SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
UNDER THE SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. ___ )(1)
TFC Enterprises, Inc.
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(Name of Issuer)
Common Stock, Par Value $0.10 Per Share
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(Title of Class of Securities)
872388103
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(CUSIP Number)
Nancy E. Barton, Esquire
General Electric Capital Corporation
260 Long Ridge Road
Stamford, Connecticut 06927
(203) 357-4000
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(Name, Address and Telephone Number of Person Authorized to Receive Notices
and Communications)
April 4, 1997
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(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule
13G to report the acquisition which is the subject of this Schedule 13D, and
is filing this schedule because of Rule 13d-1(b)(3) or (4), check the
following box [_].
Note: Six copies of this statement, including all exhibits,
should be filed with the Commission. See Rule 13d-1(a) for other parties
to whom copies are to be sent.
(Continued on following page)
(Page 1 of 92 Pages)
(1)The remainder of this cover page shall be filled out for a
reporting person's initial filing on this form with respect to the subject
class of securities, and for any subsequent amendment containing information
which would alter disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall
not be deemed to be "filed" for the purpose of Section 18 of the Securities
Exchange Act of 1934, as amended (the "Act"), or otherwise subject to the
liabilities of that section of the Act but shall be subject to all other
provisions of the Act (however, see the Notes).
<PAGE>
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SCHEDULE 13D
CUSIP No. 872388103 2 of 92 Pages
-------------------------------- -----------------------------------
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1 NAMES OF REPORTING PERSONS
S.S. OR I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS
General Electric Capital Corporation IRS # 13-1500700
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [_]
(b) [X]
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3 SEC USE ONLY
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4 SOURCE OF FUNDS*
WC
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5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEM 2(d) or 2(e) [X]
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6 CITIZENSHIP OR PLACE OF ORGANIZATION
New York, USA
----------------------- ------- -------------------------------------------
NUMBER OF 7 SOLE VOTING POWER
SHARES 1,135,280
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8 SHARED VOTING POWER
BENEFICIALLY
-0-
------- -------------------------------------------
OWNED BY EACH 9 SOLE DISPOSITIVE POWER
REPORTING 1,135,280
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10 SHARED DISPOSITIVE POWER
PERSON WITH
-0-
----------------------- ------- -------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
1,135,280
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12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES*
[_]
Not Applicable
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13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
9.1 %
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14 TYPE OF REPORTING PERSON*
CO
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*SEE INSTRUCTIONS BEFORE FILLING OUT!
<PAGE>
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SCHEDULE 13D
CUSIP No. 872388103 3 of 92 Pages
-------------------------------- -----------------------------------
------- -------------------------------------------------------------------
1 NAMES OF REPORTING PERSONS
S.S. OR I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS
General Electric Capital Services, Inc. IRS # 06-11095031
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [_]
(b) [X]
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3 SEC USE ONLY
------- -------------------------------------------------------------------
4 SOURCE OF FUNDS*
Not Applicable
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5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEM 2(d) or 2(e) [X]
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6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware, USA
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NUMBER OF 7 SOLE VOTING POWER
SHARES Disclaimed. See 11 below.
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8 SHARED VOTING POWER
BENEFICIALLY
-0-
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OWNED BY EACH 9 SOLE DISPOSITIVE POWER
REPORTING Disclaimed. See 11 below.
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10 SHARED DISPOSITIVE POWER
PERSON WITH
-0-
----------------------- ------- -------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
Beneficial ownership of all shares of Common Stock is disclaimed by
General Electric Capital Services, Inc.
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12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES*
[_]
Not Applicable
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13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
Disclaimed. See 11 above.
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14 TYPE OF REPORTING PERSON*
CO
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*SEE INSTRUCTIONS BEFORE FILLING OUT!
<PAGE>
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SCHEDULE 13D
CUSIP No. 872388103 4 of 92 Pages
-------------------------------- -----------------------------------
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1 NAMES OF REPORTING PERSONS
S.S. OR I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS
General Electric Company IRS # 14-0089340
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [_]
(b) [X]
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3 SEC USE ONLY
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4 SOURCE OF FUNDS*
Not Applicable
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5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEM 2(d) or 2(e) [X]
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6 CITIZENSHIP OR PLACE OF ORGANIZATION
New York, USA
----------------------- ------- -------------------------------------------
NUMBER OF 7 SOLE VOTING POWER
SHARES Disclaimed. See 11 below.
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8 SHARED VOTING POWER
BENEFICIALLY
-0-
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OWNED BY EACH 9 SOLE DISPOSITIVE POWER
REPORTING Disclaimed. See 11 below.
------- -------------------------------------------
10 SHARED DISPOSITIVE POWER
PERSON WITH
-0-
----------------------- -------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
Beneficial ownership of all shares of Common Stock is disclaimed by
General Electric Company.
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12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES*
[_]
Not Applicable
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13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
Disclaimed. See 11 above.
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14 TYPE OF REPORTING PERSON*
CO
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*SEE INSTRUCTIONS BEFORE FILLING OUT!
<PAGE>
SCHEDULE 13D
FOR
GENERAL ELECTRIC CAPITAL CORPORATION
Item 1. Security and Issuer.
This Schedule 13D (this "Statement") relates to common stock, par value
$0.01 per share (the "Common Stock"), of TFC Enterprises, Inc., a Delaware
corporation engaged in the business of lending and financial services (the
"Issuer"). The address of the principal executive offices of the Issuer is 5425
Robin Hood Road, Suite 101B, Norfolk, Virginia 23513.
Item 2. Identity and Background.
(a) - (c) This Statement is filed by General Electric Capital
Corporation ("GECC"), for and on behalf of itself, General Electric Capital
Services, Inc. ("GECS") and General Electric Company ("GE," and together with
GECC and GECS, the "Filing Persons"). The agreement among each of the Filing
Persons that this Statement be filed on behalf of each of them is attached
hereto as Exhibit 4.
GECS is a wholly-owned subsidiary of GE and GECC is a wholly-owned
subsidiary of GECS.
GECC is a New York corporation. GECC, together with its subsidiaries,
engages in financing services that include lending, equipment management
services and annuities and maintains its principal executive offices at 260 Long
Ridge Road, Stamford, Connecticut 06927.
GECS is a Delaware corporation with its principal executive offices
located at 260 Long Ridge Road, Stamford, Connecticut 06927. The business of
GECS consists of the ownership of two principal subsidiaries which, together
with their affiliates, constitute GE's principal financial services businesses.
GE is a New York corporation with its principal executive offices
located at 3135 Easton Turnpike, Fairfield, Connecticut 06431. GE engages in
providing a wide variety of industrial, commercial and consumer products and
services.
For information with respect to the identity and background of each
officer and director of the Filing Persons, see Schedules I, II and III attached
hereto and hereby incorporated herein.
The information required herein with respect to the respective
executive officers and directors of the Filing Persons is to the best knowledge
of the Filing
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Persons. If subsequent to the date of this Statement additional information is
received with respect to such individuals which would cause a material change in
the information contain herein, an amendment to this Statement will be filed
that will set forth such change in information.
(d) and (e). Except as set forth in Schedule IV, which is hereby
incorporated herein, during the past five years, none of the Filing Persons,
nor, to the best of their knowledge, any of their directors or executive
officers, has been convicted in a criminal proceeding, excluding traffic
violations or similar misdemeanors, or been a party to a civil proceeding of a
judicial or administrative body of competent jurisdiction and as a result of
such proceeding has been subject to a judgment, decree or final order enjoining
future violations of, or prohibiting or mandating activities subject to, federal
or state securities laws or finding any violation with respect to such laws.
(f) All of the executive officers and directors of the Filing Persons
are U.S. citizens, except that (i) Nigel D.T. Andrews, a GECS director and
executive officer and a GECC director, is a citizen of the United Kingdom, (ii)
Paolo Fresco, an executive officer and director of GE and a director of GECC and
GECS, is an Italian citizen, (iii) Claudio X. Gonzalez, a director of GE, is a
citizen of Mexico and (iv) Kaj Ahlmann, an executive officer and a director of
GECS, is a citizen of Denmark.
Item 3. Source and Amount of Funds or Other Consideration.
The Common Stock reported herein is beneficially owned by GECC through
warrants which were acquired by GECC pursuant to a loan transaction and
subsequent loan restructure between GECC, as lender, and the Issuer, as
guarantor. On December 20, 1996, THE Finance Company ("TFC"), a Virginia
corporation and subsidiary of the Issuer, entered into an Amended and Restated
Motor Vehicle Installment Contract Loan and Security Agreement (the "Loan
Agreement"), under which, GECC agreed to amend and restate the agreement
governing the previous credit arrangement between GECC and TFC. The Loan
Agreement provided for maximum borrowings by TFC from GECC of $150,000,000,
funded by working capital of GECC.
As consideration for GECC extending credit under the Loan Agreement,
the Issuer and certain affiliates guarantied TFC's performance and payment under
the Loan Agreement in separate guarantees made by each and dated December 20,
1996. As further consideration for GECC entering into the Loan Agreement, the
Company issued to GECC a Warrant to Purchase Common Stock, dated December 20,
1996 (the "First Warrant"), whereby GECC was granted rights to purchase 567,640
shares of the Common Stock (or 4.79%) of the Issuer. In connection with the
First Warrant, the Issuer entered into a Registration Rights Agreement with
GECC, dated December 20, 1996 (the "Registration Rights Agreement"), in order to
provide GECC with certain registration rights with respect to the shares of
Common Stock purchasable under the First Warrant.
6
<PAGE>
TFC defaulted under the Loan Agreement and negotiated a loan
restructure with GECC which, among other things, caused GECC to advance
additional monies to TFC to pay certain amounts to another creditor of TFC (the
"Loan Restructure"). As a condition to the Loan Restructure, GECC required that
the Issuer grant GECC another warrant to purchase shares of Common Stock at an
exercise price of $1.00 (the "Second Warrant") under terms substantially similar
to those in the First Warrant and which, upon exercise together with the First
Warrant, would give GECC beneficial ownership of the Issuer totaling 9.1%. GECC
also required that the First Warrant be amended to reduce the exercise price
from $2.00 per share to $1.00 per share and to extend the expiration date
thereof from December 31, 2000 to March 31, 2002 (the same expiration date under
the Second Warrant). Furthermore, the Issuer amended and restated the
Registration Rights Agreement (the "Amended and Restated Registration Rights
Agreement") to provide for registration rights with respect to Common Stock
issuable under both the First Warrant and the Second Warrant.
As a part of the Restructure, the maximum amount which could be
borrowed by TFC under the Loan Agreement was reduced to $110,000,000.
Although both warrants are immediately exercisable, as of April 14,
1997, neither the First Warrant nor the Second Warrant had been exercised by
GECC. Upon any such event, GECC anticipates funding the exercise price of the
Common Stock with working capital.
Item 4. Purpose of Transaction.
The purpose of the Issuer conveying the First Warrant and the Second
Warrant to GECC was to provide additional consideration to GECC for its entering
into the Loan Agreement and the Loan Restructure, respectively. GECC intends to
hold the First Warrant and the Second Warrant as investments and in the ordinary
course of business and not for the purpose of effecting a change in the control
of the Issuer. GECC intends to review its investment in the First Warrant and
the Second Warrant on a regular basis and as a result thereof may, at any time
or from time to time, exercise all or a portion of such warrants, acquire
additional shares of the Common Stock in the open market or private transactions
or otherwise, or dispose of all or a portion of such warrants and/or any of the
Common Stock acquired by it upon the exercise thereof. Any such acquisition or
disposition would be in compliance with all applicable laws and regulations.
Except as otherwise set forth herein, none of the Filing Persons has
any current plans or proposals which relate to or would result in the following:
(a) The acquisition or disposition of securities of the Issuer;
(b) An extraordinary corporate transaction, such as a merger,
reorganization or liquidation, involving the Issuer or any of
its subsidiaries;
7
<PAGE>
(c) The sale or transfer of a material amount of assets of the
Issuer or any of its subsidiaries;
(d) Any change in the present board of directors or management of
the Issuer, including any plans or proposals that change the
number or term of directors or to fill any existing vacancies
on the board;
(e) Any material change in the present capitalization or dividend
policy of the Issuer;
(f) Any other material change in the Issuer's business or
corporate structure;
(g) Changes in the Issuer's charter, bylaws or instruments
corresponding thereto or other actions that may impede the
acquisition of control of the Issuer by any person;
(h) Causing a class of securities of the Issuer to be delisted
from a national securities exchange or to cease to be
authorized to be quoted in an inter-dealer quotation system of
a registered national securities association;
(i) A class of equity securities of the Issuer becoming eligible
for termination of registration pursuant to Section 12(g)(4)
of the Securities Exchange Act of 1934, as amended; or
(j) Any action similar to any of those enumerated above.
Item 5. Interest in Securities of the Issuer.
(a) The aggregate number and percentage of Common Stock
beneficially owned by the Reporting Person are 1,135,280 and
9.1%, respectively, on April 4, 1997. GECS and GE disclaim
beneficial ownership in any shares of the Common Stock and the
First Warrant and Second Warrant.
None of the Filing Persons, nor to the best of their
knowledge, any of their executive officers and directors,
beneficially own any securities of the Issuer or has a right
to acquire any securities of the Company.
(b) GECC would have sole power to vote and dispose of the
Common Stock obtained upon exercise of either the First
Warrant (up to 567,640 shares) or the Second Warrant (up to
567,640 shares). None of the Filing Persons, nor, to the best
of their knowledge, any of their executive officers and
directors, presently has the power to vote or to direct the
vote or to dispose or direct the disposition of any of the
securities which they may deemed to beneficially own.
8
<PAGE>
(c) On April 4, 1997, the Issuer granted GECC the Second Warrant
to purchase 567,640 shares of Common Stock. See description of
the Loan Restructure in Item 3 above. Otherwise, none of the
Filing Persons, nor, to their best knowledge, any of their
executive officers or directors, has effected any transaction
in securities of the Issuer in the past 60 days.
(d) No person is known to have the right to receive or the
power to direct the receipt of dividends from, or the proceeds
from the sale of, securities held by GECC except for GECC.
(e) Not applicable.
Neither the filing of the Statement or any amendment thereto, nor
anything contained herein is intended as, or should be construed as, an
admission that any Filing Person is the "beneficial owner" of any shares of
Common Stock which any other Filing Person is deemed to beneficially own.
Item 6. Contracts, Arrangements, Understandings or Relationships with Respect
to Securities of the Issuer.
See description of the Loan Restructure in Item 3 above, which is
incorporated by reference herein. Otherwise, none of the Filing Persons, nor, to
the best of their knowledge, any of their executive officers or directors, has
any contracts, arrangements, understanding, or relationships (legal or
otherwise) with any person with respect to any securities of the Issuer.
Item 7. Material to be Filed as Exhibits.
See Schedule and Exhibit Index attached hereto.
[Next page is signatures.]
9
<PAGE>
SIGNATURES
After reasonable inquiry and to the best of its knowledge and belief,
the undersigned hereby certify that the information set forth in this statement
is true, complete and correct.
Date: April 11, 1997 GENERAL ELECTRIC CAPITAL CORPORATION
By: /s/ Nancy E. Barton
---------------------------------------
(Signature)
Nancy E. Barton, Senior Vice President
---------------------------------------
(Name/Title)
Date: April 11, 1997 GENERAL ELECTRIC CAPITAL SERVICES, INC.
By: /s/ Nancy E. Barton
---------------------------------------
(Signature)
Nancy E. Barton, Senior Vice President
---------------------------------------
(Name/Title)
Date: April 11, 1997 GENERAL ELECTRIC COMPANY
By: /s/ Nancy E. Barton
---------------------------------------
(Signature)
Nancy E. Barton, Attorney-in-Fact
---------------------------------------
(Name/Title)
Attention: Intentional misstatements or omissions of fact constitute
federal criminal violations (see 18 U.S.C. 1001).
10
<PAGE>
SCHEDULE AND EXHIBIT INDEX
Schedule Description
I Directors and Officers of GECC
II Directors and Officers of GECS
III Directors and Officers of GE
IV Litigation
Exhibit Description
1. Warrant to Purchase Common Stock, dated December 20,
1996, as amended by the Allonge to Warrant to
Purchase Common Stock, dated April 4, 1997
2. Warrant (No. 2) to Purchase Common Stock, dated April
4, 1997
3. Amended and Restated Registration Rights Agreement,
dated April 4, 1997, between GECC and the Issuer.
4. Joint Filing Agreement dated as of April 11, 1997 by
and among GECC, GECS and GE.
5. Power of Attorney executed by GE.
11
<PAGE>
Schedule I
GENERAL ELECTRIC CAPITAL CORPORATION
DIRECTORS AND EXECUTIVE OFFICERS
DIRECTORS:
PRESENT PRESENT
BUSINESS PRINCIPAL
NAME ADDRESS OCCUPATION
N.D.T. Andrews GECC Executive Vice
260 Long Ridge Road President, GECC.
Stamford, CT 06927
N.E. Barton GECC Senior Vice President,
260 Long Ridge Road General Counsel and
Stamford, CT 06927 Secretary, GECC.
J.R. Bunt GE Vice President and
3135 Easton Turnpike Treasurer, GEC.
Fairfield, CT 06431
D.D. Dammerman GE Senior Vice President-
3135 Easton Turnpike Finance and Chief
Fairfield, CT 06431 Financial Officer, GEC.
P. Fresco GE Vice Chairman and
3135 Easton Turnpike Executive Officer, GEC.
Fairfield, CT 06431
B.W. Heineman, Jr. GE Senior Vice President,
3135 Easton Turnpike General Counsel and
Fairfield, CT 06431 Secretary, GEC.
R.L. Nardelli GE Senior Vice President
One River Road GE Power Systems.
Schenectady, NY 12345
D.J. Nayden GECC President and Chief
260 Long Ridge Road Operating Officer, GECC.
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Stamford, CT 06927
M.A. Neal GECC Executive Vice
260 Long Ridge Road President, GEEC.
Stamford, CT 06927
J.A. Parke GECC Senior Vice President,
260 Long Ridge Road Finance, GECC.
Stamford, CT 06927
J.M. Samuels GE Vice President and
3135 Easton Turnpike Senior Counsel,
Fairfield, CT 06431 Corporate Taxes, GE.
E.D. Stewart GECC Executive Vice
260 Long Ridge Road President, GECC.
Stamford, CT 06927
J.F. Welch, Jr. GE Chairman and Chief
3135 Easton Turnpike Executive Officer, GEC.
Fairfield, CT 06431
G.C. Wendt GECC Chairman and Chief
260 Long Ridge Road Executive Officer, GECC.
Stamford, CT 06927
EXECUTIVE OFFICERS:
G.C. Wendt GECC Chairman and Chief
260 Long Ridge Road Executive Officer, GECC.
Stamford, CT 06927
D.J. Nayden GECC President and Chief
260 Long Ridge Road Operating Officer, GECC.
Stamford, CT 06927
N.D.T. Andrews GECC Executive Vice
260 Long Ridge Road President, GECC.
Stamford, CT 06927
13
<PAGE>
M.A. Neal GECC Executive Vice
260 Long Ridge Road President, GECC.
Stamford, CT 06927
E.D. Stewart GECC Executive Vice
260 Long Ridge Road President, GECC.
Stamford, CT 06927
N.E. Barton GECC Senior Vice President,
260 Long Ridge Road General Counsel and
Stamford, CT 06927 Secretary, GECC.
See Schedule I.
J.A. Colica GECC Senior Vice President,
260 Long Ridge Road Risk Management and
Stamford, CT 06927 Credit Policy, GECC.
M.D. Fraizer GECC Senior Vice President,
292 Long Ridge Road Insurance/Investment
Stamford, CT 06927 Products, GECC.
R.L. Lewis GECC Senior Vice President,
1600 Sumner Street Global Project and
6th Floor Structured Finance,
Stamford, CT 06905 GECC.
See Schedule I.
J.A. Parke GECC Senior Vice President,
260 Long Ridge Road Finance, GECC.
Stamford, CT 06927 See Schedule I.
