-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Oxuv7UzXJnjt725SSwiUseGMBr2T5z60NrrQYwkO1nsaAjt2Rpf4zhH4Kw4wUou2 rLA3gvAuk8q2fKMkf8gkCQ== 0000018497-96-000002.txt : 19960604 0000018497-96-000002.hdr.sgml : 19960604 ACCESSION NUMBER: 0000018497-96-000002 CONFORMED SUBMISSION TYPE: 10-K PUBLIC DOCUMENT COUNT: 7 CONFORMED PERIOD OF REPORT: 19951231 FILED AS OF DATE: 19960603 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: CENCOR INC CENTRAL INDEX KEY: 0000018497 STANDARD INDUSTRIAL CLASSIFICATION: PERSONAL CREDIT INSTITUTIONS [6141] IRS NUMBER: 430914033 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-03417 FILM NUMBER: 96576214 BUSINESS ADDRESS: STREET 1: 1100 MAIN STREET SUITE 2350 STREET 2: P O BOX 26098 CITY: KANSAS CITY STATE: MO ZIP: 64196 BUSINESS PHONE: 8162219744 MAIL ADDRESS: STREET 1: P O BOX 26098 STREET 2: 1100 MAIN STREET, SUITE 2350 CITY: KANSAS CITY STATE: MO ZIP: 64196 FORMER COMPANY: FORMER CONFORMED NAME: ALLIED SERVICE INC DATE OF NAME CHANGE: 19680709 10-K 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K Annual Report Pursuant to Section 13 or 15(d) of The Securities Exchange Act of 1934 (fee required) For the Year Ended December 31, 1995 Commission file number 0-3417 CENCOR, INC. (Exact name of registrant as specified in its charter) 1100 Main Street, City Center Square, Suite 416A P.O. Box 26098 Kansas City, MO 64196-6098 Telephone (816) 221-5833 Incorporated in the State of Delaware 43-0914033 (I.R.S. Employer Identification No.) Securities registered pursuant to Section 12(g) of the Act: TITLE OF CLASS Regular Common Stock, $1.00 par value Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YesX No__ Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13, or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. YesX No__ Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by references in Part III of this Form 10-K or any amendment to this Form 10-K. Indicate the number of shares outstanding of each of the issuer's classes of Common Stock, as of May 16, 1996. 1,366,321 Shares of Regular Common Stock, $1.00 par value Market value at May 16, 1996 was $5,123,704 Documents incorporated by reference--None CENCOR, INC. FORM 10-K YEAR ENDED DECEMBER 31, 1995 INDEX Item Page PART I 1 Item 1. Business 1 Item 2. Properties 1 Item 3. Legal Proceedings 1 Item 4. Submission of Matters to a Vote of Security Holders 2 PART II 3 Item 5. Market for Registrant's Common Stock and Related Stockholder Matters 3 Item 6. Selected Financial Data 4 Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations 5 Item 8. Financial Statements and Supplementary Data 9 Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure 24 PART III 25 Item 10. Directors and Executive Officers of the Registrant 25 Item 11. Executive Compensation 26 Item 12. Security Ownership of Certain Beneficial Owners and Management 30 Item 13. Certain Relationships and Related Transactions 31 PART IV 33 Item 14. Exhibits, Financial Statements, Schedules, and Reports on Form 8-K 33 PART I Item 1. Business CenCor, Inc. ("CenCor") was incorporated under the laws of Delaware on May 27, 1968. Prior to June 30, 1995, CenCor, was engaged in the consumer finance business through its wholly-owned subsidiary Century Acceptance Corporation ("Century"). As used herein, the term "the Company" refers to CenCor and Century collectively. Effective June 30, 1995, substantially all of the assets of Century were sold. For additional information regarding the sale of Century, see "Management's Discussion and Analysis of Financial Condition and Results of Operations--Financial Condi- tions--Sale of Century". The Company has not conducted on-going operations since the sale of its consumer finance business and is in the process of liquidation. CenCor's Board of Directors has adopted a resolution calling for the dissolution of CenCor and has adopted a Plan of Dissolution and Liquidation (the "Plan of Liquidation") which will be submitted for stockholder approval at CenCor's next annual meeting. If the Plan of Liquidation is approved, CenCor is expected to be fully liquidated by 1999. See "Management's Discus- sion and Analysis of Financial Condition and Results of Operation-- Financial Condition--Plan of Liquidation". Subsequent to December 31, 1995, CenCor caused its Convertible Notes (as later defined) to be converted into CenCor common stock (see "Management's Discussion and Analysis of Financial Condition and Results of Operations--Financial Condition--Conversion of Convertible Notes"). As a result of the conversion, 572,554 shares of CenCor common stock are issuable to the holders of the Convertible Notes. As of May 16, 1996, 450,464 shares of common stock have been issued upon the surrender of Convertible Notes. Subsequent to December 31, 1995, CenCor received into its treasury 324,641 shares of CenCor common stock in settlement of a claim against the Estate of Robert F. Brozman and the related Robert F. Brozman Trust (see "Certain Relationships and Related Transac- tions"). The issued and outstanding share amounts reflected in this report (except the cover page) and in the December 31, 1995 financial statements included herein reflect the receipt and retirement of the 324,641 shares received from the Robert F. Brozman Trust and treats all 572,554 shares issuable as a result of the conversion of the Convertible Notes as issued and outstanding at December 31, 1995. Item 2. Properties Since the sale of its consumer finance business, the Company's need for office space has decreased sufficiently. The Company currently subleases approximately 800 sq. feet of office space on a month to month basis (see "Certain Relationships and Related Transactions"). The Company believes that its office space is adequate for its needs. Item 3. Legal Proceedings During 1991, a Century subsidiary was the victim of a fraudulent scheme involving the purchase of automobile financing contracts which Century later determined were fictitious. Century recorded a multi-million dollar loss in 1991 as a result of the fraudulent automobile contracts. At the time of the fraudulent scheme, the Century subsidiary was insured by Lloyds of London for a maximum of $1,000,000 under a fidelity policy. Lloyds of London initially denied the claim filed by Century as a result of the fraudulent scheme. On April 22, 1994, the Century subsidiary filed suit in the Circuit Court of the Thirteenth Judicial Circuit of the State of Florida, Hillsborough County, against Lloyds of London seeking recovery of $1,000,000 for breach of contract. In March 1996, the Century subsidiary and the insurance company reached an agreement to settle the claim for $750,000. On July 21, 1994, Century, along with a number of other consumer finance companies, was named as a defendant in a lawsuit styled Princess Nobels v. Associates Corporation of North America, et al. The case is currently pending in the U.S. District Court for the Middle District of Alabama. The plaintiffs, who allegedly were charged for non-filing insurance, make claims for antitrust violations, fraud, violations of RICO, breach of contract, conversion, and Truth-in-Lending Act violations and seek statutory and actual damages, attorney fees and litigation costs. On April 22, 1996, a statewide class of borrowers was certified by the court. Century has denied the allegations presented in the suit and is actively defending the charges. On April 13, 1995, Century, along with a number of other consumer finance companies, was named as a defendant in a lawsuit filed by certain alleged borrowers of the defendant creditor/lenders. In the action, which is pending before the United States District Court for the Middle District of Alabama, Northern Division and styled Dorothy McCurdy, et al. v. American General Finance, Inc., et al, the plaintiffs allege that the defendants engaged in violations of the Alabama Mini-Code, fraud, and conspiracy with respect to the sale of credit property insurance. The plaintiffs seek statutory damages, compensatory and punitive damages, and attorneys' fees. Preliminary motions are currently pending in the case. Century has denied the allegations presented in the suit and is actively defending the charges. Item 4. Submission of Matters to a Vote of Security Holders No matter was submitted to a vote of security holders during the fourth quarter of the registrant's fiscal year ended Decem- ber 31, 1995. PART II Item 5. Market for Registrant's Common Stock and Related Stockholder Matters CenCor's common stock is quoted on the OTC Bulletin Board under the symbol CNCR. The range of high and low sales price as quoted on the OTC Bulletin Board for each quarter of 1994 and 1995 is as follows:
1994 1995 Quarter Ended High Low High Low March 31 3/4 1/2 5/8 5/8 June 30 13/16 1/2 3 3 September 30 3/4 1/2 4-3/8 4-3/8 December 31 3/4 9/16 3-1/2 3-1/2
The quotations from the OTC Bulletin Board reflect inter- dealer prices without retail mark-up, mark-down, or commission and may not represent actual transactions. On May 16, 1996, the quoted bid price of the Common Stock on the OTC Bulletin Board was $3.75. At May 16, 1996, CenCor had approximately 1,166 stockholders of record. No dividends have been paid on the common stock. (The remainder of this page is intentionally blank.) Item 6. Selected Financial Data
December 31 1995 Net Assets in Liquidation Cash and cash equivalents $22,439,000 Property and equipment, net 30,000 Other assets 11,903,000 Total assets 34,372,000 Accounts payable and accrued liabilities 3,200,000 Income taxes payable 759,000 Long-term debt 12,303,000 Total liabilities 16,262,000 Net assets in liquidation $18,110,000 Number of common shares outstanding 1,488,411 Net assets in liquidation per share $ 12.17 Operating results for the year ended December 31, 1995*: Income $ 1,220,000 Expenses 5,082,000 Operating loss (3,862,000) Non-operating income 3,087,000 Loss before discontinued operations (775,000) Income from discontinued operations 18,717,000 Net income $17,942,000 Weighted average shares outstanding 1,813,052 Earnings per share from net income $ 9.90
________________ *As discussed in "Description of Business," the Company is in the process of liquidation and therefore prior year financial data is not comparable or meaningful. Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations Financial Condition Sale of Century Effective June 30, 1995, Century consummated the sale of its consumer finance business to Fidelity Acceptance Corporation, a subsidiary of the Bank of Boston Corporation. Under the terms of the sale, Century received $128.7 million for substantially all of its assets. In accordance with the provisions of the sales agreement, $5 million of the sale proceeds were placed in escrow to secure certain indemnification obligations of Century and CenCor to the buyer that run through July 1, 1998. While the escrow may be reduced by claims of the buyer, no such claims have been made as of May 16, 1996. As a result of the sale, Century was able to redeem all of its outstanding secured notes held by its lenders for a purchase price equal to the principal amount of the secured notes (approximately $102 million) together with interest. The lenders also surrendered for cancellation outstanding warrants which would have allowed them to acquire up to 30% of Century. The remaining net proceeds from the sale have been invested in short-term government and government agency instruments. Conversion of Convertible Notes On December 31, 1995, CenCor had outstanding non-interest bearing convertible notes due July 1, 1999 (the "Convertible Notes") in the principal amount of $11,449,771. Effective April 1, 1996, CenCor converted these Convertible Notes into shares of CenCor's common stock at a ratio of one share of common stock for each $20 principal amount of Convertible Notes. As a result of this conversion, the holders of the Convertible Notes are entitled to be issued 572,554 shares of CenCor common stock upon surrender of their Convertible Notes. As of May 16, 1996, 450,464 shares have been issued and are outstanding as a result of the surrender of Convertible Notes. Plan of Liquidation With the sale of its consumer finance business, CenCor's business purpose no longer exists. For that reason, Cencor's Board of Directors adopted a resolution on January 22, 1996 that CenCor be liquidated and that the Plan of Liquidation be submitted to the stockholders for approval at the next annual meeting. Under Delaware law, the Plan of Liquidation requires the affirmative approval of a majority of the issued and outstanding shares of common stock entitled to vote. If the Plan of Liquida- tion is adopted by the stockholders, a Certificate of Dissolution will be filed with the State of Delaware and CenCor shall be dissolved. Under Delaware law, CenCor will continue as a corporate entity for three years after the dissolution becomes effective, or for such longer period as the Delaware Court of Chancery directs in its own discretion, for the purpose of prosecuting and defending suits by or against CenCor and winding up the business and affairs of CenCor, but not for the purpose of continuing the business of CenCor. The Plan of Liquidation provides that the implementation of the plan is intended to be completed within three years of the effective date of the Certificate of Dissolution. During this three year period, CenCor would not engage in any business activities, except for preserving the value of its assets, adjusting and winding up its business and affairs, and distributing its assets in accordance with the Plan of Liquidation. CenCor's debts and liabilities, whether fixed, conditioned or contingent, would either be paid as they become due or provided for. At such time as the Board has determined that all claims and liabilities have been identified and paid or provided for, which CenCor does not expect to occur prior 1999, CenCor will distribute in one or a series of distributions, at any time, or from time to time as the Board, in its discretion may determine, all funds resulting from CenCor's liquidation to the stockholders in accor- dance with the respective rights of each. The proportionate interests of the respective stockholders in the assets of CenCor would be fixed on the basis of their ownership of the outstanding shares of CenCor on a record date to be determined by the Board of Directors. The Plan of Liquidation provides that CenCor will be fully liquidated no later than three years from the effective date of the Certificate of Dissolution. During the period of liquidation, CenCor's directors and officers would implement and carry out the provisions of the Plan of Liquidation and would receive compensation for their services. Under Delaware law, stockholders of CenCor do not have the right to dissent and demand appraisal of their shares if the Plan of Liquidation is adopted. Accordingly, if the Plan of Liquidation is adopted, all stockholders would be bound by its terms whether or not they voted for the plan. The Board of Directors has been informed that Jack Brozman, who has the authority to vote 21% of the common stock, intends to vote all of these shares in favor of the Plan of Liquidation. Assuming CenCor had fully liquidated and distributed its assets by December 31, 1995 and assuming further that the Company's actual realizable value of its assets and liabilities is identical to the Company's estimated realized value of these items, CenCor's stockholders would have received $18,110,000 in distributions or approximately $12.17 per share, less expenses. The actual amount to be received upon complete liquidation may be adversely affected by claims arising from the indemnification obligations resulting from the sale of Century's assets, unanticipated tax liabilities, the ultimate amount collected on the Debenture and Preferred Stock of Concorde Career Colleges, Inc., (as discussed below), or other unforeseen factors. The actual liquidation amount also may be reduced by legal matters, including the class action lawsuits pending in Alabama against Century (see "Legal Proceedings"). If the stockholders do not approve the proposed Plan of Liquidation, management will in all likelihood seek liquidation of CenCor under the supervision of the U.S. Bankruptcy Court that has retained jurisdiction of CenCor's 1993 plan of reorganization, on the basis that the sale of Century accomplished CenCor's plan of reorganization. A court-supervised liquidation would result in additional legal and administrative fees being incurred by CenCor, which would reduce the amount payable to stockholders upon liquidation. Assets and Liabilities Following Sale of Century Using Liquidation Accounting Following the sale of its consumer finance business, the Company's assets consist primarily of cash and cash equivalents, a junior secured debenture (the "Debenture") in the principal amount of $2,422,000 of Concorde Career Colleges, Inc. ("Concorde"), 300,000 shares of Concorde's cumulative preferred stock (the "Preferred Stock"), certain previously charged-off receivables received in payment of accrued interest on the Debenture, and the escrow account established to secure the indemnification obliga- tions of the Company to the buyer of the consumer finance business. At December 31, 1995, the Company also held a receivable in the amount of $750,000 relating to a fidelity bond claim arising from a loss on fraudulent automobile contracts in 1991 (see "Legal Proceedings") and a $875,000 receivable for a claim against a third party relating to the Company's loss of goodwill due to the so- called CenCor, Inc. of Kansas City loans (the "CIKC Loans"). The Company received payment for these receivables in March 1996. The Company's remaining liabilities consist primarily of the amounts due to the holders of its Non-Convertible Notes (as later defined), accounts payable, and other accrued liabilities, including accrued income taxes. As a result of being in the process of liquidation, the Company is required to adopt the liquidation basis of account- ing. Generally accepted accounting principles require the adjustment of assets and liabilities to estimated fair value under the liquidation basis of accounting. For information concerning the estimated fair values given these items by the Company and the methods and assumptions used to arrive at such values, see the Company's Financial Statements and the notes thereto. Results of Operations During the year ended December 31, 1995, the Company's sources of income, apart from the income received from the discontinued operations of Century, consisted mostly of collections from the Concorde charged-off receivables that the Company accepted in exchange for accrued interest on the Debenture. The Company also recognized an additional $875,000 of income from the settlement claim against a third party as described above. In addition, the Company recognized a gain of $3,087,000 as a result of its settlement with the Estate of Robert F. Brozman and related Robert F. Brozman Trust (collectively the "Brozman Estate"). CenCor released the Brozman Estate of all liability upon receipt of $600,000 in cash plus the transfer of shares of CenCor common stock held by the Brozman Estate in the amount of $2,487,000 (see "Certain Relationships and Related Transactions"). The Company's expenses during the year ended December 31, 1995 consisted mainly of salaries, professional fees, consulting fees in connection with the sale of Century's assets and accrued expenses related to the Company's stock appreciation rights ("SARs") and phantom stock options. See Note 9 to the consolidated financial statements for further information regarding the SARs and phantom stock options. In addition, interest expense on the Non-Convert- ible Notes and Convertible Notes accrued monthly during the period at the estimated discount rate of 16%. Consequently, interest expense exceeded interest income due to the higher discount of the Company's long-term debt as compared to the yield on the Company's investments. During the period of liquidation, the change in the discounted value of the long-term debt will be recognized currently as an adjustment to estimated liquidation value. Century's loss from operations was $5,330,000. The loss was comprised of revenue of $15,714,000 which was offset by expenses of $21,044,000, including interest expense of $5,981,000, provision for credit losses of $4,462,000 and salaries and other expenses of $10,601,000. From the date of sale of Century's assets to December 31, 1995, the Company earned $707,000 in interest income from its short-term investments. The Company's expenses during the same time period consisted mostly of professional fees, severance and bonus payments to former employees and officers, a charge-off in the amount of $250,000 related to the reduction in the receivable from its fidelity bond claim arising from a loss on fraudulent automobile contracts in 1991, and a contingency reserve related to various legal matters. Activities During Liquidation Period The Company's activities during the period of liquidation will focus on the collection of various amounts owed to it, including the collection of the Debenture, Preferred Stock, and the previous- ly charged-off Concorde receivables received in payment of accrued interest. The Company will also closely monitor claims arising from indemnification obligations to the buyer of Century in order to maximize the value of the escrow fund established as a result of the sale. Until the Company's long-term debt becomes payable and distributions are made to stockholders, management expects to invest the available proceeds from the sale of Century and the Company's other cash in short-term government or government agency instruments. The Company's expenses during the period of liquidation are expected to consist mostly of salaries, professional fees, stockholder communication expenses and other liquidating expenses. The Company will be required to satisfy the balance of the Non-Convertible Notes together with all other liabilities prior to any distribution on its outstanding common stock. Regulation During the Liquidation Because of the sale of Century's consumer finance business, CenCor may be an "investment company" as defined in the Investment Company Act of 1940 (the "1940 Act"). The 1940 Act generally requires investment companies to register with the Securities and Exchange Commission after which their capital structure, securities issuances, investments and transactions with affiliates, along with numerous other activities would become subject to extensive regulation. The 1940 Act does not, however, require an investment company to register if its only activities are those "merely incidental to its dissolution". CenCor believes that in light of the dissolution exception from registration under the 1940 Act, CenCor will not have to register under such act, assuming that the plan of liquidation is approved by the stockholders. Surrender of Certificates for Common Stock At such time as the respective interest of the stockholders are fixed on the basis of the ownership of their outstanding shares of common stock of the Corporation on a record date determined by the Board (the "Record Date"), it is anticipated that the stock transfer books of CenCor will be closed, no further transfers will be recorded on CenCor's books and no further stock certificates will be issued, other than replacement certificates. All distribu- tions from CenCor on or after the Record Date will be made to stockholders according to their stockholdings as of the Record Date. As soon as practicable after the determination of the Record Date, stockholders will be advised of the procedures for surrender- ing certificates representing their shares of common stock. Stockholders should not forward their stock certificates before receiving those instructions. All distributions otherwise payable by CenCor to stockholders who have not surrendered their stock certificate and executed and returned such documents may be held for such stockholders, without interest, until the surrender of their certificates (subject to the laws relating to unclaimed property). Liquidity and Capital Resources Capital Obligations The Company has no significant obligations for capital purchases. Defaults on Long-Term Debt The Company is in compliance with all covenants and terms under the indenture for the Non-Convertible Notes. Internal Revenue Service Examination and Potential California Sales Tax Assessment The Company's income tax returns for 1988 and 1989 were examined by the Internal Revenue Service (IRS) which has proposed certain adjustments, a portion of which have been protested by the Company. The Company has also claimed additional deductions in these years. In addition, the Company's 1990, 1991, and 1992 income tax returns are currently under examination by the IRS. Management believes that the ultimate disposition of these IRS examinations will not have a material effect on the financial position of the Company. As a result of the unresolved IRS examinations, management cannot precisely estimate the amount of the Company's net operating loss ("NOL") carryforward for federal income tax purposes. For purposes of estimating the Company's current income tax liability, management has made certain assumptions regarding the Company's NOL carryforwards, which were utilized in full during 1995. Because the proposed adjustments for 1988 and 1989 have not been resolved and the 1990-1992 IRS examination is still ongoing, no assurance can be made regarding this amount. The California Board of Equalization (the "Board of Equaliza- tion") issued a Notice of Determination on January 30, 1996 to Charter Equipment Leasing Corp. ("Charter"), a former subsidiary of CenCor, in the approximate amount of $723,300 for sales taxes, interest and penalties for the period October 1 through 31, 1992. On April 29, 1996, the Board of Equalization issued a revised Report of Field Audit reducing the sales tax assessment against Charter to $5,362. Charter sold substantially all of its assets in November 1992 and dissolved in October 1994. The bulk of the January 1996 tax assessment was based upon Charter's sale of assets. The April 1996 Report of Field Audit reduced the sales tax assessment, because the asset sale occurred in November 1992 and the assessment period ended October 31, 1992. The Board of Equalization may still attempt to assert a claim against the buyer of Charter's assets based upon successor liability for the sales taxes allegedly due from the November 1992 sale transaction. If the buyer is assessed sales taxes, the buyer may attempt to assert an indemnification claim against CenCor. Item 8. Financial Statements and Supplementary Data INDEX TO FINANCIAL STATEMENTS Page CenCor, Inc. Report of Independent Auditors 11 Audited Consolidated Financial Statements Consolidated Statement of Net Assets in Liquidation 12 Consolidated Statement of Operations 13 Consolidated Statement of Stockholders' Equity 14 Consolidated Statement of Cash Flows 15 Notes to Consolidated Financial Statements 17 Report of Independent Auditors The Board of Directors and Stockholders CenCor, Inc. We have audited the accompanying consolidated statement of net assets in liquidation of CenCor, Inc. (the Company) as of December 31, 1995, and the related consolidated statements of operations, stockholders' equity, and cash flows for the year then ended. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. As described in Note 1 to the financial statements, as a result of the Board of Directors' intent at December 31, 1995, the Company changed its basis of accounting from the going-concern basis to the liquidation basis. In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the net assets in liquidation of CenCor, Inc. as of December 31, 1995, and the consolidated results of its operations and its cash flows for the year ended December 31, 1995, in conformity with generally accepted accounting principles applied on the basis described in the preceding paragraph. Ernst & Young LLP May 22, 1996 Kansas City, Missouri CenCor, Inc. (In Process of Liquidation) Consolidated Statement of Net Assets in Liquidation December 31, 1995
Assets: Cash and cash equivalents $22,439,000 Property and equipment, net of accumulated depreciation 30,000 Other assets 11,903,000 Total assets $34,372,000 Liabilities: Accounts payable and accrued liabilities $3,200,000 Income taxes payable 759,000 Long-term debt 12,303,000 Total liabilities 16,262,000 Net assets in liquidation $18,110,000 Number of common shares outstanding 1,488,411 Net assets in liquidation per share $ 12.17
