EXHIBIT 10.1

 

 

 

AMENDED AND RESTATED

LOAN AND SECURITY AGREEMENT

 

 

 

 

 

By and among

 

 

 

1ST FRANKLIN FINANCIAL CORPORATION

 

 

as Borrower

______________________

 

 

 

WELLS FARGO BANK, N.A.

 

as Agent

________________________

 

 

FIRST HORIZON BANK

 

as Syndication Agent

________________________

 

 

Each of the financial institutions

now or hereafter a party hereto

 

as Lenders

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TABLE OF CONTENTS

Page

 

ARTICLE 1 DEFINITIONS1 

Section  1.1Certain Definitions1 

Section  1.2Rules of Construction14 

ARTICLE 2 THE REVOLVING CREDIT FACILITY14 

Section  2.1The Loan14 

Section  2.2The Notes15 

Section  2.3Method of Payment15 

Section  2.4Extension and Adjustment of Maturity Date16 

Section  2.5Use of Proceeds16 

Section  2.6Interest.16 

Section  2.7Advances.16 

Section  2.8Prepayment.19 

Section  2.9Fees19 

Section  2.10Regulatory Changes in Capital Requirements; Replacement of a
Lender20 

Section  2.11Sharing of Payments20 

Section  2.12Pro Rata Treatment21 

Section  2.13Accordion21 

Section  2.14Existing Indebtedness22 

ARTICLE 3 SECURITY22 

Section  3.1Security Interest22 

Section  3.2Financing Statements23 

Section  3.3Documents to be Delivered to Agent23 

Section  3.4Collections23 

Section  3.5Additional Rights of Agent; Power of Attorney.23 

Section  3.6Additional Collateral Provisions.24 

ARTICLE 4 REPRESENTATIONS AND WARRANTIES25 

Section  4.1Representations and Warranties as to Receivables.25 

Section  4.2Organization and Good Standing26 

Section  4.3Perfection of Security Interest26 

Section  4.4No Violations26 

Section  4.5Power and Authority.26 

Section  4.6Validity of Agreements27 

Section  4.7Litigation27 

Section  4.8Compliance27 

Section  4.9Accuracy of Information; Full Disclosure.27 

Section  4.10Taxes.28 

Section  4.11Indebtedness28 

Section  4.12Investments28 

Section  4.13ERISA28 

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Section  4.14Hazardous Wastes, Substances and Petroleum Products.28 

Section  4.15Solvency29 

Section  4.16Business Location29 

Section  4.17Capital Stock29 

Section  4.18No Extension of Credit for Securities29 

Section  4.19Sanctions29 

Section  4.20Anti-Money Laundering and Anti-Corruption Laws30 

Section  4.21Beneficial Ownership Certification30 

ARTICLE 5 CONDITIONS TO LOAN30 

Section  5.1Documents to be Delivered to Agent Prior to Effectiveness30 

Section  5.2Conditions to all Advances31 

ARTICLE 6 AFFIRMATIVE COVENANTS31 

Section  6.1Place of Business and Books and Records31 

Section  6.2Reporting Requirements.32 

Section  6.3Books and Records33 

Section  6.4Financial Covenants33 

Section  6.5Compliance With Applicable Law.34 

Section  6.6Notice of Certain Events35 

Section  6.7Existence, Properties35 

Section  6.8Payment of Indebtedness; Taxes35 

Section  6.9Notice Regarding Any Plan35 

Section  6.10Other Information35 

Section  6.11Litigation, Enforcement Actions and Requests for Information36 

Section  6.12Business Location, Legal Name and State of Organization36 

Section  6.13Operations36 

Section  6.14Further Assurances36 

Section  6.15Chattel Paper/Jurisdictions.36 

ARTICLE 7 NEGATIVE COVENANTS37 

Section  7.1Payments to and Transactions with Affiliates37 

Section  7.2Restricted Payments37 

Section  7.3Indebtedness38 

Section  7.4Guaranties38 

Section  7.5Nature of Business38 

Section  7.6Negative Pledge38 

Section  7.7Investments38 

Section  7.8Compliance with Formula38 

Section  7.9Mergers, Divestitures 38 

Section  7.10Use of Proceeds.38 

Section  7.11Ownership and Management38 

Section  7.12Amendment to Subordinated Debt39 

Section  7.13Bulk Purchases39 

Section  7.14Guarantor Dividends39 

Section  7.15Asset Sales39 

Section  7.16Deposit Accounts39 

Section  7.17Source of Repayment and Collateral39 

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Section  7.18Franklin Securities, Inc.39 

ARTICLE 8 EVENTS OF DEFAULT39 

Section  8.1Failure to Make Payments.39 

Section  8.2Information, Representations and Warranties39 

Section  8.3Covenants40 

Section  8.4Collateral40 

Section  8.5Defaults Under Other Agreements40 

Section  8.6Certain Events40 

Section  8.7Possession of Collateral41 

Section  8.8Guarantor41 

Section  8.9Credit Documents41 

Section  8.10Hedging Agreements41 

Section  8.11Material Adverse Change41 

Section  8.12Level Two Regulatory Event41 

ARTICLE 9 REMEDIES OF AGENT AND WAIVER41 

Section  9.1Agent’s Remedies41 

Section  9.2Waiver and Release by Borrowers42 

Section  9.3No Waiver42 

Section  9.4Application of Proceeds42 

ARTICLE 10 MISCELLANEOUS43 

Section  10.1Indemnification and Release Provisions43 

Section  10.2Amendments.43 

Section  10.3APPLICABLE LAW45 

Section  10.4Notices45 

Section  10.5Termination and Release46 

Section  10.6Counterparts46 

Section  10.7Costs, Expenses and Taxes46 

Section  10.8Participations and Assignments.46 

Section  10.9Effectiveness of Agreement49 

Section  10.10JURISDICTION AND VENUE49 

Section  10.11WAIVER OF JURY TRIAL49 

Section  10.12REVIEW BY COUNSEL49 

Section  10.13Exchanging Information49 

Section  10.14Acknowledgment of Receipt49 

Section  10.15Patriot Act Notice50 

Section  10.16Recognition of the U.S. Special Resolution Regimes.50 

ARTICLE 11 AGENT50 

Section  11.1Appointment of Agent.50 

Section  11.2Nature of Duties of Agent.51 

Section  11.3Lack of Reliance on Agent.51 

Section  11.4Certain Rights of Agent52 

Section  11.5Reliance by Agent52 

Section  11.6Indemnification of Agent52 

Section  11.7Agent in its Individual Capacity52 

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Section  11.8Holders of Notes53 

Section  11.9Successor Agent.53 

Section  11.10Collateral Matters.53 

Section  11.11Delivery of Information54 

Section  11.12Defaults54 

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AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT

This AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT is made as of the 19th day
of November, 2019 by and among 1ST FRANKLIN FINANCIAL CORPORATION, a Georgia
corporation, and such other Persons joined hereto from time to time as borrowers
pursuant to written agreement by the parties hereto (collectively, the
“Borrowers” and each individually is referred to as a “Borrower”), WELLS FARGO
BANK, N.A., as agent for Lenders (“Agent”), and the financial institutions from
time to time party hereto (collectively, the “Lenders” and each individually is
referred to as a “Lender”).

BACKGROUND

A.Wells Fargo Bank, N.A., as agent and lender, and 1st Franklin Financial
Corporation are parties to that certain Loan and Security Agreement dated as of
September 11, 2009 (as amended or modified from time to time, the “Existing
Agreement”) and certain instruments, documents and agreements executed in
connection therewith (together with the Existing Agreement, the “Existing Loan
Documents”). 

B.Agent, Lenders and Borrowers desire to amend and restate the Existing
Agreement in its entirety pursuant to the terms and conditions hereof. 

NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, and intending to be legally bound hereby, the
parties covenant and agree as follows:

ARTICLE 1
DEFINITIONS

Section 1.1          Certain Definitions.  The terms defined in this
Section 1.1, whenever used and capitalized in this Agreement shall, unless the
context otherwise requires, have the respective meanings herein specified. 

“Access Agreement” shall mean the access agreement, in form and substance
acceptable to Agent, executed and delivered to Agent by Borrowers and a Person
reasonably acceptable to Agent (including DHI Computing Service, Inc., doing
business through a division known as GOLDPoint Systems).

“Adjusted Tangible Net Worth” means Tangible Net Worth minus (a) any deficits
from the amount required as Allowance for Loan Losses under Section 6.4(c)
hereof and (b) the amount of any accounts to be charged-off, that have not been
charged-off, under Section 6.4(e) hereof.

“Advance” means each advance of the Loan made to Borrowers pursuant to
Section 2.1 of this Agreement.

“Advance Rate” means 70%.

“Affiliate” means (i) any Person who or entity which directly or indirectly
owns, controls or holds 5.0% or more of the outstanding beneficial interest in a
Borrower; (ii) any entity of which 5.0% or more of the outstanding beneficial
interest is directly or indirectly owned, controlled, or held by a

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Borrower; (iii) any entity which directly or indirectly is under common control
with a Borrower; or (iv) any officer, director, partner or employee of a
Borrower or any Affiliate.  For purposes of this definition, “control” means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of an entity, whether through the
ownership of voting securities, by contract, or otherwise.  

“Agreement” means this Amended and Restated Loan and Security Agreement and all
exhibits and schedules hereto, as the same may be amended, modified or
supplemented from time to time.

“Allowance for Loan Losses” means, at all times, the sum of allowance for loan
losses, as calculated in accordance with GAAP (inclusive of discounts, Dealer
Reserves and dealer holdbacks).

“Anti-Corruption Laws” means: (a) the U.S. Foreign Corrupt Practices Act of
1977, as amended; (b) the U.K. Bribery Act 2010, as amended; and (c) any other
anti-bribery or anti-corruption laws, regulations or ordinances in any
jurisdiction in which any Borrower or any member of the Borrowing Group is
located or doing business.

“Anti-Money Laundering Laws” means applicable laws or regulations in any
jurisdiction in which any Borrower or any member of the Borrowing Group is
located or doing business that relates to money laundering, any predicate crime
to money laundering, or any financial record keeping and reporting requirements
related thereto.

“Anti-Terrorism Laws” means any laws relating to terrorism or money laundering
(including Anti-Money Laundering Laws), including the Patriot Act.

“Applicable Margin” means (a) initially 2.75% and (b) commencing with Agent’s
receipt of the monthly financial statements and other documentation and reports
required pursuant to Section 6.2 of this Agreement for the calendar month ending
November 30, 2019, the following percentage as set forth in the matrix below (no
downward rate adjustment being permitted if an Event of Default or Default is
outstanding):

 

Funded Debt to

Adjusted Tangible Net Worth Ratio

Applicable Margin

Less than 2.75 to 1.0

2.75%

Greater than or equal to 2.75 to 1.0

3.00%

 

For purposes of the foregoing (i) the Applicable Margin shall be adjusted
monthly in accordance with the matrix above, based upon Agent’s receipt of
monthly financial statements and other documentation and reports required
pursuant to Section 6.2 of this Agreement, and effective the first (1st) day of
the month of the delivery of such financial statements and other documentation
and reports and (ii) if Borrowers fail to timely deliver the applicable
financial statements, documentation and reports or any other Event of Default
then exists, then at Agent’s option, the Applicable Margin will be increased to
the highest rate of interest pursuant to the above matrix, which rate of
interest shall continue in effect until the applicable financial statements are
delivered.  In the event that any financial

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statement, covenant compliance certificate, documentation and reports delivered
pursuant to Section 6.2 of this Agreement is shown to be inaccurate (regardless
of whether this Agreement is in effect when such inaccuracy is discovered), and
such inaccuracy, if corrected, would have led to the application of a higher
Applicable Margin for any period (an “Applicable Period”) than the Applicable
Margin applied for such Applicable Period, and only in such case, then Borrowers
shall immediately (i) deliver to Agent a corrected covenant compliance
certificate for such Applicable Period, (ii) determine the Applicable Margin for
such Applicable Period based upon the corrected covenant compliance certificate,
and (iii) pay to Agent the accrued additional interest owing as a result of such
increased Applicable Margin for such Applicable Period.

“Asset Quality” means, as of the date of determination, the sum of the following
percentage: (a) Net Charge-Offs of Receivables for the 12 month period ending on
such date, as a percentage of Principal Receivables outstanding during such 12
month period, plus (b) Receivables more than 60 days past due on a contractual
basis on such date, as a percentage of gross Receivable on such date.

“Assignment and Acceptance” means an assignment and acceptance entered into by
an assigning Lender and an assignee Lender, accepted by Agent, in accordance
with Section 10.8 in form and substance satisfactory to Agent (in its sole and
absolute discretion).

“Annual Compliance Certificate” means the certificate in the form of Exhibit A
attached hereto and made a part hereof to be delivered by Borrowers to Agent
pursuant to Section 6.2(f) hereof.

“Availability Statement” means the certificate in substantially the form of
Exhibit B attached hereto and made part hereof to be submitted by Borrowers to
Agent in accordance with the provisions of this Agreement.

“Bankruptcy Code” means the United States Bankruptcy Code as now constituted or
hereafter amended and any similar statute or law affecting the rights of
debtors.

“Bank Products” means any one or more of the following types of services or
facilities extended to a Borrower by the Agent or any Wells Fargo Affiliate: (a)
Cash Management Services; (b) products under Hedging Agreements; (c) commercial
credit card and merchant card services; and (d) leases and other banking
products or services as may be requested by any Borrower.

“Beneficial Ownership Certification” means a certification regarding beneficial
ownership as required by the Beneficial Ownership Regulation.

“Beneficial Ownership Regulation” means 31 C.F.R. § 1010.230.

“BHC Act Affiliate” has the meaning assigned to the term “affiliate” in, and
shall be interpreted in accordance with, 12 U.S.C. §1841(k).

“Books and Records” means all of Borrowers’ original ledger cards, payment
schedules, credit applications, contracts, lien and security instruments,
guarantees relating in any way to the Collateral and other books and records or
transcribed information of any type, whether expressed in electronic form in
tapes, discs, tabulating runs, programs and similar materials now or hereafter
in existence relating to the Collateral.

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“Borrowers’ Loan Account” has the meaning assigned to that term in Section 2.1
of this Agreement.

“Borrowing Base” means, as of the date of determination, and subject to change
from time to time as described below, an amount equal to the Advance Rate
multiplied by the aggregate balance of outstanding Eligible Receivables.
 Notwithstanding the foregoing, Agent may adjust the above rates in the
Borrowing Base from time to time and at any time in Agent’s commercially
reasonable discretion, upon 10 days notice to Borrowers if, in Agent’s
commercially reasonable judgment, there has been an adverse change with respect
to Borrowers’ Receivables, business operation or regulatory affairs related to
Borrowers’ Receivables or business operations.

“Borrowing Group” means: (a) Borrowers, (b) the parent of Borrowers, (c) any
Affiliate or Subsidiary of Borrowers, (c) any Guarantor, (d) the owner of any
collateral securing any part of the credit (including the Collateral), any
guaranty (including the Guaranties), or this Agreement, and (e) any officer,
director or agent acting on behalf of any of the parties referred to in items
(a) through (d) with respect to the credit, this Agreement or any of the other
Credit Documents.  

“Business Day” means any day except a Saturday, Sunday or other day on which
national banks are authorized by law to close including, without limitation,
United States federal government holidays.

“Cash Management Services” means any services provided from time to time by
Agent or any Wells Fargo Affiliate to any Borrower or Subsidiary in connection
with operating, collections, payroll, trust, or other depository or disbursement
accounts, including automated clearinghouse, e-payable, electronic funds
transfer, wire transfer, controlled disbursement, overdraft, depository,
information reporting, lockbox and stop payment services.

“Code” means the Internal Revenue Code of 1986, as amended from time to time,
and regulations with respect thereto in effect from time to time.

“Collateral” means:

 

(i)All of each Borrower’s Receivables, now owned or existing or hereafter
arising or acquired; 

(ii)All collateral, security and guaranties now or hereafter in existence for
any Receivables; 

(iii)All insurance related to any Receivables, to any collateral or security for
any Receivables or to any obligor in respect of any Receivables and all proceeds
of such insurance to which a Borrower has a right of receipt (including, without
limitation, all non-filing insurance, credit insurance and credit life insurance
related to any Receivables, to any collateral or security for any Receivables,
or to any obligor in respect of any Receivables and all proceeds of such
insurance); 

(iv)All of each Borrower’s Books and Records related to any Receivables
including tapes and software; 

(v)All notes, drafts, deposit accounts, acceptances, documents of title, deeds,
 

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policies and policies or certificates of insurance (including without limitation
credit insurance, credit life insurance, non-filing insurance and title
insurance) and securities (domestic and foreign) and letter of credit rights now
or hereafter owned by each Borrower or in which a Borrower has or at any time
acquires an interest in connection with any Receivables;

(vi)All of each Borrower’s Accounts, Documents, Instruments, General
Intangibles, Investment Property (including, without limitation, equity
interests in and capital stock of each Entity Guarantor) and Chattel Paper, now
owned or existing or hereafter arising or acquired, and all payment obligations
owed to a Borrower, now owned or existing or hereafter arising or acquired;
together with all collateral, security and guaranties now or hereafter in
existence for any of the foregoing; and 

(vii)All cash and non-cash proceeds of all the foregoing. 

“Collections” means payment of principal, interest and fees on Receivables, the
cash and non-cash proceeds realized from the enforcement of such Receivables and
any security therefor, or the Collateral, proceeds of credit, group life or
non-filing insurance, or proceeds of insurance on any real or personal property
which is part of the collateral for the Receivables.

“Commercial Paper” means the short term promissory notes issued by Borrowers
from time to time in connection with their commercial paper program.

“Commitment” means, with respect to each Lender, a commitment of such Lender to
make its portion of the Advance in a principal amount up to each such Lender’s
Commitment Percentage of the Maximum Principal Amount.

“Commitment Percentage” means, for any Lender, the percentage identified as the
Commitment Percentage on Schedule I, as such percentage may be modified in
connection with any assignment made in accordance with Section 10.8.

“Commodity Exchange Act” means the Commodity Exchange Act (7 U.S.C. Section 1 et
seq.), as amended from time to time, and any successor statute.

“Consumer Finance Laws” means all applicable laws and regulations, federal,
state and local, relating to the extension of consumer credit, and the creation
of a security interest in personal property or a mortgage in real property in
connection therewith, as the case may be, and laws with respect to protection of
consumers’ interests in connection with such transactions, including without
limitation, any usury laws, the Federal Consumer Credit Protection Act, the
Federal Fair Credit Reporting Act, RESPA, the Magnuson-Moss Warranty Act, the
Federal Trade Commission’s Rules and Regulations and Regulations B and Z of the
Federal Reserve Board, as any of the foregoing may be amended from time to time.

“Consumer Purpose Loans” means amortizing loans to one or more individuals the
proceeds of which are used for personal use including to purchase goods,
services or merchandise for personal, household or family use.

“Control Agreement” means that certain deposit account control agreement among
Borrowers, Agent and South State Bank (in form and substance satisfactory to
Agent and South State Bank).

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“Covered Entity” means any of the following: (i) a “covered entity” as that term
is defined in, and interpreted in accordance with, 12 C.F.R. §252.82(b); (ii) a
“covered bank” as that term is defined in, and interpreted in accordance with,
12 C.F.R. §47.3(b); or (iii) a “covered FSI” as that term is defined in, and
interpreted in accordance with, 12 C.F.R. §382.2(b). 

“Credit Documents” means this Agreement, the Notes, the Guaranties, the
Subordination Agreement, the Control Agreement and any and all additional
documents, instruments, agreements and other writings executed and delivered
pursuant to or in connection with this Agreement.

“Dealer Reserves” means a reserve on Borrower’s Books and Records for charges
and claims against dealers.

“Debt” means as of the date of determination, all outstanding indebtedness
(other than deferred loan origination fees of Borrowers) including without
limitation (a) all loans made hereunder to Borrowers; (b) accounts payable as of
the date of determination; (c) income tax liabilities; (d) mortgages;
(e) deposits, debenture instruments, and other instruments, including all
accruals of interest and fees related thereto; (e) all other obligations which
in accordance with GAAP would be classified upon a balance sheet as liabilities
(except capital stock and surplus earned or otherwise); (f) Subordinated Debt
and (g) Other Debt.

“Default” means an event, condition or circumstance which, with the giving of
notice or the passage of time, or both, would constitute an Event of Default.

“Default Right” has the meaning assigned to that term in, and shall be
interpreted in accordance with, 12 C.F.R. §§252.81, 47.2 or 382.1, as
applicable.

“Deficiency Balance Receivable” means a Receivable for which a balance remains
after any collateral associated with such Receivable has been sold and the
remaining balance has not been charged off.

