reorganization as a troubled debt
restructuring, whereby the New Notes were recorded at their net
present value on August 30, 1993, using an estimated market
discount rate of 16%. Interest on the New Notes is accruing
monthly until the date of maturity of the New Notes on July 1,
1999. Interest expense on the New Notes for the year ended
December 31, 1994 was $1,887,000. Century's net interest
expense on long-term debt and line of credit for the year ended
December 31, 1994 was $8,858,000. See Notes 6 and 7 to the
financial statements for a further discussion of Century's
interest expense.
In addition, Century, in connection with its debt
restructure on January 29, 1993, issued warrants to its
noteholders to acquire 300,000 shares of Century common stock
(see Note 6 to the financial statements). The value of the
warrants in excess of the exercise price is being accrued as
interest expense.
During 1994 Century sold four of its branch offices and
closed an additional three offices. Management determined that
these locations were outside of its focused market area and the
cost of operating the offices was not providing adequate
benefits. The elimination of these branches will enable
Century to focus on its more profitable and geographically
desirable locations. The net gain on the sale of the four
branches was $512,000 for the year ending December 31, 1994 as
compared to a net gain from the sale of four branches and the
centralized collection location in 1993 of $926,000.
No provision for income tax was recorded in 1994. See
Note 9 to the financial statements.
1993 Compared to 1992
Interest on finance receivables decreased by $2,131,000
(9%) in the year ended December 31, 1993. The decrease
resulted primarily from the change in the concentration of high
yielding assets, such as automobile sales finance contracts, to
an increase in the level of lower yielding home equity loans.
The provision for credit losses decreased by $11,052,000
to $2,104,000 for the year ended December 31, 1993. The
decrease in the provision for credit losses is primarily
attributable to the significant decrease in the auto paper
portfolio, the increased recoveries of previously charged off
receivables and the strengthening of management and controls.
Operating expenses increased by $4,687,000 (32%) to
$19,339,000 for the year ended December 31, 1993. The increase
was mostly due to additional costs incurred to improve the
quality and effectiveness of Century's operations. Most of the
increase in operating expenses occurred in the following
categories: salary and employment expenses (44%), rent expense
(30%), computer system conversion (100%), incentives toward the
growth of Century's portfolio (68%), settlement with a former
employee (100%), and relocation expenses (78%).
Interest expense decreased slightly in the year ended
December 31, 1993 from $10,685,000 at December 31, 1992 to
$9,263,000 at December 31, 1993. The decrease in the interest
expense resulted from the restructuring of the outstanding long
term debt (see Notes 2 and 6 to the financial statements).
<PAGE>
1993 Compared to 1992 (continued)
In addition, Century, in connection with its debt
restructure on January 29, 1993, issued warrants to its
noteholders to acquire 300,000 shares of Century common stock
(see Note 6 to the financial statements). The value of the
warrants in excess of the exercise price is being accrued as
interest expense
As previously mentioned, Century sold four of its branch
offices and its centralized collection location during 1993.
The resulting gain from the sale of the branch receivables
($944,000) and the loss from the sale of the branch fixed
assets ($18,000) was recorded as other income (loss) in the
accompanying consolidated statement of operations.
As a result of CenCor's reorganization plan (see Note 2 to
the financial statements), CenCor issued New Notes, Convertible
Notes, and stock to its noteholders. The New Notes and
Convertible Notes were recorded at their net present value
using an estimated market discount rate of 16%. As a result of
these transactions, an extraordinary gain of $18,033,000 was
recorded.
No provision for income tax was recorded in 1993. See
Note 9 to the financial statements.
Liquidity and Capital Resources
Debt Availability
Prior to 1992, Century historically funded its operations
through borrowings. Between 1992 and 1994, Century's growth
has been severely limited because of the unavailability of a
credit facility.
On April 1, 1994, Century obtained a $25 million revolving
line of credit with Congress Financial Corporation
("Congress"). Borrowings under the line of credit are now
being used by Century to provide working capital for the
financing of its portfolio growth. Borrowings under the line
of credit are fully secured by a first lien on all of Century's
assets. Funds borrowed under the line of credit bear interest
at 2% above the prime commercial interest rate, adjusted
monthly. The line of credit expires on April 1, 1996, but is
automatically renewable on a year-to-year basis unless
terminated by either party. As of December 31, 1994, the
outstanding balance on the line of credit was $13,693,000.
Century's acquisition of the line of credit follows the
restructuring of its debt and CenCor's debt restructuring. On
January 29, 1993, after extensive negotiations with its major
creditors, Century successfully completed its debt
restructuring (see Note 6 to the financial statements). Prior
to that date, Century had been in default on all its debt due
to various covenant violations. The terms of Century's
restructuring agreements provide certain limits on Century's
ability to incur additional indebtedness.
Capital Obligations
The Company has no significant obligations for capital
purchases.
Defaults on Long-Term Debt
At December 31, 1992, Century was in default of certain
covenants in its long-term debt agreements. On January 29,
1993, Century entered into amendment and exchange agreements
with the holders of its long-term debt (collectively the
"Restructuring Agreements"), whereby the holders agreed to
defer all principal payments until April 30, 1997.
Additionally, many covenants of the debt agreements were
amended. The covenants include, in part, maintaining net worth
at certain minimum levels and limitations on indebtedness and
payment of dividends.
Pursuant to the Restructuring Agreements, all of Century's
long-term debt will mature on April 30, 1997. However, certain
scheduled principal installments as provided for in the
original debt agreements are due prior to this date. In lieu
of cash payment of the scheduled principal installments,
Century will deliver Secured Deferred Payment Notes for the
related senior debt and a combination of Secured Deferred
Payment Notes and Secured Compound PIK Notes for the related
subordinated and junior subordinated debt. These notes will
bear interest at a fixed rate equal to the rate on 4.5 year
Treasury notes as of the installment
<PAGE>
due date, plus 2.25% (senior notes), 3.75% (subordinated notes)
and 5% (junior subordinated notes).
On March 30, 1995, the Restructuring Agreements were
amended to relax certain financial ratios that Century is
required to maintain during 1995. As more fully discussed
below, Century granted to the lenders, as consideration for the
amendment to the Restructuring Agreements, additional warrants
("Additional Warrants") to acquire up to 5% of Century's common
stock on a fully diluted basis. Century is in compliance with
all of the covenants in the Restructuring Agreements, including
the amended financial ratios.
Interest is payable monthly under all of the notes, except
for the Secured Compound PIK Notes, for which interest
compounds monthly and is payable on April 30, 1997.
Prior to the restructuring of its debt, CenCor was in
default on both its public and private debt. As part of the
restructuring, which was consummated on August 30, 1993, the
old debt was exchanged for New Notes, Convertible Notes, and
stock (see Note 2 to the financial statements). The Company is
in compliance with all covenants and terms under the new
indenture.
Internal Revenue Service Examination
The Company's income tax returns for 1988 and 1989 were
examined by the Internal Revenue Service (IRS), which has
proposed certain adjustments, a portion of which have been
protested by the Company. The Company has also claimed
additional deductions in these years. Management believes that
the ultimate disposition of the IRS examination will not have
a material effect on the financial position of the Company.
In addition, the Company's 1991 income tax return is
currently under examination by the IRS.
As a result of the unresolved IRS examination, management
cannot precisely estimate the amount of the Company's net
operating loss carryforward for financial statement or federal
income tax purposes.
Continuing Operations
The Board of Directors of Century recently determined that
it could be beneficial to CenCor and Century's creditors if
Century was sold. Accordingly, Century has engaged the
services of an investment banker for the purpose of locating
potential purchasers for Century's consumer finance business.
There can be no assurance that such an engagement will result
in the location of a potential purchaser willing to acquire
Century's business at a price and on terms acceptable to
CenCor.
The sale of Century may also be beneficial to CenCor as a
result of the March 30, 1995 amendment to the Restructuring
Agreements. As discussed above, as part of that amendment
Century granted to the Century lenders the Additional Warrants.
While the Warrants and the Additional Warrants permit Century's
lenders to acquire up to 30% of Century's outstanding common
stock for nominal consideration, the March 30, 1995 amendment
to the Restructuring Agreements provides that in the event
Century is sold in accordance with the terms and conditions
contained in the amendment, the lenders will: (i) sell their
Secured Notes to Century for an aggregate purchase price equal
to the principal amount of the Secured Notes outstanding,
together with accrued interest but excluding the prepayment
premiums payable under the Restructuring Agreements; and (ii)
surrender all the Warrants and Additional Warrants to Century
without consideration. See Note 6 to the financial statements.
<PAGE>
<PAGE>
Item 8. Financial Statements and Supplementary Data
INDEX TO FINANCIAL STATEMENTS
Page
CenCor, Inc.
Report of Independent Auditors . . . . . . . . . . . . . . . . 19
Consolidated Balance Sheets--At December 31, 1994 and 1993 . . 20
Consolidated Statement of Operations--For the Years
Ended December 31, 1994, 1993, and 1992 . . . . . . . . . 21
Consolidated Statements of Stockholders' Equity (Deficit)--For
the Years Ended December 31, 1994, 1993, and 1992 . . . . . . 23
Consolidated Statements of Cash Flows--For the Years
Ended December 31, 1994, 1993, and 1992 . . . . . . . . . 24
Notes to Consolidated Financial Statements . . . . . . . . . . 26
<PAGE>
<PAGE>
Report of Independent Auditors
The Board of Directors and Stockholders
CenCor, Inc.
We have audited the accompanying consolidated balance sheets of
CenCor, Inc. as of December 31, 1994 and 1993, and the related
consolidated statements of operations, stockholders' equity
(deficit) and cash flows for each of the three years in the
period ended December 31, 1994. Our audits also included the
financial statement schedules listed in the Index at Item
14(a). These financial statements and schedules are the
responsibility of the Company's management. Our responsibility
is to express an opinion on these financial statements and
schedules based on our audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used
and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We
believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements referred to above
present fairly, in all material respects, the consolidated
financial position of CenCor, Inc. at December 31, 1994 and
1993, and the consolidated results of its operations and its
cash flows for each of the three years in the period ended
December 31, 1994, in conformity with generally accepted
accounting principles. Also, in our opinion, the related
financial statement schedules, when considered in relation to
the basic financial statements taken as a whole, present fairly
in all material respects the information set forth therein.
Ernst & Young LLP
February 17, 1995
except for the last paragraph of
Note 6, as to which the date is
March 30, 1995
<PAGE>
<PAGE>
<TABLE>
CenCor, Inc.
Consolidated Balance Sheets
<CAPTION>
December 31
1994 1993
<S> <C> <C>
Assets
Cash and cash equivalents $1,033,000 $3,277,000
Net finance receivables, less
allowance for credit losses
of $5,194,000 ($5,026,000 in 1993) 104,125,000 88,972,000
Property and equipment, net 2,154,000 1,742,000
Unamortized debt issuance costs 667,000 225,000
Other assets 3,965,000 3,240,000
Total assets $111,944,000 $97,456,000
Liabilities and stockholders'
equity (deficit)
Accounts payable and accrued
liabilities $2,265,000 $3,189,000
Accrued interest - warrants 1,152,000 513,000
Unearned insurance commissions 2,654,000 2,544,000
Long-term debt 99,407,000 96,925,000
Borrowings under line of credit 13,693,000 -
Total liabilities 119,171,000 103,171,000
Stockholders' equity (deficit):
Common stock, $1 par value,
2,000,000 shares
authorized, 1,240,498 shares
issued and outstanding 1,241,000 1,241,000
Paid-in capital 2,805,000 2,805,000
Accumulated deficit (11,273,000) (9,761,000)
Total stockholders' deficit (7,227,000) (5,715,000)
Total liabilities and stockholders'
equity (deficit) $111,944,000 $97,456,000
</TABLE>
See accompanying notes.
<PAGE>
<PAGE>
<TABLE>
CenCor, Inc.
Consolidated Statements of Operations
<CAPTION>
Year ended December 31
1994 1993 1992
<S> <C> <C> <C>
Finance charges and insurance
commissions $29,034,000 $23,037,000 $25,805,000
Operating expenses:
Operating expenses 14,155,000 19,339,000 14,652,000
Provision for credit losses 5,519,000 2,104,000 13,156,000
Interest expense, net 10,745,000 9,263,000 10,685,000
Interest expense, warrants 639,000 513,000 -
31,058,000 31,219,000 38,493,000
Operating loss (2,024,000) (8,182,000 (12,688,000)
Other income (loss):
Gain on sale of finance receivables 517,000 944,000 -
Loss on sale of property and
equipment (5,000) (18,000) -
512,000 926,000 -
Loss from continuing operations
before income taxes and
extraordinary item (1,512,000) (7,256,000) (12,688,000)
Income tax benefit - - 336,000
Loss from continuing operations
before extraordinary item (1,512,000) (7,256,000) (12,352,000)
Discontinued operations:
Loss from operations, net of taxes
($0 in 1992) - - (502,000)
Loss on disposal, net of tax
benefits ($0 in - - (3,699,000)
Provision for credit loss on
subordinated
notes assumed by spun-off
subsidiary, net of
taxes ($0 in 1992) - - (5,422,000)
Loss from discontinued operations - - (9,623,000)
Loss before extraordinary item (1,512,000) (7,256,000) (21,975,000)
Extraordinary item:
Gain on restructuring of
long-term debt
net of taxes ($0 in 1993) - 18,033,000 -
Net income (loss) $(1,512,000) $10,777,000 $(21,975,000)
Weighted average common and common
equivalent shares outstanding 1,815,080 1,331,058 1,089,048
Earnings per share of common stock
and common equivalent shares
of stock:
Loss per share from continuing
operations $ (.83) $(5.45) $(11.34)
Loss per share from discontinued
operations - - (8.84)
Loss per share before extraordinary
items (.83) (5.45) (20.18)
Earnings per share from extraordinary
item - 13.55 -
Earnings (loss) per share from net
income $ (.83) $8.10 $(20.18)
</TABLE>
See accompanying notes.
<PAGE>
<PAGE>
<TABLE>
CenCor, Inc.
Consolidated Statements of Stockholders' Equity
<CAPTION>
Common Stock Treasury Stock
<CAPTION>
Retained
Paid-In Earnings
Shares Amount Capital (Deficit) Shares Amount Total
<S> <C> <C> <C> <C> <C> <C> <C>
Balance at December 31, 1991 1,360,458 $1,360,000 $6,574,000 $1,437,000 271,410 $(4,021,000) $5,350,000
Net loss - - - (21,975,000) - - (21,975,000)
Balance at December 31, 1992 1,360,458 1,360,000 6,574,000 (20,538,000) 271,410 (4,021,000) (16,625,000)
Net income - - - 10,777,000 - - 10,777,000
Cancellation of treasury
stock (271,410) (271,000) (3,750,000) - (271,410) 4,021,000 -
Issuance of common stock 151,450 152,000 (19,000) - - - 133,000
Balance at December 31, 1993 1,240,498 1,241,000 2,805,000 (9,761,000) - - (5,715,000)
Net loss - - - (1,512,000) - - (1,512,000)
Balance at December 31, 1994 1,240,498 $1,241,000 $2,805,000 $(11,273,000) - $ - $(7,227,000)
</TABLE>
See accompanying notes.
<PAGE>
<PAGE>
<TABLE>
CenCor, Inc.
Consolidated Statements of Cash Flows
<CAPTION>
Year ended December 31
1994 1993 1992
<S> <C> <C> <C>
Operating Activities
Net income (loss) $(1,512,000) $10,777,000 $(21,975,000)
Adjustments to reconcile net
income (loss) to net cash
provided by
(used in) operating activities:
Depreciation 269,000 191,000 113,000
Amortization 372,000 95,000 335,000
Discount accretion on
long-term debt 2,026,000 641,000 -
Provision for credit losses 5,519,000 2,104,000 13,156,000
Loss from discontinued
operations - - 9,623,000
Gain on sale of finance
receivables (517,000) (944,000) -
Deferred tax benefit - - (336,000)
Gain on restructure of debt - (18,033,000) -
Changes in assets and
liabilities:
Accrued interest 456,000 - 388,000
Accrued interest - warrants 639,000 513,000 -
Other assets and
liabilities (1,539,000) 1,164,000 6,696,000
Total adjustments 7,225,000 (14,269,000) 29,975,000
Net cash provided by
(used in) operating
activities 5,713,000 (3,492,000) 8,000,000
Investing activities
Finance receivables originated
or purchased (88,824,000) (91,842,000) (52,718,000)
Proceeds from finance receivables
repaid or sold 68,669,000 76,487,000 65,858,000
Capital expenditures, net (681,000) (1,338,000) (515,000)
Cash used in discontinued
operations - - (671,000)
Proceeds from sale of
discontinued operations - - 7,042,000
Proceeds from sale of other
assets - 61,000 1,202,000
Net cash provided by (used in)
investing activities (20,836,000) (16,632,000) 20,198,000
</TABLE>
<PAGE>
<PAGE>
<TABLE>
CenCor, Inc.
Consolidated Statements of Cash Flows (continued)
<CAPTION>
Year ended December 31
1994 1993 1992
<S> <C> <C> <C>
Financing Activities
Debt issuance costs $(814,000) $ - $ -
Principal payments on long-term debt - - (7,731,000)
Net decrease in commercial paper - - (491,000)
Net borrowings under line of credit 13,693,000 - -
Net cash provided by (used in)
financing activities 12,879,000 - (8,222,000)
Net increase (decrease) in cash
and cash equivalents (2,244,000) (20,124,000) 19,976,000
Cash and cash equivalents at
beginning of year 3,277,000 23,401,000 3,425,000
Cash and cash equivalents at
end of year $1,033,000 $3,277,000 $23,401,000
<CAPTION>
Supplemental disclosures of cash flow information
Cash paid during the year for:
<S> <C> <C> <C>
Interest $8,061,000 $9,010,000 $11,503,000
</TABLE>
See accompanying notes.
<PAGE>
<PAGE>
CenCor, Inc.
Notes to Consolidated Financial Statements
December 31, 1994, 1993, and 1992
1. Summary of Significant Accounting Policies
Basis of Presentation
CenCor, Inc. is essentially a holding company for its wholly-
owned subsidiary, Century Acceptance Corporation ("Century").
On July 19, 1993, CenCor filed a Voluntary Petition with the
United States Bankruptcy Court for the Western District of
Missouri seeking protection under Chapter 11 of the United
States Bankruptcy Code. At the same time, CenCor filed an
Application with the Bankruptcy Court seeking expeditious
confirmation of its previously creditor approved prepackaged
plan of reorganization. The plan was confirmed by the
bankruptcy court on August 30, 1993. As discussed further in
Note 2, on November 1, 1993, CenCor issued new notes and stock
to its subordinated noteholders pursuant to the provisions of
the plan. The filing did not involve Century.
Accounting Principles
The consolidated financial statements have been prepared in
accordance with generally accepted accounting principles. In
preparing the consolidated financial statements, management is
required to make estimates and assumptions that affect the
reported amounts of assets and liabilities as of the date of
the balance sheet and revenues and expenses for the year.
Because of changing economic conditions and the economic
prospects of borrowers, it is often necessary to make frequent
changes in estimates and assumptions. Accordingly, actual
results could differ from such estimates. Material estimates
that are particularly susceptible to significant change in the
near-term relate to the determination of the allowance for
credit losses. Management believes that the allowance for
credit losses is adequate. While management uses currently
available information to recognize losses on finance
receivables, future additions to the allowances may be
necessary based on changes in economic conditions in the
Company's market areas.
Principles of Consolidation
The accompanying consolidated financial statements include the
accounts of CenCor, Inc., and its subsidiaries, (together, the
"Company") all of which are wholly-owned. At December 31, 1994
and 1993, Century was the Company's only subsidiary.
The Company, through Century, is engaged in the consumer
finance industry. Century provides consumer loans and real
estate loans to individuals and purchases sales finance
contracts. The Company also sells various insurance products
including property, credit life, and accident and health
insurance in conjunction with its consumer loan business. All
significant intercompany accounts and transactions have been
eliminated in consolidation.
Revenue Recognition
Finance charges on receivables are recognized as revenue using
the interest method. Finance charge accruals are suspended on
accounts more than three payments contractually past due. Once
an account is suspended, finance charges are recognized on a
collection basis.
Commissions from the sale of property, credit life, and
accident and health insurance are recognized as revenue over
the term of the loan.
<PAGE>
<PAGE>
CenCor, Inc.
Notes to Consolidated Financial Statements (continued)
1. Summary of Significant Accounting Policies (continued)
Credit Losses
Provisions for credit losses are charged to income in amounts
sufficient to maintain the allowance for credit losses at a
level considered adequate to cover the losses in the existing
portfolio. The allowance is determined using estimated loss
percentages established by management for each major category
of receivables. Additions to the allowance are charged to the
provision for credit losses.
Management evaluates allowance requirements by examining
current delinquencies, historical charge-off ratios, the
characteristics of the accounts, the value of the underlying
collateral and general economic conditions and trends.
Management also evaluates the availability of dealer reserves
to absorb finance receivable losses.
Finance receivables are charged to the allowance for credit
losses when they are deemed to be uncollectible but, in any
event, all accounts (except for real estate secured loans) for
which an amount aggregating a full contractual payment has not
been received after six consecutive months are written off.
Real estate secured loans are charged to the allowance for
credit losses when a full contractual payment has not been
received for twelve months unless the property has been
foreclosed.
Dealer Reserves
As part of Century's financing of sales finance contracts and
automobile portfolio purchases, agreements are commonly entered
into with dealers, whereby reserves are established to protect
Century from potential losses associated with such contracts.
As part of the agreement, a portion of the proceeds due to the
dealer is retained by Century as a reserve against potential
losses on related loans. The unused portion of this reserve is
typically refunded to the dealer. Century negotiates the
amount of the reserves with the dealers based upon various
criteria, one of which is the credit risk associated with the
contracts being purchased.
Century purchases individual automobile contracts from dealers
at a discount. Based upon projected loss experience, a portion
or all of the discount is allocated to a nonrefundable reserve
against which future credit losses will be applied. The
remaining portion of the discount, after allocation to the
nonrefundable reserve, is recorded as unearned finance charge
and accredited into income using the interest method over the
contractual life of the related receivables.
Depreciation and Amortization
Property and equipment are depreciated over the estimated
useful lives of the assets using the straight-line method.
Leasehold improvements are amortized ratably over the terms of
the related leases.
Debt issuance costs are amortized over the term of the related
debt using the straight line method.
Other Assets
Included in other assets at December 31, 1994 and 1993, is a
$1,000,000 receivable from an insurance company in connection
with a fidelity bond claim arising from the loss on fraudulent
automobile contracts in 1991.
<PAGE>
<PAGE>
CenCor, Inc.
Notes to Consolidated Financial Statements (continued)
1. Summary of Significant Accounting Policies (continued)
Other Assets (continued)
Other assets at December 31, 1994 and 1993, also include a
$750,000 note receivable related to the sale of Charter
Equipment Leasing (Charter) (Note 3). Such note was repaid on
February 7, 1995.
Goodwill and Other Intangible Assets
In connection with sale of the Company's Temporary Services
division and Charter in 1992, all remaining unamortized
goodwill and other intangibles of $3,097,000 were netted
against the sale proceeds. Amortization expense was $145,000
in 1992.
Transactions with Affiliates
Prior to 1993, certain corporate, general and administrative
expenses had been allocated from the Company to two former
subsidiaries, Concorde Career Colleges, Inc. (Concorde) and
LaPetite Academy, Inc. (LaPetite), which were spun off in 1988
and 1983, respectively. These allocations were made in
accordance with agreements between the Company, Concorde, and
LaPetite based on the estimated amounts attributable to each.
The expense allocations from the Company to Concorde were
$328,000 in 1992. The expense allocations from the Company to
LaPetite were $689,000 in 1992.
Management believes the allocations were reasonable and
approximate the costs of services had they been obtained from
unaffiliated parties.
Cash Equivalents
Cash equivalents consisted of money market funds and are stated
at cost, which approximates market.
Reclassifications
Certain 1992 and 1993 amounts have been reclassified to conform
to the 1994 presentation.
Dividend Restriction
CenCor has limited sources of funds from continuing operations.
The terms of Century's debt restructuring (Note 6) eliminate
Century's ability to pay dividends on its common stock other
than in the stock of Century. Accordingly, CenCor will not be
entitled to receive cash dividends from Century until Century's
restructured debt obligations have been paid-in-full.
2. Reorganization and Extraordinary Item
On July 19, 1993, CenCor filed a Voluntary Petition with the
United States Bankruptcy Court. At the same time, CenCor filed
an Application with the Bankruptcy Court seeking expeditious
confirmation of its previously creditor approved prepackaged
plan of reorganization. The plan was confirmed by the
Bankruptcy Court on August 30, 1993.
<PAGE>
<PAGE>
CenCor, Inc.
Notes to Consolidated Financial Statements (continued)
2. Reorganization and Extraordinary Item (continued)
Pursuant to the plan, CenCor's noteholders received the
following securities for each $1,000 aggregate amount of
principal and accrued but unpaid interest at December 31,
1992:
(i) $600 principal amount of non-interest bearing New Notes
(ii) $400 principal amount of non-interest bearing Convertible Notes
(iii) 5.2817 shares of CenCor common stock, par value $1 per share
The New Notes and Convertible Notes are non-interest bearing
and will mature on July 1, 1999. The Convertible Notes may be
converted at the option of the holder, at any time, into shares
of common stock at a ratio of one share of common stock for
each $20 principal amount of Convertible Notes. The
reorganization resulted in the issuance of $17,230,589 of New
Notes, $11,487,060 of Convertible Notes, and 151,450 shares of
$1 par value common stock on November 1, 1993. Simultaneously
the Company canceled 271,410 shares of treasury stock. The New
Notes and Convertible Notes were recorded at their net present
value using an estimated market discount rate of 16%. A market
value of $0.125 was assigned to the issuance of the common
stock. As a result of these transactions, an extraordinary
gain of $18,033,000 was recorded.
3. Discontinued Operations
Effective November 6, 1992, the Company sold substantially all
the net assets of Charter in exchange for cash of $2,396,000,
net of selling expenses of approximately $144,000, a promissory
note in the amount of $750,000 and the buyer's assumption of
certain liabilities. The promissory note is payable in full on
November 5, 1995, including all accrued interest compounded
monthly at a rate of 12% per annum. Net assets sold were
approximately $6,969,000. The Company recorded a loss on
disposal (net of income taxes) of $4,090,000 which is
classified as discontinued operations in the accompanying
consolidated statements of operations.
On February 7, 1995, the Company received approximately
$768,000 from the buyer of Charter in full payment of its
promissory note including accrued interest. At that time the
Company and the buyer of Charter also entered into a Mutual
Release which released the parties from various provisions
under the original Asset Purchase Agreement of November 6,
1992, including all existing and future liabilities.
Effective February 29, 1992, the Company sold seven Temporary
Services offices located in Ohio. The gross cash proceeds of
the sale was $2,842,000 which was received May 1, 1992. In
July 1992, the remainder of the Temporary Services offices were
sold. The gross cash proceeds to the Company of the sale was
approximately $1,660,000 which was received July 29, 1992.
Total net assets of all the offices sold was approximately
$4,111,000. The Company recorded a gain of $391,000 (net of
income taxes) from the sale of these Temporary Services offices
which is classified as discontinued operations in the
accompanying consolidated statements of operations.
The loss from operations, net of applicable income taxes, for
the Temporary Services division and Charter is classified as
discontinued operations in the accompanying consolidated
statements of operations. The net loss from discontinued
operations is as follows:
<PAGE>
<PAGE>
CenCor, Inc.
Notes to Consolidated Financial Statements (continued)
3. Discontinued Operations (continued)
<TABLE>
<CAPTION>
December 31, 1992
<S> <C>
Revenue $10,803,000
Expense 11,305,000
Loss from discontinued
operations before income taxes (502,000)
Income taxes applicable to discontinued
operations -
Net loss from discontinued operations $(502,000)
</TABLE>
Concorde, which was spun off to the stockholders of the Company
in 1988, had previously agreed to assume certain obligations of
the Company relating to the Company's Series H 10% notes.
Concorde notified the Company on October 1, 1992, that it was
unable to continue making payments on the assumed debt. On
October 30, 1992, Concorde executed a Restructuring Agreement
with the Company, which terminated Concorde's obligations
regarding these notes. In consideration, the Company accepted
Concorde's Junior Secured Debenture ("Junior Secured
Debenture") for $5,422,000. As a result of Concorde's
precarious financial condition, the Company established a
reserve for the full amount due from Concorde. The loss
provision related to the allowance is classified in the
accompanying 1992 consolidated statement of operations as
discontinued operations.
On December 30, 1993, Concorde and the Company amended the
Restructuring Agreement to provide that the Company would
receive $8,390,000 of Concorde's previously charged-off
receivables in full payment of the accrued interest on the
Junior Secured Debenture through December 31, 1993 in the
amount of $559,353. The receivables, which consist of accounts
and notes receivable from students who attended schools
operated by Concorde or its subsidiaries, were assigned to the
Company without recourse with the Company assuming all risk of
non-payment of the receivables. The amendment grants the
Company limited rights of substitution until such time as it
collects $559,353 from the receivables, exclusive of out-of-
pocket collection fees and expenses paid to third-parties. The
Company has engaged a collection agent to pursue recovery of
such receivables. The $559,353 accrued but unpaid interest is
fully reserved in the accompanying consolidated balance sheet.
On November 15, 1994, Concorde and the Company executed a
Second Amendment to the Restructuring Agreement to provide that
the Company would receive an additional $15,000,000 of
Concorde's previously charged-off receivables in full payment
of the accrued interest on the Junior Secured debenture through
December 31, 1994 in the amount of $500,231. The Second
Amendment grants the Company the same rights of assignment and
substitution for these receivables as provided for in the First
Amendment. The Company has also engaged a collection agent to
pursue recovery of these receivables. The $500,231 accrued but
unpaid interest is fully reserved in the accompanying
consolidated balance sheet.
The Company also agreed in the Second Amendment to the
Restructuring Agreement to accept 300,000 shares of Concorde's
cumulative preferred stock in exchange for the cancellation of
$3,000,000 of the total $5,422,000 of original principal amount
of the Junior Secured Debenture. Dividends on the cumulative
preferred stock will be calculated on a quarterly basis from
the date of issuance at an annual dividend rate equal to
seventy-three percent of the then current interest rate on the
Junior Secured Debenture. No value has been recorded for the
cumulative preferred stock in the accompanying consolidated
balance sheet.
<PAGE>
<PAGE>
CenCor, Inc.
Notes to Consolidated Financial Statements (continued)
3. Discontinued Operations (continued)
Dividends will accumulate until the Junior Secured Debenture
has been repaid in full. At that time, the accumulated
dividends will be paid ratably over three years.
Upon retirement of the Junior Secured Debenture, dividends on
the cumulative preferred stock will become payable currently at
the Mark Twain Kansas City Bank prime rate plus 2 percent, up
to a maximum rate of 12 percent.
4. Finance Receivables
Finance receivables at December 31, 1994 and 1993, consisted
of:
<TABLE>
<CAPTION>
1994 1993
<S> <C> <C>
Consumer loans $ 82,175,000 $78,951,000
Real estate loans 13,924,000 13,560,000
Sales finance contracts 25,374,000 25,258,000
Automobile contracts 10,972,000 1,407,000
132,445,000 119,176,000
Less:
Unearned finance charges (21,891,000) (24,063,000)
Allowance for credit losses (5,194,000) (5,026,000)
Dealer reserves (384,000) (629,000)
Nonrefundable reserve (851,000) (486,000)
Net finance receivables $104,125,000 $88,972,000
</TABLE>
Finance receivables may be originated at any one of Century's
46 branch offices or may be purchased. Century's branches are
located in 14 states, primarily in the Midwest and the South.
