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, 1995
Commission file number 0-3417
CENCOR, INC.
(Exact name of registrant as specified in its charter)
1100 Main Street, City Center Square, Suite 416A
P.O. Box 26098
Kansas City, MO 64196-6098
Telephone (816) 221-5833
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.
YesX No__
Indicate by check mark whether the registrant has filed all
documents and reports required to be filed by Sections 12, 13, or
15(d) of the Securities Exchange Act of 1934 subsequent to the
distribution of securities under a plan confirmed by a court.
YesX 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 May 16, 1996.
1,366,321 Shares of Regular Common Stock, $1.00 par value
Market value at May 16, 1996 was $5,123,704
Documents incorporated by reference--None
<PAGE>
<PAGE>
CENCOR, INC.
FORM 10-K
YEAR ENDED DECEMBER 31, 1995
INDEX
Item Page
PART I 1
Item 1. Business 1
Item 2. Properties 1
Item 3. Legal Proceedings 1
Item 4. Submission of Matters to a Vote of Security Holders 2
PART II 3
Item 5. Market for Registrant's Common Stock and
Related Stockholder Matters 3
Item 6. Selected Financial Data 4
Item 7. Management's Discussion and Analysis of Financial Condition
and Results of Operations 5
Item 8. Financial Statements and Supplementary Data 9
Item 9. Changes in and Disagreements with Accountants on Accounting
and Financial Disclosure 24
PART III 25
Item 10. Directors and Executive Officers of the Registrant 25
Item 11. Executive Compensation 26
Item 12. Security Ownership of Certain Beneficial Owners and
Management 30
Item 13. Certain Relationships and Related Transactions 31
PART IV 33
Item 14. Exhibits, Financial Statements, Schedules, and Reports on
Form 8-K 33
<PAGE>
<PAGE>
PART I
Item 1. Business
CenCor, Inc. ("CenCor") was incorporated under the laws of
Delaware on May 27, 1968. Prior to June 30, 1995, CenCor, was
engaged in the consumer finance business through its wholly-owned
subsidiary Century Acceptance Corporation ("Century"). As used
herein, the term "the Company" refers to CenCor and Century
collectively. Effective June 30, 1995, substantially all of the
assets of Century were sold. For additional information regarding
the sale of Century, see "Management's Discussion and Analysis of
Financial Condition and Results of Operations--Financial Condi-
tions--Sale of Century".
The Company has not conducted on-going operations since the
sale of its consumer finance business and is in the process of
liquidation. CenCor's Board of Directors has adopted a resolution
calling for the dissolution of CenCor and has adopted a Plan of
Dissolution and Liquidation (the "Plan of Liquidation") which will
be submitted for stockholder approval at CenCor's next annual
meeting. If the Plan of Liquidation is approved, CenCor is
expected to be fully liquidated by 1999. See "Management's Discus-
sion and Analysis of Financial Condition and Results of Operation--
Financial Condition--Plan of Liquidation".
Subsequent to December 31, 1995, CenCor caused its Convertible
Notes (as later defined) to be converted into CenCor common stock
(see "Management's Discussion and Analysis of Financial Condition
and Results of Operations--Financial Condition--Conversion of
Convertible Notes"). As a result of the conversion, 572,554
shares of CenCor common stock are issuable to the holders of the
Convertible Notes. As of May 16, 1996, 450,464 shares of common
stock have been issued upon the surrender of Convertible Notes.
Subsequent to December 31, 1995, CenCor received into its treasury
324,641 shares of CenCor common stock in settlement of a claim
against the Estate of Robert F. Brozman and the related Robert F.
Brozman Trust (see "Certain Relationships and Related Transac-
tions"). The issued and outstanding share amounts reflected in
this report (except the cover page) and in the December 31, 1995
financial statements included herein reflect the receipt and retirement of
the 324,641 shares received from the Robert F. Brozman Trust and treats all
572,554 shares issuable as a result of the conversion of
the Convertible Notes as issued and outstanding at December 31, 1995.
Item 2. Properties
Since the sale of its consumer finance business, the Company's
need for office space has decreased sufficiently. The Company
currently subleases approximately 800 sq. feet of office space on
a month to month basis (see "Certain Relationships and Related
Transactions"). The Company believes that its office space is
adequate for its needs.
Item 3. Legal Proceedings
During 1991, a Century subsidiary was the victim of a
fraudulent scheme involving the purchase of automobile financing
contracts which Century later 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
initially denied the claim filed by Century as a result of the
fraudulent scheme. 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. In March
1996, the Century subsidiary and the insurance company reached an
agreement to settle the claim for $750,000.
<PAGE>
<PAGE>
On July 21, 1994, Century, along with a number of
other consumer finance companies, was named as a defendant in a
lawsuit styled Princess Nobels v. Associates Corporation of North
America, et al. The case is currently pending in the U.S. District
Court for the Middle District of Alabama. The plaintiffs, who
allegedly were charged for non-filing insurance, make claims for
antitrust violations, fraud, violations of RICO, breach of
contract, conversion, and Truth-in-Lending Act violations and seek
statutory and actual damages, attorney fees and litigation costs.
On April 22, 1996, a statewide class of borrowers was certified by
the court. Century has denied the allegations
presented in the suit and is actively defending the charges.
On April 13, 1995, Century, along with a number of
other consumer finance companies, was named as a defendant in a
lawsuit filed by certain alleged borrowers of the defendant
creditor/lenders. In the action, which is pending before the
United States District Court for the Middle District of Alabama,
Northern Division and styled Dorothy McCurdy, et al. v. American
General Finance, Inc., et al, the plaintiffs allege that the
defendants engaged in violations of the Alabama Mini-Code, fraud,
and conspiracy with respect to the sale of credit property
insurance. The plaintiffs seek statutory damages, compensatory and
punitive damages, and attorneys' fees. Preliminary motions are
currently pending in the case. Century has denied
the allegations presented in the suit and is actively defending the
charges.
Item 4. Submission of Matters to a Vote of Security Holders
No matter was submitted to a vote of security holders during
the fourth quarter of the registrant's fiscal year ended Decem-
ber 31, 1995.
<PAGE>
<PAGE>
PART II
Item 5. Market for Registrant's Common Stock and Related Stockholder Matters
CenCor's common stock is quoted on the OTC Bulletin Board
under the symbol CNCR. The range of high and low sales price as
quoted on the OTC Bulletin Board for each quarter of 1994 and 1995
is as follows:
<TABLE>
<CAPTION>
1994 1995
Quarter Ended High Low High Low
<S> <C> <C> <C> <C>
March 31 3/4 1/2 5/8 5/8
June 30 13/16 1/2 3 3
September 30 3/4 1/2 4-3/8 4-3/8
December 31 3/4 9/16 3-1/2 3-1/2
</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 May 16, 1996, the quoted bid price of the Common Stock on
the OTC Bulletin Board was $3.75.
At May 16, 1996, CenCor had approximately 1,166 stockholders
of record. No dividends have been paid on the common stock.
(The remainder of this page is intentionally blank.)
<PAGE>
<PAGE>
Item 6. Selected Financial Data
<TABLE>
<CAPTION>
December 31
1995
<S> <C>
Net Assets in Liquidation
Cash and cash equivalents $22,439,000
Property and equipment, net 30,000
Other assets 11,903,000
Total assets 34,372,000
Accounts payable and
accrued liabilities 3,200,000
Income taxes payable 759,000
Long-term debt 12,303,000
Total liabilities 16,262,000
Net assets in liquidation $18,110,000
Number of common shares outstanding 1,488,411
Net assets in liquidation per share $ 12.17
Operating results for the year ended
December 31, 1995*:
Income $ 1,220,000
Expenses 5,082,000
Operating loss (3,862,000)
Non-operating income 3,087,000
Loss before discontinued operations (775,000)
Income from discontinued operations 18,717,000
Net income $17,942,000
Weighted average shares outstanding 1,813,052
Earnings per share from net income $ 9.90
</TABLE>
________________
*As discussed in "Description of Business," the Company is in the
process of liquidation and therefore prior year financial data is
not comparable or meaningful.
<PAGE>
<PAGE>
Item 7. Management's Discussion and Analysis of Financial Condition
and Results of Operations
Financial Condition
Sale of Century
Effective June 30, 1995, Century consummated the sale of its
consumer finance business to Fidelity Acceptance Corporation, a
subsidiary of the Bank of Boston Corporation.
Under the terms of the sale, Century received $128.7 million
for substantially all of its assets. In accordance with the
provisions of the sales agreement, $5 million of the sale proceeds
were placed in escrow to secure certain indemnification obligations
of Century and CenCor to the buyer that run through July 1, 1998.
While the escrow may be reduced by claims of the buyer, no such
claims have been made as of May 16, 1996.
As a result of the sale, Century was able to redeem all of its
outstanding secured notes held by its lenders for a purchase price
equal to the principal amount of the secured notes (approximately
$102 million) together with interest. The lenders also surrendered
for cancellation outstanding warrants which would have allowed them
to acquire up to 30% of Century. The remaining net proceeds from
the sale have been invested in short-term government and government
agency instruments.
Conversion of Convertible Notes
On December 31, 1995, CenCor had outstanding non-interest
bearing convertible notes due July 1, 1999 (the "Convertible
Notes") in the principal amount of $11,449,771. Effective April 1,
1996, CenCor converted these Convertible Notes into shares of
CenCor's common stock at a ratio of one share of common stock for
each $20 principal amount of Convertible Notes. As a result of
this conversion, the holders of the Convertible Notes are entitled
to be issued 572,554 shares of CenCor common stock upon surrender
of their Convertible Notes. As of May 16, 1996, 450,464 shares
have been issued and are outstanding as a result of the surrender
of Convertible Notes.
Plan of Liquidation
With the sale of its consumer finance business, CenCor's
business purpose no longer exists. For that reason, Cencor's Board
of Directors adopted a resolution on January 22, 1996 that CenCor
be liquidated and that the Plan of Liquidation be submitted to the
stockholders for approval at the next annual meeting.
Under Delaware law, the Plan of Liquidation requires the
affirmative approval of a majority of the issued and outstanding
shares of common stock entitled to vote. If the Plan of Liquida-
tion is adopted by the stockholders, a Certificate of Dissolution
will be filed with the State of Delaware and CenCor shall be
dissolved. Under Delaware law, CenCor will continue as a corporate
entity for three years after the dissolution becomes effective, or
for such longer period as the Delaware Court of Chancery directs in
its own discretion, for the purpose of prosecuting and defending
suits by or against CenCor and winding up the business and affairs
of CenCor, but not for the purpose of continuing the business of
CenCor.
The Plan of Liquidation provides that the implementation of
the plan is intended to be completed within three years of the
effective date of the Certificate of Dissolution. During this
three year period, CenCor would not engage in any business
activities, except for preserving the value of its assets,
adjusting and winding up its business and affairs, and distributing
its assets in accordance with the Plan of Liquidation. CenCor's
debts and liabilities, whether fixed, conditioned or contingent,
would either be paid as they become due or provided for.
<PAGE>
<PAGE>
At such time as the Board has determined that all claims and
liabilities have been identified and paid or provided for, which
CenCor does not expect to occur prior 1999, CenCor will distribute
in one or a series of distributions, at any time, or from time to
time as the Board, in its discretion may determine, all funds
resulting from CenCor's liquidation to the stockholders in accor-
dance with the respective rights of each. The proportionate
interests of the respective stockholders in the assets of CenCor
would be fixed on the basis of their ownership of the outstanding
shares of CenCor on a record date to be determined by the Board of
Directors. The Plan of Liquidation provides that CenCor will be
fully liquidated no later than three years from the effective date
of the Certificate of Dissolution.
During the period of liquidation, CenCor's directors and
officers would implement and carry out the provisions of the Plan
of Liquidation and would receive compensation for their services.
Under Delaware law, stockholders of CenCor do not have the
right to dissent and demand appraisal of their shares if the Plan
of Liquidation is adopted. Accordingly, if the Plan of Liquidation
is adopted, all stockholders would be bound by its terms whether or
not they voted for the plan.
The Board of Directors has been informed that Jack Brozman,
who has the authority to vote 21% of the common stock, intends to
vote all of these shares in favor of the Plan of Liquidation.
Assuming CenCor had fully liquidated and distributed its
assets by December 31, 1995 and assuming further that the Company's
actual realizable value of its assets and liabilities is identical
to the Company's estimated realized value of these items, CenCor's
stockholders would have received $18,110,000 in distributions or
approximately $12.17 per share, less expenses. The actual amount
to be received upon complete liquidation may be adversely affected
by claims arising from the indemnification obligations resulting
from the sale of Century's assets, unanticipated tax liabilities,
the ultimate amount collected on the Debenture and Preferred Stock
of Concorde Career Colleges, Inc., (as discussed below), or other
unforeseen factors. The actual liquidation amount also may be
reduced by legal matters, including the class action lawsuits
pending in Alabama against Century (see "Legal Proceedings").
If the stockholders do not approve the proposed Plan of
Liquidation, management will in all likelihood seek liquidation of
CenCor under the supervision of the U.S. Bankruptcy Court that has
retained jurisdiction of CenCor's 1993 plan of reorganization, on
the basis that the sale of Century accomplished CenCor's plan of
reorganization. A court-supervised liquidation would result in
additional legal and administrative fees being incurred by CenCor,
which would reduce the amount payable to stockholders upon
liquidation.
Assets and Liabilities Following Sale of Century Using Liquidation
Accounting
Following the sale of its consumer finance business, the
Company's assets consist primarily of cash and cash equivalents, a
junior secured debenture (the "Debenture") in the principal amount
of $2,422,000 of Concorde Career Colleges, Inc. ("Concorde"),
300,000 shares of Concorde's cumulative preferred stock (the
"Preferred Stock"), certain previously charged-off receivables
received in payment of accrued interest on the Debenture, and the
escrow account established to secure the indemnification obliga-
tions of the Company to the buyer of the consumer finance business.
At December 31, 1995, the Company also held a receivable in the
amount of $750,000 relating to a fidelity bond claim arising from
a loss on fraudulent automobile contracts in 1991 (see "Legal
Proceedings") and a $875,000 receivable for a claim against a third
party relating to the Company's loss of goodwill due to the so-
called CenCor, Inc. of Kansas City loans (the "CIKC Loans"). The
Company received payment for these receivables in March 1996. The
Company's remaining liabilities consist primarily of the amounts
due to the holders of its Non-Convertible Notes (as later defined),
accounts payable, and other accrued liabilities, including accrued
income taxes. As a result of being in the process of liquidation,
the Company is required to adopt the liquidation basis of account-
ing. Generally accepted accounting principles require the
adjustment of assets and liabilities to estimated fair value under
the liquidation basis of accounting. For information concerning
the estimated fair values given these items by the Company and the
methods and assumptions used to arrive at such values, see the
Company's Financial Statements and the notes thereto.
<PAGE>
<PAGE>
Results of Operations
During the year ended December 31, 1995, the Company's sources
of income, apart from the income received from the discontinued
operations of Century, consisted mostly of collections from the
Concorde charged-off receivables that the Company accepted in
exchange for accrued interest on the Debenture. The Company also
recognized an additional $875,000 of income from the settlement
claim against a third party as described above. In addition, the
Company recognized a gain of $3,087,000 as a result of its
settlement with the Estate of Robert F. Brozman and related Robert
F. Brozman Trust (collectively the "Brozman Estate"). CenCor
released the Brozman Estate of all liability upon receipt of
$600,000 in cash plus the transfer of shares of CenCor common stock
held by the Brozman Estate in the amount of $2,487,000 (see
"Certain Relationships and Related Transactions").
The Company's expenses during the year ended December 31, 1995
consisted mainly of salaries, professional fees, consulting fees in
connection with the sale of Century's assets and accrued expenses
related to the Company's stock appreciation rights ("SARs") and
phantom stock options. See Note 9 to the consolidated financial
statements for further information regarding the SARs and phantom
stock options. In addition, interest expense on the Non-Convert-
ible Notes and Convertible Notes accrued monthly during the period
at the estimated discount rate of 16%. Consequently, interest
expense exceeded interest income due to the higher discount of the
Company's long-term debt as compared to the yield on the Company's
investments. During the period of liquidation, the change in the
discounted value of the long-term debt will be recognized currently
as an adjustment to estimated liquidation value.
Century's loss from operations was $5,330,000. The loss was
comprised of revenue of $15,714,000 which was offset by expenses of
$21,044,000, including interest expense of $5,981,000, provision for
credit losses of $4,462,000 and salaries and other expenses of $10,601,000.
From the date of sale of Century's assets to December 31,
1995, the Company earned $707,000 in interest income from its
short-term investments. The Company's expenses during the same
time period consisted mostly of professional fees, severance and
bonus payments to former employees and officers, a charge-off in
the amount of $250,000 related to the reduction in the receivable
from its fidelity bond claim arising from a loss on fraudulent
automobile contracts in 1991, and a contingency reserve related to
various legal matters.
Activities During Liquidation Period
The Company's activities during the period of liquidation will
focus on the collection of various amounts owed to it, including
the collection of the Debenture, Preferred Stock, and the previous-
ly charged-off Concorde receivables received in payment of accrued
interest. The Company will also closely monitor claims arising
from indemnification obligations to the buyer of Century in order
to maximize the value of the escrow fund established as a result of
the sale. Until the Company's long-term debt becomes payable and
distributions are made to stockholders, management expects to
invest the available proceeds from the sale of Century and the
Company's other cash in short-term government or government agency
instruments.
The Company's expenses during the period of liquidation are
expected to consist mostly of salaries, professional fees,
stockholder communication expenses and other liquidating expenses.
The Company will be required to satisfy the balance of the
Non-Convertible Notes together with all other liabilities prior to
any distribution on its outstanding common stock.
<PAGE>
<PAGE>
Regulation During the Liquidation
Because of the sale of Century's consumer finance business,
CenCor may be an "investment company" as defined in the Investment
Company Act of 1940 (the "1940 Act"). The 1940 Act generally
requires investment companies to register with the Securities and
Exchange Commission after which their capital structure, securities
issuances, investments and transactions with affiliates, along with
numerous other activities would become subject to extensive
regulation. The 1940 Act does not, however, require an investment
company to register if its only activities are those "merely
incidental to its dissolution". CenCor believes that in light of
the dissolution exception from registration under the 1940 Act,
CenCor will not have to register under such act, assuming that the
plan of liquidation is approved by the stockholders.