“EBITDA Ratio” means the ratio of such Person’s (a) earnings before payments of
interest, taxes, depreciation and amortization expense for the twelve month
period ending on the date of determination, net of any deficits from the amount
required as an Allowance for Loan Losses under Section 6.4(c) hereof and the
amount of any accounts to be charged off, that have not been charged off, in
Section 6.4(e) hereof, to (b) interest expense during such twelve month period
in accordance with GAAP principles pursuant to Section 6.4 of this Agreement.

“Eligible Receivables” means, as of the date of determination, Receivables (net
of unearned interest, fees, dealer reserves, holdbacks, discounts, insurance
premiums and commissions thereon), which conform to the warranties set forth in
Section 4.1 hereof, in which Agent has a validly perfected first priority Lien,
and which are not any of the following: (i) Receivables for which a payment is
more than 60 days past due on a contractual basis; (ii) Receivables subject to a
bankruptcy proceeding, litigation, foreclosure, repossession or other legal
proceeding; (iii) Receivables from employees (unless payments with respect
thereto are automatically deducted from such employee’s paycheck) or
shareholders of any Borrower or any Affiliate; (iv) Receivables which have been
deferred, restructured, extended, renewed, modified or altered not in compliance
with Borrowers’ Modification Policy; (vi) Receivables not in compliance with
Borrowers’ Underwriting Policy; (vii) if Borrowers have elected to note their
first priority Lien on the applicable certificate of title, Receivables for
which Agent or

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Borrowers have not received a valid certificate of title or notification of a
valid certificate of title with the Lien of a Borrower noted thereon, if
applicable, within 120 days after the origination of the Receivable;
(viii) Receivables arising from balloon payment accounts, non-amortizing
accounts or Interest-Only Accounts; (ix) Receivables arising from assignments
for repossession; (x) Real Estate Related Accounts for which the original term
exceeds 120 months; (xi) Receivables which were originated to support the
acquisition of commercial vehicles; (xii) RESERVED; (xiii) Deficiency Balance
Receivables; (xiv) Receivables serviced, collected or enforced by a Person other
than a Borrower without prior written consent of Agent; (xv) Real Estate Related
Accounts for which the amount, when aggregated with all other Real Estate
Related Accounts exceeds the lesser of (A) $55,000,000 or (B) 10% of all total
Receivables of Borrowers then outstanding, to the extent of such excess; (xvi)
Receivables with any deferred payments; (xvii) Receivables constituting “premier
loans” with a credit score of less than 640; (xviii) Receivables for which the
original term exceeds 60 months (other than Real Estate Related Accounts); (xix)
Receivables with an original principal balance in excess of $15,000 (other than
Real Estate Related Accounts); and (xx) Receivables which, in Agent’s
commercially reasonable discretion, do not constitute acceptable collateral
following 10 days’ notice from Agent to Borrowers.

“Entity Guarantors” means, collectively, Frandisco Life Insurance Company, a
Georgia corporation, and Frandisco Property & Casualty Insurance Company, a
Georgia corporation.

“Environmental Control Statutes” means any federal, state, county, regional or
local laws governing the control, storage, removal, spill, release or discharge
of Hazardous Substances, including without limitation CERCLA, the Solid Waste
Disposal Act, as amended by the Resource Conservation and Recovery Act of 1976
and the Hazardous and Solid Waste Amendments of 1984, the Federal Water
Pollution Control Act, as amended by the Clean Water Act of 1976, the Hazardous
Materials Transportation Act, the Emergency Planning and Community Right to Know
Act of 1986, the National Environmental Policy Act of 1975, the Oil Pollution
Act of 1990, any similar or implementing state law, and in each case including
all amendments thereto and all rules and regulations promulgated thereunder and
permits issued in connection therewith.

“EPA” means the United States Environmental Protection Agency, or any successor
thereto.

“ERISA” means the Employee Retirement Income Security Act of 1974, all
amendments thereto, and any successor statute of similar import, and regulations
thereunder, in each case as in effect from time to time.  References to sections
of ERISA shall be construed to refer to any successor sections.

“Event of Default” has the meaning assigned to that term in Article 8 of this
Agreement.

“Excess Availability” means, as of any date of determination, an amount equal to
(a) the lesser of the Borrowing Base and the Maximum Principal Amount, minus (b)
the amount of outstanding Advances.

“Excluded Swap Obligation” means, with respect to any Person, any Swap
Obligation if, and to the extent that, all or a portion of the agreement of such
Person to be obligated with respect of, or the grant by such Person of a Lien to
secure, such Swap Obligation (or any Guaranty thereof) is or becomes illegal or
unlawful under the Commodity Exchange Act or any rule, regulation or order of
the Commodity Futures Trading Commission (or the application or official
interpretation of any

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thereof) by virtue of such Person’s failure for any reason not to constitute an
“eligible contract participant” as defined in the Commodity Exchange Act at the
time the agreement of such Person to be obligated with respect of such Swap
Obligation would otherwise have become effective with respect to such related
Swap Obligation but for such Person’s failure to constitute an “eligible
contract participant” at such time.  If a Swap Obligation arises under a master
agreement governing more than one swap, such exclusion shall apply only to the
portion of such Swap Obligation that is attributable to swaps for which such
agreement of such Person to be obligated or Lien is or becomes illegal or
unlawful.

“Funded Debt” means, with respect to any Person on any day, without duplication,
the following Debt: (i) all indebtedness or guarantees of such Person for
borrowed money or for the deferred purchase price of property or services (other
than current liabilities incurred in the ordinary course of business and payable
in accordance with customary trade practices) or which is evidenced by a note,
bond, debenture or similar instrument or which accrue interest or are a type
upon which interest charges are customarily paid (specifically excluding all
obligations of such Person under capital leases), (ii) liabilities secured by
any Lien on any property owned by such Person even though such Person has not
assumed or otherwise become liable for the payment thereof (provided that the
amount of such liabilities included as Funded Debt shall be the lesser of the
amount of such liabilities and the fair market value of the property of such
Person securing such liabilities), (iii) the net amount of all indebtedness,
obligations or liabilities of that Person in respect of Hedge Agreements, (iv)
all obligations, contingent or otherwise, of such Person as an account party in
respect of undrawn letters of credit and undrawn letters of guaranty, (v) all
obligations, contingent or otherwise, of such Person in respect of bankers’
acceptances, and (vi) guaranties of any of the foregoing

“Funded Debt to Adjusted Tangible Net Worth Ratio” means the ratio of Funded
Debt to Adjusted Tangible Net Worth.

“GAAP” means generally accepted accounting principles as in effect from time to
time in the United States, consistently applied; provided, however, that all
calculations relative to liabilities shall be made without giving effect to
Statement of Financial Accounting Standards No. 159.

“Governmental Authority” means any federal, state, local, or other governmental
or administrative body, instrumentality, board, department, or agency or any
court, tribunal, administrative hearing body, arbitration panel, commission, or
other similar dispute-resolving panel or body (including, without limitation,
Local Authorities).

“Guarantors” shall mean, collectively, Entity Guarantors.

“Guaranty” means individually, and “Guaranties” means collectively, the limited
and unlimited guaranty agreements in form and substance satisfactory to Agent,
as the same may be amended, modified, restated or extended from time to time.

“Hazardous Substance” means any toxic, reactive, corrosive, carcinogenic,
flammable or hazardous pollutant or other substance, including without
limitation petroleum and items defined in Environmental Control Statutes as
“hazardous substances,” “hazardous wastes,” “pollutants” or “contaminants.”

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“Hedging Agreement” an agreement relating to any interest rate hedge, exchange,
swap, cap, floor, collar, option, forward, cross right or obligation, or
combination thereof or similar transaction, with respect to interest rate,
foreign exchange, currency, commodity, credit or equity risk (including, without
limitation, any ISDA Master Agreement).

“Insurance Premium Dividend” means distribution to shareholders of Borrowers
used solely to pay life insurance premiums.

“Intangible Assets” means all assets of any Person which would be classified in
accordance with GAAP as intangible assets, including without limitation (a) all
franchises, licenses, permits, patents, applications, copyrights, trademarks,
trade names, goodwill, experimental or organization expenses and other like
intangibles, and (b) unamortized debt discount and expense and unamortized stock
discount and expense.

“Interest-Only Accounts” means those Receivables on which collections are
applied entirely to interest and expense charges, with no portion thereof being
required to reduce the principal balance on the loan prior to the stated
maturity of such accounts.

“Level One Regulatory Event” means the formal commencement by written notice by
any federal or state Governmental Authority of any inquiry, investigation, legal
action or similar proceeding against any Borrower or any of their Subsidiaries
challenging its authority to originate, hold, own, service, collect or enforce
Receivables generally or any category or group of Receivables that is material
to the business of such Borrower or such Subsidiary, or otherwise alleging any
material non-compliance by any Borrower or any of their Subsidiaries with any
applicable laws related to originating, holding, collecting, servicing or
enforcing Receivables generally or any category or group of Receivables that is
material to the business of such Borrower or such Subsidiary (which shall
include, without limitation, the issuance of a civil investigative demand by the
Consumer Financial Protection Bureau that meets the criteria set forth above),
which inquiry, investigation, legal action or proceeding is not released or
terminated in a manner reasonably acceptable to Agent within thirty (30)
calendar days of commencement thereof.

“Level Two Regulatory Event” means the issuance or entering of any stay, order,
judgment, cease and desist order, injunction, temporary restraining order, or
other judicial or non-judicial sanction, order or ruling against any Borrower or
any of their Subsidiaries related in any way to the originating, holding,
pledging, collecting, servicing or enforcing of Receivables generally or any
category or group of Receivables that is material to the business of such
Borrower or such Subsidiary.

“LIBOR Rate” means the greater of (a) 0.75% per annum or (b) the one-month
London Interbank Offered Rate as found in the Wall Street Journal, Interactive
Edition, or any successor edition or publication and selected by Agent in its
sole discretion for its entire loan portfolio for all borrowers for any day
during a given month.  The LIBOR Rate shall be adjusted on the first day of each
calendar month based upon the LIBOR Rate as of the last day of the immediately
preceding calendar month.  In the event such rate ceases to be published or
quoted, LIBOR Rate shall mean a comparable rate of interest reasonably selected
by Agent for its entire loan portfolio for all borrowers.  Agent’s determination
of the LIBOR Rate shall be conclusive and binding on Borrowers, absent manifest
error.

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“Lien” means any mortgage, deed of trust, pledge, lien, security interest,
charge or other encumbrance or security arrangement of any nature whatsoever,
including without limitation any conditional sale or title retention
arrangement, and any assignment, deposit arrangement or lease intended as, or
having the effect of, security.

“Liquidity” means the sum of unencumbered cash of Borrowers, Excess Availability
and availability under the Reinsurance Credit Facilities.

“Loan” means the aggregate principal amount advanced by Lenders to Borrowers
pursuant to Section 2.1 of this Agreement, together with interest accrued
thereon and fees and costs owing hereunder in connection therewith.

“Loan Availability” means the amount available for Advances under this Agreement
on any date as determined in accordance with the Availability Statement
submitted to Agent pursuant to the terms hereof.

“Local Authorities” means individually and collectively the state and local
governmental authorities which govern the business and operations owned or
conducted by Borrowers or any of them.  

“Maturity Date” means February 28, 2022, as such date may be extended from time
to time in accordance with the provisions of Section 2.4 of this Agreement.

“Maximum Principal Amount” means $200,000,000.

“Modification Policy” means that certain policy of Borrowers attached hereto as
Exhibit E.

“Net Charge-Offs” means Principal Receivables which have been charged off (net
of bad debt recoveries).

“Notes” mean collectively, the promissory notes to this Agreement of Borrowers
in favor of each Lender in form and substance satisfactory to Agent, evidencing
the joint and several obligation of Borrowers to repay the Loan, and any and all
amendments, renewals, replacements or substitutions therefor, and each is
referred to individually as a “Note.”

“Obligations” means (a) each and every draft, liability and obligation of every
type and description which Borrowers may now or at any time hereafter owe to
Agent and Lenders (whether such debt, liability or obligation now exists or is
hereafter created or incurred, whether it arises in a transaction involving
Agent and/or any Lender alone or in a transaction involving other creditors of
Borrowers, or any of them, and whether it is direct or indirect, due or to
become due, absolute or contingent, primary or secondary, liquidated or
unliquidated, or sole, joint, several or joint and several), and including
specifically, but not limited to, all indebtedness of Borrowers arising under
this Agreement, the Notes, any fee letter or any other loan or credit agreement
between or among a Borrower or Borrowers and Agent and/or any Lender, whether
now in effect or hereafter entered into and including, without limitation, all
Loans and (b) payment or performance, as the case may be, of all obligations of
Borrowers with respect to Bank Products.  Notwithstanding anything to the
contrary contained herein, the Obligations shall specifically exclude Excluded
Swap Obligations.

“OFAC” means The Office of Foreign Assets Control of the U.S. Department of the

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Treasury.

“Other Debt” means Senior Demand Notes, Commercial Paper and Variable Rate
Subordinated Debentures.

“Participant” has the meaning assigned to that term in Section 10.8 of this
Agreement.

“Patriot Act” means the Uniting and Strengthening America by Providing
Appropriate Tools Required to Intercept and Obstruct Terrorism Act (USA Patriot
Act of 2001).

“PBGC” means the Pension Benefit Guaranty Corporation, or any successor thereto.

“Permitted Indebtedness” means (a) borrowings from Agent and Lenders hereunder;
(b) trade indebtedness in the normal and ordinary course of business for value
received; (c) indebtedness and obligations incurred to purchase or lease fixed
or capital assets, (d) the other indebtedness and obligations described on
Schedule II attached hereto and made part hereof, (e) indebtedness in connection
with Bank Products, (f) Other Debt, (g) real property leases entered into by
Borrowers with respect to the branch offices and other buildings in the ordinary
course of their business and (h) unsecured Debt permitted to be drawn with the
prior written consent of Agent owing under the Reinsurance Credit Facilities.

“Permitted Liens” means (a) Liens granted to Agent by Borrowers pursuant to this
Agreement, (b) Liens existing as of the date hereof described on Schedule III
attached hereto and (c) Liens granted to real property landlords by Borrowers on
furniture, fixture and equipment.

“Permitted Tax Distributions” shall mean as to any taxable year of a Borrower
during which such Borrower makes an S corporation election with the Internal
Revenue Service and appropriate state agency, an annual distribution necessary
to enable each shareholder of such Borrower to pay federal or state income taxes
attributable to such shareholder resulting solely from the allocated share of
income of such Borrower for such period.

“Person” means all natural persons, corporations, limited partnerships, general
partnerships, joint stock companies, limited liability companies, joint
ventures, associations, companies, trusts, banks, trust companies, land trusts,
business trusts or other organizations, whether or not legal entities, and
federal and state governments and agencies or regulatory authorities and
political subdivisions thereof, or any other entity.  

“Plan” means any employee benefit plan subject to the provisions of Title IV of
ERISA which is maintained in whole or in part for employees of Borrowers or any
Affiliate of Borrowers.

“Principal Receivables” means net Receivables less unearned interest and
insurance commissions (including discounts).

“Property” means any interest in any kind of property or asset, whether real,
personal or mixed, or tangible or intangible.

“Real Estate Related Accounts” means Receivables arising from loans (a) the
proceeds of which are used to purchase or improve real property; or
(b) collateralized or secured by an interest in real property; and shall include
without limitation home equity accounts. 

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“Receivables” means all lien, title retention and security agreements, chattel
mortgages, chattel paper, bailment leases, installment sale agreements,
instruments, consumer finance paper and/or promissory notes securing and
evidencing loans made, and/or time sale transactions acquired, by a Borrower.

“Regulatory Event” means either a Level One Regulatory Event or a Level Two
Regulatory Event.

“Reinsurance Credit Facilities” means the unsecured credit facilities
established for the benefit of Borrowers pursuant to two Line of Credit Loan
Agreements with Borrowers’ Subsidiaries, Frandisco Life Insurance Company and
Frandisco Property and Casualty Insurance Company, the documentation of which
are in form and substance acceptable to Agent, and which shall have (w) maturity
dates thereunder at least five (5) months after the Maturity Date, (x) no
financial or negative covenants, (y) a per annum rate of interest no more than
25 basis points greater than the interest accruing on the principal balance of
the Obligations and (z) an aggregate commitment of at least $92,000,000.

“Replacement Lender” has the meaning assigned to that term in Section 2.10(b) of
this Agreement.

“Reportable Event” has the meaning assigned to that term in Section 4.13 of this
Agreement.

“Required Lenders” means, at any time, Lenders which are then in compliance with
their obligations hereunder and holding in the aggregate at least seventy five
percent (75%) of (a) the Commitment Percentage (and participation interest) or
(b) if this Agreement has been terminated, the outstanding Loans and
participation interest; provided, however, if there are less than three (3)
Lenders at any time, Required Lenders shall mean one hundred percent (100%) of
Lenders which are then in compliance with their obligations hereunder.

“Restricted Payments” means payments by Borrowers, or any of them, which
constitute (a) redemptions, repurchases, dividends or distributions of any kind
with respect to a Borrower’s stock or any warrants, rights or options to
purchase or otherwise acquire any shares of Borrower’s capital stock or
(b) payments of principal or interest on Subordinated Debt.

“Sanction” or “Sanctions” means any and all economic or financial sanctions,
sectoral sanctions, secondary sanctions, trade embargoes and restrictions and
anti-terrorism laws imposed, administered or enforced from time to time by any
Sanctioned Entity: including, without limitation: (a) the United States of
America, including those administered by the U.S. Department of the Treasury’s
Office of Foreign Assets Control (OFAC), the U.S. Department of State, the U.S.
Department of Commerce, or through any existing or future statute or Executive
Order, (b) the United Nations Security Council, (c) the European Union, (d) the
United Kingdom, (e) any other governmental authority with jurisdiction over
Borrower or any member of the Borrowing Group.

“Sanctioned Entity” means (a) a country or a government of a country, (b) an
agency of the government of a country, (c) an organization directly or
indirectly controlled by a country or its government, (d) a Person resident in
or determined to be resident in a country, in each case, that is subject to a
country sanctions program administered and enforced by OFAC.

“Sanctioned Target” means any target of Sanctions, including: (a) Persons on any
list of targets

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identified or designated pursuant to any Sanctions, (b) Persons, countries, or
territories that are the target of any territorial or country-based Sanctions
program, (c) Persons that are a target of Sanctions due to their ownership or
control by any Sanctioned Target(s), or (d) otherwise a target of Sanctions,
including vessels and aircraft, that are designated under any Sanctions program.

“Schedule of Receivables and Assignment” means a Schedule of Receivables and
Assignment to be submitted by Borrowers to Agent pursuant to the terms hereof,
describing the Receivables assigned and pledged to Agent, for the benefit of
Agent, on the date hereof and thereafter for the period to which such schedule
relates and confirming the assignment and pledge of such Receivables.

“Senior Demand Notes” means the Senior Demand Notes issued by Borrowers from
time to time, as more fully described in the most current prospectus with
respect to the Senior Demand Notes as filed with the Securities and Exchange
Commission, as the same may be amended, modified, supplemented, increased or
restated from time to time.

“Subordinated Debt” means any indebtedness for borrowed money which shall
contain provisions subordinating the payment of such indebtedness and the liens
and security interests securing such indebtedness to Obligations, in form,
substance and extent acceptable to Agent in its sole discretion.  For purposes
hereof, Subordinated Debt includes, without limitation, the Variable Rate
Subordinated Debentures.

“Subordination Agreement” means, individually, and “Subordination Agreements”
means, collectively, the Subordination Agreements executed in connection with
the Subordinated Debt, from time to time, each in the form of Exhibit D attached
hereto and made part hereof.

“Subsidiary” of any entity means any corporation, limited liability company,
partnership or other legal entity of which such entity directly or indirectly
owns or controls at least a majority of the outstanding stock or other equity
interest having general voting power.  For purposes of this definition,
“control” means the possession, directly or indirectly, of the power to direct
or cause the direction of the management and policies of an entity, whether
through the ownership of voting securities, by contract, or otherwise.

“Swap Obligation” means, with respect to any Person, any obligation to pay or
perform under any agreement, contract or transaction that constitutes a “Swap”
within the meaning of Section 1a(47) of the Commodity Exchange Act.

“Tangible Net Worth” means, at any date, the amount of the capital stock
liability of such Person on a consolidated basis (but excluding the effect of
intercompany transactions) plus (or minus in the case of a deficit) its capital
surplus and earned surplus minus, to the extent not otherwise excluded (i) the
cost of treasury shares; (ii) the amount equal to the value shown on its books
of Intangible Assets, including the excess paid for assets acquired over their
respective book values on the books of the corporation from which acquired; and
(iii) investments in and loans to any Subsidiary or Affiliate or to any
shareholder, director or employee of such Person, any Subsidiary or any
Affiliate.