As of December 31, 1994, the five states with the largest
concentration of net finance receivables are as follows:
<TABLE>
<S> <C>
Georgia $23,042,000
Kansas 17,031,000
Texas 14,423,000
Florida 10,994,000
Tennessee 9,331,000
</TABLE>
The maximum term of finance receivables, other than real estate
secured accounts, is four years, although Century generally
restricts maturities to three years. The maximum term over
which real estate loans are written is fifteen years.
Contractual maturities at December 31, 1994, were estimated to
be as follows:
<PAGE>
<PAGE>
CenCor, Inc.
Notes to Consolidated Financial Statements (continued)
4. Finance Receivables (continued)
<TABLE>
<CAPTION>
1995 1996 1997 1998 and after
<S> <C> <C> <C> <C>
Consumer loans 61% 31% 8% 0%
Real estate loans 11% 11% 11% 67%
Sales finance and automobile
contracts 54% 23% 12% 11%
</TABLE>
Experience of the finance industry indicates a substantial
portion of finance receivables will be paid off or renewed
prior to contractual maturity dates. Accordingly, the
preceding table cannot be regarded as a forecast of future cash
collections.
Although Century may require borrowers to pledge collateral on
consumer loans, such collateral is generally not pursued in the
event of default. Sales finance and automobile contracts are
generally collateralized, although the fair value of the
collateral in the event of repossession has historically been
significantly less than the book value of the contract. Real
estate loans are secured by real property and are generally
limited to a maximum of 75% of the property's unencumbered
appraised market value at the date of the loan.
5. Credit Loss Experience
An analysis of the allowance for credit losses on finance
receivables is as follows:
<TABLE>
<CAPTION> December 31
1994 1993 1992
<S> <C> <C> <C>
Balance at beginning of year $5,026,000 $5,990,000 $7,618,000
Charge-offs (5,800,000) (5,032,000) (16,278,000)
Recoveries 449,000 1,964,000 880,000
Net charge-offs (5,351,000) (3,068,000) (15,398,000)
Provision charged to continuing
operations 5,519,000 2,104,000 12,988,000
Additions from purchases
of bulk sales contracts - - 782,000
Balance at end of year $5,194,000 $5,026,000 $5,990,000
</TABLE>
<PAGE>
<PAGE>
<TABLE>
CenCor, Inc.
Notes to Consolidated Financial Statements (continued)
<CAPTION>
6. Long-Term Debt
Long-term debt at December 31, 1994 and 1993, consisted of:
1994 1993
Century Acceptance Corporation
<S> <C> <C>
Senior debt:
Senior secured notes, 7% to 9.875%
payable through April 30, 1997 $20,083,000 $45,542,000
Senior secured deferred payment notes,
7.118% to 9.86%, due April 30, 1997 33,117,000 7,658,000
Total Senior Debt 53,200,000 53,200,000
Subordinated debt:
Senior Subordinated notes:
Subordinated secured notes, 9.5% to 10.875%
payable through April, 1997 6,720,000 9,173,000
Subordinated secured deferred payments notes,
8.393% to 11.36%, due April 30, 1997 7,534,000 5,430,000
Subordinated secured compound PIK notes,
8.393% to 11.36%, due April 30, 1997 1,617,000 1,147,000
Junior subordinated notes:
Junior subordinated secured notes, 10.75% to
11.875%, payable through April 30, 1997 4,050,000 4,725,000
Junior subordinated secured deferred payment
notes, 9.868% to 12.61%, due April 30, 1997 8,148,000 7,637,000
Junior subordinated secured compound PIK
notes, 9.868% to 12.61%, due April 30, 1997 3,451,000 2,952,000
Total Subordinated Debt 31,520,000 31,064,000
Total Century Acceptance Corporation $84,720,000 $84,264,000
<CAPTION>
CenCor, Inc.
<S> <C> <C>
Subordinated debt securities,
due July 1, 1999 17,231,000 17,231,000
Less: discount, 16%, effective rate (8,419,000) (9,634,000)
Convertible debt securities,
due July 1, 1999 11,487,000 11,487,000
Less: discount, 16%, effective rate (5,612,000) (6,423,000)
Total CenCor, Inc. 14,687,000 12,661,000
Total Companies $99,407,000 $96,925,000
</TABLE>
<PAGE>
<PAGE>
CenCor, Inc.
Notes to Consolidated Financial Statements (continued)
6. Long-Term Debt (continued)
On January 29, 1993, Century entered into Amendment and
Exchange agreements with the holders of its long-term debt
(collectively the "Restructuring Agreements"), whereby the
holders exchanged their prior notes for new notes and the terms
and covenants of the debt agreements were amended. Century
must comply with various restrictive covenants which require
the maintenance of certain financial ratios and other financial
conditions. The Restructuring Agreements restrict Century's
ability to pay dividends to CenCor.
Pursuant to the Restructuring Agreements, all of Century's
long-term debt will mature on April 30, 1997. However,
scheduled principal installments as provided for in the
original debt agreements are due prior to this date (except for
past-due installments as of January 29,1993, aggregating
approximately $18.7 million, for which a combination of Secured
Deferred Payment Notes and Secured Compound PIK Notes were
issued but are not due prior to April 30, 1997). In lieu of
cash payment of the scheduled principal installments, Century
has delivered Secured Deferred Payment Notes for the related
senior debt and a combination of Secured Deferred Payment Notes
and Secured Compound PIK Notes for the related subordinated and
junior subordinated debt. These notes will bear interest at
the then current rate on 4.5 year Treasury Notes as of the
installment due date, plus 2.25% (senior notes), 3.75%
(subordinated notes) and 5% (junior subordinated notes).
Interest is payable monthly under all of the notes, except for
the Secured Compound PIK Notes, for which interest compounds
monthly and is payable on April 30, 1997.
All of the notes issued are secured by a second priority lien
and security interest in the assets of Century. The
noteholders have agreed to subordinate their lien to providers
of new secured lending (Note 7), provided that Century is in
compliance with the conditions specified in the Agreements.
Century is required under the Restructuring Agreements to pay
a prepayment penalty if Century pays off the notes in full
prior to the April 30, 1997 maturity date. The amount of the
prepayment penalty is dependent upon the rates at which the
noteholders can reinvest the principal. Century is prohibited
from making partial principal payments and from redeeming less
than all of the notes.
Prior to the execution of the Restructuring Agreements, Century
had scheduled principal installment payments due subsequent to
April 30, 1997 of approximately $16,547,000. Pursuant to the
Restructuring Agreements, the notes issued in exchange for
these scheduled payments mature on April 30, 1997, at which
time Century may be required to pay a premium based upon the
rates at which the noteholders are able to reinvest the
principal.
In consideration of the noteholders entering into the
Restructuring Agreements, Century issued warrants (the
"Warrants") to the noteholders to acquire 300,000 shares of
Century's common stock which constitutes 25% of Century's
common stock on a fully diluted basis. The Warrants vested on
April 30, 1993 and expire on January 1, 2003. The exercise
price of the Warrants is $.01 per share. Century has the right
to call the Warrants in May 1997 if the notes have been paid in
full. The noteholders can require Century to purchase (at a
per share price based upon the greater of the fair value of the
shares or equity value, equal to the book value of Century plus
a 5% premium on net finance receivables) their Warrants and the
shares obtained from the exercise of the Warrants [at the
greater of their then current market value if an offer exists,
or equity value (as defined)] after the notes are paid in full
or upon the occurrence of certain events including the sale of
substantially all of the assets of Century.
<PAGE>
<PAGE>
CenCor, Inc.
Notes to Consolidated Financial Statements (continued)
6. Long-Term Debt (continued)
The value of the put Warrants in excess of the exercise price
(the put adjustment) is accrued as interest expense over the
period from the date of issuance to the earliest date the
creditors may force Century to buy the Warrants (the put date).
Changes in the highest redemption price after the date of
issuance and before the earliest put date, including changes in
interim periods, will be considered changes in accounting
estimates and will affect the put adjustment on a prospective
basis. Changes in the highest redemption price after the
earliest put date will be recognized as interest expense in the
current year.
The terms and provisions of the long-term debt of CenCor are
described in Note 2 to the financial statements.
On March 30, 1995, the Restructuring Agreements were amended to
modify certain financial ratios Century is required to maintain
during 1995. Such ratios will revert back to more stringent
requirements in 1996. In consideration of this amendment to
the Agreements, Century agreed to deliver to the noteholders
additional warrants (the "Additional Warrants") which
constitute 5% of Century's common stock on a fully diluted
basis. Also, the amendment provides for the noteholders to
surrender all Warrants and Additional Warrants to Century for
cancellation if Century is sold under certain conditions.
7. Line of Credit
On April 1, 1994, Century entered into a $25,000,000 revolving
line of credit. The commitment made under the agreement
expires April 1, 1996, but may be extended annually for
successive one year periods unless terminated by either party.
At December 31, 1994, borrowings outstanding under the facility
totaled $13,693,000.
The line of credit is fully secured by a first lien on all of
Century's assets. Century is required to remit all cash
collections to the lender on a daily basis. The line of credit
bears interest at a rate of 2% above the prime commercial rate
plus .25% per annum on the unused portion of the facility. At
December 31, 1994, the interest rate was 10.5%. The weighted
average interest rate during the year was 9.92%.
8. Earnings Per Share
As of December 31, 1994, 1993, and 1992, earnings per common
share and common equivalent shares were computed by dividing
net income by the weighted average number of shares of common
stock and common stock equivalents outstanding during the
period.
For the years ended December 31, 1994 and 1993, the number of
weighted average common share equivalents was increased under
the assumption that all of the Convertible Notes were converted
to common stock. As indicated in Note 2, the Convertible Notes
may be converted, at the option of the holder at any time, into
shares of common stock at a ratio of one share of common stock
for each $20 principal amount of Convertible Notes.
<PAGE>
<PAGE>
CenCor, Inc.
Notes to Consolidated Financial Statements (continued)
9. Income Taxes
The Company and its subsidiaries file a consolidated federal
income tax return. The benefit for income taxes allocated to
continuing operations for each of the three years ended
December 31, 1994, 1993, and 1992 consisted of the following:
<TABLE>
<CAPTION>
1994 1993 1992
<S> <C> <C> <C>
Federal income taxes:
Other, net $-- $-- $(336,000)
$-- $-- $(336,000)
</TABLE>
A reconciliation of income tax benefit allocated to continuing operations
to the amount computed using the statutory federal income tax rate is
as follows:
<TABLE>
<CAPTION> 1994 1993 1992
<S> <C> <C> <C>
Benefit at statutory rate (34%) $(514,000) $(2,467,000) $(4,314,000)
Estimated limitation of recognition
of operating loss under applicable
accounting principles 514,000 2,467,000 3,978,000
Income tax benefit allocated to
continuing operations $ 0 $ 0 $ (336,000)
</TABLE>
The Company's income tax returns for 1988 and 1989 were
examined by the Internal Revenue Service (IRS), which has
proposed certain adjustments, a portion of which have been
protested by the Company. The Company has also claimed
additional deductions in these years as a result of the prior
period adjustments. Management believes that the ultimate
disposition of the IRS examination will not have a material
effect on the financial position of the Company.
In addition, the Company's 1991 income tax return is currently
under examination by the IRS.
As a result of the matters described above, management cannot
precisely estimate the amount of the Company's net operating
loss carryforward for financial reporting and income tax
purposes and thus, the deferred tax assets which may exist.
However, a valuation allowance would be required at December
31, 1994 and 1993 to fully offset the amount of any such
assets. Accordingly, the present inability to estimate the net
operating loss carryforward for income tax purposes has no
impact on the consolidated financial statements.
<PAGE>
<PAGE>
CenCor, Inc.
Notes to Consolidated Financial Statements (continued)
10. Stock Option Plan
In March 1993, the Company's stock option plan was terminated
and participants were paid $0.50 for each of the 5,380 options
previously outstanding in exchange for a waiver of rights with
respect to acquiring shares of CenCor common stock under the
plan.
In 1993 the Company granted 90,000 phantom share options to
certain officers and directors of the Company. For each option
exercised, the holders will receive a cash payment equal to the
excess, if any, over $1.00 per share of the greater of (i) the
closing price of the Common Stock on the NASDAQ National Market
(as determined on the date the option is exercised), (ii) the
stockholders' equity of CenCor at the end of its most recent
fiscal quarter, and (iii) the aggregate distributions per share
received by CenCor's stockholders in the event CenCor is
liquidated. For the purposes of the phantom share option
agreement, a merger or consolidation in which CenCor is not
the surviving party or a transaction in which the CenCor
stockholders receive cash or securities of another company
in exchange for their CenCor shares shall be deemed to be a
liquidation. The options automatically terminate (a) five years
after such officer or director resigns, or is removed, or (b) on
the date that said officer or director engages in certain misconduct
under his employment agreement.
In 1994 the Company granted 55,000 Stock Appreciation Rights
(SARs) to certain directors and officers of the Company. The
SARs permit the holders to receive a cash payment of the excess
of the fair value of Century's stock at the date of exercise
over the fair value of Century's stock as of the date of grant.
The fair market value of Century's stock is determined by it's
net assets (assets less liabilities) on the valuation date.
The officers and directors are entitled to payment only in the
event of the sale of Century prior to December 31, 1998; upon
termination of employment due to death, disability or
involuntary termination; or upon continuous employment through
December 31, 1998. The SARs are also subject to forfeiture if
the officers or directors terminate employment with Century
prior to January 1, 1999 for reasons other than death or
disability; for termination due to cause; or for directly or
indirectly participating in a entity which competes with
Century. The plan also provides for the granting of an
additional 55,000 SARs in March of 1995 provided that said
officers and directors are still employed by Century or CenCor
at that date.
An expense of $12,000 was recorded in 1994 related to the SARs.
11. Employee Benefit Plan
The Company has a Profit-Sharing and 401(k) Retirement Savings
Plan (the Plan) which covers all employees, age 21 or older,
with one year of service. Participants may contribute from 1%
to 20% of their annual compensation, with certain exclusions.
The Company may make discretionary contributions. No
contributions were made by the Company to the Plan in 1994,
1993, or 1992.
12. Commitments and Contingencies
The Company has agreed not to compete with Charter in the
equipment leasing business through November 1995.
Additionally, the Company has agreed not to engage in the
business of temporary services for various terms, the longest
of which extends through July, 1997.
The Company rents substantially all office space under leases
expiring at various dates through 1999. Certain of the leases
contain renewal options and/or obligations for occupancy
expenses allocated to tenants. Total rent expense was
$921,000, $946,000 and $980,000 in 1994, 1993, and 1992,
respectively. Aggregate minimum future rentals under these
noncancelable operating leases at December 31, 1994, were as
follows:
<TABLE>
<S> <C>
1995 $ 854,000
1996 776,000
1997 672,000
1998 240,000
1999 67,000
$2,609,000
</TABLE>
<PAGE>
<PAGE>
Item 9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure
None.
(The remainder of this page is intentionally blank.)
<PAGE>
<PAGE>
PART III
Item 10. Directors and Executive Officers of the Registrant
The following tables sets for the names of the directors of
the registrant and certain related information as of December
31, 1994. Each of the directors has been elected to serve
until the next annual meeting of stockholders or until his
successor is duly elected and qualified.
<TABLE>
<CAPTION>
Name of Served Principal Occupation for
Director Since Age Last Five Years and Directorships<F1>
<S> <C> <C> <C>
Jack L. Brozman<F1> 1979 44 Chairman of the Board, President and Chief
Executive Officer of CenCor and ConCorde
Career Colleges, Inc. ("ConCorde") since
June 1991. Chief Executive Officer of
Century from July 1991 to August 1992.
Chairman of the Board and Treasurer, from
June 1991 until July 23, 1993, and
President and Director, for more than five
years prior to July 23, 1993, of La Petite
Academy, Inc. ("LaPetite"). Director of
Century and ConCorde.
Edward G. Bauer, 1991 66 Vice President and General Counsel of Phila-
Jr. <F2><F3> delphia Electric Company for more than the
five-year period prior to August 1988.
Retired from this position at the end of
August 1988. Director of Continental Bank,
Philadelphia, Pennsylvania for the five-
year period prior to September 1992.
George L.
Bernstein<F2><F3> 1991 62 Chief Financial and Administrative Officer
of Howard Fischer Associates, Inc.
(executive search firm) since October 1994.
Chief Operating Officer of Dilworth,
Paxson, Kalish & Kauffman, Philadelphia,
Pennsylvania (law firm) from November 1991
to September 1994. Executive Partner/
Chief Executive Officer of Laventhol &
Horwath (national public accounting firm
which filed for protection under the bank-
ruptcy laws in November 1990) for more than
five years prior to May 1990. Director of
R & B, Inc. (distributor of automotive
parts). Director of Century effective
April 8, 1993. Director of O'Brien
Environmental Energy, Inc. effective March, 1994.
Marvin S.
Riesenbach<F2><F3> 1991 65 Executive Vice President and Chief Financial
Officer of Subaru of America, Inc. for more
than the five years prior to October 1990.
Retired from this position at the end of
October 1990.
<FN>
<F1>
(1) Jack L. Brozman is the son of the late Robert F. Brozman
and the sole executor of the Brozman Estate.
<F2>
(2) Director effective July 1, 1991.
<F3>
(3) Member of Special and Audit Committees beginning July 1,
1991. Elected to Executive Compensation Committee on
August 21, 1991.
</FN>
</TABLE>
<PAGE>
The Board of Directors of the Company held five meetings
and acted by unanimous written consent on one occasion during
the last fiscal year. Standing committees, consisting of the
Special Committee and the Audit Committee, held 15 meetings
during the last fiscal year. The Executive Compensation
Committee makes salary and bonus recommendations for certain
executive officers. The Audit Committee oversees the work of
CenCor's independent auditors. The Company's Board of
Directors does not have a nominating committee. The Special
Committee has the final authority to thoroughly investigate
and report to the Board of Directors on certain matters
concerning the misappropriation of CenCor's assets by
CenCor's previous chairman of the board, Robert F. Brozman,
or certain of his affiliated privately held companies. The
Special Committee also has the power and authority to
consider the adequacy of CenCor's internal controls and
procedures and to investigate and report upon such other
matters as the Special Committee considers appropriate. The
Special Committee, the Executive Compensation Committee, and
the Audit Committee are composed of Messrs. Bauer, Bernstein
and Riesenbach.
In addition to Jack L. Brozman, the following persons also
serve as executive officers of CenCor or Century.
<TABLE>
<CAPTION>
Name Age Principal Occupation for Last Five Years
<S> <C> <C>
Dennis C. Berglund 57 Chief Executive Officer and President of
Century since June 1993. Acting Chief
Executive Officer and President of Century
from April 1993 until June 1993. Chief
Financial Officer, Executive Vice Presi-
dent and Chief Administrative Officer of
Imperial Thrift and Loan Association,
Burbank, California, from March 1988
through November 1992. Experience
includes 24 years with Avco Financial
Services, an international consumer
finance company.
Patrick F. Healy 42 Vice President-Finance, Treasurer
and Chief Financial Officer of CenCor
and Chief Accounting Officer of CenCor since
July 1991. Chief Financial Officer of
Century from July 1991 to January
1995. General partner in Equity
Analysts, a Kansas City, Missouri
based real estate investment
group, for more than the prior
five years. Vice President,
Treasurer and Director of TSI
Holdings, Inc., a parent company
of a manufacturing enterprise,
from November 1989 through June 1991.
Randall J. Opliger 37 Controller of CenCor and Vice President
and Controller of Century since July 1992.
Controller and member of Executive Com-
mittee of Garsite/TSR, Inc., a Kansas
City, Kansas manufacturing enterprise,
from April 1990 to December 1991.
Director of Finance of R.F.D. Travel
Corp., Overland Park, Kansas from July
1984 to March 1990.
William J. Turner 59 Executive Vice President-Acquisitions and
Administration of Century since January 1993.
Employed by Century in various management
positions for approximately 31 years.
</TABLE>
<PAGE>
Disclosure of Delinquent Files
Except as described below, the Company believes, based on
information filed with the Company, that all reports required
to be filed for the past two years with the Securities and
Exchange Commission under Section 16 by the Companies
executive officers, directors, and ten percent stockholders
have been filed in compliance with applicable rules:
Dennis C. Berglund failed to file an initial report on
Form-3 with respect to his appointment as an executive
officer of the Company in June 1993. A report on Form 5
disclosing the information required by Form 3 (and reporting
no common stock ownership or transactions) was subsequently
filed, on an untimely basis, with the Securities and Exchange
Commission.
<PAGE>
<PAGE>
Item 11. Executive Compensation.
Summary Compensation Table
The following table sets forth information as to the
compensation of the Chief Executive Officer and each of the
other executive officers of CenCor and Century, whose total
annual salary and bonus exceeded $100,000, during the year
ended December 31, 1994 for services in all capacities to
CenCor and its subsidiaries in 1992, 1993, and 1994.
<TABLE>
<CAPTION>
Long-Term
Compensation
____________
Annual
Compensation Awards
_______________________________________ ____________
Other Annual
Name and Principal Salary Bonus Compensation Options/SARs
Position Year ($) ($) ($) (#)
_____________________________________________________________________________________________
<S> <C> <C> <C> <C> <C>
Jack L. Brozman, Chairman 1994 $134,800<F1> $25,000<F2> 15,000<F3>
of the Board and Chief 1993 $129,800<F1> $25,000<F2> 60,000
Executive Officer of CenCor 1992 $125,000<F1>
Patrick F. Healy, Vice 1994 $152,800 10,000<F3>
President-Finance; Treasurer 1993 $161,000 $5,000<F4> 30,000
and Chief Financial Officer of 1992 $144,000
CenCor and Century and Chief
Accounting Officer of CenCor
Dennis Berglund, Chief 1994 $150,000 $700<F5> 30,000<F3>
Executive Officer and 1993 $100,100 $800<F6>
President of Century
<FN>
<F1>
(1) Mr. Brozman also received compensation as an executive
officer of ConCorde.
<F2>
(2) Mr. Brozman was awarded and paid a $25,000 cash bonus in
1993 in recognition of his excellent performance during
1992. Mr. Brozman was also awarded and paid a cash
bonus in 1994 of $25,000 in recognition of his excellent
performance in 1993. See "Executive Compensation and
Certain Transactions--Executive Committee Report."
<F3>
(3) "See "Executive Compensation--Option/SAR Grants in Last
Fiscal Year."
<F4>
(4) Mr. Healy was awarded and paid a $5,000 cash bonus in
1993 in recognition of his excellent performance to the
Company during 1992. Mr. Healy was also awarded a cash
bonus in 1994 of $15,000 in recognition of his excellent
performance to the Company during 1993. The $15,000
bonus was not paid until 1995. See "Executive
Compensation and Certain Transactions--Executive
Compensation Committee Report."
<F5>
(5) Consists of the value of a leased automobile.
<F6>
(6) Consists of the value of a leased automobile and
vacation earned as the result of a promotional program.
</FN>
</TABLE>
<PAGE>
<PAGE>
Option/SAR Grants in Last Fiscal Year
The following table sets forth information as to stock
appreciation rights granted by CenCor during 1994 to
executive officers named in the Summary Compensation Table.
<TABLE>
<CAPTION> Potential Realizable
Value at Assumed
Annual Rates of
Stock Price Appreciation
Individual Grants For Option Term<F2>
_________________________________________________________________________________________________________
Percent of
Total Options/
SARs Granted Exercise or
Options/SARs to Employees Base Price Expiration
Name Granted (#)(1) in Fiscal Year ($/Sh) Date 5% ($) 10% ($)
___________________________________________________________________________________________________
<S> <C> <C> <C> <C> <C> <C>
Jack L. Brozman<F1> 15,000 27% $13.72 12/31/98 $56,850 $125,70
Patrick F. Healy<F3> 10,000 18% $13.72 12/31/95 $14,100 $28,800
Dennis Berglund<F1> 30,000 55% $13.72 12/31/98 $113,700 $251,400
<FN>
<F1>
(1) In 1994, CenCor approved stock appreciation rights for
Messrs. Berglund and Brozman relating to appreciation in
value of Century's common stock. Messrs. Berglund and
Brozman were granted 30,000 and 15,000 stock apprecia-
tion units, respectively, effective June 28, 1994.
Under the Stock Appreciation Agreements that granted the
rights, each executive was to further have been be
entitled to a like number of stock appreciation units
effective June 28, 1995 provided the executive was still
employed by CenCor or Century at that time.
Subsequently, these additional stock appreciation rights
were granted as of March 1, 1995. The executive will
receive cash compensation for his units at the earlier
of his death, permanent disability, involuntary termina-
tion of employment without cause or December 31, 1998,
equal to the amount by which the per share value of
Century Stock at such time (determined by a formula in
the Agreement) exceeds a base amount of $13.72. If
substantially all of the assets or stock of Century are
sold prior to December 31, 1998, the amount to be paid
to the executive would be equal to the amount by which
the net liquidation recovery per share of Century
exceeds the base amount. The base amount of $13.72 was
selected by CenCor's Executive Compensation Committee as
the estimated value per share of Century stock as of
December 31, 1993. The stock appreciation rights
terminate if (a) the executive terminates employment
with Century prior to January 1, 1999, for reasons other
than death or disability; (b) the executive is
terminated for cause; or (c) the executive violates
certain noncompetition obligations.
<F2>
(2) Using a base price of $13.72 per share, a 5% compound
rate of return would result in a per share price of
$15.13 and $17.51 at December 31, 1995 and December 31,
1998, respectively. Assuming a 10% compound rate of
return, the per share price would be $16.60 and $22.10
on December 31, 1995 and December 31, 1998,
respectively.
<F3>
(3) In 1994, CenCor also approved stock appreciation rights
relating to Century's common stock for Mr. Healy. Mr. Healy
was granted 10,000 stock
appreciation units effective June 28, 1994 having the
same terms and conditions as the stock appreciation
rights granted to
Messrs. Berglund and Brozman. Mr. Healy
left the employment of the Company on January
18, 1995. Mr. Healy was awarded 10,000 additional stock
appreciation rights on March 1, 1995. In recognition of
Mr. Healy's continuing consulting services to CenCor and
Century and his service as CenCor's representative on
the Board of Directors of Century, CenCor determined,
subsequent to the termination of Mr. Healy's employment,
that Mr. Healy's benefits under his stock appreciation
rights should continue only with respect to a sale
Century at any time on or before December 31, 1995.
</FN>
</TABLE>
<PAGE>
<PAGE>
Option/SAR Exercise and Fiscal Year-End Option/
SAR Value Table
No option on stock appreciation rights were exercised by
any of the named executive officers during 1994. The
following table provides information with respect to the
named executive officers concerning unexercised options held
as of December 31, 1994.
<TABLE>
<CAPTION>
# of Securities Underlying Value of Unexercised In-the-Money
Name Unexercised Options/SARs at FY-End SARs at FY-End
<CAPTION>
Exercisable Unexercisable Exercisable<F1> Unexercisable<F2>
__________________________ ____________________________
<S> <C> <C> <C> <C>
Jack L. Brozman, CEO 60,000 15,000 NA 29,700
Patrick F.Healy 30,000 10,000 NA 19,800
Dennis Berglund 30,000 0 59,400
<FN>
<F1>
(1) Based on the difference between the closing price of the
Company's common stock on December 31, 1993 and the
exercise price on the phantom share options.
<F2>
(2) Based on the difference between the base price of the
stock appreciation rights and the estimated value of a
share of Century common stock on December 31, 1994.
</FN>
</TABLE>
Compensation of Directors
Each non-officer/director of CenCor is paid an annual
retainer of $5,000 plus a fee (based on time spent on
corporate matters, including attendance at board and
committee meetings) and expenses.
Employment Contracts, Termination of Employment and
Change-In-Control Arrangements
On June 28, 1993, Century entered into a three-year
employment agreement with Mr. Berglund. Under the terms of
the agreement, Mr. Berglund will serve as Century's President
and Chief Executive Officer at annual salaries of $140,000,
$160,000 and $180,000 for the first, second and third years
respectively of the agreement. Mr. Berglund may also receive
an annual bonus based on annual pre-tax profits. Mr.
Berglund has also agreed that he will not, during the term of
the employment agreement and without the expressed written
consent of Century's Board of Directors, directly or
indirectly have any interest in any business which is a
supplier to Century.
<PAGE>
<PAGE>
Item 12. Security Ownership of Certain Beneficial Owners and
Management
The following table sets forth, with respect to the
Company's common stock (the only class of voting securities),
the only person known to be a beneficial owner of more than
five percent (5%) of any class of the Company's voting
securities as of March 1, 1995.
<TABLE>
<CAPTION>
Number of Shares and
Name and Address Nature of Beneficial
of Beneficial Owner Ownership<F1> Percent of Class
_____________________________________________________________________________
<S> <C> <C>
Jack L. Brozman, Trustee 597,064<F2> 48.1%
Robert F. Brozman, Trust
1100 Main St.
Kansas City,
Missouri 64105
<FN>
<F1>
(1) Nature of ownership of securities is direct. Beneficial
ownership as shown in the table arises from sole voting power
and sole investment power.
<F2>
(2) Does not include 34,344 shares held by Jack L. Brozman or
20,025 shares held by or for the benefit of Robert F.
Brozman's other children, in which the Trust disclaims any
beneficial interest.
</FN>
</TABLE>
Under the terms of a Settlement Agreement between the Company
and the Estate of Robert E. Brozman, all or a portion of the
597,064 shares held by the Robert F. Brozman Trust will be
transferred to the Company on January 31, 1996. See "Certain
Relationships and Related Transactions--Other Transactions".
<PAGE>
<PAGE>
The following table sets forth, with respect to the
Company's common stock (the only class of voting securities),
(i) shares beneficially owned by all directors of the Company
and nominees for director, and (ii) total shares beneficially
owned by directors and officers as a group, as of March 1,
1995.
<TABLE>
<CAPTION>
Number of Shares and
Name and Address Nature of Beneficial
of Beneficial Owner Ownership<F1> Percent of Class
_______________________________________________________________________________
<S> <C> <C>
Jack L. Brozman, Trustee 631,408<F2> 51%
Edward G. Bauer, Jr. --- ---
George L. Bernstein --- ---
Marvin S. Riesenbach --- ---
Directors and Officers
as a Group 631,408<F2> 51%
<FN>
<F1>
(1) Nature of ownership of securities is indirect. Beneficial
ownership as shown in the table arises from sole voting power
and sole investment power.
<F2>
(2) Includes 34,344 shares held by Jack L Brozman and 597,064
shares held by the Robert E. Brozman Trust. Does not include
20,025 shares held by or for the benefit of Robert F.
Brozman's other children, in which the Trust disclaims any
beneficial interest. Jack L. Brozman is the sole trustee and
is also one of the beneficiaries of the Robert F. Brozman
Trust.
</FN>
</TABLE>
Item 13. Certain Relationships and Related Transactions
Transactions with Concorde
Concorde, a former CenCor subsidiary, continues to be
indebted to CenCor as a result of a 1992 restructuring agree-
ment between Concorde and CenCor (the "Restructuring
Agreement"). Under the Restructuring Agreement, Concorde,
which is in the business of operating proprietary vocational
training schools, was released from an earlier agreement by
which it assumed the obligations of CenCor to make principal
and interest payments on CenCor's outstanding Series H 10%
Notes. In consideration for releasing Concorde from this
obligation, CenCor received from Concorde a Junior Secured
Debenture in the principal amount of $5,422,000 (the amount
of the principal and accrued interest on the Series H 10%
Notes immediately prior to the execution of the Restructuring
Agreement) and received Concorde's promise to pay an
additional contingent payment to CenCor on July 31, 1997 in
an amount equal to 25% of the market value of Concorde's
outstanding common stock in excess of
$3,500,000.