Surrender of Certificates for Common Stock
At such time as the respective interest of the stockholders
are fixed on the basis of the ownership of their outstanding shares
of common stock of the Corporation on a record date determined by
the Board (the "Record Date"), it is anticipated that the stock
transfer books of CenCor will be closed, no further transfers will
be recorded on CenCor's books and no further stock certificates
will be issued, other than replacement certificates. All distribu-
tions from CenCor on or after the Record Date will be made to
stockholders according to their stockholdings as of the Record
Date. As soon as practicable after the determination of the Record
Date, stockholders will be advised of the procedures for surrender-
ing certificates representing their shares of common stock.
Stockholders should not forward their stock certificates before
receiving those instructions. All distributions otherwise payable
by CenCor to stockholders who have not surrendered their stock
certificate and executed and returned such documents may be held
for such stockholders, without interest, until the surrender of
their certificates (subject to the laws relating to unclaimed
property).
Liquidity and Capital Resources
Capital Obligations
The Company has no significant obligations for capital
purchases.
Defaults on Long-Term Debt
The Company is in compliance with all covenants and terms
under the indenture for the Non-Convertible Notes.
Internal Revenue Service Examination and Potential California Sales
Tax Assessment
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. In addition, the Company's 1990, 1991, and 1992
income tax returns are currently under examination by the IRS.
Management believes that the ultimate disposition of these IRS
examinations will not have a material effect on the financial
position of the Company.
<PAGE>
<PAGE>
As a result of the unresolved IRS examinations, management
cannot precisely estimate the amount of the Company's net operating
loss ("NOL") carryforward for federal income tax purposes. For
purposes of estimating the Company's current income tax liability,
management has made certain assumptions regarding the Company's NOL
carryforwards, which were utilized in full during 1995. Because
the proposed adjustments for 1988 and 1989 have not been resolved
and the 1990-1992 IRS examination is still ongoing, no assurance
can be made regarding this amount.
The California Board of Equalization (the "Board of Equaliza-
tion") issued a Notice of Determination on January 30, 1996 to
Charter Equipment Leasing Corp. ("Charter"), a former subsidiary of
CenCor, in the approximate amount of $723,300 for sales taxes,
interest and penalties for the period October 1 through 31, 1992.
On April 29, 1996, the Board of Equalization issued a revised
Report of Field Audit reducing the sales tax assessment against
Charter to $5,362.
Charter sold substantially all of its assets in November 1992
and dissolved in October 1994. The bulk of the January 1996 tax
assessment was based upon Charter's sale of assets. The April 1996
Report of Field Audit reduced the sales tax assessment, because the
asset sale occurred in November 1992 and the assessment period
ended October 31, 1992. The Board of Equalization may still
attempt to assert a claim against the buyer of Charter's assets
based upon successor liability for the sales taxes allegedly due
from the November 1992 sale transaction. If the buyer is assessed
sales taxes, the buyer may attempt to assert an indemnification
claim against CenCor.
<PAGE>
<PAGE>
Item 8. Financial Statements and Supplementary Data
INDEX TO FINANCIAL STATEMENTS
Page
CenCor, Inc.
Report of Independent Auditors 11
Audited Consolidated Financial Statements
Consolidated Statement of Net Assets in Liquidation 12
Consolidated Statement of Operations 13
Consolidated Statement of Stockholders' Equity 14
Consolidated Statement of Cash Flows 15
Notes to Consolidated Financial Statements 17
<PAGE>
<PAGE>
Report of Independent Auditors
The Board of Directors and Stockholders
CenCor, Inc.
We have audited the accompanying consolidated statement of net
assets in liquidation of CenCor, Inc. (the Company) as of December
31, 1995, and the related consolidated statements of operations,
stockholders' equity, and cash flows for the year then ended.
These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these
financial statements based on our audit.
We conducted our audit 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 audit
provides a reasonable basis for our opinion.
As described in Note 1 to the financial statements, as a result of
the Board of Directors' intent at December 31, 1995, the Company changed
its basis of accounting from the going-concern basis to the
liquidation basis.
In our opinion, the consolidated financial statements referred to
above present fairly, in all material respects, the net assets in
liquidation of CenCor, Inc. as of December 31, 1995, and the
consolidated results of its operations and its cash flows for the
year ended December 31, 1995, in conformity with generally accepted
accounting principles applied on the basis described in the
preceding paragraph.
Ernst & Young LLP
May 22, 1996
Kansas City, Missouri
<PAGE>
<PAGE>
<TABLE>
CenCor, Inc.
(In Process of Liquidation)
Consolidated Statement of Net Assets in Liquidation
December 31, 1995
<CAPTION>
<S> <C>
Assets:
Cash and cash equivalents $22,439,000
Property and equipment, net of accumulated
depreciation 30,000
Other assets 11,903,000
Total assets $34,372,000
Liabilities:
Accounts payable and accrued liabilities $3,200,000
Income taxes payable 759,000
Long-term debt 12,303,000
Total liabilities 16,262,000
Net assets in liquidation $18,110,000
Number of common shares outstanding 1,488,411
Net assets in liquidation per share $ 12.17
</TABLE>
See accompanying notes.
<PAGE>
<PAGE>
<TABLE>
CenCor, Inc.
(In Process of Liquidation)
Consolidated Statement of Operations
For the Year Ended December 31, 1995
<CAPTION>
<S> <C>
Income $1,220,000
Expenses:
Salaries and other expenses 2,822,000
Interest expense, net 2,260,000
Operating loss (3,862,000)
Non-operating income 3,087,000
Loss before discontinued operations (775,000)
Discontinued operations:
Loss from operations, net of $0 taxes (5,330,000)
Gain on disposal, net of $1,100,000 taxes 24,047,000
Income from discontinued operations 18,717,000
Net income $17,942,000
Weighted average common and common
equivalent shares outstanding 1,813,052
Earnings per share of common stock and
common equivalent shares of stock:
Loss per share before discontinued operations $ (0.43)
Earnings per share from discontinued operations 10.33
Earnings per share from net income $ 9.90
</TABLE>
See accompanying notes.
<PAGE>
<PAGE>
<TABLE>
CenCor, Inc.
(In Process of Liquidation)
Consolidated Statement of Stockholders' Equity
<CAPTION>
Retained
Shares Amount Paid-in Earnings Net Assets
Capital (Deficit) In Liquidation Total
<S> <C> <C> <C> <C> <C> <C>
Balance at December 31, 1994 1,240,498 $1,241,000 $2,805,000 $(11,273,000) $ -- $(7,277,000)
Net income -- -- -- 17,942,000 -- 17,942,000
Shares received in settlement (324,641) (325,000) (734,000) (1,428,000) -- (2,487,000)
Balance at December 31, 1995
prior to adoption of
liquidation basis of
accounting 915,857 916,000 2,071,000 5,241,000 -- 8,228,000
Adoption of liquidation
basis of accounting 572,554 (916,000) (2,071,000) (5,241,000) 18,110,000 9,882,000
Net assets in liquidation at
December 31, 1995 1,488,411 $ -- -- $ -- $18,110,000 $18,110,000
</TABLE>
See accompanying notes.
<PAGE>
<PAGE>
<TABLE>
CenCor, Inc.
(In Process of Liquidation)
Consolidated Statement of Cash Flows
For the Year Ended December 31, 1995
<CAPTION>
<S> <C>
Operating activities:
Net income $17,942,000
Adjustments to reconcile net income to net
cash provided by operating activities:
Gain on disposal (24,047,000)
Other changes in assets and liabilities, net 1,370,000
Total adjustments (22,677,000)
Net cash provided by operating activities (4,735,000)
Investing and other activities:
Proceeds from sale of discontinued operations 123,710,000
Loss from discontinued operations 4,561,000
Capital expenditures, net (35,000)
Net cash provided by investing and other
activities 128,236,000
</TABLE>
<PAGE>
<PAGE>
<TABLE>
CenCor, Inc.
(In Process of Liquidation)
Consolidated Statement of Cash Flows (continued)
For the Year Ended December 31, 1995
<CAPTION>
Financing activities:
<S> <C>
Payments of long-term debt $(102,095,000)
Net cash used in financing activities (102,095,000)
Net increase in cash and cash equivalents 21,406,000
Cash and cash equivalents at beginning of year 1,033,000
Cash and cash equivalents at end of year $22,439,000
Supplemental disclosures of cash flow information:
Cash paid during the year for:
Interest $5,698,000
Income taxes $356,000
</TABLE>
See accompanying notes.
<PAGE>
<PAGE>
CenCor, Inc.
Notes to Consolidated Financial Statements
December 31, 1995
1. Summary of Significant Accounting Policies
Basis of Presentation
The accompanying consolidated financial statements include the
accounts of CenCor, Inc. and its wholly-owned subsidiary, Century
Acceptance Corporation ("Century") (collectively, "the Company").
Effective June 30, 1995, the Company sold substantially all of the
assets of Century, its only operating subsidiary. Since the date
of the sale of Century, the Company has had no ongoing operations.
As the Company has changed its basis of accounting from going
concern basis to liquidation basis, comparative financial state-
ments are not meaningful and thus have not been presented.
The operations of Century, which accounted for substantially all of
the Company's operations, have been reflected as discontinued
operations.
As a result of Board of Directors' intent of Liquidation, as of
December 31, 1995, the Company adopted a Plan of Dissolution and
Liquidation (the Plan of Liquidation). In connection with the Plan of
Liquidation, the officers and directors of CenCor are authorized to (i)
dissolve CenCor, including the execution and filing of a Certifi-
cate of Dissolution with the Secretary of State of the State of
Delaware, (ii) wind up CenCor's affairs, including satisfaction of
all liabilities and long-term debt of CenCor and (iii) liquidate
CenCor's assets on a pro rata basis in accordance with the
respective interests of its common stockholders. CenCor is
expected to be dissolved in October 1999. The Plan of
Liquidation will be submitted to the shareholders for approval at
the next stockholder meeting. If the stockholders do not approve
the Plan of Liquidation, management will in all likelihood seek
liquidation of CenCor under the supervision of the U.S. Bankruptcy
Court.
Generally accepted accounting principles require the adjustment of
assets and liabilities to estimated fair value under the liquida-
tion basis of accounting. Accordingly, the statement of net assets
in liquidation at December 31, 1995 reflects assets and liabilities
on this basis. Adjustments for changes in estimated liquidation
value in subsequent periods will be recognized currently.
Estimated costs of liquidation have not been provided since such
costs are not reasonably estimatable.
Use of Estimates
The preparation of financial statements in conformity with
generally accepted accounting principles under the liquidation
basis of accounting requires management to make estimates and
assumptions that affect the amounts reported in the financial
statements and accompanying notes. Actual results could differ
from such estimates.
Cash and Cash Equivalents
Cash and cash equivalents include cash, money market accounts, and
short-term government or government agency instruments.
Fair Values of Assets and Liabilities
The following methods and assumptions were used by the Company in
estimating the liquidation value of its assets and liabilities:
Cash and cash equivalents: The carrying amount reported in the
statement of net assets in liquidation for cash and cash equiva-
lents approximates their fair value.
<PAGE>
<PAGE>
Other Assets: The fair value of the Company's other assets (see
Note 4) is estimated using discounted cash flow analysis, based on
an estimated discount rate commensurate with the associated risks.
Accounts Payable and Accrued Liabilities: The carrying amount
reported in the statement of net assets in liquidation for accounts
payable and accrued liabilities approximates their fair value.
Income Tax Payable: The carrying amount reported in the statement
of net assets in liquidation approximates the fair value of taxes
currently payable.
Long-Term Debt: The fair value of the Company's long-term debt is
estimated using discounted cash flow analyses, based on the
Company's current incremental borrowing rates for similar types of
borrowing arrangements (10% at December 31, 1995). The fair value
reflects a conversion of the convertible notes in accordance with
the bankruptcy plan (see Note 5).
The $9,882,000 effect of adoption of liquidation basis of account-
ing is comprised primarily of the increased value in the Concorde
related assets, as described in Note 4, and the revaluation and
conversion of long-term debt as described in Note 5.
2. Discontinued Operations
Effective June 30, 1995, the Company sold substantially all of the
assets of Century. The gross cash proceeds from the sale of
Century were approximately $128,710,000. In accordance with the
provisions of the sales agreement, $5,000,000 of the purchase price
was placed in escrow to secure certain indemnification obligations
of the Company to the buyer that run through July 1, 1998.
Century was able to redeem all of its outstanding secured notes
held by its lenders for a purchase price equal to the principal
amount of the secured notes (approximately $102 million) together
with interest, but without the payment of substantial prepayment
premiums payable under the secured notes. The lenders also
surrendered for cancellation outstanding warrants which would have
allowed them to acquire up to 30% of Century.
The loss from operations, net of applicable income taxes, for
Century is segregated as discontinued operations in the accompany-
ing consolidated statement of operations. The net loss from
discontinued operations is as follows:
<TABLE>
<CAPTION> December 31,
1995
<S> <C>
Revenues $15,714,000
Expenses (20,988,000)
Other loss (56,000)
Loss from discontinued
operations before income taxes (5,330,000)
Income taxes applicable to
discontinued operations --
Net loss from discontinued
operations $(5,330,000)
</TABLE>
3. Litigation and Contingencies
Century is a defendant, along with a number of other consumer
finance companies, in two class action lawsuits currently pending
in the State of Alabama. The suits were filed by certain alleged
borrowers of the defendant creditor/lenders and assert various
violations. Century has denied the allegations presented in the
suit and is actively defending the charges. Management believes
that any potential liability pertaining to these lawsuits would be
immaterial to the accompanying financial statements.<PAGE>
<PAGE>
4. Other Assets
Concorde Career Colleges, Inc. ("Concorde"), a former subsidiary of
CenCor that was spun off in 1988, agreed as part of the spin-off
arrangement to assume certain obligations of CenCor relating to
CenCor's then outstanding Series H 10% notes. As a result of
Concorde's subsequent inability to make payments on the assumed
debt, CenCor terminated Concorde's obligation regarding these notes
in consideration of Concorde issuing to CenCor a junior secured
debenture (the "Debenture") in the amount of $5,422,000. The
Debenture, which is due July 31, 1997, 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. Interest on the Debenture
compounds and accrues quarterly at a variable rate not to exceed 12
percent. The interest rate (11.0 percent at December 31, 1995) is
variable based upon both Concorde's cost of funds and the amount of
debt outstanding under the agreement.
The Debenture also entitles CenCor to an amount equal to 25% of the
amount by which the "market capitalization" of Concorde exceeds
$3,500,000. Market capitalization is the total common shares of
Concorde multiplied by the highest average share price (high-bid)
for any 30 consecutive trading days between January 1, 1997 and
June 30, 1997.
In 1993, Concorde and CenCor amended their Agreement to provide
that CenCor would receive Concorde's previously charged-off
receivables in full payment of the accrued interest on the Junior
Secured Debenture through December 31, 1993. The receivables,
which consist of account 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 full
payment of the accrued interest, exclusive of out-of-pocket
collection fees and expenses paid to third parties.
In 1994, Concorde and CenCor further amended their Agreement to
provide that CenCor would receive an additional $15,000,000 of
Concorde's previously charged-off receivables in full payment of
the accrued interest on the Debenture through December 31, 1994 in
the amount of $500,231. The amendment grants CenCor the same
rights of assignment and substitution for these receivables as
provided for in the first amendment. CenCor has engaged a
collection agent to pursue recovery of such receivables assigned to
the Company as a result of the 1993 and 1994 amendments.
As part of the 1994 amendment, CenCor also agreed to accept 300,000
shares of Concorde's cumulative preferred stock (the "Preferred
Stock") in exchange for the cancellation of $3,000,000 of the total
$5,422,000 of original principal amount of the Debenture. The
Preferred Stock, $.10 par value, has a per share liquidation
preference of $10.00. Cumulative quarterly dividends accrue at a
rate equal to 73% of the then current interest rate on the
Debenture. The dividends accumulate until such time as the
Debenture has been repaid in full which is currently scheduled for
July 31, 1997. At such time, the accumulated quarterly dividends
will be paid ratably over the ensuing 12 fiscal quarters. The
Preferred Stock has no mandatory redemption date but Concorde may
redeem the Preferred Stock, in whole or in part, at any time, at
liquidation value plus accrued cumulative dividends.
Management of Concorde recently reported improvements in its
financial condition resulting in a substantial reduction in its
outstanding bank debt. Consequently management, in conjunction
with its independent financial advisor, has estimated the liquidation value in
the Debenture, including accrued interest, to be $2,802,804 as of
December 31, 1995. In addition, management and its independent financial
advisor have determined that Concorde will most likely elect to
redeem the preferred stock on December 31, 2003. The estimated
liquidation value of the Preferred Stock and accrued dividends is
$2,074,925 at December 31, 1995.
Also included in other assets are receivables relating to a
fidelity bond claim arising from a loss on fraudulent automobile
contracts in 1991 and a claim against a third party relating to the
CenCor, Inc. of Kansas City. In March of
1996, the Company reached agreements to settle these claims.
<PAGE>
<PAGE>
As mentioned in Note 2, an escrow account was established in
accordance with the provisions of the agreement pertaining to the
sale of Century's assets. Such amount, including accrued interest
($5,028,000), is included in other assets. The escrow was
established in order to secure certain indemnification obligations
of Century and CenCor to the buyer that run through July 1, 1998.
Management believes that any potential liability pertaining to
these obligations would be immaterial to the accompanying financial
statements.
5. Long-Term Debt
Pursuant to a 1993 plan of reorganization, 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 Non-Convertible Notes
ii. $400 principal amount of non-interest bearing Convertible Notes
iii. 5.2817 shares of CenCor common stock, par value of $1 per share
The principal balances of the Non-Convertible Notes at December 31,
1995 is $17,174,656. The Non-Convertible Notes are non-interest
bearing and will mature on July 1, 1999. Such notes have been
assigned a fair value of $12,303,000 at December 31, 1995.
In accordance with the provisions of the bankruptcy plan, the
Convertible Notes are convertible at CenCor's option due to the
receipt of at least $17,500,000 in net proceeds from the sale of
Century's assets. The Convertible Notes were converted at a ratio
of one share of common stock for each $20 principal amount of
Convertible Notes. In connection with the conversion of these
notes, 572,554 shares of CenCor common stock are issuable to the
convertible noteholders. The conversion of these notes in
satisfaction of $11,449,771 principal amount of the obligations is
reflected in the financial statements and the number of outstanding shares
at December 31, 1995.