Todd S. Thomson GECC Senior Vice President,
260 Long Ridge Road Strategic Planning and
Stamford, CT 06927 and Business
Development, GECC.
L.J. Toole GECC Senior Vice President,
260 Long Ridge Road Human Resources,
Stamford, CT 06927 GECC.
See Schedule I.
J.S. Werner GECC Senior Vice President,
201 High Ridge Road Corporate Treasury and
Stamford, CT 06927 Global Funding
Operation, GECC.
14
<PAGE>
Schedule II
GENERAL ELECTRIC CAPITAL SERVICES, INC.
DIRECTORS AND EXECUTIVE OFFICERS
DIRECTORS:
PRESENT PRESENT
BUSINESS PRINCIPAL
NAME ADDRESS OCCUPATION
G.C. Wendt GECS Chairman, President
260 Long Ridge Road and Chief Executive
Stamford, CT 06927 Officer, GECS.
See Schedule I
K. Ahlmann ERC Executive Vice
5200 Metcalf President, GECS.
Overland Park, KS 66202 President and Chief
Operating Officer,
Employers Reinsurance
Corp.
N.D.T. Andrews GECC Executive Vice
260 Long Ridge Road President, GECC.
Stamford, CT 06927
J.R. Bunt GE Vice President and
3135 Easton Turnpike Treasurer, GEC.
Fairfield, CT 06431
D.D. Dammerman GE Senior Vice President -
3135 Easton Turnpike Finance and Chief
Fairfield, CT 06431 Financial Officer, GEC.
P. Fresco GE Vice Chairman and
3135 Easton Turnpike Executive Officer, GEC.
Fairfield, CT 06431
15
<PAGE>
B.W. Heineman, Jr. GE Senior Vice President,
3135 Easton Turnpike General Counsel and
Fairfield, CT 06431 Secretary, GEC.
R.L. Nardelli GE Power Systems Senior Vice President,
One River Road GE Power Systems.
Schenectady, NY 12345
D.J. Nayden GECC President and Chief
260 Long Ridge Road Operating Officer,
Stamford, CT 06927 GECC.
M.A. Neal GECC Executive Vice
260 Long Ridge Road President, GECC.
Stamford, CT 06927
J.M. Samuels GE Vice President and
3135 Easton Turnpike Senior Counsel,
Fairfield, CT 06431 Corporate Taxes, GEC.
E.D. Stewart GECC Executive Vice
260 Long Ridge Road President, GECC.
Stamford, CT 06927
J.F. Welch, Jr. GE Chairman and Chief
3135 Easton Turnpike Executive Officer,
Fairfield, CT 06431 GEC.
EXECUTIVE OFFICERS:
G.C. Wendt GECS Chairman, President
260 Long Ridge Road and Chief Executive
Stamford, CT 06927 Officer, GECS.
K. Ahlmann ERC Executive Vice
5200 Metcalf President, GECS.
Overland Park, KS 66202 President and Chief
Operating Officer,
ERC.
N.D.T. Andrews GECC Executive Vice
260 Long Ridge Road President, GECC.
Stamford, CT 06927 See Schedule I.
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<PAGE>
D.J. Nayden GECC President and Chief
260 Long Ridge Road Operating Officer, GECC.
Stamford, CT 06927 See Schedule I.
M.A. Neal GECC Executive Vice
260 Long Ridge Road President, GECC.
Stamford, CT 06927 See Schedule I.
E.D. Stewart GECC Executive Vice
260 Long Ridge Road President, GECC.
Stamford, CT 06927 See Schedule I.
N.E. Barton GECC Senior Vice President,
260 Long Ridge Road General Counsel and
Stamford, CT 06927 Secretary, GECC.
See Schedule I.
J.A. Parke GECC Senior Vice President,
260 Long Ridge Road Finance, GECC.
Stamford, CT 06927 See Schedule I.
L.J. Toole GECC Senior Vice President,
260 Long Ridge Road Human Resources,
Stamford, CT 06927 GECC.
See Schedule I.
J.S. Werner GECC Senior Vice President,
201 High Ridge Road Corporate Treasury and
Stamford, CT 06927 Global Funding
Operation.
See Schedule I.
17
<PAGE>
Schedule III
GENERAL ELECTRIC COMPANY
DIRECTORS AND EXECUTIVE OFFICERS
DIRECTORS:
PRESENT PRESENT
BUSINESS PRINCIPAL
NAME ADDRESS OCCUPATION
J.C. Amble GECS Vice President and
260 Long Ridge Road Controller.
Stamford, CT 06927
D.W. Calloway Pepsico, Inc. Chairman of the Board,
700 Anderson Hill Road Pepsico, Inc.
Purchase, NY 10577
S.S. Cathcart 222 Wisconsin Avenue Director and Retired
Suite 103 Chairman of the Board,
Lake Forest, IL 60045 Illinois Tool Works.
D.D. Dammerman GE Senior Vice President,
3135 Easton Turnpike Finance and Chief
Fairfield, CT 06431 Financial Officer, GE.
P. Fresco General Electric Vice Chairman of the
Company (U.S.A.) Board and Executive
3 Shortlands, Officer, GE.
Hammersmith
London W6 8BX, England
C.X. Gonzalez Kimberly-Clark de Chairman of the Board
Mexico, S.A. de C.V. and Chief Executive
Jose Luis Lagrange 103, Officer, Kimberly-
Tercero Piso Clark de Mexico, S.A.
Colonia Los Morales de C.V., Consumer Mexico, D.F.
11510, Paper Products, Mexico Mexico
City, Mexico.
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R.E. Mercer GE Retired Chairman of
3135 Easton Turnpike the Board and former
Fairfield, CT 06431 Director, The Goodyear
Tire & Rubber Company,
Akron, Ohio.
G.G. Michelson Federated Department Member of the Board of
Stores Directors -- Federated
151 West 34th Street Department Stores,
New York, NY 10001 Retailers, New York,
New York.
S. Nunn King & Spalding Partner, King & Spalding.
191 Peachtree Street, N.E.
Atlanta, GA 30303
J. D. Opie GE Vice Chairman of the
3135 Easton Turnpike Board and Executive
Fairfield, CT 06431 Officer, GE.
R. D. Penske enske Corporation Chairman of the Board,
13400 Outer Drive, West Penske Corporation
Detroit, MI 48239-4001 Corporation and
Detroit Diesel
Corporation.
B.S. Preiskel Suite 3125 Former Senior Vice
60 East 42nd Street President, Motion
New York, NY 10165 Picture Association
F.H.T. Rhodes Cornell University President Emeritus,
3104 Snee Building Cornell University.
Ithaca, NY 14853
A.C. Sigler Champion International Chairman of the Board,
Corporation Chief Executive
1 Champion Plaza Officer and Director
Stamford, CT 06921 Champion International
Corporation.
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D.A. Warner III J.P. Morgan & Co., Inc. President, Chief
and Morgan Guaranty Executive Officer and
Trust Co. Director, J.P. Morgan
60 Wall Street & Co., Incorporated
New York, NY 10260 and Morgan Guaranty
Trust Company.
J.F. Welch, Jr. GE Chairman of the Board
3135 Easton Turnpike and Chief Executive
Fairfield, CT 06431 Officer, GE.
EXECUTIVE OFFICERS:
J.F. Welch, Jr. GE Chairman of the Board
3135 Easton Turnpike and Chief Executive
Fairfield, CT 06431 Officer, GE.
P. Fresco General Electric Vice Chairman of the
Company (U.S.A.) Board and Executive
3 Shortlands, Officer, GE.
Hammersmith
London W6 8BX, England
P.D. Ameen GE Vice President and
3135 Easton Turnpike Comptroller, GE.
Fairfield, CT 06431
J.R. Bunt GE Vice President and
3135 Easton Turnpike Treasurer, GE.
Fairfield, CT 06431
D. L. Calhoun GE Vice President -- GE
2901 East Lake Road Transportation
Erie, PA 16531 Systems, GE.
W. J. Conaty GE Senior Vice President
3135 Easton Turnpike -- Human Resources,
Fairfield, CT 06431 GE.
D.M. Cote GE Vice President -- GE
Appliance Park Appliances, GE.
Louisville, KY 40225
D. D. Dammerman GE Senior Vice President,
3135 Easton Turnpike Finance, GE.
Fairfield, CT 06431
20
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L.S. Edelheit GE Senior Vice President
P.O. Box 8 -- Corporate Research
Schenectady, NY 12301 and Development, GE.
B.W. Heineman, Jr. GE Senior Vice President,
3135 Easton Turnpike General Counsel
Fairfield, CT 06431 and Secretary, GE.
J.R. Immelt GE Senior Vice President
P.O. 414 GE Medical Systems
Milwaukee, WI 53201
W.J. Lansing GE Vice President -
3135 Easton Turnpike Corporate Business
Fairfield, CT 06431 Development, GE.
W.J. McNerney GE Senior Vice President,
Nela Park -- GE Lighting, GE.
Cleveland, OH 44122
E.F. Murphy GE Senior Vice President,
1 Newmann Way GE Aircraft Engines, GE.
Cincinnati, OH 05242
R.L. Nardelli GE Power Systems Senior Vice President,
One River Road GE Power Systems, GE.
Schenectady, NY 12345
R.W. Nelson GE Vice President --
3135 Easton Turnpike Corporate Financial
Fairfield, CT 06431 Planning and Analysis,
GE.
J. D. Opie GE Vice Chairman of the
3135 Easton Turnpike Board and Executive
Fairfield, CT 06431 Officer, GE.
G.M. Reiner GE Senior Vice President
3135 Easton Turnpike -- Chief Information
Fairfield, CT 06431 Officer, GE.
G.L. Rogers GE Senior Vice President
1 Plastics Avenue -- GE Plastics, GE.
Pittsfield, MA 01201
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J.W. Rogers GE Vice President -- GE
1635 Broadway Motors, GE.
Fort Wayne, IN 46801
J.M. Trani GE Senior Vice President
P.O. Box 414 -- GE Medical Systems,
Milwaukee, WI 53201
L.G. Trotter GE Vice President -- GE
41 Woodford Avenue Electrical Distribution
Plainville, CT 06062 and Control, GE.
22
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Schedule IV
1. United States ex rel. Taxpayers Against Fraud and Chester L. Walsh v.
General Electric Company
On November 15, 1990, an action under the federal False Claims Act, 31
U.S.C. ss.ss. 3729-32, was filed under seal against General Electric Company
("GE") in the United States District Court for the Southern District of Ohio.
The qui tam action, brought by an organization called Taxpayers Against Fraud
and an employee of GE's Aircraft Engines division ("GEAE"), alleged that GEAE,
in connection with its sales of F110 aircraft engines and support equipment to
Israel, made false statements to the Israeli Ministry of Defense ("MoD"),
causing MoD to submit false claims to the United States Department of Defense
under the Foreign Military Sales Program. Senior GE management became aware of
possible misconduct in GEAE's Israeli F110 program in December 1990. Before
learning of the sealed qui tam suit, GE immediately made a voluntary disclosure
to the Departments of Defense and Justice, promised full cooperation and
restitution, and began an internal investigation. In August 1991, the federal
court action was unsealed, and the Department of Justice intervened and took
over responsibility for the case.
On July 22, 1992, after GE had completed its investigation and made a
complete factual disclosure to the U.S. government as part of settlement
discussions, the United States and GE executed a settlement agreement and filed
a stipulation dismissing the civil action. Without admitting or denying the
allegations in the complaint, GE agreed to pay $59.5 million in full settlement
of the civil fraud claims. Also on July 22, 1992, in connection with the same
matter, the United States filed a four count information charging GE with
violations of 18 U.S.C. ss. 287 (submitting false claims against the United
States), 18 U.S.C. ss.1957 (engaging in monetary transactions in criminally
derived property), and 15 U.S.C. ss.ss. 78m(b)(2)(A) and 78ff(a) (inaccurate
books and records), and 18 U.S.C. ss. 371 (conspiracy to defraud the United
States and to commit offenses against the United States). The same day, GE and
the United States entered a plea agreement in which GE agreed to waive
indictment, plead guilty to the information, and pay a fine of $9.5 million. GE
was that day sentenced by the federal court in accordance with the plea
agreement.
2. Her Majesty's Inspectorate of Pollution v. IGE Medical Systems Limited
(St. Albans Magistrates Court, St. Albans, Hertsfordshire, England, Case No.
04/00320181)
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In April, 1994, General Electric Medical Systems' U.K. subsidiary, IGE
Medical Systems Limited ("IGEMS") discovered the loss of a radioactive barium
source at the Radlett, England facility. The lost source, used to calibrate
nuclear camera detectors, emits a very low level of radiation. IGEMS immediately
reported the loss as required by the U.K. Radioactive Substances Act. An ensuing
investigation, conducted in cooperation with government authorities, failed to
locate the source. On July 21, 1994, Her Majesty's Inspectorate of Pollution
("HMIP") charged IGEMS with violating the Radioactive Substances Act by failing
to comply with a condition of registration. The Act provides that a registrant
like IGEMS, which "does not comply with a limitation or condition subject to
which (it) is so registered ... shall be guilty of (a criminal) offense."
Condition 7 of IGEMS' registration states that it "shall so far as is reasonably
practicable prevent ... loss of any registered source."
At the beginning of trial on February 24, 1995, IGEMS entered a guilty
plea and agreed to pay of fine of 5,000(pound) and assessed costs of
5,754(pound). The prosecutors presentation focused primarily on the 1991 change
in internal IGEMS procedures and, in particular, the source logging procedure.
The prosecutor complimented IGEMS' investigation and efforts to locate the
source and advised the court that IGEMS had no previous violations of the
Radioactive Substances Act. He also told the court that the Radlett plant had
been highlighted as an exemplary facility to HMIP inspectors as part of their
training. In mitigation, IGEMS emphasized the significant infrastructure and
expense undertaken by IGEMS to provide security for radiation sources and the
significant effort and expense incurred in attempting to locate the missing
source.
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Exhibit 1
[EXECUTION ORIGINAL]
THIS WARRANT MAY NOT BE SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF EXCEPT AS
SPECIFIED HEREIN. NEITHER THE RIGHTS REPRESENTED BY THIS WARRANT NOR THE SHARES
ISSUABLE UPON THE EXERCISE THEREOF HAVE BEEN REGISTERED FOR OFFER OR SALE UNDER
THE SECURITIES ACT OF 1933. SUCH RIGHTS AND SHARES MAY NOT BE SOLD OR OFFERED
FOR SALE IN WHOLE OR IN PART EXCEPT IN ACCORDANCE WITH THE APPLICABLE PROVISIONS
HEREOF.
TFC ENTERPRISES, INC.
Warrant to Purchase Common Stock
December 20, 1996
TFC ENTERPRISES, INC., a Delaware corporation, its successors or
assigns (the "Company"), hereby certifies that, for value received, GENERAL
ELECTRIC CAPITAL CORPORATION, a New York corporation, or its registered assigns
(the "Warrant Holder" or collectively the "Warrant Holders"), is entitled,
subject to the terms set forth below, to purchase from the Company upon
surrender of this Warrant, at any time or times on or after December 20, 1996
but not after 5:00 p.m., prevailing Eastern Standard or Daylight Time, on the
Expiration Date (as such term is hereinafter defined), 567,640 fully paid and
nonassessable shares of Common Stock (as such term is hereinafter defined) of
the Company (as adjusted from time to time as provided in this Warrant, the
"Warrant Shares"), at a purchase price per share equal to the Warrant Exercise
Price (as such term is hereinafter defined), in lawful money of the United
States of America. The Company represents and warrants, as of the date hereof,
that (a) there are 11,290,308 shares of the Common Stock issued and outstanding
and (b) Exhibit D
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sets forth all options or other rights to acquire any shares of the Common
Stock.
DEFINITIONS
A. (a) Definitions. The following words and terms as used in this Warrant
shall have the following meanings, unless the context in which any such term is
used herein clearly requires a different meaning:
"Affiliate" means, with respect to a Person, any other Person that,
directly or indirectly through one or more intermediaries, controls, or is
controlled by, or is under common control with, such first Person.
"Business Day", except as otherwise provided herein, means a day other
than a Saturday, a Sunday or a day on which banking institutions in the
Commonwealth of Virginia are authorized or obligated by law or required by
executive order to be closed.
"Common Stock" means all shares now or hereafter authorized of the
Company's Common Stock, $.01 par value per share, and stock of any other class
into which such shares may hereafter be changed.
"Convertible Securities" mean any securities issued by the Company
which are convertible into or exchangeable for, directly or indirectly, shares
of Common Stock.
"Expiration Date" means December 31, 2000.
"Market Price" means the average of the closing prices of Common Stock
sales on all domestic exchanges (including the NASDAQ National Market System) on
which the Common Stock may at the time be listed, or, if there shall have been
no sales on any such exchange on any day, the average of the reported bid prices
on all such exchanges at the end of such day, or, if on any day the Common Stock
shall not be so listed, the average of the representative bid prices quoted in
the NASDAQ System as of 3:30 P.M., Eastern Standard Time, or if on any day the
Common Stock shall not be quoted in the NASDAQ System, the average of the high
and low bid prices on such day in the domestic over-the-counter market as
reported by the National Quotation Bureau, Incorporated, or any similar
successor organization, in each such case averaged over a period of 30
consecutive Business Days (or such other period as shall be specified herein)
prior to the date as of which "Market Price" is being determined; provided, that
if the Common Stock is listed on any domestic exchange, the term "business days"
as used in this sentence shall mean business days on which such exchange is open
for trading. If at any time the Common Stock is not listed on any domestic
exchange or quoted in the NASDAQ System or the domestic over-the-counter market,
the "Market Price" shall be deemed to be the higher of (i) the book value per
share thereof, as determined by any firm of independent public accountants
(which may include the
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<PAGE>
independent auditors engaged by the Company) of recognized standing selected by
the Board of Directors of the Company and acceptable to the Warrant Holder in
its reasonable discretion (the Warrant Holder agreeing that the Company's
current independent auditors and any other "Big 6" accounting firms engaged by
the Company will be acceptable), as of the last day of which such determination
shall have been made, or (ii) the fair value per share thereof reasonably
determined in good faith by the Board of Directors of the Company as of the date
which is within 15 days of the date as of which the determination is to be made
(in determining the fair value per share thereof, the Board of Directors shall
consider stock market valuations and price to earnings ratios of comparable
companies in similar industries).
"Person" means an individual or corporation, partnership, limited
liability company, trust, incorporated or unincorporated association, joint
venture, joint stock company, government (or an agency or political subdivision
thereof) or other entity of any kind.
"Securities Act" means the Securities Act of 1933, as amended.
"Warrant Exercise Price" shall initially be $2.00 per share and shall
be adjusted and readjusted from time to time as provided in this Warrant.
"Warrant Share Holder" means any holder of the Warrant Shares.
(b) Other Definitional Provisions. Except as otherwise specified
herein:
a. all references herein (A) to any Person shall be
deemed to include such Person's successors and assigns, and (B) to any
applicable law defined or referred to herein, shall be deemed references to such
applicable law as the same may have been or may be amended or supplemented from
time to time.
b. Whenever used in this Warrant, the words "herein",
"hereof" and "hereunder", and words of similar import, shall refer to this
Warrant as a whole and not to any provision of this Warrant, and the words
"Section" and "Exhibit" shall refer to Sections of, and Exhibits to, this
Warrant unless otherwise specified.
c. When the context so requires, the neuter gender
includes the masculine or feminine, and the singular number includes the plural,
and vice versa.