“Termination Date” means the earlier of: (a) the Maturity Date, or (b) the date
on which the Commitments are terminated and the Loan becomes due and payable
pursuant to Section 9.1.

“U.S. Special Resolution Regime” means each of (i) the Federal Deposit Insurance
Act and the regulations promulgated thereunder and (ii) Title II of the
Dodd-Frank Wall Street Reform and

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Consumer Protection Act and the regulations promulgated thereunder.

“Underwriting Policy” means that certain policy of Borrowers attached hereto as
Exhibit F.

“UCC” means the Uniform Commercial Code as in effect in the State of New York
from time to time.

“Variable Rate Subordinated Debentures” means the Variable Rate Subordinated
Debentures issued by Borrowers from time to time under the Subordinated
Indenture (that certain Indenture dated as of October 31, 1984, as the same may
be amended, modified, supplemented, restated, renewed, refinanced or replaced
from time to time), the repayment of which are subordinate in right of payment
to the Obligations, the Senior Demand Notes, the Commercial Paper and any other
Indebtedness of Borrowers.

“Wells Fargo Affiliate” means in relation to Agent, any entity controlled,
directly or indirectly, by Agent, any entity that controls, directly or
indirectly, Agent or any entity directly or indirectly under common control with
Agent (including, without limitation, Wachovia Bank, National Association and
its subsidiaries and affiliates).  For this purpose, “control” of any entity
means ownership of a majority of the voting power of the entity.

Section 1.2          Rules of Construction. 

(a)Accounting Term.  All accounting terms not specifically defined herein shall
be construed in accordance with GAAP; provided, however, that if at any time any
change in GAAP would affect the computation of any covenant (including the
computation of any financial covenant) and/or pricing grid set forth in this
Agreement or any other Credit Document, Borrowers and Agent shall negotiate in
good faith to amend such covenant and/or pricing grid to preserve the original
intent in light of such change; provided further, that until so amended,
(i) such covenant and/or pricing grid shall continue to be computed in
accordance with the application of GAAP prior to such change and (ii) Borrowers
shall provide to Agent a written reconciliation in form and substance reasonably
satisfactory to Agent, between calculations of such covenant and/or pricing grid
made before and after giving effect to such change in GAAP.  Whenever the term
“Borrowers” is used in respect of a financial covenant or a related definition,
it shall be understood to mean Borrowers and their Subsidiaries on a
consolidated basis, unless the context clearly requires otherwise. 

(b)Uniform Commercial Code.  Except as otherwise provided herein, terms used in
the foregoing definitions or elsewhere in this Agreement that are defined in the
Uniform Commercial Code, including without limitation, “Accounts”, “Documents”,
“Goods”, “Instruments”, “Investment Property”, “General Intangibles” and
“Chattel Paper” shall have the respective meanings given to such terms in the
UCC. 

ARTICLE 2
THE REVOLVING CREDIT FACILITY

Section 2.1          The Loan.  Until the Termination Date, Borrowers may
request Lenders to make Advances to Borrowers and, subject to the terms and
conditions of this Agreement, each Lender severally and not jointly agrees to
lend such Lender’s Commitment Percentage of each requested Advance up to such
Lender’s Commitment which Borrowers may repay and reborrow from time to  

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time.  The aggregate unpaid principal amount at any one time outstanding of all
Advances shall not exceed the lesser of the Maximum Principal Amount or the
Borrowing Base in effect as of the date of determination.

(a)Agent shall establish on its books an account in the name of Borrowers (the
“Borrowers’ Loan Account”).  A debit balance in Borrowers’ Loan Account shall
reflect the amount of Borrowers’ indebtedness to Agent and Lenders from time to
time by reason of Advances and other appropriate charges (including, without
limitation, interest charges) hereunder.  At least once each month, Agent shall
provide to Borrowers a statement of Borrowers’ Loan Account which statement
shall be considered correct and accepted by Borrowers and conclusively binding
upon Borrowers unless Borrowers notify Agent to the contrary within 30 days of
Agent’s providing such statement to Borrowers.  

(b)Each Advance made hereunder shall, in accordance with GAAP, be entered as a
debit to Borrowers’ Loan Account, and shall be in a principal amount which, when
aggregated with all other Advances then outstanding, shall not exceed the lesser
of the then effective Borrowing Base or Maximum Principal Amount. 

(c)The Loan shall be due and payable on the Termination Date.  Upon the
occurrence of an Event of Default, Agent shall have rights and remedies
available to it under Article 9 of this Agreement. 

(d)Agent has the right upon 10 days prior notice to Borrowers at any time, and
from time to time, in its commercially reasonable discretion exercised in good
faith (but without any obligation), to set aside reasonable reserves against the
Borrowing Base in such amounts as it may deem commercially reasonable,
including, without limitation, a reserve equal to the amount of outstanding
indebtedness in connection with Bank Products and with respect to Regulatory
Events. 

Section 2.2          The Notes.  The indebtedness of Borrowers to each Lender
hereunder shall be evidenced by a separate Note executed by Borrowers in favor
of such Lender in the principal amount equal to each such Lender’s Commitment
Percentage of the Maximum Principal Amount.  The principal amount of the Notes
will be the Maximum Principal Amount; provided, however, that notwithstanding
the face amount of the Notes, Borrowers’ liability under the Notes shall be
limited at all times to the actual indebtedness (principal, interest and fees)
then outstanding and owing by Borrowers to Agent and Lenders hereunder. 

Section 2.3          Method of Payment.  Borrowers shall make all payments of
principal and interest on the Notes in lawful money of the United States of
America and in funds immediately available by wire transfer or funds transfer,
to Agent at its address referred to in Section 10.4 of this Agreement or at such
other address as Agent otherwise directs.  Whenever any payment is due on a day,
which is not a Business Day, the date for payment shall be extended to the next
succeeding Business Day and interest shall be paid for such extended time. As
soon as practicable after Agent receives payment from Borrowers, but in no event
later than 1 Business Day after such payment has been made, subject to Section
2.7, Agent will cause to be distributed like funds relating to the payment of
principal, interest or fees (other than amounts payable to Agent to reimburse
Agent for fees and expenses payable solely to Agent pursuant to the terms of
this Agreement) or expenses payable to Agent and Lenders in accordance with the
terms of this Agreement, in like funds relating to the payment of any such other
amounts payable to Lenders.  Borrowers’ obligations to Lenders with  

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respect to such payment shall be discharged by making such payments to Agent
pursuant to this Section 2.3 or, if not timely paid or any Event of Default or
Default then exists, may be added to the principal amount of the Loans
outstanding.  Borrowers hereby authorize Agent to charge the line of credit
established hereunder for any amounts that are due and owing pursuant to the
terms of this Agreement with such amounts added to the principal amount of the
Loans outstanding and Agent may elect to utilize such right in its sole
discretion.

Section 2.4          Extension and Adjustment of Maturity Date.  Upon the
written agreement of Borrowers, Agent and Lenders, the Maturity Date may be
extended.   

Section 2.5          Use of Proceeds.  Advances shall be used to finance
Borrowers’ portfolios of Consumer Purpose Loans, for general working capital
purposes and for other lawful corporate purposes except as limited under this
Agreement. 

Section 2.6          Interest. 

(a)In the absence of an Event of Default or Default hereunder, and prior to
maturity, the outstanding balance of the Loan will bear interest at an annual
rate at all times equal to the LIBOR Rate plus the Applicable Margin.   

(b)Interest shall be payable monthly in arrears on the first day of each month
commencing on the first such date after the first Advance under the Loan and
continuing until the Commitments are terminated and the Obligations are
indefeasibly paid in full.  Interest as provided hereunder will be calculated on
the basis of a 360 day year and the actual number of days elapsed. 

(c)Notwithstanding the foregoing, upon the occurrence and during the continuance
of an Event of Default hereunder, including after maturity and before and after
judgment, Borrowers hereby agree to pay to Lenders interest on the outstanding
principal balance of the Loan and any other obligations and, to the extent
permitted by law, overdue interest with respect thereto, at the rate of 2.50%
per annum above the rate otherwise applicable to the Loan.  

Section 2.7          Advances. 

(a)Borrowers shall notify Agent in writing not later than 3:00 P.M. eastern
time, on the date of each requested Advance, specifying the date and amount of
the Advance.  Such notice shall submitted electronically via Agent’s online
system (or in such other manner as acceptable to Agent in its sole discretion)
and shall contain the following information and representations, which shall be
deemed affirmed and true and correct as of the date of the requested Advance: 

(i)the aggregate amount of the requested Advance, which shall be in an minimum
amount of at least $25,000 or the unborrowed balance of the Borrowing Base; 

(ii)confirmation that no Event of Default or Default exists either immediately
prior to or after making such Advance; and that there has been no material
adverse change in Borrowers’ financial condition, operations or business since
the date of the monthly and audited annual financial statements most recently
delivered by Borrowers to Agent pursuant to this Agreement; and 

(iii)statements that the representations and warranties set forth in Article 4  

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are true and correct as of the date of the Advance in all material respects.

(b)Agent shall give to each Lender prompt notice of each request for Advance
submitted via Agent’s online automatic advance request system.  Unless Agent
shall have been notified by any Lender at least 5 Business Days prior to the
date of Advance that such Lender does not intend to make available to Agent its
portion of the Advance to be made on such date, Agent may assume that such
Lender will make such amount available to Agent as required above and Agent may,
in reliance upon such assumption, make available the amount of the Advance to be
provided by such Lender.  Upon fulfillment of the conditions set forth in
Sections 2.7(a) and 5.2 for such Advance, and as soon as practicable after
receipt of funds from Lenders Agent will make such funds as have been received
from Lenders available to Borrowers at the account specified by Borrowers from
time to time in writing to Agent. 

(c)Because Borrowers anticipate requesting Advances on a daily basis, resulting
in the amount of outstanding Advances fluctuating from day to day, in order to
administer the Loan in an efficient manner and to minimize the transfer of funds
between Agent and Lenders, Lenders hereby instruct Agent, and Agent may (in its
sole discretion, without any obligation) (i) make available, on behalf of
Lenders, the full amount of all Advances requested by Borrowers, without giving
each Lender prior notice of the proposed Advance and of such Lender’s Commitment
Percentage thereof and (ii) if Agent has made any such amounts available as
provided in clause (i), upon repayment of Loans by Borrowers, first apply such
amounts repaid directly to the amounts made available by Agent in accordance
with clause (i) and not yet settled as described below.  If Agent makes an
Advance on behalf of Lenders, as provided in the immediately preceding sentence,
the amount of outstanding Loans and each Lender’s Commitment Percentage thereof
shall be computed weekly rather than daily and shall be adjusted upward or
downward on the basis of the amount of outstanding Loans as of 5:00 P.M.,
Central time on the Business Day immediately preceding the date of each
computation; provided, however, that Agent retains the absolute right at any
time or from time to time to make the afore-described adjustments at intervals
more frequent than weekly.  Agent shall deliver to each of Lenders at the end of
each week, or such lesser period or periods as Agent shall determine, a summary
statement of the amount of outstanding Loans for such period (such week or
lesser period or periods being hereafter referred to as a “Settlement Period”).
 If the summary statement is sent by Agent and received by Lenders prior to
12:00 Noon, Central time on any Business Day each Lender shall make the
transfers described in the next succeeding sentence no later than 3:00 P.M.,
Central time on the day such summary statement was sent; and if such summary
statement is sent by Agent and received by Lenders after 12:00 Noon, Central
time on any Business Day, each Lender shall make such transfers no later than
3:00 P.M., Central time no later than the next succeeding Business Day after
such summary statement was sent.  If in any Settlement Period, the amount of a
Lender’s Commitment Percentage of the Loans is in excess of the amount of Loans
actually funded by such Lender, such Lender shall forthwith (but in no event
later than the time set forth in the next preceding sentence) transfer to Agent
by wire transfer in immediately available funds the amount of such excess; and,
on the other hand, if the amount of a Lender’s Commitment Percentage of the
Loans in any Settlement Period is less than the amount of Loans actually funded
by such Lender, Agent shall forthwith transfer to such Lender by wire transfer
in immediately available funds the amount of such difference.  The obligation of
each of Lenders to transfer such funds shall be irrevocable and unconditional,
without recourse to or warranty by Agent and made without setoff or deduction of
any kind.  Each of Agent and Lenders agree to mark their respective books and
records at the end of each Settlement Period to show at all times the dollar
amount of their respective Commitment Percentages of the outstanding Loans.
 Because Agent on behalf of Lenders may be advancing and/or may be repaid Loans
prior to  

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the time when Lenders will actually advance and/or be repaid Loans, interest
with respect to Loans shall be allocated by Agent to each Lender (including
Agent) in accordance with the amount of Loans actually advanced by and repaid to
each Lender (including Agent) during each Settlement Period and shall accrue
from and including the date such Advance is made by Agent to but excluding the
date such Loans are repaid by Borrower in accordance with Section 2.3 or
actually settled by the applicable Lender as described in this Section 2.7(c).
 All such Advances made by Agent on behalf of Lenders hereunder shall bear
interest at the interest rate applicable hereunder for Advances.

(d)If the amounts described in subsection (b) or (c) of this Section 2.7 are not
in fact made available to Agent by a Lender (such Lender being hereinafter
referred to as a “Defaulting Lender”) and Agent has made such amount available
to Borrowers, Agent shall be entitled to recover such corresponding amount on
demand from such Defaulting Lender.  If such Defaulting Lender does not pay such
corresponding amount forthwith upon Agent’s demand therefor, Agent shall
promptly notify Borrowers and Borrowers shall immediately (but in no event later
than 10 Business Days after such demand) pay such corresponding amount to Agent.
 Agent shall also be entitled to recover from such Defaulting Lender and
Borrowers, (i) interest on such corresponding amount in respect of each day from
the date such corresponding amount was made available by Agent to Borrowers to
the date such corresponding amount is recovered by Agent, at a rate per annum
equal to either (A) if paid by such Defaulting Lender, the overnight federal
funds rate or (B) if paid by Borrowers, the then applicable rate of interest,
calculated in accordance with Section 2.6, plus (ii) in each case, an amount
equal to any costs (including reasonable legal expenses) and losses incurred as
a result of the failure of such Defaulting Lender to provide such amount as
provided in this Agreement.  Nothing herein shall be deemed to relieve any
Lender from its obligation to fulfill its commitments hereunder or to prejudice
any rights which Borrowers may have against any Lender as a result of any
default by such Lender hereunder, including, without limitation, the right of
Borrowers to seek reimbursement from any Defaulting Lender for any amounts paid
by Borrowers under clause (ii) above on account of such Defaulting Lender’s
default. 

(e)The failure of any Lender to make its portion of the Advance to be made by it
as part of any Advance shall not relieve any other Lender of its obligation, if
any, hereunder to make its Advance on the date of such borrowing, but no Lender
shall be responsible for the failure of any other Lender to make the Advance to
be made by such other Lender on the date of any Advance.  The amounts payable by
each Lender shall be a separate and independent obligation. 

(f)Each Lender shall be entitled to earn interest at the then applicable rate of
interest, calculated in accordance with Section 2.6, on outstanding Loans which
it has funded to Agent from the date such Lender funded such Advance to, but
excluding, the date on which such Lender is repaid with respect to the Loan. 

(g)RESERVED. 

(h)Nothing contained in this Section 2.7 or otherwise in this Agreement shall
impair or limit any claim of Borrowers against a Defaulting Lender (including,
without limitation, expenses incurred by Borrowers by reason of any such
default) who breaches its commitment to fund Advances hereunder. 

(i)Each request for an Advance pursuant to this Section 2.7 shall be irrevocable
and binding on Borrowers. 

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Section 2.8          Prepayment. 

(a)Optional Prepayments.  Borrowers may prepay the Loan from time to time, in
full or in part without premium or penalty, provided that (i) in the event
Borrowers prepay the Loan in full and terminate this Agreement prior to the
Maturity Date, Borrowers shall provide at least 3 Business Days prior notice to
Agent and pay a sum equal to 1.0% of the Maximum Principal Amount as a
prepayment fee; (ii) prepayments shall be in a minimum amount of $25,000 and
$25,000 increments in excess thereof; and (iii) partial prepayments prior to the
Termination Date shall not reduce Lenders’ Commitments under this Agreement and
may be reborrowed, subject to the terms and conditions hereof for borrowing, and
prior to the occurrence of an Event of Default, partial prepayments will be
applied first to outstanding Advances and thereafter to other Obligations owing
hereunder.  Each Borrower acknowledges that the above described fee is an
estimate of Lenders’ damages in the event of early termination and is not a
penalty.  In the event of termination of the credit facility established
pursuant to this Agreement, all of the Obligations shall be immediately due and
payable upon the termination date stated in any notice of termination.  All
undertakings, agreements, covenants, warranties and representations of Borrowers
contained in the Credit Documents shall survive any such termination, and Agent
shall retain its liens in the Collateral and all of its rights and remedies
under the Credit Documents notwithstanding such termination until Borrowers have
paid the Obligations to Agent and Lenders, in full, in immediately available
funds, together with the applicable termination fee, if any.  Notwithstanding
the foregoing, in the event that (y) Borrowers repay the Loan in full and
terminate this Agreement within 60 days of making a payment under Section
2.10(a), Borrowers shall not be obligated to pay to the specific Lender
receiving such payment under Section 2.10(a) the prepayment fee contained in
this Section 2.8(a) and (z) Borrowers request an increase to the Maximum
Principal Amount in writing and Agent and Lenders fail to approve such increase
within 45 days of such request, Borrowers shall not be obligated to pay the
prepayment fee to Lenders if (i) the amount of such increase is supported by
Borrowers’ financial statement projections of availability and usage, (ii)
Borrowers refinance the Obligations with a larger credit facility agented by a
financial institution other than Wells Fargo Bank, N.A. within one hundred
twenty (120) days thereafter and (iii) no Event of Default then exists. 

(b)Mandatory Prepayments.  In the event that amounts outstanding hereunder at
any time exceed the Borrowing Base (whether established by an Availability
Statement or otherwise) Borrowers shall pay to Agent immediately and without
demand or notice of any kind required, the amount by which Borrowers’
indebtedness hereunder exceeds the Borrowing Base then applicable, together with
all accrued interest on the amount so paid and any fees and costs incurred in
connection therewith. 

Section 2.9          Fees.  Borrowers shall pay to Agent, at Agent’s offices,
the following: 

(a)Administrative Fee.  A non-refundable administrative fee of $2,000 shall be
due and payable monthly in arrears on the first day of each month solely for the
account of Agent, commencing on the first such date after the funding of this
Agreement and continuing until the Commitments are terminated and the
Obligations are indefeasibly paid in full, in which event a pro-rated monthly
installment of the administrative fee shall be paid on the date of such
termination. 

(b)Unused Line Fee.  A non-refundable unused line fee at the rate of 0.50% per
annum (computed on the basis of a 360 day year and the actual number of days
elapsed) on the daily unused Commitments.  Such fee shall be payable to Agent,
for the account of Lenders in accordance  

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with their Commitment Percentages, monthly in arrears on the first day of each
month, and on the Termination Date, unless the Commitments are terminated on an
earlier date, in which event the unused line fee shall be paid on the date of
such termination.  

Section 2.10          Regulatory Changes in Capital Requirements; Replacement of
a Lender.   

(a)Regulatory Changes in Capital Requirements. If any Lender shall have
determined that the adoption or the effectiveness after the date hereof of any
law, rule, regulation or guideline regarding capital adequacy, or any change in
any of the foregoing or in the interpretation or administration of any of the
foregoing by any governmental authority, central lender or comparable agency
charged with the interpretation or administration thereof, or compliance by such
Lender (or any lending office of such Lender) or such Lender’s holding company
with any industry wide request or directive regarding capital adequacy (whether
or not having the force of law) of any such authority, central lender or
comparable agency, has or would have the effect of reducing the rate of return
on such Lender’s capital or on the capital of such Lender’s holding company, if
any, as a consequence of this Agreement, to a level below that which such Lender
or its holding company could have achieved on the portion of the Loans made by
such Lender pursuant hereto but for such adoption, change or compliance (taking
into consideration such Lender’s policies and the policies of such Lender’s
holding company with respect to capital adequacy) by an amount deemed by such
Lender to be material and Lender has made such determination with respect to all
or substantially all of the loans in its loan portfolio, then from time to time
Borrowers shall pay to such Lender on demand such additional amount or amounts
as will compensate such Lender or its holding company for any such reduction
suffered together with interest on each such amount from the date demanded until
payment in full thereof at the rate of interest otherwise applicable to the
Obligations.  Agent will notify Borrowers of any event occurring after the date
of this Agreement that will entitle a Lender to compensation pursuant to this
Section 2.10(a) as promptly as practicable after it obtains knowledge thereof
and determines to request such compensation. 