<PAGE>
The Junior Secured Debenture is secured by a lien on
substantially all of Concorde's assets, which lien is junior
to the lien of Concorde's secured bank lender. The Junior
Secured Debenture bears interest ranging from prime plus 1%
to prime plus 1-1/2% per annum, and provides for principal
and interest payments commencing September 30, 1995 based on
a ten-year amortization schedule. The Junior Secured
Debenture initially provided that interest would accrue and
compound quarterly through September 30, 1995, when the first
interest payment would be due. Interest will be payable
quarterly thereafter. In addition, the Junior Secured
Debenture provides that Concorde shall make annual
prepayments equal to 50% of Concorde's Excess Cash Flow, as
defined in the debt restructuring agreement between CenCor
and Concorde.
On February 9, 1993, Concorde's secured bank lender and
CenCor executed an intercreditor agreement. Under the terms
of the intercreditor agreement, CenCor has agreed not to
assert its rights against collateral pledged to it by
Concorde until the earlier to occur of (i) payment in full of
Concorde's secured bank debt or (ii) July 31, 1997. In
addition, CenCor agreed that any amount due to CenCor under
the terms of the Restructuring Agreement or the Junior
Secured Debenture would be subordinate to the indebtedness
evidenced by Concorde's secured bank debt.
On December 30, 1993, Concorde and Century amended the
Restructuring Agreement to provide that CenCor would receive
$8,390,000 of Concorde's previously charged-off receivables
in full payment of the accrued interest on the Junior Secured
Debenture through December 31, 1993 in the amount of
$559,353. The receivables, which consist of accounts and
notes receivable from students who attended schools operated
by Concorde or its subsidiaries, were assigned to CenCor
without recourse with CenCor assuming all risk of non-payment
of the receivables. The amendment grants CenCor limited
rights of substitution until such time as it collects
$559,353 from the receivables, exclusive of out-of-pocket
collection fees and expenses paid to third-parties.
On November 15, 1994, CenCor exchanged $3,000,000 in
principal amount of the Junior Secured Debentures for 300,000
shares of Concorde's class A cumulative Preferred Stock, 10 cent
par value (the "Preferred Stock") pursuant to the terms of a
second amendment to the Restructuring Agreement (the "Second
Amendment"). The balance of the Junior Secured Debenture
remains outstanding. Under the Second Amendment, CenCor also
agreed to accept an addition $15,000,000 of Concorde's
written off receivables in full payment of accrued interest
on the Junior Secured Debentures from January 1, 1994 through
December 31, 1994, in the amount of $500,231. As with the
December 30, 1993 Agreement amended the Restructuring<PAGE>
<PAGE>
Agreement, the Second Amendment also grants CenCor limited
rights of substitution until such time as it collects
$500,231 from the receivables, exclusive of out of pocket
collection fees and expenses paid to third parties.
The Preferred Stock provides for cumulative quarterly
dividends from the date of issuance on an annual rate equal
to 73% of the then current interest rates on the Junior
Secured Debenture. Such dividends will accrue until such
time as the Junior Secured Debenture has been paid in full,
at which time they will be paid ratably over 12 fiscal
quarters. After the retirement of the Junior Secured
Debenture, the current dividends will become payable at a
dividend rate equal to 2% above prime, provided that the
annual rate shall not exceed 12% of the per share liquidation
value of the Preferred Stock. The Preferred Stock has a
liquidation preference of $10.00 per share, plus cumulative
dividends. Concorde has agreed that it may not issue any
Preferred Stock with rights or preferences superior to the
Preferred Stock.
Concorde previously reported that it had an ongoing dispute
with the United States Department of Education ("DOE")
concerning Concorde's compliance with DOE factors of
financial responsibility and, therefore, its eligibility to
participate in various student financial assistance programs.
This dispute was resolved based on evidence Concorde met the
standards. The DOE has since established more stringent
standards that Concorde will be required to meet in the
future. Concorde also reported that it is continuing legal
proceedings and appeals related to the DOE's calculations of
its cohort default rates. Rates exceeding certain limits
could also restrict eligibility to participate in the
financial assistance programs. Concorde has acknowledged
that if its schools are not allowed to participate in these
student financial assistance programs, the viability of
Concorde's continuing operations would be in doubt.
Because the outcome of Concorde's regulatory disputes
cannot be predicted, there can be no assurance that Concorde
will be able to perform its obligations under the Junior
Secured Debenture or that CenCor will receive any additional
payment based on the market value of Concorde's stock.
Accordingly, Cencor has established a reserve in its consoli-
dated financial statements in the full amount of the Junior
Secured Debenture plus the receivables received in payment of
the accrued but unpaid interest.
Jack L. Brozman, who is Chairman of the Board of CenCor and
Century, is Chairman of the Board of Concorde. Mr. Brozman
owns 171,724 shares of Concorde (2.5% of the outstanding).
As sole fiduciary for the Estate of Robert F. Brozman (the
"Brozman Estate") and the Robert F. Brozman Trust (he is one
of the beneficiaries of the estate and the trust), he owns
2,985,324 shares of Concorde (42.9% of the outstanding).
<PAGE>
Management believes that these transactions with Concorde
have been made on no less favorable terms than could be ob-
tained from unaffiliated third parties.
Other Transactions
Prior to Robert F. Brozman's death on June 10, 1991, loans
were made by outside institutions, purportedly to CenCor,
whose proceeds were never received by or used for the benefit
of CenCor, but rather were credited to the account of and
used by CenCor, Inc. of Kansas City ("CIKC"). CIKC is a
wholly-owned subsidiary of Cor, Inc., which was, at the time
of the loans, wholly-owned and controlled by Robert F.
Brozman. CIKC recorded such loans (the "CIKC Loans") on its
financial statements as its obligations. Shortly following
the death of Robert F. Brozman, the Board of Directors of
CenCor learned for the first time of the CIKC Loans, which
had at that time a principal balance of $23,117,820.
Certain creditors, including the institutions referred to
above (the "CIKC Lenders"), asserted claims against CenCor,
among others, for actions taken by the late Robert F.
Brozman, CenCor's former chairman, including the CIKC Loans.
Although CenCor did not admit liability with respect to these
claims, it executed a Continuing Guarantee of Collection with
respect to liabilities flowing from the CIKC Loans as well as
a Continuing Guarantee of Collection for Certain Creditors
Previously Unsecured of up to $3 million for the benefit of
certain unsecured creditors of the Estate of Robert F.
Brozman.
The Estate of Robert F. Brozman and the related Trust of
Robert F. Brozman (collectively the "Brozman Estate"), Cor,
and CIKC (collectively the "Indemnitors") executed an
Indemnity Agreement (the "Indemnity Agreement") with CenCor
in which the Indemnitors acknowledged that they were jointly
and severally liable to repay the amounts due to the CIKC
Lenders. The Indemnitors also agreed that they were jointly
and severally liable to CenCor to the extent CenCor was
obligated to pay any of the CIKC Loans or for any loss,
damages or expense in connection with the CIKC Loans.
CenCor was informed by the Brozman Estate that the estate
paid in full, on March 31, 1994, all of the remaining
outstanding debt related to the CIKC Loans and the other
loans previously guaranteed by CenCor.
The Company and the Brozman Estate have entered into a
settlement agreement pursuant to which the claims of the
Company against the Brozman Estate will be settled. Under
the settlement agreement, the Company will release the
Brozman Estate for all liability upon receipt of $600,000 in
cash plus the transfer of all or a portion of the 597,064
shares of common <PAGE>
<PAGE>
stock held by the Robert F. Brozman Trust. The amount of
stock to be transferred to the Company depends on the
valuation of the stock on December 31, 1995. If the stock
held by the Robert E. Brozman Trust is determined to have a
value of $400,000 or less, the trust will transfer all of its stock to CenCor
on or before January 31, 1996. If the stock is determined to
have a value in excess of $400,000 then the trust will
transfer to the Company on or before January 31, 1996 the
number of shares of common stock held by the trust which
equals the aggregate of $400,000 plus one-half the amount by
which the year-end fair market value of the stock held by the
trust exceeds $400,000. The probate court having juris-
diction over the Brozman Estate approved the Settlement
Agreement on March 27, 1995.
PART IV
Item 14. Exhibits, Financial Statements, Schedules, and
Reports on Form 8-K.
(a) The following documents are filed as part of this Annual
Report on Form 10-K.
(A) The following Consolidated Financial Statements of
CenCor, Inc. and Subsidiaries are included in
Item 8:
Consolidated Balance Sheets--At December 31, 1994
and 1993.
Consolidated Statements of Operations--For the years
ended December 31, 1994, 1993, and 1992.
Consolidated Statements of Stockholders' Equity
(Deficit)--For the years ended December 31, 1994,
1993, and 1992.
Consolidated Statements of Cash Flows--For the years
ended December 31, 1994, 1993, and 1992.
Notes to Consolidated Financial Statements.
(B) The following Consolidated Financial Statement
Schedules of CenCor, Inc. and Subsidiaries are
included in Item 14(d):
Schedule III--Condensed Financial Information of
Registrant (Parent Company Only).
Schedule VIII--Valuation and Qualifying Accounts and
Allowances.
Schedules other than those referred to above have been
omitted as not applicable or not required under the
instructions contained in Regulations S-X, or the informa-
tion is included elsewhere in the financial statements or
notes thereto.
<PAGE>
<PAGE>
<TABLE>
(C) Exhibits.
<CAPTION>
Exhibit
Number Description
____________________
<S> <C>
2(a) Plan of Reorganization (Incorporated by refer-
ence--Exhibit 2(b) to the Company's Annual
Report on Form 10-K for the year ended December
31, 1992).
3(a) Certificate of Incorporation and all Amendments
thereto through August 31, 1990. (Incorporated
by reference--Exhibit 3(a) to the Company's
Annual Report on Form 10-K for the year ended
December 31, 1990.)
3(b) Bylaws amended through July 29, 1991.
(Incorporated by reference--Exhibit 3(a) to the
Company's Annual Report on Form 10-K for the
year ended December 31, 1991.)
4(a) Specimen common stock certificate. (Incorporated
by reference--Exhibit 4(a) to the Company's
Annual Report on Form 10-K for the year ended
December 31, 1990.)
4(b) Certificate of Incorporation and all Amendments
and Amended and Restated Bylaws. (Incorporated
by reference--Exhibit 3(a) to the Company's
Annual Report on Form 10-K for the year ended
December 31, 1990 and included as Exhibit 3(b)
hereto.)
4(c) Composite Conform Copy Relating To: Century
Acceptance Corporation Amendment and Exchange
Agreement dated as of January 29, 1993 and
Composite Conformed Copy of Amendment and Ex-
change Agreement Regarding Century Acceptance
Corporation Amendment and Exchange Agreement
dated as of January 29, 1993 relating to the
restructuring of Century Acceptance
Corporation's outstanding indebtedness to All
State Life Insurance Company, Inc., American
Banker's Life Insurance Company of Florida,
American Mutual Life Insurance Company,
Continental American Life Insurance Company, The
Lincoln National Life Insurance Company, Mutual
Services Casualty Insurance Company, New England
Mutual Life Insurance Company, Principal Mutual
Life Insurance Company, Provident Mutual Life
Annuity Company of America, Provident Mutual
Life Insurance Company of Philadelphia, and
Standard Insurance Company. (Incorporated by
reference -Exhibit 4(d) to Company's Annual
Report on Form 10-K for the year ended December
31, 1992.)
4(d) Indentures between CenCor, Inc. and Commercial
National Bank of Kansas City, N.A. dated April
27, 1993 with respect to notes due 1999.
(Incorporated by reference--Exhibit T3C to
Company's Application on Form T-3; SEC file #22-
24246.)
4(e) Indenture between CenCor, Inc. and Commercial
National Bank of Kansas City, N.A. dated April
27, 1993, with respect to convertible notes due
1.999. (Incorporated by reference--Exhibit T3C
to Company's Application on Form T-3; SEC file
#22-24248.)
4(f) Third Amendment to Amendment and Exchange
Agreement dated March 31, 1995.
10(a) Indemnity Agreement dated July 26, 1991 between
the Company and the Indemnitors. (Incorporated
by reference--Exhibit 2 to Report on Form 8-K
dated July 29, 1991.)
10(b) First Amendment to Indemnity Agreement dated
August 20, 1991 between the Company and the
Indemnitors. (Incorporated by reference--Exhibit
1 to Report on Form 8-K dated September 3,
1991.)
<PAGE>
10(c) Modification and Exchange Agreement and Lender
Consent Stipulation dated August 1, 1991 between
the Company, the Indemnitors, and certain CIKC
Lenders. (Incorporated by reference--Exhibit 2
to Report on the Company's Form 8-K dated
September 3, 1991.)
10(d) Restructuring, Security and Guaranty Agreement
dated October 30, 1992 between and Dental
Assistants, Inc., United Health Careers Insti-
tute, Inc., Southern California College of
Medical and Dental Assistants, Inc., Concorde
Careers--Florida, Inc., Colleges of Dental and
Medical Assistants, Inc. and Computer Career
Institute, Inc. (Incorporated by reference --
Exhibit 100) to Company's Annual Report on Form
10-K for the year ended December 31, 1992.)
10(e) Amendment to Agreement for Transfer of Assets
and Assumption of Liabilities dated October 30,
1992 between CenCor, Inc. and Concorde Career
Colleges, Inc. (Incorporated by, reference--
Exhibit 10(k) to Company's Annual Report on Form
10-K for the year ended December 31, 1992.)
10(f) Employment Agreement with Dennis C. Berglund
dated June 28, 1993. (Incorporated by
reference--Exhibit 10(g) to the Company's Annual
Report on Form 10-K for the year ended December
31, 1993)
10(g) First Amendment to Restructuring, Security and
Guarantee Agreement between CenCor, Concorde,
Minnesota Institute of Medical and Dental Assis-
tance, Texas College of Medical and Dental
Assistants, Texas College of Medical and Dental
Assistants, Inc., United Health Careers
Institute, Inc., Southern California College of
Medical and Dental Assistants, Inc., Concorde
Careers--Florida, Inc., College of Dental and
Medical Assistants, Inc. and Computer Career
Institute, Inc. dated December 30, 1993.
(Incorporated by reference--Exhibit 10(i) to the
Company's Annual Report on Form 10-K for the
year ended December 31, 1993)
10(h) Stock Appreciation Agreement with Dennis
Berglund dated August 29, 1994
10(i) Stock Appreciation Agreement with Pat Healy
dated October 4, 1994
10(j) Stock Appreciation Agreement with Jack Brozman
dated October 4, 1994
10(k) Minutes of Compensation Committee dated February
7, 1995 relating to amendments to Stock
Appreciation Agreements.
10(l) Mutual Release between First Portland
Corporation, FP Holdings, Inc., and Leonard and
Sharlene Ludwig, Arthur and Phyllis Levinson,
CEL-CEN Corp. and CenCor, Inc. dated February
14, 1995.
10(m) Second Amendment to the Restructuring, Security
and Guaranty Agreement between CenCor, Concorde,
Minnesota Institute of Medical and Dental Assis-
tance, Texas College of Medical and Dental
Assistants, Texas College of Medical and Dental
Assistants, Inc., United Health Careers
Institute, Inc., Southern California College of
Medical and Dental Assistants, Inc., Concorde
Careers--Florida, Inc., College of Dental and
Medical Assistants, Inc. and Computer Career
Institute, Inc. dated November 15, 1994.
10(n) Subordination Agreement dated November 15, 1994
among Concorde Career Colleges, Inc., CenCor,
Inc. and Mark Twain Kansas City Bank
10(o) Settlement Agreement dated March 27, 1995 among
CenCor, Inc., Century Acceptance Corporation,
Jack L. Brozman, Executor, and Jack L. Brozman,
Trustee
<PAGE>
21 Subsidiaries of the Registrant.
27 Financial Data Schedule.
</TABLE>
<TABLE>
<S> <C>
(b) Reports on Form 8-K:
No reports on Form 8-K were filed during the quarter
ending December 31, 1994.
</TABLE>
<PAGE>
<PAGE>
<TABLE>
CENCOR, INC.
(Parent Company Only)
-------
SCHEDULE III--CONDENSED FINANCIAL INFORMATION OF REGISTRANT
CONDENSED BALANCE SHEETS
December 31, 1994 and 1993
<CAPTION>
ASSETS
1994 1993
____ ____
<S> <C> <C>
Cash and cash equivalents $ 809,000 $ 986,000
Investments in and advances to
subsidiaries 6,106,000 5,614,000
Other assets 750,000 872,000
_________ _________
$7,665,000 $7,472,000
</TABLE>
<TABLE>
LIABILITIES AND STOCKHOLDERS' DEFICIT
<CAPTION>
<S> <C> <C>
Long-term debt $14,687,000 $12,661,000
Other liabilities 205,000 526,000
Stockholders' deficit (7,227,000) (5,715,000)
_________ _________
$7,665,000 $7,472,000
</TABLE>
See Notes to Consolidated Financial Statements
of CenCor, Inc. included elsewhere in this report.
<PAGE>
<PAGE>
<TABLE>
CENCOR, INC.
(Parent Company Only)
-------
SCHEDULE III--CONDENSED FINANCIAL INFORMATION OF REGISTRANT
CONDENSED STATEMENTS OF OPERATIONS
For the Years Ended December 31
<CAPTION>
1994 1993 1992
______________________________________
<S> <C> <C> <C>
Revenue $ 436,000 $ 318,000 $ 419,000
Expenses
Salaries and other operating expenses 553,000 913,000 1,438,000
Interest expense, net 1,887,000 2,109,000 3,359,000
_____________________________________
2,440,000 3,022,000 4,797,000
_____________________________________
Loss from continuing operations before
income taxes, equity in undistributed
income (loss) of subsidiaries and
extraordinary item (2,004,000) (2,704,000) (4,378,000)
Income tax allocation -- -- 1,646,000
_____________________________________
Loss from continuing operations before
equity in undistributed income (loss)
of subsidiaries and extraordinary item (2,004,000) (2,704,000) (2,732,000)
Equity in undistributed income (loss)
of subsidiaries 492,000 (4,552,000) (9,620,000)
_____________________________________
Loss from continuing operations before
extraordinary item (1,512,000) (7,256,000) (12,352,000)
Loss from discontinued operations, net
of income taxes - - (9,623,000)
______________________________________
Net loss before extraordinary item (1,512,000) (7,256,000) (21,975,000)
Gain on restructuring of long-term
debt, net of taxes ($0 in 1993) - 18,033,000 -
______________________________________
Net income (loss) $(1,512,000) $10,777,000 $(21,975,000)
______________________________________
Weighted average common and common
equivalent share outstanding 1,815,080 1,331,058 1,089,048
______________________________________
Earnings per share of common share
and common equivalent shares of
stock:
Earnings (loss) per share from
continuing operations $ (.83) $ (5.45) $ (11.34)
Earnings (loss) per share from
discontinued operations - - (8.84)
______________________________________
Earnings (loss) per share before
extraordinary item (.83) (5.45) (20.18)
Earnings (loss) per share from
extraordinary item - 13.55 -
______________________________________
Earnings (loss) per share from net
income (.83) $ 8.10 $ (20.18)
______________________________________
</TABLE>
See Notes to Consolidated Financial Statements
of CenCor, Inc. included elsewhere in this report.
<PAGE>
<PAGE>
<TABLE>
CENCOR, INC.
(Parent Company Only)
-------
SCHEDULE III--CONDENSED FINANCIAL INFORMATION OF REGISTRANT
STATEMENT OF CASH FLOWS
For the Years Ended December 31
<CAPTION>
1994 1993 1992
______________________________________
<S> <C> <C> <C>
Cash flows from operating activities:
Net income (loss) $(1,512,000) $10,777,000 $(21,975,000)
Adjustments to reconcile net income
(loss) to net cash provided by
(used in) operating activities:
Depreciation - - 21,000
Amortization of intangibles and
debt expense - - 226,000
Discount accretion on long-term debt 2,026,000 641,000 -
Provision for credit losses - - 168,000
Provision for credit losses on
subordinated notes assumed by
spun-off subsidiary - - 5,422,000
Change in assets and liabilities:
Accrued interest - - 1,274,000
Investment in and advances to
subsidiaries - - 16,656,000
Income tax receivable - - 2,494,000
Gain on restructure of debt - (18,033,000) -
Other assets and liabilities (691,000) 6,007,000 4,069,000
______________________________________
Total adjustments 1,335,000 (11,385,000) 30,330,000
______________________________________
Net cash provided by (used in) operating
activities (177,000) (608,000) 8,355,000
______________________________________
Cash flows from investing activities:
Proceeds from sale of other assets - 61,000 1,202,000
______________________________________
Net cash flow provided by
investing activities - 61,000 1,202,000
______________________________________
Cash flows from financing activities:
Repayment of note payable - - (491,000)
Principal payments under
long-term debt - - (6,536,000)
______________________________________
Net cash used in financing activities - - (7,027,000)
______________________________________
Net increase (decrease) in cash and
cash equivalents (177,000) (547,000) 2,530,000
Cash and cash equivalents at beginning
of year 986,000 1,533,000 (997,000)
______________________________________
Cash and cash equivalents at end of year $ 809,000 986,000 1,533,000
______________________________________
Supplemental disclosures of cash flow
information:
Cash paid during the year for:
Interest $ - $ - $2,085,000
______________________________________
</TABLE>
See Notes to Consolidated Financial Statements of CenCor, Inc.
included elsewhere in this report.
<PAGE>
<TABLE>
CENCOR, INC.
SCHEDULE VIII --VALUATION AND QUALIFYING ACCOUNTS AND ALLOWANCES
Additions Deductions
_____________________________________________________________________
<CAPTION> Net
Charge-Off Balance
Balance at Charged to Charged to of at
Beginning Costs and Other Transfers Receivables End of
Description of Period Expenses Accounts to Income and Other Period
___________ _________ __________ __________ _________ ___________ ________
<S> <C> <C> <C> <C> <C> <C>
YEAR ENDED
DECEMBER 31, 1994:
Allowance for credit losses
on accounts receivable $ 595,000 $ --- $ 140,000 $ --- $ 314,000 $ 421,000
Allowance for credit losses
on finance receivables 5,026,000 5,519,000 --- --- 5,351,000 5,194,000
Allowance for credit losses
on Concorde note 5,982,000 --- 500,000 --- 4,060,000 2,422,000
Unearned discount, interest
and finance charges<F5> 25,178,000 --- 23,453,000<F1> 25,505,000 --- 23,126,000
<CAPTION>
YEAR ENDED
DECEMBER 31, 1993:
<S> <C> <C> <C> <C> <C> <C>
Allowance for credit losses
on accounts receivable $70,000 $ --- $ 525,000 $ --- $ --- $ 595,000
Allowance for credit losses
on finance receivables 5,990,000 2,104,000 --- --- 3,068,000 5,026,000
Allowance for credit losses
on Concorde note 5,588,000 --- 487,000 93,000 --- 5,982,000
Unearned discount, interest
and finance charges<F5> 20,349,000 --- 26,721,000<F1> 21,892,000 --- 25,178,000
<CAPTION>
YEAR ENDED
DECEMBER 31, 1992:
<S> <C> <C> <C> <C> <C> <C>
Allowance for credit losses
on accounts receivable $ 366,000 $ 168,000 $ --- $ --- $ 464,000<F2> $ 70,000
Allowance for credit losses
on finance receivables 7,618,000 12,988,000 782,000<F3> --- 15,398,000 5,990,000
Allowance for credit losses
on net investment in direct
financing leases 575,000 56,000 --- --- 631,000<F4> ---
Allowance for credit losses
on Concorde note --- 5,588,000 --- --- --- 5,588,000
Unearned discount, interest
and finance charges<F5> 24,659,000 --- 19,713,000<F1> 24,023,000 --- 20,349,000
<FN>
<F1>
(1) Additions from purchases of bulk sale contracts and
origination of finance notes receivable.
<F2>
(2) Result from sale of the Temporary Services division.
<F3>
(3) Additions from purchases of bulk sale contracts.
<F4>
(4) Result from sale of certain Charter net assets.
<F5>
(5) Includes dealer and nonrefundable reserves.
</FN>
</TABLE>
<PAGE>
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the Registrant has duly caused
this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
<TABLE>
<CAPTION>
CENCOR, INC.
<S> <C>
By /s/ JACK L. BROZMAN
Jack L. Brozman
Chairman of the Board
Date: April 17, 1995
</TABLE>
Pursuant to the requirements of the Securities Act of 1934,
this report has been signed below by the following persons on
behalf of Registrant and in the capacities and on the dates
indicated.
<TABLE>
<CAPTION>
Signature Date
<S> <C>
By: /s/ JACK L. BROZMAN April 17, 1995
Jack L. Brozman
(Chairman of the Board, Chief
Executive Officer and Director)
By:/s/ PATRICK F. HEALY April 17, 1995
Patrick F. Healy
(Vice President-Finance and
Treasurer, Principal Financial
Officer)
By:/s/ EDWARD G. BAUER, JR. April 17, 1995
Edward G. Bauer, Jr.
(Director)
By:/s/ GEORGE L. BERNSTEIN April 17, 1995
George L. Bernstein
(Director)
By: /s/ MARVIN S. RIESENBACH April 17, 1995
Marvin S. Riesenbach
(Director)
</TABLE>
<PAGE>
<TABLE>
EXHIBIT INDEX
<CAPTION>
Exhibit
Number Description
_______ ___________
<S> <C>
2(a) Plan of Reorganization (Incorporated by reference--
Exhibit 2(b) to the Company's Annual Report on Form 10-K
for the year ended December 31, 1992).
3(a) Certificate of Incorporation and all Amendments thereto
through August 31, 1990. (Incorporated by reference--
Exhibit 3(a) to the Company's Annual Report on Form 10-K
for the year ended December 31, 1990.)
3(b) Bylaws amended through July 29, 1991. (Incorporated by
reference--Exhibit 3(a) to the Company's Annual Report on
Form 10-K for the year ended December 31, 1991.)
4(a) Specimen common stock certificate. (Incorporated by
reference--Exhibit 4(a) to the Company's Annual Report on
Form 10-K for the year ended December 31, 1990.)
4(b) Certificate of Incorporation and all Amendments and
Amended and Restated Bylaws. (Incorporated by reference--
Exhibit 3(a) to the Company's Annual Report on Form 10-K
for the year ended December 31, 1990 and included as
Exhibit 3(b) hereto.)
4(c) Composite Conform Copy Relating To: Century Acceptance
Corporation Amendment and Exchange Agreement dated as of
January 29, 1993 and Composite Conformed Copy of
Amendment and Exchange Agreement Regarding Century
Acceptance Corporation Amendment and Exchange Agreement
dated as of January 29, 1993 relating to the
restructuring of Century Acceptance Corporation's
outstanding indebtedness to All State Life Insurance
Company, Inc., American Banker's Life Insurance Company
of Florida, American Mutual Life Insurance Company,
Continental American Life Insurance Company, The Lincoln
National Life Insurance Company, Mutual Services Casualty
Insurance Company, New England Mutual Life Insurance
Company, Principal Mutual Life Insurance Company,
Provident Mutual Life Annuity Company of America,
Provident Mutual Life Insurance Company of Philadelphia,
and Standard Insurance Company. (Incorporated by
reference -Exhibit 4(d) to Company's Annual Report on
Form 10-K for the year ended December 31, 1992.)
4(d) Indentures between CenCor, Inc. and Commercial National
Bank of Kansas City, N.A. dated April 27, 1993 with
respect to notes due 1999. (Incorporated by reference--
Exhibit T3C to Company's Application on Form T-3; SEC
file #22-24246.)
4(e) Indenture between CenCor, Inc. and Commercial National
Bank of Kansas City, N.A. dated April 27, 1993, with
respect to convertible notes due 1.999. (Incorporated by
reference--Exhibit T3C to Company's Application on Form
T-3; SEC file #22-24248.)
4(f) Third Amendment to Amendment and Exchange Agreement dated
March 31, 1995.
10(a) Indemnity Agreement dated July 26, 1991 between the
Company and the Indemnitors. (Incorporated by reference--
Exhibit 2 to Report on Form 8-K dated July 29, 1991.)
10(b) First Amendment to Indemnity Agreement dated August 20,
1991 between the Company and the Indemnitors. (Incorpo-
rated by reference--Exhibit 1 to Report on Form 8-K dated
September 3, 1991.)
10(c) Modification and Exchange Agreement and Lender Consent
Stipulation dated August 1, 1991 between the Company, the
Indemnitors, and certain CIKC Lenders. (Incorporated by
reference--Exhibit 2 to Report on the Company's Form 8-K
dated September 3, 1991.)
<PAGE>
10(d) Restructuring, Security and Guaranty Agreement dated
October 30, 1992 between and Dental Assistants, Inc.,
United Health Careers Institute, Inc., Southern
California College of Medical and Dental Assistants,
Inc., Concorde Careers--Florida, Inc., Colleges of Dental
and Medical Assistants, Inc. and Computer Career
Institute, Inc. (Incorporated by reference -- Exhibit
100) to Company's Annual Report on Form 10-K for the year
ended December 31, 1992.)
10(e) Amendment to Agreement for Transfer of Assets and Assump-
tion of Liabilities dated October 30, 1992 between
CenCor, Inc. and Concorde Career Colleges, Inc. (Incorpo-
rated by, reference--Exhibit 10(k) to Company's Annual
Report on Form 10-K for the year ended December 31,
1992.)
10(f) Employment Agreement with Dennis C. Berglund dated June
28, 1993. (Incorporated by reference--Exhibit 10(g) to
the Company's Annual Report on Form 10-K for the year
ended December 31, 1993)
10(g) First Amendment to Restructuring, Security and Guarantee
Agreement between CenCor, Concorde, Minnesota Institute
of Medical and Dental Assistance, Texas College of
Medical and Dental Assistants, Texas College of Medical
and Dental Assistants, Inc., United Health Careers
Institute, Inc., Southern California College of Medical
and Dental Assistants, Inc., Concorde Careers--Florida,
Inc., College of Dental and Medical Assistants, Inc. and
Computer Career Institute, Inc. dated December 30, 1993.
(Incorporated by reference--Exhibit 10(i) to the
Company's Annual Report on Form 10-K for the year ended
December 31, 1993)
10(h) Stock Appreciation Agreement with Dennis Berglund dated
August 29, 1994
10(i) Stock Appreciation Agreement with Pat Healy dated October
4, 1994
10(j) Stock Appreciation Agreement with Jack Brozman dated
October 4, 1994
10(k) Minutes of Compensation Committee dated February 7, 1995
relating to amendments to Stock Appreciation Agreements.
10(l) Mutual Release between First Portland Corporation, FP
Holdings, Inc., and Leonard and Sharlene Ludwig, Arthur
and Phyllis Levinson, CEL-CEN Corp. and CenCor, Inc.
dated February 14, 1995.
10(m) Second Amendment to the Restructuring, Security and
Guaranty Agreement between CenCor, Concorde, Minnesota
Institute of Medical and Dental Assistance, Texas College
of Medical and Dental Assistants, Texas College of
Medical and Dental Assistants, Inc., United Health
Careers Institute, Inc., Southern California College of
Medical and Dental Assistants, Inc., Concorde Careers--
Florida, Inc., College of Dental and Medical Assistants,
Inc. and Computer Career Institute, Inc. dated November
15, 1994.