6. Other Income
The Company and the Estate of Robert F. Brozman and the related
Trust of Robert F. Brozman (collectively the "Brozman Estate")
entered into a settlement agreement pursuant to which the claims of
the Company against the Brozman Estate, including claims arising
from CenCor's loss of goodwill, would be
settled. Under the settlement agreement, CenCor released the
Brozman Estate of all liability upon receipt of $600,000 in cash
plus the transfer of shares of common stock held by the Brozman
Estate in the amount of $2,487,000. In March of 1995, CenCor
received the $600,000 in cash from the Brozman Estate. The
Company, with the assistance of its independent financial advisor,
and the Brozman Estate agreed to a value of the stock of
$7.66 per share which resulted in 324,641 shares of stock being
transferred to the Company. The transfer in satisfaction of the
settlement agreement and the
subsequent retirement of the stock is reflected in the December 31, 1995
financial statements.
7. Per Share Information
Earnings per common share and common equivalent shares were
computed by dividing net income by the average outstanding shares
of stock during the year ended December 31, 1995. The number of
weighted average common share equivalents was increased under the
assumption that the common stock shares issued as a result of the
conversion of the Convertible Notes were outstanding during the
year ended December 31, 1995.
Net assets in liquidation per common share was computed by dividing
net assets in liquidation by the outstanding shares of common stock
at December 31, 1995.
8. Income Taxes
The Company and its subsidiaries file a consolidated federal income
tax return. There is no provision or benefit for income taxes
allocated to operations as of December 31, 1995. A reconciliation
of income tax provision (benefit) allocated to operations to the
amount computed using the statutory federal income tax rate is as
follows:
<PAGE>
<PAGE>
<TABLE>
<CAPTION> 1995
<S> <C>
Provision (benefit) at statutory rate (34%) $(264,000)
Estimated limitation of recognition of operating
loss under applicable accounting principles 264,000
Income tax provision (benefit) allocated
to operations $ 0
The provision for income taxes allocated to discontinued operations
consisted of the following:
</TABLE>
<TABLE>
<CAPTION>
December 31,
1995
<S> <C>
Federal $765,000
State 335,000
$1,100,000
</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. In addition, the
Company's 1990, 1991, and 1992 income tax returns are currently
under examination by the IRS. Management believes that the
ultimate disposition of the IRS examination will not have a
material effect on the financial position of the Company and no
liability has been accrued at December 31, 1995.
As a result of the unresolved IRS examinations, management cannot
precisely estimate the amount of the Company's net operating loss
("NOL") carryforward for federal income tax purposes. For purposes
of estimating the Company's current income tax liability, manage-
ment has made certain assumptions regarding the Company's NOL
carryforwards, which were utilized in full during 1995. Because
the proposed adjustments for 1988 and 1989 have not been resolved
and the 1990-1992 IRS examination is still ongoing, no assurance
can be made regarding this amount.
The Company has alternative minimum tax (AMT) credit carryforwards
of approximately $190,000 which have an unlimited carryforward
period.
9. Stock Option Plan
In 1993, CenCor granted 90,000 phantom share options to certain
officers and directors of CenCor. 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, or (iii) the
aggregate distributions per share received by CenCor's stockholders
in the event CenCor is liquidated. 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. The
Company recorded a liability in the amount of $1,010,000 at
December 31, 1995 for this obligation.
The Company has 50,000 Stock Appreciation Rights (SARs) to certain
directors and officers of the Company outstanding at December 31,
1995. The liability related to the SARs was $701,505 at December
31, 1995. 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. As a result of the sale of Century during 1995, the holders
of the SARs became entitled to payment. The fair market value of
Century's stock has been determined as the net proceeds from the
sale less liabilities retained by Century. $505,500 of the payment
due on the SARs was disbursed in January of 1996 and the remaining
liability is scheduled to be paid in installments through July of
1998.
<PAGE>
<PAGE>
10. 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 1995.
The Company terminated its Plan on September 30, 1995. At
termination the account of each participant of the Plan became
fully vested and nonforfeitable. The Plan will continue to be
administered in accordance with its terms until the receipt of a
favorable determination letter from the IRS. At that time, the
Plan assets will be distributed to the participants as indicated by
the terms of the Plan.
<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, 1995.
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 46 Chairman of the Board, President and Chief
Executive Officer of CenCor and 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.
Director of Century and ConCorde.
Edward G. Bauer, Jr.<F2><F3> 1991 68 Vice President and General Counsel of
Philadelphia Electric Company for more than
the five-year period prior to August 1988.
Retired from this position at the end of
August 1988.
George L. Bernstein<F2><F3> 1991 64 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. Director of
R & B, Inc. (distributor of automotive parts).
Director of Century effective April 8, 1993.
Marvin S. Riesenbach<F2><F3> 1991 66 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> Jack L. Brozman is the sole trustee of the Estate of Robert F. Brozman.
<F2> Director effective July 1, 1991.
<F3> Member of Special and Audit Committees beginning July 1, 1991. Elected to
Executive Compensation Committee on August 21, 1991.
</FN>
</TABLE>
The Board of Directors of CenCor held 12 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 five 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.
CenCor'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 person also serves as
an executive officer of the Company as of December 31, 1995.
<TABLE>
<CAPTION>
Name Age Principal Occupation for Last Five Years
<S> <C> <C>
Terri Rinne 28 Vice President CenCor since July 1, 1995.
Controller of CenCor from April 1994 through
June 1995. Tax manager of CenCor and Century
from August 1993 through March 1994. Accountant
with Arthur Andersen, LLP from October 1989
through August 1993.
</TABLE>
<PAGE>
<PAGE>
Disclosure of Delinquent Files
Except as described below, the Company believes, based on informa-
tion 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 Company's executive officers, directors,
and ten percent stockholders have been filed in compliance with
applicable rules:
Terri Rinne failed to file a report on Form 3 with respect to her
appointment as an executive officer of the Company in July 1995.
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.
Edward Bauer reported, on an untimely basis, a transaction in CenCor
common stock in May 1995.
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 $100,000, during the year ended December 31, 1995 for
services in all capacities to CenCor and its subsidiaries in 1993,
1994, and 1995.
<PAGE>
<PAGE>
<TABLE>
<CAPTION>
Long-Term
Compensation
Annual
Compensation Awards Payout
Other Annual
Name and Principal Salary Bonus Compensation Option/SARs
Position Year ($) ($) ($) (#) SARs
<S> <C> <C> <C> <C>
Jack L. Brozman, Chairman
of the Board and Chief
Executive Officer of CenCor 1995 $178,300<F1> 15,000<F2> <F3>
1994 $134,800<F1> $25,000<F4> 15,000
1993 $129,800<F1> $25,000<F4> 60,000
Patrick F. Healy, former
Vice President-Finance,
Treasurer and Chief
Financial Officer of
CenCor and Century and
former Chief Accounting
Officer of CenCor<F5> 1995 $ 56,400 $15,000<F6> 10,000<F2> <F7>
1994 $152,800 10,000
1993 $161,000 $5,000<F6> 30,000
Dennis Berglund, former
Chief Executive Officer and
President of Century<F8> 1995 $94,000 $571,600<F9> $265,000<F10> 30,000<F2>
1994 $150,000 $700<F11> 30,000
1993 $100,100 $800<F12>
<FN>
<F1> Mr. Brozman also received compensation as an executive officer
of ConCorde.
<F2> "See "Executive Compensation--Option/SAR Grants in Last Fiscal
Year."
<F3> Mr. Brozman will receive a payout on 30,000 units of stock
appreciation rights (SARs) deemed exercised in 1995 in the amount
of $427,000 but payable in installments beginning in 1996 and
ending in 1998. See "Executive Compensation -- Option/SAR Exercise
and Fiscal Year End Option Value Table."
<F4> 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.
<F5> Mr. Healy's employment with the Company terminated on January
18, 1995.
<F6> 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.
<F7> Mr. Healy will receive a payout on 20,000 SAR units deemed
exercised in 1996 in the amount of approximately $286,700 but
payable in installments beginning in 1996 and ending in 1998. See
"Executive Compensation -- Optional/SAR Exercises and Fiscal Year-
End Option/SAR Value Table."
<F8> Mr. Berglund's employment with the Company terminated on July 1,
1995.
F9> Consists of a bonus attributable to incentives contained in
employment agreement. As a result of this incentive arrangement,
Mr. Berglund will receive an estimated additional bonus of $803,000
during 1996.
<F10> Consists of $85,000 paid in satisfaction and termination of in-
the-money SARs and a $180,000 severance payment pursuant to Mr.
Berglund's employment agreement.
<F11> Consists of the value of a leased automobile.
<F12> Consists of the value of a leased automobile and vacation
earned as the result of a promotional program.
</FN>
</TABLE>
<PAGE>
<PAGE>
Option/SAR Grants in Last Fiscal Year
The following table sets forth information as to SARs granted by
CenCor during 1995 to executive officers named in the Summary
Compensation Table.
<TABLE>
<CAPTION>
Potential Realizable Value at
Assumed Annual Rates of
Stock Price Appreciation For
Individual Grants Option Term
Percent of Total Options/
SARs Granted to Em- Exercise or
Options/SARs ployees in Fiscal Year Base Price Expiration
Name Granted (#) ($/Sh) Date 5%($) 10%($)
<S> <C> <C> <C> <C> <C> <C>
Jack L. Brozman 15,000<F1> 27% $13.72 12/31/98 NA<F2> NA<F2>
Patrick F. Healy<F3> 10,000 18% $13.72 12/31/95 NA<F2> NA<F2>
Dennis Berglund 30,000<F1> 55% $13.72 12/31/98 NA<F2> NA<F2>
<FN>
<F1> In 1995, CenCor approved SARs 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 SAR
units, respectively, effective March 1, 1995. The SARs provide
that the executive will receive cash compensation for his units at
the earlier of his death, permanent disability, involuntary
termination 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 formula) 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
$13.72 was selected by CenCor's Executive Compensation Committee as
the estimated value per share of Century stock as of December 31,
1993. The SARs terminate if (a) the executive terminates employ-
ment with Century prior to January 1, 1999, for reasons other than
death or disability; (b) the executive is terminated for cause; or
(c) the executive violates certain noncompetition obligations.
<F2> As a result of the consideration received from the sale of
Century on June 30, 1995, the payout receivable for the SARs
granted during 1995 has been determined. See "Executive Compensa-
tion -- Option/SAR Exercise and Fiscal Year-End Option/SAR Value
Table."
<F3> Mr. Healy was awarded 10,000 SAR units relating to Century's
common stock on March 1, 1995 having the same terms and conditions
as the stock appreciation rights granted to Messrs. Berglund and
Brozman. In recognition of Mr. Healy's continuing consulting
services to CenCor and Century and his service as CenCor's
representative on the Board of Directors of Century, CenCor
determined, subsequent to the termination of Mr. Healy's employment
on January 18, 1995, that Mr. Healy's benefits under his SARs
continue only with respect to a sale Century at any time on or
before December 31, 1995.
</FN>
</TABLE>
<PAGE>
<PAGE>
Option/SAR Exercise and Fiscal Year-End Option/SAR Value Table
The following table provides information with respect to the named
executive officers concerning SARs exercised during 1995 and
unexercised options held as of December 31, 1995.
<TABLE>
<CAPTION>
SAR's Value # of Securities Underlying Value of Unxercised In-The-
Exercised Realized Unexercised Options/SARs Money Options/SARs
Name ($) at FY-End at FY-End ($)
Exercisable Unexercisable Exercisable Unexercisable
<S> <C> <C> <C> <C> <C> <C>
Jack L. Brozman,
CEO 30,000 $427,000<F1> 60,000<F2> N/A Between N/A
$150,000
and
$670,000<F3>
Patrick F. Healy 20,000 $286,700<F1> 30,000<F4> N/A Between N/A
$75,000 and
$335,100<F3>
Dennis Berglund <F5> <F5> N/A N/A N/A N/A
<FN>
<F1> Amount relates to value of SAR units deemed exercised during
1995 but payable in subsequent years.
<F2> Consists of phantom share options relating to 60,000 shares of
CenCor common stock.
<F3> Represents range of estimated value of phantom stock options.
The actual value at exercise will depend on which of three
approaches to value are then applicable. The actual value realized
may fall outside the range indicated.
<F4> Consists of phantom share options relating to 30,000 shares of
CenCor common stock.
<F5> Mr. Berglund received $85,000 in satisfaction and termination of
60,000 in-the-money SAR units. See "Executive Compensation --
Summary Compensation Table."
</FN>
</TABLE>
Compensation of Directors
Each non-officer/director of CenCor is paid an annual retainer of
$25,000 plus a fee (based on time spent on corporate matters,
including attendance at board and committee meetings) and expenses.
<PAGE>
<PAGE>
Item 12. Security Ownership of Certain Beneficial Owners and
Management
The following table sets forth, with respect to CenCor 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
CenCor voting securities as of May 16, 1996.
<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 272,423<F2> 18%
Robert F. Brozman Trust
1100 Main St.
Kansas City, Missouri 64105
<FN>
<F1> Nature of ownership of securities is direct. Beneficial
ownership as shown in the table arises from sole voting power and
sole investment power.
<F2> 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 Robert F. Brozman Trust disclaims any
beneficial interest.
</FN>
</TABLE>
<PAGE>
<PAGE>
The following table sets forth, with respect to CenCor 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 May 16, 1996.
<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 306,767<F2> 21%
Edward G. Bauer, Jr. --- ---
George L. Bernstein --- ---
Marvin S. Riesenbach -- ---
Directors and Officers as a Group 306,767<F2> 21%
<FN>
<F1> Nature of ownership of securities is indirect. Beneficial
ownership as shown in the table arises from sole voting power and
sole investment power.
<F2> Includes 34,344 shares held by Jack L. Brozman and 272,423
shares held by the Robert F. Brozman Trust. Does not include
20,025 shares held by or for the benefit of Robert F. Brozman's
other children, in which the Robert F. Brozman 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
Concorde, a business in which Jack L. Brozman has an interest,
continues to be indebted to CenCor. CenCor holds the Debenture in
the principal amount of $2,422,000 of Concorde. In addition,
CenCor owns 300,000 shares of Concorde's Preferred Stock. Further,
CenCor has been assigned approximately $23.4 million in previously
charged-off Concorde receivable in payment of accrued interest on
the Debenture.
The Debenture, which matures July 31, 1997, provides for principal
and interest payments commencing June 30, 1996 based on a ten year
amortization schedule. A balloon payment for the remaining balance is called
for on July 31, 1997.
Under the Debenture, Concorde will make an additional contingent
payment to CenCor at maturity in an amount equal to 25% of the
market value of Concorde's outstanding common stock in excess of
$3,500,000 on July 31, 1997.
The Preferred Stock provides for cumulative quarterly dividends
from the date of issuance at an annual dividend rate equal to 73%
of the then current interest rate on the Debenture. Dividends
cumulate until such time as the Debenture has been repaid in full.
At such time, the accumulated dividends are then paid ratably over the next 12
consecutive quarters. After the
retirement of the Debenture, the current dividends on the Preferred
Stock will become payable and the dividend rate changes to 2% above the prime
rate charged by Concorde's bank lender up to a maximum rate of 12%. In the
event of Concorde's voluntary or involuntary liquidation, the Preferred
Stock has a liquidation preference of $10 per share ($3,000,000),
plus cumulative dividends. While Concorde may redeem the Preferred
Stock in whole or in part at liquidation value plus accrued
cumulative dividends, the Preferred Stock does not provide for
mandatory redemption.
<PAGE>
<PAGE>
Concorde assigned to CenCor the previously charged off receivables
(primarily student loan promissory notes) in payment of accrued
interest on the Debenture through December 31, 1994 of approximate-
ly $1 million. Provided that CenCor undertakes reasonable steps
to collect the charged off receivables, CenCor has a right to
substitute receivables as to which collection efforts have been
made for new Concorde receivables until such time as CenCor
receives cash equal to the accrued interest. Any amounts collected
in excess of the accrued interest amount, apply first to reimburs-
ing Concorde for its professional fees and then to interest and
principal on the Debenture.
The Company currently subleases its approximately 800 sq. feet
office space from Concorde on a month to month basis. The Company
pays rent of $927 per month for the space.
Jack L. Brozman, who is Chairman of the Board of CenCor and Centu-
ry, 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).
The Company and the Brozman Estate have settled the claims of the
Company against the Brozman Estate arising from the CIKC Loans.
The Company released the Brozman Estate from all liability in
exchange for $600,000 in cash plus the transfer to the Company on
May 16, 1996 of 324,641 shares of CenCor common stock previously
held by the Brozman Estate. Pursuant to the terms of the settle-
ment agreement between the Company and the Brozman Estate, the
shares transferred represent the number of shares of common stock
which equal the aggregate of $400,000 plus one-half the amount by
which the December 31, 1995 fair market value of the stock held by
the Brozman Estate exceeds $400,000. The Special Committee, with
the assistance of its independent financial advisor, determined
that the fair market value of the CenCor common stock on Decem-
ber 31, 1995, for the purposes of the settlement, was $7.66 per
share.
<PAGE>
<PAGE>
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.
The following Consolidated Financial Statements of CenCor, Inc. and
Subsidiaries are included in Item 8:
Consolidated Statement of Net Assets in Liquidation.
Consolidated Statement of Operations.
Consolidated Statement of Stockholders' Equity.
Consolidated Statement of Cash Flows.
Notes to Consolidated Financial Statements.
(i) Consolidated Financial Statement Schedules of CenCor, Inc. and
Subsidiaries have been omitted as not applicable or not required
under the instructions contained in Regulations S-X, or the information
is included elsewhere in the financial statements or notes thereto.
(ii) Exhibits.
<TABLE>
<CAPTION>
Exhibit
Number Description
<S> <C>
2.1 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.)
3.1 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.)
3.2 Bylaws amended through July 29, 1991. (Incorporated by refer-
ence--Exhibit 3(a) to the Company's Annual Report on Form 10-K for
the year ended December 31, 1991.)
4.1 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.)
4.2 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.)
<PAGE>
<PAGE>
4.3 Composite Conform Copy Relating To: Century Acceptance Corpo-
ration 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.)
4.4 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.)
4.5 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.)
4.6 Third Amendment to Amendment and Exchange Agreement dated March
31, 1995.
10.1 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.)
10.2 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.)
10.3 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.)
10.4 First Amendment to Restructuring, Security and Guarantee
Agreement between CenCor, Concorde, Minnesota Institute of Medical
and Dental Assistance, Texas College of Medical and Dental Assis-
tants, 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.)
10.5 Stock Appreciation Agreement with Dennis Berglund dated August
29, 1994. (Incorporated by reference--Exhibit 10(h) to the
Company's Annual Report on Form 10-K for the year ended December
31, 1994.)