B. Exercise of Warrant. The rights represented by this Warrant may be exercised
by the Warrant Holder then registered on the books of the Company, in whole or
from time to time in part (except that this Warrant shall not be exercisable as
to a fractional share) by (i) delivery of a written notice, in the form of the
Subscription Notice attached as Exhibit A hereto, of such holder's election to
exercise this
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<PAGE>
Warrant, which notice shall specify a number of Warrant Shares to be purchased
not less than 1,000 (as adjusted from time to time as provided herein), (ii)
payment to the Company of an amount equal to the Warrant Exercise Price
multiplied by the number of Warrant Shares as to which the Warrant is then being
exercised (plus any applicable issue or transfer taxes) in cash or by certified
or official bank check, (iii) surrender of this Warrant, properly endorsed, at
the principal office of the Company in Norfolk, Virginia, as set forth in
Section 19 hereof (or at such other agency or office of the Company as the
Company may designate by notice to the holder hereof), and (iv) if the Warrant
Shares issuable upon the exercise of the rights represented by this Warrant have
not been registered under the Securities Act, delivery to the Company by such
holder of a letter in the form of Exhibit B hereto; provided, that if such
Warrant Shares are to be issued in any name other than that of the registered
holder of this Warrant, such issuance shall be deemed a transfer and the
provisions of Section 15 hereof shall be applicable. In the event of any
exercise of the rights represented by this Warrant, a certificate or
certificates for the Warrant Shares so purchased, registered in the name
directed by the holder, shall be delivered as directed by the holder within a
reasonable time, not exceeding 15 Business Days, after such exercise. Unless the
rights represented by this Warrant shall have expired or have been fully
exercised, the Company shall issue a new Warrant identical in all respects to
the Warrant exercised except it shall represent rights to purchase the number of
Warrant Shares purchasable immediately prior to such exercise under the Warrant
exercised, less the number of Warrant Shares with respect to which such Warrant
was exercised. The person in whose name any certificate for Warrant Shares is
issued upon the exercise of this Warrant shall for all purposes be deemed to
have become the holder of record of such Warrant Shares immediately prior to the
close of business on the date on which the Warrant was surrendered and payment
of the amount due in respect of such exercise and any applicable taxes was made,
irrespective of the date of delivery of such share certificate, except that, if
the date of such surrender and payment is a date when the stock transfer books
of the Company are properly closed, such person shall be deemed to have become
the holder of such Warrant Shares at the opening of business on the next
succeeding date on which the stock transfer books are open.
C. Covenants as to Common Stock. The Company covenants and agrees that:
1. All Warrant Shares which may be issued upon the exercise of
the rights represented by this Warrant will, upon issuance, be validly issued,
fully paid and nonassessable;
2. During the period within which the rights represented by
this Warrant may be exercised, the Company will at all times have authorized and
reserved a sufficient number of shares of Common Stock, free of preemptive
rights, to provide for the exercise of the rights then represented by this
Warrant, and that the par value of such shares will at all times be less than
the applicable
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<PAGE>
Warrant Exercise Price. Before taking any action that would cause an adjustment
reducing the Warrant Exercise Price below the then par value, if any, of the
shares of Common Stock issuable upon exercise of this Warrant, the Company will
take any corporate action that may be necessary in order that the Company may
validly and legally issue fully paid and non-assessable shares of such Common
Stock at such adjusted Warrant Exercise Price; and
3. If any shares of Common Stock reserved or to be reserved to
provide for the exercise of the rights then represented by this Warrant require
registration with or approval of any governmental authority under any federal
law (other than the Securities Act) or under any state law before such shares
may be validly issued, then the Company covenants that it will in good faith and
as expeditiously as possible endeavor to secure such registration or approval,
as the case may be.
D. Adjustment of Warrant Exercise Price Upon Stock Splits, Dividends,
Distributions and Combinations; Adjustment of Number of Warrant Shares.
1. In case the Company shall subdivide at any time its
outstanding shares of Common Stock into a greater number of shares or issue a
stock dividend or make a distribution with respect to outstanding shares of
Common Stock or Convertible Securities, payable in Common Stock or in
Convertible Securities which are convertible with no additional consideration,
the Warrant Exercise Price in effect immediately prior to such subdivision or
stock dividend or distribution shall be proportionately reduced (treating for
such purpose any such shares of Convertible Securities outstanding or payable as
being the number of shares of Common Stock issuable upon their conversion); and,
conversely, in the case that the outstanding shares of Common Stock of the
Company shall be combined into a smaller number of shares, the Warrant Exercise
Price in effect immediately prior to such combination shall be proportionately
increased.
2. Upon each adjustment of the Warrant Exercise Price as
provided in this Section 4, the Warrant Holder shall thereafter be entitled to
purchase, at the Warrant Exercise Price resulting from such adjustment, the
number of shares of Common Stock obtained by multiplying the Warrant Exercise
Price in effect immediately prior to such adjustment by the number of shares of
Common Stock purchasable pursuant hereto immediately prior to such adjustment,
and dividing the product thereof by the Warrant Exercise Price after such
adjustment.
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<PAGE>
E. Adjustment of Warrant Exercise Price Upon Certain Issuances or Sales of
Common Stock.
1. Whenever the Company shall issue, sell or otherwise
distribute any shares of its Common Stock (except as provided for in Section 6)
and the amount of consideration per share is less than the Market Price in
effect immediately prior to the time of such issuance or sale, then, forthwith
upon such issue or sale, and thereafter successively upon each such issue, the
Warrant Exercise Price shall be reduced to the amount determined by multiplying
the Warrant Exercise Price in effect immediately prior to the time of such issue
or sale by a fraction, whose numerator shall be (i) the sum of (x) the number of
shares of Common Stock outstanding immediately prior to such issue or sale
multiplied by the current Market Price immediately prior to such issue or sale,
and (y) the consideration received by the Company upon such issue or sale, and
whose denominator shall be (ii) the total number of shares of Common Stock
outstanding immediately after such issue or sale multiplied by the current
Market Price immediately prior to such issue or sale.
2. For the purposes of this Section 5, the following clauses
(i) to (v), inclusive, shall also be applicable:
a. in case at any time the Company shall in any
manner grant any rights to subscribe for any rights or options to purchase any
shares of Common Stock or any Convertible Securities, whether or not such rights
or options or the rights to convert or exchange any such Convertible Securities
are immediately exercisable, and the purchase price per share for which Common
Stock is issuable upon the exercise of such rights or options or upon conversion
or exchange of such rights or options or upon conversion or exchange of such
Convertible Securities (determined by dividing (x) the total amount, if any,
received or receivable by the Company as consideration for the granting of all
such rights or options, plus the minimum aggregate amount of additional
consideration payable to the Company upon the exercise of all such rights or
options, plus, in the case of such Convertible Securities, the average aggregate
amount of additional consideration, if any, payable upon the conversion or
exchange thereof, by (y) the maximum aggregate number of shares of Common Stock
issuable upon the exercise of such rights or options or upon the conversion or
exchange of all such Convertible Securities issuable upon the exercise of such
rights or options) shall be less than the Market Price in effect immediately
prior to the time of the granting of such rights or options, then the maximum
aggregate number of shares of Common Stock issuable upon the exercise of such
rights or options or upon conversion or exchange of the total maximum amount of
such Convertible Securities issuable upon the exercise of such rights or options
shall be deemed (as of the date of granting of such rights or options) to be
outstanding and to have been issued for such price per share. No further
adjustments of the Warrant Exercise Price shall be made upon the actual issue of
such Common Stock or of such Convertible Securities upon exercise of such rights
or options or upon the actual issue of such
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<PAGE>
Common Stock upon conversion or exchange of such Convertible Securities, except
as otherwise provided in clause (iii) below;
b. in case at any time the Company shall issue or
sell in any manner any Convertible Securities, whether or not the rights to
exchange or convert thereunder are immediately exercisable, and the purchase
price per share for which Common Stock is issuable upon such conversion or
exchange (determined by dividing (x) the total amount received or receivable by
the Company as consideration for the issue or sale of all such Convertible
Securities, plus the minimum aggregate amount of additional consideration, if
any, payable to the Company upon the conversion or exchange thereof, by (y) the
maximum aggregate number of shares of Common Stock issuable upon the conversion
or exchange of all such Convertible Securities) shall be less than the Market
Price in effect immediately prior to the time of such issue or sale, then the
maximum aggregate number of shares of Common Stock issuable upon conversion or
exchange of all such Convertible Securities shall be deemed (as of the date of
the issue or sale of such Convertible Securities) to be outstanding and to have
been issued for such price per share, provided that, except as otherwise
specified in clause (iii) below, (a) no further adjustment of the Warrant
Exercise Price shall be made upon the actual issue of such Common Stock upon
conversion or exchange of such Convertible Securities, and (b) if any such issue
or sale of such Convertible Securities is made upon exercise of any rights to
subscribe for or to purchase or upon exercise of any option to purchase any such
Convertible Securities for which adjustments of the Warrant Exercise Price have
been or are to be made pursuant to other provisions of this Section 5, no
further adjustment of the Warrant Exercise Price shall be made by reason of such
issue or sale;
c. if the purchase price or number of shares
purchasable provided for in any right or option referred to in clause (i) above,
or the rate at which any Convertible Securities referred to in clause (i) or
(ii) above are convertible into or exchangeable for Common Stock, shall change
at any time (other than under, or by reason of, similar provisions contained in
such securities designed to protect against dilution for which provision for
adjustments in the Warrant Exercise Price are provided for in this Warrant), the
Warrant Exercise Price then in effect hereunder shall forthwith be readjusted to
such Warrant Exercise Price as would have obtained had the adjustments made upon
the issuance of such rights, options or Convertible Securities been made upon
the basis of the changed terms; and on the expiration of any such option or
right referred to in clause (i) above or the termination of any such right to
convert or exchange such Convertible Securities referred to in clause (i) or
(ii) above, the Warrant Exercise Price then in effect hereunder shall forthwith
be readjusted to such Warrant Exercise Price as would have obtained had the
adjustments made upon the issuance of such rights or options or Convertible
Securities have been made upon the basis of the issuance of only the number of
shares of Common Stock, if any, theretofore actually delivered upon the exercise
of such rights or options or upon the conversion or exchange of such Convertible
Securities;
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<PAGE>
d. the cash consideration received for any shares of
Common Stock or Convertible Securities or any rights or options to purchase any
such Common Stock or Convertible Securities issued or sold shall be deemed to be
the amount received therefor, before deduction therefrom of any expenses
incurred or any underwriting commissions or concessions paid or allowed in
connection therewith; in case any shares of Common Stock or Convertible
Securities or any rights or options to purchase any such Common Stock or
Convertible Securities shall be issued or sold for a consideration other than
cash, the amount of the consideration other than cash (including any non-cash
consideration received in respect of any acquisition by the Company of
substantially all of the stock or assets of another entity) received by the
Company for such shares shall be deemed to be the value of such consideration as
determined reasonably and in good faith by the Board of Directors of the
Company; and
e. the number of shares of Common Stock outstanding
at any given time shall not include such shares owned or held by or for the
account of the Company; but the transfer from the Company of any such shares so
owned or held shall be considered to be an issue or sale of Common Stock for the
purposes of this Section 5.
3. If the Company shall distribute to all holders of its
Common Stock evidence of its indebtedness or assets, then in each such case the
Warrant Exercise Price in effect immediately prior to such distribution shall be
adjusted so that the same shall equal the price determined by multiplying the
Warrant Exercise Price in effect immediately prior to the date of such
distribution by a fraction whose numerator shall be the Market Price per share
of Common Stock on the effective date of distribution less the then fair market
value per share (as reasonably determined by the Board of Directors of the
Company) of the assets or evidences of indebtedness so distributed and whose
denominator shall be such Market Price per share of the Common Stock. Such
adjustment shall be made whenever any such distribution is made and shall be
retroactively effective as of immediately after the record date for the
determination of stockholders entitled to receive such distribution.
4. If the Company shall take a record of the holders of its
Common Stock for the purpose of entitling them (x) to receive a dividend or
other distribution of Common Stock, or (y) to receive rights or options to
subscribe for Common Stock or Convertible Securities, then, for purposes of this
Warrant, such record date shall be deemed to be the date of the issue or sale of
the shares of Common Stock deemed to have been issued or sold upon the
declaration of such dividend or the making of such other distribution or the
date of the granting of such right or option of subscription or purchase.
5. Upon each adjustment of the Warrant Exercise Price as
provided in this Section 5, the Warrant Holder shall thereafter be entitled to
purchase, at the Warrant Exercise Price resulting from such adjustment, the
number of shares of Common Stock obtained by multiplying the Warrant Exercise
Price in effect
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<PAGE>
immediately prior to such adjustment by the number of shares of Common Stock
purchasable pursuant hereto immediately prior to such adjustment, and dividing
the product thereof by the Warrant Exercise Price after such adjustment.
F. Reorganization, Reclassification, Etc. In case of any capital reorganization,
or of any reclassification of the capital stock, of the Company (other than a
change in par value or from a par value to no par value or from no par value to
a par value or as a result of a split-up or combination) or in case of the
consolidation or merger of the Company with or into any other corporation (other
than a consolidation or merger in which the Company is the continuing
corporation and which does not result in the Common Stock being changed into, or
exchanged for, stock or other securities or property of any other Person), or
the sale of all or substantially all of the assets of the Company to another
corporation shall be effected, or a share exchange shall be effected by the
Company with another corporation or Person, or the liquidation of the Company,
or any other event similar to any of the foregoing events (any of the foregoing,
a "Reorganization Event"), then, this Warrant, upon exercise after such
Reorganization Event, shall entitle the Warrant Holder to purchase the kind and
number of shares of stock or other securities or property of the Company, or of
the Person resulting from such Reorganization Event, to which the Warrant Holder
would have been entitled if he had exercised the Warrant in full immediately
prior to such Reorganization Event; and upon any Reorganization Event,
appropriate provision shall be made with respect to the rights and interests of
the Warrant Holder to the end that the provisions hereof (including, without
limitation, provisions for the term of the Warrant, adjustment of the Warrant
Exercise Price and of the number of shares purchasable upon the exercise of this
Warrant) shall be applicable thereafter, as nearly as may be in relation to any
shares of stock, securities or assets thereafter deliverable upon the exercise
of the rights represented hereby. The Company shall not effect any
Reorganization Event unless prior to, or simultaneously with, the consummation
thereof the successor Person (if other than the Company) resulting from such
Reorganization Event shall assume by written instrument executed and mailed or
delivered to the Warrant Holder at the address of such holder appearing on the
books of the Company, the obligation to deliver to such holder such shares of
stock, securities or assets as, in accordance with the foregoing provisions,
such holder may be entitled to purchase.
G. Notice of Adjustment of Warrant Exercise Price and Number of Warrant Shares.
Upon any adjustment of the Warrant Exercise Price or the number of Warrant
Shares purchasable hereunder, the Company shall notify the Warrant Holder of the
Warrant Exercise Price and number of Warrant Shares in effect after such
adjustment, setting forth in reasonable detail the method of calculation and the
facts upon which such calculation is based.
H. Computation of Adjustments. Upon each computation of an adjustment in the
Warrant Exercise Price and the number of shares which may be subscribed for and
purchased upon exercise of this Warrant, the Warrant Exercise Price shall be
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<PAGE>
computed to the nearest cent (i.e., fractions of .5 of a cent, or greater, shall
be rounded to the next highest cent) and the number of shares which may be
subscribed for and purchased upon exercise of this Warrant shall be calculated
to the nearest whole share (i.e., fractions of one half of a share, or greater,
shall be treated as being a whole share). No such adjustment shall be made,
however, if the change in the Warrant Exercise Price would be less than $.01 per
share, but any such lesser adjustment shall be made at the time and together
with the next subsequent adjustment which, together with any adjustments carried
forward, shall amount to $.01 per share or more.
I. Notice of Certain Events. In case at any time:
1. the Company shall declare any dividend or distribution in
respect of its Common Stock payable in Common Stock or Convertible Securities;
2. the Company shall offer for subscription pro rata
exclusively to the holders of its Common Stock any additional shares of stock of
any class or other rights;
3. there shall be any capital reorganization, or
reclassification of the capital stock, of the Company, or consolidation or
merger of the Company with, or sale of all or substantially all of its assets
to, another Person; or
4. there shall be a voluntary or involuntary dissolution,
liquidation or winding-up of the Company; then, in any one or more of said
cases, the Company shall give to the Warrant Holder (i) at least twenty (20)
days' prior written notice of the date on which the books of the Company shall
close or a record shall be taken for such dividend, distribution, or
subscription rights or for determining rights to vote in respect of any such
reorganization, reclassification, consolidation, merger, sale, dissolution,
liquidation or winding up, and (ii) in the case of any such reorganization,
reclassification, consolidation, merger, sale, dissolution, liquidation or
winding up, at least twenty (20) days' prior written notice of the date when the
same shall take place. Such notice in accordance with the foregoing clause (i)
shall also specify, in the case of such dividend, distribution or subscription
rights, the date on which holders of capital stock shall be entitled thereto,
and such notice in accordance with the foregoing clause (ii) shall also specify
the date on which the holders of capital stock shall be entitled to exchange
their capital stock for securities or other property deliverable upon such
reorganization, reclassification, consolidation, merger, sale, dissolution,
liquidation or winding up, as the case may be.
J. No Change in Warrant Terms on Adjustment. Irrespective of any adjustment in
the Warrant Exercise Price or the number of shares of Common Stock issuable upon
exercise hereof, this Warrant, whether theretofore or thereafter issued or
reissued, may continue to express the same price and number of shares as are
stated herein, and the Warrant Exercise Price and such number of shares
specified
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herein shall be deemed to have been so adjusted.
K. Registration Rights. The initial holder of this Warrant, and any assignee
thereof, shall have the registration rights with respect to the Warrant Shares
set forth in that certain Registration Rights Agreement of even date herewith by
and between the Company and such initial holder, a copy of which is attached
hereto as Exhibit C.
L. Taxes. The Company shall not be required to pay any tax or taxes
attributable to the initial issuance of the Warrant Shares or any transfer taxes
involved in the issue or delivery of any certificates for Warrant Shares in a
name other than that of the initial Warrant Holder or upon any transfer of this
Warrant.
M. Warrant Holder Not Deemed a Shareholder; Information; Rights Offerings.
1. No Warrant Holder, as such, shall be entitled to vote or
receive dividends or be deemed the holder of shares of the Company for any
purpose, nor shall anything contained in this Warrant be construed to confer
upon a Warrant Holder, as such, any of the rights of a shareholder of the
Company or any right to vote, give or withhold consent to any corporate action,
or receive dividends prior to the issuance of record to a Warrant Holder of the
Warrant Shares to which he is then entitled to receive upon the due exercise of
this Warrant.
2. Notwithstanding anything to the contrary contained herein
(i) so long as this Warrant or any portion hereof is outstanding, a Warrant
Holder shall be entitled to receive from the Company copies of all annual
financial statements generated by the Company, including but not limited to the
annual audited financial statements of the Company, and any and all other
notices and information provided, or required by applicable law or regulation to
be provided, by the Company to its shareholders generally, and (ii) if the
Company should offer to all of the Company's shareholders the exclusive right to
purchase any securities of the Company, then all shares of Common Stock that are
subject to this Warrant shall be deemed to be outstanding and owned by the
Warrant Holder solely for the purposes thereof, and the Warrant Holder shall be
entitled to participate in such rights offering.
3. No provision hereof, in the absence of affirmative action
by the Warrant Holder to purchase shares of Common Stock, and no mere
enumeration herein of the rights or privileges of the Warrant Holder, shall give
rise to any liability of such Warrant Holder for the purchase price of any
Warrant Shares or as a shareholder of the Company, whether such liability is
asserted by the Company or otherwise.
N. Preemptive Rights. The Company shall not grant any preemptive rights with
respect to any of its capital stock without the prior written consent of the
Warrant Holder.
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O. Transfer; Opinions of Counsel; Restrictive Legends.
1. This Warrant and any Warrant Shares shall be registered on
the books of the Company, and a copy of it shall be kept by the Company at its
principal office set forth in Section 19 hereof.
2. Subject to the provisions of this Section 15, this Warrant
may be transferred, in whole or in part, to any Person or business entity, by
presentation of this Warrant to the Company at the office of the Company set
forth in Section 19 hereof, with written instructions for such transfer. Upon
such presentation for transfer, the Company shall promptly execute and deliver a
new Warrant or Warrants in the form hereof in the name of the assignee or
assignees and in the denominations specified in such instructions.
3. The Company shall pay all expenses incurred by it (but not
those incurred by the Warrant Holder or Warrant Share Holder, as applicable) in
connection with the preparation, issuance and delivery of Warrants or the
Warrant Shares under this Section 15.