See accompanying notes. CenCor, Inc. (In Process of Liquidation) Consolidated Statement of Operations For the Year Ended December 31, 1995
Income $1,220,000 Expenses: Salaries and other expenses 2,822,000 Interest expense, net 2,260,000 Operating loss (3,862,000) Non-operating income 3,087,000 Loss before discontinued operations (775,000) Discontinued operations: Loss from operations, net of $0 taxes (5,330,000) Gain on disposal, net of $1,100,000 taxes 24,047,000 Income from discontinued operations 18,717,000 Net income $17,942,000 Weighted average common and common equivalent shares outstanding 1,813,052 Earnings per share of common stock and common equivalent shares of stock: Loss per share before discontinued operations $ (0.43) Earnings per share from discontinued operations 10.33 Earnings per share from net income $ 9.90
See accompanying notes. CenCor, Inc. (In Process of Liquidation) Consolidated Statement of Stockholders' Equity
Retained Shares Amount Paid-in Earnings Net Assets Capital (Deficit) In Liquidation Total Balance at December 31, 1994 1,240,498 $1,241,000 $2,805,000 $(11,273,000) $ -- $(7,277,000) Net income -- -- -- 17,942,000 -- 17,942,000 Shares received in settlement (324,641) (325,000) (734,000) (1,428,000) -- (2,487,000) Balance at December 31, 1995 prior to adoption of liquidation basis of accounting 915,857 916,000 2,071,000 5,241,000 -- 8,228,000 Adoption of liquidation basis of accounting 572,554 (916,000) (2,071,000) (5,241,000) 18,110,000 9,882,000 Net assets in liquidation at December 31, 1995 1,488,411 $ -- -- $ -- $18,110,000 $18,110,000
See accompanying notes. CenCor, Inc. (In Process of Liquidation) Consolidated Statement of Cash Flows For the Year Ended December 31, 1995
Operating activities: Net income $17,942,000 Adjustments to reconcile net income to net cash provided by operating activities: Gain on disposal (24,047,000) Other changes in assets and liabilities, net 1,370,000 Total adjustments (22,677,000) Net cash provided by operating activities (4,735,000) Investing and other activities: Proceeds from sale of discontinued operations 123,710,000 Loss from discontinued operations 4,561,000 Capital expenditures, net (35,000) Net cash provided by investing and other activities 128,236,000
CenCor, Inc. (In Process of Liquidation) Consolidated Statement of Cash Flows (continued) For the Year Ended December 31, 1995
Financing activities: Payments of long-term debt $(102,095,000) Net cash used in financing activities (102,095,000) Net increase in cash and cash equivalents 21,406,000 Cash and cash equivalents at beginning of year 1,033,000 Cash and cash equivalents at end of year $22,439,000 Supplemental disclosures of cash flow information: Cash paid during the year for: Interest $5,698,000 Income taxes $356,000
See accompanying notes. CenCor, Inc. Notes to Consolidated Financial Statements December 31, 1995 1. Summary of Significant Accounting Policies Basis of Presentation The accompanying consolidated financial statements include the accounts of CenCor, Inc. and its wholly-owned subsidiary, Century Acceptance Corporation ("Century") (collectively, "the Company"). Effective June 30, 1995, the Company sold substantially all of the assets of Century, its only operating subsidiary. Since the date of the sale of Century, the Company has had no ongoing operations. As the Company has changed its basis of accounting from going concern basis to liquidation basis, comparative financial state- ments are not meaningful and thus have not been presented. The operations of Century, which accounted for substantially all of the Company's operations, have been reflected as discontinued operations. As a result of Board of Directors' intent of Liquidation, as of December 31, 1995, the Company adopted a Plan of Dissolution and Liquidation (the Plan of Liquidation). In connection with the Plan of Liquidation, the officers and directors of CenCor are authorized to (i) dissolve CenCor, including the execution and filing of a Certifi- cate of Dissolution with the Secretary of State of the State of Delaware, (ii) wind up CenCor's affairs, including satisfaction of all liabilities and long-term debt of CenCor and (iii) liquidate CenCor's assets on a pro rata basis in accordance with the respective interests of its common stockholders. CenCor is expected to be dissolved in October 1999. The Plan of Liquidation will be submitted to the shareholders for approval at the next stockholder meeting. If the stockholders do not approve the Plan of Liquidation, management will in all likelihood seek liquidation of CenCor under the supervision of the U.S. Bankruptcy Court. Generally accepted accounting principles require the adjustment of assets and liabilities to estimated fair value under the liquida- tion basis of accounting. Accordingly, the statement of net assets in liquidation at December 31, 1995 reflects assets and liabilities on this basis. Adjustments for changes in estimated liquidation value in subsequent periods will be recognized currently. Estimated costs of liquidation have not been provided since such costs are not reasonably estimatable. Use of Estimates The preparation of financial statements in conformity with generally accepted accounting principles under the liquidation basis of accounting requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from such estimates. Cash and Cash Equivalents Cash and cash equivalents include cash, money market accounts, and short-term government or government agency instruments. Fair Values of Assets and Liabilities The following methods and assumptions were used by the Company in estimating the liquidation value of its assets and liabilities: Cash and cash equivalents: The carrying amount reported in the statement of net assets in liquidation for cash and cash equiva- lents approximates their fair value. Other Assets: The fair value of the Company's other assets (see Note 4) is estimated using discounted cash flow analysis, based on an estimated discount rate commensurate with the associated risks. Accounts Payable and Accrued Liabilities: The carrying amount reported in the statement of net assets in liquidation for accounts payable and accrued liabilities approximates their fair value. Income Tax Payable: The carrying amount reported in the statement of net assets in liquidation approximates the fair value of taxes currently payable. Long-Term Debt: The fair value of the Company's long-term debt is estimated using discounted cash flow analyses, based on the Company's current incremental borrowing rates for similar types of borrowing arrangements (10% at December 31, 1995). The fair value reflects a conversion of the convertible notes in accordance with the bankruptcy plan (see Note 5). The $9,882,000 effect of adoption of liquidation basis of account- ing is comprised primarily of the increased value in the Concorde related assets, as described in Note 4, and the revaluation and conversion of long-term debt as described in Note 5. 2. Discontinued Operations Effective June 30, 1995, the Company sold substantially all of the assets of Century. The gross cash proceeds from the sale of Century were approximately $128,710,000. In accordance with the provisions of the sales agreement, $5,000,000 of the purchase price was placed in escrow to secure certain indemnification obligations of the Company to the buyer that run through July 1, 1998. Century was able to redeem all of its outstanding secured notes held by its lenders for a purchase price equal to the principal amount of the secured notes (approximately $102 million) together with interest, but without the payment of substantial prepayment premiums payable under the secured notes. The lenders also surrendered for cancellation outstanding warrants which would have allowed them to acquire up to 30% of Century. The loss from operations, net of applicable income taxes, for Century is segregated as discontinued operations in the accompany- ing consolidated statement of operations. The net loss from discontinued operations is as follows:
December 31, 1995 Revenues $15,714,000 Expenses (20,988,000) Other loss (56,000) Loss from discontinued operations before income taxes (5,330,000) Income taxes applicable to discontinued operations -- Net loss from discontinued operations $(5,330,000)
3. Litigation and Contingencies Century is a defendant, along with a number of other consumer finance companies, in two class action lawsuits currently pending in the State of Alabama. The suits were filed by certain alleged borrowers of the defendant creditor/lenders and assert various violations. Century has denied the allegations presented in the suit and is actively defending the charges. Management believes that any potential liability pertaining to these lawsuits would be immaterial to the accompanying financial statements. 4. Other Assets Concorde Career Colleges, Inc. ("Concorde"), a former subsidiary of CenCor that was spun off in 1988, agreed as part of the spin-off arrangement to assume certain obligations of CenCor relating to CenCor's then outstanding Series H 10% notes. As a result of Concorde's subsequent inability to make payments on the assumed debt, CenCor terminated Concorde's obligation regarding these notes in consideration of Concorde issuing to CenCor a junior secured debenture (the "Debenture") in the amount of $5,422,000. The Debenture, which is due July 31, 1997, is secured by a lien on substantially all of Concorde's assets, which lien is junior to the lien of Concorde's secured bank lender. Interest on the Debenture compounds and accrues quarterly at a variable rate not to exceed 12 percent. The interest rate (11.0 percent at December 31, 1995) is variable based upon both Concorde's cost of funds and the amount of debt outstanding under the agreement. The Debenture also entitles CenCor to an amount equal to 25% of the amount by which the "market capitalization" of Concorde exceeds $3,500,000. Market capitalization is the total common shares of Concorde multiplied by the highest average share price (high-bid) for any 30 consecutive trading days between January 1, 1997 and June 30, 1997. In 1993, Concorde and CenCor amended their Agreement to provide that CenCor would receive Concorde's previously charged-off receivables in full payment of the accrued interest on the Junior Secured Debenture through December 31, 1993. The receivables, which consist of account and notes receivable from students who attended schools operated by Concorde or its subsidiaries, were assigned to CenCor without recourse with CenCor assuming all risk of non-payment of the receivables. The amendment grants CenCor limited rights of substitution until such time as it collects full payment of the accrued interest, exclusive of out-of-pocket collection fees and expenses paid to third parties. In 1994, Concorde and CenCor further amended their Agreement to provide that CenCor would receive an additional $15,000,000 of Concorde's previously charged-off receivables in full payment of the accrued interest on the Debenture through December 31, 1994 in the amount of $500,231. The amendment grants CenCor the same rights of assignment and substitution for these receivables as provided for in the first amendment. CenCor has engaged a collection agent to pursue recovery of such receivables assigned to the Company as a result of the 1993 and 1994 amendments. As part of the 1994 amendment, CenCor also agreed to accept 300,000 shares of Concorde's cumulative preferred stock (the "Preferred Stock") in exchange for the cancellation of $3,000,000 of the total $5,422,000 of original principal amount of the Debenture. The Preferred Stock, $.10 par value, has a per share liquidation preference of $10.00. Cumulative quarterly dividends accrue at a rate equal to 73% of the then current interest rate on the Debenture. The dividends accumulate until such time as the Debenture has been repaid in full which is currently scheduled for July 31, 1997. At such time, the accumulated quarterly dividends will be paid ratably over the ensuing 12 fiscal quarters. The Preferred Stock has no mandatory redemption date but Concorde may redeem the Preferred Stock, in whole or in part, at any time, at liquidation value plus accrued cumulative dividends. Management of Concorde recently reported improvements in its financial condition resulting in a substantial reduction in its outstanding bank debt. Consequently management, in conjunction with its independent financial advisor, has estimated the liquidation value in the Debenture, including accrued interest, to be $2,802,804 as of December 31, 1995. In addition, management and its independent financial advisor have determined that Concorde will most likely elect to redeem the preferred stock on December 31, 2003. The estimated liquidation value of the Preferred Stock and accrued dividends is $2,074,925 at December 31, 1995. Also included in other assets are receivables relating to a fidelity bond claim arising from a loss on fraudulent automobile contracts in 1991 and a claim against a third party relating to the CenCor, Inc. of Kansas City. In March of 1996, the Company reached agreements to settle these claims. As mentioned in Note 2, an escrow account was established in accordance with the provisions of the agreement pertaining to the sale of Century's assets. Such amount, including accrued interest ($5,028,000), is included in other assets. The escrow was established in order to secure certain indemnification obligations of Century and CenCor to the buyer that run through July 1, 1998. Management believes that any potential liability pertaining to these obligations would be immaterial to the accompanying financial statements. 5. Long-Term Debt Pursuant to a 1993 plan of reorganization, CenCor's noteholders received the following securities for each $1,000 aggregate amount of principal and accrued but unpaid interest at December 31, 1992: i. $600 principal amount of non-interest bearing Non-Convertible Notes ii. $400 principal amount of non-interest bearing Convertible Notes iii. 5.2817 shares of CenCor common stock, par value of $1 per share The principal balances of the Non-Convertible Notes at December 31, 1995 is $17,174,656. The Non-Convertible Notes are non-interest bearing and will mature on July 1, 1999. Such notes have been assigned a fair value of $12,303,000 at December 31, 1995. In accordance with the provisions of the bankruptcy plan, the Convertible Notes are convertible at CenCor's option due to the receipt of at least $17,500,000 in net proceeds from the sale of Century's assets. The Convertible Notes were converted at a ratio of one share of common stock for each $20 principal amount of Convertible Notes. In connection with the conversion of these notes, 572,554 shares of CenCor common stock are issuable to the convertible noteholders. The conversion of these notes in satisfaction of $11,449,771 principal amount of the obligations is reflected in the financial statements and the number of outstanding shares at December 31, 1995. 6. Other Income The Company and the Estate of Robert F. Brozman and the related Trust of Robert F. Brozman (collectively the "Brozman Estate") entered into a settlement agreement pursuant to which the claims of the Company against the Brozman Estate, including claims arising from CenCor's loss of goodwill, would be settled. Under the settlement agreement, CenCor released the Brozman Estate of all liability upon receipt of $600,000 in cash plus the transfer of shares of common stock held by the Brozman Estate in the amount of $2,487,000. In March of 1995, CenCor received the $600,000 in cash from the Brozman Estate. The Company, with the assistance of its independent financial advisor, and the Brozman Estate agreed to a value of the stock of $7.66 per share which resulted in 324,641 shares of stock being transferred to the Company. The transfer in satisfaction of the settlement agreement and the subsequent retirement of the stock is reflected in the December 31, 1995 financial statements. 7. Per Share Information Earnings per common share and common equivalent shares were computed by dividing net income by the average outstanding shares of stock during the year ended December 31, 1995. The number of weighted average common share equivalents was increased under the assumption that the common stock shares issued as a result of the conversion of the Convertible Notes were outstanding during the year ended December 31, 1995. Net assets in liquidation per common share was computed by dividing net assets in liquidation by the outstanding shares of common stock at December 31, 1995. 8. Income Taxes The Company and its subsidiaries file a consolidated federal income tax return. There is no provision or benefit for income taxes allocated to operations as of December 31, 1995. A reconciliation of income tax provision (benefit) allocated to operations to the amount computed using the statutory federal income tax rate is as follows:
1995 Provision (benefit) at statutory rate (34%) $(264,000) Estimated limitation of recognition of operating loss under applicable accounting principles 264,000 Income tax provision (benefit) allocated to operations $ 0 The provision for income taxes allocated to discontinued operations consisted of the following:
December 31, 1995 Federal $765,000 State 335,000 $1,100,000
The Company's income tax returns for 1988 and 1989 were examined by the Internal Revenue Service (IRS), which has proposed certain adjustments, a portion of which have been protested by the Company. The Company has also claimed additional deductions in these years as a result of the prior period adjustments. In addition, the Company's 1990, 1991, and 1992 income tax returns are currently under examination by the IRS. Management believes that the ultimate disposition of the IRS examination will not have a material effect on the financial position of the Company and no liability has been accrued at December 31, 1995. As a result of the unresolved IRS examinations, management cannot precisely estimate the amount of the Company's net operating loss ("NOL") carryforward for federal income tax purposes. For purposes of estimating the Company's current income tax liability, manage- ment has made certain assumptions regarding the Company's NOL carryforwards, which were utilized in full during 1995. Because the proposed adjustments for 1988 and 1989 have not been resolved and the 1990-1992 IRS examination is still ongoing, no assurance can be made regarding this amount. The Company has alternative minimum tax (AMT) credit carryforwards of approximately $190,000 which have an unlimited carryforward period. 9. Stock Option Plan In 1993, CenCor granted 90,000 phantom share options to certain officers and directors of CenCor. For each option exercised, the holders will receive a cash payment equal to the excess, if any, over $1.00 per share of the greater of (i) the closing price of the Common Stock on the NASDAQ National Market (as determined on the date the option is exercised), (ii) the stockholders' equity of CenCor at the end of its most recent fiscal quarter, or (iii) the aggregate distributions per share received by CenCor's stockholders in the event CenCor is liquidated. The options automatically terminate (a) five years after such officer or director resigns, or is removed, or (b) on the date that said officer or director engages in certain misconduct under his employment agreement. The Company recorded a liability in the amount of $1,010,000 at December 31, 1995 for this obligation. The Company has 50,000 Stock Appreciation Rights (SARs) to certain directors and officers of the Company outstanding at December 31, 1995. The liability related to the SARs was $701,505 at December 31, 1995. The SARs permit the holders to receive a cash payment of the excess of the fair value of Century's stock at the date of exercise over the fair value of Century's stock as of the date of grant. As a result of the sale of Century during 1995, the holders of the SARs became entitled to payment. The fair market value of Century's stock has been determined as the net proceeds from the sale less liabilities retained by Century. $505,500 of the payment due on the SARs was disbursed in January of 1996 and the remaining liability is scheduled to be paid in installments through July of 1998. 10. Employee Benefit Plan The Company has a Profit-Sharing and 401(K) Retirement Savings Plan (the Plan) which covers all employees, age 21 or older, with one year of service. Participants may contribute from 1% to 20% of their annual compensation, with certain exclusions. The Company may make discretionary contributions. No contributions were made by the Company to the Plan in 1995. The Company terminated its Plan on September 30, 1995. At termination the account of each participant of the Plan became fully vested and nonforfeitable. The Plan will continue to be administered in accordance with its terms until the receipt of a favorable determination letter from the IRS. At that time, the Plan assets will be distributed to the participants as indicated by the terms of the Plan. Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure None. (The remainder of this page is intentionally blank.) PART III Item 10. Directors and Executive Officers of the Registrant The following tables sets for the names of the directors of the registrant and certain related information as of December 31, 1995. Each of the directors has been elected to serve until the next annual meeting of stockholders or until his successor is duly elected and qualified.