10.6 Stock Appreciation Agreement with Pat Healy dated October 4,
1994. (Incorporated by reference--Exhibit 10(i) to the Company's
Annual Report on Form 10-K for the year ended December 31, 1994.)
10.7 Stock Appreciation Agreement with Jack Brozman dated October
4, 1994. (Incorporated by reference--Exhibit 10(j) to the
Company's Annual Report on Form 10-K for the year ended December
31, 1994.)
10.8 Minutes of Compensation Committee dated February 7, 1995
relating to amendments to Stock Appreciation Agreements. (Incorpo-
rated by reference--Exhibit 10(k) to the Company's Annual Report on
Form 10-K for the year ended December 31, 1994.)
<PAGE>
<PAGE>
10.9 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.
(Incorporated by reference--Exhibit 10(l) to the Company's Annual
Report on Form 10-K for the year ended December 31, 1994.)
10.10 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 Assis-
tants, 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. (Incorporated by
reference--Exhibit 10(m) to the Company's Annual Report on Form 10-
K for the year ended December 31, 1994.)
10.11 Subordination Agreement dated November 15, 1994 among Concorde
Career Colleges, Inc., CenCor, Inc. and Mark Twain Kansas City
Bank. (Incorporated by reference--Exhibit 10(n) to the Company's
Annual Report on Form 10-K for the year ended December 31, 1994.)
10.12 Settlement Agreement dated March 27, 1995 among CenCor, Inc.,
Century Acceptance Corporation, Jack L. Brozman, Executor, and Jack
L. Brozman, Trustee. (Incorporated by reference--Exhibit 10(o) to
the Company's Annual Report on Form 10-K for the year ended
December 31, 1994.)
10.13 Purchase Agreement dated May 19, 1995 by and among CenCor,
Century and Fidelity Acceptance Corporation.
10.14 Employment Agreement dated July 3, 1995 between CenCor and
Jack Brozman.
10.15 Letter Agreement dated July 15, 1995 between Century and
Dennis Berglund.
10.16 General Release and Settlement Agreement dated July 13, 1995
between CenCor and Dennis Berglund.
21 Subsidiaries of the Registrant.
27 Financial Data Schedule.
</TABLE>
(b) Reports on Form 8-K:
No reports on Form 8-K were filed during the quarter ending
December 31, 1995.
<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.
CENCOR, INC.
By:/s/ Jack L. Brozman
Jack L. Brozman
Chairman of the Board
Date: May 28, 1996
Pursuant to the requirements of the Securities Exchange 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.
Signature Date
By: /s/ Jack L. Brozman May 28, 1996
Jack L. Brozman
(Chairman of the Board,
Chief Executive Officer and Director)
By: /s/ Terri L. Rinne May 28, 1996
Terri L. Rinne
(Vice President and Chief Financial Officer)
By:/s/ Edward G. Bauer, Jr. May 28, 1996
Edward G. Bauer, Jr.
(Director)
By:/s/ George L. Bernstein May 28, 1996
George L. Bernstein
(Director)
By:/s/ Marvin S. Riesenbach May 28, 1996
Marvin S. Riesenbach
(Director)
EX-10.13
PURCHASE AGREEMENT
THIS AGREEMENT is made and entered into as of the 19th day of
May 1995 (the "Contract Date"), by and among CENCOR, INC., a
Delaware corporation with a place of business at 1100 Main Street,
Suite 416, Kansas City, Missouri, 64105 ("Holding Company"),
CENTURY ACCEPTANCE CORPORATION, a Delaware corporation with a place
of business at 1100 Main Street, Suite 2350, Kansas City, Missouri
64105 and a direct wholly owned subsidiary of Holding Company
("Parent"), the corporations listed on the attached Schedule 1
which are direct or indirect wholly owned subsidiaries of Parent
(herein collectively referred to as "Sellers" or individually as
"Seller"), and Fidelity Acceptance Corporation, a Minnesota
corporation with a place of business at 330 Second Avenue, South,
Suite 790, Minneapolis, Minnesota 55401 ("Buyer").
WITNESSETH THAT
WHEREAS, Holding Company wishes to cause Parent and Sellers to
sell, and Buyer wishes to buy from Parent and Sellers, certain
Contracts and Business Assets (as hereinafter defined), upon the
terms and conditions contained herein and, in addition, Holding
Company wishes to cause Parent and Sellers to assign and Buyer
wishes to assume the Assigned Obligations (as hereinafter defined);
NOW THEREFORE, in consideration of the mutual promises and
covenants contained in this Agreement, the parties agree as
follows:
1. DEFINITIONS: Whenever used in this Agreement, the
following words and phrases, unless the context otherwise requires,
shall have the following meanings:
Agreement means this purchase agreement, including all
schedules and exhibits attached hereto.
American Bankers means American Bankers Insurance Group.
Assigned Obligations shall mean all of Parent's and the
Sellers' obligations under the Leases and Third Party Agreements,
Unearned Insurance Commissions (as hereinafter defined), Dealer
Holdback (as hereinafter defined) and any other obligations of
Parent or any Seller as expressly agreed to by the parties, all as
listed on the attached Schedule 2.
Business means the consumer finance business of Parent and the
Sellers, considered in the aggregate, as presently conducted.
Business Assets means the assets of Sellers and Parent listed
on the attached Schedule 3 to be purchased by Buyer including
Sellers' and Parent's furniture, equipment, leasehold improvements,
security deposits and such other assets as agreed to by Parent and
Buyer.
Business Day means any day other than Saturday, Sunday or
legal holidays.
Contract means a promissory note, retail installment sales
contract, and any related security instrument payable to any Seller
by an Obligor and evidencing a loan or account made or acquired by
such Seller, including all such loans or accounts that have been
charged off as of the Purchase Date.
Closing means the consummation of the transactions contemplat-
ed by this Agreement, which shall be deemed to occur upon the
commencement of business on the Purchase Date.
<PAGE>
<PAGE>
Dealer Holdback means the aggregate amount reflected on the
books and records of Parent and Sellers as of any given date as
withheld from dealers in connection with purchases of retail
installment finance contracts by Parent and Sellers, which amount
is available to cover losses that may be incurred on such purchased
contracts and may be subject to repayment by Parent, Sellers or
their assignees in accordance with the terms of such purchases.
The dealer holdback amounts per dealer as of April 30, 1995 are
listed on Schedule 2.
Determination Date means the last calendar day preceding the
Purchase Date.
Gross Loan Amount means, as of any given date, the aggregate
amount reflected on the books and records of Parent and Sellers as
due from the Obligors with respect to all Contracts.
Interest Bearing Contracts means Contracts which are reflected
on the books and records of Parent and Sellers in an amount equal
to the principal balance of such Contracts without regard to any
interest charged or chargeable for such Contracts.
Leases means all real property leases, including all amend-
ments, modifications and extensions thereof, for each of the office
locations set forth in Schedule 2 hereto.
Master Insurance Policies means those various policies of
insurance issued by American Bankers as disclosed in Schedule 2
hereto.
Net Outstanding Balances means with respect to Interest
Bearing Contracts, the aggregate amount reflected on the books and
records of Parent and Sellers as due from the Obligors thereof as
of the Determination Date multiplied by a fraction equal to (X) the
aggregate amount reflected on the books and records of Parent and
Sellers for all Interest Bearing Contracts as of the end of the
preceding calendar month (the "Interest Bearing Contracts Month End
Balance") plus all accrued and unpaid interest thereon as of such
month end and less all deferred fees on such Contracts as of such
month end over (Y) the Interest Bearing Contracts Month End
Balance, and with respect to Precomputed Interest Contracts, the
gross amount reflected on the books and records of Parent and
Sellers for all such Precomputed Interest Contracts as of the
Determination Date multiplied by a fraction equal to (X) the
aggregate gross amount reflected on the books and records of Parent
and Sellers for all Precomputed Interest Contracts as of the end of
the preceding calendar month (the "Precomputed Interest Contracts
Month End Balance") less unearned interest and deferred fees on
such Contracts as of such month end over (Y) the Precomputed
Interest Contracts Month End Balance.
Obligor means the person or persons who obtained a loan from
any Seller or, if any Seller's ownership of a loan or account was
established by purchase, who obtained the extension of credit from
any such Seller's predecessor in interest, and who are obligated to
pay such Seller in accordance with the Contracts.
Post Closing Settlement Date shall be a date not later than
sixty (60) days after the Purchase Date.
Precomputed Interest Contracts means the Contracts which are
reflected on the books and records of Parent and Sellers in an
amount equal to the entire amount of principal and interest payable
under such Contracts to Sellers.
Purchase Date shall be the date on which the Closing occurs,
which shall take place at the offices of Parent at 1100 Main
Street, Suite 2350, Kansas City, Missouri or at such other place as
may be agreed upon by Buyer and Parent. In the event the Purchase
Date does not occur prior to September 30, 1995 or such later date
as shall have been agreed to in writing by Buyer and Parent (the
"Termination Date"), this Agreement shall be null and void and of
no further force or effect, subject, however, to Section 22 below.
Purchase Price shall be the aggregate cash amount to be paid
by Buyer to Parent and the Sellers on the Purchase Date for the
Contracts and Business Assets in accordance with the terms of this
Agreement.
Retrospective Insurance Commission Receivable means all of the
right, title and interest of Parent and the Sellers, considered
collectively, to receive amounts following the Closing payable by
American Bankers with respect to the Service Expense Reimbursement
Agreement.<PAGE>
<PAGE>
Service Expense Reimbursement Agreement means that certain
agreement between Parent or Sellers as customer and American
Bankers and all modifications and addendums thereto, all as
disclosed in Schedule 2 hereto.
Third Party Agreements means each of the written agreements
between Parent or a Seller and a third party, including without
limitation all equipment and other personal property leases,
maintenance agreements and service agreements, which are disclosed
in Schedule 2 hereto.
Unearned Insurance Commissions means the aggregate amount
reflected on the books and records of Parent and Sellers as of any
given date of advanced commissions retained by Parent and/or the
Sellers less the earned portion thereof with respect to sales of
insurance products occurring prior to such date, where the
applicable insurance policies remain in effect as of such date,
which aggregate amount may be subject to repayment in whole or in
part by Parent, the Sellers or their assignees in accordance with
the Service Expense Reimbursement Agreement.
2. SUBSIDIARIES OF BUYER: Buyer may designate one or more
of its subsidiaries as the purchaser of any Contract or Business
Asset or assignee of any Lease or Third Party Agreement and the
word "Buyer" as used in this Agreement shall,. wherever applicable,
include each such subsidiary; provided, however, notwithstanding
any such designation, Fidelity Acceptance Corporation shall remain
jointly and severally responsible for the performance of all
obligations of Buyer under this Agreement. If a subsidiary of
Buyer purchases a Contract or Business Asset or assumes an Assigned
Obligation, the subsidiary shall have all the benefits and
obligations of this Agreement including, but not limited to, the
benefits of the representations, warranties and covenants made by
Holding Company, Parent and Sellers, and the indemnification
obligations thereof, and shall have the authorizations, rights and
powers granted by Parent and Sellers, with respect to the Contract,
Business Asset, Lease or Third Party Agreement as applicable.
3. SALE OF CONTRACTS AND BUSINESS ASSETS, Etc.:
On the Purchase Date and subject to the conditions of this
Agreement Parent and each Seller will sell, assign, transfer and
set over to Buyer the Business Assets, the Leases, the Third Party
Agreements, the Contracts, the Retrospective Insurance Commission
Receivable, and all of their rights, title and interest therein to
Buyer, Parent and Sellers shall deliver a Schedule of Contracts,
which shall include (i) a list of the Contracts, identified by name
of Obligor and account number as of the end of the calendar month
immediately preceding the month in which the Closing shall occur
(the "Pre-Closing Month End"), (ii) the amounts, calculated on an
aggregate and per account basis, for outstanding principal balance,
unearned interest (with respect to Precomputed Interest Contracts)
and deferred fees, and on an aggregate basis only for accrued and
unpaid interest (with respect to Interest Bearing Contracts), all
as of the Pre-Closing Month End, and (iii the Gross Loan Amount as
of the Determination Date, all of which shall be prepared by Parent
and Sellers on a basis consistent with the applicable policies,
procedures and practices of Parent and Sellers, as in effect on the
Contract Date and disclosed at such time by Parent to Buyer, and
shall be attached to this Agreement as Schedule 4 and (iii) Parent
and Sellers shall prepare supplements to Schedules 3 and 2 (the
Business Assets and the Leases and Third Party Agreements Sched-
ules) to add any Business Assets, Leases and Third Party Agreements
purchased or entered into and eliminate any Business Assets, Leases
and Third Party Agreements sold or terminated, all in the ordinary
course of business and as permitted under this Agreement, between
the date hereof or the date of the applicable schedule attached
hereto, whichever is applicable, and the Purchase Date, and Buyer
will purchase the Business Assets as listed on Schedule 3 as
supplemented and assume the Assigned Obligations under the Leases
and Third Party Agreements as listed on Schedule 2 as supplemented.
4. PURCHASE PRICE - CONTRACTS - BUSINESS ASSETS: On the
Purchase Date, Buyer shall pay to the Sellers and Parent an
aggregate amount equal to the Purchase Price, in U.S. Dollars
delivered by wire transfer in immediately available funds as
directed by Parent. The Purchase Price shall consist of the
aggregate amount of:
<PAGE>
<PAGE>
A. An amount equal to the Net Outstanding Balances, less
an amount equal to the Dealer Holdback as of the Determination
Date (which shall be estimated on the Purchase Date to be the
amount of the Dealer Holdback as of the Pre-Closing Month End and
shall be adjusted on the Settlement Sheet to reflect the actual
amount of the Dealer Holdback as of the Determination Date) and
less an amount equal to the Gross Loan Amount as of the Determina-
tion Date multiplied by a fraction equal to (x) the Unearned
Insurance Commissions balance as reflected on the books and records
of Parent and the Sellers as of the Pre-Closing Month End over (y)
the Gross Loan Amount as of the Pre-Closing Month End, plus (iv)
$18,501,000.00 plus (v) $750,000.00 (which the parties agree is the
value assigned to the Retrospective Insurance Commission Receiv-
able); and
B. An amount equal to the net book value of the Business
Assets listed on Schedule 3 as shown on the books and records of
Parent and Sellers as of the Pre-Closing Month End plus Parent's or
Sellers' actual cost of any Business Asset acquired less the book
value of any Business Assets sold between such calendar month end
and the Purchase Date.
5. ASSUMPTION OF ASSIGNED OBLIGATIONS: On the Purchase
Date, in addition to the payment of the Purchase Price to Parent
and Sellers, Buyer shall assume all of Parent's and/or Sellers'
obligations accruing on or after the Purchase Date under the
Assigned Obligations by the execution of an Assignment and
Assumption Agreement in substantially the form of Exhibit "A" and
Buyer shall not be responsible for, and shall not assume hereunder,
any other liabilities, responsibilities or obligations of Holding
Company, Parent or any Seller whatsoever.
<PAGE>
<PAGE>
6. POST CLOSING SETTLEMENT DATE: Within thirty (30) days
after the Purchase Date, Parent and Sellers shall prepare a
settlement sheet ("Settlement Sheet") setting forth adjustments to
the Purchase Price in order to prorate lease, utilities, personal
property tax, maintenance, service contract and other similar
payments as of the Purchase Date, compensate each respective
Seller for Contracts, if any, made or acquired and transferred by
such Seller to Buyer which were not included in the calculation of
the Purchase Price as of the Purchase Date, compensate each Seller
for not sufficient funds checks ("NSF Check(s)") received by such
Seller prior to the Purchase Date and returned by Seller's
depository bank on or after the Purchase Date, such that the Net
Outstanding Balances on the Determination Date incorrectly
reflected a payment and understated the amount due from the Obligor
by the amount of the NSF Check and charges related thereto;
provided, however, that no such adjustment shall be made under this
clause if and to the extent that the Contract(s) to which any such
NSF Check(s) relate shall have been required to have been written
down or charged off by such Seller as of the Determination Date in
accordance with this Agreement, in which case the Net Outstanding
Balances shall be appropriately adjusted to reflect such writedown-
s) or charge-off(s), and make such other adjustments, including
without limitation adjustments to the values of Net Outstanding
Balances, Dealer Holdback as of the Determination Date, Unearned
Insurance Commissions as of the Determination Date, Gross Loan
Amount as of the Determination Date and net book value of the
Business Assets as of the Determination Date (taking into account
depreciation from the Pre-Closing Month End through the Determina-
tion Date), appropriate to effectuate the terms of this Agreement.
Parent shall also deliver, together with the Settlement Sheet, a
revised Schedule of Contracts, which will update, to the extent
obtainable by Parent (using its best efforts), all of the informa-
tion that was previously provided in Schedule 4 as of the Pre-
Closing Month End to provide such information as of the Determina-
tion Date. Parent shall also include in such revised Schedule 4,
to the extent obtainable by Parent (using its best efforts), the
amounts as of the Determination Date for accrued and unpaid
interest with respect to Interest Bearing Contracts on an aggregate
and per account basis. Buyer shall notify Parent in writing of any
proposed adjustments to the Settlement Sheet within fifteen (15)
days after receipt of the Settlement Sheet. Buyer, at its expense,
shall have access to the books, records, personnel and representa-
tives of Holding Company, Parent and the Sellers, including all
financial statements, schedules and work papers of Holding Company,
Parent and the Sellers relating to the calculation of the Purchase
Price and preparation of the Settlement Sheet, in order to verify
to Buyer's reasonable satisfaction the validity of the Purchase
Price and the inclusion of all appropriate adjustments, and the
amounts thereof, in the Settlement Sheet. The parties will attempt
in good faith to agree upon the final version of the Settlement
Sheet on or before the Post Closing Settlement Date. If the
parties are unable to agree upon the Settlement Sheet by the Post
Closing Settlement Date, the independent auditors for Buyer and
Parent shall mutually select a nationally recognized accounting
firm (the "Accountant") to review the Settlement Sheets proposed by
Parent and Buyer and to determine the final version of the
Settlement Sheet. The cost of the Accountant shall be borne
equally by the Parent and Buyer, unless the Accountant determines
that one of the parties presented incorrect data or took a position
which was clearly contrary to the terms of this Agreement in which
case the entire cost of the Accountant shall be borne by such
party. On the Post Closing Settlement Date or, if the Accountant
determined the final Settlement Sheet, on the first Business Day
after the Accountant's determination, the Buyer will pay by wire
transfer in immediately available funds as directed by the Parent
the amount, if any, owed by Buyer to Parent or any Seller as shown
on the final Settlement Sheet, and the Parent will pay by wire
transfer in immediately available funds as directed by Buyer the
amount, if any, owed by Parent and Sellers to Buyer as shown on the
final Settlement Sheet. A single net payment may be made by Parent
or Buyer as appropriate at such time.