4. Prior to any sale, transfer or other disposition of this
Warrant or the Warrant Shares, as the case may be, the Warrant Holder or Warrant
Share Holder, as applicable, will give ten (10) Business Days' notice to the
Company of such Warrant Holder's or Warrant Share Holder's intention to effect
such transfer. Each such notice shall describe the manner and circumstances of
the proposed transfer and, absent registration under the Securities Act of the
securities relating to such proposed transfer, shall be accompanied by an
opinion, addressed to the Company and reasonably satisfactory in form and
substance to it, of counsel experienced in such matters for such Warrant Holder
or Warrant Share Holder, stating whether, in the opinion of such counsel, such
transfer will be a transaction exempt from registration under the Securities
Act.
5. If such sale, transfer or other disposition is subject to
registration under the Securities Act, or may in the reasonable opinion of such
counsel be effected without registration under the Securities Act, such Warrant
Holder or Warrant Share Holder shall thereupon be entitled to transfer this
Warrant or the Warrant Shares, as the case my be, in accordance with the terms
of the notice delivered by such Warrant Holder or Warrant Share Holder to the
Company. In the absence of such registration under the Securities Act, if in the
opinion of such counsel such transfer may not be effected without registration
under the Securities Act, such Warrant Holder or Warrant Share Holder shall not
be entitled to so transfer this Warrant or the Warrant Shares, as the case may
be, until such time as the foregoing conditions to transfer are fulfilled.
6. Subject to the provisions of this Section 15, the Warrant
Holder may at any time transfer this Warrant or the Warrant Shares, as the case
may be, to an Affiliate of the Warrant Holder.
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<PAGE>
7. Each certificate for Warrant Shares initially issued upon
exercise of this Warrant, unless at the time of exercise such Warrant Shares are
registered under the Securities Act, shall bear the following legend (and any
additional legend or legends required by any securities exchange upon which such
Warrant Shares may, at the time of such exercise, be listed) on the face
thereof:
The shares of stock represented by this certificate have not
been registered under the Securities Act of 1933, as amended, or under
the securities laws of any state. The shares may not be sold,
transferred, pledged or hypothecated in the absence of an effective
registration statement under the Securities Act of 1933, as amended,
and such registration or qualification as may be necessary under the
securities laws of any state, or an opinion of counsel reasonably
satisfactory to the Company that such registration or qualification is
not required.
The shares of stock represented by this certificate are held
subject to the conditions as set forth in a certain Warrant to Purchase
Common Stock dated December 20, 1996, pursuant to which such shares
were initially issued. A copy of such Warrant to Purchase Common Stock
is on file at the principal office of the Company.
P. Exchange of Warrant; No Redemption.
1. This Warrant is divisible into warrants of smaller
denominations or fractional warrants, and may be exchanged upon the surrender
hereof, accompanied by written instructions with respect to such exchange, by
the Warrant Holder at the office of the Company set forth in Section 19 hereof
for new Warrants of like provisions representing in the aggregate the right to
subscribe for and purchase the number of shares which may be subscribed for and
purchased hereunder from time to time after giving effect to all the provisions
hereof.
2. This Warrant may not be called or redeemed by the Company
without the express written consent of the Warrant Holder.
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<PAGE>
Q. Lost, Stolen, Mutilated or Destroyed Warrant. If this Warrant shall be
mutilated, lost, stolen or destroyed, the Company shall issue and deliver, in
exchange and substitution for and upon cancellation of the mutilated Warrant, or
in lieu of and substitution for the Warrant lost, stolen or destroyed, a new
Warrant of like tenor and representing an equivalent number of Warrant Shares,
but only upon receipt of evidence satisfactory to the Company in its reasonable
discretion (which, in the appropriate instance, may include a reasonable
certification) from the applicable Warrant Holder of such loss, theft or
destruction of such Warrant and, if requested, indemnity also satisfactory to it
in its reasonable discretion. Applicants for such substitute Warrant shall also
pay such reasonable charges as the Company may prescribe relating to issuance of
such new Warrant. Further, applicants for such substitute Warrant, other than
General Electric Capital Corporation, shall also comply with such other
reasonable assurances to protect the Company, including without limitation, a
request to provide an indemnity bond sufficient in the reasonable judgment of
the Company to protect it from and against any loss that it may suffer arising
out of or relating to the issuance of a replacement Warrant. Any such new
Warrant shall constitute an original contractual obligation of the Company,
whether or not the allegedly lost, stolen, mutilated or destroyed Warrant shall
be enforceable at any time by anyone.
R. Representations of Warrant Holder. The Warrant Holder, by the acceptance
hereof, represents that:
1. It is acquiring this Warrant for its own account for the
purpose of investment and not with a view to, or for sale in connection with,
any distribution thereof in violation of the Securities Act.
2. It understands that this Warrant at the time of issuance
will not be registered under the Securities Act on the ground that the sale
provided for in this Warrant and the issuance of securities hereunder is exempt
from registration under the Securities Act and that the Company's reliance on
such exemption is predicated in part on Warrant Holder's representations set
forth herein.
3. It has such knowledge and experience in financial and
business matters as to be capable of evaluating the merits and risks of Warrant
Holder's investment in the Warrant, Warrant Holder has the ability to bear the
economic risks of such investment, and Warrant Holder has no need for liquidity
with respect to this Warrant.
4. It understands that this Warrant may not be sold,
transferred, or otherwise disposed of without registration under the Securities
Act or an exemption therefrom, and that in the absence of an effective
registration statement covering this Warrant or an available exemption from
registration under the Securities Act, this Warrant may need to be held
indefinitely.
5. It represents that the Warrant Holder is an "accredited
investor" as that term is defined in Rule 501 promulgated by the Commission
pursuant to
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<PAGE>
the Securities Act.
6. It has obtained, in its judgment, sufficient information
from the Company to evaluate the merits and risks of an investment in this
Warrant.
S. Notice. All notices and other communications under this Warrant shall be (a)
in writing (which shall include communications by telex or other facsimile
transmission, promptly construed in writing), (b) sent by registered or
certified mail, postage prepaid, return receipt requested, or delivered by hand,
and (c) be given at the following respective addresses and telecopier and
telephone numbers and to the attention of the following Persons:
a. if to the Company, to it at:
5425 Robin Hood Road
Suite 101A
Norfolk, Virginia 23513
Attention: President
Telecopier No.:
Telephone No.: (757) 858-1400
with copies to:
John M. Paris, Esquire
Kaufman & Canoles
Post Office Box 3037
Norfolk, Virginia 23514
Telecopier No.: (757) 624-3169
Telephone No.: (757) 624-3181
b. if to the Warrant Holder, to him at:
Nicholas L. Calabrese, Esquire
Auto Financial Services
General Electric Capital Corporation
600 Hart Road
Battington, Illinois 60010
Telecopier No.: (847) 304-3444
Telephone No.: (847) 304-3374
with copies to:
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<PAGE>
William L. Pitman, Esquire
Williams, Mullen, Christian & Dobbins
Post Office Box 1320
Richmond, Virginia 23210-1320
Telecopier No.: (804) 783-6456
Telephone No.: (804) 783-6474
or at such other address, telecopier or telephone number or to the attention of
such other person as the party to which such information pertains may hereafter
specify for the purpose in a notice to the other party.
T. Judicial Proceedings. Any judicial proceeding brought against the Company
with respect to this Warrant may be brought in any court of competent
jurisdiction in the Commonwealth of Virginia, and, by execution and delivery of
this Warrant, the Company and the Warrant Holder (a) accept, generally and
unconditionally, the nonexclusive jurisdiction of such courts and any related
appellate courts, and (b) irrevocably waive any objection it may now or
hereafter have as to the venue of any such suit, action or proceedings brought
in such court or that such court is an inconvenient forum. Nothing herein shall
affect the right to serve process in any manner permitted by law or shall limit
the right of the Warrant Holder to bring proceedings against the Company in the
courts of any other jurisdiction.
U. Miscellaneous. This Warrant and any term hereof may be changed, waived,
discharged, or terminated only by an instrument in writing signed by the party
or holder hereof against which enforcement of such change, waiver, discharge or
termination is sought. The headings in this Warrant are for purposes of
reference only and shall not limit or otherwise affect the meaning hereof. This
Warrant shall be interpreted, construed and enforced in accordance with the laws
of the Commonwealth of Virginia, exclusive, however, of such Commonwealth's
rules respecting the choice of law.
V. Date. The date of this Warrant is as of December 20, 1996. This Warrant, in
all events, shall be wholly void and of no effect after the close of business on
the Expiration Date, except that notwithstanding any other provisions hereof,
the provisions of Section 15 shall continue in full force and effect after such
date as to any Warrant Shares issued on or prior to the Expiration Date upon the
exercise of this Warrant.
IN WITNESS WHEREOF, the Company has caused this Warrant to be executed
by its duly authorized officers and its corporate seal to be hereunto affixed as
of the 20th day of December, 1996.
40
<PAGE>
TFC ENTERPRISES, INC.
By: /s/ R. S. Raley, Jr.
----------------------------------
R. S. Raley, Jr., President and
Chief Executive Officer
ATTEST:
By: /s/ John M. Paris
--------------------------------
John M. Paris, Secretary
ACCEPTED AND AGREED:
By: /s/ W. Jerome McDermott
--------------------------------
W. Jerome McDermott,
Account Executive
41
<PAGE>
EXHIBIT A
SUBSCRIPTION FORM
TO BE EXECUTED BY THE REGISTERED HOLDER IF HE DESIRES
TO EXERCISE THIS WARRANT.
TFC ENTERPRISES, INC.
The undersigned hereby exercises the right to purchase _____ Warrant
Shares covered by this Warrant according to the conditions thereof and herewith
makes payment of $______________, the aggregate Warrant Exercise Price of such
Warrant Shares, in full.
Date: _________________, ____ ___________________________________
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<PAGE>
EXHIBIT B
address
Attention: President
RE: Exercise of Warrant, Dated as of December ___, 1996
Dear Sirs:
In connection with the undersigned's purchase of _____ shares of the
Common Stock of TFC Enterprises, Inc., upon exercise of the Warrant therefor
(the "Purchased Shares"), the undersigned confirms and agrees as follows:
1. As the purchaser of the Purchased Shares in a transaction not
registered under the Securities Act of 1933 (the "Act"), the undersigned is
purchasing such Purchased Shares for its own account for investment and (subject
to the disposition of its property being at all times within its control) not
with a view to any resale, distribution or other disposition thereof; and the
undersigned is proceeding on the assumption that it must bear the economic risk
of the investment for an indefinite period, since the Purchased Shares may not
be sold except as provided in paragraph 2 below.
2. The undersigned agrees that, if in the future the undersigned
should decide to dispose of such Purchased Shares (such disposition not being
presently foreseen or contemplated), the undersigned will not offer, sell,
transfer or exchange such Purchased Shares, except (a) pursuant to Section 15 of
the Warrant and (b) under the conditions that would not violate the Act.
3. The undersigned is purchasing such Purchased Shares pursuant to
an exemption from the registration requirements of the Act.
Date: _________________, 19__ _____________________________________
43
<PAGE>
EXHIBIT C
REGISTRATION RIGHTS AGREEMENT
[This Exhibit C has not been provided because the Registration Rights Agreement,
dated December 20, 1996, was superseded by that certain Amended and Restated
Registration Rights Agreement, dated April 4, 1997, a copy of which is attached
to this Statement as Exhibit 3.]
44
<PAGE>
EXHIBIT D
LIST OF OPTIONS AND RIGHTS TO ACQUIRE COMMON STOCK
TFC Enterprises, Inc.
Option Holder Number Price Term
of Shares
- ------------------------------------------ ------------------ -----------------
Charles M. Johnson 17,390 $11.50 5/9/95-12/31/99
14,632 $11.50 5/9/95-12/31/99
Joseph R. Becka 17,390 $11.50 5/9/95-12/31/99
153,590 $11.50 5/9/95-12/31/99
George R. Kouri 17,390 $11.50 5/9/95-12/31/99
193,986 $11.50 5/9/95-12/31/99
Preston K. Gregory 7,436 $11.50 5/9/95-12/31/99
14,632 $11.50 5/9/95-12/31/99
Ronald G. Tray 39,679 $11.50 5/9/95-12/31/99
David W. Karsten 100,000 $1.125 1/1/97-12/31/2006
Ronald G. Tray 50,000 $1.25 1/1/97-12/31/2006
Issued and Outstanding Shares - 11,290,308
45
<PAGE>
ALLONGE TO WARRANT TO
PURCHASE COMMON STOCK
This Allonge to Warrant to Purchase Common Stock (this "Allonge"), made
as of April 4, 1997, and delivered by TFC Enterprises, Inc., a Delaware
corporation (the "Company"), for the benefit of General Electric Capital
Corporation ("GECC") recites and provides as follows:
RECITALS:
A. THE Finance Company ("TFC"), a Virginia corporation and
subsidiary of the Company, and GECC entered into a certain Amended and Restated
Motor Vehicle Installment Contract Loan and Security Agreement, dated as of
December 20, 1996 (the "Loan Agreement") amending and restating the terms
governing the payment and performance of certain loans made by GECC to TFC.
B. As a condition of the Loan Agreement, the Company granted to
GECC the right to purchase from the Company 567,640 shares of common stock of
the Company, pursuant to a Warrant to Purchase Common Stock, dated as of
December 20, 1996 (the "First Warrant").
C. TFC is currently in default under the Loan Agreement and GECC
has agreed to restructure the loans thereunder; as a result, TFC and GECC
executed Amendment No. 1, dated as of the date hereof (the "Amendment"), in
order to set forth the amended terms to the Loan Agreement.
D. In connection with the Amendment, the Company is required to
grant a warrant to GECC for additional shares of the Company's common stock
pursuant to that certain Warrant (No. 2) to Purchase Common Stock, dated as of
the date hereof (the "Second Warrant").
E. GECC and the Company agreed that the terms of the First
Warrant should be the same as the terms of the Second Warrant, and thus, the
Company now desires to execute and deliver this Allonge to GECC to amend the
First Warrant.
AGREEMENT:
NOW, THEREFORE, for and in consideration of the foregoing, and other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Company certifies, covenants and agrees as follows:
1. The Company consents to the terms of this Allonge for the
benefit of GECC and ratifies, reaffirms and reconfirms its obligations under the
First Warrant, except to the extent that such obligations are amended by this
Allonge. The Company certifies that there has been no adjustment in the Warrant
Exercise Price or
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<PAGE>
the number of Warrant Shares (as both such terms are defined in the First
Warrant). This Allonge does not constitute a novation.
2. It is the intent of the Company and GECC that the exercise
price and the expiration date be amended effective as of the date hereof.
Therefore, the First Warrant is hereby amended by deleting the definitions of
"Expiration Date" and "Warrant Exercise Price" as set forth in Section 1 and
substituting in lieu thereof the following definitions of "Expiration Date" and
"Warrant Exercise Price":
"Expiration Date" means March 31, 2002.
"Warrant Exercise Price" shall initially be $1.00 per share
and shall be adjusted and readjusted from time to time as
provided in this Warrant.
3. Section 11 of the First Warrant is hereby deleted in its
entirety and a new Section 11 is substituted in lieu thereof as follows:
SECTION 11. Registration Rights. The initial holder
of this Warrant, and any assignee thereof, shall have the
registration rights with respect to the Warrant Shares set
forth in that certain Amended and Restated Registration Rights
Agreement, dated April 4, 1997, by and between the Company and
such initial holder, a copy of which is attached hereto as
Exhibit C.
4. Exhibit C to the First Warrant, containing the Registration
Rights Agreement between the Company and GECC, dated December 20, 1996, is
hereby deleted in its entirety and a new Exhibit C, as attached hereto,
containing the Amended and Restated Registration Rights Agreement between the
parties, dated as of the date hereof, shall be substituted in lieu thereof.
5. In all other respects, the terms of the First Warrant,
except as expressly modified hereby, are ratified and reaffirmed and shall
remain in full force and effect.
6. This Allonge shall be binding upon and inure to the benefit of
the Company and its successors and assigns, and shall be governed by the laws of
the Commonwealth of Virginia.
7. This Allonge may be executed in any number of counterparts,
each of which shall be an original and all of which together shall constitute
one and the same instrument.
IN WITNESS WHEREOF, the Company has caused this Allonge to be executed
by its duly authorized officers as of the date first written above.
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<PAGE>
TFC ENTERPRISES, INC.
By: /s/ R. S. Raley, Jr.
----------------------------------------
R. S. Raley, Jr., Chairman, President
and Chief Executive Officer
ATTEST:
s/s Ronald G. Tray
- ------------------------------------
Ronald G. Tray, Assistant Secretary
ACCEPTED AND AGREED:
GENERAL ELECTRIC CAPITAL CORPORATION
By: /s/ W. Jerome McDermott
- ------------------------------------
W. Jerome McDermott, Account
Executive
48
<PAGE>
Exhibit C
[The Amended and Restated Registration Rights Agreement, dated April 4, 1997 is
attached to this Statement as Exhibit 3.]
49
<PAGE>
Exhibit 2
THIS WARRANT MAY NOT BE SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF EXCEPT AS
SPECIFIED HEREIN. NEITHER THE RIGHTS REPRESENTED BY THIS WARRANT NOR THE SHARES
ISSUABLE UPON THE EXERCISE HEREOF HAVE BEEN REGISTERED FOR OFFER OR SALE UNDER
THE SECURITIES ACT OF 1933. SUCH RIGHTS AND SHARES MAY NOT BE SOLD OR OFFERED
FOR SALE IN WHOLE OR IN PART EXCEPT IN ACCORDANCE WITH THE APPLICABLE PROVISIONS
HEREOF.
TFC ENTERPRISES, INC.
WARRANT (NO. 2) TO PURCHASE COMMON STOCK
April 4, 1997
TFC ENTERPRISES, INC., a Delaware corporation, its successors or assigns (the
"Company"), hereby certifies that, for value received, GENERAL ELECTRIC CAPITAL
CORPORATION, a New York corporation, or its registered assigns (the "Warrant
Holder" or collectively the "Warrant Holders"), is entitled, subject to the
terms set forth below, to purchase from the Company upon surrender of this
Warrant, at any time or times on or after April 4, 1997 but not after 5:00 p.m.,
prevailing Eastern Standard or Daylight Time, on the Expiration Date (as such
term is hereinafter defined), 567,640 fully paid and nonassessable shares of
Common Stock (as such term is hereinafter defined) of the Company (as adjusted
from time to time as provided in this Warrant, the "Warrant Shares"), at a
purchase price per share equal to the Warrant Exercise Price (as such term is
hereinafter defined), in lawful money of the United States of America. The
Company represents and warrants, as of the date hereof, that (a) there are
11,290,308 shares of the Common Stock issued and outstanding and (b) Exhibit D
sets forth all options or other rights to acquire any shares of the Common
Stock.
DEFINITIONS
SECTION 1. (a) Definitions. The following words and terms as used in this
Warrant shall have the following meanings, unless the context in which any such
term is used herein clearly requires a different meaning:
"Affiliate" means, with respect to a Person, any other Person that, directly or
indirectly through one or more intermediaries, controls, or is controlled by, or
is under common control with, such first Person.
"Business Day," except as otherwise provided herein, means a day other than a
Saturday, a Sunday or a day on which banking institutions in the Commonwealth
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<PAGE>
of Virginia are authorized or obligated by law or required by executive order to
be closed.
"Common Stock" means all shares now or hereafter authorized of the Company's
Common Stock, $.01 par value per share, and stock of any other class into which
such shares may hereafter be changed.
"Convertible Securities" mean any securities issued by the Company which are
convertible into or exchangeable for, directly or indirectly, shares of Common
Stock.
"Expiration Date" means March 31, 2002.