Name of Served Principal Occupation for Director Since Age Last Five Years and Directorships Jack L. Brozman 1979 46 Chairman of the Board, President and Chief Executive Officer of CenCor and ConCorde since June 1991. Chief Executive Officer of Century from July 1991 to August 1992. Chairman of the Board and Treasurer, from June 1991 until July 23, 1993, and President and Director, for more than five years prior to July 23, 1993, of La Petite Academy, Inc. Director of Century and ConCorde. Edward G. Bauer, Jr. 1991 68 Vice President and General Counsel of Philadelphia Electric Company for more than the five-year period prior to August 1988. Retired from this position at the end of August 1988. George L. Bernstein 1991 64 Chief Financial and Administrative Officer of Howard Fischer Associates, Inc. (executive search firm) since October 1994. Chief Operating Officer of Dilworth, Paxson, Kalish & Kauffman, Philadelphia, Pennsylvania (law firm) from November 1991 to September 1994. Director of R & B, Inc. (distributor of automotive parts). Director of Century effective April 8, 1993. Marvin S. Riesenbach 1991 66 Executive Vice President and Chief Financial Officer of Subaru of America, Inc. for more than the five years prior to October 1990. Retired from this position at the end of October 1990. Jack L. Brozman is the sole trustee of the Estate of Robert F. Brozman. Director effective July 1, 1991. Member of Special and Audit Committees beginning July 1, 1991. Elected to Executive Compensation Committee on August 21, 1991.
The Board of Directors of CenCor held 12 meetings and acted by unanimous written consent on one occasion during the last fiscal year. Standing committees, consisting of the Special Committee and the Audit Committee, held five meetings during the last fiscal year. The Executive Compensation Committee makes salary and bonus recommendations for certain executive officers. The Audit Committee oversees the work of CenCor's independent auditors. CenCor's Board of Directors does not have a nominating committee. The Special Committee has the final authority to thoroughly investigate and report to the Board of Directors on certain matters concerning the misappropriation of CenCor's assets by CenCor's previous chairman of the board, Robert F. Brozman, or certain of his affiliated privately held companies. The Special Committee also has the power and authority to consider the adequacy of CenCor's internal controls and procedures and to investigate and report upon such other matters as the Special Committee considers appropriate. The Special Committee, the Executive Compensation Committee, and the Audit Committee are composed of Messrs. Bauer, Bernstein and Riesenbach. In addition to Jack L. Brozman, the following person also serves as an executive officer of the Company as of December 31, 1995.
Name Age Principal Occupation for Last Five Years Terri Rinne 28 Vice President CenCor since July 1, 1995. Controller of CenCor from April 1994 through June 1995. Tax manager of CenCor and Century from August 1993 through March 1994. Accountant with Arthur Andersen, LLP from October 1989 through August 1993.
Disclosure of Delinquent Files Except as described below, the Company believes, based on informa- tion filed with the Company, that all reports required to be filed for the past two years with the Securities and Exchange Commission under Section 16 by the Company's executive officers, directors, and ten percent stockholders have been filed in compliance with applicable rules: Terri Rinne failed to file a report on Form 3 with respect to her appointment as an executive officer of the Company in July 1995. A report on Form 5 disclosing the information required by Form 3 (and reporting no common stock ownership or transactions) was subsequently filed, on an untimely basis, with the Securities and Exchange Commission. Edward Bauer reported, on an untimely basis, a transaction in CenCor common stock in May 1995. Item 11. Executive Compensation. Summary Compensation Table The following table sets forth information as to the compensation of the Chief Executive Officer and each of the other executive officers of CenCor and Century whose total annual salary and bonus exceeded $100,000, during the year ended December 31, 1995 for services in all capacities to CenCor and its subsidiaries in 1993, 1994, and 1995.
Long-Term Compensation Annual Compensation Awards Payout Other Annual Name and Principal Salary Bonus Compensation Option/SARs Position Year ($) ($) ($) (#) SARs Jack L. Brozman, Chairman of the Board and Chief Executive Officer of CenCor 1995 $178,300 15,000 1994 $134,800 $25,000 15,000 1993 $129,800 $25,000 60,000 Patrick F. Healy, former Vice President-Finance, Treasurer and Chief Financial Officer of CenCor and Century and former Chief Accounting Officer of CenCor 1995 $ 56,400 $15,000 10,000 1994 $152,800 10,000 1993 $161,000 $5,000 30,000 Dennis Berglund, former Chief Executive Officer and President of Century 1995 $94,000 $571,600 $265,000 30,000 1994 $150,000 $700 30,000 1993 $100,100 $800 Mr. Brozman also received compensation as an executive officer of ConCorde. "See "Executive Compensation--Option/SAR Grants in Last Fiscal Year." Mr. Brozman will receive a payout on 30,000 units of stock appreciation rights (SARs) deemed exercised in 1995 in the amount of $427,000 but payable in installments beginning in 1996 and ending in 1998. See "Executive Compensation -- Option/SAR Exercise and Fiscal Year End Option Value Table." Mr. Brozman was awarded and paid a $25,000 cash bonus in 1993 in recognition of his excellent performance during 1992. Mr. Brozman was also awarded and paid a cash bonus in 1994 of $25,000 in recognition of his excellent performance in 1993. Mr. Healy's employment with the Company terminated on January 18, 1995. Mr. Healy was awarded and paid a $5,000 cash bonus in 1993 in recognition of his excellent performance to the Company during 1992. Mr. Healy was also awarded a cash bonus in 1994 of $15,000 in recognition of his excellent performance to the Company during 1993. The $15,000 bonus was not paid until 1995. Mr. Healy will receive a payout on 20,000 SAR units deemed exercised in 1996 in the amount of approximately $286,700 but payable in installments beginning in 1996 and ending in 1998. See "Executive Compensation -- Optional/SAR Exercises and Fiscal Year- End Option/SAR Value Table." Mr. Berglund's employment with the Company terminated on July 1, 1995. F9> Consists of a bonus attributable to incentives contained in employment agreement. As a result of this incentive arrangement, Mr. Berglund will receive an estimated additional bonus of $803,000 during 1996. Consists of $85,000 paid in satisfaction and termination of in- the-money SARs and a $180,000 severance payment pursuant to Mr. Berglund's employment agreement. Consists of the value of a leased automobile. Consists of the value of a leased automobile and vacation earned as the result of a promotional program.
Option/SAR Grants in Last Fiscal Year The following table sets forth information as to SARs granted by CenCor during 1995 to executive officers named in the Summary Compensation Table.
Potential Realizable Value at Assumed Annual Rates of Stock Price Appreciation For Individual Grants Option Term Percent of Total Options/ SARs Granted to Em- Exercise or Options/SARs ployees in Fiscal Year Base Price Expiration Name Granted (#) ($/Sh) Date 5%($) 10%($) Jack L. Brozman 15,000 27% $13.72 12/31/98 NA NA Patrick F. Healy 10,000 18% $13.72 12/31/95 NA NA Dennis Berglund 30,000 55% $13.72 12/31/98 NA NA In 1995, CenCor approved SARs for Messrs. Berglund and Brozman relating to appreciation in value of Century's common stock. Messrs. Berglund and Brozman were granted 30,000 and 15,000 SAR units, respectively, effective March 1, 1995. The SARs provide that the executive will receive cash compensation for his units at the earlier of his death, permanent disability, involuntary termination of employment without cause or December 31, 1998, equal to the amount by which the per share value of Century stock at such time (determined by formula) exceeds a base amount of $13.72. If substantially all of the assets or stock of Century are sold prior to December 31, 1998, the amount to be paid to the executive would be equal to the amount by which the net liquidation recovery per share of Century exceeds the base amount. The base amount of $13.72 was selected by CenCor's Executive Compensation Committee as the estimated value per share of Century stock as of December 31, 1993. The SARs terminate if (a) the executive terminates employ- ment with Century prior to January 1, 1999, for reasons other than death or disability; (b) the executive is terminated for cause; or (c) the executive violates certain noncompetition obligations. As a result of the consideration received from the sale of Century on June 30, 1995, the payout receivable for the SARs granted during 1995 has been determined. See "Executive Compensa- tion -- Option/SAR Exercise and Fiscal Year-End Option/SAR Value Table." Mr. Healy was awarded 10,000 SAR units relating to Century's common stock on March 1, 1995 having the same terms and conditions as the stock appreciation rights granted to Messrs. Berglund and Brozman. In recognition of Mr. Healy's continuing consulting services to CenCor and Century and his service as CenCor's representative on the Board of Directors of Century, CenCor determined, subsequent to the termination of Mr. Healy's employment on January 18, 1995, that Mr. Healy's benefits under his SARs continue only with respect to a sale Century at any time on or before December 31, 1995.
Option/SAR Exercise and Fiscal Year-End Option/SAR Value Table The following table provides information with respect to the named executive officers concerning SARs exercised during 1995 and unexercised options held as of December 31, 1995.
SAR's Value # of Securities Underlying Value of Unxercised In-The- Exercised Realized Unexercised Options/SARs Money Options/SARs Name ($) at FY-End at FY-End ($) Exercisable Unexercisable Exercisable Unexercisable Jack L. Brozman, CEO 30,000 $427,000 60,000 N/A Between N/A $150,000 and $670,000 Patrick F. Healy 20,000 $286,700 30,000 N/A Between N/A $75,000 and $335,100 Dennis Berglund N/A N/A N/A N/A Amount relates to value of SAR units deemed exercised during 1995 but payable in subsequent years. Consists of phantom share options relating to 60,000 shares of CenCor common stock. Represents range of estimated value of phantom stock options. The actual value at exercise will depend on which of three approaches to value are then applicable. The actual value realized may fall outside the range indicated. Consists of phantom share options relating to 30,000 shares of CenCor common stock. Mr. Berglund received $85,000 in satisfaction and termination of 60,000 in-the-money SAR units. See "Executive Compensation -- Summary Compensation Table."
Compensation of Directors Each non-officer/director of CenCor is paid an annual retainer of $25,000 plus a fee (based on time spent on corporate matters, including attendance at board and committee meetings) and expenses. Item 12. Security Ownership of Certain Beneficial Owners and Management The following table sets forth, with respect to CenCor common stock (the only class of voting securities), the only person known to be a beneficial owner of more than five percent (5%) of any class of CenCor voting securities as of May 16, 1996.
Number of Shares and Name and Address Nature of Beneficial of Beneficial Owner Ownership Percent of Class Jack L. Brozman, Trustee 272,423 18% Robert F. Brozman Trust 1100 Main St. Kansas City, Missouri 64105 Nature of ownership of securities is direct. Beneficial ownership as shown in the table arises from sole voting power and sole investment power. Does not include 34,344 shares held by Jack L. Brozman or 20,025 shares held by or for the benefit of Robert F. Brozman's other children, in which the Robert F. Brozman Trust disclaims any beneficial interest.
The following table sets forth, with respect to CenCor common stock (the only class of voting securities), (i) shares beneficially owned by all directors of the Company and nominees for director, and (ii) total shares beneficially owned by directors and officers as a group, as of May 16, 1996.
Number of Shares and Name and Address Nature of Beneficial of Beneficial Owner Ownership Percent of Class Jack L. Brozman 306,767 21% Edward G. Bauer, Jr. --- --- George L. Bernstein --- --- Marvin S. Riesenbach -- --- Directors and Officers as a Group 306,767 21% Nature of ownership of securities is indirect. Beneficial ownership as shown in the table arises from sole voting power and sole investment power. Includes 34,344 shares held by Jack L. Brozman and 272,423 shares held by the Robert F. Brozman Trust. Does not include 20,025 shares held by or for the benefit of Robert F. Brozman's other children, in which the Robert F. Brozman Trust disclaims any beneficial interest. Jack L. Brozman is the sole trustee and is also one of the beneficiaries of the Robert F. Brozman Trust.
Item 13. Certain Relationships and Related Transactions Concorde, a business in which Jack L. Brozman has an interest, continues to be indebted to CenCor. CenCor holds the Debenture in the principal amount of $2,422,000 of Concorde. In addition, CenCor owns 300,000 shares of Concorde's Preferred Stock. Further, CenCor has been assigned approximately $23.4 million in previously charged-off Concorde receivable in payment of accrued interest on the Debenture. The Debenture, which matures July 31, 1997, provides for principal and interest payments commencing June 30, 1996 based on a ten year amortization schedule. A balloon payment for the remaining balance is called for on July 31, 1997. Under the Debenture, Concorde will make an additional contingent payment to CenCor at maturity in an amount equal to 25% of the market value of Concorde's outstanding common stock in excess of $3,500,000 on July 31, 1997. The Preferred Stock provides for cumulative quarterly dividends from the date of issuance at an annual dividend rate equal to 73% of the then current interest rate on the Debenture. Dividends cumulate until such time as the Debenture has been repaid in full. At such time, the accumulated dividends are then paid ratably over the next 12 consecutive quarters. After the retirement of the Debenture, the current dividends on the Preferred Stock will become payable and the dividend rate changes to 2% above the prime rate charged by Concorde's bank lender up to a maximum rate of 12%. In the event of Concorde's voluntary or involuntary liquidation, the Preferred Stock has a liquidation preference of $10 per share ($3,000,000), plus cumulative dividends. While Concorde may redeem the Preferred Stock in whole or in part at liquidation value plus accrued cumulative dividends, the Preferred Stock does not provide for mandatory redemption. Concorde assigned to CenCor the previously charged off receivables (primarily student loan promissory notes) in payment of accrued interest on the Debenture through December 31, 1994 of approximate- ly $1 million. Provided that CenCor undertakes reasonable steps to collect the charged off receivables, CenCor has a right to substitute receivables as to which collection efforts have been made for new Concorde receivables until such time as CenCor receives cash equal to the accrued interest. Any amounts collected in excess of the accrued interest amount, apply first to reimburs- ing Concorde for its professional fees and then to interest and principal on the Debenture. The Company currently subleases its approximately 800 sq. feet office space from Concorde on a month to month basis. The Company pays rent of $927 per month for the space. Jack L. Brozman, who is Chairman of the Board of CenCor and Centu- ry, is Chairman of the Board of Concorde. Mr. Brozman owns 171,724 shares of Concorde (2.5% of the outstanding). As sole fiduciary for the Estate of Robert F. Brozman (the "Brozman Estate") and the Robert F. Brozman Trust (he is one of the beneficiaries of the estate and the trust), he owns 2,985,324 shares of Concorde (42.9% of the outstanding). The Company and the Brozman Estate have settled the claims of the Company against the Brozman Estate arising from the CIKC Loans. The Company released the Brozman Estate from all liability in exchange for $600,000 in cash plus the transfer to the Company on May 16, 1996 of 324,641 shares of CenCor common stock previously held by the Brozman Estate. Pursuant to the terms of the settle- ment agreement between the Company and the Brozman Estate, the shares transferred represent the number of shares of common stock which equal the aggregate of $400,000 plus one-half the amount by which the December 31, 1995 fair market value of the stock held by the Brozman Estate exceeds $400,000. The Special Committee, with the assistance of its independent financial advisor, determined that the fair market value of the CenCor common stock on Decem- ber 31, 1995, for the purposes of the settlement, was $7.66 per share. PART IV Item 14. Exhibits, Financial Statements, Schedules, and Reports on Form 8-K. (a) The following documents are filed as part of this Annual Report on Form 10-K. The following Consolidated Financial Statements of CenCor, Inc. and Subsidiaries are included in Item 8: Consolidated Statement of Net Assets in Liquidation. Consolidated Statement of Operations. Consolidated Statement of Stockholders' Equity. Consolidated Statement of Cash Flows. Notes to Consolidated Financial Statements. (i) Consolidated Financial Statement Schedules of CenCor, Inc. and Subsidiaries have been omitted as not applicable or not required under the instructions contained in Regulations S-X, or the information is included elsewhere in the financial statements or notes thereto. (ii) Exhibits.