<PAGE>
<PAGE>
7. ENDORSEMENTS/ASSIGNMENTS OF MORTGAGES, Etc. On the
Purchase Date, upon payment of the Purchase Price, each respective
Seller will deliver to Buyer an executed assignment of mortgage for
each Contract secured by an interest in real property, in record-
able form and in a form to be agreed upon by Parent and Buyer
within thirty (30) days of the date of this Agreement. Buyer shall
be responsible for causing all such assignments to be recorded in
the appropriate public records and shall bear all costs, including
filing fees, in connection therewith. In addition, on the Purchase
Date each respective Seller will endorse and assign to Buyer such
Seller's interest in each Contract in order to evidence the
transfer of such Seller's interest in the Contracts to Buyer in
such manner as may be reasonable and appropriate. On the Purchase
Date, each Seller shall furnish Buyer with a Power of Attorney in
the form of the document attached hereto as Exhibit "B". Buyer
agrees to save and hold Parent and each Seller harmless from any
loss occasioned by Buyer's use of the Power of Attorney. Parent
and each Seller further agree, on the Purchase Date and from time
to time following the Purchase Date, to execute any individual
assignments and any other instruments of transfer or conveyance and
to take or cause to be taken all other actions, including without
limitation obtaining all third party releases and/or terminations
of liens and security interests affecting any of the Contracts or
Business Assets, which are necessary or desirable in the reasonable
judgment of Buyer to effect the sale, transfer, conveyance and
assignment to Buyer of all of Parent's and the Sellers' respective
rights, title and interest in and to each Contract, Business Asset,
Lease and Third Party Agreement to be so sold, transferred,
conveyed and assigned to Buyer upon the Closing in accordance with
the terms of this Agreement. Parent shall deliver all necessary
UCC Termination Statements on the Purchase Date and shall cause all
such UCC Termination Statements to be filed within five (5) days
thereafter in the appropriate public records and shall bear all
costs including filing fees, in connection therewith.
8. OTHER ITEMS SUBJECT TO SALE/DELIVERIES BY SELLER: On the
Purchase Date, upon payment of the Purchase Price, each Seller will
also sell, assign, transfer and deliver to Buyer in connection
with:
A. The Contracts:
(1) All of the Seller's interest and benefits in, to and
under all endorsements and guaranties by or of others held by it
with respect to the Contracts.
(2) All of the Seller's right, title and interest in all
security instruments, mortgages or deeds of trusts and the liens
created thereunder with respect to the Contracts.
(3) Subject to the Parent and Seller retaining such
documents that are subject to existing attorney-client privilege in order to
maintain the confidentiality of such documents, all individual
Contract files, ledger cards, bookkeeping memoranda, receipts,
correspondence, folders, credit files, fanfolds, indexes and all
other records of each respective Seller directly pertaining to both
the Contracts and contracts paid or charged off prior to the
Purchase Date; including filing receipts evidencing recordation or
filing in governmental filing or recording offices of financing
statements, mortgages, and other filing instruments. All such
materials, which may be in the form of microfilm or magnetic tape,
shall be delivered to Buyer on the Purchase Date.
(4) All of the interest of each Seller under each and every
existing policy or certificate of insurance, if any, to the extent
such relates to any property securing any Contracts and as relates
to the life or lives or health of any Obligors of said Contracts.
(5) All pending insurance claims and all claims filed in the
future, if any, and the proceeds thereof, if any, in connection
with any of the Contracts purchased by Buyer. The parties acknowl-
edge and agree that Buyer is not purchasing those Contracts related
to JoAnn's Instant Finance Cars, Inc. nor Parent's and Sellers'
claim against Lloyds' of London related to such Contracts.
<PAGE>
<PAGE>
B. The Business Assets, Leases and Third Party Agreements:
(1) A Bill of Sale covering the Business Assets in substan-
tially the form of Exhibit "C".
(2) Subject to the Parent and Seller retaining such
documents that are subject to existing attorney-client privilege in order to
maintain the confidentiality of such documents, all files,
receipts, correspondence and all other records of each respective
Seller directly pertaining to the Business Assets, Leases and Third
Party Agreements.
9. CREDIT INSURANCE: The obligations of Buyer, Parent and
the Sellers with respect to the transfer of Parent's or any
Seller's interest under policies or certificates of insurance
relating to the life or lives or sickness and/or disability or
property of any Obligor under any Contract shall be satisfied in
the following manner:
A. On the Purchase Date, each respective Seller and, to the
extent necessary, the Parent will execute and deliver to Buyer an
assignment of death benefits and/or sickness and/or disability
benefits under any and all group creditor life and/or sickness and
accident insurance or property insurance policies covering the
Contracts to be sold hereby, which assignment shall be acknowledged
and consented to as of the Purchase Date by the insurer and which
acknowledgment and consent shall be delivered by the insurer on the
Purchase Date or as soon thereafter as practicable.
B. Neither Parent nor any Seller will initiate, on or after
the Purchase Date, any action to terminate the insurance coverage
on any insured Contract until such time as such Contract is
terminated by prepayment, renewal, refinance or repossession of the
collateral, or charge-off by Buyer, whichever occurs first.
C. On the Purchase Date, Parent and each Seller shall notify
the insurance carrier(s) of this Agreement and instruct said
carrier(s) to pay to Buyer any and all unearned premiums from
cancellations occurring after the Purchase Date and claims due or
thereafter to become due to any Seller. Buyer agrees to refund to
the Obligors any applicable unearned insurance premiums to the
extent received by Buyer from the appropriate insurance carrier.
Buyer agrees to assume, to the extent effectively assigned on terms
and conditions reasonably satisfactory to Buyer, all obligations
arising under the Service Expense Reimbursement Agreement between
American Bankers and Parent and/or any Seller.
10. ALLOCATION: The aggregate amount of the Purchase Price
plus the value of the Assigned Obligations (such aggregate amount
being referred to herein as the "Acquisition Consideration"), as
may be adjusted in accordance with Section 6 above, shall be
allocated among all of the assets to be purchased by Buyer under
this Agreement (such assets being referred to herein as the
"Purchased Assets") in accordance with a Schedule 5 hereto, to be
prepared by Buyer and to be made a part of this Agreement at such
time as the Acquisition Consideration is finally determined in
accordance with the terms hereof The allocation of the Acquisition
Consideration among the Purchased Assets to be contained in
Schedule 5 shall be consistent with the allocation of value
contained in that certain sample schedule prepared by Buyer and
delivered to Parent under separate cover dated as of or prior to
the date hereof.
11. TRANSFER TAXES: All sales, transfer and other taxes
payable in connection with the sale, transfer, conveyance and
assignment of the Contracts (including all related security instru-
ments), Business Assets, Leases and Third Party Agreements by
Parent and the Sellers to Buyer as contemplated under this
Agreement shall be borne by Parent and/or Sellers, except as set
forth in Section 7 above.
12. PARENT'S AND SELLERS' WARRANTIES: The following
covenants, warranties and representations are made to Buyer by each
of the Holding Company, Parent and the Sellers, as of the Contract
Date and the Purchase Date, which covenants, warranties and
representations shall survive the execution of this Agreement and
the Closing as provided herein:
<PAGE>
<PAGE>
A. Holding Company, Parent and Sellers covenant, represent
and warrant that they have taken all appropriate corporate action
necessary to authorize the execution of and consummation of the
transactions contemplated by this Agreement. This Agreement has
been duly and validly executed and delivered by Holding Company,
Parent and the Sellers and constitutes the valid and binding
obligation of Holding Company, Parent and the Sellers, enforceable
against Holding Company, Parent and each of the Sellers in
accordance with its terms. The execution and performance of this
Agreement by Holding Company, Parent and each Seller do not violate
any laws, regulations, indentures, contracts, judgments or decrees
to which any of them is a party or by which any of their respective
properties or assets may be affected nor the respective Certifi-
cates of Incorporation and By-laws of Holding Company, Parent and
each Seller.
<PAGE>
<PAGE>
B. Holding Company, Parent and Sellers covenant, represent
and warrant that the ledger cards or equivalent record delivered to
Buyer shall fully and accurately reflect the true outstanding
unpaid balance of the Contracts as of the close of business on the
Determination Date, and the cards or equivalent record will
accurately reflect the collection activity on the Contracts and the
payments received on the Contracts from the respective Obligors.
C. Holding Company, Parent and Sellers covenant, represent
and warrant that, except as set forth on Schedule 6 hereto, each
respective Seller has good and marketable title to the Business
Assets and Contracts to be sold under this Agreement, free and
clear of any liens, encumbrances or charges whatsoever, and any
such claims shall be released on the Purchase Date; such Seller is
the absolute owner thereof with full and sole right to transfer all
right, title and interest in and to the Contracts and Business
Assets; and no person, firm, corporation or association has any
claim whatsoever to the Contracts sold under this Agreement or the
proceeds of the Contracts or any of the rights, title and interest
in and to any of the Leases and Third Party Agreements intended to
be transferred to Buyer under this Agreement.
D. Holding Company, Parent and Sellers covenant, represent
and warrant that, other than as may be set forth on Schedule 7
hereto, none of them is a party to any, and there is no pending or
threatened, litigation, legal or administrative proceeding, which
would, if decided against Holding Company, Parent or any Seller, as
applicable, have a material adverse effect on the Business
generally or the Contracts or Parent's or any Seller's right to
transfer same, or on any of the Business Assets, Leases or Third
Party Agreements to be sold and assigned pursuant to this Agree-
ment.
E. Holding Company, Parent and Sellers covenant, represent
and warrant, except as noted on the records of Parent or the
respective Seller, that each Contract sold under this Agreement is
genuine, valid and complete in all material respects and is
enforceable in accordance with its terms; no understanding or
agreement has been reached between the respective Seller and the
Obligor for any variation of the interest rate, schedule of
payments or other material item or condition of any Contract; and
no such variation or alteration has been made by any Seller or any
of its employees.
F. Holding Company, Parent and Sellers covenant, represent
and warrant, except as noted on the records of Parent or the
respective Seller, that no Contract is subject to any defense,
setoff or counterclaim to the payment of the amount of the unpaid
balance due on the Contract or a proceeding in bankruptcy.
G. Holding Company, Parent and Sellers covenant, represent
and warrant that, except as otherwise disclosed in their respective
records, each instrument or the property or goods described in
each instrument representing or securing a Contract is in the
possession of the respective Seller; and each mortgage and deed of
trust evidencing and securing any Contract sold hereunder will
constitute as of the Closing, a valid and enforceable and perfected
first, second or third lien, as indicated in the records of the
Seller, as against all persons on the real property described in
the mortgage or deed of trust or other agreement. All personal
property loans to be sold to Buyer under this Agreement will have
a valid and perfected lien as of the Closing, except where the
failure to be perfected would not have a material adverse effect,
individually or in the aggregate, on Parent or the respective
Seller.
H. Holding Company, Parent and Sellers covenant, represent
and warrant that all the Contracts and any security instruments
sold by Parent and the Sellers under this Agreement, and Parent's
and the Sellers' statements and applications relating thereto, and
Parent's and the Sellers' practices and the conduct of their
respective businesses with reference to the Contracts comply in all
material respects with all applicable state, federal and local laws
and regulations.
I. Holding Company, Parent and each respective Seller
covenant, represent and warrant that it has paid or will cause to
be paid any and all license, franchise, intangible or stamp taxes
or fees due and owing at the Purchase Date to the federal govern-
ment, any state government and any political subdivision thereof,
arising from or growing out of the acquisition, collection or
holding of any and all of the Contracts and Business Assets by
Parent or such Seller.<PAGE>
<PAGE>
J. Holding Company, Parent and Sellers covenant, represent
and warrant that they will, from and after the Purchase Date, pay
over to Buyer any payments received in payment on the Contracts,
which are attributable to payments that become due and payable from
and after the Purchase Date for the Contracts listed on Schedule 4.
Other items pertaining to the Contracts received after the Purchase
Date by Parent or any Seller will be forwarded promptly to Buyer.
K. Holding Company, Parent and Sellers covenant, represent
and warrant that they are in compliance in all material respects
with all laws governing their labor, employment and employee
benefit practices, including but not limited to the Fair Labor
Standards Act, the Civil Rights Acts of 1964 and 1991, the Age
Discrimination in Employment Act, the Family and Medical Leave Act,
the Employee Retirement Income Security Act of 1974 and the
Internal Revenue Code of 1986.
L. As of April 30, 1995, the net book value of the Business
Assets as reflected on Parent's and Sellers' books and records is
approximately $2,139,463; the principal and accrued interest on
Interest Bearing Contracts is approximately $32,259,771 and
$460,923; the gross amount due under Precomputed Interest Contracts
and unearned interest on such Contracts is approximately $98,439,6-
08 and $20,034,514; the Net Outstanding Balance of the Contracts as
of such date is approximately $109,905,439; the amount of Dealer
Holdback is approximately $612,666; the amount of Unearned
Insurance Commissions is approximately $2,087,198; and the amount
of aggregate deferred fees on the Contracts is approximately
$1,220,349.
M. Except as may be set forth in Schedule 8 attached hereto,
no consents, waivers or approvals of, notices to or filings with
any governmental agency or authority, including without limitation
any court or judicial authority, are necessary, and no consents or
approvals of or notices to any nongovernmental third parties are
necessary, in connection with the execution and delivery by Holding
Company, Parent and each Seller of this Agreement or the consumma-
tion by Holding Company, Parent and each Seller of the transactions
contemplated by this Agreement.
N. Holding Company, Parent and each of the Sellers is in
compliance and has at all times been in compliance, in all material
respects, with all environmental laws, rules, regulations and
standards promulgated, adopted or enforced by the United States
Environmental Protection Agency and of similar agencies in states
in which they conduct their collective business. There is no suit,
claim, action or proceeding now pending before any court, govern-
mental agency or board or other forum or, to the knowledge of
Parent and the Sellers, threatened by any person for alleged
noncompliance with any environmental law, rule or regulation or
relating to the discharge or release into the environment of any
hazardous material or waste at or on a site presently or formerly
owned, leased or operated by Holding Company, Parent or any Seller.
O. Parent and each of the Sellers maintains insurance with
respect to the Business and the Business Assets of the kinds, with
respect to the risks, and in such amounts as are consistent with
prudent business practices.
P. Holding Company, Parent and each of the Sellers is, and
after giving effect to the transactions contemplated hereby will
be, in compliance in all material respects with all federal, state
and local laws, rules and regulations applicable to the Business.
Q. Parent has provided Buyer with a schedule of all
employees, other than those certain officers and other employees
identified in Schedule 9 hereto (the "Headquarters Employees"), of
Parent and the Sellers (the "Branch Employees"), showing for
each the position held, the date of birth and current salary. None
of the Branch Employees is a party to any employment or severance
agreement or covered by any collective bargaining or similar
agreement. There is no strike or other labor dispute pending or,
to the knowledge of Parent or any of the Sellers, threatened
against Parent or any Seller, which would have a material adverse
effect on the Business.
R. Parent is not aware of any reason why any of the
necessary consents or approvals of governmental agencies or
authorities or nongovernmental third parties referred to in
paragraph M of this Section 12 above would not be obtained within
a time period sufficient to enable the parties to consummate the
transactions contemplated by this Agreement within a time frame
customary for transactions of the nature contemplated hereby.
<PAGE>
<PAGE>
S. No representation or warranty contained in this Agree-
ment, and no statement contained in any certificate, list or other
writing, including but not necessarily limited to the exhibits and
any schedules attached hereto or to be included herewith, furnished
by Holding Company, Parent or any Seller to Buyer pursuant to the
provisions hereof contains or will contain any untrue statement of
a material fact or omits to state a material fact necessary in
order to make the statements herein or therein not misleading.
In the event of any breach or breaches of any of the foregoing
representations or warranties and subject to the provisions of
Section 13 below, Parent or the respective Seller will, upon thirty
(30) days prior written notice (which notice shall describe the
breach with specificity, setting out the nature of the breach and
such other information, documents, records and papers as necessary)
to Parent by Buyer and provided Parent or the appropriate Seller
has not cured, corrected or resolved such breach within such thirty
(30) day period, refund to Buyer the uncollected portion of each
Contract, if any, to which such breach relates, paying Buyer an
amount equal to the Net Outstanding Balance owing on said Contract
as of the date of refund, less any Dealer Holdback and Unearned
Insurance Commissions attributable to said Contract as of such
date; provided that Parent or such Seller receives the written
notice within thirty-six (36) months after the Purchase Date and
further provided that Buyer shall continue to own and pursue
collection of such Contracts and promptly pay over to Parent
seventy-five percent (75%) of any payments received in payment of
such Contracts.
13. INDEMNIFICATION
A. Indemnification; To the Buyer. Holding Company, Parent
and Sellers agree, Jointly and severally, to defend, indemnify and
hold harmless the Buyer and its officers, directors, employees,
successors and assigns, from and against any and all losses,
damages, claims, suits, proceedings, liabilities, costs and
expenses, including reasonable attorneys' fees ("Losses" or
"Claims" as the context requires), which may be imposed on,
sustained, incurred or suffered by or asserted against any such
persons, directly or indirectly, as a result of or relating to or
arising out of:
(1) The breach of any representation or warranty or covenant
or agreement of Holding Company, Parent or any Seller contained in
this Agreement; or
(2) The actions or omissions of Holding Company, Parent or
any Seller in the conduct of the Business or as related to the
ownership, possession or use of any of the Business Assets or as
related to the payment or performance of any of the Assigned
Obligations, in each case during the period prior to the Purchase
Date.
Notwithstanding anything herein to the contrary, Buyer shall have
no right of refund or indemnification for the noncollectibility for
any reason of any Contract transferred to Buyer which was assigned
a value of zero ($O) for purposes of calculating the Purchase
Price; provided, however, that the foregoing shall not limit the
indemnification obligations of Holding Company, Parent and the
Sellers otherwise imposed under this Section 13 with respect to any
Losses relating to any such Contract (other than noncollectibility)
in excess of any amounts collected by Buyer on such Contract
incurred by Buyer or any of its officers, directors, employees,
successors or assigns as a result of any breach of any representa-
tion or warranty or covenant or agreement of Holding Company,
Parent or any Seller relating to any such Contract contained in
this Agreement or the actions or omissions of Holding Company,
Parent or any Seller with respect to any such Contract during the
period prior to the Purchase Date.
