OMB APPROVAL
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
(Rule 13d-101)
INFORMATION TO BE INCLUDED IN STATEMENTS FILED PURSUANT TO RULE 13d-1(a) AND
AMENDMENTS THERETO FILED PURSUANT TO RULE 13d-2(a)
(Amendment 1)*
NATIONAL AUTO FINANCE COMPANY, INC.
(Name of Issuer)
Shares of Common Stock, par value $0.01 per share
(Title of Class of Securities)
632528-10-5
(CUSIP Number)
Richard Gorevitz Joseph P. Donlan David M. Schneider
The Prudential Insurance Brown Brothers Harriman The Progressive
Company of America & Co. Corporation
One Gateway Center 59 Wall Street 6300 Wilson Mills Road
11th Floor New York, NY 10005 Mayfield Village, OH
Newark, NJ 07102-5311 (212) 493-7882 44143
(973) 802-7003 (216) 461-5000
with a copy to:
David C.L. Frauman
Cadwalader, Wickersham & Taft
100 Maiden Lane
New York, New York 10038
(212) 504-6652
(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
April 12, 1999
(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 that is the subject of this Schedule 13D, and is filing this
schedule because of Subsections 240.13d-1(e), 240.13d-1(f) or 240.13d-1(g),
check the following box [ ].
Note: Schedules filed in paper format shall include a signed original and five
copies of the schedule, including all exhibits. See Sections 240.13d-7 for other
parties to whom copies are to be sent.
*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 ("Exchange 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).
Potential persons who are to respond to the collection of information
contained in this form are not required to respond unless the form displays
a currently valid OMB control number.
<PAGE>
SCHEDULE 13D
- ---------------------
CUSIP NO. 632528-10-5
- ---------------------
- --------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
The Progressive Corporation, 34-0963169
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (See Instructions)
(a) [X] (b) [ ]
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS (See Instructions)
OO
- --------------------------------------------------------------------------------
5 CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d)
or 2(e)
[ ]
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Ohio
- --------------------------------------------------------------------------------
7 SOLE VOTING POWER
0
NUMBER OF ----------------------------------------------------------------
SHARES 8 SHARED VOTING POWER
BENEFICIALLY
OWNED BY 8,113,623
EACH ----------------------------------------------------------------
REPORTING 9 SOLE DISPOSITIVE POWER
PERSON
WITH 0
----------------------------------------------------------------
10 SHARED DISPOSITIVE POWER
3,883,623
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
3,883,623
- --------------------------------------------------------------------------------
12 CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES
(See Instructions)
[X]
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
22.01%
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON (See Instructions)
HC, CO
- --------------------------------------------------------------------------------
<PAGE>
SCHEDULE 13D
- ---------------------
CUSIP NO. 632528-10-5
- ---------------------
- --------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Progressive Casualty Insurance Company, 34-6513736
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (See Instructions)
(a) [X] (b) [ ]
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS (See Instructions)
OO
- --------------------------------------------------------------------------------
5 CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d)
or 2(e)
[ ]
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Ohio
- --------------------------------------------------------------------------------
7 SOLE VOTING POWER
0
NUMBER OF ----------------------------------------------------------------
SHARES 8 SHARED VOTING POWER
BENEFICIALLY
OWNED BY 8,113,623
EACH ----------------------------------------------------------------
REPORTING 9 SOLE DISPOSITIVE POWER
PERSON
WITH 0
----------------------------------------------------------------
10 SHARED DISPOSITIVE POWER
3,883,623
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
3,883,623
- --------------------------------------------------------------------------------
12 CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES
(See Instructions)
[X]
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
22.01%
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON (See Instructions)
IC, CO, Subsidiary of The Progressive Corporation
- --------------------------------------------------------------------------------
<PAGE>
SCHEDULE 13D
- ---------------------
CUSIP NO. 632528-10-5
- ---------------------
- --------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
PC Investment Company, 34-1576555
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (See Instructions)
(a) [X] (b) [ ]
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS (See Instructions)
OO
- --------------------------------------------------------------------------------
5 CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d)
or 2(e)
[ ]
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
- --------------------------------------------------------------------------------
7 SOLE VOTING POWER
0
NUMBER OF ----------------------------------------------------------------
SHARES 8 SHARED VOTING POWER
BENEFICIALLY
OWNED BY 8,113,623
EACH ----------------------------------------------------------------
REPORTING 9 SOLE DISPOSITIVE POWER
PERSON
WITH 0
----------------------------------------------------------------
10 SHARED DISPOSITIVE POWER
3,883,623
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
3,883,623
- --------------------------------------------------------------------------------
12 CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES
(See Instructions)
[X]
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
22.01%
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON (See Instructions)
CO, Subsidiary of Progressive Casualty Insurance Company
- --------------------------------------------------------------------------------
<PAGE>
SCHEDULE 13D
- ---------------------
CUSIP NO. 632528-10-5
- ---------------------
- --------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Progressive Investment Company, Inc., 34-1378861
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (See Instructions)
(a) [X] (b) [ ]
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS (See Instructions)
OO
- --------------------------------------------------------------------------------
5 CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d)
or 2(e)
[ ]
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
- --------------------------------------------------------------------------------
7 SOLE VOTING POWER
0
NUMBER OF ----------------------------------------------------------------
SHARES 8 SHARED VOTING POWER
BENEFICIALLY
OWNED BY 8,113,623
EACH ----------------------------------------------------------------
REPORTING 9 SOLE DISPOSITIVE POWER
PERSON
WITH 0
----------------------------------------------------------------
10 SHARED DISPOSITIVE POWER
3,883,623
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
3,883,623
- --------------------------------------------------------------------------------
12 CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES
(See Instructions)
[X]
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
22.01%
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON (See Instructions)
CO, Subsidiary of The Progressive Corporation
- --------------------------------------------------------------------------------
<PAGE>
SCHEDULE 13D
- ---------------------
CUSIP NO. 632528-10-5
- ---------------------
- --------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
The 1818 Mezzanine Fund, L.P.
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (See Instructions)
(a) [X] (b) [ ]
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS (See Instructions)
OO
- --------------------------------------------------------------------------------
5 CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d)
or 2(e)
[ ]
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
- --------------------------------------------------------------------------------
7 SOLE VOTING POWER
0
NUMBER OF ----------------------------------------------------------------
SHARES 8 SHARED VOTING POWER
BENEFICIALLY
OWNED BY 7,764,617
EACH ----------------------------------------------------------------
REPORTING 9 SOLE DISPOSITIVE POWER
PERSON
WITH 0
----------------------------------------------------------------
10 SHARED DISPOSITIVE POWER
3,534,617
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
3,534,617
- --------------------------------------------------------------------------------
12 CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES
(See Instructions)
[X]
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
19.97%
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON (See Instructions)
PN
- --------------------------------------------------------------------------------
<PAGE>
SCHEDULE 13D
- ---------------------
CUSIP NO. 632528-10-5
- ---------------------
- --------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Brown Brothers Harriman & Co.
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (See Instructions)
(a) [X] (b) [ ]
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS (See Instructions)
OO
- --------------------------------------------------------------------------------
5 CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d)
or 2(e)
[ ]
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
New York
- --------------------------------------------------------------------------------
7 SOLE VOTING POWER
0
NUMBER OF ----------------------------------------------------------------
SHARES 8 SHARED VOTING POWER
BENEFICIALLY
OWNED BY 7,764,617
EACH ----------------------------------------------------------------
REPORTING 9 SOLE DISPOSITIVE POWER
PERSON
WITH 0
----------------------------------------------------------------
10 SHARED DISPOSITIVE POWER
3,534,617
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
3,534,617
- --------------------------------------------------------------------------------
12 CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES
(See Instructions)
[X]
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
19.97%
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON (See Instructions)
PN
- --------------------------------------------------------------------------------
<PAGE>
SCHEDULE 13D
- ---------------------
CUSIP NO. 632528-10-5
- ---------------------
- --------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Joseph P. Donlan
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (See Instructions)
(a) [X] (b) [ ]
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS (See Instructions)
OO
- --------------------------------------------------------------------------------
5 CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d)
or 2(e)
[ ]
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
United States of America
- --------------------------------------------------------------------------------
7 SOLE VOTING POWER
0
NUMBER OF ----------------------------------------------------------------
SHARES 8 SHARED VOTING POWER
BENEFICIALLY
OWNED BY 7,764,617
EACH ----------------------------------------------------------------
REPORTING 9 SOLE DISPOSITIVE POWER
PERSON
WITH 0
----------------------------------------------------------------
10 SHARED DISPOSITIVE POWER
3,534,617
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
3,534,617
- --------------------------------------------------------------------------------
12 CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES
(See Instructions)
[X]
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
19.97%
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON (See Instructions)
IN
- --------------------------------------------------------------------------------
<PAGE>
SCHEDULE 13D
- ---------------------
CUSIP NO. 632528-10-5
- ---------------------
- --------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Robert R. Gould
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (See Instructions)
(a) [X] (b) [ ]
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS (See Instructions)
OO
- --------------------------------------------------------------------------------
5 CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d)
or 2(e)
[ ]
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
United States of America
- --------------------------------------------------------------------------------
7 SOLE VOTING POWER
0
NUMBER OF ----------------------------------------------------------------
SHARES 8 SHARED VOTING POWER
BENEFICIALLY
OWNED BY 7,764,617
EACH ----------------------------------------------------------------
REPORTING 9 SOLE DISPOSITIVE POWER
PERSON
WITH 0
----------------------------------------------------------------
10 SHARED DISPOSITIVE POWER
3,534,617
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
3,534,617
- --------------------------------------------------------------------------------
12 CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES
(See Instructions)
[X]
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
19.97%
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON (See Instructions)
IN
- --------------------------------------------------------------------------------
<PAGE>
SCHEDULE 13D
- ---------------------
CUSIP NO. 632528-10-5
- ---------------------
- --------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
T. Michael Long
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (See Instructions)
(a) [X] (b) [ ]
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS (See Instructions)
OO
- --------------------------------------------------------------------------------
5 CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d)
or 2(e)
[ ]
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
United States of America
- --------------------------------------------------------------------------------
7 SOLE VOTING POWER
0
NUMBER OF ----------------------------------------------------------------
SHARES 8 SHARED VOTING POWER
BENEFICIALLY
OWNED BY 7,764,617
EACH ----------------------------------------------------------------
REPORTING 9 SOLE DISPOSITIVE POWER
PERSON
WITH 0
----------------------------------------------------------------
10 SHARED DISPOSITIVE POWER
3,534,617
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
3,534,617
- --------------------------------------------------------------------------------
12 CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES
(See Instructions)
[X]
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
19.97%
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON (See Instructions)
IN
- --------------------------------------------------------------------------------
<PAGE>
SCHEDULE 13D
- ---------------------
CUSIP NO. 632528-10-5
- ---------------------
- --------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Lawrence C. Tucker
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (See Instructions)
(a) [X] (b) [ ]
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS (See Instructions)
OO
- --------------------------------------------------------------------------------
5 CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d)
or 2(e)
[ ]
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
United States of America
- --------------------------------------------------------------------------------
7 SOLE VOTING POWER
0
NUMBER OF ----------------------------------------------------------------
SHARES 8 SHARED VOTING POWER
BENEFICIALLY
OWNED BY 7,764,617
EACH ----------------------------------------------------------------
REPORTING 9 SOLE DISPOSITIVE POWER
PERSON
WITH 0
----------------------------------------------------------------
10 SHARED DISPOSITIVE POWER
3,534,617
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
3,534,617
- --------------------------------------------------------------------------------
12 CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES
(See Instructions)
[X]
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
19.97%
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON (See Instructions)
IN
- --------------------------------------------------------------------------------
<PAGE>
SCHEDULE 13D
- ---------------------
CUSIP NO. 632528-10-5
- ---------------------
- --------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
The Structured Finance High Yield Fund, LLC
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (See Instructions)
(a) [X] (b) [ ]
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS (See Instructions)
OO
- --------------------------------------------------------------------------------
5 CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d)
or 2(e)
[ ]
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
- --------------------------------------------------------------------------------
7 SOLE VOTING POWER
0
NUMBER OF ----------------------------------------------------------------
SHARES 8 SHARED VOTING POWER
BENEFICIALLY
OWNED BY 7,180,814
EACH ----------------------------------------------------------------
REPORTING 9 SOLE DISPOSITIVE POWER
PERSON
WITH 0
----------------------------------------------------------------
10 SHARED DISPOSITIVE POWER
2,950,814
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
2,950,814
- --------------------------------------------------------------------------------
12 CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES
(See Instructions)
[X]
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
16.51%
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON (See Instructions)
00
- --------------------------------------------------------------------------------
<PAGE>
SCHEDULE 13D
- ---------------------
CUSIP NO. 632528-10-5
- ---------------------
- --------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
The Prudential Insurance company of America, 22-121160
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (See Instructions)
(a) [X] (b) [ ]
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS (See Instructions)
OO
- --------------------------------------------------------------------------------
5 CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d)
or 2(e)
[ ]
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
New Jersey
- --------------------------------------------------------------------------------
7 SOLE VOTING POWER
0
NUMBER OF ----------------------------------------------------------------
SHARES 8 SHARED VOTING POWER
BENEFICIALLY
OWNED BY 7,180,814
EACH ----------------------------------------------------------------
REPORTING 9 SOLE DISPOSITIVE POWER
PERSON
WITH 0
----------------------------------------------------------------
10 SHARED DISPOSITIVE POWER
2,950,814
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
2,950,814
- --------------------------------------------------------------------------------
12 CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES
(See Instructions)
[X]
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
16.51%
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON (See Instructions)
IC, IA
- --------------------------------------------------------------------------------
<PAGE>
Item 1. Security and Issuer.