(b)Replacement of a Lender.  If Borrowers become obligated to pay additional
amounts to any Lender pursuant to Section 2.10(a), then Borrowers may within 120
days thereafter designate another bank that is acceptable to Agent in its
reasonable discretion (such other bank being called a “Replacement Lender”) to
purchase the Loans of such Lender and such Lender’s rights hereunder, without
recourse to or warranty by, or expense to, such Lender, for a purchase price
equal to the outstanding principal amount of the Loans payable to such Lender
plus any accrued but unpaid interest on such Loans and all accrued but unpaid
fees owed to such Lender and any other amounts payable to such Lender under this
Agreement, and to assume all the obligations of such Lender hereunder, and, upon
such purchase and assumption (pursuant to an Assignment and Acceptance), such
Lender shall no longer be a party hereto or have any rights hereunder (other
than rights with respect to indemnities and similar rights applicable to such
Lender prior to the date of such purchase and assumption) and shall be relieved
from all obligations to Borrower hereunder, and the Replacement Lender shall
succeed to the rights and obligations of such Lender hereunder.  In addition to
the foregoing, if a Replacement Lender purchases such Loans and assumes all such
obligations of a Lender hereunder pursuant to this Section 2.10(b), each such
replaced Lender shall reimburse Borrowers for all amounts previously paid
pursuant to Section 2.10(a) within 30 days of such replacement. 

Section 2.11          Sharing of Payments.  If any Lender shall obtain any
payment (whether voluntary, involuntary, through the exercise of any right of
setoff or otherwise) on account of the  

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Loans made by it in excess of its pro rata share of such payment as provided for
in this Agreement, such Lender shall forthwith purchase from the other Lenders
such participations in the Loans made by them as shall be necessary to cause
such purchasing Lender to share the excess payment accruing to all Lenders in
accordance with their respective ratable shares as provided for in this
Agreement; provided, however, that if all or any portion of such excess is
thereafter recovered from such purchasing Lender, such purchase from each Lender
shall be rescinded and each such Lender shall repay to the purchasing Lender the
purchase price to the extent of such recovery together with an amount equal to
such Lender’s ratable share (according to the proportion of (a) the amount of
such Lender’s required repayment to (b) the total amount so recovered from the
purchasing Lender) or any interest or other amount paid or payable by the
purchasing Lender in respect to the total amount so recovered.  Borrowers agree
that any Lender so purchasing a participation from another Lender pursuant to
this Section 2.11 may, to the fullest extent permitted by law, exercise all of
its rights of payment (including the right of setoff) with respect to such
participation as fully as if such Lender were the direct creditor of Borrowers
in the amount of such participation.

Section 2.12          Pro Rata Treatment.  Subject to Section 9.4 hereof, each
payment or prepayment of principal of the Loan, and each payment of interest on
the Loans, actually received by Agent shall be allocated pro rata among Lenders
in accordance with the respective principal amounts of their outstanding Loans;
provided, however, that the foregoing fees payable hereunder (other than the
fees payable under Section 2.9(a) hereof) to Lenders shall be allocated to each
Lender based on such Lender’s Commitment Percentage. 

Section 2.13          Accordion.  Subject to the terms and conditions set forth
herein below, Borrowers shall have a right at any time to increase the amount of
the Maximum Principal Amount (the “Accordion Increase”) in an amount acceptable
to Agent in its sole and absolute discretion; provided, however, that the
aggregate amount of the Accordion Increase shall not exceed $100,000,000.  The
following additional terms and conditions shall apply to the Accordion
Increase: 

(a)the Accordion Increase shall constitute additional Obligations and shall be
secured and guaranteed with the other Obligations on a pari passu basis by the
Collateral; 

 

(b)Borrowers shall execute a new Note in favor of any new Lender or any existing
Lender whose Commitment is increased, as well as any other legal documentation
and modification documents reasonably requested by Agent to consummate the
Accordion Increase;  

 

(c)unless otherwise provided by Agent, the Accordion Increase shall be subject
to the same terms (including interest rate and maturity date) as the existing
Loan;  

 

(d)all documents, organizational documents and other documents evidencing and
contemplated by the Accordion Increase shall be in form and substance acceptable
to Agent and Borrowers;  

 

(e)Borrowers shall have delivered all due diligence materials and other
deliverables reasonably requested by Agent;  

 

(f)each of the closing conditions set forth in Article 5 shall have been
satisfied;  

 

(g)no Default or Event of Default shall have occurred that has not been waived  

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by Lenders pursuant to the terms hereof;

 

(h)Agent shall have received from Borrowers updated financial statements and
projections and a certificate, in each case in form and substance reasonably
satisfactory to Agent, demonstrating that, after giving effect to the Accordion
Increase on a pro forma basis, Borrowers will be in compliance with all
financial covenants set forth herein; 

 

(i)the Accordion Increase shall be subject to the ability of Agent to syndicate
the Accordion Increase as determined by Agent in its sole and absolute
discretion; and  

 

(j)Agent shall have received such other due diligence and credit committee
approvals as it may require with results satisfactory to Agent in its sole and
absolute discretion.   

 

Participation in the Accordion Increase shall be offered first to each of the
existing Lenders in an amount equal to each Lender’s Commitment Percentage of
the Accordion Increase, but no such Lender shall have any obligation to provide
all or any portion of the Accordion Increase.  If the amount of the Accordion
Increase requested by Borrowers shall exceed the Commitments which the existing
Lenders are willing to provide with respect to the Accordion Increase, then
Agent may invite other banks or lending institutions acceptable to Agent and
Borrowers to join this Agreement as Lenders hereunder for the portion of such
Accordion Increase not provided by the existing Lenders; provided, however, that
such other banks, or financial institutions shall enter into such joinder
agreements to give effect thereto as Agent and Borrowers may reasonably request.
 Agent is authorized to enter into, on behalf of Lenders, any amendment to this
Agreement or any other Credit Document as may be necessary to incorporate the
terms of the Accordion Increase in accordance with the terms hereof.

Section 2.14          Existing Indebtedness.  This Agreement amends and restates
the Existing Agreement and the existing indebtedness under the Existing
Agreement (“Existing Indebtedness”) shall be deemed to constitute an Advance
hereunder.  The execution and delivery of this Agreement and the other Credit
Documents, however, does not evidence or represent a refinancing, repayment,
accord and/or satisfaction or novation of the Existing Indebtedness.  All of the
obligations of Agent and Lenders to Borrowers with respect to Advances to be
made concurrently herewith or after the date hereof are set forth in this
Agreement.  All liens and security interests previously granted to Agent (or its
predecessors in interest), pursuant to the Existing Loan Documents are
acknowledged and reconfirmed and remain in full force and effect and are not
intended to be released, replaced or impaired. 

ARTICLE 3
SECURITY

Section 3.1          Security Interest.  To secure the payment and performance
of the Obligations, each Borrower hereby grants to Agent, for the benefit of
Lenders, a continuing general Lien on and a continuing security interest in all
of the Collateral, wherever located, whether now owned or hereafter acquired,
existing or created, together with all replacements and substitutions therefor,
and the cash and non-cash proceeds thereof, subject to Permitted Liens.  The
Liens and security interests of Agent in the Collateral shall be first and prior
perfected Liens and security interests, subject only to Permitted Liens, and may
be retained by Agent until all of the Obligations  

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have been indefeasibly satisfied in full and the Commitments have expired or
otherwise have been terminated.  

Section 3.2          Financing Statements.  Agent is hereby authorized by each
Borrower to file any financing statements covering the Collateral or any
amendment adding collateral to any financing statement in each case whether or
not a Borrower’s signature appears thereon.  Borrowers agree to comply with the
requirements of all state and federal laws and requests of Agent in order for
Agent to have and maintain a valid and perfected first security interest in the
Collateral. 

Section 3.3          Documents to be Delivered to Agent.  All Receivables of
Borrowers originated on or after the date hereof shall be stamped or watermarked
with the following: 

This document is pledged as collateral to Wells Fargo Bank, N.A., as agent.

Borrowers shall (a) upon request of Agent following the occurrence of an Event
of Default, deliver to Agent or its designee any other property in which
Borrowers have granted Agent a security interest hereunder; and (b) execute and
deliver to Agent, for the benefit of Lenders, such assignments, endorsements,
allonges to promissory notes, mortgages, financing statements, amendments
thereto and continuation statements thereof, in form satisfactory to Agent, and
such additional agreements, documents or instruments as Agent may, from time to
time, require to evidence, perfect and continue to perfect Agent’s liens and
security interests granted hereunder.

Section 3.4          Collections.  Notwithstanding the security interest granted
hereunder with respect to the Collateral by Borrowers to Agent, until notice to
the contrary is provided to Borrowers by Agent following the occurrence of an
Event of Default, Borrowers may service, manage, enforce and receive Collections
on Receivables.  Borrowers shall have no power to make any unusual allowance or
credit to any obligor without Agent’s prior written consent.  Upon notice by
Agent at any time following the occurrence of an Event of Default, Agent may
require Borrowers to endorse and deposit all Collections within 1 Business Day
of receipt thereof and in the original form received (except for the endorsement
of Borrowers, if necessary, to enable the collection of instruments for the
payment of money, which endorsements Borrowers hereby agree to make) in such
account maintained with such depository as Agent may from time to time specify,
such account to limit withdrawals by Borrowers therefrom only to the order of
Agent, but to permit withdrawals by Agent therefrom without the co-signature of
a Borrower.  Agent may also require Borrowers to enter into an appropriate lock
box agreement with Agent or another financial institution acceptable to Agent,
in form and content acceptable to Agent, with respect to opening and maintaining
a lock box arrangement for the Collections.  Such lock box agreements shall be
irrevocable so long as Borrowers are indebted to Agent under this Agreement and
this Agreement remains in effect. 

Section 3.5          Additional Rights of Agent; Power of Attorney. 

(a)In addition to all the rights granted to Agent hereunder, Agent shall have
the right, at any time following the occurrence and during the continuance of an
Event of Default, to notify the obligors and account debtors of all Collateral
to make payment thereon directly to Agent, and to take control of the cash and
non-cash proceeds of such Collateral.  When Collections received by Agent have
been converted into cash form, Agent shall forthwith apply the same first to
discharge all expenses, fees, costs and charges including reasonable attorneys’
fees and costs of Collections owing hereunder; second to pay all interest
accrued under the Notes and this Agreement; third to pay  

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principal due under the Notes and this Agreement; fourth to pay any other sums
due to Agent and Lenders under the terms of this Agreement and fifth to whoever
is entitled to such amounts under applicable law.

(b)Each Borrower irrevocably appoints Agent its true and lawful attorney, with
power of substitution, to act in the name of such Borrower or in the name of
Agent or otherwise, for the use and benefit of Agent, but at the cost and
expense of Borrowers, without notice to Borrowers to do any of the following
after the occurrence of an Event of Default: to demand, collect, receipt for and
give renewals, extensions, discharges and releases of any Collateral; to
institute and to prosecute legal and equitable proceedings to realize upon any
Collateral; to settle, compromise, or adjust claims; to take possession and
control in any manner and in any place of any cash or non-cash items of payment
or proceeds thereof; to endorse the name of such Borrower upon any notes,
checks, drafts, money orders, or other evidences of payment of Collateral; to
sign such Borrower’s name on any instruments or documents relating to any of the
Collateral or on drafts against account debtors; to do all other acts and things
necessary, in Agent’s commercially reasonable judgment, to effect collection of
the Collateral or protect its security interest in the Collateral; and generally
to sell in whole or in part for cash, credit or property to others or to itself
at any public or private sale, assign, make any agreement with respect to or
otherwise deal with the Collateral as fully and completely as though Agent were
the absolute owner thereof for all purposes, except to the extent limited by any
applicable laws and subject to any requirement of notice to Borrowers or other
Persons under applicable laws. 

(c)Each Borrower hereby agrees to indemnify and hold Agent and Lenders harmless
from and against any and all expenses, costs, liabilities or damages (including
reasonable attorneys fees) sustained by Agent and each Lender by reason of any
misrepresentation, breach of warranty or breach of covenant by Borrowers whether
caused by Borrowers or Guarantors, or whether caused by any other Person if
Borrowers knew of or reasonably should have known that facts, circumstances or
information on which Borrowers relied were false, incorrect or incomplete in any
material respect, and also all court costs and all other expenses Agent and each
Lender incurred in enforcing or attempting to enforce payment of the Loan or any
Collateral, in supervising the records and proper management and disposition of
the collection of Collateral or in prosecuting or defending any of Agent’s and
Lenders’ rights under this Agreement. 

Section 3.6          Additional Collateral Provisions. 

(a)Borrowers will defend the Collateral against all Liens (other than Permitted
Liens), and claims and demands of all Persons at any time claiming the same or
any interest therein.  Borrowers agree to comply with the requirements of all
state and federal laws and requests of Agent in order for Agent to have and
maintain a valid and perfected first security interest and/or mortgage Lien in
the Collateral. 

(b)In addition to the foregoing, Borrowers shall perform all further acts that
may be lawfully and reasonably required by Agent to secure Agent and effectuate
the intentions and objects of this Agreement. 

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ARTICLE 4
REPRESENTATIONS AND WARRANTIES

Each Borrower represents and warrants and shall continue to represent and
warrant to Agent and Lenders until the Obligations hereunder have been
indefeasibly satisfied in full and the Commitments have expired or otherwise
have been terminated as follows:

Section 4.1          Representations and Warranties as to Receivables. 

(a)As to the Receivables generally: 

(i)Each Borrower or, where a Borrower was not the original lender, to the best
of such Borrower’s knowledge, the original lender or seller had full power and
authority to make the loans (or other extensions of credit) evidenced by the
Receivables and all such Receivables and all Books and Records related thereto
are genuine, based on enforceable contracts and are in all respects what they
purport to be; 

(ii)All Receivables have been duly authorized, executed, delivered by the
parties whose names appear thereon and are valid and enforceable in accordance
with their terms; any chattels described in any Receivable are and will be
accurately described and are and will be in the possession of the parties
granting the security interest therein; and (A) any applicable filing, recording
or lien notation law with respect to any collateral securing a Receivable will
have been complied with to the extent such filing or recording is necessary
under applicable law to create or perfect such Borrower’s security interest in
such collateral consistent with its present policy; or (B) a Borrower shall have
procured non-filing insurance from a reputable insurer in an amount not less
than the value of the collateral securing such Receivables. 

(iii)The form and content of all Receivables and the security related thereto
and the transactions from which they arose comply in all material respects (and
in any event in all respects necessary to maintain and ensure the validity and
enforceability of the Receivables) with any and all applicable laws, rules and
regulations, including without limitation, the Consumer Finance Laws; 

(iv)The original amount and unpaid balance of each Receivable on Borrowers’
Books and Records and on any statement or schedule delivered to Agent and/or any
Lender, including without limitation the Schedule of Receivables, is and will be
the true and correct amount actually owing to a Borrower as of the date each
Receivable is pledged to Agent, is not subject to any claim of reduction,
counterclaim, set-off, recoupment or any other claim, allowance or adjustment;
and no Borrower has any knowledge of any fact which would impair the validity or
collectability of any Receivables; 

(v)All security agreements, title retention instruments, mortgages and other
documents and instruments which are security for Receivables contain a correct
and sufficient description of the real or personal property covered thereby,
and, subject to the rights of Agent hereunder and the interests of Borrowers as
holder of such security agreements, title retention instruments or mortgages or
other documents or instruments, are or create security interests and Liens; 

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(vi)Borrowers have made an adequate credit investigation of the obligor of each
Receivable and has determined that his or her credit is satisfactory and meets
the standards generally observed by prudent finance companies and is in
conformity in all material respects with Borrowers’ policies and standards; and 

(vii)A Borrower has good and valid indefeasible title to the Receivables, free
and clear of all prior assignments, claims, liens, encumbrances and security
interests, and has the right to pledge and grant Agent, for the benefit of
Lenders, a first priority security interest in the same, in the manner provided
in this Agreement; the parties specifically agree and acknowledge that from time
to time Borrowers make loans based upon a subordinate lien status (such as but
not limited to a second lien on a motor vehicle or real property) and such
ordinary-course loans secured by subordinate lien status shall not be and are
not in violation of this representation and warranty; and 

Notwithstanding the provisions of this Section 4.1, the parties agree and
acknowledge that in the ordinary course of Borrowers’ business, Borrowers from
time to time (w) make loans on an unsecured basis (such as with Borrowers’ "Live
Checks" loan product), (x) elect not to perfect their security interests, (y)
make errors that defeat the viability of perfecting a security interest in
collateral pledged by a customer, and (z) unaffiliated first lienholders refuse
to give effect to Borrowers’ second liens (especially regarding motor vehicles)
and that in each such instance such decisions, mistakes, or failures to
recognize Borrowers’ lien status by Borrowers’ branch offices or third parties
shall not be considered to be in breach of this Section 4.1.

Section 4.2          Organization and Good Standing.  Each Borrower is duly
organized and validly existing in good standing under the laws of the state
identified on Schedule 4.2 attached hereto and made part hereof and has the
power and authority to engage in the business it conducts and is qualified and
in good standing in those states wherein the nature of business or property
owned by it requires such qualification, is not required to be qualified in any
other state; or if not so qualified, no adverse effect would result therefrom. 

Section 4.3          Perfection of Security Interest.  Upon filing of
appropriate financing statements in all places as are necessary to perfect the
security interests granted in Article 3 of this Agreement, Agent will have a
first perfected security interest in the Collateral which can be perfected by
the filing of a UCC-1 financing statement in each Borrower’s state of
organization, superior in right of interest to any other Person (including,
without limitation, purchasers from, or creditors or receivers or a trustee in
bankruptcy of, Borrowers).   

Section 4.4          No Violations.  The making and performance of the Credit
Documents do not and will not violate any provisions of any law, rule,
regulation, judgment, order, writ, decree, determination or award or breach any
provisions of the charter, bylaws or other organizational documents of any
Borrower or any Guarantor, or constitute a default or result in the creation or
imposition of any security interest in, or lien or encumbrance upon, any assets
of any Borrower or any Guarantor (immediately or with the passage of time or
with the giving of notice and passage of time, or both) under any other
contract, agreement, indenture or instrument to which a Borrower or a Guarantor
is a party or by which a Borrower or a Guarantor or its property is bound with
failure to comply resulting in a material adverse change in the business,
operations, property (including the Collateral), prospects or financial
condition of any Borrower or any Guarantor. 

Section 4.5          Power and Authority. 

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(a)Each Borrower and each Guarantor has full power and authority under the law
of the state of its organization and under its organizational documents to enter
into, execute and deliver and perform the Credit Documents; to borrow monies
hereunder, to incur the obligations herein provided for and to pledge and grant
to Agent, for the benefit of Lenders, a security interest in the Collateral;
and 

(b)All actions (corporate or otherwise) necessary or appropriate for each
Borrower’s and each Guarantor’s execution, delivery and performance of the
Credit Documents have been taken. 

Section 4.6          Validity of Agreements.  Each of the Credit Documents is,
or when delivered to Agent will be, duly executed and constitute valid and
legally binding obligations of each Borrower and each Guarantor enforceable
against such Borrower and such Guarantor, as applicable, in accordance with
their respective terms. 

Section 4.7          Litigation.  As of the date hereof, there is no order,
notice, claim, action, suit, litigation, proceeding or investigation pending or,
threatened against or affecting any Borrower or any Guarantor where the amount
in controversy is in excess of $100,000, whether or not fully covered by
insurance, except as identified and described on Schedule 4.7 attached hereto
and made part hereof. 

Section 4.8          Compliance.  As of the date hereof, each Borrower and each
Guarantor is in compliance in all material respects with all applicable material
laws and regulations, federal, state and local (including all Consumer Finance
Laws and those administered by the Local Authorities), material to the conduct
of its business and operations; each Borrower and each Guarantor possesses all
the franchises, permits, licenses, certificates of compliance and approval and
grants of authority necessary or required in the conduct of its business and the
same are valid, binding, enforceable and subsisting without any defaults
thereunder or enforceable adverse limitations thereon, and are not subject to
any proceedings or claims opposing the issuance, development or use thereof or
contesting the validity thereof; and no approvals, waivers or consents,
governmental (federal, state or local) or non-governmental, under the terms of
contracts or otherwise, are required by reason of or in connection with such
Borrower’s and such Guarantor’s execution and performance of the Credit
Documents. 

Section 4.9          Accuracy of Information; Full Disclosure. 

(a)All financial statements, including any related schedules and notes appended
thereto, delivered and to be delivered to Agent and/or any Lender pursuant to
this Agreement have been or will be prepared in accordance with GAAP with
respect to Borrowers and on a statutory basis with respect to Guarantors and do
and will fairly present the financial condition of each Borrower, its
consolidated Subsidiaries, if any, and Guarantors on the dates thereof and
results of operations for the periods covered thereby and discloses all
liabilities (including contingent liabilities) of any kind of such Borrower and
such Guarantor. 