B. Indemnification: To the Seller, Etc. The Buyer agrees to
defend, indemnify and hold harmless Holding Company, Parent, each
Seller and their officers, directors, employees, successors and
assigns, from and against any and all losses, damages, claims,
suits, proceedings, liabilities, costs and expenses (including
without limitation reasonable attorneys' fees) ("Losses" or
"Claims" as the context requires) which may be imposed on,
sustained, incurred or suffered by, or asserted against any such
persons, directly or indirectly, as a result of or relating to or
arising out of: the breach of any representation or warranty or
covenant or agreement of the Buyer contained in this Agreement, or
Buyer's conduct of the Business or its ownership or operation of
the Contracts or Business Assets purchased under this Agreement or
related to its assumption of the Assigned Obligations, at any time
on or after the Purchase Date.
<PAGE>
<PAGE>
C. Limitations on Parties' Respective Indemnification
Obligations. The Parties' respective indemnification of one
another as provided in Paragraphs A and B of this Section 13 above
(meaning the indemnification obligations of Holding Company, Parent
and the Sellers, together on the one hand, and of Buyer on the
other hand) shall be limited to an aggregate amount of Seven
Million and 00/100 Dollars ($7,000,000.00); provided, however,
notice of claims for indemnification of the Buyer by Holding
Company, Parent or any Seller or of Holding Company, Parent or any
Seller by Buyer, as the case may be, pursuant to the provisions of
this Section 13 must be received by Parent or Buyer, as applicable,
prior to the last day of the thirty-sixth (36th) calendar month
after the Purchase Date.
D. Procedure for Indemnification.
(1) If a party to this Agreement entitled to assert a Claim
under this Agreement shall receive notice of the assertion by a
person who is not a party to this Agreement of any claim or of the
commencement by any such person of any action or proceeding (a
"Third Party Claim") with respect to which Holding Company, Parent,
any Seller or the Buyer, as applicable, is obligated to provide
indemnification, the indemnified party (the "Indemnitee") shall
give the indemnifying party (the "Indemnitor") prompt written
notice thereof Such notice shall describe the Third Party Claim in
reasonable detail.
(2) The Indemnitor may elect to compromise or defend, at
such Indemnitor's own expense and by such Indemnitor's own counsel, any
Third Party Claim. If an Indemnitor elects to defend a Third Party
Claim, it shall, within thirty (30) days of receipt of the notice
referred to in Paragraph D(1) of this Section 13 above (or sooner
if the nature of such Third Party Claim so requires), notify the
related Indemnitee of its intent to do so, and such Indemnitee
shall reasonably cooperate in the compromise of, or defense against
such Third Party Claim. Such Indemnitor shall pay such Indemnitee-
's actual out-of-pocket expenses incurred in connection with such
cooperation. After written notice from an Indemnitor to an
Indemnitee of its election to assume the defense of a Third Party
Claim, such Indemnitor shall not be liable to such Indemnitee under
Paragraph A or Paragraph B of this Section 13 above, as the case
may be, for any legal expenses subsequently incurred by such
Indemnitee in connection with the defense thereof, provided,
however, that such Indemnitee shall have the right to employ one
counsel for each Third Party Claim to represent such Indemnitee if,
in such Indemnitee's good faith judgment, a conflict of interest
between such Indemnitee and such Indemnitor exists in respect of
such Third Party Claim, in which events the fees and expenses of
such separate counsel shall be paid by such Indemnitor. If an
Indemnitor elects not to defend against a Third Party Claim or
fails to notify an Indemnitee of its election as provided in
Paragraph D(1) of this Section 13 above, such Indemnitee may
without advance written notice to the Indemnitor, pay, compromise
or defend such Third Party Claim reasonably and in good faith on
behalf of and for the account and risk of the Indemnitor to the
extent that the Indemnitee is entitled to receive indemnification
from the Indemnitor hereunder. No Indemnitor shall consent to
entry of any Judgment or entry into any settlement against or with
respect to any Indemnitee without the written consent of such
Indemnitee, unless such judgment or settlement:
(a) Provides solely for money damages or other payments for
which such Indemnitee is entitled to indemnification hereunder, and
(b) Includes as an unconditional term thereof the giving by
the claimant or plaintiff to such Indemnitee of a release for all
liability in respect of such Third Party Claim.
(3) With respect to any Claim hereunder which does not
result from a Third Party Claim, the Indemnitor shall have a period of
thirty (30) days from receipt of written notice from the Indemnitee
within which to respond thereto. If such Indemnitor does not
respond within such 30-day period or rejects such Claim in whole or
in part, such Indemnitee shall be free to pursue such remedies as
may be available to such Indemnitee under applicable law or this
Agreement.
(4) If the amount of any Claim or Loss shall, at any time
subsequent to payment pursuant to this Agreement, be reduced by
recovery, settlement, insurance or otherwise, the amount of such
reduction, less any expenses incurred in connection therewith,
shall promptly be repaid by the Indemnitee to the related Indemni-
tor.
<PAGE>
<PAGE>
E. Collateral for Indemnification Obligations. To secure in
part the indemnification obligations of Holding Company, Parent and
the Sellers under this Section 13, on the Purchase Date Parent
shall deposit Five Million and 00/100 Dollars ($5,000,000.00) in
cash into an escrow account with The First National Bank of Boston
("FNBB") as escrow agent. The terms of such escrow arrangement
shall be governed by an escrow agreement to be entered into by the
parties on the Closing Date, in substantially the form attached
hereto as Exhibit "D" (the "Escrow Agreement").
14. PARTIES' COVENANT TO SEEK REGULATORY APPROVALS AND OTHER
CONSENTS AND APPROVALS: Each of the parties covenants that it will
timely file, to the extent required of such party to consummate the
transactions contemplated by this Agreement, and at its own
expense, all documents, forms, applications and fees necessary to
obtain all federal, state and local regulatory approvals necessary
to effectuate the transactions contemplated herein, including
without limitation the Notification and Report Form for Certain
Mergers and Acquisitions required pursuant to the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, the related filing fee and all
such further documents requested by the Federal Trade Commission or
the Department of Justice, and the applications, fees and
documents required to obtain licenses, if necessary, to operate
within each of the states in which the Sellers currently maintain
branch offices. Prior to the Purchase Date, the parties will use
their respective best efforts to obtain all consents and approvals,
of both governmental agencies or authorities and nongovernmental
third parties, required for Parent and Sellers to sell and assign
and Buyer to purchase and assume all of the Contracts, Business
Assets, Leases, Third Party Agreements and Assigned Obligations on
the Purchase Date in accordance with the terms of this Agreement
and to otherwise take all actions necessary or appropriate to
ensure the consummation of the transactions contemplated by this
Agreement as soon after the date hereof as reasonably practicable.
<PAGE>
<PAGE>
15. EMPLOYEES: Effective as of the Purchase Date, each
employee at will of Parent and Sellers shall be offered employment
with Buyer; provided, however, that any such employment shall not
be construed to limit the ability of the Buyer to terminate any
such employee at any time for any reason. Each such employee who
accepts such employment and becomes an employee of Buyer shall be
hereinafter referred to as a "Transferred Employee." Employment of
Transferred Employees shall be subject to all of Buyer's policies
and practices, including the policy of employment-at-will. On and
after the Purchase Date or such later date as Buyer in its
discretion may determine (the "Transition Date"), Buyer shall
provide the Transferred Employees with the employee benefits it
provides to all other new employees of Buyer, provided that the
Buyer will grant past service credit to the Transferred Employees
for the time of service at Parent or any Seller for purposes of
eligibility to participate, vesting and for other appropriate
benefits, but not for benefit accrual, under any pension benefit
plan or welfare benefit plan of Buyer. If the Transition Date is
later than the Purchase Date, from the Purchase Date through the
Transition Date Buyer shall provide the Transferred Employees with
employee benefits as nearly equivalent as practicable to either the
employee benefits theretofore maintained for them by Parent and
Sellers or to the employee benefits it provides to its other
employees, determined benefit by benefit by the Purchaser in its
discretion; provided, however, that Headquarters Employees shall be
entitled to no severance pay from the Buyer. The parties acknowl-
edge and agree that the Assigned Obligations do not include, and
Buyer has no ability, obligation or liability responsibility after
the Closing for, any and all liabilities, responsibilities and
obligations (current, runoff or other) under and with respect to
any employee benefit plans, including without limitation all
pension and profit-sharing plans, all severance pay plans and all
group health, life, disability and workers' compensation insurance
plans, of Holding Company, Parent or any Seller, and the responsi-
bility and obligation of maintaining and/or terminating any such
plans, including establishing appropriate reserves or accounts to
provide for any obligations under such plans incurred prior to the
Closing and becoming payable after the Closing, remains with
Holding Company, Parent and the Sellers; provided, however, Buyer
acknowledges and agrees that on and after the later of the Purchase
Date or such date as the Transferred Employees cease to be covered
under any group health plan maintained or contributed to by Holding
Company, Parent or Sellers, health care continuation coverage shall
be offered by Buyer under its appropriate group health plan to
"qualified beneficiaries" of Parent or Sellers, whether such
individuals become qualified beneficiaries prior to, on or after
the Purchase Date. Qualified beneficiaries shall have the meaning
set forth in Part 6 of Title I of ERISA and Section 4980B of the
Code. In the event that Buyer fails to offer employment to
Parent's or Sellers' current employees, then Buyer shall indemnify
and hold harmless Parent and Sellers for any loss or liability
incurred by Parent or any Seller with respect to any employees
under the Worker Adjustment and Retraining Notification Act,
including without limitation the costs and expenses associated with
defending a claim under said Act.
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<PAGE>
16. USE OF RECORDS BY PARENT OR ANY SELLER: Buyer agrees
that all records and memoranda of Parent and Sellers hereby
transferred will be maintained and made available for the use of
Holding Company, Parent and Sellers in making tax returns,
defending claims, or for any other legitimate purpose which does
not tend to injure Buyer in its competition with other companies
and will remain so liable for a period of not less than three (3)
years after the payment in full of the accounts represented by the
Contracts. Holding Company, Parent or Sellers may make copies of
any such documentation, at their expense, to the extent necessary
to fulfill the purposes of this Section 16.
17. NON-SOLICITATION/NON-COMPETE: Parent and each Seller
agree that neither they nor any of their present or future
subsidiaries, nor any purchaser of all or substantially all of the
voting shares of Parent or any Seller will, for a period of three
(3) years from the Purchase Date, directly and knowingly solicit
any of the Obligors for the purpose of making a loan to the
Obligors. Parent and each Seller further agree that, from and
after the Purchase Date, it will not, for a period of three (3)
years, open a consumer loan office for the purpose of engaging in
the same business as the Business within any state in which Buyer
operates or solicit or encourage to leave the employment of Buyer
or employ in any capacity or retain as a consultant any person who
is employed or retained in any capacity by Buyer following the
Purchase Date. As of the date hereof, each of the officers of
Parent identified in Schedule 10 hereto (the "Key Employees") has
entered into a protection agreement with Buyer, substantially in
the form attached hereto as Exhibit "E" (the "Protection Agree-
ment"), which by its terms shall become effective on the Purchase
Date.
18. ADDITIONAL COVENANTS OF HOLDING COMPANY, PARENT AND
SELLERS:
A. During the period from the Contract Date to the Purchase
Date, Holding Company and Parent will give or cause to be given to
Buyer and its officers, accountants, counsel and other representa-
tives full access during normal business hours to all of the
properties, assets, books, contracts, commitments and records of
Holding Company, Parent and the Sellers. All of the information
provided to Buyer or any of its representatives by Holding Company,
Parent and the Sellers hereunder shall remain subject to the
confidentiality requirements of the confidentiality agreement dated
March 10, 1995 between Parent and FNBB (the "Confidentiality
Agreement").
B. During the period from the Contract Date to the
Purchase Date, Holding Company, Parent and the Sellers shall:
(i) conduct the Business only in the ordinary course and
consistent with past practices;
(ii) maintain such insurance relating to the Business and
the Business Assets as is in place on the date hereof;
(iii) not increase any salaries or wages of any officer or
employee of Parent or any Seller nor establish or increase any
bonus, pension, option, incentive or deferred compensation,
retirement,, death, profit sharing, or similar benefits of the
officers or employees of Parent or any Seller except in all
instances in the ordinary course of business, consistent with past
practices, and as disclosed in Schedule 11 hereto or as otherwise
disclosed in writing by Parent to Buyer on or prior to the date
hereof;
(iv) not place any liens or encumbrances upon any of the
Contracts or Business Assets;
(v) not terminate (other than by expiration) or materially
amend or modify any Lease or Third Party Agreement, unless Buyer is
consulted prior to such action;
(vi) use their best efforts to prevent any material breach
of any contract or commitment that is materially related to the
Business;
(vii) not sell or transfer any property or asset of Parent
or any Seller, except in the ordinary course and consistent with past
practices;<PAGE>
<PAGE>
(viii) not release or waive any claims of Parent or any Seller
relating to any Contract or rights thereunder, except in the
ordinary course and consistent with past practices.
(i use their best efforts to maintain the franchise value
and goodwill of the Business and the services of Parent's and the
Sellers' full-time officers and employees; and
(x) maintain the books of account and records of Holding
Company, Parent and the Sellers in the ordinary course and in
accordance with applicable laws, regulations and accounting
standards.
C. Unless and until this Agreement shall have been properly
terminated by either party pursuant to Section 21 hereof, neither
Holding Company nor Parent nor any Seller (including any officer,
director, employee, representative or agent, including but not
limited to any investment banker, attorney or accountant, of
Holding Company, Parent and any Seller) shall, directly or
indirectly, encourage, solicit, initiate or participate in any
discussions or negotiations with, or provide any information to,
any corporation, partnership, person or other entity or group
(other than Buyer and its affiliates or representatives) concerning
any merger, tender offer, sale of assets, sale of shares of capital
stock or debt securities or similar transaction involving Holding
Company, Parent or any Seller ("Acquisition Transaction"). Parent
will immediately communicate to Buyer the terms of any proposal,
discussion, negotiation or inquiry relating to an Acquisition
Transaction and the identity of the party making such proposal or
inquiry which it or Holding Company or any Seller may receive in
respect of any such transaction (which shall mean that any such
communication shall be delivered no less promptly than by telephone
within 24 hours of the receipt of any such proposal or inquiry) or
the receipt of any request for information from any governmental
agency or authority with respect to a proposed Acquisition
Transaction.
D. If this Agreement is terminated by Buyer pursuant to
Section 21 hereof as a result of a willful breach of this Agreement
by Holding Company, Parent or any of the Sellers, then Parent shall
pay to Buyer as soon as practicable, but in any event within five
(5) business days of the termination of this Agreement, a fee, in
cash. of Five Million and 00/100 Dollars ($5,000,000.00) (the
"Termination Fee"); provided, however, that the foregoing shall not
relieve any of Holding Company, Parent or any Seller from any
additional liability any of them may have for any such willful
breach of this Agreement. The provisions of this paragraph D shall
survive the termination of this Agreement.
E. Parent shall maintain its legal existence and good
standing for a period of time from and after the Purchase Date not
less than the period during which the Escrow Agreement remains in
effect in accordance with its terms.
19. BUYER'S WARRANTIES: Buyer hereby covenants, represents
and warrants to Holding Company, Parent and Sellers, as of the
Contract Date and the Purchase Date, which representations and
warranties shall survive the execution of this Agreement and the
Closing as provided herein:
A. Buyer is a corporation, duly organized, validly existing
and in good standing under the laws of the State of Minnesota.
Buyer has taken all appropriate corporate action necessary to
authorize the execution of and consummation of the transactions
contemplated by this Agreement. This Agreement has been duly and
validly executed and delivered by Buyer and constitutes the valid
and binding obligations of Buyer, enforceable against Buyer in
accordance with its terms. The execution and performance of this
Agreement by Buyer do not violate any laws, regulations, inden-
tures, contracts, judgments or decrees to which Buyer is a party or
by which any of Buyer's properties or assets may be affected nor
the Certificate of Incorporation or By-laws of Buyer.
B. Buyer is not a party to, and there is no pending or
threatened, litigation, legal or administrative proceeding, which
would, if decided against Buyer, have any material adverse impact
on Buyer's ability to purchase the Contracts and Business Assets to
be purchased pursuant to this Agreement or to otherwise perform its
obligations hereunder.
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<PAGE>
C. Except as may be set forth in Schedule 12 attached
hereto, no consents, waivers or approvals of, notices to or filings
with any governmental agency or authority, including without
limitation any court or judicial authority, are necessary, and no
consents or approvals of or notices to any nongovernmental third
parties are necessary, in connection with the execution and
delivery by Buyer of this Agreement or the consummation by Buyer of
the transactions contemplated by this Agreement.
D. Buyer is not aware of any reason why any of the necessary
consents or approvals of governmental agencies or authorities or
nongovernmental third parties referred to in paragraph C of this
Section 19 above would not be obtained within a time period
sufficient to enable the parties to consummate the transactions
contemplated by this Agreement within a time frame customary for
transactions of the nature contemplated hereby.
E. No representation or warranty contained in this Agree-
ment, and no statement contained in any certificate, list or other
writing, including but not necessarily limited to the exhibit and
any schedules attached hereto or to be included herewith, furnished
by Buyer to Holding Company, Parent or the Sellers pursuant to the
provisions hereof contains or will contain any untrue statement of
a material fact or omits to state a material fact necessary in
order to make the statements herein or therein not misleading.
20. ADDITIONAL EVIDENCE OF OWNERSHIP. Each Seller agrees
that it will, upon the reasonable request of Buyer, supply copIes
of any additional documents it may still have in its possession
which evidence such Seller's ownership of the Contracts sold
hereby.
21. TERMINATION: This Agreement may be terminated at any
time prior to the Closing in accordance with the following
provisions:
A. by mutual written consent of Parent and Buyer authorized
by their respective Boards of Directors;
B. by Parent or Buyer if the Closing shall not have occurred
on or prior to the Termination Date;
C. by Buyer or Parent if any governmental or regulatory
authority or agency, or court of competent jurisdiction, shall have
issued a final permanent order or injunction enjoining, denying
approval of, or otherwise prohibiting the consummation of the
transactions contemplated by this Agreement and the time for appeal
or petition for reconsideration of such order or injunction shall
have expired without such appeal or petition being granted; or
D. by Buyer or Parent (provided that the terminating party
is not then in material breach of any representation, warranty,
covenant or other agreement contained herein), in the event of a
material breach by the other party of any representation, warranty,
covenant or other agreement contained herein which breach is not
cured after 30 days written notice thereof is given to the party
committing such breach.