This statement relates to shares of Common Stock, par value $0.01 per share
(the "Common Stock"), of National Auto Finance Company, Inc., a Delaware
corporation (the "Issuer"). The Issuer's principal executive office is located
at 10302 Deerwood Park, Jacksonville, Florida 32256. This statement amends the
Schedule 13D filed on behalf of the Progressive Entities (as defined below) on
December 31, 1997, the Schedule 13D filed on behalf of the BBH Entities (as
defined below) on December 30, 1997, and the Schedule 13G filed on behalf of the
Prudential Entities (as defined below) on April 26, 1999.
Item 2(a) and (f). Names of Persons Filing; State of Organization or
Citizenship.
The Progressive Entities:
(1) The Progressive Corporation, an Ohio corporation ("Progressive").
(2) Progressive Casualty Insurance Company, an Ohio corporation
("Progressive Casualty").
(3) PC Investment Company, a Delaware corporation ("PCI").
(4) Progressive Investment Company, Inc., a Delaware corporation
("Progressive Investment").
Progressive, Progressive Casualty, PCI and Progressive Investment are
referred to herein collectively as the "Progressive Entities."
Progressive is filing this statement by virtue of its ownership of all of
the issued and outstanding shares of capital stock of Progressive Casualty and
Progressive Investment. Progressive Casualty is filing this statement because it
owns all of the issued and outstanding shares of capital stock of PCI. PCI is
filing this statement by virtue of its direct ownership of 1,650,000 shares of
Common Stock. Progressive Investment is filing this statement because it owns
1,870,000 shares of Common Stock and warrants (the "Warrants") to purchase
363,623 shares of Common Stock.
The BBH Entities:
(5) The 1818 Mezzanine Fund, L.P., a Delaware limited partnership (the
"Fund").
(6) Brown Brother Harriman & Co., a New York limited partnership
("BBH&Co.").
(7) Joseph P. Donlan, a United States citizen ("Donlan").
(8) Robert R. Gould, a United States citizen ("Gould").
(9) T. Michael Long, a United States citizen ("Long").
(10) Lawrence C. Tucker, a United States citizen ("Tucker").
The Fund, BBH&Co., Donlan, Gould, Long and Tucker are referred to herein
collectively as the "BBH Entities."
BBH&Co. is filing this statement by virtue of its status as the general
partner of the Fund. The Fund is filing this statement because it owns 3,119,047
shares of Common Stock and 415,570 Warrants. Pursuant to a resolution adopted by
the partners of BBH&Co., BBH&Co. has designated and appointed Donlan, Gould,
Long and Tucker, or any of them, the sole and exclusive persons having voting
power (including the power to direct the vote) and investment power (including
the power to dispose or to direct the disposition) with respect to the shares of
Common Stock and the Warrants beneficially owned by the Fund, and this statement
is filed by virtue thereof.
The Prudential Entities:
(11) The Structured Finance High Yield Fund, LLC, a Delaware limited
liability company ("SFHY").
(12) The Prudential Insurance Company of America, a mutual insurance
company organized under the laws of New Jersey ("Prudential").
SFHY and Prudential are referred to herein collectively as the "Prudential
Entities."
SFHY is filing this statement by virtue of its direct ownership of
2,357,143 shares of Common Stock and 593,671 Warrants. Prudential is filing this
statement because it is the sole member of SFHY and may be deemed to control
SFHY.
The Reporting Persons:
The Progressive Entities, the BBH Entities and the Prudential Entities are
referred to herein collectively as the "Reporting Persons." The agreement among
the Reporting Persons relating to the joint filing of this statement is attached
hereto as Exhibit 7.1.
Information with respect to each Reporting Person has been provided solely
by such Reporting Person. No Reporting Person is responsible for the accuracy
and completeness of any information in this statement other than information
provided by such Reporting Person for inclusion herein. However, no Reporting
Person knows or has reason to believe that any information contained herein is
inaccurate.
Item 2(b). Address of Principal Office or, if none, Residence.
(1) and (2) 6300 Wilson Mills Road, Mayfield Village, Ohio 44143
(3) and (4) 801 West Street, Wilmington, Delaware 19801-1545
(5) through (10) 59 Wall Street, New York, New York 10005
(11) and (12) One Gateway Center, 11th Floor, Newark, New Jersey
07102-5311
Item 2(c). Present Principal Occupation or Employment.
(1) through (4) Progressive is an insurance holding company whose insurance
subsidiaries and affiliates, including Progressive Casualty,
provide personal automobile insurance and other specialty
property-casualty insurance and related services throughout
the United States and in Canada. PCI and Progressive
Investment are engaged in the business of acquiring, holding
and disposing of and trading in investment securities and
other financial instruments.
Set forth on Appendix A-1 hereto and incorporated by
reference herein are the names, residence or business
addresses, present principal occupation or employment, and
the name, principal business and address of any corporation
or other organization in which such employment is conducted,
of each executive officer and director of each of the
Progressive Entities.
(5) through (10) The Fund was formed to provide a vehicle for institutional
and substantial investors to invest in a portfolio of
mezzanine investments designed to provide a substantial
current return with the opportunity for significant capital
gains. BBH&Co. is a private bank.
Set forth on Appendix A-2 hereto and incorporated by
reference herein are the names, residence or business
addresses, present principal occupation or employment, and
the name, principal business and address of any corporation
or other organization in which such employment is conducted,
of each general partner of BBH&Co.
(11) and (12) Prudential is a mutual insurance company organized under
the laws of the State of New Jersey. SFNY is an investment
subsidiary of Prudential.
Set forth on Appendix A-3 hereto and incorporated by
reference herein are the names, residence or business
addresses, present principal occupation or employment, and
the name, principal business and address of any corporation
or other organization in which such employment is conducted,
of each executive officer and director of each of
Prudential. Prudential is the sole member of SFHY.
Item 2(d).
No Reporting Person has been convicted in a criminal proceeding (excluding
traffic violations or similar misdemeanors) during the last five years.
Item 2(e).
During the last five years, no Reporting Person was a party to a civil
proceeding of a judicial or administrative body of competent jurisdiction and as
a result of such proceeding was or is subject to a judgment, decree or final
order enjoining further violations of, or prohibiting or mandating activities
subject to, federal or state securities laws or finding any violation with
respect to such laws.
Item 3. Source and Amount of Funds or Other Consideration.
On April 12, 1999, the Issuer, National Auto Finance Company, L.P., a
Delaware limited partnership (the "Partnership"), certain partners of the
Partnership, the Fund, PCI, Progressive Investment, Manufacturers Life Insurance
Company (U.S.A.), a Michigan corporation ("ML"), and SFHY entered into a
Restructuring Agreement (the "Restructuring Agreement"), a copy of which is
attached hereto as Exhibit 7.2 and incorporated herein by reference. The
Restructuring Agreement amends certain of the covenants contained in the
Securities Purchase Agreement, dated as of December 22, 1997 (the "December
Agreement"), pursuant to which (i) the Fund, PCI and ML purchased from the
Issuer $40,000,000 aggregate principal amount of the Issuer's Senior
Subordinated Notes due December 22, 2004 (the "Notes"), and 1,038,924 Warrants
to purchase initially 1,038,924 shares of the Issuer's Common Stock, at an
exercise price of $.01 per share, and (ii) the Fund and Progressive Investment
purchased 1,904,762 shares of the Issuer's Common Stock. The corresponding
covenants in the Securities Purchase Agreement, dated as of March 27, 1998 (the
"March Agreement" and, together with the December Agreement, the "Purchase
Agreements"), pursuant to which SFHY purchased $20,000,000 aggregate principal
amount of the Issuer's Notes and 593,671 Warrants to purchase initially 593,671
shares of the Issuer's Common Stock were similarly amended.
In consideration of the waiver of past defaults and breaches of covenants,
representations and warranties with respect to the Notes, releases exchanged in
respect thereof, and amendments of certain of the covenants in each of the
Purchase Agreements, the Restructuring Agreement, to the extent relevant for the
reporting of the Reporting Persons' beneficial ownership, provides for:
(1) the issuance to the Fund, PCI, ML and SFHY, as purchasers of the
Notes pursuant to the Purchase Agreements, of 1,885,714; 1,650,000;
1,178,572 and 2,357,143 shares of Common Stock, respectively;
(2) an amendment to the Notes (as so amended, the "Amended Notes") to
allow the Issuer, at its option, to pay during the two-year period ending
March 31, 2001, up to fifty percent (50%) of the interest owed on the
Amended Notes (and the interest on such interest) through the issuance of
additional senior subordinated notes (the "Convertible Notes") that are
convertible into common stock at the conversion price of $0.75 per share;
(3) the issuance to the Fund and Progressive Investment, as purchasers
of shares of Common Stock pursuant to the Purchase Agreements, of 471,428
and 707,143 shares of Common Stock, respectively;
(4) the right on the part of each of the Fund, PCI and SFHY to
designate a total of two directors to the Issuer's Board of Directors (the
"Board Representatives"), thereby giving the Fund, PCI and SFHY,
collectively, majority control of the Board of Directors, though none of
them individually controls the Issuer's board of directors; and
(5) the granting by the Partnership to the Board Representatives of an
irrevocable proxy, as more fully described below.
Pursuant to the Restructuring Agreement, the Partnership has granted the
Board Representatives of the Fund, PCI and SFHY an irrevocable proxy (the
"Proxy") with respect to 4,230,000 shares of Common Stock owned by the
Partnership (the "Partnership Shares"). The Proxy is exercisable by majority
vote of the Board Representative. The Proxy relates solely to the voting of the
Partnership Shares. The Board Representatives do not have the power and
authority to dispose of, or make decisions with respect to the disposition of
the Partnership Shares. Subject to certain restrictions on transfer set forth in
the Restructuring Agreement, the Partnership retains discretionary authority to
dispose of the Partnership Shares. Each of the Reporting Persons disclaims
beneficial ownership with respect to the Partnership Shares.
Item 4. Purpose of Transaction.
Except as described herein, none of the Reporting Persons has any present
plans or proposals which relate to or would result in any of the events
described in Items (a) through (j) of Item 4 of Schedule 13D.
Each of the Reporting Persons reserves the right in the future to formulate
plans or proposals, and to take action required to implement such plans or
proposals, with respect to any or all of the matters referred to in Items (a)
through (j) of Item 4 of Schedule 13D or with respect to any other matters such
Reporting Persons deems advisable. Each of the Reporting Persons reserves the
right, either alone or together with one or more others persons (including other
Reporting Persons), to have discussions with management, members of the Issuer's
board of directors (including other Board Representatives) and other
stockholders (including other Reporting Persons) of the Issuer regarding the
management, operations and future plans with respect to or affecting the Issuer.
In addition, the Reporting Persons intend to review their holdings with
respect to the Issuer on a continuing basis. Depending on the Issuer's business
and prospects, and upon future developments (including, but not limited to,
market prices of the Common Stock and availability and alternative uses of
funds, as well as conditions in the securities markets and general economic
conditions and industry conditions), the Reporting Persons may acquire other
securities of the Issuer, sell all or a portion of their shares of Common Stock
or other securities of the Issuer, now owned or hereafter acquired, or maintain
their position at current levels. Accordingly, the Reporting Persons reserve the
right to acquire additional securities of the Issuer or to dispose of some or
all of the securities of the Issuer beneficially owned by them either in the
open market, in privately negotiated transactions or otherwise, or take such
other action or actions with respect to the Common Stock as they deem advisable,
to the extent permitted under applicable federal and state securities law.
However, the Reporting Persons have no present intention of engaging in any such
transaction.
Item 5. Interest in Securities of the Issuer.
(a) The Amended Notes permit the Issuer, at its option, to issue
Convertible Notes in lieu of up to 50% of the interest accrued on the Amended
Notes. The Convertible Notes are convertible, at the option of the holder
thereof, at a price of $0.75 per share, into shares of Common Stock. The
Convertible Notes are substantially similar to the Amended Notes, except for the
conversion feature and except that up to 100% of the interest accrued on the
Convertible Notes may be paid, at the option of the Issuer, in additional
Convertible Notes. The number of shares of Common Stock, if any, that may be
acquired by any Reporting Person upon conversion of any Convertible Notes is not
presently determinable because Convertible Notes are issuable at the option of
the Issuer and, as of the date hereof, no Convertible Notes have been issued.