Exhibit Number Description 2.1 Plan of Reorganization. (Incorporated by reference--Exhibit 2(b) to the Company's Annual Report on Form 10-K for the year ended December 31, 1992.) 3.1 Certificate of Incorporation and all Amendments thereto through August 31, 1990. (Incorporated by reference--Exhibit 3(a) to the Company's Annual Report on Form 10-K for the year ended December 31, 1990.) 3.2 Bylaws amended through July 29, 1991. (Incorporated by refer- ence--Exhibit 3(a) to the Company's Annual Report on Form 10-K for the year ended December 31, 1991.) 4.1 Specimen common stock certificate. (Incorporated by reference-- Exhibit 4(a) to the Company's Annual Report on Form 10-K for the year ended December 31, 1990.) 4.2 Certificate of Incorporation and all Amendments and Amended and Restated Bylaws. (Incorporated by reference--Exhibit 3(a) to the Company's Annual Report on Form 10-K for the year ended December 31, 1990 and included as Exhibit 3(b) hereto.) 4.3 Composite Conform Copy Relating To: Century Acceptance Corpo- ration Amendment and Exchange Agreement dated as of January 29, 1993 and Composite Conformed Copy of Amendment and Exchange Agreement Regarding Century Acceptance Corporation Amendment and Exchange Agreement dated as of January 29, 1993 relating to the restructuring of Century Acceptance Corporation's outstanding indebtedness to All State Life Insurance Company, Inc., American Banker's Life Insurance Company of Florida, American Mutual Life Insurance Company, Continental American Life Insurance Company, The Lincoln National Life Insurance Company, Mutual Services Casualty Insurance Company, New England Mutual Life Insurance Company, Principal Mutual Life Insurance Company, Provident Mutual Life Annuity Company of America, Provident Mutual Life Insurance Company of Philadelphia, and Standard Insurance Company. (Incorporated by reference -Exhibit 4(d) to Company's Annual Report on Form 10-K for the year ended December 31, 1992.) 4.4 Indentures between CenCor, Inc. and Commercial National Bank of Kansas City, N.A. dated April 27, 1993 with respect to notes due 1999. (Incorporated by reference--Exhibit T3C to Company's Application on Form T-3; SEC file #22-24246.) 4.5 Indenture between CenCor, Inc. and Commercial National Bank of Kansas City, N.A. dated April 27, 1993, with respect to convertible notes due 1.999. (Incorporated by reference--Exhibit T3C to Company's Application on Form T-3; SEC file #22-24248.) 4.6 Third Amendment to Amendment and Exchange Agreement dated March 31, 1995. 10.1 Restructuring, Security and Guaranty Agreement dated October 30, 1992 between and Dental Assistants, Inc., United Health Careers Institute, Inc., Southern California College of Medical and Dental Assistants, Inc., Concorde Careers--Florida, Inc., Colleges of Dental and Medical Assistants, Inc. and Computer Career Institute, Inc. (Incorporated by reference -- Exhibit 100) to Company's Annual Report on Form 10-K for the year ended December 31, 1992.) 10.2 Amendment to Agreement for Transfer of Assets and Assumption of Liabilities dated October 30, 1992 between CenCor, Inc. and Concorde Career Colleges, Inc. (Incorporated by, reference-- Exhibit 10(k) to Company's Annual Report on Form 10-K for the year ended December 31, 1992.) 10.3 Employment Agreement with Dennis C. Berglund dated June 28, 1993. (Incorporated by reference--Exhibit 10(g) to the Company's Annual Report on Form 10-K for the year ended December 31, 1993.) 10.4 First Amendment to Restructuring, Security and Guarantee Agreement between CenCor, Concorde, Minnesota Institute of Medical and Dental Assistance, Texas College of Medical and Dental Assis- tants, Texas College of Medical and Dental Assistants, Inc., United Health Careers Institute, Inc., Southern California College of Medical and Dental Assistants, Inc., Concorde Careers--Florida, Inc., College of Dental and Medical Assistants, Inc. and Computer Career Institute, Inc. dated December 30, 1993. (Incorporated by reference--Exhibit 10(i) to the Company's Annual Report on Form 10- K for the year ended December 31, 1993.) 10.5 Stock Appreciation Agreement with Dennis Berglund dated August 29, 1994. (Incorporated by reference--Exhibit 10(h) to the Company's Annual Report on Form 10-K for the year ended December 31, 1994.) 10.6 Stock Appreciation Agreement with Pat Healy dated October 4, 1994. (Incorporated by reference--Exhibit 10(i) to the Company's Annual Report on Form 10-K for the year ended December 31, 1994.) 10.7 Stock Appreciation Agreement with Jack Brozman dated October 4, 1994. (Incorporated by reference--Exhibit 10(j) to the Company's Annual Report on Form 10-K for the year ended December 31, 1994.) 10.8 Minutes of Compensation Committee dated February 7, 1995 relating to amendments to Stock Appreciation Agreements. (Incorpo- rated by reference--Exhibit 10(k) to the Company's Annual Report on Form 10-K for the year ended December 31, 1994.) 10.9 Mutual Release between First Portland Corporation, FP Holdings, Inc., and Leonard and Sharlene Ludwig, Arthur and Phyllis Levinson, CEL-CEN Corp. and CenCor, Inc. dated February 14, 1995. (Incorporated by reference--Exhibit 10(l) to the Company's Annual Report on Form 10-K for the year ended December 31, 1994.) 10.10 Second Amendment to the Restructuring, Security and Guaranty Agreement between CenCor, Concorde, Minnesota Institute of Medical and Dental Assistance, Texas College of Medical and Dental Assis- tants, Texas College of Medical and Dental Assistants, Inc., United Health Careers Institute, Inc., Southern California College of Medical and Dental Assistants, Inc., Concorde Careers--Florida, Inc., College of Dental and Medical Assistants, Inc. and Computer Career Institute, Inc. dated November 15, 1994. (Incorporated by reference--Exhibit 10(m) to the Company's Annual Report on Form 10- K for the year ended December 31, 1994.) 10.11 Subordination Agreement dated November 15, 1994 among Concorde Career Colleges, Inc., CenCor, Inc. and Mark Twain Kansas City Bank. (Incorporated by reference--Exhibit 10(n) to the Company's Annual Report on Form 10-K for the year ended December 31, 1994.) 10.12 Settlement Agreement dated March 27, 1995 among CenCor, Inc., Century Acceptance Corporation, Jack L. Brozman, Executor, and Jack L. Brozman, Trustee. (Incorporated by reference--Exhibit 10(o) to the Company's Annual Report on Form 10-K for the year ended December 31, 1994.) 10.13 Purchase Agreement dated May 19, 1995 by and among CenCor, Century and Fidelity Acceptance Corporation. 10.14 Employment Agreement dated July 3, 1995 between CenCor and Jack Brozman. 10.15 Letter Agreement dated July 15, 1995 between Century and Dennis Berglund. 10.16 General Release and Settlement Agreement dated July 13, 1995 between CenCor and Dennis Berglund. 21 Subsidiaries of the Registrant. 27 Financial Data Schedule.
(b) Reports on Form 8-K: No reports on Form 8-K were filed during the quarter ending December 31, 1995. SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. CENCOR, INC. By:/s/ Jack L. Brozman Jack L. Brozman Chairman of the Board Date: May 28, 1996 Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of Registrant and in the capacities and on the dates indicated. Signature Date By: /s/ Jack L. Brozman May 28, 1996 Jack L. Brozman (Chairman of the Board, Chief Executive Officer and Director) By: /s/ Terri L. Rinne May 28, 1996 Terri L. Rinne (Vice President and Chief Financial Officer) By:/s/ Edward G. Bauer, Jr. May 28, 1996 Edward G. Bauer, Jr. (Director) By:/s/ George L. Bernstein May 28, 1996 George L. Bernstein (Director) By:/s/ Marvin S. Riesenbach May 28, 1996 Marvin S. Riesenbach (Director) EX-10.13 2 EX-10.13 PURCHASE AGREEMENT THIS AGREEMENT is made and entered into as of the 19th day of May 1995 (the "Contract Date"), by and among CENCOR, INC., a Delaware corporation with a place of business at 1100 Main Street, Suite 416, Kansas City, Missouri, 64105 ("Holding Company"), CENTURY ACCEPTANCE CORPORATION, a Delaware corporation with a place of business at 1100 Main Street, Suite 2350, Kansas City, Missouri 64105 and a direct wholly owned subsidiary of Holding Company ("Parent"), the corporations listed on the attached Schedule 1 which are direct or indirect wholly owned subsidiaries of Parent (herein collectively referred to as "Sellers" or individually as "Seller"), and Fidelity Acceptance Corporation, a Minnesota corporation with a place of business at 330 Second Avenue, South, Suite 790, Minneapolis, Minnesota 55401 ("Buyer"). WITNESSETH THAT WHEREAS, Holding Company wishes to cause Parent and Sellers to sell, and Buyer wishes to buy from Parent and Sellers, certain Contracts and Business Assets (as hereinafter defined), upon the terms and conditions contained herein and, in addition, Holding Company wishes to cause Parent and Sellers to assign and Buyer wishes to assume the Assigned Obligations (as hereinafter defined); NOW THEREFORE, in consideration of the mutual promises and covenants contained in this Agreement, the parties agree as follows: 1. DEFINITIONS: Whenever used in this Agreement, the following words and phrases, unless the context otherwise requires, shall have the following meanings: Agreement means this purchase agreement, including all schedules and exhibits attached hereto. American Bankers means American Bankers Insurance Group. Assigned Obligations shall mean all of Parent's and the Sellers' obligations under the Leases and Third Party Agreements, Unearned Insurance Commissions (as hereinafter defined), Dealer Holdback (as hereinafter defined) and any other obligations of Parent or any Seller as expressly agreed to by the parties, all as listed on the attached Schedule 2. Business means the consumer finance business of Parent and the Sellers, considered in the aggregate, as presently conducted. Business Assets means the assets of Sellers and Parent listed on the attached Schedule 3 to be purchased by Buyer including Sellers' and Parent's furniture, equipment, leasehold improvements, security deposits and such other assets as agreed to by Parent and Buyer. Business Day means any day other than Saturday, Sunday or legal holidays. Contract means a promissory note, retail installment sales contract, and any related security instrument payable to any Seller by an Obligor and evidencing a loan or account made or acquired by such Seller, including all such loans or accounts that have been charged off as of the Purchase Date. Closing means the consummation of the transactions contemplat- ed by this Agreement, which shall be deemed to occur upon the commencement of business on the Purchase Date. Dealer Holdback means the aggregate amount reflected on the books and records of Parent and Sellers as of any given date as withheld from dealers in connection with purchases of retail installment finance contracts by Parent and Sellers, which amount is available to cover losses that may be incurred on such purchased contracts and may be subject to repayment by Parent, Sellers or their assignees in accordance with the terms of such purchases. The dealer holdback amounts per dealer as of April 30, 1995 are listed on Schedule 2. Determination Date means the last calendar day preceding the Purchase Date. Gross Loan Amount means, as of any given date, the aggregate amount reflected on the books and records of Parent and Sellers as due from the Obligors with respect to all Contracts. Interest Bearing Contracts means Contracts which are reflected on the books and records of Parent and Sellers in an amount equal to the principal balance of such Contracts without regard to any interest charged or chargeable for such Contracts. Leases means all real property leases, including all amend- ments, modifications and extensions thereof, for each of the office locations set forth in Schedule 2 hereto. Master Insurance Policies means those various policies of insurance issued by American Bankers as disclosed in Schedule 2 hereto. Net Outstanding Balances means with respect to Interest Bearing Contracts, the aggregate amount reflected on the books and records of Parent and Sellers as due from the Obligors thereof as of the Determination Date multiplied by a fraction equal to (X) the aggregate amount reflected on the books and records of Parent and Sellers for all Interest Bearing Contracts as of the end of the preceding calendar month (the "Interest Bearing Contracts Month End Balance") plus all accrued and unpaid interest thereon as of such month end and less all deferred fees on such Contracts as of such month end over (Y) the Interest Bearing Contracts Month End Balance, and with respect to Precomputed Interest Contracts, the gross amount reflected on the books and records of Parent and Sellers for all such Precomputed Interest Contracts as of the Determination Date multiplied by a fraction equal to (X) the aggregate gross amount reflected on the books and records of Parent and Sellers for all Precomputed Interest Contracts as of the end of the preceding calendar month (the "Precomputed Interest Contracts Month End Balance") less unearned interest and deferred fees on such Contracts as of such month end over (Y) the Precomputed Interest Contracts Month End Balance. Obligor means the person or persons who obtained a loan from any Seller or, if any Seller's ownership of a loan or account was established by purchase, who obtained the extension of credit from any such Seller's predecessor in interest, and who are obligated to pay such Seller in accordance with the Contracts. Post Closing Settlement Date shall be a date not later than sixty (60) days after the Purchase Date. Precomputed Interest Contracts means the Contracts which are reflected on the books and records of Parent and Sellers in an amount equal to the entire amount of principal and interest payable under such Contracts to Sellers. Purchase Date shall be the date on which the Closing occurs, which shall take place at the offices of Parent at 1100 Main Street, Suite 2350, Kansas City, Missouri or at such other place as may be agreed upon by Buyer and Parent. In the event the Purchase Date does not occur prior to September 30, 1995 or such later date as shall have been agreed to in writing by Buyer and Parent (the "Termination Date"), this Agreement shall be null and void and of no further force or effect, subject, however, to Section 22 below. Purchase Price shall be the aggregate cash amount to be paid by Buyer to Parent and the Sellers on the Purchase Date for the Contracts and Business Assets in accordance with the terms of this Agreement. Retrospective Insurance Commission Receivable means all of the right, title and interest of Parent and the Sellers, considered collectively, to receive amounts following the Closing payable by American Bankers with respect to the Service Expense Reimbursement Agreement. Service Expense Reimbursement Agreement means that certain agreement between Parent or Sellers as customer and American Bankers and all modifications and addendums thereto, all as disclosed in Schedule 2 hereto. Third Party Agreements means each of the written agreements between Parent or a Seller and a third party, including without limitation all equipment and other personal property leases, maintenance agreements and service agreements, which are disclosed in Schedule 2 hereto. Unearned Insurance Commissions means the aggregate amount reflected on the books and records of Parent and Sellers as of any given date of advanced commissions retained by Parent and/or the Sellers less the earned portion thereof with respect to sales of insurance products occurring prior to such date, where the applicable insurance policies remain in effect as of such date, which aggregate amount may be subject to repayment in whole or in part by Parent, the Sellers or their assignees in accordance with the Service Expense Reimbursement Agreement. 2. SUBSIDIARIES OF BUYER: Buyer may designate one or more of its subsidiaries as the purchaser of any Contract or Business Asset or assignee of any Lease or Third Party Agreement and the word "Buyer" as used in this Agreement shall,. wherever applicable, include each such subsidiary; provided, however, notwithstanding any such designation, Fidelity Acceptance Corporation shall remain jointly and severally responsible for the performance of all obligations of Buyer under this Agreement. If a subsidiary of Buyer purchases a Contract or Business Asset or assumes an Assigned Obligation, the subsidiary shall have all the benefits and obligations of this Agreement including, but not limited to, the benefits of the representations, warranties and covenants made by Holding Company, Parent and Sellers, and the indemnification obligations thereof, and shall have the authorizations, rights and powers granted by Parent and Sellers, with respect to the Contract, Business Asset, Lease or Third Party Agreement as applicable. 3. SALE OF CONTRACTS AND BUSINESS ASSETS, Etc.: On the Purchase Date and subject to the conditions of this Agreement Parent and each Seller will sell, assign, transfer and set over to Buyer the Business Assets, the Leases, the Third Party Agreements, the Contracts, the Retrospective Insurance Commission Receivable, and all of their rights, title and interest therein to Buyer, Parent and Sellers shall deliver a Schedule of Contracts, which shall include (i) a list of the Contracts, identified by name of Obligor and account number as of the end of the calendar month immediately preceding the month in which the Closing shall occur (the "Pre-Closing Month End"), (ii) the amounts, calculated on an aggregate and per account basis, for outstanding principal balance, unearned interest (with respect to Precomputed Interest Contracts) and deferred fees, and on an aggregate basis only for accrued and unpaid interest (with respect to Interest Bearing Contracts), all as of the Pre-Closing Month End, and (iii the Gross Loan Amount as of the Determination Date, all of which shall be prepared by Parent and Sellers on a basis consistent with the applicable policies, procedures and practices of Parent and Sellers, as in effect on the Contract Date and disclosed at such time by Parent to Buyer, and shall be attached to this Agreement as Schedule 4 and (iii) Parent and Sellers shall prepare supplements to Schedules 3 and 2 (the Business Assets and the Leases and Third Party Agreements Sched- ules) to add any Business Assets, Leases and Third Party Agreements purchased or entered into and eliminate any Business Assets, Leases and Third Party Agreements sold or terminated, all in the ordinary course of business and as permitted under this Agreement, between the date hereof or the date of the applicable schedule attached hereto, whichever is applicable, and the Purchase Date, and Buyer will purchase the Business Assets as listed on Schedule 3 as supplemented and assume the Assigned Obligations under the Leases and Third Party Agreements as listed on Schedule 2 as supplemented. 4. PURCHASE PRICE - CONTRACTS - BUSINESS ASSETS: On the Purchase Date, Buyer shall pay to the Sellers and Parent an aggregate amount equal to the Purchase Price, in U.S. Dollars delivered by wire transfer in immediately available funds as directed by Parent. The Purchase Price shall consist of the aggregate amount of: A. An amount equal to the Net Outstanding Balances, less an amount equal to the Dealer Holdback as of the Determination Date (which shall be estimated on the Purchase Date to be the amount of the Dealer Holdback as of the Pre-Closing Month End and shall be adjusted on the Settlement Sheet to reflect the actual amount of the Dealer Holdback as of the Determination Date) and less an amount equal to the Gross Loan Amount as of the Determina- tion Date multiplied by a fraction equal to (x) the Unearned Insurance Commissions balance as reflected on the books and records of Parent and the Sellers as of the Pre-Closing Month End over (y) the Gross Loan Amount as of the Pre-Closing Month End, plus (iv) $18,501,000.00 plus (v) $750,000.00 (which the parties agree is the value assigned to the Retrospective Insurance Commission Receiv- able); and B. An amount equal to the net book value of the Business Assets listed on Schedule 3 as shown on the books and records of Parent and Sellers as of the Pre-Closing Month End plus Parent's or Sellers' actual cost of any Business Asset acquired less the book value of any Business Assets sold between such calendar month end and the Purchase Date. 5. ASSUMPTION OF ASSIGNED OBLIGATIONS: On the Purchase Date, in addition to the payment of the Purchase Price to Parent and Sellers, Buyer shall assume all of Parent's and/or Sellers' obligations accruing on or after the Purchase Date under the Assigned Obligations by the execution of an Assignment and Assumption Agreement in substantially the form of Exhibit "A" and Buyer shall not be responsible for, and shall not assume hereunder, any other liabilities, responsibilities or obligations of Holding Company, Parent or any Seller whatsoever. 