10(n) Subordination Agreement dated November 15, 1994 among
Concorde Career Colleges, Inc., CenCor, Inc. and Mark
Twain Kansas City Bank
10(o) Settlement Agreement dated March 27, 1995 among CenCor,
Inc., Century Acceptance Corporation, Jack L. Brozman,
Executor, and Jack L. Brozman, Trustee
21 Subsidiaries of the Registrant.
27 Financial Data Schedule.
</TABLE>
<PAGE>
<PAGE>
Exhibit 4(f)
THIRD AMENDMENT
TO
AMENDMENT AND EXCHANGE AGREEMENT
This THIRD AMENDMENT TO THE AMENDMENT AND EXCHANGE
AGREEMENT (the "Third Amendment"), dated and effective as of
March 31, 1995 (except as otherwise provided hereinbelow), is
made by and between Century Acceptance Corporation (the
"Company"), and Allstate Life Insurance Company, American
Bankers Life Assurance Company of Florida, American Mutual
Life Insurance Company, Continental American Life Insurance
Company, The Lincoln National Life Insurance Company, Mutual
Service Casualty Insurance Company, New England Mutual Life
Insurance Company, Principal Mutual Life Insurance Company,
Providentmutual Life and Annuity Company of America,
Provident Mutual Life Insurance Company of Philadelphia, and
Standard Insurance Company (collectively, the "Holders").
Capitalized terms not otherwise defined herein shall have
those meanings as defined in the Amendment and Exchange
Agreements (as defined below).
R E C I T A L S
WHEREAS, the Company and each of the Holders entered into
separate Amendment and Exchange Agreements, each dated as of
January 28, 1993 (such agreements, as amended by the
hereinafter-defined First Amendment and Second Amendment
being hereinafter collectively referred to as the "Amendment
and Exchange Agreements"), which provided, among other
things, for warrants to be delivered to the Holders to
purchase twenty-five percent (25%) of Pro Forma Shares of
Common Stock of the Company for the exercise price of $.01
per share (the "Warrants"); and
WHEREAS, the Company entered into that certain Indenture of
Mortgage, Deed of Trust and Security Agreement dated as of
January 28, 1993 (the "Indenture") by and between the Company
and Trustee, as security for the Secured Indebtedness (as
defined in the Indenture); and
WHEREAS, the Amendment and Exchange Agreements and the
Indenture were amended and revised pursuant to (i) that
certain Amendment to the Amendment and Exchange Agreement and
Indenture of Mortgage, Deed of Trust, Pledge and Security
Agreement, by and between the Company, the Holders and the
Trustee, dated July 30, 1993 (the "First Amendment") and (ii)
that certain Amendment Agreement, by and between the Company
and the Holders, dated as of March 1, 1994 (the "Second
Amendment"); and
WHEREAS, the parties hereto have agreed to make certain
modifications to the Amendment and Exchange Agreements and
have made certain other agreements with respect to the
possible sale of the business and assets of the Company and
its subsidiaries.
NOW, THEREFORE, in consideration of the premises and for
other good and valuable consideration, the receipt and suffi-
ciency of which are hereby acknowledged, it is hereby agreed
as follows:
1. Reduction of Fixed Charge Coverage Ratios.
Section 5.13 of each of the Amendment and Exchange
Agreements is hereby amended in its entirety so that the same
shall henceforth read as follows:
<PAGE>
Section 5.13. Fixed Charge Coverage Ratio. The Company
will keep and maintain the Fixed Charge Coverage Ratio for
the fiscal periods set forth below at no less than:
<TABLE>
<CAPTION>
FIXED CHARGE
FISCAL PERIOD COVERAGE RATIO
<S> <C> <C>
(a) for the fiscal quarter ending 50%
March 31, 1993
(b) for the two consecutive fiscal 55%
quarter period ending June 30, 1993
(c) for the three consecutive fiscal 60%
quarter period ending September 30, 1993
(d) for the four consecutive fiscal quarter
period ending:
(1) December 31, 1993 62%
(2) March 31, 1994 75%
(3) June 30, 1994 85%
(4) September 30, 1994 95%
(5) December 31, 1994 100%
(6) March 31, 1995 89.41%
(7) June 30, 1995 93.56%
(8) September 30, 1995 97.07%
(9) December, 31, 1995 100.79%
(e) for each four consecutive fiscal 120%
quarter period ending on March 31,
1996 and thereafter
</TABLE>
2. Modification of Definition of Fixed Charge Coverage
Ratio.
The definition of "Fixed Charge Coverage Ratio" contained
in Section 9.1 of each of the Amendment and Exchange Agree-
ments is hereby amended in its entirety so that the same
shall henceforth read as follows:
"Fixed Charge Coverage Ratio" shall mean for each period
for which a determination thereof is to be made, the result,
stated as a percentage, derived by dividing Net Income Avail-
able for Fixed Charges by Fixed Charges for such period;
provided, however that for purposes of calculating the Fixed
Charge Coverage Ratio for any fiscal quarter ending after
January 1, 1995, "Net Income Available for Fixed Charges"
shall not include (i) gains on the sale of any assets of the
Company or its subsidiaries, nor (ii) any increase in
Consolidated Net Income due to the reversing of contingency
reserves.
<PAGE>
3. Sale of the Company.
(a) In the event, and only in the event, that the
Company shall comply with each of the hereinafter-specified
elements of the Time Schedule (as defined below) with
respect to a Sale (as defined below), (x) the Company shall
purchase, and the holders of the Secured Notes shall sell,
concurrently with the consummation of the Sale, all of the
Secured Notes then outstanding for an aggregate purchase
price equal to the principal amount of the Secured Notes so
outstanding, together with accrued interest to the date of
purchase and other amounts which shall be payable under the
Amendment and Exchange Agreements or Indenture (but not
including any make-whole amount or other prepayment premium
payable under the Amendment and Exchange Agreements or the
Indenture which shall be waived by the holders) and
(y) upon receipt of all amounts due to it pursuant to
clause (x) of this Section 3(a), each holder of Warrants
then outstanding shall surrender to the Company the Secured
Notes and all Warrants held thereby (including those
Warrants issued January 29, 1993 and those Warrants issued
pursuant to Section 4 hereof), which Warrants shall be
surrendered and cancelled without any consideration. The
elements of the "Time Schedule" for the Sale are as
follows:
(i) the Company shall receive on or before June 1,
1995, a non-binding letter of intent entered into in
good faith by and between the Company and a Qualified
Buyer (as defined below) and relating to the consumma-
tion of the Sale on or before September 30, 1995, and
such letter of intent shall remain in full force and
effect until the earlier to occur of (x) September 1,
1995 or (y) the execution and delivery of the agreement
referred to in clause (ii) below;
(ii) a definitive, binding and enforceable agreement
shall be entered into in good faith by and between the
Company and said Qualified Buyer on or before September
1, 1995, pursuant to which the Company and said
Qualified Buyer shall agree to consummate the Sale on
or before September 30, 1995, and said agreement shall
remain in full force and effect until the earlier to
occur of (x) September 30, 1995 or (y) the consummation
of such Sale; and
(iii) the Sale shall be consummated on or before
September 30, 1995.
(b) Subject to compliance by the Company with the
requirements of Section 3(a), above, each of the holders of
the Secured Notes hereby consents and agrees to the Sale in
compliance with the elements of the Time Schedule. The
parties hereto acknowledge and agree that time is of the
essence in respect of the performance of this Third
Amendment.
(c) As used herein, (i) the term "Sale" shall mean the
sale to a Qualified Buyer for a consideration which shall
include cash in an amount (determined net of all expenses
and other amounts which are for any reason not available
for payment to the holders of the Secured Notes) sufficient
to pay all amounts outstanding with respect to the Secured
Notes (subject to the provisions of Section 3(a) above) of
substantially all of the assets and business of the Company
and its subsidiaries, and (ii) the term "Qualified Buyer"
shall mean a Person which shall, at all relevant times,
have the financial and legal ability to consummate the
Sale.
(d) Anything contained herein to the contrary notwith-
standing, under no circumstances (i) shall any holder of
Secured Notes or Warrants be deemed to be under any
obligation to sell any Secured Notes or surrender any
Warrants to the Company for cancellation other than upon
the compliance by the Company with each of the elements of
the Time Schedule or as otherwise provided in the Amendment
and Exchange Agreements or the Warrants, (ii) shall any
holder of Secured Notes be deemed to have consented or
agreed to any sale of any assets or business of the Company
or its Subsidiaries other than in compliance with the
elements of the Time Schedule or (iii) shall any of the
provisions of this Section 3 or any of the other provisions
of this Third Amendment in any manner affect any rights or
remedies of the holders of the Secured Notes upon the
occurrence of any Default or Event of Default.
(e) The payment of the purchase price payable to any
holder for any Secured Notes purchased by the Company shall
be made in the manner and to the address or account
currently applicable to such holder under the provisions of
the Amendment and Exchange Agreements or to such other
address or account as said holder shall designate in
writing to the Company.
<PAGE>
(f) If any Holder should transfer a Secured Note or
Warrant, such Holder shall notify the transferee of the
provisions of this Third Amendment, and in particular, the
provisions of this Section 3, and such transferee must
agree to be bound thereby.
(g) Notwithstanding anything herein to the contrary,
neither the Company or any of its subsidiaries is under any
obligation to sell its assets.
4. Issuance of Additional Warrants.
In consideration of the foregoing, the Company hereby
agrees that it shall, on or prior to April 7, 1995, deliver
to each holder of Warrants then outstanding (ratably, deter-
mined by reference to the principal amount of Warrants held
thereby on the date of such delivery), warrants entitling the
holders thereof to purchase an aggregate of 5% of Pro Forma
Shares of Common Stock (as defined in the form of Warrant
attached as Exhibit "A" to the Amendment and Exchange
Agreement but containing a legend referencing this Third
Amendment and subject to adjustment as provided therein) of
the Common Stock of the Company for the exercise price of
$.01 per share, and otherwise in accordance with Section 1.5
of the Amendment and Exchange Agreement. In connection with
such delivery, the Company shall provide to each recipient of
said warrants such additional documents, legal opinions and
other showings reasonably requested by such recipient or its
counsel and relating to the authorization, issuance and
delivery of said warrants.
5. Confidentiality.
The Holders hereby agree that, prior to and on the
Specified Confidentiality Date (as defined below), each such
Holder shall use its best efforts to reasonably maintain the
confidentiality of the contents of Sections 3 and 4 of this
Third Amendment, the fact that the Company is seeking
prospective purchasers and the contents of any such sale
negotiations, in accordance with standards generally adhered
to in the private placement industry; provided, however,
that, anything herein to the contrary notwithstanding, any
Holder may disclose or disseminate such information
to: (a) such Holder's employees, agents, attorneys,
consultants, directors and accountants in the course of the
performance of their duties; (b) such Holder's subsidiaries;
(c) such third parties as such Holder may, in its discretion
(which such Holder agrees will be exercised in a manner
consistent with standards generally adhered to in the private
placement industry), deem reasonably necessary or desirable
in connection with or in response to (i) compliance with any
law, ordinance or governmental order, regulation, rule,
policy, subpoena, investigation, or regulatory authority
request, or (ii) any order, decree, judgment, subpoena,
notice of discovery or similar ruling or pleading issued,
filed, served (x) by or under authority of any court,
tribunal, arbitration board or any governmental or industry
agency, commission, authority, board or similar entity,
(y) in connection with any proceeding, case or matter pending
(or on its face purported to be pending) before any court,
tribunal, arbitration board or any governmental agency,
commission, authority, board or similar entity, or (z) in
connection with any action by such Holder to enforce the
obligations existing under the Secured Notes, the Amendment
and Exchange Agreements, the Warrants or the Indenture;
(d) any prospective purchaser, securities broker or dealer or
investment banker in connection with the resale or proposed
resale by such Holder or any portion of the Secured Notes or
Warrants and who shall have executed and delivered to the
Company a letter to substantially the same effect as this
Section 5; (e) the National Association of Insurance
Commissioners; or (f) any entity utilizing such information
to rate or classify such Holder's debt or equity securities.
As used herein, the term "Specified Confidentiality Date"
shall mean the earliest to occur of (1) October 1, 1995,
(2) the abandonment by the Company of efforts to sell
substantially all of the assets and business of the Company
and its Subsidiaries in the manner contemplated in Section 3
hereof, (3) the date on which the Company shall default in
the performance of any of its obligations under this Third
Amendment or (4) the date on which such information shall
have been publicly disclosed (other than by a Holder) so that
such contents shall no longer be confidential.
<PAGE>
<PAGE>
6. Event of Default.
The parties hereto agree that (i) any failure by the
Company to make any payment required to be made pursuant to
Sections 3 and 10 of this Third Amendment shall be deemed to
constitute an Event of Default under Section 6.1(b) of the
Amendment and Exchange Agreement and (ii) any failure by the
Company to comply with any other provision of this Third
Amendment shall be deemed to constitute an Event of Default
under Section 6.1(e) of the Amendment and Exchange Agreement
(without giving effect to the proviso contained in said
Section 6.1(e)).
7. Representation by Company.
The Company hereby represents to each other party hereto
that on the date hereof and after giving effect to this Third
Amendment, no Default or Event of Default has occurred and is
continuing.
8. Sophistication and Investment Intent.
The Holders have such knowledge and experience in financial
affairs that the Holders are capable of evaluating the merits
and risks of acquiring the additional Warrants. The Holders
are acquiring the additional Warrants pursuant to this Third
Amendment for the Holders' own account and not with a view to
making any distribution of all or any part of the Warrants,
it being understood, however, that the disposition of your
property shall at all times be and remain in your control.
9. Execution in Counterparts.
Two or more duplicate originals of this Third Amendment may
be signed by the parties hereto, each of which shall be an
original but all of which together shall constitute one and
the same instrument. This Third Amendment will be effective
as of the date set forth above, when counterparts have been
executed by the Company and the holders of 100% of the Base
Principal Amount of the Secured Notes then outstanding, and
each set of counterparts which, collectively, show execution
by each such party shall constitute one duplicate original.
10. Fees and Expenses.
All fees and expenses relating to the subject matter of
this Third Amendment shall be paid by the Company.
11. Governing Law.
This Amendment Agreement shall be governed by and construed
in accordance with Illinois law.
12. Captions.
The descriptive headings of the various Sections or parts
of this Amendment Agreement are for convenience only and
shall not affect the meaning or construction of any of the
provisions hereof.
If this Third Amendment is satisfactory to you, please so
indicate by signing the acceptance at the foot of a counter-
part of this Third Amendment and return such counterpart to
the Company, and upon receipt by the Company of counterparts
of this Third Amendment executed by the holders of 100% of
the Base Principal Amount of the Secured Notes then
outstanding, each of the Amendment and Exchange Agreements
shall be amended as set forth above, but all other terms and
provisions of the Amendment and Exchange Agreements shall
remain unchanged and are in all respects ratified, confirmed
and approved. If and to the extent that any of the terms or
provisions of the Amendment and Exchange Agreements, as
amended prior to the date hereof, are in conflict with or are
inconsistent with any of the terms or provisions of this
Third Amendment, this Third Amendment shall govern.
<PAGE>
<PAGE>
COMPANY:
CENTURY ACCEPTANCE CORPORATION
By: /s/ Randall J. Opliger
Its: Senior VP/Controller
[THE REMAINDER OF THIS PAGE HAS BEEN LEFT BLANK]
SIGNATURES OF THE HOLDERS ARE ON THE FOLLOWING PAGES
<PAGE>
<PAGE>
Accepted and Agreed To By:
HOLDERS:
ALLSTATE LIFE INSURANCE COMPANY
By: /s/ Patricia W. Wilson
_____________________________
Its: _____________________________
By: /s/ Gary W. Fridley
_____________________________
Its: Vice President
AMERICAN BANKERS LIFE ASSURANCE
COMPANY OF FLORIDA
By: /s/ Robert L. Kisiel
_____________________________
Its: Director of Investments
AMERICAN MUTUAL LIFE INSURANCE
COMPANY
By: /s/ Roger D. Fors
_____________________________
Its: Vice President, Fixed Income Investments
CONTINENTAL AMERICAN LIFE
INSURANCE COMPANY
By: /s/ Dina Welch
_____________________________
Its: Investment Officer
THE LINCOLN NATIONAL LIFE
INSURANCE COMPANY
By: Lincoln National
Investment Management Company,
its Attorney in Fact
By: /s/ David C. Patch
____________________________
Its: Vice President
<PAGE>
MUTUAL SERVICE CASUALTY
INSURANCE COMPANY
By: /s/ Ronald Kabiebe
___________________________
Its: Investment Officer, Securities
NEW ENGLAND MUTUAL LIFE
INSURANCE COMPANY
By: /s/ Hanson C. Robbins
___________________________
Its: Senior Investment Officer
PRINCIPAL MUTUAL LIFE INSURANCE
COMPANY
By: /s/ Annette M. Masterson
____________________________
Its: Assistant Director-Securities
Investment
By: /s/ Dora M. Everett
___________________________
Its: Counsel
PROVIDENTMUTUAL LIFE AND ANNUITY
COMPANY OF AMERICA
By: /s/ Timothy P. Henry
___________________________
Its: Investment Officer
PROVIDENT MUTUAL LIFE INSURANCE
COMPANY OF PHILADELPHIA
By: /s/ James D. Kestner
__________________________
Its: Vice President
STANDARD INSURANCE COMPANY
By: /s/ Vicki R. Chase
_________________________
Its: Vice President - Securities
<PAGE>
<PAGE>
EXHIBIT 10(h)
STOCK APPRECIATION AGREEMENT
THIS AGREEMENT is made and entered into this 29th day of
August, 1994, by and between CENCOR, INC., a Delaware
corporation ("CenCor") and DENNIS BERGLUND ("Berglund").
WITNESSETH:
WHEREAS, Century Acceptance Corporation ("Century") is a
wholly-owned subsidiary of CenCor;
WHEREAS, CenCor directly benefits from the financial
success of Century;
WHEREAS, CenCor wishes to recognize and reward Berglund
for his contributions to the present and future success of
Century, encourage Berglund to contribute to the future
success of Century, and retain the valuable services of
Berglund for the benefit of CenCor; and
WHEREAS, CenCor wishes to award, and Berglund wishes to
accept, the award of stock appreciation units in accordance
with this Agreement.
NOW, THEREFORE, in consideration of the mutual promises,
covenants, and agreements contained herein, the parties agree
as follows:
1. Award of Stock Appreciation Units. CenCor hereby
awards Berglund thirty thousand (30,000) stock appreciation
units ("Units") effective June 28, 1994. An additional
thirty thousand (30,000) Units shall be awarded to Berglund
on June 28, 1995, provided the Berglund is employed with
Century on such date.
2. Nature of Units. The Units shall be used solely as a
device to determine the amount (if any) to be paid Berglund
under this Agreement. The Units shall not constitute, or be
treated as, property or a trust fund of any kind. All
amounts at any time attributable to the Units shall be and
remain the sole property of CenCor. Berglund's rights
hereunder are limited to the right to receive cash as
provided in this Agreement. The award of Units shall not
create or give Berglund any rights as a shareholder of
Century, including without limitation, dividend, voting or
stock ownership rights.
3. Valuation of Units.
(a) The parties agree the per Unit fair market value as
of December 31, 1993, is Thirteen and 72/100 Dollars ($13.72)
as calculated on Exhibit "A" to this Agreement, based upon a
seven and one-half percent (7.5%) premium on net accounts
receivable.
(b) The per Unit fair market value as of a subsequent
valuation date pursuant to Sections 5 or 7 shall be
determined by mutual agreement of CenCor's Board of Directors
and Berglund or his legal representative, executor or
guardian, if Berglund is deceased or incapacitated (herein
his "Legal Representative"), using the methodology set forth
in Section 3(c). If the parties are unable to agree upon the
per Unit fair market value, a valuation shall be performed at
CenCor's expense by an independent third party appraiser
jointly selected by CenCor's Board of Directors and Berglund
(or his Legal Representative) using the methodology set forth
in Section 3(c). If Berglund (or his Legal Representative)
and CenCor's Board of Directors are unable to agree upon an
appraiser, CenCor's Board of Directors and Berglund (or his
Legal Representative) shall each select an appraiser and
these two appraisers shall select the independent third party
appraiser to perform the valuation. The valuation rendered
by the independent third party appraiser shall be final and
binding on all parties.
<PAGE>
<PAGE>
(c) The fair market value of one Unit on a subsequent
valuation date pursuant to Sections 5 or 7 shall be the fair
market value of one share of the common stock of Century on
that valuation date assuming a hypothetical sale of Century's
assets or stock as further defined in this Section 3(c). In
determining the fair market value, the assets and liabilities
of Century shall be determined in accordance with generally
accepted accounting principles, subject to the following:
(1) Net accounts receivable shall be gross
receivables minus unearned interest. For this purpose,
deferred fees shall not be subtracted from gross receiv-
ables in arriving at net accounts receivable.
(2) Net accounts receivable shall be valued at
their fair market value, assuming a premium of at least
five percent (5%) and not more than fifteen percent
(15%).
(3) Cash and other receivables shall be reflected
as assets, to be valued at face value minus reserves for
uncollectibility of the other receivables.
(4) Accounts receivable shall exclude retro
commissions on insurance.
(5) Fixed assets shall have no value and shall be
treated as being sold as part of Century's receivables
for no additional consideration.
(6) Prepaid expenses shall be treated as having
no value.
(7) Reserve holdbacks for monies owed a dealer
shall be treated as a liability of Century.
(8) All liabilities of Century are to be included
in the determination of fair market value.
(9) The determination of fair market value shall
be made on a pre-tax, pre-warrant basis.
(10) Fair market value shall include as a
liability the actual prepayment penalty on debt as of the
applicable valuation date. For purposes of the December
31, 1993 valuation, the parties agree the prepayment
penalty shall be deemed to be $3,000,000. For subsequent
valuations, the prepayment penalty shall be adjusted to
reflect the prepayment penalty in effect on the outstand-
ing debt as of that valuation date.
(11) Fair market value shall include as a
liability the estimated costs and fees which would be
incurred in the event CenCor sold substantially all of
its stock in Century or Century sold substantially all of
its assets. Such costs and fees shall include, without
limitation, legal and accounting fees, brokerage fees,
and lease termination expenses. For purposes of the
December 31, 1993 valuation, the parties agree such fees
shall be deemed to be $1,000,000. For subsequent
valuations, such fees shall be the amount mutually agreed
upon by the parties or established by the appraiser.
4. Events Triggering Berglund's Right to Payment.
(a) As provided in Sections 5, 6 and 7 hereof, Berglund
shall be entitled to payment under this Agreement upon the
earliest of the following events:
(1) Berglund's termination of employment due to
his death or disability or termination by Century other
than "for cause;"
(2) the sale of Century as provided in Section 6;
or
(3) Berglund's continuous employment with Century
through December 31, 1998.
<PAGE>
<PAGE>
(b) Berglund shall be entitled to payments under the
provisions of Section 5, 6 or 7; payments shall not be made
under more than one (1) such Section. Payments shall be
governed solely by Section 5, 6 or 7, as determined by the
earliest occurrence of the event entitling Berglund to
payment under this Agreement.
5. Payment Due to Death, Disability or Involuntary
Termination of Employment.
(a) If Berglund's employment with Century is terminated
prior to January 1, 1999 due to Berglund's death or
disability, or is involuntarily terminated by Century other
than "for cause," Berglund shall be entitled to benefits
under this Section. In such event, CenCor shall pay to
Berglund the difference between the per Unit fair market
value as of December 31, 1993 and the per Unit fair market
value as of the last month-end prior to such event multiplied
by the number of Units awarded to Berglund under Section 1,
subject to the ceiling set forth in Section 8.
(b) Any payment required under Section 5(a) shall be made
on the six (6) month anniversary after the occurrence of
Berglund's death or disability or termination of his
employment by Century other than "for cause", as applicable,
subject to Section 9; provided that, if for any reason such
amount cannot be finally determined as of the sixth month
anniversary, CenCor will pay a preliminary amount mutually
agreed upon by the parties to Berglund on the sixth month
anniversary and any balance due Berglund under Section 5(a)
shall be made on the twelfth month anniversary, subject to
Section 9.
(c) Berglund shall have a "disability" for purposes of
this Agreement only if Berglund has been unable for a period
of three (3) consecutive months to perform his duties as an
employee of Century due to a mental or physical illness or
injury as documented by a licensed physician selected by
CenCor's Board of Directors. For purposes of this Agreement,
the disability shall be deemed to have occurred on the last
day of the three (3) month period.
(do For purposes of this Agreement, Berglund's employment
is terminated "for cause" if such employment is terminated
due to:
(1) a conviction of, or a plea of guilty or nolo
contendere by, Berglund to any felony or the commission
of any fraud, embezzlement, theft, dishonesty or other
criminal conduct; or
(2) a material breach by Berglund of his
Employment Agreement with Century dated June 28, 1993 or
any subsequent employment agreement; or
(3) gross negligence or material failure in the
performance of employment duties assigned to Berglund by
CenCor's or Century's Board of Directors.
6. Payment Due to Century's Sale. If prior to December
31, 1998 CenCor sells substantially all of its stock in
Century or Century sells substantially all of its assets,
Berglund shall be entitled to benefits under this Section.
In such event, CenCor shall pay Berglund the difference
between the per Unit fair market value as of December 31,
1993 and the per share liquidation value of the then issued
and outstanding shares of Century common stock multiplied by
the number of Units awarded to Berglund under Section 1,
subject to the ceiling set forth in Section 8. For this
purpose, liquidation value shall mean the net proceeds
received by CenCor or Century, as the case may be, as a
result of such sale less, in the case of an asset sale, any
liabilities retained by Century. The amount payable under
this Section 6 shall be paid to Berglund, subject to Section
9, in a single sum payment on the later of December 31, 1998
or thirty (30) days after the closing of the sale; provided,
however, CenCor's Board of Directors may modify the time and
form of payment if sales proceeds or a portion thereof are
paid by the buyer to CenCor or Century after December 31,
1998. Any such modification shall be consistent with the
time and form of payment by the buyer. If the closing of the
sale of substantially all of Century's stock by CenCor or the
sale of substantially all of Century's assets occurs prior to
December 31, 1998, and CenCor's Board of Directors receives a
legal opinion from its counsel or similar opinion from its
independent auditors that prepayment of the amount due
Berglund under this Section 6 will not give rise to "golden
parachute payment" under Internal Revenue Code ("IRC")
Section 280G, as then amended or interpreted or under any
similar IRC section, CenCor shall pay Berglund the amount due
under this Section 6 on the sixth month anniversary of the
closing of the sale.
<PAGE>
7. Payment Due to Continuous Employment. If Berglund
has been continuously employed with Century from the date of
this Agreement through December 31, 1998, and if payment is
not otherwise due under Section 5 or 6 hereof, Berglund shall
be entitled to benefits under this Section. In that event,
CenCor shall pay Berglund the difference between the per Unit
fair market value as of December 31, 1993 and the per Unit
fair market value as of December 31, 1998, multiplied by the
number of Units awarded to Berglund under Section 1, subject
to the ceiling set forth in Section 8. CenCor shall make any
payment required by this Section 7 on or before March 31, 1999,
subject to Section 9; provided that, if for any reason such
amount cannot be finally determined as of March 31, 1999,
CenCor will pay a preliminary amount mutually agreed upon by
the parties to Berglund on March 31, 1999 and any balance
shall be paid as soon as practicable thereafter that the per
Unit fair market value as of December 31, 1998 is determined
under Section 3, subject to Section 9.
8. Ceiling on Benefit Payments. In no event shall the
aggregate payments to Berglund under this Agreement exceed
the aggregate net income of Century for the fiscal years 1994
through the valuation date (which for purposes of Section 5
is the last month-end prior to Berglund's death, disability
or involuntary termination of his employment without cause,
for purposes of Section 6 is the closing date, and for
purposes of Section 7 is December 31, 1998). If such
valuation date is not a year end, the net income through such
valuation date shall equal (i) net income for the fiscal year
in which the valuation date arises, times (ii) the fraction
of such fiscal year transpiring before such valuation date.
Net income shall mean the after tax, pre-warrant net income
of Century for book purposes determined in accordance with
generally accepted accounting principles by Century's
independent auditors.
9. Deferral of Benefit Payment. Notwithstanding any
provision herein to the contrary, the provisions of this
Section 9 shall apply if, due to the application of Section
162(m) of the Internal Revenue Code of 1986 ("Code"), CenCor
or Century would be precluded from deducting for its taxable
year the full amount of any compensation to Berglund or any
payment required at the times provided in Section 5, 6 or 7
above. In such event, payment to Berglund hereunder shall be
made at the times specified in Section 5, 6 or 7, as the case
may be, but only to the extent a corresponding deduction is
not precluded by Code Section 162(m). Any remaining balance
shall be paid on the 30th day of CenCor's next-following
taxable year to the extent not disallowable as a deduction
under Code Section 162(m). Any still remaining balance shall
be paid on the 30th day of each following taxable year of
CenCor to the extent not disallowable as a deduction under
Code Section 162(m).
10. Forfeiture of Units.
Berglund shall forfeit Units awarded under this
Agreement, and any associated rights to payment hereunder,
if:
(1) Berglund terminates employment with Century
prior to January 1, 1999, for reasons other than death or
disability;
(2) Berglund is terminated "for cause" as defined
in Section 5(d); or
(3) Berglund violates the provisions of Section
13.
11. Dilution. In the event of a stock split, stock
dividend, reclassification, reorganization, or other capital
adjustment of shares of common stock of Century, the number
of Units awarded under Section 1 shall be adjusted in the
same manner as shares of Century's common stock reflected by
those Units would be adjusted. Any time money or assets are
paid into Century as equity or new shares are issued, the
formulas in Sections 5, 6 and 7 used to determine the amount
of the payments to Berglund shall be adjusted to assure the
formulas are fair to all parties.
<PAGE>
<PAGE>
12. Payments Upon Death. If Berglund dies before
receiving all amounts payable under this Agreement, the
unpaid amounts shall be paid to Berglund's beneficiary or
beneficiaries in accordance with this Section 12. Berglund
may, by written instrument delivered to CenCor, designate
primary and contingent beneficiaries to receive any amounts
which may be payable hereunder following Berglund's death,
and may designate the proportions in which such beneficiaries
are to receive such payments. Berglund may change such
designations from time to time in writing filed with CenCor.
If Berglund fails to designate a beneficiary or all designated
beneficiaries die before all payments hereunder are made, the
remaining payment shall be made to Berglund's estate.
1
13. Noncompetition.
(a) Until Berglund receives full payment of any benefits
provided in this Agreement, Berglund agrees that:
(1) Berglund will not, in any state of the United States in
which Century is doing business, directly or indirectly
engage in or own any interest in or act as an officer,
director, employee or consultation of any corporation,
company or other entity which directly or indirectly competes
with Century; (2) Berglund will not disclose any confidential
information of Century; and (3) Berglund will not recruit or
hire any employee, consultant or contractor of Century to
become an employee of or otherwise be associated with
Berglund or any company or business with which Berglund is
associated.
(b) In order to receive any payment pursuant to Section
7, Berglund shall agree in writing that for a period of two
(2) years commencing on January 1, 1999 and terminating on
December 31, 2000: (1) Berglund will not, in any state of the
United States in which Century is doing business, directly or
indirectly engage in or own any interest in or act as an
officer, director, employee or consultant of any corporation,
company or other entity which directly or indirectly competes
with Century; (2) Berglund will not disclose any confidential
information of Century; and (3) Berglund will not recruit or
hire any employee, consultant or contractor of Century to
become an employee of or otherwise be associated with
Berglund or any company or business with which Berglund is
associated.