Although the Issuer has indicated that it intends, at least initially, to issue
Convertible Notes to the fullest extend permitted by the terms of the Amended
Notes and the Convertible Notes, the following information with respect to the
beneficial ownership of the Reporting Persons does not give effect to any shares
of Common Stock that may be acquired by any Reporting Person upon conversion of
any Convertible Notes that may be issued to it.
The Board Representatives of the Fund, PCI and SFHY, acting by majority
consent of all Board Representatives, have the power to vote the Partnership
Shares pursuant to the Proxy granted by the Partnership. Accordingly, each of
the Fund, PCI and SFHY may be deemed to be the beneficial owner of the
Partnership Shares and the following calculations do give effect to such
beneficial ownership.
As previously disclosed, prior to the execution and delivery of the
Restructuring Agreement, Progressive Investment owned 1,142,857 shares of Common
Stock and Warrants to purchase 363,623 shares of Common Stock. In January and
February of 1998, in open market purchases, Progressive Investment acquired, at
prices ranging from $2.17 to $2.39 per share, an additional 20,000 shares of
Common Stock. In connection with the transactions contemplated by the
Restructuring Agreement, 1,650,000 shares of Common Stock were issued to PCI and
an additional 707,143 shares of Common Stock were issued to Progressive
Investment.
Each of the Progressive Entities may be deemed to beneficially own
8,113,623 shares of Common Stock (the "Progressive Shares"), or 46.0% of the
Issuer's Common Stock, which percentage is calculated based upon (i) 17,280,762
shares of Common Stock represented by the Issuer to be issued and outstanding on
April 12, 1999, (ii) 363,623 shares of Common Stock issuable upon exercise of
the Warrants held by Progressive Investment, and (iii) shared voting power with
respect to the 4,230,000 Partnership Shares. The Progressive Entities disclaim
beneficial ownership of the Partnership Shares, the BBH Shares (as defined
below) and the Prudential Shares (as defined below).
As previously disclosed, prior to the execution and delivery of the
Restructuring Agreement, the Fund owned 761,905 shares of Common Stock and
Warrants to purchase an additional 415,570 shares of Common Stock. In connection
with the transactions contemplated by the Restructuring Agreement, the Fund
acquired an additional 2,357,142 shares of Common Stock.
Each of the BBH Entities may be deemed to beneficially own 7,764,617 shares
of Common Stock (the "BBH Shares"), or 43.9% of the Issuer's Common Stock, which
percentage is calculated based upon (i) 17,280,762 shares of Common Stock
represented by the Issuer to be issued and outstanding on April 12, 1999, (ii)
415,570 shares of Common Stock issuable upon exercise of the Warrants held by
the Fund, and (iii) shared voting power with respect to the 4,230,000
Partnership Shares. The BBH Entities disclaim beneficial ownership of the
Partnership Shares, the Progressive Shares and the Prudential Shares (as defined
below). Donlan, Gould, Long and Tucker disclaim beneficial ownership of the BBH
Shares.
As previously disclosed, prior to the execution and delivery of the
Restructuring Agreement, SFHY owns Warrants to purchase 593,671 shares of Common
Stock. In connection with the transactions contemplated by the Restructuring
Agreement, SFHY acquired 2,357,143 shares of Common Stock.
Each of the Prudential Entities may be deemed to beneficially own 7,180,814
shares of Common Stock (the "Prudential Shares"), or 40.2% of the Issuer's
Common Stock, which percentage is calculated based upon (i) 17,280,762 shares of
Common Stock represented by the Issuer to be issued and outstanding on April 12,
1999, (ii) 593,671 shares of Common Stock issuable upon exercise of the Warrants
held by SFHY, and (iii) shared voting power with respect to the 4,230,000
Partnership Shares. The Prudential Entities disclaim beneficial ownership of the
Partnership Shares, the Progressive Shares and the BBH Shares.
(b) Number of Shares as to which each of the Progressive Entities has:
(i) Sole power to vote or direct the vote:
0 shares for each Progressive Entity;
(ii) Shared power to vote or direct the vote:
8,113,623 shares for each Progressive Entity;
(iii) Sole power to dispose or to direct the disposition:
0 shares for each Progressive Entity;
(iv) Shared power to dispose or to direct the disposition:
3,883,623 shares for each Progressive Entity.
Number of Shares as to which each of the of the BBH Entities has:
(i) Sole power to vote or direct the vote:
0 shares for each BBH Entity;
(ii) Shared power to vote or direct the vote:
7,764,617 shares for each BBH Entity;
(iii) Sole power to dispose or to direct the disposition:
0 shares for each BBH Entity;
(iv) Shared power to dispose or to direct the disposition:
3,534,6117 shares for each BBH Entity.
Number of Shares as to which each of the Prudential Entities has:
(i) Sole power to vote or direct the vote:
0 shares for each Prudential Entity;
(ii) Shared power to vote or direct the vote:
7,180,814 shares for each Prudential Entity;
(iii Sole power to dispose or to direct the disposition:
0 shares for each Prudential Entity;
(iv) Shared power to dispose or to direct the disposition:
2,950,814 shares for each Prudential Entity.
(c) None of the Reporting Persons has effected any transactions in Common
Stock directly or indirectly during the 60 days prior to the date of this
statement.
(d) No one other than the Reporting Persons has the right to receive, or
the power to direct the receipt of, dividends from, or the proceeds from the
sale of, the shares of Common Stock, the Warrants or any other securities of the
Issuer acquired by the Reporting Persons as described in Item 5. As described
above, the Partnership retains the right to dispose of the Partnership Shares,
subject to certain restrictions as set forth in the Restructuring Agreement.
(e) Not applicable.
Item 6. Contracts, Arrangements, Understandings or Relationships with Respect
to Securities of the Issuer.
Covenants contained in each of the Purchase Agreements with respect to
Notes remain in effect with respect to the Amended Notes, except to the extent
amended by the Restructuring Agreement. The Warrants remain in effect unaltered
by the Restructuring Agreement as described herein and in the initial Schedules
13D filed by the Progressive Entities and the BBH Entities. The registration
rights granted by the Issuer and described in the initial Schedules 13D filed by
the Progressive Entities and the BBH Entities with respect to the shares of
Common Stock held by any of the Reporting Persons pursuant to a Registration
Rights Agreement remain in effect unaltered by the Restructuring Agreement. In
addition, the Board Representatives of the Fund, PCI and SFHY hold a proxy with
respect to the Partnership Shares, The foregoing response to this Item 6 is
qualified in its entirety by reference to the Restructuring Agreement, each of
the Purchase Agreements as amended by the Restructuring Agreement, the Proxy,
the form of Note, the form of Warrant, each of which is an exhibit to this
statement and incorporated by reference herein.
Except as described herein, to the best knowledge of the Reporting Persons,
there are no contracts, arrangements, understandings or relationships (legal or
otherwise) between the Reporting Persons and any other persons with respect to
any securities of the Issuer, including but not limited to transfer or voting of
any such securities, finder's fees, joint ventures, loan or option arrangements,
puts or calls, guarantees of profits, division of profits or loss, or the giving
or withholding of proxies, or a pledge or contingency the occurrence of which
would give another person voting power over the securities of the Issuer.
Item 7. Material Filed as Exhibits.
Exhibit 7.1. Joint Filing Agreement and Power of Attorney (filed
herewith).
Exhibit 7.2. Restructuring Agreement by and among the Issuer, National
Auto Finance Company, L.P., National Auto Finance
Corporation, Gary L. Shapiro, Edgar A. Otto, Stephen L.
Gurba, The 1818 Mezzanine Fund, L.P., PC Investment Company,
Progressive Investment Company, Inc., Manufacturers Life
Insurance Company (U.S.A.) and The Structured Finance High
Yield Fund, L.P. (filed herewith).
Exhibit 7.3. Irrevocable Proxy granted by National Auto Finance Company,
L.P. (filed herewith).
Exhibit 7.4. Stock Purchase Agreement, dated as of December 22, 1997,
among National Auto Finance Company, Inc., The 1818 Mezzanine
Fund, L.P., PC Investment Company, Progressive Investment
Company, Inc. and Manufacturers Life Insurance Company
(U.S.A.) (previously filed)
Exhibit 7.5. Registration Rights Agreement contemplated by Stock Purchase
Agreement referenced above as Exhibit 7.4 (previously filed).
Exhibit 7.6. Form of Note contemplated by Stock Purchase Agreement
referenced above as Exhibit 7.4 (previously filed).
Exhibit 7.7. Form of Warrant contemplated by Stock Purchase Agreement
referenced above as Exhibit 7.4 (previously filed).
<PAGE>
Signature.
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
THE PROGRESSIVE CORPORATION
PROGRESSIVE CASUALTY INSURANCE COMPANY
By: /s/ W. Thomas Forrester, II
---------------------------
Name: W. Thomas Forrester
Title: Treasurer
PC INVESTMENT COMPANY
PROGRESSIVE INVESTMENT COMPANY, INC.
By: /s/ Janet A. Dolohanty
------------------------
Name: Janet A. Dolohanty
Title: Treasurer
Date: May 5, 1999
<PAGE>
Signature.
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
BROWN BROTHERS HARRIMAN & CO.
By: /s/ Robert R. Gould
------------------------------------
Name: Robert R. Gould
Title: Partner
THE 1818 MEZZANINE FUND, L.P.
By: Brown Brothers Harriman & Co.
General Partner
By: /s/ Robert R. Gould
------------------------------------
Name: Robert R. Gould
Title: Partner
/s/ Joseph P. Donlan
--------------------------------------
Joseph P. Donlan
/s/ Robert R. Gould
--------------------------------------
Robert R. Gould
/s/ T. Michael Long
--------------------------------------
T. Michael Long
/s/ Lawrence C. Tucker
--------------------------------------
Lawrence C. Tucker
Date: May 5, 1999
<PAGE>
Signature.
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
THE STRUCTURED FINANCE HIGH YIELD FUND, LLC
THE PRUDENTIAL INSURANCE COMPANY OF AMERICA
By: /s/ Michael J. Bozzo
------------------------
Name: Michael J. Bozzo
Title: Vice President
Date: May 5, 1999
<PAGE>
APPENDIX A-1
DIRECTORS AND EXECUTIVE OFFICERS
OF THE PROGRESSIVE ENTITIES
The following table sets forth the name, business address, present
principal occupation or employment, and the name, principal business and address
of the principal office of any corporation or other organization in which such
employment is conducted, of each director and executive officer of The
Progressive Corporation ("Progressive"), Progressive Casualty Insurance Company
("Progressive Casualty"), PC Investment Company ("PCI") and Progressive
Investment Company, Inc. ("Progressive Investment"). Unless otherwise indicated,
each person listed below is a citizen of the United States.