6. POST CLOSING SETTLEMENT DATE: Within thirty (30) days after the Purchase Date, Parent and Sellers shall prepare a settlement sheet ("Settlement Sheet") setting forth adjustments to the Purchase Price in order to prorate lease, utilities, personal property tax, maintenance, service contract and other similar payments as of the Purchase Date, compensate each respective Seller for Contracts, if any, made or acquired and transferred by such Seller to Buyer which were not included in the calculation of the Purchase Price as of the Purchase Date, compensate each Seller for not sufficient funds checks ("NSF Check(s)") received by such Seller prior to the Purchase Date and returned by Seller's depository bank on or after the Purchase Date, such that the Net Outstanding Balances on the Determination Date incorrectly reflected a payment and understated the amount due from the Obligor by the amount of the NSF Check and charges related thereto; provided, however, that no such adjustment shall be made under this clause if and to the extent that the Contract(s) to which any such NSF Check(s) relate shall have been required to have been written down or charged off by such Seller as of the Determination Date in accordance with this Agreement, in which case the Net Outstanding Balances shall be appropriately adjusted to reflect such writedown- s) or charge-off(s), and make such other adjustments, including without limitation adjustments to the values of Net Outstanding Balances, Dealer Holdback as of the Determination Date, Unearned Insurance Commissions as of the Determination Date, Gross Loan Amount as of the Determination Date and net book value of the Business Assets as of the Determination Date (taking into account depreciation from the Pre-Closing Month End through the Determina- tion Date), appropriate to effectuate the terms of this Agreement. Parent shall also deliver, together with the Settlement Sheet, a revised Schedule of Contracts, which will update, to the extent obtainable by Parent (using its best efforts), all of the informa- tion that was previously provided in Schedule 4 as of the Pre- Closing Month End to provide such information as of the Determina- tion Date. Parent shall also include in such revised Schedule 4, to the extent obtainable by Parent (using its best efforts), the amounts as of the Determination Date for accrued and unpaid interest with respect to Interest Bearing Contracts on an aggregate and per account basis. Buyer shall notify Parent in writing of any proposed adjustments to the Settlement Sheet within fifteen (15) days after receipt of the Settlement Sheet. Buyer, at its expense, shall have access to the books, records, personnel and representa- tives of Holding Company, Parent and the Sellers, including all financial statements, schedules and work papers of Holding Company, Parent and the Sellers relating to the calculation of the Purchase Price and preparation of the Settlement Sheet, in order to verify to Buyer's reasonable satisfaction the validity of the Purchase Price and the inclusion of all appropriate adjustments, and the amounts thereof, in the Settlement Sheet. The parties will attempt in good faith to agree upon the final version of the Settlement Sheet on or before the Post Closing Settlement Date. If the parties are unable to agree upon the Settlement Sheet by the Post Closing Settlement Date, the independent auditors for Buyer and Parent shall mutually select a nationally recognized accounting firm (the "Accountant") to review the Settlement Sheets proposed by Parent and Buyer and to determine the final version of the Settlement Sheet. The cost of the Accountant shall be borne equally by the Parent and Buyer, unless the Accountant determines that one of the parties presented incorrect data or took a position which was clearly contrary to the terms of this Agreement in which case the entire cost of the Accountant shall be borne by such party. On the Post Closing Settlement Date or, if the Accountant determined the final Settlement Sheet, on the first Business Day after the Accountant's determination, the Buyer will pay by wire transfer in immediately available funds as directed by the Parent the amount, if any, owed by Buyer to Parent or any Seller as shown on the final Settlement Sheet, and the Parent will pay by wire transfer in immediately available funds as directed by Buyer the amount, if any, owed by Parent and Sellers to Buyer as shown on the final Settlement Sheet. A single net payment may be made by Parent or Buyer as appropriate at such time. 7. ENDORSEMENTS/ASSIGNMENTS OF MORTGAGES, Etc. On the Purchase Date, upon payment of the Purchase Price, each respective Seller will deliver to Buyer an executed assignment of mortgage for each Contract secured by an interest in real property, in record- able form and in a form to be agreed upon by Parent and Buyer within thirty (30) days of the date of this Agreement. Buyer shall be responsible for causing all such assignments to be recorded in the appropriate public records and shall bear all costs, including filing fees, in connection therewith. In addition, on the Purchase Date each respective Seller will endorse and assign to Buyer such Seller's interest in each Contract in order to evidence the transfer of such Seller's interest in the Contracts to Buyer in such manner as may be reasonable and appropriate. On the Purchase Date, each Seller shall furnish Buyer with a Power of Attorney in the form of the document attached hereto as Exhibit "B". Buyer agrees to save and hold Parent and each Seller harmless from any loss occasioned by Buyer's use of the Power of Attorney. Parent and each Seller further agree, on the Purchase Date and from time to time following the Purchase Date, to execute any individual assignments and any other instruments of transfer or conveyance and to take or cause to be taken all other actions, including without limitation obtaining all third party releases and/or terminations of liens and security interests affecting any of the Contracts or Business Assets, which are necessary or desirable in the reasonable judgment of Buyer to effect the sale, transfer, conveyance and assignment to Buyer of all of Parent's and the Sellers' respective rights, title and interest in and to each Contract, Business Asset, Lease and Third Party Agreement to be so sold, transferred, conveyed and assigned to Buyer upon the Closing in accordance with the terms of this Agreement. Parent shall deliver all necessary UCC Termination Statements on the Purchase Date and shall cause all such UCC Termination Statements to be filed within five (5) days thereafter in the appropriate public records and shall bear all costs including filing fees, in connection therewith. 8. OTHER ITEMS SUBJECT TO SALE/DELIVERIES BY SELLER: On the Purchase Date, upon payment of the Purchase Price, each Seller will also sell, assign, transfer and deliver to Buyer in connection with: A. The Contracts: (1) All of the Seller's interest and benefits in, to and under all endorsements and guaranties by or of others held by it with respect to the Contracts. (2) All of the Seller's right, title and interest in all security instruments, mortgages or deeds of trusts and the liens created thereunder with respect to the Contracts. (3) Subject to the Parent and Seller retaining such documents that are subject to existing attorney-client privilege in order to maintain the confidentiality of such documents, all individual Contract files, ledger cards, bookkeeping memoranda, receipts, correspondence, folders, credit files, fanfolds, indexes and all other records of each respective Seller directly pertaining to both the Contracts and contracts paid or charged off prior to the Purchase Date; including filing receipts evidencing recordation or filing in governmental filing or recording offices of financing statements, mortgages, and other filing instruments. All such materials, which may be in the form of microfilm or magnetic tape, shall be delivered to Buyer on the Purchase Date. (4) All of the interest of each Seller under each and every existing policy or certificate of insurance, if any, to the extent such relates to any property securing any Contracts and as relates to the life or lives or health of any Obligors of said Contracts. (5) All pending insurance claims and all claims filed in the future, if any, and the proceeds thereof, if any, in connection with any of the Contracts purchased by Buyer. The parties acknowl- edge and agree that Buyer is not purchasing those Contracts related to JoAnn's Instant Finance Cars, Inc. nor Parent's and Sellers' claim against Lloyds' of London related to such Contracts. B. The Business Assets, Leases and Third Party Agreements: (1) A Bill of Sale covering the Business Assets in substan- tially the form of Exhibit "C". (2) Subject to the Parent and Seller retaining such documents that are subject to existing attorney-client privilege in order to maintain the confidentiality of such documents, all files, receipts, correspondence and all other records of each respective Seller directly pertaining to the Business Assets, Leases and Third Party Agreements. 9. CREDIT INSURANCE: The obligations of Buyer, Parent and the Sellers with respect to the transfer of Parent's or any Seller's interest under policies or certificates of insurance relating to the life or lives or sickness and/or disability or property of any Obligor under any Contract shall be satisfied in the following manner: A. On the Purchase Date, each respective Seller and, to the extent necessary, the Parent will execute and deliver to Buyer an assignment of death benefits and/or sickness and/or disability benefits under any and all group creditor life and/or sickness and accident insurance or property insurance policies covering the Contracts to be sold hereby, which assignment shall be acknowledged and consented to as of the Purchase Date by the insurer and which acknowledgment and consent shall be delivered by the insurer on the Purchase Date or as soon thereafter as practicable. B. Neither Parent nor any Seller will initiate, on or after the Purchase Date, any action to terminate the insurance coverage on any insured Contract until such time as such Contract is terminated by prepayment, renewal, refinance or repossession of the collateral, or charge-off by Buyer, whichever occurs first. C. On the Purchase Date, Parent and each Seller shall notify the insurance carrier(s) of this Agreement and instruct said carrier(s) to pay to Buyer any and all unearned premiums from cancellations occurring after the Purchase Date and claims due or thereafter to become due to any Seller. Buyer agrees to refund to the Obligors any applicable unearned insurance premiums to the extent received by Buyer from the appropriate insurance carrier. Buyer agrees to assume, to the extent effectively assigned on terms and conditions reasonably satisfactory to Buyer, all obligations arising under the Service Expense Reimbursement Agreement between American Bankers and Parent and/or any Seller. 10. ALLOCATION: The aggregate amount of the Purchase Price plus the value of the Assigned Obligations (such aggregate amount being referred to herein as the "Acquisition Consideration"), as may be adjusted in accordance with Section 6 above, shall be allocated among all of the assets to be purchased by Buyer under this Agreement (such assets being referred to herein as the "Purchased Assets") in accordance with a Schedule 5 hereto, to be prepared by Buyer and to be made a part of this Agreement at such time as the Acquisition Consideration is finally determined in accordance with the terms hereof The allocation of the Acquisition Consideration among the Purchased Assets to be contained in Schedule 5 shall be consistent with the allocation of value contained in that certain sample schedule prepared by Buyer and delivered to Parent under separate cover dated as of or prior to the date hereof. 11. TRANSFER TAXES: All sales, transfer and other taxes payable in connection with the sale, transfer, conveyance and assignment of the Contracts (including all related security instru- ments), Business Assets, Leases and Third Party Agreements by Parent and the Sellers to Buyer as contemplated under this Agreement shall be borne by Parent and/or Sellers, except as set forth in Section 7 above. 12. PARENT'S AND SELLERS' WARRANTIES: The following covenants, warranties and representations are made to Buyer by each of the Holding Company, Parent and the Sellers, as of the Contract Date and the Purchase Date, which covenants, warranties and representations shall survive the execution of this Agreement and the Closing as provided herein: A. Holding Company, Parent and Sellers covenant, represent and warrant that they have taken all appropriate corporate action necessary to authorize the execution of and consummation of the transactions contemplated by this Agreement. This Agreement has been duly and validly executed and delivered by Holding Company, Parent and the Sellers and constitutes the valid and binding obligation of Holding Company, Parent and the Sellers, enforceable against Holding Company, Parent and each of the Sellers in accordance with its terms. The execution and performance of this Agreement by Holding Company, Parent and each Seller do not violate any laws, regulations, indentures, contracts, judgments or decrees to which any of them is a party or by which any of their respective properties or assets may be affected nor the respective Certifi- cates of Incorporation and By-laws of Holding Company, Parent and each Seller. B. Holding Company, Parent and Sellers covenant, represent and warrant that the ledger cards or equivalent record delivered to Buyer shall fully and accurately reflect the true outstanding unpaid balance of the Contracts as of the close of business on the Determination Date, and the cards or equivalent record will accurately reflect the collection activity on the Contracts and the payments received on the Contracts from the respective Obligors. C. Holding Company, Parent and Sellers covenant, represent and warrant that, except as set forth on Schedule 6 hereto, each respective Seller has good and marketable title to the Business Assets and Contracts to be sold under this Agreement, free and clear of any liens, encumbrances or charges whatsoever, and any such claims shall be released on the Purchase Date; such Seller is the absolute owner thereof with full and sole right to transfer all right, title and interest in and to the Contracts and Business Assets; and no person, firm, corporation or association has any claim whatsoever to the Contracts sold under this Agreement or the proceeds of the Contracts or any of the rights, title and interest in and to any of the Leases and Third Party Agreements intended to be transferred to Buyer under this Agreement. D. Holding Company, Parent and Sellers covenant, represent and warrant that, other than as may be set forth on Schedule 7 hereto, none of them is a party to any, and there is no pending or threatened, litigation, legal or administrative proceeding, which would, if decided against Holding Company, Parent or any Seller, as applicable, have a material adverse effect on the Business generally or the Contracts or Parent's or any Seller's right to transfer same, or on any of the Business Assets, Leases or Third Party Agreements to be sold and assigned pursuant to this Agree- ment. E. Holding Company, Parent and Sellers covenant, represent and warrant, except as noted on the records of Parent or the respective Seller, that each Contract sold under this Agreement is genuine, valid and complete in all material respects and is enforceable in accordance with its terms; no understanding or agreement has been reached between the respective Seller and the Obligor for any variation of the interest rate, schedule of payments or other material item or condition of any Contract; and no such variation or alteration has been made by any Seller or any of its employees. F. Holding Company, Parent and Sellers covenant, represent and warrant, except as noted on the records of Parent or the respective Seller, that no Contract is subject to any defense, setoff or counterclaim to the payment of the amount of the unpaid balance due on the Contract or a proceeding in bankruptcy. G. Holding Company, Parent and Sellers covenant, represent and warrant that, except as otherwise disclosed in their respective records, each instrument or the property or goods described in each instrument representing or securing a Contract is in the possession of the respective Seller; and each mortgage and deed of trust evidencing and securing any Contract sold hereunder will constitute as of the Closing, a valid and enforceable and perfected first, second or third lien, as indicated in the records of the Seller, as against all persons on the real property described in the mortgage or deed of trust or other agreement. All personal property loans to be sold to Buyer under this Agreement will have a valid and perfected lien as of the Closing, except where the failure to be perfected would not have a material adverse effect, individually or in the aggregate, on Parent or the respective Seller. H. Holding Company, Parent and Sellers covenant, represent and warrant that all the Contracts and any security instruments sold by Parent and the Sellers under this Agreement, and Parent's and the Sellers' statements and applications relating thereto, and Parent's and the Sellers' practices and the conduct of their respective businesses with reference to the Contracts comply in all material respects with all applicable state, federal and local laws and regulations. I. Holding Company, Parent and each respective Seller covenant, represent and warrant that it has paid or will cause to be paid any and all license, franchise, intangible or stamp taxes or fees due and owing at the Purchase Date to the federal govern- ment, any state government and any political subdivision thereof, arising from or growing out of the acquisition, collection or holding of any and all of the Contracts and Business Assets by Parent or such Seller. J. Holding Company, Parent and Sellers covenant, represent and warrant that they will, from and after the Purchase Date, pay over to Buyer any payments received in payment on the Contracts, which are attributable to payments that become due and payable from and after the Purchase Date for the Contracts listed on Schedule 4. Other items pertaining to the Contracts received after the Purchase Date by Parent or any Seller will be forwarded promptly to Buyer. K. Holding Company, Parent and Sellers covenant, represent and warrant that they are in compliance in all material respects with all laws governing their labor, employment and employee benefit practices, including but not limited to the Fair Labor Standards Act, the Civil Rights Acts of 1964 and 1991, the Age Discrimination in Employment Act, the Family and Medical Leave Act, the Employee Retirement Income Security Act of 1974 and the Internal Revenue Code of 1986. L. As of April 30, 1995, the net book value of the Business Assets as reflected on Parent's and Sellers' books and records is approximately $2,139,463; the principal and accrued interest on Interest Bearing Contracts is approximately $32,259,771 and $460,923; the gross amount due under Precomputed Interest Contracts and unearned interest on such Contracts is approximately $98,439,6- 08 and $20,034,514; the Net Outstanding Balance of the Contracts as of such date is approximately $109,905,439; the amount of Dealer Holdback is approximately $612,666; the amount of Unearned Insurance Commissions is approximately $2,087,198; and the amount of aggregate deferred fees on the Contracts is approximately $1,220,349. M. Except as may be set forth in Schedule 8 attached hereto, no consents, waivers or approvals of, notices to or filings with any governmental agency or authority, including without limitation any court or judicial authority, are necessary, and no consents or approvals of or notices to any nongovernmental third parties are necessary, in connection with the execution and delivery by Holding Company, Parent and each Seller of this Agreement or the consumma- tion by Holding Company, Parent and each Seller of the transactions contemplated by this Agreement. N. Holding Company, Parent and each of the Sellers is in compliance and has at all times been in compliance, in all material respects, with all environmental laws, rules, regulations and standards promulgated, adopted or enforced by the United States Environmental Protection Agency and of similar agencies in states in which they conduct their collective business. There is no suit, claim, action or proceeding now pending before any court, govern- mental agency or board or other forum or, to the knowledge of Parent and the Sellers, threatened by any person for alleged noncompliance with any environmental law, rule or regulation or relating to the discharge or release into the environment of any hazardous material or waste at or on a site presently or formerly owned, leased or operated by Holding Company, Parent or any Seller. O. Parent and each of the Sellers maintains insurance with respect to the Business and the Business Assets of the kinds, with respect to the risks, and in such amounts as are consistent with prudent business practices. P. Holding Company, Parent and each of the Sellers is, and after giving effect to the transactions contemplated hereby will be, in compliance in all material respects with all federal, state and local laws, rules and regulations applicable to the Business. Q. Parent has provided Buyer with a schedule of all employees, other than those certain officers and other employees identified in Schedule 9 hereto (the "Headquarters Employees"), of Parent and the Sellers (the "Branch Employees"), showing for each the position held, the date of birth and current salary. None of the Branch Employees is a party to any employment or severance agreement or covered by any collective bargaining or similar agreement. There is no strike or other labor dispute pending or, to the knowledge of Parent or any of the Sellers, threatened against Parent or any Seller, which would have a material adverse effect on the Business. R. Parent is not aware of any reason why any of the necessary consents or approvals of governmental agencies or authorities or nongovernmental third parties referred to in paragraph M of this Section 12 above would not be obtained within a time period sufficient to enable the parties to consummate the transactions contemplated by this Agreement within a time frame customary for transactions of the nature contemplated hereby. S. No representation or warranty contained in this Agree- ment, and no statement contained in any certificate, list or other writing, including but not necessarily limited to the exhibits and any schedules attached hereto or to be included herewith, furnished by Holding Company, Parent or any Seller to Buyer pursuant to the provisions hereof contains or will contain any untrue statement of a material fact or omits to state a material fact necessary in order to make the statements herein or therein not misleading. In the event of any breach or breaches of any of the foregoing representations or warranties and subject to the provisions of Section 13 below, Parent or the respective Seller will, upon thirty (30) days prior written notice (which notice shall describe the breach with specificity, setting out the nature of the breach and such other information, documents, records and papers as necessary) to Parent by Buyer and provided Parent or the appropriate Seller has not cured, corrected or resolved such breach within such thirty (30) day period, refund to Buyer the uncollected portion of each Contract, if any, to which such breach relates, paying Buyer an amount equal to the Net Outstanding Balance owing on said Contract as of the date of refund, less any Dealer Holdback and Unearned Insurance Commissions attributable to said Contract as of such date; provided that Parent or such Seller receives the written notice within thirty-six (36) months after the Purchase Date and further provided that Buyer shall continue to own and pursue collection of such Contracts and promptly pay over to Parent seventy-five percent (75%) of any payments received in payment of such Contracts. 