(c) Berglund acknowledges that a remedy at law for any
breach of this Section would be inadequate and that
Corporation shall, in addition to its other remedies at law
or in equity, be entitled to injunctive relief. All of
CenCor's remedies for the breach of this Section shall be
cumulative and the pursuit of one remedy shall not be deemed
to exclude any and all other remedies.
(d) Berglund has carefully read and considered the
provisions of this Section and, having done so, agrees that
the restrictions set forth in this Section (including, but
not limited to, the time period and scope of such
restriction) are fair and reasonable and are reasonably
required for the protection of the interests of CenCor,
Century and their shareholders, directors, officers and other
employees.
(e) In the event that, notwithstanding the foregoing, any
of the provisions of this Section shall be held to be invalid
or unenforceable, the remaining provisions hereof shall
nevertheless continue to be valid and enforceable as though
the invalid or unenforceable parts had not been included
therein. In the event that any provision of this Section
relating to time period, area of restriction, and/or scope
shall be declared by a court of competent jurisdiction to
exceed the maximum time period, area or scope such court
deems reasonable and enforceable, said time period, area
and/or scope of restriction shall be deemed to become and
thereafter be the maximum time period, area and/or scope
which such court deems reasonable and enforceable.
14. Non-alienability. The rights of Berglund to the
payment of benefits as provided in this Agreement shall not
be assigned, transferred, pledged or encumbered or be subject
in any manner to alienation or anticipation. Berglund may
not borrow against his interest under the Agreement. No
interest or amounts payable under the Agreement shall be
subject in any manner to anticipation, alienation, sale,
transfer, assignment, pledge, encumbrance, charge,
garnishment, execution or levy of any kind, whether voluntary
or involuntary, including but not limited to, any liability
which is for alimony or other payments for the support of a
spouse or former spouse, or for any other relative of
Berglund.
15. No Employment Rights. Nothing contained herein shall
be construed as conferring upon Berglund the right to
continue in the employ of CenCor or Century as an executive
or in any other capacity.
<PAGE>
16. Withholding Payroll Taxes. To the extent required by
the laws in effect at the time payments hereunder are made,
CenCor shall withhold from such payments any taxes required
to be withheld for federal, state or local government
purposes.
17. Income Taxes. Berglund (or his beneficiary or
estate) shall be solely responsible for the payment of all
federal, state and local income taxes resulting from CenCor's
payment of benefits pursuant to this Agreement.
18. Successors and Assigns. The provisions of this
Agreement are binding upon and inure to the benefit of
CenCor, its successors and assigns, and Berglund, his
beneficiaries, heirs, and legal representatives.
19. Governing Law. This Agreement shall be subject to
and construed in accordance with the laws of the State of
Missouri.
IN WITNESS WHEREOF, this Agreement has been executed the
day and year first above written.
<TABLE>
<CAPTION>
CENCOR, INC.
<S> <C> <C>
Attest:
/s/ PATRICK F. HEALY By: /s/ JACK L. BROZMAN
_________________________ ____________________________
Title: President
</TABLE>
BERGLUND:
/s/ DENNIS C. BERGLUND
____________________________
Dennis Berglund
<PAGE>
<PAGE>
<TABLE>
EXHIBIT "A"
VALUATION OF CENTURY
DECEMBER 31, 1993
<CAPTION>
ASSETS
<S> <C>
Sales Price of Accounts Receivable $ 95,888,000
x Premium Factor x 1.075
___________
103,080,000
Cash 2,300,000
Other Accounts Receivable 1,000,000
___________
Total Assets 106,380,000
<CAPTION>
LIABILITIES
<S> <C>
Long Term Debt 83,930,000
Accounts Payable & Accrued Liabilities 2,997,000
Reserve Holdback 564,000
Estimated Prepayment Penalty 3,000,000
Estimated Cost of Sale 1,000,000
Accrued Interest on Long Term Debt *
Unearned Insurance 2,544,000
__________
Total Liabilities 94,035,000
__________
Total Value 12,345,000
==========
Value per Share (900,000 Shares) $13.72
======
</TABLE>
NOTES: * in accounts payable amount
<PAGE>
<PAGE>
EXHIBIT 10(i)
STOCK APPRECIATION AGREEMENT
THIS AGREEMENT is made and entered into this 4th day of
October, 1994, by and between CENCOR, INC., a Delaware
corporation ("CenCor") and PAT HEALY ("Healy").
WITNESSETH:
WHEREAS, Healy is the Vice President, Chief Financial
Officer and Treasurer of Century and CenCor;
WHEREAS, Century is a wholly-owned subsidiary of CenCor;
WHEREAS, CenCor directly benefits from the financial
success of Century;
WHEREAS, CenCor wishes to recognize and reward Healy for
his contributions to the present and future success of CenCor
and Century, encourage Healy to contribute to the future
success of CenCor and Century, and retain the valuable
services of Healy for the benefit of CenCor; and
WHEREAS, CenCor wishes to award, and Healy wishes to
accept, the award of stock appreciation units in accordance
with this Agreement.
NOW, THEREFORE, in consideration of the mutual promises,
covenants, and agreements contained herein, the parties agree
as follows:
1. Award of Stock Appreciation Units. CenCor hereby
awards Healy ten thousand (10,000) stock appreciation units
("Units") effective June 28, 1994. An additional ten
thousand (10,000) Units shall be awarded to Healy on June 28,
1995, provided the Healy is employed with CenCor or Century
on such date.
2. Nature of Units. The Units shall be used solely as a
device to determine the amount (if any) to be paid Healy
under this Agreement. The Units shall not constitute, or be
treated as, property or a trust fund of any kind. All
amounts at any time attributable to the Units shall be and
remain the sole property of CenCor. Healy's rights hereunder
are limited to the right to receive cash as provided in this
Agreement. The award of Units shall not create or give Healy
any rights as a shareholder of Century, including without
limitation, dividend, voting or stock ownership rights.
3. Valuation of Units.
(a) The parties agree the per Unit fair market value as
of December 31, 1993, is Thirteen and 72/100 Dollars ($13.72)
as calculated on Exhibit "A" to this Agreement, based upon a
seven and one-half percent (7.5%) premium on net accounts
receivable.
(b) The per Unit fair market value as of a subsequent
valuation date pursuant to Sections 5 or 7 shall be
determined by mutual agreement of CenCor's Board of Directors
and Healy or his legal representative, executor or guardian,
if Healy is deceased or incapacitated (herein his "Legal
Representative"), using the methodology set forth in Section
3(c). If the parties are unable to agree upon the per Unit
fair market value, a valuation shall be performed at CenCor's
expense by an independent third party appraiser jointly
selected by CenCor's Board of Directors and Healy (or his
Legal Representative) using the methodology set forth in
Section 3(c). If Healy (or his Legal Representative) and
CenCor's Board of Directors are unable to agree upon an
appraiser, CenCor's Board of Directors and Healy (or his
Legal Representative) shall each select an appraiser and
these two appraisers shall select the independent third party
appraiser to perform the valuation. The valuation rendered
by the independent third party appraiser shall be final and
binding on all parties.
<PAGE>
(c) The fair market value of one Unit on a subsequent
valuation date pursuant to Sections 5 or 7 shall be the fair
market value of one share of the common stock of Century on
that valuation date assuming a hypothetical sale of Century's
assets or stock as further defined in this Section 3(c). In
determining the fair market value, the assets and liabilities
of Century shall be determined in accordance with generally
accepted accounting principles, subject to the following:
(1) Net accounts receivable shall be gross
receivables minus unearned interest. For this purpose,
deferred fees shall not be subtracted from gross receiv-
ables in arriving at net accounts receivable.
(2) Net accounts receivable shall be valued at
their fair market value, assuming a premium of at least
five percent (5%) and not more than fifteen percent
(15%).
(3) Cash and other receivables shall be reflected
as assets, to be valued at face value minus reserves for
uncollectibility of the other receivables.
(4) Accounts receivable shall exclude retro
commissions on insurance.
(5) Fixed assets shall have no value and shall be
treated as being sold as part of Century's receivables
for no additional consideration.
(6) Prepaid expenses shall be treated as having
no value.
(7) Reserve holdbacks for monies owed a dealer
shall be treated as a liability of Century.
(8) All liabilities of Century are to be included
in the determination of fair market value.
(9) The determination of fair market value shall
be made on a pre-tax, pre-warrant basis.
(10) Fair market value shall include as a
liability the actual prepayment penalty on debt as of the
applicable valuation date. For purposes of the December
31, 1993 valuation, the parties agree the prepayment
penalty shall be deemed to be $3,000,000. For subsequent
valuations, the prepayment penalty shall be adjusted to
reflect the prepayment penalty in effect on the outstand-
ing debt as of that valuation date.
(11) Fair market value shall include as a
liability the estimated costs and fees which would be
incurred in the event CenCor sold substantially all of
its stock in Century or Century sold substantially all of
its assets. Such costs and fees shall include, without
limitation, legal and accounting fees, brokerage fees,
and lease termination expenses. For purposes of the
December 31, 1993 valuation, the parties agree such fees
shall be deemed to be $1,000,000. For subsequent
valuations, such fees shall be the amount mutually agreed
upon by the parties or established by the appraiser.
4. Events Triggering Healy's Right to Payment.
(a) As provided in Sections 5, 6 and 7 hereof, Healy
shall be entitled to payment under this Agreement upon the
earliest of the following events:
(1) Healy's termination of employment due to his
death or disability or termination by CenCor and Century
"without cause";
(2) the sale of Century as provided in Section 6;
or
(3) Healy's continuous employment with CenCor or
Century through December 31, 1998.
(b) Healy shall be entitled to payments under the
provisions of Section 5, 6 or 7; payments shall not be made
under more than one (1) such Section. Payments shall be
governed solely by Section 5, 6 or 7, as determined by the
earliest occurrence of the event entitling Healy to payment
under this Agreement.
<PAGE>
5. Payment Due to Death, Disability or Involuntary
Termination of Employment.
(a) If Healy's employment with CenCor and Century is
terminated prior to January 1, 1999 due to Healy's death or
disability, or is involuntarily terminated by CenCor and
Century "without cause," Healy shall be entitled to benefits
under this Section. In such event, CenCor shall pay to Healy
the difference between the per Unit fair market value as of
December 31, 1993 and the per Unit fair market value as of
the last month-end prior to such event multiplied by the
number of Units awarded to Healy under Section 1, subject to
the ceiling set forth in Section 8.
(b) Any payment required under Section 5(a) shall be made
on the six (6) month anniversary after the occurrence of
Healy's death or disability or termination of his employment
by CenCor and Century "without cause", as applicable, subject
to Section 9; provided that, if for any reason such amount
cannot be finally determined as of the sixth month
anniversary, CenCor will pay a preliminary amount mutually
agreed upon by the parties to Healy on the sixth month
anniversary and any balance due Healy under Section 5(a)
shall be made on the twelfth month anniversary, subject to
Section 9.
(c) Healy shall have a "disability" for purposes of this
Agreement only if Healy has been unable for a period of three
(3) consecutive months to perform his duties as an employee
of CenCor and Century due to a mental or physical illness or
injury as documented by a licensed physician selected by
CenCor's Board of Directors. For purposes of this Agreement,
the disability shall be deemed to have occurred on the last
day of the three (3) month period.
(d) For purposes of this Agreement, Healy's employment is
terminated for "cause" if such employment is terminated due
to:
(1) a conviction of, or a plea of guilty or nolo
contendere by, Healy to any felony or the commission of
any fraud, embezzlement, theft, dishonesty or other
criminal conduct; or
(2) a material breach by Healy of any employment
agreement with CenCor or Century; or
(3) gross negligence or material failure in the
performance of employment duties assigned to Healy by
CenCor's or Century's Board of Directors.
6. Payment Due to Century's Sale. If prior to December
31, 1998 CenCor sells substantially all of its stock in
Century or Century sells substantially all of its assets,
Healy shall be entitled to benefits under this Section. In
such event, CenCor shall pay Healy the difference between the
per Unit fair market value as of December 31, 1993 and the
per share liquidation value of the then issued and
outstanding shares of Century common stock multiplied by the
number of Units awarded to Healy under Section 1, subject to
the ceiling set forth in Section 8. For this purpose,
liquidation value shall mean the net proceeds received by
CenCor or Century, as the case may be, as a result of such
sale less, in the case of an asset sale, any liabilities
retained by Century. The amount payable under this Section 6
shall be paid to Healy, subject to Section 9, in a single sum
payment on the later of December 31, 1998 or thirty (30) days
after the closing of the sale; provided, however, CenCor's
Board of Directors may modify the time and form of payment if
sales proceeds or a portion thereof are paid by the buyer to
CenCor or Century after December 31, 1998. Any such
modification shall be consistent with the time and form of
payment by the buyer. If the closing of the sale of
substantially all of Century's stock by CenCor or the sale of
substantially all of Century's assets occurs prior to
December 31, 1998, and CenCor's Board of Directors receives a
legal opinion from its counsel or similar opinion from its
independent auditors that prepayment of the amount due Healy
under this Section 6 will not give rise to "golden parachute
payment" under Internal Revenue Code ("IRC") Section 280G, as
then amended or interpreted or under any similar IRC section,
CenCor shall pay Healy the amount due under this Section 6 on
the sixth month anniversary of the closing of the sale.
<PAGE>
<PAGE>
7. Payment Due to Continuous Employment. If Healy has
been continuously employed with CenCor or Century from the
date of this Agreement through December 31, 1998, and if
payment is not otherwise due under Section 5 or 6 hereof,
Healy shall be entitled to benefits under this Section. In
that event, CenCor shall pay Healy the difference between the
per Unit fair market value as of December 31, 1993 and the
per Unit fair market value as of December 31, 1998,
multiplied by the number of Units awarded to Healy under
Section 1, subject to the ceiling set forth in Section 8.
CenCor shall make any payment required by this Section 7 on
or before March 31, 1999, subject to Section 9; provided
that, if for any reason such amount cannot be
finally determined as of March 31, 1999, CenCor will pay a
preliminary amount mutually agreed upon by the parties to
Healy on March 31, 1999 and any balance shall be paid as soon
as practicable thereafter that the per Unit fair market value
as of December 31, 1998 is determined under Section 3,
subject to Section 9.
8. Ceiling on Benefit Payments. In no event shall the
aggregate payments to Healy under this Agreement exceed one
third (1/3) of the aggregate net income of Century for the
fiscal years 1994 through the valuation date (which for
purposes of Section 5 is the last month-end prior to Healy's
death, disability or involuntary termination of his
employment without cause, for purposes of Section 6 is the
closing date, and for purposes of Section 7 is December 31,
1998). If such valuation date is not a year end, the net
income through such valuation date shall equal (i) net income
for the fiscal year in which the valuation date arises, times
(ii) the fraction of such fiscal year transpiring before such
valuation date. Net income shall mean the after tax, pre-
warrant net income of Century for book purposes determined in
accordance with generally accepted accounting principles by
Century's independent auditors.
9. Deferral of Benefit Payment. Notwithstanding any
provision herein to the contrary, the provisions of this
Section 9 shall apply if, due to the application of Section
162(m) of the Internal Revenue Code of 1986 ("Code"), CenCor
or Century would be precluded from deducting for its taxable
year the full amount of any compensation to Healy or any
payment required at the times provided in Section 5, 6 or 7
above. In such event, payment to Healy hereunder shall be
made at the times specified in Section 5, 6 or 7, as the case
may be, but only to the extent a corresponding deduction is
not precluded by Code Section 162(m). Any remaining balance
shall be paid on the 30th day of CenCor's next-following
taxable year to the extent not disallowable as a deduction
under Code Section 162(m). Any still remaining balance shall
be paid on the 30th day of each following taxable year of
CenCor to the extent not disallowable as a deduction under
Code Section 162(m).
10. Forfeiture of Units.
Healy shall forfeit Units awarded under this Agreement,
and any associated rights to payment hereunder, if:
(1) Healy terminates employment with Century
prior to January 1, 1999, for reasons other than death or
disability;
(2) Healy is terminated "for cause" as defined in
Section 5(d); or
(3) Healy violates the provisions of Section 13.
11. Dilution. In the event of a stock split, stock
dividend, reclassification, reorganization, or other capital
adjustment of shares of common stock of Century, the number
of Units awarded under Section 1 shall be adjusted in the
same manner as shares of Century's common stock reflected by
those Units would be adjusted. Any time money or assets are
paid into Century as equity or new shares are issued, the
formulas in Sections 5, 6 and 7 used to determine the amount
of the payments to Healy shall be adjusted to assure the
formulas are fair to all parties.
12. Payments Upon Death. If Healy dies before receiving
all amounts payable under this Agreement, the unpaid amounts
shall be paid to Healy's beneficiary or beneficiaries in
accordance with this Section 12. Healy may, by written
instrument delivered to CenCor, designate primary and
contingent beneficiaries to receive any amounts which may be
payable hereunder following Healy's death, and may designate
the proportions in which such beneficiaries are to receive
such payments. Healy may change such designations from time
to time in writing filed with CenCor. If Healy fails to
designate a beneficiary or all designated beneficiaries die
before all payments hereunder are made, the remaining payment
shall be made to Healy's estate.
<PAGE>
13. Noncompetition.
(a) Until Healy receives full payment of any benefits
provided in this Agreement, Healy agrees that: (1) Healy will
not, in any state of the United States in which CenCor or
Century is doing business, directly or indirectly engage in
or own any interest in or act as an officer, director,
employee or consultation of any corporation, company or other
entity which directly or indirectly competes with CenCor or
Century; (2) Healy will not disclose any confidential
information of CenCor or Century; and
(3) Healy will not recruit or hire any employee, consultant
or contractor of CenCor or Century to become an employee of
or otherwise be associated with Healy or any company or
business with which Healy is associated.
(b) In order to receive any payment pursuant to Section
7, Healy shall agree in writing that for a period of two (2)
years commencing on January 1, 1999 and terminating on
December 31, 2000: (1) Healy will not, in any state of the
United States in which CenCor or Century is doing business,
directly or indirectly engage in or own any interest in or
act as an officer, director, employee or consultant of any
corporation, company or other entity which directly or
indirectly competes with CenCor or Century; (2) Healy will
not disclose any confidential information of CenCor or
Century; and (3) Healy will not recruit or hire any employee,
consultant or contractor of CenCor or Century to become an
employee of or otherwise be associated with Healy or any
company or business with which Healy is associated.
(c) Healy acknowledges that a remedy at law for any
breach of this Section would be inadequate and that CenCor
shall, in addition to its other remedies at law or in equity,
be entitled to injunctive relief. All of CenCor's remedies
for the breach of this Section shall be cumulative and the
pursuit of one remedy shall not be deemed to exclude any and
all other remedies.
(d) Healy has carefully read and considered the
provisions of this Section and, having done so, agrees that
the restrictions set forth in this Section (including, but
not limited to, the time period and scope of such
restriction) are fair and reasonable and are reasonably
required for the protection of the interests of CenCor,
Century and their shareholders, directors, officers and other
employees.
(e) In the event that, notwithstanding the foregoing, any
of the provisions of this Section shall be held to be invalid
or unenforceable, the remaining provisions hereof shall
nevertheless continue to be valid and enforceable as though
the invalid or unenforceable parts had not been included
therein. In the event that any provision of this Section
relating to time period, area of restriction, and/or scope
shall be declared by a court of competent jurisdiction to
exceed the maximum time period, area or scope such court
deems reasonable and enforceable, said time period, area
and/or scope of restriction shall be deemed to become and
thereafter be the maximum time period, area and/or scope
which such court deems reasonable and enforceable.
14. Non-alienability. The rights of Healy to the payment
of benefits as provided in this Agreement shall not be
assigned, transferred, pledged or encumbered or be subject in
any manner to alienation or anticipation. Healy may not
borrow against his interest under the Agreement. No interest
or amounts payable under the Agreement shall be subject in
any manner to anticipation, alienation, sale, transfer,
assignment, pledge, encumbrance, charge, garnishment,
execution or levy of any kind, whether voluntary or
involuntary, including but not limited to, any liability
which is for alimony or other payments for the support of a
spouse or former spouse, or for any other relative of Healy.
15. No Employment Rights. Nothing contained herein shall
be construed as conferring upon Healy the right to continue
in the employ of CenCor or Century as an executive or in any
other capacity.
16. Withholding Payroll Taxes. To the extent required by
the laws in effect at the time payments hereunder are made,
CenCor shall withhold from such payments any taxes required
to be withheld for federal, state or local government
purposes.
17. Income Taxes. Healy (or his beneficiary or estate)
shall be solely responsible for the payment of all federal,
state and local income taxes resulting from CenCor's payment
of benefits pursuant to this Agreement.
18. Successors and Assigns. The provisions of this
Agreement are binding upon and inure to the benefit of
CenCor, its successors and assigns, and Healy, his beneficia-
ries, heirs, and legal representatives.
<PAGE>
19. Governing Law. This Agreement shall be subject to
and construed in accordance with the laws of the State of
Missouri.
IN WITNESS WHEREOF, this Agreement has been executed the
day and year first above written.
<TABLE>
<CAPTION>
CENCOR, INC.
Attest:
<S> <C> <C>
/s/ LISA M. HENAK By: /s/ JACK L. BROZMAN
_________________________ ____________________________
Title: President
HEALY:
/s/ PATRICK F. HEALY
___________________________
Pat Healy
</TABLE>
<PAGE>
<PAGE>
<TABLE>
EXHIBIT "A"
VALUATION OF CENTURY
DECEMBER 31, 1993
<CAPTION>
ASSETS
<S> <C>
Sales Price of Accounts Receivable $ 95,888,000
x Premium Factor x 1.075
___________
103,080,000
___________
Cash 2,300,000
Other Accounts Receivable 1,000,000
___________
Total Assets 106,380,000
<CAPTION>
LIABILITIES
<S> <C>
Long Term Debt 83,930,000
Accounts Payable & Accrued Liabilities 2,997,000
Reserve Holdback 564,000
Estimated Prepayment Penalty 3,000,000
Estimated Cost of Sale 1,000,000
Accrued Interest on Long Term Debt *
Unearned Insurance 2,544,000
__________
Total Liabilities 94,035,000
__________
Total Value 12,345,000
==========
Value per Share (900,000 Shares) $13.72
=====
</TABLE>
NOTES: * in accounts payable amount
<PAGE>
<PAGE>
STOCK APPRECIATION AGREEMENT
THIS AGREEMENT is made and entered into this 4th day of
October, 1994, by and between CENCOR, INC., a Delaware
corporation ("CenCor") and JACK BROZMAN ("Brozman").
WITNESSETH:
WHEREAS, Brozman is the President and Chairman of the
Board of Directors of CenCor and the Chairman of the Board of
Directors of Century Acceptance Corporation ("Century");
WHEREAS, Century is a wholly-owned subsidiary of CenCor;
WHEREAS, CenCor directly benefits from the financial
success of Century;
WHEREAS, CenCor wishes to recognize and reward Brozman
for his contributions to the present and future success of
CenCor and Century, encourage Brozman to contribute to the
future success of CenCor and Century, and retain the valuable
services of Brozman for the benefit of CenCor; and
WHEREAS, CenCor wishes to award, and Brozman wishes to
accept, the award of stock appreciation units in accordance
with this Agreement.
NOW, THEREFORE, in consideration of the mutual promises,
covenants, and agreements contained herein, the parties agree
as follows:
1. Award of Stock Appreciation Units. CenCor hereby
awards Brozman fifteen thousand (15,000) stock appreciation
units ("Units") effective June 28, 1994. An additional
fifteen thousand (15,000) Units shall be awarded to Brozman
on June 28, 1995, provided the Brozman is employed with
CenCor or Century on such date.
2. Nature of Units. The Units shall be used solely as a
device to determine the amount (if any) to be paid Brozman
under this Agreement. The Units shall not constitute, or be
treated as, property or a trust fund of any kind. All
amounts at any time attributable to the Units shall be and
remain the sole property of CenCor. Brozman's rights
hereunder are limited to the right to receive cash as
provided in this Agreement. The award of Units shall not
create or give Brozman any rights as a shareholder of
Century, including without limitation, dividend, voting or
stock ownership rights.
3. Valuation of Units.
(a) The parties agree the per Unit fair market value as
of December 31, 1993, is Thirteen and 72/100 Dollars ($13.72)
as calculated on Exhibit "A" to this Agreement, based upon a
seven and one-half percent (7.5%) premium on net accounts
receivable.
(b) The per Unit fair market value as of a subsequent
valuation date pursuant to Sections 5 or 7 shall be
determined by mutual agreement of CenCor's Board of Directors
and Brozman or his legal representative, executor or
guardian, if Brozman is deceased or incapacitated (herein his
"Legal Representative"), using the methodology set forth in
Section 3(c). If the parties are unable to agree upon the
per Unit fair market value, a valuation shall be performed at
CenCor's expense by an independent third party appraiser
jointly selected by CenCor's Board of Directors and Brozman
(or his Legal Representative) using the methodology set forth
in Section 3(c). If Brozman (or his Legal Representative)
and CenCor's Board of Directors are unable to agree upon an
appraiser, CenCor's Board of Directors and Brozman (or his
Legal Representative) shall each select an appraiser and
these two appraisers shall select the independent third party
appraiser to perform the valuation. The valuation rendered
by the independent third party appraiser shall be final and
binding on all parties.
<PAGE>
<PAGE>
(c) The fair market value of one Unit on a subsequent
valuation date pursuant to Sections 5 or 7 shall be the fair
market value of one share of the common stock of Century on
that valuation date assuming a hypothetical sale of Century's
assets or stock as further defined in this Section 3(c). In
determining the fair market value, the assets and liabilities
of Century shall be determined in accordance with generally
accepted accounting principles, subject to the following:
(1) Net accounts receivable shall be gross
receivables minus unearned interest. For this purpose,
deferred fees shall not be subtracted from gross receiv-
ables in arriving at net accounts receivable.
(2) Net accounts receivable shall be valued at
their fair market value, assuming a premium of at least
five percent (5%) and not more than fifteen percent
(15%).
(3) Cash and other receivables shall be reflected
as assets, to be valued at face value minus reserves for
uncollectibility of the other receivables.
(4) Accounts receivable shall exclude retro
commissions on insurance.
(5) Fixed assets shall have no value and shall be
treated as being sold as part of Century's receivables
for no additional consideration.
(6) Prepaid expenses shall be treated as having
no value.
(7) Reserve holdbacks for monies owed a dealer
shall be treated as a liability of Century.
(8) All liabilities of Century are to be included
in the determination of fair market value.
(9) The determination of fair market value shall
be made on a pre-tax, pre-warrant basis.
(10) Fair market value shall include as a
liability the actual prepayment penalty on debt as of the
applicable valuation date. For purposes of the December
31, 1993 valuation, the parties agree the prepayment
penalty shall be deemed to be $3,000,000. For subsequent
valuations, the prepayment penalty shall be adjusted to
reflect the prepayment penalty in effect on the outstand-
ing debt as of that valuation date.
(11) Fair market value shall include as a
liability the estimated costs and fees which would be
incurred in the event CenCor sold substantially all of
its stock in Century or Century sold substantially all of
its assets. Such costs and fees shall include, without
limitation, legal and accounting fees, brokerage fees,
and lease termination expenses. For purposes of the
December 31, 1993 valuation, the parties agree such fees
shall be deemed to be $1,000,000. For subsequent
valuations, such fees shall be the amount mutually agreed
upon by the parties or established by the appraiser.
4. Events Triggering Brozman's Right to Payment.
(a) As provided in Sections 5, 6 and 7 hereof, Brozman
shall be entitled to payment under this Agreement upon the
earliest of the following events:
(1) Brozman's termination of employment due to
his death or disability or termination by CenCor and
Century "without cause";
(2) the sale of Century as provided in Section 6;
or
(3) Brozman's continuous employment with CenCor
or Century through December 31, 1998.
<PAGE>
<PAGE>
(b) Brozman shall be entitled to payments under the
provisions of Section 5, 6 or 7; payments shall not be made
under more than one (1) such Section. Payments shall be
governed solely by Section 5, 6 or 7, as determined by the
earliest occurrence of the event entitling Brozman to payment
under this Agreement.
5. Payment Due to Death, Disability or Involuntary
Termination of Employment.
(a) If Brozman's employment with CenCor and Century is
terminated prior to January 1, 1999 due to Brozman's death or
disability, or is involuntarily terminated by CenCor and
Century "without cause," Brozman shall be entitled to
benefits under this Section. In such event, CenCor shall pay
to Brozman the difference between the per Unit fair market
value as of December 31, 1993 and the per Unit fair market
value as of the last month-end prior to such event multiplied
by the number of Units awarded to Brozman under Section 1,
subject to the ceiling set forth in Section 8.
(b) Any payment required under Section 5(a) shall be made
on the six (6) month anniversary after the occurrence of
Brozman's death or disability or termination of his
employment by CenCor and Century "without cause", as
applicable, subject to Section 9; provided that, if for any
reason such amount cannot be finally determined as of the
sixth month anniversary, CenCor will pay a preliminary amount
mutually agreed upon by the parties to Brozman on the sixth
month anniversary and any balance due Brozman under Section
5(a) shall be made on the twelfth month anniversary, subject
to Section 9.
(c) Brozman shall have a "disability" for purposes of
this Agreement only if Brozman has been unable for a period
of three (3) consecutive months to perform his duties as an
employee of CenCor and Century due to a mental or physical
illness or injury as documented by a licensed physician
selected by CenCor's Board of Directors. For purposes of
this Agreement, the disability shall be deemed to have
occurred on the last day of the three (3) month period.
(d) For purposes of this Agreement, Brozman's employment
is terminated for "cause" if such employment is terminated
due to:
(1) a conviction of, or a plea of guilty or nolo
contendere by, Brozman to any felony or the commission of
any fraud, embezzlement, theft, dishonesty or other
criminal conduct; or
(2) a material breach by Brozman of any
employment agreement with CenCor or Century; or
(3) gross negligence or material failure in the
performance of employment duties assigned to Brozman by
CenCor's or Century's Board of Directors.
6. Payment Due to Century's Sale. If prior to December
31, 1998 CenCor sells substantially all of its stock in
Century or Century sells substantially all of its assets,
Brozman shall be entitled to benefits under this Section. In
such event, CenCor shall pay Brozman the difference between
the per Unit fair market value as of December 31, 1993 and
the per share liquidation value of the then issued and
outstanding shares of Century common stock multiplied by the
number of Units awarded to Brozman under Section 1, subject
to the ceiling set forth in Section 8. For this purpose,
liquidation value shall mean the net proceeds received by
CenCor or Century, as the case may be, as a result of such
sale less, in the case of an asset sale, any liabilities
retained by Century. The amount payable under this Section 6
shall be paid to Brozman, subject to Section 9, in a single
sum payment on the later of December 31, 1998 or thirty (30)
days after the closing of the sale; provided, however,
CenCor's Board of Directors may modify the time and form of
payment if sales proceeds or a portion thereof are paid by
the buyer to CenCor or Century after December 31, 1998. Any
such modification shall be consistent with the time and form
of payment by the buyer. If the closing of the sale of
substantially all of Century's stock by CenCor or the sale of
substantially all of Century's assets occurs prior to
December 31, 1998, and CenCor's Board of Directors receives a
legal opinion from its counsel or similar opinion from its
independent auditors that prepayment of the amount due
Brozman under this Section 6 will not give rise to "golden
parachute payment" under Internal Revenue Code ("IRC")
Section 280G, as then amended or interpreted or under any
similar IRC section, CenCor shall pay Brozman the amount due
under this Section 6 on the sixth month anniversary of the
closing of the sale.