Principal Occupation or Employment and
Name, Principal Business and Address
of Organization in which Employment
Name and Business Address(1) is Conducted (2)
------------------------- -----------------------------------------
A. Directors of Progressive
Peter B. Lewis Chairman of the Board, President,
Chief Executive Officer--Insurance
Operations and a director of
Progressive;
Chairman of the Board, President,
Chief Executive Officer and a director of
Progressive Casualty Insurance Company,
the principal subsidiary of Progressive
Milton N. Allen Director of various companies
12 Lieutenant River Lane
Old Lyme, Connecticut 06371-2308
B. Charles Ames Principal, Clayton, Dubilier & Rice, Inc.
25700 Science Park Landmark Center New York, New York (investment banking)
Suite 180
Beachwood, Ohio 44122-7312
James E. Bennett III Senior Executive Vice President,
127 Public Square, 55th Floor KeyCorp, Cleveland Ohio (banking)
Cleveland, Ohio 44114
Charles B. Chokel Chief Executive Officer--Investments
and Capital Management and a director of
Progressive
Charles A. Davis President and Chief Executive Officer,
20 Horse Neck Lane Marsh & McLennan Capital, Inc.
Greenwich, Connecticut 06830 (global private equity firm)
Stephen R. Hardis Chairman of the Board and
Eaton Center Chief Executive Officer of
1111 Superior Avenue Eaton Corporation, Cleveland, Ohio
Cleveland, Ohio 44114-2507 (manufacturing)
Janet Hill President, Staubach Alexander Hill, LLC
400 C Street, NW Washington, D.C.
Washington, D.C. 20002 (commercial real estate consulting) and
Vice President,
Alexander & Associates, Inc.,
Washington, D.C. (management consulting)
Norman S. Matthews Consultant, New York, New York
650 Madison Avenue
23rd Floor
New York, New York 10022-1004
Donald B. Shackelford Chairman of the Board, Fifth Third
21 East Broad Street Bank of Central Ohio, Columbus, Ohio
Columbus, Ohio 43215-3403 (commercial bank)
Paul B. Sigler Henry Ford II Professor,
260 Whitney Avenue/JWG 423 Yale University and Investigator in the
P.O. Box 208114 Howard Hughes Medical Institute,
New Haven, Connecticut 06520-8114 New Haven, Connecticut
B. Executive Officers of Progressive
Peter B. Lewis See Section A. above
Alan R. Bauer Internet Distribution Leader
Charles B. Chokel See Section A. above
W. Thomas Forrester, II Chief Financial Officer and Treasurer
Moira G. Lardakis Chief Communications Officer
Daniel R. Lewis Independent Agent Distribution Leader
Robert J. McMillan Direct Distribution Leader
Brian J. Passell Chief Claim Officer
Glenn M. Renwick Chief Information Officer
David L. Roush Strategic Alliance Distribution Leader
David M. Schneider Secretary and Chief Legal Officer
Tiona M. Thompson Chief Human Resources Officer
Robert T. Williams Chief Pricing and Product Officer
C. Directors of Progressive Casualty
Peter B. Lewis See Sections A. and B. above
Alan R. Bauer See Section B. above
Charles B. Chokel See Section B. above
W. Thomas Forrester, II See Section B. above
Thomas A. King Controller
Moira G. Lardakis See Section B. above
David L. Roush See Section B. above
David M. Schneider See Section B. above
Tiona M. Thompson See Section B. above
Robert T. Williams See Section B. above
D. Executive Officers of Progressive Casualty
Peter B. Lewis Chairman of the Board and President
David M. Schneider Secretary and Chief Legal Officer
Charles B. Chokel Treasurer and Chief Financial Officer
Alan R. Bauer See Section B. above
W. Thomas Forrester, II See Section B. above
Moira G. Lardakis See Section B. above
Daniel R. Lewis See Section B. above
Robert J. McMillan See Section B. above
Brian J. Passell See Section B. above
David L. Roush See Section B. above
Glenn M. Renwick See Section B. above
Tiona M. Thompson See Section B. above
Robert T. Williams See Section B. above
E. Directors and Executive Officers of PC Investment and Progressive Investment
Charles B. Chokel Director and President
Janet A. Dolohanty Director, Vice President and Treasurer
Kenneth J. Kubacki Director, Manager of various holding
801 West Street companies and investments
Wilmington, Delaware 19801
David M. Schneider Chief Legal Officer and Secretary
- -------------------
[1] Unless otherwise indicated, the business address of each person in the
table is 6300 Wilson Mills Road, Mayfield Village, Ohio 44123.
[2] The business address of the organization in which each person's
employment is conducted is the same as such person's business address.
<PAGE>
APPENDIX A-2
GENERAL PARTNERS OF
BROWN BROTHERS HARRIMAN & CO.
The following table sets forth the name, business address, present
principal occupation or employment, and the name, principal business and address
of the principal office of any corporation or other organization in which such
employment is conducted, of each of the general partners of BBH&Co. The
principal occupation or employment of each person listed below is private
banker, and, unless otherwise indicated, the business address of each person is
59 Wall Street, New York, New York 10005. Unless otherwise indicated, each
person listed below is a citizen of the United States.
Business Address
Name (if other than as indicated above)
- ------------------------ -----------------------------------------
J. William Anderson
Peter B. Bartlett
Brian A. Berris
Taylor S. Bodman 40 Water Street
Boston, Massachusetts 02109
Walter H. Brown
Douglas A. Donahue, Jr. 40 Water Street
Boston, Massachusetts 02109
Anthony T. Enders
Alexander T. Ercklentz Veritas House
125 Finsbury Pavement
London EC2A 1PN, England
Terrence M. Farley
Elbridge T. Gerry, Jr.
Robert R. Gould
Ronald Hill
Kyosuko Kashimoto 8-14 Nihonbashi 30-Chome Chuo-ku
(citizen of Japan) Tokyo 103, Japan
Radford W. Klotz
Landon Hilliard
Michael Kraynak, Jr.
T. Michael Long
Hampton S. Lynch
Michael W. McConnell
William H. Moore III
Donald B. Murphy
John A. Nielsen
Eugene C. Rainis
A. Heaton Robertson 40 Water Street
Boston, Massachusetts 02109
Jeffrey A. Schoenfeld
Stokley P. Towles 40 Water Street
Boston, Massachusetts 02109
Lawrence C. Tucker
Maarten van Hengel
Douglas C. Walker 1531 Walnut Street
Philadelphia, Pennsylvania 19102
Laurence F. Whittemore
Richard H. Witmer, Jr.
<PAGE>
APPENDIX A-3
DIRECTORS AND EXECUTIVE OFFICERS
OF THE PRUDENTIAL ENTITIES
The following table sets forth the name, business address, present
principal occupation or employment, and the name, principal business and address
of the principal office of any corporation or other organization in which such
employment is conducted, of each director and executive officer of The
Prudential Insurance Company of America ("Prudential"). Prudential is the sole
member of The Structured Finance High Yield Fund, LLC ("SFHY"). Unless otherwise
indicated, each person listed below is a citizen of the United States.
Principal Occupation or
Employment and Name,
Principal Business and
Address of Organization in
Name and Business Address(3) which Employment is Conducted(4)
- ---------------------------------- -----------------------------------------
A. Directors of Prudential
Franklin E. Agnew Business Consultant
600 Grant Street
Suite 660
Pittsburgh, Pennsylvania 15219
Frederic K. Becker President, Wilentz, Goldman & Spitzer,
90 Woodbridge Center Drive P.A.
Suite 900
P.O. Box 10
Woodbridge, New Jersey 07095
Gilbert F. Casellas President and Chief Operating Officer,
1646 West Chester Pike The Swarthmore Group, Inc.
Suite 3
West Chester, Pennsylvania 19382
James G. Cullen President and Chief Operating Officer,
1310 North Court House Road Bell Atlantic Corporation
11th Floor
Arlington, Virginia 22201
Carolyne K. Davis Independent Health Care Advisor
751 Broad Street
23rd Floor
Newark, New Jersey 07102
Roger A. Enrico Chairman and Chief Executive Officer,
700 Anderson Hill Road PepsiCo, Inc.
Purchase, New York 10577
Allan D. Gilmour Retired
751 Broad Street
23rd Floor
Newark, New Jersey 07102
William H. Gray, III President and Chief Executive Officer,
8260 Willow Oaks Corp. Drive The College Fund/UNCF
P. O. Box 10444
Fairfax, Virginia 22031-4511
Jon F. Hanson Chairman, Hampshire Management Company
235 Moore Street
Suite 200
Hackensack, New Jersey 07601
Glen H. Hiner Chairman and Chief Executive Officer,
One Owens Corning Parkway Owens Corning
Toledo, Ohio 43659
Constance J. Horner Guest Scholar, The Brookings Institute
1775 Massachusetts Avenue, N.W.
Washington, D.C. 20036-2188
Gaynor N. Kelley Retired
751 Broad Street
24th Floor
Newark, New Jersey 07102
Burton G. Malkiel Professor, Princeton University
Department of Economics
110 Fisher Hall, Prospect Ave.
Princeton University
Princeton, New Jersey 08544-1021
Arthur F. Ryan Chairman of the Board,
751 Broad Street Chief Executive Officer and President,
24th Floor Prudential
Newark, New Jersey 07102
Ida F. S. Schmertz Principal,
751 Broad Street Investment Strategies International
23rd Floor
Newark, New Jersey 07102
Charles R. Sitter Retired
5959 Los Colinas Blvd.
Irving, Texas 75039-2298
Donald L. Staheli Retired
39 Locust Street
Suite 204
New Canaan, Connecticut 06840
Richard M. Thomson Retired
Toronto-Dominion Bank
Box 1
Toronto-Dominion Centre
Toronto, Ontario
Canada M5K 1A2
James A. Unruh Founding Principal,
7600 Doubletree Ranch Road Alerion Capital Group, LLC
Scottsdale, Arizona 95258
P. Roy Vagelos Retired
One Crossroads Drive
Building A, 3rd Floor
Bedminster, New Jersey 07921
Stanley C. Van Ness Counselor at Law,
22 Chambers Street Herbert, Van Ness, Cayci & Goodell
Princeton, New Jersey 08542
Paul A. Volcker Consultant
610 Fifth Avenue
Suite 420
New York, New York 10020
Joseph H. Williams Director,
One Williams Center The Williams Companies, Inc.
Tulsa, Oklahoma 74172
B. Executive Officers of Prudential
James J. Avery, Jr. Senior Vice President, Prudential
213 Washington Street
Newark, New Jersey 07102
William M. Bethke Senior Vice President and
100 Mulberry Street Chief Investment Officer, Prudential
Newark, New Jersey 07102
Martin A. Berkowitz Senior Vice President, Prudential
213 Washington Street
Newark, New Jersey 07102
Susan L. Blount Vice President and Secretary,
751 Broad Street Prudential
Newark, New Jersey 07102
Ann E. Bossi Senior Vice President, Prudential
290 West Mt. Pleasant Ave.
Livingston, New Jersey 07039
Richard Carbone Senior Vice President and
751 Broad Street Chief Financial Officer, Prudential
Newark, New Jersey 07102
Thomas J. Carroll Senior Vice President and Auditor
751 Broad Street
Newark, New Jersey 07102
E. Michael Caulfield Executive Vice President, Prudential
751 Broad Street
Newark, New Jersey 07102
C. Edward Chaplin Vice President and Treasurer,
751 Broad Street Prudential
Newark, New Jersey 07102
Thomas W. Crawford Senior Vice President, Prudential
213 Washington Street
Newark, New Jersey 07102
Michele S. Darling Executive Vice President, Prudential
751 Broad Street
Newark, New Jersey 07102
William D. Friel Senior Vice President and
80 Livingston Avenue Chief Information Officer, Prudential
Roseland, New Jersey
Helen M. Galt Vice President and Company Actuary,
213 Washington Street Prudential
Newark, New Jersey 07102
Robert Golden Executive Vice President, Prudential
80 Livingston Avenue
Roseland, New Jersey 07068
Jonathan M. Greene Senior Vice President, Prudential
751 Broad Street
Newark, New Jersey 07102
Mark B. Grier Executive Vice President, Prudential
751 Broad Street
Newark, New Jersey 07102
Jean D. Hamilton Executive Vice President, Prudential
751 Broad Street
Newark, New Jersey 07102
Michael J. Hines Senior Vice President, Prudential
751 Broad Street
Newark, New Jersey 07102
Ronald P. Joelson Senior Vice President, Prudential
71 Hanover Road
Florham Park, New Jersey 07932
Ira J. Kleinman Senior Vice President, Prudential
751 Broad Street
Newark, New Jersey 07102
Kathleen Krall Senior Vice President, Prudential
213 Washington Street
Newark, New Jersey 07102
Rodger A. Lawson Executive Vice President, Prudential
751 Broad Street
Newark, New Jersey 07102
Joyce R. Leibowitz Senior Vice President, Prudential
80 Livingston Ave.
Newark, New Jersey 07068-1701
John M. Liftin Senior Vice President and
751 Broad Street General Counsel, Prudential
Newark, New Jersey 07102
Neil A. McGuinness Senior Vice President, Prudential
100 Mulberry Street
Newark, New Jersey 07102
Priscilla A. Myers Senior Vice President, Prudential
751 Broad Street
Newark, New Jersey 07102
Richard O. Painter Senior Vice President, Prudential
213 Washington Street
Newark, New Jersey 07102
Anthony Piszel Vice President and Comptroller,
213 Washington Street Prudential
Newark, New Jersey 07102
I. Edward Price Senior Vice President, Prudential
213 Washington Street
Newark, New Jersey 07102
Kiyofumi Sakaguchi Executive Vice President, Prudential
Tokyo, Japan
Arthur F. Ryan See Section A above
John V. Scicutella Executive Vice President, Prudential
213 Washington Street
Newark, New Jersey 07102
Brian M. Storms Senior Vice President, Prudential
100 Mulberry Street
Newark, New Jersey 07102
John R. Strangfeld Executive Vice President, Prudential
8 Campus Drive
Parsippany, New Jersey 07054
Robert J. Sullivan Senior Vice President, Prudential
100 Mulberry Street
Newark, New Jersey 07102
C. Executive Officers of SFHY
John R. Wilson President
C. Edward Chaplin See Section A. above
Richard D. Gorevitz Secretary
Michael J. Bozzo Vice President
Peter M. Freitag Vice President
Andrea B. Kutscher Vice President
Richard B. Rogers Vice President
Thomas J. Terchek Vice President
Steven M. Tompson Vice President
- -------------------
[3] The business address of each person in the table is One Gateway Center,
11th Floor, Newark, NY 07102-5311.
[4] The business address of the organization in which each person's
employment is conducted is the same as such person's business address.