(b)Since the date of the most recent financial statements furnished to Agent
and/or any Lender, there has not been any material adverse change in the
financial condition, business or operations of any Borrower or any Guarantor. 

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(c)All financial statements and other statements, documents and information
furnished by Borrowers or Guarantors, or any of them, to Agent and/or any Lender
in connection with this Agreement and the Notes and the transactions
contemplated hereunder do not and will not contain any untrue statement of
material fact or omit to state a material fact necessary in order to make the
statements contained therein not misleading.  Each Borrower and each Guarantor
has disclosed to Agent in writing any and all facts which materially and
adversely affect the business, properties, operations or condition, financial or
otherwise, of such Borrower or such Guarantor, or such Borrower’s or such
Guarantor’s ability to perform its obligations under this Agreement and the
Notes. 

Section 4.10          Taxes.  Each Borrower and each Guarantor has filed and
will file all tax returns which are required to be filed and has paid or will
pay when due all taxes, license and other fees with respect to the Collateral
and the business of such Borrower and such Guarantor except taxes contested in
good faith for which adequate reserves have been established by such Borrower on
its Books and Records. 

Section 4.11          Indebtedness.  No Borrower has presently outstanding
indebtedness or obligations including contingent obligations and obligations
under leases of property from others, except Permitted Indebtedness. 

Section 4.12          Investments.  No Borrower has direct or indirect
Subsidiaries or Affiliates, or investments in or loans to any other Person
(other than Consumer Purpose Loans), except as described in Schedule 4.12
attached hereto and made part hereof. 

Section 4.13          ERISA.  Each Borrower, any Subsidiary, and Guarantors and
each member of the controlled group of corporations (as such term “controlled
group of corporations” is defined in Section 1563 of the Internal Revenue Code
of 1986, as amended) of which such Borrower and such Guarantor is a member, is
in compliance in all material respects with all applicable provisions of ERISA
and the regulations promulgated thereunder.  No reportable event, as such term
(hereinafter called a “Reportable Event’) is defined in Title IV of ERISA, has
occurred with respect to, nor has there been terminated, any Plan maintained for
employees of any Borrower, any Subsidiary, any Guarantor or any member of the
controlled group of corporations of which a Borrower or a Guarantor is a
member. 

Section 4.14          Hazardous Wastes, Substances and Petroleum Products. 

(a)Each Borrower (i) has received all permits and filed all notifications
necessary to carry on its respective business; and (ii) is in compliance in all
respects with all Environmental Control Statutes. 

(b)No Borrower has given any written or oral notice to the Environmental
Protection Agency (“EPA”) or any state or local agency with regard to any actual
or imminently threatened removal, spill, release or discharge of hazardous or
toxic wastes, substances or petroleum products or properties owned or leased by
such Borrower or in connection with the conduct of its business and operations. 

(c)No Borrower has received notice that it is potentially responsible for costs
of clean-up of any actual or imminently threatened spill, release or discharge
of hazardous or toxic wastes  

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or substances or petroleum products pursuant to any Environmental Control
Statute.

Section 4.15          Solvency.  Each Borrower is, and after receipt and
application of the first and each subsequent Advance will be, solvent such that
(a) the fair value of its assets (including without limitation the fair salable
value of such Borrower’s Intangible Assets) is greater than the total amount of
its liabilities, including without limitation, contingent liabilities, (b) the
present fair salable value of its assets (including without limitation the fair
salable value of its Intangible Assets) is not less than the amount that will be
required to pay the probable liability on its debts as they become absolute and
matured, and (c) it is able to realize upon its assets and pay its debts and
other liabilities, contingent obligations and other commitments as they mature
in the normal course of business.  No Borrower intends to, or believes that it
will, incur debts or liabilities beyond its ability to pay as such debts and
liabilities mature, and is not engaged in a business or transaction, or about to
engage in a business or transaction, for which its property would constitute
unreasonably small capital after giving due consideration to the prevailing
practice and industry in which it is engaged.  For purposes of this
Section 4.15, in computing the amount of contingent liabilities at any time, it
is intended that such liabilities will be computed at the amount which, in light
of all the facts and circumstances existing at such time, represents the amount
that reasonably can be expected to become an actual matured liability. 

Section 4.16          Business Location.  As of the date hereof, each Borrower’s
address set forth on Schedule 4.16 attached hereto and made part hereof is the
location of such Borrower’s principal place of business and such address,
together with the addresses set forth on Schedule 4.16 attached hereto and made
part hereof, and the location of all other places of business of each Borrower
and the names in which each Borrower conducts business at each such location are
set forth in Schedule 4.16 attached hereto and made part hereof. 

Section 4.17          Capital Stock.  All of the issued and outstanding capital
stock or other ownership interest of each Borrower is owned as described on
Schedule 4.17 attached hereto and made part hereof, and all such ownership
interests are fully paid and non-assessable. 

Section 4.18          No Extension of Credit for Securities.  No Borrower is,
nor will it be, engaged principally or as one of its important activities in the
business of extending credit for the purpose of purchasing or carrying or
trading in any margin stocks or margin securities (within the meaning of
Regulations T, U and X of the Board of Governors of the Federal Reserve System)
or other securities, and no part of the proceeds of the Loan hereunder has been
or will be applied for the purpose of purchasing or carrying or trading in any
such stock or securities or of refinancing any credit previously extended, or of
extending credit to others, for the purpose of purchasing or carrying any such
margin stock, margin securities or other securities in contravention of such
Regulations. 

Section 4.19          Sanctions.  (a) No member of the Borrowing Group is a
Sanctioned Target; (b) no member of the Borrowing Group is owned or controlled
by, or is acting or purporting to act for or on behalf of, directly or
indirectly, a Sanctioned Target; (c) each member of the Borrowing Group has
instituted, maintains and complies with policies, procedures and controls
reasonably designed to assure compliance with Sanctions; and (d) to the best of
Borrowers’ knowledge, after due care and inquiry, no member of the Borrowing
Group is under investigation for an alleged violation of Sanction(s) by a
Governmental Authority that enforces Sanctions.  Borrowers shall notify Agent in
writing not more than one (1) Business Day after first becoming aware of any
breach of this Section. 

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Section 4.20          Anti-Money Laundering and Anti-Corruption Laws.  (a) Each
member of the Borrowing Group has instituted, maintains and complies with
policies, procedures and controls reasonably designed to assure compliance with
Anti-Money Laundering Laws and Anti-Corruption Laws; and (b) to the best of
Borrowers’ knowledge, after due care and inquiry, no member of the Borrowing
Group is under investigation for an alleged violation of Anti-Money Laundering
Laws or Anti-Corruption Laws by a Governmental Authority that enforces such
laws. 

Section 4.21          Beneficial Ownership Certification. As of the date of this
Agreement, the information included in the Beneficial Ownership Certification is
true and correct in all respects. 

ARTICLE 5
CONDITIONS TO LOAN

Section 5.1          Documents to be Delivered to Agent Prior to Effectiveness.
 Prior to the effectiveness of this Agreement, Borrowers shall deliver or cause
to be delivered to Agent (all documents to be in form and substance satisfactory
to Agent in its sole and absolute discretion): 

(a)Credit Documents.  This Agreement, the Notes and all other Credit Documents
duly and properly executed by the parties thereto; 

(b)Searches.  Uniform Commercial Code, tax, judgment, PBGC and EPA searches
against each Borrower in those offices and jurisdictions as Agent shall
reasonably request which shall show that no financing statement, liens, or
assignments or other filings have been filed or remain in effect against each
Borrower or any Collateral except for Permitted Liens and those other Liens,
financing statements, assignments or other filings with respect to which the
secured party or existing lender (i) has delivered to Agent Uniform Commercial
Code termination statements or other documentation evidencing the termination of
its Liens and security interests in Collateral, (ii) has agreed in writing to
release or terminate its Lien and security interest in Collateral upon receipt
of proceeds of the Advances or (iii) has delivered a Subordination Agreement to
Agent with respect to its Lien and security interest in the Collateral, all in a
form and substance satisfactory to Agent in its sole discretion; 

(c)Organizational Documents.  A copy of each Borrower’s and Entity Guarantor’s
(A) organization documents, certified as of a recent date by such Person’s
secretary (or other appropriate officer), and (B) bylaws, partnership agreement
or operating agreement, as applicable, certified as of a recent date by such
Person’s secretary (or other appropriate officer); together with certificates of
good standing in such Person’s state of organization and in each jurisdiction in
which such Person is qualified to do business, each dated within 30 days from
the date of this Agreement; 

(d)Authorization Documents.  A certified copy of resolutions of each Borrower’s
and Entity Guarantor’s board of directors, members, managers or partners, as
applicable, authorizing the execution, delivery and performance of the Notes,
this Agreement and all other Credit Documents, the pledge of the Collateral to
Agent as security for the Loan made hereunder and the borrowing evidenced by the
Notes and designating the appropriate officers to execute and deliver the Credit
Documents; 

(e)Incumbency Certificates.  A certificate of each Borrower’s and Entity’s  

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Guarantor’s secretary (or other appropriate officer) as to the incumbency and
signatures of officers of such Person signing this Agreement, the Notes and
other Credit Documents, as applicable;

(f)Opinion of Counsel.  Agent shall have received a written opinion of
Borrowers’ and Guarantors’ counsel addressed to Agent and Lenders in form and
substance satisfactory to Agent in its sole discretion; 

(g)Officer’s Certificate.  A certificate, dated the date of this Agreement,
signed by the President of each Borrower, to the effect that (i) all
representations and warranties set forth in this Agreement are true and correct
as of the date hereof in all material respects and (ii) no Default or Event of
Default hereunder has occurred, each Borrower’s seal being affixed to such
certificate and each Borrower’s secretary attesting thereto; 

(h)Guaranties.  The Guaranties duly executed by each Guarantor; 

(i)Financial Statements. A copy of each of the reports required pursuant to
Section 6.2 of this Agreement for the period most recently ended prior to the
date hereof together with a covenant compliance certificate; 

(j)Availability Statement.  A completed Availability Statement; 

(k)Insurance.  Evidence of Borrowers’ self-insurance and other insurance issued
by a reputable carrier with respect to each Borrower’s fire, casualty,
liability, and other insurance covering its Property, and any key owner/operator
insurance; 

(l)Access Agreement.  The Access Agreement duly executed by the parties thereto;
and 

(m)Other Documents.  Such additional documents as Agent reasonably may request. 

Section 5.2          Conditions to all Advances.  The obligation of Lenders to
make each subsequent Advance hereunder pursuant to Section 2.1 is conditioned
upon (a) the continuing accuracy of the representations and warranties made by
Borrowers under this Agreement in all material respects; and (b) the absence,
after giving effect to such Advance and the receipt of the proceeds thereof and
the retirement of any indebtedness then being retired out of the proceeds of
such Advance, of any Default or Event of Default. 

 

ARTICLE 6
AFFIRMATIVE COVENANTS

In addition to the covenants contained in Article 3 and 4 of this Agreement
relating to the Collateral, until all Obligations have been indefeasibly
satisfied in full and the Commitments have expired or otherwise have been
terminated, each Borrower covenants and agrees as follows:

Section 6.1          Place of Business and Books and Records.  Each Borrower
will promptly advise Agent in writing of (a) the establishment of any new places
of business by such Borrower and of the discontinuance of any existing places of
business of such Borrower; (b) the creation of any new  

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Subsidiaries and (c) the acquisition and or use of any trade name or trade
style.

Section 6.2          Reporting Requirements.  Borrowers will deliver to Agent: 

(a)within 30 days after the end of each month, company prepared consolidated and
consolidating financial statements of Borrowers’ business for such previous
month, consisting of a balance sheet, income statement and consolidating
schedules as of the end of such month, all in reasonable detail, prepared in
accordance with GAAP consistently applied, subject to year-end adjustments,
together with a covenant compliance certificate;  

(b)within 120 days after the close of each fiscal year, (i) consolidated and
consolidating financial statements of Borrowers and their consolidated
Subsidiaries for the fiscal year then ended consisting of a balance sheet,
income statement and statement of cash flow of Borrowers and their consolidated
Subsidiaries as of the end of such fiscal year, all in reasonable detail,
including all supporting schedules and footnotes, prepared in accordance with
GAAP consistently applied, and shall be audited and certified without
qualification by an independent certified public accountant selected by
Borrowers and acceptable to Agent and accompanied by the unqualified opinion of
such accountant; (ii) cause Agent to be furnished at the time of completion
thereof, a copy of any management letter for Borrowers and their consolidated
Subsidiaries prepared by such certified public accounting firm, (iii) a covenant
compliance certificate and (iv) an Annual Compliance Certificate executed by the
president or chief executive officer of each Borrower; 

(c)on or before June 1 of each calendar year, (i) consolidated financial
statements of Guarantors for the fiscal year then ended consisting of a balance
sheet, income statement and statement of cash flow of Guarantors as of the end
of such fiscal year, all in reasonable detail, including all supporting
schedules and footnotes, prepared in accordance with statutory accounting
requirements consistently applied, and shall be audited and certified without
qualification by an independent certified public accountant selected by
Guarantors and acceptable to Agent and accompanied by the unqualified opinion of
such accountant and (ii) cause Agent to be furnished at the time of completion
thereof, a copy of any management letter for Guarantors prepared by such
certified public accounting firm; 

(d)within 30 days after the end of each month (or more frequently as requested
by Agent from time to time), an Availability Statement (together with all
supporting schedules), a Schedule of Receivables and Assignment, an aging of
Receivables, a covenant compliance certificate, delinquency reports, books and
records consisting of data tape information (which shall include, without
limitation, credit scores), static pool report, and such other documentation as
and information Agent may require; 

(e)on or before May 31 of each calendar year, a copy of the operating budget or
plan prepared by management of Borrowers including, without limitation, a
balance sheet and profit and loss statement of Borrowers for the greater of two
(2) years or through the Maturity Date, in form and detail reasonably acceptable
to Agent, together with a summary of the material assumptions made in the
preparation of such annual budget or plan; 

(f)on or before November 20 of each calendar year after calendar year 2019, and
on or before December 1, 2019 for calendar year 2019, copies of documentation
submitted to the applicable Governmental Authority in the State of Georgia with
respect to the Reinsurance Credit  

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Facilities and authorization of Entity Guarantors to make extraordinary
dividends and/or lines of credit;

(g)at Agent’s request from time to time and at any time, copies of Borrowers’
and Guarantors’ corporate income tax returns, including any schedules attached
thereto, filed with the Internal Revenue Service or applicable state
governmental agency; 

(h)at Agent’s request from time to time and at any time, such other financial
information and reports concerning Borrowers, Guarantors and their businesses
and property. 

Section 6.3          Books and Records.  Borrowers will keep accurate and
complete Books and Records concerning the Collateral and all transactions with
respect thereto consistent with sound business practices (including, without
limitation, accurately account for insurance commissions) and will comply with
Agent’s reasonable requirements, from time to time in effect, including those
concerning the submission of reports on all items of Collateral including those
which are deemed to be delinquent.  The form of delinquency reports, the
frequency with which such reports shall be submitted to Agent (which in any case
shall be no less frequently than monthly) and the standards for determining
which Collateral transactions are deemed delinquent for this purpose, shall at
all times be satisfactory to Agent.  Agent shall have the right at any time and
from time to time during regular business hours, at Borrowers’ expense, to
inspect, audit, and copy the Books and Records of Borrowers and inspect and
audit any Collateral. 

Section 6.4          Financial Covenants.  Borrowers shall maintain, or cause to
be maintained, the following financial covenants (based on consolidated
financial statements of Borrowers and their consolidated Subsidiaries unless
otherwise indicated): 

(a)EBITDA Ratio.  As of the end of each calendar month, an EBITDA Ratio of not
less than 1.75 to 1.00. 

(b)Asset Quality.  As of the end of each calendar month, an Asset Quality of not
more than 20%. 

(c)Allowance for Loan Losses.  At all times the aggregate value of their
Allowance for Loan Losses, as calculated in accordance with GAAP, in an amount
not less than an amount acceptable to the independent certified public
accountant auditing Borrowers’ financial statements. 

(d)Liquidity.  As of the end of each calendar month, Liquidity of at least
$100,000,000.   

(e)Charge-off Policy.  Receivables must be charged off (on a monthly basis) with
respect to which no payment due and owing thereunder has been made for a period
that is equal to or greater than 180 days, as determined on a contractual
basis. 

(f)Minimum Tangible Net Worth.  As of the end of each calendar month, a minimum
Tangible Net Worth of at least $200,000,000 (such amount to be increased on an
annual basis upon Agent’s receipt of Borrowers’ audited financial statements by
an amount equal to 75% of Borrowers’ net income (less Permitted Tax
Distributions, Insurance Premium Dividends and dividends permitted pursuant to
Section 7.2(e)) for the prior fiscal year, commencing with the fiscal year
ending December 31, 2019).   

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(g)Funded Debt to Adjusted Tangible Net Worth Ratio.  As of the end of each
calendar month, a Funded Debt to Adjusted Tangible Net Worth Ratio of not more
than 3.00 to 1.00.   

Notwithstanding the foregoing, (x) Borrowers’ failure to comply with Section
6.4(c) or Section 6.4(e) shall not, in itself, constitute an Event of Default so
long as such shortfalls or losses are deducted, as contemplated by the terms of
this Agreement, in the determination of the other financial covenants contained
herein, (y) the determination of the covenants contained in this Section 6.4
shall exclude any asset or liability associated with Statement of Financial
Accounting Standard No. 133 and (z) Borrowers’ failure to comply with (i)
Section 6.4(a) as a result of maintaining an EBITDA Ratio of no more than 25
basis points less than the required EBITDA Ratio, (ii) RESERVED, (iii) Section
6.4(f) as a result of maintaining a minimum Tangible Net Worth of not less than
99% of the required minimum Tangible Net Worth or (iv) Section 6.4(g) as a
result of maintaining a Funded Debt to Adjusted Tangible Net Worth Ratio greater
than 3.00 to 1.00 but not more than 3.25 to 1.00, shall not constitute an Event
of Default under Section 8.3(b) unless such failure continues for more than 1
consecutive calendar month; provided, however, clause (z) shall not in any event
be effective as an exception to the Event of Default described in Section 8.3(b)
more than 2 times per calendar year.

Section 6.5          Compliance With Applicable Law. 

(a)All Receivables shall comply in all material respects with all applicable
material federal, state and local laws, rules, regulations, proclamations,
statutes, orders and interpretations at the time when Agent obtains any interest
therein pursuant to this Agreement. 

(b)Each Borrower shall comply in all material respects with all applicable
material local, state and federal laws and regulations applicable to its
business including without limitation the Consumer Finance Laws, Environmental
Control Statutes, and all laws and regulations of the Local Authorities, and the
provisions and requirements of all franchises, permits, certificates of
compliance and approval issued by regulatory authorities and other like grants
of authority held by Borrowers; and notify Agent immediately (and in detail) of
any actual or alleged failure to comply with or perform, breach, violation or
default under any such laws or regulations or under the terms of any of such
franchises or licenses, grants of authority, or of the occurrence or existence
of any facts or circumstances which with the passage of time, the giving of
notice or otherwise could create such a breach, violation or default or could
occasion the termination of any of such franchises or grants of authority. 

(c)With respect to the Environmental Control Statutes, Borrowers shall notify
Agent when, in connection with the conduct of Borrowers’ business or operations,
any Person (including, without limitation, EPA or any state or local agency)
provides oral or written notification to any Borrower or any Subsidiary with
regard to an actual or imminently threatened removal, spill, release or
discharge of hazardous or toxic wastes, substances or petroleum products; and
notify Agent immediately (and in detail) upon the receipt by any Borrower of an
assertion of liability under the Environmental Control Statutes, of any actual
or alleged failure to comply with or perform, breach, violation or default under
any such statutes or regulations or of the occurrence or existence of any facts,
events or circumstances which with the passage of time, the giving of notice, or
both, could create such a breach, violation or default. 

(d)In addition to the foregoing, each Borrower shall, and each Borrower shall
ensure that each member of the Borrowing Group will, comply with Sanctions,
Anti-Money  

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Laundering Laws, and Anti-Corruption Laws.

Section 6.6          Notice of Certain Events.  Borrowers will promptly notify
Agent of (a) the occurrence of any Default or Event of Default or (b) any change
in the information provided in the Beneficial Ownership Certification that would
result in a change to the list of beneficial owners identified in such
certification. 