"Market Price" means the average of the closing prices of Common Stock sales on
all domestic exchanges (including the NASDAQ National Market System) on which
the Common Stock may at the time be listed, or, if there shall have been no
sales on any such exchange on any day, the average of the reported bid prices on
all such exchanges at the end of such day, or, if on any day the Common Stock
shall not be so listed, the average of the representative bid prices quoted in
the NASDAQ System as of 3:30 P.M., Eastern Standard Time, or if on any day the
Common Stock shall not be quoted in the NASDAQ System, the average of the high
and low bid prices on such day in the domestic over-the-counter market as
reported by the National Quotation Bureau, Incorporated, or any similar
successor organization, in each such case averaged over a period of 30
consecutive Business Days (or such other period as shall be specified herein)
prior to the date as of which "Market Price" is being determined; provided, that
if the Common Stock is listed on any domestic exchange, the term "business days"
as used in this sentence shall mean business days on which such exchange is open
for trading. If at any time the Common Stock is not listed on any domestic
exchange or quoted in the NASDAQ System or the domestic over-the-counter market,
the "Market Price" shall be deemed to be the higher of (i) the book value per
share thereof, as determined by any firm of independent public accountants
(which may include the independent auditors engaged by the Company) of
recognized standing selected by the Board of Directors of the Company and
acceptable to the Warrant Holder in its reasonable discretion (the Warrant
Holder agreeing that the Company's current independent auditors and any other
"Big 6" accounting firms engaged by the Company will be acceptable), as of the
last day of which such determination shall have been made, or (ii) the fair
value per share thereof reasonably determined in good faith by the Board of
Directors of the Company as of the date which is within 15 days of the date as
of which the determination is to be made (in determining the fair value per
share thereof, the Board of Directors shall consider stock market valuations and
price to earnings ratios of comparable companies in similar industries).
"Person" means an individual or corporation, partnership, limited liability
company, trust, incorporated or unincorporated association, joint venture, joint
stock
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<PAGE>
company, government (or an agency or political subdivision thereof) or other
entity of any kind.
"Securities Act" means the Securities Act of 1933, as amended.
"Warrant Exercise Price" shall initially be $1.00 per share and shall be
adjusted and readjusted from time to time as provided in this Warrant.
"Warrant Share Holder" means any holder of the Warrant Shares.
(b) Other Definitional Provisions. Except as otherwise specified
herein:
a. all references herein (A) to any Person shall be
deemed to include such Person's successors and assigns, and (B) to any
applicable law defined or referred to herein, shall be deemed references to such
applicable law as the same may have been or may be amended or supplemented from
time to time.
b. Whenever used in this Warrant, the words "herein,"
"hereof" and "hereunder," and words of similar import, shall refer to this
Warrant as a whole and not to any provision of this Warrant, and the words
"Section" and "Exhibit" shall refer to Sections of, and Exhibits to, this
Warrant unless otherwise specified.
c. When the context so requires, the neuter gender
includes the masculine or feminine, and the singular number includes the plural,
and vice versa.
SECTION 2. Exercise of Warrant. The rights represented by this
Warrant may be exercised by the Warrant Holder then registered on the books of
the Company, in whole or from time to time in part (except that this Warrant
shall not be exercisable as to a fractional share) by
(i) delivery of a written notice, in the form of
the Subscription Notice attached as Exhibit A hereto, of such holder's election
to exercise this Warrant, which notice shall specify a number of Warrant Shares
to be purchased not less than 1,000 (as adjusted from time to time as provided
herein),
(ii) payment to the Company of an amount equal to
the Warrant Exercise Price multiplied by the number of Warrant Shares as to
which the Warrant is then being exercised (plus any applicable issue or transfer
taxes) in cash or by certified or official bank check,
(iii) surrender of this Warrant, properly endorsed,
at the principal office of the Company in Norfolk, Virginia, as set forth in
Section 19 hereof (or at such other agency or office of the Company as the
Company may designate by notice to the holder hereof), and
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(iv) if the Warrant Shares issuable upon the
exercise of the rights represented by this Warrant have not been registered
under the Securities Act, delivery to the Company by such holder of a letter in
the form of Exhibit B hereto;
provided, that if such Warrant Shares are to be issued in any name other than
that of the registered holder of this Warrant, such issuance shall be deemed a
transfer and the provisions of Section 15 hereof shall be applicable. In the
event of any exercise of the rights represented by this Warrant, a certificate
or certificates for the Warrant Shares so purchased, registered in the name
directed by the holder, shall be delivered as directed by the holder within a
reasonable time, not exceeding 15 Business Days, after such exercise. Unless the
rights represented by this Warrant shall have expired or have been fully
exercised, the Company shall issue a new Warrant identical in all respects to
the Warrant exercised except it shall represent rights to purchase the number of
Warrant Shares purchasable immediately prior to such exercise under the Warrant
exercised, less the number of Warrant Shares with respect to which such Warrant
was exercised. The person in whose name any certificate for Warrant Shares is
issued upon the exercise of this Warrant shall for all purposes be deemed to
have become the holder of record of such Warrant Shares immediately prior to the
close of business on the date on which the Warrant was surrendered and payment
of the amount due in respect of such exercise and any applicable taxes was made,
irrespective of the date of delivery of such share certificate, except that, if
the date of such surrender and payment is a date when the stock transfer books
of the Company are properly closed, such person shall be deemed to have become
the holder of such Warrant Shares at the opening of business on the next
succeeding date on which the stock transfer books are open.
SECTION 3. Covenants as to Common Stock. The Company covenants and
agrees that:
(a) All Warrant Shares which may be issued upon the
exercise of the rights represented by this Warrant will, upon issuance, be
validly issued, fully paid and nonassessable;
(b) During the period within which the rights represented
by this Warrant may be exercised, the Company will at all times have authorized
and reserved a sufficient number of shares of Common Stock, free of preemptive
rights, to provide for the exercise of the rights then represented by this
Warrant, and that the par value of such shares will at all times be less than
the applicable Warrant Exercise Price. Before taking any action that would cause
an adjustment reducing the Warrant Exercise Price below the then par value, if
any, of the shares of Common Stock issuable upon exercise of this Warrant, the
Company will take any corporate action that may be necessary in order that the
Company may validly and legally issue fully paid and non-assessable shares of
such Common Stock at such adjusted Warrant Exercise Price; and
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(c) If any shares of Common Stock reserved or to be
reserved to provide for the exercise of the rights then represented by this
Warrant require registration with or approval of any governmental authority
under any federal law (other than the Securities Act) or under any state law
before such shares may be validly issued, then the Company covenants that it
will in good faith and as expeditiously as possible endeavor to secure such
registration or approval, as the case may be.
SECTION 4. Adjustment of Warrant Exercise Price Upon Stock Splits,
Dividends, Distributions and Combinations; Adjustment of Number of Warrant
Shares.
(a) In case the Company shall subdivide at any time its
outstanding shares of Common Stock into a greater number of shares or issue a
stock dividend or make a distribution with respect to outstanding shares of
Common Stock or Convertible Securities, payable in Common Stock or in
Convertible Securities which are convertible with no additional consideration,
the Warrant Exercise Price in effect immediately prior to such subdivision or
stock dividend or distribution shall be proportionately reduced (treating for
such purpose any such shares of Convertible Securities outstanding or payable as
being the number of shares of Common Stock issuable upon their conversion); and,
conversely, in the case that the outstanding shares of Common Stock of the
Company shall be combined into a smaller number of shares, the Warrant Exercise
Price in effect immediately prior to such combination shall be proportionately
increased.
(b) Upon each adjustment of the Warrant Exercise Price as
provided in this Section 4, the Warrant Holder shall thereafter be entitled to
purchase, at the Warrant Exercise Price resulting from such adjustment, the
number of shares of Common Stock obtained by multiplying the Warrant Exercise
Price in effect immediately prior to such adjustment by the number of shares of
Common Stock purchasable pursuant hereto immediately prior to such adjustment,
and dividing the product thereof by the Warrant Exercise Price after such
adjustment.
SECTION 5. Adjustment of Warrant Exercise Price Upon Certain Issuances
or Sales of Common Stock.
(a) Whenever the Company shall issue, sell or otherwise
distribute any shares of its Common Stock (except as provided for in Section 6)
and the amount of consideration per share is less than the Market Price in
effect immediately prior to the time of such issuance or sale, then, forthwith
upon such issue or sale, and thereafter successively upon each such issue, the
Warrant Exercise Price shall be reduced to the amount determined by multiplying
the Warrant Exercise Price in effect immediately prior to the time of such issue
or sale by a fraction, whose numerator shall be (i) the sum of (x) the number of
shares of
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Common Stock outstanding immediately prior to such issue or sale multiplied by
the current Market Price immediately prior to such issue or sale, and (y) the
consideration received by the Company upon such issue or sale, and whose
denominator shall be (ii) the total number of shares of Common Stock outstanding
immediately after such issue or sale multiplied by the current Market Price
immediately prior to such issue or sale.
(b) For the purposes of this Section 5, the following
clauses (i) to (v), inclusive, shall also be applicable:
(i) in case at any time the Company shall in any
manner grant any rights to subscribe for any rights or options to purchase any
shares of Common Stock or any Convertible Securities, whether or not such rights
or options or the rights to convert or exchange any such Convertible Securities
are immediately exercisable, and the purchase price per share for which Common
Stock is issuable upon the exercise of such rights or options or upon conversion
or exchange of such rights or options or upon conversion or exchange of such
Convertible Securities (determined by dividing (x) the total amount, if any,
received or receivable by the Company as consideration for the granting of all
such rights or options, plus the minimum aggregate amount of additional
consideration payable to the Company upon the exercise of all such rights or
options, plus, in the case of such Convertible Securities, the average aggregate
amount of additional consideration, if any, payable upon the conversion or
exchange thereof, by (y) the maximum aggregate number of shares of Common Stock
issuable upon the exercise of such rights or options or upon the conversion or
exchange of all such Convertible Securities issuable upon the exercise of such
rights or options) shall be less than the Market Price in effect immediately
prior to the time of the granting of such rights or options, then the maximum
aggregate number of shares of Common Stock issuable upon the exercise of such
rights or options or upon conversion or exchange of the total maximum amount of
such Convertible Securities issuable upon the exercise of such rights or options
shall be deemed (as of the date of granting of such rights or options) to be
outstanding and to have been issued for such price per share. No further
adjustments of the Warrant Exercise Price shall be made upon the actual issue of
such Common Stock or of such Convertible Securities upon exercise of such rights
or options or upon the actual issue of such Common Stock upon conversion or
exchange of such Convertible Securities, except as otherwise provided in clause
(iii) below;
(ii) in case at any time the Company shall issue
or sell in any manner any Convertible Securities, whether or not the rights to
exchange or convert thereunder are immediately exercisable, and the purchase
price per share for which Common Stock is issuable upon such conversion or
exchange (determined by dividing (x) the total amount received or receivable by
the Company as consideration for the issue or sale of all such Convertible
Securities, plus the minimum aggregate amount of additional consideration, if
any, payable to the Company upon the conversion or exchange thereof, by (y) the
maximum
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aggregate number of shares of Common Stock issuable upon the conversion or
exchange of all such Convertible Securities) shall be less than the Market Price
in effect immediately prior to the time of such issue or sale, then the maximum
aggregate number of shares of Common Stock issuable upon conversion or exchange
of all such Convertible Securities shall be deemed (as of the date of the issue
or sale of such Convertible Securities) to be outstanding and to have been
issued for such price per share, provided that, except as otherwise specified in
clause (iii) below, (a) no further adjustment of the Warrant Exercise Price
shall be made upon the actual issue of such Common Stock upon conversion or
exchange of such Convertible Securities, and (b) if any such issue or sale of
such Convertible Securities is made upon exercise of any rights to subscribe for
or to purchase or upon exercise of any option to purchase any such Convertible
Securities for which adjustments of the Warrant Exercise Price have been or are
to be made pursuant to other provisions of this Section 5, no further adjustment
of the Warrant Exercise Price shall be made by reason of such issue or sale;
(iii) if the purchase price or number of shares
purchasable provided for in any right or option referred to in clause (i) above,
or the rate at which any Convertible Securities referred to in clause (i) or
(ii) above are convertible into or exchangeable for Common Stock, shall change
at any time (other than under, or by reason of, similar provisions contained in
such securities designed to protect against dilution for which provision for
adjustments in the Warrant Exercise Price are provided for in this Warrant), the
Warrant Exercise Price then in effect hereunder shall forthwith be readjusted to
such Warrant Exercise Price as would have obtained had the adjustments made upon
the issuance of such rights, options or Convertible Securities been made upon
the basis of the changed terms; and on the expiration of any such option or
right referred to in clause (i) above or the termination of any such right to
convert or exchange such Convertible Securities referred to in clause (i) or
(ii) above, the Warrant Exercise Price then in effect hereunder shall forthwith
be readjusted to such Warrant Exercise Price as would have obtained had the
adjustments made upon the issuance of such rights or options or Convertible
Securities have been made upon the basis of the issuance of only the number of
shares of Common Stock, if any, theretofore actually delivered upon the exercise
of such rights or options or upon the conversion or exchange of such Convertible
Securities;
(iv) the cash consideration received for any
shares of Common Stock or Convertible Securities or any rights or options to
purchase any such Common Stock or Convertible Securities issued or sold shall be
deemed to be the amount received therefor, before deduction therefrom of any
expenses incurred or any underwriting commissions or concessions paid or allowed
in connection therewith; in case any shares of Common Stock or Convertible
Securities or any rights or options to purchase any such Common Stock or
Convertible Securities shall be issued or sold for a consideration other than
cash, the amount of the consideration other than cash (including any non-cash
consideration received in respect of any acquisition by the Company of
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substantially all of the stock or assets of another entity) received by the
Company for such shares shall be deemed to be the value of such consideration as
determined reasonably and in good faith by the Board of Directors of the
Company; and
(iv) the number of shares of Common Stock
outstanding at any given time shall not include such shares owned or held by or
for the account of the Company; but the transfer from the Company of any such
shares so owned or held shall be considered to be an issue or sale of Common
Stock for the purposes of this Section 5.
(c) If the Company shall distribute to all holders of its
Common Stock evidence of its indebtedness or assets, then in each such case the
Warrant Exercise Price in effect immediately prior to such distribution shall be
adjusted so that the same shall equal the price determined by multiplying the
Warrant Exercise Price in effect immediately prior to the date of such
distribution by a fraction whose numerator shall be the Market Price per share
of Common Stock on the effective date of distribution less the then fair market
value per share (as reasonably determined by the Board of Directors of the
Company) of the assets or evidences of indebtedness so distributed and whose
denominator shall be such Market Price per share of the Common Stock. Such
adjustment shall be made whenever any such distribution is made and shall be
retroactively effective as of immediately after the record date for the
determination of stockholders entitled to receive such distribution.
(d) If the Company shall take a record of the holders of
its Common Stock for the purpose of entitling them (x) to receive a dividend or
other distribution of Common Stock, or (y) to receive rights or options to
subscribe for Common Stock or Convertible Securities, then, for purposes of this
Warrant, such record date shall be deemed to be the date of the issue or sale of
the shares of Common Stock deemed to have been issued or sold upon the
declaration of such dividend or the making of such other distribution or the
date of the granting of such right or option of subscription or purchase.
(e) Upon each adjustment of the Warrant Exercise Price as
provided in this Section 5, the Warrant Holder shall thereafter be entitled to
purchase, at the Warrant Exercise Price resulting from such adjustment, the
number of shares of Common Stock obtained by multiplying the Warrant Exercise
Price in effect immediately prior to such adjustment by the number of shares of
Common Stock purchasable pursuant hereto immediately prior to such adjustment,
and dividing the product thereof by the Warrant Exercise Price after such
adjustment.
SECTION 6. Reorganization, Reclassification, Etc. In case of any
capital reorganization, or of any reclassification of the capital stock, of the
Company (other than a change in par value or from a par value to no par value or
from no par value to a par value or as a result of a split-up or combination) or
in case of
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the consolidation or merger of the Company with or into any other corporation
(other than a consolidation or merger in which the Company is the continuing
corporation and which does not result in the Common Stock being changed into, or
exchanged for, stock or other securities or property of any other Person), or
the sale of all or substantially all of the assets of the Company to another
corporation shall be effected, or a share exchange shall be effected by the
Company with another corporation or Person, or the liquidation of the Company,
or any other event similar to any of the foregoing events (any of the foregoing,
a "Reorganization Event"), then, this Warrant, upon exercise after such
Reorganization Event, shall entitle the Warrant Holder to purchase the kind and
number of shares of stock or other securities or property of the Company, or of
the Person resulting from such Reorganization Event, to which the Warrant Holder
would have been entitled if he had exercised the Warrant in full immediately
prior to such Reorganization Event; and upon any Reorganization Event,
appropriate provision shall be made with respect to the rights and interests of
the Warrant Holder to the end that the provisions hereof (including, without
limitation, provisions for the term of the Warrant, adjustment of the Warrant
Exercise Price and of the number of shares purchasable upon the exercise of this
Warrant) shall be applicable thereafter, as nearly as may be in relation to any
shares of stock, securities or assets thereafter deliverable upon the exercise
of the rights represented hereby. The Company shall not effect any
Reorganization Event unless prior to, or simultaneously with, the consummation
thereof the successor Person (if other than the Company) resulting from such
Reorganization Event shall assume by written instrument executed and mailed or
delivered to the Warrant Holder at the address of such holder appearing on the
books of the Company, the obligation to deliver to such holder such shares of
stock, securities or assets as, in accordance with the foregoing provisions,
such holder may be entitled to purchase.
SECTION 7. Notice of Adjustment of Warrant Exercise Price and Number
of Warrant Shares. Upon any adjustment of the Warrant Exercise Price or the
number of Warrant Shares purchasable hereunder, the Company shall notify the
Warrant Holder of the Warrant Exercise Price and number of Warrant Shares in
effect after such adjustment, setting forth in reasonable detail the method of
calculation and the facts upon which such calculation is based.
SECTION 8. Computation of Adjustments. Upon each computation of an
adjustment in the Warrant Exercise Price and the number of shares which may be
subscribed for and purchased upon exercise of this Warrant, the Warrant Exercise
Price shall be computed to the nearest cent (i.e., fractions of .5 of a cent, or
greater, shall be rounded to the next highest cent) and the number of shares
which may be subscribed for and purchased upon exercise of this Warrant shall be
calculated to the nearest whole share (i.e., fractions of one half of a share,
or greater, shall be treated as being a whole share). No such adjustment shall
be made, however, if the change in the Warrant Exercise Price would be less than
$.01 per share, but any such lesser adjustment shall be made at the time and
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together with the next subsequent adjustment which, together with any
adjustments carried forward, shall amount to $.01 per share or more.
SECTION 9. Notice of Certain Events. In case at any time:
(a) the Company shall declare any dividend or
distribution in respect of its Common Stock payable in Common Stock or
Convertible Securities;
(b) the Company shall offer for subscription pro rata
exclusively to the holders of its Common Stock any additional shares of stock of
any class or other rights;
(c) there shall be any capital reorganization, or
reclassification of the capital stock, of the Company, or consolidation or
merger of the Company with, or sale of all or substantially all of its assets
to, another Person; or
(d) there shall be a voluntary or involuntary
dissolution, liquidation or winding-up of the Company;
then, in any one or more of the above-referenced cases, the Company shall give
to the Warrant Holder (i) at least twenty (20) days' prior written notice of the
date on which the books of the Company shall close or a record shall be taken
for such dividend, distribution, or subscription rights or for determining
rights to vote in respect of any such reorganization, reclassification,
consolidation, merger, sale, dissolution, liquidation or winding up, and (ii) in
the case of any such reorganization, reclassification, consolidation, merger,
sale, dissolution, liquidation or winding up, at least twenty (20) days' prior
written notice of the date when the same shall take place. Such notice in
accordance with the foregoing clause (i) shall also specify, in the case of such
dividend, distribution or subscription rights, the date on which holders of
capital stock shall be entitled thereto, and such notice in accordance with the
foregoing clause (ii) shall also specify the date on which the holders of
capital stock shall be entitled to exchange their capital stock for securities
or other property deliverable upon such reorganization, reclassification,
consolidation, merger, sale, dissolution, liquidation or winding up, as the case
may be.