JOINT FILING AGREEMENT
In accordance with Rule 13d-1(k)(1) under the Securities Exchange
Act of 1934, as amended, each of the undersigned hereby agrees to the joint
filing with all other Reporting Persons (as such term is defined in Amendment
No. 1 to Schedule 13D referred to below), on behalf of each of them, of
Amendment No. 1 to Schedule 13D (including amendments thereto) with respect to
the Common Stock, par value $0.01 per share, of National Auto Finance Company,
Inc. and that this Agreement be included as an Exhibit to such joint filing.
This Agreement may be executed in any number of counterparts, all of which taken
together shall constitute one and the same instrument.
IN WITNESS WHEREOF, the undersigned have executed this Agreement as
of the 5th day of May, 1999.
THE PROGRESSIVE CORPORATION
PROGRESSIVE CASUALTY INSURANCE COMPANY
By: /s/ W. Thomas Forrester, II
---------------------------
Name: W. Thomas Forrester
Title: Treasurer
PC INVESTMENT COMPANY
PROGRESSIVE INVESTMENT COMPANY, INC.
By: /s/ Janet A. Dolohanty
------------------------
Name: Janet A. Dolohanty
Title: Treasurer
<PAGE>
BROWN BROTHERS HARRIMAN & CO.
By: /s/ Robert R. Gould
------------------------------------
Name: Robert R. Gould
Title: Partner
THE 1818 MEZZANINE FUND, L.P.
By: Brown Brothers Harriman & Co.
General Partner
By: /s/ Robert R. Gould
------------------------------------
Name: Robert R. Gould
Title: Partner
/s/ Joseph P. Donlan
---------------------------------------
Joseph P. Donlan
/s/ Robert R. Gould
---------------------------------------
Robert R. Gould
/s/ T. Michael Long
---------------------------------------
T. Michael Long
/s/ Lawrence C. Tucker
---------------------------------------
Lawrence C. Tucker
THE STRUCTURED FINANCE HIGH YIELD
FUND, LLC
THE PRUDENTIAL INSURANCE COMPANY OF
AMERICA
By: /s/ Michael J. Bozzo
-----------------------------------
Name: Michael J. Bozzo
Title: Vice President
RESTRUCTURING AGREEMENT
RESTRUCTURING AGREEMENT, dated as of April 7, 1999 (the
"Agreement"), by and among National Auto Finance Company, Inc., a Delaware
corporation (the "COMPANY"), National Auto Finance Company, L.P., a Delaware
limited partnership (the "PARTNERSHIP"), National Auto Finance Corporation, a
Delaware corporation (the "GENERAL PARTNER"), the Partners (as defined below),
The 1818 Mezzanine Fund, L.P., a Delaware limited partnership (the "FUND"), PC
Investment Company, a Delaware corporation ("PCI"), Progressive Investment
Company, Inc., a Delaware corporation ("PROGRESSIVE"), Manufacturers Life
Insurance Company (U.S.A.), a Michigan corporation ("ML"), and The Structured
Finance High Yield Fund, LLC, a Delaware limited liability company ("SFHY"). The
Fund, PCI, ML and SFHY are sometimes collectively referred to herein as the
"NOTEHOLDERS," and the Fund and Progressive are sometimes collectively referred
to herein as the "EQUITYHOLDERS."
PRELIMINARY STATEMENT
Pursuant to a Securities Purchase Agreement, dated as of December
22, 1997 (the "DECEMBER AGREEMENT"), (i) the Fund, PCI and ML purchased from the
Company $40,000,000 aggregate principal amount of the Company's Senior
Subordinated Notes due December 22, 2004 (the "NOTES"), and 1,038,924 detachable
warrants to purchase initially 1,038,924 shares of the Company's Common Stock,
par value $.01 per share (the "COMMON STOCK"), and (ii) the Fund and Progressive
purchased 1,904,762 shares of the Company's Common Stock.
SFHY purchased from the Company, pursuant to a Securities Purchase
Agreement, dated as of March 27, 1998 (the "MARCH AGREEMENT"; the December
Agreement and the March Agreement are sometimes collectively referred to herein
as the "AGREEMENTS"), $20,000,000 aggregate principal amount of the Company's
Notes and 593,671 detachable warrants to purchase initially 593,671 shares of
the Company's Common Stock.
The Partnership is the owner, directly and indirectly, of 4,230,000
shares of the Company's Common Stock (the "PARTNERSHIP SHARES"). In
consideration of, and as part of the transactions contemplated by, this
Agreement, the Partnership has agreed to grant the nominees of the Noteholders
and the Equityholders from time to time serving on the Company's Board of
Directors (the "BOARD") an irrevocable proxy to vote the Partnership Shares.
The Noteholders and the Equityholders have asserted potential claims
against the Partnership, National Auto Finance Corporation, a Delaware
corporation and the general partner of the Partnership (the "GENERAL Partner"),
Nova Financial Corporation, a Delaware corporation ("NOVA Financial"), Nova
Corporation, a Delaware corporation ("NOVA"), Gary L. Shapiro ("SHAPIRO"), Edgar
A. Otto ("OTTO") and Stephen L. Gurba ("GURBA"), each a limited partner of the
Partnership (collectively, the "PARTNERS"), which claims the parties desire to
settle. In consideration of, and as part of the transactions contemplated by,
this Agreement, the Noteholders and Equityholders have agreed to release the
Partnership, the General Partner and the Partners from certain liabilities and
have agreed not to bring certain causes of action against them.
The Company has issued its junior subordinated promissory notes in
the aggregate principal amount of $430,152, $961,714, $33,714, $27,246 and
$487,656, to Shapiro, Otto, Gurba, Nova Financial and Nova, respectively (such
promissory notes as amended to the date hereof, the "JUNIOR NOTES"). The Company
is in default under the Junior Notes. In consideration of, and as part of the
transactions contemplated by, this Agreement, the holders of the Junior Notes
(the "JUNIOR NOTEHOLDERS") have agreed to restructure the terms of the Junior
Notes.
The Company has been unable to satisfy certain affirmative, negative
and financial covenants under the Agreements. The Company, the Noteholders and
the Equityholders now desire, on the terms and conditions set forth in this
Agreement, to restructure the terms of the Notes and the Junior Notes and to
waive breaches of certain of the covenants contained in, and defaults under, the
Agreements, the Notes and the Junior Notes and to provide for the issuance of
the Shares (as defined in Section 3 hereof) to the Noteholders and the
Equityholders (collectively, the "RESTRUCTURING").
Capitalized terms used but not defined herein shall have the
meanings ascribed to such terms in the Agreements.
In consideration of the mutual covenants and agreements set forth
herein and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto hereby agree as
follows:
1. Waivers and Amendments.
(a) In accordance with Section 14.5 of each of the Agreements, the
Noteholders and the Equityholders hereby waive the currently existing defaults
and breaches by the Company of (i) the representations and warranties contained
in each of the Agreements and the Notes, and (ii) the affirmative, negative and
financial covenants contained in Sections 9.1, 9.2, 9.4, 9.6, 10.1, 10.2, 10.4,
10.9, 11.1(iii), 11.1(iv), 11.1(v) and 11.1(vi) of each of the Agreements. The
Company hereby represents and warrants to the Noteholders and the Equityholders
that, to the knowledge of the Company after due inquiry, it is not in default or
breach of any covenant contained in either of the Agreements, other than
Sections 9.1, 9.2, 9.4, 9.6, 10.1, 10.2, 10.4, 10.9, 11.1(iii), 11.1(iv),
11.1(v) and 11.1(vi) of each thereof.
(b) The Company, the Noteholders and the Equityholders hereby amend
Section 10.1(a) of each of the Agreements so that, for the period commencing on
the date hereof (the "RESTRUCTURING DATE") and ending on March 31, 2001 (the
"WAIVER PERIOD"), the Company shall not be required to comply with the
Consolidated Net Worth covenant set forth in such Section 10.1(a). From and
after April 1, 2001, the Company's required Consolidated Net Worth shall
increase (from the Company's actual Consolidated Net Worth as of March 31, 2001)
through the term of the Amended Notes (as defined in Section 2 hereof) as set
forth in Section 10.1(b) (with respect to Net Income from and after April 1,
2001) and Section 10.1(c) (with respect to proceeds received after April 1,
2001) of each of the Agreements to the extent such sections are applicable to
the period from and after March 31, 2001. Schedule 1(b)(1) attached hereto sets
forth the Company's good faith estimates, based on consultation with its
independent accountants, of the charges that may arise as a result of the
Restructuring and the balance sheet effect thereof (it being acknowledged by all
parties hereto that the actual charges or the balance sheet effect thereof may
differ from such estimates). Schedule 1(b)(2) attached hereto sets forth the
Company's business plan for the twenty-four month period commencing April 1,
1999 and ending March 31, 2001 (the "BUSINESS PLAN"). The Business Plan has been
prepared by the Company in good faith and is based on assumptions the Company
believes to be reasonable as of the date hereof (it being acknowledged by all
parties hereto that actual results during the periods covered by the Business
Plan may differ from the results contained in the Business Plan).
(c) The Company, the Noteholders and the Equityholders hereby amend
Section 10.2 of each of the Agreements so that the covenant relating to the
Company's Adjusted Interest Expense set forth in each such Section 10.2 will be
waived for the Waiver Period. Such covenant shall become effective and the
Company shall be required to comply with such covenant upon the completion of
the first full fiscal quarter following the Waiver Period. Upon expiration of
the Waiver Period, the Adjusted Interest Expense covenant shall encompass only
those periods after the Waiver Period. Until the end of the fourth full fiscal
quarter following the Waiver Period, compliance by the Company with the Adjusted
Interest Expense covenant shall be determined by calculating the Company's EBIT
and Consolidated Total Interest Expense from the expiration of the Waiver Period
through the end of the quarterly period for which compliance is being determined
and then annualizing each such amount. From and after the end of the fourth full
fiscal quarter following the Waiver Period, the Company shall again comply with
the Adjusted Interest Rate covenant as set forth in Section 10.2 of each of the
Agreements.
(d) The Company, the Noteholders and the Equityholders hereby amend
Article 10 of each of the Agreements to add a new Section 10.15 to each of the
Agreements, which reads in its entirety as follows:
"10.15 RETURN ON ASSETS. The Company's required Return on
Assets (as defined below) for each of the quarterly periods
ending on the Measurement Dates indicated below (each such
quarterly period, a "MEASUREMENT PERIOD") shall not be less than the
corresponding amount set forth below:
----------------------------------------------
MEASUREMENT DATE RETURN ON ASSETS
----------------------------------------------
September 30, 1999 -1.00% (i.e.
negative 1.00%)
----------------------------------------------
December 31, 1999 0.01%
----------------------------------------------
March 31, 2000 0.01%
----------------------------------------------
June 30, 2000 1.00%
----------------------------------------------
September 30, 2000 2.00%
----------------------------------------------
December 31, 2000 2.25%
----------------------------------------------
March 31, 2001 and 2.50%
thereafter
----------------------------------------------
For purposes of the covenant set forth in this Section 10.15, the
following terms shall have the following meanings:
"RETURN ON ASSETS" shall mean the amount derived by subtracting (A) the
sum of (i) the Portfolio Loss Percentage for the applicable Measurement
Period, (ii) the Portfolio Cost of Funds Percentage for the applicable
Measurement Period, and (iii) the Direct Operating Expense Percentage for
the applicable Measurement Period, from (B) the sum of (x) the Weighted
Average Coupon, (y) the Weighted Average Dealer Discount, and (z) the
Third Party Servicing Revenue Percentage. The Company's Return on Assets
will be measured for each Measurement Period, with results to be submitted
to the Noteholders and the Equityholders no later than the forty-fifth day
after the closing of each Measurement Period. Attached hereto as Schedule
1(d) is a sample calculation of the Company's Return on Assets. The
Company shall calculate its Return on Assets consistent with the sample
calculation set forth on Schedule 1(d).
"AVERAGE NAFI PORTFOLIO SIZE" shall mean the aggregate principal amount of
all loans in the NAFI Portfolio at the end of each day in the Measurement
Period, divided by the number of days in the applicable Measurement
Period.
"AVERAGE TOTAL PORTFOLIO SIZE" shall mean the aggregate principal amount
of all loans in the Total Portfolio at the end of each day in the
Measurement Period, divided by the number of days in the applicable
Measurement Period.
"DIRECT OPERATING EXPENSE PERCENTAGE" shall mean all expenses (on an
annualized basis) of the Company for the applicable Measurement Period
that are properly classified in accordance with GAAP as operating expenses
(but excluding depreciation and interest expenses), divided by the Average
Total Portfolio Size during the applicable Measurement Period.
"NAFI PORTFOLIO" shall mean all loans originated by the Company or
acquired by the Company through its Portfolio Acquisition Program.
"PORTFOLIO COST OF FUNDS PERCENTAGE" shall mean the actual weighted
average composite cost of funds for the applicable Measurement Period,
including the capital costs of the Company's securitization tranches A and
B, the capital costs of the Company's overcollateralization credit
enhancement of any such securitization and the capital costs of all cash
maintained in any spread account of any such securitization.