<PAGE>
<PAGE>
7. Payment Due to Continuous Employment. If Brozman has
been continuously employed with CenCor or Century from the
date of this Agreement through December 31, 1998, and if
payment is not otherwise due under Section 5 or 6 hereof,
Brozman shall be entitled to benefits under this Section. In
that event, CenCor shall pay Brozman the difference between
the per Unit fair market value as of December 31, 1993 and
the per Unit fair market value as of December 31, 1998,
multiplied by the number of Units awarded to Brozman under
Section 1, subject to the ceiling set forth in Section 8.
CenCor shall make any payment required by this Section 7 on
or before March 31, 1999, subject to Section 9; provided
that, if for any reason such amount cannot be finally
determined as of March 31, 1999, CenCor will pay a
preliminary amount mutually agreed upon by the parties to
Brozman on March 31, 1999 and any balance shall be paid as
soon as practicable thereafter that the per Unit fair market
value as of December 31, 1998 is determined under Section 3,
subject to Section 9.
8. Ceiling on Benefit Payments. In no event shall the
aggregate payments to Brozman under this Agreement exceed
fifty percent (50%) of the aggregate net income of Century
for the fiscal years 1994 through the valuation date (which
for purposes of Section 5 is the last month-end prior to
Brozman's death, disability or involuntary termination of his
employment without cause, for purposes of Section 6 is the
closing date, and for purposes of Section 7 is December 31,
1998). If such valuation date is not a year end, the net
income through such valuation date shall equal (i) net income
for the fiscal year in which the valuation date arises, times
(ii) the fraction of such fiscal year transpiring before such
valuation date. Net income shall mean the after tax, pre-
warrant net income of Century for book purposes determined in
accordance with generally accepted accounting principles by
Century's independent auditors.
9. Deferral of Benefit Payment. Notwithstanding any
provision herein to the contrary, the provisions of this
Section 9 shall apply if, due to the application of Section
162(m) of the Internal Revenue Code of 1986 ("Code"), CenCor
or Century would be precluded from deducting for its taxable
year the full amount of any compensation to Brozman or any
payment required at the times provided in Section 5, 6 or 7
above. In such event, payment to Brozman hereunder shall be
made at the times specified in Section 5, 6 or 7, as the case
may be, but only to the extent a corresponding deduction is
not precluded by Code Section 162(m). Any remaining balance
shall be paid on the 30th day of CenCor's next-following
taxable year to the extent not disallowable as a deduction
under Code Section 162(m). Any still remaining balance shall
be paid on the 30th day of each following taxable year of
CenCor to the extent not disallowable as a deduction under
Code Section 162(m).
10. Forfeiture of Units.
Brozman shall forfeit Units awarded under this Agreement,
and any associated rights to payment hereunder, if:
(1) Brozman terminates employment with Century
prior to January 1, 1999, for reasons other than death or
disability;
(2) Brozman is terminated "for cause" as defined
in Section 5(d); or
(3) Brozman violates the provisions of Section
13.
11. Dilution. In the event of a stock split, stock
dividend, reclassification, reorganization, or other capital
adjustment of shares of common stock of Century, the number
of Units awarded under Section 1 shall be adjusted in the
same manner as shares of Century's common stock reflected by
those Units would be adjusted. Any time money or assets are
paid into Century as equity or new shares are issued, the
formulas in Sections 5, 6 and 7 used to determine the amount
of the payments to Brozman shall be adjusted to assure the
formulas are fair to all parties.
12. Payments Upon Death. If Brozman dies before
receiving all amounts payable under this Agreement, the
unpaid amounts shall be paid to Brozman's beneficiary or
beneficiaries in accordance with this Section 12. Brozman
may, by written instrument delivered to CenCor, designate
primary and contingent beneficiaries to receive any amounts
which may be payable hereunder following Brozman's death, and
may designate the proportions in which such beneficiaries are
to receive such payments. Brozman may change such designa-
tions from time to time in writing filed with CenCor. If
Brozman fails to designate a beneficiary or all designated
beneficiaries die before all payments hereunder are made, the
remaining payment shall be made to Brozman's estate.<PAGE>
<PAGE>
13. Noncompetition.
(a) Until Brozman receives full payment of any benefits
provided in this Agreement, Brozman agrees that: (1) Brozman
will not, in any state of the United States in which CenCor
or Century is doing business, directly or indirectly engage
in or own any interest in or act as an officer, director,
employee or consultation of any corporation, company or other
entity which directly or indirectly competes with CenCor or Century;
(2) Brozman will not disclose any confidential information of CenCor or
Century; and (3) Brozman will not recruit or hire any
employee, consultant or contractor of CenCor or Century to
become an employee of or otherwise be associated with Brozman
or any company or business with which Brozman is associated.
(b) In order to receive any payment pursuant to Section
7, Brozman shall agree in writing that for a period of two
(2) years commencing on January 1, 1999 and terminating on
December 31, 2000: (1) Brozman will not, in any state of the
United States in which CenCor or Century is doing business,
directly or indirectly engage in or own any interest in or
act as an officer, director, employee or consultant of any
corporation, company or other entity which directly or
indirectly competes with CenCor or Century; (2) Brozman will
not disclose any confidential information of CenCor or
Century; and (3) Brozman will not recruit or hire any
employee, consultant or contractor of CenCor or Century to
become an employee of or otherwise be associated with Brozman
or any company or business with which Brozman is associated.
(c) Brozman acknowledges that a remedy at law for any
breach of this Section would be inadequate and that CenCor
shall, in addition to its other remedies at law or in equity,
be entitled to injunctive relief. All of CenCor's remedies
for the breach of this Section shall be cumulative and the
pursuit of one remedy shall not be deemed to exclude any and
all other remedies.
(d) Brozman has carefully read and considered the
provisions of this Section and, having done so, agrees that
the restrictions set forth in this Section (including, but
not limited to, the time period and scope of such
restriction) are fair and reasonable and are reasonably
required for the protection of the interests of CenCor,
Century and their shareholders, directors, officers and other
employees.
(e) In the event that, notwithstanding the foregoing, any
of the provisions of this Section shall be held to be invalid
or unenforceable, the remaining provisions hereof shall
nevertheless continue to be valid and enforceable as though
the invalid or unenforceable parts had not been included
therein. In the event that any provision of this Section
relating to time period, area of restriction, and/or scope
shall be declared by a court of competent jurisdiction to
exceed the maximum time period, area or scope such court
deems reasonable and enforceable, said time period, area
and/or scope of restriction shall be deemed to become and
thereafter be the maximum time period, area and/or scope
which such court deems reasonable and enforceable.
14. Non-alienability. The rights of Brozman to the
payment of benefits as provided in this Agreement shall not
be assigned, transferred, pledged or encumbered or be subject
in any manner to alienation or anticipation. Brozman may not
borrow against his interest under the Agreement. No interest
or amounts payable under the Agreement shall be subject in
any manner to anticipation, alienation, sale, transfer,
assignment, pledge, encumbrance, charge, garnishment,
execution or levy of any kind, whether voluntary or
involuntary, including but not limited to, any liability
which is for alimony or other payments for the support of a
spouse or former spouse, or for any other relative of
Brozman.
15. No Employment Rights. Nothing contained herein shall
be construed as conferring upon Brozman the right to continue
in the employ of CenCor or Century as an executive or in any
other capacity.
16. Withholding Payroll Taxes. To the extent required by
the laws in effect at the time payments hereunder are made,
CenCor shall withhold from such payments any taxes required
to be withheld for federal, state or local government
purposes.
17. Income Taxes. Brozman (or his beneficiary or estate)
shall be solely responsible for the payment of all federal,
state and local income taxes resulting from CenCor's payment
of benefits pursuant to this Agreement.
18. Successors and Assigns. The provisions of this
Agreement are binding upon and inure to the benefit of
CenCor, its successors and assigns, and Brozman, his
beneficiaries, heirs, and legal representatives.<PAGE>
<PAGE>
19. Governing Law. This Agreement shall be subject to
and construed in accordance with the laws of the State of
Missouri.
IN WITNESS WHEREOF, this Agreement has been executed the
day and year first above written.
<TABLE>
<CAPTION>
CENCOR, INC.
Attest:
<S> <C> <C>
/s/ LISA HENAK By: /s/ PATRICK F. HEALY
______________________ _______________________________
Title: Chief Financial Officer
BROZMAN:
/s/ JACK L. BROZMAN
______________________________
Jack Brozman
</TABLE>
<PAGE>
<PAGE>
<TABLE>
EXHIBIT "A"
VALUATION OF CENTURY
DECEMBER 31, 1993
<CAPTION>
ASSETS
<S> <C>
Sales Price of Accounts Receivable $ 95,888,000
x Premium Factor x 1.075
___________
103,080,000
Cash 2,300,000
Other Accounts Receivable 1,000,000
Total Assets 106,380,000
<CAPTION>
LIABILITIES
<S> <C>
Long Term Debt 83,930,000
Accounts Payable & Accrued Liabilities 2,997,000
Reserve Holdback 564,000
Estimated Prepayment Penalty 3,000,000
Estimated Cost of Sale 1,000,000
Accrued Interest on Long Term Debt *
Unearned Insurance 2,544,000
__________
Total Liabilities 94,035,000
__________
Total Value 12,345,000
==========
Value per Share (900,000 Shares) $13.72
=====
</TABLE>
NOTES: * in accounts payable amount
<PAGE>
<PAGE>
EXHIBIT 10(k)
MINUTES OF THE MEETING OF
THE COMPENSATION COMMITTEE OF THE
BOARD OF DIRECTORS OF CENCOR, INC.
By consent and upon waiver of all of the members of the
Compensation Committee of the Board of Directors of CenCor,
Inc., a Delaware corporation (the "Corporation"), a Meeting
was called to order on February 17, 1995 at 1:00 p.m. CDT for
the purpose of reviewing the separate Stock Appreciation
Agreements between the Corporation and Dennis C. Berglund,
Patrick F. Healy and Jack Brozman.
Chairman Marvin Riesenbach, Committee member Edward
Bauer and, at their request, Lisa M. Schultes participated in
the meeting via telephone conference. The Chairman had
contacted the only other member of the Committee, George
Bernstein, and had received Mr. Bernstein's proxy to vote in
favor of the proposed resolutions affecting the Stock
Appreciation Agreements.
Upon motion by the Chairman, seconded by Mr. Bauer, the
following resolutions were adopted:
RESOLVED, that the 30,000 Units to be awarded
to Dennis Berglund on June 28, 1995, the 15,000
Units to be awarded to Jack Brozman on June 28,
1995 and the 10,000 Units to be awarded to Patrick
Healy on June 28, 1995 be accelerated and instead
be awarded as of March 1, 1995;
FURTHER RESOLVED, that in consideration of an
agreement by Patrick Healy to (i) provide
consulting services to the Corporation and its
wholly owned subsidiary, Century Acceptance
Corporation, including without limitation, with
respect to financial matters, compliance with loan
covenants and the pursuit of claims against third
parties and (ii) serve as the Corporation's
representative on the Board of Directors of Century
Acceptance Corporation, the Corporation agrees that
Healy continue to be entitled to the (benefits
under Section 6 of his Stock Appreciation Agreement
thru December 31, 1995) provided that Century
Acceptance Corporation is sold on or before
December 31, 1995.
There being no further business to come before the
meeting, the same was duly adjourned.
Dated as of the 16th day of February, 1995.
/s/ LISA M. SCHULTES
_______________________________
LISA M. SCHULTES
SECRETARY OF THE MEETING
APPROVED:
/s/ Marvin Riesenbach
__________________________
MARVIN RIESENBACH
CHAIRMAN OF THE MEETING
<PAGE>
<PAGE>
Exhibit 10(l)
MUTUAL RELEASE
This Mutual Release (the "Release") is entered into this
14th day of February, 1995, by and between First Portland
Corporation (formerly First Portland Technology Corp., and
successor in interest to First Portland Leasing Corp.), FP
Holdings, Inc. (formerly First Portland Corporation), Leonard
and Sharlene Ludwig (the "Ludwigs"), Arthur and Phyllis
Levinson (the "Levinsons"), CEL-CEN Corp. ("CEL-CEN",
formerly Charter Equipment Leasing Corp.), and CenCor, Inc.
("CenCor").
RECITALS:
WHEREAS, First Portland Corporation and CEL-CEN entered
into an Asset Purchase Agreement (the "Agreement") on
November 6th, 1992, which provided for the purchase by First
Portland Corporation of certain assets from CEL-CEN; and
WHEREAS, CenCor guaranteed CEL-CEN's performance of its
duties, obligations, agreements, covenants, representations
and warranties under the Agreement; and
WHEREAS, in addition to other amounts due under the
Agreement, First Portland was to pay CEL-CEN $750,000.00
pursuant to a promissory note (the "Promissory Note")
executed on November 6, 1994; and
WHEREAS, FP Holdings, Inc., First Portland Corporation,
the Ludwigs and the Levinsons guaranteed First Portland
Corporation's performance of its obligations under the
Promissory Note; and
WHEREAS, the Agreement provided that the parties' rights
to claims, indemnification for damages, and offsets arising
out of breach of the representations, warranties and
covenants under the Agreement would survive as to only those
claims of which the indemnifying party received notice on or
before April 30, 1997; and
WHEREAS, First Portland Corporation has made claims for
offsets under paragraphs 9.1-9.5 of the Agreement, and CEL-
CEN has disputed those claims in part; and
WHEREAS, the parties wish to resolve substantially all
existing and future liabilities under the Agreement at this
time
;
NOW THEREFORE,
THE PARTIES HEREBY AGREE AS FOLLOWS:
20. The above recitals are hereby incorporated into this
Release.
<PAGE>
21. The "Agreement", as used herein, shall be construed to
include the Agreement itself, the Supplemental Closing Agree-
ment dated November 6, 1992, the Second Supplemental Closing
Agreement dated November 6, 1992, and all exhibits and sched-
ules executed in relation to or in conjunction with the
Agreement.
22. CEL-CEN acknowledges its receipt of First Portland
Corporation's checks in an amount totaling $767,669.58,
representing payment in full of any and all outstanding
subordinated debt, including both principle and interest,
owed by First Portland Corporation to CEL-CEN under the
Agreement and under the Promissory Note.
23. CEL-CEN and CenCor represent and warrant that the sales
and other taxes provided for under paragraph 6 of the
Agreement have been paid by CEL-CEN as required under the
Agreement. First Portland Corporation releases CEL-CEN and
CenCor from any obligation to pay to First Portland
Corporation the different between the taxes paid and
$100,000.00.
24. The parties do hereby release and forever discharge each
other and each of their respective past and present
directors, officers, managers, shareholders, partners,
agents, attorneys, assigns, employees, servants, successors,
predecessors, subsidiaries, divisions, affiliates, and each
of them separately and collectively from any and all actions,
causes of action, claims, suits, debts, charges, obligations,
promises, agreements, controversies, damages, liabilities,
expenses (including attorneys fees and costs) and demands
for, upon or by reason of any damage, loss or injury, arising
directly or indirectly, which heretofore has been or which
may hereafter be sustained by the parties arising out of or
in relation to or in any way connected with or arising out of
the Agreement, the Promissory Note or the guaranties of
CenCor, Ludwigs and Levinsons relating thereto (the
"Guaranties"). This release extends, applies to, and covers
all unknown and unforeseen and unexpected injuries, damages,
loss, and liability, and all consequences thereof, as well as
those now disclosed or known to exist, except as provided in
sections 6 and 7, below.
25. Notwithstanding the provisions of section 5 hereof, the
parties agree that the Release will not relieve or release
any of the parties of their obligations under paragraph 5.2
of the Agreement.
26. Notwithstanding the provisions of section 5 hereof, the
parties agree that the Release will not relieve or release
any of the parties from their obligations relating to the
Non-Competition Agreement entered into between CEL-CEN,
CenCor and First Portland Corporation on November 6, 1992.
<PAGE>
<PAGE>
27. Notwithstanding the provisions of Section 5 hereof, the
parties agree that the Release will not relieve or release
First Portland Corporation's obligations under the
Undertaking and Assumption Agreement dated November 6, 1992,
nor FP Holdings, Inc.'s guaranty of these obligations.
28. This Agreement shall be deemed to have been made and
shall be construed in accordance to the laws of the State of
Oregon.
29. Any lawsuits or actions for any and every breach hereof
shall be instituted and maintained in Multnomah County, State
of Oregon.
30. This Agreement is the final agreement pertaining to the
mutual release by the parties of one another in relation to
their obligations and liabilities under the Agreement, the
Promissory Note, and the Guaranties.
IN WITNESS WHEREOF, the parties have executed this
Agreement as of the date first above-written.
<TABLE>
<CAPTION>
CENCOR: CEL-CEN:
CENCOR, INC. CEL-CEN CORP.
<S> <C> <C> <C>
By: /s/ PATRICK F. HEALY By: /s/ PATRICK F. HEALY
___________________________ ___________________________
Title CFO Title Vice President
<CAPTION>
FIRST PORTLAND CORPORATION: F P HOLDINGS, INC.:
<S> <C> <C> <C>
By: /s/ LEONARD LUDWIG By: /s/ LEONARD LUDWIG
___________________________ ___________________________
Title President Title
<CAPTION>
LEVINSONS: LUDWIGS:
<S> <C>
/s/ PHYLLIS LEVINSON /s/ SHARLENE LUDWIG
___________________________ ___________________________
Phyllis Levinson Sharlene Ludwig
/s/ ARTHUR LEVINSON /s/ LEONARD LUDWIG
___________________________ ___________________________
Arthur Levinson Leonard Ludwig
</TABLE>
<PAGE>
<PAGE>
EXHIBIT 10(m)
SECOND AMENDMENT
TO THE
RESTRUCTURING, SECURITY AND GUARANTY AGREEMENT
THIS AGREEMENT, made and entered into as of the 15th day
of November, 1994, (the "Second Amendment") by and among
CENCOR, INC., a Delaware corporation ("CenCor"); CONCORDE
CAREER COLLEGES, INC., a Delaware corporation ("Concorde");
MINNESOTA INSTITUTE OF MEDICAL AND DENTAL ASSISTANTS, INC., a
Minnesota corporation ("Minnesota"); TEXAS COLLEGE OF MEDICAL
AND DENTAL ASSISTANTS, INC., a Texas corporation ("Texas");
UNITED HEALTH CAREERS INSTITUTE, INC., a California
corporation ("United"); SOUTHERN CALIFORNIA COLLEGE OF
MEDICAL AND DENTAL ASSISTANTS, INC., a California corporation
("Southern California"); CONCORDE CAREERS - FLORIDA, INC., a
Florida corporation ("Florida"); COLLEGES OF DENTAL AND
MEDICAL ASSISTANTS, INC., a California corporation
("Dental"); and COMPUTER CAREER INSTITUTE, INC., an Oregon
corporation ("Computer") (Minnesota, Texas, United, Southern
California, Florida, Dental, and Computer being hereinafter
referred to collectively as "Guarantors" and each
individually as a "Guarantor") amends that certain
Restructuring, Security and Guaranty Agreement between the
parties dated as of October 30, 1992, as previously amended
by written agreement dated as of December 30, 1993
(collectively, the "Agreement").
RECITALS
(i) Pursuant to the Agreement entered into by CenCor,
Concorde and the Guarantors, Concorde issued a debenture
to CenCor in the principal amount of $5,422,307, dated
October 30, 1992 (the "Debenture").
(ii) Under the terms of the Agreement and the
Debenture, the interest due on the principal amount of
the Debenture is to be accrued until the commencement of
quarterly payments on September 30, 1995.
(iii) Pursuant to the terms of the December 30, 1993
amendment (the "First Amendment"), Concorde paid to
CenCor $559,353 in interest, all that had accrued on the
Debenture through and including December 31, 1993, by the
assignment of certain of Concorde's receivables to
CenCor.
(iv) At this time Concorde wishes to exchange 300,000
shares of its Class A Redeemable Preferred Stock, $.10
par value (the "Class A Preferred Shares") for $3,000,000
of the principal amount of the Debenture, and amend the
Debenture to reflect such, all on the terms and
conditions set forth below (the "Exchange").
(v) Furthermore, Concorde wishes to pay to CenCor all
interest that has accrued on the Debenture since Janu-
ary 1, 1994 and will so accrue through and including
December 31, 1994, totaling $497,596 (the "1994 Accrued
Interest"), by the assignment of certain of Concorde's
receivables to CenCor, all on terms and conditions
similar to those set forth in the First Amendment, as set
forth below.
<PAGE>
(vi) CenCor wishes to receive the Class A Preferred
Shares in exchange for three million dollars ($3,000,000)
of the principal amount of the Debenture and to receive
payment of the 1994 Accrued Interest through the
assignment of such receivables, all on the terms and
conditions set forth below.
(vii) Concorde and CenCor wish to amend the Agreement
to provide for the Exchange and for such payment of the
1994 Accrued Interest.
(viii) The Guarantors, each a wholly-owned subsidiary of
Concorde, wish to reduce the amount of their guaranteed
obligations through the Exchange and such payment of the
1994 Accrued Interest and thus consent to the amendment
of the Agreement to provide for such.
AGREEMENT
In consideration of the premises and the mutual covenants
and agreements herein contained, CenCor, Concorde and
Guarantors agree as follows:
ARTICLE I
Definitions
1.1 Certain Defined Terms. The following terms used
herein shall have the meanings set forth in this Article and
in the other parts of this Agreement referred to in this
Article, and such meanings shall apply to both the singular
and plural forms of such terms.
(a) "Class A Preferred Shares" means the 300,000
shares of Class A Redeemable Preferred Stock, $.10 par
value, having the rights and privileges described in the
Certificate of Designations filed with the Secretary of
State of Delaware, a copy of which is attached hereto as
Exhibit B, which shall be issued to CenCor pursuant to
the terms hereof.
(b) "Compounding Period" is the period during which
interest on the Debenture shall accrue and compound, from
October 30, 1992 until the last day of the calendar
quarter preceding the quarter in which the First
Scheduled Payment Date occurs.
(c) "Exchange" means the exchange of 300,000 Class
A Preferred Shares for, and in cancellation of,
$3,000,000 principal amount of the Debenture as set forth
in Article II hereof.
(d) "First Scheduled Payment Date" means the date
Concorde shall be obligated to make its first payment of
principal and interest on the Debenture, pursuant to
Section 2.3(a) of the Agreement, as amended hereby in
Section 6.1 hereof, which shall be June 30, 1996.
(e) "1994 Accrued Interest" means the total
interest that, has accrued on the Debenture since
January 1, 1994 and will so accrue through and including
December 31, 1994, totaling $497,596.
<PAGE>
(f) "1994 Receivables" shall mean the receivables
due on all Accounts (as defined in the Agreement), which
are currently owned by Concorde but have been written off
by Concorde or a Guarantor for financial statement
purposes, pursuant to Concorde's historical accounting
practices, and have been placed with third party
collection agents, having aggregate balances due of
approximately $15,000,000, which are being assigned to
CenCor pursuant to Article III, hereof (the
"Assignment"), plus any Substituted Receivables
subsequently assigned to CenCor pursuant to Section 5.1,
hereof, it being understood that (i) all 1994 Receivables
are accounts or notes receivable which have previously
been written off by Concorde or a Guarantor for financial
statement purposes, pursuant to Concorde's historical
accounting practices, and (ii) the 1994 Receivables shall
constitute a portion of the Receivables (as defined in
the First Amendment) as the context requires.
(g) "Second Amendment" means this Second Amendment
to the Restructuring, Security and Guaranty Agreement,
dated October 30, 1992, as previously amended by written
agreement dated as of December 30, 1993.
1.2 Other Terms. All capitalized terms used herein,
not defined in Section 1.1 or elsewhere in this Second
Amendment, shall have the meanings and be as defined in the
First Amendment, and if not therein defined, as defined in
the original provisions of the Agreement.
ARTICLE II
The Exchange
2.1 Issuance of Class A Preferred Shares. Subject to
the terms and conditions contained herein and as payment in
full of three million dollars ($3,000,000) of the principal
amount of the Debenture, Concorde hereby issues to CenCor
three hundred thousand (300,000) shares, $.10 par value, of
its Class A Redeemable Preferred Stock, which Class A
Preferred Shares have the rights and privileges as set forth
in that certain Certificate of Designations filed by Concorde
with the Secretary of State of Delaware on November 15, 1994,
a copy of which is attached hereto as Exhibit B.
2.2 Acceptance of Class A Preferred Shares as Payment
on Debenture. Subject to the terms and conditions contained
herein, CenCor hereby accepts the three hundred thousand
(300,000) Class A Preferred Shares as payment in full of
three million dollars ($3,000,000) of the principal amount
due under the Debenture.
2.3 Modification of Maturity Dates of Debenture. The
initial required payment of principal or interest under the
Debenture shall be June 30, 1996. Unpaid interest on the
Debenture shall accrue and compound during the period from
October 30, 1992 until the last day of the calendar quarter
preceding the quarter in which the date of such first payment
occurs.
<PAGE>
<PAGE>
2.4 No Other Modification of Debenture. Other than the
cancellation of three million dollars ($3,000,000) of the
principal amount of the Debenture, as provided for in this
Article II; the modification of the maturity dates of the
Debenture, as provided for in Section 2.3 above; and the
prepayment of the 1994 Accrued Interest, as provided for in
Article III, it is agreed by the parties that the provisions
of the Debenture shall remain as previously provided and
shall not be otherwise modified or changed. The Guarantors
reaffirm their guaranties of the Debenture, as such Debenture
has been modified by this Second
Amendment.
2.5 Covenants. It is agreed that for so long as any
Class A Preferred Shares remain outstanding and are held by
CenCor, or its successors, the covenants of Concorde and the
Guarantors set forth in Articles VI and VII of the Agreement
shall remain in full force and effect.
2.6 Dividends. Concorde covenants that, in accordance
with Section 154 of the Delaware General Corporation Law,
only Thirty Thousand Dollars ($30,000) of the consideration
received for the Class A Preferred Shares shall be capital
and the remainder of the consideration shall be surplus.
Concorde agrees to promptly declare and pay dividends due
under the Class A Preferred Shares to the extent of legally
available funds. Concorde further covenants that, in the
event Concorde is unable to legally pay accrued dividends due
under the Class A Preferred Shares because of insufficient
surplus, it will take such actions legally available to
increase its surplus, including without limitation those
actions set forth in Section 244 or any similar statute of
the Delaware General Corporation Law.
ARTICLE III
Assignment and Payment of 1994 Accrued Interest
3.1 Assignment of 1994 Receivables. Subject to the
terms and conditions contained herein, Concorde hereby
transfers, assigns and conveys the 1994 Receivables, having
aggregate balances due of approximately $15,000,000, to
CenCor.
3.2 Acceptance of Payment of 1994 Accrued Interest.
Subject to the terms and conditions contained herein,
including without limitation the execution and delivery to
CenCor of all consents, releases and other documents set
forth in Article VIII hereof, CenCor hereby accepts the
assignment of the 1994 Receivables, as payment in full of the
1994 Accrued Interest (including prepayment of that portion
of such interest which shall accrue from the date hereof,
through and including December 31, 1994), which will total
$497,596 at December 31, 1994.
3.3 Assignment of Future Payments. In the event any
Students make payments on the 1994 Receivables to Concorde or
a Guarantor after the date hereof, it is agreed that any such
payments shall be delivered to CenCor.
3.4 Without Recourse. This assignment shall be without
recourse, and CenCor shall fully assume all risks of
nonpayment of the 1994 Receivables, subject to the limited
Right of Substitution set forth in Section 5.1
ARTICLE IV
<PAGE>
Terms of Assignment
4.1 Delivery of Documentation. Concorde promptly will
deliver to CenCor, or its agents, all relevant documentation
underlying each of the 1994 Receivables, including copies of
ledger cards, enrollment agreements, promissory notes (if
existing), and any documentation, available to either
Concorde or the Guarantors, concerning prior collection
efforts on the part of any of them or their agents in
connection with the assignments pursuant to Section 3.1, and
in accordance with the practices provided for in the First
Amendment and developed by the parties since the date
thereof. Deliveries shall be made to CenCor at its offices
at City Center Square, 1100 Main Street, Suite 2350, Kansas
City, Missouri 64105, or such other location that CenCor
shall designate in writing.
4.2 Collection Efforts. In consideration of the Right
of Substitution afforded to CenCor and in light of the Right
of Credit, CenCor agrees that it will take reasonable steps
to collect, in full or part, in a lump sum or in installment
payments, each of the 1994 Receivables (the "Collection
Efforts"), including, but not necessarily limited to those
set forth in Section 3.2 of the First Amendment.
4.3 Record Keeping and Reports. CenCor shall maintain,
or cause its Collection Agents to maintain, such records and
make such reports concerning the 1994 Receivables as set
forth in Section 3.3 of the First Amendment.
ARTICLE V
Rights of Substitution and Credit
5.1 Right of Substitution. Subject to the provisions
set forth herein, provided that CenCor has not yet recouped
an amount equal to one hundred percent (100%) of the 1994
Accrued Interest, and a Remainder of 1994 Accrued Interest
exists, CenCor shall have a limited right of substitution as
to the 1994 Receivables (the "Right of Substitution"), and
may elect to reassign certain Worked Receivables to Concorde
in exchange for the assignment from Concorde or the
Guarantors of Substituted Receivables of equal face value as
set forth in Section 4.1 of the First Amendment. The timing
of substitutions for 1994 Receivables that constitute Worked
Receivables shall be substantially as set forth in
Section 4.1 of the First Amendment, as may be agreed to by
the parties to coordinate those Rights of Substitution
granted in the First Amendment and this Second Amendment.
Substitutions shall be in $100,000 (one hundred thousand
dollar) blocks, provided that such blocks may be comprised of
1994 Receivables and Receivables assigned to CenCor pursuant
to the First Amendment. Notwithstanding anything contained
herein or in the Agreement, all Rights of Substitution
granted herein or therein are specifically limited to the
amount of Receivables held by Concorde at the date of the
request for Substitution which have been written off by
Concorde or a Guarantor for financial statement purposes
pursuant to Concorde's historical accounting practices prior
to the date of such request. Neither Concorde nor the
Guarantors make any representation, warranty or guaranty as
to the amount of qualified Receivables available at the time
of any such request.
5.2 Right of Credit. In the event the amount of
CenCor's Gross Collections on the 1994 Receivables, less
Allowable Collection Expenses, exceeds the amount of the 1994
Accrued Interest, the amount of such excess (the "Overage")
shall be:
<PAGE>
(a) paid to Concorde as reimbursement of amounts
paid by Concorde in legal fees and expenses, either to
Concorde's legal counsel or CenCor's legal counsel
(pursuant to Section 10.1) in connection with the
negotiation, preparation and implementation of this
Second Amendment, including such fees and expenses
related to the Exchange; and
(b) to the extent the Overage exceeds such
reimbursement, retained by CenCor but applied as a credit
to any amounts owing from Concorde to CenCor under the
Debenture, first to interest which has accrued since
December 31, 1994 and then, to the extent of any excess
Overage, either to prepayment of principal or to
prepayment of future interest payments due on the Deben-
ture, at the option of Concorde.
In the event of an Overage, and in lieu of creating
additional Overages, CenCor may elect to cease its Collection
Efforts on Outstanding Unworked Receivables by reassigning
those remaining Outstanding Unworked Receivables to Concorde
and/or may assign any outstanding installment payments on
settlement agreements with Students to Concorde.