13. INDEMNIFICATION A. Indemnification; To the Buyer. Holding Company, Parent and Sellers agree, Jointly and severally, to defend, indemnify and hold harmless the Buyer and its officers, directors, employees, successors and assigns, from and against any and all losses, damages, claims, suits, proceedings, liabilities, costs and expenses, including reasonable attorneys' fees ("Losses" or "Claims" as the context requires), which may be imposed on, sustained, incurred or suffered by or asserted against any such persons, directly or indirectly, as a result of or relating to or arising out of: (1) The breach of any representation or warranty or covenant or agreement of Holding Company, Parent or any Seller contained in this Agreement; or (2) The actions or omissions of Holding Company, Parent or any Seller in the conduct of the Business or as related to the ownership, possession or use of any of the Business Assets or as related to the payment or performance of any of the Assigned Obligations, in each case during the period prior to the Purchase Date. Notwithstanding anything herein to the contrary, Buyer shall have no right of refund or indemnification for the noncollectibility for any reason of any Contract transferred to Buyer which was assigned a value of zero ($O) for purposes of calculating the Purchase Price; provided, however, that the foregoing shall not limit the indemnification obligations of Holding Company, Parent and the Sellers otherwise imposed under this Section 13 with respect to any Losses relating to any such Contract (other than noncollectibility) in excess of any amounts collected by Buyer on such Contract incurred by Buyer or any of its officers, directors, employees, successors or assigns as a result of any breach of any representa- tion or warranty or covenant or agreement of Holding Company, Parent or any Seller relating to any such Contract contained in this Agreement or the actions or omissions of Holding Company, Parent or any Seller with respect to any such Contract during the period prior to the Purchase Date. B. Indemnification: To the Seller, Etc. The Buyer agrees to defend, indemnify and hold harmless Holding Company, Parent, each Seller and their officers, directors, employees, successors and assigns, from and against any and all losses, damages, claims, suits, proceedings, liabilities, costs and expenses (including without limitation reasonable attorneys' fees) ("Losses" or "Claims" as the context requires) which may be imposed on, sustained, incurred or suffered by, or asserted against any such persons, directly or indirectly, as a result of or relating to or arising out of: the breach of any representation or warranty or covenant or agreement of the Buyer contained in this Agreement, or Buyer's conduct of the Business or its ownership or operation of the Contracts or Business Assets purchased under this Agreement or related to its assumption of the Assigned Obligations, at any time on or after the Purchase Date. C. Limitations on Parties' Respective Indemnification Obligations. The Parties' respective indemnification of one another as provided in Paragraphs A and B of this Section 13 above (meaning the indemnification obligations of Holding Company, Parent and the Sellers, together on the one hand, and of Buyer on the other hand) shall be limited to an aggregate amount of Seven Million and 00/100 Dollars ($7,000,000.00); provided, however, notice of claims for indemnification of the Buyer by Holding Company, Parent or any Seller or of Holding Company, Parent or any Seller by Buyer, as the case may be, pursuant to the provisions of this Section 13 must be received by Parent or Buyer, as applicable, prior to the last day of the thirty-sixth (36th) calendar month after the Purchase Date. D. Procedure for Indemnification. (1) If a party to this Agreement entitled to assert a Claim under this Agreement shall receive notice of the assertion by a person who is not a party to this Agreement of any claim or of the commencement by any such person of any action or proceeding (a "Third Party Claim") with respect to which Holding Company, Parent, any Seller or the Buyer, as applicable, is obligated to provide indemnification, the indemnified party (the "Indemnitee") shall give the indemnifying party (the "Indemnitor") prompt written notice thereof Such notice shall describe the Third Party Claim in reasonable detail. (2) The Indemnitor may elect to compromise or defend, at such Indemnitor's own expense and by such Indemnitor's own counsel, any Third Party Claim. If an Indemnitor elects to defend a Third Party Claim, it shall, within thirty (30) days of receipt of the notice referred to in Paragraph D(1) of this Section 13 above (or sooner if the nature of such Third Party Claim so requires), notify the related Indemnitee of its intent to do so, and such Indemnitee shall reasonably cooperate in the compromise of, or defense against such Third Party Claim. Such Indemnitor shall pay such Indemnitee- 's actual out-of-pocket expenses incurred in connection with such cooperation. After written notice from an Indemnitor to an Indemnitee of its election to assume the defense of a Third Party Claim, such Indemnitor shall not be liable to such Indemnitee under Paragraph A or Paragraph B of this Section 13 above, as the case may be, for any legal expenses subsequently incurred by such Indemnitee in connection with the defense thereof, provided, however, that such Indemnitee shall have the right to employ one counsel for each Third Party Claim to represent such Indemnitee if, in such Indemnitee's good faith judgment, a conflict of interest between such Indemnitee and such Indemnitor exists in respect of such Third Party Claim, in which events the fees and expenses of such separate counsel shall be paid by such Indemnitor. If an Indemnitor elects not to defend against a Third Party Claim or fails to notify an Indemnitee of its election as provided in Paragraph D(1) of this Section 13 above, such Indemnitee may without advance written notice to the Indemnitor, pay, compromise or defend such Third Party Claim reasonably and in good faith on behalf of and for the account and risk of the Indemnitor to the extent that the Indemnitee is entitled to receive indemnification from the Indemnitor hereunder. No Indemnitor shall consent to entry of any Judgment or entry into any settlement against or with respect to any Indemnitee without the written consent of such Indemnitee, unless such judgment or settlement: (a) Provides solely for money damages or other payments for which such Indemnitee is entitled to indemnification hereunder, and (b) Includes as an unconditional term thereof the giving by the claimant or plaintiff to such Indemnitee of a release for all liability in respect of such Third Party Claim. (3) With respect to any Claim hereunder which does not result from a Third Party Claim, the Indemnitor shall have a period of thirty (30) days from receipt of written notice from the Indemnitee within which to respond thereto. If such Indemnitor does not respond within such 30-day period or rejects such Claim in whole or in part, such Indemnitee shall be free to pursue such remedies as may be available to such Indemnitee under applicable law or this Agreement. (4) If the amount of any Claim or Loss shall, at any time subsequent to payment pursuant to this Agreement, be reduced by recovery, settlement, insurance or otherwise, the amount of such reduction, less any expenses incurred in connection therewith, shall promptly be repaid by the Indemnitee to the related Indemni- tor. E. Collateral for Indemnification Obligations. To secure in part the indemnification obligations of Holding Company, Parent and the Sellers under this Section 13, on the Purchase Date Parent shall deposit Five Million and 00/100 Dollars ($5,000,000.00) in cash into an escrow account with The First National Bank of Boston ("FNBB") as escrow agent. The terms of such escrow arrangement shall be governed by an escrow agreement to be entered into by the parties on the Closing Date, in substantially the form attached hereto as Exhibit "D" (the "Escrow Agreement"). 14. PARTIES' COVENANT TO SEEK REGULATORY APPROVALS AND OTHER CONSENTS AND APPROVALS: Each of the parties covenants that it will timely file, to the extent required of such party to consummate the transactions contemplated by this Agreement, and at its own expense, all documents, forms, applications and fees necessary to obtain all federal, state and local regulatory approvals necessary to effectuate the transactions contemplated herein, including without limitation the Notification and Report Form for Certain Mergers and Acquisitions required pursuant to the Hart-Scott-Rodino Antitrust Improvements Act of 1976, the related filing fee and all such further documents requested by the Federal Trade Commission or the Department of Justice, and the applications, fees and documents required to obtain licenses, if necessary, to operate within each of the states in which the Sellers currently maintain branch offices. Prior to the Purchase Date, the parties will use their respective best efforts to obtain all consents and approvals, of both governmental agencies or authorities and nongovernmental third parties, required for Parent and Sellers to sell and assign and Buyer to purchase and assume all of the Contracts, Business Assets, Leases, Third Party Agreements and Assigned Obligations on the Purchase Date in accordance with the terms of this Agreement and to otherwise take all actions necessary or appropriate to ensure the consummation of the transactions contemplated by this Agreement as soon after the date hereof as reasonably practicable. 15. EMPLOYEES: Effective as of the Purchase Date, each employee at will of Parent and Sellers shall be offered employment with Buyer; provided, however, that any such employment shall not be construed to limit the ability of the Buyer to terminate any such employee at any time for any reason. Each such employee who accepts such employment and becomes an employee of Buyer shall be hereinafter referred to as a "Transferred Employee." Employment of Transferred Employees shall be subject to all of Buyer's policies and practices, including the policy of employment-at-will. On and after the Purchase Date or such later date as Buyer in its discretion may determine (the "Transition Date"), Buyer shall provide the Transferred Employees with the employee benefits it provides to all other new employees of Buyer, provided that the Buyer will grant past service credit to the Transferred Employees for the time of service at Parent or any Seller for purposes of eligibility to participate, vesting and for other appropriate benefits, but not for benefit accrual, under any pension benefit plan or welfare benefit plan of Buyer. If the Transition Date is later than the Purchase Date, from the Purchase Date through the Transition Date Buyer shall provide the Transferred Employees with employee benefits as nearly equivalent as practicable to either the employee benefits theretofore maintained for them by Parent and Sellers or to the employee benefits it provides to its other employees, determined benefit by benefit by the Purchaser in its discretion; provided, however, that Headquarters Employees shall be entitled to no severance pay from the Buyer. The parties acknowl- edge and agree that the Assigned Obligations do not include, and Buyer has no ability, obligation or liability responsibility after the Closing for, any and all liabilities, responsibilities and obligations (current, runoff or other) under and with respect to any employee benefit plans, including without limitation all pension and profit-sharing plans, all severance pay plans and all group health, life, disability and workers' compensation insurance plans, of Holding Company, Parent or any Seller, and the responsi- bility and obligation of maintaining and/or terminating any such plans, including establishing appropriate reserves or accounts to provide for any obligations under such plans incurred prior to the Closing and becoming payable after the Closing, remains with Holding Company, Parent and the Sellers; provided, however, Buyer acknowledges and agrees that on and after the later of the Purchase Date or such date as the Transferred Employees cease to be covered under any group health plan maintained or contributed to by Holding Company, Parent or Sellers, health care continuation coverage shall be offered by Buyer under its appropriate group health plan to "qualified beneficiaries" of Parent or Sellers, whether such individuals become qualified beneficiaries prior to, on or after the Purchase Date. Qualified beneficiaries shall have the meaning set forth in Part 6 of Title I of ERISA and Section 4980B of the Code. In the event that Buyer fails to offer employment to Parent's or Sellers' current employees, then Buyer shall indemnify and hold harmless Parent and Sellers for any loss or liability incurred by Parent or any Seller with respect to any employees under the Worker Adjustment and Retraining Notification Act, including without limitation the costs and expenses associated with defending a claim under said Act. 16. USE OF RECORDS BY PARENT OR ANY SELLER: Buyer agrees that all records and memoranda of Parent and Sellers hereby transferred will be maintained and made available for the use of Holding Company, Parent and Sellers in making tax returns, defending claims, or for any other legitimate purpose which does not tend to injure Buyer in its competition with other companies and will remain so liable for a period of not less than three (3) years after the payment in full of the accounts represented by the Contracts. Holding Company, Parent or Sellers may make copies of any such documentation, at their expense, to the extent necessary to fulfill the purposes of this Section 16. 17. NON-SOLICITATION/NON-COMPETE: Parent and each Seller agree that neither they nor any of their present or future subsidiaries, nor any purchaser of all or substantially all of the voting shares of Parent or any Seller will, for a period of three (3) years from the Purchase Date, directly and knowingly solicit any of the Obligors for the purpose of making a loan to the Obligors. Parent and each Seller further agree that, from and after the Purchase Date, it will not, for a period of three (3) years, open a consumer loan office for the purpose of engaging in the same business as the Business within any state in which Buyer operates or solicit or encourage to leave the employment of Buyer or employ in any capacity or retain as a consultant any person who is employed or retained in any capacity by Buyer following the Purchase Date. As of the date hereof, each of the officers of Parent identified in Schedule 10 hereto (the "Key Employees") has entered into a protection agreement with Buyer, substantially in the form attached hereto as Exhibit "E" (the "Protection Agree- ment"), which by its terms shall become effective on the Purchase Date. 18. ADDITIONAL COVENANTS OF HOLDING COMPANY, PARENT AND SELLERS: A. During the period from the Contract Date to the Purchase Date, Holding Company and Parent will give or cause to be given to Buyer and its officers, accountants, counsel and other representa- tives full access during normal business hours to all of the properties, assets, books, contracts, commitments and records of Holding Company, Parent and the Sellers. All of the information provided to Buyer or any of its representatives by Holding Company, Parent and the Sellers hereunder shall remain subject to the confidentiality requirements of the confidentiality agreement dated March 10, 1995 between Parent and FNBB (the "Confidentiality Agreement"). B. During the period from the Contract Date to the Purchase Date, Holding Company, Parent and the Sellers shall: (i) conduct the Business only in the ordinary course and consistent with past practices; (ii) maintain such insurance relating to the Business and the Business Assets as is in place on the date hereof; (iii) not increase any salaries or wages of any officer or employee of Parent or any Seller nor establish or increase any bonus, pension, option, incentive or deferred compensation, retirement,, death, profit sharing, or similar benefits of the officers or employees of Parent or any Seller except in all instances in the ordinary course of business, consistent with past practices, and as disclosed in Schedule 11 hereto or as otherwise disclosed in writing by Parent to Buyer on or prior to the date hereof; (iv) not place any liens or encumbrances upon any of the Contracts or Business Assets; (v) not terminate (other than by expiration) or materially amend or modify any Lease or Third Party Agreement, unless Buyer is consulted prior to such action; (vi) use their best efforts to prevent any material breach of any contract or commitment that is materially related to the Business; (vii) not sell or transfer any property or asset of Parent or any Seller, except in the ordinary course and consistent with past practices; (viii) not release or waive any claims of Parent or any Seller relating to any Contract or rights thereunder, except in the ordinary course and consistent with past practices. (i use their best efforts to maintain the franchise value and goodwill of the Business and the services of Parent's and the Sellers' full-time officers and employees; and (x) maintain the books of account and records of Holding Company, Parent and the Sellers in the ordinary course and in accordance with applicable laws, regulations and accounting standards. C. Unless and until this Agreement shall have been properly terminated by either party pursuant to Section 21 hereof, neither Holding Company nor Parent nor any Seller (including any officer, director, employee, representative or agent, including but not limited to any investment banker, attorney or accountant, of Holding Company, Parent and any Seller) shall, directly or indirectly, encourage, solicit, initiate or participate in any discussions or negotiations with, or provide any information to, any corporation, partnership, person or other entity or group (other than Buyer and its affiliates or representatives) concerning any merger, tender offer, sale of assets, sale of shares of capital stock or debt securities or similar transaction involving Holding Company, Parent or any Seller ("Acquisition Transaction"). Parent will immediately communicate to Buyer the terms of any proposal, discussion, negotiation or inquiry relating to an Acquisition Transaction and the identity of the party making such proposal or inquiry which it or Holding Company or any Seller may receive in respect of any such transaction (which shall mean that any such communication shall be delivered no less promptly than by telephone within 24 hours of the receipt of any such proposal or inquiry) or the receipt of any request for information from any governmental agency or authority with respect to a proposed Acquisition Transaction. D. If this Agreement is terminated by Buyer pursuant to Section 21 hereof as a result of a willful breach of this Agreement by Holding Company, Parent or any of the Sellers, then Parent shall pay to Buyer as soon as practicable, but in any event within five (5) business days of the termination of this Agreement, a fee, in cash. of Five Million and 00/100 Dollars ($5,000,000.00) (the "Termination Fee"); provided, however, that the foregoing shall not relieve any of Holding Company, Parent or any Seller from any additional liability any of them may have for any such willful breach of this Agreement. The provisions of this paragraph D shall survive the termination of this Agreement. E. Parent shall maintain its legal existence and good standing for a period of time from and after the Purchase Date not less than the period during which the Escrow Agreement remains in effect in accordance with its terms. 