"PORTFOLIO LOSS PERCENTAGE" shall mean the actual net principal
liquidations (on an annualized basis) as reported by the Company's loan
servicing system for the applicable Measurement Period, divided by the
Average NAFI Portfolio Size during the applicable Measurement Period.
"THIRD PARTY SERVICING REVENUE PERCENTAGE" shall mean all third party
servicing revenue (on an annualized basis) for the applicable Measurement
Period as reported by the Company in accordance with GAAP, divided by the
Average Total Portfolio Size during the applicable Measurement Period.
"TOTAL PORTFOLIO" shall mean the NAFI Portfolio and all loans serviced by
the Company for or on behalf of a third party.
"WEIGHTED AVERAGE COUPON" shall mean the weighted average coupon of all
loans in the NAFI Portfolio as of the last day of the applicable
Measurement Period, as derived from the Company's loan servicing system.
"WEIGHTED AVERAGE DEALER DISCOUNT" shall mean the weighted average dealer
discount of the NAFI Portfolio as of the last day of the applicable
Measurement Period, as derived from the Company's loan servicing system,
divided by the Weighted Average Life of the NAFI Portfolio.
"WEIGHTED AVERAGE LIFE" shall mean the weighted average life of all loans
in the NAFI Portfolio as of the last day of the applicable Measurement
Period, as derived from the Company's loan servicing system.
Any other terms used but not defined in this Section 10.15 shall have the
meaning ascribed to such terms in Section 1.1 of each of the Agreements."
(e) The Company, the Noteholders and the Equityholders hereby amend
Section 11.1(vi) of each of the Agreements by adding the following at the end of
each thereof: "provided, however, that for purposes of determining whether an
"Amortization Event" under Section 9.01(f) or (g) of that certain Pooling and
Administration Agreement, dated as of December 8, 1994, as amended (as so
amended, the "POOLING AGREEMENT"), by and among National Financial Auto Funding
Trust II, the Company and Bankers Trust Company, has occurred and constitutes an
Event of Default under the Agreements, the Company's "Net Loss Ratio" (as
defined in the Pooling Agreement) shall be calculated and determined as provided
in the Pooling Agreement as in effect on the Restructuring Date, without giving
effect to any amendments or waivers, if any, after the Restructuring Date.
(f) Except to the extent each is expressly amended or waived by the
terms of this Agreement, all terms and conditions of each of the Agreements and
all other instruments and agreements executed thereunder shall remain in full
force and effect in accordance with their respective terms. Following the
Restructuring Date, except as specifically set forth or provided for herein, the
Company again shall comply with all Affirmative Covenants and Negative and
Financial Covenants contained in each of the Agreements.
2. RESTRUCTURING NOTES. Effective on the Restructuring Date, the
Notes held by the Noteholders shall be amended and restated, in the form of
Exhibit A attached hereto (the "AMENDED NOTES"), to allow the Company, at its
option, for a two-year period ending on the date that is two years from the
Restructuring Date, to pay an amount equal to up to 50% of the scheduled cash
interest payments on the Amended Notes through the issuance of convertible
senior subordinated notes (the "CONVERTIBLE NOTES"), in the form of Exhibit B
attached hereto. Upon presentation of the originally issued Notes from the
Noteholders to the Company, the Company shall mark "Canceled" on the originally
issued Notes and deliver to the Noteholders in exchange therefor Amended Notes
having an aggregate principal amount equal to the aggregate principal amount of
the canceled Notes.
3. RESTRUCTURING SHARES. Simultaneously with the execution and
delivery of this Agreement, the Company shall issue, or cause to be issued, to
(i) the Noteholders, on a pro-rata basis (in relation to the aggregate principal
amount of Notes held by them), an aggregate of 7,071,429 shares of the Company's
Common Stock, and (ii) the Equityholders, on a pro-rata basis (in relation to
the number of shares of the Company's Common Stock purchased by each of them
pursuant to the December Agreement), an aggregate of 1,178,571 shares of the
Company's Common Stock (collectively, the "SHARES").
4. RELEASES. (a) Simultaneously with the execution and delivery of
this Agreement, the Noteholders and the Equityholders shall execute and deliver
the Release in the form of Exhibit C attached hereto. (b) Simultaneously with
the execution and delivery of this Agreement, the Partnership, the General
Partner and the Partners shall execute and deliver the Release and Covenant Not
to Sue in the form of Exhibit D attached hereto. (c) Simultaneously with the
execution and delivery of this Agreement, the Company, the Noteholders and the
Equityholders shall execute and deliver the Release in the form of Exhibit E
attached hereto. (d) Anything to the contrary notwithstanding, the releases
contemplated by and provided for in Sections 4(b) and 4(c) shall not release any
of the released parties from any claims brought by holders of the Company's
securities not signing the releases (such as from shareholder derivative or
class action claims).
5. VOTING PROXY AND TRANSFER LIMITATIONS. (a) Simultaneously with
the execution and delivery of this Agreement, the Partnership shall execute and
deliver to the Noteholders and the Equityholders a proxy with respect to the
Partnership Shares, in the form attached hereto as Exhibit F (the "PROXY"). The
Partnership shall deliver to the Company or its transfer agent the
certificate(s) representing the Partnership Shares for the purpose of imprinting
thereon the following legend:
THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO AN
IRREVOCABLE PROXY AND CERTAIN LIMITATIONS ON TRANSFER AS
CONTEMPLATED BY AND SET FORTH IN THAT CERTAIN RESTRUCTURING
AGREEMENT, DATED AS OF APRIL 7, 1999, BY AND AMONG THE COMPANY AND
NATIONAL AUTO FINANCE COMPANY, L.P., NATIONAL AUTO FINANCE
CORPORATION, THE PARTNERS (AS DEFINED THEREIN), THE 1818 MEZZANINE
FUND, L.P., PC INVESTMENT COMPANY, PROGRESSIVE INVESTMENT COMPANY,
INC., MANUFACTURERS LIFE INSURANCE COMPANY (U.S.A.) AND THE
STRUCTURED FINANCE HIGH YIELD FUND, LLC.
(b) The Partnership agrees not to sell, assign, transfer, pledge,
encumber or otherwise dispose of the Partnership Shares, except (i) in an arm's
length transaction to a party who is not an affiliate (as defined in Rule 405
under the Securities Act of 1933, as amended) of the Partnership or its
partners, or (ii) if to an affiliate (as defined in Rule 405 under the
Securities Act of 1933, as amended) of the Partnership or its partners, subject
to the Proxy (in which case the buyer, assignee, transferee or pledgee, as the
case may be, shall agree in writing to be bound by the terms of this Agreement,
including, without limitation, the Proxy and the transfer limitations set forth
in this Section 5(b)). The foregoing notwithstanding, the Partnership may
distribute the Partnership Shares to the partners of the Partnership, provided
each such partner shall execute and deliver to the Noteholders and the
Equityholders an instrument agreeing to be bound by the terms of this Agreement,
including, without limitation, the Proxy and the transfer limitations set forth
in this Section 5(b).
6. BOARD REPRESENTATION. The Company and the Noteholders hereby
amend Section 9.10(d) of each of the Agreements so that, upon completion of the
Restructuring and (subject to the other provisions of Section 9.10 of each of
the Agreements) from time to time thereafter, each of the Fund, PCI and SFHY
shall have the right to designate a total of two directors to the Board. The
Company shall take all action within its power to cause the appointment or
election of such separate and individual designees of each of the Fund, PCI and
SFHY.
7. AFFILIATED TRANSACTIONS. The Company, the Noteholders and the
Equityholders hereby amend Section 10.4 of each of the Agreements so that from
and after the Restructuring Date, anything to the contrary in Section 10.9 of
each of the Agreements notwithstanding, the Company shall not, and shall not
permit any of its Subsidiaries to, enter into any transaction with any Affiliate
of the Company, including payments on the Company's Preferred Stock (other than
payments on Preferred Stock issued to Noteholders, if any), unless such
transaction is approved by the Board, including the affirmative vote of a
majority of the representatives of the Noteholders; provided that no such
approval shall be required in connection with the Company's ongoing transactions
with BNI, Inc. or any ordinary course transaction between the Company and the
Noteholders or the Equityholders (or any of their respective affiliates).
8. REPRESENTATIONS. (a) Each of the Noteholders, the Equityholders,
the Company, the Partnership, the General Partner, Nova and Nova Financial
severally and not jointly, as to itself only, represents and warrants to the
other parties hereto as follows:
(i) it is a corporation, limited liability company or limited
partnership, as the case may be, duly organized, validly existing and in
good standing under the laws of the jurisdiction of its organization, with
full corporate, limited liability company or partnership power and
authority, as the case may be, to execute and deliver the Restructuring
Documents (as defined in Section 11(n)) and to consummate the transactions
contemplated thereby;
(ii) the Restructuring Documents have been duly authorized, executed
and delivered by it and constitute legal, valid and binding obligations of
it, enforceable against it in accordance with their respective terms
(except as such enforceability may be limited by bankruptcy, insolvency or
similar laws of general application from time to time affecting the rights
of creditors generally and subject to general principles of equity); and
(iii) the execution and delivery of the Restructuring Documents and
the performance by it of its obligations thereunder will not constitute a
violation, breach or default (with or without the passage of time or the
giving of notice, or both) on its part under its organizational documents,
under any federal, state, local or foreign law, rule or regulation, under
any order or judgment that is binding on it or any of its properties, or
under any agreement, instrument or document to which it is a party or by
which it or any of its properties are bound.
(b) In addition to the representations and warranties contained in
Section 8(a) above, the Company represents and warrants to the Noteholders and
the Equityholders as follows: (i) the Shares and the shares of Common Stock
issuable upon conversion of the Convertible Notes (the "CONVERSION SHARES") are
duly authorized and, upon issuance as provided herein or in the Convertible
Notes, as the case may be, will be validly issued, fully paid and nonassessable;
and (ii) upon issuance as provided herein or in the Convertible Notes, as the
case may be, the Shares and the Conversion Shares will be free and clear of any
mortgage, pledge, security interest, encumbrance, charge or other lien.
The foregoing notwithstanding, the Noteholders and the Equityholders
acknowledge that the Company will be required to amend its certificate of
incorporation to increase the number of authorized shares of Common Stock to
permit the issuance of the Conversion Shares. The Company hereby covenants and
agrees to take all action within its power (including seeking the requisite
stockholder approval) to amend its certificate of incorporation as soon as
practicable following the Restructuring Date (but no later than June 30, 1999)
to increase the number of authorized shares of Common Stock to permit the
issuance of the Conversion Shares.
(c) In addition to the representations and warranties contained in
Section 8(a) above, the Partnership represents and warrants to the Noteholders
and the Equityholders as follows:
(i) the Partnership Shares are owned, beneficially and of record, by
the Partnership, free and clear of any liens, claims, security interests,
pledges, charges, encumbrances, mortgages or other defects or restrictions
of any kind whatsoever; and
(ii) the Partnership owns no shares of the Company's Common Stock,
other than the Partnership Shares.
(d) Each of the Partners (other than Nova and Nova Financial),
severally and not jointly, as to himself only, represents and warrants to the
other parties hereto as follows:
(i) he has full power and authority to execute and deliver the
Restructuring Documents and to consummate the transactions contemplated
thereby;
(ii) the Restructuring Documents have been duly executed and
delivered by him and constitute his legal, valid and binding obligations,
enforceable against him in accordance with their respective terms (except
as such enforceability may be limited by bankruptcy, insolvency or similar
laws of general application from time to time affecting the rights of
creditors generally and subject to general principles of equity); and
(iii) the execution and delivery of the Restructuring Documents and
the performance by him of his obligations thereunder will not constitute a
violation, breach or default (with or without the passage of time or the
giving of notice, or both) on his part under any federal, state, local or
foreign law, rule or regulation, or under any order or judgment that is
binding on him or any of his properties, or under any agreement, instrument
or document to which he is a party or by which he or any of his properties
are bound.
9. CONDITIONS TO THE RESTRUCTURING.
(a) Simultaneously with the execution and delivery of this
Agreement, the Company and First Union National Bank shall execute and deliver
(i) the Amended and Restated Pooling and Administration Agreement, (ii) the
Revolving Credit, Term Loan and Security Agreement, and (iii) the Commitment
Letter and the agreements, instruments and documents contemplated thereby, in
the forms attached hereto as Exhibit G-1, G-2 and G-3, respectively.
(b) Simultaneously with the execution and delivery of this
Agreement, the Company, the Partnership and the Junior Noteholders shall execute
and deliver the Note Exchange Agreement and the agreements, instruments and
documents contemplated thereby, in the forms attached hereto as Exhibit H (the
"JUNIOR RESTRUCTURING DOCUMENTS").