Section 6.7          Existence, Properties.  Borrowers will (a) do or cause to
be done all things necessary to preserve and keep in full force and effect its
existence, rights and franchises and comply with all laws applicable to it;
(b) maintain, preserve and protect all franchises, licenses and trade names and
preserve all the remainder of its property used or useful in the conduct of its
business; and (c) maintain in effect insurance with responsible and reputable
insurance companies or associations in such amounts and covering such risks as
shall be consistent with prudent business practices in the industry or otherwise
self-insure each business location of Borrowers in a manner reasonably
acceptable to Agent, and furnish to Agent from time to time, upon their request
therefor, evidence of same. 

Section 6.8          Payment of Indebtedness; Taxes.  Borrowers will (a) pay all
of their indebtedness and obligations promptly and in accordance with normal
terms; and (b) pay and discharge or cause to be paid and discharged promptly all
taxes, assessments, and governmental charges or levies imposed upon it or upon
its income and profits, or upon any of its property, real, personal or mixed, or
upon any part thereof, before the same shall become in default, as well as all
lawful claims for labor, materials and supplies or otherwise which, if unpaid,
might become a lien or charge upon such properties or any part thereof;
provided, however, that Borrowers shall not be required to pay and discharge or
to cause to be paid and discharged any such indebtedness, tax, assessment,
charge, levy or claim so long as the validity thereof shall be contested in good
faith by appropriate proceedings and Borrowers shall have set aside on their
books adequate reserves (as may be required in accordance with GAAP) with
respect to any such indebtedness, tax, assessment, charge, levy or claim, so
contested. 

Section 6.9          Notice Regarding Any Plan.  Borrowers shall furnish to
Agent: 

(a)as soon as possible, and in any event within 10 days after any senior officer
of Borrowers know or have reason to know that any Reportable Event has occurred
with respect to any Plan maintained in whole or in part for the employees of a
Borrower or any of their Subsidiaries, a statement of the President or Treasurer
of Borrowers setting forth details as to such Reportable Event and the action
which is proposed to be taken with respect thereto, together with a copy of the
notice of such Reportable Event given to the Pension Benefit Guaranty
Corporation; and 

(b)promptly after receipt thereof, a copy of any notice which a Borrower may
receive from the Pension Benefit Guaranty Corporation relating to the intention
of a Borrower to terminate any Plan maintained in whole or in part for the
benefit of employees of any Borrower or any of their Subsidiaries or to appoint
a trustee to administer any such Plan. 

Section 6.10          Other Information.  From time to time upon request of
Agent, Borrowers will furnish to Agent such additional information and reports
regarding the Collateral and the operations, businesses, affairs, prospects and
financial condition of Borrowers and their Subsidiaries as Agent may request. 

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Section 6.11          Litigation, Enforcement Actions and Requests for
Information.  Borrowers will promptly notify Agent (a) of any litigation or
action instituted or, to Borrowers’ knowledge, threatened in writing against any
Borrower or any of their Subsidiaries or Guarantors where the amount in
controversy, in Borrowers’ reasonable judgment, will or may exceed $100,000; (b)
of the entry of any judgment or lien against any property of Borrower, in an
amount of $100,000 or more as to any separate action, litigation, judgment or
lien instituted, threatened or entered or in an aggregate amount of $300,000 or
more as to all actions, litigation, judgments, or liens instituted, threatened
or entered; (c) any enforcement action or investigation instituted or, to
Borrowers’ knowledge, threatened, in writing, against any Borrower or any of
their Subsidiaries by any Governmental Authority, including without limitation
any proceeding or action to be commenced by the filing of a stipulation and
consent; (d) receipt by any Borrower or any of their Subsidiaries of an “Early
Warning Notice,” “Notice and Opportunity to Respond and Advise” or “Civil
Investigative Demand” from the Consumer Financial Protection Bureau or similar
notice or request from any other Governmental Authority; or (e) the occurrence
of a Regulatory Event. 

Section 6.12          Business Location, Legal Name and State of Organization.
 Borrowers shall notify Agent: at least 30 days prior to: (i) any proposed
change in a Borrower’s principal place of business, a Borrower’s legal name or a
Borrower’s state of organization; (ii) the change in the names in which a
Borrower or any Subsidiary conducts business at each such location; and (iii)
the change of a Borrower’s jurisdiction of organization. 

Section 6.13          Operations.  Borrowers shall maintain satisfactory credit
underwriting and operating standards, including, with respect to each obligor of
each Receivable, the completion of an adequate investigation of such obligor and
a determination that the credit history and anticipated performance of such
obligor is and will be satisfactory and meets the standards generally observed
by prudent finance companies.  

Section 6.14          Further Assurances.  Borrowers shall from time to time
execute and deliver to Agent such other documents and shall take such other
action as may be requested by Agent in order to implement or effectuate the
provisions of, or more fully perfect the rights granted or intended to be
granted by Borrowers to Agent pursuant to the terms of this Agreement, the Notes
or any other Credit Documents. 

Section 6.15          Chattel Paper/Jurisdictions. 

(a) Borrowers represent and warrant to Agent and Lenders that (i) Borrowers are
sophisticated consumer lenders and reinsurance corporations, (ii) Borrowers
employ attorneys with regulatory experience, and (iii) Borrowers’ internal
attorneys regularly consult with multiple different attorneys at outside law
firms on regulatory matters including but not limited to the content and form of
Borrowers’ Receivable documentation.  If Agent has reasonable cause (which it
articulates in writing to Borrowers) to believe it necessary for Borrowers to
undertake a regulatory review of Receivable documentation of Borrowers and their
Subsidiaries, then Borrowers shall employ one or more of these firms to provide
such review at Borrowers sole cost and expense (which firm shall be reasonably
acceptable to Agent).  However, in no event shall Agent request such a review
more than one (1) time per calendar year so long as no Event of Default has
occurred.  Borrowers shall provide Agent with copies of such review within sixty
(60) days after each such request with the results of such documentation.   

(b)Borrowers shall promptly (i) notify Agent of either (A) Borrowers or any of  

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their Subsidiaries conducting business in any new jurisdiction, and (B)
Borrowers or any of their Subsidiaries making any material modifications to its
respective Receivable documentation outside of the ordinary course of business
and (ii) upon the request of Agent, provide Agent a list of jurisdictions in
which Borrowers and their Subsidiaries conduct business and licenses held in
each such jurisdiction.

 

Section 6.17Reinsurance Credit Facilities; Extraordinary Dividends.  Borrowers
shall (a) furnish to Agent promptly after receipt thereof copies of any notices
or other communications received from Governmental Authorities in the State of
Georgia with respect to Reinsurance Credit Facilities and authorization of
Entity Guarantors to make extraordinary dividends and (b) have the ability to
fully access $92,000,000 of extraordinary dividends and/or lines of credit from
Entity Guarantors, and the applicable Governmental Authorities in the State of
Georgia shall not have disapproved any such payment. 

 

ARTICLE 7
NEGATIVE COVENANTS

Each Borrower covenants and agrees with Agent and Lenders that until all
Obligations have been indefeasibly satisfied in full and the Commitments have
expired or otherwise have been terminated, no Borrower will do any of the
following without the prior written consent of Agent:

Section 7.1          Payments to and Transactions with Affiliates.  (a) Make any
loan, advance, extension of credit or payment to any Affiliate, officer,
employee, member, manager, shareholder or director of any Borrower or any
Affiliate outside the ordinary course of business, except as described in
Schedule 4.12 attached hereto and made part hereof and the payment of insurance
premiums for a split dollar insurance policy for Roger Guimond, or (b) enter
into any other transaction, including, without limitation, the purchase, sale,
lease or exchange of property, or the rendering or any service, to or with any
Affiliate or any shareholder, officer, or employee of any Borrower or any
Affiliate, and except for other transactions with or services rendered to any
Affiliate of a Borrower in the ordinary course of business and pursuant to the
reasonable requirements of the business of such Affiliate and upon terms found
by the board of directors of a Borrower to be fair and reasonable and no less
favorable to a Borrower than such Borrower would obtain in a comparable arms’
length transaction with a Person not affiliated with or employed by a Borrower;
provided, however, that Borrowers may in any event pay reasonable compensation
to any such employee or officer in the ordinary course of Borrowers’ business
consistent and commensurate with industry custom and practice for the services
provided by such Person. 

Section 7.2          Restricted Payments.  Make any Restricted Payment except
for (a) Permitted Tax Distributions, (b) Insurance Premium Dividends, (c)
payments of principal and interest on Subordinated Debt not otherwise prohibited
under the subordination provisions applicable to such Subordinated Debt, (d)
payments of principal and interest on Other Debt, (e) payments of principal and
interest on the Reinsurance Credit Facilities and (f) an annual distribution to
the shareholders of Borrowers the proceeds of which shall be used solely for
contributions to the Cheek Family Foundation in an amount not to exceed the
lesser of (i) $10,000,000 or (ii) twenty five percent (25%) of the annual net
income of Borrowers as determined in accordance with GAAP based upon the annual
audited financial statements delivered to Agent pursuant to Section 6.2(b),
provided immediately prior to and after giving effect to any distribution or
payment no Default or Event of Default shall exist. 

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Section 7.3          Indebtedness.  Borrow any monies or create any Debt except
for Permitted Indebtedness. 

Section 7.4          Guaranties.  Guarantee or assume or agree to become liable
in any way, either directly or indirectly, for any additional indebtedness or
liability of others except to endorse checks or drafts in the ordinary course of
business. 

Section 7.5          Nature of Business.  Engage in any business other than the
business in which such Borrower currently is engaged or make any material change
in the nature of the financings which such Borrower extends, (including without
limiting the generality of the foregoing, matters relating to size, type, term,
nature and dollar amount). 

Section 7.6          Negative Pledge.  Assign, discount, pledge, grant a Lien in
or otherwise encumber any Receivables or the Collateral except as contemplated
by Section 7.15 of this Agreement. 

Section 7.7          Investments.  Make any investments in any other Person
except as described in Schedule 4.12 attached hereto and made part hereof; or
enter into any new business activities or ventures not related to such
Borrower’s business existing as of the date of this Agreement; or create or form
any Subsidiary. 

Section 7.8          Compliance with Formula.  Permit the aggregate amount of
all Advances outstanding at any time to exceed the Borrowing Base. 

Section 7.9          Mergers, Divestitures.  Except as permitted by Section 7.13
of this Agreement, acquire all or substantially all of the assets or shares of
stock of or other equity interest in any Person, or be a party to any
consolidation or merger. 

Section 7.10          Use of Proceeds.   

(a)Use the proceeds of any Advance or other extension of credit made hereunder
for any purpose other than consistent with the terms and conditions hereof, for
their lawful and permitted purposes (including that no part of the proceeds of
the loans made to Borrowers will be used to purchase or carry any margin stock
or to extend credit to others for the purpose of purchasing or carrying any
margin stock or for any purpose that violates the provisions of Regulation T, U
or X of the Board of Governors of the United States Federal Reserve). 

(b)Use, and shall ensure that each member of the Borrowing Group will not,
directly or indirectly use any of the credit to fund, finance or facilitate any
activities, business or transactions: (i) that are prohibited by Sanctions, (ii)
that would be prohibited by U.S. Sanctions if conducted by a U.S. Person, or
(iii) that would be prohibited by Sanctions if conducted by Agent or any Lender,
or any other party hereto.  Borrowers shall notify Agent in writing not more
than one (1) Business Day after first becoming aware of any breach of this
Section. 

(c)Use, and shall ensure that each member of the Borrowing Group will not,
directly or indirectly use any of the credit to fund, finance or facilitate any
activities, business or transactions that would be prohibited by Anti-Money
Laundering Laws or Anti-Corruption Laws. 

Section 7.11          Ownership and Management.  Allow any Borrower to be owned
and controlled directly or indirectly by any Person other than shareholders,
members and senior  

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management that own and control such Borrower as of the date of this Agreement.

Section 7.12          Amendment to Subordinated Debt.  (a) Amend or permit the
amendment of any of the documents and instruments evidencing Subordinated Debt
or (b) make any prepayment on account of such Subordinated Debt which is not
otherwise allowed to be made under the subordination provisions applicable to
such Subordinated Debt.  Notwithstanding anything in this Agreement to the
contrary, Borrowers are permitted to amend their Proxy Statements and related
documents in connection with its Senior Demand Notes, Variable Rate Subordinated
Debentures and Commercial Paper. 

Section 7.13          Bulk Purchases.  In any purchase transaction, purchase
Receivables in an aggregate amount exceeding $5,000,000 without prior written
consent of Agent. 

Section 7.14          Guarantor Dividends.  Permit any Guarantor to make any
redemptions, repurchases, dividends or distributions of any kind with respect to
a Guarantor’s stock to any Person other than a Borrower. 

Section 7.15          Asset Sales. Sell, transfer or otherwise dispose of any
Property (including the Collateral) other than sales in the ordinary course of
business, of ineligible Receivables which have been charged-off pursuant to
Section 6.4(e) so long as no Event of Default or Default then exists. 

Section 7.16          Deposit Accounts.  Open or maintain any primary operating
deposit account other than the primary operating deposit account maintained with
South State Bank listed on Schedule 7.16 attached hereto without the prior
written consent of Agent. 

Section 7.17          Source of Repayment and Collateral.  Fund any repayment of
the credit with proceeds, or provide as collateral any property, that is
directly or indirectly derived from any transaction or activity that is
prohibited by Sanctions, Anti-Money Laundering Laws or Anti-Corruption Laws, or
that could otherwise cause Agent or any Lender to be in violation of Sanctions,
Anti-Money Laundering Laws or Anti-Corruption Laws. 

Section 7.18          Franklin Securities, Inc.  Permit Franklin Securities,
Inc. to conduct any business or operations or own any Property other than
Property with an aggregate value not to exceed $1,000. 

 

ARTICLE 8
EVENTS OF DEFAULT

Each of the following events shall constitute an Event of Default under this
Agreement:

Section 8.1          Failure to Make Payments.  The failure of Borrowers to make
any payment of (a) principal when due or (b) interest under the Notes or this
Agreement or any other payment hereunder or in respect of any other Obligation
within 5 days of when due. 

Section 8.2          Information, Representations and Warranties.  Any financial
statement, written information furnished or representation or warranty,
certificates, document or instrument made or given by any Borrower or any
Guarantor or furnished in connection herewith shall be false, misleading or
incorrect in any material respect, provided, however, that should any
representation or  

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warranty by Borrowers under Section 4.1(a) be false, misleading or incorrect
with respect to the Receivables, such default shall not, in itself, constitute
an Event of Default so long as the aggregate amount of such Receivables failing
to meet the representations and warranties in Section 4.1(a) at any time does
not exceed 1.0% of the gross Receivables of Borrowers.

Section 8.3          Covenants.  The failure of any Borrower or any Guarantor to
observe, perform or comply with (a) any of the covenants contained Sections 6.3
(first sentence), 6.5, 6.7 or 6.8 of this Agreement and such failure continues
for 30 days following the earlier of notice from Agent to Borrowers of such
failure or Borrowers’ knowledge of such failure or (b) any other covenant
contained in this Agreement or any other Credit Document. 

Section 8.4          Collateral.  At any time after the grant to Agent for the
benefit of Lenders of a security interest in or Lien upon any Collateral,
Agent’s interest therein shall for any reason cease to be a valid and subsisting
first priority Lien in favor of Agent and/or a valid and perfected first
priority security interest in and to the Collateral purported to be covered
thereby having the priority set forth therein. 

Section 8.5          Defaults Under Other Agreements.  Any default by any
Borrower or any Guarantor under any agreement to which such Borrower or such
Guarantor is a party and with respect to which the amount claimed exceeds
$2,500,000, singly or in the aggregate. 

Section 8.6          Certain Events.  The occurrence of any of the following
with respect to any Borrower or any Guarantor: 

(a)Voluntary Proceedings.  It shall (i) apply for or consent to the appointment
of a receiver, custodian, trustee or liquidator of itself or of all or a
substantial part of its property, (ii) be generally not paying its debts as such
debts become due as defined in the United States Bankruptcy Code, (iii) make a
general assignment for the benefit of its creditors, (iv) commence a voluntary
case under the Bankruptcy Code, (v) fail to controvert in a timely or
appropriate manner, or acquiesce in writing to, any petition filed against it in
any involuntary case under the Bankruptcy Code, or (vi) take any corporate
action for the purpose of effecting any of the foregoing. 

(b)Involuntary Proceeding.  A proceeding or case shall be commenced against it
without its application or consent in any court of competent jurisdiction,
seeking (i) the liquidation, reorganization, dissolution, winding up, or
composition or readjustment of debts, of it, (ii) the appointment of a trustee,
receiver, custodian, liquidator or the like for it or of all or any substantial
part of its assets, or (iii) similar relief in respect of it under any law
providing for the relief of debtors, and such proceeding or case shall continue
undismissed or unstayed and in effect, for a period of 90 days, or an order for
relief against it shall be entered in an involuntary case under the Bankruptcy
Code. 

(c)Reportable and Other Events.  (i) The occurrence of any Reportable Event
which Agent determines in good faith constitutes grounds for the termination of
any Plan by the Pension Benefit Guaranty Corporation (“PBGC”) or for the
appointment by the United States District Court of a trustee to administer any
Plan; (ii) the institution by the PBGC of proceedings to terminate any Plan; or
(iii) the failure of Borrower, or any Subsidiary to meet the minimum funding
standards established in Section 412 of the Internal Revenue Code of 1986, as
amended. 

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Section 8.7          Possession of Collateral.  A judgment creditor of any
Borrower shall take possession or file proceedings to attempt to take possession
of any of the Collateral with a value in excess of an amount equal to 1.0% of
the gross Receivables of Borrowers by any means including without limitation, by
levy, distraint, replevin, self-help, seizure or attachment. 

Section 8.8          Guarantor.  Any Guarantor shall repudiate, purport to
revoke or fail to perform any such Guarantor’s obligations under such
Guarantor’s Guaranty. 

Section 8.9          Credit Documents.  An event of default following the
expiration of any cure period (however defined) shall occur under any Credit
Document or under any other security agreement, guaranty, mortgage, deed of
trust, assignment or other instrument or agreement securing or supporting any
obligation of any Borrower under this Agreement or under the Notes. 

Section 8.10          Hedging Agreements. Any default by Borrowers under any
Hedging Agreement. 

Section 8.11          Material Adverse Change.  Agent or Required Lenders
determine in good faith that a material adverse change in the business,
operations, property (including the Collateral), prospects or financial
condition of any Borrower or any Guarantor shall occur. 

Section 8.12          Level Two Regulatory Event.  The occurrence of a Level Two
Regulatory Event which remains unvacated, undischarged, unbonded or unstayed by
appeal or otherwise for a period of thirty (30) days from the date of its entry
which Agent or Required Lenders determine in good faith that a material adverse
change in the business, operations, property (including the Collateral),
prospects or financial condition of any Borrower or any Guarantor shall occur as
a result thereof. 

ARTICLE 9
REMEDIES OF AGENT AND WAIVER

Section 9.1          Agent’s Remedies.  Upon the occurrence of any Event of
Default or Default, Agent may, or at the direction of Required Lenders shall,
cease making Advances hereunder.  Upon the occurrence of an Event of Default,
Agent may, or at the direction of Required Lenders shall, (i) immediately
terminate this Agreement or (ii) declare the Obligations immediately due and
payable.  Upon such occurrence and/or declaration, Agent shall have, in addition
to the rights and remedies given to it by the Notes, this Agreement and the
other Credit Documents, all the rights and remedies of a secured party as
provided in the UCC (regardless of whether such Code has been adopted in the
jurisdiction where such rights and remedies are asserted) and without limiting
the generality of the foregoing, Agent may, in addition to all the rights
conferred upon it by law, exercise one or more of the following rights
successively or concurrently: (a) to take possession of the Collateral, or any
evidence thereof, proceeding without judicial process or by judicial process,
(b) to lawfully dispose of the whole or any part of the Receivables or any other
Collateral, or any other Property, instrument or document pledged as security
for any Obligation at public or private sale, without advertisement or demand
upon Borrowers, or upon any obligor of Receivables, the Collateral, or any other
security, the same being hereby waived, except to the extent otherwise required
by law, with the right on the part of Agent or their respective nominees to
become the purchaser thereof as provided by law absolutely freed and discharged
from any equity of redemption, and all trusts and other claims whatsoever;
(c) after deduction of all reasonable legal and other costs and expenses  

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permitted by law, including attorneys’ fees, to apply the Collateral or all or
any portion of proceeds thereof on account of, or to hold as a reserve against,
all Obligations; (d) terminate any Interest Period; and (e) to exercise any
other rights and remedies available to it by law or agreement.  Any remainder of
the proceeds after indefeasible satisfaction in full of the Obligations shall be
distributed as required by applicable law.  Notice of any sale or disposition of
Collateral shall be given to Borrowers at least 10 Business Days before any
intended public sale or the time after which any intended private sale or other
disposition of the Collateral is to be made, which Borrowers agree shall be
reasonable notice of such sale or other disposition.  Notwithstanding the
foregoing, upon the occurrence of an Event of Default described in
Section 8.6(a) or (b) hereof, the Commitments shall immediately terminate and
the Loan made pursuant to this Agreement and all other Obligations, together
with all accrued interest, shall be immediately due and payable in full without
presentment, demand, or protest or notice of any kind, all of which Borrowers
hereby expressly waive.