ARTICLE VI
Amendment of Agreement
6.1 Payment Terms and Maturity.
(a) Section 2.3(a) of the Agreement is hereby
amended to read as follows:
"(a) The principal and accrued interest due
hereunder, not otherwise prepaid, shall be
repayable to CenCor in quarterly installments
commencing on June 30, 1996 (the "First
Scheduled Payment Date"), and continuing on
the last day of each September, December,
March and June thereafter until June 30,
1997. Notwithstanding the fact that interest
shall accrue hereunder from October 30, 1992
until July 31, 1997 at the Interest Rate, the
interest that accrues during the period from
October 30, 1992 until the last day of the
calendar quarter preceding the quarter in
which the First Scheduled Payment Date occurs
(such period being the "Compounding Period"),
that is not otherwise prepaid, shall be added
to the principal due hereunder and shall bear
interest at the Interest Rate. Concorde
shall pay to CenCor quarterly installments of
principal and interest based on a ten year
amortization schedule based on the amount due
at the last day of the Compounding Period.
In determining the Interest Rate, Mark
Twain's Prime Rate shall, for the purposes
hereof, be adjusted quarterly on the last day
of September, December, March, and June. In
any and all events, the entire principal
balance remaining unpaid, plus accrued
interest and other charges due hereunder
shall be due and payable on July 31, 1997."
(b) Section 2.3(e) of the Agreement is hereby
amended to read as follows:
<PAGE>
<PAGE>
"(e) Notwithstanding the foregoing, (i) the
interest accrued from the date of issuance of the
Debenture through and including December 31, 1993
shall be prepaid by Concorde through the
Assignment of the Receivables and (ii) the
interest accrued from January 1, 1994 through and
including December 31, 1994 shall be prepaid by
Concorde through the Assignment of the 1994
Receivables. In the event the Collection Efforts
of CenCor, pursuant to the terms of either the
First Amendment or the Second Amendment, yield an
Overage, the amount of such Overage shall be
(a) paid to Concorde as reimbursement of amounts
paid by Concorde in legal fees and expenses,
either to Concorde's legal counsel or CenCor's
legal counsel (pursuant to Section 9.1 of the
First Amendment or Section 10.1 of the Second
Amendment) in connection with the negotiation,
preparation and implementation of such
Amendments; and (b) to the extent the Overage
exceeds such reimbursements, retained by CenCor
but applied as a credit first against the
interest on the Debenture then accrued but
unpaid, and then, to the extent of any excess
Overage, either to prepayment of principal or to
prepayment of future interest payments due, at
the option of Concorde. Additionally, subject to
the written consent of CenCor's Board of
Directors, Concorde and Mark Twain, interest on
the Debenture accrued after December 31, 1994 may
be paid or prepaid by the future assignment of
additional receivables, on the same terms as set
forth in the First Amendment, as evidenced by the
execution of subsequent assignments,
substantially in the form of Exhibit A to the
Second Amendment."
6.2 Interest: Rate and Terms. The last three
sentences of Section 2.4 of the Agreement (following
Subsection (c) thereof) are hereby amended to read as
follows:
"Interest on the Debenture shall not be paid,
but shall be accrued, through the last day of
the Compounding Period. Thereafter, interest
shall be paid quarterly (together with
payments of principal, as set forth in
Section 2.3), commencing on the First
Scheduled Payment Date. Notwithstanding the
foregoing, accrued interest may be prepaid as
set forth in Section 2.3(e)."
6.3 Credit for Payments on Account of Assumed
Subordinated Indebtedness. Section 2.6 of the Agreement is
hereby amended to read as follows:
"2.6 Credit Against Principal Amount.
Notwithstanding anything herein to the
contrary, in the event Concorde, as a result
of an action before a court of competent
jurisdiction, to which Concorde has presented
a reasonable defense, makes any future
payments, to CenCor or any other Person, on
account of the Assumed Subordinated
Indebtedness, from which it has been released
pursuant to the terms of this Agreement,
Concorde shall be entitled to a credit in the
amount of such payments, which credit shall
be applied first to principal payments due
under the Debenture in the reverse order of
their maturity and second as redemption
payments on then outstanding Class A
Preferred Shares and any accrued but unpaid
dividends thereon (and such Class A Preferred
Shares shall be automatically redeemed).
Concorde hereby irrevocably waives and
repudiates any right of subrogation or other
claim against CenCor which may accrue as a
result of any such payments."
<PAGE>
6.4 Right of Substitution. Section 4.1 of the First
Amendment shall be amended by the addition of a new paragraph
(e), which shall read as follows:
"(e) Notwithstanding anything contained
herein, all Rights of Substitution granted
herein are specifically limited to the amount
of Receivables held by Concorde at the date
of the request for Substitution which have
been written off by Concorde or a Guarantor
for financial statement purposes, pursuant to
Concorde's historical accounting practices,
prior to the date of such request. Neither
Concorde nor the Guarantors make any
representation, warranty or guaranty as to
the amount of qualified Receivables available
at the time of any such request."
6.5 Notices. Section 10.6 of the Agreement is hereby
amended to read as follows:
"10.6 Notices. All notices, requests,
demands and other communications required or
permitted by this Agreement shall be in
writing and shall be given to or made upon
the respective parties hereto by depositing
the same in the United States mail, certified
or registered, postage prepaid, or by
telegram or private courier service, charges
prepaid, or by delivery in person, to the
appropriate address set forth below, and
shall be deemed given or made when so
deposited in the mail, delivered to the
telegraph company or personally delivered.
If to Concorde:
Concorde Career Colleges, Inc.
City Center Square
1100 Main Street, Suite 416
Kansas City, Missouri 64105
Attention: Jack L. Brozman
with a copy to:
Bryan Cave
3300 One Kansas City Place
1200 Main Street
P.O. Box 419914
Kansas City, Missouri 64141-6914
Attention: Lorna Wright
If to CenCor:
CenCor, Inc.
City Center Square
1100 Main, Suite 2350
<PAGE>
Kansas City, Missouri 64105
Attention: Patrick F. Healy
with a copy to:
Polsinelli White Vardeman & Shalton
1000 Plaza Steppes Building
700 West 47th Street
Kansas City, Missouri 64112
Attention: Lisa M. Schultes
Either party may change its notice address by giving
written notice to the other party. When given to
Concorde as herein provided, notice shall also be deemed
to have been given to all Guarantors."
6.6 Survival of Representations, Rights and
Obligations. Section 10.9 of the Agreement is hereby amended
to read as follows:
"10.9 Survival of Representations, Rights and
Obligations. All representations,
warranties, conditions, covenants and other
terms herein shall survive the execution
hereof. The rights of CenCor and the
obligations of Concorde and the Guarantors
under this Agreement shall survive the
maturity of the Debenture (whether such
maturity occurs by acceleration or otherwise)
and shall continue in full force and effect
until all amounts due under the Debenture and
all other Debenture Liabilities have been
fully paid and discharged. Furthermore, the
covenants of Concorde, CenCor, and the
Guarantors set forth in the Agreement (as
amended by the First Amendment) and all those
contained in this Second Amendment shall
survive the maturity of the Debenture
(whether such maturity occurs by acceleration
or otherwise) and shall continue in full
force and effect until payment of all amounts
due under the Debenture and all other
Debenture Liabilities and until all of the
Class A Preferred Shares held by CenCor, or
its successors, have been redeemed by
Concorde."
ARTICLE VII
Cross Indemnifications
<PAGE>
<PAGE>
7.1 Indemnification by Concorde and Guarantors.
Concorde and each of the Guarantors jointly and severally
agree to indemnify and hold harmless CenCor from and against
any and all damages, losses, and expenses (including attorney
fees and expenses) directly incurred, sustained or suffered
by or asserted against CenCor resulting from, arising out of,
relating to, or caused by (a) the breach of any
representation or warranty contained in Section 9.1, (b) any
breach or failure on the part of Concorde or any Guarantor to
perform or comply with any obligation, agreement or covenant
hereunder, or (c) a claim by a Student with respect to the
transactions giving rise to a given 1994 Receivable or the
collection efforts by Concorde, any Guarantor, or their
agents prior to the delivery of documentation to Cencor or
its Collection Agents with respect to such 1994 Receivable
pursuant to Sections 4.1 or 5.1 of this Second Amendment, as
applicable; provided however that such indemnity as to claims
by Students shall not extend to losses related to
uncollectibility of such Receivables, provided, however, that
any payments made pursuant to this Section 7.1 shall be
subordinated to Mark Twain's superior right of payment for
amounts due and owing pursuant to the Mark Twain Agreement
(as defined in the First Amendment).
7.2 Indemnification by CenCor. CenCor agrees to
indemnify and hold harmless Concorde and each of the
Guarantors from and against any and all damages, losses, and
expenses (including attorney fees and expenses) directly
incurred, sustained or suffered by or asserted against any of
them resulting from, arising out of, relating to, or caused
by (a) the breach of any representation or warranty contained
in Section 9.2, (b) any breach or failure on the part of
CenCor to perform or comply with any obligation, agreement or
covenant hereunder, or (c) any actions taken by CenCor, or
its agents, in connection with collection activities with
respect to the Receivables, which have been taken in the
absence of Concorde's rights of approval set forth in
Section 3.2 of the First Amendment, or any actions taken by
CenCor or its affiliates in contravention of Concorde's
rights of approval set forth in Section 3.2 of the First
Amendment.
ARTICLE VIII
Consents and Releases
8.1 Consent to Transaction. Attached as Exhibit C
hereto is the consent (the "Mark Twain Consent") of Mark
Twain, Concorde's primary lender, under the Mark Twain
Agreement, whereby Mark Twain consents to the Exchange,
Concorde's prepayment of 1994 Accrued Interest, and the
assignment of 1994 Receivables, and waives the restrictions
regarding issuance of stock by Concorde contained in Section
10.11 of the Mark Twain Agreement, all pursuant to the terms
hereof.
8.2 Release of Security Interests.
(a) As set forth in the Mark Twain Consent, Mark
Twain has agreed to release any and all security
interests it has in the 1994 Receivables, granted to it
either by Concorde or any of the Guarantors pursuant to
the Mark Twain Agreement, and/or waive, as to CenCor, any
claims it may have to the proceeds from such Receivables,
and has agreed to execute all necessary UCC statements,
waivers, releases and/or other documents, necessary to
effectuate such release.
<PAGE>
<PAGE>
(b) Concorde hereby agrees to release any and all
security interests it has in the 1994 Receivables granted to
it by the Guarantors pursuant to the Mark Twain Agreement,
the Agreement, or otherwise, and/or waive, as to CenCor, any
claims it may have to the proceeds from such Receivables, and
has agreed to execute all necessary UCC statements, waivers,
releases and/or other documents, necessary to effectuate such
release.
8.3 Assignments. Concorde and each Guarantor agrees to
execute all assignments, powers of attorney and other
documents, in form and substance satisfactory to CenCor's
counsel, to transfer the 1994 Receivables to CenCor and to
grant CenCor or its agent the right to file suit on behalf of
or in the name of Concorde to collect such Receivables.
ARTICLE IX
Representations
9.1 Of Concorde and Guarantors.
(a) Subject to the release of the security
interests held by Mark Twain and Concorde, as set forth
in Section 8.2, and those granted to CenCor under the
Agreement, Concorde is the owner of the 1994 Receivables,
free and clear from any Lien or other right, title or
interest of any other persons and free from any
restriction on transfer.
(b) Concorde is a corporation duly organized and
validly existing in good standing under the laws of the
State of Delaware. Each Guarantor is a corporation duly
organized and existing in good standing under the laws of
the jurisdiction in which it is incorporated, as
indicated in the first paragraph of this Agreement.
(c) Each of Concorde and Guarantors has all
requisite power and authority to enter into and perform
this Second Amendment and to execute, deliver and perform
its obligations thereunder, including the exchange and
the assignment of the 1994 Receivables. The Second
Amendment has been duly authorized by all necessary
corporate action by and has been duly executed and
delivered by authorized officers of Concorde and
Guarantors, and is the valid agreement and obligation of
Concorde and Guarantors legally binding upon and
enforceable against them, in accordance with its terms.
(d) The Class A Preferred Shares issued pursuant to
Section 2.1 hereof have been duly authorized and validly
issued and, assuming cancellation of that portion of
outstanding principal of the Debenture as set forth in
Section 2.2, are fully paid and nonassessable; Concorde
has no other shares of any class of preferred stock
issued or outstanding and has no obligation to issue any
such preferred stock; the only shares of capital stock of
Concorde issued and outstanding as of the date hereof,
prior to the issuance of the Preferred Shares, are
6,952,176 shares, $.10 par value, of Common Stock, all of
which shares of common stock have been duly authorized
and validly issued and are fully paid and nonassessable.
<PAGE>
<PAGE>
(e) Subject to the Mark Twain Consent, as set forth
in Section 8.1, neither the execution nor the delivery of
this Second Amendment nor Concorde's and Guarantors'
performance of and compliance with the terms and
provisions hereof, including the issuance of the Class A
Preferred Shares, will conflict with, or result in a
breach of, the terms, conditions or provisions of, or
constitute a default under, or result in any violation
of, or result in the creation of any Lien upon any of the
Assets of Concorde or any of the Guarantors pursuant to,
or require any authorization, consent, approval,
exemption or other action by or notice to or filing with
any court, governmental body, administrative agency or
other Person pursuant to, the charter or bylaws of
Concorde or any of the Guarantors, any agreement
(including any agreement with stockholders), lease,
indenture, mortgage, security agreement or other
instrument (other than agreements, leases, indentures,
mortgages, security agreements and other instruments
relating to the Mark Twain Liabilities), or any order,
judgment, decree, arbitration award, law, rule or
regulation to or by which Concorde or any of the
Guarantors or any of Concorde's Assets are subject or
bound.
(f) The 1994 Receivables are and will be valid
debts owed by Students, fully transferrable and
assignable to CenCor. None of the 1994 Receivables are,
nor will be, (i) guaranteed student loans, (ii) subject
to any rules or regulations of the U.S. Department of
Education regarding collection procedures, or
(iii) subject to any pending, or to Concorde's knowledge,
threatened, litigation or counterclaim by a Student.
9.2 Of CenCor.
(a) CenCor is a corporation duly organized and
validly existing in good standing under the laws of the
State of Delaware.
(b) CenCor has all requisite power and authority to
enter into and perform this Second Amendment and to
execute, deliver and perform its obligations thereunder.
The Second Amendment has been duly authorized by all
necessary corporate action by and has been duly executed
and delivered by authorized officers of CenCor and is the
valid agreement and obligation of CenCor legally binding
upon and enforceable against it, in accordance with its
terms.
(c) CenCor acknowledges (i) that the issuance of
the Class A Preferred Shares has not been registered
pursuant to the Securities Act of 1933, as amended, but
rather such Class A Preferred Shares are being offered by
Concorde in reliance on an exemption therefrom; (ii) that
CenCor is acquiring the Class A Preferred Shares with the
intention of holding such shares and not with a view to
resale; and (iii) that in determining the availability of
such exemptions from registration, Concorde is relying
upon such represented intentions of CenCor.
<PAGE>
<PAGE>
(d) Neither the execution nor the delivery of this
Second Amendment nor CenCor's performance of and compliance
with the terms and provisions hereof, will conflict with, or
result in a breach of, the terms, conditions or provisions
of, or constitute a default under, or result in any violation
of, or require any authorization, consent, approval,
exemption or other action by or notice to or filing with any
court, governmental body, administrative agency or other
Person pursuant to, the charter or bylaws of CenCor, any
agreement (including any agreement with stockholders), lease,
indenture, mortgage, security agreement or other instrument,
or any order, judgment, decree, arbitration award, law, rule
or regulation to or by which CenCor is subject or bound.
ARTICLE X
Miscellaneous
10.1 Attorneys' Fees. Notwithstanding anything in the
Agreement or herein to the contrary, Concorde shall pay to
CenCor in cash CenCor's expenses in connection with the
negotiation of this Second Amendment, including the Exchange,
and the consummation of the transactions contemplated
thereby, including attorneys' fees and expenses within ten
(10) business days after receiving an invoice from CenCor
with supporting documentation, which the parties agree shall
not exceed $7,500.00 in the aggregate.
10.2 Ratification. All provisions of the Agreement not
specifically amended in this Second Amendment are hereby
ratified and reaffirmed.
10.3 Governing Law. Except as otherwise provided by
express reference to the Uniform Commercial Code, this Second
Amendment shall be construed in accordance with and governed
by the laws, statutes and decisions of the State of Missouri,
to the non-exclusive jurisdiction of whose courts, state and
federal, Concorde and Guarantors irrevocably agree to submit.
10.4 Counterparts. This Agreement may be executed in
any number of counterparts, each of which shall be deemed an
original and all of which together shall constitute one and
the same instrument.
10.5 Further Assurances. Concorde and the Guarantors
will execute, and pursuant to the provisions of the Mark
Twain Consent, Mark Twain Bank will execute, all additional
documents reasonably necessary to effectuate the transaction
contemplated herein, including without limitation those
documents to transfer the Substituted Receivables to CenCor
free and clear of all liens and encumbrances.
IN WITNESS WHEREOF, the parties hereto have caused
this First Amendment to the Agreement to be executed by their
respective duly authorized officers as of the day and year
first above written.
Oral agreements or commitments to loan money, extend
credit or to forbear from enforcing repayment of a debt
including promises to extend or renew such debt are not
enforceable. To protect the debtor and creditor from
misunderstanding or disappointment, any agreements we reach
covering such matters are contained in this writing, which is
the complete and exclusive statement of the agreement between
us, except as we may later agree in writing to modify it.
<PAGE>
<TABLE>
<CAPTION>
CENCOR, INC.
<S> <C> <C>
ATTEST:
/s/ Lisa M. Henak By: /s/ Patrick F. Healy
________________________ _____________________________
Secretary Patrick F. Healy,
Vice President-Finance
</TABLE>
<PAGE>
ACKNOWLEDGEMENT
STATE OF MISSOURI )
) ss.
COUNTY OF JACKSON )
BE IT REMEMBERED, that on this 15 day of November, 1994,
before me, the undersigned, a notary public in and for said
state, came Patrick F. Healy, Vice President-Finance of
CenCor, Inc., a Delaware corporation, to me personally known
to be such officer and the same person who executed as such
officer the foregoing instrument on behalf of said
corporation, and such person duly acknowledged the execution
of the same to be the act and deed of said corporation.
IN WITNESS WHEREOF, I have hereunto set my hand and
affixed my official seal at my office in Kansas City,
Missouri, the day and year last above mentioned.
/s/ Marlene E. Baswell
________________________________
Notary Public in and for said
County and State
My commission expires:
July 27, 1997
<PAGE>
<PAGE>
<TABLE>
<CAPTION>
CONCORDE CAREER COLLEGES, INC.
<S> <C> <C>
ATTEST:
/s/ Lisa M. Henak By: /s/ Gregg Gimlin
__________________________ ____________________________
Secretary M. Gregg Gimlin
Vice President
</TABLE>
ACKNOWLEDGEMENT
STATE OF MISSOURI )
) ss.
COUNTY OF JACKSON )
BE IT REMEMBERED, that on this 15 day of November,
1994, before me, the undersigned, a notary public in and for
said state, came M. Gregg Gimlin, Vice President of Concorde
Career Colleges, Inc., a Delaware corporation, to me
personally known to be such officer and the same person who
executed as such officer the foregoing instrument on behalf
of said corporation, and such person duly acknowledged the
execution of the same to be the act and deed of said
corporation.
IN WITNESS WHEREOF, I have hereunto set my hand and
affixed my official seal at my office in Kansas City,
Missouri, the day and year last above mentioned.
/s/ Marlene E. Baswell
_____________________________________
Notary Public in and for said
County and State
My commission expires:
July 27, 1997
<PAGE>
<PAGE>
<TABLE>
<CAPTION>
MINNESOTA INSTITUTE OF MEDICAL
AND DENTAL ASSISTANTS, INC.
ATTEST:
<S> <C> <C>
/s/ Lisa M. Henak By: /s/ A. Eugene Johnson
__________________________ ________________________________
Secretary A. Eugene Johnson
President
</TABLE>
ACKNOWLEDGEMENT
STATE OF Missouri )
) ss.
COUNTY OF Jackson )
BE IT REMEMBERED, that on this 15th day of November,
1994, before me, the undersigned, a notary public in and for
said state, came A. Eugene Johnson President of Minnesota
Institute of Medical and Dental Assistants, Inc. a Minnesota
corporation, to me personally known to be such officer and
the same person who executed as such officer the foregoing
instrument on behalf of said corporation, and such person
duly acknowledged the execution of the same to be the act and
deed of said corporation.
IN WITNESS WHEREOF, I have hereunto set my hand and
affixed my official seal at my office in Kansas City,
Missouri the day and year last above mentioned.
/s/ Lisa M. Henak
___________________________________
Notary Public in and for said
County and State
My commission expires:
September 7, 1996
<PAGE>
<PAGE>
<TABLE>
<CAPTION>
TEXAS COLLEGE OF MEDICAL AND
DENTAL ASSISTANTS, INC.
<S> <C> <C>
ATTEST:
/s/ Lisa M. Henak By: /s/ A. Eugene Johnson
_______________________ ______________________________
Secretary A. Eugene Johnson
President
</TABLE>
ACKNOWLEDGEMENT
STATE OF Missouri )
) ss.
COUNTY OF Jackson )
BE IT REMEMBERED, that on this 15th day of November,
1994, before me, the undersigned, a notary public in and for
said state, came A. Eugene Johnson, President of Texas
College of Medical and Dental Assistants, Inc. a Texas
corporation, to me personally known to be such officer and
the same person who executed as such officer the foregoing
instrument on behalf of said corporation, and such person
duly acknowledged the execution of the same to be the act and
deed of said corporation.
IN WITNESS WHEREOF, I have hereunto set my hand and
affixed my official seal at my office in Kansas City,
Missouri the day and year last above mentioned.
/s/ Lisa M. Henak
______________________________________
Notary Public in and for said
County and State
My commission expires:
September 7, 1996
<PAGE>
<PAGE>
<TABLE>
<CAPTION>
UNITED HEALTH CAREERS INSTITUTE,
INC.
<S> <C> <C>
ATTEST:
/s/ Lisa M Henak By: /s/ A. Eugene Johnson
_________________________ ____________________________
Secretary A. Eugene Johnson
President
</TABLE>
ACKNOWLEDGEMENT
STATE OF Missouri )
) ss.
COUNTY OF Jackson )
BE IT REMEMBERED, that on this 15th day of November,
1994, before me, the undersigned, a notary public in and for
said state, came A. Eugene Johnson, President of United
Health Careers Institute, Inc. a California corporation, to
me personally known to be such officer and the same person
who executed as such officer the foregoing instrument on
behalf of said corporation, and such person duly acknowledged
the execution of the same to be the act and deed of said
corporation.
IN WITNESS WHEREOF, I have hereunto set my hand and
affixed my official seal at my office in Kansas City,
Missouri the day and year last above mentioned.
/s/ Lisa M. Henak
___________________________________
Notary Public in and for said
County and State
My commission expires:
September 7, 1996
<PAGE>
<PAGE>
<TABLE>
<CAPTION>
SOUTHERN CALIFORNIA COLLEGE OF
MEDICAL AND DENTAL ASSISTANTS,
INC.
<S> <C> <C>
ATTEST:
/s/ Lisa M. Henak By: /s/ A. Eugene Johnson
__________________________ ____________________________
Secretary A. Eugene Johnson
President
</TABLE>
ACKNOWLEDGEMENT
STATE OF Missouri )
) ss.
COUNTY OF Jackson )
BE IT REMEMBERED, that on this day of November,
1994, before me, the undersigned, a notary public in and for
said state, came A. Eugene Johnson, President of Southern
California College of Medical and Dental Assistants, Inc. a
California corporation, to me personally known to be such
officer and the same person who executed as such officer the
foregoing instrument on behalf of said corporation, and such
person duly acknowledged the execution of the same to be the
act and deed of said corporation.
IN WITNESS WHEREOF, I have hereunto set my hand and
affixed my official seal at my office in Kansas City,
Missouri the day and year last above mentioned.
/s/ Lisa M. Henak
_________________________________
Notary Public in and for said
County and State
My commission expires:
September 7, 1996
<PAGE>
<PAGE>
<TABLE>
<CAPTION>
COLLEGES OF DENTAL AND MEDICAL
ASSISTANTS, INC.
<S> <C> <C>
ATTEST:
/s/ Lisa M. Henak By: /s/ A. Eugene Johnson
_______________________ ___________________________
Secretary A. Eugene Johnson
President
</TABLE>
ACKNOWLEDGEMENT
STATE OF Missouri )
) ss.
COUNTY OF Jackson )
BE IT REMEMBERED, that on this 15th day of November,
1994, before me, the undersigned, a notary public in and for
said state, came A. Eugene Johnson, President of Colleges of
Dental and Medical Assistants, Inc. a California corporation,
to me personally known to be such officer and the same person
who executed as such officer the foregoing instrument on
behalf of said corporation, and such person duly acknowledged
the execution of the same to be the act and deed of said
corporation.
IN WITNESS WHEREOF, I have hereunto set my hand and
affixed my official seal at my office in Kansas City,
Missouri the day and year last above mentioned.
/s/ Lisa M. Henak
______________________________________
Notary Public in and for said
County and State
My commission expires:
September 7, 1996
<PAGE>
<PAGE>
<TABLE>
<CAPTION>
COMPUTER CAREER INSTITUTE, INC.
<S> <C> <C>
ATTEST:
/s/ Lisa M. Henak By: /s/ A. Eugene Johnson
__________________________ ____________________________
Secretary A. Eugene Johnson
President
</TABLE>
ACKNOWLEDGEMENT
STATE OF Missouri )
) ss.
COUNTY OF Jackson )
BE IT REMEMBERED, that on this 15th day of November,
1994, before me, the undersigned, a notary public in and for
said state, came A. Eugene Johnson, President of Computer
Career Institute, Inc. an Oregon corporation, to me
personally known to be such officer and the same person who
executed as such officer the foregoing instrument on behalf
of said corporation, and such person duly acknowledged the
execution of the same to be the act and deed of said
corporation.
IN WITNESS WHEREOF, I have hereunto set my hand and
affixed my official seal at my office in Kansas City,
Missouri the day and year last above mentioned.
/s/ Lisa M.Henak
_________________________________
Notary Public in and for said
County and State
My commission expires:
September 7, 1996
<PAGE>
<PAGE>
<TABLE>
<CAPTION>
CONCORDE CAREERS-FLORIDA, INC.
<S> <C> <C>
ATTEST:
/s/ Lisa M. Henak By: /s/ A. Eugene Johnson
__________________________ ______________________________
Secretary A. Eugene Johnson
President
</TABLE>
ACKNOWLEDGEMENT
STATE OF Missouri )
) ss.
COUNTY OF Jackson )
BE IT REMEMBERED, that on this 15th day of November,
1994, before me, the undersigned, a notary public in and for
said state, came A. Eugene Johnson, President of Concorde
Careers-Florida, Inc. a Florida corporation, to me personally
known to be such officer and the same person who executed as
such officer the foregoing instrument on behalf of said
corporation, and such person duly acknowledged the execution
of the same to be the act and deed of said corporation.
IN WITNESS WHEREOF, I have hereunto set my hand and
affixed my official seal at my office in Kansas City,
Missouri the day and year last above mentioned.
/s/ Lisa M. Henak
_________________________________
Notary Public in and for said
County and State
My commission expires:
September 7, 1996
<PAGE>
<PAGE>
EXHIBIT A
ASSIGNMENT AND ACCEPTANCE AGREEMENT
AND RECEIPT
Subject to the terms and conditions of the Second
Amendment to the Restructuring, Security and Guaranty
Agreement, dated as of November 15, 1994 (the "Second
Amendment"), by and among CenCor, Inc., a Delaware
corporation ("CenCor"); Concorde Career Colleges, Inc., a
Delaware corporation ("Concorde"); Minnesota Institute of
Medical and Dental Assistants, Inc.; Texas College of Medical
and Dental Assistants, Inc.; United Health Careers Institute,
Inc.; Southern California College of Medical and Dental
Assistants, Inc.; Concorde Careers - Florida, Inc.; Colleges
of Dental and Medical Assistants, Inc.; and Computer Career
Institute, Inc., Concorde does hereby irrevocably assign,
transfer, sell, deliver and set over to CenCor all of
Concorde's right, title and interest, as of the close of
business on the date hereof, in and to the 1994 Receivables
and CenCor hereby accepts such assignment subject to such
terms.
Furthermore, subject to the terms and conditions of
the Second Amendment, CenCor acknowledges receipt of three
hundred thousand (300,000) shares, $.10 par value, of Class A
Redeemable Preferred Stock of Concorde as payment in full of
three million dollars ($3,000,000) of the outstanding
principal amount of the Junior Secured Debenture issued by
Concorde, dated October 30, 1992 (the "Debenture"), and the
resulting reduction of the outstanding principal amount of
the Debenture to $2,422,307 as of the date hereof.
IN WITNESS WHEREOF, the parties hereto have executed
this Assignment Agreement as of November 15, 1994.
<TABLE>
<CAPTION>
CONCORDE CAREER COLLEGES, INC. CENCOR, INC.
<S> <C> <C> <C>
By: /s/ M. Gregg Gimlin By: /s/ Patrick F.Healy
_________________________ ____________________________
M. Gregg Gimlin, Patrick F. Healy,
Vice President Vice President-Finance
</TABLE>
<PAGE>
<PAGE>
EXHIBIT B
CONCORDE CAREER COLLEGES, INC.
Certificate of Designations of the
Class A Redeemable
Preferred Stock
Par Value 0.10 Per Share
Liquidation Value $10.00 Per Share
________________
Pursuant to Section 151 of the
General Corporation Law of the State of Delaware
The undersigned, the President of Concorde Career
Colleges, Inc., a Delaware corporation (hereinafter called the
"Corporation"), DOES HEREBY CERTIFY that:
1. The following resolution has been duly adopted by
the Board of Directors of the Corporation (the "Board of
Directors"):
RESOLVED, that pursuant to the authority expressly
granted to and vested in the Board of Directors of the
Corporation by the provisions of the Restated Certificate of
Incorporation, as amended, and the Amended and Restated Bylaws,
the Board of Directors hereby authorizes the issuance of a
series of the preferred stock (the "Preferred Stock") of the
Corporation which shall consist of 300,000 shares of the
Corporation's Preferred Stock and hereby fixes the
designations, preferences and relative, participating, optional
or other special rights, and qualifications, limitations or
restrictions thereof of the shares of such series as follows:
(i) Designation. The designation of said series of
the Preferred Stock shall be Class A Redeemable Preferred Stock
(the "Class A Preferred Stock"). The number of shares of
Class A Preferred Stock shall be 300,000. The liquidation
value of the Class A Preferred Stock shall be $10.00 per share.
The shares of Class A Preferred Stock shall be issued as full
shares.
(ii) Dividends. The shares of Class A
Preferred Stock shall be entitled to receive cumulative
dividends, as declared by the Board of Directors or a duly
authorized committee thereof (an "Authorized Board Committee"),
out of funds legally available for the payment of dividends,
(the "Dividends") and at a variable annual rate, all as set
forth in this Section (ii).
<PAGE>
<PAGE>
(a) For so long as the Corporation's junior secured
debenture, dated October 30, 1992 and issued in the original
principal amount of $5,422,307 (the "Debenture"), or any
portion of the principal amount thereof, is outstanding, the
annual rate of the Dividend shall be equal to 73% of the
current interest rate on the Debenture, as of the first day of
calendar quarter during which the Dividend is earned, as
calculated based on the liquidation value of the Class A
Preferred Stock set forth in Section (iv), below;
(b) commencing upon the retirement, in full, of the
Debenture (the "Debenture Repayment Date"), the annual rate
of the Dividend shall be equal to 2% above the prime rate
charged, as of the first day of calendar quarter during
which the Dividend is earned, by Mark Twain Kansas City
Bank, as calculated based on the liquidation value of the
Class A Preferred Stock set forth in Section (iv), below;
(c) provided that, notwithstanding the foregoing, the
annual rate of the Dividends shall not exceed 12% of the
per share liquidation value of the Class A Preferred Stock,
as set forth in Section (iv), below ($1.20 per share).