(c) Simultaneously with the execution and delivery of this
Agreement, the Partnership shall execute and deliver to the Company the
Certificate Sale Agreement and the Assignment contemplated thereby, and attached
thereto as Exhibit A, in the forms attached hereto as Exhibit I.
(d) Simultaneously with the execution and delivery of this
Agreement, the Board shall receive an opinion from Rothschild Inc. with respect
to the fairness to the Company and its equityholders (other than the
Equityholders and the Partnership), from a financial point of view, of the
transactions contemplated by the Restructuring Documents.
The parties hereto (other than the Company) consent to the Company's
execution and delivery of the foregoing agreements, instruments and documents
and acknowledge and agree that such execution and delivery, and the consummation
of the transactions contemplated thereby, do not violate or constitute a default
under either of the Agreements, the Notes or the Junior Notes.
10. INDEMNIFICATION. (a) In addition to all sums due or to be due
under the Amended Notes and Convertible Notes, the Company agrees to indemnify
and hold harmless the Noteholders and the Equityholders, their respective
Affiliates and each of their respective officers, directors, agents, employees,
members and partners (each, an "INDEMNIFIED PARTY") to the fullest extent
permitted by law from and against all losses, claims, damages, expenses
(including reasonable fees and disbursements of counsel as provided for in
Section 11(o) hereof) or other liabilities ("LOSSES") resulting from any breach
of any agreement, covenant or undertaking of the Company contained in the
Restructuring Documents or any legal, administrative or other actions (including
actions brought by any equityholders of the Company or derivative actions
brought by a Person claiming through the Company or in the Company's name),
proceedings or investigations (whether formal or informal), or written threats
thereof, based upon, relating to or arising out of the Restructuring Documents
or the transactions contemplated thereby or any Indemnified Party's role in the
Restructuring transactions; provided, however, that the Company shall not be
liable under this Section 10: (a) for any amount paid in settlement of claims
without the Company's consent (which consent shall not be unreasonably
withheld), (b) with respect to Losses arising solely out of actions brought by
the partners or shareholders of the Fund, PCI, Progressive, ML or SFHY against
an Indemnified Party or by one Indemnified Party against another, or (c) to the
extent that it is finally judicially determined that such Losses resulted
primarily from the willful misconduct, bad faith or gross negligence of such
Indemnified Party or a breach of the Indemnified Party's agreements herein;
provided, further, that if and to the extent that such indemnification is
unenforceable for any reason, the Company shall make the maximum contribution to
the payment and satisfaction of such indemnified Losses which shall be
permissible under applicable laws. In connection with the obligation of the
Company to indemnify for Losses as set forth above, the Company further agrees
to reimburse each Indemnified Party for all such documented Losses (including
reasonable fees and disbursements of counsel) as they are incurred by such
indemnified party; provided, however, that if an Indemnified Party is reimbursed
hereunder for any Losses, such reimbursement of Losses shall be refunded to the
extent it is finally judicially determined that the Losses in question resulted
primarily from the willful misconduct, bad faith or gross negligence of such
Indemnified Party.
(b) In addition to all sums due or to be due under the New Junior
Notes (as defined in the Note Exchange Agreement that is part of the Junior
Restructuring Documents) and the Junior Convertible Interest Notes (as defined
in the New Junior Notes), the Company agrees to indemnify and hold harmless the
Partnership, Shapiro, Otto and Gurba (each, a "PARTNERSHIP INDEMNITEE") to the
fullest extent permitted by law from and against all losses, claims, damages,
expenses (including reasonable fees and disbursements of counsel) or other
liabilities ("PARTNERSHIP LOSSES") resulting from any legal actions (including
actions brought by any equityholders of the Company or derivative actions
brought by a Person claiming through the Company or in the Company's name)
brought against any Partnership Indemnitee as a result of such Partnership
Indemnitee's role in the transactions contemplated by the Restructuring
Documents to which it is a party; provided, however, that the Company shall not
be liable under this Section 10(b): (i) for any amount paid in settlement of
claims without the Company's consent (which consent shall not be unreasonably
withheld), (ii) with respect to Partnership Losses arising solely out of actions
brought by the partners of the Partnership against a Partnership Indemnitee or
by one Partnership Indemnitee against another, or (iii) to the extent that it is
finally judicially determined that such Partnership Losses resulted primarily
from the willful misconduct, bad faith or gross negligence of a Partnership
Indemnitee or a breach of a Partnership Indemnitee's agreements in the
Restructuring Documents; provided, further, that if and to the extent that such
indemnification is unenforceable for any reason, the Company shall make the
maximum contribution to the payment and satisfaction of such indemnified
Partnership Losses which shall be permissible under applicable laws.
11. MISCELLANEOUS.
(A) SURVIVAL OF PROVISIONS. All representations, warranties,
covenants and other agreements made herein shall survive the execution and
delivery of the Restructuring Documents.
(B) NOTICES. All notices, demands and other communications provided
for or permitted hereunder shall be made in writing and shall be by registered
or certified first-class mail, return receipt requested, telecopier, courier
services or personal delivery to the following addresses, or to such other
addresses as shall be designated from time to time by a party in accordance with
this Section 11(b).
if to the Fund: with a copy to:
The 1818 Mezzanine Fund, L.P. Cadwalader, Wickersham & Taft
c/o Brown Brothers Harriman & Co. 100 Maiden Lane
59 Wall Street New York, New York 10038
New York, New York 10005 Attention: David C. L. Frauman,
Attention: Joseph P. Donlan Esq.
Telecopier No.: (212) 493-8429 Telecopier No.: (212) 504-6666
if to PCI or Progressive: with a copy to:
3 Parklands Drive, 2nd Floor Cadwalader, Wickersham & Taft
Darien, Connecticut 06820 100 Maiden Lane
Attention: Evelyn Erb New York, New York 10038
Telecopier No.: (203) 655-1200 Attention: David C. L. Frauman,
Esq.
Telecopier No.: (212) 504-6666
if to ML: with a copy to:
c/o MF Private Capital, Inc. Manufacturers Life Insurance
45 Milk Street, Suite 600 Company
Boston, Massachusetts 02109-5105 Corporate Law Department
Attention: Raymond L. Britt, Jr. 200 Bloor Street East
Telecopier No.: (617) 451-5601 Toronto, Ontario M4W 1ES, Canada
Attention: William Dawson, Esq.
Telecopier No: (416) 926-5657
if to SFHY: with a copy to:
The Structured Finance High Yield Fund, Cadwalader, Wickersham & Taft
LLC 100 Maiden Lane
c/o Prudential Investments--Structured New York, New York 10038
Finance Group Attention: David C. L. Frauman,
One Gateway Center, 11th Floor Esq.
Newark, New Jersey 07106-5311 Telecopier No.: (212) 504-6666
Attention: Steven M. Tompson
Telecopier No.: (973) 802-2147
if to the Company: with a copy to:
National Auto Finance Company, Inc. Weil, Gotshal & Manges LLP
10302 Deerwood Park Blvd., Suite 100 767 Fifth Avenue
Jacksonville, Florida 32256 New York, New York 10153-0119
Attention: Keith B. Stein Attention: Howard Chatzinoff,
Telecopier No.: (904) 996-2557 Esq.
Telecopier No.: (212) 310-8007
if to the Partnership: with a copy to:
National Auto Finance Company, L.P. O'Sullivan, Graev & Karabell, LLP
Via Mizner Financial Plaza 30 Rockfeller Plaza
700 South Federal Highway, Suite 200 New York, New York 10112
Boca Raton, Florida 33432 Attention: Charles E. Bachman,
Attention: Gary L. Shapiro Esq.
Telecopier No.: (561) 417-0033 Telecopier No.: (212) 408-2420
if to Gary L. Shapiro: with a copy to:
National Financial Companies, LLC O'Sullivan, Graev & Karabell, LLP
Via Mizner Financial Plaza, Ste. 200 30 Rockefeller Plaza
700 South Federal Highway New York, New York 10112
Fax: (561) 417-8827 Attention: Charles E. Bachman,
Esq.
Telecopier No.: (212) 408-2420
if to Edgar A. Otto: with a copy to:
Congress Point Financial Corp. O'Sullivan, Graev & Karabell, LLP
6400 Congress Avenue, Suite 2800 30 Rockefeller Plaza
Boca Raton, Florida 33487 New York, New York 10112
Main Facsimile: (561) 988-7087 Attention: Charles E. Bachman,
Esq.
Telecopier No.: (212) 408-2420
if to Stephen L. Gurba: with a copy to:
Bulova Technologies O'Sullivan, Graev & Karabell, LLP
101 North Queen Street 30 Rockefeller Plaza
P. O. Box 4787 New York, New York 10112
Lancaster, Pennsylvania 17604-4787 Attention: Charles E. Bachman,
Fax: (717) 397-2434 Esq.
Telecopier No.: (212) 408-2420
All such notices and communications shall be deemed to have been
duly given: if delivered by hand, when personally delivered; if delivered by
courier, when delivered to the recipient by commercial overnight courier
service; if mailed, five Business Days after being deposited in the mail,
postage prepaid; and if telecopied, upon confirmation of receipt.
(C) SUCCESSORS AND ASSIGNS. This Agreement shall inure to the
benefit of and be binding upon the successors and permitted assigns and
permitted transferees of the parties hereto.
(D) ASSIGNMENTS.
The Company may not assign any of its rights or obligations under
this Agreement (other than in connection with a transaction permitted pursuant
to Section 10.3 of the Agreements) without the written consent of the holders of
a majority (i) in aggregate principal amount of the Amended Notes held by the
Noteholders, and (ii) of the aggregate number of shares of Common Stock held by
the Equityholders.
Subject to the other limitations contained in the Amended Notes, the
Convertible Notes and this Agreement, the Noteholders and Equityholders and any
subsequent Holder of Amended Notes, Convertible Notes or Common Stock may, at
any time, or from time to time, sell, agree to sell or assign to one or more
other Persons who agree to be bound by all of the terms of this Agreement, all
or any portion of the Amended Notes, Convertible Notes or Common Stock. Subject
to the other limitations contained in the Amended Notes, the Convertible Notes
and this Agreement, in the event of any such sale or assignment of an Amended
Note or Convertible Note, upon surrender for exchange of any Amended Note or
Convertible Note at the office of the Company designated for notices in
accordance with Section 11(b), the Company shall execute and deliver in exchange
therefor, without expense to the Holder (provided the Company shall not be
responsible for any transfer taxes in connection with any such sale or
assignment), one or more new Amended Notes or Convertible Notes, as the case may
be, in the same aggregate principal amount as the then unpaid principal amount
of the Amended Note or Convertible Note so surrendered as such Holder shall
specify, dated as of the date to which interest has been paid on the Amended
Note or Convertible Note so surrendered (or, if no interest has been paid, the
date of such surrendered Amended Note or Convertible Note), in the name of such
Person or Persons as may be designated by such Holder in writing, and otherwise
of the same form and tenor as the Amended Note or Convertible Note so
surrendered for exchange.
Subject to the limitations contained in certificates representing
the Shares or the Partnership Shares and this Agreement, in the event of any
sale or assignment of any certificate representing any of the Shares or the
Partnership Shares at the office of the Company designated for notices in
accordance with Section 11(b), the Company shall execute and deliver in exchange
therefor, without expenses to the holder (provided the Company shall not be
responsible for any transfer taxes in connection with any such sale or
assignment), one or more certificates representing shares of Common Stock in the
same amount as surrendered as such holder shall specify in the name of such
Person or Persons as may be designated by such holder in writing, and otherwise
of the same form. Every Amended Note, Convertible Note or certificate
representing any Shares or the Partnership Shares surrendered for transfer shall
be duly endorsed, or accompanied by a written instrument of transfer duly
executed by the holder of such Amended Note, Convertible Note or certificate
representing any Shares or the Partnership Shares or its attorney duly
authorized in writing.
(e) Amendment and Waiver.
(i) No failure or delay on the part of any party hereto in
exercising any right, power or remedy under any of the Restructuring
Documents shall operate as a waiver thereof, nor shall any single or
partial exercise of any such right, power or remedy preclude any other or
further exercise thereof or the exercise of any other right, power or
remedy.
(ii) Any amendment, supplement or modification of or to any
provision of this Agreement, the Amended Notes or the Convertible Notes,
any waiver of any provision of this Agreement, the Amended Notes or the
Convertible Notes, and any consent to any departure by the Company from the
terms of any provision of this Agreement, the Amended Notes or the
Convertible Notes, shall be effective (i) only if it is made or given in
writing and signed by the Company and (x) if such amendment, supplement or
modification affects the holders of the Amended Notes, the holders of 66%
of the aggregate principal amount of the Amended Notes outstanding, (y) if
such amendment, supplement or modification affects the holders of the
Convertible Notes, the holders of 66% of the aggregate principal amount of
the Convertible Notes outstanding or (z) if such amendment, supplement or
modification affects both the holders of the Amended Notes and the
Convertible Notes, the holders of 66% of the aggregate principal amount of
both the Amended Notes and the Convertible Notes, and (ii) only in the
specific instance and for the specific purpose for which made or given.