SECTION 10. No Change in Warrant Terms on Adjustment. Irrespective of
any adjustment in the Warrant Exercise Price or the number of shares of Common
Stock issuable upon exercise hereof, this Warrant, whether theretofore or
thereafter issued or reissued, may continue to express the same price and number
of shares as are stated herein, and the Warrant Exercise Price and such number
of shares specified herein shall be deemed to have been so adjusted.
SECTION 11. Registration Rights. The initial holder of this Warrant,
and any assignee thereof, shall have the registration rights with respect to the
Warrant Shares set forth in that certain Amended and Restated Registration
Rights
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Agreement of even date herewith by and between the Company and such initial
holder, a copy of which is attached hereto as Exhibit C.
SECTION 12. Taxes. The Company shall not be required to pay any tax or
taxes attributable to the initial issuance of the Warrant Shares or any transfer
taxes involved in the issue or delivery of any certificates for Warrant Shares
in a name other than that of the initial Warrant Holder or upon any transfer of
this Warrant.
SECTION 13. Warrant Holder Not Deemed a Shareholder; Information;
Rights Offerings.
(a) No Warrant Holder, as such, shall be entitled to vote
or receive dividends or be deemed the holder of shares of the Company for any
purpose, nor shall anything contained in this Warrant be construed to confer
upon a Warrant Holder, as such, any of the rights of a shareholder of the
Company or any right to vote, give or withhold consent to any corporate action,
or receive dividends prior to the issuance of record to a Warrant Holder of the
Warrant Shares to which he is then entitled to receive upon the due exercise of
this Warrant.
(b) Notwithstanding anything to the contrary contained
herein (i) so long as this Warrant or any portion hereof is outstanding, a
Warrant Holder shall be entitled to receive from the Company copies of all
annual financial statements generated by the Company, including but not limited
to the annual audited financial statements of the Company, and any and all other
notices and information provided, or required by applicable law or regulation to
be provided, by the Company to its shareholders generally, and (ii) if the
Company should offer to all of the Company's shareholders the exclusive right to
purchase any securities of the Company, then all shares of Common Stock that are
subject to this Warrant shall be deemed to be outstanding and owned by the
Warrant Holder solely for the purposes thereof, and the Warrant Holder shall be
entitled to participate in such rights offering.
(c) No provision hereof, in the absence of affirmative
action by the Warrant Holder to purchase shares of Common Stock, and no mere
enumeration herein of the rights or privileges of the Warrant Holder, shall give
rise to any liability of such Warrant Holder for the purchase price of any
Warrant Shares or as a shareholder of the Company, whether such liability is
asserted by the Company or otherwise.
SECTION 14. Preemptive Rights. The Company shall not grant any
preemptive rights with respect to any of its capital stock without the prior
written consent of the Warrant Holder.
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SECTION 15. Transfer; Opinions of Counsel; Restrictive Legends.
(a) This Warrant and any Warrant Shares shall be
registered on the books of the Company, and a copy of it shall be kept by the
Company at its principal office set forth in Section 19 hereof.
(b) Subject to the provisions of this Section 15, this
Warrant may be transferred, in whole or in part, to any Person or business
entity, by presentation of this Warrant to the Company at the office of the
Company set forth in Section 19 hereof, with written instructions for such
transfer. Upon such presentation for transfer, the Company shall promptly
execute and deliver a new Warrant or Warrants in the form hereof in the name of
the assignee or assignees and in the denominations specified in such
instructions.
(c) The Company shall pay all expenses incurred by it
(but not those incurred by the Warrant Holder or Warrant Share Holder, as
applicable) in connection with the preparation, issuance and delivery of
Warrants or the Warrant Shares under this Section 15.
(d) Prior to any sale, transfer or other disposition of
this Warrant or the Warrant Shares, as the case may be, the Warrant Holder or
Warrant Share Holder, as applicable, will give ten (10) Business Days' notice to
the Company of such Warrant Holder's or Warrant Share Holder's intention to
effect such transfer. Each such notice shall describe the manner and
circumstances of the proposed transfer and, absent registration under the
Securities Act of the securities relating to such proposed transfer, shall be
accompanied by an opinion, addressed to the Company and reasonably satisfactory
in form and substance to it, of counsel experienced in such matters for such
Warrant Holder or Warrant Share Holder, stating whether, in the opinion of such
counsel, such transfer will be a transaction exempt from registration under the
Securities Act.
(e) If such sale, transfer or other disposition is
subject to registration under the Securities Act, or may in the reasonable
opinion of such counsel be effected without registration under the Securities
Act, such Warrant Holder or Warrant Share Holder shall thereupon be entitled to
transfer this Warrant or the Warrant Shares, as the case my be, in accordance
with the terms of the notice delivered by such Warrant Holder or Warrant Share
Holder to the Company. In the absence of such registration under the Securities
Act, if in the opinion of such counsel such transfer may not be effected without
registration under the Securities Act, such Warrant Holder or Warrant Share
Holder shall not be entitled to so transfer this Warrant or the Warrant Shares,
as the case may be, until such time as the foregoing conditions to transfer are
fulfilled.
(f) Subject to the provisions of this Section 15, the
Warrant Holder may at any time transfer this Warrant or the Warrant Shares, as
the case may be, to an Affiliate of the Warrant Holder.
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(g) Each certificate for Warrant Shares initially issued
upon exercise of this Warrant, unless at the time of exercise such Warrant
Shares are registered under the Securities Act, shall bear the following legend
(and any additional legend or legends required by any securities exchange upon
which such Warrant Shares may, at the time of such exercise, be listed) on the
face thereof:
The shares of stock represented by this certificate have not
been registered under the Securities Act of 1933, as amended, or under
the securities laws of any state. The shares may not be sold,
transferred, pledged or hypothecated in the absence of an effective
registration statement under the Securities Act of 1933, as amended,
and such registration or qualification as may be necessary under the
securities laws of any state, or an opinion of counsel reasonably
satisfactory to the Company that such registration or qualification is
not required.
The shares of stock represented by this certificate are held
subject to the conditions as set forth in a certain Warrant to Purchase
Common Stock dated April 4, 1997, pursuant to which such shares were
initially issued. A copy of such Warrant to Purchase Common Stock is on
file at the principal office of the Company.
SECTION 16. Exchange of Warrant; No Redemption.
(a) This Warrant is divisible into warrants of smaller
denominations or fractional warrants, and may be exchanged upon the surrender
hereof, accompanied by written instructions with respect to such exchange, by
the Warrant Holder at the office of the Company set forth in Section 19 hereof
for new Warrants of like provisions representing in the aggregate the right to
subscribe for and purchase the number of shares which may be subscribed for and
purchased hereunder from time to time after giving effect to all the provisions
hereof.
(b) This Warrant may not be called or redeemed by the
Company without the express written consent of the Warrant Holder.
SECTION 17. Lost, Stolen, Mutilated or Destroyed Warrant. If this
Warrant shall be mutilated, lost, stolen or destroyed, the Company shall issue
and deliver, in exchange and substitution for and upon cancellation of the
mutilated Warrant, or in lieu of and substitution for the Warrant lost, stolen
or destroyed, a new Warrant of like tenor and representing an equivalent number
of Warrant Shares, but only upon receipt of evidence satisfactory to the Company
in its reasonable discretion (which, in the appropriate instance, may include a
reasonable certification) from the applicable Warrant Holder of such loss, theft
or destruction of such Warrant and, if requested, indemnity also satisfactory to
it in its reasonable discretion. Applicants for such substitute Warrant shall
also pay such reasonable charges as the Company may prescribe relating to
issuance of such
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new Warrant. Further, applicants for such substitute Warrant, other than General
Electric Capital Corporation, shall also comply with such other reasonable
assurances to protect the Company, including without limitation, a request to
provide an indemnity bond sufficient in the reasonable judgment of the Company
to protect it from and against any loss that it may suffer arising out of or
relating to the issuance of a replacement Warrant. Any such new Warrant shall
constitute an original contractual obligation of the Company, whether or not the
allegedly lost, stolen, mutilated or destroyed Warrant shall be enforceable at
any time by anyone.
SECTION 18. Representations of Warrant Holder. The Warrant Holder,
by the acceptance hereof, represents that:
(a) It is acquiring this Warrant for its own account for
the purpose of investment and not with a view to, or for sale in connection
with, any distribution thereof in violation of the Securities Act.
(b) It understands that this Warrant at the time of
issuance will not be registered under the Securities Act on the ground that the
sale provided for in this Warrant and the issuance of securities hereunder is
exempt from registration under the Securities Act and that the Company's
reliance on such exemption is predicated in part on Warrant Holder's
representations set forth herein.
(c) It has such knowledge and experience in financial
and business matters as to be capable of evaluating the merits and risks of
Warrant Holder's investment in the Warrant, Warrant Holder has the ability to
bear the economic risks of such investment, and Warrant Holder has no need for
liquidity with respect to this Warrant.
(d) It understands that this Warrant may not be sold,
transferred, or otherwise disposed of without registration under the Securities
Act or an exemption therefrom, and that in the absence of an effective
registration statement covering this Warrant or an available exemption from
registration under the Securities Act, this Warrant may need to be held
indefinitely.
(e) It represents that the Warrant Holder is an
"accredited investor" as that term is defined in Rule 501 promulgated by the
Commission pursuant to the Securities Act.
(f) It has obtained, in its judgment, sufficient
information from the Company to evaluate the merits and risks of an investment
in this Warrant.
SECTION 19. Notice. All notices and other communications under this
Warrant shall be (a) in writing (which shall include communications by telex or
other facsimile transmission, promptly construed in writing), (b) sent by
registered or certified mail, postage prepaid, return receipt requested, or
delivered by hand, and (c) be given at the following respective addresses and
telecopier and
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telephone numbers and to the attention of the following Persons:
(a) if to the Company, to it at:
5425 Robin Hood Road
Suite 101A
Norfolk, Virginia 23513
Attention: President
Facsimile No.: (757) 858-4073
Telephone No.: (757) 858-1400
with copies to:
John M. Paris, Esquire
Kaufman & Canoles
Post Office Box 3037
Norfolk, Virginia 23514
Facsimile No.: (757) 624-3169
Telephone No.: (757) 624-3181
(b) if to the Warrant Holder, to him at:
Nicholas L. Calabrese, Esquire
Auto Financial Services
General Electric Capital Corporation
600 Hart Road
Barrington, Illinois 60010
Facsimile No.: (847) 304-3444
Telephone No.: (847) 304-3374
with copies to:
William L. Pitman, Esquire
Williams, Mullen, Christian & Dobbins
Post Office Box 1320
Richmond, Virginia 23210-1320
Facsimile No.: (804) 783-6456
Telephone No.: (804) 783-6474
or at such other address, telecopier or telephone number or to the attention of
such other person as the party to which such information pertains may hereafter
specify for the purpose in a notice to the other party.
SECTION 20. Judicial Proceedings. Any judicial proceeding brought
against the Company with respect to this Warrant may be brought in any court of
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competent jurisdiction in the Commonwealth of Virginia, and, by execution and
delivery of this Warrant, the Company and the Warrant Holder (a) accept,
generally and unconditionally, the nonexclusive jurisdiction of such courts and
any related appellate courts, and (b) irrevocably waive any objection it may now
or hereafter have as to the venue of any such suit, action or proceedings
brought in such court or that such court is an inconvenient forum. Nothing
herein shall affect the right to serve process in any manner permitted by law or
shall limit the right of the Warrant Holder to bring proceedings against the
Company in the courts of any other jurisdiction.
SECTION 21. Miscellaneous. This Warrant and any term hereof may be
changed, waived, discharged, or terminated only by an instrument in writing
signed by the party or holder hereof against which enforcement of such change,
waiver, discharge or termination is sought. The headings in this Warrant are for
purposes of reference only and shall not limit or otherwise affect the meaning
hereof. This Warrant shall be interpreted, construed and enforced in accordance
with the laws of the Commonwealth of Virginia, exclusive, however, of such
Commonwealth's rules respecting the choice of law.
SECTION 22. Date. The date of this Warrant is as of April 4, 1997. This
Warrant, in all events, shall be wholly void and of no effect after the close of
business on the Expiration Date, except that notwithstanding any other
provisions hereof, the provisions of Section 15 shall continue in full force and
effect after such date as to any Warrant Shares issued on or prior to the
Expiration Date upon the exercise of this Warrant.
[ Intentionally left blank ]
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IN WITNESS WHEREOF, the Company has caused this Warrant to be executed
by its duly authorized officers and its corporate seal to be hereunto affixed as
of the 4th day of April, 1996.
TFC ENTERPRISES, INC.
By: /s/ R. S. Raley, Jr.
-----------------------------------------
R. S. Raley, Jr., Chairman, President
and Chief Executive Officer
ATTEST:
By: /s/ Ronald G. Tray
---------------------------------
Ronald G. Tray, Assistant
Secretary
ACCEPTED AND AGREED:
GENERAL ELECTRIC CAPITAL CORPORATION
By: /s/ W. Jerome McDermott
---------------------------------
W. Jerome McDermott, Account
Executive
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EXHIBIT A
WARRANT (NO. 2)
SUBSCRIPTION FORM
TO BE EXECUTED BY THE REGISTERED HOLDER IF HE DESIRES
TO EXERCISE THIS WARRANT.
TFC ENTERPRISES, INC.
The undersigned hereby exercises the right to purchase _____ Warrant
Shares covered by this Warrant according to the conditions thereof and herewith
makes payment of $______________, the aggregate Warrant Exercise Price of such
Warrant Shares, in full.
_________________________________________
DATE:____________________________________
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EXHIBIT B
Address:
_______________________________
_______________________________
Attention: President
RE: Exercise of Warrant (No. 2), Dated as of April ____, 1997
Dear Sirs:
In connection with the undersigned's purchase of _____ shares of the
Common Stock of TFC Enterprises, Inc., upon exercise of the Warrant therefor
(the "Purchased Shares"), the undersigned confirms and agrees as follows:
1. As the purchaser of the Purchased Shares in a transaction
not registered under the Securities Act of 1933 (the "Act"), the undersigned is
purchasing such Purchased Shares for its own account for investment and (subject
to the disposition of its property being at all times within its control) not
with a view to any resale, distribution or other disposition thereof; and the
undersigned is proceeding on the assumption that it must bear the economic risk
of the investment for an indefinite period, since the Purchased Shares may not
be sold except as provided in paragraph 2 below.
2. The undersigned agrees that, if in the future the undersigned
should decide to dispose of such Purchased Shares (such disposition not being
presently foreseen or contemplated), the undersigned will not offer, sell,
transfer or exchange such Purchased Shares, except (a) pursuant to Section 15 of
the Warrant and (b) under the conditions that would not violate the Act.
3. The undersigned is purchasing such Purchased Shares pursuant to
an exemption from the registration requirements of the Act.
_________________________________________
DATE:____________________________________
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EXHIBIT C
AMENDED AND RESTATED
REGISTRATION RIGHTS AGREEMENT
[The Amended and Restated Registration Rights Agreement, dated April 4, 1997, is
attached to this Statement as Exhibit 3.]
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EXHIBIT D
LIST OF OPTIONS AND RIGHTS TO ACQUIRE COMMON STOCK
TFC Enterprises, Inc.
<TABLE>
<CAPTION>
Option Holder Number Price Term
of Shares
- -------------------------------------- ---------------------- ------------------ ------------------------------------
<S> <C> <C> <C>
Charles M. Johnson 17,390 $11.50 5/9/95-12/31/99
14,632 $11.50 5/9/95-12/31/99
Joseph R. Becka 17,390 $11.50 5/9/95-12/31/99
153,590 $11.50 5/9/95-12/31/99
George R. Kouri 17,390 $11.50 5/9/95-12/31/99
193,986 $11.50 5/9/95-12/31/99
Preston K. Gregory 7,436 $11.50 5/9/95-12/31/99
14,632 $11.50 5/9/95-12/31/99
Ronald G. Tray 39,679 $11.50 5/9/95-12/31/99
David W. Karsten 100,000 $1.125 1/1/97-12/31/2006
Ronald G. Tray 50,000 $1.25 1/1/97-12/31/2006
Robert S. Raley, Jr. 200,000 $1.44 1/1/97 - 12/31/2006
*General Electric Capital Corporation 567,640 $1.00 12/20/96-3/31/2002
</TABLE>
* The Warrant granted to General Electric Capital Corporation on December 20,
1996, for 567,640 Warrant Shares was amended by that certain Allonge, dated as
of the date of this Agreement, to reduce the Exercise Price from $2.00 to $1.00
per share and to change the Expiration Date of the Warrant from 12/31/2000 to
3/31/2002.
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Exhibit 3
AMENDED AND RESTATED
REGISTRATION RIGHTS AGREEMENT
THIS AMENDED AND RESTATED REGISTRATION RIGHTS AGREEMENT (the
"Agreement"), dated as of April 4, 1997, is made between TFC ENTERPRISES, INC.,
a Delaware corporation (the "Company") and GENERAL ELECTRIC CAPITAL CORPORATION,
a New York corporation ("GECC") and amends and restates that certain
Registration Rights Agreement, dated as of December 20, 1996 between the Company
and GECC and does not constitute a novation.
RECITALS:
A. THE Finance Company ("TFC"), a Virginia corporation and
subsidiary of the Company, entered into a certain Amended and Restated Motor
Vehicle Installment Contract Loan and Security Agreement, dated as of December
20, 1996 (the "Loan Agreement"), whereby, among other things, GECC agreed to
make loans to TFC pursuant to the terms thereof, and which agreement is
guaranteed by the Company.
B. As consideration for GECC entering into the Loan Agreement,
the Company issued to GECC a certain Warrant to Purchase Common Stock, dated
December 20, 1996, (including any divisions thereof, the "First Warrant"),
whereby GECC was granted rights to purchase shares of the Common Stock (as
hereinafter defined) of the Company. The Company also entered into a
Registration Rights Agreement with GECC, dated December 20, 1996 (the "Original
Registration Rights Agreement") in order to provide certain registration rights
to GECC in order to facilitate the distribution of such shares of Common Stock
purchasable under the First Warrant.
C. TFC is currently in default under the Loan Agreement and GECC
has agreed to restructure the loans under the Loan Agreement and to pay off
another creditor of the Company, namely, Nationsbank, N.A. (the "Loan
Restructure"). In connection with the Loan Restructure, TFC and GECC executed
Amendment No. 1, dated as of the date hereof (the "Amendment," and together with
the Loan Agreement, the "Amended Loan Agreement"), in order to set forth the
terms and conditions of the Loan Restructure.
D. As consideration for GECC entering into the Amendment, the
Company is required to issue to GECC a warrant for additional shares of Common
Stock of the Company, pursuant to that certain Warrant (No. 2) to Purchase
Common Stock, dated as of the date hereof (including any divisions thereof, the
"Second Warrant").
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E. As further consideration for GECC entering into the Amendment,
the Company is required to grant GECC registration rights with respect to the
Common Stock purchasable under the Second Warrant. It is the desire of the
Company and GECC to amend and restate the Original Registration Rights Agreement
to provide for registration rights with respect to the Common Stock purchasable
under both the First Warrant and the Second Warrant. For the purposes of this
Agreement, the First Warrant and the Second Warrant, together, shall be referred
to as the "Warrant."
AGREEMENT
NOW, THEREFORE, in consideration of the mutual covenants and agreements
set forth herein, in the Loan Agreement and in the Warrant, the Company and GECC
hereby agree as follows:
ARTICLE I
DEFINITIONS
1.1 Defined Terms. For purposes of this Agreement, the following
terms have the following meanings:
(a) "Affiliate" and "Associate" shall have the respective
meanings ascribed to such terms in Rule 12b-2 under the Exchange Act as in
effect on the date of this Agreement.
(b) "Blue Sky Filing" shall mean a filing made in connection
with the registration or qualification of the GECC Shares under a particular
state's or similar jurisdiction's securities or blue sky laws.
(c) "Business Day" shall mean a day on which the principal
offices of the SEC in Washington, D.C. are open to accept filings, or in the
case of determining a date on which any payment is due, a day other than a
Saturday, Sunday or a day on which banking institutions in the Commonwealth of
Virginia are authorized or obligated by law or required by executive order to be
closed.