22. EFFECT OF TERMINATION: In the event of termination of
this Agreement by either Parent or Buyer as provided above, this
Agreement shall forthwith become null and void (other than Sections
18(D) (if applicable) and 33 hereof, which shall remain in full
force and effect, and there shall be no further liability on the
part of any of the parties or their respective officers or
directors to the others, except any liability of any party under
said Sections 18(D) (as may be applicable) and 33, and in the
event of a willful breach of any representation, warranty, covenant
or agreement contained in this Agreement, in which case, the
breaching party shall remain liable for any and all damages, costs
and expenses, including all reasonable attorneys' fees, sustained
or incurred by the nonbreaching party(ies) as a result thereof or
in connection therewith or with the enforcement of its rights
hereunder. In the event of any termination of this Agreement by
either Parent or Buyer, the Confidentiality Agreement shall remain
in full force and effect in accordance with its terms.
<PAGE>
<PAGE>
23. AMENDMENT, EXTENSION AND WAIVER: Subject to applicable
law and as may be authorized by their respective Boards of
Directors, at any time prior to the consummation of the transac-
tions contemplated by this Agreement or termination of this
Agreement in accordance with the provisions of Section 21 hereof,
the parties may, amend this Agreement, extend the time for the
performance of any of the obligations or other acts of any other
party hereto, waive any inaccuracies in the representations and
warranties contained herein or in any document delivered pursuant
hereto, or waive compliance with any of the agreements or
conditions contained in Sections 25, 26 and 27 (to the extent
legally permitted) hereof. This Agreement may not be amended
except by an instrument in writing signed on behalf of each of the
parties hereto. Any agreement on the part of a party hereto to any
extension or waiver shall be valid only if set forth in an
instrument in writing signed on behalf of such party, but such
waiver or failures to insist on strict compliance with such
obligation, covenant, agreement or condition shall not operate as
a waiver of, or estoppel with respect to, any subsequent or other
failure.
24. CONDITIONS TO BUYER'S OBLIGATIONS: The obligation of
Buyer to purchase the Contracts and Business Assets and Assume the
Assigned Obligations under this Agreement shall be subject to
Holding Company, Parent and Sellers having performed and complied
with all agreements and conditions in this Agreement necessary to
be performed or complied with by them prior to or at the Purchase
Date unless otherwise waived in writing by the Buyer and the
satisfaction of the following conditions and delivery by Holding
Company, Parent and the Sellers of the following documents:
A. There shall not exist any fact or have occurred any
event, which has had, or is reasonably likely to have, individually
or in the aggregate, a material adverse effect on the Business
generally or the value of the Contracts or the Business Assets
specifically. In connection with Buyer's verification of the
satisfaction of this condition, but not in limitation hereof, Buyer
may undertake prior to the Closing, directly or through its
retention, at its expense, of an independent outside auditor, to
verify the existence and collectibility of the Contracts, and if
such verification review is undertaken then Buyer shall have
obtained reasonable assurance as a result of such review as to the
existence and collectibility of the Contracts.
B. An opinion of the Counsel to Holding Company, Parent and
Sellers, dated the Purchase Date, substantially in the form as
delivered in draft to, and accepted by, Buyer's counsel on or prior
to the date hereof
C. On the Purchase Date, a certificate signed by a duly
authorized officer of Holding Company, Parent and each Seller,
solely in his/her capacity as an officer of Holding Company, Parent
or such Seller, to the effect that:
(1) The warranties and representations of Holding Company,
Parent and such Seller were true on the date hereof and are true as
of the Purchase Date, and
(2) The covenants and agreements of Holding Company, Parent
or such Seller to be performed hereunder on or before the Purchase
Date have been performed.
D. Resolutions of the Board of Directors and stockholders,
to the extent legally required, of Holding Company, Parent and each
Seller certified by the Secretary or an Assistant Secretary,
authorizing the execution and delivery of this Agreement and the
consummation of the transactions contemplated by this Agreement.
E. The Escrow Agreement shall have been executed and deliv-
ered by Buyer, Parent and FNBB and shall be in full force and
effect.
F. The Protection Agreements as executed and delivered by
Buyer and each of the Key Employees shall be in full force and
effect.
<PAGE>
<PAGE>
G. There shall not be any action taken, or any statute,
rule, regulation or order enacted, entered, enforced or deemed
applicable to the transactions contemplated by this Agreement or
Buyer after the Closing, by any federal or state governmental
agency or authority which, in connection with the granting of any
Requisite Regulatory Approval (as such term is defined below)
imposes any condition or restriction upon Buyer or any Buyer
subsidiary after the Closing, which would so materially adversely
impact the economic or business benefits of the transactions
contemplated by this Agreement as to render inadvisable in the
reasonable judgment of Buyer the consummation of the transactions
contemplated hereby.
H. In addition to the foregoing, Holding Company, Parent and
the Sellers will furnish Buyer with such additional certificates,
instruments or other documents in the name or on behalf of Holding
Company, Parent or any Seller, executed by appropriate officers or
others, including without limitation certificates or correspondence
of governmental agencies or authorities or nongovernmental third
parties, to evidence fulfillment of the conditions set forth in
this Section 24 as Buyer may reasonably request.
25. CONDITIONS TO THE OBLIGATIONS OF PARENT AND SELLERS: The
obligations of Holding Company, Parent and Sellers to sell the
Contracts and Business Assets and assign the Leases and Third Party
Agreements under this Agreement shall be subject to Buyer having
performed and complied with all agreements and conditions in this
Agreement necessary to be performed or complied with by it prior to
or at the Purchase Date unless otherwise waived in writing by the
Parent and the delivery by Buyer of the following documents:
A. An opinion of the Counsel to Buyer, who may be a member
of the legal department of Buyer or an affiliate of Buyer,
substantially in the form as delivered in draft to, and accepted by
Parent's counsel on or prior to the date hereof.
B. On the Purchase Date, a certificate signed by a duly
authorized officer of Buyer, solely in his/her capacity as an
officer of Buyer, to the effect that:
(1) The warranties and representations of Buyer were true as
of the date hereof and are true as of the Purchase Date, and
(2) The covenants and agreements of Buyer to be performed
hereunder on or before the Purchase Date have been performed.
C. Resolutions of the Board of Directors of Buyer certified
by the Secretary or an Assistant Secretary, authorizing the
execution and delivery of this Agreement and the consummation of
the transactions contemplated by this Agreement.
D. In addition to the foregoing, Buyer will furnish Parent
with such additional certificates, instruments or other documents
in the name or on behalf of Buyer, executed by appropriate officers
or others, including without limitation certificates or correspon-
dence of governmental agencies or authorities or non-governmental
third parties, to evidence fulfillment of the conditions set forth
in this Section 25 as Parent may reasonably request.
26. CONDITIONS TO EITHER PARTY'S OBLIGATIONS: The obligation
of the Parent and Sellers to sell the Contracts and Business Assets
and assign the Leases and Third Party Agreements and the Buyer's
obligation to purchase such Contracts and Business Assets and
assume the Assigned Obligations shall be subject to (unless waived,
to the extent permitted by law, by all parties):
A. The absence of any action, proceeding or administrative
investigation against Buyer, Holding Company, Parent or any Seller
seeking to enjoin or otherwise affect the consummation of the
transactions contemplated by this Agreement, constituted or
threatened by any governmental agency or other party, that might
eventuate in an order of any court or administrative agency which,
in the reasonable opinion of either the Buyer and its counsel, or
Parent and its counsel, would render it impossible or inadvisable
to consummate the transactions contemplated by this Agreement.
<PAGE>
<PAGE>
B. All required licenses (including any licenses from state
authorities necessary to allow Buyer to operate a business similar
to that of the Sellers as presently conducted in their respective
branch offices), approvals, consents and notifications of any
relevant state and federal regulatory agencies including, without
limitation, the Federal Trade Commission and the Department of
Justice pursuant to the Hart-Scott-Rodino Antitrust Improvements
Act of 1976, as amended, in respect of the transactions contem-
plated hereby having been obtained or made and any necessary
conditions, including all legally required waiting, notice or
protest periods, of such licenses, approvals, consents and
notifications having been fully satisfied (all such approvals,
consents and notifications, including all such legally required
waiting, notice or protest periods, being referred to collectively
as the "Requisite Regulatory Approvals").
C. All consents, approvals and notifications required to be
obtained from or made to nongovernmental third parties for the
purchase and sale of the Contracts and Business Assets and the
assignment of the Leases and Third Party Agreements and related
assumption of the Assigned Obligations having been obtained or
made.
27. ANNOUNCEMENTS; NOTIFICATIONS: Except as may be specifi-
cally required by law, the rules of the New York Stock Exchange or
any governmental agency, no party hereto will make any announcement
of this transaction or disclose any material provisions of this
Agreement either prior to or subsequent to the Purchase Date
without prior written approval of the other parties, which approval
shall not be unreasonably withheld. Buyer will notify at its
expense within thirty (30) days after the Purchase Date all
Contract Obligors of its ownership of the Contracts, provided that
Sellers shall have provided Buyer with the necessary information to
do so. Parent and each Seller authorize the use of their name in
the notices.
28. NOTICES: Any notice to be given or other documents to be
delivered by any party to the other party may be delivered in
person to such party, by fax with confirmed receipt, or may be
deposited in the United States certified mail, return receipt
requested, with postage thereon fully prepaid and addressed to the
party for whom intended at the address shown below:
<PAGE>
<PAGE>
To Buyer: To Parent or Seller:
Donald D. Davidson Jack L. Brozman
President Chairman of the Board
Fidelity Acceptance Century Acceptance
Corporation Corporation
330 Second Avenue, South Suite 416, City Center
Suite 790 Square 12th and Baltimore
Minneapolis, Minnesota 55401 Kansas City, Missouri 64196
Fax: (612) 337-5644 Fax: (816) 474-7610
with copies to: with a copy to:
Peter J. Manning Polsinelli, White, Vardeman
Executive Director, & Shalton
Mergers and Acquisitions Country Club Plaza
Bank of Boston Corporation 700 West 47th St., Ste. 1000
100 Federal Street Kansas City, Missouri 64112
Boston, Massachusetts 02110 Att: Lisa M. Schultes, Esq.
and
Bingham, Dana & Gould
150 Federal Street
Boston, Massachusetts 02110
Att: Stephen J. Coukos, Esq.
Any party to this Agreement may, from time to time by written
notice to the other, designate a different address which shall be
substituted for the one above. Notices sent by certified mail
shall be deemed effective when receipted for.
29. POST CLOSING COVENANT: Buyer agrees to maintain all
records pertaining to paid and charged off contracts currently
maintained at any of the locations covered by the real estate
leases listed on the attached Schedule 2 and for all Contracts sold
hereunder for a minimum of two (2) years after such contract is
paid or charged off.
30. SOLE UNDERSTANDING: It is understood and agreed that
this Agreement constitutes the sole mutual understanding regarding
the subject matter of this Agreement, and that no provision hereof
shall be modified or altered except in writing duly signed by the
parties to this Agreement.
31. APPLICABLE LAW: The laws of the State of Missouri shall
govern the validity and interpretation of this Agreement and the
performance of the parties to this Agreement, without giving effect
to the principles of conflicts of laws thereof.
32. HEADINGS: Headings are for informational purposes only
and are not a part of the Agreement.
<PAGE>
<PAGE>
33. EXPENSES: Except as is otherwise specifically provided
in this Agreement, regardless whether the Closing takes place or
whether this Agreement is terminated, all parties shall pay
their,own costs and expenses in connection with this Agreement and
the transactions contemplated hereby, including, but not by way of
limitation, an regulatory fees, attorneys' fees, accounting fees
and other expenses.
34. SUCCESSORS AND ASSIGNS: All terms and provisions of this
Agreement shall be binding upon and shall inure to the benefit of
the parties to this Agreement and their respective permitted
transferees, successors and assigns.
<PAGE>
<PAGE>
35. MULTIPLE COUNTERPARTS: This Agreement may be executed in
multiple counterparts, each of which shall be deemed an original
for all purposes and all of which shall be deemed, collectively,
one agreement. but in making proof hereof it shall not be necessary
to exhibit more than one such counterpart.
36. INVALID PROVISIONS: If any provision of this Agreement
is held to be illegal, invalid or unenforceable under present or
future laws effective during the term of this Agreement, the
provision shall be fully severable; this document shall be
construed and enforced as if the illegal, invalid or unenforceable
provision had never comprised a part of this Agreement, and the
remaining provisions shall remain in full force and effect and
shall not be affected by the illegal, invalid or unenforceable
provision or by its severance from this Agreement. Furthermore, In
lieu of the illegal, invalid or unenforceable provision there shall
be added automatically as a part hereof a provision as similar in
terms to the illegal, invalid or unenforceable provision as may be
possible and be legal, valid and enforceable, and, as changed or
amended, continue to reflect the original intent of the parties
hereto.
37. ENTIRE AGREEMENT: The making, execution and delivery of
this Agreement by the parties have been induced by no representa-
tions, statements, warranties or agreements other than those herein
expressed. This Agreement embodies the entire understanding of the
parties and there are no further or other agreements or understand-
ing, written or oral, in effect between the parties the subject
matter of this Agreement.
38. TIME OF ESSENCE. The parties to this Agreement agree and
stipulate that time is of the essence with regard to the perfor-
mance by each party of its obligations under this Agreement.
39. BROKERAGE: Holding Company, Parent, each Seller and
Buyer represent and warrant to the other that it has not engaged or
dealt with any broker, finder or other person or entity who or
which may be entitled to any brokerage fee or finder's fee,
commission or similar charge in respect of the execution of this
Agreement or the consummation of the transactions contemplated
hereby, except that Parent has engaged Piper Jaffray, Inc. Each of
said parties hereby indemnifies and agrees to hold the other
harmless against any and all claims, losses, liabilities or
expenses which may be asserted against the other as the result of
the other party's dealings, arrangements or agreements with any
such broker, finder or person or entity.
[Remainder of Page Intentionally Blank]
<PAGE>
<PAGE>
IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be executed for it and on its behalf by its respective
duly authorized officers, as of the day and year first set forth
above.
CENCOR, INC.
Attest: /s/Lisa M. Schultes By: /s/ Jack L. Brozman
Jack L. Brozman
Chairman and President
CENTURY ACCEPTANCE
CORPORATION
Attest: /s/Lisa M. Schultes By: /s/ Jack L. Brozman
FIDELITY ACCEPTANCE
CORPORATION
Attest: /s/Lisa M. Schultes By: /s/ William H. Ott, Jr.
William H. Ott, Jr.
Chairman
CENTURY FINANCE COMPANY OF
ALABAMA
CENTURY FINANCE COMPANY OF
COLORADO
CENTURY FINANCE COMPANY OF
FLORIDA
CENTURY FINANCE CO., INC. OF
GEORGIA
CENTURY FINANCE COMPANY OF KANSAS
CENTURY FINANCE COMPANY OF
KENTUCKY
CENTURY FINANCE COMPANY OF
LOUISIANA
CENTURY FINANCE COMPANY OF
MISSOURI
CENTURY FINANCE COMPANY OF
OMAHA, INC.
CENTURY FINANCE COMPANY OF
OKLAHOMA, INC.
CENTURY FINANCE COMPANY OF
GREENVILLE, INC.
CENTURY FINANCE COMPANY OF
TENNESSEE
CENTURY ACCEPTANCE
CORPORATION OF TEXAS
CENTURY FINANCE COMPANY OF UTAH
CENTURY HOME EQUITY CORPORATION
A FLORIDA CORPORATION
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Attest: /s/ Lisa M. Henak By: /s/ Dennis C. Berglund
Lisa M. Henak, Dennis C. Berglund,
as Secretary of each as President of each of
of the foregoing the foregoing corporations
corporations
EX-10.14
EMPLOYMENT AGREEMENT
THIS AGREEMENT is made effective the 3rd day of July, 1995 by
and between JACK BROZMAN ("Executive") and CENCOR, INC., a Delaware
corporation ("Employer").
RECITALS:
A. Employer has a wholly owned subsidiary, Century Accep-
tance Corporation ("Century") which previously operated a consumer
finance business.
B. Century is in the process of liquidating its assets and
contemplates dividending the net proceeds to Employer and Employer
contemplates, after the liquidation of Century, either the use of
the net proceeds to pay claims as part of a liquidation process or
the use of the net proceeds for other business purposes.
C. Executive desires to be employed by Employer, and
Employer desires to employ Executive under the terms set forth
herein.
AGREEMENT
In consideration of the mutual promises, covenants and
agreements contained herein and other good and valuable consider-
ation, the legal sufficiency of which is hereby acknowledged by
Executive and Employer, the parties hereto agree as follows:
1. Employment and Term of Employment. Employer hereby
employs Executive, and Executive hereby accepts employment with
Employer for the term commencing on July 3, 1995 and continuing
until June 30, 1998, unless sooner terminated as provided in
Section 5. After the initial term hereof, this Agreement shall
continue on a month-to-month basis until terminated under Section
5.
2. Duties and Authority. Executive's principal duties shall
be that of President and Chief Executive Officer of the business of
Employer. Executive's duties shall include overseeing the sale of
Century and the management of the remaining assets. Executive
agrees to use his best efforts to perform the duties assigned to
him from time to time by the Board of Directors of Employer.
Executive further agrees that he will not engage in any activities
during the term of this Agreement in conflict with the best
interests of Employer.
3. Compensation. During the term of this Agreement,
Employer shall pay to Executive the following compensation:
3.1 Salary. Executive shall be paid the annual salary set
forth below, less withholding, social security and unemployment
taxes, payable in accordance with the policies established by
Employer from time to time but in installments no less frequent
than every month:
Year Annual Salary
7/3/95-6/30/96 $225,000
7/1/96-6/30/97 $175,000
after 6/30/97 $125,000
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3.2 Reimbursement of Expenses. Employer shall reimburse
Executive for ordinary, necessary and reasonable business expenses
incurred to conduct or promote Employer's business, including
travel and entertainment, provided Executive submits supporting
documentation, indicating (a) the amount of the expenditure,
(b) the time, place and nature of the expenditure, (c) the business
reason or the benefit derived or expected to be derived from the
expenditure, and (d) the name and other appropriate information
concerning any other person entertained or otherwise deriving a direct
benefit from such expenditure.