19. BUYER'S WARRANTIES: Buyer hereby covenants, represents and warrants to Holding Company, Parent and Sellers, as of the Contract Date and the Purchase Date, which representations and warranties shall survive the execution of this Agreement and the Closing as provided herein: A. Buyer is a corporation, duly organized, validly existing and in good standing under the laws of the State of Minnesota. Buyer has taken all appropriate corporate action necessary to authorize the execution of and consummation of the transactions contemplated by this Agreement. This Agreement has been duly and validly executed and delivered by Buyer and constitutes the valid and binding obligations of Buyer, enforceable against Buyer in accordance with its terms. The execution and performance of this Agreement by Buyer do not violate any laws, regulations, inden- tures, contracts, judgments or decrees to which Buyer is a party or by which any of Buyer's properties or assets may be affected nor the Certificate of Incorporation or By-laws of Buyer. B. Buyer is not a party to, and there is no pending or threatened, litigation, legal or administrative proceeding, which would, if decided against Buyer, have any material adverse impact on Buyer's ability to purchase the Contracts and Business Assets to be purchased pursuant to this Agreement or to otherwise perform its obligations hereunder. C. Except as may be set forth in Schedule 12 attached hereto, no consents, waivers or approvals of, notices to or filings with any governmental agency or authority, including without limitation any court or judicial authority, are necessary, and no consents or approvals of or notices to any nongovernmental third parties are necessary, in connection with the execution and delivery by Buyer of this Agreement or the consummation by Buyer of the transactions contemplated by this Agreement. D. Buyer is not aware of any reason why any of the necessary consents or approvals of governmental agencies or authorities or nongovernmental third parties referred to in paragraph C of this Section 19 above would not be obtained within a time period sufficient to enable the parties to consummate the transactions contemplated by this Agreement within a time frame customary for transactions of the nature contemplated hereby. E. No representation or warranty contained in this Agree- ment, and no statement contained in any certificate, list or other writing, including but not necessarily limited to the exhibit and any schedules attached hereto or to be included herewith, furnished by Buyer to Holding Company, Parent or the Sellers pursuant to the provisions hereof contains or will contain any untrue statement of a material fact or omits to state a material fact necessary in order to make the statements herein or therein not misleading. 20. ADDITIONAL EVIDENCE OF OWNERSHIP. Each Seller agrees that it will, upon the reasonable request of Buyer, supply copIes of any additional documents it may still have in its possession which evidence such Seller's ownership of the Contracts sold hereby. 21. TERMINATION: This Agreement may be terminated at any time prior to the Closing in accordance with the following provisions: A. by mutual written consent of Parent and Buyer authorized by their respective Boards of Directors; B. by Parent or Buyer if the Closing shall not have occurred on or prior to the Termination Date; C. by Buyer or Parent if any governmental or regulatory authority or agency, or court of competent jurisdiction, shall have issued a final permanent order or injunction enjoining, denying approval of, or otherwise prohibiting the consummation of the transactions contemplated by this Agreement and the time for appeal or petition for reconsideration of such order or injunction shall have expired without such appeal or petition being granted; or D. by Buyer or Parent (provided that the terminating party is not then in material breach of any representation, warranty, covenant or other agreement contained herein), in the event of a material breach by the other party of any representation, warranty, covenant or other agreement contained herein which breach is not cured after 30 days written notice thereof is given to the party committing such breach. 22. EFFECT OF TERMINATION: In the event of termination of this Agreement by either Parent or Buyer as provided above, this Agreement shall forthwith become null and void (other than Sections 18(D) (if applicable) and 33 hereof, which shall remain in full force and effect, and there shall be no further liability on the part of any of the parties or their respective officers or directors to the others, except any liability of any party under said Sections 18(D) (as may be applicable) and 33, and in the event of a willful breach of any representation, warranty, covenant or agreement contained in this Agreement, in which case, the breaching party shall remain liable for any and all damages, costs and expenses, including all reasonable attorneys' fees, sustained or incurred by the nonbreaching party(ies) as a result thereof or in connection therewith or with the enforcement of its rights hereunder. In the event of any termination of this Agreement by either Parent or Buyer, the Confidentiality Agreement shall remain in full force and effect in accordance with its terms. 23. AMENDMENT, EXTENSION AND WAIVER: Subject to applicable law and as may be authorized by their respective Boards of Directors, at any time prior to the consummation of the transac- tions contemplated by this Agreement or termination of this Agreement in accordance with the provisions of Section 21 hereof, the parties may, amend this Agreement, extend the time for the performance of any of the obligations or other acts of any other party hereto, waive any inaccuracies in the representations and warranties contained herein or in any document delivered pursuant hereto, or waive compliance with any of the agreements or conditions contained in Sections 25, 26 and 27 (to the extent legally permitted) hereof. This Agreement may not be amended except by an instrument in writing signed on behalf of each of the parties hereto. Any agreement on the part of a party hereto to any extension or waiver shall be valid only if set forth in an instrument in writing signed on behalf of such party, but such waiver or failures to insist on strict compliance with such obligation, covenant, agreement or condition shall not operate as a waiver of, or estoppel with respect to, any subsequent or other failure. 24. CONDITIONS TO BUYER'S OBLIGATIONS: The obligation of Buyer to purchase the Contracts and Business Assets and Assume the Assigned Obligations under this Agreement shall be subject to Holding Company, Parent and Sellers having performed and complied with all agreements and conditions in this Agreement necessary to be performed or complied with by them prior to or at the Purchase Date unless otherwise waived in writing by the Buyer and the satisfaction of the following conditions and delivery by Holding Company, Parent and the Sellers of the following documents: A. There shall not exist any fact or have occurred any event, which has had, or is reasonably likely to have, individually or in the aggregate, a material adverse effect on the Business generally or the value of the Contracts or the Business Assets specifically. In connection with Buyer's verification of the satisfaction of this condition, but not in limitation hereof, Buyer may undertake prior to the Closing, directly or through its retention, at its expense, of an independent outside auditor, to verify the existence and collectibility of the Contracts, and if such verification review is undertaken then Buyer shall have obtained reasonable assurance as a result of such review as to the existence and collectibility of the Contracts. B. An opinion of the Counsel to Holding Company, Parent and Sellers, dated the Purchase Date, substantially in the form as delivered in draft to, and accepted by, Buyer's counsel on or prior to the date hereof C. On the Purchase Date, a certificate signed by a duly authorized officer of Holding Company, Parent and each Seller, solely in his/her capacity as an officer of Holding Company, Parent or such Seller, to the effect that: (1) The warranties and representations of Holding Company, Parent and such Seller were true on the date hereof and are true as of the Purchase Date, and (2) The covenants and agreements of Holding Company, Parent or such Seller to be performed hereunder on or before the Purchase Date have been performed. D. Resolutions of the Board of Directors and stockholders, to the extent legally required, of Holding Company, Parent and each Seller certified by the Secretary or an Assistant Secretary, authorizing the execution and delivery of this Agreement and the consummation of the transactions contemplated by this Agreement. E. The Escrow Agreement shall have been executed and deliv- ered by Buyer, Parent and FNBB and shall be in full force and effect. F. The Protection Agreements as executed and delivered by Buyer and each of the Key Employees shall be in full force and effect. G. There shall not be any action taken, or any statute, rule, regulation or order enacted, entered, enforced or deemed applicable to the transactions contemplated by this Agreement or Buyer after the Closing, by any federal or state governmental agency or authority which, in connection with the granting of any Requisite Regulatory Approval (as such term is defined below) imposes any condition or restriction upon Buyer or any Buyer subsidiary after the Closing, which would so materially adversely impact the economic or business benefits of the transactions contemplated by this Agreement as to render inadvisable in the reasonable judgment of Buyer the consummation of the transactions contemplated hereby. H. In addition to the foregoing, Holding Company, Parent and the Sellers will furnish Buyer with such additional certificates, instruments or other documents in the name or on behalf of Holding Company, Parent or any Seller, executed by appropriate officers or others, including without limitation certificates or correspondence of governmental agencies or authorities or nongovernmental third parties, to evidence fulfillment of the conditions set forth in this Section 24 as Buyer may reasonably request. 25. CONDITIONS TO THE OBLIGATIONS OF PARENT AND SELLERS: The obligations of Holding Company, Parent and Sellers to sell the Contracts and Business Assets and assign the Leases and Third Party Agreements under this Agreement shall be subject to Buyer having performed and complied with all agreements and conditions in this Agreement necessary to be performed or complied with by it prior to or at the Purchase Date unless otherwise waived in writing by the Parent and the delivery by Buyer of the following documents: A. An opinion of the Counsel to Buyer, who may be a member of the legal department of Buyer or an affiliate of Buyer, substantially in the form as delivered in draft to, and accepted by Parent's counsel on or prior to the date hereof. B. On the Purchase Date, a certificate signed by a duly authorized officer of Buyer, solely in his/her capacity as an officer of Buyer, to the effect that: (1) The warranties and representations of Buyer were true as of the date hereof and are true as of the Purchase Date, and (2) The covenants and agreements of Buyer to be performed hereunder on or before the Purchase Date have been performed. C. Resolutions of the Board of Directors of Buyer certified by the Secretary or an Assistant Secretary, authorizing the execution and delivery of this Agreement and the consummation of the transactions contemplated by this Agreement. D. In addition to the foregoing, Buyer will furnish Parent with such additional certificates, instruments or other documents in the name or on behalf of Buyer, executed by appropriate officers or others, including without limitation certificates or correspon- dence of governmental agencies or authorities or non-governmental third parties, to evidence fulfillment of the conditions set forth in this Section 25 as Parent may reasonably request. 26. CONDITIONS TO EITHER PARTY'S OBLIGATIONS: The obligation of the Parent and Sellers to sell the Contracts and Business Assets and assign the Leases and Third Party Agreements and the Buyer's obligation to purchase such Contracts and Business Assets and assume the Assigned Obligations shall be subject to (unless waived, to the extent permitted by law, by all parties): A. The absence of any action, proceeding or administrative investigation against Buyer, Holding Company, Parent or any Seller seeking to enjoin or otherwise affect the consummation of the transactions contemplated by this Agreement, constituted or threatened by any governmental agency or other party, that might eventuate in an order of any court or administrative agency which, in the reasonable opinion of either the Buyer and its counsel, or Parent and its counsel, would render it impossible or inadvisable to consummate the transactions contemplated by this Agreement. B. All required licenses (including any licenses from state authorities necessary to allow Buyer to operate a business similar to that of the Sellers as presently conducted in their respective branch offices), approvals, consents and notifications of any relevant state and federal regulatory agencies including, without limitation, the Federal Trade Commission and the Department of Justice pursuant to the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, in respect of the transactions contem- plated hereby having been obtained or made and any necessary conditions, including all legally required waiting, notice or protest periods, of such licenses, approvals, consents and notifications having been fully satisfied (all such approvals, consents and notifications, including all such legally required waiting, notice or protest periods, being referred to collectively as the "Requisite Regulatory Approvals"). C. All consents, approvals and notifications required to be obtained from or made to nongovernmental third parties for the purchase and sale of the Contracts and Business Assets and the assignment of the Leases and Third Party Agreements and related assumption of the Assigned Obligations having been obtained or made. 27. ANNOUNCEMENTS; NOTIFICATIONS: Except as may be specifi- cally required by law, the rules of the New York Stock Exchange or any governmental agency, no party hereto will make any announcement of this transaction or disclose any material provisions of this Agreement either prior to or subsequent to the Purchase Date without prior written approval of the other parties, which approval shall not be unreasonably withheld. Buyer will notify at its expense within thirty (30) days after the Purchase Date all Contract Obligors of its ownership of the Contracts, provided that Sellers shall have provided Buyer with the necessary information to do so. Parent and each Seller authorize the use of their name in the notices. 28. NOTICES: Any notice to be given or other documents to be delivered by any party to the other party may be delivered in person to such party, by fax with confirmed receipt, or may be deposited in the United States certified mail, return receipt requested, with postage thereon fully prepaid and addressed to the party for whom intended at the address shown below: To Buyer: To Parent or Seller: Donald D. Davidson Jack L. Brozman President Chairman of the Board Fidelity Acceptance Century Acceptance Corporation Corporation 330 Second Avenue, South Suite 416, City Center Suite 790 Square 12th and Baltimore Minneapolis, Minnesota 55401 Kansas City, Missouri 64196 Fax: (612) 337-5644 Fax: (816) 474-7610 with copies to: with a copy to: Peter J. Manning Polsinelli, White, Vardeman Executive Director, & Shalton Mergers and Acquisitions Country Club Plaza Bank of Boston Corporation 700 West 47th St., Ste. 1000 100 Federal Street Kansas City, Missouri 64112 Boston, Massachusetts 02110 Att: Lisa M. Schultes, Esq. and Bingham, Dana & Gould 150 Federal Street Boston, Massachusetts 02110 Att: Stephen J. Coukos, Esq. Any party to this Agreement may, from time to time by written notice to the other, designate a different address which shall be substituted for the one above. Notices sent by certified mail shall be deemed effective when receipted for. 29. POST CLOSING COVENANT: Buyer agrees to maintain all records pertaining to paid and charged off contracts currently maintained at any of the locations covered by the real estate leases listed on the attached Schedule 2 and for all Contracts sold hereunder for a minimum of two (2) years after such contract is paid or charged off. 30. SOLE UNDERSTANDING: It is understood and agreed that this Agreement constitutes the sole mutual understanding regarding the subject matter of this Agreement, and that no provision hereof shall be modified or altered except in writing duly signed by the parties to this Agreement. 31. APPLICABLE LAW: The laws of the State of Missouri shall govern the validity and interpretation of this Agreement and the performance of the parties to this Agreement, without giving effect to the principles of conflicts of laws thereof. 32. HEADINGS: Headings are for informational purposes only and are not a part of the Agreement. 33. EXPENSES: Except as is otherwise specifically provided in this Agreement, regardless whether the Closing takes place or whether this Agreement is terminated, all parties shall pay their,own costs and expenses in connection with this Agreement and the transactions contemplated hereby, including, but not by way of limitation, an regulatory fees, attorneys' fees, accounting fees and other expenses. 34. SUCCESSORS AND ASSIGNS: All terms and provisions of this Agreement shall be binding upon and shall inure to the benefit of the parties to this Agreement and their respective permitted transferees, successors and assigns. 35. MULTIPLE COUNTERPARTS: This Agreement may be executed in multiple counterparts, each of which shall be deemed an original for all purposes and all of which shall be deemed, collectively, one agreement. but in making proof hereof it shall not be necessary to exhibit more than one such counterpart. 36. INVALID PROVISIONS: If any provision of this Agreement is held to be illegal, invalid or unenforceable under present or future laws effective during the term of this Agreement, the provision shall be fully severable; this document shall be construed and enforced as if the illegal, invalid or unenforceable provision had never comprised a part of this Agreement, and the remaining provisions shall remain in full force and effect and shall not be affected by the illegal, invalid or unenforceable provision or by its severance from this Agreement. Furthermore, In lieu of the illegal, invalid or unenforceable provision there shall be added automatically as a part hereof a provision as similar in terms to the illegal, invalid or unenforceable provision as may be possible and be legal, valid and enforceable, and, as changed or amended, continue to reflect the original intent of the parties hereto. 37. ENTIRE AGREEMENT: The making, execution and delivery of this Agreement by the parties have been induced by no representa- tions, statements, warranties or agreements other than those herein expressed. This Agreement embodies the entire understanding of the parties and there are no further or other agreements or understand- ing, written or oral, in effect between the parties the subject matter of this Agreement. 38. TIME OF ESSENCE. The parties to this Agreement agree and stipulate that time is of the essence with regard to the perfor- mance by each party of its obligations under this Agreement. 39. BROKERAGE: Holding Company, Parent, each Seller and Buyer represent and warrant to the other that it has not engaged or dealt with any broker, finder or other person or entity who or which may be entitled to any brokerage fee or finder's fee, commission or similar charge in respect of the execution of this Agreement or the consummation of the transactions contemplated hereby, except that Parent has engaged Piper Jaffray, Inc. Each of said parties hereby indemnifies and agrees to hold the other harmless against any and all claims, losses, liabilities or expenses which may be asserted against the other as the result of the other party's dealings, arrangements or agreements with any such broker, finder or person or entity. [Remainder of Page Intentionally Blank] IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to be executed for it and on its behalf by its respective duly authorized officers, as of the day and year first set forth above. CENCOR, INC. Attest: /s/Lisa M. Schultes By: /s/ Jack L. Brozman Jack L. Brozman Chairman and President CENTURY ACCEPTANCE CORPORATION Attest: /s/Lisa M. Schultes By: /s/ Jack L. Brozman FIDELITY ACCEPTANCE CORPORATION Attest: /s/Lisa M. Schultes By: /s/ William H. Ott, Jr. William H. Ott, Jr. Chairman CENTURY FINANCE COMPANY OF ALABAMA CENTURY FINANCE COMPANY OF COLORADO CENTURY FINANCE COMPANY OF FLORIDA CENTURY FINANCE CO., INC. OF GEORGIA CENTURY FINANCE COMPANY OF KANSAS CENTURY FINANCE COMPANY OF KENTUCKY CENTURY FINANCE COMPANY OF LOUISIANA CENTURY FINANCE COMPANY OF MISSOURI CENTURY FINANCE COMPANY OF OMAHA, INC. CENTURY FINANCE COMPANY OF OKLAHOMA, INC. CENTURY FINANCE COMPANY OF GREENVILLE, INC. CENTURY FINANCE COMPANY OF TENNESSEE CENTURY ACCEPTANCE CORPORATION OF TEXAS CENTURY FINANCE COMPANY OF UTAH CENTURY HOME EQUITY CORPORATION A FLORIDA CORPORATION Attest: /s/ Lisa M. Henak By: /s/ Dennis C. Berglund Lisa M. Henak, Dennis C. Berglund, as Secretary of each as President of each of of the foregoing the foregoing corporations corporations EX-10.14 3 EX-10.14 EMPLOYMENT AGREEMENT THIS AGREEMENT is made effective the 3rd day of July, 1995 by and between JACK BROZMAN ("Executive") and CENCOR, INC., a Delaware corporation ("Employer"). RECITALS: A. Employer has a wholly owned subsidiary, Century Accep- tance Corporation ("Century") which previously operated a consumer finance business. B. Century is in the process of liquidating its assets and contemplates dividending the net proceeds to Employer and Employer contemplates, after the liquidation of Century, either the use of the net proceeds to pay claims as part of a liquidation process or the use of the net proceeds for other business purposes. C. Executive desires to be employed by Employer, and Employer desires to employ Executive under the terms set forth herein. AGREEMENT In consideration of the mutual promises, covenants and agreements contained herein and other good and valuable consider- ation, the legal sufficiency of which is hereby acknowledged by Executive and Employer, the parties hereto agree as follows: 1. Employment and Term of Employment. Employer hereby employs Executive, and Executive hereby accepts employment with Employer for the term commencing on July 3, 1995 and continuing until June 30, 1998, unless sooner terminated as provided in Section 5. After the initial term hereof, this Agreement shall continue on a month-to-month basis until terminated under Section 5. 