(d) "Common Stock" shall mean all shares now or hereafter
authorized of the Company's Common Stock, $.01 par value per share, and stock of
any other class into which such shares may hereafter be changed.
(e) "Counsel to the Holders" shall mean the single law firm
from time to time representing the Holders, as appointed by the Holders of a
majority in number of the GECC Shares.
(f) "Effective Date" shall mean the date on which the
Registration Statement provided in Section 2.2 is initially declared effective
by the SEC.
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(g) "Effective Period" shall have the meaning set forth in
Section 2.2(b) hereof.
(h) "Exchange Act" shall mean the Securities Exchange Act of
1934, as amended.
(i) "GECC Shares" shall mean collectively (i) the Warrant
Shares and (ii) the Warrant, if applicable pursuant to Section 2.1(b).
Securities shall cease to be GECC Shares (and therefore cease to be entitled to
the benefits of this Agreement) in accordance with Section 2.1(a).
(j) "Holder" shall mean, collectively, (i) GECC and (ii) any
successor holder of GECC Shares pursuant to Section 5.3.
(k) "Inspectors" shall have the meaning set forth in Section
2.4(k) hereof.
(l) "NASD" shall mean the National Association of Securities
Dealers, Inc.
(m) "NASDAQ" shall mean the NASDAQ Stock Market.
(n) "Person" shall have the meaning set forth in Section
3(a)(9) of the Exchange Act as in effect on the date of this Agreement.
(o) "Prospectus" shall mean the prospectus included in any
Registration Statement (including a prospectus that discloses information
previously omitted from a prospectus filed as part of an effective registration
statement in reliance upon Rule 430A under the Securities Act), as amended or
supplemented by any prospectus supplement, with respect to the terms of the
offering of any portion of the GECC Shares covered by such Registration
Statement and all other amendments and supplements to such prospectus, including
post-effective amendments, and all material incorporated by reference or deemed
to be incorporated by reference in any such prospectus.
(p) "Records" shall have the meaning set forth in Section
2.4(k) hereof.
(q) "Registration Expenses" shall mean any and all
out-of-pocket expenses incident to the Company's performance of or compliance
with this Agreement, including, without limitation, (i) all registration and
filing fees with the SEC, NASD and NASDAQ, or any other exchange or automated
interdealer quotation system as then applicable, (ii) all fees and expenses of
complying with state securities or blue sky laws, (iii) all printing, messenger
and delivery expenses, (iv) all fees and expenses incurred in connection with
the listing of the
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GECC Shares on NASDAQ, or any other exchange or automated interdealer quotation
system as then applicable, (v) the fees and disbursements of the Company's
counsel and of its independent public accountants, (vi) the reasonable fees and
expenses of any special experts retained by the Company in connection with the
requested registration, (vii) one-half of the reasonable fees and expenses of
Counsel to the Holders, and (viii) out-of-pocket expenses of underwriters, if
any, paid by the issuer to the extent provided for in any underwriting
agreement. Registration Expenses shall not include (x) any fees or disbursements
of counsel to the Holders (other than Counsel to the Holders) and (y)
underwriting discounts and commissions, and transfer taxes, if any, relating to
the sale or disposition of the GECC Shares.
(r) "Registration Statement" shall mean one or more
registration statements of the Company under the Securities Act that cover any
portion of the GECC Shares pursuant to the terms of this Agreement, including
the related Prospectus, all amendments and supplements to such registration
statement, including pre-and post-effective amendments, all exhibits thereto and
all material incorporated by reference or deemed to be incorporated by reference
in any such registration statement.
(s) "SEC" shall mean the Securities and Exchange Commission.
(t) "Securities Act" shall mean the Securities Act of 1933,
as amended.
(u) "Warrant Shares" shall mean the 1,135,280 shares of
Common Stock purchasable by the Holders under the Warrant, as adjusted from time
to time as provided therein, and including but not limited to, any securities
paid, issued or distributed in respect of any shares of Common Stock by way of
stock dividend or distribution or stock split or in connection with a
combination of shares, recapitalization, reorganization, merger, consolidation
or otherwise.
1.2 Other Definitional Provisions. Except as otherwise specified
herein:
(a) All references herein (i) to any Person shall be deemed
to include such Person's successors and assigns, and (ii) to any applicable law
defined or referred to herein, shall be deemed references to such applicable
laws as same may have been or may be amended or supplemented from time to time.
(b) Whenever used in this Agreement, the words "herein,"
"hereof" and "hereunder," and words of similar import, shall refer to this
Agreement as a whole and not to any provision of this Agreement, and the words
"Section" and "Exhibit" shall refer to Sections of, and Exhibits to, this
Agreement unless otherwise specified.
(c) When the context so requires, the neuter gender includes
the
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masculine or feminine, and the singular number includes the plural, and vice
versa.
ARTICLE II
REGISTRATION OF SECURITIES
2.1 Securities Subject to this Agreement.
(a) The securities entitled to the benefits of this Agreement
are the Warrant Shares and the Warrant (subject to Section 2.1(b)). For the
purposes of this Agreement, any such securities will no longer be subject to
this Agreement and no longer deemed "GECC Shares" when and to the extent that
(i) a Registration Statement covering such securities has been declared
effective under the Securities Act and such securities have been disposed of
pursuant to such effective Registration Statement, (ii) such securities are sold
or otherwise transferred pursuant to Rule 144 under the Securities Act, (iii)
such securities shall have been otherwise transferred or disposed of, new
certificates therefor not bearing a legend restricting further transfer shall
have been delivered by the Company and, at such time, subsequent transfer or
disposition of such securities shall not require registration or qualification
of such securities under the Securities Act or any similar state law then in
force, or (iv) such securities have ceased to be outstanding following the
issuance thereof.
(b) Section 2.1(a) notwithstanding, the Warrant shall be
entitled to the benefits of this Agreement and deemed to be a "GECC Share" only
to the extent necessary to provide the benefits hereunder (including
registration) with respect to the Warrant Shares.
2.2 Registration Requirements.
(a) The Company shall: (i) on or prior to September 5, 1997,
file a Registration Statement with respect to the GECC Shares with the SEC; and
(ii) use its best efforts to cause such Registration Statement to be declared
effective by the SEC.
(b) The Company shall use its best efforts to maintain the
effectiveness of any registration relating to the GECC Shares pursuant to
Section 2.2(a), and the listing of any such Warrant Shares on NASDAQ or any
exchange or automated interdealer quotation system on which the Common Stock is
then listed or quoted, for the period from the Effective Date to and including
March 31, 2002, subject to extension as provided in Sections 2.2(c), 2.4(e) and
2.4(l) (the "Effective Period").
(c) For each Holdback Period required by the Company under
Article III of this Agreement, the Effective Period specified in Section 2.2(b)
above
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shall be extended for the number of Business Days of the relevant Holdback
Period.
(d) The obligations of the Company under this Section 2.2 are
in addition to, and independent of, the Company's obligation to provide
piggy-back registration rights under Section 2.3. In no event shall a
registration of GECC Shares, or the offer by the Company of such registration,
pursuant to this Section 2.2 be deemed to preclude, be in substitution for, or
otherwise relieve the Company of its obligations under, Section 2.3, or vice
versa.
2.3 Piggy-Back Registration Rights.
(a) Whenever prior to the Effective Date, the Company shall
propose to file a registration statement under the Securities Act relating to
the public offering by or through one or more underwriters of Common Stock for
the Company's own account (other than pursuant to a registration statement on
Form S-4 or Form S-8 or any successor forms, or filed in connection with an
exchange offer or an offering of securities solely to existing stockholders or
employees of the Company) and on a form and in a manner that would permit
registration of GECC Shares for sale to the public under the Securities Act, the
Company shall (i) give written notice at least 20 Business Days prior to the
filing thereof to each Holder, specifying the approximate date on which the
Company proposes to file such registration statement and advising such Holder of
its right to have any or all of the GECC Shares then held by it included among
the securities to be covered thereby and (ii) at the written request of any such
Holder given to the Company within 15 days after such Holder's receipt of
written notice from the Company, include among the securities covered by such
registration statement the number of GECC Shares which such Holder (a
"Requesting Holder") shall have requested be so included (subject, however, to
reduction in accordance with Section 2.3(b) below).
(b) If the lead managing underwriter selected by the Company
for an underwritten offering pursuant to Section 2.3(a) determines that
marketing factors require a limitation on the number of shares of GECC Shares to
be offered and sold by Requesting Holders in such offering, there shall be
included in the offering only that number of GECC Shares, if any, that such lead
managing underwriter reasonably and in good faith believes will not jeopardize
the success and pricing of the offering of all the shares of Common Stock that
the Company desires to sell for its own account. In such event and provided the
lead managing underwriter has so notified the Company in writing, the shares of
Common Stock to be included in such offering shall consist of (i) first, the
securities the Company proposes to sell, and (ii) second, the number, if any, of
GECC Shares requested to be included in such registration that, in the opinion
of such lead managing underwriter, can be sold without jeopardizing the success
of the offering of all the securities that the Company desires to sell for its
own account. If the Requesting Holders of GECC Shares shall number greater than
one, then such amount set
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forth in (ii) above shall be allocated on a pro rata basis among such Requesting
Holders based on the number of GECC Shares that each such Requesting Holder has
requested to be so included.
(c) Nothing in this Section 2.3 shall create any liability on
the part of the Company to the Holders if the Company for any reason should
decide not to file a registration statement proposed to be filed under Section
2.3(a) or to withdraw such registration statement subsequent to its filing,
regardless of any action whatsoever that a Holder may have taken, whether as a
result of the issuance by the Company of any notice hereunder or otherwise.
(d) Each Holder of GECC Shares to be included in any
underwritten offering pursuant to Section 2.3(a) above shall be a party to the
underwriting agreement between the Company and such underwriters and the
representations and warranties by, and the other agreements on the part of, the
Company to and for the benefit of such underwriters shall also be made to and
for the benefit of such Holders and the conditions precedent to the obligations
of such Holders under such underwriting agreement shall be satisfactory to the
Holders of a majority in number of the GECC Shares being so sold.
(e) Any such Holder shall not be required to make any
representations or warranties to the Company or its underwriters other than
representations or warranties regarding such Holder, title to its securities and
such Holder's intended method of distribution, but shall agree to the
indemnities and rights to contribution to the effect and to the extent provided
in Article IV hereof.
(f) The Company may also require that the GECC Shares
requested for inclusion pursuant to this Section 2.3 be included in the offering
on the same financial terms (to the extent feasible and applicable) as the
securities otherwise being sold through the underwriters.
(g) Subject to Sections 2.3(d), (e), and (f), no Holder may
participate in any underwritten offering pursuant to this Section 2.3 unless
such Holder completes and executes all questionnaires, powers of attorney,
custody agreements, indemnities, underwriting agreements and other documents
reasonably required under the terms of such underwriting arrangement.
2.4 Registration Procedures. If and whenever the Company is
required to use its best efforts to effect or cause the registration of any GECC
Shares under the Securities Act as provided in this Agreement, the Company will:
(a) prepare and file with the SEC one or more Registration
Statements covering the GECC Shares on any form or forms for which the Company
then qualifies or that counsel for the Company shall deem appropriate, and which
form shall be available for the sale of the GECC Shares in accordance with the
intended methods of distribution thereof, and use its best efforts to cause such
Registration Statement to become effective;
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(b) prepare and promptly file with the SEC pre- and
post-effective amendments to any such Registration Statement and such amendments
and supplements to the Prospectus used in connection therewith as may be
necessary to maintain the effectiveness of such registration or as may be
required by the rules, regulations or instructions applicable to the
registration form utilized by the Company or by the Securities Act or rules and
regulations thereunder necessary to keep such Registration Statement effective
(i) in the case of the registration required by Section 2.2, during the
Effective Period and (ii) in the case of a piggy-back registration under Section
2.3, for up to 90 days, and cause the Prospectus as so supplemented to be filed
pursuant to Rule 424 under the Securities Act, and to otherwise comply with the
provisions of the Securities Act with respect to the disposition of the GECC
Shares covered by such Registration Statement;
(c) furnish to each Holder such number of copies of any
Registration Statement and each pre- and post-effective amendment thereto, any
Prospectus or Prospectus supplement and such other documents as such Holder may
reasonably request in order to facilitate the disposition of the GECC Shares by
such Holder (the Company hereby consenting to the use (subject to the limitation
set forth in the last paragraph of this Section 2.4) of the Prospectus or any
amendment or supplement thereto in connection with such disposition);
(d) use its best efforts to register or qualify the GECC
Shares under such other securities or blue sky laws of such jurisdictions as any
Holders may reasonably request, and do any and all other acts and things that
may be reasonably necessary or advisable to enable such Holders to consummate
the disposition in such jurisdictions of the GECC Shares, except that the
Company shall not for any such purpose be required to qualify generally to do
business as a foreign corporation in any jurisdiction where, but for the
requirements of this Section 2.4(d), it would not be obligated to be so
qualified, to subject itself to taxation in any such jurisdiction, or to consent
to general service of process in any such jurisdiction;
(e) notify each Holder at any time when a Prospectus is
required to be delivered under the Securities Act while the GECC Shares are
subject to this Agreement, of the Company's becoming aware that a Prospectus
included in a Registration Statement, as then in effect, includes an untrue
statement of a material fact or omits to state a material fact required to be
stated therein or necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading (the period during
which Holders are required to refrain from effecting public sales or
distributions in such case being referred to as a "Section 2.4(e) Period"), and
prepare and furnish to each Holder a reasonable number of copies of an amendment
to such Registration Statement or related Prospectus as may be necessary so
that, as thereafter delivered to the purchasers of such GECC Shares, such
Prospectus shall not include an untrue statement of a material fact or omit to
state a material fact required to be stated
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therein or necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading, and the time during
which such Registration Statement shall remain effective pursuant to Section 2.2
shall be extended by the number of Business Days of the Section 2.4(e) Period;
provided, however, that the time required to make effective any post-effective
amendments required to be filed by the Company to (i) comply with Section
10(a)(3) of the Securities Act or (ii) reflect any facts or events arising after
the Effective Date, which, individually or in the aggregate, represent a
material fundamental change in the information set forth in the Registration
Statement shall not be included within the Section 2.4(e) Period.
(f) notify each Holder,
(i) when the Prospectus or any Prospectus
supplement or pre- or post-effective amendment has been filed, and, with respect
to the Registration Statement or any post-effective amendment, when the same has
become effective;
(ii) of any request by the SEC for amendments or
supplements to any Registration Statement or Prospectus or for additional
information;
(iii) of the issuance by the SEC of any stop order
of which the Company or its counsel is aware or should be aware suspending the
effectiveness of any Registration Statement or any order preventing the use of a
related Prospectus, or the initiation or any threats of any proceedings for such
purposes; and
(iv) of the receipt by the Company of any written
notification of the suspension of the registration or qualification of any of
the GECC Shares for sale in any jurisdiction or the initiation or any threats of
any proceeding for that purpose;
(g) otherwise use its best efforts to comply with all
applicable rules and regulations of the SEC, and make available to its
shareholders, as soon as reasonably practicable, an earnings statement that
shall satisfy the provisions of Section 11(a) of the Securities Act, provided
that the Company shall be deemed to have complied with this paragraph if it has
complied with Rule 158 under the Securities Act;
(h) use its best efforts to cause all such GECC Shares to be
listed on any securities exchange or automated quotation system on which the
Common Stock has been listed, if such GECC Shares are not already so listed and
if listing is then permitted under the rules of such exchange or automated
quotation system, and to provide a transfer agent and registrar for the GECC
Shares covered by any Registration Statement no later than the effective date of
such Registration
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Statement;
(i) cooperate with the Holders to facilitate the timely
preparation and delivery of certificates (not bearing any restrictive legends)
representing the securities to be sold under any Registration Statement, and
enable such securities to be in such denominations and registered in such names
as such Holders may request;
(j) if a Holder reasonably requests in connection with any
underwritten offering pursuant to Section 2.3, incorporate in a Prospectus
supplement or post-effective amendment such information as the managing
underwriters and the Holders of a majority in number of the GECC Shares being
sold agree should be included therein relating to the plan of distribution with
respect to such GECC Shares, including, without limitation, information with
respect to the principal amount of GECC Shares being sold to underwriters, the
purchase price being paid therefor by such underwriters and with respect to any
other terms of the underwritten offering of the GECC Shares to be sold in such
offering and make all required filings of such Prospectus supplement or
post-effective amendment as promptly as practicable upon being notified of the
matters to be incorporated in such Prospectus supplement or post-effective
amendment;
(k) provide any Holder and any attorney, accountant or other
agent retained by any such Holder (collectively, the "Inspectors") with
reasonable access during normal business hours to appropriate officers of the
Company and its subsidiaries to ask questions and to obtain information that any
such Inspector reasonably requests and make available for inspection all
financial and other records and other information, pertinent corporate documents
and properties of any of the Company and its subsidiaries and affiliates
(collectively, the "Records"), as shall be reasonably necessary to enable them
to exercise their due diligence responsibility; provided, however, that the
Records that the Company determines, in good faith, to be confidential and that
it notifies the Inspectors in writing are confidential shall not be disclosed to
any Inspector unless such Inspector signs or is otherwise bound by a
confidentiality agreement reasonably satisfactory to the Company. The Company
will furnish to each Holder at least five Business Days prior to the filing
thereof, a copy of any Registration Statement or any amendment or supplement
thereto that reflects new revised information concerning one or more of the
Holders, and shall not file any such Registration Statement, amendment or
supplement to which any Holder shall have reasonably objected on the grounds
that such Registration Statement, amendment or supplement does not comply in all
material respects with the requirements of the Securities Act or the rules and
regulations thereunder;
(l) in the event of the issuance of any stop order of which
the Company or its counsel is aware or should be aware suspending the
effectiveness of the Registration Statement or of any order suspending or
preventing the use of
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any related Prospectus or suspending the registration or qualification of any
GECC Shares for sale in any jurisdiction, the Company will use its best efforts
promptly to obtain its withdrawal, and the Effective Period for which the
Registration Statement under Section 2.2 shall be kept effective shall be
extended by the number of Business Days equal to the number of Business Days
between the issuance and withdrawal of any stop orders (a "Section 2.4(l)
Period"); and
(m) in any Registration Statement under Section 2.2, provide
with respect to the plan of distribution that a Holder may offer and sell his
GECC Shares by one or more of the following methods: (i) ordinary brokerage
transactions by one or more brokers acting as agent for the Holder, at a price
or prices related to the then current market price of the Common Stock, with
such commissions to be paid by the Holder to the broker as shall be agreed upon
by them, (ii) purchases by a broker or dealer as principal and resale by such
broker or dealer for its own account at a price or prices related to the then
current market price of the Common Stock, less such discount, if any, as shall
be agreed upon by the Holder and such broker or dealer, (iii) by a combination
of the methods described in (i) and (ii) above, (iv) privately negotiated
transactions at such prices as may be agreed upon, and (v) sales made pursuant
to Rule 144 under the Securities Act, where applicable.
Each Holder shall furnish to the Company in writing such information
regarding it and pertinent to the disclosure requirements relating to the
registration and the distribution of the GECC Shares as the Company may
reasonably request from time to time. Each Holder agrees to notify the Company
as promptly as practicable of any inaccuracy or change in information previously
furnished by it to the Company or of the happening of any event in either case
as a result of which a Registration Statement, a Prospectus, or any amendment or
supplement thereto contains an untrue statement of a material fact regarding it
or omits to state any material fact regarding it required to be stated therein
or necessary to make the statements therein not misleading and to furnish
promptly to the Company any additional information required to correct and
update any previously furnished information or required so that such
Registration Statement, Prospectus, or amendment or supplement, shall not
contain, with respect to such Holder, an untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary to make
the statements therein not misleading.