Notwithstanding the foregoing, without the consent of each holder of an
Amended Note or Convertible Note affected, an amendment may not:
(1) reduce the rate of or extend the time for payment of
interest on any Amended Note or Convertible Note;
(2) reduce the principal of or extend the maturity of any
Amended Note or Convertible Note;
(3) change the time at which any Amended Note or Convertible
Note shall or may be prepaid in accordance with Sections
3 and 4 of the Amended Notes and Sections 4 and 5 of the
Convertible Notes;
(4) make any Amended Note or Convertible Note payable in
money or securities other than as stated in the Amended
Notes or Convertible Notes; or
(5) make any change in the first or second sentence of this
Section 11(e)(i) or (ii).
(F) COUNTERPARTS. This Agreement and any of the other Restructuring
Documents may be executed in any number of counterparts and by the parties
hereto in separate counterparts, each of which when so executed shall be deemed
to be an original and all of which taken together shall constitute one and the
same agreement.
(G) HEADINGS. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
(H) DETERMINATIONS. All elections or determinations to be made by
the Company, any Noteholder, any Equityholder or the Board hereunder in its
opinion or judgment or with its approval or otherwise shall be made by it in its
sole discretion, unless otherwise specified herein.
(I) GOVERNING LAW. This Agreement has been negotiated, executed and
delivered in the State of New York and shall be governed by and construed in
accordance with the laws of the State of New York, without regard to principles
of conflicts of law.
(J) JURISDICTION. Each party to this Agreement hereby irrevocably
agrees that any legal action or proceeding arising out of or relating to the
Restructuring Document or transactions contemplated thereby may be brought in
the courts of the State of New York located in New York City or of the United
States of America for the Southern District of New York and hereby expressly
submits to the personal jurisdiction and venue of such courts for the purposes
thereof and expressly waives any claim of improper venue and any claim that such
courts are an inconvenient forum. Each party hereby irrevocably consents to the
service of process of any of the aforementioned courts pursuant to a contractual
provision in any such suit, action or proceeding by the mailing of copies
thereof by registered or certified mail, postage prepaid, to the address set
forth in Section 11(b), such service to become effective 10 days after such
mailing. TO THE EXTENT NOT PROHIBITED BY APPLICABLE LAW WHICH CANNOT BE WAIVED,
EACH PARTY HEREBY WAIVES AND COVENANTS THAT IT WILL NOT ASSERT (WHETHER AS
PLAINTIFF, DEFENDANT OR OTHERWISE) ANY RIGHT TO TRIAL BY JURY IN ANY FORUM IN
RESPECT OF ANY ISSUE, CLAIM, DEMAND, ACTION, OR CAUSE OF ACTION ARISING OUT OF
OR BASED UPON THE RESTRUCTURING DOCUMENTS OR THE SUBJECT MATTER THEREOF, IN EACH
CASE WHETHER NOW EXISTING OR HEREAFTER ARISING OR WHETHER IN CONTRACT OR TORT OR
OTHERWISE. (K) SEVERABILITY. In the event that any one or more of the provisions
contained herein, or the application thereof in any circumstance, is held
invalid, illegal or unenforceable in any respect for any reason, the validity,
legality and enforceability of any such provision in every other respect and of
the remaining provisions hereof shall not be in any way impaired, unless the
provisions held invalid, illegal or unenforceable shall substantially impair the
benefits of the remaining provisions hereof.
(L) RULES OF CONSTRUCTION. Unless the context otherwise requires,
"or" is not exclusive, and references to sections or subsections refer to
sections or subsections of this Agreement.
(M) REMEDIES. If a breach of this Agreement, the Amended Notes or
the Convertible Notes by the Company occurs and is continuing, the Noteholders
or any subsequent holder of Amended Notes or Convertible Notes may pursue any
available remedy by proceeding at law or in equity to enforce the performance
(including, without limitation, the specific performance) of any provision of
the Amended Notes, the Convertible Notes or this Agreement. The Noteholders or
any holder of Amended Notes or Convertible Notes may maintain a proceeding even
if it does not possess any of the Amended Notes or Convertible Notes or does not
produce any of them in the proceeding. No remedy is exclusive of any other
remedy. All available remedies are cumulative.
(N) ENTIRE AGREEMENT. This Agreement and the exhibits and schedules
hereto, the Amended Notes and the Convertible Notes, the Proxy, the Junior
Restructuring Documents and the releases described herein (collectively, the
"RESTRUCTURING DOCUMENTS"), are intended by the parties as a final expression of
their agreement and intended to be a complete and exclusive statement of the
agreement and understanding of the parties hereto in respect of the subject
matter contained herein and therein; provided, however, that notwithstanding the
foregoing, except as expressly amended or otherwise modified by any of the
provisions of any of the Restructuring Documents, the provisions of the
Agreements shall remain in full force and effect and unaffected by the
provisions of or the Restructuring Documents. There are no restrictions,
promises, warranties or undertakings, other than those set forth or referred to
herein or therein. The Restructuring Documents supersede all prior agreements
and understandings among the parties with respect to such subject matter. This
Agreement shall not be effective unless and until this Agreement and each of the
other Restructuring Documents has been signed by each of the parties whose
signature is provided for herein and therein.
(O) NOTEHOLDERS AND EQUITYHOLDERS' ATTORNEYS' FEES. All reasonable
attorney's fees, charges and disbursements and all reasonable out-of-pocket
expenses incurred by the Noteholders and the Equityholders in connection with
the negotiation, execution and delivery of this Agreement and the other
Restructuring Documents and the transactions contemplated hereby and thereby
shall be paid by the Company. In any action or proceeding brought to enforce any
provision of this Agreement or any of the other Restructuring Documents or any
other document or instrument contemplated hereby or thereby, or where any
provision hereof or thereof is validly asserted as a defense, the successful
party shall be entitled to recover reasonable attorneys' fees, charges and
disbursements in addition to any other available remedy.
(P) PARTNERSHIP COUNSEL FEES. Simultaneously with the execution and
delivery of this Agreement, the Company shall pay to the Partnership, by wire
transfer in immediately available funds, $15,000 in contribution to the counsel
fees incurred by the Partnership in connection with the transactions
contemplated hereby.
(Q) PUBLICITY. Except as may be required by applicable law or a
listing agreement with any securities exchange or The Nasdaq Stock Market, Inc.,
the Company, the Noteholders and the Equityholders severally agree that none of
them shall issue a publicity release or announcement or otherwise make any
public disclosure concerning this Agreement or the transactions contemplated
hereby, without prior approval of the others of them. If any announcement is
required by law to be made by any party referred to in this Section 11(q), prior
to making such announcement such party, to the greatest extent practicable (i)
will deliver a draft of such announcement to such other parties referred to in
this Section 11(q), and (ii) shall give such other parties an opportunity to
comment thereon.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed and delivered by their respective officers or partners hereunto duly
authorized as of the date first above written.
NATIONAL AUTO FINANCE COMPANY, INC.
By:____________________________________
Name: Keith B. Stein
Title: Chief Executive Officer
NATIONAL AUTO FINANCE COMPANY, L.P.
By:_________________________________
National Auto Finance Corporation,
its general partner
By:____________________________________
Name: Gary L. Shapiro
Title: President
NATIONAL AUTO FINANCE CORPORATION
By:____________________________________
Name: Gary L. Shapiro
Title: President
NOVA FINANCIAL CORPORATION
By:____________________________________
Name:
Title:
NOVA CORPORATION
By:____________________________________
Name:
Title:
GARY L. SHAPIRO
_________________________________________
EDGAR A. OTTO
_________________________________________
STEPHEN L. GURBA
_________________________________________
THE 1818 MEZZANINE FUND, L.P.
By: Brown Brothers Harriman & Co.,
its General Partner
By:____________________________________
Name: Joseph P. Donlan
Title: Senior Manager
THE PROGRESSIVE INVESTMENT COMPANY,
INC.
By:____________________________________
Name: Evelyn Erb
Title: Portfolio Manager
PC INVESTMENT COMPANY
By:____________________________________
Name: Evelyn Erb
Title: Portfolio Manager
MANUFACTURERS LIFE INSURANCE COMPANY
(U.S.A.)
By:____________________________________
Name: Raymond L. Britt
Title: Senior Managing Director
THE STRUCTURED FINANCE HIGH YIELD
FUND, LLC.
By:____________________________________
Name:
Title: Vice President
<PAGE>
SCHEDULE 1(b)(1)
GOOD FAITH ESTIMATE OF RESTRUCTURING CHARGES
<PAGE>
SCHEDULE 1(b)(2)
BUSINESS PLAN
<PAGE>
SCHEDULE 1(d)
SAMPLE RETURN ON ASSETS CALCULATION
<PAGE>
EXHIBIT A
AMENDED AND RESTATED SENIOR SUBORDINATED NOTE
<PAGE>
EXHIBIT B
CONVERTIBLE NOTE
<PAGE>
EXHIBIT C
RELEASE OF THE COMPANY BY THE NOTEHOLDERS AND THE EQUITYHOLDERS
<PAGE>
EXHIBIT D
RELEASE OF THE COMPANY, THE NOTEHOLDERS AND THE EQUITYHOLDERS BY THE
PARTNERSHIP
<PAGE>
EXHIBIT E
RELEASE OF THE PARTNERSHIP BY THE COMPANY, THE NOTEHOLDERS AND THE
EQUITYHOLDERS
<PAGE>
EXHIBIT F
PROXY
<PAGE>
EXHIBIT G
AGREEMENTS BETWEEN THE COMPANY AND FIRST UNION
<PAGE>
EXHIBIT H
JUNIOR RESTRUCTURING DOCUMENTS
<PAGE>
EXHIBIT I
CERTIFICATE SALE AGREEMENT
IRREVOCABLE PROXY
The undersigned, National Auto Finance Company, L.P., a Delaware
limited partnership (the "PARTNERSHIP"), is the holder of 4,230,000 shares of
common stock (the "SHARES"), par value $.01 per share, of National Auto Finance
Company, Inc., a Delaware corporation (the "COMPANY").
The undersigned hereby grants an irrevocable proxy to, and
constitutes and appoints the persons from time to time designated to serve on
the Company's Board of Directors by The 1818 Mezzanine Fund, L.P., a Delaware
limited partnership (the "FUND"), PC Investment Company, a Delaware corporation
("PCI"), Progressive Investment Company, Inc., a Delaware corporation
("PROGRESSIVE"), Manufacturers Life Insurance Company (U.S.A.), a Michigan
corporation ("ML"), and The Structured Finance High Yield Fund, LLC, a Delaware
limited liability company ("SFHY"), the undersigned's true and lawful
attorney-in-fact, with full power of substitution, to vote, or to execute and
deliver written consents or otherwise act with respect to, the Shares and any
other shares of capital stock of the Company now owned or hereafter acquired by
the undersigned (the "PROXY SHARES") as fully and to the same extent and with
the same effect as the undersigned might or could do under any applicable laws
or regulations governing the rights and powers of stockholders of the Company.
If more than one of the above-mentioned proxies shall be present and
voting in person or by substitution at any such meeting, or at any adjournment
or adjournments thereof, the majority of the proxies so present and voting,
either in person or by substitution, shall exercise all the powers hereby given.
This proxy is the proxy contemplated by, and attached as Exhibit F
to, that certain Restructuring Agreement, dated as of April 7, 1999 (the
"RESTRUCTURING AGREEMENT"), by and among the Company, the Partnership, National
Auto Finance Corporation, a Delaware corporation, Nova Financial Corporation, a
Delaware corporation, Nova Corporation, a Delaware corporation, Gary L. Shapiro,
Edgar A. Otto, Stephen L. Gurba, the Fund, PCI, Progressive, ML and SFHY. The
Restructuring Agreement provides, among other things, for a release of the
undersigned from certain claims asserted against it, and this proxy is therefore
a proxy coupled with an interest. As to any Proxy Share, this proxy shall
terminate upon the earlier of (i) the date on which such Proxy Share is sold,
assigned, transferred or otherwise disposed of in an arm's length transaction to
a party who is not an affiliate (as defined in Rule 405 under the Securities Act
of 1933, as amended) of the Partnership or its partners, and (ii) the date on
which the Restructuring Agreement is terminated as provided therein.
The undersigned consents and acknowledges that a notation regarding
this proxy and the transfer limitations set forth in Section 5(b) of the
Restructuring Agreement may be placed on the stock certificate(s) representing
the Proxy Shares.
<PAGE>
IN WITNESS WHEREOF, the undersigned has executed and delivered this
Irrevocable Proxy, this 7th day of April, 1999.
NATIONAL AUTO FINANCE COMPANY, L.P.,
a Delaware limited partnership
By: National Auto Finance Corporation,
its general partner
By:----------------------------------
Name: Gary L. Shapiro
Title: President