Section 9.2          Waiver and Release by Borrowers.  To the extent permitted
by applicable law, each Borrower: (a) waives each of the following in connection
with Agent’s exercise of rights and remedies following the occurrence of an
Event of Default under this Agreement: (i) presentment and protest of the Notes
and this Agreement or any Receivables held by Agent on which any Borrower is any
way liable and (ii) notice and opportunity to be heard, after acceleration in
the manner provided in Article 9 of this Agreement, before exercise by Agent of
the remedies of self-help or set-off permitted by law or by any agreement with
any Borrower, and except where required hereby or by law, notice of any other
action taken by Agent; and (b) releases Agent, Lenders and their respective
officers, attorneys, agents and employees from all claims for loss or damage
caused by any act or omission on the part of Agent, Lenders or their respective
officers, attorneys, agents and employees, except willful misconduct or gross
negligence. 

Section 9.3          No Waiver.  Neither the failure nor any delay on the part
of Agent or any Lender to exercise any right, power or privilege under the Notes
or this Agreement shall operate as a waiver thereof, nor shall any single or
partial exercise of any right, power or privilege preclude any other further
exercise of any right, power or privilege. 

Section 9.4          Application of Proceeds.  Notwithstanding any other
provisions of this Agreement or any other Credit Document to the contrary,
following acceleration of the Obligations after the occurrence of an Event of
Default, all amounts collected or received by Agent or any Lender on account of
the Obligations (whether in an insolvency or bankruptcy case or proceeding or
otherwise) or any other amounts outstanding under any of the Credit Documents or
in respect of the Collateral shall be paid over or delivered as follows: 

 

FIRST, to the payment of all costs, fees, expenses, and other amounts owing to
Agent, pursuant to Section 10.7, in connection with enforcing the rights of
Agent and Lenders under the Credit Documents, any protective advances made by
Agent with respect to the Collateral under or pursuant to the terms of the
Credit Documents;

 

SECOND, to payment of any costs, fees or expenses owed to Agent or to any Wells
Fargo Affiliate hereunder or under any other Credit Document;

 

THIRD, to the payment of all costs, fees, expenses of each of Lenders owing
hereunder in connection with enforcing its rights under the Credit Documents;

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FOURTH, to the payment of all Obligations consisting of accrued fees and
interest payable to Lenders hereunder (excluding amounts relating to Bank
Products);

 

FIFTH, to the payment of the outstanding principal amount of the Obligations
(excluding amounts relating to Bank Products);

 

SIXTH to the payment of all liabilities and obligations now or hereafter arising
from or in connection with respect to any Bank Products, any fees, premiums and
scheduled periodic payments due with respect thereto and any interest accrued
thereon;

 

SEVENTH, to all other Obligations which shall have become due and payable under
the Credit Documents and not repaid pursuant to clauses “FIRST” through ‘SIXTH”
above; and

 

EIGHTH, to the payment of the surplus, if any, to whoever may be lawfully
entitled to receive such surplus.

 

In carrying out the foregoing, (a) amounts received shall be applied in the
numerical order provided until exhausted prior to application to the next
succeeding category; and (b) each of Lenders shall receive an amount equal to
its pro rata share (based on the proportion that its then outstanding Loans and
Obligations outstanding of amounts available to be applied pursuant to clauses
“THIRD,” “FOURTH,” “FIFTH,” “SIXTH” and “SEVENTH” above).

 

ARTICLE 10
MISCELLANEOUS

Section 10.1          Indemnification and Release Provisions.  Each Borrower
hereby agrees to defend Agent, Lenders and their directors, officers, agents,
employees and attorneys from, and hold each of them harmless against, any and
all losses, liabilities (including without limitation settlement costs and
amounts, transfer taxes, documentary taxes, or assessments or charges made by
any governmental authority), claims, damages, interests, judgments, costs, or
expenses, including without limitation, reasonable fees and disbursements of
attorneys, incurred by any of them arising out of or in connection with or by
reason of this Agreement, the making of the Loan or any Collateral, or any other
Credit Document, or related transaction, including without limitation, any and
all losses, liabilities, claims, damages, interests, judgments, costs or
expenses relating to or arising under any Consumer Finance Laws or Environmental
Control Statute or the application of any such statute to Borrowers’ properties
or assets.  Each Borrower hereby releases Agent, Lenders and their respective
directors, officers, agents, employees and attorneys from any and all claims for
loss, damages, costs or expenses caused or alleged to be caused by any act or
omission on the part of any of them, other than such loss, damage cost or
expense which has been determined by a court of competent jurisdiction to have
been caused by the breach of contract, gross negligence or willful misconduct of
Agent and Lenders.  All obligations provided for in this Section 10.1 shall
survive any termination of this Agreement or the Commitments and the repayment
of the Loan. 

Section 10.2          Amendments.   

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(a)Neither the amendment or waiver of any provision of this Agreement or any
other Credit Document, nor the consent to any departure by Borrowers therefrom,
shall in any event be effective unless the same shall be in writing and signed
by the Required Lenders, or if Lenders shall not be parties thereto, by the
parties thereto and consented to by the Required Lenders, and each such
amendment, waiver or consent shall be effective only in the specific instance
and for the specific purpose for which given; provided that no amendment, waiver
or consent shall unless in writing and signed by all Lenders, do any of the
following except as expressly provided in this Agreement: (a) modify the
definition of Maximum Principal Amount, (b) modify the Commitments of Lenders or
subject Lenders to any additional obligations, (c) reduce the interest on any
Note, (d) postpone any date fixed for any payment in respect of principal of, or
interest on, any Note or any fees hereunder, (e) change the percentage of the
Commitments, or any minimum requirement necessary for Lenders or the Required
Lenders to take any action hereunder, (f) amend or waive this Section 10.2, or
change the definition of Required Lenders, (g) except as otherwise expressly
provided in this Agreement, and other than in connection with the financing,
refinancing, sale or other disposition of any Property of Borrowers permitted
under this Agreement, release any Liens in favor of Lenders on any portion of
the Collateral, (h) permit Borrowers or any Guarantor to delegate, transfer or
assign any of its obligations to any Lender, (i) release or compromise the
obligations of Borrowers or any Guarantor to any Lender, or (j) amend the
definition of “Advance Rate” or “Borrowing Base” (or any defined term used in
either such definition), or increase any advance rate, or (k) amend or waive
Section 7.11 and, provided, further, that no amendment, waiver or consent
affecting the rights or duties of Agent under any Credit Document shall in any
event be effective, unless in writing and signed by Agent, as applicable, in
addition to Lenders required hereinabove to take such action.  Notwithstanding
any of the foregoing to the contrary, the consent of Borrowers shall not be
required for any amendment, modification or waiver of the provisions of Article
11.  In addition, Borrowers and Lenders hereby authorize Agent to modify this
Agreement by unilaterally amending or supplementing Schedule I from time to time
in the manner requested by Borrowers, Agent or any Lender in order to reflect
any assignments or transfers of the Loans as provided for hereunder; provided,
however, that Agent shall promptly deliver a copy of any such modification to
Borrowers and each Lender.  Without regard to any other provision hereof, if any
Lender (for such purpose, a “Dissenting Lender”) dissents to any action Agent
desires to take requiring either the unanimous consent of Lenders or the consent
of Required Lenders or fails to respond to Agent within 5 Business Days of
Agent’s request for a consent, either Borrowers (if no Event of Default or
Default is outstanding and with the prior written consent of Agent) or Agent may
compel such Dissenting Lender to assign its entire Commitment (either to one or
more existing Lenders or other financial institution(s) who is to become a
Lender pursuant to the terms hereof) so long as (i) such Dissenting Lender
receives written notice of such intended assignment (and the proposed effective
date thereof) within 120 days of its providing its dissent to Agent or such
Dissenting Lender failing to respond to Agent within the required 15 Business
Day period and the effective date of such intended assignment is not later than
10 days thereafter and (ii) the Dissenting Lender receives full payment on the
effective date of such assignment of its entire portion of the outstanding
Obligations, with accrued interest and unpaid fees to such date (but excluding
any otherwise applicable early termination fee under Section 2.8(a) hereof). 

(b)Notwithstanding anything contained in clause (a) above, any other provision
of this Agreement or whether there exists a Default or Event of Default, Agent
may at its discretion and without the consent of Required Lenders, voluntarily
permit the outstanding Advances at any time to exceed the Borrowing Base by up
to 1.0% of the Borrowing Base (the “Out of Formula Loans”). 

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(c) If Agent is willing in its sole and absolute discretion to permit such Out
of Formula Loans, such Out of Formula Loans shall be payable on demand and shall
bear interest at 2.50% per annum above the rate otherwise applicable to the
Advances; provided, however, that, if Agent, on behalf of Lenders, permits Out
of Formula Loans (and thereafter continues to make, on behalf of Lenders,
Advances under such conditions), neither Agent nor Lenders shall be deemed to
have changed the limits contained in Section 2.1.  If Agent permits such Out of
Formula loans, then any payment or prepayment made by Borrowers shall be applied
first to the amount of the Out-of-Formula Loan principal, then to the
Out-of-Formula Loan interest, and then as provided in Section 2.8. 

Section 10.3          APPLICABLE LAW.  THIS AGREEMENT AND ALL DOCUMENTS EXECUTED
IN CONNECTION HEREWITH SHALL BE DEEMED TO HAVE BEEN MADE AND TO BE PERFORMABLE
IN THE STATE OF NEW YORK AND SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF NEW YORK. 

Section 10.4          Notices.  All communications provided for hereunder shall
be in writing and shall be deemed to have been delivered, if delivered in
person, or sent by certified mail, postage pre-paid, return receipt requested,
by reliable overnight courier, by facsimile or by e-mail (with a copy by other
method permitted hereunder), as follows: 

If to Agent: 

 

Wells Fargo Bank, N.A. 

123 South Broad Street, 5th Floor

MAC: Y1379-059

Philadelphia, Pennsylvania 19109

Attn:  Mr. William M. Laird, Senior Vice President 

Facsimile: (215) 670-6120 

E-mail:  billlaird@wellsfargo.com 

 

With a copy to: 

 

Blank Rome LLP 

One Logan Square 

Philadelphia, Pennsylvania 19103 

Attn: Kevin J. Baum, Esquire 

Facsimile: (215) 832-5612 

E-mail:  baum@blankrome.com 

 

If to Borrowers: 

 

1st Franklin Financial Corporation
135 East Tugalo Street 

Toccoa, Georgia  30577
Attn:Mr. A.R. Guimond 

Facsimile: (706) 886-7953 

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E-mail:  arguimond@1ffc.com 

 

With a copy to: 

 

1st Franklin Financial Corporation

1019 S. Perry Street 

Montgomery, AL 36104-5049 

Attn: C.E. Vercelli, Jr., General Counsel 

Facsimile: (334) 834-8807

E-mail:  cvercelli@1ffc.com

 

or to such other address as any party shall specify to the other party in
writing in accordance with this Section 10.4.

Section 10.5          Termination and Release.  This Agreement shall not
terminate until all amounts due under the Notes, this Agreement and any other
Credit Document and other Obligations, together with all interest and costs due,
shall have been indefeasibly paid in full and the Commitments have expired or
otherwise have been terminated.  Upon such termination and payment, the
Collateral securing the Loan, the Notes, this Agreement and the other
Obligations shall be released from the provisions of this Agreement and any
right, title and interest of Agent in or to the same shall cease.  Thereafter,
Agent agrees to deliver to Borrowers such documents as Borrowers reasonably
request to release of record any security interest or lien of Agent in the
Collateral. 

 

Section 10.6          Counterparts.  This Agreement may be executed in two or
more counterparts, each of which shall be deemed an original, and it shall not
be necessary in making proof of this Agreement to produce or account for more
than one such counterpart.  Signature by facsimile or electronic transmission
shall bind the parties hereto. 

Section 10.7          Costs, Expenses and Taxes.  Borrowers agree to pay
immediately upon demand legal fees and out-of-pocket expenses of Agent related
to the preparation, negotiation, documentation, execution, filing or delivery of
this Agreement or any other Credit Document and any and all waivers, amendments
or modifications of any of the Credit Documents or any of the terms and
provisions thereof and, following any Default or Event of Default hereunder, any
and all audits and required inspections permitted under this Agreement or any
other Credit Documents.  Borrowers shall also pay immediately upon demand
therefor all fees (including without limitation, legal fees and expenses), costs
and other expenses incurred by Agent and Lenders in connection with collection
of the Loan, the maintenance or preservation of the security interest in the
Collateral, the sale, disposition or other realization on the Collateral, or the
enforcement of Agent’s and Lenders’ rights hereunder or under any Credit
Document.  In addition, Borrowers shall also pay any and all stamp and other
taxes or filing fees payable or determined to be payable in connection with the
execution and delivery of the Notes and this Agreement, the Collateral and other
documents to be delivered hereunder, and agrees to save Agent and Lenders
harmless from and against any and all liabilities with respect to or resulting
from any delay in payment or omission to pay such taxes. 

Section 10.8          Participations and Assignments. 

(a)This Agreement shall bind and inure to the benefit of each signatory, its  

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successors and assigns; provided, however that, Borrowers shall not have the
right to assign or delegate their obligations and duties under this Agreement or
any other Credit Documents or any interest therein except with the prior written
consent of Agent and Lenders.

(b)Notwithstanding subsection (c) of this Section 10.8, nothing herein shall
restrict, prevent or prohibit any Lender from (i) pledging its Loans hereunder
to a Federal Reserve Bank in support of borrowings made by such Lender from such
Federal Reserve Bank or (ii) granting assignments or participations in such
Lender’s Loans hereunder to its parent and/or to any affiliate of such Lender or
to any existing Lender or affiliate thereof.  Any Lender may make, carry or
transfer Loans at, to or for the account of, any of its branch offices or the
office of an affiliate of such Lender except to the extent such transfer would
result in increased costs to Borrower. 

(c)Each Lender may, with the prior written consent of Agent and (if no Default
or Event of Default is outstanding) with the consent of Borrowers, assign to one
or more banks or other financial institutions all or a portion of its rights and
obligations under this Agreement and the Notes; provided that Wells Fargo Bank,
N.A. may assign to one or more banks or other financial institutions up to fifty
percent (50%) of its Commitment as of the date hereof without the prior written
consent of Lenders or Borrowers.  In connection with each assignment: (i) the
parties thereto shall execute and deliver to Agent, for its acceptance (if
properly completed and executed in accordance with the terms hereof) and
recording in its books and records, an Assignment and Acceptance, together with
any Note or Notes subject to such assignment and a processing and recordation
fee of $3,500 to be paid by the assignee, (ii) no such assignment shall be for
less than $10,000,000 or, if less, the entire remaining Commitment of such
Lender, each such assignment shall be of a uniform, and not a varying,
percentage of all rights and obligations under and in respect of both the
Commitment of such Lender and all Loans of such Lender.  Upon such execution and
delivery of the Assignment and Acceptance to Agent, from and after the date
specified as the effective date in the Assignment and Acceptance (“Acceptance
Date”), (x) the assignee thereunder shall be a party hereto, and, to the extent
that rights and obligations hereunder have been assigned to it pursuant to such
Assignment and Acceptance, such assignee shall have the rights and obligations
of a Lender hereunder and (y) the assignor thereunder shall, to the extent that
rights and obligations hereunder have been assigned by it pursuant to such
Assignment and Acceptance, relinquish its rights (other than any rights it may
have pursuant to Section 10.1 which will survive) and be released from its
obligations under this Agreement (and, in the case of an Assignment and
Acceptance covering all or the remaining portion of an assigning Lender’s rights
and obligations under this Agreement, such Lender shall cease to be a party
hereto). 

(d)Within 10 days after demand by Agent, Borrowers shall execute and deliver to
Agent in exchange for any surrendered Note or Notes (which the assigning Lender
agrees to promptly deliver to Borrowers) a new Note or Notes to the order of the
assignee in an amount equal to the Commitment assumed by it pursuant to such
Assignment and Acceptance and, if the assigning Lender has retained a Commitment
hereunder, a new Note or Notes to the order of the assigning Lender in an amount
equal to the Commitment retained by it hereunder.  Such new Note or Notes shall
re-evidence the indebtedness outstanding under the old Notes or Notes and shall
be in an aggregate principal amount equal to the aggregate principal amount of
such surrendered Note or Notes and shall otherwise be in substantially the form
of the Note or Notes subject to such assignments. 

(e)Each Lender may, with the prior written consent of Agent, but without the
consent of any other Lender or Borrowers, sell participations to one or more
parties (a “Participant”)  

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in or to all or a portion of its rights and obligations under this Agreement
(including, without limitation, all or a portion of its Commitments, the Loans
owing to it and the Note or Notes held by it); provided that if such Lender
obtains the consents required under this clause (e) then (i) such Lender’s
obligations under this Agreement (including, without limitation, its Commitment
to Borrowers hereunder) shall remain unchanged, (ii) such Lender shall remain
solely responsible to the other parties hereto for the performance of such
obligations, (iii) such Lender shall remain the holder of any such Note for all
purposes of this Agreement, (iv) Borrowers, Agent, and the other Lenders shall
continue to deal solely and directly with such Lender in connection with such
Lender’s rights and obligations under this Agreement and (v) such Lender shall
not transfer, grant, assign or sell any participation under which the
Participant shall have rights to approve any amendment or waiver of this
Agreement.  

(f)Each Lender agrees that, without the prior written consent of Borrowers and
Agent, it will not make any assignment or sell a participation hereunder in any
manner or under any circumstances that would require registration or
qualification of, or filings in respect of, any Advance, Note or other
Obligation under the securities laws of the United States of America or of any
jurisdiction. 

(g)In connection with the efforts of any Lender to assign its rights or
obligations or to participate interests, Agent or such Lender may disclose any
information in its possession regarding Borrowers, their finances and/or
Property.  By executing and delivering an Assignment and Acceptance, the
assigning Lender thereunder and the assignee thereunder confirm to and agree
with each other and the other parties hereto as follows: (i) other than as
provided in such Assignment and Acceptance, such assigning Lender makes no
representation or warranty and assumes no responsibility with respect to any
statements, warranties or representations made in or in connection with this
Agreement or the execution, legality, validity, enforceability, genuineness,
sufficiency or value of this Agreement or any other Loan Document furnished
pursuant hereto; (ii) such assigning Lender makes no representation or warranty
and assumes no responsibility with respect to the financial condition of the
Borrowers or the performance or observance by the Borrowers of any of their
obligations under this Agreement or any other Loan Document furnished pursuant
hereto; (iii) such assignee confirms that it has received a copy of this
Agreement, together with such other documents and information as it has deemed
appropriate to make its own credit analysis and decision to enter into such
Assignment and Acceptance; (iv) such assignee will, independently and without
reliance upon Agent, such assigning Lender or any other Lender, and based on
such documents and information as it shall deem appropriate at the time,
continue to make its own credit decisions in taking or not taking action under
this Agreement; (v) such assignee appoints and authorizes Agent to take such
action as agent on its behalf and to exercise such powers under this Agreement
as are delegated to Agent by the terms hereof, together with such powers as are
reasonably incidental thereto; and (vi) such assignee agrees that it will
perform in accordance with their terms all of the obligations which by the terms
of this Agreement are required to be performed by it as a Lender. 

(h)Notwithstanding anything in this Agreement to the contrary, under no
circumstances shall Agent or any Lender provide any information regarding this
Agreement (including related documents), the Receivables, the financial
statements, affairs, policies, or business operations of Borrower to any
Affiliate or otherwise related company that competes with Borrower or is engaged
in the business of consumer finance lending outside the ordinary course of
Agent’s or such Lender’s business in administering loans in such Person’s
portfolio.  Without limiting the generality of the preceding sentence, Agent and
Lenders shall not disclose any information about Borrower of any kind  

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or character to Wells Fargo Financial Resources, Inc., Wells Fargo Financial, or
any other consumer finance company outside the ordinary course of Agent’s or
such Lender’s business in administering loans in such Person’s portfolio;
provided, however, prior to the occurrence of an Event of Default, Agent shall
not disclose any customer specific information to such Affiliates.

Section 10.9          Effectiveness of Agreement.  Anything to the contrary in
this Agreement notwithstanding, the provisions hereof shall not be effective
until this Agreement is: (a) duly executed, and delivered by authorized officers
of Borrowers to Agent; and (b) duly signed by an authorized officer of Agent. 