Each Holder agrees that, upon receipt of any notice from the Company of
the happening of any event of the kind described in Sections 2.4(e) or 2.4(l)
above, it will forthwith discontinue disposition of any GECC Shares pursuant to
the Prospectus or Registration Statement covering such GECC Shares until such
Holder's receipt of the copies of the amended or supplemented Prospectus
contemplated by Section 2.4(e) or the withdrawal of any stop order contemplated
by Section 2.3(l), and, if so directed by the Company, such Holder will deliver
to the Company all copies, other than permanent file copies then in such
Holder's possession, of the Prospectus covering such GECC Shares at the time of
receipt of
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such notice.
2.5 Registration Expenses. The Company will pay all
Registration Expenses in connection with all registrations of GECC Shares
hereunder, and each Holder shall pay (x) any fees and disbursements of counsel
to such Holder (other than Counsel to the Holders), (y) one-half of the
reasonable fees and expenses of Counsel to the Holders and (z) all underwriting
discounts and commissions and transfer taxes, if any, relating to the sale or
disposition of its respective GECC Shares.
2.6 Reports Under the Exchange Act. The Company agrees to:
(a) file with the SEC in a timely manner all reports and
other documents required of the Company under the Exchange Act; and
(b) furnish to any Holder, during the Effective Period,
forthwith upon request (i) a written statement of the Company that it has
complied with the current public information reporting requirements of Rule 144
under the Securities Act and the Exchange Act and (ii) a copy of the most recent
annual or quarterly report of the Company and such other reports and documents
so filed by the Company with the SEC under the Exchange Act.
ARTICLE III
HOLDBACK PERIOD
If one or more underwritten public offerings of shares of Common Stock
(other than the Warrant Shares) occur during the Effective Period, then, in
connection with each such public offering, the Company may require the Holders
and their respective Associates and Affiliates to refrain from, and each Holder
and its Associates and Affiliates will refrain from, selling any of the Warrant
Shares for a period determined by the Company but not to exceed one-hundred
twenty (120) days (each such period referred to as a "Holdback Period") so long
as the Company delivers written notice to such Holder of the Company's
requirement of a Holdback Period, and the length of such Holdback Period, no
less than five (5) Business Days prior to the inception of the Holdback Period;
provided, that the Company may so require each Holder to refrain from selling
any of the Warrant Shares during no more than two such Holdback Periods during
the Effective Period.
ARTICLE IV
INDEMNIFICATION; CONTRIBUTION
4.1 Indemnification by the Company. The Company will, and hereby
does indemnify and hold harmless, to the fullest extent permitted by law, and,
subject to Section 4.3 below, defend each Holder, its officers, directors,
agents, trustees,
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stockholders and each other Person, if any, who controls Holder (within the
meaning of the Securities Act), against any and all losses, claims, damages,
liabilities and expenses, joint or several, to which they or any of them may
become subject under the Securities Act or any other statute or common law,
including any amount paid in settlement of any litigation, commenced or
threatened, and to reimburse them for any reasonable legal or other expenses
incurred by them in connection with investigating any claims and defending any
actions, insofar as any such losses, claims, damages, liabilities, expenses or
actions arise out of or are based upon (i) any untrue statement or alleged
untrue statement of a material fact contained in the Registration Statement or
any pre- or post-effective amendment thereto or in any Blue Sky Filing, or the
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading or
(ii) any untrue statement or alleged untrue statement of a material fact
contained in the Prospectus, or the omission or alleged omission to state
therein a material fact necessary in order to make the statements therein, in
the light of the circumstances under which they were made, not misleading
(unless such statement is corrected and the Company has furnished copies of such
corrected Prospectus to such Holder under Section 2.4(e) above); provided,
however, that the indemnification agreement contained herein shall not (i) apply
to such losses, claims, damages, liabilities, expenses or actions arising out
of, or based upon, any such untrue statement or alleged untrue statement, or any
such omission or alleged omission, if such statement or omission was made in
reliance upon and in conformity with written information furnished to the
Company by such indemnified party from time to time specifically for use in
connection with preparation of the Registration Statement, the Prospectus, any
such amendment or supplement thereto or any Blue Sky Filing or (ii) inure to the
benefit of any Person, to the extent that any such loss, claim, damage or
expense arises out of such Person's failure to send or give a copy of the
Prospectus, as the same may be then supplemented or amended, to the Person
asserting an untrue statement or alleged untrue statement, or omission or
alleged omission, at or prior to the written confirmation of the sale of the
GECC Shares to such Person if such statement or omission was corrected in the
Prospectus. Such indemnity shall remain in full force and effect regardless of
any investigation made by or on behalf of a Holder or controlling Person and
shall survive the transfer of such securities by a Holder.
4.2 Indemnification by the Holders. Each Holder will, and hereby
does, indemnify and hold harmless and, subject to Section 4.3 below, defend (in
the same manner and to the same extent as set forth in Section 4.1 above) the
Company, its officers, directors, agents, trustees, stockholders and each other
Person, if any, who controls the Company (within the meaning of the Securities
Act), with respect to any such untrue statement or alleged untrue statement in,
or any such omission or alleged omission from, any Registration Statement, any
Prospectus, or any amendment or supplement thereto, if such statement or
omission was made in reliance upon and in conformity with written information
furnished to the Company by such Holder from time to time specifically for use
in connection with preparation of the Registration Statement, the Prospectus,
and any such amendment or supplement thereto. Such indemnity shall remain in
full force and effect, regardless of any investigation made by
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or on behalf of the Company or such other indemnified Person and shall survive
the transfer of such securities by a Holder.
4.3 Notices of Claims. Promptly after receipt by an indemnified
party of notice of the commencement of any action or proceeding involving a
claim referred to in Sections 4.1 and 4.2 above, such indemnified party will
give, if a claim in respect thereof is to be made against an indemnifying party,
written notice to the latter of the commencement of such action, provided that
the failure of any indemnified party to give notice as provided herein shall not
relieve the indemnifying party of its obligations under this Article IV, except
to the extent that the indemnifying party is actually prejudiced in any material
respect by such failure to give notice. In case any such action is brought
against an indemnified party, the indemnifying party shall be entitled to
participate in and, unless in such indemnified party's reasonable judgment a
material conflict of interest between such indemnified and indemnifying parties
exists in respect of such claim, to assume the defense thereof, jointly with any
other indemnifying party similarly notified to the extent that it may wish, with
counsel chosen by the indemnifying party who is reasonably satisfactory to such
indemnified party, and after notice from the indemnifying party to such
indemnified party of its election so to assume the defense thereof, the
indemnifying party shall not be liable to such indemnified party for any legal
or other expenses subsequently incurred by the latter in connection with the
defense thereof other than reasonable costs of reasonable investigation. If the
indemnifying party advises an indemnified party that it will contest a claim for
indemnification hereunder, or fails, within thirty (30) days of receipt of any
written indemnification notice to notify, in writing, such Person of its
election to defend, settle or compromise, at its sole cost and expense, any
action, proceeding or claim (or discontinues its defense at any time after it
commences such defense), then the indemnified party may, at its option, defend,
settle or otherwise compromise or pay such action or claim. In any event, unless
and until the indemnifying party elects in writing to assume and does so assume
the defense of any such claim, proceeding or action, the indemnified party's
reasonable costs and expenses arising out of the defense, settlement or
compromise of any such action, claim or proceeding shall be losses subject to
indemnification hereunder. The indemnified party shall cooperate fully with the
indemnifying party in connection with any negotiation or defense of any such
action or claim by the indemnifying party and shall furnish to the indemnifying
party all information reasonably available to the indemnified party that relates
to such action or claim. The indemnifying party shall keep the indemnified party
fully informed at all times as to the status of the defense or any settlement
negotiations with respect thereto. If the indemnifying party elects to defend
any such action or claim, then the indemnified party shall be entitled to
participate in such defense with counsel of its choice at its sole cost and
expense, except that the indemnifying party shall be liable for such reasonable
costs and expenses if, in such indemnified party's reasonable judgment, a
material conflict of interest between such indemnified and indemnifying parties
may exist as described above. If the indemnifying party does not assume such
defense, the indemnified party shall keep the indemnifying party informed at all
times as to the status of the defense; provided, however, that the failure to
keep the indemnifying party so informed shall
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not affect the obligations of the indemnifying party hereunder. No indemnifying
party shall be liable for any settlement of any action, claim or proceeding
effected without its written consent; provided, however, that the indemnifying
party shall not unreasonably withhold, delay or condition its consent. No
indemnifying party shall, without the consent of the indemnified party, consent
to entry of any judgment or enter into any settlement that does not include as
an unconditional term thereof the giving by the claimant or plaintiff to such
indemnified party of a release from all liability with respect to such claim or
litigation.
4.4 Indemnification Payments. The indemnification required by
this Article IV shall be made by periodic payments of the amount thereof during
the course of the investigation or defense as and when bills are received or
expense, loss, damage or liability is incurred, subject to the receipt of such
documentary support therefor as the indemnifying party may reasonably request.
4.5 Contribution. If the indemnification provided for in this
Article IV is unavailable to or insufficient to hold harmless an indemnified
party otherwise entitled to be indemnified thereunder in respect to any losses,
claims, damages and expenses (or actions or proceedings, whether commenced or
threatened, in respect thereof) referred to therein, then the indemnifying
party, in lieu of indemnifying such indemnified party, shall contribute to the
amount paid or payable by such indemnified party as a result of such losses,
claims, damages, liabilities, expenses or actions in such proportion as is
appropriate to reflect the relative fault of the indemnifying party and the
indemnified party in connection with the statements or omissions that resulted
in such losses, claims, damages, liabilities, expenses or actions; provided,
however, that the liability of each Holder hereunder shall be limited to the
proportion of any such loss, claim, damage, liability or expense that is equal
to the proportion that the net proceeds from the sale of securities sold by each
Holder under such Registration Statement bears to the total net proceeds from
the sale of all securities sold thereunder, but not in any event to exceed the
net proceeds received by such Holder from the sale of GECC Shares covered by
such Registration Statement. The relative fault of the indemnifying party and
the indemnified party shall be determined by reference to whether the untrue
statement or alleged untrue statement of a material fact or the omission or
alleged omission to state a material fact relates to information supplied by the
indemnifying party or the indemnified party and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission. The Company and each Holder agree that it would not be
just and equitable if contributions pursuant to this Section 4.5 were determined
by pro rata allocation or by any other method of allocation that does not take
account of the equitable considerations referred to above in this Section 4.5.
No person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Securities Act) shall be entitled to contribution from any person
who is not guilty of such fraudulent misrepresentation.
4.6 Other Rights and Liabilities. The indemnity and contribution
agreements contained herein shall be in addition to (i) any cause of action or
similar right of the
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indemnified party against the indemnifying party or others and (ii) any
liabilities the indemnifying party may be subject to pursuant to the law.
ARTICLE V
MISCELLANEOUS
5.1 Notices, Etc. All notices, requests, demands or other
communications required by or otherwise with respect to this Agreement shall be
in writing and shall be deemed to have been duly given to any party when
delivered personally (by courier service or otherwise), when delivered by
facsimile and confirmed by return facsimile, or seven (7) days after being
mailed by first-class mail, postage prepaid in each case to the applicable
addresses set forth below:
(a) if to the Company, to it at:
5425 Robin Hood Road
Suite 101A
Norfolk, Virginia 23513
Attention: President
Facsimile No.: (757) 858-4093
Telephone No.: (757) 858-1400
with copies to:
John M. Paris, Esquire
Kaufman & Canoles
Post Office Box 3037
Norfolk, Virginia 23514
Facsimile No.: (757) 624-3169
Telephone No.: (757) 624-3181
(b) if to GECC, to it at:
Nicholas L. Calabrese, Esquire
Auto Financial Services
General Electric Capital Corporation
600 Hart Road
Barrington, Illinois 60010
Facsimile No.: (847) 304-3444
Telephone No.: (847) 304-3374
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with copies to:
William L. Pitman, Esquire
Williams, Mullen, Christian & Dobbins
Post Office Box 1320
Richmond, Virginia 23210-1320
Facsimile No.: (804) 783-6456
Telephone No.: (804) 783-6474
or to such other address as such party shall have designated by notice so given
to each other party.
5.2 Amendments, Waivers, Etc. This Agreement may not be amended,
changed, supplemented, waived or otherwise modified or terminated except by an
instrument in writing signed by the Company and Holders of at least a majority
in number of the GECC Shares then outstanding.
5.3 Successors and Assigns. This Agreement shall inure to the
benefit of and be binding upon the parties hereto, any Holder other than GECC,
and any successors thereof; provided, however, that any prospective Holder which
is not a party to this Agreement shall have agreed in writing to become a Holder
under this Agreement and to be bound by the terms and conditions hereof. In the
absence of compliance with the foregoing sentence of this Section 5.3, any such
purported assignment shall be null and void.
5.4 Entire Agreement. This Agreement embodies the entire
agreement and understanding among the parties relating to the subject matter
hereof and supersedes all prior agreements and understandings relating to such
subject matter. There are no representations, warranties or covenants by the
parties hereto relating to such subject matter other than those expressly set
forth in this Agreement, the Loan Agreement and the Warrant.
5.5 Specific Performance. The parties acknowledge that money
damages are not an adequate remedy for violations of this Agreement and that any
party may, in its sole discretion, apply to a court of competent jurisdiction
for specific performance or injunctive or such other relief as such court may
deem just and proper in order to enforce this Agreement or prevent any violation
hereof and, to the extent permitted by applicable law, each party waives any
objection to the imposition of such relief.
5.6 Remedies Cumulative. All rights, powers and remedies provided
under this Agreement or otherwise available in respect hereof at law or in
equity shall be cumulative and not alternative, and the exercise or beginning of
the exercise of any thereof by any party shall not preclude the simultaneous or
later exercise of any other such right, power or remedy by such party.
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5.7 No Waiver. The failure of any party hereto to exercise any
right, power or remedy provided under this Agreement or otherwise available in
respect hereof at law or in equity, or to insist upon compliance by any other
party hereto with its obligations hereunder, and any custom or practice of the
parties at variance with the terms hereof, shall not constitute a waiver by such
party of its right to exercise any such or other right, power or remedy or to
demand such compliance.
5.8 Severability. If any terms of this Agreement or the
application thereof to any party or circumstance shall be held invalid or
unenforceable to any extent, the remainder of this Agreement and the application
of such term to the other parties or circumstances shall not be affected thereby
and shall be in force to the greatest extent permitted by applicable law,
provided that in such event the parties shall negotiate in good faith in an
attempt to agree to another provision (in lieu of the term or application held
to be invalid or unenforceable) that will be valid and enforceable and will
carry out the parties' intentions hereunder.
5.9 Jurisdiction. Each party to this Agreement (i) hereby
irrevocably submits to the exclusive jurisdiction of the Federal courts located
in the Commonwealth of Virginia, and in the event that such Federal courts shall
not have subject matter jurisdiction over the relevant proceeding, then of the
state courts located in the Commonwealth of Virginia, for the purpose of any
action arising out of or based upon this Agreement or relating to the subject
matter hereof or the transactions contemplated hereby, (ii) hereby waives, to
the extent not prohibited by applicable law, and agrees not to assert, by way of
motion, as a defense or otherwise, in any such action, any claim that it is not
subject personally to the jurisdiction of the above-named courts, that its
property is exempt or immune from attachment or execution, that any such
proceeding brought in one of the above-named courts is improper, or that this
Agreement, or the subject matter hereof, may not be enforced in or by such court
and (iii) hereby agrees not to commence any action arising out of or based upon
this Agreement or relating to the subject matter hereof other than before one of
the above-named courts nor to make any motion or take any other action seeking
or intending to cause the transfer or removal of any such action to any court
other than one of the above-named court whether on the grounds of inconvenient
forum or otherwise. Each party hereby consents to service of process in any such
proceeding in any manner permitted by Virginia law, and agrees that service of
process by registered or certified mail, return receipt requested, at its
address specified pursuant to Section 5.1 hereof is reasonably calculated to
give actual notice.
5.10 Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the Commonwealth of Virginia.
5.11 Name, Captions. The name assigned to this Agreement and the
section captions used herein are for convenience of reference only and shall not
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affect the interpretation or construction hereof.
5.12 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original, but all of which
together shall constitute one instrument. Each counterpart may consist of a
number of copies each signed by less than all, but together signed by all, the
parties hereto.
IN WITNESS WHEREOF, the parties have duly executed this Agreement as of
the date first above written.
TFC ENTERPRISES, INC.
By: /s/ R. S. Raley, Jr.
-------------------------------------
R. S. Raley, Jr., President and
Chief Financial Officer
GENERAL ELECTRIC CAPITAL CORPORATION
By: /s/ W. Jerome McDermott
-------------------------------------
W. Jerome McDermott, Account
Executive
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Exhibit 4
JOINT FILING AGREEMENT
This will confirm the agreement by and among all the undersigned that
the Schedule 13D filed on or about this date with respect to beneficial
ownership of the undersigned of shares of the Common Stock, par value $0.01 per
share, of TFC Enterprises, Inc. is being filed on behalf of each of the
undersigned in accordance with Rule 13d-1(f)(1) under the Securities Exchange
Act of 1934. This agreement may be executed in two or more counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
GENERAL ELECTRIC CAPITAL CORPORATION
By: /s/ Nancy E. Barton
--------------------------------------
(Signature)
Nancy E. Barton, Senior Vice President
--------------------------------------
(Name/Title)
Date: April 11, 1997
--------------------------------------
GENERAL ELECTRIC CAPITAL SERVICES, INC.
By: /s/ Nancy E. Barton
--------------------------------------
(Signature)
Nancy E. Barton, Senior Vice President
--------------------------------------
(Name/Title)
Date: April 11, 1997
--------------------------------------
GENERAL ELECTRIC COMPANY
By: /s/ Nancy E. Barton
--------------------------------------
(Signature)
Nancy E. Barton, Attorney-in-Fact
--------------------------------------
(Name/Title)
Date: April 11, 1997
--------------------------------------
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Exhibit 5
POWER OF ATTORNEY
The undersigned, General Electric Company, a New York corporation
(hereinafter referred to as the 'Corporation') does hereby make, constitute and
appoint the persons listed below as the Corporation's true and lawful agent and
attorney-in-fact (hereinafter referred to as the 'Attorney') to act either
together or alone in the name and on behalf of the Corporation for and with
respect to the matters hereinafter described.
Name of Attorney: Joan C. Amble
Nancy E. Barton
Jeffrey S. Werner
Michael A. Gaudino
John J. Walker
Michael E. Pralle
Paul J. Licursi
Each Attorney shall have the power and authority to do the following:
To execute and deliver any Schedule 13D, Schedule 13G or Forms 3, 4 and
5 or any amendments thereto required to be filed with the Securities and
Exchange Commission under the Securities Exchange Act of 1934 on behalf of the
Corporation with regard to any securities owned by GENERAL ELECTRIC CAPITAL
Services, Inc., GENERAL ELECTRIC CAPITAL Corporation or any of their
subsidiaries.
And, in connection with the foregoing, to execute and deliver all
documents, acknowledgments, consents and other agreements and to take such
further action as may be necessary or convenient for the Corporation in order to
more effectively carry out the intent and purpose of the foregoing.
Agreements, commitments, documents, instruments, and other writings
executed by the Attorney in accordance with the terms hereof shall be binding
upon the Corporation without attestation and without affixation of the seal of
the Corporation. The Power of Attorney conferred hereby shall not be delegable
by any Attorney. The Attorney shall serve without compensation for acting in the
capacity of agent and attorney-in-fact hereunder.
Unless sooner revoked by the Corporation, this Power of Attorney shall
be governed under the laws of the State of New York and the authority of the
Attorney hereunder shall terminate on March 31, 1998.
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IN WITNESS WHEREOF, the Corporation has caused this Power of Attorney
to be executed, attested and its corporate seal to be affixed pursuant to
authority granted by the Corporation's board of directors, as of the 5th day of
June, 1996.
General Electric Company
(Corporate Seal) By: /s/ Philip D. Ameen
-------------------------------
Philip D. Ameen, Vice President
ATTEST:
/s/ Robert T. Healing
- --------------------------------------
Robert E. Healing, Attesting Secretary
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