2. Duties and Authority. Executive's principal duties shall be that of President and Chief Executive Officer of the business of Employer. Executive's duties shall include overseeing the sale of Century and the management of the remaining assets. Executive agrees to use his best efforts to perform the duties assigned to him from time to time by the Board of Directors of Employer. Executive further agrees that he will not engage in any activities during the term of this Agreement in conflict with the best interests of Employer. 3. Compensation. During the term of this Agreement, Employer shall pay to Executive the following compensation: 3.1 Salary. Executive shall be paid the annual salary set forth below, less withholding, social security and unemployment taxes, payable in accordance with the policies established by Employer from time to time but in installments no less frequent than every month: Year Annual Salary 7/3/95-6/30/96 $225,000 7/1/96-6/30/97 $175,000 after 6/30/97 $125,000 3.2 Reimbursement of Expenses. Employer shall reimburse Executive for ordinary, necessary and reasonable business expenses incurred to conduct or promote Employer's business, including travel and entertainment, provided Executive submits supporting documentation, indicating (a) the amount of the expenditure, (b) the time, place and nature of the expenditure, (c) the business reason or the benefit derived or expected to be derived from the expenditure, and (d) the name and other appropriate information concerning any other person entertained or otherwise deriving a direct benefit from such expenditure. 4. Nondisclosure. Executive acknowledges that as a result of his employment by Employer, Executive has used and acquired and, in the future, will use and acquire knowledge and information used by Employer in its business and which is not generally available to the public ("Confidential Information"), including, without limitation, Employer's systems, procedures, manuals, confidential reports, lists of customers, dealers and lenders with which Employer has business relations, and services and methods used with and preferred by its customers. As a material inducement to Employer to enter into this Agreement, and to pay to Executive the compensation set forth herein, Executive agrees that Executive shall not, at any time, directly or indirectly, divulge or disclose to any person, for any purpose, any Confidential Information, except to those persons authorized by Employer to receive Confiden- tial Information and then only if use by such person is for Employer's benefit. 5. Termination. This Agreement shall terminate as follows: 5.1 Death. On the date of Executive's death. 5.2 Disability. At Employer's option, upon Executive's disability effective on the date Executive receives notice from Employer that Employer is exercising its option granted by this Section to terminate this Agreement. "Disability" as used in this Agreement shall mean Executive's inability, because of sickness or other incapacity, whether physical or mental, to perform Executive- 's duties under this Agreement for a period in excess of One Hundred Eighty (180) consecutive days. 5.3 Breach by Employee. Upon failure by Executive to comply with the provisions of this Agreement, which shall include without limitation Executive's breach of Section 2, gross negligence in the performance of the duties assigned to Executive by Employer's Board of Directors, the commission by Executive of any act of dishonesty toward Employer, theft of corporate property, unethical business conduct or conviction of any misdemeanor or felony involving dishonesty, immoral or unethical conduct. 5.4 Resignation. On the date Executive resigns. 5.5 Notice. Thirty (30) days after receipt by Executive of written notice of termination by the Employer. 5.6 Complete Liquidation. On the date that the Employer's assets are fully liquidated. 6. Payments Upon Termination. 6.1 Termination Upon Death, Disability, Notice or Liquidation Prior to a Substantial Distribution. Upon the termination of this Agreement pursuant to Sections 5.1, 5.2, 5.5 or 5.6, and provided Executive has not breached this Agreement or resigned and further provided that the Company has not made a Substantial Distribution (as hereinafter defined) prior to the termination, Employer shall pay, or cause to be paid, to Executive or Executive's legal representative: (a) Severance pay of One Hundred Fifty Thousand Dollars ($150,000)(the "Severance Payment") to be paid within thirty (30) days after such termination; and (b) All ordinary, necessary and reasonable business expenses incurred by Executive prior to termination of this Agreement to be paid in the ordinary course of Company's business. 6.2 Termination Upon Death, Disability, Notice or Liquidation After a Substantial Distribution. If Employer makes a Substantial Distribution prior to termination of this Agreement for any reason, Employer shall pay the following: (a) Employer shall prepay one-half (1/2) of the Severance Payment within thirty (30) days after Employer makes the Substan- tial Distribution; (b) Executive shall continue to receive the same monthly salary between the date of the Substantial Distribution and termination pursuant to Section 5; and (c) Employer shall pay Executive the final one-half (1/2) of the Severance Payment upon termination pursuant to Sections 5.1, 5.2, 5.5 or 5.6 within thirty (30) days after such termination, provided that Executive has not prior thereto breached this Agreement or resigned. "Substantial Distribution" shall mean a distribution to Employer's creditors and shareholders of substantially all of the Employer's assets, except for unliquidated claims against third parties, the receivable from Concorde Career Colleges, Inc., and any funds held in escrow or reserve for potential claims of third parties against Employer. 6.3 Termination for Breach or Resignation by Executive. Upon termination of this Agreement pursuant to Section 5.3 or 5.4, Employer shall not be obligated to pay Executive any sums. 7. Conflict of Interest. During the term of this Agreement, Executive shall not, directly or indirectly, have any interest (including, without limitation, an interest as a partner, officer, director, stockholder, advisor or employee) in any business which does business with Employer without the express written consent of Employer's Board of Directors, except for his interests as a stockholder, director and chief executive officer of Concorde Career Colleges, Inc. ("Concorde"). Executive will not partici- pate on behalf of Employer in any vote as a shareholder or director involving transactions or matters between Employer and Concorde, nor take any action without approval of the majority of the independent directors which would compromise the debt owed by Concorde to Employer, modify the terms of repayment or waive any right of Employer against Concorde. An ownership interest of less than five percent (5%) in a business whose stock is publicly held or regularly traded shall not be a violation of this Section 7. 8. General Provisions. 8.1 Location of Employment. Executive's principal office shall be located at 1100 Main Street, Kansas City, Missouri or such other location as may be designated by the Employer's Board of Directors. 8.2 Assignment. Neither party may assign any of the rights or obligations under this Agreement without the written consent of the other party, which consents shall not be unreasonably withheld. 8.3 Binding Effect. The Agreement shall be binding upon and inure to the benefit of the parties' heirs, personal representa- tives, successors and assigns, to the extent allowed. 8.4 Severability. The provisions of this Agreement are severable. The invalidity or unenforceability of any one or more of the provisions hereof shall not affect the enforceability of any other part of this Agreement. 8.5 Entire Agreement. This Agreement contains the entire agreement and understanding between the parties with respect to Executive's employment by Employer. 8.6 Waiver. To be valid, a waiver must be in writing. Waiver of any provision of this Agreement or any breach thereof by either party shall not be construed to be a waiver of any other provision or any subsequent breach of this Agreement. 8.7 Notices. Any notice or other communication required or permitted herein shall be sufficiently given if delivered or sent by certified mail, return receipt requested, postage prepaid, addressed to: Employer: CenCor, Inc. c/o Marvin Riesenbach The Executive Mews, Suite H-42 1930 East Marlton Pike Cherry Hill, New Jersey 08003 Executive: Jack Brozman 8607 Cedar Drive Shawnee Mission, Kansas 66207 or such other address as shall be furnished in writing by any such party. Any notice sent by the above-described method shall be deemed to have been received on the date personally delivered or so mailed. Notices sent by any other method shall be deemed to have been received when actually received by the addressee or its or his authorized agent. 8.8 Applicable Law. This Agreement shall be construed in accordance with the laws of the State of Missouri. The parties agree to submit irrevocably to the jurisdiction of either the Circuit Court for Jackson County, Missouri or the United States District Court for the Western District of Missouri. 8.9 Attorneys' Fees. In the event of any litigation between the parties arising out of or relating to this Agreement, the prevailing party may recover a court award of attorneys' fees and litigation costs from the losing party for all trial and appellate proceedings, as well as for all post-judgment collection proceed- ings. IN WITNESS WHEREOF, the parties have executed this agreement on the 17th day of July, 1995. EXECUTIVE: /s/ Jack Brozman JACK BROZMAN EMPLOYER: CENCOR, INC. By: /s/ Patrick Healy Patrick Healy Title: CFO EX-10.15 4 EX-10.15 July 18, 1995 HAND-DELIVERY Mr. Dennis C. Berglund 5331 West 60th Street Kansas City, MO 64151 Re: Employment Agreement dated June 28, 1993, as amended on June 23, 1994 (the "Employment Agreement") Dear Denny: The purpose of this letter is to confirm and accept your resignation as an officer and director of Century Acceptance Corporation ("Century") and all of its subsidiaries, your resigna- tion and the termination of your employment with Century, and to set forth our mutual agreement and understanding with respect to the payments of the amounts due to you by Century pursuant to the provisions of the Employment Agreement. The term of your employment with Century was terminated and your resignation as an officer and director of Century and its subsidiaries was effective July 1, 1995 at which time you became an employer of Fidelity Acceptance Corporation, the purchaser of the assets of Century and its subsidiaries. In accordance with Section 6.01(a) of the Employment Agree- ment, you are entitled to and upon the execution and return of a copy of this letter and the resignation attached, Century will pay you twelve (12) months severance pay in the gross amount of One Hundred Eighty Thousand Dollars ($180,000) (less applicable federal, state, local, and FICA taxes) (the "Severance Payment"). The Severance Payment is in full satisfaction of Century's obligations to you for the payment of severance pay under Section 6.01(a) of the Employment Agreement. Additionally, you have requested that the 1995 bonus payable to you pursuant to Section 3.03 of the Employment Agreement (the "Bonus") be paid in installments with the first installment payable as soon as practicable and the last installment as soon as practicable after the completion of the financial reports prepared by Century's independent accountants for Century's calendar year ending December 31, 1995. The Bonus will be calculated in accordance with the provisions set forth in Section 3.03 of the Employment Agreement and calculated by Century's independent accountants on a pre-tax, pre-warrant income and pre-warrant expense basis and otherwise in accordance with generally accepted accounting principles. It is Century's intent to continue to maximize Century's value and to protect its assets for the benefit of the shareholders and creditors of Century and its parent, Cencor, Inc. Therefore, it is anticipated that for the balance of the 1995 calendar year most of the proceeds received from the sale of Century and its subsidiarie- s' assets will be invested in short-term instruments on a conserva- tive basis. The parties contemplate that the aggregate gross Bonus payable to you will be at least One Million Four Hundred Thousand Dollars ($1,400,000) (the "Contemplated Amount"). If the aggregate gross Bonus as calculated by Century's independent accountants equals or exceeds the Contemplated Amount, the calculation by Century's independent accountants shall be final and binding on Century and you. However, if the aggregate, gross Bonus payable as calculated by Century's independent accountants is less than the Contemplated Amount, you shall have the right to challenge the Calculated amount with your own accountants (the cost of which will be borne by you). If after the challenge a bona fide dispute remains between you and Century as to the aggregate gross Bonus payable, the dispute will be submitted to arbitration pursuant to the rules of the American Arbitration Association (the cost of which shall be borne equally by Century and you). You have requested and Century shall, subject to the execution and return by you of a copy of this letter and the attached resignation, pay the Bonus to you as follows: (i) a portion of the Bonus in the gross amount of Five Hundred Fifteen Thousand Dollars ($515,000) will be paid to you by Century upon the receipt of an executed copy of this letter and the attached resignation; (ii) a second installment on the Bonus in the gross amount of Five Hundred Thousand Dollars ($500,000) will be paid to you by Century on January 10, 1996; and (iii) the balance of the Bonus, after reducing the aggregate gross Bonus payable to you for Century's fiscal year ending December 31, 1995 as provided in Section 3.03 of the Employment Agreement by One Million Fifteen Thousand Dollars ($1,015,000), will be paid to you by Century within fifteen (15) days after the completion of the financial reports by Century's independent accountants for Century's fiscal year ending December 31, 1995 (the "Financial Reports"). At the time of the payment of the final installment of the balance of the Bonus, Century will provide you with a report setting forth the calculation of the aggregate Bonus paid and payable to you pursuant to Section 3.03 of the Employment Agreement. If the amount of the aggregate gross Bonus payable to you for Century's fiscal year ending December 31, 1995 as provided in Section 3.03 of the Employment Agreement shall be less than One Million Fifteen Thousand Dollars ($1,015,000), you shall refund the difference to Century within fifteen (15) days after Century sends the report containing the calculation of the Bonus to you. Each installment payment of the Bonus paid to you in accor- dance with Section 3.03 of the Employment Agreement and as provided in this letter will be subject to withholdings for all applicable federal, state, local, and FICA taxes. Except for Century's obligations to pay the Severance Payment as set forth in Section 6.01 and the Bonus as set forth in Section 3.03 of the Employment Agreement as provided in this letter, by returning an executed copy of this letter you thereby release, fully, finally and irrevocably, Century, its affiliates, subsidiar- ies, agents, servants, representatives, attorneys, employees, successors and assigns from any and all claims, equities, claims for relief, expenses, written or oral contracts (including, but not limited to, the Employment Agreement), damages, injuries, losses, all causes of action, choses in action, whether in contract or in tort, suits and demands whatsoever which you may now have or hereinafter have against Century or any of them, provided, however, it being understood and agreed that this release by you shall not release Century from its obligations to pay the Severance Payment and Bonus to you pursuant to Section 6.01(a) and Section 3.03 of the Employment Agreement as set forth in this letter. Further, upon the return of an executed copy of this letter, together with the executed copy of your resignation, Century agrees to release, fully, finally and irrevocably, you, your successors and heirs from any and all claims, equities, claims for relief, expenses, written or oral contracts (including, but not limited to, the Employment Agreement), damages, injuries, losses, all causes of action, choses in action, whether in contract or in tort, suits and demands whatsoever which you may now have or hereafter have against you or any of them, provided however, it being understood and agreed that this release by Century shall not release you from your obligations pursuant to Section 4 or claims arising from any act specified in Section 5.03 of the Employment Agreement. After you have had an opportunity to review this letter and if it sets forth our agreement and understanding, please acknowledge your consent and acceptance by executing a copy of the letter and returning it to me. Additionally, enclosed for your execution is your written resignation as an officer and employee of Century, its subsidiaries and affiliates. Please return executed copies of the resignation when you return the executed copy of this letter to me. Upon receipt of the executed copy of this letter and your written resignation, I will deliver to you (i) Century's check payable to you for your Severance Payment under Section 6.01(a) of the Employment Agreement in the gross amount of One Hundred Eighty Thousand Dollars ($180,000) (less applicable withholdings) and (ii) Century's check in the gross amount of Five Hundred Fifteen Thousand Dollars ($515,000) (less applicable withholdings) as the first installment payment of the Bonus payable to you under Section 3.03 of the Employment Agreement for Century's calendar year ending December 31, 1995. THIS LETTER CONTAINS A BINDING ARBITRATION PROVISION WHICH MAY BE ENFORCED BY THE PARTIES. Yours very truly, /s/ Jack Brozman JACK BROZMAN Chairman of the Board of Directors Agreed to and accepted this 18th day of July, 1995. /s/Dennis C. Berglund Dennis C. Berglund EX-10.16 5 EX-10.16 GENERAL RELEASE AND SETTLEMENT AGREEMENT This General Release and Settlement Agreement ("Agreement") is made and entered into on this 13th day of July, 1995, by and between CenCor, Inc., a Delaware corporation ("Cencor"), and Dennis Berglund ("Berglund"). WHEREAS, Cencor and Berglund entered into a Stock Appreciation Agreement dated August 29, 1994 (the "SAR Agreement") and the parties desire to satisfy their respective obligations under the SAR Agreement and release all Claims (as hereinafter defined) against each other in accordance with the provisions of this Agreement. NOW, THEREFORE, for and in consideration of the mutual promises, covenants, and agreements contained herein, the receipt and sufficiency of which is hereby acknowledged by the parties to this Agreement, the parties hereto agree as follows: 1. Cencor hereby delivers to Berglund, the receipt of which Berglund acknowledges, the gross sum of Eighty-five Thousand Dollars ($85,000) (less all applicable federal, state, local and FICA taxes) in the form of Cencor's check therefor, which amount shall constitute the entire amount due and owing Berglund pursuant to the terms and conditions of the SAR Agreement, which SAR Agreement is hereby terminated and of no further force or effect. 2. Cencor and Berglund do hereby fully, finally, and irrevocably release, settle, and discharge each other, their respective agents, ser- vants, representatives, employees, successors, and assigns, from any and all claims, equities, claims for relief, expenses, written or oral contracts (including, but not limited to, the SAR Agreement), damages, injuries, losses, all causes or causes of action, choses in action, whether in contract or tort, suits and demands whatsoever ("Claims"), which they may now have or hereinafter have against each other, their respective representatives, employees, beneficiaries, attorneys, agents, successors and assigns. 3. The parties agree and acknowledge that nothing contained in this Agreement constitutes an admission by any party hereto with respect to the Claims of any other party or of liability with respect to any matter referred to herein. 4. The parties further stipulate and agree that this Agreement is the entire agreement of the parties and that in executing this Agreement each party is reliant upon their own judgment and that no other representation, promise or agreement not herein expressed has been made to any of the parties by any person. 5. The parties further stipulate and agree that this Agreement shall be binding and inure to the benefit of their respective successors and assigns and upon all persons, firms, or corporations claiming by and through the parties herein. 6. This Agreement shall be governed, construed and enforced in accordance with the laws of the State of Missouri. IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the day and year first above written. CENCOR, INC. By/s/ Jack Brozman Jack Brozman, President /s/ Dennis Burglund Dennis Berglund EX-21 6 EX-21 CENCOR, INC. AND SUBSIDIARIES SUBSIDIARIES OF THE REGISTRANT Century Acceptance Corporation, 100% owned The following is a list of Century's wholly-owned subsidiaries: Name State of Incorporation Century Finance Company of Colorado Colorado Century Finance Company of Missouri Missouri Century Finance Company of Omaha, Inc. Nebraska Century Finance Company of Oklahoma, Inc. Oklahoma Century Finance Company of Tennessee Tennessee Century Acceptance Corporation of Texas Texas Century Finance Company of Utah Utah EX-27 7
5 DEC-31-1995 DEC-31-1995 YEAR $22,439,000 0 0 0 0 11,903,000 35,000 5,000 34,372,000 3,959,000 12,303,000 0 0 0 18,110,000 34,372,000 0 1,220,000 0 2,822,000 (3,087,000) 0 2,260,000 (775,000) 0 (775,000) 18,717,000 0 0 17,942,000 $9.90 $9.90
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