Dividends shall be earned from date of original issue
of a share of Class A Preferred Stock, however they shall not
be paid, but rather accrued until the Debenture Repayment Date
(the "Initial Accrued Dividends"). Upon the Debenture
Repayment Date, future earned Dividends shall be payable in
cash, commencing on the last day of the calendar quarter which
occurs following the Debenture Repayment Date (the "Initial
Dividend Payment Date") with respect to the period commencing
on the Debenture Repayment Date and ending the day prior to the
Initial Dividend Payment Date, and thereafter quarterly on
March 31, June 30, September 30 and December 31 in each year
(the "Dividend Payment Dates") with respect to the quarterly
period ending on the March 30, June 29, September 29 and
December 30, respectively, next preceding such Dividend Payment
Date, to stockholders of record on the record date, not
exceeding sixty days preceding the Initial Dividend Payment
Date or such Dividend Payment Date, respectively, fixed for the
purpose by the Board of Directors or an Authorized Board
Committee in advance of each particular dividend. The amount
of dividends payable on shares of Class A Preferred Stock, for
each full quarterly dividend period shall be computed by
dividing by four the annual rate per share set forth in this
paragraph (ii).
The Initial Accrued Dividends shall be paid ratably
over 12 calendar quarters, commencing with the calendar quarter
which ends immediately after the Debenture Repayment Date.
Payment of the Initial Accrued Dividends shall be made on the
Initial Dividend Payment Date and the following 11 Dividend
Payment Dates, to stockholders of record on the respective
record dates for such Dividend Payment Dates.
Notice of the current rate of Dividends, which shall
detail the basis for such determination, shall be given by the
Corporation on a quarterly basis to the holders of record of
the shares of Class A Preferred Stock as of the record date for
such Dividends, at their respective addresses appearing on the
books of the Corporation. Such notice shall be given on each
Dividend Payment Date (including the Initial Dividend Payment
Date), and, prior to the Debenture Repayment Date, shall be
given each December 31, March 31, June 30 and September 30.
Notice of the Debenture Repayment Date shall be given
by the Corporation, promptly upon its determination, to the
holders of record of the shares of Class A Preferred Stock on
such date, at their respective addresses appearing on the books
of the Corporation.
<PAGE>
Dividends payable on the Class A Preferred Stock for
the initial dividend period and for any other period which is
less than a full quarterly period shall be computed on the
basis of a 360-day year of twelve 30-day months.
(iii) Optional Redemption. The
Corporation at any time and from time to time may at its option
redeem all, or any number less than all, of the outstanding
shares of Class A Preferred Stock. Any redemption of shares of
Class A Preferred Stock shall be effected at a redemption price
of $10.00 per share plus, in each case, an amount equal to all
dividends (whether or not earned or declared) accrued and
unpaid on such share of Class A Preferred Stock to the date
fixed for redemption. Notice of any proposed redemption of
shares of Class A Preferred Stock shall be given by the
Corporation by mailing a copy of such notice no less than
20 days nor more than 60 days prior to the date fixed for such
redemption to holders of record of the shares of Class A
Preferred Stock to be redeemed at their respective addresses
appearing on the books of the Corporation. Said notice shall
specify the shares called for redemption, the redemption price
and the place at which and date on which the shares called for
redemption will, upon presentation and surrender of the
certificates of stock evidencing such shares, be redeemed and
the redemption price therefor paid. In the case of the
redemption of less than all the outstanding shares of Class A
Preferred Stock, such redemption shall be of full shares
selected by lot among all then outstanding Class A Preferred
Stock in such manner as may be prescribed by the Board of
Directors. From and after the date fixed in any such notice as
the date of redemption of shares of Class A Preferred Stock,
unless default shall be made by the Corporation in providing
monies at the time and place specified for the payment of the
redemption price pursuant to such notice, all dividends on the
Class A Preferred Stock thereby called for redemption shall
cease to accrue and all rights of the holders thereof as
stockholders of the Corporation, except the right to receive
the redemption price, shall cease and terminate.
All shares of Class A Preferred Stock which shall at
any time have been redeemed shall, after such redemption, have
the status of authorized but unissued shares of Preferred
Stock, without designation as to series until such shares are
once more designated as part of a particular series by the
Board of Directors or an Authorized Board Committee.
(iv) Priority of Class A Preferred Stock. The shares
of Class A Preferred Stock shall be preferred as to assets over
the shares of the Common Stock or any other capital stock of the
Corporation ranking junior to the Class A Preferred Stock upon
liquidation, dissolution or winding up of the Corporation so that
in the event of any liquidation, dissolution or winding up of the
Corporation, whether voluntary or involuntary, the holders of the
Class A Preferred stock shall be entitled to receive out of the
assets of the Corporation available for distribution to its
stockholders, whether from capital, surplus or earnings, after
distribution and payment in full to the holders of any capital
stock of the Corporation ranking prior to the Class A Preferred
Stock upon liquidation, dissolution or winding up of the
Corporation of the preferential amounts and dividends payable
thereon, and before any distribution is made to holders of
shares of the Common Stock or any other capital stock of the
Corporation ranking junior to the Class A Preferred stock upon
liquidation, dissolution or winding up of the Corporation, an
amount equal to $10.00 per share plus an amount equal to all
dividends (whether or not earned or declared) accrued and
unpaid on such share of Class A Preferred Stock to the date of
final distribution. If, upon any liquidation, dissolution or
winding up of the Corporation, the assets of the Corporation,
or proceeds thereof, distributable among the holders of shares
of <PAGE>
<PAGE>
Class A Preferred Stock or any capital stock ranking on a par
with the Class A Preferred Stock upon liquidation, dissolution
or winding up of the Corporation, shall be insufficient to pay
in full the preferential amounts to which such stock would be
entitled, then such assets, or the proceeds thereof, shall be
distributable among such holders ratably in accordance with the
respective amounts which would be payable on such shares if all
amounts payable thereof were payable in full. For the purposes
hereof, neither a consolidation nor a merger of the Corporation
with one or more other corporations, nor a sale or a transfer
of all or substantially all of the assets of the Corporation,
shall be deemed to be a liquidation, dissolution or winding up,
voluntary or involuntary, of the Corporation.
(v) Voting Rights.
(I) Notwithstanding anything herein to the contrary,
so long as any shares of the Class A Preferred Stock remain
outstanding, the Corporation will not, either directly or
indirectly or through merger or consolidation with any other
corporation, without the affirmative unanimous vote at a
meeting, or the written consent with or without a meeting, of
the holders of the shares of Class A Preferred Stock then
outstanding, amend, alter or repeal any of the provisions of
the Certificate of Designations of the Class A Preferred Stock
or the certificate of Incorporation of the Corporation, or
authorize any reclassification of the Class A Preferred Stock,
so as in any such case to affect adversely the preferences,
special rights or powers of the Class A Preferred Stock, or
authorize any capital stock of the Corporation ranking, either
as to payment of dividends or upon liquidation, dissolution or
winding up of the Corporation, prior to the Class A Preferred
Stock.
(II) Notwithstanding anything herein to the contrary,
so long as any shares of the Class A Preferred Stock remain
outstanding, the Corporation will not, either directly or
indirectly or through merger or consolidation with any other
corporation, without the affirmative unanimous vote at a
meeting, or the written consent with or without a meeting, of
the holders of the shares of Class A Preferred Stock then
outstanding, increase the authorized number of shares of
Class A Preferred Stock, increase the authorized number of
shares of Preferred Stock or create, or increase the authorized
number of shares of, any other class of capital stock of the
Corporation ranking on a parity with the Class A Preferred
Stock either as to payment of dividends or upon liquidation,
dissolution or winding up of the Corporation.
(III) In exercising the voting rights set forth in this
paragraph or when otherwise granted voting rights by operation
of law, each share of Class A Preferred Stock shall be entitled
to one vote.
(IV) No consent of holders of the Class A Preferred
Stock shall be required for (a) the creation of any
indebtedness of any kind of the Corporation, (b) the
authorization or issuance of any class of capital stock of the
Corporation ranking junior to the Class A Preferred Stock in
payment of dividends and upon liquidation, dissolution or
winding up of the Corporation, or (c) subject to clauses (I)
and (II) of this Section, the authorization or issuance of any
shares of Preferred Stock, including any additional shares of
Class A Preferred Stock.
<PAGE>
<PAGE>
(vi) Amendment. The Board of Directors reserves the
right by subsequent amendment of this resolution from time to
time to decrease the number of shares which constitute the
Class A Preferred Stock (but not below the number of shares
thereof then outstanding) and, subject to anything to the
contrary set forth in the Restated Certificate of Incorporation,
as amended, of the Corporation applicable to the Preferred Stock,
to subdivide the number of shares, the par value per share and the
liquidation value per share of the Class A Preferred Stock, and
in other respects to amend, within the limitations provided by law,
this resolution and the Restated Certificate of Incorporation, as
amended, of the Corporation.
IN WITNESS WHEREOF, the Corporation has caused this
Certificate to be duly executed on its behalf by its
undersigned President and attested to by its Secretary this
15th day of November, 1994.
/s/ Jack L. Brozman, President
_______________________________________
Jack L. Brozman, President
[Corporate Seal]
ATTEST:
/s/ Lisa M. Henak
___________________________
Secretary
<PAGE>
<PAGE>
EXHIBIT C
CONSENT
The undersigned, Mark Twain Kansas City Bank, a
Missouri banking corporation, hereby consents to the terms and
provisions of the Second Amendment to the Restructuring,
Security and Guaranty Agreement, dated as of November 15, 1994
(the "Second Amendment"), by and among CenCor, Inc. ("CenCor");
Concorde Career Colleges, Inc. ("Concorde"); Minnesota
Institute of Medical and Dental Assistants, Inc.; Texas College
of Medical and Dental Assistants, Inc.; United Health Careers
Institute, Inc.; Southern California College of Medical and
Dental Assistants, Inc.; Concorde Careers - Florida, Inc.;
Colleges of Dental and Medical Assistants, Inc.; and Computer
Career Institute, Inc., and, specifically to the Exchange and
the Assignment of the 1994 Receivables by Concorde to CenCor
(as those terms are defined in the Second Amendment), waives
the restrictions regarding issuance of stock by Concorde
contained in Section 10.11 of the Mark Twain Agreement, and
agrees to comply with and perform its duties and obligations
under Sections 8.2 and 10.5 of the Second Amendment.
Dated: November 11, 1994
MARK TWAIN KANSAS CITY BANK
By: /s/ Mark Degner
Mark Degner, its
Senior Vice President
<PAGE>
<PAGE>
EXHIBIT 10(n)
SUBORDINATION AGREEMENT
THIS SUBORDINATION AGREEMENT dated this 15th day of
November, 1994 is among CONCORDE CAREER COLLEGES, INC.
("Concorde"), CENCOR, INC. ("CenCor"), and MARK TWAIN KANSAS
CITY BANK, a Missouri banking corporation ("Bank").
WHEREAS, Concorde is indebted to Bank pursuant to a
Revolving Credit, Security and Guaranty Agreement dated
September 3, 1991, as amended by Amendment No. One dated April
30, 1992 and Amendment No. Two dated April 30, 1993 ("Credit
Agreement");
WHEREAS, ConCorde is indebted to CenCor pursuant to a
Restructuring, Security and Guaranty Agreement dated October
30, 1992, as amended by the First Amendment dated December 30,
1993 and the Second Amendment dated November 15, 1994
("Restructuring Agreement");
WHEREAS, the subsidiaries of ConCorde have guaranteed
ConCorde's obligations to CenCor and to the Bank;
WHEREAS, ConCorde and its subsidiaries have executed and
filed UCC Financing Statements with the Secretary of State for
the States of Kansas, Missouri, California, Colorado, Oregon,
Texas, Florida, and Tennessee as well as with certain local
recorders of deeds in order to perfect the security interest of
the Bank in certain assets of ConCorde and its subsidiaries
(the "Bank Lien");
WHEREAS, ConCorde and its subsidiaries have executed and
filed UCC Financing Statements with the Secretary of State for
the States of Kansas, Missouri, California, Colorado, Oregon,
Texas, Florida, and Tennessee as well as with certain local
recorders of deeds in order to perfect the security interest of
CenCor in certain assets of ConCorde and its subsidiaries (the
"CenCor Lien");
WHEREAS, in connection with the First Amendment and Second
Amendment to the Restructuring Agreement, ConCorde transferred
to CenCor certain receivables;
WHEREAS, pursuant to the terms of the First Amendment and
Second Amendment to the Restructuring Agreement, ConCorde
agreed to transfer certain additional receivables to CenCor at
the occurrence of certain specified events;
WHEREAS, the Bank consented to the First Amendment and
Second Amendment to the Restructuring Agreement and the related
transfer of receivables to CenCor and agreed to execute all
necessary or appropriate documents to effectuate the transfer
of the receivables to CenCor free and clear of all liens,
security interests and other encumbrances; and
WHEREAS, the Bank benefitted from the transfer of
receivables to CenCor because such transfer increased the net
worth of ConCorde and the likelihood of ConCorde's continued
operations.
<PAGE>
NOW, THEREFORE, in consideration of the mutual promises and
other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties agree
as follows:
I. Bank hereby consents to the transfer of the Receivables
as defined in the First Amendment to the Restructuring
Agreement, the Substituted Receivables as defined in the First
Amendment to the Restructuring Agreement, and the 1994
Receivables as defined in the Second Amendment to the
Restructuring Agreement (cumulatively such Receivables,
Substituted Receivables and 1994 Receivables shall be referred
to as "Written Off Receivables").
II. Bank agrees to release any and all liens it has in the
Written Off Receivables.
III. If for any reason Bank's release of the Bank Lien is
determined to be without effect, including without limitation
due to the nonfiling of releases or partial releases of UCC-1
Financing Statements, Bank further agrees that the Bank's Lien
in the Written Off Receivables shall be subordinate to CenCor's
Lien, notwithstanding the chronological order in which any UCC
Financing Statements are filed.
IV. Bank agrees to execute all additional documents
reasonably necessary to effectuate the agreements herein and
the transactions contemplated in the First Amendment and Second
Amendment to the Restructuring Agreement, including those
documents to release the Bank's Lien in the Written Off
Receivables.
V. This Agreement is binding upon and shall inure to the
benefit of the parties hereto and their successors and assigns.
VI. This Agreement shall be construed in accordance with
the laws of the State of Missouri.
CONCORDE CAREER COLLEGES, INC.
BY: /s/ GREGG GIMLIN
CENCOR, INC.
BY: /s/ PATRICK F. HEALY
MARK TWAIN KANSAS CITY BANK
BY: /s/ MARK DEGREN
TITLE: Senior Vice President
<PAGE>
EXHIBIT 10(o)
SETTLEMENT AGREEMENT
This Agreement is made this 27th day of March, 1995 by and
among CenCor, Inc., a Delaware corporation ("CenCor"), its
wholly owned subsidiary, Century Acceptance Corporation, a
Delaware corporation ("Century") (collectively CenCor, Century
and the wholly owned subsidiaries of Century shall be referred
to herein as "CenCor and its Affiliates"), Jack L. Brozman,
Executor of the Estate of Robert F. Brozman, deceased (the
"Estate"), and Jack L. Brozman, Successor Trustee under the
Robert F. Brozman Trust U/A dated December 28, 1989, as amended
(the "Trust").
WHEREAS, CenCor and its Affiliates have asserted certain
claims against the Estate and Trust arising from the actions of
the late Robert F. Brozman as a director and officer of CenCor
and its Affiliates which have been disputed by the Estate and
Trust; and
WHEREAS, the Trust is the legal and beneficial owner of
Five Hundred Ninety Seven Thousand Sixty Four (597,064) shares
of common stock of CenCor (the "Brozman Stock"); and
WHEREAS, CenCor and its Affiliates, the Estate and the
Trust have agreed to settle the disputes between them on the
terms and conditions herein, subject to approval of this
Agreement by the District Court of Johnson County, Kansas,
Probate Division in that case entitled "In the Matter of the
Estate of Robert F. Brozman, Deceased," Case No. 91P-393 (the
"Probate Court").
NOW, THEREFORE, in consideration of the payments to be made
by the Estate and the transfer of the Brozman Stock by the
Trust to CenCor, the mutual releases to be given by the
parties, and other valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties agree
as follows:
1. Cash Payments. The Estate agrees to pay to CenCor Six
Hundred Thousand Dollars ($600,000) in the form of a cashier's
check or wire transfer within fifteen (15) days after approval
of this Agreement by the Probate Court.
2. Stock Payment. On or before the Stock Transfer Date
(as defined in paragraph 4), the Trust shall transfer all or
part of the Brozman Stock to CenCor based upon the Year End
Fair Market Value (as defined in paragraph 3) as follows:
(a) If the Year End Fair Market Value of the Brozman
Stock is determined to be Four Hundred Thousand Dollars
($400,000) or less, then the Trust shall transfer all of
the Brozman Stock to CenCor on or before the Stock Transfer
Date.
<PAGE>
<PAGE>
(b) If the Year End Fair Market Value of the Brozman Stock
is determined to be in excess of Four Hundred Thousand Dollars
($400,000), then the Trust shall transfer to CenCor on or
before the Stock Transfer Date the number of shares of the
Brozman Stock which have an aggregate value of (i) $400,000
plus (ii) one-half (1/2) of the amount by which the Year End Fair
Market Value of the Brozman Stock exceeds $400,000.
3. Valuation of the Brozman Stock. The Year End Fair
Market Value means the fair market value of the Brozman Stock
as of December 31, 1995 determined in the following manner:
(a) The parties will use their best efforts to
mutually agree upon the Year End Fair Market Value prior to
December 31, 1995.
(b) If the parties are unable to agree upon the Year
End Fair Market Value, the parties will use their best
efforts to mutually select an appraiser to determine the
Year End Fair Market Value prior to December 31, 1995. If
the parties are unable to agree upon either the Year End
Fair Market Value or an appraiser prior to December 31,
1995, the judge of the Probate Court who presided over the
administration of the Estate (the "Probate Judge") shall
select the appraiser. CenCor and the Trust shall each
submit the name of three (3) appraisers with a description
of their qualifications to the Probate Judge and the other
parties on or before January 5, 1996. Any party may submit
a written objection to the Probate Judge and the other
parties on or before January 10, 1996 with respect to any
appraiser submitted by another party. The parties shall
request that the Probate Judge select the appraiser by
January 19, 1996. If the Probate Court declines to select
an appraiser by January 19, 1996, CenCor and the Trust
shall each select an appraiser by January 25, 1996 and
those appraisers shall mutually select by January 31, 1996
an appraiser to determine the Year End Fair Market Value.
(c) The appraiser selected by mutual agreement of the
parties, by the Probate Judge or by mutual agreement of the
two appraisers selected by CenCor and the Trust (the
"Appraiser") may use the guidelines of the Internal Revenue
Service and the U. S. Treasury Department, among other
criteria, to determine the Year End Fair Market Value, as
the Appraiser deems appropriate and to the extent such
guidelines are consistent with the terms of this Agreement.
In determining the Year End Fair Market Value, the
Appraiser shall not adjust the value of the Brozman Stock
(i) for any premium or discount by reason of the Brozman
Stock being considered a minority interest, a majority
interest or a controlling interest, nor (ii) for any
discount arising solely by reason of the common stock of
CenCor not being listed on an exchange or actively traded.
Furthermore, the Appraiser shall exclude the $600,000
payment received by CenCor pursuant to paragraph 1 when
determining the Year End Fair Market Value. The cost of
the appraisal, if necessary, shall be borne equally by the
Estate and CenCor.
(d) The parties and any selected Appraiser shall use
their best efforts to determine the Year End Fair Market
Value by March 31, 1996.
<PAGE>
<PAGE>
4. Stock Transfer Date. The Stock Transfer Date shall
be three (3) business days after the first of the following
events to occur: (i) the parties mutually agree upon the Year
End Fair Market Value, (ii) the Appraiser determines the Year
End Fair Market Value, (iii) the sale or liquidation of
substantially all of the assets of CenCor or Century such that
substantially all of the remaining assets of CenCor on a
consolidated basis are cash or cash equivalents and
substantially all of the liabilities of CenCor have been paid
or finally determined, or (iv) March 31, 1996.
5. Mutual Release.
(a) Subject to the conditions set forth in
paragraphs 9 and 10, CenCor and its Affiliates do hereby
release as of the Effective Date (as defined in paragraph
12) the Estate, its executor in his capacity as executor,
the Trust and its trustee in his capacity as trustee from
any claim, cause of action, agreement or demand whatsoev-
er, whether known or unknown, and whether or not
heretofore asserted, which CenCor and its Affiliates, or
any of them, ever had or now have or ever claimed to have
had by reason of any transaction, activity or omission by
Robert Brozman.
(b) The Estate and Trust do hereby release, as of
the Effective Date, CenCor and its Affiliates and the
officers and directors of CenCor and each of its
Affiliates from any claim, cause of action, agreement or
demand whatsoever, whether known or unknown, and whether
or not heretofore asserted, which the Estate or Trust ever
had or now has or ever claimed to have against CenCor, its
Affiliates or their officers and directors of any kind
whatsoever.
6. Representation by Estate and Trust. The Estate and
Trust jointly and severally represent and warrant, as of the
date of this Agreement and as of the date of the transfer of
the Brozman Stock, as follows:
(a) The Trust is the legal and beneficial owner of
597,064 shares of common stock of CenCor. The Estate does
not own, hold or have a beneficial interest in any shares
of common stock of CenCor.
(b) The Brozman Stock is owned by the Trust free and
clear of any lien, pledge, security interest, encumbrance
or other interest whatsoever, except for that certain
pledge of the Brozman Stock to Mercantile Bank of Kansas
City pursuant to a Pledge Agreement dated August 29, 1991
(the "Pledge Agreement"). The claims of all of the
Beneficiaries listed on Exhibit "A" of the Pledge
Agreement (the "Beneficiaries") except CenCor have been
fully satisfied and, therefore, none of the Beneficiaries
except CenCor has a security interest in the Brozman Stock
pursuant to the Pledge Agreement. The Trust will not
transfer, assign, pledge, gift or grant any interest
whatsoever in the Brozman Stock to any person or entity
other than to CenCor.
(c) This Agreement is binding upon the Estate, the
executor of the Estate, the devisees, legatees and heirs
of Robert Brozman, the Trust and the trustee(s) and
beneficiaries of the Trust.
(d) Jack Brozman, as executor of the Estate has the
legal authority and capacity to enter into this Agreement
on behalf of the Estate and to legally bind the Estate and
its devisees, legatees and heirs.
<PAGE>
<PAGE>
(e) Jack Brozman, as trustee of the Trust has the
legal authority and capacity to enter into this Agreement
on behalf of the Trust and to legally bind the Trust and
its beneficiaries.
(f) The Estate will not make any distributions out
of the Estate until the payment to CenCor set forth in
paragraph 1 has been made.
7. Representatives by CenCor and its Affiliates. CenCor
and Century jointly and severally represent and warrant that
this Agreement is binding upon CenCor and its Affiliates and
their successors and assigns and has been approved by all
requisite corporate action.
8. Termination of Options. The Estate and Trust agree
that any and all options or warrants to acquire stock in CenCor
or its Affiliates that either entity may own or hold are hereby
terminated.
9. Conditions to Release of Estate by CenCor and its
Affiliates. The Release of the Estate by CenCor and its
Affiliates herein is conditioned upon occurrence of each of the
following:
(a) execution of the Consent attached hereto as
Exhibit "A" by all of the Brozman Relatives listed on such
Consent;
(b) approval of this Agreement by an Order of the
Probate Court;
(c) the Estate timely making the payment to CenCor
pursuant to paragraph 1; and
(d) compliance by the Estate with all the agreements,
covenants, representations and warranties herein.
10. Conditions to Release of Trust by CenCor and its
Affiliates. The Release of the Trust by CenCor and its
Affiliates herein is conditioned upon occurrence of each of the
following:
(a) execution of the Consent attached hereto as
Exhibit "A" by all of the Brozman Relatives listed on such
Consent;
(b) approval of this Agreement by an Order of the
Probate Court;
(c) the Estate timely making the payment to CenCor
pursuant to paragraph 1;
(d) the Trust timely transferring the required
shares of the Brozman Stock to CenCor, and
(e) compliance by the Estate and Trust with all the
agreements, covenants, representations and warranties
therein.
11. Petition for Probate Court Approval. The Estate
agrees to file a Petition with the Probate Court seeking
approval of this Agreement, including without limitation the
cash payment set forth in paragraph 1, within two business days
after execution of this Agreement.<PAGE>
<PAGE>
12. Effective Date. The Effective Date shall be the day
on which the CenCor receives from the Estate the $600,000
payment pursuant to paragraph 1.
13. Termination. This Agreement shall terminate if it is
not approved by a final and nonappealable Order of the Probate
Court on or before May 31, 1995.
14. Survival. All of the warranties and representations
by the parties contained in this Agreement shall survive the
transfer of the Brozman Stock to CenCor and shall remain in
full force and effect.
15. Notices. Any notice required to be given hereunder
shall be sufficient if it is in writing, sent by hand-delivery,
via fax, or by certified mail, return receipt requested and
postage prepaid to the following address:
<TABLE>
<S> <C>
To CenCor, Inc.: George L. Bernstein, Director
CenCor, Inc.
1901 Walnut Street
Philadelphia, PA 19103
Fax: (215) 963-1026
To Century: Dennis Berglund, President
Century Acceptance Corporation
1100 Main Street, Suite 2350
Kansas City, Missouri 64105
Fax: (816) 221-6854
To Estate: Jack Brozman, Executor
1100 Main Street
Kansas City, Missouri 64105
Fax: (816) 474-7610
To Trust: Jack Brozman, Trustee
1100 Main Street, Suite 416
Kansas City, Missouri 64105
Fax: (816) 474-7610
</TABLE>
A notice shall be deemed delivered (i) on the date it is hand
delivered or faxed or (ii) on the third business day after it
is mailed by certified mail. A party may change its address
for purposes of receiving a notice hereunder by complying with
this paragraph 15.
16. Miscellaneous Provisions.
(a) Entire Agreement. This Agreement contains the
entire agreement and understanding between the parties and
supersedes all other written and oral agreements.<PAGE>
<PAGE>
(b) Burden and Benefit. The rights and duties under
this Agreement shall be binding upon and shall inure to
the benefit of the parties hereto and their successors and
assigns and the devisees, legatees and heirs of Robert F.
Brozman.
(c) Governing Law. This Agreement is to be executed in
Johnson County, Kansas. The parties agree that the construc-
tion and interpretation of this Agreement shall be governed by
the laws of the State of Kansas.
(d) Headings and Exhibits. The headings to the
various paragraphs are for convenience only and shall not
affect the interpretation of this Agreement. All exhibits
referenced herein are hereby incorporated into this
Agreement.
(e) Counterparts. This Agreement may be executed
simultaneously in one or more counterparts, each of which
may be deemed an original, but all of which together shall
constitute one and the same agreement.
(f) Further Assurances. In addition to the acts
recited in this Agreement to be performed by the parties,
the parties agree to perform or cause to be performed any
and all such further acts as may be reasonably necessary
to consummate the transactions contemplated herein,
including without limitation the execution of such further
documents or instruments as may be reasonably requested by
the other party.
(g) Attorneys' Fees. In the event of litigation or
arbitration involving a dispute arising out of this
Agreement, the prevailing party shall be entitled to
recover reasonable attorneys' fees and expenses from the
other party.
IN WITNESS WHEREOF, we have hereunto executed this
Agreement the day and year first above-written.
CENCOR, INC.
By: RANDALL J. OPLIGER
Title: Chief Financial Officer
CENTURY ACCEPTANCE CORPORATION
By: DENNIS C. BERGLUND
Title: President/Chief
Executive Officer
<PAGE>
<PAGE>
ESTATE OF ROBERT F. BROZMAN
By: JACK L. BROZMAN
Jack L. Brozman, Executor
ROBERT F. BROZMAN TRUST
By: JACK L. BROZMAN
Jack L. Brozman, Trustee
<PAGE>
<PAGE>
EXHIBIT "A"
The following persons consent to the above Settlement
Agreement among CenCor, Inc., Century Acceptance Corporation,
the Estate of Robert F. Brozman, deceased, and the Robert F.
Brozman Trust:
<TABLE>
<S> <C>
Date: March 28, 1995 /s/ BARBARA EDWARDS
Barbara Edwards
Date: March 27, 1995 /s/ JACK L. BROZMAN
Jack L. Brozman
Date: March 28, 1995 /s/ NANCY C. DALEY
Nancy C. Daley
Date: March 29, 1995 /s/ RICKI E. BROZMAN
Ricki E. Brozman
Date: March 24, 1995 /s/ LORETTA J. BROZMAN
Loretta J. Brozman
Date: March 25, 1995 /s/ ANNE FELD
Anne Feld
Date: March 24, 1995 /s/ ROSE MARIE FOWLER
Rose Marie Fowler
</TABLE>
<PAGE>
<PAGE>
<TABLE>
EXHIBIT 22
CENCOR, INC. AND SUBSIDIARIES
SUBSIDIARIES OF THE REGISTRANT
<CAPTION>
Century Acceptance Corporation, 100% owned
The following is a list of Century's wholly-owned
subsidiaries:
Name State of Incorporation
<S> <C>
Century Finance Company of Alabama. Alabama
Century Finance Company of Colorado Colorado
Century Finance Company of Florida. Florida
Century Home Equity Corporation . . Florida
Century Finance Company, Inc.
of Georgia Georgia
Century Finance Company of Kansas . Kansas
Century Finance Company of Kentucky Kentucky
Century Finance Company of Louisiana Louisiana
Century Finance Company of Missouri Missouri
Century Finance Company of Omaha, Inc. Nebraska
Century Finance Company of
Oklahoma, Inc. Oklahoma
Century Finance Company of
Greenville, Inc. South Carolina
Century Finance Company of Tennessee Tennessee
Century Acceptance Corporation of Texas Texas
Century Finance Company of Utah . . Utah
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-END> DEC-31-1994
<CASH> 1,033,000
<SECURITIES> 0
<RECEIVABLES> 109,319,000
<ALLOWANCES> 5,194,000
<INVENTORY> 0
<CURRENT-ASSETS> 109,790,000
<PP&E> 2,756,000
<DEPRECIATION> 602,000
<TOTAL-ASSETS> 111,944,000
<CURRENT-LIABILITIES> 6,021,000
<BONDS> 113,100,000
<COMMON> 1,241,000
0
0
<OTHER-SE> (8,468,000)
<TOTAL-LIABILITY-AND-EQUITY> 111,944,000
<SALES> 0
<TOTAL-REVENUES> 29,034,000
<CGS> 0
<TOTAL-COSTS> 14,155,000
<OTHER-EXPENSES> (512,000)
<LOSS-PROVISION> 5,519,000
<INTEREST-EXPENSE> 11,384,000
<INCOME-PRETAX> (1,512,000)
<INCOME-TAX> 0
<INCOME-CONTINUING> (1,512,000)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,512,000)
<EPS-PRIMARY> ($0.83)
<EPS-DILUTED> ($0.83)
</TABLE>