Section 10.10          JURISDICTION AND VENUE.  IN ANY JUDICIAL PROCEEDING
INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER ARISING OUT OF OR RELATED TO THIS
AGREEMENT OR ANY CREDIT DOCUMENT OR THE RELATIONSHIP ESTABLISHED HEREUNDER,
BORROWERS HEREBY IRREVOCABLY SUBMIT TO THE EXCLUSIVE JURISDICTION OF ANY STATE
OR FEDERAL COURT LOCATED IN MANHATTAN, NEW YORK AND AGREE NOT TO RAISE ANY
OBJECTION TO SUCH JURISDICTION OR TO THE LAYING OR MAINTAINING OF THE VENUE OF
ANY SUCH PROCEEDING IN SUCH COUNTY.  BORROWERS AGREE THAT SERVICE OF PROCESS IN
ANY SUCH PROCEEDING MAY BE DULY EFFECTED UPON IT BY MAILING A COPY THEREOF BY
REGISTERED MAIL, POSTAGE PREPAID, TO BORROWERS.  THE PREVAILING PARTY IN ANY
SUCH JUDICIAL PROCEEDING SHALL BE ENTITLED TO THE PAYMENT OF ITS LEGAL FEES AND
EXPENSES IN CONNECTION THEREOF BY THE OTHER PARTY. 

Section 10.11          WAIVER OF JURY TRIAL.  EACH PARTY HERETO HEREBY WAIVES
TRIAL BY JURY IN ANY JUDICIAL PROCEEDING INVOLVING, DIRECTLY OR INDIRECTLY, ANY
MATTER (WHETHER SOUNDING IN TORT, CONTRACT OR OTHERWISE) IN ANY WAY ARISING OUT
OF OR RELATED TO THIS AGREEMENT OR ANY CREDIT DOCUMENT OR THE RELATIONSHIP
ESTABLISHED HEREUNDER.  THIS PROVISION IS A MATERIAL INDUCEMENT FOR AGENT AND
LENDERS TO ENTER INTO THIS AGREEMENT. 

Section 10.12          REVIEW BY COUNSEL.  BORROWERS ACKNOWLEDGE THAT THEY HAVE
HAD THE ASSISTANCE OF COUNSEL IN THE REVIEW AND EXECUTION OF THIS AGREEMENT AND,
SPECIFICALLY, SECTIONS 10.10 AND 10.11 HEREOF, AND FURTHER ACKNOWLEDGE THAT THE
MEANING AND EFFECT OF THE FOREGOING WAIVER OF JURISDICTION AND VENUE OBJECTION
AND JURY TRIAL HAVE BEEN FULLY EXPLAINED TO BORROWERS BY THEIR COUNSEL. 

Section 10.13          Exchanging Information.  Subject to Section 10.8(h),
Agent, Lenders, Wells Fargo & Company and all direct and indirect subsidiaries
of Agent, Lenders or Wells Fargo & Company may exchange and share any and all
information they may have in their possession regarding Borrowers and their
Affiliates with Agent’s and Lenders’ prospective participants, affiliates,
accountants, lawyers and other advisors, Agent, Lenders, Wells Fargo & Company
and all direct and indirect subsidiaries of Agent, Lenders or Wells Fargo &
Company, and Borrowers waive any right of confidentiality it may have with
respect to such exchange of such information. 

Section 10.14          Acknowledgment of Receipt.  Each Borrower acknowledges
receipt of a  

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copy of this Agreement, the Notes, each Credit Document and each other document
and agreement executed by Borrowers in connection with the Agreement or the
Obligations.

Section 10.15          Patriot Act Notice.  Each Lender that is subject to the
requirements of the Patriot Act hereby notifies Borrowers that pursuant to the
requirements of the Patriot Act, it is required to obtain, verify and record
information that identifies Borrowers, which information includes the name and
address of Borrowers and other information that will allow such Lender to
identify Borrowers in accordance with the Patriot Act.  In addition, if Agent is
required by law or regulation or internal policies to do so, it shall have the
right to periodically conduct (a) Patriot Act searches, OFAC/PEP searches, and
customary individual background checks for Borrowers and Guarantors and (b)
OFAC/PEP searches and customary individual  background checks for the Borrowers’
senior management and key principals, and Borrowers agree to cooperate in
respect of the conduct of such searches and further agrees that the reasonable
costs and charges for such searches shall constitute expenses hereunder and be
for the account of Borrowers. 

Section 10.16          Recognition of the U.S. Special Resolution Regimes. 

(a)In the event that any Lender that is a Covered Entity becomes subject to a
proceeding under a U.S. Special Resolution Regime, the transfer from such Lender
of this Agreement, and any interest and obligation in or under this Agreement,
will be effective to the same extent as the transfer would be effective under
the U.S. Special Resolution Regime if this Agreement, and any such interest and
obligation, were governed by the laws of the United States of America or a state
of the United States of America. 

(b)In the event that any Lender that is a Covered Entity or a BHC Act Affiliate
of such Lender becomes subject to a proceeding under a U.S. Special Resolution
Regime, Default Rights under this Agreement that may be exercised against such
Lender are permitted to be exercised to no greater extent than such Default
Rights could be exercised under the U.S. Special Resolution Regime if this
Agreement were governed by the laws of the United States of America or a state
of the United States of America. 

ARTICLE 11
AGENT

Section 11.1          Appointment of Agent. 

(a)Each Lender hereby designates Wells Fargo Bank, N.A. as Agent to act as
herein specified.  Each Lender hereby irrevocably authorizes, and each holder of
any Note by the acceptance of a Note or participation, shall be deemed
irrevocably to authorize Agent to take such action on its behalf under the
provisions of this Agreement and the Notes and any other Credit Documents and to
exercise such powers and to perform such duties hereunder and thereunder as are
specifically delegated to or required of Agent by the terms hereof and thereof
and such other powers as are reasonably incidental thereto.  Agent shall hold
all Collateral and all payments of principal, interest, fees (other than the
administrative fee payable solely for the account of Agent pursuant to Section
2.9 hereof), charges and expenses received pursuant to this Agreement or any
other Credit Document for the ratable benefit of Lenders except as otherwise
provided herein.  Agent may perform any of its duties hereunder by or through
its agents or employees. 

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(b)The provisions of this Article 11 are solely for the benefit of Agent and
Lenders, and Borrowers shall not have any duties under this Section 11 or any
rights as a third party beneficiary of any of the provisions hereof (except for
the applicable provision of Section 11.9(a)).  In performing its functions and
duties under this Agreement, Agent shall act solely as agent of Lenders and does
not assume and shall not be deemed to have assumed any obligation toward or
relationship of agency or trust with or for Borrowers. 

(c)Borrowers, Agent and Lenders hereby covenant and agree that First Horizon
Bank shall be the syndication agent (“Syndication Agent”), but that in such
capacity, Syndication Agent shall have no rights, duties, responsibilities,
obligations, liabilities, responsibilities or duties, except for those received,
undertaken or incurred by Syndication Agent in its capacity as a Lender.  No
duty, responsibility, right or option granted to Agent in this Agreement and
Credit Documents is delegated or transferred, in whole or in part, to
Syndication Agent and no compensation payable to Agent shall be shared with, or
paid to, Syndication Agent. Syndication Agent shall not be entitled to any fees
or reimbursement of expenses except as Syndication Agent shall otherwise be
entitled in its capacity as a Lender. 

Section 11.2          Nature of Duties of Agent.  Agent shall have no duties or
responsibilities except those expressly set forth in this Agreement.  Neither
Agent nor any of its officers, directors, employees or agents shall be liable
for any action taken or omitted by it as such hereunder or in connection
herewith, unless caused by its or their gross negligence or willful misconduct.
 The duties of Agent shall be mechanical and administrative in nature; Agent
shall not have by reason of this Agreement a fiduciary relationship in respect
of any Lender; and nothing in this Agreement, expressed or implied, is intended
to or shall be so construed as to impose upon Agent any obligations in respect
of this Agreement except as expressly set forth herein. 

Section 11.3          Lack of Reliance on Agent. 

(a)Independently and without reliance upon Agent, each Lender, to the extent it
deems appropriate, has made and shall continue to make (i) its own independent
investigation of the financial or other condition and affairs of Borrowers in
connection with the taking or not taking of any action in connection herewith
and (ii) its own appraisal of the creditworthiness of Borrowers, and, except as
expressly provided in this Agreement, Agent shall have no duty or
responsibility, either initially or on a continuing basis, to provide any Lender
with any credit or other information with respect thereto, whether coming into
its possession before the making of Advances or at any time or times thereafter.
 In addition to the foregoing, Agent agrees to provide summary reports to
Lenders in connection with inspections and audits performed under Section 6.3
for informational purposes only and Agent shall not be responsible for the
accuracy of any information contained therein. 

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(b)Agent shall not be responsible to any Lender for any recitals, statements,
information, representations or warranties herein or in any document,
certificate or other writing delivered in connection herewith or for the
execution, effectiveness, genuineness, validity, enforceability, collectability,
priority or sufficiency of this Agreement, the Notes, the Credit Documents or
the financial or other condition of Borrowers.  Agent shall not be required to
make any inquiry concerning either the performance or observance of any of the
terms, provisions or conditions of this Agreement or the Notes, or the financial
condition of Borrowers, or the existence or possible existence of any Default or
Event of Default, unless specifically requested to do so in writing by any
Lender. 

Section 11.4          Certain Rights of Agent.  Without limiting Agent’s rights
and discretion under any provision hereof, Agent shall have the right to request
instructions from the Required Lenders or, as required, each of Lenders.  If
Agent shall request instructions from the Required Lenders or each of Lenders,
as the case may be, with respect to any act or action (including the failure to
act) in connection with this Agreement, Agent shall be entitled to refrain from
such act or taking such action unless and until Agent shall have received
instructions from the Required Lenders or each of Lenders, as the case may be,
and Agent shall not incur liability to any Person by reason of so refraining.
 Without limiting the foregoing, no Lender shall have any right of action
whatsoever against Agent as a result of Agent acting or refraining from acting
hereunder in accordance with the instructions of the Required Lenders or each of
Lenders, as the case may be. 

Section 11.5          Reliance by Agent.  Agent shall be entitled to rely, and
shall be fully protected in relying, upon any note, writing, resolution, notice,
statement, certificate, facsimile, telex teletype or telecopier message, e-mail
or other electronic transmission, cablegram, radiogram, order or other
documentary, teletransmission or telephone message believed by it to be genuine
and correct and to have been signed, sent or made by the proper person.  Agent
may consult with legal counsel (including counsel for Borrowers with respect to
matters concerning Borrowers), independent public accountants and other experts
selected by it and shall not be liable for any action taken or omitted to be
taken by it in good faith in accordance with the advice of such counsel,
accountants or experts. 

Section 11.6          Indemnification of Agent.  To the extent Agent is not
reimbursed and indemnified by Borrowers, each Lender will reimburse and
indemnify Agent, in proportion to its respective Commitment, for and against any
and all liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses (including reasonable counsel fees and
disbursements) or disbursements of any kind or nature whatsoever which may be
imposed on, incurred by or asserted against Agent in any way relating to or
arising out of this Agreement, provided that no Lender shall be liable for any
portion of such liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements resulting solely from Agent’s
gross negligence or willful misconduct. 

Section 11.7          Agent in its Individual Capacity.  With respect to its
obligation to lend under this Agreement, the Advances made by it and the Notes
issued to it and all of its rights and obligations as a Lender hereunder and
under other Credit Documents, Agent shall have the same rights and powers
hereunder as any other Lender or holder of a Note or participation interests and
may exercise the same as though it was not performing the duties specified
herein; and the terms “Lenders”, “Required Lenders”, “holders of Notes”, or any
similar terms shall, unless the context clearly otherwise indicates, include
Agent in its individual capacity.  Agent may accept deposits from, lend money
to, acquire equity interests in, and generally engage in any kind of banking,
trust, financial  

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advisory or other business with Borrowers or any Affiliate of Borrowers as if it
were not performing the duties specified herein, and may accept fees and other
consideration from Borrowers for services in connection with this Agreement and
otherwise without having to account for the same with Lenders.

Section 11.8          Holders of Notes.  Agent may deem and treat the payee of
any Note as the owner thereof for all purposes hereof unless and until a written
notice of the assignment or transfer thereof shall have been filed with Agent.
 Any request, authority or consent of any Person who, at the time of making such
request or giving such authority or consent, is the holder of any Note, shall be
conclusive and binding on any subsequent holder, transferee or assignee of such
Note or of any Note or Notes issued in exchange therefor. 

Section 11.9          Successor Agent. 

(a)Agent may, upon 5 Business Days notice to Lenders and Borrowers, resign at
any time (effective upon the appointment of a successor Agent pursuant to the
provisions of this Section 11.9(a)) by giving written notice thereof to Lenders
and Borrowers.  Upon any such resignation, the Required Lenders shall have the
right, upon 5 days notice, to appoint a successor Agent.  If no successor Agent
shall have been so appointed by the Required Lenders, and shall have accepted
such appointment, within 30 days after the retiring Agent’s giving of notice of
resignation, then, upon 5 days notice, the retiring Agent may, on behalf of
Lenders, appoint a successor Agent, which shall be a bank or other financial
institution which maintains an office in the United States, or a commercial bank
organized under the laws of the United States of America or of any State
thereof, or any affiliate of such bank or trust or other financial institution
which is engaged in the banking business, having a combined capital and surplus
of at least $500,000,000; provided, however, that Required Lenders may, upon 5
days notice, replace any such successor Agent appointed by a retiring Agent.   

(b)Upon the acceptance of any appointment as Agent hereunder by a successor
Agent, such successor Agent shall thereupon succeed to and become vested with
all the rights, powers, privileges and duties of the retiring Agent, and the
retiring Agent shall be discharged from its duties and obligations under this
Agreement.  After any retiring Agent’s resignation hereunder as Agent, the
provisions of this Article 11 shall inure to its benefit as to any actions taken
or omitted to be taken by it while it was Agent under this Agreement.  In the
event Agent or its assets are taken over by any state or federal agency having
jurisdiction over Agent or its assets, a majority of the Lenders other than
Agent may appoint a successor to Agent. 

Section 11.10          Collateral Matters. 

(a)Each Lender authorizes and directs Agent to accept the other Credit Documents
for the benefit of Lenders.  Agent is hereby authorized, on behalf of all
Lenders, without the necessity of any notice to or further consent from any
Lender, from time to time prior to an Event of Default, to take any action, in
its sole discretion, with respect to any Collateral or Credit Document which may
be necessary or appropriate to perfect and maintain perfected or enforce the
Liens upon the Collateral granted pursuant to this Agreement. 

(b)Lenders hereby authorize Agent, at its option and in its discretion, to
release any Lien granted to or held by Agent upon any Collateral (i) upon
termination of the Commitments  

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and payment in immediately available funds and satisfaction of all of the
Obligations at any time arising under or in respect of this Agreement or the
Credit Documents or the transactions contemplated hereby or thereby, (ii)
constituting Property being sold or disposed of upon receipt of the proceeds of
such sale by Agent if the sale or disposition is permitted under this Agreement
or any other Credit Document or is made by Agent in the enforcement of its
rights hereunder following the occurrence of an Event of Default or (iii) if
approved, authorized or ratified in writing by the Required Lenders, unless such
release is required to be approved by all Lenders hereunder; provided, however,
that Agent may, in its discretion, upon request by Borrowers, release Agent’s
Liens on Collateral value in the aggregate not in excess of $1,000,000 during
any one year period without the prior written approval or authorization of any
of the other Lenders.  Upon request by Agent at any time, Lenders will confirm
in writing Agent’s authority to release particular types or items of Collateral
pursuant to this Section 11.10(b).

(c)Agent shall have no obligation whatsoever to Lenders or to any other Person
to assure that the Collateral exists or is owned by Borrowers or is cared for,
protected or insured or that the Liens granted to Agent herein or pursuant
hereto have been properly or sufficiently or lawfully created, perfected,
protected or enforced or are entitled to any particular priority, or to exercise
or to continue exercising at all or in any manner or under any duty of care,
disclosure or fidelity any of the rights, authorities and powers granted or
available to Agent in this Section 11.10 or in any of the Credit Documents, it
being understood and agreed that in respect of the Collateral, or any act,
omission or event related thereto, Agent may act in any manner it may deem
appropriate, in its sole discretion, given Agent’s own interest in the
Collateral as one of Lenders and that Agent shall have no duty or liability
whatsoever to Lenders, except for its gross negligence or willful misconduct. 

Section 11.11          Delivery of Information.  Agent shall not be required to
deliver to any Lender originals or copies of any documents, instruments,
agreements, notices, communications or other information received by Agent from
Borrowers, the Required Lenders, any Lender or any other Person under or in
connection with this Agreement or any other Credit Document except (a) as
specifically provided in this Agreement or any other Credit Document and (b) as
requested from time to time in writing by any Lender with respect to documents,
instruments, notices or other written communications from Borrowers received by
and in the possession of Agent. 

Section 11.12          Defaults.  Agent shall not be deemed to have knowledge of
the occurrence of a Default or Event of Default (other than the non-payment of
principal of or interest on the Loan to the extent the same is required to be
paid to Agent for the account of Lenders) unless Agent has actual knowledge
thereof or has received notice from a Lender or Borrowers specifying such
Default or Event of Default and stating that such notice is a “Notice of
Default.”  In the event that Agent has such knowledge of or receives such a
notice of the occurrence of a Default or Event of Default, Agent shall give
prompt notice thereof to Lenders.  Agent shall (subject to Article 9) take such
action with respect to such Default or Event of Default or refrain from taking
such action, with respect to such Default or Event of Default as Agent shall
deem advisable in the best interest of Lenders and shall, without limiting
Agent’s rights or discretion under this Agreement, use reasonable efforts under
the circumstances to consult with Lenders before taking any material enforcement
action; and provided further that Agent shall not be required to take any such
action which it determines to be contrary to law. 

[SIGNATURES APPEAR ON THE FOLLOWING PAGE(S)]

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54

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IMPORTANT: READ BEFORE SIGNING.  THE TERMS OF THIS AGREEMENT SHOULD BE READ
CAREFULLY BECAUSE ONLY THOSE TERMS IN WRITING ARE ENFORCEABLE.  NO OTHER TERMS
OR ORAL PROMISES NOT CONTAINED IN THIS WRITTEN CONTRACT MAY BE LEGALLY ENFORCED.
 YOU MAY CHANGE THE TERMS OF THIS AGREEMENT ONLY BY ANOTHER WRITTEN AGREEMENT.

 

Dated the date and year first set forth above

BORROWER:

1ST FRANKLIN FINANCIAL CORPORATION

 

 

By:/s/ A. R. Guimond, Jr.                                                      

Name:A. Roger Guimond,
Jr.                                                       

Title:Executive Vice President and CFO                     

 

 

 

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AGENT:

WELLS FARGO BANK, N.A.

 

 

By:/s/ William M.
Laird                                                               

Name:William M.
Laird                                                                          

Title:SVP                                                                                                                  

 

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116549.01097/122059808v.9

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LENDERS:

WELLS FARGO BANK, N.A.

 

 

By:/s/ William M.
Laird                                                              

Name:William M.
Laird                                                                         

Title:SVP                                                                                                                 

 

FIRST HORIZON BANK

 

 

By:/s/ Jake
McCrary                                                                        

Name:Jake
McCrary                                                                                    

Title:Vice
President                                                                                  

 

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[SIGNATURE PAGE TO LOAN AND SECURITY AGREEMENT]

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EXHIBITS

 

Exhibit A:Form of Annual Compliance Certificate 

Exhibit B:Form of Availability Statement 

Exhibit C:RESERVED 

Exhibit D:Form of Subordination Agreement 

Exhibit E:Modification Policy 

Exhibit F:Underwriting Policy 

Exhibit G:Charge-off Policy 

 

SCHEDULES

 

Schedule I:Lenders 

Schedule II:Permitted Debt 

Schedule III:Permitted Liens 

Schedule 4.2:Organization and Good Standing 

Schedule 4.7:Litigation 

Schedule 4.12:Investments and Subsidiaries 

Schedule 4.16:Locations of Borrower 

Schedule 4.17:Capital Stock  

Schedule 7.16:Deposit Accounts 

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SCHEDULE I

 

Commitments

 

Lenders

Commitment Percentage

Commitment Amount

 

 

 

Wells Fargo Bank, N.A.

123 South Broad Street, 5th Floor

MAC: Y1379-059

Philadelphia, Pennsylvania

Attn:  Mr. William M. Laird, Senior Vice President

Facsimile: (215) 670-6120

 

75%

$150,000,000

First Horizon Bank

165 Madison Avenue, Suite 1000

Memphis, Tennessee 38103

Attn:  Mr. Jake McCrary, Vice President

Facsimile:  (901) 523-4566

 

25%

$50,000,000

 

TOTAL

 

100%

 

$200,000,000

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