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4. Nondisclosure. Executive acknowledges that as a result
of his employment by Employer, Executive has used and acquired and,
in the future, will use and acquire knowledge and information used
by Employer in its business and which is not generally available to
the public ("Confidential Information"), including, without
limitation, Employer's systems, procedures, manuals, confidential
reports, lists of customers, dealers and lenders with which
Employer has business relations, and services and methods used with
and preferred by its customers. As a material inducement to
Employer to enter into this Agreement, and to pay to Executive the
compensation set forth herein, Executive agrees that Executive
shall not, at any time, directly or indirectly, divulge or disclose
to any person, for any purpose, any Confidential Information,
except to those persons authorized by Employer to receive Confiden-
tial Information and then only if use by such person is for
Employer's benefit.
5. Termination. This Agreement shall terminate as follows:
5.1 Death. On the date of Executive's death.
5.2 Disability. At Employer's option, upon Executive's
disability effective on the date Executive receives notice from
Employer that Employer is exercising its option granted by this
Section to terminate this Agreement. "Disability" as used in this
Agreement shall mean Executive's inability, because of sickness or
other incapacity, whether physical or mental, to perform Executive-
's duties under this Agreement for a period in excess of One
Hundred Eighty (180) consecutive days.
5.3 Breach by Employee. Upon failure by Executive to comply
with the provisions of this Agreement, which shall include without
limitation Executive's breach of Section 2, gross negligence in the
performance of the duties assigned to Executive by Employer's Board
of Directors, the commission by Executive of any act of dishonesty
toward Employer, theft of corporate property, unethical business
conduct or conviction of any misdemeanor or felony involving
dishonesty, immoral or unethical conduct.
5.4 Resignation. On the date Executive resigns.
5.5 Notice. Thirty (30) days after receipt by Executive of
written notice of termination by the Employer.
5.6 Complete Liquidation. On the date that the Employer's
assets are fully liquidated.
6. Payments Upon Termination.
6.1 Termination Upon Death, Disability, Notice or Liquidation
Prior to a Substantial Distribution. Upon the termination of this
Agreement pursuant to Sections 5.1, 5.2, 5.5 or 5.6, and provided
Executive has not breached this Agreement or resigned and further
provided that the Company has not made a Substantial Distribution
(as hereinafter defined) prior to the termination, Employer shall
pay, or cause to be paid, to Executive or Executive's legal
representative:
(a) Severance pay of One Hundred Fifty Thousand Dollars
($150,000)(the "Severance Payment") to be paid within thirty (30)
days after such termination; and
(b) All ordinary, necessary and reasonable business expenses
incurred by Executive prior to termination of this Agreement to be
paid in the ordinary course of Company's business.
6.2 Termination Upon Death, Disability, Notice or Liquidation
After a Substantial Distribution. If Employer makes a Substantial
Distribution prior to termination of this Agreement for any reason,
Employer shall pay the following:
(a) Employer shall prepay one-half (1/2) of the Severance
Payment within thirty (30) days after Employer makes the Substan-
tial Distribution;
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(b) Executive shall continue to receive the same monthly
salary between the date of the Substantial Distribution and
termination pursuant to Section 5; and
(c) Employer shall pay Executive the final one-half (1/2) of
the Severance Payment upon termination pursuant to Sections 5.1,
5.2, 5.5 or 5.6 within thirty (30) days after such termination,
provided that Executive has not prior thereto breached this
Agreement or resigned.
"Substantial Distribution" shall mean a distribution to Employer's
creditors and shareholders of substantially all of the Employer's
assets, except for unliquidated claims against third parties, the
receivable from Concorde Career Colleges, Inc., and any funds held
in escrow or reserve for potential claims of third parties against
Employer.
6.3 Termination for Breach or Resignation by Executive.
Upon termination of this Agreement pursuant to Section 5.3 or 5.4,
Employer shall not be obligated to pay Executive any sums.
7. Conflict of Interest. During the term of this Agreement,
Executive shall not, directly or indirectly, have any interest
(including, without limitation, an interest as a partner, officer,
director, stockholder, advisor or employee) in any business which
does business with Employer without the express written consent of
Employer's Board of Directors, except for his interests as a
stockholder, director and chief executive officer of Concorde
Career Colleges, Inc. ("Concorde"). Executive will not partici-
pate on behalf of Employer in any vote as a shareholder or director
involving transactions or matters between Employer and Concorde,
nor take any action without approval of the majority of the
independent directors which would compromise the debt owed by
Concorde to Employer, modify the terms of repayment or waive any
right of Employer against Concorde. An ownership interest of less
than five percent (5%) in a business whose stock is publicly held
or regularly traded shall not be a violation of this Section 7.
8. General Provisions.
8.1 Location of Employment. Executive's principal office
shall be located at 1100 Main Street, Kansas City, Missouri or such
other location as may be designated by the Employer's Board of
Directors.
8.2 Assignment. Neither party may assign any of the rights
or obligations under this Agreement without the written consent of
the other party, which consents shall not be unreasonably withheld.
8.3 Binding Effect. The Agreement shall be binding upon and
inure to the benefit of the parties' heirs, personal representa-
tives, successors and assigns, to the extent allowed.
8.4 Severability. The provisions of this Agreement are
severable. The invalidity or unenforceability of any one or more
of the provisions hereof shall not affect the enforceability of any
other part of this Agreement.
8.5 Entire Agreement. This Agreement contains the entire
agreement and understanding between the parties with respect to
Executive's employment by Employer.
8.6 Waiver. To be valid, a waiver must be in writing.
Waiver of any provision of this Agreement or any breach thereof by
either party shall not be construed to be a waiver of any other
provision or any subsequent breach of this Agreement.
8.7 Notices. Any notice or other communication required or
permitted herein shall be sufficiently given if delivered or sent
by certified mail, return receipt requested, postage prepaid,
addressed to:
Employer: CenCor, Inc.
c/o Marvin Riesenbach
The Executive Mews, Suite H-42
1930 East Marlton Pike
Cherry Hill, New Jersey 08003
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Executive: Jack Brozman
8607 Cedar Drive
Shawnee Mission, Kansas 66207
or such other address as shall be furnished in writing by any such
party. Any notice sent by the above-described method shall be
deemed to have been received on the date personally delivered or so
mailed. Notices sent by any other method shall be deemed to have
been received when actually received by the addressee or its or his
authorized agent.
8.8 Applicable Law. This Agreement shall be construed in
accordance with the laws of the State of Missouri. The parties
agree to submit irrevocably to the jurisdiction of either the
Circuit Court for Jackson County, Missouri or the United States
District Court for the Western District of Missouri.
8.9 Attorneys' Fees. In the event of any litigation between
the parties arising out of or relating to this Agreement, the
prevailing party may recover a court award of attorneys' fees and
litigation costs from the losing party for all trial and appellate
proceedings, as well as for all post-judgment collection proceed-
ings.
IN WITNESS WHEREOF, the parties have executed this agreement
on the 17th day of July, 1995.
EXECUTIVE:
/s/ Jack Brozman
JACK BROZMAN
EMPLOYER:
CENCOR, INC.
By: /s/ Patrick Healy
Patrick Healy
Title: CFO
EX-10.15
July 18, 1995
HAND-DELIVERY
Mr. Dennis C. Berglund
5331 West 60th Street
Kansas City, MO 64151
Re: Employment Agreement dated June 28, 1993, as amended on
June 23, 1994 (the "Employment Agreement")
Dear Denny:
The purpose of this letter is to confirm and accept your
resignation as an officer and director of Century Acceptance
Corporation ("Century") and all of its subsidiaries, your resigna-
tion and the termination of your employment with Century, and to
set forth our mutual agreement and understanding with respect to
the payments of the amounts due to you by Century pursuant to the
provisions of the Employment Agreement.
The term of your employment with Century was terminated and
your resignation as an officer and director of Century and its
subsidiaries was effective July 1, 1995 at which time you became an
employer of Fidelity Acceptance Corporation, the purchaser of the
assets of Century and its subsidiaries.
In accordance with Section 6.01(a) of the Employment Agree-
ment, you are entitled to and upon the execution and return of a
copy of this letter and the resignation attached, Century will pay
you twelve (12) months severance pay in the gross amount of One
Hundred Eighty Thousand Dollars ($180,000) (less applicable
federal, state, local, and FICA taxes) (the "Severance Payment").
The Severance Payment is in full satisfaction of Century's
obligations to you for the payment of severance pay under Section
6.01(a) of the Employment Agreement.
Additionally, you have requested that the 1995 bonus payable
to you pursuant to Section 3.03 of the Employment Agreement (the
"Bonus") be paid in installments with the first installment payable
as soon as practicable and the last installment as soon as
practicable after the completion of the financial reports prepared
by Century's independent accountants for Century's calendar year
ending December 31, 1995. The Bonus will be calculated in
accordance with the provisions set forth in Section 3.03 of the
Employment Agreement and calculated by Century's independent
accountants on a pre-tax, pre-warrant income and pre-warrant
expense basis and otherwise in accordance with generally accepted
accounting principles.
It is Century's intent to continue to maximize Century's value
and to protect its assets for the benefit of the shareholders and
creditors of Century and its parent, Cencor, Inc. Therefore, it is
anticipated that for the balance of the 1995 calendar year most of
the proceeds received from the sale of Century and its subsidiarie-
s' assets will be invested in short-term instruments on a conserva-
tive basis.
The parties contemplate that the aggregate gross Bonus payable
to you will be at least One Million Four Hundred Thousand Dollars
($1,400,000) (the "Contemplated Amount"). If the aggregate gross
Bonus as calculated by Century's independent accountants equals or
exceeds the Contemplated Amount, the calculation by Century's
independent accountants shall be final and binding on Century and
you.
However, if the aggregate, gross Bonus payable as calculated
by Century's independent accountants is less than the Contemplated
Amount, you shall have the right to challenge the Calculated amount
with your own accountants (the cost of which will be borne by you).
If after the challenge a bona fide dispute remains between you and
Century as to the aggregate gross Bonus payable, the dispute will
be submitted to arbitration pursuant to the rules of the American
Arbitration Association (the cost of which shall be borne equally
by Century and you).
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You have requested and Century shall, subject to the execution
and return by you of a copy of this letter and the attached
resignation, pay the Bonus to you as follows: (i) a portion of the
Bonus in the gross amount of Five Hundred Fifteen Thousand Dollars
($515,000) will be paid to you by Century upon the receipt of an
executed copy of this letter and the attached resignation; (ii) a
second installment on the Bonus in the gross amount of Five Hundred
Thousand Dollars ($500,000) will be paid to you by Century on
January 10, 1996; and (iii) the balance of the Bonus, after
reducing the aggregate gross Bonus payable to you for Century's
fiscal year ending December 31, 1995 as provided in Section 3.03 of
the Employment Agreement by One Million Fifteen Thousand Dollars
($1,015,000), will be paid to you by Century within fifteen (15)
days after the completion of the financial reports by Century's
independent accountants for Century's fiscal year ending December
31, 1995 (the "Financial Reports"). At the time of the payment of
the final installment of the balance of the Bonus, Century will
provide you with a report setting forth the calculation of the
aggregate Bonus paid and payable to you pursuant to Section 3.03 of
the Employment Agreement. If the amount of the aggregate gross
Bonus payable to you for Century's fiscal year ending December 31,
1995 as provided in Section 3.03 of the Employment Agreement shall
be less than One Million Fifteen Thousand Dollars ($1,015,000), you
shall refund the difference to Century within fifteen (15) days
after Century sends the report containing the calculation of the
Bonus to you.
Each installment payment of the Bonus paid to you in accor-
dance with Section 3.03 of the Employment Agreement and as provided
in this letter will be subject to withholdings for all applicable
federal, state, local, and FICA taxes.
Except for Century's obligations to pay the Severance Payment
as set forth in Section 6.01 and the Bonus as set forth in Section
3.03 of the Employment Agreement as provided in this letter, by
returning an executed copy of this letter you thereby release,
fully, finally and irrevocably, Century, its affiliates, subsidiar-
ies, agents, servants, representatives, attorneys, employees,
successors and assigns from any and all claims, equities, claims
for relief, expenses, written or oral contracts (including, but not
limited to, the Employment Agreement), damages, injuries, losses,
all causes of action, choses in action, whether in contract or in
tort, suits and demands whatsoever which you may now have or
hereinafter have against Century or any of them, provided, however,
it being understood and agreed that this release by you shall not
release Century from its obligations to pay the Severance Payment
and Bonus to you pursuant to Section 6.01(a) and Section 3.03 of
the Employment Agreement as set forth in this letter.
Further, upon the return of an executed copy of this letter,
together with the executed copy of your resignation, Century agrees
to release, fully, finally and irrevocably, you, your successors
and heirs from any and all claims, equities, claims for relief,
expenses, written or oral contracts (including, but not limited to,
the Employment Agreement), damages, injuries, losses, all causes of
action, choses in action, whether in contract or in tort, suits and
demands whatsoever which you may now have or hereafter have against
you or any of them, provided however, it being understood and
agreed that this release by Century shall not release you from your
obligations pursuant to Section 4 or claims arising from any act
specified in Section 5.03 of the Employment Agreement.
After you have had an opportunity to review this letter and if
it sets forth our agreement and understanding, please acknowledge
your consent and acceptance by executing a copy of the letter and
returning it to me.
Additionally, enclosed for your execution is your written
resignation as an officer and employee of Century, its subsidiaries
and affiliates. Please return executed copies of the resignation
when you return the executed copy of this letter to me.
Upon receipt of the executed copy of this letter and your
written resignation, I will deliver to you (i) Century's check
payable to you for your Severance Payment under Section 6.01(a) of
the Employment Agreement in the gross amount of One Hundred Eighty
Thousand Dollars ($180,000) (less applicable withholdings) and (ii)
Century's check in the gross amount of Five Hundred Fifteen
Thousand Dollars ($515,000) (less applicable withholdings) as the
first installment payment of the Bonus payable to you under Section
3.03 of the Employment Agreement for Century's calendar year ending
December 31, 1995.
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THIS LETTER CONTAINS A BINDING ARBITRATION PROVISION WHICH MAY
BE ENFORCED BY THE PARTIES.
Yours very truly,
/s/ Jack Brozman
JACK BROZMAN
Chairman of the Board of Directors
Agreed to and accepted this 18th day of July, 1995.
/s/Dennis C. Berglund
Dennis C. Berglund
EX-10.16
GENERAL RELEASE AND SETTLEMENT AGREEMENT
This General Release and Settlement Agreement ("Agreement") is made and
entered into on this
13th day of July, 1995, by and between CenCor, Inc., a Delaware corporation
("Cencor"), and Dennis
Berglund ("Berglund").
WHEREAS, Cencor and Berglund entered into a Stock Appreciation Agreement
dated August 29,
1994 (the "SAR Agreement") and the parties desire to satisfy their respective
obligations under the SAR
Agreement and release all Claims (as hereinafter defined) against each other in
accordance with the
provisions of this Agreement.
NOW, THEREFORE, for and in consideration of the mutual promises,
covenants, and agreements
contained herein, the receipt and sufficiency of which is hereby acknowledged
by the parties to this
Agreement, the parties hereto agree as follows:
1. Cencor hereby delivers to Berglund, the receipt of which Berglund
acknowledges, the gross sum of Eighty-five Thousand Dollars ($85,000) (less
all applicable federal, state, local and FICA taxes) in
the form of Cencor's check therefor, which amount shall constitute the entire
amount due and owing Berglund pursuant to the terms and conditions of the SAR
Agreement, which SAR Agreement is hereby terminated and of no further force
or effect.
2. Cencor and Berglund do hereby fully, finally, and irrevocably
release, settle, and discharge each other, their respective agents, ser-
vants, representatives, employees, successors, and assigns, from any
and all claims, equities, claims for relief, expenses, written or oral
contracts (including, but not limited to, the SAR Agreement), damages,
injuries, losses, all causes or causes of action, choses in action, whether
in contract or tort, suits and demands whatsoever ("Claims"), which they
may now have or hereinafter have against each other, their respective
representatives, employees, beneficiaries, attorneys, agents, successors
and assigns.
3. The parties agree and acknowledge that nothing contained in this
Agreement constitutes an admission by any party hereto with respect to the
Claims of any other party or of liability with respect to
any matter referred to herein.
4. The parties further stipulate and agree that this Agreement is
the entire agreement of the parties and that in executing this Agreement
each party is reliant upon their own judgment and that no other
representation, promise or agreement not herein expressed has been made
to any of the parties by any person.
5. The parties further stipulate and agree that this Agreement shall
be binding and inure to the benefit of their respective successors and
assigns and upon all persons, firms, or corporations claiming by
and through the parties herein.
6. This Agreement shall be governed, construed and enforced in
accordance with the laws of the State of Missouri.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
the day and year first above written.
CENCOR, INC.
By/s/ Jack Brozman
Jack Brozman, President
/s/ Dennis Burglund
Dennis Berglund
EX-21
CENCOR, INC. AND SUBSIDIARIES
SUBSIDIARIES OF THE REGISTRANT
Century Acceptance Corporation, 100% owned
The following is a list of Century's wholly-owned subsidiaries:
Name State of Incorporation
Century Finance Company of Colorado Colorado
Century Finance Company of Missouri Missouri
Century Finance Company of Omaha, Inc. Nebraska
Century Finance Company of Oklahoma, Inc. Oklahoma
Century Finance Company of Tennessee Tennessee
Century Acceptance Corporation of Texas Texas
Century Finance Company of Utah Utah
<TABLE> <S> <C>
<ARTICLE> 5
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> DEC-31-1995
<PERIOD-TYPE> YEAR
<CASH> $22,439,000
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 11,903,000
<PP&E> 35,000
<DEPRECIATION> 5,000
<TOTAL-ASSETS> 34,372,000
<CURRENT-LIABILITIES> 3,959,000
<BONDS> 12,303,000
<COMMON> 0
0
0
<OTHER-SE> 18,110,000
<TOTAL-LIABILITY-AND-EQUITY> 34,372,000
<SALES> 0
<TOTAL-REVENUES> 1,220,000
<CGS> 0
<TOTAL-COSTS> 2,822,000
<OTHER-EXPENSES> (3,087,000)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2,260,000
<INCOME-PRETAX> (775,000)
<INCOME-TAX> 0
<INCOME-CONTINUING> (775,000)
<DISCONTINUED> 18,717,000
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 17,942,000
<EPS-PRIMARY> $9.90
<EPS-DILUTED> $9.90
</TABLE>
